Oregon Pacific Bank Announces First Quarter Earnings Results

Rhea-AI Summary

Oregon Pacific Bancorp (ORPB) reported strong financial results for Q1 2023, with net income of $2.4 million or $0.34 per diluted share, up from $1.4 million or $0.20 per diluted share in Q1 2022. The bank achieved a quarterly loan growth of $10.5 million, reflecting an 8.82% annualized growth rate, while deposits increased by $7.2 million, translating to a 4.26% annualized growth. The net interest margin stood at 3.87%, indicating improved earnings from interest. Notably, the bank's cost of funds rose to 0.51% from 0.21% in the previous quarter, highlighting increasing market pressures. Management emphasized the bank's focus on service and maintaining client relationships despite competitive yield pressures. The bank also adopted new credit loss accounting standards impacting its allowance for credit losses.

Positive

• Net income of $2.4 million, up from $1.4 million YoY.
• Quarterly loan growth of $10.5 million (8.82% annualized).
• Deposit growth of $7.2 million (4.26% annualized).
• Increased net interest margin to 3.87%.

Negative

• Cost of funds increased to 0.51% from 0.21%.

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, 2023.

Highlights:

• First quarter net income of $2.4 million; $0.34 per diluted share.
• Quarterly loan growth of $10.5 million or annualized growth of 8.82%.
• Quarterly deposit growth of $7.2 million or annualized growth of 4.26%.
• Quarterly tax equivalent net interest margin of 3.87%

Net income for the quarter ended March 31, 2023, was $2.4 million, or $0.34 per diluted share compared to $1.4 million or $0.20 per diluted share for the quarter ended March 31, 2022. Ron Green, President and Chief Executive Officer said today upon the release of Oregon Pacific Bank’s earnings, “We are pleased with our first quarter results for 2023, reflecting period-ending, year-over-year growth in net loans, deposits, and earnings per share.” He continued, “During the recent events surrounding the closure of two larger financial institutions in the United States, our historical emphasis on balance sheet diversification, and our focus on attracting business banking relationships that value service, continues to serve the Bank well. Our increase in cost of funds has been at a rate lower than most of our peers. Although we are aware that some business depositors have invested their excess liquidity in non-banking products, such as U.S. Treasuries, we have not lost any business relationships to other local or regional commercial banks purely for reasons of clients demanding a higher yield on deposits. We will continue to lead with our value-proposition of service first and our desire to create mutual value for the Bank and its customers.”

Period-end loans, net of deferred loan origination fees, totaled $493.5 million, representing quarterly growth of $10.5 million. The first quarter loan yield grew to 4.85%, an increase of 0.15% over the prior quarter. Effective January 1, 2023, the Bank adopted Accounting Standards Update 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) and all related amendments. The day 1 adoption of ASU 2016-13 and related amendments resulted in an increase of $60 thousand to the Bank’s allowance for credit losses on loans, an increase of $777 thousand to the Bank’s allowance for unfunded commitments and letters of credit and a net-of-tax cumulative-effect adjustment of $611 thousand to decrease the beginning balance of retained earnings. The Bank’s estimate of provision for credit losses for the first quarter of 2023, under the new CECL methodology, resulted in a reversal of $51 thousand of provision expense, which was comprised of an increase to the allowance for credit losses on loans of $70 thousand and a reduction in the reserve for unfunded commitments of $121 thousand. In addition to provision for credit losses, the Bank also recognized recoveries of $88 thousand during the quarter.

The Bank experienced quarterly deposit growth totaling $7.2 million or an annualized increase of 4.26%. Included in the first quarter deposit growth was approximately $19.1 million in deposits that migrated from off-balance sheet holdings with IntraFi Network, into on-balance sheet reciprocal balances. As of March 31, 2023, the Bank has migrated all off-balance sheet deposits into a reciprocal position. During the quarter the Bank experienced an increase in requests for the full FDIC insurance coverage associated with the Insured Cash Sweep accounts. Excluding the reciprocal migration, the Bank’s ICS balances grew $22.5 million. The ICS balances are currently listed under the demand interest bearing category on the balance sheet. As deposit rate pressure continues, the Bank’s cost of funds increased to 0.51% during the first quarter 2023, up from the 0.21% reported in the fourth quarter 2022. The Bank has also analyzed deposit balances and below is a breakout of deposit balances as of March 31, 2023, by type.

