Oregon Pacific Bank Announces Second Quarter Earnings Results

Florence, Ore., July 21, 2022 – Oregon Pacific Bancorp (ORPB), the holding company of Oregon Pacific Bank, today reported financial results for the second quarter ended June 30, 2022.


  • Final PPP forgiveness payments processed, bringing PPP loan balances to zero.    
  • Second quarter net income of $1.9 million; $0.27 per diluted share.
  • Quarterly non-PPP loan growth of $28.1 million.
  • Quarterly deposit growth of $6.3 million.
  • Quarterly tax equivalent net interest margin of 3.27%

View full financial tables: Web-JUN-Statement-of-Condition-Q2-2022.pdf (opbc.com)

Net income for the quarter ended June 30, 2022, was $1.9 million, or $0.27 per diluted share compared to $1.9 million, or $0.27 per diluted share for the quarter ended June 30, 2021. During the quarter the Bank saw a conclusion of the Paycheck Protection Program (PPP) forgiveness payments, recognizing $145 thousand in PPP fee and interest income during the second quarter. PPP income recognized during second quarter 2022 was down $816 thousand from the $961 thousand recognized in second quarter 2021, yet overall net income was comparable. 


“We are pleased to report the ending to our PPP loan program,” said Ron Green, President and CEO. “PPP loans provided much needed support to the business community during a tremendously uncertain time. While the forgiveness process is complete, we are proud of the lasting economic benefits our clients received because of the program.”


Period-end non-PPP loans, net of deferred loan origination fees, totaled $435.5 million, with quarterly growth of $28.1 million, and year-to-date growth of $47.3 million, which represented an annualized growth rate of 24.37%.  The Bank continued to experience non-PPP loan demand, but pricing pressures remain strong. The second quarter effective yield on the non-PPP loan portfolio lowered to 4.33%, down from 4.37% in first quarter.  During the second quarter a USDA guaranteed loan prepaid, which was purchased at a premium during 2017. This resulted in the expense of $47 thousand for the remaining purchase premium, which resulted in a reduction to interest income during the second quarter.  Without the prepayment, the effective yield on the non-PPP loan portfolio would have been 4.38%, an improvement of 0.01% over first quarter 2022.    


During the quarter the Bank saw a decrease in classified assets totaling $1.3 million, bringing the classified asset ratio to 6.68% as of June 30, 2022. This decrease was primarily attributable to upgrades of one loan relationship and payoffs of three additional loans.  Offsetting the upgrades and payoffs, the Bank migrated one relationship totaling $375 thousand, to nonaccrual status.  This was a single-family residential loan, which as of June 30, 2022, was well secured.   


Second quarter 2022 deposit growth slowed but totaled $6.3 million. The Bank maintained second quarter cost of funds totaling 0.07% and had not initiated any deposit rate increases.  The Bank also continues to maintain $121.6 million of additional off-balance sheet deposits in the IntraFi Network’s Insured Cash Sweep (ICS) product. In prior quarters the Bank maintained both time deposits and demand deposits in the IntraFi network due to capacity limitation imposed by the IntraFi Network.  During second quarter those limitations were eliminated, and the Bank migrated all off-balance sheet deposits into the ICS demand product. The off-balance sheet deposits remain a source of liquidity, with the ICS deposits available on demand.


During the second quarter the Bank continued to purchase investment securities with quarterly purchases totaling $19.4 million, with a weighted average maturity of 3.08 years and a weighted average yield of 3.11%. Securities purchases were offset by portfolio amortization and an increase in the unrealized loss on the securities portfolio.  The June 30, 2022, unrealized loss on the securities portfolio grew to $10.5 million or 5.8% of the portfolio book value.  Second quarter securities income totaled $828 thousand, an increase of $272 thousand from the $556 thousand recognized in the first quarter ended March 31, 2022. Several factors contributed to the increased earnings, including securities purchased during the quarter occurred at an effective rate higher than the overall portfolio yield and the increase in the yield on the variable rate securities tied to the prime rate. As of June 30, 2022, approximately $47.7 million of the securities portfolio is subject to monthly or quarter rate resets.   The Bank continues to plan for additional securities purchases during 2022, which will continue to enhance the net interest margin by shifting earnings assets from fed funds into higher yielding securities. 


Second quarter 2022 noninterest income totaled $1.8 million, which represented an increase of $136 thousand from the first quarter 2022. The increase occurred across all income categories except for mortgage loan sales. While higher interest rates have stopped most refinance activity, the Bank’s Florence community continues to see inward migration which provides opportunities for mortgage originations, but at a pace slower than 2021. The largest increase in noninterest income occurred in the other income category, which is primarily attributable to the income earned on the off-balance sheet portion of the IntraFi deposits, which totaled $80 thousand. This represents the difference between what IntraFi paid the bank for the deposits and what was passed to the depositors.  As interest rates push upward this source of non-interest income will likely decrease over time as the Bank will be forced to increase the interest amount paid to depositors. 


Noninterest expense in the second quarter 2022 totaled $4.5 million, down $43 thousand from first quarter 2022. The primary driver of the reduction came from the other operating expense category, with the difference primarily attributable to timing differences in business development expenses, including nonprofit event sponsorships and charitable donations, which totaled $22 thousand in second quarter, down from $57 thousand in the first quarter. 

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.