CHATTANOOGA, Tenn., Oct. 18, 2005 (PRIMEZONE) -- First Security Group, Inc. (Nasdaq:FSGI), a community bank holding company serving middle and eastern Tennessee and northern Georgia, today reported results for the third quarter and nine months of 2005.
-- Net income for the quarter was $4.3 million, an increase of
402.7% over the third quarter of 2004; excluding an
extraordinary gain of $2.4 million after-tax, net income was
$1.9 million, up 124.4%; further excluding non-recurring expenses
totaling $342 thousand after-tax, net operating income was $2.3
million, an increase of 164.3%.
-- Diluted net income per share was $0.28, an increase of 300.0%
over the prior-year third quarter; excluding the extraordinary
gain, diluted net income per share was $0.12, up 71.4%; further
excluding non-recurring expenses, diluted net operating income
per share was $0.14, up 100.0%.
-- Total assets grew 57.2% over the last twelve months to $1.1
billion.
-- Total revenue increased 47.2% over the prior-year third quarter
to $12.8 million.
-- Acquisition of Jackson Bank & Trust with assets of $169.7
million was completed on August 31st
-- The IPO, completed on August 9th, raised net proceeds of
approximately $44.7 million.
-- FSGI common stock commenced trading on the Nasdaq National market
on August 10th.
Net income for the third quarter ended September 30, 2005 was $4.3 million, an increase of 402.7 percent from the $857 thousand reported for the third quarter ended September 30, 2004. Earnings for the current period include an extraordinary gain of $2.4 million after-tax ($3.5 million pre-tax) and non-recurring expenses totaling $342 thousand after-tax ($503 thousand pre-tax). The extraordinary gain resulted from the determination by First Security that an obligation associated with certain tax liabilities assumed in a prior acquisition had become remote. The pre-tax non-recurring expenses include $308 thousand related to impairment of long-lived assets, $157 thousand related to severance expenses and the balance due to miscellaneous accruals, including, but not limited to, expenses related to our acquisition of Jackson Bank & Trust. Excluding these items, net operating income for the current period was $2.3 million, an increase of 164.3 percent over the prior-year third quarter.
Diluted net income per share was $0.28 compared with $0.07 reported for the prior-year third quarter, an increase of 300.0 percent. Diluted net operating income (excluding extraordinary gains and non-recurring expenses) per share for the current period was $0.14, an increase of 100.0 percent over the prior-year third quarter. The current quarter's per share results reflect the impact of First Security's stock offering of 4.9 million shares in the third quarter, which increased average fully diluted shares outstanding by 2,745,000, or 21.3 percent, above third quarter of 2004.
For the first nine months of 2005, First Security reported net income of $7.3 million, an increase of 214.6 percent from the $2.3 million reported in the prior-year period. Earnings for the current nine-month period include the $2.4 million extraordinary gain and $213 thousand in non-recurring expenses (net of tax). Net operating income was $5.1 million, an increase of 121.1 percent over the prior-year nine-month period. Year-to-date, diluted net income per share was $0.53, an increase of 194.4 percent above the 2004 nine-month period. Diluted net operating income per share was $0.37, an increase of 105.6 percent above 2004. Per share results for the 2005 nine-month period also reflects the impact of First Security's stock offering, which increased 2005 average fully diluted shares outstanding by 983,000, or 7.6%, above 2004 average levels.
Rodger B. Holley, Chairman, President and CEO of First Security, commented, "We are pleased to report exceptional earnings growth this quarter, our first as a newly-public company. We began trading on the Nasdaq National Market in August, concurrent with our initial public offering of 4.9 million shares. Shortly thereafter, on August 31st, we completed the acquisition of Jackson Bank & Trust, headquartered in Gainesboro, Tennessee with $169.7 million in total assets. This acquisition forms the basis of our new Cookeville Region, an emerging growth area along the Interstate 40 corridor that runs between Nashville and Knoxville, Tennessee.
"Since our inception in 1999, we have grown to 35 full-service offices and four lease production offices. This quarter, we exceeded the $1 billion mark in asset size. Our strategy has remained consistent throughout this period. We continue to expand into markets where our brand of hometown relationship banking provides a meaningful alternative to the super-regional competition. We have targeted our growth initiatives toward communities along the interstate corridors of middle and eastern Tennessee and northern Georgia. We want to increase our share of these markets, but not at the expense of profitability or asset quality. Our year-over-year improvement in all of these categories reflects the ongoing success of this strategy."
