1st Capital Bank Announces Third Quarter 2020 Financial Results

SALINAS, CA / ACCESSWIRE / October 30, 2020 / 1st Capital Bank (OTC PINK:FISB) reported unaudited net income of $953 thousand for the three months ended September 30, 2020, a decrease of 29.4% compared to net income of $1.35 million in the second quarter of 2020 and a decrease of 50.8% compared to net income of $1.94 million in the third quarter of 2019. Earnings per share were $0.17 (diluted) for the third quarter of 2020, compared to $0.24 (diluted) for the prior quarter, and $0.35 (diluted) for the third quarter of 2019.

Unaudited net income for the nine-month period ended September 30, 2020 was $2.91 million, a decrease of 45.6% compared to net income of $5.35 million for the nine-month period ended September 30, 2019. Year-to-date earnings per share were $0.52 (diluted) and $0.96 (diluted) for the nine-month periods ended September 30, 2020 and 2019, respectively.

"The economic effects of the global pandemic continued to impact the Bank's operating results in the third quarter of 2020," said Samuel D. Jimenez, chief executive officer. "Repricing and prepaying assets have depressed our asset yields and compressed our net interest margin by 0.20% to 3.45%. In addition, an overall downward migration of loan risk ratings with a modest increase in non-performing loans resulted in continuing loan loss provisions. On an optimistic note, we filled out our executive team during the quarter and opportunistically strengthened our lending team in San Luis Obispo County, adding three experienced local lenders to the team. While the future remains uncertain, we believe we are taking appropriate steps to position the Bank for future success."

Operating results reflect a provision for loan losses of $650 thousand in the third quarter of 2020, compared to provisions of $825 thousand and $650 thousand in the first and second quarters of 2020, respectively, 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 third quarter of 2019.

As of September 30, 2020, the Bank's allowance for loan and lease losses was $8.8 million, or 1.40% percent of loans held for investment, compared to $8.1 million, or 1.30% of loans held for investment, as of June 30, 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 September 30, 2020 was 1.69% of loans held for investment excluding its net investment of $106.6 million in loans insured under the U.S. Small Business Administration's ("SBA") Paycheck Protection Program ("PPP"). As of June 30, 2020, the allowance was 1.55% of loans not insured under the PPP. The Bank recognized net recoveries of $61 thousand, $12 thousand, and $9 thousand in the third quarter of 2020, the second quarter of 2020, and the third quarter of 2019, respectively, and recognized no loan or lease charge-offs in such periods.

"In the third quarter, it became increasingly apparent that the economy's recovery from the effects of the COVID-19 pandemic will take longer than previously estimated," said Dale R. Diederick, chief credit officer. "The trend in coronavirus cases is again increasing, creating continued uncertainty regarding the speed of the recovery and volatility in the value and market absorption of commercial real estate. The Bank also has seen a downward migration in loan risk ratings. These trends caused management to determine that continuing to provide for credit losses in the third quarter was prudent."

Total assets increased $12.3 million in the third quarter, from $736.7 million at June 30, 2020 to $749.0 million at September 30, 2020, an increase of 1.7%. Net loans held for investment increased $3.8 million, or 0.6%, during the third quarter, from $615.6 million at June 30, 2020 to $619.4 million at September 30, 2020.

In the third quarter, PPP loans outstanding increased $5.9 million, or 5.9%. Single-family loans purchased by the Bank in prior quarters declined $11.1 million, or 10.6%, while the portfolio of loans originated by the Bank increased $15.6 million, or 3.0%. Growth in the core loan portfolio was concentrated in multi-family loans, which increased $7.9 million, or 11.0%. Commercial and industrial loans increased $1.1 million, or 2.3%, and commercial real estate loans increased $1.8 million, or 0.7%. Undrawn, available credit increased $21.3 million, from $67.0 million at June 30, 2020 to $88.3 million at September 30, 2020.

