First Business Financial Services, Inc. (the “Company” or “First
Business”) (NASDAQ:FBIZ) reported third quarter 2017 results
including sequential earnings growth driven by record trust and
investment performance, prudent operating expense management and
solid net interest margin; partially offset by elevated recourse
provision expense and net charge-offs related to two previously
disclosed impaired loans.
Summary results for the quarter ended September 30, 2017
include:
- Net income totaled $2.6 million, compared to $1.9 million in
the linked quarter and $2.7 million in the third quarter of
2016.
- Diluted earnings per common share measured $0.30, compared to
$0.22 and $0.31 for the linked and prior year quarters,
respectively.
- Annualized return on average assets and annualized return on
average equity measured 0.58% and 6.22%, respectively, for the
third quarter of 2017, compared to 0.42% and 4.50% for the linked
quarter and 0.59% and 6.69% for the third quarter of 2016.
- Net interest margin measured 3.52%, compared to 3.64% in the
linked quarter and 3.50% for the third quarter of 2016. Prepayment
fees within our conventional portfolio contributed less than one
basis point to the third quarter 2017 net interest margin, compared
to 16 basis points and four basis points in the linked quarter and
prior year quarter, respectively.
- Trust and investment services fee income totaled a
record $1.7 million, compared to $1.6 million in the
linked quarter and $1.4 million for the third quarter of
2016.
- Trust assets under management and administration reached a
record $1.416 billion, compared to $1.338 billion at June 30, 2017
and $1.167 billion at September 30, 2016.
- The Company’s efficiency ratio measured 66.56%, compared to
65.39% for the linked quarter and 63.63% for the third quarter of
2016.
- Provision for loan and lease losses was $1.5 million, compared
to $3.7 million for the linked quarter and $3.5 million for the
third quarter of 2016.
- SBA recourse provision was $1.3 million, compared to $774,000
for the linked quarter and $375,000 for the third quarter of
2016.
- Net charge-offs measured an annualized 0.88% of average loans
and leases, compared to 0.99% in the linked quarter and 0.44% for
the third quarter of 2016.
- Period-end gross loans and leases receivable measured $1.467
billion at September 30, 2017, compared to $1.458 billion at both
June 30, 2017 and September 30, 2016.
- Non-performing loans as a percent of total gross loans and
leases receivable measured 2.26% at period end, compared to 2.55%
and 1.76% at the end of the linked and prior year quarters,
respectively.
“During the third quarter of 2017 we made progress in resolving
certain impaired credits that have impacted our bottom line through
both provision and recourse reserve expenses,” said Corey Chambas,
President and Chief Executive Officer. “At the same time, we have
stabilized loan balances and increased profitability from the prior
quarter as we continue to build our client-facing teams in Kansas
City and our specialty finance business lines, positioning our
balance sheet for expected loan growth throughout our markets.”
Chambas added, “The ability to maintain net interest margin
above our established 3.50% target reflects the continued success
of our funding model and relationship approach to business banking.
Likewise, we are very pleased to report solid conventional net loan
growth in our established Wisconsin markets of approximately $80
million, compared to the third quarter of 2016. We believe this
demonstrates the ability of our teams to execute growth objectives
when appropriately staffed.”
Results of Operations
Net interest income was $14.9 million in the third quarter of
2017, compared to $15.5 million in the linked quarter and $15.3
million in the third quarter of 2016. Elevated second quarter 2017
fees collected in lieu of interest from loan payoffs (“prepayment
fees”) was the primary driver of higher net interest income in the
linked quarter. Compared to the prior year period, net interest
income in the third quarter of 2017 reflected a shift in the mix of
loan originations toward lower-yielding conventional commercial
loans, offset by runoff in the Company’s specialty lending
portfolios. This was partially offset by successful efforts to
manage deposit rates and increased rates on certain variable-rate
loans following the Federal Open Market Committee’s decision to
raise the targeted federal funds rate in December 2016, March 2017
and June 2017.
Net interest margin measured 3.52% for the third quarter of
2017, compared to 3.64% in the second quarter of 2017 and 3.50% in
the third quarter of 2016. Despite unusually low loan prepayment
fees, management is pleased to have maintained net interest margin
above our stated goal of 3.50%. The collection of prepayment fees
is, and will continue to be, an expected source of volatility to
quarterly net interest income and net interest margin. Prepayment
fees within our conventional portfolio totaling $7,000 were
immaterial to net interest margin during the third quarter of 2017,
while prepayment fees totaling $658,000 contributed 16 basis points
to net interest margin in the second quarter of 2017 and prepayment
fees totaling $189,000 contributed four basis points in the third
quarter of 2016.
The rising rate environment resulted in modest increases in
deposit pricing as necessary to serve the Company’s client
relationships. As such, the average total deposit costs for the
third quarter of 2017 increased to 0.74%, compared to 0.72% in the
linked quarter and 0.71% in the prior year quarter. Similarly, the
Company’s cost of total interest-bearing liabilities remained
steady at 1.09% for the third quarter of 2017, flat compared to the
linked quarter and up nominally from 1.04% in the prior year
quarter. Management believes a modest increase in average total
deposit costs may continue as the Company looks to effectively
manage deposit relationships amid intense competition and continued
expectation of a rising rate environment.
Non-interest income totaled $4.3 million, or 22.6% of total
revenue, for the third quarter of 2017, compared to $4.7 million,
or 23.4%, for the second quarter of 2017 and $3.6 million, or
19.2%, for the third quarter of 2016. The linked quarter comparison
primarily reflected lower loan fees, partially offset by an
increase in swap fees and moderately higher gains on the sale of
SBA loans. The increase in non-interest income from the prior year
primarily reflected an increase in trust and investment services
fee income, strong swap income and higher gains from SBA loan
sales.
Trust and investment services fee income totaled $1.7 million in
the third quarter of 2017, increasing $5,000, or 0.3%, and
$289,000, or 21.2%, 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 $1.416 billion at
September 30, 2017, up $78.1 million, or 23.3% annualized, from the
prior quarter and $249.1 million, or 21.3%, from September 30,
2016.
“Our trust and investment services business has been a stellar
contributor for the Company for several years now,” Chambas
commented. “What originally started as a retirement plan platform
to meet the employee-benefit needs of our commercial clients has
transitioned into a very successful wealth management business that
we believe is scalable beyond our established Madison, Wisconsin
market. Over the past 18 months we have added two experienced
private wealth management producers in our Wisconsin markets; one
in our Milwaukee market and one in our Northeast Wisconsin market.
We are also excited to announce the September 2017 addition of an
experienced private wealth management producer in Kansas City as we
begin to build out our wealth management presence in our newest
market.”
Non-interest expense was $14.2 million in both the third quarter
of 2017 and the linked second quarter, and $15.8 million in the
third quarter of 2016. The prior year period included $3.2 million
in nonrecurring expense due to impairment of a historic tax credit
investment, which corresponded with $3.6 million in tax credits
recognized during the quarter, providing a net benefit to after-tax
earnings of $430,000. Excluding this tax credit-related expense
impact, third quarter 2016 non-interest expense totaled $12.6
million.
