Pacific Financial Corp Earns $2.6 Million, or $0.25 per Diluted Share for Third Quarter 2024; Tangible Book Value Per Share Up 6.6% During Quarter; Board of Directors Declares Quarterly Cash Dividend of $0.14 per Share

Rhea-AI Summary

Pacific Financial Corp (OTCQX: PFLC) reported net income of $2.6 million, or $0.25 per diluted share for Q3 2024, up from $2.1 million in Q2 2024 but down from $3.6 million in Q3 2023. The quarter saw higher net interest income, with loan and investment yields outpacing deposit costs. Total deposits increased 2.6% to $1.0 billion, while tangible book value per share rose 6.6% to $10.47. The board declared a quarterly dividend of $0.14 per share and authorized an additional $2.6 million for share repurchases. The company plans to close its mortgage banking division by end of 2024 to improve operational efficiency.

Positive

• Net income increased 22% quarter-over-quarter to $2.6 million
• Net interest margin improved to 4.19% from 4.15% in previous quarter
• Tangible book value per share increased 6.6% to $10.47
• Total deposits grew 2.6% to $1.01 billion
• Strong asset quality with nonperforming assets at just 0.10% of total assets

Negative

• Net income decreased 29% year-over-year from $3.6 million in Q3 2023
• Gross loans decreased 0.6% quarter-over-quarter
• Efficiency ratio increased to 75.48% from 65.78% year-over-year
• Expected one-time charges in Q4 2024 for mortgage division closure
• Total deposits down 3.8% year-over-year from $1.05 billion

ABERDEEN, Wash., Oct. 25, 2024 (GLOBE NEWSWIRE) -- Pacific Financial Corporation (OTCQX: PFLC), (“Pacific Financial”) or the (“Company”), the holding company for Bank of the Pacific (the “Bank”), reported net income of $2.6 million, or $0.25 per diluted share for the third quarter of 2024, compared to $2.1 million, or $0.21 per diluted share for the second quarter of 2024, and $3.6 million, or $0.35 per diluted share for the third quarter of 2023. All results are unaudited.

Pacific Financials’ third quarter 2024 operating results reflected the following changes from the second quarter of 2024: (1) higher net interest income as the rise in loan and investment yields outpaced the rise in deposit and borrowing costs; (2) a negative provision for credit losses due to lower provision for unfunded loans; (3) lower non-interest income due to smaller gains on the sale of loans and investment securities; (4) slightly lower non-interest expenses; (5) a small decrease in total gross loans of 0.6% offset by an increase in the purchase of investment securities with the balance of investment securities increasing $18.1 million, or 6.5% during the third quarter; (6) an increase in total deposits of 2.6% to $1.0 billion at September 30, 2024, and (7) a $6.2 million increase in shareholder equity, or 5.4%. Tangible book value per share increased 6.6% during the quarter to $10.47.

The board of directors of Pacific Financial declared a quarterly cash dividend of $0.14 per share on October 23, 2024. The dividend will be payable on November 22, 2024 to shareholders of record on November 8, 2024. Additionally, the Board of Directors has authorized an additional $2.6 million toward future repurchases, or approximately 2.0% of total shares outstanding. The current stock repurchase program expires in November 2024.

“Our core operations continue to remain strong,” said Denise Portmann, President and Chief Executive Officer. “Our focused efforts on deposit retention, combined with the efforts of our new commercial loan and deposit teams, resulted in increased business relationships during the third quarter. Additionally, we added to our investment securities portfolio to increase yields. During the fourth quarter, we will be closing our mortgage banking division which we anticipate will improve the efficiency of our operation and improve earnings. However, the fourth quarter will reflect some one-time charges related to severance, contract and lease terminations.”

Third Quarter 2024 Financial Highlights:

• Return on average assets (“ROAA”) was 0.90%, compared to 0.76% for the second quarter 2024, and 1.21% for the third quarter 2023.
• Return on average equity (“ROAE”) was 8.77%, compared to 7.47% from the preceding quarter, and 13.16% from the third quarter a year earlier.
• Net interest income was $11.2 million, compared to $10.8 million for the second quarter of 2024, and $12.3 million for the third quarter of 2023.
• Net interest margin (“NIM”) increased to 4.19%, compared to 4.15% from the preceding quarter, and 4.37% for the third quarter a year ago. The increase in the net interest margin in the most recent quarter was due to increased yields on interest-earning assets outpacing the increased cost of interest-bearing liabilities.
• Provision for credit losses was a benefit of $66,000 for the third quarter ended September 30, 2024 compared to a provision of $304,000 for the preceding quarter and $244,000 in the third quarter a year ago. The benefit largely reflected lower provisions for unfunded loans relative to prior periods.
• Gross loans balances held in portfolio decreased by $4.4 million, or less than 1% to $699.6 million at September 30, 2024, compared to $704.0 million at June 30, 2024, and increased by $27.6 million, or 4%, from $672.0 million at September 30, 2023.
• Total deposits increased $25.8 million to $1.01 billion, compared to $985.6 million at June 30, 2024, and decreased from $1.05 billion at September 30, 2023. Core deposits represented 87% of total deposits, with non-interest bearing deposits representing 38% of total deposits at September 30, 2024.
• Coverage of short-term funds available to uninsured and uncollateralized deposits was 229% at September 30, 2024 and June 30, 2024. Uninsured or uncollateralized deposits were 25% of total deposits at September 30, 2024, and 24% at June 30, 2024.
• Asset quality remains solid with nonperforming assets to total assets at 0.10%, compared to 0.12% three months earlier, and 0.10% at September 30, 2023. Accruing loans past due 30 or more days represent only 0.03% of total loans at September 30, 2024.
• Tangible book value per share increased 6.6% during the quarter to $10.47 per share at September 30, 2024 from $9.82 per share at June 30, 2024. The increase was largely the result of a decline in interest rates and its impact on the fair market value of securities.
• Pacific Financial and Bank of the Pacific continued to exceed regulatory well-capitalized requirements. At September 30, 2024 Pacific Financial’s estimated leverage ratio was 11.6% and its estimated total risk-based capital ratio was 17.9%.
  

