CHATTANOOGA, Tenn., July 25, 2006 (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 second quarter and first six months of 2006. Net income for the second quarter of 2006 was $2.8 million, an increase of 48.6 percent above the $1.9 million reported for the prior-year period. Diluted net income per share was $0.16 compared with $0.15 reported for the 2005 second quarter, an increase of 6.7 percent. The financial results of 2006 include the assets, liabilities and results of operations for Jackson Bank & Trust (Jackson Bank), which was acquired by First Security on August 31, 2005. Per share results also reflect the impact of First Security's stock offering of 4.9 million shares in the third quarter of 2005; average diluted shares for the second quarter of 2006 increased by 4,745,000, or 36.5 percent, above last year's second quarter.
For the first six months of 2006, First Security reported net income of $5.3 million, an increase of 76.3 percent from the $3.0 million reported in the prior-year period. Diluted net income per share was $0.30, an increase of 30.4 percent from the first six months of 2005.
Highlights of the second quarter include:
-- Net operating income for the second quarter of 2006 rose
59.5 percent compared to the same period in 2005. Diluted net
operating income per share increased 14.3 percent, from $0.14 to
$0.16. For the six months year-to-date, net operating income rose
84.2 percent; diluted net operating income per share was up
36.4 percent, from $0.22 to $0.30. 2005 net operating income
excluded non-recurring income net of taxes of $129,000.
-- Comparing the second quarter of 2006 to the linked first quarter,
net income rose 13.8 percent and diluted net income per share rose
$0.02, or 14.3 percent.
-- For the six months year-to-date, performance reflects a stronger
net interest margin, up 7 basis points, to 5.27 percent; a
480 basis point improvement in the core efficiency ratio, to
65.25 percent; and higher profitability, as evidenced by the
operating return on average assets of 1.00 percent, up 28 basis
points.
-- Total assets grew $258.1 million, or 31.0 percent, over the last
twelve months to $1.1 billion; excluding the assets of Jackson
Bank, organic growth was $71 million, or 8.6 percent.
Year-to-date, asset growth, all of it organic, was $48.6 million,
or 4.7 percent.
-- Asset quality improved, as evidenced by a lower level of net
charge-offs and nonperforming assets. For the first half of 2006,
annualized net charge-offs were 0.26 percent of average loans
compared with 0.37 percent for the prior-year period;
nonperforming assets at June 30, 2006 declined to 0.52 percent of
assets, a 29 basis point improvement from the year-ago level.
Rodger B. Holley, Chairman, President and CEO of First Security, commented, "Our second quarter and six-month performance reflects the momentum we have achieved as we continue to implement a strategy based on personalized sales and service. We anticipate an excellent year based on quarterly improving trends in virtually every category, including net interest margin, efficiency ratio, profitability and asset quality, as well as strong loan and deposit growth. Second quarter performance demonstrates the strength of our markets and our strategy."
Total revenue, comprised of net interest income and non-interest income, was $14.8 million for the second quarter of 2006, an increase of 25.4 percent over the $11.8 million reported for the second quarter of 2005. Net interest income increased 28.9 percent over the prior-year period, reaching $12.2 million; year-over-year growth reflects the combination of a 28.5 percent increase in average earning assets and a 5 basis point improvement in net interest margin to 5.27 percent. Compared with the first quarter of 2006, the second quarter margin remained consistent at 5.27 percent.
Non-interest income for the second quarter of 2006 was $2.7 million, an 11.6 percent increase above the $2.4 million earned in the second quarter of 2005. Excluding non-recurring income of $427,000 reported in the second quarter of 2005, non-interest income increased 36.0 percent. Service charges on deposit accounts increased $249,000, or 25.9 percent, primarily due to the Jackson Bank acquisition which contributed $200,000 for the second quarter of 2006. All other sources of non-interest operating income increased by $456,000, or 45.7 percent, due to improvements in the following categories: earnings from bank-owned life insurance, up $120,000; gains on sales of assets, up $104,000; point-of-sale fees, up $67,000; and trust fee income, up $66,000. Compared with first quarter, non-interest income rose $230,000, or 9.4 percent, primarily from a $58,000, or 5.0 percent, increase in service charges and a $150,000, or 58.1 percent, increase in mortgage fees.
