ABERDEEN, Wash., April 28, 2023 (GLOBE NEWSWIRE) — Pacific Financial Corporation (OTCQX: PFLC), (“Pacific Financial”) or the (“Company”), the holding company for Bank of the Pacific (the “Bank”), reported net income of $4.1 million, or $0.39 per diluted share for the first quarter 2023, compared to $4.7 million, or $0.45 per diluted share for the fourth quarter of 2022, and $1.7 million, or $0.16 per diluted share for the first quarter of 2022. All results are unaudited.
The board of directors of Pacific Financial declared a quarterly cash dividend of $0.13 per share on April 26, 2023. The dividend will be payable on May 26, 2023 to shareholders of record on May 12, 2023.
“First quarter 2023 operating results of $4.1 million were driven by steady loan growth, higher net interest income and an improved net interest margin. Our net interest margin continued to benefit from rising short-term rates as yields on interest-earning bank deposits as well on variable rate loans and investments increased during the quarter, while our cost of funding increased at a slower pace,” said Denise Portmann, President and Chief Executive Officer.
“Our liquidity metrics remain robust with high levels of on-balance sheet interest earning cash and unencumbered available for sale securities. Additionally, our funds available to uninsured and uncollateralized deposits stands at 259%, and uninsured and uncollateralized deposits represent only 23% of total deposits,” said Portmann. “Although deposits have decreased during the quarter as experienced industry-wide, the Bank has a long history of strong core deposit funding. Our core deposit funding represents 94% of deposits with non-interest and interest-bearing demand deposits at 63% of total deposits,” Portmann stated.
"We continued to build on an already strong capital base during the quarter, while maintaining our $0.13 quarterly dividend, with the company’s leverage ratio at 9.9% and total risk-based capital ratio at 17.5%,” stated Portmann. “Together with our good earnings performance, robust liquidity metrics, strong core deposit base, solid loan growth and conservative risk practices, we have a solid foundation upon which to continue to grow our Company.”
First Quarter 2023 Financial Highlights
- Return on average assets (“ROAA”) was 1.33%, compared to 1.41% for the fourth quarter 2022, and 0.51% for the first quarter 2022.
- Return on average equity (“ROAE”) was 15.63%, compared to 18.70% from the preceding quarter, and 5.81% from the first quarter a year earlier.
- Net interest income increased 1%, or $162,000, to $13.1 million, compared to $12.9 million for the fourth quarter of 2022, and increased 58%, or $4.8 million, from $8.3 million from the first quarter a year ago.
- Net interest margin (“NIM”) improved 39 basis points to 4.51% compared to 4.12% from the preceding quarter and expanded 180 basis points from 2.71% in the first quarter a year ago.
- Gross loans balances increased $4.9 million, or 1%, to $645.6 million at March 31, 2023, compared to $640.7 from the preceding quarter end.
- Total deposits declined $70.0 million to $1.11 billion, compared to $1.18 billion from the fourth quarter 2022, with core deposits representing 94% of total deposits at March 31, 2023. Non-interest bearing deposits represented 43% of total deposits at March 31, 2023.
- Asset quality remains solid with nonperforming assets to total assets at 0.08%, compared to nonperforming assets to total assets at 0.07% for the preceding quarter.
- Tangible book value per common share increased to $9.16, compared to $8.62 at December 31, 2022 and $9.15 at March 31, 2022.
Liquidity
Liquidity metrics were robust with:
- Cash on hand or in banks of $238 million at March 31, 2023 compared to $302 million at December 31, 2022
- Coverage of short-term funds available to uninsured and uncollateralized deposits was 259% at March 31, 2023 compared to 222% at December 31, 2022.
- Uninsured or uncollateralized deposits were 23% of total deposits at March 31, 2023 compared to 26% as of December 31, 2022.
As shown below the Bank has established credit lines with borrowing capacity from the Federal Home Loan Bank of Des Moines (FHLB) and from the Federal Reserve Bank of San Francisco, both of which are subject to collateral requirements. In addition, the Bank has $60.0 million in unsecured borrowing capacity from various correspondent banks. There is no balance outstanding on any of these facilities.
| Liquidity | ||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||
| Mar 31, 2023 |
% of Deposits |
Dec 31, 2022 |
% of Deposits |
$ Change |
% Change |
Mar 31, 2022 |
% of Deposits |
$ Change |
% Change |
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| (Dollars in thousands) | ||||||||||||||||||||||||||||||
| Cash on hand and in banks | $ | 237,704 | 21 | % | $ | 302,178 | 26 | % | $ | (64,474 | ) | -21 | % | $ | 400,561 | 33 | % | $ | (162,857 | ) | -41 | % | ||||||||
| Unencumbered AFS Securities | 116,886 | 11 | % | 133,892 | 11 | % | (17,006 | ) | -13 | % | 125,622 | 11 | % | (8,736 | ) | -7 | % | |||||||||||||
| Secured lines of Credit (FHLB, FRB) | 318,179 | 29 | % | 253,387 | 21 | % | 64,792 | 26 | % | 236,019 | 20 | % | 82,160 | 35 | % | |||||||||||||||
| Total short-term funds available | $ | 672,769 | 61 | % | $ | 689,457 | 58 | % | $ | (16,688 | ) | -2 | % | $ | 762,202 | 64 | % | $ | (89,433 | ) | -12 | % | ||||||||
| Mar 31, 2023 |
Dec 31, 2022 |
Mar 31, 2022 |
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| Short-term funds available to uninsured/uncollateralized deposits | 259 | % | 222 | % | 250 | % | ||||||||||||||||||||||||
| Uninsured/uncollateralized deposits to total deposits | 23 | % | 26 | % | 25 | % | ||||||||||||||||||||||||
| Gross loans to deposits ratio | 57 | % | 54 | % | 51 | % | ||||||||||||||||||||||||
Income Statement Review
Net interest income increased 1% to $13.10 million for the first quarter of 2023, compared to $12.94 million for the fourth quarter of 2022, and grew 58% from $8.29 million for the first quarter of 2022.
Net interest margin (“NIM”), expanded 39 basis points to 4.51% for the first quarter of 2023, compared to 4.12% for the fourth quarter of 2022, and expanded 180 basis points from 2.71% for the first quarter of 2022. Average interest-earning asset yield was 4.72% for the current quarter, compared to 4.25% for the preceding quarter and 2.78% for the first quarter in 2022. The increase in average yields on interest-earning assets during the current quarter reflects the benefit of variable rate interest-earning assets repricing higher, as well as new loans being originated at higher interest rates. Average loan yields for the current quarter increased 27 basis points to 5.44% compared to the preceding quarter of 5.17%, and increased 99 basis points from 4.45% from the first quarter of 2022. Yields on investment securities also increased during the first quarter to 3.20%, compared to 2.81% for the fourth quarter 2022, and 1.72% for the first quarter a year ago. The recent hikes in interest rates had a positive impact on earning asset yields, including yields on interest-earning bank deposits. The yield on interest-bearing bank deposits increased 89 basis points to 4.61% for the current quarter, compared to 3.72% for the preceding quarter, and increased 441 basis points from 0.20% from the first quarter of 2022.
