SOURCE: Capital Pacific Bancorp

January 23, 2013 15:57 ET

Capital Pacific Bancorp Reports Higher Net Income Year-Over-Year and Growth in Loans and Deposits in 2012

PORTLAND, OR--(Marketwire - Jan 23, 2013) - Capital Pacific Bancorp (OTCQB: CPBO), a community bank focused on serving greater Portland area businesses, private schools and not-for-profit institutions, today reported financial results for the quarter and year ended December 31, 2012.

Highlights

  • Net income to common shareholders in 2012 of $1.11 million or $0.44 per common diluted share, an increase of 110% compared with 2011.
  • Fourth quarter net income to common shareholders of $345,000 or $0.13 per common diluted share, secured its 11th consecutive quarter of profitable results.
  • Total loans increased 19% to $159.20 million at December 31, 2012, compared with $133.48 million at December 31, 2011, primarily reflecting an increase in owner-occupied and investor-owned commercial real estate loans.
  • Deposits rose 10% to $174.31 million at December 31, 2012, compared with $158.69 million at December 31, 2011.
  • Total non-performing assets including troubled debt restructurings declined to 2.68% of total assets in 2012, compared with 3.35% of total assets in 2011.
  • The company's cost of funds fell to 25 basis points, an all time low. 
  • Tangible book value per share increased 6% year-over-year to $7.79 at December 31, 2012.

"Capital Pacific experienced quality client growth in 2012 and we achieved considerable success identifying new commercial lending opportunities within our areas of expertise. We also continued our focus on operating efficiently, managing our net interest margin carefully, and addressing problem assets," said Mark Stevenson, President and CEO. "Our return on average assets of 0.82% in fourth quarter 2012 reflected steady improvement throughout the year, and compared with a return on average assets of 0.54% in fourth quarter 2011. For the year, return on average assets totaled 0.69% as compared to the prior year's return on average assets of 0.37%, demonstrating the progress made."

Net Income and Income Statement Demonstrate Growth

For the year ended December 31, 2012, the company reported net income of $1.37 million, compared with $695,000 in 2011. Net income to common shareholders (after preferred stock dividends) increased to $1.11 million or $0.44 per diluted common share in 2012, compared with $437,000 or $0.21 per diluted share in 2011, up 110%. In fourth quarter 2012, the company reported net income to common shareholders of $345,000 or $0.13 per diluted common share, compared with net income of $202,000 or $0.08 per diluted common share in fourth quarter 2011.

Total interest income was $8.17 million for the year ended December 31, 2012 compared with $8.11 million in 2011, up 1%, as declining loan yields kept revenue growth at a modest level. However, the bank maintained a strong 3.98% net interest margin in the fourth quarter, unchanged from the same quarter in 2011. The bank lowered interest expense 36% year over year and maintained stability in its provision for loan losses, resulting in net interest income of $7.34 million in 2012, compared with $7.01 million in 2011. Non-interest income for the year ended December 31, 2012 rose 21% to $765,000, compared with $631,000 at December 31, 2011. Total non-interest expense in 2012 declined 8% to $6.23 million, compared with $6.78 million at December 31, 2011, primarily reflecting a $282,000 recovery of work-out related expenses incurred in prior periods.

Salaries and benefits increased by $325,000, or 10% in 2012, growing to $3.7 million. "We built a very experienced team of commercial banking officers in 2011, which is reflected in the higher salaries and benefits in 2012," noted Stevenson. One of the cornerstones of Capital Pacific Bank's success and continued growth is our ability to attract and retain top industry talent. We continue to enhance our team as appropriate."

Balance Sheet Reflects Loan and Deposit Growth Asset Quality Stable

Total loans at December 31, 2012 increased 19% to $159.20 million, compared with $133.48 million at December 31, 2011, with strong sequential loan growth in the fourth quarter totaling $14 million. "While the competition for quality loans remains heated, Capital Pacific Bank provides superior service and support, and specializes in niche markets such as private schools and not-for-profit institutions, market segments that are often underserved," said Stevenson.

