GlobeNewswire Inc | Jan 31, 2022 03:00PM EST

January 31, 2022

SALINAS, Calif., Jan. 31, 2022 (GLOBE NEWSWIRE) -- 1st Capital Bancorp (the Company), (OTCQX: FISB), the $999.4 million asset bank holding company and parent company of 1st Capital Bank (the Bank), today reported unaudited net income of $1.89 million for the quarter ended December 31, 2021, a decrease of 19.3% compared to net income of $2.26 million in the third quarter of 2021, and an increase of 18.6% compared to net income of $1.59 million in the fourth quarter of 2020.

Net income for the year ended December 31, 2021 of $7.6 million increased 69.4% compared to net income for the year ended December 31, 2020.

Financial Highlights Performance highlights for the quarter ended December 31, 2021, as compared to the quarter ending December 31, 2020, and the quarter ending September 30, 2021:

-- For the quarter ended December 31, 2021, the Company's return on average equity was 9.39%, as compared to 8.60% and 11.35% for the quarters ended December 31, 2020 and September 30, 2021, respectively. -- For the quarter ended December 31, 2021, the Companys return on average assets was 0.75%, as compared to 0.82% and 0.92% for the quarters ended December 31, 2020 and September 30, 2021, respectively. -- Earnings per share (diluted) were $0.33 for the fourth quarter of 2021, compared to $0.40 for the prior quarter, and $0.28 for the fourth quarter of 2020. -- For the quarter ended December 31, 2021, the Companys net interest margin was 3.17%, as compared to 3.54% and 3.26% for the quarters ended December 31, 2020 and September 30, 2021, respectively. -- For the quarter ended December 31, 2021, the Companys efficiency ratio was 68.01%, as compared to 67.65% and 60.58% for the quarters ended December 31, 2020 and September 30, 2021, respectively. -- The Company recorded $0 provision expense for the quarters ended December 31, 2021, December 31, 2020 and September 30, 2021. -- As of December 31, 2021, the Companys nonperforming assets to total assets was 0.10%, as compared to 0.16% and 0.11% for the quarters ended December 31, 2020 and September 30, 2021, respectively. -- As of December 31, 2021, the Company reported total assets, total deposits, and total loans of $999.4 million, $899.2 million, and $564.2 million, respectively.

Performance highlights for the year ended December 31, 2021, as compared to the year ending December 31, 2020:

-- The Company's return on average equity was 9.93% for the year ended December 31, 2021, as compared to 6.32% for the year ended December 31, 2020. -- The Companys return on average assets was 0.83% for the year ended December 31, 2021, as compared to 0.63% for the year ended December 31, 2020. -- Earnings per share (diluted) increased $0.53 per share to $1.34 per share for the year ended December 31, 2021 from $0.81 per share for the year ended December 31, 2020. -- The Companys net interest margin was 3.35% for the year ended December 31, 2021 as compared to 3.62% for the year ended December 31, 2020. -- The Companys efficiency ratio was 65.65% for the year ended December 31, 2021 as compared to 67.77% for the year ended December 31, 2020. -- The Company recorded $0 provision expense for the year ended December 31, 2021 as compared to $2.1 million for the year ended December 31, 2020.

We are pleased with our year over year performance, commented Sam Jimenez, chief executive officer. The strong balance sheet growth and solid operating metrics are substantially attributable to our PPP and core loan activities, and highly reflective of our Mission to provide sustainable value to our customers, communities, team members, and shareholders. As we settle into 2022, we are confident in our ability to uphold our Mission and sustain our performance.

1ST CAPITAL BANCORP CONDENSED FINANCIAL DATA UNAUDITED ($000S, except per share data)

For the Three Months Ended For the Year EndedOperating Results 12/31/ 12/31/ Change 12/30/ 12/30/ ChangeData 2021 2020 2021 2020 Interest income $ 8,203 $ 6,852 $ 1,351 $ 31,322 $ 26,039 $ 5,283 Interest expense 530 226 304 1,563 1,001 562 Net interest income 7,673 6,626 1,047 29,759 25,038 4,721 Provision for loan - - - - 2,125 (2,125 )lossesNoninterest income 238 233 5 913 1,028 (115 )Noninterest 5,380 4,640 740 20,135 17,666 2,470 expensesIncome beforeprovision for 2,531 2,219 312 10,537 6,276 4,261 income taxesProvision for 640 626 15 2,904 1,770 1,134 income taxesNet income $ 1,891 $ 1,593 $ 297 $ 7,633 $ 4,505 $ 3,128

