FLORENCE, Ore.--(BUSINESS WIRE)--Oregon Pacific Bancorp (ORPB), the holding company of Oregon Pacific Bank, today reported net income of $2.2 million, or $0.31 per diluted share, during the quarter ended December 31, 2024, compared to $1.8 million or $0.26 per diluted share for the quarter ended September 30, 2024. "We are happy to report the Bank's 2024 financial performance," said Ron Green, President and Chief Executive Officer. "During the year the banking industry faced increased pressures on our net interest margin as competition for deposits intensified. Oregon Pacific has remained disciplined with our deposit strategy, and we believe this approach has contributed to the bank's overall 2024 success."
During the quarter the bank's net interest margin expanded to 3.66%, up from 3.59% reported in the third quarter 2024. The expansion was primarily attributable to a reduction in the bank's cost of funds, which decreased by 0.05% to 1.36% on a linked quarter basis. The bank also experienced an increase in the yield on loans, which grew to 5.55%, up from 5.47% in the third quarter 2024. Despite the fourth quarter fed funds rate reduction of 0.50%, the bank continued to see an increase in loan yields as the decrease in the yield on the fully floating portion of the bank's loan portfolio was more than offset by the yield on new production. Period-end loans, net of deferred loan origination fees, totaled $571.6 million, representing quarterly growth of $6.1 million for the period ended December 31, 2024. Quarterly loan production for new and renewed loans totaled $25.7 million, with a weighted average effective rate of 7.36% and a weighted-average repricing life of 3.05 years.
During the fourth quarter of 2024, the bank experienced a reduction in classified assets of $2.2 million, defined as loans and loan contingent liabilities internally graded substandard or worse, impaired loans, adversely classified securities and other real estate owned. The primary driver of the reduction was the payoff of a substandard loan participation totaling $2 million, which matured during the quarter. Despite a reduction in classified assets, the bank did see a small increase in nonperforming loans, which grew $520 thousand due to the migration of one loan into nonaccrual status. The bank recorded no quarterly provision for credit losses and reversed $30 thousand of provision for unfunded commitments partially attributable to a reduction in the unfunded commitment balances during the quarter.
Period-end deposits totaled $676.6 million, representing a quarterly deposit contraction of $19 million. During the quarter the bank redeemed $8 million of callable brokered time deposits with an effective interest rate of 5.40%. The Bank elected to not reissue the time deposits, as first quarter cash flows from the securities portfolio are projected to more than offset the redeemed deposits. At December 31, 2024, core deposits contracted by $11.0 million, since September 30, 2024, with the majority of that migration occurring during the last two weeks of the year, which aligns with the typical seasonal fluctuations historically experienced by the Bank. Average core deposits, a calculation that eliminates daily volatility of outstanding balances, for the fourth quarter 2024 were $676.9 million, up $5.0 million over the third quarter 2024 average core deposits of $671.9 million.
Noninterest income totaled $2.2 million for the quarter ended December 31, 2024, and represented growth of $117 thousand compared to the quarter ended September 30, 2024. The largest increase occurred in the trust fee income category, which grew $105 thousand from the prior quarter. This increase was primarily tied to growth in Assets Under Management, which increased $4.0 million from September 30, 2024, and $44.4 million since December 31, 2023.
During the quarter the bank announced the planned discontinuation of residential mortgage lending. In recent periods, this source of noninterest income has decreased significantly due to a reduction in mortgage refinance activity. The bank historically originated brokered mortgages through third-party lenders, in addition to non-conforming portfolio mortgages, primarily for business clients. This decision occurred due to two factors: a reduction in mortgage origination revenue, coupled with difficulty finding and retaining mortgage lenders and processors. The bank does not anticipate this change to have significant impacts on overall profitability. There will be a reduction in mortgage revenue, which will be roughly offset by systems and personnel savings. The bank stopped acceptance of new mortgage applications in December, with the intention of full elimination of mortgage lending once the existing pipeline was complete, which is estimated in early second quarter 2025.
