NEXITY FINANCIAL CORPORATION 
By Nexity Financial Corporation (NASDAQ: NXTY):
Fourth Quarter 2006 Highlights:
- Record net income of $1.61 million, up 37.3% from last year
- Diluted net income per share of $0.18, up 43.5% from last year
- Total assets of $891.0 million, up 13.6% from last year's $784.5 million
- Total loans of $606.0 million, up 17.5% from last year's $515.6 million
- Total deposits of $658.4 million, up 10.3% from last year's $596.7 million
- Strong credit quality with QTD annualized net charge-offs of 0.04% and nonperforming loans of 0.08% of total loans
Nexity Financial Corporation (NASDAQ: NXTY) today reported fourth quarter net income of $1.61 million, or $0.18 per diluted share. Net income was up 37.3% from the same period in 2005. The improved earnings were primarily related to improved noninterest income, lower noninterest expense, and a lower provision for loan losses. Net interest income was down slightly from the same period in 2005 due to a lower net interest margin which was 2.87% in the fourth quarter of 2006 versus 3.30% in 2005. Average interest-earning assets increased 12.9% from the fourth quarter of 2005 to the same period in 2006.
"We continued to build on our positive momentum during the Fourth Quarter of 2006. Our earnings increased significantly versus Fourth Quarter of 2005 while we maintained very sound credit quality,? said Greg Lee, Chairman and CEO of Nexity Financial Corporation. ?Despite a challenging environment which included a slower economy and a flat yield curve our employees continued to demonstrate their ability to produce strong results. Our focus on sound fundamentals has positioned Nexity well for aggressive expansion in 2007."
Return on average assets and return on average equity were 0.76% and 10.12%, respectively, for the fourth quarter of 2006 compared with 0.79% and 10.50% during the third quarter in 2006 and 0.63% and 7.31% for the fourth quarter of 2005.
For the year ended December 31, 2006, operating income was $5.94 million or $0.66 per diluted share compared to $4.25 million or $0.53 per diluted share during the same period in 2005. For the year ended December 31, 2006, Nexity's net income was $6.09 million or $0.67 per diluted share compared with $4.54 million, or $0.57 per diluted share for the same period in 2005. Operating income is net income less after tax non-recurring items and is more indicative of financial performance because it focuses on core earnings. The non-recurring items in each period presented are net gains and losses realized on the sale of investment securities.
Return on average assets and return on average equity were 0.75% and 9.78%, respectively, for the year ended December 31, 2006 compared with 0.67% and 10.38% for the same period in 2005. Return on equity is lower than the same period last year primarily due to the additional equity raised at the end of the third quarter of 2005.
Total assets grew to $891.0 million at December 31, 2006, up $106.5 million or 13.6% from the $784.5 million reported at December 31, 2005. Total loans were $606.0 million at December 31, 2006, up $90.4 million or 17.5% from the $515.6 million reported at December 31, 2005. Total deposits were $658.4 million at December 31, 2006, up $61.7 million or 10.3% from the $596.7 million reported at December 31, 2005.
Net interest income, the major component of Nexity's income statement was $6.0 million for the fourth quarter of 2006 versus $6.1 million for the same period in 2005, a decrease of 1.6%. This decrease was due to a lower net interest margin. Average interest-earning assets were up 12.9% while the net interest margin decreased from 3.30% in 2005 to 2.87% in 2006. Our target level for the net interest margin is 3.00% and we believe that we should be able to maintain that level during 2007.
Average earning assets were higher because of strong growth in loans and deposits. Average loans were up $69.2 million or 13.7%. The net interest margin was weaker due to a low level of loan fees and an increase in the cost of funds. Average loans as a percentage of average earning assets was 69.2% during the fourth quarter of 2006 versus 68.7% for the same period in 2005.
The provision for loan losses during the fourth quarter of 2006 was down $155,000 or 26.7% versus the same period in 2005. The provision for loan losses was lower primarily because of slower loan growth and lower net charge-offs in 2006. Net charge-offs for the fourth quarter of 2006 were $62,623 or 0.04% of average loans on an annualized basis versus $92,934 or 0.07% for the same period in 2005.
Noninterest income for the fourth quarter of 2006 was $440,085 which was up $62,154 or 16.4% from the $377,931 reported for the third quarter of 2006 and up $58,910 or 15.5% from the $381,175 reported for the same period in 2005. Noninterest income was up from last quarter and from the same period in 2005 primarily because of higher income from our brokerage and investment services division and our clearing and cash management business with correspondent banks.
Noninterest expense for the fourth quarter of 2006 was $3.52 million which was down $638,982 or 15.4% from the $4.16 million reported for the third quarter of 2006 and down $521,624 or 12.9% from the $4.04 million reported for the same period in 2005. Noninterest expense was lower than last quarter and last year primarily due a decrease in salary and employee benefits expense related to lower incentive pay accruals and more effective management of certain expenses including marketing, professional fees and communication expenses.