Balance Sheet Review

Total assets increased 3% to $1.16 billion at September 30, 2024, compared to $1.12 billion at June 30, and decreased 2% from $1.18 billion at September 30, 2023.

Liquidity metrics continued to remain strong with total liquidity, both on and off balance sheet sources, at $576.8 million as of September 30, 2024. The Bank has established collateralized credit lines with borrowing capacity from the Federal Home Loan Bank of Des Moines (FHLB) and from the Federal Reserve Bank of San Francisco, as well as $60.0 million in unsecured borrowing lines from various correspondent banks. There was no balance outstanding on any of these facilities at quarter-end.

The following table summarizes the Bank’s available liquidity:

LIQUIDITY (unaudited)	Period Ended							Change from										% of Deposits
($ in 000s)
		Sep 30,		Jun 30,		Sep 30,			Jun 30, 2024				Sep 30, 2023					Sep 30,		Jun 30,		Sep 30,
		2024		2024		2023			$	%			$		%			2024		2024		2023
Short-term Funding
Cash and cash equivalents	$	85,430	$	63,183	$	147,970		$	22,247	35	%	$	(62,540	)	-42	%		8	%	6	%	14	%
Unencumbered AFS Securities		154,565		139,581		123,842			14,984	11	%		30,723		25	%		15	%	14	%	12	%
Secured lines of Credit (FHLB, FRB)		336,771		332,674		318,557			4,097	1	%		18,214		6	%		33	%	34	%	30	%
Short-term Funding	$	576,766	$	535,438	$	590,369		$	41,328	8	%	$	(13,603	)	-2	%		56	%	54	%	56	%

Investment securities: The investment securities portfolio increased 6% to $296.8 million, compared to $278.7 million at June 30, 2024 and increased 3% compared to the like period a year ago. The increase from the prior quarter was primarily due to the purchase of collateralized mortgage obligations and mortgage backed securities. U.S. Treasury bonds, and securities issued by the U.S. Government sponsored agencies accounted for 85% of the investment portfolio as of September 30, 2024, June 30, 2024, and September 30, 2023. Within that total, collateralized mortgage obligations accounted for 48% of the investment portfolio at September 30, 2024, compared to 45% the previous quarter.

The average adjusted duration to reset of the investment securities portfolio was 4.2 years at September 30, 2024. Net unrealized losses on the investments classified as available for sale declined $7.2 million to $14.8 million ($11.5 million after-tax) at September 30, 2024, or 5% of AFS portfolio.

Gross loans balances excluding loans held for sale decreased $4.4 million, or 1%, to $699.6 million at September 30, 2024, compared to $704.0 million at June 30, 2024. During the third quarter, loan pipelines and originations slowed from prior levels as borrowers continued to adjust to higher interest rates and economic uncertainty. Due primarily to loan amortization the loan portfolio reflected slight declines in most categories except multi-family lending which increased $2.8 million. Year-over-year loan growth was 4%, or $27.6 million, with the largest increases in residential 1-4 family and multi-family loans which increased $14.8 million and $11.7 million, respectively. Loans classified as commercial real estate for regulatory concentration purposes totaled $261.3 million at September 30, 2024, or 185% of total risk based capital.

The Company continues to manage concentration limits that establish maximum exposure levels by certain industry segments, loan product types, geography and single borrower limits. In addition, the loan portfolio continues to be well-diversified and is collateralized with assets predominantly within the Company’s Western Washington and Oregon markets.

Credit quality: Non-performing assets were minimal and remained at $1.1 million, or 0.10% of total assets at September 30, 2024, compared to $1.2 million, or 0.10% at September 30, 2023. The Company has zero other real estate owned as of September 30, 2024 and accruing loans past due more than 30 days represent only 0.04% of total loans.

Allowance for credit losses (“ACL”) for loans was $8.9 million, or 1.27% of gross loans at September 30, 2024, compared to $8.9 million or 1.26% of loans at June 30, 2024 and $8.3 million or 1.24% at September 30, 2023.

A negative provision for credit losses of $66,000 was recorded in the current quarter, reflecting less allowance requirements for unfunded loans. This compares to a provision for credit losses of $304,000 in the second quarter of 2024 and $244,000 for the third quarter of 2023. Net charge-offs for the current quarter remained minimal and reflected a net recovery of $11,000, compared to a net charge-off of $56,000 for the preceding quarter and $125,000 for the third quarter one year ago.

Total deposits increased to $1.01 billion at September 30, 2024, compared to $985.6 million at June 30, 2024 and decreased from $1.05 billion at September 30, 2023. The bank has focused efforts to retain customer relationships resulting in a $22.1 million increase in business deposits.

Non-interest-bearing account balances, composed of commercial banking relationships, are the largest component of the deposit portfolio at 38% at September 30, 2024 and June 30, 2024. Money market deposits currently represent the second largest component of the deposit base and increased $11.5 million from the linked quarter and $12.8 million from the same quarter a year ago and represent 19%, 18%, and 17%, of total deposits, at September 30, 2024, June 30, 2024, and September 30, 2023, respectively. Interest-bearing demand deposits are the third largest component of the deposit base representing 18% of total deposits at September 30, 2024. Pacific Financial continues to benefit from a strong core deposit base, with core deposits representing 87% of total deposits at quarter end.

Shareholder’s equity increased $6.2 million, or 5% to $121.1 million at September 30, 2024, compared to $114.9 million at June 30, 2024, and increased $14.5 million, or 14% compared to $106.6 million at September 30, 2023. The increase in shareholders’ equity during the current quarter was due to quarterly net income, a decrease in unrealized losses on available-for-sale securities and dividends paid to shareholders. Net unrealized losses (after-tax) on available-for-sale securities were $11.5 million at September 30, 2024 compared to $17.1 million at June 30, 2024, and $23.1 million at September 30, 2023. This decrease in net unrealized losses reflects lower longer-term market interest rates at the end of the quarter.

