-- Highlighted by Record Trust and Investment
Services Fee Income, Strong Loan Growth and an 8% Increase in
Quarterly Cash Dividend Declared in January --
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 first quarter 2017 results including record trust
and investment services fee income and solid loan growth. Overall
performance trends reflect the Company’s previously disclosed
decision to temporarily slow Small Business Administration (“SBA”)
loan production, beginning in the second half of 2016, in order to
make significant investments in the platform. Overall credit
quality metrics reflect an increase in non-performing assets.
Highlights for the quarter ended March 31, 2017
include:
- Net income totaled $3.4 million, compared to $4.6
million in the first quarter of 2016.
- Diluted earnings per common share measured $0.39, compared
to $0.52 for the first quarter of 2016.
- The Company increased its quarterly cash dividend declared in
January 8.3% to $0.13 per share, compared to $0.12 per share for
the first quarter of 2016.
- Annualized return on average assets and annualized return on
average equity measured 0.77% and 8.31%, respectively, for the
first quarter of 2017, compared to 1.00% and 11.70%, respectively,
for the first quarter of 2016.
- Trust and investment services fee income was a record $1.6
million, compared to $1.3 million for the first quarter of
2016.
- Top line revenue, consisting of net interest income and total
non-interest income, totaled $19.0 million, compared
to $20.1 million for the first quarter of 2016.
- Net interest margin measured 3.51%, compared to 3.59% for the
first quarter of 2016.
- The Company’s efficiency ratio measured 70.85%, compared to
62.44% for the first quarter of 2016.
- Provision for loan and lease losses was $572,000, up from
$525,000 for the first quarter of 2016.
- Provision for loan and lease losses included net recoveries of
$182,000, compared to net charge-offs of $157,000 for the first
quarter of 2016.
- Period-end gross loans and leases receivable increased
to $1.481 billion, up 8.4% annualized from December 31, 2016
and 2.2% from March 31, 2016.
- Non-performing assets as a percent of total assets measured
2.17% at period end, compared to 1.09% at March 31, 2016,
primarily reflecting additional impaired loans related to three
loan relationships.
“The execution of our strategy, including prudent investments in
talent, is reflected in this quarter’s solid loan production and
continued growth in our trust and investment services business,
which again delivered record fee income,” said Corey Chambas,
President and Chief Executive Officer. “We intend to continue this
momentum with the rebuild of our SBA lending business,
strategically diversifying our sources of revenue while improving
operating efficiency. At the same time, we remain committed to
maintaining a lending culture where credit quality is foundational
and we are disappointed with the increase in non-performing assets
that blemished our otherwise positive first quarter
performance.”
Results of Operations
Net interest income of $14.9 million decreased $1.9 million, or
11.1%, compared to the linked quarter and $651,000, or 4.2%,
compared to the first quarter of 2016. The linked quarter
comparison primarily reflects unusually elevated fees collected in
lieu of interest from loan payoffs during the fourth quarter of
2016. Net interest income in the first quarter of 2017 compared to
the prior year period reflected competitive loan pricing pressure,
partially offset by successful efforts to decrease various deposit
rates and increased rates on certain variable-rate loans stemming
from the Federal Open Market Committee raising the targeted federal
funds rate by 25 basis points in December of 2016 and again in
March of 2017.
Net interest margin was 3.51% for the first quarter of 2017,
compared to 3.91% in the fourth quarter of 2016 and 3.59% in the
first quarter of 2016. First quarter 2017 net interest margin
declined from the linked quarter principally due to the
aforementioned elevated amount of fees collected in lieu of
interest during the fourth quarter of 2016. Compared to the prior
year period, first quarter 2017 net interest margin reflected
continued loan yield compression, principally due to a shift in the
mix of loan originations toward lower-yielding conventional
commercial loans in recent quarters, in line with market demand.
Asset yield compression was partially offset by successful efforts
to decrease various deposit rates and utilize an efficient mix of
wholesale funding sources, and the aforementioned targeted federal
funds rate increases. The Company’s cost of interest-bearing
liabilities declined from 1.07% for the first quarter of 2016 to
1.04% for the first quarter of 2017, despite a rising interest rate
environment.
Management expects the successful continuation of these efforts
will allow the Company to maintain a net interest margin of 3.50%
or better. The collection of loan fees in lieu of interest is an
expected source of volatility to quarterly net interest income and
net interest margin, given the nature of the Company’s specialty
lending business. Net interest margin may also experience
volatility due to events such as the collection of interest on
loans previously in non-accrual status or the accumulation of
significant short-term deposit inflows.
Non-interest income of $4.1 million for the first
quarter of 2017, representing 21.4% of total revenue,
increased 3.4% from the fourth quarter of 2016 and
decreased 11.6% from the first quarter of 2016. The
increase from the linked quarter reflected record trust and
investment services fee income and increased swap fee income. The
decrease from the prior year primarily reflects lower gains from
SBA loan sales resulting from the Company’s previously announced
decision to temporarily slow loan production while making
investments in the SBA platform. Gains on the sale of SBA loans
totaled $360,000 in the first quarter of 2017, compared to $546,000
in the linked quarter and $1.4 million in the first quarter of
2016. Trust and investment services fee income totaled a record
$1.6 million in the first quarter of 2017, increasing $356,000, or
28.0%, compared to the same quarter in the prior year. Existing
client relationships and business development efforts remained
strong as trust assets under management and administration reached
a record $1.304 billion at March 31, 2017, up $99.4 million, or
33.0% annualized, from the prior quarter and $197.0 million, or
17.8%, from March 31, 2016.
Non-interest expense was $13.6 million in the first quarter of
2017, $14.5 million in the fourth quarter of 2016 and $12.7 million
in the first quarter of 2016. As previously disclosed, fourth
quarter 2016 non-interest expense included $794,000 for one-time
termination fees associated with consolidating the Company’s
technology vendor relationships and a $1.6 million SBA recourse
provision for estimated losses in the outstanding guaranteed
portion of SBA loans sold. No material SBA recourse provision was
recognized in the first quarters of 2016 or 2017, though changes to
SBA recourse reserves may be a source of non-interest expense
volatility in future quarters. In addition, the Company’s first
quarter 2017 marketing expenses were less than recent quarters,
primarily reflecting the timing of rebranding efforts ahead of the
Company’s expected consolidation of its bank charters in the second
quarter of 2017.
