1st Capital Bancorp Announces Third Quarter 2022 Financial Results
SALINAS, Calif., Oct. 28, 2022 (GLOBE NEWSWIRE) -- 1st Capital Bancorp (the “Company”), (OTCQX: FISB), the $994.6 million asset bank holding company and parent company of 1st Capital Bank (the “Bank”), today reported unaudited net income of $2.66 million for the quarter ended September 30, 2022, a 18.0% increase compared to net income of $2.26 million for the quarter ended September 30, 2021, and a 5.6% increase compared to net income of $2.52 million for the quarter ended June 30, 2022.
Financial Highlights
Performance highlights for the quarter ended September 30, 2022, as compared to the quarter ended September 30, 2021, and the quarter ended June 30, 2022:
- Earnings per share (diluted) were $0.48 for the third quarter of 2022, as compared to $0.40 and $0.45 for the quarters ended September 30, 2021 and June 30, 2022, respectively.
- For the quarter ended September 30, 2022, the Company's return on average equity was 16.44%, as compared to 11.35% and 14.82% for the quarters ended September 30, 2021 and June 30, 2022, respectively.
- For the quarter ended September 30, 2022, the Company’s return on average assets was 1.04%, as compared to 0.92% and 0.98% for the quarters ended September 30, 2021 and June 30, 2022, respectively.
- For the quarter ended September 30, 2022, the Company’s net interest margin was 3.46%, as compared to 3.26% and 3.58% for the quarters ended September 30, 2021 and June 30, 2022 and, respectively.
- Pretax, pre-provision income for the quarter ended September 30, 2022 totaled $3.7 million, as compared to $3.2 million and $3.5 million for the quarters ended September 30, 2021 and June 30, 2022, respectively.
- For the quarter ended September 30, 2022, the Company’s efficiency ratio was 59.54%, as compared to 60.58% and 61.89% for the quarters ended September 30, 2021 and June 30, 2022, respectively.
- The Company recorded no provision expense for the quarters ended September 30, 2022, September 30, 2021 and June 30, 2022.
- As of September 30, 2022, the Company’s nonperforming assets to total assets was 0.04%, as compared to 0.11% and 0.01% for the quarters ended September 30, 2021 and June 30, 2022, respectively.
- As of September 30, 2022, the Company reported total assets, total deposits, and total loans of $994.6 million, $922.2 million, and $579.2 million, respectively.
- Federal regulatory capital ratios for the quarters ended September 30, 2022, June 30, 2022 and September 30, 2021 exceed well capitalized thresholds.
“We are pleased with the continuing positive trends in our Company's operating performance,” commented Sam Jimenez, chief executive officer. “While the economic outlook remains uncertain, the Company is well positioned with strong asset quality and liquidity positions, reflecting a relatively low risk profile.”
Net Interest Income and Net Interest Margin
The Company's third quarter 2022 net interest income decreased $253 thousand, or 2.86%, to $8.59 million as compared with $8.84 million for the quarter ended June 30, 2022. Loan interest income, excluding PPP income, increased $45 thousand, or 0.65%, to $6.96 million for the quarter ended September 30, 2022 compared to $6.91 million for the quarter ended June 30, 2022. Interest and fee income related to PPP loans decreased $292 thousand to $52 thousand for the quarter ended September 30, 2022, compared to $344 thousand for the quarter ended June 30, 2022. PPP loans have been fully forgiven in the third quarter 2022.
The Company's net interest margin increased by 20 basis points (bps), or 6.03%, to 3.46% when compared to 3.26% for the quarter ended September 30, 2021. The increase was primarily driven by the Company’s mix of average interest earning assets as cash was deployed into higher yielding loans and leases and investment securities. Interest expense increased $173 thousand, or 34.93%, to $669 thousand for the quarter ended September 30, 2022 compared to $496 thousand for the quarter ended September 30, 2021 due to an increase in average balances of interest-bearing deposits and interest expense associated with the cap corridor. Interest expense includes $169 thousand of interest expense associated with subordinated debt recognized in each period.
Provision for Loan Losses
Stable credit quality resulted in no loan loss provision in the quarters ended September 30, 2022, September 30, 2021 and June 30, 2022.
Noninterest Expenses
The Company's total non-interest expense increased $525 thousand, or 10.81%, to $5.38 million in the quarter ended September 30, 2022, compared to $4.85 million for the quarter ended September 30, 2021. The increase reflects the salary and benefit costs of senior leadership positions filled in the fourth quarter of 2021.
