SOURCE: Capital Pacific Bancorp

April 21, 2011 13:16 ET

Capital Pacific Bancorp Reports Net Income in First Quarter of 2011

PORTLAND, OR--(Marketwire - Apr 21, 2011) - Capital Pacific Bancorp (OTCBB: CPBO) ("the Company") reported net income of $194,000 for the three months ended March 31, 2011. Including the effect of preferred stock dividends, the Company reported net income to common shareholders of $129,000, or $0.07 per diluted share for the same period.

"This is our fourth consecutive quarter of positive performance," said Mark Stevenson, CEO and President of Capital Pacific Bancorp. "We saw marked improvement in asset quality and a decline in expenses associated with non-performing assets. I am pleased with our ongoing resilience as we work through this economic cycle."

Deposits

Average client deposits were essentially unchanged when comparing the first quarter of 2011 to the last quarter of 2010. However, client deposit growth garnered momentum toward the end of the period, reaching $150.6 million as of March 31, 2011 compared to $138.7 million as of December 31, 2010, an increase of 9%.

"We are confident about our emerging foothold in several market sectors," said Stevenson. "We have real optimism for growth in 2011, as we build upon our strong foundation in several niches and capitalize on new market opportunities in other areas."

Loans

Loans totaled $127.8 million as of March 31, 2011, an increase of $3.0 million, or 2% when compared to balances as of December 31, 2010. "Total loans increased for the first time in several quarters, even with a few significant payoffs," said Stevenson. "While it is too early to say whether recent loan growth is indicative of changes in the local economy, we do believe that the growth is in part the result of our on-the-ground initiative to increase loan origination."

Non-performing assets

At March 31, 2011, non-performing assets declined by $2.1 million to end the period at $7.8 million, or 4.39% of total assets. The composition of non-performing assets is as follows:

                                        March 31,  December 31, Percentage
Non-performing Asset Category             2011         2010       Change
                                       ----------- -----------   --------
Loans 90 days past due and
 still accruing interest               $         - $         -          0%
Loans on nonaccrual status               2,456,000   2,975,000        (17%)
Other real estate owned                  5,346,000   6,893,000        (22%)
                                       ----------- -----------   --------
  Totals                               $ 7,802,000 $ 9,868,000        (21%)


-- During the quarter, the Company placed $136,000 in loans on non-accrual
   status, upgraded $562,000 in loans back to accruing status, and received
   $93,000 in payments. Fifty-two percent of the loans on non-accrual
   status at March 31, 2011 are fully current.  Loans on non-accrual status
   are evaluated for potential upgrade when the borrower has demonstrated a
   history of performance and the risk of loss is minimal.

-- The decline in other real estate owned since December 31, 2010 is due to
   sales of three properties in the first quarter of 2011 with a carrying
   value of $1.4 million, resulting in gains on sales of approximately
   $134,000. The Company also recognized $165,000 in property value
   impairments.

   At March 31, 2011, $3.4 million of total other real estate owned, or
   63%, represents commercial and residential real estate supported with
   income producing cash flow and the outlook for disposition is favorable.

Non-performing assets as of March 31, 2011 by sector were as follows:

                                                                   Land
                               No. of               Commercial  Development
                            Borrowers or               Real        and
                             Properties  Commercial   Estate   Construction
                            ------------ ---------- ---------- ------------
Non-performing loans                  10 $  979,000 $  299,000 $          -
Other real estate owned               13 $        - $2,230,000 $  1,394,000


                            Residential Consumer   Total
                            ----------- -------- ----------
Non-performing loans        $ 1,041,000 $137,000 $2,456,000
Other real estate owned     $ 1,722,000 $      - $5,346,000

Credit quality

At March 31, 2011, the Company's reserve for loan losses totaled $3.0 million, or 2.38% of total loans, compared to $2.9 million, or 2.33% of total loans, as of December 31, 2010. The Company recognized $123,000 in loan loss provision expense in the first quarter of 2011. This is a modest decrease when compared to the prior quarter's loan loss provision expense of $209,000 and is the result of stable to improving asset quality.

