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Pacific Financial Corporation (PFLC)

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Previous Close7.68
Open7.68
Bid0.00 x 0
Ask0.00 x 0
Day's Range7.68 - 7.68
52 Week Range5.80 - 12.85
Volume4,165
Avg. Volume8,058
Market Cap80.773M
Beta (5Y Monthly)0.94
PE Ratio (TTM)7.54
EPS (TTM)1.02
Earnings DateMay 05, 2020
Forward Dividend & Yield0.32 (4.17%)
Ex-Dividend DateAug 11, 2020
1y Target EstN/A
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  • GlobeNewswire

    Pacific Financial Corp Earns $2.4 Million, or $0.23 per Diluted Share, for Second Quarter 2020; Declares Quarterly Cash Dividend of $0.08 per Share; Updates COVID-19 Response

    ABERDEEN, Wash., July 28, 2020 (GLOBE NEWSWIRE) -- Pacific Financial Corporation (OTCQX: PFLC), (“Pacific”), the holding company (the “Company”) for Bank of the Pacific (the “Bank”), today reported net income of $2.4 million, or $0.23 per diluted share for the second quarter 2020, compared to $1.2 million, or $0.11 per diluted share in the preceding quarter and $3.6 million, or $0.34 per diluted share, for the second quarter of 2019. For the first six months of 2020, net income was $3.6 million, or $0.34 per diluted share, compared to $6.6 million, or $0.61 per diluted share, for the first six months of 2019. Impacting earnings for the second quarter and for the first half of 2020 was the increased loan loss provision taken in the first two quarters of 2020 related to the COVID-19 pandemic, which was partially offset by robust revenue growth generated from gain on sale of loans.“Driven by solid loan and deposit growth, Pacific’s second quarter 2020 operating results were strong, although overshadowed by the Coronavirus pandemic and its continuing impact on the economy and our communities,” said Denise Portmann, President and Chief Executive Officer. “Our focus continues to be on keeping our employees and communities safe. All of our branches are currently open with COVID-19 health safety protocols in place, while many of our back-office employees continue to work from home.“Earnings for the current quarter benefitted from a record level of mortgage banking production, propelled by refinancing activity as a result of historically low interest rates, which led to higher gains on sale of loans. Also enhancing our loan portfolio was the addition of $130.5 million in Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans that we funded during the quarter, which was partially offset by an $18.0 million reduction in commercial loans mainly due to a decline in credit line utilization,” said Portmann. “Significant deposit inflows as well as the deposits of customer PPP loan proceeds contributed to a 25% growth in total deposits during the quarter. I am incredibly proud of our bankers as they worked together to support our customers and communities during one of the most difficult and challenging quarters on record.“Our net interest margin contracted during the quarter as anticipated with two Fed rate cuts earlier in the year as well as the 1% rate on newly funded SBA PPP loans,” commented Portmann. “While there were no deteriorating credit metrics, with nonperforming assets and adversely classified loans improving from the linked quarter, we proactively provisioned an additional $1.0 million for potential credit losses on loans for the second quarter of 2020, bringing our reserves to $11.5 million at quarter end.”Pacific Financial’s board of directors declared a quarterly cash dividend of $0.08 per share on July 22, 2020. The dividend will be payable August 26, 2020, to shareholders of record on August 12, 2020. The current annualized dividend yield is 4.5% based on recent market prices and represents 35% of second quarter earnings. “Pacific will continue to take appropriate measures to maintain strong capital and liquidity levels,” said Portmann. COVID-19 Pandemic Update Pacific has taken a number of steps to protect its employees and support small businesses impacted by COVID-19 and continues to work diligently with its customers.Branches and Key Operating Functions: In Mid-June, as counties within our branch footprint began removing some restrictions as they met COVID-19 phase qualifications for the states of Washington or Oregon, our branch lobbies were re-opened after operating through the drive-up only early in the pandemic. However, Pacific continues to encourage the use of digital and electronic channels. Additionally, the Company continues to disperse key operating functions including deposit operations, loan documentation and servicing, electronic banking and wires, and network services to enhance the safety of our employees and to minimize disruption in case of illness.Programs to Provide Relief and Support our Clients:  SBA Paycheck Protection Program: In March 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) which provides economic relief for the country, including the Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) to fund short-term loans for small businesses. The Company actively participated in this program and as of June 30, 2020, the Bank has processed and funded 740 applications for a total of $130.5 million with an average loan amount of $176,000. Lender origination fees, paid by the SBA, are estimated to be $4.6 million and will be recognized over the earlier of forgiveness/payoff of the loan or amortized over the term of the loan. As of the date of this release, the bank has not processed any requests for loan forgiveness as the SBA has not yet announced the method by which applications are to be submitted.PPP Loan Detail (Unaudited) PPP Loan Balance (000's) as of June 30, 2020 Number of Loans Total Balance Average Loan Size Estimated Fee Number Submitted for Forgiveness Amount Submitted for Forgiveness                 (Dollars in thousands) Under $100 479$18,187 $38$909 -$- $100 to $350 173 32,277  187 1,614 - - $350 to $2,000 82 62,231  759 1,867 - - Over $2,000 6 17,812  2,969 178 - -   PPP Loans 740$130,507 $176$4,568 -$-                              PPP by Industry          (Unaudited)           June 30, 2020 % of Total                         (Dollars in thousands)         Agriculture$9,526 7%         Construction 32,921 25%         Manufacturing 20,346 16%         Wholesale Trade 7,881 6%         Retail Trade 11,684 9%         Transportation and Warehousing 4,060 3%         Professional Services 5,574 4%         Waste Mngt & Remediation 8,112 6%         Health Care 7,632 6%         Accommodation and Food Services 13,220 10%         Other Services 4,251 3%         Other 5,300 4%           Total$130,507 100%         Loan Payment Deferrals: In March 2020, the Bank began providing 90 day payment deferrals to customers adversely impacted by operating restrictions due to COVID-19. Currently, loan payment deferral requests have declined. As of June 30, 2020, 354 notes, or $106.2 million in loans, have been modified under this program representing 15.8% of gross loans outstanding, excluding PPP loans. A majority of these loan payment deferrals will expire during July and August. As of June 30, 2020, the bank granted a second round of payment deferrals on approximately $4.0 million in loans. Payment Deferrals by Industry (Unaudited) Industry June 30, 2020 % of Total  of Loans         (Dollars in thousands) Accommodation and food services$33,824  32% 49 Construction and manufacturing 7,254  7% 45 Health care and social assistance 1,231  1% 2 Real estate, rental and leasing 44,881  42% 100 Recreation and leisure 2,452  2% 9 Retail and wholesale trade 4,643  4% 18 Other services (except public admin) 4,609  4% 13 Consumer loans 5,405  5% 91 Other 1,930  2% 27   Total deferrals$106,229  100% 354 Other: As well as the items mentioned above, the Bank implemented other measures to assist its customers, including waiver of telephone transfer fees, waiver of deposit account monthly service charges through September for first responders and health care professionals, and waiver of early withdrawal fees on time deposits with a COVID-19 related need.  