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 three and six months ended June 30,
2013 of $4.4 million and $5.8 million, respectively, compared to
$751,000 and $1.3 million for the same periods last year. Earnings
for the three and six months ended June 30, 2013 included a $3.2
million income tax benefit in connection with the reversal of our
deferred tax valuation allowance and a $535,000 gain on the sale of
investment securities. Pre-tax, pre-provision earnings for the
three and six months ended June 30, 2013 was $1.2 million and $2.2
million, respectively, compared to $770,000 and $1.4 million for
the same periods 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, "I'm pleased to announce our second
quarter financial results. This quarter we are reporting the
highest book value per share and earnings in the Company's history.
At the end of the second quarter, our book value per share
increased to $5.77 per share from $5.12 per share at June 30, 2012,
while our net income for the quarter increased to $4.4 million, or
$0.49 per diluted share, from $751,000, or $0.09 per diluted share,
during the same period last year."
Jason P. DiNapoli, President and Chief Operating Officer of the
Company, added, "I'm proud of our quarterly results and I'm
optimistic that we will continue to build on these trends for the
remainder of the year. Our increased earnings were led by the
reversal of our deferred tax valuation allowance, which resulted in
an income tax benefit of approximately $3.2 million. Excluding
the impact of this item, net income improved by over 50% compared
to the same period last year. This increase was primarily
related to gains recognized in connection with the opportunistic
sale of investment securities. We've also continued to enjoy
robust quality loan growth, with total loans increasing by over $45
million since the beginning of the year. I believe that, in
addition to our quality loan growth and our increasing book value
per share, that our credit quality, regulatory capital ratios and
earnings will remain a source of strength and a cornerstone for
future initiatives."
2013 2nd Quarter
Highlights
- The Bank's total risk-based capital ratio was 14.77% at June
30, 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 three and six months ended June 30, 2013, the Company
recorded net income of $4.4 million, or $0.49 per diluted share,
and $5.8 million, or $0.65 per diluted share,
respectively. During the same periods last year, the Company
reported net income of $751,000, or $0.09 per diluted share, and
$1.3 million, or $0.15 per diluted share, respectively. The
increase in net income during the three months ended June 30, 2013
as compared to the same period last year was primarily due to the
$3.2 million income tax benefit recorded in connection with the
reversal of our deferred tax valuation allowance and a $535,000
gain on the sale of investment securities. The increase during
the six months ended June 30, 2013 as compared to the same period
last year, was primarily due to the reasons discussed above, as
well as the reversal of $500,000 of provision for loan losses and
the recovery of $294,000 in deferred interest income from the
repayment of non-accrual and previously charged off loan
balances.
- At June 30, 2013 and 2012, the Company's book value per share
was $5.77 and $5.12, respectively, representing an increase of
12.7% during the twelve month period. The increase in our book
value per share during this period is primarily attributable to net
income earned during the twelve months ended June 30, 2013 of $7.4
million, partially offset by a net decline in other comprehensive
income of $1.3 million.
- During the quarter ended June 30, 2013, the Company reversed
its deferred tax valuation allowance, resulting in a $3.2 million
net income tax benefit being recognized in net income during the
three and six months ended June 30, 2013.
- Net interest margin was 3.15% and 3.22% for the three and six
months ended June 30, 2013, respectively, compared to 3.09% and
3.14% for the same periods last year. The increase in net
interest margin during the quarter is primarily due to an increase
in the average balance of loans relative to total earning assets as
compared to the same period last year. The increase in net
interest margin during the six months ended June 30, 2013, is
primarily attributable to the recovery of $294,000 in deferred
interest income from the repayment of non-accrual and previously
charged off loan balances. The increases in net interest
margin during both the three and six months ended June 30, 2013
were also positively impacted by a decline in the cost of our
interest bearing liabilities as compared to the same periods last
year, and negatively impacted by a general decline in the loan
yields.
- Loans increased to $312.3 million at June 30, 2013, compared to
$266.7 million at December 31, 2012. Loan originations were $41.1
million and $107.4 million during the three and six months ended
June 30, 2013, respectively, compared to $21.2 million and $46.9
million during the same periods last year.
