Southern Oregon Business Journal - September 2020 Edition by Southern Oregon Business Journal

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September 2020

Telecommunications: Hunter Gets Bought, and a New CEO, Wins Awards and Launches Fiber to the Home in Medford. All since April - Page 12 Pandemic Projects Meet Chad Sobotka - He took this stunning cover photo and more - Page 41 COVID-19: Yelp Economic Average Uncovers a Drop in Total Business Closures and a Rise in Permanent Closures During the Second Quarter - Page 36

The Journal for Business in Southern Oregon

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A Few Words from Jim

Contributors Joe Cortright Joe Cortright is President and principal economist of Impresa, a consulting firm specializing in regional economic analysis, innovation and industry clusters. Prior to starting Impresa, Joe served for 12 years as the Executive Officer of the Oregon Legislature’s Trade and Economic Development Committee. jcortright@cityobservatory.org Anna Johnson Senior Economic Analyst at the Oregon Employment Department anna.l.johnson@oregon.gov

Tim Duy Senior Director, Oregon Economic Forum, Professor of Practice Department of Economics, University of Oregon duy@uoregon.edu Julianne Rowe Senior Manager, Corporate and Product Communications Yelp, Inc. Ron Green President & Chief Executive Officer Oregon Pacific Bank

Last months edition of the Southern Oregon Business Journal was our most successful one yet. I tried something new - the 10 page insert that focused on People's Bank and it really resonated with people. I will be working on another one soon. Maybe I will do one per quarter. The readership is continually growing month over month. The number of hard copy reprints ordered was the most ever as well. The bank wanted to hand them out to employees and customers. Who knew? And we got several new advertisers. Please see page 5 for an index to them. It's all very exciting. I'm also trying some new things in this issue to see what you think. 1. A five minute profile - I use Google to find out as much as I can on an Oregon based company in 5 minutes and share it with you. There are so many great companies in Oregon and I want to learn about and share everyone of them. 2. Pandemic Projects - My friend Chad worked on his photography hobby during the pandemic. The results are stunning. Page 41 will tell his story and I'll feature a new pandemic project each month, including my own. 3. Main Street, Not Wall Street - This month I have an article on McMenamins seeking investors and it got me thinking that I’d like to feature Oregon based companies to invest in. 4. Focus on a County - I'll do quick focus blurbs on the counties we cover. I hope you have a great September and do something amazing so I can live vicariously through you. Thanks for being part of my journey.

Founder Greg Henderson ghenderson703@gmail.com Greg started the Southern Oregon Business Journal in 2015 and retired in 2020.

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Jim Teece Publisher of the Southern Oregon Business Journal

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September 2020 - Table of Contents

Inside This Issue People: Oregon Pacific Wealth Management Names New Manager to Oversee Firm - Page 4 Advertisers - Page 5 Opinion: Youth Movement - Page 6 Economy: Powell Green Lights Easier Policy But Details Lacking - Page 8 Telecommunications: Hunter Gets Bought, and a New CEO, Wins Awards and Launches Fiber to the Home in Medford. All since April - Page 12 Employment: Oregon Jobs Recovery Slows in July - Page 14 Employment: Oregon Current Labor Force and Industry Employment Table Page 16 Lithia Reports Highest Second Quarter Net Income in Company History - Page 20 Employment: Labor Force and Unemployment by Area Table - Page 23 Employment: July 2020 Employment and Unemployment in Oregon’s Counties - Page 24 Focus on Linn County - Page 25 5 minute profile: Hydro Flask - Page 26 Klamath County Community Profile - Page 28 Main Street, Not Wall Street: McMenamins is looking for investors for the first time outside the family - Page 30 COVID-19: Umpqua Bank Releases Nationwide Study gauging the impact of COVID-19 - Page 32 COVID-19: All About DoorDash - Page 34 COVID-19: Yelp Economic Average Uncovers a Drop in Total Business Closures and a Rise in Permanent Closures During the Second Quarter - Page 36

Cover photo by Chad Sobotka Milky Way Over Pilot Rock Planned for one month, drove 13 miles, hiked for 1.8 miles with 30 pounds of camera gear, rang a bear bell for 2.5 hours. Totally worth it. Taken from the PCT on the backside of Pilot Rock (Babbit's Gap). Two planets are visible: Saturn & Jupiter. See Page 41 to learn more about Chad and pages 42-43 for more photos.

Banking: Oregon Pacific Bank Announces Second Quarter Earnings Results Page 38 Pandemic Projects - Chad Sobotka - Photography Hobbyist - Page 41 Stories in future editions of the Southern Oregon Business Journal - Page 44

Find the latest news on SouthernOregonBusiness.com

PEOPLE

By Press Release oregonpacificwealth.com

Oregon Pacific Wealth Management Names New Manager to Oversee Firm has over 20 years of investment management experience and is knowledgeable in all aspects of portfolio management, including tactical and strategic asset allocation, as well as the use of technical and fundamental analysis.

rew Corradetti has been promoted to Company Manager for Oregon Pacific Wealth Management, LLC, a registered investment adviser and a wholly owned subsidiary of Oregon Pacific Banking Co.

“I look forward to the opportunity to build on the successes of Oregon Pacific Wealth Management and deepen the relationship with Oregon Pacific Bank (OPB), and the communities we serve. It’s an honor and privilege to lead and be a part of the great team at Oregon Pacific Wealth Management,” says Corradetti.

Prior to joining Oregon Pacific Wealth Management, he served as chief investment strategist and portfolio manager for several registered investment adviser firms, where his responsibilities included strategy design and implementation, separate account management, and portfolio manager for a mutual fund. Drew earned his business degree at the University of Nevada at Las Vegas. He was selected to manage the firm upon the impending retirement of Director of Trust and Wealth Management, Jay Boelter. “I’ve had the pleasure of working with Drew for the past six years. He is a highly skilled manager, and I know I’m leaving Oregon Pacific Wealth Management in good hands,” says Boelter. Drew Corradetti manages the firm and assists clients at Oregon Pacific Wealth Management’s Medford office, located at 3250 Hillcrest Park Drive, Suite 100.

Serving the communities of Medford, Roseburg, Coos Bay, Florence and Eugene, Oregon Pacific Wealth Management, LLC, “I look forward to the opportunity to build on the provides asset successes of Oregon Pacific Wealth Management and management solutions, including financial deepen the relationship with Oregon Pacific Bank advisement and (OPB), and the communities we serve. It’s an honor and planning, investment privilege to lead and be a part of the great team at management, and insurance services. Oregon Pacific Wealth Management,” says Corradetti. Drew Corradetti, CMT,

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Southern Oregon Business Journal September 2020 | 5

OPINION

By Joe Cortright

he movement of talented young adults to dense urban neighborhoods isn’t waning, it is widespread and accelerating, and it is powering urban revival. Cities continue to be magnets for talented young adults The number of well-educated young adults living in close-in urban neighborhoods is increasing in every large US metropolitan area, and this trend has accelerated in recent years. City Observatory’s new report—Youth Movement: Accelerating America’s Urban Renaissance—shows that the growth of close-in urban neighborhoods in the US since 2010 has been propelled by the accelerating movement of welleducated young adults back to the city. Close-in urban neighborhoods are increasingly attractive to the “young

Youth Movement

Image by Free-Photos from Pixabay

and restless” 25- to 34 year-olds who’ve completed at least a four-year college degree. These well-educated young adults have accounted for more than half of the increase in population in close-in urban neighborhoods in the nation’s large metro areas since 2010. There’s no evidence that this powerful momentum has been blunted by Coronavirus concerns. In April, the market share of search activity for urban locations increased in 29 of the 35 largest US metro areas, while search activity for suburban locations decreased in all 35 of the largest metro areas, according to data gathered by Zillow. Independently, ApartmentList.Com reported an actual increase in searches for apartments in New York City, in April, concluding: “The pandemic is not scaring renters away from New York.” Despite

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pronouncements to the contrary, there’s no sign people are looking away from cities. Smart young adults concentrating in cities: Well-educated young adults are three-and-half times more likely to live in close-in urban neighborhoods, which the report defines as census tracts within 3 miles of the center of a region’s principal central business district. The trend is remarkably widespread: The number of well-educated adults living in close-in urban neighborhoods increased in every one of the nation’s 52 most populated metropolitan areas since 2010. In addition, the rate of growth of this key demographic in city centers has accelerated to a pace faster than the previous decade in four-fifths of these large metro areas. Slower growth in recent years is due to supply constraints.

