OMNI FINANCIAL SERVICES, INC. 
By Omni Financial Services, Inc. (NASDAQ: OFSI):
Second Quarter 2007 Highlights (compared to June 30, 2006 unless otherwise noted):
- Net income of $1.71 million ? increase of 21.3%
- Diluted earnings per share of $0.15
- Total capital of $71.9 million ? increase of 99.8%
- Asset growth of $271.7 million ? increase of 46.4%
- Net interest margin of 5.02% - 4 basis point linked quarter increase
- Dividend of $0.05 per share declared
Financial Performance
Omni Financial Services, Inc. (NASDAQ: OFSI), the bank holding company for Omni National Bank, reported an increase of 21.3% in net income for the three months ended June 30, 2007, to $1.7 million or $0.15 per diluted share, compared to $1.4 million or $0.18 per diluted share in the same quarter in 2006. Comparing linked quarters, net income increased 17.5% or $0.02 per diluted share, from the first quarter of 2007. For the six months ended June 30, 2007 the Company posted net income of $3.2 million or $0.28 per diluted share, which is a net income increase of 15.9% as compared to $2.7 million or $0.36 for the six month period ended June 30, 2006. For comparison purposes, net income for the six months ended June 30, 2006 has been reduced by a $3.69 million tax credit recorded on January 1, 2006 upon conversion from an S-Corporation to a C-Corporation at January 1, 2006. Including the tax credit, net income calculated in accordance with generally accepted accounting principles (?GAAP?) for the six months ended June 30, 2006 was $6.4 million or $0.85 per diluted share.
The primary reason for the increase in earnings during 2007 is expansion in net interest income, which was driven by a $193.1 million or 52% increase in average loans outstanding for the six months ended June 30, 2007 as compared to the six months ended June 30, 2006. Chairman and CEO Stephen Klein stated, ?We are pleased that quarter after quarter we are able to produce record earnings and consistent loan growth for our shareholders.? Earnings for the quarter were also positively impacted by the May 2007 recovery of $357,000 relating to a $1.0 million fraud loss recorded in December 2005 in the warehouse lending line of business. President Irwin Berman noted, ?Our diligence in pursuing this matter has resulted in the recovery of 35% of the loss previously recognized. While further recovery remains uncertain, we continue to pursue our options.?
Net Interest Income and Margin
For the three months ended June 30, 2007, the Company recorded record net interest income of $9.2 million, an increase of $2.78 million or 43.1% from $6.5 million for the same period in 2006, the result of continued strong loan growth which drove the increase in average earning assets of $223.5 million or 42.6% when compared to the same period in 2006. Compared to the first quarter of 2007, net interest income increased $847,000 or 10.10%.
The Company's net interest margin for the quarter was 5.02%, which was four basis points below second quarter 2006 but an increase of 4 basis points from the quarter ended March 31, 2007.
Loans
Loans, net of deferred loan fees, were $610.5 million at June 30, 2007, an increase of $189.2 million or 44.9% when compared to $421.3 million at June 30, 2006. On a linked-quarter basis, gross loans grew $40.6 million or 7.1% over the prior quarter. For the quarter ended June 30, 2007, net charge-offs totaled $456,000, resulting in an annualized net charge-off ratio of 0.31% compared to $174,000 or 0.18% for the quarter ended June 30, 2006 and $56,000 or 0.04% for the linked quarter. Approximately $175,000 or 38% of the net charge-offs related to losses recognized for properties in Griffin and Macon, Georgia that were foreclosed and taken into OREO during the quarter. During the first quarter of 2007 the Company noted that an accelerated economic downturn in these markets had increased non performing assets. An additional $146,000 or 32% of the net charge-offs arose from losses recognized on the liquidation of collateral related to two loans acquired in the Company's July 2005 acquisition of a troubled Dalton Georgia bank.
On a linked quarter basis, the provision for loan losses increased $455,000 or 46%. $424,000 of the increase was attributable to specific reserves related to two loans for which the Company has identified a probable incurred loss. The ratio of the allowance for loan losses to loans increased from 1.33% to 1.40%. Without the specific reserves noted, the ratio would have been 1.33%. The provision for loan losses for the three months ended June 30, 2006 was $725,000 and the ratio of the allowance for loan losses to loans was 1.32%. The $716,000 or 99% year over year increase in the provision reflects the Bank's significant loan growth.
