First Business Bank Reports Strong Second Quarter 2021 Net Income of $8.2 Million
First Business Financial Services (Nasdaq:FBIZ) reported a net income of $8.2 million for Q2 2021, with $0.95 diluted earnings per share, surpassing last year's $3.3 million. This quarter marked an 11.2% growth in loans, total non-performing assets (NPAs) decreased by 39% to $11.6 million, and net interest income rose 14.6% year-over-year. The bank anticipates continued loan growth and no significant provisions for losses in the second half of 2021, reflecting improved asset quality metrics, indicating a strong operational performance.
- Net income of $8.2 million, representing a 147.8% increase from Q2 2020.
- Loan growth of $55.3 million, or 11.2% annualized, excluding PPP loans.
- Non-performing assets (NPAs) declined 39% to $11.6 million.
- Private wealth management revenue reached a record $2.7 million.
- Annualized growth in specialized lending continued, with strong performance in commercial loans.
- Non-interest income decreased by $874,000, or 12.1%, to $6.3 million.
- Operating expenses rose by $854,000, or 4.9%, to $18.2 million.
- Commercial loan interest rate swap fee income dropped to zero compared to $684,000 in the previous quarter.
First Business Financial Services, Inc. (the “Company”, the “Bank”, or “First Business Bank”) (Nasdaq:FBIZ) reported net income of
“First Business Bank again delivered strong financial performance in the second quarter, highlighted by continued double-digit annualized loan growth, further improvement in asset quality metrics, and diversified fee income,” President and Chief Executive Officer Corey Chambas said. “Our active management of asset quality led to another significant reduction in non-performing assets as well as a provision benefit that positively impacted the bottom-line. Our NPAs as a percentage of total assets are at the lowest level since 2006 and, based on what we are seeing today, we believe there will be additional reductions in NPAs and release of reserves in the second half of 2021. Therefore, at this time, we believe there will be no meaningful provision for the second half of 2021, even though we expect double-digit organic loan growth to continue.”
Quarterly Highlights
-
Exceptional Loan Growth. Loans, excluding Paycheck Protection Program (“PPP”) loans, grew
$55.3 million , or11.2% annualized, from the first quarter of 2021 and$286.0 million , or16.5% , from the second quarter of 2020, as we continued to expand specialized lending offerings for commercial clients and focus on business development across products and geographies. This marks the fourth consecutive quarter of10% or greater annualized loan growth, excluding PPP loans. -
Positive Asset Quality Trends. Non-performing assets (“NPAs”) declined
39.0% to$11.6 million , marking the third consecutive quarterly reduction of more than25% . NPAs made up0.42% of total assets, excluding PPP loans, improving by 39 and 77 basis points from March 31, 2021 and June 30, 2020, respectively. -
Diversified Fee Income. Second quarter 2021 non-interest income continued to reflect the strength and diversity of our fee income sources and contributed meaningfully to top-line revenue. Private wealth management generated record revenue of
$2.7 million on$2.56 4 billion in assets under management and administration for the period, while gains on the sale of Small Business Administration (“SBA”) loans grew to$1.2 million . -
Robust Core Earnings and Top-Line Revenue. Our improved asset quality metrics, net interest margin stability, organic loan growth, and fee income generation produced strong net income of
$8.2 million in the second quarter, up$4.9 million , or147.8% , compared to the same period in 2020. Top-line revenue of$28.0 million was up$2.8 million , or11.0% from the same period in 2020. -
PPP Update. Our participation in PPP has been a tremendous benefit to our clients. As of June 30, 2021, the Company had
$123.8 million in gross PPP loans outstanding and deferred processing fees outstanding of$3.1 million to be recognized into income in future quarters. During the quarter,$2.5 million of processing fees were recognized.
Quarterly Financial Results
(Unaudited) |
|
As of and for the Three Months Ended |
|
As of and for the Six Months Ended |
||||||||||||||||
(Dollars in thousands, except per share amounts) |
|
June 30,
|
|
March 31,
|
|
June 30,
|
|
June 30,
|
|
June 30,
|
||||||||||
Net interest income |
|
$ |
21,652 |
|
|
$ |
20,863 |
|
|
$ |
18,888 |
|
|
$ |
42,515 |
|
|
$ |
35,937 |
|
Adjusted non-interest income (1) |
|
6,292 |
|
|
7,195 |
|
|
6,319 |
|
|
13,487 |
|
|
12,737 |
|
|||||
Operating revenue (1) |
|
27,944 |
|
|
28,058 |
|
|
25,207 |
|
|
56,002 |
|
|
48,674 |
|
|||||
Operating expense (1) |
|
17,932 |
|
|
17,449 |
|
|
15,431 |
|
|
35,383 |
|
|
31,327 |
|
|||||
Pre-tax, pre-provision adjusted earnings (1) |
|
10,012 |
|
|
10,609 |
|
|
9,776 |
|
|
20,619 |
|
|
17,347 |
|
|||||
Less: |
|
|
|
|
|
|
|
|
|
|
||||||||||
Provision for loan and lease losses |
|
(958) |
|
|
(2,068) |
|
|
5,469 |
|
|
(3,026) |
|
|
8,651 |
|
|||||
Net (gain) loss on foreclosed properties |
|
(1) |
|
|
3 |
|
|
348 |
|
|
1 |
|
|
450 |
|
|||||
Amortization of other intangible assets |
|
8 |
|
|
8 |
|
|
9 |
|
|
15 |
|
|
18 |
|
|||||
SBA recourse provision (benefit) |
|
245 |
|
|
(130) |
|
|
(30) |
|
|
115 |
|
|
(5) |
|
|||||
Impairment on tax credit investments |
|
— |
|
|
— |
|
|
1,841 |
|
|
— |
|
|
1,954 |
|
|||||
Loss on early extinguishment of debt |
|
— |
|
|
— |
|
|
744 |
|
|
— |
|
|
744 |
|
|||||
Add: |
|
|
|
|
|
|
|
|
|
|
||||||||||
Net gain (loss) on sale of securities |
|
29 |
|
|
— |
|
|
— |
|
|
29 |
|
|
(4) |
|
|||||
Income before income tax expense |
|
10,747 |
|
|
12,796 |
|
|
1,395 |
|
|
23,543 |
|
|
5,531 |
|
|||||
Income tax expense (benefit) |
|
2,512 |
|
|
3,065 |
|
|
(1,928) |
|
|
5,577 |
|
|
(1,070) |
|
|||||
Net income |
|
$ |
8,235 |
|
|
$ |
9,731 |
|
|
$ |
3,323 |
|
|
$ |
17,966 |
|
|
$ |
6,601 |
|
Earnings per share, diluted |
|
$ |
0.95 |
|
|
$ |
1.12 |
|
|
$ |
0.38 |
|
|
$ |
2.08 |
|
|
$ |
0.77 |
|
Book value per share |
|
$ |
25.70 |
|
|
$ |
24.83 |
|
|
$ |
23.04 |
|
|
$ |
25.70 |
|
|
$ |
23.04 |
|
Tangible book value per share (1) |
|
$ |
24.28 |
|
|
$ |
23.43 |
|
|
$ |
21.65 |
|
|
$ |
24.28 |
|
|
$ |
21.65 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net interest margin |
|
3.49 |
% |
|
3.44 |
% |
|
3.34 |
% |
|
3.46 |
% |
|
3.39 |
% |
|||||
Adjusted net interest margin (1) |
|
3.20 |
% |
|
3.20 |
% |
|
3.32 |
% |
|
3.20 |
% |
|
3.32 |
% |
|||||
Efficiency ratio (1) |
|
64.17 |
% |
|
62.19 |
% |
|
61.22 |
% |
|
63.18 |
% |
|
64.36 |
% |
|||||
Return on average assets |
|
1.26 |
% |
|
1.51 |
% |
|
0.55 |
% |
|
1.38 |
% |
|
0.58 |
% |
|||||
Pre-tax, pre-provision adjusted return on average assets (1) |
|
1.53 |
% |
|
1.65 |
% |
|
1.61 |
% |
|
1.59 |
% |
|
1.53 |
% |
|||||
Return on average equity |
|
15.09 |
% |
|
18.48 |
% |
|
6.70 |
% |
|
16.75 |
% |
|
6.92 |
% |
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Period-end loans and leases receivable |
|
$ |
2,143,561 |
|
|
$ |
2,235,112 |
|
|
$ |
2,056,863 |
|
|
$ |
2,143,561 |
|
|
$ |
2,056,863 |
|
Period-end loans and leases receivable, excluding net PPP loans |
|
$ |
2,022,839 |
|
|
$ |
1,967,545 |
|
|
$ |
1,736,827 |
|
|
$ |
2,022,839 |
|
|
$ |
1,736,827 |
|
Average loans and leases receivable |
|
$ |
2,223,353 |
|
|
$ |
2,182,958 |
|
|
$ |
1,983,121 |
|
|
$ |
2,203,267 |
|
|
$ |
1,858,432 |
|
Period-end in-market deposits |
|
$ |
2,016,215 |
|
|
$ |
1,737,226 |
|
|
$ |
1,620,616 |
|
|
$ |
2,016,215 |
|
|
$ |
1,620,616 |
|
Average in-market deposits |
|
$ |
1,735,393 |
|
|
$ |
1,722,107 |
|
|
$ |
1,570,552 |
|
|
$ |
1,728,787 |
|
|
$ |
1,468,348 |
|
Allowance for loan and lease losses |
|
$ |
25,675 |
|
|
$ |
28,982 |
|
|
$ |
27,464 |
|
|
$ |
25,675 |
|
|
$ |
27,464 |
|
Non-performing assets |
|
$ |
11,601 |
|
|
$ |
19,023 |
|
|
$ |
25,484 |
|
|
$ |
11,601 |
|
|
$ |
25,484 |
|
Allowance for loan and lease losses as a percent of total gross loans and leases |
|
1.20 |
% |
|
1.29 |
% |
|
1.33 |
% |
|
1.20 |
% |
|
1.33 |
% |
|||||
Allowance for loan and lease losses as a percent of total gross loans and leases, excluding net PPP loans |
|
1.27 |
% |
|
1.47 |
% |
|
1.57 |
% |
|
1.27 |
% |
|
1.57 |
% |
|||||
Non-performing assets as a percent of total assets |
|
0.40 |
% |
|
0.73 |
% |
|
1.03 |
% |
|
0.40 |
% |
|
1.03 |
% |
|||||
Non-performing assets as a percent of total assets, excluding net PPP loans |
|
0.42 |
% |
|
0.81 |
% |
|
1.19 |
% |
|
0.42 |
% |
|
1.19 |
% |
|||||
| (1) | This is a non-GAAP financial measure. Management believes these measures are meaningful because they reflect adjustments commonly made by management, investors, regulators, and analysts to evaluate financial performance, provide greater understanding of ongoing operations, and enhance comparability of results with prior periods. See the section titled Non-GAAP Reconciliations at the end of this release for a reconciliation of GAAP financial measures to non-GAAP financial measures. |
Second Quarter 2021 Compared to First Quarter 2021
Net interest income increased
-
Net interest income reflected increases in average loans and leases, as well as in fees received in lieu of interest. Fees in lieu of interest, which can vary from quarter to quarter based on client-driven activity, totaled
$3.5 million , compared to$3.1 million . Excluding fees in lieu of interest, net interest income increased$338,000 , or1.9% . -
Average loans and leases receivable, excluding net PPP loans in both periods of comparison, increased
$53.5 million , or11.0% annualized, to$1.99 4 billion. -
The yield on average interest-earning assets increased 3 basis points to
3.96% from3.93% . Excluding average net PPP loans, the PPP loan interest income of$566,000 , and the aforementioned fees in lieu of interest, the yield earned on average interest-earning assets decreased 5 basis points to3.64% from3.69% . The rate paid for average total bank funding decreased one basis point to0.39% from0.40% . Total bank funding is defined as total deposits plus Federal Home Loan Bank (“FHLB”) advances, and Federal Reserve Discount Window advances. -
Net interest margin increased five basis points to
3.49% from3.44% . Adjusted net interest margin, excluding fees in lieu of interest and other recurring but volatile components of net interest margin, was3.20% , unchanged from the linked quarter.
