Pacific Financial Corp Earns $2.9 Million, or $0.28 per Diluted Share, for Third Quarter of 2022; Declares Quarterly Cash Dividend of $0.13 per Share

Rhea-AI Summary

Pacific Financial Corporation (OTCQX: PFLC) reported a net income of $2.9 million or $0.28 per diluted share for Q3 2022, marking an 82% increase from Q2 2022. Year-to-date income totaled $6.2 million or $0.59 per share, down from $10.6 million in the previous year. The board declared a quarterly cash dividend of $0.13 per share, payable on November 25, 2022. Highlights include a 23% increase in net interest income, strong deposit growth, and minimal nonperforming assets at 0.07% of total assets. However, tangible book value per share decreased to $8.16 from $10.02 a year ago.

Positive

• Net income increased 82% quarter-over-quarter.
• Quarterly cash dividend of $0.13 per share declared.
• Net interest income rose 23%, indicating strong revenue generation.
• Non-interest bearing deposits grew 8% linked quarter and 9% year-over-year.

Negative

• Year-to-date net income decreased 42% compared to 2021.
• Tangible book value per share decreased to $8.16 from $10.02 year-over-year.
• Noninterest income fell significantly, down 59% year-to-date.

ABERDEEN, Wash., Oct. 27, 2022 (GLOBE NEWSWIRE) -- Pacific Financial Corporation (OTCQX: PFLC), (“Pacific Financial”) or the (“Company”), the holding company for Bank of the Pacific (the “Bank”), today reported net income of $2.9 million, or $0.28 per diluted share for the third quarter, compared to $1.6 million, or $0.15 per diluted share for the second quarter of 2022, and $2.6 million, or $0.25 per diluted share for the third quarter of 2021.   Second and third quarter results include zero provision for loan losses while third quarter of 2021 includes the recapture of provision for loan losses of $500,000. For the first nine months of 2022, net income was $6.2 million, or $0.59 per diluted share, compared to $10.6 million, or $1.01 per diluted share, for the first nine months of 2021. Net Income for the first nine months of 2022 include zero provision compared to a recapture of $3.5 million for the provision for loan losses in for the first nine months of 2021. All results are unaudited.

The board of directors of Pacific Financial declared a quarterly cash dividend of $0.13 per share on October 19, 2022. The dividend will be payable on November 25, 2022 to shareholders of record on November 11, 2022.

“We are very pleased with our third quarter operating results, with earnings up 82% on a linked quarter basis and up 12% from a year ago,” said Denise Portmann, President and Chief Executive Officer. “We benefitted from an increased net interest income, primarily as a result of rising interest rates and the Company’s asset sensitivity and strong core deposit base.  Deposit balances were higher with non-interest bearing deposits growing 8% from the linked quarter and increasing 9% year-over-year. Our cost of average interest bearing deposits continued to remain low, and our on-balance sheet liquidity and deposit mix should help mitigate rising deposit costs.”

“In light of our strong overall financial condition, including solid capital levels, outstanding asset quality metrics, solid operating performance, including the possibility of augmenting net interest income from probable further FOMC rate hikes, we believe we are well positioned to withstand the negative impacts associated with a likely weakened economic environment,” said Portmann. “In addition, our financial strength has allowed us to continue our regular cash dividend and provide shareholders with competitive returns on their investments while we continuing to execute upon our strategic plan.”

Third Quarter 2022 Financial Highlights

• Net interest income increased significantly reflecting a net interest margin expansion. Net interest income increased 23% to $10.9 million from the second quarter of 2022 and net interest margin (“NIM”) expanded 53 basis points to 3.42% from the linked quarter.
• Return on average assets (“ROAA”) was 0.86%, compared to 0.49% for the preceding quarter and 0.79% for the like quarter in 2021.
• Gross loans balances increased by $14.7 million to $621.5 million at September 30, 2022, compared to $608.9 from the preceding quarter.
• Total deposits continued to grow, increasing 4%, or $50.8 million, from the linked quarter. Non-interest bearing deposits grew 8% during the quarter and represent 43% of total deposits.
• Asset quality remained strong with delinquency ratio at 0.01% at September 30, 2022 as well as an ongoing low level of non-performing assets, loan charge-offs and loans on non-accrual.
• Tangible book value per share decreased $0.43 to $8.16 at September 30, 2022, compared to $8.59 at the preceding quarter end, and decreased $1.86 from $10.02 a year ago.
• Strong capital with capital ratios exceeding regulatory well-capitalized guidelines with a leverage ratio at 8.7% and total risk-based capital ratio at 17.4% as of quarter end.

Income Statement Review

Net interest income increased 23% to $10.9 million for the third quarter of 2022, compared to $8.8 million for the second quarter of 2022, and grew 22% from $8.9 million for the third quarter of 2021.   During the quarter, the recognition of deferred loan fee income from PPP loan repayments continued to decline with amortized PPP fees and interest totaling $4,000, $222,000 and $1.0 million, for the quarters ended September 30, 2022, June 30, 2022 and September 30, 2021, respectively.   The linked-quarter increase in net interest income was primarily due to rising interest rates resulting in increases in interest income from federal funds sold, investment securities and net loans of $1.5 million, $344,000 and $261,000, respectively. For the first nine months of 2022, net interest income was $28.0 million, compared to $27.1 million for the first nine months of 2021, with PPP interest and fees of $960,000 and $4.2 million, respectively. Year-over-year, the increase was primarily driven by higher interest rates resulting in an increase in interest income from federal funds sold/other interest bearing deposits and investment securities of $2.9 million and $1.5 million, respectively. “With likely continued FOMC interest rate increases, we expect further expansion of our net interest margin, with abundant on-sheet liquidity to mitigate rising deposits costs,” stated Carla Tucker, Executive Vice-President and Chief Financial Officer.

