INVESTOR RELATIONS
Third Quarter Report
November 7, 2011
Dear Shareholders,
We are pleased to announce another excellent quarter in performance for your bank. Not only did we achieve another record quarter in net income, we were also recognized as a Five Star rated bank by Bauer Financial Inc., the nation’s leading independent bank rating company.
The 5 Star Rating by Bauer Financial is the highest possible rating and is higher than any rating achieved by any other commercial bank in the Owensboro and Evansville market and is equal to the highest rating achieved in the Bowling Green and Lexington, KY markets. (See enclosed insert)
We are proud to announce once again a record quarter in net income. This represents the 9th consecutive quarter of year over year increases in quarterly net income. Net income for the third quarter of 2011 was $657,000 as compared to $398,000 during the same prior year period, a 65% increase. Net income for the year was $1.7 million, up nearly $700,000 or 66 % from one year ago. Net income is also up over the second quarter of 2011, which was $572,000, an increase of $85,000 or 15%.
The Company’s nonperforming loans have remained well below peer, ending the quarter at 0.82% of loans, a testament to our unwavering commitment to good credit quality.
Our dedicated associates continue to work tirelessly to attract and service our many great customers. Their efforts helped lead to a more than 6% increase in loans outstanding and over 14% increase in total retail deposits over last year. These are remarkable results as many other banks have continued to be challenged with retaining their loan and deposit customers.
We are happy to announce a dividend of 14 cents per share payable to shareholders of record as of October 26, 2011. This is the 33rd successive quarter of dividends and the 7th consecutive year of dividend increases. Your dividend check is enclosed or has been direct deposited into your account.
Highlights of the third quarter of 2011, which reflect the change as compared to the same period in 2010, follow:
- Basic earnings per share increased 60%
- Net Interest Income increased 18%
- Efficiency Ratio improved 9.5% to 69.3%
- Return on assets increased 39% to 0.71%
- Return on equity increased 45% to 11.65%
- Book value per share is at $30.06 per share, up 9%
We are pleased to report that your Company recently completed a very successful capital raising campaign. Over the last year we have raised approximately $13.5 million in common stock and convertible subordinated debentures. This capital enabled the Company to enter the Bowling Green/Franklin, Kentucky markets and grow the Evansville and Owensboro markets as well as the Lexington market. While this capital effort is complete, our strong growth as well as many new opportunities to expand may lead to the need for additional capital in the future.
While not immune to credit losses, we have continued to perform better than the majority of banks in our peer group. Our nonperforming loans to total loans of 0.82% at September 2011 were well below our peer. Our allowance for loan losses, coupled with the loan discount, equals $3.6 million, representing approximately 1.27% of total loans. The Company believes it has provided sufficient reserves to cover its expected losses.
First Security is nearly complete with its renovation of its soon to be 9th banking center which is located in Lexington, KY, the second largest city in Kentucky. Located at 2352 Sir Barton Way in what is more commonly referred to as the Hamburg Place area, we expect that a talented team of bankers will share and grow the First Security culture of community banking.
Attached is the third quarter 2011 Financial Report for First Security, Inc. While we are proud of our history, we are focused on building for our future. As always, please feel free to contact us should you have any questions, suggestions, or comments. We thank you for your continued support and welcome any opportunity to provide you with banking products and services to meet your needs.
Sincerely,
M. Lynn CooperJames "Tab" Quisenberry
President and CEOChairman of the Board
