SOURCE: Capital Pacific Bancorp

July 21, 2011 15:18 ET

Capital Pacific Bancorp Reports Net Income in Second Quarter of 2011

PORTLAND, OR--(Marketwire - Jul 21, 2011) - Capital Pacific Bancorp (OTCBB: CPBO) (OTCQB: CPBO) ("the Company") reported net income of $158,000 for the three months ended June 30, 2011. Including the effect of preferred stock dividends, the Company reported net income to common shareholders of $93,000, or $0.05 per diluted share for the same period.

"We are encouraged by our resilient performance and the positive momentum we're seeing in the second quarter of 2011," said Mark Stevenson, CEO and President of Capital Pacific Bancorp. "Asset quality continues to improve, the result of our ongoing drive to reduce our non-performing assets. Progress is slow, but steady, as we continue to work through challenging economic conditions."

Deposits

Average quarterly client deposits increased to $154.5 million in the second quarter of 2011, an increase of approximately $11 million or 8% when compared to the prior quarter. Actual client deposits closed the quarter at $160.3 million.

"We are pleased with client deposit growth this quarter, which signals a broader base of core clients in our market," said Stevenson.

Loans

Loans totaled $132.0 million as of June 30, 2011, an increase of $4.2 million, or 3% when compared to balances as of March 31, 2011. "Total loans have increased modestly for the second quarter in a row. For the year, loans have increased $7.2 million, or 6%," said Stevenson. "We really like the profile of our new loan clients, representing durable businesses and organizations that are contributing to our local economy."

Non-performing assets

At June 30, 2011, non-performing assets declined by $540,000 when compared to the prior quarter and closed the quarter at $7.3 million, or 3.95% of total assets. The composition of non-performing assets is as follows:

Non-performing
 Asset          June 30,    March 31, Percentage   December 31, Percentage
 Category         2011        2011      Change         2010      Change
               ----------- ----------- ---------    ----------- ---------
Loans 90 days
 past due and
 still accruing
 interest       $         - $         -         -%  $         -         -%
Loans on
 nonaccrual
 status           2,601,000   2,456,000         6%    2,975,000       (13%)
Other real
 estate owned     4,661,000   5,346,000       (13%)   6,893,000       (32%)
                ----------- ----------- ---------   ----------- ---------
     Totals     $ 7,262,000 $ 7,802,000        (7%) $ 9,868,000       (26%)

-- During the quarter, the Company placed $737,000 in loans on
   non-accrual status, charged off $143,000 in loans and received
   $449,000 in payments. On a net basis, loans on non-accrual status
   increased 6%. Despite the increase, fifty-one percent of the loans
   on non-accrual status at June 30, 2011 are fully current and the
   Company anticipates that these loans are candidates for placement
   back on accrual status in 2011. Loans on non-accrual status are
   evaluated for potential upgrade when the borrower has demonstrated
   a history of performance and the risk of loss has decreased.

-- Other real estate owned declined 13% in the second quarter of 2011.
   The decline is due to the sale of three properties in the second
   quarter of 2011 with a carrying value of $303,000, resulting in
   gains on sales of approximately $5,000. The Company also recognized
   $382,000 in property value impairments reflecting persistent weakness
   in property valuations. At June 30, 2011, $2.1 million of the balance
   is commercial property supported with income producing cash flow that
   significantly reduces the carrying cost of the asset.

Non-performing assets as of June 30, 2011 by sector were as follows:

                             No. of                               Land
                           Borrowers                           Development
                               or                  Commercial      and
                           Properties  Commercial  Real Estate Construction
                           ----------- ----------- ----------- -----------
Non-performing loans                11 $ 1,030,000 $    90,000 $         -
Other real estate owned             11 $         - $ 2,107,000 $ 1,346,000
Total

                           Residential  Consumer     Total
                           ----------- ----------- -----------
Non-performing loans       $ 1,481,000 $         - $ 2,601,000
Other real estate owned    $ 1,208,000 $         - $ 4,661,000
Total                                              $ 7,262,000

Credit quality

At June 30, 2011, the Company's reserve for loan losses totaled $2.9 million, or 2.19% of total loans, compared to $3.0 million, or 2.38% of total loans, as of March 31, 2011. No loan loss provision expense was recognized in the second quarter of 2011. In the first quarter of 2011, the Company recognized $123,000 in loan loss provision expense.

"Non-performing loans as a percentage of total loans is less than 2%, in stark contrast to this time last year when non-performing loans as a percentage of total loans was 4.9%," said Stevenson. "Again this is a direct result of our steadfast effort to improve credit quality and reduce non-performing assets."

At June 30, 2011, loans past due 30-89 days increased to $1.8 million. Of that total, one loan for $1.4 million is 90% guaranteed by the Small Business Administration. A second loan for $370,000 is a loan originated under the Small Business Administration's 504 program, and was paid current in July 2011.

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 14.3% at June 30, 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.

