First Business Financial Services, Inc. (the “Company” or “First
Business”) (NASDAQ:FBIZ), the parent company of First Business
Bank, today reported second quarter 2017 results highlighted by net
interest margin expansion, improved efficiency and record trust and
investment services fee income. The quarter was negatively impacted
by elevated provision expense and net charge-offs related to two
previously disclosed impaired loans. Overall performance trends
continue to reflect the Company’s previously disclosed decision to
temporarily slow Small Business Administration (“SBA”) loan
production, in order to make significant investments in the
platform.
Summary results for the quarter ended June 30, 2017
include:
- Net income totaled $1.9 million, compared to $3.4
million in the linked quarter and $3.7 million in the second
quarter of 2016.
- Diluted earnings per common share measured $0.22, compared
to $0.39 and $0.43 for the linked and prior year quarters,
respectively.
- Annualized return on average assets and annualized return on
average equity measured 0.42% and 4.50%, respectively, for the
second quarter of 2017, compared to 0.77% and 8.31% for linked
quarter and 0.82% and 9.45% for the second quarter of 2016.
- Net interest margin increased to 3.64%, compared to 3.51% in
the linked quarter and 3.59% for the second quarter of 2016.
- Trust and investment services fee income totaled $1.6 million
in both the first and second quarters of 2017, compared to $1.3
million for the second quarter of 2016.
- The Company’s efficiency ratio measured 65.39%, compared to
70.85% for the linked quarter and 61.14% for the second quarter of
2016.
- Provision for loan and lease losses was $3.7 million,
compared to $572,000 for the linked quarter and $2.8 million for
the second quarter of 2016.
- Net charge-offs measured an annualized 0.99% of average loans
and leases, primarily related to the Company’s remaining energy
sector exposure for which a specific reserve was previously
recorded for the majority of the charge-off. This compared to
annualized net recoveries measuring 0.05% of average loans and
leases in the linked quarter and annualized net charge-offs
measuring 0.35% of average loans and leases in the second quarter
of 2016.
- Period-end gross loans and leases receivable
measured $1.458 billion at June 30, 2017, compared to
$1.481 billion at March 31, 2017 and $1.452 billion at June 30,
2016.
- Non-performing loans as a percent of total gross loans and
leases receivable measured 2.55% at period end, compared to
2.53% and 1.56% at the end of the linked and prior year
quarters, respectively.
“Our organizational focus remains on moving credit quality
metrics toward the Bank’s historical levels, building on the
operating efficiency gains we’ve made to date and laying the
foundation to generate sustainable and high-quality revenue
growth,” said Corey Chambas, President and Chief Executive Officer.
“Our efforts today are designed to bring First Business back to
levels of profitability that generate returns on average assets and
equity in excess of 1% and 12%, respectively, along with
above-market levels of revenue growth.”
Results of Operations
Net interest income of $15.5 million increased $591,000, or
4.0%, compared to the linked quarter and decreased $262,000, or
1.7%, compared to the second quarter of 2016. The linked quarter
comparison primarily reflects higher fees collected in lieu of
interest from loan payoffs during the second quarter of 2017 and
higher average loan balances. Compared to the prior year period,
net interest income in the second quarter of 2017 reflected
competitive loan pricing pressure, partially offset by successful
efforts to manage 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 2016, March 2017 and June 2017.
Net interest margin increased to 3.64% for the second quarter of
2017, compared to 3.51% in the first quarter of 2017 and 3.59% in
the second quarter of 2016. Second quarter 2017 net interest margin
improved from the linked quarter principally due to higher fees
collected in lieu of interest. Compared to the prior year period,
net interest margin reflected successful efforts to manage 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 measured 1.09% for
the second quarter of 2017, essentially flat compared to 1.08% for
the second quarter of 2016 despite a rising interest rate
environment. Continued competitive pressures tempered net interest
margin expansion compared to the prior year, principally due to a
shift in the mix of loan originations toward lower-yielding
conventional commercial loans in recent quarters.
Management believes the successful efforts to optimize funding
costs and profitably expand loan balances will allow the Company to
continue to maintain a net interest margin of 3.50% or better.
However, 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 asset-based
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 $4.7 million for the second
quarter of 2017 increased 16.6% from the first quarter of
2017 and decreased 18.6% from the second quarter of 2016.
Correspondingly, non-interest income represented 23.4% of total
revenue for the second quarter of 2017 compared to 21.4% and 27.0%
for the linked and prior year quarters, respectively. Linked
quarter growth reflected higher loan fees, as well as increased
gains from SBA loan sales as the Company seeks to grow sustainable
and high-quality production. The decrease in non-interest income
from the prior year primarily reflects lower gains from SBA loan
sales resulting from the Company’s previously announced decision to
slow production while rebuilding its SBA platform. Gains on the
sale of SBA loans totaled $535,000 in the second quarter of 2017,
compared to $360,000 in the linked quarter and $2.1 million in the
second quarter of 2016. Trust and investment services fee income
totaled a record $1.6 million in the second quarter of 2017,
increasing $19,000, or 1.2%, and $304,000, or 22.6%, compared to
the linked and prior year quarters, respectively. Existing client
relationships and business development efforts remained strong as
trust assets under management and administration reached a record
$1.338 billion at June 30, 2017, up $34.6 million, or 10.6%
annualized, from the prior quarter and $204.3 million, or 18.0%,
from June 30, 2016.
Non-interest expense was $14.2 million in the second quarter of
2017, $13.6 million in the first quarter of 2017 and $13.5 million
in the second quarter of 2016. Second quarter 2017 non-interest
expense included a $774,000 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 quarter
of 2017 and $74,000 was recognized in the second quarter of 2016.
Changes to SBA recourse reserves may be a source of non-interest
expense volatility in future quarters.
Second quarter 2017 compensation expense decreased by $301,000
compared to the linked quarter and $65,000 compared to the year-ago
quarter, primarily due to incentive compensation adjustments made
to more closely align these expenses to the Company’s full year
2017 performance expectations.
Marketing expenses increased as expected, growing by $212,000
and $134,000 compared to the linked and year ago periods,
respectively, reflecting rebranding efforts related to the
completed consolidation of the Company’s bank charters in the
second quarter of 2017. The Company anticipates marketing expenses
will remain elevated in the second half of 2017.
The Company’s second quarter 2017 efficiency ratio was 65.39%,
compared to 70.85% for the linked quarter and 61.14% for the first
quarter of 2016. Higher loan prepayment fees and gains from SBA
loan sales benefited the efficiency ratio compared to the linked
quarter. 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 slow production
while rebuilding its SBA platform. Over time the Company intends to
achieve its target efficiency ratio range of 58-62% through
proactive expense management efforts, including its recently
completed charter consolidation, as well as revenue initiatives
such as efforts to increase sustainable and high-quality SBA
lending production in the second half of 2017 and into 2018.
