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First Community Financial Partners, Inc. Announces First Quarter 2017 Financial Results

First Quarter 2017 Highlights

  • Signed definitive agreement to merge with First Busey Corporation (“First Busey”)

  • Diluted earnings per share (“EPS”) of $0.19 for the three months ended March 31, 2017, an increase of 26.67% from the fourth quarter 2016

  • Asset growth of $68.6 million, or 5.41%, from the end of the fourth quarter of 2016

  • Loan growth of $72.1 million, or 7.30%, from the end of the fourth quarter of 2016

  • Deposit growth of $25.1 million, or 2.32%, from the end of the fourth quarter of 2016

  • Noninterest bearing deposits increase of $13.7 million, or 5.52%, from the end of the fourth quarter 2016

JOLIET, Ill., April 25, 2017 (GLOBE NEWSWIRE) -- First Community Financial Partners, Inc. (NASDAQ:FCFP) (“First Community” or the “Company”), the parent company of First Community Financial Bank (the “Bank”), today reported financial results as of and for the three months ended March 31, 2017.

Net income applicable to shareholders for the quarter ended March 31, 2017 was $3.4 million, or $0.19 per diluted share, compared with $2.7 million, or $0.15 per diluted share, for the quarter ended December 31, 2016 and $2.0 million, or $0.12 per diluted share, for the quarter ended March 31, 2016. First quarter results were positively impacted by an increase in net interest income and reduced income tax expense from the benefit related to stock incentive compensation, offset by increased professional fees in connection with the announced pending merger with First Busey.

“We are seeing positive trends across most of our key metrics including strong balance sheet growth, an expanding net interest margin and improving credit quality,” said Roy Thygesen, Chief Executive Officer of First Community. “We continue to successfully attract new commercial customers to the Bank, which helped drive organic loan growth of 29% in the first quarter. We are executing well and looking forward to completing our merger with First Busey Corporation, which we believe will enhance our ability to serve our customers’ needs through an expanded offering of financial products and services.”

First Quarter 2017 Financial Results

Loans

At March 31, 2017, total loans were $1.1 billion, an increase of $72.1 million, or 7.30%, since December 31, 2016 and $286.2 million, or 36.96%, year-over-year.

Commercial loans grew $14.5 million, or 5.15%, since year end 2016 and $115.2 million, or 63.58%, year-over-year. Commercial real estate loans increased $48.1 million, or 11.30%, since year end 2016, and $95.7 million, or 25.31%, year-over-year. Residential real estate loans grew $5.4 million, or 3.10%, since year end 2016 and $42.2 million, or 30.33% year-over-year. Construction loans were up $3.7 million, or 7.92%, since year end 2016 and $23.3 million, or 83.77%, year-over-year.

Deposits and Other Borrowings

At March 31, 2017, total deposits were $1.11 billion, an increase of $25.1 million, or 2.32%, since December 31, 2016 and $229.3 million, or 26.08%, year-over-year.

Noninterest bearing demand deposits increased $13.7 million, or 5.52%, since December 31, 2016 and $57.1 million, or 27.94%, year-over-year. Interest bearing transactional accounts (NOW, savings and money market accounts) increased $20.6 million, or 4.05%, during the first quarter of 2017 and $148.5 million, or 39.03%, year-over-year. Time deposits decreased $9.2 million, or 2.80%, during the first quarter, but increased $23.6 million, or 8.04%, year-over-year. The ratio of time deposits to total deposits was 28.67% at March 31, 2017, down from 30.18% at December 31, 2016 and 30.36% at March 31, 2016. Other borrowings increased $38.1 million, or 74.57%, since the end of the fourth quarter of 2016, and $32.4 million, or 56.84%, year-over-year, as a result of higher reliance on FHLB borrowings in order to fund loan growth.

Net Interest Income and Margin

First quarter 2017 net interest income was up $387,000, or 3.78%, from the fourth quarter of 2016. The increase was primarily attributable to an increase in average loan balances and higher net interest margin.

The Company’s net interest margin was 3.50% for the first quarter of 2017, compared to 3.40% in the fourth quarter of 2016. The increase was primarily attributable to two prime rate increases since mid December 2016 in response to the Federal Reserve increasing the targeted Federal Funds rate by 25 basis points in December 2016 and again in March 2017.

Noninterest Income and Expense

First quarter 2017 noninterest income increased $59,000, or 6.57%, from the fourth quarter of 2016. The increase was primarily related to increases in service charges on deposits and other non-interest income.

Service charges on deposits increased $24,000, or 8.42%, from the fourth quarter of 2016, which was primarily the result of higher account analysis fees. Mortgage income was down $98,000, or 45.79%, for the first quarter of 2017, as compared to the fourth quarter of 2016, as a result of lower mortgage sale volumes. The increase in other non-interest income of $142,000 was primarily the result of a $144,000 fee earned on a swap transaction that closed in the first quarter of 2017 offset by lower income related to letter of credit fees, lease referral income and other miscellaneous income.

First quarter 2017 noninterest expense increased $521,000, or 7.53%, from the fourth quarter of 2016. The increase from the fourth quarter was primarily related to an increase in professional fees related to our pending merger with First Busey and an increase in data processing fees as a result of accrual reversals booked in the fourth quarter of 2016.

