PERSONALIED RESPEC Partnership SSAINEN Annual Report.pdfbusiness loan and mortgage businesses, as...
Transcript of PERSONALIED RESPEC Partnership SSAINEN Annual Report.pdfbusiness loan and mortgage businesses, as...
2015 Annual Report
BUSINESS
Relation
ship
sVolunteerism
fellowshipAssociation
CITYCOOPERATION fo
rem
ost
FIRST
service
HELPFULC
OM
MU
NIT
Y
FUTU
RECh
arita
ble
NeighborsFRIENDS
VILLAGE
Foster
NURTURE
kins
hip
TRUST
Mainstreet
OPPORTUNITY
HONOR
Per
son
al B
ank
TO
GET
HER
UNITED
RESPECT
SUPPORT
gr
ow
LocalEX
PERI
ENCE
PE
OP
LE
connectionRESOURCE
PhilanthropicFoster
DEVELOP TOWN
thri
ve
Partnership
renown
CARIN
G
SERV
ICE
SUST
AIN
MEN
T
GR
OW
TH
Change
succ
ess
affiliation
SUPPORT
LocalVILLAGE
Partnership
Per
son
al B
ank RESPECTfellowship
FOR
EM
OS
T
FUTUREAsso
ciation
kinship
LOYA
L
truth
GR
OW
FELLOWSHIP
FELL
OW
SHIP
CITY
PE
RSO
NA
LIZ
ED
LOCAL
SUST
AIN
MEN
T
HONOR
serv
iceRESOURCEUN
ITED
Main
stre
et
NeighborsOPPORTUNITY
LOYAL
thri
ve
CA
RIN
G
relationshipNURTURE
One Bank | One Resource
Community Banking. Our Model for Growth.
2 3
BUSINESS
Relation
ship
sVolunteerism
fellowshipAssociation
CITYCOOPERATION fo
rem
ost
FIRST
service
HELPFUL
CO
MM
UN
ITY
FUTU
RECh
arita
ble
VILLAGE
Foster
kins
hip
TRUST
Mainstreet
HONOR
Per
son
al B
ank
TO
GET
HERRESPECT
SUPPORT
un
ited
Local
EXPE
RIEN
CE
PE
OP
LE
connectionRESOURCE
PhilanthropicFoster
DEVELOP TOWN
thri
ve
Partnership
renown
CARIN
G
SERV
ICE
SUST
AIN
MEN
T
GR
OW
TH
succ
ess
SUPPORT
Partnership
Per
son
al B
ank
RESPECTfellowship
FOR
EM
OS
T
FUTURE
Asso
ciation
kinship
LOYA
L
truth
FELL
OWSH
IPFE
LLO
WSH
IP
CITYP
ER
SON
AL
IZE
D
LOCAL
SUST
AIN
MEN
T
serv
ice
RESOURCE
Main
stre
et
NEI
GH
BO
RS
LOYAL
thri
ve
CA
RIN
G
NURTUREBUSINESS
LOYAL
TRUS
T
connect
Positioned for Growth
Amid the rapid change and ongoing consolidation within the banking industry, we believe that our proven community banking model — and our commitment to remaining independent — has positioned us for continued growth.
Nationwide, consolidation is reducing the number of institutions offering a true community banking experience — one that is anchored by local decision- making, personalized service, and hometown bankers who value customer relationships and are actively involved in the communities where they work and live. In Wisconsin, the number of true community banks and thrifts head- quartered in our state, is shrinking.
As a cornerstone of Southeast Wisconsin for more than 155 years, FBFC stands to benefit from this ongoing market disruption. Our stability, financial strength, deep community engagement and distinctive customer service creates an increasingly differentiated value proposition for existing and prospective customers. For instance, while we understand the importance of mobile and online banking, we also know that study after study affirms that customers — even tech-savvy Millennials — still want to bank where they can get financial advice and to
have the option of visiting a branch where they will be greeted with a familiar smile and friendly, knowledgeable service.