The Company recorded provision for loan and lease losses
totaling $3.7 million in the second quarter of 2017, compared to
$572,000 in the linked quarter and $2.8 million in the second
quarter of 2016. Provision for the second quarter of 2017 reflected
a $3.7 million specific reserve related to the previously disclosed
$6.7 million Wisconsin-based commercial and industrial impaired
loan due to degradation of repayment sources during the quarter.
The provision also included a $3.4 million charge-off related to
the Corporation’s remaining energy sector exposure, for which a
previously recorded specific reserve offset the majority of the
provision impact. These increases were partially offset by a
reduction in provision commensurate with the application of our
allowance for loan and lease loss methodology and
positive credit trends in our performing non-SBA commercial
real estate portfolio. As of June 30, 2017, our accruing
non-SBA commercial real estate portfolio consisted of approximately
66.6% of our total accruing loan and lease portfolio.
Net charge-offs represented an annualized 0.99% of average loans
and leases for the second quarter of 2017. This compares to
annualized net recoveries measuring 0.05% of average loans and
leases in the linked quarter and annualized net charge-offs
measuring 0.35% of average loans and leases in the second quarter
of 2016.
The effective tax rate was 19.4% in the second quarter 2017,
compared to 29.5% in the linked quarter and 30.3% in the second
quarter of 2016.
Balance Sheet
Period-end gross loans and leases receivable totaled $1.458
billion at June 30, 2017, decreasing $22.8 million, or 1.5%, from
March 31, 2017 and increasing $6.4 million, or 0.4%, from June
30, 2016. Unusually strong first quarter loan growth totaling $30.3
million largely occurred late in that quarter, tempering second
quarter loan growth but increasing average loans and leases for the
quarter. Second quarter loan growth was additionally limited by
loan prepayments in the asset-based lending portfolio, reflecting
typical volatility inherent in the specialty financing business. On
an average basis, gross loans and leases of $1.470 billion
increased by $14.1 million, or 1.0%, and $9.8 million, or 0.7%,
compared to the first quarter of 2017 and second quarter of 2016,
respectively.
“Second quarter 2017 loan balances reflect continued competitive
pressure and soft commercial loan demand overall,” said Chambas.
“However, we do anticipate high-quality loan growth will resume at
a modest pace in the second half of 2017, in tandem with the steady
and gradual expansion of our rebuilt SBA lending program. Of
course, quality trumps quantity, and we continue to exercise
caution and patience.”
Period-end in-market deposits - consisting of all transaction
accounts, money market accounts and non-wholesale deposits -
totaled $1.120 billion, or 72.0% of total bank funding at June 30,
2017, compared to $1.104 billion, or 69.5% at March 31, 2017 and
$1.131 billion, or 70.1% at June 30, 2016. The increase 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 $436.4 million at June 30, 2017,
including brokered certificates of deposit of $321.1 million,
deposits gathered through internet deposit listing services of
$33.3 million and Federal Home Loan Bank (“FHLB”) advances of $82.0
million. Consistent with the Company’s longstanding funding
strategy to use the most efficient and cost effective source of
wholesale funds, management continues to replace maturing wholesale
deposits with fixed rate FHLB advances at various terms to meet our
balance sheet management needs. 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%.
Subordinated Debt Issued
As previously disclosed, on June 15, 2017, the Company issued
$9.1 million in 6.00% fixed rate subordinated debt, using the net
proceeds to redeem $7.9 million of existing subordinated debt that
carried a weighted average fixed rate of 7.18%. The remaining net
proceeds were used to increase the capital position of the Company
and for general corporate purposes.
Asset Quality
Total non-performing loans were $37.2 million at June 30, 2017,
decreasing by $357,000, or 1.0%, compared to $37.5 million at March
31, 2017 and increasing by $14.5 million, or 63.9%, compared to
$22.7 million at June 30, 2016. As a percent of total gross loans
and leases receivable, non-performing loans measured 2.55% at June
30, 2017, compared to 2.53% and 1.56% at the end of the linked
quarter and second quarter of 2016, respectively. Included in these
totals are non-performing loans originated in our Kansas City
office which totaled $20.9 million at June 30, 2017, compared to
$20.2 million at March 31, 2017 and $9.5 million at June 30,
2016.
Deterioration in a $2.8 million asset-based lending relationship
during the second quarter partially offset the decline in
non-performing loans associated with the aforementioned energy
sector charge-off of $3.4 million. The loan is fully-collateralized
and management believes they will successfully liquidate the
collateral by year-end and receive all contractual principal and
interest.
As of June 30, 2017, our direct exposure to the energy
sector consisted of $2.9 million in loans and leases
receivable, or 0.20% of total gross loans and leases
receivable, with no remaining unfunded commitments. Of this
population, $2.2 million was considered non-performing as
of June 30, 2017. Management believes the portfolio is
adequately collateralized as of the end of the reporting
period.
Following the planned discontinuation of all banking activities
at the Company’s Overland Park branch in the second quarter of
2017, the building and land were reclassified to other real estate
owned. Management is in the process of selling the property, which
is expected to be completed by the end of the year.
Capital Strength
The Company's capital ratios continued to exceed the highest
required regulatory benchmark levels. As of June 30, 2017, total
capital to risk-weighted assets was 11.91%, tier 1 capital to
risk-weighted assets was 9.33%, tier 1 leverage capital to adjusted
average assets was 9.28% and common equity tier 1 capital to
risk-weighted assets was 8.77%.
