Press Release
Capital Pacific Bancorp Announces Results for First Quarter 2010
4/22/2010
Contact:
Mark Stevenson, President and CEO or
Felice Belfiore, CFO
(503) 796-0100
PORTLAND, OR -- (Marketwire) -- 04/22/10 -- Capital Pacific Bancorp (OTCBB: CPBO) ("the Company") reported a net loss of $129,000 for the three months ended March 31, 2010. Including the effect of preferred stock dividends, the Company reported a net loss to common shareholders of $194,000, or $0.11 per diluted share.
"While risk remains, particularly in the local economy, our capital is strong, our liquidity is near record levels, and we are making progress in proactively working through our problem loans, which I believe will be reflected in near-term financial results," said Mark Stevenson, President and CEO of Capital Pacific Bancorp. "Our small loss for the quarter reflects aggressive measures taken to reduce non-performing assets, including market value impairments on other real estate owned totaling $278,000."
Stevenson continued, "Beyond asset quality, other financial measures such as deposit and loan growth are trending upward as we add new client relationships. We continue to expand our market leadership in the non-profit sector, including acquiring several new non-profit clients this quarter."
Deposits
As of March 31, 2010, actual client deposits totaled $148.5 million. Balances were down $7.6 million compared to the end of 2009 when client deposits included $10 million in temporary deposits received immediately prior to the end of the year. Those funds have since been disbursed as anticipated. Excluding the temporary deposit, client deposits have increased by $2.4 million. On an average basis, client deposits grew by $13.7 million, from $127.2 million in the fourth quarter of 2009 to $140.9 million in the first quarter of 2010.
Loans
At March 31, 2010, loans totaled $130.3 million, up $5.5 million for the quarter. "Lending conditions have yet to improve. However, we have increased loans in select sectors, including high performing multi-family housing and commercial real estate, while demand for small business lending remains well under pre-recession levels," said Stevenson.
Credit quality
At March 31, 2010, the Company's reserve for loan losses totaled $3.0 million, a decrease of $310,000 when compared to the prior quarter. The decrease is primarily the result of loan charge-offs of $569,000, net of recoveries of $279,000.
At March 31, 2010, the reserve for loan losses was 2.31% of total loans, down from 2.67% from the prior quarter, and is believed to be conservatively measured given the commensurate risk in the loan portfolio. Reserves for loan losses not allocated to specific loans total 19% of total reserves. The Company completed its most recent regulatory exam in January, 2010, which included an assessment of the adequacy of the reserve for loan losses.
Non-performing assets
At March 31, 2010, non-performing assets totaled $10.5 million, or 5.65% of total assets. This is an increase of $596,000 when compared to the previous quarter. Non-performing assets include loans 90 days past due and still accruing interest, loans on non-accrual status and other real estate owned as follows:
-- At March 31, 2010, there were no loans 90 days past due and still
accruing interest.
-- At March 31, 2010, the Company had $7.9 million in loans on non-accrual
status, virtually unchanged from the prior quarter on a net basis.
During the quarter, the Company received payments of $531,000, charged
off loans of $569,000, migrated $1.1 million to other real estate
owned and added one new non-accruing commercial owner-occupied
construction loan of $2.2 million. The construction is complete.
The Company's exposure is well protected based upon current appraised
collateral with an estimated loan-to-value of 65%, and a rapid
resolution is expected.
-- At March 31, 2010, the Company had $2.6 million in other real estate
owned, up $522,000 when compared to the prior quarter. During the
quarter, the Company sold residential land totaling $556,000.
Non-performing assets as of March 31, 2010 by sector were as follows:
Land
Development
Commercial and
Commercial Real Estate Construction Residential
------------- ------------- ------------- -------------
Non-performing
loans $ 3,314,000 $ 714,000 $ 3,828,000 -
Other real estate
owned $ 531,000 $ 1,118,000 $ 808,000 $ 157,000
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 13.5% at March 31, 2010. 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 million in preferred stock outstanding under this program. Preferred dividends paid in 2010 totaled $64,500.
Net interest income
Net interest income (or interest income less interest expense) stabilized at $1.5 million after several sequential quarterly declines. Net interest income is expected to grow as asset quality improves. Further, the Company has been actively reducing the level of funds held in cash into higher yielding investment grade securities, and expects net interest income to rise as the Company continues to redeploy cash into both loans and long-term investments.
Non-interest expense
Non-interest expense in the first quarter of 2010 totaled $2.0 million, up $643,000 when compared to the prior quarter. The increase is the result of higher legal and professional fees related to nonperforming assets and losses on the impairment or sale of other real estate owned, and an increase in FDIC premiums.