Balance Sheet Summary
The Company's total assets decreased $12.90 million, or 1.3%, to $994.6 million as compared to $1.01 billion at September 30, 2021.
Total loans outstanding were $586.8 million as of September 30, 2022, representing a $21.8 million, or 3.9%, increase from the September 30, 2021 outstanding balance of $565.0 million. Excluding the $42.4 million decline in PPP loan balances, loans increased $64.2 million, or 12.3%, at September 30, 2022 compared to September 30, 2021. The increase includes purchased lease pools with outstanding balances of $45.0 million and a $10 million increase in consumer loan pool balances, along with growth in commercial real estate loan originations, partially offset by declines in construction and residential loans outstanding.
PPP loans outstanding were $0 as of September 30, 2022, compared to $42.4 million at September 30, 2021.
| Loan type (dollars in thousands) | 9/30/2022 | % of Total Loans | 6/30/2022 | % of Total Loans | 9/30/2021 | % of Total Loans | |||||||||||
| Construction / land (including farmland) | $ | 12,403 | 2.1 | % | $ | 18,502 | 3.2 | % | $ | 25,476 | 4.5 | % | |||||
| Residential 1 to 4 units | 56,592 | 9.6 | % | 57,381 | 9.8 | % | 68,438 | 12.1 | % | ||||||||
| Home equity lines of credit | 4,909 | 0.8 | % | 5,392 | 0.9 | % | 7,601 | 1.3 | % | ||||||||
| Multifamily | 82,936 | 14.1 | % | 76,168 | 13.0 | % | 81,268 | 14.4 | % | ||||||||
| Owner occupied commercial real estate | 111,097 | 18.9 | % | 111,283 | 19.0 | % | 80,166 | 14.2 | % | ||||||||
| Investor commercial real estate | 188,930 | 32.2 | % | 186,448 | 31.8 | % | 185,001 | 32.7 | % | ||||||||
| Commercial and industrial | 39,804 | 6.8 | % | 43,652 | 7.4 | % | 40,719 | 7.2 | % | ||||||||
| Paycheck Protection Program | - | 0.0 | % | 1,986 | 0.3 | % | 42,414 | 7.5 | % | ||||||||
| Leases | 45,049 | 7.7 | % | 34,095 | 5.8 | % | - | 0.0 | % | ||||||||
| Consumer | 30,902 | 5.3 | % | 36,372 | 6.2 | % | 20,581 | 3.6 | % | ||||||||
| Other loans | 14,176 | 2.4 | % | 14,784 | 2.6 | % | 13,366 | 2.4 | % | ||||||||
| Total loans | 586,798 | 100.0 | % | 586,063 | 100.0 | % | 565,030 | 100.0 | % | ||||||||
| Allowance for loan losses | (7,560 | ) | (8,066 | ) | (8,830 | ) | |||||||||||
| Net loans held for investment | $ | 579,238 | $ | 577,997 | $ | 556,200 | |||||||||||
The investment portfolio increased $34.8 million, or 11.7%, to $332.3 million from $297.5 million at September 30, 2021. The unrealized loss associated with the Company’s available-for-sale investment security portfolio increased from $38.2 million at June 30, 2022 to $40.1 million at September 30, 2022 as market yields continued to negatively impact portfolio valuation.
Total deposits were $922.2 million as of September 30, 2022. This represents a $10.5 million, or 1.1% increase from the September 30, 2021 balance of $911.7 million. Growth in money market balances of $56.5 million drove deposit growth, offset by noninterest bearing balances declining $14.1 million. Noninterest bearing balances comprised 46.0% and 48.1% of total deposit balances at September 30, 2022 and September 30, 2021, respectively.
