Franklin Financial Network Reports Double-Digit Annualized Growth in Loans and Deposits in Second Quarter 2015

Jul 28, 2015, 16:01 ET from Franklin Synergy Bank

FRANKLIN, Tenn., July 28, 2015 /PRNewswire/ -- Franklin Financial Network, Inc., (NYSE: FSB) the parent company of Franklin Synergy Bank (the "Bank"), today reported consolidated net income of $3.1 million for the second quarter of 2015, a 54.0% increase compared to $2.0 million for the second quarter of 2014. Basic earnings per common share for the quarter ending June 30, 2015 totaled $0.30, a 26.8% decrease compared to $0.41 for the same period in 2014.

For the six months ended June 30, 2015, consolidated net income was $6.3 million, an increase of 75.8% over $3.6 million for the same period in 2014. Basic earnings per common share for the six months ending June 30, 2015 totaled $0.67, a 6.9% decrease compared to $0.72 for the same period in 2014.

On a fully diluted basis, earnings per share were $0.28 for the quarter ended June 30, 2015, compared to fully diluted earnings per share of $0.40 for the quarter ended June 30, 2014, a decrease of 30.0%.  On a fully diluted basis, earnings per share were $0.64 for the six months ended June 30, 2015, compared to fully diluted earnings per share of $0.70 for the six months ended June 30, 2014, a decrease of 8.6%.  

The disparity between growth in net income and lower earnings per share is the result of the addition of 2.64 million shares of common stock issued through the Company's Initial Public Offering (IPO) in March 2015. The second quarter was the first full quarter to reflect the impact of the additional shares.

"Franklin Financial Network, Inc. posted a solid twenty-sixth consecutive profitable quarter, with our growth momentum accelerating," stated Richard Herrington, Chairman and Chief Executive Officer. "While earnings were slightly lower than planned due to our investment in a new healthcare banking team, we expect this strategic building block to quickly produce significant gains in this new line of business."

"Organic loan growth continues to exceed expectations; our annualized growth rate in loans, including loans held for sale, since December 31, 2014 is 43%," Herrington added. "In spite of this growth rate, asset quality continues to remain very strong, with non-performing assets holding steady at 0.1% at both December 31, 2014 and June 30, 2015. Our plan continues to build and deliver long-term sustainable value for our shareholders."

Selected highlights for the second quarter of 2015 include:

  • The Company added an experienced healthcare banking team, expanding the Bank's reach into the local and national healthcare markets.
  • The Company received $55 million in capital on the final day of the first quarter of 2015, related to its initial public offering, issuing 2.64 million shares of common stock. Late in the second quarter, the Company initiated a leverage program by purchasing securities to properly utilize the capital raised during the IPO.
  • The quarter marks a full year of results that include the addition of five branches and the associated personnel in Rutherford County through the MidSouth Bank acquisition in July of 2014.  
  • The mortgage segment remained strong with mortgage banking revenues for the six months ended June 30, 2015 of $3.1 million, up by $759 thousand, or 32.3%, over the same period in 2014.

Second Quarter 2015 Results of Franklin Financial Network, Inc.

Balance Sheet Growth and Asset Quality

  • Loans, including loans held for sale, at June 30, 2015 totaled $979.0 million, an increase of $477.4 million from June 30, 2014, a year-over-year growth rate of 95.2%.  Loan growth, including loans held for sale, during the six months ended June 30, 2015 was $173.4 million, or 21.5%, when compared with $805.7 million at December 31, 2014.  The majority of the loan growth was in two categories: commercial and industrial lending and construction lending, which grew $68.2 million and $54.4 million, respectively.
  • Investment securities available for sale grew $239.5 million, or 60.5%, during the first six months of 2015, to $635.2 million. This growth is attributable to the leverage program that was initiated during the second quarter of 2015.
  • Deposits grew to $1.5 billion at June 30, 2015 versus $747.3 million at June 30, 2014, a year-over-year growth rate of 99.6%.  Deposits grew $319.8 million, or 27.3%, during the first six months of 2015 when compared with deposits of $1.2 billion at December 31, 2014. 
  • At June 30, 2015, assets totaled $1.8 billion, compared to $872.1 million at June 30, 2014, an annual growth rate of 102.6%.  Assets grew $410.9 million, or 30.3%, during the first six months of 2015 when compared with assets of $1.4 billion at December 31, 2014.
  • Non-performing assets decreased $712 thousand, or 61.7%, to $1.2 million from the December 31, 2014 total of $1.9 million due to sales of four foreclosed properties during the first six months of 2015. Non-performing assets as a percent of total assets were 0.1% at June 30, 2015 and at December 31, 2014. When compared with June 30, 2014, non-performing assets decreased approximately $1.5 million, or 55.0%. At June 30, 2014 non-performing assets were 0.3% of total assets.

