CHATTANOOGA, Tenn., April 26, 2007 (PRIME NEWSWIRE) -- First Security Group, Inc. (Nasdaq:FSGI), a community bank holding company serving middle and east Tennessee and north Georgia, today reported first quarter 2007 net income of $2.84 million, up 14.6 percent from net income of $2.47 million reported for the first quarter of 2006. Earnings per diluted share were $0.16, an increase of 14.3 percent over the $0.14 reported in the 2006 first quarter. Results reflect solid loan growth and growing fee income, partially offset by margin compression.
* Year over year, loans grew $97.3 million, or 12.7 percent, to $863.9 million, led by construction and development (C&D) lending, which accounted for sixty percent of this growth. First quarter loans grew 1.9 percent (7.7 percent annualized), and again C&D loans were the fastest growing sector of the portfolio. C&D loans account for 21.6 percent of First Security's highly diversified loan portfolio. * Asset quality continues to be sound. Nonperforming assets modestly improved from year-end 2006 but increased relative to the year-ago quarter. Net charge-offs have been declining quarterly; for the first quarter of 2007, they were 0.10 percent of annualized average loans. * Non-interest income grew 20.6 percent over the prior-year first quarter, to $2.9 million; fee income is increasingly diversified through growth of trust and mortgage banking activities. * Expenses remain very well controlled; non-interest expense increased marginally compared to the year-ago quarter, by $159,000 or 1.6 percent, to $10.2 million, and the core efficiency ratio was stable at 66.1 percent compared to the year-earlier quarter.
Rodger B. Holley, Chairman, President and CEO of First Security Group, Inc., commented, "We have reason to be pleased with our first quarter performance. Our earnings have increased year-over-year, reflecting the impact of several positive trends in our operations, namely, growing fee income from diverse bank and non-bank activities, a balanced loan portfolio that includes growing commercial and consumer loans, disciplined control of operating expenses, and sound management of our asset quality. We continue to experience the impact of an extremely challenging interest rate environment, yet we improved our net interest margin by two basis points since last quarter. We are consistently and reliably executing our strategy to achieve the results and performance goals we committed to when we became a public company."
Total revenue, comprised of net interest income and non-interest income, was $14.8 million for the first quarter of 2007, an increase of 4.2 percent over the $14.2 million reported for the first quarter of 2006. Net interest income was $11.9 million, a 0.8 percent increase over the prior-year period. Results reflect a 9.3 percent increase in average earning assets to $1.01 billion, offset by a 41 basis point decline in the net interest margin to 4.86 percent.
First Security's income stream is becoming increasingly diversified with non-interest income accounting for a growing percentage of total revenue: 19.8 percent for the first quarter of 2007, compared with 17.2 percent for the prior-year period. Non-interest income for the first quarter of 2007 was $2.9 million, up 20.6 percent over the $2.4 million earned in the first quarter of 2006. Excluding the $139,000 gain on trading assets under FAS 159, non-interest income was $2.8 million, up 14.9 percent from the prior year first quarter. Non-bank revenue, namely, trust fees and gains from the sale of mortgages, was $588,000 this quarter compared with $336,000 for the year-ago quarter, an increase of $252,000, or 75.0 percent.
Operating expenses remain well controlled, with non-interest expense for the first quarter increasing a nominal $159,000, or 1.6 percent, to $10.2 million, compared with $10.0 million incurred in the first quarter of 2006. Salaries and benefits increased $215,000, or 3.8 percent year over year, reflecting the addition of eight FTE employees over the past twelve months, to 369. The core efficiency ratio remained unchanged at 66.1 percent for the first quarter of both years.
First Security efforts to improve asset quality are reflected in the declining level of net charge-offs over the past twelve months. First quarter net charge-offs reduced to $211,000, or 0.10 percent of average loans on an annualized basis, partially as a result of stronger recoveries, compared to $531,000, or 0.28 percent of average loans, reported for the year-ago quarter. Non-performing assets plus delinquencies were $7.9 million, or 0.69 percent of total assets at March 31, 2007, compared with $8.2 million or 0.72 percent of total assets at December 31, 2006, and $5.4 million, or 0.51 percent of total assets for the year-ago period. Loan loss reserves were 1.18 percent of total loans at March 31, 2007.