Stevenson said strengthening the bank's commercial lending portfolio remains a major focus and is an integral part of the company's ongoing growth strategy. "Loan growth was a major contributor to the company's improved financial performance and strong earnings growth in 2012," he explained. "We are confident in the likelihood of continued loan growth as managed by our existing sales team and believe this is an important aspect of delivering increased earnings in 2013."

Total non-performing assets including troubled debt restructurings totaled $5.4 million, unchanged from the prior quarter and down modestly when compared to the end of 2011. Total non-performing assets including troubled debt restructurings declined to 2.68% of total assets in 2012, compared with 3.35% of total assets in 2011.

The company continued selling its other real estate owned, reducing its balance to $198,000 in fourth quarter 2012 compared with $724,000 in fourth quarter 2011. Capital Pacific Bank's loan loss reserve was $2.64 million at December 31, 2012, compared with $2.89 million at December 31, 2011, primarily reflecting the bank's loan charge-offs and recoveries throughout the year. The loan loss reserve as a percentage of total loans was 1.65% as of December 31, 2012, which compared to 2.17% as of December 31, 2011.

Stevenson noted that throughout 2012, the company had little in the way of loans 30 days or more past due. "We feel this long-term trend of sound performance underscores the significantly improved quality of our current loan portfolio as compared with the past few years," he explained.

Total deposits at December 31, 2012 rose 10% to $174.31 million compared with $158.69 million at December 31, 2011. Throughout the year, the bank grew non interest-bearing demand balances 37% and interest-bearing demand balances 24%, while trimming certificates of deposit 29%. The bank's cost of funds declined to 25 basis points in the fourth quarter of 2012, a historical low.

"We've grown total core deposits and maintained an attractive deposit mix, which is a significant accomplishment," explained Stevenson. "The steady growth of deposits reflects our ability to attract well balanced companies and organizations, with both deposit and lending needs and we strongly emphasize this type of relationship banking with new customers."

Operational Efficiency, Capital Adequacy, and Outlook

The company improved its efficiency ratio to 73.9% in 2012, as compared to 85.2% in 2011 and believes its ability to drive more revenue through a single-headquarter facility is a key component of future improvements. The company's return on average common equity increased significantly throughout 2012, and was 7.06% in the fourth quarter 2012, compared with 4.39% in fourth quarter 2011.

The company is well-capitalized by regulatory standards as of December 31, 2012. The company's tier 1 leverage ratio, tier 1 capital ratio and total risk-based capital ratio were 11.2%, 14.0% and 15.2%, respectively. To be considered well-capitalized, a bank holding company must have ratios of 5.00%, 6.00% and 10.00%, respectively.

Stevenson reflected on the company's performance, "When put in perspective, we have strengthened our income statement and aggressively addressed the bank's asset quality which should have a positive impact on future performance. Just as important, we have established a culture of client growth, backed by appropriate goals for our market. While we would like to see advancement in the overall business and economic climate which will benefit our clients, in the meantime, our diverse market has many opportunities for growth including clusters such as high technology, advanced manufacturing, software development, and education that have proven resistant to economic vagaries."

"We are mindful of building shareholder value, and we are pleased to report a steady increase in the company's tangible book value in each quarter of 2012, now totaling $7.79 per common share. We appreciate the support from shareholders, and look forward to continuing positive, value-creating performance in 2013."

About Capital Pacific Bancorp
Capital Pacific Bancorp (OTCQB: CPBO) is the parent company of Capital Pacific Bank, which serves businesses, professionals and not-for-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   As of 12/31/2012     As of 12/31/2011     % change  
Cash and due from banks   $ 3,643     $ 11,773     -69 %
Time certificates of deposits at other banks     5,181       7,144     -27 %
Investments     30,224       28,792     5 %
Loans:                      
Construction and land development     7,479       4,758     57 %
Real estate     117,030       94,771     23 %
Commercial     34,454       33,875     2 %
Other     239       71     nm  
  Total loans     159,202       133,475     19 %
Loan loss reserve     (2,642 )     (2,893 )   -9 %
  Total loans, net of loan loss reserve     156,560       130,582     20 %
Other real estate owned     198       724     -73 %
Other assets     5,451       5,832     -7 %
  Total assets   $ 201,257     $ 184,847     9 %
                       