"In the third quarter of 2020, the Bank continued to source new business opportunities as competing banks withdrew from the market," said Jon D. Ditlevsen, president. "Our new lenders in San Luis Obispo already have contributed to the Bank's success in building market share in that attractive market. At the same time, Santa Cruz, Monterey, and the Salinas Valley continue to provide numerous opportunities to extend credit well within our credit risk acceptance criteria. During the third quarter we funded $40.9 million in core commercial and industrial and commercial real estate loans, as well as $6.0 million in PPP fundings, compared to $33.2 million in non-PPP core production in the prior quarter."

Third Quarter Highlights:

Return on average equity was 5.26%, compared to 7.74% for the second quarter of 2020 and 11.79% for the third quarter of 2019.
Return on average assets was 0.51%, compared to 0.75% for the second quarter of 2020 and 1.25% for the third quarter of 2019.
Gross loans held for investment increased $4.5 million, or 0.7%, during the third quarter of 2020, from $623.7 million at June 30, 2020 to $628.2 million at September 30, 2020.
Non-accrual loans were $1.5 million, or 0.24% of loans outstanding, at September 30, 2020, compared to $490 thousand at June 30, 2020 and $492 thousand at 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 and $8.0 million at September 30, 2020.
The Bank's net loans to deposits ratio decreased from 94.6% at June 30, 2020 to 93.6% at September 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 $283.9 million at September 30, 2020. $25.0 million of additional liquidity under Federal funds facilities also was available.
Deposits totaled $661.6 million at September 30, 2020, compared to $650.8 million at June 30, 2020, an increase of $10.8 million, or 1.7%.
Demand deposits increased $13.7 million, or 4.0%, from $343.0 million at June 30, 2020 to $356.7 million at September 30, 2020 and made up 53.9% of total deposits at September 30, 2020.
The Bank's cost of funds decreased from 0.15% in the second quarter of 2020 to 0.13% in the third quarter of 2020.
Non-interest income increased from $181 thousand in the second quarter of 2020 to $326 thousand in the third quarter of 2020.
Non-interest expenses increased from $3.95 million in the second quarter of 2020 to $4.58 million in the third quarter of 2020, primarily because of increased headcount and legal and recruiting fees, as well as reduced absorption of direct loan origination costs.
The Bank's common equity Tier 1 ("CET1") risked-based capital ratio was 14.16%, and its Tier 1 leverage ratio was 9.58% at September 30, 2020, compared to 14.12% and 9.66%, respectively, at June 30, 2020.
Net interest margin decreased from 3.65% in the second quarter of 2020 to 3.45% in the third quarter of 2020.
Deferred loan origination fees (net of unamortized direct loan origination costs) on PPP loans totaled $2.49 million at September 30, 2020.

Throughout the third 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. Seven of the Bank's 94 employees have tested positive for the coronavirus, and all have recovered and returned to work after quarantine periods.

NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES

Net interest income before provision for credit losses was $6.22 million in the third quarter of 2020, a decrease of $97 thousand, or 1.5%, compared to $6.32 million in the second quarter of 2020 and an increase of $234 thousand, or 3.9%, compared to $5.99 million in the third quarter of 2019.

Average earning assets were $718.6 million during the third quarter of 2020, an increase of 3.1% compared to $697.2 million in the second quarter of 2020. The yield on earning assets was 3.55% in the third quarter of 2020, compared to 3.78% in the second quarter of 2020. The decrease in yield reflected lower yields on both the loan and investment portfolios and the absence of $100 thousand of deferred SBA fees on PPP loans recognized in connection with loan payoffs in the second quarter of 2020.

The average balance of the investment portfolio decreased $1.7 million, from $63.0 million in the second quarter of 2020 to $61.3 million in the third quarter of 2020, and the tax-equivalent yield decreased from 2.03% in the second quarter of 2020 to 1.78% in the third quarter of 2020, as variable rate instruments with annual resets repriced downward.