| Deposit type (dollars in thousands) | 9/30/2022 | % of Total Deposits | 6/30/22 | % of Total Deposits | 9/30/2021 | % of Total Deposits | ||||||||
| Interest bearing checking accounts | $ | 69,258 | 7.5 | % | $ | 62,780 | 6.8 | % | $ | 72,867 | 8.0 | % | ||
| Money market | 308,772 | 33.5 | % | 290,106 | 31.3 | % | 252,257 | 27.7 | % | |||||
| Savings | 109,653 | 11.9 | % | 143,215 | 15.4 | % | 135,736 | 14.9 | % | |||||
| Time | 10,256 | 1.1 | % | 13,509 | 1.5 | % | 12,422 | 1.4 | % | |||||
| Total interest-bearing deposits | 497,889 | 54.0 | % | 509,609 | 54.9 | % | 473,281 | 51.9 | % | |||||
| Noninterest-bearing | 424,312 | 46.0 | % | 418,692 | 45.1 | % | 438,445 | 48.1 | % | |||||
| Total deposits | $ | 922,201 | 100.0 | % | $ | 928,301 | 100.0 | % | $ | 911,726 | 100.0 | % | ||
Shareholder’s equity totaled $48.3 million at September 30, 2022, a decline of $30.2 million, or 38.5%, compared to $78.5 million at September 30, 2021. This is reflective of the increase in unrealized losses on the investment security portfolio, the impact of which flows through accumulated other comprehensive income, a component of equity. At September 30, 2022 $72.8 million in bonds are classified as held-to-maturity, approximately 22% of the total investment portfolio. The unrealized losses on these held-to-maturity bonds are captured in AOCI at the transfer date and amortize over the life of the bonds, with interest rate environment changes having no further impact on the unrealized loss position of these bonds.
In the second quarter of 2022, the Company entered into a cap corridor transaction with a $100 million notional amount designed to hedge a portion of deposit interest expense and to partially mitigate the future investment portfolio valuation impact of increasing interest rates. The corridor qualifies for hedge accounting and is carried at fair value on the balance sheet with changes in fair value flowing through AOCI. The fair value of the hedge increased $1.0 million in the third quarter, positively impacting AOCI, and is carried on the balance sheet at a fair value of $3.1 million at September 30, 2022.
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. Repurchase activity has been suspended through the remainder of 2022.
Asset Quality
At September 30, 2022, non-performing assets were 0.04% of the Company’s total assets, compared with 0.11% at September 30, 2021. The allowance for loan losses was 1.29% of outstanding loans at September 30, 2022, compared to 1.56% at September 30, 2021. The Company had $0 and $921 thousand in nonaccrual loans at September 30, 2022 and September 30, 2021, respectively. The Company recorded net charge-offs of $506 thousand in the quarter ended September 30, 2022 compared to $10 thousand in the quarter ended September 30, 2021. Charge-offs were within the purchased consumer loan pools.
| Asset Quality (dollars in thousands) | 9/30/2022 | 6/30/2022 | 9/30/2021 | ||||||
| Loans past due 90 days or more and accruing interest | $ | 409 | $ | 145 | $ | 146 | |||
| Other nonaccrual loans | - | - | 921 | ||||||
| Other real estate owned | - | - | - | ||||||
| Total nonperforming assets | $ | 409 | $ | 145 | $ | 1,067 | |||
| Allowance for loan losses to total loans | 1.29 | % | 1.38 | % | 1.56 | % | |||
| Allowance for loan losses to nonperforming loans | 1848.34 | % | 5562.76 | % | 827.55 | % | |||
| Nonaccrual loans to total loans | 0.00 | % | 0.00 | % | 0.16 | % | |||
| Nonperforming assets to total assets | 0.04 | % | 0.01 | % | 0.11 | % | |||
As of September 30, 2022, the Company had no outstanding loan deferments or forbearances stemming from COVID-19.
