-- Robust deposit generation supports record loan balances and strong
net interest margin --
MADISON, Wis.--(BUSINESS WIRE)--
First Business Financial Services, Inc. (the “Company” or “First
Business”) (NASDAQ:FBIZ) reported fourth quarter 2018 net income of $4.1
million highlighted by solid balance sheet growth and reduced operating
expenses, partially offset by an increase in recourse provision related
to certain legacy Small Business Administration (“SBA”) loans previously
identified as impaired.
Summary results for the quarter ended December 31, 2018 include:
-
Net income totaled $4.1 million, compared to $5.3 million in the
linked quarter and $4.0 million in the fourth quarter of 2017.
-
Diluted earnings per common share measured $0.46, compared to $0.60
and $0.46 for the linked and prior year quarters, respectively.
-
Annualized return on average assets and annualized return on average
equity measured 0.83% and 9.06%, respectively, compared to 1.11% and
12.06% for the linked quarter and 0.91% and 9.57% for the fourth
quarter of 2017.
-
Net interest margin was 3.69%, compared to 3.75% in the linked quarter
and 3.63% for the fourth quarter of 2017.
-
Net interest income was $17.1 million, increasing by $21,000 from the
linked quarter and by $1.8 million from the fourth quarter of 2017.
-
Trust and investment services fee income totaled $1.9 million for both
the current and linked quarter and $1.7 million in the fourth quarter
of 2017.
-
Top line revenue, the sum of net interest income and non-interest
income, totaled $21.8 million, compared to $22.0 million in the linked
quarter and $18.9 million in the fourth quarter of 2017.
-
Provision for loan and lease losses was $983,000, compared to
provision benefit of $546,000 for the linked quarter and provision
expense of $473,000 for the fourth quarter of 2017.
-
SBA recourse provision was $1.8 million, compared to $314,000 in the
linked quarter and $145,000 for the fourth quarter of 2017.
-
The Company’s efficiency ratio measured 66.95%, compared to 69.55% for
the linked quarter and 63.23% for the fourth quarter of 2017.
-
Active in-market historic tax credit investing program contributed
$752,000, or $0.09 per share, compared to $674,000, or $0.08 per
share, in the fourth quarter of 2017.
-
Record period-end gross loans and leases receivable of $1.618 billion
grew 4.8% annualized during the fourth quarter and 7.7% from December
31, 2017.
-
Non-performing assets were $27.8 million at December 31, 2018,
compared to $32.1 million and $27.5 million at September 30, 2018 and
December 31, 2017, respectively.
-
Record period-end in-market deposits of $1.179 billion, which consist
of all transaction accounts, money market accounts and non-wholesale
deposits, increased 38.1% annualized during the fourth quarter and
8.6% from December 31, 2017.
“Consistent with the first three quarters of 2018, commercial banking
operations continued to show positive momentum, including our sixth
consecutive quarter of loan growth, record in-market deposit growth,
solid fee income, and stable net interest margin,” said Corey Chambas,
President and Chief Executive Officer. “While this strong fundamental
performance was somewhat offset by the remnants of our acquired legacy
SBA portfolio, we are encouraged by the progress of the past year and
remain confident the significant investment made across our footprint
has built a foundation for sustainable growth in 2019 and beyond.”
Results of Operations
Net interest income was $17.1 million in the fourth quarter of 2018 and
linked quarter, compared to $15.4 million in the fourth quarter of 2017.
The increase compared to the prior year quarter was principally due to
an increase in both average loans and leases outstanding and average
loan and lease yields. Average gross loans and leases of $1.617 billion
increased by $149.9 million, or 10.2%, compared to the fourth quarter of
2017. Both periods of comparison benefited from increases to short-term
market rates, which management defines as the daily average effective
federal funds rate for purposes of estimating interest-earning asset and
interest-bearing liability betas. The benefit from the increase in
short-term market rates during the fourth quarter of 2018, compared to
the linked quarter, was offset by an increase in interest expense
resulting from an increase in rates across various interest-bearing
products combined with the successful deposit campaigns designed to
appeal to prospective private wealth management clients in local markets.
The yield on average loans and leases improved to 5.70%, up from 5.56%
and 5.03% in the linked and prior year quarters, respectively. The
average loans and leases beta was 48% from the linked quarter and 67%
from the prior year quarter. We present betas, which represent the
change in the yield of our interest-earning asset or the rate paid on
our interest-bearing liabilities over a particular period, compared to
the changes in the daily effective federal funds rate over that period.
The increase in yield from the linked quarter was primarily due to the
increase in short-term market rates. Fees collected in lieu of interest
were $1.4 million in both the fourth quarter of 2018 and linked quarter,
compared to $1.1 million in the prior year quarter. Excluding fees
collected in lieu of interest, the average loans and leases beta was 53%
from the linked quarter and 62% from the prior year quarter. Similarly,
the yield on average interest-earning assets improved to 5.29%, up from
5.17% and 4.61% in the linked and prior year quarter, respectively. The
average interest-earning assets beta was 41% from the linked quarter and
68% from the prior year quarter. Also, excluding fees collected in lieu
of interest, the average interest-earning assets beta was 47% from the
linked quarter and 63% from the prior year quarter.
The Company’s cost of total average interest-bearing liabilities
increased to 1.99% for the fourth quarter of 2018 from 1.75% and 1.22%
in the linked and prior year quarters, respectively. The average
interest-bearing liabilities beta was 83% from the linked quarter and
77% from the prior year quarter. Average interest-bearing deposit costs
for the fourth quarter of 2018 increased to 1.77%, up from 1.47% and
0.96% in the linked and prior year quarter, respectively. The average
interest-bearing deposit beta was 103% from the linked quarter and 81%
from the prior year quarter. Management believes an increase in funding
costs may put downward pressure on net interest margin as the Company
looks to grow in-market deposits amid intense competition.
Net interest margin measured 3.69% for the fourth quarter of 2018,
compared to 3.75% in the linked quarter and 3.63% in the fourth quarter
of 2017. The decrease compared to the linked quarter was principally due
to the rate paid on average interest-bearing liabilities increasing at a
slightly greater rate than growth in the yield on average
interest-earning assets. When comparing the fourth quarter of 2018 to
the same period in 2017, the increase in the rate paid on average
interest-bearing liabilities was offset by the increase in yield on
average interest-earning assets and a $317,000 increase in fees
collected in lieu of interest. Management expects the successful
continuation of its strategies will allow the Company to maintain a net
interest margin at or above its target of 3.50%.
The Company recorded a provision for loan and lease losses of $983,000
in the fourth quarter of 2018, compared to a provision benefit of
$546,000 in the linked quarter and provision expense of $473,000 in the
fourth quarter of 2017. The increase in provision for the fourth quarter
of 2018 was principally due to $1.0 million in net charge-offs, related
to the deterioration of collateral associated with certain existing
impaired legacy SBA loans and one conventional loan. Net charge-offs
were partially offset by a net reduction in specific reserves from
improved collateral values of legacy SBA loan relationships previously
identified as impaired. The size of the legacy on-balance-sheet
portfolio, defined as SBA loans originated prior to 2017, continues to
decline. As of December 31, 2018, total on-balance sheet legacy loans
were $39.3 million, compared to $41.2 million and $51.7 million at
September 30, 2018 and December 31, 2017, respectively. Total performing
on-balance sheet legacy loans were $26.3 million at December 31, 2018,
down from $29.3 million and $40.6 million at September 30, 2018 and
December 31, 2017, respectively.
Non-interest income totaled $4.6 million, or 21.4% of total revenue, in
the fourth quarter of 2018, compared to $4.9 million, or 22.2% of total
revenue, in the linked quarter and $3.5 million, or 18.7% of total
revenue, in the prior year quarter. Non-interest income decreased
compared to the linked quarter primarily due to a reduction in SBA
gains, partially offset by fee income related to the Company’s
commercial loan swap transactions. Non-interest income increased
compared to the prior year quarter principally due to trust and
investment services fee income growth and an increase in commercial loan
swap fee income. In addition, fourth quarter 2017 non-interest income
was reduced from the strategic sale of certain securities at a net loss
of $409,000.