Non-interest expense for the second quarter was $10.1 million, an increase of $1.9 million, or 22.7 percent, over the $8.2 million reported in the second quarter of 2005. Excluding non-recurring expense of $238,000 taken in the second quarter of 2005, non-interest operating expense rose $2.1 million, or 26.4 percent, from the year-ago quarter. The increase primarily reflects additional investment to support corporate growth, and the inclusion of Jackson Bank expenses. On a linked quarter basis, operating expenses increased $37,000; growth was moderated by a $99,000 decline in salaries and benefits expense resulting from a reduction of six FTE employees year-over-year, to 355 at period-end.
As a result of both revenue growth and expense control, the core efficiency ratio improved to 64.45 percent for the second quarter of 2006 compared with 68.60 percent for the prior-year period, and 66.07 percent for the linked quarter. Mr. Holley commented, "We have been successful with our integration initiatives, yet we believe there are still additional economies to be realized. Even with a new headquarters building and an active branch expansion strategy, we are still comfortable with our 3-year core efficiency goal of 60 percent."
Asset quality improves with each quarter. Net charge-offs for the current quarter were $468,000, or 0.24 percent of average loans on an annualized basis, compared with $531,000, or 0.28 percent of average loans for the linked quarter, and $544,000, or 0.35 percent of average loans for the second quarter of 2005. Non-performing assets plus delinquencies were $5.7 million at June 30, 2006, which relative to portfolio size remains strong and continues to represent a significant improvement over 2005: 0.52 percent of total assets at June 30, 2006, compared with 0.51 percent of total assets at March 31, 2006, and 0.81 percent of total assets twelve months ago. Loan loss reserves were 1.28 percent of total loans at June 30, 2006.
Total assets were $1.1 billion at June 30, 2006, an increase of $258.1 million, or 31.0 percent above year-earlier levels. Loan growth was $176.2 million, or 28.2 percent over the twelve-month period, with Jackson Bank contributing approximately $104.3 million, or 59.2 percent of this growth. Excluding Jackson Bank, loan growth was $71.9 million, or 11.5 percent, year-over-year. The loan categories with the largest increases over the past twelve months were: construction & land development, up $45.2 million or 47.5%, to $140.2 million, of which $33.7 million was organic; commercial real estate, up $29.5 million or 20.9%, to $170.5 million, of which $15.8 million was organic; and residential mortgage loans, up $66.6 million or 41.6 percent, to $226.8 million, of which $11.3 million was organic.
For the first half of the year, loans grew $51.6 million or 6.9 percent, with approximately 65.2 percent of the growth occurring in the second quarter. Commercial real estate accounted for $12.8 million, up 8.1 percent, with virtually all of this growth occurring in the second quarter. Construction and land development loans, up $19.8 million for the half year, or 16.4 percent, slowed slightly in the second quarter.
Deposits were $907.4 million at June 30, 2006, up $199.3 million, or 28.2 percent, over the last twelve months; Jackson Bank contributed approximately $140.2 million, or 70.3 percent of total deposit growth. Excluding Jackson Bank, total deposits grew $59.1 million, or 8.4 percent. Core deposits (demand, savings, money market and retail time deposits) were $637.2 million at June 30, 2006, up 28.2 percent year-over-year; they comprised 70.2 percent of total deposits for both the current and year-ago quarters. Deposits increased $24.9 million, or 2.8 percent from the linked quarter, of which $12.7 million consisted of core deposits. On a year-over-year basis, non-interest bearing demand deposits outpaced total deposit growth, increasing to 19.6 percent of deposits from 18.3 percent a year ago. Brokered deposits, primarily used to match fund First Security's leasing portfolio, were $86.7 million, or 9.6 percent of the deposit portfolio.
Shareholders' equity at June 30, 2006 was $137.8 million, a twelve-month increase of $48.6 million, or 54.4 percent. The majority of this increase reflects $44.7 million in proceeds from the issuance of 4.9 million shares during the third quarter of 2005. Total shares outstanding at quarter-end were 17,934,000. First Security's tangible leverage ratio at quarter-end was 10.0 percent. Mr. Holley concluded, "Our performance for the first half of 2006 provides a solid foundation for continued growth and greater profitability. We believe these positive trends should have a favorable impact on shareholder value, serving to reward investors for their confidence in First Security Group."
Web Cast and Conference Call Information
First Security's executive management team will host a conference call and simultaneous web cast on Tuesday, July 25, 2006 at 3:00 p.m. 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 can be accessed via the Company's website for one month or via phone by dialing 877-660-6853, Account #286 Conference ID#207350 through Midnight, ET, August 2, 2006.
