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Avenue Financial Holdings, Inc. Announces Record Second Quarter Results

Second Quarter Net Income Up 33.6% to $1.6 Million

Loans Up 16.7% to a Record $800 Million

NASHVILLE, Tenn., July 23, 2015 (GLOBE NEWSWIRE) -- Avenue Financial Holdings, Inc. (NASDAQ:AVNU) ("Avenue Financial" or "the Company") announced record results for the second quarter ended June 30, 2015. Net income available to common stockholders rose 33.6% to $1.59 million compared with $1.19 million for the second quarter of 2014. Net income per diluted share increased 14.3% to $0.16 in the second quarter of 2015 compared with $0.14 in the second quarter of 2014. Total loans, including loans held for sale, rose 16.7% to a record $800 million in the second quarter of 2015 compared with $685.3 million at June 30, 2014.

"We are pleased with Avenue Financial's record performance in the second quarter," stated Ronald L. Samuels, Chairman and Chief Executive Officer. "Our solid loan growth benefited from increased demand for commercial and industrial loans and loans to the small business market in the Nashville area. We also expanded our mortgage origination operations this year, resulting in record levels of mortgage banking income and gain on sales of mortgage loans. These contributed to our non-interest income more than doubling to almost $1.9 million compared with the second quarter of last year.

"We are also pleased with our strong balance sheet, sound asset quality and improved loan metrics. We reported a reduction in non-performing assets to total assets, continued reductions in other real estate owned, and we had no past due loans over 30 days as of the end of the second quarter. We remain focused on generating quality loan growth across our market segments.

"We expect Avenue Financial to post record results for 2015 based on the broad-based growth of the Nashville economy that is driving increased demand for commercial and industrial loans, commercial real estate loans and mortgage loans. We believe our Concierge banking team's proactive approach to assisting our clients will be an important part in growing our market share as we focus on commercial and private banking, along with our key vertical markets in music and entertainment, healthcare, and not-for-profit," continued Samuels.

Balance Sheet Growth

($millions)
Quarterly % Annual %
Q2 2015 Q1 2015 Change Q2 2014 Change
Total Assets $1,076.0 $1,036.5 3.8% $955.1 12.7%
Loans held for investment $773.4 $716.3 8.0% $677.8 14.1%
Loans held for sale $26.4 $33.5 -21.2% $7.5 252.0%
Total loans $799.8 $749.8 6.7% $685.3 16.7%
Cash surrender value of company owned life insurance $25.4 $20.2 25.7% $16.3 55.8%
Total Deposits $851.5 $815.9 4.4% $784.7 8.5%
Demand Deposits $270.3 $260.5 3.8% $217.9 24.0%

  • Total assets increased $39.5 million, or 3.8%, to $1.08 billion at June 30, 2015, rising from $1.04 billion at March 31, 2015, and $120.9 million, or 12.7%, compared with $955.1 million at June 30, 2014.
  • Loans increased $57.1 million, or 8.0%, to a record $773.4 million at June 30, 2015 compared with $716.3 million at March 31, 2015 and were up $95.6 million from June 30, 2014, for a year-over-year growth rate of 14.1%. Mortgage loans held-for-sale increased $18.9 million to $26.4 million at June 30, 2015, compared with $7.5 million at June 30, 2014.
  • Cash surrender value of company owned life insurance totaled $25.4 million at June 30, 2015, up $5.2 million, or 25.7%, from March 31, 2015 and up $9.1 million, or 55.8%, compared with $16.3 million at June 30, 2014.
  • Deposits rose to $851.5 million at June 30, 2015, an increase of 4.4% compared with $815.9 million at March 31, 2015. Deposits grew $66.8 million, or 8.5%, compared with $784.7 million at June 30, 2014. Demand deposits rose $52.4 million, or 24.0% to $270.3 million at June 30, 2015 compared with $217.9 million at June 30, 2014. For the second quarter of 2015, demand deposits rose to 31.6% of average deposits compared with 27.7% for the second quarter of 2014.

