SOURCE: Capital Pacific Bancorp

January 26, 2011 12:57 ET

Capital Pacific Bancorp Posts Positive Results for 2010

PORTLAND, OR--(Marketwire - January 26, 2011) - Capital Pacific Bancorp (OTCBB: CPBO) ("the Company") reported net income of $134,000 for the three months ended December 31, 2010. Including the effect of preferred stock dividends, the Company reported net income to common shareholders of $69,000, or $0.04 per diluted share for the same period.

For the year, the Company reported net income of $242,000. Including preferred stock dividends, the Company incurred a net loss to common shareholders of $16,000, or $.01 per share.

"This year marked significant improvement in our financial performance over the prior year," said Mark Stevenson, CEO and President of Capital Pacific Bancorp. "We're pleased that 2010 was a profitable year, despite the bleak economy. We are confident that this is the first milestone of many as we begin 2011 with a disciplined plan to improve asset quality and grow our Company."

Deposits

For the quarter ended December 31, 2010, average client deposits totaled $147.4 million, a decline of $6.3 million when compared to the third quarter of 2010. Total deposits tapered off toward the end of 2010 due to external factors that impacted a handful of larger clients, but have since rebounded.

Compared to the same quarter last year, average client deposits have grown $20.2 million, an increase of 16.9%. "We are continuing to execute our focused strategy to grow deposits and vigorously pursue new client acquisition," said Stevenson.

Loans

For the quarter ended December 31, 2010, average loans totaled $127.6 million, down $3.6 million when compared to the prior quarter and down $2.0 million when compared to the same quarter last year. "We've been successful in moving problem loans out of the portfolio, which influenced loan totals in 2010," said Stevenson. "Beyond that, small business loan demand remains low."

Non-performing assets

At December 31, 2010, non-performing assets totaled $9.9 million, or 5.81% of total assets. Non-performing assets are defined as loans 90 days past due and still accruing interest, loans on non-accrual status and other real estate owned as follows:

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

--  At December 31, 2010, the Company had $3.0 million in loans on
    non-accrual status, down $4.2 million when compared to the prior
    quarter on a net basis.  During the quarter, the Company placed
    $710,000 in loans on non-accrual status, charged-off loans totaling
    $371,000, received $32,000 in payments and transferred $4.5 million to
    other real estate owned. Sixty-nine percent of the loans on non-accrual
    status are fully current.  Loans on non-accrual status are evaluated
    for potential upgrade when the borrower has a demonstrated history of
    performance and the risk of loss is minimal.

--  At December 31, 2010, the Company had $6.9 million in other real estate
    owned, up $4.4 million when compared to the prior quarter. $3.8 million
    of total other real estate owned, or 55%, represents commercial and
    residential real estate supported with income producing cash flow and
    the outlook for disposition is favorable.

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


             No. of                         Land
          Borrowers           Commercial Development
                 or             Real         and
         Properties Commercial  Estate  Construction Residential   Total
           -------- ---------- ---------- ---------- ----------- ----------
Non-
 performing
 loans           10 $1,607,000 $  301,000 $        - $ 1,067,000 $2,975,000
Other real
 estate
 owned           15 $        - $2,262,000 $1,796,000 $ 2,835,000 $6,893,000


Credit quality

At December 31, 2010, the Company's reserve for loan losses totaled $2.9 million, or 2.33% of total loans compared to $3.0 million or 2.38% of total loans as of September 30, 2010. The Company recognized $209,000 in provision expense in the fourth quarter of 2010. This is a modest increase when compared to the prior quarter's provision expense of $165,000 and is the result of the soft real estate market.

"We believe our reserve for loan losses to be appropriate yet conservative," said Stevenson, "given that non-performing loans as a percentage of total loans has declined from 6.2% at December 31, 2009 to 2.4% at December 31, 2010." The Company completed its most recent regulatory examination in January 2011.

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 13.8% at December 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 $4.2 million in preferred stock outstanding under this program. Preferred dividends totaled $258,000 in 2010.

Net interest income

Net interest income (interest income less interest expense) declined $71,000, or 4% in the three months ended December 31, 2010 when compared to the prior quarter. The decline is due to lower average loan balances.

Non-interest expense

Non-interest expense in the fourth quarter of 2010 totaled $1.7 million, up slightly when compared to the prior quarter. The increase is due to a small uptick in general operating expenses. Professional costs associated with non-performing assets and losses on the impairment or sale of other real estate owned ("work-out costs") totaled $298,000 in the fourth quarter of 2010 compared with $264,000 in the third quarter of 2010. Work-out costs increased during the quarter as a result of the significant migration of non-performing loans to other real estate owned.

