Exhibit 99.1
FFBW, Inc. Announces March 31, 2019 Financial Results
Quarterly Earnings Increase 102%
Brookfield, WI, April 29, 2019 – 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 ended March 31, 2019. The March 31, 2019 results showed significant period-over-period earnings growth, continued strong asset quality, and solid loan portfolio growth. For the three months ended March 31, 2019, net income was $249,000, or $0.04 per share, compared with net income of $123,000, or $0.02 per share, for the same respective period last year.
“Earnings are in line with our expectations with nice increases in interest income as we grow our commercial loan portfolio ,” Edward H. Schaefer, President and CEO, commented. “We will continue to focus on growth of our core deposits with our expanded treasury management products and services as well as our broadened line of consumer deposit products as we deliver our community bank model to the markets we serve.”
First Quarter 2019 Highlights
• | Continued earnings growth. Quarterly earnings improved 102% to $249,000 in the first quarter of 2019 from $123,000 in the first quarter of 2018. |
• | Strong asset quality. Nonperforming assets decreased 38% to $775,000 at March 31, 2019 from $1.2 million as of March 31, 2018. Non-performing loans to total loans decreased to 0.35% at March 31, 2019 compared to 0.69% at March 31, 2018. |
• | Strong loan portfolio growth. Total loans have increased 12% since March 31, 2018, with a larger component of the portfolio in commercial development, commercial real estate, and commercial and industrial loans. |
Income Statement and Balance Sheet Overview
Total interest and dividend income increased $403,000, or 17.2%, to $2.8 million for the first quarter of 2019 compared to $2.4 million for the same quarter in the prior year. Average interest-earning assets increased $7.8 million, or 3.22%, to $248.2 million for the quarter ended March 31, 2019 compared to $240.4 million for the quarter ended March 31, 2018 and the weighted average yield on interest-earning assets increased 53 basis points for the same period.
Total interest expense increased $288,000, or 72.2%, to $687,000 for the quarter ended March 31, 2019 compared to $399,000 for the quarter ended March 31, 2018. Average interest-bearing liabilities increased $8.5 million, or 4.9%, to $181.9 million for the quarter ended March 31, 2019 from $173.3 for the quarter ended March 31, 2018. The rate paid on interest-bearing liabilities increased 59 basis points to 1.51% for the quarter ended March 31, 2019 compared to 0.92% for the quarter ended March 31, 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 3.33% for the three months ended March 31, 2019, compared to 3.24% for the three months ended March 31, 2018, an increase of nine basis points.
The loan loss provision was $70,000 for the quarter ended March 31, 2019 compared to $115,000 the quarter ended March 31, 2018. At March 31, 2019, our allowance for loan loss was $2.2 million, or 1.09%, of total loans. Management believes the allowance is adequate for future probable losses.
Noninterest income decreased $36,000, or 20.5% to $140,000 for the three months ended March 31, 2019 compared to $176,000 for the three months ended March 31, 2018. The decrease is due to lower service charges and fees as well as a small loss on the sale of securities compared to a small gain in the prior year quarter.
Noninterest expense decreased $25,000 to $1.8 million for the three months ended March 31, 2019 compared to $1.8 million for the three months ended March 31, 2018. This was primarily due to a decrease of $45,000, or 98%, in expenses related to foreclosed assets.
Total assets decreased $3.1 million to $259.6 million at March 31, 2019 from $262.7 million at December 31, 2018. This decrease was primarily due to the decrease in cash and cash equivalents of $2.0 million and in loans of $700,000.
Nonaccrual loans decreased to $706,000, or 0.35% of total loans, at March 31, 2019, from $720,000, or 0.36% of total loans, at December 31, 2018. Non-performing assets decreased to $775,000, or 0.30% of total assets, at March 31, 2019 compared to $789,000, or 0.30% of total assets, at December 31, 2018.
The following table presents the estimated regulatory capital ratios for the Company, the Bank, and the minimum requirements for the Bank at March 31, 2019.
