Franklin Financial Network Announces Record Second Quarter Earnings Of $0.68 Per Diluted Share
FRANKLIN, Tenn., July 25, 2018 /PRNewswire/ -- Franklin Financial Network, Inc. (NYSE: FSB), the parent company (the "Company") of Franklin Synergy Bank (the "Bank"), today announced financial results for the quarter ended June 30, 2018. For the quarter, net income available to common shareholders was $10.2 million, up 14.6% from $8.9 million for the second quarter of 2017. Earnings per diluted share increased 6.3% to $0.68 for the second quarter of 2018 from $0.64 for the second quarter last year. Results for the second quarter of 2018 include pre-tax acquisition costs of $0.5 million, or $0.03 per diluted share after tax. Weighted average diluted common shares outstanding for the second quarter of 2018 increased 9.3% from the second quarter of 2017, primarily due to the issuance of shares as consideration for the acquisition of Civic Bank & Trust ("Civic").
Highlights for the second quarter of 2018 include:
- Return on average assets of 0.98% and return on average tangible common equity of 12.72%;
- An improvement in net interest margin to 2.74% from 2.71% for the first quarter of 2018;
- A 23.0% comparable-quarter increase in loans, including loans held for sale ("total loans"), to $2.49 billion at June 30, 2018, and a 7.1% (28.7% annualized) sequential-quarter increase. This increase included approximately $85.0 million of loans added by the Civic acquisition. Excluding the acquired volume, loans grew 18.8% from the second quarter of 2017 and at an annualized pace of approximately 14.0% sequentially;
- A 23.4% comparable-quarter increase in total deposits to $3.40 billion and 1.3% (5.1% annualized) sequential growth reflecting the seasonality of public funds deposits, which peak in the fourth and early first quarter of each year and decline to their annual low points in the third quarter;
- Strong credit quality, with nonperforming loans to total loans, excluding loans held for sale, of 0.14%; allowance for loan losses to total loans, excluding loans held for sale, of 0.90%; and net recoveries to average loans of 0.01%; and
- An efficiency ratio of 58.13%, including a 161 basis point impact from acquisition costs.
For the first six months of 2018, net income available to common shareholders increased 20.3% to $20.2 million from $16.8 million for the first six months of 2017. Earnings per diluted share increased 15.6% to $1.41 for the first half of 2018 from $1.22 for the same period in 2017.
Richard Herrington, Chairman, President and CEO remarked, "I'm pleased to report second quarter earnings per share that outpaced expectations. Contributing to these results were continued substantial growth in the loan portfolio, combined with pristine credit quality and solid capital ratios. Record net interest income contributed to margin improvement despite sustained pressure from rising short-term rates and continued yield curve flattening. In addition to loan growth, these pressures were offset by incremental yield improvement from the ongoing favorable shift in the mix of our interest earning assets and from our strategic loan portfolio review during the first quarter.
"Our second quarter results reflected the completion of our acquisition of Civic. We remain optimistic about the longer-term benefits of the merger, which gave the Bank our first full service branch office in Nashville and Davidson County. The continuing strength of the Nashville and Middle Tennessee markets is evident in the area's ranking as third in the nation in job growth for 2017, with unemployment rates in the Company's three-county footprint averaging 2.1% as of April 2018.
"In this environment, we expect to deliver further organic growth as we focus on managing the expansion in our loan portfolio consistent with the growth in retail deposits. In addition, we will continue to evaluate potential acquisitions with strong asset quality and capital as well as attractive deposit franchises. With our sound balance sheet and strong credit quality, our investment in technology infrastructure and our entrepreneurial and customer-centric team, we believe continued successful execution of our growth strategies will produce long-term growth in shareholder value."
Strong Asset Quality: The Company continues to be differentiated among its peers through its pristine asset quality measures. For the second quarter of 2018, the provision for loan losses was $0.6 million, consistent with the second quarter of 2017 and the first quarter of 2018. Provision expense for the quarter and year-to-date in 2018 reflects net recoveries over the preceding year, yet is sufficient to provide an allowance for loan losses to total loans, excluding loans held for sale, of 0.90%.
Attractive, Growing, Local Markets Support Balance Sheet Expansion: Total assets increased 21.0% to $4.17 billion at quarter end from the same time in 2017 and 2.0% (8.0% annualized) sequentially. As noted earlier, total loans increased to $2.49 billion at the end of the second quarter, up 23.0% from the same prior-year quarter and 7.1% (28.7% annualized) sequentially.
