Oregon Pacific Bank Announces First Quarter Earnings Results

Rhea-AI Summary

Oregon Pacific Bancorp (ORPB) reported a net income of $1.4 million for Q1 2022, translating to $0.20 per diluted share, a decrease from $2.0 million ($0.28/share) in Q1 2021. Non-PPP loans grew by $19.2 million (20.08% annually) and deposits increased by $17.7 million (11.61% annually). However, PPP income dropped significantly to $205 thousand from $1.5 million a year prior. Noninterest income declined to $1.6 million, and noninterest expenses rose to $4.5 million, primarily due to higher salaries and benefits.

Positive

• Net income of $1.4 million for Q1 2022.
• Non-PPP loan growth of $19.2 million (20.08% annually).
• Deposit growth of $17.7 million (11.61% annually).
• Trust assets growth of $20.1 million (40.55% annually).

Negative

• Net income decreased from $2.0 million in Q1 2021.
• PPP income significantly dropped from $1.5 million to $205 thousand year-over-year.
• Noninterest income fell by $117 thousand from Q4 2021.
• Noninterest expenses increased by $208 thousand from Q4 2021.

FLORENCE, Ore.--(BUSINESS WIRE)-- Oregon Pacific Bancorp (ORPB), the holding company of Oregon Pacific Bank, today reported financial results for the first quarter ended March 31, 2022.

Highlights:

• First quarter net income of $1.4 million; $0.20 per diluted share.
• Non-PPP loan growth of $19.2 million or 20.08% annually.
• Deposit growth of $17.7 million or 11.61% annually
• Trust assets under management growth of $20.1 million or 40.55% annually.

Net income for the first quarter was $1.4 million, or $0.20 per diluted share compared to $2.0 million, or $0.28 per diluted share for the quarter ended March 31, 2021. The Bank continued to see Paycheck Protection Program (PPP) forgiveness payments processed during the first quarter, but the PPP interest and fees decreased substantially to $205 thousand, down from $1.5 million recognized in first quarter 2021. During the quarter the Bank saw outstanding PPP loans reduce to $4.8 million. As of March 31, 2022, unamortized PPP fee income totaled $141 thousand.

Period-end non-PPP loans, net of deferred loan origination fees, totaled $407.4 million, with growth of $19.2 million which represented an annualized growth rate of 20.08%. The Bank continued to experience non-PPP loan demand, but pricing pressures remain strong. The first quarter effective yield on the non-PPP loan portfolio lowered to 4.37%, down from 4.47% in fourth quarter, primarily related to new production occurring at rates below the current effective yield of the portfolio.

“We are pleased to post strong quarterly earnings as we see the financial benefits of the PPP loan program lessen in relation to the Bank’s overall profitability,” said Ron Green, President and CEO. “Our board and management team have understood the temporary nature of the PPP fee income and have worked to enhance our noninterest income sources, primarily through Trust Services and Wealth Management.”

During the quarter the Bank saw a decrease in classified assets totaling $2.4 million. This decrease was primarily attributable to upgrades of two loan relationships and one loan payoff. The payoff was related to a commercial relationship that was downgraded in the prior fiscal year.

First quarter 2022 deposit growth totaled $17.7 million. While the Bank did not experience deposit contraction during the first quarter, the possibility of this will grow as depositors react to the changing interest rate environment. The Bank maintained first quarter cost of funds totaling 0.07% and did not make any rate adjustments following the change in the fed funds rate. The Bank also continues to maintain $116.2 million of additional off-balance sheet deposits in the IntraFi Network’s Insured Cash Sweep (ICS) and CDARS products. The off-balance sheet deposits remain a source of liquidity, with the ICS deposits available on demand and the CDARs deposits with a maximum maturity of four weeks.

