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25.04.2018 22:15:00
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Franklin Financial Network Announces Record Earnings For First Quarter 2018 Of $0.73 Per Diluted Share
FRANKLIN, Tenn., April 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 March 31, 2018. For the quarter, net income available to common shareholders was $10.1 million, up 26.7% from $7.9 million for the first quarter of 2017. Earnings per diluted share increased 25.9% to a record $0.73 for the first quarter of 2018 from $0.58 for the first quarter last year.
Highlights for the first quarter of 2018 include:
- Return on average assets of 1.03% and return on average tangible common equity of 14.07%;
- An 18.4% comparable-quarter increase in loans, including loans held for sale ("total loans"), to $2.32 billion at March 31, 2018, and a 2.4% (9.6% annualized) sequential-quarter increase. This included replacing record monthly loan pay-offs/pay-downs during the first quarter of 2018 of approximately $200 million;
- A 19.1% comparable-quarter increase in total deposits to $3.36 billion and 5.9% (23.7% annualized) sequential growth;
- Strong credit quality, with nonperforming loans to total loans of 0.15%; allowance for loan losses to total loans of 0.94%; and net charge offs to average loans of just 0.01%; and
- An efficiency ratio of 54.21%.
Richard Herrington, Chairman, President and CEO remarked, "I'm pleased to report a strong start to 2018 with our first quarter results that produced record earnings per diluted share. Contributing to these results were continued substantial growth in the loan portfolio combined with pristine credit quality, solid capital ratios and higher Net Interest Income despite sustained pressure from rising short-term rates and continued yield curve flattening. We remain very encouraged by the ongoing strength of our Middle Tennessee market. According to a January 2018 report from the Bureau of Labor Statistics studying metropolitan areas with more than one million people and the lowest unemployment rates in the country, the Middle Tennessee market ranked third in the country for job growth in 2017.
"We have built a strong foundation for continued growth, reflected in the soundness of our balance sheet and credit quality, in the enhanced capabilities and efficiencies gained through our technology infrastructure investment and in the depth and experience of our management team as well as our colleagues throughout the Company. We are an entrepreneurial, customer-centric business, clearly focused on 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 first quarter of 2018, the provision for loan losses declined significantly on a comparable- and sequential-quarter basis to $0.6 million reflecting continued minimal net charge-offs of 0.01% of average loans for the quarter, yet sufficient to maintain an allowance for loan losses to total loans, excluding loans held for sale, of 0.94%.
Attractive, Growing, Local Markets Support Expansion of Balance Sheet: Total assets crossed the milestone of $4 billion for the first time during the first quarter of 2018, increasing 18.2% to $4.08 billion at the quarter's end from the same time in 2017 and 6.2% sequentially. Total loans increased to $2.32 billion or 18.4% compared to March 31, 2017, and 2.4% (9.6% annualized) sequentially for the first quarter of 2018, including loan pay-offs during the quarter of approximately $200 million.
Total deposits at March 31, 2018, increased 19.1% on a comparable- and sequential-quarter basis to $3.36 billion and 5.9% (23.7% annualized). Non-interest bearing deposits increased 24.3% and 9.7% (38.7% annualized) on a comparable- and sequential-quarter basis, and interest bearing deposits increased 18.6% and 5.6% (22.3% annualized).
Growth in Loans, Slower Growth in Noninterest Expense and Reduced Tax Rate Offset Impact of Interest Rate Environment: Net interest income for the first quarter of 2018 increased 6.2% to $25.1 million compared with the first quarter of 2017 and increased 2.1% sequentially, while net interest margin was 2.71% for the first quarter, compared with 3.18% for the first quarter last year and 2.92% for the fourth quarter of 2017. Factors contributing to this sequential-quarter decline included approximately six basis points from the impact of tax reform, approximately four basis points from the Company's repositioning of its bond portfolio in the fourth quarter of 2017 and higher short-term funding costs.
Noninterest income was $3.5 million for the first quarter of 2018, a 13.8% comparable-quarter decline and a 5.9% sequential-quarter increase. Compared with the first quarter of 2017, noninterest income reflected a 38.3% decline in net gains on sale of loans, partially offset by an 18.7% increase in wealth management income. Compared with the fourth quarter of 2017, noninterest income reflected a 67.1% increase in net gains on sale of loans, primarily related to an increase in the value of held-for-sale mortgages due to market conditions.
