1st Capital Bank Announces First Quarter 2014 Financial Results

1st Capital Bank Announces First Quarter 2014 Financial Results 
Record Loans, Assets, Deposits, and Shareholders' Equity 
MONTEREY, CA -- (Marketwired) -- 04/30/14 --  1st Capital Bank
(OTCQB: FISB) (the "Bank") today announced first quarter financial
results through March 31, 2014. The Bank achieved record levels of
loans, assets, deposits, and shareholders' equity at March 31, 2014. 
Net income during the first quarter of 2014 was $408 thousand,
equivalent to $0.11 per diluted common share. This compares to net
income of $263 thousand, equivalent to $0.08 per diluted common
share, during the first quarter of 2013. Net income for the fourth
quarter of 2013 (the immediately preceding quarter) was $612
thousand, equivalent to $0.18 per diluted common share. The increase
in earnings from the first quarter of 2013 primarily resulted from a
lower provision for loan losses. The Bank charged off a $500 thousand
impaired commercial loan during the first quarter of 2013, which
increased loan loss provision expense by $277 thousand during that
three month period. The Bank has since received a partial recovery of
that charge-off in the amount of $32 thousand. The decline in
earnings from the fourth quarter of 2014 was primarily due to: (i)
$120 thousand in higher loan loss provision expense, which in turn
principally stemmed from growth in the size of the loan portfolio;
(ii) the impact of two fewer calendar days in the quarter; and (iii)
$41 thousand in recruiting expense during the most recent quarter
associated with the hire of the Bank's new Chief Financial Officer. 
Total assets expanded by 9.7% to $424.5 million during the first
quarter of 2014, representing one of the fastest rates of growth for
any quarter in the Bank's recent history. This record level of assets
was achieved just prior to the Bank's seventh anniversary of opening
for business. 
Commenting on the first quarter of 2014 financial performance, Mark
Andino, the Bank's President and Chief Executive Officer, stated: "We
are pleased to report continued growth and a record balance sheet.
The Bank concluded the first quarter of 2014 with a favorable credit
profile and a strong pipeline of potential new business. We also
finished the first quarter of 2014 with a high level of on-balance
sheet liquidity, some of which was associated with seasonal deposit
inflows from certain clients and some of which represented a short
term accumulation of transaction account balances by customers in
preparation for April tax payments." Mr. Andino then continued: "The
Bank's total assets increased by 22.9% during the twelve months ended
March 31, 2014. We capitalized this expansion through a combination
of retained earnings, equity based compensation (primarily restricted
share awards), and the exercise of vested stock options. Stock option
exercises continued during April 2014; and over the past year have
been a meaningful source of new capital for the Bank." 
Kurt Gollnick, the Bank's Chairman of the Board, stated: "The Bank's
first quarter 2014 return on average equity of 4.33% reflected both
the costs inherent in a relatively rapid pace of growth, including
provision expense to build the allowance for loan losses, and the
ongoing spread compression arising from the continuation of the
historically low interest rate environment combined with aggressive
pricing competition for high quality loans. The Board of Directors
recognizes that the Bank needs to generate a higher return on average
equity in order to maximize long term shareholder value." 
Daniel R. Hightower, M.D., the Bank's Vice Chairman of the Board,
added: "We have been pleased with the Bank's increasing market share
while building an enviable balance sheet chiefly composed of low cost
transaction deposits and high quality loans. The rate of growth has
required investments in the Bank's infrastructure, including both
human and technology resources. The cost of those investments has
restrained the current level of return on average assets." 
Performance Highlights 


 
--  The Bank presented a high quality credit profile at March 31, 2014,
    with a nonperforming asset ratio of 0.19% and a ratio of allowance for
    loan losses to nonperforming loans of 590.95%. In addition, the
    largest credit relationship in the Bank rated Substandard at December
    31, 2013 paid off in full during the first quarter of 2014; and the
    Bank recorded net recoveries during the first quarter of 2014.
    
    
--  Non-accrual loans totaled $0.8 million at March 31, 2014, equivalent
    to 0.30% of loans outstanding. No new loans were transferred to
    non-accrual status during the first quarter of 2014, and the inventory
    of non-accrual loans at December 31, 2013 continued to pay down.
    
