First California Financial Group, Inc. (NASDAQ: FCAL), the holding
company of First California Bank, today reported financial results
for the first quarter ended March 31, 2010, reflecting improved
operational and asset quality trends.
The company posted net income of $117,000 for the three months
ended March 31, 2010, versus a net loss of $1.9 million for the
same period a year ago. Preferred dividends of $312,500 and
$194,000 during the first quarter of 2010 and 2009, respectively,
reduced net income available to common shareholders resulting in a
loss per common share of $0.02 and $0.18, respectively.
"We continue to make progress managing through challenging
economic times as improved operating efficiencies, stable core
deposit base and lower credit costs are manifesting positively in
our operating results," said C. G. Kum, President and Chief
Executive Officer. "In addition, the successful capital raise in
the first quarter significantly increased our capital levels, as
well as further enhancing our strong liquidity position."
2010 First Quarter Financial Highlights:
-- Substantially increased tier 1 capital through completion of a common
stock offering, which improved the company's tangible common equity
ratio to 7.36% at March 31, 2010 from 4.38% at December 31, 2009. In
addition, regulatory capital ratios continue to remain significantly
above well-capitalized requirements with a total risk-based capital
ratio of 17.08%, a tier 1 capital ratio of 15.82% and a tier 1 leverage
ratio of 11.52%;
-- Loans past due 30 to 89 days down significantly to $2.5 million at
March 31, 2010 from $14.6 million at year-end 2009;
-- Nonaccrual loans decreased to $37.0 million at March 31, 2010 from
$40.0 million at December 31, 2009;
-- The company recorded a 2010 first quarter provision for loan losses of
$1.8 million, compared with $5.1 million in the first quarter a year
ago and $6.4 million in the 2009 fourth quarter. The allowance for loan
losses was 1.70% of total loans at March 31, 2010, compared with 1.76%
at December 31, 2009 and 1.26% at March 31, 2009;
-- Demand deposits and core deposits represented 28% and 76% of total
deposits at March 31, 2010, respectively, compared with 28% and 74% of
total deposits at December 31, 2009, respectively;
-- Noninterest expense for the 2010 first quarter was $9.9 million,
compared with $10.8 million in the first quarter a year ago.
Asset Quality
Nonaccrual loans and loans past due 90 days and accruing
amounted to $37.0 million as of March 31, 2010 and represented 4.0%
of total loans. This reflects an improvement from $40.2 million as
of December 31, 2009, or 4.3% of total loans. Accruing loans past
due 30 to 89 days significantly declined to $2.5 million at March
31, 2010 from $14.6 million at December 31, 2009. Total foreclosed
property at March 31, 2010 rose to $6.0 million from $4.9 million
at December 31, 2009, reflecting the addition of two properties and
sale of one property. The company currently holds two properties as
other real estate owned.
The company's construction and land portfolio declined to $73.4
million at March 31, 2010, down by $13.2 million, or 15%, since
December 31, 2009 as a result of pay downs and strategic
downsizing. The commercial real estate portfolio continued to
perform well, as evidenced by only seven loans aggregating $4.8
million in the company's past due and nonaccrual loan categories at
March 31, 2010.
Net loan charge-offs were $2.7 million for the 2010 first
quarter compared with $1.8 million in the first quarter a year ago
and $2.0 million in the fourth quarter of 2009. The 2010 first
quarter net loan charge-offs include $1.2 million relating to a
$1.7 million nonaccrual multifamily loan identified in the fourth
quarter of 2009, for which a specific loss allowance of $1.7
million was reserved at December 31, 2009. The company noted that
it collected the remaining balance in the 2010 second quarter. The
allowance for loan losses as a percentage of total loans was 1.70%
at March 31, 2010, compared with 1.76% at December 31, 2009 and
1.26% at March 31, 2009.
