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Oregon Pacific Bank Announces Fourth Quarter Earnings Results

Oregon Pacific Bancorp (ORPB), the holding company of Oregon Pacific Bank, today reported financial results for the fourth quarter ended December 31, 2021.

Highlights:

  • Fourth quarter net income of $1.9 million; $0.27 per diluted share.
  • Annual Non-PPP loan growth of $76.3 million or 24.47%
  • Annual Deposit growth of $132.3 million or 27.21%
  • Annual Trust assets under management growth of $40.2 million or 24.97%
  • Annual Oregon Pacific Wealth Management assets under management growth of $47.3 million or 57.04%.

Net income for the fourth quarter was $1.9 million, or $0.27 per diluted share compared to $2.0 million, or $0.30 per diluted share for the quarter ended December 31, 2020. On an annual basis, the Bank recorded net income totaling $7.8 million, or $1.11 per diluted share compared to $4.4 million, or $0.62 per diluted share for the same period in 2020. The Bank continued to see Paycheck Protection Program (PPP) forgiveness payments processed during the fourth quarter, with the PPP fee income totaling $697 thousand for the fourth quarter 2021, compared to $1.1 million for the third quarter 2021. During the quarter the Bank saw outstanding PPP loans reduce to $10.0 million. As of December 31, 2021, the Bank had remaining unamortized PPP fee income of $347 thousand.

Period-end non-PPP loans, net of deferred loan origination fees, totaled $388.2 million, representing quarterly net growth of $26.6. million and year-to-date net growth of $76.3 million or an annualized growth rate of 24.47%. The Bank continued to experience non-PPP loan demand, but pricing pressures remain strong. The fourth quarter effective yield on the non-PPP loan portfolio lowered to 4.47%, down from 4.49% in third quarter, primarily related to new production occurring at rates below the current effective yield of the portfolio.

“We are very proud of the many significant achievements that occurred during the year,” said Ron Green, President and CEO. “We have a talented team that has remained focused on strategic growth and building future shareholder value.”

During the quarter the Bank saw a small increase in classified assets totaling $600 thousand. This increase was attributable to downgrades of three loans totaling $1.9 million, which was partially offset by upgrades of five loans during the quarter and one charge off totaling $128 thousand on a commercial line of credit. The downgrades represent one lending relationship in the commercial construction industry. The Bank believes the relationship is adequately collateralized, and all loans are current as of December 31, 2021. The Bank’s credit administration team continues to proactively work with lending staff to identify any possible credit stress.

Fourth quarter 2021 deposit growth slowed but totaled $5.7 million. The Bank also continues to maintain $102.9 million of additional off-balance sheet deposits in the InterFi Network’s Insured Cash Sweep (ICS) and CDARS products. The off-balance sheet deposits remain a source of liquidity, with the ICS deposits available on-demand and the CDARs deposits had a maximum maturity of four weeks.

Prior to the end of the quarter, the Bank closed on the purchase of a 15,000 sq ft building in Eugene, with the primary objective of housing the Eugene-based administrative staff. The Bank continues to see additional staffing growth in Eugene and during second quarter 2021 the Bank leased additional temporary office space located at 1600 Valley River Drive. The new building will require improvements and has a targeted occupancy date of Q2 2023. Once the building is occupied, all administrative staff will relocate from the branch building at 59 E. 11th and the Bank will also vacate the temporary office space.

Fourth quarter 2021 noninterest income totaled $1.8 million, which represented an increase of $133 thousand from third quarter 2021 and an increase of $399 thousand over fourth quarter 2020. The increase in revenue is attributable to ancillary revenue through trust fee income, fee income from Oregon Pacific Wealth Management and mortgage loan sales income, which grew by $116 thousand, $35 thousand, and $25 thousand, respectively, over third quarter 2021. “The Bank’s ancillary noninterest income sources exemplify our mission of creating value for all we serve,” said Ron Green, President and CEO. “Our clients come to Oregon Pacific Bank for traditional banking needs, and that relationship can be leveraged into investment advisory, trust and mortgage services.”

Noninterest expense in the fourth quarter totaled $4.3 million, up $146 thousand over the third quarter. The largest change occurred in the salaries and employee benefits category, which was primarily due to increased officer bonus accrual, tied to the Bank performance. The Bank also experienced an increase in the other operating expense category of $71 thousand, which was partially attributable to an increase in losses experienced due to check and debit card fraud.