    
--  Total deposits increased by 10.5% during the first quarter of 2014.
    Over 93% of the Bank's deposit portfolio at March 31, 2014 was
    composed of transaction accounts.
    
    
--  At March 31, 2014, the Bank maintained a regulatory total risk-based
    capital ratio of 15.24%, 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 March 31, 2014 benefited from an increase of $57 thousand in
    Tier 1 Regulatory Capital from payments received for the exercise of
    vested stock options during the first quarter of 2014. An additional
    $98 thousand in Tier 1 Regulatory Capital from the exercise of vested
    stock options was obtained during early April 2014.
    
    
--  Tangible book value per share rose to a record $10.96 as of March 31,
    2014, as compared to $10.79 per share at December 31, 2013.

  
Financial Condition Analysis 
Funds held at the Federal Reserve Bank of San Francisco ("FRB-SF")
rose from $15.5 million at December 31, 2013 to $28.2 million at
March 31, 2014. The Bank decided to retain excess on-balance sheet
liquidity at the FRB-SF at the conclusion of the first quarter of
2014 rather than invest those funds into securities in light of: (i)
the size of the loan
 pipeline; (ii) the planned purchase of a pool of
closed end residential hybrid adjustable rate mortgages during the
second quarter of 2014; (iii) recognition of seasonal deposit
patterns for certain clients; and (iv) forecasted deposit outflows in
April in conjunction with tax payments by clients. 
Time deposits at other financial institutions declined from $4.6
million at December 31, 2013 to $4.3 million at March 31, 2014, as
funds from maturing time deposits were reinvested into securities. 
Securities categorized as available for sale increased from $104.0
million at December 31, 2013 to $107.3 million at March 31, 2014.
Security purchases during the first quarter of 2014 were entirely
composed of floating rate tranches of collateralized mortgage
obligations ("CMO") issued by the Federal National Mortgage
Association ("FNMA") or the Federal Home Loan Mortgage Corporation
("FHLMC"). The Bank purchased variable rate securities during the
first quarter of 2014 in order to allocate most of its balance sheet
duration to meeting client demand for primarily intermediate term
fixed rate loans in the current interest rate environment. The
following table presents the Bank's security portfolio profile at
March 31, 2014: 


 
                                                              
                                                     March 31,
$ In Thousands                                            2014
                                                    Fair Value
Type of Security                                   (Unaudited)
                                              ----------------
SBA(1) fixed rate loan pools                  $          2,754
Municipal fixed rate securities                          2,213
Agency(2) variable rate residential MBS(3)               3,042
Agency fixed rate residential MBS                        5,693
Agency variable rate commercial MBS                     23,253
Agency variable rate residential CMO                    64,593
Agency variable rate commercial CMO                      5,704
                                              ----------------
                                                              
Total                                         $        107,252
                                              ================

