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CST: 18/02/2019 00:55:59   

FFBW, Inc. Announces December 31, 2018 Financial Results

10 Days ago

FFBW, Inc. Posts Another Successful Quarter

BROOKFIELD, Wis., Feb. 07, 2019 (GLOBE NEWSWIRE) -- FFBW, Inc. (Nasdaq: FFBW) (the “Company”), the parent company of First Federal Bank of Wisconsin (the “Bank”), a federally chartered stock savings bank offering full-service commercial banking, retail banking and residential lending, today announced unaudited financial results for the three months and year ended December 31, 2018.  The December 31, 2018 results showed significant period-over-period earnings growth, improved asset quality, and solid loan portfolio growth.  For the three months and year ended December 31, 2018, net income was $233,000, or $0.04 per share, and $1.1 million, or $0.17 per share, respectively, compared with net losses of $417,000, or $0.07 per share, and $186,000, or $0.03 per share, for the same respective periods last year.

Edward H. Schaefer, President and CEO, commented, “Our fourth quarter results marked a strong finish to a successful first full year as a public company. We were able to strategically realign our balance sheet, realizing a loss on sale of securities during the quarter, and still finished ahead of our budget. By selling more than $5.4 million in lower-yielding securities, we positioned ourselves to reinvest those funds into higher-yielding loans and securities, thereby increasing our future earnings.”

Fourth Quarter and Year-to-Date Highlights

  • Earnings growth. Quarterly earnings improved $650,000 from a loss of $417,000 to income of $233,000, and annual earnings increased more than $1.2 million from a loss of $186,000 to income of $1.1 million.
     
  • Asset quality improvement. Nonperforming assets decreased 58% to $789,000 at December 31, 2018 from $1.9 million as of December 31, 2017. Non-performing loans to total loans dropped to 0.36% at December 31, 2018 compared to 0.72% at December 31, 2017.
     
  • Strong loan portfolio growth. Net loans have increased 16% since December 31, 2017 to $199 million. Commercial loans have increased $26 million, while residential real estate and consumer loans have increased $2 million for the same period.      

Repurchase Plan Announcement

On January 25, 2019, the Company announced that the Board of Directors authorized the repurchase of up to 5% of total outstanding shares of common stock (“the Repurchase Program”). The Company is not obligated to repurchase any such shares under the Repurchase Program, but will make decisions based on the prevailing market prices and in accordance with federal securities laws.

Income Statement and Balance Sheet Overview

Total interest and dividend income increased $375,000, or 15.4%, to $2.8 million for the fourth quarter of 2018 compared to $2.4 million for the prior year quarter.  Average interest-earning assets increased $1.5 million, or 0.6%, for the quarter ended December 31, 2018 compared to the quarter ended December 31, 2017 and the weighted average yield on interest-earning assets increased 58 basis points for quarter to quarter. Total interest and dividend income increased $1.6 million, or 17.9%, to $10.6 million for the year ended December 31, 2018 compared to $9.0 million for 2017.  Total average interest-earning assets increased $21.4 million, or 9.5%, for the year ended December 31, 2018 compared to the year ended December 31, 2017, and the weighted average yield on interest-earning assets increased 31 basis points year to year.

Total interest expense increased $272,000, or 72.9%, to $645,000 for the quarter ended December 31, 2018 compared to $373,000 for the quarter ended December 31, 2017.  Average interest-bearing liabilities increased $4.7 million, or 2.6%, for the quarter ended December 31, 2018 compared to the quarter ended December 31, 2017, and the cost of funds increased 57 basis points to 1.40% for the quarter ended December 31, 2018 compared to 0.83% for the quarter ended December 31, 2017. The increase in average cost of funds was primarily the result of rising interest rates and competition within our market. Total interest expense increased $555,000, or 35.7%, to $2.1 million for the year ended December 31, 2018 compared to $1.6 million for the year ended December 31, 2017.  Average interest-bearing liabilities increased $767,000, or 0.4%, for 2018 compared to 2017, and the cost of funds increased 30 basis points to 1.15% for the year ended December 31, 2018 compared to 0.85% for year ended December 31, 2017.