Net interest margin (“NIM”), was 3.42% for the third quarter of 2022, compared to 2.89% for the second quarter of 2022, and 2.86% for the third quarter of 2021. With the Company’s asset sensitive balance sheet, rising market interest rates increased yields on the Bank’s existing floating rate loans and investments plus federal funds sold, as well as positively impacted new loan production yields. Average loan yields excluding PPP loans, for the current quarter increased to 4.80% compared to the linked quarter of 4.57%, and 4.59% from the third quarter of 2021. Yields on investment securities also increased during the quarter to 2.33% compared to 1.96% for the second quarter 2022, and from 1.87% for the second quarter 2021.   Since 12/31/2020, investment securities have increased 109% or $136 million as a result of securities purchased both in 2021 and 2022. For the first nine months of 2022, the NIM was 3.01% compared to 3.08% for the first nine months of 2021, and excluding PPP loans increased to 2.92% from 2.83% in 2021. The Bank’s total cost of funds remained low at 0.10% for the current quarter, compared to 0.08% for the preceding quarter and 0.10% for the third quarter of 2021. As part of the cost of funds, $13.0 million in TRUPS repriced as market interest rates, including LIBOR, rose, resulting in the cost of borrowing rising 132 basis points and 332 basis points, respectively during the current quarter from the linked and year-over-year quarter, while cost of deposits declined slightly during the like time-periods.

Noninterest income was $1.7 million for the third quarter of 2022, compared to $1.9 million for the second quarter of 2022, and $4.0 million for the third quarter of 2021. For the first nine months of 2022, non-interest income totaled $5.7 million, compared to $13.7 million for the first nine months of 2021. The decrease in noninterest income for the first nine months of 2022 and for the current quarter compared to the preceding quarter and year-over-year was largely due to the decline in gain on sale of loans and other mortgage banking revenue. As expected, the rise in interest rates adversely impacted mortgage loan production during 2022, with home refinance activity accounting for only 19% of mortgage loan originations compared to 31% in the preceding quarter and 66% in the third quarter of 2021. Gain-on-sale of loans decreased $101,000 for the current quarter to $265,000 from the second quarter of 2022, and declined $1.3 million from $1.6 million for the third quarter a year ago.   For the first nine months of 2022 compared to the like period in 2021, gain on sale of loans decreased $6.7 million. Service charges on deposits were relatively flat on a linked quarter basis and increased 14% from a year ago. While still below pre-pandemic levels, NSF fees have continued to trend upwards during the year.

Noninterest expense was $9.0 million for the third quarter of 2022, compared to $8.8 million for the second quarter of 2022, and $10.4 million for the third quarter of 2021. The modest increase in noninterest expense on a linked quarter basis was primarily due to increased employee insurance benefit expenses while the decline in expenses from a year ago reflect reductions of mortgage salary and origination commissions that have decreased commensurate with lower mortgage loan originations and revenues. For the first nine months of the year, non-interest expenses declined 16% to $26.3 million, compared to $31.4 million for the first nine months of 2021, with the primary decline relating back to decreases in mortgage banking commission. In addition, most categories of expenses were down year-over-year as the Company continues to pro-actively monitor and manage expenses.

Federal and Oregon state income tax expense was $705,000 for the current quarter, and $310,000 for the preceding quarter, resulting in effective tax rates of 19.5% and 16.2%, respectively. These income tax expenses reflect the benefits of tax exempt income and an adjustment to deferred tax asset during the preceding quarter.  

Balance Sheet Review

Total Assets increased $47.4 million or 4% and $38.7 million or 3%, respectively, to $1.4 billion at September 30, 2022, from the preceding quarter and from a year ago. These increases were due primarily to the increase in total deposits during the like time periods. Interest bearing deposits balances and federal funds sold increased to $401.9 million from $369.0 million and $361.5 million, respectively from the preceding quarter and a year ago.

Investment Securities decreased 5% to $261.3 million at September 30, 2022, compared to $274.4 million at June 30, 2022 and grew 17% from $223.6 million at September 30, 2021. A majority of the decrease during the current quarter is related to increased unrealized losses on securities as a result of market interest rate increases, as well as by principal payments or other payoffs of $6.0 million. Investment purchases were minimal in the third quarter of 2022 at $1.5 million compared to earlier in the year and during 2021. For the first nine months of 2022, the Company purchased $74.4 million in investments at an average yield of 2.87%, at an adjusted duration of 3.5. These purchases along with the adjustments in yield for floating rate securities increased the average portfolio yield to 2.33% for the current quarter compared to 1.96% for the linked quarter and 1.87% for the like quarter a year ago. The average adjusted duration of the investment securities portfolio was 4.9 at September 30, 2022.

Gross loans balances increased 2% to $621.5 million during the current quarter compared to the prior quarter, while, excluding PPP loans, remained relatively unchanged from a year ago. Within the net increase during the current quarter, residential loans increased 25% or $16.1 million with a combination of organic growth and the purchase of $10 million in residential mortgage loans primarily within our current markets. In addition, commercial real estate and consumer loans increased $2.0 million and $2.3 million, respectively during the quarter. Total gross loan growth was partially offset by a $6.3 million decrease in commercial and agriculture loans. Due to the strength of our commercial customers and perhaps a cautious approach to spending given the level of economic uncertainty, commercial lines of credit utilization continues to be below pre-pandemic levels impacting commercial loan balances. Within the consumer loan category, loans to finance luxury and classic cars were $57.6 million at September 30, 2022, compared to $55.2 million at June 30, 2022 and $49.7 million at September 30, 2021. “We believe the strong loan production we’ve seen in 2022, the highest since 2017, will continue into 2023, with commercial assets in our metropolitan markets up an annualized 4.0% year-to-date. This is a result of the solid level of business development activity by our commercial teams, and provides momentum as we conclude 2022 and head into 2023. With interest rates rising above record lows, higher levels of pre-payments are expected to abate and this combined with continued strong loan production is expected to result in increased loan balances,” stated Walker Evans, Executive Vice-President and Chief Lending Officer.

Credit Quality remained strong as evidenced by our credit metrics. Nonperforming assets were at $989,000, or 0.07% of total assets at September 30, 2022, down from $1.4 million for the linked quarter, and down 50% from $2.0 million or 0.15% of total assets at September 30, 2021. In addition, balances related to non-impaired loans, graded watch or other loans especially mentioned, remained low and relatively steady at $31.5 million for the third quarter 2022, compared to $31.4 million at June 30, 2022, and increased slightly from $30.8 million at September 30, 2021.