We continued to meet that need in 2015, thoughtfully expanding what is now a fourteen-branch network, with two new locations that create a more consistent and convenient presence along Wisconsin’s important I-43 corridor. We also added five loan production offices to effectively manage loan growth, while assuring our customers continue to receive unmatched levels of service throughout the entire loan cycle.
To that end, we believe our streamlined loan underwriting and approval process offers a clear competitive advantage. A fast and fair response to every loan application is top priority, and our flat and lean management structure assures that our executive team remains actively involved in the loan approval process. This approach is a win-win, as customers get a decision with the speed and efficiency that has made many of them enthusiastic advocates for FBFC, forging stronger relationships and fueling our referral pipeline. Meanwhile, we are able to make local, informed lending decisions based on deep knowledge of the customers, communities and neighborhoods we serve, which is essential to how we manage credit risk and maintain strong asset quality.
Growing with Purpose
The year featured nearly 16% revenue growth, driven primarily by strong mortgage and Small Business Administration (SBA) program lending, as well as organic customer and deposit growth as we expanded our geographic footprint and further enhanced our online, mobile and technology platforms.
Grounded by an unwavering focus on community banking, we continue to sharpen
our competitive edge with seasoned and knowledgeable employees providing our expanding customer base with integrated financial solutions and personalized service. Our continued success — underscored by our 2015 performance — reflects our commitment to create long-term value for our shareholders while strengthening relationships with the customers and communities we serve.
We continued our momentum in 2015, leveraging our unique strengths and community banking model to deliver record earnings for the second consecutive year and position First Bank Financial Centre (FBFC) to thrive in 2016 and beyond.
4 5
Glendale, Wisconsin
6 7
Assets2013
2014
2015
$810,332
$973,229
$871,350
On & Off Balance Sheet Loans2013
2014
2015
$1,066,368
$1,151,493
$1,267,291
We have also successfully deployed leading-edge online account-opening and loan application platforms, enabling businesses and consumers to bank when and where they want. In addition to giving customers the convenience they demand, technology is creating efficiencies that benefit the bank’s bottom line. Within the past 18 months, we have enhanced all of our customer-facing technology platforms, making it easier to do business with us and significantly reducing paper communications, while always maintaining and enhancing state- of-the-art security.
National SBA Lending Leader
SBA lending continues to be another key driver of our growth. We are honored to maintain our position as Wisconsin’s No. 1 Small Business Administration lender, placing us among the top 30 SBA lenders nationally. Within that top ranking is another key point of pride — we are Wisconsin’s leading lender of SBA loans to Veterans.
Our SBA platform — which we have honed over the course of several years — benefits FBFC in many ways. From a customer acquisition perspective, an SBA loan often serves as an entry point into our bank. From there, we focus on a seamless customer onboarding experience aimed at providing the service and support that gives that individual customer the best chance to
succeed. As a result, over time that initial SBA relationship often expands to having FBFC provide personal banking, wealth management, mortgage and other services.
From a balance sheet perspective, SBA lending also serves to strengthen our capital and liquidity. In terms of risk management, 75% of most SBA loans are guaranteed by the government. Meanwhile that 75% guaranteed portion is a liquid asset that can be sold on the secondary market, serving as a profitable source of non-interest income for the bank.
Our success in SBA lending follows years of investing resources and energy to develop and continually refine our SBA platform. We have also focused on assuring that our employees have the expertise and training to effectively guide our customers through what can be a complicated process. At a time in which growth in SBA lending nationally is drawing more banks into the mix, we believe our platform and deep knowledge of SBA lending is difficult to duplicate, and provides a clear competitive advantage.
Similarly, mortgage lending is playing a larger role in driving growth. The expertise of our mortgage lending team who are well-versed in recent regulatory changes, combined with efficient response times and our streamlined technology platform, creates a customer experience that is hard to match.
Record 2015 Performance
Our solid financial performance in 2015 strengthened FBFC’s ability to seize new opportunities and further grow momentum in what remains a challenging banking environment.
