Attached files
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| 8-K - 8-K - Franklin Financial Network Inc. | d812591d8k.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 Third Quarter 2014
$1 Billion Asset and Deposit Milestones Surpassed During the Quarter
MidSouth Bank Acquisition Complete
Franklin, Tenn., October 28, 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 $0.26 basic earnings per common share, for the third quarter of 2014, a 100.0 percent increase in net income when compared with net income of $1.0 million, or $0.27 basic earnings per common share, for the third quarter of 2013. For the nine months ended September 30, 2014, consolidated net income was $5.6 million, or $0.94 basic earnings per common share, an increase of 75.0 percent over $3.2 million, or $0.84 basic earnings per common share, for the same period in 2013.
“The third 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’s President. “During the third quarter, we surpassed the $1 billion milestones for both assets and deposits, and earnings increased even taking into account the expenses related to the bank’s recently completed acquisition of Rutherford County’s MidSouth Bank. Acquisition expenses of $603 thousand included systems conversion fees, investment banking, accounting, legal, and marketing expenses.”
“This is our twenty-third consecutive profitable quarter at Franklin Synergy Bank, and our results demonstrate that the core earnings of our bank continue to grow.”
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Highlights of Franklin Financial Network’s Performance
Balance Sheet Growth and Asset Quality
| • | Loans, including loans held for sale, at September 30, 2014 totaled $744.9 million, an increase of $357.5 million from September 30, 2013, for a year-over-year growth rate of 92.3 percent. Loan growth improved in the third quarter to $243.2 million compared with $38.6 million growth in the second quarter of 2014. Of the loan growth, $191.4 million resulted from the acquisition of MidSouth Bank, and $51.8 million was the net organic loan production growth for the third quarter. Residential construction loans again accounted for the majority of the loan growth, and residential lending picked up significantly during the quarter. |
| • | Deposits grew to $1.1 billion versus $523.7 million at September 30, 2013, an annualized growth rate of 100.8 percent. Of the deposit growth, $244.4 million resulted from the acquisition of MidSouth Bank. Since December 31, 2013, total deposits have grown $370.3 million, or 54.4 percent. |
| • | Assets at September 30, 2014 totaled $1.2 billion, compared to $659.9 million at September 30, 2013, an annual growth rate of 87.7 percent. In addition to the $293.8 million increase in assets from the acquisition of MidSouth Bank, the company’s results were driven by growth in the loan portfolio and the investment portfolio. Assets at June 30, 2014 totaled $872.1 million. |
| • | Non-performing assets were $5.0 million at September 30, 2014, compared to $2.8 million at June 30, 2014 and $3.4 million at September 30, 2013. Non-performing assets were 0.4 percent of total assets at September 30, 2014, compared to 0.3 percent at June 30, 2014 and 0.5 percent at September 30, 2013. The increase in non-performing assets in the third quarter of 2014 was related to the MidSouth Bank acquisition. |
Profitability
| • | Net interest income increased to $11.1 million for the quarter ended September 30, 2014, up from $5.4 million, or 106.6 percent, from the same period in 2013. Net interest income for the nine months ended September 30, 2014 was $25.6 million, which is a 74.5 percent increase when compared with the same period in 2013. The company’s acquisition of MidSouth Bank and continued strong loan growth were the primary factors driving the increase in net interest income. |
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| • | Noninterest income for the quarter ended September 30, 2014, was $3.3 million compared to $1.3 million for the quarter ended September 30, 2013, representing a 148.6 percent increase. Noninterest income was $7.1 million for the nine months ended September 30, 2014, compared to noninterest income of $5.2 million for the same period in 2013, an increase of 37.5 percent. The improvement in noninterest income during the third quarter of 2014 is primarily attributable to growth in mortgage banking income. |
| • | Noninterest expense for the quarter ended September 30, 2014 was $10.4 million, a 114.6 percent increase over noninterest expense of $4.8 million from the third quarter of 2013. For the nine months ended September 30, 2014 noninterest expense was $22.0 million, which is an increase of 7.7 million, or 53.8 percent, when compared with the same period in 2013. The increase in noninterest expense was attributed in part to $603 thousand in systems conversion, investment banking, accounting, legal and marketing expenses associated with the acquisition of MidSouth Bank. The acquisition significantly increased the bank’s branch network with five additional branches in Rutherford County added to the bank’s existing six Williamson County branches, with a corresponding increase in associated operating expenses. Also during the quarter, the bank incurred additional one-time expenses when two branches in Williamson County each relocated to new facilities. |
| • | Provision for loan and lease losses for the quarter ended September 30, 2014 was $664 thousand versus $225 thousand for the quarter ended September 30, 2013. Provision for loan and lease losses for the nine months ended September 30, 2014 totaled $1.5 million versus $457 thousand for the same period in 2013. Significant loan growth during the third quarter, with $51.8 million in net new loan production, drove the increase in provision for loan and lease losses during 2014. |
“Franklin Synergy’s total revenue reached another historic high in the third quarter, as we continued to build on our successful results from the first two quarters and on our acquisition of MidSouth Bank,” Herrington said. “We believe that we have the best banking and investment professionals in our markets, and our growth and earnings results support this.”