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)

Condensed Consolidated Balance Sheets
                                           Year over
                       As of      As of      year %
                    12/31/2010 12/31/2009    change
                     ---------  ---------  ---------
Cash and due from
 banks               $   8,758  $  58,534        -85%
Time certificates of
 deposits at other
 banks                   7,321      9,771        -25%
Investments             21,565        885         nm
Loans:
Construction and
 land development       10,273     21,043        -51%
Real estate             75,210     62,932         20%
Commercial              39,095     37,342          5%
Other                      243      3,407        -93%
                     ---------  ---------
  Total loans          124,821    124,724          0%
Loan loss reserve       (2,905)    (3,325)       -13%
                     ---------  ---------
  Total loans, net of
   loan loss reserve   121,916    121,399          0%
Other real estate
 owned                   6,894      2,092        230%
Other assets             3,409      4,049        -16%
                     ---------  ---------
  Total assets       $ 169,863  $ 196,730        -14%
                     =========  =========

Deposits:
Non interest-bearing
 demand              $  38,500  $  37,282          3%
Interest-bearing
 demand                 64,573     75,695        -15%
Certificates of
 deposit                35,634     43,111        -17%
                     ---------  ---------
   Total client
    deposits           138,707    156,088        -11%

Brokered certificates
 of deposit              5,369     17,647        -70%
                     ---------  ---------
  Total deposits       144,076    173,735        -17%

Other liabilities        6,947      4,256         63%
Shareholders' equity    18,840     18,739          1%
                     ---------  ---------
  Total liabilities
   and shareholders'
   equity            $ 169,863  $ 196,730        -14%
                     =========  =========

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

Condensed Consolidated Statements
 of Operations
                     For the     For the    For the
                      three       three      three
                      months      months     months  Sequential  Year over
                      ending      ending     ending   quarter %    year %
                    12/31/2010  9/30/2010  12/31/2009  change      change
                     ---------  ---------  ---------  ---------  ---------
Interest income      $   1,996  $   2,120  $   1,907         -6%         5%
Interest expense           282        335        444        -16%       -36%
                     ---------  ---------  ---------
  Net interest
   income                1,714      1,785      1,463         -4%        17%
                     ---------  ---------  ---------
Provision for loan
 losses                    209        165        207         27%         1%
                     ---------  ---------  ---------
  Net interest
   income, net of
   provision for
   loan losses           1,505      1,620      1,256         -7%        20%
                     ---------  ---------  ---------
Deposit fees and
 other non-interest
 income                    201        178        190         13%         6%
Income associated
 with the sale of
 loans                      36          -        195         nm        -82%
Net gain on the sale
 of other real
 estate owned                -         66          -         nm         nm
                     ---------  ---------  ---------
  Total non-interest
   income                  237        244        385         -3%       -38%
                     ---------  ---------  ---------
Salaries and benefits      673        695        707         -3%        -5%
Occupancy                  149        154        143         -3%         4%
Professional and other
 costs associated with
 non-performing
 assets                    188         93         90        102%       109%
Net loss on sale or
 impairment of other
 real estate owned         110        171         25        -36%        nm
FDIC assessments           121        122         65         -1%        86%
Other non-interest
 expense                   414        347        362         19%        14%
                     ---------  ---------  ---------
  Total non-interest
   expense               1,655      1,582      1,392          5%        19%
                     ---------  ---------  ---------
  Net income before
   tax expense
   (benefit)                87        282        249        -69%       -65%
                     ---------  ---------  ---------
Income tax expense
 (benefit)                 (47)        78         24       -160%      -296%
                     ---------  ---------  ---------
  Net income         $     134  $     204  $     225        -34%       -40%
                     =========  =========  =========
Preferred stock
 dividends                 (65)       (65)       (65)         0%         0%
                     ---------  ---------  ---------
  Net income available
   to common
   shareholders      $      69  $     139  $     160        -50%       -57%
                     =========  =========  =========
  Earnings per common
   share, basic (1)  $    0.04  $    0.08  $    0.09        -49%       -56%
                     =========  =========  =========
  Earnings per common
   share, fully
   diluted (1)       $    0.04  $    0.08  $    0.09        -49%       -56%
                     =========  =========  =========
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  1,772,374
                     =========  =========  =========



