BEO Bancorp Earnings Up 63% In 2Q2007

  
    
  
  
    
      BEO Bancorp, parent company of Bank of Eastern Oregon 
      (OTCBB:BEOB), reported a 63% increase in earnings in the second 
      quarter of 2007.
    
    
      
        Earning $583,000 in 2Q2007, compared to $358,000 in 2Q2006.
      
      
        Earning $1,039,000 YTD 2007, compared to $601,000 YTD 2006.
      
      
        Net interest income up 32% quarter over quarter in 2Q2007.
      
      
        Loan growth 9.9% year over year.
      
      
        EPS $1.32 in 2Q2007 versus $.81 in 2Q2006.
      
    
    
      For further information on the Company or to access Internet banking, 
      please visit our website at http://www.beobank.com.
    
    
      Financial Performance:
    
    
      BEO Bancorp delivered record earnings in the second quarter of 2007 at 
      $583,000. This is a 63% increase over the $358,000 earned in 2Q2006. 
      Earnings per share increased to $1.32 per share compared to $.81 earned 
      in 2Q2006. YTD earnings of $1,039,000 for the first half of 2007 are at 
      record levels and compare to earnings of $601,000 in the first half of 
      2006, an improvement of 73%. “We are extremely 
      gratified at the results of the second quarter of 2007 and the first 
      half of the year. Primary drivers of this improvement are an improving 
      net interest margin, solid loan growth, and loan fee income generation,” 
      said President and CEO, E. George Koffler.
    
    
      ROAA improved in the second quarter to 1.21% for the quarter and 1.09% 
      for the first half of 2007. ROAE also showed excellent trending, 
      improving to 23.57% for the second quarter and 21.58% YTD.
    
    
      Revenue and Expense
    
    
      Total revenue continues a strong upward trend with YTD total income at 
      $7,677,000, a 17% increase over the $6,583,000 of last year through the 
      second quarter. Loan fee income for the second quarter increased 278% 
      from $59,604 to $225,477 with mortgage fees, commercial loan fees and 
      loan participation fees leading the way. Interest on loans, which is 
      always a primary profit driver, increased 18% year over year.
    
    
      Total expenses are showing a slower rate of growth with YTD expenses at 
      $6,638,000, compared to $5,982,000 in 2006, an 11% increase. Of 
      particular note is the interest expense increase year over year of only 
      3%.
    
    
      Loan Growth and Credit Quality
    
    
      Loan growth continues to be a foundation of the bank’s 
      improving performance with total loans standing at $131,370,000 at 
      quarter end, a 9.9% increase over last year and an 11.4% increase over 
      the linked quarters. “We continue to grow 
      organically in our footprint with strong local relationships. We also 
      have leveraged our relationships with other top performing community 
      banks and purchased good quality participation loans to supplement that 
      growth,” said EVP and CCO, Jeff Bailey.
    
    
      “Credit quality is sound,” 
      said Bailey. “We had no past dues at quarter 
      end compared to .06% at the end of the first quarter,” 
      he added. Charge offs for the quarter were $2,370 and recoveries $1,722. 
      There was a single non-accrual loan booked at quarter end totaling 
      $48,000, secured by real estate. No loss is expected on the credit.
    
    
      Deposit Growth and Operations
    
    
      Deposits grew 3.8% year over year from $162,669,000 to $168,869,000. 
      Adding to the funding mix was increased sweep repurchase balances 
      growing from $3,910,000 to $9,402,000 in the past twelve months. “We 
      continue to generate more than sufficient deposit and other liability 
      funds to support loan growth,” said EVP and 
      COO, Gary Propheter. “This month Bank of 
      Eastern Oregon will bring live its first Remote Deposit Capture Service 
      customer. We are excited about this addition to our business product 
      line and how it will enable us to better service business customers in 
      our extended footprint.”
    
    
      Net Interest Margin and Interest Rate Risk
    
    
      Net Interest Margin (NIM) continues to be a bright spot for the 
      organization. Average NIM for 2Q2007 was 5.82%, compared to 4.82% in 
      2Q2006. NIM for 2007 stands at a solid 5.48%. “Profitability 
      continues to be driven by an improving NIM at the bank,” 
      said EVP and CFO, Mark Lemmon. “Stable rates 
      that don’t appear to be declining for the 
      balance of 2007 should help keep the NIM at acceptable levels,” 
      Lemmon added.
    
    
      Interest rate risk continues at a manageable level with the cumulative 
      gap from one to three years being within policy levels and earning 
      fluctuations are projected to be minimal based on interest rate 
      forecasts.
    
    
      Capital and Equity
    
    
      Capital levels continue to strengthen as a result of overall bank 
      profitability. At the bank level, tier 1 capital improved year over year 
      and linked quarters while tier 1 risked based capital and total risk 
      based capital declined because of strong loan growth. Capital levels are 
      at 8.87%, 10.57%, and 11.59% at quarter end as compared to first quarter 
      2007 ratios at 8.55%, 11.17%, and 12.25%.
    