Revenue Growth and Profitability

($millions, except EPS)
Quarterly % Annual %
Q2 2015 Q1 2015 Change Q2 2014 Change
Net income available to common stockholders $1.59 $1.43 11.2% $1.19 33.6%
Fully diluted EPS $0.16 $0.15 6.7% $0.14 14.3%
Net interest income $8.09 $7.56 7.0% $7.29 11.0%
Net interest margin 3.29% 3.23% +6BP 3.33% -4BP
Non-interest income $1.88 $1.26 49.2% $0.92 104.3%
Provision for loan losses $0.86 $0.15 473.3% $0.55 56.4%
Non-interest expense $6.82 $6.47 5.4% $5.86 16.4%

  • For the second quarter of 2015, net income available to common stockholders rose 33.6% to $1.59 million compared with $1.19 million for the second quarter of 2014. The increase was attributable primarily to growth in loan volume, increased fee income and gain on sale of loans and investments, offset slightly by higher provision for loan losses and noninterest expenses compared with the second quarter of 2014. Diluted net income per share rose 14.3% to $0.16 on 10.2 million weighted average shares outstanding in the second quarter of 2015 from $0.14 on 8.5 million weighted average shares outstanding in the second quarter of 2014. The 19.7% increase in weighted average shares outstanding is attributable to Avenue Financial's initial public stock offering in February 2015.
  • Net interest income increased 11.0% to $8.1 million for the second quarter of 2015, compared with $7.3 million for the second quarter of 2014 and was attributable primarily to growth in loans, offset partially by higher interest costs associated with $20.0 million in subordinated debt issued in December 2014.
  • The tax equivalent net interest margin rose 6 basis points to 3.29% in the second quarter of 2015 compared with 3.23% in the first quarter of 2015. The increase was due primarily to growth in interest earning assets and loan fees over the past quarter. The yield on investments rose 3 basis points from the previous quarter and the cost of interest-bearing liabilities dropped 2 basis points to 0.68% from 0.70% for the first quarter of 2015. Cost of the subordinated debt was the primary driver for the 4 basis point reduction in the net interest margin compared with 3.33% reported for the second quarter of 2014.
  • Non-interest income increased 104.3%, or $960.0 thousand, to $1.9 million from $915 thousand at June 30, 2014. Avenue Financial reported growth in every major non-interest income category since last year that benefited from overall growth in assets, growth in number of customer accounts and volume related fees. Customer service fees rose 25.2% to $743.4 thousand, mortgage banking fees jumped 106.7% to $417.1 thousand, and cash surrender value of life insurance rose 51.0% to $183.5 thousand. Net gain on sales of bulk mortgage loans totaled $315.8 thousand in the second quarter of 2015. There were no comparable sales of bulk mortgage loans in the second quarter of 2014. Net gain on sale of securities rose to $215.2 thousand in the second quarter of 2015 compared with a loss of $2.1 thousand in the same quarter the prior year.
  • The provision for loan losses was $855.1 thousand for the second quarter of 2015, compared with $548.6 thousand for the second quarter of 2014. The increase was due primarily to higher net loan growth for this quarter compared with this same quarter last year.
  • Non-interest expense for the second quarter of 2015 increased $349.7 thousand, or 5.4%, to $6.8 million from $6.5 million for the first quarter of 2015, and increased $961.1 thousand from the second quarter of 2014. The increase was due primarily to higher compensation costs related to growth in employee headcount, volume related costs attributable to loans, deposits, and data processing, and higher legal, accounting and insurance related to public company expenses. These increases were offset partially by a $120.0 thousand recovery on an operating loss taken in the fourth quarter of 2014.

"We made progress on managing costs going forward with new contracts signed for core processing, portfolio management services and audit services," stated Samuels. "We believe these new contracts will help us contain costs as we continue to grow the bank."

Asset Quality

($millions, except EPS)
Quarterly % Annual %
Q2 2015 Q1 2015 Change Q2 2014 Change
Nonaccruing loans $0.776 $0.854 -9.1% $0.897 -13.5%
Ratio of non-performing assets to total assets 0.32% 0.35% -3BP 0.30% +2BP
Other real estate owned $2.71 $2.81 -3.6% $2.00 35.5%
Net loan charge-offs $0.213 $0.002 10,550.0% -$0.005 -4,360.0%
Allowance for loan losses $9.31 $8.67 7.4% $8.60 8.3%

