1st Capital Bancorp Announces Fourth Quarter 2021 Financial

SALINAS, Calif., Jan. 31, 2022 (GLOBE NEWSWIRE) — 1st Capital Bancorp (the “Company), (OTCQX: FISB), the $999.4 million asset bank holding company and parent company of 1st Capital Bank (the “Bank”), today reported unaudited net income of $1.89 million for the quarter ended December 31, 2021, a decrease of 19.3% compared to net income of $2.26 million in the third quarter of 2021, and an increase of 18.6% compared to net income of $1.59 million in the fourth quarter of 2020.

Net income for the year ended December 31, 2021 of $7.6 million increased 69.4% compared to net income for the year ended December 31, 2020.

Financial Highlights
Performance highlights for the quarter ended December 31, 2021, as compared to the quarter ending December 31, 2020, and the quarter ending September 30, 2021:

  • For the quarter ended December 31, 2021, the Company’s return on average equity was 9.39%, as compared to 8.60% and 11.35% for the quarters ended December 31, 2020 and September 30, 2021, respectively.
     
  • For the quarter ended December 31, 2021, the Company’s return on average assets was 0.75%, as compared to 0.82% and 0.92% for the quarters ended December 31, 2020 and September 30, 2021, respectively.
     
  • Earnings per share (diluted) were $0.33 for the fourth quarter of 2021, compared to $0.40 for the prior quarter, and $0.28 for the fourth quarter of 2020.
     
  • For the quarter ended December 31, 2021, the Company’s net interest margin was 3.17%, as compared to 3.54% and 3.26% for the quarters ended December 31, 2020 and September 30, 2021, respectively.
     
  • For the quarter ended December 31, 2021, the Company’s efficiency ratio was 68.01%, as compared to 67.65% and 60.58% for the quarters ended December 31, 2020 and September 30, 2021, respectively.
     
  • The Company recorded $0 provision expense for the quarters ended December 31, 2021, December 31, 2020 and September 30, 2021.
     
  • As of December 31, 2021, the Company’s nonperforming assets to total assets was 0.10%, as compared to 0.16% and 0.11% for the quarters ended December 31, 2020 and September 30, 2021, respectively.
     
  • As of December 31, 2021, the Company reported total assets, total deposits, and total loans of $999.4 million, $899.2 million, and $564.2 million, respectively.

Performance highlights for the year ended December 31, 2021, as compared to the year ending December 31, 2020:

  • The Company’s return on average equity was 9.93% for the year ended December 31, 2021, as compared to 6.32% for the year ended December 31, 2020.
     
  • The Company’s return on average assets was 0.83% for the year ended December 31, 2021, as compared to 0.63% for the year ended December 31, 2020.
     
  • Earnings per share (diluted) increased $0.53 per share to $1.34 per share for the year ended December 31, 2021 from $0.81 per share for the year ended December 31, 2020.
     
  • The Company’s net interest margin was 3.35% for the year ended December 31, 2021 as compared to 3.62% for the year ended December 31, 2020.
     
  • The Company’s efficiency ratio was 65.65% for the year ended December 31, 2021 as compared to 67.77% for the year ended December 31, 2020.
     
  • The Company recorded $0 provision expense for the year ended December 31, 2021 as compared to $2.1 million for the year ended December 31, 2020.

“We are pleased with our year over year performance,” commented Sam Jimenez, chief executive officer. “The strong balance sheet growth and solid operating metrics are substantially attributable to our PPP and core loan activities, and highly reflective of our Mission to provide sustainable value to our customers, communities, team members, and shareholders. As we settle into 2022, we are confident in our ability to uphold our Mission and sustain our performance.”

1ST CAPITAL BANCORP
CONDENSED FINANCIAL DATA – UNAUDITED
($000’S, except per share data)

             
  For the Three Months Ended For the Year Ended
Operating Results Data 12/31/2021 12/31/2020 Change 12/30/2021 12/30/2020 Change
             
