Le Lézard
Classified in: Business
Subject: EARNINGS

Oregon Pacific Bank Announces Fourth Quarter and Full Year Earnings Results


Oregon Pacific Bancorp (ORPB) today reported financial results for the fourth quarter and year ended December 31, 2019.

Highlights

Oregon Pacific Bancorp, and its wholly owned subsidiary Oregon Pacific Bank, reported quarterly net income of $1.05 million, or $0.15 per diluted share and annual net income of $3.5 million, or $0.50 per diluted share. "We are pleased to see our growth continue during the fourth quarter," said Ron Green, President and Chief Executive Officer, "with the strategic investments made before year end, we believe the Bank's growth will continue into 2020."

In November 2019 the Bank hired a small team of bankers for the Bank's Medford loan production office, headed by Tom Skinner and Dawn Hartley, both longtime Medford area bankers. The Bank has also completed the application process to convert the Medford loan production office into a full-service branch, which is currently awaiting regulatory approval anticipated sometime before the end of the first quarter. In addition, the Bank hired a new Chief Administrative Officer, Margaret Tibbets, to strengthen the Bank's operational executive oversight.

In the fourth quarter the Bank continued to experience growth in both loans and deposits. Period end loans, net of deferred loan origination fees, totaled $298.8 million representing growth of $17.4 million during the quarter and growth of $46.8 million from year end. Expansion continued across most loan categories as the Bank continues to see diversified loan production. Period end deposits totaled $318.0 million, representing growth of $1.9 million over the prior quarter end and growth of $48.3 million over the prior year end. Average deposits for the quarter, a metric that removes the daily volatility in balances, totaled $321.7 million. During the quarter the cost of interest-bearing deposits totaled 0.47%, down 0.04% from the third quarter.

"The significant growth in loans and deposits was primarily tied to an expansion in the Eugene market," said John Raleigh, Executive Vice President and Chief Lending Officer. "Since May of 2018 the Eugene market has seen $100 million in loan growth, paired with deposit growth of over $52 million. This success is a testament to the Eugene team and to the Bank as a whole."

For the quarter ended December 31, 2019, the Bank booked net loan loss recoveries of $78 thousand which resulted in a lower provision for loan losses totaling $30 thousand for the quarter. During the fourth quarter the Bank saw a slight increase in nonperforming assets which grew to $1.6 million, up from $1.5 million at the end of the third quarter. The additional loan added to the nonperforming asset totals is covered by an 80% government guarantee.

The fourth quarter 2019 net interest margin of 4.35% represented an increase of sixteen basis points from the 4.19% earned during the third quarter 2019. During the quarter the bank received a prepayment penalty totaling $103 thousand which contributed eleven basis points to the quarterly margin. Excluding the prepayment penalty, the fourth quarter net interest margin would have been 4.24%. Excluding the prepayment penalty, the linked quarter net interest margin increase of five basis points was due to a combination of an increase in the yield on loans, which grew to 5.11%, excluding the prepayment penalty, up from 5.09% in the third quarter 2019. The Bank also saw a decrease in the cost of interest-bearing liabilities which fell to 0.54%, down from 0.60% in the third quarter as the Bank made some targeted reduction in deposit rates.

For the quarter ended December 31, 2019, noninterest income was $1.26 million, up from $1.24 million in the third quarter of 2019. The biggest increase in noninterest income was attributable to the Bank's Trust Department, which saw an increase in extraordinary fee income, which is primarily related to real estate sales. On an annual basis noninterest income was $4.7 million, down from $4.8 million during 2018. Included in 2018 trust fee income was an additional $202 thousand due to a one-time accrual accounting adjustment.

Noninterest expense in the fourth quarter totaled $3.6 million, up $369 thousand from the third quarter of 2019. On a linked quarter basis, the Bank saw increases in salaries and employee benefits expense, primarily tied to the additional Medford staff. The Bank continued to incur loan and collection expense as one of the Bank's problem assets, an agricultural property, is requiring ongoing assistance from a receiver to support maintenance of the property. The Bank is continuing to work through issues associated with the liquidation.

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, strategic focus, capital position, liquidity, credit quality 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)
 
 

December 31,

 

September 30,

 

December 31,

 

2019

 

 

 

2019

 

 

 

2018

 

ASSETS
Cash and due from banks

$

4,982

 

$

8,224

 

$

5,516

 

Interest bearing deposits

 

17,511

 

 

29,475

 

 

9,540

 

Securities

 

27,601

 

 

27,152

 

 

26,806

 

Loans, net of deferred loan fees and costs

 

298,847

 

 

281,463

 

 

252,064

 

Allowance for loan losses

 

(3,592

)

 

(3,484

)

 

(3,180

)

Premises and equipment, net

 

7,042

 

 

7,092

 

 

6,777

 

Bank owned life insurance

 

7,066

 

 

7,010

 

 

6,836

 

Other real estate owned

 

-

 

 

-

 

 

1,224

 

Deferred tax asset

 

535

 

 

793

 

 

1,220

 