Book value per common share was $11.78 at September 30, 2024, compared to $11.12 at June 20, 2024, and $10.22 at September 30, 2023. The Company’s tangible common equity ratio was 9.4% at September 30, 2024 and 9.1% at June 30, 2024, compared to 8.0% at September 30, 2023. Regulatory capital ratios of both the Company and the Bank continue to exceed the well-capitalized regulatory thresholds, with the Company’s leverage ratio at 11.6% and total risk-based capital ratio at 17.9% as of September 30, 2024. These regulatory capital ratios are estimates, pending completion and filing of regulatory reports.

The current stock repurchase program expires in November 2024. The Board of Directors has authorized an additional $2.6 million toward future repurchases, or approximately 2.0% of total shares outstanding.

Income Statement Review

Net interest income increased $438,000 to $11.2 million for the third quarter of 2024, compared to $10.8 million for the second quarter of 2024, and decreased $1.1 million compared to $12.3 million for the third quarter a year ago. The change in the current quarter compared to the preceding quarter reflects higher yields on a larger investment portfolio and an increase in loan yields due primarily to repricing of loans. Increasing deposit costs offset some of the benefit from higher yielding investments and loans. For the current quarter compared to the like period a year ago, funding costs have outpaced the rising yields on investments and loans.

The Bank’s net interest margin continued to remain strong at 4.19% for the quarter ended September 30, 2024 compared to 4.15% the preceding quarter. For the third quarter ended September 30, 2023, the net interest margin was 4.37% reflecting lower funding costs relative to more recent periods.

Yields on total interest earning assets increased 14 basis points to 5.29% for the third quarter of 2024 compared to 5.15% for the prior quarter and 5.06% in the like quarter a year ago. Average loan yields increased to 5.99% during the current quarter, compared to 5.80% for the preceding quarter and 5.71% for the third quarter 2023.

The Bank’s total cost of funds increased to 1.15% for the current quarter, compared to 1.05% for the preceding quarter, and 0.72% for the third quarter 2023. The increase in the costs of deposits was due to retention efforts and competitive pricing of deposit products. The percentage of non-interest bearing deposits remained high at 38% for the current quarter.

Noninterest income decreased to $1.7 million for the current quarter, compared to $2.0 million for the linked quarter and increased from $1.6 million a year earlier. The decrease compared to the linked quarter was primarily due to decreased mortgage banking loan production and no gains on the sale of investment securities.

The company plans to close its mortgage banking division by the end of 2024 which is expected to reduce non-interest income offset by a reduction of personnel and overhead expenses associated with the operation. The elimination of the mortgage banking division is expected to improve the efficiency of the company after severance and contract termination expenses are realized in the fourth quarter of 2024.

Fee and service charge income remained consistent in the third quarter of 2024 at $1.2 million compared to the previous quarter and the third quarter of 2023.

Noninterest expenses decreased to $9.7 million for the third quarter of 2024 compared to $9.8 million for the prior quarter and increased from $9.1 million for the third quarter of 2023. Within the total of noninterest expenses for the current quarter compared to the prior quarter, the largest category of salaries and employee benefits remained at $6.3 million. Similarly, data processing and occupancy expenses remained consistent to the prior quarter.

The company’s efficiency ratio decreased to 75.48% for the third quarter of 2024, compared to 77.34% in the preceding quarter and increased from 65.78% in the same quarter a year ago. The increase in the efficiency ratio relative to the previous year primarily relates to the decreased net interest margin and higher overhead expenses related to the hiring, building and marketing of new commercial loan and deposit teams.

Income tax expense: Federal and Oregon state income tax expenses totaled $633,000 for the current quarter, and $454,000 for the preceding quarter, resulting in effective tax rates of 19.6% and 17.6%, respectively. These income tax expenses reflect the benefits of tax exempt income and credits on tax-exempt loans and investments, affordable housing tax credit financing, and investments in bank owned life insurance.