These outstanding asset quality metrics reflect the company’s commitment to underwriting loans in a disciplined and conservative manner. “Our unwavering focus on sound loan underwriting has enabled us to once again report strong asset quality metrics. As our borrowers continue to operate in an economic environment full of challenges, including elevated levels of inflation, unfavorable labor market conditions, and ongoing supply chain issues, we remain committed to diligently monitoring our loan portfolio for any signals of deterioration and quickly implementing corrective measures to alleviate the impact of any identified credit weakness on our overall financials,” said Dan Kuenzi, Executive Vice-President and Chief Credit Officer.

The Allowance for Loan Losses (“ALL”) remained flat at $8.3 million, or 1.33% of gross loans (excluding PPP) at September 30, 2022, compared to $8.3 million, or 1.37% of gross loans, at June 30, 2022, while declining from $8.5 million, or 1.38%, at September 30, 2021.   Net charge-offs remained minimal and were $33,000 for the current quarter, compared to net recoveries of $6,000 for the second quarter 2022 and net charge-offs of $51,000 for the third quarter 2021. There was no loan loss provision for the second or third second quarters of 2022, compared to a recapture of $500,000 in the third quarter a year ago. There was no provision for loan losses in the first nine months of 2022, compared to a recapture of $3.5 million during for the first nine months of 2021.

Total Deposits for September 30, 2022 were $1.25 billion, an increase from the prior quarter end and from a year ago, of $50.8 million, or 4%, and $59.5 million, or 5%, respectively.  Noninterest-bearing deposits representing 43% of total deposits, grew by 8% from the linked quarter and increased 9% from a year ago and totaled $540.2 million at September 30, 2022, compared to $499.5 million and $493.6 million, respectively at June 30, 2022 and September 30, 2021. Term deposits represent only 4% of total deposits at quarter end.

Shareholder’s Equity was $98.3 million at September 30, 2022, down 4% from $102.8 million at June 30, 2022 and decreased 16% from $117.5 million at September 30, 2021, primarily as a result a decrease in accumulated other comprehensive income (AOCI) of $6.1 million following an increase in market interest rates during the quarter, which negatively impacted the fair value of our investment securities available for sale at September 30, 2022. AOCI has no effect on our regulatory capital ratios. The company’s tangible book value per share was also impacted by AOCI decreases and was $8.16 at September 30, 2022, compared to $8.59 at June 30, 2022, and $10.02 at September 30, 2021. The Company’s tangible common equity ratio was 6.2% at September 30, 2022, compared to 6.8% at June 30, 2022, and 7.9% at September 30, 2021. The Bank’s tangible common equity ratio was 7.2% at September 30, 2022, compared to 7.8% at June 30, 2022, and 8.9% at December 31, 2021.

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 8.7% and total risk-based capital ratio at 17.4% as of September 30, 2022.  

Balance Sheet Overview
(Unaudited)
			Sep 30, 2022			Jun 30, 2022			$ Change			% Change			Sep 30, 2021			$ Change			% Change
Assets:			(Dollars in thousands, except per share data)
	Cash on hand and in banks	$	29,361		$	16,434		$	12,927			79	%	$	20,003		$	9,358			47	%
	Interest bearing deposits		401,873			199,431			202,442			102	%		328,717			73,156			22	%
	Federal funds sold		-			169,597			(169,597	)		-100	%		32,796			(32,796	)		-100	%
	Investment securities		261,264			274,427			(13,163	)		-5	%		223,610			37,654			17	%
	Loans held-for-sale		700			2,477			(1,777	)		-72	%		15,903			(15,203	)		-96	%
	Loans, net of deferred fees		620,850			606,336			14,514			2	%		663,219			(42,369	)		-6	%
	Allowance for loan losses		(8,249	)		(8,282	)		33			0	%		(8,527	)		278			-3	%
	Net loans		612,601			598,054			14,547			2	%		654,692			(42,091	)		-6	%
	Federal Home Loan Bank and Pacific Coast Bankers' Bank stock, at cost		2,583			2,596			(13	)		-1	%		2,418			165			7	%
	Other assets		66,891			64,870			2,021			3	%		58,470			8,421			14	%
	Total assets	$	1,375,273		$	1,327,886		$	47,387			4	%	$	1,336,609		$	38,664			3	%
Liabilities and Shareholders' Equity:
	Total deposits	$	1,254,323		$	1,203,509		$	50,814			4	%	$	1,194,867		$	59,456			5	%
	Borrowings		13,403			13,731			(328	)		-2	%		13,844			(441	)		-3	%
	Accrued interest payable and other liabilities		9,267			7,892			1,375			17	%		10,408			(1,141	)		-11	%
	Shareholders' equity		98,280			102,754			(4,474	)		-4	%		117,490			(19,210	)		-16	%
	Total liabilities and shareholders' equity	$	1,375,273		$	1,327,886		$	47,387			4	%	$	1,336,609		$	38,664			3	%
Common Shares Outstanding			10,395,110			10,392,738			2,372			0	%		10,385,133			9,977			0	%
Book value per common share (1)		$	9.45		$	9.89		$	(0.44	)		-4	%	$	11.31		$	(1.86	)		-16	%
Tangible book value per common share (2)		$	8.16		$	8.59		$	(0.43	)		-5	%	$	10.02		$	(1.86	)		-19	%
Gross loans to deposits ratio			49.5	%		50.4	%		-0.9	%					55.5	%		-6.0	%
(1) Book value per common share is calculated as the total common shareholders' equity divided by the period ending number of common stock shares outstanding.
(2) Tangible book value per common 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 Overview
(Unaudited)
			For the Three Months Ended,
			Sep 30, 2022			Jun 30, 2022			$ Change			% Change			Sep 30, 2021			$ Change			% Change
			(Dollars in thousands, except per share data)
Interest and dividend income		$	11,177		$	9,097		$	2,080			23	%	$	9,188		$	1,989			22	%
Interest expense			298			253			45			18	%		284			14			5	%
	Net interest income		10,879			8,844			2,035			23	%		8,904			1,975			22	%
Loan loss provision			-			-			-			100	%		(500	)		500			-100	%
Noninterest income			1,692			1,864			(172	)		-9	%		3,951			(2,259	)		-57	%
Noninterest expense			8,950			8,800			150			2	%		10,375			(1,425	)		-14	%
Income before income taxes			3,621			1,908			1,713			90	%		2,980			641			22	%
Income tax expense			705			310			395			127	%		368			337			92	%
	Net Income	$	2,916		$	1,598		$	1,318			82	%	$	2,612		$	304			12	%
Average common shares outstanding - basic			10,393,705			10,392,738			967			0	%		10,405,340			(11,635	)		0	%
Average common shares outstanding - diluted			10,423,404			10,422,073			1,331			0	%		10,435,341			(11,937	)		0	%
Income per common share
	Basic	$	0.28		$	0.15		$	0.13			87	%	$	0.25		$	0.03			12	%
	Diluted	$	0.28		$	0.15		$	0.13			87	%	$	0.25		$	0.03			12	%
Effective tax rate			19.5	%		16.2	%		3.3	%					12.3	%		7.2	%
			For the Nine Months Ended,
			Sep 30, 2022			Sep 30, 2021			$ Change			% Change
			(Dollars in thousands, except per share data)
Interest and dividend income		$	28,800		$	28,118		$	682			2	%
Interest expense			789			995			(206	)		-21	%
	Net interest income		28,011			27,123			888			3	%
Loan loss provision			-			(3,500	)		3,500			-100	%
Noninterest income			5,668			13,732			(8,064	)		-59	%
Noninterest expense			26,326			31,377			(5,051	)		-16	%
Income before income taxes			7,353			12,978			(5,625	)		-43	%
Income tax expense			1,182			2,402			(1,220	)		-51	%
	Net Income	$	6,171		$	10,576		$	(4,405	)		-42	%
Average common shares outstanding - basic			10,392,325			10,422,089			(29,764	)		0	%
Average common shares outstanding - diluted			10,423,504			10,451,334			(27,830	)		0	%
Income per common share
	Basic	$	0.59		$	1.01		$	(0.42	)		-42	%
	Diluted	$	0.59		$	1.01		$	(0.42	)		-42	%
Effective tax rate			16.1	%		18.5	%		-2.4	%

