1st Capital Bancorp Announces Third Quarter 2022 Financial Results

Rhea-AI Summary

1st Capital Bancorp (OTCQX: FISB) reported a net income of $2.66 million for Q3 2022, marking an 18% increase from Q3 2021. Earnings per share increased to $0.48, up from $0.40 a year earlier. The return on average equity stood at 16.44%, reflecting improved performance. Total assets were $994.6 million, with total loans at $586.8 million, a 3.9% increase year-over-year. However, net interest income dipped by 2.86% to $8.59 million. The company showed strong asset quality with nonperforming assets at just 0.04%.

Positive

• 18% increase in net income to $2.66 million compared to Q3 2021.
• Earnings per share rose to $0.48 from $0.40 year-over-year.
• Return on average equity improved to 16.44%.
• Total loans increased by 3.9% year-over-year to $586.8 million.
• Nonperforming assets to total assets ratio at just 0.04%.
• Total deposits rose 1.1% to $922.2 million.

Negative

• Net interest income decreased by 2.86% to $8.59 million compared to Q2 2022.
• Total assets declined 1.3% from $1.01 billion a year ago.
• Total non-interest expenses increased by 10.81% to $5.38 million year-over-year.
• Shareholder's equity fell by 38.5% to $48.3 million due to unrealized losses.

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

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.

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 (FISB) in Q3 2022?

1st Capital Bancorp reported a net income of $2.66 million for Q3 2022, an increase of 18% compared to Q3 2021.

What is the earnings per share (EPS) for FISB in Q3 2022?

The earnings per share (diluted) for 1st Capital Bancorp in Q3 2022 was $0.48, up from $0.40 in Q3 2021.

How did the total loans change for 1st Capital Bancorp (FISB)?

Total loans increased by 3.9% year-over-year, reaching $586.8 million as of September 30, 2022.

What was the return on average equity for FISB in Q3 2022?

The return on average equity for 1st Capital Bancorp in Q3 2022 was 16.44%, an increase from 11.35% in Q3 2021.

What is the status of nonperforming assets at FISB?

Nonperforming assets at 1st Capital Bancorp were just 0.04% of total assets as of September 30, 2022.