Oregon Pacific Bancorp Announces Third Quarter Earnings Results

Florence, Ore., October 19, 2023 – Oregon Pacific Bancorp (ORPB), the holding company of Oregon Pacific Bank, today reported financial results for the third quarter ended, September 30, 2023.


  • Net income of $2.3 million; $0.33 per diluted share.
  • Return on average assets of 1.22%
  • Quarterly loan growth of $15.0 million or 2.93%.
  • Net interest margin increased to 3.74%

See full release with financial tables: SEPT-Statement-of-Condition-Q3-2023.pdf

Net income for the quarter ended September 30, 2023, was $2.3 million, or $0.33 per diluted share compared to $2.2 million or $0.31 per diluted share for the quarter ended June 30, 2023.  Core earnings remained strong, with net interest income expanding to $6.8 million, up from $6.7 million during the second quarter 2023.  The third quarter net interest margin increased to 3.74%, up from 3.72% in the second quarter 2023.  “We are pleased with the margin expansion experienced during the third quarter and strong loan production,” said Ron Green, President and Chief Executive Officer. “The higher interest rate environment has been challenging for many community banks, but Oregon Pacific has focused on relationship deposits, which enabled us to maintain strong financial performance and continue to serve our clients.” 

The Bank’s cost of funds moved to 0.86% during the third quarter, compared to 0.78% during the second quarter, resulting in an increase in interest expense of $174 thousand during the quarter. The Bank experienced quarterly deposit contraction totaling $7.8 million compared to deposit totals at June 30, 2023. During the third quarter a large client continued to utilize excess cash to fund a large construction project, with funding beginning in the second quarter 2023 and expecting to continue into fourth quarter.  Third quarter funding totaled $7.2 million and is anticipated to draw on an additional $3 million of deposits into the fourth quarter. The Bank experienced a reduction in the savings and money market deposit totals, which decreased by a total of $19.2 million during the third quarter, primarily tied to clients seeking higher yields. A reduction in money market and savings deposits was partially offset by an increase in interest bearing and non-interest-bearing demand deposits of $6.2 million.  Additionally, the Bank saw certificates of deposit grow to $30.9 million, with clients looking to secure higher deposit rates. Disruption in the market due to a recent large merger has provided great opportunities for the transition of operating accounts looking for stable and available customer service. The Bank anticipates this activity will continue into the fourth quarter and 2024.   

Period-end loans, net of deferred loan origination fees, totaled $525.2 million, representing quarterly growth of $15 million, which is 2.9% or 11.7% annualized. The third quarter loan yield grew to 5.07%, representing an increase of 0.11% over the prior quarter as new loan production is occurring at a rate higher than the portfolio yield. Quarterly loan production for new and renewed loans totaled $39.5 million, with a weighted average effective rate of 7.38% and a weighted-average repricing life of 4.32 years.  During the quarter the Bank recorded a credit to the provision for loan losses totaling $123 thousand.  This was primarily tied to a reduction in the reserve for unfunded commitments.     

During the quarter the Bank saw a small increase in classified assets totaling $502 thousand. This increase was attributable to downgrades of two loans totaling $589 thousand, which was partially offset by the payoff of one relationship.  The downgrades represent two lending relationships, both of which are secured by commercial real estate. The Bank believes both relationships are adequately collateralized and does not currently recognize any impairment.   The Bank’s credit administration team continues to proactively work with lending staff to identify any possible credit stress, placing particular attention on the office sector. At September 30, 2023, commercial real estate loans classified as office loans totaled $78.3 million, with an average loan size of $850 thousand, with 31.7%, or $24.9 million classified as owner-occupied.  98.2% of the office portfolio is located within the state of Oregon.  The aggregate loan-to-value of the office portfolio was 45.4%. 

Noninterest income totaled $1.8 million during the third quarter 2023 and represented growth of $13 thousand over second quarter 2023.  The largest increase in non-interest income occurred in the Merchant card services category which grew $40 thousand over the prior quarter. This fluctuation is typical of seasonal merchant activity as many Florence-based merchant clients experience an increase in tourism during the summer. Offsetting that growth was a quarterly reduction in trust income of $95 thousand. The Bank’s trust department experienced a small reduction in assets under management (AUM) of $3.6 million or 1.62% during the third quarter.  The trust business includes terminating trusts which occur typically after the death of the grantor, and assets are distributed to beneficiaries over a period of 12 to 24 months.  This can cause occasional reductions in AUM due to the temporary nature of some trust assets. 

Noninterest expense for the third quarter 2023 totaled $5.6 million, representing an increase of $133 thousand over the quarter ended June 30, 2023.  The largest expense fluctuation totaled $90 thousand and occurred in the outside services category. A portion of the increase was due to the one-time data conversion from the Bank’s prior loan imaging software to a new software, which totaled $38 thousand.  Salaries and benefits also increased during the quarter by $82 thousand.  This increase was attributable to two factors 1) growth in salary expense due to the hiring of operational staff for the Portland office and the full quarter of salary expense for the second quarter new hires, which grew $37 thousand and 2) a reduction in the number of new and renewed loans during the quarter which impacted the deferred loan origination costs, which are reflected as a credit to salary expense. The third quarter ASC 310-20 loan origination costs totaled $164 thousand, a reduction of $41 thousand from the prior quarter. These variances were partially offset by a reduction in advertising expense of $52 thousand as the bank discontinued its Money Matters television advertising, which was airing on loan KVAL news.        

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, investment yields, strategic focus, capital position, liquidity, credit quality, special asset liquidation, noninterest income, 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.