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Oregon Pacific Bancorp Announces First Quarter 2024 Earnings Results

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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