The Company reported a net benefit to provision for loan and lease losses of
-
The decrease in the provision for loan and lease losses was primarily due to a
$1.7 million reduction in the general reserve from improving historical loss rates and a$1.5 million decrease in specific reserves. These decreases were partially offset by$2.3 million in net charge-offs and a$498,000 increase in the general reserve due to loan growth. Net charge-offs for the quarter principally consisted of a$2.2 million charge-off of one previously identified and partially reserved for legacy SBA loan.
Non-interest income decreased
-
Private wealth management fee income increased
$337,000 , or14.0% to$2.7 million . Private wealth and trust assets under management and administration measured a record$2.56 4 billion at June 30, 2021, up$177.8 million , or29.8% annualized, primarily due to growth from new and existing clients and increased equity market values. -
Gains on sale of SBA loans increased
$125,000 , or11.6% , to$1.2 million . Management believes the gain on sale of traditional SBA loans (i.e., SBA loans unrelated to PPP loans), while variable based on timing of closings, will continue to increase annually at a measured pace. -
During the second quarter there was no commercial loan interest rate swap fee income, compared to total swap fees of
$684,000 in the first quarter. Swap fee income can vary from period to period based on client demand and the interest rate environment in any given quarter. -
Other fee income decreased
$729,000 t o$835,000 , compared to$1.6 million in the first quarter, which reflected higher than typical returns in the first three months of 2021 from the Company’s investments in mezzanine funds.
Non-interest expense increased
-
Compensation expense increased
$598,000 , or4.7% , to$13.3 million , primarily due to a$415,000 t rue up of the Company’s performance-based incentive compensation accrual to reflect the strong earnings results through the first half of 2021. -
SBA recourse provision for estimated losses in the outstanding guaranteed portion of SBA loans sold totaled
$245,000 , compared to a net benefit of$130,000 in the linked quarter. -
Other non-interest expense decreased
$228,000 t o$176,000. T he decrease was principally due to a reduction in the credit valuation adjustment (“CVA”) related to the commercial loan interest rate swap program and a reduction in the loan servicing valuation adjustment related to the Bank’s SBA portfolio.
Total period-end loans and leases receivable, excluding net PPP loans in both periods of comparison, increased
-
Commercial and industrial (“C&I”) loans, excluding net PPP loans, increased
$58.0 million , or44.8% annualized, led by First Business Bank’s specialized lending commercial business lines. While we believe this level of above average growth is not sustainable, management believes the timely prior-period investments in producers for specialized lending, such as dealer floorplan financing, small-ticket equipment vendor financing, and accounts receivable financing, have positioned C&I lending to increase throughout the current economic cycle. -
Commercial real estate (“CRE”) loans were unchanged at
$1.39 2 billion, as growth from non-owner occupied CRE was offset by payoffs and paydowns in the remaining categories.
Total period-end in-market deposits increased
-
A significant portion of the large increase in deposits was due to the proceeds of a commercial client’s business sale late in the second quarter, the majority of which was moved off the balance sheet in early July. Excluding this temporary deposit, total period-end in-market deposits increased
$54.0 million to$1.79 1 billion, or12.4% annualized. -
Excluding the temporary deposit described above, non-interest bearing transaction and money market accounts increased
$52.4 million and$53.1 million , respectively, while interest-bearing transaction accounts and certificates of deposits decreased$49.8 million and$1.7 million , respectively.
Period-end wholesale funding, including FHLB advances, Federal Reserve Discount Window advances, brokered deposit, and deposits gathered through internet deposit listing services, decreased
-
Wholesale deposits decreased
$21.0 million to$144.5 million , due to contractual runoff. The average rate paid on wholesale deposits decreased 2 basis points to0.74% and the weighted average original maturity of brokered certificates of deposit decreased to 3.5 years from 3.9 years. -
FHLB advances decreased
$28.0 million to$387.8 million . The average rate paid on FHLB advances decreased nine basis points to1.27% and the weighted average original maturity increased to 6.1 years from 5.7 years.
Non-performing assets decreased
The allowance for loan and lease losses decreased
-
The allowance for loan and lease losses as a percent of total gross loans and leases was
1.20% compared to1.29% as of March 31, 2021. -
Excluding net PPP loans, the allowance for loan and leases losses as a percent of total gross loans and leases was
1.27% , compared to1.47% as of March 31, 2021.
Second Quarter 2021 Compared to Second Quarter 2020
Net interest income increased
-
The increase in net interest income reflects an increase in average gross loans and leases and an increase in fees collected in lieu of interest. Fees in lieu of interest, which can vary from quarter to quarter, totaled
$3.5 million compared to$2.3 million . Excluding fees in lieu of interest and interest income from PPP loans, net interest income increased$1.5 million , or9.7% . Excluding net PPP loans, average gross loans and leases increased$263.9 million , or15.3% . -
The yield on average interest-earning assets measured
3.96% compared to4.03% . Excluding fees collected in lieu of interest, PPP loan interest income and net PPP loans, the yield on average interest-earning assets was3.64% , compared to3.96% . The decline in yields was primarily due to the decrease in LIBOR and Prime rates and related impact on variable-rate loans, in addition to the renewal of fixed-rate loans and reinvestment of security cash flows at historically low interest rates. The rate paid for average total bank funding decreased 22 basis points to0.39% from0.61% . -
Net interest margin increased 15 basis points to
3.49% from3.34% . Adjusted net interest margin decreased 12 basis points to3.20% from3.32% .
The Company reported a net benefit to provision for loan and lease losses of
Non-interest income was
-
Gains on sale of SBA loans increased
$629,000 , or109.6% , to$1.2 million as a result of the Company’s rebuilt SBA business line. -
Private wealth management fee income increased
$620,000 , or29.2% , to$2.7 million . Private wealth and trust assets under management and administration measured a record$2.56 4 billion at June 30, 2021, up$691.0 million , or36.9% . -
During the second quarter there was no commercial loan interest rate swap fee income, compared to total swap fees of
$1.7 million for the year-ago quarter. -
Other fee income increased
$149,000 , or21.7% , to$835,000 compared to$686,000.
Non-interest expense decreased
-
Compensation expense increased
$2.5 million , or22.8% , to$13.3 million . The increase reflects new hires and an increase in the Company’s performance-based incentive compensation accrual based on estimated full year 2021 results, compared to a second quarter 2020 reduction to the same accrual due to COVID-19 pandemic uncertainty. Average full-time equivalent employees increased to 312, up11.0% for the quarter ended June 30, 2021, compared to 281 for the quarter ended June 30, 2020. -
In the second quarter of 2020, the Company recognized
$1.7 million in expense due to the impairment of federal historic tax credit investments, which corresponded with the recognition of a$2.5 million in tax credits during the quarter. No federal historic tax credit investments were recognized in the second quarter of 2021. -
Other non-interest expense decreased
$369,000 , or67.7% , to$176,000. T he decrease was principally due to a reduction in the credit valuation adjustment (“CVA”) related to the commercial loan interest rate swap program and a decrease in business travel expense.
Total period-end loans and leases receivable, excluding net PPP loans in both periods of comparison, increased
-
C&I loans, excluding net PPP loans, increased
$113.5 million , or24.6% . -
CRE loans increased
$169.8 million , or13.9% , driven by an increase across most CRE categories with the majority in the non-owner occupied and multi-family portfolios.
Total period-end in-market deposits increased
-
Excluding the temporary deposit from a client’s business sale, total period-end in-market deposits increased
$170.6 million to$1.79 1 billion, or10.5% . -
Excluding the temporary deposit described above, transaction and money market accounts increased
$214.0 million and$28.4 million , respectively, while certificates of deposits decreased$71.8 million .
Period-end wholesale funding increased
-
Wholesale deposits increased
$54.7 million to$144.5 million mainly due to adding non-maturity brokered deposits at a favorable rate compared to alternative funding sources. Excluding these deposits, wholesale deposits decreased as the existing portfolio runoff was replaced by in-market deposits and lower cost FHLB advances to match-fund long-term fixed rate loans and fund loan growth. The average rate paid on brokered certificates of deposit decreased 168 basis points to0.74% and the weighted average original maturity decreased to 3.5 years from 4.6 years. -
FHLB advances decreased
$23.2 million to$387.8 million . The average rate paid on FHLB advances increased 2 basis points to1.27% and the weighted average original maturity increased to 6.1 years from 5.3 years.
Non-performing assets decreased to
The allowance for loan and lease losses decreased
-
The allowance for loan and lease losses as a percent of total gross loans and leases was
1.20% compared to1.33% . -
Excluding net PPP loans, the allowance for loan and leases losses as a percent of total gross loans and leases was
1.27% as of June 30, 2021 compared to1.57% one year prior.
COVID-19 Update
On March 11, 2020, the World Health Organization declared COVID-19, the disease caused by the novel coronavirus, a pandemic as a result of the global spread of the coronavirus illness. In response to the outbreak, federal and state authorities in the U.S. introduced various measures to try to limit or slow the spread of the virus, including travel restrictions, nonessential business closures, stay-at-home orders, and strict social distancing. The Company activated its Pandemic Preparedness Plan to protect the health of employees and clients, which included temporarily limiting lobby hours and transitioning the vast majority of the Company’s workforce to remote work. The Company did not incur any significant disruptions to its business activities during this time of transition and extended remote work.