FINANCIAL HIGHLIGHTS (unaudited)	Quarter Ended										Change From											Nine Months Ended						Change
(In 000s, except per share data)
		Sep 30,			Jun 30,			Sep 30,				Jun 30, 2024					Sep 30, 2023					Sep 30,			Sep 30,
		2024			2024			2023				$		%			$		%			2024			2023				$		%
Earnings Ratios & Data
Net Income	$	2,594		$	2,126		$	3,645			$	468		22	%	$	(1,051	)	-29	%	$	7,370		$	11,663			$	(4,293	)	-37	%
Return on average assets		0.90	%		0.76	%		1.21	%			0.14	%				-0.31	%				0.87	%		1.28	%			-0.41	%
Return on average equity		8.77	%		7.47	%		13.16	%			1.30	%				-4.39	%				8.52	%		14.34	%			-5.82	%
Efficiency ratio (1)		75.48	%		77.34	%		65.78	%			-1.86	%				9.70	%				75.67	%		64.64	%			11.03	%
Net-interest margin %(2)		4.19	%		4.15	%		4.37	%			0.04	%				-0.18	%				4.24	%		4.40	%			-0.16	%
Share Ratios & Data
Basic earnings per share	$	0.25		$	0.21		$	0.35			$	0.04		19	%	$	(0.10	)	-29	%	$	0.71		$	1.12			$	(0.41	)
Diluted earning per share	$	0.25		$	0.21		$	0.35			$	0.04		19	%	$	(0.10	)	-29	%	$	0.71		$	1.12			$	(0.41	)
Book value per share(3)	$	11.78		$	11.12		$	10.22			$	0.66		6	%	$	1.56		15	%
Tangible book value per share(4)	$	10.47		$	9.82		$	8.93			$	0.65		7	%	$	1.54		17	%
Common shares outstanding		10,283			10,336			10,427				(53	)	-1	%		(144	)	-1	%
PFLC stock price	$	11.65		$	9.76		$	10.00			$	1.89		19	%	$	1.65		17	%
Dividends paid per share	$	0.14		$	0.14		$	0.13			$	-		0	%	$	0.01		8	%	$	0.42		$	0.39			$	0.03		8	%
Balance Sheet Data
Assets	$	1,158,410		$	1,124,295		$	1,181,975			$	34,115		3	%	$	(23,565	)	-2	%
Portfolio Loans	$	699,603		$	703,977		$	671,969			$	(4,374	)	-1	%	$	27,634		4	%
Deposits	$	1,011,473		$	985,627		$	1,051,256			$	25,846		3	%	$	(39,783	)	-4	%
Investments	$	296,792		$	278,728		$	289,152			$	18,064		6	%	$	7,640		3	%
Shareholders equity	$	121,087		$	114,923		$	106,601			$	6,164		5	%	$	14,486		14	%
Liquidity Ratios
Short-term funding to uninsured
and uncollateralized deposits		229	%		229	%		254	%			0	%				-25	%
Uninsured and uncollateralized
deposits to total deposits		25	%		24	%		22	%			1	%				3	%
Portfolio loans to deposits ratio		69	%		71	%		63	%			-2	%				6	%
Asset Quality Ratios
Non-performing assets to assets		0.10	%		0.12	%		0.10	%			-0.02	%				0.00	%
Non-accrual loans to portfolio loans		0.16	%		0.19	%		0.18	%			-0.03	%				-0.02	%
Loan losses to avg portfolio loans		-0.01	%		0.03	%		0.07	%			-0.04	%				-0.08	%				0.01	%		0.04	%			-0.03	%
ACL to portfolio loans		1.27	%		1.26	%		1.24	%			0.01	%				0.03	%
Capital Ratios (PFC)
Total risk-based capital ratio		17.9	%		17.6	%		17.6	%			0.3	%				0.3	%
Tier 1 risk-based capital ratio		16.7	%		16.4	%		16.5	%			0.3	%				0.2	%
Common equity tier 1 ratio		15.0	%		14.8	%		14.8	%			0.2	%				0.2	%
Leverage ratio		11.6	%		11.7	%		10.7	%			-0.1	%				0.9	%
Tangible common equity ratio		9.4	%		9.1	%		8.0	%			0.3	%				1.4	%
(1) Non-interest expense divided by net interest income plus noninterest income.
(2) Tax-exempt income has been adjusted to a tax equivalent basis at a rate of 21%.
(3) Book value per share is calculated as the total common shareholders' equity divided by the period ending number of common stock shares outstanding.
(4) Tangible book value per share is calculated as the total common shareholders' equity less total intangible assets and liabilities, divided by the period ending number of common stock shares outstanding.

INCOME STATEMENT (unaudited)	Quarter Ended										Change From											Nine Months Ended						Change
($ in 000s)
		Sep 30,			Jun 30,			Sep 30,				Jun 30, 2024					Sep 30, 2023					Sep 30,			Sep 30,
		2024			2024			2023				$		%			$		%			2024			2023				$		%
Interest Income
Loan interest & fee income	$	10,520		$	10,109		$	9,549			$	411		4	%	$	971		10	%	$	30,853		$	27,166			$	3,687		14	%
Interest bearing cash income		1,108			847			2,322				261		31	%		(1,214	)	-52	%		2,890			7,669				(4,779	)	-62	%
Investment income		2,503			2,410			2,371				93		4	%		132		6	%		7,388			6,832				556		8	%
Interest Income		14,131			13,366			14,242				765		6	%		(111	)	-1	%		41,131			41,667				(536	)	-1	%
Interest Expense
Deposits interest expense		2,684			2,358			1,716				326		14	%		968		56	%		7,033			3,437				3,596		105	%
Other borrowings interest expense		243			242			246				1		0	%		(3	)	-1	%		727			682				45		7	%
Interest Expense		2,927			2,600			1,962				327		13	%		965		49	%		7,760			4,119				3,641		88	%
Net Interest Income		11,204			10,766			12,280				438		4	%		(1,076	)	-9	%		33,371			37,548				(4,177	)	-11	%
Provision (benefit) for credit losses		(66	)		304			244				(370	)	-122	%		(310	)	-127	%		271			409				(138	)	-34	%
Net Interest Income after provision		11,270			10,462			12,036				808		8	%		(766	)	-6	%		33,100			37,139				(4,039	)	-11	%
Non-Interest Income
Fees and service charges		1,225			1,198			1,248				27		2	%		(23	)	-2	%		3,523			3,695				(172	)	-5	%
Gain on sale of investments, net		-			121			-				(121	)	-100	%		-		-100	%		121			(154	)			275		-179	%
Gain on sale of loans, net		267			445			170				(178	)	-40	%		97		57	%		865			540				325		60	%
Income on bank-owned insurance		188			182			174				6		3	%		14		8	%		550			509				41		8	%
Other non-interest income		7			17			18				(10	)	-59	%		(11	)	-61	%		34			53				(19	)	-36	%
Non-Interest Income		1,687			1,963			1,610				(276	)	-14	%		77		5	%		5,093			4,643				450		10	%
Non-Interest Expense
Salaries and employee benefits		6,341			6,321			5,560				20		0	%		781		14	%		18,656			17,006				1,650		10	%
Occupancy		601			564			501				37		7	%		100		20	%		1,806			1,536				270		18	%
Furniture, Fixtures & Equipment		286			267			252				19		7	%		34		13	%		837			808				29		4	%
Marketing & donations		201			176			160				25		14	%		41		26	%		531			380				151		40	%
Professional services		233			327			301				(94	)	-29	%		(68	)	-23	%		897			941				(44	)	-5	%
Data Processing & IT		1,185			1,165			1,161				20		2	%		24		2	%		3,541			3,490				51		1	%
Other		883			1,025			1,207				(142	)	-14	%		(324	)	-27	%		2,839			3,174				(335	)	-11	%
Non-Interest Expense		9,730			9,845			9,142				(115	)	-1	%		588		6	%		29,107			27,335				1,772		6	%
Income before income taxes		3,227			2,580			4,504				647		25	%		(1,277	)	-28	%		9,086			14,447				(5,361	)	-37	%
Provision for income taxes		633			454			859				179		39	%		(226	)	-26	%		1,716			2,784				(1,068	)	-38	%
Net Income	$	2,594		$	2,126		$	3,645			$	468		22	%		(1,051	)	-29	%	$	7,370		$	11,663			$	(4,293	)	-37	%
Effective tax rate		19.6	%		17.6	%		19.1	%			2.0	%				0.5	%				18.9	%		19.3	%			-0.4	%

