CHATTANOOGA, Tenn., Oct. 23, 2007 (PRIME NEWSWIRE) -- First Security Group, Inc. (Nasdaq:FSGI), a community bank holding company serving middle and east Tennessee and north Georgia, today reported third quarter 2007 net income of $3.0 million, an increase of 4.0 percent from the $2.9 million reported for the third quarter of 2006. Earnings per diluted share were $0.18, up 12.5 percent from the $0.16 reported for the 2006 third quarter. Compared with the second quarter of 2007, net income and diluted earnings per share increased 4.6 percent and 5.9 percent, respectively.
For the first nine months of 2007, First Security reported net income of $8.7 million, an increase of 6.7 percent from the $8.2 million reported in the prior-year period. Diluted earnings per share were $0.50, up 8.7 percent from the first nine months of 2006.
Highlights of the third quarter include:
-- Loans grew $114.3 million, or 13.8 percent, over the twelve-month
period to $940.0 million at September 30, 2007. Third quarter loans
grew $30.8 million, or 3.4 percent (13.6 percent annualized), from
the second quarter of this year; growth was led by commercial real
estate (CRE) loans and commercial and industrial (C&I) loans, which
accounted for $24.4 million of the increase. Construction and
development (C&D) loans, consumer loans and residential real estate
loans rounded out the growth for the quarter.
-- Non-interest income remains an important component of First
Security's revenue stream, accounting for 19.8 percent of total
quarterly revenue. Third quarter non-interest income increased $318
thousand, or 11.5 percent, over the prior-year third quarter, and
$272 thousand, or 9.6 percent, from the previous quarter, excluding
the $168 thousand loss on trading assets incurred during the second
quarter of 2007.
-- First Security continues to improve operating efficiencies.
Non-interest expense was $10.6 million for the third quarter, up
5.2 percent from the year-ago quarter, and 3.4 percent from the
linked quarter. The core efficiency ratio improved for the second
consecutive quarter to 64.68 percent due to revenue growth and
non-interest expense control.
-- Nonperforming assets plus delinquencies increased to $7.4 million,
or 0.62 percent of total assets at period end, compared with $6.3
million, or 0.54 percent of total assets at June 30, 2007. Net
charge-offs were $298 thousand, or an annualized 0.13 percent of
average loans.
-- First Security repurchased 228 thousand shares of its common stock
through the open market during the third quarter of 2007 at an
average cost of $10.22 per share. These purchases were conducted
through and concluded the December 2006 board-authorized, share
repurchase plan.
-- On August 22, 2007, First Security's board of directors authorized
the repurchase of up to an additional 500,000 shares of common
stock. Approval of the plan took into account current economic and
market conditions and the strong capital position of First
Security. Repurchases under the August plan began in October 2007.
Rodger B. Holley, Chairman and CEO of First Security, commented, "With the wide-sweeping changes that have impacted the banking industry over the past twelve months and in light of the current operating environment, we believe that our results for the third quarter were a positive accomplishment. The increase in earnings reflected our efforts across the board; we continued growing our loan portfolio with quality loans, and we continued diversifying our revenue stream by increasing fee income, which, coupled with our non-interest expense control, helped counter the impact of a lower net interest margin."
Total revenue, comprised of net interest income and non-interest income, was $15.6 million for the third quarter of 2007, an increase of $688 thousand, or 4.6 percent, over the third quarter of 2006. Net interest income was $12.5 million, a 3.0 percent increase over the year-ago period. Results reflect an 8.2 percent increase in average earning assets to $1.1 billion, partially offset by a 25 basis point decline in the net interest margin to 4.80 percent. Compared with the previous quarter, net interest income rose 2.4 percent, reflecting a 3.5 percent (13.8 percent annualized) increase in average earning assets, partially offset by an 11 basis point decline in the margin. Mr. Holley commented, "The quarter-over-quarter decline in our margin resulted primarily from a higher cost of funding; we had to rely on CDs and overnight borrowings to fund our loan growth, and this cost our margin approximately 10 basis points. While our loan yield declined by five basis points, our yield on average earning assets remained unchanged from the previous quarter at 8.21 percent."