2015 marked our second straight year of achieving record earnings with consolidated net income of $6.0 million and topline revenues increasing 16.8%. Meanwhile, loan production totaled $397.6 million and total outstanding loans grew $70.0 million, or 11.4%, to $683.5 million. Also, in spite of the low-interest-rate environment, our net interest
margin held at 3.63% and FBFC grew net interest income by 8.2% to $28.8 million.
Earnings were also boosted by 47.6% growth in non-interest income, including but not limited to fees from our wealth management, business loan and mortgage businesses, as well as our SBA lending business, which increased gains on SBA loan sales by 64.9% and generated over a third of all non-interest income in 2015.
While we continued to aggressively pursue loan growth, we did not do so at the expense of quality. Underwriting discipline, and further reduction in legacy troubled
Financial Highlights (in thousands)
Earnings2013
2014
2015
$5,010
$6,048
$5,235
Capital2013
2014
2015 $71,139
$60,161
$66,162
#1 SBA LENDERIn Wisconsin
TOP 30 SBA LENDERNationally
Deposits2013
2014
2015
$656,209
$683,931
$732,489
BUSINESS
Relation
ship
s
fellowshipAssociation
CITYCOOPERATION fore
mo
st
FIRST
service
HELPFUL
CO
MM
UN
ITY
FUTU
RECh
arita
ble
NeighborsFRIENDS
VILLAGE
Foster
NURTURE
kins
hip
TRUST
Mainstreet
OPPORTUNITY
HONOR
Per
son
al B
ank
TO
GET
HER
UNITED
RESPECT
SUPPORT
un
ited
Local
EXPE
RIEN
CE
PE
OP
LE
connectionRESOURCE
PhilanthropicFoster
DEVELOP TOWN
thri
ve
Partnership
renown
CARIN
G
SERV
ICE
SUST
AIN
MEN
T
GR
OW
TH
Changesu
cces
saffiliation LocalVILLAGE
Partnership
Per
son
al B
ank
FOR
EM
OS
T
Asso
ciation
kinship
truth
GROW
FELL
OWSH
IPFE
LLO
WSH
IPCITY
PE
RSO
NA
LIZ
ED
SUST
AIN
MEN
T
HONOR
serv
ice
RESOURCE
Main
stre
et
NEI
GH
BO
RS
LOYAL
thri
ve
relationship
NURTUREBUSINESS
Mainstreet
LOYAL
8
downtowns. We have initiated redevelopment loan pools that target several downtowns within our footprint. Typically, we commit $150,000 to $250,000 that can be distributed as low-interest loans through economic development agencies or municipalities to help fund redevelopment projects aimed at putting urban commercial properties back on the tax rolls and housing locally owned retail stores and other small businesses. In Oconomowoc alone , this program has provided more than 20 small businesses with more than $500,000 in capital to start or grow their businesses.
The FBFC Culture
This community-minded focus is both a reflection and outgrowth of the culture that we have developed over many years. We are constantly amazed and inspired by the many stories of our employees who donated time or money for a worthy cause, or went the extra mile to help a customer resolve a problem. We take time to recognize our employees’ success and contributions and are proud to again have been named a Top Workplace by the Milwaukee Journal Sentinel.
Future Focused
The future, we believe, is very strong for FBFC, and our momentum continues as we move deeper into 2016.
We believe we have a unique opportunity to help shape that future because we can operate with a locally oriented, longer-term mindset than publicly-traded banks that are guided by reactionary quarter-to-quarter decisions. Our structure — and our unwavering commitment to remaining independent — allows our leadership to
make strategic long-range decisions aimed at creating long-term shareholder value while furthering our track record of delivering consistent returns and strong dividend yields.
Our management team and board of directors greatly appreciate the continuing support from our shareholders. We remain committed to executing our community banking model that promises that FBFC will grow with purpose while creating value for our customers, employees, communities and shareholders.
credits, enabled us to maintain very strong asset quality metrics. By the end of 2015, non-performing assets declined to just 0.69% of total assets, its lowest level since 2005 and down from 1.14% at the end of 2014.