 

Noninterest Income
(Unaudited)
			For the Three Months Ended,
			Sep 30, 2022		Jun 30, 2022			$ Change			% Change			Sep 30, 2021		$ Change			% Change
			(Dollars in thousands)
Service charges on deposits		$	415	$	420		$	(5	)		-1	%	$	365	$	50			14	%
Gain on sale of loans, net			265		366			(101	)		-28	%		1,562		(1,297	)		-83	%
Earnings on bank owned life insurance			167		170			(3	)		-2	%		1,003		(836	)		-83	%
Other noninterest income
	Fee income		841		909			(68	)		-7	%		995		(154	)		-15	%
	Other		4		(1	)		5			-500	%		26		(22	)		-85	%
Total noninterest income		$	1,692	$	1,864		$	(172	)		-9	%	$	3,951	$	(2,259	)		-57	%
			For the Nine Months Ended,
			Sep 30, 2022		Sep 30, 2021			$ Change			% Change
			(Dollars in thousands)
Service charges on deposits		$	1,217	$	1,059		$	158			15	%
Gain on sale of loans, net			1,309		7,980			(6,671	)		-84	%
Gain on sale of securities available for sale, net			-		-			-			0	%
Earnings on bank owned life insurance			521		1,255			(734	)		-58	%
Other noninterest income
	Fee income		2,616		3,376			(760	)		-23	%
	Other		5		62			(57	)		-92	%
Total noninterest income		$	5,668	$	13,732		$	(8,064	)		-59	%

 

 

Noninterest Expense
(Unaudited)
			For the Three Months Ended,
			Sep 30, 2022		Jun 30, 2022		$ Change			% Change			Sep 30, 2021		$ Change			% Change
			(Dollars in thousands)
Salaries and employee benefits		$	5,792	$	5,661	$	131			2	%	$	6,577	$	(785	)		-12	%
Occupancy			489		506		(17	)		-3	%		503		(14	)		-3	%
Equipment			289		311		(22	)		-7	%		315		(26	)		-8	%
Data processing			881		889		(8	)		-1	%		841		40			5	%
Professional services			154		195		(41	)		-21	%		251		(97	)		-39	%
State and local taxes			176		161		15			9	%		186		(10	)		-5	%
FDIC and State assessments			93		101		(8	)		-8	%		124		(31	)		-25	%
Other noninterest expense:
	Director fees		62		75		(13	)		-17	%		76		(14	)		-18	%
	Communication		60		68		(8	)		-12	%		69		(9	)		-13	%
	Advertising		95		118		(23	)		-19	%		31		64			206	%
	Professional liability insurance		67		63		4			6	%		60		7			12	%
	Amortization		45		46		(1	)		-2	%		48		(3	)		-6	%
	Other		747		606		141			23	%		1,294		(547	)		-42	%
Total noninterest expense		$	8,950	$	8,800	$	150			2	%	$	10,375	$	(1,425	)		-14	%
			For the Nine Months Ended,
			Sep 30, 2022		Sep 30, 2021		$ Change			% Change
			(Dollars in thousands)
Salaries and employee benefits		$	16,969	$	21,058	$	(4,089	)		-19	%
Occupancy			1,515		1,495		20			1	%
Equipment			887		949		(62	)		-7	%
Data processing			2,625		2,474		151			6	%
Professional services			551		781		(230	)		-29	%
State and local taxes			495		661		(166	)		-25	%
FDIC and State assessments			294		287		7			2	%
Other noninterest expense:
	Director fees		211		234		(23	)		-10	%
	Communication		195		212		(17	)		-8	%
	Advertising		238		119		119			100	%
	Professional liability insurance		189		179		10			6	%
	Amortization		138		264		(126	)		-48	%
	Other		2,019		2,664		(645	)		-24	%
Total noninterest expense		$	26,326	$	31,377	$	(5,051	)		-16	%

 

Financial Performance Overview
(Unaudited)
		For the Three Months Ended
		Sep 30, 2022			Jun 30, 2022			Change			Sep 30, 2021			Change
Performance Ratios
Return on average assets, annualized		0.86	%		0.49	%		0.37			0.79	%		0.07
Return on average equity, annualized		11.13	%		6.05	%		5.08			8.73	%		2.40
Efficiency ratio (1)		71.20	%		82.18	%		(10.98	)		80.71	%		(9.51	)
(1) Non-interest expense divided by net interest income plus noninterest income.
		For the Nine Months Ended,
		Sep 30, 2022			Sep 30, 2021			Change
Performance Ratios
Return on average assets, annualized		0.62	%		1.13	%		(0.51	)
Return on average equity, annualized		7.61	%		12.11	%		(4.50	)
Efficiency ratio (1)		78.17	%		76.80	%		1.37
(1) Non-interest expense divided by net interest income plus noninterest income.