Noninterest expense was $15.5 million for the first quarter of 2017, an 8.5% comparable-quarter increase and a 3.1% sequential-quarter decline. The comparable-quarter increase reflected growth of 14.4% in salaries and employee benefits and 23.8% in occupancy and equipment, primarily due to the Company's continuing growth. These expenses were offset by decreases of 16.0% in professional fees, 13.2% in FDIC assessment expense and 8.5% in other expenses. The sequential-quarter decline in expenses was primarily due to a 34.3% decrease in the FDIC assessment and an 18.1% decline in other expense. The Company's efficiency ratio was 54.21% for the first quarter of 2018, compared with 51.63% for the first quarter of 2017 and 57.36% for the fourth quarter of 2017.
The Company's income tax rate improved significantly, to 19.7% for the quarter from 31.1% for the first 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, April 26, 2018, to discuss operating and financial results for the first 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, and plans concerning products and market acceptance. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "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 $4.08 billion at March 31, 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, and the FTSE Russell 2000 Index, is available at www.FranklinSynergyBank.com.
Investor Relations Contact:
Sarah Meyerrose
EVP, Chief Financial Officer
(615) 236-8344
sarah.meyerrose@franklinsynergy.com
FRANKLIN FINANCIAL NETWORK CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share data) | |||
March 31, | December 31, | ||
ASSETS | (Unaudited) | ||
Cash and due from financial institutions | $ 246,164 | $ 251,543 | |
Certificates of deposit at other financial institutions | 2,855 | 2,855 | |
Securities available for sale | 1,186,420 | 999,881 | |
Securities held to maturity (fair value 2018—$210,888 and 2017—$217,608) | 213,381 | 214,856 | |
Loans held for sale, at fair value | 12,871 | 12,024 | |
Loans | 2,310,018 | 2,256,608 | |
Allowance for loan losses | (21,738) | (21,247) | |
Net loans | 2,288,280 | 2,235,361 | |
Restricted equity securities, at cost | 19,606 | 18,492 | |
Premises and equipment, net | 10,941 | 11,281 | |
Accrued interest receivable | 12,937 | 11,947 | |
Bank owned life insurance | 49,450 | 49,085 | |
Deferred tax asset | 13,807 | 10,007 | |
Foreclosed assets | 1,503 | 1,503 | |
Servicing rights, net | 3,602 | 3,620 | |
Goodwill | 9,124 | 9,124 | |
Core deposit intangible, net | 903 | 1,007 | |
Other assets | 11,819 | 10,940 | |
Total assets | $ 4,083,663 | $ 3,843,526 | |
LIABILITIES AND EQUITY | |||
Deposits | |||
Non-interest bearing | $ 298,503 | $ 272,172 | |
Interest bearing | 3,056,650 | 2,895,056 | |
Total deposits | 3,355,153 | 3,167,228 | |
Federal Home Loan Bank advances | 317,000 | 272,000 | |
Federal funds purchased and repurchase agreements | 36,071 | 31,004 | |
Subordinated notes, net | 58,559 | 58,515 | |
Accrued interest payable | 2,775 | 2,769 | |
Other liabilities | 9,240 | 7,357 | |
Total liabilities | 3,778,798 | 3,538,873 | |
Equity | |||
Preferred stock, no par value: 1,000,000 shares authorized; no shares outstanding at March 31, 2018 and December 31, 2017 | — | — | |
