1st Capital Bancorp Announces Second Quarter 2022 Financial Results

Jul 29th, 2022 16:00 EST

SALINAS, Calif., July 29, 2022 (GLOBE NEWSWIRE) -- 1st Capital Bancorp (the “Company”), (OTCQX: FISB), the $990.1 million asset bank holding company and parent company of 1st Capital Bank (the “Bank”), today reported unaudited net income of $2.52 million for the quarter ended June 30, 2022, an increase of 20.49% compared to net income of $2.09 million for the quarter ended March 31, 2022, and an increase of 29.25% compared to net income of $1.95 million for the quarter ended June 30, 2021.

Financial Highlights Performance highlights for the quarter ended June 30, 2022, as compared to the quarter ended June 30, 2021 and the quarter ended March 31, 2022:

  • Earnings per share (diluted) were $0.45 for the second quarter of 2022, as compared to $0.34 and $0.37 for the quarters ended June 30, 2021 and March 31, 2022, respectively.
  • For the quarter ended June 30, 2022, the Company's return on average equity was 14.82%, as compared to 10.36% and 10.59% for the quarters ended June 30, 2021 and March 31, 2022, respectively.
  • For the quarter ended June 30, 2022, the Company’s return on average assets was 0.98%, as compared to 0.89% and 0.85% for the quarters ended June 30, 2021 and March 31, 2022, respectively.
  • For the quarter ended June 30, 2022, the Company’s net interest margin was 3.58%, as compared to 3.54% and 3.40% for the quarters ended June 30, 2021 and March 31, 2022, respectively.
  • Pre-tax, pre-provision income for the quarter ended June 30, 2022 totaled $3.5 million, as compared to $2.7 million and $2.8 million for the quarters ended June 30, 2021 and March 31, 2022, respectively.
  • For the quarter ended June 30, 2022, the Company’s efficiency ratio was 61.89%, as compared to 64.79% and 65.75% for the quarters ended June 30, 2021 and March 31, 2022, respectively.
  • The Company recorded no provision expense for the quarters ended June 30, 2022, June 30, 2021, and March 31, 2022.
  • As of June 30, 2022, the Company’s nonperforming assets to total assets was .01%, as compared to 0.23% and 0.01% for the quarters ended June 30, 2021 and March 31, 2022, respectively.
  • As of June 30, 2022, the Company reported total assets, total deposits, and total loans of $990.1 million, $928.3 million, and $586.1 million, respectively.

“Our second quarter results continue to reflect our expectations of positive operating trends including strong growth in net interest income, net income, and earnings per share,” commented Sam Jimenez, Chief Executive Officer. “While the yield curve paints a picture of economic uncertainty on the horizon, we anticipate continuing solid financial results, and maintain a strong capital position with a Common Equity Tier 1 ratio of 13.01%.”

Net Interest Income and Net Interest MarginThe Company's second quarter 2022 net interest income increased $1.3 million, or 17.8%, to $8.84 million as compared with $7.51 million for the quarter ending June 30, 2021 and $844 thousand or 10.6% compared with the $7.99 million for the quarter ending March 31, 2022. Loan interest income in the second quarter of 2022, excluding PPP income, increased $959 thousand, or 16.1%, to $6.91 million compared to $5.96 million for the quarter ending June 30, 2021. Interest and fee income related to PPP loans decreased $677 thousand to $344 thousand for the quarter ended June 30, 2022, compared to $1.02 million for the quarter ended June 30, 2021, a year over year decrease of 66.3%.

The Company's net interest margin increased by 4 basis points (bps), or 1.1%, to 3.58% when compared to 3.54% for the quarter ended June 30, 2021. This increase was primarily driven by the Company’s mix of average earning assets as cash was deployed into higher yielding loans and leases, and investment securities. Interest expense increased $278 thousand for the quarter ended June 30, 2022 compared to the quarter ended June 30, 2021 primarily related to interest expense associated with subordinated debt.

Provision for Loan LossesStrong credit quality resulted in no loan loss provision in the quarters ended June 30, 2022, June 30, 2021, March 31, 2022.

Noninterest ExpensesThe Company's total non-interest expense increased $663 thousand, or 13.3%, to $5.65 million in the quarter ended June 30, 2022, compared to $4.99 million for the quarter ended June 30, 2021. This increase is attributed to a rise in salaries and benefits, software, community relations and business development costs.

