Strong earnings momentum on the back of impressive second
quarter results, including a 25% earnings surprise, helped
First California Financial Group, Inc.
) achieve a Zacks #1 Rank (Strong Buy) on September 8. Moreover,
this regional bank has surpassed the Zacks Consensus Estimate in
six of the last ten quarters while matching it in one quarter. The
average surprise for the period was 148.7%.
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With a solid year-to-date return of 100.9% and a history of beating
the quarterly earnings estimates, this stock offers an attractive
The Rank Driver
Better-than-expected second-quarter earnings, loan growth as well
as fundamental strength - including strong credit quality and
capital ratios - are the primary rank drivers for this stock.
First California reported its second-quarter results on July 26
with earnings per share of 10 cents, beating the Zacks Consensus
Estimate of 8 cents by 25.0% and year-ago earnings of 7 cents by
42.9%. Strong results for the quarter were primarily aided by
higher non-interest and interest income. However, a hike in
non-interest expenses was the downside.
Net interest income increased 11.2% to $17.2 billion from $15.5
million in the year-ago quarter. The improvement was primarily due
to a surge in average earning assets and increase in the net
interest margin (NIM). Non-interest income increased 5.6% year over
year to $3.4 million.
Non-interest expense increased 5.5% from the year-ago period to
$14.8 million. Provision for loan losses remained unchanged
compared with the year-ago quarter at $0.5 million.
Credit quality continued to improve. As of June 30, 2012, allowance
for loan losses was 1.76% of total loans, down 23 basis points from
1.99% as of June 30, 2011. Net charge-offs for the quarter were
$0.3 million compared with $0.9 million in the year-ago
As of June 30, 2012, North Valley's total risk-based capital ratio
was 16.93% and Tier 1 leverage ratio was 9.99%. Tangible book value
per share came in at $4.51 versus $4.11 in the year-ago quarter.
Earnings Estimate Revisions
For 2012, the Zacks Consensus Estimate advanced 16.7% to 42 cents
per share in the past 60 days. This implies a year-over-year growth
of about 797.2%. For 2013, the Zacks Consensus Estimate jumped
12.8% over the same period. This represents an increase of 27.5%
compared with the prior year.
First California currently trades at a forward P/E of 16.6x, a
10.7% premium to the peer group average of 15.0x. However, on a
price-to-book basis, the shares are trading at 0.99x, a discount of
18.9% to the peer group average of 1.22x.
First California has a trailing 12-month ROE of 5.0% compared with
the peer group average of 9.3%.
About the Company
Headquartered in Westlake Village, California, First California
Financial is a bank holding company operating 19 commercial banking
offices through its subsidiary - First California Bank. It offers a
wide range of consumer and business banking deposit products and
services to individuals and small and middle sized businesses.
Founded in 1979, the company has a market capitalization of roughly
Other Zacks #1 Rank bank stocks include
BofI Holding Inc.