SOURCE: Capital Pacific Bancorp

January 26, 2012 12:54 ET

Capital Pacific Bancorp Reports Positive Financial Results for Fourth Quarter of 2011

PORTLAND, OR--(Marketwire - Jan 26, 2012) - Capital Pacific Bancorp (OTCQB: CPBO) (OTCBB: CPBO) ("the Company") reported net income of $267,000 for the three months ended December 31, 2011, or $.08 per common share on a fully diluted basis. For the twelve months ended December 31, 2011, the Company reported net income of $695,000, or $.21 per common share on a fully diluted basis.

"Net income for the fourth quarter, and for the year, grew at a steady pace when compared to the prior year," said Mark Stevenson, President and CEO of Capital Pacific Bancorp. "Our stronger performance is a natural outcome from our efforts to continuously improve asset quality and accelerate the growth of both loans and deposits."

Loans
Loans totaled $133.5 million as of December 31, 2011, up $1.8 million in the fourth quarter. For the year, loans increased $8.7 million, or 7%. "We have been focused on seeking quality loan opportunities, with most of our growth coming from within the commercial real estate and multi-family sectors of the market," said Stevenson. "In 2011, loans grew by a meaningful level, especially given the lack of economic growth in our region."

Deposits
Average quarterly client deposits for the fourth quarter grew slightly to $168.4 million, up 1% when compared to the prior quarter. "Our fourth quarter performance has historically been quieter for deposit growth due to the higher cash outlays that are typical for business clients as the year winds to a close," said Stevenson.

For the year, average client deposits increased $20.9 million, an increase of 14%. "We believe this is a more revealing picture of the growth of the Bank and the result of our diligent work throughout the year. We are very pleased with the new clients we added in 2011." Non interest-bearing demand deposits continue to be a high percentage of total deposits, currently 30% of total deposits and up 21% for the year.

Non-performing assets
At December 31, 2011, non-performing assets were essentially unchanged when compared to the prior quarter and closed the quarter at $3.5 million. For the year, non-performing assets have declined $6.4 million and non-performing assets as a percentage of total assets has dropped from 5.81% to 1.89%. The composition of non-performing assets is as follows:

Non-performing Asset Category December 31, 2011 September 30, 2011 December 31, 2010
Loans 90 days past due and still accruing interest $ - $ - $ -
Loans on non-accrual status 2,701,000 2,063,000 2,975,000
Other real estate owned 803,000 1,413,000 6,893,000
Totals $ 3,504,000 $ 3,476,000 $ 9,868,000
  • During the quarter, the Company charged off $93,000 in loans and received $174,000 in payments on loans on non-accrual status. The Company added one loan to the list of loans on non-accrual status. Forty two percent of the loans on non-accrual status at December 31, 2011 are paid 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 has decreased.
  • Other real estate owned declined 43% in the fourth quarter of 2011. The decline is due to the sale of three properties with a carrying value of $581,000, resulting in gains on sales of approximately $38,000. The Company also recognized $30,000 in property value impairments reflecting persistent weakness in property valuations.

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

No. of Borrowers or Properties Commercial Commercial Real Estate (1) Land Development and Construction Residential Consumer Total
Non-performing loans 8 $ 412,000 $ 1,332,000 $ - $ 957,000 $ - $ 2,701,000
Other real estate owned 4 $ - $ - $ 684,000 $ 119,000 $ - $ 803,000
Total $ 3,504,000

(1) Fifty-four percent of non-performing commercial real estate loans are guaranteed by the Small Business Administration.

Credit quality
At December 31, 2011, the Company's reserve for loan losses totaled $2.9 million, or 2.17% of total loans, compared to $2.8 million, or 2.16% of total loans, as of September 30, 2011. The Company's provision for loan losses was $124,000 in the fourth quarter of 2011. For the year, the Company set aside $267,000 in provision for loan losses.

"Provision levels have been modest in 2011 due to the infrequent nature of new problems and the positive trends in overall asset quality," said Stevenson. "However, the current economic conditions continue to cause us to be cautious, and our reserve for loan losses remains elevated. We did experience a small increase in non-performing loans in the fourth quarter due to the addition of one loan now totaling $792,000 which is 90% guaranteed by the Small Business Administration."

Capital adequacy
On August 4, 2011, the Company announced that it had raised $3.2 million in new common equity at an issue price of $4.35 per share. The new equity was raised to support growth in deposits and loans and broaden the Company's reach into the business community, capitalize on market opportunities with the expansion of our work force and fortify the balance sheet. The Company's total risk-based capital ratio is estimated at 16.8% at December 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.

