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1st Enterprise Bank Announces Net Income of $3.7 Million for 2012, an Increase of 18% Over 2011

LOS ANGELES, CA -- (Marketwire) -- 01/31/13 -- 1st Enterprise Bank ("the Bank") (OTCBB: FENB), an independent full-service commercial bank serving the Southern California business community, announced full year net income of $3.7 million for 2012, an 18% increase over 2011.

Financial Highlights

  • Net income for 2012 was $3,732,000, an 18% increase over 2011 net income of $3,152,000
  • Diluted earnings per common share were $.98 for 2012, compared to $.85 in 2011
  • Net income was $1,230,000 for the fourth quarter of 2012, a 28% increase over the fourth quarter of 2011 and a 90% increase over the third quarter of 2012
  • Diluted earnings per common share were $.29 for the fourth quarter, compared to $.32 for the fourth quarter of 2011 and $.15 for the third quarter of 2012
  • Total Assets grew by 25% in 2012, ending the year at $706 million
  • Total Loans outstanding grew by 40% in 2012, ending the year at $409 million
  • Total Deposits grew by 23% in 2012, ending the year at $612 million
  • The Bank continues to be well capitalized with a Tier 1 Leverage Ratio of 9.4% and Total Risk Based Capital Ratio of 13.2%

John Black, CEO, stated, "We are pleased to announce that 1st Enterprise Bank achieved record full year earnings of $3.7 million in 2012 and record quarterly earnings of $1.2 million in the fourth quarter. The Bank continued to generate strong growth in both loans and deposits, as loans grew by an annualized rate of 29% and deposits grew by 14%, during the fourth quarter of 2012. Net interest income continued to grow, as reflected in the 25% increase over the prior year. Excluding gain on the sale of securities, the Bank grew non-interest income by 42%. In addition to our strong financial performance during 2012, we also were successful in adding five highly experienced bankers to our team. They included two experienced commercial relationship managers that will open and lead our new San Fernando regional loan production office opening in March of this year."

Net interest income before provision was $18.9 million in 2012, a $3.9 million or 26% increase over the prior year. The growth in net interest income was the result of both growth in earning assets and an increase in net interest margin. Earning assets grew by $93 million or 19% over 2011. Net interest margin increased from 3.03% in 2011 to 3.23% in 2012, as a result of both an increase in the earning asset yield and a decrease in the Bank's cost of funds. The provision for loan loss was $1,508,000 in 2012, a $373,000 increase over 2011. Net loan charge-offs for 2012 and for the fourth quarter totaled $598,000 and non-accrual loans totaled $471,000 at December 31, 2012. "While we were disappointed to have experienced our first charge-off and non-accrual loans (all related to the same borrower), these levels are still far below industry averages, as reflected in the net charge-off ratio of 0.17% for all of 2012 and a non-performing asset ratio of 0.44% at year end," stated Mr. Black.

Non-interest income, excluding gain on sale of securities was $3.1 million in 2012, an increase of more than $900,000 or 42% over 2011. Gain on sale of securities was approximately $900,000 in 2012, a 24% decline from the $1.2 million in gains recorded in 2011.

Non-interest expense grew by $3 million over 2011 to $16 million for 2012. The majority of this growth was attributable to increased staff and benefit expense as the Bank continued to expand its staffing levels to maintain high levels of customer service and to accommodate continued growth in the coming years.

For the three months ended December 31, 2012, net interest income before provision was $5.1 million, an increase of more than $1 million or 25% compared to the fourth quarter of 2011 and an increase of more than $300,000 or 6% compared to the third quarter of 2012. The growth in net interest income was the result of both growth in earning assets and an increase in net interest margin. Average earning assets were $649 million in the fourth quarter of 2012, a 22% increase over the prior year and a 4% increase from the prior quarter. Net interest margin was 3.13% for the fourth quarter, compared to 3.04% and 3.08% for the prior year and prior quarter, respectively. The increase in net interest margin resulted from both an increase in the earning asset yield and a decrease in the Bank's cost of funds. The provision for loan loss was $513,000 in the fourth quarter of 2012 compared to $565,000 in the fourth quarter of 2011 and $745,000 in the third quarter of 2012.

Non-interest income was $1.4 million in the fourth quarter of 2012, including gains on sale of securities of $629,000. Excluding the gains, non-interest income declined by $36,000 and $194,000 over the prior year and prior quarter, respectively. Non-interest expense in the fourth quarter of 2012 grew by more than $800,000 or 26% over 2011, but grew by only 2% over the third quarter of 2012.

Brian Horton, President, concluded, "We are very pleased with these results and the Bank's ability to successfully navigate the economic headwinds that we have faced the last five years. We want to thank our loyal staff for their efforts and our loyal customers, because they are the drivers of our success."