For the third quarter of 2017 the Company recognized a $1.3
million SBA recourse provision for estimated losses in the
outstanding guaranteed portion of SBA loans sold. The provision
reflected refinements to the recourse reserve estimate due to the
migration of certain credits with potential guaranty eligibility
issues during the third quarter. SBA recourse provisions of
$774,000 and $375,000 were recognized in the second quarter of 2017
and third quarter of 2016, respectively. The total recourse reserve
balance was $2.7 million at September 30, 2017. Changes to SBA
recourse reserves may be a source of non-interest expense
volatility in future quarters.
Third quarter 2017 compensation expense decreased by $737,000
compared to the linked quarter, primarily due to incentive
compensation adjustments made to more closely align these expenses
to the Company’s full year 2017 performance expectations.
Compensation expenses were essentially flat compared to the third
quarter of 2016.
Collateral liquidation costs increased to $371,000 for the third
quarter of 2017, compared to $77,000 and $89,000 in the linked and
prior year quarters, respectively. The increase primarily reflected
the Company’s workout process related to two non-performing
loans.
The Company’s third quarter 2017 efficiency ratio was 66.56%,
compared to 65.39% for the linked quarter and 63.63% for the third
quarter of 2016. Lower prepayment fees and loan fees, and an
increase in collateral liquidation costs drove the modest decrease
in operating efficiency compared to both the linked quarter and
prior year quarter. Over time the Company intends to achieve its
target efficiency ratio range of 58-62% through proactive expense
management efforts, including through its recently completed
charter consolidation and planned December 2017 core conversion, as
well as long-term revenue initiatives, such as efforts to increase
sustainable and high-quality SBA lending production.
The Company recorded provision for loan and lease losses
totaling $1.5 million in the third quarter of 2017, compared to
$3.7 million in the linked quarter and $3.5 million in the third
quarter of 2016. Provision for the third quarter of 2017 reflected
a $1.6 million charge-off related to a previously disclosed energy
sector loan in connection with liquidating the underlying
collateral during the quarter. The provision also included the
partial charge-off of the previously disclosed $6.7 million
Wisconsin-based commercial and industrial impaired loan due to
further degradation of repayment sources during the quarter.
Management continues to pursue all potential repayment sources
related to this credit. These increases were partially offset by
the reversal of a $1.8 million specific reserve based on the full
repayment of a previously disclosed impaired construction loan
originated in our Kansas City market. The payoff proceeds were
received in October 2017, which will reduce non-performing loans by
$2.5 million in the fourth quarter of 2017.
As of September 30, 2017, our direct exposure to the energy
sector consisted of $669,000 in performing loans and leases
receivable, or 0.05% of total gross loans and leases
receivable, with no remaining unfunded commitments. Management
believes the portfolio is adequately collateralized as of the end
of the reporting period.
The effective tax rate was 26.6% in the third quarter of 2017,
compared to 19.4% in the linked quarter. The third quarter 2016
effective tax rate was impacted by the recognition of the
previously noted $3.6 million historic tax credit.
Balance Sheet
Period-end gross loans and leases receivable totaled $1.467
billion at September 30, 2017, increasing $8.5 million, or 0.6%,
from June 30, 2017 and increasing $8.4 million, or 0.6%, from
September 30, 2016. On an average basis, gross loans and leases of
$1.471 billion increased by $829,000, or 0.1%, and $10.0 million,
or 0.7%, compared to the second quarter of 2017 and third quarter
of 2016, respectively.
“We continue to see solid pipelines in our Wisconsin markets and
are committed to replicating this activity in our Kansas City
market and nationwide SBA platform through continued opportunistic
hiring of experienced lenders,” Chambas said. As of September 30,
2017, net conventional loan balances for the Company’s established
Wisconsin markets increased $18.3 million compared to the linked
quarter and $83.4 million compared to the prior year quarter,
reflecting solid execution of the Company’s niche business banking
model. The Company expects recent and ongoing investments in its
Kansas City market and SBA platform to deliver similar growth
outcomes over time, outpacing acquired portfolio runoff. “Moving
forward, we anticipate high-quality loan growth will continue at a
moderate pace as recently hired talent and anticipated hires gain
momentum,” Chambas added.
Period-end in-market deposits - consisting of all transaction
accounts, money market accounts and non-wholesale deposits -
totaled $1.091 billion, or 69.6% of total bank funding at September
30, 2017, compared to $1.120 billion, or 72.0% at June 30, 2017 and
$1.117 billion, or 71.0% at September 30, 2016. The decrease in
in-market deposits compared to the linked quarter was primarily due
to lower money market account balances, reflecting First Business
Bank’s pricing discipline. Period-end wholesale bank funds were
$476.7 million at September 30, 2017, including brokered
certificates of deposit of $306.4 million, deposits gathered
through internet deposit listing services of $26.8 million and
Federal Home Loan Bank (“FHLB”) advances of $143.5 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 its 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%.
Asset Quality
Total non-performing loans were $33.2 million at September 30,
2017, decreasing by $3.9 million, or 10.6%, compared to $37.2
million at June 30, 2017 and increasing by $7.5 million, or 29.2%,
compared to $25.7 million at September 30, 2016. The decrease to
the linked quarter primarily reflected the aforementioned
charge–offs related to an energy sector loan and the
Wisconsin–based commercial and industrial impaired loan. As a
percent of total gross loans and leases receivable, non-performing
loans measured 2.26% at September 30, 2017, compared to 2.55% and
1.76% at the end of the linked quarter and third quarter of 2016,
respectively. Included in these totals are non-performing loans
originated in our Kansas City office, which totaled $21.1 million
at September 30, 2017, compared to $20.9 million at June 30, 2017
and $12.8 million at September 30, 2016.
“We believe we have made progress in further resolving certain
problem credits and implementing our Company’s credit policies and
procedures across all of our markets,” Chambas said. “The
significant steps we’ve taken over the past 18 months position us
well to begin delivering improved asset quality and financial
performance metrics.”
Capital Strength
The Company's capital ratios continued to exceed the highest
required regulatory benchmark levels. As of September 30, 2017,
total capital to risk-weighted assets was 11.91%, tier 1 capital to
risk-weighted assets was 9.43%, tier 1 leverage capital to adjusted
average assets was 9.39% and common equity tier 1 capital to
risk-weighted assets was 8.86%. In addition, as of September 30,
2017, tangible common equity to tangible assets was
8.69%.
Quarterly Dividend
As previously announced, during the third quarter of 2017, the
Company's Board of Directors declared a regular quarterly dividend
of $0.13 per share. The dividend was paid on August 17, 2017 to
shareholders of record at the close of business on August 7, 2017.
