CHATTANOOGA, Tenn., Jan. 25, 2007 (PRIME NEWSWIRE) -- First Security Group, Inc. (Nasdaq:FSGI), a community bank holding company serving middle and eastern Tennessee and northern Georgia, today reported results for the fiscal year and fourth quarter of 2006. Net income and diluted earnings per share for 2006 were $11.1 million and $0.63, respectively, compared with $7.4 million, or $0.50 per diluted share, for fiscal 2005, excluding an extraordinary after-tax gain of $2.2 million or $0.14 per diluted share in 2005. Including the extraordinary after-tax gain, First Security earned $9.6 million, or $0.64 per diluted share in 2005.
Financial results 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 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 fiscal year 2006 increased by 2,770,000 shares, or 18.6 percent, above last year.
For the fourth quarter of 2006, First Security reported net income of $2.9 million, or $0.17 per diluted share compared with earnings of $2.3 million, or $0.13 per diluted share, for the prior-year fourth quarter. Excluding a fourth quarter 2005 extraordinary after-tax loss of $210,000, or $0.01 per diluted share, fourth quarter 2006 earnings increased 18.0 percent, or 21.4 percent per diluted share, above the $2.5 million, or $0.14 per diluted share, reported for the prior-year quarter.
Highlights of the year and fourth quarter include:
* Operating income for the fiscal year 2006 rose 44.1 percent
above the prior fiscal year; on a diluted per share basis,
net operating income increased 21.2 percent, from $0.52 to
$0.63. Net operating income excludes a $2.2 million
extraordinary gain and non-recurring expense of $346,000,
both net of tax, from 2005 results, as well as a non-recurring
after-tax $44,000 expense resulting from the relocation of
First Security's headquarters from 2006 results.
* For the fourth quarter of 2006, net operating income rose 13.6
percent; net operating income per diluted share increased 13.3
percent, from $0.15 to $0.17. Net operating income excludes a
$210,000 extraordinary loss as well as non-recurring expense of
$133,000, both net of tax, from fourth quarter 2005 results, as
well as the aforementioned $44,000 after-tax expense from the
2006 fourth quarter.
* Net interest income rose 18.6 percent for fiscal year 2006,
reflecting growth in average earning assets of 20.3 percent
for the 12-months ending December 31, 2006, partially offset
by a modest decline in the net interest margin of six basis
points, to 5.09 percent.
* Non-interest income for 2006 increased 20.0 percent above year
earlier levels; excluding $427,000 of non-recurring items from
2005, non-interest operating income rose 26.1 percent as First
Security continues to build a well-diversified stream of fee
income, with increasing contributions from non-bank activities.
* Year-over-year, loans grew $98.9 million or 13.2 percent.
Commercial loans, including construction and land development,
commercial real estate, commercial and industrial, multi-family
housing, and commercial leases, increased 15.6 percent during
the 12-month period; they accounted for 62.6 percent of First
Security's portfolio as of December 31, 2006.
* Construction and land development loans contributed the majority
of First Security's 2006 loan growth - up $56.3 million, or 48.0
percent above year-earlier levels; compared to the third quarter,
construction lending grew 10.5 percent, or 42.0 percent
annualized.
* First Security continues to achieve operating efficiencies
through the implementation of integration initiatives and
growing economies of scale. The core efficiency ratio improved
to 64.27 percent for the fiscal year 2006 compared with 66.34
percent for the prior-year period; for the fourth quarter of
2006, the efficiency ratio was 62.46 percent.
Rodger B. Holley, Chairman, President and CEO of First Security, commented, "We worked diligently this past year on all fronts to achieve the high level of performance we reported today. Under any circumstances, a year that produces 44 percent growth in operating earnings reflects well on all who have contributed to this outstanding result. Taking into account the combined challenges associated with the interest rate environment over the past year, the competition for quality loans, as well as for well-priced deposits, these results become even more impressive."
Total revenue, comprised of net interest income and non-interest operating income, was $58.6 million for the fiscal year 2006, an increase of 19.9 percent over the $48.9 million reported for the fiscal year 2005. Net interest income reached $48.0 million, an increase of 18.6 percent above the prior year; year-over-year growth reflects a 20.3 percent increase in average earning assets, partially offset by a six basis point decline in net interest margin to 5.09 percent. Mr. Holley continued, "We completed the year with our annual net interest margin above 5.00 percent, which is exceptional in our southern region. In the second half of 2006, we too have experienced the continuing impact of competitive pricing and an inverted yield curve, which reduced our fourth quarter margin to 4.84 percent, 21 basis points lower than third quarter. We continue to depend on our strong loan growth and an increasingly diverse stream of fee income to drive revenue growth."
