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1st Capital Bancorp Announces Second Quarter 2022 Financial Results
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1st Capital Bancorp Announces Second Quarter 2022 Financial Results

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Deposit type (dollars in thousands) 6/30/2022 % of Total Deposits   3/31/2022 % of Total Deposits   6/30/2021 % of Total Deposits
Interest bearing checking accounts $ 62,779 6.8 %   $ 59,455 6.4 %   $ 57,422 6.7 %
Money market             290,106 31.3 %               250,596 27.2 %               241,163 28.3 %
Savings             143,215 15.4 %               161,720 17.5 %               129,176 15.1 %
Time               13,509 1.5 %                 11,520 1.2 %                 13,761 1.6 %
Total interest-bearing deposits             509,609 54.9 %               483,291 52.4 %               441,522 51.7 %
Noninterest-bearing             418,692 45.1 %               438,914 47.6 %               412,108 48.3 %
Total deposits $ 928,301 100.0 %   $ 922,205 100.0 %   $ 853,630 100.0 %

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

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

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

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

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

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

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

  Three Months Ended
Operating Results Data 6/30/2022 3/31/2022 6/30/2021
Interest and dividend income      
Loans $ 7,258 $ 6,896 $                   6,976
Investment securities      2,038      1,557   750
Federal Home Loan Bank stock   59   58   66
Other income   56   13      8
Total interest and dividend income   9,411   8,524   7,800
Interest expense      573      530      295
Net interest income   8,838   7,994   7,505
Provision for loan losses      
Net interest income after provision for loan losses   8,838   7,994   7,505
Noninterest income   290      319   191
Noninterest expenses      
Salaries and benefits expense   3,457   3,445   3,222
Occupancy expense   463   435   390
Data and item processing   265   263   265
Furniture and equipment   150   140   114
Professional services   114   169   162
Other   1,201   1,014   833
Total noninterest expenses   5,650   5,466   4,986
Income before provision for income taxes   3,478   2,847   2,710
Provision for income taxes   958   755   760
Net income $ 2,520 $ 2,092 $                  1,950

                          Three Months Ended  
Selected Average Balances 6/30/2022 3/31/2022 6/30/2021
Gross loans $ 593,990   $ 569,997   $ 620,093  
Investment securities   373,853     362,328     202,246  
Federal Home Loan Bank stock   4,024     3,948     3,834  
Other interest earning assets   31,158     31,744     30,287  
Total interest earning assets   1,003,025     968,017     856,460  
Total assets   1,027,269     996,632     881,495  
Interest bearing checking accounts   64,988     65,753     59,503  
Money market   278,646     221,071     200,199  
Savings   149,930     158,988     127,046  
Time deposits   12,350     11,572     14,279  
Total interest- bearing deposits   505,914     457,384     401,027  
Noninterest bearing demand deposits   427,351     438,394     398,007  
Total deposits   933,265     895,778     799,034  
Subordinated debentures and other borrowings   17,546     14,669     1,641  
Shareholders’ equity $ 68,227   $ 80,143   $ 75,481  

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

  Three Months Ended
Selected Financial Ratios  6/30/2022 3/31/2022 6/30/2021
Return on average total assets   0.98 %   0.85 %   0.89 %
Return on average shareholders’ equity   14.82 %   10.59 %   10.36 %
Net interest margin   3.58 %   3.40 %   3.54 %
Net interest income to average total assets   3.56 %   3.25 %   3.41 %
Efficiency ratio   61.89 %   65.75 %   64.79 %

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

  Six Months Ended
Operating Results Data 6/30/2022 6/30/2021
Interest and dividend income    
Loans $ 14,154 $ 13,577
Investment securities      3,595      1,205
Federal Home Loan Bank stock   117   110
Other income   69   16
Total interest and dividend income   17,935   14,908
Interest expense      1,103      537
Net interest income   16,832   14,371
Provision for loan losses    
Net interest income after provision for loan losses   16,832   14,371
Noninterest income   609      381
Noninterest expenses    
Salaries and benefits expense   6,902   6,365
Occupancy expense   897   808
Data and item processing   528   515
Furniture and equipment   290   231
Professional services   283   341
Other   2,215   1,642
Total noninterest expenses   11,115   9,902
Income before provision for income taxes   6,326   4,850
Provision for income taxes   1,714   1,363
Net income $ 4,612 $                3,487

  Six Months Ended
Selected Average Balances 6/30/2022 6/30/2021  
Gross loans $ 582,060 $ 617,604  
Investment securities   368,123   163,658  
Federal Home Loan Bank stock   3,987   3,685  
Other interest earning assets   35,207   37,811  
Total interest earning assets   989,377   822,758  
Total assets   1,012,035   847,719  
Interest bearing checking accounts   65,368   59,366  
Money market   250,017   179,197  
Savings   154,434   125,701  
Time deposits   11,963   14,483  
Total interest- bearing deposits   481,782   378,747  
Noninterest bearing demand deposits   432,842   385,085  
Total deposits   914,624   763,832  
Subordinated debentures and other borrowings   16,116   3,311  
Shareholders’ equity $ 74,152 $ 75,352  

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

  Six Months Ended
Selected Financial Ratios 6/30/2022 6/30/2021
Return on average total assets 0.92 % 0.83 %
Return on average shareholders’ equity 12.54 % 9.33 %
Net interest margin 3.51 % 3.54 %
Net interest income to average total assets 3.35 % 3.42 %
Efficiency ratio 63.73 % 67.12 %
     

Regulatory Capital and Ratios 6/30/2022 3/31/2022 6/30/2021
Common equity tier 1 capital $ 97,226   $ 83,272   $ 76,158  
Tier 1 regulatory capital $ 97,226   $ 83,272   $ 76,158  
Total regulatory capital $ 105,418   $ 91,877   $ 83,518  
Tier 1 leverage ratio   9.62 %   8.36 %   8.64 %
Common equity tier 1 risk-based capital ratio   13.27 %   11.49 %   12.99 %
Tier 1 capital ratio   13.27 %   11.49 %   12.99 %
Total risk-based capital ratio   14.39 %   12.67 %   14.24 %

About 1st Capital Bancorp

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

Forward-Looking 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.

For further information, please contact:

Samuel D. Jimenez   Danelle Thomsen
Chief Executive Officer   Chief Financial Officer
831.264.4057 office   831.264.4014 office
Sam.Jimenez@1stCapitalBank.com   Danelle.Thomsen@1stCapitalBank.com

 

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