Exhibit 99.1
Press Release
|
| | | | |
| For Release: | | For More Information Contact: |
| October 23, 2014 | | Patrick Oakes, Executive Vice President and Chief Financial Officer |
| | | 919.627.6366, poakes@square1bank.com |
SQUARE 1 FINANCIAL REPORTS THIRD QUARTER 2014 RESULTS
Durham, NC, October 23, 2014 - Square 1 Financial, Inc. (Nasdaq: SQBK) today announced results for the quarter ended September 30, 2014.
Consolidated net income available to common shareholders for the third quarter of 2014 was $8.8 million, or $0.29 per diluted share, compared to $6.9 million, or $0.29 per diluted share, for the third quarter of 2013 and $8.1 million, or $0.27 per diluted share, for the second quarter of 2014. “Continued growth in loans and deposits, combined with a decrease in our loan loss provision, resulted in another quarter of strong profitability,” said Douglas H. Bowers, President and Chief Executive Officer of Square 1 Financial. “We remain focused on executing our strategy to provide the best banking services to our clients in the innovation economy.”
Third Quarter Highlights
Highlights of the third quarter of 2014 include:
| |
| • | Increase in net income available to common shareholders of $1.8 million, or 26.7%, compared to the third quarter of 2013, and $0.7 million, or 8.7%, compared to the second quarter of 2014. |
| |
| • | Return on average common equity of 12.01% and return on average assets of 1.22%. |
| |
| • | Tangible book value per share of $10.23 as of September 30, 2014. |
| |
| • | Average on-balance sheet deposits grew $633.2 million, or 33.3%, compared to the third quarter of 2013, and increased $174.7 million, or 7.4%, compared to the second quarter of 2014. Average client investment funds grew $488.2 million, or 110.0%, compared to the third quarter of 2013, and grew $181.8 million, or 24.2%, compared to the second quarter of 2014. |
| |
| • | Average loan balances grew $280.2 million, or 29.7%, to $1.2 billion, and period-end loans increased $252.6 million, or 24.8%, compared to the third quarter of 2013. Average loans grew $104.0 million, or 9.3%, while period-end loans increased $119.8 million, or 10.4%, compared to the second quarter of 2014. |
| |
| • | Net loan charge-offs were $1.2 million, or 0.40%, of average loans (annualized) for the third quarter of 2014 and were $4.2 million, or 0.49%, for the nine months ended September 30, 2014. Provision for loan losses expense decreased $0.7 million compared to the second quarter of 2014. |
| |
| • | Net interest margin decreased to 4.00% from 4.03% for the second quarter of 2014. |
| |
| • | Third quarter 2014 core banking noninterest income increased $0.6 million, or 16.7%, to $4.3 million from $3.7 million in the second quarter of 2014. |
Earnings Summary
The increase in net income available to common shareholders compared to the third quarter of 2013 resulted from a $7.1 million increase in net interest income, partially offset by a $1.2 million decrease in noninterest income and a $3.2 million increase in noninterest expense.
The increase in net income available to common shareholders compared to the second quarter of 2014 was due primarily to a $1.9 million increase in net interest income, partially offset by a $0.8 million decrease in noninterest income and a $0.2 million increase in noninterest expense.
Consolidated net income available to common shareholders for the nine months ended September 30, 2014 was $24.6 million, or $0.87 per diluted share, compared to $15.3 million, or $0.64 per diluted share, for the nine months ended September 30, 2013.
Net Interest Income and Margin (Fully Tax Equivalent Basis)
The information set forth below contains certain financial information determined by methods other than in accordance with GAAP. Net interest income and the net interest margin are presented on a fully taxable equivalent basis based on the federal statutory rate of 35% to consistently reflect income from taxable loans and securities and tax-exempt securities. See "Non-GAAP Financial Measures" section for a reconciliation of these non-GAAP measures to their most comparable GAAP measures.
For the third quarter of 2014, net interest income increased $7.3 million, or 35.4%, to $27.9 million compared to the third quarter of 2013. The increase in net interest income was primarily the result of our continued success in growing our loan portfolio and our low cost deposits, along with higher balances and yields on our investment portfolio. The increase in interest income included a $4.4 million, or 29.3%, increase in interest income on loans and a $2.7 million, or 45.7%, increase in interest income on securities. Deposit growth of $633.2 million, or 33.3%, supported a 29.7% increase in the average balance of our loan portfolio and a 37.1% increase in the average balance of our investment securities portfolio.
Net interest income for the third quarter of 2014 increased $2.0 million compared to the second quarter of 2014, primarily driven by an increase in loan interest income of $1.6 million and an increase in investment interest income of $0.4 million from higher average balances, partially offset by a lower yield. Deposit growth of $174.7 million, or 7.4%, and lower average cash balances supported a 9.3% increase in the average balance of our loan portfolio and a 10.9% increase in the average balance of our investment securities portfolio.
For the third quarter of 2014 our net interest margin increased to 4.00% from 3.95% versus the same period in the prior year. This increase was due largely to lower premium amortization on agency mortgage-backed securities resulting from slower prepayments. For the third quarter of 2014, our net interest margin decreased to 4.00% from 4.03% for the second quarter of 2014. This decrease was largely due to the impact of slightly higher premium amortization on agency mortgage-backed securities resulting from faster prepayments and a decrease in the yield earned on our loan portfolio, partially offset by lower cash balances.
Noninterest Income
Noninterest income for the third quarter of 2014 was $5.5 million, a decrease of $1.2 million, or 17.8%, compared to the third quarter of 2013, and a decrease of $0.8 million compared to the second quarter of 2014. The decrease in noninterest income compared to the third quarter of 2013 was primarily driven by a $1.2 million decrease in income from our venture capital fund investments due to unrealized losses. Core banking noninterest income within noninterest income for the third quarter of 2014 was $4.3 million, an increase of $0.9 million, or 26.8%, compared to the third quarter of 2013, and an increase of $0.6 million, or 16.7%, compared to the second quarter of 2014, primarily driven by higher foreign exchange fee income and higher credit card and merchant income.
The $0.8 million decrease in noninterest income compared to the second quarter of 2014 was primarily driven by a $1.7 million decrease in income from our venture capital fund investments due to unrealized losses, and a $0.2 million net loss on the sale of securities in the third quarter of 2014. The $0.2 million net loss on the sale of securities in the third quarter of 2014 was primarily related to the sale of equity securities held in our investment portfolio that we obtained in two public companies through the exercise of warrants. These decreases were partially offset by warrant income of $0.7 million compared to warrant income of $21 thousand for the second quarter of 2014, and a $0.4 million increase in foreign exchange fee income.
Quarterly results from our venture capital fund investments are not indicative of annual results as income from venture capital fund investments was $1.2 million for the nine months ended September 30, 2014 compared to $1.0 million for the nine months ended September 30, 2013. The increase in foreign exchange fee income reflects the expanding geographic footprint of our clients, and our ability to cross-sell our banking services. Additionally, foreign exchange fee income fluctuates based on our customers' needs for foreign currency-based transactions and third quarter of 2014 reflects certain large transactions, which may not occur in future periods.
