Pacific Financial Corp Third Quarter 2025 Earnings up 30% to $3.5 Million, or $0.35 per Diluted Share; Declares Quarterly Cash Dividend of $0.14 per Share

ABERDEEN, Wash., Oct. 31, 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 $3.5 million, or $0.35 per diluted share for the third quarter of 2025, compared to $2.7 million, or $0.27 per diluted share for the second quarter of 2025, and $2.6 million, or $0.25 per diluted share for the third quarter of 2024. The current quarter’s net income relative to the prior quarter reflects an increase in net interest income, lower non-interest expenses as health insurance claims normalized and a small recapture for credit losses. 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 October 22, 2025. The dividend will be payable on November 28, 2025 to shareholders of record on November 14, 2025.

“We are encouraged by the continued momentum driven by both strong loan growth and deposit growth as well as the strategic initiatives taken in 2024 - expanding our lending team while also improving our efficiency through the closure of our mortgage division. During 2025, deposit balances have increased 10% or $99 million and loan balances have increased 10% or $67 million. As we continue to redeploy lower yielding liquid investments into higher yielding assets, we anticipate our earnings levels will remain strong,” said Denise Portmann, President and Chief Executive Officer.

“Credit quality metrics remain strong and continued on a positive trend with non-performing assets totaling only 0.03% of total assets, or less than $400,000 at quarter end. Our return on shareholder equity was 11.5% for the quarter, dividend payments were $0.14 per share, and our market capitalization now exceeds $115 million based on current market pricing. We remain focused on delivering strong returns to our shareholders through our operations and managing our capital to support growth," said Portmann.

Third Quarter 2025 Financial Highlights:

• Return on average assets (“ROAA”) improved to 1.12% in the third quarter 2025, compared to 0.89% for the second quarter 2025, and 0.90% for the third quarter 2024.
  
  
• Return on average equity (“ROAE”) was 11.50%, compared to 9.14% the preceding quarter, and 8.77% the third quarter a year earlier.
  
  
• Net interest income increased to $12.3 million, compared to $11.9 million for the second quarter of 2025, and $11.2 million for the third quarter of 2024.
  
  
• Net interest margin (“NIM”) increased to 4.25%, compared to 4.23% the preceding quarter, and 4.19% for the third quarter a year ago.
  
  
• A recapture for credit losses of $49,000 was recognized in the third quarter ended September 30, 2025, compared to a provision of $387,000 for the preceding quarter and a recapture of $66,000 in the third quarter a year ago.
  
  
• Gross portfolio loan balances increased 3% to $772.2 million at September 30, 2025, compared to $746.5 million at June 30, 2025, and increased 10%, or $72.6 million from $699.6 million one year earlier.
  
  
• Total deposits increased $43.2 million to $1.11 billion at September 30, 2025, compared to the previous quarter and increased $102.6 million, or 10%, from one year earlier.
  
  
• Non-performing assets to total assets ratio declined to 0.03%, or $365,000 for the current quarter end compared to 0.04% and $468,000 three months earlier. Substandard loans decreased $410,000 to $1.2 million and special mention assets declined $61,000 to $9.6 million at September 30, 2025 compared to the previous quarter.
  
  
• Shareholder equity increased $4.4 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 $10.97 at September 30, 2025, an increase of $0.50 from $10.47 at September 30, 2024. Total dividends paid to shareholders over the past year totaled $0.56 per share.
  
  
• Pacific Financial and Bank of the Pacific continue to exceed regulatory well-capitalized requirements. At September 30, 2025, Pacific Financial’s estimated leverage ratio was 10.9% and its estimated total risk-based capital ratio was 17.1%.

Balance Sheet Review

Total assets increased to $1.26 billion at September 30, 2025 from $1.21 billion one quarter earlier, and $1.16 billion at September 30, 2024.

Cash and interest earning deposits increased $25.5 million to $124.3 million at September 30, 2025, from $98.8 million at June 30, 2025, and increased $23.1 million from $101.1 million one year earlier. These increases largely relate to deposit growth during the same time periods.

During the third quarter of 2025, liquidity metrics improved and continued to be strong. At September 30, 2025, the Company’s on and off-balance sheet sources totaled $580.5 million. This represents a coverage ratio of short-term funds available to uninsured and uncollateralized deposits of 187%. 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 28% of total deposits at September 30, 2025.

Investment securities decreased $4.0 million to $303.8 million at September 30, 2025, compared to $307.8 million at June 30, 2025, and increased $7.0 million compared to a year ago. The largest investment category was collateralized mortgage obligations, which accounted for 52% of the investment portfolio at September 30, 2025, and at June 30, 2025 compared to 48% one year earlier. The yield on the investment portfolio increased 3 basis points during the current quarter to 3.61% from 3.58% the prior quarter and increased 8 basis points from 3.53% the third quarter a year ago. The adjusted duration of the portfolio was 4.3 years at September 30, 2025, up slightly from 4.2 years a year ago.

