SOURCE: Capital Pacific Bancorp

January 28, 2010 12:00 ET

Capital Pacific Bancorp Announces Results for Fourth Quarter and Full Year of 2009

PORTLAND, OR--(Marketwire - January 28, 2010) - Capital Pacific Bancorp (OTCBB: CPBO) ("the Company") reported net income of $242,000 for the three months ended December 31, 2009. Including the effect of preferred stock dividends, the Company reported net income to common shareholders of $177,000, or $.10 per diluted share.

For the year ended December 31, 2009, the Company reported a net loss of $1,689,000. Including dividends, the net loss to common shareholders was $1,947,000, or $1.10 loss per diluted share.

"In the fourth quarter, credit deterioration slowed and earnings improved. We've also experienced record deposit growth for the second quarter in a row," said Mark Stevenson, President and CEO of Capital Pacific Bancorp. "We've been successful establishing full banking relationships with stable businesses in our targeted niche sectors, including not-for-profit organizations and professional practices. Our client list is especially strong among independent K-12 schools, where we continue to increase our market share."

Deposits

As of December 31, 2009, actual client deposits totaled $156.1 million, up $36.9 million for the quarter, and up $66.0 million for the year. Approximately $10 million of the increase is temporary and expected to move elsewhere in early 2010. Excluding the temporary deposit, client deposits have increased 62% in 2009, a record year for the Company. The growth is attributable to a variety of clients, most of which are local not-for-profit organizations and professional practices.

Loans

As of December 31, 2009, loans totaled $124.7 million, down approximately $8.6 million for the quarter and $10.6 million for the year. In 2009, the Company originated $22.4 million in new loan commitments, renewed another $43.8 million in loan commitments and sold $5.9 million in existing loans. Total new and renewed loan commitments are approximately 66% of volumes experienced in 2008.

"Weak economic conditions in 2009 and planned reductions in certain sectors contributed to a decline in loan activity this year," Stevenson said. "However, we are targeting specific industries where we expect to see an increase in loan demand as economic conditions stabilize. That said, we've created an internal loan origination program to help jump start loan activity in 2010."

Credit quality

At December 31, 2009, the Company's reserve for loan losses totaled $3.3 million, a decrease of $414,000 when compared to the immediately prior quarter. The decrease is the result of adding a provision for loan losses of $207,000 and deducting net loan charge-offs of $621,000.

At December 31, 2009, the reserve for loan losses was 2.67% of total loans, down from 2.80% from the prior quarter, and is believed to be conservatively measured given the commensurate risk in the loan portfolio.

The Company completed its regularly scheduled FDIC examination in January 2010. In addition, the Company recently expanded its commercial real estate stress test to include both owner occupied and non-owner occupied commercial real estate. The results of the most recent test showed signs of stress under combined assumptions of increasing capitalization rates, interest rates and vacancy rates. The Company significantly increased the loan loss reserve earlier in the year to address the potential deterioration that may occur in this sector. Non-performing commercial real estate loans increased by $378,000 in the fourth quarter of 2009.

Non-performing assets

At December 31, 2009, non-performing assets totaled $9.9 million, or 5.02% of total assets. This is an increase of $1.6 million when compared to the previous quarter. The rise in non-performing assets resided in commercial, commercial real estate and construction lending. 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 December 31, 2009, there were no loans 90 days past due and still
    accruing interest.
    
--  At December 31, 2009, the Company had $7.8 million in loans on non-
    accrual status, an increase of $1.1 million from the prior quarter.
    Similar to the prior quarter, the Company continues to have a high number
    of borrowers experiencing financial hardship.  However, progress toward
    ultimate resolution of loans on non-accrual status has picked up and the
    Company expects that growth in loans on non-accrual status will be less
    prevalent in future periods.
    
--  At December 31, 2009, the Company had $2.1 million in other real
    estate owned, up $506,000 when compared to the prior quarter.
    

