1st Century Bancshares, Inc. Reports Financial Results for the Quarter and Six Months Ended June 30, 2011

Wed Aug 10, 2011 4:00pm EDT

* Reuters is not responsible for the content in this press release.

  LOS ANGELES, CA, Aug 10 (MARKET WIRE) -- 
1st Century Bancshares, Inc. (the "Company") (NASDAQ: FCTY), the holding
company of 1st Century Bank, N.A. (the "Bank"), today reported net income
for the three and six months ended June 30, 2011 of $116,000 and
$240,000, respectively, compared to $119,000 and $243,000 for the same
periods last year. Pre-tax, pre-provision earnings for the three and six
months ended June 30, 2011 was $191,000 and $515,000, respectively,
compared to $219,000 and $343,000 for the same periods last year.

    Alan I. Rothenberg, Chairman of the Board and Chief Executive Officer of
the Company, stated, "I'm pleased to announce our second quarter results,
highlights of which include:


--  Growth in total assets from $308 million at December 31, 2010 to $361
    million at June 30, 2011;
--  Growth in total deposits from $258 million at December 31, 2010 to
    $303 million at June 30, 2011, with virtually all of that growth
    coming from our core deposits; and
--  Improvement in our credit quality with non-performing assets reduced
    to 2.1% of total assets, a decline of over 57% from its peak in 2009.

    

In addition, our bank continues to maintain double the regulatory
capital required to be considered 'well capitalized' and we remain liquid
as represented by a loan-to-deposit ratio of 62%. With our growth and our
excellent capital and liquidity positions, coupled with our strong
underwriting standards, I believe we're well poised to benefit as the
country's economic conditions improve and with it quality loan demand
returns."

    Jason P. DiNapoli, President and Chief Operating Officer of the Company,
stated, "Our core deposits have grown by over 29% during the first six
months of this year, and have helped to maintain our cost of deposits at
29 basis points. These core relationships represent an integral part of
our Bank and I believe will be a valuable source of future business as
the economy normalizes."

    Pre-tax, pre-provision earnings figures, which are non-GAAP financial
measures, are presented because the Company believes adjusting its
results to exclude tax 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 summary financial information
below.

    2011 2nd Quarter Highlights


--  The Bank's total risk-based capital ratio was 20.30% at June 30, 2011,
    compared to the regulatory requirement of 10.00% for "well
    capitalized" financial institutions. The Bank's capital does not
    include any funding received in connection with TARP, nor other forms
    of capital such as trust preferred securities, convertible preferred
    stock or other equity or debt instruments.
    
    
--  Total assets increased 17.1%, or $52.7 million, to $361.1 million at
    June 30, 2011, from $308.4 million at December 31, 2010.
    
    
--  Total core deposits, which include non-interest bearing demand
    deposits, interest bearing demand deposits, and money market deposits
    and savings, were $255.4 million and $197.9 million at June 30, 2011
    and December 31, 2010, respectively, representing an increase of $57.5
    million, or 29.1%.
    
    
--  Cost of funds was 32 and 31 basis points for the three and six months
    ended June 30, 2011, respectively, compared to 45 and 50 basis points
    for the same periods last year.
    
    
--  Investment securities increased by $17.8 million, or 30.5%, to $76.3
    million at June 30, 2011, from $58.5 million at December 31, 2010.
    During the six months ended June 30, 2011, the Company increased the
    level of investment purchases as a result of excess liquidity
    generated by deposit growth and a lack of quality loan demand that
    adheres to our underwriting criteria.
    
    
--  Gross loans increased $7.4 million, or 4.1%, to $186.7 million at June
    30, 2011 from $179.3 million at December 31, 2010. Loan originations
    were $10.5 million and $40.4 million during the three and six months
    ended June 30, 2011, compared to $8.0 million and $17.9 million during
    the same periods last year.
    
    
--  As of June 30, 2011, the allowance for loan losses ("ALL") was $5.1
    million, or 2.72% of gross loans, compared to $5.3 million, or 2.95%
    of gross loans, at December 31, 2010. The ALL to total non-performing
    loans was 75.84% and 74.22% at June 30, 2011 and December 31, 2010,
    respectively.
    