Net interest income

Net interest income (interest income less interest expense) increased 5% in the three months ended June 30, 2011 when compared to the prior quarter, the result of higher average loan balances. The net interest margin which measures the net yield on earning assets totaled 4.41% in the second quarter of 2011, virtually unchanged when compared to the three months ending March 31, 2011 and up from 3.84% for the same quarter in 2010. Year over year, 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 second quarter of 2011 totaled $1.8 million, up $401,000 when compared to the preceding quarter. Excluding one-time net losses on sales of other real estate owned, non-interest expense increased $267,000. The change quarter over quarter is principally due to impairments on other real estate owned.

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)
                                                               Period-over
Condensed Consolidated Balance          As of        As of       period
 Sheets                               6/30/2011   12/31/2010    % change
                                     -----------  -----------  -----------
Cash and due from banks              $    26,733  $     8,758          205%
Time certificates of deposits at
 other banks                                 843        7,321          -88%
Investments                               19,649       21,354           -8%
Loans:
Construction and land development          6,329       10,273          -38%
Real estate                               86,188       75,210           15%
Commercial                                39,363       39,095            1%
Other                                         91          243          -63%
                                     -----------  -----------
  Total loans                            131,971      124,821            6%
Loan loss reserve                         (2,897)      (2,905)           0%
                                     -----------  -----------
  Total loans, net of loan loss
   reserve                               129,074      121,916            6%
Other real estate owned                    4,661        6,893          -32%
Other assets                               3,077        3,516          -12%
                                     -----------  -----------
  Total assets                       $   184,037  $   169,758            8%
                                     ===========  ===========

Deposits:
Non interest-bearing demand          $    55,499  $    38,500           44%
Interest-bearing demand                   58,463       64,573           -9%
Certificates of deposit                   46,283       35,634           30%
                                     -----------  -----------
   Total client deposits                 160,245      138,707           16%

Brokered certificates of deposit             886        5,368          -83%
                                     -----------  -----------
  Total deposits                         161,131      144,075           12%

Other liabilities                          3,670        6,842          -46%
Shareholders' equity                      19,236       18,841            2%
                                     -----------  -----------
  Total liabilities and
   shareholders' equity              $   184,037  $   169,758            8%
                                     ===========  ===========




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

                      For the    For the    For the
                       three      three      three
Condensed              months     months     months
 Consolidated          ending     ending     ending   Sequential Year over
 Statements of       June 30,   March 31,  June 30,    quarter     year
 Operations            2011       2011       2010     % change   % change
                     ---------  ---------  ---------  ---------  ---------
Interest income      $   2,010  $   1,938  $   2,033          4%        -1%
Interest expense           215        223        396         -4%       -46%
                     ---------  ---------  ---------
  Net interest
   income                1,795      1,715      1,637          5%        10%
                     ---------  ---------  ---------
Provision for loan
 losses                      -        123         80       -100%      -100%
                     ---------  ---------  ---------
  Net interest
   income, net of
   provision for
   loan losses           1,795      1,592      1,557         13%        15%
                     ---------  ---------  ---------
Deposit fees and
 other non-interest
 income                    154        145        222          6%       -31%
Income associated
 with the sale of
 loans and
 investments                43          -        146         nm        -71%
                     ---------  ---------  ---------
  Total non-interest
   income                  197        145        368         36%       -46%
                     ---------  ---------  ---------
Salaries and
 benefits                  838        768        722          9%        16%
Occupancy                  150        148        150          1%         0%
Net (income) expense
 associated with
 non-performing
 assets                     (3)       (45)       191        -93%       102%
Net loss on sale or
 impairment of other
 real estate owned         377         32        293         nm         29%
FDIC assessments           100         95        138          5%       -28%
Other non-interest
 expense                   355        418        367        -15%        -3%
                     ---------  ---------  ---------
  Total non-interest
   expense               1,817      1,416      1,861         28%        -2%
                     ---------  ---------  ---------
  Net income before
   tax expense             175        321         64        -45%       173%
                     ---------  ---------  ---------
Income tax expense          17        126         29        -87%       -41%
                     ---------  ---------  ---------
  Net income         $     158  $     195  $      35        -19%       351%
                     =========  =========  =========
Preferred stock
 dividends                 (65)       (65)       (65)         0%         0%
                     ---------  ---------  ---------
  Net income (loss)
   to common
   shareholders      $      93  $     130  $     (30)       -28%       410%
                     =========  =========  =========
  Net income (loss)
   per common share,
   basic (1)         $    0.05  $    0.07  $   (0.02)       -29%       350%
                     =========  =========  =========
  Net income (loss)
   per common share,
   fully diluted (1) $    0.05  $    0.07  $   (0.02)       -29%       350%
                     =========  =========  =========
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)

