UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8‑K
CURRENT REPORT Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
|
| | |
Date of report (Date of earliest event reported) | | October 28, 2014 |
First Security Group, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Tennessee
(State or Other Jurisdiction of Incorporation)
|
| | |
000-49747 | | 58-2461486 |
(Commission File Number) | | (IRS Employer Identification No.) |
|
| | |
531 Broad Street, Chattanooga, Tennessee | | 37402 |
(Address of Principal Executive Offices) | | (Zip Code) |
(423) 266-2000
(Registrant's telephone number, including area code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition
A copy of First Security's press release summarizing its financial results for the third quarter of 2014 is attached as Exhibit 99.1. Summarized financial highlights and consolidated financial statements are attached as Exhibit 99.2 and 99.3, respectively. The publication date of the press release is October 28, 2014.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
|
| | |
Exhibit No. |
| Description |
99.1 |
| Third Quarter 2014 Earnings Release dated October 28, 2014. 1 |
99.2 |
| Financial Highlights. 1 |
99.3 |
| Consolidated Balance Sheet and Consolidated Statement of Operations. 1 |
1 The information provided in the attached press release shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
FIRST SECURITY GROUP, INC.
Dated: October 28, 2014
|
| |
By: | /s/ John R. Haddock |
Name: | John R. Haddock |
Title: | Executive Vice President and Chief Financial Officer |
Exhibit Index
|
| | |
Exhibit No. |
| Description |
99.1 |
| Third Quarter 2014 Earnings Release dated October 28, 2014. |
99.2 |
| Financial Highlights |
99.3 |
| Consolidated Balance Sheet and Consolidated Statement of Operations |
First Security Group Announces Third Quarter Profits
Strong Deposit and Loan Growth Achieved
CHATTANOOGA, TN, October 28, 2014 - First Security Group, Inc. (NASDAQ: FSGI) (“First Security” or “FSG”) reported net income for the third quarter of 2014 of $927 thousand, or $0.01 per basic and diluted share, and $1.5 million for the nine months ended September 30, 2014, or $0.02 per basic and diluted share.
Financial Highlights
| |
• | Net income of $927 thousand for the third quarter, a $314 thousand, or 51%, improvement from the second quarter and a $2.4 million improvement from the third quarter of 2013. |
| |
• | Loans increased by $83.6 million, or 14.3% (19.2% annualized) from December 31, 2013 to September 30, 2014. Additionally, FSG has transferred $86.3 million of loans into the held-for-sale category during 2014 for net loan production of $169.9 million, or 29.1% (39.0% annualized) of the 2013 year-end balance of $583.1 million. |
| |
• | Average pure deposits increased by $38.3 million, or 8.4% (33.4% annualized) comparing the second and third quarters of 2014. |
“Our goal for the near- and long-term is to enhance our profitability each and every quarter. We made additional progress building a balance sheet that will produce sustainable, predictable and consistently improving earnings,” said Michael Kramer, First Security’s President and Chief Executive Officer. “In the current interest rate environment, we have placed a significant emphasis on growing our deposit base to support our loan growth and we are pleased with the progress achieved during the quarter.”
The below discussion of First Security’s results of operations and financial condition is supplemented by the accompanying financial highlights.
Net Interest Income
For the third quarter of 2014, net interest income improved by $942 thousand, or 12.5%, to $8.5 million compared to $7.5 million for the second quarter of 2014. Interest income on loans, including fees, increased by $1.1 million while total interest income increased by $937 thousand due to the continued reduction in the investment security portfolio. Included in the increase in interest income on loans is approximately $650 thousand of discount accretion as a result of the resolution of various loans purchased at discounts. The net interest margin improved by 30 basis points in the third quarter of 2014 from 3.30% to 3.60% compared to the second quarter. Excluding the discount accretion, the net interest margin for the third quarter improved by 3 basis points to 3.33%.
Loans
Loans totaled $666.7 million as of September 30, 2014 compared to $659.5 million as of June 30, 2014. During the third quarter, approximately $52.7 million of loans were transferred into the held-for-sale category. Including the transfer into the held-for-sale category, net loan production totaled $59.9 million during the third quarter of 2014.
“During the third quarter, we achieved significant loan production from our primary markets of Chattanooga and Knoxville as well as our TriNet line of business,” said John Haddock, First Security’s EVP and Chief Financial
Officer. “We will continue to evaluate and sell a portion of our TriNet production to capitalize on market opportunities and manage certain lending concentrations. We expect to realize solid gains on loan sales during the fourth quarter from the $50 million held-for-sale at the end of the quarter.”
