The Board of Directors of Pacific Financial declared a quarterly cash dividend of $0.15 per share on April 22, 2026. The dividend will be payable on May 22, 2026 to shareholders of record on May 8, 2026. This is the same dividend paid per share the prior quarter and an increase from $0.14 per share in the first quarter one year ago.
"Bank of the Pacific has built lasting relationships within the communities we serve which has enabled us to build a strong franchise with $1.3 billion in assets that reinvests into the same communities that have supported our Bank," said Denise Portmann, President and Chief Executive Officer. "Our shareholders have benefited from growth in earnings per share, tangible book value per share and quarterly dividends. For the first quarter of 2026, earnings increased 28% from the same period one year earlier, while tangible book value per share increased 10% over the same time frame. Core deposit growth continued in the first quarter reflecting our commitment to our communities and their support of our community bank franchise."
First Quarter 2026 Financial Highlights:
Return on average assets ("ROAA") was 0.97% in the first quarter 2026, compared to 0.98% for the fourth quarter 2025, and 0.81% for the first quarter 2025.
Return on average equity ("ROAE") was 9.69%, compared to 9.84% the preceding quarter, and 8.48% the first quarter a year earlier.
Net interest income decreased $322,000 to $12.0 million in the first quarter, compared to the prior quarter, and increased $693,000 from $11.3 million in the first quarter of 2025.
Net interest margin ("NIM") decreased to 4.04%, compared to 4.11% the preceding quarter, and decreased from 4.12% for the first quarter a year ago. The decrease in the net interest margin was largely related to lower yields on loans and interest-earning cash balances which reflect a full quarter of interest rate reductions by the Federal Reserve in the fourth quarter of 2025.
A recapture for credit losses of $300,000 was recognized in the first quarter ended March 31, 2026, compared to a provision of $120,000 in the preceding quarter and a provision of $83,000 in the first quarter a year ago.
Gross portfolio loan balances decreased slightly to $771.1 million at March 31, 2026, compared to $775.9 million at December 31, 2025, and increased 9%, or $64.1 million, from $707.0 million one year earlier.
Total deposits increased $15.7 million to $1.14 billion at March 31, 2026, compared to the previous quarter and increased $64.0 million, or 6%, from one year earlier.
Non-performing assets to total assets ratio remained minimal at 0.05%, or $663,000 for the current quarter ended March 31, 2026. Substandard loans increased $742,000 to $2.8 million while special mention assets decreased $2.0 million to $14.2 million at March 31, 2026 compared to the previous quarter.
Shareholders' equity increased $690,000 during the quarter largely due to net income. Partially offsetting net income was higher accumulated other comprehensive loss marks on the available-for-sale investment portfolio and payments of dividends. Tangible book value per share was $11.34 at March 31, 2026, an increase of $1.01 per share from $10.33 at March 31, 2025, representing growth in tangible book value per share of 10%. Total dividends paid to shareholders over the past year totaled $0.57 per share.
Bank of the Pacific continues to exceed regulatory well-capitalized requirements. At March 31, 2026, Bank of the Pacific's estimated leverage ratio was 10.7% and its estimated total risk-based capital ratio was 17.4%.
Balance Sheet Review
Total assets increased $15.5 million to $1.29 billion at March 31, 2026 from $1.28 billion one quarter earlier, and increased $71.7 million compared to $1.22 billion at March 31, 2025.
Cash and interest-earning cash increased $12.0 million to $126.9 million at March 31, 2026, from $114.8 million at December 31, 2025, and decreased $17.0 million from $143.8 million one year earlier. The increase in cash and interest-earning cash in the current quarter largely relates to deposit growth and a slight reduction in outstanding loan balances.
During the first quarter of 2026, liquidity metrics continued to be strong. At March 31, 2026, the Company's short-term funding sources totaled $626.3 million. This represents a coverage ratio of short-term funds available to uninsured and uncollateralized deposits of 194%. Included in available sources are collateralized credit lines the Company has established with the Federal Home Loan Bank of Des Moines (FHLB) and the Federal Reserve Bank of San Francisco. Additionally, the Bank has $60.0 million of unsecured borrowing lines from various correspondent banks. There was no balance outstanding on any of these facilities at quarter-end. Uninsured or uncollateralized deposits were 28% of total deposits at March 31, 2026.
Investment securities increased $7.2 million to $329.7 million at March 31, 2026, compared to $322.6 million at December 31, 2025, and increased $24.4 million compared to a year ago. The increase in investment securities was funded from deposit growth. The largest investment category was collateralized mortgage obligations, which accounted for 55% of the investment portfolio at March 31, 2026 compared to 54% at December 31, 2025 and 51% at March 31, 2025. The yield on the investment portfolio increased 10 basis points during the current quarter to 3.60% from 3.50% the prior quarter and the same as the first quarter a year ago. The current quarter increase was related to purchases totaling $13.9 million with an average yield of 4.78%. The adjusted duration of the investment securities portfolio was 4.0 years at March 31, 2026.