Interest income $ 8,203 $ 6,852 $ 1,351 $ 31,322 $ 26,039 $ 5,283  
Interest expense   530   226   304   1,563   1,001   562  
Net interest income   7,673   6,626   1,047   29,759   25,038   4,721  
Provision for loan losses           2,125   (2,125 )
Noninterest income   238   233   5   913   1,028   (115 )
Noninterest expenses   5,380   4,640   740   20,135   17,666   2,470  
Income before provision for income taxes   2,531   2,219   312   10,537   6,276   4,261  
Provision for income taxes   640   626   15   2,904   1,770   1,134  
Net income $ 1,891 $ 1,593 $ 297 $ 7,633 $ 4,505 $ 3,128  
Assets   12/31/2021 9/30/2021 6/30/2021 12/31/2020
Cash and due from banks   $ 6,768   $ 9,668   $ 17,876   $ 9,304  
Funds held at the Federal Reserve Bank     77,311     120,005     43,615     97,462  
Available-for-sale securities, at fair value     333,869     297,456     264,572     106,214  
Loans     564,241     565,031     608,101     605,154  
Allowance for loan losses     (8,578 )   (8,830 )   (8,840 )   (8,816 )
Net loans     555,564     556,201     599,261     596,338  
Other Assets     25,748     24,186     25,379     23,233  
Total assets   $ 999,360   $ 1,007,516   $ 950,703   $ 832,551  
           
Liabilities and Shareholders’ Equity   12/31/2021 9/30/2021 6/30/2021 12/31/2020
Noninterest bearing demand deposits   $ 463,990   $ 438,446   $ 412,108   $ 386,710  
Interest bearing checking accounts     68,575     72,867     57,421     65,686  
Money market     197,703     252,255     241,164     159,510  
Savings     157,332     135,736     129,176     121,148  
Time     11,559     12,422     13,761     15,284  
Interest bearing deposits     435,169     473,280     441,522     361,628  
Total deposits     899,159     911,726     853,630     748,338  
Other liabilities     20,203     17,309     19,779     9,880  
Shareholders’ equity     79,998     78,481     77,294     74,333  
Total liabilities and shareholders’ equity   $ 999,360   $ 1,007,516   $ 950,703   $ 832,551  
           
Shares outstanding     5,609,141     5,587,878     5,581,848     5,570,021  
Earnings per share basic   $ 0.34   $ 0.40   $ 0.35   $ 0.29  
Earnings per share diluted   $ 0.33   $ 0.40   $ 0.34   $ 0.28  
Nominal and tangible book value per share   $ 14.26   $ 14.04   $ 13.85   $ 13.35  

Net Interest Income and Net Interest Margin
The Company’s fourth quarter 2021 net interest income increased $1.0 million or 15.8% as compared with the quarter ending December 31, 2020. This increase was primarily driven by higher investment income.

The Company’s net interest margin decreased by 38 basis points (bps) or 10.7% when compared to the quarter ending December 31, 2020. This decrease was primarily driven by the Company’s mix of average earning assets. Lower yielding average earning asset balances have grown at an exceeding rate relative to higher yielding average earning assets. Interest expense associated with the subordinated debt issued by the Company in 2021 also contributed to the net interest margin decrease in the fourth quarter of 2021 compared to the same quarter in 2020.

In general terms, prepaying and repricing higher yielding loans have been substantially replaced and supplemented with lower yielding investment securities purchased in the current year. The negative impact has been partially offset by higher yields resulting from fee recognition on PPP loan forgiveness, and to a lesser extent, the impact of the higher yielding consumer loans purchased during the second and fourth quarters.

Provision for Loan Losses
Stable credit quality and improving economic conditions resulted in $0 loan loss provision in the quarters ending December 31, 2021 and December 31, 2020.

Noninterest Expenses
The Company’s fourth quarter 2021 non-interest expenses increased $740 thousand, or 16.0%, to $5.38 million in the fourth quarter of 2021, compared to $4.64 million for the fourth quarter of 2020. This increase is primarily due to increased salary and benefit costs related to filling four key leadership positions in the fourth quarter of 2021 and increased FDIC insurance costs associated with deposit growth.

Balance Sheet Summary
The Company’s total assets marginally decreased $8.2 million or 0.8% to $999.4 million as compared to $1.007 billion at September 30, 2021.

Total loans outstanding were $564.2 million as of December 31, 2021. This represents a $40.9 million decrease or 6.8% from the December 31, 2020 outstanding balance of $605.2 million. The decrease in loan level reflects PPP loan forgiveness and payoff activity in the purchased residential loan portfolio, offset by an increase in originations of commercial real estate core loans, and the purchase of two consumer loan pools in the second and fourth quarters of 2021 with $36.6 million in outstanding balances at December 31, 2021.

PPP loans outstanding were $25.2 million as of December 31, 2021, and included a deferred fee balance of $765 thousand. At December 31, 2020, PPP loans outstanding were $90.4 million and included a deferred fee balance of $1.7 million.

