First Business Financial Services, Inc. (the "Company")
(Nasdaq:FBIZ), the parent company of First Business Bank and First
Business Bank - Milwaukee, today reported strong fourth quarter and
record full year earnings, reflecting successful execution on
initiatives to grow loans and in-market deposits, invest in
fee-generating capabilities and improve asset quality.
Highlights for the quarter and full year ended December 31, 2012
include:
- The successful public offering of $29.1 million in common
equity closed in December 2012 at $23.00 per share, nearly 40%
higher than 2011's closing stock price of $16.50 per share.
- Net income for the fourth quarter of 2012 was a strong $2.5
million, representing a 6% increase from the $2.4 million earned in
the fourth quarter of 2011.
- Net income for the full year ended December 31, 2012 was a
record $8.9 million, 6% higher than the previous record of $8.4
million earned for the full year ended December 31, 2011. Net
income for the full year 2011 had also included a substantial
one-time tax benefit relating to a change in Wisconsin tax
law.
- Core earnings, defined as pre-tax income excluding the effects
of provision for loan and lease losses, other identifiable costs of
credit and other discrete items unrelated to the Company's core
business activities, grew 4% to a record $5.0 million for the
fourth quarter of 2012, compared to $4.8 million recorded in the
fourth quarter of 2011. Record core earnings of $18.5 million for
the full year of 2012 grew 12% from the prior year.
- Annualized return on average assets and return on average
equity were 0.84% and 12.88%, respectively, for the quarter ended
December 31, 2012, compared to 0.82% and 15.02% for the same period
in 2011. Return on average assets and return on average equity for
the full year ended December 31, 2012 were 0.75% and 12.65%
respectively, compared to 0.75% and 14.03% in 2011. Returns for the
full year 2011 benefited from the substantial one-time tax benefit
relating to a change in Wisconsin tax law.
- Top line revenue, consisting of net interest income and
non-interest income, increased 12% to a record $12.1 million for
the quarter ended December 31, 2012, compared to $10.8 million for
the prior year quarter. Top line revenue of $46.6 million for the
full year 2012 grew 10% compared to 2011.
- Average in-market deposits of $649.0 million for the full year
2012 grew 25%, increasing to 61.8% of total deposits, compared to
$519.3 million, or 51.6% of total deposits, for the full year of
2011.
- Net loans and leases at December 31, 2012 increased
$33.1 million or an annualized 15% from September 30,
2012 to $896.6 million as of December 31,
2012.
- Net interest margin was 3.36% for the full year of 2012,
improving seven basis points compared to the full year of
2011.
- Non-performing assets of $15.7 million at December 31,
2012 decreased by $8.3 million, or 35%, from December 31,
2011. Non-performing assets now measure 1.28% of total assets,
compared to 2.04% at December 31, 2011.
The Company recorded net income of $2.5 million in the fourth
quarter 2012, an increase of 6.1% compared to net income of $2.4
million earned in the fourth quarter of 2011. Diluted earnings
per common share were $0.86 for the fourth quarter of 2012 compared
to $0.90 for the 2011 period. Diluted earnings per common
share for the fourth quarter of 2012 reflect the issuance of
1,265,000 shares of common stock in December
2012. Weighted-average diluted common shares outstanding
during the fourth quarter of 2012 were higher than the prior year
quarter by approximately 318,000, or 12.6%, primarily causing the
slight decrease in the fourth quarter diluted earnings per common
share, despite overall earnings growth.
The Company earned record net income of $8.9 million for the
full year ended December 31, 2012, representing an increase of
5.9% from $8.4 million earned in the full year ended
December 31, 2011. Diluted earnings per common share were
$3.29 for the full year 2012 compared to $3.23 earned in the prior
year. Diluted earnings per share for the full year 2011 had
also included a substantial one-time tax benefit relating to a
change in Wisconsin tax law.
"In 2012 First Business again delivered record full year
earnings, achieving best-ever results across each of our primary
revenue sources and driving substantial improvement in asset
quality," said Corey A. Chambas, President and Chief Executive
Officer. "Our talented team coupled with our many strategic
new hires delivered impressive loan and revenue production during
the year, growing net loan balances over 7% and top line revenue
nearly 10%. Perhaps most notably, we believe the successful
public offering of $29.1 million of FBIZ common stock has
positioned us to take advantage of continued market disruption in
Wisconsin, accelerating our growth potential in 2013 and
beyond."