Forward-Looking Statement Safe Harbor

This release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”). These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as “anticipates,” “targets,” “expects,” “estimates,” “intends,” “plans,” “goals,” “believes” and other similar expressions or future or conditional verbs such as “will,” “should,” “would” and “could.” The forward-looking statements made represent Oregon Pacific Bank’s current estimates, projections, expectations, plans or forecasts of its future results and revenues, including but not limited to statements about performance, loan or deposit growth, loan prepayments, investment purchases, strategic focus, capital position, liquidity, credit quality, special asset liquidation, noninterest expense and credit quality trends. These statements are not guarantees of future results or performance and involve certain risks, uncertainties and assumptions that are difficult to predict and are often beyond Oregon Pacific Bank’s control. Actual outcomes and results may differ materially from those expressed in, or implied by, any of these forward-looking statements. You should not place undue reliance on any forward-looking statement and should consider all of the following uncertainties and risks. Oregon Pacific Bancorp undertakes no obligation to publicly revise or update any forward-looking statement to reflect the impact of events or circumstances that arise after the date of this release. This statement is included for the express purpose of invoking the PSLRA’s safe harbor provisions.

CONSOLIDATED BALANCE SHEETS
Unaudited (dollars in thousands)
 
 
December 31, September 30, December 31,

 

2021

 

 

2021

 

 

2020

 

ASSETS
Cash and due from banks

$

8,643

 

$

10,496

 

$

7,785

 

Interest bearing deposits

 

143,192

 

 

186,565

 

 

86,570

 

Securities

 

123,076

 

 

82,398

 

 

37,805

 

Non PPP Loans, net of deferred fees and costs

 

388,187

 

 

361,573

 

 

311,883

 

PPP Loans, net of deferred fees and costs

 

9,968

 

 

30,073

 

 

79,081

 

Total Loans, net of deferred fees and costs

 

398,155

 

 

391,646

 

 

390,964

 

Allowance for loan losses

 

(5,905

)

 

(6,026

)

 

(5,791

)

Premises and equipment, net

 

9,721

 

 

6,351

 

 

6,770

 

Bank owned life insurance

 

8,402

 

 

8,342

 

 

8,160

 

Deferred tax asset

 

1,270

 

 

1,111

 

 

943

 

Other assets

 

5,167

 

 

3,431

 

 

3,935

 

 
Total assets

$

691,721

 

$

684,314

 

$

537,141

 

 
 
LIABILITIES
Deposits
Demand - non-interest bearing

$

171,380

 

$

180,991

 

$

136,428

 

Demand - interest bearing

 

181,885

 

 

177,404

 

 

146,202

 

Money market

 

164,742

 

 

158,392

 

 

116,505

 

Savings

 

80,856

 

 

75,710

 

 

66,936

 

Certificates of deposit

 

19,816

 

 

20,453

 

 

20,272

 

Total deposits

 

618,679

 

 

612,950

 

 

486,343

 

 
Junior subordinated debenture

 

4,124

 

 

4,124

 

 

4,124

 

Subordinated debenture

 

14,528

 

 

14,492

 

 

-

 

Other liabilities

 

5,130

 

 

4,874

 

 

4,399

 

 
Total liabilities

 

642,461

 

 

636,440

 

 

494,866

 

 
STOCKHOLDERS' EQUITY
Common stock

 

20,904

 

 

20,866

 

 

20,745

 

Retained earnings

 

28,318

 

 

26,448

 

 

20,517

 

Accumulated other comprehensive
income, net of tax

 

38

 

 

560

 

 

1,013

 

 
Total stockholders' equity

 

49,260

 

 

47,874

 

 

42,275

 

 
Total liabilities & stockholders' equity

$

691,721

 

$

684,314

 

$

537,141

 

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,

 

2021

 

2021

 

2020

 

2021

 

2020

INTEREST INCOME
Non-PPP loans

$

4,194

$

3,973

$

3,640

$

15,575

$

14,711

PPP loans

 

697

 

1,100

 

1,911

 

4,217

 

3,376

Securities

 

364

 

262

 

174

 

1,046

 

670

Other interest income

 

63

 

69

 

21

 

212

 

119

Total interest income

 

5,318

 

5,404

 

5,746

 

21,050

 

18,876

 
INTEREST EXPENSE
Deposits

 

115

 

119

 

129

 

450

 

667

Borrowed funds

 

185

 

34

 

31

 

280

 

146

Total interest expense

 

300

 

153

 

160

 

730

 

813

 
NET INTEREST INCOME

 

5,018

 

5,251

 

5,586

 

20,320

 

18,063

Provision for loan losses

 

-

 

-

 

-

 

-

 