Deposit Detail - March 31, 2023
Unaudited (dollars in thousands)
	Consumer						Business
	Account Balance		Number of Accounts	Avg, Bal. Per Account			Account Balance		Number of Accounts	Avg, Bal. Per Account
Demand - non-interest bearing	$	62,014	4,854	$	13		$	104,395	1,993	$	52
Demand - interest bearing		52,858	801		66			106,819	730		146
Demand - ICS		6,045	8		756			98,307	36		2,731
Money market		80,729	655		123			84,389	335		252
Savings		65,773	2,534		26			12,642	240		53
Certificates of deposit		16,075	374		43			-	-		-
	$	283,494	9,226				$	406,552	3,334

The securities portfolio contracted slightly from $195.9 million at December 31, 2022, down to $195.6 million at Mach 31, 2023. The contraction was attributable to portfolio cash flows, which was partially offset by a reduction in the unrealized loss on the portfolio, as the Bank did not purchase any securities during the quarter. The unrealized loss at March 31, 2023 reflected a reduction of $1.9 million, moving to $12.4 million, down from $14.3 million at December 31, 2022. The increase in market values was primarily attributable to a reduction in longer-term interest rates positively affecting the market values. The weighted average life of the portfolio was 5.2 years and the modified duration of 4.4 years at March 31, 2023. During the quarter the yield on securities grew to 3.41%, up from 3.02% in the fourth quarter 2022, with securities income increasing $217 thousand over fourth quarter 2022, which was primarily attributable to the securities repositioning strategy executed during fourth quarter 2022.

Noninterest income totaled $1.7 million during the first quarter 2023 and represented a decrease of $187 thousand from fourth quarter 2022. The largest decrease in noninterest income occurred in the other income category, which is primarily attributable to the income earned on the off-balance sheet portion of the IntraFi Network deposits, which totaled $7 thousand during first quarter 2023, down from $191 thousand in fourth quarter 2022. With the Bank migrating all IntraFi deposits into a reciprocal position, this source of noninterest income is not anticipated in future periods.

First quarter 2023 noninterest expense totaled $5.3 million, down $1.4 million from the $6.7 million recorded during fourth quarter 2022. During the fourth quarter 2022 the bank recognized a loss on sale of securities of $1.8 million. Excluding the loss on sale of securities, noninterest expense increased $405 thousand over the fourth quarter 2022. The largest fluctuation occurred in the salaries and employee benefits category which grew $342 thousand, primarily attributable to the full quarter of salary expense associated with the Portland Market expansion.

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 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,
			2023				2022				2022
ASSETS
Cash and due from banks		$	8,783			$	10,657			$	16,039
Interest bearing deposits			41,931				39,863				98,345
Securities			195,647				195,881				157,922
Non PPP Loans, net of deferred fees and costs			493,480				482,979				407,405
PPP Loans, net of deferred fees and costs			-				-				4,783
Total Loans, net of deferred fees and costs			493,480				482,979				412,188
Allowance for credit losses			(6,884	)			(6,666	)			(5,959	)
Premises and equipment, net			9,867				9,556				9,645
Bank owned life insurance			8,677				8,616				8,456
Deferred tax asset			5,319				5,631				2,998
Other assets			7,669				7,665				6,893
Total assets		$	764,489			$	754,182			$	706,527
LIABILITIES
Deposits
Demand - non-interest bearing		$	166,409			$	180,589			$	178,367
Demand - interest bearing			264,029				236,511				187,276
Money market			165,118				165,671				167,681
Savings			78,415				82,662				83,477
Certificates of deposit			16,075				17,436				19,583
Total deposits			690,046				682,869				636,384
Junior subordinated debenture			4,124				4,124				4,124
Subordinated debenture			14,652				14,627				14,553
Other liabilities			6,300				6,474				5,420
Total liabilities			715,122				708,094				660,481
STOCKHOLDERS' EQUITY
Common stock			21,103				21,099				20,917
Retained earnings			37,284				35,462				29,762
Accumulated other comprehensive income, net of tax			(9,020	)			(10,473	)			(4,633	)
Total stockholders' equity			49,367				46,088				46,046
Total liabilities & stockholders' equity		$	764,489			$	754,182			$	706,527