Balance Sheet SummaryThe Company's total assets increased $39.4 million, or 4.1%, to $990.1 million as compared to $950.7 million at June 30, 2021.

Total loans outstanding were $586.1 million as of June 30, 2022, representing a $20.2 million, or 3.3%, decrease from the June 30, 2021 outstanding balance of $606.3 million. Excluding the $82.9 million decline in PPP loan balances, loans increased $62.6 million, or 12.0% at June 30, 2022 compared to June 30, 2021. In the second quarter of 2022, the Company purchased an $11.0 million pool of consumer loans and a $18.7 million pool of leases.

PPP loans outstanding were $1.99 million as of June 30, 2022, and included a deferred fee balance of $51 thousand. At June 30, 2021, PPP loans outstanding were $84.9 million and included a deferred fee balance of $2.2 million.

Loan type (dollars in thousands)6/30/2022% of Total Loans 3/31/2022% of Total Loans 6/30/2021% of Total Loans
         
Construction / land (including farmland)$18,502 3.2% $17,738 3.1% $22,091 3.6%
Residential 1 to 4 units             57,381 9.8%              58,191 10.0%              75,906 12.5%
Home equity lines of credit               5,392 0.9%                5,555 1.0%  6,669 1.1%
Multifamily             76,168 13.0%  78,291 13.5%              77,183 12.7%
Owner occupied commercial real estate           111,283 19.0%          111,580 19.2%              83,763 13.8%
Investor commercial real estate           186,448 31.8%            193,426 33.3%            172,776 28.3%
Commercial and industrial             43,652 7.4%              41,859 7.2%              49,147 8.1%
Paycheck Protection Program               1,986 0.3%            13,342 2.3%              84,866 14.0%
Leases             34,095 5.8%  17,597 3.0%  - 0.0%
Consumer             36,372 6.2%  31,488 5.4%  23,380 3.9%
Other loans             14,784 2.6%  11,143 2.0%  12,320      2.0%
Total loans           586,063 100.0%            580,210 100.0%  606,310 100.0%
Allowance for loan losses (8,066)   (8,424)   (8,840) 
Net loans held for investment$577,997   $571,786   $597,470  

The investment portfolio increased $79.1 million, or 29.9%, to $343.7 million from $264.6 million at June 30, 2021. The unrealized loss associated with the Company’s available-for-sale investment security portfolio increased from $23.6 million at March 31, 2022 to $38.2 million at June 30, 2022 as market yields rose in the second quarter of driving down market values. Investment securities with book values of $60 million and unrealized losses of $7.7 million were transferred from available-for-sale to held-to-maturity in the second quarter of 2022.

Total deposits were $928.3 million as of June 30, 2022. This represents a $74.7 million, or 8.7% increase from the June 30, 2021 balance of $853.6 million. Growth in money market and savings balances of $48.9 million and $14.0 million, respectively, drove deposit growth. Noninterest-bearing balances comprised 45.1% and 48.3% of total deposit balances at June 30, 2022 and June 30, 2021, respectively.

Deposit type (dollars in thousands)6/30/2022% of Total Deposits 3/31/2022% of Total Deposits 6/30/2021% of Total Deposits
Interest bearing checking accounts$62,7796.8% $59,4556.4% $57,4226.7%
Money market           290,10631.3%            250,59627.2%            241,16328.3%
Savings           143,21515.4%            161,72017.5%            129,17615.1%
Time             13,5091.5%              11,5201.2%              13,7611.6%
Total interest-bearing deposits           509,60954.9%            483,29152.4%            441,52251.7%
Noninterest-bearing           418,69245.1%            438,91447.6%            412,10848.3%
Total deposits$928,301100.0% $922,205100.0% $853,630100.0%

Shareholder’s equity totaled $38.7 million at June 30, 2022, a decline of $38.6 million, or 49.9%, compared to $77.3 million at June 30, 2021. The decrease is driven by the increase in unrealized losses on the investment security portfolio, the impact of which flows through accumulated other comprehensive income (AOCI), a component of equity. The Company transferred approximately 20% of the book value of the investment portfolio from available-for-sale to held-to-maturity to mitigate the impact of future market rate increases on unrealized losses and AOCI.

In the second quarter of 2022, the Company entered into a cap corridor transaction with a $100 million notional amount. The cap corridor is designed to hedge a portion of interest expenses associated with deposits and to partially mitigate the future investment portfolio valuation impact of increasing interest rates. The corridor qualifies for hedge accounting treatment and is carried at fair value on the balance sheet with changes in fair value flowing through AOCI.

