SOURCE: Capital Pacific Bancorp

July 25, 2012 14:01 ET

Capital Pacific Bancorp Reports Strong Earnings for 2nd Quarter of 2012

PORTLAND, OR--(Marketwire - Jul 25, 2012) - Capital Pacific Bancorp (OTCQB: CPBO) ("the Company") today reported financial results for the second quarter of 2012. 

Net income
The Company reported net income of $330,000 for the three months ended June 30, 2012, or $.10 per common diluted share. This compares favorably to the second quarter of 2011 when the Company earned $158,000, or $.05 per common diluted share. Net income was $560,000 for the six months ended June 30, 2012, or $.17 per common share. This is a 59% increase over the same period in 2011, when earnings totaled $353,000, or $.13 per common diluted share.

"We are pleased with the growth in the Company's second quarter earnings," said Mark Stevenson, President and CEO of Capital Pacific Bancorp. "Increases in net interest income and non-interest income, and lower expenses associated with non-performing assets, all helped to boost overall performance."

Loans
Loans grew to $144.5 million as of June 30, 2012, up $9.9 million in the second quarter and up $12.6 million from one year ago. "Loan growth really took off this quarter, increasing 7.3%," said Stevenson. "The growth is the culmination of our work to add several new lending relationships that fit nicely within our locally sourced portfolio." The new originations are varied by industry, but the largest gains are in our areas of demonstrated expertise including independent schools and nonprofits. Loan activity is noticeably stronger throughout the region, and the Company's pipeline of quality opportunities is strong. 

Deposits
Client deposits totaled $160.9 million, relatively unchanged from the first quarter of 2012 and from one year ago. "Client deposit growth has been mixed this year," said Stevenson. "While we continue to increase the number of quality clients and are instilling a healthy granularity to our deposit base, growth in total client deposits has been offset by declines in the balances for a few of our larger clients." 

"We remain energized about our opportunities for deposit growth and believe that our growing network of clients will bear positive results in 2012," said Stevenson.

Non-performing assets and credit quality
At June 30, 2012, non-performing assets totaled $2.7 million, comparable to the prior quarter. Non-performing assets as a percentage of total assets have dropped from 5.81% at its peak in 2010 to 1.46% at the end of the current quarter. "Credit trends overall remain very positive and asset quality is at a satisfactory level," said Stevenson.

The composition of non-performing assets is as follows:

  • During the second quarter of 2012, non-performing loans increased by $60,000. The Company received $230,000 in payments, including the entire payment of one commercial loan totaling $184,000. Loans charged-off totaled $27,000 and the Company placed one new loan on non-accrual for $317,000. Forty-two percent of the loans on non-accrual status at June 30, 2012 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. 

  • During the second quarter of 2012, there was no change in other real estate owned which remains at $320,000. Subsequent to the reporting period, the Company sold one of its last remaining parcels of land with a book value of $122,000, resulting in a $19,000 gain on sale.

Non-performing assets as of June 30, 2012 by sector were as follows:

                         
    No. of Borrowers or Properties   Commercial   Commercial Real Estate (1)   Land Development and Construction   Residential   Total
Non-performing loans   8   $ 206,000   $ 1,336,000   $ -   $ 851,000   $ 2,393,000
Other real estate owned   2   $ -   $ -   $ 320,000   $ -   $ 320,000
  Total                               $ 2,713,000
                                     
(1) Forty-eight percent of non-performing commercial real estate loans are guaranteed by the Small Business Administration.
 

At June 30, 2012, the Company's reserve for loan losses totaled $2.7 million, or 1.86% of total loans, compared to $2.7 million, or 1.99% of total loans, as of March 31, 2012. The Company recognized $35,000 in provision for loan losses in the second quarter of 2012, the Company's first provision in several quarters which was the result of the increase in loans outstanding. 

Capital adequacy
The Company is well-capitalized by regulatory standards as of June 30, 2012. The Company's tier 1 leverage ratio, tier 1 capital ratio and total risk-based capital ratio are 12.10%, 14.97% and 16.22%. To be considered well-capitalized, a bank holding company must have ratios of 5.00%, 6.00% and 10.00% respectively. 

Net interest income
Net interest income (interest income less interest expense) increased 3% in the three months ended June 30, 2012 when compared to the same quarter last year. The increase is due to lower interest rates paid on interest-bearing deposits. Net interest income is expected to benefit in future periods as a result of the Company's recent increase in loans outstanding. 

