First Business Financial Services, Inc. (the "Company" or "First
Business") (NASDAQ:FBIZ), the parent company of First Business
Bank, First Business Bank - Milwaukee and Alterra Bank (“Alterra”),
today reported third quarter results which included elevated credit
costs at Alterra, prudent operating expense management, investments
to enhance the Small Business Administration (“SBA”) lending
platform and high-quality loan production.
Highlights for the quarter ended September 30,
2016 include:
- Net income totaled $2.5 million, compared to $4.4
million for the third quarter of 2015.
- Diluted earnings per common share measured $0.29, compared
to $0.50 for the third quarter of 2015.
- Provision for loan and lease losses was $3.5 million, up from
$287,000 for the third quarter of 2015, driven by increased
specific reserves and charge-offs related to three relationships
originated at Alterra. First Business Bank and First Business Bank
- Milwaukee continued to have strong asset quality.
- During the third quarter of 2016, the Company recognized a $3.6
million historic tax credit that resulted in a net benefit totaling
$430,000, or $0.05 per share, after consideration of the $3.2
million impairment of the underlying tax credit investment.
- Annualized return on average assets and annualized return on
average equity measured 0.56% and 6.38%, respectively, compared to
1.02% and 11.93%, respectively, for the third quarter of 2015.
- Top line revenue, consisting of net interest income and
non-interest income, totaled $18.9 million, compared to $18.7
million for the third quarter of 2015.
- The Company’s efficiency ratio measured 63.6%, compared to
64.8% for the third quarter of 2015.
- Period-end gross loans and leases receivable grew for the
eighteenth consecutive quarter to $1.458 billion, up 6% from
September 30, 2015.
- Net interest margin measured 3.50%, compared to 3.61% for the
third quarter of 2015.
- Non-performing assets as a percent of total assets measured
1.54% at period end, compared to 0.65% at September 30,
2015.
“First Business has long delivered superior asset
quality as a result of our talented employees, deep commercial
client relationships and disciplined underwriting,” said Corey
Chambas, President and Chief Executive Officer. “Unfortunately, the
increased reserves on certain loans at our Alterra subsidiary
significantly impacted our bottom line. We are taking action
to further enhance our policies, processes, controls, training,
talent and reporting structures to help ensure First Business’s
proven credit culture and discipline are instilled throughout the
Company. In order to meet market demand and drive high-quality
growth in 2017 and beyond, we are working to ensure future growth
is achieved in the way that has historically served our company and
shareholders well. Consequently, we have temporarily slowed our SBA
production while making investments to enhance the infrastructure,
processes, capacity and scalability of the SBA platform.”
“We see great opportunities for Alterra and the
Kansas City market, including its SBA lending platform, and we are
committed to maximizing this potential. We continue to execute our
growth strategy, further building-out our scalable franchise and
working to grow long-term shareholder value,” Chambas added.
Results of Operations
Net interest income of $15.3 million decreased 2.8%
compared to the linked quarter and increased 4.7% compared to the
third quarter of 2015. The linked quarter comparison reflects
elevated second quarter 2016 prepayment fees collected in lieu of
interest from loan payoffs and a decline in average loan and lease
yields during the third quarter of 2016, partially offset by a
decline in the rate paid on non-maturity interest-bearing deposits.
Compared to the third quarter of 2015, net interest income
benefited from a $98.3 million, or 7.2%, increase in average loan
and lease balances, which more than offset the decline in average
loan and lease yields and decrease in net accretion/amortization of
purchase accounting adjustments over the same period.
Net interest margin was 3.50% for the third quarter
of 2016, compared to 3.59% in the second quarter of 2016 and 3.61%
in the third quarter of 2015. Third quarter 2016 net interest
margin included four basis points related to the net
accretion/amortization of purchase accounting adjustments, while
the linked quarter and third quarter 2015 margin included four and
nine basis points, respectively. Excluding the net
accretion/amortization of the purchase accounting adjustments,
third quarter 2016 net interest margin of 3.46% declined by nine
basis points from the linked quarter, principally due to lower
prepayment fees collected in lieu of interest. Net interest margin,
excluding the net accretion/amortization of purchase accounting
adjustments in the third quarter of 2016, declined by six basis
points compared to the third quarter of 2015, primarily due to a
moderate decline in average loan and lease yields and a temporary
increase in excess cash held at the Federal Reserve during the
quarter. In order to counter the asset yield pressure the Company
continues to take actions, including pursuing non-interest bearing
deposit accounts and adjusting deposit rates to manage to our net
interest margin goal of 3.50% or better.
Due to the uncertain nature of prepayments of loans
acquired in the Alterra transaction, the net accretion/amortization
of purchase accounting adjustments may be a source of volatility in
future quarters, but generally with a declining effect on net
interest margin. As of September 30, 2016, $512,000 and $150,000 of
purchase accounting discounts and premiums, respectively, remained
outstanding. Excluding purchase accounting, management expects to
maintain a stable net interest margin within the Company’s target
range driven by appropriate pricing and its ability to mitigate
interest rate risk through the Company’s unique wholesale funding
model. Net interest margin may also experience occasional
volatility due to events such as loan fees collected in lieu of
interest, the collection of interest on loans previously in
non-accrual or the accumulation of significant short-term deposit
inflows.
Non-interest income totaled $3.6 million for the
third quarter of 2016, compared to $5.8 million in the second
quarter of 2016 and $4.1 million in the third quarter of 2015. The
decreases from the linked quarter and prior year primarily reflect
lower gains from SBA loan sales resulting from the Company’s
decision to temporarily slow production while making investments to
the SBA platform. Gains on the sale of SBA loans totaled $347,000
in the third quarter of 2016, compared to $2.1 million in the
linked quarter and $927,000 in the third quarter of 2015. Trust and
investment services income totaled a record $1.4 million during the
quarter, increasing $113,000, or 9.0%, compared to the same quarter
in the prior year and partially offsetting the overall decline in
non-interest income. Existing client relationships and business
development efforts remained strong as trust assets under
management and administration measured a record $1.167 billion at
September 30, 2016 compared to $1.134 billion at June 30, 2016 and
$978.6 million at September 30, 2015.
Non-interest expense for the third quarter of 2016
was $15.8 million, increasing 17.1% compared to the linked quarter
and 31.5% compared to the third quarter of 2015. During the third
quarter of 2016, in accordance with the applicable accounting
guidance the Company recognized $3.2 million in nonrecurring
expense due to impairment of a historic tax credit investment,
which corresponded with the recognition of $3.6 million in
tax credits recognized during the quarter, providing a net benefit
to after-tax earnings of $430,000. Excluding the impact of the tax
credit-related amortization expense, third quarter 2016
non-interest expense totaled $12.5 million, compared to $13.5
million for the second quarter of 2016 and $12.0 million in the
prior year quarter. The linked quarter decrease was primarily
driven by an $811,000 nonrecurring reduction in compensation costs,
reflecting a reduction of the accrual for the 2016 annual incentive
bonus plan. This reduction in annual incentive compensation was
partially offset by severance expense related to Alterra’s
president’s termination in accordance with the previously disclosed
employment agreement.
Excluding the impact of tax credit investment
impairment expense, the $455,000 increase in total non-interest
expense year-over-year primarily reflects an 11.4% increase in
full-time equivalent employees to 263 at September 30, 2016 from
236 at September 30, 2015. The Company expects to continue to
opportunistically invest in talent to support its strategic growth
efforts, both in the form of additional business development and
operational staff. The Company produced a third quarter 2016
efficiency ratio of 63.63%, compared to 61.49% for the linked
quarter and 64.82% for the third quarter of 2015.
