SOURCE: Capital Pacific Bancorp

October 21, 2010 12:42 ET

Capital Pacific Bancorp Announces Results for Third Quarter 2010

PORTLAND, OR--(Marketwire - October 21, 2010) - Capital Pacific Bancorp (OTCBB: CPBO) ("the Company") reported net income of $204,000 for the three months ended September 30, 2010. Including the effect of preferred stock dividends, the Company reported net income to common shareholders of $139,000, or $0.08 per diluted share for the same period.

"Net income increased by $169,000 when compared to the second quarter of the current year," said Mark Stevenson, CEO and President of Capital Pacific Bancorp. "The largest contributor to our improved performance was a decline in credit costs related to managing and reducing non-performing assets. Outside of credit costs, our financial performance progressed with net interest income up for the fourth quarter in a row."

Deposits

At September 30, 2010, average client deposits totaled $153.7 million, an increase of $5.4 million when compared to the second quarter of 2010. On a year to date basis, average client deposits have grown $26.5 million, an increase of 20.9%. "Steady growth in client deposits is encouraging, and we continue to vigorously pursue new client acquisition, both within our established specialty niche sectors of nonprofits, professional services firms and independent schools and in new market categories such as healthcare practices," said Stevenson.

Loans

At September 30, 2010, average loans totaled $131.1 million, down slightly when compared to the prior quarter and up $1.5 million for the year. "Local borrowers continue to be highly cautious and loan demand remains sluggish despite very low interest rates," said Stevenson. "As a result, the Company's balance sheet is liquid and includes cash and investments available to lend should demand increase."

Credit quality

At September 30, 2010, the Company's reserve for loan losses totaled $3.1 million, or 2.38% of total loans compared to $3.2 million or 2.42% of total loans as of June 30, 2010. The Company recognized $165,000 in provision expense in the third quarter of 2010. This is an increase when compared to the prior quarter when provision expense totaled $80,000.

"Economic conditions remain challenging, accounting for the small uptick in provision expense," said Stevenson. "Although we have yet to fully resolve all of our problem loans, there are several loans that have signs of stabilization and we believe our efforts have instilled a sense of stability within the loan portfolio."

Non-performing assets

At September 30, 2010, non-performing assets totaled $9.7 million, or 5.43% of total assets. 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 September 30, 2010, there were no loans 90 days past due and still
    accruing interest.

--  At September 30, 2010, the Company had $7.1 million in loans on
    non-accrual status, up $779,000 when compared to the prior quarter on
    a net basis.  During the quarter, the Company placed $1.8 million in
    loans on non-accrual status, charged-off loans totaling $268,000,
    received $212,000 in payments and transferred $507,000 to other real
    estate owned. Loans newly placed on non-accrual were primarily
    attributable to one borrower paying under restructured terms.
    The loans are secured by two residential properties.

--  At September 30, 2010, the Company had $2.5 million in other real
    estate owned, down $303,000 when compared to the prior quarter.
    During the quarter, the Company sold two pieces of commercial property
    with a net book value of $656,000.  In addition, the Company
    recognized market value impairments on remaining other real estate
    owned of $155,000.

Non-performing assets as of September 30, 2010 by sector were as follows:

                                 No. of
                              Borrowers
                                     or                    Commercial
                             Properties     Commercial    Real Estate
                           ------------   ------------   ------------
Non-performing loans                 13   $  2,638,000   $  2,708,000
Other real estate owned               5   $          -   $          -


                                   Land
                            Development
                                    and
                           Construction    Residential          Total
                           ------------   ------------   ------------
Non-performing loans       $          -   $  1,812,000   $  7,158,000
Other real estate owned    $  2,514,000   $          -   $  2,514,000

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 14.0% at September 30, 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 $4.2 million in preferred stock outstanding under this program. Preferred dividends total $194,000 in 2010.

Net interest income

Net interest income (or interest income less interest expense) increased $148,000, or 9% in the three months ended September 30, 2010 when compared to the prior quarter. The increase is due to movement of funds previously held in cash into higher yielding investment grade securities and declines in the rates paid on interest-bearing deposits. In addition, the Company recognized one-time fee income totaling $44,000 tied to the early prepayment of loans.

Non-interest expense

Non-interest expense in the third quarter of 2010 totaled $1.6 million, down $279,000 or 15% when compared to the prior quarter. The decrease is due to lower professional costs associated with non-performing assets and losses on the impairment or sale of other real estate owned ("work-out costs") which totaled $264,000 in the third quarter of 2010. Work-out costs are believed to have peaked in the first quarter of 2010 when work-out costs totaled $608,000 and expected to level out at current quarter results.