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 37 full-service banking offices along the interstate corridors of middle and eastern Tennessee and northern Georgia. In Dalton, GA, 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 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 Balance Sheets
(in thousands, except share data)
June 30, December 31, June 30,
2006 2005 2005
(unaudited) (unaudited)
---------------------------------------------------------------------
ASSETS
Cash & Due from Banks $ 36,658 $ 23,917 $ 21,771
Federal Funds Sold and
Securities Purchased under
Agreements to Resell -- 17,835 9,710
---------- ---------- ----------
Cash and Cash Equivalents 36,658 41,752 31,481
---------- ---------- ----------
Interest-Bearing Deposits
in Bank 3,846 1,153 307
---------- ---------- ----------
Securities Available-for-Sale 155,355 155,993 112,859
---------- ---------- ----------
Loans Held for Sale 8,912 4,244 5,917
Loans 791,301 744,415 618,069
---------- ---------- ----------
Total Loans 800,213 748,659 623,986
Less: Allowance for Loan Losses 10,205 10,121 9,165
---------- ---------- ----------
790,008 738,538 614,821
---------- ---------- ----------
Premises and Equipment, net 32,645 31,604 25,639
---------- ---------- ----------
Goodwill 26,965 27,032 12,430
---------- ---------- ----------
Intangible Assets 4,764 5,431 2,503
---------- ---------- ----------
Other Assets 39,091 39,189 31,214
---------- ---------- ----------
TOTAL ASSETS $1,089,332 $1,040,692 $ 831,254
========== ========== ==========
LIABILITIES
Deposits
Noninterest-Bearing Demand $ 178,132 $ 153,278 $ 129,251
Interest-Bearing Demand 70,070 75,123 58,000
---------- ---------- ----------
248,202 228,401 187,251
---------- ---------- ----------
Savings and Money Market
Accounts 144,721 152,901 147,513
---------- ---------- ----------
Time Deposits:
Certificates of Deposit of
$100 thousand or more 183,443 156,134 116,454
Certificates of Deposit of less
than $100 thousand 244,309 234,501 162,443
Brokered Certificates of Deposit 86,680 89,570 94,347
---------- ---------- ----------
514,432 480,205 373,244
---------- ---------- ----------
Total Deposits 907,355 861,507 708,008
Federal Funds Purchased and
Securities Sold under
Agreements to Repurchase 21,856 16,894 18,384
Security Deposits 4,651 4,094 3,724
Other Borrowings 8,144 10,150 2,144
Other Liabilities 9,535 9,658 9,778
---------- ---------- ----------
Total Liabilities 951,541 902,303 742,038
---------- ---------- ----------
STOCKHOLDERS' EQUITY
Common stock - $.01 par value
$50,000,000 shares authorized;
17,558,983 issued as of June
30, 2006; 17,653,833 issued
as of December 31, 2005;
12,734,060 issued as of
June 30, 2005 122 122 88
Paid-In Surplus 121,966 122,545 78,165
Unallocated ESOP Shares (3,077) (91) --
Retained Earnings 21,802 17,392 11,263
Accumulated Other
Comprehensive Loss (3,022) (1,579) (300)
---------- ---------- ----------
Total Stockholders' Equity 137,791 138,389 89,216
---------- ---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,089,332 $1,040,692 $ 831,254
========== ========== ==========
First Security Group, Inc. and Subsidiary
Consolidated Statements of Income
(unaudited)
(in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
---------------------------------------------------------------------