Second Quarter 2020 Results“There was significant growth in our balance sheet in the second quarter,” said Carla Tucker, Executive Vice President and Chief Financial Officer. “The growth was primarily a result of the funding of SBA PPP loans totaling $130.5 million. Most of these loans were made to existing customers who deposited the loan proceeds into their checking accounts with us at Bank of the Pacific. In addition, net income grew from the first quarter as a result of increased mortgage banking production as well as a lower provision for loan losses.” Second quarter 2020 Financial Highlights (as of, or for the period ended June 30, 2020, except as noted): * Net income was $2.4 million for the second quarter of 2020, compared to $3.6 million for the second quarter a year ago, and $1.2 million for first quarter 2020. * Diluted earnings per share were $0.23, for the second quarter of 2020, compared to $0.34 for the second quarter 2019, and $0.11 for the first quarter 2020. * Provision for loan losses was $1.0 million for the second quarter, compared to no provision a year earlier, and $2.0 million in the first quarter of 2020. * Net interest margin (“NIM”) was 3.70% including SBA PPP loans, and 3.89% excluding SBA PPP loans, for the second quarter of 2020, compared to 4.74% for the second quarter of 2019, and 4.30% for the preceding quarter. Industry peer NIM was 3.57% at March 31, 2020. [Industry peers comprise of approximately 488 banks in the SNL Microcap U.S. Bank Index.]  * Noninterest income for the second quarter of 2020 increased 39% over the like quarter a year ago and 35% from the linked quarter. * Total deposits increased $199.5 million, or 25%, to $995.0 million at June 30, 2020, compared to $795.5 million at June 30, 2019 and increased $200.4 million from $794.6 million at March 31, 2020. Non-interest-bearing deposits grew by 42% from the linked quarter and represented 34% of total deposits at June 30, 2020. * Gross loans increased $97.7 million, or 14%, to $787.3 million at June 30, 2020, compared to $689.7 million at June 30, 2019, and grew $108.7 million, or 16%, from $678.6 million at March 31, 2020. Included in total loans for the current quarter were 740 PPP loans totaling $130.5 million. * Annualized return on average assets was 0.93%, and annualized return on average equity was 8.90%. Industry peer ROAA was 0.67% and ROAE was 6.15% at March 31, 2020. Pre-tax pre-provision return on average assets (non-GAAP) was 1.53% for the second quarter of 2020, compared to 2.01% for the second quarter a year ago and 1.53% for the first quarter of 2020. [Industry peers comprise of approximately 488 banks in the SNL Microcap U.S. Bank Index.]  * Shareholder equity increased 8% to $109.4 million from a year ago and grew 3% from the linked quarter. * Book value per share increased 8% to $10.31 from a year earlier and 3% from the first quarter of 2020.Results of Operations Net income was $2.4 million for the second quarter of 2020, compared to $3.6 million for the second quarter a year ago, and $1.2 million for first quarter 2020. For the first six months of 2020, net income was $3.6 million, compared to $6.6 million for the first six months of 2019.Diluted earnings per share were $0.23 for the second quarter of 2020, compared to $0.34 per diluted share for the second quarter of 2019, and $0.11 for the first quarter of 2020. For the six months ended June 20, 2020, diluted earnings per share were $0.34, compared to $0.61 for the six months ended June 30, 2019.Net interest income, before provision for loan losses, was $9.0 million for the second quarter of 2020, compared to $9.7 million for the second quarter a year ago, and $9.1 million for first quarter 2020. For the first six months of 2020, net interest income was $18.1 million compared to $19.3 million from the first six months of 2019. The drop in net interest income from the preceding quarter and year-to-date, was primarily due to a decline in earning asset yields, as interest rates on adjustable rate loans and investments decreased following reductions in short term interest rates, coupled with a lagging decrease in the cost of interest bearing deposits. Contributing to net interest income was amortized SBA PPP fees of $276,000 and SBA PPP loan interest of $258,000 for the current quarter.The net interest margin was 3.70% including SBA PPP loans, and 3.89% excluding SBA PPP loans, for the second quarter of 2020, compared to 4.74% for the second quarter 2019, and 4.30% for the first quarter 2020. For the first six months of 2020, the NIM was 3.98% including SBA PPP loans and 4.15% excluding SBA PPP loans, compared to 4.72% for the first six months of 2019. “Our NIM came under pressure from the two Federal Reserve rate cuts earlier in the year, lower yields on the repricing of the loan portfolio, and the growth in lower yielding federal funds sold as a result of PPP loan proceeds, as well as the addition of $130.5 million in low yielding SBA PPP loans,” said Tucker. Pacific Financial continues to maintain a net interest margin above the peer average posted by the SNL Small Cap U.S. Bank Index as of March 31, 2020. The yield on average interest-earning assets was 3.96%, including PPP loans, and 4.17% excluding PPP loans, for the second quarter of 2020, compared to 5.10% for the second quarter a year ago and 4.62% for the first quarter of 2020. Year-to-date, the yield on average interest-earning assets was 4.27%, including PPP loans, and 4.46% excluding PPP loans, compared to 5.07% for the first six months of 2019. The average yield on PPP loans, including amortized fees and interest income, was 2.12% for the current quarter. The loan portfolio, excluding PPP loans, is comprised of $193.0 million, or 29.4%, of fixed rate loans, and $463.8 million, or 70.6%, of variable rate loans. As of June 30, 2020, $223.2 million, or 48%, of total variable rate loans with a weighted average rate of 5.05%, have reached their rate floors.The cost of average total funds was 0.27% for the second quarter of 2020, compared to 0.37% for the second quarter a year ago and 0.35% for the first quarter of 2020. Year-to-date, the cost of average total funds was 0.31% compared to 0.38% for the first six months of 2019. As a pro-active step to partially offset the decrease in earning assets yields, rates on new and renewed term deposits rates, as well as rates on money market, savings and checking accounts were lowered during the quarter.Provision for loan losses was $1.0 million for the second quarter of 2020, compared to $2.0 million provision for loan losses for the preceding quarter. Year-to-date, the provision