First Business Financial Services, Inc. (the "Company")
(Nasdaq:FBIZ), the parent company of First Business Bank and First
Business Bank - Milwaukee, today reported strong first quarter
profitability, a result of continued execution of its strategic
objectives. During the quarter the Company grew loans to record
levels, added low-cost deposits and delivered record trust and
investment service fees, all while maintaining an efficiency ratio
below 60%.
Highlights for the quarter ended March 31, 2014 include:
- Net income for the first quarter of 2014 totaled $3.3 million,
compared to $3.2 million in the first quarter of 2013.
- Pre-tax adjusted earnings, defined as pre-tax income excluding
the effects of provision for loan and lease losses, other
identifiable costs of credit and other discrete items unrelated to
the Company's primary business activities, totaled $5.3 million in
the first quarter of 2014, compared to $5.0 million in the first
quarter of 2013.
- At 1.06%, first quarter 2014 annualized return on average
assets exceeded 1.0% for the fifth consecutive quarter.
- At 12.01%, first quarter 2014 annualized return on average
equity exceeded 12.0% for the seventh consecutive quarter.
- Top line revenue, consisting of net interest income and
non-interest income, increased 8% to $13.1 million for the quarter
ended March 31, 2014, compared to $12.2 million for the first
quarter of 2013.
- Trust and investment service fee income was a record $1.1
million, reflecting trust assets under management and
administration of $969.3 million as of March 31, 2014, an increase
of $126.3 million, or 15%, from March 31, 2013.
- The Company's efficiency ratio of 59.84% marked its seventh
consecutive quarter below 60%.
- Period-end net loans and leases grew for the eighth consecutive
quarter, reaching a record $971.2 million at March 31, 2014.
- Average in-market deposit balances remained strong at $736.0
million for the three months ended March 31, 2014, up 2% from
$722.7 million in the first quarter of 2013. The Company's
in-market funding mix benefited from year-over-year growth in
low-cost transaction deposits and non-interest-bearing deposit
balances of 13%, or $25.2 million.
- Net interest margin measured 3.58% for the quarter ended March
31, 2014, improving 5 basis points compared to the same period of
2013.
- Non-performing assets of $14.4 million at March 31, 2014
decreased by $1.7 million, or 11%, from December 31, 2013.
- The Company recognized no charge-offs during the first quarter
of 2014 and $20,000 of recoveries on loans previously charged off,
resulting in a ratio of annualized net recoveries to average loans
and leases of 0.01%.
The Company recorded net income of $3.3 million in the first
quarter of 2014, compared to $3.8 million earned in the fourth
quarter of 2013 and $3.2 million in the first quarter of 2013.
Diluted earnings per common share were $0.84 for the first quarter
of 2014, compared to $0.95 for the linked quarter and $0.83 for the
first quarter of 2013. Lower earnings compared to the linked
quarter principally resulted from typical first quarter increases
in compensation expense and continued investment in personnel,
while improved earnings compared to the first quarter of 2013 were
driven by higher top line revenue production. Linked quarter
comparisons include the impact of the Company's fourth quarter 2013
endowment to the First Business Charitable Foundation, totaling
$1.3 million, and a negative $1.2 million provision for loan and
lease losses which resulted from the Company's annual fourth
quarter review of credit loss factors. Although the Company
completes its migration analysis on a quarterly basis in
determining the appropriateness of the allowance for loan loss, it
only updates its loss factors used in such analysis in the fourth
quarter of each year.
"First Business started 2014 with another quarter of solid
results by capitalizing on momentum achieved in 2013," said Corey
A. Chambas, President and Chief Executive Officer. "We are pleased
that our significant and opportunistic investment in talent,
products and technology is producing the desired outcomes:
continued loan growth, increased treasury management revenues,
excellent asset quality, record trust revenues and sustained
efficiency. We remain focused on executing our strategic objectives
for growth and improving the fundamental strengths and competitive
position of our franchise in 2014."
Core Business Results
Net interest income totaled $10.8 million in the first quarter
of 2014, compared to $11.0 million in the linked quarter. Interest
income declined $361,000, compared to the linked quarter, as lower
commercial real estate balances and yields offset growth in
commercial and industrial ("C&I") loan balances and yields.
