1st Century Bancshares, Inc. (the "Company") (Nasdaq:FCTY), the
holding company of 1st Century Bank, N.A. (the "Bank"), today
reported net income for the three and six months ended June 30,
2012 of $751,000 and $1.3 million, respectively, compared to
$116,000 and $240,000 for the same periods last year. Pre-tax,
pre-provision earnings for the three and six months ended June 30,
2012 was $770,000 and $1.4 million, respectively, compared to
$191,000 and $515,000 for the same periods last year.
Pre-tax, pre-provision earnings, a non-GAAP financial measure,
is presented because the Company believes adjusting its results to
exclude tax and loan loss provisions provides stockholders with a
useful metric for evaluating the core profitability of the Company.
A schedule reconciling our GAAP net income to pre-tax,
pre-provision earnings is provided in the table below.
Alan I. Rothenberg, Chairman of the Board and Chief Executive
Officer of the Company, stated, "I'm proud to announce our
financial results for the current quarter and year-to-date periods.
These results represent our fifth consecutive quarter of improved
earnings and our current year-to-date net income has already
exceeded our net income for the entire prior year. In
addition, this is the largest reported asset size in our Company's
history. Highlights for the quarter and year-to-date periods
include:
- Growth in total assets from $405 million at December 31, 2011
to $454 million at June 30, 2012;
- Growth in total deposits from $332 million at December 31, 2011
to $380 million at June 30, 2012, while reducing our cost of funds
to 26 basis points;
- Continued improvement in our credit quality, with
non-performing assets being reduced to $6.8 million at June 30,
2012, compared to $7.6 million at December 31, 2011;
- Improved net interest income of $3.4 million and $6.7 million
for the three and six months ended June 30, 2012, compared to $2.7
million and $5.4 million for the same periods last year, despite a
decrease in our net interest margin; and
- Improved diluted earnings per share, increasing to $0.09 per
share and $0.15 per share during the three and six months ended
June 30, 2012, respectively, compared to $0.01 per share and $0.03
per share during the same periods last year."
Jason P. DiNapoli, President and Chief Operating Officer of the
Company, stated, "We also continue to benefit from our proactive
and aggressive approach to addressing credit issues. Our
percentage of non-performing loans to total loans has improved to
2.8% at June 30, 2012, over 21% less than the same period last
year, and down by 58% since this ratio peaked in 2009."
2012 2nd Quarter Highlights
- The Bank's total risk-based capital ratio was 15.82% at June
30, 2012, compared to the requirement of 10.00% to be considered a
"well capitalized" financial institution for regulatory
purposes. The Bank's equity is comprised solely of common
stock, and does not include any capital received in connection with
TARP, or other forms of capital such as trust preferred securities,
convertible preferred stock or other equity or debt instruments.
- Total assets increased 12.1%, or $49.1 million, to $454.4
million at June 30, 2012, from $405.3 million at December 31, 2011.
- Total core deposits, which include non-interest bearing demand
deposits, interest bearing demand deposits, and money market
deposits and savings, were $334.2 million and $285.6 million at
June 30, 2012 and December 31, 2011, respectively, representing an
increase of $48.6 million, or 17.0%.
- Net interest margin was 3.09% and 3.14% for the three and six
months ended June 30, 2012, respectively, compared to 3.21% and
3.39% for the same periods last year.
- Cost of funds were 26 basis points for both the three and six
months ended June 30, 2012, compared to 32 and 31 basis points for
the same periods last year.
- Investment securities were $162.9 million at June 30, 2012,
representing 35.8% of our total assets, compared to $129.9 million,
or 32.1% of total assets at December 31, 2011.
- Loans were $236.3 million at June 30, 2012, compared to $233.0
million at December 31, 2011. Loan originations were $21.2
million and $46.9 million during the three and six months ended
June 30, 2012, respectively, compared to $10.5 million and $40.4
million during the same periods last year.