Profitability

  • Net Interest income increased to $13.3 million for the quarter ended June 30, 2015, up from $7.3 million for the same period in 2014, an 81.4% increase.  The net interest margin for the quarter ended June 30, 2015 increased to 3.51%, compared to 3.48% for the quarter ended June 30, 2014.
  • Net Interest income increased to $25.5 million for the six months ended June 30, 2015, up from $14.4 million for the same period in 2014, a 76.4% increase. The net interest margin for the six months ended June 30, 2015 increased to 3.57%, compared to 3.51% for the six months ended June 30, 2014. Earning asset growth, improved interest margins related to purchase accounting adjustments and decreased costs of funds related to deposits and borrowings drove the increase in net interest income for the quarter as well as the six-month period ended June 30, 2015.
  • The net interest margin for the quarter ended June 30, 2015 decreased to 3.51%, from 3.65% for the quarter ended March 31, 2015. The net interest margin decrease in second quarter 2015 from first quarter 2015 is primarily attributed to the change in asset mix as the Bank's leverage program was initiated.
  • Noninterest income for the six months ended June 30, 2015, was $6.1 million, compared to $3.9 million for the six months ended June 30, 2014, an increase of 57.5%. Increased mortgage loan volume and improved margins on the loans sold accounted for $759 thousand of the increase in non-interest income when compared with the same period in 2014.  The Company also experienced increases in gains from the sales of securities of $453 thousand and in other services charges and fees of $759 thousand. Noninterest income for the second quarter decreased 11.3% from first quarter of 2015 noninterest income of $3.2 million primarily due to the decrease in gain on sale of securities of $306 thousand.
  • Noninterest expense for the quarter ended June 30, 2015 was $10.6 million, a 73.9% increase over the second quarter 2014 noninterest expense of $6.1 million. Noninterest expense for the six months ended June 30, 2015 was $20.2 million, a 74.5% increase over noninterest expense of $11.6 million for the same period in 2014. Primary drivers of the increase in noninterest expense second quarter 2015 over second quarter 2014 as well as for the six months ended June 30, 2015 over the same period in 2014 include:
  • Salary and benefit increases associated with the addition of the healthcare banking team early in the second quarter, the addition of the Rutherford County personnel as part of the Company's July 2014 acquisition of MidSouth Bank, and the commissions paid on the increased mortgage loan origination volume in 2015.
    • Salaries and employee benefits increased $2.3 million in the second quarter of 2015 compared to the second quarter of 2014, and $4.4 million for the six-month period ended June 30, 2015 compared to the same period in 2014.
  • One-time expenses associated with the Company's IPO that were not fully absorbed during the first quarter of 2015 and insurance and professional fees associated with the Company's status as a publicly traded company on the New York Stock Exchange.
  • The expansion of the Company's Franklin headquarters, the relocation of two Williamson County branches, and the acquisition of five branch locations in Rutherford County. 
    • Occupancy and equipment expense increased $690 thousand in the second quarter of 2015 compared to the second quarter of 2014 and $1.5 million for the six-month period ended June 30, 2015 compared to the same period in 2014. 
  • Increases in the Company's FDIC insurance and marketing expenses associated with the Company's growth.
  • Provision for loan and lease losses for the quarter ended June 30, 2015 was $805 thousand versus $440 thousand for the quarter ended June 30, 2014, and $625 thousand for the first quarter of 2015, and for the six months ended June 30, 2015, provision for loan and lease losses was $1.4 million versus $825 thousand for the same period in 2014.  The Company's significant loan growth drove the increase in provision for loan and lease losses from 2014 to 2015. 

"We continue to execute our plan in two of the most vibrant communities in Middle Tennessee," stated Herrington.  "We are attracting and retaining the best bankers in the market."