Successful Capital Raise
In December 2012, the Company successfully raised approximately
$29.1 million through the issuance of 1,265,000 shares of common
stock at a price of $23.00 per share. The net proceeds of the
offering, approximately $27.1 million, were immediately used to
repay a portion of subordinated debt, lowering the Company's future
interest expense and strengthening its capital ratios. The
Company expects the net proceeds to ultimately support its future
growth plans, including accelerated investment in organic growth
and the potential for future acquisitions of niche talent and
organizations.
Core Business Results
Net interest income increased $527,000, or 5.9%, to $9.4 million
in the fourth quarter of 2012 compared to $8.9 million for the
fourth quarter of 2011. More than offsetting the
year-over-year decline in interest income attributed to higher
asset balances with lower yields in the sustained low-rate
environment, interest expense for the fourth quarter of 2012
decreased $1.2 million, or 24.7%, to $3.7 million. The decline
in interest expense is primarily due to reduced interest expense on
other borrowings due to the substantial pay-down of subordinated
debt from the common stock offering net proceeds, along with lower
deposit funding costs due to continued success of the Company's
initiative to attract in-market deposits through new business
relationships and increase client deposit balances. In-market
client deposits - comprised of all transaction accounts, money
market accounts, and non-brokered certificates of deposit - grew
18.7% to $717.9 million at December 31, 2012 from $604.6
million at December 31, 2011. Correspondingly, the
Company also continued to reduce its overall reliance on
higher-cost brokered certificates of deposit by $72.3 million, or
16.2%, lowering balances to $374.4 million at December 31,
2012. The improvement in funding costs and lesser decline in
earning asset yields resulted in the widening of the net interest
margin by eight basis points to 3.31% in the fourth quarter of
2012, compared to 3.23% in the fourth quarter of 2011. The
Company's net interest margin of 3.31% declined compared to the
linked third quarter of 2012 primarily due to fewer exits from
lending relationships in the fourth quarter, resulting in lower
pre-payment fees collected in lieu of interest, which had benefited
prior quarters' net interest income. Additionally, lower
average yields on commercial and industrial loans in the fourth
quarter of 2012 also reflected new originations booked at lower
yields than exiting relationships.
Net interest income for the full year ended December 31,
2012 increased $2.4 million, or 6.8%, to a record $37.9 million,
compared to $35.5 million generated during the full year of
2011. The Company's success in growing and rebalancing its
deposit portfolio in 2012 drove a reduction in the overall cost of
funds which offset the effects of declines in the weighted average
yield of the securities portfolio. Overall this benefited net
interest margin, which increased seven basis points to 3.36% for
the full year 2012 compared to 2011.
Non-interest income increased $780,000, or 40.7%, to a record
$2.7 million for the fourth quarter of 2012, compared with the
fourth quarter of 2011. Improvement over the prior year reflects
substantial growth across each of the Company's primary fee income
sources, most notably loan fees, which grew $379,000, or 94.3%, to
a record $781,000 primarily due to the completion of a large loan
syndication during the quarter. Trust and investment services
income grew by $135,000, or 22.0%, to $749,000 for the fourth
quarter of 2012, reflecting an 18.4% increase in trust assets under
management and administration to $784.2 million at
December 31, 2012, compared to December 31, 2011. In
addition, service charges on deposits grew by $27,000, or 5.4%, to
$524,000, as continued success in acquiring new commercial
relationships drove increased deposit transaction
volume. Other income increased $239,000, or 59.3%, to $642,000
for the fourth quarter of 2012 compared to the same quarter of the
prior period. The increase in other income is primarily due to
an initial fair value recognition related to interest rate
swaps.
Similarly, non-interest income increased $1.6 million, or 23.2%,
to a record $8.7 million for the full year 2012, demonstrating
successful execution of the Company's strategic plan to grow top
line revenue in 2012. Early results of strategic investments
in additional talent were evident across each of the Company's
primary fee income sources. Loan fees grew by $545,000, or
36.8%, to $2.0 million for the full year 2012. The Company
experienced improved pricing and volumes of letters of credit and
other administrative loan fees during the year, while the
completion of a large loan syndication in the fourth quarter also
bolstered revenues. Success in attracting new trust
administration relationships drove trust and investment services
income to $2.9 million for the full year 2012, $395,000, or 15.6%,
higher than in 2011. In addition, continued success in
attracting new commercial relationships drove deposit service
charges up by $316,000, or 18.5%, to $2.0 million for the full year
of 2012.
