Oregon Pacific Bancorp (ORPB), the holding company of Oregon Pacific Bank, today reported financial results for the second quarter ended, June 30, 2024.

Highlights:

• Second quarter net income of $1.9 million; $0.26 per diluted share.
• Quarterly tax equivalent net interest margin of 3.65%.
• Quarterly cost of funds of 1.30%.
• Quarterly loan growth of $12.1 million or 8.80% annualized.

Net income for the quarter ended June 30, 2024, was $1.9 million, or $0.26 per diluted share compared to $1.6 million or $0.22 per diluted share for the quarter ended March 31, 2024. “We are pleased with the growth in our core earnings,” said Ron Green, President and Chief Executive Officer. “Expansion of our net interest margin coupled with growth in noninterest income centered around our trust, Oregon Pacific Wealth Management investment advisory services and mortgage income continue to trend positively. We remain uniquely positioned to offer these additional services and are optimistic about future opportunities for the Bank to attract clients who desire the traditional community banking model.”

During the quarter the Bank’s net interest margin expanded to 3.65%, up from 3.59% in the first quarter. The expansion was primarily driven by an increase in the asset yields, which grew from 4.88% in the first quarter of 2024 to 5.03% in the second quarter of 2024. This occurred in part due to the shift in asset mix as investment securities matured and shifted into higher yielding loans and fed funds, with that increase more than offsetting the growth in the cost of interest-bearing liabilities.

Period-end loans, net of deferred loan origination fees, totaled $563 million, representing quarterly growth of $12.1 million, or 8.80% annualized. The second quarter loan yield grew to 5.43%, representing an increase of 0.13% over the prior quarter as new loan production continued to occur at a rate higher than the existing portfolio yield. Quarterly loan production for new and renewed loans totaled $31.6 million, with a weighted average effective rate of 7.50% and a weighted-average repricing life of 4.22 years.

During the second quarter ended June 30, 2024, the bank experienced an increase in classified assets, defined as loans and loan contingent liabilities internally graded substandard or worse, impaired loans, adversely classified securities and other real estate owned, totaling $2 million. This occurred primarily due to the downgrade of one commercial and industrial lending relationship, totaling $2 million, into substandard classification. The company is a manufacturer that has been impacted by a slowdown in the RV industry but is shifting focus onto non-RV related industries while working to reduce expenses. The relationship is comprised of three loans secured by business assets and is monitored monthly. All three loans continue to pay as agreed and no losses are currently anticipated.

During the quarter, the Bank recorded a recovery of $91 thousand, attributable to a residential real estate loan which was charged off in 2011. In addition to the recovery, the Bank also recorded a $141 thousand provision for credit losses, which resulted in a quarterly increase in the allowance for credit losses of $232 thousand. The increase was primarily attributable to quarterly loan growth.

Period-end deposits totaled $677.5 million and represented quarterly contraction of $18.0 million. While the balances contracted on a quarterly basis, total deposits still reflect growth of $17.0 million since December 31, 2023. The Bank’s cost of funds experienced a small increase to 1.30%, up from 1.20% in the first quarter. The Bank is continuing to evaluate deposit pricing and will likely see quarterly increases in cost of funds based on competitive rate pressures to retain deposits.

Noninterest income totaled $2.0 million during the second quarter 2024 and represented growth of $171 thousand from first quarter 2024. The largest increase occurred in the trust fee income category, which grew $37 thousand from the prior quarter. This increase was primarily tied to growth in Assets Under Management, which increased $12.2 million as the Bank continues to onboard new trust clients. The Bank also experienced growth of $63 thousand in the other income category compared to the first quarter 2024. This growth was partially attributable to a one-time incentive payment of $34 thousand through Visa associated with our debit card processing. This payment is not anticipated to be received in future periods. During the second quarter 2024 noninterest expense totaled $6.1 million, representing a decrease of $130 thousand from the quarter ended March 31, 2024. The largest expense fluctuation occurred in the outside services category as the cost of the financial statement audit in the first quarter of $69 thousand was not repeated during the second quarter.

