First Capital Bancorp, Inc. Reports Continued Improvement in Core Operating Results

GLEN ALLEN, Va., Oct. 20 /PRNewswire-FirstCall/ -- First Capital Bancorp, Inc. (the "Company") (Nasdaq: FCVA) parent company to First Capital Bank ("the Bank") reported today its financial results for the third quarter of 2010.  For the three months ended September 30, 2010, the Company had net income of $636 thousand and net income available to common shareholders of $466 thousand, or $0.16 per fully diluted share, compared to net income of $405 thousand and net income available to common shareholders of $236 thousand, or $0.08 per fully diluted share, for the same period in 2009.  For the nine months ended September 30, 2010, the Company had a net loss of $2.5 million and net loss available to common shareholders of $3.0 million, or ($1.01) per fully diluted share, compared to a net loss of $224 thousand and a net loss available to common shareholders of $557 thousand, or ($0.19) per fully diluted share, for the same period in 2009.  

Total assets at September 30, 2010 were $541.1 million, up $10.7 million, or 2.0% from December 31, 2009.  Total loans, net of allowance, increased $329 thousand to $397.4 million.  Deposits increased $6.7 million to $428.8 million, up 1.6% from December 31, 2009.  The deposit growth was has been exclusively in noninterest-bearing deposits which increased $6.5 million from December 31, 2009.

Core operating results as measured by pre-provision, pre-tax earnings continued to show significant improvement on a quarterly basis.  For the three months ended September 30, 2010, pre-provision, pre-tax earnings were $1.3 million, up $308 thousand from $980 thousand for the quarter ended June 30, 2010 and up $304 thousand from $984 thousand for the quarter ended September 30, 2009.  For the nine months ended September 30, 2010, pre-provision, pre-tax earnings were $3.2 million up from $1.4 million for the comparable period in 2009.

John Presley, Managing Director and CEO of First Capital Bancorp stated, "Core operating metrics continue to improve as third quarter net income before dividends was the highest in the company's history.  Net interest income continues to rise even as we position the balance sheet to be more neutral to changes in interest rates.  We feel that these metrics coupled with our elevated levels of Loan Loss Reserves and more than adequate levels of capital, position the company well as we come out of these extreme economic conditions."


Three Months Ended


Nine Months Ended


Quarter Ended


September 30,


September 30,


June 30,


2010


2009


2010


2009


2010











Pre-provision, pre-tax income

$            1,288


$               984


$            3,224


$            1,442


$               980

Provision for loan losses

375


380


7,121


1,690


6285

Income (loss) before income tax

913


604


(3897)


(248)


(5305)

Income tax (benefit)

277


199


(1413)


(24)


(1833)

Net income (loss)

$               636


$               405


$          (2,484)


$             (224)


$          (3,472)













Contributing to the improvement in pre-provision, pre-tax earnings was the improvement in net interest margin.  For the quarter ended September 30, 2010, net interest margin increased 55 basis points to 3.24% from 2.71% for the third quarter of 2009 and increased 18 basis points from 3.06% for the second quarter of 2010.  This improvement in net interest margin is attributable to decreasing cost of interest-bearing liabilities.  Interest-bearing liabilities were 2.20% for the third quarter of 2010 down 78 basis points from 2.98% for the third quarter of 2009 and down 15 basis points from the second quarter of 2010.  The Company expects the net interest margin to continue to improve as the rate environment continues to allow for reduced funding costs.

Net interest income increased $879 thousand or 26.4% to $4.2 million for the three months ended September 30, 2010 compared to $3.3 million for the three months ended September 30, 2009.   For the nine months ended September 30, 2010 net interest income increased to $12.0 million, a $3.3 million or 37.1% increase over the same period in 2009.  The increase in quarter over quarter net interest income was due to relatively stable loan portfolio yields and a decrease in total funding costs.  

Provisions for loan losses amounted to $375 thousand for the three months ended September 30, 2010 compared to $380 thousand for the same period in 2009.  The decrease in the provision for loan losses in 2010 reflects management's recognition of higher provisions in previous periods attributable to the Bank's current level of nonperforming assets.  We continue to focus on improving overall asset quality in these uncertain economic times while the level of nonperforming assets remains significant.  

The following table reflects details related to asset quality and allowance for loan losses of First Capital Bank:




Sept 30,


Jun 30,


Mar 31,


Dec 31,


Sept 30,



2010


2010


2010


2009


2009



(Dollars in thousands)

Nonaccrual loans

$13,146


$11,185


$6,505


$3,607


$3,936

Restructured loans

3,390


3,390


3,390


3,390


3,390

Loans past due 90 days and accruing interest

765


50


3,336


-


-


Total nonperforming loans

17,301


14,625


13,231


6,997


7,326

Other real estate owned

2,851


2,102


3,014


3,388


2,646


Total nonperforming assets

$20,152


$16,727


$16,245


$10,385


$9,972














Sept 30,


Jun 30,


Mar 31,


Dec 31,


Sept 30,



2010


2010


2010


2009


2009



(Dollars in thousands)

Allowance for loan losses











Beginning balance

$11,482


$6,800


$6,600


$6,317


$6,044


Provision for loan losses

375


6,285


461


595


380


Net charge-offs

833


1,603


261


312


107


Ending balance

$11,024


$11,482


$6,800


$6,600


$6,317












Allowance for loan losses to period end loans

2.70%


2.78%


1.65%


1.64%


1.60%

Nonperforming assets to total loans & other real estate

4.90%


4.03%


3.90%


2.55%


2.51%

Nonperforming assets to total assets

3.72%


3.06%


3.03%


1.96%


1.95%

Allowance for loan losses to nonaccrual loans

83.85%


102.65%


104.53%


182.98%


160.48%




In the last 11 quarters, the company has increased its allowance for loan losses by $12.3 million while net charge-offs totaled $3.8 million over the same period.  At the same time, the Company's capital position remains strong.  At September 30, 2010, the Company and the Bank exceeded all regulatory capital requirements and were classified as well-capitalized for regulatory capital purposes.