Total assets were $1.1 billion at March 31, 2007, an increase of $85.5 million, or 8.1 percent, above year-earlier levels. Loans grew $97.3 million, or 12.7 percent, to $863.9 million at March 31, 2007, primarily from growth in the C&D portfolio, which accounted for sixty percent of loan growth year-over-year. While C&D loan growth has been exceptionally strong over the past twelve months, First Security's loan portfolio still remains highly diversified; C&D loans currently account for 21.6 percent of total loans, while commercial real estate and residential real estate account for 21.0 percent and 28.1 percent, respectively. Commercial and industrial loans contribute another 14.5 percent to the total mix, up $16.6 million, or 15.3 percent, year-over-year. First quarter loan growth was 1.9 percent (7.7 percent annualized), and C&D originations and pipeline continue to lead the growth.
At the end of the first quarter, deposits were $926.3 million, up $43.8 million, or 5.0 percent, over the past twelve months, while core deposits (demand, savings, money market and retail time deposits) were $634.6 million, a 1.6 percent increase over the $624.5 million reported for the prior-year period. Core deposits comprised 68.5 percent of total deposits at March 31, 2007 compared with 70.8 percent of deposits at March 31, 2006. First quarter core deposit growth was 0.8 percent (3.1 percent annualized); whereas, total deposits (excluding brokered CDs) increased 1.4 percent (5.7 percent annualized) due to strong growth of in-market certificates of deposit greater than $100,000.
Shareholders' equity at March 31, 2007 was $146.4 million, a twelve-month increase of $8.3 million, or 6.0 percent. First Security's tangible leverage ratio remained strong at quarter-end at 10.3 percent.
Mr. Holley concluded, "We expect that conditions will continue to be challenging for First Security, and for the industry as a whole. However, we will continue to perform in the same consistent, disciplined, and thoughtful manner, and anticipate that our earnings will continue to benefit from the prudent strategies we implement."
Web Cast and Conference Call Information
First Security's executive management team will host a conference call and simultaneous web cast on Thursday, April 26 at 3:00 PM Eastern Time to discuss first quarter results. The web cast can be accessed live on the Company's website, www.FSGBank.com, on the Corporate Information/Investor Relations page. A replay will be available approximately two hours after the live conference call ends, and will be archived on the Company's website for one month.
About First Security Group, Inc.
First Security Group, Inc. is a bank holding company headquartered in Chattanooga, Tennessee with $1.1 billion in assets. Founded in 1999, First Security's community bank subsidiary, FSGBank, N.A. has 39 full-service banking offices along the interstate corridors of middle and east Tennessee and north Georgia. In Dalton, Georgia, FSGBank operates six full-service banking offices under the name of Dalton Whitfield Bank and two offices under the name Primer Banco Seguro (PBS); PBS serves the region's rapidly growing Latino population. FSGBank also operates six branches under the name of Jackson Bank & Trust along the I-40 corridor. FSGBank provides retail and commercial banking services, trust and investment management, mortgage banking, financial planning, Internet banking (www.FSGBank.com) and equipment leasing through its wholly-owned subsidiaries, Kenesaw Leasing, Inc. and J & S Leasing, Inc.
Adoption of Accounting Standard No. 159
First Security elected to adopt SFAS No. 157 and SFAS No. 159, pursuant to the early adoption guidance. Upon adoption, First Security selected the fair value option for certain investment securities with a fair value as of March 31, 2007 of approximately $27.2 million, the majority of which had stated yields at or below 4.5 percent. As of the end of 2006, these investments had been included in its "available for sale" portfolio. Effective January 1, 2007, these securities were transferred to First Security's "trading securities" account at their fair market value. Pursuant to the guidance in SFAS No. 159, this transfer resulted in a one-time mark-to-market charge of $481.2 thousand, net of tax, to retained earnings. This one-time charge did not adversely affect stockholders' equity, because the fair value adjustment for these securities had previously been reported in the accumulated other comprehensive loss component of stockholders' equity. Prior to the adoption of these standards, First Security had intended to hold these securities until their scheduled maturities or until there was a recovery in the market prices of these specific investments. First Security reported a pre-tax gain of $139,000 from the trading securities in the first quarter of 2007. Pursuant to the principles of SFAS No. 159, First Security matched its trading securities (short term assets) with its Federal Home Loan Bank (FHLB) overnight borrowings (short term liabilities).