The second half of 2020 saw improvements in economic trends, but continued waves of new cases of COVID-19 created continued uncertainty in the economic environment. However, at the end of the fourth quarter of 2020 and into the first quarter of 2021, the rollout of new vaccines and the ratification of two additional stimulus laws resulted in lower infection rates and significant improvement in the outlook of the economy. In the second quarter of 2021, the Company communicated return to office plans to employees. Based on the national and local guidelines, the Company developed a phased-in approach for returning to the office. Under this phased-in approach, offices opened in early June 2021. The return to office included enhanced safety protocols and processes to provide the best working environment possible for employees.
Paycheck Protection Program
As of June 30, 2021, the Company had
Deferral Requests
The Company provided loan modifications deferring payments for certain borrowers impacted by COVID-19 who were current in their payments at the inception of the Company’s loan modification program. Excluding gross PPP loans, as of June 30, 2021, the Company had five deferred loans outstanding of
The following tables represent a breakdown of the deferred loan balances by industry segment and collateral type:
|
|
As of |
||||||||||
|
|
June 30, 2021 |
||||||||||
|
|
|
|
Collateral Type |
||||||||
Industries Description |
|
Balance |
|
Real Estate |
|
Non-Real Estate |
||||||
|
|
(In thousands) |
||||||||||
Accommodation and Food Services |
|
$ |
19,811 |
|
|
$ |
19,811 |
|
|
$ |
— |
|
Manufacturing |
|
310 |
|
|
310 |
|
|
— |
|
|||
Agriculture, Forestry, Fishing, and Hunting |
|
210 |
|
|
— |
|
|
210 |
|
|||
Educational Services |
|
195 |
|
|
195 |
|
|
— |
|
|||
Total deferred loan balances |
|
$ |
20,526 |
|
|
$ |
20,316 |
|
|
$ |
210 |
|
Exposure to Stressed Industries
Certain industries have been and are expected to be particularly impacted by social distancing, quarantines, and the economic impact of the COVID-19 pandemic, such as the following:
|
|
As of |
||||||||||||
|
|
June 30, 2021 |
|
December 31, 2020 |
||||||||||
Industries: |
|
Balance |
|
% Gross Loans
|
|
Balance |
|
% Gross Loans
|
||||||
|
|
(Dollars in Thousands) |
||||||||||||
Retail (2) (3) |
|
$ |
75,588 |
|
|
3.7 |
% |
|
$ |
62,719 |
|
|
3.3 |
% |
Hospitality |
|
82,818 |
|
|
4.1 |
% |
|
80,832 |
|
|
4.2 |
% |
||
Entertainment |
|
13,729 |
|
|
0.7 |
% |
|
14,208 |
|
|
0.7 |
% |
||
Restaurants & food service |
|
23,340 |
|
|
1.2 |
% |
|
24,854 |
|
|
1.3 |
% |
||
Total outstanding exposure |
|
$ |
195,475 |
|
|
9.6 |
% |
|
$ |
182,613 |
|
|
9.5 |
% |
| (1) | Excluding net PPP loans. |
| (2) |
Includes |
| (3) |
Includes |
As of June 30, 2021, the Company had no meaningful direct exposure to the energy sector, airline industry or retail consumer, and does not participate in Shared National Credits.
Because of the uncertainties related to the ultimate duration of the COVID-19 pandemic and its effects on our clients and prospects, and on the national and local economies as a whole, there can be no assurances as to how the crisis may ultimately affect the Company’s loan portfolio.
About First Business Financial Services, Inc.
First Business Financial Services, Inc., (Nasdaq: FBIZ) is the parent company of First Business Bank. First Business Bank specializes in Business Banking, including Commercial Banking and Specialized Lending, Private Wealth, and Bank Consulting services, and through its refined focus, delivers unmatched expertise, accessibility, and responsiveness. Specialized Lending solutions are delivered through First Business Bank’s wholly owned subsidiary First Business Specialty Finance, LLC. For additional information, visit www.firstbusiness.bank.
This release may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, which reflect First Business Bank’s current views with respect to future events and financial performance. Forward-looking statements are not based on historical information, but rather are related to future operations, strategies, financial results, or other developments. Forward-looking statements are based on management’s expectations as well as certain assumptions and estimates made by, and information available to, management at the time the statements are made. Those statements are based on general assumptions and are subject to various risks, uncertainties, and other factors that may cause actual results to differ materially from the views, beliefs, and projections expressed in such statements. Such statements are subject to risks and uncertainties, including among other things:
- Adverse changes in the economy or business conditions, either nationally or in our markets, including, without limitation, the adverse effects of the COVID-19 pandemic on the global, national, and local economy.
- The effect of the COVID-19 pandemic on the Company’s credit quality, revenue, and business operations.
- Competitive pressures among depository and other financial institutions nationally and in our markets.
- Increases in defaults by borrowers and other delinquencies.
- Our ability to manage growth effectively, including the successful expansion of our client service, administrative infrastructure, and internal management systems.
- Fluctuations in interest rates and market prices.
- Changes in legislative or regulatory requirements applicable to us and our subsidiaries.
- Changes in tax requirements, including tax rate changes, new tax laws, and revised tax law interpretations.
- Fraud, including client and system failure or breaches of our network security, including our internet banking activities.
- Failure to comply with the applicable SBA regulations in order to maintain the eligibility of the guaranteed portion of SBA loans.
For further information about the factors that could affect the Company’s future results, please see the Company’s annual report on Form 10-K for the year ended December 31, 2020 and other filings with the Securities and Exchange Commission.
SELECTED FINANCIAL CONDITION DATA
(Unaudited) |
|
As of |
||||||||||||||||||
(in thousands) |
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
||||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents |
|
$ |
389,977 |
|
|
$ |
58,874 |
|
|
$ |
56,909 |
|
|
$ |
51,728 |
|
|
$ |
42,391 |
|
Securities available-for-sale, at fair value |
|
171,219 |
|
|
173,261 |
|
|
183,925 |
|
|
179,274 |
|
|
171,680 |
|
|||||
Securities held-to-maturity, at amortized cost |
|
22,382 |
|
|
24,783 |
|
|
26,374 |
|
|
28,897 |
|
|
29,826 |
|
|||||
Loans held for sale |
|
6,059 |
|
|
6,576 |
|
|
8,695 |
|
|
15,049 |
|
|
13,672 |
|
|||||
Loans and leases receivable |
|
2,143,561 |
|
|
2,235,112 |
|
|
2,145,970 |
|
|
2,170,299 |
|
|
2,056,863 |
|
|||||
Allowance for loan and lease losses |
|
(25,675) |
|
|
(28,982) |
|
|
(28,521) |
|
|
(30,817) |
|
|
(27,464) |
|
|||||
Loans and leases receivable, net |
|
2,117,886 |
|
|
2,206,130 |
|
|
2,117,449 |
|
|
2,139,482 |
|
|
2,029,399 |
|
|||||
Premises and equipment, net |
|
1,747 |
|
|
1,923 |
|
|
1,998 |
|
|
2,130 |
|
|
2,266 |
|
|||||
Foreclosed properties |
|
179 |
|
|
31 |
|
|
34 |
|
|
613 |
|
|
1,389 |
|
|||||
Right-of-use assets |
|
5,472 |
|
|
5,486 |
|
|
5,814 |
|
|
6,141 |
|
|
6,272 |
|
|||||
Bank-owned life insurance |
|
52,887 |
|
|
52,537 |
|
|
52,188 |
|
|
51,798 |
|
|
51,433 |
|
|||||
