CHATTANOOGA, Tenn., July 24, 2007 (PRIME NEWSWIRE) -- First Security Group, Inc. (Nasdaq:FSGI), a community bank holding company serving middle and east Tennessee and north Georgia, today reported second quarter 2007 net income of $2.9 million, up 2.6 percent from the $2.8 million reported for the second quarter of 2006. Earnings per diluted share were $0.17 compared with $0.16 reported in the 2006 second quarter, an increase of 6.3 percent. Compared with the first quarter of 2007, net income and diluted earnings per share increased 1.9 percent and 6.3 percent, respectively.
For the first six months of 2007, First Security reported net income of $5.7 million, an increase of 8.2 percent from the $5.3 million reported in the prior-year period. Diluted earnings per share were $0.33, an increase of 10.0 percent above the first six months of 2006.
Highlights of the second quarter include:
-- Year over year, loans grew $109.0 million, or 13.6 percent, to
$909.2 million, led by construction and land development (C&D)
lending, which accounted for over sixty percent of the $109.0
million growth. Second quarter loans grew $45.2 million, or 5.2
percent (20.9 percent annualized), from the first quarter of this
year; growth was led by C&D loans, commercial and residential real
estate loans, as well as commercial and industrial loans. At
quarter end, C&D loans account for 22.8 percent of First
Security's highly diversified loan portfolio.
-- First Security's asset quality continues to improve. Nonperforming
assets plus delinquencies decreased for a second consecutive
quarter, totaling $6.3 million, or 0.54 percent of total assets at
period end. Net charge-offs decreased for a third consecutive
quarter; for the second quarter of 2007, they were $201,000, or an
annualized 0.09 percent of average loans.
-- Net interest margin improved five basis points from the linked
quarter to 4.91 percent, contributing to a 3.1 percent growth
(12.5 percent annualized) in net interest income. The improvement
in net interest margin was caused by growth in noninterest-bearing
demand deposits of 4.9 percent (19.6 percent annualized) and
improving the mix of earning assets by selling investment
securities yielding less than 4.5 percent and funding loans
yielding more than 8.5 percent.
-- Operating expense was $10.2 million this quarter, an increase of
$137,000, or 1.4 percent, compared to the year-ago quarter;
expenses remained flat compared with the linked quarter even
though First Security opened two new bank branches this quarter.
For the second quarter, the core efficiency ratio improved to
64.95 percent from the linked quarter at 66.09 percent due to
revenue growth.
-- In the final week of June, First Security completed a series of
cash flow swaps with a total notional value of $150 million which
should reduce interest rate risk, volatility of earnings and the
asset sensitivity of the bank.
Rodger B. Holley, Chairman and CEO of First Security Group, Inc., commented, "Our operating environment is not getting any easier, so it is a credit to our people and a reflection of our stable markets that we continue to grow our loan portfolio with quality loans, as evidenced by the lower level of nonperforming assets this quarter. Our net interest margin has been strengthening for the past two quarters, and the swap we just entered into should help to protect our spread regardless of the direction of interest rates. We continue to hold the line on operating expenses, which have not changed materially over the past five quarters, yet we continue to open branches and enhance our franchise base. Most importantly, our earnings per share continue to grow; for the first six months of this year, we are 10 percent ahead of 2006."
Total revenue, comprised of net interest income and non-interest income, was $14.9 million for the second quarter of 2007, an increase of 0.4 percent over the $14.8 million reported for the second quarter of 2006. Net interest income was $12.2 million, a 0.6 percent increase over the year-ago period. Results reflect a 7.4 percent increase in average earning assets, to $1.0 billion, offset by a 36 basis point decline in the net interest margin to 4.91 percent. On a linked-quarter basis, net interest income rose 3.1 percent, reflecting a five basis point improvement in the net interest margin, primarily due to our increase in noninterest-bearing demand deposits and our changing mix of earning assets. First Security entered into a series of swap agreements at the end of June for a notional amount of $150 million, exchanging future cash flows on variable Prime rate assets for fixed rate cash flows, which will help to reduce the asset-sensitivity of the bank.
First Security's non-interest income stream continues to be a significant contributor to earnings, accounting for 17.8 percent of total revenue for the quarter. Non-interest income for the second quarter of 2007 was $2.7 million, unchanged from the prior-year second quarter, and a decline of $283,000, or 9.6 percent, from the first quarter of 2007. Excluding the $139,000 gain on trading assets during the first quarter of 2007, and a $168,000 loss on trading assets during the second quarter of 2007, non-interest income increased $24,000, or 0.9 percent, from the linked quarter. In the second quarter, First Security sold its trading assets and used the proceeds to pay down its Federal Home Loan Bank borrowings, which are among its most expensive funding sources.