Non-interest operating income for 2006 was $10.6 million, up 26.1 percent from the $8.4 million reported for the previous year. Excluding losses of $197,000 on the sale of securities taken in the fourth quarter of 2006 and $117,000 of losses taken in the fourth quarter of 2005, recurring non-interest operating income for the fiscal year 2006 was $10.8 million, up $2.3 million or 26.7 percent above the $8.5 million earned in the prior fiscal year. Service charges accounted for $622,000 of the increase, but the major factor contributing to higher non-interest income was a $1.7 million, or 38.3 percent, increase in other fee income, derived largely from point of sale fees, bank owned life insurance income and gains on asset sales, in addition to growth of wealth management activities.
For the fourth quarter of 2006, total revenue was $14.6 million compared with $14.0 million for the fourth quarter of 2005, an increase of 4.7 percent. Net interest income increased 2.4 percent to $11.9 million, reflecting growth in average earnings assets of 7.2 percent, partially offset by a 22 basis point decline in the net interest margin to 4.84 percent. Excluding losses on the sales of securities in both quarters, recurring non-interest income was $2.9 million compared with $2.5 million in the prior-year fourth quarter, an increase of 18.3 percent.
Operating efficiencies continue to improve year-over-year as Jackson Bank becomes increasingly integrated, and First Security focuses on cost savings within the entire organization. Excluding non-recurring expenses of $64,000 of expenses relating to the relocation of First Security's corporate headquarters in 2006 and $937,000 relating to the merger with Jackson Bank, underwriting expenses and other matters in 2005, non-interest operating expense for the fiscal year 2006 was $40.0 million compared with $34.4 million for the fiscal year 2005, an increase of 16.0 percent. Jackson Bank accounted for $2.5 million or 44.4 percent of the increase. The balance reflects additional spending to support corporate growth and de novo branching activity, and includes the addition of 11 FTE employees year-over-year. Non-interest operating expense for the fourth quarter of 2006, excluding $64,000 of costs for relocation, was $9.8 million, basically unchanged from the prior-year fourth quarter after excluding $196,000 of Jackson Bank integration costs. The core efficiency ratio improved to 64.27 percent for the fiscal year 2006 compared with 66.34 percent for the prior fiscal year, and was 62.46 percent for the fourth quarter of 2006.
Asset quality remains sound, although First Security experienced modest deterioration in all categories of assets over the course of the year. Nonperforming assets plus 90-day past due receivables increased by $2.4 million to $8.2 million, or 0.72 percent of assets, at fourth quarter 2006 compared with $5.8 million, or 0.56 percent of assets, at year-end 2005, and $6.1 million, or 0.55 percent, for the third quarter of 2006. Fourth quarter 2006 includes a $2.0 million addition to nonaccrual loans, most of which was related to real estate loans and is supported by sufficient collateral. "Our nonperforming loans are well-collateralized and carry adequate reserves. Net charges offs for the fourth quarter were $303,000, our lowest quarterly level in several years," added Mr. Holley. Net charge-offs for the current fiscal year were $2.2 million, or 0.28 percent of average loans, compared with 0.36 percent last year. The loan loss reserve at year-end 2006 at 1.18 percent of loans outstanding.
Total assets were $1.1 billion at December 31, 2006, an increase of $89.1 million, or 8.6 percent above year-earlier levels. Total loans, excluding reserves, were $847.6 million, up $98.9 million, or 13.2 percent, over the same twelve-month period, as First Security converted surplus liquidity into higher-yielding assets. For the most recent quarter, total loans grew $21.8 million, or 10.6 percent annualized. All of First Security's loan growth during the past twelve month period has been organic.
Commercial real estate-related loans, including construction & land development loans (20.5 percent of total loans); commercial real estate (20.5 percent of loans); and multi-family loans (1.2 percent) together accounted for $357.6 million in outstandings at December 31, 2006, or approximately 42.2 percent of First Security's portfolio. These three commercial real estate loan categories grew 24.5 percent over the past twelve months, increasing from 38.4 percent of total loans for the year-earlier period. Compared with the linked quarter, commercial real estate loans grew 4.9 percent, or 19.6 percent annualized. Commercial and industrial loans were 14.3 percent of the total loan portfolio and grew 11.4 percent year-over-year, and 3.3 percent (13.3 percent annualized) compared with the third quarter of 2006.
Deposits were $922.0 million at December 31, 2006, up $60.5 million, or 7.0 percent, from twelve months ago. Core deposits (demand, savings, money market and retail time deposits) were $629.7 million at December 31, 2006, up 2.3 percent year-over-year; they comprised 68.3 percent of total deposits compared to 71.5 percent a year ago. First Security has been successful at attracting and retaining a high level of non-interest bearing demand deposits, which account for approximately 18.3 percent of total deposits, of which 65.0 percent is derived from commercial customers. Commenting on First Security's deposit initiatives, Mr. Holly added, "We are cross-selling transaction accounts with just about every product we have. As a result, our noninterest checking accounts grew ten percent over the past year."
