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 . 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 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 | |