After March 31, 2007, First Security decided to sell its portfolio of trading securities, which had been categorized as such upon the adoption of SFAS No. 159. Upon the sale, First Security recognized a pre-tax loss of approximately $180,000. First Security believes that the adoption of SFAS No. 159, combined with its decision to sell its trading securities portfolio and pay down its FHLB overnight borrowings, will have a beneficial impact on its earnings for the remainder of 2007 and beyond by eliminating a negative interest rate spread between short term assets and short term liabilities. Furthermore, the net effect of the sale of the trading securities de-leveraged a portion of the balance sheet. First Security believes that decreasing the size of the balance sheet will have a positive impact on its asset liability position through selective growth in the current challenging interest rate environment.
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)
March 31, December 31, March 31,
2007 2006 2006
(unaudited) (unaudited)
---------------------------------------------------------------------
ASSETS
Cash & Due from Banks $ 31,472 $ 26,512 $ 27,824
Federal Funds Sold and
Securities Purchased under
Agreements to Resell -- 1,600 16,800
---------- ---------- ----------
Cash and Cash Equivalents 31,472 28,112 44,624
---------- ---------- ----------
Interest-Bearing Deposits in Bank 189 481 1,696
---------- ---------- ----------
Trading Assets 27,213 -- --
---------- ---------- ----------
Securities Available-for-Sale 126,436 153,759 157,425
---------- ---------- ----------
Loans Held for Sale 5,251 7,524 6,177
Loans 858,689 840,069 760,445
---------- ---------- ----------
Total Loans 863,940 847,593 766,622
Less: Allowance for Loan Losses 10,154 9,970 10,103
---------- ---------- ----------
853,786 837,623 756,519
---------- ---------- ----------
Premises and Equipment, net 35,830 35,835 31,543
---------- ---------- ----------
Goodwill 27,156 27,156 26,965
---------- ---------- ----------
Intangible Assets 3,921 4,185 5,061
---------- ---------- ----------
Other Assets 41,526 42,652 38,176
---------- ---------- ----------
TOTAL ASSETS $1,147,529 $1,129,803 $1,062,009
========== ========== ==========
LIABILITIES
Deposits
Noninterest-Bearing Demand $ 166,492 $ 168,654 $ 159,441
Interest-Bearing Demand 68,649 66,787 79,117
---------- ---------- ----------
235,141 235,441 238,558
---------- ---------- ----------
Savings and Money Market Accounts 135,897 135,784 149,176
---------- ---------- ----------
Time Deposits:
Certificates of Deposit of
$100 thousand or more 212,536 205,428 171,733
Certificates of Deposit of less
than $100 thousand 263,514 258,456 236,801
Brokered Certificates of Deposit 79,225 86,892 86,224
---------- ---------- ----------
555,275 550,776 494,758
---------- ---------- ----------
Total Deposits 926,313 922,001 882,492
Federal Funds Purchased and
Securities Sold under
Agreements to Repurchase 26,991 20,851 19,483
Security Deposits 3,704 3,920 4,369
Other Borrowings 31,928 24,838 8,147
Other Liabilities 12,194 13,405 9,377
---------- ---------- ----------
Total Liabilities 1,001,130 985,015 923,868
---------- ---------- ----------
STOCKHOLDERS' EQUITY
Common stock - $.01 par value
