FIRST CAPITAL BANCORP INC. 
By GLEN ALLEN, Va., Oct. 31, 2011 /PRNewswire/ -- 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 2011. For the three months ended September 30, 2011, the Company had a net loss of $2.6 million and net loss allocable to common shareholders of $2.8 million, or ($0.93) per fully diluted share, compared to net income of $637 thousand and net income available to common shareholders of $467 thousand, or $0.16 per fully diluted share, for the same period in 2010.
The third quarter loss was due primarily to the recognition of losses on several nonaccrual loans and properties included in other real estate owned. In that regard, the Company disposed of other real estate owned and charged off loans totaling $6.1 million during the quarter and have additional properties of $1.5 million under contract for sale subsequent to quarter end. The properties under contract are not expected to result in further losses for the Company.
First Capital Bancorp, Inc. CEO John Presley stated, "In the third quarter we took advantage of our strong capital levels to dispose of assets that have declined in value during this tough economic time. We also wrote down certain assets to position them for future disposal. During these challenging times, the Company has keenly focused on five primary objectives. In order of importance those areas are: asset quality, capital preservation, liquidity, reducing exposure to real estate acquisition and development loans and improving core earnings. Highlighted below is progress made in those areas."
Asset Quality
The Company made significant improvement in most of its key asset ratios during the quarter which are highlighted below and presented in an attached spreadsheet.
-- Total adversely classified items as a percent of Tier 1 capital plus the
allowance decreased to 90% at the end of the third quarter of 2011 from
105% at the end of the second quarter of 2011.
-- Total classified loans decreased by $13.0 million or 25% from $52.1
million at the end of the second quarter of 2011 to $39.2 million at the
end of the third quarter of 2011.
-- Total non-accrual loans decreased $3.3 million or 16% from $21.8 million
at the end of the second quarter of 2011 to $18.5 million at the end of
the third quarter of 2011.
-- Of the $18.5 million in non-accrual loans, $11.1 million required, and
have already been subject to, a write-down to their estimated current
market value.
-- Loans past due 30 to 89 days dropped to its lowest level in two years
from $7.6 million at the end of the second quarter of 2011 to $2.3
million at the end of the third quarter, a $5.2 million or 69% reduction
in those balances.
We are encouraged by these directional moves within the portfolio and will continue to aggressively take measures to improve the Company's asset quality.
Capital Preservation
Through the growth and the improvement in core earnings, the Company has been able to maintain relatively strong capital levels.
-- At the end of the third quarter the Company's total risk based capital
stood at 13.01% compared to 13.73% at the end of the second quarter of
2011 and 13.18% at the end of the third quarter of 2010. The Company's
Tier 1 capital ratio was 11.34% at the end of the third quarter compared
to 12.06% at the end of the second quarter of 2011 and 11.64% at the end
of the third quarter of 2010.
-- For the Bank, total risk based capital was 12.76% at the end of the
third quarter of 2011 compared to 13.46% at the end of the second
quarter and 12.78% at the end of the third quarter of 2010. The Bank's
Tier 1 capital levels were 11.09% at the end of the third quarter
compared to 11.78% at the end of the second quarter and 11.24% at the
end of the third quarter of last year.
It should be noted that even with the aforementioned losses recognized in loans and other real estate owned, both the bank and the holding company have been able to keep capital levels relatively constant year over year.
Liquidity
The Company continues to maintain high levels of liquidity and closely monitors its sensitivity to interest rate risk.
-- As of September 30, 2011 the bank had approximately $34.2 million in
cash and cash equivalents on the balance sheet.
-- The holding company has $716 thousand in cash on hand.
-- The loan to deposit ratio was 85.6%.
-- Loans to deposits and borrowings was 75.6%.
-- Loans to available funds was 58.4%.
-- Unpledged securities were $79.6 million.
Reducing Exposure to Real Estate Acquisition and Development Loans
As a result of actions taken by the Company we have reduced real estate acquisition and development loan balances from a high of approximately 195% of capital to 113% today. We will continue to make every effort to reduce the level of the Company's other real estate owned.
