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| 8-K - FORM 8-K - Franklin Financial Network Inc. | v445098_8k.htm |
Franklin Financial Network Announces Record Second-Quarter Earnings Per Diluted Share Of $0.62
FRANKLIN, Tenn., July 26, 2016 /PRNewswire/ -- Franklin Financial Network, Inc. (NYSE: FSB), the parent company (the "Company") of Franklin Synergy Bank (the "Bank"), today announced financial results for the second quarter and six months ended June 30, 2016. For the second quarter, net income available for common shareholders increased 125.1% to a record $7.0 million from $3.1 million for the second quarter of 2015. Earnings per diluted share were a record $0.62 for the second quarter of 2016, up 121.4% from $0.28 for the second quarter of 2015.
For the first six months of 2016, net income available for common shareholders increased 112.5% to $13.2 million from $6.2 million for the first six months of 2015. Earnings per diluted share grew 84.4% for the first half of 2016 to $1.18 from $0.64 for the same period in 2015.
Highlights for the second quarter of 2016 include:
- Profitability measures reached new records, as return on average assets improved to 1.14% for the quarter and return on average tangible common equity increased to 15.35%.
- Net interest income plus noninterest income continued to grow at a strong rate, increasing 51.8% to $24.6 million from $16.2 million for the second quarter of 2015.
- The efficiency ratio improved to 52.58%, compared with 52.91% for the first quarter of 2016 and 65.35% for the second quarter last year.
- Total loans, including loans held for sale, increased $133.9 million during the second quarter to $1.57 billion at the quarter's end, which is a $588.5 million or 60.1% increase from June 30, 2015.
- Credit quality remained strong for the quarter, with nonperforming loans at 0.10% of total loans, excluding loans held for sale; the allowance for loan losses increasing to 0.92% of total loans, excluding loans held for sale; and net recoveries for the quarter.
- Tangible book value per share increased 22.1% to $18.09 at the end of the quarter compared with the end of the second quarter of 2015.
"We are pleased with our outstanding financial results for the second quarter of 2016," remarked Richard Herrington, the Company's Chairman, President and Chief Executive Officer. "Despite the challenges presented by the interest rate environment, we produced substantial comparable quarter growth in net interest income and noninterest income, driven in part by continued strong loan growth and our mortgage banking unit. In addition, our efficiency ratio improved in second quarter 2016 when compared with the same period last year and with first quarter 2016 as a result of significant economies of scale. As importantly, all key asset quality metrics stayed constant or improved.
"During the second quarter, we continued to selectively add experienced local bankers to our team and invest in expanding our corporate capabilities and infrastructure, positioning the Company to continue to leverage strong growth trends in Middle Tennessee. As evidence of those trends, Williamson County posted the highest percentage job growth among large counties nationally in 2015 and the three-county metro area including Davidson (Nashville), Williamson, (Franklin) and Rutherford (Murfreesboro) ranked fifth in the country for job growth. In addition, Nashville was ranked as the fifth best city in the country for startups and entrepreneurship, while Franklin—one of the country's 15 fastest growing cities with a population over 50,000—was also recently named the third best city in America in which to retire. Given the continuing strength of economic indicators and corporate investment in Middle Tennessee, especially Williamson County, and ongoing disciplined execution of our business model, we believe the Company is well positioned to achieve further profitable growth in the second half of 2016."
Maintaining Strong Asset Quality
- At June 30, 2016, nonperforming loans were 0.10% of total loans, excluding loans held for sale, compared with 0.12% and 0.10% at March 31, 2016 and June 30, 2015.
- Nonperforming assets were 0.12% of total loans, excluding loans held for sale, plus foreclosed assets, compared with 0.14% and 0.12% at March 31, 2016 and June 30, 2015.
- The allowance for loan losses was 0.92% of total loans, excluding loans held for sale, compared with 0.89% and 0.83% at March 31, 2016 and June 30, 2015.
- There was a net recovery for the second quarter of 2016, compared with net charge-offs as a percentage of average loans of 0.01% and 0.04% at March 31, 2016 and June 30, 2015.
Attractive, Growing, Local Markets Support Expansion of Balance Sheet
- Total assets were $2.60 billion at June 30, 2016, an increase of 47.6% from June 30, 2015 and 13.3% from the end of the first quarter of 2016.