Warrant income was $0.7 million in the third quarter of 2014, compared to warrant income of $0.9 million in the third quarter of 2013 and warrant income of $21 thousand in the second quarter of 2014. Warrant income is largely driven by changes in the fair value of our equity warrant assets and successful liquidity events, including IPOs, for the clients in which we had taken warrant positions. These variances demonstrate the volatility of this income which is created, in part, by the erratic nature of public equity markets and their receptivity to IPOs. Equity securities received upon the exercise of warrants are either sold or are held as equity securities within our investment portfolio, if subject to a lock-up period. The increase in warrant income compared to the second quarter of 2014 was primarily due to higher income from warrants in one client that conducted an IPO during the third quarter of 2014. At September 30, 2014, the valuation of our remaining warrants held was $4.1 million held in 451 companies, which included $0.1 million held in five publicly traded companies.
Noninterest Expense
Noninterest expense for the third quarter of 2014 increased $3.2 million, or 23.3%, compared to the third quarter of 2013, and increased $0.2 million compared to the second quarter of 2014. The increase compared to the third quarter of 2013 was primarily due to $2.2 million higher personnel expenses in the third quarter of 2014, driven by an increase of 27 full-time equivalent employees and higher incentive compensation expense. The $0.2 million increase compared to the second quarter of 2014 primarily resulted from increases in professional and data processing fees due to company growth.
Loans and Credit Quality
Average loans grew $280.2 million, or 29.7%, to $1.2 billion and period-end loans increased $252.6 million, or 24.8%, compared to the third quarter of 2013. Average loans grew $104.0 million, or 9.3%, while period-end loans increased $119.8 million, or 10.4%, compared to the second quarter of 2014. The increase in commercial loans occurred in all our major client industry segments. Period-end loans to venture firms increased $37.7 million, while total loans to venture-backed companies, including life sciences, technology and asset-based loans were up $73.0 million, or 7.6%, at September 30, 2014 compared to June 30, 2014.
At September 30, 2014, nonperforming loans totaled $11.8 million, or 0.93%, of total loans compared to $13.6 million, or 1.32%, of total loans for the third quarter of 2013 and $12.3 million, or 1.07%, of total loans for the second quarter of 2014. The allowance for loan losses to nonperforming loans at September 30, 2014, was 193.38%, compared to 134.56% at September 30, 2013 and 175.54% at June 30, 2014. Net loan charge-offs were $1.2 million, or 0.40%, of average loans (annualized) for the third quarter of 2014 compared to net loan charge-offs of $3.0 million, or 1.25%, of average loans (annualized) for the third quarter of 2013 and $0.7 million, or 0.25%, of average loans (annualized) for the second quarter of 2014.
Investments
Average investments grew $374.9 million, or 37.1%, compared to the third quarter of 2013 and grew $136.5 million, or 10.9%, compared to the second quarter of 2014 as a result of strong deposit growth. Our available-for-sale securities portfolio totaled $1.2 billion at September 30, 2014, an increase of $93.2 million, or 8.5%, compared to $1.1 billion at June 30, 2014. Our held to maturity securities portfolio had an amortized cost of $278.1 million at September 30, 2014, an increase of $67.9 million, or 32.3%, compared to $210.2 million at June 30, 2014.
Deposits and Client Investment Funds
Average on-balance sheet deposits grew $633.2 million, or 33.3%, to $2.5 billion, compared to the third quarter of 2013 and increased $174.7 million, or 7.4%, compared to the second quarter of 2014. Our September 30, 2014 period-end deposits increased $804.1 million, or 43.1%, to $2.7 billion from September 30, 2013, and increased $223.3 million, or 9.1%, from June 30, 2014. This increase was primarily due to growth of our client base and a continued strong funding environment for venture-backed firms. Our period-end noninterest-bearing deposits increased $147.8 million, or 9.4%, and our interest-bearing deposits increased $75.5 million, or 8.6%, during the third quarter of 2014. Average interest-bearing deposits grew $40.9 million compared to the second quarter of 2014 and increased $118.8 million compared to the third quarter of 2013. Despite the increase in deposits, average cost of deposits of 0.02%, 0.02% and 0.04% for the third quarter of 2014, the second quarter of 2014 and the third quarter of 2013, respectively, yielded interest expense on deposits of $0.1 million, $0.1 million and $0.2 million for the same periods, respectively.
Average off-balance sheet client investment funds grew $488.2 million, or 110.0%, to $931.8 million, compared to the third quarter of 2013, and grew $181.8 million, or 24.2%, compared to the second quarter of 2014. Our period-end client investment funds increased to $957.6 million for the third quarter of 2014 from $460.1 million for the third quarter of 2013, an increase of 108.1%, and from $780.0 million for the second quarter of 2014, an increase of 22.8%, as our clients took advantage of alternative cash investment vehicles offered by Square 1 Asset Management, our registered investment adviser subsidiary.
Square 1 Asset Management offers customized solutions that are tailored to meet the unique corporate cash management needs of entrepreneurial companies and venture firms.
Forward-Looking Statements
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.
There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following: (i) market and economic conditions (including interest rate environment, levels of public offerings, mergers and acquisitions and venture capital financing activities) and the associated impact on us; (ii) the sufficiency of our capital, including sources of capital (such as funds generated through retained earnings) and the extent to which capital may be used or required; (iii) our overall investment plans, strategies and activities, including our investment of excess cash/liquidity; (iv) operational, liquidity and credit risks associated with our business; (v) deterioration of our asset quality; (vi) our overall management of interest rate risk; (vii) our ability to execute our strategy and to achieve organic loan and deposit growth; (viii) increased competition in the financial services industry, nationally, regionally or locally, which may adversely affect pricing and terms; (ix) the adequacy of reserves (including allowance for loan and lease losses) and the appropriateness of our methodology for calculating such reserves; (x) volatility and direction of market interest rates; (xi) changes in the regulatory or legal environment; and (xii) other factors that are discussed in the section titled “Risk Factors,” in our registration statement on Form S-1/A, filed with the Securities and Exchange Commission and effective as of March 26, 2014.
The foregoing factors should not be construed as exhaustive. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Any forward-looking statement speaks only as of the date on which it is made, and we do not intend, or undertake any obligation to publicly update these forward-looking statements.
Earnings Conference Call
The Company will host a conference call at 10:30 a.m. EDT on Thursday, October 23, 2014, to discuss the financial results for the quarter ended September 30, 2014. Individuals wishing to participate in the conference call may do so by dialing 877.359.9508 from the United States, or 224.357.2393 from outside the United States, and entering Conference ID 15998084. The call will also be available live via webcast on the Investor Relations page of the Company's website, www.square1financial.com. A replay of the call will be available on the Company's website for 90 days beginning on Thursday, October 23, 2014.