Common stock, no par value: 30,000,000 shares authorized; 13,258,142 and 13,237,128 issued at March 31, 2018 and December 31, 2017, respectively | 223,594 | 222,665 | |
Retained earnings | 98,723 | 88,671 | |
Accumulated other comprehensive loss | (17,555) | (6,786) | |
Total shareholders' equity | 304,762 | 304,550 | |
Noncontrolling interest in consolidated subsidiary | 103 | 103 | |
Total equity | $ 304,865 | $ 304,653 | |
Total liabilities and equity | $ 4,083,663 | $ 3,843,526 | |
FRANKLIN FINANCIAL NETWORK, INC CONSOLIDATED STATEMENTS OF INCOME (Amounts in thousands, except per share data) (Unaudited) | |||
Three Months Ended | |||
2018 | 2017 | ||
Interest income and dividends | |||
Loans, including fees | $ 28,793 | $ 22,560 | |
Securities: | |||
Taxable | 6,111 | 5,617 | |
Tax-Exempt | 1,915 | 2,020 | |
Dividends on restricted equity securities | 274 | 181 | |
Federal funds sold and other | 954 | 163 | |
Total interest income | 38,047 | 30,541 | |
Interest expense | |||
Deposits | 10,643 | 5,246 | |
Federal funds purchased and repurchase agreements | 96 | 508 | |
Federal Home Loan Bank advances | 1,110 | 70 | |
Subordinated notes and other borrowings | 1,082 | 1,074 | |
Total interest expense | 12,931 | 6,898 | |
Net interest income | 25,116 | 23,643 | |
Provision for loan losses | 573 | 1,855 | |
Net interest income after provision for loan losses | 24,543 | 21,788 | |
Noninterest income | |||
Service charges on deposit accounts | 42 | 30 | |
Other service charges and fees | 751 | 752 | |
Net gains on sale of loans | 1,439 | 2,334 | |
Wealth management | 704 | 593 | |
Loan servicing fees, net | 119 | 107 | |
Net gain on sale and write-down of foreclosed assets | 3 | 3 | |
Other | 398 | 189 | |
Total noninterest income | 3,456 | 4,008 | |
Noninterest expense | |||
Salaries and employee benefits | 9,188 | 8,033 | |
Occupancy and equipment | 2,594 | 2,095 | |
FDIC assessment expense | 660 | 760 | |
Marketing | 280 | 267 | |
Professional fees | 869 | 1,035 | |
Amortization of core deposit intangible | 104 | 127 | |
Other | 1,793 | 1,959 | |
Total noninterest expense | 15,488 | 14,276 | |
Income before income tax expense | 12,511 | 11,520 | |
Income tax expense | 2,459 | 3,586 | |
Net income available to common shareholders | $ 10,052 | $ 7,934 | |
Earnings per share: | |||
Basic | $ 0.76 | $ 0.61 | |
Diluted | 0.73 | 0.58 | |
FRANKLIN FINANCIAL NETWORK, INC. AVERAGE BALANCES(7) — ANALYSIS OF YIELDS & RATES (UNAUDITED) (Amounts in thousands, except percentages) | |||||||||||
Three Months Ended March 31, | |||||||||||
2018 | 2017 | ||||||||||
Average | Interest | Average | Average | Interest | Average | ||||||
ASSETS: | |||||||||||
Loans(1)(6) | $ 2,307,899 | $ 28,805 | 5.06 % | $ 1,868,678 | $ 22,583 | 4.90 % | |||||
Securities available for sale(6) | 1,074,981 | 6,682 | 2.52 % | 991,679 | 6,584 | 2.69 % | |||||
Securities held to maturity(6) | 214,214 | 2,021 | 3.83 % | 227,662 | 2,355 | 4.20 % | |||||
Restricted equity securities | 18,658 | 274 | 5.96 % | 13,695 | 181 | 5.36 % | |||||
Certificates of deposit at other financial institutions | 2,814 | 12 | 1.73 % | 1,820 | 7 | 1.56 % | |||||