- Total loans, including loans held for sale, increased to $1.57 billion at the end of the second quarter of 2016, up 60.1% or $588.5 million from June 30, 2015, and 9.3% or $133.9 million from March 31, 2016 (37.6% annualized).
- Loan growth for the 12 months ended June 30, 2016 was primarily due to an increase of $201.0 million in business loans, which included $122.8 million in healthcare loans, $160.0 million in commercial real estate loans and $145.2 million in construction loans.
- The mix of total loans at the end of the second quarter was consistent with the mix at the end of the prior quarter, with total real estate lending at 77.2% and business loans at 22.4% of total loans.
- Deposits were $2.25 billion at June 30, 2016, an increase of 50.8% from June 30, 2015 and 15.2% from March 31, 2016. Non-interest bearing deposits increased 36.5% and 13.9% on a comparable and sequential-quarter basis, and interest bearing deposits increased 52.6% and 15.3% on a comparable and sequential-quarter basis.
- On June 30, 2016, the Company completed a private placement of $20 million of unsecured, fixed-to-floating rate subordinated notes due 2026, which were structured to qualify as Tier 2 capital under regulatory guidelines. Substantially all of the net proceeds were contributed to Franklin Synergy Bank, the Company's primary subsidiary, as capital to fund growth and for general corporate purposes.
Revenue-Driven Economies of Scale Enhance Profitability
- Net interest income for the second quarter of 2016 increased 49.6% to $19.9 million from the second quarter of 2015 and 3.4% from the first quarter of 2016. Compared with the second quarter last year, the growth in net interest income reflected strong growth in interest earning assets. On a sequential-quarter basis, the impact from growth in interest earning assets was somewhat offset by reduced yield, as well as the growth, change in mix and increased average rate of interest bearing liabilities, which included the issuance of $40 million of subordinated notes on March 31, 2016.
- The average yield on total interest earning assets was 4.20% for the second quarter of 2016, up 14 basis points from the second quarter of 2015 and down 10 basis points from the first quarter of 2016. The average rate on total interest bearing liabilities was 0.85% for the second quarter of 2016, up 18 basis points from the second quarter of 2015 and 14 basis points from the first quarter of 2016. Net interest margin ("NIM"), adjusted for tax equivalent yield, was 3.47% for the second quarter of 2016, compared with 3.51% for the second quarter last year and 3.70% for the first quarter of 2016. Sequential quarter changes in NIM are affected by seasonal factors associated with our funding sources, specifically related to public funds deposits.
- Noninterest income for the second quarter of 2016 was $4.6 million, up 62.3% from the second quarter of 2015 and 50.0% from the first quarter of 2016. On a comparable quarter basis, the increase primarily reflected net gains on the sales of loans and securities. The sequential quarter increase also reflected net gains on the sales of loans and securities, mortgage banking activities, and substantial growth in wealth management income and other service charges and fees.
- Noninterest expense increased 22.1% to $12.9 million for the second quarter of 2016 from the second quarter of 2015 and 9.1% from the first quarter of 2016, primarily as a result of the Company's substantial growth. Increasing economies of scale drove improvement in the Company's efficiency ratio to 52.58% for the second quarter of 2016, compared with 65.35% for the second quarter of 2015 and 52.91% for the first quarter of 2016.
- Provision expense was $1.6 million for the second quarter of 2016, compared with $0.8 million and $1.1 million for the second quarter last year and the first quarter of 2016, resulting primarily from continued strong loan growth.
- The Company's effective income tax rate improved to 30.6% for the second quarter of 2016 compared with 34.7% and 33.6% for the comparable and sequential quarters, primarily due to an increase in municipal debt in the securities portfolio and other tax strategies.
Webcast and Conference Call Information
The Company will host a webcast and conference call at 9:00 a.m. (CT) on Wednesday, July 27, 2016, to discuss operating and financial results for the second quarter of 2016. To access the call for audio only, please call 1-844-378-6480. For the presentation materials and streaming audio, please access the webcast on the Investor Relations page of Franklin Synergy Bank's website at www.FranklinSynergyBank.com. For those unable to participate in the webcast, it will be archived for one year, with audio available for 90 days.
Safe Harbor for Forward-Looking Statements
This media release contains forward-looking statements. 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 and market acceptance. 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 cannot 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.
