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1ST CENTURY BANCSHARES, INC. ANNOUNCES J. SCOTT GREEN AS NEW BSA OFFICER
Los Angeles, CA (May 15, 2013)– 1st Century Bancshares, Inc. (the “Company”) (NASDAQ:FCTY), the holding company of 1st Century Bank, N.A. (the “Bank”), announced today that J. Scott Green, has been appointed as its new BSA Officer.

As BSA Officer of 1st Century Bank, Mr. Green will be responsible for overseeing adherence of the Bank’s policies and procedures to federal and state laws and regulations as well as developing, implementing and administering all aspects of the Bank Secrecy Act.

Mr. Green has over 30 years of experience in Operations and Lending/Note Department with a “hands on” background in all areas of Business Development, Banking Operations and Note Operations. Nineteen years of that time was spent in management with an emphasis on BSA and Deposit and Credit Compliance. He recently completed the ABA 2010 Nationals Compliance School in both Deposit/Operations and Credit modules.

“Mr. Green is a welcome addition to our team here at 1st Century Bank,” said Chairman of the Board, Alan I. Rothenberg. “He brings a wealth of knowledge and experience in the BSA field that will allow us to continue to reach our goals set forth.”

Most recently, Mr. Green was SVP, BSA Officer, Privacy Officer and Information Security Officer at The Private Bank of California. He was responsible for writing all compliance policies as well as creating all BSA Policies including CIP Risk Rating forms, OFAC, FinCEN, CTR Reporting, SAR Reporting and NSA Letters, and all bank compliance trainings including BSA. He has been involved in many other areas of banking including, but not limited to, Branch Management/Operations, Core System Conversions as well as being a part of a team to start a De Novo National Bank in 2004, Excel National Bank.

He has professional certifications in CRCM: Certified Regulatory Compliance Manager Certification from ABA (through ICBA) as well as CAMS: Designation for AML professional from ACAMS.

 

 

1ST CENTURY BANCSHARES, INC. REPORTS FINANCIAL RESULTS
FOR THE QUARTER ENDED MARCH 31, 2013

Los Angeles, CA (May 8, 2013) – 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 quarter ended March 31, 2013 of $1.4 million compared to $592,000 for the same period last year. Pre-tax, pre-provision earnings for the quarters ended March 31, 2013 and 2012 were $980,000 and $608,000, respectively.

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 core 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 extremely proud to announce our first quarter financial results. Net income for the period was $1.4 million, or $0.16 per diluted share, compared to $592,000, or $0.07 per diluted share, during the same period last year. Our increased earnings were primarily driven by favorable loan growth, as well as improved credit quality. During the quarter, our average loans grew by over $43 million as compared to the same period last year, while our non-performing loans declined to less than $1.0 million. Non-performing loans currently represent only 0.31% of our total loan portfolio, compared to a peak of 6.66% at September 30, 2009. The decline in these problem loans during the current quarter was primarily attributable to the full repayment and recovery of non-performing loan balances.”

Jason P. DiNapoli, President and Chief Operating Officer of the Company added, “I am very encouraged with our results for the first quarter. Our core profitability continues to improve, our book value per share continues to grow and, with our credit quality issues substantially behind us, we can focus further attention and resources on our long-term strategic objective of becoming the premier community business bank serving the Westside of Los Angeles.”

2013 1st Quarter Highlights

          • The Bank’s total risk-based capital ratio was 14.41% at March 31, 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 quarter ended March 31, 2013, the Company recorded net income of $1.4 million, or $0.16 per diluted share, compared to $592,000, or $0.07
          per diluted share, for the same period last year.

          • At March 31, 2013 and 2012, the Company’s book value per share was $5.54 and $5.06, respectively, representing an increase of 9.5% during the
          twelve month period.

          • Net interest margin was 3.30% for the quarter ended March 31, 2013, compared to 3.20% for the same period last year. This increase in net interest
          margin was primarily attributable to the recovery of $294,000 in deferred interest income from the repayment of non-accrual and previously charged
          off loan balances during the quarter ended March 31, 2013.

          • Loans increased to $297.8 million at March 31, 2013, compared to $266.7 million at December 31, 2012. Loan originations were $66.3 million
         
          during the quarter ended March 31, 2013, compared to $25.7 million during the same period last year.

          • Non-performing loans declined to $917,000, or 0.31% of total loans, at March 31, 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 0.20% at March 31, 2013, compared to 0.39% at December 31, 2012.

          • Net loan recoveries were $1.1 million during the quarter ended March 31, 2013, compared to net loan recoveries of $4,000 during the same period
          last year.

          • As of March 31, 2013, the allowance for loan losses (“ALL”) was $6.6 million, or 2.22% 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 722.16% and 324.36% at March 31, 2013 and December 31, 2012, respectively.

          • Investment securities declined to $168.0 million at March 31, 2013, representing 34.1% of our total assets, compared to $181.2 million, or 36.3% of
          our total assets, at December 31, 2012.

          • Total core deposits, which include non-interest bearing demand deposits, interest bearing demand deposits, and money market deposits and savings,
          were $369.7 million and $371.4 million at March 31, 2013 and December 31, 2012, respectively. Non-interest bearing deposits represent 47.2% of
          total deposit at March 31, 2013, compared to 47.0% at December 31, 2012.

          • Cost of funds declined to 19 basis points for the quarter ended March 31, 2013, compared to 26 basis points for the same period last year.

Capital Adequacy

At March 31, 2013, the Company’s stockholders’ equity totaled $50.6 million compared to $49.2 million at December 31, 2012. At March 31, 2013, the Bank’s total risk-based capital ratio, tier 1 risk-based capital ratio, and tier 1 leverage ratio were 14.41%, 13.15%, and 9.77%, 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 March 31, 2013 were $493.4 million, representing a decrease of approximately $5.8 million, or 1.2%, from $499.2 million at December 31, 2012. Cash and cash equivalents at March 31, 2013 were $27.5 million, representing a decrease of $23.0 million, or 45.6%, from $50.6 million at December 31, 2012. The decline in cash and cash equivalents was primarily related to the increase in loan funding during the quarter ended March 31, 2013. Loans increased by $31.1 million during the quarter from $266.7 million at December 31, 2012 to $297.8 million at March 31, 2013. The majority of growth within our loan portfolio related to increases of $9.0 million, $8.5 million and $7.4 million in our single-family, multi-family and commercial real estate loans, respectively. Loan originations were $66.3 million during the quarter ended March 31, 2013, compared to $25.7 million during the same period last year. Prepayment speeds for the quarter ended March 31, 2013 were 15.2% compared to 30.1% for the same period last year. Investment securities were $168.0 million at March 31, 2013, compared to $181.2 million at December 31, 2012, representing a decrease of $13.2 million, or 7.3%. The weighted average life of our investment securities was 2.52 years and 2.80 years at March 31, 2013 and December 31, 2012, respectively.

Total liabilities at March 31, 2013 decreased by $7.2 million, or 1.6%, to $442.8 million compared to $450.0 million at December 31, 2012. This decrease is primarily due the repayment during the current quarter of a $4.5 million short-term borrowing that was outstanding at December 31, 2012. Total core deposits, which includes non-interest bearing demand deposits, interest bearing demand deposits and money market deposits and savings, were $369.7 million and $371.4 million at March 31, 2013 and December 31, 2012, respectively, representing a decrease of $1.7 million, or 0.45%.

Credit Quality

Allowance and Provision for Loan Losses

The ALL was $6.6 million, or 2.22% of our total loan portfolio, at March 31, 2013, compared to $6.0 million, or 2.26% of our total loan portfolio, at December 31, 2012. At March 31, 2013 and December 31, 2012, our non-performing loans were $917,000 and $1.9 million, respectively. The decline in non-performing loans during the quarter ended March 31, 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 722.16% and 324.36% at March 31, 2013 and December 31, 2012, respectively. In addition, our ratio of non-performing loans to total loans was 0.31% and 0.70% at March 31, 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 quarter ended March 31, 2013, we reversed $500,000 of provision for loan losses. There was no provision for loan losses recorded during the quarter ended March 31, 2012. The reversal in provision for loan losses 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 $31.1 million increase in our loan portfolio during the quarter ended March 31, 2013. Criticized and classified loans generally consist of special mention, substandard and doubtful loans. Special mention, substandard and doubtful loans were $6.5 million, $2.3 million and none, respectively, at March 31, 2013, compared to $4.1 million, $9.8 million and none, respectively, at March 31, 2012. We had net recoveries of $1.1 million and $4,000 during the quarters ended March 31, 2013 and 2012, respectively. Management believes that the ALL as of March 31, 2013 and December 31, 2012 was adequate to absorb known and inherent risks in the loan portfolio.

Non-Performing Assets

Non-performing assets totaled $1.0 million and $1.9 million at March 31, 2013 and December 31, 2012, respectively. Non-accrual loans totaled $917,000 and $1.9 million at March 31, 2013 and December 31, 2012, respectively. At March 31, 2013, non-accrual loans consisted of one commercial loan totaling $572,000 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 March 31, 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 0.20% and 0.39% at March 31, 2013 and December 31, 2012, respectively.

Net Interest Income and Margin

During the quarter ended March 31, 2013, net interest income was $3.9 million, compared to $3.3 million for the same period last year. The average balances of our loan portfolio were $272.9 million and $229.6 million during the quarter ended March 31, 2013 and 2012, respectively. In addition, during the quarter ended March 31, 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 3.30% for the quarter ended March 31, 2013, compared to 3.20% for the same period last year. This 10 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 was primarily due to a decrease in the yield on our earning assets, partially offset by a decline in the cost of our interest bearing liabilities. The decline in yield on our interest earning assets 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% and 0.40% during the quarters ended March 31, 2013 and 2012, respectively.

Non-Interest Income

Non-interest income was $359,000 for the quarter ended March 31, 2013, compared to $347,000 for the same period last year. 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 $3.3 million for the quarter ended March 31, 2013, compared to $3.0 million for the same period last year. The increase in non-interest expense during the quarter ended March 31, 2013 as compared to the same period 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 quarter ended March 31, 2013, we recorded a tax expense of approximately $38,000, compared to $16,000 for the same period last year. The Company does not anticipate owing any substantial taxes for Federal or State purposes until the Company’s net operating losses (“NOL”) are fully utilized.

Net Income

For the quarter ended March 31, 2013, the Company recorded net income of $1.4 million, or $0.16 per diluted share, compared to $592,000, or $0.07 per diluted share, for the same period 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.

1ST CENTURY BANCSHARES, INC. REPORTS FINANCIAL RESULTS
FOR THE QUARTER AND YEAR ENDED DECEMBER 31, 2012

 

Los Angeles, CA (March 6, 2013) – 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 quarter and year ended December 31, 2012 of $912,000 and $2.9 million, respectively, compared to $432,000 and $1.0 million, respectively, for the same periods last year. Pre-tax, pre-provision earnings for the quarter and year ended December 31, 2012 were $963,000 and $3.1 million, respectively, compared to $503,000 and $1.4 million, respectively, 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 core 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 financial results for this year. Net income for the current year increased to $2.9 million and exceeded the prior year results by over 187%. We’ve also experienced robust growth in our balance sheet primarily resulting from a 25% increase in our deposit balances compared to the previous year. At the end of this year, total assets were $499 million, which is the largest reported asset size in our Company’s history. In addition, I’m further encouraged by the decline in our non-performing assets, which have declined to $1.9 million compared to $7.6 million at the end of last year. Our non-performing assets are at the lowest level since 2008, when the economic recession started. Highlights for the year end include:

          •     Growth in total assets from $405 million at December 31, 2011 to $499 million at December 31, 2012;
          •     Growth in total deposits from $332 million at December 31, 2011 to $417 million at December 31, 2012, while reducing our cost of deposits from
                 27 basis points during the prior year to 17 basis points during the current year;
          •     Continued improvement in our credit quality, with non-performing assets being reduced to $1.9 million at December 31, 2012, compared to
                $7.6 million at December 31, 2011;
          •     Growth in total investments from $130 million at December 31, 2011 to $181 million at December 31, 2012;
          •     Improved net interest income of $14.1 million for the year ended December 31, 2012, respectively, compared to $11.3 million for the same
                period last year, despite a decrease in our net interest margin; and
          •     Improved diluted earnings per share, increasing to $0.33 per share for the year ended December 31, 2012, compared to $0.11 per share during
                the same period last year.”

Jason P. DiNapoli, President and Chief Operating Officer of the Company stated, “I’m encouraged by our financial results for this year and I’m cautiously optimistic that we’re well positioned to benefit as economic conditions improve. The progress this year in developing our franchise is primarily attributable to our strong team and their efforts to establish our Bank as the premier community bank serving the Westside of Los Angeles. In addition, our credit strategy to aggressively identify and address problem assets has allowed us to focus our attention on future opportunities, as opposed to dealing with credit issues stemming from the recession.”

2012 4th Quarter and Year End Highlights

         •      The Bank’s total risk-based capital ratio was 15.29% at December 31, 2012, 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.

         •     Total assets increased 23.2%, or $93.9 million, to $499.2 million at December 31, 2012, from $405.3 million at December 31, 2011.

         •     Total core deposits, which include non-interest bearing demand deposits, interest bearing demand deposits, and money market deposits and savings,
               were $371.4 million and $285.6 million at December 31, 2012 and 2011, respectively, representing an increase of $85.7 million, or 30.0%.

         •     Net interest margin was 3.24% and 3.12% for the quarter and year ended December 31, 2012, respectively, compared to 3.07% and 3.21% for the
                same periods last year.

         •     Cost of funds were 20 and 24 basis points for the quarter and year ended December 31, 2012, respectively, compared to 26 and 30 basis points for
                the same periods last year.

         •     Investment securities were $181.2 million at December 31, 2012, representing 36.3% of our total assets, compared to $129.9 million, or 32.1% of
                our total assets at December 31, 2011.

         •     Loans were $266.7 million at December 31, 2012, compared to $233.0 million at December 31, 2011. Loan originations were $52.4 million and
               $123.1 million during the quarter and year ended December 31, 2012, respectively, compared to $58.7 million and $117.1 million during the same
               periods last year.

         •     As of December 31, 2012, the allowance for loan losses (“ALL”) was $6.0 million, or 2.26% of total loans, compared to $5.3 million, or 2.27% of total
               loans, at December 31, 2011. The ALL to non-performing loans was 324.36% and 69.47% at December 31, 2012 and 2011, respectively.

         •     Non-performing loans to total loans was 0.70% and 3.26% at December 31, 2012 and 2011, respectively.

         •     Non-performing assets as a percentage of total assets declined to 0.39% at December 31, 2012, compared to 1.88% at December 31, 2011.

         •     For the quarter and year ended December 31, 2012, the Company recorded net income of $912,000, or $0.10 per diluted share, and $2.9 million, or
               $0.33 per diluted share, respectively. During the same periods last year, the Company reported net income of $432,000, or $0.05 per diluted share,
               and $1.0 million, or $0.11 per diluted share, respectively.

Capital Adequacy

At December 31, 2012, the Company’s stockholders’ equity totaled $49.2 million compared to $45.1 million at December 31, 2011. At December 31, 2012, the Bank’s total risk-based capital ratio, tier 1 risk-based capital ratio, and tier 1 leverage ratio were 15.29%, 14.03%, and 9.22%, 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 December 31, 2012 were $499.2 million, representing an increase of approximately $93.9 million, or 23.2%, from $405.3 million at December 31, 2011. The increase in total assets is primarily attributable to growth in our deposit portfolio. Cash and cash equivalents at December 31, 2012 were $50.6 million, representing an increase of $8.6 million, or 20.6%, from $41.9 million at December 31, 2011. Investment securities were $181.2 million at December 31, 2012, compared to $129.9 million at December 31, 2011, representing an increase of $51.3 million, or 39.5%. The increase in our investment portfolio is primarily attributable to the purchase of agency mortgage-backed securities and investment grade corporate notes of $62.3 million and $28.4 million, respectively, during the year ended December 31, 2012. The weighted average life of our investment securities was 2.80 years and 3.50 years at December 31, 2012 and 2011, respectively. Loans were $266.7 million and $233.0 million at December 31, 2012 and December 31, 2011, respectively. The majority of growth within our loan portfolio primarily related to an increase in our commercial real estate loans. Commercial real estate loans were $110.0 million at December 31, 2012, compared to $70.3 million at December 31, 2011. Prepayment speeds for the quarter and year ended December 31, 2012 were 27.0% and 23.2%, respectively, compared to 18.5% and 20.7% for the same periods last year.

Total liabilities at December 31, 2012 increased by $89.8 million, or 24.9%, to $450.0 million, compared to $360.2 million at December 31, 2011. This increase is primarily due to growth within our non-interest bearing deposits of $73.2 million, and is primarily due to our continued core deposit gathering efforts. Total core deposits, which includes non-interest bearing demand deposits, interest bearing demand deposits and money market deposits and savings, were $371.4 million and $285.6 million at December 31, 2012 and 2011, respectively, representing an increase of $85.7 million, or 30.0%.

Credit Quality

Allowance and Provision for Loan Losses

The ALL was $6.0 million, or 2.26% of our total loan portfolio, at December 31, 2012, compared to $5.3 million, or 2.27%, at December 31, 2011. At December 31, 2012 and 2011, our non-performing loans were $1.9 million and $7.6 million, respectively. The ratio of our ALL to non-performing loans was 324.36% and 69.47% at December 31, 2012 and 2011, respectively. In addition, our ratio of non-performing loans to total loans was 0.70% and 3.26% at December 31, 2012 and 2011, 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 and year ended December 31, 2012. There was no provision for loan losses for the quarter ended December 31, 2011 and a $275,000 provision for loan losses for the year ended December 31, 2011. The decline in provision for loan losses recorded during the year ended December 31, 2012, compared to the same period last year, is primarily due to the improvement in the level of our criticized and classified loans, as well as an increase in our ALL during the current year resulting from net recoveries recognized on previously charged-off loans. These declines were partially offset by the provision needed for the $33.7 million increase in our loan portfolio during the current year as compared to the same period last year. Criticized and classified loans generally consist of special mention, substandard and doubtful loans. Special mention, substandard and doubtful loans were $6.6 million, $3.5 million and none, respectively, at December 31, 2012, compared to $3.7 million, $11.0 million, and none, respectively, at December 31, 2011. We had net recoveries of $1.1 million and $731,000 during the quarter and year ended December 31, 2012, respectively, compared to net recoveries (charge-offs) of $38,000 and ($274,000) during the same periods last year. Management believes that the ALL as of December 31, 2012 and 2011 was adequate to absorb known and inherent risks in the loan portfolio.

Non-Performing Assets

Non-performing assets totaled $1.9 million and $7.6 million at December 31, 2012 and 2011, respectively. Non-accrual loans totaled $1.9 million and $7.6 million at December 31, 2012 and 2011, respectively. At December 31, 2012, non-accrual loans consisted of three commercial loans totaling $1.5 million and one consumer related loan totaling $345,000. 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, 2012, other real estate owned (“OREO”) consisted of one undeveloped land property totaling $90,000. There was no OREO outstanding at December 31, 2011. As a percentage of total assets, the amount of non-performing assets was 0.39% and 1.88% at December 31, 2012 and 2011, respectively.

Refer to “Subsequent Events” discussion below for further details regarding the pay-off of a substandard non-accrual loan in February 2013.

Net Interest Income and Margin

During the quarter and year ended December 31, 2012, net interest income was $4.0 million and $14.1 million, respectively, compared to $3.0 million and $11.3 million for the same periods last year. These increases were primarily attributable to additional interest earned in connection with our loan and investment portfolios as compared to the same periods last year, and were the result of increases in the average balances of these portfolios during the current periods, partially offset by a decline in yields earned. In addition, during the quarter ended December 31, 2012, the Company recognized $396,000 of interest income in connection with the pay-off of a non-accrual loan.

The Company’s net interest margin (net interest income divided by average interest earning assets) was 3.24% for the quarter ended December 31, 2012, compared to 3.07% for the same period last year. This 17 basis point improvement in net interest margin is primarily due to the interest income recognized as a part of the pay-off of the non-accrual loan discussed above, and to a lesser extent, the decline in the cost of interest bearing deposits and borrowings. Excluding the impact of the pay-off of this non-accrual loan, the yield on earning assets is decreasing due to a decline in interest rates earned on these assets during the quarter ended December 31, 2012, as compared to the same period last year. These declines were 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. During the quarter ended December 31, 2012 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 0.35% during the quarter ended December 31, 2012 compared to 0.41% for the same period last year.

The Company’s net interest margin was 3.12% for the year ended December 31, 2012, compared to 3.21% for the same period last year. This 9 basis point decline in net interest margin is primarily due to a decrease in the yield on earning assets, partially offset by a decline in the cost of interest bearing deposits and borrowings and the interest income recognized as a part of the pay-off of a non-accrual loan. 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, 2012, as compared to the same period last year, and was caused by a general decline in interest rates, as well as competitive loan pricing conditions in our market, which have continued to compress loan yields. In addition, 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 0.38% during the year ended December 31, 2012 compared to 0.46% for the same period last year.

Non-Interest Income

Non-interest income was $726,000 and $2.0 million for the quarter and year ended December 31, 2012, respectively, compared to $316,000 and $934,000 for the same periods last year. The increase in non-interest income during the quarter and year ended December 31, 2012, compared to the same period last year is primarily attributable to an increase in loan arrangement fees earned in connection with our college loan funding program. The increase during the year ended December 31, 2012, compared to the same period last year was due to the loan arrangement fees, as well as, other income recognized on interest rate swap transactions entered into during the year ended December 31, 2012. During the first quarter of 2013, the Company terminated its college loan funding program. During the year ended December 31, 2012, net earnings in connection with this program was approximately $550,000, consisting of non-interest income and non-interest expense of $1.5 million and $911,000, respectively. Refer to “Subsequent Events” discussion below for further details regarding the termination of the college loan funding program.

Non-Interest Expense

Non-interest expense was $3.7 million and $13.0 million for the quarter and year ended December 31, 2012, respectively, compared to $2.9 million and $10.8 million for the same periods last year. The increase in non-interest expense during the quarter ended December 31, 2012, is primarily due to the additional costs incurred related to expanding the Bank’s business development team and increased costs associated with our college loan funding program. During the year ended December 31, 2012, this increase was primarily due to the factors discussed above, as well as expenses incurred related to interest rate swaps, as well as the opening of our Santa Monica relationship office in the middle of 2011. As discussed above, the Company terminated its college loan funding program during the first quarter of 2013. Refer to “Subsequent Events” discussion below for further details regarding the termination of the college loan funding program.

Income Tax Provision

During the quarter and year ended December 31, 2012, we recorded a tax expense of approximately $51,000 and $111,000, respectively, compared to $71,000 for the same periods last year. The Company does not anticipate owing any substantial taxes for Federal or State purposes until the Company’s net operating losses (“NOL”) are fully utilized. As of December 31, 2012, the Company had federal and state NOL carryforwards of approximately $4.1 million and $6.8 million, respectively. As of December 31, 2011, the Company had federal and state NOL carryforwards of approximately $8.1 million and $10.6 million, respectively. For federal and California tax purposes, the Company’s NOL carryforwards expire beginning in 2029.

Net Income

For the quarter and year ended December 31, 2012, the Company recorded net income of $912,000, or $0.10 per diluted share, and $2.9 million, or $0.33 per diluted share, respectively, compared to $432,000, or $0.05 per diluted share, and $1.0 million, or $0.11 per diluted share, for the same periods last year.

Subsequent Events

On February 19, 2013, the Company notified the student loan provider that it partners with in connection with its college loan funding program that the Company is terminating its participation in this program. Consistent with its agreement, the Company’s involvement in the program will terminate 60 days from the date of this notification.

On February 20, 2013, the Bank received a pay-off on a commercial loan that was classified at December 31, 2012 as a substandard non-accrual loan. The outstanding principal balance at December 31, 2012 was $810,000. In addition to the pay-off of the outstanding principal balance, this pay-off resulted in a $1.0 million recovery, as well as the recognition of approximately $220,000 of interest income that had been deferred following the commercial loan’s classification as a non-accrual loan in December 2010. At December 31, 2012 and 2011, this loan had a specific allowance for loan losses allocated to it of $500,000 and $700,000, respectively. The pay-off, corresponding recovery and previously deferred interest income were all recognized at the time of pay-off during the quarter ending March 31, 2013. In the ordinary course of business, management will assess the adequacy of the allowance for loan losses taking into consideration, among many other factors, the foregoing event.

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.


1ST CENTURY BANCSHARES, INC. REPORTS FINANCIAL RESULTS
FOR THE QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 2012

 

Los Angeles, CA (November 6, 2012) – 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 nine months ended September 30, 2012 of $687,000 and $2.0 million, respectively, compared to $354,000 and $593,000 for the same periods last year. Pre-tax, pre-provision earnings for the three and nine months ended September 30, 2012 were $712,000 and $2.1 million, respectively, compared to $354,000 and $868,000 for the same periods last year.

Pre-tax, pre-provision earnings, a non-GAAP financial measure, is presented because the Company believes adjusting its results to exclude taxes 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 table below.

Alan I. Rothenberg, Chairman of the Board and Chief Executive Officer of the Company stated, “I’m encouraged by our financial results for the current period. I believe that our core earnings reflect the strength of our balance sheet, as well as the continued progress we are making in connection with resolving our problem loans. For twelve consecutive quarters, we have experienced a decline in our percentage of non-performing loans to total loans. At September 30, 2012, this ratio was 2.6%, and has declined by over 25% compared to the same period last year. In addition, I believe we’re well positioned and prepared to benefit as quality loan demand improves. Highlights for the quarter and year-to-date periods include:

         •     Growth in total assets from $405 million at December 31, 2011 to $474 million at September 30, 2012;
         •     Growth in total deposits from $332 million at December 31, 2011 to $397 million at September 30, 2012, while reducing our cost of deposits to 18
                basis points during the current year-to-date period;
         •     Continued improvement in our credit quality, with non-performing assets being reduced to $6.5 million at September 30, 2012, compared to $7.6
                million at December 31, 2011;
         •     Growth in total investments from $130 million at December 31, 2011 to $195 million at September 30, 2012;
         •     Improved net interest income of $3.4 million and $10.1 million for the three and nine months ended September 30, 2012,
                respectively, compared to $2.8 million and $8.2 million for the same periods last year, despite a decrease in our net interest margin; and
         •     Improved diluted earnings per share, increasing to $0.08 per share and $0.23 per share during the three and nine months ended September 30,
                2012, respectively, compared to $0.04 per share and $0.07 per share during the same periods last year.”

Jason P. DiNapoli, President and Chief Operating Officer of the Company stated, “I’m further encouraged by our ability to consistently grow our core deposit relationships. We believe that these customer relationships are one of the most meaningful parts of our franchise value; and we continue to emphasize our service as a means of differentiating ourselves from competitors within our market. Deposits have increased by approximately 20% since the beginning of the year, and our cost of deposits has declined to 16 basis points during the current quarter.”

2012 3rd Quarter Highlights

        •     The Bank’s total risk-based capital ratio was 15.68% at September 30, 2012, 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.
        •     Total assets increased 17.0%, or $69.1 million, to $474.4 million at September 30, 2012, from $405.3 million at December 31, 2011.
        •     Total core deposits, which include non-interest bearing demand deposits, interest bearing demand deposits, and money market deposits and savings,
               were $350.8 million and $285.6 million at September 30, 2012 and December 31, 2011, respectively, representing an increase of $65.1 million, or
               22.8%.
        •     Net interest margin was 2.95% and 3.07% for the three and nine months ended September 30, 2012, respectively, compared to 3.05% and 3.27%
               for the same periods last year.
        •     Cost of funds were 23 and 25 basis points for the three and nine months ended September 30, 2012, respectively, compared to 32 and 31 basis points
               for the same periods last year.
        •     Investment securities were $194.7 million at September 30, 2012, representing 41.0% of our total assets, compared to $129.9 million, or 32.1% of
               total assets at December 31, 2011.
        •     Loans were $241.3 million at September 30, 2012, compared to $233.0 million at December 31, 2011. Loan originations were $23.7 million and
              $70.6 million during the three and nine months ended September 30, 2012, respectively, compared to $18.0 million and $58.4 million during the
               same periods last year.
        •     As of September 30, 2012, the allowance for loan losses (“ALL”) was $4.9 million, or 2.02% of total loans, compared to $5.3 million, or 2.27% of total
               loans, at December 31, 2011. The ALL to non-performing loans was 76.76% and 69.47% at September 30, 2012 and December 31, 2011,
               respectively.
        •     Non-performing loans to total loans was 2.64% and 3.26% at September 30, 2012 and December 31, 2011, respectively.
        •     Non-performing assets as a percentage of total assets declined to 1.37% at September 30, 2012, compared to 1.88% at December 31, 2011.
        •     For the three and nine months ended September 30, 2012, the Company recorded net income of $687,000, or $0.08 per diluted share, and $2.0
               million, or $0.23 per diluted share, respectively. For the three and nine months ended September 30, 2011, the Company recorded net income of
               $354,000, or $0.04 per diluted share, and $593,000, or $0.07 per diluted share, respectively.

Capital Adequacy

At September 30, 2012, the Company’s stockholders’ equity totaled $48.6 million compared to $45.1 million at December 31, 2011. At September 30, 2012, the Bank’s total risk-based capital ratio, tier 1 risk-based capital ratio, and tier 1 leverage ratio were 15.68%, 14.43%, and 9.49%, 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 September 30, 2012 were $474.4 million, representing an increase of approximately $69.1 million, or 17.0%, from $405.3 million at December 31, 2011. The increase in total assets is primarily attributable to growth in our deposit portfolio. Cash and cash equivalents at September 30, 2012 were $36.5 million, representing a decrease of $5.4 million, or 12.9%, from $41.9 million at December 31, 2011. Investment securities were $194.7 million at September 30, 2012, compared to $129.9 million at December 31, 2011, representing an increase of $64.8 million, or 49.8%. The increase in our investment portfolio is primarily attributable to the purchase of agency mortgage-backed securities and corporate notes of $62.3 million and $28.4 million, respectively, during the nine months ended September 30, 2012. The average life of our investment securities was 3.14 years and 3.50 years at September 30, 2012 and December 31, 2011, respectively. Loans were $241.3 million and $233.0 million at September 30, 2012 and December 31, 2011, respectively. The nominal growth within our loan portfolio is primarily being caused by a lack of quality loan demand, as well as elevated prepayment speeds during the current year. Prepayment speeds for the three and nine months ended September 30, 2012 were 19.4% and 21.9%, respectively, compared to 38.1% and 12.3% for the same periods last year.

Total liabilities at September 30, 2012 increased by $65.6 million, or 18.2%, to $425.8 million, compared to $360.2 million at December 31, 2011. This increase is primarily due to growth within our non-interest bearing deposits of $47.7 million, and is primarily due to our continued core deposit gathering efforts. Total core deposits, which include non-interest bearing demand deposits, interest bearing demand deposits and money market deposits and savings, were $350.8 million and $285.6 million at September 30, 2012 and December 31, 2011, respectively, representing an increase of $65.1 million, or 22.8%.

Credit Quality

Allowance and Provision for Loan Losses

The ALL was $4.9 million, or 2.02% of our total loan portfolio, at September 30, 2012, compared to $5.3 million, or 2.27%, at December 31, 2011. At September 30, 2012 and December 31, 2011, our non-performing loans were $6.4 million and $7.6 million, respectively. The ratio of our ALL to non-performing loans was 76.76% and 69.47% at September 30, 2012 and December 31, 2011, respectively. In addition, our ratio of non-performing loans to total loans was 2.64% and 3.26% at September 30, 2012 and December 31, 2011, 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 three and nine months ended September 30, 2012. There was no provision for loan losses for the three months ended September 30, 2011 and a $275,000 provision for loan losses for the nine months ended September 30, 2011. The decline in provision for loan losses recorded during the nine months ended September 30, 2012, compared to the same period last year, is primarily due to the improvement 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 $888,000, $8.1 million and none, respectively, at September 30, 2012, compared to $6.8 million, $10.4 million, and $900,000, respectively, at September 30, 2011. We had net recoveries of $15,000 and $162,000 during the three months ended September 30, 2012 and 2011, respectively, and net charge-offs of $403,000 and $312,000 during the nine months ended September 30, 2012 and 2011, respectively. Management believes that the ALL as of September 30, 2012 and December 31, 2011 was adequate to absorb known and inherent risks in the loan portfolio.

