1st Capital Bank Announces: Second Quarter and Year to Date 2013 Financial Results; Increased Profitability; Record Loans,

1st Capital Bank Announces: Second Quarter and Year to Date 2013 Financial 
Results; Increased Profitability; Record Loans, Assets,
Deposits, and Shareholders' Equity 
MONTEREY, CA -- (Marketwired) -- 07/29/13 --  1st Capital Bank
(OTCQB: FISB) (the "Bank") today announced second quarter and year to
date financial results through June 30, 2013. The Bank achieved
record levels of loans, assets, deposits, and shareholders' equity at
June 30, 2013. 
Net income during the second quarter of 2013 was $359 thousand,
equivalent to $0.11 per diluted common share. This compares favorably
to both: (i) net income of $209 thousand, equivalent to $0.06 per
diluted common share, for the second quarter of 2012; and (ii) net
income of $263 thousand, equivalent to $0.08 per diluted common
share, for the first quarter of 2013 (the immediately preceding
quarter). 
Net income for the first six months of 2013 was $622 thousand,
equivalent to $0.19 per diluted common share, compared to net income
of $519 thousand, equivalent to $0.16 per diluted common share, for
the first six months of 2012. 
The improved earnings during the 2013 periods primarily arose from
increased net interest income, which in turn was produced by higher
average balances of interest earning assets. The Bank's total assets
expanded by 21.7% during the twelve months ended June 30, 2013; and
average interest earning assets were 19.1% higher during the second
quarter of 2013 compared to the second quarter of 2012. 
Commenting on the second quarter of 2013 financial performance, Mark
Andino, the Bank's President and Chief Executive Officer, stated: "We
are very pleased to again announce record levels of loans, assets,
deposits, and shareholders' equity; complemented by improved
earnings. The Bank continues to attract a broad range of local
businesses and professionals who are seeking the combination of
client service, technology, customization, timeliness, and
experienced bankers offered by 1st Capital Bank." Mr. Andino then
continued: "The increase in earnings, despite the challenging
interest rate environment prevalent during the first half of 2013,
was supported by a series of initiatives implemented over the past
six months, including new commercial loan products and pricing, a
revised fee and service charge sche
dule, new delivery features and
channels, enhanced liquidity management, and targeted reductions in
certain operating costs." 
Kurt Gollnick, the Bank's Chairman of the Board, added: "The initial
cost savings from the Bank's voluntary deregistration of its common
shares under the Securities Exchange Act of 1934 were realized during
the second quarter of 2013. The Board of Directors continued its
focus on enhancing shareholder value during recent months, resulting
in new officer hires receiving a greater percentage of their
aggregate compensation in the form of multiple-year, time-based
restricted share awards. This practice should even more closely align
officer interests with the generation of long term shareholder
value." Mr. Gollnick then commented: "We were very pleased to
announce last week the addition of Francis Giudici to the Board of
Directors effective August 16, 2013. Mr. Giudici is a well-known
local businessman in South Monterey County who shares our commitment
to effectively representing the Bank's shareholders and who plans to
contribute to the Bank's goal of gaining market share in that
region." 
Susan Freeland, a Bank director and Chairperson of the Board Asset /
Liability Management Committee, added: "1st Capital Bank once again
recently received a 5 Star, Superior rating from Bauer Financial,
Inc. This is Bauer's highest possible rating and reflects the
financial soundness of the Bank, including its strong capital
position." 
Performance Highlights 


 
--  The Bank continued to present an excellent credit profile at June 30,
    2013, with a non-performing asset ratio of 0.24% and a ratio of
    allowance for loan losses to nonperforming loans of 517.81%. The Bank
    did not record any charge-offs during the second quarter of 2013.
    
    
--  Non-accrual loans totaled $0.9 million at June 30, 2013, equivalent to
    0.35% of loans outstanding. No new loans were transferred to
    non-accrual status during the second quarter of 2013, and the
    inventory of non-accrual loans at March 31, 2013 continued to pay
    down.
    
    
--  Total deposits rose 7.7% during the second quarter of 2013, while
    transaction accounts increased from 89.4% of total deposits at
    December 31, 2012 to 91.5% of total deposits at June 30, 2013.
    
    
--  At June 30, 2013, the Bank maintained a regulatory total risk-based
    capital ratio of 14.90%, substantially in excess of the 10.00%
    threshold to be categorized in the highest regulatory capital
    classification of "well capitalized." The Bank's regulatory capital
    ratios at June 30, 2013 benefited from $533 thousand in new Tier One
    Regulatory Capital from payments received for the exercise of vested
    stock options during the second quarter of 2013.
    
    
--  Tangible book value per share rose to $10.61 as of June 30, 2013.