Non-interest expense for the fourth quarter of 2012 was $7.4
million, an increase of $1.2 million, or 19.2%, compared to the
same quarter in 2011. Compensation expense grew $1.1 million,
or 30.9%, to $4.6 million, reflecting the Company's continued
investment in key talent in support of strategic initiatives as
well as increased accruals to record the appropriate level of
compensation expense associated with the Company's non-equity
incentive compensation program. A reduction in FDIC Insurance
expense of $399,000, or 68.2%, in the fourth quarter of 2012 helped
offset overall expense growth compared to the prior year
quarter. Other non-interest expense was $2.1 million, an
increase of $430,000, or 25.2%, compared to the same quarter of
2011. Most notably, marketing expense grew by $207,000 to
$379,000 as the Company continued to capitalize on market
disruption in Wisconsin. The Company's efficiency ratio
increased to 58.46% from 55.17% in the fourth quarter of 2011.
Non-interest expense for the full year 2012 increased by $2.3
million, or 8.6%, to $28.7 million as compared to the full year
2011. Compensation expense increased by $2.1 million, or
14.2%, to support strategic investments in additional talent along
with annual salary merit increases, increased accruals associated
with non-equity incentive compensation programs, and other
ancillary benefits. From December 2011 to December 2012 the
Company expanded its team of Business Development Officers by
nearly 30%, to 44. Additionally, other non-interest expense
increased. Specifically, marketing expense grew by $230,000,
or 23.1%, while real estate costs associated with the process of
exiting certain foreclosed properties increased by approximately
$269,000, or 84.1%. Overall expense growth was partially
offset by a decline in FDIC insurance costs of $754,000, or 30.3%,
primarily due to a change in the method of assessment. Expense
growth was appropriately aligned with the Company's growth in top
line revenue, thus aiding in the improvement of the efficiency
ratio to 60.27% for the full year 2012, 75 basis points lower than
the 61.02% reported for the full year 2011.
The provision for loan and lease losses for the fourth quarter
of 2012 was $844,000, representing a modest decrease of $6,000
compared to the linked third quarter of 2012 and a decrease of
9.9%, or $93,000, from the fourth quarter of 2011. Net
charge-offs for the fourth quarter of 2012 improved to $150,000,
compared to $962,000 for the third quarter of 2012 and $923,000 for
the fourth quarter of 2011. For the same periods, annualized
net charge-offs as a percentage of average loans and leases
measured 0.07%, 0.44% and 0.43%, respectively.
Provision for loan and lease losses totaled $4.2 million for the
full year ended December 31, 2012, essentially flat compared
to the prior year period. Net charge-offs for the full year
2012 fell by more than half to $3.0 million from $6.4 million in
the full year 2011. Annualized net charge-offs as a percentage
of average loans and leases improved to 0.35% for the full year
2012, compared to 0.74% for full year 2011.
Loans Grow To Record Levels While Asset Quality Remains
Strong
Net loans and leases reached a record $896.6 million at
December 31, 2012, growing $33.1 million, or 15.3% annualized,
from September 30, 2012. Growth reflected the combined
efforts of the strong existing business development team and the
Company's more recent additions of niche lending talent, coupled
with increased demand from new and existing quality clients, during
the quarter. Over the last year, net loan and lease balances
grew $59.9 million, or 7.2%, from $836.7 million at
December 31, 2011. At the same time, total assets of $1.2
billion grew $34.0 million, or 11.4% annualized, from
September 30, 2012 and grew $48.9 million, or 4.2%, from
December 31, 2011.
Asset quality continues to be a source of strength and
differentiation for the Company. The ratio of non-performing
assets to total assets remained strong at 1.28% at
December 31, 2012, modestly higher than 1.26% at
September 30, 2012. The same measure fell 76 basis points
from 2.04% at December 31, 2011. Non-performing assets
increased by $663,000, or 4.4%, from September 30, 2012 to
December 31, 2012, reflecting reductions offset by continued
additions of newly identified impaired loans and
leases. Non-performing assets decreased by $8.3 million, or
34.6%, from December 31, 2011 to December 31, 2012,
reflecting the success of certain exit strategies, including
payoffs, paydowns and charge-offs, as well as improved client
performance causing a return to accrual status. These
reductions were partially offset by continued additions of newly
identified impaired loans and leases. The Company's allowance for
loan and lease loss as a percentage of total loans and leases
measured 1.69% as of December 31, 2012, modestly higher
compared to 1.67% at September 30, 2012 and 1.66% at
December 31, 2011.
