GLEN ALLEN, Va., April 23 /PRNewswire-FirstCall/ -- First Capital Bancorp,Inc. (the 'Company') (Nasdaq: FCVA) announced today that quarterly earningswere $415 thousand or $0.14 per diluted share, for the three months endedMarch 31, 2008, representing a 18.6% increase over earnings of $350 thousand,or $0.19 per diluted share, for the three months ended March 31, 2007.
During the first quarter of 2008, the financial markets continued toexperience significant turmoil, primarily resulting from the problems in thesub prime mortgage market and illiquidity in the financial markets. TheCompany has no exposure to the sub prime market as it neither owns nororiginates any sub prime mortgage instruments. The continued turmoil resultedin the Federal Reserve's decision to lower short-term interest rates by 200basis points during the three months ended March 31, 2008 after loweringshort-term rates by 50 basis points both in the third and fourth quarter of2007. This resulted in the prime rate decreasing 200 basis points in thefirst quarter of 2008 to 5.25% at March 31, 2008 from 7.25% at December 31,2007.
This decrease in short-term rates negatively impacted the Company as asignificant portion of our loan portfolio has interest rates that adjustaccording to the direction of short-term rates. The reduction in short-terminterest rates also reduces the rates we pay on deposits, although thereduction in interest rates paid on deposits will be slower than the reductionof interest rates on loans, as deposits generally do not reprice as quickly asloans. Consequently, our net interest margin decreased 53 basis points to3.16% for the first quarter of 2008, down from 3.69% for the fourth quarter of2007.
Net loans outstanding increased $20.5 million, or 6.9%, in the firstquarter of 2008 compared to $11.6 million, or 5.7%, for the first three monthsof 2007. Net loans outstanding before allowance for loan losses were $317.2million. The allowance for loan losses stood at $2.8 million representing.89% of loans outstanding, up from .84% at December 31, 2007. Nonaccrualloans totaled $58 thousand at March 31, 2008 and loans delinquent 30 to 89days totaled $58 thousand. For the first three months of 2007, nonaccrualloans totaled $120 thousand with no loans 30 or more days delinquent. Theprovision for loan losses for the three months ended March 31, 2008 was $325thousand as compared to $122 thousand for the same period in 2007. Whiledelinquencies have not materialized, the Company's watch list has increaseddue to a slow down in the real estate market, as well as a weaker economy.
Net interest income for the three months ended March 31, 2008 was $2.8million, an increase of $737 thousand, or 35.7%, over net interest income of$2.1 million for the same period in 2007.
