Net Income Exceeds One Million - 1st Capital Bank Announces Its Unaudited Financial Results for the Year Ended December 31, 2010

MONTEREY, Calif., Feb. 10, 2011 (GLOBE NEWSWIRE) -- 1^st Capital Bank (OTCBB:FISB) today announced that it ended the year with $1,006,000 in net income and total assets of $226,834,000. Net income for the year ended December 31, 2010 increased $1,712,000 or 242% over a net loss of ($706,000) for the previous year. Diluted earnings per share for 2010 increased 245% to a positive $0.32 from a loss of ($0.22) in 2009. Net income for the year ended December 31, 2010, excluding the allowance for loan losses and provision for income taxes, was $1,796,000, an increase of $1,972,000 or 1120% over ($176,000) for the prior year. Total assets as of December 31, 2010 increased $34,536,000 (18%) from December 31, 2009 and $94,304,000 from December 31, 2008. As of December 31, 2010, 1^st Capital Bank was well capitalized, with a Total Risk Based Capital ratio of 17.3%, which was over twice the regulatory required minimum.

1^st Capital Bank is proud to report the following statistical data regarding its results of operations for the year ended December 31, 2010. This data was provided to the Bank by the investment banking firm of Howe Barnes Hoefer & Arnett, derived from data provided by SNL Financial, and is believed by the Bank to be reliable: 

• Of the 226 banks headquartered in California, 1^st Capital Bank is one of only six banks with no non-performing assets at December 31, 2010, which were also profitable for the year ending December 31, 2010.
• Of those 226 California based banks, 1^st Capital Bank is one of only 10 banks which had a highly desirable concentration of more than 35% of its loan portfolio in Commercial and Industrial loans and more than 35% of its deposit base consisting of non-interest bearing accounts.
• Out of these 10 institutions, 1^st Capital Bank is the only one with no non-performing assets at December 31, 2010.

On a national level, 1^st Capital Bank is one of only five banks out of 6,565 commercial banks in the United States to meet the same high standards of profitability, loan and deposit concentrations and no non-performing assets at December 31, 2010.

 "1^st Capital Bank has now been profitable for a year and a half and it has done so while growing in a safe and secure manner," said President and Chief Executive Officer Fred Rowden. "Serving the needs of local businesses and community members, 1^st Capital Bank is growing its reputation for quality service and performance. There is a buzz in the air, and customers and shareholders are beginning to get excited…with good reason," added Mr. Rowden.

Also during the year ended December 31, 2010, 1^st Capital Bank was one of a limited number of banks in California to receive the Bauer Financial, Inc. five-star "superior" rating. Per Bauer Financial, "Five-stars is our highest rating and indicates that this institution is one of the strongest in the United States."

Financial Summary:

Total assets were $226,834,000 as of December 31, 2010. Growth in loans was the greatest contributor to the overall asset growth. Loans, net of the allowance for loan losses of $2,723,000, totaled $174,264,000 at December 31, 2010, an increase of $41,533,000 (31%) from December 31, 2009. The growth in loans was primarily funded by an increase in deposits of $33,045,000 (20%) to $197,277,000 at December 31, 2010. "Balance sheet liquidity and deposit growth will facilitate future loan growth as 1^st Capital Bank continues to lend to businesses and individuals without the use of 'bailout money,'" said Mr. Rowden.

Net interest income after the provision for loan losses for the year ended December 31, 2010 was $7,285,000, an increase of $2,318,000 (47%) over the year ended December 31, 2009. Interest income for the year ended December 31, 2010 was $9,178,000, an increase of $1,964,000 (27%) over the year ended December 31, 2009. Average earning assets for the year ended December 31, 2010 were $193,243,000, an increase of $40,282,000 (26%) compared to $152,961,000 for the year ended December 31, 2009.   While the yield on the loan portfolio increased slightly, the majority of the increase in interest income was due to growth in the loan portfolio.

Interest expense for the year ended December 31, 2010 was $1,251,000, a decrease of $467,000 (27%) from the year ended December 31, 2009. Average interest bearing liabilities for the year ended December 31, 2010 were $123,676,000, an increase of $24,919,000 (25%) compared to $98,757,000 for the year ended December 31, 2009.   While average balances of interest-bearing deposit liabilities increased, interest expense decreased in 2010 from 2009 due to the repricing of the interest-bearing deposits throughout the year, reflecting the lower interest rate environment. The higher volume of interest-bearing liabilities increased interest expense $395,000 while the lower rates decreased the expense an offsetting $862,000.

These changes in the composition and pricing of 1^st Capital Bank's earning assets and deposit liabilities resulted in a net interest margin for the year ended December 31, 2010 of 4.1% compared to 3.6% for the year ended December 31, 2009. 

1^st Capital Bank recorded a provision for loan losses of $642,000 during the year ended December 31, 2010 compared to $529,000 in the year ended December 31, 2009. The ratio of the allowance for loan losses to total loans outstanding was 1.54% at December 31, 2010 and 2009. At December 31, 2010 and 2009, there were no non-performing, restructured or impaired loans and the Bank did not have any real estate acquired through foreclosure.

Noninterest income increased $10,000 (9%) to $116,000 for the year ended December 31, 2010 compared to the year ended December 31, 2009, largely due to service charges from the growth in the Bank's deposit portfolio.

Noninterest expenses increased by $469,000 (8%) to $6,247,000 for the year ended December 31, 2010 compared to the year ended December 31, 2009.   The majority of this increase was due to the overall growth of the Bank including the addition of several new employees during the year. 

1^st Capital Bank currently operates three branch offices in Monterey County, which are located in the historic Estrada Adobe at 470 Tyler Street, Monterey; 1097 South Main Street, Salinas; and downtown King City at 432 Broadway Street. The experienced bankers at 1^st Capital Bank provide traditional deposit, lending, mortgage and commercial products and services to business and retail customers throughout the California Central Coast and Salinas Valley areas of Monterey County.

Information regarding the Bank may be obtained from the Banks website at www.1stCapitalBank.com. Copies of the Bank's press releases are available on the website.

Forward Looking Statements

In addition to the historical information contained herein, this press release may contain certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. The reader of this press release should understand that 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 terrorist related incidents and other factors beyond the Bank's control; and factors discussed in the Bank's periodic reports under the Securities Exchange Act of 1934, as amended, on Forms 10-K, 10-Q and 8-K filed with the FDIC. The Bank does not undertake any obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information, future events or otherwise, except as required by law.