The net interest margin which measures the net yield on earning assets totaled 4.21% in the second quarter of 2012, up slightly from 4.17% when compared to the three months ending March 31, 2012. The stability in the net interest margin is attributable to the gradual rise in average loans outstanding. The Company does expect future loan yields to contract as new and renewed loans are originated with rates that are lower than average portfolio yields, potentially resulting in a lower interest margin in future periods. 

Non-interest income
Non-interest income in the second quarter of 2012 totaled $229,000, an increase of 19% when compared to the preceding quarter and an increase of 16% over the same quarter last year. The second quarter of 2012 included one-time gains from the sale of investment of $23,000. The increase year-over-year is the result of the investment of $2.7 million in bank owned life insurance in the 4th quarter of 2011.

Non-interest expense
Non-interest expense in the second quarter of 2012 totaled $1.6 million, down 6% when compared to the preceding quarter and a decrease of 13% over the same quarter last year. The change is due primarily to lower costs associated with the impairments of non-performing assets.

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 6/30/2012     As of 12/31/2011     % change  
Cash and due from banks   $ 6,167     $ 11,773     -48 %
Time certificates of deposits at other banks     6,899       7,144     -3 %
Investments     25,523       28,792     -11 %
Loans:                      
Construction and land development     5,667       4,758     19 %
Real estate     103,680       94,771     9 %
Commercial     35,061       33,875     4 %
Other     117       71     65 %
  Total loans     144,525       133,475     8 %
Loan loss reserve     (2,683 )     (2,893 )   -7 %
  Total loans, net of loan loss reserve     141,842       130,582     9 %
Other real estate owned     320       724     -56 %
Other assets     5,455       5,832     -6 %
  Total assets   $ 186,206     $ 184,847     1 %
                       
Deposits:                      
Non interest-bearing demand   $ 46,793     $ 46,088     2 %
Interest-bearing demand     74,227       58,899     26 %
Certificates of deposit     39,852       52,811     -25 %
  Total client deposits     160,872       157,798     2 %
                       
Brokered certificates of deposit     -       888     -100 %
  Total deposits     160,872       158,686     1 %
                       
Other liabilities     2,364       3,656     -35 %
Shareholders' equity     22,970       22,505     2 %
  Total liabilities and shareholders' equity   $ 186,206     $ 184,847     1 %
                         
                             
Capital Pacific Bancorp                            
(unaudited and dollars in thousands, except per share data)                            
Condensed Consolidated Statements of Operations For the three months ending June 30, 2012     For the three months ending March 31, 2012     For the three months ending June 30, 2011     Sequential quarter % change     Year over year % change  
Interest income $ 1,990     $ 1,960     $ 2,010     2 %   -1 %
Interest expense   137       155       215     -12 %   -36 %
  Net interest income   1,853       1,805       1,795     3 %   3 %
Provision for loan losses   35       -       -     nm     nm  
  Net interest income, net of provision for loan losses   1,818       1,805       1,795     1 %   1 %
Deposit fees and other non-interest income   206       193       154     7 %   34 %
Income associated with the sale of loans and investments   23       -       43     nm     nm  
  Total non-interest income   229       193       197     19 %   16 %
Salaries and benefits   900       944       838     -5 %   7 %
Occupancy   161       148       150     9 %   7 %
Net expense associated with non-performing assets   57       33       (3 )   nm     nm  
Net loss (income) on sale or impairment of other real estate owned   -       73       377     nm     nm  
FDIC assessments   50       78       100     -36 %   -50 %
Other non-interest expense   411       403       355     2 %   16 %
  Total non-interest expense   1,579       1,679       1,817     -6 %   -13 %
  Net income before tax expense   468       319       175     47 %   167 %
Income tax expense (benefit)   138       88       17     57 %   nm  
  Net income $ 330     $ 231     $ 158     43 %   109 %
Preferred stock dividends   (65 )     (65 )     (65 )   0 %   0 %
  Net income to common shareholders $ 265     $ 166     $ 93     60 %   185 %
  Net income per common share, basic (1) $ 0.11     $ 0.07     $ 0.05     57 %   120 %
  Net income per common share, fully diluted (1) $ 0.10     $ 0.07     $ 0.05     43 %   100 %
Basic average common shares outstanding   2,513,558       2,503,311       1,771,911              
Fully diluted average common shares outstanding   2,597,086       2,520,663       1,771,911              
                                   
