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Capital Pacific Bancorp: Capital Pacific Bancorp Announces Earnings for Fourth Quarter and Full Year of 2008

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  Published in Business and Finance on Thursday, January 22nd 2009 at 9:19 GMT, Last Modified on 2009-01-22 09:22:59 by Market Wire
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PORTLAND, OR--(Marketwire - January 22, 2009) - Capital Pacific Bancorp (OTCBB: [ CPBO ]) reported net income of $114,000 or earnings of $0.07 per diluted share in the fourth quarter of 2008, compared to a net loss of $855,000 and $0.55 loss per diluted share in the fourth quarter last year. For the year 2008, net income was $1,256,000, or earnings of $0.74 per diluted share, compared to a net loss in 2007 of $486,000, or $0.31 loss per diluted share. Net income for 2008 was positively impacted by a pre-tax $1.3 million recovery related to a $2.0 million loan that was charged off in 2007. Excluding the recovery, net income for 2008 would have been $447,000, or earnings of $0.26 per share.

"We are pleased to have remained profitable in 2008, particularly given that 2008 has been a tumultuous year for many in the financial sector, both locally and at the national level," said Mark Stevenson, CEO of Capital Pacific Bancorp.

Loans and reserve for loan losses

As of December 31, 2008, loans totaled $135.3 million, an increase of $5.1 million when compared to the third quarter of 2008 and up $6.7 million for the year. Loan growth remains lower than prior reporting periods, reflecting the decline in the local economy.

"We continue to reduce the underlying credit risk in our loan portfolio, by increasing sector diversity and collateral, and reducing our exposure to residential development loans," said Stevenson. "Overall, residential development loans are less than 5% of total loans."

The Company's reserve for loan losses remained unchanged from the third quarter of 2008 at $2.9 million and equals 2.17% of total loans. Management considers the Company's reserve for loan losses to be appropriate given prevailing economic conditions.

The following table provides information about the Company's reserve for loan losses:

 Quarter- Quarter- Year- Year- to-date to-date to-date to-date December December December December 31, 31, 31, 31, 2008 2007 2008 2007 ---------- ---------- ---------- ---------- Reserve for loan losses, beginning of period $2,917,000 $2,313,000 $2,403,000 $1,280,000 Provision for (recovery of) loan losses 463,000 2,103,000 (40,000) 3,189,000 Loan charge-offs (687,000) (2,039,000) (739,000) (2,108,000) Loan recoveries 236,000 26,000 1,305,000 42,000 ---------- ---------- ---------- ---------- Reserve for loan losses, end of period $2,929,000 $2,402,000 $2,929,000 $2,402,000 

Non-performing assets

At December 31, 2008, non-performing assets were $2.6 million, or 1.86% of total assets, and 12.7% of total capital. There were no loans past due 90 days or more. Non-performing assets include both non-performing loans and other real estate owned.

At December 31, 2008, the company had one non-performing loan of $970,000 for a residential development in Vancouver, Washington. This loan is believed to be adequately secured by the underlying collateral based upon a discounted appraisal. The Company is moving toward foreclosure on this property.

At December 31, 2008, the Company had $1.7 million in other real estate owned representing two properties. One property is a commercial building valued at $350,000 which is expected to sell in early 2009. The Company also owns land in southern Oregon valued at $1.3 million. The disposition of this property is expected as soon as market conditions improve.

Capital adequacy

On December 23, 2008, the Company issued $4 million in preferred stock as part of the U.S. Department of the Treasury's Capital Purchase Program (TCPP). TCPP is designed to attract broad participation by banking institutions to help stabilize the financial system and increase lending for the benefit of the U.S. economy.

"Our intent is to use the funds to support continued growth while maintaining healthy capital ratios during this difficult economic cycle," said Stevenson. "As a local community bank, we are very supportive of opportunities to deploy new capital on behalf of Oregonians and our local businesses."

The company continues to be classified as well-capitalized by regulatory standards. The Company's total risk-based capital ratio is 15.8% at December 31, 2008. To be considered well-capitalized, a company must have total risked-based capital equal to 10.0% of risk-weighted assets.

Deposits

Average client deposits of $89.6 million are virtually unchanged when compared to the last several reporting periods; client deposits totaled $90.1 million at quarter-end. The Company has posted solid growth in new clients, and overall account retention is strong. However, new deposit growth has been offset by fluctuations in client accounts driven by client-specific circumstances and other economic factors. Client deposits are defined as total deposits excluding brokered or nationally sourced deposits.

Net interest margin

The net interest margin was 4.69% in the fourth quarter of 2008, down 5 basis points from the previous quarter and down 33 basis points compared to the same quarter last year. The net interest margin in the fourth quarter of 2008 included approximately $20,000 in pre-payment penalties. Excluding the pre-payment penalties, the interest margin was 4.63%.

Other financial highlights

 -- Income associated with the sale of loans in the fourth quarter of 2008 totaled $16,000 compared to $102,000 for the previous quarter, and $112,000 in the same quarter last year. The Company anticipates that income associated with the sale of loans will be much lower than in previous periods due to significant declines in investor interest in government- guaranteed and commercial real estate loans. -- Non-interest expense in the fourth quarter of 2008 totaled $1.2 million, down slightly when compared to the prior quarter and the same quarter last year. For the year, non-interest expense increased to $5.5 million in 2008 from $5.0 million in 2007, an increase of 11%. The increase was due to growth in compensation and professional fees. The Company has since reduced its workforce and expects to severely limit the growth in non- interest expenses in 2009. 

About Capital Pacific Bancorp

Capital Pacific Bancorp (OTCBB: [ CPBO ]) is the parent company of Capital Pacific Bank, which serves businesses, professionals and nonprofit organizations with comprehensive banking expertise and an elite level of service. 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, deteriorating asset values caused by changing market conditions, loan losses that exceed our reserve for loan losses, 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.

