SOURCE: Capital Pacific Bank

October 23, 2007 11:15 ET

Capital Pacific Bancorp Reports 3rd Quarter Earnings

PORTLAND, OR--(Marketwire - October 23, 2007) - Capital Pacific Bancorp (OTCBB: CPBO) reported net income of $170,000 for the third quarter ended September 30, 2007, up 73 percent compared to net income of $98,000 in the third quarter last year, and far greater than net income of $8,000 reported in the second quarter of 2007.

Loans and credit quality

As of September 30, 2007, loans totaled $128 million, up 20 percent compared to a year ago and 6 percent on a linked-quarter basis. Growth is attributable to increases in commercial real estate loans along with moderate growth in construction loans.

Credit quality was mixed for the quarter. The loan loss reserve increased to 1.80 percent of total loans as of the end of the quarter, up from 1.53 percent in the previous quarter. "There has been some deterioration in our outlook on one of the credits reported in last quarter's earnings announcement," said CEO Mark Stevenson. "After careful consideration, we have increased our provision for loan losses on this, and another related credit."

As a result, the company set aside $445,000 in provision for loan losses in the third quarter. This compares to $215,000 in the same quarter last year and $543,000 for the linked quarter. Non-performing assets were $3 million at quarter-end, representing previously discussed credits, and totaled 2.4 percent of total loans. There were no charge-offs for the quarter and other credit metrics were stable or modestly improving. "While economic conditions have heightened the level of risk in our loan portfolio, our borrowers appear well positioned to sustain an economic downturn," said Stevenson.

Deposits

As of September 30, 2007, client deposits were $79 million, virtually unchanged compared to a year ago, and down 4 percent on a linked quarter basis. Client deposits are defined as total deposits excluding brokered or nationally sourced deposits. On an average basis, client deposits grew $10 million over the previous quarter, with growth focused in money market demand deposits.

Interest margin

The net interest margin declined to 4.96 percent for the most recent quarter, compared to 5.43 percent for the same quarter last year, and 5.44 percent on a linked quarter basis. The decline in margin reflects the increased level of non-performing assets, a more competitive deposit pricing environment, and tighter credit spreads on higher quality loans.

Other financial highlights

--  Income from the sale of loans totaled $28,000, compared to $58,000 for
    the same quarter last year, and $82,000 on a linked quarter basis.
    Expectations are higher for the fourth quarter based upon scheduled sales.
--  Our efficiency ratio improved to 62 percent in the current quarter due
    to one-time valuation adjustments to both short and long-term variable
    compensation plans.
    

About Capital Pacific Bancorp

Capital Pacific Bancorp (OTCBB: CPBO) is the parent company of Capital Pacific Bank, which serves businesses, professionals and nonprofit organizations with comprehensive banking solutions and an elite level of service. Headquartered in the Fox Tower in downtown Portland, the bank's full array of products and services are delivered through a strategic combination of highly experienced client service officers and the innovative application of technology. For more information on Capital Pacific Bancorp, past press releases, or to see a copy of our 2007 third quarter letter to shareholders, 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 fluctuations in interest rates, and economic conditions, and the impact those 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.

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

Condensed Balance Sheets         As of Sept. 30, 2007  As of Dec. 31, 2006
                                 ====================  ===================
Cash and due from banks          $              2,130  $             2,420
Investments                                     1,849                3,870
Loans:
Commercial                                     62,906               55,403
Real estate                                    60,920               49,423
Other                                           4,332                1,640
                                 --------------------  -------------------
  Total loans                                 128,158              106,466
Loan loss reserve                              (2,311)              (1,280)
                                 --------------------  -------------------
  Total loans, net of loan loss
   reserve                                    125,847              105,186
Other assets                                    1,903                1,927
                                 --------------------  -------------------
  Total assets                   $            131,729  $           113,403
                                 ====================  ===================

Deposits:
Non interest-bearing demand      $             14,222  $            19,188
Interest-bearing demand                        50,607               45,598
Certificates of deposit                        38,843               33,265
                                 --------------------  -------------------
  Total deposits                              103,672               98,051

Other liabilities                              13,781                1,460
Shareholders' equity                           14,276               13,892
                                 --------------------  -------------------
  Total liabilities and
   shareholders' equity          $            131,729  $           113,403
                                 ====================  ===================



