SOURCE: Capital Pacific Bancorp

April 22, 2010 13:04 ET

Capital Pacific Bancorp Announces Results for First Quarter 2010

PORTLAND, OR--(Marketwire - April 22, 2010) - Capital Pacific Bancorp (OTCBB: CPBO) ("the Company") reported a net loss of $129,000 for the three months ended March 31, 2010. Including the effect of preferred stock dividends, the Company reported a net loss to common shareholders of $194,000, or $0.11 per diluted share.

"While risk remains, particularly in the local economy, our capital is strong, our liquidity is near record levels, and we are making progress in proactively working through our problem loans, which I believe will be reflected in near-term financial results," said Mark Stevenson, President and CEO of Capital Pacific Bancorp. "Our small loss for the quarter reflects aggressive measures taken to reduce non-performing assets, including market value impairments on other real estate owned totaling $278,000."

Stevenson continued, "Beyond asset quality, other financial measures such as deposit and loan growth are trending upward as we add new client relationships. We continue to expand our market leadership in the non-profit sector, including acquiring several new non-profit clients this quarter."

Deposits

As of March 31, 2010, actual client deposits totaled $148.5 million. Balances were down $7.6 million compared to the end of 2009 when client deposits included $10 million in temporary deposits received immediately prior to the end of the year. Those funds have since been disbursed as anticipated. Excluding the temporary deposit, client deposits have increased by $2.4 million. On an average basis, client deposits grew by $13.7 million, from $127.2 million in the fourth quarter of 2009 to $140.9 million in the first quarter of 2010.

Loans

At March 31, 2010, loans totaled $130.3 million, up $5.5 million for the quarter. "Lending conditions have yet to improve. However, we have increased loans in select sectors, including high performing multi-family housing and commercial real estate, while demand for small business lending remains well under pre-recession levels," said Stevenson.

Credit quality

At March 31, 2010, the Company's reserve for loan losses totaled $3.0 million, a decrease of $310,000 when compared to the prior quarter. The decrease is primarily the result of loan charge-offs of $569,000, net of recoveries of $279,000.

At March 31, 2010, the reserve for loan losses was 2.31% of total loans, down from 2.67% from the prior quarter, and is believed to be conservatively measured given the commensurate risk in the loan portfolio. Reserves for loan losses not allocated to specific loans total 19% of total reserves. The Company completed its most recent regulatory exam in January, 2010, which included an assessment of the adequacy of the reserve for loan losses.

Non-performing assets

At March 31, 2010, non-performing assets totaled $10.5 million, or 5.65% of total assets. This is an increase of $596,000 when compared to the previous quarter. Non-performing assets include loans 90 days past due and still accruing interest, loans on non-accrual status and other real estate owned as follows:

--  At March 31, 2010, there were no loans 90 days past due and still
    accruing interest.

--  At March 31, 2010, the Company had $7.9 million in loans on non-accrual
    status, virtually unchanged from the prior quarter on a net basis.
    During the quarter, the Company received payments of $531,000, charged
    off loans of $569,000,  migrated $1.1 million to other real estate
    owned and added one new non-accruing commercial owner-occupied
    construction loan of $2.2 million.   The construction is complete.
    The Company's exposure is well protected based upon current appraised
    collateral with an estimated loan-to-value of 65%, and a rapid
    resolution is expected.

--  At March 31, 2010, the Company had $2.6 million in other real estate
    owned, up $522,000 when compared to the prior quarter. During the
    quarter, the Company sold residential land totaling $556,000.

Non-performing assets as of March 31, 2010 by sector were as follows:

                                                    Land
                                                Development
                                   Commercial       and
                     Commercial   Real Estate   Construction  Residential
                    ------------- ------------- ------------- -------------
Non-performing
 loans              $   3,314,000 $     714,000 $   3,828,000             -
Other real estate
 owned              $     531,000 $   1,118,000 $     808,000 $     157,000

Capital adequacy

The Company continues to be classified as well-capitalized by regulatory standards. The Company's total risk-based capital ratio is estimated at 13.5% at March 31, 2010. To be considered well-capitalized, a bank holding company must have total risked-based capital of at least 10.0% of risk-weighted assets.

The Company is a participant in the U.S. Department of the Treasury's Capital Purchase Program and currently has $4 million in preferred stock outstanding under this program. Preferred dividends paid in 2010 totaled $64,500.

Net interest income

Net interest income (or interest income less interest expense) stabilized at $1.5 million after several sequential quarterly declines. Net interest income is expected to grow as asset quality improves. Further, the Company has been actively reducing the level of funds held in cash into higher yielding investment grade securities, and expects net interest income to rise as the Company continues to redeploy cash into both loans and long-term investments.

