Second Quarter 2014

August 15, 2014



We are very excited to update you on your Company’s second quarter performance.  As we shared with you in our first quarter 2014 shareholder letter, prior investments in people and facilities are helping to bolster the Company’s growth and net income.

We exceeded one half billion dollars in assets and set record earnings for the first six months of this year. Our loans increased over 16% compared to prior year, when many financial institutions are having difficulty maintaining their loan balances.  Our loan growth can be attributed to organic growth or growth generated by our loan officers in the markets we serve.

Highlights of the quarter include:

  • Asset size - The bank holding company assets exceeded one half billion for the first time.  A celebratory milestone in the history of your company.
  • Earnings - Second quarter earnings were up $263,000 or 67% as compared to the second quarter of 2013 and were up $252,000 or 63% over the most recent prior quarter.  This is the second highest quarterly earnings in our company’s history when comparing to historical core earnings excluding any gains on the sale of securities or other one-time events.   On a year to date basis, the Company recorded net income of $1.1 million during the first six months of 2014 as compared to $549,000 during the same year to date period in 2013, a 92% increase.  This is the highest first 6 months earnings on record for the company. Net income for the first six months of 2014 was almost equal to net income recorded for all of 2013.

  • Cash Dividend - A dividend was declared in the amount of $.16 per share, our 44th consecutive dividend. The dividend is payable to shareholders of record August 15, 2014.  Your dividend check is enclosed or has been electronically posted to your account.  As we shared with you earlier this year, stock trading activity for First Security (symbol FIIT) can be accessed at www.otcmarkets.com.

  • Asset Quality – Nonperforming assets to total assets were 0.87% as of the end of the second quarter of 2014 compared to 1.27% as of the end of the second quarter of 2013, a 31% improvement.  The Company remains proud of its strong credit quality, better than many of its peers.  During this same year over year period our allowance for loan losses has grown to 1.05% of loans, up over 8% from a year ago, recognizing that along with our strong loan growth, adequate reserves are necessary when building a strong bank.

  • Expansion – The Company is actively pursuing many opportunities to help further grow shareholder value.  These opportunities may result in an expansion within our existing footprint or in newer markets.  We also continue to look for ways to deliver more and better products and services to our client base.
  • Consolidation -  We consolidated two facilities into one in the Bowling Green market and at the same time are considering a new branch facility in Bowling Green to potentially further consolidate smaller facilities.

Our second quarter 2014 financial report of First Security is enclosed.  Financial highlights below reflect second quarter results as compared to the first quarter of 2014 as well as our financial results for the first six months of 2014 as compared to the first six months of 2013:

                                                Compared to Prior Quarter                         Compared to First Six Months, 2013

Loans                                    Up $17 million or 5%                                       Up $54 million or 16%

Deposits                              Down $2.3 million or 1%                                Up $23 million or 6%

Stockholders’ Equity      Up $800 thousand or 1%                               Up $30 million or 121%

Net Income                        Up $252 thousand or 63%                             Up $507 thousand or 92%

Non-Interest Income     Up $252 thousand or 31%                             Up $161 thousand or 9%

Non-Interest Expense   Up $71 thousand or 2%                                 Up $224 thousand or 3%

Net Interest Income       Up $218 thousand or 6%                               Up $964 thousand or 14%

Other areas of note include improvement to net interest margin, return on assets, and non-interest income.

It is important to state that basic earnings per share for the first six months of 2014 were $0.68 per share as compared to $0.70 per share for the same period in 2013.  While this represents a slight decline, the new capital raised, which significantly increased our outstanding shares during the first quarter of 2014, provides the Company with the ability to seek out expansion opportunities and further enhance shareholder value.  Absent this capital, the Company would be unable to continue to invest and grow to build the long term shareholder value consistent with our strategic plan.  We do anticipate further growth in net income, which will ultimately help grow earnings per share and we appreciate your patience as we execute our strategic plan.


We remain resolute in our commitment to build a franchise of which each shareholder will reap the benefits for many years to come. As always, please feel free to contact us should you have any questions, suggestions, or comments.  We thank you for your investment and welcome any opportunity to provide you with banking products and services to meet your needs.



M. Lynn Cooper                                                                                 James T. “Tab” Quisenberry

President and CEO                                                                            Chairman of the Board



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