Deposits
First Security continued to improve its deposit mix to reduce the overall cost of deposits from 0.59% for the second quarter of 2014 to 0.55% for the third quarter of 2014. Average transaction deposits accounted for 56.8% of average total deposits during the third quarter, up from 54.1% for the second quarter of 2014, totaling $493.7 million as compared to $455.4 million. Average core deposits, defined as transaction accounts plus retail CDs, increased to 75.3% of average total deposits as compared to 74.0% for the second quarter. Brokered CDs declined by $14.7 million during the third quarter, while customer deposits placed and reciprocated through our Promontory© products increased by $11.6 million.
Non-Interest Income
Non-interest income totaled $2.8 million for the third quarter of 2014 compared to $3.0 million for the second quarter of 2014. FSG reported $254 thousand in net gains on sales of loans during the third quarter, or a decline of $196 thousand, as compared to $450 thousand in the second quarter of 2014. This represents the aggregate gains from First Security’s SBA lending department as well as gains from certain commercial real estate loans that were classified as held-for-sale as of June 30, 2014. As of September 30, 2014, loans held-for-sale totaled $46.9 million, which are expected to be sold for gains during the fourth quarter. Mortgage banking income increased by $183 thousand to $462 thousand for the third quarter, assisted by a sale of long-term fixed rate mortgages previously held-for-investment.
Non-Interest Expense
Non-interest expense increased by $121 thousand to $10.2 million for the third quarter of 2014 as compared to the second quarter of 2014. Total non-performing asset costs, including write-downs, net gains or losses and associated expenses, increased by $135 thousand during the third quarter of 2014. As of September 30, 2014, full-time equivalent employees remained steady at 264 as compared June 30, 2014 and declined from the 313 as of September 30, 2013. Salary expense declined slightly to $5.2 million in the third quarter as compared to the second quarter.
Asset Quality
First Security recorded provision expense of $11 thousand to adjust the allowance for loan losses to FSG’s current estimate of $8.6 million as of September 30, 2014. Net charge-offs during the third quarter totaled $664 thousand, of which approximately $500 thousand was a release of a previously recorded specific reserve within the allowance. The ratio of the allowance to total loans declined from 1.43% as of June 30, 2014 to 1.29% as of September 30, 2014. Total non-performing assets (“NPAs”) declined by $1.8 million to improve the NPA to total assets ratio from 1.35% to 1.16% comparing June 30, 2014 to September 30, 2014.
Capital
Stockholders’ equity as of September 30, 2014 totaled $88.0 million, a $1.4 million increase from June 30, 2014. As of September 30, 2014, book value per share increased to $1.32 per share compared to $1.30 per share as of June 30, 2014 and $1.26 per share as of December 31, 2013.
“The banking teams that joined FSG this past spring are producing great results in new loan and deposit relationships,” said CEO Kramer. “We believe that our East Tennessee and North Georgia markets will enable us to build a strong community bank that will provide our shareholders with solid returns.” Kramer concluded, “While we are pleased with our progress and proud of our improvement, we are still a long way from satisfied with the level of our earnings.”
About First Security Group, Inc.
First Security Group, Inc. is a bank holding company headquartered in Chattanooga, Tennessee, with $1.0 billion in assets. Founded in 1999, First Security’s community bank subsidiary, FSGBank, N.A. has 26 full-service banking offices along the interstate corridors of eastern and middle Tennessee and northern Georgia. FSGBank provides retail and commercial banking services, trust and investment management, mortgage banking, financial planning, and internet banking (www.FSGBank.com).
Non-GAAP Financial Measures
This press release contains financial information determined by methods other than in accordance with generally accepted accounting principles in the United States of America (GAAP). First Security’s management uses these “non-GAAP” measures in its analysis of First Security’s performance. Non-GAAP measures typically adjust GAAP performance measures to exclude the effects of charges, expenses and gains related to the consummation of mergers and acquisitions, and costs related to the integration of merged entities. These non- GAAP measures may also exclude other significant gains, losses or expenses that are unusual in nature and not expected to recur. Since these items and their impact on First Security’s performance are difficult to predict, management believes presentations of financial measures excluding the impact of these items provide useful supplemental information that is important for a proper understanding of the operating results of First Security’s core business. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.
Forward-Looking Statements
This news release contains comments or information that constitute forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1993) that are based on current expectations that involve a number of risks and uncertainties. Actual results may differ materially from the results expressed in forward-looking statements. Factors that might cause such a difference include changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking regulation; changes in tax laws; changes in prices, levies, and assessments; the impact of technological advances; governmental and regulatory policy changes; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; changes in the national and local economy; and other factors, including risk factors, referred to from time to time in filings made by First Security with the Securities and Exchange Commission. First Security undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.
Public companies, from time to time, become aware of rumors concerning their business. Investors are cautioned that in this age of instant communication and internet access, it may be important to avoid relying on rumors and unsubstantiated information. First Security complies with Federal and State law applicable to disclosure of information. Investors may be at significant risk in relying on unsubstantiated information from other sources.
