Oregon Pacific Bank Announces First Quarter Earnings Results

FLORENCE, Ore.–(BUSINESS WIRE)–Oregon Pacific Bancorp (ORPB) today reported financial results for the first quarter ended March 31, 2021.

Highlights

• First quarter net income of $1.96 million; $0.28 per diluted share
• Quarterly gross PPP loan production of $46.2 million with $2.1 million in loan fees
• Quarterly deposit growth of $99.0 million, an annualized growth rate of 83.20%
• Quarterly non-PPP loan growth of $10.6 million, an annualized growth rate of 13.74%
• Tax equivalent first quarter net interest margin of 3.82%

Oregon Pacific Bancorp, and its wholly owned subsidiary Oregon Pacific Bank, reported quarterly net income of $1.96 million, or $0.28 per diluted share in the first quarter of 2021 compared to $642 thousand, or $0.09 per diluted share for the quarter ended March 31, 2020. First quarter net income was again elevated due to the processing of Paycheck Protection Program (PPP) forgiveness payments, which resulted in increased interest income due to amortization of the remaining loan origination fees at payoff. The Bank made no provision for loan losses during the first quarter as the Bank’s allowance for loan loss methodology indicated no provision was necessary based on current credit metrics.

“We are extremely proud of the first quarter performance as we continue to navigate the pandemic,” said Ron Green, President and CEO. “Our staff successfully onboarded a significant number of new deposit clients during the quarter. We believe this will contribute to managing the Bank’s future cost of funds and strengthen our enterprise value. We are also fortunate to see improvement in our credit metrics, and we will continue to be there for our clients as they work through the impacts of COVID-19 and any remaining economic uncertainty.”

During the quarter, deposit growth totaled $99.0 million, an annualized growth rate of 83.20%. On an annual basis, growth totaled $246.1 million, a 72.5% increase over March 31, 2020. Initially, the deposit growth experienced by the Bank closely mirrored the PPP loan totals, but during the first quarter deposit growth far exceeded the quarterly funding of new PPP loans. Management attributes growth to several factors: migration of new clients acquired through the first round PPP loans who experienced some delay in their account transition due to the pandemic, economic uncertainty leading to increased savings, and additional stimulus payments processed at the end of the quarter. The Bank still believes some of this deposit growth is temporary as some borrowers are delaying investment or capital purchases until the economy has fully recovered from the pandemic. The Bank continues to maintain funds in the InterFi Network Insured Cash Sweep (ICS) product. As of March 31, 2021, the one-way sell ICS deposits residing off-balance sheet totaled $44.0 million. The off-balance sheet deposits continue to remain a source of liquidity and can be moved back into a reciprocal position at any point.

In April 2020, the Small Business Administration (SBA) opened the Paycheck Protection Program (PPP), which enabled eligible businesses and non-profit agencies to receive loans with forgiveness provisions to support payroll and other eligible expenses during the COVID-19 crisis. The PPP loans also carry a 100% SBA guarantee. During the initial round, Oregon Pacific Bank funded 752 PPP loans, totaling $125.2 million. Through March 31, 2021, the Bank received forgiveness and borrower payments totaling $90.3 million, representing more than 70% of the first funding loans.

At the beginning of 2021, the Paycheck Protection Program was expanded to allow certain eligible borrowers that previously received a PPP loan to apply for a Second Draw PPP Loan. Through March 31, 2021, Oregon Pacific Bank funded an additional 332 PPP loans, totaling $46.2 million. The quarterly PPP loan production was almost fully offset by forgiveness payments received during the quarter. The…