Federal Home Loan Bank stock, at cost |
|
13,451 |
|
|
14,941 |
|
|
13,578 |
|
|
15,153 |
|
|
13,470 |
|
|||||
Goodwill and other intangible assets |
|
12,178 |
|
|
12,055 |
|
|
12,018 |
|
|
12,024 |
|
|
11,925 |
|
|||||
Derivatives |
|
32,377 |
|
|
26,104 |
|
|
49,377 |
|
|
58,210 |
|
|
58,808 |
|
|||||
Accrued interest receivable and other assets |
|
39,855 |
|
|
38,017 |
|
|
39,478 |
|
|
41,348 |
|
|
36,283 |
|
|||||
Total assets |
|
$ |
2,865,669 |
|
|
$ |
2,620,718 |
|
|
$ |
2,567,837 |
|
|
$ |
2,601,847 |
|
|
$ |
2,468,814 |
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
|
||||||||||
In-market deposits |
|
$ |
2,016,215 |
|
|
$ |
1,737,226 |
|
|
$ |
1,683,008 |
|
|
$ |
1,667,245 |
|
|
$ |
1,620,616 |
|
Wholesale deposits |
|
144,492 |
|
|
165,492 |
|
|
172,508 |
|
|
154,130 |
|
|
89,759 |
|
|||||
Total deposits |
|
2,160,707 |
|
|
1,902,718 |
|
|
1,855,516 |
|
|
1,821,375 |
|
|
1,710,375 |
|
|||||
Federal Home Loan Bank advances and other borrowings |
|
420,113 |
|
|
448,417 |
|
|
419,167 |
|
|
483,517 |
|
|
465,007 |
|
|||||
Junior subordinated notes |
|
10,069 |
|
|
10,065 |
|
|
10,062 |
|
|
10,058 |
|
|
10,054 |
|
|||||
Lease liabilities |
|
6,005 |
|
|
6,040 |
|
|
6,386 |
|
|
6,728 |
|
|
6,877 |
|
|||||
Derivatives |
|
36,109 |
|
|
29,565 |
|
|
54,927 |
|
|
64,403 |
|
|
65,390 |
|
|||||
Accrued interest payable and other liabilities |
|
11,214 |
|
|
9,422 |
|
|
15,617 |
|
|
14,981 |
|
|
13,549 |
|
|||||
Total liabilities |
|
2,644,217 |
|
|
2,406,227 |
|
|
2,361,675 |
|
|
2,401,062 |
|
|
2,271,252 |
|
|||||
Total stockholders’ equity |
|
221,452 |
|
|
214,491 |
|
|
206,162 |
|
|
200,785 |
|
|
197,562 |
|
|||||
Total liabilities and stockholders’ equity |
|
$ |
2,865,669 |
|
|
$ |
2,620,718 |
|
|
$ |
2,567,837 |
|
|
$ |
2,601,847 |
|
|
$ |
2,468,814 |
|
STATEMENTS OF INCOME
(Unaudited) |
|
As of and for the Three Months Ended |
|
As of and for the Six Months Ended |
||||||||||||||||||||||||
(Dollars in thousands, except per share amounts) |
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
June 30,
|
|
June 30,
|
||||||||||||||
Total interest income |
|
$ |
24,599 |
|
|
$ |
23,806 |
|
|
$ |
25,770 |
|
|
$ |
22,276 |
|
|
$ |
22,761 |
|
|
$ |
48,406 |
|
|
$ |
46,132 |
|
Total interest expense |
|
2,947 |
|
|
2,943 |
|
|
3,258 |
|
|
3,655 |
|
|
3,873 |
|
|
5,891 |
|
|
10,195 |
|
|||||||
Net interest income |
|
21,652 |
|
|
20,863 |
|
|
22,512 |
|
|
18,621 |
|
|
18,888 |
|
|
42,515 |
|
|
35,937 |
|
|||||||
Provision for loan and lease losses |
|
(958) |
|
|
(2,068) |
|
|
4,322 |
|
|
3,835 |
|
|
5,469 |
|
|
(3,026) |
|
|
8,651 |
|
|||||||
Net interest income after provision for loan and lease losses |
|
22,610 |
|
|
22,931 |
|
|
18,190 |
|
|
14,786 |
|
|
13,419 |
|
|
45,541 |
|
|
27,286 |
|
|||||||
Private wealth management service fees |
|
2,744 |
|
|
2,407 |
|
|
2,208 |
|
|
2,167 |
|
|
2,124 |
|
|
5,151 |
|
|
4,235 |
|
|||||||
Gain on sale of SBA loans |
|
1,203 |
|
|
1,078 |
|
|
1,300 |
|
|
760 |
|
|
574 |
|
|
2,281 |
|
|
839 |
|
|||||||
Service charges on deposits |
|
941 |
|
|
917 |
|
|
887 |
|
|
881 |
|
|
829 |
|
|
1,859 |
|
|
1,647 |
|
|||||||
Loan fees |
|
569 |
|
|
545 |
|
|
412 |
|
|
478 |
|
|
451 |
|
|
1,114 |
|
|
936 |
|
|||||||
Net gain on sale of securities |
|
29 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
29 |
|
|
(4) |
|
|||||||
Swap fees |
|
— |
|
|
684 |
|
|
1,078 |
|
|
2,446 |
|
|
1,655 |
|
|
684 |
|
|
3,336 |
|
|||||||
Other non-interest income |
|
835 |
|
|
1,564 |
|
|
914 |
|
|
676 |
|
|
686 |
|
|
2,398 |
|
|
1,744 |
|
|||||||
Total non-interest income |
|
6,321 |
|
|
7,195 |
|
|
6,799 |
|
|
7,408 |
|
|
6,319 |
|
|
13,516 |
|
|
12,733 |
|
|||||||
Compensation |
|
13,255 |
|
|
12,657 |
|
|
12,145 |
|
|
11,857 |
|
|
10,796 |
|
|
25,912 |
|
|
21,848 |
|
|||||||
Occupancy |
|
533 |
|
|
552 |
|
|
556 |
|
|
570 |
|
|
554 |
|
|
1,085 |
|
|
1,126 |
|
|||||||
Professional fees |
|
913 |
|
|
866 |
|
|
909 |
|
|
943 |
|
|
859 |
|
|
1,778 |
|
|
1,678 |
|
|||||||
Data processing |
|
798 |
|
|
770 |
|
|
668 |
|
|
679 |
|
|
710 |
|
|
1,569 |
|
|
1,386 |
|
|||||||
Marketing |
|
511 |
|
|
391 |
|
|
411 |
|
|
356 |
|
|
352 |
|
|
902 |
|
|
813 |
|
|||||||
Equipment |
|
261 |
|
|
246 |
|
|
294 |
|
|
310 |
|
|
304 |
|
|
506 |
|
|
595 |
|
|||||||
Computer software |
|
1,129 |
|
|
1,115 |
|
|
1,028 |
|
|
1,017 |
|
|
966 |
|
|
2,244 |
|
|
1,856 |
|
|||||||
FDIC insurance |
|
280 |
|
|
362 |
|
|
479 |
|
|
312 |
|
|
239 |
|
|
642 |
|
|
448 |
|
|||||||
Collateral liquidation cost |
|
84 |
|
|
94 |
|
|
47 |
|
|
45 |
|
|
115 |
|
|
178 |
|
|
236 |
|
|||||||
Net (gain) loss on foreclosed properties |
|
(1) |
|
|
3 |
|
|
54 |
|
|
(121) |
|
|
348 |
|
|
1 |
|
|
450 |
|
|||||||
Tax credit investment impairment |
|
— |
|
|
— |
|
|
328 |
|
|
113 |
|
|
1,841 |
|
|
— |
|
|
1,954 |
|
|||||||
SBA recourse provision (benefit) |
|
245 |
|
|
(130) |
|
|
(330) |
|
|
57 |
|
|
(30) |
|
|
115 |
|
|
(5) |
|
|||||||
Loss on early extinguishment of debt |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
744 |
|
|
— |
|
|
744 |
|
|||||||
Other non-interest expense |
|
176 |
|
|
404 |
|
|
1,062 |
|
|
620 |
|
|
545 |
|
|
582 |
|
|
1,359 |
|
|||||||
Total non-interest expense |
|
18,184 |
|
|
17,330 |
|
|
17,651 |
|
|
16,758 |
|
|
18,343 |
|
|
35,514 |
|
|
34,488 |
|
|||||||
Income before income tax expense (benefit) |
|
10,747 |
|
|
12,796 |
|
|
7,338 |
|
|
5,436 |
|
|
1,395 |
|
|
23,543 |
|
|
5,531 |
|
|||||||
Income tax expense (benefit) |
|
2,512 |
|
|
3,065 |
|
|
1,254 |
|
|
1,143 |
|
|
(1,928) |
|
|
5,577 |
|
|
(1,070) |
|
|||||||
Net income |
|
$ |
8,235 |
|
|
$ |
9,731 |
|
|
$ |
6,084 |
|
|
$ |
4,293 |
|
|
$ |
3,323 |
|
|
$ |
17,966 |
|
|
$ |
6,601 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Basic earnings |
|
$ |
0.95 |
|
|
$ |
1.12 |
|
|
$ |
0.71 |
|
|
$ |
0.50 |
|
|
$ |
0.38 |
|
|
$ |
2.08 |
|
|
$ |
0.77 |
|
Diluted earnings |
|
0.95 |
|
|
1.12 |
|
|
0.71 |
|
|
0.50 |
|
|
0.38 |
|
|
2.08 |
|
|
0.77 |
|
|||||||
Dividends declared |
|
0.18 |
|
|
0.18 |
|
|
0.165 |
|
|
0.165 |
|
|
0.165 |
|
|
0.36 |
|
|
0.33 |
|
|||||||
Book value |
|
25.70 |
|
|
24.83 |
|
|
24.06 |
|
|
23.45 |
|
|
23.04 |
|
|
25.70 |
|
|
23.04 |
|
|||||||
Tangible book value |
|
24.28 |
|
|
23.43 |
|
|
22.66 |
|
|
22.05 |
|
|
21.65 |
|
|
24.28 |
|
|
21.65 |
|
|||||||
Weighted-average common shares outstanding(1) |
|
8,385,069 |
|
|
8,429,149 |
|
|
8,417,216 |
|
|
8,404,084 |
|
|
8,392,197 |
|
|
8,381,868 |
|
|
8,379,696 |
|
|||||||
Weighted-average diluted common shares outstanding(1) |
|
8,385,069 |
|
|
8,429,149 |
|
|
8,417,216 |
|
|
8,404,084 |
|
|
8,392,197 |
|
|
8,381,868 |
|
|
8,379,696 |
|
|||||||
(1) Excluding participating securities. |
||||||||||||||||||||||||||||
NET INTEREST INCOME ANALYSIS
(Unaudited) |
|
For the Three Months Ended |
|||||||||||||||||||||||||||||||
(Dollars in thousands) |
|
June 30, 2021 |
|
March 31, 2021 |
|
June 30, 2020 |
|||||||||||||||||||||||||||
|
|
Average Balance |
|
Interest |
|
Average Yield/Rate(4) |
|
Average Balance |
|
Interest |
|
Average Yield/Rate(4) |
|
Average Balance |
|
Interest |
|
Average Yield/Rate(4) |
|||||||||||||||
Interest-earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Commercial real estate and other mortgage loans(1) |
|
$ |
1,386,187 |
|
|
$ |
13,087 |
|
|
3.78 |
% |
|
$ |
1,357,141 |
|
|
$ |
12,528 |
|
|
3.69 |
% |
|
$ |
1,192,530 |
|
|
$ |
12,450 |
|
|
4.18 |
% |
Commercial and industrial loans(1) |
|
772,257 |
|
|
9,875 |
|
|