Non-performing assets as of December 31, 2009 by sector were as follows:

                                                       Land
                                                    Development
                                       Commercial      and
                            Commercial Real Estate Construction Residential
                            ----------- ----------- ----------- -----------
Non-performing loans        $ 1,490,000 $ 2,426,000 $ 2,379,000 $ 1,487,000
Other real estate owned     $   531,000           - $ 1,396,000 $   165,000

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 13.9% at December 31, 2009. 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 2009 totaled $195,000.

Net interest income

Net interest income (or interest income less interest expense) was $1.5 million in the fourth quarter of 2009, down approximately $80,000 when compared to the third quarter of 2009. The decline is partially due to the volume of loans on non-accrual status and other real estate owned. In addition, the Company maintains an unusually high level of cash and short term investments. The Company expects the level of cash and short term investments to decline in 2010 as a result of early retirement of non-core deposits, the reduction in temporary deposits already discussed, and new loan originations.

Non-interest expense

Non-interest expense in the fourth quarter of 2009 totaled $1.4 million compared to $2.0 million in the third quarter of 2009. This category includes losses on the impairment or sale of other real estate owned. Excluding the impairment or sale of other real estate owned, non-interest expense was up slightly when compared to historical averages due to a rise in professional fees related to troubled loans 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)

                                            As of Dec. 31,  As of Dec. 31,
Condensed Consolidated Balance Sheets            2009            2008
                                            ==============  ==============
Cash and due from banks                     $       58,534  $        3,804
Investments                                         10,656             993
Loans:
Construction and land development                   14,999          16,114
Real estate                                         68,976          57,143
Commercial                                          37,342          58,430
Other                                                3,407           3,593
                                            --------------  --------------
  Total loans                                      124,724         135,280
Loan loss reserve                                   (3,325)         (2,929)
                                            --------------  --------------
  Total loans, net of loan loss reserve            121,399         132,351
Other real estate owned                              2,092           1,651
Other assets                                         4,039           1,901
                                            --------------  --------------
  Total assets                              $      196,720  $      140,700
                                            ==============  ==============

Deposits:
Non interest-bearing demand                 $       37,282  $       19,142
Interest-bearing demand                             75,695          38,720
Certificates of deposit                             43,111          32,229
                                            --------------  --------------
  Total client deposits                            156,088          90,091

Brokered certificates of deposit                    17,647          24,396
                                            --------------  --------------
  Total deposits                                   173,735         114,487

Other liabilities                                    4,230           5,663
Shareholders' equity                                18,755          20,550
                                            --------------  --------------
  Total liabilities and shareholders'
   equity                                   $      196,720  $      140,700
                                            ==============  ==============



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

                                            For the three   For the three
                                            months ending   months ending
Condensed Consolidated Statements of Income Dec. 31, 2009   Dec. 31, 2008
                                            ==============  ==============
Interest income                             $        1,907  $        2,255
Interest expense                                       444             662
                                            --------------  --------------
  Net interest income                                1,463           1,593
Provision for loan losses                              207             463
                                            --------------  --------------
  Net interest income, net of provision for
   loan losses                                       1,256           1,130
Deposit fees and other non-interest income             190             206
Income associated with the sale of loans               195              16
Non-interest expense                                 1,366           1,245
                                            --------------  --------------
  Net income before tax expense (benefit)              275             107
Income tax expense (benefit)                            33              (7)
                                            --------------  --------------
  Net income                                $          242  $          114
                                            ==============  ==============
Preferred stock dividends                              (65)              -
                                            --------------  --------------
  Net income available to common
   shareholders                             $          177  $          114
                                            ==============  ==============
  Earnings per common share, basic (2)      $         0.10  $         0.07
                                            ==============  ==============
  Earnings per common share, fully diluted
   (2)                                      $         0.10  $         0.07
                                            ==============  ==============
Basic average common shares outstanding          1,771,910       1,748,594
                                            ==============  ==============
Fully diluted average common shares
 outstanding                                     1,772,374       1,748,594
                                            ==============  ==============