The yields on non-PPP commercial and industrial and commercial real estate loans in the third quarter of 2020 were 4.16% and 4.72% on average balances of $48.7 million and $243.7 million, respectively, compared to 4.46% and 4.74% on average balances of $50.5 million and $242.2 million in the second quarter of 2020. The average balance of multi-family residential loans increased to $76.1 million in the third quarter of 2020 from $64.9 million in the second quarter of 2020, while the respective yields were 4.21% and 4.42%. The portfolio of single-family residential first liens yielded 3.24% and 3.48% on average balances of $121.3 million and $128.3 million in the third quarter of 2020 and the second quarter of 2020, 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 third quarter totaled $693 thousand, compared to $608 thousand in the second quarter. Second quarter income included $100 thousand of deferred fees recognized as income in connection with loan payoffs; no such income was recognized in the third quarter. During the third quarter, the average balance of PPP loans was $105.7 million, with a yield of 2.66%, compared to $77.6 million, with a yield of 3.18%, in the second quarter.

The cost of interest-bearing liabilities was 0.28% in the third quarter of 2020, compared to 0.30% in the second quarter of 2020, while the average balance of interest-bearing liabilities decreased 6.1% from $317.1 million in the second quarter of 2020 to $297.6 million in the third quarter of 2020. The average balance of reciprocal deposits, all of which are money market deposits, decreased 79.6% from $29.7 million in the second quarter of 2020 to $6.1 million in the third quarter of 2020 at a cost of 0.09% and 0.05%, respectively. Reciprocal deposits totaled $15.3 million as of June 30, 2020; there were no reciprocal deposits on the Bank's balance sheet as of September 30, 2020.

The Bank's portfolio of certificates of deposit had average balances of $19.2 million in the second quarter of 2020 and $17.7 million in the third quarter of 2020, and an average cost of funds of 1.12% and 0.79%, respectively. As of September 30, 2020, $14.9 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 0.15% in the second quarter of 2020 to 0.13% in the third 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 September 30, 2020, approximately $58.4 million, or 82.5%, of owner-occupied commercial real estate loans, $238.5 million, or 94.8%, of investor real estate loans, $26.1 million, or 21.4%, 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 $15.6 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.

As of October 29, 2020, the State of California had assigned a "widespread" pandemic risk rating (the most severe of four ratings) to Monterey County, a "substantial" risk rating (the second most severe) to San Luis Obispo County, and a "moderate" risk rating (the third most severe) to Santa Cruz County. The State of California has indicated that under a "widespread" risk rating, many non-essential business operations (including shopping malls, retailers not offering merchandise deemed essential, bars, restaurants not offering take-out and/or outdoor dining, and most personal services) are closed, under a "substantial" risk rating, some non-essential indoor business operations are closed, and under a "moderate" risk rating, some indoor business operations are open with modifications.

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

Single-family mortgages totaling $93.4 million as of September 30, 2020 are serviced by the Bank's outside single-family loan servicers 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.

As of September 30, 2020, the Bank had forbearance agreements as defined by the CARES Act in effect on seven non-conforming single-family mortgages serviced by the Bank's outside servicers totaling $5.9 million. Such forbearance agreements call for the deferral of payments for 90 days, with a 30-day catch-up period and allow for one extension of the 90-day term. In addition, as of September 30, 2020, the Bank had in effect deferment agreements with three borrowers with loans aggregating $1.9 million, comprising one $1.2 million nonowner-occupied commercial real estate loan and two owner-occupied commercial real estate loans totaling $713 thousand. Loans on forbearance or deferment plans totaled $53.9 million as of June 30, 2020.

At September 30, 2020, non-accrual loans totaled $1.5 million or 0.24% of the Bank's loans held for investment, compared with $490 thousand, or 0.08%, at June 30, 2020, and $492 thousand, or 0.10%, at December 31, 2019.