 
(1) U.S. Small Business Administration  
(2) FNMA, FHLMC, or the Government National Mortgage Association or
GNMA  
(3) Mortgage backed security 
The municipal securities were all rated at least AA by a nationally
recognized ratings agency. The fair value of the Bank's $107.3
million in securities at March 31, 2014 exceeded its amortized cost
basis by $64 thousand. 
At March 31, 2014, the Bank maintained a strong liquidity profile,
consisting of a significant volume of on-balance sheet assets
(including cash & cash equivalents and securities available for sale)
and significant off-balance sheet borrowing capacity. The increase in
the Bank's liquidity profile during the first quarter of 2014 is
reflected in the ratio of net loans to deposits, which decreased from
72.0% at December 31, 2013 to 70.6% at March 31, 2014. 
Commenting on the Bank's liquidity, Jon Ditlevsen, the Bank's Chief
Lending Officer, stated: "The Bank commenced the second quarter of
2014 with both ample funds for lending and a strong loan pipeline.
The new relationship managers we have added to the team over the past
year are now fully integrated with the Bank and its markets, leading
to the sourcing of a greater volume of loan applications from 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; as we aim to build a greater stream of net interest
income." 
Warren Wayland, Chairman of the Director Loan Committee, added: "We
have been pleased with the volume of loan applications from markets
adjacent to Monterey County, particularly San Luis Obispo County, as
the Bank continues to enhance its presence along the Central Coast." 
Net loans increased from $250.8 million at December 31, 2013 to a
record $271.8 million at March 31, 2014. The Bank originated or
purchased over $35 million in new credit commitments during the first
quarter of 2014, which were partially offset by payoffs and
curtailments, principal reductions on lines of credit, and scheduled
principal amortization. 
The Bank's loan mix shifted during the first quarter of 2014.
Residential 1 to 4 unit loans increased by $15.8 million; primarily
due to the purchase of a $19.2 million residential loan pool. The
loans in the pool were seasoned 5/1 or 7/1 mortgages that reprice
based upon a margin over the 1 year LIBOR index. These mortgages met
the Bank's standard underwriting criteria and are secured by first
deeds of trust on homes located in several California counties.
Multifamily loans increased by $2.7 million during the first quarter
of 2014, as the Bank has sought to originate more of this type of
loan given the favorable trends in rents, vacancies, and real estate
values in many of the market areas along the Central Coast.
Commercial and industrial loans outstanding declined by $5.2 million
during the first quarter of 2014 primarily due to the payoff in full
of $5.4 million in commercial and industrial loans graded Substandard
at December 31, 2013. This collection by the Bank notably improved
its aggregate credit profile. 
The Bank's allowance for loan losses increased from $4.7 million, or
1.84% of total loans, at December 31, 2013 to $4.8 million, or 1.75%
of total loans, at March 31, 2014. The allowance was increased during
the first quarter of 2014 by: (i) $120 thousand in loan loss
provision; and (ii) $23 t
housand in recoveries. The Bank did not
record any charge-offs during the first quarter of 2014. 
Non-accrual loans decreased by $16 thousand from December 31, 2013 to
March 31, 2014 due to principal payments received. All of the Bank's
non-accrual loans were current or less than 30 days delinquent in
scheduled payments as of March 31, 2014. 
Loans graded Substandard decreased from $8.7 million at December 31,
2013 to $4.9 million at March 31, 2014. The effect of the
aforementioned collection in full of the largest credit relationship
graded Substandard at December 31, 2013 was partially offset by a
$1.7 million credit relationship being downgraded to Substandard
during the first quarter of 2014. Loans graded Special Mention
increased from $5.9 million at December 31, 2013 to $6.9 million at
March 31, 2014, primarily due to the downgrade of one credit
relationship. Both of the aforementioned credit relationships
downgraded during the first quarter of 2014 were current in their
scheduled payments at March 31, 2014 and the borrowers and guarantors
have continued to be cooperative with the Bank. 
The ratio of the Bank's allowance for loan losses to non-performing
loans rose from 562.47% at December 31, 2013 to 590.95% at March 31,
2014. The Bank has never owned any foreclosed real estate. 
Premises and equipment, net of accumulated depreciation, decreased
slightly from $1.48 million at December 31, 2013 to $1.45 million at
March 31, 2014, as periodic depreciation more than offset new asset
purchases. During the second quarter of 2014, the Bank plans to
complete the implementation of a significant upgrade to its
technology infrastructure to provide much greater bandwidth and
support faster processing speeds, while also enhancing redundancy in
order to better position the Bank to respond to a range of potential
natural disasters or other events presenting challenges to the
continued provision of financial services to the Bank's clients. 
The Bank's investment in the capital stock of the Federal Home Loan
Bank ("FHLB") was constant at $1.5 million at both December 31, 2013
and March 31, 2014. During April 2014, the Bank purchased an
additional $0.5 million in FHLB capital stock in conjunction with the
standard asset-based investment requirement applicable to FHLB
members. 