Operating expenses remain well controlled, with non-interest expense for the second quarter increasing a nominal $137,000, or 1.4 percent, to $10.2 million, compared with $10.1 million reported for the second quarter of 2006. Salaries and benefits increased $315,000, or 5.7 percent, year over year, reflecting the addition of 20 full time equivalent employees over the past twelve months to 375, of which six were added during the second quarter of 2007. On a linked-quarter basis, operating expenses remained essentially flat, increasing a mere $15,000. Mr. Holley commented, "We were able to contain our overhead expenses and at the same time we opened two new bank branches this quarter -- one on Mouse Creek Road in Cleveland, Tennessee and the second near the new Wal-Mart in Algood, Tennessee."
As a result of exceptional expense control, the second quarter 2007 core efficiency ratio was virtually unchanged from the year-ago quarter, at 64.95 percent and 64.45 percent, respectively. In the first quarter of this year the core efficiency ratio was 66.09 percent; the second quarter 2007 ratio improved by 114 basis points based on higher revenues. For the six-months of each year, the efficiency ratio was 65.51 percent in 2007 and 65.25 percent in 2006.
First Security's asset quality continues to improve. Second quarter net charge-offs declined to $201,000, or an annualized 0.09 percent of average loans, compared with $468,000 and an annualized 0.24 percent of loans reported for the year-ago quarter. Non-performing assets plus delinquencies were $6.3 million, or 0.54 percent of total assets at June 30, 2007, compared with $7.9 million, or 0.69 percent of total assets at March 31, 2007, and $5.7 million, or 0.52 percent of total assets for the year-ago period. Loan loss reserves were 1.14 percent of total loans at June 30, 2007.
Total assets were $1.2 billion at June 30, 2007, an increase of $68.6 million, or 6.3 percent, above year-earlier levels. Year over year, loans grew $109.0 million, or 13.6 percent, to $909.2 million at June 30, 2007. Second quarter loan growth of 5.2 percent (20.9 percent annualized) exceeded the running twelve-month growth rate of 13.6 percent. C&D loans continue to be the primary source of growth, up 50.7 percent over the year-ago quarter; this sector now accounts for 22.8 percent of the overall loan portfolio, and 64.1 percent of the trailing 12 month loan growth. Second quarter C&D loans grew $20.7 million, or 11.1 percent (44.3 percent annualized). First Security's loan portfolio still remains highly diversified. Commercial real estate and residential real estate loans grew 5.5 percent (22.2 percent annualized) and 5.0 percent (19.8 percent annualized), respectively, from the linked quarter; the two categories account for 21.0 percent and 28.1 percent, respectively of total loans. Commercial and industrial loans contribute 14.5 percent to the total loan mix, up 5.7 percent (22.7 percent annualized) from March 31, 2007. Mr. Holley added, "Our loan portfolio remains well diversified with strong second quarter loan growth balanced among the sectors we serve."
At the end of the second quarter, total deposits were $925.6 million, up $18.3 million, or 2.0 percent, over the past twelve months; excluding brokered deposits, First Security's in-market deposits increased $46.6 million, or 5.7 percent. Comparing the second quarter to the linked first quarter, First Security's in-market deposits increased $20.2 million, or 2.4 percent (9.5 percent annualized); First Security allowed its brokered deposits to decrease by $28.3 million, or 32.7 percent, from the year-ago quarter, and by $20.9 million, or 26.3 percent, from the linked quarter.
Core deposits (demand, savings, money market and retail time deposits) were $645.8 million at period-end, a 1.3 percent increase over the $637.2 million reported for the prior-year second quarter, and a 1.8 percent (7.1 percent annualized) increase from the first quarter of 2007. As of June 30, 2007, core deposits comprised 69.8 percent of total deposits, down modestly from 70.2 percent for the year-ago quarter. Compared with the prior-year period, second quarter 2007 core deposit growth was primarily due to a higher level of retail CDs. Compared with the linked quarter, second quarter 2007 core deposit growth reflects an increase of $8.2 million, or 4.9 percent (annualized 19.6 percent), in noninterest-bearing demand deposits and an increase of $4.3 million, or 1.6 percent (6.5 percent annualized), in retail CDs.
Shareholders' equity at June 30, 2007 was $144.9 million, a twelve-month increase of $7.1 million, or 5.2 percent. This increase is net of First Security doubling its cash dividends paid for the 2007 six month period compared to the 2006 period and repurchasing approximately $3.1 million of common stock over the past year. First Security's tangible leverage ratio remained strong at quarter-end at 10.1 percent, and virtually unchanged from its year-ago level. At quarter-end, First Security had 17,498,000 shares of common stock outstanding, reflecting the repurchase of 180,000 shares of common stock in the second quarter.