At March 31, 2019 | Company | Bank | Minimum Requirement For Capital Adequacy Purposes | Minimum Requirement to Be Well Capitalized Under Prompt Corrective Action Provisions | ||||||||||||
Tier 1 leverage ratio | 22.9 | % | 18.7 | % | 4.0 | % | 5.0 | % | ||||||||
Common equity Tier 1 capital ratio | 29.4 | % | 23.9 | % | 4.5 | % | 6.5 | % | ||||||||
Tier 1 capital ratio | 29.4 | % | 23.9 | % | 6.0 | % | 8.0 | % | ||||||||
Total capital ratio | 30.5 | % | 25.0 | % | 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 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
March 31, 2019 (Unaudited) and December 31, 2018
(In thousands, except share data)
March 31, | December 31, | |||||||
Assets | 2019 | 2018 | ||||||
Cash and due from banks | $ | 2,135 | $ | 1,746 | ||||
Fed funds sold | 418 | 2,742 | ||||||
Cash and cash equivalents | 2,553 | 4,488 | ||||||
Available for sale securities, stated at fair value | 44,169 | 43,751 | ||||||
Loans held for sale | - | 679 | ||||||
Loans, net of allowance for loan and lease losses of $2,188 and $2,118, respectively | 198,090 | 198,694 | ||||||
Premises and equipment, net | 4,975 | 5,057 | ||||||
Foreclosed assets | 69 | 69 | ||||||
FHLB stock, at cost | 609 | 739 | ||||||
Accrued interest receivable | 856 | 768 | ||||||
Cash value of life insurance | 7,054 | 7,007 | ||||||
Other assets | 1,212 | 1,474 | ||||||
TOTAL ASSETS | $ | 259,587 | $ | 262,726 | ||||
Liabilities and Equity | ||||||||
Deposits | $ | 180,942 | $ | 183,205 | ||||
Advance payments by borrowers for taxes and insurance | 430 | 55 | ||||||
FHLB advances | 15,750 | 17,750 | ||||||
Accrued interest payable | 364 | 70 | ||||||
Other liabilities | 1,260 | 1,284 | ||||||
Total liabilities | $ | 198,746 | $ | 202,364 | ||||
Preferred stock ($0.01 par value, 1,000,000 authorized, no shares issued or outstanding as of March 31, 2019 and December 31, 2018, respectively) | $ | - | $ | - | ||||
Common stock ($0.01 par value, 19,000,000 authorized, 6,696,742 issued and outstanding as of March 31, 2019 and December 31, 2018, respectively) | 67 | 67 | ||||||
Additional paid in capital | 28,406 | 28,326 | ||||||
Unallocated common stock of Employee Stock Ownership Plan ("ESOP") (240,063 and 243,303 shares at March 31, 2019 and December 31, 2018, respectively) | (2,401 | ) | (2,433 | ) | ||||
Retained earnings | 35,244 | 34,995 | ||||||
Accumulated other comprehensive loss, net of income taxes | (156 | ) | (593 | ) | ||||
Less common stock repurchased, 29,436 and 0 shares at cost, at March 31, 2019 and December 31, 2018, respectively | (319 | ) | - | |||||
Total equity | $ | 60,841 | $ | 60,362 | ||||
TOTAL LIABILITIES AND EQUITY | $ | 259,587 | $ | 262,726 |
FFBW, Inc.
Statements of Income
Three Months Ended March 31, 2019 and 2018 (Unaudited)
(In thousands, except share data)
Three months ended March 31, | ||||||||
2019 | 2018 | |||||||
Interest and dividend income: | ||||||||
Loans, including fees | $ | 2,448 | $ | 1,968 | ||||
Securities | ||||||||
Taxable | 275 | 340 | ||||||
Tax-exempt | 2 | 23 | ||||||
Other | 25 | 16 | ||||||
Total interest and dividend income | 2,750 | 2,347 | ||||||
Interest expense: | ||||||||
Interest-bearing deposits | 599 | 346 | ||||||
Borrowed funds | 88 | 53 | ||||||
Total interest expense | 687 | 399 | ||||||
Net interest income | 2,063 | 1,948 | ||||||
Provision for loan losses | 70 | 115 | ||||||
Net interest income after provision for loan losses | 1,993 | 1,833 | ||||||
Noninterest income: | ||||||||
Service charges and other fees | 35 | 60 | ||||||
Net gain on sale of loans | 41 | 39 | ||||||
Net gain (loss) on sale of securities | (8 | ) | 8 | |||||
Increase in cash surrender value of insurance | 47 | 46 | ||||||
Other noninterest income | 25 | 23 | ||||||
Total noninterest income | 140 | 176 | ||||||
Noninterest expense: | ||||||||
Salaries and employee benefits | 1,097 | 1,057 | ||||||
Occupancy and equipment | 242 | 233 | ||||||
Data processing | 175 | 152 | ||||||
Technology | 78 | 55 | ||||||
Foreclosed assets, net | 1 | 46 | ||||||
Professional fees | 112 | 118 | ||||||
Other noninterest expense | 103 | 172 | ||||||
Total noninterest expense | 1,808 | 1,833 | ||||||
Income before income taxes | 325 | 176 | ||||||
Provision for income taxes | 76 | 53 | ||||||
Net income | $ | 249 | $ | 123 | ||||
Earnings per share | ||||||||
Basic | $ | 0.04 | $ | 0.02 | ||||
Diluted | $ | 0.04 | $ | 0.02 |
FFBW, Inc.
