First California Financial Group, Inc. (NASDAQ: FCAL), the holding
company of First California Bank, today reported financial results
for the second quarter ended June 30, 2010. The company also
announced that it will host a conference call tomorrow, Thursday,
July 22, 2010 at 11 a.m. Pacific (2:00 p.m. Eastern) to review its
financial results.
For the 2010 second quarter, net income was $147,000 compared
with $217,000 for the same quarter of the prior year. Preferred
dividends were $312,500 for both the second quarter of 2010 and
2009. Net loss available to common shareholders was $166,000, or
$0.01 per share, compared with $96,000, or $0.01 per share, for the
2009 second quarter.
"During the second quarter, we made excellent progress in
several key areas of our business," said C. G. Kum, President and
Chief Executive Officer. "We achieved strong growth in core
deposits and continued to make significant progress in asset
quality trends. Moreover, the results of the company enabled the
absorption of credit losses and a buildup of our loan loss
reserves."
2010 Second Quarter Financial Highlights:
-- Loans past due 30 to 89 days significantly declined to $1.1 million at
June 30, 2010 from $14.6 million at December 31, 2009;
-- Nonaccrual loans decreased to $13.2 million at June 30, 2010 from $40.0
million at December 31, 2009;
-- Net loan charge-offs for the first half of 2010, annualized, narrowed to
0.78 percent of average loans from 0.89 percent for 2009 year;
-- The allowance for loans increased to 1.85% of total loans at June 30,
2010 from 1.76% at December 31, 2009;
-- Core deposits grew to 79% of total deposits at June 30, 2010 from 74% at
December 31, 2009;
-- Total risk-based capital ratio climbed to 17.32% at June 30, 2010 from
12.69% at December 31, 2009, largely as the result of the company's
capital raise completed during the first quarter of 2010.
Asset Quality
Nonaccrual loans decreased to $13.2 million at June 30, 2010
from $40.0 million at December 31, 2009. The decrease was mainly
due to the completed foreclosure of a $21.0 million completed
commercial construction project. In addition, the company benefited
from $5.3 million of reductions from pay downs and pay offs and
$2.0 million of reductions from loans returned to accruing status
as a result of the borrowers' payment performance and improved
financial health. Subsequent to the end of the quarter, the company
received full payment on a $4.5 million nonaccrual completed
residential construction loan.
Foreclosed property increased to $27.9 million at June 30, 2010
from $4.9 million at December 31, 2009. The increase reflects the
addition of the completed commercial construction project, which
gives the company control of the project and advances resolution of
a complex and difficult credit. The company had four foreclosed
properties at June 30, 2010 compared with one property at December
31, 2009. A $1.0 million foreclosed property is currently in escrow
and is due to close in July.
Consistent with other asset quality trends, net loan charge-offs
declined to $912,000 for the 2010 second quarter from $2.7 million
for the 2010 first quarter. Net loan charge-offs for the first half
of 2010, annualized, declined to 0.78% of average loans from 0.89%
for the 2009 year.
The company continued to downsize its construction and land
portfolio, which decreased 31% to $59.9 million at June 30, 2010
from $86.6 million at December 31, 2009. Construction and land
loans represented 7% of the loan portfolio at June 30, 2010, down
from 9% at December 31, 2009. The company's $389.1 million
commercial mortgage portfolio continued to perform well with only
$755,000, or two loans, categorized as past due or nonaccrual at
the end of the 2010 second quarter.
The allowance for loan losses was $16.5 million at both June 30,
2010 and December 31, 2009. The provision for loan losses was $1.8
million for the second quarter of 2010 compared with $1.1 million
for the second quarter of 2009 and $1.8 million for the first
quarter of 2010. As a percentage of total loans, the allowance was
1.85% of total loans at the end of the 2010 second quarter and
1.76% at the end of 2009.
"The improvement in our asset quality trends, which began in the
fourth quarter of 2009, was truly evident in the recently completed
second quarter of 2010," Kum said. "Our focus on credit
underwriting and administration has allowed us to resolve problem
assets quickly and with low levels of loss. Notwithstanding these
trends, we believe the higher allowance percentage reflects the
economic adversity confronting our borrowers and further protects
our capital in these uncertain times. The outlook for business
activity and unemployment across the nation, and particularly in
California, causes us to remain cautious."
Results of Operations
For the 2010 second quarter, net interest income before the
provision for loan losses declined to $10.8 million from $11.9
million for the prior-year quarter. Net interest margin (on a
taxable equivalent basis) was 3.40% compared with 3.75% for the
same period a year ago. The decline in the net interest income and
net interest margin principally reflects a higher level of
lower-yielding earning assets. Net interest income and net interest
margin for the 2010 second quarter increased modestly from the 2010
first quarter.
