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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 ENDEDTWELVE 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 Quarter3rd Quarter2nd Quarter1st Quarter4th 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

Contacts:

Ron Green, President & Chief Executive Officer
ron.green@opbc.com
(541) 902-9800

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