The efficiency ratio was 54.71% for the fourth quarter of 2006 which was improved from the 58.60% reported for the third quarter of 2006 and the 62.43% reported for the same period in 2005. The efficiency ratio was lower in the fourth quarter of 2006 primarily because of lower overhead and improved noninterest income.
Credit quality continues to be sound. There were $513,920 in nonperforming loans or 0.08% of total loans at December 31, 2006 compared with $2,651,025 or 0.51% of total loans at December 31, 2005. Nonperforming assets were $5.3 million or 0.59% of total assets at December 31, 2006 compared with $4.2 million or 0.53% of total assets at December 31, 2005. Annualized net charge-offs were 0.12% of average loans during 2006 compared with 0.07% in 2005. The allowance for loan losses was 1.22% of total loans at December 31, 2006 and 1.25% of total loans at December 31, 2005.
Nexity's total risk-based capital, tier 1 risk-based capital, and leverage ratios at December 31, 2006 were 11.80%, 10.78%, and 9.25%, respectively, compared with 12.77%, 11.77%, and 10.24%, respectively, at December 31, 2005. On March 3, 2006, Nexity announced a stock repurchase program to acquire up to 400,000 shares, or approximately 4.6% of the total common shares outstanding at that time. Nexity has repurchased 365,950 shares or approximately 4.2% of total common shares outstanding at that time.
Conference Call / Webcast Information
Nexity Financial Corporation will host a conference call on Friday, January 26, 2007 at 10:00 AM Eastern Daylight Time (EDT) to discuss the fourth quarter 2006 results. Additional material information, including forward-looking statements such as trends and projections, may be discussed during the presentation. To participate in the conference call or webcast, please follow the instructions listed below.
Webcast: Live via the Internet and Windows Media Player
http://www.nexitybank.com/ then to the Investor Relations
section, to conference in via the web
Then click on "Fourth Quarter 2006 Earnings Release
Conference Call." The Webcast access will be "listen
only".
Webcast URL: http://www.vcall.com/IC/CEPage.asp?ID=112773
Live via telephone to conference in via telephone
1-877-407-8033 (U.S. and Canada)
(201) 689-8033 (International)About Nexity Financial Corporation
Nexity Financial Corporation is an $891 million commercial bank offering deposit products nationwide consisting of money markets, checking accounts and online access. Nexity generates the majority of its income through wholesale correspondent banking activities. Nexity is headquartered in Birmingham, Alabama. Customer Service Representatives can be reached at 1-877-738-6391. To learn more about Nexity Bank please visit www.nexitybank.com.
CAUTION ABOUT FORWARD-LOOKING STATEMENTS
In accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Nexity Financial Corporation notes that any statements in this press release and elsewhere that are not historical facts are ?forward-looking statements.? The words ?expect?, ?anticipate?, ?intend?, ?consider?, ?plan?, ?believe?, ?seek?, ?should?, ?estimate? and similar expressions are intended to identify such forward-looking statements, but other statements may constitute forward-looking statements. The forward-looking statements involve risks and uncertainties that may cause Nexity's actual results of operations to differ materially from expected results. For a discussion of such risks and uncertainties, see Nexity's Annual Report on Form 10-K for the fiscal year ended December 31, 2005, as well as its other filings with the U.S. Securities and Exchange Commission. Nexity assumes no obligation to update any forward-looking statements contained in this document as a result of new information or future events or developments.