"Net loan charge offs for the first quarter was higher
reflecting our commitment to promptly move possible losses off of
our balance sheet. The reduced level of provisioning in the first
quarter, however, reflects an improving asset quality trend that
started in the fourth quarter of 2009," said Kum.
Results of Operations
Net interest income before provision for loan losses was $10.7
million for both three-month periods ended March 31, 2010 and 2009.
Net interest margin for the 2010 first quarter was 3.39%, compared
with 3.35% in the preceding 2009 fourth quarter and 3.60% in the
same period a year ago. Compared with the first quarter a year ago,
the net interest margin declined by 21 basis points due to the
adverse impact from higher levels of nonaccrual loans and the shift
in the composition of the company's securities portfolio to safer,
but lower interest-yielding investments. These adverse effects were
partially offset by a continued reduction in the cost of
interest-bearing liabilities, which equaled 1.66% for the 2010
first quarter, compared with 1.79% for the preceding fourth quarter
and 2.29% in the first quarter a year-ago.
Noninterest income for the 2010 first quarter decreased to $1.2
million from $1.9 million in the prior-year period. The decrease
reflects lower levels of securities gains quarter over quarter. The
net gain on sale of securities in the 2010 first quarter was
$132,000, compared with $671,000 in the first quarter of 2009.
Noninterest expense for the 2010 first quarter was $9.9 million,
compared with $10.8 million in the first quarter a year ago. The
decline reflects a reduction in personnel expenses, offset in part
by increased FDIC insurance costs. The 2009 first quarter included
integration and conversion expenses of approximately $473,000
related to the FDIC-assisted 1st Centennial Bank transaction.
Loans at March 31, 2010 were $919.4 million, down 2% from $939.2
million at year-end 2009 reflecting the weak economy and low demand
for loans. Deposits as of March 31, 2010 were $1.08 billion,
compared with $1.12 billion as of December 31, 2009. The company
attributed the decline in large part to the managed reduction of
higher rate certificates of deposit $100,000 and greater. Total
assets at March 31, 2010 were $1.44 billion, compared with $1.46
billion at December 31, 2009.
Liquidity and Capital Resources
Core deposits, which exclude brokered deposits and time deposits
of $100,000 or more, continue to be First California's primary
source of funds and represented 76% of total deposits at March 31,
2010, compared with 74% of total deposits at December 31, 2009.
With the company's strong liquidity position and stable core
deposit relationships, First California reduced its brokered
deposits, State of California time deposits and FHLB borrowings.
Since year-end 2009, brokered deposits declined $13.3 million,
State of California time deposits declined $22.0 million and FHLB
borrowings declined $10.0 million.
At March 31, 2010, First California had $66.2 million of
interest bearing deposits with other banks and $293.1 million of
securities. The securities portfolio is comprised mainly of U.S.
Treasury securities and U.S. government agency notes and
mortgage-related securities. During the 2009 fourth quarter, the
company shifted the composition of its securities portfolio to
include more lower-risk, shorter-term investments. The
repositioning of the securities portfolio was designed to reduce
risk, shorten the duration of the portfolio and increase the
liquidity of the portfolio, effectively enhancing the company's
ability to increase interest-earning assets in future periods.
Total shareholders' equity was $196.8 million at March 31, 2010,
compared with $157.2 million at December 31, 2009. The company's
net book value per common share was $6.12 at March 31, 2010,
compared with $11.45 at December 31, 2009. Tangible book value per
common share was $3.57 at March 31, 2010, compared with $5.23 at
December 31, 2009. The decline is attributed to a higher number of
outstanding common shares versus the prior year-end count.
First California's total risk-based and leverage capital ratios
at March 31, 2010 were 17.08% and 11.52%, respectively. First
California's tangible common equity as a percentage of tangible
assets increased to 7.36% as of March 31, 2010 from 4.38% as of
year-end 2009, primarily reflecting the increase in common equity
from the capital raised in March 2010.