Capital Strength
The Company's earnings power continues to generate capital, and
its capital ratios are in excess of the highest required regulatory
benchmark levels. In addition, the common stock offering
completed in the fourth quarter of 2012 improved the composition of
the Company's capital by increasing Tier 1 capital in the form of
equity and allowing the Company to pay down Tier II capital
previously in the form of subordinated debt. Total capital to
risk-weighted assets was 12.97% as of December 31, 2012,
compared to 13.11% at December 31, 2011. Tier 1 capital
to risk-weighted assets was 10.54% as of December 31, 2012,
compared to 7.91% at December 31, 2011. Tier 1 capital to
average assets was 8.99%, as of December 31, 2012, compared to
6.22% as of December 31, 2011.
The Company is pleased to return a portion of the capital it
generates to shareholders. During the fourth quarter of 2012
the Company's Board of Directors approved a $0.07 quarterly cash
dividend on its common stock, which was paid on January 15,
2013 to shareholders of record at the close of business on
January 1, 2013. This maintained the Company's annualized
dividend at $0.28 per share, a level it has maintained for 20
consecutive quarters.
About First Business Financial Services, Inc.
First Business Financial Services (Nasdaq:FBIZ) is a $1.2
billion Wisconsin-based bank holding company that specializes in
focused financial solutions for businesses, key executives, and
high net worth individuals through its operating companies. It is
the second largest Wisconsin-based commercial bank holding company
listed on NASDAQ or the New York Stock Exchange. Its companies
include: First Business Bank - Madison; First Business Bank -
Milwaukee; First Business Bank - Northeast; First Business Trust
& Investments; First Business Equipment Finance, LLC; and First
Business Capital Corp. For additional information, visit
www.firstbusiness.com or call (608) 238-8008.
This press release includes "forward-looking" statements related
to First Business Financial Services, Inc. (the "Company") that can
generally be identified as describing the Company's future plans,
objectives or goals. Such forward-looking statements are subject to
risks and uncertainties that could cause actual results or outcomes
to differ materially from those currently anticipated. These
forward-looking statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
For further information about the factors that could affect the
Company's future results, please see the Company's annual report on
Form 10-K, quarterly reports on Form 10-Q and other filings with
the Securities and Exchange Commission.
The First Business Financial Services, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=2667
SELECTED FINANCIAL CONDITION DATA
(Unaudited) |
As
of |
|
December 31, |
September 30, |
June 30, |
March 31, |
December 31, |
(Dollars in Thousands) |
2012 |
2012 |
2012 |
2012 |
2011 |
ASSETS |
|
|
|
|
|
Cash and cash equivalents |
$ 85,586 |
$ 87,842 |
$ 78,369 |
$ 135,351 |
$ 130,093 |
Securities available-for-sale, at fair
value |
200,596 |
202,805 |
195,904 |
170,547 |
170,386 |
Loans and leases receivable |
911,960 |
878,192 |
862,529 |
831,748 |
850,842 |
Allowance for loan and lease losses |
(15,400) |
(14,706) |
(14,818) |
(14,451) |
(14,155) |
Loans and leases, net |
896,560 |
863,486 |
847,711 |
817,297 |
836,687 |
Leasehold improvements and equipment,