Statements of Income
(In thousands, except share data)
For the Quarter Ended | ||||||||||||||||||||
March 31, 2019 | December 31, 2018 | September 30, 2018 | June 30, 2018 | March 30, 2018 | ||||||||||||||||
Total interest and dividend income | $ | 2,750 | $ | 2,817 | $ | 2,738 | $ | 2,700 | $ | 2,347 | ||||||||||
Total interest expense | 687 | 645 | 607 | 458 | 399 | |||||||||||||||
Net interest income | 2,063 | 2,172 | 2,131 | 2,242 | 1,948 | |||||||||||||||
Provision for loan losses | 70 | 98 | 111 | 189 | 115 | |||||||||||||||
Net interest income after provision for loan losses | 1,993 | 2,074 | 2,020 | 2,053 | 1,833 | |||||||||||||||
Total noninterest income | 140 | 39 | 250 | 200 | 176 | |||||||||||||||
Total noninterest expense | 1,808 | 1,810 | 1,810 | 1,816 | 1,833 | |||||||||||||||
Income before income taxes | 325 | 303 | 460 | 437 | 176 | |||||||||||||||
Provision for income taxes | 76 | 70 | 111 | 84 | 53 | |||||||||||||||
Net income | $ | 249 | $ | 233 | $ | 349 | $ | 353 | $ | 123 | ||||||||||
Earnings per share | ||||||||||||||||||||
Basis | $ | 0.04 | $ | 0.04 | $ | 0.05 | $ | 0.06 | $ | 0.02 | ||||||||||
Diluted | $ | 0.04 | $ | 0.04 | $ | 0.05 | $ | 0.06 | $ | 0.02 |
FFBW, Inc.
Non-performing Assets
(In thousands)
March 31, 2019 and Three Months Then Ended | December 31, 2018 and Twelve Months Then Ended | December 31, 2017 and Twelve Months Then Ended | ||||||||||
Nonperforming assets: | ||||||||||||
Nonaccrual loans | $ | 706 | $ | 720 | $ | 1,243 | ||||||
Accruing loans past due 90 days or more | - | - | - | |||||||||
Total nonperforming loans ("NPLs") | 706 | 720 | 1,243 | |||||||||
Foreclosed assets | 69 | 69 | 619 | |||||||||
Total nonperforming assets ("NPAs") | $ | 775 | $ | 789 | $ | 1,862 | ||||||
Troubled Debt Restructurings ("TDRs") | $ | 1,264 | $ | 1,201 | $ | 1,630 | ||||||
Nonaccrual TDRs | $ | 687 | $ | 700 | $ | 969 | ||||||
Average outstanding loan balance | $ | 201,267 | $ | 189,233 | $ | 170,577 | ||||||
Loans, end of period | $ | 200,399 | $ | 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 | - | (172 | ) | (133 | ) | |||||||
Total loans charged off | - | (196 | ) | (133 | ) | |||||||
Recoveries of loans previously charged off: | ||||||||||||
Commercial | - | - | - | |||||||||
Residential real estate and consumer | - | 1 | 36 | |||||||||
Total recoveries of loans previous charged off | - | 1 | 36 | |||||||||
Net loans charged off ("NCOs'") | - | (195 | ) | (97 | ) | |||||||
Additions to ALLL via provision for loan losses charged to operations | 70 | 513 | 419 | |||||||||
ALLL, at end of period | $ | 2,188 | $ | 2,118 | $ | 1,800 | ||||||
Ratios: | ||||||||||||
ALLL to NCOs (annualized) | N/A | 1086.15 | % | 1855.67 | % | |||||||
NCOs (annualized) to average loans | 0.00 | % | 0.10 | % | 0.06 | % | ||||||
ALLL to total loans | 1.09 | % | 1.05 | % | 1.04 | % | ||||||
NPL to total loans | 0.35 | % | 0.36 | % | 0.72 | % | ||||||
NPAs to total assets | 0.30 | % | 0.30 | % | 0.73 | % | ||||||
Total Assets | $ | 259,587 | $ | 262,726 | $ | 256,481 |
FFBW, Inc.