  
Financial Condition Analysis 
Funds held at the Federal Reserve Bank of San Francisco ("FRB-SF")
decreased from $21.0 million at December 31, 2012 to $12.0 million at
June 30, 2013. This reduction resulted from the Bank's decision to
invest excess on-balance sheet liquidity primarily into variable rate
mortgage backed securities ("MBS") and floating rate tranches of
collateralized mortgage obligations ("CMOs") issued by the Federal
National Mortgage Association ("FNMA"), the Government National
Mortgage Association ("GNMA"), or the Federal Home Loan Mortgage
Corporation ("FHLMC") (collectively, "U.S. Agencies") in order to
augment interest income. Funds held at the FRB-SF earned a yield of
0.25% during the second quarter of 2013, compared to a yield of 0.66%
for the U.S. Agency variable rate MBS and 0.39% for the U.S. Agency
floating rate CMOs. 
Time deposits at other financial institutions declined from $9.3
million at December 31, 2012 to $8.8 million at June 30, 2013, as
funds from maturing time deposits were reinvested into securities. 
Securities categorized as available for sale increased from $41.8
million at December 31, 2012 to $79.7 million at June 30, 2013.
During the first half of 2013, the Bank invested deposit inflows in
excess of loan portfolio growth, maturing time deposit funds, plus
some of its balances at the FRB-SF into: 


 
--  variable rate FNMA multifamily MBS;
    
    
--  floating rate tranches of FNMA, GNMA, or FHLMC residential or
    multifamily CMOs; and
    
    
--  two municipal bond purchases aggregating $0.7 million, the majority of
    which was associated with the Bank's proactively supporting education
    for low income students consistent with its Community Reinvestment Act
    ("CRA") goals.

  
The MBS and CMOs were all rated at least AA+ by a nationally recognized
ratings agency and float at a margin over 1 month LIBOR, with some of
these securities subject to lifetime caps. The fair value of the
Bank's $79.7 million in securities at June 30, 2013 exceeded its
amortized cost basis by $275 thousand. 
At June 30, 2013, the Bank maintained a very strong liquidity
profile, consisting of a significant volume of on-balance sheet
assets (including cash & cash equivalents and securities available
for sale) and over $100 million in off-balance sheet borrowing
capacity. The increase in the
 Bank's liquidity profile during the
first half of 2013 is reflected in the ratio of net loans to
deposits, which decreased from 81.1% at December 31, 2012 to 74.5% at
June 30, 2013. Commenting on the Bank's liquidity, Jon Ditlevsen, the
Bank's Chief Lending Officer, stated: "The Bank concluded the second
quarter of 2013 with ample funds for lending. We continue to
extensively market to local businesses and professionals. We
recognize that increasing the Bank's ratio of net loans to deposits
via quality lending is a key objective for the Bank during the second
half of 2013, as we aim to build a greater stream of net interest
income." 
Net loans increased from $238.9 million at December 31, 2012 to
$248.5 million at June 30, 2013. While the Bank originated or
purchased an aggregate $40.8 million in new credit commitments during
the first half of 2013, loan payoffs and curtailments, principal
reductions on lines of credit, and scheduled principal amortization
combined to limit net portfolio growth. During the second quarter of
2013, the Bank purchased $7.6 million of seasoned, closed end, hybrid
residential mortgages secured by first deeds of trust from another
California community bank in order to deploy excess liquidity and
diversify the Bank's credit portfolio. Commenting on this
acquisition, Dale Diederick, the Bank's Chief Credit Officer, stated:
"All of the purchased mortgages were individually underwritten by the
Bank and met the Bank's normal credit criteria. In fact, the weighted
average loan to value ratio was 51%. All of the collateral real
properties are located in the Central Coast Region of California." 
During April 2013, the Bank relocated its expanded government
guaranteed lending department to the Monterey branch office. This
provided more office and client meeting space for that team. The Bank
has been allocating more of its marketing and promotion budget during
2013 to various government lending programs (including those through
the U.S. Small Business Administration or "SBA" and the U.S.
Department of Agriculture or "USDA") in order to be able to offer
increased and / or longer term financing to newer stage businesses
than would otherwise be available and in order to take advantage of
the current attractive secondary market prices for the guaranteed
portion of such loans. 
The Bank's allowance for loan losses increased from $4.3 million, or
1.77% of total loans, at December 31, 2012 to $4.6 million, or 1.81%
of total loans, at June 30, 2013. The allowance was increased by $779
thousand in loan loss provision during the first half of 2013, and
decreased by the charge-off during the first quarter of 2013 of a
$500 thousand impaired commercial loan. The Bank continues to pursue
recovery of that loan charge-off. 
Non-accrual loans decreased from $1.4 million at December 31, 2012 to
$0.9 million at June 30, 2013, reflective of the charge-off of the
$500 thousand commercial loan described above and, to a lesser
extent, payments received on non-accrual loans. All but one of the
non-accrual loans were current or less than 30 days delinquent in
scheduled payments as of June 30, 2013. Loans graded Substandard
increased from $5.1 million at December 31, 2012 to $7.7 million at
June 30, 2013 primarily due to the downgrade of one credit
relationship from Special Mention. Loans graded as Special Mention
increased from $4.2 million at December 31, 2012 to $6.6 million at
June 30, 2013, primarily due to the downgrade of one credit
relationship in response to weaker farming results over the past two
years. Both of the aforementioned downgraded credit relationships
were current in their scheduled payments at June 30, 2013. 
The ratio of the Bank's allowance for loan losses to non-performing
loans rose from 299.38% at December 31, 2012 to 517.81% at June 30,
2013. The Bank has never owned any foreclosed real estate. 
Premises and equipment, net of accumulated depreciation, increased
from $1.3 million at December 31, 2012 to $1.4 million at June 30,
2013. The majority of this increase was due to a minor remodeling of
the Salinas branch office and the purchase of new hardware in support
of the Bank's technology platform. 
The $40.2 million increase in total assets by the Bank during the
first half of 2013 to a record $369.5 million better leveraged its
capital, with the ratio of total equity to total assets decreasing
from 10.32% at December 31, 2012 to 9.49% at June 30, 2013. The Bank
generally seeks to maintain this ratio at between 9.00% and 10.00% in
order to present a well-capitalized profile on the one hand, but also
support return on average shareholders' equity on the other hand.
Commenting in this regard, Clay Larson, the Bank's Regional
President, stated: "The Bank is well positioned to increase its loan
portfolio without needing to further increase its total assets by
shifting funds from excess cash equivalents and the security
portfolio to loans. We plan to have an even greater level of
visibility throughout Monterey County during the second half of 2013
as the Bank sponsors or participates in a wide range of community
events." 
The Bank's investment in the capital stock of the Federal Home Loan
Bank ("FHLB") increased from $1.0 million at December 31, 2012 to
$1.5 million at June 30, 2013 due to the standard asset-based
investment requirement applicable to FHLB members. 
Non-interest bearing demand deposits increased from $123.4 million at
December 31, 2012 to $129.8 million at June 30, 2013. The Bank
continues to enhance and market its suite of electronic banking and
cash management services, with the recent addition of a new service
that allows qualified businesses to make deposits to their 1st
Capital Bank accounts at over 400 locations along the West Coast. 
Interest bearing checking accounts increased from $17.5 million at
December 31, 2012 to $18.6 million at June 30, 2013. Given the
historically low interest rate environment, the Bank has attracted
these consumer, sole proprietor, and non-profit organization checking
accounts by its focus on a concierge level of service rather than
based upon interest rate. 
Money market deposits increased from $60.1 million at December 31,
2012 to $85.2 million at June 30, 2013. Money market deposits during
2013 benefited from: 


