SARASOTA, Fla., Jan. 25, 2007 (PRIME NEWSWIRE) -- First State Financial Corporation (Nasdaq:FSTF) reported record earnings for the year ended December 31, 2006. Net income for 2006 was a record $5.3 million, an increase of 39% over the previous year end net income of $3.8 million. On a per diluted share basis, earnings were $0.90 for 2006, up 38% from $0.65 in 2005. Net income for the fourth quarter of 2006 was $1.5 million, an increase of 20% over the fourth quarter of 2005 net income of $1.2 million. On a per diluted share basis, earnings were $0.24 for the fourth quarter of 2006 and $0.21 for the fourth quarter of 2005. Diluted earnings per share for the fourth quarter of 2006 increased 14% over the fourth quarter 2005.
"We are extremely delighted to report record earnings for 2006. We have built solid earnings through the quality growth of our earning assets, coupled with our ability to control overhead. We continue to build a team that will allow us to reach our growth and profitability goals. With the initiatives we have in place, we are excited about 2007 and look forward to building upon our success," said Corey J. Coughlin, President and CEO.
The increase in net income for the year ended December 31, 2006 over the previous year period resulted primarily from a 32% increase in net interest income from $13.5 million a year ago to $17.9 million in 2006. The increase in net interest income from 2005 to 2006 is a result of asset growth and the maintenance of the margin through internal controls to monitor credit quality and effective balance sheet and risk management practices. The annualized net interest margin on a tax equivalent basis for the year ended December 31, 2006 was 4.56%, compared to 4.48% for the year ended December 31, 2005.
The increase in net income for the fourth quarter of 2006 over 2005 resulted primarily from a 14% increase in net interest income of $0.5 million from $4.0 million a year ago to $4.5 million in the fourth quarter of 2006. The annualized net interest margin on a tax equivalent basis for the fourth quarter ended December 31, 2006 was 4.26%, compared to 4.64% for the fourth quarter of 2005.
Non-interest expense for the year ending 2006 was $11.0 million, compared to $8.9 million for the prior year of 2005, an increase of 23%. The year to year increase in non-interest expense was primarily attributable to salaries and employee benefits costs. The increase in salaries and employee benefits is a result of growth, as the Company had 105.5 full-time equivalent employees at December 31, 2006, up from 91 full-time equivalent employees at December 31, 2005. Salaries and employee benefits totaled $7.0 million in 2006, an increase of $1.5 million or 28% over the full year of 2005. Higher incentive payouts, higher employee benefit costs, and salary increases also contributed to the increase. Also, in January 2006 SFAS 123R was adopted and the Company began to recognize stock-based compensation costs, of which approximately $125,000 was expensed in 2006.
Non-interest expense for the fourth quarter of 2006 was $2.6 million, compared with $2.5 million for the fourth quarter of 2005, an increase of 5%. The increase in non-interest expense for the fourth quarter of 2006 when compared to the fourth quarter of 2005 is the result of an increase in salaries and employee benefits as noted above, occupancy costs and professional services, partially offset by a decline in advertising and supplies.
As of December 31, 2006, the allowance for loan losses totaled $4.4 million, or 1.15% of total loans and 490% of non-performing loans compared to 1.00% and 313% respectively as of December 31, 2005. The increase in the allowance for loan losses is a result of several economic variables in the market place; the increased risks in the real estate loan market and concerns about rising insurance rates. Annualized net charge-offs represented .05% of average loans for the quarter ended December 31, 2006 compared to annualized net charge-offs of .05% of average loans for the quarter ended December 31, 2005.
Total assets increased 22% to $453.4 million as of December 31, 2006, compared with $372.7 million a year ago. The increase in total assets from year to year is attributable to the growth in our securities and loan portfolios. Total loans grew 11% to $378.5 million as of December 31, 2006 versus $339.5 million a year ago.
Total liabilities increased 23% to $404.9 million as of December 31, 2006, compared with $328.2 million a year ago. The increase in total liabilities from year to year is attributable to an aggressive calling effort and favorable interest rates on time deposits. Total deposits increased 28% to $400.3 million as of December 31, 2006 from $312.6 million a year ago.
During the fourth quarter of 2006, the Board of Directors of First State Financial Corporation declared a quarterly cash dividend of $0.08 per share on its common stock. The cash dividend was paid on December 29, 2006 for shareholders of record as of December 15, 2006.
About First State Financial Corporation
Headquartered in Sarasota, Florida, First State Financial Corporation, through its wholly owned subsidiary First State Bank, serves the personal and commercial banking needs of local residents and businesses in its market area. The Bank operates from six locations, three branches in Sarasota County and three branches in Pinellas County.
Copies of recent news releases, SEC filings, price quotes, stock charts and other valuable information may be found on First State's investor relations website at www.firststatefl.com.
Except for historical information contained herein, the statements made in the press release constitute "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements involve certain risks and uncertainties, including statements regarding the Company's strategic direction, prospects and future results. Certain factors, including those outside the Company's control may cause actual results to differ materially from those in the forward-looking statements, including economic and other conditions in the markets in which the Company operates; risks associated with acquisitions, competition, seasonality and the other risks discussed in our filings with the Securities and Exchange Commission, which discussions are incorporated in this press release by reference.
First State Financial Corporation
Unaudited Summary Consolidated Statements of Income
(in thousands, except for per share data)
For the quarter ended For the year ended
December 31, December 31,
2006 2005 2006 2005
------- ------- ------- -------
Interest income $ 8,584 $ 6,268 $31,391 $20,781
Interest expense 4,063 2,296 13,531 7,268
Net interest income 4,521 3,972 17,860 13,513
Provision for loan loss 255 255 1,240 735
Non-interest income 669 700 2,849 2,239
Non-interest expense 2,615 2,481 10,962 8,891
Income before income tax
expense 2,320 1,936 8,507 6,126
Income tax expense 855 714 3,166 2,289
Net income $ 1,465 $ 1,222 $ 5,341 $ 3,837
Basic earnings per share $ 0.24 $ 0.21 $ 0.91 $ 0.65
Diluted earnings per share $ 0.24 $ 0.21 $ 0.90 $ 0.65
Selected financial data
(in thousands except for share data)
For the year ended
December 31,
2006 2005
---------- ----------
Average loans outstanding $ 362,606 $ 273,508
Average earning assets $ 397,119 $ 302,372
Return on average assets 1.29% 1.21%
Return on average equity 11.25% 8.86%
Net interest margin on a
fully tax equivalent basis 4.56% 4.48%
Weighted average basic shares 5,828,528 5,860,599
At December 31, At December 31,
2006 2005
---------- ----------
Book Value $ 8.26 $ 7.59
End of period shares outstanding 5,874,450 5,863,265
Total earning assets $ 442,356 $ 361,782
Total loans $ 378,511 $ 339,540
Total assets $ 453,448 $ 372,689
Total deposits $ 400,319 $ 312,625
Total stockholders equity $ 48,526 $ 44,484
Net loan (charge-offs)/recoveries ($280) ($65)
Non-accrual loans $ 889 $ 1,086
Non-accrual loans as a % of
total loans 0.23% 0.32%