About 1st Enterprise Bank
Founded in 2006, 1st Enterprise Bank is a full service commercial banking institution, whose highly experienced bankers personally serve Southern California entrepreneurial businesses, professional firms and nonprofit organizations, along with their owners and key managers. Headquartered in the Los Angeles financial district, with full service regional banking offices in Irvine and Ontario, 1st Enterprise Bank offers a full range of credit and depository services, with special emphasis on superior customer service, sophisticated cash management services and direct access to bank decision makers. Customers work directly with a dedicated Relationship Manager, a seasoned professional who understands their unique challenges serving as a sounding board and an active participant in their client's success. For more information on 1st Enterprise Bank, please visit www.1stenterprisebank.com.

Forward-Looking Statement:
This news release contains statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, estimates and projections about 1st Enterprise Bank's business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including those described above and the following: 1st Enterprise Bank's timely implementation of new products and services, technological changes, changes in consumer spending and savings habits and other risks discussed from time to time in 1st Enterprise Bank's reports and filings with banking regulatory agencies. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic and international economic conditions. Such forward-looking statements speak only as of the date on which they are made, and 1st Enterprise Bank does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release.



1st Enterprise Bank
Condensed Statements of Financial Condition
$000

                                       Unaudited    Unaudited     Audited
                                      -----------  -----------  -----------
Assets                                 12/31/2012   9/30/2012    12/31/2011
                                      -----------  -----------  -----------
  Cash and due from banks             $    14,520  $    21,058       17,344
  Interest earning deposits in other
   banks                                   23,386       15,357        8,389
                                      -----------  -----------  -----------
    Total cash and cash equivalents        37,906       36,415       25,733

  Certificates of deposit in other
   banks                                    2,490          498        5,522
  Investment securities - available-
   for-sale                               180,491      167,518      173,155
  Investment securities - held-to-
   maturity                                56,026       56,114       53,127
  Loans, net of deferred loan fees        408,767      381,307      292,587
  Allowance for loan losses                (5,510)      (5,595)      (4,600)
                                      -----------  -----------  -----------
  Loans, net of allowance for loan
   losses                                 403,257      375,712      287,987
  Bank owned life insurance                13,389       13,276       10,462
  Premises and equipment, net               2,256        2,274        2,464
  Accrued interest receivable and
   other assets                            10,323       10,022        8,611
                                      -----------  -----------  -----------
    Total Assets                      $   706,138  $   661,829  $   567,061
                                      ===========  ===========  ===========

Liabilities
  Non-interest-bearing demand
   deposits                           $   286,800  $   273,197  $   215,355
  Interest bearing transaction
   accounts                                39,428       43,884       37,075
  Money market and savings accounts       274,088      264,056      233,537
  Time deposits                            11,784       10,739       10,976
                                      -----------  -----------  -----------
    Total Deposits                        612,100      591,876      496,943
  Federal Home Loan Bank Borrowings        24,000            -       17,000
  Other liabilities                         4,647        4,913        2,881
                                      -----------  -----------  -----------
    Total Liabilities                     640,747      596,789      516,824

Shareholders' Equity
  Serial Preferred Stock                   16,380       16,380       16,380
  Common Stock                             43,034       43,008       30,958
  Retained Earnings                         4,942        3,752        1,374
  Accumulated other comprehensive
   income                                   1,035        1,900        1,525
                                      -----------  -----------  -----------
    Total Shareholders' Equity             65,391       65,040       50,237
                                      -----------  -----------  -----------

Total Liabilities and Shareholders'
 Equity                               $   706,138  $   661,829  $   567,061
                                      ===========  ===========  ===========



1st Enterprise Bank
Condensed Statements of Operations
$000
                                                    For the Years Ended
                                               ----------------------------
                                                 Unaudited       Audited
                                               -------------  -------------
                                                 12/31/2012     12/31/2011
                                               -------------  -------------
Interest Income
  Interest and fees on loans                   $      15,355  $      11,536
  Interest on investment securities                    4,141          4,423
  Other interest income                                   90            149
                                               -------------  -------------
    Total interest income                             19,586         16,108
Interest Expense                                         723          1,120
                                               -------------  -------------
Net Interest Income                                   18,862         14,988

Provision for loan losses                              1,508          1,135
                                               -------------  -------------

Net Interest Income After Provision for Loan
 Losses                                               17,355         13,853

Non-interest Income
Service charges, fees and other income                 3,138          2,210
Gain on sale of investment sercurities                   899          1,177
                                               -------------  -------------
    Total non-interest Income                          4,037          3,387

Non-interest Expenses
  Compensation and benefit expenses                    9,663          7,513
  Occupancy and equipment expenses                     1,443          1,325
  Data processing                                      1,007            818
  Professional and legal                               1,269          1,226
  Other operating expenses                             2,683          2,138
                                               -------------  -------------
    Total non-interest expense                        16,065         13,020

