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1st Capital Bank Announces Second Quarter 2020 Financial Results

Thursday, 30 July 2020 05:00 PM

1st Capital Bank

Topic:
Earnings

SALINAS, CA / ACCESSWIRE / July 30, 2020 / 1st Capital Bank (OTC PINK:FISB) reported unaudited net income of $1.35 million for the three months ended June 30, 2020, an increase of 122.1% compared to net income of $608 thousand in the first quarter of 2020 and a decrease of 17.6% compared to net income of $1.64 million in the second quarter of 2019. Earnings per share were $0.24 (diluted) for the second quarter of 2020, compared to $0.11 (diluted) for the prior quarter, and $0.29 (diluted) for the second quarter of 2019.

Unaudited net income for the six-month period ended June 30, 2020 was $1.96 million, a decrease of 42.7% compared to net income of $3.41 million for the six-month period ended June 30, 2019. Year-to-date earnings per share were $0.35 (diluted) and $0.61 (diluted) for the six-month periods ended June 30, 2020 and 2019, respectively.

"The Bank's operating results for the second quarter were driven by the effects of the global pandemic," said Samuel D. Jimenez, chief executive officer. "Our lenders worked tirelessly during the second quarter to fund more than 400 loans totaling more than $100 million to businesses in our community under the U.S. Small Business Administration's Paycheck Protection Program. As we entered the third quarter, we made key hires to address the asset quality issues the current economic situation presents while continuing to actively expand our business and fill out our geographic footprint. We believe the steps we are taking now will position the Bank to proactively address the challenges ahead."

Operating results reflect a provision for loan losses of $650 thousand in the second quarter of 2020, compared to $825 thousand in the first quarter of 2020, to recognize incurred losses in the Bank's loan portfolio, which are attributable primarily to the COVID-19 outbreak and consequent action taken by governmental officials to curtail the operations of businesses deemed nonessential. The Bank did not record a provision for loan losses in the second quarter of 2019.

As of June 30, 2020, the Bank's allowance for loan and lease losses was $8.1 million, or 1.30% percent of loans held for investment, compared to $7.4 million, or 1.40% of loans held for investment, as of March 31, 2020 and $6.6 million, or 1.29% of loans held for investment, as of December 31, 2019. The Bank's allowance for loan losses as of June 30, 2020 was 1.55% of loans held for investment excluding its net investment of $100.7 million in loans insured under the U.S. Small Business Administration's ("SBA") Paycheck Protection Program ("PPP"). The Bank recognized net recoveries of $12 thousand, $12 thousand, and $13 thousand in the second quarter of 2020, the first quarter of 2020, and the second quarter of 2019, respectively, and recognized no loan or lease charge-offs in such periods.

"We believe it was prudent to continue to provide for credit losses in the second quarter, as the potential for a V-shaped recovery faded" said Dale R. Diederick, chief credit officer. "While recent unemployment levels and jobless claims are lower than initially projected, the level and trend of coronavirus cases has increased, raising the potential for a prolonged recession, with adverse consequences for the value and market absorption of commercial real estate. The Bank also has seen a downward migration in loan risk ratings, an increase in the level of 30- to 89-day delinquencies, and an increase in forbearance requests, primarily on single-family residential loans. All of these factors point to the need for an increased allowance for loan and lease losses."

Total assets increased $90.9 million in the second quarter, from $645.8 million at March 31, 2020 to $736.7 million at June 30, 2020, an increase of 14.1%. Net loans held for investment increased $92.5 million, or 17.7%, during the second quarter, from $523.1 million at March 31, 2020 to $615.6 million at June 30, 2020.

PPP loans totaled $100.7 million at June 30, 2020. Single-family loans purchased by the Bank in prior quarters declined $13.6 million, or 11.5%, while the portfolio of loans originated by the Bank increased $6.7 million, or 1.6%, in the second quarter of 2020. Growth in the core loan portfolio was concentrated in multi-family loans, which increased $13.9 million, or 24.0%, while commercial real estate loans decreased $2.1 million, or 0.8%, and commercial and industrial loans decreased $2.8 million, or 5.5%. Undrawn, available credit decreased $951 thousand, from $68.0 million at March 31, 2020 to $67.0 million at June 30, 2020.

