Dear Shareholder,

The Board of Directors of People's Bank of Commerce is pleased to report our 2021 annual results and accomplishments.

One of People's Bank's ongoing strategic initiatives has been diversification, both geographically and by income source. Adherence to this strategy was brought to fruition in 2021 by the successful merger with Willamette Community Bank (WCB) in March. We added three more branches and community service areas, which has contributed a distinctly different industry profile and economic composition for People's Bank outside of southern Oregon.

The addition of Steelhead Finance to People's Bank in 2017 enhanced non-interest income opportunities, which lessened the impact of the latest period of low interest rates. The bank's mortgage division has been very successful in the low-rate environment but will see less opportunity as rates rise. In contrast, the commercial loan department is positioned to show better results with rising rates.

2021 was a very busy year for the bank. Not only was the successful merger with WCB completed, but a large operations conversion was implemented. People's Bank opened its newest branch in Klamath Falls and purchased its tenth branch in Jacksonville. Three representatives of WCB joined the bank's Board of Directors and participated in updating the strategic plan for the next three years, which includes expanding our footprint to the Eugene market.

We say goodbye to Director Jim Wright, who has faithfully and diligently served the bank for the last 16 years. The bank's executive succession plan is also progressing with Julia Beattie assuming the role of Chief Credit Officer upon the retirement of John Boyd this past year. The WCB merger added Joan Reukauf to the executive team as Chief Operating Officer (COO), allowing for a smooth transition for Jeri Reno, the bank's COO for the past 24 years, to retire at the end of 2022.

The results for 2021, the second year of the pandemic, were very favorable for People's Bank:

  • ƒ 2021 net income of $11,473,000 compared to $6,131,000 in 2020, a 87% increase,

  • ƒ 2021 earnings per share of $2.44 compared $1.72 during 2020, a 42% increase,

  • ƒ Steelhead Finance gross revenue of $6,663,000 in 2021 vs $4,073,000 during 2020, up 64%,

  • ƒ Total loans increased $109 million, a 31% increase over the prior year,

  • ƒ Total deposits increased $308 million, a 68% increase over 2020,

  • ƒ Total bank assets increased $336 million or 64% over the previous year,

  • ƒ Non-Interest income totaled $14.1 million in 2021 versus $10.4 million in 2020, a 36% increase,

  • ƒ The bank's year-to-date efficiency ratio was 56.65%,

  • ƒ ROAE was 15.89% in 2021 and ROAA was 1.47%,

  • ƒ Nonperforming assets to total loans was .14% in 2021 vs .20% the prior year.

We look forward to what 2022 will bring and are thankful to our shareholders, employees and customers, who we strive to honor and serve. We proudly believe in our locally-owned community bank and are committed to the long-term value of its stock (PBCO); follow it atwww.peoplesbank.bank.

Please don't hesitate to contact me directly at 541-774-7654, if you have questions or comments.

Sincerely,

Ken Trautman

Chief Executive Officer

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995:

This release includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by phrases such as People's Bank or its management "believes," "expects," "anticipates," "foresees," "forecasts," "estimates" or other words or phrases of similar import. Similarly, statements herein that describe People's Bank's business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. All such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those in forward-looking statements.

ONE BANK, ONE NAME

When looking for an acquisition partner, finding a community bank with shared values and like culture were top of the list of requirements. Willamette Community Bank fit those requirements extremely well, making a merger not only possible but advantageous for all. Willamette Community Bank had been in the Willamette Valley, delivering outstanding community banking service for over seventeen years. Their clocktower logo was recognizable throughout the region and they were known for service to community, their customers, and their employees. Keeping the Willamette Community Bank name during merger was an important part of letting the surrounding communities know that their locally owned community bank was still there for them and able to offer even more than before.

We knew that bringing Willamette Community Bank and People's Bank together would be a strong combination. Now, almost a year later, we are ready to exhibit that strength under one name - People's Bank. We are excited about this next evolution and are committed to providing our communities with the same high level of service our clients have come to expect from us.

BANK HOLDING CO UPDATE

At last year's shareholder's meeting, the bank's shareholders overwhelmingly approved the formation of a bank holding company, PBCO Financial Corporation. I am pleased to announce that we have successfully completed all of the steps to merge the bank into our new holding company, having received approval from the Federal Reserve in February of this year. Effective February 28, 2022, People's Bank of Commerce became a wholly owned subsidiary of PBCO Financial Corporation.

What does this mean for our shareholders? To complete the transition to our new bank holding company, all People's Bank of Commerce shareholders will exchange their current shares for shares in the PBCO Financial Corporation on a one-for-one basis. Shareholders who hold their shares electronically will automatically be converted to the new holding company stock. Those shareholders who own certificated shares will receive a letter of transmittal, in the near future, from our transfer agent, Broadridge Corporate Issuer Services. The letter of transmittal should be completed and remitted, along with the original stock certificates, to Broadridge. If you have any questions regarding the exchange of shares, please contact Lindsey Trautman, the company's Chief Financial Officer, at 541-774-7665 or by email atlindsey.trautman@peoplesbank.bank.

DIRECTOR NEWS

People's Bank continues to grow and thrive to meet the needs of the communities we serve. Part of what makes a great bank is a great board of directors. People's Bank Board is just that. We have a great, diverse group of professionals, many of whom have served in their roles as directors for many years. Today, People's Bank and its board wish to acknowledge and thank Director Jim Wright, who will be leaving the board after nearly 20 years of outstanding service. His foresight and wisdom have helped guide the bank in becoming one of the strongest and best community banks in the country. We

are thankful to Jim for his many years of outstanding service. He will be greatly missed, but the board will continue to carry on his legacy of excellence.

As a board leader, Jim has served as Governance Committee chair for many years. I would like to thank Governance Committee member Bob Mayers for stepping up to this role as Jim Wright retires. I would also like to welcome Jim Teece as the newest member of the Governance Committee.

People's Bank is here to serve you.

BOARD OF DIRECTORS

William C. St. Laurent

Vice Chairman

Albany Branch

Ashland Branch

333 Lyon Street SE Albany, OR 97321 541-926-9000

1500 Siskiyou Boulevard Ashland, OR 97520 541-482-3886

Medford Branches

Central Point Branch

Grants Pass Branch

1528 Biddle Road

Medford, OR 97504

541-776-5350

1017 East Pine Street Central Point, OR 97502 541-665-5262

509 SE 7th Street

Grants Pass, OR 97526 541-955-8005

1311 East Barnett Road

Jacksonville Branch

Klamath Falls Branch

Medford, OR 97504

541-622-6222

185 E. California Street Jacksonville OR 97530 541-702-5070

210 Timbermill Drive Klamath Falls, OR 97601 541-273-2717

Lebanon Branch

Salem Branch

Steelhead Finance

1495 South Main Lebanon, OR 97355 541-223-7180

315 Commercial Street SE, Suite 110 Salem, OR 97301 503-468-5558

3518 Heathrow Way Medford, OR 97504 541-773-3377

www.peoplesbank.bank

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People's Bank of Commerce published this content on 18 March 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 April 2022 17:27:01 UTC.