As expected, the Bank’s total cost of funds increased to 0.21% for the current quarter, compared to 0.14% for the preceding quarter and 0.08% for the first quarter of 2022. The increases are primarily a result of the increase in TRUPS borrowing costs as well as increased cost of funds on interest bearing deposits of 10 and 14 basis points from the preceding quarter and first quarter of 2022, respectively. As noted above, while the Bank’s cost of funds continued to remain low for the current quarter, we expect that rate increases put in place late in the quarter as well as continued rate increases will increase cost of funds in the coming quarters.
Noninterest income was $1.3 million for the first quarter of 2023, compared to $1.6 million for the fourth quarter of 2022, and $2.1 million for the first quarter of 2022. The decrease in noninterest income was primarily due to the sale of securities during the quarter and the decline in gain on sale of loans and other mortgage banking revenue. The sale of securities represented an opportunity to take advantage of an investment strategy, with the sale of $20 million in securities with a small loss on sale of $154,000 and an earn-back of less than one year, by re-investing in higher-yielding securities at an average yield of 4.79% compared to a 3.76% yield on sold securities. With continued higher mortgage rates, residential mortgage volume continued to be compressed and as a result gain-on-sale of loans decreased by $75,000 for the current quarter to $111,000, compared to $186,000 for the fourth quarter 2022, and declined by $684,000 from $795,000 for the first quarter a year ago. Service charges on deposits increased 24% to $473,000 from a year and was primarily the result of the Bank’s review and implementation of updated service charges and fees as the beginning of 2023.
Noninterest expense was $9.2 million for the first quarter of 2023, compared to $8.6 million for the fourth quarter of 2022, and $8.6 million for the first quarter of 2022. Competition for experienced and knowledgeable personnel combined with high inflation impacted and increased salary and employee benefits compared to prior quarters, in addition to higher payroll taxes and benefits typically experienced in the first quarter. Professional services fees primarily increased due to FDICIA testing and audit services, as the company reached $1.0 billion in 2021 and became subject to the FDICIA internal control testing and audit requirements. In addition, FDIC assessments, data processing and advertising increased during the same time periods.
Federal and Oregon state income tax expense was $930,000 for the current quarter, and $1.1 million for the preceding quarter, resulting in effective tax rates of 18.5% and 19.3%, respectively. These income tax expenses reflect the benefits of tax exempt income and tax credits.
Balance Sheet Review
Total Assets declined 5% to $1.2 billion at March 31, 2023, compared to $1.3 billion at December 31, 2022 and declined 6% from $1.3 billion at March 31, 2022. The decrease in total assets from the linked quarter and year-over-year was primarily due to the decrease in deposits during the current quarter.
Investment Securities totaled $285.9 million at March 31, 2023, relatively flat compared to $286.3 million at December 31, 2022, and up 21% from $236.4 million at March 31, 2022. The average portfolio yield increased to 3.20% for the current quarter, compared to 2.81% for the linked quarter, and 1.72% for the like quarter a year ago and for the current quarter compared to the linked quarter was primarily related to the increase in interest rates. The average adjusted duration of the investment securities portfolio was 4.5 at March 31, 2023.
Gross loans balances increased $4.9 million, or 1%, to $645.6 million at March 31, 2023, compared to $640.7 million at December 31, 2022. Owner-occupied commercial real estate increased $6.2 million or 4%, and residential 1-4 family loans increased $2.7 million or 3% while construction and development and commercial real estate non-owner occupied decreased. The Bank’s commercial real estate loan portfolio is prudently managed to meet regulatory concentration guidelines. Within the consumer loan category, loans to finance luxury and classic cars were $62.1 million at March 31, 2023, compared to $60.7 million at December 31, 2022 and $50.2 million at March 31, 2022. Our loan pipeline continues to be strongly supported by continued business development activity by our commercial lending teams.
The Company manages new loan origination volume using concentration limits that establish maximum exposure levels by certain industry segments, loan product types, geography and single borrower limits. The loan portfolio continues to be well-diversified and is originated predominately within our Western Washington and Oregon markets.
Credit Quality metrics remain low and below historical norms with nonperforming assets at $961,000, or 0.08% of total assets at March 31, 2023, compared to nonperforming assets of $899, 000, or 0.07% of total assets at December 31, 2022, and $1.3 million of nonperforming assets, or 0.10% of total assets, at March 31, 2022. Balances related to non-impaired loans, graded watch or other loans especially mentioned, decreased substantially to $12.7 million at March 31, 2023, compared to $26.4 million at December 31, 2022, and decreased from $30.0 million at March 31, 2022. This decrease was primarily related to risk rating upgrades.
Adoption of New Accounting Standard In June 2016, Financial Accounting Standards Board issued Accounting Standard Update No. 2016-13, Measurement of Credit Losses on Financial Instruments (ASU 2016-13). The allowance for credit losses under ASU 2016-13 utilizes a Current Expected Credit Losses (“CECL”) methodology which estimates the expected loan losses over the contractual life of the loans. GAAP prior to ASU 2016-13 required an “incurred loss” methodology for recognizing credit losses that delays recognition until it is probable a loss has been incurred. ASU 2016-13 became effective for the Company on January 1, 2023. The day 1 adoption of ASU 2016-13 and related amendments resulted in a decrease of $157,000 to the Bank’s allowance for credit losses-loans and an increase of $609,000 to the Bank’s allowance for credit losses-unfunded loan commitments for a cumulative-effect adjustment of $452,000 to decrease the beginning balance of retained earnings.
Allowance for Credit Losses (“ACL”) remained flat at $8.2 million, or 1.28% of gross loans (excluding PPP) at March 31, 2023, compared to $8.2 million, or 1.29% of gross loans, at December 31, 2022, and $8.3 million, or 1.36%, at March 31, 2022. Net recoveries totaled $1,000 for the current quarter, compared to net charge-offs of $13,000 for the fourth quarter of 2022 and net charge-offs of $21,000 for the first quarter 2022. A provision for credit losses of $150,000 was booked in the first quarter of 2023 compared to zero provision for credit losses in the fourth quarter of 2022 and for the first quarter a year earlier. The $150,000 provision booked in the current quarter was primarily as a result of loan growth and an increase to the Federal Open Market Committee’s (FOMC) forecasted national unemployment rate. In addition to the allowance for credit losses – loans, the Bank maintains an allowance for credit losses – unfunded loan commitments, which was $817,000 at March 31, 2023, compared to $203,000 at December 31, 2022 and at March 31, 2022.
