We have begun the year with much excitement and enthusiasm about the investments in new office locations that were made in 2012 as well as our ability to attract investment dollars from new and existing shareholders.
Highlights of the quarter include:
5% Stock Dividend - All shareholders of record as of April 30, 2013 will receive 5% more shares. These additional shares will be mailed to each shareholder later this month.
Cash dividend - A dividend was declared of $.16 per share.
Capital - We have issued new shares totaling over $1 million through April 30, 2013. This tremendous response will help support the Company’s growth and we thank all those who elected to participate. For a limited time we still have stock available, offering shares to accredited investors or existing shareholders for purchase. We welcome your inquiry if you are interested in purchasing our Common Stock. For more information, please contact Mike Beckwith at
extension 4668.
Five Star Rating - We again received a 5 Star Rating by Bauer Financial, a nationally known, independent bank rating firm. This is the highest possible rating a bank can achieve and was one of only a handful in the Tri-State area.
As we have shared with you before, 2013 is a year in which we expect earnings to be negatively impacted by these new office investments. To that end, the Company recorded net income of $158,000 or $0.21 diluted earnings per share down from the first quarter of 2012. We expect 2013 financial results to continue to be impacted by our investments. During the 1st quarter the Bank has grown both loans and deposits at our new and existing banking centers. This growth will add to the Bank’s net income and help the Bank’s results in coming quarters.
Your Board of Directors declared a Common Stock dividend which is our 39th consecutive dividend. All shareholders of record as of April 24, 2013, the record date, will receive $0.16 per share. Your dividend check is enclosed with this letter or your dividend has been electronically posted to the account you have previously provided.
Our first quarter 2013 financial report for First Security is enclosed. Financial highlights for the 1st quarter are compared to the same period one year ago:
Assets at quarter end totaled $440 million which is an increase of11%
Loans - Loans increased 9%
Deposits - Deposits increased 10%
Stockholders’ Equity increased 7%
Book Value per Share increased 7%
Tangible Book Value per Share increased 9%
Net Interest Margin Margin declined 43 basis points from 3.84% to 3.41%
Net Income for the quarter was $158,000, down from $407,000
Diluted earnings per share was $0.21 versus $0.50
Net interest income declined slightly or 1%
Noninterest income increased 21%
Noninterest expense increased 16%
While the strong growth in loans, deposits and noninterest income came from both new and existing banking centers, the increase in noninterest expense was primarily driven by the addition of the Lexington, Newburgh and downtown Evansville branch offices opened in 2012. A brief summary of information on these new locations is enclosed for your review. A substantial impact to earnings was a 43 point decline in net interest margin, which has negatively impacted most banks nationwide. We plan to offset this decline in part with additional, high quality loans. The Company expects that each quarter of 2013 will reflect better results than the quarter before, absent any other investments or unanticipated events.
Maintaining strong credit quality will continue to be a focus. While not immune from credit losses, we have continued to perform better than our peer group with nonperforming assets to total assets at the end the quarter at 1.40%. The total amount set aside as reserves to cover losses within the Company’s loan portfolio totals $3.9 million, representing 1.24% of total loans. The Company believes it has recorded an adequate reserve, in the form of an allowance for loan losses and a discount on purchased loans.
We remain steadfast in our commitment to build a franchise of which each shareholder will reap the benefits for many years to come. We ask for your continued patience and support as we continue to build your Company. 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 T. "Tab" Quisenberry President and CEOChairman of the Board