While some analysts have noted a slowdown in central city growth, there’s little evidence that the “young and restless” are disenchanted with cities. If anything, its likely that population growth in these neighborhoods is constrained not by a lack of demand, but by a lack of supply: it’s been difficult to build enough housing to accommodate all those who’d like to live in these neighborhoods, with the result that rents have gone up. Some of the most popular cities for well-educated young adults—like New York and San Diego—have

experienced slower rates of growth in the young and restless compared to the 2000-2010 period, most likely reflecting limited housing supply and rising rents. The movement of young people to cities has been the foundation of urban economic vitality. Former Seattle Mayor Mike McGinn attributes his city’s robust growth to its attractiveness to young adults: “The return to cities after the decades long destruction wrought by freeways, urban planning and

redlining is testament to their enduring qualities over the centuries. Seattle didn’t add population because Amazon chose to expand here. Amazon (and many others) chose to expand here because that is how they competed for talented young people who want to live in diverse, progressive and vital places.” Despite panicky predictions of an urban exodus, real-time real estate search data show no decline in interest in cities. Zillow’s Skylar Olsen explains:

“While many have predicted “urban flight” we see no such evidence in search activity on Zillow, where the suburbs are actually experiencing a falling share of national search traffic even on homes for rent. Our past research and that of other economists on natural disasters and other traumatic events, really don’t support the idea that our preferences change that fast or that we hold onto the anxiety after the risk has passed.”

If anything, the heightened awareness of the need for more public space, for walking, cycling and to allow social distancing, is making the case for more investment in our cities, especially as we look to the future. Carol Coletta, President of the, Memphis River Parks Partnership points out: “What feels remarkable to those of us who lived through the devastating effects civil unrest had on cities in the Sixties, recent protests seem only to have solidified the feelings of community and the embrace of diversity that come so much more naturally from city living. Clearly, many Americans want to be part of that. It points to a desire to lean in to city living rather than turn away from it.” Meanwhile, even the hardest hit center cities, places like Detroit and Cleveland, have recorded noticeable increases in welleducated young adults living in close-in urban neighborhoods since 2010. Detailed data for each the 52 largest US metropolitan areas is available in an interactive dashboard: www.cityobservatory.org/ymdashboard.

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ECONOMY

Powell Green Lights Easier Policy But Details Lacking

By Tim Duy, Senior Director, Oregon Economic Forum, Professor of Practice Department of Economics, University of Oregon

ederal Reserve Chair Jerome Powell delivered his muchawaited speech in which he unveiled the outcome of the Fed’s strategy and communications review. As expected, the Fed adopted a policy of average inflation targeting. There, however, was a twist. Powell describes the policy as “flexible” inflation targeting, meaning that it lacks specificity beyond a general intention to compensate for periods of undershooting the inflation target. That lack of specificity makes it a Fed watcher’s dream as it opens up range of possible policy objectives that may shift over time. Much of the ground Powell covered would sound familiar to

Image by NikolayFrolochkin from Pixabay

someone following the Fed throughout this process. The last decade has challenged the Fed’s operating framework with a falling natural rate of inflation, policy rates near the zero bound, a weakened relationship between unemployment and inflation, questionable estimates of the natural rate of unemployment, and a heightened awareness of the cost of unemployment, particularly as the costs relate to disadvantaged persons. Powell does very good job of running through the history and the motivation for the review; it will make a nice addition to my syllabus this fall. As a result of this process, the Fed made four innovations to the strategy statement: The Fed identified the zero bound problem as constraint on

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policy: A lower neutral real rate translates into policy rates suffi ciently close to the zero bound that the Fed will more often face the zero bound constraint when attempting to stimulate the economy. The creates a downward bias in the risks to the economy. As a consequence, the Fed is “prepared to use its full range of tools to achieve its maximum employment and price stability goals.” In other words, the Fed will continue to heavily rely on tools such as forward guidance and asset purchases. The persistence of the downside risks means that they will bring these tools to bear more quickly. The importance of employment is elevated over inflation: The Fed now describes the goal of maximum employment as “a broad-based and inclusive goal.”

The Fed explicitly recognizes that a focus on headline infl ation fails to account for higher unemployment among disadvantaged populations. To benefi t everyone, the headline unemployment rate needs to be pulled lower than previously though compatible with full employment (in practice, the Fed uses a broad array of labor indicators in forming this assessment). The Fed also added that policy decisions will be “informed by assessments of the shortfalls of employment from its maximum level.” This replaces “deviations from maximum employment” language. “Deviations” is two-sided, “shortfalls” is one-sided. In practical terms, low unemployment itself no longer justifi es tighter policy when in the absence of clear infl ationary pressures. Average inflation targeting: Under the previous framework, the Fed did not attempt to compensate for undershooting the infl ation target. As a consequence, the Fed appeared to be treating the 2% infl ation target as a ceiling in that they tightened policy to preemptively prevent infl ation from rising above 2%. The end result was infl ation persistently below 2%, an outcome that may have contributed to softening infl ation expectations. Now the policy allows for overshooting: In order to anchor longerterm inflation expectations at this level, the Committee seeks to achieve inflation that

averages 2 percent over time, and therefore judges that, following periods when inflation has been running persistently below 2 percent, appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time.

An increased focus on a stable financial system: Powell and others have frequently cited the role of fi nancial sector imbalances in recent cycles and this fact likely heightened some concern among FOMC participants that a persistently low interest rate policy would lead to fresh imbalances that would threaten the economy. To recognize this, the Fed added this language: Moreover, sustainably achieving maximum employment and price stability depends on a stable financial system. Therefore, the Committee’s policy decisions reflect its longerrun goals, its medium-term outlook, and its assessments of the balance of risks, including risks to the financial system that could impede the attainment of the Committee’s goals.

This opens up the possibility of rate hikes to quell financial excess, although this remains a focus for only a minority of FOMC participants. All well and good. Now here is the bad news: You can drive a truck through the holes in the

average infl ation targeting policy. It averages over an unspecifi ed time, it only will “likely” aim to achieve “moderate” infl ation again for an unspecifi ed amount of time. As Powell further explained: In seeking to achieve inflation that averages 2 percent over time, we are not tying ourselves to a particular mathematical formula that defines the average. Thus, our approach could be viewed as a flexible form of average inflation targeting.