Yield and Cost
For the Three Months Ended March 31, | ||||||||||||||||||||||||
2019 | 2018 | |||||||||||||||||||||||
Average Outstanding Balance | Interest | Yield/ Rate | Average Outstanding Balance | Interest | Yield/ Rate | |||||||||||||||||||
| (in thousands) |
| ||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||
Loans | $ | 201,267 | $ | 2,448 | 4.87 | % | $ | 174,591 | $ | 1,968 | 4.51 | % | ||||||||||||
Available for sale securities | 43,658 | 277 | 2.54 | % | 59,787 | 363 | 2.43 | % | ||||||||||||||||
Interest-bearing deposits | 2,595 | 16 | 2.47 | % | 5,526 | 12 | 0.87 | % | ||||||||||||||||
FHLB stock | 645 | 9 | 5.58 | % | 513 | 4 | 3.12 | % | ||||||||||||||||
Total interest-earning assets | 248,165 | 2,750 | 4.43 | % | 240,417 | 2,347 | 3.90 | % | ||||||||||||||||
Noninterest-earning assets | 16,233 | 16,904 | ||||||||||||||||||||||
Allowance for loan losses | (2,145 | ) | (1,810 | ) | ||||||||||||||||||||
Total assets | $ | 262,253 | $ | 255,511 | ||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||
Demand accounts | $ | 9,680 | 31 | 1.28 | % | $ | 4,230 | 3 | 0.28 | % | ||||||||||||||
Money market accounts | 41,202 | 111 | 1.08 | % | 53,621 | 82 | 0.61 | % | ||||||||||||||||
Savings accounts | 14,740 | 5 | 0.14 | % | 15,606 | 8 | 0.21 | % | ||||||||||||||||
Health savings accounts | 11,370 | 9 | 0.32 | % | 11,579 | 7 | 0.24 | % | ||||||||||||||||
Certificates of deposit | 88,272 | 443 | 2.01 | % | 75,550 | 246 | 1.30 | % | ||||||||||||||||
Total interest-bearing deposits | 165,264 | 599 | 1.45 | % | 160,586 | 346 | 0.86 | % | ||||||||||||||||
Borrowings | 16,596 | 88 | 2.12 | % | 12,750 | 53 | 1.66 | % | ||||||||||||||||
Total interest-bearing liabilities | 181,860 | 687 | 1.51 | % | 173,336 | 399 | 0.92 | % | ||||||||||||||||
Noninterest-bearing deposits | 17,716 | 21,788 | ||||||||||||||||||||||
Other non-interest bearing liabilities | 1,969 | 1,288 | ||||||||||||||||||||||
Total liabilities | 201,545 | 196,412 | ||||||||||||||||||||||
Equity | 60,708 | 59,099 | ||||||||||||||||||||||
Total liabilities and equity | $ | 262,253 | $ | 255,511 | ||||||||||||||||||||
Net interest income | 2,063 | 1,948 | ||||||||||||||||||||||
Net interest rate spread(1) | 2.92 | % | 2.98 | % | ||||||||||||||||||||
Net interest-earning assets(2) | 66,305 | 67,081 | ||||||||||||||||||||||
Net interest margin(3) | 3.33 | % | 3.24 | % | ||||||||||||||||||||
Average of interest-earning assets to interest-bearing liabilities | 136 | % | 139 | % |
(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. |