This was partially offset by a $178,000 decline in interest expense
due to a $4.0 million paydown of subordinated debt and the combined
effect of lower average brokered certificate of deposit balances
and a six basis point reduction in the rate paid on those
funds.
Compared to the first quarter of 2013, net interest income grew
$572,000, or 5.6%, as lower funding costs and earning asset growth
offset declines in earning asset yields. Interest income benefited
from earning asset balances that were 4.2% higher than in the
prior-year period due to 8.6% growth in average loans. The
Company's continued success in executing on its strategic objective
to increase business loans effectively offset the 43 basis point
compression in average loan yields in the sustained low-rate
environment. In addition, compared to the prior-year period,
interest expense declined by $489,000, or 15.8%, principally due to
a 47 basis point reduction in the average rate paid on brokered
certificates of deposit. Funding costs further declined as a result
of the paydown of subordinated debt and continued growth in the
Company's in-market deposit relationships at lower average rates
than those paid in the prior-year period. Period-end in-market
client deposits - comprised of all transaction accounts, money
market accounts, and non-brokered certificates of deposit - grew
1.2% to $731.2 million at March 31, 2014 from $722.5 million at
March 31, 2013.
First quarter 2014 net interest margin of 3.58% improved 5 basis
points compared to the first quarter of 2013 and declined 2 basis
points compared to 3.60% in the fourth quarter of 2013. Management
believes that net interest margin stability continues to
differentiate the Company from many community and regional bank
peers.
Growth in non-interest income reflects the continued success of
the Company's initiatives to grow full-service banking
relationships. Non-interest income of $2.3 million for the
first quarter of 2014 increased $130,000, or 5.9%, from the fourth
quarter of 2013 and $368,000, or 18.8%, from the first quarter of
2013. Continued growth in trust and investment services fee
income benefited both the linked quarter and year-over-year
comparisons, as growth in client accounts and rising equity market
values drove trust assets under administration and management to a
record $969.3 million at March 31, 2014, compared to $959.0
million and $843.0 million at December 31, 2013 and
March 31, 2013, respectively. Trust and investment
services fee income of $1.1 million grew $85,000 and $241,000 on a
linked quarter and year-over-year basis, respectively. Service
charges on deposits totaled $567,000 for the first quarter of 2014,
down from the linked quarter but representing an increase of
$84,000, or 17.4%, from the first quarter of 2013 due to growth in
customer accounts. In addition, loan fees of $390,000 improved
$81,000 and $32,000 on a linked quarter and year-over-year basis,
respectively.
Non-interest expense for the first quarter of 2014 was $7.9
million, a decrease of $704,000, or 8.2%, compared to the fourth
quarter of 2013 and an increase of $674,000, or 9.4%, compared to
the first quarter of 2013. The lower non-interest expense on a
linked quarter basis was a result of the Company's $1.3 million
endowment to the First Business Charitable Foundation in the fourth
quarter of 2013. Excluding the charitable contribution,
non-interest expense grew $596,000, or 8.2%, on a linked quarter
basis primarily due to typical first quarter increases in
compensation costs and continued investment in personnel. In
addition, collateral liquidation costs for the first quarter of
2014 increased by $130,000, while the fourth quarter of 2013
benefited from $118,000 in net gains on the sales of foreclosed
properties. Compared to the first quarter of 2013, the Company
experienced a $331,000 increase in compensation expense due to its
continued investment in personnel and annual merit
increases. Year-over-year expense growth also reflected a
$173,000 increase in collateral liquidation costs, as the Company
incurred costs to facilitate resolution of certain problem loans in
the first quarter of 2014 and experienced a net recovery of costs
in the prior-year period. The Company continues to expect
gradual improvement in problem credit
resolutions. Non-interest expense growth remained aligned with
top line revenue growth as reflected in the first quarter 2014
efficiency ratio of 59.84%, marking the seventh consecutive quarter
below 60%.