Non-interest income for the third quarter of 2007 was $3.1 million, up $318 thousand, or 11.5 percent, from the prior-year third quarter. Year-over-year growth resulted primarily from a $142 thousand increase in total deposit fees due to higher fees charged combined with increased transaction volume, and from the continued growth in trust fees, which increased $84 thousand. Compared with the linked quarter, non-interest income rose $440 thousand, or 16.6 percent; excluding the $168 thousand loss on trading assets during the second quarter of 2007, third quarter non-interest income increased $272 thousand, or 9.6 percent. Total fees on deposits were once again a growth driver, increasing $70 thousand from the previous quarter. First Security also experienced an increase in gains on sales of leased and repossessed assets of $142 thousand in the third quarter.
Non-interest expense for the third quarter was $10.6 million, an increase of $525 thousand, or 5.2 percent, from the prior-year quarter. Salaries and benefits increased $276 thousand, or 4.9 percent, year over year, accounting for the majority of the increase, and reflecting the addition of 13 full-time equivalent (FTE) employees over the past twelve months to 373 at period end. Compared with the second quarter of 2007, third quarter non-interest expense rose $343 thousand, or 3.4 percent. The greatest impact was from a $125 thousand increase in losses on foreclosed real estate and repossessed equipment, which partially offset the gains in non-interest income. Salaries and benefits rose $107 thousand, or 1.8 percent, during the quarter; while the number of FTE employees declined by two from the end of the second quarter, the average number of FTE employees increased by four from 370.7 in the second quarter to 374.7 in the third quarter. Also impacting the third quarter was implementation of the new FDIC insurance premium assessments, included in other expense, which increased $59 thousand to $87 thousand from the second quarter of 2007 level of $28 thousand; a quarterly fee of approximately $150 thousand will apply going forward.
The third quarter 2007 core efficiency ratio was 64.68 percent, compared with 63.84 percent for the third quarter of 2006. Compared with the linked quarter, First Security's efficiency ratio improved by 27 basis points. For the first nine months of 2007 and 2006, the efficiency ratio was 65.23 percent and 64.87 percent, respectively.
First Security's overall asset quality remains sound. Third quarter net charge-offs were $298 thousand, or an annualized 0.13 percent of average loans, compared with $201 thousand, or an annualized 0.09 percent of loans, in the previous quarter, and $914 thousand, or an annualized 0.45 percent of loans, reported for the year-ago quarter. Non-performing assets plus delinquencies were $7.4 million, or 0.62 percent of total assets, at September 30, 2007, compared with $6.3 million, or 0.54 percent of total assets, at June 30, 2007, and $6.1 million, or 0.55 percent of total assets, for the year-ago period. Other real estate owned accounted for $2.6 million of non-performing assets, up $632 thousand from the previous quarter. The increase was attributable to a single foreclosed property on which construction is almost complete, and the market value is well above First Security's cost per square foot. Repossessed assets accounted for $2.5 million of non-performing assets; the majority of these assets are leased equipment whose value is carried at the lower of cost or market value. Loan loss reserves were 1.13 percent of total loans at September 30, 2007.
Total assets were $1.2 billion at September 30, 2007, an increase of $88.4 million, or 8.0 percent, over the third quarter of 2006. Loans grew $114.3 million, or 13.8 percent, over the twelve-month period to $940.0 million; third quarter loan growth was $30.8 million, or 3.4 percent (13.6 percent annualized). Both year-over-year loan growth and third quarter loan growth were balanced among the sectors that First Security serves, preserving its highly diversified portfolio. C&D loans were the primary source of twelve-month growth, up 34.5 percent over the third quarter of 2006. During the third quarter of 2007, C&D loan growth slowed to 1.9 percent (7.5 percent annualized). CRE loans were the second largest contributor to loan growth, increasing $33.0 million, or 18.9 percent over the past twelve months; CRE loan growth accelerated during the third quarter of 2007, increasing $16.2 million, or 33.9 percent annualized, and accounting for 52.5 percent of total loan growth for the quarter. C&I loans and residential real estate loans rounded out the year-over-year loan growth, increasing $22.6 million and $18.3 million, respectively. At period end, residential real estate loans remained the largest component of the loan portfolio, accounting for 27.4 percent of loans, followed by C&D (22.5 percent), CRE (22.1 percent), and C&I (14.9 percent).
At period end, total deposits were $941.0 million, an increase of $27.4 million, or 3.0 percent, from the prior-year third quarter; excluding brokered deposits, First Security's in-market deposits increased $31.2 million, or 3.8 percent. Compared with the second quarter of 2007, First Security's third quarter in-market deposits decreased $9.4 million, or 1.1 percent (4.3 percent annualized); accordingly, brokered deposits increased $24.8 million, or 42.4 percent, to continue funding loan growth.