Gross loans balances increased $25.7 million, to $772.2 million at September 30, 2025, compared to $746.5 million at June 30, 2025. During the third quarter of 2025, $30.2 million SBA C&I loans were purchased, primarily in an effort to manage loan portfolio diversification and concentration levels. With the purchase of the SBA loans, commercial and agricultural loans increased from 10% of gross loans to 14% during the current quarter. Excluding the loan purchase, gross loans declined slightly during the current quarter. Year-over-year gross loan growth was 10%, or $72.6 million and exclusive of the loan purchase, gross loans increased $42.4 million, or 6% year-over-year. The Bank originated $181 million in loans year to date through the third quarter of 2025. The loan pipeline continues to be supported by sustained business development activity of the Company’s commercial lending teams.

The Company manages concentration limits that establish maximum exposure levels by certain industry segments, loan product types, geography and single borrower limits. In addition, the loan portfolio continues to be well-diversified and is collateralized with assets predominantly within the Company’s Western Washington and Oregon markets. Loans classified as commercial real estate for regulatory concentration purposes totaled $291.4 million at September 30, 2025, or 204% of total risk-based capital.

Credit quality: Nonperforming assets declined from the previous quarter and remain minimal at $365,000, or 0.03% of total assets at September 30, 2025, compared to $468,000, or 0.04% at June 30, 2025. Total loans designated as special mention decreased $61,000 to $9.6 million at September 30, 2025 compared to the previous quarter. The Company has zero other real estate owned as of September 30, 2025.

Allowance for credit losses (“ACL”): ACL-loans decreased $165,000 to $9.1 million, or 1.17% of total portfolio loans at September 30, 2025, compared to 1.27% at September 30, 2024. The decrease in the percentage of ACL-loans to total portfolio loans was primarily the result of the $30.2 million purchase of fully guaranteed SBA loans during the quarter, as the guaranteed portion of SBA loans are expected to have zero credit losses. The ratio of ACL to non-government guaranteed loans was 1.23% at September 30, 2025.

A recapture for credit losses of $49,000 was recorded in the current quarter resulting from a small decline in non-government guaranteed loan balances. Conversely, a provision for credit losses of $387,000 was established in the second quarter of 2025 due to loan growth while a recapture of $66,000 was recorded for the third quarter one year ago.

Total deposits increased $43.2 million to $1.11 billion at September 30, 2025, compared to the previous quarter and increased $102.6 million from $1.01 billion one year earlier. A majority of the increase for the current quarter was due to increased money-market balances, which were partially offset by decreases in interest-bearing demand balances. Core deposits represented 88% of total deposits at quarter end, including non-interest-bearing deposits of 38% of deposits, and interest-bearing demand and money market deposits representing 18% and 22% of total deposits, respectively. CDs as a percentage of deposits remained at 12% of total deposits. The high percentage of non-interest-bearing deposits supports a lower cost core deposits portfolio.

Shareholders’ equity was $123.3 million at September 30, 2025, compared to $118.9 million at June 30, 2025, and $121.1 million at September 30, 2024. The increase in shareholders’ equity during the current quarter was primarily due to $3.5 million in net income and a $2.3 million decrease in unrealized losses (after-tax) 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 $11.0 million at September 30, 2025, compared to $13.3 million at June 30, 2025, and $11.4 million at September 30, 2024.

Book value per common share was $12.31 at September 30, 2025, compared to $11.87 at June 30, 2025, and $11.78 at September 30, 2024. Tangible book value per common share was $10.97 at September 30, 2025, compared to $10.53 at June 30, 2025, and $10.47 at September 30, 2024. The Company’s tangible common equity ratio was 8.8% at September 30, 2025, remaining the same compared to the prior quarter and decreased from 9.4% at September 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 17.1% as of September 30, 2025. These regulatory capital ratios are estimates, pending completion and filing of regulatory reports.

Income Statement Review

Net interest income increased $368,000 to $12.3 million for the third quarter of 2025, compared to $11.9 million for the second quarter of 2025, and increased $1.1 million compared to $11.2 million for the third quarter a year ago. The change in the current quarter compared to the preceding quarter reflects increased loan interest income from larger average loan balances and increased investment income from higher yields, partially offset by increased deposit interest expense from both higher average balances and a 2 basis point increase in cost of funds, plus decreased interest income on interest-earning cash resulting from both decreased cash balances as well as decreased yields. Late in the quarter, the FOMC decreased the federal funds rate by 25 basis points. For the nine months ended September 30, 2025, net interest income increased to $35.5 million compared to $33.4 million for the like period a year ago.

The Bank’s net interest margin improved to 4.25% for the quarter ended September 30, 2025, from 4.23% the prior quarter and from 4.19% in the third quarter a year ago. Increases in net interest margin during the last year were driven by asset composition changes, i.e. deploying interest-earning cash into higher-earning loan balances augmented by a decline in cost of funds and growth in loan and investment securities yields. These changes were only partially offset by a decline in yields on interest-earning cash. FOMC has decreased the federal funds target rate 75 basis points during the last 12 months.

Yields on loans remained relatively unchanged; decreasing 1 basis points to 6.01% for the third quarter of 2025 compared to 6.02% for the prior quarter and increasing 2 basis points from 5.99% in the like quarter a year ago. The Bank continues to actively monitor and manage its costs of funds and for the current quarter the Bank’s total cost of funds increased only 2 basis points to 1.05%, compared to 1.03% for the preceding quarter, and 1.15% for the third quarter 2024. The high percentage of non-interest-bearing deposits at 38% continues to help reduce volatility in deposit costs.