for loan losses totaled $3.0 million, compared to no provision for the first six months of 2019. “The higher provision taken in the first half of the year was predominantly due to economic uncertainties associated with COVID-19 and changes to the qualitative factors within the allowance for loan losses,” said Portmann. Net charge-offs for the second quarter totaled $279,000, unrelated to COVID-19, compared to $207,000 for the preceding quarter, and $10,000 for the second quarter a year ago.Noninterest income increased 39%, or $1.4 million, to $4.8 million for the second quarter of 2020, compared to $3.4 million for the second quarter 2019, and grew $1.2 million, or 35%, from $3.6 million for the first quarter 2020, primarily due to the increase in gain on sale of loans. Gain on sale of loans almost doubled from a year ago and increased by 68% on a linked quarter basis. Service charges on deposits were down 41%, or $216,000, from the second quarter of 2019 and 38%, or $192,000, from the quarter ended March 31, 2020. The decrease is a result of the impact of Stay-at-Home orders decreasing customer spending and the increased customer deposit balances from SBA PPP loan proceeds and stimulus checks. For the first six months of 2020, noninterest income increased 43% to $8.4 million from $5.8 million for the first six months of 2019. The growth in noninterest income for the first half of 2020 was largely due to higher gain on sale of loans.Noninterest expense increased 13% to $9.8 million for the second quarter of 2020, compared to $8.7 million for the second quarter of 2019, and increased 7% from $9.1 million for the first quarter of 2020. Higher noninterest expense in the current quarter was primarily due to variable compensation and commissions on record mortgage production, as well as costs associated with the continued I-5 corridor expansion into the Eugene market and the growing Willamette Valley. These expenses were partially offset by the decrease in FDIC and State assessments as well as the decline in marketing and consulting expenses.Income tax provision was $569,000 for the second quarter of 2020, compared to $870,000 for the second quarter 2019 and $296,000 for the first quarter 2020. The effective tax rate for the second quarter of 2020 was 19.1%, compared to 19.4% for the second quarter 2019, and 19.8% for the first quarter 2020. For the first six months of 2020 the income tax provision was $864,000, down 43% from $1.5 million. In addition to federal corporate income tax, Pacific Financial also pays Oregon corporate income tax and Washington Business and Occupation tax on revenues.Balance Sheet ReviewTotal Assets reached $1.1 billion at June 30, 2020, up 22% from $925.0 million at June 30, 2019. Total assets increased 22% from $926.3 million on a linked quarter basis, primarily due to the addition of SBA PPP loans and the related deposit inflows.Investment Securities increased 13% to $118.1 million at June 30, 2020, compared to $104.1 million at June 30, 2019, and increased 7% compared to $109.9 million at March 31, 2020. The increase in investment securities on a linked quarter basis and year-over-year was primarily the result of reinvesting a portion of its federal funds sold balances into higher yielding investments. The portfolio is comprised mainly of amortizing U.S. agency collateralized mortgage, mortgage-backed securities and municipal securities. Liquidity: “Liquidity within the Company remains strong with significant on-balance sheet liquidity and access to unused lines totaling $195.4 million with the Federal Reserve and Federal Home Loan Bank,” said Tucker. In addition, the Company has access to $16 million in unused unsecured lines with correspondent banks, as well as access to brokered deposits and access to the Federal Reserve Paycheck Protection Program Lending Facility (“PPPLF”). The Federal Reserve’s PPPLF allows the Bank to pledge and borrow against 100% of the principal balance of PPP loans originated. The Bank’s borrowing facilities with the FHLB and the Federal Reserve Bank are subject to collateral requirements.Gross Loans increased 14% to $787.3 million at June 30, 2020, compared to $689.7 million at June 30, 2019 and increased 16% compared to $678.6 million at March 31, 2020. The growth in gross loans compared to the preceding quarter reflects the addition of $130.5 million in funded SBA PPP loans during the second quarter. Loan balances, excluding SBA PPP loans, declined 3%, or $21.8 million, from March 31, 2020, primarily due to an $18.0 million reduction in commercial and agricultural loans. Commercial and agricultural loans balances were impacted by a $15 million reduction in commercial line of credit utilization during the quarter. Loans are predominately originated within our Western Washington and Oregon markets and the portfolio is well-diversified without significant concentration risk by collateral type or by industry. CRE concentrations were at 193% at June 30, 2020, compared to regulatory guidance of 300%. Commercial loans, along with CRE-owner occupied, account for 40% of total loans outstanding (excluding PPP loans) at June 30, 2020 and remained relatively constant compared to 41% at June 30, 2019. Loans to finance luxury and classic cars comprise a majority of the consumer loan balances at $45.4 million as of June 30, 2020, a decline of $8.4 million from $53.8 million a year ago and down $685,000 compared to $46.1 million at March 31, 2020. Commercial non-owner occupied and multifamily loans were $190.0 million at June 30, 2020, comprising 29% of gross loans, excluding PPP loans, an increase from $184.1 million at June 30, 2019 and from $183.2 million at March 31, 2020. Hospitality, 5+ unit apartments and commercial property comprise the largest areas of the commercial real estate non-owner occupied and multifamily portfolios.  Commercial Real Estate -- Non Owner Occupied and Multifamily Concentration (Unaudited)    June 30, 2020 % of Total           (Dollars in thousands) Hospitality$45,283  24% Apartments (5+ units) 37,949  20% Commercial property 33,271  18% Retail 26,413  14% Mini storage 17,529  9% Office 7,902  4% Industrial 7,521  4% Warehouse/cold storage 5,918  3% Medical-office and clinics 4,576  2% Restaurants 1,417  1% Other 1,888  1%  Total CRE NOO and Multifamily$189,667  100% Higher Risk Industries as a Result of COVID-19: Although it is difficult to determine the economic and business impact of the Coronavirus pandemic on various business and industries, with the Stay-at-Home orders and phased reopening plans in both Washington and Oregon, certain industries have seen a dramatic change in revenues in their businesses. Those early impact industries include accommodation (hospitality), animal production (primarily dairy), restaurants, retail trade, health care, repair and maintenance (primary automotive) and recreation and entertainment. At Pacific Financial, the total of these higher risk categories is $134.7 million, or 21% of gross loans without PPP. Although these industries are more directly impacted by COVID-19, the bank’s customer base within these sectors covers a wide range of clients, including those who operate under diversified business models reaching a broader range of clients, possess necessary financial resources, and are managed by experienced management teams who aid in