Total non-performing assets as a percentage of total loans and OREO increased to 2.42% as of June 30, 2007 compared to 2.03% as of March 31, 2007 and 1.64% as of June 30, 2006. While there was a large reduction in non-performing assets in the community redevelopment portfolio to 0.92% of loans and OREO, from 1.38% of loans and OREO as of March 31, 2007, there was an increase in non-performing assets in the Atlanta real estate construction portfolio (to 0.71% of loans and OREO from 0.05%) due to credit deterioration detected in 5 metro Atlanta residential construction relationships, totaling $5.4 million. ?We have been proactive in facing the loan performance challenges that we have seen and may continue to see in the industry, and believe we have a strong team in place to manage the resulting opportunities,? Chief Lending Officer Charlie Barnwell commented. ?We continue to evaluate market data as it relates to residential housing absorption, and in particular, building lot absorption and sales so that we can identify potential issues and work with our borrowers to avoid default.?
Financial Ratios
Certain performance ratios for the quarter ended June 30, 2007 compared to the quarter ended June, 2006 have been significantly impacted by the large increase in stockholders' equity and shares outstanding associated with the Company's initial public offering that was effective September 29, 2006 and was consummated in the fourth quarter of 2006. As a result of the offering, shares outstanding increased by 3,852,500 and net proceeds of $33.0 million were received. The increase in these items resulted in the denominators used in calculating certain ratios to increase, which resulted in reduced ratios for the current quarter, specifically for return on equity and earnings per share. As the proceeds from the offering are utilized in the growth of the business it is expected that the performance ratios will continue to increase and return to historical levels.
Return on average equity for the three months ended June 30, 2007 was 9.25% compared to 15.83% for the same period in 2006. Return on average assets for the three months ended June 30, 2007 was 0.85% compared to 1.00% for the same period in 2006. The Company's efficiency ratio (non-interest expense divided by the sum of net interest income and non-interest income) was 60.22% for the three months ended June 30, 2007 compared to 59.76% for the three months ended June 30, 2006.
On a linked quarter basis, return on average equity and assets improved from 8.05% and 0.79% to 9.25% and 0.85%, respectively, as more of the capital raised in 2006 has been deployed and begun to produce a return. Also on a linked quarter basis, there was improvement in the efficiency ratio from 65.50% to 60.22%.
Selected Financial Information
| For the Three Months Ended June 30 | For the Six Months Ended June 30 | ||||||||||||||
| 2007 | 2006 | % Change | 2007 | 2006 | % Change | ||||||||||
| Share Data | |||||||||||||||
| Diluted earnings per share (1) | $ | 0.15 | $ | 0.18 | -16.67% | $ | 0.28 | $ | 0.36 | -22.22% | |||||
| Book value at period end | $ | 6.41 | $ | 4.80 | 33.50% | $ | 6.41 | $ | 4.80 | 33.50% | |||||
| Tangible book value at period end | $ | 5.89 | $ | 4.03 | 46.18% | $ | 5.89 | $ | 4.03 | 46.18% | |||||
| Performance Ratios: | |||||||||||||||
| Return on average equity (1) (2) | 9.25% | 15.83% | -41.57% | 8.66% | 36.94% | -76.56% | |||||||||
| Net interest margin | 5.02% | 5.06% | -0.88% | 5.01% | 5.01% | 0.01% | |||||||||
| Efficiency ratio | 60.22% | 59.76% | 0.77% | 62.72% | 62.70% | 0.03% | |||||||||
| Credit Quality Ratios: | |||||||||||||||
| Allowance for loan losses to loans | 1.40% | 1.32% | 6.06% | 1.40% | 1.32% | 6.06% | |||||||||
| Nonperforming assets to total assets | 1.74% | 1.19% | 46.57% | 1.74% | 1.19% | 46.57% | |||||||||
| Nonperforming assets to total loans and Oreo | 2.42% | 1.58% | 53.22% | 2.42% | 1.58% | 53.22% | |||||||||
| Net charge-offs to average loans (2) | 0.31% | 0.18% | 72.22% | 0.18% | 0.11% | 63.64% | |||||||||
| Selected Balance Sheet Averages: | |||||||||||||||
| Loans outstanding | $ | 585,922,266 | $ | 397,518,592 | 47.39% | $ | 561,964,567 | $ | 368,844,315 | 52.36% | |||||
| Total assets | $ | 802,534,768 | $ | 562,571,304 | 42.65% | $ | 768,147,016 | $ | 529,836,306 | 44.98% | |||||
| Interest-earning assets | $ | 748,415,943 | $ | 524,924,386 | 42.58% | $ | 718,920,830 | $ | 494,468,429 | 45.39% | |||||
| Deposits | $ | 620,400,496 | $ | 399,348,478 | 55.35% | $ | 593,683,745 | $ | 380,289,702 | 56.11% | |||||
| Tangible shareholders equity | $ | 68,217,130 | $ | 29,842,787 | 128.59% | $ | 67,781,725 | $ | 29,206,587 | 132.08% | |||||
| Shareholders' equity | $ | 74,005,291 | $ | 35,658,426 | 107.54% | $ | 73,570,177 | $ | 35,024,206 | 110.06% | |||||