Noninterest income remained at $1.5 million for the current quarter and decreased compared to $1.7 million for the third quarter a year earlier. The decrease compared to one year earlier was primarily due to the loss of revenue associated with the mortgage banking division which was closed in late 2024. Fee and service charge income remained at $1.3 million in the current quarter compared to the previous quarter and increased slightly from $1.2 million in the third quarter of 2024. Total non-interest income was $4.1 million for the nine months ended September 30, 2025, compared to $5.1 million for the same period a year ago, with the decrease primarily due to the loss of gross revenue associated with the mortgage banking division which closed in late 2024.

Noninterest expenses decreased to $9.4 million for the third quarter of 2025 compared to $9.7 million for both the prior quarter and the third quarter of 2024. The decrease in the current quarter compared to the prior quarter was primarily related to a decrease in salary and benefit expenses associated with decreased health insurance claims and accruals and the decrease from the third quarter of 2024 was primarily due to decreased expenses associated with the mortgage banking division which was closed in late 2024.

For the nine months ended September 30, 2025, total non-interest expenses were $28.6 million, compared to $29.1 million for the nine months ended September 30, 2024. The decrease in non-interest expenses primarily relates to decreased expenses associated with the mortgage division which closed in late 2024, as the first nine months of 2024 included operating costs of the mortgage banking division. The Bank’s efficiency ratio improved to 68.47% for the third quarter of 2025, compared to 72.47% in the preceding quarter and 75.48% in the same quarter a year ago.