At the end of the third quarter of 2016, the
Company took measures to reduce annual operating costs, including
the announcement to close four offices, which reduced compensation
expense, and the moderation of certain marketing and professional
expenses. These measures are designed to better match expenses to
the rate of near-term revenue production the
Company anticipates from its SBA platform and national and
regional trends slowing growth in commercial and industrial
lending, with the objective of moving the efficiency ratio back
toward the Company’s long-term operating goal of 58-62%.
“Prudent expense management is a critical component
of our strategy and our culture, from our limited branch network
and unique funding model to strategic investments in talent and
technology,” Chambas said. “As we have always done, we are
diligently managing our operating costs to align with revenue
expectations, while continuing to make investments that grow our
business and enhance our ability to serve current and prospective
clients.”
In the third quarter of 2016, the Company recorded
provision for loan and lease losses totaling $3.5 million, compared
to $2.8 million in the linked quarter and $287,000 in the third
quarter of 2015. Third quarter 2016 provision primarily reflected a
$3.0 million increase in specific reserves and net charge-offs
related to the three aforementioned Alterra relationships.
Total charge-offs at Alterra represented $1.7
million, or 100% of the Company’s total charge-offs, for the third
quarter of 2016. Including immaterial recoveries from other bank
subsidiaries, the Company’s net charge-offs of $1.6 million
represented an annualized 0.44% of average loans and leases for the
third quarter of 2016. Annualized net charge-offs measured 0.35%
and 0.04% of average loans and leases in the linked quarter and
third quarter of 2015, respectively. Net charge-offs of $3.1
million represented an annualized 0.28% of average loans and leases
for the nine months ended September 30, 2016, compared to $461,000
and 0.05% for the nine months ended September 30, 2015.
The Company routinely evaluates tax strategies to
lower its tax liability over time. During the quarter the Company
recognized a $3.6 million historic tax credit related to a
significant commercial lending relationship. The Company also
recognized a corresponding $3.2 million impairment of the
underlying tax credit investment, resulting in a net $430,000
benefit to third quarter 2016 net income. The Company expects
the 2016 effective tax rate to return to levels commensurate
with expected full year taxable income.
Balance Sheet
Period-end gross loans and leases receivable grew
to $1.458 billion at September 30, 2016, increasing $6.5
million, or 0.4%, from June 30, 2016 and $81.1 million,
or 5.9%, from September 30, 2015. On an average basis, gross
loans and leases of $1.461 billion increased by $98.3 million, or
7.2%, compared to the third quarter of 2015. The pace of
overall loan growth has slowed in recent quarters, primarily due to
elevated payoffs and muted demand across much of the Company’s
markets in Madison and Kansas City, offset by strong traction in
the Milwaukee market.
Period-end in-market deposits - consisting of all
transaction accounts, money market accounts and non-wholesale
deposits - totaled $1.117 billion, or 71.3% of total deposits, at
September 30, 2016. Period-end wholesale deposits were $449.2
million at September 30, 2016, consisting of brokered certificates
of deposit and deposits gathered through internet deposit listing
services of $378.4 million and $70.8 million, respectively. In
order to reduce interest-rate risk, the Company uses wholesale
deposits to efficiently match-fund fixed rate loans. Over time,
management expects to maintain a ratio of in-market deposits to
total deposits in line with the Company's recent historical range
of 60%-70%.
Asset Quality
Management continues to believe the Company’s
credit culture is a core competency which differentiates First
Business from other banks. However, in the second and third
quarters of 2016, deterioration in particular credits originated at
Alterra had a significant impact on the Company’s loan loss
provision and non-performing asset levels at September 30, 2016.
Subsequently, management has taken steps to enhance policies,
processes, controls, training, talent and reporting structures to
ensure future lending meets the high standards long established
within the First Business franchise.
Non-performing assets at Alterra represented $14.4
million, or 53% of the Company's total non–performing assets, at
September 30, 2016. First Business’s total non-performing assets
were $27.2 million at September 30, 2016, increasing by $3.0
million, or 12.4%, compared to $24.2 million at June 30, 2016 and
increasing by $15.9 million, or 140.2%, compared to $11.3 million
at September 30, 2015. Alterra non-performing assets increased $3.3
million and $10.1 million, respectively, during the same periods of
comparison. As a percent of total assets, non-performing assets
measured 1.54% at September 30, 2016, compared to 1.33% and 0.65%
at the end of the linked quarter and third quarter of 2015,
respectively.
As of September 30, 2016, the Company’s direct
exposure to the energy sector was $6.7 million, or 0.46% of total
gross loans and leases, with no remaining unfunded commitments.
This reflects a decrease of $333,000, or 4.7%, compared to the
linked quarter entirely due to payments received. The associated
reserve for loan and lease losses related to this portfolio was
23.31% of total loans at September 30, 2016, compared to 20.43% at
June 30, 2016. Of this population, $5.7 million was considered
non-performing as of September 30, 2016. After considering specific
reserves, management believes the portfolio is adequately
collateralized as of the end of the reporting period.
Capital Strength
The Company's earnings continue to generate capital
and its capital ratios exceed the highest required regulatory
benchmark levels. As of September 30, 2016, total capital to
risk-weighted assets was 11.44%, tier 1 capital to risk-weighted
assets was 9.02%, tier 1 capital to average assets was 8.75% and
common equity tier 1 capital to risk-weighted assets was 8.45%.
Quarterly Dividend
As previously announced, during the third quarter
of 2016 the Company's Board of Directors declared a regular
quarterly dividend of $0.12 per share. The dividend was
paid on August 25, 2016 to shareholders of record at the
close of business on August 11, 2016. Measured against third
quarter 2016 diluted earnings per share of $0.29, the dividend
represents a 41.4% payout ratio. The Board of Directors
routinely considers dividend declarations as part of its normal
course of business.
About First Business Financial Services, Inc.
First Business Financial Services, Inc.
(NASDAQ:FBIZ) is a Wisconsin-based bank holding company focused on
the unique needs of businesses, business executives and high net
worth individuals. First Business offers commercial banking,
specialty finance and private wealth management solutions, and
because of its niche focus, is able to provide its clients with
unmatched expertise, accessibility and responsiveness. For
additional information, visit www.firstbusiness.com or call
608-238-8008.
This release may include forward-looking statements
as defined in the Private Securities Litigation Reform Act of 1995,
which reflect First Business’s current views with respect to future
events and financial performance. Forward-looking statements are
not based on historical information, but rather are related to
future operations, strategies, financial results or other
developments. Forward-looking statements are based on management’s
expectations as well as certain assumptions and estimates made by,
and information available to, management at the time the statements
are made. Those statements are based on general assumptions and are
subject to various risks, uncertainties and other factors that may
cause actual results to differ materially from the views, beliefs
and projections expressed in such statements. Such statements are
subject to risks and uncertainties, including among other
things:
- Competitive pressures among depository and other financial
institutions nationally and in our markets.
- Adverse changes in local, national and international economic
and business conditions.
- Increases in defaults by borrowers and other
delinquencies.
- Our inability to manage growth effectively, including the
successful expansion of our client service, administrative
infrastructure and internal management information systems.
- Fluctuations in interest rates and market prices.
- The consequences of continued bank acquisitions and mergers in
our market areas, resulting in fewer but much larger and
financially stronger competitors.
- Changes in legislative or regulatory requirements applicable to
us and our subsidiaries.