Our capital and liquidity position remained strong through 2015, positioning us to support our growth strategy in 2016 and beyond. Loan growth was funded by ample access to liquidity, including a $48.5 million increase in deposits in 2015 (particularly lower-cost core deposits), increased use of repurchase agreements by customers (particularly municipalities), and utilization of a portion of FBFC’s Federal Home Loan Bank borrowing availability. Liquidity was also fortified by cash and investments increasing by 14.9% in 2015 to $222.6 million at December 31.
We also capitalized on a strategic opportunity to strengthen our balance sheet in 2015, completing a $12.0 million subordinated debt issue that bolstered and diversified our capital structure with no dilution to common stockholders.
In 2015, total stockholders’ equity increased to $71.1 million at year end, up from $66.2 million one year prior, while retained earnings grew to $63.8 million last year, from $58.8 million in 2014.
Committed to Community
We firmly believe that long-term success relies on active community engagement, and we aim to demonstrate that engagement in many ways. For instance, our growing brick-and-mortar presence doesn’t merely offer our customers a convenient and personalized banking experience. We think it also sends a concrete message — that we are committed to the communities we serve. Our branch managers typically become active and engaged participants in their communities, serving on boards, leading civic efforts, and often quarterbacking the charitable efforts that resulted in our employees devoting more than 10,000 volunteer hours in 2015 alone.
Our community commitment also extends to partnering with local economic and governmental leaders to revive our
Mark W. Mohr
President and CEO
Nate Zastrow
Executive Vice President and CFO
6 YEARS STRONG
ONE BANK | ONE FAMILY
9
GROWTH
COMMUNITYB A N K I N GOur Model for
10 11
Condensed Financial Statement
Assets 2013 2014 2015Cash and cash equivalents 58,593 14,327 16,713Investments 148,823 179,443 205,903Loans, net 542,628 613,518 683,509Premises and equipment 20,541 28,890 29,510Servicing Assets 9,921 10,520 12,167 Other Real Estate 7,524 3,114 3,216Other Assets 22,302 21,538 22,211 Total Assets 810,332 871,350 973,229
Liabilities & Capital 2013 2014 2015Deposits 656,209 683,931 732,489Borrowed Funds 85,679 111,931 149,227Subordinated debentures 6,186 6,186 17,972Other Liabilities 2,097 3,140 2,402Capital 60,161 66,162 71,139Total Liabilities & Capital 810,332 871,350 973,229
Income Statement 2013 2014 2015Interest income 29,441 31,180 33,724Interest expense (4,797) (4,600) (4,953)Net interest income 24,644 26,580 28,771Provision for loan losses (937) (405) (885)
Net interest income after provision for loan losses 23,707 26,175 27,886Non-interest income 10,882 8,796 12,986Non-interest expense (28,564) (28,464) (33,271)Income before income tax expense 6,025 6,507 7,601Income tax expense (1,015) (1,272) (1,553)
Net income 5,010 5,235 6,048Earnings per share $14.95 $15.62 $18.05 Selected Other Data: 2013 2014 2015Book Value Per Share $180 $197 $212Return on average assets 0.65% 0.64% 0.68%Return on average equity 8.37% 8.24% 8.75%Net interest margin 3.45% 3.66% 3.63%Non-performing assets to total assets 1.35% 1.14% 0.69%Allowance for loan losses as a percent of total loans 1.19% 1.08% 0.82%Leverage Ratio 8.55% 8.28% 8.03%Risk Based Capital Ratio 12.38% 11.78% 14.19%
Dear Shareholders,
It seems that nearly every day there is a news story about a local bank being acquired, or that two small area banks are merging. Against that landscape, I’m pleased to report that our commitment to being a locally-owned, true community bank continues to benefit our shareholders, employees and customers.
As your Board of Directors, we are proud of the accomplishments of the bank, and are pleased to share our story of success with friends and colleagues through- out our footprint.
But we’re not alone in promoting all the bank has achieved. Our President and CEO, Mark W. Mohr, was recently recognized by the Independent Community Bankers of America as their National Community Banker of the Year. Mark was chosen from over 400 nominees, and is the first banker from the state of Wisconsin to win this prestigious award.
The ICBA proudly featured Mark on the cover of their December 2015 issue, further elevating the profile of our bank.