I do enjoy that we can’t define the “average.” It sounds like the policy was written by a committee, which it of course was, and as such it likely has a different interpretation to each committee member. It is a Fed watcher’s dream come true. At this point, the practical implication of the policy change is that they intend to maintain an accommodative policy stance until inflation at a minimum reaches 2%. Beyond that though, there is as of yet no meat on the bones of this policy. We do not know how much inflation the Fed is willing to tolerate and for how long. We do not know under what conditions they are willing to ease policy further. We do not know how long they will tolerate the long end of the yield curve drifting higher. In short, we are still waiting for operational guidance to support the new policy. As of the July FOMC meeting, participants appeared to not have

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Economy : Continued from Page 9

reached any sort of agreement on next steps: With regard to the outlook for monetary policy beyond this meeting, a number of participants noted that providing greater clarity regarding the likely path of the target range for the federal funds rate would be appropriate at some point. Concerning the possible form that revised policy communications might take, these participants commented on outcomebased forward guidance— under which the Committee would undertake to maintain the current target range for the federal funds rate at least until one or more specified economic outcomes was achieved—and also touched on calendar-based forward guidance—under which the current target range would be maintained at least until a particular calendar date. In the context of outcomebased forward guidance, various participants mentioned using thresholds calibrated to inflation outcomes, unemployment rate outcomes, or combinations of the two, as well as combinations with calendar-based guidance. In addition, many participants commented that it might become appropriate to frame communications regarding the Committee’s ongoing asset purchases more in terms of their role in fostering accommodative financial conditions and supporting economic recovery.

Nor did it seem like they would focus on the issue until the strategy review was complete: More broadly, in discussing the policy outlook, a number of participants observed that completing a revised Statement on Longer-Run Goals and Monetary Policy Strategy would be very helpful in providing an overarching framework that would help guide the Committee’s future policy actions and communications.

I don’t know that they have time to move on to operationalizing the new policy prior to the next meeting, which means the market participants may remain in the dark about the exact implementation of average inflation targeting.

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Bottom Line: The Fed formalized the outcome of its policy review and left little doubt that they intended to pursue a more dovish policy path than in the last expansion. They have, however, provided few operational details. The average inflation targeting described so far looks less like a commitment to achieving an average of 2% inflation and instead just provides room to allow inflation temporarily to rise a notch above 2%. Interestingly, the lack of specificity leaves them less vulnerable to claims they aren’t meeting their target. Who knows what it is? More information is needed; look for Fed speakers for clarity. Hopefully.

TELECOMMUNICATIONS

Hunter Gets Bought, and a New CEO, Wins Awards and Launches Fiber to the Home in Medford. All since April.

by Jim Teece Via Press Releases and an Interview

ig things are happening at Hunter Communications (Medford, Jackson County) during the Pandemic. •

They were purchased by Grain.

•

They hired a new CEO.

•

They received an award for the fastest internet in Oregon

•

They are going to roll out affordable and fast Fiber-To-TheHome in the markets they serve starting with Medford.

Hunter Communications provides ultra-high-speed fiber-optic broadband internet, data and voice services to business and residential customers in communities throughout southern Oregon and northern California, including 2,500 fiber-lit commercial buildings. With Gig speeds, no data caps, and competitive pricing, Hunter’s 2,000+mile fiber network is nationally

Hunter Technician, Trenton Eller, installing Fiber-To-The-Home in Medford. - Photo Courtesy of Hunter

recognized for performance and reliability. The company was founded in 1992 by Rich Ryan and he spent decades building a network, growing the company, and fostering goodwill in the communities they served. Hunter built Southern Oregon’s only local fiber optic Metropolitan Area Network (MAN) in 1999, which currently satisfies high bandwidth and voice service needs throughout Lane, Jackson, Josephine, Klamath and Lake County. Purchased by Grain. In August 2019, Grain Management, LLC, (“Grain”) a Washington, D.C.based private equity firm, founded in

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2007, focused on the global communications sector, announced that it had signed a definitive agreement to acquire a majority interest in Hunter. Hunter Communications Founder and CEO Richard Ryan said: “Hunter Communications is ideally positioned to further penetrate a growing fiber market with the backing of our new partners at Grain, who bring decades of communications industry expertise. This partnership is proof of the progress the Hunter team has made, establishing itself as an industry leader, servicing our customers for over 25 years. Our team is looking forward to the further expansion of our network as we continually improve the quality of our customer experience.”

The transaction closed in April 2020. Just after COVID-19 shut down the country. They got a new CEO. In May 2020, Grain hired Industry Veteran Michael Wynschenk as CEO of Hunter. Michael is a seasoned executive with senior leadership experience spanning wireline and wireless carriers, more than 30 years of experience in the telecommunications and cable industry, and a strong track record of growth acceleration and value creation. Most recently, he was a regional business operations leader in the northeastern U.S. at Altice Technical Services (acquired by Cablevision). He has also held leadership roles at Frontier Communications, BendBroadband, Alaska Communications, Verizon Business, and AT&T/Lucent Technologies. “Hunter is very pleased to appoint a leader with Michael’s deep industry experience and proven track record driving growth and expansion in organizations like ours,” said Sam Ackley, Chief Operating Officer of Hunter Communications. “Along with his impressive professional background, Michael has deep roots in the Oregon community, and we are excited to have him join the Hunter family, working alongside us and the Grain team to guide the business forward to continued success.” “Michael brings a strong combination of sales leadership skills, strategic vision, and operational discipline,”

said Michael McKenzie, Managing Director at Grain. “We believe his appointment will help enable Hunter to advance its position as a leading regional connectivity provider.” They won awards. In August 2020, they were recognized by BroadbandNow with four 2020 Internet Service Provider Awards, for fastest business internet speeds in Oregon and Top 10 Fastest Nationwide.

anywhere in the State, as well as being top 10 in the nation." “BroadbandNow highlights excellence in broadband service among internet service providers across the United States. We are extremely pleased to distinguish Hunter Communications with an extraordinary four 2020 BroadbandNow Service Provider awards in both regional and nationwide mid-size categories,” said John Busby, Managing Director of BroadbandNow.

BroadbandNow, an organization that tracks and analyzes broadband speeds and overall customer satisfaction, annually recognizes excellence among internet service providers. Hunter won four awards for fastest average speed, customer satisfaction, and affordable plans in the mid-size provider categories: • #1 Fastest Business Internet in Oregon • #1 Fastest Business Fiber Service in Oregon • Top 10 Fastest Business Internet Nationwide • Top 10 Fastest Business Fiber Service Nationwide "Our employees and team have worked very hard to deliver an exceptional service to our customers, while building a world class fiber network right here in southern Oregon," said Michael Wynschenk, CEO of Hunter Communications. "It's great to be recognized by BroadbandNow, a nationwide broadband rating company, as it confirms that southern Oregon has access to fiber services better than

They are going to roll out affordable and fast Fiber-To-TheHome in the markets they serve starting with Medford. I had a chance to speak with Michael Wynschenk to find out more about the awards they won. He recently moved to Ashland after working remotely from the east coast for several months. He also mentioned that he still has a house in Bend, which he acquired while living there and working for BendBroadband earlier in his career. He was very proud of Hunter winning the awards and was particularly proud to be an important service provider during the pandemic. Healthcare, Education and Remote Workers demand the always-on, highspeed network Hunter provides. Fastest Business Internet in Oregon and Top 10 Fastest in the Nation are very impressive awards. When I asked him what he was going working on now, he told me that they are working hard to rollout low priced, high speed, fiber to the home starting in Continued on Page 47