Total Deposits were $1.11 billion at March 31, 2023, compared to $1.18 billion at December 31, 2022 and $1.19 billion at March 31, 2022. The decrease was primarily due to seasonal outflows typical for this time of year combined with competitive pricing pressures and interest rate sensitive customers moving a portion of their excess deposits funds to alternative higher yielding investments such as treasury bonds or money market funds. As customers sought higher yields, we saw the demand for our certificates of deposits (“CD’s”) increase, increasing $16.5 million from December 31, 2022 and $11.3 from March 31, 2022. Time deposits represented 6%, 4%, and 5%, of total deposits, as of March 31, 2023, December 31, 2022 and March 31, 2022, respectively. Noninterest-bearing deposits represent 43% of total deposits and declined $27.1 million or 5% from December 31, 2022, and decreased $15.0 million or 3% from a year ago for reasons noted above. The Bank has a strong core deposit track record as shown by our core deposit ratios. Core deposits were 94% of total deposits at March 31, 2023, compared to 95% at March 31, 2022.
Shareholder’s Equity was $108.9 million at March 31, 2023, an increase of 6% from $103.2 million at December 31, 2022 and remained relatively flat from $108.5 million at March 31, 2022. Book value per common share increased 5% to $10.45, at March 31, 2023, compared to $9.91 at December 31, 2022, and $10.44 at March 31, 2022. The increase in shareholder’s equity during the current quarter was due to net income during the quarter plus the decrease in unrealized loss on available-for-sale securities which was partially offset by dividends to shareholders. The decrease in the unrealized gain/(loss) on available-for-sale investment securities had a positive impact on the Tangible Common Equity Ratio (TCE) increasing the Company’s tangible common equity ratio to 7.8% at March 31, 2023, compared to 6.9% at December 31, 2022 and from 7.2% at March 31, 2022. The unrealized loss on available for sale securities was $20.5 million; $24.9 million; and $10.5 million as of March 31, 2023, December 31, 2022 and March 31, 2022, respectively. The decline in longer-term rates during the quarter contributed to this change, coupled with the restructure of $20 million in securities during the quarter and subsequent reinvestment at current market rates. Regulatory capital ratios of both the company and the Bank continue to exceed the well-capitalized regulatory thresholds, with the company’s leverage ratio at 9.9% and total risk-based capital ratio at 17.5% as of March 31, 2023.
| Financial Performance Overview | |||||||||||||||
| (Unaudited) | |||||||||||||||
| For the Three Months Ended | |||||||||||||||
| Mar 31, 2023 |
Dec 31, 2022 |
Change | Mar 31, 2022 |
Change | |||||||||||
| Performance Ratios | |||||||||||||||
| Return on average assets, annualized | 1.33 | % | 1.41 | % | (0.08 | ) | 0.51 | % | 0.82 | ||||||
| Return on average equity, annualized | 15.63 | % | 18.70 | % | (3.07 | ) | 5.81 | % | 9.82 | ||||||
| Efficiency ratio (1) | 63.91 | % | 59.67 | % | 4.24 | 82.48 | % | (18.57 | ) | ||||||
| (1) Non-interest expense divided by net interest income plus noninterest income. | |||||||||||||||
| Balance Sheet Overview | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| Mar 31, 2023 |
Dec 31, 2022 |
$ Change |
% Change |
Mar 31, 2022 |
$ Change |
% Change |
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| Assets: | (Dollars in thousands, except per share data) | ||||||||||||||||||||||
| Cash on hand and in banks | $ | 16,593 | $ | 18,673 | $ | (2,080 | ) | -11 | % | $ | 19,007 | $ | (2,414 | ) | -13 | % | |||||||
| Interest bearing deposits | 235,958 | 299,813 | (63,855 | ) | -21 | % | 312,194 | (76,236 | ) | -24 | % | ||||||||||||
| Federal funds sold | – | – | – | 0 | % | 81,339 | (81,339 | ) | -100 | % | |||||||||||||
| Investment securities | 285,925 | 286,296 | (371 | ) | 0 | % | 236,434 | 49,491 | 21 | % | |||||||||||||
| Loans held-for-sale | 249 | – | 249 | 100 | % | 3,703 | (3,454 | ) | -93 | % | |||||||||||||
| Loans, net of deferred fees | 644,901 | 639,958 | 4,943 | 1 | % | 615,891 | 29,010 | 5 | % | ||||||||||||||
| Allowance for loan losses | (8,231 | ) | (8,236 | ) | 5 | 0 | % | (8,276 | ) | 45 | -1 | % | |||||||||||
| Net loans | 636,670 | 631,722 | 4,948 | 1 | % | 607,615 | 29,055 | 5 | % | ||||||||||||||
| Federal Home Loan Bank and Pacific Coast Bankers’ Bank stock, at cost | 2,567 | 2,583 | (16 | ) | -1 | % | 2,598 | (31 | ) | -1 | % | ||||||||||||
| Other assets | 65,572 | 67,116 | (1,544 | ) | -2 | % | 62,579 | 2,993 | 5 | % | |||||||||||||
| Total assets | $ | 1,243,534 | $ | 1,306,203 | $ | (62,669 | ) | -5 | % | $ | 1,325,469 | $ | (81,935 | ) | -6 | % | |||||||
| Liabilities and Shareholders’ Equity: | |||||||||||||||||||||||
| Total deposits | $ | 1,110,368 | $ | 1,180,362 | $ | (69,994 | ) | -6 | % | $ | 1,196,106 | $ | (85,738 | ) | -7 | % | |||||||
| Borrowings | 13,403 | 13,403 | – | 0 | % | 13,769 | (366 | ) | -3 | % | |||||||||||||
| Accrued interest payable and other liabilities | 10,848 | 9,276 | 1,572 | 17 | % | 7,108 | 3,740 | 53 | % | ||||||||||||||
