FRANKLIN FINANCIAL NETWORK, INC. FRANKLIN, Tenn., Jan. 24, 2017 /PRNewswire/ -- Franklin Financial Network, Inc. (NYSE: FSB), the parent company (the "Company") of Franklin Synergy Bank (the "Bank"), today announced record financial results for the fourth quarter and twelve months ended December 31, 2016.
For the fourth quarter, net income available for common shareholders increased 54.8% to $7.2 million from $4.6 million for the fourth quarter of 2015. Earnings per diluted share were $0.58 for the fourth quarter of 2016, up 41.5% from $0.41 for the fourth quarter of 2015. The increase in earnings per diluted share is subsequent to an 11.6% increase in weighted average diluted shares outstanding due primarily to the Company's public offering of common stock in November 2016.
For the 12 months ended December 31, 2016, net income available for common shareholders increased 75.4% to $28.0 million from $16.0 million for the twelve months ended December 31, 2015. Earnings per diluted share grew 57.1% for 2016 to $2.42 from $1.54 for 2015. Results for 2016 included an excess tax benefit of $1.0 million, or $0.08 per diluted share, from the exercise of nonqualified stock options and the vesting of restricted stock related to the retrospective adoption of a new accounting standards update. See page 9 for the retrospective impact of this adoption for the first three quarters of 2016.
Highlights for fourth-quarter and full-year 2016 include:
-- Return on average assets increased to 1.00% for the fourth quarter and
return on average tangible common equity increased to 12.68%, from 0.89%
and 11.01% for the fourth quarter of 2015. For 2016, return on average
assets increased to 1.10% from 0.92% for 2015, and return on average
tangible common equity increased to 14.43% from 10.84%.
-- Net interest income plus noninterest income increased 20.1% to $24.3
million for the fourth quarter from $20.2 million for the same period in
2015. Net interest income plus noninterest income increased 33.8% to
$96.7 million for 2016 from $72.3 million for 2015.
-- The efficiency ratio remained low at 54.55% for the fourth quarter
compared with 54.96% for the same quarter in 2015. The efficiency ratio
improved to 53.43% for 2016 compared with 58.31% for 2015.
-- Total loans, including loans held for sale, increased 36.4% or $479.4
million to $1.80 billion at the quarter's end from $1.32 billion at
December 31, 2015.
-- Credit quality remained strong, with nonperforming loans at 0.35% of
total loans, excluding loans held for sale; the allowance for loan
losses at 0.93% of total loans, excluding loans held for sale; and net
charge-offs at 0.04% of average loans for the quarter and 0.02% for the
year.
-- Tangible book value per share increased 25.6% to $19.91 at December 31,
2016, compared with $15.85 at December 31, 2015.
"We are pleased to report that the Company completed another year of profitable growth, with continued solid operating and financial performance for the year and the fourth quarter of 2016," commented Richard Herrington, the Company's Chairman, President, and Chief Executive Officer. "Asset quality remains strong as we enter 2017. Substantial loan growth for the fourth quarter was consistent with our expectations, driving growth in net interest income. Noninterest income for the fourth quarter was below expectations, affected primarily by the impact of rapidly rising mortgage interest rates on our mortgage loans held for sale. However, mortgage production for the quarter remained solid, as did the growth in other noninterest income sources. Additional economies of scale continued to result in a strong efficiency ratio for the quarter, despite significant investment during the year in people, systems and infrastructure required by our current and anticipated growth. As a result, we achieved a 41.5% increase in diluted earnings per share for the quarter, and tangible book value per share increased to $19.91 at the end of 2016, up 25.6% from year-end 2015.