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EMPLOYMENT

by Anna Johnson, Senior Economic Analyst, for Employment in Oregon

regon’s total nonfarm payroll employment rose by 20,500 jobs in July, following a gain of 57,000 jobs in June. Over the past three months, employers added back 38 percent of the jobs that were cut in March and April. Over-the-month job gains in July were largest in leisure and hospitality (+7,300 jobs); government (+5,700); retail trade (+3,600); health care and social assistance (+3,100); and professional and business services (+1,900). Meanwhile, three of the major industries cut a substantial number of jobs in July: construction (-1,900 jobs); manufacturing (-1,500); and information (-1,200). Over the past five months the major industries were impacted differently by the pandemic. Leisure and

Oregon Jobs Recovery Slows in July

Image by Tayeb MEZAHDIA from Pixabay

hospitality suffered by far the largest job loss during March and April, shedding 118,700 jobs during the outset of the pandemic-induced drop in business. Then, between April and July, the industry regained half of the loss, as it rebounded by 58,900 jobs over the past three months. Three industries regained more than half of their lost jobs. Health care and social assistance regained twothirds of its lost jobs, with a rebound of 18,700 jobs over the past three months. During that time, two industries regained nearly two-thirds of their lost jobs: other services (+9,300 jobs, or a 63% rebound) and retail trade (+13,900 jobs, or 62%). However, several key industries experienced substantial job losses in March and April but have not rebounded substantially or have even declined further over the past

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three months. The following industries shed jobs between April and July: government (-5,200 jobs); manufacturing (-3,100); and information (-1,900). Most of the other major industries have regained fewer than 5,000 jobs each over the past three months while regaining less than a third of jobs lost during March and April. These industries include construction; financial activities; private education; professional and business services; and transportation, warehousing, and utilities. Oregon’s unemployment rate dropped to 10.4 percent in July from 11.6 percent, as revised, in June. In July, Oregon’s unemployment rate was very close to the U.S. unemployment rate; the U.S. rate dropped to 10.2 percent in July from 11.1 percent in June.

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LITHIA

Lithia Reports Highest Second Quarter Net Income in Company History

by Press Release Lithia Motors, Inc. www.lithia.com

Declares Dividend of $0.31 Per Share for Second Quarter Lithia Motors, Inc. (NYSE: LAD) today reported second quarter 2020 revenue of $2.8 billion. Second quarter 2020 net income per diluted share was $3.38, a 29% increase from $2.63 per diluted share reported in the second quarter of 2019. Adjusted second quarter 2020 net income per diluted share was $3.72, a 26% increase compared to adjusted net income of $2.95 per diluted share in the same period of 2019.

quarter adjusted results exclude a $0.34 net noncore charge related to an impairment charge, insurance reserves and acquisition expenses, partially offset by a net gain on sale of stores and a beneficial tax attribute. The 2019 second quarter adjusted results exclude a $0.32 net non-core charge due to a net loss on sale of stores, insurance reserves, and acquisition expenses.

our stores' responsiveness to the current environment, led us to the highest quarterly adjusted earnings per share in our company's history," said Bryan DeBoer, President and CEO. "This record performance illustrates the massive opportunity that exists within our $2 trillion industry that we are unlocking through continued growth and the activation of our ecommerce digital home solutions."

Second Quarter-overQuarter Operating Highlights:

For the first six months of 2020 revenues decreased 8% to $5.6 billion, compared to $6.1 billion in 2019.

• Same store new vehicle sales decreased 23.5 %

Second quarter 2020 net income was $78 million, a 26% increase compared to net income of $62 million in the same period of 2019. Adjusted second quarter 2020 net income was $86 million, a 23% increase compared to adjusted net income of $69 million for the same period of 2019.

• Same store used vehicle retail sales increased 0.5%

As shown in the attached non-GAAP reconciliation tables, the 2020 second

"The strong sequential improvements throughout the quarter, coupled with

• Same store F&I per unit increased 9.4% to $1,590 • Same store total gross profit per unit increased 11.4% to $4,030 • SG&A as a percentage of gross profit improved 540bps to 64.7%

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Net income for the first six months of 2020 was $5.32 per diluted share, compared to $5.08 per diluted share in 2019, an increase of 5%. Adjusted net income per diluted share for the first six months of 2020 increased 5% to $5.70 from $5.42 in the same period of 2019. Corporate Development In July, they announced the acquisitions of Smolich CJDR and Nissan in Bend, Oregon and Ladin Subaru in

Thousand Oaks, California. These acquisitions are anticipated to generate $160 million in annualized steady state revenues. For the year, this brings the total

anticipated annualized revenue from acquired locations to $320 million and expanded our density in both the Southwest and Northwest regions.

Balance Sheet Update They ended the second quarter with over $750 million in cash and availability on their revolving lines of credit. Earlier this

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month, they closed on a $255 million syndicated real estate revolving line of credit, bringing their current total cash and available credit to over $1 billion. Their unfinanced real estate could provide additional liquidity of approximately $250 million.

"The acquisition market is robust and we are accelerating the build out of our coast-to-coast network enabling us to serve customers wherever, whenever, and however they desire," said DeBoer. "Our balance sheet is in the strongest position in our

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company's history and we are well positioned to accelerate our plan to reach 5% national market share." Dividend Payment The Board of Directors approved increasing their dividend to $0.31 per share.

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EMPLOYMENT

July 2020 Employment and Unemployment in Oregon’s Counties

by Press Release State or Oregon Employment Department

In July 2020, 35 of Oregon’s 36 counties experienced over-the-month decreases in their unemployment rates. In 19 counties, unemployment rates dropped by 1 percentage point or more. Clatsop County experienced the largest over-the-month decrease at 2.6 percentage points. Counties with the smallest percentage point

changes in their unemployment rates since June 2020 include Lake (+/-0.0pp), and Harney, Malheur, and Union (-0.2pp each). Lincoln County had Oregon’s highest seasonally adjusted unemployment rate at 15.2 percent. Other counties with some of the highest unemployment rates

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in July include Clatsop (12.9%), Multnomah (12.7%), and Curry (11.9%). Wheeler County registered the lowest unemployment rate for the month at 5.3 percent. Other counties with some of the lowest unemployment rates in July were Morrow (6.0%) and Malheur (7.1%). Twenty-four counties had unemployment

rates at or below the statewide rate of 10.4 percent. Twenty- two counties also had unemployment rates at or below the national rate of 10.2 percent. Total nonfarm payroll employment declined sharply in all six of Oregonâ&#x20AC;&#x2122;s broad regions between July 2019 and July 2020. The largest job losses occurred in the Coast region (-13.6%). Central Oregon (-9.0%), Portland-5 (-8.9%), and the Willamette Valley (-7.0%) also experienced large overthe-year employment losses.

Focus on : LINN COUNTY, OR POPULATION 121,074

from DataUSA.io

1.01% GROWTH

POVERTY RATE 16.1% MEDIAN AGE 39.7 MEDIAN HOUSEHOLD INCOME $49,515 5.84% GROWTH

NUMBER OF EMPLOYEES 51,079 3.17% GROWTH

MEDIAN PROPERTY VALUE $184,900 6.82% GROWTH

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5 MINUTE PROFILE

By Jim Teece Each Month I spend 5 minutes using the web to find information about Oregon Companies.