Income tax expense: Federal and Oregon state income tax expenses totaled $904,000 for the current quarter, and $633,000 for the preceding quarter, resulting in effective tax rates of 20.6% and 19.2%, 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											Nine Months Ended						Change
(In 000s, except per share data)
		Sep 30,			Jun 30,			Sep 30,				Jun 30, 2025					Sep 30, 2024					Sep 30,			Sep 30,
		2025			2025			2024				$		%			$		%			2025			2024				$		%
Earnings Ratios & Data
Net Income	$	3,478		$	2,669		$	2,594			$	809		30	%	$	884		34	%	$	8,525		$	7,370			$	1,155		16	%
Return on average assets		1.12	%		0.89	%		0.90	%			0.23	%				0.22	%				0.94	%		0.87	%			0.07	%
Return on average equity		11.50	%		9.14	%		8.77	%			2.36	%				2.73	%				9.75	%		8.52	%			1.23	%
Efficiency ratio (1)		68.47	%		72.47	%		75.48	%			-4.00	%				-7.01	%				72.14	%		75.67	%			-3.53	%
Net-interest margin %(2)		4.25	%		4.23	%		4.19	%			0.02	%				0.06	%				4.20	%		4.24	%			-0.04	%
Share Ratios & Data
Basic earnings per share	$	0.35		$	0.27		$	0.25			$	0.08		30	%	$	0.10		40	%	$	0.85		$	0.71			$	0.14
Diluted earning per share	$	0.35		$	0.27		$	0.25			$	0.08		30	%	$	0.10		40	%	$	0.85		$	0.71			$	0.14
Book value per share(3)	$	12.31		$	11.87		$	11.78			$	0.44		4	%	$	0.53		4	%
Tangible book value per share(4)	$	10.97		$	10.53		$	10.47			$	0.44		4	%	$	0.50		5	%
Common shares outstanding		10,020			10,020			10,283				-		0	%		(263	)	-3	%
PFLC stock price	$	11.59		$	10.69		$	11.65			$	0.90		8	%	$	(0.06	)	-1	%
Dividends paid per share	$	0.14		$	0.14		$	0.14			$	-		0	%	$	-		0	%	$	0.42		$	0.42			$	-		0	%
Balance Sheet Data
Assets	$	1,263,138		$	1,215,468		$	1,158,410			$	47,670		4	%	$	104,728		9	%
Portfolio Loans	$	772,220		$	746,475		$	699,603			$	25,745		3	%	$	72,617		10	%
Deposits	$	1,114,040		$	1,070,831		$	1,011,473			$	43,209		4	%	$	102,567		10	%
Investments	$	303,804		$	307,790		$	296,792			$	(3,986	)	-1	%	$	7,012		2	%
Shareholders equity	$	123,329		$	118,937		$	121,087			$	4,392		4	%	$	2,242		2	%
Liquidity Ratios
Short-term funding to uninsured
and uncollateralized deposits		187	%		190	%		229	%			-3	%				-42	%
Uninsured and uncollateralized
deposits to total deposits		28	%		25	%		25	%			3	%				3	%
Portfolio loans to deposits ratio		69	%		70	%		69	%			-1	%				0	%
Asset Quality Ratios
Non-performing assets to assets		0.03	%		0.04	%		0.10	%			-0.01	%				-0.07	%
Non-accrual loans to portfolio loans		0.05	%		0.06	%		0.16	%			-0.01	%				-0.11	%
Loan losses to avg portfolio loans		0.03	%		0.04	%		-0.01	%			-0.01	%				0.04	%				0.04	%		0.01	%			0.03	%
ACL-loans to portfolio loans		1.17	%		1.24	%		1.27	%			-0.07	%				-0.10	%
Capital Ratios (PFC)
Total risk-based capital ratio		17.1	%		16.9	%		17.9	%			0.2	%				-0.8	%
Tier 1 risk-based capital ratio		15.9	%		15.7	%		16.7	%			0.2	%				-0.8	%
Common equity tier 1 ratio		14.4	%		14.2	%		15.0	%			0.2	%				-0.6	%
Leverage ratio		10.9	%		10.9	%		11.6	%			0.0	%				-0.7	%
Tangible common equity ratio		8.8	%		8.8	%		9.4	%			0.0	%				-0.6	%
(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											Nine Months Ended						Change
($ in 000s)
		Sep 30,			Jun 30,			Sep 30,				Jun 30, 2025					Sep 30, 2024					Sep 30,			Sep 30,
		2025			2025			2024				$		%			$		%			2025			2024				$		%
Interest Income
Loan interest & fee income	$	11,469		$	10,840		$	10,520			$	629		6	%	$	949		9	%	$	32,613		$	30,853			$	1,760		6	%
Interest earning cash income		957			1,124			1,108				(167	)	-15	%		(151	)	-14	%		3,288			2,890				398		14	%
Investment income		2,760			2,728			2,503				32		1	%		257		10	%		8,166			7,388				778		11	%
Interest Income		15,186			14,692			14,131				494		3	%		1,055		7	%		44,067			41,131				2,936		7	%
Interest Expense
Deposits interest expense		2,695			2,571			2,684				124		5	%		11		0	%		7,960			7,033				927		13	%
Other borrowings interest expense		208			206			243				2		1	%		(35	)	-14	%		620			727				(107	)	-15	%
Interest Expense		2,903			2,777			2,927				126		5	%		(24	)	-1	%		8,580			7,760				820		11	%
Net Interest Income		12,283			11,915			11,204				368		3	%		1,079		10	%		35,487			33,371				2,116		6	%
Provision (recapture) for credit losses		(49	)		387			(66	)			(436	)	-113	%		17		-26	%		422			271				151		56	%
Net Interest Income after provision		12,332			11,528			11,270				804		7	%		1,062		9	%		35,065			33,100				1,965		6	%
Non-Interest Income
Fees and service charges		1,255			1,293			1,225				(38	)	-3	%		30		2	%		3,666			3,523				143		4	%
Gain on sale of investments, net		-			-			-				-		0	%		-		0	%		(165	)		121				(286	)	-236	%
Gain on sale of loans, net		-			-			267				-		0	%		(267	)	-100	%		(2	)		865				(867	)	-100	%
Income on bank-owned insurance		195			191			188				4		2	%		7		4	%		578			550				28		5	%
Other non-interest income		9			3			7				6		200	%		2		29	%		24			34				(10	)	-29	%
Non-Interest Income		1,459			1,487			1,687				(28	)	-2	%		(228	)	-14	%		4,101			5,093				(992	)	-19	%
Non-Interest Expense
Salaries and employee benefits		5,851			6,103			6,341				(252	)	-4	%		(490	)	-8	%		17,923			18,656				(733	)	-4	%
Occupancy		566			618			601				(52	)	-8	%		(35	)	-6	%		1,775			1,806				(31	)	-2	%
Furniture, Fixtures & Equipment		318			305			286				13		4	%		32		11	%		924			837				87		10	%
Marketing & donations		135			157			201				(22	)	-14	%		(66	)	-33	%		446			531				(85	)	-16	%
Professional services		278			254			233				24		9	%		45		19	%		830			897				(67	)	-7	%
Data Processing & IT		1,245			1,250			1,185				(5	)	0	%		60		5	%		3,713			3,541				172		5	%
Other		1,016			1,026			883				(10	)	-1	%		133		15	%		2,948			2,839				109		4	%
Non-Interest Expense		9,409			9,713			9,730				(304	)	-3	%		(321	)	-3	%		28,559			29,107				(548	)	-2	%
Income before income taxes		4,382			3,302			3,227				1,080		33	%		1,155		36	%		10,607			9,086				1,521		17	%
Provision for income taxes		904			633			633				271		43	%		271		43	%		2,082			1,716				366		21	%
Net Income	$	3,478		$	2,669		$	2,594			$	809		30	%		884		34	%	$	8,525		$	7,370			$	1,155		16	%
Effective tax rate		20.6	%		19.2	%		19.6	%			1.4	%				1.0	%				19.6	%		18.9	%			0.7	%