Net interest margin was 3.48% and 3.44% for the three and twelve months ended December 31, 2018, compared to 3.34% and 3.29% for the three and twelve months ended December 31, 2017, respectively.

The loan loss provision was $98,000 for the quarter ended December 31, 2018 compared to $253,000 the quarter ended December 31, 2017.  The net recoveries for the 2018 were $1,000, 0.00%, of average total loans. The loan loss provision was $513,000 for the year ended December 31, 2018 compared to $419,000 for the year ended December 31, 2017. Net charge-offs for 2018 were $195,000, 0.10% of average total loans.  At December 31, 2018, our allowance for loan loss is $2.1 million, or 1.05%, of total loans. Management believes the allowance is adequate for future probable losses.

Noninterest income decreased to $39,000 for the three months ended December 31, 2018 compared to $264,000 for the three months ended December 31, 2017.  The decreased resulted primarily from a $224,000 loss from sale of securities completed in the fourth quarter as part of a balance sheet restructuring strategy to sell more than $5.4 million of securities with below market book yields and redeploy those funds into higher yielding assets. By redeploying those funds into higher yielding loans and securities, management expects an earnback period of approximately 1.15 years. Both gain on sale of loans and service charges and other fees improved for the three months ended December 31, 2018 compared to the same period in the prior year.

Compared to 2017, noninterest income decreased $191,000.  This was primarily due to the following: (1) gain on sale of loans dropped $22,000 in 2018 compared to 2017 due to management’s decision to retain more mortgage loans in the loan portfolio rather than selling to the secondary market, (2) a loss of $224,000 from the sale of securities recognized in the fourth quarter, and (3) 2017 included a gain on the sales of two office buildings. This was partially offset by the increase in service charges and other fees of $92,000 year over year.

Noninterest expense decreased $421,000 to $1.8 million for the three months ended December 31, 2018 compared to $2.2 million for the three months ended December 31, 2017.  The Company had decreases in other noninterest expense, occupancy and equipment, and foreclosed assets while having increases in salaries and employee benefits, data processing, and professional fees.  Noninterest expense decreased $524,000 to $7.3 million for the year ended December 31, 2018 compared to $7.8 million for the year ended December 31, 2017. The Company had decreases in other noninterest expense and occupancy and equipment while having increases in salaries and employee benefits, data processing, foreclosed assets, and professional fees.  The other noninterest expense decrease is due to the third quarter 2017 donation of our former downtown office to a local community group and the fourth quarter 2017 donation to FFBW Community Foundation, Inc.

Total assets increased $6.2 million to $262.7 million at December 31, 2018 from $256.5 million at December 31, 2017.  This increase was primarily due to the increase in total loans of $27.3 million to $198.7 million at December 31, 2018 from $171.4 million at December 31, 2017.  The increase in loans resulted from increases in our commercial real estate loans of $16.2 million, development loans of $6.3 million, and multifamily loans of $2.8 million.  The increase in loans was offset by decreases in cash and cash equivalents of $7.3 million and available for sale securities of $14.3 million. Total deposits increased $292,000 to $183.2 million at December 31, 2018 from $182.9 million at December 31, 2017, primarily due to the increase in certificates required to fund the increasing loan activity.

Nonaccrual loans decreased to $720,000, or 0.36% of total loans, at December 31, 2018 from $1.2 million, or 0.72% of total loans, at December 31, 2017.  Non-performing assets decreased to $789,000, or 0.30% of total assets, at December 31, 2018 compared to $1.9 million, or 0.73% of total assets, at December 31, 2017.

The following table presents the estimated regulatory capital ratios for the Company, the Bank, and the minimum requirements for the Bank at December 31, 2018.