- Non-performing loans declined to $1.1 million, or 0.36% of
total loans, at June 30, 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 0.25% at June 30, 2013, compared to 0.39% at December 31,
2012.
- Net loan recoveries were $1,000 and $1.1 million during the
three and six months ended June 30, 2013, respectively, compared to
net loan charge-offs of $422,000 and $418,000 during the same
periods last year.
- As of June 30, 2013, the allowance for loan losses ("ALL") was
$6.6 million, or 2.12% 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 594.06% and 324.36% at June 30, 2013 and
December 31, 2012, respectively.
- Investment securities declined to $143.7 million at June 30,
2013, representing 29.4% of our total assets, compared to $181.2
million, or 36.3% of our total assets, at December 31,
2012. During the quarter ended June 30, 2013, the Company sold
$10.8 million of investment securities, recognizing a gain of
$535,000 in connection with these sales.
- Total core deposits, which include non-interest bearing demand
deposits, interest bearing demand deposits, and money market
deposits and savings, were $357.8 million and $371.4 million at
June 30, 2013 and December 31, 2012,
respectively. Non-interest bearing deposits represent 47.2% of
total deposit at June 30, 2013, compared to 47.0% at December 31,
2012.
- Cost of funds declined to 19 basis points for both the three
and six months ended June 30, 2013, compared to 26 basis points for
both the three and six months ended June 30, 2012.
Capital Adequacy
At June 30, 2013, the Company's stockholders' equity totaled
$53.3 million compared to $49.2 million at December 31, 2012.
At June 30, 2013, the Bank's total risk-based capital ratio,
tier 1 risk-based capital ratio, and tier 1 leverage ratio were
14.77%, 13.51%, and 10.13%, 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 June 30, 2013 were $489.3 million, representing
a decrease of approximately $9.8 million, or 2.0%, from $499.2
million at December 31, 2012. Cash and cash equivalents at
June 30, 2013 were $29.8 million, representing a decrease of $20.7
million, or 41.0%, from $50.6 million at December 31, 2012.
The decline in cash and cash equivalents was primarily
related to the increase in loan fundings during the six months
ended June 30, 2013. Loans increased by $45.7 million, from
$266.7 million at December 31, 2012 to $312.3 million at June 30,
2013. The majority of growth within our loan portfolio related
to increases of $16.5 million in our single-family loans, $8.8
million in multi-family loans, $7.5 million in commercial real
estate loans and $11.3 million in construction and land development
loans. Loan originations were $41.1 million and $107.4
million during the three and six months ended June 30, 2013,
compared to $21.2 million and $46.9 million during the same periods
last year. Prepayment speeds for the three and six months
ended June 30, 2013 were 19.2% and 17.3%, respectively, compared to
16.2% and 23.1% for the same periods last year. Investment
securities were $143.7 million at June 30, 2013, compared to $181.2
million at December 31, 2012, representing a decrease of $37.5
million, or 20.7%. The weighted average life of our
investment securities was 2.48 years and 2.80 years at June 30,
2013 and December 31, 2012, respectively.
Total liabilities at June 30, 2013 decreased by $14.0 million,
or 3.1%, to $436.0 million compared to $450.0 million at December
31, 2012. This decrease is primarily due to a $9.8 million decline
in deposits. Total core deposits, which includes non-interest
bearing demand deposits, interest bearing demand deposits and money
market deposits and savings, were $357.8 million and $371.4 million
at June 30, 2013 and December 31, 2012, respectively, representing
a decrease of $13.6 million, or 3.7%.