Core deposits (demand, savings, money market and retail time deposits) were $634.1 million at September 30, 2007, a $1.2 million, or 0.2 percent, increase over the prior-year period. Average core deposits increased $11.8 million, or 1.9 percent, from the third quarter of 2006 to the third quarter of 2007. Average core deposits in the third quarter of 2007 increased $3.7 million, or 0.6 percent (2.3 percent annualized), as compared to the linked quarter. The quarter-end decrease of $11.6 million from June 30, 2007 was caused by an outflow of funds in the last few days of September; this was temporary in nature, and therefore, the average balance is more representative of First Security's performance in growing core deposits.
Shareholders' equity at September 30, 2007 was $148.1 million, a twelve-month increase of $6.5 million, or 4.6 percent. First Security's tangible leverage ratio remained strong at quarter-end at 10.1 percent; 13 basis points below the year-ago level and reflecting a positive trend to leverage excess capital. At quarter-end, First Security had 17,274,728 shares of common stock outstanding, reflecting the repurchase of 228 thousand shares of common stock in the third quarter.
Mr. Holley concluded, "We continue to benefit from the expertise of our highly experienced lenders functioning in one of the more stable economic regions of the nation; our loan pipeline is strong, our asset quality is solid, and accordingly, we are cautiously optimistic about our outlook for the fourth quarter."
Web Cast and Conference Call Information
First Security's executive management team will host a conference call and simultaneous web cast on Tuesday, October 23 at 3:00 PM Eastern Time to discuss third quarter 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 will be archived on the First Security's website for one month.
About First Security Group, Inc.
First Security Group, Inc. is a bank holding company headquartered in Chattanooga, Tennessee with $1.2 billion in assets. Founded in 1999, First Security's community bank subsidiary, FSGBank, N.A. has 40 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.
The First Security Group, Inc. logo is available at http://www.primenewswire.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 September 30, December 31, September 30,
(in thousands, except share 2007 2006 2006
data) (unaudited) (unaudited)
---------------------------------------------------------------------
ASSETS
Cash & Due from Banks $ 32,088 $ 26,512 $ 25,500
Federal Funds Sold and
Securities Purchased under
Agreements to Resell -- 1,600 --
---------- ---------- ----------
Cash and Cash Equivalents 32,088 28,112 25,500
---------- ---------- ----------
Interest-Bearing Deposits
in Bank 779 481 2,888
---------- ---------- ----------
Securities Available-for-Sale 126,927 153,759 159,727
---------- ---------- ----------
Loans Held for Sale 5,412 7,524 5,125
Loans 934,613 840,069 820,620
---------- ---------- ----------
Total Loans 940,025 847,593 825,745
Less: Allowance for Loan
Losses 10,635 9,970 9,862
---------- ---------- ----------
929,390 837,623 815,883
---------- ---------- ----------
Premises and Equipment, net 35,360 35,835 33,939
---------- ---------- ----------
Goodwill 27,156 27,156 27,156
---------- ---------- ----------
Intangible Assets 3,423 4,185 4,441
---------- ---------- ----------
Other Assets 43,303 42,652 40,531
---------- ---------- ----------
TOTAL ASSETS $1,198,426 $1,129,803 $1,110,065
========== ========== ==========
LIABILITIES
Deposits
Noninterest-Bearing Demand $ 164,880 $ 168,654 $ 176,544