 

LIQUIDITY

Cash and Cash Equivalents and Investment Securities
(Unaudited)
				Sep 30, 2022		% of Total			Jun 30, 2022		% of Total			$ Change			% Change			Sep 30, 2021		Total			$ Change			% Change
				(Dollars in thousands)
Cash on hand and in banks			$	29,361		4	%	$	16,434		2	%	$	12,927			79	%	$	20,003		3	%	$	9,358			47	%
Interest bearing deposits				398,123		57	%		196,181		30	%		201,942			103	%		325,467		54	%		72,656			22	%
Other interest earning deposits				3,750		1	%		3,250		0	%		500			15	%		3,250		1	%		500			15	%
Federal funds sold				-		0	%		169,597		26	%		(169,597	)		-100	%		32,796		5	%		(32,796	)		-100	%
	Total			431,234		62	%		385,462		58	%		45,772			12	%		381,516		63	%		49,718			13	%
Investment securities:
	Collateralized mortgage obligations			78,741		11	%		84,807		13	%		(6,066	)		-7	%		84,530		14	%		(5,789	)		-7	%
	Mortgage backed securities			33,415		5	%		35,017		5	%		(1,602	)		-5	%		16,013		3	%		17,402			109	%
	U.S. Government and agency securities			84,028		13	%		86,988		14	%		(2,960	)		-3	%		49,901		8	%		34,127			68	%
	Municipal securities			62,986		9	%		65,538		10	%		(2,552	)		-4	%		71,041		12	%		(8,055	)		-11	%
	Corporate debt securities			1,995		0	%		1,979		0	%		16			1	%		2,016		0	%		(21	)		-1	%
	Equity securities			99		0	%		98		0	%		1			1	%		109		0	%		(10	)		-9	%
		Total		261,264		38	%		274,427		42	%		(13,163	)		-5	%		223,610		37	%		37,654			17	%
Total cash equivalents and investment securities			$	692,498		100	%	$	659,889		100	%	$	32,609			5	%	$	605,126		100	%	$	87,372			14	%
Total cash equivalents and investment securities
	as a percent of total assets					50	%				50	%										45	%

 

LOANS 

	Loans by Category
	(Unaudited)
				Sep 30, 2022			% of Gross Loans			Jun 30, 2022			% of Gross Loans			$ Change			% Change			Sep 30, 2021			% of Gross Loans			$ Change			% Change
	Commercial:			(Dollars in thousands)
		Commercial and agricultural	$	73,788			12	%	$	80,041			13	%	$	(6,253	)		-8	%	$	88,828			13	%	$	(15,040	)		-17	%
		PPP		553			0	%		570			0	%		(17	)		-3	%		45,558			7	%		(45,005	)		-99	%
	Real estate:
	Construction and development			35,500			6	%		34,750			6	%		750			2	%		35,052			5	%		448			1	%
	Residential 1-4 family			79,497			13	%		63,377			10	%		16,120			25	%		66,771			10	%		12,726			19	%
	Multi-family			41,473			7	%		39,428			6	%		2,045			5	%		39,971			6	%		1,502			4	%
	Commercial real estate -- owner occupied			150,598			24	%		150,533			25	%		65			0	%		153,502			23	%		(2,904	)		-2	%
	Commercial real estate -- non owner occupied			149,627			24	%		149,093			25	%		534			0	%		153,641			23	%		(4,014	)		-3	%
	Farmland			25,140			4	%		26,051			5	%		(911	)		-3	%		25,140			4	%		-			0	%
	Consumer			65,365			10	%		63,047			10	%		2,318			4	%		57,112			9	%		8,253			14	%
		Gross Loans		621,541			100	%		606,890			100	%		14,651			2	%		665,575			100	%		(44,034	)		-7	%
		Less: allowance for loan losses		(8,249	)					(8,282	)					33						(8,527	)					278
		Less: deferred fees		(691	)					(554	)					(137	)					(2,356	)					1,665
		Net loans	$	612,601					$	598,054					$	14,547					$	654,692					$	(42,091	)
	Loan Concentration
	(Unaudited)
				Sep 30, 2022			% of Risk Based Capital			Jun 30, 2022			% of Risk Based Capital			Change			Sep 30, 2021			% of Risk Based Capital			Change
	Commercial:			(Dollars in thousands)
		Commercial and agricultural	$	73,788			58	%	$	80,041			64	%		-6	%	$	88,828			72	%		-14	%
		PPP		553			0	%		570			0	%		0	%		45,558			37	%		-37	%
	Real estate:
	Construction and development			35,500			28	%		34,750			28	%		0	%		35,052			28	%		0	%
	Residential 1-4 family			79,497			63	%		63,377			51	%		12	%		66,771			54	%		9	%
	Multi-family			41,473			33	%		39,428			32	%		1	%		39,971			32	%		1	%
	Commercial real estate -- owner occupied			150,598			119	%		150,533			121	%		-2	%		153,502			124	%		-5	%
	Commercial real estate -- non owner occupied			149,627			118	%		149,093			119	%		-1	%		153,641			124	%		-6	%
	Farmland			25,140			20	%		26,051			21	%		-1	%		25,140			20	%		0	%
	Consumer			65,365			52	%		63,047			51	%		1	%		57,112			46	%		6	%
		Gross Loans	$	621,541					$	606,890								$	665,575
	Regulatory Commercial Real Estate		$	224,100			177	%	$	220,881			177	%		0	%	$	214,212			173	%		4	%
	Total Risk Based Capital*		$	126,526					$	124,810								$	123,676
	*Bank of the Pacific

