Press Release

FFBW, Inc. Announces June 30, 2019 Financial Results

Quarterly Earnings Continue Double-Digit Growth

Company Release - 7/25/2019 9:23 AM ET

BROOKFIELD, Wis., July 25, 2019 (GLOBE NEWSWIRE) -- FFBW, Inc. (Nasdaq: FFBW) (the “Company”), the parent company of First Federal Bank of Wisconsin (the “Bank”), a federally chartered stock savings bank offering full-service commercial banking, retail banking and residential lending, today announced unaudited financial results for the three and six months ended June 30, 2019.  The June 30, 2019 results showed significant period-over-period earnings growth, continued strong asset quality, and continued loan portfolio realignment in accordance with strategy.  For the quarter ended June 30, 2019, net income was $388,000, or $0.06 per share, compared with net income of $353,000, or $0.06 per share, for the same respective period last year.

“Core earnings continue to improve nicely as we further develop our community bank model serving the commercial and consumer banking needs, as well as the residential lending needs of our customers,” stated Edward H. Schaefer, President and CEO of First Federal Bank of Wisconsin.

Second Quarter 2019 Highlights

  • Continued earnings growth. Quarterly earnings improved 10% to $388,000 in the second quarter of 2019 from $353,000 in the second quarter of 2018. Excluding prior year one-time adjustments (1), quarterly earnings improved more than 55% while year-to-date earnings grew 70%.
     
  • Continued strong asset quality. Nonperforming assets increased slightly to $1.1 million at June 30, 2019 from $968,000 as of June 30, 2018. Although the nonperforming assets increased slightly, all but one loan is contractually current on payments.
     
  • Continued balance sheet realignment. Although total loans balances remain steady at June 30, 2019 compared to June 30, 2018, the composition of the portfolio is further diversifying as the Company is executing its strategy as a community bank concentrating on commercial and consumer banking in addition to residential lending. Commercial loans increased $18.2 million, or 23%, while residential real estate and consumer loans decreased by $17.8 million, or 15%, resulting in a shift from 40% commercial loans to 49% of the loan portfolio in the last twelve months.

Income Statement and Balance Sheet Overview

Total interest and dividend income increased $110,000, or 4.1%, to $2.8 million for the second quarter of 2019 compared to $2.7 million for the same quarter in the prior year. Excluding prior year one-time adjustments (1), total interest and dividend income increased $227,000, or 8.4%. Average interest-earning assets decreased $207,000, or 0.08%, to $245.9 million for the quarter ended June 30, 2019 compared to $246.1 million for the quarter ended June 30, 2018, and the weighted average yield on interest-earning assets increased 18 basis points for the same period. Excluding the prior year one-time adjustments (1), the weighted average yield increased 37 basis points quarter to quarter.

Total interest expense increased $266,000, or 58.1%, to $724,000 for the quarter ended June 30, 2019 compared to $458,000 for the quarter ended June 30, 2018.  Average interest-bearing liabilities decreased $1.5 million, or 0.8%, to $177.6 million for the quarter ended June 30, 2019 from $179.1 million for the quarter ended June 30, 2018. The rate paid on interest-bearing liabilities increased 61 basis points to 1.63% for the quarter ended June 30, 2019 compared to 1.02% for the quarter ended June 30, 2018. The increase in average cost of funds was primarily the result of rising interest rates and competition within our market.

Net interest margin was 3.38% for the three months ended June 30, 2019, compared to the adjusted 3.41% for the three months ended June 30, 2018, a decrease of three basis points after backing out the nonaccrual interest in the prior year period(1).

The loan loss provision was $85,000 for the quarter ended June 30, 2019 compared to $189,000 the quarter ended June 30, 2018.  At June 30, 2019, our allowance for loan loss was $2.3 million, or 1.15%, of total loans. Management believes the allowance is adequate for future probable losses.

Noninterest income increased $110,000, or 68.3% to $271,000 for the three months ended June 30, 2019 compared to $161,000 for the three months ended June 30, 2018.  The increase was due primarily to increased gains from sales of loans to the secondary market.

Noninterest expense decreased $19,000 to $1.8 million for the three months ended June 30, 2019 compared to $1.8 million for the three months ended June 30, 2018.  This was primarily due to a decrease of $108,000, or 9.5%, in salaries and employee benefits due to staffing efficiencies and vacancies, partially offset by increases in technology and professional fees.

Total assets decreased $7.6 million to $258.3 million at June 30, 2019 from $265.9 million at June 30, 2018.  This decrease was primarily due to the decrease in available for sale securities of $11.7 million, partially offset by increases in cash and cash equivalents of $3.0 million and in loans held for sale of $2.0 million.

