First Community Financial Partners, Inc. Reports Net Income Applicable to Common Shareholders of $20.6 Million for the Year Ended December 31, 2013

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| Source: First Community Financial Partners, Inc.

JOLIET, Ill., Feb. 19, 2014 (GLOBE NEWSWIRE) -- First Community Financial Partners, Inc. (OTCQB:FCMP) ("First Community"), the parent company of First Community Financial Bank (the "Bank"), today announced results for the year ended December 31, 2013.

Net income applicable to common shareholders for the year ended December 31, 2013 was $20.6 million, or $1.29 per diluted share, compared with $104,000, or $0.01 per diluted share, for the year ended December 31, 2012. Net income applicable to common shareholders for the three months ended December 31, 2013 was a net loss of $921,000 compared to net income of $490,000 for the three months ended December 31, 2012. The results for 2013 included an income tax benefit of $14.6 million primarily related to the reversal of a previously established deferred tax valuation allowance and $4.9 million related to gains on redemption of preferred stock.

Roy C. Thygesen, Chief Executive Officer commented, "Following the merger and consolidation of our subsidiary banks early in 2013, overall financial performance benefited from operating efficiencies and improved capital utilization. Shareholder value was significantly enhanced through the reversal of our deferred tax valuation allowance and gains realized from the retirement of outstanding preferred stock. As importantly, while still focusing on improving credit quality and reducing the level of our nonperforming loans, we grew loan commitments and the commercial loan portfolio during 2013. Before loan sales and chargeoffs, loan balances increased $41.0 million and unused loan commitments increased by $25.7 million. We also continued diversifying the mix of our loans and deposits. More of our loan growth came in residential 1-4 family and commercial portfolios, reducing our focus on commercial real estate. Deposit growth was concentrated on expanding our core demand deposit base, allowing us to rely less on higher cost time deposits. We have more work to do in decreasing the level of our nonperforming assets, but we are very excited by the progress made in 2013 and the foundation built for 2014 and beyond."

YEAR TO DATE FINANCIAL HIGHLIGHTS

  • Net income available to common shareholders increased $20.5 million to $20.6 million for the year ended December 31, 2013 compared to $104,000 for the year ended December 31, 2012.
  • Book value per common share increased $1.10 to $5.24 at December 31, 2013, compared to $4.14 at December 31, 2012.
  • First Community repurchased $16.8 million of its outstanding $22.0 million Fixed Rate Cumulative Perpetual Preferred Stock, Series B (the "Series B Preferred Stock"), during 2013. The 16,824 preferred shares, with a liquidation preference of $1,000 per share, were repurchased at a cost of $11.9 million resulting in a gain attributable to common shareholders of $4.9 million.
  • Loan growth before loan sales and chargeoffs was $41.0 million during 2013 which included $15.3 million of loan growth in commercial and residential 1-4 family loans. Loan commitments increased $25.7 million during 2013.
  • Nonperforming loans decreased $4.7 million to $23.2 million or 3.56% of total loans at December 31, 2013, compared with $27.9 million or 4.39% of total loans at December 31, 2012. Current year asset sales, charge-offs and a continued focus on asset quality contributed to the improvement in 2013.
  • Total criticized and classified loans decreased $41.5 million to $57.0 million at December 31, 2013.
  • Noninterest expense continued to improve as a result of the 2013 merger of First Community's four bank subsidiaries and overall improved operating performance. Noninterest expense for the year was $20.2 million which was a $1.6 million improvement over $21.8 million in the prior year.

QUARTERLY FINANCIAL HIGHLIGHTS

  • Income before income taxes and provision for loan losses increased from $2.3 million for the third quarter of 2014 to $2.8 million for the fourth quarter of 2014.
  • Net interest income increased $0.1 million to $7.2 million for the fourth quarter of 2014 from the third quarter of 2014.
  • Noninterest income increased $0.2 million to $0.4 million for the fourth quarter of 2014 from the third quarter of 2014.
  • Noninterest expense decreased $0.2 million to $4.9 million for the fourth quarter of 2014 from the third quarter of 2014.
  • Loan growth before loan sales and charge-offs was $7.8 million during the fourth quarter of 2013. Loan commitments increased $5.8 million during the fourth quarter of 2013.
  • Total criticized and classified loans decreased $11.4 million to $57.0 million during the fourth quarter of 2013.

