SOURCE: First California Financial Group

First California Financial Group

October 21, 2010 08:00 ET

First California Reports 2010 Third Quarter Results

WESTLAKE VILLAGE, CA--(Marketwire - October 21, 2010) - 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
                                                  ===========  ===========


Contact Information

  • 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