Trust and investment services fee income, which remained the Company’s
largest source of non-interest income, totaled $1.9 million in both the
current and linked quarters, compared to $1.7 million in the prior year
quarter. Cash additions from existing relationships and successful
business development efforts added $93.5 million new trust assets under
management and administration during the fourth quarter of 2018, offset
by market volatility in the period. Trust assets under management and
administration were $1.630 billion at December 31, 2018, compared to
$1.721 billion at September 30, 2018 and $1.536 billion at December 31,
2017.
Gains on sale of SBA loans totaled $267,000 in the fourth quarter of
2018, compared to $641,000 in the linked quarter and $90,000 in the
fourth quarter of 2017. Gross SBA loan commitments closed for the full
year 2018 totaled $26.1 million, compared to $11.6 million for the full
year 2017. As of December 31, 2018, gross SBA loan commitments closed,
but not ready for sale, totaled $8.4 million.
Swap fee income totaled $662,000 in the fourth quarter of 2018, compared
to $306,000 in the linked quarter and $42,000 in the fourth quarter of
2017. While interest rate swaps continue to be a valuable product for
the Bank’s commercial borrowers, management expects client demand to
moderate if and as the pace of Fed Funds Target Rate hikes slows.
Non-interest expense was $18.2 million for the fourth quarter of 2018,
compared to $15.7 million for the linked quarter and $14.9 million in
the fourth quarter of 2017. Operating expense, as defined in the
Efficiency Ratio table included in the Non-GAAP Reconciliations at the
end of this release, totaled $14.6 million in the fourth quarter of
2018, $15.3 million in the linked quarter, and $12.2 million in the
fourth quarter of 2017.
Fourth quarter 2018 compensation expense was $9.4 million, a decrease of
$387,000 compared to the linked quarter and an increase of $2.5 million
compared to the prior year quarter. The decrease in compensation expense
from the linked quarter reflects a decrease in the Company’s
performance-based incentive compensation accrual based on actual full
year 2018 results. The addition of several new producers across multiple
business lines, including commercial lending, SBA lending, wealth
management, and equipment finance contributed to the increase in
compensation expense from the prior year quarter. Full-time equivalent
employees were 274 at December 31, 2018, compared to 275 at September
30, 2018 and 251 at December 31, 2017. Management expects to continue
strategically investing in talent to drive long-term organic revenue
growth.
Non-interest expense includes SBA recourse provision for estimated
losses in the outstanding guaranteed portion of SBA loans sold. SBA
recourse provision totaled $1.8 million in the fourth quarter of 2018,
$314,000 in the linked quarter and $145,000 in the prior year quarter.
The increase during the fourth quarter of 2018 was primarily related to
$1.6 million in net charge-offs resulting from the repurchase of the
sold portion of two legacy SBA loans previously identified as impaired.
The total recourse reserve balance was $3.0 million, or 3.6% of total
sold SBA loans outstanding at December 31, 2018. The balance of sold
legacy SBA loans, which is defined as SBA loans originated prior to
2017, continues to decline. Total sold legacy SBA loans at December 31,
2018 were $62.0 million, compared to $72.1 million and $93.6 million at
September 30, 2018 and December 31, 2017, respectively. Total performing
sold legacy SBA loans were $49.0 million at December 31, 2018, down from
$54.6 million and $84.8 million at September 30, 2018 and December 31,
2017, respectively. Changes to SBA recourse reserves may be a source of
non-interest expense volatility in future quarters, though the magnitude
of this volatility should diminish over time.
The Company’s fourth quarter 2018 efficiency ratio was 66.95%, compared
to 69.55% for the linked quarter and 63.23% for the fourth quarter of
2017. Over time, the Company intends to achieve its target efficiency
ratio range of 58-62% through proactive expense management and revenue
growth efforts. These include our newly consolidated board membership,
as well as efforts to increase SBA lending production and to increase
commercial banking market share, particularly in our less mature
markets, by continuing to prudently invest in production talent.
During the fourth quarter of 2018, the Company recognized $1.4 million
in nonrecurring expense due to partial impairment of in-market federal
historic tax credit investments, which corresponded with the recognition
of $2.3 million in tax credits during the quarter. The full year 2018
effective tax rate, excluding the discrete items, was 19.0%. For 2019,
the Company expects to report an effective tax rate of 20%-22%,
excluding discrete items.
“In-market historic tax credit opportunities are not only part of our
proactive tax expense management efforts, but allow us to deepen and
strengthen commercial and community relationships through our support of
high-profile redevelopment projects,” said Chambas. “Consistent with the
past three years, we intend to actively pursue in-market historic tax
credit opportunities that meet our underwriting criteria, allowing us to
partner with high-quality commercial real estate developers on projects
designed to make a positive impact on the communities we serve.”
Balance Sheet
Period-end gross loans and leases receivable totaled a record $1.618
billion at December 31, 2018, increasing $19.0 million, or 4.8%
annualized, from September 30, 2018 and increasing $116.1 million, or
7.7%, from December 31, 2017.
“Commercial banking growth in 2018 reflects a combination of healthy
in-market demand and our investments in talent,” said Chambas. “The
majority of our fourth quarter growth came in the form of commercial
real estate as construction advanced on many of the great local projects
we are proud to finance. In addition, we are very pleased with our
team’s success in growing the C&I portfolio, including the initial
success of our nascent small-ticket vendor equipment finance program.
The platform formally launched in the fourth quarter and originated
nearly $10 million in new C&I business.”
Period-end in-market deposits, which consist of all transaction
accounts, money market accounts, and non-wholesale deposits, increased
to $1.179 billion, or 68.2% of total bank funding at December 31, 2018,
compared to $1.077 billion, or 64.6%, at September 30, 2018 and $1.086
billion, or 68.9%, at December 31, 2017. Period-end wholesale funding
was $550.4 million at December 31, 2018, including FHLB advances of
$274.5 million, brokered certificates of deposit of $274.5 million, and
deposits gathered through internet deposit listing services of $1.3
million, compared to period-end wholesale funding of $491.5 million at
December 31, 2017.
The successful introduction of certificate of deposit campaigns and
indexed money market accounts complemented the Company’s traditional
strength in commercial banking and wealth management, contributing to
its in-market deposit growth during the fourth quarter of 2018. “Strong
in-market deposit growth during the fourth quarter highlighted the
strength of our relationship-based approach,” commented Chambas. “We
will continue to pursue growth of in-market deposits through both
additional commercial banking relationships as well as a new focus on
executive and high net worth private wealth management relationships.”
Consistent with the Company’s longstanding funding strategy to manage
risk and use the most efficient and cost-effective source of wholesale
funds, management intends to maintain a ratio of in-market deposits to
total bank funding sources in line with the Company’s target range of
60%-70%.
Asset Quality
Non-performing assets declined to 1.42% of total assets at December 31,
2018, compared to 1.69% and 1.53% at the end of the linked quarter and
fourth quarter of 2017, respectively. Total non-performing assets were
$27.8 million at December 31, 2018, $32.1 million at September 30, 2018
and $27.5 million at December 31, 2017. The decrease from the linked
quarter primarily reflects the partial payoff of the previously
disclosed $9.1 million fully-collateralized asset-based loan identified
as impaired during the second quarter of 2018, which reduced
non-performing assets by $5.8 million. We believe we will successfully
liquidate the remaining collateral and receive all outstanding
contractual principal and interest in the first half of 2019.
Non-performing assets also decreased due to $1.0 million of current
quarter charge-offs principally related to legacy SBA loans previously
identified as impaired. These decreases were partially offset by the
repurchase of the sold portion of certain legacy SBA loan relationships,
which increased non-performing assets by approximately $4.4 million.
