BEO Bancorp earnings up 39.4% in 3Q2007
CONTACT:
E. George Koffler, President & CEO, (541) 676-020l
Mark Lemmon, EVP & CFO, (541) 676-0201
Joey J. Warmenhoven, McAdams, Wright and Ragan, Market Maker,
(866) 662-0351
John T. Cavender, Howe Barnes Hoefer & Arnett, Market
Maker, (800) 346-5544
(OTC Bulletin Board: BEOB)
Heppner, Oregon (October 26, 2007)
-BEO Bancorp, parent company of
Bank of Eastern Oregon, reported a
39.4% increase in earnings in the third quarter of 2007.
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Earnings $577,000 in 3Q2007, compared to $414,000 in 3Q2006.
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Earnings YTD $1,616,000 compared to YTD earnings in 2006 of $1,015,000, a 59.2% increase.
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Loan growth 9.3% year over year.
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Total asset growth 6.4% year over year, approaching $200 million.
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Earnings per share $1.83 YTD versus $1.15 in 2006.
For further information on the Company or to access
Internet banking, please visit our website at
http://www.beobank.com.
Financial Performance
Earnings for BEO Bancorp were substantial in 3Q2007 at $577,000
compared to earnings of $414,000 in 3Q2006, an increase of
39.4%. Net Income YTD 2007 was also impressive at
$1,616,000 compared to YTD 2006 earnings of $1,015,000, a 59.2%
increase.
"Our improved results continue to be driven by increased
interest income through moderate loan growth and a very small
increase in interest expense through cost containment," said
President and CEO, E. George Koffler. "We are
particularly pleased the stock price increased from $19.45 to
$26 during the last quarter, adjusted for the stock dividend
paid, a 34% increase," Koffler added.
ROAA was 1.17% for 3Q2007 and 1.12% YTD, increases of 31.1% and
49.7% over the same period of 2006. ROAE also is trending
positively with ROAE of 22.12% for 3Q2007 compared to 19.23% in
3Q2006, a 15.1% increase.
Revenue and Expense
Interest income continues on a positive trend at $3,629,000 for
the quarter compared to $3,190,000 in 2006, a 13.8%
increase. YTD interest income grew from $8,841,000 in 2006
to $10,283,000 in 2007, an increase of 16.3%. Both loan
interest and securities portfolio interest complement that
total.
Loan fee income leads the non-interest income totals, primarily
from commercial and Mortgage Division loan fees. Despite
the subprime debacle in the real estate markets and the general
slowdown in that segment, BEO Mortgage is running 14% ahead of
2006 performance due to targeted marketing, strong local
relationships, flexible programs, and branch production.
Interest expense containment continues to drive profitability
with interest expense for the third quarter up only 0.6% and
1.9% YTD. Despite this, the bank continues to grow market
share.
Loan Growth and Credit Quality
Loan totals continue to grow at a manageable rate, increasing
9.3% year over year from $123,543,000 to
$135,072,000. Growth over linked quarters was
2.8%. "We are pleased about the continued quality loan
growth we are experiencing," said EVP and Chief Credit Officer,
Jeff Bailey. "Our new Enterprise loan production office is
averaging $2,000,000 per month in booked loans and our pipeline
system wide is adequate to continue growing loans," said
Bailey.
Credit quality remains strong with no 30 day past due loans at
quarter end and the non accrual loan of the previous quarter
was liquidated. There were no loan charge offs or
recoveries during the quarter. "Commodity prices,
particularly wheat, are stronger than they have been for
years. Our loan portfolio quality has strengthened because
of that," said Bailey.
Deposit Growth and Operations
Liabilities, including deposits and repurchase agreements,
totaled $179,060,000 at quarter end compared to 3Q2006's end of
$169,646,000, an increase of 5.6%. "We are completing a
successful customer service training program to complement our
history of providing service excellence to our customers," said
EVP and Chief Operations Officer, Gary Propheter. "We have also
bundled a great package of business and municipal products that
will come to the market in the fourth quarter that we hope will
increase business accounts and deposit and loan totals,"
Propheter concluded.
Net Interest Margin and Interest Rate Risk
Net interest margin (NIM) average for 3Q2007 was 5.52% compared
to 3Q2006 of 4.82%. Comparing linked quarters shows NIM
averaged 5.81% in 2Q2007, for a reduction of 29 basis points
that was primarily driven by variances in loan fees. "We
expect continued pressure on NIM during the remainder of 2007
and into next year," said EVP and Chief Financial Officer, Mark
Lemmon. "The market experienced a reduction in rates at
the end of the quarter and we are prepared for one or two
additional moves in the coming months," said Lemmon.
Interest rate risk continues at a manageable level. The
bank is slightly asset sensitive and earnings could be
negatively affected short term by downward rate
movements.
Capital and Equity
Capital ratios at the bank level were mixed for the
quarter. Tier 1 capital declined by 9 basis points, from
8.87% to 8.78%, primarily as a result of strong quarterly
growth of total assets from $186,000,000 to
$196,000,000. Tier 1 risk based capital and total risk
based capital improved to 10.71% and 11.74% from 10.57% and
11.59% for the previous quarter.
Total equity at the holding company continued to strengthen
from $9,015,000 to $10,957,000, year over year, as a result of
improved earnings and improvements in the value of the
investment portfolio due to market movements.
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.
