MONTEREY, Calif., July 17 /PRNewswire-FirstCall/ -- 1st Capital Bank (OTC:FISB) (BULLETIN BOARD: FISB) today announced continued growth in its balance sheet since its opening on April 16, 2007. At June 30, 2008, total assets were $107,231,000, or an increase of $37,872,000 (55%) from December 31, 2007 and $17,957,000 (20%) from March 31, 2008. Most of this asset growth was in loans. Loans, net of the allowance for loan losses of $1,239,000, at June 30, 2008, totaled $81,411,000, an increase of $45,392,000 (126%) from December 31, 2007 and $20,469,000 (34%) from March 31, 2008. In addition, 1st Capital Bank held $8,710,000 in federal funds sold plus fed funds borrowing lines and other borrowing facilities as of June 30, 2008 to provide additional liquidity to fund future loan growth. At June 30, 2008, deposits were $79,099,000, an increase of $38,960,000 (97%) from December 31, 2007 and $18,573,000 (31%) from March 31, 2008. As anticipated in its business plan, the Bank experienced a net operating loss of $671,000 for the second quarter of 2008. Net losses decreased $20,000 (3%) compared to $691,000 for the quarter ended March 31, 2008. Basic loss per share for the second quarter of 2008 was $0.21 compared to $0.22 for the quarter ended March 31, 2008. As of June 30, 2008, 1st Capital Bank held excess capital represented by a Total Risk Weighted Capital ratio of 32.8%, over four times the regulatory required minimum. Net loss for the six months ended June 30, 2008 decreased $63,000 (4%) to $1,361,000 from $1,424,000 for the six months ended December 31, 2007. Net loss per share decreased to $0.43 for the six months ended June 30, 2008 from $0.45 for the six months ended December 31, 2007. "1st Capital Bank continues to work diligently to build a strong balance sheet and a safe and financially sound bank. This can be seen by its continued strong organic loan and deposit growth," said Fred Rowden, President and CEO of 1st Capital Bank. "A financially sound 1st Capital Bank serving the needs of the community is a win-win for the Bank and the Monterey Peninsula and Salinas Valley communities it serves. Each of 1st Capital Bank's local customers and shareholders is an asset that contributes to its success, and 1st Capital Bank will continue to looks for ways to serve their needs," said Mr. Rowden. Mr. Rowden went on to say, "There are many reports of turmoil in the financial markets resulting from so called 'sub-prime' loans. 1st Capital Bank has focused on building strong relationships in the local community and has not participated in the type of lending that has contributed to the issues surrounding sub-prime lenders. Further, at June 30, 2008, the Bank did not have any nonperforming or restructured loans. 1st Capital Bank is carefully managing the Bank's development through these difficult times, including managing the types of lending and growth in loans, developing strong, organic deposit growth and other sources of liquidity, and maintaining capital reserves well in excess of regulatory minimum requirements. Based on these strengths, we believe 1st Capital Bank is well positioned to pursue its goal of developing a safe and financially sound bank with which depositors and customers can confidently conduct their banking business." Financial Summary: Net interest income for the second quarter of 2008 was $874,000, an increase of $91,000 (12%) over the quarter ended March 31, 2008. Interest income for the second quarter of 2008 was $1,225,000, an increase of $128,000 (12%) from the first quarter of 2008. Average earning assets in the second quarter of 2008 were $91,938,000 compared to $77,565,000 in the first quarter of 2008. Interest expense in the second quarter of 2008 was $351,000, an increase of $37,000 (12%) over the quarter ended March 31, 2008. Average interest bearing liabilities in the second quarter of 2008 were $47,729,000 compared to $35,892,000 in the first quarter of 2008. The net interest margin for the second quarter of 2008 was 3.8% compared to 4.0% for the first quarter of 2008. The negative effect on net interest income and net interest margin of the 225 basis point reduction by the Federal Reserve Bank of key interest rates during the first two quarters of 2008 was offset by the growth of, and changes in the composition of, 1st Capital Bank's earning assets and deposit liabilities, with most of that offset coming from the growth in the loan portfolio. The net interest margin for the first six months of 2008 was 3.9% compared to 4.5% for the last six months of 2007. In addition to the effect of a reduction of key interest rates by the Federal Reserve Bank during these periods, the net interest margin decreased as the bank's balance sheet grew and the bank began to rely less on capital and more on interest bearing liabilities as a source of funding for its loans and investments. In response to continuing significant growth in its loans, 1st Capital Bank provided $280,000 for loan losses in the second quarter of 2008 compared to $368,000 in the quarter ended March 31, 2008. The ratio of the allowance for loan losses to total loans outstanding was 1.50% at June 30, 2008 compared to 1.56% at March 31, 2008 and 1.63% at December 31, 2007. At June 30, 2008, there were no nonperforming or restructured loans and the Bank did not have any other real estate owned. Noninterest income decreased $4,000 (22%) to $14,000 in the second quarter of 2008 as compared to the quarter ended March 31, 2008 largely due to fluctuations in customer transactions. Noninterest expenses increased $156,000 (14%) to $1,279,000 in the second quarter of 2008 as compared to the quarter ended March 31, 2008 primarily due to increased benefit and depreciation expenses, and to fluctuations in audit, insurance, shareholder, donation and community event expenses. Noninterest expense increased $120,000 (5%) in the first six months of 2008 compared to the last six months of 2007. The majority of this increase was due to changes in staffing between the two periods. Included in noninterest expenses were stock-based compensation expenses related to previously granted stock options of $119,000 per quarter for both the first and second quarter of 2008. 1st Capital Bank operates two branch offices in Monterey County, which are located in the historic Estrada Adobe at 470 Tyler Street, Monterey, and in a recently expanded location at 1097 South Main Street, Salinas. 1st Capital Bank also operates a loan production office in King City. The experienced bankers at 1st 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 http://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. 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, and 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. 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. DATASOURCE: 1st Capital Bank CONTACT: Jayme Fields, CFO of 1st Capital Bank, +1-831-264-4011 Web site: http://www.1stcapitalbank.com/

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