- Changes in tax requirements, including tax rate changes, new
tax laws and revised tax law interpretations.
- Fraud, including client and system failure or breaches of our
network security, including with respect to our internet banking
activities.
- Failure to comply with applicable SBA regulations in order to
maintain the eligibility of the guaranteed portion of SBA loans
could lead to significant losses from denial of the guaranty.
For further information about the factors that
could affect the Company’s future results, please see the Company’s
2015 annual report on Form 10-K, quarterly reports on Form 10-Q and
other filings with the Securities and Exchange Commission.
SELECTED FINANCIAL CONDITION DATA
|
|
|
(Unaudited) |
|
As of |
(in
thousands) |
|
September 30, 2016 |
|
June 30, 2016 |
|
March 31, 2016 |
|
December 31, 2015 |
|
September 30, 2015 |
ASSETS |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
68,764 |
|
|
$ |
131,611 |
|
|
$ |
104,854 |
|
|
$ |
113,564 |
|
|
$ |
122,671 |
|
Securities available-for-sale, at
fair value |
|
154,480 |
|
|
137,692 |
|
|
140,823 |
|
|
140,548 |
|
|
143,729 |
|
Securities held-to-maturity, at
amortized cost |
|
35,109 |
|
|
36,167 |
|
|
36,485 |
|
|
37,282 |
|
|
38,364 |
|
Loans held for sale |
|
2,627 |
|
|
5,548 |
|
|
1,697 |
|
|
2,702 |
|
|
2,910 |
|
Loans and leases receivable |
|
1,458,297 |
|
|
1,451,815 |
|
|
1,448,586 |
|
|
1,430,965 |
|
|
1,377,172 |
|
Allowance for loan and lease
losses |
|
(20,067 |
) |
|
(18,154 |
) |
|
(16,684 |
) |
|
(16,316 |
) |
|
(15,359 |
) |
Loans and leases, net |
|
1,438,230 |
|
|
1,433,661 |
|
|
1,431,902 |
|
|
1,414,649 |
|
|
1,361,813 |
|
Premises and equipment, net |
|
3,898 |
|
|
3,969 |
|
|
3,868 |
|
|
3,954 |
|
|
3,889 |
|
Foreclosed properties |
|
1,527 |
|
|
1,548 |
|
|
1,677 |
|
|
1,677 |
|
|
1,632 |
|
Bank-owned life insurance |
|
29,028 |
|
|
28,784 |
|
|
28,541 |
|
|
28,298 |
|
|
28,029 |
|
Federal Home Loan Bank and Federal
Reserve Bank stock, at cost |
|
2,165 |
|
|
2,163 |
|
|
2,734 |
|
|
2,843 |
|
|
2,843 |
|
Goodwill and other intangible
assets |
|
12,762 |
|
|
12,923 |
|
|
12,606 |
|
|
12,493 |
|
|
12,244 |
|
Accrued interest receivable and
other assets |
|
23,848 |
|
|
25,003 |
|
|
24,945 |
|
|
24,071 |
|
|
25,203 |
|
Total assets |
|
$ |
1,772,438 |
|
|
$ |
1,819,069 |
|
|
$ |
1,790,132 |
|
|
$ |
1,782,081 |
|
|
$ |
1,743,327 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
In-market deposits |
|
$ |
1,116,974 |
|
|
$ |
1,130,890 |
|
|
$ |
1,105,633 |
|
|
$ |
1,089,748 |
|
|
$ |
1,062,753 |
|
Wholesale deposits |
|
449,225 |
|
|
477,054 |
|
|
475,955 |
|
|
487,483 |
|
|
476,617 |
|
Total deposits |
|
1,566,199 |
|
|
1,607,944 |
|
|
1,581,588 |
|
|
1,577,231 |
|
|
1,539,370 |
|
Federal Home Loan Bank and other
borrowings |
|
29,946 |
|
|
33,570 |
|
|
35,011 |
|
|
34,740 |
|
|
35,856 |
|
Junior subordinated notes |
|
10,001 |
|
|
9,997 |
|
|
9,993 |
|
|
9,990 |
|
|
9,987 |
|
Accrued interest payable and other
liabilities |
|
6,361 |
|
|
9,164 |
|
|
8,341 |
|
|
9,288 |
|
|
10,147 |
|
Total liabilities |
|
1,612,507 |
|
|
1,660,675 |
|
|
1,634,933 |
|
|
1,631,249 |
|
|
1,595,360 |
|
Total stockholders’ equity |
|
159,931 |
|
|
158,394 |
|
|
155,199 |
|
|
150,832 |
|
|
147,967 |
|
Total liabilities and
stockholders’ equity |
|
$ |
1,772,438 |
|
|
$ |
1,819,069 |
|
|
$ |
1,790,132 |
|
|
$ |
1,782,081 |
|
|
$ |
1,743,327 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STATEMENTS OF INCOME
|
|
|
|
|
(Unaudited) |
|
As of and for the Three Months
Ended |
|
As of and for the Nine Months
Ended |
(Dollars in thousands, except per share
amounts) |
|
September 30, 2016 |
|
June 30, 2016 |
|
March 31, 2016 |
|
December 31, 2015 |
|
September 30, 2015 |
|
September 30, 2016 |
|
September 30, 2015 |
Total interest
income |
|
$ |
18,898 |
|
|
$ |
19,555 |
|
|
$ |
19,343 |
|
|
$ |
18,600 |
|
|
$ |
18,135 |
|
|
$ |
57,796 |
|
|
$ |
53,871 |
|
Total interest
expense |
|
3,603 |
|
|
3,814 |
|
|
3,804 |
|
|
3,688 |
|
|
3,525 |
|
|
11,221 |
|
|
10,143 |
|
Net interest income |
|
15,295 |
|
|
15,741 |
|
|
15,539 |
|
|
14,912 |
|
|
14,610 |
|
|
46,575 |
|
|
43,728 |
|
Provision for loan and
lease losses |
|
3,537 |
|
|
2,762 |
|
|
525 |
|
|
1,895 |
|
|
287 |
|
|
6,824 |
|
|
1,491 |
|
Net interest income after provision
for loan and lease losses |
|
11,758 |
|
|
12,979 |
|
|
15,014 |
|
|
13,017 |
|
|
14,323 |
|
|
39,751 |
|
|
42,237 |
|
Trust and investment
services fee income |
|
1,364 |
|
|
1,344 |
|
|
1,273 |
|
|
1,217 |
|
|
1,251 |
|
|
3,981 |
|
|
3,737 |
|
Gain on sale of SBA
loans |
|
347 |
|
|
2,131 |
|
|
1,376 |
|
|
1,725 |
|
|
927 |
|
|
3,854 |
|
|
2,274 |
|
Gain on sale of
residential mortgage loans |
|
198 |
|
|
198 |
|
|
145 |
|
|
115 |
|
|
244 |
|
|
540 |
|
|
614 |
|
Service charges on
deposits |
|
772 |
|
|
733 |
|
|
742 |
|
|
718 |
|
|
705 |
|
|
2,247 |
|
|
2,094 |
|
Loan fees |
|
506 |
|
|
676 |
|
|
609 |
|
|
700 |
|
|
486 |
|
|
1,791 |
|
|
1,487 |
|
Other non-interest
income |
|
453 |
|
|
741 |
|
|
449 |
|
|
460 |
|
|
489 |
|
|
1,644 |
|
|
1,870 |
|