Founded in November 2007, Franklin Synergy Bank currently has six offices in Williamson County, Tennessee and five offices in Rutherford County, Tennessee. 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 and deposits both surpassed $1 billion in July 2014, just after the completion of the acquisition of Rutherford County’s MidSouth Bank.
Recent FDIC deposit share of market data shows that Franklin Synergy Bank has grown to be the largest bank headquartered in Williamson County. The bank is also the top market share bank in Franklin, TN based on deposits.
Additional information about Franklin Synergy Bank is available at the bank’s website: www.franklinsynergybank.com.
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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 acquisition of 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)
| September 30, 2014 |
December 31, 2013 |
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| ASSETS |
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| Cash and due from financial institutions |
$ | 36,657 | $ | 18,217 | ||||
| Securities available for sale |
347,000 | 268,515 | ||||||
| Securities held to maturity (fair value 2014—$58,006 and 2013—$54,004) |
56,293 | 56,575 | ||||||
| Loans held for sale |
25,652 | 10,694 | ||||||
| Loans |
719,275 | 421,304 | ||||||
| Allowance for loan losses |
(5,883 | ) | (4,900 | ) | ||||
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| Net loans |
713,392 | 416,404 | ||||||
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| Restricted equity securities, at cost |
5,349 | 3,032 | ||||||
| Premises and equipment, net |
13,113 | 4,138 | ||||||
| Accrued interest receivable |
3,426 | 2,396 | ||||||
| Bank owned life insurance |
11,579 | 8,232 | ||||||
| Deferred tax asset |
8,028 | 3,995 | ||||||
| Foreclosed assets |
1,690 | 181 | ||||||
| Servicing rights, net |
2,956 | 2,640 | ||||||
| Mortgage banking derivative asset |
368 | 464 | ||||||
| Goodwill |
9,129 | 157 | ||||||
| Core deposit intangible |
2,876 | — | ||||||
| Other assets |
1,080 | 734 | ||||||
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| Total assets |
$ | 1,238,588 | $ | 796,374 | ||||
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| LIABILITIES AND SHAREHOLDERS’ EQUITY |
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| Deposits |
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| Non-interest bearing |
$ | 136,830 | $ | 52,686 | ||||
| Interest bearing |
914,728 | 628,614 | ||||||
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| Total deposits |
1,051,558 | 681,300 | ||||||
| Federal funds purchased and repurchase agreements |
34,238 | 24,291 | ||||||
| Federal Home Loan Bank advances |
33,000 | 23,000 | ||||||
| Accrued interest payable |
437 | 222 | ||||||
| Mortgage banking derivative liability |
54 | — | ||||||
| Other liabilities |
2,838 | 2,398 | ||||||
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| Total liabilities |
1,122,125 | 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 September 30, 2014 and December 31, 2013, respectively |
10,000 | 10,000 | ||||||
| Common stock, no par value; 10,000,000 shares authorized; 7,739,644 and 4,862,875 issued at September 30, 2014 and December 31, 2013, respectively |
93,897 | 52,638 | ||||||
| Retained earnings |
12,562 | 7,058 | ||||||
| Accumulated other comprehensive income (loss) |
4 | (4,533 | ) | |||||
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| Total shareholders’ equity |
116,463 | 65,163 | ||||||
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| Total liabilities and shareholders’ equity |
$ | 1,238,588 | $ | 796,374 | ||||
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FRANKLIN FINANCIAL NETWORK, INC.
