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First Community Financial Partners, Inc. Announces Fourth Quarter 2016 Financial Results

Fourth Quarter 2016 Highlights

  • Diluted earnings per share (“EPS”) of $0.15
  • Asset growth of $21.6 million, or 1.73%, from the end of the third quarter of 2016
  • Loan growth of $34.7 million, or 3.62%, from the end of the third quarter of 2016
  • Deposit growth of $17.9 million, or 1.68%, from the end of the third quarter of 2016
  • Noninterest bearing deposits increase of $1.6 million, or 0.65%, from the end of the third quarter of 2016

JOLIET, Ill., Jan. 23, 2017 (GLOBE NEWSWIRE) -- First Community Financial Partners, Inc. (NASDAQ:FCFP) (“First Community,” “FCFP” or the “Company”), the parent company of First Community Financial Bank (the “Bank”), today reported financial results as of and for the three and twelve months ended December 31, 2016.

Net income applicable to shareholders for the quarter ended December 31, 2016 was $2.7 million, or $0.15 per diluted share, compared with $2.9 million, or $0.17 per diluted share, for the quarter ended December 31, 2015. Financial results for the fourth quarter of 2015 were positively impacted by a negative provision for credit losses of $515,000. Pre-tax, pre-provision core income was $4.3 million in the fourth quarter of 2016, an increase of 11.29% from $3.8 million in the same period of the prior year.

“We delivered a strong performance in the fourth quarter, driven by positive trends in revenue, operating efficiencies and asset quality,” said Roy Thygesen, Chief Executive Officer of First Community.

“We had another strong quarter of business development, resulting in organic loan growth of 15% on an annualized basis. We are generating well balanced loan production and seeing solid growth across all of our major lending areas.”

“We were able to create significant franchise value in 2016 through organic growth and the completion of our first acquisition. We intend to continue to execute on our core strategies in 2017, focusing on developing additional commercial banking relationships with small- and middle-market companies and exploring other acquisitions in our existing footprint that can strengthen our core deposit base. We anticipate another year of double-digit organic loan growth, increased operating efficiencies, and stable credit quality in 2017, resulting in further improvement in our overall level of profitability and additional value being created for our shareholders,” said Mr. Thygesen.

Fourth Quarter 2016 Financial Results

Loans

At December 31, 2016, total loans were $991.6 million, an increase of $34.7 million, or 3.62%, since the end of the third quarter of 2016, and $219.3 million, or 28.39%, year-over-year. The loan growth was the result of a continued strong loan pipeline along with results produced by the addition of six commercial lenders and one new leasing officer hired during the first quarter of 2016.

Commercial loans grew $6.9 million, or 2.52%, since the end of the third quarter and $102.2 million, or 56.89%, year-over-year. Commercial real estate loans increased $6.0 million, or 1.42%, since the end of the third quarter and $44.9 million, or 11.78%, year-over-year. Residential real estate loans grew $8.6 million, or 5.13%, since the end of the third quarter and $40.1 million, or 29.53%, year-over-year. Construction loans were up $7.5 million, or 18.83%, since the third quarter and $25.3 million, or 114.37%, year-over-year.

Deposits and Other Borrowings

At December 31, 2016, total deposits were $1.1 billion, an increase of $17.9 million, or 1.68%, since the end of the third quarter and $217.2 million, or 25.08%, year-over-year.

Noninterest bearing demand deposits increased $1.6 million, or 0.65%, since the end of the third quarter and $51.8 million, or 26.42%, year-over-year. Interest bearing transactional accounts (NOW, savings and money market accounts) increased $28.1 million, or 5.85%, during the fourth quarter of 2016 and $136.0 million, or 36.52%, year-over-year. Time deposits decreased $11.8 million, or 3.48%, to $326.9 million at December 31, 2016, from $338.7 million at September 30, 2016, and increased $29.4 million, or 9.87%, year-over-year. The ratio of time deposits to interest bearing deposits was 39.13% at December 31, 2016, down from 41.35% at September 30, 2016.

Other borrowings increased $4.5 million, or 7.34%, since the end of the third quarter due to higher FHLB borrowings resulting from loan growth during the fourth quarter, partially offset by the payoff of our secured borrowings of $7.0 million during the quarter.