Quarterly Dividend
As previously announced, during second quarter of 2017 the
Company's Board of Directors declared a regular quarterly dividend
of $0.13 per share. The dividend was paid on May 25, 2017 to
shareholders of record at the close of business on May 9,
2017. Measured against second quarter 2017 diluted earnings per
share of $0.22, the dividend represents a 60.1% 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) |
|
June 30, 2017 |
|
March 31, 2017 |
|
December 31, 2016 |
|
September 30, 2016 |
|
June 30, 2016 |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
| Cash and
cash equivalents |
|
$ |
63,745 |
|
|
$ |
60,899 |
|
|
$ |
77,517 |
|
|
$ |
68,764 |
|
|
$ |
131,611 |
|
|
Securities available-for-sale, at fair value |
|
136,834 |
|
|
147,058 |
|
|
145,893 |
|
|
154,480 |
|
|
137,692 |
|
|
Securities held-to-maturity, at amortized cost |
|
37,806 |
|
|
38,485 |
|
|
38,612 |
|
|
35,109 |
|
|
36,167 |
|
| Loans
held for sale |
|
3,491 |
|
|
3,924 |
|
|
1,111 |
|
|
2,627 |
|
|
5,548 |
|
| Loans and
leases receivable |
|
1,458,175 |
|
|
1,480,971 |
|
|
1,450,675 |
|
|
1,458,297 |
|
|
1,451,815 |
|
| Allowance
for loan and lease losses |
|
(21,677 |
) |
|
(21,666 |
) |
|
(20,912 |
) |
|
(20,067 |
) |
|
(18,154 |
) |
|
Loans and leases, net |
|
1,436,498 |
|
|
1,459,305 |
|
|
1,429,763 |
|
|
1,438,230 |
|
|
1,433,661 |
|
| Premises
and equipment, net |
|
2,930 |
|
|
3,955 |
|
|
3,772 |
|
|
3,898 |
|
|
3,969 |
|
|
Foreclosed properties |
|
2,585 |
|
|
1,472 |
|
|
1,472 |
|
|
1,527 |
|
|
1,548 |
|
|
Bank-owned life insurance |
|
39,674 |
|
|
39,358 |
|
|
39,048 |
|
|
29,028 |
|
|
28,784 |
|
| Federal
Home Loan Bank and Federal Reserve Bank stock, at cost |
|
2,815 |
|
|
4,782 |
|
|
2,131 |
|
|
2,165 |
|
|
2,163 |
|
| Goodwill
and other intangible assets |
|
12,760 |
|
|
12,774 |
|
|
12,773 |
|
|
12,762 |
|
|
12,923 |
|
| Accrued
interest receivable and other assets |
|
29,790 |
|
|
28,578 |
|
|
28,607 |
|
|
23,848 |
|
|
25,003 |
|
|
Total assets |
|
$ |
1,768,928 |
|
|
$ |
1,800,590 |
|
|
$ |
1,780,699 |
|
|
$ |
1,772,438 |
|
|
$ |
1,819,069 |
|
| LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
| In-market
deposits |
|
$ |
1,120,205 |
|
|
$ |
1,104,281 |
|
|
$ |
1,122,174 |
|
|
$ |
1,116,974 |
|
|
$ |
1,130,890 |
|
| Wholesale
deposits |
|
354,393 |
|
|
388,433 |
|
|
416,681 |
|
|
449,225 |
|
|
477,054 |
|
|
Total deposits |
|
1,474,598 |
|
|
1,492,714 |
|
|
1,538,855 |
|
|
1,566,199 |
|
|
1,607,944 |
|
| Federal
Home Loan Bank advances and other borrowings |
|
106,395 |
|
|
121,841 |
|
|
59,676 |
|
|
29,946 |
|
|
33,570 |
|
| Junior
subordinated notes |
|
10,012 |
|
|
10,008 |
|
|
10,004 |
|
|
10,001 |
|
|
9,997 |
|
| Accrued
interest payable and other liabilities |
|
12,689 |
|
|
11,893 |
|
|
10,514 |
|
|
6,361 |
|
|
9,164 |
|
|
Total liabilities |
|
1,603,694 |
|
|
1,636,456 |
|
|
1,619,049 |
|
|
1,612,507 |
|
|
1,660,675 |
|
|
Total stockholders’ equity |
|
165,234 |
|
|
164,134 |
|
|
161,650 |
|
|
159,931 |
|
|
158,394 |
|
|
Total liabilities and stockholders’
equity |
|
$ |
1,768,928 |
|
|
$ |
1,800,590 |
|
|
$ |
1,780,699 |
|
|
$ |
1,772,438 |
|
|
$ |
1,819,069 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STATEMENTS OF INCOME
|
(Unaudited) |
|
As of and for the Three Months
Ended |
|
As of and for the Six Months
Ended |
|
(Dollars in thousands, except per share
amounts) |
|
June 30, 2017 |
|
March 31, 2017 |
|
December 31, 2016 |
|
September 30, 2016 |
|
June 30, 2016 |
|
June 30, 2017 |
|
June 30, 2016 |
| Total interest
income |
|
$ |
19,225 |
|
|
$ |
18,447 |
|
|
$ |
20,321 |
|
|
$ |
18,898 |
|
|
$ |
19,555 |
|
|
$ |
37,672 |
|
|
$ |
38,898 |
|
| Total interest
expense |
|
3,746 |
|
|
3,559 |
|
|
3,568 |
|
|
3,603 |
|
|
3,814 |
|
|
7,305 |
|
|
7,619 |
|
| Net
interest income |
|
15,479 |
|
|
14,888 |
|
|
16,753 |
|
|
15,295 |
|
|
15,741 |
|
|
30,367 |
|
|
31,279 |
|
| Provision for loan and
lease losses |
|
3,656 |
|
|
572 |
|
|
994 |
|
|
3,537 |
|
|
2,762 |
|
|
4,228 |
|
|
3,287 |
|
| Net
interest income after provision for loan and lease losses |
|
11,823 |
|
|
14,316 |
|
|
15,759 |
|
|
11,758 |
|
|
12,979 |
|
|
26,139 |
|
|
27,992 |
|
| Trust and investment
services fee income |
|
1,648 |
|
|
1,629 |
|
|
1,375 |
|
|
1,364 |
|
|
1,344 |
|
|
3,277 |
|
|
2,618 |
|
| Gain on sale of SBA
loans |
|
535 |
|
|
360 |
|
|
546 |
|
|
347 |
|
|
2,131 |
|
|
895 |
|
|
3,506 |
|
| Service charges on
deposits |
|
766 |
|
|
765 |
|
|
743 |
|
|
772 |
|
|
733 |
|
|
1,531 |
|
|
1,475 |
|
| Loan fees |
|
675 |
|
|
458 |
|
|
639 |
|
|
506 |
|
|
676 |
|
|
1,133 |
|
|
1,285 |
|
| Other non-interest