Webcast and Conference Call Information Franklin Financial Network, Inc. will host a webcast and conference call at 9:00 a.m. (CDT) on July 29, 2015 to discuss second quarter 2015 results. To access the call for audio only, please call 1-888-317-6016. For the presentation 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 on the Investor Relations page of Franklin Synergy Bank's website at www.franklinsynergybank.com for one year, with audio available for 90 days.  

Founded in November 2007, Franklin Synergy Bank currently has six offices in Williamson County and five offices in Rutherford County. The Bank provides deposit and loan products, treasury management, wealth management, trust and financial planning services for consumers and businesses. Franklin Synergy earned its first profit after just five quarters of operation, and has been profitable since that time. The Bank's assets and deposits both surpassed $1 billion in July 2014, just after the completion of the acquisition of Rutherford County's MidSouth Bank. Loans surpassed $1 billion in July 2015.

Recent FDIC data shows that Franklin Synergy Bank is the deposit share market leader in Williamson County. The Bank is also the top deposit share bank in Franklin, Tennessee.

Additional information about Franklin Synergy Bank is available at the Bank's website: www.franklinsynergybank.com.

 

This media release contains forward-looking statements.  Such statements include, but are not limited to, 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" 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.

###

Franklin Financial Network, Inc.

 

FRANKLIN FINANCIAL NETWORK, INC

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Amounts in thousands, except share data)

June 30, 2015

December 31, 2014

(Unaudited)

ASSETS

Cash and due from financial institutions

$             43,163

$          49,347

Certificates of deposit at other financial institutions

250

250

Securities available for sale

635,184

395,705

Securities held to maturity (fair value 2015—$46,885 and 2014—$53,741)

46,815

53,332

Loans held for sale, at fair value

16,842

18,462

Loans

962,191

787,188

Allowance for loan losses

(8,016 )

(6,680 )

Net loans

954,175

780,508

Restricted equity securities, at cost

7,685

5,349

Premises and equipment, net

9,584

9,664

Accrued interest receivable

4,886

3,545

Bank owned life insurance

21,938

11,664

Deferred tax asset

8,430

6,780

Buildings held for sale

4,080

Foreclosed assets

206

715

Servicing rights, net

3,298

3,053

Goodwill

9,124

9,124

Core deposit intangible, net

2,359

2,698

Other assets

2,813

1,551

Total assets

$        1,766,752

$     1,355,827

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits

Non-interest bearing

$           166,848

$        150,337

Interest bearing

1,325,138

1,021,896

Total deposits

1,491,986

1,172,233

Federal funds purchased and repurchase agreements

36,567

39,078

Federal Home Loan Bank advances

57,000

19,000

Accrued interest payable

578

421

Other liabilities

3,540

3,296

Total liabilities

1,589,671

1,234,028

Shareholders' equity

Senior non-cumulative preferred stock, no par value, $10,000 liquidation value: Series A, 1,000,000 shares authorized; 10,000 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively

10,000

10,000

Common stock, no par value; 20,000,000 and 10,000,000 shares authorized; 10,502,671 and 7,756,411 issued at June 30, 2015 and December 31, 2014, respectively

146,017

94,251

Retained earnings

21,588

15,372

Accumulated other comprehensive income

(524 )

2,176

Total shareholders' equity

177,081

121,799

Total liabilities and shareholders' equity

$        1,766,752

$     1,355,827

 

 

FRANKLIN FINANCIAL NETWORK, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Amounts in thousands, except per share data)

Three Months Ended June 30,

Six Months Ended June 30,

2015

2014

2015

2014

Interest income and dividends

Loans, including fees

$      12,173

$        6,380

$      23,327

$   12,298

Securities:

Taxable

2,957

2,234

5,622

4,537

Tax-Exempt

169

20

189

40

Dividends on restricted equity securities

83

51

150

91

Federal funds sold and other

31

14

51

32

Total interest income

15,413

8,699

29,339

16,998

Interest expense

Deposits

1,913

1,214

3,546

2,362

Federal funds purchased and repurchase agreements

92

57

163

84

Federal Home Loan Bank advances

81

80

146

109

Total interest expense

2,086

1,351

3,855

2,555

Net interest income

13,327

7,348

25,484

14,443

Provision for loan losses

805

440

1,430

825

Net interest income after provision for loan losses

12,522

6,908

24,054

13,618

Noninterest income

Service charges on deposit accounts

18

12

34

24

Other service charges and fees

690

313

1,308

549

Net gains on sale of loans

1,463

1,567

3,110

2,351

Loan servicing fees, net

60

88

103

100

Gain on sale of securities

109

63

524

71

Net gain (loss) on foreclosed assets

21

(2 )