About Capital Pacific Bancorp
Capital Pacific Bancorp (OTC: CPBO.OB) 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)
Sequential
Condensed Consolidated Balance As of As of quarter %
Sheets 3/31/2010 12/31/2009 change
------------ ------------ ------------
Cash and due from banks $ 27,343 $ 58,534 -53%
Time certificates of deposits at
other banks 13,987 9,771 43%
Investments 10,019 885 1032%
Loans:
Construction and land development 21,531 21,043 2%
Real estate 66,618 62,932 6%
Commercial 38,833 37,342 4%
Other 3,289 3,407 -3%
------------ ------------
Total loans 130,271 124,724 4%
Loan loss reserve (3,015) (3,325) -9%
------------ ------------
Total loans, net of loan loss
reserve 127,256 121,399 5%
Other real estate owned 2,614 2,092 25%
Other assets 4,089 4,049 1%
------------ ------------
Total assets $ 185,308 $ 196,730 -6%
============ ============
Deposits:
Non interest-bearing demand $ 33,624 $ 37,282 -10%
Interest-bearing demand 70,797 75,695 -6%
Certificates of deposit 44,095 43,111 2%
------------ ------------
Total client deposits 148,516 156,088 -5%
Brokered certificates of deposit 12,166 17,647 -31%
------------ ------------
Total deposits 160,682 173,735 -8%
Other liabilities 6,086 4,256 43%
Shareholders' equity 18,540 18,739 -1%
------------ ------------
Total liabilities and
shareholders' equity $ 185,308 $ 196,730 -6%
============ ============
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 Year
Consolidated ending ending ending Sequential over
Statements of March 31, December 31, March 31, quarter % year %
Operations 2010 2009 2009 change change
----------- ----------- ----------- ---------- -------
Interest income $ 1,905 $ 1,907 $ 1,930 0% -1%
Interest
expense 409 444 495 -8% -17%
----------- ----------- -----------
Net interest
income 1,496 1,463 1,435 2% 4%
----------- ----------- -----------
Provision for
(recovery of)
loan losses (20) 207 262 -110% -108%
----------- ----------- -----------
Net interest
income, net
of provision
for loan
losses 1,516 1,256 1,173 21% 29%
----------- ----------- -----------
Deposit fees
and other
non-interest
income 199 190 220 5% -10%
Income
associated
with the sale
of loans - 195 110 -100% -100%
----------- ----------- -----------
Total
non-interest
income 199 385 330 -48% -40%
----------- ----------- -----------
Salaries and
benefits 702 707 648 -1% 8%
Occupancy 140 143 142 -2% -1%
Professional
costs
associated
with
nonperforming
assets 329 92 25 258% 1216%
Net loss on
sale or
impairment of
other real
estate owned 278 24 - 1058% -
FDIC
assessments 183 65 47 182% 289%
Other
non-interest
expense 404 362 469 12% -14%
----------- ----------- -----------
Total
non-interest
expense 2,036 1,393 1,331 46% 53%
----------- ----------- -----------
Net income
(loss)
before tax
expense
(benefit) (321) 248 172 -229% -287%
----------- ----------- -----------
Income tax
expense
(benefit) (192) 22 60 -973% -420%
----------- ----------- -----------
Net income
(loss) $ (129) $ 226 $ 112 -157% -215%
=========== =========== ===========
Preferred stock
dividends (65) (65) (65) 0% 0%
----------- ----------- -----------
Net income
(loss)
available to
common
shareholders $ (194) $ 161 $ 47 -220% -513%
=========== =========== ===========
Earnings
(loss) per
common
share, basic
(2) $ (0.11) $ 0.09 $ 0.03 -222% -467%
=========== =========== ===========
Earnings
(loss) per
common
share, fully
diluted (2) $ (0.11) $ 0.09 $ 0.03 -222% -467%
=========== =========== ===========
Basic average
common shares
outstanding 1,771,910 1,771,910 1,752,221
=========== =========== ===========
Fully diluted
average common
shares
outstanding 1,771,910 1,772,374 1,752,221
=========== =========== ===========
Capital Pacific Bancorp
(unaudited and dollars in thousands, except per share data)
Performance by
Quarter 3/31/10 12/31/09 9/30/09 6/30/09 3/31/09
---------- ---------- ---------- ---------- ---------
Actual loans,
gross $ 130,271 $ 124,724 $ 133,362 $ 130,292 $ 130,067
Average loans,
gross $ 123,984 $ 129,650 $ 133,460 $ 131,645 $ 136,984
Loans past due
30-89 days (4) $ - $ - $ 52 $ 2,131 $ 1,879
Loans past due
90 days or more
(4) $ - $ - $ - $ - $ -
Loans on
non-accrual
status $ 7,856 $ 7,782 $ 6,707 $ 1,484 $ 3,129
Other real
estate owned $ 2,614 $ 2,092 $ 1,586 $ 3,976 $ 2,041
Total
non-performing
assets $ 10,470 $ 9,874 $ 8,293 $ 5,460 $ 5,170
Total
non-performing
assets as a
percentage of
total assets 5.65% 5.02% 5.15% 3.81% 3.61%
Loan loss
reserve $ 3,015 $ 3,325 $ 3,739 $ 2,573 $ 3,001
Loans charged
off, net of
recoveries $ 290 $ 621 $ 2,588 $ 853 $ 190
Loan loss
reserve as a
percentage of
loans 2.31% 2.67% 2.80% 1.97% 2.31%
Loan loss
reserve as a
percentage of
non-performing
loans 38% 43% 56% 173% 96%
Actual client
deposits $ 148,516 $ 156,088 $ 119,218 $ 99,080 $ 99,489
Average client
deposits $ 140,915 $ 127,193 $ 108,662 $ 98,680 $ 93,739
Net income
(loss) $ (129) $ 226 $ (2,044) $ 1 $ 112
Net income
(loss)
available to
common
shareholders
(1) $ (194) $ 161 $ (2,109) $ (63) $ 47
Net earnings
(loss) per
common share,
basic (1) $ (0.11) $ 0.09 $ (1.19) $ (0.04) $ 0.03
Net earnings
(loss) per
common share,
fully diluted
(1) $ (0.11) $ 0.09 $ (1.19) $ (0.04) $ 0.03
Actual common
shares
outstanding 1,771,911 1,771,911 1,771,911 1,771,911 1,771,911
Book value per
common share $ 8.18 $ 8.30 $ 8.20 $ 9.38 $ 9.42
Return on
average common
equity (1) -5.37% 4.37% -52.60% -1.52% 1.20%
Return on
average assets -0.29% 0.53% -5.26% 0.00% 0.32%
Net interest
margin (2) 3.65% 3.64% 4.21% 4.62% 4.33%
Efficiency ratio
(3) 120% 76% 91% 76% 75%
(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
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