During the fourth quarter 2024 noninterest expense totaled $6.1 million, representing a decrease of $32 thousand from the quarter ended September 30, 2024. The largest expense fluctuation occurred in the salaries and employee benefits category. For the quarter ended December 31, 2024, the bank reduced bonus compensation expense by $181 thousand compared to the quarter ended September 30, 2024, as the bank completed a true-up of year end bonus projections for 2024. Additionally, the bank also reduced group insurance expense by approximately $43 thousand associated with the bank's self-funded dental insurance, and partially self-funded medical insurance. Throughout the plan year the bank accrued expense based on estimated utilization. The bank completed an expense reversal because actual claims activity claims occurred below projected levels. Partially offsetting the positive variance was an increase of $118 thousand in outside services for the quarter ended December 31, 2024, compared to the quarter ended September 30, 2024. During the quarter the bank made a $50 thousand one-time vendor payment and a $45 thousand recruiter payment, both of which are not expected in future periods.
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) | ||||||||||||
| December 31, | September 30, | December 31, | ||||||||||
2024 | 2024 | 2023 | ||||||||||
| ASSETS | ||||||||||||
| Cash and due from banks | $ | 9,521 | $ | 12,437 | $ | 8,106 | ||||||
| Interest bearing deposits | 10,921 | 25,874 | 6,246 | |||||||||
| Securities | 155,258 | 163,275 | 177,599 | |||||||||
| Loans, net of deferred fees and costs | 571,565 | 565,492 | 536,662 | |||||||||
| Allowance for credit losses | (7,400 | ) | (7,400 | ) | (6,975 | ) | ||||||
| Premises and equipment, net | 13,279 | 13,444 | 13,470 | |||||||||
| Bank owned life insurance | 9,142 | 9,071 | 8,866 | |||||||||
| Deferred tax asset | 5,398 | 4,754 | 5,758 | |||||||||
| Other assets | 8,764 | 8,279 | 11,254 | |||||||||
| Total assets | $ | 776,448 | $ | 795,226 | $ | 760,986 | ||||||
| LIABILITIES | ||||||||||||
| Deposits | ||||||||||||
| Demand - non-interest bearing | $ | 141,719 | $ | 156,296 | $ | 155,693 | ||||||
| Demand - interest bearing | 277,932 | 278,563 | 272,968 | |||||||||
| Money market | 135,255 | 136,984 | 129,543 | |||||||||
| Savings | 66,194 | 65,456 | 66,254 | |||||||||
| Certificates of deposit | 55,517 | 58,289 | 35,991 | |||||||||
| Total deposits | 676,617 | 695,588 | 660,449 | |||||||||
| FHLB borrowings | 7,500 | 7,500 | 17,000 | |||||||||
| Junior subordinated debenture | 4,124 | 4,124 | 4,124 | |||||||||
| Subordinated debenture | 14,827 | 14,802 | 14,727 | |||||||||
| Other liabilities | 8,090 | 8,612 | 8,304 | |||||||||
| Total liabilities | 711,158 | 730,626 | 704,604 | |||||||||
| STOCKHOLDERS' EQUITY | ||||||||||||
| Common stock | 21,612 | 21,491 | 21,291 | |||||||||
| Retained earnings | 51,603 | 49,385 | 44,083 | |||||||||
| Accumulated other comprehensive income, net of tax | (7,925 | ) | (6,276 | ) | (8,992 | ) | ||||||
| Total stockholders' equity | 65,290 | 64,600 | 56,382 | |||||||||
| Total liabilities & stockholders' equity | $ | 776,448 | $ | 795,226 | $ | 760,986 | ||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||||