Total non-interest income |
|
3,640 |
|
|
5,823 |
|
|
4,594 |
|
|
4,935 |
|
|
4,102 |
|
|
14,057 |
|
|
12,076 |
|
Compensation |
|
7,637 |
|
|
8,447 |
|
|
8,370 |
|
|
6,945 |
|
|
7,320 |
|
|
24,454 |
|
|
21,598 |
|
Occupancy |
|
530 |
|
|
500 |
|
|
508 |
|
|
501 |
|
|
486 |
|
|
1,538 |
|
|
1,472 |
|
Professional fees |
|
1,065 |
|
|
961 |
|
|
861 |
|
|
1,121 |
|
|
1,268 |
|
|
2,888 |
|
|
3,661 |
|
Data processing |
|
623 |
|
|
697 |
|
|
651 |
|
|
606 |
|
|
587 |
|
|
1,971 |
|
|
1,772 |
|
Marketing |
|
528 |
|
|
448 |
|
|
734 |
|
|
549 |
|
|
693 |
|
|
1,710 |
|
|
2,036 |
|
Equipment |
|
292 |
|
|
341 |
|
|
280 |
|
|
316 |
|
|
308 |
|
|
913 |
|
|
914 |
|
FDIC Insurance |
|
444 |
|
|
254 |
|
|
291 |
|
|
227 |
|
|
260 |
|
|
989 |
|
|
693 |
|
Collateral liquidation
costs |
|
89 |
|
|
68 |
|
|
47 |
|
|
70 |
|
|
22 |
|
|
204 |
|
|
402 |
|
Net loss (gain) on
foreclosed properties |
|
— |
|
|
93 |
|
|
— |
|
|
7 |
|
|
(163 |
) |
|
93 |
|
|
(178 |
) |
Merger-related
costs |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
111 |
|
Impairment of tax
credit investments |
|
3,314 |
|
|
94 |
|
|
112 |
|
|
— |
|
|
— |
|
|
3,520 |
|
|
— |
|
Other non-interest
expense |
|
1,231 |
|
|
1,555 |
|
|
845 |
|
|
1,342 |
|
|
1,203 |
|
|
3,630 |
|
|
3,209 |
|
Total non-interest expense |
|
15,753 |
|
|
13,458 |
|
|
12,699 |
|
|
11,684 |
|
|
11,984 |
|
|
41,910 |
|
|
35,690 |
|
(Loss) income before
income tax expense |
|
(355 |
) |
|
5,344 |
|
|
6,909 |
|
|
6,268 |
|
|
6,441 |
|
|
11,898 |
|
|
18,623 |
|
Income tax (benefit)
expense |
|
(2,895 |
) |
|
1,628 |
|
|
2,362 |
|
|
2,185 |
|
|
2,060 |
|
|
1,095 |
|
|
6,192 |
|
Net income |
|
$ |
2,540 |
|
|
$ |
3,716 |
|
|
$ |
4,547 |
|
|
$ |
4,083 |
|
|
$ |
4,381 |
|
|
$ |
10,803 |
|
|
$ |
12,431 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings |
|
$ |
0.29 |
|
|
$ |
0.43 |
|
|
$ |
0.52 |
|
|
$ |
0.47 |
|
|
$ |
0.50 |
|
|
$ |
1.24 |
|
|
$ |
1.43 |
|
Diluted earnings |
|
0.29 |
|
|
0.43 |
|
|
0.52 |
|
|
0.47 |
|
|
0.50 |
|
|
1.24 |
|
|
1.43 |
|
Dividends declared |
|
0.12 |
|
|
0.12 |
|
|
0.12 |
|
|
0.11 |
|
|
0.11 |
|
|
0.36 |
|
|
0.33 |
|
Book value |
|
18.35 |
|
|
18.20 |
|
|
17.84 |
|
|
17.34 |
|
|
17.01 |
|
|
18.35 |
|
|
17.01 |
|
Tangible book
value |
|
16.88 |
|
|
16.71 |
|
|
16.39 |
|
|
15.90 |
|
|
15.60 |
|
|
16.88 |
|
|
15.60 |
|
Weighted-average common
shares outstanding(1) |
|
8,582,836 |
|
|
8,566,718 |
|
|
8,565,050 |
|
|
8,558,810 |
|
|
8,546,563 |
|
|
8,569,613 |
|
|
8,538,219 |
|
Weighted-average diluted
common shares outstanding(1) |
|
8,582,836 |
|
|
8,566,718 |
|
|
8,565,050 |
|
|
8,558,810 |
|
|
8,546,563 |
|
|
8,569,613 |
|
|
8,539,705 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Excluding participating securities
NET INTEREST INCOME ANALYSIS
|
|
|
(Unaudited) |
|
For the Three Months Ended |
(Dollars in
thousands) |
|
September 30, 2016 |
|
June 30, 2016 |
|
September 30, 2015 |
|
|
Averagebalance |
|
Interest |
|
Averageyield/rate(4) |
|
Average balance |
|
Interest |
|
Averageyield/rate(4) |
|
Averagebalance |
|
Interest |
|
Averageyield/rate(4) |
Interest-earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate
and other mortgage loans(1) |
|
$ |
947,167 |
|
|
$ |
10,656 |
|
|
4.50 |
% |
|
$ |
933,681 |
|
|
$ |
10,980 |
|
|
4.70 |
% |
|
$ |
856,488 |
|
|
$ |
9,994 |
|
|
4.67 |
% |
Commercial and
industrial loans(1) |
|
459,871 |
|
|
6,651 |
|
|
5.79 |
% |
|
469,888 |
|
|
7,100 |
|
|
6.04 |
% |
|
454,184 |
|
|
6,741 |
|
|
5.94 |
% |
Direct financing
leases(1) |
|
30,231 |
|
|
341 |
|
|
4.51 |
% |
|
30,977 |
|
|
355 |
|
|
4.58 |
% |
|
28,352 |
|
|
328 |
|
|
4.63 |
% |
Consumer and other
loans(1) |
|
23,662 |
|
|
368 |
|
|
6.22 |
% |
|
25,675 |
|
|
266 |
|
|
4.14 |
% |
|
23,647 |
|
|
260 |
|
|
4.40 |
% |
Total loans and leases
receivable(1) |
|
1,460,931 |
|
|
18,016 |
|
|
4.93 |
% |
|
1,460,221 |
|
|
18,701 |
|
|
5.12 |
% |
|
1,362,671 |
|
|
17,323 |
|
|
5.09 |
% |
Mortgage-related
securities(2) |
|
149,414 |
|
|
567 |
|
|
1.52 |
% |
|
142,443 |
|
|
556 |
|
|
1.56 |
% |
|
152,763 |
|
|
602 |
|
|
1.57 |
% |
Other investment
securities(3) |
|
34,042 |
|
|
131 |
|
|
1.54 |
% |
|
32,169 |
|
|
126 |
|
|
1.57 |
% |
|
30,431 |
|
|
120 |
|
|
1.58 |
% |
FHLB and FRB stock |
|
2,163 |
|
|
21 |
|
|
3.88 |
% |
|
2,485 |
|
|
19 |
|
|
3.06 |
% |
|
3,175 |
|
|
22 |
|
|
2.69 |
% |
Short-term
investments |
|
103,549 |
|
|
163 |
|
|
0.63 |
% |
|
117,180 |
|
|
153 |
|
|
0.52 |
% |
|
67,716 |
|
|
68 |
|
|
0.41 |
% |
Total interest-earning assets |
|
1,750,099 |
|
|
18,898 |
|
|
4.32 |
% |
|
1,754,498 |
|
|
19,555 |
|
|
4.46 |
% |
|
1,616,756 |
|
|
18,135 |
|
|
4.49 |
% |
Non-interest-earning
assets |
|
67,884 |
|
|
|
|
|
|
70,947 |
|
|
|
|
|
|
100,023 |
|
|
|
|
|
Total assets |
|
$ |
1,817,983 |
|
|
|
|
|
|
$ |
1,825,445 |
|
|
|
|
|
|
$ |
1,716,779 |
|
|
|
|
|
Interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction
accounts |
|
$ |
182,743 |
|
|
113 |
|
|
0.25 |
% |
|
$ |
147,095 |
|
|
71 |
|
|
0.19 |
% |
|
$ |
138,489 |
|
|
84 |
|
|
0.24 |
% |
Money market |
|
632,415 |
|
|
758 |
|
|
0.48 |
% |
|
674,015 |
|
|
868 |
|