working through these economic challenges. Higher Risk Industries (without PPP) (Unaudited)   June 30, 2020  % of Gross Loans (without PPP)        (Dollars in thousands) Animal production$21,763  3% Accommodation 44,014  7% Restaurants 13,051  2% Recreation, arts and entertainment 5,201  1% Retail trade 19,032  3% Repair and maintenance 12,685  2% Other services 4,499  1% Health care and social assistance 14,503  2%   Total high risk loans$134,748  21% Credit Underwriting policies are conservative. In light of increased risk associated with the COVID-19 pandemic, the Company has continued to make prudent enhancements to its credit oversight, such as greater underwriting control of unsecured lending with all requests regardless of size requiring credit administration approval, and the planned addition of an experienced credit risk officer to the credit administration team to support existing clients as needed. To manage risk, the Company oversees new loan origination volume and current loan balances using concentration limits that establish maximum exposure levels by designated industry segment, real estate product types, geography and single borrower limits. The overall risk profile of the loan portfolio continues to be conservative, demonstrating the solid credit risk management framework in place. Total Deposits increased 25% to $995.0 million at June 30, 2020, compared to $795.5 million from a year earlier, and grew 25.2% from $794.6 million at March 31, 2020. Significant deposit inflows as well as the deposits from customer PPP loan proceeds contributed to this growth. Approximately 50% of the growth was in non-interest-bearing deposits which increased 37%, or $93.4 million, to $342.6 million at June 30, 2020, compared $249.2 million at June 30, 2019, and 42%, or $101.1 million, from $241.5 million at March 31, 2020. “The substantial growth in non-interest-bearing demand deposits was mainly a result of deposits made while funding SBA PPP loans,” said Portmann. Non-interesting-bearing deposits represented 34% of total deposits at June 30, 2020, while total core deposits, (consisting of non-interest-bearing, interest-bearing accounts, money market and savings accounts) accounted for 93% of total deposits.Capital Ratios of Pacific Financial Corporation, and its subsidiary Bank of the Pacific, continue to exceed the well-capitalized regulatory thresholds. At June 30, 2020, Pacific Financial Corporation’s leverage ratio was 10.17% and the total risk-based capital ratio was 15.11%. On April 9, 2020, the regulatory agencies issued an interim final rule that neutralizes the effects of PPP loans funded through the Federal Reserve’s new PPPLF. As of June 30, 2020, the Company has not utilized the PPPLF, as result the funding of the PPP loans impacted our leverage ratio by 111 basis points. The funding of PPP loans did not impact the total risk-based capital ratio, as with the 100% SBA guarantee, PPP loans have a zero percent risk-weighting for risk-based capital purposes. The total risk-based capital ratios of the Company include $13.4 million of junior subordinated debentures, all of which qualified as Tier 1 capital under guidance issued by the Federal Reserve. As provided in the Dodd-Frank Act, the Company expects to continue to rely on these junior subordinated debentures as part of its regulatory capital.Asset Quality: “Although our credit metrics remain solid, we continue to build reserves in response to the Coronavirus pandemic and its economic impact in our markets,” said Portmann. As noted above, the Bank offered a 90-day deferred payment option to eligible borrowers. These loans were not categorized as troubled debt restructures, but were conservatively downgraded to watch within the pass category at the time of the loan modification. As of June 30, 2020, 354 notes, or $106.2 million in loans, have been modified under the deferred payment option. Adversely classified loans increased by $1.7 million to $9.8 million, or 1.48% of adversely classified loans to gross loans (excluding PPP loans) at June 30, 2020, compared to $8.1 million, or 1.17% of gross loans, at June 30, 2019, while declining $1.4 million, from $11.2 million, or 1.65% of gross loans, at March 31, 2020. The decline on a linked quarter basis was primarily due to the payoff of several loans totaling $1.0 million.90 day payment deferrals granted in the first half of 2020 have provided temporary relief to businesses as those businesses navigate the impacts of pandemic disruptions. At June 30, 2020, delinquencies were 0.03% of total loans, excluding SBA PPP loans, compared to 0.12% at June 30, 2019, and 0.27% at March 31, 2020. As with adversely classified assets, the decline from the linked quarter was related to payoffs and charge-offs of several loans totaling $1.0 million. Nonperforming assets (“NPA”) remain minimal and totaled $1.4 million, or 0.18% of total assets, at June 30, 2020, compared to $773,000 at June 30, 2019 and $1.6 million at March 31, 2020. While delinquencies and nonperforming assets remained low for the quarter, we recognize that the challenges and credit impacts related to the COVID-19 economic downturn may not be realized until later in the year or into next year. As of June 30, 2020, the classified coverage ratio was 8.3% compared to 9.6% and 7.4% on March 31, 2020 and June 30, 2019, respectively. As noted above, the improvement in the ratio from linked quarter was primarily related to payoffs and charge offs of adversely classified assets. The classified coverage ratio is a measurement of asset risk and the capacity for capital to protect against that risk. It reflects the aggregate level of all adversely classified items in relation to Tier 1 Capital and the allowance for loan losses. The Allowance for Loan Losses (“ALL”) increased 27% to $11.5 million, or 1.46% of gross loans or 1.75% of gross loans excluding PPP loans, at June 30, 2020, compared to $9.0 million, or 1.31% of gross loans, a year earlier and grew 7% from $10.8 million, or 1.59% of gross loans, at March 31, 2020. The Company provisioned $1.0 million for loan losses during the second quarter, compared to $2.0 million in the first quarter. These provisions are a proactive response to the economic uncertainties associated with the COVID-19 pandemic and are primarily a result of the pro-active downgrade within the pass category of deferred payment loans. While above June 30, 2019 levels, net charge offs for the current quarter and the first half of 2020 remained relatively low at 17 and 7 basis points of gross loans, excluding PPP loans, respectively. Net charge-offs in the current quarter totaled $279,000, compared to $207,000 in the preceding quarter and $10,000 in the like quarter a year ago. Current quarter net charge-offs were primarily a result of three loans totaling $329,000, unrelated to COVID-19. For the first six months of 2020, net charge-offs totaled $486,000 compared to $3,000 for the first six months of 2019. Balance Sheet Overview (Unaudited)                     June 30, 2020 Mar 31, 2020 $ Change % Change June 30, 2019 $ Change % Change                  Assets: (Dollars in thousands, except per share data)  Cash on hand and in banks$140,132 $40,342 $99,790  247%$33,158 $106,974  323%  Interest bearing deposits 3,250  3,250  -  0% 3,250  -  0%  Federal funds sold 17,635  25,170  (7,535) -30% 