1st Century Bancshares, Inc. (the "Company") (Nasdaq:FCTY), the
holding company for 1st Century Bank, N.A. (the "Bank"), today
reported net income for the quarter ended March 31, 2014 of
$402,000, compared to $1.4 million for the same period last year.
Pre-tax, pre-provision earnings for the quarter ended March 31,
2014 was $712,000, compared to $980,000, for the same period last
year.
Pre-tax, pre-provision earnings, a non-GAAP financial measure,
is presented because management believes adjusting the Company's
results to exclude taxes and loan loss provisions provides
stockholders with a useful metric for evaluating the 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, "Although loan production slowed
during the quarter, I'm pleased that we've continued to see growth
in our core deposits and slight improvement in our net interest
margin. Core deposits grew at an annualized rate of over 15% since
the end of last year and our net interest margin improved to 3.25%
compared to last year's margin of 3.19%, although still lower than
optimum. In addition, asset quality has continued to be strong with
total non-performing assets at only 15 basis points of total assets
at the end of the quarter."
Jason P. DiNapoli, President and Chief Operating Officer of the
Company added, "Our focus continues to remain on growing our core
franchise and drilling deeper in our current market. I'm
pleased that we continue to see positive growth in our deposits,
and I believe that loan demand will resume. I also feel
strongly that our local economy is healthy and that it will
continue to improve throughout the year."
2014 1st
Quarter Highlights
- The Bank's total risk-based capital ratio was 14.24% at March
31, 2014, compared to the requirement of 10.00% to generally 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.
- For the quarter ended March 31, 2014, the Company recorded net
income of $402,000, or $0.04 per diluted share, compared to $1.4
million, or $0.16 per diluted share, during the same period last
year. The decline in net income during the three months ended
March 31, 2014 as compared to the same period last year was
primarily due to a $736,000 increase in non-interest expense and a
$272,000 increase in income tax provisions during the quarter ended
March 31, 2014 as compared to the same period in the year prior and
a $500,000 reversal of provision for loan losses that was recorded
during the quarter ended March 31, 2013. These items were
partially offset by a $462,000 increase in net interest
income. This increase in net interest income occurred even
with the recognition of $294,000 in interest income during the
three months ended March 31, 2013 in connection with the recovery
of non-accrual and previously charged off loans during that
period.
- At March 31, 2014 and 2013, the Company's book value per share
was $5.85 and $5.54, respectively, representing an increase of
5.6%.
- Net interest margin was 3.25% during the quarter ended March
31, 2014, compared to 3.30% during the same period last
year. The decline in net interest margin is primarily due to a
recovery of non-accrual and previously charged off loans during the
quarter ended March 31, 2013, which resulted in the recognition of
$294,000 in interest income during that period. Excluding the
impact of this recovery, net interest margins would have improved
by approximately 20 basis points during the quarter ended March 31,
2014 compared to the same period last year.
- Loans decreased to $376.1 million at March 31, 2014, compared
to $383.5 million at December 31, 2013. Loan originations
were $24.3 million during the quarter ended March 31, 2014,
compared to $66.3 million during the same period last year.
- Non-performing loans were $735,000, or 0.20% of total loans, at
March 31, 2014, compared to $735,000, or 0.19% of total loans, at
December 31, 2013.
- Non-performing assets as a percentage of total assets was 0.15%
at both March 31, 2014 and December 31, 2013.
- Net loan recoveries were $16,000 during the quarter ended March
31, 2014, compared to net recoveries of $1.1 million during the
same period last year.
- As of March 31, 2014, the allowance for loan losses ("ALL") was
$7.3 million, or 1.93% of total loans, compared to $7.2 million, or
1.89% of total loans, at December 31, 2013. The ALL to
non-performing loans was 986.43% and 984.26% at March 31, 2014 and
December 31, 2013, respectively.
- Investment securities declined to $102.6 million at March 31,
2014, representing 18.5% of our total assets, compared to $106.3
million, or 19.7% of our total assets, at December 31,
2013. During the quarter ended March 31, 2014, the Company
sold investment securities with an amortized cost of $14.8 million,
recognizing gains of $253,000 in connection with these
sales. In addition, the unrealized gain on investment
securities increased to $279,000 at March 31, 2014, compared to
$89,000 at December 31, 2013.
- Total core deposits, which includes non-interest bearing demand
deposits, interest bearing demand deposits, and money market
deposits and savings, were $425.3 million and $409.8 million at
March 31, 2014 and December 31, 2013,
respectively. Non-interest bearing deposits represent 51.6% of
total deposits at March 31, 2014, compared to 52.3% at December 31,
2013.
- Cost of funds declined to 16 basis points for the quarter ended
March 31, 2014, compared to 19 basis points for the same period
last year.
Capital Adequacy
At March 31, 2014, the Company's stockholders' equity totaled
$58.3 million compared to $55.4 million at December 31, 2013.
At March 31, 2014, the Bank's total risk-based capital ratio,
tier 1 risk-based capital ratio, and tier 1 leverage ratio were
14.24%, 12.99%, and 9.63%, respectively, compared to the
requirements of 10.00%, 6.00%, and 5.00%, respectively, to
generally be considered a "well capitalized" financial institution
for regulatory purposes.