Non-interest expense

Non-interest expense in the first quarter of 2010 totaled $2.0 million, up $643,000 when compared to the prior quarter. The increase is the result of higher legal and professional fees related to nonperforming assets and losses on the impairment or sale of other real estate owned, and an increase in FDIC premiums.

About Capital Pacific Bancorp

Capital Pacific Bancorp (OTCBB: CPBO) is the parent company of Capital Pacific Bank, which serves businesses, professionals and non-profit organizations with comprehensive banking expertise and an elite level of service. Centrally headquartered in the Fox Tower in downtown Portland, the bank's full array of products and services are delivered through a strategic combination of Vice President-level client service officers and the innovative application of technology. For more information on Capital Pacific Bancorp or to see past press releases, visit www.capitalpacificbank.com.

Forward-looking statements

Statements in this release about future events or performance are forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause the actual results of the Company to be materially different from any future results expressed or implied by such forward-looking statements. Factors that could affect future results include changes in the financial condition of our borrowers, changes in economic conditions generally, changes in non-performing assets, deteriorating asset values caused by market conditions, loan losses that exceed our reserve for loan losses, gains or losses on other real estate owned, fluctuations in interest rates and the impact any of these factors may have upon clients of the Company. Other factors include competition for loans and deposits within the Company's trade area, and the impact that may have upon growth or income. Although forward-looking statements help to provide complete information about the Company, readers should keep in mind that forward-looking statements may be less reliable than historical information. The Company undertakes no obligation to update or revise forward-looking statements in this release to reflect events or changes in circumstances that occur after the date of this release.

Capital Pacific Bancorp
(unaudited and dollars in thousands)
                                                               Sequential
Condensed Consolidated Balance        As of         As of       quarter %
 Sheets                             3/31/2010    12/31/2009      change
                                  ------------  ------------  ------------
Cash and due from banks           $     27,343  $     58,534           -53%
Time certificates of deposits at
 other banks                            13,987         9,771            43%
Investments                             10,019           885          1032%
Loans:

Construction and land development       21,531        21,043             2%
Real estate                             66,618        62,932             6%
Commercial                              38,833        37,342             4%
Other                                    3,289         3,407            -3%
                                  ------------  ------------
  Total loans                          130,271       124,724             4%
Loan loss reserve                       (3,015)       (3,325)           -9%
                                  ------------  ------------
  Total loans, net of loan loss
   reserve                             127,256       121,399             5%
Other real estate owned                  2,614         2,092            25%
Other assets                             4,089         4,049             1%
                                  ------------  ------------
  Total assets                    $    185,308  $    196,730            -6%
                                  ============  ============

Deposits:
Non interest-bearing demand       $     33,624  $     37,282           -10%
Interest-bearing demand                 70,797        75,695            -6%
Certificates of deposit                 44,095        43,111             2%
                                  ------------  ------------
   Total client deposits               148,516       156,088            -5%

Brokered certificates of deposit        12,166        17,647           -31%
                                  ------------  ------------
  Total deposits                       160,682       173,735            -8%

Other liabilities                        6,086         4,256            43%
Shareholders' equity                    18,540        18,739            -1%
                                  ------------  ------------
  Total liabilities and
   shareholders' equity           $    185,308  $    196,730            -6%
                                  ============  ============





Capital Pacific Bancorp
(unaudited and dollars in thousands, except per share data)