 

DEPOSITS

Deposits by Category
(Unaudited)
		Sep 30, 2022		% of Total			Jun 30, 2022		% of Total			$ Change			% Change			Sep 30, 2021		% of Total			$ Change			% Change
		(Dollars in thousands)
Interest-bearing demand	$	268,874		20	%	$	260,712		21	%	$	8,162			3	%	$	274,505		24	%	$	(5,631	)		-2	%
Money market		208,486		17	%		214,218		18	%		(5,732	)		-3	%		196,236		16	%		12,250			6	%
Savings		184,229		15	%		176,790		15	%		7,439			4	%		168,786		14	%		15,443			9	%
Time deposits (CDs)		52,550		4	%		52,241		4	%		309			1	%		61,786		5	%		(9,236	)		-15	%
Total interest-bearing deposits		714,139		57	%		703,961		58	%		10,178			1	%		701,313		59	%		12,826			2	%
Non-interest bearing demand		540,184		43	%		499,548		42	%		40,636			8	%		493,554		41	%		46,630			9	%
Total deposits	$	1,254,323		100	%	$	1,203,509		100	%	$	50,814			4	%	$	1,194,867		100	%	$	59,456			5	%

The following table summarizes the capital measures of the Company and the Bank respectively, at the dates listed below.

Capital Measures
(unaudited)
	Sep 30, 2022			Jun 30, 2022			Change			Sep 30, 2021			Change				Well Capitalized Under Prompt Correction Action Regulations
Pacific Financial Corporation
Total risk-based capital ratio	17.4	%		16.7	%		0.7			17.3	%		0.1				N/A
Tier 1 risk-based capital ratio	16.2	%		15.6	%		0.6			16.1	%		0.1				N/A
Common equity tier 1 ratio	14.4	%		13.9	%		0.5			14.2	%		0.2				N/A
Leverage ratio	8.7	%		8.9	%		(0.2	)		8.8	%		(0.1	)			N/A
Tangible common equity ratio	6.2	%		6.8	%		(0.6	)		7.9	%		(1.7	)			N/A
Bank of the Pacific
Total risk-based capital ratio	17.3	%		16.7	%		0.6			17.2	%		0.1				10.5%
Tier 1 risk-based capital ratio	16.2	%		15.6	%		0.6			16.0	%		0.2				8.5%
Common equity tier 1 ratio	16.2	%		15.6	%		0.6			16.0	%		0.2				7.0%
Leverage ratio	8.8	%		8.9	%		(0.1	)		8.7	%		0.1				7.5%

The following tables set forth information regarding average balances of interest-earning assets and interest-bearing liabilities and the resultant yields or cost, and the net interest margin on a tax equivalent basis. Loans held for sale and non-accrual loans are included in total loans.

Net Interest Margin
(Unaudited)
(Annualized, tax-equivalent basis)
			For the Three Months Ended,
			Sep 30, 2022			Jun 30, 2022			$ Change			% Change			Sep 30, 2021			$ Change			% Change
Average Balances			(Dollars in thousands)
Gross loans		$	610,146		$	607,332		$	2,814			0	%	$	670,061		$	(59,915	)		-9	%
Gross loans without PPP		$	609,587		$	604,824		$	4,763			1	%	$	613,090		$	(3,503	)		-1	%
Loans held for sale		$	1,448		$	2,561		$	(1,113	)		-43	%	$	23,270		$	(21,822	)		-94	%
Investment securities		$	274,773		$	259,643		$	15,130			6	%	$	188,997		$	85,776			45	%
Federal funds sold & interest bearing deposits in banks		$	387,437		$	372,181		$	15,256			4	%	$	363,327		$	24,110			7	%
Total interest-earning assets		$	1,273,804		$	1,241,717		$	32,087			3	%	$	1,245,655		$	28,149			2	%
Non-interest bearing demand deposits		$	521,119		$	492,912		$	28,207			6	%	$	483,479		$	37,640			8	%
Interest bearing deposits		$	702,476		$	694,671		$	7,805			1	%	$	685,650		$	16,826			2	%
Total Deposits		$	1,223,595		$	1,187,583		$	36,012			3	%	$	1,169,129		$	54,466			5	%
Borrowings		$	13,451		$	13,745		$	(294	)		-2	%	$	13,856		$	(405	)		-3	%
Total interest-bearing liabilities		$	715,927		$	708,416		$	7,511			1	%	$	699,506		$	16,421			2	%
Total Equity		$	103,945		$	105,922		$	(1,977	)		-2	%	$	118,744		$	(14,799	)		-12	%
			For the Three Months Ended,
			Sep 30, 2022			Jun 30, 2022			Change			Sep 30, 2021			Change
Yield on average gross loans (1)			4.80	%		4.70	%		0.10			4.82	%		(0.02	)
Yield on average gross loans without PPP (1)			4.80	%		4.57	%		0.23			4.59	%		0.21
Yield on average investment securities (1)			2.33	%		1.96	%		0.37			1.87	%		0.46
Yield on Fed funds sold & interest bearing deposits in banks			2.31	%		0.84	%		1.47			0.16	%		2.15
Cost of average interest bearing deposits			0.09	%		0.10	%		(0.01	)		0.13	%		(0.04	)
Cost of average borrowings			3.86	%		2.54	%		1.32			1.72	%		2.14
Cost of average total deposits and borrowings			0.10	%		0.08	%		0.02			0.10	%		-
Yield on average interest-earning assets			3.51	%		2.97	%		0.54			2.96	%		0.55
Cost of average interest-bearing liabilities			0.16	%		0.14	%		0.02			0.16	%		-
Net interest spread			3.35	%		2.83	%		0.52			2.80	%		0.55
Net interest spread without PPP			3.35	%		2.76	%		0.59			2.59	%		0.76
Net interest margin (1)			3.42	%		2.89	%		0.53			2.86	%		0.56
Net interest margin without PPP (1)			3.42	%		2.82	%		0.60			2.66	%		0.76
(1) Tax-exempt income has been adjusted to a tax equivalent basis at a rate of 21%.
			For the Nine Months Ended,
			Sep 30, 2022			Sep 30, 2021			$ Change			% Change
Average Balances			(Dollars in thousands)
Gross loans		$	612,922		$	701,181		$	(88,259	)		-13	%
Gross loans without PPP		$	606,157		$	616,163		$	(10,006	)		-2	%
Loans held for sale		$	2,551		$	26,222		$	(23,671	)		-90	%
Investment securities		$	258,953		$	154,587		$	104,366			68	%
Federal funds sold & interest bearing deposits in banks		$	382,835		$	307,014		$	75,821			25	%
Interest-earning assets		$	1,257,261		$	1,189,004		$	68,257			6	%
Non-interest bearing demand deposits		$	503,710		$	432,386		$	71,324			16	%
Interest bearing deposits		$	696,866		$	679,162		$	17,704			3	%
Total Deposits		$	1,200,576		$	1,111,548		$	89,028			8	%
Borrowings		$	13,656		$	13,891		$	(235	)		-2	%
Interest-bearing liabilities		$	710,522		$	693,053		$	17,469			3	%
Total Equity		$	108,467		$	116,760		$	(8,293	)		-7	%
			For the Nine Months Ended,
			Sep 30, 2022			Sep 30, 2021			Change
Net Interest Margin
Yield on average gross loans (1)			4.77	%		4.81	%		(0.04	)
Yield on average gross loans without PPP (1)			4.61	%		4.60	%		0.01
Yield on average investment securities (1)			2.02	%		2.11	%		(0.09	)
Yield on Fed funds sold & interest bearing deposits in banks			1.13	%		0.14	%		0.99
Cost of average interest bearing deposits			0.10	%		0.16	%		(0.06	)
Cost of average borrowings			2.75	%		1.76	%		0.99
Cost of average total deposits and borrowings			0.09	%		0.12	%		(0.03	)
Yield on average interest-earning assets			3.09	%		3.19	%		(0.10	)
Cost of average interest-bearing liabilities			0.15	%		0.19	%		(0.04	)
Net interest spread			2.94	%		3.00	%		(0.06	)
Net interest spread without PPP			2.86	%		2.76	%		0.10
Net interest margin (1)			3.01	%		3.08	%		(0.07	)
Net interest margin without PPP (1)			2.92	%		2.83	%		0.09
(1) Tax-exempt income has been adjusted to a tax equivalent basis at a rate of 21%.

