1st Capital Bank Reports Continued Growth in Core Deposits and Loans for the 2nd Quarter of 2012

MONTEREY, CA -- (Marketwire) -- 07/19/12 -- 1st Capital Bank (OTCBB: FISB), Monterey County's award winning community bank, reported continued growth in core deposits and loans for the second quarter of 2012. Overall, the Bank reported an increase in total assets of 32% to $304 million as of June 30, 2012, compared to $229 million for the same quarter one year ago.

Key Performance Highlights of the Second Quarter 2012:

• Total assets of $304 million as of June 30, 2012 increased $74 million (32%) from June 30, 2011
  
  
• Core deposit growth of $73 million, or 37%, to a total of $270 million compared to the second quarter of 2011
  
  
• Loan growth of $38 million, or 20%, to a total of $228 million compared to the second quarter of 2011
  
  
• 18% increase in net interest income compared to the same quarter a year ago
  
  
• Continuing strong asset quality, with a ratio of nonperforming loans to total loans of just 0.33%
  
  
• Strong capital position with a total risk based capital ratio of 15.65%
  
  
• 2% Stock dividend paid to shareholders as of March 28, 2012
  
  

"1st Capital Bank has continued its strong growth in loans, deposits and total assets. The Bank's results for the first two quarters of 2012 continue to outperform most banks in the industry," stated President and CEO Fred Rowden. "We are pleased that the investment the Bank has made in key staff and facilities in the past year has contributed to increased growth in the Bank's deposits and earning assets. That additional growth will provide the basis for future strong earnings growth. The Bank's investment in personnel and infrastructure is a part of our long-term plan to take advantage of market opportunities and is aimed at enhancing shareholder value," concluded Mr. Rowden.

In conjunction with the Bank's strong loan and deposit growth, the Bank recorded a number of increases, including a $330,000 increase in the provision for loan losses for the quarter ended June 30, 2012 compared to the same quarter in 2011. It also recorded increased non-interest costs of $404,000 from the above discussed investment in staff and facilities compared to the same quarter in the prior year and a tax expense of $152,000 for quarter ended June 30, 2012 compared to a tax benefit of $1,313,000 recorded for the same period in the prior year as a result of the deferred tax valuation allowance reversal in the prior year. These increases were partially offset by a $441,000 increase in net interest income compared to the same quarter a year ago.

Overall, increases in these key income statement categories are consistent with the Bank's plans to grow. The positive results of this planned growth are seen not only in the growing totals but also in the composition of the loan and deposit portfolios as new, quality customers join the Bank. The percentage of checking and savings accounts compared to total deposits has increased to 86% compared to 76% one year ago and the overall cost of deposits has dropped from 0.56% to 0.34%. As the Bank continues to grow it is leveraging its excess capital, as can be seen by current Total Risk Based Capital of 15.7% compared to 17.5% one year ago. Likewise, book value per share has increased to $10.10 as of June 30, 2012 compared to $9.88 one year ago.

The Bank's Financial Summary for the quarter ended June 30, 2012 is described below. For more information regarding the Bank's growth and performance, please visit our website at www.1stcapitalbank.com, or call 831.264.4000.

Financial Summary

Net Income -- Income before taxes of $361,000 for the quarter ended June 30, 2012 compared to $660,000 for the same quarter in the prior year. This decrease is largely due to an increase in the provision for loan loss expense due to loan growth and an increase in noninterest expense, partially offset by an increase in net interest income. Net income of $209,000 for the quarter ended June 30, 2012 decreased $1,764,000 compared to net income of $1,973,000 for the same quarter in the prior year, and decreased $101,000 over the net income for the trailing quarter ended March 31, 2012. This decrease resulted from the factors outlined above, as well as increased provision for income tax as the Bank recorded a $152,000 tax expense for the second quarter 2012 compared to a tax benefit of $1,313,000 for the same period in 2011 due to the accounting applied to taxes by the Bank during its then start-up period.