FLORENCE, Ore.--(BUSINESS WIRE)--Oregon Pacific Bancorp (ORPB), the holding company of Oregon Pacific Bank, today reported net income of $1.8 million, or $0.26 per diluted share, during the quarter ended September 30, 2024, compared to $1.9 million or $0.26 per diluted share for the quarter ended June 30, 2024.
Period-end deposits grew to $695.6 million and represented quarterly growth of $18.1 million, and growth of $35.1 million since December 31, 2023. "The bank's quarterly deposit growth was strong, and we are pleased to see a return to the normal seasonal deposit growth occurring in the latter half of the year," said Ron Green, President and Chief Executive Officer. "Although we experienced modest margin compression during the quarter, we expect our strong core deposit base to support increased profitability as we transition into a more normalized rate environment."
During the quarter the bank's net interest margin contracted slightly to 3.59%, down from 3.65% in the second quarter. Margin compression was tied to a small increase in the cost of funds, which grew to 1.41%, up from 1.30% in the second quarter. The increase was primarily attributable to continued deposit pricing pressure, despite the Fed rate reduction on September 19, 2024. The bank continued to evaluate core-deposit pricing based on competitive rate pressures to retain deposits and placed low reliance on non-core funding. Callable brokered deposits totaled $18 million and Federal Home Loan term advances totaled $7.5 million at September 30, 2024, which was unchanged from June 30, 2024.
Period-end loans, net of deferred loan origination fees, totaled $565.5 million, representing quarterly growth of $2.5 million for the period ended September 30, 2024. Quarterly loan production for new and renewed loans totaled $18.6 million, with a weighted average effective rate of 7.45% and a weighted-average repricing life of 4.41 years. The third quarter loan yield grew to 5.47%, representing an increase of 0.04% over the prior quarter as new loan production continued to occur at a rate higher than the existing portfolio yield.
During the third quarter of 2024, the bank experienced a reduction in classified assets of $1.4 million, defined as loans and loan contingent liabilities internally graded substandard or worse, impaired loans, adversely classified securities and other real estate owned. "We are pleased to see loan migration out of the classified asset category, back to performing loans," said James Atwood, Executive Vice President and Chief Credit Officer. "While some economic uncertainty continues, the bank remains in close contact with borrowers to proactively identify credit issues." During the third quarter of 2024 the bank recorded $150 thousand of provision for credit losses, and $35 thousand of provision for unfunded commitments, which occurred due to quarterly loan growth.
Noninterest income totaled $2.0 million for the quarter ended September 30, 2024, and represented growth of $78 thousand compared to the quarter ended June 30, 2024. The largest increase occurred in the trust fee income category, which grew $93 thousand from the prior quarter. This increase was tied to growth in Assets Under Management, which increased $12.7 million from June 30, 2024, and $40.4 million since December 31, 2023. The bank has five trust officers across four branch locations and believes future business opportunities will be significant, especially as national trust companies have continued to raise the minimum asset threshold to accept new trust clients. Offsetting the growth in trust income the bank also experienced a contraction of $55 thousand in the other income category compared to the second quarter 2024. During the second quarter the bank recognized a $34 thousand incentive payment through Visa associated with debit card processing. This payment was a one-time event and was not anticipated to be received in future periods.
During the third quarter 2024 noninterest expense totaled $6.2 million, representing an increase of $93 thousand from the quarter ended June 30, 2024. The largest expense fluctuation occurred in the occupancy category, as the bank renewed its general liability insurance effective August 1, 2024. While the bank has not had any claims activity, the bank saw annual premiums increase $23 thousand.
Forward-Looking Statement Safe Harbor
This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 ("PSLRA"). These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as "anticipates," "targets," "expects," "estimates," "intends," "plans," "goals," "believes" and other similar expressions or future or conditional verbs such as "will," "should," "would" and "could." The forward-looking statements made represent Oregon Pacific Bank's current estimates, projections, expectations, plans or forecasts of its future results and revenues, including but not limited to statements about performance, loan or deposit growth, loan prepayments, investment purchases, investment yields, strategic focus, capital position, liquidity, credit quality, special asset liquidation, noninterest income, noninterest expense and credit quality trends. These statements are not guarantees of future results or performance and involve certain risks, uncertainties and assumptions that are difficult to predict and are often beyond Oregon Pacific Bank's control. Actual outcomes and results may differ materially from those expressed in, or implied by, any of these forward-looking statements. You should not place undue reliance on any forward-looking statement and should consider all of the following uncertainties and risks. Oregon Pacific Bancorp undertakes no obligation to publicly revise or update any forward-looking statement to reflect the impact of events or circumstances that arise after the date of this release. This statement is included for the express purpose of invoking the PSLRA's safe harbor provisions.