"We are grateful for our colleagues throughout the Company, who are critical to our continued growth and responsible for our 2016 performance, which would not have been possible without their hard work and dedication. Our core middle Tennessee market, comprised primarily of the three-county metro area including Davidson (Nashville), Williamson (Franklin) and Rutherford (Murfreesboro) counties, was one of the leading markets in the country during 2016. All signs point toward continued growth and prosperity in this market in 2017. The combination of a great team and a great market produced an increase in diluted earnings per share for the year of 57.1%. With this outstanding foundation, we enter 2017 confident that our proven strategies and ongoing focus on asset quality, growth and profitability during the coming year position the Company well to achieve our long-term objectives."
Strong Asset Quality
-- At December 31, 2016, nonperforming loans were 0.35% of total loans,
excluding loans held for sale, compared with 0.10% and 0.25% at
September 30, 2016 and December 31, 2015.
-- The allowance for loan losses at December 31, 2016, was 0.93% of total
loans, excluding loans held for sale, compared with 0.94% and 0.89% at
September 30, 2016 and December 31, 2015.
-- Net charge-offs for the fourth quarter of 2016 totaled 0.04% of average
loans compared with 0.01% for both the third quarter of 2016 and fourth
quarter of 2015. Net charge-offs for 2016 totaled 0.02% of average loans
compared with 0.01% for 2015.
Attractive, Growing, Local Markets Support Expansion of Balance Sheet
-- Total assets were $2.94 billion at December 31, 2016, an increase of
35.8% from December 31, 2015. On January 18, 2017, the Company announced
that total assets had crossed the $3 billion threshold, a significant
milestone for the Bank that followed achieving $2 billion in assets in
September 2015 and $1 billion in assets in July 2014.
-- Total loans, including loans held for sale, increased to $1.80 billion
at December 31, 2016, up 36.4% or $479.4 million from the end of 2015,
primarily due to an increase of $92.7 million in business loans, which
included $31.1 million in healthcare loans, and growth in real estate
loans, with increases of $116.7 million in construction loans; $139.6
million in 1-4 family real estate loans; and $131.9 million in
commercial real estate loans.
-- The mix of total loans, excluding loans held for sale, at the end of the
fourth quarter changed slightly in comparison with the mix at the end of
the prior quarter, with total real estate lending at 78.5% and business
loans at 21.3% of total loans, compared with prior-quarter total real
estate lending at 77.2% and business loans at 22.6%.
-- Deposits were $2.39 billion at December 31, 2016, an increase of 31.9%
from December 31, 2015. Non-interest bearing deposits increased 32.2%
compared with the fourth quarter of 2015 and interest bearing deposits
increased 31.8%.
Strong Growth in the Loan Portfolio and Net Interest Income Drive Earnings per Share
-- Net interest income for the fourth quarter of 2016 increased 26.2% to
$21.7 million from $17.2 million for the fourth quarter of 2015. The
growth in net interest income resulted from strong growth in interest
earning assets, partly offset by a slight decrease in yield on interest
earning assets, reflecting, in part, an increase in tax-exempt municipal
debt in the securities portfolio. The resulting growth in interest
income was somewhat offset by the growth and change in mix of funding
sources as well as a significantly increased average rate on
interest-bearing liabilities, which included the issuance of $60 million
of subordinated notes during 2016. Net interest income for full-year
2016 increased 37.3% to $81.6 million from $59.4 million for 2015.
-- The average yield on total interest earning assets was 4.08% for the
fourth quarter of 2016, a decrease of four basis points from 4.12% for
the same quarter in 2015. The average rate on total interest bearing
liabilities was 0.95% for the fourth quarter of 2016, up 28 basis points
from 0.67% for the fourth quarter of 2015. This increase was driven, in
large part, by the addition of subordinated debt issued by the Company
and down streamed to the Bank as equity to support growth. Excluding the
subordinated debt, the average rate on Bank funding was 0.79%, an
increase of 12 basis points.
-- Net interest margin, adjusted for tax equivalent yield, was 3.27% for
the fourth quarter of 2016, compared with 3.55% for the fourth quarter
of 2015. For full-year 2016, net interest margin, adjusted for tax
equivalent yield, was 3.37% compared with 3.62% for 2015.