5.11 |
% |
|
757,898 |
|
|
9,625 |
|
|
5.08 |
% |
|
726,862 |
|
|
8,347 |
|
|
4.59 |
% |
||||||
Direct financing leases(1) |
|
19,883 |
|
|
222 |
|
|
4.47 |
% |
|
22,271 |
|
|
244 |
|
|
4.38 |
% |
|
27,115 |
|
|
395 |
|
|
5.83 |
% |
||||||
Consumer and other loans(1) |
|
45,026 |
|
|
407 |
|
|
3.62 |
% |
|
45,648 |
|
|
398 |
|
|
3.49 |
% |
|
36,614 |
|
|
356 |
|
|
3.89 |
% |
||||||
Total loans and leases receivable(1) |
|
2,223,353 |
|
|
23,591 |
|
|
4.24 |
% |
|
2,182,958 |
|
|
22,795 |
|
|
4.18 |
% |
|
1,983,121 |
|
|
21,548 |
|
|
4.35 |
% |
||||||
Mortgage-related securities(2) |
|
149,253 |
|
|
631 |
|
|
1.69 |
% |
|
163,324 |
|
|
666 |
|
|
1.63 |
% |
|
174,113 |
|
|
912 |
|
|
2.10 |
% |
||||||
Other investment securities(3) |
|
41,569 |
|
|
185 |
|
|
1.78 |
% |
|
42,177 |
|
|
187 |
|
|
1.77 |
% |
|
30,194 |
|
|
158 |
|
|
2.09 |
% |
||||||
FHLB stock |
|
14,172 |
|
|
176 |
|
|
4.97 |
% |
|
12,465 |
|
|
152 |
|
|
4.88 |
% |
|
10,301 |
|
|
127 |
|
|
4.93 |
% |
||||||
Short-term investments |
|
55,100 |
|
|
16 |
|
|
0.12 |
% |
|
24,575 |
|
|
6 |
|
|
0.10 |
% |
|
61,030 |
|
|
16 |
|
|
0.10 |
% |
||||||
Total interest-earning assets |
|
2,483,447 |
|
|
24,599 |
|
|
3.96 |
% |
|
2,425,499 |
|
|
23,806 |
|
|
3.93 |
% |
|
2,258,759 |
|
|
22,761 |
|
|
4.03 |
% |
||||||
Non-interest-earning assets |
|
137,893 |
|
|
|
|
|
|
151,665 |
|
|
|
|
|
|
167,008 |
|
|
|
|
|
||||||||||||
Total assets |
|
$ |
2,621,340 |
|
|
|
|
|
|
$ |
2,577,164 |
|
|
|
|
|
|
$ |
2,425,767 |
|
|
|
|
|
|||||||||
Interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Transaction accounts |
|
$ |
499,040 |
|
|
248 |
|
|
0.20 |
% |
|
$ |
521,130 |
|
|
250 |
|
|
0.19 |
% |
|
$ |
368,844 |
|
|
291 |
|
|
0.32 |
% |
|||
Money market |
|
662,919 |
|
|
282 |
|
|
0.17 |
% |
|
657,690 |
|
|
274 |
|
|
0.17 |
% |
|
637,714 |
|
|
368 |
|
|
0.23 |
% |
||||||
Certificates of deposit |
|
45,993 |
|
|
112 |
|
|
0.97 |
% |
|
57,424 |
|
|
177 |
|
|
1.23 |
% |
|
123,581 |
|
|
627 |
|
|
2.03 |
% |
||||||
Wholesale deposits |
|
162,580 |
|
|
301 |
|
|
0.74 |
% |
|
166,752 |
|
|
318 |
|
|
0.76 |
% |
|
105,597 |
|
|
638 |
|
|
2.42 |
% |
||||||
Total interest-bearing deposits |
|
1,370,532 |
|
|
943 |
|
|
0.28 |
% |
|
1,402,996 |
|
|
1,019 |
|
|
0.29 |
% |
|
1,235,736 |
|
|
1,924 |
|
|
0.62 |
% |
||||||
FHLB advances |
|
405,855 |
|
|
1,284 |
|
|
1.27 |
% |
|
366,670 |
|
|
1,249 |
|
|
1.36 |
% |
|
409,281 |
|
|
1,283 |
|
|
1.25 |
% |
||||||
Federal Reserve PPPLF |
|
— |
|
|
— |
|
|
— |
% |
|
— |
|
|
— |
|
|
— |
% |
|
20,821 |
|
|
18 |
|
|
0.35 |
% |
||||||
Other borrowings |
|
32,447 |
|
|
443 |
|
|
5.46 |
% |
|
27,296 |
|
|
401 |
|
|
5.88 |
% |
|
24,681 |
|
|
371 |
|
|
6.01 |
% |
||||||
Junior subordinated notes |
|
10,066 |
|
|
277 |
|
|
11.01 |
% |
|
10,063 |
|
|
274 |
|
|
10.89 |
% |
|
10,052 |
|
|
277 |
|
|
11.02 |
% |
||||||
Total interest-bearing liabilities |
|
1,818,900 |
|
|
2,947 |
|
|
0.65 |
% |
|
1,807,025 |
|
|
2,943 |
|
|
0.65 |
% |
|
1,700,571 |
|
|
3,873 |
|
|
0.91 |
% |
||||||
Non-interest-bearing demand deposit accounts |
|
527,441 |
|
|
|
|
|
|
485,863 |
|
|
|
|
|
|
440,413 |
|
|
|
|
|
||||||||||||
Other non-interest-bearing liabilities |
|
56,691 |
|
|
|
|
|
|
73,695 |
|
|
|
|
|
|
86,504 |
|
|
|
|
|
||||||||||||
Total liabilities |
|
2,403,032 |
|
|
|
|
|
|
2,366,583 |
|
|
|
|
|
|
2,227,488 |
|
|
|
|
|
||||||||||||
Stockholders’ equity |
|
218,308 |
|
|
|
|
|
|
210,581 |
|
|
|
|
|
|
198,279 |
|
|
|
|
|
||||||||||||
Total liabilities and stockholders’ equity |
|
$ |
2,621,340 |
|
|
|
|
|
|
$ |
2,577,164 |
|
|
|
|
|
|
$ |
2,425,767 |
|
|
|
|
|
|||||||||
Net interest income |
|
|
|
$ |
21,652 |
|
|
|
|
|
|
$ |
20,863 |
|
|
|
|
|
|
$ |
18,888 |
|
|
|
|||||||||
Interest rate spread |
|
|
|
|
|
3.31 |
% |
|
|
|
|
|
3.27 |
% |
|
|
|
|
|
3.12 |
% |
||||||||||||
Net interest-earning assets |
|
$ |
664,547 |
|
|
|
|
|
|
$ |
618,474 |
|
|
|
|
|
|
$ |
558,188 |
|
|
|
|
|
|||||||||
Net interest margin |
|
|
|
|
|
3.49 |
% |
|
|
|
|
|
3.44 |
% |
|
|
|
|
|
3.34 |
% |
||||||||||||
(1) |
The average balances of loans and leases include non-accrual loans and leases and loans held for sale. Interest income related to non-accrual loans and leases is recognized when collected. Interest income includes net loan fees collected in lieu of interest. |
(2) |
Includes amortized cost basis of assets available for sale and held to maturity. |
(3) |
Yields on tax-exempt municipal obligations are not presented on a tax-equivalent basis in this table. |
(4) |
Represents annualized yields/rates. |
NET INTEREST INCOME ANALYSIS
(Unaudited) |
|
For the Six Months Ended |
||||||||||||||||||||
(Dollars in thousands) |
|
June 30, 2021 |
|
June 30, 2020 |
||||||||||||||||||
|
|
Average Balance |
|
Interest |
|
Average Yield/Rate(4) |
|
Average Balance |
|
Interest |
|
Average Yield/Rate(4) |
||||||||||
Interest-earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial real estate and other mortgage loans(1) |
|
$ |
1,371,744 |
|
|
$ |
25,615 |
|
|
3.73 |
% |
|
$ |
1,173,251 |
|
|
$ |
25,973 |
|
|
4.43 |
% |
Commercial and industrial loans(1) |
|
765,117 |
|
|
19,500 |
|
|
5.10 |
% |
|
621,399 |
|
|
16,204 |
|
|
5.22 |
% |
||||
Direct financing leases(1) |
|
21,071 |
|
|
466 |
|
|
4.42 |
% |
|
27,538 |
|
|
503 |
|
|
3.65 |
% |
||||
Consumer and other loans(1) |
|
45,335 |
|
|
805 |
|
|
3.55 |
% |
|
36,244 |
|
|
717 |
|
|
3.96 |
% |
||||
Total loans and leases receivable(1) |
|
2,203,267 |
|
|
46,386 |
|
|
4.21 |
% |
|
1,858,432 |
|
|
43,397 |
|
|
4.67 |
% |
||||
Mortgage-related securities(2) |
|
156,249 |
|
|
1,297 |
|
|
1.66 |
% |
|
177,352 |
|
|
1,973 |
|
|
2.22 |
% |
||||
Other investment securities(3) |
|
41,871 |
|
|
372 |
|
|
1.78 |
% |
|
26,737 |
|
|
285 |
|
|
2.13 |
% |
||||
FHLB stock |
|
13,323 |
|
|
329 |
|
|
4.94 |
% |
|
9,407 |
|
|
331 |
|
|
7.04 |
% |
||||
Short-term investments |
|
39,922 |
|
|
22 |
|
|
0.11 |
% |
|
48,396 |
|
|
146 |
|
|
0.60 |
% |
||||
Total interest-earning assets |
|
2,454,632 |
|
|
48,406 |
|
|
3.94 |
% |
|
2,120,324 |
|
|
46,132 |
|
|
4.35 |
% |
||||
Non-interest-earning assets |
|
144,741 |
|
|
|
|
|
|
144,991 |
|
|
|
|
|
||||||||
Total assets |
|
$ |
2,599,373 |
|
|
|
|
|
|
$ |
2,265,315 |
|
|
|
|
|
||||||
Interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Transaction accounts |
|
$ |
510,024 |
|
|
498 |
|
|
0.20 |
% |
|
$ |
320,188 |
|
|
938 |
|
|
0.59 |
% |
||
Money market |
|
660,319 |
|
|
557 |
|
|
0.17 |
% |
|
653,598 |
|
|
2,237 |
|
|
0.68 |
% |
||||
Certificates of deposit |
|
51,677 |
|
|
288 |
|
|
1.11 |
% |
|
128,791 |
|
|
1,377 |
|
|
2.14 |
% |
||||
Wholesale deposits |
|
164,654 |
|
|
619 |
|
|
0.75 |
% |
|
119,032 |
|
|
1,488 |
|
|
2.50 |
% |
||||
Total interest-bearing deposits |
|
1,386,674 |
|
|
1,962 |
|
|
0.28 |
% |
|
1,221,609 |
|
|
6,040 |
|
|
0.99 |
% |
||||
FHLB advances |
|
386,371 |
|
|
2,533 |
|
|
1.31 |
% |
|
367,604 |
|
|
2,842 |
|
|
1.55 |
% |
||||
Federal Reserve PPPLF |
|
— |
|
|
— |
|
|
— |
% |
|
10,410 |
|
|
18 |
|
|
0.35 |
% |
||||
Other borrowings |
|
29,886 |
|
|
844 |
|
|
5.65 |
% |
|
24,533 |
|
|
740 |
|
|
6.03 |
% |
||||
Junior subordinated notes |
|
10,064 |
|
|
552 |
|
|
10.97 |
% |
|
10,050 |
|
|
555 |
|
|
11.04 |
% |
||||
Total interest-bearing liabilities |
|
1,812,995 |
|
|
5,891 |
|
|
0.65 |
% |
|
1,634,206 |
|
|
10,195 |
|
|
1.25 |
% |
||||
Non-interest-bearing demand deposit accounts |
|
506,767 |
|
|
|
|
|
|
365,771 |
|
|
|
|
|
||||||||
Other non-interest-bearing liabilities |