| Unaudited (dollars in thousands, except per share data) | ||||||||||||||||||||
THREE MONTHS ENDED | TWELVE MONTHS ENDED | |||||||||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||||||||
2024 | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||
| INTEREST INCOME | ||||||||||||||||||||
| Loans | $ | 7,941 | $ | 7,746 | $ | 6,871 | $ | 30,378 | $ | 25,531 | ||||||||||
| Securities | 1,376 | 1,477 | 1,608 | 5,906 | 6,504 | |||||||||||||||
| Other interest income | 282 | 314 | 172 | 1,018 | 1,263 | |||||||||||||||
| Total interest income | 9,599 | 9,537 | 8,651 | 37,302 | 33,298 | |||||||||||||||
| INTEREST EXPENSE | ||||||||||||||||||||
| Deposits | 2,357 | 2,452 | 1,677 | 9,023 | 5,331 | |||||||||||||||
| Borrowed funds | 318 | 319 | 379 | 1,344 | 1,066 | |||||||||||||||
| Total interest expense | 2,675 | 2,771 | 2,056 | 10,367 | 6,397 | |||||||||||||||
| NET INTEREST INCOME | 6,924 | 6,766 | 6,595 | 26,935 | 26,901 | |||||||||||||||
| Provision for credit losses on loans | - | 150 | 80 | 331 | 150 | |||||||||||||||
| Provision (credit) for unfunded commitments | (30 | ) | 35 | (150 | ) | (25 | ) | (380 | ) | |||||||||||
| Net interest income after provision (credit) for credit losses | 6,954 | 6,581 | 6,665 | 26,629 | 27,131 | |||||||||||||||
| NONINTEREST INCOME | ||||||||||||||||||||
| Trust fee income | 1,135 | 1,030 | 944 | 4,001 | 3,619 | |||||||||||||||
| Service charges | 378 | 371 | 348 | 1,457 | 1,374 | |||||||||||||||
| Mortgage loan sales | 72 | 39 | 56 | 204 | 147 | |||||||||||||||
| Merchant card services | 125 | 157 | 129 | 519 | 515 | |||||||||||||||
| Oregon Pacific Wealth Management income | 349 | 336 | 274 | 1,301 | 1,095 | |||||||||||||||
| Other income | 96 | 105 | 106 | 457 | 405 | |||||||||||||||
| Total noninterest income | 2,155 | 2,038 | 1,857 | 7,939 | 7,155 | |||||||||||||||
| NONINTEREST EXPENSE | ||||||||||||||||||||
| Salaries and employee benefits | 3,418 | 3,651 | 3,218 | 14,337 | 12,594 | |||||||||||||||
| Outside services | 787 | 669 | 631 | 2,814 | 2,449 | |||||||||||||||
| Occupancy & equipment | 485 | 511 | 540 | 1,985 | 1,895 | |||||||||||||||
| Trust expense | 724 | 615 | 542 | 2,589 | 2,102 | |||||||||||||||
| Loan and collection, OREO expense | 16 | 21 | 16 | 70 | 76 | |||||||||||||||
| Advertising | 89 | 88 | 77 | 328 | 417 | |||||||||||||||
| Supplies and postage | 76 | 75 | 98 | 299 | 363 | |||||||||||||||
| Other operating expenses | 552 | 549 | 561 | 2,201 | 2,119 | |||||||||||||||
| Total noninterest expense | 6,147 | 6,179 | 5,683 | 24,623 | 22,015 | |||||||||||||||
| Income before taxes | 2,962 | 2,440 | 2,839 | 9,945 | 12,271 | |||||||||||||||
| Provision for income taxes | 744 | 593 | 614 | 2,424 | 3,039 | |||||||||||||||
| NET INCOME | $ | 2,218 | $ | 1,847 | $ | 2,225 | $ | 7,521 | $ | 9,232 | ||||||||||
| Quarterly Highlights | |||||||||||||||||||
| 4th Quarter | 3rd Quarter | 2nd Quarter | 1st Quarter | 4th Quarter | |||||||||||||||
2024 | 2024 | 2024 | 2024 | 2023 | |||||||||||||||
| Earnings | |||||||||||||||||||
| Interest income | $ | 9,599 | $ | 9,537 | $ | 9,287 | $ | 8,880 | $ | 8,651 | |||||||||
| Interest expense | 2,675 | 2,771 | 2,549 | 2,371 | 2,056 | ||||||||||||||
| Net interest income | $ | 6,924 | $ | 6,766 | $ | 6,738 | $ | 6,509 | $ | 6,595 | |||||||||