Federal funds sold and other(2) | 249,391 | 942 | 1.53 % | 80,982 | 156 | 0.78 % | |||||
TOTAL INTEREST EARNING ASSETS | $ 3,867,957 | $ 38,736 | 4.06 % | $ 3,184,516 | $ 31,866 | 4.06 % | |||||
Allowance for loan losses | (21,683) | (17,162) | |||||||||
All other assets | 125,590 | 96,018 | |||||||||
TOTAL ASSETS | $ 3,971,864 | $ 3,263,372 | |||||||||
LIABILITIES & EQUITY | |||||||||||
Deposits: | |||||||||||
Interest checking | $ 918,332 | $ 3,166 | 1.40 % | $ 701,983 | $ 1,062 | 0.61 % | |||||
Money market | 744,473 | 2,600 | 1.42 % | 613,574 | 1,228 | 0.81 % | |||||
Savings | 50,442 | 38 | 0.31 % | 55,613 | 42 | 0.31 % | |||||
Time deposits | 1,271,558 | 4,839 | 1.54 % | 1,080,031 | 2,914 | 1.09 % | |||||
Federal Home Loan Bank advances | 296,667 | 1,110 | 1.52 % | 196,556 | 508 | 1.05 % | |||||
Federal funds purchased and other(3) | 31,823 | 96 | 1.22 % | 44,446 | 70 | 0.64 % | |||||
Subordinated notes and other borrowings | 58,532 | 1,082 | 7.50 % | 58,352 | 1,074 | 7.46 % | |||||
TOTAL INTEREST BEARING LIABILITIES | $ 3,371,827 | $ 12,931 | 1.56 % | $ 2,750,555 | $ 6,898 | 1.02 % | |||||
Demand deposits | 286,918 | 230,494 | |||||||||
Other liabilities | 13,279 | 9,610 | |||||||||
Total equity | 299,840 | 272,713 | |||||||||
TOTAL LIABILITIES AND EQUITY | $ 3,971,864 | $ 3,263,372 | |||||||||
NET INTEREST SPREAD(4) | 2.50 % | 3.04 % | |||||||||
NET INTEREST INCOME | $ 25,805 | $ 24,968 | |||||||||
NET INTEREST MARGIN(5) | 2.71 % | 3.18 % | |||||||||
(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 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. |
Three Months Ended | |||||||||||
March 31, 2018 | December 31, 2017 | ||||||||||
Average | Interest | Average | Average | Interest | Average | ||||||
ASSETS: | |||||||||||
Loans(1)(6) | $ 2,307,899 | $ 28,805 | 5.06 % | $ 2,198,919 | $ 27,294 | 4.92 % | |||||
Securities available for sale(6) | 1,074,981 | 6,682 | 2.52 % | 942,916 | 6,224 | 2.62 % | |||||
Securities held to maturity(6) | 214,214 | 2,021 | 3.83 % | 216,429 | 2,255 | 4.13 % | |||||
Restricted equity securities | 18,658 | 274 | 5.96 % | 18,481 | 265 | 5.69 % | |||||
Certificates of deposit at other financial institutions | 2,814 | 12 | 1.73 % | 2,381 | 9 | 1.50 % | |||||
Federal funds sold and other(2) | 249,391 | 942 | 1.53 % | 150,627 | 477 | 1.26 % | |||||
TOTAL INTEREST EARNING ASSETS | $ 3,867,957 | $ 38,736 | 4.06 % | $ 3,529,753 | $ 36,524 | 4.11 % | |||||
Allowance for loan losses | (21,683) | (20,351) | |||||||||
All other assets | 125,590 | 123,906 | |||||||||
TOTAL ASSETS | $ 3,971,864 | $ 3,633,308 | |||||||||
LIABILITIES & EQUITY | |||||||||||
Deposits: | |||||||||||
Interest checking | $ 918,332 | $ 3,166 | 1.40 % | $ 603,930 | $ 1,417 | 0.93 % | |||||
Money market | 744,473 | 2,600 | 1.42 % | 681,950 | 2,130 | 1.24 % | |||||
Savings | 50,442 | 38 | 0.31 % | 53,121 | 42 | 0.31 % | |||||
Time deposits | 1,271,558 | 4,839 | 1.54 % | 1,323,637 | 4,757 | 1.43 % | |||||
Federal Home Loan Bank advances | 296,667 | 1,110 | 1.52 % | 290,913 | 987 | 1.35 % | |||||
Federal funds purchased and other(3) | 31,823 | 96 | 1.22 % | 35,689 | 98 | 1.09 % | |||||
