Oregon Pacific Bancorp : 2021 – December 31st Statement of Condition

C

S C

December 31, 2021

Oregon Pacific Bank is a wholly owned subsidiary of Oregon Pacific Bancorp. Stock is traded over-the-counter on the OTCBB under symbol ORPB.

FOR IMMEDIATE RELEASE

Editorial Contact:

Ron Green, President & Chief Executive Officer [e-mail]│ [phone]

Oregon Pacific Bank Announces Fourth Quarter Earnings Results

Florence, Ore., January 20, 2022-Oregon Pacific Bancorp (ORPB), the holding company of Oregon Pacific Bank, today reported financial results for the fourth quarter ended December 31, 2021.

Highlights:

• Fourth quarter net income of $1.9 million; $0.27 per diluted share.
• Annual Non-PPP loan growth of $76.3 million or 24.47%
• Annual Deposit growth of $132.3 million or 27.21%
• Annual Trust assets under management growth of $40.2 million or 24.97%
• Annual Oregon Pacific Wealth Management assets under management growth of $47.3 million or 57.04%.

Net income for the fourth quarter was $1.9 million, or $0.27 per diluted share compared to $2.0 million, or $0.30 per diluted share for the quarter ended December 31, 2020. On an annual basis, the Bank recorded net income totaling $7.8 million, or $1.11 per diluted share compared to $4.4 million, or $0.62 per diluted share for the same period in 2020. The Bank continued to see Paycheck Protection Program (PPP) forgiveness payments processed during the fourth quarter, with the PPP fee income totaling $697 thousand for the fourth quarter 2021, compared to $1.1 million for the third quarter 2021. During the quarter the Bank saw outstanding PPP loans reduce to $10.0 million. As of December 31, 2021, the Bank had remaining unamortized PPP fee income of $347 thousand.

Period-endnon-PPP loans, net of deferred loan origination fees, totaled $388.2 million, representing quarterly net growth of $26.6. million and year-to-date net growth of $76.3 million or an annualized growth rate of 24.47%. The Bank continued to experience non-PPP loan demand, but pricing pressures remain strong. The fourth quarter effective yield on the non-PPP loan portfolio lowered to 4.47%, down from 4.49% in third quarter, primarily related to new production occurring at rates below the current effective yield of the portfolio.

"We are very proud of the many significant achievements that occurred during the year," said Ron Green, President and CEO. "We have a talented team that has remained focused on strategic growth and building future shareholder value."

During the quarter the Bank saw a small increase in classified assets totaling $600 thousand. This increase was attributable to downgrades of three loans totaling $1.9 million, which was partially offset by upgrades of five loans during the quarter and one charge off totaling $128 thousand on a commercial line of credit. The downgrades represent one lending relationship in the commercial construction industry. The Bank believes the relationship is adequately collateralized, and all loans are current as of December 31, 2021. The Bank's credit administration team continues to proactively work with lending staff to identify any possible credit stress.

Fourth quarter 2021 deposit growth slowed but totaled $5.7 million. The Bank also continues to maintain $102.9 million of additional off-balance sheet deposits in the InterFi Network's Insured Cash Sweep (ICS) and CDARS products. The off-balance sheet deposits remain a source of liquidity, with the ICS deposits available on-demand and the CDARs deposits had a maximum maturity of four weeks.

Prior to the end of the quarter, the Bank closed on the purchase of a 15,000 sq ft building in Eugene, with the primary objective of housing the Eugene-based administrative staff. The Bank continues to see additional staffing growth in Eugene and during second quarter 2021 the Bank leased additional temporary office space located at 1600 Valley River Drive. The new building will require improvements and has a targeted occupancy date of Q2 2023. Once the building is occupied, all administrative staff will relocate from the branch building at 59 E. 11th and the Bank will also vacate the temporary office space.

Fourth quarter 2021 noninterest income totaled $1.8 million, which represented an increase of $133 thousand from third quarter 2021 and an increase of $399 thousand over fourth quarter 2020. The increase in revenue is attributable to ancillary revenue through trust fee income, fee income from Oregon Pacific Wealth Management and mortgage loan sales income, which grew by $116 thousand, $35 thousand, and $25 thousand, respectively, over third quarter 2021. "The Bank's ancillary noninterest income sources exemplify our mission of creating value for all we serve," said Ron Green, President and CEO. "Our clients come to Oregon Pacific Bank for traditional banking needs, and that relationship can be leveraged into investment advisory, trust and mortgage services."