Condensed Statements of           For the three months For the three months
 Operations                       ended Sept. 30, 2007 ended Sept. 30, 2006
                                  ==================== ====================
Interest income                   $              2,744 $              2,210
Interest expense                                 1,137                  825
                                  -------------------- --------------------
  Net interest income                            1,607                1,385
Provision for loan losses                          445                  215
                                  -------------------- --------------------
  Net interest income, net of
   provision for loan losses                     1,162                1,170
Deposit fees and other
 non-interest income                               207                  129
Income associated with the sale
 of loans                                           28                   58
Non-interest expense                             1,131                1,177
                                  -------------------- --------------------
  Net income before tax expense                    266                  180
Income tax expense                                  96                   82
                                  -------------------- --------------------
  Net income                      $                170 $                 98
                                  ==================== ====================
  Net income per share, basic     $               0.11 $               0.06
                                  ==================== ====================
  Net income per share, fully
   diluted                        $               0.11 $               0.06
                                  ==================== ====================
Basic average shares outstanding             1,552,048            1,511,178
                                  ==================== ====================
Fully diluted average shares
 outstanding                                 1,555,927            1,577,618
                                  ==================== ====================




Condensed Statements of           For the nine months  For the nine months
 Operations                       ended Sept. 30, 2007 ended Sept. 30, 2006
                                  ==================== ====================
Interest income                   $              7,679 $              5,594
Interest expense                                 3,014                2,002
                                  -------------------- --------------------
  Net interest income                            4,665                3,592
Provision for loan losses                        1,087                  365
                                  -------------------- --------------------
  Net interest income, net of
   provision for loan losses                     3,578                3,227
Deposit fees and other
 non-interest income                               548                  386
Income associated with the sale
 of loans                                          179                  124
Non-interest expense                             3,711                3,441
                                  -------------------- --------------------
  Net income before tax expense                    594                  296
Income tax expense                                 225                  128
                                  -------------------- --------------------
  Net income                      $                369 $                168
                                  ==================== ====================
  Net income per share, basic     $               0.24 $               0.11
                                  ==================== ====================
  Net income per share, fully
   diluted                        $               0.23 $               0.11
                                  ==================== ====================
Basic average shares outstanding             1,551,471            1,511,178
                                  ==================== ====================
Fully diluted average shares
 outstanding                                 1,589,080            1,577,985
                                  ==================== ====================



Performance by Quarter           9/30/07    6/30/07    3/31/07   12/31/06
                                =========  =========  =========  =========

Actual Loans                    $ 128,158  $ 121,468  $ 109,905  $ 106,466
Average Loans                   $ 125,388  $ 113,135  $ 109,208  $ 106,817

Non-performing loans  and loans
 past due 90 days               $   3,029  $   2,121  $     150  $     150
Loan loss reserve as a
 percentage of loans                 1.80%      1.53%      1.19%      1.20%
Loans charged off, net of
 recoveries                     $      (6) $      (6) $      66  $     180

Actual Client and Wholesale
 Deposits                       $ 103,682  $ 105,471  $  91,182  $  98,051
Average Client and Wholesale
 Deposits                       $ 111,607  $  95,295  $  94,584  $  95,662

Actual Client Deposits          $  79,489  $  82,963  $  74,824  $  79,605
Average Client Deposits         $  88,053  $  78,317  $  76,560  $  77,184

Net interest income             $   1,607  $   1,569  $   1,489  $   1,525
Net income before tax expense   $     266  $      10  $     321  $     295
Net income                      $     170  $       8  $     192  $     175
Net income per share, basic     $    0.11  $    0.01  $    0.12  $    0.11
Net income per share, fully
 diluted                        $    0.11  $    0.01  $    0.12  $    0.11

Actual shares outstanding       1,552,178  1,551,178  1,551,178  1,551,178
Book value per share            $    9.20  $    9.08  $    9.08  $    8.96

Return on average equity             4.71%      0.22%      5.53%      5.02%
Return on average assets             0.52%      0.03%      0.68%      0.60%
Net interest margin                  4.96%      5.44%      5.38%      5.38%
Efficiency ratio (1)                   62%        70%        74%        70%

(1) Calculated by dividing non-interest expense by net interest income and
non-interest income.

Contact Information

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