Results of Operations - Year to Date 2013 vs. 2012

Net income for 2013 was $16.7 million, compared to $1.5 million for 2012. Net income applicable to common shareholders for 2013 was $20.6 million, compared to $0.1 million for 2012.

Income before income taxes was $2.1 million for 2013 compared to $3.0 million for 2012. The decrease was primarily due to a $1.5 million decrease in net interest income and $0.9 million increase in provision for loan losses, partially offset by a $1.6 million decrease in professional fees. Income before taxes and provision for loan losses totaled $10.1 million for 2013, compared to $10.0 million for 2012.

Net interest and noninterest income

Net interest income was $28.7 million for 2013, as compared to $30.2 million for 2012, a decrease of $1.5 million due largely to decreased interest income on loans. Loan yields decreased 0.60% from 5.56% for 2012 to 4.96% in 2013. Interest income on investment securities increased from $1.6 million in 2012 to $2.1 million in 2013. The increase was due to the reinvestment of cash and investment securities maturities into higher yielding assets. Investment securities yields increased 0.37% from 1.61% in 2012 to 1.98% in 2013. Interest expense decreased $2.1 million in 2013 primarily due to repricing of time deposits from yields of 1.70% in 2012 to 1.04% in 2013. This was partially offset by an increase in interest expense from subordinated debt of $0.9 million from 2012 to 2013. During 2013, the Company issued $10.0 million of junior subordinated debentures at an interest rate of 9.0% in March and $5.5 million of junior subordinated debentures at an interest rate of 8.625% in September. 

Noninterest income was $1.6 million for 2013 and 2012. 

Noninterest Expense

Noninterest expense was $20.2 million for 2013 compared to $21.8 million for 2012, a decrease of $1.5 million. The decrease in noninterest expense consisted of a $0.2 million decrease in occupancy expense, a $0.3 million decrease in data processing expense and a $1.6 million decrease in professional fees, which was partially offset by a $0.9 million increase in salaries and benefits.

The $0.9 million increase in salaries and employee benefits in 2013 was comprised of a $0.5 million increase in salaries, taxes and benefits and a $0.4 million increase in incentive compensation.

The $0.3 million decrease in data processing expense was due to renegotiating our core processing contract in the first quarter of 2013. The $1.6 million decrease in professional fees in 2013 was related to legal, investment banking and accounting fees incurred in 2012 in connection with the consolidation of our banking charters.

Preferred Dividends and Gains on Redemption

Preferred dividends decreased $0.4 million in 2013 due to the redemption of $16.8 million liquidation value of Series B Preferred Stock for $11.9 million, which resulted in a gain on retirement of preferred stock of $4.9 million.

On March 12, 2013, the Company repurchased 9,500 shares, or $9.5 million, of its Series B Preferred Stock at $690.00 per share. The total cost of repurchasing these shares was approximately $6.6 million which included accrued and unpaid dividends earned on the shares up to the date of repurchase. A gain on retirement of preferred stock of $2.9 million was recorded directly to accumulated deficit.

On September 30, 2013, the Company repurchased 7,324 shares, or $7.3 million, of its Series B Preferred Stock at $728.61 per share. The total cost of repurchasing these shares was $5.3 million which included accrued and unpaid dividends earned on the shares up to the date of repurchase. A gain on retirement of preferred stock of $2.0 million was recorded directly to accumulated deficit.

Results of Operations - Fourth Quarter of 2013 vs. Third Quarter of 2013

Net income (loss) for the fourth quarter of 2013 was $(0.7) million, compared to $15.2 million for third quarter of 2013. Net income (loss) applicable to common shareholders for the fourth quarter of 2013 was $(0.9) million, compared to $17.0 million for the third quarter of 2013. The net income applicable to common shareholders for the third quarter of 2013 included an income tax benefit of $14.1 million primarily related to the reversal of a previously established deferred tax valuation and gain on redemption of preferred stock of $2.0 million.

Income (loss) before income taxes was $(1.3) million for the fourth quarter of 2013, compared to $1.1 million for the third quarter of 2013. The decrease was primarily due to a $2.9 million increase in provision for loan losses. The increase in provision for loan losses in the fourth quarter of 2013 was needed to fund the allowance for loan losses as a result of a sale of nonperforming loans in the amount of $2.7 million with resulting chargeoffs of $2.0 million.

