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CST: 14/12/2019 17:19:16   

FFBW, Inc. Announces June 30, 2019 Financial Results

142 Days ago

Quarterly Earnings Continue Double-Digit Growth

BROOKFIELD, Wis., July 25, 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 and six months ended June 30, 2019.  The June 30, 2019 results showed significant period-over-period earnings growth, continued strong asset quality, and continued loan portfolio realignment in accordance with strategy.  For the quarter ended June 30, 2019, net income was $388,000, or $0.06 per share, compared with net income of $353,000, or $0.06 per share, for the same respective period last year.

“Core earnings continue to improve nicely as we further develop our community bank model serving the commercial and consumer banking needs, as well as the residential lending needs of our customers,” stated Edward H. Schaefer, President and CEO of First Federal Bank of Wisconsin.

Second Quarter 2019 Highlights

  • Continued earnings growth. Quarterly earnings improved 10% to $388,000 in the second quarter of 2019 from $353,000 in the second quarter of 2018. Excluding prior year one-time adjustments (1), quarterly earnings improved more than 55% while year-to-date earnings grew 70%.
     
  • Continued strong asset quality. Nonperforming assets increased slightly to $1.1 million at June 30, 2019 from $968,000 as of June 30, 2018. Although the nonperforming assets increased slightly, all but one loan is contractually current on payments.
     
  • Continued balance sheet realignment. Although total loans balances remain steady at June 30, 2019 compared to June 30, 2018, the composition of the portfolio is further diversifying as the Company is executing its strategy as a community bank concentrating on commercial and consumer banking in addition to residential lending. Commercial loans increased $18.2 million, or 23%, while residential real estate and consumer loans decreased by $17.8 million, or 15%, resulting in a shift from 40% commercial loans to 49% of the loan portfolio in the last twelve months.

Income Statement and Balance Sheet Overview

Total interest and dividend income increased $110,000, or 4.1%, to $2.8 million for the second quarter of 2019 compared to $2.7 million for the same quarter in the prior year. Excluding prior year one-time adjustments (1), total interest and dividend income increased $227,000, or 8.4%. Average interest-earning assets decreased $207,000, or 0.08%, to $245.9 million for the quarter ended June 30, 2019 compared to $246.1 million for the quarter ended June 30, 2018, and the weighted average yield on interest-earning assets increased 18 basis points for the same period. Excluding the prior year one-time adjustments (1), the weighted average yield increased 37 basis points quarter to quarter.

Total interest expense increased $266,000, or 58.1%, to $724,000 for the quarter ended June 30, 2019 compared to $458,000 for the quarter ended June 30, 2018.  Average interest-bearing liabilities decreased $1.5 million, or 0.8%, to $177.6 million for the quarter ended June 30, 2019 from $179.1 million for the quarter ended June 30, 2018. The rate paid on interest-bearing liabilities increased 61 basis points to 1.63% for the quarter ended June 30, 2019 compared to 1.02% for the quarter ended June 30, 2018. The increase in average cost of funds was primarily the result of rising interest rates and competition within our market.

Net interest margin was 3.38% for the three months ended June 30, 2019, compared to the adjusted 3.41% for the three months ended June 30, 2018, a decrease of three basis points after backing out the nonaccrual interest in the prior year period(1).

The loan loss provision was $85,000 for the quarter ended June 30, 2019 compared to $189,000 the quarter ended June 30, 2018.  At June 30, 2019, our allowance for loan loss was $2.3 million, or 1.15%, of total loans. Management believes the allowance is adequate for future probable losses.

Noninterest income increased $110,000, or 68.3% to $271,000 for the three months ended June 30, 2019 compared to $161,000 for the three months ended June 30, 2018.  The increase was due primarily to increased gains from sales of loans to the secondary market.

Noninterest expense decreased $19,000 to $1.8 million for the three months ended June 30, 2019 compared to $1.8 million for the three months ended June 30, 2018.  This was primarily due to a decrease of $108,000, or 9.5%, in salaries and employee benefits due to staffing efficiencies and vacancies, partially offset by increases in technology and professional fees.

Total assets decreased $7.6 million to $258.3 million at June 30, 2019 from $265.9 million at June 30, 2018.  This decrease was primarily due to the decrease in available for sale securities of $11.7 million, partially offset by increases in cash and cash equivalents of $3.0 million and in loans held for sale of $2.0 million.