26,551  (8,916) 100%  Investment securities 118,078  109,875  8,203  7% 104,143  13,935  13%  Loans held-for-sale 19,477  21,398  (1,921) -9% 18,489  988  5%  Loans, net of deferred fees 782,562  677,907  104,655  15% 688,684  93,878  14%  Allowance for loan losses (11,507) (10,786) (721) 7% (9,046) (2,461) 27%    Net loans 771,055  667,121  103,934  16% 679,638  91,417  13%  Federal Home Loan Bank and Pacific Coast Bankers' Bank stock, at cost 2,140  2,241  (101) -5% 2,220  (80) -4%  Other assets 57,708  56,947  761  1% 57,496  212  0%    Total assets$1,129,475 $926,344 $203,131  22%$924,945 $204,530  22%                  Liabilities and Shareholders' Equity:                Total deposits$994,960 $794,585 $200,375  25%$795,504 $199,456  25%  Borrowings 14,031  16,569  (2,538) -15% 16,681  (2,650) -16%  Accrued interest payable and other liabilities 11,092  8,641  2,451  28% 11,534  (442) -4%  Shareholders' equity 109,392  106,549  2,843  3% 101,226  8,166  8%    Total liabilities and shareholders' equity$1,129,475 $926,344 $203,131  22%$924,945 $204,530  22%                  Common Stock Shares Outstanding 10,607,617  10,607,617  -  0% 10,593,697  13,920  0%                  Book value per common share (1)$10.31 $10.04 $0.27  3%$9.56 $0.75  8% Tangible book value per common share (2)$9.04 $8.78 $0.26  3%$8.28 $0.76  9% Gross loans to deposits ratio 78.7% 85.3% -6.6%   86.6% -7.9%                    (1) Book value per common share is calculated as the total common shareholders' equity divided by the period ending number of common stock shares outstanding. (2) Tangible book value per common 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 Overview (Unaudited)                     For the Three Months Ended,    June 30, 2020 Mar 31, 2020 $ Change % Change June 30, 2019 $ Change % Change                     (Dollars in thousands, except per share data) Interest and dividend income$9,608 $9,783 $(175) -2%$10,460 $(852) -8% Interest expense 625  700  (75) -11% 735  (110) -15%  Net interest income 8,983  9,083  (100) -1% 9,725  (742) -8% Loan loss provision 1,000  2,000  (1,000) -50% -  1,000  100% Noninterest income 4,802  3,555  1,247  35% 3,444  1,358  39% Noninterest expense 9,810  9,142  668  7% 8,692  1,118  13% Income before income taxes 2,975  1,496  1,479  99% 4,477  (1,502) -34% Income tax expense 569  296  273  92% 870  (301) -35%  Net Income$2,406 $1,200 $1,206  101%$3,607 $(1,201) -33%                  Average common shares outstanding - basic 10,607,617  10,627,160  (19,543) 0% 10,587,140  20,477  0% Average common shares outstanding - diluted 10,630,458  10,676,227  (45,769) 0% 10,670,586  (40,128) 0%                  Income per common share                Basic$0.23 $0.11 $0.12  109%$0.34 $(0.11) -32%  Diluted$0.23 $0.11 $0.12  109%$0.34 $(0.11) -32%                  Effective tax rate 19.1% 19.8% -0.7%   19.4% -0.3%                       For the Six Months Ended,          June 30, 2020 June 30, 2019 $ Change % Change                           (Dollars in thousands, except per share data)       Interest and dividend income$19,391 $20,820 $(1,429) -7%       Interest expense 1,326  1,477  (151) -10%        Net interest income 18,065  19,343  (1,278) -7%       Loan loss provision 3,000  -  3,000  100%       Noninterest income 8,356  5,843  2,513  43%       Noninterest expense 18,952  17,105  1,847  11%       Income before income taxes 4,469  8,081  (3,612) -45%       Income tax expense 864  1,528  (664) -43%        Net Income$3,605 $6,553 $(2,948) -45%                        Average common shares outstanding - basic 10,617,389  10,582,095  35,294  0%       Average common shares outstanding - diluted 10,640,230  10,670,819  (30,589) 0%                        Income per common share                Basic$0.34 $0.62 $(0.28) -45%        Diluted$0.34 $0.61 $(0.27) -44%                        Effective tax rate 19.3% 18.9% 0.4%         Reconciliation of Non-GAAP Measure (Unaudited)                     For the Three Months Ended,    June 30, 2020 Mar 31, 2020 $ Change % Change June 30, 2019 $ Change % Change                  Non-GAAP Net Income (Dollars in thousands) Net Income$2,406 $1,200 $1,206  101%$3,607 $(1,201) -33%  Loan loss provision 1,000  2,000  (1,000) -50% -  1,000  100%  Income tax expense 569  296  273  92% 870  (301) -35% Pre-tax, pre-provision net income$3,975 $3,496 $479  14%$4,477 $(502) -11%                  Pre-tax, pre-provisions ROA, annualized1.53% 1.53% -    2.01% (0.48)   Pre-tax, pre-provisions ROE, annualized14.70% 13.16% 1.54    18.14% (4.98)                       For the Six Months Ended,          June 30, 2020 June 30, 2019 $ Change % Change                        Non-GAAP Operating Income (Dollars in thousands)       Net Income$3,605 $6,553 $(2,948) -45%        Loan loss provision 3,000  -  3,000  100%        Loss on real estate owned, net -  -  -  0%        Income tax expense 864  1,528  (664) -43%       Pre-tax, pre-provision net income$7,469 $8,081 $(612) -8%                        Pre-tax, pre-provisions ROA, annualized1.53% 1.82% (0.29)         Pre-tax, pre-provisions ROE, annualized14.03% 16.86% (2.83)         Noninterest Income (Unaudited)    For the Three Months Ended,    June 30, 2020 Mar 31, 2020 $ Change % Change June 30, 2019 $ Change % Change                     (Dollars in thousands) Service charges on deposits$315$507$(192) -38%$531$(216) -41% Gain on sale of loans, net 3,335 1,990 1,345  68% 1,707 1,628  95% Earnings on bank owned life insurance 129 115 14  12% 109 20  18% Other noninterest income                Fee income 992 918 74  8% 884 108  12%  Other 31 25 6  24% 111 (80) -72% Total noninterest income$4,802$3,555$1,247  35%$3,444$1,358  39%                                      For the Six Months Ended,          June 30, 2020 June 30, 2019 $ Change % Change                           (Dollars in thousands)       Service charges on deposits$822$1,036$(214) -21%       Gain on sale of loans, net 5,325 2,638 2,687  102%       Gain on sale of securities available for sale, net - 102 (102) -100%       Earnings on bank owned life insurance 243 215 28  13%       Other noninterest income                Fee income 1,910 1,713 197  12%        Other 56 139 (83) -60%       Total noninterest income$8,356$5,843$2,513  43%       Noninterest Expense (Unaudited)                     For the Three Months Ended,    June 30, 2020 Mar 31, 2020 $ Change % Change June 30, 2019 $ Change % Change                     (Dollars in thousands) Salaries and employee benefits$6,781$6,066$715  12%$5,506$1,275  23% Occupancy 507 522 (15) -3% 510 (3) -1% Equipment 294 285 9  3% 241 53  22% Data processing 803 746 57  8% 701 102  15% Professional services 312 200 112  56% 303 9  3% State and local taxes 112 145 (33) -23% 139 (27) -19% FDIC and State assessments 8 8 -  0% 69 (61) -88% Other noninterest expense:                Director fees 83 74 9  12% 66 17  26%  Communication 76 68 8  12% 76 -  0%  Advertising 33 48 (15) -31% 90 (57) -63%  Professional liability insurance 57 55 2  4% 50 7  14%  Amortization 101 97 4  4% 100 1  1%  Other 643 828 (185) -22% 841 (198) -24% Total noninterest expense$9,810$9,142$668  7%$8,692$1,118  13%                                      For the Six Months Ended,          June 30, 2020 June 30, 2019 $ Change % Change                           (Dollars in thousands)       Salaries and employee benefits$12,847$10,907$1,940  18%       Occupancy 1,029 1,011 18  2%       Equipment 578 483 95  20%       Data processing 1,549 1,393 156  11%       Professional services 513 671 (158) -24%       State and local taxes 257 221 36  16%       FDIC and State assessments 16 76 (60) -79%       Other noninterest expense:                Director fees 157 131 26  20%        Communication 144 147 (3) -2%        Advertising 81 156 (75) -48%        Professional liability insurance 112 99 13  13%        Amortization 198 192 6  3%        Other 1,471 1,618 (147) -9%       Total noninterest expense$18,952$17,105$1,847  11%       Financial Performance Overview (Unaudited)               For the Three Months Ended   June 30, 2020 Mar 31, 2020 Change June 30, 2019 Change Performance Ratios          Return on average assets, annualized0.93% 0.52% 0.41  1.62% (0.69) Return on average equity, annualized8.90% 4.52% 4.38  14.62% (5.72) Efficiency ratio (1)71.16% 72.34% (1.18) 66.00% 5.16              (1) Non-interest expense divided by net interest income plus noninterest income.                                 