    
--  Non-performing loans decreased $414,000, or 5.8%, to $6.7 million at
    June 30, 2011 from $7.1 million at December 31, 2010. Non-performing
    loans to total loans was 3.59% and 3.97% at June 30, 2011 and December
    31, 2010, respectively.
    
    
--  Non-performing assets as a percentage of total assets declined to
    2.09% at June 30, 2011, compared to 2.58% at December 31, 2010.
    
    
--  Net interest margin was 3.21% and 3.39% during the three and six
    months ended June 30, 2011, respectively, compared to 3.80% and 3.88%
    for the same periods last year.
    
    
--  For the three and six months ended June 30, 2011, the Company recorded
    net income of $116,000, or $0.01 per diluted share, and $240,000, or
    $0.03 per diluted share, respectively. During the same periods last
    year, the Company reported net income of $119,000, or $0.01 per
    diluted share, and $243,000, or $0.03 per diluted share.
    


    

Capital Adequacy

    At June 30, 2011, the Company's stockholders' equity totaled $45.1
million compared to $44.3 million at December 31, 2010. At June 30, 2011,
the Bank's total risk-based capital ratio, tier 1 risk-based capital
ratio, and tier 1 leverage ratio were 20.30%, 19.04%, and 11.83%,
respectively, compared to the regulatory requirements for "well
capitalized" financial institutions of 10.00%, 6.00%, and 5.00%,
respectively.

    Balance Sheet

    Total assets increased 17.1%, or $52.7 million, to $361.1 million at June
30, 2011, from $308.4 million at December 31, 2010. The increase in total
assets was primarily attributable to increases in cash and cash
equivalents, investment securities and gross loans. Cash and cash
equivalents increased $27.7 million, or 40.1%, from $69.0 million at
December 31, 2010 to $96.7 million at June 30, 2011. This increase was
primarily attributable to the growth in our deposit portfolio during the
period. Investment securities at June 30, 2011 were $76.3 million,
representing an increase of $17.8 million, or 30.5%, from $58.5 million
at December 31, 2010. Gross loans at June 30, 2011 were $186.7 million,
representing an increase of $7.4 million, or 4.1%, from $179.3 million at
December 31, 2010. Loan originations were $10.5 million and $40.4 million
during the three and six months ended June 30, 2011, compared to $8.0
million and $17.9 million during the same periods last year.

    Total liabilities at June 30, 2011 increased by $51.9 million, or 19.7%,
to $315.9 million as compared to $264.0 million at December 31, 2010.
This increase was primarily due to increases in non-interest bearing
deposits and money market deposits and savings of $15.3 million and $46.7
million, respectively, due to continued core deposit gathering efforts,
partially offset by declines of $12.1 million and $4.5 million in
certificates of deposit and interest bearing demand accounts,
respectively. Total core deposits, which include non-interest bearing
demand deposits, interest bearing demand deposits and money market
deposits and savings, were $255.4 million and $197.9 million at June 30,
2011 and December 31, 2010, respectively, representing an increase of
$57.5 million, or 29.1%. The increase in total liabilities was also
partially due to an $8.0 million increase in other borrowings, which were
primarily utilized to fund additional loan production during the period.

    Credit Quality

    Allowance and Provision for Loan Losses

    The ALL was $5.1 million, or 2.72% of our total loan portfolio, at June
30, 2011 as compared to $5.3 million, or 2.95% of our total loan
portfolio, at December 31, 2010. The decline in our ratio of ALL to total
loans was primarily a function of improving trends within our loan
portfolio. During the six months ended June 30, 2011, our non-performing
loans declined to $6.7 million from $7.1 million at December 31, 2010,
and the ratio of our ALL to total non-performing loans improved to 75.84%
at June 30, 2011 compared to 74.22% at December 31, 2010. In addition,
our ratio of non-performing loans to total loans was 3.59% and 3.97% at
June 30, 2011 and December 31, 2010, respectively, and has declined for
seven consecutive quarters, or 46.10% since the third quarter of 2009.

    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. The provision for loan losses was $75,000 and
$275,000 for the three and six months ended June 30, 2011, respectively,
compared to $100,000 for both the three and six months ended June 30,
2010. We incurred net charge-offs of $467,000 and $474,000 during the
three and six months ended June 30, 2011, compared to net charge-offs of
$655,000 and $631,000 during the same periods last year. Management
believes that the ALL as of June 30, 2011 and December 31, 2010 was
adequate to absorb known and inherent risks in the loan portfolio.

