BEO Bancorp 3Q Earnings Increase 5.7%

  
    
  
  
    
      BEO Bancorp (OTCBB:BEOB), and its subsidiary, Bank of Eastern Oregon, 
      continued with its steady and strong earnings result for 2008 with net 
      income for 3Q2008 of $610,000, compared to 3Q2007 earnings of $577,000, 
      an increase of 5.7%. YTD earnings were even more impressive with 2008 
      YTD net income of $1,831,000, compared to 2007 YTD earnings of 
      $1,616,000, an improvement of 13.3% year over year.
    
    
      “We are very pleased with these interim 
      results being posted today,” said E. George 
      Koffler, President and CEO of the holding company. “Despite 
      the significant financial headwinds we see nationally and regionally, 
      our team of dedicated bankers continues to make good decisions that 
      benefit us in the long run.”
    
    
      “Our challenge, like many banks, is to 
      maintain credit quality in these tumultuous times,” 
      said bank President and Chief Credit Officer, Jeff Bailey. “We 
      have consistently improved our regular monitoring systems in the credit 
      area and aggressively built up our loan loss provision.”
    
    
      The bank booked a $500,000 recovery during the quarter from a 
      charged-off loan relationship in 2005, while also adding $300,000 to the 
      reserve from earnings. This was balanced by write downs totaling 
      $268,000 on loans secured by real estate, of which the bank expects to 
      recover about $115,000 in the fourth quarter. The net effect of these 
      activities was an increase in the loan loss reserve balance from 
      $2,001,000 on June 30, 2008, to $2,536,000 on September 30, 2008. Loan 
      totals increased 33% year over year to $176,101,000, and the loan loss 
      reserve ratio to total loans now stands at 1.44%. “Strong 
      profitability has allowed us to add appropriately to the reserve while 
      sustaining continued growth,” added Bailey.
    
    
      Non-accrual loans grew from $760,886 to $1,726,303. A bulk sale is 
      expected to pay off the real estate loans noted above during October and 
      the remaining $760,886 is a well-secured agricultural loan in a Chapter 
      12 bankruptcy. No loss is expected on this credit.
    
    
      Non-performing assets increased from 0.46% to 1.02% as a result of the 
      non accruals and the classification of a single construction and land 
      development loan. That loan is well secured and is expected to be 
      performing in the fourth quarter.
    
    
      Deposit liability growth continued slow and steady, ending the quarter 
      at $178,293,000, a 4% improvement year over year. “Our 
      branch operations staff continues to attract good quality, reasonable 
      priced deposits,” said Executive Vice 
      President and Chief Operating Officer, Gary Propheter. “We 
      are also using a variety of strategies to help depositors keep their 
      nest egg safe and sound, including FDIC insurance restructuring and our 
      CDARS product that gives customers access to $50,000,000 worth of FDIC 
      coverage,” added Propheter. Bank of Eastern 
      Oregon opened a full-service branch in Enterprise, Oregon, on October 
      14, building on its very successful Loan Production Office in Wallowa 
      County.
    
    
      Liquidity issues that have caused a number of bank problems recently 
      were aggressively addressed during the quarter according to Executive 
      Vice President and Chief Financial Officer, Mark Lemmon. “We 
      implemented a multifaceted liquidity plan during the third quarter that 
      assures our ability to meet cash requirements and lending needs of our 
      customers. The plan has been rigorously tested and is sound,” 
      said Lemmon.
    
    
      Total assets of the bank grew to $222,605,000, a 12% increase year over 
      year. Capital growth was also a bright spot with total equity at 
      $20,056,000, an improvement of 12% year over year. The bank continues to 
      be well capitalized by FDIC standards.
    
    
      For further information on the company or to access internet banking, 
      please visit our website at http://www.beobank.com.
    
    
      About BEO Bancorp
    
    
      BEO Bancorp is the holding company for Bank of Eastern Oregon, which 
      operates 12 branches and two loan production offices in nine eastern 
      Oregon counties. Branches are located in Arlington, Ione, Heppner, 
      Condon, Irrigon, Boardman, Burns, John Day, Prairie City, Fossil and 
      Moro and Enterprise; loan production offices are located in Hermiston 
      and Ontario. Bank of Eastern Oregon also operates a mortgage division 
      and offers brokerage services through BEO Financial Services. The bank’s 
      website is www.beobank.com.
    
    
      Forward-Looking Statements
    
    
      The statements contained in this release that are not historical facts 
      are forward-looking statements based upon management’s 
      current expectations and beliefs concerning future developments and 
      their potential effect on BEO Bancorp. There can be no assurances that 
      future developments affecting BEO Bancorp will be the same as those 
      anticipated by management.
    
    
      Actual results may differ from those projected in the forward-looking 
      statements. These forward-looking statements involve risks and 
      uncertainties. These risks and uncertainties include, but are not 
      limited to:
    
    
      
        
           
        
        
           
        
        
           
        
        
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          Competitive pressures in the banking and financial industries.
        
      
      
        
        
        
        
        
        
        
          (2)
        
        
        
        
          Changes in interest rate environment.
        
      
      
        
        
        
        
        
        
        
          (3)
        
        
        
        
          General economic conditions, nationally, regionally, and in 
          operating markets.
        
      
      
        
        
        
        
        
        
        
          (4)
        
        
        
        
          Changes in regulatory environment.
        
      
      
        
        
        
        
        
        
        
          (5)
        
        
        
        
          Changes in business conditions and inflation.
        
      
      
        
        
        
        
        
        
        
          (6)
        
        
        
        
          Changes in securities markets.
        
      
      
        
        
        
        
        
        
        
          (7)
        
        
        
        
          Future credit loss experience.