Shareholders' equity at December 31, 2006 was $144.8 million, a twelve-month increase of $6.4 million, or 4.6 percent. Total shares outstanding at quarter-end were 17,762,000. First Security's tangible leverage ratio at quarter-end was 10.33 percent. Mr. Holley concluded, "This has been an excellent year for First Security. We anticipate a continuation of strong loan growth in our markets, and we are positioned to capture a growing share of these opportunities as we enter 2007."
Web Cast and Conference Call Information
First Security's executive management team will host a conference call and simultaneous web cast on at 3:00 p.m. Eastern Time to discuss fourth quarter and full-year 2006 results. The web cast can be accessed live on the First Security'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 at the First Security's website for one month. The web cast can also be accessed by phone for one week, until Midnight on February 1, 2007, by dialing 877-660-6853, Account No. 286, Conference ID No. 227328
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 38 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 five 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, 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.
The First Security Group, Inc. logo is available at http://www.primezone.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
(in thousands, except share data)
December 31, December 31,
2006 2005
----------- -----------
(unaudited)
ASSETS
Cash & Due from Banks $ 26,512 $ 23,917
Federal Funds Sold and
Securities Purchased
under Agreements
to Resell 1,600 17,835
----------- -----------
Cash and Cash Equivalents 28,112 41,752
----------- -----------
Interest-Bearing
Deposits in Bank 481 1,153
----------- -----------
Securities
Available-for-Sale 153,759 155,993
----------- -----------
Loans Held for Sale 7,524 4,244
Loans 840,069 744,415
----------- -----------
Total Loans 847,593 748,659
Less: Allowance for
Loan Losses 9,970 10,121
----------- -----------
837,623 738,538
----------- -----------
Premises and
Equipment, net 35,835 31,604
----------- -----------
Goodwill 27,156 27,032
----------- -----------
Intangible Assets 4,185 5,431
----------- -----------
Other Assets 42,652 39,189
----------- -----------
TOTAL ASSETS $ 1,129,803 $ 1,040,692
=========== ===========
LIABILITIES
Deposits
Noninterest-Bearing
Demand $ 168,654 $ 153,278
Interest-Bearing
Demand 66,787 75,123
----------- -----------
235,441 228,401
----------- -----------
Savings and Money
Market Accounts 135,784 152,901
----------- -----------
Time Deposits:
Certificates of Deposit
of $100 thousand or more 205,428 156,134
Certificates of Deposit
of less than $100 thousand 258,456 234,501
Brokered Certificates
of Deposit 86,892 89,570
----------- -----------
550,776 480,205
----------- -----------
Total Deposits 922,001 861,507
Federal Funds Purchased
and Securities Sold
under Agreements
to Repurchase 20,851 16,894
Security Deposits 3,920 4,094
Other Borrowings 24,838 10,150
Other Liabilities 13,405 9,658
----------- -----------
Total Liabilities 985,015 902,303
----------- -----------
STOCKHOLDERS' EQUITY
Common stock - $.01
par value 50,000,000
shares authorized
as of December 31,
2006; 20,000,000
shares authorized
as of December 31,
2005; 17,762,278
issued as of December
31, 2006; 17,653,833
issued as of December
31, 2005; 123 122
Paid-In Surplus 124,293 122,545
Unallocated ESOP Shares (5,094) (91)
Retained Earnings 26,337 17,392
Accumulated Other
Comprehensive Loss (871) (1,579)
----------- -----------
Total Stockholders' Equity 144,788 138,389
----------- -----------
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY $ 1,129,803 $ 1,040,692
=========== ===========
First Security Group, Inc.