| Provision for credit losses on loans | - | 150 | 141 | 40 | 80 | ||||||||||||||
| Provision (credit) for unfunded commitments | (30 | ) | 35 | 10 | (40 | ) | (150 | ) | |||||||||||
| Noninterest income | 2,155 | 2,038 | 1,960 | 1,789 | 1,857 | ||||||||||||||
| Noninterest expense | 6,147 | 6,179 | 6,086 | 6,216 | 5,683 | ||||||||||||||
| Provision for income taxes | 744 | 593 | 595 | 492 | 614 | ||||||||||||||
| Net income | $ | 2,218 | $ | 1,847 | $ | 1,866 | $ | 1,590 | $ | 2,225 | |||||||||
| Average shares outstanding | 7,136,389 | 7,134,259 | 7,135,227 | 7,115,125 | 7,094,180 | ||||||||||||||
| Average diluted shares outstanding | 7,154,126 | 7,153,663 | 7,154,631 | 7,128,148 | 7,100,680 | ||||||||||||||
| Period end shares outstanding | 7,138,259 | 7,134,259 | 7,135,227 | 7,135,615 | 7,094,180 | ||||||||||||||
| Period end diluted shares outstanding | 7,155,996 | 7,153,663 | 7,154,631 | 7,155,019 | 7,100,680 | ||||||||||||||
| Earnings per share | $ | 0.31 | $ | 0.26 | $ | 0.26 | $ | 0.22 | $ | 0.31 | |||||||||
| Diluted earnings per share | $ | 0.31 | $ | 0.26 | $ | 0.26 | $ | 0.22 | $ | 0.31 | |||||||||
| Performance Ratios | |||||||||||||||||||
| Return on average assets | 1.12 | % | 0.93 | % | 0.96 | % | 0.83 | % | 1.17 | % | |||||||||
| Return on average equity | 14.01 | % | 12.12 | % | 13.01 | % | 11.43 | % | 17.45 | % | |||||||||
| Net interest margin - tax equivalent | 3.66 | % | 3.59 | % | 3.65 | % | 3.59 | % | 3.64 | % | |||||||||
| Yield on loans | 5.55 | % | 5.47 | % | 5.43 | % | 5.30 | % | 5.15 | % | |||||||||
| Yield on securities | 3.31 | % | 3.48 | % | 3.62 | % | 3.54 | % | 3.53 | % | |||||||||
| Cost of deposits | 1.36 | % | 1.41 | % | 1.30 | % | 1.20 | % | 1.00 | % | |||||||||
| Cost of interest-bearing liabilities | 1.89 | % | 1.97 | % | 1.83 | % | 1.74 | % | 1.52 | % | |||||||||
| Efficiency ratio | 67.71 | % | 70.20 | % | 70.00 | % | 74.91 | % | 67.25 | % | |||||||||
| Full-time equivalent employees | 145 | 144 | 143 | 142 | 134 | ||||||||||||||
| Capital | |||||||||||||||||||
| Tier 1 capital | $ | 89,133 | $ | 87,101 | $ | 85,416 | $ | 83,699 | $ | 82,278 | |||||||||
| Leverage ratio | 11.19 | % | 10.96 | % | 10.82 | % | 10.78 | % | 10.70 | % | |||||||||
| Common equity tier 1 ratio | 14.86 | % | 14.65 | % | 14.36 | % | 14.33 | % | 14.28 | % | |||||||||
| Tier 1 risk based ratio | 14.86 | % | 14.65 | % | 14.36 | % | 14.33 | % | 14.28 | % | |||||||||
| Total risk based ratio | 16.11 | % | 15.90 | % | 15.61 | % | 15.58 | % | 15.53 | % | |||||||||
| Book value per share | $ | 9.12 | $ | 9.05 | $ | 8.39 | $ | 8.13 | $ | 7.95 | |||||||||
| Quarterly Highlights | |||||||||||||||||||
4th Quarter | 3rd Quarter | 2nd Quarter | 1st Quarter | 4th Quarter | |||||||||||||||
2024 | 2024 | 2024 | 2024 | 2023 | |||||||||||||||
| Asset quality | |||||||||||||||||||
| Allowance for credit losses (ACL) | $ | 7,400 | $ | 7,400 | $ | 7,250 | $ | 7,018 | $ | 6,975 | |||||||||
| Nonperforming loans (NPLs) | $ | 798 | $ | 278 | $ | 275 | $ | 113 | $ | 443 | |||||||||
| Nonperforming assets (NPAs) | $ | 798 | $ | 278 | $ | 275 | $ | 113 | $ | 443 | |||||||||
| Classified Assets (1) | $ | 8,132 | $ | 10,363 | $ | 11,778 | $ | 9,668 | $ | 9,186 | |||||||||