Measured against third quarter 2017 diluted earnings per share of
$0.30, the dividend represents a 43.3% 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 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.
|
|
|
CONTACT: |
|
First Business
Financial Services, Inc. |
|
|
Edward G. Sloane,
Jr. |
|
|
Chief Financial
Officer |
|
|
608-232-5970 |
|
|
esloane@firstbusiness.com |
SELECTED FINANCIAL CONDITION DATA |
|
(Unaudited) |
|
As of |
(in
thousands) |
|
September 30, 2017 |
|
June 30, 2017 |
|
March 31, 2017 |
|
December 31, 2016 |
|
September 30, 2016 |
ASSETS |
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
73,196 |
|
|
$ |
63,745 |
|
|
$ |
60,899 |
|
|
$ |
77,517 |
|
|
$ |
68,764 |
|
Securities available-for-sale, at fair value |
|
131,130 |
|
|
136,834 |
|
|
147,058 |
|
|
145,893 |
|
|
154,480 |
|
Securities held-to-maturity, at amortized cost |
|
38,873 |
|
|
37,806 |
|
|
38,485 |
|
|
38,612 |
|
|
35,109 |
|
Loans
held for sale |
|
— |
|
|
3,491 |
|
|
3,924 |
|
|
1,111 |
|
|
2,627 |
|
Loans and
leases receivable |
|
1,466,713 |
|
|
1,458,175 |
|
|
1,480,971 |
|
|
1,450,675 |
|
|
1,458,297 |
|
Allowance
for loan and lease losses |
|
(19,923 |
) |
|
(21,677 |
) |
|
(21,666 |
) |
|
(20,912 |
) |
|
(20,067 |
) |
Loans and
leases, net |
|
1,446,790 |
|
|
1,436,498 |
|
|
1,459,305 |
|
|
1,429,763 |
|
|
1,438,230 |
|
Premises
and equipment, net |
|
3,048 |
|
|
2,930 |
|
|
3,955 |
|
|
3,772 |
|
|
3,898 |
|
Foreclosed properties |
|
2,585 |
|
|
2,585 |
|
|
1,472 |
|
|
1,472 |
|
|
1,527 |
|
Bank-owned life insurance |
|
39,988 |
|
|
39,674 |
|
|
39,358 |
|
|
39,048 |
|
|
29,028 |
|
Federal
Home Loan Bank and Federal Reserve Bank stock, at cost |
|
5,083 |
|
|
2,815 |
|
|
4,782 |
|
|
2,131 |
|
|
2,165 |
|
Goodwill
and other intangible assets |
|
12,735 |
|
|
12,760 |
|
|
12,774 |
|
|
12,773 |
|
|
12,762 |
|
Accrued
interest receivable and other assets |
|
32,228 |
|
|
29,790 |
|
|
28,578 |
|
|
28,607 |
|
|
23,848 |
|
Total assets |
|
$ |
1,785,656 |
|
|
$ |
1,768,928 |
|
|
$ |
1,800,590 |
|
|
$ |
1,780,699 |
|
|
$ |
1,772,438 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
In-market
deposits |
|
$ |
1,090,524 |
|
|
$ |
1,120,205 |
|
|
$ |
1,104,281 |
|
|
$ |
1,122,174 |
|
|
$ |
1,116,974 |
|
Wholesale
deposits |
|
333,200 |
|
|
354,393 |
|
|
388,433 |
|
|
416,681 |
|
|
449,225 |
|
Total
deposits |
|
1,423,724 |
|
|
1,474,598 |
|
|
1,492,714 |
|
|
1,538,855 |
|
|
1,566,199 |
|
Federal
Home Loan Bank advances and other borrowings |
|
167,884 |
|
|
106,395 |
|
|
121,841 |
|
|
59,676 |
|
|
29,946 |
|
Junior
subordinated notes |
|
10,015 |
|
|
10,012 |
|
|
10,008 |
|
|
10,004 |
|
|
10,001 |
|
Accrued
interest payable and other liabilities |
|
17,252 |
|
|
12,689 |
|
|
11,893 |
|
|
10,514 |
|
|
6,361 |
|
Total
liabilities |
|
1,618,875 |
|
|
1,603,694 |
|
|
1,636,456 |
|
|
1,619,049 |
|
|
1,612,507 |
|
Total
stockholders’ equity |
|
166,781 |
|
|
165,234 |
|
|
164,134 |
|
|
161,650 |
|
|
159,931 |
|
Total liabilities and stockholders’ equity |
|
$ |
1,785,656 |
|
|
$ |
1,768,928 |
|
|
$ |
1,800,590 |
|
|
$ |
1,780,699 |
|
|
$ |
1,772,438 |
|
STATEMENTS OF INCOME |
|
(Unaudited) |
|
As of and for the Three Months
Ended |
|
As of and for the Nine Months
Ended |
(Dollars in
thousands, except per share amounts) |
|
September 30, 2017 |
|
June 30, 2017 |
|
March 31, 2017 |
|
December 31, 2016 |
|
September 30, 2016 |
|
September 30, 2017 |
|
September 30, 2016 |
Total interest
income |
|
$ |
18,634 |
|
|
$ |
19,225 |
|
|
$ |
18,447 |
|
|
$ |
20,321 |
|
|
$ |
18,898 |
|
|
$ |
56,306 |
|
|
$ |
57,796 |
|
Total interest
expense |
|
3,751 |
|
|
3,746 |
|
|
3,559 |
|
|
3,568 |
|
|
3,603 |
|
|
11,056 |
|
|
11,221 |
|
Net
interest income |
|
14,883 |
|
|
15,479 |
|
|
14,888 |
|
|
16,753 |
|
|
15,295 |
|
|
45,250 |
|
|
46,575 |
|
Provision for loan and
lease losses |
|
1,471 |
|
|
3,656 |
|
|
572 |
|
|
994 |
|
|
3,537 |
|
|
5,699 |
|
|
6,824 |
|
Net
interest income after provision for loan and lease losses |
|
13,412 |
|
|
11,823 |
|
|
14,316 |
|
|
15,759 |
|
|
11,758 |
|
|
39,551 |
|
|
39,751 |
|
Trust and investment
services fee income |
|
1,653 |
|
|
1,648 |
|
|
1,629 |
|
|
1,375 |
|
|
1,364 |
|
|
4,930 |
|
|
3,981 |
|
Gain on sale of SBA
loans |
|
606 |
|
|
535 |
|
|
360 |
|
|
546 |
|
|
347 |
|
|
1,501 |
|
|
3,854 |
|
Service charges on
deposits |
|
756 |
|
|
766 |
|
|
765 |
|
|
743 |
|
|
772 |
|
|
2,287 |
|
|
2,247 |
|
Loan fees |
|
391 |
|
|
675 |
|
|
458 |
|
|
639 |
|
|
506 |
|
|
1,525 |
|
|
1,791 |
|
Other non-interest
income |
|
933 |
|
|
1,114 |
|
|
851 |
|
|
628 |
|
|
651 |
|
|
2,897 |
|
|
2,184 |
|
Total
non-interest income |
|
4,339 |
|
|
4,738 |
|
|
4,063 |
|
|
