EX-99.1 2 d761181dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

722 Columbia Avenue

Franklin, Tennessee 37064

For Immediate Release

Contact: Aimee Punessen, (615) 236-8329

aimee.punessen@franklinsynergy.com

Franklin Financial Network Reports Continued Growth in Second Quarter 2014

Loans up 44.5% over second quarter 2013

Franklin, Tenn., July 22, 2014 – Franklin Financial Network, Inc., (OTCPK:FRFN) the parent company of Franklin Synergy Bank, today reported unaudited consolidated net income of $2.0 million, or $0.41 basic earnings per common share, for the second quarter of 2014, a 66.7 percent increase when compared with net income of $1.2 million, or $0.32 basic earnings per common share, for the second quarter of 2013. For the six months ended June 30, 2014, consolidated net income was $3.6 million, or $0.72 basic earnings per common share, an increase of 71.4 percent over $2.1 million, or $0.57 basic earnings per common share, for the same period in 2013.

Diluted earnings per share for the second quarter were $0.40, compared to $0.31 for the same period in 2013. For the six months ended June 30, 2014 diluted earnings per share were $0.70, compared to $0.56 for the first six months of 2013.

Financial results for MidSouth Bank, acquired by Franklin Synergy Bank on July 1, 2014 are not included in second quarter results.

“The second quarter was another strong quarter of strategic execution for our bank. We remain on target for soundness, profitability and growth,” noted Richard Herrington, Franklin Financial Network president. “The growth in net income was even more impressive considering that second quarter earnings were impacted by non-recurring costs related to the bank’s recently completed acquisition of MidSouth Bank in Rutherford County. This is our twenty-second consecutive profitable quarter at Franklin Synergy Bank, and our results demonstrate that the core earnings of our bank continue to grow.”


Highlights of Franklin Financial Network’s Performance

Balance Sheet Growth and Soundness

 

    Loans at June 30, 2014 totaled $501.7 million, an increase of $154.6 million from June 30, 2013, for a year-over-year growth rate of 44.5 percent. Loan growth improved in the second quarter to $38.6 million compared with $31.1 million growth in the first quarter of 2014. Residential construction loans accounted for the majority of the loan growth, although small business lending picked up significantly during the quarter.

 

    Deposits grew to $747.3 million versus $535.5 million at June 30, 2013, an annualized growth rate of 39.6 percent. Since December 31, 2013, total deposits have grown $66.0 million, or 9.7 percent.

 

    Assets at June 30, 2014 totaled $872.1 million, compared to $618.6 million at June 30, 2013, an annual growth rate of 41.0 percent. Results were driven by growth in the loan portfolio and the investment portfolio. Assets at March 31, 2014 totaled $866.4 million.

 

    Over the past 12 months, the company’s non-performing assets have significantly improved and compose only 0.3 percent of total assets at June 30, 2014. Nonaccrual loans were $1.4 million at June 30, 2014, compared with nonaccrual loans of $2.7 million at June 30, 2013, a decrease of 48.1%, and foreclosed real estate was reduced from $1.9 million at June 30, 2013 to $1.2 million at June 30, 2014, a decrease of 36.8%.

Profitability

 

    Net Interest income increased to $7.3 million for the quarter ended June 30, 2014, up from $4.9 million, or 49.0 percent, from the same period in 2013. Net interest income for the six months ended June 30, 2014 was $14.4 million, which is a 54.8 percent increase when compared with the same period in 2013. The company’s continued strong loan growth was the primary factor driving the increase in net interest income.

 

    Noninterest income for the quarter ended June 30, 2014, was $2.4 million compared to $2.1 million for the quarter ended June 30, 2013, representing a 14.3 percent increase. Noninterest income was $3.9 million for the six months ended June 30, 2014, matching noninterest income of $3.9 million for the same period in 2013. The improvement in noninterest income during the second quarter of 2014 is attributed to growth in mortgage banking income.

 

2


    Noninterest expense for the quarter ended June 30, 2014 was $6.1 million, a 25.3 percent increase over noninterest expense of $4.9 million from the second quarter of 2013. For the six months ended June 30, 2014 noninterest expense was $11.6 million, which is an increase of 2.2 million, or 23.4 percent, when compared with the same period in 2013. The increase in noninterest expense was attributed to the company’s facilities expansion during the second quarter, the addition of key personnel needed to support and sustain the company’s growth, and professional fees and other non-recurring costs associated with the acquisition of MidSouth Bank.

 

    Provision for loan and lease losses for the quarter ended June 30, 2014 was $440 thousand versus $182 thousand for the quarter ended June 30, 2013, and $385 thousand for the first quarter of 2014. Significant loan growth during the second quarter, with $38.6 million in loans added, drove the increase in provision for loan and lease losses during 2014.

“Franklin Synergy’s total revenues reached an historic high in the second quarter, as we continued to build on our successful first quarter results,” Herrington said. “We continue to find growth opportunities in our markets as we expand our banking team, adding the best banking and investment professionals in the market.”

 

Founded in November 2007, Franklin Synergy Bank currently has six offices in Williamson County and five offices in Rutherford County. The bank provides deposit and loan products, treasury management and financial planning services for consumers and businesses. Franklin Synergy earned its first profit in 2009, after just five quarters of operation. The bank’s assets surpassed $750 million in November 2013. Deposits surpassed $750 million in February 2014. In July 2014, Franklin Synergy Bank acquired Rutherford County’s MidSouth Bank.

Recent FDIC deposit share of market data shows that Franklin Synergy Bank has grown to the third largest bank doing business in Williamson County. The bank is the top market share bank in Franklin.

Additional information about Franklin Synergy Bank is available at the bank’s website: www.franklinsynergybank.com.

