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| 8-K - 8-K - Franklin Financial Network Inc. | d761181d8k.htm |
Exhibit 99.1
722 Columbia Avenue
Franklin, Tennessee 37064
For Immediate Release
Contact: Aimee Punessen, (615) 236-8329
aimee.punessen@franklinsynergy.com
Franklin Financial Network Reports Continued Growth in Second Quarter 2014
Loans up 44.5% over second quarter 2013
Franklin, Tenn., July 22, 2014 – Franklin Financial Network, Inc., (OTCPK:FRFN) the parent company of Franklin Synergy Bank, today reported unaudited consolidated net income of $2.0 million, or $0.41 basic earnings per common share, for the second quarter of 2014, a 66.7 percent increase when compared with net income of $1.2 million, or $0.32 basic earnings per common share, for the second quarter of 2013. For the six months ended June 30, 2014, consolidated net income was $3.6 million, or $0.72 basic earnings per common share, an increase of 71.4 percent over $2.1 million, or $0.57 basic earnings per common share, for the same period in 2013.
Diluted earnings per share for the second quarter were $0.40, compared to $0.31 for the same period in 2013. For the six months ended June 30, 2014 diluted earnings per share were $0.70, compared to $0.56 for the first six months of 2013.
Financial results for MidSouth Bank, acquired by Franklin Synergy Bank on July 1, 2014 are not included in second quarter results.
“The second quarter was another strong quarter of strategic execution for our bank. We remain on target for soundness, profitability and growth,” noted Richard Herrington, Franklin Financial Network president. “The growth in net income was even more impressive considering that second quarter earnings were impacted by non-recurring costs related to the bank’s recently completed acquisition of MidSouth Bank in Rutherford County. This is our twenty-second consecutive profitable quarter at Franklin Synergy Bank, and our results demonstrate that the core earnings of our bank continue to grow.”
Highlights of Franklin Financial Network’s Performance
Balance Sheet Growth and Soundness
| • | Loans at June 30, 2014 totaled $501.7 million, an increase of $154.6 million from June 30, 2013, for a year-over-year growth rate of 44.5 percent. Loan growth improved in the second quarter to $38.6 million compared with $31.1 million growth in the first quarter of 2014. Residential construction loans accounted for the majority of the loan growth, although small business lending picked up significantly during the quarter. |
| • | Deposits grew to $747.3 million versus $535.5 million at June 30, 2013, an annualized growth rate of 39.6 percent. Since December 31, 2013, total deposits have grown $66.0 million, or 9.7 percent. |
| • | Assets at June 30, 2014 totaled $872.1 million, compared to $618.6 million at June 30, 2013, an annual growth rate of 41.0 percent. Results were driven by growth in the loan portfolio and the investment portfolio. Assets at March 31, 2014 totaled $866.4 million. |
| • | Over the past 12 months, the company’s non-performing assets have significantly improved and compose only 0.3 percent of total assets at June 30, 2014. Nonaccrual loans were $1.4 million at June 30, 2014, compared with nonaccrual loans of $2.7 million at June 30, 2013, a decrease of 48.1%, and foreclosed real estate was reduced from $1.9 million at June 30, 2013 to $1.2 million at June 30, 2014, a decrease of 36.8%. |
Profitability
| • | Net Interest income increased to $7.3 million for the quarter ended June 30, 2014, up from $4.9 million, or 49.0 percent, from the same period in 2013. Net interest income for the six months ended June 30, 2014 was $14.4 million, which is a 54.8 percent increase when compared with the same period in 2013. The company’s continued strong loan growth was the primary factor driving the increase in net interest income. |
| • | Noninterest income for the quarter ended June 30, 2014, was $2.4 million compared to $2.1 million for the quarter ended June 30, 2013, representing a 14.3 percent increase. Noninterest income was $3.9 million for the six months ended June 30, 2014, matching noninterest income of $3.9 million for the same period in 2013. The improvement in noninterest income during the second quarter of 2014 is attributed to growth in mortgage banking income. |
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| • | Noninterest expense for the quarter ended June 30, 2014 was $6.1 million, a 25.3 percent increase over noninterest expense of $4.9 million from the second quarter of 2013. For the six months ended June 30, 2014 noninterest expense was $11.6 million, which is an increase of 2.2 million, or 23.4 percent, when compared with the same period in 2013. The increase in noninterest expense was attributed to the company’s facilities expansion during the second quarter, the addition of key personnel needed to support and sustain the company’s growth, and professional fees and other non-recurring costs associated with the acquisition of MidSouth Bank. |
| • | Provision for loan and lease losses for the quarter ended June 30, 2014 was $440 thousand versus $182 thousand for the quarter ended June 30, 2013, and $385 thousand for the first quarter of 2014. Significant loan growth during the second quarter, with $38.6 million in loans added, drove the increase in provision for loan and lease losses during 2014. |
“Franklin Synergy’s total revenues reached an historic high in the second quarter, as we continued to build on our successful first quarter results,” Herrington said. “We continue to find growth opportunities in our markets as we expand our banking team, adding the best banking and investment professionals in the market.”