Commenting on the Bank's asset profile at March 31, 2014, Mike
Winiarski, the Bank's Chief Financial Officer, stated: "We continue
to seek to increase loans as a percentage of total assets as a means
to augment net interest income. We also plan to bring comparatively
low yielding balances held at the Federal Reserve Bank down to 4.00%
to 5.00% of total assets." 
Total deposits increased 10.5% from $348.4 million at December 31,
2013 to a record $385.1 million at March 31, 2014. The weighted
average interest rate on the Bank's deposits at March 31, 2014 was
0.17%, up from 0.15% at December 31, 2013 primarily due to the shift
in deposit mix during the first quarter of 2014. The Bank was
successful in attracting deposit accounts from local businesses and
professionals during the first quarter of 2014 in part due to its
comprehensive suite of cash management services combined with a
dedicated Cash Management Department. The Bank plans to introduce
further enhancements to its cash management services and online and
mobile banking platforms later this year. 
Non-interest bearing demand deposits decreased from $144.2 million at
December 31, 2013 to $140.1 million at March 31, 2014. This reduction
primarily stemmed from normal fluctuations in client account
balances. Interest bearing checking accounts increased from $20.3
million at December 31, 2013 to $25.2 million at March 31, 2014.
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 $81.3 million at December 31,
2013 to $107.6 million at March 31, 2014. Savings deposits rose from
$75.7 million at December 31, 2013 to $85.7 million at March 31,
2014. A portion of these increases was associated with seasonal
deposit patterns by certain clients. Both money market and savings
deposits have been an attractive alternative for liquid funds in the
current historically low interest rate environment. 
Time deposits decreased slightly from $27.0 million at December 31,
2013 to $26.5 million at March 31, 2014. 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
$26.5 million in time deposits at March 31, 2014 were comprised of
low cost state term funds. None of the Bank's deposits at March 31,
2014 or December 31, 2013 were brokered deposits or sourced from
deposit listing services. 
Commenting on the Bank's deposit performance, Irene Shippee, the
Bank's Operations Administrator, stated: "The Bank enjoyed an
outstanding deposit performance during the first quarter of 2014. We
opened in excess of 200 new deposit accounts, with all three full
service branch offices performing well." Ms. Shippee then continued:
"We also enjoyed good success in establishing deposit services for
new credit customers, with those borrowers often taking advantage of
the customized online banking features offered by the Bank." 
Shareholders' equity rose from $37.7 million at December 31, 2013 to
a record $38.4 million at March 31, 2014. This increase resulted
from: (i) 2014 year to date net income of $408 thousand; (ii) $108
thousand in equity compensation expense (primarily associated with
restricted shares); (iii) $57 thousand from the exercise of vested
stock options; and (iv) a $79 thousand increase in the accumulated
other comprehensive income associated with changes in unrealized
gains and losses on securities classified as available for sale.
During the first quarter of 2014, the Bank's Board of Directors
continued to be compensated solely via restricted shares (i.e., no
cash compensation). The Bank also continued to gradually shift its
compensation mix for officers toward a greater percentage of
restricted shares versus cash. The more extensive use of restricted
share awards as a form of compensation highlights the directors' and
officers' commitment to enhancing shareholder value. 
Operating Results Analysis 
Net interest income before provision for loan losses increased from
$3.0 million during the three months ended March 31, 2013 to $3.1
million during the three months ended March 31. 2014. However, net
interest income before provision for loan losses during the most
recent quarter decreased from $3.2 million during the three months
ended December 31, 2013 (the immediately preceding quarter) primarily
due to a combination of two fewer calendar days and a lower yield on
the loan portfolio. The Bank's yield on gross loans declined from
4.85% during the fourth quarter of 2013 to 4.55% during the first
quarter of 2014. This reduction stemmed from: (i) older, higher rate
loans continuing to amortize and be paid off; (ii) aggressive price
competition in the Bank's market area from both large banks and
smaller financial institutions for high quality loans; and (iii) the
purchase of the aforementioned seasoned residential mortgage pool
during the first quarter of 2014, with the yield on that pool being
below the average for the existing loan portfolio. 
The year over year increase in first quarter net interest income was
primarily generated by a rise in interest earning assets, as the
Bank's net interest margin declined from 3.73% during the first
quarter of 2013 to 3.11% during the first quarter of 2014. While the
Bank was successful in decreasing the weighted average interest rate
on deposits from 0.22% during the first quarter of 2013 to 0.17%
during the first quarter of 2014, this savings was insufficient to
offset the impact of the aforementioned reduction in loan portfolio
yield and a decline in the ratio of average gross loans to average
deposits from 79.7% during the first quarter of 2013 to 72.0% during
the first quarter of 2014. 
The Bank plans to support its net interest income in upcoming
quarters via the following strategies: 