Non-Performing Assets

Non-performing assets totaled $6.5 million and $7.6 million at September 30, 2012 and December 31, 2011, respectively. Nonaccrual loans totaled $6.4 million and $7.6 million at September 30, 2012 and December 31, 2011, respectively. At September 30, 2012, non-accrual loans consisted of three commercial loans totaling $1.8 million, one commercial real estate loan totaling $3.1 million, one commercial land loan totaling $1.1 million and one consumer related loan totaling $345,000. 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 September 30, 2012, other real estate owned (“OREO”) consisted of one commercial real estate property totaling $50,000 and one undeveloped land property totaling $90,000. There was no OREO outstanding at December 31, 2011. As a percentage of total assets, the amount of non-performing assets was 1.37% and 1.88% at September 30, 2012 and December 31, 2011, respectively.

Net Interest Income and Margin

During the three and nine months ended September 30, 2012, net interest income was $3.4 million and $10.1 million, respectively, compared to $2.8 million and $8.2 million for the same periods last year. These increases were primarily attributable to additional interest earned in connection with our loan and investment portfolios as compared to the same periods last year, and were the result of increases in the average balances of these portfolios during the current periods, partially offset by a decline in yields earned.

The Company’s net interest margin (net interest income divided by average interest earning assets) was 2.95% for the three months ended September 30, 2012, compared to 3.05% for the same period last year. This 10 basis point decline in net interest margin is primarily due to a decrease in the yield on earning assets, partially offset by a decline in the cost of interest bearing deposits and borrowings. The decrease in yield on earning assets is primarily attributable to a decline in interest rates earned on these assets during the three months ended September 30, 2012, as compared to the same period last year, and was caused by a general decline in interest rates, as well as competitive loan pricing conditions in our market, which have continued to compress loan yields. During the three months ended September 30, 2012 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 0.38% during the three months ended September 30, 2012 compared to 0.49% for the same period last year. The Company’s net interest margin was 3.07% for the nine months ended September 30, 2012, compared to 3.27% for the same period last year. This 20 basis point decline in net interest margin is primarily due to a decrease in the yield on earning assets, partially offset by a decline 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 nine months ended September 30, 2012, as compared to the same period last year, and was caused by a general decline in interest rates, as well as competitive loan pricing conditions in our market, which have continued to compress loan yields. In addition, 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 0.39% during the nine months ended September 30, 2012 compared to 0.48% for the same period last year.

Non-Interest Income

Non-interest income was $424,000 and $1.3 million for the three and nine months ended September 30, 2012, respectively, compared to $222,000 and $618,000 for the same periods last year. The increase in non-interest income during the three months ended September 30, 2012, compared to the same period last year is primarily attributable to an increase in loan arrangement fees earned in connection with our college loan funding program. The increase during the nine months ended September 30, 2012, compared to the same period last year was due to the loan arrangement fees discussed above, as well as, other income recognized on interest rate swap transactions entered into during the nine months ended September 30, 2012.

Non-Interest Expense

Non-interest expense was $3.1 million and $9.3 million for the three and nine months ended September 30, 2012, respectively, compared to $2.7 million and $8.0 million for the same periods last year. The increase in non-interest expense during the three months ended September 30, 2012, is primarily due to the additional costs incurred related to expanding the Bank’s business development team and increased costs associated with our college loan funding program. During the nine months ended September 30, 2012, this increase was primarily due to the factors discussed above, as well as expenses incurred related to interest rate swaps, as well as the opening of our Santa Monica relationship office in the middle of 2011.

Income Tax Provision

During the three and nine months ended September 30, 2012, we recorded a tax expense of approximately $25,000 and $60,000, respectively. 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 three and nine months ended September 30, 2011, we did not record an income tax provision.

Net Income

For the three and nine months ended September 30, 2012, the Company recorded net income of $687,000, or $0.08 per diluted share, and $2.0 million, or $0.23 per diluted share, respectively, compared to $354,000, or $0.04 per diluted share, and $593,000, or $0.07 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) 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.

 

1ST CENTURY BANCSHARES, INC. REPORTS FINANCIAL RESULTS
FOR THE QUARTER AND SIX MONTHS ENDED JUNE 30, 2012

 

Los Angeles, CA (August 7, 2012)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, 2012 of $751,000 and $1.3 million, respectively, compared to $116,000 and $240,000 for the same periods last year. Pre-tax, pre-provision earnings for the three and six months ended June 30, 2012 was $770,000 and $1.4 million, respectively, compared to $191,000 and $515,000 for the same periods last year.

Pre-tax, pre-provision earnings, a non-GAAP financial measure, is 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 table below.

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 current quarter and year-to-date periods. These results represent our fifth consecutive quarter of improved earnings and our current year-to-date net income has already exceeded our net income for the entire prior year. In addition, this is the largest reported asset size in our Company’s history. Highlights for the quarter and year-to-date periods include:

          •     Growth in total assets from $405 million at December 31, 2011 to $454 million at June 30, 2012;
          •     Growth in total deposits from $332 million at December 31, 2011 to $380 million at June 30, 2012, while reducing our cost of funds to 26 basis
                 points;
          •     Continued improvement in our credit quality, with non-performing assets being reduced to $6.8 million at June 30, 2012, compared to $7.6
                 million at December 31, 2011;
          •     Improved net interest income of $3.4 million and $6.7 million for the three and six months ended June 30, 2012, compared to $2.7 million and
                 $5.4 million for the same periods last year, despite a decrease in our net interest margin; and
          •     Improved diluted earnings per share, increasing to $0.09 per share and $0.15 per share during the three and six months ended June 30, 2012,
                 respectively, compared to $0.01 per share and $0.03 per share during the same periods last year.”

Jason P. DiNapoli, President and Chief Operating Officer of the Company stated, “We also continue to benefit from our proactive and aggressive approach to addressing credit issues. Our percentage of non-performing loans to total loans has improved to 2.8% at June 30, 2012, over 21% less than the same period last year, and down by 58% since this ratio peaked in 2009.”

2012 2nd Quarter Highlights

         •     The Bank’s total risk-based capital ratio was 15.82% at June 30, 2012, compared to the requirement of 10.00% to 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.
         •     Total assets increased 12.1%, or $49.1 million, to $454.4 million at June 30, 2012, from $405.3 million at December 31, 2011.
         •     Total core deposits, which include non-interest bearing demand deposits, interest bearing demand deposits, and money market deposits and savings,
                were $334.2 million and $285.6 million at June 30, 2012 and December 31, 201, respectively, representing an increase of $48.6 million, or 17.0%.
         •     Net interest margin was 3.09% and 3.14% for the three and six months ended June 30, 2012, respectively, compared to 3.21% and 3.39% for the
                same periods last year.
         •     Cost of funds were 26 basis points for both the three and six months ended June 30, 2012, compared to 32 and 31 basis points for the same periods
                last year.
         •     Investment securities were $162.9 million at June 30, 2012, representing 35.8% of our total assets, compared to $129.9 million, or 32.1% of total
                assets at December 31, 2011.
         •     Loans were $236.3 million at June 30, 2012, compared to $233.0 million at December 31, 2011. Loan originations were $21.2 million and $46.9
                million during the three and six months ended June 30, 2012, respectivel, compared to $10.5 million and $40.4 million during the same periods
                last year.  
         •     As of June 30, 2012, the allowance for loan losses (“ALL”) was $4.9 million, or 2.06% of total loans, compared to $5.3 million, or 2.27% of total
                loans, at December 31, 2011. The ALL to non-performing loans was 72.88% and 69.47% at June 30, 2012 and December 31, 2011, respectively.
         •     Non-performing loans to total loans was 2.83% and 3.26% at June 30, 2012 and December 31, 2011, respectively.
         •     Non-performing assets as a percentage of total assets declined to 1.50% at June 30, 2012, compared to 1.88% at December 31, 2011.
         •     For the three and six months ended June 30, 2012, the Company recorded net income of $751,000, or $0.09 per diluted share, and $1.3 million, or
                $0.15 per diluted share, respectively. During the same periods last year, the Company reported net income of $116,000, or $0.01 per diluted share,
                and $240,000, or $0.03 per diluted share, respectively.

Capital Adequacy

At June 30, 2012, the Company’s stockholders’ equity totaled $46.6 million compared to $45.1 million at December 31, 2011. At June 30, 2012, the Bank’s total risk-based capital ratio, tier 1 risk-based capital ratio, and tier 1 leverage ratio were 15.82%, 14.56%, and 9.77%, respectively, compared to the requirements of 10.00%, 6.00%, and 5.00%, respectively, to be considered a “well capitalized” financial institution for regulatory purposes.

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 June 30, 2012, the Company had repurchased 534,171 shares in the open market at a cost ranging from $3.35 to $4.02 per share in connection with this program. During the six months ended June 30, 2012, the Company repurchased 43,847 shares in the open market at a cost ranging from $3.52 to $3.99 per share in connection with this program. At June 30, 2012, the remaining value of shares that may be repurchased under this program was $29,000.

Balance Sheet

Total assets at June 30, 2012 were $454.4 million, representing an increase of approximately $49.1 million, or 12.1%, from $405.3 million at December 31, 2011. The increase in total assets is primarily attributable to growth in our deposit portfolio. Cash and cash equivalents at June 30, 2012 were $53.6 million, representing an increase of $11.6 million, or 27.8%, from $41.9 million at December 31, 2011. Investment securities were $162.9 million at June 30, 2012, compared to $129.9 million at December 31, 2011, representing an increase of $33.0 million, or 25.4%. The average life of our investment securities was 3.26 years and 3.50 years at June 30, 2012 and December 31, 2011, respectively. Loans were $236.3 million and $233.0 million at June 30, 2012 and December 31, 2011, respectively. The nominal growth within our loan portfolio is primarily being caused by a lack of quality loan demand, as well as elevated prepayment speeds during the current year. Prepayment speeds for the three and six months ended June 30, 2012 were 16.2% and 23.1%, respectively, compared to 6.9% and 13.1% for the same periods last year.

Total liabilities at June 30, 2012 increased by $47.5 million, or 13.2%, to $407.8 million, compared to $360.2 million at December 31, 2011. This increase is primarily due to growth within our money market deposits and savings and non-interest bearing deposits of $19.3 million and $27.6 million, respectively. These increases were due to continued core deposit gathering efforts. Total core deposits, which include non-interest bearing demand deposits, interest bearing demand deposits and money market deposits and savings, were $334.2 million and $285.6 million at June 30, 2012 and December 31, 2011, respectively, representing an increase of $48.5 million, or 17.0%.

Credit Quality

Allowance and Provision for Loan Losses

The ALL was $4.9 million, or 2.06% of our total loan portfolio, at June 30, 2012, compared to $5.3 million, or 2.27%, at December 31, 2011. At June 30, 2012 and December 31, 2011, our non-performing loans were $6.7 million and $7.6 million, respectively. The ratio of our ALL to non-performing loans was 72.88% and 69.47% at June 30, 2012 and December 31, 2011, respectively. In addition, our ratio of non-performing loans to total loans was 2.83% and 3.26% at June 30, 2012 and December 31, 2011, 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 three and six months ended June 30, 2012, compared to a $75,000 and $275,000 provision for loan losses for the same periods last year. The decline in provision for loan losses recorded during the three and six months ended June 30, 2012, compared to the same periods last year, is primarily due to the improvement 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 $1.9 million, $9.0 million and none, respectively, at June 30, 2012, compared to $7.2 million, $10.9 million, and $1.1 million, respectively, at June 30, 2011. We had net charge-offs of $422,000 and $418,000 during the three and six months ended June 30, 2012, compared to net charge-offs of $467,000 and $474,000 during the same periods last year. Management believes that the ALL as of June 30, 2012 and December 31, 2011 was adequate to absorb known and inherent risks in the loan portfolio.

Non-Performing Assets

Non-performing assets totaled $6.8 million and $7.6 million at June 30, 2012 and December 31, 2011, respectively. Non-accrual loans totaled $6.7 million and $7.6 million at June 30, 2012 and December 31, 2011, respectively. At June 30, 2012, non-accrual loans consisted of three commercial loans totaling $1.9 million, one commercial real estate loan totaling $3.2 million, one commercial land loan totaling $1.3 million and one consumer related loan totaling $345,000. 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 June 30, 2012, other real estate owned (“OREO”) consisted of one commercial real estate property totaling $50,000 and one undeveloped land property totaling $90,000. There was no OREO outstanding at December 31, 2011. As a percentage of total assets, the amount of non-performing assets was 1.50% and 1.88% at June 30, 2012 and December 31, 2011, respectively.

Net Interest Income and Margin

During the three and six months ended June 30, 2012, net interest income was $3.4 million and $6.7 million, respectively, compared to $2.7 million and $5.4 million for the same periods last year. These increases were primarily attributable to additional interest earned in connection with our loan and investment portfolios as compared to the same periods last year, and were the result of increases in the average balances of these portfolios during the current periods, partially offset by a decline in yields earned.

The Company’s net interest margin (net interest income divided by average interest earning assets) was 3.09% for the three months ended June 30, 2012, compared to 3.21% for the same period last year. This 12 basis point decline in net interest margin is primarily due to a decrease in the yield on earning assets, partially offset by a decline in the cost of interest bearing deposits and borrowings. The decrease in yield on earning assets is primarily attributable to a decline in interest rates earned on these assets during the three months ended June 30, 2012, as compared to the same period last year, and was caused by a general decline in interest rates, as well as competitive loan pricing conditions in our market, which have continued to compress loan yields. During the three months ended June 30, 2012 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 0.40% during the three months ended June 30, 2012 compared to 0.48% for the same period last year.

The Company’s net interest margin was 3.14% for the six months ended June 30, 2012, compared to 3.39% for the same period last year. This 25 basis point decline in net interest margin is primarily due to a decrease in the yield on earning assets, partially offset by a decline 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 six months ended June 30, 2012, as compared to the same period last year, and was caused by a general decline in interest rates, as well as competitive loan pricing conditions in our market, which have continued to compress loan yields. In addition, 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 0.40% during the six months ended June 30, 2012 compared to 0.48% for the same period last year.

Non-Interest Income

Non-interest income was $489,000 and $836,000 for the three and six months ended June 30, 2012, compared to $192,000 and $396,000 for the same periods last year. The increase in non-interest income was primarily attributable to an increase in loan arrangement fees earned in connection with our college loan funding program, as well as, other income recognized on interest rate swap transactions that were entered into during the three months ended June 30, 2012 to facilitate the needs of our customers.

Non-Interest Expense

Non-interest expense was $3.1 million and $6.1 million for the three and six months ended June 30, 2012, compared to $2.7 million and $5.3 million for the same periods last year. The increase in non-interest expense is primarily due to the additional costs incurred related to expanding the Bank’s business development team, increased costs associated with our college loan funding program, expenses incurred related to interest rate swaps, as well as the opening of our Santa Monica relationship office in the middle of 2011.

Income Tax Provision

During the three and six months ended June 30, 2012, we recorded a tax expense of approximately $19,000 and $35,000, respectively. 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 three and six months ended June 30, 2011, we did not record an income tax provision.

Net Income

For the three and six months ended June 30, 2012, the Company recorded net income of $751,000, or $0.09 per diluted share, and $1.3 million, or $0.15 per diluted share, compared to $116,000, or $0.01 per diluted share, and $240,000, 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 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) 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.

 

1ST CENTURY BANCSHARES, INC. REPORTS FINANCIAL RESULTS
FOR THE QUARTER ENDED MARCH 31, 2012

Los Angeles, CA (May 8, 2012) – 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 ended March 31, 2012 of $592,000, compared to $123,000 for the same period last year. Pre-tax, pre-provision earnings for the quarters ended March 31, 2012 and 2011 were $608,000 and $323,000, respectively.

Alan I. Rothenberg, Chairman of the Board and Chief Executive Officer of the Company stated, “I’m encouraged by our financial results for the first quarter, which represent the continuation of our improving financial performance as market conditions and the general economy gradually stabilize. In addition to the increase in net income, highlights for the quarter include:

  • Growth in total assets from $405 million at December 31, 2011 to $433 million at March 31, 2012;
  • Growth in total deposits from $332 million at December 31, 2011 to $360 million at March 31, 2012, while reducing our cost of funds to 26 basis points;
  • Continued improvement in our credit quality, with non-performing assets reduced to 1.7% of total assets, over a 30% decline in this ratio compared to the same period last year;
  • Improved net interest income of $3.3 million for the quarter ended March 31, 2012 as compared to $2.7 million for the quarter ended March 31, 2011, despite a decrease in our net interest margin;
  • Improved pre-tax, pre-provision earnings, which increased by over 88% during the current quarter as compared to the same period last year; and
  • Improved diluted earnings per share, increasing to $0.07 per share from $0.01 per share during the first quarter of last year.”

Pre-tax, pre-provision earnings, a non-GAAP financial measure, is 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, “I’m also encouraged by our growth. Over the past twelve months, our total assets have increased by approximately $115 million, or over 35%, and we believe that West Los Angeles continues to offer substantial opportunities for our institution. Although we continue to experience considerable growth, our Bank’s capital ratios remain 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 optimistic about our consistently improving credit quality as our non-performing assets continue a declining trend. Since March 31, 2011, non-performing assets as a percentage of total assets has declined by over 30% and has declined by over 65% since its peak in 2009.”


2012 1st Quarter Highlights

  • The Bank’s total risk-based capital ratio was 17.34% at March 31, 2012, compared to the regulatory requirement of 10.00% for “well capitalized” financial institutions. The Bank’s equity is comprised solely of common stock, and 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.


  • Total assets increased 6.9%, or $28.1 million, to $433.4 million at March 31, 2012, from $405.3 million at December 31, 2011.


  • Total core deposits, which include non-interest bearing demand deposits, interest bearing demand deposits, and money market deposits and savings, were $313.5 million and $285.6 million at March 31, 2012 and December 31, 2011, respectively, representing an increase of $27.8 million, or 9.7%.


  • Net interest margin was 3.20% for the quarter ended March 31, 2012, compared to 3.59% for the same period last year.


  • Cost of funds was 26 basis points for the quarter ended March 31, 2012, compared to 29 basis points for the same period last year.


  • Investment securities were $130.1 million at March 31, 2012, representing 30.0% of our total assets, compared to $129.9 million, or 32.1% of total assets at December 31, 2011.


  • Loans were $230.0 million at March 31, 2012, compared to $233.0 million at December 31, 2011. Loan originations were $25.7 million and $29.9 million during the quarters ended March 31, 2012 and 2011, respectively.


  • As of March 31, 2012, the allowance for loan losses (“ALL”) was $5.3 million, or 2.30% of total loans, compared to $5.3 million, or 2.27% of total loans, at December 31, 2011. The ALL to non-performing loans was 72.59% and 69.47% at March 31, 2012 and December 31, 2011, respectively.


  • Non-performing loans to total loans was 3.17% and 3.26% at March 31, 2012 and December 31, 2011, respectively.


  • Non-performing assets as a percentage of total assets declined to 1.68% at March 31, 2012, compared to 1.88% at December 31, 2011.


  • For the quarter ended March 31, 2012, the Company recorded net income of $592,000, or $0.07 per diluted share, compared to $123,000, or $0.01, during the same period last year.

    Capital Adequacy

    At March 31, 2012, the Company’s stockholders’ equity totaled $45.7 million compared to $45.1 million at December 31, 2011. At March 31, 2012, the Bank’s total risk-based capital ratio, tier 1 risk-based capital ratio, and tier 1 leverage ratio were 17.34%, 16.08%, and 10.18%, 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 March 31, 2012, the Company had repurchased 534,171 shares in the open market at a cost ranging from $3.35 to $4.02 per share in connection with this program. During the quarter ended March 31, 2012, the Company repurchased 43,847 shares in the open market at a cost ranging from $3.52 to $3.99 per share in connection with this program. At March 31, 2012, the remaining value of shares that may be repurchased under this program was $29,000.

    Balance Sheet

    Total assets at March 31, 2012 were $433.4 million, representing an increase of approximately $28.1 million, or 6.9%, from $405.3 million at December 31, 2011. The increase in total assets is primarily attributable to an increase in cash and cash equivalents, resulting from growth in our deposit portfolio. Cash and cash equivalents at March 31, 2012 were $73.2 million, representing an increase of $31.2 million, or 74.5%, from $41.9 million at December 31, 2011. Investment securities were $130.1 million at March 31, 2012, compared to $129.9 million at December 31, 2011. The average life of our investment securities was 3.21 years and 3.50 years at March 31, 2012 and December 31, 2011, respectively. Loans were $230.0 million and $233.0 million at March 31, 2012 and December 31, 2011, respectively.

    Total liabilities at March 31, 2012 increased by $27.5 million, or 7.6%, to $387.7 million, compared to $360.2 million at December 31, 2011. This increase is primarily due to growth within our money market deposits and savings and non-interest bearing deposits of $14.9 million and $12.9 million, respectively. These increases were due to continued core deposit gathering efforts. Total core deposits, which include non-interest bearing demand deposits, interest bearing demand deposits and money market deposits and savings, were $313.5 million and $285.6 million at March 31, 2012 and December 31, 2011, respectively, representing an increase of $27.8 million, or 9.7%.

    Credit Quality

    Allowance and Provision for Loan Losses

    The ALL was $5.3 million, or 2.30% of our total loan portfolio, at March 31, 2012, compared to $5.3 million, or 2.27%, at December 31, 2011. At March 31, 2012 and December 31, 2011, our non-performing loans were $7.3 million and $7.6 million, respectively. The ratio of our ALL to non-performing loans was 72.59% and 69.47% at March 31, 2012 and December 31, 2011, respectively. In addition, our ratio of non-performing loans to total loans was 3.17% and 3.26% at March 31, 2012 and December 31, 2011, 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 March 31, 2012, compared to a $200,000 provision for loan losses for the same period last year. The decline in provision for loan losses recorded during the quarter ended March 31, 2012, compared to the same period last year, is primarily due to the improvement 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 $4.1 million, $9.8 million and none, respectively, at March 31, 2012, compared to $4.9 million, $15.3 million, and $1.1 million, respectively, at March 31, 2011. We had net recoveries of $4,000 during the quarter ended March 31, 2012, compared to net charge-offs of $7,000 during the same period last year. Management believes that the ALL as of March 31, 2012 and December 31, 2011 was adequate to absorb known and inherent risks in the loan portfolio.

    Non-Performing Assets

    Non-performing assets totaled $7.3 million and $7.6 million at March 31, 2012 and December 31, 2011, respectively. Non-accrual loans totaled $7.3 million and $7.6 million at March 31, 2012 and December 31, 2011, respectively. At March 31, 2012, non-accrual loans consisted of three commercial loans totaling $1.9 million, two commercial real estate loans totaling $3.7 million, one commercial land loan totaling $1.3 million and one consumer related loan totaling $345,000. 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. As of March 31, 2012 and December 31, 2011, there was no other real estate owned. As a percentage of total assets, the amount of non-performing assets was 1.68% and 1.88% at March 31, 2012 and December 31, 2011, respectively.

    Net Interest Income and Margin

    During the quarter ended March 31, 2012, net interest income was $3.3 million, compared to $2.7 million for the same period last year. This increase is primarily related to an increase of $418,000 in interest earned in connection with our loan portfolio and an increase of $221,000 in interest earned on our investment securities. The increase in our loan interest income was primarily related to a $44.3 million increase in the average balance of loans, partially offset by a 28 basis point decline in our loan yield. The increase in interest earned on our investment portfolio was primarily due to a $58.3 million increase in the average balance of residential mortgage-backed securities, partially offset by a 108 basis point decline in the yield earned on these securities.

    The Company’s net interest margin (net interest income divided by average interest earning assets) was 3.20% for the quarter ended March 31, 2012, compared to 3.59% for the same period last year. This 39 basis point decline in net interest margin is primarily due to a decrease in the yield on earning assets of 41 basis points, partially offset by a decline of 7 basis points in the cost of interest bearing deposits and borrowings. The decrease in yield on earning assets is primarily attributable to a decline in interest rates earned on these assets during the quarter ended March 31, 2012, as compared to the same period last year, and was caused by a general decline in interest rates, as well as competitive loan pricing conditions in our market, which have continued to intensify and compress loan yields. During the quarter ended March 31, 2012 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 0.40% during the quarter ended March 31, 2012 compared to 0.47% for the same period last year.

    Non-Interest Income

    Non-interest income was $347,000 for the quarter ended March 31, 2012, compared to $204,000 for the same period last year. There were no significant changes in the sources or amounts of non-interest income during the three months ended March 31, 2012 and 2011.

    Non-Interest Expense

    Non-interest expense was $3.0 million and $2.6 million for the quarters ended March 31, 2012 and 2011, respectively. The variance in non-interest expense is primarily due to the additional costs incurred related to expanding the Bank’s business development team and the opening of our Santa Monica relationship office in the middle of 2011.

    Income Tax Provision

    During the quarter ended March 31, 2012, we recorded a tax expense of approximately $16,000, in connection with alternative minimum taxes due. 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 ended March 31, 2011, we did not record an income tax provision.

    Net Income

    For the quarter ended March 31, 2012, the Company recorded net income of $592,000, or $0.07 per diluted share, compared to $123,000, or $0.01 per diluted share, for the same period 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) 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.


     

    1ST CENTURY BANCSHARES, INC. REPORTS FINANCIAL RESULTS
    FOR THE QUARTER AND YEAR ENDED DECEMBER 31, 2011

    Los Angeles, CA (March 6, 2012) – 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.

     

     

    1ST CENTURY BANCSHARES, INC. REPORTS FINANCIAL RESULTS
    FOR THE QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 2011 

    Los Angeles, CA (November 8, 2011) – 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 nine months ended September 30, 2011 of $354,000 and $593,000, respectively, compared to $155,000 and $398,000 for the same periods last year.  Pre-tax, pre-provision earnings for the three and nine months ended September 30, 2011 was $354,000 and $868,000, respectively, compared to $255,000 and $598,000 for the same periods 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 to pre-tax, pre-provision earnings is provided in the summary financial information below.

    Alan I. Rothenberg, Chairman of the Board and Chief Executive Officer of the Company stated, “I’m encouraged by our results for the quarter, which continue to improve despite a challenging environment.  Highlights of the quarter and year-to-date periods include:

    • Growth in total assets from $308 million at December 31, 2010 to $384 million at September 30, 2011;
    • Growth in total deposits from $258 million at December 31, 2010 to $326 million at September 30, 2011, resulting primarily from robust demand for our core deposit services, which has reduced our cost of funds to 31 basis points;
    • Continued improvement in our credit quality, with non-performing assets reduced to 1.9% of total assets, a decline of 28% since the beginning of the year;
    • Improved net interest income of $8.2 million during the first nine months of 2011 as compared to $7.3 million during the first nine months of 2010; and
    • Improved pre-tax, pre-provision earnings, which have increased by over 45% during the nine months ended September 30, 2011, compared to the same period last year, despite a reduction in our net interest margin.” 

    Mr. Rothenberg continued, “I remain cautiously optimistic regarding the consistent improvement in our credit quality trends, as well as the level of our non-performing assets.  These metrics have greatly improved since the third quarter of 2009, which we believe to be the peak of our credit related issues during this economic cycle.  As of September 30, 2011, the ratio of non-performing assets to total assets and non-performing loans to total loans were 1.87% and 3.59%, respectively, compared to 4.87% and 6.66% at September 30, 2009.  Furthermore, the Bank continues to maintain capital ratios that are double the regulatory requirements to be considered ‘well capitalized’.”

    Jason P. DiNapoli, President and Chief Operating Officer of the Company stated, “In addition, we’re beginning to see a modest recovery in loan demand.  Despite only a $5.5 million increase in gross loans, loan originations increased to over $58.4 million during the nine months ended September 30, 2011, compared to $32.7 million for the same period last year.  I attribute a significant portion of this progress to our continued investment in our business development teams, which through their dedication and unsurpassed commitment to serving our customers have become an integral part of our deposit and loan initiatives.”

    2011 3rd Quarter Highlights

    • The Bank's total risk-based capital ratio was 20.15% at September 30, 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 24.6%, or $76.0 million, to $384.4 million at September 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 $279.0 million and $197.9 million at September 30, 2011 and December 31, 2010, respectively, representing an increase of $81.1 million, or 41.0%.

    • Net interest margin was 3.05% and 3.27% for the three and nine months ended September 30, 2011, respectively, compared to 3.46% and 3.73% for the same periods last year.

    • Cost of funds was 32 and 31 basis points for the three and nine months ended September 30, 2011, respectively, compared to 38 and 46 basis points for the same periods last year.

    • Investment securities increased by $44.8 million, or 76.7%, to $103.3 million at September 30, 2011, from $58.5 million at December 31, 2010. During the nine months ended September 30, 2011, the Company increased the level of investment security purchases as a result of excess liquidity generated by deposit growth, which continues to outpace quality loan demand.

    • Gross loans increased $5.5 million, or 3.1%, to $184.8 million at September 30, 2011 from $179.3 million at December 31, 2010. Loan originations were $18.0 million and $58.4 million during the three and nine months ended September 30, 2011, compared to $14.8 million and $32.7 million during the same periods last year.

    • As of September 30, 2011, the allowance for loan losses ("ALL") was $5.2 million or 2.84% 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 79.03% and 74.21% at September 30, 2011 and December 31, 2010, respectively.

    • Non-performing loans decreased $480,000, or 6.7%, to $6.6 million at September 30, 2011 from $7.1 million at December 31, 2010. Non-performing loans to total loans was 3.59% and 3.97% at September 30, 2011 and December 31, 2010, respectively.

    • Non-performing assets as a percentage of total assets declined to 1.87% at September 30, 2011, compared to 2.58% at December 31, 2010.

    • For the three and nine months ended September 30, 2011, the Company recorded net income of $354,000, or $0.04 per diluted share, and $593,000, or $0.07 per diluted share, respectively. During the same periods last year, the Company reported net income of $155,000, or $0.02 per diluted share, and $398,000, or $0.04 per diluted share.

    Capital Adequacy

    At September 30, 2011, the Company's stockholders' equity totaled $45.3 million compared to $44.3 million at December 31, 2010. At September 30, 2011, the Bank's total risk-based capital ratio, tier 1 risk-based capital ratio, and tier 1 leverage ratio were 20.15%, 18.89%, and 11.10%, 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 (the "Board") 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. During the nine months ended September 30, 2011, the Company repurchased 267,345 shares in the open market at a cost ranging from $3.52 to $4.02 per share in connection with this program. At September 30, 2011, the remaining value of shares that may be repurchased under this program was $609,000.

    Balance Sheet

    Total assets increased 24.7%, or $76.0 million, to $384.4 million at September 30, 2011, from $308.4 million at December 31, 2010. The increase in total assets is primarily attributable to increases in cash and cash equivalents, investment securities and gross loans. Cash and cash equivalents increased $26.1 million, or 37.9%, from $69.0 million at December 31, 2010 to $95.1 million at September 30, 2011. Investment securities at September 30, 2011 were $103.3 million, representing an increase of $44.8 million, or 76.7%, from $58.5 million at December 31, 2010. The increase in investment securities was primarily attributable to the purchase of agency mortgage-backed securities, which had an average life of 4.08 years at September 30, 2011. Gross loans at September 30, 2011 were $184.8 million, representing an increase of $5.5 million, or 3.1%, from $179.3 million at December 31, 2010. Loan originations were $18.0 million and $58.4 million during the three and nine months ended September 30, 2011, compared to $14.8 million and $32.7 million during the same periods last year.