 

Adversely Classified Loans and Securities
(Unaudited)
		Sep 30, 2022			Jun 30, 2022			$ Change			% Change			Sep 30, 2021			$ Change			% Change
		(Dollars in thousands)
Rated substandard or worse, but not impaired, beginning of three month period	$	7,100		$	8,122		$	(1,022	)		-13	%	$	8,038		$	(938	)		-12	%
Addition of previously classified pass graded loans		365			-			365			100	%		1,379			(1,014	)		-74	%
Upgrades to pass or other loans especially mentioned status		(4,536	)		(601	)		(3,935	)		655	%		(185	)		(4,351	)		2352	%
Moved to nonaccrual		-			(174	)		174			100	%		-			-			0	%
Principal payments, net		(115	)		(247	)		132			-53	%		(447	)		332			-74	%
Rated substandard or worse, but not impaired, end of three month period	$	2,814		$	7,100		$	(4,286	)		-60	%	$	8,785		$	(5,971	)		-68	%
Impaired		2,499			2,853			(354	)		-12	%		3,330			(831	)		-25	%
Total adversely classified loans¹	$	5,313		$	9,953		$	(4,640	)		-47	%	$	12,115		$	(6,802	)		-56	%
Other loans especially mentioned or watch, but not impaired	$	31,452		$	31,395		$	57			0	%	$	30,770		$	682			2	%
Gross loans (excluding deferred loan fees)	$	621,541		$	606,890		$	14,651			2	%	$	665,575		$	(44,034	)		-7	%
Adversely classified loans to gross loans		0.85	%		1.64	%								1.82	%
Adversely classified loans to gross loans without PPP		0.86	%		1.64	%								1.95	%
Allowance for loan losses	$	8,249		$	8,282		$	(33	)		0	%	$	8,527		$	(278	)		-3	%
Allowance for loan losses as a percentage of adversely classified loans		155.26	%		83.21	%								70.38	%
Allowance for loan losses to total impaired loans		330.09	%		290.29	%								256.07	%
Adversely classified loans to total assets		0.39	%		0.75	%								0.91	%
Delinquent loans to gross loans, not in nonaccrual status 2		0.01	%		0.09	%								0.02	%
Delinquent loans to gross loans without PPP, not in nonaccrual status		0.01	%		0.09	%								0.02	%
1 Adversely classified loans 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. Note that any loans
internally rated worse than substandard are included in the impaired loan totals.
2 Delinquent loans are defined as loans past due 30-90 days and still accruing

 

Nonperforming Assets
(Unaudited)
		Sep 30, 2022			Jun 30, 2022			$ Change			% Change			Sep 30, 2021			$ Change			% Change
		(Dollars in thousands)
Total nonaccrual loans, beginning of three month period	$	1,240		$	1,198		$	42			4	%	$	1,819		$	(579	)		-32	%
Transfer to performing loans		(334	)		-			(334	)		-100	%		-			(334	)		-100	%
Addition of nonaccrual loans		-			113			(113	)		-100	%		323			(323	)		-100	%
Moved to other assets owned		-			-			-			0	%		-			-			0	%
Principal payments, net		(7	)		(71	)		64			-90	%		(308	)		301			-98	%
Charge-offs, net		-			-			-			0	%		(34	)		34			-100	%
Total nonaccrual loans, end of three month period	$	899		$	1,240		$	(341	)		-28	%	$	1,800		$	(901	)		-50	%
Other real estate owned and foreclosed assets		90			122			(32	)		-26	%		194			(104	)		-54	%
Total nonperforming assets	$	989		$	1,362		$	(373	)		-27	%	$	1,994		$	(1,005	)		-50	%
Total restructured performing loans, beginning of period	$	1,614		$	1,623		$	(9	)		-1	%	$	1,538		$	76			5	%
Transfer to nonaccrual loans		-			-			-			0	%		-			-			0	%
Addition of restructured performing loans		-			-			-			0	%		-			-			0	%
Principal payments, net		(14	)		(9	)		(5	)		56	%		(7	)		(7	)		100	%
Charge-offs, net		-			-			-			0	%		-			-			0	%
Total restructured performing loans, end of period	$	1,600		$	1,614		$	(14	)		-1	%	$	1,531		$	69			5	%
Accruing loans past due 90 days or more	$	-		$	-		$	-			0	%	$	-		$	-			0	%
Percentage of nonperforming assets to total assets		0.07	%		0.10	%								0.15	%
Nonperforming loans to total loans		0.14	%		0.20	%								0.27	%
Nonperforming loans to total loans without PPP		0.14	%		0.20	%								0.29	%