    Non-Performing Assets

    Non-performing assets totaled $7.5 million and $8.0 million at June 30,
2011 and December 31, 2010, respectively. Non-accrual loans totaled $6.7
million and $7.1 million at June 30, 2011 and December 31, 2010,
respectively. At June 30, 2011, non-accrual loans consisted of four
commercial loans totaling $2.3 million, two commercial real estate loans
totaling $4.1 million and one consumer related loan totaling $345,000. As
of June 30, 2011, other real estate owned ("OREO") consisted of two
single-family residential properties totaling $845,000, which are both
located in California. As a percentage of total assets, the amount of
non-performing assets was 2.09% and 2.58% at June 30, 2011 and December
31, 2010, respectively.

    Net Interest Income and Margin

    During the three and six months ended June 30, 2011, net interest income
was $2.7 million and $5.4 million compared to $2.4 million and $4.9
million for the same periods last year. The increases in net interest
income during the three and six months ended June 30, 2011, was primarily
related to an increase in loan and investment income earned as compared
to the same periods last year, as well as a decline in interest expense
incurred in connection with the Bank's other borrowings.

    The Company's net interest margin (net interest income divided by average
interest earning assets) was 3.21% for the three months ended June 30,
2011, compared to 3.80% for the same period last year. During the three
months ended June 30, 2011, the 59 basis point decline in net interest
margin was primarily due to a decrease in the yield on earning assets of
70 basis points, partially offset by a decline of 20 basis points in the
cost of interest bearing deposits and borrowings. The decrease in yield
on earning assets was primarily attributable to a general decline in
interest rates earned on these assets during the three months ended June
30, 2011, as compared to the same period last year, as well as an
increase in the average balance of interest earning deposits at other
financial institutions. These deposits yielded approximately 25 basis
points during the current period. During the three months ended June 30,
2011 as compared to the same period last year, the decline in our cost of
interest bearing deposits and borrowings was primarily attributable to a
general decrease in interest rates paid on these accounts, as well as a
decline in the average balance of borrowings. The average cost of
interest bearing deposits was 0.46% during the three months ended June
30, 2011 compared to 0.52% for the same period last year. The average
balance of borrowings decreased by $6.1 million during the three months
ended June 30, 2011 as compared to the same period last year. The average
cost of borrowings was 1.41% during the three months ended June 30, 2011
compared to 2.67% for the same period last year.

    The Company's net interest margin was 3.39% for the six months ended June
30, 2011, compared to 3.88% for the same period last year. During the six
months ended June 30, 2011, the 49 basis point decline in net interest
margin was primarily due to a decrease in the yield on earning assets of
64 basis points, partially offset by a decline of 26 basis points in the
cost of interest bearing deposits and borrowings. The decrease in yield
on earning assets was primarily attributable to a general decline in
interest rates earned on these assets during the six months ended June
30, 2011, as compared to the same period last year, as well as an
increase in the average balance of interest earning deposits at other
financial institutions. These deposits yielded approximately 25 basis
points during the six months ended June 30, 2011. During the six months
ended June 30, 2011 as compared to the same period last year, the decline
in our cost of interest bearing deposits and borrowings was primarily
attributable to a general decrease in interest rates paid on these
accounts, as well as a decline in the average balance of borrowings. The
average cost of interest bearing deposits was 0.45% during the six months
ended June 30, 2011 compared to 0.57% for the same period last year. The
average balance of borrowings decreased by $8.3 million during the six
months ended June 30, 2011 as compared to the same period last year. The
average cost of borrowings was 1.47% during the six months ended June 30,
2011 compared to 2.72% for the same period last year.

    Non-Interest Income

    Non-interest income was $192,000 and $396,000 for the three and six
months ended June 30, 2011, compared to $210,000 and $439,000 for the
same periods last year.

    Non-Interest Expense

    Non-interest expense was $2.7 million and $5.3 million for the three and
six months ended June 30, 2011, compared to $2.4 million and $5.0 million
for the same periods last year. The variance in non-interest expense was
primarily due to the additional costs incurred in connection with
expanding the Bank's business development team and the opening of our
Santa Monica relationship office during the current quarter.