"Despite the devastating effects the pandemic has had on certain sectors of the economy, the Bank was able to continue to actively develop new business opportunities in the second quarter of 2020," said Jon D. Ditlevsen, president. "While a number of our competitors have scaled back their lending operations to focus solely on loss mitigation, 1st Capital has continued to source new loans to businesses that are less exposed to the effects of the pandemic and related government actions. This new business meets the credit risk acceptance criteria that we historically have had in place for our core loan portfolio, and we have remained mindful of the effects the pandemic has had on industries that are prominent in our market area, such as hospitality, tourism, and retail trade. We funded $33.2 million in commercial and industrial and commercial real estate loans in the second quarter, compared to $37.2 million in the first quarter of 2020."

Second Quarter Highlights:

  • Return on average equity was 7.74%, compared to 3.53% for the first quarter of 2020 and 10.47% for the second quarter of 2019.
  • Return on average assets was 0.75%, compared to 0.38% for the first quarter of 2020 and 1.08% for the second quarter of 2019.
  • Gross loans held for investment increased $93.2 million, or 17.7%, during the second quarter of 2020, from $530.5 million at March 31, 2020 to $623.7 million at June 30, 2020.
  • Non-accrual loans were $490 thousand, or 0.08% of loans outstanding, at June 30, 2020, compared to $492 thousand at March 31, 2020 and December 31, 2019. Loans 30 to 89 days delinquent increased from $856 thousand at March 31, 2020 to $2.3 million at June 30, 2020.
  • The Bank's net loans to deposits ratio increased from 91.4% at March 31, 2020 to 94.6% at June 30, 2020.
  • Sources of liquidity comprising secured borrowing capacity with the Federal Home Loan Bank of San Francisco and deposits eligible to be moved onto the Bank's balance sheet in the form of reciprocal deposits totaled $226.5 million at June 30, 2020. $25.0 million of additional liquidity under Federal funds facilities also was available.
  • Deposits totaled $650.8 million at June 30, 2020, compared to $572.0 million at March 31, 2020, an increase of $78.8 million, or 13.8%.
  • Demand deposits increased $90.3 million, or 35.7%, from $252.8 million at March 31, 2020 to $343.0 million at June 30, 2020 and made up 52.7% of total deposits at June 30, 2020.
  • The Bank's cost of funds decreased from 0.23% in the first quarter of 2020 to 0.15% in the second quarter of 2020.
  • Non-interest income declined from $288 thousand in the first quarter of 2020 to $181 thousand in the second quarter of 2020.
  • Non-interest expenses decreased from $4.49 million in the first quarter of 2020 to $3.95 million in the second quarter of 2020.
  • The Bank's common equity Tier 1 ("CET1") risked-based capital ratio was 14.12%, and its Tier 1 leverage ratio was 10.83% at June 30, 2020, compared to 13.66 % and 10.77%, respectively, at March 31, 2020.
  • Net interest margin decreased from 3.87% in the first quarter of 2020 to 3.65% in the second quarter of 2020. The ratio of net interest income before provision for loan losses less interest on PPP loans to average earning assets less the average net investment in PPP loans was 3.74% in the second quarter of 2020.

Throughout the second quarter of 2020, all branch offices of the Bank, other than the limited service branch at the Bank's headquarters office, which historically has had very limited transaction activity, remained open. Approximately 65% of Bank employees were working remotely, and no employees have tested positive for the coronavirus.

NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES

Net interest income before provision for credit losses was $6.32 million in the second quarter of 2020, an increase of $457 thousand, or 7.8%, compared to $5.86 million in the first quarter of 2020 and an increase of $351 thousand, or 5.9%, compared to $5.97 million in the second quarter of 2019.

Average earning assets were $697.2 million during the second quarter of 2020, an increase of 14.4% compared to $609.6 million in the first quarter of 2020. The yield on earning assets was 3.78% in the second quarter of 2020, compared to 4.12% in the first quarter of 2020, primarily due to reduced yields on commercial and industrial loans and the investment portfolio as a result of the 1.50% decrease in the Federal funds target rate in March 2020, as well as the effect of the funding of $100.7 of PPP loans at yields substantially below the Bank's first quarter 2020 yield on earning assets.

The average balance of the investment portfolio decreased $2.1 million, from $65.2 million in the first quarter of 2020 to $63.0 million in the second quarter of 2020, and the yield on the investment portfolio decreased from 2.33% in the first quarter of 2020 to 1.88% in the second quarter of 2020, as yields on floating rate securities decreased. The yield on the investment portfolio in June 2020 was 1.78%.