Consolidated Statements of Income
(in thousands, except per share amounts)
Three Months Ended Year-to-Date
December 31, December 31,
2006 2005 2006 2005
---------------------------------------------------------------------
(unaudited) (unaudited) (unaudited)
INTEREST INCOME
Loans, including fees $ 17,970 $ 14,978 $ 67,972 $ 50,774
Debt securities
- taxable 1,333 1,189 5,253 3,698
Debt securities
- non-taxable 430 396 1,596 1,191
Other 48 303 306 641
-------- -------- -------- --------
Total Interest Income 19,781 16,866 75,127 56,304
-------- -------- -------- --------
INTEREST EXPENSE
Interest Bearing
Demand Deposits 125 157 589 433
Savings Deposits and
Money Market Accounts 750 697 2,861 2,138
Certificates of Deposit
of $100 thousand or more 2,508 1,420 8,378 4,136
Certificates of Deposit
of less than
$100 thousand 3,039 1,985 10,417 5,645
Brokered Certificates
of Deposit 959 842 3,649 2,987
Other 508 156 1,251 524
-------- -------- -------- --------
Total Interest Expense 7,889 5,257 27,145 15,863
-------- -------- -------- --------
NET INTEREST INCOME 11,892 11,609 47,982 40,441
Provision for Loan Losses 441 243 2,184 2,922
-------- -------- -------- --------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 11,451 11,366 45,798 37,519
-------- -------- -------- --------
NONINTEREST INCOME
Service Charges on
Deposit Accounts 1,249 1,242 4,843 4,221
Loss on Sales of Available
for Sale Securities, net (197) (117) (197) (117)
Other 1,687 1,239 5,971 4,743
-------- -------- -------- --------
Total Noninterest Income 2,739 2,364 10,617 8,847
-------- -------- -------- --------
NONINTEREST EXPENSE
Salaries and Employee
Benefits 5,339 5,166 22,108 19,428
Expense on Premises and
Fixed Assets, net of
rental income 1,568 1,510 6,613 5,606
Other 2,964 3,365 11,296 10,339
-------- -------- -------- --------
Total Noninterest Expense 9,871 10,041 40,017 35,373
-------- -------- -------- --------
INCOME BEFORE INCOME
TAX PROVISION 4,319 3,689 16,398 10,993
Income Tax Provision 1,403 1,217 5,286 3,597
-------- -------- -------- --------
NET INCOME BEFORE
EXTRAORDINARY ITEM 2,916 2,472 11,112 7,396
Extraordinary (Loss)
Gain on Business
Combination, net of tax -- (210) -- 2,175
-------- -------- -------- --------
NET INCOME $ 2,916 $ 2,262 $ 11,112 $ 9,571
======== ======== ======== ========
NET INCOME PER SHARE:
Net Income Per Share
Before Extraordinary
Item - basic $ 0.17 $ 0.14 $ 0.64 $ 0.51
Extraordinary Item - basic $ -- $ (0.01) $ -- $ 0.14
Net Income Per Share - basic $ 0.17 $ 0.13 $ 0.64 $ 0.65
Net Income Per Share
Before Extraordinary
Item - diluted $ 0.17 $ 0.14 $ 0.63 $ 0.50
Extraordinary Item - diluted $ -- $ (0.01) $ -- $ 0.14
Net Income
Per Share - diluted $ 0.17 $ 0.13 $ 0.63 $ 0.64
First Security Group, Inc.
Consolidated Financial Highlights
(unaudited)
(in thousands, except per share amounts and
full-time equivalent employees)
4th Quarter 3rd Quarter 2nd Quarter
2006 2006 2006
---------- ---------- ----------
Earnings:
Net interest income $ 11,892 $ 12,156 $ 12,169
Provision for
loan losses $ 441 $ 600 $ 600
Non-interest income $ 2,739 $ 2,776 $ 2,666
Non-interest expense $ 9,871 $ 10,031 $ 10,076
Net income, before
extraordinary items $ 2,916 $ 2,906 $ 2,816
Extraordinary items,
net of tax $ -- $ -- $ --
Net income $ 2,916 $ 2,906 $ 2,816
Earnings - Normalized
Non-interest operating
income (2) $ 2,739 $ 2,776 $ 2,666
Non-interest operating
expense (2) $ 9,807 $ 10,031 $ 10,076
Net operating income,
net of tax (2) $ 2,960 $ 2,906 $ 2,816
Per Share Data:
Net income before
extraordinary items,
basic $ 0.17 $ 0.17 $ 0.16
Net income, basic $ 0.17 $ 0.17 $ 0.16
Net income before
extraordinary items,
diluted $ 0.17 $ 0.16 $ 0.16
Net income, diluted $ 0.17 $ 0.16 $ 0.16
Cash dividends declared $ 0.05 $ 0.03 $ 0.03
Book value $ 8.15 $ 7.98 $ 7.85
Tangible book value $ 6.39 $ 6.20 $ 6.04
Per Share Data -
Normalized:
Net operating income,
basic (2) $ 0.17 $ 0.17 $ 0.16
Net operating income,
diluted (2) $ 0.17 $ 0.16 $ 0.16
Performance Ratios:
Return on average
assets (1) 1.04% 1.06% 1.06%
Return on average
equity (1) 8.15% 8.31% 8.09%
Return on average
tangible assets (1) 1.07% 1.09% 1.09%
Return on average