FOR FURTHER INFORMATION:
John R. Haddock, EVP & CFO
Tel: (423) 308-2075
E-mail: jhaddock@FSGBank.com
First Security Group, Inc. and Subsidiary
Consolidated Financial Highlights
(unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | |
| 3rd Quarter | 2nd Quarter | 1st Quarter | 4th Quarter | 3rd Quarter | | Year-to-Date |
| 2014 | 2014 | 2014 | 2013 | 2013 | | September 30, 2014 | September 30, 2013 |
| (in thousands, except per share amounts and full-time equivalent employees) |
Earnings: | | | | | | | | |
Net interest income | $ | 8,487 |
| $ | 7,545 |
| $ | 6,925 |
| $ | 6,478 |
| $ | 6,165 |
| | $ | 22,957 |
| $ | 16,893 |
|
Credit for loan and lease losses | $ | 11 |
| $ | (270 | ) | $ | (972 | ) | $ | (955 | ) | $ | (1,632 | ) | | $ | (1,231 | ) | $ | (1,780 | ) |
Non-interest income1 | $ | 2,805 |
| $ | 3,030 |
| $ | 2,635 |
| $ | 2,188 |
| $ | 2,292 |
| | $ | 8,470 |
| $ | 6,497 |
|
Non-interest expense1 | $ | 10,222 |
| $ | 10,101 |
| $ | 10,445 |
| $ | 10,150 |
| $ | 11,197 |
| | $ | 30,768 |
| $ | 37,614 |
|
Income tax provision (benefit) | $ | 132 |
| $ | 131 |
| $ | 132 |
| $ | 119 |
| $ | 322 |
| | $ | 395 |
| $ | 358 |
|
Dividends and accretion on preferred stock | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| | $ | — |
| $ | 1,381 |
|
Effect of exchange on preferred stock to common stock | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| | $ | — |
| $ | 26,179 |
|
Net income available (loss allocated) to common stockholders | $ | 927 |
| $ | 613 |
| $ | (45 | ) | $ | (648 | ) | $ | (1,430 | ) | | $ | 1,495 |
| $ | 11,996 |
|
| | | | | | | | |
Per Share Data: | | | | | | | | |
Net income available (loss allocated) to common stockholders, basic | $ | 0.01 |
| $ | 0.01 |
| $ | 0.00 |
| $ | (0.01 | ) | $ | (0.02 | ) | | $ | 0.02 |
| $ | 0.30 |
|
Net income available (loss allocated) to common stockholders, diluted | $ | 0.01 |
| $ | 0.01 |
| $ | 0.00 |
| $ | (0.01 | ) | $ | (0.02 | ) | | $ | 0.02 |
| $ | 0.30 |
|
Book value per common share | $ | 1.32 |
| $ | 1.30 |
| $ | 1.27 |
| $ | 1.26 |
| $ | 1.25 |
| | $ | 1.32 |
| $ | 1.25 |
|
| | | | | | | | |
Performance Ratios: | | | | | | | | |
Return on average assets | 0.36 | % | 0.24 | % | (0.02 | )% | (0.26 | )% | (0.56 | )% | | 0.20 | % | 1.52 | % |
Return on average common equity | 4.23 | % | 2.86 | % | (0.21 | )% | (3.08 | )% | (7.21 | )% | | 2.32 | % | 29.77 | % |
Efficiency ratio | 90.52 | % | 95.52 | % | 109.26 | % | 117.12 | % | 132.4 | % | | 97.90 | % | 160.81 | % |
Non-interest income to net interest income and non-interest income | 24.84 | % | 28.65 | % | 27.56 | % | 25.25 | % | 27.1 | % | | 26.95 | % | 27.78 | % |
| | | | | | | | |
Capital: | | | | | | | | |
Total equity to total assets | 8.56 | % | 8.55 | % | 8.63 | % | 8.56 | % | 8.24 | % | | 8.56 | % | 8.24 | % |
| | | | | | | | |
Liquidity, Yields and Rates: | | | | | | | | |
Interest-bearing cash - average balance | $ | 8,436 |
| $ | 8,997 |
| $ | 13,653 |
| $ | 34,075 |
| $ | 68,964 |
| | $ | 10,343 |
| $ | 137,291 |
|
Investment securities - average balance | 230,297 |
| 247,459 |
| 272,563 |
| 330,094 |
| 329,385 |
| | 249,952 |
| 291,698 |
|
Loans - average balance | 702,271 |
| 673,175 |
| 604,298 |
| 550,749 |
| 529,406 |
| | 660,274 |