Total revenue, comprised of net interest income and non-interest income, was $12.8 million for the third quarter of 2005, an increase of 47.2 percent over the $8.7 million reported for the third quarter of 2004. Net interest income increased 51.3 percent over the prior-year third quarter, reaching $10.7 million; year-over-year growth reflects the combination of a 36.8 percent increase in average earning assets and a 38 basis point improvement in the net interest margin to 5.11 percent. While the majority of this growth is attributable to acquisition initiatives completed over the past year, most notably the acquisition of Kenesaw Leasing and J&S Leasing during the fourth quarter of 2004 and the acquisition of Jackson Bank & Trust on August 31, 2005, Mr. Holley noted that organic growth has also been strong.
Non-interest income for the third quarter of 2005 was $2.1 million, a 29.4 percent increase over the 2004 third quarter. There were no one-time items in either quarter. The majority of the fee growth this quarter was derived from mortgage loan fees, point-of-sale fees and trust fees, and from one-month's inclusion of Jackson Bank & Trust's results.
Non-interest expense for the third quarter of 2005 was $9.2 million, an increase of 35.9 percent over the prior-year period. Excluding non-recurring expenses of $503 thousand in the current period, non-interest expense increased 28.4 percent to $8.7 million. The increase primarily reflects the acquisition of Kenesaw Leasing and J&S Leasing in October 2004, additional investment to support corporate growth and one month's inclusion of Jackson Bank & Trust's results. Salaries and benefits, up 33.1 percent excluding non-recurring items, represented the largest dollar increase, primarily from an increase of 79 FTE employees; 50 of these employees represent staff of the newly-acquired Jackson Bank & Trust and 17 of these employees represent staff of Kenesaw Leasing and J&S Leasing. Mr. Holley noted that First Security's operating efficiency ratio continues to improve despite these expansion initiatives; it was 67.7 percent for the third quarter of 2005 compared with 77.62 percent for the prior-year period.
Regarding asset quality, Mr. Holley commented, "We have invested heavily in developing a strong credit infrastructure that maintains corporate oversight and controls, but still provides our regions with sufficient flexibility to meet local business needs. As a result of our ongoing efforts to establish standard policies and procedures and to train our bankers in the FSGBank approach to lending, asset quality remains strong." Net charge-offs for the third quarter of 2005 were $600 thousand, or 0.36 percent of average loans on an annualized basis, compared with $544 thousand or 0.35 percent for the linked quarter and $809 thousand or 0.64 percent for the prior-year third quarter. Non-performing assets were $5.4 million or 0.51 percent of total assets at September 30, 2005, compared with $4.0 million or 0.48 percent at June 30, 2005, and $3.6 million or 0.53 percent twelve months ago. Loan loss reserves were 1.42 percent of total loans at September 30, 2005.
Total assets were $1.1 billion at September 30, 2005, an increase of $386.3 million, or 57.2 percent, from last year's third quarter-end. Loan growth was $228.1 million or 44.4 percent during the same 12-month period, of which Jackson Bank & Trust contributed approximately $106.1 million or 46.5 percent of this growth while Kenesaw Leasing and J&S Leasing added approximately $60.6 million or 26.6 percent, and organic growth within FSGBank's community banking franchise contributed $61.4 million, or 26.9%. Deposits grew $287.9 million, or 50.9 percent, to $854.1 million; Jackson Bank & Trust contributed approximately $140.4 million or 48.8 percent of total deposit growth. At September 30, 2005, core deposits (demand, savings, money market and retail time deposits) and brokered deposits were 72.8 percent and 10.8 percent, respectively, of total deposits. First Security primarily uses brokered deposits to match fund its leasing portfolio.
Shareholders' equity at September 30, 2005 was $138.0 million, a twelve-month increase of $53.3 million, or 62.9 percent. The majority of this reflects $44.7 million in proceeds from the issuance of 4.9 million shares during the 2005 third quarter. Total shares outstanding at quarter-end were 17,600,960. First Security's tangible leverage at quarter-end was 10.48 percent, virtually unchanged from the prior-year third quarter. Mr. Holley concluded, "We look forward to serving our shareholders with the same dedication that we provide to our customers."
