BEO Bancorp earnings up 63% in 2Q2007
CONTACT:
E. George Koffler, President & CEO, (541) 676-0201
Mark Lemmon, EVP & CFO, (541) 676-0201
Joey J. Warmenhoven, Wedbush Morgan Securities, Market Maker,
(800) 357-3680
John T. Cavender, Howe Barnes Hoefer & Arnett, Market
Maker, (800) 346-5544
(OTC Bulletin Board: BEOB)
Heppner, Oregon, (July 27, 2007) - BEO
Bancorp, parent company of Bank of Eastern
Oregon, reported a 63% increase in earnings in the
second quarter of 2007.
-
Earning $583,000 in 2Q2007, compared to $358,000 in 2Q2006.
-
Earning $1,039,000 YTD 2007, compared to $601,000 YTD 2006.
-
Net interest income up 32% quarter over quarter in 2Q2007.
-
Loan growth 9.9% year over year.
-
EPS $1.32 in 2Q2007 versus $.81 in 2Q2006.
For further information on the Company or to access Internet
banking, please visit our website at http://www.beobank.com.
Financial Performance
BEO Bancorp delivered record earnings in the second quarter of
2007 at $583,000. This is a 63% increase over the $358,000
earned in 2Q2006. Earnings per share increased to $1.32
per share compared to $.81 earned in 2Q2006. YTD earnings
of $1,039,000 for the first half of 2007 are at record levels
and compare to earnings of $601,000 in the first half of 2006,
an improvement of 73%. "We are extremely gratified at the
results of the second quarter of 2007 and the first half of the
year. Primary drivers of this improvement are an improving
net interest margin, solid loan growth, and loan fee income
generation," said President and CEO, E. George Koffler.
ROAA improved in the second quarter to 1.21% for the quarter
and 1.09% for the first half of 2007. ROAE also showed
excellent trending, improving to 23.57% for the second quarter
and 21.58% YTD.
Revenue and Expense
Total revenue continues a strong upward trend with YTD total
income at $7,677,000, a 17% increase over the $6,583,000 of
last year through the second quarter. Loan fee income for
the second quarter increased 278% from $59,604 to $225,477 with
mortgage fees, commercial loan fees and loan participation fees
leading the way. Interest on loans, which is always a
primary profit driver, increased 18% year over year.
Total expenses are showing a slower rate of growth with YTD
expenses at $6,638,000, compared to $5,982,000 in 2006, an 11%
increase. Of particular note is the interest expense increase
year over year of only 3%.
Loan Growth and Credit Quality
Loan growth continues to be a foundation of the bank's
improving performance with total loans standing at $131,370,000
at quarter end, a 9.9% increase over last year and an 11.4%
increase over the linked quarters. "We continue to grow
organically in our footprint with strong local
relationships. We also have leveraged our relationships
with other top performing community banks and purchased good
quality participation loans to supplement that growth," said
EVP and CCO, Jeff Bailey.
"Credit quality is sound," said Bailey. "We had no past
dues at quarter end compared to .06% at the end of the first
quarter," he added. Charge offs for the quarter were
$2,370 and recoveries $1,722. There was a single
non-accrual loan booked at quarter end totaling $48,000,
secured by real estate. No loss is expected on the credit.
Deposit Growth and Operations
Deposits grew 3.8% year over year from $162,669,000 to
$168,869,000. Adding to the funding mix was increased
sweep repurchase balances growing from $3,910,000 to $9,402,000
in the past twelve months. "We continue to generate more than
sufficient deposit and other liability funds to support loan
growth," said EVP and COO, Gary Propheter. "This month Bank of
Eastern Oregon will bring live its first Remote Deposit Capture
Service customer. We are excited about this addition to
our business product line and how it will enable us to better
service business customers in our extended footprint."
Net Interest Margin and Interest Rate Risk
Net Interest Margin (NIM) continues to be a bright spot for the
organization. Average NIM for 2Q2007 was 5.82%, compared
to 4.82% in 2Q2006. NIM for 2007 stands at a solid
5.48%. "Profitability continues to be driven by an
improving NIM at the bank," said EVP and CFO, Mark Lemmon.
"Stable rates that don't appear to be declining for the balance
of 2007 should help keep the NIM at acceptable levels," Lemmon
added.
Interest rate risk continues at a manageable level with the
cumulative gap from one to three years being within policy
levels and earning fluctuations are projected to be minimal
based on interest rate forecasts.
Capital and Equity
Capital levels continue to strengthen as a result of overall
bank profitability. At the bank level, tier 1 capital
improved year over year and linked quarters while tier 1 risked
based capital and total risk based capital declined because of
strong loan growth. Capital levels are at 8.87%, 10.57%,
and 11.59% at quarter end as compared to first quarter 2007
ratios at 8.55%, 11.17%, and 12.25%.
Total equity of the holding company stands at $9,908,000 as of
the end of the second quarter, a new high for the company.
About BEO Bancorp
BEO Bancorp is the holding company for Bank of Eastern Oregon,
which operates 11 branches and three loan production offices in
nine eastern Oregon counties. Branches are located in
Arlington, Ione, Heppner, Condon, Irrigon, Boardman, Burns,
John Day, Prairie City, Fossil and Moro; loan production
offices are located in Hermiston, Ontario, and
Enterprise. Bank of Eastern Oregon also operates a
mortgage division and offers brokerage services through BEO
Financial Services. Bank of Eastern Oregon's website is
www.beobank.com.
Forward-Looking Statements
The statements contained in this release that are not
historical facts are forward-looking statements based upon
management's current expectations and beliefs concerning future
developments and their potential effect on BEO
Bancorp. There can be no assurances that future
developments affecting BEO Bancorp will be the same as those
anticipated by management.
Actual results may differ from those projected in the
forward-looking statements. These forward-looking
statements involve risks and uncertainties. These risks
and uncertainties include, but are not limited to:
(1) competitive pressures in the
banking and financial industries;
(2) changes in interest rate
environment;
(3) general economic conditions,
nationally, regionally, and in operating markets;
(4) changes in regulatory environment;
(5) changes in business conditions and
inflation;
(6) changes in securities markets; and
(7) future credit loss experience.