 
--  continuing to focus upon the size and mix of the Bank's balance sheet,
    particularly with the
 goal of originating a greater volume of loans
    (while maintaining credit standards) in order to support growth in the
    loan portfolio;
    
    
--  seeking to acquire additional residential loan pools that meet the
    Bank's credit criteria as a means of further diversifying the loan
    portfolio and as an alternative to purchasing additional investment
    securities; and
    
    
--  pursuing opportunities for incremental reductions in the Bank's
    funding costs through marginal pricing changes a
nd a shift in deposit
    mix toward non-interest bearing demand deposit accounts.

  
The provision for loan losses was $120 thousand during the first
quarter of 2014, compared to $460 thousand during the first quarter
of 2013 and none during the fourth quarter of 2013 (the immediately
preceding quarter). Factors contributing to the provision for loan
losses during the first quarter of 2014 included: 


 
--  the $21.1 million increase in the size of the gross loan portfolio;
    
    
--  the aforementioned $1.0 million increase in the balance of loans rated
    Special Mention; and
    
    
--  a $2.5 million increase in the balance of loans rated Watch, of which
    $1.7 million is associated with one credit relationship.

  
The effects of the above factors upon the level of provision for loan
losses was partially offset by the previously discussed shift in loan
portfolio mix during the first quarter of 2014; in particular the
swing in outstanding balances from commercial and industrial loans to
closed end residential mortgage loans, which are allocated a lower
formula reserve ratio due to their credit and collateral profile. The
$5.4 million in loans graded Substandard at December 31, 2013 that
were paid off in full during the first quarter of 2014 were
classified as impaired loans without specific reserves at December
31, 2013. 
The $460 thousand in provision for loan losses recorded during the
first quarter of 2013 reflected: 


 
--  additional loan loss reserves of $277 thousand associated with an
    impaired $500 thousand commercial loan that was charged off during the
    first quarter of 2013; and
    
    
--  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.

  
Non-interest income increased from $64 thousand during the first
quarter of 2013 and $67 thousand during the fourth quarter of 2013
(the immediately preceding quarter) to $73 thousand during the first
quarter of 2014. Factors contributing to this increase included: 


 
--  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.
    
    
--  The Bank has become more selective in its fee waivers.
    
    
--  Various types of non-interest income have increased in conjunction
    with the rise in the size of the deposit portfolio and the acquisition
    of certain business clients who are comparatively larger users of cash
    management, wire transfer, and other fee based services.
    
    
--  The management team has increased the Bank's focus on generating
    non-interest income through a variety of sources, including merchant
    bankcard services and check printing.