"As we've made headway into reducing the number of problem loans, the reserve for loan losses as compared to the level of non-performing loans has increased," said Stevenson. "We maintain that our reserve is appropriately conservative given the slow improvement in our economy."

As of March 31, 2011, non-performing loans as a percentage of total loans declined to 1.92% compared to 2.38% as of the preceding quarter and 6.03% as of the same quarter in 2010.

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 13.7% at March 31, 2011. 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 $64,500 in 2011.

Net interest income

Net interest income (interest income less interest expense) is unchanged in the three months ended March 31, 2011 when compared to the prior quarter, the result of little movement in average loans or deposits. The net interest margin which measures the net yield on earning assets grew to 4.42% in the first quarter of 2011, up from 4.14% for the three months ending December 31, 2010. The improvement is the result of fewer non-performing loans and the continued decline in the interest paid on deposits.

Non-interest expense

Non-interest expense in the first quarter of 2011 totaled $1.4 million, down $235,000 when compared to the preceding quarter. Excluding net gains or losses on sales of other real estate owned, non-interest expense declined $156,000. The change quarter over quarter is principally due to declines in professional expenses associated with non-performing assets and FDIC assessments.

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)
                                                                 Year over
                                            As of      As of       year %
Condensed Consolidated Balance Sheets     3/31/2011  12/31/2010    change
                                          ---------  ----------  ---------
Cash and due from banks                   $  21,494  $    8,758        145%
Time certificates of deposits at other
 banks                                        3,076       7,321        -58%
Investments                                  19,985      21,354         -6%
Loans:
Construction and land development             7,542      10,273        -27%
Real estate                                  79,293      75,210          5%
Commercial                                   40,741      39,095          4%
Other                                           222         243         -9%
                                          ---------  ----------
  Total loans                               127,798     124,821          2%
Loan loss reserve                            (3,039)     (2,905)         5%
                                          ---------  ----------
  Total loans, net of loan loss reserve     124,759     121,916          2%
Other real estate owned                       5,346       6,893        -22%
Other assets                                  3,118       3,516        -11%
                                          ---------  ----------
  Total assets                            $ 177,778  $  169,758          5%
                                          =========  ==========

Deposits:
Non interest-bearing demand               $  52,974  $   38,500         38%
Interest-bearing demand                      52,988      64,573        -18%
Certificates of deposit                      44,667      35,634         25%
                                          ---------  ----------
  Total client deposits                     150,629     138,707          9%

Brokered certificates of deposit              3,371       5,368        -37%
                                          ---------  ----------
  Total deposits                            154,000     144,075          7%

Other liabilities                             4,758       6,842        -30%
Shareholders' equity                         19,020      18,841          1%
                                          ---------  ----------
  Total liabilities and shareholders'
   equity                                 $ 177,778  $  169,758          5%
                                          =========  ==========





