1st Century Bancshares, Inc. Reports Financial Results for the Quarter and Year Ended December 31, 2011

Tue Mar 6, 2012 4:18pm EST

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

  LOS ANGELES, CA, Mar 06 (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 quarter and year ended December 31, 2011 of $432,000 and $1.0
million, respectively, compared to net losses of $2.4 million and $2.0
million for the same periods last year. Pre-tax, pre-provision earnings
for the quarter and year ended December 31, 2011 were $503,000 and $1.4
million, respectively, compared to $214,000 and $812,000 for the same
periods last year.

    Alan I. Rothenberg, Chairman of the Board and Chief Executive Officer of
the Company, stated, "I'm proud to announce our financial results for the
quarter and year ended December 31, 2011, which reflect a continuation of
the positive trends that we've seen throughout this year and I'm hopeful
this momentum will continue throughout 2012. Highlights of the quarter
and year-to-date periods include: 


--  Growth in total assets from $308 million at December 31, 2010 to $405
    million at December 31, 2011;
--  Growth in our loan portfolio from $179 million at December 31, 2010 to
    $233 million at December 31, 2011;
--  Growth in total deposits from $258 million at December 31, 2010 to
    $332 million at December 31, 2011, resulting primarily from robust
    demand for our core deposit services, which has reduced our cost of
    funds to 30 basis points;
--  Continued improvement in our credit quality, with non-performing
    assets reduced to 1.9% of total assets, a 27% decline in this ratio
    since the beginning of 2011;
--  Improved net interest income of $11.3 million for the year ended
    December 31, 2011 as compared to $9.9 million for the year ended
    December 31, 2010, despite a reduction in our net interest margin; and
--  Improved pre-tax, pre-provision earnings, which has increased by over
    60% during 2011, compared to the same period last year."

    

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/loss to pre-tax,
pre-provision earnings is provided in the table below. 

    Mr. Rothenberg added, "We continue to see improvement in our credit
quality. At December 31, 2011, the ratios of non-performing assets to
total assets and non-performing loans to total loans were 1.88% and
3.26%, respectively, compared to 2.58% and 3.97% for the same period last
year. These ratios peaked in September 2009 at 4.87% and 6.66%,
respectively, and we have seen these ratios generally improve for over
two consecutive years. Furthermore, the Bank continues to maintain
capital ratios that are substantially in excess of the regulatory
requirements to be considered 'well capitalized.'" 

    Jason P. DiNapoli, President and Chief Operating Officer of the Company,
stated, "We're also continuing to experience a modest improvement in
quality loan demand. Total loans increased by $53.7 million during 2011
and loan originations were $117.1 million during 2011, compared to $67.6
million in 2010. Continuing to grow quality loans, along with our deposit
franchise, will be a primary initiative in 2012, and I believe we're well
positioned and have the right resources in place to execute this
strategy." 

    2011 4th Quarter and Year End Highlights 


--  The Bank's total risk-based capital ratio was 17.32% at December 31,
    2011, compared to the regulatory requirement of 10.00% for "well
    capitalized" financial institutions. The Bank's capital does not
    include any capital received in connection with TARP, nor other forms
    of capital such as trust preferred securities, convertible preferred
    stock or other equity or debt instruments other than common stock.
    
    
--  Total assets increased 31.4%, or $96.9 million, to $405.3 million at
    December 31, 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 $285.6 million and $197.9 million at December 31,
    2011 and 2010, respectively, representing an increase of $87.8
    million, or 44.3%.
    
    
--  Net interest margin was 3.07% and 3.21% for the quarter and year ended
    December 31, 2011, respectively, compared to 3.33% and 3.62% for the
    same periods last year.
    
    
--  Cost of funds was 26 and 30 basis points for the quarter and year
    ended December 31, 2011, respectively, compared to 32 and 42 basis
    points for the same periods last year.
    
    
--  Investment securities increased by $71.4 million, or 122.2%, to $129.9
    million at December 31, 2011, from $58.5 million at December 31, 2010.
    During the year ended December 31, 2011, the Company increased its
    level of investment security purchases as a result of excess liquidity
    generated by strong deposit growth, which continues to outpace quality
    loan demand.
    
    
--  Loans increased $53.7 million, or 30.0%, to $233.0 million at December
    31, 2011 from $179.3 million at December 31, 2010. Loan originations
    were $58.7 million and $117.1 million during the quarter and year
    ended December 31, 2011, respectively, compared to $34.9 million and
    $67.6 million during the same periods last year.
    