Nonaccrual loans increased to $1.1 million, or 0.57% of total loans, at June 30, 2019, from $968,000, or 0.50% of total loans, at June 30, 2018. All but one nonaccrual loan is contractually current. Non-performing assets increased to $1.2 million, or 0.46% of total assets, at June 30, 2019 compared to $968,000, or 0.36% of total assets, at June 30, 2018.

The following table presents the estimated regulatory capital ratios for the Company, the Bank, and the minimum requirements for the Bank at June 30, 2019.

At June 30, 2019CompanyBankMinimum
Requirement For
Capital Adequacy
Purposes
Minimum Requirement to
Be Well Capitalized
Under Prompt Corrective
Action Provisions
Tier 1 leverage ratio23.2%19.0%4.0%5.0%
Common equity Tier 1 capital ratio29.8%24.5%4.5%6.5%
Tier 1 capital ratio29.8%24.5%6.0%8.0%
Total capital ratio31.0%25.6%8.0%10.0%

(1) In the second quarter of 2018, the Company received $136,000 of additional interest from loans that had paid off that were previously on nonaccrual status, increasing the weighted yield for the quarter by 29 basis points.

About the Company

FFBW, Inc. is the holding company for First Federal Bank of Wisconsin, a wholly owned subsidiary. The Company’s stock trades on the NASDAQ Capital Market under the symbol “FFBW.”  First Federal Bank of Wisconsin is a full-service federally chartered stock savings bank based in Waukesha, Wisconsin, servicing customers in Waukesha and Milwaukee Counties in Wisconsin through four branch locations.

Cautionary Statement Regarding Forward-Looking Statements

This release contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,” “seek,” “expect” and words of similar meaning. These forward-looking statements include but are not limited to: statements of our goals, intentions and expectations; statements regarding our business plans, prospects, growth and operating strategies; statements regarding the quality of our loan and investment portfolios; and estimates of our risks and future costs and benefits. These forward-looking statements are based on current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: general economic conditions, either nationally or in our market areas, that are worse than expected; changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses; our ability to access cost-effective funding; fluctuations in real estate values and both residential and commercial real estate market conditions; demand for loans and deposits in our market area; our ability to implement and change our business strategies; competition among depository and other financial institutions; inflation and changes in the interest rate environment that reduce our margins and yields, our mortgage banking revenues, the fair value of financial instruments or our level of loan originations, or increase the level of defaults, losses and prepayments on loans we have made and make; adverse changes in the securities or secondary mortgage markets; changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements, including as a result of Basel III; the impact of the Dodd-Frank Act and the implementing regulations; changes in the quality or composition of our loan or investment portfolios; technological changes that may be more difficult or expensive than expected; the inability of third-party providers to perform as expected; our ability to manage market risk, credit risk and operational risk in the current economic environment; our ability to enter new markets successfully and capitalize on growth opportunities;  our ability to successfully integrate into our operations any assets, liabilities, customers, systems and management personnel we may acquire and our ability to realize related revenue synergies and cost savings within expected time frames, and any goodwill charges related thereto; changes in consumer spending, borrowing and savings habits; changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board; our ability to retain key employees; our compensation expense associated with equity allocated or awarded to our employees; and changes in the financial condition, results of operations or future prospects of issuers of securities that we own. Because of these and a wide variety of other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. 

Contact: Nikola B. Schaumberg, CFO
(262) 542-4448


FFBW, Inc.
Balance Sheets
June 30, 2019 (Unaudited) and December 31, 2018
(In thousands, except share data)

 June 30,December 31,
Assets20192018
   
Cash and due from banks$4,351 $1,746 
Fed funds sold 1,046  2,742 
Cash and cash equivalents 5,397  4,488 
Available for sale securities, stated at fair value 43,478  43,751 
Loans held for sale 1,951  679 
Loans, net of allowance for loan and lease losses of $2,252 and $2,118, respectively 193,001  198,694 
Premises and equipment, net 4,888  5,057 
Foreclosed assets 84  69 
FHLB stock, at cost 609  739 
Accrued interest receivable 777  768 
Cash value of life insurance 7,105  7,007 
Other assets 1,034  1,474 
   
TOTAL ASSETS$258,324 $262,726 
   
   
Liabilities and Equity  
   
Deposits$177,553 $183,205 
Advance payments by borrowers for taxes and insurance 771  55 
FHLB advances 15,750  17,750 
Accrued interest payable 620  70 
Other liabilities 2,446  1,284 
Total liabilities$197,140 $202,364 
   