Net interest and noninterest income

Net interest income was $7.2 million for the fourth quarter of 2013 as compared to $7.1 million for the third quarter of 2013. Yields on earning assets were 4.31% for the fourth quarter of 2013 versus 4.21% for the third quarter of 2013. Yields on interest bearing liabilities were 0.99% for the fourth quarter of 2013 versus 0.95% for the third quarter of 2013.  

Noninterest income was $0.4 million for the fourth quarter of 2013 compared to $0.3 million for the third quarter of 2013. 

Noninterest Expense

Noninterest expense was $4.9 million for the fourth quarter of 2013 compared to $5.1 million for the third quarter of 2013.

Credit Quality

General

Total criticized and classified loans were $57.0 million at December 31, 2013, as compared to $68.4 million at September 30, 2013 and $98.5 million at December 31, 2012. The decrease year-over-year consisted of $8.2 million from loan sales and $17.8 million from charge-offs and the remainder from improvement in the performance of the loans.

Nonperforming loans were $23.2 million at December 31, 2013, as compared to $20.3 million at September 30, 2013, and $27.9 million at December 31, 2012.

Foreclosed assets were $4.4 million at December 31, 2013, $4.2 million at September 30, 2013 and $3.4 million at December 31, 2012.

Total nonperforming assets were $27.6 million at December 31, 2013, compared to $24.5 million at September 30, 2013 and $31.4 million at December 31, 2012. Nonperforming assets to total assets were 3.18% at December 31, 2013, compared to 2.88% at September 30, 2013 and 3.10% at December 31, 2012.

Allowance and Provision for Loan Losses

The allowance for loan losses was $15.8 million at December 31, 2013, compared to $20.2 million at September 30, 2013 and $22.9 million at December 31, 2012. The decrease from September 30, 2013 was primarily due to charge-offs of loans which had specific reserves and due to December 2010 charge-offs no longer factoring into the calculation of general reserves which uses a 36 month loss history as its starting point. The allowance for loan losses as a percent of nonperforming loans was 68.21% at December 31, 2013, as compared to 99.46% at September 30, 2013 and 81.88% at December 31, 2012.

The provision for loan losses was $4.1 million for the fourth quarter of 2013, compared to $1.2 million for the third quarter of 2013 and $1.5 million in the fourth quarter of 2012.

Balance Sheet

Assets

Total assets at December 31, 2013 were $867.6 million, compared to $852.4 million at September 30, 2013.

Investment securities were $141.3 million at December 31, 2013 down $1.8 million from $143.1 million at September 30, 2013 as a result of investment maturities.

Net loans at December 31, 2013 were $636.3 million, down $2.5 million from $638.8 million at September 30, 2013. During the fourth quarter of 2013, the Company sold $2.7 million in nonperforming loans resulting in chargeoffs of $2.0 million. 

Liabilities and Shareholders' Equity

Total liabilities at December 31, 2013 were $776.0 million, as compared to $759.7 million at September 30, 2013.

Total deposits were $725.4 million at December 31, 2013, compared to $698.3 million at September 30, 2013. Total deposits increased in the fourth quarter primarily due to increases in money market accounts.

Other borrowed funds decreased $13.1 million in the fourth quarter to $38.7 million as of December 31, 2013, which was attributable to the pay off of $7.5 million of short-term borrowings and decreases in securities sold under agreements to repurchase of $5.6 million.

Total shareholders' equity decreased $1.1 million from $92.7 million at September 30, 2013 to $91.6 million at December 31, 2013, as a result of the net loss incurred during the fourth quarter primarily due to increased loan loss provisions.

About First Community Financial Partners, Inc.: First Community Financial Partners, Inc., headquartered in Joliet, Illinois, is a bank holding company whose common stock trades on the OTCQB marketplace (OTCQB:FCMP). First Community Financial Partners, Inc. has one bank subsidiary, First Community Financial Bank.

About First Community Financial Bank: First Community Financial Bank, based in Plainfield, Illinois, is a wholly owned banking subsidiary of First Community Financial Partners, Inc., with locations in Joliet, Plainfield, Homer Glen, Channahon, Naperville and Burr Ridge, Illinois. The Bank is dedicated to its founding principles by being actively involved in the communities it serves and providing exceptional personal service through experienced local professionals.