 
--  low (often, near zero) interest rates being paid on brokerage accounts
    and money market mutual funds, thereby encouraging clients to transfer
    their funds to higher yielding and FDIC insured accounts;
    
    
--  the expiration of the FDIC Transaction Account Guaranty Program on
    December 31, 2012, whereby non-interest bearing checking accounts (as
    defined under the Program) received unlimited FDIC deposit insurance
    coverage (the expiration thereby encouraged certain clients to
    reallocate funds back to money market accounts insured under the
    FDIC's unified Standard Maximum Deposit Insurance Amount);
    
    
--  the Bank's cross-selling money market accounts to new checking account
    clients given the easy integration and customization via the Bank's
    online banking service;
    
    
--  the conversion of certain deposits from certificates of deposit to
    money market accounts given the limited yield differential between the
    products in the current interest rate environment; and
    
    
--  the Bank's offering tiered
 pricing on money market accounts, whereby
    clients receive a higher interest rate on their entire account balance
    as each successively higher balance tier level is attained.

  
Savings deposits rose from $62.4 million at December 31, 2012 to $71.7
million at June 30, 2013. The Bank realized balance increases in both
consumer and business savings products, which have been an attractive
alternative for liquid funds in the current historically low interest
rate environment. 
Time deposits decreased from $31.3 million at December 31, 2012 to
$28.3 million at June 30, 2013. Factors contributing to this decline
included transfers from certain maturing time deposits into
transaction accounts and the Bank's moderating its time deposit
pricing in response to its favorable liquidity position and the
availability of alternative low cost funding. $6.0 million of the
$28.3 million in time deposits at June 30, 2013 were comprised of low
cost state term funds. 
Commenting on the Bank's deposit performance, Marilyn Goode, the
Bank's Chief Administrative Officer, stated: "We are very pleased to
report record total deposits of $333.7 million at June 30, 2013. This
deposit growth was achieved without pursuing institutional or
wholesale deposits in light of the Bank's strong liquidity position."
Ms. Goode then continued: "The Bank's weighted average cost of
deposits during the second quarter of 2013 was just 0.19%,
representing a reduction from 0.22% during the first quarter of 2013.
We welcomed a notable number of new cash management clients during
the first half of 2013, many of whom selected multiple services from
our product set of ACH origination, online wire request, sweep,
online banking, electronic bill payment, lockbox, positive payment,
person to person payment, and remote deposit capture." 
Shareholders' equity rose from $34.0 million at December 31, 2012 to
$35.1 million at June 30, 2013. The first half net income, $164
thousand in equity compensation expense, and $533 thousand from the
exercise of vested stock options more than offset a $241 thousand
reduction in the accumulated other comprehensive income associated
with securities classified as available for sale. 
During the second quarter of 2013, the Board of Directors approved
the following administrative changes to the Bank's 2007 Equity
Incentive Plan: 


 
--  Voting and dividend rights will not be available until restricted
    share awards vest and the associated shares are issued.
    