| CONSOLIDATED BALANCE SHEETS | ||||||||||||
| Unaudited (dollars in thousands) | ||||||||||||
| September 30, | June 30, | September 30, | ||||||||||
2024 | 2024 | 2023 | ||||||||||
| ASSETS | ||||||||||||
| Cash and due from banks | $ | 12,437 | $ | 6,505 | $ | 8,925 | ||||||
| Interest bearing deposits | 25,874 | 10,559 | 11,216 | |||||||||
| Securities | 163,275 | 162,483 | 176,593 | |||||||||
| Loans, net of deferred fees and costs | 565,492 | 563,002 | 525,231 | |||||||||
| Allowance for credit losses | (7,400 | ) | (7,250 | ) | (6,892 | ) | ||||||
| Premises and equipment, net | 13,444 | 13,403 | 13,024 | |||||||||
| Bank owned life insurance | 9,071 | 9,002 | 8,801 | |||||||||
| Deferred tax asset | 4,754 | 5,784 | 6,604 | |||||||||
| Other assets | 8,279 | 8,354 | 8,986 | |||||||||
| Total assets | $ | 795,226 | $ | 771,842 | $ | 752,488 | ||||||
| LIABILITIES | ||||||||||||
| Deposits | ||||||||||||
| Demand - non-interest bearing | $ | 156,296 | $ | 154,226 | $ | 160,272 | ||||||
| Demand - interest bearing | 278,563 | 285,802 | 270,677 | |||||||||
| Money market | 136,984 | 119,863 | 139,033 | |||||||||
| Savings | 65,456 | 64,458 | 69,018 | |||||||||
| Certificates of deposit | 58,289 | 53,126 | 30,917 | |||||||||
| Total deposits | 695,588 | 677,475 | 669,917 | |||||||||
| FHLB borrowings | 7,500 | 7,500 | 5,000 | |||||||||
| Junior subordinated debenture | 4,124 | 4,124 | 4,124 | |||||||||
| Subordinated debenture | 14,802 | 14,777 | 14,702 | |||||||||
| Other liabilities | 8,612 | 8,101 | 8,168 | |||||||||
| Total liabilities | 730,626 | 711,977 | 701,911 | |||||||||
| STOCKHOLDERS' EQUITY | ||||||||||||
| Common stock | 21,491 | 21,388 | 21,212 | |||||||||
| Retained earnings | 49,385 | 47,538 | 41,859 | |||||||||
| Accumulated other comprehensive income, net of tax | (6,276 | ) | (9,061 | ) | (12,494 | ) | ||||||
| Total stockholders' equity | 64,600 | 59,865 | 50,577 | |||||||||
| Total liabilities & stockholders' equity | $ | 795,226 | $ | 771,842 | $ | 752,488 | ||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||
| Unaudited (dollars in thousands, except per share data) | ||||||||||||||||||
| THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||||||||||||
September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||||
2024 | 2024 | 2023 | 2024 | 2023 | ||||||||||||||
| INTEREST INCOME | ||||||||||||||||||
| Loans | $ | 7,746 | $ | 7,548 | $ | 6,587 | $ | 22,437 | $ | 18,660 | ||||||||
| Securities | 1,477 | 1,515 | 1,568 | 4,531 | 4,896 | |||||||||||||
| Other interest income | 314 | 224 | 373 | 736 | 1,090 | |||||||||||||
| Total interest income | 9,537 | 9,287 | 8,528 | 27,704 | 24,646 | |||||||||||||
| INTEREST EXPENSE | ||||||||||||||||||
| Deposits | 2,452 | 2,214 | 1,483 | 6,665 | 3,653 | |||||||||||||
| Borrowed funds | 319 | 335 | 231 | 1,027 | 686 | |||||||||||||
| Total interest expense | 2,771 | 2,549 | 1,714 | 7,692 | 4,339 | |||||||||||||
| NET INTEREST INCOME | 6,766 | 6,738 | 6,814 | 20,012 | 20,307 | |||||||||||||