Kum concluded: "The successful public offering in the first
quarter provided important capital to fortify our balance sheet in
this sluggish recovery period. We will use our balance sheet
strength to attract new client relationships as well as to take
advantage of the dislocation in the Southern California banking
sector. As economic conditions become more favorable, we believe
the steps we have taken will lead to a stronger and more profitable
company."
Use of Non-GAAP Financial Measures
This news release includes "non-GAAP financial measures" within
the meaning of the Securities and Exchange Commission rules.
Tangible common equity as a percentage of tangible assets is a
non-GAAP financial measure. Tangible common equity to tangible
assets represents tangible common equity, calculated as total
shareholders' equity less preferred stock and related dividend and
accretion of preferred stock discount, goodwill and intangible
assets, net, divided by total assets less goodwill and other
intangible assets, net. Management believes that this measure is
useful when comparing banks with preferred stock due to TARP
funding to banks without preferred stock on their balance sheet and
for evaluating a company's capital levels. This information is
being provided in response to market participant interest in this
financial metric. This information is not intended to be considered
in isolation or as a substitute for the relevant measures
calculated in accordance with U.S. GAAP. The reconciliation of this
non-GAAP financial measure to GAAP financial measure is provided as
an attachment to the financial tables.
Conference Call and Webcast
First California will hold a conference call on Thursday, May 6,
2010 at 11 a.m. Pacific (2 p.m. Eastern) to discuss the company's
2010 first quarter financial performance. Investment professionals
are invited to participate in the live call by dialing 800-860-2442
(domestic), or 412-858-4600 (international) and requesting the
First California conference call. Other interested parties are
invited to listen to the live call through a live, listen-only
audio Internet broadcast at www.fcalgroup.com. Listeners are
encouraged to visit the Web site at least 15 minutes prior to the
start of the call to register, download and install any necessary
audio software. For those who are not available to listen to the
live broadcast, the call will be archived on the same Web site for
one year. A telephonic replay of the call will be available through
May 13, 2010 by dialing 877-344-7529 (domestic) or 412-317-0088
(international) and entering replay passcode 440236.
About First California
First California Financial Group, Inc. (NASDAQ: FCAL) is the
holding company of First California Bank. Celebrating 31 years of
business in 2010, First California is a regional force of strength
and stability in Southern California banking with assets of $1.44
billion and led by an experienced team of bankers. The company
specializes in serving the comprehensive financial needs of the
commercial market, particularly small- and middle-sized businesses,
professional firms and commercial real estate development and
construction companies. Committed to providing the best client
service available in its markets, First California offers a full
line of quality commercial banking products through 17 full-service
branch offices in Los Angeles, Orange, Riverside, San Bernardino,
San Diego and Ventura counties. The holding company's Web site can
be accessed at www.fcalgroup.com. For additional information on
First California Bank's products and services, visit
www.fcbank.com.