| 544,136 |
|
Average Earning Assets | $ | 941,004 |
| $ | 929,631 |
| $ | 890,514 |
| $ | 914,918 |
| $ | 927,755 |
| | $ | 920,569 |
| $ | 973,125 |
|
Pure deposits2 - average balance | $ | 493,707 |
| $ | 455,407 |
| $ | 446,820 |
| $ | 452,495 |
| $ | 454,379 |
| | $ | 465,483 |
| $ | 428,826 |
|
Core deposits3 - average balance | 654,893 |
| 622,636 |
| 624,365 |
| 640,177 |
| 653,044 |
| | 634,076 |
| 646,062 |
|
Customer deposits4 - average balance | 783,996 |
| 757,704 |
| 773,336 |
| 801,827 |
| 829,926 |
| | 771,717 |
| 842,066 |
|
Brokered deposits - average balance | 85,369 |
| 84,021 |
| 70,204 |
| 84,143 |
| 90,323 |
| | 79,920 |
| 125,299 |
|
|
| | | | | | | | | | | | | | | | | | | | | | |
| 3rd Quarter | 2nd Quarter | 1st Quarter | 4th Quarter | 3rd Quarter | | Year-to-Date |
| 2014 | 2014 | 2014 | 2013 | 2013 | | September 30, 2014 | September 30, 2013 |
| (in thousands, except per share amounts and full-time equivalent employees) |
Total deposits - average balance | $ | 869,365 |
| $ | 841,725 |
| $ | 843,540 |
| $ | 885,970 |
| $ | 920,249 |
| | $ | 851,637 |
| $ | 967,365 |
|
Total loans to total deposits | 75.85 | % | 76.01 | % | 71.85 | % | 68.02 | % | 58.76 | % | | 75.85 | % | 58.76 | % |
Yield on earning assets | 4.14 | % | 3.86 | % | 3.85 | % | 3.53 | % | 3.57 | % | | 3.96 | % | 3.32 | % |
Rate on customer deposits (including impact of non-interest bearing DDAs) | 0.37 | % | 0.37 | % | 0.41 | % | 0.48 | % | 0.56 | % | | 0.38 | % | 0.63 | % |
Cost of deposits | 0.55 | % | 0.59 | % | 0.65 | % | 0.74 | % | 0.84 | % | | 0.60 | % | 0.94 | % |
Rate on interest-bearing funding | 0.66 | % | 0.68 | % | 0.78 | % | 0.73 | % | 1.01 | % | | 0.70 | % | 1.09 | % |
Net interest margin, taxable equivalent | 3.60 | % | 3.30 | % | 3.21 | % | 2.89 | % | 2.71 | % | | 3.38 | % | 2.38 | % |
| | | | | | | | |
Non-Interest Income: | | | | | | | | |
Service Charges on Deposits | $ | 778 |
| $ | 769 |
| $ | 741 |
| $ | 800 |
| $ | 798 |
| | $ | 2,288 |
| $ | 2,298 |
|
POS Fees | 436 |
| 439 |
| 401 |
| 420 |
| 401 |
| | 1,276 |
| 1,171 |
|
BOLI | 234 |
| 235 |
| 351 |
| 239 |
| 238 |
| | 820 |
| 723 |
|
Mortgage Banking Income | 462 |
| 279 |
| 180 |
| 208 |
| 420 |
| | 921 |
| 927 |
|
Trust | 233 |
| 235 |
| 200 |
| 188 |
| 193 |
| | 668 |
| 527 |
|
Other | 398 |
| 376 |
| 369 |
| 165 |
| 242 |
| | 1,143 |
| 697 |
|
Net Gains on Sales of Loans | 254 |
| 450 |
| 22 |
| — |
| — |
| | 726 |
| — |
|
Net Gains on AFS sales | 10 |
| 247 |
| 371 |
| 168 |
| — |
| | 628 |
| 154 |
|
Total Non-Interest Income | $ | 2,805 |
| $ | 3,030 |
| $ | 2,635 |
| $ | 2,188 |
| $ | 2,292 |
| | $ | 8,470 |
| $ | 6,497 |
|
| | | | | | | | |
Non-Interest Expense: | | | | | | | | |
Salaries and Benefits | $ | 5,153 |
| $ | 5,225 |
| $ | 5,274 |
| $ | 5,503 |
| $ | 5,807 |
| | $ | 15,652 |
| $ | 17,081 |
|
Occupancy | 814 |
| 776 |
| 820 |
| 799 |
| 891 |
| | 2,410 |
| 2,502 |
|
Furniture and Fixtures | 565 |
| 520 |
| 557 |
| 544 |
| 656 |
| | 1,642 |
| 1,799 |
|
Professional Fees | 658 |
| 690 |
| 599 |
| 417 |
| 533 |
| | 1,947 |
| 1,840 |
|
FDIC insurance assessments | 336 |
| 336 |
| 311 |
| 150 |
| 150 |
| | 983 |
| 2,150 |
|
Write-downs on OREO and repossessions | 289 |
| 76 |
| 309 |
| 375 |
| 374 |