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 third quarter of 2020, compared to $650 thousand in the second quarter of 2020 and no provision in the third 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, which drove an increase in the quantitative factors within the Bank's allowance for loan and leases model. In addition, during the third quarter it became apparent that economic conditions would continue to be affected by the COVID-19 pandemic longer than originally anticipated. 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 and the level of and trend in classified loans, as well as general economic conditions. Impaired loans totaled $836 thousand at September 30, 2020, compared to $891 thousand at June 30, 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 $481 thousand at September 30, 2020, compared to $501 thousand at June 30, 2020 and $326 thousand at December 31, 2019.

At September 30, 2020, the allowance for loan losses was 1.40% of outstanding loans held for investment, compared to 1.30% at June 30, 2020 and 1.33% at September 30, 2019, respectively. The ratio of the allowance for loan and lease losses to loans not guaranteed by the SBA under the PPP was 1.69% as of September 30, 2020, compared to 1.55% as of June 30, 2020. The Bank recorded net recoveries of $61 thousand in the third quarter of 2020, compared to $12 thousand in the second quarter of 2020 and $9 thousand in the third quarter of 2019. The Bank did not record any charge-offs during such periods.

NON-INTEREST INCOME

Non-interest income recognized in the third quarter of 2020 was $326 thousand, compared to $181 thousand in the second quarter of 2020. A $52 thousand increase in gain on sale of loans and a $72 thousand increase in mortgage referral fees were the primary causes of the increase.

NON-INTEREST EXPENSES

Non-interest expenses increased $625 thousand, or 15.8%, to $4.58 million in the third quarter of 2020, compared to $3.95 million for the second quarter of 2020, and increased $618 thousand, or 15.6%, compared to $3.96 million recognized in the third quarter of 2019.

Salaries and benefits increased $311 thousand, or 13.0%, to $2.70 million in the third quarter of 2020 from $2.39 million in the second quarter of 2020, and increased $252 thousand, or 10.3%, compared to $2.45 million in the third quarter of 2019. Employee salaries increased $109 thousand, or 5.4%, sequentially and $91 thousand, or 4.5%, year over year. In addition, the absorption of direct loan origination costs decreased $190 thousand sequentially and $38 thousand year over year, reflecting the origination of 413 PPP loans at a standard cost of $750 per loan in the second quarter of 2020.

Professional fees increased $183 thousand, or 111.0%, to $350 thousand in the third quarter of 2020 from $167 thousand in the second quarter of 2020, and increased $207 thousand, or 145.8%, compared to $143 thousand in the third quarter of 2019. The increase is attributable to a $125 thousand sequential increase in legal fees and a sequential increase of $50 thousand in executive recruiting fees.

The efficiency ratio (non-interest expenses divided by the sum of net interest income before provision for loan losses and non-interest income) was 69.9% for the third quarter of 2020, compared to 60.8% for the second quarter of 2020 and 60.0% for the third quarter of 2019. Annualized non-interest expenses as a percent of average total assets were 2.45%, 2.20%, and 2.56% for the third quarter of 2020, the second quarter of 2020, and the third quarter of 2019, respectively, reflecting the sequential increase in non-interest expenses and the increase in earning assets in the second quarter of 2020 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

Michael J. Winiarski

Chief Executive Officer

Chief Financial Officer

831.264.4057 office

831.264.4014 office

Sam.Jimenez@1stCapitalBank.com

Michael.Winiarski@1stCapitalBank.com

— financial data follow —

1ST CAPITAL BANK

CONDENSED FINANCIAL DATA

(Unaudited)

(Dollars in thousands, except per share data)

September 30,

June 30,

March 31,

September 30,

Financial Condition Data1

2020

2020

2020

2019

Assets

Cash and due from banks

$
6,966

$
6,719

$
6,582

$
5,947

Funds held at the Federal Reserve Bank2

38,715

29,056

30,071

47,529

Available-for-sale securities, at fair value

59,649

62,473

63,728

68,386

Loans held for sale

442

488

–

–

Loans receivable held for investment:

Construction / land (including farmland)