At December 31, 2018 Company
  Bank
  Minimum
Requirement For
Capital Adequacy
Purposes

  Minimum
Requirement to Be
Well Capitalized Under
Prompt Corrective
Action Provisions
Tier 1 leverage ratio 22.8 %   18.4 %   4.0 %   5.0 %
Common equity Tier 1 capital ratio 29.3 %   23.7 %   4.5 %   6.5 %
Tier1 capital ratio 29.3 %   23.7 %   6.0 %   8.0 %
Total capital ratio 30.4 %   24.7 %   8.0 %   10.0 %
                       

About the Company

FFBW, Inc. is the holding company for First Federal Bank of Wisconsin, a wholly owned subsidiary. The Company’s stock trades on the NASDAQ Capital Market under the symbol “FFBW.”  First Federal Bank of Wisconsin is a full-service federally chartered stock savings bank based in Waukesha, Wisconsin, servicing customers in Waukesha and Milwaukee Counties in Wisconsin through 4 branch locations.

Cautionary Statement Regarding Forward-Looking Statements

This release contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,” “seek,” “expect” and words of similar meaning. These forward-looking statements include, but are not limited to: statements of our goals, intentions and expectations; statements regarding our business plans, prospects, growth and operating strategies; statements regarding the quality of our loan and investment portfolios; and estimates of our risks and future costs and benefits. These forward-looking statements are based on current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: general economic conditions, either nationally or in our market areas, that are worse than expected; changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses; our ability to access cost-effective funding; fluctuations in real estate values and both residential and commercial real estate market conditions; demand for loans and deposits in our market area; our ability to implement and change our business strategies; competition among depository and other financial institutions; inflation and changes in the interest rate environment that reduce our margins and yields, our mortgage banking revenues, the fair value of financial instruments or our level of loan originations, or increase the level of defaults, losses and prepayments on loans we have made and make; adverse changes in the securities or secondary mortgage markets; changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements, including as a result of Basel III; the impact of the Dodd-Frank Act and the implementing regulations; changes in the quality or composition of our loan or investment portfolios; technological changes that may be more difficult or expensive than expected; the inability of third-party providers to perform as expected; our ability to manage market risk, credit risk and operational risk in the current economic environment; our ability to enter new markets successfully and capitalize on growth opportunities;  our ability to successfully integrate into our operations any assets, liabilities, customers, systems and management personnel we may acquire and our ability to realize related revenue synergies and cost savings within expected time frames, and any goodwill charges related thereto; changes in consumer spending, borrowing and savings habits; changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board; our ability to retain key employees; our compensation expense associated with equity allocated or awarded to our employees; and changes in the financial condition, results of operations or future prospects of issuers of securities that we own. Because of these and a wide variety of other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. 

Contact: Nikola B. Schaumberg, CFO
(262) 542-4448



FFBW, Inc.
Balance Sheets
December 31, 2018 (Unaudited) and December 31, 2017
(In thousands, except share data)

    December 31,
  December 31,
Assets 2018     2017  
       
Cash and due from banks   $ 1,746     $ 3,285  
Fed funds sold     2,742       8,528  
Cash and cash equivalents     4,488       11,813  
Available for sale securities, stated at fair value     43,751       58,012  
Loans held for sale     679       109  
Loans, net of allowance for loan and lease losses of $2,118 and $1,800, respectively     198,694       171,355  
Premises and equipment, net     5,057       5,290  
Foreclosed assets     69       619  
FHLB stock, at cost     739       514  
Accrued interest receivable     768       782  
Cash value of life insurance     7,007       6,558  
Other assets     1,474       1,429  
       
TOTAL ASSETS   $ 262,726     $ 256,481  
       
       
Liabilities and Equity    
       
Deposits   $ 183,205     $ 182,913  
Advance payments by borrowers for taxes and insurance     55       36  
FHLB advances     17,750       12,750  
Accrued interest payable     70       37  
Other liabilities     1,284       1,256  
Total liabilities   $ 202,364     $ 196,992  
       