  
Non-interest expense increased from $2.2 million during the first
quarter of 2013 and $2.2 million during the fourth quarter of 2013
(the immediately preceding quarter) to $2.3 million during the first
quarter of 2014. 
Salaries and benefits expense rose from $1.3 million during the first
quarter of 2013 to $1.4 million during the first quarter of 2014 due
to: (i) three more full-time equivalent employees; (ii) periodic base
salary increases for employees other than executive officers; (iii)
the Bank's recruiting more experienced and higher cost bankers to
fill certain open positions over the past year; and (iv) the Bank's
shift to a safe harbor 401(k) Plan effective January 1, 2014 that
resulted in an increased level of employer matching contributions. 
Salaries and benefits expense rose from $1.3 million during the
fourth quarter of 2013 (the immediately preceding quarter) to $1.4
million during the first quarter of 2014 primarily due to: (i)
seasonal increases in payroll taxes and the accrued vacation
liability; and (ii) an increase in equity compensation expense
associated with restricted share awards, as the Bank continues to
gradually increase the percentage of employees with equity
compensation as a means of fostering an "ownership orientation" that
aligns employee interests with the generation of long term
shareholder value. 
The Bank did not recognize any incentive compensation expense during
the first quarter of 2014 or the fourth quarter of 2013 due to the
Bank's performance on key metrics including return on average equity
and return on average assets. This compares to a $52 thousand accrual
for incentive compensation during the first quarter of 2013. 
Occupancy expenses decreased from $193 thousand during the first
quarter of 2013 to $182 thousand during the first quarter of 2014.
Occupancy expenses during the fourth quarter of 2013 (the immediately
preceding quarter) were $198 thousand. Certain tenant improvements
became fully depreciated during 2013, resulting in a lower level of
prospective depreciation expense. 
Professional services expenses increased from $112 thousand during
the first quarter of 2013 to $139 thousand during the first quarter
of 2014. The first quarter of 2014 included $41 thousand in
professional recruiter fees associated with the sourcing of the
Bank's new Chief Financial Officer, compared to $20 thousand during
the fourth quarter of 2013 and none during the first quarter of 2013.
Partially offsetting these recruiter fees were expense savings on
various professional services during the first quarter of 2014
compared to the first quarter of 2013 resulting from the Bank's
decision to deregister its common shares under the Securities
Exchange Act of 1934, as amended, during the second quarter of 2013. 
Data and item processing expenses increased from $105 thousand during
the first quarter of 2013 to $127 thousand during the first quarter
of 2014 due to a wider use of technology by the Bank and because of
the associated costs for processing a greater number of client
accounts and transactions. The Bank completed the replacement of its
remaining Windows XP based workstations during the first quarter of
2014, prior to the expiration of support for that operating system by
Microsoft. 
Furniture and equipment expense increased from $58 thousand during
the first quarter of 2013 to $72 thousand during the first quarter of
2014. Furniture and equipment expense during the fourth quarter of
2013 (the immediately preceding quarter) was $77 thousand. The
primary reason for the rise in equipment expense from the first
quarter of 2013 to the first quarter of 2014 was increased
depreciation on new technology purchases. 
Other non-interest expense was little changed from $374 thousand
during the first quarter of 2013 to $375 thousand during the first
quarter of 2014. Other non-interest expense totaled $377 thousand
during the fourth quarter of 2013 (the immediately preceding
quarter). 
The Bank's efficiency ratio (operating costs compared to income from
operations), deteriorated from 70.30% during the first quarter of
2013 to 74.60% during the first 
quarter of 2014 entirely due to the
margin compression experienced by the Bank. The ratio of the Bank's
non-interest expense to average total assets declined from 2.58%
during the first quarter of 2013 to 2.31% during the first quarter of
2014. The Bank has therefore achieved progress in operating more
efficiently and leveraging its expense base, with that progress more
than offset by the constrained net interest margin. 
The Bank increased its total assets by 22.9% during the twelve months
ended March 31, 2014 without adding additional physical locations and
while increasing full-time equivalent employees by just 5.2%. The
Bank's use of technology has enabled the processing of an increasing
volume of client transactions without adding significant overhead
expense. The Bank offers both qualified businesses and consumers
check deposit processing via scanner, with check deposit via
smartphone planned for introduction in comin
g months. 
The Bank's effective book tax rate decreased from 41.8% during the
first quarter of 2013 to 39.5% during the first quarter of 2014.
Factors contributing to this decrease included the Bank's commencing
the purchase of tax qualified municipal bonds during the second
quarter of 2013 and the Bank's reducing the amount of non-deductible
social club dues over the past year. 
About 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 ("SBA") and the U.S. Department of
Agriculture ("USDA"). A full suite of deposits accounts is 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 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. 
---  financial data follows  --- 


 
                                                                            
                                                                            
                              1ST CAPITAL BANK                              
                          CONDENSED FINANCIAL DATA                          
                                (Unaudited)                                 
          (Dollars in thousands, except share and per share data)           
                                                                            
                                       March 31,  December 31,    March 31, 
Financial Condition Data(1)                 2014          2013         2013 
                                     -----------  ------------  ----------- 
Assets                                                                      
  Cash and due from banks            $     2,729  $      1,734  $     1,943 
  Funds held at the Federal Reserve                                         
   Bank(2)                                28,230        15,548       22,135 
  Time deposits at other financial                                          
   institutions                            4,333         4,582        9,321 
  Available-for-sale securities, at                                         
   fair value                            107,252       103,961       62,903 
  Loans receivable held for                                                 
   investment:                                                              
    Construction / land (including                                          
     farmland)                            16,084        15,555       19,014 
    Residential 1 to 4 units              60,135        44,322       24,454 
    Home equity lines of credit           11,696         9,092       10,548 
    Multifamily                            8,633         5,963        5,615 
    Owner occupied commercial real                                          
     estate                               50,370        49,747       48,646 
    Investor commercial real estate       70,460        67,019       62,945 
    Commercial and industrial             51,321        56,564       67,024 
    Other loans                            7,942         7,268        5,785 
                                     -----------  ------------  ----------- 
      Total loans                        276,641       255,530      244,031 
    Allowance for loan losses             (4,834)       (4,691)      (4,274)
                                     -----------  ------------  ----------- 
  Net loans                              271,807       250,839      239,757 
  Premises and equipment, net              1,450         1,484        1,402 
  Bank owned life insurance                3,670         3,648        3,579 
  Investment in FHLB(3) stock, at                                           
   cost                                    1,494         1,494        1,026 
  Accrued interest receivable and                                           
   other assets                            3,509         3,774        3,238 
                                     -----------  ------------  ----------- 
Total assets                         $   424,474  $    387,064  $   345,304 
                                     ===========  ============  =========== 
                                                                            