    Total liabilities at September 30, 2011 increased by $75.0 million, or 28.4%, to $339.0 million as 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 $29.4 million and $60.6 million, respectively, due to continued core deposit gathering efforts, partially offset by declines of $13.2 million and $8.9 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 $279.0 million and $197.9 million at September 30, 2011 and December 31, 2010, respectively, representing an increase of $81.1 million, or 41.0%. The increase in total liabilities is also partially due to an $8.0 million increase in other borrowings, which were primarily utilized to fund additional loan production during the current year.

    Credit Quality

    Allowance and Provision for Loan Losses

    The ALL was $5.2 million, or 2.84% of our total loan portfolio, at September 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 is primarily a function of improving credit quality related trends within our loan portfolio. During the nine months ended September 30, 2011, our non-performing loans declined to $6.6 million from $7.1 million at December 31, 2010, and the ratio of our ALL to total non-performing loans improved to 79.03% at September 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 September 30, 2011 and December 31, 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 three months ended September 30, 2011 and $275,000 for the nine months ended September 30, 2011, compared to $100,000 and $200,000 for the same periods last year. The decline in provision for loan losses recorded during the three months ended September 30, 2011, as compared to the same period last year, was primarily due to the general improvement 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 $6.8 million, $10.4 million and $900,000, respectively, at September 30, 2011, compared to $14.9 million, $16.7 million, and none at September 30, 2010. We had net recoveries of $162,000 during the three months ended September 30, 2011, and net charge-offs of $312,000 during the nine months ended September 30, 2011, compared to net charge-offs of $528,000 and $1.2 million during the same periods last year. Management believes that the ALL as of September 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 $7.2 million and $8.0 million at September 30, 2011 and December 31, 2010, respectively. Non-accrual loans totaled $6.6 million and $7.1 million at September 30, 2011 and December 31, 2010, respectively. At September 30, 2011, non-accrual loans consisted of four commercial loans totaling $2.3 million, two commercial real estate loans totaling $4.0 million and one consumer related loan totaling $345,000. As of September 30, 2011, other real estate owned ("OREO") consisted of one single-family residential property totaling $532,000, which is located in California. 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 1.87% and 2.58% at September 30, 2011 and December 31, 2010, respectively.

    Net Interest Income and Margin

    During the three and nine months ended September 30, 2011, net interest income was $2.8 million and $8.2 million, respectively, compared to $2.4 million and $7.3 million for the same periods last year. The increases in net interest income during the three and nine months ended September 30, 2011, is 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. These items were partially offset by an increase in interest expense incurred on deposits, caused by growth within our deposit portfolio during the period.

    The Company's net interest margin (net interest income divided by average interest earning assets) was 3.05% for the three months ended September 30, 2011, compared to 3.46% for the same period last year. During the three months ended September 30, 2011, the 41 basis point decline in net interest margin was primarily due to a decrease in the yield on earning assets of 46 basis points, partially offset by a decline of 10 basis points in the cost of interest bearing deposits and borrowings. The decrease in yield on earning assets is primarily attributable to a general decline in interest rates earned on these assets during the three months ended September 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 three months ended September 30, 2011. During the three months ended September 30, 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 general decrease in interest rates paid on these accounts. The average cost of interest bearing deposits and borrowings was 0.44% and 1.39%, respectively during the three months ended September 30, 2011 compared to 0.50% and 2.37% for the same period last year.

    The Company's net interest margin was 3.27% for the nine months ended September 30, 2011, compared to 3.73% for the same period last year. During the nine months ended September 30, 2011, the 46 basis point decline in net interest margin was primarily due to a decrease in the yield on earning assets of 57 basis points, partially offset by a decline of 21 basis points in the cost of interest bearing deposits and borrowings. The decrease in yield on earning assets is primarily attributable to a general decline in interest rates earned on these assets during the nine months ended September 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 nine months ended September 30, 2011. During the nine months ended September 30, 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 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 and borrowings was 0.45% and 1.42%, respectively during the nine months ended September 30, 2011 compared to 0.59% and 2.64% for the same period last year. The average balance of borrowings decreased to $5.6 million during the nine months ended September 30, 2011, as compared to $10.0 million for the same period last year.

    Non-Interest Income

    Non-interest income was $222,000 and $618,000 for the three and nine months ended September 30, 2011, compared to $223,000 and $662,000 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 $2.7 million and $8.0 million for the three and nine months ended September 30, 2011, compared to $2.4 million and $7.4 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 previous quarter. The increase in non-interest expense was partially offset by a reduction in the Bank's FDIC assessments, which declined as a result of a change in the FDIC's methodology regarding calculating a bank's quarterly insurance assessments. The FDIC assessment was $41,000 and $266,000 for the three and nine months ended September 30, 2011, respectively, compared to $107,000 and $283,000 for the same periods last year.

    Income Tax Provision

    During the three and nine months ended September 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 nine months ended September 30, 2011, the Company recorded net income of $354,000, or $0.04 per diluted share, and $593,000, or $0.07 per diluted share, respectively, compared to $155,000, or $0.02 per diluted share, and $398,000, or $0.04 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 institutions, (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):

     

     

     

     

     

     

    September 30, 2011

     

     

    December 31, 2010

     

     

    September 30, 2010

    Balance Sheet Results:

    (unaudited)

    (unaudited)

     

     

     

     

     

     

     

     

     

     

     

     

     

    Total Assets

    $

                     384,375

    $

                     308,364

    $

                     298,910

     

    Gross Loans

     

     

     

    $

                     184,817

     

    $

                     179,271

     

    $

                     169,063

    Allowance for Loan Losses ("ALL")

    $

                        5,246

    $

                        5,283

    $

                        4,519

     

    Non-Performing Assets

     

     

     

    $

                        7,170

     

    $

                        7,963

     

    $

                        7,494

    Deposits:

     

         Non-Interest Bearing Demand Deposits

     

     

     

    $

                     120,895

     

    $

                       91,501

     

    $

                       88,383

         Interest Bearing Demand Deposits

                       24,770

                       33,632

                       32,693

     

         Money Market Deposits and Savings

     

     

     

     

                     133,349

     

     

                       72,757

     

     

                       63,712

         Certificates of Deposit

                       46,893

                       60,099

                       60,839

     

              Total Deposits

     

     

     

    $

                     325,907

     

    $

                     257,989

     

    $

                     245,627

    Total Stockholders' Equity

    $

                       45,331

    $

                       44,338

    $

                       47,163

     

    Gross Loans to Deposits

     

     

     

     

    56.71%

     

     

    69.49%

     

     

    68.83%

    Ending Book Value per Share

    $

                          4.99

    $

                          4.77

    $

                          5.05

     

     

     

     

     

     

     

     

     

     

     

     

     

    Three Months Ended September 30,

    Quarterly Operating Results (unaudited):

     

     

     

     

    2011

     

     

    2010

     

     

     

    Net Interest Income

    $

                        2,815

    $

                        2,433

     

    Provision for Loan Losses

     

     

     

    $

                               -

     

    $

                           100

     

     

     

    Non-Interest Income

    $

                           222

    $

                           223

     

    Non-Interest Expense

     

     

     

    $

                        2,683

     

    $

                        2,401

     

     

     

    Income Tax Provision

    $

                               -

    $

                               -

     

    Net Income

     

     

     

    $

                           354

     

    $

                           155

     

     

     

    Basic Earnings per Share

    $

                          0.04

    $

                          0.02

     

    Diluted Earnings per Share

     

     

     

    $

                          0.04

     

    $

                          0.02

     

     

     

    Quarterly Net Interest Margin*

    3.05%

    3.46%

     

     

     

     

     

     

     

     

     

     

     

     

     

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

     

     

     

     

     

     

     

     

     

     

     

     

     

    Net Income

    $

                           354

    $

                           155

     

    Provision for Loan Losses

     

     

     

     

                               -

     

     

                           100

     

     

     

    Income Tax Provision

                               -

                               -

     

    Pre-Tax, Pre-Provision Earnings

     

     

     

    $

                           354

     

    $

                           255

     

     

     

     

     

     

     

     

     

    Nine Months Ended September 30,

     

     

     

    YTD Operating Results (unaudited):

    2011

     

     

    2010

     

    Net Interest Income

     

     

     

    $

                        8,245

     

    $

                        7,328

     

     

     

    Provision for Loan Losses

    $

                           275

    $

                           200

     

    Non-Interest Income

     

     

     

    $

                           618

     

    $

                           662

     

     

     

    Non-Interest Expense

    $

                        7,995

    $

                        7,392

     

    Income Tax Provision

     

     

     

    $

                               -

     

    $

                               -

     

     

     

    Net Income

    $

                           593

    $

                           398

     

    Basic Earnings per Share

     

     

     

    $

                          0.07

     

    $

                          0.04

     

     

     

    Diluted Earnings per Share

    $

                          0.07

    $

                          0.04

     

    YTD Net Interest Margin*

     

     

     

     

    3.27%

     

     

    3.73%

     

     

     

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

     

     

     

     

     

     

     

     

     

     

     

    Net Income

     

     

     

    $

                           593

     

    $

                           398

     

     

     

    Provision for Loan Losses

                           275

                           200

     

    Income Tax Provision

     

     

     

     

                               -

     

     

                               -

     

     

     

    Pre-Tax, Pre-Provision Earnings

    $

                           868

    $

                           598


    *Percentages are reported on an annualized basis.


     

     

     

    1ST CENTURY BANCSHARES, INC. REPORTS FINANCIAL RESULTS
    FOR THE QUARTER AND SIX MONTHS ENDED JUNE 30, 2011

     

    Los Angeles, CA (August 10, 2011) – 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 milion, 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, 2011

     

     

    December 31, 2010

     

     

    June 30, 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.

     

     

     

    1ST CENTURY BANCSHARES, INC. REPORTS FINANCIAL RESULTS
    FOR THE QUARTER ENDED MARCH 31, 2011

    Los Angeles, CA (May 11, 2011) – 1st Century Bancshares, Inc. (the “Company”) (NASDAQ:FCTY), the holding company of 1st Century Bank, N.A. (the “Bank”), today reported financial results for the quarter ended March 31, 2011. 

    “I’m encouraged by our start to the new year, reporting net income of $123,000 for the first quarter and quarterly growth rates of 10% in our core deposits and over 5% in loans.  These results highlight our team’s commitment to becoming the premier community business bank on the west side of Los Angeles, as well as our belief that, as the economy normalizes, the development of our core deposit franchise will ultimately translate into increased loan demand.  In addition, we further lowered our average cost of funds to 29 basis points during the quarter and increased our total assets to over $319 million.  Our pre-tax pre-provision earnings, which excludes the impact of tax and loan loss provisions, were $323,000 and $124,000, during the three months ended March 31, 2011 and 2010, respectively,” stated Alan I. Rothenberg, Chairman of the Board and Chief Executive Officer of the Company. 

    Jason P. DiNapoli, President and Chief Operating Officer of the Company stated, “From a credit perspective, we continue to experience stability in our portfolio and positive trends related to our problem assets.  In addition, the ratio of our allowance for loan losses to total loans remained strong at 2.9% and our capital ratios were well in excess of the regulatory requirements to be considered ‘well capitalized’.  At March 31, 2011, the Bank’s total risk-based capital ratio was 19.4% compared to the regulatory requirement of 10.0%, with all of our capital being common equity.”  

    Mr. DiNapoli continued, “We remain focused on growing core deposits and looking for quality loans in our West LA market.  As part of this effort, we recently signed a lease in the heart of downtown Santa Monica for our first deposit production office.  This office will further strengthen our roots and franchise on the Westside and is scheduled to open during the second quarter of this 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 to pre-tax, pre-provision earnings is provided in the summary financial information below.

    2011 1st Quarter Highlights

    • The Bank’s total risk-based capital ratio was 19.42% at March 31, 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 3.4%, or $10.6 million, to $319.0 million at March 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 $216.7 million and $197.9 million at March 31, 2011 and December 31, 2010, respectively, representing an increase of $18.8 million, or 9.5%. 

    • Cost of funds was 29 basis points for the three months ended March 31, 2011, compared to 54 basis points for the same period last year.

    • Gross loans increased $9.2 million, or 5.1%, to $188.5 million at March 31, 2011 from $179.3 million at December 31, 2010.  Loan originations were $29.9 million during the three months ended March 31, 2011, compared to $9.9 million during the same period last year.

    • As of March 31, 2011, the allowance for loan losses was $5.5 million, or 2.90% 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 78.36% and 74.22% at March 31, 2011 and December 31, 2010, respectively.

    • Non-performing loans decreased $130,000, or 1.8%, to $7.0 million at March 31, 2011 from $7.1 million at December 31, 2010.  Non-performing loans to total loans was 3.71% and 3.97% at March 31, 2011 and December 31, 2010, respectively. 

    • Non-performing assets as a percentage of total assets declined to 2.46% at March 31, 2011, compared to 2.58% at December 31, 2010. 

    • Net interest margin was 3.59% and 3.96% during the three months ended March 31, 2011 and 2010, respectively. 

    • For the three months ended March 31, 2011 and 2010, the Company recorded net income of $123,000, or $0.01 per diluted share, and $124,000, or $0.01 per diluted share, respectively.

    Capital Adequacy

    At March 31, 2011, the Company’s stockholders’ equity totaled $44.5 million compared to $44.3 million at December 31, 2010.  At March 31, 2011, the Bank’s total risk-based capital ratio, tier 1 risk-based capital ratio, and tier 1 leverage ratio were 19.42%, 18.15%, and 12.94%, respectively, compared to the regulatory requirements for “well capitalized” financial institutions of 10.00%, 6.00%, and 5.00%, respectively.

    On August 16, 2010, we announced that our board of directors had authorized a share repurchase program, permitting us to acquire up to $2.0 million of our common stock, or approximately 6.5% of our outstanding common stock as of June 30, 2010. The manner, price, number and timing of these share repurchases are subject to market conditions and applicable U.S. Securities and Exchange Commission rules. As of March 31, 2011, the Company had repurchased 109,654 shares in the open market in connection with this program, at an average cost per share of $3.80.

    Balance Sheet

    Total assets increased 3.4%, or $10.6 million, to $319.0 million at March 31, 2011, from $308.4 million at December 31, 2010. The increase in total assets was primarily attributable to increases in gross loans and investment securities, partially offset by a decrease in cash and cash equivalents.  Gross loans at March 31, 2011 were $188.5 million, representing an increase of $9.2 million, or 5.1%, from $179.3 million at December 31, 2010.  Loan originations were $29.9 million during the three months ended March 31, 2011, compared to $9.9 million during the same period last year.  Investment securities at March 31, 2011 were $64.6 million, representing an increase of $6.1 million, or 10.4%, from $58.5 million at December 31, 2010.  Cash and cash equivalents decreased $4.4 million, or 6.4%, from $69.0 million at December 31, 2010 to $64.6 million at March 31, 2011.  The decrease in cash and cash equivalents was primarily attributable to utilizing excess liquidity to fund loan originations and to purchase investment securities.

    Total liabilities at March 31, 2011 increased by $10.6 million, or 4.0%, to $274.6 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 $5.4 million and $13.1 million, respectively, due to continued core deposit gathering efforts, partially offset by a $6.2 million decrease in certificates of deposit.  Total core deposits, which include non-interest bearing demand deposits, interest bearing demand deposits and money market deposits and savings, were $216.7 million and $197.9 million at March 31, 2011 and December 31, 2010, respectively, representing an increase of $18.8 million, or 9.5%.

    Credit Quality

    Allowance and Provision for Loan Losses

    The allowance for loan losses (“ALL”) was $5.5 million, or 2.90% of our total loan portfolio, at March 31, 2011 as compared to $5.3 million, or 2.95% of our total loan portfolio, at December 31, 2010.  The ALL to total non-performing loans was 78.36% and 74.22% at March 31, 2011 and December 31, 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. The provision for loan losses was $200,000 for the three months ended March 31, 2011, compared to no provision for the three months ended March 31, 2010.  We incurred net charge-offs of $7,000 during the three months ended March 31, 2011, compared to net recoveries of $24,000 during the same period last year.  Management believes that the ALL as of March 31, 2011 and December 31, 2010 was adequate to absorb known and inherent risks in the loan portfolio.

    Non-Performing Assets

    Non-performing assets totaled $7.8 million and $8.0 million at March 31, 2011 and December 31, 2010, respectively.  Non-accrual loans totaled $7.0 million and $7.1 million at March 31, 2011 and December 31, 2010, respectively.  At March 31, 2011, non-accrual loans consisted of three commercial loans totaling $1.6 million, three commercial real estate loans totaling $5.0 million and one consumer related loan totaling $345,000.  As of March 31, 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 our total loan portfolio, the amount of non-performing loans was 3.71% and 3.97% at March 31, 2011 and December 31, 2010, respectively.  As a percentage of total assets, the amount of non-performing assets was 2.46% and 2.58% at March 31, 2011 and December 31, 2010, respectively.

    “Like most community business banks, credit quality will remain a critical factor for us.  Despite the recent improving trends, we continue to focus on the timely recognition and resolution of any credit related matters.  Each successive quarter during the past year, we’ve generally experienced improvements within our loan portfolio and I’m cautiously optimistic that these positive trends will continue.  I also believe that, because of our aggressive approach to addressing and containing these issues, we will benefit as markets improve and loan demand returns,” stated Mr. DiNapoli. 

    Net Interest Income and Margin

    During the three months ended March 31, 2011, net interest income was $2.7 million compared to $2.5 million for the same period last year.  The increase was primarily related to an increase of $62,000 in interest earned in connection with our loan portfolio, an increase of $65,000 in interest earned on our investment securities and a $77,000 decline in interest expense incurred on borrowings. The fluctuation in our loan interest income was primarily related to an increase of $7.4 million in the average balance of loans, partially offset by a 6 basis point decline in our loan yield.  The increase in interest earned on our investment portfolio was primarily due to an increase in the average balance of residential mortgage-backed securities and CMOs, partially offset by a 93 basis points decline in the yield earned on these securities.

    The Company’s net interest margin (net interest income divided by average interest earning assets) was 3.59% for the three months ended March 31, 2011, compared to 3.96% for the same period last year.  The 37 basis point decline in net interest margin was primarily due to a decrease in the yield on earning assets of 57 basis points, partially offset by a decline of 33 basis points in the cost of interest bearing deposits and borrowings.  The decrease in yield on earning assets was primarily the result of an increase of $27.0 million in the average balance of lower yielding interest earning deposits at other financial institutions.  These deposits yielded approximately 25 basis points during the three months ended March 31, 2011.  During the three months ended March 31, 2011 as compared to the same period last year, the decline in our cost of interest bearing deposits and borrowings was primarily attributable to the decrease in interest rates paid on these accounts, as well as a decline in the average balance of borrowings, partially offset by an increase in the average balance of interest bearing deposits.  The average cost of interest bearing deposits was 0.45% during the three months ended March 31, 2011 compared to 0.61% for the same period last year.  The average balance of borrowings decreased by $10.5 million during the three months ended March 31, 2011 as compared to the same period last year.  The average cost of borrowings was 1.59% during the three months ended March 31, 2011 compared to 2.76% for the same period last year.

    Non-Interest Income

    Non-interest income was $204,000 for the three months ended March 31, 2011 compared to $229,000 for the three months ended March 31, 2010.  The decrease in non-interest income was primarily due to a decrease in loan arrangement fees of $38,000, partially offset by an increase in service charges and other operating income of $13,000.

    Non-interest income primarily consists of loan arrangement fees, service charges and fees on deposit accounts, as well as other operating income, which mainly consists of wire transfer and other consumer related fees.  Loan arrangement fees are related to a college loan funding program the Company established with a student loan provider.  The Company initially funds student loans originated by the student loan provider in exchange for non-interest income.  All loans are purchased by the student loan provider within 30 days of origination.  All purchase commitments are supported by collateralized deposit accounts.  Service charges and other operating income includes service charges and fees on deposit accounts, as well as other operating income, which mainly consists of outgoing funds transfer wire fees.

    Non-Interest Expense

    Non-interest expense was $2.6 million for both the three months ended March 31, 2011 and 2010.  Compensation and benefits was $1.4 million for both the three months ended March 31, 2011 and 2010.  Occupancy expense was $239,000 for the three months ended March 31, 2011, compared to $224,000 for the three months ended March 31, 2010, an increase of $15,000, or 6.7%.

    Income Tax Provision

    During the three months ended March 31, 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 during the three months ended March 31, 2011 and 2010, 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 months ended March 31, 2011 and 2010, the Company recorded net income of $123,000, or $0.01 per diluted share, and $124,000, or $0.01 per diluted share, respectively. 

    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 a full service business bank headquartered in the Century City area of Los Angeles. 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):

     

     

     

     

     

     

    March 31, 2011

     

     

    December 31, 2010

     

     

    March 31, 2010

    Balance Sheet Results:

    (unaudited)

    (unaudited)

     

     

     

     

     

     

     

     

     

     

     

     

     

    Total Assets

    $

                     319,043

    $

                     308,364

    $

                     263,624

     

    Gross Loans

     

     

     

    $

                     188,549

     

    $

                     179,271

     

    $

                     172,666

    Allowance for Loan Losses ("ALL")

    $

                        5,476

    $

                        5,283

    $

                        5,502

     

    ALL to Gross Loans

     

     

     

     

    2.90%

     

     

    2.95%

     

     

    3.19%

    Year-To-Date ("YTD") Net Charge-Offs (Recoveries) to YTD Average Gross Loans*

    0.01%

    1.72%

    -0.06%

     

    Non-Performing Assets

     

     

     

    $

                        7,833

     

    $

                        7,963

     

    $

                        9,002

    Deposits:

     

         Non-Interest Bearing Demand Deposits

     

     

     

    $

                       96,942

     

    $

                       91,501

     

    $

                       71,761

         Interest Bearing Demand Deposits

                       33,949

                       33,632

                       23,538

     

         Money Market Deposits and Savings

     

     

     

     

                       85,843

     

     

                       72,757

     

     

                       50,159

         Certificates of Deposit

                       53,949

                       60,099

                       58,169

     

              Total Deposits

     

     

     

    $

                     270,683

     

    $

                     257,989

     

    $

                     203,627

    Total Stockholders' Equity

    $

                       44,481

    $

                       44,338

    $

                       46,791

     

    Gross Loans to Deposits

     

     

     

     

    69.66%

     

     

    69.49%

     

     

    84.80%

    Equity to Assets

    13.94%

    14.38%

    17.75%

     

    Ending Shares Issued, excluding Treasury Stock

     

     

     

                  9,298,779

     

     

                  9,302,291

     

     

                  9,218,269

    Ending Book Value per Share

    $

                          4.78

    $

                          4.77

    $

                          5.08

     

     

     

     

     

     

     

     

     

     

     

     

     

    Three Months Ended March 31,

    Quarterly Operating Results (unaudited):

     

     

     

     

    2011

     

     

    2010

     

     

     

    Net Interest Income

    $

                        2,711

    $

                        2,478

     

    Provision for Loan Losses

     

     

     

    $

                           200

     

    $

                               -

     

     

     

    Non-Interest Income

    $

                           204

    $

                           229

     

    Non-Interest Expense

     

     

     

    $

                        2,592

     

    $

                        2,583

     

     

     

    Income Before Taxes

    $

                           123

    $

                           124

     

    Income Tax Provision

     

     

     

    $

                               -

     

    $

                               -

     

     

     

    Net Income

    $

                           123

    $

                           124

     

    Basic Earnings per Share

     

     

     

    $

                          0.01

     

    $

                          0.01

     

     

     

    Diluted Earnings per Share

    $

                          0.01

    $

                          0.01

     

    Quarterly Return on Average Assets*

     

     

     

     

    0.16%

     

     

    0.19%

     

     

     

    Quarterly Return on Average Equity*

    1.13%

    1.08%

     

    Quarterly Net Interest Margin*

     

     

     

     

    3.59%

     

     

    3.96%

     

     

     

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

     

     

     

     

     

     

     

     

     

     

     

    Net Income

     

     

     

    $

                           123

     

    $

                           124

     

     

     

    Provision for Loan Losses

                           200

                               -

     

    Income Tax Provision

     

     

     

     

                               -

     

     

                               -

     

     

     

    Pre-Tax, Pre-Provision Earnings

    $

                           323

    $

                           124


    *Percentages are reported on an annualized basis.

     


    1ST CENTURY BANCSHARES, INC. REPORTS FINANCIAL RESULTS
    FOR THE QUARTER AND YEAR ENDED DECEMBER 31, 2010

     

    Los Angeles, CA (March 15, 2011) – 1st Century Bancshares, Inc. (the “Company”) (NASDAQ:FCTY), the holding company of 1st Century Bank, N.A. (the “Bank”), today reported financial results for the quarter and year ended December 31, 2010. 

    “I’m proud to announce our financial results for the fourth quarter and the year, which reflect our continuing commitment to growing the Company’s deposit franchise and expanding our footprint within the Westside of Los Angeles.  During the year, core deposits increased by over 47%, helping us to reduce our average cost of funds to 42 basis points for the year ended December 31, 2010.  The growth in our core deposits has also enabled us to finish the year with total assets of over $308 million and represents the first time in our history that we’ve reported total assets in excess of $300 million.  Despite these accomplishments, I am disappointed to report net losses of $2.4 million and $2.0 million during the quarter and year ended December 31, 2010, respectively.  These losses were primarily caused by a single problem credit that emerged during the fourth quarter and resulted in a $2.0 million charge to our provision for loan losses.  The Bank has commenced legal proceedings in connection with this credit and I believe that the resolution of this matter will result in a substantial recovery for the Bank.  Our pre-tax pre-provision earnings, which excludes the impact of this item, were $214,000 and $813,000, respectively, during these same periods,” stated Alan I. Rothenberg, Chairman of the Board and Chief Executive Officer of the Company. 

    Mr. Rothenberg continued, “Regardless, I remain optimistic and encouraged by our achievements in 2010.  I firmly believe that the loss incurred in connection with this lone credit was an isolated incident and does not accurately reflect the general improvements that we’re experiencing within our loan portfolio.  With the exception of this credit, our outlook related to problem credits has steadily improved and we continue to observe an overall stabilizing trend within our loan portfolio.  Non-performing assets declined by 19% during the year and the percentage of non-performing loans to total loans has consistently improved over the past four consecutive quarters.  In addition, the ratio of our allowance for loan losses to total loans was 2.95% at year end and our capital ratios remain more than double the regulatory requirements to be considered ‘well capitalized’.  At December 31, 2010, the Bank’s total risk-based capital ratio was 20.2% compared to the regulatory requirement of 10.0%, with all of our capital being common equity; with no preferred stock, no trust preferred stock, no troubled asset relief program (“TARP”) funds, and no other synthetic equity instruments.”  

    Jason P. DiNapoli, President and Chief Operating Officer of the Company stated, “I believe that 2010 represented a defining year for the Company.  In addition to reaching the $300 million total asset milestone, the Company has developed over 2,900 deposit account relationships and expanded non-interest bearing demand deposits to over 35% of our total deposit portfolio at year end.  Looking forward to 2011, I’m excited to build on the successes of 2010 and feel that we’re well positioned going into the new 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 loss to pre-tax, pre-provision earnings is provided in the table below.

     

    2010 Fourth Quarter and Year End Highlights

    •      The Bank’s total risk-based capital ratio was 20.16% at December 31, 2010, which is above 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 13.3%, or $36.3 million, to $308.4 million at December 31, 2010, from $272.1 million at December 31, 2009.

    •      Total core deposits, which include non-interest bearing demand deposits, interest bearing demand deposits, savings and money market deposits, were $197.9 million and $133.9 million at December 31, 2010 and December 31, 2009, respectively, representing an increase of $64.0 million, or 47.8%. 

    •      Cost of funds was 0.32% and 0.42% for the three months and year ended December 31, 2010, respectively, compared to 0.66% and 0.66% for the same periods last year.

           
    •      Gross loans decreased $2.4 million, or 1.3%, to $179.3 million at December 31, 2010 from $181.7 million at December 31, 2009.

    •      As of December 31, 2010, the allowance for loan losses was $5.3 million, or 2.95% of gross loans, compared to $5.5 million, or 3.01% of gross loans, at December 31, 2009.

    •      Non-performing loans decreased $2.7 million, or 27.6%, to $7.1 million at December 31, 2010 from $9.8 million at December 31, 2009.  The decline in non-performing loans was primarily attributable to loan pay-downs received and charge-offs incurred during the current period and, to a lesser extent, loans migrating back to performing status or being foreclosed upon and transferred to other real estate owned. 

    •      Non-performing assets as a percentage of total assets has declined to 2.58% at December 31, 2010, compared to 3.60% at December 31, 2009. 

    •      Net interest margin for the fourth quarter of 2010 decreased 47 basis points to 3.33% compared to 3.80% for the fourth quarter of 2009.  Net interest margin decreased to 3.62% from 4.13% comparing year ended December 31, 2010 to year ended December 31, 2009.

    •      There was no income tax provision for the year ended December 31, 2010 compared to a $3.5 million income tax provision for the year ended December 31, 2009.  The income tax provision in 2009 was related to recording of a valuation allowance against the Company’s deferred tax assets.

    •      Net loss was $2.4 million, or $0.27 per diluted share, and $2.0 million, or $0.22 per diluted share, for the quarter and year ended December 31, 2010, respectively, compared to net loss of $3.5 million, or $0.39 per diluted share, and $7.8 million, or $0.86 per diluted share, for the quarter and year ended December 31, 2009, respectively.

    Capital Adequacy

    At December 31, 2010, the Company’s stockholders’ equity totaled $44.3 million compared to $46.3 million at December 31, 2009.  The decline in stockholders’ equity was primarily caused by the $2.0 million net loss incurred during 2010, as well as an increase of $550,000 of treasury stock acquired during 2010.  At December 31, 2010, the Bank’s total risk-based capital ratio, tier 1 risk-based capital ratio, and tier 1 leverage ratio were 20.16%, 18.90%, and 12.88%, respectively, and were more than double the regulatory requirements for “well capitalized” financial institutions of 10.00%, 6.00%, and 5.00%, respectively.

    On August 16, 2010, we announced that our board of directors had authorized a share repurchase program, permitting us to acquire up to $2.0 million of our common stock, or approximately 6.5% of our outstanding common stock as of June 30, 2010. The manner, price, number and timing of these share repurchases are subject to market conditions and applicable U.S. Securities and Exchange Commission rules. As of December 31, 2010, the Company had repurchased 107,142 shares in the open market at a cost ranging from $3.35 to $4.02 per share in connection with this program.

    Balance Sheet

    Total assets increased 13.3%, or $36.3 million, to $308.4 million at December 31, 2010, from $272.1 million at December 31, 2009. The growth in total assets was primarily due to increases of $23.1 million and $15.4 million in cash and cash equivalents and investment securities, respectively, partially offset by a decrease of $2.4 million in gross loans. Cash and cash equivalents totaled $69.0 million and $45.9 million at December 31, 2010 and 2009, respectively.  The elevated amount of cash and cash equivalents maintained at the most recently completed year end was primarily due to the increase in deposits generated during the year.  The increase in investment securities was primarily related to purchases during the most recently completed year of 10 and 15-year agency mortgage backed securities.  Gross loans at December 31, 2010 were $179.3 million, which represented a decrease of $2.4 million, or 1.3%, from $181.7 million at December 31, 2009.