Stock Repurchase ActivityThe Company announced a Stock Repurchase Program on December 3, 2021 and subsequently has repurchased a total of 181,589 shares to date at a weighted average price of $15.19.   The stock repurchase program is currently paused.

Asset QualityAt June 30, 2022, non-performing assets were 0.01% of the Company’s total assets, compared with 0.23% at June 30, 2021. The allowance for loan losses was 1.38% of outstanding loans at June 30, 2022, compared to 1.46% at June 30, 2021. The Company had $0 and $2.2 million in nonaccrual loans at June 30, 2022 and June 30, 2021, respectively. The Company recorded net charge-offs of $358 thousand in the quarter ended June 30, 2022 compared to $12 thousand of net recoveries for the quarter ended June 30, 2021 and net charge offs of $154 thousand in the quarter ended March 31, 2022. Charge-offs were within the purchased consumer loan pools.   

Asset Quality6/30/2022 3/31/2022 6/30/2021 
Loans past due 90 days or more and accruing interest$145 $71 $- 
Other nonaccrual loans -  -  2,161 
Other real estate owned -  -  - 
Total nonperforming assets$145 $71 $2,161 
    
Allowance for loan losses to total loans 1.38% 1.45% 1.46%
Allowance for loan losses to nonperforming loans 5562.76% 11864.79% 409.07%
Nonaccrual loans to total loans 0.00% 0.00% 0.36%
Nonperforming assets to total assets 0.01% 0.01% 0.23%

As of June 30,2022, the Company had no outstanding loan deferments or forbearances stemming from COVID-19.

1ST CAPITAL BANCORP
CONDENSED FINANCIAL DATA - UNAUDITED
($ in 000s)
 Three Months Ended
Operating Results Data6/30/20223/31/20226/30/2021
Interest and dividend income   
Loans$7,258$6,896$                  6,976
Investment securities    2,038    1,557 750
Federal Home Loan Bank stock 59 58 66
Other income 56 13    8
Total interest and dividend income 9,411 8,524 7,800
Interest expense    573    530    295
Net interest income 8,838 7,994 7,505
Provision for loan losses - - -
Net interest income after provision for loan losses 8,838 7,994 7,505
Noninterest income 290    319 191
Noninterest expenses   
Salaries and benefits expense 3,457 3,445 3,222
Occupancy expense 463 435 390
Data and item processing 265 263 265
Furniture and equipment 150 140 114
Professional services 114 169 162
Other 1,201 1,014 833
Total noninterest expenses 5,650 5,466 4,986
Income before provision for income taxes 3,478 2,847 2,710
Provision for income taxes 958 755 760
Net income$2,520$2,092$                 1,950

                         Three Months Ended 
Selected Average Balances6/30/20223/31/20226/30/2021
Gross loans$593,990 $569,997 $620,093 
Investment securities 373,853  362,328  202,246 
Federal Home Loan Bank stock 4,024  3,948  3,834 
Other interest earning assets 31,158  31,744  30,287 
Total interest earning assets 1,003,025  968,017  856,460 
Total assets 1,027,269  996,632  881,495 
Interest bearing checking accounts 64,988  65,753  59,503 
Money market 278,646  221,071  200,199 
Savings 149,930  158,988  127,046 
Time deposits 12,350  11,572  14,279 
Total interest- bearing deposits 505,914  457,384  401,027 
Noninterest bearing demand deposits 427,351  438,394  398,007 
Total deposits 933,265  895,778  799,034 
Subordinated debentures and other borrowings 17,546  14,669  1,641 
Shareholders' equity$68,227 $80,143 $75,481 
1ST CAPITAL BANCORPCONDENSED FINANCIAL DATA – UNAUDITED($ in 000s)                                                                    
 Three Months Ended
Selected Financial Ratios 6/30/20223/31/20226/30/2021
Return on average total assets 0.98% 0.85% 0.89%
Return on average shareholders' equity 14.82% 10.59% 10.36%
Net interest margin 3.58% 3.40% 3.54%
Net interest income to average total assets 3.56% 3.25% 3.41%
Efficiency ratio 61.89% 65.75% 64.79%

1ST CAPITAL BANCORPCONDENSED FINANCIAL DATA – UNAUDITED($ in 000s)