Liabilities and shareholders' equity                                        
  Deposits:                                                                 
    Noninterest bearing demand                                              
     deposits                        $   140,131  $    144,173  $   120,780 
    Interest bearing checking                                               
     accounts                             25,177        20,268       15,533 
    Money market                         107,584        81,266       73,671 
    Savings                               85,687        75,685       70,478 
    Time                                  26,489        26,983       29,391 
                                     -----------  ------------  ----------- 
      Total deposits                     385,068       348,375      309,853 
  Accrued interest 
payable and other                                        
   liabilities                             1,012           947        1,147 
  Shareholders' equity                    38,394        37,742       34,304 
                                     -----------  ------------  ----------- 
Total liabilities and shareholders'                                         
 equity                              $   424,474  $    387,064  $   345,304 
                                     ===========  ============  =========== 
                                                                            
Shares outstanding(4)                  3,503,310     3,497,190    3,310,503 
Nominal and tangible book value per                                         
 share                               $     10.96  $      10.79  $     10.36 
Ratio of net loans to total deposits       70.59%        72.00%       77.38%

 
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 = Includes cash letters in the process of collection settled
through the Federal Reserve Bank. 
3 = Federal Home Loan Bank 
4 = 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 (and
prospectively) 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 share and per share data)          
                                                                            
                                                  3 Months Ended            
                                     ---------------------------------------
                                        March 31,  December 31,    March 31,
Operating Results Data(1)                    2014          2013         2013
                                     ------------ ------------- ------------
Interest and dividend income                                                
  Loans                              $      2,951 $       3,078 $      2,992
  Investment securities                       201           188          132
  Federal Home Loan Bank stock                 28            25            6
  Other                                        22            20           36
                                     ------------ ------------- ------------
    Total interest and dividend                                             
     income                                 3,202         3,311        3,166
                                     ------------ ------------- ------------
Interest expense                                                            
  Interest bearing checking accounts            7             6            7
  Money market deposits                        66            53           64
  Savings deposits                             60            58           60
  Time deposits                                16            17           28
                                     ------------ ------------- ------------
    Total interest expense                    149           134          159
                                     ------------ ------------- ------------
Net interest income                         3,053         3,177        3,007
Provision for loan losses                     120            --          460
                                     ------------ ------------- ------------
Net interest income after provision                                         
 for loan losses                            2,933         3,177        2,547
                                                                            
Noninterest income                                                          
  Service charges on deposits                  30            30           22
  BOLI dividend income                         21            22           24
  Other                                        22            15           18
                                     ------------ ------------- ------------
    Total noninterest income                   73            67           64
                                                                            
Noninterest expenses                                                        
  Salaries and benefits                     1,437         1,329        1,317
  Occupancy                                   182           198          193
  Professional services                       139           106          112
  Data and item processing                    127           124          105
  Furniture and equipment                      72            77           58
  Other                                       375           377          374
                                     ------------ ------------- ------------
    Total noninterest expenses              2,332         2,211        2,159
                                     ------------ ------------- ------------
Income before provision for income                                          
 taxes                                        674         1,033          452
Provision for income taxes                    266           421          189
                                     ------------ ------------- ------------
Net income                           $        408 $         612 $        263
                                     ============ ============= ============
                                                                            
Common Share Data                                                           
  Earnings per share                                                        
    Basic                            $       0.12 $        0.18 $       0.08
    Diluted                          $       0.11 $        0.18 $       0.08
                                                                            
  Weighted average shares outstanding                                       
    Basic                               3,503,106     3,411,109    3,251,003
    Diluted                             3,549,319     3,474,389    3,332,108

 
1 = Certain reclassifications have been made to prior period financial
statements to conform them to the current period presentation. 