tangible equity (1) 10.44% 10.74% 10.49%
Net interest margin,
taxable equivalent 4.84% 5.05% 5.27%
Efficiency ratio (1) 67.47% 67.18% 67.92%
Non-interest income
to net interest income
and non-interest
income (1) 18.72% 18.59% 17.97%
Performance Ratios
- Normalized:
Operating return on
average assets (2) 1.06% 1.06% 1.06%
Operating return on
average equity (2) 8.27% 8.31% 8.09%
Operating return on
average tangible
assets (2) 1.09% 1.09% 1.09%
Operating return on
average tangible
equity (2) 10.60% 10.74% 10.49%
Core efficiency
ratio (1) (3) 62.46% 63.84% 64.45%
Non-interest operating
income to net interest
income and non-
interest operating
income (2) 18.72% 18.59% 17.97%
Capital & Liquidity:
Total equity to
total assets 12.82% 12.75% 12.65%
Tangible equity to
tangible assets 10.33% 10.19% 10.03%
Total loans to
total deposits 91.93% 90.39% 88.19%
Asset Quality:
Net charge-offs $ 303 $ 914 $ 468
Net loans charged-
off to average
loans, annualized 0.15% 0.45% 0.24%
Non-accrual loans $ 2,653 $ 679 $ 696
Other real estate
owned $ 1,982 $ 2,298 $ 1,986
Repossessed assets $ 2,231 $ 1,556 $ 995
Non-performing
assets (NPA) $ 6,866 $ 4,533 $ 3,677
NPA to total assets 0.61% 0.41% 0.34%
Loans 90 days
past due $ 1,325 $ 1,593 $ 2,011
NPA + loans 90 days
past due to total
assets 0.72% 0.55% 0.52%
Allowance for loan
losses to total loans 1.18% 1.19% 1.28%
Allowance for loan
losses to NPA 145.21% 217.56% 277.54%
Period End Balances:
Loans $ 847,593 $ 825,745 $ 800,213
Intangible assets $ 31,341 $ 31,597 $ 31,729
Assets $1,129,803 $1,110,065 $1,089,332
Deposits $ 922,001 $ 913,585 $ 907,355
Stockholders' equity $ 144,788 $ 141,544 $ 137,791
Common stock market
capitalization $ 204,796 $ 204,434 $ 203,684
Full-time equivalent
employees 369 360 355
Shares outstanding 17,762 17,746 17,559
Average Balances:
Loans $ 834,494 $ 812,611 $ 785,397
Intangible assets $ 31,482 $ 31,635 $ 31,897
Earning assets $ 996,189 $ 973,950 $ 948,049
Assets $1,120,233 $1,094,474 $1,066,523
Deposits $ 907,284 $ 897,739 $ 883,351
Stockholders' equity $ 143,161 $ 139,872 $ 139,315
Shares outstanding,
basic - wtd 17,216 17,218 17,342
Shares outstanding,
diluted - wtd 17,600 17,629 17,759
1st Quarter 4th Quarter
2006 2005
---------- -----------
Earnings:
Net interest income $ 11,765 $ 11,609
Provision for
loan losses $ 543 $ 243
Non-interest income $ 2,436 $ 2,364
Non-interest expense $ 10,039 $ 10,041
Net income, before
extraordinary items $ 2,474 $ 2,472
Extraordinary items,
net of tax $ -- $ (210)
Net income $ 2,474 $ 2,262
Earnings - Normalized
Non-interest operating
income (2) $ 2,436 $ 2,364
Non-interest operating
expense (2) $ 10,039 $ 9,845
Net operating income,
net of tax (2) $ 2,474 $ 2,605
Per Share Data:
Net income before
extraordinary items,
basic $ 0.14 $ 0.14
Net income, basic $ 0.14 $ 0.13
Net income before
extraordinary items,
diluted $ 0.14 $ 0.14
Net income, diluted $ 0.14 $ 0.13
Cash dividends declared $ 0.03 $ 0.03
Book value $ 7.86 $ 7.84
Tangible book value $ 6.04 $ 6.00
Per Share Data -
Normalized:
Net operating income,
basic (2) $ 0.14 $ 0.15
Net operating income,
diluted (2) $ 0.14 $ 0.15
Performance Ratios:
Return on average
assets (1) 0.95% 0.95%
Return on average
equity (1) 7.11% 7.17%
Return on average
tangible assets (1) 0.98% 0.98%
Return on average
tangible equity (1) 9.21% 9.33%
Net interest margin,
taxable equivalent 5.27% 5.06%
Efficiency ratio (1) 70.69% 71.86%
Non-interest income
to net interest income
and non-interest
income (1) 17.15% 16.92%
Performance Ratios
- Normalized:
Operating return on
average assets (2) 0.95% 1.00%
Operating return on
average equity (2) 7.11% 7.55%
Operating return on
average tangible
assets (2) 0.98% 1.03%
Operating return on
average tangible
equity (2) 9.21% 9.83%
Core efficiency
ratio (1) (3) 66.07% 62.35%
Non-interest operating
income to net interest
income and non-
interest operating
income (2) 17.15% 16.92%
Capital & Liquidity:
Total equity to
total assets 13.01% 13.30%
Tangible equity to
tangible assets 10.30% 10.51%
Total loans to
total deposits 86.87% 86.90%
Asset Quality:
Net charge-offs $ 531 $ 641
Net loans charged-
off to average
loans, annualized 0.28% 0.34%