Noninterest income for the 2010 second quarter was $2.0 million
compared with $2.7 million for the prior-year period. 2010 second
quarter results included securities gains of $130,000 and a
valuation gain on the $21.0 million foreclosed property of
$691,000. 2009 second quarter results included securities gains of
$2.0 million and impairment losses of $565,000.
Noninterest expenses declined to $10.8 million for the 2010
second quarter from $12.9 million for the second quarter a year
ago. Noninterest expenses for the 2010 second quarter increased
from the 2010 first quarter due to higher foreclosed property
activities. The year ago second quarter results included an FDIC
special insurance assessment of $675,000 and a market loss on loans
held-for-sale of $709,000. The company expects noninterest expenses
to be lower in the second half of the year as problem asset
collection-related costs should decline.
At June 30, 2010, loans were $891.5 million, down $47.7 million
or 5% from $939.2 million at year-end 2009. The decline reflects
the completion of the foreclosure on the company's $21.0 million
commercial office construction loan and generally weak loan demand
in our markets. Usage under the company's commercial lines of
credit declined to 53% at the end of the 2010 second quarter from
59% at year-end 2009. The company originated $81.1 million of new
loan commitments in the first half of 2010; however, these
originations were more than offset by the managed reduction in
riskier construction and land loans and lower line usage by
customers. The company anticipates net loan growth in the second
half of the year as construction and land loan payoffs and paydowns
will be proportionally smaller on this portfolio of loans.
Deposits as of June 30, 2010 were $1.09 billion, down $32
million or 3% from $1.12 billion as of December 31, 2009. The
decline reflects the $61 million managed reduction in wholesale
certificates of deposits. Core non-maturity deposits (checking,
savings and money market deposits) however, increased $45 million
year to date.
Liquidity and Capital Resources
At June 30, 2010, First California had $97.9 million of
interest-bearing deposits with other banks and $286.1 million of
securities. These liquid resources were $14.6 million or 4% higher
than at the end of 2009 and reflects the increase in the company's
core deposits, proceeds from the March 2010 common stock offering
and low loan demand.
Core deposits, which exclude brokered time deposits and deposits
greater than $100,000, continue to be First California's primary
source of funds. Core deposits increased to 79% of total deposits
at the end of the 2010 second quarter from 74% at year-end 2009.
With the company's strong liquidity position and stable core
deposit relationships, First California eliminated all $25.7
million of brokered time deposits and reduced State of California
time deposits by $35.0 million and FHLB borrowings by $14.8
million.
Shareholders' equity was $198.4 million at the close of the 2010
second quarter compared with $157.2 million at the end of 2009. The
company's book value per common share was $6.18 at June 30, 2010
compared with $11.45 at December 31, 2009. Tangible book value per
common share was $3.64 at June 30, 2010 compared with $5.23 at
December 31, 2009. The increase in shareholders' equity and the
decline in the per share amounts reflect the successful completion
of a common stock offering in March 2010.
At June 30, 2010, First California's preliminary total
risk-based and leverage capital ratios were 17.32% and 11.56%,
respectively. At the end of the 2009 year, the total risked-based
capital ratio was 12.69% and the leverage capital ratio was 8.52%.
The company's ratio of tangible common equity to tangible assets
was 7.42% at quarter end and 4.38% at year-end 2009. The increase
in the ratios principally reflects the increase in common equity
from the March 2010 stock offering. Total assets were $1.45 billion
compared with $1.46 billion at December 31, 2009.
Kum concluded: "We successfully completed a follow-on common
stock offering in March and resolved problem assets in the recently
completed quarter, both of which fortified our strong balance
sheet. The company has a strong origination pipeline and our
strengths and successes allow us to attract talented personnel and
capture new deposit and lending relationships. We have reduced
operating expenses to remain efficient in the current
revenue-challenged environment of low interest rates and low loan
demand. All of these actions position us for profitable growth when
the economy improves and to take advantage of the dislocation in
the Southern California banking sector."
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, July
22, 2010 at 11 a.m. Pacific (2 p.m. Eastern) to discuss the
company's 2010 second 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.