BALANCE SHEET (unaudited)	Period Ended										Change from											% of Total
($ in 000s)
		Sep 30,			Jun 30,			Sep 30,				Jun 30, 2024					Sep 30, 2023					Sep 30,		Jun 30,		Sep 30,
		2024			2024			2023				$		%			$		%			2024		2024		2023
Assets
Cash on hand and in banks	$	20,621		$	17,362		$	12,052			$	3,259		19	%	$	8,569		71	%		2	%	2	%	2	%
Interest bearing deposits		80,522			58,586			146,886				21,936		37	%		(66,364	)	-45	%		7	%	5	%	12	%
Investment securities		296,792			278,728			289,152				18,064		6	%		7,640		3	%		26	%	25	%	24	%
Loans held-for-sale		140			4,051			637				(3,911	)	-97	%		(497	)	-78	%		0	%	0	%	0	%
Portfolio Loans, net of deferred fees		698,974			703,322			671,134				(4,348	)	-1	%		27,840		4	%		60	%	63	%	57	%
Allowance for credit losses		(8,897	)		(8,859	)		(8,347	)			(38	)	0	%		(550	)	7	%		-1	%	-1	%	-1	%
Net loans		690,077			694,463			662,787				(4,386	)	-1	%		27,290		4	%		60	%	62	%	56	%
Premises & equipment		17,124			15,571			13,756				1,553		10	%		3,368		24	%		2	%	2	%	2	%
Goodwill & Other Intangibles		13,435			13,435			13,435				-		0	%		-		0	%		1	%	1	%	1	%
Bank-owned life Insurance		28,084			27,860			27,321				224		1	%		763		3	%		2	%	2	%	2	%
Other assets		11,615			14,239			15,949				(2,624	)	-18	%		(4,334	)	-27	%		1	%	1	%	1	%
Total Assets	$	1,158,410		$	1,124,295		$	1,181,975			$	34,115		3	%	$	(23,565	)	-2	%		100	%	100	%	100	%
Liabilities & Shareholders' Equity
Deposits	$	1,011,473		$	985,627		$	1,051,256			$	25,846		3	%	$	(39,783	)	-4	%		87	%	88	%	89	%
Borrowings		13,403		$	13,403		$	13,403				-		0	%		-		0	%		1	%	1	%	1	%
Other liabilities		12,447		$	10,342		$	10,715				2,105		20	%		1,732		16	%		1	%	1	%	1	%
Shareholders' equity		121,087		$	114,923		$	106,601				6,164		5	%		14,486		14	%		11	%	10	%	9	%
Liabilities & Shareholders' Equity	$	1,158,410		$	1,124,295		$	1,181,975			$	34,115		3	%	$	(23,565	)	-2	%		100	%	100	%	100	%

INVESTMENT COMPOSITION & CONCENTRATIONS (unaudited)	Period Ended										Change from											% of Total
($ in 000s)
		Sep 30,			Jun 30,			Sep 30,				Jun 30, 2024					Sep 30, 2023					Sep 30,		Jun 30,		Sep 30,
		2024			2024			2023				$		%			$		%			2024		2024		2023
Investment Securities
Collateralized mortgage obligations	$	141,842		$	125,937		$	126,376			$	15,905		13	%	$	15,466		12	%		48	%	45	%	45	%
Mortgage backed securities		41,264			37,159			38,322				4,105		11	%		2,942		8	%		14	%	13	%	13	%
U.S. Government and agency securities		68,961			72,504			82,292				(3,543	)	-5	%		(13,331	)	-16	%		23	%	27	%	27	%
Municipal securities		44,725			43,128			42,162				1,597		4	%		2,563		6	%		15	%	15	%	15	%
Investment Securities	$	296,792		$	278,728		$	289,152			$	18,064		6	%	$	7,640		3	%		100	%	100	%	100	%
Held to maturity securities	$	42,301		$	43,244		$	56,469			$	(943	)	-2	%	$	(14,168	)	-25	%		14	%	16	%	20	%
Available for sale securities	$	254,491		$	235,484		$	232,683			$	19,007		8	%	$	21,808		9	%		86	%	84	%	80	%
Government & Agency securities	$	252,039		$	235,570		$	246,956			$	16,469		7	%	$	5,083		2	%		85	%	85	%	85	%
AAA, AA, A rated securities	$	44,084		$	42,471		$	41,025			$	1,613		4	%	$	3,059		7	%		15	%	15	%	14	%
Non-rated securities	$	669		$	687		$	1,171			$	(18	)	-3	%	$	(502	)	-43	%		0	%	0	%	0	%
AFS Unrealized Gain (Loss)	$	(14,804	)	$	(21,978	)	$	(29,783	)		$	7,174		-33	%	$	14,979		-50	%		-5	%	-8	%	-10	%