BALANCE SHEET (unaudited)	Period Ended										Change from											% of Total
($ in 000s)
		Sep 30,			Jun 30,			Sep 30,				Jun 30, 2025					Sep 30, 2024					Sep 30,		Jun 30,		Sep 30,
		2025			2025			2024				$		%			$		%			2025		2025		2024
Assets
Cash on hand and in banks	$	17,650		$	19,305		$	20,621			$	(1,655	)	-9	%	$	(2,971	)	-14	%		1	%	2	%	2	%
Interest earning deposits		106,637			79,520			80,522				27,117		34	%		26,115		32	%		9	%	7	%	7	%
Investment securities		303,804			307,790			296,792				(3,986	)	-1	%		7,012		2	%		24	%	25	%	26	%
Loans held-for-sale		-			-			140				-		0	%		(140	)	-100	%		0	%	0	%	0	%
Portfolio Loans, net of deferred fees		771,526			745,834			698,974				25,692		3	%		72,552		10	%		61	%	61	%	60	%
Allowance for credit losses		(9,057	)		(9,222	)		(8,897	)			165		-2	%		(160	)	2	%		-1	%	-1	%	-1	%
Net loans		762,469			736,612			690,077				25,857		4	%		72,392		10	%		60	%	61	%	60	%
Premises & equipment		16,412			16,494			17,124				(82	)	0	%		(712	)	-4	%		1	%	1	%	2	%
Goodwill & Other Intangibles		13,435			13,435			13,435				-		0	%		-		0	%		1	%	1	%	1	%
Bank-owned life Insurance		28,626			28,395			28,084				231		1	%		542		2	%		2	%	2	%	2	%
Other assets		14,105			13,917			11,615				188		1	%		2,490		21	%		2	%	2	%	1	%
Total Assets	$	1,263,138		$	1,215,468		$	1,158,410			$	47,670		4	%	$	104,728		9	%		100	%	100	%	100	%
Liabilities & Shareholders' Equity
Deposits	$	1,114,040		$	1,070,831		$	1,011,473			$	43,209		4	%	$	102,567		10	%		88	%	88	%	87	%
Borrowings		13,403			13,403			13,403				-		0	%		-		0	%		1	%	1	%	1	%
Other liabilities		12,366			12,297			12,447				69		1	%		(81	)	-1	%		1	%	1	%	1	%
Common Stock & Retained Earnings		134,357			132,251			132,506				2,106		2	%		1,851		1	%		11	%	11	%	12	%
Accumulated Other Comprehensive Loss		(11,028	)		(13,314	)		(11,419	)			2,286		-17	%		391		-3	%		-1	%	-1	%	-1	%
Shareholders' equity		123,329			118,937			121,087				4,392		4	%		2,242		2	%		10	%	10	%	11	%
Liabilities & Shareholders' Equity	$	1,263,138		$	1,215,468		$	1,158,410			$	47,670		4	%	$	104,728		9	%		100	%	100	%	100	%
INVESTMENT COMPOSITION & CONCENTRATIONS (unaudited)	Period Ended										Change from											% of Total
($ in 000s)
		Sep 30,			Jun 30,			Sep 30,				Jun 30, 2025					Sep 30, 2024					Sep 30,		Jun 30,		Sep 30,
		2025			2025			2024				$		%			$		%			2025		2025		2024
Investment Securities
Collateralized mortgage obligations	$	156,667		$	159,386		$	141,842			$	(2,719	)	-2	%	$	14,825		10	%		52	%	52	%	48	%
Mortgage backed securities		44,927			47,094			41,264				(2,167	)	-5	%		3,663		9	%		15	%	15	%	14	%
U.S. Government and agency securities		58,770			58,668			68,961				102		0	%		(10,191	)	-15	%		19	%	19	%	23	%
Municipal securities		43,440			42,642			44,725				798		2	%		(1,285	)	-3	%		14	%	14	%	15	%
Investment Securities	$	303,804		$	307,790		$	296,792			$	(3,986	)	-1	%	$	7,012		2	%		100	%	100	%	100	%
Held to maturity securities	$	29,028		$	29,950		$	42,301			$	(922	)	-3	%	$	(13,273	)	-31	%		10	%	10	%	14	%
Available for sale securities	$	274,776		$	277,840		$	254,491			$	(3,064	)	-1	%	$	20,285		8	%		90	%	90	%	86	%
Government & Agency securities	$	260,339		$	265,122		$	252,039			$	(4,783	)	-2	%	$	8,300		3	%		86	%	86	%	85	%
AAA, AA, A rated securities	$	42,780		$	41,979		$	44,084			$	801		2	%	$	(1,304	)	-3	%		14	%	14	%	15	%
Non-rated securities	$	685		$	689		$	669			$	(4	)	-1	%	$	16		2	%		0	%	0	%	0	%
AFS Unrealized Gain (Loss)	$	(14,404	)	$	(17,375	)	$	(14,804	)		$	2,971		-17	%	$	400		-3	%		-5	%	-6	%	-5	%

LIQUIDITY (unaudited)	Period Ended							Change from										% of Deposits
($ in 000s)
		Sep 30,		Jun 30,		Sep 30,			Jun 30, 2025				Sep 30, 2024					Sep 30,		Jun 30,		Sep 30,
		2025		2025		2024			$	%			$		%			2025		2025		2024
Short-term Funding
Cash and cash equivalents	$	112,645	$	84,957	$	85,430		$	27,688	33	%	$	27,215		32	%		10	%	8	%	8	%
Unencumbered AFS Securities		122,817		114,077		154,565			8,740	8	%		(31,748	)	-21	%		11	%	11	%	15	%
Secured lines of Credit (FHLB, FRB)		345,066		317,651		336,771			27,415	9	%		8,295		2	%		31	%	30	%	33	%
Short-term Funding	$	580,528	$	516,685	$	576,766		$	63,843	12	%	$	3,762		1	%		52	%	49	%	56	%