Non-accrual loans $ 1,119 $ 1,314
Other real estate
owned $ 2,110 $ 1,552
Repossessed assets $ 1,251 $ 1,891
Non-performing
assets (NPA) $ 4,480 $ 4,757
NPA to total assets 0.42% 0.46%
Loans 90 days
past due $ 904 $ 1,042
NPA + loans 90 days
past due to total
assets 0.51% 0.56%
Allowance for loan
losses to total loans 1.32% 1.35%
Allowance for loan
losses to NPA 225.51% 212.76%
Period End Balances:
Loans $ 766,622 $ 748,659
Intangible assets $ 32,026 $ 32,463
Assets $1,062,009 $ 1,040,692
Deposits $ 882,492 $ 861,507
Stockholders' equity $ 138,141 $ 138,389
Common stock market
capitalization $ 194,193 $ 171,950
Full-time equivalent
employees 361 358
Shares outstanding 17,574 17,654
Average Balances:
Loans $ 753,872 $ 744,411
Intangible assets $ 31,784 $ 31,946
Earning assets $ 924,752 $ 929,063
Assets $1,043,280 $ 1,044,501
Deposits $ 860,499 $ 855,158
Stockholders' equity $ 139,281 $ 137,964
Shares outstanding,
basic - wtd 17,489 17,603
Shares outstanding,
diluted - wtd 17,852 17,908
YTD
December 31,
2006 2005
---------- -----------
Earnings:
Net interest income $ 47,982 $ 40,441
Provision for loan losses $ 2,184 $ 2,922
Non-interest income $ 10,617 $ 8,847
Non-interest expense $ 40,017 $ 35,373
Net income, before extraordinary items $ 11,112 $ 7,396
Extraordinary items, net of tax $ -- $ 2,175
Net income $ 11,112 $ 9,571
Earnings - Normalized
Non-interest operating income (2) $ 10,617 $ 8,420
Non-interest operating expense (2) $ 39,953 $ 34,436
Net operating income, net of tax (2) $ 11,156 $ 7,742
Per Share Data:
Net income before extraordinary
items, basic $ 0.64 $ 0.51
Net income, basic $ 0.64 $ 0.65
Net income before extraordinary items,
diluted $ 0.63 $ 0.50
Net income, diluted $ 0.63 $ 0.64
Cash dividends declared $ 0.13 $ 0.03
Book value $ 8.15 $ 7.84
Tangible book value $ 6.39 $ 6.00
Per Share Data - Normalized:
Net operating income, basic (2) $ 0.64 $ 0.53
Net operating income, diluted (2) $ 0.63 $ 0.52
Performance Ratios:
Return on average assets (1) 1.03% 0.83%
Return on average equity (1) 7.91% 6.88%
Return on average tangible assets (1) 1.06% 0.85%
Return on average tangible equity (1) 10.22% 8.45%
Net interest margin, taxable equivalent 5.09% 5.15%
Efficiency ratio (1) 68.29% 71.77%
Non-interest income to net interest
income and non-interest income (1) 18.12% 17.95%
Performance Ratios - Normalized:
Operating return on average assets (2) 1.03% 0.87%
Operating return on average equity (2) 7.94% 7.20%
Operating return on average tangible
assets (2) 1.06% 0.89%
Operating return on average tangible
equity (2) 10.26% 8.84%
Core efficiency ratio (1) (3) 64.27% 66.34%
Non-interest operating income to net
interest income and non-interest
operating income (2) 18.12% 17.23%
Capital & Liquidity:
Total equity to total assets 12.82% 13.30%
Tangible equity to tangible assets 10.33% 10.51%
Total loans to total deposits 91.93% 86.90%
Asset Quality:
Net charge-offs $ 2,216 $ 2,374
Net loans charged-off to average loans,
annualized 0.28% 0.36%
Non-accrual loans $ 2,653 $ 1,314
Other real estate owned $ 1,982 $ 1,552
Repossessed assets $ 2,231 $ 1,891
Non-performing assets (NPA) $ 6,866 $ 4,757
NPA to total assets 0.61% 0.46%
Loans 90 days past due $ 1,325 $ 1,042
NPA + loans 90 days past due to total assets 0.72% 0.56%
Allowance for loan losses to total loans 1.18% 1.35%
Allowance for loan losses to NPA 145.21% 212.76%
Period End Balances:
Loans $ 847,593 $ 748,659
Intangible assets $ 31,341 $ 32,463
Assets $1,129,803 $1,040,692
Deposits $ 922,001 $ 861,507
Stockholders' equity $ 144,788 $ 138,389
Common stock market capitalization $ 204,796 $ 171,950
Full-time equivalent employees 369 358
Shares outstanding 17,762 17,654
Average Balances:
Loans $ 796,866 $ 657,928
Intangible assets $ 31,699 $ 19,924
Earning assets $ 960,966 $ 799,109
Assets $1,081,375 $ 886,946
Deposits $ 887,319 $ 734,869
Stockholders' equity $ 140,467 $ 107,499
Shares outstanding, basic - wtd 17,315 14,618
Shares outstanding, diluted - wtd 17,680 14,910
(1) These ratios are calculated using net income, before
extraordinary items.
(2) 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.
(3) 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.