Deposits:                      
Non interest-bearing demand   $ 62,938     $ 46,088     37 %
Interest-bearing demand     73,188       58,899     24 %
Certificates of deposit     38,187       53,699     -29 %
  Total client deposits     174,313       158,686     10 %
                       
Other liabilities     3,115       3,656     -15 %
Shareholders' equity     23,829       22,505     6 %
  Total liabilities and shareholders' equity   $ 201,257     $ 184,847     9 %
                               
                               
                               
Capital Pacific Bancorp  
(unaudited and dollars in thousands, except per share data)  
                               
Condensed Consolidated Income Statements   For the three months ending December 31, 2012     For the three months ending September 30, 2012     For the three months ending December 31, 2011     Sequential quarter % change     Year over year % change  
Interest income   $ 2,115     $ 2,107     $ 2,040     0 %   4 %
Interest expense     118       123       197     -4 %   -40 %
  Net interest income     1,997       1,984       1,843     1 %   8 %
Provision for loan losses     260       -       124     nm     nm  
  Net interest income, net of provision for loan losses     1,737       1,984       1,719     -12 %   1 %
Deposit fees and other non-interest income     178       188       178     -5 %   0 %
Income associated with the sale of loans and investments     -       -       -     nm     nm  
  Total non-interest income     178       188       178     -5 %   0 %
Salaries and benefits     901       980       916     -8 %   -2 %
Occupancy     156       160       145     -3 %   8 %
Net expense (recovery) associated with non-performing assets     (252 )     45       68     nm     nm  
Net loss (income) on sale or impairment of other real estate owned     -       (19 )     (19 )   nm     nm  
Other non-interest expense     576       422       454     36 %   27 %
  Total non-interest expense     1,381       1,588       1,564     -13 %   -12 %
  Net income before tax expense     534       584       333     -9 %   60 %
Income tax expense     124       185       66     -33 %   88 %
  Net income   $ 410     $ 399     $ 267     3 %   54 %
Preferred stock dividends     (65 )     (65 )     (65 )   0 %   0 %
  Net income to common shareholders   $ 345     $ 334     $ 202     3 %   71 %
  Net income per common share, basic (1)   $ 0.14     $ 0.13     $ 0.08     8 %   75 %
  Net income per common share, fully diluted (1)   $ 0.13     $ 0.13     $ 0.08     0 %   63 %
Basic average common shares outstanding     2,517,500       2,514,778       2,501,289              
Fully diluted average common shares outstanding     2,571,300       2,584,651       2,501,289              
                   
                   
                   
Capital Pacific Bancorp  
(unaudited and dollars in thousands, except per share data)  
   
Condensed Consolidated Income Statements   For the year ending December 31, 2012     For the year ending December 30, 2011     Year over year % change  
Interest income   $ 8,171     $ 8,110     1 %
Interest expense     532       830     -36 %
  Net interest income     7,639       7,280     5 %
Provision for loan losses     295       267     10 %
  Net interest income, net of provision for loan losses     7,344       7,013     5 %
Deposit fees and other non-interest income     765       631     21 %
Income associated with the sale of loans and investments     23       43     -47 %
  Total non-interest income     788       674     17 %
Salaries and benefits     3,727       3,402     10 %
Occupancy     625       598     5 %
Net expense (recovery) associated with non-performing assets     (117 )     160     nm  
Net loss on sale or impairment of other real estate owned     54       815     nm  
Other non-interest expense     1,939       1,802     8 %
  Total non-interest expense     6,228       6,777     -8 %
  Net income before tax expense     1,904       910     109 %
Income tax expense     535       215     149 %
  Net income   $ 1,369     $ 695     97 %
Preferred stock dividends     (258 )     (258 )   0 %
  Net income to common shareholders   $ 1,111     $ 437     154 %
  Net income per common share, basic (1)   $ 0.44     $ 0.21     110 %
  Net income per common share, fully diluted (1)   $ 0.44     $ 0.21     110 %
Basic average common shares outstanding     2,512,308       2,071,655        
Fully diluted average common shares outstanding     2,531,644       2,071,655        
                       