Net interest income
Net interest income (interest income less interest expense) declined 4% in the three months ended December 31, 2011 when compared to the prior quarter, the result of declining yields on loans.

"Over the last four quarters, loan yields have been impacted by today's low interest rates, flat yield curve and aggressive price competition," said Stevenson. "While we believe that the low cost structure of our deposits and our strong client relationships will help mitigate the decline in interest income, we do expect continued pressure on loan yields going forward."

The net interest margin which measures the net yield on earning assets totaled 3.98% in the fourth quarter of 2011, down from 4.24% when compared to the three months ending September 30, 2011. The sizable decline is due to the aforementioned decline in loan yields and a decline in loan prepayment fees.

Non-interest expense
Non-interest expense in the fourth quarter of 2011 totaled $1.6 million, down $415,000 when compared to the preceding quarter. The change quarter over quarter is principally due to lower impairments on other real estate owned and other loan workout related expenses.

About Capital Pacific Bancorp
Capital Pacific Bancorp (OTCQB: CPBO) (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)
Condensed Consolidated Balance Sheets As of 12/31/2011 As of 12/31/2010 Year over year % change
Cash and due from banks $ 11,773 $ 8,758 34 %
Time certificates of deposits at other banks 7,144 7,321 -2 %
Investments 28,932 21,354 35 %
Loans:
Construction and land development 4,758 10,273 -54 %
Real estate 94,771 80,927 17 %
Commercial 33,875 33,378 1 %
Other 72 243 -70 %
Total loans 133,476 124,821 7 %
Loan loss reserve (2,893 ) (2,905 ) 0 %
Total loans, net of loan loss reserve 130,583 121,916 7 %
Other real estate owned 803 6,893 -88 %
Other assets 5,767 3,516 64 %
Total assets $ 185,002 $ 169,758 9 %
Deposits:
Non interest-bearing demand $ 46,558 $ 38,500 21 %
Interest-bearing demand 58,430 64,573 -10 %
Certificates of deposit 52,812 35,634 48 %
Total client deposits 157,800 138,707 14 %
Brokered certificates of deposit 887 5,368 -83 %
Total deposits 158,687 144,075 10 %
Other liabilities 3,810 6,842 -44 %
Shareholders' equity 22,505 18,841 19 %
Total liabilities and shareholders' equity $ 185,002 $ 169,758 9 %

Capital Pacific Bancorp
(unaudited and dollars in thousands, except per share data)
Condensed Consolidated Statements of Operations For the three months ending December 31, 2011 For the three months ending September 30, 2011 For the three months ending December 31, 2010 Sequential quarter % change Year over year % change
Interest income $ 2,040 $ 2,122 $ 1,996 -4 % 2 %
Interest expense 197 196 282 1 % -30 %
Net interest income 1,843 1,926 1,714 -4 % 8 %
Provision for loan losses 124 20 209 nm -41 %
Net interest income, net of provision for loan losses 1,719 1,906 1,505 -10 % 14 %
Deposit fees and other non-interest income 178 154 201 16 % -11 %
Income associated with the sale of loans and investments - - 36 nm nm
Total non-interest income 178 154 237 16 % -25 %
Salaries and benefits 916 878 673 4 % 36 %
Occupancy 145 155 149 -6 % -3 %
Net expense associated with non-performing assets 68 138 188 -51 % -64 %
Net loss (income) on sale or impairment of other real estate owned (19 ) 426 110 nm nm
FDIC assessments 71 45 121 58 % -41 %
Other non-interest expense 383 337 414 14 % -7 %
Total non-interest expense 1,564 1,979 1,655 -21 % -5 %
Net income before tax expense 333 81 87 311 % 283 %
Income tax expense (benefit) 66 6 (47 ) nm nm
Net income $ 267 $ 75 $ 134 256 % 99 %
Preferred stock dividends (65 ) (65 ) (65 ) 0 % 0 %
Net income to common shareholders $ 202 $ 10 $ 69 nm 193 %
Net income per common share, basic (1) $ 0.08 $ - $ 0.04 nm 100 %
Net income per common share, fully diluted (1) $ 0.08 $ - $ 0.04 nm 100 %
Basic average common shares outstanding 2,501,289 2,231,736 1,771,911
Fully diluted average common shares outstanding 2,501,289 2,231,736 1,771,911

