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. |
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(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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