Total deposits at June 30, 2018, increased 23.4% on a comparable quarter basis to $3.40 billion and 1.3% (5.1% annualized) sequentially, reflecting the seasonality of public funds deposits. Non-interest bearing deposits increased 20.9% and 3.4% (13.7% annualized) on a comparable- and sequential-quarter basis, and interest bearing deposits increased 23.6% and 1.1% (4.3% annualized).
Growth in Loans and Reduced Tax Rate Offset Impact of Interest Rate Environment: Net interest income for the second quarter of 2018 increased 10.0% to $26.9 million compared with the second quarter of 2017 and increased 7.1% sequentially (28.6% annualized), while net interest margin was 2.74% for the second quarter, compared with 3.08% for the second quarter last year and 2.71% for the first quarter 2018. Factors contributing to this sequential-quarter improvement included a positive shift in balance sheet mix between loans and the securities portfolio, as well as loan yields that widened 21 basis points compared to an 18 basis point increase in funding costs.
Noninterest income was $4.1 million for the second quarter of 2018, a 6.9% comparable-quarter increase and a 20.0% sequential-quarter increase. Comparable-quarter growth reflected strong increases in fees from wealth management, net loan servicing and other noninterest income, somewhat offset by the reduction in gain on sale of securities. Compared with the first quarter of 2018, noninterest income increased primarily due to strong growth in net gains on sale of loans, reflecting an increase in the value of held-for-sale mortgages due to market conditions, and in wealth management fees and other service charges and fees.
Noninterest expense was $18.1 million for the second quarter of 2018, an 18.1% comparable-quarter increase and a 16.5% sequential-quarter increase. In addition to increased expense associated with the Bank's significant organic growth, the latest quarter's results reflect the acquisition of Civic and related transaction costs. The Company's efficiency ratio was 58.13% for the second quarter of 2018, compared with 53.91% for the second quarter of 2017 and 54.21% for the first quarter of 2018. Acquisition costs for the second quarter increased the efficiency ratio by 161 basis points.
The Company's income tax rate improved significantly, to 18.2% for the second quarter of 2018 from 29.0% for the second quarter last year, due to the positive impact of the Tax Cuts and Jobs Act enacted in December 2017.
Webcast and Conference Call Information
The Company will host a webcast and conference call at 8:00 a.m. (CT) on Thursday, July 26, 2018, to discuss operating and financial results for the second quarter of 2018. To access the call for audio only, please call 1-844-378-6480. For the presentation materials and streaming audio, please access the webcast on the Investor Relations page of Franklin Synergy Bank's website at www.FranklinSynergyBank.com. For those unable to participate in the webcast, it will be archived for one year, with audio available for 90 days.
Safe Harbor for Forward-Looking Statements
This media release contains forward-looking statements. Such statements include, but are not limited to, expected operating results, including market share and shareholder value, strategy for growth and profitability, projected sales, gross margin and net income figures, the availability of capital resources, the effect of potential and completed acquisitions, and plans concerning products and market acceptance. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "will," "strategies" and variations of such words and similar expressions are intended to identify such forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Risks and uncertainties that could cause the corporation's actual results to materially differ from those described in forward-looking statements include those discussed in Item 1A of the corporation's Annual Report on Form 10-K for the year ended December 31, 2017 filed with the Securities and Exchange Commission on March 16, 2018. Future events and actual results, financial and otherwise, could differ materially from those set forth in or contemplated by the forward-looking statements herein. Future operating results of the corporation are impossible to predict, and no representation or warranty of any kind can be made respecting the present or future accuracy of such forward-looking statements or the ability of the corporation to meet its obligations, and no such representation or warranty is to be inferred.
About the Company
Franklin Financial Network, Inc. is a financial holding company headquartered in Franklin, Tennessee. The Company's wholly-owned bank subsidiary, Franklin Synergy Bank, a Tennessee-chartered commercial bank founded in November 2007 and a member of the Federal Reserve System, provides a full range of banking and related financial services with a focus on service to small businesses, corporate entities, local governments and individuals. With consolidated total assets of $4.17 billion at June 30, 2018, the Bank currently operates through 14 branches and one loan production office in the growing Williamson, Rutherford and Davidson Counties, all within the Nashville metropolitan statistical area. Additional information about the Company, which is included in the NYSE Financial-100 Index, the FTSE Russell 2000 Index and the S&P SmallCap 600 Index, is available at www.FranklinSynergyBank.com.
