Non-interest income increased from $37 thousand during the three months ended March 31, 2012 to $64 thousand during the three months ended March 31, 2013. The majority of this increase was due to the dividend income received on the BOLI assets purchased during the third quarter of 2012. In regards to fee income, Jayme Fields, the Bank's Chief Financial Officer, stated: "We are aiming to increase the percentage of total revenue comprised of fee income. This objective is particularly important during the current extended period of historically low interest rates. The Bank is implementing a revised fee and service charge schedule effective May 1, 2013. This schedule includes some new fees as well as increases to certain existing fees for the many services the Bank provides."
Non-interest expense totaled $2.2 million during both the first quarter of 2012 and the first quarter of 2013. Non-interest expense during the fourth quarter of 2012 (the immediately preceding quarter) was $2.3 million.
Salaries and benefits costs were consistent at approximately $1.3 million during the first quarter of 2012, the fourth quarter of 2012, and the first quarter of 2013, despite the Bank's having seven more full-time equivalent employees at March 31, 2013 versus a year earlier. The Bank redesigned its health and welfare benefits effective January 1, 2013 to both provide good relative value to its employees and control related expenses. In addition, because of the greater number of loans funded or renewed during the first quarter of 2013 versus the first quarter of 2012, capitalized loan origination costs (recorded as a reduction in salaries and benefits expenses) were greater during the 2013 period.
Occupancy expenses increased from $177 thousand during the first quarter of 2012 to $193 thousand during the first quarter of 2013 primarily due to the incremental costs associated with the new location for the Monterey Branch, which opened in March 2012.
The Bank's efficiency ratio (operating costs compared to income from operations) improved to 70.30% for the first quarter of 2013 from 79.05% for the first quarter of 2012. The Bank's efficiency ratio for the full year of 2012 was 68.74%, with that figure benefiting from $699 thousand in tax-free BOLI benefits.
Daniel Hightower, the Bank's Vice Chairman of the Board, commented: "The Board of Directors remains strongly focused on the generation of shareholder value. For 2013, we implemented an employee incentive compensation plan that incorporates the Bank's performance across eleven key metrics that closely align with shareholder value. In addition, the Board of Directors has adopted a 2013 strategic plan that seeks to enhance core earnings and the value of our franchise. We very much appreciate the longstanding support of our shareholders, a great many of whom are also clients of the Bank."
About 1st Capital Bank
The Bank's target markets are commercial enterprises, professionals, real estate investors, family business entities, and residents in Monterey County. The Bank provides a wide range of credit products, including loans under various government programs such as those provided through the U.S. Small Business Administration ("SBA") and the U.S. Department of Agriculture ("USDA"). A full suite of deposits accounts are also furnished, complemented by robust cash management services. The Bank operates full services branch offices in Monterey, Salinas, and King City. The Bank's corporate offices are located at 5 Harris Court, Building N, Suite 3, Monterey, California 93940. The Bank's website is www.1stcapitalbank.com and the main telephone number is 831.264.4000.
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