50,000,000 shares authorized as
of March 31, 2007, December 31,
2006 and March 31, 2006;
17,678,082 issued as of March 31,
2007; 17,762,278 issued as of
December 31, 2006; 17,573,707
issued as of March 31, 2006 123 123 122
Paid-In Surplus 123,448 124,293 121,832
Unallocated ESOP Shares (4,876) (5,094) (1,349)
Retained Earnings 27,827 26,337 19,425
Accumulated Other Comprehensive
Loss (123) (871) (1,889)
---------- ---------- ----------
Total Stockholders' Equity 146,399 144,788 138,141
---------- ---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,147,529 $1,129,803 $1,062,009
========== ========== ==========
First Security Group, Inc. and Subsidiary
Consolidated Statements of Income
(in thousands, except per share amounts)
Three Months Ended
March 31,
2007 2006
---------------------------------------------------------------------
(unaudited) (unaudited)
INTEREST INCOME
Loans, including fees $18,372 $15,619
Debt securities - taxable 1,013 1,277
Debt securities - non-taxable 410 381
Trading assets 284 --
Other 24 145
------- -------
Total Interest Income 20,103 17,422
------- -------
INTEREST EXPENSE
Interest Bearing Demand Deposits 125 159
Savings Deposits and Money Market Accounts 771 644
Certificates of Deposit of $100 thousand
or more 2,629 1,650
Certificates of Deposit of less than
$100 thousand 3,152 2,200
Brokered Certificates of Deposit 982 847
Other 580 157
------- -------
Total Interest Expense 8,239 5,657
------- -------
NET INTEREST INCOME 11,864 11,765
Provision for Loan Losses 417 543
------- -------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 11,447 11,222
------- -------
NONINTEREST INCOME
Service Charges on Deposit Accounts 1,140 1,153
Gain on Trading Assets, net 139 --
Other 1,658 1,283
------- -------
Total Noninterest Income 2,937 2,436
------- -------
NONINTEREST EXPENSE
Salaries and Employee Benefits 5,822 5,607
Expense on Premises and Fixed Assets, net of
rental income 1,627 1,665
Other 2,749 2,767
------- -------
Total Noninterest Expense 10,198 10,039
------- -------
INCOME BEFORE INCOME TAX PROVISION 4,186 3,619
Income Tax Provision 1,351 1,145
------- -------
NET INCOME $ 2,835 $ 2,474
======= =======
NET INCOME PER SHARE:
Net Income Per Share - basic $ 0.16 $ 0.14
Net Income Per Share - diluted $ 0.16 $ 0.14
First Security Group, Inc
Consolidated Financial Highlights
(unaudited)
(in thousands, except per share amounts
and full-time equivalent employees)
------------------------------------------------------------
1st Quarter 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
2007 2006 2006 2006 2006
---------- ---------- ---------- ---------- ----------
Earnings:
Net interest
income $ 11,864 $ 11,892 $ 12,156 $ 12,169 $ 11,765
Provision
for loan
losses $ 417 $ 441 $ 600 $ 600 $ 543
Non-interest
income $ 2,937 $ 2,739 $ 2,776 $ 2,666 $ 2,436
Non-interest
expense $ 10,198 $ 9,871 $ 10,031 $ 10,076 $ 10,039
Net income $ 2,835 $ 2,916 $ 2,906 $ 2,816 $ 2,474
Earnings -
Normalized:
Non-interest
operating
income(1) $ 2,937 $ 2,739 $ 2,776 $ 2,666 $ 2,436
Non-interest
operating ex-
pense(1) $ 10,198 $ 9,807 $ 10,031 $ 10,076 $ 10,039
Net operating
income, net
of tax(1) $ 2,835 $ 2,960 $ 2,906 $ 2,816 $ 2,474
Per Share
Data:
Net income,