    
--  As of December 31, 2011, the allowance for loan losses ("ALL") was
    $5.3 million, or 2.27% of gross loans, compared to $5.3 million, or
    2.95% of gross loans, at December 31, 2010. The ALL to non-performing
    loans was 69.47% and 74.21% at December 31, 2011 and 2010,
    respectively.
    
    
--  Non-performing loans to total loans decreased to 3.26% at December 31,
    2011, compared to 3.97% at December 31, 2010.
    
    
--  Non-performing assets as a percentage of total assets declined to
    1.88% at December 31, 2011, compared to 2.58% at December 31, 2010.
    
    
--  For the quarter and year ended December 31, 2011, the Company recorded
    net income of $432,000, or $0.05 per diluted share, and $1.0 million,
    or $0.11 per diluted share, respectively. During the same periods last
    year, the Company reported net losses of $2.4 million and $2.0
    million, respectively, or $0.27 and $0.22 per diluted share,
    respectively.

    

Capital Adequacy

    At December 31, 2011, the Company's stockholders' equity totaled $45.1
million compared to $44.3 million at December 31, 2010. At December 31,
2011, the Bank's total risk-based capital ratio, tier 1 risk-based
capital ratio, and tier 1 leverage ratio were 17.32%, 16.06%, and 10.54%,
respectively, compared to the regulatory requirements for "well
capitalized" financial institutions of 10.00%, 6.00%, and 5.00%,
respectively.

    In August 2010, the Company's Board of Directors authorized the purchase
of up to $2.0 million of the Company's common stock. Under this stock
repurchase program, the Company has been acquiring its common stock in
the open market from time to time beginning in August 2010. As of
December 31, 2011, the Company had repurchased 490,324 shares in the open
market at a cost ranging from $3.35 to $4.02 per share in connection with
this program. At December 31, 2011, the remaining value of shares that
may be repurchased under this program was $195,000.

    Balance Sheet

    Total assets increased 31.4%, or $96.9 million, to $405.3 million at
December 31, 2011, from $308.4 million at December 31, 2010. The increase
in total assets is primarily attributable to increases in investment
securities and loans, partially offset by a decrease in cash and cash
equivalents. Investment securities at December 31, 2011 were $129.9
million, representing an increase of $71.4 million, or 122.2%, from $58.5
million at December 31, 2010. The increase in investment securities is
primarily attributable to the purchase of agency mortgage-backed
securities, which had an average life of 3.57 years at December 31, 2011.
Loans at December 31, 2011 were $233.0 million, representing an increase
of $53.7 million, or 30.0%, from $179.3 million at December 31, 2010. The
most significant loan growth has been in our single-family residential
real estate portfolio, which has increased by approximately $33.2
million, or 153.1%, during 2011. Loan originations were $58.7 million and
$117.1 million during the quarter and year ended December 31, 2011,
compared to $34.9 million and $67.6 million during the same periods last
year. Cash and cash equivalents decreased $27.1 million, or 39.2%, from
$69.0 million at December 31, 2010 to $41.9 million at December 31, 2011.

    Total liabilities at December 31, 2011 increased by $96.2 million, or
36.4%, to $360.2 million, compared to $264.0 million at December 31,
2010. This increase is primarily due to increases in non-interest bearing
deposits and money market deposits and savings of $31.3 million and $69.3
million, respectively, due to continued core deposit gathering efforts,
partially offset by declines of $13.3 million and $12.9 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 $285.6 million and $197.9 million at December
31, 2011 and 2010, respectively, representing an increase of $87.8
million, or 44.3%. The increase in total liabilities is also partially
due to a $23.0 million increase in other borrowings, which were primarily
utilized to fund additional loan production during 2011.

    Credit Quality

    Allowance and Provision for Loan Losses

    The ALL was $5.3 million, or 2.27% of our total loan portfolio, at
December 31, 2011, compared to $5.3 million, or 2.95% at December 31,
2010. Based on management's assessment of the ALL, it was determined that
the decline in our ratio of ALL to total loans was appropriate due to a
reduction in the level of our criticized and classified loans, which
generally consist of special mention, substandard and doubtful loans.
Special mention, substandard and doubtful loans were $3.7 million, $11.0
million and none, respectively, at December 31, 2011, compared to $6.1
million, $17.0 million, and $1.1 million, respectively, at December 31,
2010. During the year ended December 31, 2011, our non-performing loans
increased to $7.6 million from $7.1 million at December 31, 2010. The
ratio of our ALL to non-performing loans was 69.47% at December 31, 2011
compared to 74.21% at December 31, 2010. In addition, our ratio of
non-performing loans to total loans was 3.26% and 3.97% at December 31,
2011 and 2010, 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. There was no provision for loan losses for the
quarter ended December 31, 2011 and $275,000 for the year ended December
31, 2011, compared to $2.6 million and $2.8 million for the same periods
last year. As discussed above, the decline in provision for loan losses
recorded during the quarter and year ended December 31, 2011, compared to
the same periods last year, is primarily due to the improvement in the
level of our criticized and classified loans. We had net recoveries of
$38,000 during the quarter ended December 31, 2011 and net charge-offs of
$274,000 for the year ended December 31, 2011, compared to net
charge-offs of $1.8 million and $3.0 million during the same periods last
year. Management believes that the ALL as of December 31, 2011 and 2010
was adequate to absorb known and inherent risks in the loan portfolio.