-- Noninterest income for the fourth quarter of 2016 was $2.6 million, down
14.7% from the fourth quarter of 2015. The decrease primarily reflected
a decline in net gains on sale of loans compared with the fourth quarter
of 2015, meaningfully offset by net gains on the sales and calls of
securities, as well as significant growth in wealth management and other
service charges and fees income. Contributing to these results, the
spike in mortgage interest rates during the fourth quarter of 2016
resulted in a $1.3 million reduction in the valuation of held-for-sale
mortgages. For full-year 2016, noninterest income increased 17.8% to
$15.1 million from $12.9 million.
-- Noninterest expense increased 19.2% to $13.2 million for the fourth
quarter of 2016 from $11.1 million for the fourth quarter of 2015,
primarily due to increased salaries and employee benefits related to
both the Company's growth and stronger mortgage loan production and
continued investments in systems and infrastructure. The Company's
efficiency ratio improved to 54.55% for the fourth quarter of 2016,
compared with 54.96% for the fourth quarter of 2015. For full-year 2016,
the efficiency ratio improved to 53.43% compared with 58.31% for 2015.
-- The Company's effective income tax rate improved to 27.3% for the fourth
quarter of 2016 compared with 35.4% for the fourth quarter of 2015,
largely due to the retrospective adoption of a new accounting standards
update, as well as an increase in municipal debt in the securities
portfolio and other tax strategies. The effective income tax rate for
full-year 2016 improved to 29.5% from 35.9% for 2015. The adoption of
the accounting standards update reduced the effective income tax rate by
4.0% for the fourth quarter of 2016 and by 2.5% for the year ended
December 31, 2016.
Webcast and Conference Call Information
The Company will host a webcast and conference call at 9:00 a.m. (CT) on Wednesday, January 25, 2017, to discuss operating and financial results for the fourth quarter of 2016. 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, 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. 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 $3.0 billion at January 18, 2017, the Bank currently operates through 12 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.
FRANKLIN FINANCIAL NETWORK
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data) December 31, December 31,
2016 2015
---- ----
(Unaudited)
ASSETS
Cash and due from financial institutions $90,927 $52,394
Certificates of deposit at other financial institutions 1,055 250
Securities available for sale 754,755 575,838
Securities held to maturity (fair value 2016-$227,892 and
2015-$161,969) 228,894 158,200
Loans held for sale, at fair value 23,699 14,079
Loans 1,773,592 1,303,826
Allowance for loan losses (16,553) (11,587)
------- -------
Net loans 1,757,039 1,292,239
--------- ---------
Restricted equity securities, at cost 11,843 7,998
Premises and equipment, net 9,551 7,640
Accrued interest receivable 9,931 7,299
Bank owned life insurance 23,267 22,619
Deferred tax asset 15,013 9,430
Assets held for sale - 1,640
Foreclosed assets - 200
Servicing rights, net 3,621 3,455
Goodwill 9,124 9,124
Core deposit intangible, net 1,480 2,043
Other assets 2,990 3,344
----- -----
Total assets $2,943,189 $2,167,792
========== ==========
LIABILITIES AND EQUITY
Deposits
Noninterest bearing $233,781 $176,742
Interest bearing 2,158,037 1,637,297
--------- ---------
Total deposits 2,391,818 1,814,039