Assets 12/31/2021 9/30/2021 6/30/2021 12/31/2020Cash and due from $ 6,768 $ 9,668 $ 17,876 $ 9,304 banksFunds held at theFederal Reserve 77,311 120,005 43,615 97,462 BankAvailable-for-salesecurities, at 333,869 297,456 264,572 106,214 fair valueLoans 564,241 565,031 608,101 605,154 Allowance for loan (8,578 ) (8,830 ) (8,840 ) (8,816 )lossesNet loans 555,564 556,201 599,261 596,338 Other Assets 25,748 24,186 25,379 23,233 Total assets $ 999,360 $ 1,007,516 $ 950,703 $ 832,551 Liabilities andShareholders' 12/31/2021 9/30/2021 6/30/2021 12/31/2020EquityNoninterestbearing demand $ 463,990 $ 438,446 $ 412,108 $ 386,710 depositsInterest bearing 68,575 72,867 57,421 65,686 checking accountsMoney market 197,703 252,255 241,164 159,510 Savings 157,332 135,736 129,176 121,148 Time 11,559 12,422 13,761 15,284 Interest bearing 435,169 473,280 441,522 361,628 depositsTotal deposits 899,159 911,726 853,630 748,338 Other liabilities 20,203 17,309 19,779 9,880 Shareholders' 79,998 78,481 77,294 74,333 equityTotal liabilitiesand shareholders' $ 999,360 $ 1,007,516 $ 950,703 $ 832,551 equity Shares outstanding 5,609,141 5,587,878 5,581,848 5,570,021 Earnings per share $ 0.34 $ 0.40 $ 0.35 $ 0.29 basicEarnings per share $ 0.33 $ 0.40 $ 0.34 $ 0.28 dilutedNominal andtangible book $ 14.26 $ 14.04 $ 13.85 $ 13.35 value per share

Net Interest Income and Net Interest Margin The Company's fourth quarter 2021 net interest income increased $1.0 million or 15.8% as compared with the quarter ending December 31, 2020. This increase was primarily driven by higher investment income.

The Company's net interest margin decreased by 38 basis points (bps) or 10.7% when compared to the quarter ending December 31, 2020. This decrease was primarily driven by the Companys mix of average earning assets. Lower yielding average earning asset balances have grown at an exceeding rate relative to higher yielding average earning assets. Interest expense associated with the subordinated debt issued by the Company in 2021 also contributed to the net interest margin decrease in the fourth quarter of 2021 compared to the same quarter in 2020.

In general terms, prepaying and repricing higher yielding loans have been substantially replaced and supplemented with lower yielding investment securities purchased in the current year. The negative impact has been partially offset by higher yields resulting from fee recognition on PPP loan forgiveness, and to a lesser extent, the impact of the higher yielding consumer loans purchased during the second and fourth quarters.

Provision for Loan Losses Stable credit quality and improving economic conditions resulted in $0 loan loss provision in the quarters ending December 31, 2021 and December 31, 2020.

Noninterest Expenses The Company's fourth quarter 2021 non-interest expenses increased $740 thousand, or 16.0%, to $5.38 million in the fourth quarter of 2021, compared to $4.64 million for the fourth quarter of 2020. This increase is primarily due to increased salary and benefit costs related to filling four key leadership positions in the fourth quarter of 2021 and increased FDIC insurance costs associated with deposit growth.

Balance Sheet Summary The Company's total assets marginally decreased $8.2 million or 0.8% to $999.4 million as compared to $1.007 billion at September 30, 2021.

Total loans outstanding were $564.2 million as of December 31, 2021. This represents a $40.9 million decrease or 6.8% from the December 31, 2020 outstanding balance of $605.2 million. The decrease in loan level reflects PPP loan forgiveness and payoff activity in the purchased residential loan portfolio, offset by an increase in originations of commercial real estate core loans, and the purchase of two consumer loan pools in the second and fourth quarters of 2021 with $36.6 million in outstanding balances at December 31, 2021.

PPP loans outstanding were $25.2 million as of December 31, 2021, and included a deferred fee balance of $765 thousand. At December 31, 2020, PPP loans outstanding were $90.4 million and included a deferred fee balance of $1.7 million.

The investment portfolio increased $227.7 million to $333.9 million from an outstanding balance of $106.2 million as of December 31, 2020. Incoming cashflows from deposit growth and prepaying earning assets were largely deployed in bonds. The majority of the investments were made in mortgage-backed and municipal securities.