PORTFOLIO LOAN COMPOSITION & CONCENTRATIONS (unaudited)	Period Ended										Change from											% of Total
($ in 000s)
		Sep 30,			Jun 30,			Sep 30,				Jun 30, 2025					Sep 30, 2024					Sep 30,		Jun 30,		Sep 30,
		2025			2025			2024				$		%			$		%			2025		2025		2024
Portfolio Loans
Commercial & agriculture	$	99,469		$	74,831		$	73,002			$	24,638		33	%	$	26,467		36	%		14	%	10	%	10	%
Real estate:
Construction and development		34,574			30,869			46,569				3,705		12	%		(11,995	)	-26	%		4	%	4	%	7	%
Residential 1-4 family		102,588			103,233			105,298				(645	)	-1	%		(2,710	)	-3	%		13	%	14	%	15	%
Multi-family		82,342			78,409			60,773				3,933		5	%		21,569		35	%		11	%	10	%	9	%
CRE -- owner occupied		188,814			193,127			167,086				(4,313	)	-2	%		21,728		13	%		24	%	26	%	24	%
CRE -- non owner occupied		177,384			177,860			157,347				(476	)	0	%		20,037		13	%		23	%	24	%	22	%
Farmland		29,692			27,202			26,553				2,490		9	%		3,139		12	%		4	%	4	%	4	%
Consumer		57,357			60,944			62,975				(3,587	)	-6	%		(5,618	)	-9	%		7	%	8	%	9	%
Portfolio Loans		772,220			746,475			699,603			$	25,745		3	%	$	72,617		10	%		100	%	100	%	100	%
Less: ACL		(9,057	)		(9,222	)		(8,897	)
Less: deferred fees		(694	)		(641	)		(629	)
Net loans	$	762,469		$	736,612		$	690,077
Regulatory Commercial Real Estate	$	291,421		$	283,527		$	261,292			$	7,894		3	%	$	30,129		12	%		38	%	38	%	37	%
Total Risk Based Capital(1)	$	142,676		$	140,987		$	140,971			$	1,689		1	%	$	1,705		1	%
CRE to Risk Based Capital(1)		204	%		201	%		185	%					3	%				19	%

CRE--MULTI-FAMILY & NON OWNER OCCUPIED COMPOSITION (unaudited)	Period Ended							Change from											% of Total
($ in 000s)
		Sep 30,		Jun 30,		Sep 30,			Jun 30, 2025					Sep 30, 2024					Sep 30,		Jun 30,		Sep 30,
		2025		2025		2024			$		%			$		%			2025		2025		2024
Collateral Composition(2)
Multifamily	$	83,463	$	78,760	$	63,099		$	4,703		6	%	$	20,364		32	%		31	%	30	%	27	%
Retail		31,901		36,384		37,685			(4,483	)	-12	%		(5,784	)	-15	%		12	%	14	%	16	%
Hospitality		31,961		32,573		30,844			(612	)	-2	%		1,117		4	%		12	%	12	%	13	%
Mixed Use		28,906		24,480		22,708			4,426		18	%		6,198		27	%		11	%	9	%	10	%
Mini Storage		22,828		22,488		25,758			340		2	%		(2,930	)	-11	%		9	%	8	%	11	%
Office		21,405		26,034		22,921			(4,629	)	-18	%		(1,516	)	-7	%		8	%	10	%	10	%
Industrial		17,251		14,430		13,912			2,821		20	%		3,339		24	%		6	%	5	%	6	%
Special Purpose		17,234		17,342		6,968			(108	)	-1	%		10,266		147	%		6	%	7	%	3	%
Warehouse		10,230		10,394		7,582			(164	)	-2	%		2,648		35	%		4	%	4	%	3	%
Other		2,591		2,620		3,174			(29	)	-1	%		(583	)	-18	%		1	%	1	%	1	%
Total	$	267,770	$	265,505	$	234,651		$	2,265		1	%	$	33,119		14	%		100	%	100	%	100	%
(1) Bank of the Pacific
(2) Includes loans in process of construction