Founded in November 2007, Franklin Synergy Bank currently has six offices in Williamson County and five offices in Rutherford County. The bank provides deposit and loan products, treasury management and financial planning services for consumers and businesses. Franklin Synergy earned its first profit in 2009, after just five quarters of operation. The bank’s assets surpassed $750 million in November 2013. Deposits surpassed $750 million in February 2014. In July 2014, Franklin Synergy Bank acquired Rutherford County’s MidSouth Bank.
Recent FDIC deposit share of market data shows that Franklin Synergy Bank has grown to the third largest bank doing business in Williamson County. The bank is the top market share bank in Franklin.
Additional information about Franklin Synergy Bank is available at the bank’s website: www.franklinsynergybank.com.
This media release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements include, but are not limited to, projected sales, gross margin and net income figures, the availability of capital resources, and plans concerning products, market acceptance and the recent merger with MidSouth Bank. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and variations of such words and similar expressions are intended to identify such forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties, many of which can not be predicted with accuracy and some of which might not even be anticipated. Future events and actual results, financial and otherwise, could differ materially from those set forth in or contemplated by the forward-looking statements herein. Future operating results of the corporation are impossible to predict, and no representation or warranty of any kind can be made respecting the present or future accuracy of such forward-looking statements or the ability of the corporation to meet its obligations, and no such representation or warranty is to be inferred.
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Franklin Financial Network, Inc.
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FRANKLIN FINANCIAL NETWORK, INC.
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except share and per share data)
(Unaudited)
| June 30, | December 31, | |||||||
| 2014 | 2013 | |||||||
| ASSETS |
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| Cash and due from financial institutions |
$ | 26,054 | $ | 18,217 | ||||
| Securities available for sale |
263,971 | 268,515 | ||||||
| Securities held to maturity (fair value 2014—$58,006 and 2013—$54,004) |
58,636 | 56,575 | ||||||
| Loans held for sale |
16,075 | 10,694 | ||||||
| Loans |
485,589 | 421,304 | ||||||
| Allowance for loan losses |
(5,771 | ) | (4,900 | ) | ||||
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| Net loans |
479,818 | 416,404 | ||||||
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| Restricted equity securities, at cost |
3,777 | 3,032 | ||||||
| Premises and equipment, net |
5,817 | 4,138 | ||||||
| Accrued interest receivable |
2,499 | 2,396 | ||||||
| Bank owned life insurance |
8,352 | 8,232 | ||||||
| Deferred tax asset |
1,029 | 3,995 | ||||||
| Foreclosed assets |
1,150 | 181 | ||||||
| Servicing rights, net |
2,746 | 2,640 | ||||||
| Mortgage banking derivative asset |
530 | 464 | ||||||
| Goodwill |
157 | 157 | ||||||
| Other assets |
1,531 | 734 | ||||||
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| Total assets |
$ | 872,142 | $ | 796,374 | ||||
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| LIABILITIES AND SHAREHOLDERS’ EQUITY |
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| Deposits |
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| Non-interest bearing |
$ | 69,969 | $ | 52,686 | ||||
| Interest bearing |
677,355 | 628,614 | ||||||
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| Total deposits |
747,324 | 681,300 | ||||||
| Federal funds purchased and repurchase agreements |
15,852 | 24,291 | ||||||
| Federal Home Loan Bank advances |
33,000 | 23,000 | ||||||
| Accrued interest payable |
374 | 222 | ||||||
| Mortgage banking derivative liability |
136 | — | ||||||
| Other liabilities |
1,257 | 2,398 | ||||||
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| Total liabilities |
797,943 | 731,211 | ||||||
| Shareholders’ equity |
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| Senior non-cumulative preferred stock, no par value, $10,000 liquidation value: Series A, 1,000,000 shares authorized; 10,000 shares issued and outstanding at June 30, 2014 and December 31, 2013, respectively |
10,000 | 10,000 | ||||||
| Common stock, no par value; 10,000,000 shares authorized; 4,915,907 and 4,862,875 issued at June 30, 2014 and December 31 2013, respectively |
53,225 | 52,638 | ||||||
| Retained earnings |
10,572 | 7,058 | ||||||
| Accumulated other comprehensive income (loss) |
402 | (4,533 | ) | |||||
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| Total shareholders’ equity |
74,199 | 65,163 | ||||||
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| Total liabilities and shareholders’ equity |
$ | 872,142 | $ | 796,374 | ||||
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FRANKLIN FINANCIAL NETWORK, INC.