Investor Relations Contact:
Sarah Meyerrose
EVP, Chief Financial Officer
(615) 236-8344
[email protected]
| FRANKLIN FINANCIAL NETWORK, INC. |
|||
| CONSOLIDATED BALANCE SHEETS |
|||
| (Amounts in thousands, except share data) |
|||
| June 30, |
December 31, |
||
| ASSETS |
(Unaudited) |
||
| Cash and due from financial institutions |
$ 176,870 |
$ 251,543 |
|
| Certificates of deposit at other financial institutions |
3,354 |
2,855 |
|
| Federal funds sold |
8,314 |
— |
|
| Securities available for sale |
1,148,679 |
999,881 |
|
| Securities held to maturity (fair value 2018—$206,408 and 2017—$217,608) |
209,239 |
214,856 |
|
| Loans held for sale, at fair value |
16,769 |
12,024 |
|
| Loans |
2,472,093 |
2,256,608 |
|
| Allowance for loan losses |
(22,341 ) |
(21,247 ) |
|
| Net loans |
2,449,752 |
2,235,361 |
|
| Restricted equity securities, at cost |
20,533 |
18,492 |
|
| Premises and equipment, net |
11,578 |
11,281 |
|
| Accrued interest receivable |
13,490 |
11,947 |
|
| Bank owned life insurance |
54,466 |
49,085 |
|
| Deferred tax asset |
15,090 |
10,007 |
|
| Foreclosed assets |
1,853 |
1,503 |
|
| Servicing rights, net |
3,536 |
3,620 |
|
| Goodwill |
18,176 |
9,124 |
|
| Core deposit intangible, net |
1,279 |
1,007 |
|
| Other assets |
12,260 |
10,940 |
|
| Total assets |
$ 4,165,238 |
$ 3,843,526 |
|
| LIABILITIES AND EQUITY |
|||
| Deposits |
|||
| Non-interest bearing |
$ 308,698 |
$ 272,172 |
|
| Interest bearing |
3,089,327 |
2,895,056 |
|
| Total deposits |
3,398,025 |
3,167,228 |
|
| Federal Home Loan Bank advances |
351,500 |
272,000 |
|
| Federal funds purchased and repurchase agreements |
345 |
31,004 |
|
| Subordinated notes, net |
58,604 |
58,515 |
|
| Accrued interest payable |
3,927 |
2,769 |
|
| Other liabilities |
4,675 |
7,357 |
|
| Total liabilities |
3,817,076 |
3,538,873 |
|
| Equity |
|||
| Preferred stock, no par value: 1,000,000 shares authorized; no shares outstanding at June 30, 2018 and December 31, 2017 |
— |
— |
|
| Common stock, no par value: 30,000,000 shares authorized; 14,480,240 and 13,237,128 issued at June 30, 2018 and December 31, 2017, respectively |
259,517 |
222,665 |
|
| Retained earnings |
108,884 |
88,671 |
|
| Accumulated other comprehensive loss |
(20,342 ) |
(6,786 ) |
|
| Total shareholders' equity |
348,059 |
304,550 |
|
| Noncontrolling interest in consolidated subsidiary |
103 |
103 |
|
| Total equity |
$ 348,162 |
$ 304,653 |
|
| Total liabilities and equity |
$ 4,165,238 |
$ 3,843,526 |
|
| FRANKLIN FINANCIAL NETWORK, INC. |
|||||||
| CONSOLIDATED STATEMENTS OF INCOME |
|||||||
| (Amounts in thousands, except per share data) |
|||||||
| (Unaudited) |
|||||||
| Three Months Ended |
Six Months Ended |
||||||
| 2018 |
2017 |
2018 |
2017 |
||||
| Interest income and dividends |
|||||||
| Loans, including fees |
$ 32,312 |
$ 24,662 |
$ 61,105 |
$ 47,222 |
|||
| Securities: |
|||||||
| Taxable |
6,905 |
5,700 |
13,016 |
11,317 |
|||
| Tax-Exempt |
1,929 |
2,212 |
3,844 |
4,232 |
|||
| Dividends on restricted equity securities |
329 |
213 |
603 |
394 |
|||
| Federal funds sold and other |
661 |
224 |
1,615 |
387 |
|||
| Total interest income |
42,136 |
33,011 |
80,183 |
63,552 |
|||
| Interest expense |
|||||||
| Deposits |
12,604 |
6,561 |
23,247 |
11,807 |
|||
| Federal funds purchased and repurchase agreements |
131 |
147 |
227 |
217 |
|||
| Federal Home Loan Bank advances |
1,414 |
752 |
2,524 |
1,260 |
|||
| Subordinated notes and other borrowings |
1,082 |
1,082 |
2,164 |
2,156 |
|||
| Total interest expense |
15,231 |