About Square 1 Financial
Square 1 Financial is a financial services company focused primarily on serving entrepreneurs and their investors. Square 1 Financial (Nasdaq: SQBK) is headquartered in Durham, North Carolina with twelve loan production offices located in key innovation hubs across the United States. Through Square 1 Bank, which was formed by experienced venture bankers, commercial bankers and entrepreneurs, we offer a full range of banking and financial products focused on the entrepreneurial community and their venture capital and private equity investors. Since inception, we have operated as a highly-focused venture bank and have provided a broad range of financial services to entrepreneurs, growing entrepreneurial companies and the venture capital and private equity communities. We provide banking services to our clients, including venture, commercial and international banking services, asset-based lending programs, and SBA and USDA commercial and real estate loan programs. We also provide investment advisory and asset management services to our clients through Square 1 Asset Management, a subsidiary of Square 1 Bank. More information can be found at www.square1financial.com.
SQUARE 1 FINANCIAL, INC.
Summary Financial Information
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| | | | | | | | | | | | | | | | | | | | |
| | | At or For the |
| | | Three Months Ended | | Nine Months Ended |
| (In thousands, except per share data) | | September 30,
2014 | | June 30,
2014 | | September 30,
2013 | | September 30,
2014 | | September 30,
2013 |
| Performance Ratios: | | | | | | | | | | |
| Return on average assets | | 1.22 | % | | 1.22 | % | | 1.29 | % | | 1.25 | % | | 1.02 | % |
| Return on average common equity | | 12.01 |
| | 11.74 |
| | 15.66 |
| | 13.01 |
| | 11.56 |
|
| Net interest margin(1) | | 4.00 |
| | 4.03 |
| | 3.95 |
| | 4.04 |
| | 3.89 |
|
| Efficiency ratio(2) | | 49.79 |
| | 51.29 |
| | 49.85 |
| | 50.55 |
| | 54.54 |
|
| | | | | | | | | | | |
| Per Share Data: | | | | | | | | | | |
| Net income (loss) per basic common share | | $ | 0.31 |
| | $ | 0.28 |
| | $ | 0.29 |
| | $ | 0.91 |
| | $ | 0.65 |
|
| Net income (loss) per diluted common share | | 0.29 |
| | 0.27 |
| | 0.29 |
| | 0.87 |
| | 0.64 |
|
| Book value per common share | | 10.25 |
| | 9.91 |
| | 7.55 |
| | 10.25 |
| | 7.55 |
|
| Tangible book value per common share | | 10.23 |
| | 9.88 |
| | 7.55 |
| | 10.23 |
| | 7.55 |
|
| | | | | | | | | | | |
| Capital Ratios (consolidated): | | | | | | | | | | |
| Tier 1 leverage capital(4) | | 10.05 | % | | 10.42 | % | | 9.02 | % | | 10.05 | % | | 9.02 | % |
| Tier 1 risk-based capital(4) | | 13.69 |
| | 14.70 |
| | 11.68 |
| | 13.69 |
| | 11.68 |
|
| Total risk-based capital(4) | | 14.84 |
| | 15.88 |
| | 12.79 |
| | 14.84 |
| | 12.79 |
|
| Total shareholders’ equity to assets | | 9.85 |
| | 10.35 |
| | 8.43 |
| | 9.85 |
| | 8.43 |
|
| Tangible common equity to tangible assets(3) | | 9.83 |
| | 10.33 |
| | 8.20 |
| | 9.83 |
| | 8.20 |
|
| | | | | | | | | | | |
| Asset Quality Ratios: | | | | | | | | | | |
| Allowance for loan losses as a percent of total loans | | 1.79 | % | | 1.87 | % | | 1.78 | % | | 1.79 | % | | 1.78 | % |
| Allowance for loan losses as a percent of nonperforming loans | | 193.38 |
| | 175.54 |
| | 134.56 |
| | 193.38 |
| | 134.56 |
|
| Net charge-offs to average outstanding loans (annualized) | | 0.40 |
| | 0.25 |
| | 1.25 |
| | 0.49 |
| | 0.78 |
|
| Nonperforming loans as a percent of total loans | | 0.93 |
| | 1.07 |
| | 1.32 |
| | 0.93 |
| | 1.32 |
|
| Nonperforming assets as a percent of total assets | | 0.39 |
| | 0.45 |
| | 0.63 |
| | 0.39 |
| | 0.63 |
|
| | | | | | | | | | | |
| Other Ratios and Statistics: | | | | | | | | | | |
| Average loans, net of unearned income, to average deposits | | 48.3 | % | | 47.5 | % | | 49.7 | % | | 48.4 | % | | 49.1 | % |
| Period-end full-time equivalent employees | | 253 |
| | 245 |
| | 219 |
| | 253 |
| | 219 |
|
| Average outstanding shares—basic | | 28,681 |
| | 28,333 |
| | 23,501 |
| | 26,931 |
| | 23,496 |
|
| Average outstanding shares—diluted | | 29,771 |
| | 29,664 |
| | 23,863 |
| | 28,435 |
| | 23,822 |
|
| Period-end outstanding shares—basic | | 28,701 |
| | 28,640 |
| | 23,501 |
| | 28,701 |
| | 23,501 |
|
| Period-end outstanding shares—diluted | | 29,819 |
| | 29,841 |
| | 23,890 |
| | 29,819 |
| | 23,890 |
|
| | | | | | | | | | | |
| Financial Condition Data: | | | | | | | | | | |
| Average total assets | | $ | 2,838,269 |
| | $ | 2,644,511 |
| | $ | 2,123,359 |
| | $ | 2,620,684 |
| | $ | 1,991,599 |
|
| Average cash and cash equivalents | | 157,129 |
| | 223,988 |
| | 112,915 |
| | 166,987 |
| | 128,721 |
|
| Average investment securities - available-for-sale | | 1,133,467 |
| | 1,054,438 |
| | 887,213 |
| | 1,052,298 |
| | 850,264 |
|
| Average investment securities - held-to-maturity | | 252,289 |
| | 194,781 |
| | 123,628 |
| | 204,292 |
| | 90,236 |
|
| Average loans, net of unearned income | | 1,223,906 |
| | 1,119,867 |
| | 943,696 |
| | 1,138,097 |
| | 872,873 |
|
| Average on-balance sheet deposits | | 2,533,778 |
| | 2,359,042 |
| | 1,900,576 |
| | 2,349,180 |
| | 1,776,530 |
|
| Average total client investment funds | | 931,780 |
| | 749,976 |
| | 443,612 |
| | 771,705 |
| | 405,311 |
|
| Average total shareholders' equity | | 289,021 |
| | 275,014 |
| | 179,958 |
| | 254,401 |
| | 181,319 |
|
| |
| (1) | Represents net interest income as a percent of average interest-earning assets. |
| |
| (2) | Represents noninterest expense divided by the sum of net interest income and other income, excluding gains or losses on the impairment and sale of securities. Efficiency ratio, as calculated, is a non-GAAP financial measure. See “Non-GAAP Financial Measures.” |
| |
| (3) | Tangible common equity to tangible assets is a non-GAAP financial measure. Tangible common equity is computed as total shareholders’ equity, excluding preferred stock, less intangible assets. Tangible assets are calculated as total assets less intangible assets. We believe that the most directly comparable GAAP financial measure is total shareholders’ equity to assets. See “Non-GAAP Financial Measures.” |
| |
| (4) | Tier 1 leverage capital ratio, Tier 1 risk-based capital ratio and Total risk-based capital ratio for September 30, 2014 are estimates. |
SQUARE 1 FINANCIAL, INC.