    Total liabilities increased by $38.2 million to $264.0 million as compared to $225.8 million at December 31, 2009.  This increase was primarily due to increases in non-interest bearing deposits, interest bearing checking and money market deposits and savings of $23.7 million, $13.8 million and $26.5 million, respectively, due to our continued core deposit gathering efforts, partially offset by a $13.3 million decrease in certificates of deposit and a $14.5 million decrease in other borrowings.  At December 31, 2010, total deposits were $258.0 million compared to $207.4 million at December 31, 2009, representing an increase of 24.4%, or $50.6 million. Total core deposits, which include non-interest bearing demand deposits, interest bearing demand deposits and money market deposits and savings, were $197.9 million and $133.9 million at December 31, 2010 and December 31, 2009, respectively, representing an increase of $64.0 million, or 47.8%.  As of December 31, 2010 and 2009, core deposits as a percentage of our total deposit portfolio were 76.7% and 64.6%, respectively.

    Credit Quality

    Allowance and Provision for Loan Losses

    The allowance for loan losses (“ALL”) was $5.3 million, or 2.95% of our total loan portfolio, at December 31, 2010 as compared to $5.5 million, or 3.01% of our total loan portfolio, at December 31, 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 $2.8 million and $6.2 million for the years ended December 31, 2010 and 2009, respectively.  The decrease in the provision for loan losses were primarily due to a general improvement in the level of non-performing loans, as well as a decrease in the amount of charge-offs incurred during 2010 as compared to the same period last year.  We incurred net charge-offs of $3.0 million during the most recently completed year compared to $5.8 million during the same period last year.  During the fourth quarter of 2010, we recorded a $2.0 million provision for loan losses and a corresponding $1.0 million charge-off related to a commercial loan to a borrower located in Southern California.  At December 31, 2010, the remaining balance of this loan was on non-accrual status.  Management believes that the ALL as of December 31, 2010 and December 31, 2009 was adequate to absorb known and inherent risks in the loan portfolio.

    Non-Performing Assets

    Non-performing assets totaled $8.0 million and $9.8 million at December 31, 2010 and December 31, 2009, respectively.  Non-accrual loans totaled $7.1 million and $9.8 million at December 31, 2010 and 2009, respectively.  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, 2010, other real estate owned (“OREO”) consisted of two single-family residential properties totaling $845,000.  These properties are located in Southern California.  As of December 31, 2009, the Company did not have any OREO.  As a percentage of our total loan portfolio, the amount of non-performing loans was 3.97% and 5.40% at December 31, 2010 and December 31, 2009, respectively.  As a percentage of total assets, the amount of non-performing assets was 2.58% and 3.60% at December 31, 2010 and 2009, respectively.

    “Although I’m disappointed by the isolated credit loss incurred during the last quarter of this year, I don’t believe it should overshadow the overall progress and improving trends that we’re seeing within our loan portfolio.  Our credit team has worked diligently to limit our credit related losses, as well as identify and resolve credit issues in a timely manner.  I’m extremely proud of our team and their accomplishments during 2010,” stated Mr. DiNapoli.

    Net Interest Income and Margin

    For the quarter and year ended December 31, 2010, average interest earning assets were $305.3 million and $273.4 million, respectively, generating net interest income of $2.6 million and $9.9 million, respectively.  For the quarter and year ended December 31, 2009, average interest-earning assets were $258.2 million and $252.4 million, respectively, generating net interest income of $2.5 million and $10.4 million, respectively. The growth in average earning assets during the quarter and year ended December 31, 2010 was primarily related to interest earning deposits at other financial institutions, which was primarily funded by an increase in average deposits during the year, partially offset by a decline in average other borrowings.

    The Company’s net interest margin was 3.33% and 3.62% for the quarter and year ended December 31, 2010, respectively, compared to 3.80% and 4.13% for the same periods last year.  The 47 and 51 basis point declines in net interest margin during the quarter and year ended December 31, 2010, respectively, was primarily due to decreases in yield on earning assets of 74 and 70 basis points, respectively, partially offset by declines of 43 and 26 basis points, respectively, in the cost of interest bearing deposits and borrowings.  The decreases in yield on earning assets was primarily the result of increases in the average balance of lower yielding interest earning deposits at other financial institutions, which increased by $56.0 million and $47.3 million, respectively, during the quarter and year ended December 31, 2010 as compared to the same periods last year.  The increase in the average balance of interest earning deposits at other financial institutions was primarily due to excess liquidity generated by the growth in deposits.  

    Non-Interest Income

    Non-interest income was $284,000 and $945,000 for the quarter and year ended December 31, 2010, respectively, compared to $250,000 and $1.0 million for the same periods last year.

     Non-interest income primarily consists of loan arrangement fees, service charges and fees on deposit accounts, as well as other operating income, which mainly consists of wire transfer and other consumer related fees.  Loan arrangement fees are related to a college loan funding program the Company established with a student loan provider.  The Company initially funds student loans originated by the student loan provider in exchange for non-interest income.  All loans are purchased by the student loan provider within 30 days of origination.  All purchase commitments are supported by collateralized deposit accounts.  Service charges and other operating income includes service charges and fees on deposit accounts, as well as other operating income, which mainly consists of outgoing funds transfer wire fees.

    Non-Interest Expense

    Non-interest expense was $2.6 million for the quarter ended December 31, 2010 compared to $2.4 million for the same period last year, representing an increase of $210,000, or 8.7%.  The increase during the quarter was primarily attributed to an increase in professional fees incurred related to loan related matters during the current quarter.

    Non-interest expense was $10.0 million for the year ended December 31, 2010 compared to $9.6 million for the same period last year, representing an increase of $419,000, or 4.4%.  The increase during the year was primarily due to incremental hiring of additional staff to handle the growth in deposits, as well as an increase in technology related costs.

    Income Tax Provision

    There was no income tax provision recorded for the quarter and year ended December 31, 2010 compared to none and $3.5 million, respectively for the same periods last year.  Any income tax benefit that would normally arise because of the Company’s losses incurred during the year ended December 31, 2010 is not recorded because it is offset by a corresponding increase in the valuation allowance on the Company’s net deferred tax assets.  During the year ended December 31, 2009, we established a full valuation allowance against the Company’s deferred tax assets due to uncertainty regarding its realizability.  During the year ended December 31, 2010, we reassessed the need for this valuation allowance and concluded that a full valuation allowance remained appropriate.  Management reached this conclusion as a result of the Company’s cumulative losses since inception, and the anticipated near term economic climate in which the Company will operate.

    Loss before Income Taxes

    The Company’s loss before income taxes for the quarter and the year ended December 31, 2010 was $2.4 million and $2.0 million, respectively.  The Company’s loss before income taxes for the quarter and the year ended December 31, 2009 was $3.5 million and $4.3 million, respectively.

    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 a full service business bank headquartered in the Century City area of Los Angeles. 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.1stcenturybank.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, (5) the outcome of litigation regarding a problem credit that emerged during the fourth quarter and resulted in a $2.0 million charge to our provision for loan losses, and (6) 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,

    December 31,

    Balance Sheet Results:

    2010

    2009

     

     

     

     

     

     

     

     

     

     

    Total Assets

    $

                     308,364

    $

                     272,128

     

    Gross Loans

     

     

     

    $

                     179,271

     

    $

                     181,708

    Allowance for Loan Losses ("ALL")

    $

                        5,283

    $

                        5,478

     

    ALL to Gross Loans

     

     

     

     

    2.95%

     

     

    3.01%

    Year-To-Date ("YTD") Net Charge-Offs to YTD Average Gross Loans*

    1.72%

    3.00%

     

    Non-Performing Assets

     

     

     

    $

                        7,963

     

    $

                        9,810

    Deposits:

     

         Non-Interest Bearing Demand Deposits

     

     

     

    $

                       91,501

     

    $

                       67,828

         Interest Bearing Demand Deposits

                       33,632

                       19,874

     

         Money Market Deposits and Savings

     

     

     

     

                       72,757

     

     

                       46,240

         Certificates of Deposit

                       60,099

                       73,432

     

              Total Deposits

     

     

     

    $

                     257,989

     

    $

                     207,374

    Total Stockholders' Equity

    $

                       44,338

    $

                       46,320

     

    Gross Loans to Deposits

     

     

     

     

    69.49%

     

     

    87.62%

    Equity to Assets

    14.38%

    17.02%

     

    Ending Shares Issued, excluding Treasury Stock

     

     

     

                  9,302,291

     

     

                  9,219,399

    Ending Book Value per Share

    $

                          4.77

    $

                          5.02

     

     

     

     

     

     

     

     

     

     

    Quarters Ended December 31,

    Quarterly Operating Results (unaudited):

     

     

     

     

    2010

     

     

    2009

    Net Interest Income

    $

                        2,565

    $

                        2,477

     

    Provision for Loan Losses

     

     

     

    $

                        2,575

     

    $

                        3,800

    Non-Interest Income

    $

                           284

    $

                           250

     

    Non-Interest Expense

     

     

     

    $

                        2,635

     

    $

                        2,425

    Loss Before Taxes

    $

                       (2,361)

    $

                       (3,498)

     

    Income Tax Provision

     

     

     

    $

                               -

     

    $

                               -

    Net Loss

    $

                       (2,361)

    $

                       (3,498)

     

    Basic and Diluted Loss per Share

     

     

     

    $

                         (0.27)

     

    $

                         (0.39)

    Quarterly Return on Average Assets*

    -2.98%

    -5.15%

     

    Quarterly Return on Average Equity*

     

     

     

     

    -20.04%

     

     

    -27.89%

    Quarterly Net Interest Margin*

    3.33%

    3.80%

     

     

     

     

     

     

     

     

     

     

    Years Ended December 31,

    YTD Operating Results:

     

     

     

     

    2010

     

     

    2009

     

    Net Interest Income

     

     

     

    $

                        9,893

     

    $

                       10,423

    Provision for Loan Losses

    $

                        2,775

    $

                        6,154

     

    Non-Interest Income

     

     

     

    $

                           945

     

    $

                        1,026

    Non-Interest Expense

    $

                       10,026

    $

                        9,606

     

    Loss Before Taxes

     

     

     

    $

                       (1,963)

     

    $

                       (4,311)

    Income Tax Provision

    $

                               -

    $

                        3,498

     

    Net Loss

     

     

     

    $

                       (1,963)

     

    $

                       (7,809)

    Basic and Diluted Loss per Share

    $

                         (0.22)

    $

                         (0.86)

     

    YTD Return on Average Assets

     

     

     

     

    -0.70%

     

     

    -3.00%

    YTD Return on Average Equity

    -4.18%

    -14.47%

     

    YTD Net Interest Margin

     

     

     

     

    3.62%

     

     

    4.13%

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

     

     

     

     

     

     

     

     

    Net Loss

     

     

     

    $

                       (1,963)

     

    $

                       (7,809)

    Provision for Loan Losses

                        2,775

                        6,154

     

    Income Tax Provision

     

     

     

     

                               -

     

     

                        3,498

    Pre-Tax, Pre-Provision Earnings

    $

                           812

    $

                        1,843


    *Percentages are reported on an annualized basis.

     

    1ST CENTURY BANCSHARES, INC. REPORTS FINANCIAL RESULTS
    FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2010

    Los Angeles, CA (November 9, 2010) – 1st Century Bancshares, Inc. (the “Company”) (NASDAQ:FCTY), the holding company of 1st Century Bank, N.A. (the “Bank”), today reported financial results for the three and nine months ended September 30, 2010.

    “While the general economy still faces significant challenges, I remain optimistic regarding the Company’s progress and ability to successfully emerge from this difficult economic period as a stronger and better positioned franchise.  We recorded our third consecutive profitable quarter.  We also closed the period with another record in total assets of $299 million, resulting primarily from the continued growth in our core deposits, which have increased by over $50.9 million, or 38.0%, since the beginning of this year.  As a result, our year-to-date cost of funds has declined to 46 basis points,” stated Alan I. Rothenberg, Chairman of the Board and Chief Executive Officer of the Company.

    Mr. Rothenberg continued, “We believe that these positive developments are a result of our conservative and cautious approach to managing our balance sheet, a practice we will continue.  We’ve maintained elevated levels of liquidity throughout the current year and continued our proactive approach in connection with addressing problem credits.  Non-performing assets have declined by 24% during the year and our allowance for loans losses to total loans is approximately 2.7% at the end of the third quarter.  In addition, our capital ratios remain more than double the regulatory requirements to be considered ‘well capitalized’.  At September 30, 2010, the Bank’s total risk-based capital ratio was 22.2% compared to the regulatory requirement of 10.0%, with all of our capital being common equity; with no preferred stock, no trust preferred stock, no troubled asset relief program (“TARP”) funds, and no other synthetic equity instruments.”

    Jason P. DiNapoli, President and Chief Operating Officer of the Company stated, “The strength and strategic focus of our franchise has always been predicated on the trust and personal relationships that we’ve developed with our customers by offering them extraordinary service and creative banking solutions.  This strategy has enabled us to grow our core deposits at an annualized rate of over 50% during the current year and allowed us to further expand the Bank’s footprint within West Los Angeles.”

     2010 Third Quarter and Year-To-Date Highlights

    •      The Bank’s total risk-based capital ratio was 22.21% at September 30, 2010, which is above 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, which we declined to apply for and participate in, nor other forms of capital such as trust preferred securities, convertible preferred stock or other equity or debt instruments.

    •      Total core deposits, which include non-interest bearing demand deposits, interest bearing demand deposits, savings and money market deposits, were $184.8 million and $133.9 million at September 30, 2010 and December 31, 2009, respectively, representing an increase of $50.9 million, or 38.0%.  At September 30, 2009, total core deposits were $115.3 million, representing an increase of $69.5 million, or 60.3%, during the past 12 months.

    •      Gross loans decreased $12.6 million, or 6.9%, to $169.1 million at September 30, 2010 from $181.7 million at December 31, 2009 primarily due to loan amortization and pay-downs.

    •      As of September 30, 2010, the allowance for loan losses was $4.5 million, or 2.67% of gross loans, compared to $5.5 million, or 3.01% of gross loans, at December 31, 2009.

    •      Non-performing loans totaled $7.2 million and $9.8 million at September 30, 2010 and December 31, 2009, respectively.  The decline in non-performing loans was primarily attributable to loan pay-downs received and charge-offs incurred during the current period. 

    •      Net interest margin was 3.46% and 3.73% for the three and nine months ended September 30, 2010, respectively, compared to 4.08% and 4.24% for the same periods last year.

    •     Cost of funds was 0.38% and 0.46% for the three and nine months ended September 30, 2010, respectively, compared to 0.69% and 0.66% for the same periods last year.

    •      For the three and nine months ended September 30, 2010, the Company recorded net income of $155,000, or $0.02 per diluted share, and $398,000, or $0.04 per diluted share, respectively, compared to net losses of $4.6 million, or $0.50 per diluted share, and $4.3 million, or $0.47 per diluted share, respectively, for the same periods last year.

    Capital Adequacy

    At September 30, 2010, the Company’s stockholders’ equity totaled $47.2 million compared to $46.3 million at December 31, 2009.  The increase was primarily related to an increase in unrealized gain on our available for sale investment portfolio and net income earned during the nine months ended September 30, 2010.  At September 30, 2010, the Bank’s total risk-based capital ratio, tier 1 risk-based capital ratio, and tier 1 leverage ratio were 22.21%, 20.95%, and 14.88%, respectively, and were more than double the regulatory requirements for “well capitalized” financial institutions of 10.00%, 6.00%, and 5.00%, respectively.

    On August 16, 2010, we announced that our board of directors had authorized a share repurchase program, permitting us to acquire up to $2.0 million of our common stock, or approximately 6.5% of our outstanding common stock as of June 30, 2010. The shares are to be acquired at prevailing prices through open market transactions. The manner, price, number and timing of these share repurchases are subject to market conditions and applicable U.S. Securities and Exchange Commission (“SEC”) rules. During the three months ended September 30, 2010, we repurchased a total of 35,480 shares at a weighted average price of $3.54 per share under this program, for an aggregate amount of approximately $125,000.

    Balance Sheet

    Total assets increased 9.8%, or $26.8 million, to $298.9 million at September 30, 2010, from $272.1 million at December 31, 2009. The increase in total assets was primarily attributable to an increase in cash and cash equivalents partially offset by a decrease in gross loans.  Cash and cash equivalents increased $43.7 million from $45.9 million at December 31, 2009 to $89.6 million at September 30, 2010.  The increase in cash and cash equivalents was primarily attributable to the increase in deposits generated during the nine months ended September 30, 2010, as well as the cash flows received in connection with loan amortization and pay-downs.  Gross loans at September 30, 2010 were $169.1 million, which represented a decrease of $12.6 million, or 6.9%, from $181.7 million at December 31, 2009. The decrease in gross loans was primarily attributable to loan amortization and pay-downs and, to a lesser extent, loan charge-offs.  

    Total liabilities increased by $25.9 million to $251.7 million as compared to $225.8 million at December 31, 2009.  This increase was primarily due to increases in non-interest bearing deposits, interest bearing checking and savings and money market deposits of $20.6 million, $12.8 million and $17.5 million, respectively, due to continued core deposit gathering efforts, partially offset by a $12.6 million decrease in certificates of deposit and a $12.5 million decrease in other borrowings.  At September 30, 2010, total deposits were $245.6 million compared to $207.4 million at December 31, 2009, representing an increase of 18.4%, or $38.2 million. Total core deposits, which include non-interest bearing demand deposits, interest bearing demand deposits and savings and money market deposits, were $184.8 million and $133.9 million at September 30, 2010 and December 31, 2009, respectively, representing an increase of $50.9 million, or 38.0%.

    Credit Quality

    Allowance and Provision for Loan Losses

    The allowance for loan losses (“ALL”) was $4.5 million, or 2.67% of our total loan portfolio, at September 30, 2010 as compared to $5.5 million, or 3.01% of our total loan portfolio, at December 31, 2009.  The provision for loan losses was $100,000 and $200,000 for the three and nine months ended September 30, 2010, respectively, compared to $1.7 million and $2.4 million, respectively, for the same periods last year.  During the three and nine months ended September 30, 2010, we had net charge-offs of $528,000 and $1.2 million, respectively, compared to $874,000 and $2.0 million during the same periods last year. Management believes that the ALL as of September 30, 2010 and December 31, 2009 was adequate to absorb known and inherent risks in the loan portfolio.

    Non-Performing Assets

    Non-performing assets totaled $7.5 million and $9.8 million at September 30, 2010 and December 31, 2009, respectively.  At September 30, 2010, non-accrual loans consisted of six commercial loans totaling $940,000, three commercial real estate mortgage loans totaling $5.4 million, and two residential real estate mortgage loans totaling $876,000.  At September 30, 2010, other real estate owned (“OREO”) consisted of a single family residential property totaling $313,000.  As a percentage of our total loan portfolio, the amount of non-performing loans was 4.25% and 5.40% at September 30, 2010 and December 31, 2009, respectively.  As a percentage of total assets, the amount of non-performing assets was 2.51% and 3.60% at September 30, 2010 and December 31, 2009, respectively.

    “Throughout the current year, we’ve made consistent progress related to the ultimate resolution of our non-performing assets, which have declined by $2.3 million, or 24%, since the end of last year,” stated Mr. DiNapoli.

    Net Interest Income and Margin

    For the three and nine months ended September 30, 2010, average interest-earning assets were $278.6 million and $262.7 million, respectively, generating net interest income of $2.4 million and $7.3 million, respectively. For the three and nine months ended September 30, 2009, average interest-earning assets were $246.0 million and $250.4 million, respectively, generating net interest income of $2.5 million and $7.9 million, respectively.

    The Company’s net interest margin for the three and nine months ended September 30, 2010 were 3.46% and 3.73%, respectively, compared to 4.08% and 4.24% for the same periods last year, representing a decline of 62 and 51 basis points, respectively.  These decreases were primarily due to decreases in the yield on earning assets of 84 and 66 basis points, respectively, compared to the same periods last year, partially offset by declines of 38 and 20 basis points in the cost of interest bearing deposits and borrowings, respectively, compared to the same periods last year.  The decreases in yield on earning assets were primarily the result of an increase in the average balance of lower yielding interest earning deposits at other financial institutions.  For the three and nine months ended September 30, 2010, the average balances of interest bearing deposits at other financial institutions were $69.4 million and $46.1 million, respectively, compared to $4.9 million and $1.7 million for the same periods last year.  During the three and nine months ended September 30, 2010, interest bearing deposits at other financial institutions yielded 29 and 26 basis points, respectively.  During the three and nine months ended September 30, 2010, the cost of interest bearing deposits and other borrowings declined by 38 and 20 basis points, respectively, compared to the same periods last year.  The decline in our cost of interest bearing deposits and other borrowings was attributable to the decline in the average volume of our borrowings, which decreased by $9.8 million and $20.7 million for the three and nine months ended September 30, 2010, respectively, as compared to the same periods last year.  In addition, the cost of interest bearing deposits and other borrowings were impacted by a decrease in our cost of certificates of deposit, which decreased by 31 and 26 basis points, respectively, during the three and nine months ended September 30, 2010 compared to the same periods last year, as these deposits repriced to lower current market interest rates. 

    Non-Interest Income

    Non-interest income was $223,000 for the three months ended September 30, 2010 compared to $301,000 for the same period last year.  This decrease in non-interest income was primarily due to decreases in loan arrangement fees and gain on sale of other real estate owned of $56,000 and $56,000, respectively, partially offset by an increase in service charges and other operating income of $20,000 and a decline in losses incurred in connection with the sale of AFS securities of $14,000. 

    For the nine months ended September 30, 2010, non-interest income was $662,000 compared to $776,000 for the same period last year.  The decrease in non-interest income was primarily due to decreases in loan arrangement fees and gain on sale of other real estate owned of $93,000 and $56,000, respectively, partially offset by an increase in gain on sale of AFS securities of $43,000.  During the nine months ended September 30, 2010, the Company disposed of two agency mortgage-backed securities with an amortized cost of $3.8 million at the time of sale and recognized a $44,000 gain in connection with this transaction

    Non-Interest Expen 

    Non-interest expense was $2.4 million and $7.4 million for the three and nine months ended September 30, 2010, respectively, compared to $2.3 million and $7.2 million for the three and nine months ended September 30, 2009, respectively, representing increases of $82,000, or 3.5%, and $211,000, or 2.9%, respectively.

    Income Tax Provision

    During the three and nine months ended September 30, 2010, we did not record an income tax provision related to our pretax earnings. Tax expense that would normally arise because of the Company’s earnings during the three and nine months ended September 30, 2010 is not recorded because it is offset by a reduction in the valuation allowance on the Company’s deferred tax asset.  The income tax provision for the three and nine months ended September 30, 2009 was $3.4 million and $3.5 million, respectively.  A 100% valuation allowance was provided against the deferred tax asset at September 30, 2009.  The valuation allowance of $3.4 million was recorded as income tax expense.

    Net Income

    For the three months ended September 30, 2010 and 2009, the Company recorded net income of $155,000, or $0.02 per diluted share, and a net loss of $4.6 million, or $0.50 per diluted share, respectively.  During the three months ended September 30, 2010, net income was positively impacted by declines in provisions for loan losses and income tax provision of $1.6 million and $3.4 million, respectively, as compared to the same period last year.  These items were partially offset by declines in net interest income and non-interest income of $96,000 and $78,000, respectively, as well as an increase in total non-interest expenses of $82,000, each as compared to the same period last year. 

    For the nine months ended September 30, 2010 and 2009, the Company recorded net income of $398,000, or $0.04 per diluted share, and a net loss of $4.3 million, or $0.47 per diluted share, respectively.  During the nine months ended September 30, 2010, net income was positively impacted by declines in provisions for loan losses and income tax provision of $2.2 million and $3.5 million, respectively, as compared to the same period last year.  These items were partially offset by declines in net interest income and non-interest income of $618,000 and $114,000, respectively, and an increase in total non-interest expenses of $211,000, each as compared to the same period 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 a full service business bank headquartered in the Century City area of Los Angeles. 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.1stcenturybank.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.

    September 30, 2010 December 31, 2009 September 30, 2009
    Balance Sheet Results: (unaudited)   (unaudited)
    Total Assets $                    298,910 $                  272,128 $                    257,915
    Gross Loans $                    169,063 $                  181,708 $                    188,545
    Allowance for Loan Losses ("ALL") $                        4,519 $                     5,478 $                        5,566
    ALL to Gross Loans 2.67% 3.01% 2.95%
    Year-To-Date ("YTD") Net Charge-Offs to YTD Average Gross Loans* 0.91% 3.00% 1.39%
    Non-Performing Assets $                        7,494 $                     9,810 $                      12,563
    Deposits:
         Non-Interest Bearing Demand Deposits $                      88,383 $                    67,828 $                      58,117
         Interest Bearing Demand Deposits                      32,693                    19,874                      12,754
         Savings and Money Market Deposits                      63,712                    46,240                      44,415
         Certificates of Deposit                      60,839                    73,432                      73,464
              Total Deposits $                    245,627 $                  207,374 $                    188,749
    Total Stockholders' Equity $                      47,163 $                    46,320 $                      50,578
    Gross Loans to Deposits 68.83% 87.62% 99.89%
    Equity to Assets 15.78% 17.02% 19.61%
    Ending Shares Issued, excluding Treasury Stock                 9,336,407               9,219,399                 9,331,343
    Ending Book Value per Share $                         5.05 $                       5.02 $                         5.42
    Three Months Ended September 30,
    Quarterly Operating Results (unaudited): 2010   2009
    Net Interest Income $                        2,433 $                     2,529
    Provision for Loan Losses $                          100 $                     1,707
    Non-Interest Income $                          223 $                        301
    Non-Interest Expense $                        2,401 $                     2,319
    Income (Loss) Before Taxes $                          155 $                    (1,196)
    Income Tax Provision $                               - $                     3,362
    Net Income (Loss) $                          155 $                    (4,558)
    Basic Earnings (Loss) per Share $                         0.02 $                      (0.50)
    Diluted Earnings (Loss) per Share $                         0.02 $                      (0.50)
    Quarterly Return on Average Assets* 0.22% (7.07)%
    Quarterly Return on Average Equity* 1.31% (33.25)%
    Quarterly Net Interest Margin* 3.46% 4.08%
    Nine Months Ended September 30,
    YTD Operating Results (unaudited): 2010   2009
    Net Interest Income $                        7,328 $                     7,946
    Provision for Loan Losses $                          200 $                     2,354
    Non-Interest Income $                          662 $                        776
    Non-Interest Expense $                        7,392 $                     7,181
    Income (Loss) Before Taxes $                          398 $                       (813)
    Income Tax Provision $                               - $                     3,498
    Net Income (Loss) $                          398 $                    (4,311)
    Basic Earnings (Loss) per Share $                         0.04 $                      (0.47)
    Diluted Earnings (Loss) per Share $                         0.04 $                      (0.47)
    YTD Return on Average Assets* 0.20% (2.24)%
    YTD Return on Average Equity* 1.14% (10.40)%
    YTD Net Interest Margin* 3.73% 4.24%

     

     

    1ST CENTURY BANK NAMED ONE OF THE BEST PLACES TO WORK
    BY LOS ANGELES BUSINESS JOURNAL

    LOS ANGELES, CA – August 30, 2010 – 1st Century Bank, N.A. (NASDAQ: FCTY) was honored Wednesday, August 4th as one of the Best Places to Work in Los Angeles by the Los Angeles Business Journal. This was the second time that 1st Century Bank was recognized. 

    Participants were ranked based on the results of an employee survey and an evaluation of each company’s benefits, policies and offerings.   The LA Business Journal worked with the Professionals in Human Resources Association (PIHRA), the Los Angeles Area Chamber of Commerce and the Best Companies Group to create the program.

    “We are very proud to be recognized as the only bank in the small industry category again,” said President, Jason DiNapoli.  “We have taken the time to cultivate an environment that truly promotes life and work balance, and continue to create opportunities that fully develop the potential of our employees.  As a small company competing in a mature and ever-changing industry, the quality and attitude of our employees is our key competitive advantage.”  

    This is the second time that 1st Century Bank has received this honor by the Los Angeles Business Journal.  The awards luncheon was held at the Millennium Biltmore Hotel in Los Angeles and was attended by the top 75 Best Places to Work.  The final list will be published later this month by the Los Angeles Business Journal. 

    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 a premium service business bank headquartered in the Century City area of Los Angeles. 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, coupled with the technologies of a big money center bank.  The Company maintains a website at www.1stcenturybank.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.

     

    1ST CENTURY BANCSHARES, INC. ANNOUNCES STOCK REPURCHASE PROGRAM

    Los Angeles, CA (August 16, 2010) – 1st Century Bancshares, Inc. (NASDAQ: FCTY), the holding company of 1st Century Bank, N.A. (the "Bank"), announced that the Company's Board of Directors authorized the purchase of up to $2.0 million of its common stock, which represents approximately 606,000 shares based on its common stock closing price as of August 13, 2010, or approximately 6.5% of the total common shares outstanding as of June 30, 2010.

    "This repurchase program reflects our continuing belief in the long-term value of our Company," said Alan I. Rothenberg, Chairman and CEO of 1st Century Bancshares, Inc.  "In these uncertain economic times, we strongly believe there is considerable value in our common stock, which is currently trading at a substantial discount to our book value.  Our capital ratios remain more than double the regulatory requirements to be considered ‘well capitalized’, with the Bank’s total risk based capital ratio of 22.9% at June 30, 2010.  Assuming that all $2.0 million was utilized to purchase our common stock at June 30, 2010, our total risk based capital ratio would have been 21.8%, keeping the Bank more than the double the ‘well capitalized’ regulatory threshold of 10.0%."

    Shares may be repurchased by the Company in open market purchases or in privately negotiated transactions as permitted under applicable rules and regulations. Repurchases of common stock may also be made through a 10b-18 plan.  The repurchase program may be modified, suspended or terminated by the Board at any time without notice. The extent to which the Company repurchases its shares and the timing of such repurchases will depend upon market conditions and other corporate considerations.

    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 a full service business bank headquartered in the Century City area of Los Angeles. 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.1stcenturybank.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.

     

    1ST CENTURY BANCSHARES, INC. REPORTS FINANCIAL RESULTS
    FOR THE QUARTER AND SIX MONTHS ENDED JUNE 30, 2010

    Los Angeles, CA (August 10, 2010) – 1st Century Bancshares, Inc. (the “Company”) (NASDAQ:FCTY), the holding company of 1st Century Bank, N.A. (the “Bank”), today reported financial results for the three and six months ended June 30, 2010.

    “I am encouraged by our second quarter results, which continue to show our progress despite challenging economic conditions.  We closed the quarter with over $280 million in total assets, which is the largest reported asset size in our Company’s history, and we remained profitable reporting net income of $119,000.  Our successful growth is primarily attributable to our increasing core deposit franchise, which has grown by approximately 20% since the beginning of the year.  By offering a safe and sound home for our customers’ deposits, we’ve been able to build a stronger and more robust franchise, which I believe is well positioned to emerge from the current recession,” stated Alan I. Rothenberg, Chairman of the Board and Chief Executive Officer of 1st Century Bancshares, Inc.

    Mr. Rothenberg continued, “We’re also maintaining our aggressive straightforward approach to problem credits resulting in a 12% decline in non-performing loans during the first six months of this year, and our ratio of allowance for loans losses to total loans remains at approximately 3.0%.  In addition, our capital ratios continue to be more than double the regulatory requirements to be considered ‘well capitalized’.  At June 30, 2010, the Bank’s total risk based capital ratio was 22.9% compared to the regulatory requirement of 10.0%, with all of our capital being common equity; with no preferred stock, no trust preferred stock, no troubled asset relief program (“TARP”) funds, and no other synthetic equity instruments.”

    Jason P. DiNapoli, President and Chief Operating Officer of 1st Century Bancshares, Inc. stated, “I’m cautiously optimistic regarding the general economic recovery, as well as the growth opportunities that this recovery may bring.  Our strategic focus has been, and continues to be on further developing our core deposit franchise, and we continue to benefit from disenfranchised customers that are leaving bigger banks for our service and the community business banking experience.  During the quarter, we celebrated breaking the $100 million barrier for our customer demand deposit and NOW accounts.  In addition to the substantial growth in the dollar volume of our core deposits, I’m equally encouraged by the growth in the number of our core customer accounts, which have increased by over 15% since the beginning of the year.”