Special Note Concerning Forward-Looking Statements

Any statements other than statements of historical facts, including statements about management's beliefs and expectations, are forward-looking statements and should be evaluated as such. These statements are made on the basis of management's views and assumptions regarding future events and business performance. Words such as "estimate," "believe," "anticipate," "expect," "intend," "plan," "target," "project," "should," "may," "will" and similar expressions are intended to identify forward-looking statements. Forward-looking statements (including oral representations) involve risks and uncertainties that may cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. These risks and uncertainties include the ability of First Community and its wholly owned bank subsidiary to realize the synergies from the recent merger of its non-wholly owned bank subsidiaries, as well as a number of other factors related to the businesses of First Community and its wholly owned bank subsidiary, including: risks associated with the First Community's possible pursuit of acquisitions; economic conditions in First Community's, and its wholly owned bank subsidiary's service areas; system failures; losses of large customers; disruptions in the relationship with third party vendors; losses of key management personnel and the inability to attract and retain highly qualified management and personnel in the future; the impact of legislation and regulatory changes on the banking industry, including the implementation of the Basel III capital reforms; and liability and compliance costs regarding banking regulations. These and other risks and uncertainties are discussed in more detail in First Community's filings with the Securities and Exchange Commission, including First Community's Annual Report on Form 10-K filed on March 15, 2013.

Many of these risks are beyond management's ability to control or predict. All forward-looking statements attributable to First Community, and its wholly owned bank subsidiary, or persons acting on behalf of each of them are expressly qualified in their entirety by the cautionary statements and risk factors contained in this communication. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. Furthermore, forward-looking statements speak only as of the date they are made. Except as required under the federal securities laws or the rules and regulations of the Securities and Exchange Commission, First Community does not undertake any obligation to update or review any forward-looking information, whether as a result of new information, future events or otherwise.  

       
First Community Financial Partners, Inc. and Subsidiaries      
Consolidated Balance Sheets      
       
  December 31, 2013 September 30, 2013 December 31, 2012
Assets (dollars in thousands)(unaudited)
Cash and due from banks $ 10,815 $ 14,142 $ 14,933
Interest-bearing deposits in banks 29,292 7,559 132,152
Securities available for sale 141,316 143,144 108,961
Nonmarketable equity securities 967 967 967
Loans held for sale 2,619 2,118
Loans, net of allowance for loan losses of $15,820 in December 2013; $20,203 in September 2013; $22,878 in December in 2012 636,311 638,837 614,236
Premises and equipment, net 16,380 16,586 16,990
Foreclosed assets 4,416 4,205 3,419
Cash surrender value of life insurance 4,513 4,476 4,366
Deferred tax asset 16,781 16,603 1,566
Accrued interest receivable and other assets 4,166 3,772 5,010
Total assets $ 867,576 $ 852,409 $ 902,600
Liabilities and Shareholders' Equity      
Liabilities      
Deposits      
Noninterest-bearing $ 111,955 $ 114,687 $ 114,116
Interest-bearing 613,446 583,643 666,546
Total deposits 725,401 698,330 780,662
       
Other borrowed funds 25,563 38,659 25,695
Subordinated debt 19,305 19,298 4,060
Accrued interest payable and other liabilities 5,720 3,462 4,252
Total liabilities 775,989 759,749 814,669
       
First Community Financial Partners, Inc. shareholders' equity      
       
Preferred stock, Series A, non-cumulative convertible, $1.00 par value; 5,000 shares authorized; no shares issued and outstanding at December 31, 2013, September 30, 2013 and December 31, 2012
Preferred stock, Series B, 5% cumulative perpetual, $1.00 par value; 22,000 shares authorized; 5,176 shares issued and outstanding at December 31, 2013 and September 30, 2013 and 22,000 shares issued and outstanding at December 31, 2012 5,176 5,176 22,000
Preferred stock, Series C, 9% cumulative perpetual, $1.00 par value; 1,100 shares authorized; 1,100 shares issued and outstanding at December 31, 2013, September 30, 2013 and December 31, 2012 892 837 672
Common stock, $1.00 par value; 60,000,000 shares authorized; 16,333,582 shares issued and outstanding at December 31, 2013, 16,221,413 shares issued and outstanding at September 30, 2013 and 12,175,401 shares issued and outstanding at December 31, 2012 16,334 16,221 12,175
Additional paid-in capital 81,241 81,292 70,113
Accumulated deficit (12,381) (11,469) (33,019)
Accumulated other comprehensive income 325 603 1,198
Total First Community Financial Partners, Inc. shareholders' equity 91,587 92,660 73,139
Non-controlling interest 14,792
Total shareholders' equity 91,587 92,660 87,931
Total liabilities and shareholders' equity $ 867,576 $ 852,409 $ 902,600
 