Net Interest Income and Margin

Fourth quarter 2016 net interest income was up $418,000, or 4.26%, from the third quarter of 2016. The increase was primarily attributable to an increase in average loan balances, partially offset by a lower net interest margin.

The Company’s net interest margin was 3.42% for the fourth quarter of 2016, compared to 3.40% in the third quarter of 2016. The increase was due to the effect of the prime rate increase in mid December 2016.

Noninterest Income and Expense

Fourth quarter 2016 noninterest income decreased $1.9 million, or 67.62%, from the third quarter of 2016 and increased $3.0 million, or 54.33%, from the year ended December 31, 2015. The decrease from the third quarter was primarily attributable to a $1.9 million bargain purchase option gain recorded in the third quarter related to the acquisition of Mazon State Bank.

Service charges on deposits decreased $4,000, or 1.38%, from the third quarter of 2016, which was primarily the result of a decrease in overdraft fees, partially offset by an increase in account analysis charges. Mortgage income was also up $45,000, or 26.63%, for the fourth quarter of 2016, compared to the third quarter, as a result of higher mortgage sale volumes.

Fourth quarter 2016 noninterest expense decreased $140,000, or 1.98%, from the third quarter of 2016 due to reduced data processing fees following the integration of Mazon State Bank, partially offset by increased incentive compensation expense.

Salaries and benefits expense increased $497,000, or 13.04%, from the third quarter 2016 due to increased incentive compensation expense, partially offset by cost savings from the integration of Mazon State Bank. Data processing fees decreased $433,000, or 61.86%, from the third quarter due to lower data processing conversion expenses following the integration of Mazon State Bank.

Asset Quality

Total nonperforming assets decreased $2.6 million, or 28.48%, to $6.6 million at December 31, 2016 from $9.2 million at September 30, 2016. The ratio of nonperforming assets to total assets was 0.52% at December 31, 2016 compared to 0.74% at September 30, 2016. The decrease was the result of the sale of $2.6 million in nonaccrual loans, $1.1 million in loans transferred to loans held for sale, and the charge-offs recorded in the quarter. This outflow was partially offset by new additions to nonaccrual loans.

The Company had net charge-offs on loans of $783,000 in the fourth quarter of 2016, compared to net charge-offs of $143,000 in the third quarter of 2016. The net charge-offs in the fourth quarter of 2016 primarily related to one loan relationship totaling $4.5 million that was placed on non-accrual status during the third quarter of 2016. At year-end 2016, $1.1 million of this relationship remained and was held for sale. This sale took place after year-end and this loan relationship has been paid off in full.

The ratios of the Company’s allowance for loan losses to nonperforming loans and allowance for loan losses to total loans were 199.52% and 1.18% at December 31, 2016, respectively.

The Company recorded a provision for loan losses in the fourth quarter of 2016 of $183,000, primarily as a result of the growth in the loan portfolio.

About First Community Financial Partners, Inc.: First Community Financial Partners, Inc., headquartered in Joliet, Illinois, is a bank holding company whose common stock trades on the NASDAQ Capital Market (NASDAQ:FCFP). First Community Financial Partners has one bank subsidiary, First Community Financial Bank. First Community Financial Bank, based in Plainfield, Illinois, has locations in Joliet, Plainfield, Homer Glen, Channahon, Naperville, Burr Ridge, Mazon, Braidwood, and Diamond, Illinois. The Bank is dedicated to its founding principles by being actively involved in the communities it serves and providing exceptional personal service delivered by experienced local professionals.