Non-GAAP Reconciliation Table
(in thousands, except per share data)
------------------------------------------
4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr
2006 2006 2006 2006 2005
------- ------- ------- ------- -------
Return on average assets 1.04% 1.06% 1.06% 0.95% 0.95%
Effect of intangible
assets 0.03% 0.03% 0.03% 0.03% 0.03%
------- ------- ------- ------- -------
Return on average
tangible assets 1.07% 1.09% 1.09% 0.98% 0.98%
======= ======= ======= ======= =======
Return of average equity 8.15% 8.31% 8.09% 7.11% 7.17%
Effect of
intangible assets 2.29% 2.43% 2.40% 2.10% 2.16%
------- ------- ------- ------- -------
Return on average
tangible equity 10.44% 10.74% 10.49% 9.21% 9.33%
======= ======= ======= ======= =======
Return on average assets 1.04% 1.06% 1.06% 0.95% 0.95%
Effect of
non-recurring items 0.02% -- -- -- 0.05%
------- ------- ------- ------- -------
Operating return on
average assets 1.06% 1.06% 1.06% 0.95% 1.00%
Effect of average
intangible assets 0.03% 0.03% 0.03% 0.03% 0.03%
------- ------- ------- ------- -------
Operating return on
average tangible assets 1.09% 1.09% 1.09% 0.98% 1.03%
======= ======= ======= ======= =======
Return on average equity 8.15% 8.31% 8.09% 7.11% 7.17%
Effect of
non-recurring items 0.12% -- -- -- 0.38%
------- ------- ------- ------- -------
Operating return on
average equity 8.27% 8.31% 8.09% 7.11% 7.55%
Effect on average
intangible assets 2.33% 2.43% 2.40% 2.10% 2.28%
------- ------- ------- ------- -------
Operating return on
average tangible equity 10.60% 10.74% 10.49% 9.21% 9.83%
======= ======= ======= ======= =======
Total equity to
total assets 12.82% 12.75% 12.65% 13.01% 13.30%
Effect of
intangible assets -2.49% -2.56% -2.62% -2.71% -2.79%
------- ------- ------- ------- -------
Tangible equity to
tangible assets 10.33% 10.19% 10.03% 10.30% 10.51%
======= ======= ======= ======= =======
Efficiency ratio 67.47% 67.18% 67.92% 70.69% 71.86%
Effect of
non-recurring items -0.44% -- -- -- -1.37%
Effect of non-cash
items -3.44% -2.29% -2.23% -3.41% -7.09%
Effect of net
interest income,
tax equivalent
adjustment -1.13% -1.05% -1.24% -1.21% -1.05%
------- ------- ------- ------- -------
Core efficiency ratio 62.46% 63.84% 64.45% 66.07% 62.35%
======= ======= ======= ======= =======
Non-interest income $ 2,739 $ 2,776 $ 2,666 $ 2,436 $ 2,364
Recovery on
previously disposed
repossessed asset -- -- -- -- --
Reinsurance
underwriting revenue -- -- -- -- --
------- ------- ------- ------- -------
Non-interest
operating income $ 2,739 $ 2,776 $ 2,666 $ 2,436 $ 2,364
======= ======= ======= ======= =======
Non-interest expense $ 9,871 $10,031 $10,076 $10,039 $10,041
Corporate
headquarters
relocation costs (64) -- -- -- --
Severance -- -- -- -- --
Impairment of
long-lived assets -- -- -- -- --
Jackson Bank & Trust
integration costs
and other -- -- -- -- (196)
Reinsurance
underwriting
expense -- -- -- -- --
------- ------- ------- ------- -------
Non-interest
operating expense $ 9,807 $10,031 $10,076 $10,039 $ 9,845
======= ======= ======= ======= =======
Net income $ 2,916 $ 2,906 $ 2,816 $ 2,474 $ 2,262
Extraordinary loss
(gain), net of tax -- -- -- -- 210
Non-recurring
expenses, net of tax 44 -- -- -- 133
------- ------- ------- ------- -------
Net operating income,
net of tax $ 2,960 $ 2,906 $ 2,816 $ 2,474 $ 2,605
======= ======= ======= ======= =======
Per Share Data
Book value $ 8.15 $ 7.98 $ 7.85 $ 7.86 $ 7.84
Effect of
intangible assets (1.76) (1.78) (1.81) (1.82) (1.84)
------- ------- ------- ------- -------
Tangible book value $ 6.39 $ 6.20 $ 6.04 $ 6.04 $ 6.00
======= ======= ======= ======= =======
Net income, basic 0.17 0.17 0.16 0.14 0.13
Effect of
extraordinary and
non-recurring items,
net of tax -- -- -- -- 0.02
------- ------- ------- ------- -------
Net operating
income, basic $ $ 0.17 $ 0.17 $ 0.16 $ 0.14 $ 0.15
======= ======= ======= ======= =======
Net income, diluted $ 0.17 $ 0.16 $ 0.16 $ 0.14 $ 0.13
Effect of
extraordinary and
non-recurring items,
net of tax -- -- -- -- 0.02
------- ------- ------- ------- -------
