First California Financial Group, Inc. (NASDAQ: FCAL), the holding
company of First California Bank, today reported consolidated
financial results for the third quarter ended September 30, 2010.
The company also announced that it will host a conference call
later today at 11 a.m. Pacific (2:00 p.m. Eastern) to review its
financial results.
For the 2010 third quarter, net income was $64,000 versus a net
loss of $136,000 for the same quarter of the prior year. Preferred
dividends were $312,500 for both the third quarter of 2010 and
2009. Net loss available to common shareholders was $248,500, or
$0.01 per share, compared with $448,500, or $0.04 per share, for
the 2009 third quarter.
"During the third quarter, we continued to grow our top line
revenue, improved our net interest margin and lowered operating
expenses," said C. G. Kum, President and Chief Executive Officer.
"Given current economic conditions, our focus remains on making
sound, safe business decisions and building our brand to position
First California for the eventual return to a more normal business
environment."
2010 Third Quarter Financial Highlights:
-- Net interest income grew 3 percent to $11.1 million from $10.8 million
for the 2010 second quarter;
-- Net interest margin rose to 3.46 percent from 3.40 percent for the 2010
second quarter;
-- Operating expenses declined $783,000 to $9.1 million from $9.9 million
for the 2010 second quarter;
-- The allowance for loan losses was $16.5 million, comparable to the 2010
second quarter;
-- Core deposits remained strong at 77 percent of total deposits at
September 30, 2010;
-- Tangible book value per common share increased slightly to $3.65 at
September 30, 2010 from $3.64 at June 30, 2010.
Asset Quality
Nonaccrual loans increased to $22.4 million at September 30,
2010 from $13.2 million at June 30, 2010. The increase primarily
reflects the addition of two loans representing the bank's
participation in shared national credits, aggregating $12.4
million; and a reduction from the full payment received on a $4.5
million completed residential construction loan. Since year-end
2009 however, nonaccrual loans declined $17.6 million from $40.0
million at December 31, 2009.
Foreclosed properties at the end of the 2010 third quarter were
about the same as the 2010 second quarter at $27.9 million as sales
approximated additions. At year-end 2009, foreclosed properties
were $4.9 million; the increase primarily occurred in the
2010-second quarter with the addition of a completed commercial
construction project. Non-performing assets (foreclosed properties,
nonaccrual loans and loans 90 days past due and accruing) to total
assets was 3.36 percent at September 30, 2010 compared with 2.82
percent at June 30, 2010 and 3.09 percent at December 31, 2009.
The allowance for loan losses stood at $16.5 million at the end
of the 2010 third quarter compared with $16.4 million at the end of
the 2010 second quarter. As a percentage of total loans, the
allowance was 1.80 percent of total loans at the end of the 2010
third quarter and 1.85 percent at the end of the 2010 second
quarter. At year-end 2009, the allowance was $16.5 million, or 1.76
percent of total loans.
The provision for loan losses increased to $3.6 million for the
2010 third quarter from $1.8 million for the second quarter of
2010. Net loan charge-offs also increased to $3.6 million for the
2010 third quarter from $912,000 for the 2010 second quarter. Net
loan charge-offs for the 2010 third quarter include a $3.4 million
charge-off on a $15.0 million shared national credit of which $12.2
million was outstanding before the charge-off.
"While the addition of the shared national credits to our
non-performing assets was disappointing, I am pleased with the
continued improvement in the asset quality trends in the balance of
the loan portfolio," Kum said.
Financial Results
For the 2010 third quarter, net interest income before the
provision for loan losses increased 3 percent to $11.1 million from
$10.8 million for the 2010 second quarter. Net interest margin (on
a taxable equivalent basis) was 3.46 percent for the 2010 third
quarter compared with 3.40 percent for the 2010 second quarter. The
increase in the net interest income and net interest margin
principally reflects the shift to higher-yielding loans from
lower-yielding securities, the decline in cost of interest-bearing
liabilities and the decline in average nonaccrual loans.
Operating expenses for the 2010 third quarter declined $783,000,
or 8 percent, to $9.1 million from $9.9 million for the 2010 second
quarter. Operating expenses exclude intangible amortization and
foreclosed property gains, losses and expenses. The decline
reflects a reduction in personnel and lower professional service
fees attendant to problem asset resolution. The company reduced its
workforce of full-time employees to 235 at September 30, 2010 from
245 at June 30, 2010.
