Pacific Financial Corp Earns $2.7 Million, or $0.27 per Diluted Share for Second Quarter 2025; Loan Growth Supports Net Interest Margin Expansion; Declares Quarterly Cash Dividend of $0.14 per Share

Rhea-AI Summary

Pacific Financial Corporation (OTCQX: PFLC) reported strong Q2 2025 results with net income of $2.7 million, or $0.27 per diluted share, up from $2.4 million in Q1 2025 and $2.1 million in Q2 2024. The company declared a quarterly cash dividend of $0.14 per share.

Key highlights include a 6% loan growth to $746.5 million, improved net interest margin of 4.23%, and strong asset quality with non-performing assets at just 0.04% of total assets. The company maintains a robust deposit base with 40% non-interest-bearing deposits and 88% core deposits. Return on average assets (ROAA) improved to 0.89%, while return on average equity (ROAE) reached 9.14%.

The bank's capital position remains strong with an estimated leverage ratio of 10.9% and total risk-based capital ratio of 16.9%. Tangible book value per share increased to $10.53, up from $9.82 year-over-year.

Positive

• None.

Negative

• Total deposits decreased $3.8 million quarter-over-quarter
• Provision for credit losses increased to $387,000 from $83,000 in previous quarter
• Non-interest expenses increased to $9.7 million from $9.4 million in previous quarter

ABERDEEN, Wash., July 25, 2025 (GLOBE NEWSWIRE) -- Pacific Financial Corporation (OTCQX: PFLC), (“Pacific Financial”) or (the “Company”), the holding company for Bank of the Pacific (the “Bank”), reported net income of $2.7 million, or $0.27 per diluted share for the second quarter of 2025, compared to $2.4 million, or $0.24 per diluted share for the first quarter of 2025, and $2.1 million, or $0.21 per diluted share for the second quarter of 2024. The current quarter’s net income relative to the prior quarter reflects an increase in net interest income and higher non-interest income, partially offset by an increase in non-interest expenses. Except for year-end December 31, 2024 financials, all results are unaudited.

The Board of Directors of Pacific Financial declared a quarterly cash dividend of $0.14 per share on July 16, 2025. The dividend will be payable on August 22, 2025 to shareholders of record on August 8, 2025.

“We are pleased with the strategic execution of loan growth initiatives throughout our network. Loan balances grew 6% in the second quarter, enabling us to convert cash into higher yielding loans. Loan demand improved compared to the first quarter, which had been tempered by economic uncertainty. This loan growth during the current quarter combined with a continued decrease in our deposit cost of funds resulted in an 11 basis point increase in our net interest margin. Our funding base continues to benefit from a large balance of non-interest bearing deposits which account for 40% of total deposits,” said Denise Portmann, President and Chief Executive Officer.

“Asset quality continues to remain pristine with non-performing assets totaling only 0.04% of total assets, or less than $500,000. We remain focused on delivering strong returns to our shareholders through our operations and managing our capital to support growth and enhance shareholder value," said Portmann.

Second Quarter 2025 Financial Highlights:

• Return on average assets (“ROAA”) improved to 0.89%, compared to 0.81% for the first quarter 2025, and 0.76% for the second quarter 2024.
• Return on average equity (“ROAE”) was 9.14%, compared to 8.48% from the preceding quarter, and 7.47% from the second quarter a year earlier.
• Net interest income was $11.9 million, compared to $11.3 million for the first quarter of 2025, and $10.8 million for the second quarter of 2024.
• Net interest margin (“NIM”) increased to 4.23%, compared to 4.12% from the preceding quarter, and 4.15% for the second quarter a year ago.
• Provision for credit losses increased to $387,000 for the second quarter ended June 30, 2025 due to loan growth, compared to $83,000 for the preceding quarter and $304,000 in the second quarter a year ago.
• Gross portfolio loan balances increased 6% to $746.5 million at June 30, 2025, compared to $707.0 million at March 31, 2025, and increased 6%, or $42.5 million from $704.0 million one year earlier.
• Total deposits decreased $3.8 million to $1.07 billion at June 30, 2025 compared to the previous quarter and increased $85.2 million, or 9%, from one year earlier. Non-interest-bearing deposits were at 40% of total deposits at June 30, 2025 and support a lower cost core deposits portfolio. Core deposits were 88% of total deposits at June 30, 2025.
• Non-performing assets to total assets ratio declined to 0.04%, or $468,000 for the current quarter end compared to 0.10% and $1.2 million three months earlier. Substandard loans decreased $1.0 million to $1.6 million at June 30, 2025 and special mention assets declined $494,000 to $9.6 million at June 30, 2025.
• Shareholder equity increased $2.0 million during the quarter largely due to net income and lower accumulated other comprehensive loss marks on the available-for-sale investment portfolio, partially offset by dividend payments. The tangible book value per share was $10.53 at June 30, 2025, an increase from $9.82 at June 30, 2024.
• Pacific Financial and Bank of the Pacific continue to exceed regulatory well-capitalized requirements. At June 30, 2025, Pacific Financial’s estimated leverage ratio was 10.9% and its estimated total risk-based capital ratio was 16.9%.

Balance Sheet Review

Total assets remained at $1.22 billion at June 30, 2025, and increased slightly from $1.12 billion at June 30, 2024.

Cash and interest earning deposits decreased $45.0 million to $98.8 million at June 30, 2025 from $143.8 million at March 31, 2025, and increased $22.9 million from $75.9 million one year earlier. The decrease compared to the prior quarter largely relates to funds used to support loan growth during the current quarter.