Forward-Looking Information
This press release contains certain forward-looking information
about First California that is intended to be covered by the safe
harbor for "forward-looking statements" provided by the Private
Securities Litigation Reform Act of 1995. All statements other than
statements of historical fact are forward-looking statements, and
include statements related to the maintenance of First California's
asset quality and capital position, the company's ability to
enhance efficiencies and manage costs and the expected continued
progress in consolidating operations and the benefits of those
activities, the monitoring of and management of risks in First
California's loan portfolio, the adequacy of sources of liquidity
to support First California's operations and strategic plans, the
monitoring of and response to changing market conditions, and the
status of the economy in the Southern California communities served
by First California. Such statements involve inherent risks and
uncertainties, many of which are difficult to predict and are
generally beyond the control of First California. First California
cautions readers that a number of important factors could cause
actual results to differ materially from those expressed in, or
implied or projected by, such forward-looking statements. Risks and
uncertainties include, but are not limited to, revenues are lower
than expected, credit quality deterioration which could cause an
increase in the provision for credit losses, First California's
ability to complete future acquisitions, successfully integrate
such acquired entities, or achieve expected beneficial synergies
and/or operating efficiencies within expected time-frames or at
all, changes in consumer spending, borrowing and savings habits,
technological changes, the cost of additional capital is more than
expected, a change in the interest rate environment reduces
interest margins, asset/liability repricing risks and liquidity
risks, general economic conditions, particularly those affecting
real estate values, either nationally or in the market areas in
which First California does or anticipates doing business are less
favorable than expected, a slowdown in construction activity,
recent volatility in the credit or equity markets and its effect on
the general economy, loan delinquency rates, the ability of First
California to retain customers, demographic changes, demand for the
products or services of First California as well as their ability
to attract and retain qualified people, competition with other
banks and financial institutions, and other factors. If any of
these risks or uncertainties materializes or if any of the
assumptions underlying such forward-looking statements proves to be
incorrect, First California's results could differ materially from
those expressed in, or implied or projected by such forward-looking
statements. First California assumes no obligation to update such
forward-looking statements. For a more complete discussion of risks
and uncertainties, investors and security holders are urged to read
the section titled "Risk Factors" in First California's Annual
Report on Form 10-K and any other reports filed by it with the
Securities and Exchange Commission ("SEC"). The documents filed by
First California with the SEC may be obtained at the SEC's website
at www.sec.gov. These documents may also be obtained free of charge
from First California by directing a request to: First California
Financial Group, Inc., 3027 Townsgate Road, Suite 300, Westlake
Village, CA 91361. Attention: Investor Relations. Telephone (805)
322-9655.
(Financial Tables Follow)
First California Financial Group
Unaudited Quarterly Financial Results
(in thousands except for
share data and ratios)
As of or for the
quarter ended 31-Mar-10 31-Dec-09 30-Sep-09 30-Jun-09 31-Mar-09
---------- ---------- ---------- ---------- ----------
Income
statement
summary
Net interest
income $ 10,673 $ 11,091 $ 11,396 $ 11,897 $ 10,670
Service
charges, fees
& other income 1,063 1,238 1,269 1,260 1,235
Loan
commissions &
sales 16 (6) 22 44 9
Operating
