Oregon Pacific Bank Announces First Quarter 2019 Earnings

FLORENCE, Ore.–(BUSINESS WIRE)–lt;a href="https://twitter.com/hashtag/BankLocal?src=hash" target="_blank"gt;#BankLocallt;/agt;–Oregon
Pacific Bancorp
(ORPB) today reported financial results for the
first quarter ended March 31, 2019.

First Quarter 2019 Highlights

  • First quarter net income of $400 thousand – $0.06 per diluted share
  • Quarterly loan growth of $7 million.
  • Quarterly deposit growth of $12.8 million.
  • Sale of the Bank’s only OREO property
  • Tax equivalent net interest margin of 4.26%

Oregon Pacific Bancorp, and its wholly owned subsidiary Oregon Pacific
Bank, reported quarterly net income of $400 thousand, or $0.06 per
diluted share. Included in the first quarter earnings was a $252
thousand loss on sale of other real estate as the Bank sold its last
remaining bank-owned real estate asset. Excluding the impact of the loss
on sale of other real estate, the Bank’s earnings would have been
approximately $595 thousand or $0.09 per share. This non-GAAP financial
metric is provided to show the impact of this one-time expense.

Non-GAAP income reconciliation:

  • GAAP Net Income: $400
  • Add: tax effected loss on sale of OREO: $195
  • Net income excluding loss on sale of OREO: $595

The Bank took possession of this other real estate property in March of
2015 and was incurring approximately $50 thousand of annual holding
costs. The property was aging, vacant and the high price point
translated to a potentially lengthy holding period and increased
maintenance expenses. After factoring in these considerations, the Bank
made the strategic decision to sell the property and incurred a loss on
sale. “We are very proud to resolve the Bank’s final pre-recession
nonperforming asset,” said Ron Green, President and Chief Executive
Officer. “The sale of this asset sets the Bank on the right path for
2019 and better prepares our balance sheet for any future softening in
the economy. Given the high-end nature of the property, it was an asset
we did not want to own in the event the real estate market experienced a
decline.”

During the first quarter the Bank continued to experience growth in both
deposits and loans. Period end deposits totaled $282.5 million
representing growth of $12.8 million over year end and an annualized
growth rate of 19.2%. Period end loans, net of deferred loan origination
fees, totaled $259.1 million representing quarterly growth of $7.1
million and an annualized growth rate of 11.4%. Growth continued across
all loan categories as the Bank continues to see diversified loan
production. “Our relationship management staff and administrative
support teams continue to deliver a high level of service to our
clients,” said Green. “I am very proud of everyone for the steady growth
the bank is experiencing.”

As of March 31, 2019, the allowance for loan losses as a percentage of
outstanding loans was 1.26%, equal to the 1.26% reported at December 31,
2018. For the period ended March 31, 2019, the Bank booked no provision
for loan losses as the Bank recorded a loan loss recovery of $84
thousand during the period. The loan loss recovery was sufficient to
fund the provision for the quarterly loan growth. Following the sale of
the Bank’s only other real estate property, nonperforming assets as a
percentage of total assets lowered to 0.41%, down from 0.82% as of
December 31, 2018.

The first quarter 2019 net interest margin averaged 4.26%, representing
a decrease of 5 basis points from the fourth quarter 2018 net interest
margin. The decrease in the linked-quarter net interest margin was
primarily due to an increase in the cost of interest-bearing liabilities
which grew from 0.51% in fourth quarter to 0.59% in first quarter 2019.
The Bank may continue to see pressure on the cost of interest-bearing
liabilities as market competition for deposits grows.

First quarter noninterest income was $1.0 million, down from $1.4
million in fourth quarter. Included in fourth quarter noninterest income
was an adjustment of $202 thousand attributable to refining the Bank’s
accrual accounting adjustments. The Bank also saw a decline in trust
revenue as the Bank experienced a swing due to the seasonality of
extraordinary fees associated with real estate sales and other
terminating trusts.

Noninterest expense in the first quarter totaled $3.6 million, which was
equal to the fourth quarter 2018 noninterest expense. The loss on sale
of other real estate totaling $252 thousand and outside services costs
associated with the annual financial statement audit offset a reduction
in salaries and benefits, occupancy and other operating expenses.

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’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’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.

Contacts

Ellen Huntingdon, 541-902-1509