net |
968 |
965 |
1,030 |
1,035 |
999 |
Foreclosed properties |
1,574 |
2,187 |
1,937 |
2,590 |
2,236 |
Cash surrender value of bank-owned life
insurance |
22,272 |
18,068 |
18,006 |
17,830 |
17,660 |
Investment in FHLB stock, at cost |
1,144 |
1,144 |
1,519 |
1,748 |
2,367 |
Accrued interest receivable and other
assets |
17,408 |
15,638 |
15,550 |
15,647 |
16,737 |
Total assets |
$ 1,226,108 |
$ 1,192,135 |
$ 1,160,026 |
$ 1,162,045 |
$ 1,177,165 |
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
|
|
|
In-market deposits |
$ 717,869 |
$ 670,530 |
$ 632,699 |
$ 618,609 |
$ 604,647 |
Brokered CDs |
374,385 |
390,728 |
396,531 |
415,180 |
446,665 |
Total deposits |
1,092,254 |
1,061,258 |
1,029,230 |
1,033,789 |
1,051,312 |
Federal Home Loan Bank and other
borrowings |
12,405 |
39,482 |
42,396 |
41,498 |
40,292 |
Junior subordinated notes |
10,315 |
10,315 |
10,315 |
10,315 |
10,315 |
Accrued interest payable and other
liabilities |
11,595 |
10,531 |
10,319 |
10,009 |
11,032 |
Total liabilities |
1,126,569 |
1,121,586 |
1,092,260 |
1,095,611 |
1,112,951 |
Total stockholders' equity |
99,539 |
70,549 |
67,766 |
66,434 |
64,214 |
Total liabilities and
stockholders' equity |
$ 1,226,108 |
$ 1,192,135 |
$ 1,160,026 |
$ 1,162,045 |
$ 1,177,165 |
STATEMENTS OF INCOME
|
Three Months
Ended |
Year
Ended |
(Unaudited) |
December 31, |
September 30, |
June 30, |
March 31, |
December 31, |
December 31, |
December 31, |
(Dollars in Thousands, except per
share amounts) |
2012 |
2012 |
2012 |
2012 |
2011 |
2012 |
2011 |
Total interest income |
$ 13,158 |
$ 14,032 |
$ 13,943 |
$ 13,633 |
$ 13,854 |
$ 54,766 |
$ 56,217 |
Total interest expense |
3,727 |
4,117 |
4,334 |
4,707 |
4,950 |
16,885 |
20,756 |
Net interest income |
9,431 |
9,915 |
9,609 |
8,926 |
8,904 |
37,881 |
35,461 |
Provision for loan and lease losses |
844 |
850 |
2,045 |
504 |
937 |
4,243 |
4,250 |
Net interest income after provision for
loan and lease losses |
8,587 |
9,065 |
7,564 |
8,422 |
7,967 |
33,638 |
31,211 |
Trust and investment services fee income |
749 |
736 |
755 |
687 |
614 |
2,927 |
2,532 |
Service charges on deposits |
524 |
532 |
493 |
479 |
497 |
2,028 |
1,712 |
Loan fees |
781 |
502 |
345 |
398 |
402 |
2,026 |
1,481 |
Other |
642 |
479 |
311 |
286 |
403 |
1,718 |
1,335 |
Total non-interest income |
2,696 |
2,249 |
1,904 |
1,850 |
1,916 |
8,699 |
7,060 |
Compensation |
4,563 |
4,224 |
4,226 |
4,005 |
3,485 |
17,018 |
14,898 |
FDIC insurance |
186 |
426 |
533 |
587 |
585 |
1,732 |
2,486 |
Collateral liquidation costs |
204 |
264 |
79 |
108 |
212 |
655 |
786 |
Net loss (gain) on foreclosed properties |
357 |
(14) |
67 |
175 |
261 |
585 |
420 |
Other |
2,136 |
2,351 |
2,227 |
1,957 |
1,706 |
8,671 |
7,807 |
Total non-interest expense |
7,446 |
7,251 |
7,132 |
6,832 |
6,249 |
28,661 |
26,397 |
Income before tax expense |
3,837 |
4,063 |
2,336 |
3,440 |
3,634 |
13,676 |
11,874 |
Income tax expense |
1,308 |
1,441 |
771 |
1,230 |
1,250 |
4,750 |
3,449 |
Net income |
$ 2,529 |
$ 2,622 |
$ 1,565 |
$ 2,210 |
$ 2,384 |
$ 8,926 |
$ 8,425 |
Per common share: |
|
|
|
|
|
|
|
Basic earnings |
$ 0.86 |
$ 0.99 |
$ 0.60 |
$ 0.84 |
$ 0.90 |
$ 3.30 |
$ 3.23 |
Diluted earnings |
0.86 |
0.99 |
0.60 |
0.84 |
0.90 |
3.29 |
3.23 |
Dividends declared |
0.07 |
0.07 |
0.07 |
0.07 |
0.07 |
0.28 |
0.28 |
Book value |
25.41 |
26.56 |
25.77 |
25.31 |
24.46 |
25.41 |
24.46 |
Tangible book value |
25.41 |
26.56 |
25.77 |
25.31 |