Mr. Holley concluded, "We continue to be positive about our prospects for the remainder of the year. We see continued strength in our business climate, and are optimistic about our ability to capture an increasing share of lending opportunities. Our performance metrics are all trending in a positive direction, and we will endeavor to keep our bank on its present course, which has served us well thus far."
Web Cast and Conference Call Information
First Security's executive management team will host a conference call and simultaneous web cast on Tuesday, July 24 at 3:00 PM Eastern Time to discuss second quarter results. The web cast can be accessed live on the Company's website, www.FSGBank.com, on the Corporate Information/Investor Relations page. A replay will be available approximately two hours after the live conference call ends, and will be archived on the Company's website for one month.
About First Security Group, Inc.
First Security Group, Inc. is a bank holding company headquartered in Chattanooga, Tennessee with $1.2 billion in assets. Founded in 1999, First Security's community bank subsidiary, FSGBank, N.A. has 40 full-service banking offices along the interstate corridors of middle and east Tennessee and north Georgia. In Dalton, Georgia, FSGBank operates six full-service banking offices under the name of Dalton Whitfield Bank and two offices under the name Primer Banco Seguro (PBS); PBS serves the region's rapidly growing Latino population. FSGBank also operates six branches under the name of Jackson Bank & Trust along the I-40 corridor. FSGBank provides retail and commercial banking services, trust and investment management, mortgage banking, financial planning, Internet banking (www.FSGBank.com) and equipment leasing through its wholly-owned subsidiaries, Kenesaw Leasing, Inc. and J & S Leasing, Inc.
The First Security Group, Inc. logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=1833
Non-GAAP Financial Measures
This press release contains financial information determined by methods other than in accordance with generally accepted accounting principles in the United States of America (GAAP). First Security's management uses these "non-GAAP" measures in their analysis of First Security's performance. Non-GAAP measures typically adjust GAAP performance measures to exclude the effects of charges, expenses and gains related to the consummation of mergers and acquisitions, and costs related to the integration of merged entities. These non-GAAP measures may also exclude other significant gains, losses or expenses that are unusual in nature and not expected to recur. Since these items and their impact on First Security's performance are difficult to predict, management believes presentations of financial measures excluding the impact of these items provide useful supplemental information that is important for a proper understanding of the operating results of First Security's core business. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.
Forward-Looking Statements
This news release contains comments or information that constitute forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) that are based on current expectations that involve a number of risks and uncertainties. Actual results may differ materially from the results expressed in forward-looking statements. Factors that might cause such a difference include changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking regulation; changes in tax laws; changes in prices, levies, and assessments; the impact of technological advances; governmental and regulatory policy changes; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; changes in the national and local economy; and other factors, including risk factors, referred to from time to time in filings made by First Security with the Securities and Exchange Commission. First Security undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.
First Security Group, Inc.
and Subsidiary
Consolidated Balance Sheets June 30, December 31, June 30,
(in thousands, except share 2007 2006 2006
data) (unaudited) (unaudited)