Preferred stock ($0.01 par value, 1,000,000 authorized, no shares issued or outstanding as of December 31, 2018 and 2017, respectively)   $ -     $ -  
Common stock ($0.01 par value, 19,000,000 authorized, 6,696,742 and 6,612,500 issued and outstanding as of December 31, 2018 and 2017, respectively)     67       66  
Additional paid in capital     28,326       28,296  
Retained earnings     34,995       33,937  
Unallocated common stock of Employee Stock Ownership Plan ("ESOP") (243,303 and 256,263 shares at December 31, 2018 and 2017, respectively)     (2,433 )     (2,563 )
Accumulated other comprehensive loss, net of income taxes     (593 )     (247 )
Total equity   $ 60,362     $ 59,489  
       
TOTAL LIABILITIES AND EQUITY   $ 262,726     $ 256,481  
       
       
       

 

FFBW, Inc.
Statements of Income
Three Months and Year Ended December 31, 2018 and 2017 (Unaudited)
(In thousands, except share data)

      Three months ended December 31,     Years ended December 31,  
      2018
  2017   2018   2017
               
Interest and dividend income:          
  Loans, including fees $ 2,491     $ 2,081     $ 9,192     $ 7,817  
  Securities          
    Taxable   296       270       1,290       943  
    Tax-exempt   -       27       49       142  
  Other     30       64       78       93  
               
    Total interest and dividend income   2,817       2,442       10,609       8,995  
               
Interest expense:          
  Interest-bearing deposits   538       316       1,677       1,314  
  Borrowed funds   107       57       432       240  
               
    Total interest expense   645       373       2,109       1,554  
               
Net interest income   2,172       2,069       8,500       7,441  
Provision for loan losses   98       253       513       419  
               
Net interest income after provision for loan losses   2,074       1,816       7,987       7,022  
               
Noninterest income:          
  Service charges and other fees   86       75       371       279  
  Net gain on sale of loans   102       52       244       266  
  Net gain (loss) on sale of securities   (224 )     -       (204 )     20  
  Increase in cash surrender value of insurance   50       47       194       196  
  Other noninterest income   25       90       95       130  
               
    Total noninterest income   39       264       700       891  
               
Noninterest expense:          
  Salaries and employee benefits   1,019       976       4,248       3,960  
  Occupancy and equipment   255       294       1,002       1,109  
  Data processing   177       159       719       605  
  Foreclosed assets, net   -       5       36       27  
  Professional fees   178       165       508       506  
  Other noninterest expense   181       632       798       1,628  
               
    Total noninterest expense   1,810       2,231       7,311       7,835  
               
Income (loss) before income taxes   303       (151 )     1,376       78  
Provision (credit) for income taxes   70       266       318       264  
               
Net income (loss) $ 233     $ (417 )   $ 1,058     $ (186 )
               
Earnings (loss) per share          
  Basic   $ 0.04     $ (0.07 )   $ 0.17     $ (0.03 )
  Diluted $ 0.04     $ (0.07 )   $ 0.17     $ (0.03 )
               
               
               

 

FFBW, Inc.
Statements of Income
 (In thousands, except share data)

    For the Quarter Ended
    December 31, 2018
  September 30, 2018
  June 30, 2018
  March 30, 2018
  December 31, 2017
Total interest and dividend income $ 2,817   $ 2,738   $ 2,700   $ 2,354   $ 2,442  
Total interest expense   645     607     458     399     373  
  Net interest income   2,172     2,131     2,242     1,955     2,069  
Provision for loan losses   98     111     189     115     253  
  Net interest income after provision for loan losses   2,074     2,020     2,053     1,840     1,816  
Total noninterest income   39     250     200     211     264  
Total noninterest expense   1,810     1,810     1,816     1,875     2,231  
Income (loss) before income taxes   303     460     437     176     (151 )
Provision for income taxes   70     111     84     53     266  
Net income (loss) $ 233   $ 349   $ 353   $ 123   $ (417 )
 