CREDIT QUALITY (unaudited)	Period Ended										Change from
($ in 000s)
		Sep 30,			Jun 30,			Sep 30,				Jun 30, 2025					Sep 30, 2024
		2025			2025			2024				$		%			$		%
Risk Rating Distribution
Pass	$	761,416		$	735,200		$	691,199			$	26,216		4	%	$	70,217		10	%
Special Mention		9,576			9,637			4,789				(61	)	-1	%		4,787		100	%
Substandard		1,228			1,638			3,615				(410	)	-25	%		(2,387	)	-66	%
Portfolio Loans	$	772,220		$	746,475		$	699,603			$	25,745		3	%	$	72,617		10	%
Nonperforming Assets
Nonaccruing loans		365			468			1,138			$	(103	)	-22	%		(773	)	-68	%
Other real estate owned		-			-			-				-		0	%		-		0	%
Nonperforming Assets	$	365		$	468		$	1,138			$	(103	)	-22	%		(773	)	-68	%
Credit Metrics
Classified loans1 to portfolio loans		0.16	%		0.22	%		0.52	%			-0.06	%				-0.36	%
ACL to classified loans1		737.54	%		563.00	%		246.11	%			174.54	%				491.43	%
Loans past due 30+ days to portfolio loans2		0.04	%		0.02	%		0.03	%			0.02	%				0.01	%
Nonperforming assets to total assets		0.03	%		0.04	%		0.10	%			-0.01	%				-0.07	%
Nonaccruing loans to portfolio loans		0.05	%		0.06	%		0.16	%			-0.01	%				-0.11	%
(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)
		Sep 30,		Jun 30,		Sep 30,			Jun 30, 2025					Sep 30, 2024					Sep 30,		Jun 30,		Sep 30,
		2025		2025		2024			$		%			$		%			2025		2025		2024
Deposits
Interest-bearing demand	$	196,236	$	207,208	$	183,337		$	(10,972	)	-5	%	$	12,899		7	%		18	%	19	%	18	%
Money market		244,546		200,251		192,185			44,295		22	%		52,361		27	%		22	%	19	%	19	%
Savings		112,056		111,577		117,131			479		0	%		(5,075	)	-4	%		10	%	10	%	12	%
Time deposits (CDs)		139,238		131,729		133,995			7,509		6	%		5,243		4	%		12	%	12	%	13	%
Total interest-bearing deposits		692,076		650,765		626,648			41,311		6	%		65,428		10	%		62	%	60	%	62	%
Non-interest bearing demand		421,964		420,066		384,825			1,898		0	%		37,139		10	%		38	%	40	%	38	%
Total deposits	$	1,114,040	$	1,070,831	$	1,011,473		$	43,209		4	%	$	102,567		10	%		100	%	100	%	100	%
Insured Deposits	$	627,746	$	618,964	$	636,725		$	8,782		1	%	$	(8,979	)	-1	%		56	%	58	%	63	%
Collateralized Deposits		175,802		179,399		122,448			(3,597	)	-2	%		53,354		44	%		16	%	17	%	12	%
Uninsured Deposits		310,492		272,468		252,300			38,024		14	%		58,192		23	%		28	%	25	%	25	%
Total Deposits	$	1,114,040	$	1,070,831	$	1,011,473		$	43,209		4	%	$	102,567		10	%		100	%	100	%	100	%
Consumer Deposits	$	487,753	$	462,889	$	458,097		$	24,864		5	%	$	29,656		6	%		44	%	43	%	45	%
Business Deposits		439,480		417,675		420,845			21,805		5	%		18,635		4	%		39	%	39	%	42	%
Public Deposits		186,807		190,267		132,531			(3,460	)	-2	%		54,276		41	%		17	%	18	%	13	%
Total Deposits	$	1,114,040	$	1,070,831	$	1,011,473		$	43,209		4	%	$	102,567		10	%		100	%	100	%	100	%