Subordinated notes and other borrowings | 58,532 | 1,082 | 7.50 % | 58,488 | 1,082 | 7.34 % | |||||
TOTAL INTEREST BEARING LIABILITIES | $ 3,371,827 | $ 12,931 | 1.56 % | $ 3,047,728 | $ 10,513 | 1.37 % | |||||
Demand deposits | 286,918 | 268,894 | |||||||||
Other liabilities | 13,279 | 11,839 | |||||||||
Total equity | 299,840 | 304,847 | |||||||||
TOTAL LIABILITIES AND EQUITY | $ 3,971,864 | $ 3,633,308 | |||||||||
NET INTEREST SPREAD(4) | 2.50 % | 2.74 % | |||||||||
NET INTEREST INCOME | $ 25,805 | $ 26,011 | |||||||||
NET INTEREST MARGIN(5) | 2.71 % | 2.92 % | |||||||||
(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 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 | ||||||||
Mar 31, | Dec 31, | Sept 30, | Jun 30, | Mar 31, | ||||
Income Statement Data ($): | ||||||||
Interest income | 38,047 | 35,121 | 33,780 | 33,011 | 30,541 | |||
Interest expense | 12,931 | 10,513 | 9,454 | 8,542 | 6,898 | |||
Net interest income | 25,116 | 24,608 | 24,326 | 24,469 | 23,643 | |||
Provision for loan losses | 573 | 1,295 | 590 | 573 | 1,855 | |||
Noninterest income | 3,456 | 3,264 | 3,569 | 3,880 | 4,008 | |||
Noninterest expense | 15,488 | 15,987 | 15,278 | 15,283 | 14,276 | |||
Net income before taxes | 12,511 | 10,590 | 12,027 | 12,493 | 11,520 | |||
Income tax expense | 2,459 | 8,188 | 3,138 | 3,619 | 3,586 | |||
Net income | 10,052 | 2,402 | 8,889 | 8,874 | 7,934 | |||
Earnings before interest and taxes | 25,442 | 21,103 | 21,481 | 21,035 | 18,418 | |||
Net income available to common shareholders | 10,052 | 2,394 | 8,889 | 8,866 | 7,934 | |||
Weighted average diluted common shares | 13,249,728 | 13,767,949 | 13,773,539 | 13,701,762 | 13,657,357 | |||
Earnings per share, basic | 0.76 | 0.18 | 0.67 | 0.68 | 0.61 | |||
Earnings per share, diluted | 0.73 | 0.17 | 0.65 | 0.64 | 0.58 | |||
Profitability (%) | ||||||||
Return on average assets | 1.03 | 0.26 | 1.03 | 1.03 | 0.99 | |||
Return on average equity | 13.60 | 3.13 | 11.83 | 12.46 | 11.80 | |||
Return on average tangible common equity(4) | 14.07 | 3.22 | 12.26 | 12.92 | 12.27 | |||
Efficiency ratio(4) | 54.21 | 57.36 | 54.77 | 53.91 | 51.63 | |||
Net interest margin(1) | 2.71 | 2.92 | 3.05 | 3.08 | 3.18 | |||
Balance Sheet Data ($): | ||||||||
Loans (including HFS) | 2,322,889 | 2,268,632 | 2,127,753 | 2,023,679 | 1,962,397 | |||
Loan loss reserve | 21,738 | 21,247 | 19,944 | 18,689 | 18,105 | |||
Cash | 246,164 | 251,543 | 155,842 | 96,741 | 114,664 | |||
Securities | 1,399,801 | 1,214,737 | 1,198,049 | 1,243,406 | 1,299,349 | |||
Goodwill | 9,124 | 9,124 | 9,124 | 9,124 | 9,124 | |||
Intangible assets (Sum of core deposit intangible and SBA servicing rights) | 950 | 1,057 | 1,170 | 1,232 | 1,353 | |||
Assets | 4,083,663 | 3,843,526 | 3,565,278 | 3,443,593 | 3,454,788 | |||
Deposits | 3,355,153 | 3,167,228 | 2,824,825 | 2,754,425 | 2,817,212 | |||
Liabilities | 3,778,798 | 3,538,873 | 3,261,581 | 3,150,572 | 3,176,278 | |||
Total equity | 304,865 | 304,653 | 303,697 | 293,021 | 278,510 | |||
Common equity | 304,762 | 304,550 | 303,594 | 292,918 | 278,407 | |||
Tangible common equity(4) | 294,688 | 294,369 | 293,300 | 282,562 | 267,930 | |||
Asset Quality (%) | ||||||||