Webcast and Conference Call Information
First Security's senior management team will host a conference call and simultaneous webcast on Tuesday, October 18, 2005 at 3:00 PM Eastern Time to discuss third 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, TN with $1.1 billion in assets. Founded in 1999, First Security's community bank subsidiary, FSGBank, N.A. has 35 full-service banking offices along the interstate corridors of middle and eastern Tennessee and northern Georgia. In Dalton, GA, FSGBank operates five 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 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, asset-based lending, financial planning, Internet banking (www.FSGBank.com) and equipment leasing through its wholly-owned subsidiaries, Kenesaw Leasing, Inc. and J & S Leasing, Inc.
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.
The First Security Group, Inc. logo can be found at: http://www.primezone.com/newsroom/prs/?pkgid=1833
First Security Group, Inc. and Subsidiary
Consolidated Income Statement
(Unaudited)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
(In thousands, except
per share amounts) 2005 2004 2005 2004
-----------------------------------------------------------------
INTEREST INCOME
Loans, including fees $13,117 $ 8,225 $35,796 $23,696
Debt securities
-taxable 914 572 2,509 1,650
Debt securities
-non-taxable 302 236 796 621
Other 525 85 814 192
----------------- -----------------
Total interest
income 14,858 9,118 39,915 26,159
----------------- -----------------
INTEREST EXPENSE
Interest bearing
demand deposits 123 47 276 134
Savings Deposits and
Money Market Accounts 511 295 1,441 809
Certificates of
Deposit of $100
thousand or more 1,081 629 2,716 1,820
Certificates of
Deposit of less than
$100 thousand 1,471 975 3,659 2,992
Brokered Certificates
of Deposit 862 19 2,146 68
Other 136 100 367 268
----------------- -----------------
Total Interest
Expense 4,184 2,065 10,605 6,091
----------------- -----------------
NET INTEREST INCOME 10,674 7,053 29,310 20,068
Provision for loan
losses 693 675 2,679 2,025
----------------- -----------------
NET INTEREST INCOME
AFTER PROVISION
FOR LOAN LOSSES 9,981 6,378 26,631 18,043
----------------- -----------------
NONINTEREST INCOME
Service charges on
deposit accounts 1,113 1,055 2,979 2,866
Gain on Sales of
Available-for-Sale
Securities, net -- -- -- 84
Other 992 572 3,026 1,655
----------------- -----------------
Total Noninterest
Income 2,105 1,627 6,005 4,605
----------------- -----------------
NONINTEREST EXPENSES
Salaries and employee
benefits 5,100 3,715 14,262 10,608
Expense on Premises
and Fixed Assets,
net of rental income 1,449 1,112 4,096 3,087
Other 2,605 1,910 6,974 5,600
----------------- -----------------
Total Noninterest
Expenses 9,154 6,737 25,332 19,295
----------------- -----------------
INCOME BEFORE INCOME
TAX PROVISION 2,932 1,268 7,304 3,353
Income Tax Provision 1,009 411 2,380 1,030
----------------- -----------------
NET INCOME BEFORE
EXTRAORDINARY ITEM 1,923 857 4,924 2,323
Extraordinary Gain on
Business Combination,
net of tax 2,385 -- 2,385 --
----------------- -----------------
NET INCOME $ 4,308 $ 857 $ 7,309 $ 2,323
================= =================
NET INCOME PER SHARE:
Net Income Per Share
Before
Extraordinary
Item -- basic $ 0.13 $ 0.07 $ 0.36 $ 0.18
Extraordinary Item
-- basic $ 0.15 $ -- $ 0.18 $ --
Net Income Per Share
-- basic $ 0.28 $ 0.07 $ 0.54 $ 0.18
Net Income Per Share
Before
Extraordinary Item
-- diluted $ 0.12 $ 0.07 $ 0.35 $ 0.18
Extraordinary Item
-- diluted $ 0.16 $ -- $ 0.18 $ --
Net Income Per Share
-- diluted $ 0.28 $ 0.07 $ 0.53 $ 0.18
First Security Group, Inc.