Interest-Bearing Demand 60,448 66,787 66,541
---------- ---------- ----------
225,328 235,441 243,085
---------- ---------- ----------
Savings and Money Market
Accounts 140,448 135,784 137,859
---------- ---------- ----------
Time Deposits:
Certificates of Deposit of
$100 thousand or more 223,744 205,428 193,758
Certificates of Deposit of
less than $100 thousand 268,347 258,456 251,939
Brokered Certificates of
Deposit 83,121 86,892 86,944
---------- ---------- ----------
575,212 550,776 532,641
---------- ---------- ----------
Total Deposits 940,988 922,001 913,585
Federal Funds Purchased and
Securities Sold under
Agreements to Repurchase 31,702 20,851 30,377
Security Deposits 3,059 3,920 4,170
Other Borrowings 58,052 24,838 8,141
Other Liabilities 16,555 13,405 12,248
---------- ---------- ----------
Total Liabilities 1,050,356 985,015 968,521
---------- ---------- ----------
STOCKHOLDERS' EQUITY
Common stock - $.01 par
value 50,000,000 shares
authorized as of
September 30, 2007,
December 31, 2006 and
September 30, 2006;
17,274,728 issued as of
September 30, 2007;
17,762,278 issued as of
December 31, 2006;
17,746,278 issued as of
September 30, 2006 120 123 123
Paid-In Surplus 119,466 124,293 124,097
Unallocated ESOP Shares (4,515) (5,094) (5,562)
Retained Earnings 32,027 26,337 24,264
Accumulated Other
Comprehensive Income (Loss) 972 (871) (1,378)
---------- ---------- ----------
Total Stockholders' Equity 148,070 144,788 141,544
---------- ---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,198,426 $1,129,803 $1,110,065
========== ========== ==========
First Security Group, Inc. and Subsidiary
Consolidated Statements of Income
(unaudited) Three Months Ended Nine Months Ended
(in thousands, except per September 30, September 30,
share amounts) 2007 2006 2007 2006
---------------------------------------------------------------------
INTEREST INCOME
Loans, including fees $20,086 $17,611 $57,551 $50,002
Debt Securities - taxable 1,027 1,330 3,060 3,920
Debt Securities -
non-taxable 403 397 1,218 1,166
Trading Assets -- -- 342 --
Other 44 46 102 258
------- ------- ------- -------
Total Interest Income 21,560 19,384 62,273 55,346
------- ------- ------- -------
INTEREST EXPENSE
Interest Bearing Demand
Deposits 158 142 415 464
Savings Deposits and
Money Market Accounts 814 759 2,363 2,111
Certificates of Deposit
of $100 thousand or more 2,905 2,276 8,286 5,870
Certificates of Deposit
of less than $100
thousand 3,359 2,742 9,765 7,378
Brokered Certificates of
Deposit 961 936 2,796 2,690
Other 837 373 2,022 743
------- ------- ------- -------
Total Interest Expense 9,034 7,228 25,647 19,256
------- ------- ------- -------
NET INTEREST INCOME 12,526 12,156 36,626 36,090
Provision for Loan Losses 576 600 1,409 1,743
------- ------- ------- -------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 11,950 11,556 35,217 34,347
------- ------- ------- -------
NONINTEREST INCOME
Service Charges on
Deposit Accounts 1,371 1,229 3,812 3,594
Loss on Trading Assets, net -- -- (29) --
Other 1,723 1,547 4,902 4,284
------- ------- ------- -------
Total Noninterest
Income 3,094 2,776 8,685 7,878
------- ------- ------- -------
NONINTEREST EXPENSE
Salaries and Employee
Benefits 5,930 5,654 17,575 16,769
Expense on Premises and
Fixed Assets, net of
rental income 1,769 1,655 5,095 5,045
Other 2,857 2,722 8,297 8,332
------- ------- ------- -------
Total Noninterest
Expense 10,556 10,031 30,967 30,146
------- ------- ------- -------
INCOME BEFORE INCOME TAX
PROVISION 4,488 4,301 12,935 12,079
Income Tax Provision 1,466 1,395 4,190 3,883
