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Highlights:
- First quarter net income of $1.7 million; $0.23 per diluted share.
- Quarterly tax equivalent net interest margin of 3.67%, expansion of 0.01% over prior quarter.
- Quarterly loan growth of $11.4 million or annualized 8.09%.
- Quarterly deposit growth of $18.7 million or annualized 11.24%.
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Florence, Ore., April 22, 2025 – Oregon Pacific Bancorp (ORPB), the holding company of Oregon Pacific Bank, today reported net income of $1.7 million, or $0.23 per diluted share, during the quarter ended March 31, 2025, compared to $2.2 million or $0.31 per diluted share for the quarter ended December 31, 2024.
“We are pleased to report strong performance in the first quarter,” said Ron Green, CEO of Oregon Pacific Bank. “Our focus and commitment have resulted in notable growth in both loans and deposits, showcasing the trust our clients have with Oregon Pacific Bank. As we navigate these challenging times, we remain dedicated to providing exceptional service and supporting the financial well-being of our community. We are additionally mindful of the potential risks that exist in the current environment and shareholder value remains a preeminent focus for the board of directors and management.”
Period-end deposits totaled $695.3 million, representing quarterly growth of $18.7 million, with growth primarily centered in non-interest bearing demand deposits. During the quarter the bank’s total cost of funds remained flat at 1.36%. Period-end loans, net of loan origination fees and costs grew to $582.9 million, representing quarterly growth of $11.4 million. Quarterly loan production for new and renewed loans totaled $32.7 million, with a weighted average effective rate of 6.79% and a weighted-average repricing life of 3.04 years. In addition to the loan and deposit growth the bank also experienced expansion in its linked quarter net interest margin, increasing to 3.67% in the first quarter of 2025, up from 3.66% reported in the fourth quarter of 2024. The small expansion was primarily attributable to a change in asset mix, as securities matured and transitioned into either loan growth or interest-bearing balances with the Federal Reserve.
During the first quarter of 2025, the bank reflected an increase in classified assets of $2.4 million, defined as loans and loan contingent liabilities internally graded substandard or worse, impaired loans, adversely classified securities and other real estate owned. The primary cause of the increase was the downgrade of two relationships, totaling $1.9 million and $500 thousand, respectively. The first relationship is comprised of a $1 million term loan and a $900 thousand line of credit, secured by owner occupied real estate with a combined loan to value of 48%. The borrower experienced a decline in financial performance but is working on a plan to increase profitability. The second relationship is an asset-backed line of credit that is adequately margined and secured by inventory. The borrowers experienced a decrease in financial performance but are seasoned owners who have weathered previous economic downturns, with no current losses anticipated.
Noninterest income totaled $2.1 million for the quarter ended March 31, 2025, and represented a small reduction of $12 thousand compared to the quarter ended December 31, 2024. On a linked quarter basis, the largest reduction occurred in Mortgage loan sales category, representing a decrease of $65 thousand from the prior quarter. During the quarter the bank continued to process the remaining mortgage applications, before the planned mortgage discontinuation in mid-2025. The reduction in mortgage fee income was offset by an increase in the trust fee income category, which grew $63 thousand from the prior quarter. This increase was partially attributable to extraordinary fee income, which is generally one-time fees associated with the sale of real estate, which totaled $209 thousand during the first quarter of 2025 compared to $16 thousand during the fourth quarter of 2024. The bank did experience a small reduction in traditional trust fee income, as assets under management contracted slightly during the quarter from $271 million at December 31, 2024, to $267 million at March 31, 2025. As the majority of trust fee income is calculated as a percentage of assets under management, fluctuations in the market values of the trust investments have the potential to impact trust revenue in future periods.
For the quarter ended March 31, 2025, noninterest expense totaled $6.7 million, representing an increase of $573 thousand from the quarter ended December 31, 2024. The largest expense fluctuation occurred in the salaries and employee benefits category, which grew $575 thousand from the prior quarter, accounting for all of the quarterly growth. Below is a summary of the quarterly salaries and benefits expense detail.
The largest quarterly increase was attributable to bonus compensation expense, which is tied to projected year end performance and is adjusted quarterly based on the forecasted achievement. The strong loan and deposit growth experienced during the first quarter 2025, coupled with a reduction in in the bonus accrual prior to the end of 2024, combined to reflect an increase of $233 thousand on a linked quarter basis. The bank also saw a large increase in employee benefits expenses, primarily attributable to an increase in the bank’s medical insurance, which increased $110 thousand over the prior quarter due to annual increases from the bank’s medical insurance provider. Lastly, the bank experienced a quarterly increase of $90 thousand in payroll tax expense. Payroll tax counters are generally reset on a calendar basis, so tax expense at the beginning of the year is typically higher, decreasing over the course of the year as employees reach wage caps.
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.