2,178

Net interest income after
provision for loan losses

 

5,018

 

5,251

 

5,586

 

20,320

 

15,885

 
NONINTEREST INCOME
Trust fee income

 

819

 

703

 

635

 

3,029

 

2,401

Service charges

 

303

 

300

 

248

 

1,122

 

896

Mortgage loan sales

 

163

 

138

 

132

 

688

 

477

Investment sales commissions

 

20

 

29

 

37

 

118

 

190

Merchant card services

 

120

 

151

 

94

 

471

 

325

Oregon Pacific Wealth Management income

 

259

 

224

 

144

 

870

 

545

Other income

 

78

 

84

 

73

 

320

 

312

Total noninterest income

 

1,762

 

1,629

 

1,363

 

6,618

 

5,146

 
NONINTEREST EXPENSE
Salaries and employee benefits

 

2,383

 

2,305

 

2,342

 

9,362

 

8,608

Outside services

 

511

 

506

 

423

 

1,888

 

1,648

Occupancy & equipment

 

366

 

362

 

339

 

1,422

 

1,310

Trust expense

 

384

 

364

 

398

 

1,452

 

1,422

Loan and collection, OREO expense

 

40

 

30

 

91

 

135

 

413

Advertising

 

61

 

95

 

63

 

289

 

198

Supplies and postage

 

63

 

71

 

61

 

251

 

244

Other operating expenses

 

490

 

419

 

441

 

1,728

 

1,374

Total noninterest expense

 

4,298

 

4,152

 

4,158

 

16,527

 

15,217

 
Income before taxes

 

2,482

 

2,728

 

2,791

 

10,411

 

5,814

Provision for income taxes

 

612

 

686

 

713

 

2,610

 

1,461

 
NET INCOME

$

1,870

$

2,042

$

2,078

$

7,801

$

4,353

 

Quarterly Highlights

4th Quarter 3rd Quarter 2nd Quarter 1st Quarter 4th Quarter

 

2021

 

 

2021

 

 

2021

 

 

2021

 

 

2020

 

 
Earnings
Net interest income

$

5,018

 

$

5,251

 

$

4,865

 

$

5,184

 

$

5,586

 

Provision for loan loss

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Noninterest income

 

1,762

 

 

1,629

 

 

1,812

 

 

1,414

 

 

1,363

 

Noninterest expense

 

4,298

 

 

4,152

 

 

4,105

 

 

3,969

 

 

4,158

 

Provision for income taxes

 

612

 

 

686

 

 

650

 

 

662

 

 

713

 

Net income

$

1,870

 

$

2,042

 

$

1,922

 

$

1,967

 

$

2,078

 

 
Average shares outstanding

 

7,042,478

 

 

7,042,478

 

 

7,041,041

 

 

7,022,759

 

 

7,008,125

 

Earnings per share

$

0.27

 

$

0.29

 

$

0.27

 

$

0.28

 

$

0.30

 

 
Performance Ratios
Return on average assets

 

1.09

%

 

1.22

%

 

1.17

%

 

1.38

%

 

1.52

%

Return on average equity

 

15.44

%

 

17.24

%

 

17.24

%

 

18.59

%

 

20.33

%

Net interest margin - tax equivalent

 

3.04

%

 

3.25

%

 

3.09

%

 

3.82

%

 

4.29

%

Yield on loans

 

4.99

%

 

5.11

%

 

4.78

%

 

5.14

%

 

5.37

%

Yield on loans - excluding PPP loans

 

4.47

%

 

4.49

%

 

4.63

%

 

4.63

%

 

4.69

%

Cost of deposits

 

0.07

%

 

0.08

%

 

0.08

%

 

0.08

%

 

0.10

%

Efficiency ratio

 

63.39

%

 

60.35

%

 

61.48

%

 

60.19

%

 

59.84

%

Full-time equivalent employees

 

118

 

 

116

 

 

114

 

 

116

 

 

116

 

 
Capital
Leverage ratio

 

9.73

%

 

9.70

%

 

7.45

%

 

8.18

%

 

8.33

%

Common equity tier 1 ratio

 

17.12

%

 

18.50

%

 

15.25

%

NA(1)

 

NA(1)

Tier 1 risk based ratio

 

17.12

%

 

18.50

%

 

15.25

%

NA(1)

 

NA(1)

Total risk based ratio

 

18.38

%

 

19.75

%

 

16.51

%

NA(1)

 

NA(1)

Book value per share

$

6.99

 

$

6.80

 

$

6.57

 

$

6.23

 

$

6.03

 