|
0.52 |
% |
|
587,063 |
|
|
829 |
|
|
0.56 |
% |
Certificates of
deposit |
|
63,581 |
|
|
152 |
|
|
0.96 |
% |
|
65,619 |
|
|
144 |
|
|
0.88 |
% |
|
102,477 |
|
|
204 |
|
|
0.80 |
% |
Wholesale deposits |
|
465,273 |
|
|
1,847 |
|
|
1.59 |
% |
|
471,707 |
|
|
1,955 |
|
|
1.66 |
% |
|
466,516 |
|
|
1,668 |
|
|
1.43 |
% |
Total interest-bearing
deposits |
|
1,344,012 |
|
|
2,870 |
|
|
0.85 |
% |
|
1,358,436 |
|
|
3,038 |
|
|
0.89 |
% |
|
1,294,545 |
|
|
2,785 |
|
|
0.86 |
% |
FHLB advances |
|
4,991 |
|
|
18 |
|
|
1.44 |
% |
|
14,338 |
|
|
31 |
|
|
0.86 |
% |
|
17,503 |
|
|
30 |
|
|
0.67 |
% |
Other borrowings |
|
24,976 |
|
|
435 |
|
|
6.97 |
% |
|
28,510 |
|
|
468 |
|
|
6.57 |
% |
|
24,645 |
|
|
430 |
|
|
6.98 |
% |
Junior subordinated
notes |
|
9,998 |
|
|
280 |
|
|
11.20 |
% |
|
9,995 |
|
|
278 |
|
|
11.13 |
% |
|
9,984 |
|
|
280 |
|
|
11.22 |
% |
Total interest-bearing
liabilities |
|
1,383,977 |
|
|
3,603 |
|
|
1.04 |
% |
|
1,411,279 |
|
|
3,815 |
|
|
1.08 |
% |
|
1,346,677 |
|
|
3,525 |
|
|
1.05 |
% |
Non-interest-bearing
demand deposit accounts |
|
263,627 |
|
|
|
|
|
|
246,604 |
|
|
|
|
|
|
213,712 |
|
|
|
|
|
Other
non-interest-bearing liabilities |
|
11,098 |
|
|
|
|
|
|
9,944 |
|
|
|
|
|
|
9,520 |
|
|
|
|
|
Total liabilities |
|
1,658,702 |
|
|
|
|
|
|
1,667,827 |
|
|
|
|
|
|
1,569,909 |
|
|
|
|
|
Stockholders’
equity |
|
159,281 |
|
|
|
|
|
|
157,618 |
|
|
|
|
|
|
146,870 |
|
|
|
|
|
Total liabilities and stockholders’
equity |
|
$ |
1,817,983 |
|
|
|
|
|
|
$ |
1,825,445 |
|
|
|
|
|
|
$ |
1,716,779 |
|
|
|
|
|
Net interest
income |
|
|
|
$ |
15,295 |
|
|
|
|
|
|
$ |
15,740 |
|
|
|
|
|
|
$ |
14,610 |
|
|
|
Interest rate
spread |
|
|
|
|
|
3.28 |
% |
|
|
|
|
|
3.38 |
% |
|
|
|
|
|
3.44 |
% |
Net interest-earning
assets |
|
$ |
366,122 |
|
|
|
|
|
|
$ |
343,219 |
|
|
|
|
|
|
$ |
270,079 |
|
|
|
|
|
Net interest
margin |
|
|
|
|
|
3.50 |
% |
|
|
|
|
|
3.59 |
% |
|
|
|
|
|
3.61 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The average balances of loans and leases include
non-performing loans and leases and loans held for sale. Interest
income related to non-performing loans and leases is recognized
when collected. Interest income includes net loan fees collected in
lieu of interest.(2) Includes amortized cost basis of assets
available for sale and held to maturity.(3) Yields on tax-exempt
municipal obligations are not presented on a tax-equivalent basis
in this table. (4) Represents annualized yields/rates.
NET INTEREST INCOME ANALYSIS
(CONTINUED)
|
|
|
(Unaudited) |
|
For the Nine Months Ended |
(Dollars in
thousands) |
|
September 30, 2016 |
|
September 30, 2015 |
|
|
Averagebalance |
|
Interest |
|
Averageyield/rate(4) |
|
Averagebalance |
|
Interest |
|
Averageyield/rate(4) |
Interest-earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate
and other mortgage loans(1) |
|
$ |
934,615 |
|
|
$ |
32,366 |
|
|
4.62 |
% |
|
$ |
832,042 |
|
|
$ |
29,535 |
|
|
4.73 |
% |
Commercial and
industrial loans(1) |
|
466,729 |
|
|
20,833 |
|
|
5.95 |
% |
|
440,390 |
|
|
19,973 |
|
|
6.05 |
% |
Direct financing
leases(1) |
|
30,683 |
|
|
1,039 |
|
|
4.51 |
% |
|
30,229 |
|
|
1,053 |
|
|
4.64 |
% |
Consumer and other
loans(1) |
|
25,581 |
|
|
923 |
|
|
4.81 |
% |
|
24,213 |
|
|
767 |
|
|
4.22 |
% |
Total loans and leases
receivable(1) |
|
1,457,608 |
|
|
55,161 |
|
|
5.04 |
% |
|
1,326,874 |
|
|
51,328 |
|
|
5.16 |
% |
Mortgage-related
securities(2) |
|
145,599 |
|
|
1,721 |
|
|
1.58 |
% |
|
154,734 |
|
|
1,896 |
|
|
1.63 |
% |
Other investment
securities(3) |
|
32,518 |
|
|
381 |
|
|
1.56 |
% |
|
29,213 |
|
|
350 |
|
|
1.60 |
% |
FHLB and FRB stock |
|
2,482 |
|
|
61 |
|
|
3.28 |
% |
|
2,902 |
|
|
60 |
|
|
2.74 |
% |
Short-term
investments |
|
107,369 |
|
|
472 |
|
|
0.59 |
% |
|
75,469 |
|
|
237 |
|
|
0.42 |
% |
Total interest-earning assets |
|
1,745,576 |
|
|
57,796 |
|
|
4.41 |
% |
|
1,589,192 |
|
|
53,871 |
|
|
4.52 |
% |
Non-interest-earning
assets |
|
75,969 |
|
|
|
|
|
|
96,032 |
|
|
|
|
|
Total assets |
|
$ |
1,821,545 |
|
|
|
|
|
|
$ |
1,685,224 |
|
|
|
|
|
Interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Transaction
accounts |
|
$ |
164,278 |
|
|
273 |
|
|
0.22 |
% |
|
$ |
117,242 |
|
|
205 |
|
|
0.23 |
% |
Money market |
|
650,864 |
|
|
2,453 |
|
|
0.50 |
% |
|
605,906 |
|
|
2,523 |
|
|
0.56 |
% |
Certificates of
deposit |
|
67,440 |
|
|
446 |
|
|
0.88 |
% |
|
112,602 |
|
|
643 |
|
|
0.76 |
% |
Wholesale deposits |
|
478,038 |
|
|
5,789 |
|
|
1.61 |
% |
|
439,744 |
|
|
4,576 |
|
|
1.39 |
% |
Total interest-bearing
deposits |
|
1,360,620 |
|
|
8,961 |
|
|
0.88 |
% |
|
1,275,494 |
|
|
7,947 |
|
|
0.83 |
% |
FHLB advances |
|
8,941 |
|
|
68 |
|
|
1.01 |
% |
|
16,569 |
|
|
85 |
|
|
0.68 |
% |
Other borrowings |
|
26,982 |
|
|
1,357 |
|
|
6.71 |
% |
|
24,425 |
|
|
1,279 |
|
|
7.08 |
% |
Junior subordinated
notes |
|
10,101 |
|
|
835 |
|
|
11.02 |
% |
|
9,981 |
|
|
832 |
|
|
11.12 |
% |
Total interest-bearing
liabilities |
|
1,406,644 |
|
|
11,221 |
|
|
1.06 |
% |
|
1,326,469 |
|
|
10,143 |
|
|
1.02 |
% |
Non-interest-bearing
demand deposit accounts |