Special Note Concerning Forward-Looking Statements

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Any statements in this release other than statements of historical facts, including statements about management’s beliefs and expectations, are forward-looking statements and should be evaluated as such. These statements are made on the basis of management’s views and assumptions regarding future events and business performance. Words such as “estimate,” “believe,” “anticipate,” “expect,” “intend,” “plan,” “target,” “project,” “should,” “may,” “will” and similar expressions are intended to identify forward-looking statements. Forward-looking statements (including oral representations) involve risks and uncertainties that may cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. These risks and uncertainties involve a number of factors related to the businesses of First Community and its wholly owned bank subsidiary, including: risks associated with First Community’s possible pursuit of acquisitions; unexpected results of acquisitions, including the acquisition of Mazon State Bank; economic conditions in First Community’s, and its wholly owned bank subsidiary’s service areas; system failures; losses of large customers; disruptions in relationships with third party vendors; losses of key management personnel and the inability to attract and retain highly qualified management personnel in the future; the impact of legislation and regulatory changes on the banking industry, including the implementation of the Basel III capital reforms; losses related to cyber-attacks; and liability and compliance costs regarding banking regulations; and changes in local, national and international economic conditions. These and other risks and uncertainties are discussed in more detail in First Community’s filings with the Securities and Exchange Commission, including First Community’s Annual Report on Form 10-K filed on March 14, 2016.

Many of these risks are beyond management’s ability to control or predict. All forward-looking statements attributable to First Community, and its wholly owned bank subsidiary, or persons acting on behalf of each of them are expressly qualified in their entirety by the cautionary statements and risk factors contained in this communication. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. Furthermore, forward-looking statements speak only as of the date they are made. Except as required under the federal securities laws or the rules and regulations of the Securities and Exchange Commission, First Community does not undertake any obligation to update or review any forward-looking information, whether as a result of new information, future events or otherwise.


FINANCIAL SUMMARY
December 31, 2016September 30, 2016June 30, 2016March 31, 2016December 31, 2015
Period-End Balance Sheet
(In thousands)(Unaudited)
Assets
Cash and due from banks$16,225 $21,622 $13,777 $9,132 $10,699
Interest-bearing deposits in banks8,548 33,349 19,335 30,558 7,406
Securities available for sale202,198 188,062 179,517 203,874 205,604
Mortgage loans held for sale1,230 1,331 711 133 400
Loans held for sale1,085
Commercial real estate425,910 419,958 410,461 378,304 381,098
Commercial281,804 274,889 239,038 181,142 179,623
Residential 1-4 family175,978 167,388 143,908 139,208 135,864
Multifamily36,703 31,880 30,809 31,511 34,272
Construction and land development47,338 39,836 30,834 27,798 22,082
Farmland and agricultural production12,628 12,985 9,235 9,060 9,989
Consumer and other7,967 9,280 7,924 7,250 9,391
Leases3,290 739 448
Total loans and leases991,618 956,955 872,657 774,273 772,319
Allowance for loan and lease losses11,684 12,284 12,044 11,335 11,741
Net loans and leases979,934 944,671 860,613 762,938 760,578
Other assets58,990 57,563 51,409 54,227 55,965
Total Assets$1,268,210 $1,246,598 $1,125,362 $1,060,862 $1,040,652
Liabilities and Shareholders' Equity
Noninterest bearing deposits$247,856 $246,262 $203,258 $204,414 $196,063
Savings deposits64,695 61,399 40,603 38,481 36,206
NOW accounts160,862 151,243 103,324 104,136 102,882
Money market accounts282,865 267,667 238,229 237,873 233,315
Time deposits326,878 338,680 311,416 294,076 297,525
Total deposits1,083,156 1,065,251 896,830 878,980 865,991
Total borrowings66,419 61,879 114,701 72,237 68,315
Other liabilities4,920 4,304 2,722 2,855 3,305
Total Liabilities1,154,495 1,131,434 1,014,253 954,072 937,611
Shareholders’ equity113,715 115,164 111,109 106,790 103,041
Total Shareholders’ Equity113,715 115,164 111,109 106,790 103,041
Total Liabilities and Shareholders’ Equity$1,268,210 $1,246,598 $1,125,362 $1,060,862 $1,040,652