8,542 |
28,162 |
15,440 |
|||
| Net interest income |
26,905 |
24,469 |
52,021 |
48,112 |
|||
| Provision for loan losses |
570 |
573 |
1,143 |
2,428 |
|||
| Net interest income after provision for loan losses |
26,335 |
23,896 |
50,878 |
45,684 |
|||
| Noninterest income |
|||||||
| Service charges on deposit accounts |
51 |
45 |
93 |
75 |
|||
| Other service charges and fees |
823 |
758 |
1,574 |
1,510 |
|||
| Net gains on sale of loans |
1,941 |
2,067 |
3,380 |
4,401 |
|||
| Wealth management |
789 |
648 |
1,493 |
1,241 |
|||
| Loan servicing fees, net |
103 |
53 |
222 |
160 |
|||
| Gain on sale of securities |
1 |
120 |
1 |
120 |
|||
| Net gain on sale and write-down of foreclosed assets |
3 |
3 |
6 |
6 |
|||
| Other |
436 |
186 |
834 |
375 |
|||
| Total noninterest income |
4,147 |
3,880 |
7,603 |
7,888 |
|||
| Noninterest expense |
|||||||
| Salaries and employee benefits |
10,268 |
9,128 |
19,456 |
17,161 |
|||
| Occupancy and equipment |
2,885 |
2,195 |
5,479 |
4,290 |
|||
| FDIC assessment expense |
778 |
1,015 |
1,438 |
1,775 |
|||
| Marketing |
269 |
285 |
549 |
552 |
|||
| Professional fees |
1,362 |
702 |
2,231 |
1,737 |
|||
| Amortization of core deposit intangible |
182 |
121 |
286 |
248 |
|||
| Other |
2,306 |
1,837 |
4,099 |
3,796 |
|||
| Total noninterest expense |
18,050 |
15,283 |
33,538 |
29,559 |
|||
| Income before income tax expense |
12,432 |
12,493 |
24,943 |
24,013 |
|||
| Income tax expense |
2,263 |
3,619 |
4,722 |
7,205 |
|||
| Net income |
10,169 |
8,874 |
20,221 |
16,808 |
|||
| Earnings attributable to noncontrolling interest |
(8 ) |
(8 ) |
(8 ) |
(8 ) |
|||
| Dividends paid on Series A preferred stock |
— |
— |
— |
— |
|||
| Net income available to common shareholders |
$ 10,161 |
$ 8,866 |
$ 20,213 |
$ 16,800 |
|||
| Earnings per share: |
|||||||
| Basic |
$ 0.71 |
$ 0.68 |
$ 1.46 |
$ 1.28 |
|||
| Diluted |
0.68 |
0.64 |
1.41 |
1.22 |
|||
| FRANKLIN FINANCIAL NETWORK, INC. |
|||||||||||
| AVERAGE BALANCES(7) — ANALYSIS OF YIELDS & RATES (UNAUDITED) |
|||||||||||
| (Amounts in thousands, except percentages) |
|||||||||||
| Three Months Ended June 30, |
|||||||||||
| 2018 |
2017 |
||||||||||
| Average |
Interest Inc / Exp |
Average Yield / Rate |
Average Balance |
Interest Inc / Exp |
Average Yield / Rate |
||||||
| ASSETS: |
|||||||||||
| Loans(1)(6) |
$ 2,462,120 |
$ 32,339 |
5.27 % |
$ 2,006,536 |
$ 24,685 |
4.93 % |
|||||
| Securities available for sale(6) |
1,198,583 |
7,548 |
2.53 % |
1,041,892 |
6,969 |
2.68 % |
|||||
| Securities held to maturity(6) |
211,535 |
1,970 |
3.74 % |
224,628 |
2,374 |
4.24 % |
|||||
| Restricted equity securities |
20,619 |
329 |
6.40 % |
16,360 |
213 |
5.22 % |
|||||
| Certificates of deposit at other financial institutions |
3,459 |
19 |
2.09 % |
2,296 |
8 |
1.40 % |
|||||
| Federal funds sold and other(2) |
150,393 |
642 |
1.74 % |
84,193 |
216 |
1.03 % |
|||||
| TOTAL INTEREST EARNING ASSETS |
$ 4,046,709 |
$ 42,847 |
4.25 % |
$ 3,375,905 |
$ 34,465 |
4.09 % |
|||||
| Allowance for loan losses |
(21,994 ) |
(18,475 ) |
|||||||||
| All other assets |
144,738 |
98,237 |
|||||||||
| TOTAL ASSETS |
$ 4,169,453 |
$ 3,455,667 |
|||||||||
| LIABILITIES & EQUITY |
|||||||||||
| Deposits: |
|||||||||||
| Interest checking |
$ 861,235 |
$ 3,329 |
1.55 % |
$ 641,903 |
$ 1,239 |
0.77 % |
|||||
| Money market |
772,032 |
3,048 |
1.58 % |
608,119 |
1,481 |
0.98 % |
|||||
| Savings |
47,807 |
38 |
0.32 % |
56,182 |
43 |
0.31 % |
|||||
| Time deposits |
1,417,141 |
6,189 |
1.75 % |
1,248,570 |
3,798 |
1.22 % |
|||||