About the Company
Franklin Financial Network, Inc. is a financial holding company headquartered in Franklin, Tennessee. The Company's wholly owned bank subsidiary, Franklin Synergy Bank, a Tennessee-chartered commercial bank founded in November 2007 and a member of the Federal Reserve System, provides a full range of banking and related financial services with a focus on service to small businesses, corporate entities, local governments and individuals. With consolidated total assets of $2.6 billion at June 30, 2016, the Bank currently operates through 12 branches and one loan production office in the demographically attractive and growing Williamson, Rutherford and Davidson Counties, all within the Nashville metropolitan statistical area. Additional information about the Company, which is included in the NYSE Financial-100 Index, and the FTSE Russell 2000 Index, is available at www.FranklinSynergyBank.com.
Investor Relations Contact: | Media Contact: |
Sarah Meyerrose | Aimee Punessen |
EVP, Chief Financial Officer | SVP, Chief Marketing Officer |
(615) 236-8344 | (615) 236-8329 |
sarah.meyerrose@franklinsynergy.com | aimee.punessen@franklinsynergy.com |
FRANKLIN FINANCIAL NETWORK
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| June 30,
| December 31,
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(Amounts in thousands, except share data) | (Unaudited) |
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ASSETS |
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Cash and due from financial institutions | $ 72,050 | $ 52,394 |
Certificates of deposit at other financial institutions | 1,065 | 250 |
Securities available for sale | 676,875 | 575,838 |
Securities held to maturity (fair value 2016—$243,594 and 2015—$161,969) | 232,656 | 158,200 |
Loans held for sale, at fair value | 16,808 | 14,079 |
Loans | 1,550,729 | 1,303,826 |
Allowance for loan losses | (14,253 ) | (11,587 ) |
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Net loans | 1,536,476 | 1,292,239 |
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Restricted equity securities, at cost | 9,889 | 7,998 |
Premises and equipment, net | 8,449 | 7,640 |
Accrued interest receivable | 8,448 | 7,299 |
Bank owned life insurance | 22,942 | 22,619 |
Deferred tax asset | 3,174 | 9,430 |
Buildings held for sale | — | 1,640 |
Foreclosed assets | 200 | 200 |
Servicing rights, net | 3,491 | 3,455 |
Goodwill | 9,124 | 9,124 |
Core deposit intangible, net | 1,750 | 2,043 |
Other assets | 3,704 | 3,344 |
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Total assets | $ 2,607,101 | $ 2,167,792 |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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Deposits |
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Non-interest bearing | $ 229,035 | $ 176,742 |
Interest bearing | 2,020,700 | 1,637,297 |
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Total deposits | 2,249,735 | 1,814,039 |
Federal funds purchased and repurchase agreements | 36,672 | 101,086 |
Federal Home Loan Bank advances | 52,000 | 57,000 |
Subordinated notes | 58,312 | — |
Accrued interest payable | 1,800 | 644 |
Other liabilities | 4,306 | 6,207 |
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Total liabilities | 2,402,825 | 1,978,976 |
Shareholders' equity |
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Preferred stock, no par value: 1,000,000 shares authorized; Senior non-cumulative preferred stock, Series A, no par value, $1,000 liquidation value per share, 10,000 shares authorized; no shares outstanding at June 30, 2016 and 10,000 shares issued and outstanding at December 31, 2015 | — | 10,000 |
Common stock, no par value; 20,000,000 shares authorized; 10,689,481 and 10,571,377 issued and outstanding at June 30, 2016 and December 31, 2015, respectively | 150,026 | 147,784 |
Retained earnings | 44,561 | 31,352 |
Accumulated other comprehensive income | 9,689 | (320 ) |
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Total shareholders' equity | 204,276 | 188,816 |
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Total liabilities and shareholders' equity | $ 2,607,101 | $ 2,167,792 |
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FRANKLIN FINANCIAL NETWORK, INC.