Gross loans balances decreased $4.7 million, to $771.1 million at March 31, 2026, compared to $775.9 million at December 31, 2025. Year-over-year gross loan growth was 9%, or $64.1 million, which includes $30 million in SBA commercial loan purchases during the third quarter of 2025. The decrease in loan balances was primarily the result of a $4.3 million planned decrease in Woodside auto loans as well as a $1.2 million and $1.4 million decrease in construction and development loans and CRE, NOO, respectively, which were partially offset by increases of $2.0 million and $1.8 million growth in residential 1-4 family and farmland, respectively. In the first quarter of 2026, loan originations were seasonally low and were outpaced by loan repayments. However, the loan pipeline remains steady and continues to be supported by business activity developed by the Company's commercial lending teams.
The Company manages concentration limits that establish maximum exposure levels by certain industry segments, loan product types, geography and single borrower limits. In addition, the loan portfolio continues to be well-diversified and is collateralized with assets predominantly within the Company's Western Washington and Oregon markets. Loans classified as commercial real estate for regulatory concentration purposes totaled $288.4 million at March 31, 2026, or 198% of total risk-based capital.
Credit quality: Nonperforming assets remain minimal but increased slightly to $663,000, or 0.05% of total assets at March 31, 2026. The increase primarily relates to one non-accruing commercial loan. Classified loans, which are defined as loans rated substandard or worse, totaled 0.36% of portfolio loans at March 31, 2026 compared to 0.26% the prior quarter and 0.38% one year earlier. Special mention decreased $2.0 million to $14.2 million during the quarter, or 1.84% of total loans compared to 2.09% the prior quarter. The Company had zero other real estate owned as of March 31, 2026.
Allowance for credit losses ("ACL"): ACL-loans decreased $251,000 to $9.0 million, or 1.17% of total portfolio loans at March 31, 2026, compared to 1.20% at December 31, 2025. The ratio of ACL to non-government guaranteed loans was 1.23% at March 31, 2026. The recapture for credit losses of $300,000 recorded in the current quarter compared to a provision for credit losses of $120,000 in the prior quarter, was largely due to lower loans outstanding, lower unfunded loan commitments and updates to the Company's economic forecast scenarios and related model assumptions.
Total deposits increased $15.7 million to $1.14 billion at March 31, 2026, compared to the previous quarter and increased $64.0 million, or 6% from $1.07 billion one year earlier. The majority of the increase for the current quarter was due to increased money-market balances and non-interest-bearing deposits, which were partially offset by decreases in interest-bearing demand balances. Year-over-year growth was primarily a result of increased money-market balances and non-interest-bearing accounts.
Core deposits represented 87% of total deposits at quarter end, including non-interest-bearing deposits of 38% of deposits, and interest-bearing demand, money market, and savings deposits representing 11%, 28%, and 10% of total deposits, respectively. CDs as a percentage of deposits remained at 13% of total deposits. The high percentage of non-interest-bearing deposits continues to support a lower cost core deposits portfolio.
Shareholders' equity was $127.1 million at March 31, 2026, compared to $126.4 million at December 31, 2025, and $116.9 million at March 31, 2025. The increase in shareholders' equity during the current quarter was primarily due to $3.1 million in net income, offset by $909,000 increase in unrealized losses (after-tax) on available-for-sale securities and $1.5 million in dividends to shareholders. Net unrealized losses (after-tax) included in shareholders' equity on available-for-sale securities were $10.6 million at March 31, 2026, compared to $9.7 million at December 31, 2025, and $14.0 million at March 31, 2025.
Book value per common share was $12.68 at March 31, 2026, compared to $12.61 at December 31, 2025, and $11.67 at March 31, 2025. Tangible book value per common share was $11.34 at March 31, 2026, compared to $11.27 at December 31, 2025, and $10.33 at March 31, 2025. The Company's tangible common equity ratio was 8.9% at March 31, 2026, compared to 9.0% in the prior quarter and 8.6% one year earlier.
Regulatory capital ratios of the Bank continue to exceed well-capitalized regulatory thresholds, with the Bank's leverage ratio at 10.7% and total risk-based capital ratio at 17.4% as of March 31, 2026. These regulatory capital ratios are estimates, pending completion and filing of regulatory reports.