    
--  Restricted share awards will not pro-rata vest in the event of
    recipient death or disability.
    
    
--  The Board of Directors will have greater discretion regarding the form
    of payment in conjunction with the exercise of stock options.
    
    
--  Various revisions that facilitate the efficient administration of the
    Plan, such as electronic share delivery.

  
The Bank views all of the above changes to the 2007 Equity Incentive
Plan as being favorable to shareholders. All directors and executive
officers with outstanding restricted share awards or stock options
executed documents consenting to the applicability of the above
changes to their existing unvested restricted share awards and
outstanding stock options. In addition, these revisions impacted the
disclosure treatment for unvested restricted share awards. Unvested
restricted share awards are not included in the count of outstanding
common shares effective with June 30, 2013 financial reporting. 
Commenting on the revisions to the 2007 Equity Incentive Plan, Daniel
Hightower, the Vice Chairman of the Board, stated: "Upon comparison
of the Bank's Equity Incentive Plan to similar programs maintained by
other publicly traded financial institutions, the directors
identified the opportunity to amend the Plan to have an even stronger
shareholder value orientation. We view these Plan changes as one
component of the Board's ongoing commitments to generating
shareholder value and maintaining a high caliber of corporate
governance." 
Commencing on January 1, 2013, director compensation was shifted to
consist solely of time-based restricted share awards. Similarly, the
compensation packages for recently hired Bank officers have included
a restricted share award component that vests over time, rather than
being exclusively composed of cash compensation. The stock option
exercises and the equity based compensation, in addition to retained
earnings, are supporting the Bank's regulatory capital ratios and
capacity for growth. The more extensive use of restricted share
awards as a form of compensation emphasizes the directors' and
officers' commitment to enhancing shareholder value. 
Nominal and tangible book values were a record $10.61 per share at
June 30, 2013, versus $10.27 per share at December 31, 2012. 
Operating Results Analysis 
Net interest income before provision for loan losses of $3.1 million
during the three months ended June 30, 2013 increased from both: (i)
$2.9 million during the three months ended June 30, 2012; and (ii)
$3.0 million during the three months ended March 31, 2013 (the
immediately preceding quarter). These increases in net interest
income were primarily generated by a rise in interest earning assets,
as the Bank's net interest margin declined from 4.04% during the
second quarter of 2012 to 3.82% during the first quarter of 2013 to
3.64% during the second quarter of 2013. 
Net interest income before provision for loan losses rose from $5.6
million during the six months ended June 30, 2012 to $6.1 million
during the six months ended June 30, 2013. The Bank's net interest
margin declined from 4.04% during the first six months of 2012 to
3.73% during the first six months of 2013. 
This margin compression is a general trend facing the banking
industry, as funding costs have already been reduced to historically
low levels while asset yields continue to fall in conjunction with: 


 
--  the Federal Reserve's continuing to implement aggressive monetary
    policies (including quantitative easing) in an effort to reduce the
    national unemployment rate;
    
    
--  strong price competition among financial institutions for high quality
    loans; and
    
    
--  older, higher yielding loans and securities maturing and amortizing
    and being replaced by new, lower yielding loans and securities
    reflective of current market interest rates.

  
The Bank's recent net interest margin was particularly impacted by the
decline in the ratio of average loans to average deposits to 77.6%
during the second quarter of 2013 from 79.7% during the immediately
preceding quarter. 
The Bank plans to support its net interest income during 2013 via the
following strategies: 


 
--  continuing to focus upon the growth the Bank's balance sheet,
    particularly the loan portfolio;
    
    
--  seeking to allocate a greater percentage of excess on-balance sheet
    liquidity to securities versus cash equivalents in order to obtain
    incremental yield; and
    
    
--  pursuing a further migration in deposit mix away from certificates of
    deposit and toward non-interest bearing checking accounts.

  
The provision for loan losses was $319 thousand during the second
quarter of 2013, compared to $424 thousand during the second quarter
of 2012 and $460 thousand during the first quarter of 2013 (the
immediately preceding quarter). Factors contributing to the provision
for loan losses during the second quarter of 2013 included: 


 
--  additional specific loan loss reserves of $110 thousand for two
    impaired loans associated with one credit relationship based upon an
    updated valuation of the collateral securing the debt and additional
    information regarding the borrower's recent financial profile;
    
    
--  increased formula general reserves associated with the credit
    relationship described above that was downgraded to Special Mention
    during the second quarter of 20
13; and
    
    
--  growth in the size of the loan portfolio.