  • Total asset quality improved in the second quarter compared with the first quarter of 2015 and second quarter of 2014 as measured by reductions in nonaccruing loans, non-performing loans to total assets and other real estate owned. Nonaccruing loans declined to $775.7 thousand, or 0.10% of total loans at June 30, 2015, compared with $853.8 thousand, or 0.12% of total loans, at March 31, 2015. Our ratio of non-performing assets (nonaccruing loans plus other real estate owned) to total assets decreased to 0.32% at June 30, 2015, compared with 0.35% at March 31, 2015 due to a decrease in other real estate owned and growth in total assets. Total other real estate owned declined to $2.7 million at June 30, 2015 compared with $2.8 million at March 31, 2015 due to the sale of two properties totaling $128.5 thousand. Avenue Financial expects further reductions in other real estate owned due to pending sales contracts that are expected to close in the third quarter of 2015. Troubled-debt restructurings declined slightly during the second quarter and now total $443.7 thousand at June 30, 2015 and include one loan.
  • Net loan charge-offs for the second quarter of 2015 were $212.6 thousand, or 0.12% of average loans for the quarter, compared with $1.9 thousand, or 0.00% of average loans for the quarter ended March 31, 2015. There were no past dues greater than 30 days at June 30, 2015.
  • The allowance for loan losses was $9.3 million, or 1.20% of loans, at June 30, 2015, compared with $8.7 million, or 1.21% of loans at March 31, 2015 and $8.6 million, or 1.27% of loans at June 30, 2014. The increase in the allowance for loan losses was due primarily to growth in the loan portfolio since last year.

"We expect to report continued growth in loans, deposits and earnings for the remainder of the year based on our existing pipeline for business and broad-based growth across our Nashville market," continued Samuels. "Our Concierge banking model is attracting new clients, new deposit accounts and new loan relationships. We also continue to earn a higher percentage of banking business from existing clients due to our high levels of customer service. We believe that continued progress in these areas will be key drivers to growing earnings and building future shareholder value," concluded Samuels.

About Avenue Financial Holdings, Inc.

Avenue Financial Holdings, Inc., headquartered in Nashville, Tennessee, was formed as a single-bank holding company in 2006 and operates primarily through its subsidiary, Avenue Bank. The Company's operations are concentrated in the Nashville MSA, with the vision of building Nashville's signature bank and serving clients who value creativity, expertise, and an exceptional level of personal service. Avenue Bank embodies Nashville's creative spirit - redefining how clients experience banking through a unique "Concierge Banking" model. The bank provides a wide range of business and personal banking services, including mortgage loans, with a special emphasis on Commercial, Private Client, Healthcare, and Music & Entertainment banking. The Company serves clients through five locations (a corporate headquarters and four retail branches), a limited deposit courier service (mobile branch) for select commercial clients, and mobile and online banking services. The Company's stock is traded on the NASDAQ Global Select Market under the ticker symbol "AVNU."

Forward-Looking Statements

Certain statements in this press release contain forward-looking statements within the meaning of the federal securities laws. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as "may," "should," "could," "predict," "potential," "believe," "will likely result," "expect," "continue," "will," "anticipate," "seek," "estimate," "intend," "plan," "projection," "would," and "outlook," or the negative version of those words or other comparable words of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.

You should not place undue reliance on any forward-looking statement. There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but are not limited to, the following: market and economic conditions (including interest rate environment, levels of public offerings, mergers and acquisitions, or M&A, and venture capital financing activities) and the associated impact on us; changes in management personnel; deterioration of our asset quality;our overall management of interest rate risk, including managing the sensitivity of our interest-earning assets and interest-bearing liabilities to interest rates, and the impact to earnings from a change in interest rates; our ability to execute our strategy and to achieve organic loan and deposit growth;the adequacy of reserves (including allowance for loan and lease losses) and the appropriateness of our methodology for calculating such reserves;volatility and direction of market interest rates;the sufficiency of our capital, including sources of capital (such as funds generated through retained earnings) and the extent to which capital may be used or required; our overall investment plans, strategies and activities, including our investment of excess cash/liquidity; operational, liquidity and credit risks associated with our business; increased competition in the financial services industry, nationally, regionally or locally, which may adversely affect pricing and terms; the level of client investment fees and associated margins; changes in the regulatory environment; changes in trade, monetary and fiscal policies and laws; governmental legislation and regulation, including changes in accounting regulation or standards, the nature and timing of the adoption and effectiveness of new requirements under the Dodd-Frank Act, Basel guidelines, capital requirements and other applicable laws and regulations; changes in interpretation of existing law and regulation; further government intervention in the U.S. financial system; and other factors that are discussed under the heading "Risk Factors" in our filings with the Securities and Exchange Commission.

The foregoing factors should not be construed as exhaustive and should be read in conjunction with other cautionary statements that are included in the Company's Form 10-K and subsequent periodic reports filed with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New factors emerge from time to time, and it is not possible for us to predict which will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement.