Balance
Sheet
Total assets at March 31, 2014 were $554.8 million, representing
an increase of $16.6 million, or 3.1%, from $538.1 million at
December 31, 2013. Cash and cash equivalents at March 31,
2014 were $72.7 million, representing an increase of $28.0 million,
or 62.8%, from $44.7 million at December 31, 2013. Loans
decreased by $7.5 million, from $383.5 million at December 31, 2013
to $376.1 million at March 31, 2014. Loan originations were
$24.3 million during the quarter ended March 31, 2014, compared to
$66.3 million during the same period last year. Prepayment
speeds for the quarter ended March 31, 2014 were 14.3%, compared to
15.2% for the same period last year. Investment securities
were $102.6 million at March 31, 2014, compared to $106.3 million
at December 31, 2013, representing a decline of $3.7 million, or
3.5%. During the quarter ended March 31, 2014, the Company
sold $14.8 million of securities, resulting in a gain of
$253,000. The weighted average life of our investment
securities was 4.50 and 3.78 years at March 31, 2014 and December
31, 2013, respectively.
Total liabilities at March 31, 2014 increased by $13.7 million,
or 2.8%, to $496.4 million compared to $482.8 million at December
31, 2013. This increase is primarily due to a $14.3 million
increase in deposits. Total core deposits, which includes
non-interest bearing demand deposits, interest bearing demand
deposits and money market deposits and savings, were $425.3 million
and $409.8 million at March 31, 2014 and December 31, 2013,
respectively, representing an increase of $15.5 million, or
3.8%.
Credit Quality
Allowance and Provision for Loan Losses
The ALL was $7.3 million, or 1.93% of our total loan portfolio,
at March 31, 2014, compared to $7.2 million, or 1.89% of our total
loan portfolio, at December 31, 2013. At March 31, 2014 and
December 31, 2013, our non-performing loans were $735,000. The
ratio of our ALL to non-performing loans was 986.43% and 984.26% at
March 31, 2014 and December 31, 2013, respectively. In
addition, our ratio of non-performing loans to total loans was
0.20% and 0.19% at March 31, 2014 and December 31, 2013,
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. During the
quarter ended March 31, 2014, we recorded no provision for loan
losses. During quarter ended March 31, 2013, we reversed
$500,000 of provision for loan losses. This reversal in provision
for loan losses was primarily due to $1.1 million of net loan
recoveries during that quarter, as well as the continued
improvement in the level of our criticized and classified loans.
These declines were partially offset by additional provisions
required for the $31.1 million increase in our loan portfolio
during the quarter ended March 31, 2013. Criticized and
classified loans generally consist of special mention, substandard
and doubtful loans. Special mention, substandard and doubtful
loans were $3.4 million, $2.1 million and none, respectively, at
March 31, 2014, compared to $6.5 million, $2.3 million and none,
respectively, at March 31, 2013. We had net recoveries of
$16,000 and $1.1 million during the quarters ended March 31, 2014
and 2013, respectively. Management will continue to closely
monitor the adequacy of the ALL and will make adjustments as
warranted. Management believes that the ALL as of March 31,
2014 and December 31, 2013 was adequate to absorb known and
inherent risks in the loan portfolio.
Non-Performing Assets
Non-performing assets totaled $825,000 at both March 31, 2014
and December 31, 2013. Non-accrual loans totaled $735,000 at
both March 31, 2014 and December 31, 2013. At March 31, 2014
and December 31, 2013, non-accrual loans consisted of two
commercial loans totaling $706,000 and one consumer loan totaling
$29,000. At March 31, 2014 and December 31, 2013, other real
estate owned ("OREO") consisted of one undeveloped land property
totaling $90,000. As a percentage of total assets, the amount
of non-performing assets was 0.15% at both March 31, 2014 and
December 31, 2013.
Net Interest Income and Margin
During the quarter ended March 31, 2014, net interest income was
$4.3 million, compared to $3.9 million for the same period last
year. The improvement in net interest income was primarily
attributable to increases in the average balances of our loan
portfolio during the quarter ended March 31, 2014 as compared to
the same period last year. The average balances of our loan
portfolio were $375.2 million during the quarter ended March 31,
2014, compared to $272.9 million for the same period last
year.
The Company's net interest margin (net interest income divided
by average interest earning assets) was 3.25% for the quarter ended
March 31, 2014, compared to 3.30% for the same period last year.
The 5 basis point decline in net interest margin is primarily
due to the recoveries discussed above during the quarter ended
March 31, 2013, which resulted in the recognition of $294,000 in
additional interest income during that period. Excluding the
impact of this recovery, net interest margins would have improved
by approximately 20 basis points during the quarter ended March 31,
2014 compared to the same period last year. Net interest
margin during the quarter ended March 31, 2014 was positively
impacted by an increase in the average balance of loans relative to
total average earning assets as compared to the same period last
year and a decline in the cost of our interest bearing
liabilities. The percentage of average loans to total average
earning assets increased to 69.2% during the quarter ended March
31, 2014, compared to 57.1% during the same period last
year. The average cost of interest bearing deposits and
borrowings was 0.31% during the quarter ended March 31, 2014
compared to 0.33% for the same period last year. These factors
were partially offset by a general decline in the loan
yields. The decline in loan yield was primarily caused by a
general downward trend in interest rates, as well as competitive
loan pricing conditions in our market, which have continued to
compress loan yields.