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)     June 30, March 31, December 31, June 30,

 

2024

 

 

2024

 

 

2023

 

 

2023

 

ASSETS Cash and due from banks

$

6,505

 

$

10,464

 

$

8,106

 

$

10,951

 

Interest bearing deposits

 

10,559

 

 

25,851

 

 

6,246

 

 

22,967

 

Securities

 

162,483

 

 

170,740

 

 

177,599

 

 

181,530

 

Loans, net of deferred fees and costs

 

563,002

 

 

550,945

 

 

536,662

 

 

510,264

 

Allowance for credit losses

 

(7,250

)

 

(7,018

)

 

(6,975

)

 

(6,887

)

Premises and equipment, net

 

13,403

 

 

13,346

 

 

13,470

 

 

11,708

 

Bank owned life insurance

 

9,002

 

 

8,933

 

 

8,866

 

 

8,738

 

Deferred tax asset

 

5,784

 

 

5,742

 

 

5,758

 

 

5,978

 

Other assets

 

8,354

 

 

8,432

 

 

11,254

 

 

7,555

 

  Total assets

$

771,842

 

$

787,435

 

$

760,986

 

$

752,804

 

    LIABILITIES Deposits Demand - non-interest bearing

$

154,226

 

$

155,038

 

$

155,693

 

$

159,184

 

Demand - interest bearing

 

285,802

 

 

297,288

 

 

272,968

 

 

265,550

 

Money market

 

119,863

 

 

129,154

 

 

129,543

 

 

152,046

 

Savings

 

64,458

 

 

63,230

 

 

66,254

 

 

75,196

 

Certificates of deposit

 

53,126

 

 

50,735

 

 

35,991

 

 

25,696

 

Total deposits

 

677,475

 

 

695,445

 

 

660,449

 

 

677,672

 

FHLB borrowings

 

7,500

 

 

7,500

 

 

17,000

 

 

-

 

Junior subordinated debenture

 

4,124

 

 

4,124

 

 

4,124

 

 

4,124

 

Subordinated debenture

 

14,777

 

 

14,752

 

 

14,727

 

 

14,677

 

Other liabilities

 

8,101

 

 

7,611

 

 

8,304

 

 

6,482

 

  Total liabilities

 

711,977

 

 

729,432

 

 

704,604

 

 

702,955

 

  STOCKHOLDERS' EQUITY Common stock

 

21,388

 

 

21,280

 

 

21,291

 

 

21,135

 

Retained earnings

 

47,538

 

 

45,672

 

 

44,083

 

 

39,516

 

Accumulated other comprehensive income, net of tax

 

(9,061

)

 

(8,949

)

 

(8,992

)

 

(10,802

)

  Total stockholders' equity

 

59,865

 

 

58,003

 

 

56,382

 

 

49,849

 

  Total liabilities & stockholders' equity

$

771,842

 

$

787,435

 

$

760,986

 

$

752,804

 

CONSOLIDATED STATEMENTS OF INCOME Unaudited (dollars in thousands, except per share data) THREE MONTHS ENDED SIX MONTHS ENDED June 30, March 31, June 30, June 30, June 30,

 

2024

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

INTEREST INCOME Loans

$

7,548

$

7,143

 

$

6,249

 

$

14,691

 

$

12,073

 

Securities

 

1,515

 

 

1,539

 

 

1,641

 

 

3,054

 

 

3,328

 

Other interest income

 

224

 

 

198

 

 

316

 

 

422

 

 

717

 

Total interest income

 

9,287

 

 

8,880

 

 

8,206

 

 

18,167

 

 

16,118

 

  INTEREST EXPENSE Deposits

 

2,214

 

 

1,999

 

 

1,311

 

 

4,213

 

 

2,169

 

Borrowed funds

 

335

 

 

372

 

 

229

 

 

707

 

 

455

 

Total interest expense

 

2,549

 

 

2,371

 

 

1,540

 

 

4,920

 

 

2,624

 

  NET INTEREST INCOME

 

6,738

 

 

6,509

 

 

6,666

 

 

13,247

 

 

13,494

 

Provision (credit) for credit losses on loans

 

141

 

 

40

 

 

121

 

 

181

 

 

70

 

Provision (credit) for unfunded commitments

 

10

 

 

(40

)

 

(107

)

 

(30

)

 

(107

)

Net interest income after provision (credit) for credit losses

 

6,587

 

 

6,509

 

 

6,652

 

 

13,096

 

 

13,531

 

  NONINTEREST INCOME Trust fee income

 

937

 

 

900

 

 

943

 

 

1,837

 

 

1,827

 

Service charges

 

361

 

 

347

 

 

342

 

 

708

 

 

667

 

Mortgage loan sales

 

61

 

 

32

 

 

28

 

 

93

 

 

66

 

Merchant card services

 

125

 

 

112

 

 

122

 

 

237

 

 

225

 

Oregon Pacific Wealth Management income

 

316

 

 

301

 

 

275

 

 

617

 

 

527

 

Other income

 

160

 

 

97

 

 

82

 

 

257

 

 

181

 

Total noninterest income

 

1,960

 

 

1,789

 

 

1,792

 

 

3,749

 