Earnings (loss) per share  
  Basis $ 0.04   $ 0.05   $ 0.06   $ 0.02   $ (0.07 )
  Diluted $ 0.04   $ 0.05   $ 0.06   $ 0.02   $ (0.07 )
 
 
 

 

FFBW, Inc.
Non-performing Assets
 (In thousands)

  At December 31,
  2018   2017   2016
       
Non-accrual loans:      
Commercial:      
Development $ -     $ -     $ -  
Real estate   -       -       -  
Commercial and industrial   20       114       126  
Residential real estate and consumer:      
1-4 family owner-occupied   365       580       1,698  
1-4 family investor-owned   241       549       827  
Multifamily   -       -       248  
Consumer   94       -       -  
Total   720       1,243       2,899  
       
Accruing loans 90 days or more past due:      
Residential real estate and consumer:      
Consumer   -       -       -  
Total loans 90 days or more past due   -       -       -  
Total non-performing loans   720       1,243       2,899  
Foreclosed assets   69       619       667  
Other non-performing assets   -       -       -  
Total non-performing assets $ 789     $ 1,862     $ 3,566  
       
Troubled debt restructurings:      
Commercial:      
Development $ -     $ -     $ -  
Real estate   -       -       14  
Commercial and industrial   67       192       127  
Residential real estate and consumer:      
1-4 family owner-occupied   785       630       2,104  
1-4 family investor-owned   241       808       2,454  
Multifamily   -       -       468  
Consumer   108       -       -  
Total $ 1,201     $ 1,630     $ 5,167  
       
Ratios:      
Total non-performing loans to total loans   0.36 %     0.72 %     1.72 %
Total non-performing loans to total assets   0.27 %     0.48 %     1.20 %
Total non-performing assets to total assets   0.30 %     0.73 %     1.48 %
                       
                       
                       

 

FFBW, Inc.
Yield and Cost

  For the Year Ended December 31,
  2018
  2017
  Average
Outstanding
Balance

  Interest   Yield/ Rate       Average
Outstanding
Balance

  Interest   Yield/ Rate    
  (Dollars in thousands)
Interest-earning assets:                      
Loans $ 189,233     $ 9,192   4.86 %   $ 170,577     $ 7,817   4.58 %
Investment securities   55,030       1,339   2.43       47,602       1,085   2.28  
Interest-bearing deposits   2,278       42   1.84       7,024       79   1.12  
FHLB stock   765       36   4.71       700       14   2.00  
Total interest-earning assets   247,306       10,609   4.29       225,903       8,995   3.98  
Noninterest-earning assets   20,763                 20,454            
Allowance for loan losses   (1,912 )               (1,542 )          
Total assets $ 266,157               $ 244,815            
                       
                       
Interest-bearing liabilities:                      
Demand accounts $ 5,225       24   0.46 %   $ 3,254       11   0.34 %
Money market accounts   51,855       433   0.84       54,956       282   0.51  
Savings accounts   15,394       29   0.19       16,447       16   0.10  
Health savings accounts   11,462       30   0.26       11,485       30   0.26  
Certificates of deposit   76,277       1,161   1.52       77,990       975   1.25  
Total interest-bearing deposits   160,213       1,677   1.05       164,132       1,314   0.80  
Borrowings   22,552       432   1.92       17,866       240   1.34  
Total interest-bearing liabilities   182,765       2,109   1.15       181,998       1,554   0.85  
Noninterest-bearing deposits   19,631                 20,902            
Other noninterest bearing liabilities   229                 2,083            
Total liabilities   202,625                 204,983            
Equity   63,532                 36,832            
Total liabilities and equity $ 266,157               $ 241,815            
                           
Net interest income   $ 8,500           $ 7,441      
Net interest rate spread (1)       3.14 %     3.13 %
Net interest-earning assets (2) $ 64,541               $ 43,905            
                   
Net interest margin (3)       3.44 %     3.29 %
Average interest-earning assets to interest-bearing liabilities   135 %               124 %          

(1) Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(2) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
(3) Net interest margin represents net interest income divided by total interest-earning assets.

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