Liquidity metrics continue to be strong and are managed to ensure adequate funding resources are available to meet customer demand. At June 30, 2025, the Company’s on and off-balance sheet sources totaled $516.7 million. This represents a coverage ratio of short-term funds available to uninsured and uncollateralized deposits of 190%. 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, as well as 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 25% of total deposits at June 30, 2025.

Investment securities increased $2.4 million to $307.8 million, compared to $305.4 million at March 31, 2025 and increased $29.1 million compared to a year ago. The largest investment category was collateralized mortgage obligations, which accounted for 52% of the investment portfolio at June 30, 2025, compared to 51% at March 31, 2025 and 46% one year earlier. The yield on the investment portfolio decreased 2 basis points during the current quarter to 3.58% from 3.60%, and increased 12 basis points from 3.46% the second quarter a year ago. The adjusted duration of the portfolio was 4.6 years at June 30, 2025 compared to 4.3 years at June 30, 2024.

Gross loans balances increased $39.4 million, to $746.5 million at June 30, 2025, compared to $707.0 million at March 31, 2025. During the second quarter of 2025, growth occurred in commercial and agricultural, owner and non-owner occupied commercial real estate, multi-family and residential 1-4 family loans, with owner and non-owner occupied commercial real estate increasing $16.3 million and $17.8 million, respectively. Year-over-year gross loan growth was 6%, or $42.5 million, with the largest increases in multi-family loans, and owner and non-owner occupied commercial real estate loans.

The Bank originated $63.9 million in portfolio credit commitments in the 2^nd quarter of 2025 and $104.0 million during the first half of 2025. The loan pipeline continues to be supported by sustained business development activity of its commercial lending teams including our newest office in Lake Oswego, OR that opened in late 2024.

The Company continues to manage 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 $283.5 million at June 30, 2025, or 201% of total risk-based capital.

Credit quality: Nonperforming assets declined from the previous quarter and remain minimal at $468,000, or 0.04% of total assets at June 30, 2025, compared to $1.2 million, or 0.10% at March 31, 2025. Accruing loans past due more than 30 days represent only 0.02% of total loans. Total loans designated as special mention decreased $494,000 to $9.6 million at June 30, 2025 compared to $10.1 million at March 31, 2025. The Company has zero other real estate owned as of June 30, 2025.

Allowance for credit losses (“ACL”): ACL-loans increased $332,000 to $9.2 million, or 1.24% of gross loans at June 30, 2025. A provision for credit losses of $387,000 was recorded in the current quarter resulting from loan growth and net charge-offs. This compares to a provision for credit losses of $83,000 in the first quarter of 2025 and $304,000 for the second quarter one year earlier.

Total deposits decreased $3.8 million to $1.07 billion at June 30, 2025 compared to the previous quarter and increased $85.2 million from $985.6 million one year earlier. The company’s strong core deposit base continues to positively impact the Bank’s net interest margin and operating results. Core deposits represented 88% of total deposits at quarter end, including non-interest-bearing deposits of 40% of deposits, and interest-bearing demand and money market deposits each representing 19% of total deposits. CDs as a percentage of deposits remained at 12% of total deposits.

Shareholders’ equity was $118.9 million at June 30, 2025, compared to $116.9 million at March 31, 2025, and $114.9 million at June 30, 2024. The increase in shareholders’ equity during the current quarter was primarily due to $2.7 million in net income and a $704,000 decrease in unrealized losses on available-for-sale securities partially offset by $1.4 million in dividends to shareholders. Net unrealized losses (after-tax) included in shareholders’ equity on available-for-sale securities were $13.5 million at June 30, 2025 compared to $14.2 million at March 31, 2025 and $17.1 million at June 30, 2024.

Book value per common share was $11.87 at June 30, 2025, compared to $11.67 at March 31, 2025, and $11.12 at June 30, 2024. Tangible book value per common share was $10.53 at June 30, 2025 compared to $10.33 at March 31, 2025 and $9.82 at June 30, 2024. The Company’s tangible common equity ratio increased to 8.8% at June 30, 2025 relative to 8.6% the prior quarter and decreased from 9.1% at June 30, 2024. Regulatory capital ratios of both the Company and the Bank continue to exceed well-capitalized regulatory thresholds, with the Company’s leverage ratio at 10.9% and total risk-based capital ratio at 16.9% as of June 30, 2025. These regulatory capital ratios are estimates, pending completion and filing of regulatory reports.

Income Statement Review

Net interest income increased $625,000 to $11.9 million for the second quarter of 2025, compared to $11.3 million for the first quarter of 2025, and increased $1.1 million compared to $10.8 million for the second quarter a year ago. The change in the current quarter compared to the preceding quarter reflects the impact of higher loan yields and lower deposit and borrowing costs. For the six months ended June 30, 2025, net interest income increased to $23.2 million compared to $22.2 million for the like period a year ago.

The Bank’s net interest margin improved to 4.23% for the quarter ended June 30, 2025 from 4.12% the prior quarter and from 4.15% in the second quarter a year ago. During the quarter, $45.3 million in interest-earning cash was re-deployed into higher yielding loans. This change in balance sheet composition, combined with an increase in loan yield, decrease in costs of funds which were partially offset by a decrease in investment yields positively impacted the Bank’s net interest margin for the quarter. For the current quarter compared to the like quarter a year ago, net interest margin was also positively impacted by an increase in loan and investment yields and a decrease in cost of funds which were partially offset by the 100 basis decrease in yield on interest-earning cash.