INTEREST INCOME
Loans, including fees $16,772 $11,756 $32,391 $22,679
Debt securities - taxable 1,313 819 2,590 1,593
Debt securities - non-taxable 388 254 769 494
Other 67 45 212 96
------- ------- ------- -------
Total Interest Income 18,540 12,874 35,962 24,862
------- ------- ------- -------
INTEREST EXPENSE
Interest Bearing Demand Deposits 163 96 322 153
Savings Deposits and Money
Market Accounts 708 502 1,352 930
Certificates of Deposit of
$100 thousand or more 1,944 871 3,594 1,635
Certificates of Deposit of
less than $100 thousand 2,435 1,163 4,636 2,189
Brokered Certificates of Deposit 907 726 1,754 1,283
Other 214 76 370 231
------- ------- ------- -------
Total Interest Expense 6,371 3,434 12,028 6,421
------- ------- ------- -------
NET INTEREST INCOME 12,169 9,440 23,934 18,441
Provision for Loan Losses 600 843 1,143 1,986
------- ------- ------- -------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 11,569 8,597 22,791 16,455
------- ------- ------- -------
NONINTEREST INCOME
Service Charges on
Deposit Accounts 1,212 963 2,365 1,866
Other 1,454 1,425 2,737 2,229
------- ------- ------- -------
Total Noninterest Income 2,666 2,388 5,102 4,095
------- ------- ------- -------
NONINTEREST EXPENSE
Salaries and Employee Benefits 5,508 4,586 11,115 9,161
Expense on Premises and Fixed
Assets, net of rental income 1,726 1,328 3,390 2,646
Other 2,842 2,298 5,610 4,371
------- ------- ------- -------
Total Noninterest Expense 10,076 8,212 20,115 16,178
------- ------- ------- -------
INCOME BEFORE INCOME TAX
PROVISION 4,159 2,773 7,778 4,372
Income Tax Provision 1,343 878 2,488 1,371
------- ------- ------- -------
NET INCOME $ 2,816 $ 1,895 $ 5,290 $ 3,001
======= ======= ======= =======
NET INCOME PER SHARE:
Net Income Per Share
- Basic $ 0.16 $ 0.15 $ 0.30 $ 0.24
Net Income Per Share
- Diluted $ 0.16 $ 0.15 $ 0.30 $ 0.23
First Security Group, Inc
Consolidated Financial Highlights
(unaudited)
(in thousands, except per share data and
full-time equivalent employees)
--------------------------------------------------------
2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr
2006 2006 2005 2005 2005
---------- ---------- ---------- ---------- --------
Earnings:
Net interest
income $ 12,169 $ 11,765 $ 11,609 $ 10,391 $ 9,440
Provision
for loan
losses $ 600 $ 543 $ 243 $ 693 $ 843
Non-interest
income $ 2,666 $ 2,436 $ 2,364 $ 2,388 $ 2,388
Non-interest
expense $ 10,076 $ 10,039 $ 10,041 $ 9,154 $ 8,212
Net income,
before extra-
ordinary
items $ 2,816 $ 2,474 $ 2,472 $ 1,923 $ 1,895
Extraordinary
items, net
of tax $ -- $ -- $ (210) $ 2,385 $ --
Net income $ 2,816 $ 2,474 $ 2,262 $ 4,308 $ 1,895
Earnings -
Normalized
Non-interest
operating
income(b) $ 2,666 $ 2,436 $ 2,364 $ 2,388 $ 1,961
Non-interest
operating
expense(b) $ 10,076 $ 10,039 $ 9,845 $ 8,651 $ 7,974
Net operating
income, net
of tax(b) $ 2,816 $ 2,474 $ 2,605 $ 2,265 $ 1,766
Per Share Data:
Net income
before extra-
ordinary
items,
basic $ 0.16 $ 0.14 $ 0.14 $ 0.13 $ 0.15
Net income,
basic $ 0.16 $ 0.14 $ 0.13 $ 0.28 $ 0.15
Net income
before extra-
ordinary
items,
diluted $ 0.16 $ 0.14 $ 0.14 $ 0.12 $ 0.15
Net income,
diluted $ 0.16 $ 0.14 $ 0.13 $ 0.28 $ 0.15
Cash dividends
declared $ 0.03 $ 0.03 $ 0.03 $ -- $ --
Book value $ 7.85 $ 7.86 $ 7.84 $ 7.84 $ 7.01