| | 674 |
| 1,997 |
|
Losses (Gains) on OREO, repossessions and fixed assets, net | (113 | ) | (15 | ) | 10 |
| 57 |
| (116 | ) | | (118 | ) | (417 | ) |
Non-performing asset expenses, net | 204 |
| 184 |
| 221 |
| 450 |
| 488 |
| | 609 |
| 3,506 |
|
Data processing | 577 |
| 506 |
| 588 |
| 517 |
| 628 |
| | 1,671 |
| 1,697 |
|
Communications | 129 |
| 147 |
| 150 |
| 172 |
| 141 |
| | 426 |
| 411 |
|
Debit card fees | 244 |
| 232 |
| 258 |
| 181 |
| 207 |
| | 734 |
| 625 |
|
Intangible asset amortization | 49 |
| 49 |
| 48 |
| 57 |
| 67 |
| | 146 |
| 213 |
|
Printing and supplies | 144 |
| 150 |
| 207 |
| 121 |
| 213 |
| | 501 |
| 528 |
|
Advertising | 140 |
| 135 |
| 134 |
| 65 |
| 89 |
| | 409 |
| 246 |
|
Insurance | 295 |
| 303 |
| 325 |
| 251 |
| 523 |
| | 923 |
| 1,873 |
|
Other | 738 |
| 787 |
| 634 |
| 491 |
| 546 |
| | 2,159 |
| 1,562 |
|
Total Non-Interest Expense | $ | 10,222 |
| $ | 10,101 |
| $ | 10,445 |
| $ | 10,150 |
| $ | 11,197 |
| | $ | 30,768 |
| $ | 37,613 |
|
| | | | | | | | |
Asset Quality: | | | | | | | | |
Net charge-offs (recoveries) | $ | 664 |
| $ | (470 | ) | $ | 228 |
| $ | (754 | ) | $ | (32 | ) | | $ | 422 |
| $ | 1,320 |
|
Net loan charge-offs (recoveries) to average loans, annualized | 0.19 | % | (0.14 | )% | 0.15 | % | (0.55 | )% | (0.02 | )% | | 0.09 | % | 0.32 | % |
|
| | | | | | | | | | | | | | | | | | | | | | |
| 3rd Quarter | 2nd Quarter | 1st Quarter | 4th Quarter | 3rd Quarter | | Year-to-Date |
| 2014 | 2014 | 2014 | 2013 | 2013 | | September 30, 2014 | September 30, 2013 |
| (in thousands, except per share amounts and full-time equivalent employees) |
Non-accrual loans | $ | 4,000 |
| $ | 4,891 |
| $ | 6,027 |
| $ | 7,203 |
| $ | 6,803 |
| | $ | 4,000 |
| $ | 6,803 |
|
Other real estate owned and repossessed assets, net | $ | 5,960 |
| $ | 7,725 |
| $ | 7,075 |
| $ | 8,213 |
| $ | 8,678 |
| | $ | 5,960 |
| $ | 8,678 |
|
Loans 90 days past due | $ | 1,951 |
| $ | 1,083 |
| $ | 854 |
| $ | 928 |
| $ | 509 |
| | $ | 1,951 |
| $ | 509 |
|
Non-performing assets (NPA) | $ | 11,911 |
| $ | 13,699 |
| $ | 13,956 |
| $ | 16,344 |
| $ | 15,990 |
| | $ | 11,911 |
| $ | 15,990 |
|
NPA to total assets | 1.16 | % | 1.35 | % | 1.42 | % | 1.67 | % | 1.58 | % | | 1.16 | % | 1.58 | % |
Non-performing loans (NPL) | $ | 5,951 |
| $ | 5,974 |
| $ | 6,881 |
| $ | 8,131 |
| $ | 7,312 |
| | $ | 5,951 |
| $ | 7,312 |
|
NPL to total loans | 0.89 | % | 0.91 | % | 1.14 | % | 1.39 | % | 1.37 | % | | 0.89 | % | 1.37 | % |
Allowance for loan and lease losses to total loans | 1.29 | % | 1.43 | % | 1.52 | % | 1.80 | % | 2.00 | % | | 1.29 | % | 2.00 | % |
Allowance for loan and lease losses to NPL | 144.51 | % | 157.35 | % | 133.70 | % | 129.14 | % | 146.33 | % | | 144.51 | % | 146.33 | % |
| | | | | | | | |
Period End Balances: | | | | | | | | |
Loans, excluding HFS | $ | 666,728 |
| $ | 659,539 |
| $ | 604,859 |
| $ | 583,097 |
| $ | 534,627 |
| | $ | 666,728 |
| $ | 534,627 |
|
Allowance for loan and lease losses | $ | 8,600 |
| $ | 9,400 |
| $ | 9,200 |
| $ | 10,500 |
| $ | 10,700 |
| | $ | 8,600 |
| $ | 10,700 |
|
Intangible assets | $ | 184 |
| $ | 233 |
| $ | 282 |
| $ | 330 |
| $ | 388 |
| | $ | 184 |
| $ | 388 |
|
Assets | $ | 1,027,882 |
| $ | 1,012,685 |
