Oregon Pacific Bancorp Announces Third Quarter 2024 Earnings Results

Rhea-AI Summary

Oregon Pacific Bancorp (ORPB) reported Q3 2024 net income of $1.8 million, or $0.26 per diluted share, compared to $1.9 million in Q2 2024. Period-end deposits grew by $18.1 million to $695.6 million, showing a 10.75% annualized growth. The bank's net interest margin slightly contracted to 3.59% from 3.65%, with cost of funds increasing to 1.41%. Loan portfolio reached $565.5 million with $18.6 million in new production at 7.45% weighted average rate. Trust fee income grew with Assets Under Management increasing by $12.7 million from Q2 2024.

Positive

• Quarter-over-quarter deposit growth of $18.1 million (10.75% annualized)
• Loan portfolio growth of $2.5 million with new loans at 7.45% average rate
• Reduction in classified assets of $1.4 million
• Trust Assets Under Management increased by $12.7 million from previous quarter
• Strong core deposit base with reliance on non-core funding

Negative

• Net income decreased from $1.9 million to $1.8 million quarter-over-quarter
• Net interest margin contracted to 3.59% from 3.65%
• Cost of funds increased to 1.41% from 1.30%
• Required $150,000 provision for credit losses
• Increased insurance premiums despite no claims activity

Highlights:

• 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.--(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.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241024077262/en/

Editorial Contact:

Ron Green, President & Chief Executive Officer

ron.green@opbc.com

(541) 902-9800

Source: Oregon Pacific Bancorp

FAQ

What was Oregon Pacific Bancorp's (ORPB) earnings per share in Q3 2024?

ORPB reported earnings of $0.26 per diluted share in Q3 2024.

How much did ORPB's deposits grow in Q3 2024?

ORPB's deposits grew by $18.1 million in Q3 2024, representing a 10.75% annualized growth rate.

What was ORPB's net interest margin in Q3 2024?

ORPB's net interest margin was 3.59% in Q3 2024, down from 3.65% in Q2 2024.

What was the total loan portfolio size for ORPB as of September 30, 2024?

ORPB's total loan portfolio was $565.5 million as of September 30, 2024.