| Shareholders’ equity | 108,915 | 103,162 | 5,753 | 6 | % | 108,486 | 429 | 0 | % | ||||||||||||||
| Total liabilities and shareholders’ equity | $ | 1,243,534 | $ | 1,306,203 | $ | (62,669 | ) | -5 | % | $ | 1,325,469 | $ | (81,935 | ) | -6 | % | |||||||
| Common Shares Outstanding | 10,424,294 | 10,414,276 | 10,018 | 0 | % | 10,392,738 | 31,556 | 0 | % | ||||||||||||||
| Book value per common share (1) | $ | 10.45 | $ | 9.91 | $ | 0.54 | 5 | % | $ | 10.44 | $ | 0.01 | 0 | % | |||||||||
| Tangible book value per common share (2) | $ | 9.16 | $ | 8.62 | $ | 0.54 | 6 | % | $ | 9.15 | $ | 0.01 | 0 | % | |||||||||
| (1) Book value per common share is calculated as the total common shareholders’ equity divided by the period ending number of common stock shares outstanding. | |||||||||||||||||||||||
| (2) Tangible book value per common share is calculated as the total common shareholders’ equity less total intangible assets and liabilities, divided by the period ending number of common stock shares outstanding. | |||||||||||||||||||||||
| Income Statement Overview | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| For the Three Months Ended, | |||||||||||||||||||||||
| Mar 31, 2023 |
Dec 31, 2022 |
$ Change |
% Change |
Mar 31, 2022 |
$ Change |
% Change |
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| (Dollars in thousands, except per share data) | |||||||||||||||||||||||
| Interest and dividend income | $ | 13,690 | $ | 13,352 | $ | 338 | 3 | % | $ | 8,526 | $ | 5,164 | 61 | % | |||||||||
| Interest expense | 593 | 417 | 176 | 42 | % | 239 | 354 | 148 | % | ||||||||||||||
| Net interest income | 13,097 | 12,935 | 162 | 1 | % | 8,287 | 4,810 | 58 | % | ||||||||||||||
| Loan loss provision | 151 | – | 151 | 100 | % | – | 151 | 100 | % | ||||||||||||||
| Noninterest income | 1,287 | 1,559 | (272 | ) | -17 | % | 2,112 | (825 | ) | -39 | % | ||||||||||||
| Noninterest expense | 9,193 | 8,648 | 545 | 6 | % | 8,577 | 616 | 7 | % | ||||||||||||||
| Income before income taxes | 5,040 | 5,846 | (806 | ) | -14 | % | 1,822 | 3,218 | 177 | % | |||||||||||||
| Income tax expense | 930 | 1,129 | (199 | ) | -18 | % | 166 | 764 | 460 | % | |||||||||||||
| Net Income | $ | 4,110 | $ | 4,717 | $ | (607 | ) | -13 | % | $ | 1,656 | $ | 2,454 | 148 | % | ||||||||
| Average common shares outstanding – basic | 10,418,292 | 10,407,967 | 10,325 | 0 | % | 10,390,498 | 27,794 | 0 | % | ||||||||||||||
| Average common shares outstanding – diluted | 10,432,245 | 10,426,346 | 5,899 | 0 | % | 10,415,689 | 16,556 | 0 | % | ||||||||||||||
| Income per common share | |||||||||||||||||||||||
| Basic | $ | 0.39 | $ | 0.45 | $ | (0.06 | ) | -13 | % | $ | 0.16 | $ | 0.23 | 144 | % | ||||||||
| Diluted | $ | 0.39 | $ | 0.45 | $ | (0.06 | ) | -13 | % | $ | 0.16 | $ | 0.23 | 144 | % | ||||||||
| Effective tax rate | 18.5 | % | 19.3 | % | -0.8 | % | 9.1 | % | 9.4 | % | |||||||||||||
| Noninterest Income | |||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||
| For the Three Months Ended, | |||||||||||||||||||||
| Mar 31, 2023 |
Dec 31, 2022 |
$ Change |
% Change |
Mar 31, 2022 |
$ Change |
% Change |
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| (Dollars in thousands) | |||||||||||||||||||||
| Service charges on deposits | $ | 473 | $ | 404 | $ | 69 | 17 | % | $ | 382 | $ | 91 | 24 | % | |||||||
| Gain on sale of loans, net | 111 | 186 | (75 | ) | -40 | % | 795 | (684 | ) | -86 | % | ||||||||||
| Gain on sale of securities available for sale, net | (154 | ) | – | (154 | ) | 0 | % | – | (154 | ) | 0 | % | |||||||||
| Earnings on bank owned life insurance | 164 | 161 | 3 | 2 | % | 184 | (20 | ) | -11 | % | |||||||||||
| Other noninterest income | |||||||||||||||||||||
| Fee income | 705 | 814 | (109 | ) | -13 | % | 750 | (45 | ) | -6 | % | ||||||||||
| Other | (12 | ) | (6 | ) | (6 | ) | 100 | % | 1 | (13 | ) | -1300 | % | ||||||||
| Total noninterest income | $ | 1,287 | $ | 1,559 | $ | (272 | ) | -17 | % | $ | 2,112 | $ | (825 | ) | -39 | % | |||||
| Noninterest Expense | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| For the Three Months Ended, | ||||||||||||||||||||
| Mar 31, 2023 |
Dec 31, 2022 |
$ Change |
% Change |
Mar 31, 2022 |
$ Change |
% Change |
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| (Dollars in thousands) | ||||||||||||||||||||
| Salaries and employee benefits | $ | 5,785 | $ | 5,432 | $ | 353 | 6 | % | $ | 5,516 | $ | 269 | 5 | % | ||||||
| Occupancy | 531 | 509 | 22 | 4 | % | 521 | 10 | 2 | % | |||||||||||
| Equipment | 287 | 296 | (9 | ) | -3 | % | 286 | 1 | 0 | % | ||||||||||
| Data processing | 951 | 881 | 70 | 8 | % | 855 | 96 | 11 | % | |||||||||||
| Professional services | 241 | 158 | 83 | 53 | % | 202 | 39 | 19 | % | |||||||||||
| State and local taxes | 178 | 197 | (19 | ) | -10 | % | 158 | 20 | 13 | % | ||||||||||
| FDIC and State assessments | 154 | 107 | 47 | 44 | % | 100 | 54 | 54 | % | |||||||||||
| Other noninterest expense: | ||||||||||||||||||||
| Director fees | 71 | 68 | 3 | 4 | % | 74 | (3 | ) | -4 | % | ||||||||||
| Communication | 59 | 61 | (2 | ) | -3 | % | 67 | (8 | ) | -12 | % | |||||||||
| Advertising | 60 | (31 | ) | 91 | 294 | % | 25 | 35 | 140 | % | ||||||||||