First quarter 2017 compensation costs increased by $1.6 million
compared to the linked quarter primarily due to annual merit
increases and a return to normalized accruals for the Company’s
annual bonus plan, while fourth quarter 2016 expenses included a
$513,000 reduction to performance-related compensation accruals.
Growth in compensation costs from the previous year reflects annual
merit increases as well as recent additions to the SBA lending team
as part of enhancements to that business line. Management expects
to continue strategically investing in talent as opportunities are
presented in 2017 and beyond.
The Company’s first quarter 2017 efficiency ratio was 70.85%,
compared to 57.52% for the linked quarter and 62.44% for the first
quarter of 2016. Unusually elevated loan fees and other
non-recurring items meaningfully lowered the fourth quarter 2016
efficiency ratio. The decrease in operating efficiency from the
prior year primarily reflects lower gains from SBA loan sales
resulting from the Company’s previously announced decision to
temporarily slow loan production while making investments in the
SBA platform. Over time the Company intends to achieve its target
efficiency ratio range of 58-62% through proactive expense
management efforts, including its charter consolidation plans, as
well as revenue initiatives such as the ramp up of SBA lending
production in the second half of 2017 and into 2018.
“We are working diligently in 2017 to return to our historical
targeted levels of operational efficiency,” Chambas said. “We are
building a best-in-class infrastructure, with the people and
processes in place to generate high-quality production in the
quarters and years ahead. At the same time, we expect our pending
charter consolidation and recently announced core system conversion
will create capacity within our existing workforce to accommodate
future growth in a highly efficient manner.”
The Company recorded provision for loan and lease losses
totaling $572,000 in the first quarter of 2017, compared to
$994,000 in the linked quarter and $525,000 in the first quarter of
2016. Net recoveries of $182,000 represented an annualized 0.05% of
average loans and leases for the first quarter of 2017. This
compares to annualized net charge-offs measuring 0.04% of average
loans and leases in both the linked quarter and first quarter of
2016, respectively.
The effective tax rate was 29.5% in the first quarter 2017,
compared to 23.2% in the linked quarter and 34.1% in the first
quarter of 2016. No significant discrete items were recognized
during the first quarter of 2017.
Balance Sheet
Period-end gross loans and leases receivable totaled $1.481
billion at March 31, 2017, increasing $30.3 million, or 8.4%
annualized, from December 31, 2016 and increasing $32.4 million, or
2.2%, from March 31, 2016. On an average basis, gross loans and
leases of $1.456 billion decreased by $12.1 million, or 0.8%,
compared to the fourth quarter of 2016, as first quarter growth
largely occurred late in the quarter.
“First quarter 2017 loan growth of $30.3 million marks the
Company’s strongest first quarter expansion since 2008,” said
Chambas. “In what is typically our weakest quarter for loan growth,
our team created great momentum to begin the year. Their
exceptional performance positions us well to achieve our loan
growth goals in 2017 and demonstrates the merits of our significant
investments in talent over the past several years.”
Period-end in-market deposits - consisting of all transaction
accounts, money market accounts and non-wholesale deposits -
totaled $1.104 billion, or 69.5% of total bank funding at March 31,
2017, compared to $1.122 billion, or 71.4% at December 31, 2016 and
$1.106 billion or 69.6% at March 31, 2016. The decrease in
in-market deposits compared to the linked quarter was primarily due
to expected seasonality of our non-transaction accounts. Period-end
wholesale bank funds were $484.5 million at March 31, 2017,
including brokered certificates of deposit of $342.6 million,
deposits gathered through internet deposit listing services of
$45.8 million and Federal Home Loan Bank (“FHLB”) advances of $96.1
million. Consistent with the Corporation’s longstanding funding
strategy to use the most efficient and cost effective source of
wholesale funds, management replaced maturing wholesale deposits
with fixed rate FHLB advances at various maturity terms during the
quarter. As part of this efficient funding strategy, during the
first quarter of 2017, the Company increased its use of FHLB
borrowings by $62.5 million. Over time, management intends to
maintain a ratio of in-market deposits to total bank funding
sources in line with the Company's historical range of 60%-70%.
Asset Quality
First Business’s total non-performing assets were $39.0 million
at March 31, 2017, increasing by $12.3 million, or 46.2%, compared
to $26.7 million at December 31, 2016 and increasing by $19.5
million, or 99.6%, compared to $19.5 million at March 31, 2016. As
a percent of total assets, non-performing assets measured 2.17% at
March 31, 2017, compared to 1.50% and 1.09% at the end of the
linked quarter and first quarter of 2016, respectively. Included in
these totals are non-performing assets at Alterra which totaled
$21.7 million at March 31, 2017, compared to $15.9 million at
December 31, 2016 and $5.5 million at March 31, 2016.
Deterioration in a $6.7 million commercial and industrial loan
to a Wisconsin-based client had a meaningful impact on the
Company’s non-performing assets during the first quarter. The
borrower has no additional unfunded commitments and the loan did
not require a specific reserve or charge-off as of March 31, 2017.
The Company does not believe this borrower’s deterioration is
indicative of any broader trend in its portfolio.
Two unrelated SBA relationships, an owner-occupied commercial
real estate loan and a construction loan, accounted for the
remaining increase in non-performing assets during the first
quarter. The owner-occupied loan represented the repurchase of a
previously sold portion of an SBA loan, which the Company
identified as impaired during 2016. The construction loan
impairment was primarily driven by rapid deterioration of the
client’s business that also impacted our source of repayment. The
impaired loan increases related to these loan relationships were
fully-collateralized as of March 31, 2017.