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


                      For the    For the    For the
Condensed              three      three      three
 Consolidated          months     months     months  Sequential  Year over
 Statements of         ending     ending     ending    quarter      year
 Operations          3/31/2011  12/31/2010 3/31/2010  % change    % change
                     ---------  ---------  ---------  ---------  ---------
Interest income      $   1,938  $   1,996  $   1,905         -3%         2%
Interest expense           221        282        409        -22%       -46%
                     ---------  ---------  ---------
  Net interest income    1,717      1,714      1,496          0%        15%
                     ---------  ---------  ---------
Provision for loan
 losses                    123        209        (20)       -41%        nm
                     ---------  ---------  ---------
  Net interest income,
   net of provision
   for loan losses       1,594      1,505      1,516          6%         5%
                     ---------  ---------  ---------
Deposit fees and
 other non-interest
 income                    146        201        199        -27%       -27%
Income associated
 with the sale of
 loans                       -         36          -         nm         nm
                     ---------  ---------  ---------
  Total non-interest
   income                  146        237        199        -38%       -27%
                     ---------  ---------  ---------
Salaries and benefits      764        673        702         14%         9%
Occupancy                  149        149        140          0%         6%
Net (income) expense
 associated with
 non-performing
 assets                    (43)       188        329         nm         nm
Net (gain) loss on
 sale or impairment
 of other real
 estate owned               31        110        278        -72%       -89%
FDIC assessments            95        121        183        -21%       -48%
Other non-interest
 expense                   424        414        404          2%         5%
                     ---------  ---------  ---------
  Total non-interest
   expense               1,420      1,655      2,036        -14%       -30%
                     ---------  ---------  ---------
  Net income before
   tax expense
   (benefit)               320         87       (321)       268%        nm
                     ---------  ---------  ---------
Income tax expense
 (benefit)                 126        (47)      (192)        nm         nm
                     ---------  ---------  ---------
  Net income         $     194  $     134  $    (129)        45%        nm
                     =========  =========  =========
Preferred stock
 dividends                 (65)       (65)       (65)         0%         0%
                     ---------  ---------  ---------
  Net income
   available to
   common
   shareholders      $     129  $      69  $    (194)        87%        nm
                     =========  =========  =========
  Earnings per
   common share,
   basic (1)         $    0.07  $    0.04  $   (0.11)        75%        nm
                     =========  =========  =========
  Earnings per
   common share,
   fully diluted (1) $    0.07  $    0.04  $   (0.11)        75%        nm
                     =========  =========  =========
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  1,771,911
                     =========  =========  =========


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

                      3/31/11    12/31/10   9/30/10    6/30/10    3/31/10
                     ---------  ---------  ---------  ---------  ---------

Actual loans, gross  $ 127,798  $ 124,821  $ 128,585  $ 130,353  $ 130,271
Average loans, gross $ 124,726  $ 127,605  $ 131,158  $ 131,527  $ 123,984

Loans past due 30-89
 days (4)            $     194  $      83  $     590  $      83  $       -
Loans past due 90
 days or more (4)    $       -  $       -  $       -  $       -  $       -
Loans on non-accrual
 status              $   2,456  $   2,975  $   7,158  $   6,379  $   7,856
Other real estate
 owned               $   5,346  $   6,893  $   2,514  $   2,817  $   2,614
Total non-performing
 assets              $   7,802  $   9,868  $   9,672  $   9,196  $  10,470
Total non-performing
 assets as a
 percentage of total
 assets                   4.39%      5.81%      5.69%      5.12%      5.65%

Loan loss reserve    $   3,039  $   2,905  $   3,059  $   3,159  $   3,015
Loans charged off,
 net of recoveries /
 (recoveries, net of
 loans charged off)  $     (11) $     362  $     265  $     (64) $     290
Loan loss reserve as
 a percentage of
 loans                    2.38%      2.33%      2.38%      2.42%      2.31%
Loan loss reserve as
 a percentage of
 non-performing
 loans                     124%        97%        43%        49%        38%

Actual client
 deposits            $ 150,629  $ 138,707  $ 149,689  $ 146,955  $ 148,516
Average client
 deposits            $ 147,747  $ 147,422  $ 153,732  $ 148,337  $ 140,915

Net income (loss)    $     194  $     134  $     204  $      34  $    (129)
Net income (loss)
 available to common
 shareholders (1)    $     129  $      69  $     139  $     (30) $    (194)
Net earnings (loss)
 per common share,
 basic (1)           $    0.07  $    0.04  $    0.08  $   (0.02) $   (0.11)
Net earnings (loss)
 per common share,
 fully diluted (1)   $    0.07  $    0.04  $    0.08  $   (0.02) $   (0.11)

Actual common shares
 outstanding         1,771,911  1,771,911  1,771,911  1,771,911  1,771,911
Book value per
 common share        $    8.43  $    8.33  $    8.32  $    8.22  $    8.18

Return on average
 common equity (1)        3.55%      1.87%      3.73%     -0.83%     -5.36%
Return on average
 assets                   0.46%      0.30%      0.44%      0.08%     -0.29%
Net interest margin
 (2)                      4.42%      4.14%      4.17%      3.84%      3.65%
Efficiency ratio (3)        76%        85%        78%        93%       120%


(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