 
First Community Financial Partners, Inc. and Subsidiaries
Consolidated Statements of Operations
 
  For the three months ended For the years ended
  December 31, 2013 September 30, 2013 December 31, 2012 December 31, 2013 December 31, 2012
Interest income: (dollars in thousands)(unaudited)
Loans, including fees $ 8,137 $ 8,041 $ 8,658 $ 32,664 $ 36,626
Securities 650 536 428 2,056 1,648
Federal funds sold and other 13 32 67 178 248
Total interest income 8,800 8,609 9,153 34,898 38,522
Interest expense:          
Deposits 1,149 1,179 1,655 4,936 7,894
Federal funds purchased, other borrowed funds and subordinated debt 452 335 103 1,270 405
Total interest expense 1,601 1,514 1,758 6,206 8,299
Net interest income 7,199 7,095 7,395 28,692 30,223
Provision for loan losses 4,086 1,216 1,511 8,002 7,062
Net interest income after provision for loan losses 3,113 5,879 5,884 20,690 23,161
Noninterest income:          
Service charges on deposit accounts 126 133 128 436 455
Gain on sale of loans 88 353 339
Gain on sale of securities 4 4 17
Mortgage fee income 91 63 63 368 288
Other 115 110 140 478 551
  424 306 331 1,639 1,650
Noninterest expenses:          
Salaries and employee benefits 2,769 2,709 2,259 10,666 9,805
Occupancy and equipment expense 578 560 609 2,229 2,421
Data processing 115 219 277 860 1,179
Professional fees 280 521 1,189 1,424 2,975
Advertising and business development 231 61 75 654 405
Loan workout 70 66 35 180 (43)
Foreclosed assets, net of rental income 52 57 53 250 380
Loss on sale of foreclosed assets, net (28) 216 168 936
Other expense 786 886 644 3,816 3,779
  4,853 5,079 5,357 20,247 21,837
(Loss) income before income taxes and non-controlling interest (1,316) 1,106 858 2,082 2,974
Income tax (benefit) expense (572) (14,102) (172) (14,640) 341
Income (loss) before non-controlling interest (744) 15,208 1,030 16,722 2,633
Net income attributable to non-controlling interest 185 54 1,110
Net (loss) income applicable to First Community Financial Partners, Inc. (744) 15,208 845 16,668 1,523
Dividends, accretion and discount on preferred shares (177) (236) (355) (963) (1,419)
Redemption of preferred shares 1,988 4,933
Net (loss) income applicable to common shareholders $ (921) $ 16,960 $ 490 $ 20,638 $ 104
 
 
First Community Financial Partners, Inc.
Selected Quarterly Financial Data
           
           
  2013 2012
  Fourth Quarter Third Quarter Second Quarter First Quarter Fourth Quarter
Selected Operating Data (dollars in thousands, except per share data)(unaudited)
Interest income $ 8,800 $ 8,609 $ 8,595 $ 8,890 $ 9,153
Interest expense 1,601 1,514 1,575 1,519 1,758
Net interest income 7,199 7,095 7,020 7,371 7,395
Provision for loan losses 4,086 1,216 1,468 1,232 1,511
Net interest income after provision for loan losses 3,113 5,879 5,552 6,139 5,884
Noninterest income 424 306 317 592 335
Noninterest expense 4,853 5,079 5,066 5,249 5,361
Income (loss) before income taxes (1,316) 1,106 803 1,482 858
Income tax (benefit) expense (572) (14,102) 34 (172)
Income (loss) before non-controlling interest (744) 15,208 803 1,448 1,030
Net income attributable to non-controlling interests 54 185
Net income (loss) applicable to First Community Financial Partners, Inc. (744) 15,208 803 1,394 845
Dividends and accretion on preferred shares (177) (236) (236) (314) (355)
Redemption of preferred shares 1,988 2,945
Net income (loss) applicable to common shareholders $ (921) $ 16,960 $ 567 $ 4,025 $ 490
           