Preferred stock ($0.01 par value, 1,000,000 authorized, no shares issued or outstanding as of June 30, 2019 and December 31, 2018, respectively)$- $- 
Common stock ($0.01 par value, 19,000,000 authorized, 6,706,742 issued and outstanding as of June 30, 2019 and December 31, 2018, respectively) 67  67 
Additional paid in capital 28,489  28,326 
Unallocated common stock of Employee Stock Ownership Plan ("ESOP") (236,823 and 243,303 shares at June 30, 2019 and December 31, 2018, respectively) (2,368) (2,433)
Retained earnings 35,632  34,995 
Accumulated other comprehensive income (loss), net of income taxes 235  (593)
Less common stock repurchased, 82,055 and 0 shares at cost, at June 30, 2019 and December 31, 2018, respectively (871) - 
Total equity$61,184 $60,362 
   
TOTAL LIABILITIES AND EQUITY$258,324 $262,726 
   
   

FFBW, Inc.
Statements of Income
Three and Six Months Ended June 30, 2019 and 2018 (Unaudited)
(In thousands, except share data)

   Three months ended June 30,  Six months ended June 30,
   20192018 20192018
        
Interest and dividend income:     
 Loans, including fees$2,497$2,326  $4,945 $4,294
 Securities     
  Taxable 282 339   557  679
  Tax-exempt 4 14   6  37
 Other 21 15   46  31
        
  Total interest and dividend income 2,804 2,694   5,554  5,041
        
Interest expense:     
 Interest-bearing deposits 633 342   1,232  688
 Borrowed funds 91 116   179  169
        
  Total interest expense 724 458   1,411  857
        
Net interest income 2,080 2,236   4,143  4,184
Provision for loan losses 85 189   155  304
        
Net interest income after provision for loan losses 1,995 2,047   3,988  3,880
        
Noninterest income:     
 Service charges and other fees 64 51   99  111
 Net gain on sale of loans 127 36   168  75
 Net gain (loss) on sale of securities 5 1   (3) 9
 Increase in cash surrender value of insurance 51 49   98  95
 Other noninterest income 24 24   49  47
        
  Total noninterest income 271 161   411  337
        
Noninterest expense:     
 Salaries and employee benefits 1,031 1,139   2,128  2,196
 Occupancy and equipment 242 226   484  459
 Data processing 169 158   344  310
 Technology 79 49   157  104
 Foreclosed assets, net 1 (9)  2  37
 Professional fees 104 57   216  175
 Other noninterest expense 126 151   229  323
        
  Total noninterest expense 1,752 1,771   3,560  3,604
        
Income before income taxes 514 437   839  613
Provision for income taxes 126 84   202  137
        
Net income$388$353  $637 $476
        
Earnings per share     
 Basic$0.06$0.06  $0.10 $0.07
 Diluted$0.06$0.06  $0.10 $0.07
        
        

FFBW, Inc.
Statements of Income
 (In thousands, except share data)

 For the Quarter Ended
 June 30, 2019March 31, 2019December 31,
2018
September 30,
2018
June 30, 2018
Total interest and dividend income$2,804$2,750$2,817$2,738$2,700
Total interest expense 724 687 645 607 458
Net interest income 2,080 2,063 2,172 2,131 2,242
Provision for loan losses 85 70 98 111 189
Net interest income after provision for loan losses 1,995 1,993 2,074 2,020 2,053
Total noninterest income 271 140 39 250 200
Total noninterest expense 1,752 1,808 1,810 1,810 1,816
Income before income taxes 514 325 303 460 437
Provision for income taxes 126 76 70 111 84
Net income$388$249$233$349$353
      
Earnings per share     
Basis$0.06$0.04$0.04$0.05$0.06
Diluted$0.06$0.04$0.04$0.05$0.06
      
      

FFBW, Inc.
Non-performing Assets
 (In thousands)

                                                                                                                      

 June 30, 2019
and Six
Months Then
Ended
December 31,
2018 and
Twelve
Months Then
Ended
December 31,
2017 and
Twelve
Months Then
Ended
    
Nonperforming assets:   
Nonaccrual loans$1,117 $720 $1,243 
Accruing loans past due 90 days or more -  -  - 
Total nonperforming loans ("NPLs") 1,117  720  1,243 
Foreclosed assets 84  69  619 
Total nonperforming assets ("NPAs")$1,201 $789 $1,862 
Troubled Debt Restructurings ("TDRs")$1,400 $1,201 $1,630 
Nonaccrual TDRs$1,100 $700 $969 
Average outstanding loan balance$200,246 $189,233 $170,577 
Loans, end of period$195,405 $200,898 $173,229 
ALLL, at beginning of period$2,118 $1,800 $1,478 
Loans charged off:   
Commercial -  (24) - 
Residential real estate and consumer (21) (172) (133)
Total loans charged off (21) (196) (133)
Recoveries of loans previously charged off:   
Commercial -  -  - 
Residential real estate and consumer -  1  36 
Total recoveries of loans previously charged off -  1  36 
Net loans charged off ("NCOs'") (21) (195) (97)
Additions to ALLL via provision for loan losses charged to operations 155  513  419 
ALLL, at end of period$2,252 $2,118 $1,800 
Ratios:   
ALLL to NCOs (annualized) 5440.34% 1086.15% 1855.67%
NCOs (annualized) to average loans 0.02% 0.10% 0.06%
ALLL to total loans 1.15% 1.05% 1.04%
NPL to total loans 0.57% 0.36% 0.72%
NPAs to total assets 0.46% 0.30% 0.73%
Total Assets$258,324 $262,726 $256,481 
    