Income Statement Review
Net interest income decreased by $322,000, to $12.0 million for the first quarter of 2026, and increased $693,000 compared to $11.3 million for the first quarter a year ago. The decrease in the current quarter compared to the preceding quarter primarily reflects decreased loan and interest-earning cash yields partially offset by an increase in average-interest bearing asset balances.
The Company's NIM decreased 7 basis points to 4.04% for the quarter ended March 31, 2026, from 4.11% the prior quarter and 4.12% in the first quarter a year ago.
Yields on portfolio loans decreased 7 basis points during the first quarter to 5.89% from 5.96% the preceding quarter, while yields on investment securities increased 10 basis points to 3.60% from 3.50% over the same time period while yields on interest-earning cash decreased 27 basis points. Both interest-earning cash and loan yields reflect the impact of a full quarter of interest rate reductions announced in the fourth quarter of 2025 by the Federal Reserve.
The Company continues to actively monitor and manage its cost-of-funds. For the current quarter, the Company's total cost of funds increased slightly to 1.09% compared to 1.08% for the preceding quarter, primarily as a result of higher balances of money-market accounts during the quarter and decreased from 1.10% for the first quarter of 2025. The high percentage of non-interest-bearing deposits at 38% continues to help reduce volatility in deposit costs.
Noninterest income was $1.3 million for the current quarter compared to $1.7 million the prior quarter and $1.2 million for the first quarter a year earlier. The $386,000 decrease compared to the prior quarter was primarily due to the lower fee card network incentives.
Noninterest expenses decreased to $9.8 million for the first quarter of 2026 compared to $10.0 million for the prior quarter and increased from $9.4 million for the first quarter of 2025. The decrease in the current quarter compared to the prior quarter was primarily related to decreases in salary and employee benefit expenses, as well as reduced marketing expenses. These reductions were partially offset by slightly higher professional fees, data processing & IT expenses. The increase from the first quarter of 2025 was primarily due to higher salaries and benefit expenses.
Income tax expense: Federal and Oregon state income tax expenses totaled $714,000 for the current quarter, and $792,000 for the preceding quarter, resulting in effective tax rates of 19.0% and 20.3%, respectively. These income tax expenses reflect the benefits of tax-exempt income on tax-exempt loans and investments, affordable housing tax credit financing, and investments in bank-owned life insurance.
FINANCIAL HIGHLIGHTS (unaudited)
Quarter Ended
Change From
(In 000s, except per share data)
Mar 31,
Dec 31,
Mar 31,
Dec 31, 2025
Mar 31, 2025
2026
2025
2025
$
%
$
%
Earnings Ratios & Data
Net Income
$
3,050
$
3,119
$
2,377
$
(69
)
-2
%
$
673
28
%
Return on average assets
0.97
%
0.98
%
0.81
%
-0.01
%
0.16
%
Return on average equity
9.69
%
9.84
%
8.48
%
-0.15
%
1.21
%
Efficiency ratio (1)
73.94
%
71.21
%
75.86
%
2.73
%
-1.92
%
Net-interest margin %(2)
4.04
%
4.11
%
4.12
%
-0.07
%
-0.08
%
Share Ratios & Data
Basic earnings per share
$
0.30
$
0.31
$
0.24
$
(0.01
)
-3
%
$
0.06
25
%
Diluted earning per share
$
0.30
$
0.31
$
0.24
$
(0.01
)
-3
%
$
0.06
25
%
Book value per share(3)
$
12.68
$
12.61
$
11.67
$
0.07
1
%
$
1.01
9
%
Tangible book value per share(4)
$
11.34
$
11.27
$
10.33
$
0.07
1
%
$
1.01
10
%
Common shares outstanding
10,024
10,020
10,020
4
0
%
4
0
%
PFLC stock price
$
12.98
$
12.75
$
10.90
$
0.23
2
%
$
2.08
19
%
Dividends paid per share
$
0.15
$
0.14
$
0.14
$
0.01
7
%
$
0.01
7
%
Balance Sheet Data
Assets
$
1,290,658
$
1,275,116
$
1,218,969
$
15,542
1
%
$
71,689
6
%
Portfolio Loans
$
771,142
$
775,852
$
707,034
$
(4,710
)
-1
%
$
64,108
9
%
Deposits
$
1,138,653
$
1,122,935
$
1,074,646
$
15,718
1
%
$
64,007
6
%
Investments
$
329,742
$
322,555
$
305,377
$
7,187
2
%
$
24,365
8
%
Shareholders equity
$
127,080
$
126,390
$
116,949
$
690
1
%
$
10,131
9
%
Liquidity Ratios
Short-term funding to uninsured
and uncollateralized deposits
194
%
193
%
212
%
1
%
-18
%
Uninsured and uncollateralized
deposits to total deposits
28
%
29
%
24
%
-1
%
4
%
Portfolio loans to deposits ratio
68
%
69
%
66
%
-1
%
2
%
Asset Quality Ratios
Non-performing assets to assets
0.05
%
0.01
%
0.10
%
0.04
%
-0.05
%
Non-accrual loans to portfolio loans
0.09
%
0.02
%
0.17
%
0.07
%
-0.08
%
Loan losses(recoveries) to avg portfolio loans
0.00
%
-0.07
%
0.04
%
0.07
%
-0.04
%
ACL-loans to portfolio loans
1.17
%
1.20
%
1.26
%
-0.03
%
-0.09
%
Capital Ratios
Total risk-based capital ratio (Bank)
17.4
%
17.2
%
17.4
%
0.2
%
0.0
%
Tier 1 risk-based capital ratio (Bank)
16.2
%
16.1
%
16.2
%
0.1
%
0.0
%
Common equity tier 1 ratio (Bank)
16.2
%
16.1
%
16.2
%
0.1
%
0.0
%
Leverage ratio (Bank)
10.7
%
10.7
%
10.9
%
0.0
%
-0.2
%
Tangible common equity ratio
8.9
%
9.0
%
8.6
%
-0.1
%
0.3
%
(1) Non-interest expense divided by net interest income plus noninterest income.