During first quarter 2022 the Bank continued to shift interest-bearing balances with the Federal Reserve into higher yielding securities to augment the net interest margin. First quarter securities purchases totaled $40.5 million with a weighted average maturity of 3.35 years and a weighted average yield of 1.76%. Securities purchases were offset by portfolio amortization and an increase in the unrealized loss on the securities portfolio. The March 31, 2022, unrealized loss on the securities portfolio grew to $6.3. million. This compared to an unrealized gain of $52 thousand on December 31, 2021. The Bank’s securities portfolio is classified as available-for-sale and is marked to market monthly. The changing yield curve has caused many of the investments purchased during 2021 to be at rates below the current market rate for similar securities. The Bank will benefit from the variable rate securities in the portfolio in a rising rate environment. As of March 31, 2022, approximately 30% of the securities are subject to monthly of quarter rate resets, which will enhance the Bank’s interest income moving forward.

First quarter 2022 noninterest income totaled $1.6 million, which represented a decrease of $117 thousand from fourth quarter 2021. The decrease in revenue is partially attributable to a reduction in mortgage loan sales. With increased mortgage rates, refinance activity decreased, leading to lower quarterly income. The Bank also saw a small reduction in income attributable to Oregon Pacific Wealth Management LLC, (OPWM) the wholly owned Registered Investment Advisory subsidiary of the Bank. Market fluctuations in assets contributed to a reduction in assets under management, which is directly tied to the fee income recognized through OPWM.

Noninterest expense in the first quarter totaled $4.5 million, up $208 thousand over fourth quarter 2021. The largest increase occurred in the salaries and employee benefits category, which was partially due to 401k/profit sharing expense, which was up $112 thousand over fourth quarter 2021. The Bank has a safe harbor 401k plan, and in 2022, the Bank implemented a new profit-sharing component, which is tied to overall Company profitability. The Bank is continuing to see pressure on wages due to competition for employees and will continue to evaluate overall compensation to ensure retention of key employees. Additionally, payroll tax expense was up $60 thousand over fourth quarter 2021 as payroll tax calculators are reset on an annual basis. The Bank currently anticipates this expense to decrease as the year progresses.

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, strategic focus, capital position, liquidity, credit quality, special asset liquidation, 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, 2022				December 31, 2021				March 31, 2021
ASSETS
Cash and due from banks		$	16,039			$	8,643			$	9,925
Interest bearing deposits			98,345				143,192				161,446
Securities			157,922				123,076				50,543
Non PPP Loans, net of deferred fees and costs			407,405				388,187				322,451
PPP Loans, net of deferred fees and costs			4,783				9,968				78,745
Total Loans, net of deferred fees and costs			412,188				398,155				401,196
Allowance for loan losses			(5,959	)			(5,905	)			(6,020	)
Premises and equipment, net			9,645				9,720				6,621
Bank owned life insurance			8,456				8,402				8,221
Deferred tax asset			2,998				1,270				1,079
Other assets			6,893				5,168				3,998
Total assets		$	706,527			$	691,721			$	637,009
LIABILITIES
Deposits
Demand - non-interest bearing		$	178,367			$	171,380			$	171,750
Demand - interest bearing			187,276				181,885				183,537
Money market			167,681				164,742				139,350
Savings			83,477				80,856				70,276
Certificates of deposit			19,583				19,816				20,394
Total deposits			636,384				618,679				585,307
Junior subordinated debenture			4,124				4,124				4,124
Subordinated debenture			14,553				14,528				-
Other liabilities			5,420				5,130				3,695
Total liabilities			660,481				642,461				593,126
STOCKHOLDERS' EQUITY
Common stock			20,917				20,904				20,753
Retained earnings			29,762				28,318				22,484
Accumulated other comprehensive income, net of tax			(4,633	)			38				646
Total stockholders' equity			46,046				49,260				43,883
Total liabilities & stockholders' equity		$	706,527			$	691,721			$	637,009

