SOURCE: Capital Pacific Bancorp

January 29, 2008 17:30 ET

Capital Pacific Bancorp Reports 2007 Fourth Quarter Results

PORTLAND, OR--(Marketwire - January 29, 2008) - Capital Pacific Bancorp (OTCBB: CPBO) reported a net loss of $855,000 or $0.55 per diluted share in the fourth quarter of 2007, compared to net income of $175,000 and $0.11 per diluted share in the fourth quarter last year. For the full year, the Company reported a net loss of $486,000 million, or $0.31 per diluted share, compared to net income of $342,000, or $0.23 per diluted share, for the prior year. As announced on December 28, 2007, the Company wrote off an unsecured two million dollar non-performing loan in the fourth quarter, for which the Company had previously set aside $500,000 in loan loss reserves. "While our 2007 performance was marred by this write-off, we anticipate a return to more customary profit levels in future periods," said Mark Stevenson, CEO of Capital Pacific Bancorp.

Loans and credit quality

As of December 31, 2007, loans totaled $128 million, up $22 million or 20.7% compared to a year ago and essentially flat on a linked-quarter basis. The fourth quarter is seasonally slower than other times of the year, and new production of $29.3 million was offset by maturities and payments.

The Company's provision for loan losses totaled $2.1 million for the fourth quarter, including $1.5 million related to the above-mentioned write-off. The remaining provision represents additional reserves set aside in response to a slowing economy. "While economic conditions have clearly heightened the level of risk in our loan portfolio, our credit measurements are solid, we recently completed a satisfactory independent loan review, and we have taken conservative steps to address the possibility of further deterioration," said Stevenson.

Other credit measures include:

--  At year-end, loan loss reserves totaled $2.4 million, or 1.87% of
    total loans, compared to 1.20 % of total loans at the end of 2006.
--  Non-performing assets were $1.4 million, or 1.1% of total loans, at
    year-end, up from $150,000 in the prior year.  At the end of 2007, 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.  Loans past due 30 days were a negligible .04% of total
    loans.
--  The loan loss reserve as a percentage of non-performing assets was
    175%.
    

Deposits

As of December 31, 2007, client deposits were $89 million, up $9 million or 11% compared to both a year ago and on a linked-quarter basis. The growth was the result of seasonal increases in existing accounts and new business associated with our strategic focus on deposit-oriented sectors. Client deposits are defined as total deposits excluding brokered or nationally sourced deposits.

Interest margin

The net interest margin of 5.01% was essentially unchanged when compared to the previous quarter, in part due to unusually high loan fees in the fourth quarter. Excluding loan fees, the interest margin in the fourth quarter was 4.46%, down 14 basis points when compared to the previous quarter and 59 basis points when compared to the same quarter last year. The decline in margin is the result of the Federal Reserve's action to reduce short term market rates as well as the effect of interest forgone on non-performing loans and a more competitive deposit pricing environment.

Other financial highlights

--  Income from the sale of loans totaled $112,000 compared to $137,000
    for the same quarter last year.  Income from loan sales represents a small
    but consistent source of additional revenue for the company.
--  The efficiency ratio was 66% in the current quarter compared to 70% in
    the same quarter last year and up only slightly when compared to the
    previous quarter.
    

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, our pre-release on December 28, 2007, or to see a copy of our 2007 fourth 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 Dec. 31,  As of Dec. 31,
Condensed Balance Sheets                         2007            2006
                                            ==============  ==============
Cash and due from banks                     $          517  $        2,420
Investments                                          5,569           3,870
Loans:
Commercial                                          59,023          55,403
Real estate                                         60,913          49,423
Other                                                8,598           1,640
                                            --------------  --------------
   Total loans                                     128,534         106,466
Loan loss reserve                                   (2,403)         (1,280)
                                            --------------  --------------
   Total loans, net of loan loss reserve           126,131         105,186
Other assets                                         2,341           1,927
                                            --------------  --------------
   Total assets                             $      134,558  $      113,403
                                            ==============  ==============

Deposits:
Non interest-bearing demand                 $       19,531  $       19,188
Interest-bearing demand                             58,074          45,598
Certificates of deposit                             35,769          33,265
                                            --------------  --------------
   Total deposits                                  113,374          98,051

