SOURCE: Capital Pacific Bancorp

January 22, 2015 13:12 ET

Capital Pacific Bancorp Reports Fourth Quarter, 2014 Financial Results

Loan Growth, Strong Asset Quality Results in 22% Year-Over-Year Net Income Growth

PORTLAND, OR--(Marketwired - Jan 22, 2015) - Capital Pacific Bancorp (OTCQB: CPBO) (the Company) today reported financial results for the three months and twelve months ended December 31, 2014. The Company is the parent company of Capital Pacific Bank (the Bank), a business bank focused on serving greater Portland area businesses, nonprofit organizations, private schools and companies committed to sustainable business practices. 

On November 19, 2014, the Company announced that it had entered into a definitive agreement to be acquired by Pacific Continental Corporation. The transaction is expected to close in the first quarter of 2015, subject to required regulatory approvals and approval by the shareholders of the Company. 

Highlights

  • Net income to common shareholders in the fourth quarter of 2014 was $488,000 or $0.18 per common diluted share, down 25% compared with $595,000 or $0.23 per common diluted share in the fourth quarter of 2013.
  • Excluding merger related expenses, net income to common shareholders in the fourth quarter of 2014 was $726,000, or $0.27 per common diluted share, up 19% as compared to the same quarter last year. The growth was the result of a 12% increase in net interest income and stable operating costs as compared to the same quarter last year.
  • For the year, net income to common shareholders totaled $2.2 million, or $0.84 per common diluted share, up 22% compared with the prior year results of $1.8 million, or $0.69 per common diluted share. Excluding merger related expenses, net income to common shareholders totaled $2,504,000, or $0.96 per common diluted share, an increase of 39%.
  • Total loans were $202.7 million at December 31, 2014, an 8% increase from December 31, 2013. 
  • Total client deposits, more than half of which are non-interest bearing or low-interest bearing demand deposits, increased 8% to $223.9 million at December 31, 2014 compared with $207.0 million at December 31, 2013. 
  • Asset quality ratios remained strong, including a decline in the ratio of non-performing assets to total assets to 0.75% at the close of the fourth quarter of 2014.
  • The Company was recognized as one of Oregon's 100 best companies to work for in Oregon by Oregon Business magazine.

"Our achievements in 2014 are significant, and are the result of our ability to provide banking solutions that reflect our core values and are aligned with the needs of our business community," said Mark Stevenson, President and CEO. "Our financial performance includes growth in earnings and a healthy balance sheet, both of which contribute to long-term shareholder value."

Net interest income

Results for the three and twelve months ending December 31, 2014 reflected double-digit growth year-over-year in net interest income. In the fourth quarter of 2014, net interest income was $2.5 million, up 12% from $2.2 million in the fourth quarter of 2013. For the year, net interest income was $9.3 million, an 11% increase compared with $8.4 million in 2013. Growth in net interest income is a result of new business with a growing number of companies in our market.

Non-interest income

Revenue from deposit fees and other non-interest income was $233,000 in the three months ending December 31, 2014, up 4% from the same period last year. For the year, deposit fees and other non-interest income totaled $906,000, up 13% compared with the same period last year, reflecting increases in client account fees and earnings on bank owned life insurance.

Non-interest expense

Total non-interest expense in the three months ending December 31, 2014 was $1.8 million compared with $1.6 million in the fourth quarter of 2013. The increase was the result of $268,000 in merger related expenses. Excluding merger related expenses, non-interest expense was down 2% compared to the same period last year. Non-interest expense for the year 2014 was $6.8 million, up 6% compared with the same period last year. Excluding merger related expenses, non-interest expense totaled $6.5 million, up 1% compared to the same period last year. 

Net interest margin

The Company's net interest margin was 4.15% for the quarter ending December 31, 2014 compared to the immediately prior quarter's net interest margin of 4.00%. The increase was the result of unusually high one-time loan related fees. Excluding the one-time fees, the margin was 4.05%, consistent with historical results, reflecting a stable rate environment and year-over-year increases in the loan portfolio. 