24.46 |
25.41 |
24.46 |
SELECTED FINANCIAL RATIOS
|
Three Months
Ended |
Year
Ended |
(Unaudited) |
December 31, |
September 30, |
June 30, |
March 31, |
December 31, |
December 31, |
December 31, |
|
2012 |
2012 |
2012 |
2012 |
2011 |
2012 |
2011 |
Return on average assets |
0.84% |
0.88% |
0.54% |
0.74% |
0.82% |
0.75% |
0.75% |
Return on average equity |
12.88% |
15.10% |
9.16% |
13.43% |
15.02% |
12.65% |
14.03% |
Efficiency ratio |
58.46% |
59.73% |
61.37% |
61.78% |
55.17% |
60.27% |
61.02% |
Average interest-earning assets to average
interest- bearing liabilities |
119.30% |
116.34% |
116.67% |
115.08% |
115.47% |
116.84% |
114.02% |
Interest rate spread |
3.06% |
3.26% |
3.23% |
2.91% |
2.95% |
3.11% |
3.02% |
Net interest margin |
3.31% |
3.50% |
3.49% |
3.15% |
3.23% |
3.36% |
3.29% |
ASSET QUALITY RATIOS
|
As
of |
(Unaudited) (Dollars in
Thousands) |
December 31, |
September 30, |
June 30, |
March 31, |
December 31, |
|
2012 |
2012 |
2012 |
2012 |
2011 |
Non-performing loans and leases |
$ 14,122 |
$ 12,846 |
$ 15,451 |
$ 20,199 |
$ 21,766 |
Foreclosed properties, net |
1,574 |
2,187 |
1,937 |
2,590 |
2,236 |
Total non-performing assets |
$ 15,696 |
$ 15,033 |
$ 17,388 |
$ 22,789 |
$ 24,002 |
Non-performing loans and leases as a percent
of total loans and leases |
1.55% |
1.46% |
1.79% |
2.43% |
2.56% |
Non-performing assets as a percent of total
loans and leases plus foreclosed properties |
1.72% |
1.71% |
2.01% |
2.73% |
2.81% |
Non-performing assets as a percent of total
assets |
1.28% |
1.26% |
1.50% |
1.96% |
2.04% |
Allowance for loan and lease losses as a
percent of total gross loans and leases |
1.69% |
1.67% |
1.72% |
1.74% |
1.66% |
Allowance for loan and lease losses as a
percent of non-performing loans |
109.05% |
114.48% |
95.90% |
71.55% |
65.03% |
NET CHARGE-OFFS
(Unaudited) |
Three Months
Ended |
Year
Ended |
|
December 31, |
September 30, |
June 30, |
March 31, |
December 31, |
December 31, |
December 31, |
(Dollars in thousands) |
2012 |
2012 |
2012 |
2012 |
2011 |
2012 |
2011 |
Net charge-offs |
$ 150 |
$ 962 |
$ 1,678 |
$ 208 |
$ 923 |
$ 2,998 |
$ 6,366 |
Net charge-offs as a percent of average loans
and leases (annualized) |
0.07% |
0.44% |
0.80% |
0.10% |
0.43% |
0.35% |
0.74% |
NON-GAAP RECONCILIATIONS
Certain financial information provided in this release is
determined by methods other than in accordance with generally
accepted accounting principles (United States)
("GAAP"). Although the Company believes that these non-GAAP
financial measures provide a greater understanding of its business,
these measures are not necessarily comparable to similar measures
that may be presented by other companies.
CORE EARNINGS
"Core Earnings" is a non-GAAP measure representing pre-tax
income excluding the effects of provision for loan and lease
losses, other identifiable costs of credit and other discrete items
that are unrelated to core business activities. In the
judgment of the Company's management, the presentation of core
earnings allows the management team, investors and analysts to
better assess the growth of the Company's core business by removing
the volatility that is associated with costs of credit and other
discrete items that are unrelated to its core business and
facilitates a more streamlined comparison of core growth to its
benchmark peers. The information provided below reconciles
core earnings to its most comparable GAAP measure.
