BEO Bancorp Earnings up 87% in 1Q2007

  
    
  
  
    
      BEO Bancorp (OTCBB:BEOB), parent company of Bank 
      of Eastern Oregon, reported an 87% increase in earnings in the 
      first quarter of 2007.
    
    
      
        Earnings for 1Q2007 at $455,000, compared to $243,000 1Q2006.
      
      
        Loan growth up 8% year over year.
      
      
        Total revenue increases 16% year over year.
      
      
        Loan quality strong with past due loans at 0.06% of outstanding loans.
      
      
        Loan Loss Reserve increases to 1.26% of outstanding loans.
      
    
    
      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 first quarter of 2007 with 
      net income of $455,000. This is an 87% increase over the $243,000 earned 
      in 1Q2006. Earnings per share for the first quarter were $1.03, compared 
      to earnings per share of $.55 in 1Q2006. “We 
      are very pleased that the company is performing at this level. Our 
      employees are delivering the impressive results you see in this release,” 
      said President and CEO E. George Koffler.
    
    
      ROAA improved from .57% in the first quarter of 2006 to .98% in 2007 on 
      an annualized basis. ROAE also improved year over year, increasing from 
      12.37% to 18.93%.
    
    
      Revenue and Expense
    
    
      Total revenue growth was a bright spot with total income of $3,658,000 
      in 1Q2007, compared to $3,154,000 in 1Q2006, an increase of 16%. Leading 
      the way was total fee income, which grew from $171,000 to $237,000, a 
      39% increase. Both the mortgage division and the financial services 
      division had good results adding to that total.
    
    
      Expenses grew at a slower pace, increasing from $2,911,000 to 
      $3,203,000, a 10% increase. Salaries, employee benefits, and interest 
      expense show the largest increases.
    
    
      Loan Growth and Credit Quality
    
    
      The loan portfolio showed steady growth year over year, growing from 
      $108,954,000 to $117,968,000, an 8% increase. “There 
      was some softness in loan growth we didn’t 
      anticipate in the first quarter and some unexpected loan payoffs 
      stunting totals. However, our pipeline is improving, and we are hopeful 
      we will perform at budgeted numbers for the next three quarters,” 
      said EVP and CCO Jeff Bailey. Credit quality remained strong with past 
      due loans at 0.06% as a percentage of loans at quarter end, compared to 
      no past due loans at the same time last year. Charge offs for the first 
      quarter were minimal at $1,280. The loan loss reserve continued to 
      strengthen with $260,000 added to the LLR in the past year and the LLR 
      to total loans ending at 1.26% of loans, or $1,507,000. Non-accrual 
      loans were at $121,000 at the end of the quarter.
    
    
      Deposit Growth and Operations
    
    
      Deposits increased at a modest pace year over year, growing from 
      $162,910,000 to $165,226,000. “We continue to 
      look for efficiencies in the operation and negotiate terms with vendors 
      to obtain pricing advantages. We have also launched a debit card usage 
      campaign that we believe will add to the bottom line,” 
      said Gary Propheter, EVP and COO.
    
    
      Net Interest Margin and Interest Rate Risk
    
    
      The bank’s interest rate risk is very 
      manageable with RSA to RSL ratios within policy limits. Regarding net 
      interest margin, the bank is bucking the trend of NIM compression 
      experienced by many banks. 1Q2007 NIM was 5.15%. This compares to NIM of 
      4.59% in 1Q2006. “We have been on a year-long 
      cost of funds reduction initiative and it is paying dividends. We are 
      hopeful that any market changes in the future can be managed to preserve 
      the margin we now have,” said Mark Lemmon, 
      EVP and CFO.
    
    
      Capital and Equity
    
    
      All measures of capital ratios at the bank and the holding company 
      improved year over year and linked quarters. At the bank level, Tier 1 
      capital improved from 7.87% to 8.55% year over year.
    
    
      The equity of the company has grown from $8,206,000 to $9,879,000, an 
      increase of $1,673,000, or 20% year over year.
    
    
      About BEO Bancorp
    
    
      BEO Bancorp is the holding company for Bank of Eastern Oregon, which 
      operates 11 branches in six eastern Oregon counties. Branches are 
      located in Arlington, Ione, Heppner, Condon, Irrigon, Boardman, Burns, 
      John Day, Prairie City, Fossil and Moro. Bank of Eastern Oregon also 
      operates a mortgage division, has loan production offices in Hermiston 
      and Ontario, and offers brokerage services through BEO Financial 
      Services. The bank’s web site is www.beobank.com.
    
    
      
        
          BEO BANCORP
        
      
      
        
          CONSOLIDATED FINANCIAL HIGHLIGHTS
        
      
      
        
          (DOLLAR AMOUNTS IN THOUSANDS--except earnings per share)
        
      
      
        
           
        
      
      
        
          CONDENSED BALANCE SHEET (Unaudited)
        
      
      
        
           
        
      
      
        
        
        
        
        
        
        
           
        
        
          03/31/07 
        
        
        
        
           
        
        
          03/31/06 
        
        
        
        
        
        
          % Change 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          ASSETS
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
          Cash and due from banks
        
        
          $
        
        
          10,385 
        
        
        
        
          $
        
        
          13,269 
        
        
        
        
        
        
          -21.7%
        
      
      
        
        
        
        
        
          Federal funds sold
        
        
        
        
          6,620 
        
        
        
        
        
        
          3,945 
        
        
        
        
        
        
          67.8%
        
      
      