Mark will be the first to tell you that he could not have won the award without the commitment and hard work of the bank’s nearly 300 employees. Last year, this dedicated team volunteered over 10,000 hours with nearly 400 local organizations. Coupled with our distinctive customer service and full suite of products and services, our bank continues to make a positive impact in the communities we serve.
We thank you for your commitment to our bank, so that we can continue to support local residents and businesses.
Robert W. SnyderChairman
Board of Directors
Executive Management
Mark W. Mohr President, Chief Executive Officer
Mark T. McCune Executive Vice President, Chief Lending Officer
Nate Zastrow Executive Vice President, Chief Financial Officer & Treasurer
Board of Directors (Listed left to right, Back row first)
Charles J. Folkman, Jr. Vice Chairman L.F. George, Inc.
James P. Siepmann Siepmann Realty Corporation
Mark W. Mohr First Bank Financial Centre
Mark T. McCune First Bank Financial Centre
Craig S. Schiefelbein Observation Tower LLC
Larry Tomsyck Ernst & Young LLC (retired)
Monica Stern Village of Grafton
Robert W. Snyder Board Chairman Snyder and Ek, S.C.
Maureen Stapleton Stapleton Realty and Appraisal
Peter G. Roehl Roehl Corporation
BUSINESS
Relation
ship
sVolunteerism
fellowshipAssociation
CITYCOOPERATION fo
rem
ost
FIRST
service
HELPFULC
OM
MU
NIT
Y
FUTU
RECh
arita
ble
NeighborsFRIENDS
VILLAGE
Foster
NURTUREki
nshi
p
TRUST
Mainstreet
OPPORTUNITY
HONOR
Per
son
al B
ank
TO
GET
HER
UNITED
RESPECT
SUPPORT
un
ited
LocalEX
PERI
ENCE
PE
OP
LE
connectionRESOURCE
PhilanthropicFoster
DEVELOP TOWN
thri
ve
Partnership
renown
CARIN
G
SERV
ICE
SUST
AIN
MEN
T
GR
OW
TH
Change
succ
ess
affiliation
SUPPORT
LocalVILLAGE
Partnership
Per
son
al B
ank
RESPECTfellowship
FOR
EM
OS
T
FUTURE
Asso
ciation
kinship
LOYA
L
truth
GROW
FELL
OWSH
IPFE
LLO
WSH
IP
CITY
PE
RSO
NA
LIZ
ED
LOCAL
SUST
AIN
MEN
T
HONOR
serv
ice
RESOURCE
Main
stre
et
NEI
GH
BO
RS
LOYAL
thri
ve
CA
RIN
G
relationship
NURTUREBUSINESS
Mainstreet
LOYAL
TRUS
T
connect
MEMBER FDIC NMLS #: 410817
Branch LocationsBrookfield 18815 W. Capitol Dr. (262) 957-3535 12600 W. North Ave. (888) 569-9909 GermantownN112 W17100 Mequon Rd. (262) 250-3800
Glendale5555 N. Port Washington Rd. (262) 290-3222
Grafton2300 Washington St. (262) 377-2300
Hartford940 Bell Ave. (262) 673-0920
Hartland800 Cardinal Ln. (262) 369-9900
Menomonee Falls N56 W14044 Silver Spring Dr. (262) 252-1302
Mequon11715 N. Port Washington Rd.(262) 518-5100
Milwaukee400 E. Wisconsin Ave. (414) 290-2800
Oconomowoc155 W. Wisconsin Ave. (262) 569-9900 (888) 569-9909 W359 N5900 Brown St. (262) 569-3055 1300 Summit Ave. (262) 567-3300
West Bend1811 W. Washington St. (262) 338-9900
Lobby and drive-thru hours available anytime at FBFCWI.com24-hour telephone banking: (888) 569-5066
West Bend
Brookfield
Milwaukee
Hartford Grafton
MequonGermantown
MenomoneeFalls
Hartland
181100
32
145 190
57
181
167
175
145
164
83
60
83
16
59
60
143
18
18
45
41
41
41 45
67
794
Oconomowoc Glendale