Consolidated Balance Sheet
Sept. 30, 2005 Dec. 31, 2004 Sept. 30, 2004
(Unaudited) Audited (Unaudited)
---------------------------------------------------------------------
(in thousands)
ASSETS
Cash and Due from
banks $ 23,743 $ 15,935 $ 22,156
Federal Funds Sold and
Securities Purchased
under Agreements to
Resell
48,800 -- --
----------- ----------- -----------
Cash and Cash
equivalents 72,543 15,935 22,156
----------- ----------- -----------
Interest-Bearing
Deposits in Banks 9,090 605 2,760
----------- ----------- -----------
Securities Available
For Sale 148,132 110,023 90,435
----------- ----------- -----------
Loans Held for Sale 6,597 6,073 4,275
Loans 735,653 586,284 509,893
----------- ----------- -----------
Total Loans 742,250 592,357 514,168
Less: Allowance for
Loan Losses 10,519 8,312 5,448
----------- ----------- -----------
731,731 584,045 508,720
----------- ----------- -----------
Premises and
Equipment, Net 30,698 26,295 25,886
----------- ----------- -----------
Goodwill 24,314 12,430 12,435
----------- ----------- -----------
Intangible Assets 5,712 2,844 2,884
----------- ----------- -----------
Other Assets 39,779 14,514 10,397
----------- ----------- -----------
TOTAL ASSETS $ 1,061,999 $ 766,691 $ 675,673
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits
Noninterest -- Bearing
Demand $ 160,844 $ 109,325 $ 116,097
Interest -- Bearing
Demand 77,557 54,454 52,293
----------- ----------- -----------
238,401 163,779 168,390
----------- ----------- -----------
Savings and Money
Market Accounts 158,186 147,342 137,182
Time Deposits:
Certificates of
Deposit of $100
thousand or more 140,269 106,474 100,034
Certificates of
Deposit less than
$100 thousand 224,892 157,886 159,505
Brokered Certificates
of Deposit 92,328 65,045 1,062
----------- ----------- -----------
457,489 329,405 260,601
----------- ----------- -----------
Total Deposits 854,076 640,526 566,173
Federal Funds
Purchased and
Securities Sold
under Agreements to
Repurchase 18,797 23,255 16,302
Security Deposits 3,738 3,379 --
Other Borrowings 13,153 4,150 4,152
Other Liabilities 34,191 8,936 4,279
----------- ----------- -----------
Total Liabilities 923,955 680,246 590,906
----------- ----------- -----------
STOCKHOLDERS' EQUITY
Common stock -- $.01
par value --
20,000,000 shares
authorized;
17,600,960 issued as
of September 30, 2005;
12,705,044 issued as
of December 31, 2004;
and issued as
12,705,044 of
September 30, 2004 122 88 88
Paid-In Surplus 122,877 77,981 77,981
Retained Earnings 15,570 8,262 6,318
Accumulated Other
Comprehensive Income (525) 114 380
----------- ----------- -----------
Total Stockholders'
Equity 138,044 86,445 84,767
----------- ----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,061,999 $ 766,691 $ 675,673
=========== =========== ===========
First Security Group, Inc
Consolidated Financial Highlights
(Unaudited)
(Amounts in thousands, except per share amounts
and full-time equivalent employees)
---------------------------------------------------------------------
3rd Quarter 2nd Quarter 1st Quarter
2005 2005 2005
---------- ---------- ----------
Earnings:
Net interest income $ 10,674 $ 9,591 $ 9,045
Provision for loan
losses $ 693 $ 843 $ 1,143
Non-interest income $ 2,105 $ 2,237 $ 1,663
Non-interest expense $ 9,154 $ 8,212 $ 7,966
Net income, before
extraordinary
items $ 1,923 $ 1,895 $ 1,106
Extraordinary
items, net of tax $ 2,385 $ -- $ --
Net income $ 4,308 $ 1,895 $ 1,106
Earnings -- Normalized
Non-interest income,