    2010 Second Quarter and Year-To-Date Highlights

    •      The Bank’s total risk-based capital ratio was 22.87% at June 30, 2010, which is above the regulatory standard of 10.00% for “well-capitalized” financial institutions.  The Bank’s capital does not include any funding received in connection with TARP, which we declined to apply for and participate in, nor other forms of capital such as trust preferred securities, convertible preferred stock or other equity or debt instruments.

    •      Total core deposits, which include non-interest bearing demand deposits, interest bearing demand deposits, savings and money market deposits, were $160.5 million and $133.9 million at June 30, 2010 and December 31, 2009, respectively, representing an increase of $26.6 million, or 19.9%.  At June 30, 2009, total core deposits were $108.5 million, representing an increase of $52.0 million, or 47.9%, during the past 12 months.

    •      Gross loans decreased $15.6 million, or 8.6%, to $166.1 million at June 30, 2010 from $181.7 million at December 31, 2009 primarily due to loan amortization and paydowns.

    •      As of June 30, 2010, the allowance for loan losses was $4.9 million, or 2.98% of gross loans, compared to $5.5 million, or 3.01% of gross loans, at December 31, 2009.

    •      Non-performing loans totaled $8.6 million and $9.8 million at June 30, 2010 and December 31, 2009, respectively.  The decline in non-performing loans was primarily attributable to loan paydowns received and charge-offs incurred during the current period. 

    •      Net interest margin was 3.80% and 3.88% for the three and six months ended June 30, 2010, respectively, compared to 4.26% and 4.33% for the same periods last year.

    •      For the three and six months ended June 30, 2010, the Company recorded net income of $119,000, or $0.01 per diluted share, and $243,000, or $0.03 per diluted share, respectively, compared to net income of $118,000, or $0.01 per diluted share, and $248,000, or $0.03 per diluted share, for the same periods last year.

    Capital Adequacy

    At June 30, 2010, the Company’s stockholders’ equity totaled $47.1 million compared to $46.3 million at December 31, 2009.  The increase was primarily related to an increase in unrealized gain on our available for sale investment portfolio and net income earned for the six months ended June 30, 2010.  At June 30, 2010, the Bank’s total risk-based capital ratio, tier 1 capital ratio, and leverage ratio were 22.87%, 21.60%, and 16.07%, respectively, and were more than double the regulatory requirements for “well-capitalized” financial institutions of 10.00%, 6.00%, and 5.00%, respectively.

    Balance Sheet

    Total assets increased 2.9%, or $8.0 million, to $280.1 million at June 30, 2010, from $272.1 million at December 31, 2009. This increase in total assets was primarily attributable to an increase in cash and cash equivalents, partially offset by decreases in gross loans and our available for sale investment portfolio.  Cash and cash equivalents increased $27.9 million from $45.9 million at December 31, 2009 to $73.8 million at June 30, 2010.  The increase in cash and cash equivalents was primarily attributable to the increase in deposits generated during the first six months of the year, as well as the cash flows received in connection with the decline in loans.  Gross loans at June 30, 2010 were $166.1 million, representing a decrease of $15.6 million, or 8.6%, from $181.7 million at December 31, 2009. The decrease in gross loans was primarily attributable to loan amortization and paydowns and, to a lesser extent, loan charge-offs.  The Company sold two available for sale securities totaling $3.8 million during the three months ended June 30, 2010, resulting in a realized gain of $44,000.

    Total liabilities increased by $7.1 million to $232.9 million as compared to $225.8 million at December 31, 2009.  This increase was primarily due to a $13.5 million increase in deposits, offset by a $6.5 million decline in other borrowings.  At June 30, 2010, total deposits were $220.9 million compared to $207.4 million at December 31, 2009, representing an increase of 6.5% or $13.5 million. This increase was primarily due to increases in non-interest bearing demand deposits, interest bearing demand deposits and savings and money market deposits of $12.5 million, $6.1 million and $7.9 million, respectively, partially offset by a decrease in certificates of deposit of $13.1 million. The decrease in certificates of deposit was primarily attributable to a decrease of $5.0 million in State of California Treasurer’s Office certificates of deposit.  The increase in non-interest bearing, as well as interest bearing demand deposits was primarily the result of our efforts to specifically focus on growing our core deposit franchise.  Total core deposits, which include non-interest bearing demand deposits, interest bearing demand deposits and savings and money market deposits, were $160.5 million and $133.9 million at June 30, 2010 and December 31, 2009, respectively, representing an increase of $26.6 million, or 19.9%.

    Credit Quality

    Allowance and Provision for Loan Losses

    The allowance for loan losses (“ALL”) was $4.9 million, or 2.98% of our total loan portfolio, at June 30, 2010 as compared to $5.5 million, or 3.01% of our total loan portfolio, at December 31, 2009.  The provision for loan losses was $100,000 for the three and six months ended June 30, 2010, compared to $374,000 and $647,000, respectively, for the same periods last year.  During the three and six months ended June 30, 2010, we had net charge-offs of $655,000 and $631,000, respectively, compared to net recoveries of $65,000 and net charge-offs of $1.1 million during the same periods last year.  Management believes that the ALL as of June 30, 2010 and December 31, 2009 was adequate to absorb known and inherent risks in the loan portfolio.

    Non-Performing Assets

    Non-performing loans totaled $8.6 million and $9.8 million at June 30, 2010 and December 31, 2009, respectively.  At June 30, 2010, non-accrual loans consisted of seven commercial loans totaling $2.2 million, three commercial real estate mortgage loans totaling $5.6 million, and two residential mortgage loans totaling $845,000.  As a percentage of our total loan portfolio, the amount of non-performing loans was 5.20% and 5.40% at June 30, 2010 and December 31, 2009, respectively.

    “I’m encouraged by the progress we’ve made in connection with resolving our non-performing assets, which have declined by $1.2 million since the beginning of the year.  We hope to build on this progress during the second half of the year by continuing to expeditiously resolve these credits, while limiting the impact to our current earnings,” stated Mr. DiNapoli.

    Net Interest Income and Margin

    For the three and six months ended June 30, 2010, average interest-earning assets were $255.3 million and $254.6 million, respectively, generating net interest income of $2.4 million and $4.9 million, respectively. For the three and six months ended June 30, 2009, average interest-earning assets were $250.6 million and $252.6 million, respectively, generating net interest income of $2.7 million and $5.4 million, respectively.

    The Company’s net interest margin for the three and six months ended June 30, 2010 were 3.80% and 3.88%, respectively, compared to 4.26% and 4.33% for the same periods last year, representing a decline of 46 and 45 basis points, respectively.  These decreases were primarily due to decreases in the yield on earning assets of 58 and 55 basis points, respectively, compared to the same periods last year, partially offset by declines of 16 and 11 basis points, respectively, compared to the same periods last year, in the cost of interest bearing deposits and borrowings.  The decrease in yield on earning assets was primarily the result of an increase in the average balance of lower yielding interest earning deposits at other financial institutions.  For the three and six months ended June 30, 2010, the average balance of interest bearing deposits at other financial institutions was $40.1 million and $34.3 million, respectively, compared to $165,000 and $142,000 for the same periods last year.  During the three and six months ended June 30, 2010, interest bearing deposits at other financial institutions yielded 22 basis points.  During the three and six months ended June 30, 2010, the cost of interest bearing deposits and other borrowings declined by 16 and 11 basis points, respectively, compared to the same periods last year.  The decline in our cost of interest bearing deposits and other borrowings was primarily attributable to the decline in the volume of our borrowings, which decreased by $22.3 million and $26.3 million for the three and six months ended June 30, 2010, respectively, as compared to the same periods last year.  In addition, we experienced a decrease in our cost of certificates of deposit which decreased by 25 and 24 basis points, respectively, during the three and six months ended June 30, 2010 compared to the same periods last year, as these deposits repriced to lower current market interest rates.  These items were partially offset by increases in the cost of borrowings of 113 and 137 basis points, respectively, compared to the same periods last year.

    Non-Interest Income

    Non-interest income was $210,000 for the quarter ended June 30, 2010 compared to $258,000 for the quarter ended June 30, 2009.  For the three months ended June 30, 2010, the decrease in non-interest income was primarily due to decreases in loan arrangement fees and service charges and other operating income of $55,000 and $22,000, respectively, compared to the same period last year, partially offset by an increase in gain on sale of available for sale securities of $29,000.

    For the six months ended June 30, 2010, non-interest income was $439,000 compared to $475,000 for the same period last year.  The decrease in non-interest income of $36,000 for the six months ended June 30, 2010 as compared to the same period in the prior year was primarily due to a decrease in loan arrangement fees from $287,000 for the six months ended June 30, 2009 to $250,000 for the six months ended June 30, 2010.

    Non-Interest Expense
    Non-interest expense was $2.4 million for the three months ended June 30, 2010 compared to $2.4 million for the three months ended June 30, 2009.  Non-interest expense was $5.0 million for the six months ended June 30, 2010 compared to $4.9 million for the six months ended June 30, 2009, representing an increase of $129,000, or 2.7%.

    Income Tax Provision

    During the three and six months ended June 30, 2010, we did not record an income tax provision related to our pretax earnings because of our cumulative losses since inception.  Tax expense that would normally arise because of the Company’s earnings during the three and six months ended June 30, 2010 is not recorded because it is offset by a reduction in the valuation allowance on the Company’s deferred tax asset.  The income tax provision for the three and six months ended June 30, 2009 was $52,000 and $136,000, respectively, and resulted in an effective tax rate of 30.6% and 35.4%, respectively.

    Net Income

    For the three months ended June 30, 2010 and 2009, the Company recorded net income of $119,000, or $0.01 per diluted share, and $118,000, or $0.01 per diluted share, respectively.  During the three months ended June 30, 2010, net income was positively impacted by declines in provision for loan losses and income tax provision of $274,000 and $52,000, respectively, as compared to the same period last year.  These declines were offset by declines in net interest income and non-interest income of $244,000 and $48,000, respectively, as well as an increase in total non-interest expenses of $33,000, each as compared to the same period last year.

    For the six months ended June 30, 2010 and 2009, the Company recorded net income of $243,000, or $0.03 per diluted share, and $248,000, or $0.03 per diluted share, respectively.  During the six months ended June 30, 2010, net income was positively impacted by declines in provision for loan losses and income tax provision of $547,000 and $136,000, respectively, as compared to the same period last year.  These items were primarily offset by a decline in net interest income of $523,000 and an increase in total non-interest expenses of $129,000, as compared to the same period last year.

    Other Matters

    The Company announced that Robert Moore, who had been serving as Chief Credit Officer of the Bank for the past year, will be succeeded by J. Kevin Sampson, a veteran of over 16 years at Union Bank, N.A.  Mr. Sampson has been working with Mr. Moore for the past year as our Senior Vice President of Credit Administration.  Mr. Moore will resume his previous position as Chairman of the Bank’s Directors Loan Committee.  The Company also announced that Matthew Horn was promoted to Senior Vice President, Chief Lending Officer.  Mr. Horn was previously the Bank’s Senior Vice President, Chief Underwriter.  Mr. Rothenberg stated, “We are fortunate to have the continuing involvement of Bob Moore, as well as the services of Kevin Sampson as our Chief Credit Officer and Matt Horn as our Chief Lending Officer.  We will benefit from their collective experience and knowledge as we continue our successful emergence from the difficult economic period our country has faced in a healthy, safe and sound position.”

    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 a full service business bank headquartered in the Century City area of Los Angeles. 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.1stcenturybank.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, 2010

     

    December 31, 2009

     

    June 30, 2009

    Balance Sheet Results:

    (unaudited)

     

     

     

    (unaudited)

    Total Assets

    $

                     280,073

       

    $

                     272,128

       

    $

                     245,307

    Gross Loans

    $

                     166,104

       

    $

                     181,708

       

    $

                     194,465

    Allowance for Loan Losses ("ALL")

    $

                        4,947

       

    $

                        5,478

       

    $

                        4,733

    ALL to Gross Loans

    2.98%

     

    3.01%

     

    2.43%

    Year-To-Date ("YTD") Net Charge-Offs to YTD Average Gross Loans*

    0.73%

     

    3.00%

     

    1.09%

    Non-Performing Assets

    $

                        8,644

       

    $

                        9,810

       

    $

                        9,718

    Deposits:

         Non-Interest Bearing Demand Deposits

    $

                       80,341

       

    $

                       67,828

       

    $

                       54,241

         Interest Bearing Demand Deposits

                       25,999

     

                       19,874

     

                       10,601

         Savings and Money Market Deposits

                       54,150

     

                       46,240

     

                       43,653

         Certificates of Deposit

                       60,374

     

                       73,432

     

                       63,597

              Total Deposits

    $

                     220,864

       

    $

                     207,374

       

    $

                     172,092

    Total Stockholders' Equity

    $

                       47,141

       

    $

                       46,320

       

    $

                       55,354

    Gross Loans to Deposits

    75.21%

     

    87.62%

     

    113.00%

    Equity to Assets

    16.83%

     

    17.02%

     

    22.57%

    Ending Shares Outstanding, excluding Treasury Stock

                  9,373,387

     

                  9,219,399

     

                  9,506,808

    Ending Book Value Per Share

    $

                          5.03

       

    $

                          5.02

       

    $

                          5.82

    Three Months Ended June 30,

    Quarterly Operating Results (unaudited):

    2010

       

     

    2009

     

    Net Interest Income

    $

                        2,417

       

    $

                        2,661

     

    Provision for Loan Losses

    $

                           100

       

    $

                           374

     

    Non-Interest Income

    $

                           210

       

    $

                           258

     

    Non-Interest Expense

    $

                        2,408

       

    $

                        2,375

     

    Income Before Taxes

    $

                           119

       

    $

                           170

     

    Income Tax Provision

    $

                               -

       

    $

                             52

     

    Net Income

    $

                           119

       

    $

                           118

     

    Basic Earnings per Share

    $

                          0.01

       

    $

                          0.01

     

    Diluted Earnings per Share

    $

                          0.01

       

    $

                          0.01

     

    Quarterly Return on Average Assets*

    0.18%

     

    0.18%

     

    Quarterly Return on Average Equity*

    1.02%

     

    0.85%

     

    Quarterly Net Interest Margin*

    3.80%

     

    4.26%

     

    Six Months Ended June 30,

    YTD Operating Results (unaudited):

    2010

       

     

    2009

     

    Net Interest Income

    $

                        4,895

       

    $

                        5,418

     

    Provision for Loan Losses

    $

                           100

       

    $

                           647

     

    Non-Interest Income

    $

                           439

       

    $

                           475

     

    Non-Interest Expense

    $

                        4,991

       

    $

                        4,862

     

    Income Before Taxes

    $

                           243

       

    $

                           384

     

    Income Tax Provision

    $

                               -

       

    $

                           136

     

    Net Income

    $

                           243

       

    $

                           248

     

    Basic Earnings per Share

    $

                          0.03

       

    $

                          0.03

     

    Diluted Earnings per Share

    $

                          0.03

       

    $

                          0.03

     

    YTD Return on Average Assets*

    0.19%

     

    0.19%

     

    YTD Return on Average Equity*

    1.05%

     

    0.90%

     

    YTD Net Interest Margin*

    3.88%

     

    4.33%

     

    *Percentages are reported on an annualized basis.

     

    1st CENTURY BANK SPONSORED 3RD ANNUAL WALK FOR WISHES
    MAKE-A-WISH FOUNDATION

    Los Angeles, CA – June 4, 2010 – 1st Century Bank (NASDAQ: FCTY) sponsored and participated in the Make-A-Wish Foundation of Greater Los Angeles’ 3rd Annual Walk for Wishes.  The event took place on Saturday, May 15th and raised over $200,000. 

    The funds raised will be used to help grant the wishes of more than 30 children in Los Angeles County.

    “1st Century Bank was honored to sponsor and participate in the 3rd Annual Walk for Wishes,” said President, Jason P. DiNapoli.  “As a local Southern California community bank, we are committed to giving back to the very community in which we work and live.  To help make a child’s wish come true, is the ultimate form of giving.”

    About Make-A-Wish Foundation
    The Make-A-Wish Foundation of Greater Los Angeles grants the wishes of children with
    life-threatening medical conditions.  Since 1983, they have brightened the lives of over 6,800children.

    1st Century Bank had a team of 10 walkers. The team of staff, family and friends enjoyed the event and look forward to participating in the 4th Annual Walk for Wishes next 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 a full service commercial bank headquartered in the Century City area of Los Angeles. The Bank’s primary focus is relationship banking to family owned and closely held small and middle market businesses, professional service firms and high net worth individuals, real estate investors, medical professionals, and entrepreneurs. The Company maintains a website at www.1stcenturybank.com. By including the foregoing website address link, the Company does not intend to incorporate by reference any material contained therein.

     

    1ST CENTURY BANCSHARES, INC. REPORTS FINANCIAL RESULTS
    FOR THE QUARTER ENDED MARCH 31, 2010

    Los Angeles, CA (April 23, 2010) – 1st Century Bancshares, Inc. (the “Company”) (NASDAQ:FCTY), the holding company of 1st Century Bank, N.A. (the “Bank”), today reported financial results for the quarter ended March 31, 2010.

    “I am pleased to see that our year-end actions appear to be bearing fruit. We have returned to profitability, reporting $124,000 of net income for the current quarter. Non-performing loans declined approximately 8% from year-end and we increased our loan loss reserve to approximately 3.2% of outstanding loans.  Our core deposits are up 36% from the same period last year; and we remain very liquid, including a loan to deposits ratio of 85%.  Our capital ratios are strong at 21.62% total risk based capital compared to the regulatory required 10%, with all of our capital being common equity; no preferred stock, no trust preferred stock, no troubled asset relief program (“TARP”) funds, and no other synthetic equity instruments,” stated Alan I. Rothenberg, Chairman of the Board and Chief Executive Officer of 1st Century Bancshares, Inc.  “As the country’s economy appears to be starting to recover, we believe we are extremely well positioned to enjoy quality growth for our shareholders and a continued safe environment for our depositors.”

    “Core deposit relationships are the foundation of our franchise,” said Jason P. DiNapoli, President and Chief Operating Officer of 1st Century Bancshares, Inc.  “So far in 2010, our sales team has successfully attracted new customer relationships and has demonstrated an ability to grow deposits in any economic environment.  We’re continuing to see opportunities in our market, and community business banks like 1st Century that are focused on relationship banking are filling a void left by both larger financial institutions and failed banks.”

    2010 1st Quarter Highlights

    •      The Bank’s total risk-based capital ratio was 21.62% at March 31, 2010, which is substantially above the regulatory standard of 10.0% for “well-capitalized” financial institutions.  The Bank’s capital does not include any funding received in connection with TARP, which we declined to apply for and participate in, nor other forms of capital, such as trust preferred securities, convertible preferred stock or other equity or debt instruments.

    •      Total core deposits, which include non-interest bearing demand deposits, interest bearing demand deposits and savings and money market deposits, were $145.5 million and $133.9 million at March 31, 2010 and December 31, 2009, respectively, representing an increase of $11.6 million, or 8.6%.  At March 31, 2009, total core deposits were $107.0 million, representing an increase during the current period of $38.5 million, or 36.0%, as compared to the prior period. 

    •      Gross loans decreased $9.0 million, or 5.0%, to $172.7 million at March 31, 2010 from $181.7 million at December 31, 2009 due to loan amortization and pay-downs. 

    •      As of March 31, 2010, the allowance for loan losses was $5.5 million, or 3.19% of gross loans, compared to $5.5 million, or 3.01% of gross loans, at December 31, 2009.

    •      Non-performing loans totaled $9.0 million and $9.8 million at March 31, 2010 and December 31, 2009, respectively.  The decline in non-performing loans was primarily attributable to loan pay-downs received during the current quarterly period. 

    •      Net interest margin improved to 3.96% for the quarter ended March 31, 2010, compared to 3.80% for the quarter ended December 31, 2009.  Net interest margin for the same period last year was 4.39%, representing a decline during the current quarter of 43 basis points, as compared to the prior period.

    •      For the three months ended March 31, 2010 and 2009, the Company recorded net income of $124,000, or $0.01 per diluted share, and $130,000, or $0.01 per diluted share, respectively.

    Capital Adequacy

    At March 31, 2010, the Company’s stockholders’ equity totaled $46.8 million compared to $46.3 million at December 31, 2009.  The increase was primarily related to the increase in unrealized gain on our Available for Sale investment portfolio and the net income for the quarter ended March 31, 2010.  At March 31, 2010, the Bank’s total risk-based capital ratio, tier 1 capital ratio, and leverage ratio were 21.62%, 20.35%, and 15.89%, respectively, and were more than double the regulatory requirements for “well-capitalized” financial institutions of 10.00%, 6.00%, and 5.00%, respectively.

    Balance Sheet

    Total assets decreased 3.1%, or $8.5 million, to $263.6 million at March 31, 2010, from $272.1 million at December 31, 2009. This fluctuation in total assets was primarily attributable to a decrease in gross loans.  Gross loans at March 31, 2010 were $172.7 million, which represents a decrease of $9.0 million, or 5.0%, from $181.7 million at December 31, 2009. This decrease was attributable to loan amortization and pay-downs incurred during the current period.   

    Total liabilities decreased by $9.0 million to $216.8 million as compared to $225.8 million at December 31, 2009.  This fluctuation was primarily due to a $3.7 million decrease in deposits and a $5.0 million decline in other borrowings.  At March 31, 2010, total deposits were $203.6 million compared to $207.4 million at December 31, 2009, representing a decrease of 1.8% or $3.8 million. This decline was primarily due to a decrease in certificates of deposits of $15.3 million, partially offset by increases in non-interest bearing demand deposits, interest bearing demand deposits and savings and money market deposits of $3.9 million, $3.7 million and $3.9 million, respectively. The decrease in certificates of deposits was primarily attributable to a decrease of $5.0 million in State of California Treasurer’s Office certificates of deposit.  The increase in non-interest bearing, as well as interest bearing demand deposits was the result of our efforts to specifically focus on growing our core deposit franchise.  The decline in other borrowings was related to the maturity and repayment of a $5.0 million long-term borrowing in January 2010.  

    Credit Quality

    Allowance and Provision for Loan Losses

    The allowance for loan losses (“ALL”) was $5.5 million, or 3.19% of our total loan portfolio, at March 31, 2010 as compared to $5.5 million, or 3.01% of our total loan portfolio, at December 31, 2009.  We did not record a provision for loan losses during the current period as it was determined that our ALL was adequate to support the known and inherent risk of loss in the loan portfolio, and for specific reserves required as of March 31, 2010.        

    Non-Performing Assets

    Non-performing loans totaled $9.0 million and $9.8 million at March 31, 2010 and December 31, 2009, respectively.  At March 31, 2010, non-accrual loans consisted of six commercial loans totaling $2.5 million, two real estate-commercial mortgage loans totaling $5.7 million, and two real estate-residential mortgage loans totaling $845,000.   As a percentage of our total loan portfolio, the amount of non-performing loans was 5.21% and 5.40% at March 31, 2010 and December 31, 2009, respectively. 

    “Despite the measured improvements in the economy, we’re continuing to focus resources on closely monitoring our loan portfolio and diligently working with borrowers to expeditiously resolve any remaining credit issues,” said Jason P. DiNapoli, President and Chief Operating Officer of 1st Century Bancshares, Inc.  “Our policy in regards to credit has been consistent through this cycle as we continue to maintain a direct approach that enables us to deal candidly with any lending relationship that has a possible negative outlook.”

    Net Interest Income and Margin

    For the quarter ended March 31, 2010, average interest-earning assets were $253.9 million, generating net interest income of $2.5 million. For the quarter ended March 31, 2009, average interest-earning assets were $254.7 million, generating net interest income of $2.8 million.

    The Company’s net interest margin for the quarter ended March 31, 2010 was 3.96% compared to 3.80% for the quarter ended December 31, 2009.  This 16 basis point improvement was primarily attributable to a 7 basis point increase in our loan yield and a 12 basis point decline in our cost of funds.  The increase in our loan yield was primarily related to a decline in the average balance of non-performing loans.  The accrual of interest has been suspended on all of our non-performing loans.

    Net interest margin for the same period last year was 4.39%.  The decline of 43 basis points in net interest margin during the current quarter as compared to the same period last year was primarily due to a decrease in yield on earning assets of 51 basis points, partially offset by a 5 basis point decline in the cost of interest bearing deposits and borrowings.  The decrease in yield on earning assets was primarily the result of an increase in the average balance of lower yielding interest earning deposits at other financial institutions.  For the quarter ended March 31, 2010 and 2009, the average balance of interest bearing deposits at other financial institutions was $28.5 million and $119,000, respectively.  During the three months ended March 31, 2010, the cost of interest bearing deposits and other borrowings declined by 5 basis points compared to the same period last year.  This decrease was primarily attributable to the cost of our certificates of deposits declining by 25 basis points during the period, as these deposits repriced to lower current market interest rates, partially offset by the cost of money market deposits increasing by 8 basis points. 

    “During the quarter, we continued to maintain an elevated level of lower yielding liquid assets on our balance sheet.  Although this strategy may have a negative impact our current net interest margin, we continue to consider this is a prudent approach given the current economic environment, allowing us great flexibility as the economy recovers,” stated Mr. DiNapoli. 

    Non-Interest Income

    Non-interest income was $229,000 for the quarter ended March 31, 2010 compared to $217,000 for the quarter ended March December 31, 2009.  Non-interest income primarily consists of loan arrangement fees, loan syndication fees, service charges and fees on deposit accounts, as well as other operating income, which mainly consists of wire transfer fees.

    Non-Interest Expense

    Non-interest expense was $2.6 million for the quarter ended March 31, 2010 compared to $2.5 million for the quarter ended March 31, 2009, representing an increase of $96,000, or 3.9%.  Compensation and benefits increased $72,000, or 5.4%, to $1.4 million for the three months ended March 31, 2010 from $1.3 million for the three months ended March 31, 2009.  FDIC assessments increased $31,000 to $91,000 for the three months ended March 31, 2010 compared to $60,000 for the three months ended March 31, 2009.  This increase was primarily due to an increase in the FDIC assessment rate and an increase in deposits as compared to March 31, 2009. 

    Income Tax Provision

    During the three months ended March 31, 2010, we did not record an income tax provision related to our pretax earnings because of our cumulative losses since inception.  Tax expense that would normally arise because of the Company’s earnings in the first quarter of 2010 is not recorded because it is offset by a reduction in the valuation allowance on the Company’s deferred tax asset.  The income tax provision for the three months ended March 31, 2009 was $84,000 and resulted in an effective tax rate of 39.3%. 

    Net Income

    For the three months ended March 31, 2010 and 2009, the Company recorded net income of $124,000, or $0.01 per diluted share, and $130,000, or $0.01 per diluted share, respectively.  The decline in net income during the current period compared to the same period last year was primarily due to a $279,000 decrease in net interest income and a $96,000 increase in total non-interest expenses.  These items were partially offset by a $273,000 decrease in provision for loan losses and an $84,000 decrease in income tax provision.

    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 a full service business bank headquartered in the Century City area of Los Angeles. The Bank’s primary focus is serving small, community bank relationships with big bank technologies and services.  The Company maintains a website at www.1stcenturybank.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 continuing 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 share data):

    March 31, 2010

    December 31, 2009

    March 31, 2009

    Balance Sheet Results:

    (unaudited)

     

    (unaudited)

    Total Assets

    $

                   263,624

    $

                   272,128

    $

                   259,730

    Gross Loans

    $

                   172,666

    $

                   181,708

    $

                   200,666

    Allowance for Loan Losses ("ALL")

    $

                        5,502

    $

                        5,478

    $

                        4,294

    ALL to Gross Loans

    3.19%

    3.01%

    2.14%

    Year-To-Date ("YTD") Net (Recoveries) Charge-Offs to YTD Average Gross Loans*

    -0.06%

    3.00%

    2.31%

    Non-Performing Assets

    $

                        9,002

    $

                        9,810

    $

                        4,803

    Non-Interest Bearing Demand Deposits

    $

                     71,761

    $

                     67,828

    $

                     48,635

    Interest Bearing Demand Deposits

    $

                     23,538

    $

                     19,874

    $

                        9,855

    Savings and Money Market Deposits

    $

                     50,159

    $

                     46,240

    $

                     48,470

    Certificates of Deposits

    $

                     58,169

    $

                     73,432

    $

                     56,222

         Total Deposits

    $

                   203,627

    $

                   207,374

    $

                   163,182

    Total Stockholders' Equity

    $

                     46,791

    $

                     46,320

    $

                     55,459

    Gross Loans to Deposits

    84.80%

    87.62%

    122.97%

    Equity to Assets

    17.75%

    17.02%

    21.35%

    Ending Shares Outstanding, excluding Treasury Stock

                9,218,269

                9,219,399

                9,476,106

    Ending Book Value Per Share

    $

                          5.08

    $

                          5.02

    $

                          5.85

    Three Months Ended March 31,

    Quarterly Operating Results (unaudited):

    2010

     

    2009

    Net Interest Income

    $

                        2,478

    $

                        2,757

    Provision for Loan Losses

    $

                               -

    $

                           273

    Non-Interest Income

    $

                           229

    $

                           217

    Non-Interest Expense

    $

                        2,583

    $

                        2,487

    Income Before Taxes

    $

                           124

    $

                           214

    Income Tax Provision

    $

                               -

    $

                             84

    Net Income

    $

                           124

    $

                           130

    Basic Earnings per Share

    $

                          0.01

    $

                          0.01

    Diluted Earnings per Share

    $

                          0.01

    $

                          0.01

    Quarterly Return on Average Assets*

    0.19%

    0.20%

    Quarterly Return on Average Equity*

    1.08%

    0.93%

    Quarterly Net Interest Margin*

    3.96%

    4.39%

     


    *Percentages are reported on an annualized basis.

     

    1ST CENTURY BANCSHARES, INC. REPORTS FINANCIAL RESULTS
    FOR THE QUARTER AND YEAR ENDED DECEMBER 31, 2009

    Los Angeles, CA (March 15, 2010) – 1st Century Bancshares, Inc. (the “Company”) (NASDAQ:FCTY), the holding company of 1st Century Bank, N.A. (the “Bank”), today reported financial results for its fourth quarter and year ended December 31, 2009.

    “Despite the challenges that banks in general have been facing due to current economic conditions, I’m encouraged by 1st Century Bank’s ability and success in growing our core deposit franchise, which increased by over 33% during the year,” said Alan I. Rothenberg, Chairman of the Board and Chief Executive Officer of 1st Century Bancshares. “When the economy ultimately normalizes, I believe that we’ll be well positioned to continue to grow our franchise.  Further, we have remained focused on ensuring that our capital ratios are well in excess of those required by our regulators and that our bank offers a safe environment for customer deposits.  At December 31, 2009, the Bank’s total risk based capital ratio was double the regulatory requirement to be deemed “well capitalized” - 20.8% versus 10.0%.  As we’ve grown core deposits, our cost of funds during the year has declined to 66 basis points and our cost of deposits has decreased to 49 basis points.  Our liquidity, as measured by our loan-to-deposit ratio, has improved from 129.6% at the end of last year to 87.6% this year.  In addition, we have aggressively focused on identifying, addressing and effectively resolving our problem assets, which resulted in $5.8 million of net charge-offs during the year and a provision for loan losses of $6.2 million.  At December 31, 2009, our allowance for loan losses to total loans increased to a healthy 3.0%.”

    Rothenberg further commented, “The $7.8 million net loss for the year was primarily caused by the $6.2 million provision for loan losses and a $3.5 million deferred tax provision recorded during the third quarter, which was a non-cash accounting item that had no material effect on our regulatory capital.” 

    Rothenberg added, “Our pre-tax, pre-provision earnings, which excludes the impact of these items, was $1.8 million for the current year as compared to $1.7 million for the same period last year.”