|
65,146 |
|
|
|
|
|
|
74,436 |
|
|
|
|
|
||||||||
Total liabilities |
|
2,384,908 |
|
|
|
|
|
|
2,074,413 |
|
|
|
|
|
||||||||
Stockholders’ equity |
|
214,465 |
|
|
|
|
|
|
190,902 |
|
|
|
|
|
||||||||
Total liabilities and stockholders’ equity |
|
$ |
2,599,373 |
|
|
|
|
|
|
$ |
2,265,315 |
|
|
|
|
|
||||||
Net interest income |
|
|
|
$ |
42,515 |
|
|
|
|
|
|
$ |
35,937 |
|
|
|
||||||
Interest rate spread |
|
|
|
|
|
3.29 |
% |
|
|
|
|
|
3.10 |
% |
||||||||
Net interest-earning assets |
|
$ |
641,637 |
|
|
|
|
|
|
$ |
486,118 |
|
|
|
|
|
||||||
Net interest margin |
|
|
|
|
|
3.46 |
% |
|
|
|
|
|
3.39 |
% |
||||||||
(1) |
The average balances of loans and leases include non-accrual loans and leases and loans held for sale. Interest income related to non-accrual loans and leases is recognized when collected. Interest income includes net loan fees collected in lieu of interest. |
(2) |
Includes amortized cost basis of assets available for sale and held to maturity. |
(3) |
Yields on tax-exempt municipal obligations are not presented on a tax-equivalent basis in this table. |
(4) |
Represents annualized yields/rates. |
PROVISION FOR LOAN AND LEASE LOSS COMPOSITION
(Unaudited) |
|
For the Three Months Ended |
|
For the Six Months Ended |
||||||||||||||||||||||||
(Dollars in thousands) |
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
June 30,
|
|
June 30,
|
||||||||||||||
Change in general reserve due to subjective factor changes |
|
$ |
(652) |
|
|
$ |
1,082 |
|
|
$ |
1,008 |
|
|
$ |
(766) |
|
|
$ |
2,388 |
|
|
$ |
430 |
|
|
$ |
5,224 |
|
Change in general reserve due to historical loss factor changes |
|
(1,687) |
|
|
(984) |
|
|
1,274 |
|
|
(16) |
|
|
(54) |
|
|
(2,671) |
|
|
(334) |
|
|||||||
Charge-offs |
|
2,894 |
|
|
144 |
|
|
6,685 |
|
|
505 |
|
|
817 |
|
|
3,038 |
|
|
948 |
|
|||||||
Recoveries |
|
(545) |
|
|
(2,673) |
|
|
(68) |
|
|
(23) |
|
|
(64) |
|
|
(3,218) |
|
|
(241) |
|
|||||||
Change in specific reserves on impaired loans, net |
|
(1,466) |
|
|
(194) |
|
|
(5,216) |
|
|
2,974 |
|
|
2,122 |
|
|
(1,660) |
|
|
2,559 |
|
|||||||
Change due to loan growth, net |
|
498 |
|
|
557 |
|
|
639 |
|
|
1,161 |
|
|
260 |
|
|
1,055 |
|
|
495 |
|
|||||||
Total provision for loan and lease losses |
|
$ |
(958) |
|
|
$ |
(2,068) |
|
|
$ |
4,322 |
|
|
$ |
3,835 |
|
|
$ |
5,469 |
|
|
$ |
(3,026) |
|
|
$ |
8,651 |
|
PERFORMANCE RATIOS
|
|
For the Three Months Ended |
|
For the Six Months Ended |
|||||||||||||||||
(Unaudited) |
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
June 30,
|
|
June 30,
|
|||||||
Return on average assets (annualized) |
|
1.26 |
% |
|
1.51 |
% |
|
0.93 |
% |
|
0.68 |
% |
|
0.55 |
% |
|
1.38 |
% |
|
0.58 |
% |
Return on average equity (annualized) |
|
15.09 |
% |
|
18.48 |
% |
|
11.92 |
% |
|
8.58 |
% |
|
6.70 |
% |
|
16.75 |
% |
|
6.92 |
% |
Efficiency ratio |
|
64.17 |
% |
|
62.19 |
% |
|
60.02 |
% |
|
64.16 |
% |
|
61.22 |
% |
|
63.18 |
% |
|
64.36 |
% |
Interest rate spread |
|
3.31 |
% |
|
3.27 |
% |
|
3.51 |
% |
|
2.94 |
% |
|
3.12 |
% |
|
3.29 |
% |
|
3.10 |
% |
Net interest margin |
|
3.49 |
% |
|
3.44 |
% |
|
3.69 |
% |
|
3.14 |
% |
|
3.34 |
% |
|
3.46 |
% |
|
3.39 |
% |
Average interest-earning assets to average interest-bearing liabilities |
|
136.54 |
% |
|
134.23 |
% |
|
132.88 |
% |
|
131.68 |
% |
|
132.82 |
% |
|
135.39 |
% |
|
129.75 |
% |
ASSET QUALITY RATIOS
(Unaudited) |
|
As of |
||||||||||||||||||
(Dollars in thousands) |
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
||||||||||
Non-accrual loans and leases |
|
$ |
11,422 |
|
|
$ |
18,992 |
|
|
$ |
26,617 |
|
|
$ |
36,050 |
|
|
$ |
24,095 |
|
Foreclosed properties |
|
179 |
|
|
31 |
|
|
34 |
|
|
613 |
|
|
1,389 |
|
|||||
Total non-performing assets |
|
11,601 |
|
|
19,023 |
|
|
26,651 |
|
|
36,663 |
|
|
25,484 |
|
|||||
Performing troubled debt restructurings |
|
56 |
|
|
59 |
|
|
46 |
|
|
47 |
|
|
49 |
|
|||||
Total impaired assets |
|
$ |
11,657 |
|
|
$ |
19,082 |
|
|
$ |
26,697 |
|
|
$ |
36,710 |
|
|
$ |
25,533 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Non-accrual loans and leases as a percent of total gross loans and leases |
|
0.53 |
% |
|
0.85 |
% |
|
1.24 |
% |
|
1.66 |
% |
|
1.17 |
% |
|||||
Non-performing assets as a percent of total gross loans and leases plus foreclosed properties |
|
0.54 |
% |
|
0.85 |
% |
|
1.24 |
% |
|
1.68 |
% |
|
1.23 |
% |
|||||
Non-performing assets as a percent of total assets |
|
0.40 |
% |
|
0.73 |
% |
|
1.04 |
% |
|
1.41 |
% |
|
1.03 |
% |
|||||
Allowance for loan and lease losses as a percent of total gross loans and leases |
|
1.20 |
% |
|
1.29 |
% |
|
1.33 |
% |
|
1.41 |
% |
|
1.33 |
% |
|||||
Allowance for loan and lease losses as a percent of non-accrual loans and leases |
|
224.79 |
% |
|
152.60 |
% |
|
107.15 |
% |
|
85.48 |
% |
|
113.98 |
% |
|||||
ASSET QUALITY RATIOS - EXCLUDING NET PPP LOANS
(Unaudited) |
|
As of |
||||||||||||||||||
(Dollars in thousands) |
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
||||||||||
Non-accrual loans and leases as a percent of total gross loans and leases |
|
0.56 |
% |
|
0.96 |
% |
|
1.38 |
% |
|
1.95 |
% |
|
1.38 |
% |
|||||
Non-performing assets as a percent of total gross loans and leases plus foreclosed properties |
|
0.57 |
% |
|
0.96 |
% |
|
1.38 |
% |
|
1.98 |
% |
|
1.46 |
% |
|||||
Non-performing assets as a percent of total assets |
|
0.42 |
% |
|
0.81 |
% |
|
1.14 |
% |
|
1.61 |
% |
|
1.19 |
% |
|||||
Allowance for loan and lease losses as a percent of total gross loans and leases |
|
1.27 |
% |
|
1.47 |
% |
|
1.48 |
% |
|
1.67 |
% |
|
1.57 |
% |
|||||
PPP loans outstanding, net |
|
$ |
120,723 |
|
|
$ |
267,567 |
|
|
$ |
225,323 |
|
|
$ |
325,481 |
|
|
$ |
320,036 |
|
NET CHARGE-OFFS (RECOVERIES)
(Unaudited) |
|
For the Three Months Ended |
|
For the Six Months Ended |
||||||||||||||||||||||||
(Dollars in thousands) |
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
June 30,
|
|
June 30,
|
||||||||||||||
Charge-offs |
|
$ |
2,894 |
|
|
$ |
144 |
|
|
$ |
6,685 |
|
|
$ |
505 |
|
|
$ |
817 |
|
|
$ |
3,038 |
|
|
$ |
948 |
|
Recoveries |
|
(545) |
|
|
(2,673) |
|
|
(68) |
|
|
(23) |
|
|
(64) |
|
|
(3,218) |
|
|
(241) |
|
|||||||
Net charge-offs (recoveries) |
|
$ |
2,349 |
|
|
$ |
(2,529) |
|
|
$ |
6,617 |
|
|
$ |
482 |
|
|
$ |
753 |
|
|
$ |
(180) |
|
|
$ |
707 |
|
Net charge-offs (recoveries) as a percent of average gross loans and leases (annualized) |
|
0.42 |
% |
|
(0.46) |
% |
|
1.21 |
% |
|
0.09 |
% |
|
0.15 |
% |
|
(0.02) |
% |
|
0.08 |
% |
|||||||
Annualized charge-offs (recoveries) as a percent of average gross loans and leases, excluding average net PPP loans |
|
0.47 |
% |
|
(0.52) |
% |
|
1.39 |
% |
|
0.11 |
% |
|
0.17 |
% |
|
(0.02) |
% |
|
0.08 |
% |
|||||||
Average PPP loans outstanding, net |
|
$ |
229,165 |
|
|
$ |
242,242 |
|
|
$ |
282,259 |
|
|
$ |
323,082 |
|
|
$ |
252,834 |
|
|
$ |
235,668 |
|
|
$ |
126,417 |
|
CAPITAL RATIOS
|
|
As of and for the Three Months Ended |
|||||||||||||
(Unaudited) |
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|||||
Total capital to risk-weighted assets |
|
11.22 |
% |
|
11.52 |
% |
|
11.25 |
% |
|
11.42 |
% |
|
11.97 |
% |
Tier I capital to risk-weighted assets |
|
9.14 |
% |
|
9.24 |
% |
|
8.96 |
% |
|
9.09 |
% |
|
9.57 |
% |
Common equity tier I capital to risk-weighted assets |
|
8.72 |
% |
|
8.81 |
% |
|
8.53 |
% |
|
8.64 |
% |
|
9.08 |
% |
Tier I capital to adjusted assets |
|
8.48 |