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 $1.45
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-Jun-10 31-Mar-10 31-Dec-09 30-Sep-09 30-Jun-09
----------- ----------- ----------- ----------- -----------
Income
statement
summary
Net
interest
income $ 10,806 $ 10,673 $ 11,091 $ 11,396 $ 11,897
Service
charges,
fees &
other
income 1,133 1,079 1,232 1,291 1,304
Operating
expenses 9,866 9,422 10,372 10,684 10,826
Provision
for loan
losses 1,766 1,754 6,350 4,117 1,110
Foreclosed
property
(gain)/
loss &
expense (223) 78 1,121 193 249
Amortization
of
intangible
assets 417 416 416 417 417
Gain on
securities
trans-
actions 130 132 2,159 1,639 2,000
Impairment
loss on
securities - 18 942 - 565
Market
loss on
loans
held-for-
sale - - - - 709
FDIC
special
assessment - - - - 675
----------- ----------- ----------- ----------- -----------
Income
(loss)
before
tax 243 196 (4,719) (1,085) 650
Tax
expense
(benefit) 96 79 (1,855) (949) 433
----------- ----------- ----------- ----------- -----------
Net income
(loss) $ 147 $ 117 $ (2,864) $ (136) $ 217
=========== =========== =========== =========== ===========
Balance
sheet
data
Total
assets $ 1,452,999 $ 1,440,267 $ 1,459,821 $ 1,469,628 $ 1,448,456
Share-
holders'
equity 198,384 196,835 157,226 161,058 159,116
Common
share-
holders'
equity 173,985 172,550 133,056 137,002 135,174
Earning
assets 1,275,540 1,278,641 1,308,628 1,304,625 1,282,497
Loans 891,541 919,304 939,246 940,852 940,209
Securities 286,100 293,081 349,645 302,378 245,858
Federal
funds
sold &
other 97,899 66,166 19,737 61,395 96,430
Interest-
bearing
funds 906,883 929,495 977,358 1,002,776 987,048
Interest-
bearing
deposits 751,354 769,229 807,105 827,036 804,071
Borrowings 128,750 133,500 143,500 149,000 156,250
Junior
subordinated
debt 26,779 26,766 26,753 26,740 26,727
Goodwill
and other
intangibles 71,468 71,884 72,301 72,717 73,134
Deposits 1,092,457 1,075,495 1,124,715 1,125,031 1,096,679
Asset
quality
data &
ratios
Loans past
due 30 to
89 days &
accruing $ 1,078 $ 2,520 $ 14,592 $ 7,314 $ 8,203
Loans past
due 90
days &
accruing - - 200 2,970 299
Nonaccruing
loans 13,192 37,034 39,958 39,330 26,957
----------- ----------- ----------- ----------- -----------
Total past
due &
nonaccrual
loans $ 14,270 $ 39,554 $ 54,750 $ 49,614 $ 35,459
=========== =========== =========== =========== ===========
Repossessed
personal
property $ - $ - $ - $ - $ 61
Other real
estate
owned 27,850 5,997 4,893 6,120 6,767
----------- ----------- ----------- ----------- -----------
Total
foreclosed
property $ 27,850 $ 5,997 $ 4,893 $ 6,120 $ 6,828
=========== =========== =========== =========== ===========
Net loan
charge-
offs $ 912 $ 2,661 $ 1,981 $ 3,935 $ 430
Allowance
for loan
losses $ 16,452 $ 15,598 $ 16,505 $ 12,137 $ 11,955
Allowance
for loan
losses to
loans 1.85% 1.70% 1.76% 1.29% 1.27%
Common
shareholder
data
Basic
earnings
(loss) per
common
share $ (0.01) $ (0.02) $ (0.27) $ (0.04) $ (0.01)
Diluted
earnings
(loss) per
common
share $ (0.01) $ (0.02) $ (0.27) $ (0.04) $ (0.01)
Book value
per
common
share $ 6.18 $ 6.12 $ 11.45 $ 11.78 $ 11.62
Tangible
book
value per
common
share $ 3.64 $ 3.57 $ 5.23 $ 5.53 $ 5.33
Shares
outstand-
ing 28,175,564 28,182,048 11,622,893 11,626,213 11,633,289
Basic
weighted
average
shares 28,181,602 12,910,057 11,625,386 11,630,928 11,633,289
Diluted
weighted
average
shares 28,181,602 12,910,057 11,625,386 11,630,298 11,633,289
Selected
ratios
Return on
average
assets 0.04% 0.03% -0.77% -0.04% 0.06%
Return on
average
equity 0.30% 0.28% -7.08% -0.34% 0.54%
Equity to
assets 13.65% 13.67% 10.77% 10.96% 10.99%
Tangible
equity to
tangible
assets 9.19% 9.13% 6.12% 6.32% 6.25%
Tangible
common
equity to
tangible
assets 7.42% 7.36% 4.38% 4.60% 4.51%
Efficiency
ratio 81.82% 80.99% 100.91% 85.73% 98.66%
Net interest
margin (tax
equivalent) 3.40% 3.39% 3.35% 3.50% 3.75%
Total risk-based
capital ratio:
First
California
Bank 16.67% 16.38% 12.18% 11.62% 11.54%
First
California
Financial
Group, Inc. 17.32% 17.08% 12.69% 12.47% 12.48%
First California Financial Group
Unaudited Quarterly Financial Results
Three months ended Six months ended
June 30, June 30,
------------------- ------------------
2010 2009 2010 2009
--------- -------- -------- --------
(in thousands, except per share
data)
Interest income:
Interest and fees on loans $ 12,819 $ 13,386 $ 25,806 $ 25,813
Interest on securities 1,508 3,431 3,097 7,028
Interest on federal funds sold