| Federal Home Loan Bank advances |
330,758 |
1,414 |
1.71 % |
240,846 |
752 |
1.25 % |
|||||
| Federal funds purchased and other(3) |
30,750 |
131 |
1.71 % |
55,491 |
147 |
1.06 % |
|||||
| Subordinated notes and other borrowings |
58,576 |
1,082 |
7.43 % |
58,397 |
1,082 |
7.43 % |
|||||
| TOTAL INTEREST BEARING LIABILITIES |
$ 3,518,299 |
$ 15,231 |
1.74 % |
$ 2,909,508 |
$ 8,542 |
1.18 % |
|||||
| Demand deposits |
298,125 |
248,069 |
|||||||||
| Other liabilities |
12,854 |
12,431 |
|||||||||
| Total equity |
340,175 |
285,659 |
|||||||||
| TOTAL LIABILITIES AND EQUITY |
$ 4,169,453 |
$ 3,455,667 |
|||||||||
| NET INTEREST SPREAD(4) |
2.51 % |
2.91 % |
|||||||||
| NET INTEREST INCOME |
$ 27,616 |
$ 25,923 |
|||||||||
| NET INTEREST MARGIN(5) |
2.74 % |
3.08 % |
|||||||||
| (1) |
Loan balances include both loans held in the Bank's portfolio and mortgage loans held for sale and are net of deferred origination fees and costs. Non-accrual loans are included in total loan balances. |
| (2) |
Includes federal funds sold, capital stock in the Federal Reserve Bank and Federal Home Loan Bank, and interest-bearing deposits at the Federal Reserve Bank and the Federal Home Loan Bank. |
| (3) |
Includes repurchase agreements. |
| (4) |
Represents the average rate earned on interest-earning assets minus the average rate paid on interest-bearing liabilities. |
| (5) |
Represents net interest income (annualized) divided by total average earning assets. |
| (6) |
Interest income and rates include the effects of tax-equivalent adjustments to adjust tax-exempt interest income on tax-exempt loans and investment securities to a fully taxable basis. |
| (7) |
Average balances are average daily balances. |
| Six Months Ended June 30, |
|||||||||||
| 2018 |
2017 |
||||||||||
| Average Balance |
Interest Inc / Exp |
Average Yield / Rate |
Average Balance |
Interest Inc / Exp |
Average Yield / Rate |
||||||
| ASSETS: |
|||||||||||
| Loans(1)(6) |
$ 2,385,436 |
$ 61,144 |
5.17 % |
$ 1,937,988 |
$ 47,268 |
4.92 % |
|||||
| Securities available for sale(6) |
1,137,124 |
14,231 |
2.52 % |
1,016,924 |
13,553 |
2.69 % |
|||||
| Securities held to maturity(6) |
212,867 |
3,991 |
3.78 % |
226,137 |
4,730 |
4.22 % |
|||||
| Restricted equity securities |
19,644 |
603 |
4.56 % |
15,035 |
394 |
5.28 % |
|||||
| Certificates of deposit at other financial institutions |
3,138 |
31 |
1.99 % |
2,059 |
15 |
1.47 % |
|||||
| Federal funds sold and other(2) |
199,618 |
1,584 |
1.66 % |
82,596 |
372 |
0.91 % |
|||||
| TOTAL INTEREST EARNING ASSETS |
$ 3,957,827 |
$ 81,584 |
4.16 % |
$ 3,280,739 |
$ 66,332 |
4.08 % |
|||||
| Allowance for loan losses |
(21,840 ) |
(17,822 ) |
|||||||||
| All other assets |
135,177 |
97,166 |
|||||||||
| TOTAL ASSETS |
$ 4,071,164 |
$ 3,360,083 |
|||||||||
| LIABILITIES & EQUITY |
|||||||||||
| Deposits: |
|||||||||||
| Interest checking |
$ 889,625 |
$ 6,495 |
1.47 % |
$ 671,777 |
$ 2,301 |
0.69 % |
|||||
| Money market |
757,698 |
5,648 |
1.50 % |
610,832 |
2,709 |
0.89 % |
|||||
| Savings |
49,117 |
76 |
0.31 % |
55,899 |
85 |
0.31 % |
|||||
| Time deposits |
1,344,752 |
11,028 |
1.65 % |
1,164,766 |
6,712 |
1.16 % |
|||||
| Federal Home Loan Bank advances |
313,806 |
2,524 |
1.62 % |
218,823 |
1,260 |
1.16 % |
|||||
| Federal funds purchased and other(3) |
31,283 |
227 |
1.46 % |
49,999 |
217 |
0.88 % |
|||||
| Subordinated notes and other borrowings |
58,554 |
2,164 |
7.45 % |
58,375 |
2,156 |
7.45 % |
|||||
| TOTAL INTEREST BEARING LIABILITIES |
$ 3,444,835 |
$ 28,162 |
1.65 % |
$ 2,830,471 |
