Press Release
Capital Pacific Bancorp Announces Results for Second Quarter 2010
07/30/2010
Contact:
Mark Stevenson, President and CEO or
Felice Belfiore, CFO
(503) 796-0100
PORTLAND, OR -- (Marketwire) -- 07/30/10 -- Capital Pacific Bancorp (OTC: CPBO.OB) ("the Company") reported net income of $35,000 for the three months ended June 30, 2010. Including the effect of preferred stock dividends, the Company reported a net loss to common shareholders of $30,000, or $0.02 per diluted share for the same period.
"Our primary focus remains on improving asset quality," said Mark Stevenson, President and CEO of Capital Pacific Bancorp. "Our progress is positive; loan losses are trending down and total non-performing loans have declined."
"While economic conditions remain challenging, we believe there continues to be opportunity to grow our business in this environment," Stevenson continued. "Average client deposits have grown in each of the last four quarters at an average growth rate of 11% per quarter."
Deposits
As of June 30, 2010, average client deposits grew $7.4 million, from $140.9 million in the first quarter of 2010 to $148.3 million in the second quarter of 2010. The Company's client base continues to expand within its areas of expertise, including non-profit organizations, independent schools, and professional service firms.
Loans
At June 30, 2010, gross loans totaled $130.4 million, unchanged when compared to the prior quarter and up $5.6 million for the year. "Overall, lending conditions remain well below pre-recession levels and competition has increased as more banks are looking to improve earnings," said Stevenson. "We are carefully rebuilding our loan portfolio, with approximately 15% of our current portfolio originated in 2010. Our focus is financing high quality companies or organizations within the greater Portland area."
Credit quality
At June 30, 2010, the Company's reserve for loan losses totaled $3.2 million, or 2.42% of total loans compared to $3.0 million or 2.31% of total loans as of March 31, 2010. The Company recognized $80,000 in provision expense in the 2nd quarter of 2010, and loan recoveries exceeded new charge-offs by $64,000. "The pace of loan losses has clearly eased," said Stevenson. "We believe our reserve for loan losses remains conservatively high, but appropriate given our continued uncertainty about how this prolonged economic downturn will impact our local market."
Non-performing assets
At June 30, 2010, non-performing assets totaled $9.2 million, or 5.12% of total assets. This is a decrease of $1.3 million 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 June 30, 2010, there were no loans 90 days past due and still
accruing interest.
-- At June 30, 2010, the Company had $6.4 million in loans on non-accrual
status, down $1.5 million when compared to the prior quarter on a net
basis. The decline was primarily due to the transfer of loans to other
real estate owned.
-- At June 30, 2010, the Company had $2.8 million in other real estate
owned, up $203,000 when compared to the prior quarter. During the
quarter, the Company sold two pieces of property including one
commercial building for approximately $1 million.
Non-performing assets as of June 30, 2010 by sector were as follows:
Land
No. of Development
Borrowers or Commercial and
Properties Commercial Real Estate Construction Total
---------- ----------- ----------- ------------ -----------
Non-performing
loans 14 $ 3,139,000 $ 2,715,000 $ 526,000 $ 6,380,000
Other real
estate owned 6 - $ 662,000 $ 2,155,000 $ 2,777,000
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 13.6% at June 30, 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 have been paid current and total $130,000 in 2010.
Net interest income
Net interest income (or interest income less interest expense) increased 9% in the three months ended June 30, 2010 when compared to the prior quarter. The increase is due to movement of funds previously held in cash into higher yielding investment grade securities.
Non-interest expense
Non-interest expense in the second quarter of 2010 totaled $1.9 million, down $176,000 or 9% when compared to the prior quarter. The decrease is due to slightly lower professional costs associated with non-performing assets and losses on the impairment or sale of other real estate owned ("work-out costs") which totaled $484,000 in the second quarter of 2010. Work-out costs are believed to have peaked in the first quarter of 2010 when work-out costs totaled $608,000 and should continue to decline as the number of non-performing assets decline.