Tangible book
value $ 6.04 $ 6.04 $ 6.00 $ 6.14 $ 5.83
Per Share Data
- Normalized:
Net operating
income,
basic(b) $ 0.16 $ 0.14 $ 0.15 $ 0.15 $ 0.14
Net operating
income,
diluted(b) $ 0.16 $ 0.14 $ 0.15 $ 0.14 $ 0.14
Performance
Ratios:
Return on
average
assets(a) 1.06% 0.95% 0.95% 0.84% 0.93%
Return on
average
equity(a) 8.09% 7.11% 7.17% 6.76% 8.57%
Return on
average
tangible
assets(a) 1.09% 0.98% 0.98% 0.86% 0.95%
Return on
average
tangible
equity(a) 10.49% 9.21% 9.33% 8.20% 10.32%
Net interest
margin,
taxable
equivalent 5.27% 5.27% 5.06% 5.11% 5.22%
Efficiency
ratio(a) 67.92% 70.69% 71.86% 71.63% 69.43%
Non-interest
income to net
interest in-
come and non-
interest
income(a) 17.97% 17.15% 16.92% 18.69% 20.19%
Performance
Ratios
- Normalized
Operating
return on
average
assets(b) 1.06% 0.95% 1.00% 0.99% 0.87%
Operating
return on
average
equity(b) 8.09% 7.11% 7.55% 7.96% 7.99%
Operating
return on
average
tangible
assets(b) 1.09% 0.98% 1.03% 1.01% 0.89%
Operating
return on
average
tangible
equity(b) 10.49% 9.21% 9.83% 9.66% 9.62%
Core
efficiency
ratio(a)(c) 64.45% 66.07% 62.35% 64.47% 68.60%
Non-interest
income, ad-
justed to
net interest
income and
non-interest
income, ad-
justed(b) 17.97% 17.15% 16.92% 18.69% 17.20%
Capital &
Liquidity:
Total equity
to total
assets 12.65% 13.01% 13.30% 13.00% 10.73%
Tangible
equity to
tangible
assets 10.03% 10.30% 10.51% 10.47% 9.10%
Total loans
to total
deposits 88.19% 86.87% 86.90% 86.91% 88.13%
Asset Quality:
Net charge-
offs $ 468 $ 531 $ 641 $ 600 $ 544
Net loans
charged-off
to average
loans,
annualized 0.24% 0.28% 0.34% 0.36% 0.35%
Non-accrual
loans $ 696 $ 1,119 $ 1,314 $ 1,114 $ 1,226
Other real
estate
owned $ 1,986 $ 2,110 $ 1,552 $ 1,394 $ 1,813
Repossessed
assets $ 995 $ 1,251 $ 1,891 $ 2,037 $ 2,716
Non-performing
assets
(NPA) $ 3,677 $ 4,480 $ 4,757 $ 4,545 $ 5,755
NPA to total
assets 0.34% 0.42% 0.46% 0.43% 0.69%
Loans 90 days
past due $ 2,011 $ 904 $ 1,042 $ 2,905 $ 966
NPA + loans
90 days past
due to total
assets 0.52% 0.51% 0.56% 0.70% 0.81%
Allowance for
loan losses
to total
loans 1.28% 1.32% 1.35% 1.42% 1.47%
Allowance for
loan losses
to NPA 277.54% 225.51% 212.76% 231.44% 159.25%
Period End
Balances:
Total
loans $ 800,213 $ 766,622 $ 748,659 $ 742,250 $623,986
Intangible
assets $ 31,729 $ 32,026 $ 32,463 $ 30,026 $ 14,933
Total
assets $1,089,332 $1,062,009 $1,040,692 $1,061,999 $831,254
Deposits $ 907,355 $ 882,492 $ 861,507 $ 854,076 $708,008
Stockholders'
equity $ 137,791 $ 138,141 $ 138,389 $ 138,044 $ 89,216
Common stock
market capi-
talization $ 203,684 $ 194,193 $ 171,950 $ 171,610 $117,790
Full-time
equivalent
employees 355 361 358 361 319
Shares out-
standing,
basic 17,559 17,574 17,654 17,601 12,734
Shares out-
standing,
diluted 17,934 17,934 17,942 17,909 13,015
Average
Balances:
Loans $ 785,397 $ 753,872 $ 744,411 $ 668,040 $620,185
Intangible
assets $ 31,897 $ 31,784 $ 31,946 $ 20,113 $ 15,019
Total earning
assets $ 948,049 $ 924,752 $ 929,063 $ 821,480 $737,664
Total
assets $1,066,523 $1,043,280 $1,044,501 $ 915,065 $813,172
Deposits $ 883,351 $ 860,499 $ 855,158 $ 748,603 $693,037
Stockholders'
equity $ 139,315 $ 139,281 $ 137,964 $ 113,867 $ 88,459
Shares out-
standing,
basic
- WTD 17,342 17,489 17,603 15,353 12,733
Shares out-
standing,
diluted
- WTD 17,759 17,852 17,908 15,661 13,014