--------------------------------------------------------------------
ASSETS
Cash & Due from Banks $ 26,836 $ 26,512 $ 36,658
Federal Funds Sold and
Securities Purchased
under Agreements to Resell -- 1,600 --
----------- ----------- -----------
Cash and Cash Equivalents 26,836 28,112 36,658
----------- ----------- -----------
Interest-Bearing Deposits in
Bank 2,205 481 3,846
----------- ----------- -----------
Securities Available-for-Sale 122,106 153,759 155,355
----------- ----------- -----------
Loans Held for Sale 10,971 7,524 8,912
Loans 898,206 840,069 791,301
----------- ----------- -----------
Total Loans 909,177 847,593 800,213
Less: Allowance for Loan
Losses 10,363 9,970 10,205
----------- ----------- -----------
898,814 837,623 790,008
----------- ----------- -----------
Premises and Equipment, net 35,966 35,835 32,645
----------- ----------- -----------
Goodwill 27,156 27,156 26,965
----------- ----------- -----------
Intangible Assets 3,666 4,185 4,764
----------- ----------- -----------
Other Assets 41,170 42,652 39,091
----------- ----------- -----------
TOTAL ASSETS $ 1,157,919 $ 1,129,803 $ 1,089,332
=========== =========== ===========
LIABILITIES
Deposits
Noninterest-Bearing Demand $ 174,650 $ 168,654 $ 178,132
Interest-Bearing Demand 69,234 66,787 70,070
----------- ----------- -----------
243,884 235,441 248,202
----------- ----------- -----------
Savings and Money Market
Accounts 134,106 135,784 144,721
----------- ----------- -----------
Time Deposits:
Certificates of Deposit of
$100 thousand or more 221,495 205,428 183,443
Certificates of Deposit of
less than $100 thousand 267,772 258,456 244,309
Brokered Certificates of
Deposit 58,371 86,892 86,680
----------- ----------- -----------
547,638 550,776 514,432
----------- ----------- -----------
Total Deposits 925,628 922,001 907,355
Federal Funds Purchased and
Securities Sold under
Agreements to Repurchase 27,452 20,851 21,856
Security Deposits 3,494 3,920 4,651
Other Borrowings 42,445 24,838 8,144
Other Liabilities 14,006 13,405 9,535
----------- ----------- -----------
Total Liabilities 1,013,025 985,015 951,541
----------- ----------- -----------
STOCKHOLDERS' EQUITY
Common stock - $.01 par
value 50,000,000 shares
authorized as of June 30,
2007, December 31, 2006
and June 30, 2006;
17,498,482 issued as of
June 30, 2007; 17,762,278
issued as of December 31,
2006; 17,558,983 issued as
of June 30, 2006 121 123 122
Paid-In Surplus 121,610 124,293 121,966
Unallocated ESOP Shares (4,701) (5,094) (3,077)
Retained Earnings 29,849 26,337 21,802
Accumulated Other
Comprehensive Loss (1,985) (871) (3,022)
----------- ----------- -----------
Total Stockholders' Equity 144,894 144,788 137,791
----------- ----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,157,919 $ 1,129,803 $ 1,089,332
=========== =========== ===========
First Security Group, Inc. and Subsidiary
Consolidated Statements of Income
(unaudited) Three Months Ended Six Months Ended
(in thousands, except per June 30, June 30,
share amounts) 2007 2006 2007 2006
-------------------------------------------------------------------
INTEREST INCOME
Loans, including fees $ 19,093 $ 16,772 $ 37,465 $ 32,391
Debt securities - taxable 1,020 1,313 2,033 2,590
Debt securities - non-
taxable 405 388 815 769
Trading assets 58 -- 342 --
Other 34 67 58 212
-------- -------- -------- --------
Total Interest Income 20,610 18,540 40,713 35,962
-------- -------- -------- --------
INTEREST EXPENSE
Interest Bearing Demand
Deposits 132 163 257 322
Savings Deposits and Money
Market Accounts 778 708 1,549 1,352
Certificates of Deposit of
$100 thousand or more 2,752 1,944 5,381 3,594
Certificates of Deposit of
less than $100 thousand 3,254 2,435 6,406 4,636
Brokered Certificates of
Deposit 853 907 1,835 1,754
Other 605 214 1,185 370
-------- -------- -------- --------
Total Interest Expense 8,374 6,371 16,613 12,028
-------- -------- -------- --------
NET INTEREST INCOME 12,236 12,169 24,100 23,934
Provision for Loan Losses 416 600 833 1,143
-------- -------- -------- --------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 11,820 11,569 23,267 22,791
-------- -------- -------- --------
NONINTEREST INCOME