 

Allowance for Loan Losses
(Unaudited)
		For the Three Months Ended,
		Sep 30, 2022			Jun 30, 2022			$ Change			% Change			Sep 30, 2021			$ Change			% Change
		(Dollars in thousands)
Gross loans outstanding at end of period	$	621,541		$	606,890		$	14,651			2	%	$	665,575		$	(44,034	)		-7	%
Average loans outstanding, gross	$	610,146		$	607,332		$	2,814			0	%	$	670,061		$	(59,915	)		-9	%
Allowance for loan losses, beginning of period	$	8,282		$	8,276		$	6			0	%	$	9,078		$	(796	)		-9	%
Commercial		-			-			-			0	%		(34	)		34			-100	%
Commercial Real Estate		-			-			-			0	%		-			-			0	%
Residential Real Estate		-			-			-			0	%		-			-			0	%
Consumer		(34	)		(17	)		(17	)		100	%		(21	)		(13	)		62	%
Total charge-offs		(34	)		(17	)		(17	)		100	%		(55	)		21			-38	%
Commercial		-			-			-			0	%		-			-			0	%
Commercial Real Estate		-			-			-			0	%		-			-			0	%
Residential Real Estate		-			-			-			0	%		-			-			0	%
Consumer		1			23			(22	)		-96	%		4			(3	)		-75	%
Total recoveries		1			23			(22	)		-96	%		4			(3	)		-75	%
Net recoveries/(charge-offs)		(33	)		6			(39	)		-650	%		(51	)		18			-35	%
Provision (benefit) to income		-			-			-			0	%		(500	)		500			-100	%
Allowance for loan losses, end of period	$	8,249		$	8,282		$	(33	)		0	%	$	8,527		$	(278	)		-3	%
Ratio of net loans charged-off to average
gross loans outstanding, annualized		0.02	%		0.00	%		0.02	%					0.03	%		-0.01	%
Ratio of net loans charged-off to average
gross loans outstanding without PPP, annualized		0.02	%		0.00	%		0.02	%					0.03	%		-0.01	%
Ratio of allowance for loan losses to
gross loans outstanding		1.33	%		1.36	%		-0.03	%					1.28	%		0.05	%
Ratio of allowance for loan losses to
gross loans without PPP outstanding		1.33	%		1.37	%		-0.04	%					1.38	%		-0.05	%
		For the Nine Months Ended,
		Sep 30, 2022			Sep 30, 2021			$ Change			% Change
		(Dollars in thousands)
Gross loans outstanding at end of period	$	621,541		$	665,575		$	(44,034	)		-7	%
Average loans outstanding, gross	$	612,922		$	701,181		$	(88,259	)		-13	%
Allowance for loan losses, beginning of period	$	8,297		$	12,068		$	(3,771	)		-31	%
Commercial		-			(34	)		34			-99	%
Commercial Real Estate		-			-			-			0	%
Residential Real Estate		-			-			-			0	%
Consumer		(76	)		(115	)		39			-34	%
Total charge-offs		(76	)		(149	)		73			-49	%
Commercial		-			42			(42	)		-100	%
Commercial Real Estate		-			-			-			0	%
Residential Real Estate		-			49			(49	)		-100	%
Consumer		28			17			11			65	%
Total recoveries		28			108			(80	)		-74	%
Net recoveries (charge-offs)		(48	)		(41	)		(7	)		17	%
Provision (benefit) to income		-			(3,500	)		3,500			-100	%
Allowance for loan losses, end of period	$	8,249		$	8,527		$	(278	)		-3	%
Ratio of net loans charged-off to average
gross loans outstanding, annualized		0.01	%		0.01	%		0.00	%
Ratio of net loans charged-off to average
gross loans outstanding without PPP, annualized		0.01	%		0.01	%		0.00	%
Ratio of allowance for loan losses to
gross loans outstanding		1.33	%		1.28	%		0.05	%
Ratio of allowance for loan losses to
gross loans without PPP outstanding		1.33	%		1.38	%		-0.05	%

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, 2022, the Company had total assets of $1.38 billion and operated fourteen branches in the communities of Grays Harbor, Pacific, Whatcom, Skagit, Clark and Wahkiakum counties in the State of Washington, and two branches in Clatsop County, Oregon. The Company also operated loan production offices in the communities of Burlington, Washington and Salem and Eugene, 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, including the COVID-19 pandemic and government responses thereto, 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 is the latest net income reported by Pacific Financial Corporation (PFLC)?

Pacific Financial Corporation reported a net income of $2.9 million or $0.28 per diluted share for Q3 2022.

When is the next dividend payment for PFLC shareholders?

The next cash dividend payment of $0.13 per share will be made on November 25, 2022, to shareholders of record on November 11, 2022.

How does PFLC's net interest income compare to previous quarters?

Net interest income increased by 23% in Q3 2022 compared to Q2 2022, indicating strong revenue generation.

What was PFLC's tangible book value per share at the end of Q3 2022?

The tangible book value per share decreased to $8.16 at September 30, 2022.

How much did PFLC's year-to-date net income decrease compared to the previous year?

Year-to-date net income for PFLC decreased by 42% compared to the same period in 2021.