First Business Reports Increased Second Quarter Profit $3.5 Million
MADISON, WI, – July 24, 2014 (GLOBE NEWSWIRE) – First Business Financial Services, Inc. (the “Company” or “First Business”) (NASDAQ: FBIZ), the parent company of First Business Bank and First Business Bank – Milwaukee, today reported strong second quarter profitability, even after non-recurring expenses related to the Company’s previously announced pending merger with Aslin Group, Inc. (“Aslin Group”), parent company of Alterra Bank (“Alterra”). During the quarter the Company grew loans to record levels while maintaining strong asset quality and generating robust fee income.
Highlights for the quarter ended June 30, 2014 include:
- Announced merger agreement with Aslin Group, the parent of Alterra, expanding First Business’ entrepreneurial business banking model into the Kansas City market. The merger is expected to close in late 2014.
- Net income of $3.5 million increased 12% over the second quarter of 2013, even after recording $320,000 in pre-tax merger-related expenses in the second quarter of 2014.
- Diluted earnings per common share increased 10% to $0.88 for the quarter ended June 30, 2014, compared to $0.80 for the quarter ended June 30, 2013.
Strong business fundamentals continued to deliver positive results across key profitability measures:
- Pre-tax adjusted earnings, defined as pre-tax income excluding the effects of provision for loan and lease losses, other identifiable costs of credit and other discrete items unrelated to the Company’s primary business activities, totaled $5.4 million in the second quarter of 2014, up 9% from $5.0 million in the second quarter of 2013.
- Annualized return on average assets was 1.09% for the second quarter of 2014, exceeding 1.0% for the sixth consecutive quarter.
- Annualized return on average equity was 12.29% for the second quarter of 2014, exceeding 12.0% for the eighth consecutive quarter.
- Top line revenue, consisting of net interest income and non-interest income, increased 6% to $13.2 million for the quarter ended June 30, 2014, compared to $12.4 million for the second quarter of 2013.
- The Company’s efficiency ratio was 58.9%, marking its eighth consecutive quarter below 60% even while including the impact of merger-related expenses.
- Period-end net loans and leases grew for the ninth consecutive quarter, reaching a record $993.7 million at June 30, 2014, up 7% from June 30, 2013.
- Period-end in-market deposit balances – comprised of all transaction accounts, money market accounts, and non-brokered certificates of deposit – were $729.4 million at June 30, 2014, up 6% from June 30, 2013.
- Net interest margin measured 3.52% for the quarter ended June 30, 2014, improving six basis points compared to the same period of 2013.
- For the second consecutive quarter, the Company recognized no charge-offs.
- Allowance for loan and lease losses as a percent of total loans and leases declined to 1.39% at June 30, 2014 from 1.60% at June 30, 2013, reflective of continued asset quality improvement and consistent strength in underwriting.
The Company recorded net income of $3.5 million in the second quarter of 2014, up from $3.3 million earned in the first quarter of 2014 and $3.1 million earned in the second quarter of 2013. Diluted earnings per common share were $0.88 for the second quarter of 2014, compared to $0.84 for the linked quarter and $0.80 for the year-ago quarter. Improved earnings compared to both the linked– and prior–year quarters were driven by higher top line revenue, operating expense containment and continued strength in asset quality. Second quarter 2014 results include the impact of $320,000 in non-recurring, merger expenses related to the Company’s pending merger with Aslin Group, the parent of Alterra.
“Once again our results demonstrate the effectiveness of our business model and the value our team brings to executing on our strategy. With success comes opportunity, and we are thrilled with the prospect of Alterra joining First Business in growing this franchise in the attractive Kansas City market area,” said Corey Chambas, President and Chief Executive Officer of First Business.
“Alterra and its talented team provide synergies to First Business in almost every way, and we believe that it is truly an excellent fit, with a complementary culture, market, business model and loan portfolio. Our second quarter results demonstrate First Business’ robust profitability, asset quality and capital strength. We believe that combining our strengths with the well-positioned Alterra franchise will provide us with an opportunity to accelerate our loan growth, client opportunities, earnings power and shareholder returns.”
Previously Announced Pending Merger with Aslin Group, Inc., the Parent Company of Alterra Bank
On May 23, 2014 the Company and Aslin Group announced the signing of a definitive agreement for First Business to acquire Aslin Group, including Alterra Bank, Aslin Group’s wholly owned subsidiary. The merger is expected to close in late 2014, subject to Aslin Group stockholder approval and customary regulatory approvals. Like First Business, Alterra operates an entrepreneurial business banking franchise, providing commercial loans and lines of credit, commercial real estate loans and treasury management services to small- to middle-market businesses as well as offering private banking/private wealth management services to individuals.
In addition, Alterra is the number one most active U.S. Small Business Administration lender in the Kansas City SBA district, providing First Business with immediate access to talent and a platform in a new area of lending that is highly complementary to its current focus. At the same time, Alterra will be able to offer its commercial clients First Business’ specialized product and service offerings, including equipment finance, trust and investment services, factoring and asset-based lending.
Read the full release on the Investor Relations section of our website: https://www.snl.com/irweblinkx/file.aspx?IID=1021886&FID=24585630
About First Business
First Business Financial Services is a Wisconsin-based bank holding company, focused on the unique needs of businesses, business executives and high net worth individuals. First Business offers commercial banking, specialty finance and private wealth management solutions, and because of its niche focus, is able to provide its clients with unmatched expertise, accessibility and responsiveness. For additional information, visit www.firstbusiness.com.