People's Bank of Commerce rolled up its 11th consecutive profitable reporting period, recording a 134 percent jump in first-quarter earnings.

People's Bank of Commerce rolled up its 11th consecutive profitable reporting period, recording a 134 percent jump in first-quarter earnings.

The Medford-based community bank reported net income of $227,000, or 20 cents per share, compared to $97,000, or 8 cents per share, during the first quarter of 2011. People's Bank's last down quarter ended in mid-2009.

"The last two quarters we've seen large deposit growth, but where we've really done well is loan growth," said President and Chief Executive Officer Ken Trautman.

"We've had 16 to 18 percent loan growth while our peer banks have had a 3 percent decrease across the board. A lot of that is a lack of demand. We're sitting in a perfect world as a community bank in Southern Oregon. This market has been dominated by regional banks. When they had some challenges, it created an opportunity for us to fill the void."

Net interest income grew 16 percent in the first quarter, while non-interest income soared 53 percent, primarily because of a large increase in mortgage loan income — indicative of stronger home lending activity.

"The majority of our mortgage lending is still refis (refinances) and what is shocking to me is that it took so long," Trautman said.

"We've had low interest rates for two or three years and people are taking advantage and refinancing now. It involves tighter underwriting rules and it's harder to qualify, but the volume is picking up. We're back to the levels we were doing in 2004 to 2006."

The benefit of those refinanced mortgages, he said, is when there is more disposable income in consumers' pockets.

"Some of those people have $200 to $300 additional income," Trautman said. "When that is spent locally it helps local business. I think we're at the start of the rebound we've been waiting for."

People's Bank has written up 10 presold residential construction loans in the past month.

"It isn't much, compared to the 60 or 70 we were doing at one time during the height (of the residential construction boom)," Trautman said. "But we're moving in the right direction. We're at the start of a new cycle."

Total loans of $99.6 million were up 17 percent, and total deposits of $112.6 million were up 18 percent compared to the first quarter of 2011. Total assets grew 17 percent to $128.3 million at the end of March 2012, up from $109.9 million.

The bank's loan loss reserves grew 22 percent from $1.35 million to $1.65 million — reflecting loan growth — while past-due and non-accrual loans equaled one half of 1 percent of total loans in March 2012.

"We've got to look at our capital levels and keep our liquidity high," Trautman said. "It does no good to grow loans with weaknesses we may have to deal with later on."

Reach reporter Greg Stiles at 541-776-4463 or email business@mailtribune.com.