- As of June 30, 2012, the allowance for loan losses ("ALL") was
$4.9 million, or 2.06% of total loans, compared to $5.3 million, or
2.27% of total loans, at December 31, 2011. The ALL to
non-performing loans was 72.88% and 69.47% at June 30, 2012 and
December 31, 2011, respectively.
- Non-performing loans to total loans was 2.83% and 3.26% at June
30, 2012 and December 31, 2011, respectively.
- Non-performing assets as a percentage of total assets declined
to 1.50% at June 30, 2012, compared to 1.88% at December 31, 2011.
- For the three and six months ended June 30, 2012, the Company
recorded net income of $751,000, or $0.09 per diluted share, and
$1.3 million, or $0.15 per diluted share, respectively. During
the same periods last year, the Company reported net income of
$116,000, or $0.01 per diluted share, and $240,000, or $0.03 per
diluted share, respectively.
Capital Adequacy
At June 30, 2012, the Company's stockholders' equity totaled
$46.6 million compared to $45.1 million at December 31,
2011. At June 30, 2012, the Bank's total risk-based capital
ratio, tier 1 risk-based capital ratio, and tier 1 leverage ratio
were 15.82%, 14.56%, and 9.77%, respectively, compared to the
requirements of 10.00%, 6.00%, and 5.00%, respectively, to be
considered a "well capitalized" financial institution for
regulatory purposes.
In August 2010, the Company's Board of Directors authorized the
purchase of up to $2.0 million of the Company's common
stock. Under this stock repurchase program, the Company has
been acquiring its common stock in the open market from time to
time beginning in August 2010. As of June 30, 2012, the
Company had repurchased 534,171 shares in the open market at a cost
ranging from $3.35 to $4.02 per share in connection with this
program. During the six months ended June 30, 2012, the
Company repurchased 43,847 shares in the open market at a cost
ranging from $3.52 to $3.99 per share in connection with this
program. At June 30, 2012, the remaining value of shares that
may be repurchased under this program was $29,000.
Balance Sheet
Total assets at June 30, 2012 were $454.4 million, representing
an increase of approximately $49.1 million, or 12.1%, from $405.3
million at December 31, 2011. The increase in total assets is
primarily attributable to growth in our deposit
portfolio. Cash and cash equivalents at June 30, 2012 were
$53.6 million, representing an increase of $11.6 million, or 27.8%,
from $41.9 million at December 31, 2011. Investment securities
were $162.9 million at June 30, 2012, compared to $129.9 million at
December 31, 2011, representing an increase of $33.0 million, or
25.4%. The average life of our investment securities was 3.26
years and 3.50 years at June 30, 2012 and December 31, 2011,
respectively. Loans were $236.3 million and $233.0 million at
June 30, 2012 and December 31, 2011, respectively. The nominal
growth within our loan portfolio is primarily being caused by a
lack of quality loan demand, as well as elevated prepayment speeds
during the current year. Prepayment speeds for the three and
six months ended June 30, 2012 were 16.2% and 23.1%, respectively,
compared to 6.9% and 13.1% for the same periods last
year.
Total liabilities at June 30, 2012 increased by $47.5 million,
or 13.2%, to $407.8 million, compared to $360.2 million at December
31, 2011. This increase is primarily due to growth within our
money market deposits and savings and non-interest bearing deposits
of $19.3 million and $27.6 million, respectively. These
increases were due to continued core deposit gathering
efforts. Total core deposits, which include non-interest
bearing demand deposits, interest bearing demand deposits and money
market deposits and savings, were $334.2 million and $285.6 million
at June 30, 2012 and December 31, 2011, respectively, representing
an increase of $48.5 million, or 17.0%.
Credit Quality
Allowance and Provision for Loan Losses
The ALL was $4.9 million, or 2.06% of our total loan portfolio,
at June 30, 2012, compared to $5.3 million, or 2.27%, at December
31, 2011. At June 30, 2012 and December 31, 2011, our
non-performing loans were $6.7 million and $7.6 million,
respectively. The ratio of our ALL to non-performing loans was
72.88% and 69.47% at June 30, 2012 and December 31, 2011,
respectively. In addition, our ratio of non-performing loans
to total loans was 2.83% and 3.26% at June 30, 2012 and December
31, 2011, respectively.