Non-Interest Income
Non-interest income was $365,000 for the quarter ended March 31,
2014, compared to $359,000 for the same period last year.
During the quarter ended March 31, 2014, the Company sold
$14.8 million of investment securities, recognizing a gain of
$253,000 in connection with these sales. With the exception of
such gain, non-interest income during the quarter ended March 31,
2014 primarily consists of customer related fee income. During
the quarter ended March 31, 2013, non-interest income primarily
consists of loan arrangement fees earned in connection with our
collage loan funding program and customer related fee income.
During the first quarter of 2013, the Company terminated the
college loan funding program.
Non-Interest Expense
Non-interest expense was $4.0 million for the quarter and year
ended March 31, 2014, compared to $3.3 million for the same period
last year. The increases in non-interest expense during the
quarter ended March 31, 2014 as compared to the same period last
year is primarily due to the costs incurred to expand the Bank's
business development and related operational support teams, as well
as the additional costs incurred to address regulatory compliance
matters.
Income Tax Provision
During the quarters ended March 31, 2014 and 2013, we recorded a
tax provision of $310,000 and $38,000, respectively. Beginning
in January 2014, the Company began recording tax provisions at an
estimated effective tax rate of approximately 42%.
Net Income
For the quarter ended March 31, 2014, the Company recorded net
income of $402,000, or $0.04 per diluted share, compared to $1.4
million, or $0.16 per diluted share for the same period 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) political instability, (3) changes in the
monetary policies of the U.S. Government, (4) a renewed decline in
economic conditions, (5) renewed deterioration in the value of
California real estate, both residential and commercial, (6) an
increase in the level of non-performing assets and charge-offs, (7)
further increased competition among financial institutions, (8) the
Company's ability to continue to attract interest bearing deposits
and quality loan customers, (9) further government regulation and
the implementation and costs associated with the same, (10)
internal and external fraud and cyber-security threats including
the loss of bank or customer funds, loss of system functionality or
the theft or loss of data, (11) management's ability to
successfully manage the Company's operations, (12) the possibility
that we will be unable to comply with the requirements set forth in
the OCC's Consent Order, which could result in restrictions on our
operations, and (13) 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):
|
March 31, 2014 |
December 31, 2013 |
March 31, 2013 |
Balance Sheet Results: |
(unaudited) |
|
(unaudited) |
Total Assets |
$554,773 |
$538,145 |
$493,415 |
Total Loans |
$376,064 |
$383,548 |
$297,763 |
Allowance for Loan Losses ("ALL") |
$7,252 |
$7,236 |
$6,619 |
Non-Performing Assets |
$825 |
$825 |
$1,007 |
Investment Securities-AFS, at estimated
fair value |
$102,550 |
$106,272 |
$168,034 |
Deposits: |
|
|
|
Non-Interest Bearing Demand
Deposits |
$240,962 |
$236,869 |
$195,540 |
Interest Bearing Demand
Deposits |
21,595 |
21,005 |
22,930 |
Money Market Deposits and
Savings |
162,701 |
151,879 |
151,196 |
Certificates of Deposit |
41,847 |
43,013 |
44,863 |
Total Deposits |
$467,105 |
$452,766 |
$414,529 |
Total Stockholders' Equity |
$58,337 |
$55,388 |
$50,640 |
Gross Loans to Deposits |
80.49% |
84.70% |
71.84% |
Ending Book Value per Share |
$5.85 |
$5.84 |
$5.54 |
|
|
|
|
|
Three Months Ended March
31, |
|
Quarterly Operating Results (unaudited): |
2014 |
2013 |
|
Net Interest Income |
$4,346 |
$3,884 |
|
Provision for (Reduction of) Loan
Losses |
$ -- |
$ (500) |
|
Non-Interest Income |
$365 |
$359 |
|
Non-Interest Expense |
$3,999 |
$3,263 |
|
Income Tax Provision |
$310 |
$38 |
|
Net Income |
$402 |
$1,442 |
|
Basic Earnings per Share |
$0.04 |
$0.17 |
|
Diluted Earnings per Share |
$0.04 |
$0.16 |
|
Quarterly Net Interest Margin* |
3.25% |
3.30% |
|
|
|
|
|
Reconciliation of QTD Net Income to Pre-Tax,
Pre-Provision Earnings: |
|
|
|
Net Income |
$402 |
$1,442 |
|
Provision for (Reduction of) Loan
Losses |
-- |
(500) |
|
Income Tax Provision |
310 |
38 |
|
Pre-Tax, Pre-Provision Earnings |
$712 |
$980 |
|
|
|
|
|
|
|
|
|
*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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