The yields on non-PPP commercial and industrial and commercial real estate loans in the second quarter of 2020 were 4.46% and 4.74% on average balances of $50.5 million and $242.2 million, respectively, compared to 4.66% and 4.83% on average balances of $43.8 million and $237.6 million in the first quarter of 2020. The average balance of multi-family residential loans increased to $64.9 million in the second quarter of 2020 from $58.9 million in the first quarter of 2020, while the respective yields were 4.42% and 4.65%. The portfolio of single-family residential first liens yielded 3.48% and 3.38% on average balances of $128.3 million and $136.2 million in the second quarter of 2020 and the first quarter of 2020, respectively. The yields on the Bank's non-PPP commercial and industrial, commercial real estate, multi-family residential, and single-family residential first lien portfolios in June 2020 were 4.57%, 4.74%, 4.28%, and 3.52%, respectively.

The Bank recognizes income on its net investment in PPP loans (outstanding principal plus direct loan origination costs less deferred loan fees paid by the SBA) based on the amortization schedule of the underlying loan. Unamortized loan fees are taken into income at the time a loan is paid off. Interest income on PPP loans in the second quarter totaled $608 thousand, including $100 thousand of deferred fees recognized as income in connection with loan payoffs. During the second quarter, the average balance of PPP loans outstanding was $77.6 million, with a yield of 3.18%. The yield on the PPP portfolio in June 2020, which included no income related to loan payoffs, was 2.64%.

The cost of interest-bearing liabilities was 0.30% in the second quarter of 2020, compared to 0.44% in the first quarter of 2020, while the average balance of interest-bearing liabilities increased 6.8% from $297.0 million in the first quarter of 2020 to $317.1 million in the second quarter of 2020. The average balance of reciprocal deposits, all of which are money market deposits, increased 40.7% from $21.1 million in the first quarter of 2020 to $29.7 million in the second quarter of 2020 at a cost of 0.80% and 0.09%, respectively. Reciprocal deposits totaled $15.3 million as of June 30, 2020, compared to $42.7 million as of March 31, 2020.

The average balance of noninterest-bearing demand deposit accounts increased 24.3% from $262.4 million, or 46.9% of total deposits, in the first quarter of 2020 to $326.2 million, or 50.7% of total deposits, in the second quarter of 2020. The Bank funded 413 PPP loans with loan principal totaling $103.5 million in the second quarter of 2020 and placed $84.5 million of the loan proceeds in deposit accounts with the Bank.

The Bank's portfolio of certificates of deposit had average balances of $19.4 million in the first quarter of 2020 and $19.2 million in the second quarter of 2020, and an average cost of funds of 1.15% and 1.12%, respectively. As of June 30, 2020, $17.5 million of certificates of deposit had maturities of one year or less.

On May 28, 2020, the Bank drew down $10.0 million under the Federal Home Loan Bank of San Francisco's zero interest rate Recovery Advance program. $5.0 million of this amount is payable November 27, 2020, and the remaining $5.0 million is payable May 27, 2021.

The Bank's overall cost of funds decreased from 0.23% in the first quarter of 2020 to 0.15% in the second quarter of 2020.

CREDIT QUALITY AND PROVISION FOR CREDIT LOSSES

The Bank's core market comprises Monterey, San Luis Obispo, and Santa Cruz Counties, all of which are located along California's Central Coast. As of June 30, 2020, approximately $58.1 million, or $82.5%, of owner-occupied commercial real estate loans, $229.2 million, or $94.6%, of investor real estate loans, $28.2 million, or 21.1%, of single-family residential loans, and substantially all multi-family, construction, and farmland loans, as well as all home equity lines of credit, were collateralized by properties located within the Bank's market area. An additional $15.8 million of commercial real estate loans was collateralized by properties located in neighboring San Benito and Santa Clara Counties. All single-family residential loans were collateralized by properties located in California, and substantially all commercial and industrial loans were to businesses operating within the Bank's market area or San Benito County.

According to statistics appearing in the Los Angeles Times' website, through July 28, 2020, 7,028 coronavirus cases had been identified in the Bank's market area, including 4,288 cases in Monterey County, 1,710 cases in San Luis Obispo County, and 1,030 cases in Santa Cruz County. Within Monterey County, 2,491 cases had been identified in Salinas and 1,067 cases in South Monterey County, where King City is located; agriculture is the primary basic industry in these areas. 373 cases had been identified in the Big Sur and Monterey Peninsula region, where tourism is more prominent. Coronavirus cases were more evenly distributed across San Luis Obispo and Santa Cruz Counties.