For the Six Months Ended,       June 30, 2020 June 30, 2019 Change     Performance Ratios          Return on average assets, annualized0.74% 1.47% (0.73)     Return on average equity, annualized6.73% 13.63% (6.90)     Efficiency ratio (1)71.73% 67.91% 3.82                  (1) Non-interest expense divided by net interest income plus noninterest income.       LIQUIDITYCash and Cash Equivalents and Investment Securities  (Unaudited)      June 30, 2020  % of Total Mar 31, 2020  % of Total $ Change % Change June 30, 2019  Total $ Change % Change                               (Dollars in thousands)  Cash on hand and in banks$15,227 5%$13,088 7%$2,139  16%$17,310 10%$(2,083) -12%  Interest bearing deposits 124,905 45% 27,254 15% 97,651  358% 15,848 9% 109,057  688%  Other interest earning deposits 3,250 1% 3,250 2% -  0% 3,250 2% -  0%  Federal funds sold 17,635 6% 25,170 14% (7,535) -30% 26,551 16% (8,916) 100%   Total 161,017 57% 68,762 38% 92,255  134% 62,959 37% 98,058  156%                           Investment securities:                       Collateralized mortgage obligations 44,242 16% 43,483 25% 759  2% 46,712 29% (2,470) -5%   Mortgage backed securities 15,366 6% 16,934 9% (1,568) -9% 22,061 13% (6,695) -30%   U.S. Government and agency securities 4,101 1% 2,010 1% 2,091  104% 536 0% 3,565  665%   Municipal securities 52,314 19% 45,518 26% 6,796  15% 32,766 20% 19,548  60%   Corporate debt securities 1,991 1% 1,874 1% 117  6% 1,995 1% (4) 0%   Equity securities 64 0% 56 0% 8  14% 73 0% (9) -12%    Total 118,078 43% 109,875 62% 8,203  7% 104,143 63% 13,935  13%  Total cash equivalents and investment securities$279,095 100%$178,637 100%$100,458  56%$167,102 100%$111,993  67%                           Total cash equivalents and investment securities                       as a percent of total assets   25%   19%       18%      LOANS  Loans by Category  (Unaudited)                             June 30, 2020 % of Gross Loans Mar 31, 2020 % of Gross Loans $ Change % Change June 30, 2019 % of Gross Loans $ Change % Change                          Commercial: (Dollars in thousands)   Commercial and agricultural$111,094  14%$129,085  19%$(17,991) -14%$142,107  21%$(31,013) -22%   PPP 130,507  17% -  0% 130,507  100% -  0% 130,507  100%  Real estate:                      Construction and development 40,462  5% 47,054  7% (6,592) -14% 41,815  6% (1,353) -3%  Residential 1-4 family 82,154  10% 84,662  12% (2,508) -3% 88,461  13% (6,307) -7%  Multi-family 32,955  4% 30,368  4% 2,587  9% 32,010  5% 945  3%  Commercial real estate -- owner occupied 150,626  19% 147,024  22% 3,602  2% 137,565  20% 13,061  9%  Commercial real estate -- non owner occupied 156,712  20% 152,830  23% 3,882  3% 152,143  21% 4,569  3%  Farmland 31,054  4% 31,500  5% (446) -1% 30,043  4% 1,011  3%  Consumer 51,772  7% 56,091  8% (4,319) -8% 65,533  10% (13,761) -21%   Gross Loans 787,336  100% 678,614  100% 108,722  16% 689,677  100% 97,659  14%     Less: allowance for loan losses (11,507)   (10,786)   (721)   (9,046)   (2,461)       Less: deferred fees (4,774)   (707)   (4,067)   (993)   (3,781)     Net loans$771,055   $667,121   $103,934   $679,638   $91,417                                                     Loan Concentration  (Unaudited)      June 30, 2020 % of Risk Based Capital Mar 31, 2020 % of Risk Based Capital Change June 30, 2019 % of Risk Based Capital Change                              Commercial: (Dollars in thousands)       Commercial and agricultural$111,094  97%$129,085  114% -17%$142,107  132% -35%       PPP 130,507  114% -  0% 114% -  0% 114%      Real estate:                      Construction and development 40,462  35% 47,054  42% -7% 41,815  39% -4%      Residential 1-4 family 82,154  72% 84,662  75% -3% 88,461  82% -10%      Multi-family 32,955  29% 30,368  27% 2% 32,010  30% -1%      Commercial real estate -- owner occupied 150,626  132% 147,024  130% 2% 137,565  128% 4%      Commercial real estate -- non owner occupied 156,712  137% 152,830  135% 2% 152,143  141% -4%      Farmland 31,054  27% 31,500  28% -1% 30,043  28% -1%      Consumer 51,772  45% 56,091  50% -5% 65,533  61% -16%       Gross Loans$787,336   $678,614     $689,677           Regulatory Commercial Real Estate$220,042  193%$220,794  196% -3%$221,663  205% -12%      Total Risk Based Capital*$114,216   $112,802     $107,877          DEPOSITSDeposits by Category (Unaudited)                         June 30, 2020 % of Total Mar 31, 2020 % of Total $ Change % Change June 30, 2019 % of Total $ Change % Change                         (Dollars in thousands) Interest-bearing demand$288,274  30%$224,741  29%$63,533  28%$218,828 28%$69,446  32% Money market 168,570  17% 147,412  19% 21,158  14% 146,886 18% 21,684  15% Savings 123,144  12% 105,983  13% 17,161  16% 102,721 13% 20,423  20% Time deposits (CDs) 72,402  7% 74,972  9% (2,570) -3% 77,870 10% (5,468) -7%   Total interest-bearing deposits 652,390  66% 553,108  70% 99,282  18% 546,305 69% 106,085  19% Non-interest bearing demand 342,570  34% 241,477  30% 101,093  42% 249,199 31% 93,371  37%   Total deposits$994,960  100%$794,585  100%$200,375  25.2%$795,504 100%$199,456  25% The following table summarizes the capital measures of the Company and the Bank respectively, at the dates listed below.Capital Measures (unaudited)  June 30, 2020 Mar 31, 2020 Change June 30, 2019 Change  Well Capitalized Under Prompt Correction Action Regulations* Pacific Financial Corporation             Total risk-based capital ratio15.11% 15.13% (0.02) 14.16% 0.95   N/A Tier 1 risk-based capital ratio13.86% 13.88% (0.02) 12.98% 0.88   N/A Common equity tier 1 ratio12.14% 12.13% 0.01  11.28% 0.86   N/A Leverage ratio10.17% 11.40% (1.23) 11.32% (1.15)  N/A               Tangible common equity ratio8.60% 10.20% (1.60) 9.63% (1.03)  N/A               Bank of the Pacific             Total risk-based capital ratio15.00% 15.01% (0.01) 14.08% 0.92   10.5% Tier 1 risk-based capital ratio13.75% 13.76% (0.01) 12.88% 0.87   8.5% Common equity tier 1 ratio13.75% 13.76% (0.01) 12.88% 0.87   7.0% Leverage ratio10.13% 11.34% (1.21) 11.24% (1.11)  7.5%               *Includes Basel III 2019 Capital Conservation Buffer            The following tables set forth information regarding average balances of interest-earning