Yields on loans increased 5 basis points to 6.02% for the second quarter of 2025 compared to 5.97% for the prior quarter and increased 22 basis points from 5.80% in the like quarter a year ago. Loan yields improved as longer term fixed and variable rate loans (originated in a lower rate environment) were renewed at higher rates. In addition, average loan yields on new originations were at higher yields than the current loan portfolio yield.

The Bank continues to actively monitor and manage its costs of funds and for the current quarter the Bank’s total cost of funds decreased 7 basis points to 1.03%, compared to 1.10% for the preceding quarter, and 1.05% for the second quarter 2024. The high percentage of non-interest-bearing deposits at 40% continues to help reduce volatility in deposit costs.

Noninterest income increased to $1.5 million for the current quarter, compared to $1.2 million for the linked quarter and decreased compared to $2.0 million for the second quarter a year earlier. The increase compared to the linked quarter was primarily the result of no losses realized on the sale of investment securities in the current quarter compared to a loss of $165,000 during the prior quarter as well as a $100,000 contract signing incentive recorded during the current quarter. Relative to the second quarter one year earlier, noninterest income decreased $476,000 due primarily to the loss of revenue associated with the mortgage banking division which was closed in late 2024. Fee and service charge income increased in the second quarter of 2025 to $1.3 million compared to $1.1 million in the previous quarter and $1.2 million in the second quarter of 2024. Total non-interest income was $2.6 million for the six months ended June 30, 2025 compared to $3.4 million for the same period a year ago.

Noninterest expenses increased to $9.7 million for the second quarter of 2025 compared to $9.4 million for the prior quarter and decreased compared to $9.8 million for the second quarter of 2024. The current quarter increases compared to the prior quarter were primarily related to an increase in salary and benefit expenses associated with increased health insurance claims and accruals, normal salary and wage increases and higher technology costs, partially offset by decreased professional services for the quarter.

For the six months ended June 30, 2025, total non-interest expense was $19.2 million, compared to $19.4 million for the six months ended June 30, 2024. The decrease in non-interest expense for first half of 2025 compared to the same period a year ago primarily relates to the closure of the mortgage banking division in the fourth quarter of 2024, as the first half of 2024 includes operating costs of that mortgage banking division. Offsetting the reduction in mortgage banking costs were increased salary and benefit expenses associated with increased health insurance claims and accruals, normal salary and wage increases, higher technology costs, and occupancy costs. The Bank’s efficiency ratio was 72.47% for the second quarter of 2025, compared to 75.86% in the preceding quarter and 77.34% in the same quarter a year ago.