As of July 28, 2020, businesses not deemed essential by the State of California (including shopping malls, retailers not offering merchandise deemed essential, bars, restaurants not offering take-out and/or outdoor dining, and most personal services) in Monterey and San Luis Obispo Counties were under closure orders, which are subject to change on a daily basis. Similar restrictions were in place in Santa Cruz County, except retailers generally were able to operate, but could become subject to closure orders immediately should conditions deteriorate.

A summary of loans outstanding by industry sector as of June 30, 2020 is provided within the disclosure of Condensed Financial Data.

Single-family mortgages totaling $105.0 million as of June 30, 2020 are serviced by the Bank's outside single-family loan servicer in conformity with guidance issued by the Government-Sponsored Entities, including forbearance under the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"). The Bank services all other loans (including all home equity lines of credit) in its portfolio.

The Bank has entered into loan forbearance agreements as defined by the CARES Act on fourteen non-conforming single-family mortgages serviced by the Bank's outside servicer totaling $12.6 million. Such forbearance agreements call for the deferral of payments for 90 days, with a 30-day catch-up period. In addition, the Bank has entered into deferment agreements with 41 borrowers with loans aggregating $42.3 million, comprising seven nonowner-occupied commercial real estate loans totaling $16.6 million, sixteen owner-occupied commercial real estate loans totaling $14.1 million, thirteen commercial and industrial loans totaling $6.3 million, two multi-family loans totaling $3.4 million, and three non-conforming single-family residential loans serviced by the Bank totaling $1.8 million. Deferral agreements on loans serviced by the Bank call for the deferral of principal payments, but require ongoing payments of monthly accrued interest.

Loans 30 to 89 days delinquent, all which were single-family mortgages, totaled $2.3 million as of June 30, 2020, compared to $858 thousand as of March 31, 2020.

At June 30, 2020, non-accrual loans totaled $490 thousand, or 0.08% of the Bank's loan portfolio, compared with $492 thousand, or 0.09% at March 31, 2020, and $492 thousand, or 0.10% at December 31, 2019. All such loans are commercial loans to the retail sector.

The provision for credit losses is a charge against current earnings in an amount determined by management to be necessary to maintain the allowance for loan losses at a level sufficient to absorb estimated probable losses inherent in the loan portfolio in light of losses historically incurred by the Bank and adjusted for qualitative factors associated with the loan portfolio.

The Bank recorded a provision for loan losses of $650 thousand in the second quarter of 2020, compared to $825 thousand in the first quarter of 2020 and no provision in the second quarter of 2019. Although the mix of loan types within the portfolio (excluding PPP loans) and their respective historical loss rates were largely unchanged, management recognized that loan risk ratings had migrated downward and economic conditions had continued to deteriorate in the second quarter. Therefore, the qualitative factors used to compute the allowance for loan and lease losses were adjusted upward. In particular, management made upward adjustments to the qualitative factors for portfolio concentrations in commercial real estate and related collateral values, as well as general economic conditions. The provision also reflects an increase in the loans identified as impaired. Impaired loans totaled $891 thousand at June 30, 2020, compared to $630 thousand at March 31, 2020 and $652 thousand at December 31, 2019 and were extended to borrowers engaged in manufacturing, retail trade, and business services. The amount of impairment was $501 thousand at June 30, 2020, compared to $326 thousand at March 31, 2020 and December 31, 2019.

At June 30, 2020, the allowance for loan losses was 1.30% of outstanding loans, compared to 1.40% at March 31, 2020 and 1.36% at June 30, 2019, respectively. The ratio of the allowance for loan and lease losses to loans not guaranteed by the SBA under the PPP was 1.55% as of June 30, 2020. The Bank recorded net recoveries of $12 thousand in each of the second quarter of 2020, the first quarter of 2020, and the second quarter of 2019. The Bank did not record any charge-offs during such periods.

NON-INTEREST INCOME

Non-interest income recognized in the second quarter of 2020 was $181 thousand, compared to $288 thousand in the first quarter of 2020. A $35 thousand decline in mortgage referral fees and a $26 thousand decline in Insured Cash Sweep fee income were the primary causes of the decrease.

NON-INTEREST EXPENSES

Non-interest expenses decreased $541 thousand, or 12.0%, to $3.95 million in the second quarter of 2020, compared to $4.49 million for the first quarter of 2020, and decreased $309 thousand, or 7.2%, compared to $4.26 million recognized in the second quarter of 2019.