| $ | 980,505 |
| $ | 977,574 |
| $ | 1,011,855 |
| | $ | 1,027,882 |
| $ | 1,011,855 |
|
Total deposits | $ | 879,029 |
| $ | 867,709 |
| $ | 841,832 |
| $ | 857,268 |
| $ | 909,848 |
| | $ | 879,029 |
| $ | 909,848 |
|
Common stockholders' equity | $ | 87,963 |
| $ | 86,566 |
| $ | 84,654 |
| $ | 83,649 |
| $ | 83,388 |
| | $ | 87,963 |
| $ | 83,388 |
|
Total stockholders' equity | $ | 87,963 |
| $ | 86,566 |
| $ | 84,654 |
| $ | 83,649 |
| $ | 83,388 |
| | $ | 87,963 |
| $ | 83,388 |
|
Common stock market capitalization | $ | 132,315 |
| $ | 144,594 |
| $ | 138,601 |
| $ | 153,187 |
| $ | 138,534 |
| | $ | 132,315 |
| $ | 138,534 |
|
Full-time equivalent employees | 264 |
| 264 |
| 275 |
| 285 |
| 313 |
| | 264 |
| 313 |
|
Common shares outstanding | 66,826 |
| 66,633 |
| 66,635 |
| 66,603 |
| 66,603 |
| | 66,826 |
| 66,603 |
|
| | | | | | | | |
Average Balances: | | | | | | | | |
Loans, including HFS | $ | 702,271 |
| $ | 673,175 |
| $ | 604,298 |
| $ | 550,749 |
| $ | 529,406 |
| | $ | 660,274 |
| $ | 544,136 |
|
Intangible assets | $ | 217 |
| $ | 265 |
| $ | 313 |
| $ | 363 |
| $ | 405 |
| | $ | 264 |
| $ | 501 |
|
Earning assets | $ | 941,004 |
| $ | 929,631 |
| $ | 890,514 |
| $ | 914,918 |
| $ | 927,755 |
| | $ | 920,569 |
| $ | 973,125 |
|
Assets | $ | 1,017,631 |
| $ | 1,006,143 |
| $ | 967,624 |
| $ | 993,447 |
| $ | 1,016,919 |
| | $ | 997,316 |
| $ | 1,055,611 |
|
Deposits | $ | 869,365 |
| $ | 841,725 |
| $ | 843,540 |
| $ | 885,970 |
| $ | 920,249 |
| | $ | 851,637 |
| $ | 967,365 |
|
Common stockholders' equity | $ | 87,656 |
| $ | 85,613 |
| $ | 84,340 |
| $ | 84,125 |
| $ | 79,382 |
| | $ | 85,882 |
| $ | 53,720 |
|
Total stockholders' equity | $ | 87,656 |
| $ | 85,613 |
| $ | 84,340 |
| $ | 84,125 |
| $ | 79,382 |
| | $ | 85,882 |
| $ | 65,659 |
|
Common shares outstanding, basic - wtd | 65,869 |
| 65,731 |
| 65,726 |
| 66,603 |
| 62,600 |
| | 65,776 |
| 40,020 |
|
Common shares outstanding, diluted - wtd | 65,874 |
| 65,737 |
| 65,726 |
| 66,603 |
| 62,600 |
| | 65,779 |
| 40,020 |
|
| | | | | | | | |
1 Certain amounts were reclassified between non-interest income and non-interest expense to conform with the current presentation. |
2 Pure deposits are all transaction-based accounts, including non-interest bearing DDAs, interest bearing DDAs, money market accounts and savings accounts. |
3 Core deposits are Pure deposits plus customer certificates of deposits less than $100,000. |
4 Customer deposits are total deposits less brokered deposits. |
First Security Group, Inc. and Subsidiary
Consolidated Financial Highlights
Non-GAAP Reconciliation Table
(unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | |
| 3rd Quarter | 2nd Quarter | 1st Quarter | 4th Quarter | 3rd Quarter | | Year-to-Date |
| 2014 | 2014 | 2014 | 2013 | 2013 | | September 30, 2014 | September 30, 2013 |
| (in thousands, except per share data) |
| | | | | | | | |
Total stockholders' equity | $ | 87,963 |
| $ | 86,566 |
| $ | 84,654 |
| $ | 83,649 |
| $ | 83,388 |
| | $ | 87,963 |
| $ | 83,388 |
|
Effect of preferred stock | — |
| — |
| — |
| — |
| — |
| | — |
| — |
|
Common stockholders' equity | $ | 87,963 |
| $ | 86,566 |
| $ | 84,654 |
| $ | 83,649 |
| $ | 83,388 |
| | $ | 87,963 |
| $ | 83,388 |
