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, 2013 of $1.4
million compared to $592,000 for the same period last year.
Pre-tax, pre-provision earnings for the quarters ended March 31,
2013 and 2012 were $980,000 and $608,000, respectively.
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 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 extremely proud to announce our
first quarter financial results. Net income for the period was
$1.4 million, or $0.16 per diluted share, compared to $592,000, or
$0.07 per diluted share, during the same period last year. Our
increased earnings were primarily driven by favorable loan growth,
as well as improved credit quality. During the quarter, our
average loans grew by over $43 million as compared to the same
period last year, while our non-performing loans declined to less
than $1.0 million. Non-performing loans currently represent
only 0.31% of our total loan portfolio, compared to a peak of 6.66%
at September 30, 2009. The decline in these problem loans
during the current quarter was primarily attributable to the full
repayment and recovery of non-performing loan balances."
Jason P. DiNapoli, President and Chief Operating Officer of the
Company added, "I am very encouraged with our results for the first
quarter. Our core profitability continues to improve, our book
value per share continues to grow and, with our credit quality
issues substantially behind us, we can focus further attention and
resources on our long-term strategic objective of becoming the
premier community business bank serving the Westside of Los
Angeles."
2013 1st Quarter
Highlights
- The Bank's total risk-based capital ratio was 14.41% at March
31, 2013, 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, 2013, the Company recorded net
income of $1.4 million, or $0.16 per diluted share, compared to
$592,000, or $0.07 per diluted share, for the same period last
year.
- At March 31, 2013 and 2012, the Company's book value per share
was $5.54 and $5.06, respectively, representing an increase of 9.5%
during the twelve month period.
- Net interest margin was 3.30% for the quarter ended March 31,
2013, compared to 3.20% for the same period last year. This
increase in net interest margin was primarily attributable to the
recovery of $294,000 in deferred interest income from the repayment
of non-accrual and previously charged off loan balances during the
quarter ended March 31, 2013.
- Loans increased to $297.8 million at March 31, 2013, compared
to $266.7 million at December 31, 2012. Loan originations were
$66.3 million during the quarter ended March 31, 2013, compared to
$25.7 million during the same period last year.
- Non-performing loans declined to $917,000, or 0.31% of total
loans, at March 31, 2013, compared to $1.9 million, or 0.70% of
total loans, at December 31, 2012.
- Non-performing assets as a percentage of total assets declined
to 0.20% at March 31, 2013, compared to 0.39% at December 31, 2012.
- Net loan recoveries were $1.1 million during the quarter ended
March 31, 2013, compared to net loan recoveries of $4,000 during
the same period last year.
- As of March 31, 2013, the allowance for loan losses ("ALL") was
$6.6 million, or 2.22% of total loans, compared to $6.0 million, or
2.26% of total loans, at December 31, 2012. The ALL to
non-performing loans was 722.16% and 324.36% at March 31, 2013 and
December 31, 2012, respectively.
- Investment securities declined to $168.0 million at March 31,
2013, representing 34.1% of our total assets, compared to $181.2
million, or 36.3% of our total assets, at December 31, 2012.
- Total core deposits, which include non-interest bearing demand
deposits, interest bearing demand deposits, and money market
deposits and savings, were $369.7 million and $371.4 million at
March 31, 2013 and December 31, 2012,
respectively. Non-interest bearing deposits represent 47.2% of
total deposit at March 31, 2013, compared to 47.0% at December 31,
2012.
- Cost of funds declined to 19 basis points for the quarter ended
March 31, 2013, compared to 26 basis points for the same period
last year.
Capital Adequacy
At March 31, 2013, the Company's stockholders' equity totaled
$50.6 million compared to $49.2 million at December 31, 2012.
At March 31, 2013, the Bank's total risk-based capital ratio,
tier 1 risk-based capital ratio, and tier 1 leverage ratio were
14.41%, 13.15%, and 9.77%, 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, 2013 were $493.4 million, representing
a decrease of approximately $5.8 million, or 1.2%, from $499.2
million at December 31, 2012. Cash and cash equivalents at
March 31, 2013 were $27.5 million, representing a decrease of $23.0
million, or 45.6%, from $50.6 million at December 31, 2012.