Interim Consolidated Balance Sheets (Unaudited)
|
| | | | | | | | | | | | |
| (in thousands, except share and per share data) | | September 30,
2014 | | June 30,
2014 | | September 30,
2013 |
| Assets | | | | | | |
| Cash and cash equivalents | | $ | 175,606 |
| | $ | 231,192 |
| | $ | 54,063 |
|
| Investment in time deposits | | 1,250 |
| | 1,250 |
| | 1,250 |
|
| Investment securities—available for sale, at fair value | | 1,186,887 |
| | 1,093,684 |
| | 898,931 |
|
| Investment securities—held to maturity, at amortized cost | | 278,121 |
| | 210,236 |
| | 125,473 |
|
| Loans, net of unearned income of $7.3 million, $5.5 million and $4.9 million | | 1,271,457 |
| | 1,151,616 |
| | 1,018,838 |
|
| Less allowance for loan losses | | (22,816 | ) | | (21,556 | ) | | (18,093 | ) |
| Net loans | | 1,248,641 |
| | 1,130,060 |
| | 1,000,745 |
|
| Premises and equipment, net | | 3,723 |
| | 3,502 |
| | 2,695 |
|
| Deferred income tax assets, net | | 10,142 |
| | 11,165 |
| | 16,431 |
|
| Bank owned life insurance | | 50,278 |
| | 34,948 |
| | 31,404 |
|
| Intangible assets | | 1,770 |
| | 1,922 |
| | 1,196 |
|
| Other receivables | | 3,619 |
| | 4,648 |
| | 5,628 |
|
| Warrant valuation | | 4,089 |
| | 4,747 |
| | 5,218 |
|
| Prepaid expenses | | 1,690 |
| | 1,804 |
| | 1,392 |
|
| Accrued interest receivable and other assets | | 22,370 |
| | 12,366 |
| | 19,026 |
|
| Total assets | | $ | 2,988,186 |
| | $ | 2,741,524 |
| | $ | 2,163,452 |
|
| Liabilities and Shareholders’ Equity | | | | | | |
| Deposits: | | | | | | |
| Demand, noninterest-bearing | | $ | 1,712,674 |
| | $ | 1,564,856 |
| | $ | 1,157,986 |
|
| Demand, interest-bearing | | 164,859 |
| | 107,300 |
| | 73,176 |
|
| Money market deposit accounts | | 774,405 |
| | 742,103 |
| | 606,215 |
|
| Time deposits | | 16,507 |
| | 30,906 |
| | 27,012 |
|
| Total deposits | | 2,668,445 |
| | 2,445,165 |
| | 1,864,389 |
|
| Borrowings and repurchase agreements | | — |
| | — |
| | 100,605 |
|
| Junior subordinated debt | | — |
| | — |
| | 6,205 |
|
| Accrued interest payable and other liabilities | | 25,539 |
| | 12,663 |
| | 9,840 |
|
| Total liabilities | | $ | 2,693,984 |
| | $ | 2,457,828 |
| | $ | 1,981,039 |
|
| Commitments and contingencies | | | | | | |
| Shareholders’ equity: | | | | | | |
| Convertible preferred stock, $.01 par value; 10,000,000 shares authorized, 0 shares, 0 shares and 5,000 shares issued and outstanding, respectively | | — |
| | — |
| | — |
|
| Common stock, $.01 par value; 70,000,000, 45,000,000 and 45,000,000 shares authorized, 28,700,825 shares, 28,640,126 shares and 23,501,263 shares issued and outstanding, respectively | | 287 |
| | 286 |
| | 235 |
|
| Additional paid in capital | | 251,841 |
| | 250,973 |
| | 183,211 |
|
| Accumulated other comprehensive income (loss) | | 8,193 |
| | 7,308 |
| | (3,448 | ) |
| Retained earnings | | 33,881 |
| | 25,129 |
| | 2,415 |
|
| Total shareholders’ equity | | 294,202 |
| | 283,696 |
| | 182,413 |
|
| Total liabilities and shareholders’ equity | | $ | 2,988,186 |
| | $ | 2,741,524 |
| | $ | 2,163,452 |
|
SQUARE 1 FINANCIAL, INC.