3,931 |
|
|
3,640 |
|
|
13,140 |
|
|
14,057 |
|
Compensation |
|
7,645 |
|
|
8,382 |
|
|
8,683 |
|
|
7,091 |
|
|
7,637 |
|
|
24,710 |
|
|
24,454 |
|
Occupancy |
|
527 |
|
|
519 |
|
|
475 |
|
|
481 |
|
|
530 |
|
|
1,521 |
|
|
1,538 |
|
Professional fees |
|
995 |
|
|
1,041 |
|
|
1,010 |
|
|
1,144 |
|
|
1,065 |
|
|
3,046 |
|
|
2,888 |
|
Data processing |
|
592 |
|
|
635 |
|
|
584 |
|
|
1,327 |
|
|
623 |
|
|
1,810 |
|
|
1,971 |
|
Marketing |
|
594 |
|
|
582 |
|
|
370 |
|
|
628 |
|
|
528 |
|
|
1,546 |
|
|
1,710 |
|
Equipment |
|
285 |
|
|
300 |
|
|
283 |
|
|
276 |
|
|
292 |
|
|
868 |
|
|
913 |
|
Computer software |
|
715 |
|
|
639 |
|
|
683 |
|
|
553 |
|
|
539 |
|
|
2,037 |
|
|
1,607 |
|
FDIC insurance |
|
320 |
|
|
381 |
|
|
380 |
|
|
483 |
|
|
444 |
|
|
1,081 |
|
|
989 |
|
Collateral liquidation
costs |
|
371 |
|
|
77 |
|
|
92 |
|
|
58 |
|
|
89 |
|
|
556 |
|
|
204 |
|
Net loss on foreclosed
properties |
|
— |
|
|
— |
|
|
— |
|
|
29 |
|
|
— |
|
|
— |
|
|
93 |
|
Impairment of tax
credit investments |
|
112 |
|
|
112 |
|
|
113 |
|
|
171 |
|
|
3,314 |
|
|
338 |
|
|
3,520 |
|
SBA recourse
provision |
|
1,315 |
|
|
774 |
|
|
6 |
|
|
1,619 |
|
|
375 |
|
|
2,095 |
|
|
449 |
|
Other non-interest
expense |
|
760 |
|
|
779 |
|
|
881 |
|
|
663 |
|
|
317 |
|
|
2,404 |
|
|
1,574 |
|
Total
non-interest expense |
|
14,231 |
|
|
14,221 |
|
|
13,560 |
|
|
14,523 |
|
|
15,753 |
|
|
42,012 |
|
|
41,910 |
|
Income (loss) before
income tax expense |
|
3,520 |
|
|
2,340 |
|
|
4,819 |
|
|
5,167 |
|
|
(355 |
) |
|
10,679 |
|
|
11,898 |
|
Income tax expense
(benefit)(1) |
|
936 |
|
|
454 |
|
|
1,422 |
|
|
1,199 |
|
|
(3,020 |
) |
|
2,812 |
|
|
957 |
|
Net income(1) |
|
$ |
2,584 |
|
|
$ |
1,886 |
|
|
$ |
3,397 |
|
|
$ |
3,968 |
|
|
$ |
2,665 |
|
|
$ |
7,867 |
|
|
$ |
10,941 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings(1) |
|
$ |
0.30 |
|
|
$ |
0.22 |
|
|
$ |
0.39 |
|
|
$ |
0.46 |
|
|
$ |
0.31 |
|
|
$ |
0.90 |
|
|
$ |
1.26 |
|
Diluted
earnings(1) |
|
0.30 |
|
|
0.22 |
|
|
0.39 |
|
|
0.46 |
|
|
0.31 |
|
|
0.90 |
|
|
1.26 |
|
Dividends declared |
|
0.13 |
|
|
0.13 |
|
|
0.13 |
|
|
0.12 |
|
|
0.12 |
|
|
0.39 |
|
|
0.36 |
|
Book value |
|
19.04 |
|
|
18.96 |
|
|
18.83 |
|
|
18.55 |
|
|
18.35 |
|
|
19.04 |
|
|
18.35 |
|
Tangible book
value |
|
17.59 |
|
|
17.50 |
|
|
17.36 |
|
|
17.08 |
|
|
16.88 |
|
|
17.59 |
|
|
16.88 |
|
Weighted-average common
shares outstanding(2) |
|
8,621,311 |
|
|
8,601,379 |
|
|
8,600,620 |
|
|
8,587,814 |
|
|
8,582,836 |
|
|
8,606,080 |
|
|
8,569,613 |
|
Weighted-average
diluted common shares outstanding(2) |
|
8,621,311 |
|
|
8,601,379 |
|
|
8,600,620 |
|
|
8,587,814 |
|
|
8,582,836 |
|
|
8,606,080 |
|
|
8,569,613 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Results as of and for the three and nine months ended September 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) |
|
September 30, 2017 |
|
June 30, 2017 |
|
September 30, 2016 |
|
|
AverageBalance |
|
Interest |
|
AverageYield/Rate(5) |
|
Average Balance |
|
Interest |
|
AverageYield/Rate(5) |
|
AverageBalance |
|
Interest |
|
AverageYield/Rate(5) |
Interest-earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate
and other mortgage loans(1) |
|
$ |
966,711 |
|
|
$ |
10,922 |
|
|
4.52 |
% |
|
$ |
959,176 |
|
|
$ |
10,620 |
|
|
4.43 |
% |
|
$ |
947,167 |
|
|
$ |
10,656 |
|
|
4.50 |
% |
Commercial and
industrial loans(1) |
|
448,955 |
|
|
6,187 |
|
|
5.51 |
% |
|
453,578 |
|
|
7,081 |
|
|
6.24 |
% |
|
459,871 |
|
|
6,651 |
|
|
5.79 |
% |
Direct financing
leases(1) |
|
28,648 |
|
|
303 |
|
|
4.23 |
% |
|
28,728 |
|
|
306 |
|
|
4.26 |
% |
|
30,231 |
|
|
341 |
|
|
4.51 |
% |
Consumer and other
loans(1) |
|
26,577 |
|
|
274 |
|
|
4.12 |
% |
|
28,580 |
|
|
277 |
|
|
3.88 |
% |
|
23,662 |
|
|
368 |
|
|
6.22 |
% |
Total loans and leases
receivable(1) |
|
1,470,891 |
|
|
17,686 |
|
|
4.81 |
% |
|
1,470,062 |
|
|
18,284 |
|
|
4.98 |
% |
|
1,460,931 |
|
|
18,016 |
|
|
4.93 |
% |
Mortgage-related
securities(2) |
|
136,330 |
|
|
613 |
|
|
1.80 |
% |
|
140,086 |
|
|
615 |
|
|
1.76 |
% |
|
149,414 |
|
|
567 |
|
|
1.52 |
% |
Other investment
securities(3) |
|
36,106 |
|
|
158 |
|
|
1.75 |
% |
|
37,765 |
|
|
161 |
|
|
1.70 |
% |
|
34,042 |
|
|
131 |
|
|
1.54 |
% |
FHLB and FRB stock |
|
3,949 |
|
|
25 |
|
|
2.53 |
% |
|
4,229 |
|
|
24 |
|
|
2.26 |
% |
|
2,163 |
|
|
21 |
|
|
3.88 |
% |
Short-term
investments |
|
44,478 |
|
|
152 |
|
|
1.37 |
% |
|
49,584 |
|
|
141 |
|
|
1.14 |
% |
|
103,549 |
|
|
163 |
|
|
0.63 |
% |
Total
interest-earning assets |
|
1,691,754 |
|
|
18,634 |
|
|
4.41 |
% |
|
1,701,726 |
|
|
19,225 |
|
|
4.52 |
% |
|
1,750,099 |
|
|
18,898 |
|
|
4.32 |
% |
Non-interest-earning
assets |
|
85,768 |