assets and interest-bearing liabilities and the resultant yields or cost, and the net interest margin on a tax equivalent basis. Loans held for sale and non-accrual loans are included in total loans.Net Interest Margin (Unaudited) (Annualized, tax-equivalent basis)                     For the Three Months Ended,                     June 30, 2020 Mar 31, 2020 $ Change % Change June 30, 2019 $ Change % Change                  Average Balances (Dollars in thousands) Gross loans$762,502 $683,096 $79,406  12%$695,086 $67,416  10% Gross loans without PPP$661,275 $683,096 $(21,821) 100%$695,086 $(33,811) 100% Loans held for sale$18,287 $10,293 $7,994  78%$10,746 $7,541  70% Investment securities$112,245 $105,202 $7,043  7%$123,907 $(11,662) -9% Federal funds sold & interest bearing deposits in banks$89,941 $59,139 $30,802  52%$13,630 $76,311  560% Total interest-earning assets$1,644,250 $857,730 $786,520  92%$829,739 $814,511  98% Non-interest bearing demand deposits$307,802 $239,280 $68,522  29%$231,308 $76,494  33% Interest bearing deposits$601,443 $548,769 $52,674  10%$534,823 $66,620  12% Total Deposits$909,245 $788,049 $121,196  15%$766,131 $143,114  19% Borrowings$15,832 $16,581 $(749) -5%$19,186 $(3,354) -17% Total interest-bearing liabilities$617,275 $565,350 $51,925  9%$554,009 $63,266  11% Total Equity$108,455 $106,853 $1,602  1%$98,965 $9,490  10%                     For the Three Months Ended,        June 30, 2020 Mar 31, 2020 Change June 30, 2019 Change     Yield on average gross loans (1) 4.59% 5.16% (0.57) 5.49% (0.90)     Yield on average gross loans without PPP (1) 4.96% 5.16% (0.20) 5.49% (0.53)     Yield on average investment securities (1) 2.71% 3.02% (0.31) 2.50% 0.21      Yield on Fed funds sold & interest bearing deposits in banks 0.21% 1.43% (1.22) 0.48% (0.27)     Cost of average interest bearing deposits 0.35% 0.42% (0.07) 0.42% (0.07)     Cost of average borrowings 2.56% 3.18% (0.62) 3.62% (1.06)     Cost of average total deposits and borrowings 0.27% 0.35% (0.08) 0.37% (0.10)                      Yield on average interest-earning assets 3.96% 4.62% (0.66) 5.10% (1.14)     Cost of average interest-bearing liabilities 0.41% 0.50% (0.09) 0.53% (0.12)     Net interest spread 3.55% 4.12% (0.57) 4.57% (1.02)     Net interest spread without PPP 3.76% 4.12% (0.36) 4.57% (0.81)                      Net interest margin (1) 3.70% 4.30% (0.60) 4.74% (1.04)     Net interest margin without PPP (1) 3.89% 4.30% (0.41) 4.74% (0.85)                      (1) Tax-exempt income has been adjusted to a tax equivalent basis at a rate of 21%.                               For the Six Months Ended,          June 30, 2020 June 30, 2019 $ Change % Change                        Average Balances (Dollars in thousands)       Gross loans$722,799 $695,085 $27,714  4%       Gross loans without PPP$660,829 $695,085 $(34,256) -5%       Loans held for sale$14,290 $8,024 $6,266  78%       Investment securities$108,723 $132,421 $(23,698) -18%       Federal funds sold & interest bearing deposits in banks$74,540 $15,703 $58,837  375%       Interest-earning assets$1,581,181 $835,530 $745,651  89%       Non-interest bearing demand deposits$273,541 $234,582 $38,959  17%       Interest bearing deposits$575,106 $538,225 $36,881  7%       Total Deposits$848,647 $772,807 $75,840  10%       Borrowings$16,204 $20,480 $(4,276) -21%       Interest-bearing liabilities$591,310 $558,705 $32,605  6%       Total Equity$107,655 $96,918 $10,737  11%                        Total Deposits excl. Brokered CDs 842,117  749,116  93,001  12.4%                           For the Six Months Ended,            June 30, 2020 June 30, 2019 Change         Net Interest Margin               Yield on average gross loans (1) 4.86% 5.48% (0.62)         Yield on average gross loans without PPP (1) 5.15% 5.48% (0.33)         Yield on average investment securities (1) 2.86% 2.90% (0.04)         Yield on Fed funds sold & interest bearing deposits in banks 0.69% 2.65% (1.96)         Cost of average interest bearing deposits 0.38% 0.42% (0.04)         Cost of average borrowings 2.87% 3.67% (0.80)         Cost of average total deposits and borrowings 0.31% 0.38% (0.07)                          Yield on average interest-earning assets 4.27% 5.07% (0.80)         Cost of average interest-bearing liabilities 0.45% 0.53% (0.08)         Net interest spread 3.82% 4.54% (0.72)         Net interest spread without PPP 4.01% 4.54% (0.53)                          Net interest margin (1) 3.98% 4.72% (0.74)         Net interest margin without PPP (1) 4.15% 4.72% (0.57)                          (1) Tax-exempt income has been adjusted to a tax equivalent basis at a rate of 21%.                            Adversely Classified Loans and Securities (Unaudited)                   June 30, 2020 Mar 31, 2020 $ Change % Change June 30, 2019 $ Change % Change                   (Dollars in thousands) Rated substandard or worse, but not impaired, beginning of period$9,269 $10,400 $(1,131) -11%$6,298 $2,971  47% Addition of previously classified pass graded loans 126  -  126  100% 1,132  (1,006) -89% Upgrades to pass or other loans especially mentioned status -  -  -  0% -  -  0% Moved to nonaccrual (219) -  (219) -100% (154) (65) 42% Principal payments, net (1,032) (1,131) 99  -9% (299) (733) 245% Rated substandard or worse, but not impaired, end of period$8,144 $9,269 $(1,125) -12%$6,977 $1,167  17% Impaired 1,606  1,900  (294) -15% 1,106  500  45% Total adversely classified loans¹$9,750 $11,169 $(1,419) -13%$8,083 $1,667  21%                 Other loans especially mentioned or watch, but not impaired$132,761 $105,008 $27,753  26%$31,091 $101,670  327% Gross loans (excluding deferred loan fees)$787,336 $678,614 $108,722  16%$689,677 $97,659  14% Adversely classified loans to gross loans 1.24% 1.65%     1.17%     Adversely classified loans to gross loans without PPP 1.48% 1.65%     1.17%     Allowance for loan losses$11,507 $10,786 $721  7%$9,046 $2,461  27% Allowance for loan losses as a percentage of adversely classified loans 118.02% 96.57%     111.90%     Allowance for loan losses to total impaired loans 716.50% 567.68%     817.90%     Adversely classified loans to total assets 0.86% 1.21%     0.87%     Delinquent loans to gross loans, not in nonaccrual status 0.02% 0.27%     0.12%     Delinquent loans to gross loans without PPP, not in nonaccrual status 0.03% 0.27%     0.12%                     ¹Adversely classified loans are defined as loans having a well-defined weakness or weaknesses related to the borrower's financial capacity or to pledged collateral that may jeopardize the repayment of the debt. They are characterized by the possibility that the Bank may sustain some loss if the deficiencies giving rise to the substandard classification are not corrected. Note that any loans internally rated worse than substandard are included in the impaired loan totals. Nonperforming Assets (Unaudited)                   June 30, 2020 Mar 31, 2020 $ Change % Change June 30, 2019 $ Change % Change                   (Dollars in thousands) Total nonaccrual loans, beginning of period$1,622 $1,029 $593  58%$976 $646  66% Transfer to performing loans -  (127) 127  100% -  -  0% Addition of nonaccrual loans 219  852  (633) -74% 200  19  10% Moved to other assets owned (169) -  (169) -100% -  (169) -100% Principal payments, net (12) (6) (6) 100% (403) 391  -97% Charge-offs, net (234) (126) (108) 86% -  (234) -100% Total nonaccrual loans, end of period$1,426 $1,622 $(196) -12%$773 $653  84%                 Other real estate owned and foreclosed assets -  -  -  0% -  -  0% Total nonperforming assets$1,426 $1,622 $(196) -12%$773 $653  84%                                 Total restructured performing loans, beginning of period$278 $320 $(42) -13%$338 $(60) -18% Transfer to nonaccrual loans -  (129) 129  100% -  -  100% Addition of restructured performing loans -  93  (93) -100% -  -  0% Principal payments, net (5) (6) 1  -17% (5) -  0% Charge-offs, net (93) -  (93) -100% -  (93) -100% Total restructured performing loans, end of period$180 $278 $(98) -35%$333 $(153) -46%                 Accruing loans past due 90 days or more$- $- $-  0%$151 $(151) 0% Percentage of nonperforming assets to total assets 0.13% 0.18%     0.08%     Nonperforming loans to total loans 0.18% 0.24%     0.11%     Nonperforming loans to total loans without PPP 0.22% 0.24%     0.11%     Allowance for Loan Losses (Unaudited)                   For the Three Months Ended,   June 30, 2020 Mar 31, 2020 $ Change % Change June 30, 2019 $ Change % Change                   (Dollars in thousands) Gross loans outstanding at end of period$787,336 $678,614 $108,722  16%$689,677 $97,659  14% Average loans outstanding, gross$762,502 $683,096 $79,406  12%$695,086 $67,416  10% Allowance for loan losses, beginning of period$10,786 $8,993 $1,793  20%$9,056 $1,730  19% Commercial (303) (130) (173) 133% -  (303) -100% Commercial Real Estate -  -  -  0% -  -  0% Residential Real Estate -  -  -  0% -  -  0% Consumer (51) (80) 29  -36% (20) (31) 155% Total charge-offs (354) (210) (144) 69% (20) (334) NM Commercial -  -  -  0% -  -  0% Commercial Real Estate -  -  -  0% -  -  0% Residential Real Estate 72  -  72  100% -  72  100% Consumer 3  3  -  0% 10  (7) -70% Total recoveries 75  3  72  NM 10  65  650% Net recoveries/(charge-offs) (279) (207) (72) 35% (10) (269) NM Provision charged to income 1,000  2,000  (1,000) -50% -  1,000  100% Allowance for loan losses, end of period$11,507 $10,786 $721  7%$9,046 $2,461  27% Ratio of net loans charged-off to average               gross loans outstanding, annualized 0.15% 0.12% 0.03%   0.01% 0.14%   Ratio of net loans charged-off to average               gross loans outstanding without PPP, annualized 0.17% 0.12% 0.05%   0.01% 0.16%   Ratio of allowance for loan losses to               gross loans outstanding 1.46% 1.59% -0.13%   1.31% 0.15%   Ratio of allowance for loan losses to               gross loans without PPP outstanding 1.75% 1.59% 0.16%   1.31% 0.44%                                     For the Six Months Ended,         June 30, 2020 June 30, 2019 $ Change % Change                         (Dollars in thousands)       Gross loans outstanding at end of period$787,336 $689,677 $97,659  14%       Average loans outstanding, gross$722,799 $695,085 $27,714  4%       Allowance for loan losses, beginning of period$8,993 $9,049 $(56) -1%       Commercial (433) (30) (403) NM       Commercial Real Estate -  -  -  0%       Residential Real Estate -  -  -  0%       Consumer (131) (79) (52) 66%       Total charge-offs (564) (109) (455) 417%       Commercial -  56  (56) -100%       Commercial Real Estate -  -  -  0%       Residential Real Estate 72  34  38  112%       Consumer 6  16  (10) -63%       Total recoveries 78  106  (28) -26%       Net (charge-offs) (486) (3) (483) NM       Provision charged to income 3,000  -  3,000  100%       Allowance for loan losses, end of period$11,507 $9,046 $2,461  27%       Ratio of net loans charged-off to average               gross loans outstanding, annualized 0.07% 0.00% 0.07%         Ratio of net loans charged-off to average               gross loans outstanding without PPP, annualized 0.07% 0.00% 0.07%         Ratio of allowance for loan losses to               gross loans outstanding 1.46% 1.31% 0.15%         Ratio of allowance for loan losses to               gross loans without PPP outstanding 1.75% 1.31% 0.44%         ABOUT PACIFIC FINANCIAL CORPORATION Pacific Financial Corporation of Aberdeen, Washington, is the bank holding company for Bank of the Pacific, a state chartered and federally insured commercial bank. Bank of the Pacific offers banking products and services to small-to-medium sized businesses and professionals in western Washington and Oregon. At June 30, 2020, the Company had total assets of $1.1 billion and operated fourteen branches in the communities of Grays Harbor, Pacific, Whatcom, Skagit, Clark and Wahkiakum counties in the State of Washington, and two branches in Clatsop County, Oregon. The Company also operated loan production offices in the communities of Burlington, Washington and Salem and Eugene, Oregon. Visit the Company’s website at www.bankofthepacific.com. Member FDIC.Cautions Concerning Forward-Looking StatementsThis press release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other laws, including all statements in this release that are not historical facts or that relate to future plans or events or projected results of Pacific Financial Corporation and its wholly-owned subsidiary, Bank of the Pacific. These forward-looking statements are subject to risks and uncertainties that could cause actual events or results to differ materially from those projected, anticipated or implied. These risks and uncertainties include various risks associated with growing the Bank and expanding the services it provides, successfully completing and integrating the acquisition of new branches and development of new business lines and markets, competition in the marketplace, general economic conditions, including the current COVID-19 pandemic and government responses thereto, changes in interest rates, extensive and evolving regulation of the banking industry, and many other risks. The pandemic could cause us to experience higher loan losses within our lending portfolio, impairment of goodwill, reduced demand for our products and services and other negative impacts on our financial position or results of operations. The depth, severity and scope of this current recession is uncertain, and our company will not be immune to the effects of the financial stress resulting from a global pandemic and economic shutdown. We undertake no obligation to update or revise any forward-looking statement. Readers of this release are cautioned not to put undue reliance on forward-looking statements.Contacts: Denise Portmann, President & CEO Carla Tucker, EVP & CFO 360.533.8873

  • GlobeNewswire

    Pacific Financial Corp Earns $1.2 Million, or $0.11 per Diluted Share, for First Quarter 2020; Declares Quarterly Cash Dividend of $0.11 per Share

    ABERDEEN, Wash., May 05, 2020 -- Pacific Financial Corporation (OTCQX: PFLC), the holding company (the “Company”) for Bank of the Pacific (the “Bank”), today reported first.

  • GlobeNewswire

    Pacific Financial Corp Earns $3.4 Million, or $0.32 per Diluted Share, for 4Q19, up 6% from 4Q18; Net Income Increases 21% to a Record $13.8 Million, or $1.29 per Diluted Share, for the Full Year of 2019 Declares Regular Quarterly Cash Dividend of $0.11 per Share

    ABERDEEN, Wash., Jan. 28, 2020 -- Pacific Financial Corporation (OTCQX: PFLC), the holding company (the “Company”) for Bank of the Pacific (the “Bank”), today reported fourth.