FLORENCE, Ore., April 23, 2024--(BUSINESS WIRE)--Oregon Pacific Bancorp (ORPB), the holding company of Oregon Pacific Bank, today reported financial results for the first quarter ended, March 31, 2024.
Highlights:
First quarter net income of $1.6 million; $0.22 per diluted share.
Quarterly deposit growth of $35 million or 21.31% annualized.
Quarterly cost of funds of 1.20%.
Quarterly loan growth of $14.3 million or 10.70% annualized.
Quarterly tax equivalent net interest margin of 3.59%.
Net income for the quarter ended March 31, 2024, was $1.6 million, or $0.22 per diluted share compared to $2.2 million or $0.31 per diluted share for the quarter ended December 31, 2023.
"We are pleased with the operating results for the first quarter," said Ron Green, President and Chief Executive Officer. "During the quarter the Bank made an investment in additional personnel, which we believe will help position the Bank for growth during 2024 and beyond. Oregon Pacific Bank will continue to be opportunistic with respect to new staffing that we believe can create long-term value for the Bank and our shareholders."
Period-end deposits totaled $695.4 million and represented quarterly growth of $35 million. Interest-bearing demand deposits grew by $24.3 million, as the Bank has focused on commercial deposits with cash management needs.
"At a time where interest rates are driving some deposit migration, we are happy to reflect growth in our core business deposits without a significant increase to our cost of funds," said John Raleigh, Executive Vice President, and Chief Lending Officer. "While deposit rates are still top of mind, this expansion reflects business depositors’ desire for the enhanced level of customer service offered by our bankers."
The Bank also experienced growth in certificates of deposit, with $10 million in growth coming from equal amounts of 3-year and 5-year callable brokered deposits. The remaining certificate of deposit growth occurred through the Bank’s core clientele. The use of callable brokered deposits helped support the Bank’s asset liability position and provides flexibility should the Bank wish to redeem the deposits prior to the maturity date. As a result of the additional brokered deposits, the Bank’s cost of funds moved to 1.20% during the first quarter 2024, compared to 1.00% during the fourth quarter 2023. The Bank is continuing to evaluate deposit pricing but experienced less rate-motivated migration than in prior quarters.
Period-end loans, net of deferred loan origination fees, totaled $550.9 million, representing quarterly growth of $14.3 million, or 10.70% annualized. The first quarter loan yield grew to 5.30%, representing an increase of 0.15% over the prior quarter as new loan production occurred at a rate higher than the existing portfolio yield. Quarterly loan production for new and renewed loans totaled $30.5 million, with a weighted average effective rate of 8.10% and a weighted-average repricing life of 3.30 years. During the quarter, the Bank experienced small growth in classified assets totaling $482 thousand, primarily attributable to downgrades of two commercial and industrial loan relationships. During the quarter the Bank booked no provision for credit losses, which was the result of the net of $40 thousand in provision for credit losses on loans and a $40 thousand reversal of provision for credit losses on unfunded commitments, as the Bank’s unfunded commitments decreased $6.4 million during the quarter. The Bank’s allowance for credit loss methodology continues to be impacted by improving economic factors partially offsetting the growth in loan balances.
Noninterest income totaled $1.8 million during the first quarter 2024 and represented a reduction of $68 thousand from fourth quarter 2023. The largest decrease occurred in the trust fee income category, which contracted $44 thousand from the prior quarter, despite an increase in Trust Assets Under Management. The Bank onboarded several new trust accounts toward the end of the quarter, which were not yet assessed fees during the month of March but are projected to increase trust revenue during the second quarter. Offsetting a contraction in trust revenue was an increase in revenue attributable to Oregon Pacific Wealth Management (OPWM), a wholly owned registered investment advisory subsidiary of the Bank, which grew $27 thousand. During the quarter OPWM hired a new wealth advisor in the Medford market, which contributed to growth in assets under management of $6.1 million during the quarter.
Noninterest expense for the first quarter 2024 totaled $6.2 million, representing an increase of $533 thousand over the quarter ended December 31, 2023. The largest expense fluctuation totaled $415 thousand and occurred in the salaries and benefits category as the Bank has made a substantial investment in staffing. During the quarter the Bank added eight FTEs, with five of those positions in business development for lending, deposits, and wealth management, increasing salary expenses by $145 thousand on a linked quarter basis. The Bank believes this additional staffing has been key to the quarterly loan and deposit growth. Additionally, payroll tax expense grew $72 thousand over the prior quarter due to the increase in staffing and many of the payroll tax counters resetting at the beginning of the year. Group medical insurance grew $40 thousand over the prior quarter due to increases in staff and the Bank’s updated medial insurance contract. On a linked quarter basis outside services grew by $87 thousand with a portion of that growth attributable to the cost of the annual audit, which was $55 thousand higher in the first quarter 2024 than the fourth quarter 2023. The Bank also paid recruiting fees of $23 thousand during the first quarter, which was also reflected in the outside services line item. Quarterly trust expenses grew by $75 thousand as the trust department worked with a consultant to evaluate a trust core system conversion, incurring $40 thousand attributable to this engagement.