Total deposits were $899.2 million as of December 31, 2021. This represents a $150.8 million increase or 20.2% from the December 31, 2020 outstanding balance of $748.3 million. A significant portion of this growth was associated with PPP loan proceeds deposited with the Bank. Growth in noninterest-bearing demand deposit accounts were $77.3 million or 51.2% of the total annual deposit growth. The balance of the deposit growth was distributed among interest-bearing deposit accounts with the exception of time deposits which decreased by $3.7 million to $11.6 million.

Asset Quality At December 31, 2021, non-performing assets were 0.10% of the Companys total assets, compared with 0.11% at September 30, 2021. At December 31, 2021, the allowance for loan losses was 1.52% of outstanding loans, compared to 1.56% at September 30, 2021. The Bank recorded $310 thousand in charge-offs in the fourth quarter related to the purchased consumer loan portfolio compared to $22 thousand in the quarter ended September 30, 2021. The Bank recorded net recoveries of $12 thousand in each of the first three quarters of 2021 and $58 thousand in the fourth quarter of 2021.

As of December 31, 2021, the Company does not have any outstanding loan deferments or forbearances stemming from COVID-19.

Stock Repurchase Activity The Company announced a Stock Repurchase Program December 3, 2021 and subsequently repurchased a total of 57,089 shares through January 20, 2022 at a weighted average price of $14.91.

1ST CAPITAL BANCORPCONDENSED FINANCIAL DATA - UNAUDITED($ in 000s)

Asset Quality 12/31/2021 9/30/2021 6/30/2021 12/31/2020Loans past due 90 days or $ 59 $ 146 $ - $ - more and accruing interestOther nonaccrual loans 899 921 2,161 1,299 Other real estate owned - - - - Total nonperforming assets $ 958 $ 1,067 $ 2,161 $ 1,299 Allowance for loan losses 1.52 % 1.56 % 1.46 % 1.46 %to total loansAllowance for loan losses 895.41 % 827.55 % 409.07 % 679.60 %to nonperforming loansNonaccrual loans to total 0.16 % 0.16 % 0.36 % 0.21 %loansNonperforming assets to 0.10 % 0.11 % 0.23 % 0.16 %total assets

1ST CAPITAL BANCORPCONDENSED FINANCIAL DATA - UNAUDITED($ in 000s) Three Months Year Ended EndedOperating Results Data 12/31/ 12/31/ 12/31/ 12/31/ 2021 2020 2021 2020Interest and dividend income Loans $ 6,857 $ 6,530 $ 27,555 $ 24,581Investment securities 1,247 266 3,452 1,190Federal Home Loan Bank stock 60 44 230 176Other income 39 12 85 92Total interest and dividend income 8,203 6,852 31,322 26,039Interest expense 530 226 1,563 1,001Net interest income 7,673 6,626 29,759 25,038Provision for loan losses - - - 2,125Net interest income after provision for 7,673 6,626 29,759 22,913loan lossesNoninterest income 238 233 913 1,028 Noninterest expenses Salaries and benefits expense 3,305 2,937 12,408 10,858Occupancy expense 413 408 1,643 1,515Data and item processing 260 249 1,064 901Furniture and equipment 117 131 466 638Professional services 248 123 736 802Other 1,037 792 3,818 2,952Total noninterest expenses 5,380 4,640 20,135 17,666Income before provision for income taxes 2,531 2,219 10,537 6,275Provision for income taxes 640 626 2,904 1,770Net income $ 1,891 $ 1,593 $ 7,633 $ 4,505

1ST CAPITAL BANCORP CONDENSED FINANCIAL DATA - UNAUDITED ($ in 000s)