15,850

16,372

21,193

18,602

Residential 1 to 4 units

115,881

127,192

136,014

141,907

Home equity lines of credit

6,034

6,630

7,656

7,158

Multifamily

79,693

71,795

57,900

54,324

Owner occupied commercial real estate

70,935

70,478

73,488

63,587

Investor commercial real estate

173,557

172,219

171,266

153,849

Commercial and industrial

48,812

47,717

50,460

38,801

Paycheck Protection Program

106,559

100,652

–

–

Other loans

10,877

10,638

12,510

16,042

Total loans

628,198

623,693

530,487

494,270

Allowance for loan losses

(8,804
)

(8,093
)

(7,431
)

(6,582
)

Net loans

619,394

615,600

523,056

487,688

Premises and equipment, net

3,034

2,541

2,189

2,131

Bank owned life insurance

8,215

8,167

8,119

8,020

Investment in FHLB3 stock, at cost

3,534

3,534

3,501

3,501

Accrued interest receivable and other assets

9,073

8,113

8,514

14,254

Total assets

$
749,022

$
736,691

$
645,760

$
637,456

Liabilities and shareholders' equity

Deposits:

Noninterest-bearing demand deposits

$
356,730

$
343,042

$
252,760

$
255,369

Interest-bearing checking accounts

54,228

46,774

41,857

47,148

Money market deposits

128,039

138,796

158,178

140,515

Savings deposits

105,431

103,152

99,789

103,224

Time deposits

17,147

19,031

19,400

19,399

Total deposits

661,575

650,795

571,984

565,655

Borrowings

10,000

10,000

–

–

Accrued interest payable and other liabilities

5,059

4,856

4,961

5,466

Shareholders' equity

72,388

71,040

68,815

66,335

Total liabilities and shareholders' equity

$
749,022

$
736,691

$
645,760

$
637,456

Shares outstanding

5,543,393

5,535,804

5,528,218

5,502,514

Nominal and tangible book value per share

$
13.06

$
12.83

$
12.45

$
12.06

Ratio of net loans to total deposits

93.62
%

94.59
%

91.45
%

86.22
%

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

September 30,

June 30,

March 31,

September 30,

Operating Results Data1

2020

2020

2020

2019

Interest and dividend income

Loans

$
6,133

$
6,234

$
5,683

$
5,578

Investment securities

253

296

375

442

Other

51

32

130

249

Total interest and dividend income

6,437

6,562

6,188

6,269

Interest expense

Interest-bearing checking

3

3

3

3

Money market deposits

101

116

175

125

Savings deposits

72

68

89

88

Time deposits

36

53

56

62

Total interest expense

212

240

323

278

Net interest income

6,225

6,322

5,865

5,991

Provision for loan losses

650

650

825

–

Net interest income after provision

for loan losses

5,575

5,672

5,040

5,991

Noninterest income

Service charges on deposits

73

64

94

88

BOLI dividend income

48

48

48

52

Gain on sale of loans

52

–

–

33

Gain on sale of investments

–

–

–

60

Other

153

69

146

372

Total noninterest income

326

181

288

605

1ST CAPITAL BANK

CONDENSED FINANCIAL DATA

(Unaudited)

(Dollars in thousands, except per share data)

Three Months Ended

September 30,

June 30,

March 30,

September 30,

2020

2020

2020

2019

Noninterest expenses

Salaries and benefits

2,704

2,393

2,824

2,452

Occupancy

390

353

363

372

Data and item processing

225

206

221

220

Furniture and equipment

127

189

191

150

Professional services

350

167

161

143

Provision for unfunded loan

commitments

41

–

(17
)

(7
)

Other

741

645

752

630

Total noninterest expenses

4,578

3,953

4,495

3,960

Income before provision for income taxes

1,323

1,900

833

2,636

Provision for income taxes

370

550

225

698

Net income

$
953

$
1,350

$
608

$
1,938

Common Share Data1

Earnings per common share

Basic

$
0.17

$
0.24

$
0.11

$
0.35

Diluted

$
0.17

$
0.24

$
0.11

$
0.35

Weighted average common shares outstanding

Basic

5,540,643

5,531,341

5,521,518

5,492,657

Diluted

5,575,971

5,563,391

5,582,687

5,578,507

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)