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(Amounts in thousands, except share data) | Three Months Ended
| Six Months Ended
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| 2016 | 2015 | 2016 | 2015 |
Interest income and dividends |
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Loans, including fees | $ 18,930 | $ 12,173 | $ 36,672 | $ 23,327 |
Securities: |
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Taxable | 3,985 | 2,957 | 7,513 | 5,622 |
Tax-Exempt | 1,197 | 169 | 2,319 | 189 |
Dividends on restricted equity securities | 118 | 83 | 221 | 150 |
Federal funds sold and other | 56 | 31 | 122 | 51 |
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Total interest income | 24,286 | 15,413 | 46,847 | 29,339 |
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Interest expense |
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Deposits | 3,358 | 1,913 | 6,435 | 3,546 |
Federal funds purchased and repurchase agreements | 82 | 92 | 168 | 163 |
Federal Home Loan Bank advances | 187 | 81 | 296 | 146 |
Subordinated notes and other borrowings | 725 | — | 738 | — |
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Total interest expense | 4,352 | 2,086 | 7,637 | 3,855 |
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Net interest income | 19,934 | 13,327 | 39,210 | 25,484 |
Provision for loan losses | 1,567 | 805 | 2,703 | 1,430 |
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Net interest income after provision for loan losses | 18,367 | 12,522 | 36,507 | 24,054 |
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Noninterest income |
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Service charges on deposit accounts | 46 | 18 | 95 | 34 |
Other service charges and fees | 767 | 690 | 1,400 | 1,308 |
Net gains on sale of loans | 2,309 | 1,463 | 3,917 | 3,110 |
Wealth management | 529 | 301 | 897 | 587 |
Loan servicing fees, net | (4 ) | 60 | 38 | 103 |
Gain on sale of securities | 795 | 109 | 1,105 | 524 |
Net gain on sale and write-down of foreclosed assets | 3 | 21 | 6 | 27 |
Other | 181 | 189 | 253 | 373 |
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Total noninterest income | 4,626 | 2,851 | 7,711 | 6,066 |
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Noninterest expense |
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Salaries and employee benefits | 7,603 | 6,071 | 14,120 | 11,752 |
Occupancy and equipment | 1,755 | 1,699 | 3,562 | 3,278 |
FDIC assessment expense | 405 | 216 | 818 | 430 |
Marketing | 188 | 198 | 405 | 418 |
Professional fees | 977 | 507 | 2,071 | 866 |
Amortization of core deposit intangible | 144 | 167 | 293 | 339 |
Indirect expenses related to public offering | — | 309 | — | 326 |
Other | 1,841 | 1,405 | 3,475 | 2,784 |
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Total noninterest expense | 12,913 | 10,572 | 24,744 | 20,193 |
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Income before income tax expense | 10,080 | 4,801 | 19,474 | 9,927 |
Income tax expense | 3,081 | 1,667 | 6,242 | 3,661 |
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Net income | 6,999 | 3,134 | 13,232 | 6,266 |
Dividends paid on Series A preferred stock | — | (25 ) | (23 ) | (50 ) |
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Net income available to common shareholders | $ 6,999 | $ 3,109 | $ 13,209 | $ 6,216 |
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Earnings per share: |
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Basic | $ 0.66 | $ 0.30 | $ 1.24 | $ 0.67 |
Diluted | 0.62 | 0.28 | 1.18 | 0.64 |
FRANKLIN FINANCIAL NETWORK, INC.
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| Three Months Ended June 30, | |||||
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| 2016 | 2015 | ||||
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| Average
| Interest
| Average
| Average
| Interest
| Average
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ASSETS: |
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Loans(1)(6) | $ 1,497,556 | $ 18,955 | 5.09 % | $ 909,705 | $ 12,173 | 5.37 % |
Securities available for sale(6) | 662,867 | 4,087 | 2.48 % | 512,152 | 2,790 | 2.19 % |
Securities held to maturity(6) | 190,718 | 1,868 | 3.94 % | 48,676 | 336 | 2.77 % |
Certificates of deposit at other financial institutions | 1,065 | 4 | 1.51 % | 250 | 2 | 3.21 % |
Federal funds sold and other(2) | 51,854 | 170 | 1.32 % | 53,299 | 112 | 0.84 % |
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TOTAL INTEREST EARNING ASSETS | $ 2,404,060 | $ 25,084 | 4.20 % | $ 1,524,082 | $ 15,413 | 4.06 % |
