Oregon Pacific Bank Announces Third Quarter Earnings

Oregon Pacific Bancorp ORPB today reported financial results for the third quarter ended September 30, 2019.

Third Quarter 2019 Highlights

• Third quarter net income of $1.05 million - $0.15 per diluted share
• Quarterly deposit growth of $11.7 million
• Quarterly loan growth of $11.6 million
• Tax equivalent net interest margin of 4.19%
• Efficiency ratio of 67.7%

Oregon Pacific Bancorp, and its wholly owned subsidiary Oregon Pacific Bank, reported quarterly net income of $1.05 million, or $0.15 per diluted share. "We are pleased to share the Bank's financial results for the third quarter," said Ron Green, President and Chief Executive Officer, "the success of our loan and deposit growth was driven by our dedication to delivering a customized client experience."

During the third quarter the Bank continued to experience growth in both deposits and loans. Period end deposits totaled $316.2 million representing growth of $11.7 million over the prior quarter end and growth of $46.4 million over the prior year-end. Deposit growth experienced during the first nine months of 2019 is reflective of an annualized growth rate of 23.02%. The cost of interest-bearing deposits totaled 0.51% during the third quarter, which remained unchanged from the second quarter.

Period end loans, net of deferred loan origination fees, totaled $281.5 million representing growth of $11.6 million during the quarter and growth of $29.4 million from year-end. Loan growth experienced during the first nine months of 2019 is reflective of an annualized growth rate of 15.9%. Growth continued across most loan categories as the Bank continues to see diversified loan production.

For the quarter ended September 30, 2019, the Bank booked provision for loan losses totaling $95 thousand, which was primarily tied to loan growth as there was no significant credit migration occurring during the quarter.

The third quarter 2019 net interest margin of 4.19% represented a decrease of eleven basis points from the 4.30% earned during the second quarter 2019. The decrease in the linked-quarter net interest margin was primarily due to a decrease in loan yields, which dropped to 5.09% during the third quarter 2019, down from 5.12% in the second quarter 2019. The Bank also experienced a decrease in yield on federal funds sold and interest-bearing deposits which lowered to 2.18% during third quarter, down from 2.40% in second quarter 2019. This primarily affected the Bank's excess cash position held with the Federal Reserve, which is being maintained for liquidity purposes as the Bank's loan pipeline remains robust.

For the quarter ended September 30, 2019, noninterest income was $1.24 million, up from $1.21 million in the second quarter of 2019. The biggest increase in noninterest income was attributable to the Bank's registered investment advisory income (RIA), which is generated through a wholly-owned subsidiary Oregon Pacific Wealth Management LLC. "We are pleased to see the continued growth in our investment advisory income," said Jay Boelter, Executive Vice President and Director of Trust and Wealth Management. "Offering investment advisory services allows us to assist our clients in a broad manner and is a great compliment to our trust services." At September 30, 2019, Oregon Pacific Wealth Management saw Assets Under Management grow to $56.8 million, representing growth of $22.9 million since December 31, 2018.

Noninterest expense in the third quarter totaled $3.3 million, up $153 thousand from the second quarter of 2019. On a linked quarter basis, the Bank saw increases in salaries and benefits expense, primarily tied to additional staffing to support loan and deposit growth. The Bank also incurred an increase in loan and collection expense as one of the Bank's problem assets, an agricultural property, is requiring ongoing assistance from a receiver to support maintenance of the property. The Bank is continuing to work through issues associated with the liquidation, but the expense experienced during the third quarter is expected to be repeated during the fourth 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, 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 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.

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