income |
|
1,114 |
|
|
851 |
|
|
628 |
|
|
651 |
|
|
939 |
|
|
1,965 |
|
|
1,532 |
|
| Total
non-interest income |
|
4,738 |
|
|
4,063 |
|
|
3,931 |
|
|
3,640 |
|
|
5,823 |
|
|
8,801 |
|
|
10,416 |
|
| Compensation |
|
8,382 |
|
|
8,683 |
|
|
7,091 |
|
|
7,637 |
|
|
8,447 |
|
|
17,065 |
|
|
16,818 |
|
| Occupancy |
|
519 |
|
|
475 |
|
|
481 |
|
|
530 |
|
|
500 |
|
|
994 |
|
|
1,008 |
|
| Professional fees |
|
1,041 |
|
|
1,010 |
|
|
1,144 |
|
|
1,065 |
|
|
961 |
|
|
2,051 |
|
|
1,822 |
|
| Data processing |
|
635 |
|
|
584 |
|
|
1,327 |
|
|
623 |
|
|
697 |
|
|
1,219 |
|
|
1,348 |
|
| Marketing |
|
582 |
|
|
370 |
|
|
628 |
|
|
528 |
|
|
448 |
|
|
952 |
|
|
1,182 |
|
| Equipment |
|
300 |
|
|
283 |
|
|
276 |
|
|
292 |
|
|
341 |
|
|
583 |
|
|
621 |
|
| Computer software |
|
639 |
|
|
683 |
|
|
553 |
|
|
539 |
|
|
574 |
|
|
1,322 |
|
|
1,068 |
|
| FDIC insurance |
|
381 |
|
|
380 |
|
|
483 |
|
|
444 |
|
|
254 |
|
|
761 |
|
|
545 |
|
| Collateral liquidation
costs |
|
77 |
|
|
92 |
|
|
58 |
|
|
89 |
|
|
68 |
|
|
185 |
|
|
114 |
|
| Net loss on foreclosed
properties |
|
— |
|
|
— |
|
|
29 |
|
|
— |
|
|
93 |
|
|
— |
|
|
93 |
|
| Impairment of tax
credit investments |
|
112 |
|
|
113 |
|
|
171 |
|
|
3,314 |
|
|
94 |
|
|
225 |
|
|
206 |
|
| SBA recourse
provision |
|
774 |
|
|
6 |
|
|
1,619 |
|
|
375 |
|
|
74 |
|
|
780 |
|
|
160 |
|
| Other non-interest
expense |
|
779 |
|
|
881 |
|
|
663 |
|
|
317 |
|
|
907 |
|
|
1,644 |
|
|
1,171 |
|
| Total
non-interest expense |
|
14,221 |
|
|
13,560 |
|
|
14,523 |
|
|
15,753 |
|
|
13,458 |
|
|
27,781 |
|
|
26,156 |
|
| Income (loss) before
income tax expense |
|
2,340 |
|
|
4,819 |
|
|
5,167 |
|
|
(355 |
) |
|
5,344 |
|
|
7,159 |
|
|
12,252 |
|
| Income tax expense
(benefit)(1) |
|
454 |
|
|
1,422 |
|
|
1,199 |
|
|
(3,020 |
) |
|
1,621 |
|
|
1,876 |
|
|
3,976 |
|
| Net income(1) |
|
$ |
1,886 |
|
|
$ |
3,397 |
|
|
$ |
3,968 |
|
|
$ |
2,665 |
|
|
$ |
3,723 |
|
|
$ |
5,283 |
|
|
$ |
8,276 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic earnings(1) |
|
$ |
0.22 |
|
|
$ |
0.39 |
|
|
$ |
0.46 |
|
|
$ |
0.31 |
|
|
$ |
0.43 |
|
|
$ |
0.61 |
|
|
$ |
0.95 |
|
| Diluted
earnings(1) |
|
0.22 |
|
|
0.39 |
|
|
0.46 |
|
|
0.31 |
|
|
0.43 |
|
|
0.61 |
|
|
0.95 |
|
| Dividends declared |
|
0.13 |
|
|
0.13 |
|
|
0.12 |
|
|
0.12 |
|
|
0.12 |
|
|
0.26 |
|
|
0.24 |
|
| Book value |
|
18.96 |
|
|
18.83 |
|
|
18.55 |
|
|
18.35 |
|
|
18.20 |
|
|
18.96 |
|
|
18.20 |
|
| Tangible book
value |
|
17.49 |
|
|
17.36 |
|
|
17.08 |
|
|
16.88 |
|
|
16.71 |
|
|
17.49 |
|
|
16.71 |
|
| Weighted-average common
shares outstanding(2) |
|
8,601,379 |
|
|
8,600,620 |
|
|
8,587,814 |
|
|
8,582,836 |
|
|
8,566,718 |
|
|
8,601,002 |
|
|
8,565,933 |
|
| Weighted-average
diluted common shares outstanding(2) |
|
8,601,379 |
|
|
8,600,620 |
|
|
8,587,814 |
|
|
8,582,836 |
|
|
8,566,718 |
|
|
8,601,002 |
|
|
8,565,933 |
|
(1) Results as of and for the three months ended September 30,
2016 and as of and for the three and six months ended June 30, 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) |
|
June 30, 2017 |
|
March 31, 2017 |
|
June 30, 2016 |
| |
|
AverageBalance |
|
Interest |
|
AverageYield/Rate(4) |
|
Average Balance |
|
Interest |
|
AverageYield/Rate(5) |
|
AverageBalance |
|
Interest |
|
AverageYield/Rate(4) |
|
Interest-earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Commercial real estate
and other mortgage loans(1) |
|
$ |
959,176 |
|
|
$ |
10,620 |
|
|
4.43 |
% |
|
$ |
946,110 |
|
|
$ |
10,318 |
|
|
4.36 |
% |
|
$ |
933,681 |
|
|
$ |
10,980 |
|
|
4.70 |
% |
| Commercial and
industrial loans(1) |
|
453,578 |
|
|
7,081 |
|
|
6.24 |
% |
|
451,552 |
|
|
6,595 |
|
|
5.84 |
% |
|
469,888 |
|
|
7,100 |
|
|
6.04 |
% |
| Direct financing
leases(1) |
|
28,728 |
|
|
306 |
|
|
4.26 |
% |
|
30,123 |
|
|
323 |
|
|
4.29 |
% |
|
30,977 |
|
|
355 |
|
|
4.58 |
% |
| Consumer and other
loans(1) |
|
28,580 |
|
|
277 |
|
|
3.88 |
% |
|
28,202 |
|
|
286 |
|
|
4.06 |
% |
|
25,675 |
|
|
266 |
|
|
4.14 |
% |
| Total loans and leases
receivable(1) |
|
1,470,062 |
|
|
18,284 |
|
|
4.98 |
% |
|
1,455,987 |
|
|
17,522 |
|
|
4.81 |
% |
|
1,460,221 |
|
|
18,701 |
|
|
5.12 |
% |
| Mortgage-related
securities(2) |
|
140,086 |
|
|
615 |
|
|
1.76 |
% |
|
145,804 |
|
|
618 |
|
|
1.70 |
% |
|
142,443 |
|
|
556 |
|
|
1.56 |
% |
| Other investment
securities(3) |
|
37,765 |
|
|
161 |
|
|
1.70 |
% |
|
38,554 |
|
|
161 |
|
|
1.67 |
% |
|
32,169 |
|
|
126 |
|
|
1.57 |
% |
| FHLB and FRB stock |
|
4,229 |
|
|
24 |
|
|
2.26 |
% |
|
3,150 |
|
|
24 |
|
|
3.05 |
% |
|
2,485 |
|
|
19 |
|
|
3.06 |
% |
| Short-term
investments |
|
49,584 |
|
|