Allowance for loan losses | (13,049 ) |
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| (7,483 ) |
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All other assets | 82,475 |
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| 73,183 |
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TOTAL ASSETS | $ 2,473,486 |
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| $ 1,589,782 |
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LIABILITIES & SHAREHOLDERS' EQUITY |
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Deposits: |
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Interest checking | $ 280,961 | $ 271 | 0.39 % | $ 265,844 | $ 261 | 0.39 % |
Money market | 637,922 | 941 | 0.59 % | 443,085 | 630 | 0.57 % |
Savings | 48,866 | 39 | 0.32 % | 33,471 | 38 | 0.46 % |
Time deposits | 924,837 | 2,107 | 0.92 % | 402,335 | 984 | 0.98 % |
Federal Home Loan Bank advances | 82,330 | 187 | 0.91 % | 48,165 | 81 | 0.67 % |
Federal funds purchased and other(3) | 51,597 | 82 | 0.64 % | 53,832 | 92 | 0.69 % |
Subordinated notes and other borrowings | 38,973 | 725 | 7.48 % | — | — | — |
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TOTAL INTEREST BEARING LIABILITIES | $ 2,065,486 | $ 4,352 | 0.85 % | $ 1,246,732 | $ 2,086 | 0.67 % |
Demand deposits | 200,849 |
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| 157,511 |
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Other liabilities | 12,766 |
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| 5,937 |
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Total shareholders' equity | 194,385 |
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| 179,602 |
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 2,473,486 |
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| $ 1,589,782 |
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NET INTEREST SPREAD(4) |
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| 3.35 % |
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| 3.39 % |
NET INTEREST INCOME |
| $ 20,732 |
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| $ 13,327 |
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NET INTEREST MARGIN(5) |
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| 3.47 % |
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| 3.51 % |
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(1) | Loan balances include both loans held in the Bank's portfolio and mortgage loans held for sale and are net of deferred origination fees and costs. Non-accrual loans are included in total loan balances. |
(2) | Includes federal funds sold, capital stock in the Federal Reserve Bank and Federal Home Loan Bank, and interest-bearing deposits at the Federal Reserve Bank and the Federal Home Loan Bank. |
(3) | Includes repurchase agreements. |
(4) | Represents the average rate earned on interest-earning assets minus the average rate paid on interest-bearing liabilities. |
(5) | Represents net interest income (annualized) divided by total average earning assets. |
(6) | Interest income and rates for 2016 include the effects of tax-equivalent adjustments to adjust tax-exempt interest income on tax-exempt loans and investment securities to a fully taxable basis. Due to immateriality, interest income and rates for 2015 exclude the effects of tax-equivalent adjustments to adjust tax-exempt interest income on tax-exempt loans and investment securities to a fully taxable basis. |
(7) | Averages balances are average daily balances. |
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| Six Months Ended June 30, | |||||
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| 2016 | 2015 | ||||
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| Average
| Interest
| Average
| Average
| Interest
| Average
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ASSETS: |
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Loans(1)(6) | $ 1,431,012 | $ 36,714 | 5.16 % | $ 877,749 | $ 23,327 | 5.36 % |
Securities available for sale(6) | 625,876 | 7,833 | 2.52 % | 460,458 | 5,111 | 2.24 % |
Securities held to maturity(6) | 174,278 | 3,496 | 4.03 % | 50,584 | 700 | 2.79 % |
Certificates of deposit at other financial institutions | 655 | 7 | 2.15 % | 250 | 3 | 2.42 % |
Federal funds sold and other(2) | 58,762 | 336 | 1.15 % | 49,154 | 198 | 0.81 % |
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TOTAL INTEREST EARNING ASSETS | $ 2,290,583 | $ 48,386 | 4.25 % | $ 1,438,195 | $ 29,339 | 4.11 % |