Nonperforming loans/ total loans(2) | 0.15 | 0.13 | 0.14 | 0.19 | 0.21 | |||
Nonperforming assets / (total loans(2) + foreclosed assets) | 0.22 | 0.20 | 0.21 | 0.26 | 0.27 | |||
Loan loss reserve / total loans(2) | 0.94 | 0.94 | 0.94 | 0.93 | 0.93 | |||
Net charge-offs (recoveries) / average loans | 0.01 | 0.00 | (0.13) | 0.00 | 0.07 | |||
Capital (%) | ||||||||
Tangible common equity to tangible assets(4) | 7.23 | 7.68 | 8.25 | 8.23 | 7.78 | |||
Leverage ratio(3) | 7.80 | 8.25 | 8.58 | 8.21 | 8.36 | |||
Common Equity Tier 1 ratio(3) | 11.45 | 11.37 | 11.58 | 11.54 | 11.32 | |||
Tier 1 risk-based capital ratio(3) | 11.45 | 11.37 | 11.58 | 11.54 | 11.32 | |||
Total risk-based capital ratio(3) | 14.42 | 14.40 | 14.68 | 14.69 | 14.51 | |||
(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 September 30, 2017 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 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:
(Amounts in thousands, except share/per share data and percentages) | As of or for the Three Months Ended | ||||
Mar 31, | Dec 31, | Sept 30, | Jun 30, | Mar 31, | |
Total shareholders' equity | $ 304,762 | $ 304,550 | $ 303,594 | $ 292,918 | $ 278,407 |
Less: Preferred stock | — | — | — | — | — |
Total common shareholders' equity | 304,762 | 304,550 | 303,594 | 292,918 | 278,407 |
Common shares outstanding | 13,258,142 | 13,237,128 | 13,209,055 | 13,181,501 | 13,064,110 |
Book value per share | $ 22.99 | $ 23.01 | $ 22.98 | $ 22.22 | $ 21.31 |
Total common shareholders' equity | 304,762 | 304,550 | 303,594 | 292,918 | 278,407 |
Less: Goodwill and other intangible assets | 10,074 | 10,181 | 10,294 | 10,356 | 10,477 |
Tangible common shareholders' equity | $ 294,688 | $ 294,369 | $ 293,300 | $ 282,562 | $ 267,930 |
Common shares outstanding | 13,258,142 | 13,237,128 | 13,209,055 | 13,181,501 | 13,064,110 |
Tangible book value per share | $ 22.23 | $ 22.24 | $ 22.20 | $ 21.44 | $ 20.51 |
Average total common equity | 299,840 | 304,847 | 298,088 | 285,659 | $ 272,713 |
Less: Average Preferred stock | — | — | — | — | — |
Less: Average Goodwill and other intangible assets | 10,136 | 10,247 | 10,321 | 10,427 | 10,565 |
Average tangible common shareholders' equity | $ 289,704 | $ 294,600 | $ 287,767 | $ 275,232 | $ 262,148 |
Net income available to common shareholders | 10,052 | 2,394 | 8,889 | 8,866 | $ 7,934 |
Average tangible common equity | 289,704 | 294,600 | 287,767 | 275,232 | 262,148 |
Return on average tangible common equity | 14.07 % | 3.22 % | 12.26 % | 12.92 % | 12.27 % |
Efficiency Ratio: | |||||
Net interest income | $ 25,116 | $ 24,608 | $ 24,326 | $ 24,469 | $ 23,643 |
Noninterest income | 3,456 | 3,264 | 3,569 | 3,880 | 4,008 |
Operating revenue | 28,572 | 27,872 | 27,895 | 28,349 | 27,651 |
Expense | |||||
Total noninterest expense | 15,488 | 15,987 | 15,278 | 15,283 | 14,276 |
Efficiency ratio | 54.21 % | 57.36 % | 54.77 % | 53.91 % | 51.63 % |
View original content with multimedia:http://www.prnewswire.com/news-releases/franklin-financial-network-announces-record-earnings-for-first-quarter-2018-of-0-73-per-diluted-share-300636636.html
SOURCE Franklin Financial Network, Inc.
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