| Provision for credit losses on loans | 150 | 141 | - | 331 | 70 | |||||||||||||
| Provision (credit) for unfunded commitments | 35 | 10 | (123 | ) | 5 | (230 | ) | |||||||||||
| Net interest income after provision (credit) for credit losses | 6,581 | 6,587 | 6,937 | 19,676 | 20,467 | |||||||||||||
| NONINTEREST INCOME | ||||||||||||||||||
| Trust fee income | 1,030 | 937 | 848 | 2,867 | 2,675 | |||||||||||||
| Service charges | 371 | 361 | 359 | 1,079 | 1,026 | |||||||||||||
| Mortgage loan sales | 39 | 61 | 25 | 132 | 91 | |||||||||||||
| Merchant card services | 157 | 125 | 162 | 394 | 386 | |||||||||||||
| Oregon Pacific Wealth Management income | 336 | 316 | 294 | 952 | 821 | |||||||||||||
| Other income | 105 | 160 | 117 | 362 | 299 | |||||||||||||
| Total noninterest income | 2,038 | 1,960 | 1,805 | 5,786 | 5,298 | |||||||||||||
| NONINTEREST EXPENSE | ||||||||||||||||||
| Salaries and employee benefits | 3,651 | 3,634 | 3,164 | 10,918 | 9,374 | |||||||||||||
| Outside services | 669 | 639 | 678 | 2,026 | 1,818 | |||||||||||||
| Occupancy & equipment | 511 | 478 | 456 | 1,499 | 1,355 | |||||||||||||
| Trust expense | 615 | 635 | 545 | 1,867 | 1,560 | |||||||||||||
| Loan and collection, OREO expense | 21 | 20 | 9 | 55 | 60 | |||||||||||||
| Advertising | 88 | 96 | 93 | 239 | 339 | |||||||||||||
| Supplies and postage | 75 | 68 | 98 | 222 | 264 | |||||||||||||
| Other operating expenses | 549 | 516 | 532 | 1,653 | 1,558 | |||||||||||||
| Total noninterest expense | 6,179 | 6,086 | 5,575 | 18,479 | 16,328 | |||||||||||||
| Income before taxes | 2,440 | 2,461 | 3,167 | 6,983 | 9,437 | |||||||||||||
| Provision for income taxes | 593 | 595 | 820 | 1,680 | 2,424 | |||||||||||||
| NET INCOME | $ | 1,847 | $ | 1,866 | $ | 2,347 | $ | 5,303 | $ | 7,013 | ||||||||
| Quarterly Highlights | |||||||||||||||||||
| 3rd Quarter | 2nd Quarter | 1st Quarter | 4th Quarter | 3rd Quarter | |||||||||||||||
2024 | 2024 | 2024 | 2023 | 2023 | |||||||||||||||
| Earnings | |||||||||||||||||||
| Interest income | $ | 9,537 | $ | 9,287 | $ | 8,880 | $ | 8,651 | $ | 8,528 | |||||||||
| Interest expense | 2,771 | 2,549 | 2,371 | 2,056 | 1,714 | ||||||||||||||
| Net interest income | $ | 6,766 | $ | 6,738 | $ | 6,509 | $ | 6,595 | $ | 6,814 | |||||||||
| Provision for credit losses on loans | 150 | 141 | 40 | 80 | - | ||||||||||||||
| Provision (credit) for unfunded commitments | 35 | 10 | (40 | ) | (150 | ) | (123 | ) | |||||||||||
| Noninterest income | 2,038 | 1,960 | 1,789 | 1,857 | 1,805 | ||||||||||||||
| Noninterest expense | 6,179 | 6,086 | 6,216 | 5,683 | 5,575 | ||||||||||||||
| Provision for income taxes | 593 | 595 | 492 | 614 | 820 | ||||||||||||||
| Net income | $ | 1,847 | $ | 1,866 | $ | 1,590 | $ | 2,225 | $ | 2,347 | |||||||||
| Average shares outstanding | 7,134,259 | 7,135,227 | 7,115,125 | 7,094,180 | 7,094,180 | ||||||||||||||
| Average diluted shares outstanding | 7,153,663 | 7,154,631 | 7,128,148 | 7,100,680 | 7,100,680 | ||||||||||||||