$ 15,440 |
1.10 % |
|||||
| Demand deposits |
292,553 |
239,330 |
|||||||||
| Other liabilities |
13,657 |
11,060 |
|||||||||
| Total equity |
320,119 |
279,222 |
|||||||||
| TOTAL LIABILITIES AND EQUITY |
$ 4,071,164 |
$ 3,360,083 |
|||||||||
| NET INTEREST SPREAD(4) |
2.51 % |
2.98 % |
|||||||||
| NET INTEREST INCOME |
$ 53,422 |
$ 50,892 |
|||||||||
| NET INTEREST MARGIN(5) |
2.72 % |
3.13 % |
|||||||||
| (1) |
Loan balances include both loans held in the Bank's portfolio and mortgage loans held for sale and are net of deferred origination fees and costs. Non-accrual loans are included in total loan balances. |
| (2) |
Includes federal funds sold, capital stock in the Federal Reserve Bank and Federal Home Loan Bank, and interest-bearing deposits at the Federal Reserve Bank and the Federal Home Loan Bank. |
| (3) |
Includes repurchase agreements. |
| (4) |
Represents the average rate earned on interest-earning assets minus the average rate paid on interest-bearing liabilities. |
| (5) |
Represents net interest income (annualized) divided by total average earning assets. |
| (6) |
Interest income and rates include the effects of tax-equivalent adjustments to adjust tax-exempt interest income on tax-exempt loans and investment securities to a fully taxable basis. |
| (7) |
Average balances are average daily balances. |
| FRANKLIN FINANCIAL NETWORK, INC. |
|||||
| SUMMARY QUARTERLY CONSOLIDATED FINANCIAL DATA (UNAUDITED) |
|||||
| (Amounts in thousands, except per share data and percentages) |
|||||
| As of and for the three months ended |
|||||
| Jun 30, |
Mar 31, |
Dec 31, |
Sept 30, |
Jun 30, |
|
| Income Statement Data ($): |
|||||
| Interest income |
42,136 |
38,047 |
35,121 |
33,780 |
33,011 |
| Interest expense |
15,231 |
12,931 |
10,513 |
9,454 |
8,542 |
| Net interest income |
26,905 |
25,116 |
24,608 |
24,326 |
24,469 |
| Provision for loan losses |
570 |
573 |
1,295 |
590 |
573 |
| Noninterest income |
4,147 |
3,456 |
3,264 |
3,569 |
3,880 |
| Noninterest expense |
18,050 |
15,488 |
15,987 |
15,278 |
15,283 |
| Net income before taxes |
12,432 |
12,511 |
10,590 |
12,027 |
12,493 |
| Income tax expense |
2,263 |
2,459 |
8,188 |
3,138 |
3,619 |
| Net income |
10,169 |
10,052 |
2,402 |
8,889 |
8,874 |
| Earnings before interest and taxes |
27,663 |
25,442 |
21,103 |
21,481 |
21,035 |
| Net income available to common shareholders |
10,161 |
10,052 |
2,394 |
8,889 |
8,866 |
| Weighted average diluted common shares |
14,981,440 |
13,766,394 |
13,767,949 |
13,773,539 |
13,701,762 |
| Earnings per share, basic |
0.71 |
0.76 |
0.18 |
0.67 |
0.68 |
| Earnings per share, diluted |
0.68 |
0.73 |
0.17 |
0.65 |
0.64 |
| Profitability (%) |
|||||
| Return on average assets |
0.98 |
1.03 |
0.26 |
1.03 |
1.03 |
| Return on average equity |
11.99 |
13.60 |
3.13 |
11.83 |
12.46 |
| Return on average tangible common equity(4) |
12.72 |
14.07 |
3.22 |
12.26 |
12.92 |
| Efficiency ratio(4) |
58.13 |
54.21 |
57.36 |
54.77 |
53.91 |
| Net interest margin(1) |
2.74 |
2.71 |
2.92 |
3.05 |
3.08 |
| Balance Sheet Data ($): |
|||||
| Loans (including HFS) |
2,488,862 |
2,322,889 |
2,268,632 |
2,127,753 |
2,023,679 |
| Loan loss reserve |
22,341 |
21,738 |
21,247 |
19,944 |
18,689 |
| Cash |
176,870 |
246,164 |
251,543 |
155,842 |
96,741 |
| Securities |
1,357,918 |
1,399,801 |
1,214,737 |
1,198,049 |
1,243,406 |
| Goodwill |
18,176 |
9,124 |
9,124 |
9,124 |
9,124 |
| Intangible assets (Sum of core deposit intangible and SBA servicing rights) |
1,323 |
950 |
1,057 |
1,170 |
1,232 |
| Assets |
4,165,238 |