% |
|
8.37 |
% |
|
7.99 |
% |
|
8.04 |
% |
|
8.29 |
% |
Tangible common equity to tangible assets |
|
7.33 |
% |
|
7.76 |
% |
|
7.60 |
% |
|
7.29 |
% |
|
7.56 |
% |
Tangible common equity to tangible assets, excluding net PPP loans |
|
7.66 |
% |
|
8.65 |
% |
|
8.33 |
% |
|
8.34 |
% |
|
8.69 |
% |
LOAN AND LEASE RECEIVABLE COMPOSITION
(Unaudited) |
|
As of |
||||||||||||||||||
(in thousands) |
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
||||||||||
Commercial real estate: |
|
|
|
|
|
|
|
|
|
|
||||||||||
Commercial real estate - owner occupied |
|
$ |
253,600 |
|
|
$ |
256,812 |
|
|
$ |
253,882 |
|
|
$ |
240,706 |
|
|
$ |
229,994 |
|
Commercial real estate - non-owner occupied |
|
614,289 |
|
|
592,090 |
|
|
564,532 |
|
|
565,781 |
|
|
533,211 |
|
|||||
Land development |
|
45,056 |
|
|
46,544 |
|
|
49,839 |
|
|
50,864 |
|
|
44,299 |
|
|||||
Construction |
|
139,943 |
|
|
151,345 |
|
|
141,043 |
|
|
142,726 |
|
|
133,375 |
|
|||||
Multi-family |
|
319,351 |
|
|
322,384 |
|
|
311,556 |
|
|
287,583 |
|
|
244,496 |
|
|||||
1-4 family |
|
19,769 |
|
|
23,319 |
|
|
38,284 |
|
|
38,857 |
|
|
36,823 |
|
|||||
Total commercial real estate |
|
1,392,008 |
|
|
1,392,494 |
|
|
1,359,136 |
|
|
1,326,517 |
|
|
1,222,198 |
|
|||||
Commercial and industrial |
|
695,442 |
|
|
784,305 |
|
|
732,318 |
|
|
790,349 |
|
|
781,239 |
|
|||||
Direct financing leases, net |
|
18,142 |
|
|
19,616 |
|
|
22,331 |
|
|
24,743 |
|
|
25,525 |
|
|||||
Consumer and other: |
|
|
|
|
|
|
|
|
|
|
||||||||||
Home equity and second mortgages |
|
5,740 |
|
|
6,719 |
|
|
7,833 |
|
|
7,106 |
|
|
6,706 |
|
|||||
Other |
|
36,567 |
|
|
38,266 |
|
|
28,897 |
|
|
29,341 |
|
|
29,737 |
|
|||||
Total consumer and other |
|
42,307 |
|
|
44,985 |
|
|
36,730 |
|
|
36,447 |
|
|
36,443 |
|
|||||
Total gross loans and leases receivable |
|
2,147,899 |
|
|
2,241,400 |
|
|
2,150,515 |
|
|
2,178,056 |
|
|
2,065,405 |
|
|||||
Less: |
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for loan and lease losses |
|
25,675 |
|
|
28,982 |
|
|
28,521 |
|
|
30,817 |
|
|
27,464 |
|
|||||
Deferred loan fees |
|
4,338 |
|
|
6,288 |
|
|
4,545 |
|
|
7,757 |
|
|
8,542 |
|
|||||
Loans and leases receivable, net |
|
$ |
2,117,886 |
|
|
$ |
2,206,130 |
|
|
$ |
2,117,449 |
|
|
$ |
2,139,482 |
|
|
$ |
2,029,399 |
|
LEGACY SBA 7(a) AND EXPRESS LOAN COMPOSITION (1)
(Unaudited) |
|
As of |
||||||||||||||||||
(in thousands) |
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
||||||||||
Performing loans: |
|
|
|
|
|
|
|
|
|
|
||||||||||
Off-balance sheet loans |
|
$ |
14,161 |
|
|
$ |
17,523 |
|
|
$ |
23,354 |
|
|
$ |
26,017 |
|
|
$ |
28,843 |
|
On-balance sheet loans |
|
6,836 |
|
|
7,340 |
|
|
11,117 |
|
|
15,175 |
|
|
16,554 |
|
|||||
Gross loans |
|
20,997 |
|
|
24,863 |
|
|
34,471 |
|
|
41,192 |
|
|
45,397 |
|
|||||
Non-performing loans: |
|
|
|
|
|
|
|
|
|
|
||||||||||
Off-balance sheet loans |
|
3,943 |
|
|
1,835 |
|
|
1,931 |
|
|
2,574 |
|
|
1,640 |
|
|||||
On-balance sheet loans |
|
1,800 |
|
|
6,832 |
|
|
7,435 |
|
|
9,561 |
|
|
9,725 |
|
|||||
Gross loans |
|
5,743 |
|
|
8,667 |
|
|
9,366 |
|
|
12,135 |
|
|
11,365 |
|
|||||
Total loans: |
|
|
|
|
|
|
|
|
|
|
||||||||||
Off-balance sheet loans |
|
18,104 |
|
|
19,358 |
|
|
25,285 |
|
|
28,591 |
|
|
30,483 |
|
|||||
On-balance sheet loans |
|
8,636 |
|
|
14,172 |
|
|
18,552 |
|
|
24,736 |
|
|
26,279 |
|
|||||
Gross loans |
|
$ |
26,740 |
|
|
$ |
33,530 |
|
|
$ |
43,837 |
|
|
$ |
53,327 |
|
|
$ |
56,762 |
|
(1) Defined as SBA 7(a) and Express loans originated in 2016 and prior. |
||||||||||||||||||||
DEPOSIT COMPOSITION
(Unaudited) |
|
As of |
||||||||||||||||||
(in thousands) |
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
||||||||||
Non-interest-bearing transaction accounts |
|
$ |
774,253 |
|
|
$ |
496,877 |
|
|
$ |
472,818 |
|
|
$ |
452,268 |
|
|
$ |
433,760 |
|
Interest-bearing transaction accounts |
|
511,698 |
|
|
561,466 |
|
|
503,992 |
|
|
484,761 |
|
|
413,214 |
|
|||||
Money market accounts |
|
685,127 |
|
|
632,065 |
|
|
641,504 |
|
|
636,872 |
|
|
656,741 |
|
|||||
Certificates of deposit |
|
45,137 |
|
|
46,818 |
|
|
64,694 |
|
|
93,344 |
|
|
116,901 |
|
|||||
Wholesale deposits |
|
144,492 |
|
|
165,492 |
|
|
172,508 |
|
|
154,130 |
|
|
89,759 |
|
|||||
Total deposits |
|
$ |
2,160,707 |
|
|
$ |
1,902,718 |
|
|
$ |
1,855,516 |
|
|
$ |
1,821,375 |
|
|
$ |
1,710,375 |
|
TRUST ASSETS COMPOSITION
(Unaudited) |
|
As of |
||||||||||||||||||
(in thousands) |
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
||||||||||
Trust assets under management |
|
$ |
2,362,257 |
|
|
$ |
2,195,804 |
|
|
$ |
2,061,772 |
|
|
$ |
1,841,986 |
|
|
$ |
1,704,019 |
|
Trust assets under administration |
|
202,116 |
|
|
190,721 |
|
|
187,228 |
|
|
175,521 |
|
|
169,388 |
|
|||||
Total trust assets |
|
$ |
2,564,373 |
|
|
$ |
2,386,525 |
|
|
$ |
2,249,000 |
|
|
$ |
2,017,507 |
|
|
$ |
1,873,407 |
|
NON-GAAP RECONCILIATIONS
Certain financial information provided in this release is determined by methods other than in accordance with generally accepted accounting principles (United States) (“GAAP”). Although the Company’s management believes that these non-GAAP financial measures provide a greater understanding of its business, these measures are not necessarily comparable to similar measures that may be presented by other companies.
TANGIBLE BOOK VALUE
“Tangible book value per share” is a non-GAAP measure representing tangible common equity divided by total common shares outstanding. “Tangible common equity” itself is a non-GAAP measure representing common stockholders’ equity reduced by intangible assets, if any. The Company’s management believes that this measure is important to many investors in the marketplace who are interested in period-to-period changes in book value per common share exclusive of changes in intangible assets. The information provided below reconciles tangible book value per share and tangible common equity to their most comparable GAAP measures.
(Unaudited) |
|
As of |
||||||||||||||||||
(Dollars in thousands, except per share amounts) |
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
||||||||||
Common stockholders’ equity |
|
$ |
221,452 |
|
|
$ |
214,491 |
|
|
$ |
206,162 |
|
|
$ |
200,785 |
|
|
$ |
197,562 |
|
Goodwill and other intangible assets |
|
(12,178) |
|
|
(12,055) |
|
|
(12,018) |
|
|
(12,024) |
|
|
(11,925) |
|
|||||
Tangible common equity |
|
$ |
209,274 |
|
|
$ |
202,436 |
|
|
$ |
194,144 |
|
|
$ |
188,761 |
|
|
$ |
185,637 |
|
Common shares outstanding |
|
8,617,761 |
|
|
8,638,195 |
|
|
8,566,960 |
|
|
8,561,714 |
|
|
8,575,134 |
|
|||||
Book value per share |
|
$ |
25.70 |
|
|
$ |
24.83 |
|
|
$ |
24.06 |
|
|
$ |
23.45 |
|
|
$ |
23.04 |
|
Tangible book value per share |
|
24.28 |
|
|
23.43 |
|
|
22.66 |
|
|
22.05 |
|
|
21.65 |
|
|||||
TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS
"Tangible common equity to tangible assets" is defined as the ratio of common stockholders’ equity reduced by intangible assets, if any, divided by total assets reduced by intangible assets, if any. The Company’s management believes that this measure is important to many investors in the marketplace who are interested in the relative changes from period to period in common equity and total assets, each exclusive of changes in intangible assets. The information below reconciles tangible common equity and tangible assets to their most comparable GAAP measures.