| Professional liability insurance | 67 | 68 | (1 | ) | -1 | % | 60 | 7 | 12 | % | ||||||||||
| Amortization | 44 | 48 | (4 | ) | -8 | % | 47 | (3 | ) | -6 | % | |||||||||
| Other | 765 | 854 | (89 | ) | -10 | % | 666 | 99 | 15 | % | ||||||||||
| Total noninterest expense | $ | 9,193 | $ | 8,648 | $ | 545 | 6 | % | $ | 8,577 | $ | 616 | 7 | % | ||||||
| Investment Securities | ||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||
| Mar 31, 2023 |
% of Total |
Dec 31, 2022 |
% of Total |
$ Change |
% Change |
Mar 31, 2022 |
% of Total |
$ Change |
% Change |
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| (Dollars in thousands) | ||||||||||||||||||||||||||||||||
| Investment securities: | ||||||||||||||||||||||||||||||||
| Collateralized mortgage obligations | $ | 122,992 | 43 | % | $ | 103,330 | 37 | % | $ | 19,662 | 19 | % | $ | 73,142 | 31 | % | $ | 49,850 | 68 | % | ||||||||||||
| Mortgage backed securities | 32,294 | 11 | % | 32,801 | 11 | % | (507 | ) | -2 | % | 24,741 | 10 | % | 7,553 | 31 | % | ||||||||||||||||
| U.S. Government and agency securities | 84,814 | 30 | % | 83,889 | 29 | % | 925 | 1 | % | 70,003 | 30 | % | 14,811 | 21 | % | |||||||||||||||||
| Municipal securities | 44,827 | 16 | % | 64,277 | 22 | % | (19,450 | ) | -30 | % | 66,544 | 28 | % | (21,717 | ) | -33 | % | |||||||||||||||
| Corporate debt securities | 998 | 0 | % | 1,999 | 1 | % | (1,001 | ) | -50 | % | 2,004 | 1 | % | (1,006 | ) | -50 | % | |||||||||||||||
| Total | $ | 285,925 | 100 | % | $ | 286,296 | 100 | % | $ | (371 | ) | 0 | % | $ | 236,434 | 100 | % | $ | 49,491 | 21 | % | |||||||||||
| Held to maturity securities | $ | 58,595 | 20 | % | $ | 59,513 | 21 | % | $ | (918 | ) | -2 | % | $ | 10,389 | 4 | % | $ | 48,206 | 464 | % | |||||||||||
| Available for sale securities | $ | 227,330 | 80 | % | $ | 226,783 | 79 | % | $ | 547 | 0 | % | $ | 226,045 | 96 | % | $ | 1,285 | 1 | % | ||||||||||||
| Government & Agency securities | $ | 240,061 | 84 | % | $ | 219,981 | 77 | % | $ | 20,080 | 9 | % | $ | 167,829 | 71 | % | $ | 72,232 | 43 | % | ||||||||||||
| AAA, AA, A rated securities | $ | 44,614 | 16 | % | $ | 65,024 | 23 | % | $ | (20,410 | ) | -31 | % | $ | 67,181 | 28 | % | $ | (22,567 | ) | -34 | % | ||||||||||
| Non-rated securities | $ | 1,250 | 0 | % | $ | 1,291 | 0 | % | $ | (41 | ) | -3 | % | $ | 1,424 | 1 | % | $ | (174 | ) | -12 | % | ||||||||||
| AFS Unrealized Gain (Loss) | $ | (20,518 | ) | -7 | % | $ | (24,926 | ) | -9 | % | $ | 4,408 | 2 | % | $ | (10,537 | ) | -4 | % | $ | (9,981 | ) | -3 | % | ||||||||
| Loans by Category | ||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||
| Mar 31, 2023 |
% of Gross Loans |
Dec 31, 2022 |
% of Gross Loans |
$ Change |
% Change |
Mar 31, 2022 |
% of Gross Loans |
$ Change |
% Change |
|||||||||||||||||||||||
| Commercial: | (Dollars in thousands) | |||||||||||||||||||||||||||||||
| Commercial and agricultural | $ | 75,279 | 12 | % | $ | 75,705 | 12 | % | $ | (426 | ) | -1 | % | $ | 83,324 | 14 | % | $ | (8,045 | ) | -10 | % | ||||||||||
| PPP | 405 | 0 | % | 515 | 0 | % | (110 | ) | -21 | % | 8,290 | 4 | % | (7,885 | ) | -95 | % | |||||||||||||||
| Real estate: | ||||||||||||||||||||||||||||||||
| Construction and development | 34,918 | 5 | % | 37,287 | 6 | % | (2,369 | ) | -6 | % | 31,169 | 3 | % | 3,749 | 12 | % | ||||||||||||||||
| Residential 1-4 family | 85,380 | 13 | % | 82,653 | 13 | % | 2,727 | 3 | % | 66,338 | 11 | % | 19,042 | 29 | % | |||||||||||||||||
| Multi-family | 40,882 | 6 | % | 41,122 | 7 | % | (240 | ) | -1 | % | 43,226 | 6 | % | (2,344 | ) | -5 | % | |||||||||||||||
| Commercial real estate — owner occupied | 160,534 | 25 | % | 154,380 | 24 | % | 6,154 | 4 | % | 152,301 | 25 | % | 8,233 | 5 | % | |||||||||||||||||
| Commercial real estate — non owner occupied | 151,923 | 24 | % | 153,707 | 24 | % | (1,784 | ) | -1 | % | 151,637 | 24 | % | 286 | 0 | % | ||||||||||||||||
| Farmland | 26,451 | 4 | % | 26,935 | 4 | % | (484 | ) | -2 | % | 22,734 | 4 | % | 3,717 | 16 | % | ||||||||||||||||
| Consumer | 69,867 | 11 | % | 68,412 | 10 | % | 1,455 | 2 | % | 57,590 | 9 | % | 12,277 | 21 | % | |||||||||||||||||
| Gross Loans | 645,639 | 100 | % | 640,716 | 100 | % | 4,923 | 1 | % | 616,609 | 100 | % | 29,030 | 5 | % | |||||||||||||||||
| Less: allowance for loan losses | (8,231 | ) | (8,236 | ) | 5 | (8,276 | ) | 45 | ||||||||||||||||||||||||
| Less: deferred fees | (738 | ) | (758 | ) | 20 | (718 | ) | (20 | ) | |||||||||||||||||||||||
| Net loans | $ | 636,670 | $ | 631,722 | $ | 4,948 | $ | 607,615 | $ | 29,055 | ||||||||||||||||||||||
| Loan Concentration | ||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||
| Mar 31, 2023 |
% of Risk Based Capital |
Dec 31, 2022 |
% of Risk Based Capital |
Change |
Mar 31, 2022 |
% of Risk Based Capital |
Change |
|||||||||||||||||||||||||
| Commercial: | (Dollars in thousands) | |||||||||||||||||||||||||||||||
| Commercial and agricultural | $ | 75,279 | 57 | % | $ | 75,705 | 58 | % | -1 | % | $ | 83,324 | 69 | % | -12 | % | ||||||||||||||||
| PPP | 405 | 0 | % | 515 | 0 | % | 0 | % | 8,290 | 20 | % | -20 | % | |||||||||||||||||||