Per Share Data          
Basic earnings (loss) per common share $ (0.06) $ 1.05 $ 0.04 $ 0.31 $ 0.04
Diluted earnings per common share $ (0.06) $ 1.03 $ 0.03 $ 0.31 $ 0.04
Book value per common share $ 5.24 $ 5.34 $ 4.29 $ 4.30 $ 4.14
Weighted average common shares - basic 16,231,167 16,198,676 16,155,938 13,019,954 12,065,771
Weighted average common shares - diluted 16,231,167 16,403,793 16,299,591 13,120,382 12,222,148
Common shares outstanding-end of period 16,333,582 16,221,413 16,175,938 16,175,938 12,175,401
           
Performance Ratios          
Return on average assets (0.42)% 8.05% 0.27% 1.81% 0.22%
Return on average common equity (3.40)% 71.68% 2.72% 4.93% 2.25%
Net interest margin 3.52% 3.47% 3.39% 3.44% 3.48%
Interest rate spread 3.32% 3.26% 3.19% 3.26% 3.28%
Efficiency ratio (1) 63.66% 68.63% 67.52% 65.68% 69.35%
Average interest-earning assets to average interest-bearing liabilities 125.67% 128.05% 126.06% 126.13% 124.85%
Average loans to average deposits 92.97% 92.29% 88.94% 83.30% 85.15%
           
Footnotes:
(1) We calculate our efficiency ratio by dividing noninterest expense by the sum of net interest income and noninterest income.
 
 
First Community Financial Partners, Inc.
Selected Year-to-Date Financial Data
 
 
  Year-to-Date
  December 31,
  2013 2012
Selected Operating Data dollars in thousands, except per share data)(unaudited)
Interest income $ 34,898 $ 38,522
Interest expense 6,206 8,299
Net interest income 28,692 30,223
Provision for loan losses 8,002 7,062
Net interest income after provision for loan losses 20,690 23,161
Noninterest income 1,639 1,650
Noninterest expense 20,247 21,837
Income before income taxes 2,082 2,974
Income tax (benefit) expense (14,640) 341
Income before non-controlling interest 16,722 2,633
Net income attributable to non-controlling interests 54 1,110
Net income applicable to First Community Financial Partners, Inc. 16,668 1,523
Dividends and accretion on preferred shares (963) (1,419)
Redemption of preferred shares 4,933
Net income applicable to common shareholders $ 20,638 $ 104
     
Per Share Data    
Basic earnings per common share $ 1.31 $ 0.01
Diluted earnings per common share $ 1.29 $ 0.01
Book value per common share $ 5.24 $ 4.14
Weighted average common shares - basic 15,772,940 12,047,894
Weighted average common shares - diluted 15,973,852 12,187,925
Common shares outstanding-end of period 16,333,582 12,175,401
     
Performance Ratios    
Return on average assets 2.34% 0.01%
Return on average common equity 26.20% 0.14%
Net interest margin 3.52% 3.55%
Interest rate spread 3.32% 3.31%
Efficiency ratio (1) 66.80% 68.46%
Average interest-earning assets to average interest-bearing liabilities 122.27% 124.57%
Average loans to average deposits 86.87% 87.23%
 
Footnotes:
(1) We calculate our efficiency ratio by dividing noninterest expense by the sum of net interest income and noninterest income.
 
 
First Community Financial Partners, Inc.
Summary of Selected Period-End Financial Data
           
           
  December 31, 2013 September 30, 2013 June 30, 2013 March 30, 2013 December 31, 2012
Select Balance Sheet Data (dollars in thousands)(unaudited)
Total assets $ 867,576 $ 852,409 $ 837,108 $ 867,520 $ 902,600
Total securities (1) 142,283 144,111 116,270 105,270 109,928
Loans 652,131 659,040 648,081 643,354 637,114
Allowance for loan losses (15,820) (20,203) (20,634) (21,931) (22,878)
Net loans 636,311 638,837 627,447 621,423 614,236
Total deposits 725,401 698,330 708,412 747,846 780,662
Subordinated debt 19,305 19,298 13,791 13,783 4,060
Other borrowed funds 25,563 38,659 28,536 19,769 25,695
Shareholders' equity (3) 91,587 92,660 82,756 82,759 87,931
           