        
        
        
        
        
          Securities, at fair value
        
        
        
        
          42,250 
        
        
        
        
        
        
          45,873 
        
        
        
        
        
        
          -7.9%
        
      
      
        
        
        
        
        
          Net loans
        
        
        
        
          117,968 
        
        
        
        
        
        
          108,954 
        
        
        
        
        
        
          8.3%
        
      
      
        
        
        
        
        
          Premises and equipment
        
        
        
        
          5,120 
        
        
        
        
        
        
          5,012 
        
        
        
        
        
        
          2.2%
        
      
      
        
        
        
        
        
          Other real estate owned
        
        
        
        
          - 
        
        
        
        
        
        
          104 
        
        
        
        
        
        
          -100.0%
        
      
      
        
        
        
        
        
          Other assets
        
        
           
        
        
          6,000 
        
        
        
        
           
        
        
          5,965 
        
        
        
        
        
        
          0.6%
        
      
      
        
          TOTAL ASSETS
        
        
          $
        
        
          188,343 
        
        
        
        
          $
        
        
          183,122 
        
        
        
        
        
        
          2.9%
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          LIABILITIES AND SHAREHOLDERS' EQUITY
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
          LIABILITIES
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
          Deposits
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
          Noninterest bearing
        
        
          $
        
        
          25,963 
        
        
        
        
          $
        
        
          25,497 
        
        
        
        
        
        
          1.8%
        
      
      
        
        
        
        
        
          Interest bearing
        
        
           
        
        
          139,263 
        
        
        
        
           
        
        
          137,413 
        
        
        
        
        
        
          1.3%
        
      
      
        
        
        
        
        
          Total deposits
        
        
        
        
          165,226 
        
        
        
        
        
        
          162,910 
        
        
        
        
        
        
          1.4%
        
      
      
        
        
        
        
        
          Borrowed funds/Repurchase Accounts
        
        
        
        
          4,676 
        
        
        
        
        
        
          4,032 
        
        
        
        
        
        
          16.0%
        
      
      
        
        
        
        
        
          Other liabilities
        
        
           
        
        
          8,562 
        
        
        
        
           
        
        
          7,974 
        
        
        
        
        
        
          7.4%
        
      
      
        
        
        
          TOTAL LIABILITIES
        
        
        
        
          178,464 
        
        
        
        
        
        
          174,916 
        
        
        
        
        
        
          2.0%
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
          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
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
           
        
        
          6,190 
        
        
        
        
           
        
        
          4,517 
        
        
        
        
        
        
          37.0%
        
      
      
        
        
        
          TOTAL SHAREHOLDERS' EQUITY
        
        
           
        
        
          9,879 
        
        
        
        
           
        
        
          8,206 
        
        
        
        
        
        
          20.4%
        
      
      
        
          TOTAL LIABILITIES & SHAREHOLDERS' EQUITY
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          $
        
        
          188,343 
        
        
        
        
          $
        
        
          183,122 
        
        
        
        
        
        
          2.9%
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
            CONDENSED STATEMENT OF INCOME (Unaudited)
          
        
      
      
        
           
        
      
      
        
        
        
        
        
        
        
          Results of Operation
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
          Three Months Ending
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
           
        
        
          03/31/07 
        
        
        
        
           
        
        
          03/31/06 
        
        
        
        
        
        
          % Change 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Interest income
        
        
          $
        
        
          3,170 
        
        
        
        
          $
        
        
          2,713 
        
        
        
        
        
        
          16.8%
        
      
      
        
          Interest expense
        
        
           
        
        
          1,146 
        
        
        
        
           
        
        
          1,061 
        
        
        
        
        
        
          8.0%
        
      
      
        
          Net interest income
        
        
        
        
          2,024 
        
        
        
        
        
        
          1,652 
        
        
        
        
        
        
          22.5%
        
      
      
        
          Provision for possible loan losses
        
        
           
        
        
          60 
        
        
        
        
           
        
        
          50 
        
        
        
        
        
        
          20.0%
        
      
      
        
          Net interest income after provision for possible loan losses
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
          1,964 
        
        
        
        
        
        
          1,602 
        
        
        
        
        
        
          22.6%
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Noninterest income
        
        
        
        
          488 
        
        
        
        
        
        
          441 
        
        
        
        
        
        
          10.7%
        
      
      
        
          Noninterest expense
        
        
           
        
        
          1,858 
        
        
        
        
           
        
        
          1,776 
        
        
        
        
        
        
          4.6%
        
      
      
        
          Income before taxes
        
        
        
        
          594 
        
        
        
        
        
        
          267 
        
        
        
        
        
        
          122.5%
        
      
      
        
          Income taxes
        
        
           
        
        
          139 
        
        
        
        
           
        
        
          24 
        
        
        
        
        
        
          479.2%
        
      
      
        
          NET INCOME
        
        
          $
        
        
          455 
        
        
        
        
          $
        
        
          243 
        
        
        
        
        
        
          87.2%
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Earnings per share
        
        
          $
        
        
          1.03 
        
        
        
        
          $
        
        
          0.55 
        
        
        
        
        
        
          87.2%
        
      
      
        
          Return on Average Assets
        
        
        
        
          0.98%
        
        
        
        
        
        
          0.57%
        
        
        
        
        
        
          71.3%
        
      
      
        
          Return on Average Equity
        
        
        
        
          18.93%
        
        
        
        
        
        
          12.37%
        
        
        
        
        
        
          53.0%