    Pre-tax, pre-provision earnings figures, are presented because the Company believes adjusting its results to exclude tax and loan loss provisions provides stockholders with a more comparable basis for evaluating period-to-period operating results. A schedule reconciling GAAP net loss to pre-tax, pre-provision earnings is provided in the table below.

    Total deposits increased $53.1 million, or 34.4%, from $154.3 million at December 31, 2008 to $207.4 million at December 31, 2009.  The increase in deposits resulted primarily from an increase in non-interest-bearing and interest-bearing demand deposits, as well as an increase in certificates of deposits, partially offset by a decrease in savings and money market deposits. 

    2009 Quarterly and Annual Financial Highlights

    •      The Bank’s total risk-based capital ratio was 20.79% at December 31, 2009, which is substantially above the regulatory standard of 10.0% for “well-capitalized” financial institutions.  The Bank’s capital consists entirely of common equity and does not include any funding received in connection with the troubled asset relief program (“TARP”), which we declined to apply for and participate in, nor other forms of capital, such as trust preferred securities, convertible preferred stock or other equity or debt instruments.

    •      As of December 31, 2009, total assets were $272.1 million, representing an increase of $12.7 million, or 4.9%, from $259.4 million at December 31, 2008.

    •      Gross loans decreased $18.3 million, or 9.2%, to $181.7 million at December 31, 2009 from $200.0 million at December 31, 2008 due to loan payoffs and paydowns, as well as charge-offs. 

    •      As of December 31, 2009, the allowance for loan losses was $5.5million, or 3.01% of gross loans, compared to $5.2 million, or 2.59% of gross loans, at December 31, 2008.

    •      Provision for loan losses was $6.2 million for 2009 compared to $4.3 million for 2008. 

    •      Net interest margin for the fourth quarter of 2009 decreased 52 basis points to 3.80% compared to 4.32% for the fourth quarter of 2008.  Net interest margin decreased to 4.13% from 4.63% comparing year ended December 31, 2009 to year ended December 31, 2008. 

    •      Income tax provision for the year ended December 31, 2009 was $3.5 million compared to an income tax benefit of $1.1 million for the year ended December 31, 2008.  The income tax provision was related to recording of a valuation allowance against the Company’s deferred tax assets.

    •      Net loss was $3.5 million or $0.39 per diluted share and $7.8 million or $0.86 per diluted share for the fourth quarter and the year ended December 31, 2009, respectively, compared to net loss of $1.9 million or $0.19 per diluted share and $1.5 million or $0.15 per diluted share for the fourth quarter and the year ended December 31, 2008, respectively.

    •  During the year ended December 31, 2009, the Company completed its $5.0 million stock repurchase program that was launched in September 2008.  Upon completion of this program, the Company had repurchased 1,163,800 shares of its common stock at an average discount to its book value of approximately 20%.

    Capital Adequacy

    At December 31, 2009, the Company’s stockholders’ equity totaled $46.3 million compared to $57.0 million at December 31, 2008.  The decrease was primarily related to a net loss of $7.8 million for the year ended December 31, 2009, and the repurchase of 804,400 shares of common stock for a total cost to the Company of $3.2 million under the Company’s stock repurchase program during the year ended December 31, 2009.  The Company concluded its stock repurchase program during 2009.  Throughout this program, the Company repurchased 1,163,800 shares of common stock, or approximately 10% of the total outstanding common stock, at a discount of approximately 20% to its book value at that time.  At December 31, 2009, the Bank’s total risk-based capital ratio, tier 1 capital ratio, and leverage ratio were 20.79%, 19.53%, and 15.33%, respectively, and were more than double the regulatory requirements for “well-capitalized” financial institutions of 10.00%, 6.00%, and 5.00%, respectively.

    Balance Sheet

    Total assets increased 4.9%, or $12.7 million, to $272.1 million at December 31, 2009, from $259.4 million at December 31, 2008. The growth in total assets was primarily due to an increase of $41.7 million in cash and cash equivalents, partially offset by decreases of $7.8 million and $18.5 million in investment securities and loans, net, respectively.  Cash and cash equivalents totaled $45.9 million at December 31, 2009 and $4.2 million at December 31, 2008. The increase in cash and cash equivalents was primarily due to increased liquidity maintained at the current year end.  This liquidity was primarily generated by growth in our deposits and the normal amortization within our loan and investment portfolios.  Investment securities decreased 15.3% or $7.8 million from $50.8 million at December 31, 2008 to $43.1 million at December 31, 2009 primarily due to normal amortization of the portfolio.  Loans, net of the allowance for loan losses and deferred cost/unearned fees, decreased 9.5% or $18.5 million from $194.8 million at December 31, 2008 to $176.3 million at December 31, 2009.  The decrease in the loan portfolio during the current year was primarily the result of loan pay-offs and pay-downs, as well as loan charge-offs.  Loan originations were $119.4 million and $169.0 million during the years ended December 31, 2009 and 2008, respectively.  The decline in loan originations was primarily due to a reduction in customer demand.

    Total deposits increased $53.1 million, or 34.4%, from $154.3 million at December 31, 2008 to $207.4 million at December 31, 2009.  The increase in deposits resulted primarily from an increase in non-interest-bearing and interest-bearing demand deposits, as well as an increase in certificates of deposit, partially offset by a decrease in savings and money market deposits.  Non-interest-bearing demand deposits increased $27.5 million, or 68.4%, from $40.3 million at December 31, 2008 to $67.8 million at December 31, 2009.  Interest-bearing demand deposits increased $11.7 million, or 142.5%, from $8.2 million at December 31, 2008 to $19.9 million at December 31, 2009.  Savings and money market deposits decreased $5.9 million, or 11.2%, from $52.1 million at December 31, 2008 to $46.2 million at December 31, 2009.  The increases in non-interest-bearing and interest-bearing demand deposits are primarily attributable to the Company’s continued marketing and sales efforts to expand the Bank’s core deposit franchise.  Certificates of deposits increased $19.7 million, or 36.7%, from $53.7 million at December 31, 2008 to $73.4 million at December 31, 2009. The increase in certificates of deposit was primarily attributable to the Certificate of Deposit Accounts Registry Service (“CDARS”) program, which commenced in January 2009 and an additional $5.0 million in certificates of deposit from the State of California Treasurer’s Office.  At December 31, 2009, the Bank had $12.0 million of CDARS related deposits.

    “We remain cautiously optimistic that we will continue to grow our deposit franchise and that this will result in future lending opportunities,” said Jason P. DiNapoli, President and Chief Operating Officer of 1st Century Bancshares, Inc.  “We continue to see customer discontent with larger institutional banks and I truly believe that significant business opportunities exist within our market.  Our sales force is focused on cultivating customer relationships through superior customer service and coordinated marketing efforts.”

    Credit Quality

    Allowance and Provision for Loan Losses

    The allowance for loan losses was $5.5 million, or 3.01% of our total loan portfolio, at December 31, 2009 as compared to $5.2 million, or 2.59% of our total loan portfolio, at December 31, 2008.  The change in the allowance for loan losses was due primarily to the provision for loan losses of $6.2 million, less net charge-offs of $5.8 million.  The provision for loan losses was recorded to provide reserves adequate to support the known and inherent risk of loss in the loan portfolio, and for specific reserves required as of December 31, 2009.  The provision for loan losses was $3.8 million and $6.2 million for the quarter and year ended December 31, 2009, respectively, compared to $3.6 million and $4.3 million for the same periods a year ago. 

    Non-performing Assets

    Non-performing loans totaled $9.8 million and $5.7 million at December 31, 2009 and 2008, respectively.  The fluctuation in non-performing loans was primarily caused by gross increases of $4.6 million in commercial loans and $5.2 million in commercial real estate loans, partially offset by charge-offs of $1.5 million and $2.7 million, respectively.   Non-performing loans were further impacted by $1.6 million of charge-offs related to consumer and other loans.  During the year ended December 31, 2009, 86.30% of the loan charge-offs related to five lending relationships. These charge-offs were primarily recorded in connection with a decline in real estate collateral values incurred during the year.  As a percentage of our total loan portfolio, the amount of non-performing loans was 5.40% and 2.85% at December 31, 2009 and 2008, respectively. 

    “We remain intensely focused on effectively managing through this credit cycle and working closely with our borrowers during this difficult economic environment,” said Jason P. DiNapoli, President and Chief Operating Officer of 1st Century Bancshares, Inc.  “We are committed to addressing loan problems directly and expeditiously to allow us to focus on future opportunities as the economy gradually recovers.”

    Net Interest Income and Margin

    For the quarter and the year ended December 31, 2009, average interest-earning assets were $258.2 million and $252.4 million, respectively, generating net interest income of $2.5 million and $10.4 million, respectively. For the quarter and year ended December 31, 2008, average interest-earning assets were $252.2 million and $241.4 million, respectively, generating net interest income of $2.7 million and $11.2 million, respectively. The growth in average earning assets during the quarter and year ended December 31, 2009 was primarily related to interest-earning deposits at other financial institutions, which was primarily funded by an increase in deposits and borrowings.

    The Company’s net interest margin for the quarter ended December 31, 2009 was 3.80% compared to 4.32% for the quarter ended December 31, 2008. The 52 basis point decrease in net interest margin was primarily due to a decrease in yield on earning assets of 93 basis points, partially offset by a decrease of 66 basis points in the rate paid for interest-bearing deposits and borrowings.  The decrease in yield on earning assets was primarily the result of a 35 basis point decrease in loan yield and an increase in the average balance of lower yielding interest-earning deposits at other financial institutions.  The decline in yield earned on our loan portfolio was primarily attributable to the increase in our average non-accrual loans outstanding during the quarter and new loan originations, which were originated at lower current market interest rates. 

    The Company’s net interest margin was 4.13% and 4.63% for the years ended December 31, 2009 and 2008, respectively.  The 50 basis point decline in net interest margin was primarily due to a decrease in yield on earning assets of 113 basis points, partially offset by a 105 basis point decline in the cost of interest-bearing deposits and borrowings.  The decrease in yield on earning assets was primarily the result of a 118 basis point decrease in the Company’s loan yield and, to a lesser extent, an increase in the average balance of lower yielding interest-earning deposits at other financial institutions.  As discussed above, the decline in yield earned on our loan portfolio was primarily attributable to the increase in our average non-accrual loans outstanding during the year and new loan originations, which were originated at lower current market interest rates. 

    Non-Interest Income

    Non-interest income was $250,000 for the quarter ended December 31, 2009 compared to $252,000 for the quarter ended December 31, 2008.

    Non-interest income was $1.0 million for the year ended December 31, 2009 compared to $581,000 for the year ended December 31, 2008.  The increase in non-interest income of $445,000 was primarily due to an increase in loan arrangement fees from $354,000 in 2008 to $734,000 in 2009, and an increase in service charges and other operating income from $177,000 in 2008 to $267,000 in 2009. 

    Non-Interest Expense

    Non-interest expense was $2.4 million for the quarter ended December 31, 2009 compared to $2.7 million for the quarter ended December 31, 2008, representing a decrease of $273,000, or 10.1%.  Non-interest expense was $9.6 million for the year ended December 31, 2009 compared to $10.1 million for the year ended December 31, 2008, representing a decrease of $453,000, or 4.5%. 

    Compensation and benefits increased $142,000 or 12.5%, to $1.3 million for the quarter ended December 31, 2009 from $1.1 million for the quarter ended December 31, 2008.  Compensation and benefits decreased $498,000, or 8.9%, to $5.1 million for the year ended December 31, 2009 from $5.6 million for the year ended December 31, 2008. 

    FDIC assessments increased $63,000 to $91,000 for the quarter ended December 31, 2009 compared to $28,000 for the quarter ended December 31, 2008.  The increase was primarily due to an increase in the FDIC assessment rate.  This assessment increased $268,000 to $374,000 for the year ended December 31, 2009 compared to $106,000 for the year ended December 31, 2008.  The increase during the year was primarily due to an increase in the assessment rate, as well as a $99,000 special FDIC assessment that was accrued and paid during the year ended December 31, 2009. 

    Other operating expense decreased $217,000 to $486,000 for the quarter ended December 31, 2009 compared to $703,000 million for the quarter ended December 31, 2008.  Other operating expense decreased $94,000, or 5.1%, to $1.8 million for the year ended December 31, 2009 compared to $1.9 million for the year ended December 31, 2008.

    Income Tax Provision (Benefit)

    The income tax provision for the quarter and year ended December 31, 2009 was none and $3.5 million, respectively compared to an income tax benefit of $1.4 million and $1.1 million, respectively for the same periods last year.  At December 31, 2009, the Company had a valuation allowance of $5.3 million against its net deferred tax assets.  This valuation allowance was established based on management’s assessment regarding the near-term likelihood of the Company’s ability to generate sufficient future taxable income to realize the benefits associated with these deferred tax assets.  This non-cash charge did not affect the Company’s cash flows or liquidity and did not have a significant effect on the Bank’s regulatory capital ratios. 

    Loss before Income Taxes

    The Company’s loss before income taxes for the quarter and the year ended December 31, 2009 was $3.5 million and $4.3 million, respectively.  The Company’s loss before income taxes for the quarter and the year ended December 31, 2008 was $3.3 million and $2.6 million, respectively.

    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 a full service commercial bank headquartered in the Century City area of Los Angeles. The Bank’s primary focus is relationship banking to family owned and closely held small and middle market businesses, professional service firms and high net worth individuals, real estate investors, medical professionals, and entrepreneurs. The Company maintains a website at www.1stcenturybank.com. By including the foregoing website address link, the Company does not intend 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 continuing 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.

    #   #   #

    (Tables follow)

    December 31, December 31,
    Balance Sheet Results: 2009     2008
    Total Assets $             
    272,128
    $             
    259,354
    Gross Loans $             
    181,708
    $             
    199,983
    Allowance for Loan Losses ("ALL") $                 
    5,478
    $                 
    5,171
    ALL to Gross Loans
    3.01%
    2.59%
    Net Charge-Offs to Average Gross Loans
    3.22%
    0.82%
    Non-Performing Assets $                 
    9,810
    $                 
    5,854
    Total Deposits $             
    207,374
    $             
    154,287
    Total Stockholders' Equity $               
    46,320
    $               
    57,048
    Gross Loans to Deposits
    87.62%
    129.62%
    Equity to Assets
    17.02%
    22.00%
    Ending Shares Outstanding, excluding Treasury Stock           
    9,219,399
            
    10,009,898
    Ending Book Value Per Share $                   
    5.02
    $                   
    5.70
    Quarters Ended December 31,
    Quarterly Operating Results: 2009     2008
    Net Interest Income $                 
    2,477
    $                 
    2,739
    Provision for Loan Losses $                 
    3,800
    $                 
    3,630
    Non-Interest Income $                    
    250
    $                    
    252
    Non-Interest Expense $                 
    2,425
    $                 
    2,698
    Loss Before Taxes $                
    (3,498)
    $                
    (3,337)
    Income Tax Benefit $                        
    -
    $                 
    1,403
    Net Loss $                
    (3,498)
    $                
    (1,934)
    Basic and Diluted Loss per Share $                  
    (0.39)
    $                  
    (0.19)
    Quarterly Return on Average Assets*
    -5.15%
    -3.00%
    Quarterly Return on Average Equity*
    -27.89%
    -13.22%
    Quarterly Net Interest Margin*
    3.80%
    4.32%
    Years Ended December 31,
    Year-To-Date ("YTD") Operating Results: 2009     2008
    Net Interest Income $               
    10,423
    $               
    11,178
    Provision for Loan Losses $                 
    6,154
    $                 
    4,342
    Non-Interest Income $                 
    1,026
    $                    
    581
    Non-Interest Expense $                 
    9,606
    $               
    10,059
    Loss Before Taxes $                
    (4,311)
    $                
    (2,642)
    Income Tax Provision (Benefit) $                 
    3,498
    $                
    (1,125)
    Net Loss $                
    (7,809)
    $                
    (1,517)
    Basic and Diluted Loss per Share $                  
    (0.86)
    $                  
    (0.15)
    YTD Return on Average Assets
    -3.00%
    -0.61%
    YTD Return on Average Equity
    -14.47%
    -2.59%
    YTD Net Interest Margin
    4.13%
    4.63%
    Reconciliation of YTD Net Loss to Pre-Tax, Pre-Provision Earnings:
    Net Loss $                
    (7,809)
    $                
    (1,517)
    Provision for Loan Losses                 
    6,154
                    
    4,342
    Income Tax Provision (Benefit)                 
    3,498
                   
    (1,125)
    Pre-Tax, Pre-Provision Earnings $                 
    1,843
    $                 
    1,700



    1st CENTURY BANK AND ALAN I. ROTHENBERG FEATURED IN HUFFINGTON POST BLOG

    LOS ANGELESJanuary 20, 2010 - 1st Century Bank and Alan I. Rothenberg are featured in a Huffington Post blog. To view this article, visit the following link.



    1ST CENTURY BANCSHARES COMPLETES STOCK REPURCHASE PROGRAM

    LOS ANGELESDecember 18, 2009 – 1st Century Bancshares, Inc. (NASDAQ: FCTY) (the “Company”), the holding company of 1st Century Bank, N.A. (the “Bank”), announced the completion of a stock repurchase program that was launched in September 2008.  Prior to commencement of the stock repurchase program, the Company’s Board of Directors authorized the purchase of up to $5 million of the Company’s common stock over a 24 month period.

    The Company repurchased 1,163,800 shares of its common stock at an average price of $4.30, which represents approximately a 20% discount from its book value at September 30, 2009.  Even after repurchasing approximately 10% of its outstanding common stock, the Bank remains one of the most well-capitalized banks in Southern California with a risk based capital ratio of 21.33% as of September 30, 2009, more than twice the amount regulators require to be categorized as "well-capitalized.”

    “The successful completion of the stock repurchase program not only reflects our belief in the value of the Company, but demonstrates that to our shareholders” said Alan I. Rothenberg, Chairman and CEO of 1st Century Bancshares.  “During this past year of uncertainty, we’ve remained committed to delivering shareholder value through our stock repurchase program and ensuring that our customers are doing business with a bank that’s equally committed to its safety and security, as evidenced by our risk-based capital ratio of 21.33%.”

    About 1st Century Bancshares, Inc.

    1st Century Bancshares, Inc. is the bank holding company of 1st Century Bank, N.A., a full service commercial bank headquartered in the Century City area of Los Angeles. The Bank’s primary focus is relationship banking to family owned and closely held small and middle market businesses, professional service firms and high net worth individuals, real estate investors, medical professionals, and entrepreneurs. Additional information is available at www.1stcenturybank.com. By including the foregoing Internet address link, the Company does not intend to incorporate by reference into this press release material not otherwise specifically incorporated herein.

    Safe Harbor

    Certain matters discussed in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These forward looking statements, include, but are not limited to, 1st Century Bancshares’ ability to provide greater flexibility for capital planning and operational expansion, navigate the difficult banking environment, maintain strong loan loss reserves and remain well capitalized and implement operational enhancements.  These forward-looking statements are subject to certain risks and uncertainties that could cause the actual results, performance or achievements to differ materially from those expressed, suggested or implied by the forward-looking statements.  These risks and uncertainties include, but are not limited to: (1) the impact of changes in interest rates, a decline in economic conditions and increased competition among financial service providers on 1st Century’s operating results, ability to attract deposit and loan customers and the quality of 1st Century’s earning assets; (2) government regulation; and (3) the other risks set forth in 1st Century’s reports filed with the U.S Securities and Exchange Commission.  1st Century does not undertake, and specifically disclaims, any obligation to revise or update any forward-looking statements for any reason

     

     

    1st CENTURY BANCSHARES, INC. ANNOUNCES NEW MEMBER ON EXECUTIVE TEAM

    BRAD SATENBERG IS APPOINTED CHIEF FINANCIAL OFFICER

    LOS ANGELES, CA – December 14th, 2009  – 1st Century Bancshares, Inc. (NASDAQ: FCTY), the holding company of 1st Century Bank, N.A. (the “Bank”), announced today the appointment of Bradley S. Satenberg as Executive Vice President and Chief Financial Officer, effective December 15, 2009.

    “We welcome Mr. Satenberg to our executive team here at 1st Century Bank,” said Alan I. Rothenberg, Chairman of the Board and Chief Executive Officer of 1st Century Bancshares.  “Mr. Satenberg’s solid background in public accounting coupled with his banking experience will help us continue to build our franchise for many years to come.”

    Prior to joining 1st Century Bank, Mr. Satenberg was Managing Director and Deputy Chief Financial Officer of Imperial Capital Bancorp in Los Angeles, a $4 billion publicly held financial institution. He was responsible for financial and regulatory reporting, daily accounting and finance functions for the bank, including real estate investments and off-balance sheet securitization. 

    Mr. Satenberg began his career with Arthur Andersen.  In a 10 year period he rose to Senior Manager, Assurance Practice, focusing on financial markets industries with asset bases up to $15 billion, management of $800 million in investments and $1 billion in revenues.  Other responsibilities included performing financial audits, SEC filings, and budgeting. 

    Mr. Satenberg has a Bachelor of Business Administration, Accounting degree from the University of Texas at Austin.  He is actively involved in his community, participates in a number of charities and resides in Sherman Oaks with his wife and two children.

    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 a full service commercial bank headquartered in the Century City area of Los Angeles. The Bank’s primary focus is relationship banking to family owned and closely held small and middle market businesses, professional service firms and high net worth individuals, real estate investors, medical professionals, and entrepreneurs. The Company maintains a website at www.1stcenturybank.com. By including the foregoing website address link, the Company does not intend 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 continuing 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.

     

    1st CENTURY BANCSHARES, INC. SENDS LETTER TO CLIENTS AND SHAREHOLDERS

    1st Century Bancshares Chairman, Alan I. Rothenberg and President and CEO Jason P. DiNapoli sent the following letter to clients and shareholders:

    Dear Client/Shareholder,

    As the enclosed graph displays, 1st Century Bank continues to be one of the most well-capitalized banks in Southern California. 

    1st Century Bank Capital Breakdown:

    • Risk Based Capital Ratio = 21.3%.
    • 100% of our capital is pure common equity.
    • NO TARP.
    • NO Trust Preferred.
    • NO subordinated debt.
    • NO other kind of "quasi-equity".

    The key measurement of a bank’s health is its CAPITAL, and now more than ever this is of paramount importance. 

    We have positioned our bank to withstand this current economic cycle and stand confidently poised for growth in the years to come.  We are both shareholders and clients of this bank and have full faith in our board and the talented team we have built to continue moving this bank forward into a successful future.

    We appreciate your continued commitment to and confidence in 1st Century Bank.   

    As always, feel free to contact either of us if you have any questions at all.  Or better yet, come in and pay us a visit.

    Sincerely,

    SIGNATURE_Rothenberg.tif          jason sig

    Alan I. Rothenberg                                         Jason P. DiNapoli
    Chairman                                                         President & CEO
    310.270.9501                                                  310.270.9505

    Risk Based Capital Ratio 3rd Quarter 2009 Follows:

    Capital Ratio Graph

     

    1ST CENTURY BANCSHARES, INC. REPORTS FINANCIAL RESULTS FOR THE THIRD QUARTER 2009

    Los Angeles, – November 12, 2009 – 1st Century Bancshares, Inc. (the “Company”) (NASDAQ:FCTY), the holding company of 1st Century Bank, N.A. (the “Bank”), today reported financial results for the third quarter and the nine months ended September 30, 2009.

    “In these unique economic circumstances, we have primarily focused on remaining safe and sound,” said Alan I. Rothenberg, Chairman of the Board and Chief Executive Officer of 1st Century Bancshares. “With a strong total risk-based capital ratio of 21.3%, 1st Century Bank remains one of the most highly capitalized banks in Southern California.  The Bank’s total risk based capital ratio is over twice the regulatory definition of “well-capitalized” (21.3% vs 10.0%).  We continue to provide for loan loss provisions coupled with timely and appropriate charge-offs.  With our strong capital position, proactive monitoring of our loan portfolio, and prudent increases in our loan loss reserve, we are situated to withstand these difficult economic times. With an increase in non-interest-bearing core deposits of 44.3%, we are well positioned to grow.”

    Rothenberg added, “Importantly, our capital base does not include any troubled asset relief program (“TARP”) funds, trust preferred securities, subordinated debt or any other ‘quasi-equity’ instruments.  We have only common equity, and the size of our equity base allows us to take measures to stay ahead of this economic cycle.  In addition to our provisions against potential loan losses in the third quarter, we also set up an allowance against our deferred tax asset, a sensible measure consistent with conservative accounting practice and in line with our view that our near-term prospects for realizing this asset are unlikely.  Significantly, this did not have any material effect on our regulatory capital ratios since a significant portion of the deferred tax asset had previously been excluded by regulation in the calculation of the regulatory capital ratios.”

    2009 Third Quarter Highlights

    •      The Bank’s total risk-based capital ratio was 21.3% at September 30, 2009, which is above the regulatory standard of 10.0% for “well-capitalized” financial institutions.

    •      Total deposits increased $34.4 million or 22.3% from $154.3 million at December 31, 2008 to $188.7 million at September 30, 2009.  The increase in deposits resulted primarily from an increase in non-interest-bearing demand deposits and certificates of deposits. 

    •      Non-interest-bearing demand deposits increased $17.8 million or 44.3% from $40.3 million at December 31, 2008 to $58.1 million at September 30, 2009.  The increase in non-interest-bearing demand deposits is related to the Company’s continued efforts in core deposit gathering, as well as expanding the Company’s client base through relationship banking.

    •      As of September 30, 2009, total assets were $257.9 million, a decrease of 0.6% from December 31, 2008 and 1.3% from September 30, 2008.

    •      Gross loans decreased $11.5 million or 5.7% to $188.5 million from $200.0 million at December 31, 2008 and decreased $7.4 million or 3.8% from September 30, 2008 due to payoffs and paydowns.

    •      As of September 30, 2009, the allowance for loan losses was $5.6 million or 2.95% of gross loans compared to $5.2 million or 2.59% of gross loans at December 31, 2008.

    •      Provision for loan losses was $1.7 million and $2.4 million for the three and nine months ended September 30, 2009, respectively, compared to $281,000 and $712,000 for the three and nine months ended September 30, 2008, respectively. 

    •      Net interest margin for the third quarter of 2009 decreased 56 basis points to 4.08% compared to 4.64% for the third quarter of 2008.  Net interest margin for the nine months ended September 30, 2009 decreased 50 basis points to 4.24% compared to 4.74% for the nine months ended September 30, 2008.

    •      The Company continued to manage expenses.  Non-interest expense was down 6.2% and 2.5% for the three and nine months ended September 30, 2009, respectively, compared to the same periods in 2008.

    •      The Company recorded a 100% valuation allowance against the deferred tax asset at September 30, 2009, resulting in a non-cash charge of $3.4 million recorded as income tax expense for the three and nine months ended September 30, 2009.  This charge stemmed from management’s re-evaluation of the likelihood of producing near-term taxable income coupled with cumulative losses since inception that were exacerbated by the third quarter loss. This decision does not affect the Company’s cash flows or liquidity and did not have a significant effect on the Bank’s regulatory capital ratios because a significant portion of the deferred tax asset had previously been excluded by regulation in the calculation of the regulatory capital ratios.

    •      Net loss was $4.6 million and $4.3 million for the three and nine months ended September 30, 2009, respectively, compared to net income of $151,000 and $416,000 for the three and nine months ended September 30, 2008, respectively.  The decrease in the Company’s earnings for the three and nine months ended September 30, 2009 compared to the three and nine months ended September 30, 2008 was primarily the result of the income tax expense to establish the deferred tax asset valuation allowance of $3.4 million for both the three and nine months ended September 30, 2009, and the increases in the provision for loan losses of $1.4 million and $1.6 million for the three and nine months ended September 30, 2009, respectively.

    Capital Adequacy

    At September 30, 2009, the Company’s stockholders’ equity totaled $50.6 million compared to $57.0 million at December 31, 2008.  The decrease was primarily related to a net loss of $4.3 million for the nine months ended September 30, 2009 and the repurchase under the Company’s stock repurchase program of 642,600 shares of common stock for a total cost to the Company of $2.6 million during the nine months ended September 30, 2009. The Bank’s total risk-based capital ratio, tier 1 capital ratio, and leverage ratio of 21.33%, 20.06%, and 17.43%, respectively, are all well above the regulatory standards for “well-capitalized” financial institutions of 10.00%, 6.00%, and 5.00%, respectively.

    Balance Sheet

    Total assets decreased 0.6% or $1.5 million to $257.9 million at September 30, 2009 compared to $259.4 million at December 31, 2008.  The decrease in total assets was primarily due to decreases in accrued interest and other assets, investments, and loans, net of allowance for loan losses and deferred costs/unearned fees, partially offset by an increase in cash and cash equivalents.  Accrued interest and other assets decreased 74.2% or $3.2 million to $1.1 million at September 30, 2009 compared to $4.3 million at December 31, 2008.  The decrease in accrued interest and other assets was primarily the result of a 100% valuation allowance of $3.5 million against the deferred tax asset recorded at September 30, 2009.  Investments decreased 14.9% or $7.6 million to $43.2 million at September 30, 2009 compared to $50.8 million at December 31, 2008.  The decrease in investments was primarily due to sales of investments.  Loans, net of allowance for loan losses and net deferred costs/unearned fees, decreased 6.0% or $11.7 million to $183.1 million at September 30, 2009 compared to $194.8 million at December 31, 2008.  The decrease in loans was primarily due to loan payoffs and paydowns.    Cash and cash equivalents increased $21.4 million to $25.6 million at September 30, 2009 compared to $4.2 million at December 31, 2008 due to increases in total deposits.

    At September 30, 2009, total deposits were $188.7 million compared to $154.3 million at December 31, 2008, representing an increase of 22.3% or $34.4 million. The increase in deposits resulted primarily from an increase in non-interest-bearing demand deposits and certificates of deposits.


    “We are pleased to see the substantial growth in our core deposits,” said Jason P. DiNapoli, President and Chief Operating Officer of 1st Century Bancshares, Inc.  “Our growth is a testament to the efforts made by our experienced team at 1st Century Bank.  With our continued focus on relationship deposit growth, credit quality and superior customer service, we continue to successfully grow our franchise.  The dislocation caused by problems experienced by some of our competitors has given us the opportunity to attract new customers.  We anticipate more of such growth due to these unusual economic times.”

    Credit Quality

    Allowance and Provision for Loan Losses

    The allowance for loan losses totaled $5.6 million, or 2.95% of gross loans at September 30, 2009, compared to $5.2 million, or 2.59% of gross loans at December 31, 2008. The provision for loan losses was $1.7 million and $2.4 million for the three and nine months ended September 30, 2009 compared to $281,000 and $712,000 for the same periods a year ago.

    Net charge-offs were $874,000, or 1.79% of average gross loans for the three months ended September 30, 2009 compared to zero for the three months ended September 30, 2008.  Net charge-offs were $2.0 million, or 1.02% of average gross loans for the nine months ended September 30, 2009 compared to $160,000, or 0.09% for the nine months ended September 30, 2008. 

    Non-performing Assets

    Non-accrual loans totaled $12.6 million and $5.7 million at September 30, 2009 and December 31, 2008, respectively. The Company placed seven additional loans on non-accrual status in the three months ended September 30, 2009; five secured commercial loans totaling $1.7 million, a $243,000 secured real estate-commercial mortgage loan, as well as a $1.5 million commercial loan secured by a junior lien on the borrower’s occupied residence. 

    As of December 31, 2008, $162,000 was recorded as other real estate owned (“OREO”) and included in accrued interest and other assets on the Company’s Unaudited Condensed Consolidated Balance Sheets.  During the three months ended September 30, 2009, the Company sold this OREO and recorded a gain of $56,000.  As of September 30, 2009, the Company does not have any OREO. 

