01/25/2019: Oregon Pacific Bank Announces 2018 Earnings
Florence, Ore., January 24, 2019 – Oregon Pacific Bancorp (ORPB) today reported financial results for the fourth quarter and year ended December 31, 2018.
Fourth Quarter 2018 Highlights
- Fourth quarter net income of $508 thousand – $0.07 per diluted share
- Quarterly loan growth of $22.4 million.
- Quarterly deposit growth of $6.5 million.
- Relocated the Eugene branch to 59 East 11th
- Annual net income of $2.6 million – $0.37 per diluted share
- Total Assets grew to $310 million, representing growth of 15.6% over the prior year
- Annual loan growth of $59.4 million, or 30.9%
- Annual deposit growth of $48.9 million, or 22.2%
- Annual return on average assets of 0.91%
- Tax Equivalent net interest margin of 4.17%
Oregon Pacific Bancorp and its wholly owned subsidiary Oregon Pacific Bank, reported annual net income of $2.6 million, or $0.37 per diluted share. This represents an increase of $1.2 million or 83% growth over 2017 net income of $1.4 million. “We are very proud of the many significant achievements that occurred during 2018,” said Ron Green, President and Chief Executive Officer. “We have a talented team focused on building client relationships and their hard work is reflected in our 2018 ending financial results.”
During the fourth quarter gross loans grew by $22.4 million and totaled $252.1 million at December 31, 2018. Fourth quarter loan growth marked the highest quarterly growth in Oregon Pacific’s history. On an annual basis loan growth totaled $59.4 million, representing an annual loan growth rate of 30.86%. Loan growth occurred across all loan types with the largest portion of the growth centered in non-owner occupied commercial real estate and commercial non-real estate loan categories. The Bank also saw quarterly growth in core deposits of $6.5 million and $48.9 million in growth for the year.
“We are proud of our outstanding team of bankers as they produced record loan and deposit growth during the year,” said Green. “We continue to focus on providing an exceptional client experience, which we believe will grow earning assets and drive future revenue. Our commitment continues to be that we strive to create value and success for our shareholders, clients, staff and the communities we serve.”
On an annual basis the Bank recognized interest income of $11.8 million representing an increase of $2.7 million over the prior year. The increase was due to growth in interest earning assets, coupled with increase in yield, which grew from 4.07% in 2017 to 4.46% in 2018. The Bank also experienced an increase in interest expense, which expanded from $579 thousand in 2017 to $788 thousand in 2018. During the same period the cost of interest-bearing liabilities moderately increased to 0.43% in 2018, up from 0.36% in 2017. Growth in the yield on interest earning assets more than outpaced the cost of interest-bearing liabilities and contributed to expansion of the tax equivalent margin to 4.17% in 2018, up from 3.81% in 2017.
During 2018 the Bank recognized provision for loan losses of $554 thousand, representing an increase of $282 thousand over the prior year. During the quarter the Bank recognized $256 thousand in provision for loan losses, representing an increase of $131 thousand over third quarter 2018. Provision expense for the fourth quarter 2018 was primarily attributable to loan growth as the Bank did not experience any material credit migration during the fourth quarter.
During 2018 the Bank’s noninterest income expanded to $4.8 million, an increase of $514 thousand or 11.97% over the prior year. The largest growth came from the Trust fee income category, with approximately $202 thousand of that growth attributable to refining our accrual accounting adjustments. Historically the Bank recognized Trust income on the cash basis, and migration to the accrual basis resulted in recognition of thirteen months of trust related revenue for 2018. This is a one-time adjustment and was substantially offset with similar “accrual basis” accounting adjustments in noninterest expense, primarily salaries and employee benefits and outside services. There was no significant impact to our net income as a result of these refinements to noninterest income and noninterest expense.
2018 noninterest expense totaled $11.9 million representing an increase of $2.1 million over the prior period. Increased expense was experienced across multiple categories with the largest portion related to employee salaries and benefits. During the year the Bank saw growth in staffing levels from 85 fulltime equivalent employees in December 2017 to 108 fulltime equivalent employees in December 2018. In addition to the increased staffing level, the Bank made several additional accrual accounting adjustments during the fourth quarter, which resulted in recognition of approximately $164 thousand of expense related to group insurance and salary expense and $30 thousand related to outside services.
In December the Bank relocated the Eugene office from its sixth-floor location within the Citizens Building to a full-service branch location located at 59 East 11th Avenue. Associated with the Eugene relocation was an increase in occupancy expense on a linked quarter basis of $108 thousand, primarily due to the write off of the remaining leasehold improvements for the prior office location.
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.
You can view more details about Oregon Pacific Bank’s 2018 Fourth Quarter Statement of Condition here.