|
| | | | | | | | |
Average total stockholders' equity | $ | 87,657 |
| $ | 85,613 |
| $ | 84,340 |
| $ | 84,125 |
| $ | 79,382 |
| | $ | 85,882 |
| $ | 65,659 |
|
Effect of average preferred stock | — |
| — |
| — |
| — |
| — |
| | — |
| (11,939 | ) |
Average common stockholders' equity | $ | 87,657 |
| $ | 85,613 |
| $ | 84,340 |
| $ | 84,125 |
| $ | 79,382 |
| | $ | 85,882 |
| $ | 53,720 |
|
First Security Group, Inc. and Subsidiary
Consolidated Balance Sheets
|
| | | | | | | | | | | |
| September 30,
2014 | | December 31,
2013 | | September 30,
2013 |
(in thousands) | (unaudited) | | | (unaudited) |
ASSETS | | | | | |
Cash and Due from Banks | $ | 11,519 |
| | $ | 10,742 |
| | $ | 10,357 |
|
Interest Bearing Deposits in Banks | 7,344 |
| | 10,126 |
| | 59,943 |
|
Cash and Cash Equivalents | 18,863 |
| | 20,868 |
| | 70,300 |
|
Securities Available-for-Sale | 98,677 |
| | 172,830 |
| | 207,009 |
|
Securities Held-to-Maturity, at amortized cost (fair value - $131,549 at September 30, 2014, $132,104 at December 31, 2013 and $130,170 at September 30, 2013) | 129,313 |
| | 132,568 |
| | 129,164 |
|
Loans Held-for-Sale | 46,904 |
| | 220 |
| | 1,661 |
|
Loans | 666,728 |
| | 583,097 |
| | 534,627 |
|
Less: Allowance for Loan and Lease Losses | 8,600 |
| | 10,500 |
| | 10,700 |
|
Net Loans | 658,128 |
| | 572,597 |
| | 523,927 |
|
Premises and Equipment, net | 27,862 |
| | 27,888 |
| | 28,810 |
|
Bank Owned Life Insurance | 29,020 |
| | 28,346 |
| | 28,155 |
|
Other Real Estate Owned | 5,952 |
| | 8,201 |
| | 8,662 |
|
Other Assets | 13,163 |
| | 14,056 |
| | 14,167 |
|
TOTAL ASSETS | $ | 1,027,882 |
| | $ | 977,574 |
| | $ | 1,011,855 |
|
| | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | |
LIABILITIES | | | | | |
Deposits | | | | | |
Noninterest Bearing Demand | $ | 155,177 |
| | $ | 144,365 |
| | $ | 147,865 |
|
Interest Bearing Demand | 104,404 |
| | 95,559 |
| | 92,108 |
|
Savings and Money Market Accounts | 252,218 |
| | 206,125 |
| | 215,293 |
|
Certificates of Deposit less than $100 thousand | 157,629 |
| | 182,408 |
| | 195,129 |
|
Certificates of Deposit of $100 thousand or more | 125,606 |
| | 153,750 |
| | 170,466 |
|
Brokered Deposits | 83,995 |
| | 75,062 |
| | 88,987 |
|
Total Deposits | 879,029 |
| | 857,269 |
| | 909,848 |
|
Federal Funds Purchased and Securities Sold under Agreements to Repurchase | 12,878 |
| | 12,520 |
| | 12,657 |
|
Other Borrowings | 43,485 |
| | 20,000 |
| | — |
|
Other Liabilities | 4,527 |
| | 4,137 |
| | 5,962 |
|
Total Liabilities | 939,919 |
| | 893,926 |
| | 928,467 |
|
SHAREHOLDERS’ EQUITY | | | | | |
Common Stock – $.01 par value – 150,000,000 shares authorized; 66,826,254 shares issued as of September 30, 2014, 66,602,601 shares issued as of December 31, 2013, and 66,602,601 shares issued as of September 30, 2013 | 766 |
| | 764 |
| | 764 |
|
Paid-In Surplus | 197,326 |
| | 196,536 |
| | 196,059 |
|
Accumulated Deficit | (102,547 | ) | | (104,042 | ) | | (103,395 | ) |
Accumulated Other Comprehensive Loss | (7,582 | ) | | (9,610 | ) | | (10,040 | ) |
Total Shareholders’ Equity | 87,963 |
| | 83,648 |
| | 83,388 |
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 1,027,882 |
| | $ | 977,574 |
| | $ | 1,011,855 |
|