| (1)The six month period ended June 30, 2006 has been adjusted to reflect the $3.69 million tax credit related to our conversion from an S-Corporation to a C-Corporation, recognized on January 1, 2006. | |||||||||||||||
| (2)Annualized | |||||||||||||||
Expansion Activities
During the second quarter, the Company continued its expansion activities. In April it celebrated the grand opening of a new Fayetteville, North Carolina branch, located on the north side of town and relocated the Dalton, Georgia branch to a new downtown location. The Company also expanded its geographic diversity by opening a loan production office in Dallas, Texas and entering into an agreement to acquire the charter of Wilson State Bank. The charter acquisition, which closed July 2, 2007, will allow the Company to provide full service banking in Dallas as well as expand full service banking throughout Texas. A Houston office is expected to open in the third quarter of 2007. The Company also acquired an office building in downtown Chicago, Illinois with the intent to increase its Chicago presence.
Like most financial institutions, the Bank continues to focus on core deposit growth. President Irwin Berman stated, ?Although growing demand deposits continues to be a challenge, we are pleased with the growth of our money market and savings deposits which increased $32 million ? more than 100% - since June 2006.?
To support the continued growth, the Company added 15 new associates during the quarter. One area of focus was the Credit Administration area which added 4 employees. Chief Credit Officer Terry Lawson noted, ?The additions to our Credit area further strengthen our already stringent credit culture.?
Other Information
Quarterly Dividend. The board of directors declared a quarterly cash dividend of $0.05 per share at its July 24, 2007 board meeting. The dividend is payable on August 21, 2007 to shareholders of record as of August 6, 2007.
Stock Repurchase Program. On July 24, 2007, the board of directors authorized the Company to increase the aggregate size of its existing stock repurchase program by $8.6 million to provide for the repurchase of an aggregate of $10 million of stock, of which $1.4 million has been repurchased. The closing price of Omni Financial Services, Inc. common stock on June 29, 2007 (the last trading day of the quarter) was $8.12 per share.
The Georgia 100--Best of Business 2007. Omni Financial Services was ranked #27 in the Georgia 100, the Atlanta Journal-Constitution's annual list of Georgia's top 100 public companies based on 2006 performance. Rankings are computed by an independent accounting firm and are based on five weighted variables: annual revenue, year-over-year revenue change, return on equity, annual change in profit margin in fiscal 2006 and total return on investment (share price change plus reinvested dividends) for calendar 2006.
Conference Call / Webcast Information
Omni Financial Services, Inc. will host a conference call on Thursday, July 26 at 10:00 a.m. (ET) to discuss second quarter 2007 financial 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.
Conference Call: Please call 1-866-558-6901. A transcript of the call will be available 3 days after the event on the Company's website and will be available for 14 days following the event.
Webcast: To gain access to the webcast, which will be ?listen-only,? please go to www.onb.com and click on the link ?Earnings Press Release.? For those unable to participate during the live webcast, it will be archived on the Omni National Bank website for 14 days following the event.
About Omni
Omni Financial Services, Inc. is a bank holding company headquartered in Atlanta, Georgia. Omni Financial Services, Inc. provides a full range of banking and related services through its wholly owned subsidiary, Omni National Bank, a national bank headquartered in Atlanta, Georgia. Omni has one full service banking location in Atlanta, one in Dalton, Georgia, five in North Carolina, one in Chicago, Illinois, and one in Tampa, Florida. In addition, Omni has loan production offices in Charlotte, North Carolina, Dalton, Georgia, Birmingham, Alabama, Philadelphia, Pennsylvania, and Dallas, Texas. Omni provides traditional lending and deposit gathering capabilities, as well as a broad array of financial products and services, including specialized services such as community redevelopment lending, small business lending and equipment leasing, warehouse lending, and asset-based lending. Omni Financial Services, Inc.'s common stock is traded on the NASDAQ Global Market under the ticker symbol "OFSI." Additional information about Omni National Bank is available on its website at www.onb.com.