Hydro Flask is the awardwinning leader in highperformance, insulated stainless steel beverage and food flasks. Founded in 2009 in Bend, Oregon, Hydro Flask is committed to bringing customers Unexpected Refreshment each and every time through the unique combination of temperature, taste and transport. Every bottle features the company’s TempShield™ double wall insulation to keep beverages at the desired temperature, 18/8 pro-grade stainless steel to ensure pure and refreshing taste, and durable powder coat and ergonomic design for the ultimate in transport. Hydro Flasks are stylish, BPA-free, recyclable, and backed by a lifetime warranty. They moved into new Bend Headquarters in 2016. The modern 12,000-square foot office building incorporates a variety of unique features including a

hydration station, bike corral and showers for post-lunch exercise outings. In addition, team members have access to beverage taps and specialty coffee equipment featuring Hydro Flask customers’ microbrews, kombucha, and roasted coffee. With panoramic view windows and roll-up doors facing the Cascades, the space embodies Hydro Flask’s fun and adventure-oriented brand culture. The building encompasses an integrated research and development center with product design, engineering, and testing, along with sales, marketing, operations, finance, and human resources. There is also an open space for team members to collaborate and socialize.

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“We’ve built an incredible team and we’re excited that we now have a facility that both better reflects our brand and accommodates our recent expansion,” said Hydro Flask General Manager Scott Allan. The company was acquired in February 2016 by Helen of Troy for $210M cash. The Hydro Flasks are made in China, but the company says the factory is highly regulated, pays fair wages, and is socially conscious. There are no press releases on their website since 8/9/2019. “From modest beginnings, we exploded with hydration-loving fans everywhere to hit 1 million in sales by 2011. We now offer over 100 products across : hydration, coffee, beer, food and softgoods.” Helen of Troy is based out of El Paso, TX and also owns OXO, Vicks, Honeywell, PUR, Braun, Hot Tools, Dry Bar.

never stop

learning

Visit sou.edu/admissions for application information. Visit sou.edu/academics for a complete list of degree programs offered at SOU.

Southern Oregon Business Journal September 2020 | 27

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Southern Oregon Business Journal August 2020 | 29

MAIN STREET NOT WALL STREET

McMenamins is looking for investors for the first time outside the family

From invest.mcmenamins.com

cMenamins is looking for investors who are interested in revitalizing neighborhoods, honoring art, bringing history to life, and building community – all while having fun. McMenamins has created an investment package for its Series A Preferred Stock. Although this is the first time the company has opened direct investment in McMenamins, Inc., to those outside the McMenamin family, the company has invited outside investment from accredited investors to capitalize two previous

Photo of the McMenamins Family from the website invest.mcmenamins.com

projects, the revitalization of the Anderson School in Bothell, Wash. and the Elks Lodge in Tacoma, Wash. Unlike those private securities offerings, which were for specific properties, investors who take part in this offering will have an opportunity to purchase a shareholder interest in the company itself. An Invitation from the McMenamin Family. “First off, we would like to say thank you. Thank you to everyone who has helped us transform McMenamins from a small pub in Southeast

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Portland to a 56-property company spanning across Oregon and Washington; to our employees, whose hard work and dedication makes McMenamins enjoyable for all who can experience it; to our customers and communities, who we love and are honored to serve; and to you, for stopping by to learn how you can be a part of McMenamins. For years, we’ve tinkered with and evolved the McMenamins guest experience, meshing together critical pieces, including a vintage, homemade and exotic light fixture collection amassed over

40 years. We’ve tapped our love of architectural restoration and the interpretation of local history by artists. We’ve layered in touches to create a sense of exploration and discovery − from small bars, pools, gardens, free music and events to menu updates, and secret rooms that create a sense of community and shared experiences. Oh, yes, and most importantly, great people ready to help you enjoy it all. Today, we are weathering the pandemic storm and are using our experience to adjust to this new, uncertain climate. And adjust we have – from rehiring employees to filling to-go orders, canning handcrafted beverages and roasting coffee beans; to livestreaming concerts, we’re bouncing back. We are inviting you to be part of an investment offering to shift the company’s capital structure away from short-term bank debt incurred by the coronavirus and toward a greater reliance on equity. The larger purpose of the offering, however, is to provide working capital for projects. With many long-planned projects in the works, and guests eager to come enjoy a Ruby and tots in one of the historic pubs, please join us for an exciting and creative future. It will be fun! With gratitude,

Brian, Mike and the McMenamin Family” 2020 and Beyond Over the years, McMenamins has seen greater than market average revenue growth. Prior to the current crisis, the company was on track to experience one of its best financial first quarters in more than 10 years. Of course, there have been a few changes this year based on the government-mandated COVID-19 shutdown. McMenamins is starting to reopen in a safe, cautious way, following state and local guidelines. Current services include: • All McMenamins Pubs are open for dine-in and takeout service. • All McMenamins Hotels are open including restaurants and bars. Following government mandates, soaking pools and movie theaters remain temporarily closed. • Canned beer sales and growler and crowler fills. • Livestreamed concerts from select venues, with more streamed events on the horizon. • Retail products, including McMenamins wine, spirits, canned beer, coffee beans, gifts, hand sanitizer and more, are available for purchase.

As Oregon and Washington continue reopening, McMenamins will expand services, adjusting to the COVID-19 climate and following CDC guidelines closely to ensure a safe, enjoyable experience. With these adjustments comes exciting growth. The working capital received as a result of your investment will be used to bring the company back to pre-COVID-19 levels, and fund future expansion of projects that have been in the works for years. At the top of the list? Adding lodging, meeting space, a bottle shop (and maybe a secret bar!) to Cornelius Pass Roadhouse; transforming “The Jail” into a hotel at Edgefield; and developing the neighboring 65-acre “Pig Farm” adjacent to Edgefield as well as other very special projects. Interested in learning more? Please visit invest.mcmenamins.com. This article is information only using content directly from the website invest.mcmenamins.com. This is not advise or an ad. Do your due diligence and know the risks before investing in any company. The publishers may invest in Oregon Companies like this one because they believe in investing in Main Street instead of Wall Street. They are not soliciting an investment nor were they asked to run this article.

McMenamins started in Portland and has locations all over Southern Oregon, including Roseburg, Bend, Eugene, Corvallis, Lincoln City and Salem. Southern Oregon Business Journal September 2020 | 31

COVID-19

Umpqua Bank | DHM Research Business Resiliency Survey – August 2020

mpqua Bank released its “Business Resiliency” survey, a nationwide study gauging the impact of the COVID-19 pandemic on the confidence and future of U.S.-based small and midsize businesses. More than 1,200 leaders at companies across all industries and geographic regions were surveyed on how their businesses are responding and what they will need in the months ahead to navigate successfully through a once-in-alifetime global pandemic event. “There’s no denying that the pandemic’s economic impact is deep and continues to be painful for businesses, but there is reason for measured optimism,” said Umpqua Bank President Tory Nixon. “Small and mid-size businesses are showing resilience and ingenuity in the face of unprecedented disruption and uncertainty. Our research indicates that many have already made strategic pivots that in some cases have made them more competitive, and many more are preparing to pull all the levers at their disposal to emerge healthier, more efficient and better able to serve their customers in the long run.”