    
      Total equity of the holding company stands at $9,908,000 as of the end 
      of the second quarter, a new high for the company.
    
    
      About BEO Bancorp
    
    
      BEO Bancorp is the holding company for Bank of Eastern Oregon, which 
      operates 11 branches and three 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; loan production offices are located in Hermiston, Ontario, and 
      Enterprise. Bank of Eastern Oregon also operates a mortgage division and 
      offers brokerage services through BEO Financial Services. Bank of 
      Eastern Oregon’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: (1) 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; and (7) 
      future credit loss experience.
    
    
      
        
          BEO BANCORP
        
      
      
        
          CONSOLIDATED FINANCIAL HIGHLIGHTS
        
      
      
        
          
            (DOLLAR AMOUNTS IN THOUSANDS -- except earnings per share)
          
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          CONDENSED BALANCE SHEET (Unaudited)
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
           
        
        
          06/30/07
        
        
        
        
        
        
        
        
           
        
        
          06/30/06
        
        
        
        
        
        
          % Change
        
      
      
        
          ASSETS
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
          Cash and due from banks
        
        
          $
        
        
          4,046
        
        
        
        
        
        
        
        
          $
        
        
          7,040
        
        
        
        
        
        
        
        
          -42.5%
        
        
        
        
        
      
      
        
        
        
        
        
          Federal funds sold
        
        
        
        
          7,090
        
        
        
        
        
        
        
        
        
        
          -
        
        
        
        
        
        
        
        
          -
        
        
        
        
        
      
      
        
        
        
        
        
          Securities, at fair value
        
        
        
        
          41,833
        
        
        
        
        
        
        
        
        
        
          44,550
        
        
        
        
        
        
        
        
          -6.1%
        
        
        
        
        
      
      
        
        
        
        
        
          Net loans
        
        
        
        
          131,370
        
        
        
        
        
        
        
        
        
        
          119,551
        
        
        
        
        
        
        
        
          9.9%
        
        
        
        
        
      
      
        
        
        
        
        
          Premises and equipment
        
        
        
        
          5,218
        
        
        
        
        
        
        
        
        
        
          5,031
        
        
        
        
        
        
        
        
          3.7%
        
        
        
        
        
      
      
        
        
        
        
        
          Other real estate owned
        
        
        
        
          47
        
        
        
        
        
        
        
        
        
        
          104
        
        
        
        
        
        
        
        
          -54.8%
        
        
        
        
        
      
      
        
        
        
        
        
          Other assets
        
        
           
        
        
          6,648
        
        
        
        
        
        
        
        
           
        
        
          6,705
        
        
        
        
        
        
        
        
          -0.9%
        
        
        
        
        
      
      
        
          TOTAL ASSETS
        
        
          $
        
        
          196,252
        
        
        
        
        
        
        
        
          $
        
        
          182,981
        
        
        
        
        
        
        
        
          7.3%
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          LIABILITIES AND SHAREHOLDERS' EQUITY
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
          LIABILITIES
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
          Deposits
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
          Noninterest bearing
        
        
          $
        
        
          24,513
        
        
        
        
        
        
        
        
          $
        
        
          24,051
        
        
        
        
        
        
        
        
          1.9%
        
        
        
        
        
      
      
        
        
        
        
        
          Interest bearing
        
        
           
        
        
          144,356
        
        
        
        
        
        
        
        
           
        
        
          138,618
        
        
        
        
        
        
        
        
          4.1%
        
        
        
        
        
      
      
        
        
        
        
        
          Total deposits
        
        
        
        
          168,869
        
        
        
        
        
        
        
        
        
        
          162,669
        
        
        
        
        
        
        
        
          3.8%
        
        
        
        
        
      
      
        
        
        
        
        
          Borrowed funds/Repurchase Accounts
        
        
        
        
          9,402
        
        
        
        
        
        
        
        
        
        
          3,910
        
        
        
        
        
        
        
        
          140.5%
        
        
        
        
        
      
      
        
        
        
        
        
          Other liabilities
        
        
           
        
        
          8,073
        
        
        
        
        
        
        
        
           
        
        
          8,195
        
        
        
        
        
        
        
        
          -1.5%
        
        
        
        
        
      
      
        
        
        
          TOTAL LIABILITIES
        
        
        
        
          186,344
        
        
        
        
        
        
        
        
        
        
          174,774
        
        
        
        
        
        
        
        
          6.6%
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
          SHAREHOLDERS' EQUITY
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
          Common stock
        
        
        
        
          2,202
        
        
        
        
        
        
        
        
        
        
          2,202
        
        
        
        
        
        
        
        
          0.0%
        
        
        
        
        
      
      
        
        
        
        
        
          Additional paid-in capital
        
        
        
        
          1,487
        
        
        
        
        
        
        
        
        
        
          1,487
        
        
        
        
        
        
        
        
          0.0%
        
        
        
        
        
      
      
        
        
        
        
        
          Retained earnings and accumulated other comprehensive income
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
           