    Non-Performing Assets

    Non-performing assets totaled $7.6 million and $8.0 million at December
31, 2011 and 2010, respectively. Non-accrual loans totaled $7.6 million
and $7.1 million at December 31, 2011 and 2010, respectively. At December
31, 2011, non-accrual loans consisted of four commercial loans totaling
$2.2 million, two commercial real estate loans totaling $3.8 million, one
commercial land loan totaling $1.3 million and one consumer related loan
totaling $345,000. At December 31, 2010, non-accrual loans consisted of
four commercial loans totaling $1.7 million, three commercial real estate
loans totaling $5.1 million and one consumer related loan totaling
$345,000. As of December 31, 2011, there was no other real estate owned
("OREO"). As of December 31, 2010, OREO consisted of two single-family
residential properties totaling $845,000, which were both located in
California. As a percentage of total assets, the amount of non-performing
assets was 1.88% and 2.58% at December 31, 2011 and 2010, respectively.

    Net Interest Income and Margin

    During the quarter and year ended December 31, 2011, net interest income
was $3.0 million and $11.3 million, respectively, compared to $2.6
million and $9.9 million for the same periods last year. The increases in
net interest income during the quarter and year ended December 31, 2011,
is primarily related to an increase in loan and investment income earned
as compared to the same periods last year. These increases were caused by
higher average balances outstanding for both loans and investments
compared to the same periods last year, partially offset by a decline in
yield earned. Yields earned on loans and investments were impacted by a
general decline in interest rates during the current quarter and year
compared to the same periods last year, as well as competitive loan
pricing conditions in our market, which have continued to intensify and
compress loan yields.

    The Company's net interest margin (net interest income divided by average
interest earning assets) was 3.07% for the quarter ended December 31,
2011, compared to 3.33% for the same period last year. This 26 basis
point decline in net interest margin is primarily due to a decrease in
the yield on earning assets of 32 basis points, partially offset by a
decline of 8 basis points in the cost of interest bearing deposits and
borrowings. As discussed above, the decrease in yield on earning assets
is primarily attributable to a decline in interest rates earned on these
assets during the quarter ended December 31, 2011, as compared to the
same period last year, which was caused by a general decline in interest
rates during the current quarter compared to the same period last year,
as well as competitive loan pricing conditions in our market, which have
continued to intensify and compress loan yields during this period.
During the quarter ended December 31, 2011 as compared to the same period
last year, the decline in our 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 0.36% and 1.38%, respectively, during the quarter ended
December 31, 2011 compared to 0.46% and 1.66% for the same period last
year.

    The Company's net interest margin was 3.21% for the year ended December
31, 2011, compared to 3.62% for the same period last year. This 41 basis
point decline in net interest margin is primarily due to a decrease in
the yield on earning assets of 49 basis points, partially offset by a
decline of 17 basis points in the cost of interest bearing deposits and
borrowings. As discussed above, the decrease in yield on earning assets
is primarily attributable to a decline in interest rates earned on these
assets during the year ended December 31, 2011, as compared to the same
period last year, which was caused by a general decline in interest rates
during the current year compared to the same period last year, as well as
competitive loan pricing conditions in our market, which have continued
to intensify and compress loan yields during this period. Yield on
earning assets were further impacted by an increase in the average
balance of interest earning deposits at other financial institutions.
These deposits yielded approximately 25 basis points during the year
ended December 31, 2011. During the year ended December 31, 2011 as
compared to the same period last year, the decline in our 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 0.43% and 1.40%,
respectively, during the year ended December 31, 2011 compared to 0.52%
and 2.53% for the same period last year. 

    Non-Interest Income

    Non-interest income was $316,000 and $934,000 for the quarter and year
ended December 31, 2011, compared to $284,000 and $945,000 for the same
periods last year. There were no significant changes in the sources or
amounts of non-interest income.