basic $ 0.16 $ 0.17 $ 0.17 $ 0.16 $ 0.14
Net income,
diluted $ 0.16 $ 0.17 $ 0.16 $ 0.16 $ 0.14
Cash
dividends
declared $ 0.05 $ 0.05 $ 0.03 $ 0.03 $ 0.03
Book value $ 8.28 $ 8.15 $ 7.98 $ 7.85 $ 7.86
Tangible
book
value $ 6.52 $ 6.39 $ 6.20 $ 6.04 $ 6.04
Per Share
Data -
Normalized:
Net operating
income,
basic(1) $ 0.16 $ 0.17 $ 0.17 $ 0.16 $ 0.14
Net operating
income, di-
luted(1) $ 0.16 $ 0.17 $ 0.16 $ 0.16 $ 0.14
Performance
Ratios:
Return on
average
assets 1.00% 1.04% 1.06% 1.06% 0.95%
Return on
average
equity 7.78% 8.15% 8.31% 8.09% 7.11%
Return on
average
tangible
assets 1.02% 1.07% 1.09% 1.09% 0.98%
Return on
average
tangible
equity 9.90% 10.44% 10.74% 10.49% 9.21%
Net interest
margin,
taxable
equivalent 4.86% 4.84% 5.05% 5.27% 5.27%
Efficiency
ratio 68.90% 67.47% 67.18% 67.92% 70.69%
Non-interest
income to
net interest
income and
non-interest
income 19.84% 18.72% 18.59% 17.97% 17.15%
Performance
Ratios -
Normalized:
Operating
return on
average
assets(1) 1.00% 1.06% 1.06% 1.06% 0.95%
Operating
return on
average
equity(1) 7.78% 8.27% 8.31% 8.09% 7.11%
Operating
return on
average
tangible
assets(1) 1.02% 1.09% 1.09% 1.09% 0.98%
Operating
return on
average
tangible
equity(1) 9.90% 10.60% 10.74% 10.49% 9.21%
Core
efficiency
ratio(2) 66.09% 62.46% 63.84% 64.45% 66.07%
Capital &
Liquidity:
Total equity
to total
assets 12.76% 12.82% 12.75% 12.65% 13.01%
Tangible
equity to
tangible
assets 10.33% 10.33% 10.19% 10.03% 10.30%
Total loans
to total
deposits 93.27% 91.93% 90.39% 88.19% 86.87%
Asset Quality:
Net charge-
offs $ 211 $ 303 $ 914 $ 468 $ 531
Net loans
charged-
off to
average
loans,
annualized 0.10% 0.15% 0.45% 0.24% 0.28%
Non-accrual
loans $ 1,755 $ 2,653 $ 679 $ 696 $ 1,119
Other real
estate
owned $ 2,796 $ 1,982 $ 2,298 $ 1,986 $ 2,110
Repossessed
assets $ 1,734 $ 2,231 $ 1,556 $ 995 $ 1,251
Non-per-
forming
assets
(NPA) $ 6,285 $ 6,866 $ 4,533 $ 3,677 $ 4,480
NPA to
total
assets 0.55% 0.61% 0.41% 0.34% 0.42%
Loans 90
days past
due $ 1,640 $ 1,325 $ 1,593 $ 2,011 $ 904
NPA + loans
90 days
past due
to total
assets 0.69% 0.72% 0.55% 0.52% 0.51%
Allowance for
loan losses
to total
loans 1.18% 1.18% 1.19% 1.28% 1.32%
Allowance for
loan losses
to NPA 161.56% 145.21% 217.56% 277.54% 225.51%
Period End
Balances:
Loans $ 863,940 $ 847,593 $ 825,745 $ 800,213 $ 766,622
Intangible
assets $ 31,077 $ 31,341 $ 31,597 $ 31,729 $ 32,026
Assets $1,147,529 $1,129,803 $1,110,065 $1,089,332 $1,062,009
Deposits $ 926,313 $ 922,001 $ 913,585 $ 907,355 $ 882,492
Stock-
holders'
equity $ 146,399 $ 144,788 $ 141,544 $ 137,791 $ 138,141
Common stock
market capi-
taliza-
tion $ 201,176 $ 204,796 $ 204,434 $ 203,684 $ 194,193
Full-time
equivalent
employees 369 369 360 355 361
Shares
outstanding 17,678 17,762 17,746 17,559 17,574
Average
Balances:
Loans $ 855,569 $ 834,494 $ 812,611 $ 785,397 $ 753,872
Intangible
assets $ 31,220 $ 31,482 $ 31,635 $ 31,897 $ 31,784
Earning
assets $1,010,315 $ 996,189 $ 973,950 $ 948,049 $ 924,752
Assets $1,137,915 $1,120,233 $1,094,474 $1,066,523 $1,043,280
Deposits $ 920,718 $ 907,284 $ 897,739 $ 883,351 $ 860,499
Stock-
holders'
equity $ 145,778 $ 143,161 $ 139,872 $ 139,315 $ 139,281
Shares out-
standing,
basic - wtd 17,241 17,216 17,218 17,342 17,489
Shares out-
