Fourth quarter net income of $2.2 million; $0.31 per diluted share.
Quarterly tax equivalent net interest margin of 3.66%, expansion of 0.07% over previous quarter.
Quarterly cost of funds of 1.36%, decrease of 0.05% from the previous quarter.
Annual loan growth of $34.9 million or 6.50%.
Annual deposit growth of $16.2 million or 2.45%.
Named one of the 100 Best Companies to Work For in Oregon for 2025 by Oregon Business Magazine.
FLORENCE, Ore., January 23, 2025--(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.