        
        
          6,219
        
        
        
        
        
        
        
        
           
        
        
          4,518
        
        
        
        
        
        
        
        
          37.6%
        
        
        
        
        
      
      
        
        
        
          TOTAL SHAREHOLDERS' EQUITY
        
        
           
        
        
          9,908
        
        
        
        
        
        
        
        
           
        
        
          8,207
        
        
        
        
        
        
        
        
          20.7%
        
        
        
        
        
      
      
        
          TOTAL LIABILITIES &
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          SHAREHOLDERS' EQUITY
        
        
          $
        
        
          196,252
        
        
        
        
        
        
        
        
          $
        
        
          182,981
        
        
        
        
        
        
        
        
          7.3%
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          CONDENSED STATEMENT OF INCOME (Unaudited)
        
      
      
        
           
        
      
      
        
        
        
        
        
        
        
          Results of Operation
        
        
        
        
          Results of Operation
        
      
      
        
        
        
        
        
        
        
          Three Months Ending
        
        
        
        
          Year to Date
        
      
      
        
        
        
        
        
        
        
           
        
        
          06/30/07
        
        
        
        
           
        
        
          06/30/06
        
        
        
        
          
            % 
          
          
            Change
          
        
        
        
        
          06/30/07
        
        
        
        
          06/30/06
        
        
        
        
          
            % 
          
          
            Change
          
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Interest income
        
        
          $
        
        
          3,484
        
        
        
        
          $
        
        
          2,938
        
        
        
        
        
        
          18.6%
        
        
        
        
          $
        
        
          6,655
        
        
          $
        
        
          5,651
        
        
        
        
          17.8%
        
      
      
        
          Interest expense
        
        
           
        
        
          1,144
        
        
        
        
           
        
        
          1,158
        
        
        
        
        
        
          -1.2%
        
        
        
        
           
        
        
          2,290
        
        
        
        
          2,219
        
        
        
        
          3.2%
        
      
      
        
          Net interest income
        
        
        
        
          2,340
        
        
        
        
        
        
          1,780
        
        
        
        
        
        
          31.5%
        
        
        
        
        
        
          4,365
        
        
        
        
          3,432
        
        
        
        
          27.2%
        
      
      
        
          Provision for possible loan losses
        
        
           
        
        
          60
        
        
        
        
           
        
        
          85
        
        
        
        
        
        
          -29.4%
        
        
        
        
           
        
        
          120
        
        
        
        
          135
        
        
        
        
          -11.1%
        
      
      
        
          Net interest income after provision for
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          possible loan losses
        
        
        
        
          2,280
        
        
        
        
        
        
          1,695
        
        
        
        
        
        
          34.5%
        
        
        
        
        
        
          4,245
        
        
        
        
          3,297
        
        
        
        
          28.8%
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Noninterest income
        
        
        
        
          534
        
        
        
        
        
        
          491
        
        
        
        
        
        
          8.8%
        
        
        
        
        
        
          1,022
        
        
        
        
          932
        
        
        
        
          9.7%
        
      
      
        
          Noninterest expense
        
        
           
        
        
          1,975
        
        
        
        
           
        
        
          1,730
        
        
        
        
        
        
          14.2%
        
        
        
        
           
        
        
          3,833
        
        
        
        
          3,506
        
        
        
        
          9.3%
        
      
      
        
          Income before taxes
        
        
        
        
          839
        
        
        
        
        
        
          456
        
        
        
        
        
        
          84.0%
        
        
        
        
        
        
          1,434
        
        
        
        
          723
        
        
        
        
          98.3%
        
      
      
        
          Income taxes
        
        
           
        
        
          256
        
        
        
        
           
        
        
          98
        
        
        
        
        
        
          161.2%
        
        
        
        
           
        
        
          395
        
        
        
        
          122
        
        
        
        
          223.8%
        
      
      
        
          NET INCOME
        
        
          $
        
        
          583
        
        
        
        
          $
        
        
          358
        
        
        
        
        
        
          62.8%
        
        
        
        
          $
        
        
          1,039
        
        
          $
        
        
          601
        
        
        
        
          72.9%
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Earnings per share
        
        
          $
        
        
          1.32
        
        
        
        
          $
        
        
          0.81
        
        
        
        
        
        
          62.8%
        
        
        
        
          $
        
        
          2.36
        
        
          $
        
        
          1.36
        
        
        
        
          72.9%
        
      
      
        
          Return on Average Assets
        
        
        
        
          1.21%
        
        
        
        
        
        
          0.79%
        
        
        
        
        
        
          53.5%
        
        
        
        
        
        
          1.09%
        
        
        
        
          0.67%
        
        
        
        
          63.0%
        
      
      
        
          Return on Average Equity
        
        
        
        
          23.57%
        
        
        
        
        
        
          16.46%
        
        
        
        
        
        
          43.2%
        
        
        
        
        
        
          21.58%
        
        
        
        
          13.94%
        
        
        
        
          54.8%