AVENUE FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Consolidated Balance Sheets
(unaudited)
June 30, March 31, June 30,
2015 2015 2014
Assets
Cash and due from banks $ 18,360,874 31,136,574 17,439,114
Federal funds sold -- -- 415,835
Cash and cash equivalents 18,360,874 31,136,574 17,854,949
Interest-bearing deposits in banks 215,203 214,748 335,754
Securities available-for-sale, at fair value 213,095,723 218,118,191 217,478,419
Securities held-to-maturity (fair value of $3,869,505, $2,830,932 and $2,855,733 as of June 30, 2015, March 31, 2015 and June 30, 2014, respectively) 3,802,440 2,714,706 2,721,287
Mortgage loans held-for-sale 26,363,485 33,484,272 7,456,772
Loans, net of deferred fees 773,441,243 716,252,963 677,834,744
Less allowance for loan losses (9,311,870) (8,669,356) (8,624,610)
Net loans 764,129,373 707,583,607 669,210,134
Accrued interest receivable 2,627,076 2,318,186 2,321,454
Federal Home Loan Bank stock, at cost 3,320,400 3,320,400 2,924,400
Premises and equipment, net 3,098,276 3,123,566 3,454,613
Other real estate owned 2,708,961 2,807,201 1,981,195
Deferred tax assets 8,614,624 7,238,126 8,315,112
Cash surrender value of company owned life insurance 25,362,673 20,179,158 16,282,685
Goodwill 2,966,063 2,966,063 2,966,063
Other assets 1,312,753 1,338,708 1,797,060
Total assets $ 1,075,977,924 1,036,543,506 955,099,897
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing demand deposits $ 208,415,520 200,316,324 166,180,717
Interest-bearing demand deposits 61,924,397 60,134,832 51,675,434
Savings and money market accounts 412,171,638 398,767,825 415,867,819
Time 168,979,034 156,665,732 150,993,445
Total deposits 851,490,589 815,884,713 784,717,415
Accrued interest payable 514,855 539,448 145,857
Federal funds purchased 460,000 2,716,360 --
Federal Home Loan Bank advances 105,300,000 99,300,000 75,500,000
Subordinated debt 19,595,584 19,584,942 --
Other liabilities 8,926,068 8,584,829 7,159,909
986,287,096 946,610,292 867,523,181
Stockholders' equity:
Preferred Stock, no par value; 10,000,000 shares authorized, Series C, senior noncumulative perpetual preferred stock; 0, 0, and 18,950 issued and outstanding at June 30, 2015, March 31, 2015 and June 30, 2014, respectively -- -- 18,950,000
Common Stock, no par value. Authorized 100,000,000 shares: issued and outstanding 10,256,340, 10,227,340 and 8,619,588 shares at June 30, 2015, March 31, 2015 and June 30, 2014, respectively 89,935,473 89,947,978 75,407,157
Additional paid-in-capital 1,623,211 1,498,742 1,083,463
Accumulated profit (deficit) 1,428,859 (156,469) (5,194,387)
Accumulated other comprehensive loss (3,296,715) (1,357,037) (2,669,517)
Total stockholders' equity 89,690,828 89,933,214 87,576,716
Total liabilities and stockholders' equity $ 1,075,977,924 1,036,543,506 955,099,897
This information is preliminary and based on company data available at the time of the presentation.
AVENUE FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Consolidated Statements of Income
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2015 2014 2015 2014
Interest and dividend income:
Loans, including fees $ 8,210,260 7,075,747 15,878,921 13,500,016
Taxable securities 913,092 940,299 1,832,260 2,017,781
Tax-exempt securities 229,094 193,425 445,209 481,814
Federal Funds sold and other 30,755 27,352 60,887 57,772
Total interest and dividend income 9,383,201 8,236,823 18,217,277 16,057,383
Interest expense:
Deposits 773,193 786,811 1,534,579 1,542,751
Other borrowings 523,177 165,040 1,030,877 353,165
Total interest expense 1,296,370 951,851 2,565,456 1,895,916
Net interest income 8,086,831 7,284,972 15,651,821 14,161,467
Provision for loan losses 855,095 548,598 1,008,632 1,408,940
Net interest income after provision for loan losses 7,231,736 6,736,374 14,643,189 12,752,527
Noninterest income:
Customer service fees 743,385 593,863 1,413,915 1,209,710
Mortgage banking income from sales, net of commissions 417,131 201,808 622,398 239,353