adjusted (b) $ 2,105 $ 1,810 $ 1,663
Non-interest
expense,
adjusted (b) $ 8,651 $ 7,974 $ 7,966
Net operating income,
net of tax (b) $ 2,265 $ 1,766 $ 1,106
Per Share Data:
Net income before
extraordinary
items, basic $ 0.13 $ 0.15 $ 0.09
Net income, basic $ 0.28 $ 0.15 $ 0.09
Net income before
extraordinary
items, diluted $ 0.12 $ 0.15 $ 0.09
Net income, diluted $ 0.28 $ 0.15 $ 0.09
Book value $ 7.84 $ 7.01 $ 6.81
Tangible book value $ 6.14 $ 5.83 $ 5.62
Per Share Data
-- Normalized:
Net operating
income, basic (b) $ 0.15 $ 0.14 $ 0.09
Net operating
income, diluted (b) $ 0.14 $ 0.14 $ 0.09
Performance
Ratios:
Return on average
assets (a) 0.84% 0.93% 0.57%
Return on average
equity (a) 6.76% 8.57% 5.13%
Return on average
tangible assets (a) 0.86% 0.95% 0.58%
Return on average
tangible equity (a) 8.20% 10.32% 6.22%
Net interest margin,
taxable equivalent 5.11% 5.22% 5.19%
Efficiency ratio (a) 71.63% 69.43% 74.39%
Non-interest income to
net interest income
and non-interest
income (a) 16.47% 18.91% 15.53%
Performance Ratios --
Normalized
Operating return on
average assets (b) 0.99% 0.87% 0.57%
Operating return on
average equity (b) 7.96% 7.99% 5.13%
Operating return on
average tangible
assets (b) 1.01% 0.89% 0.58%
Operating return on
average tangible
equity (b) 9.66% 9.62% 6.22%
Operating
efficiency ratio (b) 67.70% 69.94% 74.39%
Non-interest
income, adjusted, to
net interest income
and non-interest
income,adjusted (b) 16.47% 15.88% 15.53%
Capital &
Liquidity:
Average equity
to average assets 12.44% 10.88% 11.05%
Average tangible equity
to average
tangible assets 10.48% 9.20% 9.29%
Average loans
to average deposits 89.24% 89.49% 92.53%
Asset Quality:
Net charge-offs $ 600 $ 544 $ 589
Net loans
charged-off to
average loans,
annualized 0.36% 0.35% 0.39%
Non-accrual loans $ 852 $ 1,226 $ 1,794
Other real estate
owned $ 1,394 $ 1,813 $ 1,547
Loans 90 days past due $ 3,140 $ 966 $ 666
Non-performing
assets to total
assets 0.51% 0.48% 0.50%
Allowance for
loan losses to total
loans 1.42% 1.47% 1.44%
Allowance for
loan losses to
non-performing assets 195.30% 228.84% 221.26%
Period End Balances:
Total loans $ 742,250 $ 623,986 $ 614,417
Intangible
assets $ 30,026 $ 14,933 $ 15,093
Total assets $1,061,999 $ 831,254 $ 797,772
Deposits $ 854,076 $ 708,008 $ 668,361
Shareholder's equity $ 138,044 $ 89,216 $ 86,621
Common stock
market
capitalization $ 171,610 $ 117,790 $ 117,716
Full-time
equivalent employees 361 319 326
Common shares
outstanding --
basic, period end 17,601 12,734 12,726
Common shares
outstanding --
diluted, period end 17,909 13,015 12,994
Average Balances:
Loans $ 668,040 $ 620,185 $ 603,152
Intangible assets $ 20,113 $ 15,019 $ 15,189
Total earning
assets $ 821,480 $ 737,664 $ 719,123
Total assets $ 915,065 $ 813,172 $ 780,715
Deposits $ 748,603 $ 693,037 $ 651,865
Shareholder's
equity $ 113,867 $ 88,459 $ 86,286
Shares outstanding,
basic 15,353 12,733 12,722
Shares outstanding,
diluted 15,661 13,014 12,992
Nine Months Ended
--------------------
4th Quarter 3rd Quarter Sept.30, Sept.30,
2004 2004 2005 2004
---------- ---------- ---------- ----------
Earnings:
Net interest income $ 8,944 $ 7,053 $ 29,310 $ 20,068
Provision for loan
losses $ 1,374 $ 675 $ 2,679 $ 2,025
Non-interest income $ 1,746 $ 1,627 $ 6,005 $ 4,605
Non-interest expense $ 7,822 $ 6,737 $ 25,332 $ 19,295
Net income, before
extraordinary
items $ 1,159 $ 857 $ 4,924 $ 2,323
Extraordinary
items, net of tax $ 785 $ -- $ 2,385 $ --
Net income $ 1,944 $ 857 $ 7,309 $ 2,323