                       
                       
Capital Pacific Bancorp  
(unaudited and dollars in thousands, except per share data)  
   
Performance by Quarter   12/31/12   9/30/12   6/30/12   3/31/12   12/31/11  
                                 
Actual loans, gross   $ 159,202   $ 145,081   $ 144,525   $ 134,630   $ 133,475  
Average loans, gross   $ 151,536   $ 145,845   $ 137,260   $ 131,503   $ 131,829  
                                 
Loans past due 30-89 days (2)   $ -   $ 395   $ -   $ -   $ -  
Loans past due 90 days or more   $ -   $ -   $ -   $ -   $ -  
Loans on non-accrual status   $ 3,940   $ 2,500   $ 2,393   $ 2,333   $ 2,701  
Other real estate owned   $ 198   $ 198   $ 320   $ 320   $ 724  
Total non-performing assets   $ 4,138   $ 2,698   $ 2,713   $ 2,653   $ 3,425  
Total non-performing assets as a percentage of total assets     2.06 %   1.31 %   1.46 %   1.39 %   1.89 %
                                 
Performing troubled debt restructings (not included in non-performing assets)     1,262     2,753     2,754     2,762     2,766  
Total non-performing assets plus performing troubled debt restructurings   $ 5,400   $ 5,451   $ 5,467   $ 5,415   $ 6,191  
Total non-performing assets plus troubled debt restructurings as a percentage of total assets     2.68 %   2.64 %   2.94 %   2.85 %   3.35 %
                                 
Loan loss reserve   $ 2,642   $ 2,691   $ 2,683   $ 2,673   $ 2,893  
Loans charged off, net of recoveries / (recoveries, net of loans charged off)   $ 309   $ (8 ) $ 25   $ 220   $ 76  
Loan loss reserve as a percentage of loans     1.65 %   1.86 %   1.86 %   1.99 %   2.17 %
Loan loss reserve as a percentage of non-performing loans     67.06 %   107.64 %   112.00 %   115.00 %   107.00 %
                                 
Actual client deposits   $ 174,313   $ 180,245   $ 160,872   $ 159,244   $ 157,798  
Average client deposits   $ 184,740   $ 179,254   $ 160,659   $ 158,031   $ 168,369  
                                 
Net income   $ 410   $ 399   $ 330   $ 231   $ 267  
Net income available to common shareholders (1)   $ 345   $ 334   $ 265   $ 166   $ 202  
Net earnings per common share, basic (1)   $ 0.14   $ 0.13   $ 0.11   $ 0.07   $ 0.08  
Net earnings per common share, fully diluted (1)   $ 0.13   $ 0.13   $ 0.10   $ 0.07   $ 0.08  
                                 
Actual common shares outstanding     2,524,239     2,515,868     2,513,558     2,513,558     2,501,289  
Book value per common share   $ 7.79   $ 7.64   $ 7.49   $ 7.38   $ 7.36  
                                 
Return on average common equity (1)     7.06 %   6.98 %   5.69 %   3.60 %   4.39 %
Return on average assets     0.82 %   0.77 %   0.70 %   0.50 %   0.54 %
Net interest margin (3)     3.98 %   4.08 %   4.21 %   4.17 %   3.98 %
Efficiency ratio (4)     63.52 %   73.35 %   75.87 %   84.00 %   79.43 %
                                 
(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 $94,000 and $78,000 for the three months ended December 31, 2012 and 2011, respectively and approximately $346,000 and $312,000 for the twelve months ended December 31, 2012 and 2011, respectively.    
(4) Calculated by dividing non-interest expense by the sum of net interest income and non-interest income.               
nm = not meaningful               
 

Contact Information

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