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)
March 31,
December 31,
March 31,
2024
2023
2023
ASSETS
Cash and due from banks
$
10,464
$
8,106
$
8,783
Interest bearing deposits
25,851
6,246
41,931
Securities
170,740
177,599
195,647
Loans, net of deferred fees and costs
550,945
536,662
493,480
Allowance for credit losses
(7,018
)
(6,975
)
(6,884
)
Premises and equipment, net
13,346
13,470
9,867
Bank owned life insurance
8,933
8,866
8,677
Deferred tax asset
5,742
5,758
5,319
Other assets
8,432
11,254
7,669
Total assets
$
787,435
$
760,986
$
764,489
LIABILITIES
Deposits
Demand - non-interest bearing
$
155,038
$
155,693
$
166,409
Demand - interest bearing
297,288
272,968
264,029
Money market
129,154
129,543
165,118
Savings
63,230
66,254
78,415
Certificates of deposit
50,735
35,991
16,075
Total deposits
695,445
660,449
690,046
FHLB borrowings
7,500
17,000
-
Junior subordinated debenture
4,124
4,124
4,124
Subordinated debenture
14,752
14,727
14,652
Other liabilities
7,611
8,304
6,300
Total liabilities
729,432
704,604
715,122
STOCKHOLDERS' EQUITY
Common stock
21,280
21,291
21,103
Retained earnings
45,672
44,083
37,284
Accumulated other comprehensive income, net of tax
(8,949
)
(8,992
)
(9,020
)
Total stockholders' equity
58,003
56,382
49,367
Total liabilities & stockholders' equity
$
787,435
$
760,986
$
764,489
CONSOLIDATED STATEMENTS OF INCOME
Unaudited (dollars in thousands, except per share data)
THREE MONTHS ENDED
March 31,
December 31,
March 31,
2024
2023
2023
INTEREST INCOME
Loans
$
7,143
$
6,871
$
5,824
Securities
1,539
1,608
1,687
Other interest income
198
172
401
Total interest income
8,880
8,651
7,912
INTEREST EXPENSE
Deposits
1,999
1,677
858
Borrowed funds
372
379
226
Total interest expense
2,371
2,056
1,084
NET INTEREST INCOME
6,509
6,595
6,828
(Credit) provision for credit losses on loans
40
80
(51
)
(Credit) provision for unfunded commitments
(40
)
(150
)
-
Net interest income after
(credit) provision for credit losses
6,509
6,665
6,879
NONINTEREST INCOME
Trust fee income
900
944
884
Service charges
347
348
325
Mortgage loan sales
32
56
38
Merchant card services
112
129
103
Oregon Pacific Wealth Management income
301
274
252
Other income
97
106
99
Total noninterest income
1,789
1,857
1,701
NONINTEREST EXPENSE
Salaries and employee benefits
3,633
3,218
3,129
Outside services
718
631
552
Occupancy & equipment
510
540
448
Trust expense
617
542
481
Loan and collection, OREO expense
14
16
24
Advertising
55
77
102
Supplies and postage
79
98
88
Other operating expenses
590
561
489
Total noninterest expense
6,216
5,683
5,313
Income before taxes
2,082
2,839
3,267
Provision for income taxes
492
614
834
NET INCOME
$
1,590
$
2,225
$
2,433
Quarterly Highlights
1st Quarter
4th Quarter
3rd Quarter
2nd Quarter
1st Quarter
2024
2023
2023
2023
2023
Earnings
Interest income
$
8,880
$
8,651
$
8,528
$
8,206
$
7,912
Interest expense
2,371
2,056
1,714
1,540
1,084
Net interest income
$
6,509
$
6,595
$
6,814
$
6,666
$
6,828
Provision (credit) for credit losses on loans
40
80
-
121
(51
)
Provision (credit) for unfunded commitments
(40
)
(150
)
(123
)
(107
)
-
Noninterest income
1,789
1,857
1,805
1,792
1,701
Noninterest expense
6,216
5,683
5,575
5,442
5,313
Provision for income taxes
492
614
820
771
834
Net income
$
1,590
$
2,225
$
2,347
$
2,231
$
2,433
Average shares outstanding
7,115,125
7,094,180
7,094,180
7,097,866
7,085,840
Average diluted shares outstanding
7,128,148
7,100,680
7,100,680
7,104,366
7,089,090
Period end shares outstanding
7,135,615