Increase in cash surrender value of life insurance 183,513 121,556 326,920 241,298
Net gain on sales of bulk mortgage loans 315,815 -- 552,289 --
Net gain (loss) on sale of available-for-sale securities 215,201 (2,138) 215,201 11,917
Total noninterest income 1,875,045 915,089 3,130,723 1,702,278
Noninterest expenses:
Salaries and employee benefits 4,001,069 3,361,230 7,915,086 6,855,989
Equipment and occupancy 813,892 864,912 1,653,705 1,755,760
Data processing 376,232 355,955 804,715 682,615
Advertising, promotion, and public relations 197,473 147,941 380,883 296,085
Legal and accounting 407,494 218,589 683,282 405,088
FDIC insurance and other regulatory assessments 225,665 184,457 418,122 363,782
Other real estate (income) expense 22,514 2,930 (17,676) 16,088
Other expenses 779,222 726,398 1,459,285 1,331,764
Total noninterest expenses 6,823,561 5,862,412 13,297,402 11,707,171
Income before taxes 2,283,220 1,789,051 4,476,510 2,747,634
Income tax expense 697,892 555,000 1,433,892 842,575
Net income 1,585,328 1,234,051 3,042,618 1,905,059
Preferred stock dividends -- (47,375) (32,110) (94,750)
Net income available to common stockholders $ 1,585,328 1,186,676 3,010,508 1,810,309
Per share information:
Basic net income per common share available to common stockholders $ 0.16 0.14 0.31 0.21
Diluted net income per common share available to common stockholders $ 0.16 0.14 0.31 0.21
Weighted average common shares outstanding:
Basic 10,064,840 8,487,516 9,694,135 8,484,016
Diluted 10,161,167 8,487,516 9,794,661 8,484,016
This information is preliminary and based on company data available at the time of the presentation.
AVENUE FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
SELECTED QUARTERLY FINANCIAL DATA
(unaudited)
At or for the Three Months
June 30, March 31, December 31, September 30, June 30, March 31,
2015 2015 2014 2014 2014 2014
(Dollars in thousands, except employee data)
SELECTED INCOME STATEMENT DATA
Interest income $ 9,383 $ 8,834 $ 8,498 $ 8,468 $ 8,237 $ 7,821
Interest expense 1,296 1,269 938 935 952 944
Net interest income 8,087 7,565 7,560 7,533 7,285 6,877
Provision for loan losses 855 154 456 (222) 549 860
Net interest income after provision for loan losses 7,232 7,411 7,104 7,755 6,736 6,017
Non-interest income 1,875 1,256 1,059 1,904 915 787
Non-interest expense 6,824 6,474 6,297 6,122 5,862 5,845
Income tax expense 698 736 573 1,122 555 288
Net income 1,585 1,457 1,293 2,415 1,234 671
Dividends on preferred shares -- (32) (48) (47) (48) (47)
Net income available to common stockholders $ 1,585 $ 1,425 $ 1,245 $ 2,368 $ 1,186 $ 624
PER COMMON SHARE DATA:
Basic earnings per share $ 0.16 $ 0.15 $ 0.15 $ 0.28 $ 0.14 $ 0.07
Diluted earnings per share 0.16 0.15 0.15 0.28 0.14 0.07
Book value per common share 8.74 8.79 8.41 8.18 7.96 7.65
Tangible book value per common share (1) 8.45 8.50 8.07 7.84 7.62 7.31
Basic weighted average common shares 10,064,840 9,319,312 8,487,515 8,487,516 8,487,516 8,480,478
Diluted weighted average common shares 10,161,167 9,656,971 8,540,856 8,528,926 8,487,516 8,480,478
Common shares outstanding at period end 10,256,340 10,227,340 8,636,682 8,633,588 8,619,588 8,619,588
SELECTED BALANCE SHEET DATA
Total assets $ 1,075,978 $ 1,036,544 $ 998,367 $ 973,371 $ 955,100 $ 941,928
Residential real estate - Mortgage 120,208 103,728 110,929 122,128 127,462 109,909
Residential real estate - Multi-family 10,399 13,480 11,310 20,960 15,605 13,282
Commercial and industrial 272,783 247,722 235,911 181,688 188,421 181,518
Commercial real estate 284,653 289,404 271,001 268,907 275,526 262,696
Construction and land development 78,473 54,515 58,843 55,174 65,874 70,081
Consumer 7,052 7,319 5,915 4,221 4,817 1,881
Other (127) 85 (1) 157 130 155
Total loans, net of deferred fees 773,441 716,253 693,908 653,235 677,835 639,522
Allowance for loan losses (9,312) (8,669) (8,518) (8,407) (8,625) (8,070)
Securities available for sale 213,096 218,118 220,462 211,500 217,478 240,100
Mortgage loans held for sale 26,363 33,484 27,237 5,036 7,457 2,636