CONSOLIDATED STATEMENTS OF INCOME
Three and Six Months Ended June, 30 2014 and 2013
(Dollar amounts in thousands, except share and per share data)
(Unaudited)
| Three Months Ended June 30, |
Six Months Ended June 30, |
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| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Interest income and dividends |
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| Loans, including fees |
$ | 6,380 | $ | 4,747 | $ | 12,298 | $ | 9,248 | ||||||||
| Securities: |
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| Taxable |
2,234 | 1,007 | 4,537 | 1,847 | ||||||||||||
| Tax-Exempt |
20 | 14 | 40 | 28 | ||||||||||||
| Dividends on restricted equity securities |
51 | 30 | 91 | 61 | ||||||||||||
| Federal funds sold and other |
14 | 9 | 32 | 28 | ||||||||||||
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| 8,699 | 5,807 | 16,998 | 11,212 | |||||||||||||
| Interest expense |
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| Deposits |
1,214 | 894 | 2,362 | 1,859 | ||||||||||||
| Federal funds purchased and repurchase agreements |
57 | 36 | 84 | 43 | ||||||||||||
| Federal Home Loan Bank advances |
80 | 19 | 109 | 38 | ||||||||||||
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| 1,351 | 949 | 2,555 | 1,940 | |||||||||||||
| Net interest income |
7,348 | 4,858 | 14,443 | 9,272 | ||||||||||||
| Provision for loan losses |
440 | 182 | 825 | 232 | ||||||||||||
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| Net interest income after provision for loan losses |
6,908 | 4,676 | 13,618 | 9,040 | ||||||||||||
| Noninterest income |
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| Service charges on deposit accounts |
12 | 14 | 24 | 27 | ||||||||||||
| Other service charges and fees |
313 | 301 | 549 | 592 | ||||||||||||
| Net gains on sale of loans |
1,567 | 1,493 | 2,351 | 2,897 | ||||||||||||
| Loan servicing fees, net |
88 | (127 | ) | 100 | (297 | ) | ||||||||||
| Gain on sale of securities |
63 | 28 | 71 | 78 | ||||||||||||
| Net gain (loss) on sale of foreclosed assets |
(2 | ) | (31 | ) | 31 | (221 | ) | |||||||||
| Other |
389 | 418 | 725 | 789 | ||||||||||||
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| Total noninterest income |
2,430 | 2,096 | 3,851 | 3,865 | ||||||||||||
| Noninterest expense |
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| Salaries and employee benefits |
3,805 | 3,282 | 7,350 | 6,487 | ||||||||||||
| Occupancy and equipment |
1,009 | 668 | 1,795 | 1,324 | ||||||||||||
| FDIC assessment expense |
120 | 93 | 239 | 153 | ||||||||||||
| Marketing |
135 | 71 | 246 | 123 | ||||||||||||
| Professional fees |
279 | 156 | 633 | 243 | ||||||||||||
| Other |
730 | 582 | 1,307 | 1,107 | ||||||||||||
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| Total noninterest expense |
6,078 | 4,852 | 11,570 | 9,437 | ||||||||||||
| Income before income tax expense |
3,260 | 1,920 | 5,899 | 3,468 | ||||||||||||
| Income tax expense |
1,225 | 737 | 2,335 | 1,320 | ||||||||||||
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| Net income |
$ | 2,035 | $ | 1,183 | $ | 3,564 | $ | 2,148 | ||||||||
| Dividends paid on Series A preferred stock |
(25 | ) | (25 | ) | (50 | ) | (58 | ) | ||||||||
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| Net income available to common shareholders |
$ | 2,010 | $ | 1,158 | $ | 3,514 | $ | 2,090 | ||||||||
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| Earnings per share: |
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| Basic |
$ | 0.41 | $ | 0.32 | $ | 0.72 | $ | 0.57 | ||||||||
| Diluted |
0.40 | 0.31 | 0.70 | 0.56 | ||||||||||||
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