YTD
June 30,
2006 2005
---------- ----------
Earnings:
Net interest income $ 23,934 $ 18,441
Provision for loan losses $ 1,143 $ 1,986
Non-interest income $ 5,102 $ 4,095
Non-interest expense $ 20,115 $ 16,178
Net income, before extraordinary items $ 5,290 $ 3,001
Extraordinary items, net of tax $ -- $ --
Net income $ 5,290 $ 3,001
Earnings - Normalized
Non-interest operating income(b) $ 5,102 $ 3,668
Non-interest operating expense(b) $ 20,115 $ 15,940
Net operating income, net of tax(b) $ 5,290 $ 2,872
Per Share Data:
Net income before extraordinary
items, basic $ 0.30 $ 0.24
Net income, basic $ 0.30 $ 0.24
Net income before extraordinary
items, diluted $ 0.30 $ 0.23
Net income, diluted $ 0.30 $ 0.23
Cash dividends declared $ 0.05 $ --
Book value $ 7.85 $ 7.01
Tangible book value $ 6.04 $ 5.83
Per Share Data - Normalized:
Net operating income, basic(b) $ 0.30 $ 0.23
Net operating income, diluted(b) $ 0.30 $ 0.22
Performance Ratios:
Return on average assets(a) 1.00% 0.75%
Return on average equity(a) 7.60% 6.92%
Return on average tangible assets(a) 1.03% 0.77%
Return on average tangible equity(a) 9.85% 8.38%
Net interest margin, taxable equivalent 5.27% 5.20%
Efficiency ratio(a) 69.28% 71.79%
Non-interest income to net interest income
and non-interest income(a) 17.57% 18.17%
Performance Ratios - Normalized
Operating return on average assets(b) 1.00% 0.72%
Operating return on average equity(b) 7.60% 6.62%
Operating return on average
tangible assets(b) 1.03% 0.74%
Operating return on average
tangible equity(b) 9.85% 8.02%
Core efficiency ratio(a)(c) 65.25% 70.05%
Non-interest income, adjusted to net
interest income and non-interest
income, adjusted (b) 17.57% 16.59%
Capital & Liquidity:
Total equity to total assets 12.65% 10.73%
Tangible equity to tangible assets 10.03% 9.10%
Total loans to total deposits 88.19% 88.13%
Asset Quality:
Net charge-offs $ 999 $ 1,133
Net loans charged-off to average
loans, annualized 0.26% 0.37%
Non-accrual loans $ 696 $ 1,226
Other real estate owned $ 1,986 $ 1,813
Repossessed assets $ 995 $ 2,716
Non-performing assets (NPA) $ 3,677 $ 5,755
NPA to total assets 0.34% 0.69%
Loans 90 days past due $ 2,011 $ 966
NPA + loans 90 days past due to total assets 0.52% 0.81%
Allowance for loan losses to total loans 1.28% 1.47%
Allowance for loan losses to NPA 277.54% 159.25%
Period End Balances:
Total loans $ 800,213 $ 623,986
Intangible assets $ 31,729 $ 14,933
Total assets $1,089,332 $ 831,254
Deposits $ 907,355 $ 708,008
Stockholders' equity $ 137,791 $ 89,216
Common stock market capitalization $ 203,684 $ 117,790
Full-time equivalent employees 355 319
Shares outstanding, basic 17,559 12,734
Shares outstanding, diluted 17,934 13,015
Average Balances:
Loans $ 769,721 $ 611,720
Intangible assets $ 31,841 $ 15,103
Total earning assets $ 936,456 $ 725,955
Total assets $1,054,960 $ 796,410
Deposits $ 871,978 $ 672,566
Stockholders' equity $ 139,297 $ 86,758
Shares outstanding, basic - WTD 17,415 12,727
Shares outstanding, diluted - WTD 17,801 13,003
(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.
(c) In accordance with SNL Financial practice, the core efficiency
ratio is calculated on a fully tax equivalent basis excluding
non-recurring items (see footnote (2) 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.