Interim Consolidated Statements of Operations (Unaudited)
|
| | | | | | | | | | | | | | | | | | | | |
| (in thousands, except per share data) | | Three Months Ended | | Nine Months Ended |
| | | September 30,
2014 | | June 30,
2014 | | September 30,
2013 | | September 30,
2014 | | September 30,
2013 |
| Interest income: | | | | | | | | | | |
| Loans including fees on loans | | $ | 19,326 |
| | $ | 17,720 |
| | $ | 14,949 |
| | $ | 53,448 |
| | $ | 41,575 |
|
| Investment securities | | 7,528 |
| | 7,218 |
| | 4,993 |
| | 21,079 |
| | 13,266 |
|
| Federal funds and other short-term investments | | 104 |
| | 137 |
| | 78 |
| | 305 |
| | 233 |
|
| Total interest income | | 26,958 |
| | 25,075 |
| | 20,020 |
| | 74,832 |
| | 55,074 |
|
| Interest expense: | | | | | | | | | | |
| Deposits | | 150 |
| | 143 |
| | 182 |
| | 423 |
| | 476 |
|
| Borrowings and repurchase agreements | | — |
| | — |
| | 6 |
| | 4 |
| | 30 |
|
| Junior subordinated debt | | — |
| | 56 |
| | 158 |
| | 215 |
| | 475 |
|
| Total interest expense | | 150 |
| | 199 |
| | 346 |
| | 642 |
| | 981 |
|
| Net interest income | | 26,808 |
| | 24,876 |
| | 19,674 |
| | 74,190 |
| | 54,093 |
|
| Provision for loan losses | | 2,500 |
| | 3,150 |
| | 2,850 |
| | 8,614 |
| | 9,340 |
|
| Net interest income after provision for loan losses | | 24,308 |
| | 21,726 |
| | 16,824 |
| | 65,576 |
| | 44,753 |
|
| Noninterest income: | | | | | | | | | | |
| Service charges and fees | | 1,150 |
| | 1,126 |
| | 1,069 |
| | 3,345 |
| | 3,020 |
|
| Foreign exchange fees | | 1,792 |
| | 1,363 |
| | 1,270 |
| | 4,795 |
| | 3,635 |
|
| Credit card and merchant income | | 914 |
| | 765 |
| | 605 |
| | 2,314 |
| | 1,787 |
|
| Investment impairment | | — |
| | — |
| | (782 | ) | | (43 | ) | | (1,525 | ) |
| Net (loss) gain on securities | | (235 | ) | | 38 |
| | 847 |
| | (188 | ) | | 1,696 |
|
| Letter of credit fees | | 293 |
| | 297 |
| | 271 |
| | 1,104 |
| | 785 |
|
| Warrant income | | 721 |
| | 21 |
| | 899 |
| | 2,937 |
| | 3,263 |
|
| Gain on sale of loans | | 248 |
| | 249 |
| | 444 |
| | 750 |
| | 1,665 |
|
| Bank owned life insurance | | 330 |
| | 317 |
| | 298 |
| | 936 |
| | 771 |
|
| Other | | 319 |
| | 2,196 |
| | 1,808 |
| | 3,094 |
| | 3,243 |
|
| Total noninterest income | | 5,532 |
| | 6,372 |
| | 6,729 |
| | 19,044 |
| | 18,340 |
|
| Noninterest expense: | | | | | | | | | | |
| Personnel | | 10,790 |
| | 10,725 |
| | 8,639 |
| | 32,148 |
| | 26,128 |
|
| Occupancy | | 713 |
| | 773 |
| | 691 |
| | 2,227 |
| | 2,082 |
|
| Data processing | | 1,090 |
| | 918 |
| | 897 |
| | 2,830 |
| | 2,229 |
|
| Furniture and equipment | | 769 |
| | 660 |
| | 589 |
| | 2,131 |
| | 1,850 |
|
| Advertising and promotions | | 223 |
| | 342 |
| | 267 |
| | 840 |
| | 891 |
|
| Professional fees | | 976 |
| | 786 |
| | 876 |
| | 2,363 |
| | 2,280 |
|
| Telecommunications | | 246 |
| | 285 |
| | 283 |
| | 791 |
| | 866 |
|
| Travel | | 259 |
| | 292 |
| | 211 |
| | 717 |
| | 762 |
|
| FDIC assessment | | 393 |
| | 347 |
| | 349 |
| | 1,145 |
| | 949 |
|
| Other | | 1,376 |
| | 1,472 |
| | 857 |
| | 3,826 |
| | 2,768 |
|
| Total noninterest expense | | 16,835 |
| | 16,600 |
| | 13,659 |
| | 49,018 |
| | 40,805 |
|
| Income before income tax expense | | 13,005 |
| | 11,498 |
| | 9,894 |
| | 35,602 |
| | 22,288 |
|
| Income tax expense | | 4,253 |
| | 3,447 |
| | 2,926 |
| | 10,951 |
| | 6,845 |
|
| Net income | | 8,752 |
| | 8,051 |
| | 6,968 |
| | 24,651 |
| | 15,443 |
|
| Dividends on preferred stock | | — |
| | 1 |
| | 62 |
| | 63 |
| | 188 |
|
| Net income available to common shareholders | | $ | 8,752 |
| | $ | 8,050 |
| | $ | 6,906 |
| | $ | 24,588 |
| | $ | 15,255 |
|
| Earnings per share—basic | | $ | 0.31 |
| | $ | 0.28 |
| | $ | 0.29 |
| | $ | 0.91 |
| | $ | 0.65 |
|
| Earnings per share—diluted | | $ | 0.29 |
| | $ | 0.27 |
| | $ | 0.29 |
| | $ | 0.87 |
| | $ | 0.64 |
|
SQUARE 1 FINANCIAL, INC.
Interim Net Interest Margin Analysis (Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended |
| | | September 30, 2014 | | June 30, 2014 | | September 30, 2013 |
| | | Average
Balance | | Interest
and
Dividends | | Yield/
Cost | | Average
Balance | | Interest
and
Dividends | | Yield/
Cost | | Average
Balance | | Interest
and
Dividends | | Yield/
Cost |
| | | (Dollars in thousands) |
| Interest-earning assets: | | | | | | | | | | | | | | | | | | |
| Federal Reserve deposits, federal funds sold and other short-term investments | | $ | 152,008 |
| | $ | 104 |
| | 0.27 | % | | $ | 206,033 |
| | $ | 137 |
| | 0.27 | % | | $ | 111,426 |
| | $ | 78 |
| | 0.28 | % |
| Loans, net of unearned income | | 1,223,906 |
| | 19,326 |
| | 6.26 |
| | 1,119,867 |
| | 17,720 |
| | 6.35 |
| | 943,696 |
| | 14,949 |
| | 6.28 |
|
| Nontaxable securities | | 248,629 |
| | 3,020 |
| | 4.82 |
| | 233,137 |
| | 2,823 |
| | 4.86 |
| | 220,063 |
| | 2,578 |
| | 4.65 |
|
| Taxable securities | | 1,137,127 |
| | 5,567 |
| | 1.94 |
| | 1,016,082 |
| | 5,382 |
| | 2.12 |
| | 790,777 |
| | 3,317 |
| | 1.66 |
|
| Total interest-earning assets | | 2,761,670 |
| | 28,017 |
| | 4.02 |
| | 2,575,119 |
| | 26,062 |
| | 4.06 |
| | 2,065,962 |
| | 20,922 |
| | 4.02 |
|
| Less: Allowance for loan losses | | (22,888 | ) | | | | | | (20,086 | ) | | | | | | (18,038 | ) | | | | |
| Noninterest-earning assets | | 99,487 |
| | | | | | 89,478 |
| | | | | | 75,435 |
| | | | |
| Total assets | | $ | 2,838,269 |
| | | | | | $ | 2,644,511 |
| | | | | | $ | 2,123,359 |
| | | | |
| Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | |
| Demand deposits | | $ | 87,957 |
| | 18 |
| | 0.08 |
| | $ | 117,542 |
| | 21 |
| | 0.07 |
| | $ | 92,500 |
| | 33 |
| | 0.14 |
|
| Money market | | 765,338 |
| | 115 |
| | 0.06 |
| | 692,727 |
| | 106 |
| | 0.06 |
| | 641,159 |
| | 131 |
| | 0.08 |
|
| Time deposits | | 27,997 |
| | 16 |
| | 0.22 |
| | 30,133 |
| | 16 |
| | 0.22 |
| | 28,872 |
| | 17 |
| | 0.23 |
|
| Total interest-bearing deposits | | 881,292 |
| | 149 |
| | 0.07 |
| | 840,402 |
| | 143 |
| | 0.07 |
| | 762,531 |
| | 181 |
| | 0.09 |
|
| FHLB advances | | 543 |
| | — |
| | 0.14 |
| | — |
| | — |
| | — |
| | 4,783 |
| | — |
| | — |
|
| Repurchase agreements | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 22,525 |
| | 6 |
| | — |
|
| Junior subordinated debt | | — |
| | 1 |
| | — |
| | 2,236 |
| | 56 |
| | 10.09 |
| | 6,205 |
| | 159 |
| | 10.10 |
|
| Total interest-bearing liabilities | | 881,835 |
| | 150 |
| | 0.07 |
| | 842,638 |
| | 199 |
| | 0.09 |
| | 796,044 |
| | 346 |
| | 0.17 |
|
| Noninterest-bearing deposits | | 1,652,486 |
| | | | | | 1,518,640 |
| | | | | | 1,138,044 |
| | | | |
| Other noninterest-bearing liabilities | | 14,927 |
| | | | | | 8,219 |
| | | | | | 9,313 |
| | | | |
| Total liabilities | | 2,549,248 |
| | | | | | 2,369,497 |
| | | | | | 1,943,401 |
| | | | |
| Total shareholders’ equity | | 289,021 |
| | | | | | 275,014 |
| | | | | | 179,958 |
| | | | |
| Total liabilities and shareholders’ equity | | $ | 2,838,269 |
| | | | | | $ | 2,644,511 |
| | | | | | $ | 2,123,359 |
| | | | |
| Net interest income | | | | $ | 27,867 |
| | | | | | $ | 25,863 |
| | | | | | $ | 20,576 |
| | |
| Interest rate spread | | | | | | 3.95 | % | | | | | | 3.97 | % | | | | | | 3.85 | % |
| Net interest margin | | | | | | 4.00 | % | | | | | | 4.03 | % | | | | | | 3.95 | % |
| Ratio of average interest-earning assets to average interest-bearing liabilities | | | | | | 313.17 | % | | | | | | 305.60 | % | | | | | | 259.53 | % |
SQUARE 1 FINANCIAL, INC.