Income tax expense: Federal and Oregon state income tax expenses totaled $633,000 for the current quarter, and $544,000 for the preceding quarter, resulting in effective tax rates of 19.2% and 18.6%, 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											Six Months Ended						Change
(In 000s, except per share data)
		Jun 30,			Mar 31,			Jun 30,				Mar 31, 2025					Jun 30, 2024					Jun 30,			Jun 30,
		2025			2025			2024				$		%			$		%			2025			2024				$		%
Earnings Ratios & Data
Net Income	$	2,669		$	2,377		$	2,126			$	292		12%		$	543		26%		$	5,049		$	4,776			$	273		6%
Return on average assets		0.89%			0.81%			0.76%				0.08%					0.13%					0.85%			0.85%				0.00%
Return on average equity		9.14%			8.48%			7.47%				0.66%					1.67%					8.82%			8.40%				0.42%
Efficiency ratio(1)		72.47%			75.86%			77.34%				-3.39%					-4.87%					74.09%			75.77%				-1.68%
Net-interest margin %(2)		4.23%			4.12%			4.15%				0.11%					0.08%					4.18%			4.27%				-0.09%
Share Ratios & Data
Basic earnings per share	$	0.27		$	0.24		$	0.21			$	0.03		13%		$	0.06		29%		$	0.50		$	0.46			$	0.04
Diluted earning per share	$	0.27		$	0.24		$	0.21			$	0.03		13%		$	0.06		29%		$	0.50		$	0.46			$	0.04
Book value per share(3)	$	11.87		$	11.67		$	11.12			$	0.20		2%		$	0.75		7%
Tangible book value per share(4)	$	10.53		$	10.33		$	9.82			$	0.20		2%		$	0.71		7%
Common shares outstanding		10,020			10,020			10,336				-		0%			(316	)	-3%
PFLC stock price	$	10.69		$	10.90		$	9.76			$	(0.21	)	-2%		$	0.93		10%
Dividends paid per share	$	0.14		$	0.14		$	0.14			$	-		0%		$	-		0%		$	0.28		$	0.28			$	-		0%
Balance Sheet Data
Assets	$	1,215,468		$	1,218,969		$	1,124,295			$	(3,501	)	0%		$	91,173		8%
Portfolio Loans	$	746,475		$	707,034		$	703,977			$	39,441		6%		$	42,498		6%
Deposits	$	1,070,831		$	1,074,646		$	985,627			$	(3,815	)	0%		$	85,204		9%
Investments	$	307,790		$	305,377		$	278,728			$	2,413		1%		$	29,062		10%
Shareholders equity	$	118,937		$	116,949		$	114,923			$	1,988		2%		$	4,014		3%
Liquidity Ratios
Short-term funding to uninsured
and uncollateralized deposits		190%			212%			229%				-22%					-39%
Uninsured and uncollateralized
deposits to total deposits		25%			24%			24%				1%					1%
Portfolio loans to deposits ratio		70%			66%			71%				4%					-1%
Asset Quality Ratios
Non-performing assets to assets		0.04%			0.10%			0.12%				-0.06%					-0.08%
Non-accrual loans to portfolio loans		0.06%			0.17%			0.19%				-0.11%					-0.13%
Loan losses to avg portfolio loans		0.04%			0.04%			0.03%				0.00%					0.01%					0.04%			0.03%				0.01%
ACL-loans to portfolio loans		1.24%			1.26%			1.26%				-0.02%					-0.02%
Capital Ratios (PFC)
Total risk-based capital ratio		16.9%			17.4%			17.6%				-0.5%					-0.7%
Tier 1 risk-based capital ratio		15.7%			16.3%			16.4%				-0.6%					-0.7%
Common equity tier 1 ratio		14.2%			14.7%			14.8%				-0.5%					-0.6%
Leverage ratio		10.9%			10.9%			11.7%				0.0%					-0.8%
Tangible common equity ratio		8.8%			8.6%			9.1%				0.2%					-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											Six Months Ended						Change
($ in 000s)
		Jun 30,			Mar 31,			Jun 30,				Mar 31, 2025					Jun 30, 2024					Jun 30,			Jun 30,
		2025			2025			2024				$		%			$		%			2025			2024				$		%
Interest Income
Loan interest & fee income	$	10,840		$	10,304		$	10,109			$	536		5%		$	731		7%		$	21,144		$	20,333			$	811		4%
Interest earning cash income		1,124			1,208			847				(84	)	-7%			277		33%			2,332			1,782				550		31%
Investment income		2,728			2,678			2,410				50		2%			318		13%			5,407			4,885				522		11%
Interest Income		14,692			14,190			13,366				502		4%			1,326		10%			28,883			27,000				1,883		7%
Interest Expense
Deposits interest expense		2,571			2,694			2,358				(123	)	-5%			213		9%			5,265			4,349				916		21%
Other borrowings interest expense		206			206			242				-		0%			(36	)	-15%			412			484				(72	)	-15%
Interest Expense		2,777			2,900			2,600				(123	)	-4%			177		7%			5,677			4,833				844		17%
Net Interest Income		11,915			11,290			10,766				625		6%			1,149		11%			23,206			22,167				1,039		5%
Provision(recapture) for credit losses		387			83			304				304		366%			83		27%			470			337				133		39%
Net Interest Income after provision		11,528			11,207			10,462				321		3%			1,066		10%			22,736			21,830				906		4%
Non-Interest Income
Fees and service charges		1,293			1,117			1,198				176		16%			95		8%			2,410			2,299				111		5%
Gain on sale of investments, net		-			(165	)		121				165		-100%			(121	)	-100%			(165	)		121				(286	)	-236%
Gain on sale of loans, net		-			(2	)		445				2		-100%			(445	)	-100%			(2	)		597				(599	)	-100%
Income on bank-owned insurance		191			191			182				-		0%			9		5%			383			362				21		6%
Other non-interest income		3			12			17				(9	)	-75%			(14	)	-82%			15			27				(12	)	-44%
Non-Interest Income		1,487			1,153			1,963				334		29%			(476	)	-24%			2,641			3,406				(765	)	-22%
Non-Interest Expense
Salaries and employee benefits		6,103			5,969			6,321				134		2%			(218	)	-3%			12,072			12,315				(243	)	-2%
Occupancy		618			592			564				26		4%			54		10%			1,209			1,205				4		0%
Furniture, Fixtures & Equipment		305			302			267				3		1%			38		14%			606			551				55		10%
Marketing & donations		157			153			176				4		3%			(19	)	-11%			310			329				(19	)	-6%
Professional services		254			299			327				(45	)	-15%			(73	)	-22%			553			663				(110	)	-17%
Data Processing & IT		1,250			1,218			1,165				32		3%			85		7%			2,468			2,356				112		5%
Other		1,026			906			1,025				120		13%			1		0%			1,932			1,958				(26	)	-1%
Non-Interest Expense		9,713			9,439			9,845				274		3%			(132	)	-1%			19,150			19,377				(227	)	-1%
Income before income taxes		3,302			2,921			2,580				381		13%			722		28%			6,227			5,859				368		6%
Provision for income taxes		633			544			454				89		16%			179		39%			1,178			1,083				95		9%
Net Income	$	2,669		$	2,377		$	2,126			$	292		12%			543		26%		$	5,049		$	4,776			$	273		6%
Effective tax rate		19.2%			18.6%			17.6%				0.6%					1.6%					18.9%			18.5%				0.4%