141 |
|
|
1.14 |
% |
|
51,136 |
|
|
122 |
|
|
0.95 |
% |
|
117,180 |
|
|
153 |
|
|
0.52 |
% |
| Total
interest-earning assets |
|
1,701,726 |
|
|
19,225 |
|
|
4.52 |
% |
|
1,694,631 |
|
|
18,447 |
|
|
4.35 |
% |
|
1,754,498 |
|
|
19,555 |
|
|
4.46 |
% |
| Non-interest-earning
assets |
|
81,798 |
|
|
|
|
|
|
80,254 |
|
|
|
|
|
|
70,947 |
|
|
|
|
|
| Total assets |
|
$ |
1,783,524 |
|
|
|
|
|
|
$ |
1,774,885 |
|
|
|
|
|
|
$ |
1,825,445 |
|
|
|
|
|
|
Interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Transaction
accounts |
|
$ |
231,720 |
|
|
288 |
|
|
0.50 |
% |
|
$ |
192,297 |
|
|
232 |
|
|
0.48 |
% |
|
$ |
147,095 |
|
|
71 |
|
|
0.19 |
% |
| Money market |
|
588,787 |
|
|
659 |
|
|
0.45 |
% |
|
627,188 |
|
|
660 |
|
|
0.42 |
% |
|
674,015 |
|
|
868 |
|
|
0.52 |
% |
| Certificates of
deposit |
|
54,530 |
|
|
133 |
|
|
0.98 |
% |
|
55,393 |
|
|
132 |
|
|
0.95 |
% |
|
65,619 |
|
|
144 |
|
|
0.88 |
% |
| Wholesale deposits |
|
375,530 |
|
|
1,578 |
|
|
1.68 |
% |
|
400,672 |
|
|
1,649 |
|
|
1.65 |
% |
|
471,707 |
|
|
1,955 |
|
|
1.66 |
% |
| Total
interest-bearing deposits |
|
1,250,567 |
|
|
2,658 |
|
|
0.85 |
% |
|
1,275,550 |
|
|
2,673 |
|
|
0.84 |
% |
|
1,358,436 |
|
|
3,038 |
|
|
0.89 |
% |
| FHLB advances |
|
87,386 |
|
|
279 |
|
|
1.28 |
% |
|
60,703 |
|
|
154 |
|
|
1.01 |
% |
|
14,338 |
|
|
31 |
|
|
0.86 |
% |
| Other
borrowings(4) |
|
24,494 |
|
|
532 |
|
|
8.69 |
% |
|
25,921 |
|
|
458 |
|
|
7.07 |
% |
|
28,510 |
|
|
468 |
|
|
6.57 |
% |
| Junior subordinated
notes |
|
10,009 |
|
|
277 |
|
|
11.08 |
% |
|
10,006 |
|
|
274 |
|
|
10.97 |
% |
|
9,995 |
|
|
277 |
|
|
11.09 |
% |
| Total
interest-bearing liabilities |
|
1,372,456 |
|
|
3,746 |
|
|
1.09 |
% |
|
1,372,180 |
|
|
3,559 |
|
|
1.04 |
% |
|
1,411,279 |
|
|
3,814 |
|
|
1.08 |
% |
| Non-interest-bearing
demand deposit accounts |
|
229,051 |
|
|
|
|
|
|
228,015 |
|
|
|
|
|
|
246,604 |
|
|
|
|
|
| Other
non-interest-bearing liabilities |
|
14,531 |
|
|
|
|
|
|
11,223 |
|
|
|
|
|
|
9,944 |
|
|
|
|
|
| Total
liabilities |
|
1,616,038 |
|
|
|
|
|
|
1,611,418 |
|
|
|
|
|
|
1,667,827 |
|
|
|
|
|
| Stockholders’
equity |
|
167,486 |
|
|
|
|
|
|
163,467 |
|
|
|
|
|
|
157,618 |
|
|
|
|
|
| Total
liabilities and stockholders’ equity |
|
$ |
1,783,524 |
|
|
|
|
|
|
$ |
1,774,885 |
|
|
|
|
|
|
$ |
1,825,445 |
|
|
|
|
|
| Net interest
income |
|
|
|
$ |
15,479 |
|
|
|
|
|
|
$ |
14,888 |
|
|
|
|
|
|
$ |
15,741 |
|
|
|
| Interest rate
spread |
|
|
|
|
|
3.43 |
% |
|
|
|
|
|
3.31 |
% |
|
|
|
|
|
3.38 |
% |
| Net interest-earning
assets |
|
$ |
329,270 |
|
|
|
|
|
|
$ |
322,451 |
|
|
|
|
|
|
$ |
343,219 |
|
|
|
|
|
| Net interest
margin |
|
|
|
|
|
3.64 |
% |
|
|
|
|
|
3.51 |
% |
|
|
|
|
|
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) Average rate of other borrowings reflects the cost of
prepaying a secured borrowing during the second quarter of
2017.
(5) Represents annualized yields/rates.
NET INTEREST INCOME ANALYSIS (CONTINUED)
|
(Unaudited) |
|
For the Six Months Ended |
| (Dollars in
thousands) |
|
June 30, 2017 |
|
June 30, 2016 |
| |
|
AverageBalance |
|
Interest |
|
AverageYield/Rate(5) |
|
AverageBalance |
|
Interest |
|
AverageYield/Rate(4) |
|
Interest-earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
| Commercial real estate
and other mortgage loans(1) |
|
$ |
952,679 |
|
|
$ |
20,939 |
|
|
4.40 |
% |
|
$ |
928,270 |
|
|
$ |
21,710 |
|
|
4.68 |
% |
| Commercial and
industrial loans(1) |
|
452,570 |
|
|
13,675 |
|
|
6.04 |
% |
|
470,196 |
|
|
14,183 |
|
|
6.03 |
% |
| Direct financing
leases(1) |
|
29,422 |
|
|
629 |
|
|
4.28 |
% |
|
30,911 |
|
|
698 |
|
|
4.52 |
% |
| Consumer and other
loans(1) |
|
28,392 |
|
|
563 |
|
|
3.97 |
% |
|
26,551 |
|
|
554 |
|
|
4.17 |
% |
| Total loans and leases
receivable(1) |
|
1,463,063 |
|
|
35,806 |
|
|
4.89 |
% |
|
1,455,928 |
|
|
37,145 |
|
|
5.10 |
% |
| Mortgage-related
securities(2) |
|
142,929 |
|
|
1,233 |
|
|
1.73 |
% |
|
143,671 |
|
|
1,154 |
|
|
1.61 |
% |
| Other investment
securities(3) |
|
38,157 |
|
|
322 |
|
|
1.69 |
% |
|
31,748 |
|
|
250 |
|
|
1.57 |
% |
| FHLB and FRB stock |
|
3,693 |
|
|
47 |
|
|
2.57 |
% |
|
2,643 |
|
|
40 |
|
|
3.03 |
% |
| Short-term
investments |
|
50,356 |
|
|
264 |
|
|
1.05 |
% |
|
109,300 |
|
|
309 |
|
|
0.57 |
% |
| Total
interest-earning assets |
|
1,698,198 |
|
|
37,672 |
|
|
4.44 |
% |
|
1,743,290 |
|
|
38,898 |
|
|
4.46 |
% |
| Non-interest-earning
assets |
|
81,031 |
|
|
|
|
|
|
79,657 |
|
|
|
|
|
| Total assets |
|
$ |
1,779,229 |
|
|
|
|
|
|
$ |
1,822,947 |
|
|
|
|
|
|
Interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
| Transaction
accounts |
|