expenses 9,422 10,372 10,684 10,826 10,401
Provision for
loan losses 1,754 6,350 4,117 1,110 5,069
Foreclosed
property loss
& expense 78 1,121 193 249 -
Amortization of
intangible
assets 416 416 417 417 376
Gain (loss) on
securities
transactions 132 2,159 1,639 2,000 671
Impairment loss
on securities 18 942 - 565 -
Market loss on
loans
held-for-sale - - - 709 -
FDIC special
assessment - - - 675 -
---------- ---------- ---------- ---------- ----------
Income (loss)
before tax 196 (4,719) (1,085) 650 (3,261)
Tax expense
(benefit) 79 (1,855) (949) 433 (1,383)
---------- ---------- ---------- ---------- ----------
Net income
(loss) $ 117 $ (2,864) $ (136) $ 217 $ (1,878)
========== ========== ========== ========== ==========
Balance sheet
data
Total assets $1,440,267 $1,459,821 $1,469,628 $1,448,456 $1,458,841
Shareholders'
equity 196,835 157,226 161,058 159,116 158,181
Common
shareholders'
equity 172,550 133,056 137,002 135,174 134,355
Earning assets 1,278,641 1,308,628 1,304,625 1,282,497 1,285,060
Loans 919,304 939,246 940,852 940,209 897,723
Loans - held
for sale - - - - 31,309
Securities 293,081 349,645 302,378 245,858 271,743
Federal
funds sold
& other 66,166 19,737 61,395 96,430 84,285
Interest-
bearing funds 929,495 977,358 1,002,776 987,048 1,005,012
Interest-
bearing
deposits 769,229 807,105 827,036 804,071 815,799
Borrowings 133,500 143,500 149,000 156,250 162,500
Junior
subordinated
debt 26,766 26,753 26,740 26,727 26,713
Goodwill and
other
intangibles 71,884 72,301 72,717 73,134 73,545
Deposits 1,075,495 1,124,715 1,125,031 1,096,679 1,103,578
Asset quality
data & ratios
Loans past due
30 to 89 days
& accruing $ 2,520 $ 14,592 $ 7,314 $ 8,203 $ 6,395
Loans past due
90 days &
accruing - 200 2,970 299 65
Nonaccruing
loans 37,034 39,958 39,330 26,957 8,380
---------- ---------- ---------- ---------- ----------
Total past due
& nonaccrual
loans $ 39,554 $ 54,750 $ 49,614 $ 35,459 $ 14,840
========== ========== ========== ========== ==========
Repossessed
personal
property $ - $ - $ - $ 61 $ 76
Other real
estate owned 5,997 4,893 6,120 6,767 993
---------- ---------- ---------- ---------- ----------
Total
foreclosed
property $ 5,997 $ 4,893 $ 6,120 $ 6,828 $ 1,069
========== ========== ========== ========== ==========
Net loan
charge-offs $ 2,661 $ 1,981 $ 3,935 $ 430 $ 1,842
Allowance for
loan losses $ 15,598 $ 16,505 $ 12,137 $ 11,955 $ 11,275
Allowance for
loan losses to
loans 1.70% 1.76% 1.29% 1.27% 1.26%
Common
shareholder
data
Basic earnings
(loss) per
common share $ (0.02) $ (0.27) $ (0.04) $ (0.01) $ (0.18)
Diluted
earnings
(loss) per
common share $ (0.02) $ (0.27) $ (0.04) $ (0.01) $ (0.18)
Book value per
common share $ 6.12 $ 11.45 $ 11.78 $ 11.62 $ 11.55
Tangible book
value per
common share $ 3.57 $ 5.23 $ 5.53 $ 5.33 $ 5.23
Shares
outstanding 28,182,048 11,622,893 11,626,213 11,633,289 11,633,289
Basic weighted
average shares 12,910,057 11,625,386 11,630,928 11,633,289 11,527,629
Diluted
weighted
average shares 12,910,057 11,625,386 11,630,928 11,633,289 11,527,629
Selected ratios
Return on
average assets 0.03% -0.77% -0.04% 0.06% -0.55%
Return on
average equity 0.28% -7.08% -0.34% 0.54% -4.76%
Equity to
assets 13.67% 10.77% 10.96% 10.99% 10.84%
Tangible equity
to tangible
assets 9.13% 6.12% 6.32% 6.25% 6.11%
Tangible common
equity to
tangible
assets 7.36% 4.38% 4.60% 4.51% 4.39%
Efficiency
ratio 80.96% 100.91% 85.73% 98.66% 87.30%
Net interest
margin (tax
equivalent) 3.39% 3.35% 3.50% 3.75% 3.60%
Total
risk-based
capital ratio:
First
California
Bank 16.38% 12.18% 11.62% 11.54% 11.56%
First
California
Financial
Group, Inc. 17.08% 12.69% 12.47% 12.48% 12.73%
First California Financial Group
Unaudited Quarterly Financial Results
Three months ended
March 31,
------------------
2010 2009
-------- --------
(in thousands, except per share data)
Interest income:
Interest and fees on loans $ 12,987 $ 12,427
Interest on securities 1,589 3,597
Interest on federal funds sold and interest bearing
deposits 20 55
-------- --------
Total interest income 14,596 16,079
-------- --------
Interest expense:
Interest on deposits 2,172 3,367