Nine Months Ended

September 30,

September 30,

Operating Results Data1

2020

2019

Interest and dividend income

Loans

$
18,050

$
16,829

Investment securities

924

1,355

Other

213

789

Total interest and dividend income

19,187

18,973

Interest expense

Interest-bearing checking

9

9

Money market deposits

392

394

Savings deposits

229

264

Time deposits

145

165

Total interest expense

775

832

Net interest income

18,412

18,141

Provision for loan losses

2,125

–

Net interest income after provision for loan losses

16,287

18,141

Noninterest income

Service charges on deposits

231

246

BOLI dividend income

144

155

Gain on sale of loans

52

41

Gain on sale of investments

–

60

Other

368

1,105

Total noninterest income

795

1,607

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

Nine Months Ended

September 30,

September 30,

2020

2019

Noninterest expenses

Salaries and benefits

7,921

7,826

Occupancy

1,106

1,004

Data and item processing

652

719

Furniture and equipment

507

449

Professional services

678

381

Provision for unfunded loan commitments

24

(30
)

Other

2,138

2,114

Total noninterest expenses

13,026

12,463

Income before provision for income taxes

4,056

7,285

Provision for income taxes

1,145

1,933

Net income

$
2,911

$
5,352

Common Share Data1

Earnings per common share

Basic

$
0.53

$
0.98

Diluted

$
0.52

$
0.96

Weighted average common shares outstanding

Basic

5,531,202

5,479,831

Diluted

5,573,522

5,566,810

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

September 30,

June 30,

March 31,

September 30,

Asset Quality

2020

2020

2020

2019

Loans past due 90 days or more and accruing

interest

$
–

$
–

$
–

$
–

Nonaccrual restructured loans

–

–

–

–

Other nonaccrual loans

1,535

490

492

–

Other real estate owned

–

–

–

–

$
1,535

$
490

$
492

$
–

Allowance for loan losses to total loans

1.40
%

1.30
%

1.40
%

1.33
%

Allowance for loan losses to nonperforming loans

573.55
%

1651.63
%

1510.37
%

n/a

Nonaccrual loans to total loans

0.24
%

0.08
%

0.09
%

0.00
%

Nonperforming assets to total assets

0.20
%

0.07
%

0.08
%

0.00
%

Regulatory Capital and Ratios

Common equity tier 1 capital

$
70,831

$
69,675

$
68,150

$
65,536

Tier 1 regulatory capital

$
70,831

$
69,675

$
68,150

$
65,536

Total regulatory capital

$
77,117

$
75,868

$
74,404

$
71,377

Tier 1 leverage ratio

9.58
%

9.66
%

10.77
%

10.67
%

Common equity tier 1 risk-based capital ratio

14.16
%

14.12
%

13.66
%

14.05
%

Tier 1 risk-based capital ratio

14.16
%

14.12
%

13.66
%

14.05
%

Total risk-based capital ratio

15.42
%

15.37
%

14.91
%

15.30
%

Three Months Ended

September 30,

June 30,

March 31,

September 30,

Selected Financial Ratios1

2020

2020

2020

2019

Return on average total assets

0.51
%

0.75
%

0.38
%

1.25
%

Return on average shareholders' equity

5.26
%

7.74
%

3.53
%

11.79
%

Net interest margin2

3.45
%

3.65
%

3.87
%

4.05
%

Net interest income to average total assets

3.33
%

3.51
%

3.71
%

3.87
%

Efficiency ratio

69.88
%

60.79
%

73.06
%

60.04
%

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

September 30,

June 30,

March 31,

September 30,

Selected Average Balances

2020

2020

2020

2019

Gross loans

$
628,889

$
608,076

$
519,468

$
481,402

Investment securities

61,323

63,034

65,163

68,949

Other interest earning assets

28,349

26,044

24,964

38,721

Total interest earning assets

