Emerging Ideas: FISB-1st Capital Bank

Emerging Ideas – FISB in CA- FIG Partners-5.28.15

FISB-1st Capital Bank is an eight year-old community bank serving the Monterey County market in California.  The bank has three branches in Monterey, Salinas and King City.  FISB plans to open a fourth branch in San Luis Obispo in 2Q-15.  The bank’s markets include the very affluent along the coast (such as Carmel and Pebble Beach) as well as the vibrant Salinas Valley (which produces $4 Billion in agriculture revenue annually).

  • Largest commercial bank headquartered in Monterey Bay Area.  Targets affluent business owners along the coast and companies serving the $4 Bil agriculture industry in Salinas Valley.
  • Organic loan growth annual run-rate of 20% with total loan portfolio concentrated in CRE-Commercial Real Estate (44%) and C&I-Commercial & Industrial (13%).
  • Management uses purchased pools of hybrid adjustable mortgages ($79 Million purchased since 1Q-14) as investment strategy, not lending strategy.  Securities portfolio is 99.5% variable rate.
  • Non-interest bearing deposits are ~40% with cost of deposits at 0.15%.
  • NPAs were $1.9 Mil, or 55bps of Loans+OREO, with reserves at 1.59% of loans.

Please see our report for more information.