Earnings -- Normalized
Non-interest income,
adjusted (b) $ 1,746 $ 1,627 $ 5,578 $ 4,605
Non-interest
expense,
adjusted (b) $ 7,822 $ 6,737 $ 24,591 $ 19,295
Net operating income,
net of tax (b) $ 1,159 $ 857 $ 5,137 $ 2,323
Per Share Data:
Net income before
extraordinary
items, basic $ 0.09 $ 0.07 $ 0.36 $ 0.18
Net income, basic $ 0.15 $ 0.07 $ 0.54 $ 0.18
Net income before
extraordinary
items, diluted $ 0.09 $ 0.07 $ 0.35 $ 0.18
Net income, diluted $ 0.15 $ 0.07 $ 0.53 $ 0.18
Book value $ 6.80 $ 6.67 $ 7.84 $ 6.67
Tangible book value $ 5.60 $ 5.47 $ 6.14 $ 5.47
Per Share Data
-- Normalized:
Net operating
income, basic (b) $ 0.09 $ 0.07 $ 0.38 $ 0.18
Net operating
income, diluted (b) $ 0.09 $ 0.07 $ 0.37 $ 0.18
Performance
Ratios:
Return on average
assets (a) 0.63% 0.51% 0.78% 0.47%
Return on average
equity (a) 5.39% 4.08% 6.85% 3.76%
Return on average
tangible assets (a) 0.64% 0.52% 0.80% 0.48%
Return on average
tangible equity (a) 6.55% 4.97% 8.30% 4.63%
Net interest margin,
taxable equivalent 5.38% 4.73% 5.17% 4.62%
Efficiency ratio (a) 73.17% 77.62% 71.73% 78.20%
Non-interest income to
net interest income
and non-interest
income (a) 16.33% 18.74% 17.00% 18.66%
Performance Ratios --
Normalized
Operating return on
average assets (b) 0.63% 0.51% 0.82% 0.47%
Operating return on
average equity (b) 5.39% 4.08% 7.14% 3.76%
Operating return on
average tangible
assets (b) 0.64% 0.52% 0.84% 0.48%
Operating return on
average tangible
equity (b) 6.55% 4.97% 8.66% 4.63%
Operating
efficiency ratio (b) 73.17% 77.62% 70.49% 78.20%
Non-interest
income, adjusted, to
net interest income
and non-interest
income,adjusted (b) 16.33% 18.74% 15.99% 18.66%
Capital & Liquidity:
Average equity
to average assets 11.70% 12.55% 11.47% 12.55%
Average tangible equity
to average
tangible assets 9.82% 10.54% 9.65% 10.45%
Average loans
to average deposits 95.21% 91.32% 90.33% 91.00%
Asset Quality:
Net charge-offs $ 521 $ 809 $ 1,733 $ 2,404
Net loans
charged-off to
average loans,
annualized 0.37% 0.64% 0.37% 0.64%
Non-accrual loans $ 985 $ 888 $ 852 $ 888
Other real estate
owned $ 2,338 $ 1,634 $ 1,394 $ 1,634
Loans 90 days past due $ 1,230 $ 1,080 $ 3,140 $ 1,080
Non-performing
assets to total
assets 0.59% 0.53% 0.51% 0.53%
Allowance for
loan losses to total
loans 1.40% 1.06% 1.42% 1.06%
Allowance for
loan losses to
non-performing assets 182.56% 151.25% 195.30% 151.25%
Period End Balances:
Total loans $ 592,357 $ 514,168 $ 742,250 $ 514,168
Intangible
assets $ 15,274 $ 15,319 $ 30,026 $ 15,319
Total assets $ 766,691 $ 675,673 $1,061,999 $ 675,673
Deposits $ 640,526 $ 566,173 $ 854,076 $ 566,173
Shareholder's equity $ 86,445 $ 84,767 $ 138,044 $ 84,767
Common stock
market
capitalization $ 105,833 $ 105,841 $ 171,610 $ 105,841
Full-time
equivalent employees 308 282 $ 361 $ 282
Common shares
outstanding --
basic, period end 12,705 12,706 17,601 12,706
Common shares
outstanding --
diluted, period end 12,915 12,915 17,909 12,915
Average Balances:
Loans $ 564,274 $ 509,203 $ 630,697 $ 499,038
Intangible assets $ 15,271 $ 15,061 $ 16,792 $ 15,399
Total earning
assets $ 668,086 $ 600,664 $ 758,140 $ 589,666
Total assets $ 736,052 $ 669,243 $ 836,416 $ 656,047
Deposits $ 592,692 $ 557,623 $ 698,203 $ 548,371
Shareholder's
equity $ 86,083 $ 83,987 $ 95,902 $ 82,317
Shares outstanding,
basic 12,705 12,706 13,612 12,704
Shares outstanding,
diluted 12,915 12,916 13,899 12,916
(a) These ratios are calculated using net income, before extraordinary
items.