Asset Quality Ratios          
Non-performing loans (2) 23,194 20,303 26,429 31,218 27,941
Non-performing assets (4) 27,610 24,517 29,014 34,637 31,360
Non-performing loans(2) to total loans 3.56% 3.08% 4.08% 4.85% 4.39%
Non-performing assets(4) to total assets 3.18% 2.88% 3.47% 3.99% 3.10%
Allowance for loan losses to non-performing loans 68.21% 99.46% 78.07% 70.25% 81.88%
Allowance for loan losses to total loans 2.43% 3.07% 3.18% 3.41% 3.59%
           
Capital Ratios          
Average equity to average total assets 12.30% 9.91% 9.77% 9.84% 9.90%
Tier 1 leverage 8.87% 9.22% 9.41% 9.15% 9.87%
Tier 1 risk-based capital 9.77% 10.48% 11.53% 12.02% 12.60%
Total risk-based capital 13.55% 14.41% 14.80% 15.33% 14.46%
           
Footnotes:
(1) Includes available for sale securities recorded at fair value and Federal Home Loan Bank stock at cost.
(2) Non-performing loans include loans on nonaccrual status and those past due more than 90 days and still accruing interest.
(3) Includes shareholders' equity attributable to outstanding shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series B, and Fixed Rate Cumulative Perpetual Preferred Stock, Series C.
(4) Non-performing assets consist of non-performing loans and other real estate owned.
         
         
First Community Financial Partners, Inc.        
Composition of Loan Portfolio        
             
A summary of the balances of loans follows:            
             
  December 31, 2013 Percent of Gross Loans September 30, 2013 Percent of Gross Loans December 31, 2012 Percent of Gross Loans
  (dollars in thousands)(unaudited)
Construction and Land Development $ 20,745 3.18% $ 21,694 3.29% $ 30,494 4.78%
Farmland and Agricultural Production 8,505 1.30% 8,656 1.31% 7,211 1.13%
Residential 1-4 Family 86,770 13.30% 80,208 12.16% 77,567 12.17%
Commercial Real Estate 366,689 56.20% 383,320 58.14% 366,901 57.57%
Commercial 159,427 24.44% 155,116 23.53% 140,895 22.10%
Consumer and other 10,315 1.58% 10,362 1.57% 14,361 2.25%
  652,451 100.00% 659,356 100.00% 637,429 100.00%
Net deferred loan (fees) costs (320)   (316)   (315)  
Allowance for loan losses (15,820)   (20,203)   (22,878)  
  $ 636,311   $ 638,837   $ 614,236  
             
Loans Held for Sale $ 2,619   $ 2,118   $ —  
             
A summary of the Company's commercial real estate portfolio follows:
             
Commercial Real Estate December 31, 2013 Percent of
Total
September 30, 2013 Percent of
Total
December 31, 2012 Percent of
Total
  (dollars in thousands)(unaudited)
Multifamily $ 21,939 5.98% $ 23,002 6.00% $ 17,632 4.81%
Retail 94,254 25.70% 106,955 27.90% 102,646 27.98%
Office 36,095 9.84% 42,886 11.19% 49,911 13.60%
Industrial and Warehouse 64,176 17.50% 55,029 14.35% 50,562 13.78%
Health Care 34,771 9.48% 36,248 9.46% 22,215 6.05%
Other 115,454 31.50% 119,200 31.10% 123,935 33.78%
Total Commercial Real Estate Loans $ 366,689 100.00% $ 383,320 100.00% $ 366,901 100.00%
 
 
First Community Financial Partners, Inc.
Asset Quality
       
  At or for the Three Months Ended
  December 31, 2013 September 30, 2013 December 30, 2012
Nonperforming Assets: (dollars in thousands) (unaudited)
Loans past due 90 days or more still accruing interest $ 351 $ 50 $ —
Nonaccrual Loans:      
Construction and Land Development 4,436 582 3,397
Farmland and Agricultural Production
Residential 1-4 Family 681 2,189 2,313
Commercial Real Estate      
 Multifamily 597
 Retail 7,358 2,000
 Office 436 3,247 4,309
 Industrial and Warehouse 2,621
 Health Care
 Other 4,464 6,177 9,342
Commercial 4,841 8,028 3,197
Consumer and other 30 30 762
 Total nonperforming loans $ 23,194 $ 20,303 $ 27,941
Foreclosed assets 4,416 4,205 3,419
Total non-performing assets $ 27,610 $ 24,508 $ 31,360
       