|
|
|
|
|
|
|
|
81,798 |
|
|
|
|
|
|
67,884 |
|
|
|
|
|
Total assets |
|
$ |
1,777,522 |
|
|
|
|
|
|
|
|
$ |
1,783,524 |
|
|
|
|
|
|
$ |
1,817,983 |
|
|
|
|
|
Interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction
accounts |
|
$ |
240,035 |
|
|
364 |
|
|
0.61 |
% |
|
$ |
231,720 |
|
|
288 |
|
|
0.50 |
% |
|
$ |
182,743 |
|
|
113 |
|
|
0.25 |
% |
Money market |
|
588,811 |
|
|
700 |
|
|
0.48 |
% |
|
588,787 |
|
|
659 |
|
|
0.45 |
% |
|
632,415 |
|
|
758 |
|
|
0.48 |
% |
Certificates of
deposit |
|
57,716 |
|
|
150 |
|
|
1.04 |
% |
|
54,530 |
|
|
133 |
|
|
0.98 |
% |
|
63,581 |
|
|
152 |
|
|
0.96 |
% |
Wholesale deposits |
|
346,641 |
|
|
1,494 |
|
|
1.72 |
% |
|
375,530 |
|
|
1,578 |
|
|
1.68 |
% |
|
465,273 |
|
|
1,847 |
|
|
1.59 |
% |
Total
interest-bearing deposits |
|
1,233,203 |
|
|
2,708 |
|
|
0.88 |
% |
|
1,250,567 |
|
|
2,658 |
|
|
0.85 |
% |
|
1,344,012 |
|
|
2,870 |
|
|
0.85 |
% |
FHLB advances |
|
103,401 |
|
|
351 |
|
|
1.36 |
% |
|
87,386 |
|
|
279 |
|
|
1.28 |
% |
|
4,991 |
|
|
18 |
|
|
1.44 |
% |
Other
borrowings(4) |
|
24,400 |
|
|
411 |
|
|
6.74 |
% |
|
24,494 |
|
|
532 |
|
|
8.69 |
% |
|
24,976 |
|
|
435 |
|
|
6.97 |
% |
Junior subordinated
notes |
|
10,013 |
|
|
281 |
|
|
11.23 |
% |
|
10,009 |
|
|
277 |
|
|
11.08 |
% |
|
9,998 |
|
|
280 |
|
|
11.20 |
% |
Total
interest-bearing liabilities |
|
1,371,017 |
|
|
3,751 |
|
|
1.09 |
% |
|
1,372,456 |
|
|
3,746 |
|
|
1.09 |
% |
|
1,383,977 |
|
|
3,603 |
|
|
1.04 |
% |
Non-interest-bearing
demand deposit accounts |
|
224,961 |
|
|
|
|
|
|
229,051 |
|
|
|
|
|
|
263,627 |
|
|
|
|
|
Other
non-interest-bearing liabilities |
|
15,376 |
|
|
|
|
|
|
14,531 |
|
|
|
|
|
|
11,098 |
|
|
|
|
|
Total
liabilities |
|
1,611,354 |
|
|
|
|
|
|
1,616,038 |
|
|
|
|
|
|
1,658,702 |
|
|
|
|
|
Stockholders’
equity |
|
166,168 |
|
|
|
|
|
|
167,486 |
|
|
|
|
|
|
159,281 |
|
|
|
|
|
Total
liabilities and stockholders’ equity |
|
$ |
1,777,522 |
|
|
|
|
|
|
$ |
1,783,524 |
|
|
|
|
|
|
$ |
1,817,983 |
|
|
|
|
|
Net interest
income |
|
|
|
$ |
14,883 |
|
|
|
|
|
|
$ |
15,479 |
|
|
|
|
|
|
$ |
15,295 |
|
|
|
Interest rate
spread |
|
|
|
|
|
3.32 |
% |
|
|
|
|
|
3.43 |
% |
|
|
|
|
|
3.28 |
% |
Net interest-earning
assets |
|
$ |
320,737 |
|
|
|
|
|
|
|
|
$ |
329,270 |
|
|
|
|
|
|
|
|
$ |
366,122 |
|
|
|
|
|
Net interest
margin |
|
|
|
|
|
3.52 |
% |
|
|
|
|
|
3.64 |
% |
|
|
|
|
|
3.50 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 Nine Months Ended |
(Dollars in
thousands) |
|
September 30, 2017 |
|
September 30, 2016 |
|
|
Average |
|
|
|
Average |
|
Average |
|
|
|
Average |
|
|
Balance |
|
Interest |
|
Yield/Rate(5) |
|
Balance |
|
Interest |
|
Yield/Rate(5) |
Interest-earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate
and other mortgage loans(1) |
|
$ |
957,408 |
|
|
$ |
31,861 |
|
|
4.44 |
% |
|
$ |
934,615 |
|
|
$ |
32,366 |
|
|
4.62 |
% |
Commercial and
industrial loans(1) |
|
451,352 |
|
|
19,863 |
|
|
5.87 |
% |
|
466,729 |
|
|
20,833 |
|
|
5.95 |
% |
Direct financing
leases(1) |
|
29,161 |
|
|
932 |
|
|
4.26 |
% |
|
30,683 |
|
|
1,039 |
|
|
4.51 |
% |
Consumer and other
loans(1) |
|
27,780 |
|
|
837 |
|
|
4.02 |
% |
|
25,581 |
|
|
923 |
|
|
4.81 |
% |
Total loans and leases
receivable(1) |
|
1,465,701 |
|
|
53,493 |
|
|
4.87 |
% |
|
1,457,608 |
|
|
55,161 |
|
|
5.04 |
% |
Mortgage-related
securities(2) |
|
140,705 |
|
|
1,845 |
|
|
1.75 |
% |
|
145,599 |
|
|
1,721 |
|
|
1.58 |
% |
Other investment
securities(3) |
|
37,466 |
|
|
480 |
|
|
1.71 |
% |
|
32,518 |
|
|
381 |
|
|
1.56 |
% |
FHLB and FRB stock |
|
3,779 |
|
|
73 |
|
|
2.58 |
% |
|
2,482 |
|
|
61 |
|
|
3.28 |
% |
Short-term
investments |
|
48,375 |
|
|
415 |
|
|
1.14 |
% |
|
107,369 |
|
|
472 |
|
|
0.59 |
% |
Total
interest-earning assets |
|
1,696,026 |
|
|
56,306 |
|
|
4.43 |
% |
|
1,745,576 |
|
|
57,796 |
|
|
4.41 |
% |
Non-interest-earning
assets |
|
82,628 |
|
|
|
|
|
|
|
|
75,969 |
|
|
|
|
|
|
|
Total assets |
|
$ |
1,778,654 |
|
|
|
|
|
|
|
|
$ |
1,821,545 |
|
|
|
|
|
|
|
Interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction
accounts |
|
$ |
221,526 |
|
|
885 |
|
|
0.53 |
% |
|
$ |
164,278 |
|
|
273 |
|
|
0.22 |
% |
Money market |
|
601,455 |
|
|
2,019 |
|
|
0.45 |
% |
|
650,864 |
|
|
2,453 |
|
|
0.50 |
% |
Certificates of
deposit |
|
55,888 |
|
|
415 |
|
|
0.99 |
% |
|
67,440 |
|
|
446 |
|
|
0.88 |
% |
Wholesale deposits |
|
374,083 |
|
|
4,720 |
|
|
1.68 |
% |
|
478,038 |
|
|
5,789 |
|
|
1.61 |
% |
Total
interest-bearing deposits |
|
1,252,952 |
|
|
8,039 |
|
|
0.86 |
% |
|
1,360,620 |
|
|
8,961 |
|
|
0.88 |
% |
FHLB advances |
|
83,987 |
|
|
784 |
|
|
1.24 |
% |
|
8,941 |
|
|
68 |
|
|
1.01 |
% |
Other
borrowings(4) |
|
24,933 |