CONSOLIDATED STATEMENTS OF INCOME
Unaudited (dollars in thousands, except per share data)
		THREE MONTHS ENDED
		March 31,			December 31,					March 31,
			2023				2022				2022
INTEREST INCOME
Non-PPP loans		$	5,824			$	5,517			$	4,284
PPP loans			-				-				205
Securities			1,687				1,470				556
Other interest income			401				664				55
Total interest income			7,912				7,651				5,100
INTEREST EXPENSE
Deposits			858				361				109
Borrowed funds			226				220				181
Total interest expense			1,084				581				290
NET INTEREST INCOME			6,828				7,070				4,810
Provision (credit) for credit losses			(51	)			335				50
Net interest income after provision (credit) for credit losses			6,879				6,735				4,760
NONINTEREST INCOME
Trust fee income			884				841				778
Service charges			325				329				298
Mortgage loan sales			38				57				123
Merchant card services			103				121				108
Oregon Pacific Wealth Management income			252				236				250
Other income			99				304				88
Total noninterest income			1,701				1,888				1,645
NONINTEREST EXPENSE
Salaries and employee benefits			3,129				2,787				2,614
Loss on sale of securities			-				1,829				-
Outside services			552				593				520
Occupancy & equipment			448				432				401
Trust expense			481				461				392
Loan and collection, OREO expense			24				(8	)			27
Advertising			102				111				94
Supplies and postage			88				75				69
Other operating expenses			489				457				389
Total noninterest expense			5,313				6,737				4,506
Income before taxes			3,267				1,886				1,899
Provision for income taxes			834				459				455
NET INCOME		$	2,433			$	1,427			$	1,444

	Quarterly Highlights
	1st Quarter				4th Quarter				3rd Quarter				2nd Quarter				1st Quarter
		2023				2022				2022				2022				2022
Earnings
Net interest income	$	6,828			$	7,070			$	6,102			$	5,389			$	4,810
Provision for loan loss		(51	)			335				209				100				50
Noninterest income		1,701				1,888				2,042				1,781				1,645
Noninterest expense		5,313				6,737				4,811				4,463				4,506
Provision for income taxes		834				459				792				663				455
Net income	$	2,433			$	1,427			$	2,332			$	1,944			$	1,444
Average shares outstanding		7,085,840				7,070,425				7,070,433				7,070,686				7,057,361
Average diluted shares outstanding		7,089,090				NA				NA				NA				NA
Earnings per share	$	0.34			$	0.20			$	0.33			$	0.27			$	0.20
Diluted earnings per share	$	0.34				NA				NA				NA				NA
Performance Ratios
Return on average assets		1.13	%			0.74	%			1.28	%			1.12	%			0.84	%
Return on average equity		21.01	%			13.34	%			20.41	%			17.34	%			12.02	%
Net interest margin - tax equivalent		3.87	%			3.87	%			3.54	%			3.27	%			2.93	%
Yield on loans		4.85	%			4.70	%			4.50	%			4.45	%			4.50	%
Yield on loans - excluding PPP loans		4.85	%			4.70	%			4.50	%			4.33	%			4.37	%
Yield on securities		3.41	%			3.02	%			2.39	%			1.91	%			1.49	%
Cost of deposits		0.51	%			0.21	%			0.09	%			0.07	%			0.07	%
Efficiency ratio		62.29	%			75.21	%			59.07	%			62.21	%			69.81	%
Full-time equivalent employees		127				120				122				122				122
Capital
Tier 1 capital	$	75,684			$	73,882			$	72,410			$	70,041			$	68,040
Leverage ratio		9.94	%			9.55	%			9.95	%			9.96	%			9.72	%
Common equity tier 1 ratio		14.16	%			13.92	%			14.81	%			14.79	%			16.42	%
Tier 1 risk based ratio		14.16	%			13.92	%			14.81	%			14.79	%			16.42	%
Total risk based ratio		15.41	%			15.17	%			16.06	%			16.04	%			17.68	%
Book value per share	$	6.97			$	6.52			$	6.05			$	6.37			$	6.52