The provision for loan and lease losses for the first quarter of
2014 was $180,000, compared to $80,000 in the first quarter of
2013. In the fourth quarter of 2013, the Company recorded a
negative provision of $1.2 million as a result of its annual review
of credit loss factors. First quarter 2014 loan and lease loss
provision primarily reflected additions to the loan and lease loss
allowance commensurate with loan growth and an increase of specific
reserves required on previously identified impaired
loans. During the first quarter of 2014, the Company
experienced no charge-offs and recognized $20,000 in recoveries on
previously charged-off loans, compared to net charge-offs totaling
$82,000 in the fourth quarter of 2013 and net recoveries of $27,000
in the first quarter of 2013. Annualized net recoveries as a
percentage of average loans and leases measured 0.01% for the first
quarter of 2014 and 2013, compared to annualized net charge-offs as
a percentage of average loans and leases of 0.03% in the fourth
quarter of 2013.
Continued Loan Growth and Asset Quality Strength
Period-end net loans and leases grew for the eighth consecutive
quarter, reaching a record $971.2 million at March 31,
2014. Balances grew $4.2 million from December 31, 2013
and $70.1 million, or 7.8%, from March 31, 2013. Measured on
an average basis, the Company experienced year-over-year growth
across each of its loan portfolios, particularly C&I loans and
the asset-based lending business, as a result of successful
initiatives to attract new customers and capitalize on market
opportunities.
Management believes that asset quality continues to be a source
of strength and differentiation for the Company relative to many of
its peers. The ratio of non-performing assets to total assets
measured 1.13% at March 31, 2014, compared to 1.28% at
December 31, 2013 and 1.03% at March 31,
2013. Non-performing assets declined by $1.7 million, or
10.8%, from December 31, 2013 to March 31, 2014 and
increased by $1.9 million, or 14.8%, from March 31, 2013 to
March 31, 2014. The year-over-year increase was primarily
due to the fourth quarter 2013 addition of one relationship which
management continues to believe is not systemic in
nature. Overall, the continued success of certain exit
strategies, including payoffs and paydowns, as well as improved
client performance resulting in a return to accrual status,
continues to benefit asset quality. The Company's allowance
for loan and lease losses as a percentage of total loans and leases
measured 1.43% as of March 31, 2014, compared to 1.42% at
December 31, 2013 and 1.69% at March 31, 2013.
Capital Strength
The Company's earnings power continues to generate capital, and
its capital ratios are in excess of the highest required regulatory
benchmark levels. As of March 31, 2014, total capital to
risk-weighted assets was 12.92%, tier 1 capital to risk-weighted
assets was 10.96% and tier 1 capital to average assets was
9.67%.
Quarterly Dividend
As previously announced, during the first quarter of 2014 the
Company's Board of Directors approved a $0.21 quarterly
cash dividend on its common stock, which was paid on February 21,
2014 to shareholders of record at the close of business on February
11, 2014. 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 (Nasdaq:FBIZ) is a $1.3
billion Wisconsin-based bank holding company that specializes in
focused financial solutions for businesses, key executives, and
high net worth individuals through its operating companies. It is
the second largest Wisconsin-based commercial bank holding company
listed on NASDAQ or the New York Stock Exchange. Its companies
include: First Business Bank - Madison; First Business Bank -
Milwaukee; First Business Bank - Northeast; First Business Trust
& Investments; First Business Equipment Finance, LLC; and First
Business Capital Corp. For additional information, visit
www.firstbusiness.com or call (608) 238-8008.
This press release includes "forward-looking" statements related
to First Business Financial Services, Inc. (the "Company") that can
generally be identified as describing the Company's future plans,
objectives or goals. Such forward-looking statements are subject to
risks and uncertainties that could cause actual results or outcomes
to differ materially from those currently anticipated. These
forward-looking statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
For further information about the factors that could affect the
Company's future results, please see the Company's 2013 annual
report on Form 10-K, quarterly reports on Form 10-Q and other
filings with the Securities and Exchange Commission.