CONSOLIDATED STATEMENTS OF INCOME
Unaudited (dollars in thousands, except per share data)
		THREE MONTHS ENDED
		March 31,		December 31,				March 31,
		2022			2021			2021
INTEREST INCOME
Non-PPP loans		$	4,284		$	4,194		$	3,648
PPP loans			205			697			1,460
Securities			556			364			178
Other interest income			55			63			27
Total interest income			5,100			5,318			5,313
INTEREST EXPENSE
Deposits			109			115			100
Borrowed funds			181			185			31
Total interest expense			290			300			131
NET INTEREST INCOME			4,810			5,018			5,182
Provision for loan losses			50			-			-
Net interest income after provision for loan losses			4,760			5,018			5,182
NONINTEREST INCOME
Trust fee income			778			819			630
Service charges			298			303			247
Mortgage loan sales			123			163			149
Investment sales commissions			-			20			35
Merchant card services			108			120			86
Oregon Pacific Wealth Management income			250			259			188
Other income			88			78			77
Total noninterest income			1,645			1,762			1,412
NONINTEREST EXPENSE
Salaries and employee benefits			2,614			2,383			2,273
Outside services			520			511			436
Occupancy & equipment			401			366			347
Trust expense			392			384			355
Loan and collection, OREO expense			27			40			36
Advertising			94			61			58
Supplies and postage			69			63			57
Other operating expenses			389			490			407
Total noninterest expense			4,506			4,298			3,969
Income before taxes			1,899			2,482			2,625
Provision for income taxes			455			612			662
NET INCOME		$	1,444		$	1,870		$	1,963

Quarterly Highlights
	1st Quarter				4th Quarter				3rd Quarter				2nd Quarter				1st Quarter
		2022				2021				2021				2021				2021
Earnings
Net interest income	$	4,810			$	5,018			$	5,251			$	4,865			$	5,182
Provision for loan loss		50				-				-				-				-
Noninterest income		1,645				1,762				1,629				1,812				1,412
Noninterest expense		4,506				4,298				4,152				4,105				3,969
Provision for income taxes		455				612				686				650				662
Net income	$	1,444			$	1,870			$	2,042			$	1,922			$	1,963
Average shares outstanding		7,057,361				7,042,478				7,042,478				7,041,041				7,022,759
Earnings per share	$	0.20			$	0.27			$	0.29			$	0.27			$	0.28
Performance Ratios
Return on average assets		0.84	%			1.09	%			1.22	%			1.17	%			1.38	%
Return on average equity		12.02	%			15.44	%			17.24	%			17.24	%			18.59	%
Net interest margin - tax equivalent		2.93	%			3.04	%			3.25	%			3.09	%			3.82	%
Yield on loans		4.50	%			4.99	%			5.11	%			4.78	%			5.14	%
Yield on loans - excluding PPP loans		4.37	%			4.47	%			4.49	%			4.63	%			4.63	%
Cost of deposits		0.07	%			0.07	%			0.08	%			0.08	%			0.08	%
Efficiency ratio		69.81	%			63.39	%			60.35	%			61.48	%			60.19	%
Full-time equivalent employees		122				118				116				114				116
Capital
Leverage ratio		9.72	%			9.73	%			9.70	%			7.45	%			8.18	%
Common equity tier 1 ratio		16.42	%			17.12	%			18.50	%			15.25	%		NA(1)
Tier 1 risk based ratio		16.42	%			17.12	%			18.50	%			15.25	%		NA(1)
Total risk based ratio		17.68	%			18.38	%			19.75	%			16.51	%		NA(1)
Book value per share	$	6.52			$	6.99			$	6.80			$	6.57			$	6.23
Asset quality
Allowance for loan losses (ALLL)	$	5,959			$	5,905			$	6,026			$	6,024			$	6,020
Nonperforming loans (NPLs)	$	593			$	928			$	1,388			$	1,517			$	1,558
Nonperforming assets (NPAs)	$	593			$	928			$	1,388			$	1,517			$	1,558
Classified Assets (2)	$	6,349			$	8,756			$	8,156			$	12,627			$	12,141
Net loan charge offs (recoveries)	$	(4	)		$	122			$	(2	)		$	(3	)		$	(230	)
ALLL as a percentage of net loans		1.45	%			1.48	%			1.54	%			1.54	%			1.50	%
ALLL as a percentage of net loans (excluding PPP)		1.46	%			1.52	%			1.67	%			1.79	%			1.87	%
ALLL as a percentage of NPLs		1004.89	%			636.31	%			434.15	%			397.10	%			386.39	%
Net charge offs (recoveries) to average loans		0.00	%			0.03	%			0.00	%			0.00	%			-0.06	%
Net NPLs as a percentage of total loans		0.15	%			0.24	%			0.35	%			0.39	%			0.39	%
Nonperforming assets as a percentage of total assets		0.08	%			0.13	%			0.20	%			0.23	%			0.24	%
Classified Asset Ratio (3)		13.79	%			17.78	%			17.04	%			27.30	%			27.67	%
Past due as a percentage of total loans		0.21	%			0.21	%			0.03	%			0.36	%			0.14	%
Off-balance sheet figures
Off-balance sheet demand deposits (4)	$	78,674			$	55,477			$	57,105			$	54,299			$	56,226
Off-balance sheet time deposits (5)	$	37,500			$	47,500			$	49,500			$	39,500			$	-
Unused credit commitments	$	95,570			$	83,778			$	86,816			$	83,807			$	82,458
Trust assets under management (AUM)	$	221,390			$	201,264			$	188,420			$	183,175			$	178,546
Oregon Pacific Wealth Management AUM	$	127,749			$	130,099			$	122,274			$	103,401			$	94,436
End of period balances
Total securities and short term deposits	$	256,267			$	266,268			$	268,963			$	247,475			$	211,989
Total loans net of allowance	$	406,229			$	392,250			$	385,620			$	384,076			$	395,176
Total earning assets	$	670,406			$	665,780			$	661,966			$	638,932			$	614,542
Total assets	$	706,527			$	691,721			$	684,314			$	663,683			$	637,009
Total noninterest bearing deposits	$	178,367			$	171,380			$	180,991			$	181,406			$	171,750
Total deposits	$	636,384			$	618,679			$	612,950			$	609,458			$	585,307
Average balances
Total securities and short term deposits	$	264,504			$	268,332			$	250,185			$	239,921			$	150,214
Total loans net of allowance	$	398,423			$	383,161			$	388,212			$	389,766			$	397,195
Total earning assets	$	670,330			$	658,872			$	645,779			$	637,066			$	554,446
Total assets	$	699,808			$	682,779			$	666,455			$	659,644			$	576,991
Total noninterest bearing deposits	$	171,184			$	170,600			$	183,950			$	178,155			$	167,266
Total deposits	$	626,023			$	610,981			$	610,247			$	606,476			$	525,064