Goodwill and other intangible assets 2,966 2,966 2,966 2,966 2,966 2,966
Demand deposits 208,416 200,316 170,647 186,209 166,181 162,023
Interest checking accounts 61,924 60,135 55,653 52,673 51,675 44,958
Savings accounts 15,146 15,197 11,919 10,613 8,434 8,412
Money market accounts 241,182 227,999 240,646 263,947 268,417 275,768
Reciprocal ICS Money Market 155,844 155,572 163,214 147,870 139,017 105,777
CDs 74,516 70,064 82,012 82,075 82,116 87,230
Reciprocal CDARs 49,967 51,602 44,081 41,662 39,780 27,827
Brokered CDs 44,496 35,000 35,000 35,832 29,097 26,049
Total Deposits 851,491 815,885 803,173 820,881 784,717 738,044
Advances from FHLB/FRB 105,300 99,300 70,300 55,000 75,500 79,000
Subordinated debt 19,596 19,585 19,577 -- -- --
Preferred stock -- -- 18,950 18,950 18,950 18,950
Tangible common stockholders' equity (1) 86,725 86,967 69,700 67,699 65,661 62,951
Total stockholders' equity 89,691 89,933 91,616 89,615 87,577 84,867
Average total assets 1,055,912 1,014,663 976,497 952,248 932,603 906,855
Average common stockholders' equity 90,298 94,659 72,447 69,902 66,973 65,703
Full time employees 145 132 134 130 125 120
SELECTED PERFORMANCE RATIOS
Return on average assets (2) (5) 0.60% 0.57% 0.51% 0.99% 0.51% 0.28%
Return on average common stockholders' equity (2) (5) 7.04 6.11 6.82 13.44 7.10 3.85
Net interest margin (fully tax equivalent) (2) 3.29 3.23 3.35 3.36 3.33 3.30
Efficiency ratio (1) (3) 72.4 75.4 73.2 71.3 71.5 76.4
This information is preliminary and based on company data available at the time of the presentation.
AVENUE FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
SELECTED QUARTERLY FINANCIAL DATA
(unaudited)
At or for the Three Months
June 30, March 31, December 31, September 30, June 30, March 31,
2015 2015 2014 2014 2014 2014
(Dollars in thousands, except per share data)
SELECTED ASSET QUALITY DATA
Nonaccruing loans $ 776 $ 854 $ 695 $ 889 $ 897 $ 584
Past due loans over 90 days and still accruing interest -- -- -- -- -- --
Net loans charge-offs 213 2 345 (5) (5) (6)
Nonaccruing loans to total loans 0.10% 0.12 0.10 0.14 0.13 0.09
Nonaccruing loans and loans past due 90 days and still accruing to total loans 0.10 0.12 0.10 0.14 0.13 0.09
Non-performing assets to total assets (4) 0.32 0.35 0.41 0.28 0.30 0.42
Nonperforming assets to loans and OREO 0.45 0.51 0.58 0.42 0.42 0.62
Allowance for loan losses to total loans 1.20 1.21 1.23 1.29 1.27 1.26
Allowance for loan losses to nonaccruing loans 1,200.00 1,015.15 1,224.87 945.67 961.54 1,381.85
Net loan charge-offs to average loans (2) 0.12 -- 0.20 -- -- --
CAPITAL RATIOS (Consolidated)
Tier 1 Leverage ratio (6) 8.55% 8.73% 9.21% 9.16% 8.78% 8.81%
Tier 1 Risk-based capital ratio (6) 9.85 10.38 10.62 11.38 10.65 10.77
Total Risk-based capital ratio (6) 13.06 13.77 14.00 12.49 11.77 11.86
Tangible common stockholders' equity to tangible assets (1) 8.08 8.41 7.00 6.98 6.90 6.70
The information set forth above contains certain financial information determined by methods other than in accordance with GAAP. These non-GAAP financial measures are "tangible book value per common share," "tangible common stockholders' equity," "efficiency ratio," and "tangible common stockholders' equity to tangible assets." Although we believe these non-GAAP financial measures provide a greater understanding of our business, these measures are not necessarily comparable to similar measures that may be presented by other companies.
"Efficiency ratio" is defined as non-interest expenses divided by our operating revenue, which is equal to net interest income plus non-interest income excluding gains and losses on sales of securities. In our judgment, the adjustments made to operating revenue allow investors and analysts to better assess our operating expenses in relation to our core operating revenue by removing the volatility that is associated with certain non-recurring items and other discrete items that are unrelated to our core business.