Capital Strength
The Company’s capital ratios continued to exceed the highest required
regulatory benchmark levels. As of December 31, 2018, total capital to
risk-weighted assets was 11.85%, tier 1 capital to risk-weighted assets
was 9.41%, tier 1 leverage capital to adjusted average assets was 9.33%,
and common equity tier 1 capital to risk-weighted assets was 8.89%. In
addition, as of December 31, 2018, tangible common equity to tangible
assets was 8.63%.
Share Repurchases
From December 17, 2018 through January 23, 2019, the Company purchased
36,262 shares of its common stock at a weighted average price of $20.32
per share, for a total value of $737,000. Under the previously disclosed
stock repurchase program approved by its Board of Directors, the company
has $4.3 million of buyback authority remaining as of January 23, 2019.
Quarterly Dividend
As previously announced, during the fourth quarter of 2018, the
Company’s Board of Directors declared a regular quarterly dividend of
$0.14 per share. The dividend was paid on November 15, 2018 to
stockholders of record at the close of business on November 5, 2018.
Measured against fourth quarter 2018 diluted earnings per share of
$0.46, the dividend represents a 30.4% payout ratio. The Board of
Directors routinely considers dividend declarations as part of its
normal course of business.
About First Business Financial Services, Inc.
First Business Financial Services, Inc. (NASDAQ:FBIZ) is a
Wisconsin-based bank holding company focused on the unique needs of
businesses, business executives, and high net worth individuals. First
Business offers commercial banking, specialty finance, and private
wealth management solutions, and because of its niche focus, is able to
provide its clients with unmatched expertise, accessibility, and
responsiveness. For additional information, visit www.firstbusiness.com
or call 608-238-8008.
This release may include forward-looking statements as defined in the
Private Securities Litigation Reform Act of 1995, which reflect First
Business’s current views with respect to future events and financial
performance. Forward-looking statements are not based on historical
information, but rather are related to future operations, strategies,
financial results, or other developments. Forward-looking statements are
based on management’s expectations as well as certain assumptions and
estimates made by, and information available to, management at the time
the statements are made. Those statements are based on general
assumptions and are subject to various risks, uncertainties and other
factors that may cause actual results to differ materially from the
views, beliefs, and projections expressed in such statements. Such
statements are subject to risks and uncertainties, including among other
things:
-
Competitive pressures among depository and other financial
institutions nationally and in our markets.
-
Adverse changes in the economy or business conditions, either
nationally or in our markets.
-
Increases in defaults by borrowers and other delinquencies.
-
Our ability to manage growth effectively, including the successful
expansion of our client service, administrative infrastructure, and
internal management systems.
-
Fluctuations in interest rates and market prices.
-
The consequences of continued bank acquisitions and mergers in our
markets, resulting in fewer but much larger and financially stronger
competitors.
-
Changes in legislative or regulatory requirements applicable to us and
our subsidiaries.
-
Changes in tax requirements, including tax rate changes, new tax laws,
and revised tax law interpretations.
-
Fraud, including client and system failure or breaches of our network
security, including our internet banking activities.
-
Failure to comply with the applicable SBA regulations in order to
maintain the eligibility of the guaranteed portion of SBA loans.
For further information about the factors that could affect the
Company’s future results, please see the Company’s annual report on Form
10-K for the year ended December 31, 2017 and other filings with the
Securities and Exchange Commission.
SELECTED FINANCIAL CONDITION DATA
| (Unaudited) |
| As of |
| (in thousands) | | December 31,
2018 |
| September 30,
2018 |
| June 30,
2018 |
| March 31,
2018 |
| December 31,
2017 |
| Assets | | | | | | | | | | |
|
Cash and cash equivalents
| |
$
|
86,546
| | |
$
|
40,293
| | |
$
|
45,803
| | |
$
|
61,322
| | |
$
|
52,539
| |
|
Securities available-for-sale, at fair value
| |
138,358
| | |
134,995
| | |
135,470
| | |
127,961
| | |
126,005
| |
|
Securities held-to-maturity, at amortized cost
| |
37,731
| | |
39,950
| | |
40,946
| | |
41,885
| | |
37,778
| |
|
Loans held for sale
| |
5,287
| | |
4,712
| | |
4,976
| | |
3,429
| | |
2,194
| |
|
Loans and leases receivable
| |
1,617,655
| | |
1,598,607
| | |
1,594,953
| | |
1,563,490
| | |
1,501,595
| |
|
Allowance for loan and lease losses
| |
(20,425
|
)
| |
(20,455
|
)
| |
(20,932
|
)
| |
(18,638
|
)
| |
(18,763
|
)
|
|
Loans and leases receivable, net
| |
1,597,230
| | |
1,578,152
| | |
1,574,021
| | |
1,544,852
| | |
1,482,832
| |
|
Premises and equipment, net
| |
3,284
| | |
3,247
| | |
3,358
| | |
3,247
| | |
3,156
| |
|
Foreclosed properties
| |
2,547
| | |
1,454
| | |
1,484
| | |
1,484
| | |
1,069
| |
|
Bank-owned life insurance
| |
41,538
| | |
41,212
| | |
40,912
| | |
40,614
| | |
40,323
| |
| Federal Home Loan Bank stock, at cost
| |
7,240
| | |
6,890
| | |
9,295
| | |
8,650
| | |
5,670
| |
| Goodwill and other intangible assets
| |
12,045
| | |
12,132
| | |
12,380
| | |
12,579
| | |
12,652
| |
|
Accrued interest receivable and other assets
| |
34,651
|
| |
31,293
|
| |
31,142
|
| |
32,194
|
| |
29,848
|
|
|
Total assets
| |
$
|
1,966,457
|
| |
$
|
1,894,330
|
| |
$