PORTFOLIO LOAN COMPOSITION & CONCENTRATIONS (unaudited)	Period Ended										Change from											% of Total
($ in 000s)
		Sep 30,			Jun 30,			Sep 30,				Jun 30, 2024					Sep 30, 2023					Sep 30,		Jun 30,		Sep 30,
		2024			2024			2023				$		%			$		%			2024		2024		2023
Portfolio Loans
Commercial & agriculture	$	73,002		$	74,952		$	73,232			$	(1,950	)	-3	%	$	(230	)	0	%		10	%	11	%	11	%
Real estate:
Construction and development		46,569			47,856			42,584				(1,287	)	-3	%		3,985		9	%		7	%	7	%	6	%
Residential 1-4 family		105,298			105,807			90,449				(509	)	0	%		14,849		16	%		15	%	14	%	14	%
Multi-family		60,773			58,003			49,092				2,770		5	%		11,681		24	%		9	%	8	%	7	%
CRE -- owner occupied		167,086			169,491			164,057				(2,405	)	-1	%		3,029		2	%		24	%	24	%	25	%
CRE -- non owner occupied		157,347			157,591			154,993				(244	)	0	%		2,354		2	%		22	%	22	%	23	%
Farmland		26,553			27,195			27,641				(642	)	-2	%		(1,088	)	-4	%		4	%	4	%	4	%
Consumer		62,975			63,082			69,921				(107	)	0	%		(6,946	)	-10	%		9	%	10	%	10	%
Portfolio Loans		699,603			703,977			671,969				(4,374	)	-1	%		27,634		4	%		100	%	100	%	100	%
Less: ACL		(8,897	)		(8,859	)		(8,347	)
Less: deferred fees		(629	)		(655	)		(835	)
Net loans	$	690,077		$	694,463		$	662,787
Regulatory Commercial Real Estate	$	261,292		$	260,068		$	244,277			$	1,224		0	%	$	17,015		7	%		37	%	37	%	36	%
Total Risk Based Capital(1)	$	140,971		$	140,176		$	137,473			$	795		1	%	$	3,498		3	%
CRE to Risk Based Capital(1)		185	%		186	%		178	%					-1	%				7	%

CRE--MULTI-FAMILY & NON OWNER OCCUPIED COMPOSITION (unaudited)	Period Ended							Change from											% of Total
($ in 000s)
		Sep 30,		Jun 30,		Sep 30,			Jun 30, 2024					Sep 30, 2023					Sep 30,		Jun 30,		Sep 30,
		2024		2024		2023			$		%			$		%			2024		2024		2023
Collateral Composition(2)
Multifamily	$	63,099	$	63,243	$	54,677		$	(144	)	0	%	$	8,422		15	%		27	%	27	%	26	%
Retail		37,685		36,074		28,657			1,611		4	%		9,028		32	%		16	%	16	%	13	%
Hospitality		30,844		30,248		32,190			596		2	%		(1,346	)	-4	%		13	%	13	%	15	%
Mini Storage		25,758		23,619		20,977			2,139		9	%		4,781		23	%		11	%	11	%	10	%
Office		22,921		23,266		27,075			(345	)	-1	%		(4,154	)	-15	%		10	%	10	%	13	%
Mixed Use		22,708		23,520		22,457			(812	)	-3	%		251		1	%		10	%	10	%	11	%
Industrial		13,912		13,691		10,898			221		2	%		3,014		28	%		6	%	6	%	5	%
Warehouse		7,582		7,631		6,204			(49	)	-1	%		1,378		22	%		3	%	3	%	3	%
Special Purpose		6,968		7,014		7,146			(46	)	-1	%		(178	)	-2	%		3	%	3	%	3	%
Other		3,174		3,213		3,380			(39	)	-1	%		(206	)	-6	%		1	%	1	%	1	%
Total	$	234,651	$	231,519	$	213,661		$	3,132		1	%	$	20,990		10	%		100	%	100	%	100	%
(1) Bank of the Pacific
(2) Includes loans in process of construction

CREDIT QUALITY (unaudited)	Period Ended										Change from
($ in 000s)		Sep 30,			Jun 30,			Sep 30,				Jun 30, 2024					Jun 30, 2024
		2024			2024			2023				$		%			$		%
Risk Rating Distribution
Pass	$	691,199		$	694,272		$	664,327			$	(3,073	)	0	%		26,872		4	%
Special Mention		4,789			4,731			1,626				58		1	%		3,163		195	%
Substandard		3,615			4,974			6,016				(1,359	)	-27	%		(2,401	)	-40	%
Portfolio Loans	$	699,603		$	703,977		$	671,969			$	(4,374	)	-1	%	$	27,634		4	%
Nonperforming Assets
Nonaccruing loans		1,138			1,370			1,219			$	(232	)	-17	%		(81	)	-7	%
Other real estate owned		-			-			-				-		0	%		-		0	%
Nonperforming Assets	$	1,138		$	1,370		$	1,219			$	(232	)	-17	%		(81	)	-7	%
Credit Metrics
Classified loans1 to portfolio loans		0.52	%		0.71	%		0.90	%			-0.19	%				-0.38	%
ACL to classified loans1		246.11	%		178.11	%		132.68	%			68.00	%				113.43	%
Loans past due 30+ days to portfolio loans2		0.03	%		0.04	%		0.25	%			-0.01	%				-0.22	%
Nonperforming assets to total assets		0.10	%		0.12	%		0.10	%			-0.02	%				0.00	%
Nonaccruing loans to portfolio loans		0.16	%		0.19	%		0.18	%			-0.03	%				-0.02	%
(1) Classified loans include loans rated substandard or worse and are defined as loans having a well-defined weakness or weaknesses related to the borrower's financial capacity or to pledged collateral that may jeopardize the repayment of the debt. They are characterized by the possibility that the Bank may sustain some loss if the deficiencies giving rise to the substandard classification are not corrected.
(2) Excludes non-accrual loans