    

FFBW, Inc.
Yield and Cost

 For the Three Months Ended June 30,
 2019
2018
 Average
Outstanding
Balance
InterestYield/ RateAverage
Outstanding
Balance
InterestYield/ Rate
 (in thousands) (in thousands) 
Interest-earning assets:      
Loans$199,235 $2,4975.01%$185,665 $2,3265.01%
Available for sale securities 43,501  2862.63% 57,490  3532.46%
Interest-bearing deposits 2,486  132.09% 2,071  30.58%
FHLB stock 638  85.02% 841  125.71%
Total interest-earning assets 245,860  2,8044.56% 246,067  2,6944.38%
Noninterest-earning assets 15,891    15,901   
Allowance for loan losses (2,219)   (1,855)  
Total assets$259,532   $260,113   
       
Interest-bearing liabilities:      
Demand accounts$8,662  261.20%$4,817  40.33%
Money market accounts 40,373  1321.31% 52,327  1030.79%
Savings accounts 13,755  40.12% 15,196  70.18%
Health savings accounts 11,199  80.29% 11,642  60.21%
Certificates of deposit 87,112  4632.13% 69,890  2221.27%
Total interest-bearing deposits 161,101  6331.57% 153,872  3420.89%
Borrowings 16,492  912.21% 25,197  1161.84%
Total interest-bearing liabilities 177,593  7241.63% 179,069  4581.02%
Noninterest-bearing deposits 18,790    20,783   
Other non-interest bearing liabilities 2,188    1,123   
Total liabilities 198,571    200,975   
Equity 60,961    59,138   
Total liabilities and equity$259,532   $260,113   
       
Net interest income  2,080   2,236 
Net interest rate spread(1)  2.93%  3.36%
Net interest-earning assets(2) 68,267    66,998   
Net interest margin(3)  3.38%  3.63%
Average of interest-earning assets to interest-bearing liabilities 138%   137%  

(1) Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(2) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
(3) Net interest margin represents net interest income divided by total interest-earning assets.


 For the Six Months Ended June 30,
 2019
2018
 Average Outstanding BalanceInterestYield/ RateAverage Outstanding BalanceInterestYield/ Rate
 (in thousands) (in thousands) 
Interest-earning assets:      
Loans$200,246 $4,9454.94%$180,390 $4,2944.76%
Available for sale securities 43,579  5632.58% 58,451  7162.45%
Interest-bearing deposits 2,540  292.28% 3,293  150.91%
FHLB stock 642  175.30% 700  164.57%
Total interest-earning assets 247,007  5,5544.50% 242,834  5,0414.15%
Noninterest-earning assets 16,683    16,414   
Allowance for loan losses (2,182)   (1,835)  
Total assets$260,885   $257,413   
       
Interest-bearing liabilities:      
Demand accounts$9,168  571.24%$4,502  70.31%
Money market accounts 40,785  2431.19% 52,764  1850.70%
Savings accounts 14,245  90.13% 15,329  150.20%
Health savings accounts 11,284  170.30% 11,596  130.22%
Certificates of deposit 87,689  9062.07% 72,493  4681.29%
Total interest-bearing deposits 163,171  1,2321.51% 156,684  6880.88%
Borrowings 16,544  1792.16% 19,862  1691.70%
Total interest-bearing liabilities 179,715  1,4111.57% 176,546  8570.97%
Noninterest-bearing deposits 18,256    20,538   
Other non-interest bearing liabilities 1,406    1,199   
Total liabilities 200,050    198,283   
Equity 60,835    59,130   
Total liabilities and equity$260,885   $257,413   
       
Net interest income  4,143   4,184 
Net interest rate spread(1)  2.93%  3.18%
Net interest-earning assets(2) 67,292    66,288   
Net interest margin(3)  3.35%  3.45%
Average of interest-earning assets to interest-bearing liabilities 137%   138%  

(1) Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(2) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
(3) Net interest margin represents net interest income divided by total interest-earning assets.

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Source: FFBW, Inc.