SELECTED
FINANCIAL CONDITION DATA |
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
As
of |
(Dollars in thousands) |
March 31,
2014 |
December 31,
2013 |
September 30,
2013 |
June 30,
2013 |
March 31,
2013 |
ASSETS |
|
|
|
|
|
Cash and cash equivalents |
$ 76,396 |
$ 81,286 |
$ 96,114 |
$ 106,578 |
$ 75,212 |
Securities available-for-sale,
at fair value |
185,547 |
180,118 |
186,242 |
194,498 |
201,804 |
Loans and leases
receivable |
985,319 |
980,951 |
956,345 |
947,915 |
916,656 |
Allowance for loan and lease
losses |
(14,101) |
(13,901) |
(15,185) |
(15,202) |
(15,507) |
Loans and leases, net |
971,218 |
967,050 |
941,160 |
932,713 |
901,149 |
Leasehold improvements and
equipment, net |
1,186 |
1,155 |
1,182 |
1,218 |
1,128 |
Foreclosed properties |
333 |
333 |
595 |
565 |
905 |
Cash surrender value of
bank-owned life insurance |
23,348 |
23,142 |
22,906 |
22,691 |
22,479 |
Investment in Federal Home Loan
Bank stock, at cost |
1,255 |
1,255 |
1,255 |
1,829 |
1,144 |
Accrued interest receivable and
other assets |
14,489 |
14,316 |
15,485 |
15,977 |
16,466 |
Total
assets |
$ 1,273,772 |
$ 1,268,655 |
$ 1,264,939 |
$ 1,276,069 |
$ 1,220,287 |
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
|
|
|
In-market deposits |
$ 731,164 |
$ 736,323 |
$ 713,993 |
$ 691,001 |
$ 722,456 |
Brokered CDs |
405,536 |
393,532 |
414,338 |
451,978 |
349,330 |
Total deposits |
1,136,700 |
1,129,855 |
1,128,331 |
1,142,979 |
1,071,786 |
Federal Home Loan Bank and
other borrowings |
7,936 |
11,936 |
11,936 |
11,936 |
26,936 |
Junior subordinated notes |
10,315 |
10,315 |
10,315 |
10,315 |
10,315 |
Accrued interest payable and
other liabilities |
6,626 |
7,274 |
8,258 |
7,601 |
9,103 |
Total liabilities |
1,161,577 |
1,159,380 |
1,158,840 |
1,172,831 |
1,118,140 |
Total stockholders' equity |
112,195 |
109,275 |
106,099 |
103,238 |
102,147 |
Total liabilities and
stockholders' equity |
$ 1,273,772 |
$ 1,268,655 |
$ 1,264,939 |
$ 1,276,069 |
$ 1,220,287 |
|
|
|
|
|
|
STATEMENTS OF INCOME |
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
As of and for the
Three Months Ended |
(Dollars in thousands, except per
share amounts) |
March 31,
2014 |
December 31,
2013 |
September 30,
2013 |
June 30,
2013 |
March 31,
2013 |
Total interest income |
$ 13,402 |
$ 13,763 |
$ 13,586 |
$ 13,142 |
$ 13,319 |
Total interest expense |
2,601 |
2,779 |
2,887 |
2,949 |
3,090 |
Net interest income |
10,801 |
10,984 |
10,699 |
10,193 |
10,229 |
Provision for loan and lease losses |
180 |
(1,202) |
109 |
54 |
80 |
Net interest income after
provision for loan and lease losses |
10,621 |
12,186 |
10,590 |
10,139 |
10,149 |
Trust and investment services fee income |
1,068 |
983 |
976 |
970 |
827 |
Service charges on deposits |
567 |
574 |
549 |
544 |
483 |
Loan fees |
390 |
309 |
296 |
332 |
358 |
Other |
296 |
325 |
303 |
328 |
285 |
Total non-interest income |
2,321 |
2,191 |
2,124 |
2,174 |
1,953 |
Compensation |
5,057 |
4,459 |
4,586 |
4,507 |
4,726 |
FDIC insurance |
190 |
174 |
169 |
193 |
205 |
Net collateral liquidation costs