DEPOSIT COMPOSITION & CONCENTRATIONS (unaudited)	Period Ended							Change from											% of Total
($ in 000s)
		Sep 30,		Jun 30,		Sep 30,			Jun 30, 2024					Sep 30, 2023					Sep 30,		Jun 30,		Sep 30,
		2024		2024		2023			$		%			$		%			2024		2024		2023
Deposits
Interest-bearing demand	$	183,337	$	179,278	$	208,091		$	4,059		2	%	$	(24,754	)	-12	%		18	%	19	%	20	%
Money market		192,185		180,727		179,367			11,458		6	%		12,818		7	%		19	%	18	%	17	%
Savings		117,131		121,851		138,981			(4,720	)	-4	%		(21,850	)	-16	%		12	%	12	%	13	%
Time deposits (CDs)		133,995		125,560		92,720			8,435		7	%		41,275		45	%		13	%	13	%	9	%
Total interest-bearing deposits		626,648		607,416		619,159			19,232		3	%		7,489		1	%		62	%	62	%	59	%
Non-interest bearing demand		384,825		378,211		432,097			6,614		2	%		(47,272	)	-11	%		38	%	38	%	41	%
Total deposits	$	1,011,473	$	985,627	$	1,051,256		$	25,846		3	%	$	(39,783	)	-4	%		100	%	100	%	100	%
Insured Deposits	$	636,725	$	632,923	$	666,308		$	3,802		1	%	$	(414,008	)	-62	%		63	%	64	%	63	%
Collateralized Deposits		122,448		118,966		152,960			3,482		3	%		(30,512	)	-20	%		12	%	12	%	15	%
Uninsured Deposits		252,300		233,738		231,988			18,562		8	%		404,737		174	%		25	%	24	%	22	%
Total Deposits	$	1,011,473	$	985,627	$	1,051,256		$	25,846		3	%	$	(39,783	)	-4	%		100	%	100	%	100	%
Consumer Deposits	$	458,097	$	458,249	$	466,877		$	(152	)	0	%	$	(8,780	)	-2	%		45	%	47	%	44	%
Business Deposits		420,845		398,719		429,443			22,126		6	%		(8,598	)	-2	%		42	%	40	%	41	%
Public Deposits		132,531		128,659		154,936			3,872		3	%		(22,405	)	-14	%		13	%	13	%	15	%
Total Deposits	$	1,011,473	$	985,627	$	1,051,256		$	25,846		3	%	$	(39,783	)	-4	%		100	%	100	%	100	%

NET INTEREST MARGIN (unaudited)	Quarter Ended										Change From											Nine Months Ended						Change
($ in 000s)
		Sep 30,			Jun 30,			Sep 30,				Jun 30, 2024					Sep 30, 2023					Sep 30,			Sep 30,
		2024			2024			2023				$		%			$		%			2024			2023				$		%
Average Interest Bearing Balances
Portfolio loans	$	697,904		$	699,404		$	665,300			$	(1,500	)	0	%	$	32,604		5	%	$	695,418		$	653,619			$	41,799		6	%
Loans held for sale	$	1,276		$	1,593		$	497			$	(317	)	-20	%	$	779		157	%	$	1,155		$	601			$	554		92	%
Investment securities	$	285,947		$	283,637		$	284,041			$	2,310		1	%	$	1,906		1	%	$	287,315		$	285,538			$	1,777		1	%
Interest-bearing cash	$	81,755		$	62,494		$	172,119			$	19,261		31	%	$	(90,364	)	-53	%	$	71,080		$	206,259			$	(135,179	)	-66	%
Total interest-earning assets	$	1,066,882		$	1,047,128		$	1,121,957			$	19,754		2	%	$	(55,075	)	-5	%	$	1,054,968		$	1,146,017			$	(91,049	)	-8	%
Non-interest bearing deposits	$	383,332		$	387,740		$	441,782			$	(4,408	)	-1	%	$	(58,450	)	-13	%	$	388,672		$	457,750			$	(69,078	)	-15	%
Interest-bearing deposits	$	615,388		$	596,121		$	619,183			$	19,267		3	%	$	(3,795	)	-1	%	$	600,694		$	628,978			$	(28,284	)	-4	%
Total Deposits	$	998,720		$	983,861		$	1,060,965			$	14,859		2	%	$	(62,245	)	-6	%	$	989,366		$	1,086,728			$	(97,362	)	-9	%
Borrowings	$	13,403		$	13,404		$	13,403			$	(1	)	0	%	$	-		0	%	$	13,403		$	13,401			$	2		0	%
Total interest-bearing liabilities	$	628,791		$	609,525		$	632,586			$	19,266		3	%	$	(3,795	)	-1	%	$	614,097		$	642,379			$	(28,282	)	-4	%
Yield / Cost $(1)
Portfolio loans	$	10,509		$	10,092		$	9,570			$	417		4	%	$	939		10	%	$	30,834		$	27,208			$	3,626		13	%
Loans held for sale	$	22		$	28		$	8			$	(6	)	-21	%	$	14		175	%	$	55		$	28			$	27		96	%
Investment securities	$	2,535		$	2,442		$	2,405			$	93		4	%	$	130		5	%	$	7,485		$	6,954			$	531		8	%
Interest-bearing cash	$	1,108		$	847		$	2,322			$	261		31	%	$	(1,214	)	-52	%	$	2,890		$	7,669			$	(4,779	)	-62	%
Total interest-earning assets	$	14,174		$	13,410		$	14,306			$	764		6	%	$	(132	)	-1	%	$	41,265		$	41,859			$	(594	)	-1	%
Interest-bearing deposits	$	2,684		$	2,358		$	1,716			$	326		14	%	$	968		56	%	$	7,033		$	3,437			$	3,596		105	%
Borrowings	$	243		$	242		$	246			$	1		0	%	$	(3	)	-1	%	$	727		$	682			$	45		7	%
Total interest-bearing liabilities	$	2,927		$	2,600		$	1,962			$	327		13	%	$	965		49	%	$	7,760		$	4,119			$	3,641		88	%
Net interest income	$	11,247		$	10,810		$	12,344			$	437		4	%		(1,097	)	-9	%	$	33,505		$	37,740			$	(4,235	)	-11	%
Yield / Cost %(1)
Yield on portfolio loans		5.99	%		5.80	%		5.71	%			0.19	%				0.28	%				5.92	%		5.57	%			0.35	%
Yield on investment securities		3.53	%		3.46	%		3.36	%			0.07	%				0.17	%				3.48	%		3.26	%			0.22	%
Yield on interest-bearing cash		5.39	%		5.46	%		5.35	%			-0.07	%				0.04	%				5.43	%		4.97	%			0.46	%
Cost of interest-bearing deposits		1.74	%		1.59	%		1.10	%			0.15	%				0.64	%				1.56	%		0.73	%			0.83	%
Cost of borrowings		7.21	%		7.26	%		7.28	%			-0.05	%				-0.07	%				7.25	%		6.80	%			0.45	%
Cost of deposits and borrowings		1.15	%		1.05	%		0.72	%			0.10	%				0.43	%				1.03	%		0.50	%			0.53	%
Yield on interest-earning assets		5.29	%		5.15	%		5.06	%			0.14	%				0.23	%				5.22	%		4.88	%			0.34	%
Cost of interest-bearing liabilities		1.85	%		1.72	%		1.23	%			0.13	%				0.62	%				1.69	%		0.86	%			0.83	%
Net interest spread		3.44	%		3.43	%		3.83	%			0.01	%				-0.39	%				3.53	%		4.02	%			-0.49	%
Net interest margin		4.19	%		4.15	%		4.37	%			0.04	%				-0.18	%				4.24	%		4.40	%			-0.16	%
(1) Tax-exempt income has been adjusted to a tax equivalent basis at a rate of 21%.