------- ------- ------- -------
NET INCOME $ 3,022 $ 2,906 $ 8,745 $ 8,196
======= ======= ======= =======
NET INCOME PER SHARE:
Net Income Per Share -
basic $ 0.18 $ 0.17 $ 0.51 $ 0.47
Net Income Per Share -
diluted $ 0.18 $ 0.16 $ 0.50 $ 0.46
First Security Group, Inc. and Subsidiary
Consolidated Financial Highlights
(unaudited)
(in thousands, except per share amounts and
full-time equivalent employees)
3rd 2nd 1st 4th 3rd
Quarter Quarter Quarter Quarter Quarter
2007 2007 2007 2006 2006
---------- ---------- ---------- ---------- ----------
Earnings:
Net interest
income $ 12,526 $ 12,236 $ 11,864 $ 11,892 $ 12,156
Provision
for loan
losses $ 576 $ 416 $ 417 $ 441 $ 600
Non-interest
income $ 3,094 $ 2,654 $ 2,937 $ 2,739 $ 2,776
Non-interest
expense $ 10,556 $ 10,213 $ 10,198 $ 9,871 $ 10,031
Net income $ 3,022 $ 2,888 $ 2,835 $ 2,916 $ 2,906
Earnings -
Normalized
Non-interest
operating
income
(1) $ 3,094 $ 2,654 $ 2,937 $ 2,739 $ 2,776
Non-interest
operating
expense
(1) $ 10,556 $ 10,213 $ 10,198 $ 9,807 $ 10,031
Net operating
income,
net of tax
(1) $ 3,022 $ 2,888 $ 2,835 $ 2,960 $ 2,906
Per Share
Data:
Net income,
basic $ 0.18 $ 0.17 $ 0.16 $ 0.17 $ 0.17
Net income,
diluted $ 0.18 $ 0.17 $ 0.16 $ 0.17 $ 0.16
Cash
dividends
declared $ 0.05 $ 0.05 $ 0.05 $ 0.05 $ 0.03
Book value $ 8.57 $ 8.28 $ 8.28 $ 8.15 $ 7.98
Tangible
book
value $ 6.80 $ 6.52 $ 6.52 $ 6.39 $ 6.20
Per Share
Data -
Normalized:
Net operating
income,
basic
(1) $ 0.18 $ 0.17 $ 0.16 $ 0.17 $ 0.17
Net operating
income,
diluted
(1) $ 0.18 $ 0.17 $ 0.16 $ 0.17 $ 0.16
Performance
Ratios:
Return on
average
assets 1.03% 1.01% 1.00% 1.04% 1.06%
Return on
average
equity 8.27% 7.89% 7.78% 8.15% 8.31%
Return on
average
tangible
assets 1.05% 1.04% 1.02% 1.07% 1.09%
Return on
average
tangible
equity 10.48% 10.01% 9.90% 10.44% 10.74%
Net interest
margin,
taxable
equivalent 4.80% 4.91% 4.86% 4.84% 5.05%
Efficiency
ratio 67.58% 68.59% 68.90% 67.47% 67.18%
Non-interest
income
to net
interest
income and
non-interest
income 19.81% 17.82% 19.84% 18.72% 18.59%
Performance
Ratios -
Normalized:
Operating
return on
average
assets (1) 1.03% 1.01% 1.00% 1.06% 1.06%
Operating
return on
average
equity (1) 8.27% 7.89% 7.78% 8.27% 8.31%
Operating
return on
average
tangible
assets (1) 1.05% 1.04% 1.02% 1.09% 1.09%
Operating
return on
average
tangible
equity (1) 10.48% 10.01% 9.90% 10.60% 10.74%
Core
efficiency
ratio (2) 64.68% 64.95% 66.09% 62.46% 63.84%
Capital &
Liquidity:
Total
equity to
total assets 12.36% 12.51% 12.76% 12.82% 12.75%
Tangible
equity to
tangible
assets 10.06% 10.12% 10.33% 10.33% 10.19%
Total loans
to total
deposits 99.90% 98.22% 93.27% 91.93% 90.39%
Asset
Quality:
Net charge-
offs $ 298 $ 201 $ 211 $ 303 $ 914
Net loans
charged-off
to average
loans,
annualized 0.13% 0.09% 0.10% 0.15% 0.45%
Non-accrual
loans $ 1,687 $ 938 $ 1,755 $ 2,653 $ 679
Other real
estate
owned $ 2,646 $ 2,014 $ 2,796 $ 1,982 $ 2,298
Repossessed
assets $ 2,489 $ 1,707 $ 1,734 $ 2,231 $ 1,556
Non-performing
assets
(NPA) $ 6,822 $ 4,659 $ 6,285 $ 6,866 $ 4,533
NPA to
total
assets 0.57% 0.40% 0.55% 0.61% 0.41%
Loans 90
days past
due $ 585 $ 1,639 $ 1,640 $ 1,325 $ 1,593
NPA + loans
90 days
past due
to total
assets 0.62% 0.54% 0.69% 0.72% 0.55%
Allowance
for loan
losses to
total loans 1.13% 1.14% 1.18% 1.18% 1.19%
Allowance
for loan
losses to
NPA 155.89% 222.43% 161.56% 145.21% 217.56%
Period End
Balances:
Loans $ 940,025 $ 909,177 $ 863,940 $ 847,593 $ 825,745
Intangible
assets $ 30,579 $ 30,822 $ 31,077 $ 31,341 $ 31,597
Assets $1,198,426 $1,157,919 $1,147,529 $1,129,803 $1,110,065