  
The provision for loan losses increased from $464 thousand during the
first six months of 2012 to $779 thousand during the first six months
of 2013. Factors contributing to the provision for loan losses during
the first quarter of 2013 (i.e. in addition to those specified above)
included: 


 
--  additional loan loss reserves of $277 thousand associated with the
    $500 thousand impaired commercial loan that was charged off during the
    first quarter of 2013;
    
    
--  an increase in hospitality industry related loans (a primary industry
    in the Bank's market area), which are reserved at a higher ratio than
    most other types of investor real estate; and
    
    
--  a rise in the amount of loan loss reserves designated for the Bank's
    qualitative adjustment factors, which in turn primarily resulted from
    the Bank's recognition that new (but highly experienced) officers were
    recently installed into the Chief Executive Officer, Chief Credit
    Officer, and Chief Lending Officer positions.

  
Non-interest income of $76 thousand during the three months ended June
30, 2013 represented an increase from both: (i) $36 thousand during
the three months ended June 30, 2013; and (ii) $64 thousand during
the three months ended March 31, 2013 (the immediately preceding
quarter). Non-interest income of $140 thousand during the first six
months of 2013 almost doubled the $73 thousand recognized during the
first six months of 2012. The Bank implemented a revised fee and
service charge schedule effective May 1, 2013 that included some new
fees as well as increases to certain existing fees for various
services the Bank provides. In addition, during the third quarter of
2012, the Bank made its initial investment into Bank Owned Life
Insurance ("BOLI"). This investment generates monthly dividend income
that increases its cash surrender value and is accounted for as a
component of non-interest income. 
Non-interest expense increased from $2.2 million during both the
second quarter of 2012 and the first quarter of 2013 (the immediately
preceding quarter) to $2.3 million during the second quarter of 2013.
Non-interest expense rose from $4.3 million during the first six
months of 2012 to $4.4 million during the first six months of 2013. 
Salaries and benefits costs increased from $1.24 million during the
second quarter of 2012 to $1.36 million during the second quarter of
2013. Salary and benefits costs during the first quarter of 2013 (the
immediately preceding quarter) were $1.32 million. Salaries and
benefits costs rose from $2.55 million during the first six months of
2012 to $2.68 million during the first six months of 2013. The year
over year increases primarily resulted from expenses for new
positions created in support of the Bank's growth, including
Information Technology Manager, Relationship Manager, Credit
Administrator, and Business Development Officer. The increase from
the immediately preceding quarter was primarily caused by a lower
level of capitalized loan origination costs (recorded as a reduction
in salaries and benefits expenses). The Bank redesigned its health
and welfare benefits effective January 1, 2013 to both provide good
relative value to its employees and control related expenses. As a
result, health and welfare expenses were slightly lower during the
first six months of 2013 versus the same period the prior year
despite the Bank's increased staffing and the general upward trend
for such costs. 
Occupancy expenses increased slightly from $180 thousand during the
second quarter of 2012 to $186 thousand during the second quarter of
2013. Occupancy expenses during the first quarter of 2013 (the
immediately preceding quarter) were $193 thousand. Occupancy expenses
rose from $357 thousand during the first six months of 2012 to $379
thousand during the first six months of 2013 primarily due to the
incremental costs associated with the new location for the Monterey
branch office, which opened in March 2012. In addition, in response
to an expanding client base, the Bank enlarged its King City branch
office in March 2013, resulting in a monthly rent increase of $2
thousand. As of June 30, 2013, the King City branch office housed
over $63 million in deposits. 
Other non-interest expense during the second quarter of 2013 totaled
$627 thousand, down from $645 thousand during the second quarter of
2012, but up from $577 thousand during the first quarter of 2013 (the
immediately preceding quarter). The Bank's aggregate costs for
software and technology have been trending upward in conjunction with
an increased client base with more accounts and more transactions,
and with the implementation of new technologies. As one example, the
Bank recently implemented remote service technology whereby clients
with questions regarding online banking or cash management services
may permit Bank employees to view their computer desktops / screens
over the Internet and thereby provide immediate and highly specific
assistance. 
The Bank's efficiency ratio (operating costs compared to income from
operations) improved to 70.69% for the second quarter of 2013 from
73.25% for the second quarter of 2012. The Bank's efficiency ratio
for the first six months of 2013 was 70.50%, compared to 76.06%
during the first six months of 2012. These improvements in the Bank's
efficiency ratio would have been even more pronounced if the Bank had
not experienced the margin compression described above. The progress
in the Bank's efficiency ratio reflects the 21.7% rise in total
assets during the twelve months ended June 30, 2013 without adding
additional branch locations. Technology has been utilized to perform
an increasing volume of client transactions without adding new
physical locations or hiring a significant volume of additional
branch staff. The Bank offers both qualified businesses and consumers
check deposit processing via scanner, with check deposit via
smartphone planned for later in 2013. 
About 1st Capital Bank 
The Bank's target markets are commercial enterprises, professionals,
real estate investors, family business entities, and residents in
Monterey County. 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 ("SBA") and
the U.S. Department of Agriculture ("USDA"). A full suite of deposits
accounts are also furnished, complemented by robust cash management
services. The Bank operates full service branch offices in Monterey,
Salinas, and King City. The Bank's corporate offices are located at 5
Harris Court, Building N, Suite 3, Monterey, California 93940. The
Bank's website is www.1stcapitalbank.com and the main telephone
number is 831.264.4000. 
Member FDIC / Equal Opportunity Lender / SBA Preferred Lender 
Forward-Looking Statements: 
Certain of the statements contained herein that are not historical
facts are "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933, as amended, Section 21E of the
Securities Exchange Act of 1934, as amended, 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
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.1stcapitalbank.com Internet
site for no charge. 