Credit Quality
Allowance and Provision for Loan Losses
The ALL was $6.6 million, or 2.12% of our total loan portfolio,
at June 30, 2013, compared to $6.0 million, or 2.26% of our total
loan portfolio, at December 31, 2012. At June 30, 2013 and
December 31, 2012, our non-performing loans were $1.1 million and
$1.9 million, respectively. The decline in non-performing
loans during the six months ended June 30, 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 594.06% and 324.36% at June 30, 2013
and December 31, 2012, respectively. In addition, our ratio
of non-performing loans to total loans was 0.36% and 0.70% at June
30, 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 the three
months ended June 30, 2013, we recorded no provision for loan
losses. During the six months ended June 30, 2013, we reversed
$500,000 of provision for loan losses. There was no provision
for loan losses recorded during the three and six months ended June
30, 2012. The reversal in provision for loan losses during
the six months ended June 30, 2013, 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 $45.7 million increase in our loan portfolio during the six
months ended June 30, 2013. Criticized and classified loans
generally consist of special mention, substandard and doubtful
loans. Special mention, substandard and doubtful loans were
$737,000, $2.4 million and none, respectively, at June 30, 2013,
compared to $1.9 million, $9.0 million and none, respectively, at
June 30, 2012. We had net recoveries of $1,000 and $1.1
million during the three and six months ended June 30, 2013,
respectively, compared to net charge-offs of $422,000 and $418,000
during the same periods last year. Management believes that
the ALL as of June 30, 2013 and December 31, 2012 was adequate to
absorb known and inherent risks in the loan portfolio.
Non-Performing Assets
Non-performing assets totaled $1.2 million and $1.9 million at
June 30, 2013 and December 31, 2012, respectively. Non-accrual
loans totaled $1.1 million and $1.9 million at June 30, 2013 and
December 31, 2012, respectively. At June 30, 2013, non-accrual
loans consisted of two commercial loans totaling $769,000 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 June 30,
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 0.25% and 0.39% at June 30, 2013 and
December 31, 2012, respectively.
Net Interest Income and Margin
During the three and six months ended June 30, 2013, net
interest income was $3.9 million and $7.8 million, respectively,
compared to $3.4 million and $6.7 million for the same periods last
year. The average balances of our loan portfolio were $308.6
million and $290.8 million during the three and six months ended
June 30, 2013, respectively, compared to $233.5 million and $231.5
million for the same periods last year. In addition, during
the six months ended June 30, 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 3.15% for the three months
ended June 30, 2013, compared to 3.09% for the same period last
year. This 6 basis point improvement in net interest margin
is primarily due to an increase in the average balance of loans
relative to total earning assets as compared to the same period
last year. The increase in net interest margin during the
three months ended June 30, 2013 was also positively impacted by a
decline in the cost of our interest bearing liabilities as compared
to the same periods last year, and negatively impacted by a general
decline in 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%
during the three months ended June 30, 2013 compared to 0.40% for
the same period last year. The decline in loan yield 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 Company's net interest margin was 3.22% for the six months
ended June 30, 2013, compared to 3.14% for the same period last
year. This 8 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 is primarily due to a decrease
in loan yield, partially offset by an increase in the average
balance of loans relative to total earning assets as compared to
the same period last year, and a decline in the cost of our
interest bearing liabilities. The decline in loan yield 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%
during the six months ended June 30, 2013 compared to 0.40% during
the same period last year.
Non-Interest Income
Non-interest income was $837,000 and $1.2 million for the three
and six months ended June 30, 2013, compared to $489,000 and
$836,000 for the same periods last year. The increase during
the three and six months ended June 30, 2013, as compared to the
same periods last year, is primarily related to a $535,000 gain in
connection with the sale of $10.8 million of investment
securities. With the exception of such gain, 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 $3.5 million and $6.8 million for the
three and six months ended June 30, 2013, compared to $3.1 million
and $6.1 million for the same periods last year. The increase
in non-interest expense during the three and six months ended June
30, 2013 as compared to the same periods 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 three and six months ended June 30, 2013, we recorded
a tax benefit of approximately $3.2 million, compared to a tax
expense of $19,000 and $35,000 for the same periods last year.
The tax benefit recognized was related to the full reversal
of the Company's deferred tax valuation allowance that had been
previously established during the year ended December 31,
2009. In making this determination, management analyzed, among
other things, our recent history of earnings and cash flows,
forecasts of future earnings, improvements in the credit quality of
the Company's loan portfolio, the nature and timing of future
deductions and benefits represented by the deferred tax assets and
our cumulative earnings for the 12 quarters preceding the reversal
of this valuation allowance. At June 30, 2013, no further
deferred tax valuation allowance remained.