Federal funds purchased and repurchase agreements 83,301 101,086
Federal Home Loan Bank advances 132,000 57,000
Subordinated notes and other borrowings 58,337 -
Accrued interest payable 1,924 644
Other liabilities 5,448 6,207
----- -----
Total liabilities 2,672,828 1,978,976
Equity
Senior non-cumulative preferred stock, no par value,
$10,000 liquidation value: Series A, 1,000,000 shares
authorized; no shares outstanding at December 31, 2016;
10,000 shares issued and outstanding at December 31, 2015 - 10,000
Common stock, no par value; 20,000,000 and 10,000,000
shares authorized; 13,036,954 and 10,571,377 issued at
December 31, 2016 and 2015, respectively 218,354 147,784
Retained earnings 59,386 31,352
Accumulated other comprehensive income (loss) (7,482) (320)
------ ----
Total shareholders' equity 270,258 188,816
Noncontrolling interest in consolidated subsidiary 103 -
--- ---
Total equity 270,361 188,816
------- -------
Total liabilities and equity $2,943,189 $2,167,792
========== ==========
FRANKLIN FINANCIAL NETWORK, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share
data) Three Months Ended Year Ended
December 31, December 31,
2016 2015 2016 2015
---- ---- ---- ----
Interest income and dividends (Unaudited) (Unaudited) (Unaudited)
Loans, including fees $21,372 $15,503 $78,236 $53,574
Securities:
Taxable 3,904 3,278 15,306 12,362
Tax-Exempt 1,833 1,176 5,609 2,331
Dividends on restricted equity
securities 146 100 500 350
Federal funds sold and other 81 24 256 104
--- --- --- ---
Total interest income 27,336 20,081 99,907 68,721
------ ------ ------ ------
Interest expense
Deposits 4,116 2,725 14,234 8,688
Federal funds purchased and repurchase
agreements 66 74 303 306
Federal Home Loan Bank advances 373 87 884 312
Subordinated notes and other borrowings 1,082 - 2,902 -
----- --- ----- ---
Total interest expense 5,637 2,886 18,323 9,306
----- ----- ------ -----
Net interest income 21,699 17,195 81,584 59,415
Provision for loan losses 1,145 1,876 5,240 5,030
----- ----- ----- -----
Net interest income after provision for
loan losses 20,554 15,319 76,344 54,385
------ ------ ------ ------
Noninterest income
Service charges on deposit accounts 46 35 185 113
Other service charges and fees 796 657 3,041 2,644
Net gains on sale of loans 324 1,386 7,183 6,959
Wealth management 551 369 1,894 1,283
Loan servicing fees, net of amortization
of servicing assets 24 40 22 227
Gain on sales and calls of securities 637 304 2,172 833
Net gain (loss) on foreclosed assets 4 (4) 40 26
Other 171 205 603 771
--- --- --- ---
Total noninterest income 2,553 2,992 15,140 12,856
----- ----- ------ ------
Noninterest expense
Salaries and employee benefits 7,930 6,080 30,029 24,040
Occupancy and equipment 2,064 1,628 7,627 6,589
FDIC assessment expense 680 375 2,068 1,167
Marketing 151 261 762 956
Professional fees 540 1,043 3,546 2,425
Other 1,864 1,707 7,649 6,963
----- ----- ----- -----
Total noninterest expense 13,229 11,094 51,681 42,140
------ ------ ------ ------
Income before income tax expense 9,878 7,217 39,803 25,101
Income tax expense 2,699 2,553 11,746 9,021
----- ----- ------ -----
Net income 7,179 4,664 28,057 16,080
Dividends paid on Series A preferred
stock - (25) (23) (100)
Net income attributable to
noncontrolling interest - - - -
--- --- --- ---
Net income available to common
shareholders $7,179 $4,639 $28,034 $15,980
====== ====== ======= =======
Earnings per share:
Basic $0.61 $0.44 $2.56 $1.62
Diluted 0.58 0.41 2.42 1.54
FRANKLIN FINANCIAL NETWORK, INC.