Assets 12/31/2021 9/30/2021 6/30/2021 12/31/2020Cash and due from $ 6,768 $ 9,668 $ 17,876 $ 9,304 banksFunds held at theFederal Reserve 77,311 120,005 43,615 97,462 BankAvailable-for-salesecurities, at 333,869 297,456 264,572 106,214 fair valueLoans held for - - 1,791 - saleLoans held for investmentConstruction/land(including 28,260 25,476 22,091 17,097 farmland)Residential 1 to 4 61,209 68,438 75,906 102,688 unitsHome equity lines 6,087 7,601 6,669 5,955 of creditMultifamily 82,231 81,268 77,183 84,704 Owner occupiedcommercial real 89,087 80,166 81,972 72,427 estateInvestorcommercial real 185,939 185,001 172,776 174,437 estateCommercial and 40,298 40,719 49,147 47,550 industrialPaycheck 25,203 42,414 84,866 90,382 Protection ProgramOther loans 45,927 33,948 35,700 9,914 Total loans held 564,241 565,031 606,310 605,154 for investmentAllowance for loan (8,578 ) (8,830 ) (8,840 ) (8,816 )lossesNet loans held for 555,663 556,201 597,470 596,338 investmentOther assets 25,748 24,186 25,379 23,233 Total assets $ 999,360 $ 1,007,516 $ 950,703 $ 832,551 Liabilities andShareholders' EquityNoninterestbearing demand $ 463,990 $ 438,446 $ 412,108 $ 386,710 depositsInterest bearing 68,575 72,867 57,421 65,686 checking accountsMoney market 197,703 252,255 241,164 159,509 Savings 157,332 135,736 129,176 121,148 Time 11,559 12,422 13,761 15,284 Interest bearing 435,169 473,280 441,523 361,628 depositsTotal deposits 899,159 911,726 853,631 748,338 Other liabilities 20,203 17,309 19,779 9,880 Shareholders' 79,998 78,481 77,294 74,333 equityTotal liabilitiesand shareholders' $ 999,360 $ 1,007,516 $ 950,703 $ 832,551 equity

1ST CAPITAL BANCORPCONDENSED FINANCIAL DATA UNAUDITED($000s)

Three Months Ended Year EndedSelected Average Balances 12/30/ 12/30/ 12/31/ 12/31/ 2021 2020 2021 2020Gross loans $ 561,207 $ 618,458 $595,961 $ 593,887Investment securities 317,032 75,020 231,420 66,146Federal Home Loan Bank stock 3,948 3,534 3,818 3,396Other interest earning assets 92,112 46,969 58,474 28,979Total interest earning assets $ 974,299 $ 743,981 $ 889,673 $ 692,408 Total assets $ 999,508 $ 769,694 $ 891,336 $ 716,834 Interest bearing checking accounts $ 60,106 $ 54,120 $ 60,738 $ 46,821Money market 232,730 136,535 206,320 137,155Savings 141,290 111,468 131,905 105,383Time deposits 11,965 15,937 13,609 18,068Total interest- bearing deposits 446,091 318,060 412,572 307,427Noninterest bearing demand deposits 468,459 364,571 422,417 327,651Total deposits $ 914,550 $ 682,631 $ 834,989 $ 635,078Borrowings $ 14,651 $ 8,261 $ 7,657 $ 5,519Shareholders' equity $ 79,312 $ 73,488 $ 76,892 $ 71,090 Three Months Ended Year EndedSelected Financial Ratios 12/31/ 12/31/ 12/31/ 12/31/ 2021 2020 2021 2020Return on average total assets 0.75% 0.82% 0.83% 0.63%Return on average shareholders' 9.46% 8.60% 9.93% 6.32%equityNet interest margin 3.17% 3.54% 3.35% 3.62%Net interest income to average 3.05% 3.42% 3.24% 3.48%total assetsEfficiency ratio 68.01% 67.65% 65.65% 67.77%

Regulatory Capital and 12/31/2021 9/30/2021 6/30/2021 12/31/2020RatiosCommon equity tier 1 $ 80,819 $ 78,702 $ 76,158 $ 72,461 capitalTier 1 regulatory capital $ 80,819 $ 78,702 $ 76,158 $ 72,461 Total regulatory capital $ 88,798 $ 86,122 $ 83,518 $ 78,957 Tier 1 leverage ratio 8.09 % 8.07 % 8.64 % 9.44 %Common equity tier 1 12.82 % 13.30 % 12.99 % 14.01 %risk-based capital ratioTier 1 capital ratio 12.82 % 13.30 % 12.99 % 14.01 %Total risk-based capital 14.07 % 14.55 % 14.24 % 15.27 %ratio

About 1st Capital Bancorp

1st Capital Bancorp is the holding company for 1st Capital Bank. The Banks 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. The Banks corporate offices are located at 150 Main Street, Suite 150, Salinas, California 93901. The Banks website is www.1stCapital.bank. The main telephone number is 831.264.4000. 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 Banks market areas; governmental regulation and legislation; credit quality; competition affecting the Banks businesses generally; the risk of natural disasters and future catastrophic events including pandemics, terrorist related incidents and other factors beyond the Banks 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.bankinternet site for no charge.

For further information, please contact:

Samuel D. Jimenez Chief Executive Officer 831.264.4057 office Sam.Jimenez@1stCapitalBank.com