Interim Net Interest Margin Analysis (Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | |
| | | Nine Months Ended September 30, |
| | | 2014 | | 2013 |
| | | Average
Balance | | Interest
and
Dividends | | Yield/
Cost | | Average
Balance | | Interest
and
Dividends | | Yield/
Cost |
| | | (Dollars in thousands) |
| Interest-earning assets: | | | | | | | | | | | | |
| Federal Reserve deposits, federal funds sold and other short-term investments | | $ | 155,406 |
| | $ | 305 |
| | 0.26 | % | | $ | 114,901 |
| | $ | 233 |
| | 0.27 | % |
| Loans, net of unearned income | | 1,138,097 |
| | 53,448 |
| | 6.28 |
| | 872,873 |
| | 41,575 |
| | 6.37 |
|
| Nontaxable securities | | 236,695 |
| | 8,566 |
| | 4.84 |
| | 182,921 |
| | 6,121 |
| | 4.47 |
|
| Taxable securities | | 1,019,894 |
| | 15,511 |
| | 2.03 |
| | 757,579 |
| | 9,287 |
| | 1.64 |
|
| Total interest-earning assets | | 2,550,092 |
| | 77,830 |
| | 4.08 |
| | 1,928,274 |
| | 57,216 |
| | 3.97 |
|
| Less: Allowance for loan losses | | (20,827 | ) | | | | | | (16,503 | ) | | | | |
| Noninterest-earning assets | | 91,419 |
| | | | | | 81,373 |
| | | | |
| Total assets | | $ | 2,620,684 |
| | | | | | $ | 1,993,144 |
| | | | |
| Interest-bearing liabilities: | | | | | | | | | | | | |
| Demand deposits | | $ | 107,276 |
| | 63 |
| | 0.08 |
| | $ | 56,008 |
| | 61 |
| | 0.14 |
|
| Money market | | 692,178 |
| | 314 |
| | 0.06 |
| | 594,153 |
| | 369 |
| | 0.08 |
|
| Time deposits | | 28,090 |
| | 46 |
| | 0.22 |
| | 32,958 |
| | 46 |
| | 0.19 |
|
| Total interest-bearing deposits | | 827,544 |
| | 423 |
| | 0.07 |
| | 683,119 |
| | 476 |
| | 0.09 |
|
| FHLB advances | | 842 |
| | 2 |
| | 0.35 |
| | 9,670 |
| | 24 |
| | 0.34 |
|
| Repurchase agreements | | 2,009 |
| | 1 |
| | — |
| | 7,592 |
| | 6 |
| | — |
|
| Junior subordinated debt | | 2,781 |
| | 216 |
| | 10.36 |
| | 6,205 |
| | 475 |
| | 10.24 |
|
| Total interest-bearing liabilities | | 833,176 |
| | 642 |
| | 0.10 |
| | 706,586 |
| | 981 |
| | 0.19 |
|
| Noninterest-bearing deposits | | 1,521,635 |
| | | | | | 1,093,411 |
| | | | |
| Other noninterest-bearing liabilities | | 11,470 |
| | | | | | 11,828 |
| | | | |
| Total liabilities | | 2,366,281 |
| | | | | | 1,811,825 |
| | | | |
| Total shareholders’ equity | | 254,403 |
| | | | | | 181,319 |
| | | | |
| Total liabilities and shareholders’ equity | | $ | 2,620,684 |
| | | | | | $ | 1,993,144 |
| | | | |
| Net interest income | | | | $ | 77,188 |
| | | | | | $ | 56,235 |
| | |
| Interest rate spread | | | | | | 3.98 | % | | | | | | 3.78 | % |
| Net interest margin | | | | | | 4.04 | % | | | | | | 3.89 | % |
| Ratio of average interest-earning assets to average interest-bearing liabilities | | | | | | 306.07 | % | | | | | | 272.90 | % |
SQUARE 1 FINANCIAL, INC.