AVERAGE BALANCES(7) - ANALYSIS OF YIELDS & RATES (UNAUDITED)
(Amounts in thousands, except percentages)
-----------------------------------------
Three Months Ended December 31,
-------------------------------
2016 2015
---- ----
Average Interest Average Average Interest Average
Balance Inc / Exp Yield / Rate Balance Inc / Exp Yield / Rate
------- --------- ------------ ------- --------- ------------
ASSETS:
Loans(1)(6) $1,732,872 $21,397 4.91 % $1,232,217 $15,520 5.00 %
Securities available
for sale(6) 742,614 4,676 2.50 % 584,826 3,686 2.50 %
Securities held to
maturity(6) 232,350 2,244 3.84 % 147,236 1,529 4.12 %
Certificates of
deposit at other
financial
institutions 1,055 4 1.51 % 250 1 1.59 %
Federal funds sold and
other(2) 74,582 223 1.19 % 44,952 123 1.09 %
------ --- ----- ------ --- -----
TOTAL INTEREST EARNING
ASSETS $2,783,473 $28,544 4.08 % $2,009,481 $20,859 4.12 %
Allowance for loan
losses (16,137) (10,454)
All other assets 89,146 78,877
------ ------
TOTAL ASSETS $2,856,482 $2,077,904
LIABILITIES & EQUITY
Deposits:
Interest checking $452,224 $558 0.49 % $262,076 $201 0.30 %
Money market 642,541 1,086 0.67 % 504,715 698 0.55 %
Savings 52,533 41 0.31 % 41,004 47 0.45 %
Time deposits 964,396 2,431 1.00 % 784,194 1,779 0.90 %
Federal funds
purchased and
other(3) 45,091 66 0.58 % 53,122 74 0.55 %
Federal Home Loan Bank
advances 153,087 373 0.97 % 57,000 87 0.61 %
Subordinated notes and
other borrowings 58,315 1,082 7.38 % - - - %
------ ----- ----- --- --- ----
TOTAL INTEREST BEARING
LIABILITIES $2,368,187 $5,637 0.95 % $1,702,111 $2,886 0.67 %
Demand deposits 239,962 179,689
Other liabilities 12,336 7,644
Total equity 235,997 188,460
------- -------
TOTAL LIABILITIES AND
EQUITY $2,856,482 $2,077,904
NET INTEREST SPREAD(4)(6) 3.13 % 3.45 %
NET INTEREST INCOME(6) $22,907 $17,973
NET INTEREST MARGIN(5)(6) 3.27 % 3.55 %
(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, the
Federal Home Loan Bank and
other financial institutions.
(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) Averages balances are average
daily balances.
Year ended December 31,
-----------------------
2016 2015
---- ----
Average Interest Average Average Interest Average
Balance Inc / Exp Yield / Rate Balance Inc / Exp Yield / Rate
------- --------- ------------ ------- --------- ------------
ASSETS:
Loans(1)(6) $1,586,829 $78,329 4.94 % $1,009,130 $53,647 5.32 %
Securities available
for sale(6) 666,745 16,593 2.49 % 545,878 13,314 2.44 %
Securities held to
maturity(6) 203,884 7,943 3.90 % 80,932 2,887 3.57 %
Certificates of
deposit at other
financial
institutions 827 15 1.81 % 250 6 2.40 %
Federal funds sold and
other(2) 70,424 741 1.05 % 48,883 448 0.92 %
------ --- ----- ------ --- -----
TOTAL INTEREST EARNING
ASSETS $2,528,709 $103,621 4.10 % $1,685,073 $70,302 4.17 %
Allowance for loan
losses (13,923) (8,398)
All other assets 42,482 74,022
------ ------
TOTAL ASSETS $2,557,268 $1,750,697
LIABILITIES & EQUITY
Deposits:
Interest checking $332,285 $1,411 0.42 % $268,745 $806 0.30 %
Money market 617,036 3,853 0.62 % 464,588 2,616 0.56 %
Savings 49,525 162 0.33 % 35,779 164 0.46 %
Time deposits 944,086 8,808 0.93 % 545,405 5,102 0.94 %
Federal funds
purchased and
other(3) 48,841 303 0.62 % 48,789 306 0.63 %
Federal Home Loan Bank
advances 94,937 884 0.93 % 46,447 312 0.67 %
Subordinated notes and
other borrowings 39,276 2,902 7.39 % - - - %
------ ----- ----- --- --- ----
TOTAL INTEREST BEARING
LIABILITIES $2,125,986 $18,323 0.86 % $1,409,753 $9,306 0.66 %
Demand deposits 210,780 164,284
Other liabilities 12,739 7,727
Total equity 207,763 168,933
------- -------
TOTAL LIABILITIES AND
EQUITY $2,557,268 $1,750,697
NET INTEREST
SPREAD(4)(6) 3.24 % 3.51 %
NET INTEREST INCOME(6) $85,298 $60,996
NET INTEREST
MARGIN(5)(6) 3.37 % 3.62 %
(1) Loan balances include both
loans held in the Bank's
portfolio and mortgage loans
held for sale and are net of
deferred origination fees and
costs. Non-accrual loans are
included in total loan
balances.