Other Credit Quality Information:      
Criticized and classified loans, excluding consumer      
Special mention $ 31,444 $ 34,741 $ 59,746
Substandard 17,181 23,221 28,277
Doubtful 8,368 10,420 10,469
Total criticized and classified loans $ 56,993 $ 68,382 $ 98,492
Loans past due 30-89 days $ 1,821 $ 5,162 $ 3,827
Performing restructured loans 3,167 9,259 12,817
Recorded balance of impaired loans 28,629 29,513 40,193
Allowance for loan losses related to impaired loans 2,420 1,268 1,287
       
Allowance for Loan Losses Summary:      
Allowance at beginning of period $ 20,203 $ 20,634 $ 25,491
Charge-offs 9,351 2,316 4,857
Recoveries 882 669 733
Net charge-offs 8,469 1,647 4,124
Provision for loan losses 4,086 1,216 1,511
Allowance at end of period $ 15,820 $ 20,203 $ 22,878
       
Key Credit Ratios:      
Non-performing loans to total loans 3.56% 3.08% 4.39%
Nonperforming assets to total loans plus foreclosed assets 4.20% 3.69% 4.89%
Nonperforming assets to total assets 3.18% 2.88% 3.10%
Annualized net charge-offs to average total loans 5.14% 1.01% 2.50%
Allowance to total loans at end of period 2.43% 3.07% 3.59%
Allowance to non-performing loans 68.21% 99.46% 81.88%
30-89 days past due to total loans 0.28% 0.78% 0.60%
           
           
First Community Financial Partners, Inc.          
Loan Portfolio Aging          
                 
                 
  As of December 31, 2013
  Current 30-59 Days Past Due 60-89 Days Past Due 90+ Days Past Due and Still Accruing Total Accruing Loans Nonaccrual Loans Total Loans Allowance for Loan Loss Allocation
  (dollars in thousands)(unaudited)
Construction and Land Development $ 16,309 $ — $ — $ — $ 16,309 $ 4,436 $ 20,745 $ 2,711
Farmland and Agricultural Production 8,505 8,505 8,505 427
Residential 1-4 Family 85,965 67 57 86,089 681 86,770 1,440
Commercial Real Estate 351,798 1,685 351 353,834 12,855 366,689 7,909
Commercial 154,586 154,586 4,841 159,427 3,183
Consumer and other 10,273 11 1 10,285 30 10,315 150
Total $ 627,436 $ 1,763 $ 58 $ 351 $ 629,608 $ 22,843 $ 652,451 $ 15,820
 
First Community Financial Partners, Inc.
Deposit Liabilities
             
             
  December 31, 2013 Percent of Deposits September 30, 2013 Percent of Deposits December 31, 2012 Percent of Deposits
  (dollars in thousands) (unaudited)
Non-interest bearing accounts $ 111,955 15.43% $ 114,687 16.42% $ 114,116 14.62%
NOW and money market accounts 240,537 33.16% 207,631 29.73% 244,441 31.31%
Savings 24,399 3.36% 24,195 3.46% 25,411 3.26%
Time deposit certificates, $100,000 or more 223,436 30.80% 226,507 32.45% 254,268 32.57%
Other time deposit certificates 125,074 17.24% 125,310 17.94% 142,426 18.24%
Total Deposits $ 725,401  99.99% $ 698,330 100.00% $ 780,662 100.00%

As of December 31, 2012, the Company had two clients which maintained $10.6 million in a non-interest bearing account from a capital raise and $26.1 million in a money market account from the sale of their company. The funds were temporarily deposited and were withdrawn during the first quarter of 2013. Non-interest bearing accounts increased $8.4 million and money market accounts increased $25.1 million in 2013, net of these temporary deposits at December 31, 2012.
 

Glen L. Stiteley, Chief Financial Officer
(815)725-1885