(recoveries) |
159 |
29 |
108 |
73 |
(14) |
Net (gain) loss on foreclosed properties |
— |
(118) |
(48) |
79 |
(30) |
Endowment to First Business Charitable
Foundation |
— |
1,300 |
— |
— |
— |
Other |
2,446 |
2,712 |
2,332 |
2,638 |
2,291 |
Total non-interest expense |
7,852 |
8,556 |
7,147 |
7,490 |
7,178 |
Income before tax expense |
5,090 |
5,821 |
5,567 |
4,823 |
4,924 |
Income tax expense |
1,753 |
2,061 |
1,958 |
1,690 |
1,680 |
Net income |
$ 3,337 |
$ 3,760 |
$ 3,609 |
$ 3,133 |
$ 3,244 |
|
|
|
|
|
|
Per common share: |
|
|
|
|
|
Basic earnings |
$ 0.85 |
$ 0.95 |
$ 0.92 |
$ 0.80 |
$ 0.83 |
Diluted earnings |
0.84 |
0.95 |
0.91 |
0.80 |
0.83 |
Dividends declared |
0.21 |
0.14 |
0.14 |
0.14 |
0.14 |
Book value |
28.44 |
27.71 |
26.94 |
26.35 |
26.07 |
Tangible book value |
28.44 |
27.71 |
26.94 |
26.35 |
26.07 |
|
|
|
|
|
|
|
|
|
|
NET INTEREST
INCOME ANALYSIS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
For the Three
Months Ended |
(Dollars in thousands) |
March 31,
2014 |
December 31,
2013 |
March 31,
2013 |
|
Average balance |
Interest |
Average
yield/rate |
Average balance |
Interest |
Average
yield/rate |
Average balance |
Interest |
Average
yield/rate |
Interest-earning assets |
|
|
|
|
|
|
|
|
|
Commercial real estate and other mortgage
loans(1) |
$ 636,812 |
$ 7,497 |
4.71% |
$ 642,104 |
$ 8,133 |
5.07% |
$ 617,948 |
$ 8,013 |
5.19% |
Commercial and industrial loans(1) |
298,696 |
4,525 |
6.06% |
288,478 |
4,265 |
5.91% |
251,814 |
4,088 |
6.49% |
Direct financing leases(1) |
26,056 |
297 |
4.56% |
24,300 |
282 |
4.64% |
15,015 |
193 |
5.14% |
Consumer and other loans(1) |
17,083 |
156 |
3.65% |
15,880 |
153 |
3.85% |
16,711 |
159 |
3.81% |
Total loans and leases receivable(1) |
978,647 |
12,475 |
5.10% |
970,762 |
12,833 |
5.29% |
901,488 |
12,453 |
5.53% |
Mortgage-related securities(2) |
151,478 |
746 |
1.97% |
151,041 |
734 |
1.94% |
166,005 |
701 |
1.69% |
Other investment securities(3) |
31,950 |
121 |
1.51% |
33,330 |
121 |
1.45% |
33,502 |
109 |
1.30% |
FHLB stock |
1,261 |
1 |
0.30% |
1,255 |
1 |
0.36% |
1,144 |
1 |
0.30% |
Short-term investments |
43,925 |
59 |
0.54% |
65,451 |
74 |
0.45% |
56,332 |
55 |
0.39% |
Total interest-earning
assets |
1,207,261 |
13,402 |
4.44% |
1,221,839 |
13,763 |
4.51% |
1,158,471 |
13,319 |
4.60% |
Non-interest-earning assets |
57,799 |
|
|
57,233 |
|
|
59,963 |
|
|
Total assets |
$ 1,265,060 |
|
|
$ 1,279,072 |
|
|
$ 1,218,434 |
|
|
Interest-bearing
liabilities |
|
|
|
|
|
|
|
|
|
Transaction accounts |
$ 78,591 |
45 |
0.23% |
$ 72,016 |
41 |
0.23% |
$ 53,872 |
28 |
0.21% |
Money market |
462,574 |
587 |
0.51% |
471,610 |
599 |
0.51% |
459,201 |
671 |
0.58% |
Certificates of deposit |
50,925 |
120 |
0.94% |
54,400 |
134 |
0.99% |
66,128 |
170 |
1.03% |
Brokered certificates of deposit |
387,240 |
1,417 |
1.46% |
399,671 |
1,515 |
1.52% |
359,257 |
1,729 |
1.93% |
Total interest-bearing
deposits |
979,330 |
2,169 |
0.89% |
997,697 |
2,289 |
0.92% |
938,458 |
2,598 |
1.11% |
FHLB advances |
3,111 |
1 |
0.16% |
5 |
— |
—% |
1,343 |
3 |