"Tangible common stockholders' equity" is defined as common stockholders' equity reduced by goodwill. We believe that this measure is important to many investors in the marketplace who are interested in changes from period to period in common stockholders' equity exclusive of changes in intangible assets. Goodwill, an intangible asset that is recorded in a purchase business combination, has the effect of increasing both common stockholders' equity and assets while not increasing our tangible common stockholders' equity or tangible assets.
"Tangible common stockholders' equity to tangible assets" is defined as the ratio of common stockholders' equity reduced by goodwill divided by total assets reduced by goodwill. We believe that this measure is important to many investors in the marketplace who are interested in relative changes from period to period in common stockholders' equity and total assets, each exclusive of changes in intangible assets. Goodwill, an intangible asset that is recorded in a purchase business combination, has the effect of increasing both common stockholders' equity and assets while not increasing our tangible common equity or tangible assets.
"Tangible book value per common share" is defined as tangible common stockholders' equity divided by total common shares outstanding. We believe that this measure is important to many investors in the marketplace who are interested in changes from period to period in book value per common share exclusive of changes in intangible assets. Goodwill, an intangible asset that is recorded in a purchase business combination, has the effect of increasing book value while not increasing our tangible book value.
The information provided below reconciles each non-GAAP measure to its most comparable GAAP measure.
NON-GAAP FINANCIAL MEASURES
Efficiency Ratio
Non-interest expense (numerator) $ 6,824 $ 6,474 $ 6,297 $ 6,122 $ 5,862 $ 5,845
Net interest income 8,087 7,565 7,560 7,533 7,285 6,877
Non-interest income 1,875 1,256 1,059 1,904 915 787
Less: gains on sale of loans (316) (236) (14) (852) -- --
Less: gains (losses) on sales of securities (215) -- -- -- 2 (14)
Adjusted operating revenue (denominator) 9,431 8,585 8,605 8,585 8,202 7,650
Efficiency Ratio 72.36% 75.41 73.18 71.31 71.47 76.41
Tangible Common Stockholders' Equity and Tangible Common Stockholders' Equity/Tangible Assets
Common equity $ 89,691 $ 89,933 $ 72,666 $ 70,665 $ 68,627 $ 65,917
Less: intangible assets (2,966) (2,966) (2,966) (2,966) (2,966) (2,966)
Tangible common stockholders' equity 86,725 86,967 69,700 67,699 65,661 62,951
Total assets 1,075,978 1,036,544 998,367 973,371 955,100 941,928
Less: Intangible assets (2,966) (2,966) (2,966) (2,966) (2,966) (2,966)
Tangible assets 1,073,012 1,033,578 995,401 970,405 952,134 938,962
Tangible Common Stockholders' Equity/Tangible Assets 8.08% 8.41 7.00 6.98 6.90 6.70
Tangible Book Value per Common Share
Book Value Per Common Share $ 8.74 $ 8.79 $ 8.41 $ 8.18 $ 7.96 $ 7.65
Less: Effects of intangible assets (0.29) (0.29) (0.34) (0.34) (0.34) (0.34)
Tangible Book Value per Common Share 8.45 8.50 8.07 7.84 7.62 7.31
(1) These measures are not measures recognized under generally accepted accounting principles (United States) ("GAAP"), and are therefore considered to be non-GAAP financial measures.
(2) Data has been annualized.
(3) Efficiency ratio is total non-interest expense divided by the sum of net interest income and total non-interest income, (excluding securities and loan sale gains/(losses)) and is not a GAAP measure.
(4) Non-performing assets are deemed to be nonaccruing loans and OREO.
(5) Return on average assets is defined as net income available to common stockholders divided by average total assets; Return on average common stockholders equity is defined by net income available to common stockholders divided by average common stockholders' equity.
(6) Capital ratios as of June 30, 2015 are estimated.
This information is preliminary and based on company data available at the time of the presentation.