Other assets

 

4,196

 

 

2,633

 

 

2,729

 

 
Total assets

$

364,188

 

$

360,358

 

$

309,532

 

 
 
LIABILITIES
Deposits
Demand - non-interest bearing

$

73,771

 

$

78,230

 

$

70,217

 

Demand - interest bearing

 

106,242

 

 

98,698

 

 

83,169

 

Money market

 

71,027

 

 

70,197

 

 

49,583

 

Savings

 

48,398

 

 

50,320

 

 

48,955

 

Certificates of deposit

 

18,601

 

 

18,731

 

 

17,804

 

Total deposits

 

318,039

 

 

316,176

 

 

269,728

 

 
Subordinated debenture

 

4,124

 

 

4,124

 

 

4,124

 

Other liabilities

 

4,674

 

 

3,806

 

 

3,070

 

 
Total liabilities

 

326,837

 

 

324,106

 

 

276,922

 

 
STOCKHOLDERS' EQUITY
Common stock

 

20,663

 

 

20,655

 

 

20,634

 

Retained earnings

 

16,164

 

 

15,110

 

 

12,646

 

Accumulated other comprehensive income/(loss), net of tax

 

524

 

 

 

487

 

 

 

(670

)

 
Total stockholders' equity

 

37,351

 

 

36,252

 

 

32,610

 

 
Total liabilities & stockholders' equity

$

364,188

 

$

360,358

 

$

309,532

 

 
CONSOLIDATED STATEMENTS OF INCOME
Unaudited (dollars in thousands, except per share data)
THREE MONTHS ENDED TWELVE MONTHS ENDED

December 31,

September 30,

 

December 31,

 

 

December 31,

 

December 31,

 

2019

 

 

2019

 

 

2018

 

 

 

2019

 

 

2018

INTEREST INCOME
Loans

$

3,823

$

3,547

$

2,999

$

13,898

$

10,600

Securities

 

170

 

157

 

185

 

666

 

716

Other interest income

 

128

 

182

 

131

 

529

 

491

Total interest income

 

4,121

 

3,886

 

3,315

 

15,093

 

11,807

 
INTEREST EXPENSE
Deposits

 

291

 

302

 

186

 

1,120

 

573

Borrowed funds

 

51

 

53

 

52

 

217

 

215

Total interest expense

 

342

 

355

 

238

 

1,337

 

788

 
NET INTEREST INCOME

 

3,779

 

3,531

 

3,077

 

13,756

 

11,019

Provision for credit losses

 

30

 

95

 

256

 

235

 

554

Net interest income after provision for credit losses

 

3,749

 

 

3,436

 

 

2,821

 

 

 

13,521

 

 

10,465

 
NONINTEREST INCOME
Trust fee income

 

576

 

541

 

783

 

2,141

 

2,604

Service charges

 

229

 

236

 

217

 

903

 

848

Mortgage loan sales and servicing

 

145

 

132

 

115

 

498

 

409

Investment sales commissions

 

51

 

46

 

70

 

197

 

240

Merchant card services

 

67

 

88

 

60

 

273

 

235

RIA income

 

119

 

125

 

86

 

414

 

216

Other income

 

72

 

71

 

68

 

317

 

255

Total noninterest income

 

1,259

 

1,239

 

1,399

 

4,743

 

4,807

 
NONINTEREST EXPENSE
Salaries and employee benefits

 

1,942

 

1,819

 

1,867

 

7,276

 

6,178

Outside services

 

359

 

329

 

286

 

1,391

 

1,193

Occupancy & equipment

 

325

 

290

 

409

 

1,215

 

1,138

Trust expense

 

353

 

340

 

316

 

1,339

 

1,318

Loan and collection, OREO expense

 

211

 

113

 

126

 

712

 

349

Advertising

 

82

 

50

 

98

 

278

 

255

Supplies and postage

 

57

 

49

 

63

 

208

 

232

Other operating expenses

 

307

 

277

 

415

 

1,180

 

1,209

Total noninterest expense

 

3,636

 

3,267

 

3,580

 

13,599

 

11,872

 
Income before taxes

 

1,372

 

1,408

 

640

 

4,665

 

3,400

Provision for income taxes

 

318

 

363

 

132

 

1,147

 

796

 
NET INCOME

$

1,054

$

1,045

$

508

$

3,518

$

2,604

Quarterly Highlights

4th Quarter

 

3rd Quarter

 

2nd Quarter

 

1st Quarter

 

4th Quarter

 

2019

 

 

 

2019

 

 

 

2019

 

 

 

2019

 

 

 

2018

 

 
Earnings
Net interest income

$

3,779

 

$

3,531

 

$

3,383

 

$

3,062

 

$

3,077

 

Provision for loan loss

 

30

 

 

95

 

 

110

 

 

-

 

 

256

 

Noninterest income

 

1,259

 

 

1,239

 

 

1,209

 

 

1,035

 

 

1,399

 

Noninterest expense

 

3,636

 

 

3,267

 

 

3,114

 

 