This media release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements include, but are not limited to, projected sales, gross margin and net income figures, the availability of capital resources, and plans concerning products, market acceptance and the recent merger with MidSouth Bank. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and variations of such words and similar expressions are intended to identify such forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties, many of which can not be predicted with accuracy and some of which might not even be anticipated. Future events and actual results, financial and otherwise, could differ materially from those set forth in or contemplated by the forward-looking statements herein. Future operating results of the corporation are impossible to predict, and no representation or warranty of any kind can be made respecting the present or future accuracy of such forward-looking statements or the ability of the corporation to meet its obligations, and no such representation or warranty is to be inferred.

###

Franklin Financial Network, Inc.

 

3


FRANKLIN FINANCIAL NETWORK, INC.

CONSOLIDATED BALANCE SHEETS

(Dollar amounts in thousands, except share and per share data)

(Unaudited)

 

     June 30,     December 31,  
     2014     2013  

ASSETS

    

Cash and due from financial institutions

   $ 26,054      $ 18,217   

Securities available for sale

     263,971        268,515   

Securities held to maturity (fair value 2014—$58,006 and 2013—$54,004)

     58,636        56,575   

Loans held for sale

     16,075        10,694   

Loans

     485,589        421,304   

Allowance for loan losses

     (5,771     (4,900
  

 

 

   

 

 

 

Net loans

     479,818        416,404   
  

 

 

   

 

 

 

Restricted equity securities, at cost

     3,777        3,032   

Premises and equipment, net

     5,817        4,138   

Accrued interest receivable

     2,499        2,396   

Bank owned life insurance

     8,352        8,232   

Deferred tax asset

     1,029        3,995   

Foreclosed assets

     1,150        181   

Servicing rights, net

     2,746        2,640   

Mortgage banking derivative asset

     530        464   

Goodwill

     157        157   

Other assets

     1,531        734   
  

 

 

   

 

 

 

Total assets

   $ 872,142      $ 796,374   
  

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

    

Deposits

    

Non-interest bearing

   $ 69,969      $ 52,686   

Interest bearing

     677,355        628,614   
  

 

 

   

 

 

 

Total deposits

     747,324        681,300   

Federal funds purchased and repurchase agreements

     15,852        24,291   

Federal Home Loan Bank advances

     33,000        23,000   

Accrued interest payable

     374        222   

Mortgage banking derivative liability

     136        —     

Other liabilities

     1,257        2,398   
  

 

 

   

 

 

 

Total liabilities

     797,943        731,211   

Shareholders’ equity

    

Senior non-cumulative preferred stock, no par value, $10,000 liquidation value: Series A, 1,000,000 shares authorized; 10,000 shares issued and outstanding at June 30, 2014 and December 31, 2013, respectively

     10,000        10,000   

Common stock, no par value; 10,000,000 shares authorized; 4,915,907 and 4,862,875 issued at June 30, 2014 and December 31 2013, respectively

     53,225        52,638   

Retained earnings

     10,572        7,058   

Accumulated other comprehensive income (loss)

     402        (4,533
  

 

 

   

 

 

 

Total shareholders’ equity

     74,199        65,163   
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 872,142      $ 796,374   
  

 

 

   

 

 

 

 

4


FRANKLIN FINANCIAL NETWORK, INC.

CONSOLIDATED STATEMENTS OF INCOME

Three and Six Months Ended June, 30 2014 and 2013

(Dollar amounts in thousands, except share and per share data)

(Unaudited)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2014     2013     2014     2013  

Interest income and dividends

        

Loans, including fees

   $ 6,380      $ 4,747      $ 12,298      $ 9,248   

Securities:

        

Taxable

     2,234        1,007        4,537        1,847   

Tax-Exempt

     20        14        40        28   

Dividends on restricted equity securities

     51        30        91        61   

Federal funds sold and other

     14        9        32        28   
  

 

 

   

 

 

   

 

 

   

 

 

 
     8,699        5,807        16,998        11,212   

Interest expense

        

Deposits

     1,214        894        2,362        1,859   

Federal funds purchased and repurchase agreements

     57        36        84        43   

Federal Home Loan Bank advances

     80        19        109        38   
  

 

 

   

 

 

   

 

 

   

 

 

 
     1,351        949        2,555        1,940   

Net interest income

     7,348        4,858        14,443        9,272   

Provision for loan losses

     440        182        825        232   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net interest income after provision for loan losses

     6,908        4,676        13,618        9,040   

Noninterest income

        

Service charges on deposit accounts

     12        14        24        27   

Other service charges and fees

     313        301        549        592   

Net gains on sale of loans

     1,567        1,493        2,351        2,897   

Loan servicing fees, net

     88        (127     100        (297

Gain on sale of securities

     63        28        71        78   

Net gain (loss) on sale of foreclosed assets

     (2     (31     31        (221

Other

     389        418        725        789   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total noninterest income

     2,430        2,096        3,851        3,865   

Noninterest expense

        

Salaries and employee benefits

     3,805        3,282        7,350        6,487   

Occupancy and equipment

     1,009        668        1,795        1,324   

FDIC assessment expense

     120        93        239        153   

Marketing

     135        71        246        123   

Professional fees

     279        156        633        243   

Other

     730        582        1,307        1,107   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total noninterest expense

     6,078        4,852        11,570        9,437   

Income before income tax expense

     3,260        1,920        5,899        3,468   

Income tax expense

     1,225        737        2,335        1,320   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 2,035      $ 1,183      $ 3,564      $ 2,148   

Dividends paid on Series A preferred stock

     (25     (25     (50     (58
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income available to common shareholders

   $ 2,010      $ 1,158      $ 3,514      $ 2,090   
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share:

        

Basic

   $ 0.41      $ 0.32      $ 0.72      $ 0.57   

Diluted

     0.40        0.31        0.70        0.56   

 

5