Umpqua Bank Releases Nationwide Study gauging the impact of COVID-19 Survey participants come from businesses that weathered the initial economic shutdown but face continued uncertainty and are a primary audience for

economy annually and employ 44 million Americans. Key takeaways from Umpqua’s “Business Resiliency” survey include the following: Investments in tech, automation accelerate to remain competitive

financial assistance through the federal Paycheck Protection Program. They represent a broad cross-section of U.S. enterprises that drive significant job creation and prosperity, including middle market companies with at least $10 million in annual revenue that contribute $6 trillion to the U.S.

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Even as a significant majority of mid-size companies delay or cut spending in several areas, including outside vendors, marketing and promotions, hiring and benefits, nearly 5 in 10 have increased spending on technology, digital transformation or automation. More than 80% of businesses have already begun automating or plan to automate tasks previously performed by workers, and 76% are exploring ways to digitize the customer experience. Though smaller businesses are less likely to have concrete plans to make these shifts, moving toward automation and digital customer experience still rank as two of the top priorities for 30% and 46% of small businesses, respectively. Companies are making strategic shifts and pivots to adapt and reinvent their business

Mid-size companies in particular are making significant changes to lines of products and services, with 75% reporting they have or plan to do so. Thirty percent of small businesses report a similar strategic shift. Nearly 80% of midsize companies have already (17%) or are likely to makes changes to their pricing model (61%).

year. Another 66% expect their profitability to remain stable (40%) or increase (26%) in the next year. Despite the challenging environment, roughly 70% of mid-size businesses are also thinking about expansion plans, with businesses in the Western U.S. leading all other regions in planning.

rising to the occasion following the Paycheck Protection Program by providing tailored solutions that preserve cashflow and create efficiencies necessary to remain competitive in the current and post-COVID economy.

“The stakes in the current economy are high, and the pandemic is clearly forcing companies to carefully Remote work consider key aspects and emphasis on of their business and “There’s no denying that the new skills go-forward strategy,” pandemic’s economic impact is deep highlight said Cabrera. “With the potential of longhelp of experts in and continues to be painful for term workplace banking and other businesses, but there is reason for changes professional services, measured optimism. While significant many small and midThe U.S. workforce economic disruption and uncertainty size enterprises will has experienced emerge from this crisis remain, small and mid-size businesses significant looking and behaving upheaval in recent are proving resilient.” very differently, which months. -Tory Nixon, Umpqua Bank President likely will contribute to According to the significant shifts in the report, some of U.S. economy as a the changes could Some businesses are stronger whole.” have long-lasting impact. Remote today and focused on positive, workplace, for example, could be Survey Methodology long-term changes here to stay as nearly 8 in 10 midThe Umpqua Bank “Business Though businesses, especially size and almost 50% of small Resiliency” report surveyed more manufacturers and retailers, have businesses are moving now and than 1,200 decisionmakers at been negatively impacted by the planning in the future to allow small and mid-size companies pandemic, not all businesses more employees to work from across the country. The online have been impacted adversely. home. More than 60% of mid-size survey was conducted in Nearly a quarter of businesses companies are also likely to partnership with DHM Research, a report a stronger competitive replace current employees to add public policy and business advantage. Another 41% say different skillsets, as well as move research firm, and targeted they’re adapting and making away from a traditional staffing executives at companies with changes that will make them model in favor of utilizing more $500,000 to $500 million in profitable and competitive long contract workers. annual revenue. The survey has a term. Measured 12-month optimism 2.8% margin of error and was According to Richard Cabrera, is coupled with planning for fielded from June 15-July 7, 2020. Umpqua’s head of corporate & expansion Read the full Business Resiliency Survey commercial banking, there’s report at https://www.umpquabank.com/ Nearly 7 in 10 business expect tremendous opportunity for soar/business-resiliency-survey-report/ their revenue to remain stable financial institutions to continue (40%) or increase (29%) the next Southern Oregon Business Journal September 2020 | 33

COVID-19

by Jim Teece

All About DoorDash

Image from DoorDash.com

Food Delivery is one segment of the economy that took off as we shut down because of COVID-19. I was visiting a friend on their ranch for dinner and I thought they were going to have BBQ. I was pleasantly surprised when they ordered DoorDash and they delivered from a local Pizza Place. I got curious about DoorDash and this is what I found out on the web.

https://expandedramblings.com/index.php/doordashfacts-and-statistics/

DoorDash Facts Website: www.doordash.com Year Launched: 2013 Headquarters: San Francisco, CA Creators: Andy Fang, Stanley Tang, Tony Xu and Evan Moore What is DoorDash? DoorDash is an on-demand food delivery company.

Last updated 2/27/20

Reported value of DoorDash: $12.6 billion Last updated 6/23/19

Reported amount DoorDash has raised in funding: $2 billion Last updated 6/23/19

Number of DoorDash ondemand drivers:

DoorDash Statistics

200,000 drivers

DoorDash's share of the US food delivery market:

Last updated 7/12/20

38%

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Percentage of the top 100 US restaurant brands that DoorDash works with: 90% Last updated 5/2/19

Number of cities DoorDash is available in: 4,000 cities

consumers in America. Your restaurant will be seen by millennials, parents, and even companies who need catering - all without the costs of a dine-in experience.”

minutes on average. So your food is delivered to your customer exactly how you prepared it.” Commission Expense 30% The restaurant pays DoorDash the commission - It’s actually taken off the top.

Reach new customers

Last updated 7/12/20

Number of restaurants that are available on DoorDash: 300,000 restaurants Last updated 7/12/20

Amount that DoorDash reported paid Square for Caviar:

92% of orders come from entirely new customers “We feature your menu on our app and website so that customers can discover your restaurant and order food. All of this will be done without you needing to lift a finger!”

$410 million DoorDash buys rival food delivery app Caviar in 2019

Number of DashPass subscribers: 1.5 million Last updated 1/7/20

What about the restaurant? DoorDash.com says the following: More business, less effort up to 60% Profit on incremental orders “Today, more and more people want the convenience of delivery. Our app reaches 80% of

By fulfilling deliveries as far as 25 miles from your location, DoorDash enables your business to reach a customer base well beyond the traditional dine-in experience. We give options, you call the shots 37 min Average delivery time “We use our strong Dasher network to fulfill your delivery orders within 37

As the pandemic continues to transform the dining experience, restaurants can increase restaurant sales by offering online ordering and delivery. In fact, a recent Technomic report revealed that a quarter of restaurant operators saw 40% or more of their sales come from third-party delivery in 2020. Customers also tend to order more when ordering takeout — restaurants see a 20% increase in check sizes from online and delivery orders compared to dine-in orders. What’s your DoorDash experience? Let me know at jim@SouthernOregonBusine ss.com.

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COVID-19

By Julianne Rowe Senior Manager, Corporate and Product Communications | Yelp, Inc.

