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On Aug 13, Zacks Investment Research upgraded 1st Century Bancshares, Inc. (FCTY - Snapshot Report) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

1st Century Bancshares has been witnessing rising earnings estimates following the announcement of strong second-quarter 2013 results. Moreover, this regional bank has delivered earnings surprises in the last 4 quarters, with an average beat of 41.8%.

1st Century Bancshares reported second-quarter 2013 results on Aug 7. Earnings per share of 49 cents surpassed the Zacks Consensus Estimate by 69.0%. The better-than-expected results benefited from top-line growth, partially offset by a rise in operating expenses.

Net interest income grew 14.3% year over year to $3.9 million. Moreover, non-interest income jumped 71.1% to $0.8 million. On the flip side, non-interest expense rose 13.5% from the prior year quarter to $3.5 million.

Further, as of Jun 30, 2013, total loans surged 32.2% year over year to $312.3 million. Likewise, total deposits increased 7.1% to $406.9 million.

Moreover, asset quality depicted a mixed bag. Allowance for loan losses were $6.6 million, up 36.0% from the prior-year quarter. However, nonperforming assets declined 82.3% to $1.2 million.

Additionally, following the earnings release, the Zacks Consensus Estimate for 2013 increased by a penny to 85 cents per share over the last 30 days. Similarly, for 2014, the Zacks Consensus Estimate advanced by a penny to 39 cents per share over the same time period.

Positive earnings surprises and favorable estimate revisions stimulated the rank upgrade.

Other Stocks to Consider

While we prefer 1st Century Bancshares, other stocks carrying a Zacks Rank #1 include Pulaski Financial Corporation (PULB - Snapshot Report), Washington Federal Inc. (WAFD - Analyst Report) and Banner Corporation (BANR - Snapshot Report).

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