|
1,899,787
|
| |
$
|
1,878,217
|
| |
$
|
1,794,066
|
|
| Liabilities and Stockholders’ Equity | | | | | | | | | | |
|
In-market deposits
| |
$
|
1,179,448
| | |
$
|
1,076,851
| | |
$
|
1,056,294
| | |
$
|
1,078,605
| | |
$
|
1,086,346
| |
|
Wholesale deposits
| |
275,851
|
| |
332,052
|
| |
281,431
|
| |
292,553
|
| |
307,985
|
|
|
Total deposits
| |
1,455,299
| | |
1,408,903
| | |
1,337,725
| | |
1,371,158
| | |
1,394,331
| |
| Federal Home Loan Bank advances and other borrowings
| |
298,944
| | |
281,430
| | |
365,416
| | |
308,912
| | |
207,898
| |
|
Junior subordinated notes
| |
10,033
| | |
10,029
| | |
10,026
| | |
10,022
| | |
10,019
| |
|
Accrued interest payable and other liabilities
| |
21,474
|
| |
16,426
|
| |
12,948
|
| |
16,645
|
| |
12,540
|
|
|
Total liabilities
| |
1,785,750
| | |
1,716,788
| | |
1,726,115
| | |
1,706,737
| | |
1,624,788
| |
|
Total stockholders’ equity
| |
180,707
|
| |
177,542
|
| |
173,672
|
| |
171,480
|
| |
169,278
|
|
|
Total liabilities and stockholders’ equity
| |
$
|
1,966,457
|
| |
$
|
1,894,330
|
| |
$
|
1,899,787
|
| |
$
|
1,878,217
|
| |
$
|
1,794,066
|
|
| | | | | | | | | | | | | | | | | | | |
|
STATEMENTS OF INCOME
| (Unaudited) |
| As of and for the Three Months Ended |
| As of and for the Year Ended |
| (Dollars in thousands, except per share amounts) | | December 31,
2018 |
| September 30,
2018 |
| June 30,
2018 |
| March 31,
2018 |
| December 31,
2017 | | December 31,
2018 |
| December 31,
2017 |
|
Total interest income
| |
$
|
24,522
| | |
$
|
23,563
| | |
$
|
22,468
| | |
$
|
20,722
| | |
$
|
19,504
| | |
$
|
91,275
| | |
$
|
75,811
| |
|
Total interest expense
| |
7,407
|
| |
6,469
|
| |
5,537
|
| |
4,520
|
| |
4,146
|
| |
23,933
|
| |
15,202
|
|
|
Net interest income
| |
17,115
| | |
17,094
| | |
16,931
| | |
16,202
| | |
15,358
| | |
67,342
| | |
60,609
| |
|
Provision for loan and lease losses
| |
983
|
| |
(546
|
)
| |
2,579
|
| |
2,476
|
| |
473
|
| |
5,492
|
| |
6,172
|
|
|
Net interest income after provision for loan and lease losses
| |
16,132
| | |
17,640
| | |
14,352
| | |
13,726
| | |
14,885
| | |
61,850
| | |
54,437
| |
|
Trust and investment service fees
| |
1,919
| | |
1,941
| | |
1,987
| | |
1,898
| | |
1,739
| | |
7,744
| | |
6,670
| |
|
Gain on sale of SBA loans
| |
267
| | |
641
| | |
274
| | |
269
| | |
90
| | |
1,451
| | |
1,591
| |
|
Service charges on deposits
| |
770
| | |
788
| | |
720
| | |
784
| | |
727
| | |
3,062
| | |
3,013
| |
|
Loan fees
| |
408
| | |
459
| | |
389
| | |
527
| | |
463
| | |
1,783
| | |
1,988
| |
|
Net loss on sale of securities
| |
(4
|
)
| |
—
| | |
—
| | |
—
| | |
(409
|
)
| |
(4
|
)
| |
(403
|
)
|
|
Swap fees
| |
662
| | |
306
| | |
70
| | |
633
| | |
42
| | |
1,670
| | |
909
| |
|
Other non-interest income
| |
626
|
| |
736
|
| |
542
|
| |
556
|
| |
873
|
| |
2,461
|
| |
2,897
|
|
|
Total non-interest income
| |
4,648
|
| |
4,871
|
| |
3,982
|
| |
4,667
|
| |
3,525
|
| |
18,167
|
| |
16,665
|
|
|
Compensation
| |
9,432
| | |
9,819
| | |
9,116
| | |
9,071
| | |
6,953
| | |
37,439
| | |
31,663
| |
|
Occupancy
| |
560
| | |
560
| | |
544
| | |
529
| | |
567
| | |
2,192
| | |
2,088
| |
|
Professional fees
| |
879
| | |
1,027
| | |
928
| | |
1,035
| | |
1,017
| | |
3,869
| | |
4,063
| |
|
Data processing
| |
614
| | |
512
| | |
626
| | |
611
| | |
891
| | |
2,362
| | |
2,701
| |
|
Marketing
| |
617
| | |
593
| | |
591
| | |
333
| | |
563
| | |
2,135
| | |
2,109
| |
|
Equipment
| |
345
| | |
403
| | |
343
| | |
343
| | |
342
| | |
1,434
| | |
1,211
| |
|
Computer software
| |
780
| | |
814
| | |
679
| | |
742
| | |
686
| | |
3,015
| | |
2,723
| |
| FDIC insurance
| |
353
| | |
457
| | |
369
| | |
299
| | |
307
| | |
1,478
| | |
1,388
| |
|
Collateral liquidation costs
| |
193
| | |
230
| | |
222
| | |
1
| | |
273
| | |
646
| | |
829
| |
|
Net loss (gain) on foreclosed properties
| |
337
| | |
30
| | |
—
| | |
—
| | |
(143
|
)
| |
367
| | |
(143
|
)
|
|
Impairment of tax credit investments
| |
1,529
| | |
113
| | |
329
| | |
113
| | |
2,447
| | |
2,083
| | |
2,784
| |
|
SBA recourse provision (benefit)
| |
1,795
| | |
314
| | |
99
| | |
(295
|
)
| |
145
| | |
1,913
| | |
2,240
| |
|
Other non-interest expense
| |
810
|
| |
874
|
| |
621
|
| |
1,125
|
| |
811
|
| |
3,430
|
| |
3,215
|
|
|
Total non-interest expense
| |
18,244
|
| |
15,746
|
| |
14,467
|
| |
13,907
|
| |
14,859
|
| |
62,363
|
| |
56,871
|
|
|
Income before income tax (benefit) expense
| |
2,536
| | |
6,765
| | |
3,867
| | |
4,486
| | |
3,551
| | |
17,654
| | |
14,231
| |
|
Income tax (benefit) expense
| |
(1,528
|
)
| |
1,464
|
| |
578
|
| |
837
|
| |
(486
|
)
| |
1,351
|
| |
2,326
|
|
|
Net income
| |
$
|
4,064
|
| |
$
|
5,301
|
| |
$
|
3,289
|
| |
$
|
3,649
|
| |
$
|
4,037
|
| |
$
|
16,303
|
| |
$
|
11,905
|
|
| | | | | | | | | | | | | |
|
|
Per common share:
| | | | | | | | | | | | | | |
|
Basic earnings
| |
$
|
0.46
| | |
$
|
0.60
| | |
$
|
0.38
| | |
$
|
0.42
| | |
$
|
0.46
| | |
$
|
1.86
| | |
$
|
1.36
| |
|
Diluted earnings
| |
0.46
| | |
0.60
| | |
0.38
| | |
0.42
| | |
0.46
| | |
1.86
| | |
1.36
| |
|
Dividends declared
| |
0.14
| | |
0.14
| | |
0.14
| | |
0.14
| | |
0.13
| | |
0.56
| | |
0.52
| |
|
Book value
| |
20.57
| | |
20.19
| | |
19.83
| | |
19.57
| | |
19.32
| | |
20.57
| | |
19.32
| |
|
Tangible book value
| |
19.20
| | |
18.81
| | |
18.41
| | |
18.13
| | |
17.87
| | |
19.20
| | |
17.87
| |
|
Weighted-average common shares outstanding(1) | |
8,662,025
| | |
8,650,057
| | |
8,631,189
| | |
8,633,278
| | |
8,631,554
| | |
8,640,198
| | |
8,612,770
| |
|
Weighted-average diluted common shares outstanding(1) | |
8,662,025
| | |
8,650,057
| | |
8,631,189
| | |
8,633,278
| | |
8,631,554
| | |
8,640,198
| | |
8,612,770
| |
| | | | | | | | | | | | | | | | | | | | |
|
(1) Excluding participating securities.