Net operating
income, diluted $ 0.17 $ 0.16 $ 0.16 $ 0.14 $ 0.15
======= ======= ======= ======= =======
Supplemental Data (in thousands)
----------------------------------------
Allowance for
loan losses $ 9,970 $ 9,862 $10,205 $10,103 $10,121
Net interest income,
tax equivalent $12,152 $12,398 $12,453 $12,022 $11,846
Amortization of
intangibles $ 256 $ 323 $ 326 $ 341 $ 334
(Gain) Loss on sales
of available-for-sale
securities and
corporate stock, net $ (7)$ -- $ -- $ -- $ 117
Gain on foreclosed and
repossessed property,
leased equipment, and
premises and equipment $ (178)$ (219)$ (121)$ (100)$ (45)
Losses on foreclosed
and repossessed
property and premises
and equipment $ 301 $ 63 $ 39 $ 11 $ 69
Write-downs on
foreclosed and
repossessed property $ 64 $ 98 $ 45 $ 200 $ 537
Mortgage loan and
related fees $ 375 $ 405 $ 408 $ 258 $ 355
Year-to-Date Year-to-Date
December 31, 2006 December 31, 2005
----------------- -----------------
Return on average assets 1.03% 0.83%
Effect of intangible 0.03% 0.02%
assets ------- -------
Return on average
tangible assets 1.06% 0.85%
======= =======
Return of average equity 7.91% 6.88%
Effect of
intangible assets 2.31% 1.57%
------- -------
Return on average
tangible equity 10.22% 8.45%
======== =======
Return on average assets 1.03% 0.83%
Effect of
non-recurring items -- 0.04%
------- -------
Operating return on
average assets 1.03% 0.87%
Effect of average
intangible assets 0.03% 0.02%
------- -------
Operating return on
average tangible assets 1.06% 0.89%
======= =======
Return on average equity 7.91% 6.88%
Effect of
non-recurring items 0.03% 0.32%
------ -------
Operating return on
average equity 7.94% 7.20%
Effect on average
intangible assets 2.32% 1.64%
------ -------
Operating return on
average tangible equity 10.26% 8.84%
======= =======
Total equity to
total assets 12.82% 13.30%
Effect of
intangible assets -2.49% -2.79%
------- -------
Tangible equity to
tangible assets 10.33% 10.51%
======= =======
Efficiency ratio 68.29% 71.77%
Effect of
non-recurring items -0.11% -1.32%
Effect of non-cash
items -2.83% -3.12%
Effect of net
interest income,
tax equivalent
adjustment -1.08% -0.99%
------- -------
Core efficiency ratio 64.27% 66.34%
======= =======
Non-interest income $10,617 $ 8,847
Recovery on
previously disposed
repossessed asset -- (173)
Reinsurance
underwriting revenue -- (254)
------- -------
Non-interest
operating income $10,617 $ 8,420
======= =======
Non-interest expense $40,017 $35,373
Corporate
headquarters
relocation costs (64) --
Severance -- (157)
Impairment of
long-lived assets -- (308)
Jackson Bank & Trust
integration costs
and other -- (234)
Reinsurance
underwriting
expense -- (238)
Non-interest ------- -------
operating expense $39,953 $34,436
======= =======
Net income $11,112 $ 9,571
Extraordinary loss
(gain), net of tax -- (2,175)
Non-recurring
expenses, net of tax 44 346
------- -------
Net operating income,
net of tax 11,156 7,742
======= =======
Per Share Data
Book value $ 8.15 $ 7.84
Effect of
intangible assets (1.76) (1.84)
------- -------
Tangible book value $ 6.39 $ 6.00
======= =======
Net income, basic $ 0.64 $ 0.65
Effect of
extraordinary and
non-recurring items,
net of tax -- (0.12)
------- -------
Net operating 0.64 0.53
income, basic ======= =======
Net income, diluted $ 0.63 $ 0.64
Effect of
extraordinary and
non-recurring items,
net of tax -- (0.12)
------- -------
Net operating
income, diluted $ 0.63 $ 0.52
======= =======
Supplemental Data (in thousands)
-----------------------------
Allowance for
loan losses $ 9,970 $10,121
Net interest income,
tax equivalent $48,955 $41,160
Amortization of
intangibles $ 1,246 $ 930
(Gain) Loss on sales
of available-for-sale
securities and
corporate stock, net $ (7) $ 117
Gain on foreclosed and
repossessed property,
leased equipment, and
premises and equipment $ (618) $ (382)
Losses on foreclosed
and repossessed
property and premises
and equipment $ 414 $ 148
Write-downs on
foreclosed and
repossessed property $ 407 $ 640
Mortgage loan and
related fees $ 1,446 $ 1,468