First Security Group, Inc. and Subsidiary
Consolidated Statements of Operations
(unaudited)
|
| | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| September 30, | | September 30, |
(in thousands, except per share data) | 2014 | | 2013 | | 2014 | | 2013 |
INTEREST INCOME | | | | | | | |
Loans, including fees | $ | 8,805 |
| | $ | 6,461 |
| | $ | 23,493 |
| | $ | 19,537 |
|
Investment Securities – taxable | 887 |
| | 1,321 |
| | 2,883 |
| | 3,143 |
|
Investment Securities – non-taxable | 86 |
| | 312 |
| | 524 |
| | 749 |
|
Other | 2 |
| | 77 |
| | 52 |
| | 338 |
|
Total Interest Income | 9,780 |
| | 8,171 |
| | 26,952 |
| | 23,767 |
|
INTEREST EXPENSE | | | | | | | |
Interest Bearing Demand Deposits | 42 |
| | 62 |
| | 137 |
| | 213 |
|
Savings Deposits and Money Market Accounts | 193 |
| | 188 |
| | 467 |
| | 628 |
|
Certificates of Deposit of less than $100 thousand | 253 |
| | 466 |
| | 824 |
| | 1,551 |
|
Certificates of Deposit of $100 thousand or more | 246 |
| | 475 |
| | 793 |
| | 1,558 |
|
Brokered Deposits | 484 |
| | 795 |
| | 1,576 |
| | 2,873 |
|
Other | 75 |
| | 20 |
| | 198 |
| | 51 |
|
Total Interest Expense | 1,293 |
| | 2,006 |
| | 3,995 |
| | 6,874 |
|
NET INTEREST INCOME | 8,487 |
| | 6,165 |
| | 22,957 |
| | 16,893 |
|
Provision (Credit) for Loan and Lease Losses | 11 |
| | (1,632 | ) | | (1,231 | ) | | (1,780 | ) |
NET INTEREST INCOME AFTER CREDIT FOR LOAN AND LEASE LOSSES | 8,476 |
| | 7,797 |
| | 24,188 |
| | 18,673 |
|
NONINTEREST INCOME | | | | | | | |
Service Charges on Deposit Accounts | 778 |
| | 798 |
| | 2,288 |
| | 2,298 |
|
Mortgage Banking Income | 462 |
| | 420 |
| | 921 |
| | 927 |
|
Gain on Sales of Securities Available-for-Sale | 10 |
| | — |
| | 628 |
| | 154 |
|
Gain on Sales of Loans | 254 |
| | — |
| | 726 |
| | — |
|
Other | 1,301 |
| | 1,074 |
| | 3,907 |
| | 3,118 |
|
Total Noninterest Income | 2,805 |
| | 2,292 |
| | 8,470 |
| | 6,497 |
|
NONINTEREST EXPENSES | | | | | | | |
Salaries and Employee Benefits | 5,153 |
| | 5,807 |
| | 15,652 |
| | 17,081 |
|
Expense on Premises and Fixed Assets, net of rental income | 1,379 |
| | 1,547 |
| | 4,052 |
| | 4,301 |
|
Other | 3,690 |
| | 3,843 |
| | 11,064 |
| | 16,232 |
|
Total Noninterest Expenses | 10,222 |
| | 11,197 |
| | 30,768 |
| | 37,614 |
|
INCOME (LOSS) BEFORE INCOME TAX PROVISION (BENEFIT) | 1,059 |
| | (1,108 | ) | | 1,890 |
| | (12,444 | ) |
Income Tax Provision | 132 |
| | 322 |
| | 395 |
| | 358 |
|
NET INCOME (LOSS) | 927 |
| | (1,430 | ) | | 1,495 |
| | (12,802 | ) |
Preferred Stock Dividends | — |
| | — |
| | — |
| | (929 | ) |
Accretion on Preferred Stock Discount | — |
| | — |
| | — |
| | (452 | ) |
Effect of Exchange of Preferred Stock to Common Stock | — |
| | — |
| | — |
| | 26,179 |
|
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS | $ | 927 |
| | $ | (1,430 | ) | | $ | 1,495 |
| | $ | 11,996 |
|
NET INCOME PER SHARE: | | | | | | | |
Net Income (Loss) Per Share – Basic | $ | 0.01 |
| | $ | (0.02 | ) | | $ | 0.02 |
| | $ | 0.30 |
|
Net Income (Loss) Per Share – Diluted | $ | 0.01 |
| | $ | (0.02 | ) | | $ | 0.02 |
| | $ | 0.30 |
|
Dividends Declared Per Common Share | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
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