Income Before Income Taxes                             5,327          4,220
                                               -------------  -------------

Provision for income taxes                             1,595          1,067
                                               -------------  -------------

Net Income                                     $       3,732  $       3,152
                                               =============  =============

Preferred dividends & Warrant amortization               164            655
                                               -------------  -------------

Net Income Applicable to Common Shareholders   $       3,568  $       2,497
                                               =============  =============

Earnings Per Share
Basic earnings per share                       $        1.04  $        0.89

Diluted earnings per share                     $        0.98  $        0.85

Average shares outstanding                         3,431,886      2,818,497

Average fully diluted shares                       3,622,251      2,951,985

Total Shares outstanding at end of period          3,815,089      2,848,500

Capital Ratios
Tier 1 leverage ratio                                    9.4%           8.5%

Tier 1 risk-based capital ratio                         12.1%          12.0%

Total risk-based capital ratio                          13.2%          13.2%

Book value per share                           $       12.85  $       11.89

Performance Ratios
Return on average assets                                0.60%          0.59%

Return on average common equity                         8.17%          7.62%

Net interest margin                                     3.23%          3.03%

Cost of Funds                                           0.13%          0.23%

Efficiency ratio                                       70.16%         70.86%

Average Balances
Total Assets                                   $     626,527  $     534,397

Earning Assets                                       584,500        491,909

Total Loans                                          343,601        245,632

Total Securities                                     212,171        229,754

Total Deposits                                       560,741        484,172

Common Equity                                         43,677         32,774



1st Enterprise Bank
Condensed Statements of Operations
$000
                                                Three Months Ended
                                      -------------------------------------
                                                    Unaudited
                                      -------------------------------------
                                       12/31/2012   9/30/2012    12/31/2011
                                      -----------  -----------  -----------
Interest Income
  Interest and fees on loans          $     4,291  $     3,957  $     3,150
  Interest on investment securities           963          987        1,136
  Other interest income                        23           35           18
                                      -----------  -----------  -----------
    Total interest income                   5,277        4,979        4,304
Interest Expense                              174          179          231
                                      -----------  -----------  -----------
Net Interest Income                         5,103        4,800        4,073

Provision for loan losses                     513          745          565
                                      -----------  -----------  -----------

Net Interest Income After Provision
 for Loan Losses                            4,590        4,055        3,508

Non-interest Income
Service charges, fees and other
 income                                       733          927          769
Gain on sale of investment
 sercurities                                  629           18            0
                                      -----------  -----------  -----------
    Total non-interest Income               1,362          945          769

Non-interest Expenses
  Compensation and benefit expenses         2,543        2,341        1,912
  Occupancy and equipment expenses            364          359          352
  Data processing                             268          278          222
  Professional and legal                      318          417          368
  Other operating expenses                    679          683          451
                                      -----------  -----------  -----------
    Total non-interest expense              4,172        4,078        3,305

Income Before Income Taxes                  1,781          922          972
                                      -----------  -----------  -----------

Provision for income taxes                    550          273           11
                                      -----------  -----------  -----------

Net Income                            $     1,230  $       649  $       961
                                      ===========  ===========  ===========

Preferred dividends & Warrant
 amortization                                  41           41           41
                                      -----------  -----------  -----------

Net Income Applicable to Common
 Shareholders                         $     1,189  $       608  $       920
                                      ===========  ===========  ===========

Earnings Per Share
Basic earnings per share              $      0.31  $      0.16  $      0.33

Diluted earnings per share            $      0.29  $      0.15  $      0.32

Average shares outstanding              3,791,905    3,790,359    2,818,500

Average fully diluted shares            4,039,003    4,002,707    2,843,250

Total Shares outstanding at end of
 period                                 3,815,089    3,814,539    2,848,500

Capital Ratios
Tier 1 leverage ratio                         9.4%         9.6%         8.5%

Tier 1 risk-based capital ratio              12.1%        12.1%        12.0%

Total risk-based capital ratio               13.2%        13.3%        13.2%

Book value per share                  $     12.85  $     12.76  $     11.89

Performance Ratios
Return on average assets                     0.71%        0.39%        0.66%

Return on average common equity              9.56%        4.97%       10.85%

Net interest margin                          3.13%        3.08%        3.04%

Cost of Funds                                0.11%        0.12%        0.18%

Efficiency ratio                            70.16%       72.37%       70.86%

Average Balances
Total Assets                          $   689,361  $   660,792  $   575,479

Earning Assets                            648,523      620,656      531,685

Total Loans                               389,321      356,425      268,464

Total Securities                          222,696      210,271      242,694

Total Deposits                            617,678      591,691      521,104

Common Equity                              49,473       48,692       33,652

Contact:
John C. Black
CEO
213-430-7000

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