Pre-tax, pre-provision earnings increased $1.0 million, or 64
percent, to $2.7 million for the 2010 third quarter from $1.7
million for the 2010 second quarter. Pre-tax, pre-provision
earnings exclude gains on securities transactions and asset quality
charges (provision for loan losses, securities impairment and
foreclosed property gains, losses and expenses). 2010 third quarter
results included securities gains of $1.2 million, foreclosed
property gains, losses and expenses of $185,000 and securities
impairment of $23,000.
At September 30, 2010, loans increased to $918.7 million from
$891.5 million at June 30, 2010. The increase reflects the purchase
of $24.2 million of recently originated home mortgage loans at the
end of the quarter. In addition, the bank purchased in the 2010
fourth quarter another $28.3 million portfolio of home mortgages.
The company anticipates the addition of these higher-yielding loan
assets will continue to benefit the net interest margin and
diversify the credit risk concentrations of the loan portfolio.
Securities were $272.4 million at the end of the 2010 third
quarter, down from $286.1 million at the end of the 2010 second
quarter.
Deposits as of September 30, 2010 were $1.09 billion, about the
same as at the end of the 2010 second quarter.
Capital Resources
Shareholders' equity was $198.3 million at the close of the 2010
third quarter compared with $198.4 million at June 30, 2010. The
company's book value per common share was $6.17 at September 30,
2010 compared with $6.18 at June 30, 2010. Tangible book value per
common share was $3.65 at September 30, 2010 compared with $3.64 at
June 30, 2010.
At September 30, 2010, First California's preliminary total
risk-based and leverage capital ratios were 16.91 percent and 11.49
percent, respectively. At the end of the 2010 second quarter, the
total risked-based capital ratio was 17.33 percent and the leverage
capital ratio was 11.62 percent. The company's ratio of tangible
common equity to tangible assets was 7.19 percent at quarter end
and 7.42 percent at the end of the 2010 second quarter. Total
assets were $1.50 billion at September 30, 2010 compared with $1.45
billion at June 30, 2010.
Kum concluded: "During the quarter, we recorded strong growth to
our pre-tax, pre-provision earnings and added quality loan assets.
We continue to deploy liquidity into higher yielding assets, which
will provide an improved net interest margin and operating
performance in the fourth quarter and future periods."
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 today, October 21,
2010 at 11 a.m. Pacific (2 p.m. Eastern) to discuss the company's
2010 third quarter and year-to-date financial performance.
Investment professionals are invited to participate in the live
call by dialing 877-317-6789 (domestic), or 412-317-6789
(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 November 5, 2010 by dialing
877-344-7529 (domestic) or 412-317-0088 (international) and
entering replay passcode 445434.
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 $1.50
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 30-Sep-10 30-Jun-10 31-Mar-10 31-Dec-09 30-Sep-09
---------- ---------- ---------- ---------- -----------
Income
statement
summary
Net interest
income $ 11,107 $ 10,806 $ 10,673 $ 11,091 $ 11,396
Service
charges, fees
& other
income 1,116 1,133 1,079 1,232 1,291
Operating
expenses 9,083 9,866 9,422 10,372 10,684
Provision for
loan losses 3,618 1,766 1,754 6,350 4,117
Foreclosed
property
(gain)/loss &
expense 185 (223) 78 1,121 193
Amortization
of intangible
assets 416 417 416 416 417
Gain on
securities
transactions 1,204 130 132 2,159 1,639
Impairment
loss on
securities 23 - 18 942 -
---------- ---------- ---------- ---------- -----------
Income (loss)
before tax 102 243 196 (4,719) (1,085)
Tax expense
(benefit) 38 96 79 (1,855) (949)
---------- ---------- ---------- ---------- -----------
Net income
(loss) $ 64 $ 147 $ 117 $ (2,864) $ (136)
========== ========== ========== ========== ===========
Balance sheet
data
Total assets $1,498,932 $1,452,999 $1,440,267 $1,459,821 $ 1,469,628
Shareholders'
equity 198,284 198,384 196,835 157,226 161,058
Common