Average Balance Sheets and Net Interest Analysis
On a Fully Taxable-Equivalent Basis
Three Months Ended June 30,
2015 2014
Average Balance Interest Earned / Paid Average Yield / Rate Average Balance Interest Earned / Paid Average Yield / Rate
(In thousands, except Average Yields and Rates)
Assets:
Interest earning assets:
Interest-bearing deposits in banks $ 215 -- 0.74% 336 1 0.85%
Investments (1) (3) 223,038 1,290 2.32 228,012 1,260 2.22
Federal funds sold 478 -- 0.29 424 -- 0.25
Loans held-for-sale 32,361 275 3.41 3,955 -- --
Total loans (2) 742,781 7,935 4.29 656,601 7,076 4.32
Total interest earning assets 998,873 9,500 3.81 889,328 8,337 3.76
Allowance for loan losses (8,964) (8,426)
Non-interest earning assets 66,003 51,701
Total assets $ 1,055,912 932,603
Interest bearing liabilities:
Interest bearing deposits:
Checking $ 62,353 54 0.35% 48,932 51 0.42%
Savings 14,601 4 0.11 8,236 3 0.15
Money market 384,892 389 0.41 390,668 451 0.46
Time deposits 162,074 326 0.81 147,511 282 0.77
Federal funds purchased 12,356 18 0.60 8,498 15 0.71
Other borrowings 122,823 505 1.65 74,951 150 0.80
Total interest bearing liabilities 759,099 1,296 0.68 678,796 952 0.56
Non-interest bearing checking 197,676 160,824
Other liabilities 8,839 7,060
Stockholders' equity 90,298 85,923
Total liabilities and stockholders' equity $ 1,055,912 932,603
Net interest spread 3.13% 3.20%
Net interest margin 3.29 3.33
(1) Interest income and yields are presented on a fully taxable equivalent basis using a tax rate of 34%.
(2) Non-accrual loans are included in average loan balances in all periods. Loan fees of $255,000 and $131,000 are included in interest income in 2015 and 2014, respectively
(3) Unrealized gains/(losses) of $285,000 and ($3,768,000) are excluded from the yield calculation in 2015 and 2014, respectively.
This information is preliminary and based on company data available at the time of the presentation.
Average Balance Sheets and Net Interest Analysis
On a Fully Taxable-Equivalent Basis
Six Months Ended June 30,
2015 2014
Average Balance Interest Earned / Paid Average Yield / Rate Average Balance Interest Earned / Paid Average Yield / Rate
(In thousands, except Average Yields and Rates)
Assets:
Interest earning assets:
Interest-bearing deposits in banks $ 213 1 0.75% 647 4 1.21%
Investments (1) (3) 223,970 2,566 2.31 245,584 2,801 2.30
Federal funds sold 419 1 0.29 445 1 0.25
Loans held-for-sale 33,930 583 3.46 2,818 -- --
Total loans (2) 722,126 15,296 4.27 626,845 13,500 4.34
Total interest earning assets 980,658 18,447 3.79 876,339 16,306 3.75
Allowance for loan losses (8,844) (7,920)
Non-interest earning assets 63,473 51,310
Total assets $ 1,035,287 919,729
Interest bearing liabilities:
Interest bearing deposits:
Checking $ 59,457 103 0.35% 48,642 103 0.43%
Savings 14,167 8 0.11 8,172 6 0.15
Money market 388,613 775 0.40 390,300 921 0.48
Time deposits 161,906 648 0.81 138,489 513 0.75
Federal funds purchased 8,601 26 0.60 11,033 38 0.69
Other borrowings 113,212 1,005 1.79 75,249 316 0.85
Total interest bearing liabilities 745,956 2,565 0.69 671,885 1,897 0.57
Non-interest bearing checking 188,438 155,832
Other liabilities 8,414 6,724
Stockholders' equity 92,479 85,288
Total liabilities and stockholders' equity $ 1,035,287 919,729
Net interest spread 3.10% 3.18%
Net interest margin 3.27 3.32
(1) Interest income and yields are presented on a fully taxable equivalent basis using a tax rate of 34%.
(2) Non-accrual loans are included in average loan balances in all periods. Loan fees of $454,000 and $263,000 are included in interest income in 2015 and 2014, respectively
(3) Unrealized gains/(losses) of $293,000 and ($4,117,000) are excluded from the yield calculation in 2015 and 2014, respectively.
This information is preliminary and based on company data available at the time of the presentation.

CONTACT: Barbara J. Zipperian Chief Financial Officer (615) 736-7786Source:Avenue Financial Holdings, Inc.