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)
Sequential
Condensed Consolidated Balance Sheets As of As of quarter
6/30/2010 12/31/2009 % change
----------- ----------- -----------
Cash and due from banks $ 20,278 $ 58,534 -65%
Time certificates of deposits at
other banks 8,431 9,771 -14%
Investments 16,796 885 1798%
Loans:
Construction and land development 13,681 21,043 -35%
Real estate 71,399 62,932 13%
Commercial 39,913 37,342 7%
Other 5,360 3,407 57%
----------- -----------
Total loans 130,353 124,724 5%
Loan loss reserve (3,159) (3,325) -5%
----------- -----------
Total loans, net of loan loss
reserve 127,194 121,399 5%
Other real estate owned 2,817 2,092 35%
Other assets 4,150 4,049 2%
----------- -----------
Total assets $ 179,666 $ 196,730 -9%
=========== ===========
Deposits:
Non interest-bearing demand $ 30,587 $ 37,282 -18%
Interest-bearing demand 78,216 75,695 3%
Certificates of deposit 38,152 43,111 -12%
----------- -----------
Total client deposits 146,955 156,088 -6%
Brokered certificates of deposit 9,962 17,647 -44%
----------- -----------
Total deposits 156,917 173,735 -10%
Other liabilities 4,127 4,256 -3%
Shareholders' equity 18,622 18,739 -1%
----------- -----------
Total liabilities and
shareholders' equity $ 179,666 $ 196,730 -9%
=========== ===========
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 2010 2010 2009 % change % change
--------- --------- --------- ---------- ---------
Interest income $ 2,033 $ 1,905 $ 1,977 7% 3%
Interest expense 396 409 433 -3% -9%
--------- --------- ---------
Net interest
income 1,637 1,496 1,544 9% 6%
--------- --------- ---------
Provision for
(recovery of) loan
losses 80 (20) 425 500% -81%
--------- --------- ---------
Net interest
income, net of
provision for
loan losses 1,557 1,516 1,119 3% 39%
--------- --------- ---------
Deposit fees and
other non-interest
income 222 199 193 12% 15%
Income associated
with the sale of
loans 146 - 68 - 115%
--------- --------- ---------
Total
non-interest
income 368 199 261 85% 41%
--------- --------- ---------
Salaries and
benefits 722 702 702 3% 3%
Occupancy 150 140 139 7% 8%
Professional costs
associated with
non-performing
assets 191 330 147 -42% 30%
Net loss on sale or
impairment of
other real estate
owned 293 278 - 5% -
FDIC assessments 138 183 123 -25% 12%
Other non-interest
expense 367 404 267 -9% 37%
--------- --------- ---------
Total
non-interest
expense 1,861 2,037 1,378 -9% 35%
--------- --------- ---------
Net income (loss)
before tax
expense
(benefit) 64 (322) 2 120% 3100%
--------- --------- ---------
Income tax expense
(benefit) 29 (192) 1 115% 2800%
--------- --------- ---------
Net income (loss) $ 35 $ (130) $ 1 127% 3400%
========= ========= =========
Preferred stock
dividends (65) (65) (65) 0% 0%
--------- --------- ---------
Net income (loss)
available to
common
shareholders $ (30) $ (195) $ (64) 85% -53%
========= ========= =========
Earnings (loss)
per common
share, basic (2) $ (0.02) $ (0.11) $ (0.04) 82% -50%
========= ========= =========
Earnings (loss)
per common
share, fully
diluted (2) $ (0.02) $ (0.11) $ (0.04) 82% -50%
========= ========= =========
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 2010 2009 % change
--------- --------- ---------
Interest income $ 3,938 $ 3,907 1%
Interest expense 804 928 -13%
--------- ---------
Net interest income 3,134 2,979 5%