 
Asset quality
Allowance for loan losses (ALLL)

$

5,905

 

$

6,026

 

$

6,024

 

$

6,020

 

$

5,791

 

Nonperforming loans (NPLs)

$

928

 

$

1,388

 

$

1,517

 

$

1,558

 

$

2,521

 

Nonperforming assets (NPAs)

$

928

 

$

1,388

 

$

1,517

 

$

1,558

 

$

2,521

 

Classified Assets (2)

$

8,756

 

$

8,156

 

$

12,627

 

$

12,141

 

$

14,366

 

Net loan charge offs (recoveries)

$

122

 

$

(2

)

$

(3

)

$

(230

)

$

(9

)

ALLL as a percentage of net loans

 

1.48

%

 

1.54

%

 

1.54

%

 

1.50

%

 

1.48

%

ALLL as a percentage of net loans (excluding PPP)

 

1.52

%

 

1.67

%

 

1.79

%

 

1.87

%

 

1.86

%

ALLL as a percentage of NPLs

 

636.31

%

 

434.15

%

 

397.10

%

 

386.39

%

 

229.75

%

Net charge offs (recoveries) to average loans

 

0.03

%

 

0.00

%

 

0.00

%

 

-0.06

%

 

0.00

%

Net NPLs as a percentage of
total loans

 

0.24

%

 

0.35

%

 

0.39

%

 

0.39

%

 

0.64

%

Nonperforming assets as a percentage of total assets

 

0.13

%

 

0.20

%

 

0.23

%

 

0.24

%

 

0.47

%

Classified Asset Ratio (3)

 

17.78

%

 

17.04

%

 

27.30

%

 

27.67

%

 

33.98

%

Past due as a percentage of total loans

 

0.21

%

 

0.03

%

 

0.36

%

 

0.14

%

 

0.49

%

 
Off-balance sheet figures
Off-balance sheet demand deposits (4)

$

55,477

 

$

57,105

 

$

54,299

 

$

56,226

 

$

50,281

 

Off-balance sheet time deposits (5)

$

47,500

 

$

49,500

 

$

39,500

 

$

-

 

$

-

 

Unused credit commitments

$

83,778

 

$

86,816

 

$

83,807

 

$

82,458

 

$

83,982

 

 
End of period balances
Total securities and short
term deposits

$

266,268

 

$

268,963

 

$

247,475

 

$

211,989

 

$

124,375

 

Total loans net of allowance

$

392,250

 

$

385,620

 

$

384,076

 

$

395,176

 

$

385,173

 

Total earning assets

$

665,780

 

$

661,966

 

$

638,932

 

$

614,542

 

$

516,485

 

Total assets

$

691,721

 

$

684,314

 

$

663,683

 

$

637,009

 

$

537,141

 

Total noninterest bearing deposits

$

171,380

 

$

180,991

 

$

181,406

 

$

171,750

 

$

136,428

 

Total deposits

$

618,679

 

$

612,950

 

$

609,458

 

$

585,307

 

$

486,343

 

 
Average balances
Total securities and short
term deposits

$

268,332

 

$

250,185

 

$

239,921

 

$

150,214

 

$

109,006

 

Total loans net of allowance

$

383,161

 

$

388,212

 

$

389,766

 

$

397,195

 

$

405,796

 

Total earning assets

$

658,872

 

$

645,779

 

$

637,066

 

$

554,446

 

$

521,734

 

Total assets

$

682,779

 

$

666,455

 

$

659,644

 

$

576,991

 

$

543,422

 

Total noninterest bearing deposits

$

170,600

 

$

183,950

 

$

178,155

 

$

167,266

 

$

138,247

 

Total deposits

$

610,981

 

$

610,247

 

$

606,476

 

$

525,064

 

$

493,502

 

 
(1) Effective March 31, 2020 through March 31, 2021 Oregon Pacific Bank opted into the Community Bank Leverage Ratio and stopped calculating risked based capital ratios.
(2) Classified assets is defined as the sum of all loan-related contingent liabilities and loans internally graded substandard or worse, impaired loans (net of government guarantees), adversely classified securities, and other real estate owned.
(3) Classified asset ratio is defined as the sum of all loan-related contingent liabilities and loans internally graded substandard or worse, impaired loans (net of government guarantees), adversely classified securities, and other real estate owned, divided by bank Tier 1 capital, plus the allowance for loan losses.
(4) Deposits sold through IntraFi Network Deposits Insured Cash Sweep (ICS) program
(5) Deposits sold through IntraFi Network Deposits CDARs program

 

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