                  For the      For the      For the
                   three        three        three
Condensed         months       months       months                  Year
 Consolidated     ending       ending       ending     Sequential   over
 Statements of   March 31,   December 31,  March 31,    quarter %   year %
 Operations        2010         2009         2009        change     change
                -----------  -----------  -----------  ----------  -------
Interest income $     1,905  $     1,907  $     1,930           0%      -1%
Interest
 expense                409          444          495          -8%     -17%
                -----------  -----------  -----------
  Net interest
   income             1,496        1,463        1,435           2%       4%
                -----------  -----------  -----------
Provision for
 (recovery of)
 loan losses            (20)         207          262        -110%    -108%
                -----------  -----------  -----------
  Net interest
   income, net
   of provision
   for loan
   losses             1,516        1,256        1,173          21%      29%
                -----------  -----------  -----------
Deposit fees
 and other
 non-interest
 income                 199          190          220           5%     -10%
Income
 associated
 with the sale
 of loans                 -          195          110        -100%    -100%
                -----------  -----------  -----------
  Total
   non-interest
   income               199          385          330         -48%     -40%
                -----------  -----------  -----------
Salaries and
 benefits               702          707          648          -1%       8%
Occupancy               140          143          142          -2%      -1%
Professional
 costs
 associated
 with
 nonperforming
 assets                 329           92           25         258%    1216%
Net loss on
 sale or
 impairment of
 other real
 estate owned           278           24            -        1058%       -
FDIC
 assessments            183           65           47         182%     289%
Other
 non-interest
 expense                404          362          469          12%     -14%
                -----------  -----------  -----------
  Total
   non-interest
   expense            2,036        1,393        1,331          46%      53%
                -----------  -----------  -----------
  Net income
   (loss)
   before tax
   expense
   (benefit)           (321)         248          172        -229%    -287%
                -----------  -----------  -----------
Income tax
 expense
 (benefit)             (192)          22           60        -973%    -420%
                -----------  -----------  -----------
  Net income
   (loss)       $      (129) $       226  $       112        -157%    -215%
                ===========  ===========  ===========
Preferred stock
 dividends              (65)         (65)         (65)          0%       0%
                -----------  -----------  -----------
  Net income
   (loss)
   available to
   common
   shareholders $      (194) $       161  $        47        -220%    -513%
                ===========  ===========  ===========
  Earnings
   (loss) per
   common
   share, basic
   (2)          $     (0.11) $      0.09  $      0.03        -222%    -467%
                ===========  ===========  ===========
  Earnings
   (loss) per
   common
   share, fully
   diluted (2)  $     (0.11) $      0.09  $      0.03        -222%    -467%
                ===========  ===========  ===========
Basic average
 common shares
 outstanding      1,771,910    1,771,910    1,752,221
                ===========  ===========  ===========
Fully diluted
 average common
 shares
 outstanding      1,771,910    1,772,374    1,752,221
                ===========  ===========  ===========




Capital Pacific Bancorp
(unaudited and dollars in thousands, except per share data)

Performance by
 Quarter           3/31/10    12/31/09     9/30/09     6/30/09    3/31/09
                 ----------  ----------  ----------  ----------  ---------

Actual loans,
 gross           $  130,271  $  124,724  $  133,362  $  130,292  $ 130,067
Average loans,
 gross           $  123,984  $  129,650  $  133,460  $  131,645  $ 136,984

Loans past due
 30-89 days (4)  $        -  $        -  $       52  $    2,131  $   1,879
Loans past due
 90 days or more
 (4)             $        -  $        -  $        -  $        -  $       -
Loans on
 non-accrual
 status          $    7,856  $    7,782  $    6,707  $    1,484  $   3,129
Other real
 estate owned    $    2,614  $    2,092  $    1,586  $    3,976  $   2,041
Total
 non-performing
 assets          $   10,470  $    9,874  $    8,293  $    5,460  $   5,170
Total
 non-performing
 assets as a
 percentage of
 total assets          5.65%       5.02%       5.15%       3.81%      3.61%

Loan loss
 reserve         $    3,015  $    3,325  $    3,739  $    2,573  $   3,001
Loans charged
 off, net of
 recoveries      $      290  $      621  $    2,588  $      853  $     190
Loan loss
 reserve as a
 percentage of
 loans                 2.31%       2.67%       2.80%       1.97%      2.31%
Loan loss
 reserve as a
 percentage of
 non-performing
 loans                   38%         43%         56%        173%        96%

Actual client
 deposits        $  148,516  $  156,088  $  119,218  $   99,080  $  99,489
Average client
 deposits        $  140,915  $  127,193  $  108,662  $   98,680  $  93,739

Net income
 (loss)          $     (129) $      226  $   (2,044) $        1  $     112
Net income
 (loss)
 available to
 common
 shareholders
 (1)             $     (194) $      161  $   (2,109) $      (63) $      47
Net earnings
 (loss) per
 common share,
 basic (1)       $    (0.11) $     0.09  $    (1.19) $    (0.04) $    0.03
Net earnings
 (loss) per
 common share,
 fully diluted
 (1)             $    (0.11) $     0.09  $    (1.19) $    (0.04) $    0.03

Actual common
 shares
 outstanding      1,771,911   1,771,911   1,771,911   1,771,911  1,771,911
Book value per
 common share    $     8.18  $     8.30  $     8.20  $     9.38  $    9.42

Return on
 average common
 equity (1)           -5.37%       4.37%     -52.60%      -1.52%      1.20%
Return on
 average assets       -0.29%       0.53%      -5.26%       0.00%      0.32%
Net interest
 margin (2)            3.65%       3.64%       4.21%       4.62%      4.33%
Efficiency ratio
 (3)                    120%         76%         91%         76%        75%

(1) Includes the dilutive effect of preferred stock dividends accrued
    during the period
(2) Calculated on a tax equivalent basis
(3) Calculated by dividing non-interest expense by the sum of net interest
    income and non-interest income.
(4) Excludes loans that are no longer accruing interest

Contact Information

  • Contact:
    Mark Stevenson
    President and CEO
    Felice Belfiore
    CFO
    (503) 796-0100