$ |
212,118 |
|
|
520 |
|
|
0.49 |
% |
|
$ |
154,944 |
|
|
160 |
|
|
0.21 |
% |
| Money market |
|
607,882 |
|
|
1,319 |
|
|
0.43 |
% |
|
660,189 |
|
|
1,696 |
|
|
0.51 |
% |
| Certificates of
deposit |
|
54,959 |
|
|
265 |
|
|
0.96 |
% |
|
69,391 |
|
|
294 |
|
|
0.83 |
% |
| Wholesale deposits |
|
388,031 |
|
|
3,227 |
|
|
1.66 |
% |
|
484,491 |
|
|
3,941 |
|
|
1.63 |
% |
| Total
interest-bearing deposits |
|
1,262,990 |
|
|
5,331 |
|
|
0.84 |
% |
|
1,369,015 |
|
|
6,091 |
|
|
0.89 |
% |
| FHLB advances |
|
74,118 |
|
|
432 |
|
|
1.17 |
% |
|
10,937 |
|
|
50 |
|
|
0.92 |
% |
| Other
borrowings(4) |
|
25,204 |
|
|
990 |
|
|
7.86 |
% |
|
27,758 |
|
|
923 |
|
|
6.65 |
% |
| Junior subordinated
notes |
|
10,007 |
|
|
552 |
|
|
11.03 |
% |
|
9,993 |
|
|
555 |
|
|
11.11 |
% |
| Total
interest-bearing liabilities |
|
1,372,319 |
|
|
7,305 |
|
|
1.06 |
% |
|
1,417,703 |
|
|
7,619 |
|
|
1.07 |
% |
| Non-interest-bearing
demand deposit accounts |
|
228,536 |
|
|
|
|
|
|
237,449 |
|
|
|
|
|
| Other
non-interest-bearing liabilities |
|
12,886 |
|
|
|
|
|
|
11,140 |
|
|
|
|
|
| Total
liabilities |
|
1,613,741 |
|
|
|
|
|
|
1,666,292 |
|
|
|
|
|
| Stockholders’
equity |
|
165,488 |
|
|
|
|
|
|
156,655 |
|
|
|
|
|
| Total
liabilities and stockholders’ equity |
|
$ |
1,779,229 |
|
|
|
|
|
|
$ |
1,822,947 |
|
|
|
|
|
| Net interest
income |
|
|
|
$ |
30,367 |
|
|
|
|
|
|
$ |
31,279 |
|
|
|
| Interest rate
spread |
|
|
|
|
|
3.37 |
% |
|
|
|
|
|
3.39 |
% |
| Net interest-earning
assets |
|
$ |
325,879 |
|
|
|
|
|
|
$ |
325,587 |
|
|
|
|
|
| Net interest
margin |
|
|
|
|
|
3.58 |
% |
|
|
|
|
|
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) Average rate of other borrowings reflects the cost of
prepaying a secured borrowing during the second quarter of
2017.
(5) Represents annualized yields/rates.
SELECTED FINANCIAL TRENDS
PERFORMANCE RATIOS
| |
|
For the Three Months Ended |
|
For the Six Months Ended |
|
(Unaudited) |
|
June 30, 2017 |
|
March 31, 2017 |
|
December 31, 2016 |
|
September 30, 2016 |
|
June 30, 2016 |
|
June 30, 2017 |
|
June 30, 2016 |
| Return on average
assets (annualized)(1) |
|
0.42 |
% |
|
0.77 |
% |
|
0.89 |
% |
|
0.59 |
% |
|
0.82 |
% |
|
0.59 |
% |
|
0.91 |
% |
| Return on average
equity (annualized)(1) |
|
4.50 |
% |
|
8.31 |
% |
|
9.82 |
% |
|
6.69 |
% |
|
9.45 |
% |
|
6.38 |
% |
|
10.57 |
% |
| Efficiency ratio |
|
65.39 |
% |
|
70.85 |
% |
|
57.52 |
% |
|
63.63 |
% |
|
61.14 |
% |
|
68.03 |
% |
|
61.56 |
% |
| Interest rate
spread |
|
3.43 |
% |
|
3.31 |
% |
|
3.70 |
% |
|
3.28 |
% |
|
3.38 |
% |
|
3.37 |
% |
|
3.39 |
% |
| Net interest
margin |
|
3.64 |
% |
|
3.51 |
% |
|
3.91 |
% |
|
3.50 |
% |
|
3.59 |
% |
|
3.58 |
% |
|
3.59 |
% |
| Average
interest-earning assets to average interest-bearing
liabilities |
|
123.99 |
% |
|
123.50 |
% |
|
125.33 |
% |
|
126.45 |
% |
|
124.32 |
% |
|
123.75 |
% |
|
122.97 |
% |
(1) Results for the three months ended September 30, 2016 and
three and six months ended June 30, 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) |
|
June 30, 2017 |
|
March 31, 2017 |
|
December 31, 2016 |
|
September 30, 2016 |
|
June 30, 2016 |
| Non-performing loans
and leases |
|
$ |
37,162 |
|
|
$ |
37,519 |
|
|
$ |
25,194 |
|
|
$ |
25,712 |
|
|
$ |
22,680 |
|
| Foreclosed
properties |
|
2,585 |
|
|
1,472 |
|
|
1,472 |
|
|
1,527 |
|
|
1,548 |
|
| Total
non-performing assets |
|
39,747 |
|
|
38,991 |
|
|
26,666 |
|
|
27,239 |
|
|
24,228 |
|
| Performing troubled
debt restructurings |
|
702 |
|
|
702 |
|
|
717 |
|
|
732 |
|
|
788 |
|
| Total
impaired assets |
|
$ |
40,449 |
|
|
$ |
39,693 |
|
|
$ |
27,383 |
|
|
$ |
27,971 |
|
|
$ |
25,016 |
|
| |
|
|
|
|
|
|
|
|
|
|
| Non-performing loans
and leases as a percent of total gross loans and leases |
|
2.55 |
% |
|
2.53 |
% |
|
1.74 |
% |
|
1.76 |
% |
|
1.56 |
% |
| Non-performing assets
as a percent of total gross loans and leases plus foreclosed
properties |
|
2.72 |
% |
|
2.63 |
% |
|
1.83 |
% |
|
1.86 |
% |
|
1.67 |
% |
| Non-performing assets
as a percent of total assets |
|
2.25 |
% |
|
2.17 |
% |
|
1.50 |
% |
|
1.54 |
% |
|
1.33 |
% |
| Allowance for loan and
lease losses as a percent of total gross loans and leases |
|
1.49 |
% |
|
1.46 |
% |
|
1.44 |
% |
|
1.37 |
% |
|
1.25 |
% |
| Allowance for loan and
lease losses as a percent of non-performing loans and leases |
|
58.33 |
% |
|
57.75 |
% |
|
83.00 |
% |
|
78.05 |
% |
|
80.04 |
% |
| |
|
|
|
|
|
|
|
|
|
|
| Criticized assets: |
|
|
|
|
|
|
|
|
|
|
| Special
mention |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
Substandard |
|
39,011 |
|
|
46,299 |
|
|
34,299 |
|
|