 
                                                                            
                                                                            
                                                                            
                              1ST CAPITAL BANK                              
                          CONDENSED FINANCIAL DATA                          
                                (Unaudited)                                 
                           (Dollars in thousands)                           
                                                                            
                                       March 31,  December 31,    March 31, 
Asset Quality                               2014          2013         2013 
                                     -----------  ------------  ----------- 
  Loans past due 90 days or more and                                        
   accruing interest                 $        --  $         --  $        -- 
  Nonaccrual restructured loans              229           230          235 
  Other nonaccrual loans                     589     
      604          678 
  Other real estate owned                     --            --           -- 
                                     -----------  ------------  ----------- 
                                     $       818  $        834  $       913 
                                     ===========  ============  =========== 
                                                                            
  Allowance for loan losses to total                                        
   loans                                    1.75%         1.84%        1.75%
  Allowance for loan losses to                                              
   nonperforming loans                    590.95%       562.47%      468.13%
  Nonaccrual loans to total loans           0.30%
         0.33%        0.37%
  Nonperforming assets to total                                             
   assets                                   0.19%         0.22%        0.26%
                                                                            
Regulatory Capital and Ratios                                               
  Tier 1 regulatory capital          $    38,251  $     37,783  $    33,949 
  Total regulatory capital           $    41,688  $     41,087  $    37,036 
  Tier 1 leverage ratio                     9.46%        10.04%       10.16%
  Tier 1 risk based capital ratio          13.99%        14.38%       13.82%
  Total risk based capital ratio           15.24%        15.63%       15.08%
                                                                            
                                                                            
                                                  3 Months Ended            
                                       ------------------------------------ 
                                        March 31,  December 31,   March 31, 
Selected Financial Ratios(1)                 2014          2013        2013 
                                       ----------  ------------  ---------- 
  Return on average total assets             0.41%         0.65%       0.32%
  Return on average shareholders'                                           
   equity                                    4.33%         6.57%       3.10%
  Net interest margin                        3.11%         3.40%       3.73%
  Net interest income to average total                                      
   assets                                    3.06%         3.35%       3.64%
  Efficiency ratio                          74.60%        68.16%      70.30%

 
1 = All Selected Financial Ratios are annualized other than the
Efficiency Ratio. 


 
                                                                            
                                                                            
                                                  3 Months Ended            
                                     ---------------------------------------
                                        March 31,  December 31,    March 31,
Selected Average Balances(1)                 2014          2013         2013
                                     ------------ ------------- ------------
  Gross loans                        $    262,893 $     251,916 $    238,456
  Investment securities                   103,886        90,490       51,172
  Federal Home Loan Bank stock              1,494         1,494        1,028
  Other interest earning assets            29,244        26,283       36,699
                                     ------------ ------------- ------------
    Total interest earning assets    $    397,517 $     370,183 $    327,355
  Total assets                       $    404,223 $     376,265 $    334,594
                                                                            
  Interest bearing checking accounts $     21,611 $      18,924 $     15,594
  Money market                             97,630        81,571       68,202
  Savings                                  79,675        74,422       66,658
  Time deposits                            26,849        27,151       29,969
                                     ------------ ------------- ------------
    Total interest bearing deposits  $    225,765 $     202,068 $    180,423
  Noninterest bearing demand                                                
   deposits                               139,398       134,626      118,835
                                     ------------ ------------- ------------
    Total deposits                   $    365,163 $     336,694 $    299,258
  Borrowings                                   --         1,517           --
  Shareholders' equity               $     38,173 $      36,950 $     34,354

 
1 = Certain reclassifications have been made to prior period financial
statements to conform them to the current period presentation.  
For further information, please contact: 
Mark R. Andino 
President and Chief Executive Officer 
831.264.4028 office 
831.915.6498 smart phone 
Mark.Andino@1stCapitalBank.com  
or 
Michael J. Winiarski
Chief Financial Officer
831.264.4014 office
831.747.0007 smart phone
Michael.Winiarski@1stCapitalBank.com 
 
 
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