Third quarter net income of $1.8 million; $0.26 per diluted share.
Quarterly tax equivalent net interest margin of 3.59%.
Quarterly cost of funds of 1.41%.
Quarterly deposit growth of $18.1 million or 10.75% annualized.
Hired Lance Rudge as Chief Operating Officer, which expanded the company’s leadership team.
Launched Oregon Pacific Loan Solutions, an online tool for small business loan applications.
FLORENCE, Ore., October 24, 2024--(BUSINESS WIRE)--Oregon Pacific Bancorp (ORPB), the holding company of Oregon Pacific Bank, today reported net income of $1.8 million, or $0.26 per diluted share, during the quarter ended September 30, 2024, compared to $1.9 million or $0.26 per diluted share for the quarter ended June 30, 2024.
Period-end deposits grew to $695.6 million and represented quarterly growth of $18.1 million, and growth of $35.1 million since December 31, 2023. "The bank’s quarterly deposit growth was strong, and we are pleased to see a return to the normal seasonal deposit growth occurring in the latter half of the year," said Ron Green, President and Chief Executive Officer. "Although we experienced modest margin compression during the quarter, we expect our strong core deposit base to support increased profitability as we transition into a more normalized rate environment."
During the quarter the bank’s net interest margin contracted slightly to 3.59%, down from 3.65% in the second quarter. Margin compression was tied to a small increase in the cost of funds, which grew to 1.41%, up from 1.30% in the second quarter. The increase was primarily attributable to continued deposit pricing pressure, despite the Fed rate reduction on September 19, 2024. The bank continued to evaluate core-deposit pricing based on competitive rate pressures to retain deposits and placed low reliance on non-core funding. Callable brokered deposits totaled $18 million and Federal Home Loan term advances totaled $7.5 million at September 30, 2024, which was unchanged from June 30, 2024.
Period-end loans, net of deferred loan origination fees, totaled $565.5 million, representing quarterly growth of $2.5 million for the period ended September 30, 2024. Quarterly loan production for new and renewed loans totaled $18.6 million, with a weighted average effective rate of 7.45% and a weighted-average repricing life of 4.41 years. The third quarter loan yield grew to 5.47%, representing an increase of 0.04% over the prior quarter as new loan production continued to occur at a rate higher than the existing portfolio yield.
During the third quarter of 2024, the bank experienced a reduction in classified assets of $1.4 million, defined as loans and loan contingent liabilities internally graded substandard or worse, impaired loans, adversely classified securities and other real estate owned. "We are pleased to see loan migration out of the classified asset category, back to performing loans," said James Atwood, Executive Vice President and Chief Credit Officer. "While some economic uncertainty continues, the bank remains in close contact with borrowers to proactively identify credit issues." During the third quarter of 2024 the bank recorded $150 thousand of provision for credit losses, and $35 thousand of provision for unfunded commitments, which occurred due to quarterly loan growth.
Noninterest income totaled $2.0 million for the quarter ended September 30, 2024, and represented growth of $78 thousand compared to the quarter ended June 30, 2024. The largest increase occurred in the trust fee income category, which grew $93 thousand from the prior quarter. This increase was tied to growth in Assets Under Management, which increased $12.7 million from June 30, 2024, and $40.4 million since December 31, 2023. The bank has five trust officers across four branch locations and believes future business opportunities will be significant, especially as national trust companies have continued to raise the minimum asset threshold to accept new trust clients. Offsetting the growth in trust income the bank also experienced a contraction of $55 thousand in the other income category compared to the second quarter 2024. During the second quarter the bank recognized a $34 thousand incentive payment through Visa associated with debit card processing. This payment was a one-time event and was not anticipated to be received in future periods.
During the third quarter 2024 noninterest expense totaled $6.2 million, representing an increase of $93 thousand from the quarter ended June 30, 2024. The largest expense fluctuation occurred in the occupancy category, as the bank renewed its general liability insurance effective August 1, 2024. While the bank has not had any claims activity, the bank saw annual premiums increase $23 thousand.