Notwithstanding recent increases in non-performing assets, the
Company remains committed to its credit culture and the high
standards long established within the First Business franchise.
Capital Strength
The Company's capital ratios continued to exceed the highest
required regulatory benchmark levels. As of March 31, 2017, total
capital to risk-weighted assets was 11.55%, tier 1 capital to
risk-weighted assets was 9.16%, tier 1 leverage capital to adjusted
average assets was 9.26% and common equity tier 1 capital to
risk-weighted assets was 8.60%.
Quarterly Dividend Increased
As previously announced, during January 2017 the Company's Board
of Directors declared a $0.01 increase in its regular quarterly
dividend, to $0.13 per share. The dividend was paid on
February 24, 2017 to shareholders of record at the close of
business on February 10, 2017. Measured against first quarter
2017 diluted earnings per share of $0.39, the dividend represents a
33.3% 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 the economy or business conditions, either
nationally or in our markets.
- Increases in defaults by borrowers and other
delinquencies.
- Our ability to manage growth effectively, including the
successful expansion of our client support, administrative
infrastructure and internal management systems.
- Fluctuations in interest rates and market prices.
- The consequences of continued bank acquisitions and mergers in
our markets, 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 the applicable SBA regulations in order
to maintain the eligibility of the guaranteed portion of SBA
loans.
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 for the year ended December 31, 2016 and other filings
with the Securities and Exchange Commission.
SELECTED FINANCIAL CONDITION DATA |
|
(Unaudited) |
|
As of |
(in
thousands) |
|
March 31, 2017 |
|
December 31, 2016 |
|
September 30, 2016 |
|
June 30, 2016 |
|
March 31, 2016 |
ASSETS |
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
60,899 |
|
|
$ |
77,517 |
|
|
$ |
68,764 |
|
|
$ |
131,611 |
|
|
$ |
104,854 |
|
Securities available-for-sale, at fair value |
|
147,058 |
|
|
145,893 |
|
|
154,480 |
|
|
137,692 |
|
|
140,823 |
|
Securities held-to-maturity, at amortized cost |
|
38,485 |
|
|
38,612 |
|
|
35,109 |
|
|
36,167 |
|
|
36,485 |
|
Loans
held for sale |
|
3,924 |
|
|
1,111 |
|
|
2,627 |
|
|
5,548 |
|
|
1,697 |
|
Loans and
leases receivable |
|
1,480,971 |
|
|
1,450,675 |
|
|
1,458,297 |
|
|
1,451,815 |
|
|
1,448,586 |
|
Allowance
for loan and lease losses |
|
(21,666 |
) |
|
(20,912 |
) |
|
(20,067 |
) |
|
(18,154 |
) |
|
(16,684 |
) |
Loans and
leases, net |
|
1,459,305 |
|
|
1,429,763 |
|
|
1,438,230 |
|
|
1,433,661 |
|
|
1,431,902 |
|
Premises
and equipment, net |
|
3,955 |
|
|
3,772 |
|
|
3,898 |
|
|
3,969 |
|
|
3,868 |
|
Foreclosed properties |
|
1,472 |
|
|
1,472 |
|
|
1,527 |
|
|
1,548 |
|
|
1,677 |
|
Bank-owned life insurance |
|
39,358 |
|
|
39,048 |
|
|
29,028 |
|
|
28,784 |
|
|
28,541 |
|
Federal
Home Loan Bank and Federal Reserve Bank stock, at cost |
|
4,782 |
|
|
2,131 |
|
|
2,165 |
|
|
2,163 |
|
|
2,734 |
|
Goodwill
and other intangible assets |
|
12,774 |
|
|
12,773 |
|
|
12,762 |
|
|
12,923 |
|
|
12,606 |
|
Accrued
interest receivable and other assets |
|
28,578 |
|
|
28,607 |
|
|
23,848 |
|
|
25,003 |
|
|
24,945 |
|
Total assets |
|
$ |
1,800,590 |
|
|
$ |
1,780,699 |
|
|
$ |
1,772,438 |
|
|
$ |
1,819,069 |
|
|
$ |
1,790,132 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
In-market
deposits |
|
$ |
1,104,281 |
|
|
$ |
1,122,174 |
|
|
$ |
1,116,974 |
|
|
$ |
1,130,890 |
|
|
$ |
1,105,633 |
|
Wholesale
deposits |
|
388,433 |
|
|
416,681 |
|
|
449,225 |
|
|
477,054 |
|
|
475,955 |
|
Total
deposits |
|
1,492,714 |
|
|
1,538,855 |
|
|
1,566,199 |
|
|
1,607,944 |
|
|
1,581,588 |
|
Federal
Home Loan Bank advances and other borrowings |
|
121,841 |
|
|