Loans and Unfunded Commitments
|
| | | | | | | | | | | | | | | | | | | | | |
| | | September 30, 2014 | | June 30, 2014 | | September 30, 2013 |
| | | Amount | | Percent | | Amount | | Percent | | Amount | | Percent |
| | | (Dollars in thousands) |
| Commercial loans: | | | | | | | | | | | | |
| Technology | | $ | 634,908 |
| | 49.65 | % | | $ | 578,383 |
| | 49.98 | % | | $ | 560,084 |
| | 54.71 | % |
| Life sciences | | 240,375 |
| | 18.80 |
| | 232,042 |
| | 20.05 |
| | 224,321 |
| | 21.91 |
|
| Asset-based loans | | 152,282 |
| | 11.91 |
| | 144,133 |
| | 12.45 |
| | 95,481 |
| | 9.33 |
|
| Venture capital/private equity | | 159,349 |
| | 12.46 |
| | 121,601 |
| | 10.51 |
| | 85,213 |
| | 8.32 |
|
| SBA and USDA | | 33,245 |
| | 2.60 |
| | 35,357 |
| | 3.06 |
| | 19,531 |
| | 1.91 |
|
| Other | | 5,468 |
| | 0.42 |
| | 2,510 |
| | 0.22 |
| | 1,277 |
| | 0.13 |
|
| Total commercial loans | | 1,225,627 |
| | 95.84 |
| | 1,114,026 |
| | 96.27 |
| | 985,907 |
| | 96.31 |
|
| Real estate loans: | | | | | | | | | | | | |
| SBA and USDA | | 31,532 |
| | 2.47 |
| | 26,997 |
| | 2.33 |
| | 27,378 |
| | 2.67 |
|
| Total real estate loans | | 31,532 |
| | 2.47 |
| | 26,997 |
| | 2.33 |
| | 27,378 |
| | 2.67 |
|
| Construction: | | | | | | | | | | | | |
| SBA and USDA | | 2,290 |
| | 0.18 |
| | 1,101 |
| | 0.10 |
| | 1,226 |
| | 0.12 |
|
| Total construction loans | | 2,290 |
| | 0.18 |
| | 1,101 |
| | 0.10 |
| | 1,226 |
| | 0.12 |
|
| Credit cards | | 19,345 |
| | 1.51 |
| | 14,999 |
| | 1.30 |
| | 9,219 |
| | 0.90 |
|
| Total loans | | 1,278,794 |
| | 100.00 | % | | 1,157,123 |
| | 100.00 | % | | 1,023,730 |
| | 100.00 | % |
| Less unearned income(1) | | (7,337 | ) | | | | (5,507 | ) | | | | (4,893 | ) | | |
| Total loans, net of unearned income | | $ | 1,271,457 |
| | | | $ | 1,151,616 |
| | | | $ | 1,018,837 |
| | |
| | | | | | | | | | | | | |
| Total unfunded loan commitments | | $ | 1,167,115 |
| | | | $ | 1,078,788 |
| | | | $ | 924,788 |
| | |
| |
| (1) | Unearned income consists of unearned loan fees, the discount on SBA loans and the unearned initial warrant value. |
Client Investment Funds
We offer our clients alternative cash investment vehicles such as sweep accounts and investment in the Certificates of Deposit Account Registry Service (“CDARS”), the latter of which allows us to place client deposits in one or more insured depository institutions.
|
| | | | | | | | | | | | |
| | | September 30, 2014 | | June 30, 2014 | | September 30, 2013 |
| Period-end: | | (Dollars in thousands) |
| Client investment assets under management | | $ | 609,284 |
| | $ | 245,646 |
| | $ | 22,451 |
|
| Sweep money market funds | | 241,274 |
| | 277,848 |
| | 215,080 |
|
| CDARS | | 107,076 |
| | 256,485 |
| | 222,618 |
|
| Total period-end client investment funds | | $ | 957,634 |
| | $ | 779,979 |
| | $ | 460,149 |
|
SQUARE 1 FINANCIAL, INC.
Credit Quality
|
| | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | Nine Months Ended |
| | | September 30,
2014 | | June 30,
2014 | | September 30,
2013 | | September 30,
2014 | | September 30,
2013 |
| | | (Dollars in thousands) | | | | |
| Allowance at beginning of period | | $ | 21,556 |
| | $ | 19,094 |
| | $ | 18,217 |
| | $ | 18,379 |
| | $ | 13,843 |
|
| Provision for loan losses | | 2,500 |
| | 3,150 |
| | 2,850 |
| | 8,614 |
| | 9,340 |
|
| Charge-offs: | | | | | | | | | | |
| Commercial loans: | | | | | | | | | | |
| Technology | | 382 |
| | 332 |
| | 2,988 |
| | 2,548 |
| | 5,932 |
|
| Life sciences | | 1,107 |
| | 409 |
| | — |
| | 1,516 |
| | — |
|
| SBA and USDA | | — |
| | — |
| | — |
| | 518 |
| | — |
|
| Total commercial loans | | 1,489 |
| | 741 |
| | 2,988 |
| | 4,582 |
| | 5,932 |
|
| Credit cards | | — |
| | — |
| | — |
| | — |
| | — |
|
| Total charge offs | | 1,489 |
| | 741 |
| | 2,988 |
| | 4,582 |
| | 5,932 |
|
| Recoveries: | | | | | | | | | | |
| Commercial loans: | | | | | | | | | | |
| Technology | | (13 | ) | | (53 | ) | | (14 | ) | | (169 | ) | | (692 | ) |
| Life sciences | | (5 | ) | | — |
| | — |
| | (5 | ) | | — |
|
| SBA and USDA | | (14 | ) | | — |
| | — |
| | (14 | ) | | (150 | ) |
| Total commercial loans | | (32 | ) | | (53 | ) | | (14 | ) | | (188 | ) | | (842 | ) |
| Real estate loans: | | | | | | | | | | |
| SBA and USDA | | (217 | ) | | — |
| | — |
| | (217 | ) | | — |
|
| Total real estate loans | | (217 | ) | | — |
| | — |
| | (217 | ) | | — |
|
| Credit cards | | — |
| | — |
| | — |
| | — |
| | — |
|
| Total recoveries | | (249 | ) | | (53 | ) | | (14 | ) | | (405 | ) | | (842 | ) |
| Net charge offs | | $ | 1,240 |
| | $ | 688 |
| | $ | 2,974 |
| | $ | 4,177 |
| | $ | 5,090 |
|
| Allowance at end of period | | $ | 22,816 |
| | $ | 21,556 |
| | $ | 18,093 |
| | $ | 22,816 |
| | $ | 18,093 |
|
| | | | | | | | | | | |
| Total nonaccrual loans | | $ | 11,799 |
| | $ | 12,280 |
| | $ | 13,445 |
| | $ | 11,799 |
| | $ | 13,445 |
|
| | | | | | | | | | | |
| Credit Quality Ratios: | | | | | | | | | | |
| Allowance for loan losses as a percent of total loans | | 1.79 | % | | 1.87 | % | | 1.78 | % | | 1.79 | % | | 1.78 | % |
| Allowance for loan losses as a percent of nonperforming loans | | 193.38 |
| | 175.54 |
| | 134.56 |
| | 193.38 |
| | 134.56 |
|
| Net charge-offs to average outstanding loans (annualized) | | 0.40 |
| | 0.25 |
| | 1.25 |
| | 0.49 |
| | 0.78 |
|
| Nonperforming loans as a percent of total loans | | 0.93 |
| | 1.07 |
| | 1.32 |
| | 0.93 |
| | 1.32 |
|
| Nonperforming assets as a percent of total assets | | 0.39 |
| | 0.45 |
| | 0.63 |
| | 0.39 |
| | 0.63 |
|
SQUARE 1 FINANCIAL, INC.