Yelp Inc. (NYSE: YELP), the company that connects people with great local businesses, released second quarter data for the Yelp Economic Average (YEA) report, a benchmark of local economic strength in the U.S., which has been adapted to reveal the dramatic impact COVID-19 has had on local economies. YEA uncovers longer term trends, including a correlation between increased interest in restaurants, bars and nightlife, and gyms to a spike in COVID-19 cases across

Yelp Economic Average Uncovers a Drop in Total Business Closures and a Rise in Permanent Closures During the Second Quarter

hotspot states. The report also shows a declining trend in total business closures, however, permanent closures now account for 55% of all closed businesses since March 1, a 14% increase from June. Additionally, YEA finds slower, but still consistent changes in consumers getting back to pre-pandemic activities, as well as sustained interest in supporting Black-owned businesses. The report finds a correlation between consumer interest in

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restaurants, bars and nightlife, and gyms in May and COVID-19 cases in June YEA reflects data from millions of local businesses and tens of millions of users on Yelp’s platform measuring U.S. business closures, as well as consumer interest via page views, reviews and photos. According to researchers, Yelp provides a timely and accurate measure of a huge swath of the economy that is

often missed by many major indicators. “As U.S. cities struggle to balance reopening their local economies and avoid becoming the next COVID-19 hotspot, we’ve seen U.S. business closure data reflect an unstable economy. Yelp data found a decrease in total business closures, but the rate of permanent closures has actually risen 14% between June 15 and July 10,” said Justin Norman, Yelp’s vice president of data science. “Cities such as San Francisco and Honolulu, which have had some of the nation’s strictest stay-at-home orders, are now seeing the highest numbers of closures relative to the number of businesses in their respective cities.” Key findings include: Business Closures Data Oregon endured 2,239 total business closures (both temporary and permanent) between March 1 and July 10. 1,133 businesses are marked as permanently closed as of July 10. Oregon had the 6th highest rate of business closures (per 1,000 businesses). Nationally, in the U.S., temporary business closures decrease, while

permanent closures continue increasing, now accounting for 55% of all closed businesses since March 1. As of July 10, total business closures dropped to just more than 132,500, since March 1. We last reported 140,000 total business closures on June 15, which increased to more than 147,000 total business closures on June 29. Yelp data shows a statistically significant correlation between an increase of consumer interest in restaurants, bars and nightlife, and gyms in May and an increase in COVID-19 cases in June. The ten states with the largest increase in COVID-19 cases in June and a significant increase in consumer interest in restaurants, bars and nightlife, and gyms: Florida, Idaho, Nevada, Oklahoma, South Carolina, Arizona, Texas, Georgia, Kansas, Alabama. The ten states with the largest decrease in COVID-19 cases in June and relatively flat consumer interest in restaurants, bars and nightlife, and gyms: Massachusetts, Michigan, Washington D.C., New York, Connecticut, Maryland, New Hampshire, Rhode Island, Virginia,

Illinois. Consumer interest has continued to shift since May, but less rapidly than we saw in March and April. Interest for alcohol-related activities (wineries, breweries, etc.) are up, while grocery is down. Formal wear and bridal shops are up and people are heading back indoors for axe throwing, escape games and boxing. As COVID-19 cases increase we’re also seeing an increase in consumer interest for urgent care and emergency rooms. People’s interest in supporting the Black community by spending at Black-owned businesses continues to remain high. From May 25 to July 10, there have been more than 2,500,000 searches for Black-owned businesses on Yelp, compared to approximately 35,000 over the same time period last year, with a recent increased interest in specific Black-owned businesses, such as restaurants, boutiques, doctors and book stores. Read the full Yelp: Local Economic Impact Report https://www.yelpeconomicaverage.com/yelpcoronavirus-economic-impact-report.html

Southern Oregon Business Journal September 2020 | 37

BANKING

by Ron Green, President & Chief Executive Officer Oregon Pacific Bank ron.green@opbc.com

regon Pacific Bancorp, and its wholly owned subsidiary Oregon Pacific Bank, reported quarterly net income of $830 thousand, or $0.12 per diluted share compared to $1.0 million, or $0.15 per diluted share for the quarter ended June 30, 2019. Through June 30, 2020, the Bank recorded year-to-date net income totaling $1.5 million, or $0.21 per diluted share compared to $1.4 million,

Oregon Pacific Bank Announces Second Quarter Earnings Results

or $0.20 per diluted share for the same period in 2019. During the six months ended June 30, 2020 provision for loan losses grew to $1.3 million compared to $110 thousand during the six months ended June 30, 2019.

Green, President and CEO. “Our clients have experienced many struggles and our bankers have risen to the challenge, providing assistance through this difficult time.”

In the beginning of April, the Small Business Administration (SBA) opened the Paycheck Protection Program (PPP), which enabled eligible businesses and

“I am pleased with the results of the second quarter amidst the current economic uncertainty surrounding COVID-19,” said Ron

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non-profit agencies to receive loans with forgiveness provisions to support payroll and other eligible expenses during the COVID-19 crisis. The PPP loans also carry a 100% SBA guarantee. Through June 30, 2020, Oregon Pacific Bank had 708 PPP loans approved through the SBA, totaling $123.8 million. “As the Paycheck Protection Program progressed our bankers worked to secure loans for clients of all sizes, with an average loan size of $124 thousand.” said John Raleigh, Executive Vice President and Chief Lending Officer. “Oregon Pacific Bank recognizes the impact of businesses large and small in our community and is happy to provide the support borrowers desperately needed.” Period end loans, net of deferred loan origination fees, totaled $421.6 million, representing growth of $120.5 million during the quarter. The majority of that growth was attributable to the PPP loan portfolio, with $420 thousand of loan growth attributable to the non-PPP loan portfolio. The prepayment activity experienced during first quarter 2020 and fourth quarter 2019 decreased significantly as economic uncertainty made the prospects of refinancing more difficult for some borrowers. The Bank experienced deposit growth totaling $126.1 million during the second quarter. As PPP loans were initially funded most clients placed the loan

proceeds into a deposit account with Oregon Pacific Bank. This resulted in a deposit increase approximately equal to the PPP loan growth. During the month of April $95.4 million of PPP loans were funded. It was originally assumed that the increase in deposits would be temporary, and the bank would move into a borrowing position, utilizing the PPP Liquidity Facility through the Federal Reserve, as clients spent their PPP funds. This has not materialized through June, due to two factors: clients spending PPP funds slower than expected and onboarding of new deposit accounts for clients migrating their full relationship to Oregon Pacific Bank due to the Paycheck Protection Program. The Bank has enrolled in the Paycheck Protection Program Liquidity Facility, which enables the Bank to pledge PPP loans as collateral and borrow against that collateral for a term equal to the PPP loan term, at a cost of 0.35%. The Bank is ready to execute borrowings once current liquidity is depleted. The second quarter net interest margin lowered to 3.73%, down from 4.39% in first quarter 2020. Contributing to a reduction in the margin were the PPP Loans, which have a contractual effective interest rate of 1.0%. In addition to the contractual rate, the Bank is amortizing the PPP loan fees as an adjustment to yield over the term of the loan, which added an additional 1.70% to the loan yield, for a total second quarter PPP loan yield of 2.70%. The projected yield is expected to

improve slightly in the third quarter as the loans booked later in the quarter tended to be smaller in size, which had a 5% loan fee, compared to the 3% loan fee for loans over $350 thousand and a 1% loan fee for loans over $2 million. The effective yield on non-PPP loans during the second quarter totaled 4.85%, down from 5.14% in the first quarter. Included in the first quarter yield on loans was a prepayment penalty totaling $141 thousand, which when excluded would have made the first quarter yield 4.95% representing a 0.10% linked quarter reduction. The Bank also saw a reduction in the cost of funds to 0.22%, down from 0.45% in first quarter 2020 as deposit rate reductions were implemented in mid-March. An additional factor impacting the net interest margin was the interest rate paid on excess balances through the Federal Reserve. On March 16, 2020, the rate was dropped from 1.10% to 0.10% while the Bank’s quarterly average excess balance increased to $40.5 million in second quarter 2020, up from $21.8 million in first quarter 2020. On June 5, 2020, the Paycheck Protection Program Flexibility Act of 2020, became law and made significant changes to the Paycheck Protection Program. The legislation expanded the covered period during which PPP loan recipients can spend the funds and still qualify for loan forgiveness from eight weeks to