BALANCE SHEET (unaudited)	Period Ended										Change from											% of Total
($ in 000s)
		Jun 30,			Mar 31,			Jun 30,				Mar 31, 2025					Jun 30, 2024					Jun 30,		Mar 31,		Jun 30,
		2025			2025			2024				$		%			$		%			2025		2025		2024
Assets
Cash on hand and in banks	$	19,305		$	18,975		$	17,362			$	330		2	%	$	1,943		11	%		2	%	2	%	2	%
Interest earning deposits		79,520			124,854			58,586				(45,334	)	-36	%		20,934		36	%		7	%	10	%	5	%
Investment securities		307,790			305,377			278,728				2,413		1	%		29,062		10	%		25	%	25	%	25	%
Loans held-for-sale		-			-			4,051				-		-100	%		(4,051	)	-100	%		0	%	0	%	0	%
Portfolio Loans, net of deferred fees		745,834			706,439			703,322				39,395		6	%		42,512		6	%		61	%	58	%	63	%
Allowance for credit losses		(9,222	)		(8,890	)		(8,859	)			(332	)	4	%		(363	)	4	%		-1	%	-1	%	-1	%
Net loans		736,612			697,549			694,463				39,063		6	%		42,149		6	%		61	%	57	%	62	%
Premises & equipment		16,494			16,702			15,571				(208	)	-1	%		923		6	%		1	%	1	%	2	%
Goodwill & Other Intangibles		13,435			13,435			13,435				-		0	%		-		0	%		1	%	1	%	1	%
Bank-owned life Insurance		28,395			28,204			27,860				191		1	%		535		2	%		2	%	2	%	2	%
Other assets		13,917			13,873			14,239				44		0	%		(322	)	-2	%		2	%	2	%	1	%
Total Assets	$	1,215,468		$	1,218,969		$	1,124,295			$	(3,501	)	0	%	$	91,173		8	%		100	%	100	%	100	%
Liabilities & Shareholders' Equity
Deposits	$	1,070,831		$	1,074,646		$	985,627			$	(3,815	)	0	%	$	85,204		9	%		88	%	88	%	88	%
Borrowings		13,403			13,403			13,403				-		0	%		-		0	%		1	%	1	%	1	%
Other liabilities		12,297			13,971			10,342				(1,674	)	-12	%		1,955		19	%		1	%	1	%	1	%
Shareholders' equity		118,937			116,949			114,923				1,988		2	%		4,014		3	%		10	%	10	%	10	%
Liabilities & Shareholders' Equity	$	1,215,468		$	1,218,969		$	1,124,295			$	(3,501	)	0	%	$	91,173		8	%		100	%	100	%	100	%

INVESTMENT COMPOSITION & CONCENTRATIONS (unaudited)	Period Ended										Change from											% of Total
($ in 000s)
		Jun 30,			Mar 31,			Jun 30,				Mar 31, 2025					Jun 30, 2024					Jun 30,		Mar 31,		Jun 30,
		2025			2025			2024				$		%			$		%			2025		2025		2024
Investment Securities
Collateralized mortgage obligations	$	159,386		$	156,105		$	125,937			$	3,281		2	%	$	33,449		27	%		52	%	51	%	46	%
Mortgage backed securities		47,094			40,396			37,159				6,698		17	%		9,935		27	%		15	%	13	%	13	%
U.S. Government and agency securities		58,668			68,392			72,504				(9,724	)	-14	%		(13,836	)	-19	%		19	%	22	%	26	%
Municipal securities		42,642			40,484			43,128				2,158		5	%		(486	)	-1	%		14	%	14	%	15	%
Investment Securities	$	307,790		$	305,377		$	278,728			$	2,413		1	%	$	29,062		10	%		100	%	100	%	100	%
Held to maturity securities	$	29,950		$	40,718		$	43,244			$	(10,768	)	-26	%	$	(13,294	)	-31	%		10	%	13	%	16	%
Available for sale securities	$	277,840		$	264,659		$	235,484			$	13,181		5	%	$	42,356		18	%		90	%	87	%	84	%
Government & Agency securities	$	265,122		$	264,866		$	235,570			$	256		0	%	$	29,552		13	%		86	%	87	%	85	%
AAA, AA, A rated securities	$	41,979		$	39,822		$	42,471			$	2,157		5	%	$	(492	)	-1	%		14	%	13	%	15	%
Non-rated securities	$	689		$	689		$	687			$	-		0	%	$	2		0	%		0	%	0	%	0	%
AFS Unrealized Gain (Loss)	$	(17,375	)	$	(18,284	)	$	(21,978	)		$	909		-5	%	$	4,603		-21	%		-6	%	-6	%	-8	%

LIQUIDITY (unaudited)	Period Ended							Change from											% of Deposits
($ in 000s)
		Jun 30,		Mar 31,		Jun 30,			Mar 31, 2025					Jun 30, 2024					Jun 30,		Mar 31,		Jun 30,
		2025		2025		2024			$		%			$		%			2025		2025		2024
Short-term Funding
Cash and cash equivalents	$	84,957	$	129,616	$	63,183		$	(44,659	)	-34	%	$	21,774		34	%		8	%	12	%	6	%
Unencumbered AFS Securities		114,077		104,237		139,581			9,840		9	%		(25,504	)	-18	%		11	%	10	%	14	%
Secured lines of Credit (FHLB, FRB)		317,651		315,876		332,674			1,775		1	%		(15,023	)	-5	%		30	%	29	%	34	%
Short-term Funding	$	516,685	$	549,729	$	535,438		$	(33,044	)	-6	%	$	(18,753	)	-4	%		49	%	51	%	54	%