standing,
diluted
- wtd 17,641 17,600 17,629 17,759 17,852
YTD
March 31,
------------------------
2007 2006
---------- ----------
Earnings:
Net interest income $ 11,864 $ 11,765
Provision for loan losses $ 417 $ 543
Non-interest income $ 2,937 $ 2,436
Non-interest expense $ 10,198 $ 10,039
Net income $ 2,835 $ 2,474
Earnings - Normalized:
Non-interest operating income(1) $ 2,937 $ 2,436
Non-interest operating expense(1) $ 10,198 $ 10,039
Net operating income, net of tax(1) $ 2,835 $ 2,474
Per Share Data:
Net income, basic $ 0.16 $ 0.14
Net income, diluted $ 0.16 $ 0.14
Cash dividends declared $ 0.05 $ 0.03
Book value $ 8.28 $ 7.86
Tangible book value $ 6.52 $ 6.04
Per Share Data - Normalized:
Net operating income, basic(1) $ 0.16 $ 0.14
Net operating income, diluted(1) $ 0.16 $ 0.14
Performance Ratios:
Return on average assets 1.00% 0.95%
Return on average equity 7.78% 7.11%
Return on average tangible assets 1.02% 0.98%
Return on average tangible equity 9.90% 9.21%
Net interest margin, taxable equivalent 4.86% 5.27%
Efficiency ratio 68.90% 70.69%
Non-interest income to net interest
income and non-interest income 19.84% 17.15%
Performance Ratios - Normalized:
Operating return on average assets(1) 1.00% 0.95%
Operating return on average equity(1) 7.78% 7.11%
Operating return on average
tangible assets(1) 1.02% 0.98%
Operating return on average
tangible equity(1) 9.90% 9.21%
Core efficiency ratio(2) 66.09% 66.07%
Capital & Liquidity:
Total equity to total assets 12.76% 13.01%
Tangible equity to tangible assets 10.33% 10.30%
Total loans to total deposits 93.27% 86.87%
Asset Quality:
Net charge-offs $ 211 $ 531
Net loans charged-off to average loans,
annualized 0.10% 0.28%
Non-accrual loans $ 1,755 $ 1,119
Other real estate owned $ 2,796 $ 2,110
Repossessed assets $ 1,734 $ 1,251
Non-performing assets (NPA) $ 6,285 $ 4,480
NPA to total assets 0.55% 0.42%
Loans 90 days past due $ 1,640 $ 904
NPA + loans 90 days past due to total assets 0.69% 0.51%
Allowance for loan losses to total loans 1.18% 1.32%
Allowance for loan losses to NPA 161.56% 225.51%
Period End Balances:
Loans $ 863,940 $ 766,622
Intangible assets $ 31,077 $ 32,026
Assets $1,147,529 $1,062,009
Deposits $ 926,313 $ 882,492
Stockholders' equity $ 146,399 $ 138,141
Common stock market capitalization $ 201,176 $ 194,193
Full-time equivalent employees 369 361
Shares outstanding 17,678 17,574
Average Balances:
Loans $ 855,569 $ 753,872
Intangible assets $ 31,220 $ 31,784
Earning assets $1,010,315 $ 924,752
Assets $1,137,915 $1,043,280
Deposits $ 920,718 $ 860,499
Stockholders' equity $ 145,778 $ 139,281
Shares outstanding, basic - wtd 17,241 17,489
Shares outstanding, diluted - wtd 17,641 17,852
(1) These amounts and ratios are calculated using net operating
income (net of tax) which excludes certain non-recurring items.
Since these items and their impact on First Security's
performance are difficult to predict, management believes
presentation of financial measures excluding the impact of these
items provide useful supplemental information that is important
for a proper understanding of the operating results of First
Security's core business. Refer to the following non-GAAP
reconciliation table for a detail of the non-recurring items.