Service Charges on Deposit
Accounts 1,301 1,212 2,441 2,365
Loss on Trading Assets, net (168) -- (29) --
Other 1,521 1,454 3,179 2,737
-------- -------- -------- --------
Total Noninterest Income 2,654 2,666 5,591 5,102
-------- -------- -------- --------
NONINTEREST EXPENSE
Salaries and Employee
Benefits 5,823 5,508 11,645 11,115
Expense on Premises and
Fixed Assets, net of
rental income 1,699 1,726 3,326 3,390
Other 2,691 2,842 5,440 5,610
-------- -------- -------- --------
Total Noninterest Expense 10,213 10,076 20,411 20,115
-------- -------- -------- --------
INCOME BEFORE INCOME TAX
PROVISION 4,261 4,159 8,447 7,778
Income Tax Provision 1,373 1,343 2,724 2,488
-------- -------- -------- --------
NET INCOME $ 2,888 $ 2,816 $ 5,723 $ 5,290
======== ======== ======== ========
NET INCOME PER SHARE:
Net Income Per Share
- basic $ 0.17 $ 0.16 $ 0.33 $ 0.30
Net Income Per Share
- diluted $ 0.17 $ 0.16 $ 0.33 $ 0.30
First Security Group, Inc. and Subsidiary
Consolidated Financial Highlights
(unaudited)
(in thousands, except per share amounts and
full-time equivalent employees)
2nd 1st 4th 3rd 2nd
Quarter Quarter Quarter Quarter Quarter
2007 2007 2006 2006 2006
---------- ---------- ---------- ---------- ----------
Earnings:
Net interest
income $ 12,236 $ 11,864 $ 11,892 $ 12,156 $ 12,169
Provision for
loan losses $ 416 $ 417 $ 441 $ 600 $ 600
Non-interest
income $ 2,654 $ 2,937 $ 2,739 $ 2,776 $ 2,666
Non-interest
expense $ 10,213 $ 10,198 $ 9,871 $ 10,031 $ 10,076
Net income $ 2,888 $ 2,835 $ 2,916 $ 2,906 $ 2,816
Earnings -
Normalized
Non-interest
operating
income (a) $ 2,654 $ 2,937 $ 2,739 $ 2,776 $ 2,666
Non-interest
operating
expense (a) $ 10,213 $ 10,198 $ 9,807 $ 10,031 $ 10,076
Net operating
income, net
of tax (a) $ 2,888 $ 2,835 $ 2,960 $ 2,906 $ 2,816
Per Share Data:
Net income,
basic $ 0.17 $ 0.16 $ 0.17 $ 0.17 $ 0.16
Net income,
diluted $ 0.17 $ 0.16 $ 0.17 $ 0.16 $ 0.16
Cash dividends
declared $ 0.05 $ 0.05 $ 0.05 $ 0.03 $ 0.03
Book value $ 8.28 $ 8.28 $ 8.15 $ 7.98 $ 7.85
Tangible book
value $ 6.52 $ 6.52 $ 6.39 $ 6.20 $ 6.04
Per Share Data
- Normalized:
Net operating
income,
basic (a) $ 0.17 $ 0.16 $ 0.17 $ 0.17 $ 0.16
Net operating
income,
diluted (a) $ 0.17 $ 0.16 $ 0.17 $ 0.16 $ 0.16
Performance
Ratios:
Return on
average assets 1.01% 1.00% 1.04% 1.06% 1.06%
Return on
average equity 7.89% 7.78% 8.15% 8.31% 8.09%
Return on
average
tangible
assets 1.04% 1.02% 1.07% 1.09% 1.09%
Return on
average
tangible
equity 10.01% 9.90% 10.44% 10.74% 10.49%
Net interest
margin,
taxable
equivalent 4.91% 4.86% 4.84% 5.05% 5.27%
Efficiency
ratio 68.59% 68.90% 67.47% 67.18% 67.92%
Non-interest
income to net
interest
income and
non-interest
income 17.82% 19.84% 18.72% 18.59% 17.97%
Performance
Ratios -
Normalized:
Operating
return on
average
assets (a) 1.01% 1.00% 1.06% 1.06% 1.06%
Operating
return on
average
equity (a) 7.89% 7.78% 8.27% 8.31% 8.09%
Operating
return on
average
tangible
assets (a) 1.04% 1.02% 1.09% 1.09% 1.09%
Operating
return on
average
tangible
equity (a) 10.01% 9.90% 10.60% 10.74% 10.49%
Core efficiency
ratio (b) 64.95% 66.09% 62.46% 63.84% 64.45%
Capital &
Liquidity:
Total equity
to total
assets 12.51% 12.76% 12.82% 12.75% 12.65%
Tangible equity
to tangible
assets 10.12% 10.33% 10.33% 10.19% 10.03%
Total loans to
total deposits 98.22% 93.27% 91.93% 90.39% 88.19%
Asset Quality:
Net charge-
offs $ 201 $ 211 $ 303 $ 914 $ 468
Net loans
charged-off
to average
loans,
annualized 0.09% 0.10% 0.15% 0.45% 0.24%
Non-accrual
loans $ 938 $ 1,755 $ 2,653 $ 679 $ 696
Other real
estate owned $ 2,014 $ 2,796 $ 1,982 $ 2,298 $ 1,986
Repossessed
assets $ 1,707 $ 1,734 $ 2,231 $ 1,556 $ 995
Non-performing
assets (NPA) $ 4,659 $ 6,285 $ 6,866 $ 4,533 $ 3,677
NPA to total
assets 0.40% 0.55% 0.61% 0.41% 0.34%
Loans 90 days
past due $ 1,639 $ 1,640 $ 1,325 $ 1,593 $ 2,011
NPA + loans 90
days past due
to total
assets 0.54% 0.69% 0.72% 0.55% 0.52%
Allowance for
loan losses
to total loans 1.14% 1.18% 1.18% 1.19% 1.28%
Allowance for
loan losses
to NPA 222.43% 161.56% 145.21% 217.56% 277.54%
Period End
Balances:
Loans $ 909,177 $ 863,940 $ 847,593 $ 825,745 $ 800,213
Intangible