|
|
|
NET INTEREST INCOME ANALYSIS
| (Unaudited) |
| For the Three Months Ended |
| (Dollars in thousands) | | December 31, 2018 |
| September 30, 2018 |
| December 31, 2017 |
| | Average Balance |
| Interest |
| Average Yield/Rate(4) | | Average Balance |
| Interest |
| Average Yield/Rate(4) | | Average Balance |
| Interest |
| Average Yield/Rate(4) |
| Interest-earning assets | | | | | | | | | | | | | | | | | | |
|
Commercial real estate and other mortgage loans(1) | |
$
|
1,093,472
| | |
$
|
14,259
| | |
5.22
|
%
| |
$
|
1,085,315
| | |
$
|
13,755
| | |
5.07
|
%
| |
$
|
973,929
| | |
$
|
11,591
| | |
4.76
|
%
|
|
Commercial and industrial loans(1) | |
461,041
| | |
8,129
| | |
7.05
|
%
| |
455,242
| | |
7,865
| | |
6.91
|
%
| |
437,804
| | |
6,303
| | |
5.76
|
%
|
|
Direct financing leases(1) | |
32,721
| | |
339
| | |
4.14
|
%
| |
31,197
| | |
313
| | |
4.01
|
%
| |
28,476
| | |
299
| | |
4.20
|
%
|
|
Consumer and other loans(1) | |
29,963
|
| |
330
|
| |
4.41
|
%
| |
29,798
|
| |
333
|
| |
4.47
|
%
| |
27,110
|
| |
274
|
| |
4.04
|
%
|
|
Total loans and leases receivable(1) | |
1,617,197
| | |
23,057
| | |
5.70
|
%
| |
1,601,552
| | |
22,266
| | |
5.56
|
%
| |
1,467,319
| | |
18,467
| | |
5.03
|
%
|
|
Mortgage-related securities(2) | |
143,109
| | |
891
| | |
2.49
|
%
| |
140,227
| | |
833
| | |
2.38
|
%
| |
132,067
| | |
621
| | |
1.88
|
%
|
|
Other investment securities(3) | |
30,851
| | |
156
| | |
2.02
|
%
| |
34,140
| | |
169
| | |
1.98
|
%
| |
35,956
| | |
202
| | |
2.25
|
%
|
|
FHLB stock
| |
7,049
| | |
87
| | |
4.94
|
%
| |
7,722
| | |
89
| | |
4.61
|
%
| |
5,572
| | |
30
| | |
2.15
|
%
|
|
Short-term investments
| |
54,625
|
| |
331
|
| |
2.42
|
%
| |
40,201
|
| |
206
|
| |
2.05
|
%
| |
51,303
|
| |
184
|
| |
1.43
|
%
|
|
Total interest-earning assets
| |
1,852,831
| | |
24,522
|
| |
5.29
|
%
| |
1,823,842
| | |
23,563
|
| |
5.17
|
%
| |
1,692,217
| | |
19,504
|
| |
4.61
|
%
|
|
Non-interest-earning assets
| |
95,523
|
| | | | | |
91,359
|
| | | | | |
91,361
|
| | | | |
|
Total assets
| |
$
|
1,948,354
|
| | | | | |
$
|
1,915,201
|
| | | | | |
$
|
1,783,578
|
| | | | |
| Interest-bearing liabilities | | | | | | | | | | | | | | | | | | |
|
Transaction accounts
| |
$
|
245,910
| | |
850
| | |
1.38
|
%
| |
$
|
263,928
| | |
785
| | |
1.19
|
%
| |
$
|
241,421
| | |
450
| | |
0.75
|
%
|
|
Money market
| |
504,698
| | |
2,044
| | |
1.62
|
%
| |
472,866
| | |
1,413
| | |
1.20
|
%
| |
529,195
| | |
727
| | |
0.55
|
%
|
|
Certificates of deposit
| |
134,356
| | |
738
| | |
2.20
|
%
| |
88,903
| | |
384
| | |
1.73
|
%
| |
58,977
| | |
154
| | |
1.04
|
%
|
|
Wholesale deposits
| |
302,968
|
| |
1,631
|
| |
2.15
|
%
| |
327,146
|
| |
1,650
|
| |
2.02
|
%
| |
325,000
|
| |
1,435
|
| |
1.77
|
%
|
|
Total interest-bearing deposits
| |
1,187,932
| | |
5,263
| | |
1.77
|
%
| |
1,152,843
| | |
4,232
| | |
1.47
|
%
| |
1,154,593
| | |
2,766
| | |
0.96
|
%
|
|
FHLB advances
| |
264,043
| | |
1,454
| | |
2.20
|
%
| |
292,465
| | |
1,546
| | |
2.11
|
%
| |
168,451
| | |
689
| | |
1.64
|
%
|
|
Other borrowings
| |
24,435
| | |
410
| | |
6.71
|
%
| |
24,420
| | |
411
| | |
6.73
|
%
| |
24,389
| | |
411
| | |
6.74
|
%
|
|
Junior subordinated notes
| |
10,031
|
| |
280
|
| |
11.17
|
%
| |
10,027
|
| |
280
|
| |
11.17
|
%
| |
10,016
|
| |
280
|
| |
11.18
|
%
|
|
Total interest-bearing liabilities
| |
1,486,441
| | |
7,407
|
| |
1.99
|
%
| |
1,479,755
| | |
6,469
|
| |
1.75
|
%
| |
1,357,449
| | |
4,146
|
| |
1.22
|
%
|
|
Non-interest-bearing demand deposit accounts
| |
257,320
| | | | | | |
239,594
| | | | | | |
238,846
| | | | | |
|
Other non-interest-bearing liabilities
| |
25,101
|
| | | | | |
19,989
|
| | | | | |
18,632
|
| | | | |
|
Total liabilities
| |
1,768,862
| | | | | | |
1,739,338
| | | | | | |
1,614,927
| | | | | |
|
Stockholders’ equity
| |
179,492
|
| | | | | |
175,863
|
| | | | | |
168,651
|
| | | | |
|
Total liabilities and stockholders’ equity
| |
$
|
1,948,354
|
| | | | | |
$
|
1,915,201
|
| | | | | |
$
|
1,783,578
|
| | | | |
|
Net interest income
| | | |
$
|
17,115
|
| | | | | |
$
|
17,094
|
| | | | | |
$
|
15,358
|
| | |
|
Interest rate spread
| | | | | |
3.30
|
%
| | | | | |
3.42
|
%
| | | | | |
3.39
|
%
|
|
Net interest-earning assets
| |
$
|
366,390
|
| | | | | |
$
|
344,087
|
| | | | | |
$
|
334,768
|
| | | | |
|
Net interest margin
| | | | | |
3.69
|
%
| | | | | |
3.75
|
%
| | | | | |
3.63
|
%
|
|
(1)
|
|
The average balances of loans and leases include non-accrual loans
and leases and loans held for sale. Interest income related to
non-accrual loans and leases is recognized when collected. Interest
income includes net loan fees collected in lieu of interest.
|
|
(2)
| |
Includes amortized cost basis of assets available for sale and held
to maturity.
|
|
(3)
| |
Yields on tax-exempt municipal obligations are not presented on a
tax-equivalent basis in this table.
|
|
(4)
| |
Represents annualized yields/rates.