PORTFOLIO LOAN COMPOSITION & CONCENTRATIONS (unaudited)	Period Ended										Change from											% of Total
($ in 000s)
		Jun 30,			Mar 31,			Jun 30,				Mar 31, 2025					Jun 30, 2024					Jun 30,		Mar 31,		Jun 30,
		2025			2025			2024				$		%			$		%			2025		2025		2024
Portfolio Loans
Commercial & agriculture	$	74,831		$	70,209		$	74,952			$	4,622		7	%	$	(121	)	0	%		10	%	10	%	11	%
Real estate:
Construction and development		30,869			34,669			47,856				(3,800	)	-11	%		(16,987	)	-35	%		4	%	5	%	7	%
Residential 1-4 family		103,233			101,810			105,807				1,423		1	%		(2,574	)	-2	%		14	%	14	%	15	%
Multi-family		78,409			72,313			58,003				6,096		8	%		20,406		35	%		10	%	10	%	8	%
CRE -- owner occupied		193,127			176,850			169,491				16,277		9	%		23,636		14	%		26	%	25	%	24	%
CRE -- non owner occupied		177,860			160,022			157,591				17,838		11	%		20,269		13	%		24	%	23	%	22	%
Farmland		27,202			27,411			27,195				(209	)	-1	%		7		0	%		4	%	4	%	4	%
Consumer		60,944			63,750			63,082				(2,806	)	-4	%		(2,138	)	-3	%		8	%	9	%	9	%
Portfolio Loans		746,475			707,034			703,977			$	39,441		6	%	$	42,498		6	%		100	%	100	%	100	%
Less: ACL		(9,222	)		(8,890	)		(8,859	)
Less: deferred fees		(641	)		(595	)		(655	)
Net loans	$	736,612		$	697,549		$	694,463
Regulatory Commercial Real Estate	$	283,527		$	263,424		$	260,068			$	20,103		8	%	$	23,459		9	%		38	%	37	%	37	%
Total Risk Based Capital(1)	$	140,987		$	139,133		$	140,176			$	1,854		1	%	$	811		1	%
CRE to Risk Based Capital(1)		201%			189%			186%						12	%				15	%
CRE--MULTI-FAMILY & NON OWNER OCCUPIED COMPOSITION (unaudited)	Period Ended										Change from											% of Total
($ in 000s)
		Jun 30,			Mar 31,			Jun 30,				Mar 31, 2025					Jun 30, 2024					Jun 30,		Mar 31,		Jun 30,
		2025			2025			2024				$		%			$		%			2025		2025		2024
Collateral Composition(2)
Multifamily	$	78,760		$	76,421		$	63,243			$	2,339		3	%	$	15,517		25	%		30	%	31	%	27	%
Retail		36,384			36,616			36,074				(232	)	-1	%		310		1	%		14	%	15	%	16	%
Hospitality		32,573			31,772			30,248				801		3	%		2,325		8	%		12	%	13	%	13	%
Office		26,034			23,975			23,266				2,059		9	%		2,768		12	%		10	%	10	%	10	%
Mixed Use		24,480			22,706			23,520				1,774		8	%		960		4	%		9	%	9	%	10	%
Mini Storage		22,488			22,654			23,619				(166	)	-1	%		(1,131	)	-5	%		8	%	9	%	11	%
Special Purpose		17,342			6,874			7,014				10,468		152	%		10,328		147	%		7	%	3	%	3	%
Industrial		14,430			15,230			13,691				(800	)	-5	%		739		5	%		5	%	6	%	6	%
Warehouse		10,394			8,146			7,631				2,248		28	%		2,763		36	%		4	%	3	%	3	%
Other		2,620			2,648			3,213				(28	)	-1	%		(593	)	-18	%		1	%	1	%	1	%
Total	$	265,505		$	247,042		$	231,519			$	18,463		7	%	$	33,986		15	%		100	%	100	%	100	%
(1)Bank of the Pacific
(2)Includes loans in process of construction

CREDIT QUALITY (unaudited)	Period Ended										Change from
($ in 000s)
		Jun 30,			Mar 31,			Jun 30,				Mar 31, 2025					Jun 30, 2024
		2025			2025			2024				$		%			$		%
Risk Rating Distribution
Pass	$	735,200		$	694,240		$	694,272			$	40,960		6	%	$	40,928		6	%
Special Mention		9,637			10,131			4,731				(494	)	-5	%		4,906		104	%
Substandard		1,638			2,663			4,974				(1,025	)	-38	%		(3,336	)	-67	%
Portfolio Loans	$	746,475		$	707,034		$	703,977			$	39,441		6	%	$	42,498		6	%
Nonperforming Assets
Nonaccruing loans		468			1,225			1,370			$	(757	)	-62	%		(902	)	-66	%
Other real estate owned		-			-			-				-		0	%		-		0	%
Nonperforming Assets	$	468		$	1,225		$	1,370			$	(757	)	-62	%		(902	)	-66	%
Credit Metrics
Classified loans1 to portfolio loans		0.22%			0.38%			0.71%				-0.16%					-0.49%
ACL to classified loans1		563.00%			333.83%			178.11%				229.17%					384.89%
Loans past due 30+ days to portfolio loans2		0.02%			0.04%			0.04%				-0.02%					-0.02%
Nonperforming assets to total assets		0.04%			0.10%			0.12%				-0.06%					-0.08%
Nonaccruing loans to portfolio loans		0.06%			0.17%			0.19%				-0.11%					-0.13%
(1) Classified loans include loans rated substandard or worse and 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.
(2) Excludes non-accrual loans