59,676 |
|
|
29,946 |
|
|
33,570 |
|
|
35,011 |
|
Junior
subordinated notes |
|
10,008 |
|
|
10,004 |
|
|
10,001 |
|
|
9,997 |
|
|
9,993 |
|
Accrued
interest payable and other liabilities |
|
11,893 |
|
|
10,514 |
|
|
6,361 |
|
|
9,164 |
|
|
8,341 |
|
Total
liabilities |
|
1,636,456 |
|
|
1,619,049 |
|
|
1,612,507 |
|
|
1,660,675 |
|
|
1,634,933 |
|
Total
stockholders’ equity |
|
164,134 |
|
|
161,650 |
|
|
159,931 |
|
|
158,394 |
|
|
155,199 |
|
Total liabilities and stockholders’ equity |
|
$ |
1,800,590 |
|
|
$ |
1,780,699 |
|
|
$ |
1,772,438 |
|
|
$ |
1,819,069 |
|
|
$ |
1,790,132 |
|
STATEMENTS OF INCOME |
|
|
|
(Unaudited) |
|
As of and for the Three Months
Ended |
(Dollars in
thousands, except per share amounts) |
|
March 31, 2017 |
|
December 31, 2016 |
|
September 30, 2016 |
|
June 30, 2016 |
|
March 31, 2016 |
Total interest
income |
|
$ |
18,447 |
|
|
$ |
20,321 |
|
|
$ |
18,898 |
|
|
$ |
19,555 |
|
|
$ |
19,343 |
|
Total interest
expense |
|
3,559 |
|
|
3,568 |
|
|
3,603 |
|
|
3,814 |
|
|
3,804 |
|
Net
interest income |
|
14,888 |
|
|
16,753 |
|
|
15,295 |
|
|
15,741 |
|
|
15,539 |
|
Provision for loan and
lease losses |
|
572 |
|
|
994 |
|
|
3,537 |
|
|
2,762 |
|
|
525 |
|
Net
interest income after provision for loan and lease losses |
|
14,316 |
|
|
15,759 |
|
|
11,758 |
|
|
12,979 |
|
|
15,014 |
|
Trust and investment
services fee income |
|
1,629 |
|
|
1,375 |
|
|
1,364 |
|
|
1,344 |
|
|
1,273 |
|
Gain on sale of SBA
loans |
|
360 |
|
|
546 |
|
|
347 |
|
|
2,131 |
|
|
1,376 |
|
Service charges on
deposits |
|
765 |
|
|
743 |
|
|
772 |
|
|
733 |
|
|
742 |
|
Loan fees |
|
458 |
|
|
639 |
|
|
506 |
|
|
676 |
|
|
609 |
|
Other non-interest
income |
|
851 |
|
|
628 |
|
|
651 |
|
|
939 |
|
|
594 |
|
Total
non-interest income |
|
4,063 |
|
|
3,931 |
|
|
3,640 |
|
|
5,823 |
|
|
4,594 |
|
Compensation |
|
8,683 |
|
|
7,091 |
|
|
7,637 |
|
|
8,447 |
|
|
8,370 |
|
Occupancy |
|
475 |
|
|
481 |
|
|
530 |
|
|
500 |
|
|
508 |
|
Professional fees |
|
1,010 |
|
|
1,144 |
|
|
1,065 |
|
|
961 |
|
|
861 |
|
Data processing |
|
584 |
|
|
1,327 |
|
|
623 |
|
|
697 |
|
|
651 |
|
Marketing |
|
370 |
|
|
628 |
|
|
528 |
|
|
448 |
|
|
734 |
|
Equipment |
|
283 |
|
|
276 |
|
|
292 |
|
|
341 |
|
|
280 |
|
Computer software |
|
683 |
|
|
553 |
|
|
539 |
|
|
574 |
|
|
494 |
|
FDIC insurance |
|
380 |
|
|
483 |
|
|
444 |
|
|
254 |
|
|
291 |
|
Collateral liquidation
costs |
|
92 |
|
|
58 |
|
|
89 |
|
|
68 |
|
|
47 |
|
Net loss on foreclosed
properties |
|
— |
|
|
29 |
|
|
— |
|
|
93 |
|
|
— |
|
Impairment of tax
credit investments |
|
113 |
|
|
171 |
|
|
3,314 |
|
|
94 |
|
|
112 |
|
SBA recourse
provision |
|
6 |
|
|
1,619 |
|
|
375 |
|
|
74 |
|
|
— |
|
Other non-interest
expense |
|
881 |
|
|
663 |
|
|
317 |
|
|
907 |
|
|
351 |
|
Total
non-interest expense |
|
13,560 |
|
|
14,523 |
|
|
15,753 |
|
|
13,458 |
|
|
12,699 |
|
Income (loss) before
income tax expense |
|
4,819 |
|
|
5,167 |
|
|
(355 |
) |
|
5,344 |
|
|
6,909 |
|
Income tax
expense (benefit)(1) |
|
1,422 |
|
|
1,199 |
|
|
(3,020 |
) |
|
1,621 |
|
|
2,356 |
|
Net income(1) |
|
$ |
3,397 |
|
|
$ |
3,968 |
|
|
$ |
2,665 |
|
|
$ |
3,723 |
|
|
$ |
4,553 |
|
|
|
|
|
|
|
|
|
|
|
|
Per common share: |
|
|
|
|
|
|
|
|
|
|
Basic earnings(1) |
|
$ |
0.39 |
|
|
$ |
0.46 |
|
|
$ |
0.31 |
|
|
$ |
0.43 |
|
|
$ |
0.52 |
|
Diluted earnings(1) |
|
0.39 |
|
|
0.46 |
|
|
0.31 |
|
|
0.43 |
|
|
0.52 |
|
Dividends declared |
|
0.13 |
|
|
0.12 |
|
|
0.12 |
|
|
0.12 |
|
|
0.12 |
|
Book value |
|
18.83 |
|
|
18.55 |
|
|
18.35 |
|
|
18.20 |
|
|
17.84 |
|
Tangible book
value |
|
17.36 |
|
|
17.08 |
|
|
16.88 |
|
|
16.71 |
|
|
16.39 |
|
Weighted-average common
shares outstanding(2) |
|
8,600,620 |
|
|
8,587,814 |
|
|
8,582,836 |
|
|
8,566,718 |
|
|
8,565,050 |
|
Weighted-average
diluted common shares outstanding(2) |
|
8,600,620 |
|
|
8,587,814 |
|
|
8,582,836 |
|
|
8,566,718 |
|
|