(2) In accordance with SNL Financial practice, the core efficiency
ratio is calculated on a fully tax equivalent basis excluding
non-recurring items (see footnote (1) 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)
-----------------------------------------------
1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
2007 2006 2006 2006 2006
------- ------- ------- ------- -------
Return on average
assets 1.00% 1.04% 1.06% 1.06% 0.95%
Effect of intangible
assets 0.02% 0.03% 0.03% 0.03% 0.03%
------- ------- ------- ------- -------
Return on average
tangible assets 1.02% 1.07% 1.09% 1.09% 0.98%
======= ======= ======= ======= =======
Return of average
equity 7.78% 8.15% 8.31% 8.09% 7.11%
Effect of intangible
assets 2.12% 2.29% 2.43% 2.40% 2.10%
------- ------- ------- ------- -------
Return on average
tangible equity 9.90% 10.44% 10.74% 10.49% 9.21%
======= ======= ======= ======= =======
Return on average
assets 1.00% 1.04% 1.06% 1.06% 0.95%
Effect of non-
recurring items -- 0.02% -- -- --
------- ------- ------- ------- -------
Operating return on
average assets 1.00% 1.06% 1.06% 1.06% 0.95%
Effect of average
intangible assets 0.02% 0.03% 0.03% 0.03% 0.03%
------- ------- ------- ------- -------
Operating return on
average tangible
assets 1.02% 1.09% 1.09% 1.09% 0.98%
======= ======= ======= ======= =======
Return on average
equity 7.78% 8.15% 8.31% 8.09% 7.11%
Effect of non-
recurring items -- 0.12% -- -- --
------- ------- ------- ------- -------
Operating return on
average equity 7.78% 8.27% 8.31% 8.09% 7.11%
Effect on average
intangible assets 2.12% 2.33% 2.43% 2.40% 2.10%
------- ------- ------- ------- -------
Operating return on
average tangible
equity 9.90% 10.60% 10.74% 10.49% 9.21%
======= ======= ======= ======= =======
Total equity to total
assets 12.76% 12.82% 12.75% 12.65% 13.01%
Effect of intangible
assets -2.43% -2.49% -2.56% -2.62% -2.71%
------- ------- ------- ------- -------
Tangible equity to
tangible assets 10.33% 10.33% 10.19% 10.03% 10.30%
======= ======= ======= ======= =======
Efficiency ratio 68.90% 67.47% 67.18% 67.92% 70.69%
Effect of non-
recurring items -- -0.44% -- -- --
Effect of non-cash
items -1.70% -3.44% -2.29% -2.23% -3.41%
Effect of net interest
income, tax equiva-
lent adjustment -1.11% -1.13% -1.05% -1.24% -1.21%
------- ------- ------- ------- -------
Core efficiency ratio 66.09% 62.46% 63.84% 64.45% 66.07%
======= ======= ======= ======= =======
Non-interest income $ 2,937 $ 2,739 $ 2,776 $ 2,666 $ 2,436
------- ------- ------- ------- -------
Non-interest
operating income $ 2,937 $ 2,739 $ 2,776 $ 2,666 $ 2,436
======= ======= ======= ======= =======
Non-interest expense $10,198 $ 9,871 $10,031 $10,076 $10,039
Corporate head-
quarters relocation
costs -- (64) -- -- --
------- ------- ------- ------- -------
Non-interest operating
expense $10,198 $ 9,807 $10,031 $10,076 $10,039
======= ======= ======= ======= =======
Net income $ 2,835 $ 2,916 $ 2,906 $ 2,816 $ 2,474
Non-recurring
expenses, net of tax -- 44 -- -- --
------- ------- ------- ------- -------
Net operating income,
net of tax $ 2,835 $ 2,960 $ 2,906 $ 2,816 $ 2,474
======= ======= ======= ======= =======
Per Share Data
Book value $ 8.28 $ 8.15 $ 7.98 $ 7.85 $ 7.86
Effect of intangible
assets (1.76) (1.76) (1.78) (1.81) (1.82)
------- ------- ------- ------- -------
Tangible book value $ 6.52 $ 6.39 $ 6.20 $ 6.04 $ 6.04
======= ======= ======= ======= =======
Net income, basic $ 0.16 $ 0.17 $ 0.17 $ 0.16 $ 0.14
Effect of extra-
ordinary and non-
recurring items,
net of tax -- -- -- -- --
------- ------- ------- ------- -------
Net operating income,
basic $ 0.16 $ 0.17 $ 0.17 $ 0.16 $ 0.14
======= ======= ======= ======= =======
Net income, diluted $ 0.16 $ 0.17 $ 0.16 $ 0.16 $ 0.14
Effect of extra-
ordinary and non-
