BEOB BEO Bancorp (PK)

BEO Bancorp (OTCBB:BEOB) and its subsidiary, Bank of Eastern Oregon, announced consolidated year end 2011 earnings of $2,011,567, an increase of 21.5% when compared to $1,656,016 in 2010. Earnings per share were $2.18, up from $1.80 in 2010. Total assets increased 3.5% from $251.7 million to $260.4 million. Net loans ended 2011 at $199.9 million, up 4.2% year over year. Deposits increased 3.0% from $223.5 million to $230.3 million.

“We are very pleased with the 2011 results, especially when you consider the sluggish economic recovery that our nation is experiencing. On a regional basis, the farm and ranch economy performed quite well. We had a fabulous wheat harvest across the region and cattle prices are very strong. The strength in the agriculture sector is helping to support our rural communities in spite of unemployment numbers higher than we would like to see,” said President and CEO, Jeff Bailey.

“Total shareholders’ equity increased 12.3% year over year to $17.55 million. Our Tier 1 capital ratio of 10.63% matches up favorably to our peer banks across the nation and continues to make us the highest capitalized bank in eastern Oregon,” said Chief Financial Officer, Mark Lemmon. “Return on Average Assets is 0.79% and Return on Average Equity is 12.12%, compared to 0.67% and 11.0%, respectively, year over year.”

Chief Operations Officer, Gary Propheter said, “Year over year deposit growth has slowed, but we still see growth in spite of the continued low rate environment. The overall support from our local communities is impressive. The continued trend of growth in core deposits tells us our customers are happy with Bank of Eastern Oregon’s style of banking, our flexible products, and the excellent, professional service provided by our banking teams.”

“During peak borrowing season our loans were at an all-time high, but with a great harvest and high cattle prices, as expected, we experienced pay downs a bit sooner in the cycle than normal. This is good news but translates to more modest loan growth when you look at year over year numbers. We continue to see good lending opportunities within our market and are ready to loan money to qualified borrowers,” said EVP and Chief Credit Officer, E. George Koffler. “When we look at provision for loan losses and write downs on other real estate, the 2011 numbers were very similar to 2010. Over the last three years, we have taken prudent steps in aggressively addressing problem loans. Other real estate owned is down 49.6% from 2010. We see this as a very positive sign but will cautiously watch developments associated with the slow national and global economic recovery,” concluded Koffler.

“2011 was a very good year for Bank of Eastern Oregon. The past three years have been challenging for all banks, but thanks to the loyalty of our shareholders, customers and employees, Bank of Eastern Oregon has weathered the storm. Our capital ratios are strong, our troubled assets are manageable, and we continue to fund our loan loss reserve to buffet the possibility of a prolonged economic downturn. Even though there are still a few challenges to be met, I remain confident the worst is behind us and that there are brighter days ahead,” concluded Bailey.

For further information on the company or to access internet banking, please visit our website at http://www.beobank.com.

About BEO Bancorp

BEO Bancorp is the holding company for Bank of Eastern Oregon, which operates 12 branches and two loan production offices in nine eastern Oregon counties. Branches are located in Arlington, Ione, Heppner, Condon, Irrigon, Boardman, Burns, John Day, Prairie City, Fossil, Moro and Enterprise; loan production offices are located in Hermiston and Ontario. Bank of Eastern Oregon also operates a mortgage division and offers brokerage services through BEO Financial Services. The bank’s website is www.beobank.com.

Forward-Looking Statements

The statements contained in this release that are not historical facts are forward-looking statements based upon management’s current expectations and beliefs concerning future developments and their potential effect on BEO Bancorp. There can be no assurances that future developments affecting BEO Bancorp will be the same as those anticipated by management.

Actual results may differ from those projected in the forward-looking statements. These forward-looking statements involve risks and uncertainties. These risks and uncertainties include, but are not limited to:

(1) Competitive pressures in the banking and financial industries.

(2) Changes in interest rate environment.

(3) General economic conditions, nationally, regionally, and in operating markets.

(4) Changes in regulatory environment.

(5) Changes in business conditions and inflation.

(6) Changes in securities markets.

(7) Future credit loss experience.

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