Nonaccrual loans increased to $1.1 million, or 0.57% of total loans, at June 30, 2019, from $968,000, or 0.50% of total loans, at June 30, 2018. All but one nonaccrual loan is contractually current. Non-performing assets increased to $1.2 million, or 0.46% of total assets, at June 30, 2019 compared to $968,000, or 0.36% of total assets, at June 30, 2018.

The following table presents the estimated regulatory capital ratios for the Company, the Bank, and the minimum requirements for the Bank at June 30, 2019.

At June 30, 2019 Company Bank Minimum
Requirement For
Capital Adequacy
Purposes
Minimum Requirement to
Be Well Capitalized
Under Prompt Corrective
Action Provisions
Tier 1 leverage ratio 23.2% 19.0% 4.0% 5.0%
Common equity Tier 1 capital ratio 29.8% 24.5% 4.5% 6.5%
Tier 1 capital ratio 29.8% 24.5% 6.0% 8.0%
Total capital ratio 31.0% 25.6% 8.0% 10.0%

(1) In the second quarter of 2018, the Company received $136,000 of additional interest from loans that had paid off that were previously on nonaccrual status, increasing the weighted yield for the quarter by 29 basis points.

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 four 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
June 30, 2019 (Unaudited) and December 31, 2018
(In thousands, except share data)

  June 30, December 31,
Assets 2019 2018
     
Cash and due from banks $ 4,351   $ 1,746  
Fed funds sold   1,046     2,742  
Cash and cash equivalents   5,397     4,488  
Available for sale securities, stated at fair value   43,478     43,751  
Loans held for sale   1,951     679  
Loans, net of allowance for loan and lease losses of $2,252 and $2,118, respectively   193,001     198,694  
Premises and equipment, net   4,888     5,057  
Foreclosed assets   84     69  
FHLB stock, at cost   609     739  
Accrued interest receivable   777     768  
Cash value of life insurance   7,105     7,007  
Other assets   1,034     1,474  
     
TOTAL ASSETS $ 258,324   $ 262,726  
     
     
Liabilities and Equity    
     
Deposits $ 177,553   $ 183,205  
Advance payments by borrowers for taxes and insurance   771     55  
FHLB advances   15,750     17,750  
Accrued interest payable   620     70  
Other liabilities   2,446     1,284  
Total liabilities $ 197,140   $ 202,364  
     
Preferred stock ($0.01 par value, 1,000,000 authorized, no shares issued or outstanding as of June 30, 2019 and December 31, 2018, respectively) $ -   $ -  
Common stock ($0.01 par value, 19,000,000 authorized, 6,706,742 issued and outstanding as of June 30, 2019 and December 31, 2018, respectively)   67     67  
Additional paid in capital   28,489     28,326  
Unallocated common stock of Employee Stock Ownership Plan ("ESOP") (236,823 and 243,303 shares at June 30, 2019 and December 31, 2018, respectively)   (2,368 )   (2,433 )
Retained earnings   35,632     34,995  
Accumulated other comprehensive income (loss), net of income taxes   235     (593 )
Less common stock repurchased, 82,055 and 0 shares at cost, at June 30, 2019 and December 31, 2018, respectively   (871 )   -  
Total equity $ 61,184   $ 60,362  
     
TOTAL LIABILITIES AND EQUITY $ 258,324   $ 262,726  
     
     

FFBW, Inc.
Statements of Income
Three and Six Months Ended June 30, 2019 and 2018 (Unaudited)
(In thousands, except share data)

      Three months ended June 30,   Six months ended June 30,
      2019 2018   2019 2018
               
Interest and dividend income:          
  Loans, including fees $ 2,497 $ 2,326     $ 4,945   $ 4,294
  Securities          
    Taxable   282   339       557     679
    Tax-exempt   4   14       6     37
  Other   21   15       46     31
               
    Total interest and dividend income   2,804   2,694       5,554     5,041
               
Interest expense:          
  Interest-bearing deposits   633   342       1,232     688
  Borrowed funds   91   116       179     169
               
    Total interest expense   724   458       1,411     857
               
Net interest income   2,080   2,236       4,143     4,184
Provision for loan losses   85   189       155     304
               