|
|
1,401 |
|
|
7.49 |
% |
|
26,982 |
|
|
1,357 |
|
|
6.71 |
% |
Junior subordinated
notes |
|
10,009 |
|
|
832 |
|
|
11.08 |
% |
|
10,101 |
|
|
835 |
|
|
11.02 |
% |
Total
interest-bearing liabilities |
|
1,371,881 |
|
|
11,056 |
|
|
1.07 |
% |
|
1,406,644 |
|
|
11,221 |
|
|
1.06 |
% |
Non-interest-bearing
demand deposit accounts |
|
228,231 |
|
|
|
|
|
|
246,238 |
|
|
|
|
|
Other
non-interest-bearing liabilities |
|
13,726 |
|
|
|
|
|
|
11,126 |
|
|
|
|
|
Total
liabilities |
|
1,613,838 |
|
|
|
|
|
|
1,664,008 |
|
|
|
|
|
Stockholders’
equity |
|
164,816 |
|
|
|
|
|
|
157,537 |
|
|
|
|
|
Total
liabilities and stockholders’ equity |
|
$ |
1,778,654 |
|
|
|
|
|
|
$ |
1,821,545 |
|
|
|
|
|
Net interest
income |
|
|
|
$ |
45,250 |
|
|
|
|
|
|
$ |
46,575 |
|
|
|
Interest rate
spread |
|
|
|
|
|
3.36 |
% |
|
|
|
|
|
3.35 |
% |
Net interest-earning
assets |
|
$ |
324,145 |
|
|
|
|
|
|
|
|
$ |
338,932 |
|
|
|
|
|
|
|
Net interest
margin |
|
|
|
|
|
3.56 |
% |
|
|
|
|
|
3.56 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 Nine Months Ended |
(Unaudited) |
|
September 30, 2017 |
|
June 30, 2017 |
|
March 31, 2017 |
|
December 31, 2016 |
|
September 30, 2016 |
|
September 30, 2017 |
|
September 30, 2016 |
Return on average
assets (annualized)(1) |
|
0.58 |
% |
|
0.42 |
% |
|
0.77 |
% |
|
0.89 |
% |
|
0.59 |
% |
|
0.59 |
% |
|
0.80 |
% |
Return on average
equity (annualized)(1) |
|
6.22 |
% |
|
4.50 |
% |
|
8.31 |
% |
|
9.82 |
% |
|
6.69 |
% |
|
6.36 |
% |
|
9.26 |
% |
Efficiency ratio |
|
66.56 |
% |
|
65.39 |
% |
|
70.85 |
% |
|
57.52 |
% |
|
63.63 |
% |
|
67.55 |
% |
|
62.35 |
% |
Interest rate
spread |
|
3.32 |
% |
|
3.43 |
% |
|
3.31 |
% |
|
3.70 |
% |
|
3.28 |
% |
|
3.36 |
% |
|
3.35 |
% |
Net interest
margin |
|
3.52 |
% |
|
3.64 |
% |
|
3.51 |
% |
|
3.91 |
% |
|
3.50 |
% |
|
3.56 |
% |
|
3.56 |
% |
Average
interest-earning assets to average interest-bearing
liabilities |
|
123.39 |
% |
|
123.99 |
% |
|
123.50 |
% |
|
125.33 |
% |
|
126.45 |
% |
|
123.63 |
% |
|
124.10 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Results for the three and nine months ended September 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) |
|
September 30, 2017 |
|
June 30, 2017 |
|
March 31, 2017 |
|
December 31, 2016 |
|
September 30, 2016 |
Non-performing loans
and leases |
|
$ |
33,232 |
|
|
$ |
37,162 |
|
|
$ |
37,519 |
|
|
$ |
25,194 |
|
|
$ |
25,712 |
|
Foreclosed
properties |
|
2,585 |
|
|
2,585 |
|
|
1,472 |
|
|
1,472 |
|
|
1,527 |
|
Total
non-performing assets |
|
35,817 |
|
|
39,747 |
|
|
38,991 |
|
|
26,666 |
|
|
27,239 |
|
Performing troubled
debt restructurings |
|
275 |
|
|
702 |
|
|
702 |
|
|
717 |
|
|
732 |
|
Total
impaired assets |
|
$ |
36,092 |
|
|
$ |
40,449 |
|
|
$ |
39,693 |
|
|
$ |
27,383 |
|
|
$ |
27,971 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing loans
and leases as a percent of total gross loans and leases |
|
2.26 |
% |
|
2.55 |
% |
|
2.53 |
% |
|
1.74 |
% |
|
1.76 |
% |
Non-performing assets
as a percent of total gross loans and leases plus foreclosed
properties |
|
2.44 |
% |
|
2.72 |
% |
|
2.63 |
% |
|
1.83 |
% |
|
1.86 |
% |
Non-performing assets
as a percent of total assets |
|
2.01 |
% |
|
2.25 |
% |
|
2.17 |
% |
|
1.50 |
% |
|
1.54 |
% |
Allowance for loan and
lease losses as a percent of total gross loans and leases |
|
1.36 |
% |
|
1.49 |
% |
|
1.46 |
% |
|
1.44 |
% |
|
1.37 |
% |
Allowance for loan and
lease losses as a percent of non-performing loans and leases |
|
59.95 |
% |
|
58.33 |
% |
|
57.75 |
% |
|
83.00 |
% |
|
78.05 |
% |
|
|
|
|
|
|
|
|
|
|
|
Criticized assets: |
|
|
|
|
|
|
|
|
|
|
Substandard |
|
$ |
36,747 |
|
|
$ |
39,011 |
|
|
$ |
46,299 |
|
|
$ |
34,299 |
|
|
$ |
32,135 |
|
Doubtful |
|
5,055 |
|
|
6,658 |
|
|
— |
|
|
— |
|
|
— |
|
Foreclosed properties |
|
2,585 |
|
|
2,585 |
|
|
1,472 |
|
|
1,472 |
|
|
1,527 |
|
Total
criticized assets |
|
$ |
44,387 |
|
|
$ |
48,254 |
|
|
$ |
47,771 |
|
|
$ |
35,771 |
|
|
$ |
33,662 |
|
Criticized assets to
total assets |
|
2.49 |
% |
|
2.73 |
% |
|
2.65 |
% |
|
2.01 |
% |
|
1.90 |
% |
NET CHARGE-OFFS
(RECOVERIES) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
For the Three Months Ended |
|
For the Nine Months Ended |
(Dollars in
thousands) |
|
September 30, 2017 |
|
June 30, 2017 |
|
March 31, 2017 |
|
December 31, 2016 |
|
September 30, 2016 |
|
September 30, 2017 |
|
September 30, 2016 |
Charge-offs |
|
$ |
3,230 |
|
|
$ |
3,757 |
|
|
$ |
209 |
|
|
$ |
344 |
|
|
$ |
1,656 |
|
|
$ |
7,196 |
|
|
$ |
3,250 |
|
Recoveries |
|
(5 |
) |
|
(112 |
) |
|
(391 |
) |
|
(194 |
) |
|
(32 |
) |
|
(508 |
) |
|
(177 |
) |
Net charge-offs
(recoveries) |
|
$ |
3,225 |
|
|
$ |
3,645 |