 Six Months Ended
Operating Results Data6/30/20226/30/2021
Interest and dividend income  
Loans$14,154$13,577
Investment securities    3,595    1,205
Federal Home Loan Bank stock 117 110
Other income 69 16
Total interest and dividend income 17,935 14,908
Interest expense    1,103    537
Net interest income 16,832 14,371
Provision for loan losses - -
Net interest income after provision for loan losses 16,832 14,371
Noninterest income 609    381
Noninterest expenses  
Salaries and benefits expense 6,902 6,365
Occupancy expense 897 808
Data and item processing 528 515
Furniture and equipment 290 231
Professional services 283 341
Other 2,215 1,642
Total noninterest expenses 11,115 9,902
Income before provision for income taxes 6,326 4,850
Provision for income taxes 1,714 1,363
Net income$4,612$               3,487

  Six Months Ended
Selected Average Balances6/30/20226/30/2021 
Gross loans$582,060$617,604 
Investment securities 368,123 163,658 
Federal Home Loan Bank stock 3,987 3,685 
Other interest earning assets 35,207 37,811 
Total interest earning assets 989,377 822,758 
Total assets 1,012,035 847,719 
Interest bearing checking accounts 65,368 59,366 
Money market 250,017 179,197 
Savings 154,434 125,701 
Time deposits 11,963 14,483 
Total interest- bearing deposits 481,782 378,747 
Noninterest bearing demand deposits 432,842 385,085 
Total deposits 914,624 763,832 
Subordinated debentures and other borrowings 16,116 3,311 
Shareholders' equity$74,152$75,352 

1ST CAPITAL BANCORPCONDENSED FINANCIAL DATA – UNAUDITED($ in 000s)                                                                    
 Six Months Ended
Selected Financial Ratios6/30/20226/30/2021
Return on average total assets0.92%0.83%
Return on average shareholders' equity12.54%9.33%
Net interest margin3.51%3.54%
Net interest income to average total assets3.35%3.42%
Efficiency ratio63.73%67.12%
   

Regulatory Capital and Ratios6/30/20223/31/20226/30/2021
Common equity tier 1 capital$97,226 $83,272 $76,158 
Tier 1 regulatory capital$97,226 $83,272 $76,158 
Total regulatory capital$105,418 $91,877 $83,518 
Tier 1 leverage ratio 9.62% 8.36% 8.64%
Common equity tier 1 risk-based capital ratio 13.27% 11.49% 12.99%
Tier 1 capital ratio 13.27% 11.49% 12.99%
Total risk-based capital ratio 14.39% 12.67% 14.24%

About 1st Capital Bancorp

1st Capital Bancorp is the holding company for 1st Capital Bank. The Bank’s primary target markets are commercial enterprises, professionals, real estate investors, family business entities, and residents along the Central Coast region of California. The Bank provides a wide range of credit products, including loans under various government programs such as those provided through the U.S. Small Business Administration and the U.S. Department of Agriculture. A full suite of deposit accounts also is furnished, complemented by robust cash management services. The Bank operates full service branch offices in Monterey, Salinas, King City, San Luis Obispo and Santa Cruz. The Bank’s corporate offices are located at 150 Main Street, Suite 150, Salinas, California 93901. The Bank’s website is www.1stCapital.bank. The main telephone number is 831.264.4000. Member FDIC / Equal Opportunity Lender / SBA Preferred Lender

Forward-Looking StatementsCertain of the statements contained herein that are not historical facts are “forward-looking statements” within the meaning of and subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may contain words or phrases including, but not limited, to: “believe,” “expect,” “anticipate,” “intend,” “estimate,” “target,” “plans,” “may increase,” “may fluctuate,” “may result in,” “are projected,” and variations of those words and similar expressions. All such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Factors that might cause such a difference include, among other matters, changes in interest rates; economic conditions including inflation and real estate values in California and the Bank’s market areas; governmental regulation and legislation; credit quality; competition affecting the Bank’s businesses generally; the risk of natural disasters and future catastrophic events including pandemics, terrorist related incidents and other factors beyond the Bank’s control; and other factors. The Bank does not undertake, and specifically disclaims any obligation, to update or revise any forward-looking statements, whether to reflect new information, future events, or otherwise, except as required by law.

This news release is available at the www.1stCapital.bank internet site for no charge.

For further information, please contact:

Samuel D. Jimenez Danelle Thomsen
Chief Executive Officer Chief Financial Officer
831.264.4057 office 831.264.4014 office
[email protected] [email protected]

 

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