4,083,663 |
3,843,526 |
3,565,278 |
3,443,593 |
| Deposits |
3,398,025 |
3,355,153 |
3,167,228 |
2,824,825 |
2,754,425 |
| Liabilities |
3,817,076 |
3,778,798 |
3,538,873 |
3,261,581 |
3,150,572 |
| Total equity |
348,162 |
304,865 |
304,653 |
303,697 |
293,021 |
| Common equity |
348,059 |
304,762 |
304,550 |
303,594 |
292,918 |
| Tangible common shareholders' equity(4) |
328,560 |
294,688 |
294,369 |
293,300 |
282,562 |
| Asset Quality (%) |
|||||
| Nonperforming loans/ total loans(2) |
0.14 |
0.15 |
0.13 |
0.14 |
0.19 |
| Nonperforming assets / (total loans(2) + foreclosed assets) |
0.21 |
0.22 |
0.20 |
0.21 |
0.26 |
| Loan loss reserve / total loans(2) |
0.90 |
0.94 |
0.94 |
0.94 |
0.93 |
| Net charge-offs (recoveries) / average loans |
(0.01) |
0.01 |
0.00 |
(0.13 ) |
0.00 |
| Capital (%) |
|||||
| Tangible common shareholders' equity to tangible assets(4) |
7.93 |
7.23 |
7.68 |
8.25 |
8.23 |
| Leverage ratio(3) |
8.43 |
7.80 |
8.25 |
8.58 |
8.21 |
| Common Equity Tier 1 ratio(3) |
12.28 |
11.45 |
11.37 |
11.58 |
11.54 |
| Tier 1 risk-based capital ratio(3) |
12.28 |
11.45 |
11.37 |
11.58 |
11.54 |
| Total risk-based capital ratio(3) |
15.11 |
14.42 |
14.40 |
14.68 |
14.69 |
| (1) |
Net interest margins shown in the table above include tax-equivalent adjustments to adjust interest income on tax-exempt loans and tax-exempt investment securities to a fully taxable basis. |
| (2) |
Total loans in this ratio exclude loans held for sale. |
| (3) |
Capital ratios come from the Company's regulatory filings with the Board of Governors of the Federal Reserve System, and for June 30, 2018 the ratios are estimates since the Company's quarterly regulatory reports have not yet been filed. |
| (4) |
See Non-GAAP table in the pages that follow. |
GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures
Some of the financial data included in this earnings release and our selected historical consolidated financial information are not measures of financial performance recognized by GAAP. Our management uses these non-GAAP financial measures in its analysis of our performance:
- "Common shareholders' equity" is defined as total shareholders' equity at end of period less the liquidation preference value of the preferred stock;
- "Tangible common shareholders' equity" is common shareholders' equity less goodwill and other intangible assets;
- "Total tangible assets" is defined as total assets less goodwill and other intangible assets;
- "Other intangible assets" is defined as the sum of core deposit intangible and SBA servicing rights;
- "Tangible book value per share" is defined as tangible common shareholders' equity divided by total common shares outstanding. This measure is important to investors interested in changes from period-to-period in book value per share exclusive of changes in intangible assets;
- "Tangible common shareholders' equity ratio" is defined as the ratio of tangible common shareholders' equity divided by total tangible assets. We believe that this measure is important to many investors in the marketplace who are interested in relative changes from period-to period in common equity and total assets, each exclusive of changes in intangible assets;
- "Return on Average Tangible Common Equity" is defined as annualized net income available to common shareholders divided by average tangible common shareholders' equity; and
- "Efficiency ratio" is defined as noninterest expenses divided by our operating revenue, which is equal to net interest income plus noninterest income.