Allowance for loan losses | (12,508 ) |
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| (7,262 ) |
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All other assets | 82,481 |
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| 71,276 |
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TOTAL ASSETS | $ 2,360,556 |
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| $ 1,502,209 |
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LIABILITIES & SHAREHOLDERS' EQUITY |
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Deposits: |
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Interest checking | $ 307,513 | $ 597 | 0.39 % | $ 283,398 | $ 435 | 0.31 % |
Money market | 603,503 | 1,810 | 0.60 % | 418,719 | 1,215 | 0.59 % |
Savings | 47,338 | 81 | 0.34 % | 32,051 | 73 | 0.46 % |
Time deposits | 864,778 | 3,947 | 0.92 % | 371,593 | 1,823 | 0.99 % |
Federal Home Loan Bank advances | 69,665 | 296 | 0.85 % | 35,718 | 146 | 0.82 % |
Federal funds purchased and other(3) | 52,691 | 168 | 0.64 % | 48,381 | 163 | 0.68 % |
Subordinated notes and other borrowings | 20,039 | 738 | 7.41 % | — | — | — |
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TOTAL INTEREST BEARING LIABILITIES | $ 1,965,527 | $ 7,637 | 0.78 % | $ 1,189,860 | $ 3,855 | 0.65 % |
Demand deposits | 189,149 |
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| 153,827 |
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Other liabilities | 11,499 |
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| 5,919 |
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Total shareholders' equity | 194,381 |
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| 152,603 |
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 2,360,556 |
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| $ 1,502,209 |
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NET INTEREST SPREAD(4) |
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| 3.47 % |
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| 3.46 % |
NET INTEREST INCOME |
| $ 40,749 |
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| $ 25,484 |
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NET INTEREST MARGIN(5) |
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| 3.58 % |
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| 3.57 % |
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(1) | Loan balances include both loans held in the Bank's portfolio and mortgage loans held for sale and are net of deferred origination fees and costs. Non-accrual loans are included in total loan balances. |
(2) | Includes federal funds sold, capital stock in the Federal Reserve Bank and Federal Home Loan Bank, and interest-bearing deposits at the Federal Reserve Bank and the Federal Home Loan Bank. |
(3) | Includes repurchase agreements. |
(4) | Represents the average rate earned on interest-earning assets minus the average rate paid on interest-bearing liabilities. |
(5) | Represents net interest income (annualized) divided by total average earning assets. |
(6) | Interest income and rates for 2016 include the effects of tax-equivalent adjustments to adjust tax-exempt interest income on tax-exempt loans and investment securities to a fully taxable basis. Due to immateriality, interest income and rates for 2015 exclude the effects of tax-equivalent adjustments to adjust tax-exempt interest income on tax-exempt loans and investment securities to a fully taxable basis. |
(7) | Averages balances are average daily balances. |
FRANKLIN FINANCIAL NETWORK, INC.
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| As of and for the three months ended | ||||
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| Jun 30,
| Mar 31,
| Dec 31,
| Sept 30,
| Jun 30,
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Income Statement Data ($): |
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Interest income | 24,286 | 22,561 | 20,081 | 19,301 | 15,413 |
Interest expense | 4,352 | 3,285 | 2,886 | 2,565 | 2,086 |
Net interest income | 19,934 | 19,276 | 17,195 | 16,736 | 13,327 |
Provision for loan losses | 1,567 | 1,136 | 1,876 | 1,724 | 805 |
Noninterest income | 4,626 | 3,085 | 2,992 | 3,798 | 2,851 |
Noninterest expense | 12,913 | 11,831 | 11,094 | 10,853 | 10,572 |
Net income before taxes | 10,080 | 9,394 | 7,217 | 7,957 | 4,801 |
Income tax expense | 3,081 | 3,161 | 2,553 | 2,807 | 1,667 |
Net income | 6,999 | 6,233 | 4,664 | 5,150 | 3,134 |
Earnings before interest and taxes | 14,432 | 12,679 | 10,103 | 10,522 | 6,887 |