7,094,180
7,094,180
7,094,562
7,102,271
Period end diluted shares outstanding
7,155,019
7,100,680
7,100,680
7,101,062
7,108,771
Earnings per share
$
0.22
$
0.31
$
0.33
$
0.31
$
0.34
Diluted earnings per share
$
0.22
$
0.31
$
0.33
$
0.31
$
0.34
Performance Ratios
Return on average assets
0.83
%
1.17
%
1.22
%
1.19
%
1.13
%
Return on average equity
11.43
%
17.45
%
18.65
%
18.12
%
21.01
%
Net interest margin - tax equivalent
3.59
%
3.64
%
3.74
%
3.72
%
3.87
%
Yield on loans
5.30
%
5.15
%
5.07
%
4.96
%
4.85
%
Yield on securities
3.54
%
3.53
%
3.43
%
3.37
%
3.41
%
Cost of deposits
1.20
%
1.00
%
0.86
%
0.78
%
0.51
%
Cost of interest-bearing liabilities
1.74
%
1.52
%
1.26
%
1.15
%
0.84
%
Efficiency ratio
74.91
%
67.25
%
64.73
%
64.34
%
62.29
%
Full-time equivalent employees
142
134
131
128
127
Capital
Tier 1 capital
$
83,699
$
82,278
$
80,082
$
77,917
$
75,684
Leverage ratio
10.78
%
10.70
%
10.40
%
10.24
%
9.94
%
Common equity tier 1 ratio
14.33
%
14.28
%
14.34
%
14.18
%
14.16
%
Tier 1 risk based ratio
14.33
%
14.28
%
14.34
%
14.18
%
14.16
%
Total risk based ratio
15.58
%
15.53
%
15.59
%
15.43
%
15.41
%
Book value per share
$
8.13
$
7.95
$
7.13
$
7.03
$
6.97
Quarterly Highlights
1st Quarter
4th Quarter
3rd Quarter
2nd Quarter
1st Quarter
2024
2023
2023
2023
2023
Asset quality
Allowance for credit losses (ACL)
$
7,018
$
6,975
$
6,892
$
6,887
$
6,884
Nonperforming loans (NPLs)
$
113
$
443
$
456
$
178
$
72
Nonperforming assets (NPAs)
$
113
$
443
$
456
$
178
$
72
Classified Assets (1)
$
9,668
$
9,186
$
4,252
$
3,750
$
3,842
Net loan charge offs (recoveries)
$
(3
)
$
(3
)
$
(6
)
$
(3
)
$
(88
)
ACL as a percentage of net loans
1.27
%
1.30
%
1.31
%
1.35
%
1.39
%
ACL as a percentage of NPLs
6210.62
%
1574.49
%
1511.40
%
3869.10
%
9561.11
%
Net charge offs (recoveries) to average loans
0.00
%
0.00
%
0.00
%
0.00
%
-0.02
%
Net NPLs as a percentage of total loans
0.02
%
0.08
%
0.09
%
0.03
%
0.01
%
Nonperforming assets as a percentage of total assets
0.01
%
0.06
%
0.06
%
0.02
%
0.10
%
Classified Asset Ratio (2)
10.66
%
10.29
%
4.89
%
4.42
%
4.65
%
Past due as a percentage of total loans
0.29
%
0.15
%
0.12
%
0.12
%
0.06
%
Off-balance sheet figures
Unused credit commitments
$
99,498
$
105,900
$
103,163
$
97,111
$
85,390
Trust assets under management (AUM)
$
242,222
$
226,695
$
219,268
$
222,880
$
219,731
Oregon Pacific Wealth Management AUM
$
153,228
$
147,159
$
140,153
$
141,990
$
133,138
End of period balances
Total securities
$
170,740
$
177,599
$
176,593
$
181,530
$
195,647
Total short term deposits
$
25,851
$
6,246
$
11,216
$
22,967
$
41,931
Total loans net of allowance
$
543,927
$
529,687
$
518,339
$
503,377
$
486,596
Total earning assets
$
749,463
$
722,855
$
715,273
$
716,793
$
733,090
Total assets
$
787,435
$
760,986
$
752,488
$
752,804
$
764,489
Total noninterest bearing deposits
$
155,038
$
155,693
$
160,272
$
159,184
$
166,409
Total deposits
$
695,445
$
660,449
$
669,917
$
677,672
$
690,046
Average balances
Total securities
$
172,769
$
176,066
$
180,344
$
190,818
$
196,060
Total short term deposits
$
14,663
$
12,637
$
27,510
$
24,616
$
35,240
Total loans net of allowance
$
535,251
$
522,432
$
508,385
$
498,069
$
480,046
Total earning assets
$
731,735
$
720,383
$
725,179
$
722,420
$
720,003
Total assets
$
767,409
$
756,740
$
759,592
$
751,845
$
752,094
Total noninterest bearing deposits
$
156,513
$
156,729
$
163,669
$
154,949
$
167,863
Total deposits
$
672,409
$
668,296
$
681,749
$
675,954
$
678,528
(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.