Net interest income after provision for loan losses   1,995   2,047       3,988     3,880
               
Noninterest income:          
  Service charges and other fees   64   51       99     111
  Net gain on sale of loans   127   36       168     75
  Net gain (loss) on sale of securities   5   1       (3 )   9
  Increase in cash surrender value of insurance   51   49       98     95
  Other noninterest income   24   24       49     47
               
    Total noninterest income   271   161       411     337
               
Noninterest expense:          
  Salaries and employee benefits   1,031   1,139       2,128     2,196
  Occupancy and equipment   242   226       484     459
  Data processing   169   158       344     310
  Technology   79   49       157     104
  Foreclosed assets, net   1   (9 )     2     37
  Professional fees   104   57       216     175
  Other noninterest expense   126   151       229     323
               
    Total noninterest expense   1,752   1,771       3,560     3,604
               
Income before income taxes   514   437       839     613
Provision for income taxes   126   84       202     137
               
Net income $ 388 $ 353     $ 637   $ 476
               
Earnings per share          
  Basic $ 0.06 $ 0.06     $ 0.10   $ 0.07
  Diluted $ 0.06 $ 0.06     $ 0.10   $ 0.07
               
               

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

  For the Quarter Ended
  June 30, 2019 March 31, 2019 December 31,
2018
September 30,
2018
June 30, 2018
Total interest and dividend income $ 2,804 $ 2,750 $ 2,817 $ 2,738 $ 2,700
Total interest expense   724   687   645   607   458
Net interest income   2,080   2,063   2,172   2,131   2,242
Provision for loan losses   85   70   98   111   189
Net interest income after provision for loan losses   1,995   1,993   2,074   2,020   2,053
Total noninterest income   271   140   39   250   200
Total noninterest expense   1,752   1,808   1,810   1,810   1,816
Income before income taxes   514   325   303   460   437
Provision for income taxes   126   76   70   111   84
Net income $ 388 $ 249 $ 233 $ 349 $ 353
           
Earnings per share          
Basis $ 0.06 $ 0.04 $ 0.04 $ 0.05 $ 0.06
Diluted $ 0.06 $ 0.04 $ 0.04 $ 0.05 $ 0.06
           
           

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

                                                                                                                      

  June 30, 2019
and Six
Months Then
Ended
December 31,
2018 and
Twelve
Months Then
Ended
December 31,
2017 and
Twelve
Months Then
Ended
       
Nonperforming assets:      
Nonaccrual loans $ 1,117   $ 720   $ 1,243  
Accruing loans past due 90 days or more   -     -     -  
Total nonperforming loans ("NPLs")   1,117     720     1,243  
Foreclosed assets   84     69     619  
Total nonperforming assets ("NPAs") $ 1,201   $ 789   $ 1,862  
Troubled Debt Restructurings ("TDRs") $ 1,400   $ 1,201   $ 1,630  
Nonaccrual TDRs $ 1,100   $ 700   $ 969  
Average outstanding loan balance $ 200,246   $ 189,233   $ 170,577  
Loans, end of period $ 195,405   $ 200,898   $ 173,229  
ALLL, at beginning of period $ 2,118   $ 1,800   $ 1,478  
Loans charged off:      
Commercial   -     (24 )   -  
Residential real estate and consumer   (21 )   (172 )   (133 )
Total loans charged off   (21 )   (196 )   (133 )
Recoveries of loans previously charged off:      
Commercial   -     -     -  
Residential real estate and consumer   -     1     36  
Total recoveries of loans previously charged off   -     1     36  
Net loans charged off ("NCOs'")   (21 )   (195 )   (97 )
Additions to ALLL via provision for loan losses charged to operations   155     513     419  
ALLL, at end of period $ 2,252   $ 2,118   $ 1,800  
Ratios:      
ALLL to NCOs (annualized)   5440.34 %   1086.15 %   1855.67 %
NCOs (annualized) to average loans   0.02 %   0.10 %   0.06 %
ALLL to total loans   1.15 %   1.05 %   1.04 %
NPL to total loans   0.57 %   0.36 %   0.72 %
NPAs to total assets   0.46 %   0.30 %   0.73 %
Total Assets $ 258,324   $ 262,726   $ 256,481  
       