0.93% |
Other borrowings |
8,647 |
157 |
7.26% |
12,528 |
210 |
6.70% |
12,048 |
215 |
7.14% |
Junior subordinated notes |
10,315 |
274 |
10.63% |
10,315 |
280 |
10.86% |
10,315 |
274 |
10.63% |
Total interest-bearing
liabilities |
1,001,403 |
2,601 |
1.04% |
1,020,545 |
2,779 |
1.09% |
962,164 |
3,090 |
1.28% |
Non-interest-bearing demand deposit
accounts |
143,953 |
|
|
142,738 |
|
|
143,499 |
|
|
Other non-interest-bearing liabilities |
8,530 |
|
|
7,436 |
|
|
11,414 |
|
|
Total liabilities |
1,153,886 |
|
|
1,170,719 |
|
|
1,117,077 |
|
|
Stockholders' equity |
111,174 |
|
|
108,353 |
|
|
101,357 |
|
|
Total liabilities and
stockholders' equity |
$ 1,265,060 |
|
|
$ 1,279,072 |
|
|
$ 1,218,434 |
|
|
Net interest income |
|
$ 10,801 |
|
|
$ 10,984 |
|
|
$ 10,229 |
|
Interest rate spread |
|
|
3.40% |
|
|
3.42% |
|
|
3.32% |
Net interest-earning assets |
$ 205,858 |
|
|
201,294 |
|
|
$ 196,307 |
|
|
Net interest margin |
|
|
3.58% |
|
|
3.60% |
|
|
3.53% |
|
|
|
|
|
|
|
|
|
|
(1) The
average balances of loans and leases include non-performing loans
and leases. Interest income related to non-performing loans
and leases is recognized when collected. |
|
(2) Includes
amortized cost basis of assets available for sale. |
|
|
|
|
|
|
|
|
|
(3) Yields on
tax-exempt municipal obligations are not presented on a
tax-equivalent basis in this table. |
|
|
|
|
|
|
|
|
|
|
|
|
SELECTED
FINANCIAL TRENDS |
|
|
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|
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|
|
PERFORMANCE
RATIOS |
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended |
(Unaudited) |
March 31,
2014 |
December 31,
2013 |
September 30,
2013 |
June 30,
2013 |
March 31,
2013 |
Return on average assets (annualized) |
1.06% |
1.18% |
1.14% |
1.02% |
1.06% |
Return on average equity (annualized) |
12.01% |
13.88% |
13.73% |
12.05% |
12.80% |
Efficiency ratio |
59.84% |
55.97% |
56.11% |
59.93% |
59.17% |
Interest rate spread |
3.40% |
3.42% |
3.38% |
3.28% |
3.32% |
Net interest margin |
3.58% |
3.60% |
3.56% |
3.46% |
3.53% |
Average interest-earning assets to average
interest-bearing liabilities |
120.56% |
119.72% |
118.79% |
119.05% |
120.40% |
|
|
|
|
|
|
CAPITAL RATIOS |
|
|
|
|
|
|
|
|
|
|
|
|
As of and for the
Three Months Ended |
(Unaudited) |
March 31,
2014 |
December 31,
2013 |
September 30,
2013 |
June 30,
2013 |
March 31,
2013 |
Total capital to risk-weighted assets |
12.92% |
13.16% |
13.26% |
13.12% |
13.19% |
Tier I capital to risk-weighted assets |
10.96% |
10.83% |
10.89% |
10.74% |
10.77% |
Tier I capital to average assets |
9.67% |
9.35% |
9.20% |
9.17% |
9.07% |
Tangible common equity to tangible
assets |
8.81% |
8.61% |
8.39% |
8.09% |
8.37% |
|
|
|
|
|
|
ASSET QUALITY RATIOS |
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
As
of |
(Dollars in thousands) |
March 31,
2014 |
December 31,
2013 |
September 30,
2013 |
June 30,
2013 |
March 31,
2013 |
Non-performing loans and leases |
$ 14,110 |
$ 15,855 |
$ 9,725 |
$ 11,241 |
$ 11,674 |
Foreclosed properties, net |
333 |