(Unaudited) |
Three Months
Ended |
Year
Ended |
|
December 31, |
September 30, |
June 30, |
March 31, |
December 31, |
December 31, |
December 31, |
(Dollars in thousands) |
2012 |
2012 |
2012 |
2012 |
2011 |
2012 |
2011 |
Income before tax expense |
$ 3,837 |
$ 4,063 |
$ 2,336 |
$ 3,440 |
$ 3,634 |
$ 13,676 |
$ 11,874 |
Add back: |
|
|
|
|
|
|
|
Provision for loan and lease losses |
844 |
850 |
2,045 |
504 |
937 |
4,243 |
4,250 |
Loss (gain) on foreclosed properties |
357 |
(14) |
67 |
175 |
261 |
585 |
420 |
Core earnings (pre-tax) |
$ 5,038 |
$ 4,899 |
$ 4,448 |
$ 4,119 |
$ 4,832 |
$ 18,504 |
$ 16,544 |
EFFICIENCY RATIO
"Efficiency ratio" is a non-GAAP measure representing
non-interest expense excluding the effects of losses or gains on
foreclosed properties and amortization of other intangible assets
divided by operating revenue, which is equal to net interest income
plus non-interest income less any realized gains on securities. In
the judgment of the Company's management, the adjustments made to
non-interest expense and operating revenue allow investors and
analysts to better assess the Company's operating expenses in
relation to its core operating revenue by removing the volatility
that is associated with certain one-time items and other discrete
items that are unrelated to its core business. The information
provided below reconciles the efficiency ratio to its most
comparable GAAP measure.
(Unaudited) |
Three Months
Ended |
Year
Ended |
|
December 31, |
September 30, |
June 30, |
March 31, |
December 31, |
December 31, |
December 31, |
(Dollars in thousands) |
2012 |
2012 |
2012 |
2012 |
2011 |
2012 |
2011 |
Total non-interest expense |
$ 7,446 |
$ 7,251 |
$ 7,132 |
$ 6,832 |
$ 6,249 |
$ 28,661 |
$ 26,397 |
Less: |
|
|
|
|
|
|
|
Loss (gain) on foreclosed properties |
357 |
(14) |
67 |
175 |
261 |
585 |
420 |
Amortization of other intangible
assets |
— |
— |
— |
— |
19 |
— |
32 |
Total operating expense |
$ 7,089 |
$ 7,265 |
$ 7,065 |
$ 6,657 |
$ 5,969 |
$ 28,076 |
$ 25,945 |
Net interest income |
$ 9,431 |
$ 9,915 |
$ 9,609 |
$ 8,926 |
$ 8,904 |
$ 37,881 |
$ 35,461 |
Total non-interest income |
2,696 |
2,249 |
1,904 |
1,850 |
1,916 |
8,699 |
7,060 |
Less: |
|
|
|
|
|
|
|
Gain on sale of securities |
— |
— |
— |
— |
— |
— |
— |
Total operating revenue |
$ 12,127 |
$ 12,164 |
$ 11,513 |
$ 10,776 |
$ 10,820 |
$ 46,580 |
$ 42,521 |
Efficiency ratio |
58.46% |
59.73% |
61.37% |
61.78% |
55.17% |
60.27% |
61.02% |
TANGIBLE BOOK VALUE
"Tangible book value per share" is a non-GAAP measure
representing tangible equity divided by total common shares
outstanding. "Tangible equity" itself is a non-GAAP measure
representing common stockholders' equity reduced by intangible
assets. The Company's management believes that these measures
are important to many investors in the marketplace who are
interested in changes period to period in book value per common
share exclusive of changes in intangible assets. The
information provided below reconciles tangible book value per share
and tangible equity to their most comparable GAAP measures.
|
As
of |
(Unaudited) |
December 31, |
September 30, |
June 30, |
March 31, |
December 31, |
(Dollars in Thousands, except per
share amounts) |
2012 |
2012 |
2012 |
2012 |
2011 |
Equity |
$ 99,539 |
$ 70,549 |
$ 67,766 |
$ 66,434 |
$ 64,214 |
Intangible assets |
— |
— |
— |
— |
— |
Tangible Equity |
$ 99,539 |
$ 70,549 |
$ 67,766 |
$ 66,434 |
$ 64,214 |
Common shares outstanding |
3,916,667 |
2,656,102 |
2,629,352 |
2,625,288 |
2,625,669 |
Book value per share |
$ 25.41 |
$ 26.56 |
$ 25.77 |
$ 25.31 |
$ 24.46 |
Tangible book value per share |
25.41 |
26.56 |
25.77 |
25.31 |
24.46 |
CONTACT: First Business Financial Services, Inc.
James F. Ropella, Senior Vice President
and Chief Financial Officer
608-232-5970
jropella@firstbusiness.com
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