1ST CAPITAL BANCORP
CONDENSED FINANCIAL DATA - UNAUDITED
($ in 000s except per share data)
| Assets | 9/30/2022 | 6/30/2022 | 9/30/2021 | |||||||
| Cash and due from banks | $ | 41,842 | $ | 35,450 | $ | 129,673 | ||||
| Investment securities available-for-sale | 259,472 | 298,483 | 297,456 | |||||||
| Investment securities held-to-maturity | 72,818 | 45,223 | -- | |||||||
| Loans and leases held for investment | 586,798 | 586,063 | 565,031 | |||||||
| Allowance for loan and lease losses | (7,560 | ) | (8,066 | ) | (8,830 | ) | ||||
| Net loans and leases held for investment | 579,238 | 577,997 | 556,201 | |||||||
| Other Assets | 41,241 | 32,926 | 24,186 | |||||||
| Total assets | $ | 994,611 | $ | 990,079 | $ | 1,007,516 | ||||
| Liabilities and Shareholders' Equity | ||||||||||
| Deposits: | ||||||||||
| Noninterest bearing demand deposits | $ | 424,312 | $ | 418,692 | $ | 438,445 | ||||
| Interest-bearing accounts | 497,889 | 509,609 | 473,281 | |||||||
| Total deposits | 922,201 | 928,301 | 911,726 | |||||||
| Subordinated debentures | 14,719 | 14,701 | 14,644 | |||||||
| Other borrowings | -- | -- | -- | |||||||
| Other liabilities | 9,415 | 8,386 | 2,665 | |||||||
| Shareholders' equity | 48,276 | 38,691 | 78,481 | |||||||
| Total liabilities and shareholders' equity | $ | 994,611 | $ | 990,079 | $ | 1,007,516 | ||||
| Shares outstanding | 5,476,092 | 5,467,966 | 5,587,878 | |||||||
| Earnings per share basic | $ | 0.49 | $ | 0.46 | $ | 0.40 | ||||
| Earnings per share diluted | $ | 0.48 | $ | 0.45 | $ | 0.40 | ||||
| Nominal and tangible book value per share | $ | 8.82 | $ | 7.08 | $ | 14.04 | ||||
| Three Months Ended | |||||||
| Operating Results Data | 9/30/2022 | 6/30/2022 | 9/30/2021 | ||||
| Interest and dividend income | |||||||
| Loans | $ | 7,011 | $ | 7,258 | $ | 7,121 | |
| Investment securities | 2,055 | 2,038 | 1,000 | ||||
| Federal Home Loan Bank stock | 62 | 59 | 60 | ||||
| Other income | 126 | 56 | 29 | ||||
| Total interest and dividend income | 9,254 | 9,411 | 8,210 | ||||
| Interest expense | 669 | 573 | 495 | ||||
| Net interest income | 8,585 | 8,838 | 7,715 | ||||
| Provision for loan losses | - | - | - | ||||
| Net interest income after provision for loan losses | 8,585 | 8,838 | 7,715 | ||||
| Noninterest income | 446 | 290 | 294 | ||||
| Noninterest expenses | |||||||
| Salaries and benefits expense | 3,243 | 3,457 | 2,737 | ||||
| Occupancy expense | 451 | 463 | 422 | ||||
| Data and item processing | 279 | 265 | 288 | ||||
| Furniture and equipment | 127 | 150 | 119 | ||||
| Professional services | 168 | 114 | 148 | ||||
| Other | 1,109 | 1,201 | 1,138 | ||||
| Total noninterest expenses | 5,377 | 5,650 | 4,852 | ||||
| Income before provision for income taxes | 3,654 | 3,478 | 3,157 | ||||
| Provision for income taxes | 992 | 958 | 901 | ||||
| Net income | $ | 2,662 | $ | 2,520 | $ | 2,256 | |
| Three Months Ended | ||||||||||
| Selected Average Balances | 9/30/2022 | 6/30/2022 | 9/30/2021 | |||||||
| Gross loans | $ | 594,624 | $ | 593,990 | $ | 588,133 | ||||
| Investment securities | 352,564 | 373,853 | 279,122 | |||||||
| Federal Home Loan Bank stock | 4,058 | 4,024 | 3,948 | |||||||
| Other interest earning assets | 34,162 | 31,158 | 80,909 | |||||||
| Total interest earning assets | 985,408 | 1,003,025 | 952,112 | |||||||
| Total assets | 1,018,730 | 1,027,269 | 977,147 | |||||||
| Interest-bearing checking accounts | 65,171 | 64,988 | 64,009 | |||||||
| Money market | 303,802 | 278,646 | 232,979 | |||||||
| Savings | 126,511 | 149,930 | 134,724 | |||||||
| Time deposits | 12,376 | 12,350 | 13,534 | |||||||
| Total interest-bearing deposits | 507,860 | 505,914 | 445,246 | |||||||
| Noninterest bearing demand deposits | 423,166 | 427,351 | 433,518 | |||||||