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)
September 30,
June 30,
September 30,
2024
2024
2023
ASSETS
Cash and due from banks
$
12,437
$
6,505
$
8,925
Interest bearing deposits
25,874
10,559
11,216
Securities
163,275
162,483
176,593
Loans, net of deferred fees and costs
565,492
563,002
525,231
Allowance for credit losses
(7,400
)
(7,250
)
(6,892
)
Premises and equipment, net
13,444
13,403
13,024
Bank owned life insurance
9,071
9,002
8,801
Deferred tax asset
4,754
5,784
6,604
Other assets
8,279
8,354
8,986
Total assets
$
795,226
$
771,842
$
752,488
LIABILITIES
Deposits
Demand - non-interest bearing
$
156,296
$
154,226
$
160,272
Demand - interest bearing
278,563
285,802
270,677
Money market
136,984
119,863
139,033
Savings
65,456
64,458
69,018
Certificates of deposit
58,289
53,126
30,917
Total deposits
695,588
677,475
669,917
FHLB borrowings
7,500
7,500
5,000
Junior subordinated debenture
4,124
4,124
4,124
Subordinated debenture
14,802
14,777
14,702
Other liabilities
8,612
8,101
8,168
Total liabilities
730,626
711,977
701,911
STOCKHOLDERS' EQUITY
Common stock
21,491
21,388
21,212
Retained earnings
49,385
47,538
41,859
Accumulated other comprehensive income, net of tax
(6,276
)
(9,061
)
(12,494
)
Total stockholders' equity
64,600
59,865
50,577
Total liabilities & stockholders' equity
$
795,226
$
771,842
$
752,488
CONSOLIDATED STATEMENTS OF INCOME
Unaudited (dollars in thousands, except per share data)
THREE MONTHS ENDED
NINE MONTHS ENDED
September 30,
June 30,
September 30,
September 30,
September 30,
2024
2024
2023
2024
2023
INTEREST INCOME
Loans
$
7,746
$
7,548
$
6,587
$
22,437
$
18,660
Securities
1,477
1,515
1,568
4,531
4,896
Other interest income
314
224
373
736
1,090
Total interest income
9,537
9,287
8,528
27,704
24,646
INTEREST EXPENSE
Deposits
2,452
2,214
1,483
6,665
3,653
Borrowed funds
319
335
231
1,027
686
Total interest expense
2,771
2,549
1,714
7,692
4,339
NET INTEREST INCOME
6,766
6,738
6,814
20,012
20,307
Provision for credit losses on loans
150
141
-
331
70
Provision (credit) for unfunded commitments
35
10
(123
)
5
(230
)
Net interest income after provision (credit) for credit losses
6,581
6,587
6,937
19,676
20,467
NONINTEREST INCOME
Trust fee income
1,030
937
848
2,867
2,675
Service charges
371
361
359
1,079
1,026
Mortgage loan sales
39
61
25
132
91
Merchant card services
157
125
162
394
386
Oregon Pacific Wealth Management income
336
316
294
952
821
Other income
105
160
117
362
299
Total noninterest income
2,038
1,960
1,805
5,786
5,298
NONINTEREST EXPENSE
Salaries and employee benefits
3,651
3,634
3,164
10,918
9,374
Outside services
669
639
678
2,026
1,818
Occupancy & equipment
511
478
456
1,499
1,355
Trust expense
615
635
545
1,867
1,560
Loan and collection, OREO expense
21
20
9
55
60
Advertising
88
96
93
239
339
Supplies and postage
75
68
98
222
264
Other operating expenses
549
516
532
1,653
1,558
Total noninterest expense
6,179
6,086
5,575
18,479
16,328
Income before taxes
2,440
2,461
3,167
6,983
9,437
Provision for income taxes
593
595
820
1,680
2,424
NET INCOME
$
1,847
$
1,866
$
2,347
$
5,303
$
7,013
Quarterly Highlights
3rd Quarter
2nd Quarter
1st Quarter
4th Quarter
3rd Quarter
2024
2024
2024
2023
2023
Earnings
Interest income
$
9,537
$
9,287
$
8,880
$
8,651
$
8,528
Interest expense
2,771
2,549
2,371
2,056
1,714
Net interest income
$
6,766
$
6,738
$
6,509
$
6,595
$
6,814
Provision for credit losses on loans
150
141
40
80
-
Provision (credit) for unfunded commitments
35
10
(40
)
(150
)
(123
)
Noninterest income
2,038
1,960
1,789
1,857
1,805
Noninterest expense
6,179
6,086
6,216
5,683
5,575
Provision for income taxes
593
595
492
614
820
Net income
$
1,847
$
1,866
$
1,590
$
2,225
$
2,347
Average shares outstanding