32,135 |
|
|
25,723 |
|
|
Doubtful |
|
6,658 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
Foreclosed properties |
|
2,585 |
|
|
1,472 |
|
|
1,472 |
|
|
1,527 |
|
|
1,548 |
|
| Total
criticized assets |
|
$ |
48,254 |
|
|
$ |
47,771 |
|
|
$ |
35,771 |
|
|
$ |
33,662 |
|
|
$ |
27,271 |
|
| Criticized assets to
total assets |
|
2.73 |
% |
|
2.65 |
% |
|
2.01 |
% |
|
1.90 |
% |
|
1.50 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CHARGE-OFFS (RECOVERIES)
|
(Unaudited) |
|
For the Three Months Ended |
|
For the Six Months Ended |
| (Dollars in
thousands) |
|
June 30, 2017 |
|
March 31, 2017 |
|
December 31, 2016 |
|
September 30, 2016 |
|
June 30, 2016 |
|
June 30, 2017 |
|
June 30, 2016 |
| Charge-offs |
|
$ |
3,757 |
|
|
$ |
209 |
|
|
$ |
344 |
|
|
$ |
1,656 |
|
|
$ |
1,350 |
|
|
$ |
3,966 |
|
|
$ |
1,594 |
|
| Recoveries |
|
(112 |
) |
|
(391 |
) |
|
(194 |
) |
|
(32 |
) |
|
(58 |
) |
|
(503 |
) |
|
(145 |
) |
| Net charge-offs
(recoveries) |
|
$ |
3,645 |
|
|
$ |
(182 |
) |
|
$ |
150 |
|
|
$ |
1,624 |
|
|
$ |
1,292 |
|
|
$ |
3,463 |
|
|
$ |
1,449 |
|
| Net charge-offs
(recoveries) as a percent of average gross loans and leases
(annualized) |
|
0.99 |
% |
|
(0.05 |
)% |
|
0.04 |
% |
|
0.44 |
% |
|
0.35 |
% |
|
0.47 |
% |
|
0.20 |
% |
CAPITAL RATIOS
| |
|
As of and for the Three Months
Ended |
|
(Unaudited) |
|
June 30, 2017 |
|
March 31, 2017 |
|
December 31, 2016 |
|
September 30, 2016 |
|
June 30, 2016 |
| Total capital to
risk-weighted assets |
|
11.91 |
% |
|
11.55 |
% |
|
11.74 |
% |
|
11.44 |
% |
|
11.44 |
% |
| Tier I capital to
risk-weighted assets |
|
9.33 |
% |
|
9.16 |
% |
|
9.26 |
% |
|
9.02 |
% |
|
9.08 |
% |
| Common equity tier I
capital to risk-weighted assets |
|
8.77 |
% |
|
8.60 |
% |
|
8.68 |
% |
|
8.45 |
% |
|
8.50 |
% |
| Tier I capital to
adjusted assets |
|
9.28 |
% |
|
9.26 |
% |
|
9.07 |
% |
|
8.75 |
% |
|
8.63 |
% |
| Tangible common equity
to tangible assets |
|
8.68 |
% |
|
8.47 |
% |
|
8.42 |
% |
|
8.36 |
% |
|
8.05 |
% |
SELECTED OTHER INFORMATION
Loan and Lease Receivable Composition
|
(Unaudited) |
|
As of |
| (in
thousands) |
|
June 30, 2017 |
|
March 31, 2017 |
|
December 31, 2016 |
|
September 30, 2016 |
|
June 30, 2016 |
| Commercial real
estate: |
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate - owner occupied |
|
$ |
183,161 |
|
|
$ |
183,016 |
|
|
$ |
176,459 |
|
|
$ |
169,170 |
|
|
$ |
167,936 |
|
|
Commercial real estate - non-owner occupied |
|
468,778 |
|
|
492,366 |
|
|
473,158 |
|
|
483,540 |
|
|
502,378 |
|
| Land
development |
|
46,500 |
|
|
52,663 |
|
|
56,638 |
|
|
60,348 |
|
|
60,599 |
|
|
Construction |
|
104,515 |
|
|
91,343 |
|
|
101,206 |
|
|
110,426 |
|
|
88,339 |
|
|
Multi-family |
|
124,488 |
|
|
107,669 |
|
|
92,762 |
|
|
73,081 |
|
|
73,239 |
|
| 1-4
family |
|
38,922 |
|
|
40,036 |
|
|
45,651 |
|
|
46,341 |
|
|
47,289 |
|
| Total
commercial real estate |
|
966,364 |
|
|
967,093 |
|
|
945,874 |
|
|
942,906 |
|
|
939,780 |
|
| Commercial and
industrial |
|
437,955 |
|
|
458,778 |
|
|
450,298 |
|
|
464,920 |
|
|
456,297 |
|
| Direct financing
leases, net |
|
29,216 |
|
|
29,330 |
|
|
30,951 |
|
|
29,638 |
|
|
30,698 |
|
| Consumer and
other: |
|
|
|
|
|
|
|
|
|
|
| Home
equity and second mortgages |
|
7,973 |
|
|
8,237 |
|
|
8,412 |
|
|
5,390 |
|
|
7,372 |
|
|
Other |
|
17,976 |
|
|
18,859 |
|
|
16,329 |
|
|
16,610 |
|
|
18,743 |
|
| Total
consumer and other |
|
25,949 |
|
|
27,096 |
|
|
24,741 |
|
|
22,000 |
|
|
26,115 |
|
| Total
gross loans and leases receivable |
|
1,459,484 |
|
|
1,482,297 |
|
|
1,451,864 |
|
|
1,459,464 |
|
|
1,452,890 |
|
| Less: |
|
|
|
|
|
|
|
|
|
|
| Allowance
for loan and lease losses |
|
21,677 |
|
|
21,666 |
|
|
20,912 |
|
|
20,067 |
|
|
18,154 |
|
| Deferred
loan fees |
|
1,309 |
|
|
1,326 |
|
|
1,189 |
|
|
1,167 |
|
|
1,075 |
|
| Loans and
leases receivable, net |
|
$ |
1,436,498 |
|
|
$ |
1,459,305 |
|
|
$ |
1,429,763 |
|
|
$ |
1,438,230 |
|
|
$ |
1,433,661 |
|
SELECTED OTHER INFORMATION (CONTINUED)
Deposit Composition
|
(Unaudited) |
|
As of |
| (in
thousands) |
|
June 30, 2017 |
|
March 31, 2017 |
|
December 31, 2016 |
|
September 30, 2016 |
|
June 30, 2016 |
| Non-interest-bearing
transaction accounts |
|
$ |
241,577 |
|
|
$ |
227,947 |
|
|
$ |
252,638 |
|
|
$ |
258,423 |
|
|
$ |
243,370 |
|
| Interest-bearing
transaction accounts |
|
231,074 |
|
|
205,912 |
|
|
183,992 |
|
|
192,482 |
|
|
151,865 |
|
| Money market
accounts |
|
593,487 |
|
|
616,557 |
|
|
627,090 |
|
|
603,872 |
|
|
671,420 |
|
| Certificates of
deposit |
|
54,067 |
|
|
53,865 |
|
|
58,454 |
|
|
62,197 |
|
|
64,235 |
|
| Wholesale deposits |