Loans

Total loans at December 31, 2014 were $202.7 million, up 8% compared with $188.0 million at December 31, 2013. Expansion in the Company's loan portfolio was due to growth in owner-occupied commercial real estate loans, equipment financing, acquisition financing and working capital lines of credit, all part of the Bank's commercial lending segment. 

"The stronger economic climate has furthered our loan growth, evident by additional credit needs of our existing clients that are experiencing growth themselves," observed Stevenson. "Our ability to customize solutions that integrate within the overall business of our clients is also driving results."

Deposits

Total client deposits at December 31, 2014 were $223.9 million, up from $207.0 million at December 31, 2013, up 8% for the year. "Our deposit profile is that of a true business bank, with over 59% of client deposits in demand checking accounts and an emphasis in treasury related services," explained Stevenson. 

Asset Quality

Asset quality is strong, with total non-performing assets of only $1.9 million at December 31, 2014 compared with $3.0 million at December 31, 2013. The ratio of total non-performing assets to total assets was 0.75% in the current quarter compared with 1.27% at the end of 2013. Non-performing assets, including performing troubled debt restructurings, were $2.4 million or 0.94% of total assets at December 31, 2014. The Bank's loan loss reserve as a percentage of loans was 1.40% at December 31, 2014, and more than 300% of non-performing loans.

Capital

The Bank remained well-capitalized by accepted regulatory standards as of December 31, 2014, with a tier 1 leverage ratio of 10.3%, a tier 1 capital ratio of 12.4%, and a total risk based capital ratio of 13.6%.

"We closed out 2014 on a high note, with a very positive outlook about our role in the market, the influence we've had upon all of our stakeholders, and our growth prospects in the future," Stevenson concluded. "On behalf of the Board of Directors and our staff, we wish to thank our clients and our community, with an ongoing promise to maintain our focus on building value in the future."

About Capital Pacific Bancorp

Capital Pacific Bancorp (OTCQB: CPBO) is the parent company of Capital Pacific Bank (www.capitalpacificbank.com), which provides comprehensive banking expertise to businesses, professionals and nonprofit organizations. Backed by a tradition of high touch customer service, Capital Pacific Bank delivers a full array of products and services and advanced technology solutions to help businesses meet their financial goals. Capital Pacific Bank is a Certified B Corporation, one of six Certified B Corporation banks in the U.S., reflecting the Company's commitment to meeting rigorous standards for environmental and social responsibility, financial and operational transparency and performance, and community involvement. The Bank serves more than 180 clients in the nonprofit, education and sustainable focused business sectors, which collectively represent approximately 50% of the Bank's total deposits. Capital Pacific Bank itself has a longstanding commitment to sustainability, having received numerous awards and recognition for its social responsibility and sustainable business practices.

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   12/31/2014     12/31/2013     % change  
Cash and due from banks   $ 16,393     $ 17,073     -4 %
Investments     27,461       28,608     -4 %
Loans:                      
Construction     6,035       8,373     -28 %
Real estate     154,237       148,048     4 %
Commercial     42,097       29,058     45 %
Other     358       2,501     -86 %
  Total loans     202,727       187,980     8 %
Loan loss reserve     (2,846 )     (2,986 )   -5 %
  Total loans, net of loan loss reserve     199,881       184,994     8 %
Other real estate owned     1,000       157     nm  
Other assets     8,443       8,292     2 %
  Total assets   $ 253,178     $ 239,124     6 %
                       
Deposits:                      
Non interest-bearing demand deposits   $ 75,928     $ 66,205     15 %
Interest-bearing demand deposits     55,409       43,259     28 %
Money market deposits     56,913       56,499     1 %
Certificates of deposit     35,666       41,032     -13 %
  Total client deposits     223,916       206,995     8 %
                       