Salaries and benefits decreased $431 thousand, or 15.3%, to $2.39 million in the second quarter of 2020 from $2.82 million in the first quarter of 2020, and decreased $307 thousand, or 11.4%, compared to $2.70 million in the second quarter of 2019. Employee salaries increased $126 thousand, or 6.3%, sequentially and $50 thousand, or 2.4%, year over year. Health insurance premiums decreased $2 thousand, or 0.8%, sequentially, but increased $49 thousand, or 25.6%, year over year. The decrease in salaries and benefits also reflected payments in the first quarter of 2020 aggregating $234 thousand to the Bank's former chief executive officer in connection with his retirement and seasonal decreases in payroll taxes. In addition, the absorption of direct loan origination costs increased $305 thousand sequentially, reflecting the origination of 413 PPP loans at a standard cost of $750 per loan in the second quarter of 2020.

The efficiency ratio (non-interest expenses divided by the sum of net interest income before provision for loan losses and non-interest income) was 60.8% for the second quarter of 2020, compared to 73.1% for the first quarter of 2020 and 65.6% for the second quarter of 2019. Annualized non-interest expenses as a percent of average total assets were 2.20%, 2.85%, and 2.80% for the second quarter of 2020, the first quarter of 2020, and the second quarter of 2019, respectively, reflecting the sequential decrease in non-interest expenses and the increase in earning assets attributable to the PPP.

About 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 County. 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. The primary facsimile number is 831.264.4001. 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
Chief Executive Officer
831.264.4057 office
[email protected]
or
Michael J. Winiarski
Chief Financial Officer
831.264.4014 office
[email protected]

--- financial data follow ---

1ST CAPITAL BANK
CONDENSED FINANCIAL DATA
(Unaudited)
(Dollars in thousands, except per share data)

 
  June 30,     March 31,     December 31,     June 30,  
Financial Condition Data1
  2020     2020     2019     2019  
Assets
                       
Cash and due from banks
  $ 6,719     $ 6,582     $ 6,198     $ 5,994  
Funds held at the Federal Reserve Bank2
    29,056       30,071       46,155       56,057  
Available-for-sale securities, at fair value
    62,473       63,728       66,095       70,396  
Loans held for sale
    488       -       -       -  
Loans receivable held for investment:
                               
Construction / land (including farmland)
    16,372       21,193       19,457       18,014  
Residential 1 to 4 units
    127,192       136,014       140,623       144,336  
Home equity lines of credit
    6,630       7,656       6,964       7,920  
Multifamily
    71,795       57,900       59,830       53,561  
Owner occupied commercial real estate
    70,478       73,488       70,622       61,242  
Investor commercial real estate
    172,219       171,266       159,350       142,533  
Commercial and industrial
    47,717       50,460       41,100       39,603  
Paycheck Protection Program
    100,652       -       -       -  
Other loans
    10,638       12,510       12,943       14,468  
Total loans
    623,693       530,487       510,889       481,677  
Allowance for loan losses
    (8,093 )     (7,431 )     (6,594 )     (6,572 )
Net loans
    615,600       523,056       504,295       475,105  
Premises and equipment, net
    2,541       2,189       2,102       2,192  
Bank owned life insurance
    8,167       8,119       8,071       7,968  
Investment in FHLB3 stock, at cost
    3,534       3,501       3,501       3,501  
Accrued interest receivable and other assets
    8,113       8,514       8,930       9,577  
Total assets
  $ 736,691     $ 645,760     $ 645,347     $ 630,790  
 
                               
Liabilities and shareholders' equity
                               
Deposits:
                               
Noninterest-bearing demand deposits
  $ 343,042     $ 252,760     $ 280,634     $ 270,939  
Interest-bearing checking accounts
    46,774       41,857       35,804       36,721  
Money market deposits
    138,796       158,178       128,559       134,108  
Savings deposits
    103,152       99,789       107,677       100,049  
Time deposits
    19,031       19,400       19,395       19,694  
Total deposits
    650,795       571,984       572,069       561,511  
Borrowings
    10,000       -       -       -  
Accrued interest payable and other liabilities
    4,856       4,961       5,263       5,305  
Shareholders' equity
    71,040       68,815       68,015       63,974  
Total liabilities and shareholders' equity
  $ 736,691     $ 645,760     $ 645,347     $ 630,790  
 
                               
Shares outstanding
    5,535,804       5,528,218       5,520,179       5,483,634  
Nominal and tangible book value per share
  $ 12.83     $ 12.45     $ 12.32     $ 11.67  
Ratio of net loans to total deposits
    94.57 %     91.45 %     88.15 %     84.61 %
 
                               

1 = Loans receivable held for investment are presented according to definitions applicable to the regulatory Call Report.
2 = Includes cash letters in the process of collection settled through the Federal Reserve Bank.
3 = Federal Home Loan Bank
4 = Some items in prior periods have been reclassified to conform to the current presentation.