|
246,238 |
|
|
|
|
|
|
206,547 |
|
|
|
|
|
Other
non-interest-bearing liabilities |
|
11,126 |
|
|
|
|
|
|
8,646 |
|
|
|
|
|
Total liabilities |
|
1,664,008 |
|
|
|
|
|
|
1,541,662 |
|
|
|
|
|
Stockholders’
equity |
|
157,537 |
|
|
|
|
|
|
143,562 |
|
|
|
|
|
Total liabilities and stockholders’
equity |
|
$ |
1,821,545 |
|
|
|
|
|
|
$ |
1,685,224 |
|
|
|
|
|
Net interest
income |
|
|
|
$ |
46,575 |
|
|
|
|
|
|
$ |
43,728 |
|
|
|
Interest rate
spread |
|
|
|
|
|
3.35 |
% |
|
|
|
|
|
3.50 |
% |
Net interest-earning
assets |
|
$ |
338,932 |
|
|
|
|
|
|
$ |
262,723 |
|
|
|
|
|
Net interest
margin |
|
|
|
|
|
3.56 |
% |
|
|
|
|
|
3.67 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The average balances of loans and leases include
non-performing loans and leases and loans held for sale. Interest
income related to non-performing loans and leases is recognized
when collected. Interest income includes net loan fees collected in
lieu of interest.(2) Includes amortized cost basis of assets
available for sale and held to maturity.(3) Yields on tax-exempt
municipal obligations are not presented on a tax-equivalent basis
in this table. (4) Represents annualized yields/rates.
SELECTED FINANCIAL TRENDS
PERFORMANCE RATIOS
|
|
|
|
|
|
|
For the Three Months Ended |
|
For the Nine Months Ended |
(Unaudited) |
|
September 30, 2016 |
|
June 30, 2016 |
|
March 31, 2016 |
|
December 31, 2015 |
|
September 30, 2015 |
|
September 30, 2016 |
|
September 30, 2015 |
Return on average
assets (annualized) |
|
0.56 |
% |
|
0.81 |
% |
|
1.00 |
% |
|
0.93 |
% |
|
1.02 |
% |
|
0.79 |
% |
|
0.98 |
% |
Return on average
equity (annualized) |
|
6.38 |
% |
|
9.43 |
% |
|
11.68 |
% |
|
10.85 |
% |
|
11.93 |
% |
|
9.14 |
% |
|
11.55 |
% |
Efficiency ratio |
|
63.63 |
% |
|
61.49 |
% |
|
62.44 |
% |
|
58.75 |
% |
|
64.82 |
% |
|
62.47 |
% |
|
64.18 |
% |
Interest rate
spread |
|
3.28 |
% |
|
3.38 |
% |
|
3.40 |
% |
|
3.43 |
% |
|
3.44 |
% |
|
3.35 |
% |
|
3.50 |
% |
Net interest
margin |
|
3.50 |
% |
|
3.59 |
% |
|
3.59 |
% |
|
3.63 |
% |
|
3.61 |
% |
|
3.56 |
% |
|
3.67 |
% |
Average
interest-earning assets to average interest-bearing
liabilities |
|
126.45 |
% |
|
124.32 |
% |
|
121.62 |
% |
|
120.98 |
% |
|
120.05 |
% |
|
124.10 |
% |
|
119.81 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSET QUALITY RATIOS
|
|
|
(Unaudited) |
|
As of |
(Dollars in
thousands) |
|
September 30, 2016 |
|
June 30, 2016 |
|
March 31, 2016 |
|
December 31, 2015 |
|
September 30, 2015 |
Non-performing loans
and leases |
|
$ |
25,712 |
|
|
$ |
22,680 |
|
|
$ |
17,861 |
|
|
$ |
22,298 |
|
|
$ |
9,707 |
|
Foreclosed
properties |
|
1,527 |
|
|
1,548 |
|
|
1,677 |
|
|
1,677 |
|
|
1,632 |
|
Total non-performing assets |
|
27,239 |
|
|
24,228 |
|
|
19,538 |
|
|
23,975 |
|
|
11,339 |
|
Performing troubled
debt restructurings |
|
732 |
|
|
788 |
|
|
1,628 |
|
|
1,735 |
|
|
7,852 |
|
Total impaired assets |
|
$ |
27,971 |
|
|
$ |
25,016 |
|
|
$ |
21,166 |
|
|
$ |
25,710 |
|
|
$ |
19,191 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing loans
and leases as a percent of total gross loans and leases |
|
1.76 |
% |
|
1.56 |
% |
|
1.23 |
% |
|
1.56 |
% |
|
0.70 |
% |
Non-performing assets
as a percent of total gross loans and leases plus foreclosed
properties |
|
1.86 |
% |
|
1.67 |
% |
|
1.35 |
% |
|
1.67 |
% |
|
0.82 |
% |
Non-performing assets
as a percent of total assets |
|
1.54 |
% |
|
1.33 |
% |
|
1.09 |
% |
|
1.35 |
% |
|
0.65 |
% |
Allowance for loan and
lease losses as a percent of total gross loans and leases |
|
1.37 |
% |
|
1.25 |
% |
|
1.15 |
% |
|
1.14 |
% |
|
1.12 |
% |
Allowance for loan and
lease losses as a percent of non-performing loans |
|
78.05 |
% |
|
80.04 |
% |
|
93.41 |
% |
|
73.17 |
% |
|
158.23 |
% |
|
|
|
|
|
|
|
|
|
|
|
Criticized assets: |
|
|
|
|
|
|
|
|
|
|
Special mention |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Substandard |
|
32,135 |
|
|
25,723 |
|
|
33,875 |
|
|
26,797 |
|
|
11,144 |
|
Doubtful |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Foreclosed properties |
|
1,527 |
|
|
1,548 |
|
|
1,677 |
|
|
1,677 |
|
|
1,632 |
|
Total criticized assets |
|
$ |
33,662 |
|
|
$ |
27,271 |
|
|
$ |
35,552 |
|
|
$ |
28,474 |
|
|
$ |
12,776 |
|
Criticized assets to
total assets |
|
1.90 |
% |
|
1.50 |
% |
|
1.99 |
% |
|
1.60 |
% |
|
0.73 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CHARGE-OFFS (RECOVERIES)
|
|
|
|
|
(Unaudited) |
|
For the Three Months Ended |
|
For the Nine Months Ended |
(Dollars in
thousands) |
|
September 30, 2016 |
|
June 30, 2016 |
|
March 31, 2016 |
|
December 31, 2015 |
|
September 30, 2015 |
|
September 30, 2016 |
|
September 30, 2015 |
Charge-offs |
|
$ |
1,656 |
|
|
$ |
1,350 |
|
|
$ |
244 |
|
|
$ |
967 |
|
|
$ |
138 |
|
|
$ |
3,250 |
|
|
$ |
546 |
|
Recoveries |
|
(32 |
) |
|
(58 |
) |
|
(87 |
) |
|
(29 |
) |
|
(11 |
) |
|
(177 |
) |
|
(85 |
) |
Net charge-offs |
|
$ |
1,624 |
|
|
$ |
1,292 |
|
|
$ |
157 |
|
|
$ |
938 |
|
|
$ |
127 |
|
|
$ |
3,073 |
|
|
$ |
461 |
|
Net charge-offs as a
percent of average gross loans and leases (annualized) |