Brokered deposits     -       5,000     -100 %
  Total deposits     223,916       211,995     6 %
                       
Other liabilities     2,065       2,298     -10 %
Long-term debt     3,314       3,655     -9 %
Common equity     23,883       21,176     13 %
  Total liabilities and shareholders' equity   $ 253,178     $ 239,124     6 %
                         
                         
                       
Capital Pacific Bancorp            
(unaudited and dollars in thousands, except per share data)            
Condensed Consolidated Income Statements   For the three months ending 12/31/2014   For the three months ending 9/30/2014   For the three months ending 12/31/2013   Sequential quarter % change   Year over year % change  
Interest income   $ 2,624   $ 2,501   $ 2,344   5 % 12 %
Interest expense     161     156     146   3 % 10 %
  Net interest income     2,463     2,345     2,198   5 % 12 %
Provision for loan losses     -     60     -   -100 % 0 %
  Net interest income, net of provision for loan losses     2,463     2,285     2,198   8 % 12 %
Deposit fees and other non-interest income     233     235     224   -1 % 4 %
Salaries and benefits     1,040     1,008     972   3 % 7 %
Occupancy     175     167     175   5 % 0 %
Net expense (recovery) associated with non-performing assets     (52 )   (27 )   28   93 % nm  
Expenses related to merger     268     66     -   nm   nm  
Other non-interest expense     379     431     401   -12 % -5 %
  Total non-interest expense     1,810     1,645     1,576   10 % 15 %
  Net income before tax expense     886     875     846   1 % 5 %
Income tax expense     398     251     251   59 % 59 %
  Net income   $ 488   $ 624   $ 595   -22 % -18 %
  Net income per common share, basic   $ 0.19   $ 0.24   $ 0.24   -21 % -21 %
  Net income per common share, fully diluted   $ 0.18   $ 0.24   $ 0.23   -25 % -22 %
Basic average common shares outstanding     2,564,264     2,562,578     2,532,494          
Fully diluted average common shares outstanding     2,656,635     2,629,561     2,615,756          
                             
                             
                 
Capital Pacific Bancorp            
(unaudited and dollars in thousands, except per share data)            
    For the year   For the year        
Condensed Consolidated Income Statements   ending 12/31/2014   ending 12/31/2013     % change  
Interest income   $ 9,884   $ 8,936     11 %
Interest expense     615     577     7 %
  Net interest income     9,269     8,359     11 %
Provision for loan losses     60     144     -58 %
  Net interest income, net of provision for loan losses     9,209     8,215     12 %
Deposit fees and other non-interest income     906     802     13 %
Salaries and benefits     4,110     3,853     7 %
Occupancy     676     661     2 %
Net expense (recovery) associated with non-performing assets     -     81     -100 %
Expenses related to merger     339     -     nm  
Other non-interest expense     1,688     1,838     -8 %
  Total non-interest expense     6,813     6,433     6 %
  Net income before tax expense     3,302     2,584     28 %
Income tax expense     1,101     744     48 %
  Net income   $ 2,201   $ 1,840     20 %
Preferred stock dividends     -     (42 )   -100 %
  Net income to common shareholders   $ 2,201   $ 1,798     22 %
  Net income per common share, basic (1)   $ 0.86   $ 0.71     21 %
  Net income per common share, fully diluted (1)   $ 0.84   $ 0.69     22 %
Basic average common shares outstanding     2,557,386     2,529,706        
Fully diluted average common shares outstanding     2,619,417     2,605,868        
                     
                     
                             
Capital Pacific Bancorp               
(unaudited and dollars in thousands, except per share data)               
Performance by Quarter   12/31/2014     9/30/2014     6/30/2014   3/31/2014     12/31/2013  
                                       
Actual loans, gross   $ 202,727     $ 201,102     $ 193,445   $ 186,724     $ 187,980  
Average loans, gross   $ 200,572     $ 197,495     $ 189,739   $ 187,953     $ 181,518  
                                       