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       As of
Condensed Consolidated Balance Sheets     9/30/2010   12/31/2009  % change
                                          ----------  ----------  --------
Cash and due from banks                   $   18,520  $   58,534       -68%
Time certificates of deposits at other
 banks                                         8,135       9,771       -17%
Investments                                   19,742         885      2131%
Loans:
Construction and land development             10,947      21,043       -48%
Real estate                                   74,825      62,932        19%
Commercial                                    39,483      37,342         6%
Other                                          3,330       3,407        -2%
                                          ----------  ----------
  Total loans                                128,585     124,724         3%
Loan loss reserve                             (3,059)     (3,325)       -8%
                                          ----------  ----------
  Total loans, net of loan loss reserve      125,526     121,399         3%
Other real estate owned                        2,514       2,092        20%
Other assets                                   3,556       4,049       -12%
                                          ----------  ----------
  Total assets                            $  177,993  $  196,730       -10%
                                          ==========  ==========

Deposits:
Non interest-bearing demand               $   30,730  $   37,282       -18%
Interest-bearing demand                       82,232      75,695         9%
Certificates of deposit                       36,727      43,111       -15%
                                          ----------  ----------
  Total client deposits                      149,689     156,088        -4%

Brokered certificates of deposit               5,365      17,647       -70%
                                          ----------  ----------
  Total deposits                             155,054     173,735       -11%

Other liabilities                              4,120       4,256        -3%
Shareholders' equity                          18,819      18,739         0%
                                          ----------  ----------
  Total liabilities and shareholders'
   equity                                 $  177,993  $  196,730       -10%
                                          ==========  ==========




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

                        For the    For the    For the
                         three      three      three                 Year
Condensed Consolidated   months     months     months   Sequential   over
 Statements of           ending     ending     ending   quarter %   year %
 Operations            9/30/2010  6/30/2010  9/30/2009    change    change
                       ---------  ---------  ---------  ----------  ------
Interest income        $   2,120  $   2,033  $   1,984           4%      7%
Interest expense             335        396        447         -15%    -25%
                       ---------  ---------  ---------
  Net interest income      1,785      1,637      1,537           9%     16%
                       ---------  ---------  ---------
Provision for loan
 losses                      165         80      3,755         106%    -96%
                       ---------  ---------  ---------
  Net interest income,
   net of provision
   for loan losses         1,620      1,557     (2,218)          4%    173%
                       ---------  ---------  ---------
Deposit fees and other
 non-interest income         178        222        220         -20%    -19%
Income associated with
 the sale of loans             -        146         26        -100%   -100%
Net gain on the sale
 of other real estate
 owned                        66          -        453           -     -85%
                       ---------  ---------  ---------
  Total non-interest
   income                    244        368        699         -34%    -65%
                       ---------  ---------  ---------
Salaries and benefits        695        722        607          -4%     14%
Occupancy                    154        150        148           3%      4%
Professional and other
 costs associated with
 non-performing assets        93        191        133         -51%    -30%
Net loss on sale or
 impairment of other
 real estate owned           171        293        652         -42%    -74%
FDIC assessments             122        138         53         -12%    130%
Other non-interest
 expense                     347        367        449          -5%    -23%
                       ---------  ---------  ---------
  Total non-interest
   expense                 1,582      1,861      2,042         -15%    -23%
                       ---------  ---------  ---------
  Net income (loss)
   before tax expense
   (benefit)                 282         64     (3,561)        341%     nm
                       ---------  ---------  ---------
Income tax expense
 (benefit)                    78         29     (1,517)        169%     nm
                       ---------  ---------  ---------
  Net income (loss)    $     204  $      35  $  (2,044)        483%     nm
                       =========  =========  =========
Preferred stock
 dividends                   (65)       (65)       (65)          0%      0%
                       ---------  ---------  ---------
  Net income (loss)
   available to common
   shareholders        $     139  $     (30) $  (2,109)         nm      nm
                       =========  =========  =========
  Earnings (loss) per
   common share, basic
   (2)                 $    0.08  $   (0.02) $   (1.19)         nm      nm
                       =========  =========  =========
  Earnings (loss) per
   common share, fully
   diluted (2)         $    0.08  $   (0.02) $   (1.19)         nm      nm
                       =========  =========  =========
Basic average common
 shares outstanding    1,771,911  1,771,911  1,771,911
                       =========  =========  =========
Fully diluted average
 common shares
 outstanding           1,771,911  1,771,911  1,771,911
                       =========  =========  =========