| Real estate: | ||||||||||||||||||||||||||||||||
| Construction and development | 34,918 | 26 | % | 37,287 | 28 | % | -2 | % | 31,169 | 23 | % | 3 | % | |||||||||||||||||||
| Residential 1-4 family | 85,380 | 64 | % | 82,653 | 63 | % | 1 | % | 66,338 | 54 | % | 10 | % | |||||||||||||||||||
| Multi-family | 40,882 | 31 | % | 41,122 | 33 | % | -2 | % | 43,226 | 32 | % | -1 | % | |||||||||||||||||||
| Commercial real estate — owner occupied | 160,534 | 121 | % | 154,380 | 119 | % | 2 | % | 152,301 | 125 | % | -4 | % | |||||||||||||||||||
| Commercial real estate — non owner occupied | 151,923 | 115 | % | 153,707 | 118 | % | -3 | % | 151,637 | 120 | % | -5 | % | |||||||||||||||||||
| Farmland | 26,451 | 20 | % | 26,935 | 20 | % | 0 | % | 22,734 | 19 | % | 1 | % | |||||||||||||||||||
| Consumer | 69,867 | 53 | % | 68,412 | 52 | % | 1 | % | 57,590 | 45 | % | 8 | % | |||||||||||||||||||
| Gross Loans | $ | 645,639 | $ | 640,716 | $ | 616,609 | ||||||||||||||||||||||||||
| Regulatory Commercial Real Estate | $ | 225,163 | 170 | % | $ | 229,592 | 177 | % | -7 | % | $ | 223,799 | 173 | % | -3 | % | ||||||||||||||||
| Total Risk Based Capital* | $ | 132,579 | $ | 129,551 | $ | 124,636 | ||||||||||||||||||||||||||
| *Bank of the Pacific | ||||||||||||||||||||||||||||||||
| Deposits by Category | |||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||
| Mar 31, 2023 |
% of Total |
Dec 31, 2022 |
% of Total |
$ Change |
% Change |
Mar 31, 2022 |
% of Total |
$ Change |
% Change |
||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||
| Interest-bearing demand | $ | 215,853 | 20 | % | $ | 253,272 | 20 | % | $ | (37,419 | ) | -15 | % | $ | 255,120 | 21 | % | $ | (39,267 | ) | -15 | % | |||||
| Money market | 183,066 | 16 | % | 195,814 | 17 | % | (12,748 | ) | -7 | % | 214,840 | 17 | % | (31,774 | ) | -15 | % | ||||||||||
| Savings | 165,694 | 15 | % | 174,887 | 15 | % | (9,193 | ) | -5 | % | 176,753 | 15 | % | (11,059 | ) | -6 | % | ||||||||||
| Time deposits (CDs) | 65,231 | 6 | % | 48,754 | 4 | % | 16,477 | 34 | % | 53,885 | 5 | % | 11,346 | 21 | % | ||||||||||||
| Total interest-bearing deposits | 629,844 | 57 | % | 672,727 | 57 | % | (42,883 | ) | -6 | % | 700,598 | 58 | % | (70,754 | ) | -10 | % | ||||||||||
| Non-interest bearing demand | 480,524 | 43 | % | 507,635 | 43 | % | (27,111 | ) | -5 | % | 495,508 | 42 | % | (14,984 | ) | -3 | % | ||||||||||
| Total deposits | $ | 1,110,368 | 100 | % | $ | 1,180,362 | 100 | % | $ | (69,994 | ) | -6 | % | $ | 1,196,106 | 100 | % | $ | (85,738 | ) | -7 | % | |||||
| Insured Deposits | $ | 700,960 | 64 | % | $ | 709,468 | 60 | % | $ | (8,508 | ) | -1 | % | $ | 749,175 | 63 | % | $ | (48,215 | ) | -6 | % | |||||
| Collateralized Deposits | 149,856 | 13 | % | 160,354 | 14 | % | (10,498 | ) | -7 | % | 142,262 | 12 | % | 7,594 | 5 | % | |||||||||||
| Uninsured Deposits | 259,552 | 23 | % | 310,540 | 26 | % | (50,988 | ) | -16 | % | 304,669 | 25 | % | (45,117 | ) | -15 | % | ||||||||||
| Total Deposits | $ | 1,110,368 | 100 | % | $ | 1,180,362 | 100 | % | $ | (69,994 | ) | -6 | % | $ | 1,196,106 | 100 | % | $ | (85,738 | ) | -7 | % | |||||
| Consumer Deposits | $ | 502,430 | 45 | % | $ | 519,948 | 44 | % | $ | (17,518 | ) | -3 | % | $ | 558,136 | 46 | % | $ | (55,706 | ) | -10 | % | |||||
| Business Deposits | 447,778 | 40 | % | 490,341 | 42 | % | (42,563 | ) | -9 | % | 486,702 | 41 | % | (38,924 | ) | -8 | % | ||||||||||
| Public Deposits | 160,160 | 15 | % | 170,073 | 14 | % | (9,913 | ) | -6 | % | 151,268 | 13 | % | 8,892 | 6 | % | |||||||||||
| Total Deposits | $ | 1,110,368 | 100 | % | $ | 1,180,362 | 100 | % | $ | (69,994 | ) | -6 | % | $ | 1,196,106 | 100 | % | $ | (85,738 | ) | -7 | % | |||||
The following table summarizes the capital measures of the Company and the Bank respectively, at the dates listed below.
| Capital Measures | ||||||||||||||||
| (unaudited) | ||||||||||||||||
|
Mar 31, |
Dec 31, |
Change |
Mar 31, |
Change |
Well Capitalized Under Prompt Correction Action Regulations |
|||||||||||
| Pacific Financial Corporation | ||||||||||||||||
| Total risk-based capital ratio | 17.5 | % | 17.1 | % | 0.4 | 17.4 | % | 0.1 | N/A | |||||||
| Tier 1 risk-based capital ratio | 16.3 | % | 16.0 | % | 0.3 | 16.3 | % | – | N/A | |||||||
| Common equity tier 1 ratio | 14.6 | % | 14.3 | % | 0.3 | 14.4 | % | 0.2 | N/A | |||||||
| Leverage ratio | 9.9 | % | 9.4 | % | 0.5 | 8.9 | % | 1.0 | N/A | |||||||
| Tangible common equity ratio | 7.8 | % | 6.9 | % | 0.9 | 7.2 | % | 0.6 | N/A | |||||||
| Bank of the Pacific | ||||||||||||||||
| Total risk-based capital ratio | 17.4 | % | 17.0 | % | 0.4 | 17.4 | % | – | 10.5 | % | ||||||
| Tier 1 risk-based capital ratio | 16.2 | % | 15.9 | % | 0.3 | 16.2 | % | – | 8.5 | % | ||||||
| Common equity tier 1 ratio | 16.2 | % | 15.9 | % | 0.3 | 16.2 | % | – | 7.0 | % | ||||||
| Leverage ratio | 9.8 | % | 9.1 | % | 0.7 | 8.8 | % | 1.0 | 7.5 | % | ||||||
The following tables set forth information regarding average balances of interest-earning assets and interest-bearing liabilities and the resultant yields or cost, and the net interest margin on a tax equivalent basis. Loans held for sale and non-accrual loans are included in total loans.