| Period end shares outstanding | 7,134,259 | 7,135,227 | 7,135,615 | 7,094,180 | 7,094,180 | ||||||||||||||
| Period end diluted shares outstanding | 7,153,663 | 7,154,631 | 7,155,019 | 7,100,680 | 7,100,680 | ||||||||||||||
| Earnings per share | $ | 0.26 | $ | 0.26 | $ | 0.22 | $ | 0.31 | $ | 0.33 | |||||||||
| Diluted earnings per share | $ | 0.26 | $ | 0.26 | $ | 0.22 | $ | 0.31 | $ | 0.33 | |||||||||
| Performance Ratios | |||||||||||||||||||
| Return on average assets | 0.93 | % | 0.96 | % | 0.83 | % | 1.17 | % | 1.22 | % | |||||||||
| Return on average equity | 12.12 | % | 13.01 | % | 11.43 | % | 17.45 | % | 18.65 | % | |||||||||
| Net interest margin - tax equivalent | 3.59 | % | 3.65 | % | 3.59 | % | 3.64 | % | 3.74 | % | |||||||||
| Yield on loans | 5.47 | % | 5.43 | % | 5.30 | % | 5.15 | % | 5.07 | % | |||||||||
| Yield on securities | 3.48 | % | 3.62 | % | 3.54 | % | 3.53 | % | 3.43 | % | |||||||||
| Cost of deposits | 1.41 | % | 1.30 | % | 1.20 | % | 1.00 | % | 0.86 | % | |||||||||
| Cost of interest-bearing liabilities | 1.97 | % | 1.83 | % | 1.74 | % | 1.52 | % | 1.26 | % | |||||||||
| Efficiency ratio | 70.20 | % | 70.00 | % | 74.91 | % | 67.25 | % | 64.73 | % | |||||||||
| Full-time equivalent employees | 144 | 143 | 142 | 134 | 131 | ||||||||||||||
| Capital | |||||||||||||||||||
| Tier 1 capital | $ | 87,101 | $ | 85,416 | $ | 83,699 | $ | 82,278 | $ | 80,082 | |||||||||
| Leverage ratio | 10.96 | % | 10.82 | % | 10.78 | % | 10.70 | % | 10.40 | % | |||||||||
| Common equity tier 1 ratio | 14.65 | % | 14.36 | % | 14.33 | % | 14.28 | % | 14.34 | % | |||||||||
| Tier 1 risk based ratio | 14.65 | % | 14.36 | % | 14.33 | % | 14.28 | % | 14.34 | % | |||||||||
| Total risk based ratio | 15.90 | % | 15.61 | % | 15.58 | % | 15.53 | % | 15.59 | % | |||||||||
| Book value per share | $ | 9.05 | $ | 8.39 | $ | 8.13 | $ | 7.95 | $ | 7.13 | |||||||||
| Quarterly Highlights | |||||||||||||||||||
| 3rd Quarter | 2nd Quarter | 1st Quarter | 4th Quarter | 3rd Quarter | |||||||||||||||
2024 | 2024 | 2024 | 2023 | 2023 | |||||||||||||||
| Asset quality | |||||||||||||||||||
| Allowance for credit losses (ACL) | $ | 7,400 | $ | 7,250 | $ | 7,018 | $ | 6,975 | $ | 6,892 | |||||||||
| Nonperforming loans (NPLs) | $ | 278 | $ | 275 | $ | 113 | $ | 443 | $ | 456 | |||||||||
| Nonperforming assets (NPAs) | $ | 278 | $ | 275 | $ | 113 | $ | 443 | $ | 456 | |||||||||
| Classified Assets (1) | $ | 10,363 | $ | 11,778 | $ | 9,668 | $ | 9,186 | $ | 4,252 | |||||||||
| Net loan charge offs (recoveries) | $ | - | $ | (91 | ) | $ | (3 | ) | $ | (3 | ) | $ | (6 | ) | |||||
| ACL as a percentage of net loans | 1.31 | % | 1.29 | % | 1.27 | % | 1.30 | % | 1.31 | % | |||||||||
| ACL as a percentage of NPLs | 2661.87 | % | 2636.36 | % | 6210.62 | % | 1574.49 | % | 1511.40 | % | |||||||||
| Net charge offs (recoveries) to average loans | 0.00 | % | -0.02 | % | 0.00 | % | 0.00 | % | 0.00 | % | |||||||||
| Net NPLs as a percentage of total loans | 0.05 | % | 0.05 | % | 0.02 | % | 0.08 | % | 0.09 | % | |||||||||