|
|
$ |
(182 |
) |
|
$ |
150 |
|
|
$ |
1,624 |
|
|
$ |
6,688 |
|
|
$ |
3,073 |
|
Net charge-offs
(recoveries) as a percent of average gross loans and leases
(annualized) |
|
0.88 |
% |
|
0.99 |
% |
|
(0.05 |
)% |
|
0.04 |
% |
|
0.44 |
% |
|
0.61 |
% |
|
0.28 |
% |
CAPITAL
RATIOS |
|
|
|
|
|
|
|
As of and for the Three Months
Ended |
(Unaudited) |
|
September 30, 2017 |
|
June 30, 2017 |
|
March 31, 2017 |
|
December 31, 2016 |
|
September 30, 2016 |
Total capital to
risk-weighted assets |
|
11.91 |
% |
|
11.91 |
% |
|
11.55 |
% |
|
11.74 |
% |
|
11.44 |
% |
Tier I capital to
risk-weighted assets |
|
9.43 |
% |
|
9.33 |
% |
|
9.16 |
% |
|
9.26 |
% |
|
9.02 |
% |
Common equity tier I
capital to risk-weighted assets |
|
8.86 |
% |
|
8.77 |
% |
|
8.60 |
% |
|
8.68 |
% |
|
8.45 |
% |
Tier I capital to
adjusted assets |
|
9.39 |
% |
|
9.28 |
% |
|
9.26 |
% |
|
9.07 |
% |
|
8.75 |
% |
Tangible common equity
to tangible assets |
|
8.69 |
% |
|
8.68 |
% |
|
8.47 |
% |
|
8.42 |
% |
|
8.36 |
% |
SELECTED OTHER
INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan and Lease
Receivable Composition |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
As of |
(in
thousands) |
|
September 30,
2017 |
|
June 30,
2017 |
|
March 31,
2017 |
|
December 31,
2016 |
|
September 30,
2016 |
Commercial real
estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate - owner occupied |
|
$ |
182,755 |
|
|
$ |
183,161 |
|
|
$ |
183,016 |
|
|
$ |
176,459 |
|
|
$ |
169,170 |
|
Commercial real estate - non-owner occupied |
|
461,586 |
|
|
468,778 |
|
|
492,366 |
|
|
473,158 |
|
|
483,540 |
|
Land
development |
|
41,499 |
|
|
46,500 |
|
|
52,663 |
|
|
56,638 |
|
|
60,348 |
|
Construction |
|
115,660 |
|
|
104,515 |
|
|
91,343 |
|
|
101,206 |
|
|
110,426 |
|
Multi-family |
|
125,080 |
|
|
124,488 |
|
|
107,669 |
|
|
92,762 |
|
|
73,081 |
|
1-4
family |
|
40,173 |
|
|
38,922 |
|
|
40,036 |
|
|
45,651 |
|
|
46,341 |
|
Total
commercial real estate |
|
966,753 |
|
|
966,364 |
|
|
967,093 |
|
|
945,874 |
|
|
942,906 |
|
Commercial and
industrial |
|
447,223 |
|
|
437,955 |
|
|
458,778 |
|
|
450,298 |
|
|
464,920 |
|
Direct financing
leases, net |
|
28,868 |
|
|
29,216 |
|
|
29,330 |
|
|
30,951 |
|
|
29,638 |
|
Consumer and
other: |
|
|
|
|
|
|
|
|
|
|
Home
equity and second mortgages |
|
7,776 |
|
|
7,973 |
|
|
8,237 |
|
|
8,412 |
|
|
5,390 |
|
Other |
|
17,447 |
|
|
17,976 |
|
|
18,859 |
|
|
16,329 |
|
|
16,610 |
|
Total
consumer and other |
|
25,223 |
|
|
25,949 |
|
|
27,096 |
|
|
24,741 |
|
|
22,000 |
|
Total
gross loans and leases receivable |
|
1,468,067 |
|
|
1,459,484 |
|
|
1,482,297 |
|
|
1,451,864 |
|
|
1,459,464 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
Allowance
for loan and lease losses |
|
19,923 |
|
|
21,677 |
|
|
21,666 |
|
|
20,912 |
|
|
20,067 |
|
Deferred
loan fees |
|
1,354 |
|
|
1,309 |
|
|
1,326 |
|
|
1,189 |
|
|
1,167 |
|
Loans and
leases receivable, net |
|
$ |
1,446,790 |
|
|
$ |
1,436,498 |
|
|
$ |
1,459,305 |
|
|
$ |
1,429,763 |
|
|
$ |
1,438,230 |
|
SELECTED OTHER INFORMATION (CONTINUED) |
|
|
|
|
|
|
|
Deposit
Composition |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
As of |
(in
thousands) |
|
September 30, 2017 |
|
June 30, 2017 |
|
March 31, 2017 |
|
December 31, 2016 |
|
September 30, 2016 |
Non-interest-bearing
transaction accounts |
|
$ |
253,320 |
|
|
$ |
241,577 |
|
|
$ |
227,947 |
|
|
$ |
252,638 |
|
|
$ |
258,423 |
|
Interest-bearing
transaction accounts |
|
251,355 |
|
|
231,074 |
|
|
205,912 |
|
|
183,992 |
|
|
192,482 |
|
Money market
accounts |
|
527,705 |
|
|
593,487 |
|
|
616,557 |
|
|
627,090 |
|
|
603,872 |
|
Certificates of
deposit |
|
58,144 |
|
|
54,067 |
|
|
53,865 |
|
|
58,454 |
|
|
62,197 |
|
Wholesale deposits |
|
333,200 |
|
|
354,393 |
|
|
388,433 |
|
|
416,681 |
|
|
449,225 |
|
Total
deposits |
|
$ |
1,423,724 |
|
|
$ |
1,474,598 |
|
|
$ |
1,492,714 |
|
|
$ |
1,538,855 |
|
|
$ |
1,566,199 |
|
Trust
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
As of |
(in
thousands) |
|
September 30,
2017 |
|
June 30,
2017 |
|
March 31,
2017 |
|
December 31,
2016 |
|
September 30,
2016 |
Trust assets under
management |
|
$ |
1,240,014 |
|
|
$ |
1,164,433 |
|
|
$ |
1,126,835 |
|
|
$ |
977,015 |
|
|
$ |
935,584 |
|
Trust assets under
administration |
|
176,472 |
|
|
173,931 |
|
|
176,976 |
|
|
227,360 |
|
|
231,825 |
|
Total
trust assets |
|
$ |
1,416,486 |
|
|
$ |
1,338,364 |
|
|
$ |
1,303,811 |
|
|
$ |
1,204,375 |
|
|
$ |
1,167,409 |
|
|
NON-GAAP RECONCILIATIONS
Certain financial information provided in this release is
determined by methods other than in accordance with generally
accepted accounting principles (United States) (“GAAP”).
