FISB 1st Capital Bancorp (QX)

1^st Capital Bank (OTCBB:FISB) today announced total assets of $192,298,000 as of December 31, 2009, an increase of $60,856,000 (46%) from December 31, 2008. The growth in loans was the greatest contributor to the overall asset growth. Loans, net of the allowance for loan losses of $2,081,000, totaled $132,731,000 at December 31, 2009, an increase of $30,867,000 (30%) from December 31, 2008. The growth in loans was primarily funded by an increase in deposits of $60,815,000 (59%) to $164,232,000 at December 31, 2009. This deposit growth also funded an increase in Federal Funds Sold of $27,900,000 (355%) from December 31, 2008. "This balance sheet liquidity will facilitate future loan growth as 1^st Capital Bank continues to lend to businesses and individuals without the use of 'bailout money,'" said Fred Rowden, President and CEO of 1^st Capital Bank

Mr. Rowden went on to state, "Locally owned and supportive of local businesses, 1^st Capital Bank has grown in a safe and secure manner throughout the past year. Its strong ties to the community have contributed to the Bank reporting its first two quarters of profitability, even as the economy has offered new challenges. Although monthly profits are subject to fluctuation, and contributions to the allowance for loan losses could curtail short-term profitability, the Bank is reaching the size at which the balance sheet supports the generation of net income. Good bankers serving the needs of customers by building quality loan and deposit relationships through customer service is the key to this healthy growth, as 1^st Capital Bank has continued to grow without taking government 'bailout money,'" said Mr. Rowden."

Reporting its second consecutive profitable quarter, 1^st Capital Bank earned net income for the three months ended December 31, 2009 of $50,000, or $0.02 per fully diluted share, a decrease of $25,000 (33%) from $75,000, or $0.02 per fully diluted share, for the three months ended September 30, 2009. The net loss recorded for the year ended December 31, 2009 was $706,000, a decrease of $1,419,000 (67%) compared to the loss of $2,125,000 for the year ended December 31, 2008. Basic loss per share for the year ended December 31, 2009 was $0.22 compared to $0.67 for the year ended December 31, 2008. As of December 31, 2009, 1^st Capital Bank had a Total Risk Weighted Capital ratio of 21.3%, which was over two times the regulatory required minimum to be considered a "well-capitalized" financial institution.

Financial Summary:

Net interest income after the provision for loan losses for the year ended December 31, 2009 was $4,967,000, an increase of $2,258,000 (83%) over the year ended December 31, 2008. Interest income for the year ended December 31, 2009 was $7,214,000, an increase of $2,026,000 (39%) over the year ended December 31, 2008. Average earning assets for the year ended December 31, 2009 were $152,959,000, an increase of $54,086,000 (55%) compared to $98,875,000 for the year ended December 31, 2008.

Interest expense for the year ended December 31, 2009 was $1,718,000, an increase of $202,000 (13%) over the year ended December 31, 2008. Average interest bearing liabilities for the year ended December 31, 2009 were $98,757,000, an increase of $44,812,000 (83%) compared to $53,945,000 for the year ended December 31, 2008.

The net interest margin for the year ended December 31, 2009 was 3.6% compared to 3.7% for the year ended December 31, 2008. The effect on net interest income and net interest margin caused by the 400 basis point reduction by the Federal Reserve Bank to key interest rates since January of 2008 was offset by the growth and changes in the composition of 1^st Capital Bank's earning assets and deposit liabilities, with most of that offset coming from the growth in the loan portfolio. 

1^st Capital Bank recorded a provision for loan losses of $529,000 during the year ended December 31, 2009 compared to $962,000 in the year ended December 31, 2008. The ratio of the allowance for loan losses to total loans outstanding was 1.54% at December 31, 2009 compared to 1.50% at December 31, 2008. At December 31, 2009 and 2008, there were no non-performing, restructured or impaired loans and the Bank did not have any other real estate owned.

Noninterest income increased $37,000 (54%) to $106,000 for the year ended December 31, 2009 compared to the year ended December 31, 2008, largely due to service charges from the growth in the Bank's deposit portfolio.

Noninterest expenses increased by $876,000 (18%) to $5,778,000 for the year ended December 31, 2009 compared to the year ended December 31, 2008.   The majority of this increase was due to the overall growth of the Bank including a full year of operating costs for the King City branch which opened in November 2008. Also included in noninterest expenses was a $214,000 (275%) increase in insurance and assessments paid to regulatory agencies in the current year compared to the prior year as the FDIC raised assessment rates for all institutions and charged a one-time special assessment during 2009.

1^st Capital Bank currently operates three branch offices in Monterey County, which are located in the historic Estrada Adobe at 470 Tyler Street, Monterey; 1097 South Main Street, Salinas; and downtown King City at 432 Broadway Street. The experienced bankers at 1^st Capital Bank provide traditional deposit, lending, mortgage and commercial products and services to business and retail customers throughout the California Central Coast and Salinas Valley areas of Monterey County.

Information regarding the Bank may be obtained from the Banks website at www.1stCapitalBank.com. Copies of the Bank's press releases are available on the website.

Forward Looking Statements

In addition to the historical information contained herein, this press release may contain certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. The reader of this press release should understand that all such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Factors that might cause such a difference include, among other matters, changes in interest rates; economic conditions including inflation and real estate values in California and the Bank's market areas; governmental regulation and legislation; credit quality; competition affecting the Bank's businesses generally; the risk of natural disasters and future catastrophic events including terrorist related incidents and other factors beyond the Bank's control; and factors discussed in the Bank's periodic reports under the Securities Exchange Act of 1934, as amended, on Forms 10-K, 10-Q and 8-K filed with the FDIC. The Bank does not undertake any obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information, future events or otherwise, except as required by law.

CONTACT:  1st Capital Bank

          Jayme Fields, CFO

          (831) 264-4011