|
354,393 |
|
|
388,433 |
|
|
416,681 |
|
|
449,225 |
|
|
477,054 |
|
| Total
deposits |
|
$ |
1,474,598 |
|
|
$ |
1,492,714 |
|
|
$ |
1,538,855 |
|
|
$ |
1,566,199 |
|
|
$ |
1,607,944 |
|
Trust Assets
|
(Unaudited) |
|
As of |
| (in
thousands) |
|
June 30, 2017 |
|
March 31, 2017 |
|
December 31, 2016 |
|
September 30, 2016 |
|
June 30, 2016 |
| Trust assets under
management |
|
$ |
1,164,433 |
|
|
$ |
1,126,835 |
|
|
$ |
977,015 |
|
|
$ |
935,584 |
|
|
$ |
906,239 |
|
| Trust assets under
administration |
|
173,931 |
|
|
176,976 |
|
|
227,360 |
|
|
231,825 |
|
|
227,864 |
|
| Total
trust assets |
|
$ |
1,338,364 |
|
|
$ |
1,303,811 |
|
|
$ |
1,204,375 |
|
|
$ |
1,167,409 |
|
|
$ |
1,134,103 |
|
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) |
|
June 30, 2017 |
|
March 31, 2017 |
|
December 31, 2016 |
|
September 30, 2016 |
|
June 30, 2016 |
| Common stockholders’
equity |
|
$ |
165,234 |
|
|
$ |
164,134 |
|
|
$ |
161,650 |
|
|
$ |
159,931 |
|
|
$ |
158,394 |
|
| Goodwill and other
intangible assets |
|
(12,760 |
) |
|
(12,774 |
) |
|
(12,773 |
) |
|
(12,762 |
) |
|
(12,923 |
) |
| Tangible common
equity |
|
$ |
152,474 |
|
|
$ |
151,360 |
|
|
$ |
148,877 |
|
|
$ |
147,169 |
|
|
$ |
145,471 |
|
| Common shares
outstanding |
|
8,716,018 |
|
|
8,718,307 |
|
|
8,715,856 |
|
|
8,717,299 |
|
|
8,703,942 |
|
| Book value per
share |
|
$ |
18.96 |
|
|
$ |
18.83 |
|
|
$ |
18.55 |
|
|
$ |
18.35 |
|
|
$ |
18.20 |
|
| Tangible book value per
share |
|
17.49 |
|
|
17.36 |
|
|
17.08 |
|
|
16.88 |
|
|
16.71 |
|
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) |
|
June 30, 2017 |
|
March 31, 2017 |
|
December 31, 2016 |
|
September 30, 2016 |
|
June 30, 2016 |
| Common stockholders’
equity |
|
$ |
165,234 |
|
|
$ |
164,134 |
|
|
$ |
161,650 |
|
|
$ |
159,931 |
|
|
$ |
158,394 |
|
| Goodwill and other
intangible assets |
|
(12,760 |
) |
|
(12,774 |
) |
|
(12,773 |
) |
|
(12,762 |
) |
|
(12,923 |
) |
| Tangible common
equity |
|
$ |
152,474 |
|
|
$ |
151,360 |
|
|
$ |
148,877 |
|
|
$ |
147,169 |
|
|
$ |
145,471 |
|
| Total assets |
|
$ |
1,768,928 |
|
|
$ |
1,800,590 |
|
|
$ |
1,780,699 |
|
|
$ |
1,772,438 |
|
|
$ |
1,819,069 |
|
| Goodwill and other
intangible assets |
|
(12,760 |
) |
|
(12,774 |
) |
|
(12,773 |
) |
|
(12,762 |
) |
|
(12,923 |
) |
| Tangible assets |
|
$ |
1,756,168 |
|
|
$ |
1,787,816 |
|
|
$ |
1,767,926 |
|
|
$ |
1,759,676 |
|
|
$ |
1,806,146 |
|
| Tangible common equity
to tangible assets |
|
8.68 |
% |
|
8.47 |
% |
|
8.42 |
% |
|
8.36 |
% |
|
8.05 |
% |
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. The information
provided below reconciles the efficiency ratio to its most
comparable GAAP measure.
|
(Unaudited) |
|
For the Three Months Ended |
|
For the Six Months Ended |
| (Dollars in
thousands) |
|
June 30, 2017 |
|
March 31, 2017 |
|
December 31, 2016 |
|
September 30, 2016 |
|
June 30, 2016 |
|
June 30, 2017 |
|
June 30, 2016 |
| Total non-interest
expense |
|
$ |
14,221 |
|
|
$ |
13,560 |
|
|
$ |
14,523 |
|
|
$ |
15,753 |
|
|
$ |
13,458 |
|
|
$ |
27,781 |
|
|
$ |
26,156 |
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss
on foreclosed properties |
|
— |
|
|
— |
|
|
29 |
|
|
— |
|
|
93 |
|
|
— |
|
|
93 |
|
|
Amortization of other intangible assets |
|
14 |
|
|
14 |
|
|
14 |
|
|
16 |
|
|
16 |
|
|
28 |
|
|
32 |
|
| SBA
recourse provision |
|
774 |
|
|
6 |
|
|
1,619 |
|
|
375 |
|
|
74 |
|
|
780 |
|
|
160 |
|
|
Impairment of tax credit investments |
|
112 |
|
|
113 |
|
|
171 |
|
|
3,314 |
|
|
94 |
|
|
225 |
|
|
206 |
|
|
Deconversion fees |
|
101 |
|
|
— |
|
|
794 |
|
|
— |
|
|
— |
|
|
101 |
|
|
— |
|
| Total operating
expense |
|
$ |
13,220 |
|
|
$ |
13,427 |
|
|
$ |
11,896 |
|
|
$ |
12,048 |
|
|
$ |
13,181 |
|
|
$ |
26,647 |
|
|
$ |
25,665 |
|
| Net interest
income |
|
$ |
15,479 |
|
|
$ |
14,888 |
|
|
$ |
16,753 |
|
|
$ |
15,295 |
|
|
$ |
15,741 |
|
|
$ |
30,367 |
|
|
$ |
31,279 |
|
| Total non-interest
income |
|
4,738 |
|
|
4,063 |
|
|
3,931 |
|
|
3,640 |
|
|
5,823 |
|
|
8,801 |
|
|
10,416 |
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gain on
sale of securities |
|
1 |
|
|
— |
|
|
3 |
|
|
— |
|
|
7 |
|
|
1 |
|
|
7 |
|
| Total operating
revenue |
|
$ |
20,216 |
|
|
$ |
18,951 |
|
|
$ |
20,681 |
|
|
$ |
18,935 |
|
|
$ |
21,557 |
|
|
$ |
39,167 |
|
|
$ |
41,688 |
|
| Efficiency ratio |
|
65.39 |
% |
|
70.85 |
% |
|
57.52 |
% |
|
63.63 |
% |
|
61.14 |
% |
|
68.03 |
% |
|
61.56 |
% |
CONTACT:
First Business Financial Services, Inc.
Edward G. Sloane, Jr.
Chief Financial Officer
608-232-5970
esloane@firstbusiness.com
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