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

Condensed Consolidated Statements
 of Operations
                      For the    For the
                       year       year     Year over
                      ending     ending       year
                    12/31/2010 12/31/2009   % change
                     ---------  ---------  ---------
Interest income      $   8,054  $   7,798          3%
Interest expense         1,421      1,819        -22%
                     ---------  ---------
  Net interest income    6,633      5,979         11%
                     ---------  ---------
Provision for loan
 losses                    434      4,649         nm
                     ---------  ---------
  Net interest income,
   net of provision
   for loan losses       6,199      1,330         nm
                     ---------  ---------
Deposit fees and
 other non-interest
 income                    800      1,275        -37%
Income associated
 with the sale of
 loans                     182        400        -55%
Net gain on the sale
 of other real
 estate owned               66          -         nm
                     ---------  ---------
  Total non-interest
   income                1,048      1,675        -37%
                     ---------  ---------
Salaries and benefits    2,793      2,665          5%
Occupancy                  594        572          4%
Professional and other
 costs associated with
 non-performing assets     802        339        137%
Net loss on sale or
 impairment of other
 real estate owned         853        771         11%
FDIC assessments           563        288         95%
Other non-interest
 expense                 1,532      1,509          2%
                     ---------  ---------
  Total non-interest
   expense               7,137      6,144         16%
                     ---------  ---------
  Net income (loss)
   before tax expense
   (benefit)               110     (3,139)        nm
                     ---------  ---------
Income tax benefit        (132)    (1,434)        nm
                     ---------  ---------
  Net income (loss)  $     242  $  (1,705)        nm
                     =========  =========
Preferred stock
 dividends                (258)      (258)         0%
                     ---------  ---------
  Net loss to common
   shareholders      $     (16) $  (1,963)        nm
                     =========  =========
  Net loss per common
   share, basic (1)  $   (0.01) $   (1.11)        nm
                     =========  =========
  Net loss per common
   share, fully
   diluted (1)       $   (0.01) $   (1.11)        nm
                     =========  =========
Basic average common
 shares outstanding  1,771,911  1,767,055
                     =========  =========
Fully diluted average
 common shares
 outstanding         1,771,911  1,767,055
                     =========  =========



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

Performance by Quarter

                      12/31/10   9/30/10    6/30/10    3/31/10    12/31/09
                     ---------  ---------  ---------  ---------  ---------
Actual loans, gross  $ 124,821  $ 128,585  $ 130,353  $ 130,271  $ 124,724
Average loans, gross $ 127,605  $ 131,158  $ 131,527  $ 123,984  $ 129,650

Loans past due 30-89
 days (4)            $      83  $     590  $      83  $       -  $       -
Loans past due 90
 days or more (4)    $       -  $       -  $       -  $       -  $       -
Loans on non-accrual
 status              $   2,975  $   7,158  $   6,379  $   7,856  $   7,782
Other real estate
 owned               $   6,893  $   2,514  $   2,817  $   2,614  $   2,092
Total non-performing
 assets              $   9,868  $   9,672  $   9,196  $  10,470  $   9,874
Total non-performing
 assets as a
 percentage of total
 assets                   5.81%      5.69%      5.12%      5.65%      5.02%

Loan loss reserve    $   2,905  $   3,059  $   3,159  $   3,015  $   3,325
Loans charged off,
 net of recoveries /
 (recoveries, net of
 loans charged off)  $     362  $     265  $     (64) $     290  $     621
Loan loss reserve as
 a percentage of loans    2.33%      2.38%      2.42%      2.31%      2.67%
Loan loss reserve as
 a percentage of
 non-performing loans       97%        43%        49%        38%        43%

Actual client
 deposits            $ 138,707  $ 149,689  $ 146,955  $ 148,516  $ 156,088
Average client
 deposits            $ 147,422  $ 153,732  $ 148,337  $ 140,915  $ 127,193

Net income (loss)    $     134  $     204  $      34  $    (130) $     225
Net income (loss)
 available to common
 shareholders (1)    $      69  $     139  $     (30) $    (194) $     160
Net earnings (loss)
 per common share,
 basic (1)           $    0.04  $    0.08  $   (0.02) $   (0.11) $    0.09
Net earnings (loss)
 per common share,
 fully diluted (1)   $    0.04  $    0.08  $   (0.02) $   (0.11) $    0.09

Actual common shares
 outstanding         1,771,911  1,771,911  1,771,911  1,771,911  1,771,911
Book value per
 common share        $    8.33  $    8.32  $    8.22  $    8.18  $    8.29

Return on average
 common equity (1)        1.87%      3.73%     -0.83%     -5.36%      4.37%
Return on average
 assets                   0.30%      0.44%      0.08%     -0.29%      0.53%
Net interest margin (2)   4.14%      4.17%      3.84%      3.65%      3.64%
Efficiency ratio (3)        85%        78%        93%       120%        76%


(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