 
                                                                            
                                                                            
                              1ST CAPITAL BANK                              
                          CONDENSED FINANCIAL DATA                          
                                (Unaudited)                                 
               (Dollars in thousands, except per share data)                
                                                                            
Financial Condition          June 30,   March 31,  December 31,    June 30, 
 Data(1)                         2013        2013          2012        2012 
                           ----------  ----------  ------------  ---------- 
Assets                                                                      
  Cash and due from banks  $   10,474  $    6,455  $      8,551  $    6,324 
  Funds held at the                                                         
   Federal Reserve Bank        11,960      17,623        21,042      42,060 
  Time deposits at other                                                    
   financial institutions       8,823       9,321         9,321       6,823 
  Available-for-sale                                                        
   securities, at fair                                                      
   value                       79,673      62,903        41,762      18,245 
  Loans receivable held                   
                                  
   for investment:                                                          
    Construction / land                                                     
     (including farmland)      22,149      19,014        18,207      16,912 
    Residential 1 to 4                                                      
     units                     32,922      24,454        22,711      21,071 
    Home equity lines of                                                    
     credit                    10,033      10,548        12,243      12,244 
    Multifamily                 5,011       5,615         2,397       3,964 
    Owner occupied                                                          
     commercial real                                                        
     estate                    49,780      48,646        47,917      47,930 
    Investor commercial                                                     
     real estate               64,272      62,945        65,733      50,782 
    Commercial and                                                          
     industrial                62,902      67,024        71,848      72,205 
    Other loans                 6,053       5,785         2,197       2,726 
                           ----------  ----------  ------------  ---------- 
      Total loans             253,122     244,031       243,253     227,834 
    Allowance for loan                                                      
     losses                    (4,593)     (4,274)       (4,314)     (3,784)
                           ----------  ----------  ------------  ---------- 
  Net loans                   248,529     239,757       238,939     224,050 
  Premises and equipment,                                                   
   net                          1,386       1,402         1,282       1,314 
  Bank owned life                                                           
   insurance                    3,603       3,579         3,555          -- 
  Investment in FHLB(2)                                                     
   stock, at cost               1,494       1,026         1,026       1,026 
  Accrued interest                                                          
   receivable and other                                                     
   assets                       3,586       3,238         3,871       3,678 
                           ----------  ----------  ------------  ---------- 
Total assets               $  369,528  $  345,304  $    329,349  $  303,520 
                           ==========  ==========  ============  ========== 
                                                                            
Liabilities and                                                             
 shareholders' equity                                                       
  Deposits:                                                                 
    Noninterest bearing                                                     
     demand deposits       $  129,840  $  120,780  $    123,403  $   99,883 
    Interest bearing                                                        
     checking accounts         18,611      15,533        17,482      12,218 
    Money market               85,224      73,671        60,091      69,806 
    Savings                    71,690      70,478        62,364      51,620 
    Time                       28,307      29,391        31,314      36,649 
                           ----------  ----------  ------------  ---------- 
      Total deposits          333,672     309,853       294,654     270,176 
  Accrued interest payable                                                  
   and other liabilities          777       1,147           694         781 
  Shareholders' equity         35,079      34,304        34,001      32,563 
                           ----------  ----------  ------------  ---------- 
Total liabilities and                                                       
 shareholders' equity      $  369,528  $  345,304  $    329,349  $  303,520 
                           ==========  ==========  ============  ========== 
                                                                            
Shares outstanding(3)       3,306,861   3,310,503     3,310,503   3,245,903 
Nominal and tangible book                                                   
 value per share           $    10.61  $    10.36  $      10.27  $    10.03 
Ratio of net loans to                                                       
 total deposits                 74.48%      77.38%        81.09%      82.93%

 
1 = Certain reclassifications have been made to prior period financial
statements to conform them to the current period presentation. Loans
held for investment are presented according to definitions applicable
to the regulatory Call Report. 
2 = Federal Home Loan Bank 
3 = The Bank revised its 2007 Equity Incentive Plan during the second
quarter of 2013. Those revisions resulted in a lower number of
outstanding common shares being reported at June 30, 2013 due to the
elimination of voting and other rights for unvested restricted share
awards. 