7,134,259
7,135,227
7,115,125
7,094,180
7,094,180
Average diluted shares outstanding
7,153,663
7,154,631
7,128,148
7,100,680
7,100,680
Period end shares outstanding
7,134,259
7,135,227
7,135,615
7,094,180
7,094,180
Period end diluted shares outstanding
7,153,663
7,154,631
7,155,019
7,100,680
7,100,680
Earnings per share
$
0.26
$
0.26
$
0.22
$
0.31
$
0.33
Diluted earnings per share
$
0.26
$
0.26
$
0.22
$
0.31
$
0.33
Performance Ratios
Return on average assets
0.93
%
0.96
%
0.83
%
1.17
%
1.22
%
Return on average equity
12.12
%
13.01
%
11.43
%
17.45
%
18.65
%
Net interest margin - tax equivalent
3.59
%
3.65
%
3.59
%
3.64
%
3.74
%
Yield on loans
5.47
%
5.43
%
5.30
%
5.15
%
5.07
%
Yield on securities
3.48
%
3.62
%
3.54
%
3.53
%
3.43
%
Cost of deposits
1.41
%
1.30
%
1.20
%
1.00
%
0.86
%
Cost of interest-bearing liabilities
1.97
%
1.83
%
1.74
%
1.52
%
1.26
%
Efficiency ratio
70.20
%
70.00
%
74.91
%
67.25
%
64.73
%
Full-time equivalent employees
144
143
142
134
131
Capital
Tier 1 capital
$
87,101
$
85,416
$
83,699
$
82,278
$
80,082
Leverage ratio
10.96
%
10.82
%
10.78
%
10.70
%
10.40
%
Common equity tier 1 ratio
14.65
%
14.36
%
14.33
%
14.28
%
14.34
%
Tier 1 risk based ratio
14.65
%
14.36
%
14.33
%
14.28
%
14.34
%
Total risk based ratio
15.90
%
15.61
%
15.58
%
15.53
%
15.59
%
Book value per share
$
9.05
$
8.39
$
8.13
$
7.95
$
7.13
Quarterly Highlights
3rd Quarter
2nd Quarter
1st Quarter
4th Quarter
3rd Quarter
2024
2024
2024
2023
2023
Asset quality
Allowance for credit losses (ACL)
$
7,400
$
7,250
$
7,018
$
6,975
$
6,892
Nonperforming loans (NPLs)
$
278
$
275
$
113
$
443
$
456
Nonperforming assets (NPAs)
$
278
$
275
$
113
$
443
$
456
Classified Assets (1)
$
10,363
$
11,778
$
9,668
$
9,186
$
4,252
Net loan charge offs (recoveries)
$
-
$
(91
)
$
(3
)
$
(3
)
$
(6
)
ACL as a percentage of net loans
1.31
%
1.29
%
1.27
%
1.30
%
1.31
%
ACL as a percentage of NPLs
2661.87
%
2636.36
%
6210.62
%
1574.49
%
1511.40
%
Net charge offs (recoveries) to average loans
0.00
%
-0.02
%
0.00
%
0.00
%
0.00
%
Net NPLs as a percentage of total loans
0.05
%
0.05
%
0.02
%
0.08
%
0.09
%
Nonperforming assets as a percentage of total assets
0.03
%
0.04
%
0.01
%
0.06
%
0.06
%
Classified Asset Ratio (2)
10.97
%
12.63
%
10.66
%
10.29
%
4.89
%
Past due as a percentage of total loans
0.24
%
0.19
%
0.29
%
0.15
%
0.12
%
Off-balance sheet figures
Unused credit commitments
$
99,229
$
97,763
$
99,498
$
105,900
$
103,163
Trust assets under management (AUM)
$
267,061
$
254,380
$
242,222
$
226,695
$
219,268
Oregon Pacific Wealth Management AUM
$
167,025
$
159,201
$
153,228
$
147,159
$
140,153
End of period balances
Total securities
$
163,275
$
162,483
$
170,740
$
177,599
$
176,593
Total short term deposits
$
25,874
$
10,559
$
25,851
$
6,246
$
11,216
Total loans net of allowance
$
558,092
$
555,752
$
543,927
$
529,687
$
518,339
Total earning assets
$
756,571
$
737,936
$
749,463
$
722,855
$
715,273
Total assets
$
795,226
$
771,842
$
787,435
$
760,986
$
752,488
Total noninterest bearing deposits
$
156,296
$
154,226
$
155,038
$
155,693
$
160,272
Total deposits
$
695,588
$
677,475
$
695,445
$
660,449
$
669,917
Average balances
Total securities
$
162,918
$
166,077
$
172,769
$
176,066
$
180,344
Total short term deposits
$
22,887
$
16,430
$
14,663
$
12,637
$
27,510
Total loans net of allowance
$
556,336
$
552,490
$
535,251
$
522,432
$
508,385
Total earning assets
$
751,371
$
744,050
$
731,735
$
720,383
$
725,179
Total assets
$
787,072
$
780,003
$
767,409
$
756,740
$
759,592
Total noninterest bearing deposits
$
158,888
$
156,858
$
156,513
$
156,729
$
163,669
Total deposits
$
689,948
$
685,983
$
672,409
$
668,296
$
681,749
(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.