shareholders'
equity 173,770 173,985 172,550 133,056 137,002
Earning assets 1,283,963 1,275,540 1,278,641 1,308,628 1,304,625
Loans 918,708 891,541 919,304 939,246 940,852
Securities 272,381 286,100 293,081 349,645 302,378
Federal
funds sold
& other 92,874 97,899 66,166 19,737 61,395
Interest-
bearing funds 985,194 906,883 929,495 977,358 1,002,776
Interest-
bearing
deposits 780,402 751,354 769,229 807,105 827,036
Borrowings 178,000 128,750 133,500 143,500 149,000
Junior
subordinated
debt 26,792 26,779 26,766 26,753 26,740
Goodwill and
other
intangibles 71,052 71,468 71,884 72,301 72,717
Deposits 1,089,366 1,092,457 1,075,495 1,124,715 1,125,031
Asset quality
data & ratios
Loans past due
30 to 89 days
& accruing $ 2,003 $ 1,078 $ 2,520 $ 14,592 $ 7,314
Loans past due
90 days &
accruing - - - 200 2,970
Nonaccruing
loans 22,398 13,192 37,034 39,958 39,330
---------- ---------- ---------- ---------- -----------
Total past due
& nonaccrual
loans $ 24,401 $ 14,270 $ 39,554 $ 54,750 $ 49,614
========== ========== ========== ========== ===========
Foreclosed
property $ 27,906 $ 27,850 $ 5,997 $ 4,893 $ 6,120
Net loan
charge-offs $ 3,570 $ 912 $ 2,661 $ 1,981 $ 3,935
Allowance for
loan losses $ 16,500 $ 16,452 $ 15,598 $ 16,505 $ 12,137
Allowance for
loan losses
to loans 1.80% 1.85% 1.70% 1.76% 1.29%
Common
shareholder
data
Basic earnings
(loss) per
common share $ (0.01) $ (0.01) $ (0.02) $ (0.27) $ (0.04)
Diluted
earnings
(loss) per
common share $ (0.01) $ (0.01) $ (0.02) $ (0.27) $ (0.04)
Book value per
common share $ 6.17 $ 6.18 $ 6.12 $ 11.45 $ 11.78
Tangible book
value per
common share $ 3.65 $ 3.64 $ 3.57 $ 5.23 $ 5.53
Shares
outstanding 28,174,076 28,175,564 28,182,048 11,622,893 11,626,213
Basic weighted
average
shares 28,174,092 28,181,602 12,910,057 11,625,386 11,630,928
Diluted
weighted
average
shares 28,174,092 28,181,602 12,910,057 11,625,386 11,630,928
Selected
ratios
Return on
average
assets 0.00% 0.04% 0.03% -0.77% -0.04%
Return on
average
equity 0.03% 0.30% 0.28% -7.08% -0.34%
Equity to
assets 13.23% 13.65% 13.67% 10.77% 10.96%
Tangible
equity to
tangible
assets 8.91% 9.19% 9.13% 6.12% 6.32%
Tangible
common equity
to tangible
assets 7.19% 7.42% 7.36% 4.38% 4.60%
Efficiency
ratio 75.97% 81.82% 80.99% 100.91% 85.73%
Net interest
margin (tax
equivalent) 3.46% 3.40% 3.39% 3.35% 3.50%
Total
risk-based
capital
ratio:
First
California
Bank 16.33% 16.66% 16.38% 12.17% 11.62%
First
California
Financial
Group,
Inc. 16.91% 17.33% 17.08% 12.69% 12.47%
First California Financial Group
Unaudited Quarterly Financial Results
Three months ended Nine months ended
September 30, September 30,
------------------ ------------------
2010 2009 2010 2009
-------- -------- -------- --------
(in thousands, except per share
data)
Interest income:
Interest and fees on loans $ 13,075 $ 13,331 $ 38,881 $ 39,144
Interest on securities 1,529 2,819 4,626 9,847
Interest on federal funds sold
and interest bearing deposits 70 78 149 368
-------- -------- -------- --------
Total interest income 14,674 16,228 43,656 49,359
-------- -------- -------- --------
Interest expense:
Interest on deposits 1,897 2,938 5,953 9,519
Interest on borrowings 1,232 1,455 3,801 4,512
Interest on junior subordinated
debentures 438 439 1,316 1,365
-------- -------- -------- --------
Total interest expense 3,567 4,832 11,070 15,396
-------- -------- -------- --------
Net interest income before
provision for loan losses 11,107 11,396 32,586 33,963
Provision for loan losses 3,618 4,117 7,138 10,296
-------- -------- -------- --------
Net interest income after
provision for loan losses 7,489 7,279 25,448 23,667
-------- -------- -------- --------
Noninterest income:
Service charges on deposit
accounts and other
banking-related fees 932 1,111 2,835 3,199
Loan sales and commissions 10 22 26 76
Net gain on sale of securities 1,204 1,639 1,466 4,310
Impairment loss on securities (23) - (41) (565)
Market gain on foreclosed
assets - - 691 -
Other income 174 158 467 565
-------- -------- -------- --------
Total noninterest income 2,297 2,930 5,444 7,585
-------- -------- -------- --------
Noninterest expense:
Salaries and employee benefits 4,420 5,011 14,279 16,032