| Net Interest Margin | |||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||
| (Annualized, tax-equivalent basis) | |||||||||||||||||||||
| For the Three Months Ended, | |||||||||||||||||||||
| Mar 31, 2023 |
Dec 31, 2022 |
$ Change |
% Change |
Mar 31, 2022 |
$ Change |
% Change |
|||||||||||||||
| Average Balances | (Dollars in thousands) | ||||||||||||||||||||
| Gross loans | $ | 643,851 | $ | 629,976 | $ | 13,875 | 2 | % | $ | 621,412 | $ | 22,439 | 4 | % | |||||||
| Gross loans without PPP | $ | 643,414 | $ | 629,439 | $ | 13,975 | 2 | % | $ | 603,998 | $ | 39,416 | 7 | % | |||||||
| Loans held for sale | $ | 584 | $ | 898 | $ | (314 | ) | -35 | % | $ | 3,670 | $ | (3,086 | ) | -84 | % | |||||
| Investment securities | $ | 287,714 | $ | 270,416 | $ | 17,298 | 6 | % | $ | 242,084 | $ | 45,630 | 19 | % | |||||||
| Federal funds sold & interest bearing deposits in banks | $ | 251,118 | $ | 352,628 | $ | (101,510 | ) | -29 | % | $ | 388,902 | $ | (137,784 | ) | -35 | % | |||||
| Total interest-earning assets | $ | 1,183,267 | $ | 1,253,918 | $ | (70,651 | ) | -6 | % | $ | 1,256,068 | $ | (72,801 | ) | -6 | % | |||||
| Non-interest bearing demand deposits | $ | 483,135 | $ | 521,133 | $ | (37,998 | ) | -7 | % | $ | 496,833 | $ | (13,698 | ) | -3 | % | |||||
| Interest bearing deposits | $ | 643,972 | $ | 684,377 | $ | (40,405 | ) | -6 | % | $ | 693,350 | $ | (49,378 | ) | -7 | % | |||||
| Total Deposits | $ | 1,127,107 | $ | 1,205,510 | $ | (78,403 | ) | -7 | % | $ | 1,190,183 | $ | (63,076 | ) | -5 | % | |||||
| Borrowings | $ | 13,403 | $ | 13,403 | $ | – | 0 | % | $ | 13,782 | $ | (379 | ) | -3 | % | ||||||
| Total interest-bearing liabilities | $ | 657,375 | $ | 697,780 | $ | (40,405 | ) | -6 | % | $ | 707,132 | $ | (49,757 | ) | -7 | % | |||||
| Total Equity | $ | 106,612 | $ | 100,076 | $ | 6,536 | 7 | % | $ | 115,664 | $ | (9,052 | ) | -8 | % | ||||||
| For the Three Months Ended, | |||||||||||||||||||||
| Mar 31, 2023 |
Dec 31, 2022 |
Change | Mar 31, 2022 |
Change | |||||||||||||||||
| Yield on average gross loans (1) | 5.44 | % | 5.18 | % | 0.26 | 4.81 | % | 0.63 | |||||||||||||
| Yield on average gross loans without PPP (1) | 5.44 | % | 5.17 | % | 0.27 | 4.45 | % | 0.99 | |||||||||||||
| Yield on average investment securities (1) | 3.20 | % | 2.81 | % | 0.39 | 1.72 | % | 1.48 | |||||||||||||
| Yield on Fed funds sold & interest bearing deposits in banks | 4.61 | % | 3.72 | % | 0.89 | 0.20 | % | 4.41 | |||||||||||||
| Cost of average interest bearing deposits | 0.24 | % | 0.14 | % | 0.10 | 0.10 | % | 0.14 | |||||||||||||
| Cost of average borrowings | 6.45 | % | 5.42 | % | 1.03 | 1.85 | % | 4.60 | |||||||||||||
| Cost of average total deposits and borrowings | 0.21 | % | 0.14 | % | 0.07 | 0.08 | % | 0.13 | |||||||||||||
| Yield on average interest-earning assets | 4.72 | % | 4.25 | % | 0.47 | 2.78 | % | 1.94 | |||||||||||||
| Cost of average interest-bearing liabilities | 0.37 | % | 0.24 | % | 0.13 | 0.14 | % | 0.23 | |||||||||||||
| Net interest spread | 4.35 | % | 4.01 | % | 0.34 | 2.64 | % | 1.71 | |||||||||||||
| Net interest spread without PPP | 4.35 | % | 4.01 | % | 0.34 | 2.44 | % | 1.91 | |||||||||||||
| Net interest margin (1) | 4.51 | % | 4.12 | % | 0.39 | 2.71 | % | 1.80 | |||||||||||||
| Net interest margin without PPP (1) | 4.51 | % | 4.12 | % | 0.39 | 2.50 | % | 2.01 | |||||||||||||
| (1) Tax-exempt income has been adjusted to a tax equivalent basis at a rate of 21%. | |||||||||||||||||||||
| Adversely Classified Loans and Securities | |||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||
| Mar 31, 2023 |
Dec 31, 2022 |
$ Change |
% Change |
Mar 31, 2022 |
$ Change |
% Change |
|||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||
| Rated substandard or worse, but not impaired, beginning of three month period | $ | 2,884 | $ | 2,814 | $ | 70 | 2 | % | $ | 8,980 | $ | (6,096 | ) | -68 | % | ||||||
| Addition of previously classified pass graded loans | 2,237 | 272 | 1,965 | 722 | % | 174 | 2,063 | 1186 | % | ||||||||||||
| Upgrades to pass or other loans especially mentioned status | – | (85 | ) | 85 | -100 | % | (789 | ) | 789 | -100 | % | ||||||||||
| Moved to nonaccrual | (241 | ) | – | (241 | ) | -100 | % | – | (241 | ) | -100 | % | |||||||||
| Principal payments, net | (125 | ) | (117 | ) | (8 | ) | 7 | % | (243 | ) | 118 | -49 | % | ||||||||
| Rated substandard or worse, but not impaired, end of three month period | $ | 4,755 | $ | 2,884 | $ | 1,871 | 65 | % | $ | 8,122 | $ | (3,367 | ) | -41 | % | ||||||
| Impaired | 961 | 2,452 | (1,491 | ) | -61 | % | 2,821 | (1,860 | ) | -66 | % | ||||||||||
| Total adversely classified loans¹ | $ | 5,716 | $ | 5,336 | $ | 380 | 7 | % | $ | 10,943 | $ | (5,227 | ) | -48 | % | ||||||
| Other loans especially mentioned or watch, but not impaired | $ | 12,666 | $ | 26,408 | $ | (13,742 | ) | -52 | % | $ | 30,018 | $ | (17,352 | ) | -58 | % | |||||
| Gross loans (excluding deferred loan fees) | $ | 645,639 | $ | 640,716 | $ | 4,923 | 1 | % | $ | 616,609 | $ | 29,030 | 5 | % | |||||||
| Adversely classified loans to gross loans | 0.89 | % | 0.83 | % | 1.77 | % | |||||||||||||||
| Adversely classified loans to gross loans without PPP | 0.89 | % | 0.83 | % | 1.80 | % | |||||||||||||||
| Allowance for loan losses | $ | 8,231 | $ | 8,236 | $ | (5 | ) | 0 | % | $ | 8,276 | $ | (45 | ) | -1 | % | |||||
| Allowance for loan losses as a percentage of adversely classified loans | 144.00 | % | 154.35 | % | 75.63 | % | |||||||||||||||
| Allowance for loan losses to total impaired loans | 856.50 | % | 335.89 | % | 293.37 | % | |||||||||||||||
| Adversely classified loans to total assets | 0.46 | % | 0.41 | % | 0.83 | % | |||||||||||||||
| Delinquent loans to gross loans, not in nonaccrual status 2 | 0.03 | % | 0.08 | % | 0.01 | % | |||||||||||||||
| Delinquent loans to gross loans without PPP, not in nonaccrual status | 0.03 | % | 0.08 | % | 0.01 | % | |||||||||||||||
| 1 Adversely classified loans are defined as loans having a well-defined weakness or weaknesses related to the borrower’s financial capacity or to pledged collateral that may jeopardize the repayment of the debt. They are characterized by the possibility that the Bank may sustain some loss if the deficiencies giving rise to the substandard classification are not corrected. Note that any loans internally rated worse than substandard are included in the impaired loan totals. | |||||||||||||||||||||