(2) Includes federal funds sold,
capital stock in the Federal
Reserve Bank and Federal Home
Loan Bank, and interest-
bearing deposits at the
Federal Reserve Bank, the
Federal Home Loan Bank and
other financial institutions.
(3) Includes repurchase agreements.
(4) Represents the average rate
earned on interest-earning
assets minus the average rate
paid on interest-bearing
liabilities.
(5) Represents net interest income
(annualized) divided by total
average earning assets.
(6) Interest income and rates
include the effects of tax-
equivalent adjustments to
adjust tax-exempt interest
income on tax-exempt loans
and investment securities to a
fully taxable basis.
(7) Averages balances are average
daily balances.
(
)
FRANKLIN FINANCIAL NETWORK, INC.
SUMMARY QUARTERLY CONSOLIDATED FINANCIAL DATA (UNAUDITED)
(Amounts in thousands, except per share data and percentages)
As of and for the three months ended
------------------------------------
Dec 31, Sept 30, Jun 30, Mar 31, Dec 31,
2016 2016 2016 2016 2015
---- ---- ---- ---- ----
Income Statement Data ($):
Interest income 27,336 25,724 24,286 22,561 20,081
Interest expense 5,637 5,049 4,352 3,285 2,886
Net interest income 21,699 20,675 19,934 19,276 17,195
Provision for loan
losses 1,145 1,392 1,567 1,136 1,876
Noninterest income 2,553 4,876 4,626 3,085 2,992
Noninterest expense 13,229 13,708 12,913 11,831 11,094
Net income before
taxes 9,878 10,451 10,080 9,394 7,217
Income tax
expense(4) 2,699 3,314 2,572 3,161 2,553
Net income 7,179 7,137 7,508 6,233 4,664
Earnings before
interest and taxes 15,515 15,500 14,432 12,679 10,103
Net income available
to common
shareholders 7,179 7,137 7,508 6,210 4,639
Weighted average
diluted common
shares(4) 12,473,725 11,415,422 11,320,705 11,215,473 11,180,629
Earnings per share,
basic 0.61 0.67 0.70 0.59 0.44
Earnings per share,
diluted(4) 0.58 0.63 0.66 0.55 0.41
Profitability (%)
Return on average
assets 1.00 1.07 1.22 1.12 0.89
Return on average
equity 12.10 13.78 15.53 12.90 9.82
Return on average
tangible common
equity 12.68 15.48 16.47 14.36 11.01
Efficiency ratio 54.55 53.65 52.58 52.91 54.95
Net interest
margin(1) 3.10 3.19 3.33 3.56 3.39
Balance Sheet Data ($):
Loans (including
HFS) 1,797,291 1,680,877 1,567,537 1,433,623 1,317,905
Loan loss reserve 16,553 15,590 14,253 12,676 11,587
Cash 90,927 56,804 72,050 62,054 52,394
Securities 983,649 905,806 909,531 746,781 734,038
Goodwill 9,124 9,124 9,124 9,124 9,124
Intangible assets
(Sum of core
deposit intangible
and SBA servicing
rights) 1,509 1,650 1,792 1,946 2,107
Assets 2,943,189 2,703,195 2,607,101 2,300,094 2,167,792
Deposits 2,391,818 2,217,954 2,249,735 1,953,573 1,814,039