Minimum To Be Well








Minimum


Capitalized Under








Capital


Prompt Corrective




Actual


Requirement


Action Provision




Amount


Ratio


Amount


Ratio


Amount


Ratio




(dollars in thousands)

As of September 30, 2010













Total capital to risk weighted assets














Consolidated

$54,944


13.18%


$33,349


8.00%


$41,687


10.00%



First Capital Bank

$53,260


12.78%


$33,329


8.00%


$41,661


10.00%


Tier 1 capital to risk weighted assets














Consolidated

$48,508


11.64%


$16,675


4.00%


$25,012


6.00%



First Capital Bank

$46,824


11.24%


$16,664


4.00%


$24,996


6.00%


Tier 1 capital to average adjusted assets














Consolidated

$48,508


8.93%


$21,739


4.00%


$27,173


5.00%



First Capital Bank

$46,824


8.62%


$21,726


4.00%


$27,158


5.00%




First Capital Bank President and CEO Bob Watts noted, "Our focus in this environment continues to be protecting shareholder value and building a financial services company that survives in times like these and thrives in more traditional business environments.  We have a defined process and special assets team dedicated to aggressively and proactively working through troubled loans.  While fighting the battles of a heavily depressed real estate market, we are encouraged by the results of our special assets team, and we remain well capitalized, with sound liquidity, strong reserves, and highly valued relationships."

Noninterest expense increased $626 thousand or 24.6% for the three months ended September 30, 2010 as compared to the same period in 2009.  The majority of the increase can be attributed to three areas:  key additions to the lending and management team as Salaries and Employee benefits increased by $299 thousand for the three month period ending September 30, 2010, $202 thousand in Other Expenses related to the write down of assets carried in Other Real Estate Owned to better reflect the market value of those assets and cost associated with Other Real Estate Owned, and legal and professional fees associated with resolution of problem loans increased by approximately $153 thousand.

The Company currently operates seven branches in Innsbrook, Chesterfield Towne Center, near Willow Lawn on Staples Mill Road, in Ashland, at Three Chopt and Patterson in Henrico County, at the James Center in downtown, Richmond, and our newest branch in Bon Air, Chesterfield County.  

Readers are cautioned that this press release contains forward-looking statements made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on management's current knowledge, assumptions, and analyses, which it believes are appropriate in the circumstances regarding future events, and may address issues that involve significant risks including, but not limited to: changes in interest rates; changes in accounting principles, policies, or guidelines; significant changes in general economic, competitive, and business conditions; significant changes in or additions to laws and regulatory requirements; and significant changes in securities markets. Additionally, such aforementioned uncertainties, assumptions, and estimates, may cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements.

First Capital Bank...Where People Matter.

First Capital Bancorp, Inc.

Financial Highlights

(Dollars in thousands, except per share data)










Three Months Ended


Nine Months Ended


September 30,


September 30,


2010


2009


2010


2009

Selected Operating Data:












Interest income

$             6,755


$             6,490


$           19,902


$          18,630

Interest expense

2,549


3,164


7,873


9,861

Net interest income  

4,206


3,326


12,029


8,769

Provision for loan losses

375


380


7,121


1,690

Noninterest income

251


201


799


588

Noninterest expense

3,169


2,544


9,604


7,915

Income before income tax

913


603


(3,897)


(248)

Income tax expense

277


198


(1,413)


(24)

Net (loss) income

$                636


$                405


$           (2,484)


$             (224)

Less: Preferred dividends

$                170


$                137


$                508


$               333

Net (loss) income available to common shareholders

$                466


$                268


$           (2,992)


$             (557)

Income per share








    Basic

$               0.16


$               0.09


$             (1.01)


$            (0.19)

    Diluted

$               0.16


$               0.09


$             (1.01)


$            (0.19)










Three Months Ended


Nine Months Ended


September 30,


September 30,


2010


2009


2010


2009

Balance Sheet Data:
















Total assets

$         541,099


$         510,918


$         541,099


$        510,918

Loans, net

397,449


$         389,755


$         397,449


389,755

Deposits

428,834


$         403,831


$         428,834


403,831

Borrowings

63,614


$           58,100


$           63,614


58,100

Stockholders' equity

44,975


$           46,470


$           44,975


46,470

Book value per share

$             11.61


$             12.15


$                  12


$            12.15

Total shares outstanding

2,971,171


2,971,171


$      2,971,171


2,971,171









Asset Quality Ratios








Allowance for loan losses

$           11,023


$             6,317


$           11,023


$            6,317

Nonperforming assets  

20,338


9,972


20,538


9,972

Net charge-offs

833


107


2,698


433

Allowance for loan losses to total loans

2.70%


1.60%


2.70%


1.60%

Nonperforming assets % of total loans & OREO

4.90%


2.50%


4.90%


2.50%

Net charge-off to average loans

0.20%


0.11%


0.65%


0.04%









Selected Performance Ratios:








Return on average assets

0.46%


0.32%


-0.62%


-0.06%

Return on average equity

5.68%


3.53%


-7.19%


-0.71%

Net interest margin

3.24%


2.71%


3.24%


2.54%




SOURCE First Capital Bancorp, Inc.



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