(1) Effective March 31, 2020 through March 31, 2021 Oregon Pacific Bank opted into the Community Bank Leverage Ratio and stopped calculating risked based capital ratios.

(2) 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.

(3) 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 loan losses.

(4) Deposits sold through IntraFi Network Deposits Insured Cash Sweep (ICS) program

(5) Deposits sold through IntraFi Network Deposits CDARs program

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220419006052/en/

Ron Green, President & Chief Executive Officer

ron.green@opbc.com

(541) 902-9800

Source: Oregon Pacific Bancorp

FAQ

What were Oregon Pacific Bancorp's Q1 2022 earnings?

Oregon Pacific Bancorp reported a net income of $1.4 million for Q1 2022.

How did Oregon Pacific Bancorp's non-PPP loans perform in Q1 2022?

Non-PPP loans grew by $19.2 million, reflecting a 20.08% annual growth rate.

What was the change in Oregon Pacific Bancorp's deposit growth for Q1 2022?

Deposits increased by $17.7 million, marking an 11.61% annual growth.

How did Oregon Pacific Bancorp's noninterest income change in Q1 2022?

Noninterest income decreased to $1.6 million, down by $117 thousand from Q4 2021.

What factors contributed to the increase in noninterest expenses for Q1 2022?

Noninterest expenses rose to $4.5 million due to higher salaries and employee benefits.