 

3,493

 

  NONINTEREST EXPENSE Salaries and employee benefits

 

3,634

 

 

3,633

 

 

3,082

 

 

7,267

 

 

6,211

 

Outside services

 

639

 

 

718

 

 

588

 

 

1,357

 

 

1,140

 

Occupancy & equipment

 

478

 

 

510

 

 

451

 

 

988

 

 

899

 

Trust expense

 

635

 

 

617

 

 

533

 

 

1,252

 

 

1,014

 

Loan and collection, OREO expense

 

20

 

 

14

 

 

27

 

 

34

 

 

51

 

Advertising

 

96

 

 

55

 

 

145

 

 

151

 

 

247

 

Supplies and postage

 

68

 

 

79

 

 

79

 

 

147

 

 

167

 

Other operating expenses

 

516

 

 

590

 

 

537

 

 

1,106

 

 

1,026

 

Total noninterest expense

 

6,086

 

 

6,216

 

 

5,442

 

 

12,302

 

 

10,755

 

  Income before taxes

 

2,461

 

 

2,082

 

 

3,002

 

 

4,543

 

 

6,269

 

Provision for income taxes

 

595

 

 

492

 

 

771

 

 

1,087

 

 

1,605

 

  NET INCOME

$

1,866

 

$

1,590

 

$

2,231

 

$

3,456

 

$

4,664

 

  Quarterly Highlights 2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter

 

2024

 

 

2024

 

 

2023

 

 

2023

 

 

2023

 

  Earnings Interest income

$

9,287

 

$

8,880

 

$

8,651

 

$

8,528

 

$

8,206

 

Interest expense

 

2,549

 

 

2,371

 

 

2,056

 

 

1,714

 

 

1,540

 

Net interest income

$

6,738

 

$

6,509

 

$

6,595

 

$

6,814

 

$

6,666

 

Provision (credit) for credit losses on loans

 

141

 

 

40

 

 

80

 

 

-

 

 

121

 

Provision (credit) for unfunded commitments

 

10

 

 

(40

)

 

(150

)

 

(123

)

 

(107

)

Noninterest income

 

1,960

 

 

1,789

 

 

1,857

 

 

1,805

 

 

1,792

 

Noninterest expense

 

6,086

 

 

6,216

 

 

5,683

 

 

5,575

 

 

5,442

 

Provision for income taxes

 

595

 

 

492

 

 

614

 

 

820

 

 

771

 

Net income

$

1,866

 

$

1,590

 

$

2,225

 

$

2,347

 

$

2,231

 

  Average shares outstanding

 

7,135,227

 

 

7,115,125

 

 

7,094,180

 

 

7,094,180

 

 

7,097,866

 

Average diluted shares outstanding

 

7,154,631

 

 

7,128,148

 

 

7,100,680

 

 

7,100,680

 

 

7,104,366

 

Period end shares outstanding

 

7,135,227

 

 

7,135,615

 

 

7,094,180

 

 

7,094,180

 

 

7,094,562

 

Period end diluted shares outstanding

 

7,154,631

 

 

7,155,019

 

 

7,100,680

 

 

7,100,680

 

 

7,101,062

 

Earnings per share

$

0.26

 

$

0.22

 

$

0.31

 

$

0.33

 

$

0.31

 

Diluted earnings per share

$

0.26

 

$

0.22

 

$

0.31

 

$

0.33

 

$

0.31

 

  Performance Ratios Return on average assets

 

0.96

%

 

0.83

%

 

1.17

%

 

1.22

%

 

1.19

%

Return on average equity

 

13.01

%

 

11.43

%

 

17.45

%

 

18.65

%

 

18.12

%

Net interest margin - tax equivalent

 

3.65

%

 

3.59

%

 

3.64

%

 

3.74

%

 

3.72

%

Yield on loans

 

5.43

%

 

5.30

%

 

5.15

%

 

5.07

%

 

4.96

%

Yield on securities

 

3.62

%

 

3.54

%

 

3.53

%

 

3.43

%

 

3.37

%

Cost of deposits

 

1.30

%

 

1.20

%

 

1.00

%

 

0.86

%

 

0.78

%

Cost of interest-bearing liabilities

 

1.83

%

 

1.74

%

 

1.52

%

 

1.26

%

 

1.15

%

Efficiency ratio

 

70.00

%

 

74.91

%

 

67.25

%

 

64.73

%

 

64.34

%

Full-time equivalent employees

 

143

 

 

142

 

 

134

 

 

131

 

 

128

 

  Capital Tier 1 capital

$

85,416

 

$

83,699

 

$

82,278

 