 (unaudited and dollars in thousands, except per share data) Condensed Balance Sheets As of Dec. 31, 2008 As of Dec. 31, 2007 -------------------- -------------------- Cash and due from banks $ 3,804 $ 517 Investments 993 5,569 Loans: Commercial 53,595 59,023 Real estate 71,554 60,913 Other 10,131 8,598 -------------------- -------------------- Total loans 135,280 128,534 Loan loss reserve (2,929) (2,403) -------------------- -------------------- Total loans, net of loan loss reserve 132,351 126,131 Other assets 3,552 2,341 -------------------- -------------------- Total assets $ 140,700 $ 134,558 ==================== ==================== Deposits: Non interest-bearing demand $ 19,142 $ 19,531 Interest-bearing demand 38,720 58,074 Certificates of deposit 56,625 35,769 -------------------- -------------------- Total deposits 114,487 113,374 Other liabilities 5,663 7,697 Shareholders' equity 20,550 13,487 -------------------- -------------------- Total liabilities and shareholders' equity $ 140,700 $ 134,558 ==================== ==================== Condensed Statements of Income For the three months For the three months ending Dec. 31, 2008 ending Dec. 31, 2007 -------------------- -------------------- Interest income $ 2,255 $ 2,797 Interest expense 662 1,127 -------------------- -------------------- Net interest income 1,593 1,670 Provision for loan losses 463 2,103 -------------------- -------------------- Net interest income, net of provision for loan losses 1,130 (433) Deposit fees and other non-interest income 206 220 Income associated with the sale of loans 16 112 Non-interest expense 1,245 1,337 -------------------- -------------------- Net income before tax expense 107 (1,438) Income tax expense (7) (583) -------------------- -------------------- Net income (loss) $ 114 $ (855) ==================== ==================== Earnings (loss) per share, basic $ 0.07 $ (0.55) ==================== ==================== Earnings (loss) per share, fully diluted $ 0.07 $ (0.55) ==================== ==================== Basic average shares outstanding 1,748,594 1,552,178 ==================== ==================== Fully diluted average shares outstanding 1,748,594 1,552,178 ==================== ==================== Condensed Statements of Income For the year ending For the year ending Dec. 31, 2008 Dec. 31, 2007 -------------------- -------------------- Interest income $ 9,178 $ 10,476 Interest expense 2,997 4,141 -------------------- -------------------- Net interest income 6,181 6,335 Provision for (recovery of) loan losses (40) 3,190 -------------------- -------------------- Net interest income, net of provision for loan losses 6,221 3,145 Deposit fees and other non-interest income 877 768 Income associated with the sale of loans 421 291 Non-interest expense 5,549 5,047 -------------------- -------------------- Net income before tax expense 1,970 (843) Income tax expense 714 (357) -------------------- -------------------- Net income (loss) $ 1,256 $ (486) ==================== ==================== Earnings (loss) per share, basic $ 0.74 $ (0.31) ==================== ==================== Earnings (loss) per share, fully diluted $ 0.74 $ (0.31) ==================== ==================== Basic average shares outstanding 1,707,272 1,551,649 ==================== ==================== Fully diluted average shares outstanding 1,707,272 1,551,649 ==================== ==================== Performance by Quarter 12/31/08 9/30/08 6/30/08 3/31/08 --------- --------- --------- --------- Actual Loans $ 135,280 $ 130,155 $ 130,485 $ 131,020 Average Loans $ 136,486 $ 128,129 $ 129,127 $ 130,393 Loans past due 90 days or more $ - $ - $ - $ - Non-performing loans $ 970 $ 1,840 $ 441 $ 1,375 Other real estate owned $ 1,652 $ 1,066 $ 1,066 $ - Total non-performing assets $ 2,622 $ 2,906 $ 1,507 $ 1,375 Total non-performing assets as a percentage of total assets 1.86% 2.13% 1.12% 1.03% Loans charged off, net of recoveries $ 451 $ - $ (1,017) $ - Loan loss reserve as a percentage of loans 2.17% 2.24% 2.19% 1.87% Loan loss reserve as a percentage of non-performing loans 302% 159% 648% 178% Non-performing loans as a percentage of total loans 0.72% 1.41% 0.34% 1.05% Actual Client and Wholesale Deposits $ 114,487 $ 110,272 $ 106,240 $ 110,184 Average Client and Wholesale Deposits $ 115,083 $ 109,672 $ 113,624 $ 112,013 Actual Client Deposits $ 90,092 $ 90,228 $ 90,717 $ 87,399 Average Client Deposits $ 89,574 $ 89,971 $ 92,106 $ 87,840 Net interest income $ 1,593 $ 1,507 $ 1,533 $ 1,550 Net income before tax expense $ 107 $ 327 $ 1,151 $ 362 Net income $ 114 $ 212 $ 704 $ 225 Net earnings per share, basic $ 0.07 $ 0.12 $ 0.40 $ 0.14 Net earnings per share, fully diluted $ 0.07 $ 0.12 $ 0.40 $ 0.14 Actual shares outstanding 1,748,594 1,748,594 1,748,594 1,748,594 Book value per share $ 9.46 $ 9.39 $ 9.26 $ 8.86 Return on average equity 2.77% 5.14% 17.99% 6.59% Return on average assets 0.32% 0.63% 2.11% 0.67% Net interest margin (1) 4.69% 4.74% 4.74% 4.74% Efficiency ratio (2) 69% 78% 72% 78% (1) Calculated on a tax equivalent basis (2) Calculated by dividing non-interest expense by net interest income and non-interest income.