|
0.44 |
% |
|
0.35 |
% |
|
0.04 |
% |
|
0.27 |
% |
|
0.04 |
% |
|
0.28 |
% |
|
0.05 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAPITAL RATIOS
|
|
|
|
|
As of and for the Three Months
Ended |
(Unaudited) |
|
September 30, 2016 |
|
June 30, 2016 |
|
March 31, 2016 |
|
December 31, 2015 |
|
September 30, 2015 |
Total capital to
risk-weighted assets |
|
11.44 |
% |
|
11.44 |
% |
|
11.24 |
% |
|
11.11 |
% |
|
11.29 |
% |
Tier I capital to
risk-weighted assets |
|
9.02 |
% |
|
9.08 |
% |
|
8.96 |
% |
|
8.81 |
% |
|
8.95 |
% |
Common equity tier I
capital to risk-weighted assets |
|
8.45 |
% |
|
8.50 |
% |
|
8.37 |
% |
|
8.22 |
% |
|
8.34 |
% |
Tier I capital to
adjusted assets |
|
8.75 |
% |
|
8.63 |
% |
|
8.44 |
% |
|
8.63 |
% |
|
8.59 |
% |
Tangible common equity
to tangible assets |
|
8.36 |
% |
|
8.05 |
% |
|
8.02 |
% |
|
7.81 |
% |
|
7.84 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SELECTED OTHER INFORMATION
Loan and Lease Receivable Composition
|
|
|
|
|
As of |
(Unaudited) |
|
September 30, 2016 |
|
June 30, 2016 |
|
March 31, 2016 |
|
December 31, 2015 |
|
September 30, 2015 |
(Dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
Commercial real
estate |
|
|
|
|
|
|
|
|
|
|
Commercial real estate
- owner occupied |
|
$ |
169,170 |
|
|
$ |
167,936 |
|
|
$ |
174,286 |
|
|
$ |
176,322 |
|
|
$ |
168,695 |
|
Commercial real estate
- non-owner occupied |
|
483,540 |
|
|
502,378 |
|
|
441,539 |
|
|
436,901 |
|
|
416,421 |
|
Construction |
|
110,426 |
|
|
88,339 |
|
|
117,825 |
|
|
100,625 |
|
|
99,497 |
|
Land development |
|
60,348 |
|
|
60,599 |
|
|
61,953 |
|
|
59,779 |
|
|
58,154 |
|
Multi-family |
|
73,081 |
|
|
73,239 |
|
|
84,004 |
|
|
80,254 |
|
|
90,514 |
|
1-4 family |
|
46,341 |
|
|
47,289 |
|
|
50,923 |
|
|
50,304 |
|
|
44,169 |
|
Total commercial real estate |
|
942,906 |
|
|
939,780 |
|
|
930,530 |
|
|
904,185 |
|
|
877,450 |
|
Commercial and
industrial |
|
464,920 |
|
|
456,297 |
|
|
461,573 |
|
|
472,193 |
|
|
449,204 |
|
Direct
financing leases, net |
|
29,638 |
|
|
30,698 |
|
|
31,617 |
|
|
31,093 |
|
|
28,958 |
|
Consumer and
other |
|
|
|
|
|
|
|
|
|
|
Home equity and second
mortgages |
|
5,390 |
|
|
7,372 |
|
|
7,366 |
|
|
8,237 |
|
|
8,908 |
|
Other |
|
16,610 |
|
|
18,743 |
|
|
18,510 |
|
|
16,319 |
|
|
13,809 |
|
Total consumer and other |
|
22,000 |
|
|
26,115 |
|
|
25,876 |
|
|
24,556 |
|
|
22,717 |
|
Total gross loans and
leases receivable |
|
1,459,464 |
|
|
1,452,890 |
|
|
1,449,596 |
|
|
1,432,027 |
|
|
1,378,329 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease
losses |
|
20,067 |
|
|
18,154 |
|
|
16,684 |
|
|
16,316 |
|
|
15,359 |
|
Deferred loan fees |
|
1,167 |
|
|
1,075 |
|
|
1,010 |
|
|
1,062 |
|
|
1,157 |
|
Loans and leases
receivable, net |
|
$ |
1,438,230 |
|
|
$ |
1,433,661 |
|
|
$ |
1,431,902 |
|
|
$ |
1,414,649 |
|
|
$ |
1,361,813 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SELECTED OTHER INFORMATION (CONTINUED)
Deposit Composition
|
|
|
|
|
As of |
(Unaudited) |
|
September 30, 2016 |
|
June 30, 2016 |
|
March 31, 2016 |
|
December 31, 2015 |
|
September 30, 2015 |
(Dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
Non-interest-bearing
transaction accounts |
|
$ |
258,423 |
|
|
$ |
243,370 |
|
|
$ |
236,662 |
|
|
$ |
231,199 |
|
|
$ |
222,497 |
|
Interest-bearing
transaction accounts |
|
192,482 |
|
|
151,865 |
|
|
154,351 |
|
|
165,921 |
|
|
155,814 |
|
Money market
accounts |
|
603,872 |
|
|
671,420 |
|
|
646,336 |
|
|
612,642 |
|
|
591,190 |
|
Certificates of
deposit |
|
62,197 |
|
|
64,235 |
|
|
68,284 |
|
|
79,986 |
|
|
93,252 |
|
Wholesale deposits |
|
449,225 |
|
|
477,054 |
|
|
475,955 |
|
|
487,483 |
|
|
476,617 |
|
Total deposits |
|
$ |
1,566,199 |
|
|
$ |
1,607,944 |
|
|
$ |
1,581,588 |
|
|
$ |
1,577,231 |
|
|
$ |
1,539,370 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trust Assets
|
|
|
(Unaudited) |
|
As of |
(in
thousands) |
|
September 30, 2016 |
|
June 30, 2016 |
|
March 31, 2016 |
|
December 31, 2015 |
|
September 30, 2015 |
Trust assets under
management |
|
$ |
935,584 |
|
|
$ |
906,239 |
|
|
$ |
896,414 |
|
|
$ |
817,926 |
|
|
$ |
791,150 |
|
Trust assets under
administration |
|
231,825 |
|
|
227,864 |
|
|
210,357 |
|
|
203,181 |
|
|
187,495 |
|
Total trust assets |
|
$ |
1,167,409 |
|
|
$ |
1,134,103 |
|
|
$ |
1,106,771 |
|
|
$ |
1,021,107 |
|
|
$ |
978,645 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
TANGIBLE BOOK VALUE
“Tangible book value per share” is a non-GAAP measure
representing tangible common equity divided by total common shares
outstanding. “Tangible common equity” itself is a non-GAAP
measure representing common stockholders’ equity reduced by
intangible assets, if any. The Company’s management believes
that this measure is important to many investors in the marketplace
who are interested in period-to-period changes in book value per
common share exclusive of changes in intangible assets. The
information provided below reconciles tangible book value per share
and tangible common equity to their most comparable GAAP
measures.