(b) These amounts and ratios are calculated using net operating income
(net of tax) which excludes extraordinary items as defined by GAAP
and 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.
First Security Group Inc.
Non GAAP Reconciliation Table
(Ammounts in thousands)
---------------------------------------
3rd Quarter 2nd Quarter 1st Quarter
2005 2005 2005
--------- --------- ---------
Return on average assets 0.84% 0.93% 0.57%
Effect of intangible assets 0.02% 0.02% 0.01%
--------- --------- ---------
Return on average tangible
assets 0.86% 0.95% 0.58%
========= ========= =========
Return of average equity 6.76% 8.57% 5.13%
Effect of intangible assets 1.44% 1.75% 1.09%
--------- --------- ---------
Return on average tangible
equity 8.20% 10.32% 6.22%
========= ========= =========
Return on average assets 0.84% 0.93% 0.57%
Effect of non-recurring
items 0.15% (0.06)% --
Operating return on average
assets 0.99% 0.87% 0.57%
Effect of average intangible
assets 0.02% 0.02% 0.01%
--------- --------- ---------
Operating return on average
tangible assets 1.01% 0.89% 0.58%
========= ========= =========
Return on average equity 6.76% 8.57% 5.13%
Effect of non-recurring
items 1.20% (0.58)% --
Operating return on average
equity 7.96% 7.99% 5.13%
Effect on average intangible
assets 1.70% 1.63% 1.09%
--------- --------- ---------
Operating return on average
tangible equity 9.66% 9.62% 6.22%
========= ========= =========
Average equity to average
assets 12.44% 10.88% 11.05%
Effect of average intangible
assets 1.96% 1.68% 1.76%
--------- --------- ---------
Average tangible equity to
average tangible assets 10.48% 9.20% 9.29%
========= ========= =========
Non-interest expense $ 9,154 $ 8,212 $ 7,966
Severance 157 -- --
Impairment of long-lived
assets 308 -- --
Jackson Bank & Trust
integration costs and other 38 -- --
Reinsurance underwriting
expense -- 238 --
--------- --------- ---------
Non-interest expense,
adjusted $ 8,651 $ 7,974 $ 7,966
========= ========= =========
Non-interest income $ 2,105 $ 2,237 $ 1,663
Recovery on previously
disposed repossessed asset -- 173 --
Reinsurance underwriting
revenue -- 254 --
--------- --------- ---------
Non-interest income,
adjusted $ 2,105 $ 1,810 $ 1,663
========= ========= =========
Net income $ 4,308 $ 1,895 $ 1,106
Extraordinary gain, net of
tax 2,385 -- --
Non-recurring income
(expenses), net of tax (342) 129 --
--------- --------- ---------
Net operating income, net of
tax $ 2,265 $ 1,766 $ 1,106
========= ========= =========
Per Common Share:
Book value $ 7.84 $ 7.01 $ 6.81
Effect of intangible assets 1.70 1.18 1.19
--------- --------- ---------
Tangible book value $ 6.14 $ 5.83 $ 5.62
========= ========= =========
Net income, basic $ 0.28 $ 0.15 $ 0.09
Effect of extraordinary and
non-recurring items, net of
tax 0.13 0.01 --
--------- --------- ---------
Net operating income, basic $ 0.15 $ 0.14 $ 0.09
========= ========= =========
Net income, diluted $ 0.28 $ 0.15 $ 0.09
Effect of extraordinary and
non-recurring items, net
of tax 0.14 0.01 --
--------- --------- ---------
Net operating income,
diluted $ 0.14 $ 0.14 $ 0.09
========= ========= =========
Nine Months Ended
4th Quarter 3rd Quarter Sept.30, Sept.30,