27

31

Other

490

389

960

725

Total noninterest income

2,851

2,430

6,066

3,851

Noninterest expense

Salaries and employee benefits

6,071

3,805

11,752

7,350

Occupancy and equipment

1,699

1,009

3,278

1,795

FDIC assessment expense

216

120

430

239

Marketing

198

135

418

246

Professional fees

507

279

866

633

Other

1,881

730

3,449

1,307

Total noninterest expense

10,572

6,078

20,193

11,570

Income before income tax expense

4,801

3,260

9,927

5,899

Income tax expense

1,667

1,225

3,661

2,335

Net income

3,134

2,035

6,266

3,564

Dividends paid on Series A preferred stock

(25 )

(25 )

(50 )

(50 )

Net income available to common shareholders

$        3,109

$        2,010

$        6,216

$     3,514

Earnings per share:

Basic

$          0.30

$          0.41

$          0.67

$       0.72

Diluted

0.28

0.40

0.64

0.70

 

 

FRANKLIN FINANCIAL NETWORK, INC.

AVERAGE BALANCES(7) — ANALYSIS OF YIELDS & RATES (UNAUDITED)

(Amounts in thousands, except percentages)

Three Months Ended June 30,

2015

2014

Average Balance

Interest Inc / Exp

Average Yield / Rate

Average Balance

Interest Inc / Exp

Average Yield / Rate

ASSETS:

Loans(1)(6)

$     909,705

$    12,173

5.37 %

$    478,133

$      6,380

5.35 %

Securities available for sale(6)

512,152

2,790

2.19 %

285,086

1,859

2.62 %

Securities held to maturity

48,676

336

2.77 %

59,619

395

2.66 %

Certificates of deposit at other financial institutions

250

2

3.21 %

0.00 %

Federal funds sold and other(2)

53,299

112

0.84 %

23,898

65

1.09 %

TOTAL INTEREST EARNING ASSETS

$  1,524,082

$    15,413

4.06 %

$    846,736

$      8,699

4.12 %

Allowance for loan losses

(7,483 )

(5,467 )

All other assets

73,183

29,258

TOTAL ASSETS

$  1,589,782

$    870,527

LIABILITIES & SHAREHOLDERS' EQUITY

Deposits:

Interest checking

$     265,844

$         261

0.39 %

$    173,628

$         131

0.30 %

Money market

443,085

630

0.57 %

247,893

454

0.73 %

Savings

33,471

38

0.46 %

20,639

26

0.51 %

Time deposits

402,335

984

0.98 %

232,024

603

1.04 %

Federal Home Loan Bank advances

48,165

81

0.67 %

33,000

80

0.97 %

Federal funds purchased and other(3)

53,832

92

0.69 %

25,149

57

0.91 %

TOTAL INTEREST BEARING LIABILITIES

$  1,246,732

$      2,086

0.67 %

$    732,333

$      1,351

0.74 %

Demand deposits

157,511

64,923

Other liabilities

5,937

2,113

Total shareholders' equity

179,602

71,158

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$  1,589,782

$    870,527

NET INTEREST SPREAD(4)

3.39 %

3.38 %

NET INTEREST INCOME

$    13,327

$      7,348

NET INTEREST MARGIN(5)

3.51 %

3.48 %

(1)

Loan balances include both loans held in the Bank's portfolio and mortgage loans held for sale and are net of deferred origination fees and costs. Non-accrual loans are included in total loan balances.

(2)

Includes federal funds sold, capital stock in the Federal Reserve Bank and Federal Home Loan Bank, and interest-bearing deposits at the Federal Reserve Bank and the Federal Home Loan Bank.

(3)

Includes repurchase agreements.

(4)

Represents the average rate earned on interest-earning assets minus the average rate paid on interest-bearing liabilities.

(5)

Represents net interest income (annualized) divided by total average earning assets.

(6)

Interest income and rates exclude the effects of a tax equivalent adjustment to adjust tax exempt investment income on tax exempt investment securities to a fully taxable basis due to immateriality.

(7)

Averages balances are average daily balances.