$

80,082

 

$

77,917

 

Leverage ratio

 

10.82

%

 

10.78

%

 

10.70

%

 

10.40

%

 

10.24

%

Common equity tier 1 ratio

 

14.36

%

 

14.33

%

 

14.28

%

 

14.34

%

 

14.18

%

Tier 1 risk based ratio

 

14.36

%

 

14.33

%

 

14.28

%

 

14.34

%

 

14.18

%

Total risk based ratio

 

15.61

%

 

15.58

%

 

15.53

%

 

15.59

%

 

15.43

%

Book value per share

$

8.39

 

$

8.13

 

$

7.95

 

$

7.13

 

$

7.03

 

  Quarterly Highlights 2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter

 

2024

 

 

2024

 

 

2023

 

 

2023

 

 

2023

 

  Asset quality Allowance for credit losses (ACL)

$

7,250

 

$

7,018

 

$

6,975

 

$

6,892

 

$

6,887

 

Nonperforming loans (NPLs)

$

275

 

$

113

 

$

443

 

$

456

 

$

178

 

Nonperforming assets (NPAs)

$

275

 

$

113

 

$

443

 

$

456

 

$

178

 

Classified Assets (1)

$

11,778

 

$

9,668

 

$

9,186

 

$

4,252

 

$

3,750

 

Net loan charge offs (recoveries)

$

(91

)

$

(3

)

$

(3

)

$

(6

)

$

(3

)

ACL as a percentage of net loans

 

1.29

%

 

1.27

%

 

1.30

%

 

1.31

%

 

1.35

%

ACL as a percentage of NPLs

 

2636.36

%

 

6210.62

%

 

1574.49

%

 

1511.40

%

 

3869.10

%

Net charge offs (recoveries) to average loans

 

-0.02

%

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

Net NPLs as a percentage of total loans

 

0.05

%

 

0.02

%

 

0.08

%

 

0.09

%

 

0.03

%

Nonperforming assets as a percentage of total assets

 

0.04

%

 

0.01

%

 

0.06

%

 

0.06

%

 

0.02

%

Classified Asset Ratio (2)

 

12.63

%

 

10.66

%

 

10.29

%

 

4.89

%

 

4.42

%

Past due as a percentage of total loans

 

0.19

%

 

0.29

%

 

0.15

%

 

0.12

%

 

0.12

%

  Off-balance sheet figures Unused credit commitments

$

97,763

 

$

99,498

 

$

105,900

 

$

103,163

 

$

97,111

 

Trust assets under management (AUM)

$

254,380

 

$

242,222

 

$

226,695

 

$

219,268

 

$

222,880

 

Oregon Pacific Wealth Management AUM

$

159,201

 

$

153,228

 

$

147,159

 

$

140,153

 

$

141,990

 

  End of period balances Total securities

$

162,483

 

$

170,740

 

$

177,599

 

$

176,593

 

$

181,530

 

Total short term deposits

$

10,559

 

$

25,851

 

$

6,246

 

$

11,216

 

$

22,967

 

Total loans net of allowance

$

555,752

 

$

543,927

 

$

529,687

 

$

518,339

 

$

503,377

 

Total earning assets

$

737,936

 

$

749,463

 

$

722,855

 

$

715,273

 

$

716,793

 

Total assets

$

771,842

 

$

787,435

 

$

760,986

 

$

752,488

 

$

752,804

 

Total noninterest bearing deposits

$

154,226

 

$

155,038

 

$

155,693

 

$

160,272

 

$

159,184

 

Total deposits

$

677,475

 

$

695,445

 

$

660,449

 

$

669,917

 

$

677,672

 

  Average balances Total securities

$

166,077

 

$

172,769

 

$

176,066

 

$

180,344

 

$

190,818

 

Total short term deposits

$

16,430

 

$

14,663

 

$

12,637

 

$

27,510

 

$

24,616

 

Total loans net of allowance

$

552,490

 

$

535,251

 

$

522,432

 

$

508,385

 

$

498,069

 

Total earning assets

$

744,050

 

$

731,735

 

$

720,383

 

$

725,179

 

$

722,420

 

Total assets

$

780,003

 

$

767,409

 

$

756,740

 

$

759,592

 

$

751,845

 

Total noninterest bearing deposits

$

156,858

 

$

156,513

 

$

156,729

 

$

163,669

 

$

154,949

 

Total deposits

$

685,983

 

$

672,409

 

$

668,296

 

$

681,749

 

$

675,954

 

(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.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240718981482/en/

Editorial Contact: Ron Green, President & Chief Executive Officer ron.green@opbc.com (541) 902-9800