assets $ 30,822 $ 31,077 $ 31,341 $ 31,597 $ 31,729
Assets $1,157,919 $1,147,529 $1,129,803 $1,110,065 $1,089,332
Deposits $ 925,628 $ 926,313 $ 922,001 $ 913,585 $ 907,355
Stockholders'
equity $ 144,894 $ 146,399 $ 144,788 $ 141,544 $ 137,791
Common stock
market
capitali-
zation $ 188,978 $ 201,176 $ 204,796 $ 204,434 $ 203,684
Full-time
equivalent
employees 375 369 369 360 355
Shares
outstanding 17,498 17,678 17,762 17,746 17,559
Average
Balances:
Loans $ 884,383 $ 855,569 $ 834,494 $ 812,611 $ 785,397
Intangible
assets $ 30,958 $ 31,220 $ 31,482 $ 31,635 $ 31,897
Earning
assets $1,018,666 $1,010,315 $ 996,189 $ 973,950 $ 948,049
Assets $1,141,946 $1,137,915 $1,120,233 $1,094,474 $1,066,523
Deposits $ 917,215 $ 920,718 $ 907,284 $ 897,739 $ 883,351
Stockholders'
equity $ 146,412 $ 145,778 $ 143,161 $ 139,872 $ 139,315
Shares
outstanding,
basic - wtd 17,117 17,241 17,216 17,218 17,342
Shares
outstanding,
diluted - wtd 17,482 17,641 17,600 17,629 17,759
YTD YTD
June 30, June 30,
2007 2006
---------- ----------
Earnings:
Net interest income $ 24,100 $ 23,934
Provision for loan losses $ 833 $ 1,143
Non-interest income $ 5,591 $ 5,102
Non-interest expense $ 20,411 $ 20,115
Net income $ 5,723 $ 5,290
Earnings - Normalized
Non-interest operating income (a) $ 5,591 $ 5,102
Non-interest operating expense (a) $ 20,411 $ 20,115
Net operating income, net of tax (a) $ 5,723 $ 5,290
Per Share Data:
Net income, basic $ 0.33 $ 0.30
Net income, diluted $ 0.33 $ 0.30
Cash dividends declared $ 0.10 $ 0.05
Book value $ 8.28 $ 7.85
Tangible book value $ 6.52 $ 6.04
Per Share Data - Normalized:
Net operating income, basic (a) $ 0.33 $ 0.30
Net operating income, diluted (a) $ 0.33 $ 0.30
Performance Ratios:
Return on average assets 1.00% 1.00%
Return on average equity 7.84% 7.60%
Return on average tangible assets 1.03% 1.03%
Return on average tangible equity 9.96% 9.85%
Net interest margin, taxable equivalent 4.89% 5.27%
Efficiency ratio 68.74% 69.28%
Non-interest income to net interest income
and non-interest income 18.83% 17.57%
Performance Ratios - Normalized:
Operating return on average assets (a) 1.00% 1.00%
Operating return on average equity (a) 7.84% 7.60%
Operating return on average tangible
assets (a) 1.03% 1.03%
Operating return on average tangible
equity (a) 9.96% 9.85%
Core efficiency ratio (b) 65.51% 65.25%
Capital & Liquidity:
Total equity to total assets 12.51% 12.65%
Tangible equity to tangible assets 10.12% 10.03%
Total loans to total deposits 98.22% 88.19%
Asset Quality:
Net charge-offs $ 412 $ 999
Net loans charged-off to average loans,
annualized 0.09% 0.26%
Non-accrual loans $ 938 $ 696
Other real estate owned $ 2,014 $ 1,986
Repossessed assets $ 1,707 $ 995
Non-performing assets (NPA) $ 4,659 $ 3,677
NPA to total assets 0.40% 0.34%
Loans 90 days past due $ 1,639 $ 2,011
NPA + loans 90 days past due to total
assets 0.54% 0.52%
Allowance for loan losses to total loans 1.14% 1.28%
Allowance for loan losses to NPA 222.43% 277.54%
Period End Balances:
Loans $ 909,177 $ 800,213
Intangible assets $ 30,822 $ 31,729
Assets $1,157,919 $1,089,332
Deposits $ 925,628 $ 907,355
Stockholders' equity $ 144,894 $ 137,791
Common stock market capitalization $ 188,978 $ 203,684
Full-time equivalent employees 375 355
Shares outstanding 17,498 17,559
Average Balances:
Loans $ 869,984 $ 769,721
Intangible assets $ 31,088 $ 31,841
Earning assets $1,014,445 $ 936,456
Assets $1,139,874 $1,054,960
Deposits $ 918,965 $ 871,978
Stockholders' equity $ 146,042 $ 139,293
Shares outstanding, basic - wtd 17,179 17,415
Shares outstanding, diluted - wtd 17,561 17,801
(a) These amounts and ratios are calculated using net operating
income (net of tax) which excludes certain non-recurring items.
Since these items and their impact on First Security's
performance are difficult to predict, management believes
presentation of financial measures excluding the impact of these
items provide useful supplemental information that is important
for a proper understanding of the operating results of First
Security's core business. Refer to the following non-GAAP
reconciliation table for a detail of the non-recurring items.