|
| |
|
NET INTEREST INCOME ANALYSIS
| (Unaudited) |
| For the Year Ended |
| (Dollars in thousands) |
| December 31, 2018 |
| December 31, 2017 |
| | Average
Balance |
| Interest |
| Average Yield/Rate(4) | | Average Balance |
| Interest |
| Average Yield/Rate(4) |
| Interest-earning assets | | | | | | | | | | | | |
|
Commercial real estate and other mortgage loans(1) | |
$
|
1,074,873
| | |
$
|
53,620
| | |
4.99
|
%
| |
$
|
961,572
| | |
$
|
43,452
| | |
4.52
|
%
|
|
Commercial and industrial loans(1) | |
447,687
| | |
30,043
| | |
6.71
|
%
| |
447,937
| | |
26,165
| | |
5.84
|
%
|
|
Direct financing leases(1) | |
31,276
| | |
1,268
| | |
4.05
|
%
| |
28,988
| | |
1,231
| | |
4.25
|
%
|
|
Consumer and other loans(1) | |
29,761
|
| |
1,297
|
| |
4.36
|
%
| |
27,612
|
| |
1,112
|
| |
4.03
|
%
|
|
Total loans and leases receivable(1) | |
1,583,597
| | |
86,228
| | |
5.45
|
%
| |
1,466,109
| | |
71,960
| | |
4.91
|
%
|
|
Mortgage-related securities(2) | |
137,145
| | |
3,185
| | |
2.32
|
%
| |
138,528
| | |
2,466
| | |
1.78
|
%
|
|
Other investment securities(3) | |
33,929
| | |
657
| | |
1.94
|
%
| |
37,085
| | |
682
| | |
1.84
|
%
|
|
FHLB and FRB stock
| |
7,472
| | |
290
| | |
3.88
|
%
| |
4,231
| | |
103
| | |
2.43
|
%
|
|
Short-term investments
| |
49,365
|
| |
915
|
| |
1.85
|
%
| |
49,113
|
| |
600
|
| |
1.22
|
%
|
|
Total interest-earning assets
| |
1,811,508
| | |
91,275
|
| |
5.04
|
%
| |
1,695,066
| | |
75,811
|
| |
4.47
|
%
|
|
Non-interest-earning assets
| |
92,631
|
| | | | | |
84,829
|
| | | | |
|
Total assets
| |
$
|
1,904,139
|
| | | | | |
$
|
1,779,895
|
| | | | |
| Interest-bearing liabilities | | | | | | | | | | | | |
|
Transaction accounts
| |
$
|
269,943
| | |
2,671
| | |
0.99
|
%
| |
$
|
226,540
| | |
1,335
| | |
0.59
|
%
|
|
Money market
| |
491,756
| | |
5,375
| | |
1.09
|
%
| |
583,241
| | |
2,746
| | |
0.47
|
%
|
|
Certificates of deposit
| |
94,172
| | |
1,599
| | |
1.70
|
%
| |
56,667
| | |
569
| | |
1.00
|
%
|
|
Wholesale deposits
| |
302,440
|
| |
5,888
|
| |
1.95
|
%
| |
361,712
|
| |
6,155
|
| |
1.70
|
%
|
|
Total interest-bearing deposits
| |
1,158,311
| | |
15,533
| | |
1.34
|
%
| |
1,228,160
| | |
10,805
| | |
0.88
|
%
|
|
FHLB advances
| |
274,382
| | |
5,640
| | |
2.06
|
%
| |
105,276
| | |
1,472
| | |
1.40
|
%
|
|
Other borrowings
| |
24,537
| | |
1,648
| | |
6.72
|
%
| |
24,796
| | |
1,813
| | |
7.31
|
%
|
|
Junior subordinated notes
| |
10,025
|
| |
1,112
|
| |
11.09
|
%
| |
10,011
|
| |
1,112
|
| |
11.11
|
%
|
|
Total interest-bearing liabilities
| |
1,467,255
| | |
23,933
|
| |
1.63
|
%
| |
1,368,243
| | |
15,202
|
| |
1.11
|
%
|
|
Non-interest-bearing demand deposit accounts
| |
241,529
| | | | | | |
230,907
| | | | | |
|
Other non-interest-bearing liabilities
| |
22,076
|
| | | | | |
14,375
|
| | | | |
|
Total liabilities
| |
1,730,860
| | | | | | |
1,613,525
| | | | | |
|
Stockholders’ equity
| |
173,279
|
| | | | | |
166,370
|
| | | | |
|
Total liabilities and stockholders’ equity
| |
$
|
1,904,139
|
| | | | | |
$
|
1,779,895
|
| | | | |
|
Net interest income
| | | |
$
|
67,342
|
| | | | | |
$
|
60,609
|
| | |
|
Interest rate spread
| | | | | |
3.41
|
%
| | | | | |
3.36
|
%
|
|
Net interest-earning assets
| |
$
|
344,253
|
| | | | | |
$
|
326,823
|
| | | | |
|
Net interest margin
| | | | | |
3.72
|
%
| | | | | |
3.58
|
%
|
|
(1)
|
|
The average balances of loans and leases include non-accrual loans
and leases and loans held for sale. Interest income related to
non-accrual loans and leases is recognized when collected. Interest
income includes net loan fees collected in lieu of interest.
|
|
(2)
| |
Includes amortized cost basis of assets available for sale and held
to maturity.
|
|
(3)
| |
Yields on tax-exempt municipal obligations are not presented on a
tax-equivalent basis in this table.
|
|
(4)
| |
Represents annualized yields/rates.
|
| |
|
PERFORMANCE RATIOS
|
| For the Three Months Ended |
| For the Year Ended |
| (Unaudited) | | December 31,
2018 |
| September 30,
2018 |
| June 30,
2018 |
| March 31,
2018 |
| December 31,
2017 | | December 31,
2018 |
| December 31,
2017 |
|
Return on average assets (annualized)
| |
0.83
|
%
| |
1.11
|
%
| |
0.70
|
%
| |
0.78
|
%
| |
0.91
|
%
| |
0.86
|
%
| |
0.67
|
%
|
|
Return on average equity (annualized)
| |
9.06
|
%
| |
12.06
|
%
| |
7.59
|
%
| |
8.88
|
%
| |
9.57
|
%
| |
9.41
|
%
| |
7.16
|
%
|
|
Efficiency ratio
| |
66.95
|
%
| |
69.55
|
%
| |
67.07
|
%
| |
67.45
|
%
| |
63.23
|
%
| |
67.77
|
%
| |
66.48
|
%
|
|
Interest rate spread
| |
3.30
|
%
| |
3.42
|
%
| |
3.49
|
%
| |
3.42
|
%
| |
3.39
|
%
| |
3.41
|
%
| |
3.36
|
%
|
|
Net interest margin
| |
3.69
|
%
| |
3.75
|
%
| |
3.77
|
%
| |
3.65
|
%
| |
3.63
|
%
| |
3.72
|
%
| |
3.58
|
%
|
Average interest-earning
assets to average interest-
bearing liabilities
| |
124.65
|
%
| |
123.25
|
%
| |
123.25
|
%
| |
122.66
|
%
| |
124.66
|
%
| |
123.46
|
%
| |
123.89
|
%
|
| | | | | | | | | | | | | | | | | | | | |
|
ASSET QUALITY RATIOS
| (Unaudited) |
| As of |
| (Dollars in thousands) | | December 31,
2018 |
| September 30,
2018 |
| June 30,
2018 |
| March 31,
2018 |
| December 31,
2017 |
|
Non-accrual loans and leases
| |
$
|
25,301
| | |
$
|
30,613
| | |
$
|
31,091
| | |
$
|
20,030
| | |
$
|
26,389
| |
|
Foreclosed properties
| |
2,547
|
| |
1,454
|
| |
1,484
|
| |
1,484
|
| |
1,069
|
|
|
Total non-performing assets
| |
27,848
| | |
32,067
| | |
32,575
| | |
21,514
| | |
27,458
| |
|
Performing troubled debt restructurings
| |
180
|
| |
187
|
| |
249
|
| |
261
|
| |
332
|
|
|
Total impaired assets
| |
$
|
28,028
|
| |
$
|
32,254
|
| |
$
|
32,824
|
| |
$
|
21,775
|
| |
$
|
27,790
|
|
| | | | | | | | | |
|
Non-accrual loans and leases as a
percent of total gross loans and leases
| |
1.56
|
%
| |
1.91
|
%
| |
1.95
|
%
| |
1.28
|
%
| |
1.76
|
%
|
Non-performing assets as a percent of total gross loans
and leases plus foreclosed properties
| |
1.72
|
%
| |
2.00
|
%
| |
2.04
|
%
| |
1.37
|
%
| |
1.83
|
%
|
Non-performing assets as a percent of total assets
| |
1.42
|
%
| |
1.69
|
%
| |
1.71
|
%
| |
1.15
|
%
| |
1.53
|
%
|
Allowance for loan and lease losses as a percent of total