|
|
|
(Unaudited) |
|
As of |
(Dollars in
thousands, except per share amounts) |
|
September 30, 2016 |
|
June 30, 2016 |
|
March 31, 2016 |
|
December 31, 2015 |
|
September 30, 2015 |
Common stockholders’
equity |
|
$ |
159,931 |
|
|
$ |
158,394 |
|
|
$ |
155,199 |
|
|
$ |
150,832 |
|
|
$ |
147,967 |
|
Goodwill and other
intangible assets |
|
(12,762 |
) |
|
(12,923 |
) |
|
(12,606 |
) |
|
(12,493 |
) |
|
(12,244 |
) |
Tangible common
equity |
|
$ |
147,169 |
|
|
$ |
145,471 |
|
|
$ |
142,593 |
|
|
$ |
138,339 |
|
|
$ |
135,723 |
|
Common shares
outstanding |
|
8,717,299 |
|
|
8,703,942 |
|
|
8,700,172 |
|
|
8,699,410 |
|
|
8,698,755 |
|
Book value per
share |
|
$ |
18.35 |
|
|
$ |
18.20 |
|
|
$ |
17.84 |
|
|
$ |
17.34 |
|
|
$ |
17.01 |
|
Tangible book value per
share |
|
16.88 |
|
|
16.71 |
|
|
16.39 |
|
|
15.90 |
|
|
15.60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS
‘‘Tangible common equity to tangible assets’’ is defined as the
ratio of common stockholders’ equity reduced by intangible assets,
if any, divided by total assets reduced by intangible assets, if
any. The Company’s management believes that this measure is
important to many investors in the marketplace who are interested
in the relative changes from period to period in common equity and
total assets, each exclusive of changes in intangible assets.
The information below reconciles tangible common equity and
tangible assets to their most comparable GAAP measures.
|
|
|
(Unaudited) |
|
As of |
(Dollars in
thousands) |
|
September 30, 2016 |
|
June 30, 2016 |
|
March 31, 2016 |
|
December 31, 2015 |
|
September 30, 2015 |
Common stockholders’
equity |
|
$ |
159,931 |
|
|
$ |
158,394 |
|
|
$ |
155,199 |
|
|
$ |
150,832 |
|
|
$ |
147,967 |
|
Goodwill and other
intangible assets |
|
(12,762 |
) |
|
(12,923 |
) |
|
(12,606 |
) |
|
(12,493 |
) |
|
(12,244 |
) |
Tangible common
equity |
|
$ |
147,169 |
|
|
$ |
145,471 |
|
|
$ |
142,593 |
|
|
$ |
138,339 |
|
|
$ |
135,723 |
|
Total assets |
|
$ |
1,772,438 |
|
|
$ |
1,819,069 |
|
|
$ |
1,790,132 |
|
|
$ |
1,782,081 |
|
|
$ |
1,743,327 |
|
Goodwill and other
intangible assets |
|
(12,762 |
) |
|
(12,923 |
) |
|
(12,606 |
) |
|
(12,493 |
) |
|
(12,244 |
) |
Tangible assets |
|
$ |
1,759,676 |
|
|
$ |
1,806,146 |
|
|
$ |
1,777,526 |
|
|
$ |
1,769,588 |
|
|
$ |
1,731,083 |
|
Tangible common equity
to tangible assets |
|
8.36 |
% |
|
8.05 |
% |
|
8.02 |
% |
|
7.82 |
% |
|
7.84 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EFFICIENCY RATIO
“Efficiency ratio” is a non-GAAP measure representing
non-interest expense excluding the effects of losses or gains on
foreclosed properties, other discrete items that are unrelated to
the Company’s primary business activities and amortization of other
intangible assets, if any, divided by operating revenue, which is
equal to net interest income plus non-interest income less realized
gains or losses on securities, if any. 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
business. The information provided below reconciles the
efficiency ratio to its most comparable GAAP measure.
|
|
|
|
|
(Unaudited) |
|
For the Three Months Ended |
|
For the Nine Months Ended |
(Dollars in
thousands) |
|
September 30, 2016 |
|
June 30, 2016 |
|
March 31, 2016 |
|
December 31, 2015 |
|
September 30, 2015 |
|
September 30, 2016 |
|
September 30, 2015 |
Total non-interest
expense |
|
$ |
15,753 |
|
|
$ |
13,458 |
|
|
$ |
12,699 |
|
|
$ |
11,684 |
|
|
$ |
11,984 |
|
|
$ |
41,910 |
|
|
$ |
35,690 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss (gain) on foreclosed
properties |
|
— |
|
|
93 |
|
|
— |
|
|
7 |
|
|
(163 |
) |
|
93 |
|
|
(178 |
) |
Amortization of other intangible
assets |
|
16 |
|
|
16 |
|
|
16 |
|
|
17 |
|
|
18 |
|
|
48 |
|
|
55 |
|
Recourse reserve |
|
375 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
375 |
|
|
— |
|
Impairment of tax credit
investments |
|
3,314 |
|
|
94 |
|
|
112 |
|
|
— |
|
|
— |
|
|
3,520 |
|
|
— |
|
Total operating
expense |
|
$ |
12,048 |
|
|
$ |
13,255 |
|
|
$ |
12,571 |
|
|
$ |
11,660 |
|
|
$ |
12,129 |
|
|
$ |
37,874 |
|
|
$ |
35,813 |
|
Net interest
income |
|
$ |
15,295 |
|
|
$ |
15,741 |
|
|
$ |
15,539 |
|
|
$ |
14,912 |
|
|
$ |
14,610 |
|
|
$ |
46,575 |
|
|
$ |
43,728 |
|
Total non-interest
income |
|
3,640 |
|
|
5,823 |
|
|
4,594 |
|
|
4,935 |
|
|
4,102 |
|
|
14,057 |
|
|
12,076 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of securities |
|
— |
|
|
7 |
|
|
— |
|
|
— |
|
|
— |
|
|
7 |
|
|
— |
|
Total operating
revenue |
|
$ |
18,935 |
|
|
$ |
21,557 |
|
|
$ |
20,133 |
|
|
$ |
19,847 |
|
|
$ |
18,712 |
|
|
$ |
60,625 |
|
|
$ |
55,804 |
|
Efficiency ratio |
|
63.63 |
% |
|
61.49 |
% |
|
62.44 |
% |
|
58.75 |
% |
|
64.82 |
% |
|
62.47 |
% |
|
64.18 |
% |
CONTACT:
First Business Financial Services, Inc.
Edward G. Sloane, Jr.
Chief Financial Officer
608-232-5970
esloane@firstbusiness.com
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