2004 2004 2005 2004
-------- --------- -------- ---------
Return on average assets 0.63% 0.51% 0.78% 0.47%
Effect of intangible assets 0.01% 0.01% 0.02% 0.01%
-------- --------- -------- ---------
Return on average tangible
assets 0.64% 0.52% 0.80% 0.48%
======== ========= ======== =========
Return of average equity 5.39% 4.08% 6.85% 3.76%
Effect of intangible assets 1.16% 0.89% 1.45% 0.87%
-------- --------- -------- ---------
Return on average tangible
equity 6.55% 4.97% 8.30% 4.63%
======== ========= ======== =========
Return on average assets 0.63% 0.51% 0.78% 0.47%
Effect of non-recurring
items -- -- 0.04% --
Operating return on average
assets 0.63% 0.51% 0.82% 0.47%
Effect of average intangible
assets 0.01% 0.01% 0.02% 0.01%
-------- --------- -------- ---------
Operating return on average
tangible assets 0.64% 0.52% 0.84% 0.48%
======== ========= ======== =========
Return on average equity 5.39% 4.08% 6.85% 3.76%
Effect of non-recurring
items -- -- 0.29% --
Operating return on average
equity 5.39% 4.08% 7.14% 3.76%
Effect on average intangible
assets 1.16% 0.89% 1.52% 0.87%
-------- --------- -------- ---------
Operating return on average
tangible equity 6.55% 4.97% 8.66% 4.63%
======== ========= ======== =========
Average equity to average
assets 11.70% 12.55% 11.47% 12.55%
Effect of average intangible
assets 1.88% 2.01% 1.82% 2.10%
-------- --------- -------- ---------
Average tangible equity to
average tangible assets 9.82% 10.54% 9.65% 10.45%
======== ========= ======== =========
Non-interest expense $ 7,822 $ 6,737 $ 25,332 $ 19,295
Severance -- -- 157 --
Impairment of long-lived
assets -- -- 308 --
Jackson Bank & Trust
integration costs and other -- -- 38 --
Reinsurance underwriting
expense -- -- 238 --
-------- --------- -------- --------
Non-interest expense,
adjusted $ 7,822 $ 6,737 $ 24,591 $ 19,295
======== ========= ======== ========
Non-interest income $ 1,746 $ 1,627 $ 6,005 $ 4,605
Recovery on previously
disposed repossessed asset -- -- 173 --
Reinsurance underwriting
revenue -- -- 254 --
-------- --------- -------- --------
Non-interest income,
adjusted $ 1,746 $ 1,627 $ 5,578 $ 4,605
======== ========= ======== ========
Net income $ 1,944 $ 857 $ 7,309 $ 2,323
Extraordinary gain, net of
tax 785 -- 2,385 --
Non-recurring income
(expenses), net of tax -- -- (213) --
-------- --------- -------- --------
Net operating income, net of
tax $ 1,159 $ 857 $ 5,137 $ 2,323
======== ========= ======== ========
Per Common Share:
Book value $ 6.80 $ 6.67 $ 7.84 $ 6.67
Effect of intangible assets 1.20 1.20 1.70 $ 1.20
-------- --------- -------- --------
Tangible book value $ 5.60 $ 5.47 $ 6.14 $ 5.47
======== ========= ======== ========
Net income, basic $ 0.15 $ 0.07 $ 0.54 $ 0.18
Effect of extraordinary and
non-recurring items, net of
tax 0.06 -- $ 0.16 --
-------- --------- -------- --------
Net operating income, basic $ 0.09 $ 0.07 $ 0.38 $ 0.18
======== ========= ======== ========
Net income, diluted $ 0.15 $ 0.07 $ 0.53 $ 0.18
Effect of extraordinary and
non-recurring items, net
of tax 0.06 -- $ 0.16 --
-------- --------- -------- --------
Net operating income,
diluted $ 0.09 $ 0.07 $ 0.37 $ 0.18
======== ========= ======== ========