| Nonperforming assets as a percentage of total assets | 0.03 | % | 0.04 | % | 0.01 | % | 0.06 | % | 0.06 | % | |||||||||
| Classified Asset Ratio (2) | 10.97 | % | 12.63 | % | 10.66 | % | 10.29 | % | 4.89 | % | |||||||||
| Past due as a percentage of total loans | 0.24 | % | 0.19 | % | 0.29 | % | 0.15 | % | 0.12 | % | |||||||||
| Off-balance sheet figures | |||||||||||||||||||
| Unused credit commitments | $ | 99,229 | $ | 97,763 | $ | 99,498 | $ | 105,900 | $ | 103,163 | |||||||||
| Trust assets under management (AUM) | $ | 267,061 | $ | 254,380 | $ | 242,222 | $ | 226,695 | $ | 219,268 | |||||||||
| Oregon Pacific Wealth Management AUM | $ | 167,025 | $ | 159,201 | $ | 153,228 | $ | 147,159 | $ | 140,153 | |||||||||
| End of period balances | |||||||||||||||||||
| Total securities | $ | 163,275 | $ | 162,483 | $ | 170,740 | $ | 177,599 | $ | 176,593 | |||||||||
| Total short term deposits | $ | 25,874 | $ | 10,559 | $ | 25,851 | $ | 6,246 | $ | 11,216 | |||||||||
| Total loans net of allowance | $ | 558,092 | $ | 555,752 | $ | 543,927 | $ | 529,687 | $ | 518,339 | |||||||||
| Total earning assets | $ | 756,571 | $ | 737,936 | $ | 749,463 | $ | 722,855 | $ | 715,273 | |||||||||
| Total assets | $ | 795,226 | $ | 771,842 | $ | 787,435 | $ | 760,986 | $ | 752,488 | |||||||||
| Total noninterest bearing deposits | $ | 156,296 | $ | 154,226 | $ | 155,038 | $ | 155,693 | $ | 160,272 | |||||||||
| Total deposits | $ | 695,588 | $ | 677,475 | $ | 695,445 | $ | 660,449 | $ | 669,917 | |||||||||
| Average balances | |||||||||||||||||||
| Total securities | $ | 162,918 | $ | 166,077 | $ | 172,769 | $ | 176,066 | $ | 180,344 | |||||||||
| Total short term deposits | $ | 22,887 | $ | 16,430 | $ | 14,663 | $ | 12,637 | $ | 27,510 | |||||||||
| Total loans net of allowance | $ | 556,336 | $ | 552,490 | $ | 535,251 | $ | 522,432 | $ | 508,385 | |||||||||
| Total earning assets | $ | 751,371 | $ | 744,050 | $ | 731,735 | $ | 720,383 | $ | 725,179 | |||||||||
| Total assets | $ | 787,072 | $ | 780,003 | $ | 767,409 | $ | 756,740 | $ | 759,592 | |||||||||
| Total noninterest bearing deposits | $ | 158,888 | $ | 156,858 | $ | 156,513 | $ | 156,729 | $ | 163,669 | |||||||||
| Total deposits | $ | 689,948 | $ | 685,983 | $ | 672,409 | $ | 668,296 | $ | 681,749 | |||||||||
| (1) Classified assets is defined as the sum of all loan-related contingent liabilities and loans internally graded substandard or worse, impaired loans (net of government guarantees), adversely classified securities, and other real estate owned. | |||||||||||||||||||
| (2) Classified asset ratio is defined as the sum of all loan-related contingent liabilities and loans internally graded substandard or worse, impaired loans (net of government guarantees), adversely classified securities, and other real estate owned, divided by bank Tier 1 capital, plus the allowance for credit losses. | |||||||||||||||||||
Contacts
Editorial Contact:
Ron Green, President & Chief Executive Officer
ron.green@opbc.com
(541) 902-9800