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

                                            For the      For the     Year
                                          nine months  nine months   over
Condensed Consolidated Statements of        ending       ending     year %
 Operations                                 9/30/10      9/30/09    change
                                          -----------  ----------- -------
Interest income                           $     6,058  $     5,891       3%
Interest expense                                1,139        1,375     -17%
                                          -----------  -----------
  Net interest income                           4,919        4,516       9%
                                          -----------  -----------
Provision for loan losses                         225        4,442      nm
                                          -----------  -----------
  Net interest income, net of provision
   for loan losses                              4,694           74      nm
                                          -----------  -----------
Deposit fees and other non-interest
 income                                           599          631      -5%
Income associated with the sale of loans          146          205     -29%
Net gain on the sale of other real estate
 owned                                             66          453     -85%
                                          -----------  -----------
  Total non-interest income                       811        1,289     -37%
                                          -----------  -----------
Salaries and benefits                           2,120        1,959       8%
Occupancy                                         445          429       4%
Professional and other costs associated
 with non-performing assets                       615          247     149%
Net loss on sale or impairment of other
 real estate owned                                742          747      -1%
FDIC assessments                                  443          223      99%
Other non-interest expense                      1,117        1,146      -3%
                                          -----------  -----------
  Total non-interest expense                    5,482        4,751      15%
                                          -----------  -----------
  Net income (loss) before tax expense
   (benefit)                                       23       (3,388)     nm
                                          -----------  -----------
Income tax benefit                                (85)      (1,458)     nm
                                          -----------  -----------
  Net income (loss)                       $       108  $    (1,930)     nm
                                          ===========  ===========
Preferred stock dividends                        (194)        (194)      0%
                                          -----------  -----------
  Net loss available to common
   shareholders                           $       (86) $    (2,124)     nm
                                          ===========  ===========
  Loss per common share, basic (2)        $     (0.05) $     (1.20)     nm
                                          ===========  ===========
  Loss per common share, fully diluted
   (2)                                    $     (0.05) $     (1.20)     nm
                                          ===========  ===========
Basic average common shares outstanding     1,771,911    1,765,419
                                          ===========  ===========
Fully diluted average common shares
 outstanding                                1,771,911    1,765,419
                                          ===========  ===========




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

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

Actual loans, gross  $ 128,585  $ 130,353  $ 130,271  $ 124,724  $ 133,362
Average loans, gross $ 131,158  $ 131,527  $ 123,984  $ 129,650  $ 133,460

Loans past due 30-89
 days (4)            $     590  $      83  $       -  $       -  $      52
Loans past due 90
 days or more (4)    $       -  $       -  $       -  $       -  $       -
Loans on non-accrual
 status              $   7,158  $   6,379  $   7,856  $   7,782  $   6,707
Other real estate
 owned               $   2,514  $   2,817  $   2,614  $   2,092  $   1,586
Total non-performing
 assets              $   9,672  $   9,196  $  10,470  $   9,874  $   8,293
Total non-performing
 assets as a
 percentage of total
 assets                   5.43%      5.12%      5.65%      5.02%      5.15%

Loan loss reserve    $   3,059  $   3,159  $   3,015  $   3,325  $   3,739
Loans charged off,
 net of recoveries /
 (recoveries, net of
 loans charged off)  $     265  $     (64) $     290  $     621  $   2,588
Loan loss reserve as
 a percentage of
 loans                    2.38%      2.42%      2.31%      2.67%      2.80%
Loan loss reserve as
 a percentage of
 non-performing
 loans                      43%        49%        38%        43%        56%

Actual client
 deposits            $ 149,689  $ 146,955  $ 148,516  $ 156,088  $ 119,218
Average client
 deposits            $ 153,732  $ 148,337  $ 140,915  $ 127,193  $ 108,662

Net income (loss)    $     204  $      35  $    (130) $     226  $  (2,044)
Net income (loss)
 available to common
 shareholders (1)    $     139  $     (30) $    (195) $     161  $  (2,109)
Net earnings (loss)
 per common share,
 basic (1)           $    0.08  $   (0.02) $   (0.11) $    0.09  $   (1.19)
Net earnings (loss)
 per common share,
 fully diluted (1)   $    0.08  $   (0.02) $   (0.11) $    0.09  $   (1.19)

Actual common shares
 outstanding         1,771,911  1,771,911  1,771,911  1,771,911  1,771,911
Book value per
 common share        $    8.32  $    8.22  $    8.18  $    8.30  $    8.20

Return on average
 common equity (1)        3.73%     -0.83%     -5.36%     -4.82%    -52.60%
Return on average
 assets                   0.44%      0.08%     -0.29%      0.57%     -5.26%
Net interest margin
 (2)                      4.17%      3.84%      3.65%      3.64%      4.21%
Efficiency ratio (3)        78%        93%       120%        75%        91%


(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

nm = not meaningful

Contact Information

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