                   
Capital Pacific Bancorp                  
(unaudited and dollars in thousands, except per share data)                  
Condensed Consolidated Statements of Operations   For the six months ending June 30, 2012     For the six months ending June 30, 2011     Year over year % change  
Interest income   $ 3,949     $ 3,948     0 %
Interest expense     291       438     -34 %
  Net interest income     3,658       3,510     4 %
Provision for loan losses     35       123     -72 %
  Net interest income, net of provision for loan losses     3,623       3,387     7 %
Deposit fees and other non-interest income     399       299     33 %
Income associated with the sale of loans and investments     23       43     -47 %
  Total non-interest income     422       342     23 %
Salaries and benefits     1,843       1,606     15 %
Occupancy     309       298     4 %
Net expense associated with non-performing assets     92       (48 )   nm  
Net loss on sale or impairment of other real estate owned     72       409     -82 %
FDIC assessments     128       195     -34 %
Other non-interest expense     815       773     5 %
  Total non-interest expense     3,259       3,233     1 %
  Net income before tax expense     786       496     58 %
Income tax expense (benefit)     226       143     58 %
Net income   $ 560     $ 353     59 %
Preferred stock dividends     (130 )     (130 )   0 %
  Net income (loss) to common shareholders   $ 430     $ 223     93 %
  Net income (loss) per common share, basic (1)   $ 0.17     $ 0.13     31 %
  Net income (loss) per common share, fully diluted (1)   $ 0.17     $ 0.13     31 %
Basic average common shares outstanding     2,508,435       1,771,911        
Fully diluted average common shares outstanding     2,541,337       1,771,911        
                       
                               
Capital Pacific Bancorp                              
(unaudited and dollars in thousands, except per share data)                              
Performance by Quarter   6/30/12     3/31/12     12/31/11     9/30/11     6/30/11  
                               
Actual loans, gross   $ 144,525     $ 134,630     $ 133,475     $ 131,696     $ 131,971  
Average loans, gross   $ 137,260     $ 131,503     $ 131,829     $ 132,405     $ 130,404  
                                         
Loans past due 30-89 days (2)   $ -     $ -     $ -     $ 904     $ 1,812  
Loans past due 90 days or more   $ -     $ -     $ -     $ -     $ -  
Loans on non-accrual status   $ 2,393     $ 2,333     $ 2,701     $ 2,063     $ 2,601  
Other real estate owned   $ 320     $ 320     $ 724     $ 1,413     $ 4,661  
Total non-performing assets   $ 2,713     $ 2,653     $ 3,425     $ 3,476     $ 7,262  
Total non-performing assets as a percentage of total assets     1.46 %     1.39 %     1.89 %     1.76 %     3.95 %
                                         
Loan loss reserve   $ 2,683     $ 2,673     $ 2,893     $ 2,844     $ 2,897  
Loans charged off, net of recoveries / (recoveries, net of loans charged off)   $ 25     $ 220     $ 76     $ 72     $ 142  
Loan loss reserve as a percentage of loans     1.86 %     1.99 %     2.17 %     2.16 %     2.19 %
Loan loss reserve as a percentage of non-performing loans     112 %     115 %     107 %     138 %     111 %
                                         
Actual client deposits   $ 160,872     $ 159,244     $ 157,798     $ 170,274     $ 160,245  
Average client deposits   $ 160,659     $ 158,031     $ 168,369     $ 166,918     $ 154,489  
                                         
Net income   $ 330     $ 231     $ 267     $ 75     $ 158  
Net income available to common shareholders (1)   $ 265     $ 166     $ 202     $ 10     $ 93  
Net earnings per common share, basic (1)   $ 0.11     $ 0.07     $ 0.08     $ -     $ 0.05  
Net earnings per common share, fully diluted (1)   $ 0.10     $ 0.07     $ 0.08     $ -     $ 0.05  
                                         
Actual common shares outstanding     2,513,558       2,513,558       2,501,289       2,501,289       1,771,911  
Book value per common share   $ 7.49     $ 7.38     $ 7.36     $ 7.26     $ 8.54  
                                         
Return on average common equity (1)     5.69 %     3.60 %     4.39 %     0.24 %     2.50 %
Return on average assets     0.70 %     0.50 %     0.54 %     0.15 %     0.35 %
Net interest margin (3)     4.21 %     4.17 %     3.98 %     4.24 %     4.37 %
Efficiency ratio (4)     76 %     84 %     79 %     95 %     91 %
                                         
 
(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 $85,000 and $82,000 for the three months ended June 30, 2012 and 2011, respectively and approximately $163,000 and $153,000 for the six months ended June 30, 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