1ST CAPITAL BANK
CONDENSED FINANCIAL DATA
(Unaudited)
(Dollars in thousands, except per share data)

 
  Three Months Ended    
 
  June 30,     March 31,     December 31,     June 30,    
Operating Results Data
  2020     2020     2019     2019    
Interest and dividend income
                         
Loans
  $ 6,234     $ 5,683     $ 5,556     $ 5,570    
Investment securities
    296       375       410       457    
Other
    32       130       153       225    
Total interest and dividend income
    6,562       6,188       6,119       6,252    
Interest expense
                                 
Interest-bearing checking
    3       3       3       3    
Money market deposits
    116       175       159       140    
Savings deposits
    68       89       93       85    
Time deposits
    53       56       55       54    
Total interest expense
    240       323       310       282    
Net interest income
    6,322       5,865       5,809       5,970    
Provision for loan losses
    650       825       -       -    
Net interest income after provision
                                 
for loan losses
    5,672       5,040       5,809       5,970    
 
                                 
Noninterest income
                                 
Service charges on deposits
    64       94       76       82    
BOLI dividend income
    48       48       50       52    
Other
    69       146       179       394    
Total noninterest income
    181       288       305       528    
 
                                 

1ST CAPITAL BANK
CONDENSED FINANCIAL DATA
(Unaudited)
(Dollars in thousands, except per share data)

 
  Three Months Ended  
 
  June 30,     March 31,     December 31,     June 30,  
 
  2020     2020     2019     2019  
Noninterest expenses
                       
Salaries and benefits
    2,393       2,824       2,137       2,700  
Occupancy
    353       363       331       326  
Data and item processing
    206       221       231       284  
Furniture and equipment
    189       191       169       142  
Professional services
    167       161       235       108  
Provision for unfunded loan
                               
commitments
    -       (17 )     12       (8 )
Other
    645       752       630       711  
Total noninterest expenses
    3,953       4,495       3,745       4,263  
Income before provision for income taxes
    1,900       833       2,369       2,235  
Provision for income taxes
    550       225       634       597  
Net income
  $ 1,350     $ 608     $ 1,735     $ 1,638  
 
                               
Common Share Data1
                               
Earnings per common share
                               
Basic
  $ 0.24     $ 0.11     $ 0.32     $ 0.30  
Diluted
  $ 0.24     $ 0.11     $ 0.31     $ 0.29  
 
                               
Weighted average common shares outstanding
                               
Basic
    5,531,341       5,521,518       5,506,349       5,478,457  
Diluted
    5,563,391       5,582,687       5,584,827       5,571,736  
 
                               

1 = Earnings per common share and weighted average common shares outstanding have been restated to reflect the effect of the 7% stock dividend to shareholders of record November 22, 2019 and paid December 20, 2019.

1ST CAPITAL BANK
CONDENSED FINANCIAL DATA
(Unaudited)
(Dollars in thousands, except per share data)

 
  Six Months Ended  
 
  June 30,     June 30,  
Operating Results Data
  2020     2019  
Interest and dividend income
           
Loans
  $ 11,917     $ 11,251  
Investment securities
    671       913  
Other
    162       540  
Total interest and dividend income
    12,750       12,704  
Interest expense
               
Interest-bearing checking
    6       6  
Money market deposits
    291       269  
Savings deposits
    157       176  
Time deposits
    109       103  
Total interest expense on deposits
    563       554  
Interest expense on borrowings
    -       -  
Total interest expense
    563       554  
Net interest income
    12,187       12,150  
Provision for loan losses
    1,475       -  
Net interest income after provision for loan losses
    10,712       12,150  
 
               
Noninterest income
               
Service charges on deposits
    158       158  
BOLI dividend income
    96       103  
Gain on sale of loans
    -       8  
Other
    215       773  
Total noninterest income
    469       1,002  
 
               

1ST CAPITAL BANK
CONDENSED FINANCIAL DATA
(Unaudited)
(Dollars in thousands, except per share data)