(2) Tax-exempt income has been adjusted to a tax equivalent basis at a rate of 21%.
(3) Book value per share is calculated as the total common shareholders' equity divided by the period ending number of common stock shares outstanding.
(4) Tangible book value per 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 (unaudited)
Quarter Ended
Change From
($ in 000s)
Mar 31,
Dec 31,
Mar 31,
Dec 31, 2025
Mar 31, 2025
2026
2025
2025
$
%
$
%
Interest Income
Loan interest & fee income
$
11,200
$
11,561
$
10,304
$
(361
)
-3
%
$
896
9
%
Interest earning cash income
933
1,029
1,208
(96
)
-9
%
(275
)
-23
%
Investment income
2,923
2,778
2,678
145
5
%
245
9
%
Interest Income
15,056
15,368
14,190
(312
)
-2
%
866
6
%
Interest Expense
Deposits interest expense
2,889
2,865
2,694
24
1
%
195
7
%
Other borrowings interest expense
184
198
206
(14
)
-7
%
(22
)
-11
%
Interest Expense
3,073
3,063
2,900
10
0
%
173
6
%
Net Interest Income
11,983
12,305
11,290
(322
)
-3
%
693
6
%
Provision (recapture) for credit losses
(300
)
120
83
(420
)
-350
%
(383
)
-461
%
Net Interest Income after provision
12,283
12,185
11,207
98
1
%
1,076
10
%
Non-Interest Income
Fees and service charges
1,102
1,492
1,117
(390
)
-26
%
(15
)
-1
%
Gain on sale of investments, net
-
-
(165
)
-
0
%
165
-100
%
Gain on sale of loans, net
-
-
(2
)
-
0
%
2
-100
%
Income on bank-owned insurance
201
198
191
3
2
%
10
5
%
Other non-interest income
6
5
12
1
20
%
(6
)
-50
%
Non-Interest Income
1,309
1,695
1,153
(386
)
-23
%
156
14
%
Non-Interest Expense
Salaries and employee benefits
6,201
6,336
5,969
(135
)
-2
%
232
4
%
Occupancy
624
600
592
24
4
%
32
5
%
Furniture, Fixtures & Equipment
323
320
302
3
1
%
21
7
%
Marketing & donations
138
177
153
(39
)
-22
%
(15
)
-10
%
Professional services
297
247
299
50
20
%
(2
)
-1
%
Data Processing & IT
1,258
1,221
1,218
37
3
%
40
3
%
Other
987
1,068
906
(81
)
-8
%
81
9
%
Non-Interest Expense
9,828
9,969
9,439
(141
)
-1
%
389
4
%
Income before income taxes
3,764
3,911
2,921
(147
)
-4
%
843
29
%
Provision for income taxes
714
792
544
(78
)
-10
%
170
31
%
Net Income
$
3,050
$
3,119
$
2,377
$
(69
)
-2
%
673
28
%
Effective tax rate
19.0
%
20.3
%
18.6
%
-1.3
%
0.4
%
BALANCE SHEET (unaudited)
Period Ended
Change from
% of Total
($ in 000s)
Mar 31,
Dec 31,
Mar 31,
Dec 31, 2025
Mar 31, 2025
Mar 31,
Dec 31,
Mar 31,
2026
2025
2025
$
