FISB 1st Capital Bancorp (QX)

1st Capital Bank (OTCBB:FISB) today announced its fifth consecutive quarter of profitable operations. "In the past we have talked about needing to achieve a 'critical mass,' a size at which total earning assets are large enough to cover operating costs, generate positive earnings per share and increase shareholder value," said Fred Rowden, President and CEO of 1st Capital Bank. He continued, "1st Capital Bank has reached that asset size! Going forward, the Bank will continue its efforts to enhance profitability and grow earning assets through its focus on quality. The Bank is building a reputation with its investors and industry experts for its strong and sound banking practices."

Net income recorded for the quarter ended September 30, 2010 increased $142,000 (70%) to $345,000, compared to $203,000 for the trailing quarter ended June 30, 2010. Net income per basic and fully diluted share for the quarter ended September 30, 2010 was $0.11 compared to $0.06 for the trailing quarter ended June 30, 2010. The increase in net income for the third quarter of 2010 was due primarily to increased interest income and decreased interest expense. Net income of $564,000 for the nine months ended September 30, 2010 increased $1,320,000 (175%) compared to a net loss of $756,000 for the nine months ended September 30, 2009, as a result of an increase in interest income and a decrease in interest expense, partially offset by an increase in noninterest expenses. Net income per basic and fully diluted share for the nine months ended September 30, 2010 was $0.18 compared to a net loss of ($.24) for the nine months ended September 30, 2009.

Total assets as of September 30, 2010 were $193,277,000, an increase of $979,000 (1%) from December 31, 2009 and an increase of $36,387,000 (23%) from $156,890,000 as of September 30, 2009. The growth in loans was the greatest contributor to the overall asset growth. Loans, net of the allowance for loan losses, totaled $162,116,000 at September 30, 2010, an increase of $29,385,000 (22%) from December 31, 2009 and $32,243,000 (25%) from $129,873,000 as of September 30, 2009. The growth in loans was funded primarily by a decrease in Federal funds sold of $31,922,000 (89%) to $3,828,000 at September 30, 2010 from $35,750,000 as of December 31, 2009. In addition, 1st Capital Bank continued to maintain a strong capital position, with Total Risk Based Capital of 18.1%, over twice the regulatory minimum. 

Financial Summary:

Net interest income after the provision for loan losses for the quarter and nine months ended September 30, 2010 was $1,857,000 and $5,123,000, respectively, an increase of $145,000 (8%) compared to the trailing quarter ended June 30, 2010 and an increase of $1,727,000 (51%) compared to the nine months ended September 30, 2009. 

Interest income for the quarter and nine months ended September 30, 2010 was $2,372,000 and $6,589,000, respectively, an increase of $153,000 (7%) from the trailing quarter ended June 30, 2010 and an increase of $1,388,000 (27%) from the nine months ended September 30, 2009. Average earning assets for the quarter and nine months ended September 30, 2010 were $198,000,000 and $191,997,000, respectively, compared to $194,775,000 for the trailing quarter ended June 30, 2010 and $149,067,000 for the nine months ended September 30, 2009, an increase of $3,225,000 (2%) and $42,930,000 (29%), respectively.

Interest expense for the quarter and nine months ended September 30, 2010 was $306,000 and $1,000,000, respectively, a decrease of $37,000 (11%) over the trailing quarter ended June 30, 2010 and a decrease of $349,000 (26%) over the nine months ended September 30, 2009. Average interest bearing liabilities for the quarter and nine months ended September 30, 2010 were $127,491,000 and $123,897,000, an increase of $1,723,000 (1%) compared to $125,768,000 for the trailing quarter ended June 30, 2010, and an increase of $26,975,000 (28%) compared to $96,922,000 for the nine months ended September 30, 2009.

The net interest margin for the quarter ended September 30, 2010 was 4.1% compared to 3.9% for the trailing quarter ended June 30, 2010 and 3.9% for the nine months ended September 30, 2010 compared to 3.5% for the nine months ended September 30, 2009.

1st Capital Bank provided $209,000 for loan losses for the quarter ended September 30, 2010 compared to $164,000 for the trailing quarter ended June 30, 2010 and $466,000 and $456,000 for the nine months ended September 30, 2010 and 2009, respectively. The ratio of the allowance for loan losses to total loans outstanding was 1.55% at September 30, 2010, and December 31, 2009. The Bank continues to monitor and evaluate its loan portfolio and assess the sufficiency of its reserves on an ongoing basis. At September 30, 2010 and December 31, 2009, there were no non-accrual or restructured loans and the Bank did not have any other real estate owned. 

Noninterest income decreased $2,000 (6%) to $30,000 for the quarter ended September 30, 2010 as compared to the trailing quarter ended June 30, 2010 and increased $6,000 (8%) for the nine months ended September 30, 2010 compared to 2009, largely due to seasonal fluctuations in the balances of deposit accounts which generate service charges.

Noninterest expenses increased by $2,000 (0%) to $1,542,000 for the quarter ended September 30, 2010 as compared to the trailing quarter ended June 30, 2010. Noninterest expenses increased $412,000 (10%) for the nine months ended September 30, 2010 compared to 2009. The majority of this increase was due to an increase in salaries and benefit and marketing expenses as the Bank grew in size and launched new advertising campaigns, partially offset by decreases in stock-based compensation expense, as the stock options granted at the inception of the Bank became fully vested. Stock-based compensation costs included in the salaries and benefits and other expense components of noninterest expense for the quarter ended September 30, 2010 totaled $16,000, a decrease of $31,000 compared to $47,000 in expense recorded in the trailing quarter ended June 30, 2010. Stock-based compensation costs included in the salaries and benefits and other expense components of noninterest expense for the nine months ended September 30, 2010 totaled $185,000, a decrease of $205,000 compared to $390,000 recorded for the nine months ended September 30, 2009.

1st Capital Bank currently operates three branch offices in Monterey County, which are located in the historic Estrada Adobe at 470 Tyler Street, Monterey; at 1097 South Main Street, Salinas; and at 432 Broadway Street, King City. The experienced bankers at 1st Capital Bank provide traditional deposit, lending, mortgage and commercial products and services to business and retail customers throughout the California Central Coast and Salinas Valley areas of Monterey County.

Information regarding the Bank may be obtained from the Bank's website at www.1stCapitalBank.com. Copies of the Bank's press releases are available on the website.

Forward Looking Statements

In addition to the historical information contained herein, this press release may contain certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. The reader of this press release should understand that 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 terrorist related incidents and other factors beyond the Bank's control; and factors discussed in the Bank's periodic reports under the Securities Exchange Act of 1934, as amended, on Forms 10-K, 10-Q and 8-K filed with the FDIC. The Bank does not undertake any obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information, future events or otherwise, except as required by law.

CONTACT:  1st Capital Bank
          Jayme Fields, CFO
          (831) 264-4011