The ALL is impacted by inherent risk in the loan portfolio,
including the level of our non-performing loans, as well as
specific reserves and charge-off activities. There was no
provision for loan losses for the three and six months ended June
30, 2012, compared to a $75,000 and $275,000 provision for loan
losses for the same periods last year. The decline in
provision for loan losses recorded during the three and six months
ended June 30, 2012, compared to the same periods last year, is
primarily due to the improvement in the level of our criticized and
classified loans, which generally consist of special mention,
substandard and doubtful loans. Special mention, substandard
and doubtful loans were $1.9 million, $9.0 million and none,
respectively, at June 30, 2012, compared to $7.2 million, $10.9
million, and $1.1 million, respectively, at June 30, 2011. We
had net charge-offs of $422,000 and $418,000 during the three and
six months ended June 30, 2012, compared to net charge-offs of
$467,000 and $474,000 during the same periods last
year. Management believes that the ALL as of June 30, 2012 and
December 31, 2011 was adequate to absorb known and inherent risks
in the loan portfolio.
Non-Performing Assets
Non-performing assets totaled $6.8 million and $7.6 million at
June 30, 2012 and December 31, 2011, respectively. Non-accrual
loans totaled $6.7 million and $7.6 million at June 30, 2012 and
December 31, 2011, respectively. At June 30, 2012, non-accrual
loans consisted of three commercial loans totaling $1.9 million,
one commercial real estate loan totaling $3.2 million, one
commercial land loan totaling $1.3 million and one consumer related
loan totaling $345,000. At December 31, 2011, non-accrual
loans consisted of four commercial loans totaling $2.2 million, two
commercial real estate loans totaling $3.8 million, one commercial
land loan totaling $1.3 million and one consumer related loan
totaling $345,000. At June 30, 2012, other real estate owned
("OREO") consisted of one commercial real estate property totaling
$50,000 and one undeveloped land property totaling
$90,000. There was no OREO outstanding at December 31,
2011. As a percentage of total assets, the amount of
non-performing assets was 1.50% and 1.88% at June 30, 2012 and
December 31, 2011, respectively.
Net Interest Income and Margin
During the three and six months ended June 30, 2012, net
interest income was $3.4 million and $6.7 million, respectively,
compared to $2.7 million and $5.4 million for the same periods last
year. These increases were primarily attributable to additional
interest earned in connection with our loan and investment
portfolios as compared to the same periods last year, and were the
result of increases in the average balances of these portfolios
during the current periods, partially offset by a decline in yields
earned.
The Company's net interest margin (net interest income divided
by average interest earning assets) was 3.09% for the three months
ended June 30, 2012, compared to 3.21% for the same period last
year. This 12 basis point decline in net interest margin is
primarily due to a decrease in the yield on earning assets,
partially offset by a decline in the cost of interest bearing
deposits and borrowings. The decrease in yield on earning
assets is primarily attributable to a decline in interest rates
earned on these assets during the three months ended June 30, 2012,
as compared to the same period last year, and was caused by a
general decline in interest rates, as well as competitive loan
pricing conditions in our market, which have continued to compress
loan yields. During the three months ended June 30, 2012 as
compared to the same period last year, the decline in our cost of
interest bearing deposits and borrowings is primarily attributable
to a decrease in interest rates paid on these accounts. The
average cost of interest bearing deposits and borrowings was 0.40%
during the three months ended June 30, 2012 compared to 0.48% for
the same period last year.