8,565,050 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Results as of and for the three months ended September 30,
2016, June 30, 2016, and March 31, 2016, have been adjusted to
reflect early adoption of ASU 2016-09, “Compensation - Stock
Compensation (Topic 718): Improvements to Employee Share-Based
Payment Accounting.” |
(2) Excluding participating securities. |
NET INTEREST INCOME ANALYSIS |
|
(Unaudited) |
|
For the Three Months Ended |
(Dollars in
thousands) |
|
March 31, 2017 |
|
December 31, 2016 |
|
March 31, 2016 |
|
|
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) |
|
$ |
946,110 |
|
|
$ |
10,318 |
|
|
4.36 |
% |
|
$ |
950,168 |
|
|
$ |
11,561 |
|
|
4.87 |
% |
|
$ |
922,859 |
|
|
$ |
10,730 |
|
|
4.65 |
% |
Commercial and
industrial loans(1) |
|
451,552 |
|
|
6,595 |
|
|
5.84 |
% |
|
462,778 |
|
|
7,309 |
|
|
6.32 |
% |
|
470,503 |
|
|
7,082 |
|
|
6.02 |
% |
Direct financing
leases(1) |
|
30,123 |
|
|
323 |
|
|
4.29 |
% |
|
29,476 |
|
|
325 |
|
|
4.41 |
% |
|
30,845 |
|
|
343 |
|
|
4.45 |
% |
Consumer and other
loans(1) |
|
28,202 |
|
|
286 |
|
|
4.06 |
% |
|
25,714 |
|
|
271 |
|
|
4.22 |
% |
|
27,427 |
|
|
289 |
|
|
4.21 |
% |
Total loans and leases
receivable(1) |
|
1,455,987 |
|
|
17,522 |
|
|
4.81 |
% |
|
1,468,136 |
|
|
19,466 |
|
|
5.30 |
% |
|
1,451,634 |
|
|
18,444 |
|
|
5.08 |
% |
Mortgage-related
securities(2) |
|
145,804 |
|
|
618 |
|
|
1.70 |
% |
|
152,894 |
|
|
607 |
|
|
1.59 |
% |
|
144,899 |
|
|
599 |
|
|
1.65 |
% |
Other investment
securities(3) |
|
38,554 |
|
|
161 |
|
|
1.67 |
% |
|
34,414 |
|
|
136 |
|
|
1.58 |
% |
|
31,326 |
|
|
123 |
|
|
1.57 |
% |
FHLB and FRB stock |
|
3,150 |
|
|
24 |
|
|
3.05 |
% |
|
2,702 |
|
|
18 |
|
|
2.66 |
% |
|
2,802 |
|
|
21 |
|
|
2.92 |
% |
Short-term
investments |
|
51,136 |
|
|
122 |
|
|
0.95 |
% |
|
56,364 |
|
|
94 |
|
|
0.67 |
% |
|
101,420 |
|
|
156 |
|
|
0.62 |
% |
Total
interest-earning assets |
|
1,694,631 |
|
|
18,447 |
|
|
4.35 |
% |
|
1,714,510 |
|
|
20,321 |
|
|
4.74 |
% |
|
1,732,081 |
|
|
19,343 |
|
|
4.47 |
% |
Non-interest-earning
assets |
|
80,254 |
|
|
|
|
|
|
67,719 |
|
|
|
|
|
|
88,361 |
|
|
|
|
|
Total assets |
|
$ |
1,774,885 |
|
|
|
|
|
|
$ |
1,782,229 |
|
|
|
|
|
|
$ |
1,820,442 |
|
|
|
|
|
Interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction
accounts |
|
$ |
192,297 |
|
|
232 |
|
|
0.48 |
% |
|
$ |
185,336 |
|
|
184 |
|
|
0.40 |
% |
|
$ |
162,793 |
|
|
88 |
|
|
0.22 |
% |
Money market |
|
627,188 |
|
|
660 |
|
|
0.42 |
% |
|
618,723 |
|
|
659 |
|
|
0.43 |
% |
|
646,362 |
|
|
828 |
|
|
0.51 |
% |
Certificates of
deposit |
|
55,393 |
|
|
132 |
|
|
0.95 |
% |
|
60,149 |
|
|
145 |
|
|
0.96 |
% |
|
73,163 |
|
|
151 |
|
|
0.83 |
% |
Wholesale deposits |
|
400,672 |
|
|
1,649 |
|
|
1.65 |
% |
|
437,412 |
|
|
1,767 |
|
|
1.62 |
% |
|
497,274 |
|
|
1,986 |
|
|
1.60 |
% |
Total
interest-bearing deposits |
|
1,275,550 |
|
|
2,673 |
|
|
0.84 |
% |
|
1,301,620 |
|
|
2,755 |
|
|
0.85 |
% |
|
1,379,592 |
|
|
3,053 |
|
|
0.89 |
% |
FHLB advances |
|
60,703 |
|
|
154 |
|
|
1.01 |
% |
|
30,995 |
|
|
72 |
|
|
0.93 |
% |
|
7,537 |
|
|
19 |
|
|
1.03 |
% |
Other borrowings |
|
25,921 |
|
|
458 |
|
|
7.07 |
% |
|
25,387 |
|
|
461 |
|
|
7.26 |
% |
|
27,006 |
|
|
455 |
|
|
6.74 |
% |
Junior subordinated
notes |
|
10,006 |
|
|
274 |
|
|
10.97 |
% |
|
10,002 |
|
|
280 |
|
|
11.20 |
% |
|
9,991 |
|
|
277 |
|
|
11.09 |
% |
Total
interest-bearing liabilities |
|
1,372,180 |
|
|
3,559 |
|
|
1.04 |
% |
|
1,368,004 |
|
|
3,568 |
|
|
1.04 |
% |
|
1,424,126 |
|
|
3,804 |
|
|
1.07 |
% |
Non-interest-bearing
demand deposit accounts |
|
228,015 |
|
|
|
|
|
|
246,016 |
|
|
|
|
|
|
228,294 |
|
|
|
|
|
Other
non-interest-bearing liabilities |
|
11,223 |
|
|
|
|
|
|
6,655 |
|
|
|
|
|
|
12,337 |
|
|
|
|
|
Total
liabilities |
|
1,611,418 |
|
|
|
|
|
|
1,620,675 |
|
|
|
|
|
|
1,664,757 |
|
|
|
|
|
Stockholders’
equity |
|
163,467 |
|
|
|
|
|
|
161,554 |
|
|
|
|
|
|