Improving Core Earnings
The most profitable year in the Company's history was 2007 with a net income of approximately $1.7 million with a liability sensitive balance sheet. Since that time the Company's net interest margin has been stabilized in the 3.25% to 3.60% range with neutral interest rate sensitivity.
In the first nine months of 2011, the pre-tax, pre-provision, pre-mortgage start-up expense net income was $898 thousand, which includes $671 thousand in expenses related to the disposition of loans and OREO.
Additionally, in July of 2011 we started a mortgage operation. We incurred approximately $180 thousand in expenses in the third quarter without production offsets as we got up and running. We expect the mortgage operation to have a positive contribution to fee income in the fourth quarter of 2011 a positive contribution for 2012.
Total assets at September 30, 2011 were $535.6 million, relatively unchanged from December 31, 2010. Total loans, net of allowance, decreased $22.2 million to $364.0 million down 5.8% from December 31, 2010. This was the result of a focused effort by the bank to decrease its exposure to speculative real estate loans and dispose of nonperforming assets, while at the same time maintaining our already strong capital levels and the level of our allowance for loan losses.
Deposits have increased $5.6 million to $432.5 million, up 1.3% from December 31, 2010. Our deposit strategy was focused on decreasing noncore funding sources and single service CD relationships and increasing noninterest-bearing deposits accounts, which increased $8.5 million or 21.1% from December 31, 2010, a reflection of the growth of the First Capital franchise in our marketplace.
For the three months ended September 30, 2011 pre-provision, pre-tax, pre-start up expense earnings were $898 thousand, down $391 thousand from $1.3 million for the quarter ended September 30, 2010.
September 30,
-------------
2011 2010
---- ----
Income before tax and
provision $898 $1,289
Mortgage operation start up 180 -
Provision for loan losses 4,726 375
----- ---
(Loss)/Income before income
tax (4,008) 914
Income tax (benefit)/expense (1,416) 277
---
Net (loss)/income $(2,592) $637
======= ====
For the quarter ended September 30, 2011, the net interest margin remained relatively unchanged at 3.26% from the third and fourth quarters of 2010. This net interest margin stability is attributable to decreasing cost of interest-bearing liabilities realized while the yield on earning assets decreased at a similar rate. The costs of interest-bearing liabilities were 1.85% for the third quarter of 2011, down 35 basis points from 2.22% for the third quarter of 2010. The yield on earning assets decreased 30 basis points from 5.18% during the third quarter of 2010 to 4.88% during the third quarter of 2011.
Net interest income decreased $219 thousand or 5.2% to $4.0 million for the three months ended September 30, 2011 compared to $4.2 million for the three months ended September 30, 2010. This decrease is directly attributed to the decrease in the loan portfolio.
The provision for loan losses amounted to $4.7 million for the three months ended September 30, 2011 compared to $375 thousand for the same period in 2010. For the quarter ended September 30, 2011, the Company had net charge-offs of $5.9 million. The allowance for loan losses ended the quarter at 2.42% of total loans compared to 2.70% at the end of the same period in 2010. We continue to focus on improving overall asset quality in these uncertain economic times.
The following table reflects details related to asset quality and the allowance for loan losses of First Capital Bank:
Three Months Ended
Sep 30, Dec 31, Sep 30,
------- ------- -------
2011 2010 2010
---- ---- ----
(Dollars in thousands)
Nonaccrual loans $18,455 $22,355 $13,146
Loans past due 90 days and
accruing interest - 1,556 765
--- ----- ---
Total nonperforming loans 18,455 23,911 13,911
Other real estate owned 8,536 2,615 2,851
----- ----- -----
Total nonperforming assets $26,991 $26,526 $16,762
======= ======= =======
Allowance for loan losses to
period end loans 2.42% 2.78% 2.70%
Nonperforming assets to total
loans & OREO 7.07% 6.63% 4.08%
Nonperforming assets to total
assets 5.06% 4.95% 3.09%
Allowance for loan losses to
nonaccrual loans 48.91% 49.37% 83.85%
Allowance for loan losses
Beginning balance $10,153 $11,023 $11,481
Provision for loan losses 4,726 1,100 375
Net charge-offs 5,853 1,087 832
Ending balance $9,026 $11,036 $11,024
====== ======= =======
First Capital Bank President and CEO Bob Watts stated "While the state of the economy is not what we would all want, we are very pleased with the performance of our team in working through some difficult situations. One of our goals starting in 2009 was to reduce the Company's exposure to specific categories of real estate loans. Over that period of time we have reduced our exposure to loans for acquisition, development, and construction of real estate (level one) from 195% of capital to 113% today."