The decline in cash and cash equivalents was primarily related to
the increase in loan funding during the quarter ended March 31,
2013. Loans increased by $31.1 million during the quarter from
$266.7 million at December 31, 2012 to $297.8 million at March 31,
2013. The majority of growth within our loan portfolio related
to increases of $9.0 million, $8.5 million and $7.4 million in our
single-family, multi-family and commercial real estate loans,
respectively. Loan originations were $66.3 million during the
quarter ended March 31, 2013, compared to $25.7 million during the
same period last year. Prepayment speeds for the quarter ended
March 31, 2013 were 15.2% compared to 30.1% for the same period
last year. Investment securities were $168.0 million at March
31, 2013, compared to $181.2 million at December 31, 2012,
representing a decrease of $13.2 million, or 7.3%. The
weighted average life of our investment securities was 2.52 years
and 2.80 years at March 31, 2013 and December 31, 2012,
respectively.
Total liabilities at March 31, 2013 decreased by $7.2 million,
or 1.6%, to $442.8 million compared to $450.0 million at December
31, 2012. This decrease is primarily due the repayment during the
current quarter of a $4.5 million short-term borrowing that was
outstanding at December 31, 2012. Total core deposits, which
includes non-interest bearing demand deposits, interest bearing
demand deposits and money market deposits and savings, were $369.7
million and $371.4 million at March 31, 2013 and December 31, 2012,
respectively, representing a decrease of $1.7 million, or
0.45%.
Credit Quality
Allowance and Provision for Loan Losses
The ALL was $6.6 million, or 2.22% of our total loan portfolio,
at March 31, 2013, compared to $6.0 million, or 2.26% of our total
loan portfolio, at December 31, 2012. At March 31, 2013 and
December 31, 2012, our non-performing loans were $917,000 and $1.9
million, respectively. The decline in non-performing loans
during the quarter ended March 31, 2013 was primarily related to
the full repayment of two loans that had been classified as
non-performing at December 31, 2012. The ratio of our ALL to
non-performing loans was 722.16% and 324.36% at March 31, 2013 and
December 31, 2012, respectively. In addition, our ratio of
non-performing loans to total loans was 0.31% and 0.70% at March
31, 2013 and December 31, 2012, 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 quarter ended
March 31, 2013, we reversed $500,000 of provision for loan losses.
There was no provision for loan losses recorded during the
quarter ended March 31, 2012. The reversal in provision for
loan losses is primarily due to the loan recoveries discussed
above, 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 $6.5 million, $2.3 million and
none, respectively, at March 31, 2013, compared to $4.1 million,
$9.8 million and none, respectively, at March 31, 2012. We
had net recoveries of $1.1 million and $4,000 during the quarters
ended March 31, 2013 and 2012, respectively. Management
believes that the ALL as of March 31, 2013 and December 31, 2012
was adequate to absorb known and inherent risks in the loan
portfolio.
Non-Performing Assets
Non-performing assets totaled $1.0 million and $1.9 million at
March 31, 2013 and December 31, 2012, respectively. Non-accrual
loans totaled $917,000 and $1.9 million at March 31, 2013 and
December 31, 2012, respectively. At March 31, 2013, non-accrual
loans consisted of one commercial loan totaling $572,000 and one
consumer loan totaling $345,000. At December 31, 2012, non-accrual
loans consisted of three commercial loans totaling $1.5 million and
one consumer loan totaling $345,000. At March 31, 2013 and December
31, 2012, 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 0.20% and
0.39% at March 31, 2013 and December 31, 2012, respectively.
Net Interest Income and Margin
During the quarter ended March 31, 2013, net interest income was
$3.9 million, compared to $3.3 million for the same period last
year. The average balances of our loan portfolio were $272.9
million and $229.6 million during the quarter ended March 31, 2013
and 2012, respectively. In addition, during the quarter ended
March 31, 2013, the Company recognized $294,000 of interest income
in connection with the pay-off of non-accrual and previously
charged off loans.
The Company's net interest margin (net interest income divided
by average interest earning assets) was 3.30% for the quarter ended
March 31, 2013, compared to 3.20% for the same period last year.