155,685 |
|
|
|
|
|
Total
liabilities and stockholders’ equity |
|
$ |
1,774,885 |
|
|
|
|
|
|
$ |
1,782,229 |
|
|
|
|
|
|
$ |
1,820,442 |
|
|
|
|
|
Net interest
income |
|
|
|
$ |
14,888 |
|
|
|
|
|
|
$ |
16,753 |
|
|
|
|
|
|
$ |
15,539 |
|
|
|
Interest rate
spread |
|
|
|
|
|
3.31 |
% |
|
|
|
|
|
3.70 |
% |
|
|
|
|
|
3.40 |
% |
Net interest-earning
assets |
|
$ |
322,451 |
|
|
|
|
|
|
$ |
346,506 |
|
|
|
|
|
|
$ |
307,955 |
|
|
|
|
|
Net interest
margin |
|
|
|
|
|
3.51 |
% |
|
|
|
|
|
3.91 |
% |
|
|
|
|
|
3.59 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 |
(Unaudited) |
|
March 31, 2017 |
|
December 31, 2016 |
|
September 30, 2016 |
|
June 30, 2016 |
|
March 31, 2016 |
Return on average
assets (annualized)(1) |
|
0.77 |
% |
|
0.89 |
% |
|
0.59 |
% |
|
0.82 |
% |
|
1.00 |
% |
Return on average
equity (annualized)(1) |
|
8.31 |
% |
|
9.82 |
% |
|
6.69 |
% |
|
9.45 |
% |
|
11.70 |
% |
Efficiency ratio |
|
70.85 |
% |
|
57.52 |
% |
|
63.63 |
% |
|
61.14 |
% |
|
62.44 |
% |
Interest rate
spread |
|
3.31 |
% |
|
3.70 |
% |
|
3.28 |
% |
|
3.38 |
% |
|
3.40 |
% |
Net interest
margin |
|
3.51 |
% |
|
3.91 |
% |
|
3.50 |
% |
|
3.59 |
% |
|
3.59 |
% |
Average
interest-earning assets to average interest-bearing
liabilities |
|
123.50 |
% |
|
125.33 |
% |
|
126.45 |
% |
|
124.32 |
% |
|
121.62 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Results for the three months ended September 30, 2016, June 30,
2016, and March 31, 2016, have been adjusted to reflect early
adoption of ASU 2016-09, “Compensation - Stock Compensation (Topic
718): Improvements to Employee Share-Based Payment
Accounting.” |
ASSET QUALITY
RATIOS |
|
|
|
|
|
(Unaudited) |
|
As of |
(Dollars in
thousands) |
|
March 31, 2017 |
|
December 31, 2016 |
|
September 30, 2016 |
|
June 30, 2016 |
|
March 31, 2016 |
Non-performing loans
and leases |
|
$ |
37,519 |
|
|
$ |
25,194 |
|
|
$ |
25,712 |
|
|
$ |
22,680 |
|
|
$ |
17,861 |
|
Foreclosed
properties |
|
1,472 |
|
|
1,472 |
|
|
1,527 |
|
|
1,548 |
|
|
1,677 |
|
Total
non-performing assets |
|
38,991 |
|
|
26,666 |
|
|
27,239 |
|
|
24,228 |
|
|
19,538 |
|
Performing troubled
debt restructurings |
|
702 |
|
|
717 |
|
|
732 |
|
|
788 |
|
|
1,628 |
|
Total
impaired assets |
|
$ |
39,693 |
|
|
$ |
27,383 |
|
|
$ |
27,971 |
|
|
$ |
25,016 |
|
|
$ |
21,166 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing loans
and leases as a percent of total gross loans and leases |
|
2.53 |
% |
|
1.74 |
% |
|
1.76 |
% |
|
1.56 |
% |
|
1.23 |
% |
Non-performing assets
as a percent of total gross loans and leases plus foreclosed
properties |
|
2.63 |
% |
|
1.83 |
% |
|
1.86 |
% |
|
1.67 |
% |
|
1.35 |
% |
Non-performing assets
as a percent of total assets |
|
2.17 |
% |
|
1.50 |
% |
|
1.54 |
% |
|
1.33 |
% |
|
1.09 |
% |
Allowance for loan and
lease losses as a percent of total gross loans and leases |
|
1.46 |
% |
|
1.44 |
% |
|
1.37 |
% |
|
1.25 |
% |
|
1.15 |
% |
Allowance for loan and
lease losses as a percent of non-performing loans and leases |
|
57.75 |
% |
|
83.00 |
% |
|
78.05 |
% |
|
80.04 |
% |
|
93.41 |
% |
|
|
|
|
|
|
|
|
|
|
|
Criticized assets: |
|
|
|
|
|
|
|
|
|
|
Special
mention |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Substandard |
|
46,299 |
|
|
34,299 |
|
|
32,135 |
|
|
25,723 |
|
|
33,875 |
|
Doubtful |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Foreclosed properties |
|
1,472 |
|
|
1,472 |
|
|
1,527 |
|
|
1,548 |
|
|
1,677 |
|
Total
criticized assets |
|
$ |
47,771 |
|
|
$ |
35,771 |
|
|
$ |
33,662 |
|
|
$ |
27,271 |
|
|
$ |
35,552 |
|
Criticized assets to
total assets |
|
2.65 |
% |
|
2.01 |
% |
|
1.90 |
% |
|
1.50 |
% |
|
1.99 |
% |
NET CHARGE-OFFS
(RECOVERIES) |
|
|
|
|
|
(Unaudited) |
|
For the Three Months Ended |
(Dollars in
thousands) |
|
March 31, 2017 |
|
December 31, 2016 |
|
September 30, 2016 |
|
June 30, 2016 |
|
March 31, 2016 |
Charge-offs |
|
$ |
209 |
|
|
$ |