 
  Six Months Ended  
 
  June 30,     June 30,  
 
  2020     2019  
Noninterest expenses
           
Salaries and benefits
    5,217       5,374  
Occupancy
    716       632  
Data and item processing
    427       499  
Furniture and equipment
    380       299  
Professional services
    328       238  
Provision for unfunded loan commitments
    (17 )     (23 )
Other
    1,397       1,484  
Total noninterest expenses
    8,448       8,503  
Income before provision for income taxes
    2,733       4,649  
Provision for income taxes
    775       1,235  
Net income
  1,958     3,414  
 
               
Common Share Data1
               
Earnings per common share
               
Basic
  0.35     0.62  
Diluted
  0.35     0.61  
 
               
Weighted Average Common Shares Outstanding
               
Basic
    5,526,430       5,473,312  
Diluted
    5,573,039       5,560,864  
 
               

1 = Earnings per common share and weighted average common shares outstanding have been restated to reflect the effect of the 7% stock dividend to shareholders of record November 22, 2019 and paid December 20, 2019.

1ST CAPITAL BANK
CONDENSED FINANCIAL DATA
(Unaudited)
(Dollars in thousands)

 
  June 30,     March 31,     December 31,     June 30,  
Asset Quality
  2020     2020     2019     2019  
Loans past due 90 days or more and accruing
                       
interest
  $ -     $ -     $ -     $ -  
Nonaccrual restructured loans
    -       -       -       -  
Other nonaccrual loans
    490       492       492       -  
Other real estate owned
    -       -       -       -  
 
  $ 5,043     $ 492     $ -     $ -  
 
                               
Allowance for loan losses to total loans
    1.30 %     1.40 %     1.29 %     1.36 %
Allowance for loan losses to nonperforming loans
    1651.63 %     1510.37 %     1340.24 %     n/a  
Nonaccrual loans to total loans
    0.08 %     0.09 %     0.10 %     0.00 %
Nonperforming assets to total assets
    0.07 %     0.08 %     0.08 %     0.00 %
 
                               
Regulatory Capital and Ratios
                               
Common equity tier 1 capital
  $ 69,675     $ 68,150     $ 67,471     $ 63,446  
Tier 1 regulatory capital
  $ 69,675     $ 68,150     $ 67,471     $ 63,446  
Total regulatory capital
  $ 75,868     $ 74,404     $ 73,487     $ 69,077  
Tier 1 leverage ratio
    10.83 %     10.77 %     10.90 %     10.40 %
Common equity tier 1 risk-based capital ratio
    14.12 %     13.66 %     14.04 %     14.12 %
Tier 1 risk-based capital ratio
    14.12 %     13.66 %     14.04 %     14.12 %
Total risk-based capital ratio
    15.37 %     14.91 %     15.29 %     15.37 %
                                 
 
  Three Months Ended  
 
  June 30,     March 31,     December 31,     June 30,  
Selected Financial Ratios1
  2020     2020     2019     2019  
Return on average total assets
    0.75 %     0.38 %     1.11 %     1.08 %
Return on average shareholders' equity
    7.74 %     3.53 %     10.21 %     10.47 %
Net interest margin2
    3.65 %     3.87 %     3.89 %     4.06 %
Net interest income to average total assets
    3.51 %     3.71 %     3.72 %     3.92 %
Efficiency ratio
    60.79 %     73.06 %     61.25 %     65.58 %

1 = All Selected Financial Ratios are annualized other than the Efficiency Ratio.
2 = Net interest margin calculated on a tax equivalent yield basis. Prior periods have been updated to conform to current presentation.

 
  Three Months Ended  
 
  June 30,     March 31,     December 31,     June 30,  
Selected Average Balances
  2020     2020     2019     2019  
Gross loans
  $ 608,076     $ 519,468     $ 501,995     $ 484,676  
Investment securities
    63,034       65,163       67,695       70,033  
Other interest earning assets
    26,044       24,964       25,572       37,648  
Total interest earning assets
  $ 697,154     $ 609,595     $ 595,262     $ 592,357  
Total assets
  $ 721,907     $ 633,623     $ 620,218     $ 610,453  
                                 
Interest-bearing checking accounts
  $ 43,774     $ 42,092     $ 38,440     $ 36,569  
Money market deposits
    152,748       132,363       113,313       125,529  
Savings deposits
    101,291       103,156       106,293       99,517  
Time deposits
    19,247       19,367       19,484       18,759  
Total interest-bearing deposits
    317,060       296,978       277,530       280,374  
Noninterest-bearing demand deposits
    326,152       262,416       269,597       262,225  
Total deposits
  $ 643,212     $ 559,394     $ 547,127     $ 542,599  
Borrowings
  $ 3,736     $ -     $ -     $ -  
Shareholders' equity
  $ 69,982     $ 69,006     $ 67,381     $ 62,740  
                                 

