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. | |||||||||||||||||||
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