FINANCIAL SUMMARY
Three months ended,
December 31, 2016September 30, 2016June 30, 2016March 31, 2016December 31, 2015
Interest income:(In thousands, except per share data)(Unaudited)
Loans, including fees$10,663 $10,229 $9,024 $8,508 $8,401
Securities1,033 1,041 1,042 1,101 1,117
Federal funds sold and other53 43 21 19 19
Total interest income11,749 11,313 10,087 9,628 9,537
Interest expense:
Deposits1,150 1,081 957 940 986
Federal funds purchased and other borrowed funds61 112 119 93 87
Subordinated debentures297 297 297 297 297
Total interest expense1,508 1,490 1,373 1,330 1,370
Net interest income10,241 9,823 8,714 8,298 8,167
Provision for loan losses183 383 500 (515)
Net interest income after provision for loan losses10,058 9,440 8,214 8,298 8,682
Noninterest income:
Service charges on deposit accounts285 289 207 204 190
Gain on sale of loans9 7
Gain on sale of securities 14 603 212
Mortgage fee income214 169 109 78 96
Bargain purchase gain 1,920
Other390 381 315 273 261
Total noninterest income898 2,773 1,241 555 759
Noninterest expenses:
Salaries and employee benefits4,309 3,812 3,311 3,256 3,004
Occupancy and equipment expense548 568 429 437 494
Data processing267 700 690 257 203
Professional fees286 369 375 392 68
Advertising and business development245 328 262 215 219
Losses on sale and writedowns of foreclosed assets, net 1 31 16 109
Foreclosed assets expenses, net of rental income26 (99)60 53 50
Other expense1,238 1,380 974 1,310 898
Total noninterest expense6,919 7,059 6,132 5,936 5,045
Income before income taxes4,037 5,154 3,323 2,917 4,396
Income taxes1,358 1,019 1,058 889 1,474
Net income$2,679 $4,135 $2,265 $2,028 $2,922
Basic earnings per share$0.16 $0.24 $0.13 $0.12 $0.17
Diluted earnings per share$0.15 $0.24 $0.13 $0.12 $0.17


Years Ended December 31,
20162015
Interest income:(in thousands, except share data) (unaudited)
Loans, including fees$38,424 $32,525
Securities4,217 4,134
Federal funds sold and other136 66
Total interest income42,777 36,725
Interest expense:
Deposits4,128 3,923
Federal funds purchased and other borrowed funds385 215
Subordinated debt1,188 1,800
Total interest expense5,701 5,938
Net interest income37,076 30,787
Provision for loan losses1,066 (2,077)
Net interest income after provision for loan losses36,010 32,864
Noninterest income:
Service charges on deposit accounts985 756
Gain on sale of loans16
Gain on sale of securities617 484
Gain on foreclosed assets, net
Mortgage fee income570 531
Bargain purchase gain1,920
Other1,359 726
5,467 2,497
Noninterest expenses:
Salaries and employee benefits14,688 11,538
Occupancy and equipment expense1,982 1,977
Data processing1,914 912
Professional fees1,422 1,201
Advertising and business development1,050 853
Losses on sale and writedowns of foreclosed assets, net48 187
Foreclosed assets expenses, net of rental income40 130
Other expense4,902 3,744
26,046 20,542
Income before income taxes15,431 14,819
Income taxes4,324 5,000
Net income$11,107 $9,819
Common share data
Basic earnings per common share$0.65 $0.58
Diluted earnings per common share0.64 0.57
Weighted average common shares outstanding for basic earnings per common share17,184,432 16,939,010
Weighted average common shares outstanding for diluted earnings per common share17,630,600 17,085,752