3,580

 

 

3,580

 

Provision for income taxes

 

318

 

 

363

 

 

349

 

 

117

 

 

132

 

Net income

$

1,054

 

$

1,045

 

$

1,019

 

$

400

 

$

508

 

 
Average shares outstanding

 

6,975,084

 

 

6,975,084

 

 

6,973,431

 

 

6,972,584

 

 

6,972,584

 

Earnings per share

$

0.15

 

$

0.15

 

$

0.15

 

$

0.06

 

$

0.07

 

 
Performance Ratios
Return on average assets

 

1.14

%

 

1.16

%

 

1.21

%

 

0.52

%

 

0.66

%

Return on average equity

 

11.45

%

 

11.70

%

 

12.05

%

 

4.92

%

 

6.27

%

Net interest margin - tax equivalent

 

4.35

%

 

4.19

%

 

4.30

%

 

4.26

%

 

4.31

%

Efficiency ratio

 

72.19

%

 

68.49

%

 

67.77

%

 

67.81

%

 

87.38

%

Full-time equivalent employees

 

110

 

 

105

 

 

102

 

 

102

 

 

106

 

 
Capital
Tier I leverage ratio

 

11.13

%

 

11.12

%

 

11.44

%

 

11.97

%

 

12.11

%

Common equity tier 1 ratio

 

13.83

%

 

14.42

%

 

14.62

%

 

14.88

%

 

15.05

%

Tier I risk based ratio

 

13.83

%

 

14.42

%

 

14.62

%

 

14.88

%

 

15.05

%

Total risk based ratio

 

15.06

%

 

15.68

%

 

15.87

%

 

16.13

%

 

16.30

%

Book value per share

$

5.35

 

$

5.20

 

$

5.03

 

$

4.79

 

$

4.70

 

Cost of funds

 

0.54

%

 

0.60

%

 

0.60

%

 

0.59

%

 

0.48

%

 
Asset quality
Allowance for loan losses (ALLL)

$

3,592

 

$

3,484

 

$

3,380

 

$

3,264

 

$

3,180

 

Nonperforming loans (NPLs)

$

1,614

 

$

1,510

 

$

1,693

 

$

1,318

 

$

1,299

 

Nonperforming assets (NPAs)

$

1,614

 

$

1,510

 

$

1,693

 

$

1,318

 

$

2,523

 

Net loan charge offs (recoveries)

$

(78

)

$

(8

)

$

(7

)

$

(84

)

$

14

 

ALLL as a percentage of net loans

 

1.20

%

 

1.24

%

 

1.26

%

 

1.26

%

 

1.27

%

ALLL as a percentage of NPLs

 

222.55

%

 

230.73

%

 

199.65

%

 

247.65

%

 

244.80

%

Net (recoveries) charge offs to average loans

 

-0.03

%

 

0.00

%

 

0.00

%

 

-0.03

%

 

0.01

%

Net NPLs as a percentage of total loans

 

0.55

%

 

 

0.54

%

 

 

0.64

%

 

 

0.52

%

 

 

0.52

%

Nonperforming assets as a percentage of total assets

 

0.44

%

 

 

0.42

%

 

 

0.49

%

 

 

0.41

%

 

 

0.82

%

Classified Asset Ratio

 

17.60

%

 

15.80

%

 

14.99

%

 

15.46

%

 

11.62

%

Past due as a percentage of total loans

 

0.62

%

 

 

1.00

%

 

 

0.74

%

 

 

0.88

%

 

 

0.79

%

 
End of period balances
Total securities and short term deposits

$

45,112

 

$

56,627

 

$

56,932

 

$

41,694

 

$

36,346

 

Total loans net of allowance

$

295,255

 

$

277,979

 

$

266,437

 

$

255,868

 

$

248,884

 

Total earning assets

$

345,038

 

$

339,169

 

$

327,828

 

$

301,905

 

$

289,430

 

Total assets

$

364,188

 

$

360,358

 

$

347,191

 

$

322,958

 

$

309,532

 

Total noninterest bearing deposits

$

73,771

 

$

78,230

 

$

80,785

 

$

73,366

 

$

70,217

 

Total deposits

$

318,039

 

$

316,176

 

$

304,432

 

$

282,524

 

$

269,728

 

 
Average balances
Total securities and short term deposits

$

57,528

 

 

$

60,571

 

 

$

52,991

 

 

$

40,110

 

 

$

49,730

 

Total loans net of allowance

$

285,491

 

$

272,845

 

$

261,487

 

$

250,167

 

$

232,867

 

Total earning assets

$

347,646

 

$

337,903

 

$

318,838

 

$

294,537

 

$

286,587

 

Total assets

$

366,647

 

$

356,452

 

$

337,585

 

$

313,824

 

$

306,135

 

Total noninterest bearing deposits

$

74,489

 

$

78,817

 

$

77,694

 

$

69,258

 

$

71,229

 

Total deposits

$

321,687

 

$

312,530

 

$

295,451

 

$

273,364

 

$

266,286

 

 


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