and interest bearing deposits 59 235 79 290
--------- -------- -------- --------
Total interest income 14,386 17,052 28,982 33,131
--------- -------- -------- --------
Interest expense:
Interest on deposits 1,884 3,214 4,056 6,581
Interest on borrowings 1,257 1,502 2,569 3,057
Interest on junior subordinated
debentures 439 439 878 926
--------- -------- -------- --------
Total interest expense 3,580 5,155 7,503 10,564
--------- -------- -------- --------
Net interest income before
provision for loan losses 10,806 11,897 21,479 22,567
Provision for loan losses 1,766 1,110 3,520 6,179
--------- -------- -------- --------
Net interest income after
provision for loan losses 9,040 10,787 17,959 16,388
--------- -------- -------- --------
Noninterest income:
Service charges on deposit
accounts and other
banking-related fees 973 1,038 1,903 2,088
Loan sales and commissions - 44 16 53
Net gain on sale of securities 130 2,000 262 2,671
Impairment loss on securities - (565) (18) (565)
Market gain on foreclosed assets 691 - 691 -
Other income 160 222 293 407
--------- -------- -------- --------
Total noninterest income 1,954 2,739 3,147 4,654
--------- -------- -------- --------
Noninterest expense:
Salaries and employee benefits 4,889 5,363 9,859 11,021
Premises and equipment 1,517 1,780 3,054 3,313
Data processing 597 479 1,192 950
Legal, audit and other
professional services 590 597 772 1,217
Printing, stationery and supplies 113 211 125 403
Telephone 213 264 437 527
Directors' fees 113 141 233 256
Advertising, marketing and
business development 286 443 513 899
Postage 47 96 103 151
Insurance and assessments 780 1,346 1,580 1,655
Loss on and expense of
foreclosed property 468 249 546 249
Amortization of intangible assets 417 417 833 793
Market loss on loans
held-for-sale - 709 - 709
Other expenses 721 781 1,420 1,510
--------- -------- -------- --------
Total noninterest expense 10,751 12,876 20,667 23,653
--------- -------- -------- --------
Income (loss) before provision for
income taxes 243 650 439 (2,611)
Provision (benefit) for income
taxes 96 433 175 (950)
--------- -------- -------- --------
Net income (loss) 147 217 264 (1,661)
========= ======== ======== ========
First California Financial Group
Unaudited Quarterly Financial Results
June 30, December 31,
(in thousands) 2010 2009
----------- -----------
Cash and due from banks $ 33,618 $ 26,757
Interest bearing deposits with other banks 97,899 19,737
Securities available-for-sale, at fair value 286,100 349,645
Loans, net 875,089 922,741
Premises and equipment, net 19,729 20,286
Goodwill 60,720 60,720
Other intangibles, net 10,748 11,581
Deferred tax assets, net 3,811 6,046
Cash surrender value of life insurance 12,012 11,791
Foreclosed property 27,850 4,893
Accrued interest receivable and other assets 25,423 25,624
----------- -----------
Total assets $ 1,452,999 $ 1,459,821
=========== ===========
Non-interest checking $ 341,103 $ 317,610
Interest checking 79,796 82,806
Money market and savings 363,996 339,750
Certificates of deposit, under $100,000 75,470 116,012
Certificates of deposit, $100,000 and over 232,092 268,537
----------- -----------
Total deposits 1,092,457 1,124,715
Securities sold under agreements to repurchase 45,000 45,000
Federal Home Loan Bank advances 83,750 98,500
Junior subordinated debentures 26,779 26,753
Accrued interest payable and other liabilities 6,629 7,627
----------- -----------
Total liabilities 1,254,615 1,302,595
Total shareholders' equity 198,384 157,226
----------- -----------
Total liabilities and shareholders' equity $ 1,452,999 $ 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) 6/30/2010 12/31/2009
----------- -----------
Total shareholders' equity $ 198,384 $ 157,226
Less: Goodwill and intangible assets (71,468) (72,301)
----------- -----------
Tangible equity 126,916 84,925
Less: Preferred stock (24,399) (24,170)
----------- -----------
Tangible common equity $ 102,517 $ 60,755
=========== ===========
Total assets $ 1,452,999 $ 1,459,821
Less: Goodwill and intangible assets (71,468) (72,301)
----------- -----------
Tangible assets $ 1,381,531 $ 1,387,520
=========== ===========
Common shares outstanding 28,175,564 11,622,893
Tangible equity to tangible assets 9.19% 6.12%
Tangible common equity to tangible assets 7.42% 4.38%
Tangible book value per common share $ 3.64 $ 5.23
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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