 

Six Months Ended June 30,

2015

2014

Average Balance

Interest Inc / Exp

Average Yield / Rate

Average Balance

Interest Inc / Exp

Average Yield / Rate

ASSETS:

Loans(1)(6)

$     877,749

$    23,327

5.36 %

$    461,948

$    12,298

5.37 %

Securities available for sale(6)

460,458

5,111

2.24 %

280,876

3,787

2.72 %

Securities held to maturity

50,584

700

2.79 %

58,985

790

2.70 %

Certificates of deposit at other financial institutions

250

3

2.42 %

0.00 %

Federal funds sold and other(2)

49,154

198

0.81 %

26,829

123

0.92 %

TOTAL INTEREST EARNING ASSETS

$  1,438,195

$    29,339

4.11 %

$    828,638

$    16,998

4.14 %

Allowance for loan losses

(7,262 )

(5,265 )

All other assets

71,276

29,585

TOTAL ASSETS

$  1,502,209

$    852,958

LIABILITIES & SHAREHOLDERS' EQUITY

Deposits:

Interest checking

$     283,398

$         435

0.31 %

$    191,733

$         297

0.31 %

Money market

418,719

1,215

0.59 %

242,942

$         896

0.74 %

Savings

32,051

73

0.46 %

20,193

$           51

0.51 %

Time deposits

371,593

1,823

0.99 %

218,050

$      1,118

1.03 %

Federal Home Loan Bank advances

35,718

146

0.82 %

26,619

$         109

0.83 %

Federal funds purchased and other(3)

48,381

163

0.68 %

19,193

$           84

0.88 %

TOTAL INTEREST BEARING LIABILITIES

$  1,189,860

$      3,855

0.65 %

$    718,730

$      2,555

0.72 %

Demand deposits

153,827

62,352

Other liabilities

5,919

2,322

Total shareholders' equity

152,603

69,554

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$  1,502,209

$    852,958

NET INTEREST SPREAD(4)

3.46 %

3.42 %

NET INTEREST INCOME

$    25,484

$    14,443

NET INTEREST MARGIN(5)

3.57 %

3.51 %

(1)

Loan balances include both loans held in the Bank's portfolio and mortgage loans held for sale and are net of deferred origination fees and costs. Non-accrual loans are included in total loan balances.

(2)

Includes federal funds sold, capital stock in the Federal Reserve Bank and Federal Home Loan Bank, and interest-bearing deposits at the Federal Reserve Bank and the Federal Home Loan Bank.

(3)

Includes repurchase agreements.

(4)

Represents the average rate earned on interest-earning assets minus the average rate paid on interest-bearing liabilities.

(5)

Represents net interest income (annualized) divided by total average earning assets.

(6)

Interest income and rates exclude the effects of a tax equivalent adjustment to adjust tax exempt investment income on tax exempt investment securities to a fully taxable basis due to immateriality.

(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

Jun 30, 2015

Mar 31, 2015

Dec 31, 2014

Sept 30, 2014

Jun 30, 2014

Income Statement Data ($):

  Interest income

15,413

13,926

13,742

12,692

8,699

  Interest expense

2,086

1,769

1,619

1,565

1,351

  Net interest income

13,327

12,157

12,123

11,127

7,348

  Provision for loan losses

805

625

885

664

440

  Noninterest income

2,851

3,215

2,926

3,274

2,430

  Noninterest expense

10,572

9,621

9,863

10,389

6,078

  Net Income before taxes

4,801

5,126

4,301

3,348

3,260

  Income tax expense

1,667

1,994

1,466

1,333

1,225

  Net income

3,134

3,132

2,835

2,015

2,035

  Net income available to common shareholders

3,109

3,107

2,810

1,990

2,010

  Earnings per share, basic

0.30

0.39

0.36

0.26

0.41

  Earnings per share, diluted

0.28

0.37

0.34

0.25

0.40

Profitability (%)

  Return on average assets

0.79

0.90

0.88

0.67

0.94

  Return on average equity

7.00

10.14

9.40

7.02

11.47

  Return on average tangible common equity

7.89

12.18

11.42

8.20

13.23

  Efficiency ratio

65.35

62.59

65.54

72.14

62.16

  Net Interest margin

3.51

3.65

3.97

3.86

3.48

Balance Sheet Data ($):