Southern Oregon Business Journal September 2020 | 39

Oregon Pacific Bank : Continued from Page 39

24 weeks. It also lowered the portion of PPP funding that must be used on payroll costs to qualify for full forgiveness from 75% to 60%. The Bank assumes this program change will result in a larger portion of the loans qualifying for forgiveness, but it will also prolong the period for which the Bank will hold the PPP loans. This will lead to a longer period of reduced net interest margin associated with the low yield of the PPP loans. For the quarter ended June 30, 2020, the Bank booked net recoveries of $7 thousand. Quarterly earnings were impacted by an increase in provision for loan losses, totaling $900 thousand for the quarter. The increase in provision was in response to COVID-19 and the economic factors impacting the allowance for loan losses calculation. The Bank continues to monitor credit quality statistics and saw classified asset totals increase from $9.1 million at March 31, 2020, to $11.9 million at June 30, 2020. Through June 30, 2020, the Bank worked with borrowers to initiate COVID-19 related loan modifications totaling $53.3 million, with ninety-eight relationships totaling $38.8 million on interest only payment structures, and thirty-one relationships totaling $14.5 million are on six-month full payment deferral. The Bank’s Credit Administration is proactively monitoring loan relationships to determine if future downgrades are necessary. The Bank also liquidated its only

residential other real estate property, which resulted in a gain on sale of $22 thousand. During the second quarter 2020, noninterest income was $1.2 million, unchanged from the $1.2 million earned in the first quarter of 2020. The biggest reduction in noninterest income was attributable to the mortgage loan sales and servicing category, as tighter underwriting guidelines implemented by the Bank’s wholesale mortgage partners, in response to COVID-19, limited borrowers’ abilities to qualify for financing. Noninterest expense in the second quarter totaled $3.4 million, down $410 thousand from the first quarter 2020. On a linked quarter basis, the Bank saw a decrease in salaries and employee benefits expense, primarily tied to the deferred loan origination costs associated with the PPP loans, which is booked as a credit to salary expense. The Bank also saw a reduction in outside services, primarily tied to the timing of the Bank’s external audit, which occurred during the first quarter 2020. The Bank continued to incur loan and collection expense as one of the Bank’s problem assets, an agricultural property, is requiring ongoing assistance from a receiver to support maintenance of the property. The Bank is continuing to work through issues associated with the liquidation.

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PANDEMIC PROJECTS

Stories about people learning new skills during the pandemic.

Chad Sobotka - Photography Hobbyist

had Sobotka is a brilliant Network Engineer. He manages the Ashland Fiber Network and works 7 days a week at times, making sure the network is up and running smoothly, especially during the pandemic, when the internet is as essential a service as water and electricity. The COVID-19 stress as well as the stress of managing a critical infrastructure can be overwhelming at times, so he and his wife came up with a way to relieve the stress. Photographs. He has been taking photos for years and enjoys the technical aspect of it. He has spent months planning for a particular shot. He uses science and apps to know exactly when and where he needs to be to get the shot he wants. He laughs as he shares stories of waking up at 4am, to hike to his â&#x20AC;&#x153;secret spotâ&#x20AC;? while ringing a bear bell for 2.5 hours to get the shot. The following pages include a couple of his stunning and breathtaking shots. You can see more at https://www.flickr.com/photos/chadsobotka/.

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Southern Oregon Business Journal November 2019 | 43

All Photos on Pages 42-43 are by Chad Sobotka  1. Milky Way over Pilot Rock from the PCT

2. Green Heron at the upper duck pond, Lithia Park

3. Sunset at the Bandon Sea Stacks

4. Ruddy Duck at the Lower Klamath National Wildlife Refuge

5. Swallowtail in Ashland

6. Neowise take at Lake of the Woods, Sunset Boat Launch

7. Anna’s Hummingbird

Stories in future editions of the Southern Oregon Business Journal. I’m always working on stories. Sometimes they complete quickly, and I can include them right away. Other times the stories take time to develop. Over the next couple of months I will have stories on the following: Greg Walden Retires In October of 2019, Greg announced that he would not run for reelection in 2020. Ashland Independent Film Festival Reboots and goes 100% online When the state shut down all mass gatherings, the film festival had to pivot to survive. I have the inside story on the process and outcomes of moving an intimate festival online. Jackson County Fair gets cancelled due to COVID-19 but the Junior Livestock Auction still happens. Over $1 Million raised in 6 days with a virtual auction using software developed by my team at Project A. Mixed Use Development in Klamath Falls I’ll do a deep dive on Klamath Falls and focus on TimberMill Shores, a 50 acre mixed-use development with lots for sale and development. Seeds from China I received 3 different orders of seeds (that I didn’t order) from China. Why and what do I do with the seeds? 3D Printing When the lockdown started, I bought a 3D printer to learn how to make PPE (Personal Protective Equipment) to donate to the hospital. Wave Accounting vs Quickbooks I use both and I’ll compare the two. Wave is FREE and as a small business owner that is the greatest feature, but what does that mean? How to build a podcast for your business Podcasting is a great way to market your business or brand. I’ll walk you through the basics. How to build an eCommerce website using Wordpress and WooCommerce One way to pivot is to move your items online for direct to consumer sales. I’ll show you the step by step process. If there are articles that you would like to see, let me know at jim@SouthernOregonBusiness.com

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Welcome to Umpqua BroadBand! High Speed Internet for Rural Douglas County. Rural homes, farms, ranches and businesses now have an option. We have towers strategically located all over the Umpqua Valley. We have hundreds of happy customers that have made the switch to Umpqua Broadband™, replacing their slow DSL or Exede wireless service. umpquabroadband.com New Office : 845 Mosher, Roseburg, OR 97470 (541) 672-3793 customercare@umpquabroadband.com

Southern Oregon Business Journal September 2020 | 45

Hunter Fiber To The Home - Continued from Page 13

SouthernOregonBusiness.com

Medford and possibly Eureka, California. The other markets they serve will eventually get the service as well. The flyer they sent me after the interview showed 3-speed tiers with very affordable prices. •

500MB Down and 100MB up for $59.99 (For Life)

•

1GB Down and 200MB Up for $69.99 (For Life)

•

1 GB Down and 1GB Up for $99.99 (For Life)

Each tier will include an advanced WIFI Router. You can also add a phone line with unlimited long distance for $20/Month and you can get an additional wifi mesh unit for $10/ month according to the flyer. Michael also shared that the upload speed is just as important now because of video conferencing during COVID. Each device in the home needs a lot of bandwidth both down and up. If you have kids in school, learning remotely or remote workers, each one will need more and more upload speed to be able to be on a Zoom call. The new fiber rollout has started in selected Medford neighborhoods. Visit HunterFiber.com to learn more.

Be sure to visit SouthernOregonBusiness.com and sign up for FREE emails. We don’t spam and we do not sell your email address. We will send you an email at least once a month to let you know that our newest print version is out and available online.

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Southern Oregon Business Journal 5350 HWY 66, Ashland, OR. 97520 www.southernoregonbusiness.com

NeoWise Comet over Crater Lake - Taken from Victor View in Crater Lake National Park - Photo by Chad Sobotka - See Page 41 For more