Highlights:
- Third-quarter net income was $2.75 million, or $0.38 per diluted share, sustaining strong earnings.
- Loan production of $46.4 million drove $2.8 million in net growth and improved earning-asset yields.
- Deposits grew $19.3 million, led by a $19.0 million increase in noninterest-bearing balances; deposit costs fell to 1.16%.
- Asset quality improved as classified assets fell $4.6 million, past-due loans declined to 0.25%, and two nonaccrual loans paid off in the quarter.
- The Company retired $15.0 million of subordinated debt, executing prudent capital allocation.
- Successfully built-out a talented Commercial Lending Team within the Portland/Metro market.
View full release with financial tables: SEPT Statement of Condition Q3 2026
Florence, Ore., October 22, 2026 — Oregon Pacific Bancorp (ORPB), the holding company of Oregon Pacific Bank, today reported net income of $2.75 million, or $0.38 per diluted share, for the quarter ended September 30, 2026, compared to $2.76 million or $0.38 per diluted share for the quarter ended June 30, 2026.
“Our strong capital position enabled us to retire $15 million in subordinated debt,” said Amber White, President and CEO. “The retirement will reduce future borrowing costs and will allow more resources to support organic growth and long-term shareholder returns.”
In September 2021, $15.0 million of subordinated debt was issued at a fixed rate of 3.375% to strengthen capital and preserve flexibility for strategic opportunities. The Tier 1 leverage ratio was 9.70% immediately after issuance on September 30, 2021, and had increased to 10.74% as of September 30, 2026. With the debt scheduled to reprice at quarter end to three-month SOFR plus 2.66% (approximately 6.34%), management elected to retire the obligation based upon a strong capital position and capacity to support future growth via retained earnings. The retirement of subordinated debt avoids an estimated adverse impact of $505 thousand in additional annual interest expense and approximately $0.04 to $0.05 per diluted share. Funds to retire the subordinated debt came from the Bank’s net income previously transferred to the holding company beginning in April 2025. Accordingly, the September 30, 2026, transaction had no further impact on the Bank’s regulatory capital ratios and is expected to support future capital and earnings growth.
Period-end deposits totaled $728.0 million, reflecting quarterly growth of $19.3 million. Noninterest-bearing demand accounts increased $19.0 million, representing essentially all the quarterly net deposit growth. Money market balances increased $5.5 million in the third quarter and were offset by declines in interest bearing checking and certificate accounts of $3.9 million and $2.1 million, respectively. This improved deposit balance mix as of September 30, 2026, contributed to cost of deposits falling from 1.19% to 1.16% quarter over quarter. Total interest expense for the third quarter was $2.44 million versus prior quarter of $2.38 million, reflecting a 2.35% increase in expense accompanied by 2.72% growth in total period-ending deposits for the quarter.
Classified assets on September 30, 2026, totaled $14.9 million, and reflected a decrease of $4.6 million from the second quarter of 2026. Classified assets are defined as loans and loan contingent liabilities internally graded substandard or worse, impaired loans, adversely classified securities and other real estate owned. The decrease in classified assets was attributable to an upgrade of a $2.7 million owner-occupied nonprofit relationship, two nonaccrual loans that paid off totaling $2.1 million, and $384 thousand of reduced exposure on a $7.0 million multi-family construction project. The multi-family construction project is approximately 90% complete but has experienced significant delays and overages that remain under active credit administration review. This relationship was moved to nonaccrual during the quarter, accompanied by a $194 thousand interest income reversal. Potential resolutions for this relationship include foreclosure, receivership, or external refinance as the situation continues to be closely monitored.
The Bank’s third quarter net interest margin was essentially flat, decreasing slightly from 4.19% to 4.18% quarter over quarter. The reversal of $194 thousand in interest income related to a loan migrated to nonaccrual was responsible for 9 bps of adverse impact in the quarter, indicating continued quarterly net interest margin expansion on a normalized basis. Quarterly loan production for new and renewed loans totaled $46.4 million, with a weighted average repricing life of 1.78 years as compared to $36.7 million and 2.08 years, respectively, for the prior quarter. Strong loan production outpaced $20.2 million in loan payoffs, resulting in outstanding loan growth of $2.8 million in the third quarter. New and renewed loans had a weighted average effective yield of 7.15% versus loan payoffs at 6.24%. The quarter over quarter yield on loans improved from 5.89% to 5.93% despite the noted interest reversal, indicating a continuation of positive trends within earning assets as the yield on new loan originations outperform that of principal reductions.
The two loans within classified assets that paid off during the third quarter represented $1.6 million and $500 thousand of nonaccrual asset backed and owner-occupied commercial real estate balances as of June 30, 2026, respectively. The payoff of the asset backed loan resulted in a $153 thousand recovery of previous charge off, while the payoff on the owner-occupied commercial real estate loan offset all principal and interest due. Past due loans as of September 30, 2026, were 0.25% of the total loan portfolio which represents a material decrease from 1.30% in the prior quarter. As of September 30, 2026, past due totals remain at a modest level and are consistent with historical trends.
In the third quarter of 2026, noninterest expense totaled $7.0 million, reflecting an increase of $304 thousand compared to the previous quarter. The largest expense fluctuation occurred within the salaries and employee benefits category, which increased $171 thousand from the prior quarter, followed by $106 thousand and $75 thousand quarter over quarter increases in outside services and other operating expenses, respectively. The increase in salaries was $135 thousand and primarily reflected strategic hiring for previously vacant positions, including the successful build-out of a Portland/Metro production team led by Portland Market President Katherine Ledson. Subsequent to Katherine’s hiring, the Bank also welcomed three additional commercial lenders in the Portland Market, Callum Auer, Anthony Tomashek, and Evan Harris, each bringing outstanding experience and robust knowledge to the Portland Market. Vicki Gray, who has been with OPB since 2018, also joined the Executive Leadership Team as Lane County Market President, strengthening local leadership and advancing the Bank’s commitment to delivering exceptional service and building lasting customer relationships. Related to the broader staffing additions completed during the quarter, outside services included $121 thousand in one-time recruiter fees.
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 herein 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.