| Total deposits | 931,026 | 933,265 | 878,764 | |||||||
| Subordinated debentures and other borrowings | 15,055 | 17,546 | 14,646 | |||||||
| Shareholders' equity | $ | 64,227 | $ | 68,227 | $ | 78,624 | ||||
| Three Months Ended | ||||||||||
| Selected Financial Ratios | 9/30/2022 | 6/30/2022 | 9/30/2021 | |||||||
| Return on average total assets | 1.04 | % | 0.98 | % | 0.92 | % | ||||
| Return on average shareholders' equity | 16.44 | % | 14.82 | % | 11.35 | % | ||||
| Net interest margin | 3.46 | % | 3.58 | % | 3.26 | % | ||||
| Net interest income to average total assets | 3.34 | % | 3.56 | % | 3.13 | % | ||||
| Efficiency ratio | 59.54 | % | 61.89 | % | 60.58 | % | ||||
| Nine Months Ended | ||||
| Operating Results Data | 9/30/2022 | 9/30/2021 | ||
| Interest and dividend income | ||||
| Loans | $ | 21,165 | $ | 20,698 |
| Investment securities | 5,650 | 2,205 | ||
| Federal Home Loan Bank stock | 179 | 169 | ||
| Other income | 195 | 47 | ||
| Total interest and dividend income | 27,188 | 23,119 | ||
| Interest expense | 1,772 | 1,033 | ||
| Net interest income | 25,417 | 22,086 | ||
| Provision for loan losses | - | - | ||
| Net interest income after provision for loan losses | 25,417 | 22,086 | ||
| Noninterest income | 1,054 | 675 | ||
| Noninterest expenses | ||||
| Salaries and benefits expense | 10,144 | 9,103 | ||
| Occupancy expense | 1,348 | 1,230 | ||
| Data and item processing | 807 | 803 | ||
| Furniture and equipment | 417 | 349 | ||
| Professional services | 451 | 488 | ||
| Other | 3,324 | 2,782 | ||
| Total noninterest expenses | 16,492 | 14,755 | ||
| Income before provision for income taxes | 9,979 | 8,006 | ||
| Provision for income taxes | 2,705 | 2,263 | ||
| Net income | $ | 7,274 | $ | 5,743 |
| Nine Months Ended | ||||
| Selected Average Balances | 9/30/2022 | 9/30/2021 | ||
| Gross loans | $ | 586,294 | $ | 607,673 |
| Investment securities | 362,879 | 202,569 | ||
| Federal Home Loan Bank stock | 4,011 | 3,773 | ||
| Other interest earning assets | 36,790 | 52,335 | ||
| Total interest earning assets | 989,974 | 866,350 | ||
| Total assets | 1,014,291 | 891,336 | ||
| Interest bearing checking accounts | 65,302 | 60,931 | ||
| Money market | 268,143 | 197,320 | ||
| Savings | 145,024 | 128,742 | ||
| Time deposits | 12,102 | 14,163 | ||
| Total interest-bearing deposits | 490,571 | 401,156 | ||
| Noninterest bearing demand deposits | 429,581 | 401,407 | ||
| Total deposits | 920,152 | 802,563 | ||
| Subordinated debentures and other borrowings | 15,758 | 7,131 | ||
| Shareholders' equity | $ | 70,808 | $ | 76,552 |
| | Nine Months Ended | |||
| Selected Financial Ratios | 9/30/2022 | 9/30/2021 | ||
| Return on average total assets | 0.96 | % | 0.86 | % |
| Return on average shareholders' equity | 13.74 | % | 10.03 | % |
| Net interest margin | 3.43 | % | 3.44 | % |
| Net interest income to average total assets | 3.35 | % | 3.31 | % |
| Efficiency ratio | 62.30 | % | 64.82 | % |
| Regulatory Capital and Ratios | 9/30/2022 | 6/30/2022 | 9/30/2021 | ||||||
| Common equity tier 1 capital | $ | 100,148 | $ | 97,226 | $ | 78,702 | |||
| Tier 1 regulatory capital | $ | 100,148 | $ | 97,226 | $ | 78,702 | |||
| Total regulatory capital | $ | 107,855 | $ | 105,418 | $ | 86,122 | |||
| Tier 1 leverage ratio | 10.22 | % | 9.62 | % | 8.07 | % | |||
| Common equity tier 1 risk-based capital ratio | 14.44 | % | 13.27 | % | 13.30 | % | |||
| Tier 1 capital ratio | 14.44 | % | 13.27 | % | 13.30 | % | |||
| Total risk-based capital ratio | 15.55 | % | 14.39 | % | 14.55 | % | |||
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.
For further information, please contact:
| Samuel D. Jimenez | Danelle Thomsen | |
| Chief Executive Officer | Chief Financial Officer | |
| 831.264.4057 office | 831-264-4014 office | |