gross loans and leases
| |
1.26
|
%
| |
1.28
|
%
| |
1.31
|
%
| |
1.19
|
%
| |
1.25
|
%
|
Allowance for loan and lease losses as a percent of non-
accrual loans and leases
| |
80.73
|
%
| |
66.82
|
%
| |
67.32
|
%
| |
93.05
|
%
| |
71.10
|
%
|
| | | | | | | | | |
|
|
Criticized assets:
| | | | | | | | | | |
|
Substandard
| |
$
|
32,968
| | |
$
|
38,752
| | |
$
|
42,477
| | |
$
|
30,622
| | |
$
|
32,687
| |
|
Doubtful
| |
—
| | |
—
| | |
—
| | |
—
| | |
4,692
| |
|
Foreclosed properties
| |
2,547
|
| |
1,454
|
| |
1,484
|
| |
1,484
|
| |
1,069
|
|
|
Total criticized assets
| |
$
|
35,515
|
| |
$
|
40,206
|
| |
$
|
43,961
|
| |
$
|
32,106
|
| |
$
|
38,448
|
|
|
Criticized assets to total assets
| |
1.81
|
%
| |
2.12
|
%
| |
2.31
|
%
| |
1.71
|
%
| |
2.14
|
%
|
| | | | | | | | | | | | | | |
|
NET CHARGE-OFFS (RECOVERIES)
| (Unaudited) |
| For the Three Months Ended |
| For the Year Ended |
| (Dollars in thousands) | | December 31,
2018 |
| September 30,
2018 |
| June 30,
2018 |
| March 31,
2018 |
| December 31,
2017 | | December 31,
2018 |
| December 31,
2017 |
|
Charge-offs
| |
$
|
1,197
| | |
$
|
1,914
| | |
$
|
306
| | |
$
|
2,685
| | |
$
|
1,643
| | |
$
|
6,101
| | |
$
|
8,840
| |
|
Recoveries
| |
(184
|
)
| |
(1,983
|
)
| |
(21
|
)
| |
(84
|
)
| |
(11
|
)
| |
(2,271
|
)
| |
(519
|
)
|
|
Net charge-offs (recoveries)
| |
$
|
1,013
|
| |
$
|
(69
|
)
| |
$
|
285
|
| |
$
|
2,601
|
| |
$
|
1,632
|
| |
$
|
3,830
|
| |
$
|
8,321
|
|
Net charge-offs (recoveries)
as a percent of average
gross
loans and leases
(annualized)
| |
0.25
|
%
| |
(0.02
|
)%
| |
0.07
|
%
| |
0.67
|
%
| |
0.44
|
%
| |
0.24
|
%
| |
0.57
|
%
|
| | | | | | | | | | | | | | | | | | | | |
|
CAPITAL RATIOS
|
| As of and for the Three Months Ended |
| (Unaudited) | | December 31,
2018 |
| September 30,
2018 |
| June 30,
2018 |
| March 31,
2018 |
| December 31,
2017 |
|
Total capital to risk-weighted assets
| |
11.85
|
%
| |
12.05
|
%
| |
11.87
|
%
| |
11.78
|
%
| |
11.98
|
%
|
|
Tier I capital to risk-weighted assets
| |
9.41
|
%
| |
9.54
|
%
| |
9.34
|
%
| |
9.33
|
%
| |
9.45
|
%
|
|
Common equity tier I capital to risk-weighted assets
| |
8.89
|
%
| |
9.00
|
%
| |
8.80
|
%
| |
8.79
|
%
| |
8.89
|
%
|
|
Tier I capital to adjusted assets
| |
9.33
|
%
| |
9.34
|
%
| |
9.25
|
%
| |
9.26
|
%
| |
9.54
|
%
|
|
Tangible common equity to tangible assets
| |
8.63
|
%
| |
8.79
|
%
| |
8.55
|
%
| |
8.52
|
%
| |
8.79
|
%
|
| | | | | | | | | | | | | | |
|
LOAN AND LEASE RECEIVABLE COMPOSITION
| (Unaudited) |
| As of |
| (in thousands) | | December 31,
2018 |
| September 30,
2018 |
| June 30,
2018 |
| March 31,
2018 |
| December 31,
2017 |
|
Commercial real estate:
| | | | | | | | | | |
|
Commercial real estate - owner occupied
| |
$
|
203,476
| | |
$
|
203,733
| | |
$
|
196,032
| | |
$
|
197,268
| | |
$
|
200,387
|
|
Commercial real estate - non-owner occupied
| |
484,427
| | |
487,842
| | |
485,962
| | |
484,151
| | |
470,236
|
|
Land development
| |
42,666
| | |
45,009
| | |
45,033
| | |
46,379
| | |
40,154
|
|
Construction
| |
161,562
| | |
132,271
| | |
188,036
| | |
156,020
| | |
125,157
|
|
Multi-family
| |
167,868
| | |
174,664
| | |
137,388
| | |
136,098
| | |
136,978
|
|
1-4 family
| |
34,340
|
| |
35,729
|
| |
35,569
|
| |
41,866
|
| |
44,976
|
|
Total commercial real estate
| |
1,094,339
| | |
1,079,248
| | |
1,088,020
| | |
1,061,782
| | |
1,017,888
|
|
Commercial and industrial
| |
462,321
| | |
457,932
| | |
447,540
| | |
443,005
| | |
429,002
|
|
Direct financing leases, net
| |
33,170
| | |
31,090
| | |
32,001
| | |
31,387
| | |
30,787
|
|
Consumer and other:
| | | | | | | | | | |
|
Home equity and second mortgages
| |
8,438
| | |
8,388
| | |
7,962
| | |
8,270
| | |
7,262
|
|
Other
| |
20,789
|
| |
23,451
|
| |
21,075
|
| |
20,717
|
| |
18,099
|
|
Total consumer and other
| |
29,227
|
| |
31,839
|
| |
29,037
|
| |
28,987
|
| |
25,361
|
|
Total gross loans and leases receivable
| |
1,619,057
| | |
1,600,109
| | |
1,596,598
| | |
1,565,161
| | |
1,503,038
|
|
Less:
| | | | | | | | | | |
|
Allowance for loan and lease losses
| |
20,425
| | |
20,455
| | |
20,932
| | |
18,638
| | |
18,763
|
|
Deferred loan fees
| |
1,402
|
| |
1,502
|
| |
1,645
|
| |
1,671
|
| |
1,443
|
|
Loans and leases receivable, net
| |
$
|
1,597,230
|
| |
$
|
1,578,152
|
| |
$
|
1,574,021
|
| |
$
|
1,544,852
|
| |
$
|
1,482,832
|
| | | | | | | | | | | | | | | | | | |
|
DEPOSIT COMPOSITION
| (Unaudited) |
| As of |
| (in thousands) | | December 31,
2018 |
| September 30,
2018 |
| June 30,
2018 |
| March 31,
2018 |
| December 31,
2017 |
|
Non-interest-bearing transaction accounts
| |
$
|
280,769
| | |
$
|
233,915
| | |
$
|
255,521
| | |
$
|
240,422
| | |
$
|
277,445
|
|
Interest-bearing transaction accounts
| |
229,612
| | |
256,303
| | |
272,057
| | |
262,766
| | |
217,625
|
|
Money market accounts
| |
516,045
| | |
475,322
| | |
450,654
| | |
498,310
| | |
515,077
|
|
Certificates of deposit
| |
153,022
| | |
111,311
| | |
78,062
| | |
77,107
| | |
76,199
|
|
Wholesale deposits
| |
275,851
|
| |
332,052
|
| |
281,431
|
| |
292,553
|
| |
307,985
|
|
Total deposits
| |
$
|
1,455,299
|
| |
$
|
1,408,903
|
| |
$
|
1,337,725
|
| |
$
|
1,371,158
|
| |
$
|
1,394,331
|
| | | | | | | | | | | | | | | | | | |
|
TRUST ASSETS COMPOSITION
| (Unaudited) |
| As of |
| (in thousands) | | December 31,
2018 |
| September 30,
2018 |
| June 30,
2018 |
| March 31,
2018 |
| December 31,
2017 |
|
Trust assets under management
| |
$
|
1,452,911
| | |
$
|
1,534,395
| | |
$
|
1,465,101
| | |
$
|
1,393,654
| | |
$
|
1,350,025
|
|
Trust assets under administration
| |
177,416
|
| |
186,530
|
| |
180,320
|
| |
185,463
|
| |
186,383
|
|
Total trust assets
| |
$
|
1,630,327
|
| |
$
|
1,720,925
|
| |
$
|
1,645,421
|
| |
$
|
1,579,117
|
| |
$
|
1,536,408
|
| | | | | | | | | | | | | | | | | | |
|
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’s management
believes that these non-GAAP financial measures provide a greater
understanding of its business, these measures are not necessarily
comparable to similar measures that may be presented by other companies.