The Company's net interest margin was 3.14% for the six months
ended June 30, 2012, compared to 3.39% for the same period last
year. This 25 basis point decline in net interest margin is
primarily due to a decrease in the yield on earning assets,
partially offset by a decline in the cost of interest bearing
deposits and borrowings. As discussed above, the decrease in
yield on earning assets is primarily attributable to a decline in
interest rates earned on these assets during the six months ended
June 30, 2012, as compared to the same period last year, and was
caused by a general decline in interest rates, as well as
competitive loan pricing conditions in our market, which have
continued to compress loan yields. In addition, the decline in
our cost of interest bearing deposits and borrowings is primarily
attributable to a decrease in interest rates paid on these
accounts. The average cost of interest bearing deposits and
borrowings was 0.40% during the six months ended June 30, 2012
compared to 0.48% for the same period last year.
Non-Interest Income
Non-interest income was $489,000 and $836,000 for the three and
six months ended June 30, 2012, compared to $192,000 and $396,000
for the same periods last year. The increase in non-interest
income was primarily attributable to an increase in loan
arrangement fees earned in connection with our college loan funding
program, as well as other income recognized on interest rate swap
transactions that were entered into during the three months ended
June 30, 2012 to facilitate the needs of our customers.
Non-Interest Expense
Non-interest expense was $3.1 million and $6.1 million for the
three and six months ended June 30, 2012, compared to $2.7 million
and $5.3 million for the same periods last year. The increase
in non-interest expense is primarily due to the additional costs
incurred related to expanding the Bank's business development team,
increased costs associated with our college loan funding program,
expenses incurred related to interest rate swaps, as well as the
opening of our Santa Monica relationship office in the middle of
2011.
Income Tax Provision
During the three and six months ended June 30, 2012, we recorded
a tax expense of approximately $19,000 and $35,000, respectively.
The Company does not anticipate owing any substantial taxes
for Federal or State purposes until the Company's net operating
losses are fully utilized. During the three and six months
ended June 30, 2011, we did not record an income tax provision.
Net Income
For the three and six months ended June 30, 2012, the Company
recorded net income of $751,000, or $0.09 per diluted share, and
$1.3 million, or $0.15 per diluted share, compared to $116,000, or
$0.01 per diluted share, and $240,000, or $0.03 per diluted share,
for the same periods last year.
About 1st Century Bancshares, Inc.
1st Century Bancshares, Inc. is a publicly owned company traded
on the NASDAQ Capital Market under the symbol "FCTY." The
Company's wholly-owned subsidiary, 1st Century Bank, N.A., is
headquartered in the Century City area of Los Angeles, with a full
service business bank in Century City, CA, and a relationship
office in Santa Monica, CA. The Bank's primary focus is
serving the specific banking needs of entrepreneurs, professionals
and small businesses with the personal service of a traditional
community bank, while offering the technologies of a big money
center bank. The Company maintains a website at
www.1cbank.com. By including the foregoing website address link,
the Company does not intend to and shall not be deemed to
incorporate by reference any material contained therein.
Safe Harbor
Certain matters discussed in this press release may constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. You can find many (but
not all) of these forward-looking statements by looking for words
such as "approximates," "believes," "expects," "anticipates,"
"estimates," "intends," "plans," "would," "may" or other similar
expressions in this press release. These statements are based upon
our management's current expectations and speak only as of the date
hereof. Forward-looking statements are subject to certain
risks and uncertainties that could cause our actual results,
performance or achievements to differ materially and adversely from
those expressed, suggested or implied herein. Accordingly,
investors should use caution in relying on forward-looking
statements to anticipate future results or trends. These risks
and uncertainties include, but are not limited to: (1) the impact
of changes in interest rates, (2) a renewed decline in economic
conditions, (3) further increased competition among financial
institutions, (4) the Company's ability to continue to attract
interest bearing deposits and quality loan customers, (5) further
government regulation and the implementation and costs associated
with the same, (6) management's ability to successfully manage the
Company's operations, and (7) the other risks set forth in the
Company's reports filed with the U.S. Securities and Exchange
Commission. The Company does not undertake, and specifically
disclaims, any obligation to revise or update any forward-looking
statements for any reason.