DEPOSIT COMPOSITION & CONCENTRATIONS (unaudited)	Period Ended							Change from											% of Total
($ in 000s)
		Jun 30,		Mar 31,		Jun 30,			Mar 31, 2025					Jun 30, 2024					Jun 30,		Mar 31,		Jun 30,
		2025		2025		2024			$		%			$		%			2025		2025		2024
Deposits
Interest-bearing demand	$	207,208	$	243,363	$	179,278		$	(36,155	)	-15	%	$	27,930		16	%		19	%	23	%	18	%
Money market		200,251		197,184		180,727			3,067		2	%		19,524		11	%		19	%	18	%	18	%
Savings		111,577		117,130		121,851			(5,553	)	-5	%		(10,274	)	-8	%		10	%	11	%	12	%
Time deposits (CDs)		131,729		134,226		125,560			(2,497	)	-2	%		6,169		5	%		12	%	12	%	13	%
Total interest-bearing deposits		650,765		691,903		607,416			(41,138	)	-6	%		43,349		7	%		60	%	64	%	61	%
Non-interest bearing demand		420,066		382,743		378,211			37,323		10	%		41,855		11	%		40	%	36	%	39	%
Total deposits	$	1,070,831	$	1,074,646	$	985,627		$	(3,815	)	0	%	$	85,204		9	%		100	%	100	%	100	%
Insured Deposits	$	618,964	$	630,940	$	632,923		$	(11,976	)	-2	%	$	(360,455	)	-57	%		58	%	59	%	64	%
Collateralized Deposits		179,399		183,842		118,966			(4,443	)	-2	%		60,433		51	%		17	%	17	%	12	%
Uninsured Deposits		272,468		259,864		233,738			12,604		5	%		385,226		165	%		25	%	24	%	24	%
Total Deposits	$	1,070,831	$	1,074,646	$	985,627		$	(3,815	)	0	%	$	85,204		9	%		100	%	100	%	100	%
Consumer Deposits	$	462,889	$	472,839	$	458,249		$	(9,950	)	-2	%	$	4,640		1	%		43	%	44	%	47	%
Business Deposits		417,675		407,974		398,719			9,701		2	%		18,956		5	%		39	%	38	%	40	%
Public Deposits		190,267		193,833		128,659			(3,566	)	-2	%		61,608		48	%		18	%	18	%	13	%
Total Deposits	$	1,070,831	$	1,074,646	$	985,627		$	(3,815	)	0	%	$	85,204		9	%		100	%	100	%	100	%

NET INTEREST MARGIN (unaudited)	Quarter Ended										Change From											Six Months Ended						Change
($ in 000s)
		Jun 30,			Mar 31,			Jun 30,				Mar 31, 2025					Jun 30, 2024					Jun 30,			Jun 30,
		2025			2025			2024				$		%			$		%			2025			2024				$		%
Average Interest Bearing Balances
Portfolio loans	$	723,472		$	701,071		$	699,404			$	22,401		3	%	$	24,068		3	%	$	712,334		$	694,161			$	18,173		3	%
Loans held for sale	$	-		$	-		$	1,593			$	-		-100	%	$	(1,593	)	-100	%	$	-		$	1,094			$	(1,094	)	-100	%
Investment securities	$	308,774		$	305,074		$	283,637			$	3,700		1	%	$	25,137		9	%	$	306,934		$	288,006			$	18,928		7	%
Interest earning cash	$	101,170		$	110,007		$	62,494			$	(8,837	)	-8	%	$	38,676		62	%	$	105,563		$	65,684			$	39,879		61	%
Total interest-earning assets	$	1,133,416		$	1,116,152		$	1,047,128			$	17,264		2	%	$	86,288		8	%	$	1,124,831		$	1,048,945			$	75,886		7	%
Non-interest bearing deposits	$	389,453		$	378,470		$	387,740			$	10,983		3	%	$	1,713		0	%	$	383,992		$	391,372			$	(7,380	)	-2	%
Interest-bearing deposits	$	677,660		$	675,122		$	596,121			$	2,538		0	%	$	81,539		14	%	$	676,398		$	593,266			$	83,132		14	%
Total Deposits	$	1,067,113		$	1,053,592		$	983,861			$	13,521		1	%	$	83,252		8	%	$	1,060,390		$	984,638			$	75,752		8	%
Borrowings	$	13,403		$	13,403		$	13,404			$	-		0	%	$	(1	)	0	%	$	13,403		$	13,401			$	2		0	%
Total interest-bearing liabilities	$	691,063		$	688,525		$	609,525			$	2,538		0	%	$	81,538		13	%	$	689,801		$	606,667			$	83,134		14	%
Yield / Cost $(1)
Portfolio loans	$	10,854		$	10,316		$	10,092			$	538		5	%	$	762		8	%	$	21,170		$	20,325			$	845		4	%
Loans held for sale	$	-		$	-		$	28			$	-		-100	%	$	(28	)	-100	%	$	-		$	33			$	(33	)	-100	%
Investment securities	$	2,755		$	2,710		$	2,442			$	45		2	%	$	313		13	%	$	5,465		$	4,951			$	514		10	%
Interest-bearing cash	$	1,124		$	1,208		$	847			$	(84	)	-7	%	$	277		33	%	$	2,332		$	1,782			$	550		31	%
Total interest-earning assets	$	14,733		$	14,234		$	13,410			$	499		4	%	$	1,323		10	%	$	28,966		$	27,092			$	1,874		7	%
Interest-bearing deposits	$	2,571		$	2,694		$	2,358			$	(123	)	-5	%	$	213		9	%	$	5,265		$	4,349			$	916		21	%
Borrowings	$	206		$	206		$	242			$	-		0	%	$	(36	)	-15	%	$	412		$	484			$	(72	)	-15	%
Total interest-bearing liabilities	$	2,777		$	2,900		$	2,600			$	(123	)	-4	%	$	177		7	%	$	5,677		$	4,833			$	844		17	%
Net interest income	$	11,956		$	11,334		$	10,810			$	622		5	%	$	1,146		11	%	$	23,289		$	22,259			$	1,030		5	%
Yield / Cost %(1)
Yield on portfolio loans		6.02%			5.97%			5.80%				0.05%					0.22%					5.99%			5.89%				0.10%
Yield on investment securities		3.58%			3.60%			3.46%				-0.02%					0.12%					3.59%			3.46%				0.13%
Yield on interest-bearing cash		4.46%			4.45%			5.46%				0.01%					-1.00%					4.45%			5.46%				-1.01%
Cost of interest-bearing deposits		1.52%			1.62%			1.59%				-0.10%					-0.07%					1.57%			1.47%				0.10%
Cost of borrowings		6.16%			6.23%			7.26%				-0.07%					-1.10%					6.20%			7.26%				-1.06%
Cost of deposits and borrowings		1.03%			1.10%			1.05%				-0.07%					-0.02%					1.07%			0.97%				0.10%
Yield on interest-earning assets		5.21%			5.17%			5.15%				0.04%					0.06%					5.19%			5.19%				0.00%
Cost of interest-bearing liabilities		1.61%			1.71%			1.72%				-0.10%					-0.11%					1.66%			1.60%				0.06%
Net interest spread		3.60%			3.46%			3.43%				0.14%					0.17%					3.53%			3.59%				-0.06%
Net interest margin		4.23%			4.12%			4.15%				0.11%					0.08%					4.18%			4.27%				-0.09%
(1) Tax-exempt income has been adjusted to a tax equivalent basis at a rate of 21%.