344 |
|
|
$ |
1,656 |
|
|
$ |
1,350 |
|
|
$ |
244 |
|
Recoveries |
|
(391 |
) |
|
(194 |
) |
|
(32 |
) |
|
(58 |
) |
|
(87 |
) |
Net (recoveries)
charge-offs |
|
$ |
(182 |
) |
|
$ |
150 |
|
|
$ |
1,624 |
|
|
$ |
1,292 |
|
|
$ |
157 |
|
Net (recoveries)
charge-offs as a percent of average gross loans and leases
(annualized) |
|
(0.05 |
)% |
|
0.04 |
% |
|
0.44 |
% |
|
0.35 |
% |
|
0.04 |
% |
CAPITAL
RATIOS |
|
|
|
|
|
|
|
As of and for the Three Months
Ended |
(Unaudited) |
|
March 31, 2017 |
|
December 31, 2016 |
|
September 30, 2016 |
|
June 30, 2016 |
|
March 31, 2016 |
Total capital to
risk-weighted assets |
|
11.55 |
% |
|
11.74 |
% |
|
11.44 |
% |
|
11.44 |
% |
|
11.24 |
% |
Tier I capital to
risk-weighted assets |
|
9.16 |
% |
|
9.26 |
% |
|
9.02 |
% |
|
9.08 |
% |
|
8.96 |
% |
Common equity tier I
capital to risk-weighted assets |
|
8.60 |
% |
|
8.68 |
% |
|
8.45 |
% |
|
8.50 |
% |
|
8.37 |
% |
Tier I capital to
adjusted assets |
|
9.26 |
% |
|
9.07 |
% |
|
8.75 |
% |
|
8.63 |
% |
|
8.44 |
% |
Tangible common equity
to tangible assets |
|
8.47 |
% |
|
8.42 |
% |
|
8.36 |
% |
|
8.05 |
% |
|
8.02 |
% |
SELECTED OTHER
INFORMATION |
|
|
|
|
|
Loan and Lease
Receivable Composition |
|
|
|
|
|
(Unaudited) |
|
As of |
(in
thousands) |
|
March 31, 2017 |
|
December 31, 2016 |
|
September 30, 2016 |
|
June 30, 2016 |
|
March 31, 2016 |
Commercial real
estate: |
|
|
|
|
|
|
|
|
|
|
Commercial real estate - owner occupied |
|
$ |
183,016 |
|
|
$ |
176,459 |
|
|
$ |
169,170 |
|
|
$ |
167,936 |
|
|
$ |
174,286 |
|
Commercial real estate - non-owner occupied |
|
492,366 |
|
|
473,158 |
|
|
483,540 |
|
|
502,378 |
|
|
441,539 |
|
Land
development |
|
52,663 |
|
|
56,638 |
|
|
60,348 |
|
|
60,599 |
|
|
61,953 |
|
Construction |
|
91,343 |
|
|
101,206 |
|
|
110,426 |
|
|
88,339 |
|
|
117,825 |
|
Multi-family |
|
107,669 |
|
|
92,762 |
|
|
73,081 |
|
|
73,239 |
|
|
84,004 |
|
1-4
family |
|
40,036 |
|
|
45,651 |
|
|
46,341 |
|
|
47,289 |
|
|
50,923 |
|
Total
commercial real estate |
|
967,093 |
|
|
945,874 |
|
|
942,906 |
|
|
939,780 |
|
|
930,530 |
|
Commercial and
industrial |
|
458,778 |
|
|
450,298 |
|
|
464,920 |
|
|
456,297 |
|
|
461,573 |
|
Direct financing
leases, net |
|
29,330 |
|
|
30,951 |
|
|
29,638 |
|
|
30,698 |
|
|
31,617 |
|
Consumer and
other: |
|
|
|
|
|
|
|
|
|
|
Home
equity and second mortgages |
|
8,237 |
|
|
8,412 |
|
|
5,390 |
|
|
7,372 |
|
|
7,366 |
|
Other |
|
18,859 |
|
|
16,329 |
|
|
16,610 |
|
|
18,743 |
|
|
18,510 |
|
Total
consumer and other |
|
27,096 |
|
|
24,741 |
|
|
22,000 |
|
|
26,115 |
|
|
25,876 |
|
Total gross loans and leases receivable |
|
1,482,297 |
|
|
1,451,864 |
|
|
1,459,464 |
|
|
1,452,890 |
|
|
1,449,596 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
Allowance
for loan and lease losses |
|
21,666 |
|
|
20,912 |
|
|
20,067 |
|
|
18,154 |
|
|
16,684 |
|
Deferred
loan fees |
|
1,326 |
|
|
1,189 |
|
|
1,167 |
|
|
1,075 |
|
|
1,010 |
|
Loans and
leases receivable, net |
|
$ |
1,459,305 |
|
|
$ |
1,429,763 |
|
|
$ |
1,438,230 |
|
|
$ |
1,433,661 |
|
|
$ |
1,431,902 |
|
SELECTED OTHER INFORMATION (CONTINUED) |
|
|
|
Deposit
Composition |
|
|
|
|
|
(Unaudited) |
|
As of |
(in
thousands) |
|
March 31, 2017 |
|
December 31, 2016 |
|
September 30, 2016 |
|
June 30, 2016 |
|
March 31, 2016 |
Non-interest-bearing
transaction accounts |
|
$ |
227,947 |
|
|
$ |
252,638 |
|
|
$ |
258,423 |
|
|
$ |
243,370 |
|
|
$ |
236,662 |
|
Interest-bearing
transaction accounts |
|
205,912 |
|
|
183,992 |
|
|
192,482 |
|
|
151,865 |
|
|
154,351 |
|
Money market
accounts |
|
616,557 |
|
|
627,090 |
|
|
603,872 |
|
|
671,420 |
|
|
646,336 |
|
Certificates of
deposit |
|
53,865 |
|
|
58,454 |
|
|
62,197 |
|
|
64,235 |
|
|
68,284 |
|
Wholesale deposits |
|
388,433 |
|
|
416,681 |
|
|
449,225 |
|
|
477,054 |
|
|
475,955 |
|
Total
deposits |
|
$ |
1,492,714 |
|
|
$ |
1,538,855 |
|
|
$ |
1,566,199 |
|
|
$ |