Except for historical information contained herein, the matters discussed in this press release consist of forward-looking information under the Private Securities Litigation Reform Act of 1995. The accuracy of the forward-looking information is necessarily subject to and involves risks and uncertainties, which could cause actual results to differ materially from the forward-looking information. These risks and uncertainties include, but are not limited to, unforeseen general economic conditions, potential difficulties in the execution of Omni Financial Services, Inc.'s business and growth strategies, competitive risks and other factors set forth from time to time in Omni Financial Services, Inc.'s filings with the Securities and Exchange Commission. When used in this release, the words ?believes,? ?estimates,? ?plans,? ?expects,? ?should,? ?will,? ?may,? ?might,? ?outlook,? and ?anticipates? are similar expressions as they relate to Omni Financial Services, Inc.'s (including its subsidiaries), or its management, and are intended to identify forward-looking statements.
Omni Financial Services, Inc. from time to time becomes aware of rumors concerning its business, prospects and results of operations. As a matter of policy, Omni Financial Services, Inc. does not comment on rumors. Investors are cautioned that in this age of instant communication and Internet access, it may be important to avoid relying on rumors and other unsubstantiated information. Omni Financial Services, Inc. complies with federal and state laws applicable to the disclosure of information concerning its business, prospects and results of operations. Investors may be at significant risk in relying on unsubstantiated information from other sources.
| Omni Financial Services, Inc. | |||||||||||||||||||||||||||||||||||||||
| Consolidated Balance Sheets | |||||||||||||||||||||||||||||||||||||||
| ASSETS | June 30, 2007 | December 31, 2006 | June 30, 2006 | ||||||||||||||||||||||||||||||||||||
| (unaudited) | (unaudited) | ||||||||||||||||||||||||||||||||||||||
| Cash and due from banks | $ | 7,297,232 | $ | 5,874,453 | $ | 6,750,183 | |||||||||||||||||||||||||||||||||
| Interest-bearing deposits in other financial institutions | 2,126,795 | 319,961 | 1,906,400 | ||||||||||||||||||||||||||||||||||||
| Federal funds sold | 37,827,000 | 16,341,000 | - | ||||||||||||||||||||||||||||||||||||
| Total cash and cash equivalents | 47,251,027 | 22,535,414 | 8,656,583 | ||||||||||||||||||||||||||||||||||||
| Investment securities available-for-sale | 140,527,523 | 134,553,978 | 118,685,155 | ||||||||||||||||||||||||||||||||||||
| Other investments | 5,927,500 | 4,836,100 | 6,388,600 | ||||||||||||||||||||||||||||||||||||
| Loans, net of allowance for loan losses of $8,561,083, $6,646,212, and $5,544,038 | 601,971,083 | 494,813,672 | 415,802,060 | ||||||||||||||||||||||||||||||||||||
| Loans held-for-sale | 5,482,945 | 9,635,243 | 3,728,157 | ||||||||||||||||||||||||||||||||||||
| Equipment leased to others | 3,053,399 | - | 27,112 | ||||||||||||||||||||||||||||||||||||
| Other real estate owned | 5,306,283 | 3,377,719 | 1,786,917 | ||||||||||||||||||||||||||||||||||||
| Premises and equipment, net | 22,714,099 | 10,707,034 | 11,912,047 | ||||||||||||||||||||||||||||||||||||
| Goodwill | 4,753,887 | 4,753,887 | 4,753,887 | ||||||||||||||||||||||||||||||||||||
| Cash surrender value of life insurance policies | 1,225,236 | Share
© Business Wire - 2007
OMNI Financial Services, Inc. is a financial services company. The Company is engaged in offering a range of financial products and services. It provides solutions to assist individuals, professionals, and business owners. The Company offers a range of services, including personal financial services, wealth management, business solutions, business continuation strategies, and asset protection. Its personal financial planning services include personal financial planning and retirement preparation. Its wealth management services include assessing risk tolerance, designing asset allocation strategies, and evaluating investment strategies. The Company's business solutions include employee growth and retention plans, key executive benefits, and asset management. Its business continuation/exit strategies include business valuations, buy/sell agreements, and funding strategies. It offers asset protection plans for physicians, business owners, or owners of rental real estate.
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