Liabilities 2,672,828 2,493,551 2,402,825 2,108,184 1,978,976
Total equity 270,361 209,644 204,276 191,910 188,816
Common equity 270,258 209,644 204,276 191,910 178,816
Tangible common
equity 259,625 198,870 193,360 180,840 167,585
Asset Quality (%)
Nonperforming loans/
total loans(2) 0.35 0.10 0.10 0.12 0.25
Nonperforming assets
/(total loans(2) +
foreclosed assets) 0.35 0.10 0.12 0.14 0.27
Loan loss reserve /
total loans(2) 0.93 0.94 0.92 0.89 0.89
Net charge-offs /
average loans 0.04 0.01 0.00 0.01 0.01
Capital (%)
Tangible common
equity to tangible
assets 8.85 7.39 7.45 7.90 7.77
Leverage ratio(3) 9.28 7.15 7.33 7.69 8.48
Common Equity Tier 1
ratio(3) 11.75 9.09 9.22 9.60 10.08
Tier 1 risk-based
capital ratio(3) 11.75 9.09 9.22 9.60 10.51
Total risk-based
capital ratio(3) 12.48 12.74 12.93 12.49 11.21
(1) Net interest margins shown in the
table above do not include tax-
equivalent adjustments.
(2) Total loans in this ratio exclude
loans held for sale.
(3) Capital ratios for December 31,
2016 are estimates, since the
Company's quarterly regulatory
reports have not yet been filed.
(4) This item reflects the
retrospective adoption of a new
accounting standards update.
Prior to adoption, diluted
earnings per share amounts for
periods in 2016 were as follows:
September 30, 2016 -$0.62;
June 30, 2016 -$0.62; and March
31, 2016 - $0.56.
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 net income
available to common shareholders divided by average tangible common
shareholders' equity;
-- "Efficiency ratio" is defined as noninterest expenses divided by our
operating revenue, which is equal to net interest income plus
noninterest income;
-- "Adjusted yield on loans" is our yield on loans after excluding loan
accretion from our acquired loan portfolio. Our management uses this
metric to better assess the impact of purchase accounting on our yield
on loans, as the effect of loan discount accretion is expected to
decrease as the acquired loans mature or roll off of our balance sheet;
-- "Net interest margin" is defined as annualized net interest income
divided by average interest-earning assets for the period;
-- "Adjusted net interest margin" is net interest margin after excluding
loan accretion from the acquired loan portfolio and premiums for
acquired time deposits. Our management uses this metric to better assess
the impact of purchase accounting on net interest margin, as the effect
of loan discount accretion and accretion of net discounts and premiums
related to deposits is expected to decrease as the acquired loans and
deposits mature or roll off of our balance sheet.