1,607,944 |
|
|
$ |
1,581,588 |
|
Trust
Assets |
|
|
|
|
|
(Unaudited) |
|
As of |
(in
thousands) |
|
March 31, 2017 |
|
December 31, 2016 |
|
September 30, 2016 |
|
June 30, 2016 |
|
March 31, 2016 |
Trust assets under
management |
|
$ |
1,126,835 |
|
|
$ |
977,015 |
|
|
$ |
935,584 |
|
|
$ |
906,239 |
|
|
$ |
896,414 |
|
Trust assets under
administration |
|
176,976 |
|
|
227,360 |
|
|
231,825 |
|
|
227,864 |
|
|
210,357 |
|
Total
trust assets |
|
$ |
1,303,811 |
|
|
$ |
1,204,375 |
|
|
$ |
1,167,409 |
|
|
$ |
1,134,103 |
|
|
$ |
1,106,771 |
|
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) |
|
March 31, 2017 |
|
December 31, 2016 |
|
September 30, 2016 |
|
June 30, 2016 |
|
March 31, 2016 |
Common stockholders’
equity |
|
$ |
164,134 |
|
|
$ |
161,650 |
|
|
$ |
159,931 |
|
|
$ |
158,394 |
|
|
$ |
155,199 |
|
Goodwill and other
intangible assets |
|
(12,774 |
) |
|
(12,773 |
) |
|
(12,762 |
) |
|
(12,923 |
) |
|
(12,606 |
) |
Tangible common
equity |
|
$ |
151,360 |
|
|
$ |
148,877 |
|
|
$ |
147,169 |
|
|
$ |
145,471 |
|
|
$ |
142,593 |
|
Common shares
outstanding |
|
8,718,307 |
|
|
8,715,856 |
|
|
8,717,299 |
|
|
8,703,942 |
|
|
8,700,172 |
|
Book value per
share |
|
$ |
18.83 |
|
|
$ |
18.55 |
|
|
$ |
18.35 |
|
|
$ |
18.20 |
|
|
$ |
17.84 |
|
Tangible book value per
share |
|
17.36 |
|
|
17.08 |
|
|
16.88 |
|
|
16.71 |
|
|
16.39 |
|
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) |
|
March 31, 2017 |
|
December 31, 2016 |
|
September 30, 2016 |
|
June 30, 2016 |
|
March 31, 2016 |
Common stockholders’
equity |
|
$ |
164,134 |
|
|
$ |
161,650 |
|
|
$ |
159,931 |
|
|
$ |
158,394 |
|
|
$ |
155,199 |
|
Goodwill and other
intangible assets |
|
(12,774 |
) |
|
(12,773 |
) |
|
(12,762 |
) |
|
(12,923 |
) |
|
(12,606 |
) |
Tangible common
equity |
|
$ |
151,360 |
|
|
$ |
148,877 |
|
|
$ |
147,169 |
|
|
$ |
145,471 |
|
|
$ |
142,593 |
|
Total assets |
|
$ |
1,800,590 |
|
|
$ |
1,780,699 |
|
|
$ |
1,772,438 |
|
|
$ |
1,819,069 |
|
|
$ |
1,790,132 |
|
Goodwill and other
intangible assets |
|
(12,774 |
) |
|
(12,773 |
) |
|
(12,762 |
) |
|
(12,923 |
) |
|
(12,606 |
) |
Tangible assets |
|
$ |
1,787,816 |
|
|
$ |
1,767,926 |
|
|
$ |
1,759,676 |
|
|
$ |
1,806,146 |
|
|
$ |
1,777,526 |
|
Tangible common equity
to tangible assets |
|
8.47 |
% |
|
8.42 |
% |
|
8.36 |
% |
|
8.05 |
% |
|
8.02 |
% |
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 |
(Dollars in
thousands) |
|
March 31, 2017 |
|
December 31, 2016 |
|
September 30, 2016 |
|
June 30, 2016 |
|
March 31, 2016 |
Total non-interest
expense |
|
$ |
13,560 |
|
|
$ |
14,523 |
|
|
$ |
15,753 |
|
|
$ |
13,458 |
|
|
$ |
12,699 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
Net loss
on foreclosed properties |
|
— |
|
|
29 |
|
|
— |
|
|
93 |
|
|
— |
|
Amortization of other intangible assets |
|
14 |
|
|
14 |
|
|
16 |
|
|
16 |
|
|
16 |
|
SBA
recourse provision |
|
6 |
|
|
1,619 |
|
|
375 |
|
|
74 |
|
|
— |
|
Impairment of tax credit investments |
|
113 |
|
|
171 |
|
|
3,314 |
|
|
94 |
|
|
112 |
|
Deconversion fees |
|
— |
|
|
794 |
|
|
— |
|
|
— |
|
|
— |
|
Total operating
expense |
|
$ |
13,427 |
|
|
$ |
11,896 |
|
|
$ |
12,048 |
|
|
$ |
13,181 |
|
|
$ |
12,571 |
|
Net interest
income |
|
$ |
14,888 |
|
|
$ |
16,753 |
|
|
$ |
15,295 |
|
|
$ |
15,741 |
|
|
$ |
15,539 |
|
Total non-interest
income |
|
4,063 |
|
|
3,931 |
|
|
3,640 |
|
|
5,823 |
|
|
4,594 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
Gain on
sale of securities |
|
— |
|
|
3 |
|
|
— |
|
|
7 |
|
|
— |
|
Total operating
revenue |
|
$ |
18,951 |
|
|
$ |
20,681 |
|
|
$ |
18,935 |
|
|
$ |
21,557 |
|
|
$ |
20,133 |
|
Efficiency ratio |
|
70.85 |
% |
|
57.52 |
% |
|
63.63 |
% |
|
61.14 |
% |
|
62.44 |
% |
CONTACT:
First Business Financial Services, Inc.
Edward G. Sloane, Jr.
Chief Financial Officer
608-232-5970
esloane@firstbusiness.com
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