  Loans (including HFS)

979,033

897,001

805,650

744,927

501,664

  Loan loss reserve

8,016

7,308

6,680

5,883

5,771

  Cash

43,413

48,580

49,347

36,657

26,054

  Securities

681,999

507,170

449,037

403,043

322,607

  Goodwill

9,124

9,124

9,124

9,121

157

  Intangible assets

2,414

2,585

2,762

2,953

83

  Assets

1,766,752

1,509,430

1,355,827

1,238,579

872,142

  Deposits

1,491,986

1,271,602

1,172,233

1,051,558

747,324

  Liabilities

1,589,671

1,330,889

1,234,028

1,122,125

797,943

  Total equity

177,081

178,541

121,799

116,454

74,199

  Common equity

167,081

168,541

111,799

106,454

64,199

  Tangible Common equity

155,543

156,832

99,913

94,380

63,959

Asset Quality (%)

  Nonperforming loans/ total loans

0.11

0.14

0.15

0.47

0.34

  Nonperforming assets / total loans + OREO

0.13

0.19

0.24

0.70

0.58

  Loan loss reserve / loans (excluding HFS)

0.83

0.84

0.85

0.82

1.19

  Net charge-offs / average loans

0.04

0.00

0.04

0.30

(0.02)

Capital (%)

  Tangible common equity to tangible assets

8.86

10.47

7.43

7.70

7.34

  Leverage ratio(1)

10.29

11.41

8.57

8.83

8.39

  Tier 1 common ratio(1)

12.21

14.01

10.51

11.17

11.10

  Tier 1 risk-based capital ratio(1)

13.02

14.95

11.58

12.35

12.86

  Total risk-based capital ratio(1)

13.66

15.64

12.30

13.05

13.88

 

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/      per share data and percentages)

As of or for the Three Months Ended

Jun 30,

2015

Mar 31,

2015

Dec 31,

2014

Sept 30,

2014

Jun 30,

2014

Total shareholders' equity

$   177,081

$   178,541

$ 121,799

$  116,454

$    74,199

Less: Preferred stock

10,000

10,000

10,000

10,000

10,000

Total common shareholders' equity

167,081

168,541

111,799

106,454

64,199

Less: Goodwill and other intangible assets

11,538

11,709

11,886

12,074

240

Tangible common shareholders' equity

$   155,543

$   156,832

$   99,913

$    94,380

$    63,959

Common shares outstanding

10,502,671

10,465,930

7,756,411

7,739,644

4,915,907

Tangible book value per share

$       14.81

$       14.99

$     12.88

$      12.19

$      13.01

Net income available to common shareholders

$       3,109

$       3,107

$     2,810

$      1,990

$      2,010

Average tangible common equity

157,959

103,475

97,630

96,310

60,915

Return on average tangible common equity

7.89 %

12.18 %

11.42 %

8.20 %

13.23 %

Efficiency Ratio:

Net interest income

$     13,327

$     12,157

$   12,123

$    11,127

$      7,348

Noninterest income

2,851

3,215

2,926

3,274

2,430

Operating revenue

16,178

15,372

15,049

14,401

9,778

Expense

Total noninterest expense

10,572

9,621

9,863

10,389

6,078

Efficiency ratio

65.35 %

62.59 %

65.54 %

72.14 %

62.16 %

Reported yield on loans

5.37 %

5.35 %

5.67 %

5.92 %

5.77 %

Effect of accretion income on acquired loans

(0.32 %)

(0.28 %)

(0.36 %)

(0.43 %)

0.00 %

Adjusted yield on loans

5.05 %

5.07 %

5.31 %

5.49 %

5.77 %

Reported net interest margin

3.51 %

3.65 %

3.97 %

3.86 %

3.48 %

Effect of accretion income on acquired loans

(0.19 %)

(0.18 %)

(0.23 %)

(0.27 %)

0.00 %

Effect of premium amortization of acquired deposits

(0.01 %)

(0.01 %)

(0.02 %)

(0.02 %)

0.00 %

Adjusted net interest margin

3.31 %

3.46 %

3.72 %

3.57 %

3.48 %

 

Contact: Aimee Punessen, (615) 236-8329 aimee.punessen@franklinsynergy.com

Logo - http://photos.prnewswire.com/prnh/20150313/181647LOGO

 

SOURCE Franklin Synergy Bank