| Net loan charge offs (recoveries) | $ | - | $ | - | $ | (91 | ) | $ | (3 | ) | $ | (3 | ) | ||||||
| ACL as a percentage of net loans | 1.29 | % | 1.31 | % | 1.29 | % | 1.27 | % | 1.30 | % | |||||||||
| ACL as a percentage of NPLs | 927.32 | % | 2661.87 | % | 2636.36 | % | 6210.62 | % | 1574.49 | % | |||||||||
| Net charge offs (recoveries) to average loans | 0.00 | % | 0.00 | % | -0.02 | % | 0.00 | % | 0.00 | % | |||||||||
| Net NPLs as a percentage of total loans | 0.14 | % | 0.05 | % | 0.05 | % | 0.02 | % | 0.08 | % | |||||||||
| Nonperforming assets as a percentage of total assets | 0.10 | % | 0.03 | % | 0.04 | % | 0.01 | % | 0.06 | % | |||||||||
| Classified Asset Ratio (2) | 8.42 | % | 10.97 | % | 12.63 | % | 10.66 | % | 10.29 | % | |||||||||
| Past due as a percentage of total loans | 0.06 | % | 0.24 | % | 0.19 | % | 0.29 | % | 0.15 | % | |||||||||
| Off-balance sheet figures | |||||||||||||||||||
| Unused credit commitments | $ | 98,616 | $ | 99,229 | $ | 97,763 | $ | 99,498 | $ | 105,900 | |||||||||
| Trust assets under management (AUM) | $ | 271,046 | $ | 267,061 | $ | 254,380 | $ | 242,222 | $ | 226,695 | |||||||||
| Oregon Pacific Wealth Management AUM | $ | 165,045 | $ | 167,025 | $ | 159,201 | $ | 153,228 | $ | 147,159 | |||||||||
| End of period balances | |||||||||||||||||||
| Total securities | $ | 155,258 | $ | 163,275 | $ | 162,483 | $ | 170,740 | $ | 177,599 | |||||||||
| Total short term deposits | $ | 10,921 | $ | 25,874 | $ | 10,559 | $ | 25,851 | $ | 6,246 | |||||||||
| Total loans net of allowance | $ | 564,165 | $ | 558,092 | $ | 555,752 | $ | 543,927 | $ | 529,687 | |||||||||
| Total earning assets | $ | 739,677 | $ | 756,571 | $ | 737,936 | $ | 749,463 | $ | 722,855 | |||||||||
| Total assets | $ | 776,448 | $ | 795,226 | $ | 771,842 | $ | 787,435 | $ | 760,986 | |||||||||
| Total noninterest bearing deposits | $ | 141,719 | $ | 156,296 | $ | 154,226 | $ | 155,038 | $ | 155,693 | |||||||||
| Total brokered deposits | $ | 10,001 | $ | 18,001 | $ | 17,991 | $ | 17,961 | $ | 8,000 | |||||||||
| Total core deposits | $ | 666,616 | $ | 677,587 | $ | 659,484 | $ | 677,484 | $ | 652,449 | |||||||||
| Total deposits | $ | 676,617 | $ | 695,588 | $ | 677,475 | $ | 695,445 | $ | 660,449 | |||||||||
| Average balances | |||||||||||||||||||
| Total securities | $ | 159,587 | $ | 162,918 | $ | 166,077 | $ | 172,769 | $ | 176,066 | |||||||||
| Total short term deposits | $ | 23,654 | $ | 22,887 | $ | 16,430 | $ | 14,663 | $ | 12,637 | |||||||||
| Total loans net of allowance | $ | 561,601 | $ | 556,336 | $ | 552,490 | $ | 535,251 | $ | 522,432 | |||||||||
| Total earning assets | $ | 754,173 | $ | 751,371 | $ | 744,050 | $ | 731,735 | $ | 720,383 | |||||||||
| Total assets | $ | 789,333 | $ | 787,072 | $ | 780,003 | $ | 767,409 | $ | 756,740 | |||||||||
| Total noninterest bearing deposits | $ | 152,844 | $ | 158,888 | $ | 156,858 | $ | 156,513 | $ | 156,729 | |||||||||
| Total brokered deposits | $ | 12,610 | $ | 17,999 | $ | 17,975 | $ | 14,854 | $ | 7,989 | |||||||||
| Total core deposits | $ | 676,900 | $ | 671,949 | $ | 668,008 | $ | 657,555 | $ | 660,307 | |||||||||
| Total deposits | $ | 689,510 | $ | 689,948 | $ | 685,983 | $ | 672,409 | $ | 668,296 | |||||||||
| (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