Net income available to common shareholders | 6,999 | 6,210 | 4,639 | 5,125 | 3,109 |
Earnings per share, basic | 0.66 | 0.59 | 0.44 | 0.49 | 0.30 |
Earnings per share, diluted | 0.62 | 0.56 | 0.41 | 0.46 | 0.28 |
Profitability (%) |
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Return on average assets | 1.14 | 1.12 | 0.89 | 1.07 | 0.79 |
Return on average equity | 14.48 | 12.90 | 9.82 | 11.25 | 7.00 |
Return on average tangible common equity | 15.35 | 14.36 | 11.01 | 12.70 | 7.89 |
Efficiency ratio | 52.58 | 52.91 | 54.95 | 52.85 | 65.35 |
Net interest margin(1) | 3.33 | 3.56 | 3.39 | 3.60 | 3.51 |
Balance Sheet Data ($): |
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Loans (including HFS) | 1,567,537 | 1,433,623 | 1,317,905 | 1,138,492 | 979,033 |
Loan loss reserve | 14,253 | 12,676 | 11,587 | 9,744 | 8,016 |
Cash | 72,050 | 62,054 | 52,394 | 47,658 | 43,413 |
Securities | 909,531 | 746,781 | 734,038 | 756,554 | 681,999 |
Goodwill | 9,124 | 9,124 | 9,124 | 9,124 | 9,124 |
Intangible assets (Sum of core deposit intangible and SBA servicing rights) | 1,792 | 1,946 | 2,107 | 2,249 | 2,414 |
Assets | 2,607,101 | 2,300,094 | 2,167,792 | 2,002,538 | 1,766,752 |
Deposits | 2,249,735 | 1,953,573 | 1,814,039 | 1,714,594 | 1,491,986 |
Liabilities | 2,402,825 | 2,108,184 | 1,978,976 | 1,814,928 | 1,589,671 |
Total equity | 204,276 | 191,910 | 188,816 | 187,610 | 177,081 |
Common equity | 204,276 | 191,910 | 178,816 | 177,610 | 167,081 |
Tangible common equity | 193,360 | 180,840 | 167,585 | 166,237 | 155,543 |
Asset Quality (%) |
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Nonperforming loans/ total loans(2) | 0.10 | 0.12 | 0.25 | 0.07 | 0.10 |
Nonperforming assets / (total loans(2) + foreclosed assets) | 0.12 | 0.14 | 0.27 | 0.09 | 0.12 |
Loan loss reserve / total loans(2) | 0.92 | 0.89 | 0.89 | 0.87 | 0.83 |
Net charge-offs / average loans | 0.00 | 0.01 | 0.01 | 0.00 | 0.04 |
Capital (%) |
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Tangible common equity to tangible assets | 7.45 | 7.90 | 7.77 | 8.35 | 8.86 |
Leverage ratio(3) | 7.33 | 7.69 | 8.48 | 8.90 | 10.38 |
Common Equity Tier 1 ratio(3) | 9.24 | 9.60 | 10.08 | 11.03 | 12.52 |
Tier 1 risk-based capital ratio(3) | 9.24 | 9.60 | 10.51 | 11.52 | 13.09 |
Total risk-based capital ratio(3) | 13.05 | 12.49 | 11.21 | 12.18 | 13.74 |
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(1) | Net interest margins shown in the table above do not include tax-equivalent adjustments. |
(2) | Total loans in this ratio exclude loans held for sale. |
(3) | Capital ratios come from the Company's regulatory filings with the Board of Governors of the Federal Reserve System, and for June 30, 2016 the ratios are estimates since the Company's quarterly regulatory reports have not yet been filed. |
GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures
Some of the financial data included in our selected historical consolidated financial information are not measures of financial performance recognized by GAAP. Our management uses these non-GAAP financial measures in its analysis of our performance:
- "Common shareholders' equity" is defined as total shareholders' equity at end of period less the liquidation preference value of the preferred stock;
- "Tangible common shareholders' equity" is common shareholders' equity less goodwill and other intangible assets;
- "Total tangible assets" is defined as total assets less goodwill and other intangible assets;
- "Other intangible assets" is defined as the sum of core deposit intangible and SBA servicing rights;
- "Tangible book value per share" is defined as tangible common shareholders' equity divided by total common shares outstanding. This measure is important to investors interested in changes from period-to-period in book value per share exclusive of changes in intangible assets;
- "Tangible common shareholders' equity ratio" is defined as the ratio of tangible common shareholders' equity divided by total tangible assets. We believe that this measure is important to many investors in the marketplace who are interested in relative changes from period-to period in common equity and total assets, each exclusive of changes in intangible assets;
- "Return on Average Tangible Common Equity" is defined as annualized net income available to common shareholders divided by average tangible common shareholders' equity; and
- "Efficiency ratio" is defined as noninterest expenses divided by our operating revenue, which is equal to net interest income plus noninterest income.