Net Income
For the three and six months ended June 30, 2013, the Company
recorded net income of $4.4 million, or $0.49 per diluted share,
and $5.8 million, or $0.65 per diluted share, compared to $751,000,
or $0.09 per diluted share, and $1.3 million, or $0.15 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) 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):
|
June 30, 2013 |
December 31, 2012 |
June 30, 2012 |
Balance Sheet Results: |
(unaudited) |
|
(unaudited) |
Total Assets |
$489,331 |
$499,173 |
$454,399 |
Total Loans |
$312,349 |
$266,671 |
$236,261 |
Allowance for Loan Losses ("ALL") |
$6,620 |
$6,015 |
$4,866 |
Non-Performing Assets |
$1,204 |
$1,944 |
$6,816 |
Investment Securities-AFS, at estimated
fair value |
$143,678 |
$181,225 |
$162,891 |
Deposits: |
|
|
|
Non-Interest Bearing Demand
Deposits |
$192,028 |
$196,026 |
$150,441 |
Interest Bearing Demand
Deposits |
$16,933 |
$23,233 |
$22,334 |
Money Market Deposits and
Savings |
$148,874 |
$152,094 |
$161,395 |
Certificates of Deposit |
$49,026 |
$45,328 |
$45,714 |
Total Deposits |
$406,861 |
$416,681 |
$379,884 |
Total Stockholders' Equity |
$53,341 |
$49,173 |
$46,648 |
Gross Loans to Deposits |
76.76% |
63.99% |
62.19% |
Ending Book Value per Share |
$5.77 |
$5.38 |
$5.12 |
|
|
|
Three Months Ended June
30, |
Quarterly Operating Results (unaudited): |
2013 |
2012 |
Net Interest Income |
$3,868 |
$3,383 |
Provision for Loan Losses |
$ -- |
$ -- |
Gain on Sale of AFS Investment
Securities |
$535 |
$ -- |
Other Non-Interest Income |
$302 |
$489 |
Non-Interest Expense |
$3,520 |
$3,102 |
Income Tax (Benefit) Provision |
$(3,216) |
19 |
Net Income |
$4,401 |
$751 |
Basic Earnings per Share |
$0.51 |
$0.09 |
Diluted Earnings per Share |
$0.49 |
$0.09 |
Quarterly Net Interest Margin* |
3.15% |
3.09% |
|
|
|
Reconciliation of QTD Net Income to Pre-Tax,
Pre-Provision Earnings: |
|
|
Net Income |
$4,401 |
$751 |
Provision for Loan Losses |
-- |
-- |
Income Tax (Benefit) Provision |
(3,216) |
19 |
Pre-Tax, Pre-Provision Earnings |
$1,185 |
$770 |
|
|
|
Six Months Ended June
30, |
YTD Operating Results (unaudited): |
2013 |
2012 |
Net Interest Income |
$7,752 |
$6,682 |
Provision for (Reduction of) Loan
Losses |
$(500) |
$ -- |
Gain on Sale of AFS Investment
Securities |
$535 |
$ -- |
Other Non-Interest Income |
$661 |
$836 |
Non-Interest Expense |
$6,783 |
$6,140 |
Income Tax (Benefit) Provision |
$(3,178) |
35 |
Net Income |
$5,843 |
$1,343 |
Basic Earnings per Share |
$0.68 |
$0.16 |
Diluted Earnings per Share |
$0.65 |
$0.15 |
YTD Net Interest Margin* |
3.22% |
3.14% |
|
|
|
Reconciliation of YTD Net Income to Pre-Tax,
Pre-Provision Earnings: |
|
|
Net Income |
$5,843 |
$1,343 |
Provision for (Reduction of) Loan
Losses |
(500) |
-- |
Income Tax (Benefit) Provision |
(3,178) |
35 |
Pre-Tax, Pre-Provision Earnings |
$2,165 |
$1,378 |
|
|
|
|
*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
1ST Century Bancshares, (NASDAQ:FCTY)
Historical Stock Chart
From Jul 2024 to Jul 2024
1ST Century Bancshares, (NASDAQ:FCTY)
Historical Stock Chart
From Jul 2023 to Jul 2024