    Income Tax Provision

    During the three and six months ended June 30, 2011 and 2010, we did not
record an income tax provision related to our pre-tax earnings. Tax
expense that would normally arise, because of the Company's earnings, was
not recorded because it was offset by a reduction in the valuation
allowance on the Company's deferred tax asset.

    Net Income

    For the three and six months ended June 30, 2011, the Company recorded
net income of $116,000, or $0.01 per diluted share, and $240,000, or
$0.03 per diluted share, respectively, compared to $119,000, or $0.01 per
diluted share, and $243,000, or $0.03 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 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) a further decline in
economic conditions, (3) increased competition among financial service
providers, (4) government regulation, and (5) 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,     December 31,     June 30,
                                     2011           2010           2010
                                -------------  -------------  ------------- 
Balance Sheet Results:            (unaudited)                   (unaudited) 
    Total Assets                $     361,085  $     308,364  $     280,073 
    Gross Loans                 $     186,653  $     179,271  $     166,104 
    Allowance for Loan Losses   $
     ("ALL")                            5,084  $       5,283  $       4,947 
    Non-Performing Assets       $       7,549  $       7,963  $       8,644 
    Deposits:
     Non-Interest Bearing       $
      Demand Deposits                 106,827  $      91,501  $      80,341 
     Interest Bearing Demand
      Deposits                         29,132         33,632         25,999 
     Money Market Deposits and
      Savings                         119,450         72,757         54,150 
     Certificates of Deposit           48,045         60,099         60,374 
                                -------------  -------------  ------------- 
       Total Deposits           $     303,454  $     257,989  $     220,864 
    Total Stockholders' Equity  $      45,143  $      44,338  $      47,141 
    Gross Loans to Deposits             61.51%         69.49%         75.21%
    Ending Book Value per Share $        4.82  $        4.77  $        5.03 

                                 Three Months Ended June 30,
                                ----------------------------
Quarterly Operating Results
 (unaudited):                        2011           2010
                                -------------  -------------
    Net Interest Income         $       2,719  $       2,417
    Provision for Loan Losses   $          75  $         100
    Non-Interest Income         $         192  $         210
    Non-Interest Expense        $       2,720  $       2,408
    Income Tax Provision        $           -  $           -
    Net Income                  $         116  $         119
    Basic Earnings per Share    $        0.01  $        0.01
    Diluted Earnings per Share  $        0.01  $        0.01
    Quarterly Net Interest
     Margin*                             3.21%          3.80%

Reconciliation of QTD Net
 Income to Pre-Tax, Pre-
 Provision Earnings:
    Net Income                  $         116  $         119
    Provision for Loan Losses              75            100
    Income Tax Provision                    -              -
                                -------------  -------------
    Pre-Tax, Pre-Provision      $
     Earnings                             191  $         219
                                =============  =============

                                  Six Months Ended June 30,
                                ----------------------------
YTD Operating Results
 (unaudited):                        2011           2010
                                -------------  -------------
    Net Interest Income         $       5,430  $       4,895
    Provision for Loan Losses   $         275  $         100
    Non-Interest Income         $         396  $         439
    Non-Interest Expense        $       5,311  $       4,991
    Income Tax Provision        $           -  $           -
    Net Income                  $         240  $         243
    Basic Earnings per Share    $        0.03  $        0.03
    Diluted Earnings per Share  $        0.03  $        0.03
    YTD Net Interest Margin*             3.39%          3.88%

Reconciliation of YTD Net
 Income to Pre-Tax, Pre-
 Provision Earnings:
    Net Income                  $         240  $         243
    Provision for Loan Losses             275            100
    Income Tax Provision                    -              -
                                -------------  -------------
    Pre-Tax, Pre-Provision      $
     Earnings                             515  $         343
                                =============  =============


    
*Percentages are reported on an annualized basis.

    

Contact Information:
Alan I. Rothenberg
Chairman/Chief Executive Officer
Phone: (310) 270-9501

Jason P. DiNapoli
President/Chief Operating Officer
Phone: (310) 270-9505 

Copyright 2011, Market Wire, All rights reserved.

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