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


                                             For the year    For the year
Condensed Consolidated Statements of            ending          ending            
 Operations                                 Dec. 31, 2009  Dec. 31, 2008(1)
                                            ==============  ==============
Interest income                             $        7,798  $        9,178
Interest expense                                     1,819           2,997
                                            --------------  --------------
  Net interest income                                5,979           6,181
Provision for (recovery of) loan losses              4,649             (40)
                                            --------------  --------------
  Net interest income, net of provision for
   loan losses                                       1,330           6,221
Deposit fees and other non-interest income           1,275             877
Income associated with the sale of loans               400             421
Non-interest expense                                 6,118           5,549
                                            --------------  --------------
  Net income (loss) before tax expense
   (benefit)                                        (3,113)          1,970
Income tax expense (benefit)                        (1,424)            714
                                            --------------  --------------
  Net income  (loss)                        $       (1,689) $        1,256
                                            ==============  ==============
Preferred stock dividends                             (258)              -
                                            --------------  --------------
  Net income (loss) available to common
   shareholders                             $       (1,947) $        1,256
                                            ==============  ==============
  Earnings (loss) per common share, basic
   (2)                                      $        (1.10) $         0.74
                                            ==============  ==============
  Earnings (loss) per common share, fully
   diluted (2)                              $        (1.10) $         0.74
                                            ==============  ==============
Basic average common shares outstanding          1,767,065       1,707,272
                                            ==============  ==============
Fully diluted average common shares
 outstanding                                     1,767,065       1,707,272
                                            ==============  ==============




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

Performance by Quarter          12/31/09    9/30/09    6/30/09    3/31/09
                                =========  =========  =========  =========

Actual Loans                    $ 124,724  $ 133,362  $ 130,292  $ 130,067
Average Loans                   $ 129,650  $ 133,460  $ 131,645  $ 136,984

Loans past due 90 days or more
 and still accruing interest    $       -  $       -  $       -  $       -
Loans on non-accrual status     $   7,782  $   6,707  $   1,484  $   3,129
Other real estate owned         $   2,092  $   1,586  $   3,976  $   2,041
Total non-performing assets     $   9,874  $   8,293  $   5,460  $   5,170
Total non-performing assets as
 a percentage of total assets        5.02%      5.15%      3.81%      3.61%

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

Actual Client Deposits          $ 156,088  $ 119,218  $  99,080  $  99,489
Average Client Deposits         $ 127,193  $ 108,662  $  98,680  $  93,739

Net interest income             $   1,463  $   1,537  $   1,544  $   1,435
Net income (loss)               $     242  $  (2,044) $       1  $     113
Net income (loss) available to
 common shareholders (2)        $     177  $  (2,109) $     (63) $      49
Net earnings (loss) per common
 share, basic (2)               $    0.10  $   (1.19) $   (0.04) $    0.03
Net earnings (loss) per common
 share, fully diluted (2)       $    0.10  $   (1.19) $   (0.04) $    0.03

Actual common shares
 outstanding                    1,771,910  1,771,910  1,771,910  1,771,910
Book value per common share     $    8.30  $    8.20  $    9.38  $    9.42

Return on average common equity
 (2)                                 4.81%    -52.60%     -1.52%      1.19%
Return on average assets             0.57%     -5.26%      0.00%      0.32%
Net interest margin (3)              3.64%      4.21%      4.62%      4.32%
Efficiency ratio (4)                   75%        91%        76%        75%


(1)  Results in 2008 include a $1.3 million one-time pre-tax recovery of a
loan that was previously charged off.  Excluding the recovery,  net income
was $447,000, or $0.26 per diluted common share for the year ending
December 31, 2008
(2) Includes the dilutive effect of preferred stock dividends accrued
during the period
(3) Calculated on a tax equivalent basis
(4) Calculated by dividing non-interest expense by the sum of net interest
income and non-interest income.

Contact Information

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