Capital Pacific Bancorp
(unaudited and dollars in thousands, except per share data)
Condensed Consolidated Statements of Operations For the year ending December 31, 2011 For the year ending December 31, 2010 Year over year % change
Interest income $ 8,110 $ 8,054 1 %
Interest expense 830 1,421 -42 %
Net interest income 7,280 6,633 10 %
Provision for loan losses 267 434 -38 %
Net interest income, net of provision for loan losses 7,013 6,199 13 %
Deposit fees and other non-interest income 631 800 -21 %
Income associated with the sale of loans and investments 43 182 -76 %
Total non-interest income 674 982 -31 %
Salaries and benefits 3,402 2,793 22 %
Occupancy 598 594 1 %
Net expense associated with non-performing assets 160 802 -80 %
Net loss on sale or impairment of other real estate owned 815 787 4 %
FDIC assessments 311 563 -45 %
Other non-interest expense 1,491 1,532 -3 %
Total non-interest expense 6,777 7,071 -4 %
Net income before tax expense 910 110 nm
Income tax expense (benefit) 215 (132 ) nm
Net income $ 695 $ 242 187 %
Preferred stock dividends (258 ) (258 ) 0 %
Net income (loss) to common shareholders $ 437 $ (16 ) nm
Net income (loss) per common share, basic (1) $ 0.21 $ (0.01 ) nm
Net income (loss) per common share, fully diluted (1) $ 0.21 $ (0.01 ) nm
Basic average common shares outstanding 2,071,655 1,771,911
Fully diluted average common shares outstanding 2,071,655 1,771,911

Capital Pacific Bancorp
(unaudited and dollars in thousands, except per share data)
Performance by Quarter 12/31/11 9/30/11 6/30/11 3/31/11 12/31/10
Actual loans, gross $ 133,475 $ 131,696 $ 131,971 $ 127,798 $ 124,821
Average loans, gross $ 131,829 $ 132,405 $ 130,404 $ 124,726 $ 127,605
Loans past due 30-89 days (2) $ - $ 904 $ 1,812 $ 194 $ 83
Loans past due 90 days or more $ - $ - $ - $ - $ -
Loans on non-accrual status $ 2,701 $ 2,063 $ 2,601 $ 2,456 $ 2,975
Other real estate owned $ 803 $ 1,413 $ 4,661 $ 5,346 $ 6,893
Total non-performing assets $ 3,504 $ 3,476 $ 7,262 $ 7,802 $ 9,868
Total non-performing assets as a percentage of total assets 1.89 % 1.76 % 3.95 % 4.39 % 5.81 %
Loan loss reserve $ 2,893 $ 2,844 $ 2,897 $ 3,039 $ 2,905
Loans charged off, net of recoveries / (recoveries, net of loans charged off) $ 76 $ 72 $ 142 $ (11 ) $ 362
Loan loss reserve as a percentage of loans 2.17 % 2.16 % 2.19 % 2.38 % 2.33 %
Loan loss reserve as a percentage of non-performing loans 107 % 138 % 111 % 124 % 97 %
Actual client deposits $ 157,800 $ 170,274 $ 160,245 $ 150,629 $ 138,707
Average client deposits $ 168,369 $ 166,918 $ 154,489 $ 143,465 $ 147,422
Net income $ 267 $ 75 $ 158 $ 195 $ 134
Net income available to common shareholders (1) $ 202 $ 10 $ 93 $ 130 $ 69
Net earnings per common share, basic (1) $ 0.08 $ - $ 0.05 $ 0.07 $ 0.04
Net earnings per common share, fully diluted (1) $ 0.08 $ - $ 0.05 $ 0.07 $ 0.04
Actual common shares outstanding 2,501,289 2,501,289 1,771,911 1,771,911 1,771,911
Book value per common share $ 7.36 $ 7.26 $ 8.54 $ 8.43 $ 8.33
Return on average common equity (1) 4.39 % 0.24 % 2.50 % 3.55 % 1.87 %
Return on average assets 0.54 % 0.15 % 0.35 % 0.46 % 0.30 %
Net interest margin (3) 3.98 % 4.24 % 4.37 % 4.39 % 4.11 %
Efficiency ratio (4) 79 % 95 % 91 % 76 % 85 %
(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 $78,400 and $68,300 for the three months ended Decenber 31, 2011 and 2010, respectively, and $311,600 and $270,300 for the year ended December 31, 2011 and 2010, 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