NET INTEREST MARGIN (unaudited)	Quarter Ended										Change From											Nine Months Ended						Change
($ in 000s)
		Sep 30,			Jun 30,			Sep 30,				Jun 30, 2025					Sep 30, 2024					Sep 30,			Sep 30,
		2025			2025			2024				$		%			$		%			2025			2024				$		%
Average Interest Bearing Balances
Portfolio loans	$	758,282		$	723,472		$	697,904			$	34,810		5	%	$	60,378		9	%	$	727,818		$	695,418			$	32,400		5	%
Loans held for sale	$	-		$	-		$	1,276			$	-		0	%	$	(1,276	)	-100	%	$	-		$	1,155			$	(1,155	)	-100	%
Investment securities	$	306,286		$	308,774		$	285,947			$	(2,488	)	-1	%	$	20,339		7	%	$	306,716		$	287,315			$	19,401		7	%
Interest earning cash	$	85,895		$	101,170		$	81,755			$	(15,275	)	-15	%	$	4,140		5	%	$	98,935		$	71,080			$	27,855		39	%
Total interest-earning assets	$	1,150,463		$	1,133,416		$	1,066,882			$	17,047		2	%	$	83,581		8	%	$	1,133,469		$	1,054,968			$	78,501		7	%
Non-interest bearing deposits	$	418,092		$	389,453		$	383,332			$	28,639		7	%	$	34,760		9	%	$	395,483		$	388,672			$	6,811		2	%
Interest-bearing deposits	$	662,796		$	677,660		$	615,388			$	(14,864	)	-2	%	$	47,408		8	%	$	671,815		$	600,694			$	71,121		12	%
Total Deposits	$	1,080,888		$	1,067,113		$	998,720			$	13,775		1	%	$	82,168		8	%	$	1,067,298		$	989,366			$	77,932		8	%
Borrowings	$	13,403		$	13,403		$	13,403			$	-		0	%	$	-		0	%	$	13,403		$	13,403			$	-		0	%
Total interest-bearing liabilities	$	676,199		$	691,063		$	628,791			$	(14,864	)	-2	%	$	47,408		8	%	$	685,218		$	614,097			$	71,121		12	%
Yield / Cost $(1)
Portfolio loans	$	11,485		$	10,854		$	10,509			$	631		6	%	$	976		9	%	$	32,654		$	30,834			$	1,820		6	%
Loans held for sale	$	-		$	-		$	22			$	-		0	%	$	(22	)	-100	%	$	-		$	55			$	(55	)	-100	%
Investment securities	$	2,787		$	2,755		$	2,535			$	32		1	%	$	252		10	%	$	8,252		$	7,485			$	767		10	%
Interest-bearing cash	$	957		$	1,124		$	1,108			$	(167	)	-15	%	$	(151	)	-14	%	$	3,288		$	2,890			$	398		14	%
Total interest-earning assets	$	15,229		$	14,733		$	14,174			$	496		3	%	$	1,055		7	%	$	44,194		$	41,265			$	2,929		7	%
Interest-bearing deposits	$	2,695		$	2,571		$	2,684			$	124		5	%	$	11		0	%	$	7,960		$	7,033			$	927		13	%
Borrowings	$	208		$	206		$	243			$	2		1	%	$	(35	)	-14	%	$	620		$	727			$	(107	)	-15	%
Total interest-bearing liabilities	$	2,903		$	2,777		$	2,927			$	126		5	%	$	(24	)	-1	%	$	8,580		$	7,760			$	820		11	%
Net interest income	$	12,326		$	11,956		$	11,247			$	370		3	%	$	1,079		10	%	$	35,614		$	33,505			$	2,109		6	%
Yield / Cost %(1)
Yield on portfolio loans		6.01	%		6.02	%		5.99	%			-0.01	%				0.02	%				6.00	%		5.92	%			0.08	%
Yield on investment securities		3.61	%		3.58	%		3.53	%			0.03	%				0.08	%				3.60	%		3.48	%			0.12	%
Yield on interest-bearing cash		4.42	%		4.46	%		5.39	%			-0.04	%				-0.97	%				4.44	%		5.43	%			-0.99	%
Cost of interest-bearing deposits		1.61	%		1.52	%		1.74	%			0.09	%				-0.13	%				1.58	%		1.56	%			0.02	%
Cost of borrowings		6.16	%		6.16	%		7.21	%			0.00	%				-1.05	%				6.18	%		7.25	%			-1.07	%
Cost of deposits and borrowings		1.05	%		1.03	%		1.15	%			0.02	%				-0.10	%				1.06	%		1.03	%			0.03	%
Yield on interest-earning assets		5.25	%		5.21	%		5.29	%			0.04	%				-0.04	%				5.21	%		5.22	%			-0.01	%
Cost of interest-bearing liabilities		1.70	%		1.61	%		1.85	%			0.09	%				-0.15	%				1.67	%		1.69	%			-0.02	%
Net interest spread		3.55	%		3.60	%		3.44	%			-0.05	%				0.11	%				3.54	%		3.53	%			0.01	%
Net interest margin		4.25	%		4.23	%		4.19	%			0.02	%				0.06	%				4.20	%		4.24	%			-0.04	%
(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											Nine Months Ended						Change
($ in 000s)
		Sep 30,			Jun 30,			Sep 30,				Jun 30, 2025					Sep 30, 2024					Sep 30,			Sep 30,
		2025			2025			2024				$		%			$		%			2025			2024				$		%
ACL-Loans
Beginning of period balance	$	9,222		$	8,890		$	8,859			$	332		4	%	$	363		4	%	$	8,851		$	8,530			$	321		4	%
Charge-offs		(59	)		(76	)		(5	)			17		-22	%		(54	)	1080	%		(210	)		(97	)			(113	)	116	%
Recoveries		5			1			16				4		400	%		(11	)	-69	%		5			19				(14	)	-74	%
Net (charge-off) recovery		(54	)		(75	)		11				21		-28	%		(65	)	-591	%		(205	)		(78	)			(127	)	163	%
Provision (recapture)		(111	)		407			27				(518	)	-127	%		(138	)	-511	%		411			445				(34	)	-8	%
End of period balance	$	9,057		$	9,222		$	8,897			$	(165	)	-2	%	$	160		2	%	$	9,057		$	8,897			$	160		2	%
Net charge-off (recovery) to
average portfolio loans		0.03	%		0.04	%		-0.01	%			-0.01	%				0.04	%				0.04	%		0.01	%			0.03	%
ACL-loans to portfolio loans		1.17	%		1.24	%		1.27	%			-0.07	%				-0.10	%				1.17	%		1.27	%			-0.10	%
ACL-Unfunded Loans Commitments
Beginning of period balance	$	489		$	509		$	617			$	(20	)	-4	%	$	(128	)	-21	%	$	540		$	698			$	(158	)	-23	%
Provision (recapture)		62			(20	)		(93	)			82		-410	%		155		-167	%		11			(174	)			185		-106	%
End of period balance	$	551		$	489		$	524			$	62		13	%	$	27		5	%	$	551		$	524			$	27		5	%

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 September 30, 2025, the Company had total assets of $1.26 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