| Nexity Financial Corporation | ||||||||||||
| Financial Summary (Unaudited) | ||||||||||||
| Three Months Ended | Year ended | |||||||||||
| December 31, | Percent | December 31, | Percent | |||||||||
| Income Statement Data | 2006 | 2005 | Change | 2006 | 2005 | Change | ||||||
| Interest income | $15,228,125 | $12,362,413 | 23.2 | % | $57,721,714 | $41,138,636 | 40.3 | % | ||||
| Interest expense | 9,233,327 | 6,268,728 | 47.3 | 32,607,945 | 20,264,076 | 60.9 | ||||||
| Net interest income | 5,994,798 | 6,093,685 | (1.6) | 25,113,769 | 20,874,560 | 20.3 | ||||||
| Provision for loan losses | 425,000 | 580,000 | (26.7) | 1,600,000 | 1,870,000 | (14.4) | ||||||
Net interest income after provision for loan losses | 5,569,798 | 5,513,685 | 1.0 | 23,513,769 | 19,004,560 | 23.7 | ||||||
| Net gains (losses) on sales of securities | (9,713) | 0 | (100.0) | 240,952 | 468,351 | (48.6) | ||||||
| Noninterest income | 440,085 | 381,175 | 15.5 | 1,664,546 | 1,436,443 | 15.9 | ||||||
| Noninterest expense | 3,520,505 | 4,042,129 | (12.9) | 15,839,163 | 14,122,963 | 12.2 | ||||||
| Income before income taxes | 2,479,665 | 1,852,731 | 33.8 | 9,580,104 | 6,786,391 | 41.2 | ||||||
| Applicable income tax expense | 865,283 | 677,024 | 27.8 | 3,485,543 | 2,245,080 | 55.3 | ||||||
| Net income | $1,614,382 | $1,175,707 | 37.3 | % | $6,094,561 | $4,541,311 | 34.2 | % | ||||
| Reconciliation of Non-GAAP measures to GAAP: | ||||||||||||
| Net income | $1,614,382 | $1,175,707 | 37.3 | % | $6,094,561 | $4,541,311 | 34.2 | % | ||||
| Non-recurring (income) expense (after-tax) (1) | 6,041 | 0 | 100.0 | (149,687) | (293,952) | 49.1 | ||||||
| Operating income | $1,620,423 | $1,175,707 | 37.8 | % | $5,944,874 | $4,247,359 | 40.0 | % | ||||
| Net income per share - basic | $0.19 | $0.13 | 43.0 | $0.72 | $0.61 | 17.1 | ||||||
| Net income per share - diluted | $0.18 | $0.13 | 43.5 | $0.67 | $0.57 | 18.9 | ||||||
| Operating income per share - basic | $0.19 | $0.13 | 43.5 | $0.70 | $0.57 | 22.2 | ||||||
| Operating income per share - diluted | $0.18 | $0.13 | 44.1 | $0.66 | $0.53 | 24.1 | ||||||
| Weighted average shares outstanding - basic | 8,363,513 | 8,709,626 | (4.0) | 8,496,457 | 7,415,241 | 14.6 | ||||||
| Weighted average shares outstanding - diluted | 8,898,251 | 9,300,260 | (4.3) | 9,046,809 | 8,018,058 | 12.8 | ||||||
| Performance Ratios | ||||||||||||
(Annualized (a)) | ||||||||||||
Return on average assets (a) | 0.76 | % | 0.63 | % | 21.6 | % | 0.75 | % | 0.67 | % | 12.8 | % |
Return on average stockholders' equity (a) | 10.12 | 7.31 | 38.6 | 9.78 | 10.38 | (5.7) | ||||||
Net yield on average interest-earning assets (tax equivalent) (a) | 2.87 | 3.30 | (13.0) | 3.15 | 3.13 | 0.6 | ||||||
| Efficiency ratio | 54.71 | 62.43 | (12.4) | 59.15 | 63.30 | (6.6) | ||||||
| Selected Average Balances | ||||||||||||
| (In thousands) | ||||||||||||
| Total assets | $842,045 | $745,690 | 12.9 | % | $808,778 | $679,671 | 19.0 | % | ||||
| Interest-earning assets | 828,045 | 733,563 | 12.9 | 797,289 | 668,424 | 19.3 | ||||||
| Loans-net of unearned income | 573,164 | 503,940 | 13.7 | 543,789 | 444,138 | 22.4 | ||||||
| Investment securities | 241,821 | 202,489 | 19.4 | 229,869 | 202,903 | 13.3 | ||||||
| Deposits | 642,990 | 556,466 | 15.5 | 617,448 | 512,888 | 20.4 | ||||||
Noninterest-bearing deposits | 7,122 | 4,360 | 63.3 | 5,500 | 4,237 | 29.8 | ||||||
| Interest-bearing deposits | 635,868 | 552,106 | 15.2 | 611,948 | 508,651 | 20.3 | ||||||
| Interest-bearing liabilities | 760,763 | 671,465 | 13.3 | 731,882 | 626,105 | 16.9 | ||||||
| Stockholders' equity | 63,261 | 63,848 | (0.9) | 62,304 | 43,761 | 42.4 | ||||||
| (1) Non-recurring (income) expense is gains and losses on sales of investment securities. | ||||||||||||
| Nexity Financial Corporation | ||||||||||||||||||||||||||||||||||||||||
| Financial Summary (Unaudited) | ||||||||||||||||||||||||||||||||||||||||
|
Share
© Business Wire - 2007
Nexity Financial Corporation is bank holding company and financial holding company The Company operates a wholly owned subsidiary bank, Nexity Bank, which is headquartered in Birmingham, Alabama, with additional correspondent banking offices in Atlanta, Georgia; Myrtle Beach and Columbia, South Carolina; Dallas, Texas; Orlando, Florida; Milwaukee, Wisconsin, and Charlotte and Raleigh, North Carolina. Nexity Bank is an Alabama state chartered bank. The Company conducts deposit business in all 50 states in the United States and conduct loan business primarily in the southeastern United States and Texas. As of December 31, 2007, The Company had total loans of $644.9 million and total deposits of $709.2 million.
Sector
Banks
|