$
718,561

$
697,154

$
609,595

$
589,072

Total assets

$
741,263

$
721,907

$
633,623

$
614,674

Interest-bearing checking accounts

$
47,246

$
43,774

$
42,092

$
42,295

Money market deposits

127,094

152,748

132,363

113,151

Savings deposits

105,548

101,291

103,156

111,502

Time deposits

17,748

19,247

19,367

19,933

Total interest-bearing deposits

297,636

317,060

296,978

286,881

Noninterest-bearing demand deposits

356,738

326,152

262,416

256,989

Total deposits

$
654,374

$
643,212

$
559,394

$
543,870

Borrowings

$
10,000

$
3,736

$
–

$
–

Shareholders' equity

$
71,849

$
69,982

$
69,006

$
65,219

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

Nine Months Ended

September 30,

September 30,

Selected Financial Ratios

2020

2019

Return on average total assets

0.55
%

1.16
%

Return on average shareholders' equity

5.52
%

11.40
%

Net interest margin2

3.64
%

4.08
%

Net interest income to average total assets

3.51
%

3.93
%

Efficiency ratio

67.82
%

63.11
%

Nine Months Ended

September 30,

September 30,

Selected Average Balances

2020

2019

Gross loans

$
585,636

$
484,615

Investment securities

63,167

69,510

Other interest earning assets

26,459

43,381

Total interest earning assets

$
675,262

$
597,506

Total assets

$
699,085

$
617,766

Interest-bearing checking accounts

$
44,381

$
37,740

Money market deposits

137,364

122,094

Savings deposits

103,340

106,075

Time deposits

18,784

18,937

Total interest-bearing deposits

303,869

284,846

Noninterest-bearing demand deposits

315,254

264,987

Total deposits

$
619,123

$
549,833

Borrowings

$
4,599

$
–

Shareholders' equity

$
70,285

$
62,767

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

September 30, 2020:

Original Loan-to-Value Ratio

Average

Median

Maximum

Construction/land

25.85
%

28.36
%

65.93
%

Residential 1 to 4 units

52.27
%

53.33
%

78.32
%

Home equity lines of credit

23.54
%

32.46
%

75.00
%

Multifamily

43.71
%

45.81
%

71.81
%

Owner-occupied CRE

47.77
%

48.24
%

84.94
%

Investor CRE

41.37
%

42.25
%

77.85
%

September 30, 2020:

Original Loan-to-Value Ratio

Under 50%

50%-60%

60%-70%

70%-75%

75%-80%

Over 80%

Total

Construction/land

$
12,511

$
–

$
3,339

$
–

$
–

$
–

$
15,850

Residential 1 to 4 units

42,608

31,186

25,989

11,692

4,406

–

115,881

Home equity lines of credit

5,541

282

209

2

–

–

6,034

Multifamily

34,303

21,446

19,471

4,473

–

–

79,693

Owner-occupied CRE

26,874

19,960

15,285

7,940

180

696

70,935

Investor CRE

104,851

45,722

16,388

3,441

3,155

–

173,557

$
226,688

$
118,596

$
80,681

$
27,548

$
7,741

$
696

$
461,950

September 30, 2020:

Commercial Real Estate Loans

Investor

Owner-Occupied

Office

$
31,309

$
19,197

Industrial and warehouse

28,013

22,658

Hotels and motels

27,440

–

Retail

21,712

6,743

Mini storage

13,387

–

Health care

12,637

8,097

Mixed use

32,188

4,873

Other

6,871

9,367

173,557

70,935

Multifamily residential

79,693

–

Single-family residential

30,909

91,006

$
284,159

$
161,941

September 30, 2020:

Commercial and

and Industrial Loans

Health care

$
27,336

Agricultural

22,419

Manufacturing

20,392

Wholesale trade

17,294

Construction

17,291

Real estate rental/leasing

10,313

Professional services

9,867

Retail trade

5,589

Other

36,189

$
166,690

SOURCE: 1st Capital Bank

ReleaseID: 613657

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