SUMMARY FINANCIAL INFORMATION
The following tables present relevant financial data from the
Company's recent performance (dollars in thousands, except per
share data):
|
June 30, 2012 |
December 31, 2011 |
June 30, 2011 |
Balance Sheet Results: |
(unaudited) |
|
(unaudited) |
Total Assets |
$ 454,399 |
$ 405,274 |
$ 361,085 |
Total Loans |
$ 236,261 |
$ 233,005 |
$ 186,653 |
Allowance for Loan Losses ("ALL") |
$ 4,866 |
$ 5,284 |
$ 5,084 |
Non-Performing Assets |
$ 6,816 |
$ 7,606 |
$ 7,549 |
Deposits: |
|
|
|
Non-Interest Bearing Demand Deposits |
$ 150,441 |
$ 122,843 |
$ 106,827 |
Interest Bearing Demand Deposits |
22,334 |
20,739 |
29,132 |
Money Market Deposits and Savings |
161,395 |
142,061 |
119,450 |
Certificates of Deposit |
45,714 |
46,811 |
48,045 |
Total Deposits |
$ 379,884 |
$ 332,454 |
$ 303,454 |
Total Stockholders' Equity |
$ 46,648 |
$ 45,051 |
$ 45,143 |
Gross Loans to Deposits |
62.19% |
70.08% |
61.51% |
Ending Book Value per Share |
$ 5.12 |
$ 4.97 |
$ 4.82 |
|
|
|
|
|
Three Months Ended June
30, |
|
Quarterly Operating Results (unaudited): |
2012 |
2011 |
|
Net Interest Income |
$ 3,383 |
$ 2,719 |
|
Provision for Loan Losses |
$ -- |
$ 75 |
|
Non-Interest Income |
$ 489 |
$ 192 |
|
Non-Interest Expense |
$ 3,102 |
$ 2,720 |
|
Income Tax Provision |
$ 19 |
$ -- |
|
Net Income |
$ 751 |
$ 116 |
|
Basic Earnings per Share |
$ 0.09 |
$ 0.01 |
|
Diluted Earnings per Share |
$ 0.09 |
$ 0.01 |
|
Quarterly Net Interest Margin* |
3.09% |
3.21% |
|
|
|
|
|
Reconciliation of QTD Net Income to Pre-Tax,
Pre-Provision Earnings: |
|
|
|
Net Income |
$ 751 |
$ 116 |
|
Provision for Loan Losses |
-- |
75 |
|
Income Tax Provision |
19 |
-- |
|
Pre-Tax, Pre-Provision Earnings |
$ 770 |
$ 191 |
|
|
|
|
|
Six Months Ended June
30, |
|
YTD Operating Results (unaudited): |
2012 |
2011 |
|
Net Interest Income |
$ 6,682 |
$ 5,430 |
|
Provision for Loan Losses |
$ -- |
$ 275 |
|
Non-Interest Income |
$ 836 |
$ 396 |
|
Non-Interest Expense |
$ 6,140 |
$ 5,311 |
|
Income Tax Provision |
$ 35 |
$ -- |
|
Net Income |
$ 1,343 |
$ 240 |
|
Basic Earnings per Share |
$ 0.16 |
$ 0.03 |
|
Diluted Earnings per Share |
$ 0.15 |
$ 0.03 |
|
YTD Net Interest Margin* |
3.14% |
3.39% |
|
|
|
|
|
Reconciliation of YTD Net Income to Pre-Tax,
Pre-Provision Earnings: |
|
|
|
Net Income |
$ 1,343 |
$ 240 |
|
Provision for Loan Losses |
-- |
275 |
|
Income Tax Provision |
35 |
-- |
|
Pre-Tax, Pre-Provision Earnings |
$ 1,378 |
$ 515 |
|
|
|
|
|
*Percentages are reported on an
annualized basis. |
CONTACT: Alan I. Rothenberg
Chairman/Chief Executive Officer
Phone: (310) 270-9501
Jason P. DiNapoli
President/Chief Operating Officer
Phone: (310) 270-9505
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