CONSOLIDATED STATEMENTS OF INCOME
Three and Nine Months Ended September 30, 2014 and 2013
(Dollar amounts in thousands, except share and per share data)
(Unaudited)
| Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Interest income and dividends |
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| Loans, including fees |
$ | 10,168 | $ | 5,186 | $ | 22,466 | $ | 14,434 | ||||||||
| Securities: |
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| Taxable |
2,395 | 1,098 | 6,932 | 2,979 | ||||||||||||
| Tax-Exempt |
20 | 17 | 60 | 46 | ||||||||||||
| Dividends on restricted equity securities |
84 | 30 | 175 | 57 | ||||||||||||
| Federal funds sold and other |
25 | 7 | 57 | 35 | ||||||||||||
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| 12,692 | 6,338 | 29,690 | 17,551 | |||||||||||||
| Interest expense |
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| Deposits |
1,446 | 874 | 3,808 | 2,733 | ||||||||||||
| Federal funds purchased and repurchase agreements |
39 | 50 | 123 | 94 | ||||||||||||
| Federal Home Loan Bank advances |
80 | 29 | 189 | 67 | ||||||||||||
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| 1,565 | 953 | 4,120 | 2,894 | |||||||||||||
| Net interest income |
11,127 | 5,385 | 25,570 | 14,657 | ||||||||||||
| Provision for loan losses |
664 | 225 | 1,489 | 457 | ||||||||||||
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| Net interest income after provision for loan losses |
10,463 | 5,160 | 24,081 | 14,200 | ||||||||||||
| Noninterest income |
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| Service charges on deposit accounts |
13 | 12 | 37 | 39 | ||||||||||||
| Other service charges and fees |
600 | 270 | 1,149 | 868 | ||||||||||||
| Net gains on sale of loans |
1,875 | 714 | 4,226 | 3,611 | ||||||||||||
| Loan servicing fees, net |
73 | (19 | ) | 173 | (317 | ) | ||||||||||
| Gain on sale of securities |
22 | — | 93 | 78 | ||||||||||||
| Net gain (loss) on sale and write-down of foreclosed assets |
(3 | ) | (29 | ) | 28 | (250 | ) | |||||||||
| Other |
694 | 369 | 1,419 | 1,153 | ||||||||||||
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| Total noninterest income |
3,274 | 1,317 | 7,125 | 5,182 | ||||||||||||
| Noninterest expense |
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| Salaries and employee benefits |
6,144 | 3,339 | 13,494 | 9,830 | ||||||||||||
| Occupancy and equipment |
1,443 | 666 | 3,238 | 1,990 | ||||||||||||
| FDIC assessment expense |
181 | 101 | 420 | 254 | ||||||||||||
| Marketing |
224 | 70 | 470 | 193 | ||||||||||||
| Professional fees |
961 | 79 | 1,594 | 322 | ||||||||||||
| Other |
1,436 | 587 | 2,743 | 1,690 | ||||||||||||
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| Total noninterest expense |
10,389 | 4,842 | 21,959 | 14,279 | ||||||||||||
| Income before income tax expense |
3,348 | 1,635 | 9,247 | 5,103 | ||||||||||||
| Income tax expense |
1,333 | 625 | 3,668 | 1,945 | ||||||||||||
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| Net income |
$ | 2,015 | $ | 1,010 | $ | 5,579 | $ | 3,158 | ||||||||
| Dividends paid on Series A preferred stock |
(25 | ) | (25 | ) | (75 | ) | (83 | ) | ||||||||
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| Net income available to common shareholders |
$ | 1,990 | $ | 985 | $ | 5,504 | $ | 3,075 | ||||||||
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| Basic earnings per share |
$ | 0.26 | $ | 0.27 | $ | 0.94 | $ | 0.84 | ||||||||
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