    “The Bank continues to work through a period of deteriorating credit, and we are taking aggressive steps to identify and accurately address any loan with a loss potential,” said Jason P. DiNapoli, President and Chief Operating Officer of 1st Century Bancshares, Inc.  “With our capital base and current level of allowance for loan losses, we are well positioned to not only sustain a longer than anticipated downturn but also to benefit from an economic recovery.  We will continue to invest in our business and cautiously grow our franchise as opportunities arise.”

    Net Interest Income and Margin

    For the three and nine months ended September 30, 2009, average interest-earning assets were $246.0 million and $250.4 million, respectively, generating net interest income of $2.5 million and $7.9 million, respectively. For the three and nine months ended September 30, 2008, average interest-earning assets were $241.3 million and $237.8 million, respectively, generating net interest income of $2.8 million and $8.4 million, respectively. The growth in earning assets was primarily due to growth in loans.

    The Company’s net interest margin for the three months ended September 30, 2009 was 4.08% compared to 4.64% for the three months ended September 30, 2008. The 56 basis point decrease in net interest margin from the third quarter 2008 to 2009 was primarily due to a decrease in yield on earning assets of 1.13%, partially offset by a decrease of 0.93% in rate paid for interest-bearing deposits and borrowings and an increase of $14.3 million of average demand deposits.  The decrease in yield on earning assets was primarily the result of a 1.16% decrease in loan yield which was principally the result of the prime rate decreasing 1.75% from September 30, 2008 to September 30, 2009.  Interest foregone on non-accrual loans totaled $172,000, resulting in a 0.28% reduction in the net interest margin for the three months ended September 30, 2009.  There were no non-accrual loans during the three months ended September 30, 2008.


    The Company’s net interest margin for the nine months ended September 20, 2009 was 4.24% compared to 4.74% for the nine months ended September 30, 2008.  The net interest margin decreased 50 basis points comparing the nine months ended September 30, 2009 to the nine months ended September 30, 2008.  The decrease in net interest margin was primarily due to a decrease in yield on earning assets of 1.21%, partially offset by a decrease of 1.18% in rate paid for interest-bearing deposits and borrowings and an increase of $9.2 million of average demand deposits.  The decrease in yield on earning assets was primarily the result of a 1.48% decrease in loan yield which was principally the result of the prime rate decreasing 1.75% from September 30, 2008 to September 30, 2009.  Interest foregone on non-accrual loans totaled $406,000, resulting in a 0.22% reduction in the net interest margin for the nine months ended September 30, 2009.  There were no non-accrual loans during the nine months ended September 30, 2008.

    Non-Interest Income

    1. Non-interest income was $301,000 for the three months ended September 30, 2009 compared to $157,000 for the three months ended September 30, 2008.
    2.  

    The increase in non-interest income of $144,000 was primarily due to an increase in loan arrangement fees from $114,000 for the three months ended September 30, 2008 to $219,000 for the three months ended September 30, 2009 and an increase in service charges and other operating income from $16,000 for the three months ended September 30, 2008 to $40,000 for the three months ended September 30, 2009.  Additionally, during the three months ended September 30, 2009, the Company sold other real estate owned and recorded a gain of $56,000.  During the three months ended September 30, 2008, the Company sold other real estate owned for $370,000, resulting in a gain of $27,000.    

    For the nine months ended September 30, 2009, non-interest income was $776,000 compared to $329,000 for the same period a year ago. 

    1. The increase in non-interest income of $447,000 was primarily due to an increase in loan arrangement fees from $182,000 for the nine months ended September 30, 2008 to $506,000 for the nine months ended September 30, 2009 and an increase in service charges and other operating income from $97,000 for the nine months ended September 30, 2008 to $213,000 for the nine months ended September 30, 2009. 

     

    Non-Interest Expense

    Non-interest expense was $2.3 million for the three months ended September 30, 2009 compared to $2.5 million for the three months ended September 30, 2008, representing a decrease of $153,000, or 6.2%.    Non-interest expense was $7.2 million for the nine months ended September 30, 2009 compared to $7.4 million for the nine months ended September 30, 2008, representing a decrease of $181,000, or 2.5%.

    Compensation and benefits decreased $364,000 or 23.6%, to $1.2 million for the three months ended September 30, 2009 from $1.5 million for the three months ended September 30, 2008.  The decrease was primarily due to an increase in deferred loan origination costs of $109,000, and decreases in non-cash stock compensation expense, incentive compensation accrual, and health and dental insurance expenses of $96,000, $63,000, and $46,000, respectively.   Compensation and benefits decreased $640,000 or 14.4%, to $3.8 million for the nine months ended September 30, 2009 from $4.4 million for the nine months ended September 30, 2008.  The decrease was primarily due to an increase in deferred origination costs of $151,000 and decreases in incentive compensation accrual and non-cash stock compensation expense of $299,000 and $215,000, respectively. 

    FDIC assessments increased $58,000 to $83,000 for the three months ended September 30, 2009 compared to $25,000 for the three months ended September 30, 2008.  The increase was primarily due to an increase in the assessment rate.   FDIC assessments increased $203,000 to $282,000 for the nine months ended September 30, 2009 compared to $79,000 for the nine months ended September 30, 2008.  The increase was primarily due to an increase in the assessment rate, as well as a $99,000 special assessment related to the final ruling adopted by the FDIC on May 22, 2009 which provides for a special assessment on each insured depository institution as of June 30, 2009.

    Other operating expense decreased $1,000 to $395,000 for the three months ended September 30, 2009 compared to $396,000 for the three months ended September 30, 2008. Other operating expense increased $124,000 to $1.3 million for the nine months ended September 30, 2009 compared to $1.2 million for the nine months ended September 30, 2008. Other operating expense increased primarily due to increases of $257,000 of student loan servicing costs related to a new student loan program started in the third quarter of 2008 and $102,000 in Delaware franchise tax, partially offset by a decrease of $209,000 in stockholders’ relation expense.  The higher stockholders’ relation expense in the nine months ended September 30, 2008 was primarily related to the Company’s proxy solicitation for its contested election of directors at the 2008 annual meeting of stockholders.

    Income Taxes

    The Company had previously established a deferred tax asset of $3.4 million, the majority of which was represented by future tax benefits realizable from the loan loss provision and the cumulative net operating losses for tax purposes.  At September 30, 2009, management conducted a quarterly assessment of the realizability of the deferred tax asset by considering both positive and negative evidence related to the Company’s ability to generate sufficient taxable income in the near-term.  At September 30, 2009, management determined that a 100% valuation allowance against the deferred tax asset was needed.  As a result, a valuation allowance of $3.4 million was recorded as income tax expense.  This non-cash charge increased the net loss by $3.4 million for the three and nine months ended September 30, 2009. This decision reflects management’s current assessment that it is more likely than not that this asset will not be realized.  This assessment is largely based on the evidence of cumulative losses in the current year-to-date and prior two fiscal years.   This non-cash charge did not affect the Company’s cash flows or liquidity and did not have a significant effect on the Bank’s regulatory capital ratios.  The Company’s loss before income taxes for the three and nine months ended September 30, 2009 was $1.2 million and $813,000, respectively.

    The table below illustrates the effect on the Bank’s regulatory capital ratios as a result of the valuation allowance.

     

     

    Before 100%
    Valuation Allowance

    After 100%
    Valuation Allowance

    Difference

    Tier 1 Leverage Ratio                     

    18.24%

    17.43%

    -0.81%

    Tier 1 Risk Based Capital Ratio

    20.58%

    20.06%

    -0.52%

    Total Risk Based Capital Ratio

    21.85%

    21.33%

    -0.52%

    Net (Loss) Income

    For the three and nine months ended September 30, 2009, the Company recorded net loss of $4.6 million or $0.50 per diluted share and net loss of $4.3 million or $0.47 per diluted share, respectively.  For the three and nine months ended September 30, 2008, net income was $151,000 or $0.01 per diluted share and $416,000 or $0.04 per diluted share, respectively.  The decrease in the Company’s earnings for the three months ended September 30, 2009 compared to September 30, 2008 was primarily the result of establishing a 100% valuation allowance of $3.4 million against the deferred tax asset recorded at September 30, 2009 and an increase in the provision for loan losses of $1.4 million from $281,000 to $1.7 million.  The decrease in the Company’s earnings for the nine months ended September 30, 2009 compared to September 30, 2008 was primarily the result of establishing a 100% valuation allowance of $3.4 million against the deferred tax asset recorded at September 30, 2009 and an increase in the provision for loan losses of $1.6 million from $712,000 to $2.4 million. 

    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 a full service commercial bank headquartered in the Century City area of Los Angeles. The Bank’s primary focus is relationship banking to family owned and closely held small and middle market businesses, professional service firms and high net worth individuals, real estate investors, medical professionals, and entrepreneurs. The Company maintains a website at www.1stcenturybank.com. By including the foregoing website address link, the Company does not intend 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 continuing 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.

    #   #   #

    (Tables follow)

    Summary Financial Information

    The following tables present relevant financial data from 1st Century Bancshares’ recent performance:

     

     

     

     

     

    September 30,

     

    December 31,

     

    September 30,

     

     

     

     

     

    2009

     

    2008

     

    2008

    Balance Sheet results:

     

     

     

     

     

     

     

    (Dollars in thousands except share and per share data)

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Total Assets

     

     

     $           257,915

     

     $           259,354

     

     $           254,661

     

    Gross Loans

     

     

     $           188,545

     

     $           199,983

     

     $           195,938

     

    Allowance for Loan Losses ("ALL")

     $              5,566

     

     $              5,171

     

     $              2,921

     

    ALL to Gross Loans

     

     

    2.95%

     

    2.59%

     

    1.49%

     

    Net Charge-off to YTD Average Gross Loans*

    1.02%

     

    0.82%

     

    0.09%

     

    Non-performing Assets

     

     $            12,563

     

     $              5,854

     

     $                 235

     

    Total Deposits

     

     

     $           188,749

     

     $           154,287

     

     $           162,661

     

    Total Shareholders' Equity

     

     $            50,578

     

     $            57,048

     

     $            59,614

     

    Gross Loans to Deposits

     

    99.89%

     

    129.62%

     

    120.46%

     

    Equity to Assets

     

     

    19.61%

     

    22.00%

     

    23.41%

     

    Ending Shares Outstanding, excluding Treasury Stock

               9,331,343

     

             10,009,898

     

             10,303,798

     

    Ending Book Value per Share

     

     $                5.42

     

     $                5.70

     

     $                5.79

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Three Months Ended September 30,

     

     

     

     

     

     

     

    2009

     

    2008

     

     

    Quarter Operating Results:

     

     

     

     

     

     

     

    (Dollars in thousands except per share data)

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Net Interest Income

     

     

     $              2,529

     

     $              2,817

     

     

     

    Provision for Loan Losses

     

     $              1,707

     

     $                 281

     

     

     

    Non-interest Income

     

     

     $                 301

     

     $                 157

     

     

     

    Non-interest Expense

     

     $              2,319

     

     $              2,472

     

     

     

    (Loss) Income Before Taxes

     

     $             (1,196)

     

     $                 221

     

     

     

    Income Tax Provision

     

     

     $              3,362

     

     $                   70

     

     

     

    Net (Loss) Income

     

     

     $             (4,558)

     

     $                 151

     

     

     

    Basic (Loss) Earnings per Share

     $               (0.50)

     

    $                0.02

     

     

     

    Diluted (Loss) Earnings per Share

     $               (0.50)

     

      $           0.01

     

     

     

    Quarterly Return on Average Assets*

    (7.07)%

     

    0.25%

     

     

     

    Quarterly Return on Average Equity*

    (33.25)%

     

    1.02%

     

     

     

    Quarterly Net Interest Margin*

     

    4.08%

     

    4.64%

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Nine Months Ended September 30,

     

     

     

     

     

     

     

    2009

     

    2008

     

     

    YTD Operating Results:

     

     

     

     

     

     

     

    (Dollars in thousands except per share data)

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Net Interest Income

     

     

     $              7,946

     

     $              8,439

     

     

     

    Provision for Loan Losses

     

     $              2,354

     

     $                 712

     

     

     

    Non-interest Income

     

     

     $                 776

     

     $                 329

     

     

     

    Non-interest Expense

     

     $              7,181

     

     $              7,362

     

     

     

    (Loss) Income Before Taxes

     

     $                (813)

     

     $                 694

     

     

     

    Income Tax Provision

     

     

     $              3,498

     

     $                 278

     

     

     

    Net (Loss) Income

     

     

     $             (4,311)

     

     $                 416

     

     

     

    Basic (Loss) Earnings per Share

     $               (0.47)

     

     $                0.04

     

     

     

    Diluted (Loss) Earnings per Share

     $               (0.47)

     

     $                0.04

     

     

     

    YTD Return on Average Assets*

     

    (2.24)%

     

    0.23%

     

     

     

    YTD Return on Average Equity*

     

    (10.40)%

     

    0.95%

     

     

     

    YTD Net Interest Margin*

     

    4.24%

     

    4.74%

     

     


    *Percentages are reported on an annualized basis

     

     

    1ST CENTURY BANCSHARES, INC. REPORTS FINANCIAL RESULTS FOR THE SECOND QUARTER 2009

    Los Angeles, – August 12, 2009 – 1st Century Bancshares, Inc. (the “Company”) (NASDAQ:FCTY), the holding company of 1st Century Bank, N.A. (the “Bank”), today reported financial results for the second quarter and six months ended June 30, 2009.

    “During one of the most challenging financial environments that we’ve seen, 1st Century Bank remains one of the most well-capitalized banks in Southern California,” said Alan I. Rothenberg, Chairman of the Board and Chief Executive Officer of 1st Century Bancshares. “The Bank’s total risk based capital ratio is over twice the regulatory definition of “well-capitalized” (21.9% vs 10.0%) and our credit underwriting and management remains disciplined and prudent.  All of this combined with our loan loss reserve allows us to provide stability and security to our clients and stockholders.”

    2009 Second Quarter Highlights

    •      The Bank’s total risk-based capital ratio was 21.9% at June 30, 2009, which is above the regulatory standard of 10.0% for “well-capitalized” financial institutions.

    •      Non-interest bearing demand deposits increased to $54.2 million, an increase of 34.6% from December 31, 2008.  The increase of $14.0 million in non-interest-bearing demand deposits is related to the Company’s continued efforts in core deposit gathering, as well as expanding the Company’s client base through relationship banking.

    •      As of June 30, 2009, total assets were $245.3 million, a decrease of 5.4% from December 31, 2008 and 2.7% from June 30, 2008.

    •      Gross loans decreased $5.5 million or 2.8% to $194.5 million from $200.0 million at December 31, 2008 and increased $1.6 million or 0.8% from June 30, 2008.

    •      As of June 30, 2009, the allowance for loan losses was $4.7 million or 2.43% of gross loans compared to $5.2 million or 2.59% of gross loans at December 31, 2008.

    •      Provision for loan losses was $374,000 and $647,000 for the three and six months ended June 30, 2009, respectively, compared to $266,000 and $431,000 for the three and six months ended June 30, 2008, respectively. 

    •      Net interest margin for the second quarter of 2009 decreased 66 basis points to 4.26% compared to 4.92% in the second quarter of 2008.  Net Interest Margin for the six months ended June 30, 2009 decreased 46 basis points to 4.33% compared to 4.79% for the six months ended June 30, 2008.

    •      Net income was $118,000 and $248,000 for the three and six months ended June 30, 2009, respectively, compared to net income of $59,000 and $265,000 for the three and six months ended June 30, 2008, respectively.

    Capital Adequacy

    At June 30, 2009, the Company’s stockholders’ equity totaled $55.4 million compared to $57.0 million at December 31, 2008.  The decrease was primarily related to the repurchase of 510,700 shares of common stock totaling $2.0 million under the Company’s stock repurchase program during the six months ended June 30, 2009. The Bank’s total risk-based capital ratio, tier 1 capital ratio, and leverage ratio of 21.87%, 20.61%, and 18.48%, respectively, are all well above the regulatory standards for “well-capitalized” financial institutions of 10.00%, 6.00%, and 5.00%, respectively.

    Balance Sheet

    Total assets decreased 5.4% or $14.1 million to $245.3 million at June 30, 2009 compared to $259.4 million at December 31, 2008.  The decrease in assets was primarily due to a $9.7 million decrease in investments, a $5.0 million decrease in loans, net of allowance for loan losses and net deferred costs/unearned fees, and a $1.7 million decrease in interest-earning deposits, partially offset by a $2.8 million increase in cash and due from banks.  Investments decreased $9.7 million to $41.2 million at June 30, 2009 compared to $50.8 million at December 31, 2008 primarily due to principal paydowns and the sale of $3.4 million in Available for Sale securities.  Loans, net of allowance for loan losses and net deferred costs/unearned fees, decreased 2.6% or $5.0 million to $189.8 million at June 30, 2009 compared to $194.8 million at December 31, 2008 primarily due to loan payoffs and paydowns. Interest-earning deposits at other financial institutions decreased $1.7 million to $14,000 at June 30, 2009 compared to $1.8 million at December 31, 2008 due to fluctuations in normal business operations.  Cash and due from banks increased $2.8 million to $5.2 million at June 30, 2009 compared to $2.4 million at December 31, 2008 due to fluctuations in normal business operations.   

    At June 30, 2009, total deposits were $172.1 million compared to $154.3 million at December 31, 2008, representing an increase of 11.5% or $17.8 million. The majority of the increase in deposits resulted from an increase in non-interest-bearing demand deposits of $14.0 million due to the Company’s continued efforts in core deposit gathering, as well as expanding the Company’s client base through relationship banking.

    “We are pleased to see the substantial growth in our core deposits,” said Jason P. DiNapoli, President and Chief Operating Officer of 1st Century Bancshares, Inc.  “Our growth is a testament to the efforts made by our experienced team at 1st Century Bank.  With our continued focus on relationship deposit growth, credit quality and superior customer service, we continue to successfully grow our franchise.”

    Credit Quality

    Allowance and Provision for Loan Losses

    The allowance for loan losses totaled $4.7 million, or 2.43% of gross loans at June 30, 2009, compared to $5.2 million, or 2.59% of gross loans at December 31, 2008. The provision for loan losses was $374,000 and $647,000 for the three and six months ended June 30, 2009 compared to $266,000 and $431,000 for the same periods a year ago.

    Management follows diligent and thorough credit administration and risk management practices such as analyzing classified credits, pools of loans, economic factors, trends in the loan portfolio, and changes in policies, procedures, and underwriting criteria. Management believes that the allowance for loan losses at June 30, 2009 is adequate to absorb known and inherent losses in the loan portfolio and the methodology utilized in deriving that level is appropriate.

    Non-accrual Loans and Non-performing Assets

    Non-accrual loans totaled $9.6 million and $5.7 million at June 30, 2009 and December 31, 2008, respectively. There were no accruing loans past due 90 days or more at June 30, 2009 or December 31, 2008.  Other real estate owned (“OREO”) totaled $162,000 at June 30, 2009 and December 31, 2008, respectively.

    At June 30, 2009, the non-accrual loans included a $3.4 million real estate-commercial mortgage loan to a Southern California auto dealer which ceased operations in the fourth quarter of 2008 and a $607,000 purchased real estate-residential mortgage loan.  These two credit relationships were previously reported as non-accrual loans at December 31, 2008.  During the three months ended March 31, 2009 the Company charged-off $251,000 of a $750,000 secured consumer loan which was placed on non-accrual status in the fourth quarter of 2008.  The remaining balance of $499,000 remains on non-accrual status at June 30, 2009.  The Company previously reported a $100,000 commercial loan as non-accrual at March 31, 2009.  At June 30, 2009, this credit relationship has been paid down and has a balance of $59,000 and remains on non-accrual status.  Furthermore, the Company placed a $5.0 million interest-only real estate-commercial mortgage loan on non-accrual status in the three months ended June 30, 2009.  Payment on this loan is current and the borrower is not in default of any terms of the loan.  The Company expects the borrower to continue to make interest payments on this loan through maturity in December 2009.  However, the loan was placed on non-accrual due to the adverse market conditions for commercial real estate in Southern California.  Management continues to actively monitor the borrower’s financial condition to assess the collectability of this loan at maturity. 

    Net Interest Income and Margin

    For the three and six months ended June 30, 2009, average interest-earning assets were $250.6 million and $252.6 million, respectively, generating net interest income of $2.7 million and $5.4 million, respectively. For the three and six months ended June 30, 2008, average interest-earning assets were $236.7 million and $236.1 million, respectively, generating net interest income of $2.9 million and $5.6 million, respectively. The growth in earning assets was primarily in loans funded by an increase in borrowings.

    The Company’s net interest margin for the quarter ended June 30, 2009 was 4.26% compared to 4.92% for the quarter ended June 30, 2008. The 66 basis point decrease in net interest margin from the second quarter 2008 to 2009 was primarily due to a decrease in yield on earning assets of 1.21%, partially offset by a decrease of 0.88% in rate paid for interest-bearing deposits and borrowings and an increase of $12.1 million of average demand deposits.  The decrease in yield on earning assets was primarily the result of a 1.52% decrease in loan yield which was principally the result of the prime rate decreasing 1.75% from June 30, 2008 to June 30, 2009.  Interest foregone on non-accrual loans totaled $121,000, resulting in a 0.19% reduction in the net interest margin for the three months ended June 30, 2009.  There were no non-accrual loans during the three months ended June 30, 2008.

    The Company’s net interest margin for the six months ended June 20, 2009 was 4.33% compared to 4.79% for the six months ended June 30, 2008.  The net interest margin decreased 46 basis points comparing the six months ended June 30, 2009 to the six months ended June 30, 2008.  The decrease in net interest margin was primarily due to a decrease in yield on earning assets of 1.25%, partially offset by a decrease of 1.30% in rate paid for interest-bearing deposits and borrowings and an increase of $6.6 million of average demand deposits.  The decrease in yield on earning assets was primarily the result of a 1.66% decrease in loan yield which was principally the result of the prime rate decreasing 1.75% from June 30, 2008 to June 30, 2009.  Interest foregone on non-accrual loans totaled $234,000, resulting in a 0.19% reduction in the net interest margin for the six months ended June 30, 2009.  There were no non-accrual loans during the six months ended June 30, 2008.

    Non-Interest Income

    Non-interest income was $258,000 for the quarter ended June 30, 2009 compared to $56,000 for the quarter ended June 30, 2008. 

    The increase in non-interest income of $202,000 was primarily due to an increase in loan arrangement fees from none for the three months ended June 30, 2008 to $153,000 for the three months ended June 30, 2009 and an increase in service charges and other operating income from $35,000 for the three months ended June 30, 2008 to $90,000 for the three months ended June 30, 2009. 

    For the six months ended June 30, 2009, non-interest income was $475,000 compared to $171,000 for the same period a year ago. 

    The increase in non-interest income of $304,000 was primarily due to an increase in loan arrangement fees from $68,000 for the six months ended June 30, 2008 to $287,000 for the six months ended June 30, 2009 and an increase in service charges and other operating income from $82,000 for the six months ended June 30, 2008 to $173,000 for the six months ended June 30, 2009. 

    Loan arrangement fees are related to the college loan funding programs the Company established with two student loan providers, one of which was a new loan program started in the third quarter of 2008.  The Company initially funds student loans originated by the student loan providers in exchange for non-interest income.  All loans are purchased by the student loan providers within 30 days of origination.  All purchase commitments are supported by collateralized deposit accounts.

    Non-Interest Expense

    Non-interest expense was $2.4 million for the three months ended June 30, 2009 compared to $2.6 million for the three months ended June 30, 2008, representing a decrease of $189,000, or 7.4%.    Non-interest expense was $4.9 million for the six months ended June 30, 2009 and 2008, respectively.

    Compensation and benefits decreased $86,000 or 6.4%, to $1.3 million for the three months ended June 30, 2009 from $1.4 million for the three months ended June 30, 2008.  The decrease was primarily due to a decrease in incentive compensation accrual of $82,000.  Compensation and benefits decreased $276,000 or 9.6%, to $2.6 million for the six months ended June 30, 2009 from $2.9 million for the six months ended June 30, 2008.  The decrease was primarily due to a decrease in incentive compensation accrual of $237,000. 

    FDIC assessments increased $114,000 to $139,000 for the three months ended June 30, 2009 compared to $25,000 for the three months ended June 30, 2008.  The increase was primarily due to a $99,000 special assessment related to the final ruling adopted by the FDIC on May 22, 2009 which provides for a special assessment on each insured depository institution as of June 30, 2009.  FDIC assessments increased $145,000 to $199,000 for the six months ended June 30, 2009 compared to $54,000 for the six months ended June 30, 2008.  The increase was primarily due to the previously aforementioned $99,000 special assessment. 

    Other operating expense decreased $47,000 to $421,000 for the three months ended June 30, 2009 compared to $468,000 for the three months ended June 30, 2008. Other operating expense decreased primarily due to a decrease of $141,000 in shareholder relations expense, partially offset by an increase of $51,000 in student loan servicing costs related to a new student loan program started in the third quarter of 2008 and an increase of $28,000 in Delaware franchise tax.  Other operating expense increased $124,000 to $880,000 for the six months ended June 30, 2009 compared to $756,000 for the six months ended June 30, 2008. Other operating expense increased primarily due to increases of $164,000 of student loan servicing costs related to a new student loan program started in the third quarter of 2008.

    Net Income

    For the three and six months ended June 30, 2009, the Company recorded net income of $118,000 or $0.01 per diluted share and $248,000 or $0.03 per diluted share, respectively.  For the three and six months ended June 30, 2008, net income was $59,000 or $0.01 per diluted share and $265,000 or $0.03 per diluted share, respectively.  The increase in the Company’s net income for the three months ended June 30, 2009 compared to June 30, 2008 was primarily the result of a $202,000 increase in non-interest income, partially offset by the increase in provision for loan losses of $108,000 from $266,000 to $374,000.  The decrease in the Company’s net income for the six months ended June 30, 2009 compared to June 30, 2008 was primarily the result of the increase in provision for loan losses of $216,000 from $431,000 to $647,000.

    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 a full service commercial bank headquartered in the Century City area of Los Angeles. The Bank’s primary focus is relationship banking to family owned and closely held small and middle market businesses, professional service firms and high net worth individuals, real estate investors, medical professionals, and entrepreneurs. The Company maintains a website at www.1stcenturybank.com. By including the foregoing website address link, the Company does not intend 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 continuing 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.

    #   #   #

    (Tables follow)

    Summary Financial Information

    The following tables present relevant financial data from 1st Century Bancshares’ recent performance:

    June 30, December 31, June 30,
    2009 2008 2008
    Balance Sheet results:
    (Dollars in thousands except share and per share data)
    Total Assets  $           245,307  $           259,354  $           252,188
    Gross Loans  $           194,465  $           199,983  $           192,890
    Allowance for Loan Losses ("ALL")  $              4,733  $              5,171  $              2,639
    ALL to Gross Loans 2.43% 2.59% 1.37%
    Net Charge-off to YTD Average Gross Loans 0.54% 0.82% 0.09%
    Non-performing Assets  $              9,718  $              5,854  $                 578
    Total Deposits  $           172,092  $           154,287  $           167,378
    Total Shareholders' Equity  $            55,354  $            57,048  $            58,987
    Gross Loans to Deposits 113.00% 129.62% 115.24%
    Equity to Assets 22.57% 22.00% 23.39%
    Ending Shares Outstanding, excluding Treasury Stock            9,506,808          10,009,898          10,200,866
    Ending Book Value per Share  $                5.82  $                5.70  $                5.78
    Three Months Ended June 30,
    2009   2008
    Quarter Operating Results:
    (Dollars in thousands except per share data)
    Net Interest Income  $              2,661  $              2,896
    Provision for Loan Losses  $                 374  $                 266
    Non-interest Income  $                 258  $                   56
    Non-interest Expense  $              2,375  $              2,564
    Income Before Taxes  $                 170  $                 122
    Income Tax Provision  $                   52  $                   63
    Net Income  $                 118  $                   59
    Basic Income per Share  $                0.01  $                0.01
    Diluted Income per Share  $                0.01  $                0.01
    Quarterly Return on Average Assets* 0.18% 0.10%
    Quarterly Return on Average Equity* 0.85% 0.40%
    Quarterly Net Interest Margin* 4.26% 4.92%
    Six Months Ended June 30,
    2009   2008
    YTD Operating Results:
    (Dollars in thousands except per share data)
    Net Interest Income  $              5,418  $              5,622
    Provision for Loan Losses  $                 647  $                 431
    Non-interest Income  $                 475  $                 171
    Non-interest Expense  $              4,862  $              4,890
    Income Before Taxes  $                 384  $                 472
    Income Tax Provision  $                 136  $                 207
    Net Income  $                 248  $                 265
    Basic Income per Share  $                0.03  $                0.03
    Diluted Income per Share  $                0.03  $                0.03
    YTD Return on Average Assets* 0.19% 0.22%
    YTD Return on Average Equity* 0.90% 0.91%
    YTD Net Interest Margin* 4.33% 4.79%
    *Percentages are reported on an annualized basis.

     

     

    1ST CENTURY BANCSHARES, INC. REPORTS FINANCIAL RESULTS FOR THE FIRST QUARTER 2009

    Los Angeles, – May 14, 2009 – 1st Century Bancshares, Inc. (the “Company”) (NASDAQ:FCTY), the holding company of 1st Century Bank, N.A. (the “Bank”), today reported financial results for the first quarter 2009.

    “We are pleased with our continued strong capital position, prudent credit management and solid growth in our core deposits,” said Alan I. Rothenberg, Chairman of the Board and Chief Executive Officer of 1st Century Bancshares. “Our highest priority continues to be assuring the safety, soundness and security of our depositors, all of which redound to the benefit of our shareholders.”

    2009 First Quarter Highlights

    •      The Bank’s total risk-based capital ratio was 21.39% at March 31, 2009, which is above the regulatory standard of 10.00% for “well-capitalized” financial institutions.

    •      As of March 31, 2009, total assets were $259.7 million, an increase of 0.14% from December 31, 2008 and 0.42% from March 31, 2008.

    •      Gross loans increased to $200.7 million, an increase of $683,000 or 0.34% from December 31, 2008 and $23.6 million or 13.33% from March 31, 2008.

    •      As of March 31, 2009, allowance for loan losses was $4.3 million or 2.14% of gross loans compared to $5.2 million or 2.59% of gross loans at December 31, 2008.

    •      Provision for loan losses was $273,000 for the three months ended March 31, 2009 compared to $165,000 for the three months ended March 31, 2008.

    •      Non-interest bearing demand deposits increased to $48.6 million, an increase of 20.72% from December 31, 2008.  The increase of $8.3 million in non-interest-bearing demand deposits related to the Company’s continued efforts in core deposit gathering, as well as expanding our client base through relationship banking.

    •      Net interest margin for the three months ended March 31, 2009 decreased 26 basis points to 4.39% compared to 4.65% for the three months ended March 31, 2008 while the national prime rate decreased 200 basis points from March 31, 2008 to March 31, 2009.

    •      Net income was $130,000 for the three months ended March 31, 2009 compared to net income of $206,000 for the same period a year ago.

    “As we move forward through this economic cycle, we will continue to focus on growing our core deposit base, maintaining a balanced loan portfolio, and managing  net interest margin,” said Jason P. DiNapoli, President and Chief Operating Officer of 1st Century Bancshares, Inc.  “With our strong capital base and the dislocation of many of our competitors, we are optimistic about the opportunities to expand our customer base.”

    Capital Adequacy

    At March 31, 2009, the Company’s stockholders’ equity totaled $55.5 million compared to $57.0 million at December 31, 2008.  The decrease was primarily related to the repurchase of 510,700 shares of common stock totaling $2.0 million under the Company’s stock repurchase program during the three months ended March 31, 2009. The Bank’s total risk-based capital ratio, tier 1 capital ratio, and leverage ratio of 21.39%, 20.14%, and 18.25%, respectively, are all well above the regulatory standards for “well-capitalized” financial institutions of 10.00%, 6.00%, and 5.00%, respectively.