ALLOWANCE FOR CREDIT LOSSES (ACL) (unaudited)	Quarter Ended										Change From											Nine Months Ended						Change
($ in 000s)
		Sep 30,			Jun 30,			Sep 30,				Jun 30, 2024					Sep 30, 2023					Sep 30,			Sep 30,
		2024			2024			2023				$		%			$		%			2024			2023				$		%
Allowance for Credit Losses
Beginning of period balance	$	8,859		$	8,580		$	8,223			$	279		3	%	$	636		8	%	$	8,530		$	8,236			$	294		4	%
Impact of CECL Adoption (ASC 326)		-			-			-				-		-100	%		-		-100	%		-			(157	)			157		-100	%
Charge-offs		(5	)		(57	)		(126	)			52		-91	%		121		-96	%		(97	)		(259	)			162		-63	%
Recoveries		16			1			1				15		1500	%		15		1500	%		19			55				(36	)	-65	%
Net (charge-off) recovery		11			(56	)		(125	)			67		-120	%		136		-109	%		(78	)		(204	)			126		-62	%
Provision (benefit)		27			335			249				(308	)	-92	%		(222	)	-89	%		445			472				(27	)	-6	%
End of period balance	$	8,897		$	8,859		$	8,347			$	38		0	%	$	550		7	%	$	8,897		$	8,347			$	550		7	%
Net charge-off (recovery) to
average portfolio loans		-0.01	%		0.03	%		0.07	%			-0.04	%				-0.08	%				0.01	%		0.04	%			-0.03	%
ACL to portfolio loans		1.27	%		1.26	%		1.24	%			0.01	%				0.03	%				1.27	%		1.24	%			0.03	%
Allowance for unfunded loans
Beginning of period balance	$	617		$	648		$	754			$	(31	)	-5	%	$	(137	)	-18	%	$	698		$	203			$	495		244	%
Impact of CECL Adoption (ASC 326)		-			-			-				-		-100	%		-		-100	%		-			609				(609	)	-100	%
Provision (benefit)		(93	)		(31	)		(5	)			(62	)	200	%		(88	)	1760	%		(174	)		(63	)			(111	)	176	%
End of period balance	$	524		$	617		$	749			$	(93	)	-15	%	$	(225	)	-30	%	$	524		$	749			$	(225	)	-30	%

 

ABOUT PACIFIC FINANCIAL CORPORATION

Pacific Financial Corporation of Aberdeen, Washington, is the bank holding company for Bank of the Pacific, a state chartered and federally insured commercial bank. Bank of the Pacific offers banking products and services to small-to-medium sized businesses and professionals in western Washington and Oregon. At September 30, 2024, the Company had total assets of $1.16 billion and operated fifteen branches in the communities of Grays Harbor, Pacific, Thurston, Whatcom, Skagit, Clark and Wahkiakum counties in the State of Washington, and three branches in the communities of Clatsop and Clackamas counties in Oregon. The Company also operated loan production offices in the communities of Burlington, Washington and Salem, Oregon. Visit the Company’s website at www.bankofthepacific.com. Member FDIC.

Cautions Concerning Forward-Looking Statements
This press release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other laws, including all statements in this release that are not historical facts or that relate to future plans or events or projected results of Pacific Financial Corporation and its wholly-owned subsidiary, Bank of the Pacific. Such statements are based on information available at the time of communication and are based on current beliefs and expectations of the Company’s management and are subject to risks and uncertainties, many of which are beyond our control, which could cause actual events or results to differ materially from those projected, anticipated or implied, and could negatively impact the Company’s operating and stock price performance. These risks and uncertainties include various risks associated with growing the Bank and expanding the services it provides, development of new business lines and markets, competition in the marketplace, general economic conditions, changes in interest rates, extensive and evolving regulation of the banking industry, and many other risks. Any forward-looking statements in this communication are based on information at the time the statement is made. We undertake no obligation to update or revise any forward-looking statement. Readers of this release are cautioned not to put undue reliance on forward-looking statements.

CONTACTS:
DENISE PORTMANN, PRESIDENT & CEO
CARLA TUCKER, EVP & CFO
360.533.8873

FAQ

What was Pacific Financial Corp's (PFLC) earnings per share in Q3 2024?

Pacific Financial Corp reported earnings of $0.25 per diluted share in Q3 2024.

How much did PFLC's tangible book value per share increase in Q3 2024?

PFLC's tangible book value per share increased 6.6% during the quarter to $10.47.

What dividend did PFLC declare for Q3 2024?

PFLC declared a quarterly cash dividend of $0.14 per share, payable on November 22, 2024.

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

PFLC's net interest margin was 4.19% in Q3 2024, up from 4.15% in Q2 2024.