--------- ---------
Provision for loan losses 60 687 -91%
--------- ---------
Net interest income, net of provision
for loan losses 3,074 2,292 34%
--------- ---------
Deposit fees and other non-interest income 421 412 2%
Income associated with the sale of loans 146 179 -18%
--------- ---------
Total non-interest income 567 591 -4%
--------- ---------
Salaries and benefits 1,424 1,351 5%
Occupancy 291 281 4%
Professional costs associated with
non-performing assets 522 171 205%
Net loss on sale or impairment of other
real estate owned 571 - -
FDIC assessments 320 170 88%
Other non-interest expense 771 735 5%
--------- ---------
Total non-interest expense 3,899 2,708 44%
--------- ---------
Net income (loss) before tax expense
(benefit) (258) 175 -247%
--------- ---------
Income tax expense (benefit) (163) 61 -367%
--------- ---------
Net income (loss) $ (95) $ 114 -183%
========= =========
Preferred stock dividends (130) (130) 0%
--------- ---------
Net income (loss) available to common
shareholders $ (225) $ (16) -1306%
========= =========
Earnings (loss) per common share,
basic (2) $ (0.13) $ (0.01) -1200%
========= =========
Earnings (loss) per common share,
fully diluted (2) $ (0.13) $ (0.01) -1200%
========= =========
Basic average common shares outstanding 1,771,911 1,762,120
========= =========
Fully diluted average common shares
outstanding 1,771,911 1,762,120
========= =========
Capital Pacific Bancorp
(unaudited and dollars in
thousands, except per
share data)
Performance by
Quarter 6/30/10 3/31/10 12/31/09 9/30/09 6/30/09
---------- ---------- ---------- ---------- ----------
Actual loans,
gross $ 130,353 $ 130,271 $ 124,724 $ 133,362 $ 130,292
Average loans,
gross $ 131,527 $ 123,984 $ 129,650 $ 133,460 $ 131,645
Loans past due
30-89 days (4) $ 83 $ - $ - $ 52 $ 2,131
Loans past due
90 days or
more (4) $ - $ - $ - $ - $ -
Loans on
non-accrual
status $ 6,379 $ 7,856 $ 7,782 $ 6,707 $ 1,484
Other real
estate owned $ 2,817 $ 2,614 $ 2,092 $ 1,586 $ 3,976
Total
non-performing
assets $ 9,196 $ 10,470 $ 9,874 $ 8,293 $ 5,460
Total
non-performing
assets as a
percentage of
total assets 5.12% 5.65% 5.02% 5.15% 3.81%
Loan loss
reserve $ 3,159 $ 3,015 $ 3,325 $ 3,739 $ 2,573
Loans charged
off, net of
recoveries /
(recoveries,
net of loans
charged off) $ (64) $ 290 $ 621 $ 2,588 $ 853
Loan loss
reserve as a
percentage of
loans 2.42% 2.31% 2.67% 2.80% 1.97%
Loan loss
reserve as a
percentage of
non-performing
loans 49% 38% 43% 56% 173%
Actual client
deposits $ 146,955 $ 148,516 $ 156,088 $ 119,218 $ 99,080
Average client
deposits $ 148,337 $ 140,915 $ 127,193 $ 108,662 $ 98,680
Net income
(loss) $ 35 $ (130) $ 226 $ (2,044) $ 1
Net income
(loss)
available to
common
shareholders
(1) $ (30) $ (195) $ 161 $ (2,109) $ (63)
Net earnings
(loss) per
common share,
basic (1) $ (0.02) $ (0.11) $ 0.09 $ (1.19) $ (0.04)
Net earnings
(loss) per
common share,
fully diluted
(1) $ (0.02) $ (0.11) $ 0.09 $ (1.19) $ (0.04)
Actual common
shares
outstanding 1,771,911 1,771,911 1,771,911 1,771,911 1,771,911
Book value per
common share $ 8.22 $ 8.18 $ 8.30 $ 8.20 $ 9.38
Return on
average common
equity (1) -0.83% -5.36% -4.82% -52.60% -1.52%
Return on
average assets 0.08% -0.29% 0.57% -5.26% 0.00%
Net interest
margin (2) 3.84% 3.65% 3.64% 4.21% 4.62%
Efficiency
ratio (3) 93% 120% 75% 91% 76%
(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
###