    Credit Quality

    Allowance for Loan Losses

    The allowance for loan losses totaled $4.3 million, or 2.14% of gross loans at March 31, 2009, compared to $5.2 million, or 2.59% of gross loans at December 31, 2008. The provision for loan losses was $273,000 for the three months ended March 31, 2009 compared to $165,000 for the same period a year ago.

    Non-accrual Loans and Non-performing Assets

    Non-accrual loans totaled $4.6 million and $5.7 million at March 31, 2009 and December 31, 2008, respectively. There were no accruing loans past due 90 days or more at March 31, 2009 or December 31, 2008.  Other real estate owned (“OREO”) totaled $162,000 at March 31, 2009 and December 31, 2008, respectively.

    At March 31, 2009, the non-accrual loans consisted of a $3.4 million commercial mortgage loan to a Southern California auto dealer which ceased operations in the fourth quarter of 2008 and a $607,000 purchased residential real estate mortgage loan.  These two credit relationships were previously reported as non-accrual loans at December 31, 2008.  During the first quarter of 2009 the Company charged-off $251,000 of a $750,000 secured consumer loan which was placed on non-accrual status in the fourth quarter of 2008.  The remaining balance of $499,000 remains on non-accrual status at March 31, 2009.  Furthermore, the Company placed a $100,000 commercial loan on non-accrual status in the three months ended March 31, 2009.

    Charge-offs

    For the three months ended March 31, 2009, charge-offs, totaling $1.2 million, were concentrated in three loans to two borrowers.  The Company charged-off a $650,000 unsecured consumer loan which was placed on non-accrual status in the fourth quarter of 2008 when the loan became 90 days past due.  The Company also charged-off a $250,000 secured consumer loan which was placed on non-accrual status in the fourth quarter of 2008 due to the further deterioration in the financial condition of the borrower.  Furthermore, as aforementioned, the Company charged-off $251,000 of a $750,000 secured consumer loan to the same borrower which was placed on non-accrual status in the fourth quarter of 2008 due to the further deterioration in the financial condition of the borrower.  The Company is pursuing means of collection for all charged-off loans.

    For the three months ended March 31, 2008, the Company charged-off $149,000 of a purchased real estate mortgage loan. 

    Management follows diligent and thorough credit administration and risk management practices such as analyzing classified credits, pools of loans, economic factors, trends in the loan portfolio, and changes in policies, procedures, and underwriting criteria. Management believes that the allowance for loan losses at March 31, 2009 is adequate to absorb known and inherent losses in the loan portfolio and the methodology utilized in deriving that level is appropriate.

    Net Interest Income and Margin

    For the three months ended March 31, 2009, net interest income increased $31,000 or 1.14% to $2.8 million from the same period in 2008. The increase in net interest income was primarily attributed to an 8.11% expansion of average earning assets to $254.7 million for the three months ended March 31, 2009, partially offset by a lower net interest margin.

    The Company’s net interest margin for the three months ended March 31, 2009 was 4.39% compared to 4.65% for the three months ended March 31, 2008. The 26 basis point decrease in net interest margin for the three months ended March 31, 2009 compared to the three months ended March 31, 2008 was primarily due to a 128 basis point reduction in yield on average earning assets, partially offset by a 176 basis point reduction of interest paid on interest bearing liabilities and borrowings.  Interest foregone on non-accrual loans totaled $113,000, resulting in an 0.18% reduction in the net interest margin for the three months ended March 31, 2009.  There were no non-accrual loans during the three months ended March 31, 2008.

    Non-Interest Income

    Non-interest income was $217,000 for the three months ended March 31, 2009 compared to $116,000 for the three months ended March 31, 2008.

    The increase in non-interest income of 87.1% or $101,000 was primarily due to an increase in loan arrangement fees from $68,000 for the three months ended March 31, 2008 to $134,000 for the three months ended March 31, 2009 and an increase in service charges and other operating income from $48,000 for the three months ended March 31, 2008 to $83,000 for the three months ended March 31, 2009. 

     

    Non-Interest Expense

    Non-interest expense was $2.5 million for the three months ended March 31, 2009 compared to $2.3 million for the three months ended March 31, 2008, representing an increase of $160,000, or 6.9%.

    Compensation and benefits decreased $191,000, or 12.4%, to $1.3 million for the three months ended March 31, 2009 from $1.5 million for the three months ended March 31, 2008.  The decrease was primarily due to a decrease in incentive compensation accrual of $155,000 and a decrease of $53,000 in non-cash stock compensation expense for employees. 

    Occupancy expenses were $253,000 and $213,000 for the three months ended March 31, 2009 and 2008, respectively.  The increase of $40,000 primarily related to an increase of $15,000 in depreciation expense for furniture, fixtures and equipment and an increase of $22,000 in software amortization cost. 

    Professional fees increased $56,000 to $193,000 for the three months ended March 31, 2009 compared to $137,000 for the three months ended March 31, 2008. The increase was primarily due to increases in legal fees, internal audit, SOX and compliance related expenses, offset by lower external audit expenses. 

    Technology expense increased $48,000, related to an increase in data processing expense of $72,000, offset by $24,000 of lower online banking and website expense, system upgrade expense, and ATM expenses.  

    Other operating expense increased $201,000 to $519,000 for the three months ended March 31, 2009 compared to $318,000 for the three months ended March 31, 2008. Other operating expense increased in general primarily due to $111,000 of student loan servicing costs related to a new student loan program  started in the third quarter of 2008, $58,000 of Delaware franchise tax, and $31,000 of FDIC assessment fee.

    Income before Income Taxes and Net Income

    Income before income taxes was $214,000 for the three months ended March 31, 2009, compared to income before income taxes of $350,000 for the three months ended March 31, 2008.  The decrease in income before income taxes for the three months ended March 31, 2009 compared to the three months ended March 31, 2008 was primarily due to higher provision for loan losses and higher non-interest expenses, partially offset by higher net interest income.

    For the three months ended March 31, 2009, net income was $130,000, or $0.01 per diluted share, compared to net income of $206,000, or $0.02 per diluted share, for the three months ended March 31, 2008.

    Balance Sheet

    Total assets increased 0.14% or $376,000 to $259.7 million at March 31, 2009, from $259.4 million at December 31, 2008.  The growth in assets was primarily due to a $3.0 million increase in cash and due from banks and a $1.6 million increase in net loans, offset by a $1.7 million decrease in interest-earning deposits and a $2.4 million decrease in investments.  Investments decreased $2.4 million to $48.4 million at March 31, 2009 compared to $50.8 million at December 31, 2008 primarily due to maturities and paydowns.  Loans, net of allowance for loan losses and net deferred costs/unearned fees, increased 0.84% or $1.6 million to $196.4 million at March 31, 2009 compared to $194.8 million at December 31, 2008.  Loan growth was funded primarily by an increase in deposits.  Total deposits increased 5.77% or $8.9 million to $163.2 million at March 31, 2009, from $154.3 million at December 31, 2008.  Non-interest-bearing demand deposits represented $8.3 million of the increase.

    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 a full service commercial bank headquartered in the Century City area of Los Angeles. The Bank’s primary focus is relationship banking to family owned and closely held small and middle market businesses, professional service firms and high net worth individuals, real estate investors, medical professionals, and entrepreneurs. The Company maintains a website at www.1stcenturybank.com. By including the foregoing website address link, the Company does not intend 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 continuing 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.

    #   #   #

    (Tables follow)

    March 31, December 31, March 31,
    2009 2008 2008
    Balance Sheet results:
    (Dollars in thousands except share and per share data)
    Total Assets  $           259,730  $           259,354  $           258,655
    Gross Loans  $           200,666  $           199,983  $           177,063
    Net Deferred Cost (Unearned Fee)  $                   49  $                  (27)  $                (110)
    Allowance for Loan Losses ("ALL")  $              4,294  $              5,171  $              2,385
    Total Net Loans  $           196,421  $           194,785  $           174,568
    ALL to Gross Loans 2.14% 2.59% 1.35%
    Net Charge-off to YTD Average Gross Loans 0.57% 0.82% 0.08%
    Non-performing Assets  $              4,803  $              5,854  $                 578
    Total Deposits  $           163,182  $           154,287  $           192,936
    Total Shareholders' Equity  $            55,459  $            57,048  $            59,317
    Net Loans to Deposits 120.37% 126.25% 90.48%
    Equity to Assets 21.35% 22.00% 22.93%
    Ending Shares Outstanding, excluding Treasury Stock            9,476,106          10,009,898          10,215,478
    Ending Book Value per Share  $                5.85  $                5.70  $                5.81
    Three Months Ended March 31,
    2009   2008
    Quarter Operating Results:
    (Dollars in thousands except per share data)
    Net Interest Income  $              2,757  $              2,726
    Provision for Loan Losses  $                 273  $                 165
    Non-interest Income  $                 217  $                 116
    Non-interest Expense  $              2,487  $              2,327
    Income Before Taxes  $                 214  $                 350
    Income Tax Provision  $                   84  $                 144
    Net Income  $                 130  $                 206
    Basic Income per Share  $                0.01  $                0.02
    Diluted Income per Share  $                0.01  $                0.02
    Quarterly Return on Average Assets* 0.20% 0.34%
    Quarterly Return on Average Equity* 0.93% 1.40%
    Quarterly Net Interest Margin* 4.39% 4.65%
    *Percentages are reported on an annualized basis.


    1st CENTURY BANCSHARES ANNOUNCES CREDIT QUALITY INFORMATION

    FOR 2008 FOURTH QUARTER;

    TOTAL RISK BASED CAPITAL REMAINS ABOVE 22%

    Los AngelesFebruary 3, 2009 – 1st Century Bancshares, Inc. (NASDAQ:FCTY) (the “Company”), the holding company of 1st Century Bank, N.A. (the “Bank”), expects to report its results of operations and financial condition for the fourth quarter of 2008 and full year ended December 31, 2008 during the week of March 9, 2009.  At this time, management estimates that there will be a 2008 fourth quarter provision for loan losses of approximately $3.6 million compared to $281,000 in the third quarter of 2008. Total non-performing assets are estimated to be approximately $5.9 million at December 31, 2008, or approximately 2.26% of total assets at year end 2008, which includes $5.7 million of non-accrual loans and $162,000 of other real estate owned.  Total non-performing assets at September 30, 2008 were $235,000 in other real estate owned.

    After giving effect to the provision for loan losses, management expects the following estimated capital ratios for the Bank as of December 31, 2008:

                                                                           Unaudited                     Regulatory Guideline
    Capital Ratios                                  December 31, 2008               “Well Capitalized”
    Tier 1 Leverage Ratio                                19.73%                                        5.00%
    Tier 1 Risk Based Capital Ratio            21.35%                                        6.00%
    Total Risk Based Capital Ratio             22.61%                                      10.00%

    “Our actions in the fourth quarter to bolster the allowance for loan losses were a prudent step to fortify the safety and soundness of our balance sheet,” said Alan I. Rothenberg, Chairman and Chief Executive Officer.  “We enjoy one of the highest capital ratios of any bank in Southern California and are well positioned to navigate through a challenging economic environment.  Our excess capital provides us with opportunities to fully support our core client base and make available our banking services to prospective customers.”

    Expected charge-offs for the fourth quarter of 2008 are approximately $1.4 million and for the full year 2008 are approximately $1.5 million, or 0.82% of average loans.  The majority of the charge-offs are concentrated in three loans.  The Bank charged-off $972,000 of a business loan to a distributor of discretionary consumer goods, which ceased operations in the fourth quarter of 2008 due to the economic weakness in consumer spending. The Bank also charged-off $189,000 of a commercial mortgage to its estimated current fair value that was provided to a Southern California auto dealer which ceased operations in the fourth quarter of 2008.  The Bank has no other loans to automobile dealerships.  

    In the third situation, the Bank charged-off $219,000 of a residential mortgage loan purchased as part of an investment pool.  In 2004, in the Bank’s initial year of operations it purchased 28 single family residential mortgage loans totaling approximately $12.6 million, none of which were sub-prime mortgages. The Bank purchased these loans as an opportunity to enhance its yield on earning assets during its initial months of operation. As of December 31, 2008, other than the aforementioned loan, there are two remaining purchased loans totaling approximately $777,000, both of which are performing. The Bank has not purchased residential mortgages since 2004 and has no intention of doing so in the future.  The Bank is pursuing prudent means of collection for all charged-off loans.

    The allowance for loan losses is expected to be approximately $5.2 million at December 31, 2008, which is 2.59% of outstanding loans compared to 1.37% at December 31, 2007.  Management regularly assesses the level of the Company’s allowance for loan losses, giving consideration to current and developing economic conditions, levels of classified loans, and other relevant external and internal considerations.  Management believes that the allowance for loan losses is adequate based on the results of its loan portfolio review process.

    About 1st Century Bancshares, Inc.

    1st Century Bancshares, Inc. is the bank holding company of 1st Century Bank, N.A., a full service commercial bank headquartered in the Century City area of Los Angeles.  The Bank’s primary focus is relationship banking to family owned and closely held small and middle market businesses, professional service firms and high net worth individuals, real estate investors, medical professionals, and entrepreneurs.  The Company’s common stock is traded on the NASDAQ Capital Market under the symbol FCTY. The Company maintains a website at www.1stcenturybank.com. By including the foregoing website address, the Company does not intend to incorporate by reference herein any of the information or material set forth on the website.

    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.  These forward looking statements, include, but are not limited to, the Company’s ability to provide greater flexibility for capital planning and operational expansion, navigate the difficult banking environment, maintain strong loan loss reserves and remain well capitalized and implement operational enhancements.  These forward-looking statements are subject to certain risks and uncertainties that could cause actual results, performance or achievements to differ materially from those expressed, suggested or implied by the forward-looking statements.  These risks and uncertainties include, but are not limited to: (1) the impact of changes in interest rates, a decline in economic conditions and increased competition among financial service providers on the Company’s operating results, ability to attract deposit and loan customers and the quality of the Company’s earning assets; (2) government regulation; and (3) 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.

    #   #   #

    1st Century Bancshares announces nasdaq listing

    -- Company to Begin Trading on Nasdaq December 18, 2008 Under Symbol FCTY --

     
    Los Angeles – December 17, 2008 – 1st Century Bancshares, Inc. (OTCBB:FCTY) (“Company”), the holding company of 1st Century Bank, N.A. (“Bank”), today announced that its application for listing of its common stock on the NASDAQ Capital Market has been approved. The Company expects to begin trading on the NASDAQ under the same symbol “FCTY” on December 18, 2008.

    “We believe a NASDAQ listing will provide increased awareness of the 1st Century Bancshares’ story and enhance the liquidity of our Company’s stock,” said Alan I. Rothenberg, Chairman and Chief Executive Officer.   “As one of the strongest capitalized financial institutions in our geographic market, 1st Century Bank continues to pursue growth and new business opportunities, and we look forward to sharing our vision with a broader base of the institutional investment community.”

    As of September 30, 2008, the Bank’s total risk-based and tier 1 risk-based capital ratios were 25.43% and 24.18%, respectively, both substantially above the minimum regulatory thresholds to be considered “well capitalized.”  

    1st Century Bancshares DECIDES NOT TO PARTICIPATE
    IN TREASURY’S CAPITAL PURCHASE PROGRAM

    Los Angeles – November 17, 2008 –1st Century Bancshares, Inc. (OTCBB:FCTY, the “Company”), the holding company of 1st Century Bank, N.A. (the “Bank”), today announced that it will not apply for funds available in the Treasury’s Capital Purchase Program, which is part of the recently launched Troubled Assets Relief Program (TARP.)

    1st Century cited its strong capital structure as the principal reason for not applying for the additional funds.

     “1st Century is among the strongest capitalized financial institutions in our geographic market, with more than sufficient capital to continue our growth and to pursue business opportunities,” said Alan I. Rothenberg, Chairman and Chief Executive Officer.  “Despite the challenging external operating environment, we have consistently focused on asset quality metrics and are leveraging our solid position to continue supporting our community through prudent lending.”  

    The Bank’s total risk-based capital ratio of 25.43% and tier 1 risk-based capital ratio of 24.18% as of September 30, 2008 are substantially above the minimum regulatory thresholds of 10.00% and 6.00%, respectively, to be considered “well capitalized.”

    3q graph

     

    1st CENTURY BANK Proves Bigger is NOT Necessarily Better-Captial Ratio Comparison

    The recent events in the financial markets have been unprecedented. The federal takeover of Fannie Mae and Freddie Mac, and the sudden bankruptcy filings and sales of some of the largest investment banks underscore the severity in the capital markets. We believe the primary cause of this dislocation in the market is the excessive leverage employed by these institutions.

    These events have shown that size is not an indication of financial strength. Instead, a better measure of strength is equity capital relative to asset size. The attached table illustrates 1st Century Bank’s financial strength relative to our Southern California peers.

    As of June 30, 2008, 1st Century Bank had a Tier-one Capital Ratio of 23.7% which is over 3.5 times the required level for “well capitalized” banks. For comparison, the average of banks listed in the Los Angeles Business Journal Stock Index – Financial Services as of June 30, 2008 is approximate 9.5%. 1st Century Bank has over 2.5 times the average capital of our Southern California peers.

    1st Century Bank is very well capitalized, and this strong capital position has allowed us to weather the storm. Our approach to the market, which emphasizes deep knowledge and strong relationships with our clients, has served us well. We have maintained our focus on our core strengths, and the end result is a Bank that is well positioned for years to come.

    We appreciate your business and continued support.

     

    1st CENTURY BANCSHARES, INC. REPORTS 2008 SECOND QUARTER FINANCIAL RESULTS

    Los Angeles, – August 11, 2008 – 1st Century Bancshares, Inc. (OTCBB:FCTY), the holding company of 1st Century Bank, N.A. (the “Bank”), today reported financial results for its second quarter and six months ended June 30, 2008.

     “1st Century Bank proudly stands very well poised in terms of capital and credit quality with a total risk-based capital ratio of 24.85%, far exceeding the standards for being considered well-capitalized, and no nonperforming loans as of June 30, 2008 which is more important than ever during these difficult financial times,” said Alan I. Rothenberg, Chairman and Chief Executive Officer of 1st Century Bancshares. “Supported by one of the strongest balance sheets amongst our peers, we will continue to operate the Bank prudently in a safe and sound manner and keep the welfare of our clients at the forefront of our efforts.”

    Second Quarter Highlights

    • Net interest margin for the second quarter of 2008 expanded to 4.92% compared to 4.57% in the second quarter of 2007.
    • Total risk-based capital was 26.14% at June 30, 2008, which is substantially above the regulatory standard of 10.00% for “well-capitalized” financial institutions.
    • As of June 30, 2008, total assets were $252.2 million, an increase of 12.7% from December 31, 2007 and 24.0% from June 30, 2007.
    • Gross loans increased to $192.9 million, an increase of $15.8 million or 8.9% compared to March 31, 2008 and an increase of $20.5 million or 11.9% compared to December 31, 2007.
    • Net income of $59,000 for the second quarter of 2008 was $191,000 lower than the second quarter of 2007.
    • Provision for loan losses of $266,000 for the second quarter of 2008 represented an increase of $12,000 compared to the second quarter of 2007.
    • The Company has no subprime mortgages.

    Net Interest Income and Margin

    Net interest income of $2.9 million for the quarter ended June 30, 2008 represented an increase of $525,000 or 22.1% over the $2.4 million reported for the same quarter in 2007.  The increase in net interest income was primarily attributed to growth in average earning assets from $207.6 million for the quarter ended June 30, 2007 to $236.7 million for the quarter ended June 30, 2008, or an increase of 14.1%, and an improved net interest margin.

    The Company’s net interest margin for the quarter ended June 30, 2008 was 4.92% compared to 4.65% for the quarter ended March 31, 2008 and 4.57% for the quarter ended June 30, 2007.  The 35 basis point increase in net interest margin from second quarter 2007 to 2008 was primarily due to a 222 basis point reduction of interest paid on interest-bearing liabilities and an increase in average demand deposit balances of $2.7 million, partially offset by an 88 basis point reduction in yield on average earning assets.

    “We continue to focus on our net interest margin.  Our disciplined pricing strategy has allowed us to increase our margin year over year while maintaining solid growth in assets,” said Jason DiNapoli, President and Chief Operating Officer of 1st Century Bancshares.

    For the six months ended June 30, 2008, net interest income was $5.6 million compared to $4.6 million in the prior year period.  The increase was attributed to average earning assets growth of $28.1 million to $236.1 million and expanded net interest margin from 4.45% to 4.79% for the six months ended June 30, 2007 and 2008, respectively. 

    Net interest margin expanded to 4.79% for the six months ended June 30, 2008 primarily due to a 196 basis point reduction of interest paid on interest-bearing liabilities and a $5.0 million increase in average demand deposits, offset by a 76 basis point reduction in yield on average earning assets.

    Non-Interest Income

    Non-interest income for the quarter ended June 30, 2008 was $56,000 compared to $132,000 for the same period a year ago.  The decrease in non-interest income is primarily a result of the Company having no loan syndication fees in the quarter ended June 30, 2008 compared to $70,000 for the same period in 2007.

    For the six months ended June 30, 2008, non-interest income was $171,000 compared to $307,000 in the same period a year ago.  The decrease of $136,000 was primarily due to a decrease of $195,000 in loan syndication fees, partially offset by an increase in loan arrangement fees of $51,000.

    Non-Interest Expense

    Non-interest expense was $2.6 million for the three months ended June 30, 2008 compared to $2.0 million for the prior year period.  Compensation and benefits increased $250,000 primarily due to an increase in the average full-time equivalent (“FTE”) employees from 32 FTE for the quarter ended June 30, 2007 to 41 FTE for the quarter ended June 30, 2008.  Occupancy expenses increased $47,000 as a result of the January 2008 opening of the Company’s Private Banking Center located on the ground floor of the Company’s headquarters.  Technology expenses increased by $93,000 primarily due to costs associated with the conversion to a new core systems processor in May 2008.  Other expenses increased by $175,000 due primarily to $198,000 in proxy related expenses principally related to the Company’s proxy solicitation for its contested election of directors at its annual meeting of stockholders. 

    Non-interest expense was $4.9 million for the six months ended June 30, 2008 compared to $4.2 million for the prior year period.  Compensation and benefits increased $634,000 primarily due to an increase in FTE from 32 FTE for the six months ended June 30, 2007 to 41 FTE for the six months ended June 30, 2008.  Occupancy costs increased by $54,000 primarily due to the opening of the new Private Banking Center.  Professional fees decreased by $323,000 as a result of a reduction in consultant fees of $174,000, corporate legal fees of $60,000, net of an increase of $63,000 in legal fees, principally related to the Company’s proxy solicitation for its contested election of directors at its annual meeting of stockholders, and a reduction of Sarbanes-Oxley Act related costs of $77,000.  Technology expenses increased by $93,000 primarily due to the conversion to a new core systems processor in May 2008.  Other operating expenses increased $183,000 in general due to growth in the loan and deposit portfolio as well as $135,000 in proxy related expenses principally related to the Company’s proxy solicitation for its contested election of its directors at its annual meeting of stockholders. 

    Income Before Income Taxes and Net Income

    Income before income taxes was $122,000 and $250,000 for the quarter ended June 30, 2008 and 2007, respectively, and $472,000 and $414,000 for the six months ended June 30, 2008 and 2007, respectively. Excluding the non-core cost of $198,000 related to the proxy solicitation, income before income taxes would have been $320,000 and $670,000 for the three and six month periods ended June 30, 2008.

    The Company reported net income of $59,000, or $.01 per diluted share, for the three months ended June 30, 2008 compared to net income of $250,000, or $.02 per diluted share, in the same period a year ago.

    Balance Sheet

    Total assets increased 12.7% or $28.3 million to $252.2 million at June 30, 2008 compared to $223.9 million at December 31, 2007.  The growth in assets was primarily in investment securities, which increased $4.7 million to $46.5 million at June 30, 2008, and total gross loans, which increased $20.5 million to $192.9 million at June 30, 2008.

    Loan growth was funded primarily by an increase in total deposits of $6.2 million or 3.8% from $161.2 million at December 31, 2007 to $167.4 million at June 30, 2008 and an increase in other borrowings of $22.0 million to $24.0 million at June 30, 2008 compared to $2.0 million at December 31, 2007.

    Credit Quality

    The allowance for loan losses was $2.6 million, or 1.37% of total loans at June 30, 2008, compared to $2.4 million, or 1.37% of total loans at December 31, 2007.  The provision for loan losses was $266,000 and $431,000 for the three months and six months ended June 30, 2008, respectively, compared to $254,000 and $271,000 for the same periods a year ago.  Charge-offs were $12,000 and $161,000 for the three and six months ended June 30, 2008, respectively.  There were no charge-offs for the first six months of 2007.

    At June 30, 2008, the Company had $578,000 of other real estate owned through the foreclosure of two residential real estate properties.  As previously reported, both properties were collateral for two purchased real estate mortgage loans located in Southern California.  In March 2008, the Company charged-off $149,000 related to these loans.  The amount of $578,000 represents management’s estimate of fair value less estimated disposal costs for these properties at June 30, 2008.

    In 2004, the Company purchased 28 single family residential mortgage loans totaling approximately $12.6 million, none of which were sub-prime mortgages.  The Company purchased these loans as an opportunity to enhance its yield on earning assets during its initial months of operation.  As of June 30, 2008 there are three remaining purchased loans totaling $1.6 million that are performing loans.

    The Company had no non-performing loans and $578,000 of other real estate owned at June 30, 2008.

    Management follows diligent and thorough credit administration and risk management practices such as analyzing classified credits, pools of loans, economic factors, trends in loan portfolio, and changes in policies, procedures, and underwriting criteria.  Management believes that the allowance for loan losses at June 30, 2008 and the methodology utilized in deriving that level is adequate to absorb known and inherent losses in the loan portfolio.

    Capital Adequacy

    At June 30, 2008, stockholders’ equity in the Company totaled $59.0 million compared to $58.6 million at December 31, 2007.  The Bank’s total risk-based capital ratio, tier one capital ratio, and leverage ratio of 24.85%, 23.69% and 23.87%, respectively, were all substantially above the regulatory standards for “well-capitalized” financial institutions.

    About 1st Century Bancshares, Inc.

    1st Century Bancshares, Inc. is the bank holding company of 1st Century Bank, N.A., a full service commercial bank headquartered in the Century City area of Los Angeles.  The Bank’s primary focus is relationship banking to family owned and closely held small and middle market businesses, professional service firms and high net worth individuals, real estate investors, medical professionals, and entrepreneurs.  Additional information is available at www.1stcenturybank.com.

    Safe Harbor

    Certain matters discussed in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These forward looking statements, include, but are not limited to, the Company’s ability to provide greater flexibility for capital planning and operational expansion, navigate the difficult banking environment, maintain strong loan loss reserves and remain well capitalized and implement operational enhancements.  These forward-looking statements are subject to certain risks and uncertainties that could cause the actual results, performance or achievements to differ materially from those expressed, suggested or implied by the forward-looking statements.  These risks and uncertainties include, but are not limited to: (1) the impact of changes in interest rates, a decline in economic conditions and increased competition among financial service providers on the Company’s operating results, ability to attract deposit and loan customers and the quality of the Company’s earning assets; (2) government regulation; and (3) 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 1st Century Bancshares’ recent performance:          

     

     

     

     

     

    June 30,

     

    December 31,

     

    June 30,

     

     

     

     

     

    2008

     

    2007

     

    2007

       Balance Sheet results:

     

     

     

     

     

     

     

       (Dollars in thousands except per share data)

     

     

     

     

     

     

    Total Assets

     

     

     $          252,188

     

     $          223,855

     

     $          203,296

     

    Gross Loans

     

     

     $          192,890

     

     $          172,364

     

     $          146,165

     

    Unearned Fee Income

     

     $                   63

     

     $                 131

     

     $                   99

     

    Allowance for Loan Losses ("ALL")

     $              2,639

     

     $              2,369

     

     $              1,939

     

    Total Net Loans

     

     

     $          190,188

     

     $          169,864

     

     $          144,127

     

    ALL to Gross Loans

     

     

                     1.37%

     

                     1.37%

     

                     1.33%

     

    Net Charge-off to YTD Average Gross Loans

                    0.09%

     

                          -  

     

                          -  

     

    Non-performing Assets

     

     $                 578

     

     $                   -  

     

     $                   -  

     

    Total Deposits

     

     

     $          167,378

     

     $          161,193

     

     $          147,402

     

    Other Borrowings

     

     $           24,000

     

     $             2,000

     

     $                   -

     

    Total Shareholders' Equity

     

     $           58,987

     

     $            58,612

     

     $            54,400

     

    Net Loans to Deposits

     

               113.63%

     

                105.38%

     

                  97.78%

     

    Equity to Assets

     

     

                  23.39%

     

                  26.18%

     

                  26.76%

     

    Ending Shares Outstanding

     

                 9,935,300

     

            9,913,884

     

          9,898,884

     

    Ending Book Value per Share

     

     $               5.94

     

     $                5.91

     

     $                5.50

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Three Months Ended June 30,

     

     

     

     

     

     

     

    2008

     

    2007

     

     

       Quarter Operating Results:

     

     

     

     

     

     

     

       (Dollars in thousands except per share data)

     

     

     

     

     

     

    Net Interest Income

     

     

    $              2,896

     

    $              2,371

     

     

     

    Provision for Loan Losses

     

    $                 266

     

    $                 254

     

     

     

    Non-interest Income

     

     

    $                   56

     

    $                 132

     

     

     

    Non-interest Expense

     

    $              2,564

     

    $              1,999

     

     

     

    Income Before Taxes

     

     

    $                 122

     

    $                 250

     

     

     

    Income Tax Provision

     

     

    $                   63

     

    $                   -  

     

     

     

    Net Income

     

     

    $                   59

     

    $                 250

     

     

     

    Basic Income per Share

     

    $                0.01

     

    $                0.03

     

     

     

    Diluted Income per Share

     

    $                0.01

     

    $                0.02

     

     

     

    Quarterly Return on Average Assets*

                    0.10%

     

                    0.47%

     

     

     

    Quarterly Return on Average Equity*

                    0.40%

     

                    1.83%

     

     

     

    Quarterly Net Interest Margin*

     

                    4.92%

     

                    4.57%

     

     

     

     

     

     

     

     

    Six Months Ended June 30,

     

     

     

     

     

     

     

    2008

     

    2007

     

     

       YTD Operating Results
       (Dollars in thousands except per share data)

     

     

     

     

     

     

    Net Interest Income

     

     

    $              5,622

     

    $              4,623

     

     

     

    Provision for Loan Losses

     

    $                 431

     

    $                 271

     

     

     

    Non-interest Income

     

     

    $                 171

     

    $                 307

     

     

     

    Non-interest Expense

     

    $              4,890

     

    $              4,245

     

     

     

    Income Before Taxes

     

     

    $                 472

     

    $                 414

     

     

     

    Income Tax Expense

     

     

    $                 207

     

    $                   -  

     

     

     

    Net Income

     

     

    $                 265

     

    $                 414

     

     

     

    Basic Income per Share

     

    $                0.03

     

    $                0.04

     

     

     

    Diluted Income per Share

     

    $                0.03

     

    $                0.04

     

     

     

    YTD Return on Average Assets*

     

                    0.22%

     

                    0.39%

     

     

     

    YTD Return on Average Equity*

     

                    0.91%

     

                    1.51%

     

     

     

    YTD Net Interest Margin*

     

                    4.79%

     

                    4.45%

     

     

     

     

     

     

     

     

     

     

     

     

     

    *Percentages are reported on an annualized basis.

     

     

     

     

    For all the latest 1st Century Bank news, press releases and media coverage, please visit this page. To receive updated press releases via email visit our Investor Relations page and click on Press Releases. You will be prompted to fill out a form.

    Media requests for interviews or information on the bank should be directed to
    Margaret Tillman at (310) 270-9556.

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