We believe these non-GAAP financial measures provide useful information to management and investors that is supplementary to our financial condition, results of operations and cash flows computed in accordance with GAAP; however, we acknowledge that our non-GAAP financial measures have a number of limitations. As such, you should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other companies use. The following reconciliation table provides a more detailed analysis of these non-GAAP financial measures:
| As of or for the Three Months Ended |
|||||
| (Amounts in thousands, except share/per share data and percentages) |
Jun 30, 2018 |
Mar 31, 2018 |
Dec 31, 2017 |
Sept 30, 2017 |
Jun 30, 2017 |
| Total shareholders' equity |
$ 348,059 |
$ 304,762 |
$ 304,550 |
$ 303,594 |
$ 292,918 |
| Less: Preferred stock |
— |
— |
— |
— |
— |
| Total common shareholders' equity |
348,059 |
304,762 |
304,550 |
303,594 |
292,918 |
| Common shares outstanding |
14,480,240 |
13,258,142 |
13,237,128 |
13,209,055 |
13,181,501 |
| Book value per share |
$ 24.04 |
$ 22.99 |
$ 23.01 |
$ 22.98 |
$ 22.22 |
| Total common shareholders' equity |
348,059 |
304,762 |
304,550 |
303,594 |
292,918 |
| Less: Goodwill and other intangible assets |
19,499 |
10,074 |
10,181 |
10,294 |
10,356 |
| Tangible common shareholders' equity |
$ 328,560 |
$ 294,688 |
$ 294,369 |
$ 293,300 |
$ 282,562 |
| Common shares outstanding |
14,480,240 |
13,258,142 |
13,237,128 |
13,209,055 |
13,181,501 |
| Tangible book value per share |
$ 22.69 |
$ 22.23 |
$ 22.24 |
$ 22.20 |
$ 21.44 |
| Average total common equity |
340,175 |
299,840 |
304,847 |
298,088 |
285,659 |
| Less: Average Preferred stock |
— |
— |
— |
— |
— |
| Less: Average Goodwill and other intangible assets |
19,860 |
10,136 |
10,247 |
10,321 |
10,427 |
| Average tangible common shareholders' equity |
$ 320,315 |
$ 289,704 |
$ 294,600 |
$ 287,767 |
$ 275,232 |
| Net income available to common shareholders |
10,161 |
10,052 |
2,394 |
8,889 |
8,866 |
| Average tangible common equity |
320,315 |
289,704 |
294,600 |
287,767 |
275,232 |
| Return on average tangible common equity |
12.72 % |
14.07 % |
3.22 % |
12.26 % |
12.92 % |
| Efficiency Ratio: |
|||||
| Net interest income |
$ 26,905 |
$ 25,116 |
$ 24,608 |
$ 24,326 |
$ 24,469 |
| Noninterest income |
4,147 |
3,456 |
3,264 |
3,569 |
3,880 |
| Operating revenue |
31,052 |
28,572 |
27,872 |
27,895 |
28,349 |
| Expense |
|||||
| Total noninterest expense |
18,050 |
15,488 |
15,987 |
15,278 |
15,283 |
| Efficiency ratio |
58.13 % |
54.21 % |
57.36 % |
54.77 % |
53.91 % |
SOURCE Franklin Financial Network, Inc.
Related Links
http://www.FranklinSynergyBank.com
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