(Unaudited) |
|
As of |
||||||||||||||||||
(Dollars in thousands) |
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
||||||||||
Common stockholders’ equity |
|
$ |
221,452 |
|
|
$ |
214,491 |
|
|
$ |
206,162 |
|
|
$ |
200,785 |
|
|
$ |
197,562 |
|
Goodwill and other intangible assets |
|
(12,178) |
|
|
(12,055) |
|
|
(12,018) |
|
|
(12,024) |
|
|
(11,925) |
|
|||||
Tangible common equity |
|
$ |
209,274 |
|
|
$ |
202,436 |
|
|
$ |
194,144 |
|
|
$ |
188,761 |
|
|
$ |
185,637 |
|
Total assets |
|
$ |
2,865,669 |
|
|
$ |
2,620,718 |
|
|
$ |
2,567,837 |
|
|
$ |
2,601,847 |
|
|
$ |
2,468,814 |
|
Goodwill and other intangible assets |
|
(12,178) |
|
|
(12,055) |
|
|
(12,018) |
|
|
(12,024) |
|
|
(11,925) |
|
|||||
Tangible assets |
|
$ |
2,853,491 |
|
|
$ |
2,608,663 |
|
|
$ |
2,555,819 |
|
|
$ |
2,589,823 |
|
|
$ |
2,456,889 |
|
Tangible common equity to tangible assets |
|
7.33 |
% |
|
7.76 |
% |
|
7.60 |
% |
|
7.29 |
% |
|
7.56 |
% |
|||||
Period-end net PPP loans |
|
120,722 |
|
|
267,567 |
|
|
225,323 |
|
|
325,481 |
|
|
320,036 |
|
|||||
Tangible assets, excluding net PPP loans |
|
$ |
2,732,769 |
|
|
$ |
2,341,096 |
|
|
$ |
2,330,496 |
|
|
$ |
2,264,342 |
|
|
$ |
2,136,853 |
|
Tangible common equity to tangible assets, excluding net PPP loans |
|
7.66 |
% |
|
8.65 |
% |
|
8.33 |
% |
|
8.34 |
% |
|
8.69 |
% |
|||||
EFFICIENCY RATIO & PRE-TAX, PRE-PROVISION ADJUSTED EARNINGS
“Efficiency ratio” is a non-GAAP measure representing non-interest expense excluding the effects of the SBA recourse provision, impairment of tax credit investments, losses or gains on foreclosed properties, amortization of other intangible assets and other discrete items, if any, divided by operating revenue, which is equal to net interest income plus non-interest income less realized gains or losses on securities, if any. “Pre-tax, pre-provision adjusted earnings” is defined as operating revenue less operating expense. In the judgment of the Company’s management, the adjustments made to non-interest expense and non-interest income allow investors and analysts to better assess the Company’s operating expenses in relation to its core operating revenue by removing the volatility that is associated with certain one-time items and other discrete items. The information provided below reconciles the efficiency ratio and pre-tax, pre-provision adjusted earnings to its most comparable GAAP measure.
(Unaudited) |
|
For the Three Months Ended |
|
For the Six Months Ended |
||||||||||||||||||||||||
(Dollars in thousands) |
|
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
June 30,
|
|
June 30,
|
||||||||||||||
Total non-interest expense |
|
$ |
18,184 |
|
|
$ |
17,330 |
|
|
$ |
17,651 |
|
|
$ |
16,758 |
|
|
$ |
18,343 |
|
|
$ |
35,514 |
|
|
$ |
34,488 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net (gain) loss on foreclosed properties |
|
(1) |
|
|
3 |
|
|
54 |
|
|
(121) |
|
|
348 |
|
|
1 |
|
|
450 |
|
|||||||
Amortization of other intangible assets |
|
8 |
|
|
8 |
|
|
8 |
|
|
9 |
|
|
9 |
|
|
15 |
|
|
18 |
|
|||||||
SBA recourse provision (benefit) |
|
245 |
|
|
(130) |
|
|
(330) |
|
|
57 |
|
|
(30) |
|
|
115 |
|
|
(5) |
|
|||||||
Tax credit investment impairment |
|
— |
|
|
— |
|
|
328 |
|
|
113 |
|
|
1,841 |
|
|
— |
|
|
1,954 |
|
|||||||
Loss on early extinguishment of debt |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
744 |
|
|
— |
|
|
744 |
|
|||||||
Total operating expense (a) |
|
$ |
17,932 |
|
|
$ |
17,449 |
|
|
$ |
17,591 |
|
|
$ |
16,700 |
|
|
$ |
15,431 |
|
|
$ |
35,383 |
|
|
$ |
31,327 |
|
Net interest income |
|
$ |
21,652 |
|
|
$ |
20,863 |
|
|
$ |
22,512 |
|
|
$ |
18,621 |
|
|
$ |
18,888 |
|
|
$ |
42,515 |
|
|
$ |
35,937 |
|
Total non-interest income |
|
6,321 |
|
|
7,195 |
|
|
6,799 |
|
|
7,408 |
|
|
6,319 |
|
|
13,516 |
|
|
12,733 |
|
|||||||
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net gain (loss) on sale of securities |
|
29 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
29 |
|
|
(4) |
|
|||||||
Adjusted non-interest income |
|
6,292 |
|
|
7,195 |
|
|
6,799 |
|
|
7,408 |
|
|
6,319 |
|
|
13,487 |
|
|
12,737 |
|
|||||||
Total operating revenue (b) |
|
$ |
27,944 |
|
|
$ |
28,058 |
|
|
$ |
29,311 |
|
|
$ |
26,029 |
|
|
$ |
25,207 |
|
|
$ |
56,002 |
|
|
$ |
48,674 |
|
Efficiency ratio |
|
64.17 |
% |
|
62.19 |
% |
|
60.02 |
% |
|
64.16 |
% |
|
61.22 |
% |
|
63.18 |
% |
|
64.36 |
% |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Pre-tax, pre-provision adjusted earnings (b - a) |
|
$ |
10,012 |
|
|
$ |
10,609 |
|
|
$ |
11,720 |
|
|
$ |
9,329 |
|
|
$ |
9,776 |
|
|
$ |
20,619 |
|
|
$ |
17,347 |
|
Average total assets |
|
$ |
2,621,340 |
|
|
$ |
2,577,164 |
|
|
$ |
2,603,745 |
|
|
$ |
2,540,735 |
|
|
$ |
2,425,767 |
|
|
$ |
2,599,373 |
|
|
$ |
2,265,315 |
|
Pre-tax, pre-provision adjusted return on average assets |
|
1.53 |
% |
|
1.65 |
% |
|
1.80 |
% |
|
1.47 |
% |
|
1.61 |
% |
|
1.59 |
% |
|
1.53 |
% |
|||||||
ADJUSTED NET INTEREST MARGIN
“Adjusted Net Interest Margin” is a non-GAAP measure representing net interest income excluding the fees in lieu of interest and other recurring but volatile components of net interest margin divided by average interest-earning assets less average net PPP loans, if any, and other recurring but volatile components of average interest-earning assets. Fees in lieu of interest are defined as prepayment fees, asset-based loan fees, non-accrual interest, and loan fee amortization. In the judgment of the Company’s management, the adjustments made to net interest income allow investors and analysts to better assess the Company’s net interest income in relation to its core client-facing loan and deposit rate changes by removing the volatility that is associated with these recurring but volatile components. The information provided below reconciles the net interest margin to its most comparable GAAP measure.
(Unaudited) |
For the Three Months Ended |
|
For the Six Months Ended |
||||||||||||||||||||||||
(Dollars in thousands) |
June 30,
|
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
June 30,
|
|
June 30,
|
||||||||||||||
Interest income |
$ |
24,599 |
|
|
$ |
23,806 |
|
|
$ |
25,770 |
|
|
$ |
22,276 |
|
|
$ |
22,761 |
|
|
$ |
48,406 |
|
|
$ |
46,132 |
|
Interest expense |
2,947 |
|
|
2,943 |
|
|
3,258 |
|
|
3,655 |
|
|
3,873 |
|
|
5,891 |
|
|
10,195 |
|
|||||||
Net interest income (a) |
21,652 |
|
|
20,863 |
|
|
22,512 |
|
|
18,621 |
|
|
18,888 |
|
|
42,515 |
|
|
35,937 |
|
|||||||
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Fees in lieu of interest |
3,536 |
|
|
3,085 |
|
|
4,749 |
|
|
1,511 |
|
|
2,257 |
|
|
6,621 |
|
|
3,055 |
|
|||||||
PPP loan interest income |
566 |
|
|
603 |
|
|
718 |
|
|
833 |
|
|
647 |
|
|
1,169 |
|
|
647 |
|
|||||||
FRB interest income and FHLB dividend income |
192 |
|
|
158 |
|
|
188 |
|
|
167 |
|
|
134 |
|
|
350 |
|
|
435 |
|
|||||||
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
FRB PPPLF interest expense |
— |
|
|
— |
|
|
9 |
|
|
26 |
|
|
18 |
|
|
— |
|
|
18 |
|
|||||||
Adjusted net interest income (b) |
$ |
17,358 |
|
|
$ |
17,017 |
|
|
$ |
16,866 |
|
|
$ |
16,136 |
|
|
$ |
15,868 |
|
|
$ |
34,375 |
|
|
$ |
31,818 |
|
Average interest-earning assets (c) |
$ |
2,483,447 |
|
|
$ |
2,425,499 |
|
|
$ |
2,441,735 |
|
|
$ |
2,374,891 |
|
|
$ |
2,258,759 |
|
|
$ |
2,454,632 |
|
|
$ |
2,120,324 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Average net PPP loans |
229,165 |
|
|
242,242 |
|
|
282,259 |
|
|
323,082 |
|
|
252,834 |
|
|
235,668 |
|
|
126,417 |
|
|||||||
Average FRB cash and FHLB stock |
68,503 |
|
|
36,643 |
|
|
45,611 |
|
|
33,756 |
|
|
69,176 |
|
|
52,661 |
|
|
53,583 |
|
|||||||
Average non-accrual loans and leases |
16,744 |
|
|
22,069 |
|
|
36,013 |
|
|
26,931 |
|
|
25,386 |
|
|
19,392 |
|
|
23,797 |
|
|||||||
Adjusted average interest-earning assets (d) |
$ |
2,169,035 |
|
|
$ |
2,124,545 |
|
|
$ |
2,077,852 |
|
|
$ |
1,991,122 |
|
|
$ |
1,911,363 |
|
|
$ |
2,146,911 |
|
|
$ |
1,916,527 |
|
Net interest margin (a / c) |
3.49 |
% |
|
3.44 |
% |
|
3.69 |
% |
|
3.14 |
% |
|
3.34 |
% |
|
3.46 |
% |
|
3.39 |
% |
|||||||
Adjusted net interest margin (b / d) |
3.20 |
% |
|
3.20 |
% |
|
3.25 |
% |
|
3.24 |
% |
|
3.32 |
% |
|
3.20 |
% |
|
3.32 |
% |
|||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20210729006036/en/
FAQ
What were First Business Financial Services' latest earnings results for Q2 2021 (FBIZ)?
How did First Business Financial Services' loan growth perform in Q2 2021?
What are the non-performing assets for FBIZ in Q2 2021?
How did the net interest income change for FBIZ in Q2 2021 compared to last year?
What is the outlook for First Business Financial Services regarding loan provisions in H2 2021?