                                            For the    For the
                                              six        six
                                             months     months
                                             ending     ending   Year over
Condensed Consolidated Statements of       June 30,   June 30,     year %
 Operations                                  2011       2010       change
                                           ---------  ---------  ---------
Interest income                            $   3,948  $   3,938          0%
Interest expense                                 438        804        -46%
                                           ---------  ---------
  Net interest income                          3,510      3,134         12%
                                           ---------  ---------
Provision for loan losses                        123         60        105%
                                           ---------  ---------
  Net interest income, net of provision
   for loan losses                             3,387      3,074         10%
                                           ---------  ---------
Deposit fees and other non-interest income       299        421        -29%
Income associated with the sale of loans
 and investments                                  43        146        -71%
                                           ---------  ---------
  Total non-interest income                      342        567        -40%
                                           ---------  ---------
Salaries and benefits                          1,606      1,424         13%
Occupancy                                        298        291          2%
Net (income) expense associated with
 non-performing assets                           (48)       522       -109%
Net loss on sale or impairment of other
 real estate owned                               409        571        -28%
FDIC assessments                                 195        320        -39%
Other non-interest expense                       773        771          0%
                                           ---------  ---------
  Total non-interest expense                   3,233      3,899        -17%
                                           ---------  ---------
  Net income (loss) before tax expense
   (benefit)                                     496       (258)       292%
                                           ---------  ---------
Income tax expense (benefit)                     143       (163)       188%
                                           ---------  ---------
  Net income (loss)                        $     353  $     (95)       472%
                                           =========  =========
Preferred stock dividends                       (130)      (130)         0%
                                           ---------  ---------
  Net income (loss) to common shareholders $     223  $    (225)       199%
                                           =========  =========
  Net income (loss) per common share,
   basic (1)                               $    0.13  $   (0.13)       200%
                                           =========  =========
  Net income (loss) per common share,
   fully diluted (1)                       $    0.13  $   (0.13)       200%
                                           =========  =========
Basic average common shares outstanding    1,771,911  1,771,911
                                           =========  =========
Fully diluted average common shares
 outstanding                               1,771,911  1,771,911
                                           =========  =========




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

Performance by
 Quarter              6/30/11    3/31/11   12/31/10    9/30/10    6/30/10
                     ---------  ---------  ---------  ---------  ---------

Actual loans, gross  $ 131,971  $ 127,798  $ 124,821  $ 128,585  $ 130,353
Average loans, gross $ 130,404  $ 124,726  $ 127,605  $ 131,158  $ 131,527

Loans past due 30-89
 days (4)            $   1,812  $     194  $      83  $     590  $      83
Loans past due 90
 days or more        $       -  $       -  $       -  $       -  $       -
Loans on non-accrual
 status              $   2,601  $   2,456  $   2,975  $   7,158  $   6,379
Other real estate
 owned               $   4,661  $   5,346  $   6,893  $   2,514  $   2,817
Total non-performing
 assets              $   7,262  $   7,802  $   9,868  $   9,672  $   9,196
Total non-performing
 assets as a
 percentage of total
 assets                   3.95%      4.39%      5.81%      5.69%      5.12%

Loan loss reserve    $   2,897  $   3,039  $   2,905  $   3,059  $   3,159
Loans charged off,
 net of recoveries /
 (recoveries, net of
 loans charged off)  $     132  $     (11) $     362  $     265  $     (64)
Loan loss reserve as
 a percentage of
 loans                    2.19%      2.38%      2.33%      2.38%      2.42%
Loan loss reserve as
 a percentage of
 non-performing
 loans                     111%       124%        97%        43%        49%

Actual client
 deposits            $ 160,245  $ 150,629  $ 138,707  $ 149,689  $ 146,955
Average client
 deposits            $ 154,489  $ 143,465  $ 147,422  $ 153,732  $ 148,337

Net income (loss)    $     158  $     195  $     134  $     204  $      35
Net income (loss)
 available to common
 shareholders (1)    $      93  $     130  $      69  $     139  $     (30)
Net earnings (loss)
 per common share,
 basic (1)           $    0.05  $    0.07  $    0.04  $    0.08  $   (0.02)
Net earnings (loss)
 per common share,
 fully diluted (1)   $    0.05  $    0.07  $    0.04  $    0.08  $   (0.02)

Actual common shares
 outstanding         1,771,911  1,771,911  1,771,911  1,771,911  1,771,911
Book value per
 common share        $    8.54  $    8.43  $    8.33  $    8.32  $    8.22

Return on average
 common equity (1)        2.50%      3.55%      1.87%      3.73%     -0.83%
Return on average
 assets                   0.35%      0.46%      0.30%      0.44%      0.08%
Net interest margin
 (2)                      4.41%      4.42%      4.14%      4.17%      3.84%
Efficiency ratio (3)        91%        76%        85%        78%        93%


(1) Includes the dilutive effect of preferred stock dividends accrued
    during the period

(2) 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 $98,000 and $79,000 for the
    three months ended June 30, 2011 and 2010, respectively

(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