 
                                                                            
                                                                            
                                                                            
                              1ST CAPITAL BANK                              
                          CONDENSED FINANCIAL DATA                          
                                 (Unaudited)                                
                (Dollars in thousands, except per share data)               
                                                                            
                                                    3 Months Ended          
                                         -----------------------------------
                                            June 30,   March 31,    June 30,
Operating Results Data                          2013        2013        2012
                                         ----------- ----------- -----------
Interest and dividend income                                                
  Loans                                  $     3,089 $     2,992 $     2,966
  Investment securities                          141         132         106
  Federal Home Loan Bank stock                    16           6           1
  Other                                           31          36          50
                                         ----------- ----------- -----------
    Total interest and dividend income         3,277       3,166       3,123
                                         ----------- ----------- -----------
Interest expense                                                            
  Interest bearing checking accounts               7           7          11
  Money market                                    72          64         100
  Savings                                         56          60          69
  Time                                            21          28          44
                                         ----------- ----------- -----------
    Total interest expense                       156         159         224
                                         ----------- ----------- -----------
Net interest income                            3,121       3,007       2,899
Provision for loan losses                        319         460         424
                                         ----------- ----------- -----------
Net interest income after provision for                                     
 loan losses                                   2,802       2,547       2,475
                                                                            
Noninterest income                                                          
  Service charg
es on deposits                     29          22          21
  BOLI dividend income                            24          24          --
  Other                                           23          18          15
                                         ----------- ----------- -----------
    Total noninterest income                      76          64          36
                                                                            
Noninterest expenses                                                        
  Salaries and benefits                        1,360       1,317       1,243
  Occupancy                                      186         193         180
  Furniture and equipment                         87          72          82
  Other                                          627         577         645
                                         ----------- ----------- -----------
    Total noninterest expenses                 2,260       2,159       2,150
                                         ----------- ----------- -----------
Income before provision for income taxes         618         452         361
Provision for income taxes                       259         189         152
                                         ----------- ----------- -----------
Net income                               $       359 $       263 $       209
                                         =========== =========== ===========
                                                                            
Common Share Data                                                           
  Earnings per share                                                        
    Basic                                $      0.11 $      0.08 $      0.06
    Diluted                              $      0.11 $      0.08 $      0.06
                                                                            
  Weighted average shares outstanding                                       
    Basic                                  3,269,382   3,251,003   3,223,836
    Diluted                                3,359,011   3,332,108   3,317,799
                                                                            
                                                                            
                                                                            
                              1ST CAPITAL BANK                              
                          CONDENSED FINANCIAL DATA                          
                                 (Unaudited)                                
                (Dollars in thousands, except per share data)               
                                                                            
                                                        6 Months Ended      
                                                 ---------------------------
                                                      June 30,      June 30,
Operating Results Data                                    2013          2012
                                                 ------------- -------------
Interest and dividend income                                                
  Loans                                          $       6,081 $       5,745
  Investment securities                                    273           209
  Federal Home Loan Bank stock                              22             2
  Other                                                     67            92
                                                 ------------- -------------
    Total interest and dividend income                   6,443         6,048
                                                 ------------- -------------
Interest expense                                                            
  Interest bearing checking accounts                        14            22
  Money market                                             136           180
  Savings                                                  116           134
  Time                                                      49            96
                                                 ------------- -------------
    Total interest expense                                 315           432
                                                 ------------- -------------
Net interest income                                      6,128         5,616
Provision for loan losses                                  779           464
                                                 ------------- -------------
Net interest income after provision for loan                                
 losses                                                  5,349         5,152
                                                                            
Noninterest income                                                          
  Service charges on deposits                               51            43
  BOLI dividend income                                      48            --
  Other                                                     41            30
                                                 ------------- -------------
    Total noninterest income                               140            73
                                                                            
Noninterest expenses                                                        
  Salaries and benefits                                  2,677         2,545
  Occupancy                                                379           357
  Furniture and equipment                                  159           177
  Other                                                  1,204         1,248
                                                 ------------- -------------
    Total noninterest expenses                           4,419         4,327
                                                 ------------- -------------
Income before provision for income taxes                 1,070           898
Provision for income taxes                                 448           379
                                                 ------------- -------------
Net income                                       $         622 $         519
                                                 ============= =============
                                                                            
Common Share Data                                                           
  Earnings per share                                                        
    Basic                                        $        0.19 $        0.16
    Diluted                                      $        0.19 $        0.16
                                                                            
