1st Capital Bancorp Announces Second Quarter 2022 Financial Results

Rhea-AI Summary

1st Capital Bancorp (OTCQX: FISB) reported a net income of $2.52 million for Q2 2022, representing a 20.49% increase from Q1 2022 and a 29.25% increase from Q2 2021. Earnings per share rose to $0.45 from $0.34 and $0.37 in the prior-year quarters. The company's return on average equity was 14.82%, while net interest income increased to $8.84 million, up 17.8% year-over-year. Nonperforming assets remained low at 0.01%. Total assets reached $990.1 million, with deposits increasing by 8.7% to $928.3 million.

Positive

• Net income increased by 20.49% from Q1 2022 and 29.25% from Q2 2021.
• Earnings per share rose to $0.45 compared to previous quarters.
• Return on average equity improved to 14.82%.
• Net interest income increased by 17.8% year-over-year to $8.84 million.
• Total assets grew 4.1% year-over-year to $990.1 million.
• Deposits rose 8.7% year-over-year, totaling $928.3 million.

Negative

• Shareholder equity declined by 49.9% year-over-year due to increased unrealized losses.
• Total loans decreased by 3.3% compared to the prior year, primarily due to a decline in PPP loans.

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

1^st Capital Bancorp is the holding company for 1^st 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

 

FAQ

What were the earnings results for 1st Capital Bancorp in Q2 2022?

1st Capital Bancorp reported net income of $2.52 million for Q2 2022.

How did 1st Capital Bancorp's EPS perform in Q2 2022?

Earnings per share for Q2 2022 was $0.45, up from $0.34 in Q2 2021.

What was the return on equity for 1st Capital Bancorp in Q2 2022?

Return on average equity was 14.82% for Q2 2022.

What is the loan performance of 1st Capital Bancorp as of June 30, 2022?

Total loans outstanding decreased by 3.3% year-over-year, with a notable decline in PPP loans.

What are the total assets reported by 1st Capital Bancorp?

Total assets reached $990.1 million as of June 30, 2022.