    Non-Interest Expense

    Non-interest expense was $2.9 million and $10.8 million for the quarter
and year ended December 31, 2011, compared to $2.6 million and $10.0
million for the same periods last year. The variance in non-interest
expense is primarily due to a $284,000 loss incurred during the fourth
quarter of 2011 in connection with the sale of an OREO, as well as the
additional costs incurred related to expanding the Bank's business
development team and the opening of our Santa Monica relationship office
during 2011. 

    Income Tax Provision

    During the quarter and year ended December 31, 2011, we recorded a tax
expense of approximately $71,000, primarily related to amounts due for
California State taxes. The taxes owed in connection with our pre-tax
earnings would have typically been entirely offset by the Company's net
operating loss carryforwards, however, the State temporarily suspended
the use of these carryforwards for the year ended December 31, 2011, and,
as a result, the Company has recorded a tax liability for that period.
Going forward, the Company does not anticipate owing any substantial
taxes for Federal or State purposes, until the Company's net operating
losses are fully utilized. During the quarter and year ended December 31,
2010, we did not record an income tax provision. 

    Net Income (Loss)

    For the quarter and year ended December 31, 2011, the Company recorded
net income of $432,000, or $0.05 per diluted share, and $1.0 million, or
$0.11 per diluted share, respectively, compared to net losses of $2.4
million, or $0.27 per diluted share, and $2.0 million, or $0.22 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 renewed decline in
economic conditions, (3) further increased competition among financial
institutions, (4) the Company's ability to continue to attract interest
bearing deposits and quality loan customers, (5) further government
regulation and the implementation and costs associated with the same, (6)
management's ability to successfully manage the Company's operations, and
(7) 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): 

                                                       December 31,
                                               ---------------------------- 
Balance Sheet Results:                              2011           2010
                                               -------------  ------------- 

    Total Assets                               $     405,274  $     308,364 
    Total Loans                                $     233,005  $     179,293 
    Allowance for Loan Losses ("ALL")          $       5,284  $       5,283 
    Non-Performing Assets                      $       7,606  $       7,963 
    Deposits:
      Non-Interest Bearing Demand Deposits     $     122,843  $      91,501 
      Interest Bearing Demand Deposits                20,739         33,632 
      Money Market Deposits and Savings              142,061         72,757 
      Certificates of Deposit                         46,811         60,099 
                                               -------------  ------------- 
        Total Deposits                         $     332,454  $     257,989 
    Total Stockholders' Equity                 $      45,051  $      44,338 
    Gross Loans to Deposits                            70.08%         69.49%
    Ending Book Value per Share                $        4.97  $        4.77 

                                                Quarters Ended December 31, 
                                               ---------------------------- 
Quarterly Operating Results (unaudited):            2011           2010
                                               -------------  ------------- 

    Net Interest Income                        $       3,036  $       2,565 
    Provision for Loan Losses                  $           -  $       2,575 
    Non-Interest Income                        $         316  $         284 
    Non-Interest Expense                       $       2,849  $       2,635 
    Income Tax Provision                       $          71  $           - 
    Net Income (Loss)                          $         432  $      (2,361)
    Basic Earnings (Loss) per Share            $        0.05  $       (0.27)
    Diluted Earnings (Loss) per Share          $        0.05  $       (0.27)
    Quarterly Net Interest Margin*                      3.07%          3.33%

Reconciliation of QTD Net Income (Loss) to
Pre-Tax, Pre-Provision Earnings:

    Net Income (Loss)                          $         432  $      (2,361)
    Provision for Loan Losses                              -          2,575 
    Income Tax Provision                                  71              - 
                                               -------------  ------------- 
    Pre-Tax, Pre-Provision Earnings            $         503  $         214 
                                               =============  ============= 

                                                 Years Ended December 31,
                                               ---------------------------- 
YTD Operating Results:                              2011           2010
                                               -------------  ------------- 

    Net Interest Income                        $      11,281  $       9,893 
    Provision for Loan Losses                  $         275  $       2,775 
    Non-Interest Income                        $         934  $         945 
    Non-Interest Expense                       $      10,844  $      10,026 
    Income Tax Provision                       $          71  $           - 
    Net Income (Loss)                          $       1,025  $      (1,963)
    Basic Earnings (Loss) per Share            $        0.12  $       (0.22)
    Diluted Earnings (Loss) per Share          $        0.11  $       (0.22)
    YTD Net Interest Margin                             3.21%          3.62%

Reconciliation of YTD Net Income (Loss) to
Pre-Tax, Pre-Provision Earnings:

    Net Income (Loss)                          $       1,025  $      (1,963)
    Provision for Loan Losses                            275          2,775 
    Income Tax Provision                                  71              - 
                                               -------------  ------------- 
    Pre-Tax, Pre-Provision Earnings            $       1,371  $         812 
                                               =============  ============= 

*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 

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