The Company's regulatory capital ratios remain well above the regulatory minimum for well capitalized institutions. Total Risk Based Capital was 13.01% down 17 basis points from September 30, 2010, yet 301 basis points above the regulatory minimum for well capitalized institutions. Tier 1 Risk capital decreased 30 basis points over the prior year to 11.34%.
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, 2011
Total
capital
to risk
weighted
assets
Consolidated $51,494 13.01% $31,670 8.00% $39,588 10.00%
Tier 1
capital
to risk
weighted
assets
Consolidated $44,895 11.34% $15,835 4.00% $23,753 6.00%
Tier 1 capital to
average adjusted
assets
Consolidated $44,895 8.43% $21,304 4.00% $26,630 5.00%
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%
Tier 1
capital
to risk
weighted
assets
Consolidated $48,508 11.64% $16,675 4.00% $25,012 6.00%
Tier 1
capital
to
average
adjusted
assets
Consolidated $48,508 8.93% $21,739 4.00% $27,173 5.00%
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 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.
(Dollars in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2011 2010 2011 2010
---- ---- ---- ----
Selected
Operating
Data:
Interest
income $6,054 $6,755 $18,406 $19,902
Interest
expense 2,067 2,549 6,369 7,873
----- ----- ----- -----
Net
interest
income 3,987 4,206 12,037 12,029
Provision
for
loan
losses 4,726 375 8,572 7,121
Noninterest
income 313 252 1,373 799
Noninterest
expense 3,582 3,169 10,313 9,604
----- ----- ------ -----
(Loss)
income
before
income
tax (4,008) 914 (5,475) (3,897)
Income
tax
(benefit) (1,416) 277 (1,993) (1,413)
------ --- ------ ------
Net
(loss)
income $(2,592) $637 $(3,482) $(2,484)
======= ==== ======= =======
Less:
Preferred
dividends $170 $170 $509 $508
Net
(loss)
income
available
to
common
shareholders $(2,762) $467 $(3,991) $(2,992)
======= ==== ======= =======
(Loss)
income
per
share:
Basic
&
diluted
(loss)
income
per
share $(0.93) $0.16 $(1.34) $(1.01)
====== ===== ====== ======
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2011 2010 2011 2010
---- ---- ---- ----
Balance
Sheet
Data:
Total
assets $535,631 $541,099 $535,631 $541,099
Loans,
net 363,986 397,449 363,986 397,449
Deposits 432,469 428,834 432,469 428,834
Borrowings 58,632 63,614 58,632 63,614
Stockholders'
equity 41,157 44,975 41,157 44,975
Book
value
per
share $10.28 $11.61 $10.28 $11.61
Total
shares
outstanding 2,971 2,971 2,971 2,971
Asset
Quality
Ratios
Allowance
for
loan
losses $9,026 $11,023 $9,026 $11,023
Nonperforming
assets 26,992 16,762 26,992 16,762
Net
charge-
offs 5,853 833 10,583 2,698
Net
charge-
off
to
average
loans 1.54% 0.20% 2.72% 0.66%
Allowance
for
loan
losses
to
period
end
loans 2.42% 2.70% 2.42% 2.70%
Nonperforming
assets
to
total
loans
&
OREO 6.93% 4.90% 6.93% 4.08%
Selected
Performance
Ratios:
Return
on
average
assets -1.93% 0.46% -0.88% -0.62%
Return
on
average
equity -23.68% 5.68% -10.59% -7.19%
Net
interest
margin
(tax
equivalent
basis) 3.26% 3.24% 3.28% 3.17%
SOURCE First Capital Bancorp, Inc.