Deposits $ 940,988 $ 925,628 $ 926,313 $ 922,001 $ 913,585
Stockholders'
equity $ 148,070 $ 144,894 $ 146,399 $ 144,788 $ 141,544
Common stock
market
capitaliz-
ation $ 172,750 $ 188,978 $ 201,176 $ 204,796 $ 204,434
Full-time
equivalent
employees 373 375 369 369 360
Shares
outstanding 17,275 17,498 17,678 17,762 17,746
Average
Balances:
Loans $ 926,216 $ 884,383 $ 855,569 $ 834,494 $ 812,611
Intangible
assets $ 30,708 $ 30,958 $ 31,220 $ 31,482 $ 31,635
Earning
assets $1,053,908 $1,018,666 $1,010,315 $ 996,189 $ 973,950
Assets $1,178,298 $1,141,946 $1,137,915 $1,120,233 $1,094,474
Deposits $ 934,034 $ 917,215 $ 920,718 $ 907,284 $ 897,739
Stockholders'
equity $ 146,101 $ 146,412 $ 145,778 $ 143,161 $ 139,872
Shares
outstanding,
basic -
wtd 16,901 17,117 17,241 17,216 17,218
Shares
outstanding,
diluted -
wtd 17,223 17,482 17,641 17,600 17,629
Year-to-Date Year-to-Date
September 30, September 30,
2007 2006
---------- ----------
Earnings:
Net interest income $ 36,626 $ 36,090
Provision for loan losses $ 1,409 $ 1,743
Non-interest income $ 8,685 $ 7,878
Non-interest expense $ 30,967 $ 30,146
Net income $ 8,745 $ 8,196
Earnings - Normalized
Non-interest operating income (1) $ 8,685 $ 7,878
Non-interest operating expense (1) $ 30,967 $ 30,146
Net operating income, net of tax (1) $ 8,745 $ 8,196
Per Share Data:
Net income, basic $ 0.51 $ 0.47
Net income, diluted $ 0.50 $ 0.46
Cash dividends declared $ 0.15 $ 0.08
Book value $ 8.57 $ 7.98
Tangible book value $ 6.80 $ 6.20
Per Share Data - Normalized:
Net operating income, basic (1) $ 0.51 $ 0.47
Net operating income, diluted (1) $ 0.50 $ 0.46
Performance Ratios:
Return on average assets 1.01% 1.02%
Return on average equity 7.98% 7.83%
Return on average tangible assets 1.04% 1.05%
Return on average tangible equity 10.13% 10.14%
Net interest margin, taxable equivalent 4.86% 5.18%
Efficiency ratio 68.34% 68.56%
Non-interest income to net interest income
and non-interest income 19.17% 17.92%
Performance Ratios - Normalized:
Operating return on average assets (1) 1.01% 1.02%
Operating return on average equity (1) 7.98% 7.83%
Operating return on average tangible
assets (1) 1.04% 1.05%
Operating return on average tangible
equity (1) 10.13% 10.14%
Core efficiency ratio (2) 65.23% 64.87%
Capital & Liquidity:
Total equity to total assets 12.36% 12.75%
Tangible equity to tangible assets 10.06% 10.19%
Total loans to total deposits 99.90% 90.39%
Asset Quality:
Net charge-offs $ 710 $ 1,913
Net loans charged-off to average loans,
annualized 0.11% 0.33%
Non-accrual loans $ 1,687 $ 679
Other real estate owned $ 2,646 $ 2,298
Repossessed assets $ 2,489 $ 1,556
Non-performing assets (NPA) $ 6,822 $ 4,533
NPA to total assets 0.57% 0.41%
Loans 90 days past due $ 585 $ 1,593
NPA + loans 90 days past due to total
assets 0.62% 0.55%
Allowance for loan losses to total loans 1.13% 1.19%
Allowance for loan losses to NPA 155.89% 217.56%
Period End Balances:
Loans $ 940,025 $ 825,745
Intangible assets $ 30,579 $ 31,597
Assets $1,198,426 $1,110,065
Deposits $ 940,988 $ 913,585
Stockholders' equity $ 148,070 $ 141,544
Common stock market capitalization $ 172,750 $ 204,434
Full-time equivalent employees 373 360
Shares outstanding 17,275 17,746
Average Balances:
Loans $ 888,934 $ 784,185
Intangible assets $ 30,960 $ 31,772
Earning assets $1,027,745 $ 949,096
Assets $1,152,823 $1,068,280
Deposits $ 924,044 $ 880,591
Stockholders' equity $ 146,062 $ 139,559
Shares outstanding, basic - wtd 17,085 17,349
Shares outstanding, diluted - wtd 17,447 17,741
(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.