TANGIBLE BOOK VALUE
“Tangible book value per share” is a non-GAAP measure representing
tangible common equity divided by total common shares outstanding.
“Tangible common equity” itself is a non-GAAP measure representing
common stockholders’ equity reduced by intangible assets, if any. The
Company’s management believes that this measure is important to many
investors in the marketplace who are interested in period-to-period
changes in book value per common share exclusive of changes in
intangible assets. The information provided below reconciles tangible
book value per share and tangible common equity to their most comparable
GAAP measures.
| (Unaudited) |
| As of |
| (Dollars in thousands, except per share amounts) | | December 31,
2018 |
| September 30,
2018 |
| June 30,
2018 |
| March 31,
2018 |
| December 31,
2017 |
|
Common stockholders’ equity
| |
$
|
180,707
| | |
$
|
177,542
| | |
$
|
173,672
| | |
$
|
171,480
| | |
$
|
169,278
| |
| Goodwill and other intangible assets
| |
(12,045
|
)
| |
(12,132
|
)
| |
(12,380
|
)
| |
(12,579
|
)
| |
(12,652
|
)
|
|
Tangible common equity
| |
$
|
168,662
|
| |
$
|
165,410
|
| |
$
|
161,292
|
| |
$
|
158,901
|
| |
$
|
156,626
|
|
|
Common shares outstanding
| |
8,785,480
| | |
8,793,941
| | |
8,760,103
| | |
8,764,420
| | |
8,763,539
| |
|
Book value per share
| |
$
|
20.57
| | |
$
|
20.19
| | |
$
|
19.83
| | |
$
|
19.57
| | |
$
|
19.32
| |
|
Tangible book value per share
| |
19.20
| | |
18.81
| | |
18.41
| | |
18.13
| | |
17.87
| |
| | | | | | | | | | | | | | |
|
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS
“Tangible common equity to tangible assets’’ is defined as the ratio of
common stockholders’ equity reduced by intangible assets, if any,
divided by total assets reduced by intangible assets, if any. The
Company’s management believes that this measure is important to many
investors in the marketplace who are interested in the relative changes
from period to period in common equity and total assets, each exclusive
of changes in intangible assets. The information below reconciles
tangible common equity and tangible assets to their most comparable GAAP
measures.
| (Unaudited) |
| As of |
| (Dollars in thousands) | | December 31,
2018 |
| September 30,
2018 |
| June 30,
2018 |
| March 31,
2018 |
| December 31,
2017 |
|
Common stockholders’ equity
| |
$
|
180,707
| | |
$
|
177,542
| | |
$
|
173,672
| | |
$
|
171,480
| | |
$
|
169,278
| |
| Goodwill and other intangible assets
| |
(12,045
|
)
| |
(12,132
|
)
| |
(12,380
|
)
| |
(12,579
|
)
| |
(12,652
|
)
|
|
Tangible common equity
| |
$
|
168,662
|
| |
$
|
165,410
|
| |
$
|
161,292
|
| |
$
|
158,901
|
| |
$
|
156,626
|
|
|
Total assets
| |
$
|
1,966,457
| | |
$
|
1,894,330
| | |
$
|
1,899,787
| | |
$
|
1,878,217
| | |
$
|
1,794,066
| |
| Goodwill and other intangible assets
| |
(12,045
|
)
| |
(12,132
|
)
| |
(12,380
|
)
| |
(12,579
|
)
| |
(12,652
|
)
|
|
Tangible assets
| |
$
|
1,954,412
|
| |
$
|
1,882,198
|
| |
$
|
1,887,407
|
| |
$
|
1,865,638
|
| |
$
|
1,781,414
|
|
|
Tangible common equity to tangible assets
| |
8.63
|
%
| |
8.79
|
%
| |
8.55
|
%
| |
8.52
|
%
| |
8.79
|
%
|
| | | | | | | | | | | | | | |
|
EFFICIENCY RATIO
“Efficiency ratio” is a non-GAAP measure representing non-interest
expense excluding the effects of the SBA recourse provision, impairment
of tax credit investments, losses or gains on foreclosed properties,
amortization of other intangible assets and other discrete items, if
any, divided by operating revenue, which is equal to net interest income
plus non-interest income less realized gains or losses on securities, if
any. In the judgment of the Company’s management, the adjustments made
to non-interest expense and operating revenue allow investors and
analysts to better assess the Company’s operating expenses in relation
to its core operating revenue by removing the volatility that is
associated with certain one-time items and other discrete items. The
information provided below reconciles the efficiency ratio to its most
comparable GAAP measure.
| (Unaudited) |
| For the Three Months Ended |
| For the Year Ended |
| (Dollars in thousands) | | December 31,
2018 |
| September 30,
2018 |
| June 30,
2018 |
| March 31,
2018 |
| December 31,
2017 | | December 31,
2018 |
| December 31,
2017 |
|
Total non-interest expense
| |
$
|
18,244
| | |
$
|
15,746
| | |
$
|
14,467
| | |
$
|
13,907
| | |
$
|
14,859
| | |
$
|
62,363
| | |
$
|
56,871
| |
|
Less:
| | | | | | | | | | | | | | |
|
Net loss (gain) on foreclosed properties
| |
337
| | |
30
| | |
—
| | |
—
| | |
(143
|
)
| |
367
| | |
(143
|
)
|
|
Amortization of other intangible assets
| |
11
| | |
12
| | |
12
| | |
12
| | |
13
| | |
47
| | |
54
| |
|
SBA recourse provision (benefit)
| |
1,795
| | |
314
| | |
99
| | |
(295
|
)
| |
145
| | |
1,913
| | |
2,240
| |
|
Impairment of tax credit investments
| |
1,529
| | |
113
| | |
329
| | |
113
| | |
2,447
| | |
2,083
| | |
2,784
| |
|
Deconversion fees
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
199
|
| |
—
|
| |
300
|
|
|
Total operating expense
| |
$
|
14,572
|
| |
$
|
15,277
|
| |
$
|
14,027
|
| |
$
|
14,077
|
| |
$
|
12,198
|
| |
$
|
57,953
|
| |
$
|
51,636
|
|
|
Net interest income
| |
$
|
17,115
| | |
$
|
17,094
| | |
$
|
16,931
| | |
$
|
16,202
| | |
$
|
15,358
| | |
$
|
67,342
| | |
$
|
60,609
| |
|
Total non-interest income
| |
4,648
| | |
4,871
| | |
3,982
| | |
4,667
| | |
3,525
| | |
18,167
| | |
16,665
| |
|
Less:
| | | | | | | | | | | | | | |
|
Net loss on sale of securities
| |
(4
|
)
| |
—
|
| |
—
|
| |
—
|
| |
(409
|
)
| |
(4
|
)
| |
(403
|
)
|
|
Total operating revenue
| |
$
|
21,767
|
| |
$
|
21,965
|
| |
$
|
20,913
|
| |
$
|
20,869
|
| |
$
|
19,292
|
| |
$
|
85,513
|
| |
$
|
77,677
|
|
|
Efficiency ratio
| |
66.95
|
%
| |
69.55
|
%
| |
67.07
|
%
| |
67.45
|
%
| |
63.23
|
%
| |
67.77
|
%
| |
66.48
|
%
|
| | | | | | | | | | | | | | | | | | | | |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20190124005755/en/
First Business Financial Services, Inc.
Edward G. Sloane, Jr.
Chief
Financial Officer
608-232-5970
esloane@firstbusiness.com
Source: First Business Financial Services, Inc.