  Weighted average shares outstanding                                       
    Basic                                            3,260,406     3,222,982
    Diluted                                          3,344,682     3,313,647
                                                                            
                                                                            
                                                                            
                              1ST CAPITAL BANK                              
                          CONDENSED FINANCIAL DATA                          
                                (Unaudited)                                 
                           (Dollars in thousands)                           
                                                                            
                               June 30,  March 31,  December 31,   June 30, 
Asset Quality                      2013       2013          2012       2012 
                              ---------  ---------  ------------  --------- 
  Loans past due 90 days or                                                 
   more and accruing interest $      --  $      --  $         --  $      -- 
  Nonaccrual rest
ructured                                                   
   loans                            233        235           238        226 
  Other nonaccrual loans            654        678         1,203        534 
  Other real estate owned            --         --            --         -- 
                              ---------  ---------  ------------  --------- 
                              $     887  $     913  $      1,441  $     760 
                              =========  =========  ============  ========= 
                                                                            
  Allowance for loan losses                                                 
   to total loans                  1.81%      1.75%         1.77%      1.66%
  Allowance for loan losses                                                 
   to nonperforming loans        517.81%    468.13%       299.38%    497.89%
  Nonaccrual loans to total                                                 
   loans                           0.35%      0.37%         0.59%      0.33%
  Nonperforming assets to                                                   
   total assets                    0.24%      0.26%         0.44%      0.25%
                                                                            
Regulatory Capital and Ratios                                               
  Tier 1 regulatory capital   $  34,918  $  33,949  $     33,600  $  32,192 
  Total regulatory capital    $  38,141  $  37,035  $     36,646  $  35,001 
  Tier 1 leverage ratio            9.79%     10.15%        10.67%     10.80%
  Tier 1 risk based capital                                                 
   ratio                          13.64%     13.82%        13.87%     14.40%
  Total risk based capital                                                  
   ratio                          14.90%     15.08%        15.12%     15.70%
                                                                            
                                                                            
                               3 Months Ended             6 Months Ended    
                      -------------------------------  -------------------- 
Selected Financial     June 30,  March 31,   June 30,   June 30,   June 30, 
 Ratios(1)                 2013       2013       2012       2013       2012 
                      ---------  ---------  ---------  ---------  --------- 
  Return on average                                                         
   total assets            0.40%      0.32%      0.28%      0.36%      0.36%
  Return on average                                                         
   shareholders'                                                            
   equity                  4.14%      3.10%      2.59%      3.63%      3.23%
  Net interest margin      3.64%      3.82%      4.04%      3.73%      4.04%
  Net interest income                                                       
   to average total                                                         
   assets                  3.51%      3.64%      3.92%      3.57%      3.91%
  Efficiency ratio        70.69%     70.30%     73.25%     70.50%     76.06%
                                                                            
Selected Average                                                            
 Balances                                                                   
  Loans               $ 249,169  $ 238,456  $ 214,583  $ 243,842  $ 207,261 
  Investment                                                                
   securities            70,398     51,172     17,790     60,838     16,761 
  Federal Home Loan                                                         
   Bank stock             1,366      1,026        996      1,198        957 
  Other interest                                                            
   earning assets        22,654     28,775     55,218     25,697     54,412 
                      ---------  ---------  ---------  ---------  --------- 
    Total interest                                                          
     earning assets   $ 343,587  $ 319,429  $ 288,587  $ 331,575  $ 279,391 
  Total assets        $ 356,775  $ 334,594  $ 297,159  $ 345,746  $ 288,697 
                                                                            
  Interest bearing                                                          
   checking accounts  $  17,431  $  15,594  $  14,469  $  16,478  $  13,806 
  Money market           81,289     68,202     66,699     74,821     61,646 
  Savings                67,991     66,658     48,242     67,328     44,899 
  Time deposits          28,000     29,969     37,704     28,979     39,377 
                      ---------  ---------  ---------  ---------  --------- 
    Total interest                                                          
     bearing deposits $ 194,711  $ 180,423  $ 167,114  $ 187,606  $ 159,728 
  Noninterest bearing                                                       
   demand deposits      126,349    118,835     96,972    122,612     96,146 
                      ---------  ---------  ---------  ---------  --------- 
    Total Deposits    $ 321,060  $ 299,258  $ 264,086  $ 310,218  $ 255,874 
  Shareholders'                                                             
   equity             $  34,775  $  34,354  $  32,513  $  34,566  $  32,327 

 
1 = All Selected Financial Ratios are annualized other than the
Efficiency ratio. 
For further information, please contact: 
Mark R. Andino
President and Chief Executive Officer
831.264.4028 office
831.915.6498 cellular
Mark.Andino@1stcapitalbank.com 
Or 
Jayme C. Fields
Chief Financial Officer
831.264.4011 office
831.917.8725 cellular
Jayme.Fields@1stcapitalbank.com 
 
 
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