Non-GAAP Reconciliation Table
(in thousands, except per share data)
3rd 2nd 1st 4th 3rd
Quarter Quarter Quarter Quarter Quarter
2007 2007 2007 2006 2006
------- ------- ------- ------- -------
Return on average assets 1.03% 1.01% 1.00% 1.04% 1.06%
Effect of intangible
assets 0.02% 0.03% 0.02% 0.03% 0.03%
------- ------- ------- ------- -------
Return on average
tangible assets 1.05% 1.04% 1.02% 1.07% 1.09%
======= ======= ======= ======= =======
Return of average equity 8.27% 7.89% 7.78% 8.15% 8.31%
Effect of intangible
assets 2.21% 2.12% 2.12% 2.29% 2.43%
------- ------- ------- ------- -------
Return on average
tangible equity 10.48% 10.01% 9.90% 10.44% 10.74%
======= ======= ======= ======= =======
Return on average assets 1.03% 1.01% 1.00% 1.04% 1.06%
Effect of non-recurring
items -- -- -- 0.02% --
------- ------- ------- ------- -------
Operating return on
average assets 1.03% 1.01% 1.00% 1.06% 1.06%
Effect of average
intangible assets 0.02% 0.03% 0.02% 0.03% 0.03%
------- ------- ------- ------- -------
Operating return on
average tangible assets 1.05% 1.04% 1.02% 1.09% 1.09%
======= ======= ======= ======= =======
Return on average equity 8.27% 7.89% 7.78% 8.15% 8.31%
Effect of non-recurring
items -- -- -- 0.12% --
------- ------- ------- ------- -------
Operating return on
average equity 8.27% 7.89% 7.78% 8.27% 8.31%
Effect on average
intangible assets 2.21% 2.12% 2.12% 2.33% 2.43%
------- ------- ------- ------- -------
Operating return on
average tangible equity 10.48% 10.01% 9.90% 10.60% 10.74%
======= ======= ======= ======= =======
Total equity to total
assets 12.36% 12.51% 12.76% 12.82% 12.75%
Effect of intangible
assets -2.30% -2.39% -2.43% -2.49% -2.56%
------- ------- ------- ------- -------
Tangible equity to
tangible assets 10.06% 10.12% 10.33% 10.33% 10.19%
======= ======= ======= ======= =======
Efficiency ratio 67.58% 68.59% 68.90% 67.47% 67.18%
Effect of
non-recurring items -- -- -- -0.44% --
Effect of non-cash items -1.91% -2.61% -1.70% -3.44% -2.29%
Effect of net interest
income, tax equivalent
adjustment -0.99% -1.03% -1.11% -1.13% -1.05%
------- ------- ------- ------- -------
Core efficiency ratio 64.68% 64.95% 66.09% 62.46% 63.84%
======= ======= ======= ======= =======
Non-interest income $ 3,094 $ 2,654 $ 2,937 $ 2,739 $ 2,776
------- ------- ------- ------- -------
Non-interest operating
income $ 3,094 $ 2,654 $ 2,937 $ 2,739 $ 2,776
======= ======= ======= ======= =======
Non-interest expense $10,556 $10,213 $10,198 $ 9,871 $10,031
Corporate headquarters
relocation costs -- -- -- (64) --
------- ------- ------- ------- -------
Non-interest operating
expense $10,556 $10,213 $10,198 $ 9,807 $10,031
======= ======= ======= ======= =======
Net income $ 3,022 $ 2,888 $ 2,835 $ 2,916 $ 2,906
Non-recurring expenses,
net of tax -- -- -- 44 --
------- ------- ------- ------- -------
Net operating income,
net of tax $ 3,022 $ 2,888 $ 2,835 $ 2,960 $ 2,906
======= ======= ======= ======= =======
Per Share Data
Book value $ 8.57 $ 8.28 $ 8.28 $ 8.15 $ 7.98
Effect of intangible
assets (1.77) (1.76) (1.76) (1.76) (1.78)
------- ------- ------- ------- -------
Tangible book value $ 6.80 $ 6.52 $ 6.52 $ 6.39 $ 6.20
======= ======= ======= ======= =======
Net income, basic $ 0.18 $ 0.17 $ 0.16 $ 0.17 $ 0.17
Effect of extraordinary
and non-recurring
items, net of tax -- -- -- -- --
------- ------- ------- ------- -------
Net operating income,
basic $ 0.18 $ 0.17 $ 0.16 $ 0.17 $ 0.17
======= ======= ======= ======= =======
Net income, diluted $ 0.18 $ 0.17 $ 0.16 $ 0.17 $ 0.16
Effect of extraordinary
and non-recurring items,
net of tax -- -- -- -- --
------- ------- ------- ------- -------
Net operating income,
diluted $0.18 $ 0.17 $ 0.16 $ 0.17 $ 0.16