We believe these non-GAAP financial measures provide useful information to management and investors that is supplementary to our financial condition, results of operations and cash flows computed in accordance with GAAP; however, we acknowledge that our non-GAAP financial measures have a number of limitations. As such, you should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other companies use. The following reconciliation table provides a more detailed analysis of these non-GAAP financial measures:
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| As of or for the Three Months Ended | ||||
(Amounts in thousands, except share/
| Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sept 30, 2015 | Jun 30, 2015 |
Total shareholders' equity | $ 204,276 | $ 191,910 | $ 188,816 | $ 187,610 | $ 177,081 |
Less: Preferred stock | — | — | 10,000 | 10,000 | 10,000 |
Total common shareholders' equity | 204,276 | 191,910 | 178,816 | 177,610 | 167,081 |
Common shares outstanding | 10,689,481 | 10,586,592 | 10,571,377 | 10,524,630 | 10,502,671 |
Book value per share | $ 19.11 | $ 18.13 | $ 16.92 | $ 16.88 | $ 15.91 |
Total common shareholders' equity | 204,276 | 191,910 | 178,816 | 177,610 | 167,081 |
Less: Goodwill and other intangible assets | 10,916 | 11,070 | 11,231 | 11,373 | 11,538 |
Tangible common shareholders' equity | $ 193,360 | $ 180,840 | $ 167,585 | $ 166,237 | $ 155,543 |
Common shares outstanding | 10,689,481 | 10,586,592 | 10,571,377 | 10,524,630 | 10,502,671 |
Tangible book value per share | $ 18.09 | $ 17.08 | $ 15.85 | $ 15.80 | $ 14.81 |
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Average total shareholders' equity | 194,385 | 194,383 | 188,460 | 181,540 | 179,602 |
Less: Average Preferred stock | — | 9,231 | 10,000 | 10,000 | 10,000 |
Less: Average Goodwill and other intangible assets | 11,006 | 11,165 | 11,309 | 11,469 | 11,643 |
Average tangible common shareholders' equity | $ 183,379 | $ 173,987 | $ 167,151 | $ 160,071 | $ 157,959 |
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Net income available to common shareholders | 6,999 | $ 6,210 | $ 4,639 | $ 5,125 | $ 3,109 |
Average tangible common equity | 183,379 | 173,987 | 167,151 | 160,071 | 157,959 |
Return on average tangible common equity | 15.35 % | 14.36 % | 11.01 % | 12.70 % | 7.89 % |
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Efficiency Ratio: |
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Net interest income | $ 19,934 | $ 19,276 | $ 17,195 | $ 16,736 | $ 13,327 |
Noninterest income | 4,626 | 3,085 | 2,992 | 3,798 | 2,851 |
Operating revenue | 24,560 | 22,361 | 20,187 | 20,534 | 16,178 |
Expense |
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Total noninterest expense | 12,913 | 11,831 | 11,094 | 10,853 | 10,572 |
Efficiency ratio | 52.58 % | 52.91 % | 54.96 % | 52.85 % | 65.35 % |
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Annualized interest and fees from loans | $ 76,136 | $ 71,358 | $ 61,506 | $ 58,495 | $ 48,826 |
Average loans | 1,497,556 | 1,364,467 | 1,232,218 | 1,044,520 | 909,705 |
Reported yield on loans(1) | 5.08 % | 5.23 % | 4.99 % | 5.60 % | 5.37 % |
Annualized accretion income on acquired loans | $ 1,108 | $ 1,447 | $ 1,409 | $ 4,374 | $ 2,893 |
Less: Effect of accretion income on acquired loans | (0.07 %) | (0.11 %) | (0.11 %) | (0.42 %) | (0.32 %) |
Adjusted yield on loans | 5.01 % | 5.12 % | 4.88 % | 5.18 % | 5.05 % |
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| As of or for the Three Months Ended | ||||
(Amounts in thousands, except share/
| Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sept 30, 2015 | Jun 30, 2015 |
Annualized net interest income | $ 80,174 | $ 77,528 | $ 68,219 | $ 66,398 | $ 53,454 |
Average earning assets | 2,404,060 | 2,177,905 | 2,009,481 | 1,846,372 | 1,524,082 |
Reported net interest margin(1) | 3.33 % | 3.56 % | 3.39 % | 3.60 % | 3.51 % |
Annualized accretion income on acquired loans | $ 1,108 | $ 1,447 | $ 1,409 | $ 4,374 | $ 2,893 |
Effect of accretion income on acquired loans | (0.05 %) | (0.07 %) | (0.07 %) | (0.24 %) | (0.19 %) |
Annualized premium amortization on acquired deposits | $ — | $ — | $ — | $ 4 | $ 100 |
Effect of premium amortization of acquired deposits | (0.00 %) | (0.00 %) | (0.00 %) | (0.00 %) | (0.01 %) |
Net interest margin adjusted for purchase accounting adjustments | 3.28 % | 3.49 % | 3.32 % | 3.36 % | 3.31 % |
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(1) | The yields and margins reported in the table above do not include any tax-equivalent adjustments. |
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