Second Quarter 2015

August 15, 2015



We welcome all new shareholders to First Security, especially those that are our employees. Over 70% of our total employees are shareholders of First Security. Employees have a dual interest in the success of the company, both in terms of employment and as an investment. We thank them and you for your investment and commitment to First Security.

We are excited to report we have continued the momentum gained during the first quarter in helping post record performance during the second quarter and first half of 2015. Our investment in growth over the past few years is paying dividends as your Company is on pace to surpass net income levels achieved in any year since the Company opened its doors in 1997.

Highlights of the quarter include:

  • Two New Records – We are pleased to report two new records in the history of our company— The strongest earnings for any second quarter and the strongest earnings for any first 6 months.
  • Cash Dividend - A dividend was declared of $.17 per share payable to shareholders of record August 15, 2015, our 48th consecutive dividend.
  • Earnings - Second quarter earnings were up $369,000 or 56% as compared to the second quarter of 2014. Year to date earnings for 2015 were up $821,000 or 78% as compared to the same period in 2014.

Our earnings results provided us with a few records to share with you. First, our year-to-date 2015 earnings reflect a record net income during the first six months of any year during our Company’s history. Additionally, our second quarter earnings in excess of $1 million provided a new record as well; it was the largest net income ever posted during the second quarter of any year during the Company’s history. Record net income of nearly $1.9 million during the first half of 2015 and over $1.0 million during the second quarter of 2015 was even more impressive as the Company opened a new location in Lexington during January of this year.

New locations typically take a while to return a profit. Existing operations not only grew their net income base in 2015 over 2014, but they also provided enough increased revenue to help the Company overcome the investment expense in our newest branch office location. Our second Lexington office, the Wellington Branch, opened in January of this year and already has exceeded its budgeted goals for loan and deposit growth as well as its earnings goal. A solid professional team in that location is providing the company good results. Additionally, all the other offices of the company are profitable.

We are very proud of the good deposit growth that has occurred during the first half of 2015 as non-interest bearing deposits are up 24% year over year. These zero cost deposits are not only our cheapest source of funds, but they also represent excellent core deposit customers which we have worked hard to attract. We have put forth initiatives to increase our deposit balances to augment our strong loan growth. We believe that these initiatives are important in growing a solid balance sheet that will help lead to even greater shareholder value.

Our second quarter 2015 financial report of First Security is enclosed. Financial highlights for the second quarter are compared to the prior year’s second quarter.

  • Assets at quarter end total $569 million, representing an increase of 13%
  • Loans increased 15%

  • Deposits increased 5%, Demand Deposits (non-interest bearing checking accounts) are up 24%

  • Tangible Book Value increased $1.19 to $22.27 per share, up 6%

  • Net Income increased $369,000 or 56%
  • Provision for Loan Losses increased $15,000 or 3%
  • Net Interest Income increased $632,000 or 16%
  • Net Interest Margin increased from 3.44% to 3.53%, an increase of 0.09 points
  • Non-Interest Income increased $91,000 up 9%

  • Non-Interest Expense increased $162,000 or 4%

  • Efficiency Ratio declined to 67.0% as compared to 76.4%. The lower the number, the better the performance. This ratio indicates how much expense occurred during the period for every $1 of revenue produced by the Company. This ratio has steadily declined as the Bank has grown its revenue from new locations.

  • Non-Performing Assets to total assets improved and were 0.61% at the end of June 2015, a decline of 0.27% from the prior year’s ratio of 0.87%.

  • Return on Assets improved from 0.53% to 0.72%

  • Basic Earnings-Per-Share were $0.43 as compared to $0.19, up 126%. Second quarter earnings per share in 2014 were negatively impacted by a large number of new shares issued during the first quarter of 2014.

We remain steadfast in our commitment to build a franchise in which each shareholder will reap the benefits. As always, please feel free to contact us should you have any questions, suggestions, or comments. We thank you for your investment in First Security.



M. Lynn Cooper                                                                                 James T. “Tab” Quisenberry

President and CEO                                                                            Chairman of the Board



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