======= ======= ======= ======= =======
Supplemental Data (in thousands)
Allowance for loan losses $10,635 $10,363 $10,154 $ 9,970 $ 9,862
Net interest income, tax
equivalent $12,761 $12,474 $12,107 $12,152 $12,398
Amortization of
intangibles $ 243 $ 254 $ 265 $ 256 $ 323
(Gain) Loss on sales of
available-for-sale
securities and corporate
stock, net $ -- $ -- $ -- $ (7) $ --
Loss (Gain) on trading
assets, net $ -- $ 168 $ (139) $ -- $ --
Gain on foreclosed and
repossessed property,
leased equipment, and
premises and equipment $ (210) $ (68) $ (188) $ (178) $ (219)
Losses on foreclosed and
repossessed property and
premises and equipment $ 156 $ 8 $ 7 $ 301 $ 63
Write-downs on foreclosed
and repossessed
property $ 38 $ 60 $ 199 $ 64 $ 98
Mortgage loan and
related fees $ 396 $ 388 $ 458 $ 375 $ 405
(in thousands,
except per share data)
Year-to-Date Year-to-Date
Sept. 30, Sept. 30,
2007 2006
------- -------
Return on average assets 1.01% 1.02%
Effect of intangible assets 0.03% 0.03%
------- -------
Return on average tangible assets 1.04% 1.05%
======= =======
Return of average equity 7.98% 7.83%
Effect of intangible assets 2.15% 2.31%
------- -------
Return on average tangible equity 10.13% 10.14%
======= =======
Return on average assets 1.01% 1.02%
Effect of non-recurring items -- --
------- -------
Operating return on average assets 1.01% 1.02%
Effect of average intangible assets 0.03% 0.03%
------- -------
Operating return on average tangible assets 1.04% 1.05%
======= =======
Return on average equity 7.98% 7.83%
Effect of non-recurring items -- --
------- -------
Operating return on average equity 7.98% 7.83%
Effect on average intangible assets 2.15% 2.31%
------- -------
Operating return on average tangible equity 10.13% 10.14%
======= =======
Total equity to total assets 12.36% 12.75%
Effect of intangible assets -2.30% -2.56%
------- -------
Tangible equity to tangible assets 10.06% 10.19%
======= =======
Efficiency ratio 68.34% 68.56%
Effect of non-recurring items -- --
Effect of non-cash items -2.07% -2.63%
Effect of net interest income, tax equivalent
adjustment -1.04% -1.06%
------- -------
Core efficiency ratio 65.23% 64.87%
======= =======
Non-interest income $ 8,685 $ 7,878
------- -------
Non-interest operating income $ 8,685 $ 7,878
======= =======
Non-interest expense $30,967 $30,146
Corporate headquarters relocation costs -- --
------- -------
Non-interest operating expense $30,967 $30,146
======= =======
Net income $ 8,745 $ 8,196
Non-recurring expenses, net of tax -- --
------- -------
Net operating income, net of tax $ 8,745 $ 8,196
======= =======
Per Share Data
Book value $ 8.57 $ 7.98
Effect of intangible assets (1.77) (1.78)
------- -------
Tangible book value $ 6.80 $ 6.20
======= =======
Net income, basic $ 0.51 $ 0.47
Effect of extraordinary and non-recurring
items, net of tax -- --
------- -------
Net operating income, basic $ 0.51 $ 0.47
======= =======
Net income, diluted $ 0.50 $ 0.46
Effect of extraordinary and non-recurring
items, net of tax -- --
------- -------
Net operating income, diluted $ 0.50 $ 0.46
======= =======
Supplemental Data (in thousands)
Allowance for loan losses $10,635 $ 9,862
Net interest income, tax equivalent $37,343 $36,802
Amortization of intangibles $ 762 $ 990
(Gain) Loss on sales of available-for-sale
securities and corporate stock, net $ -- $ --
Loss (Gain) on trading assets, net $ 29 $ --
Gain on foreclosed and repossessed property,
leased equipment, and premises and equipment $ (466) $ (440)
Losses on foreclosed and repossessed property
and premises and equipment $ 171 $ 113
Write-downs on foreclosed and repossessed
property $ 297 $ 343
Mortgage loan and related fees $ 1,242 $ 1,071