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/ As of or for the Three Months Ended
per share data and percentages)
Dec 31, Sept 30, Jun 30, Mar 31, Dec 31,
2016 2016 2016 2016 2015
---- ---- ---- ---- ----
Total shareholders' equity $270,258 $209,644 $204,276 $191,910 $188,816
Less: Preferred stock - - - - 10,000
Total common shareholders' equity 270,258 209,644 204,276 191,910 178,816
Common shares outstanding 13,036,954 10,757,483 10,689,481 10,586,592 10,571,377
---------- ---------- ---------- ---------- ----------
Book value per share $20.73 $19.49 $19.11 $18.13 $16.92
====== ====== ====== ====== ======
270,258 209,644 204,276 191,910 178,816
Total common shareholders' equity
Less: Goodwill and other intangible assets 10,633 10,774 10,916 11,070 11,231
Tangible common shareholders' equity $259,625 $198,870 $193,360 $180,840 $167,585
Common shares outstanding 13,036,954 10,757,483 10,689,481 10,586,592 10,571,377
---------- ---------- ---------- ---------- ----------
Tangible book value per share $19.91 $18.49 $18.09 $17.08 $15.85
====== ====== ====== ====== ======
Average total shareholders' equity $235,984 $206,009 $194,385 $194,383 $188,460
Less: Average Preferred stock - - - 9,231 10,000
Less: Average Goodwill and other intangible assets 10,719 10,855 11,006 11,165 11,309
------ ------ ------ ------ ------
Average tangible common shareholders' equity $225,265 $195,154 $183,379 $173,987 $167,151
======== ======== ======== ======== ========
Net income available to common shareholders $7,179 $7,137 $7,508 $6,210 $4,639
Average tangible common equity 225,265 195,154 183,379 173,987 167,151
------- ------- ------- ------- -------
Return on average tangible common equity 12.68 % 14.55 % 16.47 % 14.36 % 11.01 %
====== ====== ====== ====== ======
Efficiency Ratio:
Net interest income $21,699 $20,675 $19,934 $19,276 $17,195
Noninterest income 2,553 4,876 4,626 3,085 2,992
Operating revenue 24,252 25,551 24,560 22,361 20,187
Expense
Total noninterest expense 13,229 13,708 12,913 11,831 11,094
Efficiency ratio 54.55 % 53.65 % 52.58 % 52.91 % 54.96 %
====== ====== ====== ====== ======
Annualized interest and fees from loans $85,023 $80,329 $76,136 $71,358 $61,506
Average loans 1,714,638 1,620,347 1,497,556 1,364,467 1,232,218
--------- --------- --------- --------- ---------
Reported yield on loans(1) 4.96 % 4.96 % 5.08 % 5.23 % 4.99 %
----- ----- ----- ----- -----
Annualized accretion income on acquired loans $1,306 $841 $1,108 $1,447 $1,409
Less: Effect of accretion income on acquired loans (0.08 %) (0.05 %) (0.07 %) (0.11 %) (0.11 %)
Adjusted yield on loans 4.88 % 4.91 % 5.01 % 5.12 % 4.88 %
===== ===== ===== ===== =====
(Amounts in thousands, except share/ As of or for the Three Months Ended
per share data and percentages)
Dec 31, Sept 30, Jun 30, Mar 31, Dec 31,
2016 2016 2016 2016 2015
---- ---- ---- ---- ----
Annualized net interest income $86,324 $82,251 $80,174 $77,528 $68,219
Average earning assets 2,783,473 2,576,294 2,404,060 2,177,905 2,009,481
--------- --------- --------- --------- ---------
Reported net interest margin(1) 3.10 % 3.19 % 3.33 % 3.56 % 3.39 %
$1,306 $841 $1,108 $1,447 $1,409
Annualized accretion income on acquired loans
Effect of accretion income on acquired loans (0.05 %) (0.03 %) (0.05 %) (0.07 %) (0.07 %)
------- ------- ------- ------- -------
$ - $ - $ - $ - $ -
Annualized premium amortization on acquired deposits
Effect of premium amortization of acquired deposits (0.00 %) (0.00 %) (0.00 %) (0.00 %) (0.00 %)
------- ------- ------- ------- -------
3.05 % 3.16 % 3.28 % 3.49 % 3.32 %
Net interest margin adjusted for purchase accounting adjustments
(1) The yields and margins reported
in the table above do not
include any tax-equivalent
adjustments.
Investor Relations Contact:
Sarah Meyerrose
EVP, Chief Financial Officer
(615) 236-8344
sarah.meyerrose@franklinsynergy.com
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/franklin-financial-network-announces-fourth-quarter-earnings-per-diluted-share-of-058-300395972.html
SOURCE Franklin Financial Network, Inc.