ALLOWANCE FOR CREDIT LOSSES (ACL) (unaudited)	Quarter Ended										Change From											Six Months Ended						Change
($ in 000s)
		Jun 30,			Mar 31,			Jun 30,				Mar 31, 2025					Jun 30, 2024					Jun 30,			Jun 30,
		2025			2025			2024				$		%			$		%			2025			2024				$		%
ACL-Loans
Beginning of period balance	$	8,890		$	8,851		$	8,580			$	39		0	%	$	310		4	%	$	8,851		$	8,530			$	321		4	%
Charge-offs		(76	)		(75	)		(57	)			(1	)	1	%		(19	)	33	%		(151	)		(92	)			(59	)	64	%
Recoveries		1			-			1				1		100	%		-		0	%		1			3				(2	)	-67	%
Net (charge-off) recovery		(75	)		(75	)		(56	)			-		0	%		(19	)	34	%		(150	)		(89	)			(61	)	69	%
Provision (recapture)		407			114			335				293		257	%		72		21	%		521			418				103		25	%
End of period balance	$	9,222		$	8,890		$	8,859			$	332		4	%	$	363		4	%	$	9,222		$	8,859			$	363		4	%
Net charge-off (recovery) to
average portfolio loans		0.04%			0.04%			0.03%				0.00%					0.01%					0.04%			0.03%				0.01%
ACL-loans to portfolio loans		1.24%			1.26%			1.26%				-0.02%					-0.02%					1.24%			1.26%				-0.02%
ACL-Unfunded Loans Commitments
Beginning of period balance	$	509		$	540		$	648			$	(31	)	-6	%	$	(139	)	-21	%	$	540		$	698			$	(158	)	-23	%
Provision (recapture)		(20	)		(31	)		(31	)			11		-35	%		11		-35	%		(51	)		(81	)			30		-37	%
End of period balance	$	489		$	509		$	617			$	(20	)	-4	%	$	(128	)	-21	%	$	489		$	617			$	(128	)	-21	%

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, 2025, the Company had total assets of $1.22 billion and operated fifteen branches in the communities of Grays Harbor, Pacific, Thurston, Whatcom, Skagit, Clark and Wahkiakum counties in the State of Washington, and three branches in the communities of Clatsop and Clackamas counties in Oregon. The Company also operated loan production offices in the communities of Burlington, Washington and Salem, Oregon. Visit the Company’s website at www.bankofthepacific.com. Member FDIC.

Cautions Concerning Forward-Looking Statements
This 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. Such statements are based on information available at the time of communication and are based on current beliefs and expectations of the Company’s management and are subject to risks and uncertainties, many of which are beyond our control, which could cause actual events or results to differ materially from those projected, anticipated or implied, and could negatively impact the Company’s operating and stock price performance. These risks and uncertainties include various risks associated with growing the Bank and expanding the services it provides, development of new business lines and markets, competition in the marketplace, general economic conditions, changes in interest rates, extensive and evolving regulation of the banking industry, and many other risks. Any forward-looking statements in this communication are based on information at the time the statement is made. 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

FAQ

What was Pacific Financial's (PFLC) earnings per share in Q2 2025?

Pacific Financial reported earnings of $0.27 per diluted share in Q2 2025, compared to $0.24 in Q1 2025 and $0.21 in Q2 2024.

What dividend did PFLC declare for Q2 2025?

Pacific Financial declared a quarterly cash dividend of $0.14 per share, payable on August 22, 2025 to shareholders of record on August 8, 2025.

How much was Pacific Financial's loan growth in Q2 2025?

The company's gross loan balances increased 6% to $746.5 million in Q2 2025, up $39.4 million from $707.0 million in Q1 2025.

What is PFLC's asset quality status as of Q2 2025?

Asset quality remains excellent with non-performing assets at just 0.04% of total assets ($468,000), down from 0.10% ($1.2 million) in the previous quarter.

What was Pacific Financial's net interest margin in Q2 2025?

The net interest margin improved to 4.23% in Q2 2025, up from 4.12% in Q1 2025 and 4.15% in Q2 2024.