Premises and equipment 1,576 1,558 4,630 4,871
Data processing 607 862 1,800 1,812
Legal, audit and other
professional services 445 541 1,216 1,758
Printing, stationery and
supplies 69 197 194 600
Telephone 193 237 630 764
Directors' fees 101 142 335 398
Advertising, marketing and
business development 194 245 706 1,144
Postage 55 39 158 190
Insurance and assessments 797 849 2,377 2,504
Loss on and expense of
foreclosed property 185 193 731 442
Amortization of intangible
assets 416 417 1,249 1,210
Market loss on loans
held-for-sale - - - 709
Other expenses 626 1,003 2,046 2,513
-------- -------- -------- --------
Total noninterest expense 9,684 11,294 30,351 34,947
-------- -------- -------- --------
Income (loss) before provision for
income taxes 102 (1,085) 541 (3,695)
Provision (benefit) for income
taxes 38 (949) 213 (1,898)
-------- -------- -------- --------
Net income (loss) $ 64 $ (136) $ 328 $ (1,797)
======== ======== ======== ========
First California Financial Group
Unaudited Quarterly Financial Results
September 30, December 31,
(in thousands) 2010 2009
------------- -------------
Cash and due from banks $ 73,028 $ 26,757
Interest bearing deposits with other banks 92,874 19,737
Securities available-for-sale, at fair value 272,381 349,645
Loans, net 902,208 922,741
Premises and equipment, net 19,973 20,286
Goodwill 60,720 60,720
Other intangibles, net 10,332 11,581
Deferred tax assets, net 3,520 6,046
Cash surrender value of life insurance 12,122 11,791
Foreclosed property 27,906 4,893
Accrued interest receivable and other assets 23,868 25,624
------------- -------------
Total assets $ 1,498,932 $ 1,459,821
============= =============
Non-interest checking $ 308,964 $ 317,610
Interest checking 71,224 82,806
Money market and savings 382,482 339,750
Certificates of deposit, under $100,000 72,114 116,012
Certificates of deposit, $100,000 and over 254,582 268,537
------------- -------------
Total deposits 1,089,366 1,124,715
Federal Funds purchased 15,000 -
Securities sold under agreements to repurchase 45,000 45,000
Federal Home Loan Bank advances 118,000 98,500
Junior subordinated debentures 26,792 26,753
Accrued interest payable and other liabilities 6,490 7,627
------------- -------------
Total liabilities 1,300,648 1,302,595
Total shareholders' equity 198,284 157,226
------------- -------------
Total liabilities and shareholders' equity $ 1,498,932 $ 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) 9/30/2010 12/31/2009
----------- -----------
Total shareholders' equity $ 198,284 $ 157,226
Less: Goodwill and intangible assets (71,052) (72,301)
----------- -----------
Tangible equity 127,232 84,925
Less: Preferred stock (24,513) (24,170)
----------- -----------
Tangible common equity $ 102,719 $ 60,755
=========== ===========
Total assets $ 1,498,932 $ 1,459,821
Less: Goodwill and intangible assets (71,052) (72,301)
----------- -----------
Tangible assets $ 1,427,880 $ 1,387,520
=========== ===========
Common shares outstanding 28,174,076 11,622,893
Tangible equity to tangible assets 8.91% 6.12%
Tangible common equity to tangible assets 7.19% 4.38%
Tangible book value per common share $ 3.65 $ 5.23
Three months ended
------------------------
9/30/2010 6/30/2010
----------- -----------
Noninterest expense $ 9,684 $ 10,751
Less: Amortization of intangible assets (416) (417)
Less: Loss on and expense of foreclosed property (185) (468)
----------- -----------
Operating expenses $ 9,083 $ 9,866
=========== ===========
Three months ended
------------------------
9/30/2010 6/30/2010
----------- -----------
Income before provision for income taxes $ 102 $ 243
Add back: Provision for loan losses 3,618 1,766
Add back: Impairment loss on securities 23 -
Add back: Loss on and expense of foreclosed
property 185 (223)
Less: Net gain on sale of securities (1,204) (130)
----------- -----------
Pre-tax, Pre-provision income $ 2,724 $ 1,656
=========== ===========
For further Information: At the Company: Ron Santarosa
805-322-9333 At PondelWilkinson: Robert Jaffe 310-279-5969
Corporate Headquarters Address: 3027 Townsgate Road, Suite 300
Westlake Village, CA 91361
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