Loans past due 90 days or more (2)   $ -     $ -     $ -   $ -     $ -  
Loans on non-accrual status   $ 910     $ 1,164     $ 1,450   $ 2,781     $ 2,832  
Other real estate owned   $ 1,000     $ 1,129     $ 1,129   $ 157     $ 157  
Total non-performing assets   $ 1,910     $ 2,293     $ 2,579   $ 2,938     $ 2,989  
Total non-performing assets as a percentage of total assets     0.75 %     0.90 %     1.09 %   1.27 %     1.27 %
                                       
Performing troubled debt restructurings (not included in non-performing assets)   $ 467     $ 1,089     $ 1,096   $ 908     $ 913  
Total non-performing assets plus performing troubled debt restructurings   $ 2,377     $ 3,382     $ 3,675   $ 3,846     $ 3,902  
Total non-performing assets plus troubled debt restructurings as a percentage of total assets     0.94 %     1.32 %     1.55 %   1.66 %     1.63 %
                                       
Loan loss reserve   $ 2,846     $ 2,836     $ 2,769   $ 3,001     $ 2,986  
Loans charged off, net of recoveries / (recoveries, net of loans charged off)   $ (10 )   $ (7 )   $ 232   $ (15 )   $ (95 )
Loan loss reserve as a percentage of loans     1.40 %     1.41 %     1.43 %   1.61 %     1.59 %
Loan loss reserve as a percentage of non-performing loans     312.75 %     243.64 %     190.97 %   107.91 %     105.44 %
                                       
Actual client deposits   $ 223,916     $ 225,216     $ 209,823   $ 203,085     $ 206,995  
Average client deposits   $ 223,578     $ 220,311     $ 211,942   $ 205,642     $ 203,529  
                                       
Net income   $ 488     $ 624     $ 547   $ 541     $ 595  
Net earnings per common share, basic   $ 0.19     $ 0.24     $ 0.21   $ 0.21     $ 0.24  
Net earnings per common share, fully diluted   $ 0.18     $ 0.24     $ 0.21   $ 0.21     $ 0.23  
                                       
Actual common shares outstanding     2,564,373       2,563,707       2,560,689     2,560,689       2,532,985  
Book value per common share   $ 9.31     $ 9.08     $ 8.82   $ 8.58     $ 8.36  
Tier 1 risk-based capital ratio (bank)     12.38 %     12.22 %     12.33 %   12.45 %     11.95 %
Tier 1 risk-based capital ratio (company)     11.32 %     11.15 %     11.00 %   11.08 %     10.50 %
                                       
Return on average common equity     8.19 %     10.80 %     9.84 %   10.18 %     11.24 %
Return on average assets     0.77 %     1.02 %     0.92 %   0.92 %     1.02 %
Net interest margin (3)     4.15 %     4.00 %     4.02 %   4.12 %     4.08 %
Efficiency ratio (4)     67.14 %     63.75 %     67.09 %   69.11 %     65.12 %
                                       
                                       
(1) Includes the dilutive effect of preferred stock dividends accrued during the period.
(2) Excludes loans that are no longer accruing interest.
(3) Tax exempt interest has been adjusted to a tax equivalent basis at a 34% tax rate. The amount of such adjustment was an addition to recorded interest income of approximately $111,000 and $114,000 for the three months ended December 31, 2014 and 2013, respectively, and $445,000 and $405,000 for the year ended December 31, 2014 and 2013, respectively.
(4) Calculated by dividing non-interest expense by the sum of net interest income and non-interest income. Excluding merger related expenses, the efficiency ratio was 58.13% for the three months ended December 31, 2014.
 
nm = percentage not meaningful
 

Contact Information

  • Contact:
    Mark Stevenson
    President and CEO

    Felice Belfiore
    CFO

    (503) 796-0100