Noninterest expense in the fourth quarter totaled $4.3 million, up $146 thousand over the third quarter. The largest change occurred in the salaries and employee benefits category, which was primarily due to increased officer bonus accrual, tied to the Bank performance. The Bank also experienced an increase in the other operating expense category of $71 thousand, which was partially attributable to an increase in losses experienced due to check and debit card fraud.

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.

CONSOLIDATED BALANCE SHEETS

Unaudited (dollars in thousands)

	December 31,		September 30,		December 31,
ASSETS		2021			2021			2020
Cash and due from banks	$	8,643	$	10,496	$	7,785
Interest bearing deposits		143,192			186,565			86,570
Securities		123,076			82,398			37,805
Non PPP Loans, net of deferred fees and costs		388,187			361,573			311,883
PPP Loans, net of deferred fees and costs		9,968			30,073			79,081
Total Loans, net of deferred fees and costs		398,155			391,646			390,964
Allowance for loan losses		(5,905)			(6,026)			(5,791)
Premises and equipment, net		9,721			6,351			6,770
Bank owned life insurance		8,402			8,342			8,160
Deferred tax asset		1,270			1,111			943
Other assets		5,167			3,431			3,935
Total assets	$	691,721	$	684,314	$	537,141
LIABILITIES
Deposits
Demand - non-interest bearing	$	171,380	$	180,991	$	136,428
Demand - interest bearing		181,885			177,404			146,202
Money market		164,742			158,392			116,505
Savings		80,856			75,710			66,936
Certificates of deposit		19,816			20,453			20,272
Total deposits		618,679			612,950			486,343
Junior subordinated debenture		4,124			4,124			4,124
Subordinated debenture		14,528			14,492			-
Other liabilities		5,130			4,874			4,399
Total liabilities		642,461			636,440			494,866
STOCKHOLDERS' EQUITY
Common stock		20,904			20,866			20,745
Retained earnings		28,318			26,448			20,517
Accumulated other comprehensive
income, net of tax		38			560			1,013
Total stockholders' equity		49,260			47,874			42,275
Total liabilities &
stockholders' equity	$	691,721	$	684,314	$	537,141

	CONSOLIDATED STATEMENTS OF INCOME
Unaudited (dollars in thousands, except per share data)
			THREE MONTHS ENDED					TWELVE MONTHS ENDED
		December 31,	September 30,		December 31,			December 31,		December 31,
INTEREST INCOME			2021			2021			2020				2021			2020
Non-PPP loans	$	4,194	$	3,973	$	3,640	$	15,575	$	14,711
PPP loans			697			1,100			1,911				4,217			3,376
Securities			364			262			174				1,046			670
Other interest income			63			69			21				212			119
Total interest income			5,318			5,404			5,746				21,050			18,876
INTEREST EXPENSE
Deposits			115			119			129				450			667
Borrowed funds			185			34			31				280			146
Total interest expense			300			153			160				730			813
NET INTEREST INCOME			5,018			5,251			5,586				20,320			18,063
Provision for loan losses			-			-			-				-			2,178
Net interest income after
provision for loan losses			5,018			5,251			5,586				20,320			15,885
NONINTEREST INCOME
Trust fee income			819			703			635				3,029			2,401
Service charges			303			300			248				1,122			896
Mortgage loan sales			163			138			132				688			477
Investment sales commissions			20			29			37				118			190
Merchant card services			120			151			94				471			325
Oregon Pacific Wealth Management income			259			224			144				870			545
Other income			78			84			73				320			312
Total noninterest income			1,762			1,629			1,363				6,618			5,146
NONINTEREST EXPENSE
Salaries and employee benefits			2,383			2,305			2,342				9,362			8,608
Outside services			511			506			423				1,888			1,648
Occupancy & equipment			366			362			339				1,422			1,310
Trust expense			384			364			398				1,452			1,422
Loan and collection, OREO expense			40			30			91				135			413
Advertising			61			95			63				289			198
Supplies and postage			63			71			61				251			244
Other operating expenses			490			419			441				1,728			1,374
Total noninterest expense			4,298			4,152			4,158				16,527			15,217
Income before taxes			2,482			2,728			2,791				10,411			5,814
Provision for income taxes			612			686			713				2,610			1,461
NET INCOME	$	1,870	$	2,042	$	2,078	$	7,801	$	4,353