First Security Group, Inc
Non-GAAP Reconciliation Table
(in thousands, except per share data)
---------------------------------------------------
2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr
2006 2006 2005 2005 2005
------- ------- ------- ------- -------
Return on average
assets 1.06% 0.95% 0.95% 0.84% 0.93%
Effect of
intangible assets 0.03% 0.03% 0.03% 0.02% 0.02%
------- ------- ------- ------- -------
Return on average
tangible assets 1.09% 0.98% 0.98% 0.86% 0.95%
======= ======= ======= ======= =======
Return of average
equity 8.09% 7.11% 7.17% 6.76% 8.57%
Effect of
intangible assets 2.40% 2.10% 2.16% 1.44% 1.75%
------- ------- ------- ------- -------
Return on average
tangible equity 10.49% 9.21% 9.33% 8.20% 10.32%
======= ======= ======= ======= =======
Return on average
assets 1.06% 0.95% 0.95% 0.84% 0.93%
Effect of non-
recurring items -- -- 0.05% 0.15% -0.06%
------- ------- ------- ------- -------
Operating return
on average assets 1.06% 0.95% 1.00% 0.99% 0.87%
Effect of average
intangible assets 0.03% 0.03% 0.03% 0.02% 0.02%
------- ------- ------- ------- -------
Operating return
on average
tangible assets 1.09% 0.98% 1.03% 1.01% 0.89%
======= ======= ======= ======= =======
Return on average
equity 8.09% 7.11% 7.17% 6.76% 8.57%
Effect of non-
recurring items -- -- 0.38% 1.20% -0.58%
------- ------- ------- ------- -------
Operating return
on average equity 8.09% 7.11% 7.55% 7.96% 7.99%
Effect on average
intangible assets 2.40% 2.10% 2.28% 1.70% 1.63%
------- ------- ------- ------- -------
Operating return
on average
tangible equity 10.49% 9.21% 9.83% 9.66% 9.62%
======= ======= ======= ======= =======
Total equity to
total assets 12.65% 13.01% 13.30% 13.00% 10.73%
Effect of average
intangible assets -2.62% -2.71% -2.79% -2.53% -1.63%
------- ------- ------- ------- -------
Tangible equity to
tangible assets 10.03% 10.30% 10.51% 10.47% 9.10%
======= ======= ======= ======= =======
Efficiency ratio 67.92% 70.69% 71.86% 71.63% 69.43%
Effect of non-
recurring items -- -- -1.37% -3.90% 0.47%
Effect of non-
cash items -2.23% -3.41% -7.09% -2.26% -0.34%
Effect of net
interest income,
tax equivalent
adjustment -1.24% -1.21% -1.05% -1.00% -0.96%
------- ------- ------- ------- -------
Core efficiency
ratio 64.45% 66.07% 62.35% 64.47% 68.60%
======= ======= ======= ======= =======
Non-interest
income $ 2,666 $ 2,436 $ 2,364 $ 2,388 $ 2,388
Recovery on
previously dis-
posed repossessed
asset -- -- -- -- (173)
Reinsurance under-
writing revenue -- -- -- -- (254)
------- ------- ------- ------- -------
Non-interest
operating income $ 2,666 $ 2,436 $ 2,364 $ 2,388 $ 1,961
======= ======= ======= ======= =======
Non-interest
expense $10,076 $10,039 $10,041 $ 9,154 $ 8,212
Severance -- -- -- (157) --
Impairment of
long-lived assets -- -- -- (308) --
Jackson Bank &
Trust integration
costs and other -- -- (196) (38) --
Reinsurance under-
writing expense -- -- -- -- (238)
------- ------- ------- ------- -------
Non-interest
operating
expense $10,076 $10,039 $ 9,845 $ 8,651 $ 7,974
======= ======= ======= ======= =======
Net income $ 2,816 $ 2,474 $ 2,262 $ 4,308 $ 1,895
Extraordinary
gain, net of tax -- -- 210 (2,385) --
Non-recurring
expenses (income),
net of tax -- -- 133 342 (129)
------- ------- ------- ------- -------
Net operating
income, net of
tax $ 2,816 $ 2,474 $ 2,605 $ 2,265 $ 1,766
======= ======= ======= ======= =======
Per Common Share:
Book value $ 7.85 $ 7.86 $ 7.84 $ 7.84 $ 7.01
Effect of in-
tangible assets (1.81) (1.82) (1.84) (1.70) (1.18)
------- ------- ------- ------- -------
Tangible book
value $ 6.04 $ 6.04 $ 6.00 $ 6.14 $ 5.83
======= ======= ======= ======= =======
Net income,
basic $ 0.16 $ 0.14 $ 0.13 $ 0.28 $ 0.15
Effect of
extraordinary and
non-recurring
items, net of tax -- -- 0.02 (0.13) (0.01)
------- ------- ------- ------- -------
Net operating
income, basic $ 0.16 $ 0.14 $ 0.15 $ 0.15 $ 0.14
======= ======= ======= ======= =======
Net income,
diluted $ 0.16 $ 0.14 $ 0.13 $ 0.28 $ 0.15
Effect of extra-
ordinary and
non-recurring
items, net of tax -- -- 0.02 (0.14) (0.01)