The investment portfolio increased $227.7 million to $333.9 million from an outstanding balance of $106.2 million as of December 31, 2020. Incoming cashflows from deposit growth and prepaying earning assets were largely deployed in bonds. The majority of the investments were made in mortgage-backed and municipal securities.

Total deposits were $899.2 million as of December 31, 2021. This represents a $150.8 million increase or 20.2% from the December 31, 2020 outstanding balance of $748.3 million. A significant portion of this growth was associated with PPP loan proceeds deposited with the Bank. Growth in noninterest-bearing demand deposit accounts were $77.3 million or 51.2% of the total annual deposit growth. The balance of the deposit growth was distributed among interest-bearing deposit accounts with the exception of time deposits which decreased by $3.7 million to $11.6 million.

Asset Quality
At December 31, 2021, non-performing assets were 0.10% of the Company’s total assets, compared with 0.11% at September 30, 2021. At December 31, 2021, the allowance for loan losses was 1.52% of outstanding loans, compared to 1.56% at September 30, 2021. The Bank recorded $310 thousand in charge-offs in the fourth quarter related to the purchased consumer loan portfolio compared to $22 thousand in the quarter ended September 30, 2021. The Bank recorded net recoveries of $12 thousand in each of the first three quarters of 2021 and $58 thousand in the fourth quarter of 2021.

As of December 31, 2021, the Company does not have any outstanding loan deferments or forbearances stemming from COVID-19.

Stock Repurchase Activity
The Company announced a Stock Repurchase Program December 3, 2021 and subsequently repurchased a total of 57,089 shares through January 20, 2022 at a weighted average price of $14.91.

1ST CAPITAL BANCORP
CONDENSED FINANCIAL DATA – UNAUDITED
($ in 000s)
Asset Quality 12/31/2021  9/30/2021  6/30/2021  12/31/2020 
Loans past due 90 days or more and accruing interest $ 59   $ 146   $   $  
Other nonaccrual loans   899     921     2,161     1,299  
Other real estate owned                
Total nonperforming assets $ 958   $ 1,067   $ 2,161   $ 1,299  
         
Allowance for loan losses to total loans   1.52 %   1.56 %   1.46 %   1.46 %
Allowance for loan losses to nonperforming loans   895.41 %   827.55 %   409.07 %   679.60 %
Nonaccrual loans to total loans   0.16 %   0.16 %   0.36 %   0.21 %
Nonperforming assets to total assets   0.10 %   0.11 %   0.23 %   0.16 %
1ST CAPITAL BANCORP
CONDENSED FINANCIAL DATA – UNAUDITED
($ in 000s)
         
  Three Months Ended Year Ended
Operating Results Data 12/31/2021  12/31/2020 12/31/2021  12/31/2020
Interest and dividend income        
Loans $ 6,857 $ 6,530 $ 27,555 $ 24,581
Investment securities   1,247   266   3,452   1,190
Federal Home Loan Bank stock   60   44   230   176
Other income   39   12   85   92
Total interest and dividend income   8,203   6,852   31,322   26,039
Interest expense   530   226   1,563   1,001
Net interest income   7,673   6,626   29,759   25,038
Provision for loan losses         2,125
Net interest income after provision for loan losses   7,673   6,626   29,759   22,913
Noninterest income   238   233   913   1,028
         
Noninterest expenses        
Salaries and benefits expense   3,305   2,937   12,408   10,858
Occupancy expense   413   408   1,643   1,515
Data and item processing   260   249   1,064   901
Furniture and equipment   117   131   466   638
Professional services   248   123   736   802
Other   1,037   792   3,818   2,952
Total noninterest expenses   5,380   4,640   20,135   17,666
Income before provision for income taxes   2,531   2,219   10,537   6,275
Provision for income taxes   640   626   2,904   1,770
Net income $ 1,891 $ 1,593 $ 7,633 $ 4,505