Three months ended,
December 31, 2016September 30, 2016December 31, 2015
Average
Balances
Income/
Expense
Yields/
Rates
Average
Balances
Income/
Expense
Yields/
Rates
Average
Balances
Income/
Expense
Yields/
Rates
Assets(Dollars in thousands)(Unaudited)
Loans (1)$973,149 $10,663 4.38%$932,047 $10,229 4.39%$760,332 $8,401 4.42%
Investment securities (2)199,940 1,033 2.07%199,139 1,041 2.09%209,936 1,117 2.13%
Interest-bearing deposits with other banks25,612 53 0.83%24,580 43 0.70%22,378 19 0.34%
Total earning assets$1,198,701 $11,749 3.92%$1,155,766 $11,313 3.92%$992,646 $9,537 3.84%
Other assets61,777 62,470 61,572
Total assets$1,260,478 $1,218,236 $1,054,218
Liabilities
NOW accounts$147,627 $118 0.32%$122,727 $90 0.29%$102,783 $66 0.26%
Money market accounts279,110 203 0.29%260,070 190 0.29%237,818 163 0.27%
Savings accounts63,816 15 0.09%62,179 15 0.10%36,015 14 0.16%
Time deposits331,025 814 0.98%326,860 786 0.96%304,941 743 0.97%
Total interest bearing deposits821,578 1,150 0.56%771,836 1,081 0.56%681,557 986 0.58%
Securities sold under agreements to repurchase26,548 11 0.17%23,339 10 0.17%32,315 12 0.15%
Secured borrowings2,134 22 4.12%7,752 58 2.99%12,875 73 2.27%
FHLB borrowings21,764 28 0.51%42,391 44 0.42%3,261 2 0.25%
Subordinated debentures15,300 297 7.76%15,300 297 7.76%15,300 297 7.76%
Total interest bearing liabilities$887,324 $1,508 0.68%$860,618 $1,490 0.69%$745,308 $1,370 0.74%
Noninterest bearing deposits253,877 239,802 203,108
Other liabilities3,817 3,726 3,963
Total liabilities$1,145,018 $1,104,146 $952,379
Total shareholders’ equity$113,509 $114,090 $101,839
Total liabilities and shareholders’ equity$1,258,527 $1,218,236 $1,054,218
Net interest income $10,241 $9,823 $8,167
Interest rate spread 3.24% 3.23% 3.10%
Net interest margin 3.42% 3.40% 3.29%


Footnotes:
(1) Average loans include nonperforming loans.
(2) No tax-equivalent adjustments were made, as the effect thereof was not material.


Year ended December 31,
20162015
Average
Balances
Income/
Expense
Yields/
Rates
Average
Balances
Income/
Expense
Yields/
Rates
Assets(Dollars in thousands)(Unaudited)
Loans (1)$842,580 $38,424 4.56%$728,276 $32,525 4.47%
Investment securities (2)198,867 4,217 2.12%197,427 4,134 2.09%
Federal funds sold % %
Interest-bearing deposits with other banks17,256 136 0.79%18,087 66 0.36%
Total earning assets$1,058,703 $42,777 4.04%$943,790 $36,725 3.89%
Other assets56,124 49,879
Total assets$1,114,827 $993,669
Liabilities
NOW accounts$112,221 $360 0.32%$91,410 $204 0.22%
Money market accounts242,890 716 0.29%224,640 620 0.28%
Savings accounts46,357 53 0.11%33,815 56 0.17%
Time deposits304,138 2,999 0.99%303,668 3,043 1.00%
Total interest bearing deposits705,606 4,128 0.59%653,533 3,923 0.60%
Securities sold under agreements to repurchase22,966 38 0.17%30,849 39 0.13%
Secured borrowings9,175 221 2.41%6,662 160 2.40%
Mortgage payable %180 13 7.22%
FHLB borrowings33,058 126 0.38%1,686 3 0.18%
Subordinated debentures15,300 1,188 7.76%22,124 1,800 8.14%
Total interest bearing liabilities$786,105 $5,701 0.73%$715,034 $5,938 0.83%
Noninterest bearing deposits216,430 177,085
Other liabilities3,113 4,157
Total liabilities$1,005,648 $896,276
Total shareholders’ equity$109,179 $97,393
Total liabilities and shareholders’ equity$1,114,827 $993,669
Net interest income $37,076 $30,787
Interest rate spread 3.31% 3.06%
Net interest margin 3.50% 3.26%


Footnotes:
(1) Average loans include nonperforming loans.
(2) No tax-equivalent adjustments were made, as the effect thereof was not material.


COMMON STOCK DATA
20162015
Fourth QuarterThird QuarterSecond QuarterFirst QuarterFourth Quarter
(Unaudited)
Market value (1):
End of period$11.70 $9.52 $8.80 $8.70 $7.24
High12.15 9.55 9.10 8.84 7.31
Low9.10 8.35 8.18 7.00 6.26
Book value (end of period)6.59 6.68 6.47 6.22 6.05
Tangible book value (end of period)6.53 6.62 6.47 6.22 6.05
Shares outstanding (end of period)17,242,645 17,237,845 17,183,780 17,175,864 17,026,941
Average shares outstanding17,239,897 17,189,113 17,182,197 17,125,928 16,939,010
Average diluted shares outstanding17,860,017 17,565,667 17,550,547 17,451,354 17,085,752