Non-GAAP Financial Measures
The information set forth in this release contains certain financial information determined by methods other than in accordance with GAAP. Generally, a non-GAAP financial measure is a numerical measure of financial performance, financial position or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP. These non-GAAP financial measures for us are “efficiency ratio,” “tangible common equity to tangible assets,” “net operating income,” "net interest income," and "core banking noninterest income." Although we believe these non-GAAP financial measures provide a greater understanding of our business, these measures are not necessarily comparable to similar measures that may be presented by other companies. The non-GAAP financial measures should be viewed as a supplement to, and not a substitute for, financial measures presented in accordance with GAAP.
The information provided below reconciles each non-GAAP measure to its most comparable GAAP measure.
|
| | | | | | | | | | | | |
| (Dollars in thousands) | | Three Months Ended |
| | | September 30,
2014 | | June 30,
2014 | | September 30,
2013 |
| Efficiency Ratio | | | | | | |
| Noninterest expense (GAAP) | | $ | 16,835 |
| | $ | 16,600 |
| | $ | 13,659 |
|
| Net interest taxable equivalent income | | 27,867 |
| | 25,863 |
| | 20,577 |
|
| Noninterest taxable equivalent income | | 5,709 |
| | 6,543 |
| | 6,889 |
|
| Less: (loss) gain on sale of securities and impairment | | (235 | ) | | 38 |
| | 65 |
|
| Adjusted operating revenue | | $ | 33,811 |
| | $ | 32,368 |
| | $ | 27,401 |
|
| Efficiency ratio | | 49.79 | % | | 51.29 | % | | 49.85 | % |
| Tangible Common Equity/Tangible Assets | | | | | | |
| Total equity | | $ | 294,202 |
| | $ | 283,696 |
| | $ | 182,413 |
|
| Less: preferred stock | | — |
| | — |
| | 4,950 |
|
| Intangible assets(1) | | 495 |
| | 597 |
| | — |
|
| Tangible common equity | | $ | 293,707 |
| | $ | 283,099 |
| | $ | 177,463 |
|
| Total assets | | $ | 2,988,186 |
| | $ | 2,741,524 |
| | $ | 2,163,452 |
|
| Less: intangible assets(1) | | 495 |
| | 597 |
| | — |
|
| Tangible assets | | $ | 2,987,691 |
| | $ | 2,740,927 |
| | $ | 2,163,452 |
|
| Tangible common equity/tangible assets | | 9.83 | % | | 10.33 | % | | 8.20 | % |
| Net Operating Income | | | | | | |
| GAAP income before taxes | | $ | 13,005 |
| | $ | 11,498 |
| | $ | 9,894 |
|
| Add: (loss) gain on sale of securities and impairment | | (235 | ) | | 38 |
| | 65 |
|
| Add: tax equivalent adjustment | | 1,237 |
| | 1,157 |
| | 1,063 |
|
| Non-GAAP net operating income before taxes | | $ | 14,477 |
| | $ | 12,617 |
| | $ | 10,892 |
|
| Net Interest Income | | | | | | |
| GAAP net interest income | | $ | 26,808 |
| | $ | 24,876 |
| | $ | 19,674 |
|
| Add: tax equivalent adjustment | | 1,059 |
| | 987 |
| | 903 |
|
| Non-GAAP net interest income (fully tax equivalent basis) | | $ | 27,867 |
| | $ | 25,863 |
| | $ | 20,577 |
|
| Core Banking Noninterest Income | | | | | | |
| GAAP noninterest income | | $ | 5,532 |
| | $ | 6,372 |
| | $ | 6,729 |
|
| Less: net (loss) gain on securities | | (235 | ) | | 38 |
| | 65 |
|
| Warrant income | | 721 |
| | 21 |
| | 899 |
|
| Gain on sale of loans | | 248 |
| | 249 |
| | 444 |
|
| Bank owned life insurance | | 330 |
| | 317 |
| | 298 |
|
| Other | | 137 |
| | 2,035 |
| | 1,607 |
|
| Non-GAAP core banking noninterest income | | $ | 4,331 |
| | $ | 3,712 |
| | $ | 3,416 |
|
| |
| (1) | Does not include a loan servicing asset of $1.3 million, $1.3 million and $1.2 million at September 30, 2014, June 30, 2014, and September 30, 2013, respectively. |
|
| | | | | | | | |
| (Dollars in thousands) | | Nine Months Ended |
| | | September 30,
2014 | | September 30,
2013 |
| Efficiency Ratio | | | | |
| Noninterest expense (GAAP) | | $ | 49,019 |
| | $ | 40,805 |
|
| Net interest taxable equivalent income | | 77,186 |
| | 56,235 |
|
| Noninterest taxable equivalent income | | 19,549 |
| | 18,755 |
|
| Add: (loss) gain on sale of securities and impairment | | (231 | ) | | 171 |
|
| Adjusted operating revenue | | $ | 96,966 |
| | $ | 74,819 |
|
| Efficiency ratio | | 50.55 | % | | 54.54 | % |
| Tangible Common Equity/Tangible Assets | | | | |
| Total equity | | $ | 294,202 |
| | $ | 182,413 |
|
| Less: preferred stock | | — |
| | 4,950 |
|
| Intangible assets(1) | | 495 |
| | — |
|
| Tangible common equity | | $ | 293,707 |
| | $ | 177,463 |
|
| Total assets | | $ | 2,988,186 |
| | $ | 2,163,452 |
|
| Less: intangible assets(1) | | 495 |
| | — |
|
| Tangible assets | | $ | 2,987,691 |
| | $ | 2,163,452 |
|
| Tangible common equity/tangible assets | | 9.83 | % | | 8.20 | % |
| Net Operating Income | | | | |
| GAAP income before taxes | | $ | 35,600 |
| | $ | 22,286 |
|
| Add: (loss) gain on sale of securities and impairment | | (231 | ) | | 171 |
|
| Add: tax equivalent adjustment | | 3,503 |
| | 2,558 |
|
| Non-GAAP net operating income before taxes | | $ | 39,334 |
| | $ | 24,673 |
|
| Net Interest Income | | | | |
| GAAP net interest income | | $ | 74,190 |
| | $ | 54,093 |
|
| Add: tax equivalent adjustment | | 2,996 |
| | 2,142 |
|
| Non-GAAP net interest income (fully tax equivalent basis) | | $ | 77,186 |
| | $ | 56,235 |
|
| Core Banking Noninterest Income | | | | |
| GAAP noninterest income | | $ | 19,044 |
| | $ | 18,340 |
|
| Less: net (loss) gain on securities | | (231 | ) | | 171 |
|
| Warrant income | | 2,937 |
| | 3,263 |
|
| Gain on sale of loans | | 750 |
| | 1,665 |
|
| Bank owned life insurance | | 936 |
| | 771 |
|
| Other | | 2,573 |
| | 2,739 |
|
| Non-GAAP core banking noninterest income | | $ | 12,079 |
| | $ | 9,731 |
|
| |
| (1) | Does not include a loan servicing asset of $1.3 million and $1.2 million at September 30, 2014 and September 30, 2013, respectively. |