333 |
595 |
565 |
905 |
Total non-performing assets |
14,443 |
16,188 |
10,320 |
11,806 |
12,579 |
Performing troubled debt restructurings |
586 |
371 |
789 |
1,076 |
1,245 |
Total impaired assets |
$ 15,029 |
$ 16,559 |
$ 11,109 |
$ 12,882 |
$ 13,824 |
|
|
|
|
|
|
Non-performing loans and leases as a percent
of total gross loans and leases |
1.43% |
1.61% |
1.02% |
1.18% |
1.27% |
Non-performing assets as a percent of total
gross loans and leases plus foreclosed properties |
1.46% |
1.65% |
1.08% |
1.24% |
1.37% |
Non-performing assets as a percent of total
assets |
1.13% |
1.28% |
0.82% |
0.93% |
1.03% |
Allowance for loan and lease losses as a
percent of total gross loans and leases |
1.43% |
1.42% |
1.59% |
1.60% |
1.69% |
Allowance for loan and lease losses as a
percent of non-performing loans |
99.94% |
87.68% |
156.14% |
135.24% |
132.83% |
|
|
|
|
|
|
Criticized assets: |
|
|
|
|
|
Special mention |
$ — |
$ — |
$ — |
$ — |
$ — |
Substandard |
21,283 |
22,841 |
17,145 |
21,564 |
19,737 |
Doubtful |
— |
— |
— |
— |
— |
Total criticized assets |
$ 21,283 |
$ 22,841 |
$ 17,145 |
$ 21,564 |
$ 19,737 |
Criticized assets to total assets |
1.67% |
1.80% |
1.36% |
1.69% |
1.62% |
|
|
|
|
|
|
NET
CHARGE-OFFS (RECOVERIES) |
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
For the Three
Months Ended |
(Dollars in thousands) |
March 31,
2014 |
December 31,
2013 |
September 30,
2013 |
June 30,
2013 |
March 31,
2013 |
Charge-offs |
$ — |
$ 120 |
$ 135 |
$ 647 |
$ 11 |
Recoveries |
(20) |
(38) |
(9) |
(288) |
(38) |
Net (recoveries) charge-offs |
$ (20) |
$ 82 |
$ 126 |
$ 359 |
$ (27) |
Net (recoveries) charge-offs as a percent of
average gross loans and leases (annualized) |
(0.01)% |
0.03% |
0.05% |
0.15% |
(0.01)% |
|
|
|
|
|
|
SELECTED
OTHER INFORMATION |
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
As
of |
(Dollars in thousands) |
March 31,
2014 |
December 31,
2013 |
September 30,
2013 |
June 30,
2013 |
March 31,
2013 |
Trust assets under management |
$ 787,645 |
$ 763,912 |
$ 731,076 |
$ 676,855 |
$ 660,599 |
Trust assets under administration |
181,611 |
195,056 |
179,692 |
175,929 |
182,376 |
Total trust assets |
$ 969,256 |
$ 958,968 |
$ 910,768 |
$ 852,784 |
$ 842,975 |
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.
PRE-TAX ADJUSTED EARNINGS
"Pre-tax adjusted earnings" is a non-GAAP measure representing
pre-tax income excluding the effects of (1) provision for loan and
lease losses, (2) other identifiable costs of credit and (3) other
discrete items that are unrelated to the Company's primary business
activities. In the judgment of the Company's management, the
presentation of pre-tax adjusted earnings allows the management
team, investors and analysts to better assess the growth of the
Company's business by removing the volatility that is associated
with costs of credit and other discrete items and facilitates a
more streamlined comparison of growth to its benchmark
peers. The information provided below reconciles pre-tax
adjusted earnings to its most comparable GAAP measure.