1ST CAPITAL BANK
CONDENSED FINANCIAL DATA
(Unaudited)
(Dollars in thousands)

 
  Six Months Ended  
 
  June 30,     June 30,  
Selected Financial Ratios
  2020     2019  
Return on average total assets
    0.58 %     1.11 %
Return on average shareholders' equity
    5.65 %     11.19 %
Net interest margin2
    3.75 %     4.09 %
Net interest income to average total assets
    3.61 %     3.96 %
Efficiency ratio
    66.75 %     64.65 %

1 = All Selected Financial Ratios are annualized other than the Efficiency Ratio.
2 = Net interest margin calculated on a tax equivalent yield basis. Prior periods have been updated to conform to current presentation.

 
  Six Months Ended  
 
  June 30,     June 30,  
Selected Average Balances
  2020     2019  
Gross loans
  $ 563,772     $ 486,248  
Investment securities
    64,099       69,794  
Other interest earning assets
    25,504       45,750  
Total interest earning assets
  $ 653,375     $ 601,792  
Total assets
  $ 677,765     $ 619,337  
                 
Interest-bearing checking accounts
  $ 42,933     $ 35,425  
Money market deposits
    142,555       126,638  
Savings deposits
    102,224       103,316  
Time deposits
    19,307       18,431  
Total interest-bearing deposits
    307,019       283,811  
Noninterest-bearing demand deposits
    294,284       269,053  
Total deposits
  $ 601,303     $ 552,864  
Borrowings
  $ 1,869     $ -  
Shareholders' equity
  $ 69,494     $ 61,520  
                 

1ST CAPITAL BANK
CONDENSED FINANCIAL DATA
(Unaudited)
(Dollars in thousands)

June 30, 2020:
  Original Loan-to-Value Ratio  
 
  Average     Median     Maximum  
Construction/land
    25.88 %     48.16 %     56.23 %
Residential 1 to 4 units
    53.20 %     46.46 %     78.75 %
Home equity lines of credit
    23.78 %     46.29 %     75.00 %
Multifamily
    43.14 %     46.29 %     70.72 %
Owner-occupied CRE
    48.42 %     47.71 %     81.60 %
Investor CRE
    42.24 %     47.94 %     78.32 %
                         
June 30, 2020:
  Original Loan-to-Value Ratio  
 
  Under 50%     50%-60%     60%-70%     70%-75%     75%-80%     Over 80%     Total  
Construction/land
  $ 12,436     $ 3,936     $ -     $ -     $ -     $ -     $ 16,372  
Residential 1 to 4 units
    46,458       36,143       26,871       11,190       6,530       -       127,192  
Home equity lines of credit
    5,099       936       211       384       -       -       6,630  
Multifamily
    28,595       21,036       20,871       1,293       -       -       71,795  
Owner-occupied CRE
    28,773       19,798       15,276       5,985       181       465       70,478  
Investor CRE
    104,294       43,886       17,021       3,845       3,173       -       172,219  
 
  $ 225,655     $ 125,735     $ 80,250     $ 22,697     $ 9,884     $ 465     $ 464,686  
                                                         
June 30, 2020:
  Commercial Real Estate Loans  
 
  Investor     Owner-Occupied  
Office
  $ 28,717     $ 21,298  
Industrial and warehouse
    28,203       21,619  
Hotels and motels
    27,609       -  
Retail
    21,901       6,865  
Mini storage
    13,486       -  
Health care
    12,731       6,198  
Mixed use
    32,557       5,005  
Other
    7,015       9,493  
 
    172,219       70,478  
Multifamily residential
    71,795       -  
Single-family residential
    32,772       101,050  
 
  $ 276,786     $ 171,528  
                 
June 30, 2020:
  Commercial and  
 
  Industrial Loans  
Health care
  $ 24,484  
Agricultural
    22,269  
Manufacturing
    21,679  
Wholesale trade
    15,564  
Construction
    15,538  
Real estate rental/leasing
    10,548  
Professional services
    10,009  
Retail trade
    5,758  
Other
    33,646  
 
  $ 159,495  
 
       

SOURCE: 1st Capital Bank

Topic:
Earnings
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