SOURCE: Capital Pacific Bancorp

April 17, 2008 15:00 ET

Capital Pacific Bancorp Posts Profit in First Quarter of 2008

PORTLAND, OR--(Marketwire - April 17, 2008) - Capital Pacific Bancorp (OTCBB: CPBO) reported net income of $225,000 or $0.14 per diluted share in the first quarter of 2008, compared to net income of $192,000 and $0.12 per diluted share in the first quarter last year. The performance reflects the company's return to positive financial performance after reporting a loss in the previous quarter.

"While in the middle of a very difficult economic cycle, net income has returned to levels more in line with historical performance," said Mark Stevenson, CEO of Capital Pacific Bancorp.

Loans and credit quality

As of March 31, 2008, loans totaled $131.0 million, up $2.5 million in the first quarter of 2008 and $21.1 million when compared to the same quarter last year. Loan growth was modest in the first quarter, a period often characterized as being seasonally slow. The company's provision for loan losses dropped to $40,000 in the first quarter, compared to $2.1 million in the preceding quarter.

"Overall asset quality stabilized in the first quarter of 2008," said Stevenson. "We achieved tangible improvement in, or payoff of, certain adversely rated loans; however this improvement was offset to a degree by some level of softness in other loans."

Other credit measures include:

--  At quarter-end, loan loss reserves totaled $2.4 million, or 1.87% of
    total loans, virtually unchanged when compared to the previous quarter.
--  Non-performing assets were also unchanged from the previous quarter at
    $1.4 million, or 1.1% of total loans.  Non-performing assets represent
    construction and land development loans that are 90 days past due and no
    longer accruing interest.  No other loans were 90 days past due.
--  The loan loss reserve as a percentage of non-performing assets was
    178%.
    

Deposits

As of March 31, 2008, client deposits were $87.4 million, down slightly on a linked-quarter basis and up $12.6 million compared to the same quarter last year. Initiative based deposits, or deposits coming from the nonprofit and professional sectors, grew approximately six million in the current quarter. However, this growth was offset by declines in other accounts, some of which were affected by seasonal factors. Client deposits are defined as total deposits excluding brokered or nationally sourced deposits.

Interest margin

The net interest margin declined to 4.77% in the current quarter, down 24 basis points compared to 5.01% in the fourth quarter and 61 basis points compared to the same quarter last year. The decline in margin is the result of the rapid reduction in the federal funds target rate. Approximately half of the company's loans have interest rates that are fully floating and decline as the target rate declines. Further, deposit competition remains intense which places upward pressure on deposit rates.

Other financial highlights

--  Income from the sale of loans totaled $87,000 compared to $70,000 for
    the same quarter last year.  Income from the sale of loans remains a small
    but consistent source of additional revenue for the company.
--  The efficiency ratio increased to 78% in the current quarter compared
    to 74% in the same quarter last year and 66% when compared to the fourth
    quarter of 2007, which included lower than usual incentive compensation
    expense.
    

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 2008 first 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 changes in the financial condition of our borrowers, changes in economic conditions generally, deteriorating asset values caused by changing market conditions, loan losses that exceed our allowance for loan losses, and fluctuations in interest rates 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)
                                                        As of      As of
                                                      March 31,  December
Condensed Balance Sheets                                2008     31, 2007
                                                      ---------  ---------
Cash and due from banks                               $   1,065  $     517
Investments                                               2,135      5,569

Loans:
Commercial                                               59,498     59,023
Real estate                                              62,144     60,913
Other                                                     9,378      8,598
                                                      ---------  ---------
  Total loans                                           131,020    128,534
Loan loss reserve                                        (2,444)    (2,403)
                                                      ---------  ---------
  Total loans, net of loan loss reserve                 128,576    126,131
Other assets                                              2,077      2,341
                                                      ---------  ---------
  Total assets                                        $ 133,853  $ 134,558
                                                      =========  =========

Deposits:
Non interest-bearing demand                           $  20,885  $  19,531
Interest-bearing demand                                  47,187     58,074
Certificates of deposit                                  42,112     35,769
                                                      ---------  ---------
  Total deposits                                        110,184    113,374

Other liabilities                                         8,184      7,697
Shareholders' equity                                     15,485     13,487
                                                      ---------  ---------
  Total liabilities and shareholders' equity          $ 133,853  $ 134,558
                                                      =========  =========


                                            For the three   For the three
                                            months ending   months ending
Condensed Statements of Operations          March 31, 2008  March 31, 2007
                                            --------------- ---------------
Interest income                             $         2,468 $         2,396
Interest expense                                        918             907
                                            --------------- ---------------
  Net interest income                                 1,550           1,489
Provision for loan losses                                40              99
                                            --------------- ---------------
  Net interest income, net of provision for
   loan losses                                        1,510           1,390
Deposit fees and other non-interest income              227             167
Income associated with the sale of loans                 87              70
Non-interest expense                                  1,462           1,306
                                            --------------- ---------------
  Net income before tax expense                         362             321
Income tax expense                                      137             129
                                            --------------- ---------------
  Net income                                $           225 $           192
                                            =============== ===============
  Net income per share, basic               $          0.14 $          0.12
                                            =============== ===============
  Net income per share, fully diluted       $          0.14 $          0.12
                                            =============== ===============

Basic average shares outstanding                  1,582,396       1,551,178
                                            =============== ===============
Fully diluted average shares outstanding          1,582,418       1,612,160
                                            =============== ===============


Performance by Quarter           3/31/08   12/31/07    9/30/07    6/30/07
                                ---------  ---------  ---------  ---------

Actual Loans                    $ 131,020  $ 128,534  $ 128,158  $ 121,468
Average Loans                   $ 130,393  $ 131,692  $ 125,388  $ 113,135

Non-performing loans  and loans
 past due 90 days               $   1,375  $   1,375  $   3,029  $   2,121
Loan loss reserve as a
 percentage of loans                 1.87%      1.87%      1.80%      1.53%
Loans charged off, net of
 recoveries                     $      (2) $   2,012  $      (6) $      (6)

Actual Client and Wholesale
 Deposits                       $ 110,184  $ 113,374  $ 103,682  $ 105,471
Average Client and Wholesale
 Deposits                       $ 112,013  $ 110,641  $ 111,607  $  95,295

Actual Client Deposits          $  87,399  $  88,604  $  79,489  $  82,963
Average Client Deposits         $  87,840  $  88,056  $  88,053  $  78,317

Net interest income             $   1,550  $   1,670  $   1,607  $   1,569
Net income (loss) before tax
 expense                        $     362  $  (1,438) $     266  $      10
Net income (loss)               $     225  $    (855) $     170  $       8
Net income (loss) per share,
 basic                          $    0.14  $   (0.55) $    0.11  $    0.01
Net income (loss) per share,
 fully diluted                  $    0.14  $   (0.55) $    0.11  $    0.01

Actual shares outstanding       1,748,594  1,552,178  1,552,178  1,551,178
Book value per share            $    8.86  $    8.69  $    9.20  $    9.08

Return on average equity             6.59%    -23.31%      4.71%      0.22%
Return on average assets             0.67%     -2.49%      0.52%      0.03%
Net interest margin (2)              4.77%      5.01%      5.00%      5.44%
Efficiency ratio (1)                   78%        66%        62%        70%

(1) Calculated by dividing non-interest expense by net interest income and
     non-interest income.
(2) Calculated on a tax equivalent basis

Contact Information

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