       

FFBW, Inc.
Yield and Cost

  For the Three Months Ended June 30,
  2019
2018
  Average
Outstanding
Balance
Interest Yield/ Rate Average
Outstanding
Balance
Interest Yield/ Rate
  (in thousands)   (in thousands)  
Interest-earning assets:            
Loans $ 199,235   $ 2,497 5.01 % $ 185,665   $ 2,326 5.01 %
Available for sale securities   43,501     286 2.63 %   57,490     353 2.46 %
Interest-bearing deposits   2,486     13 2.09 %   2,071     3 0.58 %
FHLB stock   638     8 5.02 %   841     12 5.71 %
Total interest-earning assets   245,860     2,804 4.56 %   246,067     2,694 4.38 %
Noninterest-earning assets   15,891         15,901      
Allowance for loan losses   (2,219 )       (1,855 )    
Total assets $ 259,532       $ 260,113      
             
Interest-bearing liabilities:            
Demand accounts $ 8,662     26 1.20 % $ 4,817     4 0.33 %
Money market accounts   40,373     132 1.31 %   52,327     103 0.79 %
Savings accounts   13,755     4 0.12 %   15,196     7 0.18 %
Health savings accounts   11,199     8 0.29 %   11,642     6 0.21 %
Certificates of deposit   87,112     463 2.13 %   69,890     222 1.27 %
Total interest-bearing deposits   161,101     633 1.57 %   153,872     342 0.89 %
Borrowings   16,492     91 2.21 %   25,197     116 1.84 %
Total interest-bearing liabilities   177,593     724 1.63 %   179,069     458 1.02 %
Noninterest-bearing deposits   18,790         20,783      
Other non-interest bearing liabilities   2,188         1,123      
Total liabilities   198,571         200,975      
Equity   60,961         59,138      
Total liabilities and equity $ 259,532       $ 260,113      
             
Net interest income     2,080       2,236  
Net interest rate spread(1)     2.93 %     3.36 %
Net interest-earning assets(2)   68,267         66,998      
Net interest margin(3)     3.38 %     3.63 %
Average of interest-earning assets to interest-bearing liabilities   138 %       137 %    

(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.


  For the Six Months Ended June 30,
  2019
2018
  Average Outstanding Balance Interest Yield/ Rate Average Outstanding Balance Interest Yield/ Rate
  (in thousands)   (in thousands)  
Interest-earning assets:            
Loans $ 200,246   $ 4,945 4.94 % $ 180,390   $ 4,294 4.76 %
Available for sale securities   43,579     563 2.58 %   58,451     716 2.45 %
Interest-bearing deposits   2,540     29 2.28 %   3,293     15 0.91 %
FHLB stock   642     17 5.30 %   700     16 4.57 %
Total interest-earning assets   247,007     5,554 4.50 %   242,834     5,041 4.15 %
Noninterest-earning assets   16,683         16,414      
Allowance for loan losses   (2,182 )       (1,835 )    
Total assets $ 260,885       $ 257,413      
             
Interest-bearing liabilities:            
Demand accounts $ 9,168     57 1.24 % $ 4,502     7 0.31 %
Money market accounts   40,785     243 1.19 %   52,764     185 0.70 %
Savings accounts   14,245     9 0.13 %   15,329     15 0.20 %
Health savings accounts   11,284     17 0.30 %   11,596     13 0.22 %
Certificates of deposit   87,689     906 2.07 %   72,493     468 1.29 %
Total interest-bearing deposits   163,171     1,232 1.51 %   156,684     688 0.88 %
Borrowings   16,544     179 2.16 %   19,862     169 1.70 %
Total interest-bearing liabilities   179,715     1,411 1.57 %   176,546     857 0.97 %
Noninterest-bearing deposits   18,256         20,538      
Other non-interest bearing liabilities   1,406         1,199      
Total liabilities   200,050         198,283      
Equity   60,835         59,130      
Total liabilities and equity $ 260,885       $ 257,413      
             
Net interest income     4,143       4,184  
Net interest rate spread(1)     2.93 %     3.18 %
Net interest-earning assets(2)   67,292         66,288      
Net interest margin(3)     3.35 %     3.45 %
Average of interest-earning assets to interest-bearing liabilities   137 %       138 %    

(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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