	Quarterly Highlights
	1st Quarter				4th Quarter				3rd Quarter				2nd Quarter				1st Quarter
		2023				2022				2022				2022				2022
Asset quality
Allowance for loan losses (ALLL)	$	6,884			$	6,666			$	6,328			$	6,088			$	5,959
Nonperforming loans (NPLs)	$	72			$	52			$	424			$	960			$	593
Nonperforming assets (NPAs)	$	72			$	52			$	424			$	960			$	593
Classified Assets (1)	$	3,842			$	3,877			$	4,574			$	5,089			$	6,349
Net loan charge offs (recoveries)	$	(88	)		$	(4	)		$	(31	)		$	(29	)		$	(4	)
ACL as a percentage of net loans		1.39	%			1.38	%			1.39	%			1.40	%			1.45	%
ACL as a percentage of net loans (excluding PPP)		1.39	%			1.38	%			1.39	%			1.40	%			1.46	%
ACL as a percentage of NPLs		9561.11	%			12819.23	%			1492.45	%			634.17	%			1004.89	%
Net charge offs (recoveries) to average loans		-0.02	%			0.00	%			-0.01	%			-0.01	%			0.00	%
Net NPLs as a percentage of total loans		0.01	%			0.01	%			0.09	%			0.22	%			0.15	%
Nonperforming assets as a percentage of total assets		0.01	%			0.01	%			0.05	%			0.13	%			0.08	%
Classified Asset Ratio (2)		4.65	%			4.81	%			5.81	%			6.68	%			8.58	%
Past due as a percentage of total loans		0.06	%			0.19	%			0.13	%			0.12	%			0.21	%
Off-balance sheet figures
Off-balance sheet demand deposits (3)	$	-			$	18,976			$	60,588			$	121,645			$	78,674
Off-balance sheet time deposits (4)	$	-			$	-			$	-			$	-			$	37,500
Unused credit commitments	$	85,390			$	89,680			$	85,880			$	93,411			$	95,570
Trust assets under management (AUM)	$	219,731			$	215,736			$	193,448			$	195,058			$	199,983
Oregon Pacific Wealth Management AUM	$	113,138			$	117,549			$	116,193			$	114,973			$	127,749
End of period balances
Total securities	$	195,647			$	195,881			$	188,366			$	170,977			$	157,922
Total short term deposits	$	41,931			$	39,863			$	97,840			$	71,429			$	98,345
Total loans net of allowance	$	486,596			$	476,313			$	450,299			$	429,390			$	406,229
Total earning assets	$	733,090			$	720,712			$	744,786			$	679,835			$	670,406
Total assets	$	764,489			$	754,182			$	780,711			$	712,532			$	706,527
Total noninterest bearing deposits	$	166,409			$	180,589			$	195,536			$	189,112			$	178,367
Total deposits	$	690,046			$	682,869			$	712,710			$	642,653			$	636,384
Average balances
Total securities	$	196,060			$	192,348			$	186,535			$	165,729			$	143,830
Total short term deposits	$	35,240			$	68,808			$	57,557			$	73,515			$	120,674
Total loans net of allowance	$	480,046			$	459,440			$	436,522			$	418,445			$	398,423
Total earning assets	$	720,003			$	728,980			$	688,723			$	665,637			$	670,330
Total assets	$	752,094			$	761,361			$	720,465			$	697,913			$	699,808
Total noninterest bearing deposits	$	167,863			$	178,226			$	191,292			$	178,626			$	171,184
Total deposits	$	678,528			$	692,412			$	648,827			$	627,700			$	626,023
(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 loan losses.
(3) Deposits sold through IntraFi Network Deposits Insured Cash Sweep (ICS) program
(4) Deposits sold through IntraFi Network Deposits CDARs program

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230418005286/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 earnings for Q1 2023?

Oregon Pacific Bancorp reported net income of $2.4 million or $0.34 per diluted share for Q1 2023.

How much did Oregon Pacific Bancorp grow its loans in Q1 2023?

The bank experienced a loan growth of $10.5 million during Q1 2023.

What was the deposit growth for Oregon Pacific Bancorp in Q1 2023?

Oregon Pacific Bancorp reported a deposit growth of $7.2 million in Q1 2023.

What is the net interest margin for Oregon Pacific Bancorp in Q1 2023?

The net interest margin for Oregon Pacific Bancorp stood at 3.87% for Q1 2023.

How has the cost of funds changed for Oregon Pacific Bancorp in Q1 2023?

The cost of funds increased to 0.51% in Q1 2023, up from 0.21% in the previous quarter.