This 10 basis point improvement in net interest margin is due
to the interest income recognized as a part of the pay-offs
discussed above. Excluding the impact of these pay-offs, our
net interest margin would have declined, as compared to the same
period last year. This decline was primarily due to a decrease
in the yield on our earning assets, partially offset by a decline
in the cost of our interest bearing liabilities. The decline
in yield on our interest earning assets was 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. The decline in the 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 0.33% and 0.40% during
the quarters ended March 31, 2013 and 2012, respectively.
Non-Interest Income
Non-interest income was $359,000 for the quarter ended March 31,
2013, compared to $347,000 for the same period last year.
Non-interest income primarily consists of loan arrangement
fees earned in connection with our college loan funding program.
During the first quarter of 2013, the Company terminated this
program and does not anticipate any further loan arrangement fee
earnings subsequent to the second quarter of 2013.
Non-Interest Expense
Non-interest expense was $3.3 million for the quarter ended
March 31, 2013, compared to $3.0 million for the same period last
year. The increase in non-interest expense during the quarter
ended March 31, 2013 as compared to the same period last year is
primarily due to the additional costs incurred related to expanding
the Bank's business development and related operational support
teams.
Income Tax Provision
During the quarter ended March 31, 2013, we recorded a tax
expense of approximately $38,000, compared to $16,000 for the same
period last year. The Company does not anticipate owing any
substantial taxes for Federal or State purposes until the Company's
net operating losses ("NOL") are fully utilized.
Net Income
For the quarter ended March 31, 2013, the Company recorded net
income of $1.4 million, or $0.16 per diluted share, compared to
$592,000, or $0.07 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) continued 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, and (12) 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, 2013 |
December 31, 2012 |
March 31, 2012 |
Balance Sheet Results: |
(unaudited) |
|
(unaudited) |
Total Assets |
$ 493,415 |
$ 499,173 |
$ 433,398 |
Total Loans |
$ 297,763 |
$ 266,671 |
$ 230,010 |
Allowance for Loan Losses ("ALL") |
$ 6,619 |
$ 6,015 |
$ 5,288 |
Non-Performing Assets |
$ 1,007 |
$ 1,944 |
$ 7,285 |
Investment Securities-AFS, at estimated
fair value |
$ 168,034 |
$ 181,225 |
$ 130,051 |
Deposits: |
|
|
|
Non-Interest Bearing Demand Deposits |
$ 195,540 |
$ 196,026 |
$ 135,753 |
Interest Bearing Demand Deposits |
$ 22,930 |
$ 23,233 |
$ 20,790 |
Money Market Deposits and Savings |
$ 151,196 |
$ 152,094 |
$ 156,935 |
Certificates of Deposit |
$ 44,863 |
$ 45,328 |
$ 46,715 |
Total Deposits |
$ 414,529 |
$ 416,681 |
$ 360,193 |
Total Stockholders' Equity |
$ 50,640 |
$ 49,173 |
$ 45,706 |
Gross Loans to Deposits |
71.84% |
63.99% |
63.83% |
Ending Book Value per Share |
$5.54 |
$5.38 |
$5.06 |
|
|
|
|
|
Three Months Ended March
31, |
|
Quarterly Operating Results (unaudited): |
2013 |
2012 |
|
Net Interest Income |
$ 3,884 |
$ 3,299 |
|
Provision for (Reduction of) Loan
Losses |
$ (500) |
$ -- |
Non-Interest Income |
$ 359 |
$ 347 |
|
Non-Interest Expense |
$ 3,263 |
$ 3,038 |
|
Income Tax Provision |
$ 38 |
$ 16 |
|
Net Income |
$ 1,442 |
$ 592 |
|
Basic Earnings per Share |
$0.17 |
$0.07 |
|
Diluted Earnings per Share |
$0.16 |
$0.07 |
|
Quarterly Net Interest Margin* |
3.30% |
3.20% |
|
|
|
|
|
Reconciliation of QTD Net Income to Pre-Tax,
Pre-Provision Earnings: |
|
|
|
Net Income |
$ 1,442 |
$ 592 |
|
Provision for (Reduction of) Loan
Losses |
(500) |
-- |
|
Income Tax Provision |
38 |
16 |
|
Pre-Tax, Pre-Provision Earnings |
$ 980 |
$ 608 |
|
|
|
|
|
______________________________ |
|
|
|
* 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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