Other liabilities                                    7,697           1,460
Shareholders' equity                                13,487          13,892
                                            --------------  --------------
   Total liabilities and shareholders'
    equity                                  $      134,558  $      113,403
                                            ==============  ==============

Condensed Statements of Operations           For the three   For the three
                                              months ended    months ended
                                             Dec. 31, 2007   Dec. 31, 2006
                                            ==============  ==============
Interest income                             $        2,797  $        2,452
Interest expense                                     1,127             927
                                            --------------  --------------
   Net interest income                               1,670           1,525
Provision for loan losses                            2,103             229
                                            --------------  --------------
   Net interest income, net of provision
    for loan losses                                   (433)          1,296
Deposit fees and other non-interest income             220             142
Income associated with the sale of loans               112             137
Non-interest expense                                 1,337           1,280
                                            --------------  --------------
   Net income (loss) before tax expense             (1,438)            295
Income tax expense  (benefit)                         (583)            120
                                            --------------  --------------
   Net income (loss)                        $         (855) $          175
                                            ==============  ==============
   Net income (loss) per share, basic       $        (0.55) $         0.11
                                            ==============  ==============
   Net income (loss) per share, fully
    diluted                                 $        (0.55) $         0.11
                                            ==============  ==============
Basic average shares oustanding                  1,552,178       1,542,482
                                            ==============  ==============
Fully diluted average shares outstanding         1,552,178       1,605,873
                                            ==============  ==============

Condensed Statements of Operations           For the year    For the year
                                            ended Dec. 31,  ended Dec. 31,
                                                2007             2006
                                            ==============  ==============
Interest income                             $       10,476  $        8,046
Interest expense                                     4,141           2,930
                                            --------------  --------------
   Net interest income                               6,335           5,116
Provision for loan losses                            3,190             594
                                            --------------  --------------
   Net interest income, net of provision
    for loan losses                                  3,145           4,522
Deposit fees and other non-interest income             768             529
Income associated with the sale of loans               291             260
Non-interest expense                                 5,047           4,721
                                            --------------  --------------
   Net income (loss) before tax expense               (843)            590
Income tax expense  (benefit)                         (357)            248
                                            --------------  --------------
   Net income (loss)                        $         (486) $          342
                                            ==============  ==============
   Net income (loss) per share, basic       $        (0.31) $         0.23
                                            ==============  ==============
   Net income (loss) per share, fully
    diluted                                 $        (0.31) $         0.23
                                            ==============  ==============
Basic average shares oustanding                  1,551,649       1,519,068
                                            ==============  ==============
Fully diluted average shares outstanding         1,551,649       1,583,200
                                            ==============  ==============





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

Actual Loans                    $ 128,534  $ 128,158  $ 121,468  $ 109,905
Average Loans                   $ 131,692  $ 125,388  $ 113,135  $ 109,208

Non-performing loans  and loans
 past due 90 days               $   1,375  $   3,029  $   2,121  $     150
Loan loss reserve as a
 percentage of loans                 1.87%      1.80%      1.53%      1.19%
Loans charged off, net of
 recoveries                     $   2,012  $      (6) $      (6) $      66

Actual Client and Wholesale
 Deposits                       $ 113,375  $ 103,682  $ 105,471  $  91,182
Average Client and Wholesale
 Deposits                       $ 110,641  $ 111,607  $  95,295  $  94,584

Actual Client Deposits          $  88,604  $  79,489  $  82,963  $  74,824
Average Client Deposits         $  88,056  $  88,053  $  78,317  $  76,560

Net interest income             $   1,670  $   1,607  $   1,569  $   1,489
Net income (loss) before tax
 expense                        $  (1,438) $     266  $      10  $     321
Net income (loss)               $    (855) $     170  $       8  $     192
Net income (loss) per share,
 basic                          $   (0.55) $    0.11  $    0.01  $    0.12
Net income (loss) per share,
 fully diluted                  $   (0.55) $    0.11  $    0.01  $    0.12

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

Return on average equity           -23.31%      4.71%      0.22%      5.53%
Return on average assets            -2.49%      0.52%      0.03%      0.68%
Net interest margin                  5.01%      5.00%      5.44%      5.38%
Efficiency ratio (1)                   66%        62%        70%        74%

(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