Although the Company believes that these non-GAAP financial
measures provide a greater understanding of its business, these
measures are not necessarily comparable to similar measures that
may be presented by other companies.
TANGIBLE BOOK VALUE
“Tangible book value per share” is a non-GAAP measure
representing tangible common equity divided by total common shares
outstanding. “Tangible common equity” itself is a non-GAAP
measure representing common stockholders’ equity reduced by
intangible assets, if any. The Company’s management believes
that this measure is important to many investors in the marketplace
who are interested in period-to-period changes in book value per
common share exclusive of changes in intangible assets. The
information provided below reconciles tangible book value per share
and tangible common equity to their most comparable GAAP
measures.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
As of |
(Dollars in
thousands, except per share amounts) |
|
September 30,
2017 |
|
June 30,
2017 |
|
March 31,
2017 |
|
December 31,
2016 |
|
September 30,
2016 |
Common stockholders'
equity |
|
$ |
166,781 |
|
|
$ |
165,234 |
|
|
$ |
164,134 |
|
|
$ |
161,650 |
|
|
$ |
159,931 |
|
Goodwill and other
intangible assets |
|
(12,735 |
) |
|
(12,760 |
) |
|
(12,774 |
) |
|
(12,773 |
) |
|
(12,762 |
) |
Tangible common
equity |
|
$ |
154,046 |
|
|
$ |
152,474 |
|
|
$ |
151,360 |
|
|
$ |
148,877 |
|
|
$ |
147,169 |
|
Common shares
outstanding |
|
8,758,923 |
|
|
8,716,018 |
|
|
8,718,307 |
|
|
8,715,856 |
|
|
8,717,299 |
|
Book value per
share |
|
$ |
19.04 |
|
|
$ |
18.96 |
|
|
$ |
18.83 |
|
|
$ |
18.55 |
|
|
$ |
18.35 |
|
Tangible book value per
share |
|
17.59 |
|
|
17.49 |
|
|
17.36 |
|
|
17.08 |
|
|
16.88 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS
‘‘Tangible common equity to tangible assets’’ is defined as the
ratio of common stockholders’ equity reduced by intangible assets,
if any, divided by total assets reduced by intangible assets, if
any. The Company’s management believes that this measure is
important to many investors in the marketplace who are interested
in the relative changes from period to period in common equity and
total assets, each exclusive of changes in intangible assets.
The information below reconciles tangible common equity and
tangible assets to their most comparable GAAP measures.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
As of |
(Dollars in
thousands) |
|
September 30,
2017 |
|
June 30,
2017 |
|
March 31,
2017 |
|
December 31,
2016 |
|
September 30,
2016 |
Common stockholders'
equity |
|
$ |
166,781 |
|
|
$ |
165,234 |
|
|
$ |
164,134 |
|
|
$ |
161,650 |
|
|
$ |
159,931 |
|
Goodwill and other
intangible assets |
|
(12,735 |
) |
|
(12,760 |
) |
|
(12,774 |
) |
|
(12,773 |
) |
|
(12,762 |
) |
Tangible common
equity |
|
$ |
154,046 |
|
|
$ |
152,474 |
|
|
$ |
151,360 |
|
|
$ |
148,877 |
|
|
$ |
147,169 |
|
Total assets |
|
$ |
1,785,656 |
|
|
$ |
1,768,928 |
|
|
$ |
1,800,590 |
|
|
$ |
1,780,699 |
|
|
$ |
1,772,438 |
|
Goodwill and other
intangible assets |
|
(12,735 |
) |
|
(12,760 |
) |
|
(12,774 |
) |
|
(12,773 |
) |
|
(12,762 |
) |
Tangible assets |
|
$ |
1,772,921 |
|
|
$ |
1,756,168 |
|
|
$ |
1,787,816 |
|
|
$ |
1,767,926 |
|
|
$ |
1,759,676 |
|
Tangible common equity
to tangible assets |
|
8.69 |
% |
|
8.68 |
% |
|
8.47 |
% |
|
8.42 |
% |
|
8.36 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 Nine Months Ended |
(Dollars in
thousands) |
|
September 30, 2017 |
|
June 30, 2017 |
|
March 31, 2017 |
|
December 31, 2016 |
|
September 30, 2016 |
|
September 30, 2017 |
|
September 30, 2016 |
Total non-interest
expense |
|
$ |
14,231 |
|
|
$ |
14,221 |
|
|
$ |
13,560 |
|
|
$ |
14,523 |
|
|
$ |
15,753 |
|
|
$ |
42,012 |
|
|
$ |
41,910 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
on foreclosed properties |
|
— |
|
|
— |
|
|
— |
|
|
29 |
|
|
— |
|
|
— |
|
|
93 |
|
Amortization of other intangible assets |
|
14 |
|
|
14 |
|
|
14 |
|
|
14 |
|
|
16 |
|
|
41 |
|
|
48 |
|
SBA
recourse provision |
|
1,315 |
|
|
774 |
|
|
6 |
|
|
1,619 |
|
|
375 |
|
|
2,095 |
|
|
449 |
|
Impairment of tax credit investments |
|
112 |
|
|
112 |
|
|
113 |
|
|
171 |
|
|
3,314 |
|
|
338 |
|
|
3,520 |
|
Deconversion fees |
|
— |
|
|
101 |
|
|
— |
|
|
794 |
|
|
— |
|
|
101 |
|
|
— |
|
Total operating
expense |
|
$ |
12,790 |
|
|
$ |
13,220 |
|
|
$ |
13,427 |
|
|
$ |
11,896 |
|
|
$ |
12,048 |
|
|
$ |
39,437 |
|
|
$ |
37,800 |
|
Net interest
income |
|
$ |
14,883 |
|
|
$ |
15,479 |
|
|
$ |
14,888 |
|
|
$ |
16,753 |
|
|
$ |
15,295 |
|
|
$ |
45,250 |
|
|
$ |
46,575 |
|
Total non-interest
income |
|
4,339 |
|
|
4,738 |
|
|
4,063 |
|
|
3,931 |
|
|
3,640 |
|
|
13,140 |
|
|
14,057 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on
sale of securities |
|
5 |
|
|
1 |
|
|
— |
|
|
3 |
|
|
— |
|
|
6 |
|
|
7 |
|
Total operating
revenue |
|
$ |
19,217 |
|
|
$ |
20,216 |
|
|
$ |
18,951 |
|
|
$ |
20,681 |
|
|
$ |
18,935 |
|
|
$ |
58,384 |
|
|
$ |
60,625 |
|
Efficiency ratio |
|
66.56 |
% |
|
65.39 |
% |
|
70.85 |
% |
|
57.52 |
% |
|
63.63 |
% |
|
67.55 |
% |
|
62.35 |
% |
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