| 2 Delinquent loans are defined as loans past due 30-90 days and still accruing | |||||||||||||||||||||
| Nonperforming Assets | |||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||
| Mar 31, 2023 |
Dec 31, 2022 |
$ Change |
% Change |
Mar 31, 2022 |
$ Change |
% Change |
|||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||
| Total nonaccrual loans, beginning of three month period | $ | 869 | $ | 899 | $ | (30 | ) | -3 | % | $ | 1,221 | $ | (352 | ) | -29 | % | |||||
| Transfer to performing loans | (21 | ) | – | (21 | ) | -100 | % | – | (21 | ) | -100 | % | |||||||||
| Addition of nonaccrual loans | 241 | – | 241 | 100 | % | – | 241 | 100 | % | ||||||||||||
| Moved to other assets owned | – | – | – | 0 | % | – | – | 0 | % | ||||||||||||
| Principal payments, net | (128 | ) | (30 | ) | (98 | ) | 327 | % | (23 | ) | (105 | ) | 457 | % | |||||||
| Charge-offs, net | – | – | – | 0 | % | – | – | 0 | % | ||||||||||||
| Total nonaccrual loans, end of three month period | $ | 961 | $ | 869 | $ | 92 | 11 | % | $ | 1,198 | $ | (237 | ) | -20 | % | ||||||
| Other real estate owned and foreclosed assets | – | 30 | (30 | ) | -100 | % | 122 | (122 | ) | -100 | % | ||||||||||
| Total nonperforming assets | $ | 961 | $ | 899 | $ | 62 | 7 | % | $ | 1,320 | $ | (359 | ) | -27 | % | ||||||
| Accruing loans past due 90 days or more | $ | – | $ | – | $ | – | 0 | % | $ | – | $ | – | 0 | % | |||||||
| Percentage of nonperforming assets to total assets | 0.08 | % | 0.07 | % | 0.10 | % | |||||||||||||||
| Nonperforming loans to total loans | 0.15 | % | 0.14 | % | 0.19 | % | |||||||||||||||
| Nonperforming loans to total loans without PPP | 0.15 | % | 0.14 | % | 0.20 | % | |||||||||||||||
| Allowance for Credit Losses | ||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||
| For the Three Months Ended, | ||||||||||||||||||||||
| Mar 31, 2023 |
Dec 31, 2022 |
$ Change |
% Change |
Mar 31, 2022 |
$ Change |
% Change |
||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||
| Gross loans outstanding at end of period | $ | 645,639 | $ | 640,716 | $ | 4,923 | 1 | % | $ | 616,609 | $ | 29,030 | 5 | % | ||||||||
| Average loans outstanding, gross | $ | 643,851 | $ | 629,976 | $ | 13,875 | 2 | % | $ | 621,412 | $ | 22,439 | 4 | % | ||||||||
| Allowance for credit losses, beginning of period | $ | 8,236 | $ | 8,249 | $ | (13 | ) | 0 | % | $ | 8,297 | $ | (61 | ) | -1 | % | ||||||
| Impact of CECL Adoption (ASC 326) | (157 | ) | – | (157 | ) | -100 | % | – | (157 | ) | -100 | % | ||||||||||
| Commercial | – | – | – | 0 | % | – | – | 0 | % | |||||||||||||
| Commercial Real Estate | – | – | – | 0 | % | – | – | 0 | % | |||||||||||||
| Residential Real Estate | – | – | – | 0 | % | – | – | 0 | % | |||||||||||||
| Consumer | (39 | ) | (14 | ) | (25 | ) | 179 | % | (25 | ) | (14 | ) | 56 | % | ||||||||
| Total charge-offs | (39 | ) | (14 | ) | (25 | ) | 179 | % | (25 | ) | (14 | ) | 56 | % | ||||||||
| Commercial | 27 | – | 27 | 100 | % | – | 27 | 100 | % | |||||||||||||
| Commercial Real Estate | – | – | – | 0 | % | – | – | 0 | % | |||||||||||||
| Residential Real Estate | – | – | – | 0 | % | – | – | 0 | % | |||||||||||||
| Consumer | 13 | 1 | 12 | 1200 | % | 4 | 9 | 225 | % | |||||||||||||
| Total recoveries | 40 | 1 | 39 | 3900 | % | 4 | 36 | 900 | % | |||||||||||||
| Net recoveries/(charge-offs) | 1 | (13 | ) | 14 | -108 | % | (21 | ) | 22 | -105 | % | |||||||||||
| Provision (benefit) to income | 151 | – | 151 | 100 | % | – | 151 | 100 | % | |||||||||||||
| Allowance for credit losses, end of period | $ | 8,231 | $ | 8,236 | $ | (5 | ) | 0 | % | $ | 8,276 | $ | (45 | ) | -1 | % | ||||||
| Ratio of net loans charged-off to average gross loans outstanding, annualized | 0.00 | % | 0.01 | % | -0.01 | % | 0.01 | % | -0.01 | % | ||||||||||||
| Ratio of net loans charged-off to average gross loans outstanding without PPP, annualized | 0.00 | % | 0.01 | % | -0.01 | % | 0.01 | % | -0.01 | % | ||||||||||||
| Ratio of allowance for credit losses to gross loans outstanding | 1.27 | % | 1.29 | % | -0.02 | % | 1.34 | % | -0.07 | % | ||||||||||||
| Ratio of allowance for loan credit to gross loans without PPP outstanding | 1.28 | % | 1.29 | % | -0.01 | % | 1.36 | % | -0.08 | % | ||||||||||||
ABOUT PACIFIC FINANCIAL CORPORATION
Pacific Financial Corporation of Aberdeen, Washington, is the bank holding company for Bank of the Pacific, a state chartered and federally insured commercial bank. Bank of the Pacific offers banking products and services to small-to-medium sized businesses and professionals in western Washington and Oregon. At March 31, 2023, the Company had total assets of $1.24 billion and operated fourteen branches in the communities of Grays Harbor, Pacific, Whatcom, Skagit, Clark and Wahkiakum counties in the State of Washington, and two branches in Clatsop County, Oregon. The Company also operated loan production offices in the communities of Olympia and Burlington, Washington and Salem, Oregon. Visit the Company’s website at www.bankofthepacific.com. Member FDIC.
Cautions Concerning Forward-Looking Statements
This press release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other laws, including all statements in this release that are not historical facts or that relate to future plans or events or projected results of Pacific Financial Corporation and its wholly-owned subsidiary, Bank of the Pacific. Such statements are based on information available at the time of communication and are based on current beliefs and expectations of the Company’s management and are subject to risks and uncertainties, many of which are beyond our control, which could cause actual events or results to differ materially from those projected, anticipated or implied, and could negatively impact the Company’s operating and stock price performance. These risks and uncertainties include various risks associated with growing the Bank and expanding the services it provides, development of new business lines and markets, competition in the marketplace, general economic conditions, including the COVID-19 pandemic and government responses thereto, changes in interest rates, extensive and evolving regulation of the banking industry, and many other risks. Any forward-looking statements in this communication are based on information at the time the statement is made. We undertake no obligation to update or revise any forward-looking statement. Readers of this release are cautioned not to put undue reliance on forward-looking statements.