------- ------- ------- ------- -------
Net operating
income, diluted $ 0.16 $ 0.14 $ 0.15 $ 0.14 $ 0.14
======= ======= ======= ======= =======
Year-to-Date
June 30,
2006 2005
-------- --------
Return on average assets 1.00% 0.75%
Effect of intangible assets 0.03% 0.02%
-------- --------
Return on average tangible assets 1.03% 0.77%
======== ========
Return of average equity 7.60% 6.92%
Effect of intangible assets 2.25% 1.46%
-------- --------
Return on average tangible equity 9.85% 8.38%
======== ========
Return on average assets 1.00% 0.75%
Effect of non-recurring items -- -0.03%
-------- --------
Operating return on average assets 1.00% 0.72%
Effect of average intangible assets 0.03% 0.02%
-------- --------
Operating return on average tangible assets 1.03% 0.74%
======== ========
Return on average equity 7.60% 6.92%
Effect of non-recurring items -- -0.30%
-------- --------
Operating return on average equity 7.60% 6.62%
Effect on average intangible assets 2.25% 1.40%
-------- --------
Operating return on average tangible equity 9.85% 8.02%
======== ========
Total equity to total assets 12.65% 10.73%
Effect of average intangible assets -2.62% -1.63%
-------- --------
Tangible equity to tangible assets 10.03% 9.10%
======== ========
Efficiency ratio 69.28% 71.79%
Effect of non-recurring items -- 0.27%
Effect of non-cash items -2.81% -1.13%
Effect of net interest income, tax
equivalent adjustment -1.22% -0.88%
-------- --------
Core efficiency ratio 65.25% 70.05%
======== ========
Non-interest income $ 5,102 $ 4,095
Recovery on previously disposed
repossessed asset -- (173)
Reinsurance underwriting revenue -- (254)
-------- --------
Non-interest operating income $ 5,102 $ 3,668
======== ========
Non-interest expense $ 20,115 $ 16,178
Severance -- --
Impairment of long-lived assets -- --
Jackson Bank & Trust integration costs
and other -- --
Reinsurance underwriting expense -- (238)
-------- --------
Non-interest operating expense $ 20,115 $ 15,940
======== ========
Net income $ 5,290 $ 3,001
Extraordinary gain, net of tax -- --
Non-recurring expenses (income), net of tax -- (129)
-------- --------
Net operating income, net of tax $ 5,290 $ 2,872
======== ========
Per Common Share:
Book value $ 7.85 $ 7.01
Effect of intangible assets (1.81) (1.18)
-------- --------
Tangible book value $ 6.04 $ 5.83
======== ========
Net income, basic $ 0.30 $ 0.24
Effect of extraordinary and
non-recurring items, net of tax -- (0.01)
-------- --------
Net operating income, basic $ 0.30 $ 0.23
======== ========
Net income, diluted $ 0.30 $ 0.23
Effect of extraordinary and
non-recurring items, net of tax -- (0.01)
-------- --------
Net operating income, diluted $ 0.30 $ 0.22
======== ========
Supplemental Data (in thousands)
---------------------------------------------------
2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr
2006 2006 2005 2005 2005
------- ------- ------- ------- -------
Allowance for
loan losses $10,205 $10,103 $10,121 $10,519 $ 9,165
Net interest
income, tax
equivalent $12,453 $12,022 $11,846 $10,587 $ 9,597
Amortization of
intangibles $ 326 $ 341 $ 334 $ 254 $ 160
Gain on sales of
available-for-
sale securities,
net $ -- $ -- $ 117 $ -- $ --
Gain on foreclosed
and repossessed
property and
premises and
equipment $ (121) $ (100) $ (45) $ (61) $ (190)
Losses on fore-
closed and re-
possessed property
and premises and
equipment $ 39 $ 11 $ 69 $ 28 $ 18
Write-downs on
foreclosed and
repossessed
property $ 45 $ 200 $ 537 $ 43 $ (2)
Mortgage loan
and related fees $ 408 $ 258 $ 355 $ 419 $ 366
Year-to-Date
June 30,
2006 2005
-------- --------
Allowance for loan losses $ 10,205 $ 9,165
Net interest income, tax equivalent $ 24,474 $ 18,716
Amortization of intangibles $ 667 $ 342
Gain on sales of available-for-sale
securities, net $ -- $ --
Gain on foreclosed and repossessed property
and premises and equipment $ (221) $ (276)
Losses on foreclosed and repossessed property
and premises and equipment $ 50 $ 51
Write-downs on foreclosed and repossessed
property $ 245 $ 60
Mortgage loan and related fees $ 666 $ 694