Interest on borrowings 1,312 1,555
Interest on junior subordinated debentures 439 487
-------- --------
Total interest expense 3,923 5,409
-------- --------
Net interest income before provision for loan
losses 10,673 10,670
Provision for loan losses 1,754 5,069
-------- --------
Net interest income after provision for loan
losses 8,919 5,601
-------- --------
Noninterest income:
Service charges on deposit accounts and other
banking-related fees 930 1,050
Loan sales and commissions 16 9
Net gain on sale of securities 132 671
Impairment loss on securities (18) -
Other income 133 185
-------- --------
Total noninterest income 1,193 1,915
-------- --------
Noninterest expense:
Salaries and employee benefits 4,970 5,658
Premises and equipment 1,537 1,533
Data processing 595 471
Legal, audit and other professional services 182 620
Printing, stationery and supplies 12 192
Telephone 224 263
Directors' fees 120 115
Advertising, marketing and business development 227 456
Postage 56 55
Insurance and assessments 800 309
Loss on and expense of foreclosed property 78 -
Amortization of intangible assets 416 376
Other expenses 699 729
-------- --------
Total noninterest expense 9,916 10,777
-------- --------
Income (loss) before provision for income taxes 196 (3,261)
Provision (benefit) for income taxes 79 (1,383)
-------- --------
Net income (loss) $ 117 $ (1,878)
======== ========
Preferred stock dividends $ (313) $ (194)
Net income available to common stockholders $ (196) $ (2,072)
Earnings (loss) per common share:
Basic $ (0.02) $ (0.18)
Diluted $ (0.02) $ (0.18)
First California Financial Group
Unaudited Quarterly Financial Results
March 31, December 31,
(in thousands) 2010 2009
----------- -----------
Cash and due from banks $ 36,714 $ 26,757
Interest bearing deposits with other banks 66,166 19,737
Securities available-for-sale, at fair value 293,081 349,645
Loans, net 903,706 922,741
Premises and equipment, net 19,798 20,286
Goodwill 60,720 60,720
Other intangibles, net 11,164 11,581
Deferred tax assets, net 4,946 6,046
Cash surrender value of life insurance 11,903 11,791
Foreclosed property 5,997 4,893
Accrued interest receivable and other assets 26,072 25,624
----------- -----------
Total assets $ 1,440,267 $ 1,459,821
=========== ===========
Non-interest checking $ 306,266 $ 317,610
Interest checking 83,549 82,806
Money market and savings 351,655 339,750
Certificates of deposit, under $100,000 91,896 116,012
Certificates of deposit, $100,000 and over 242,129 268,537
----------- -----------
Total deposits 1,075,495 1,124,715
Securities sold under agreements to repurchase 45,000 45,000
Federal Home Loan Bank advances 88,500 98,500
Junior subordinated debentures 26,766 26,753
Accrued interest payable and other liabilities 7,671 7,627
----------- -----------
Total liabilities 1,243,432 1,302,595
Total shareholders' equity 196,835 157,226
----------- -----------
Total liabilities and shareholders' equity $ 1,440,267 $ 1,459,821
=========== ===========
First California Financial Group, Inc.
Reconciliation of GAAP Financial Measures to Non - GAAP Financial Measures
(unaudited)
(in thousands except for share data and ratios) 3/31/2010 12/31/2009
----------- -----------
Total shareholders' equity $ 196,835 $ 157,226
Less: Goodwill and intangible assets (71,884) (72,301)
----------- -----------
Tangible equity 124,951 84,925
Less: Preferred stock (24,285) (24,170)
----------- -----------
Tangible common equity $ 100,666 $ 60,755
=========== ===========
Total assets $ 1,440,267 $ 1,459,821
Less: Goodwill and intangible assets (71,884) (72,301)
----------- -----------
Tangible assets $ 1,368,383 $ 1,387,520
=========== ===========
Common shares outstanding 28,182,048 11,622,893
Tangible equity to tangible assets 9.13% 6.12%
Tangible common equity to tangible assets 7.36% 4.38%
Tangible book value per common share $ 3.57 $ 5.23
For further Information: At the Company: Ron Santarosa
805-322-9333 At PondelWilkinson: Angie Yang 310-279-5980 Corporate
Headquarters Address: 3027 Townsgate Road, Suite 300 Westlake
Village, CA 91361
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