(Unaudited) |
For the Three
Months Ended |
(Dollars in thousands) |
March 31,
2014 |
December 31,
2013 |
September 30,
2013 |
June 30,
2013 |
March 31,
2013 |
Income before tax expense |
$ 5,090 |
$ 5,821 |
$ 5,567 |
$ 4,823 |
$ 4,924 |
Add back: |
|
|
|
|
|
Provision for loan and lease
losses |
180 |
(1,202) |
109 |
54 |
80 |
Net (gain) loss on foreclosed
properties |
— |
(118) |
(48) |
79 |
(30) |
Endowment to First Business
Charitable Foundation |
— |
1,300 |
— |
— |
— |
Pre-tax adjusted earnings |
$ 5,270 |
$ 5,801 |
$ 5,628 |
$ 4,956 |
$ 4,974 |
TANGIBLE BOOK VALUE
"Tangible book value per share" is a non-GAAP measure
representing tangible 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) |
March 31,
2014 |
December 31,
2013 |
September 30,
2013 |
June 30,
2013 |
March 31,
2013 |
Common stockholders' equity |
$ 112,195 |
$ 109,275 |
$ 106,099 |
$ 103,238 |
$ 102,147 |
Intangible assets |
— |
— |
— |
— |
— |
Tangible common equity |
$ 112,195 |
$ 109,275 |
$ 106,099 |
$ 103,238 |
$ 102,147 |
Common shares outstanding |
3,944,795 |
3,943,997 |
3,938,423 |
3,918,347 |
3,918,758 |
Book value per share |
$ 28.44 |
$ 27.71 |
$ 26.94 |
$ 26.35 |
$ 26.07 |
Tangible book value per share |
28.44 |
27.71 |
26.94 |
26.35 |
26.07 |
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 other 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) |
March 31,
2014 |
December 31,
2013 |
September 30,
2013 |
June 30,
2013 |
March 31,
2013 |
Common stockholders' equity |
$ 112,195 |
$ 109,275 |
$ 106,099 |
$ 103,238 |
$ 102,147 |
Intangible assets |
— |
— |
— |
— |
— |
Tangible common equity |
$ 112,195 |
$ 109,275 |
$ 106,099 |
$ 103,238 |
$ 102,147 |
Total assets |
$ 1,273,772 |
$ 1,268,655 |
$ 1,264,939 |
$ 1,276,069 |
$ 1,220,287 |
Intangible assets |
— |
— |
— |
— |
— |
Tangible assets |
$ 1,273,772 |
$ 1,268,655 |
$ 1,264,939 |
$ 1,276,069 |
$ 1,220,287 |
Tangible common equity to tangible
assets |
8.81% |
8.61% |
8.39% |
8.09% |
8.37% |
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 that are unrelated to its
business. The information provided below reconciles the
efficiency ratio to its most comparable GAAP measure.
(Unaudited) |
For the Three
Months Ended |
(Dollars in thousands) |
March 31,
2014 |
December 31,
2013 |
September 30,
2013 |
June 30,
2013 |
March 31,
2013 |
Total non-interest expense |
$ 7,852 |
$ 8,556 |
$ 7,147 |
$ 7,490 |
$ 7,178 |
Less: |
|
|
|
|
|
Net (gain) loss on foreclosed
properties |
— |
(118) |
(48) |
79 |
(30) |
Amortization of other
intangible assets |
— |
— |
— |
— |
— |
Endowment to First Business
Charitable Foundation |
— |
1,300 |
— |
— |
— |
Total operating expense |
$ 7,852 |
$ 7,374 |
$ 7,195 |
$ 7,411 |
$ 7,208 |
Net interest income |
$ 10,801 |
$ 10,984 |
$ 10,699 |
$ 10,193 |
$ 10,229 |
Total non-interest income |
2,321 |
2,191 |
2,124 |
2,174 |
1,953 |
Less: |
|
|
|
|
|
Gain on sale of securities |
— |
— |
— |
— |
— |
Total operating revenue |
$ 13,122 |
$ 13,175 |
$ 12,823 |
$ 12,367 |
$ 12,182 |
Efficiency ratio |
59.84% |
55.97% |
56.11% |
59.93% |
59.17% |
CONTACT: First Business Financial Services, Inc.
James F. Ropella, Senior Vice President
and Chief Financial Officer
608-232-5970
jropella@firstbusiness.com
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