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

Assets 12/31/2021   9/30/2021   6/30/2021   12/31/2020
Cash and due from banks $ 6,768     $ 9,668     $ 17,876     $ 9,304  
Funds held at the Federal Reserve Bank   77,311       120,005       43,615       97,462  
Available-for-sale securities, at fair value   333,869       297,456       264,572       106,214  
Loans held for sale               1,791        
Loans held for investment                              
Construction/land (including farmland)   28,260       25,476       22,091       17,097  
Residential 1 to 4 units   61,209       68,438       75,906       102,688  
Home equity lines of credit   6,087       7,601       6,669       5,955  
Multifamily   82,231       81,268       77,183       84,704  
Owner occupied commercial real estate   89,087       80,166       81,972       72,427  
Investor commercial real estate   185,939       185,001       172,776       174,437  
Commercial and industrial   40,298       40,719       49,147       47,550  
Paycheck Protection Program   25,203       42,414       84,866       90,382  
Other loans   45,927       33,948       35,700       9,914  
Total loans held for investment   564,241       565,031       606,310       605,154  
Allowance for loan losses   (8,578 )     (8,830 )     (8,840 )     (8,816 )
Net loans held for investment   555,663       556,201       597,470       596,338  
Other assets   25,748       24,186       25,379       23,233  
Total assets $ 999,360     $ 1,007,516     $ 950,703     $ 832,551  
                               
Liabilities and Shareholders’ Equity                              
Noninterest bearing demand deposits $ 463,990     $ 438,446     $ 412,108     $ 386,710  
Interest bearing checking accounts   68,575       72,867       57,421       65,686  
Money market   197,703       252,255       241,164       159,509  
Savings   157,332       135,736       129,176       121,148  
Time   11,559       12,422       13,761       15,284  
Interest bearing deposits   435,169       473,280       441,523       361,628  
Total deposits   899,159       911,726       853,631       748,338  
Other liabilities   20,203       17,309       19,779       9,880  
Shareholders’ equity   79,998       78,481       77,294       74,333  
Total liabilities and shareholders’ equity $ 999,360     $ 1,007,516     $ 950,703     $ 832,551  

1ST CAPITAL BANCORP
CONDENSED FINANCIAL DATA – UNAUDITED
($000’s)

  Three Months Ended Year Ended
Selected Average Balances 12/30/2021  12/30/2020  12/31/2021  12/31/2020 
Gross loans $ 561,207 $ 618,458 $595,961 $ 593,887
Investment securities 317,032 75,020 231,420 66,146
Federal Home Loan Bank stock 3,948 3,534 3,818 3,396
Other interest earning assets 92,112 46,969 58,474 28,979
Total interest earning assets $ 974,299 $ 743,981 $ 889,673 $ 692,408
         
Total assets $ 999,508 $ 769,694 $ 891,336 $ 716,834
         
Interest bearing checking accounts $ 60,106 $ 54,120 $ 60,738 $ 46,821
Money market 232,730 136,535 206,320 137,155
Savings 141,290 111,468 131,905 105,383
Time deposits 11,965 15,937 13,609 18,068
Total interest- bearing deposits 446,091 318,060 412,572 307,427
Noninterest bearing demand deposits 468,459 364,571 422,417 327,651
Total deposits $ 914,550 $ 682,631 $ 834,989 $ 635,078
Borrowings $ 14,651 $ 8,261 $ 7,657 $ 5,519
Shareholders’ equity $ 79,312 $ 73,488 $ 76,892 $ 71,090
         
         
         
  Three Months Ended Year Ended
Selected Financial Ratios  12/31/2021  12/31/2020  12/31/2021  12/31/2020 
Return on average total assets 0.75% 0.82% 0.83% 0.63%
Return on average shareholders’ equity 9.46% 8.60% 9.93% 6.32%
Net interest margin 3.17% 3.54% 3.35% 3.62%
Net interest income to average total assets 3.05% 3.42% 3.24% 3.48%
Efficiency ratio 68.01% 67.65% 65.65% 67.77%
Regulatory Capital and Ratios 12/31/2021  9/30/2021  6/30/2021  12/31/2020 
Common equity tier 1 capital $ 80,819   $ 78,702   $ 76,158   $ 72,461  
Tier 1 regulatory capital $ 80,819   $ 78,702   $ 76,158   $ 72,461  
Total regulatory capital $ 88,798   $ 86,122   $ 83,518   $ 78,957  
Tier 1 leverage ratio   8.09 %   8.07 %   8.64 %   9.44 %
Common equity tier 1 risk-based capital ratio   12.82 %   13.30 %   12.99 %   14.01 %
Tier 1 capital ratio   12.82 %   13.30 %   12.99 %   14.01 %
Total risk-based capital ratio   14.07 %   14.55 %   14.24 %   15.27 %


About 1st Capital Bancorp

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

Forward-Looking 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 pandemics, terrorist related incidents and other factors beyond the Bank’s control; and other factors. The Bank does not undertake, and specifically disclaims any obligation, to update or revise any forward-looking statements, whether to reflect new information, future events, or otherwise, except as required by law.

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

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