(b) In accordance with SNL Financial practice, the core efficiency
ratio is calculated on a fully tax equivalent basis excluding
non-recurring items (see footnote (a) and non-GAAP reconciliation
table) and certain non-cash items, such as amortization of
intangibles, gains or losses on investment securities and gains,
losses and write-downs on foreclosed and repossessed properties.
Non-GAAP Reconciliation Table
(in thousands, except per share data)
2nd 1st 4th 3rd 2nd
Quarter Quarter Quarter Quarter Quarter
2007 2007 2006 2006 2006
------- ------- ------- ------- -------
Return on average assets 1.01% 1.00% 1.04% 1.06% 1.06%
Effect of intangible
assets 0.03% 0.02% 0.03% 0.03% 0.03%
------- ------- ------- ------- -------
Return on average
tangible assets 1.04% 1.02% 1.07% 1.09% 1.09%
======= ======= ======= ======= =======
Return of average equity 7.89% 7.78% 8.15% 8.31% 8.09%
Effect of intangible
assets 2.12% 2.12% 2.29% 2.43% 2.40%
------- ------- ------- ------- -------
Return on average
tangible equity 10.01% 9.90% 10.44% 10.74% 10.49%
======= ======= ======= ======= =======
Return on average assets 1.01% 1.00% 1.04% 1.06% 1.06%
Effect of non-recurring
items -- -- 0.02% -- --
------- ------- ------- ------- -------
Operating return on
average assets 1.01% 1.00% 1.06% 1.06% 1.06%
Effect of average
intangible assets 0.03% 0.02% 0.03% 0.03% 0.03%
------- ------- ------- ------- -------
Operating return on
average tangible assets 1.04% 1.02% 1.09% 1.09% 1.09%
======= ======= ======= ======= =======
Return on average equity 7.89% 7.78% 8.15% 8.31% 8.09%
Effect of non-recurring
items -- -- 0.12% -- --
------- ------- ------- ------- -------
Operating return on
average equity 7.89% 7.78% 8.27% 8.31% 8.09%
Effect on average
intangible assets 2.12% 2.12% 2.33% 2.43% 2.40%
------- ------- ------- ------- -------
Operating return on
average tangible equity 10.01% 9.90% 10.60% 10.74% 10.49%
======= ======= ======= ======= =======
Total equity to total
assets 12.51% 12.76% 12.82% 12.75% 12.65%
Effect of intangible
assets -2.39% -2.43% -2.49% -2.56% -2.62%
------- ------- ------- ------- -------
Tangible equity to
tangible assets 10.12% 10.33% 10.33% 10.19% 10.03%
======= ======= ======= ======= =======
Efficiency ratio 68.59% 68.90% 67.47% 67.18% 67.92%
Effect of non-recurring
items -- -- -0.44% -- --
Effect of non-cash items -2.61% -1.70% -3.44% -2.29% -2.23%
Effect of net interest
income, tax equivalent
adjustment -1.03% -1.11% -1.13% -1.05% -1.24%
------- ------- ------- ------- -------
Core efficiency ratio 64.95% 66.09% 62.46% 63.84% 64.45%
======= ======= ======= ======= =======
Non-interest income $ 2,654 $ 2,937 $ 2,739 $ 2,776 $ 2,666
------- ------- ------- ------- -------
Non-interest operating
income $ 2,654 $ 2,937 $ 2,739 $ 2,776 $ 2,666
======= ======= ======= ======= =======
Non-interest expense $10,213 $10,198 $ 9,871 $10,031 $10,076
Corporate headquarters
relocation costs -- -- (64) -- --
------- ------- ------- ------- -------
Non-interest operating
expense $10,213 $10,198 $ 9,807 $10,031 $10,076
======= ======= ======= ======= =======
Net income $ 2,888 $ 2,835 $ 2,916 $ 2,906 $ 2,816
Non-recurring expenses,
net of tax -- -- 44 -- --
------- ------- ------- ------- -------
Net operating income,
net of tax $ 2,888 $ 2,835 $ 2,960 $ 2,906 $ 2,816
======= ======= ======= ======= =======
Per Share Data
Book value $ 8.28 $ 8.28 $ 8.15 $ 7.98 $ 7.85
Effect of intangible
assets (1.76) (1.76) (1.76) (1.78) (1.81)
------- ------- ------- ------- -------
Tangible book value $ 6.52 $ 6.52 $ 6.39 $ 6.20 $ 6.04
======= ======= ======= ======= =======
Net income, basic $ 0.17 $ 0.16 $ 0.17 $ 0.17 $ 0.16
Effect of extraordinary
and non-recurring items,
net of tax -- -- -- -- --
------- ------- ------- ------- -------
Net operating income,
basic $ 0.17 $ 0.16 $ 0.17 $ 0.17 $ 0.16
======= ======= ======= ======= =======
Net income, diluted $ 0.17 $ 0.16 $ 0.17 $ 0.16 $ 0.16
