BEO Bancorp, parent company of Bank of Eastern Oregon (OTCBB:BEOB),
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. BEO BANCORP CONSOLIDATED FINANCIAL HIGHLIGHTS
(DOLLAR AMOUNTS IN THOUSANDS -- except earnings per share) �
CONDENSED BALANCE SHEET (Unaudited) � 06/30/07 � 06/30/06 % Change
ASSETS Cash and due from banks $ 4,046 $ 7,040 -42.5% Federal funds
sold 7,090 - - Securities, at fair value 41,833 44,550 -6.1% Net
loans 131,370 119,551 9.9% Premises and equipment 5,218 5,031 3.7%
Other real estate owned 47 104 -54.8% Other assets � 6,648 � 6,705
-0.9% TOTAL ASSETS $ 196,252 $ 182,981 7.3% � LIABILITIES AND
SHAREHOLDERS' EQUITY LIABILITIES Deposits Noninterest bearing $
24,513 $ 24,051 1.9% Interest bearing � 144,356 � 138,618 4.1%
Total deposits 168,869 162,669 3.8% Borrowed funds/Repurchase
Accounts 9,402 3,910 140.5% Other liabilities � 8,073 � 8,195 -1.5%
TOTAL LIABILITIES 186,344 174,774 6.6% � SHAREHOLDERS' EQUITY
Common stock 2,202 2,202 0.0% Additional paid-in capital 1,487
1,487 0.0% Retained earnings and accumulated other comprehensive
income � 6,219 � 4,518 37.6% TOTAL SHAREHOLDERS' EQUITY � 9,908 �
8,207 20.7% TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 196,252
$ 182,981 7.3% � � CONDENSED STATEMENT OF INCOME (Unaudited) �
Results of Operation Results of Operation Three Months Ending Year
to Date � 06/30/07 � 06/30/06 % Change 06/30/07 06/30/06 % Change �
Interest income $ 3,484 $ 2,938 18.6% $ 6,655 $ 5,651 17.8%
Interest expense � 1,144 � 1,158 -1.2% � 2,290 2,219 3.2% Net
interest income 2,340 1,780 31.5% 4,365 3,432 27.2% Provision for
possible loan losses � 60 � 85 -29.4% � 120 135 -11.1% Net interest
income after provision for possible loan losses 2,280 1,695 34.5%
4,245 3,297 28.8% � Noninterest income 534 491 8.8% 1,022 932 9.7%
Noninterest expense � 1,975 � 1,730 14.2% � 3,833 3,506 9.3% Income
before taxes 839 456 84.0% 1,434 723 98.3% Income taxes � 256 � 98
161.2% � 395 122 223.8% NET INCOME $ 583 $ 358 62.8% $ 1,039 $ 601
72.9% � Earnings per share $ 1.32 $ 0.81 62.8% $ 2.36 $ 1.36 72.9%
Return on Average Assets 1.21% 0.79% 53.5% 1.09% 0.67% 63.0% Return
on Average Equity 23.57% 16.46% 43.2% 21.58% 13.94% 54.8%
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