(1) The prices shown are as reported on the NASDAQ Capital Market


ASSET QUALITY DATA
December 31, 2016September 30, 2016June 30, 2016March 31, 2016December 31, 2015
(Dollars in thousands)(Unaudited)
Loans identified as nonperforming$5,856 $8,385 $2,622 $2,146 $1,411
Other nonperforming loans 91 67
Total nonperforming loans5,856 8,476 2,622 2,146 1,478
Foreclosed assets725 725 2,211 5,231 5,487
Total nonperforming assets$6,581 $9,201 $4,833 $7,377 $6,965
Allowance for loan and lease losses$11,684 $12,284 $12,044 $11,335 $11,741
Nonperforming assets to total assets0.52%0.74%0.43%0.70%0.67%
Nonperforming loans to total assets0.46%0.68%0.23%0.20%0.14%
Allowance for loan and lease losses to nonperforming loans199.52%144.93%459.34%528.19%794.38%


ALLOWANCE FOR LOAN AND LEASE LOSSES ROLLFORWARD
(Dollars in thousands)(Unaudited)Three months ended,
December 31, 2016September 30, 2016June 30, 2016March 31, 2016December 31, 2015
Beginning balance$12,284 $12,044 $11,335 $11,741 $11,753
Charge-offs1,363 340 193 506 133
Recoveries580 197 402 100 636
Net charge-offs (recoveries)783 143 (209)406 (503)
Provision for loan losses183 383 500 (515)
Ending balance$11,684 $12,284 $12,044 $11,335 $11,741
Net chargeoff percentage annualized0.32%0.06%(0.11)%0.21%(0.26)%


OTHER DATA
(Unaudited)
Three months ended,
December 31, 2016September 30, 2016June 30, 2016March 31, 2016December 31, 2015
Return on average assets0.85%1.36%0.84%0.78%1.11%
Return on average equity9.44%14.50%8.36%7.68%11.48%
Net interest margin3.42%3.44%3.39%3.36%3.29%
Average loans to assets77.20%75.50%76.55%73.63%72.12%
Average loans to deposits90.49%90.92%94.16%88.00%85.95%
Average noninterest bearing deposits to total deposits23.44%22.51%22.75%23.35%23.45%
COMPANY CAPITAL RATIOS
(Unaudited)December 31, 2016September 30, 2016June 30, 2016March 31, 2016December 31, 2015
Tier 1 leverage ratio9.10%9.15%9.77%9.72%9.36%
Common equity tier 1 capital ratio10.51%10.83%11.26%11.94%11.62%
Tier 1 capital ratio10.51%10.83%11.26%11.94%11.62%
Total capital ratio12.99%13.52%14.14%14.99%14.69%
Tangible common equity to tangible assets8.88%9.24%10.47%10.26%10.07%


NON-GAAP MEASURES
Pre-tax pre-provision core income (1)
(In thousands)(Unaudited)
For the three months ended,
December 31, 2016September 30, 2016June 30, 2016March 31, 2016December 31, 2015
Income before income taxes$4,037 $5,154 $3,323 $2,917 $4,396
Provision for loan losses183 383 500 (515)
Gain on sale of securities (14)(603) (212)
Merger related expenses included in professional fees 24 26 100
Merger related expenses included in data processing fees14 363 410
Severances paid in relation to the merger 92
Stock options included in other expense 164
Bargain purchase option (1,920)
Losses (gain) on sale and writedowns of foreclosed assets, net 1 31 16 109
Foreclosed assets expense, net of rental income26 (99)60 53 50
Pre-tax pre-provision core income$4,260 $4,148 $3,747 $3,086 $3,828


(1) This is a non-GAAP financial measure. In compliance with applicable rules of the Securities and Exchange Commission, this non-GAAP measure is reconciled to pre-tax net income, which is the most directly comparable GAAP financial measure. The Company’s management believes the presentation of pre-tax pre-provision core income provides investors with a greater understanding of the Company’s operating results, in addition to the results measured in accordance with GAAP.


Contact: Glen L. Stiteley, Chief Financial Officer - (815) 725-1885

Source:First Community Financial Partners, Inc.