Effect of extraordinary
and non-recurring items,
net of tax -- -- -- -- --
------- ------- ------- ------- -------
Net operating income,
diluted $ 0.17 $ 0.16 $ 0.17 $ 0.16 $ 0.16
======= ======= ======= ======= =======
Supplemental Data (in thousands)
-------------------------------------------
Allowance for loan
losses $10,363 $10,154 $ 9,970 $ 9,862 $10,205
Net interest income,
tax equivalent $12,474 $12,107 $12,152 $12,398 $12,453
Amortization of
intangibles $ 254 $ 265 $ 256 $ 323 $ 326
(Gain) Loss on sales of
available-for-sale
securities and
corporate stock, net $ -- $ -- $ (7) $ -- $ --
Loss (Gain) on trading
assets, net $ 168 $ (139) $ -- $ -- $ --
Gain on foreclosed and
repossessed property,
leased equipment, and
premises and equipment $ (68) $ (188) $ (178) $ (219) $ (121)
Losses on foreclosed and
repossessed property
and premises and
equipment $ 8 $ 7 $ 301 $ 63 $ 39
Write-downs on foreclosed
and repossessed
property $ 60 $ 199 $ 64 $ 98 $ 45
Mortgage loan and
related fees $ 387 $ 458 $ 375 $ 405 $ 408
(in thousands, except
per share data)
-----------------
Year-to-Date
June 30, June 30,
2007 2006
------- -------
Return on average assets 1.00% 1.00%
Effect of intangible assets 0.03% 0.03%
------- -------
Return on average tangible assets 1.03% 1.03%
======= =======
Return of average equity 7.84% 7.60%
Effect of intangible assets 2.12% 2.25%
------- -------
Return on average tangible equity 9.96% 9.85%
======= =======
Return on average assets 1.00% 1.00%
Effect of non-recurring items -- --
------- -------
Operating return on average assets 1.00% 1.00%
Effect of average intangible assets 0.03% 0.03%
------- -------
Operating return on average tangible assets 1.03% 1.03%
======= =======
Return on average equity 7.84% 7.60%
Effect of non-recurring items -- --
------- -------
Operating return on average equity 7.84% 7.60%
Effect on average intangible assets 2.12% 2.25%
------- -------
Operating return on average tangible equity 9.96% 9.85%
======= =======
Total equity to total assets 12.51% 12.65%
Effect of intangible assets -2.39% -2.62%
------- -------
Tangible equity to tangible assets 10.12% 10.03%
======= =======
Efficiency ratio 68.74% 69.28%
Effect of non-recurring items -- --
Effect of non-cash items -2.16% -2.81%
Effect of net interest income, tax equivalent
adjustment -1.07% -1.22%
------- -------
Core efficiency ratio 65.51% 65.25%
======= =======
Non-interest income $ 5,591 $ 5,102
------- -------
Non-interest operating income $ 5,591 $ 5,102
======= =======
Non-interest expense $20,411 $20,115
Corporate headquarters relocation costs -- --
------- -------
Non-interest operating expense $20,411 $20,115
======= =======
Net income $ 5,723 $ 5,290
Non-recurring expenses, net of tax -- --
------- -------
Net operating income, net of tax $ 5,723 $ 5,290
======= =======
Per Share Data
Book value $ 8.28 $ 7.85
Effect of intangible assets (1.76) (1.81)
------- -------
Tangible book value $ 6.52 $ 6.04
======= =======
Net income, basic $ 0.33 $ 0.30
Effect of extraordinary and non-recurring items,
net of tax -- --
------- -------
Net operating income, basic $ 0.33 $ 0.30
======= =======
Net income, diluted $ 0.33 $ 0.30
Effect of extraordinary and non-recurring items,
net of tax -- --
------- -------
Net operating income, diluted $ 0.33 $ 0.30
======= =======
Supplemental Data (in thousands)
-----------------
Allowance for loan losses $10,363 $10,205
Net interest income, tax equivalent $24,582 $24,474
Amortization of intangibles $ 519 $ 667
(Gain) Loss on sales of available-for-sale
securities and corporate stock, net $ -- $ --
Loss (Gain) on trading assets, net $ 29 $ --
Gain on foreclosed and repossessed property,
leased equipment, and premises and equipment $ (256) $ (221)
Losses on foreclosed and repossessed property and
premises and equipment $ 15 $ 50
Write-downs on foreclosed and repossessed property $ 259 $ 245
Mortgage loan and related fees $ 845 $ 666