recurring items, net
of tax -- -- -- -- --
------- ------- ------- ------- -------
Net operating income,
diluted $ 0.16 $ 0.17 $ 0.16 $ 0.16 $ 0.14
======= ======= ======= ======= =======
Supplemental Data (in thousands)
-----------------------------------------------
Allowance for loan
losses $10,154 $ 9,970 $ 9,862 $10,205 $10,103
Net interest income,
tax equivalent $12,107 $12,152 $12,398 $12,453 $12,022
Amortization of
intangibles $ 265 $ 256 $ 323 $ 326 $ 341
(Gain) Loss on sales
of available-for-sale
securities and
corporate stock, net$ -- $ (7) $ -- $ -- $ --
(Gain) Loss on trading
assets, net $ (139) $ -- $ -- $ -- $ --
Gain on foreclosed and
repossessed property,
leased equipment, and
premises and
equipment $ (188) $ (178) $ (219) $ (121) $ (100)
Losses on foreclosed
and repossessed
property and premises
and equipment $ 7 $ 301 $ 63 $ 39 $ 11
Write-downs on
foreclosed and
repossessed property $ 199 $ 64 $ 98 $ 45 $ 200
(in thousands, except
per share data)
-------------------
Year-to-Date
March 31,
2007 2006
------- -------
Return on average assets 1.00% 0.95%
Effect of intangible assets 0.02% 0.03%
------- -------
Return on average tangible assets 1.02% 0.98%
======= =======
Return of average equity 7.78% 7.11%
Effect of intangible assets 2.12% 2.10%
------- -------
Return on average tangible equity 9.90% 9.21%
======= =======
Return on average assets 1.00% 0.95%
Effect of non-recurring items -- --
------- -------
Operating return on average assets 1.00% 0.95%
Effect of average intangible assets 0.02% 0.03%
------- -------
Operating return on average tangible assets 1.02% 0.98%
======= =======
Return on average equity 7.78% 7.11%
Effect of non-recurring items -- --
------- -------
Operating return on average equity 7.78% 7.11%
Effect on average intangible assets 2.12% 2.10%
------- -------
Operating return on average tangible equity 9.90% 9.21%
======= =======
Total equity to total assets 12.76% 13.01%
Effect of intangible assets -2.43% -2.71%
------- -------
Tangible equity to tangible assets 10.33% 10.30%
======= =======
Efficiency ratio 68.90% 70.69%
Effect of non-recurring items -- --
Effect of non-cash items -1.70% -3.41%
Effect of net interest income,
tax equivalent adjustment -1.11% -1.21%
------- -------
Core efficiency ratio 66.09% 66.07%
======= =======
Non-interest income $ 2,937 $ 2,436
------- -------
Non-interest operating income $ 2,937 $ 2,436
======= =======
Non-interest expense $10,198 $10,039
Corporate headquarters relocation costs -- --
------- -------
Non-interest operating expense $10,198 $10,039
======= =======
Net income $ 2,835 $ 2,474
Non-recurring expenses, net of tax -- --
------- -------
Net operating income, net of tax $ 2,835 $ 2,474
======= =======
Per Share Data
Book value $ 8.28 $ 7.86
Effect of intangible assets (1.76) (1.82)
------- -------
Tangible book value $ 6.52 $ 6.04
======= =======
Net income, basic $ 0.16 $ 0.14
Effect of extraordinary and
non-recurring items, net of tax -- --
------- -------
Net operating income, basic $ 0.16 $ 0.14
======= =======
Net income, diluted $ 0.16 $ 0.14
Effect of extraordinary and
non-recurring items, net of tax -- --
------- -------
Net operating income, diluted $ 0.16 $ 0.14
======= =======
Supplemental Data (in thousands)
-------------------
Allowance for loan losses $10,154 $10,103
Net interest income, tax equivalent $12,107 $12,022
Amortization of intangibles $ 265 $ 341
(Gain) Loss on sales of available-
for-sale securities and corporate stock, net $ -- $ --
(Gain) Loss on trading assets, net $ (139) $ --
Gain on foreclosed and repossessed property,
leased equipment, and premises and equipment $ (188) $ (100)
Losses on foreclosed and repossessed property
and premises and equipment $ 7 $ 11
Write-downs on foreclosed and repossessed
property $ 199 $ 200