Income Taxes

Income taxes for the first quarter of 2017 were $365,000, or 9.68%, of income before income taxes as compared to $1.4 million, or 33.64%, of income before income taxes for the fourth quarter of 2016. The decrease in effective tax rate was largely related to $936,000 in excess tax benefit on stock-based compensation, which is recognized as a credit to income tax expense by way of the adoption of ASU 2016-09.

Asset Quality

Total nonperforming assets decreased $225,000, or 3.42%, to $6.4 million at March 31, 2017 from December 31, 2016. The ratio of nonperforming assets to total assets was 0.48% at March 31, 2017 compared to 0.52% at December 31, 2016. The decrease in total nonperforming assets was the result of charge-offs and the return of one loan to accrual status during the first quarter. In addition, one loan was moved to other real estate owned during the first quarter.

The Company had net charge-offs on loans of $108,000 in the first quarter of 2017, compared to net charge-offs of $783,000 in the fourth quarter of 2016.

The ratios of the Company’s allowance for loan losses to nonperforming loans and allowance for loan losses to total loans were 219.65% and 1.12% at March 31, 2017, respectively.

The Company recorded a provision for loan losses in the first quarter of 2017 of $375,000 compared to $0 for the same period in 2016. The current year provision was the result of the loan growth experienced during the first quarter of 2017.

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 Joliet, 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.

Additional Information
This document does not constitute an offer to sell or the solicitation of an offer to buy any securities. First Busey has filed a registration statement on Form S-4 with the SEC in connection with the proposed merger. The registration statement includes a proxy statement of First Community that also constitutes a prospectus of First Busey, which will be sent to the shareholders of First Community. First Community’s shareholders are advised to read the proxy statement/prospectus because it will contain important information about First Busey, First Community and the proposed merger. This document and other documents relating to the merger filed by First Busey and First Community can be obtained free of charge from the SEC’s website at www.sec.gov. These documents also can be obtained free of charge by accessing First Busey’s website at www.busey.com under the tab “Investors Relations” and then under “SEC Filings” or by accessing First Community’s website at www.fcbankgroup.com under “Investor Relations” and then under “SEC Filings.” Alternatively, these documents, when available, can be obtained free of charge from First Busey upon written request to First Busey Corporation, Corporate Secretary, 100 W. University Avenue, Champaign, Illinois 61820 or by calling (217) 365-4544, or from First Community, upon written request to First Community Financial Partners, Inc., Corporate Secretary, 2801 Black Road, Joliet, Illinois 60435 or by calling (815) 725-1885.

Participations in the Solicitation
First Busey, First Community and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from shareholders in connection with the proposed merger under the rules of the SEC. Information about these participants may be found in the definitive proxy statement of First Busey relating to its 2017 Annual Meeting of Stockholders filed with the SEC on April 13, 2017 and the Annual Report on Form 10-K of First Community filed with the SEC on March 8, 2017, as amended by Amendment No. 1 to Form 10-K filed with the SEC on April 13, 2017. These documents can be obtained free of charge from the sources indicated above. Additional information regarding the interests of these participants will also be included in the proxy statement/prospectus regarding the proposed merger when it becomes available.

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 proposed merger with First Busey, including possible termination of the Agreement and Plan of Merger; unexpected results of acquisitions; 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; 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 (the “SEC”), including First Community’s Annual Report on Form 10-K filed on March 8, 2017, as amended by Amendment No. 1 to Form 10-K filed with the SEC on April 13, 2017.

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 SEC, 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
March 31,
2017
December 31,
2016
September 30,
2016
June 30,
2016
March 31,
2016
Period-End Balance Sheet
(In thousands)(Unaudited)
Assets
Cash and due from banks $12,740 $16,225 $21,622 $13,777 $9,132
Interest-bearing deposits in banks 13,494 8,548 33,349 19,335 30,558
Securities available for sale 200,758 202,198 188,062 179,517 203,874
Mortgage loans held for sale 78 1,230 1,331 711 133
Loans held for sale 1,085
Leases, net 3,381 3,290 739 448
Commercial real estate 474,035 425,910 419,958 410,461 378,304
Commercial 296,309 281,804 274,889 239,038 181,142
Residential 1-4 family 181,426 175,978 167,388 143,908 139,208
Multifamily 36,040 36,703 31,880 30,809 31,511
Construction and land development 51,085 47,338 39,836 30,834 27,798
Farmland and agricultural production 11,892 12,628 12,985 9,235 9,060
Consumer and other 9,664 7,967 9,280 7,924 7,250
Total loans 1,060,451 988,328 956,216 872,209 774,273
Allowance for loan losses 11,951 11,684 12,284 12,044 11,335
Net loans 1,048,500 976,644 943,932 860,165 762,938
Other assets 57,818 58,990 57,563 51,409 54,227
Total Assets $1,336,769 $1,268,210 $1,246,598 $1,125,362 $1,060,862
Liabilities and Shareholders' Equity
Noninterest bearing deposits $261,532 $247,856 $246,262 $203,258 $204,414
Savings deposits 69,295 64,695 61,399 40,603 38,481
NOW accounts 165,696 160,862 151,243 103,324 104,136
Money market accounts 293,999 282,865 267,667 238,229 237,873
Time deposits 317,724 326,878 338,680 311,416 294,076
Total deposits 1,108,246 1,083,156 1,065,251 896,830 878,980
Total borrowings 104,598 66,419 61,879 114,701 72,237
Other liabilities 3,161 4,920 4,304 2,722 2,855
Total Liabilities 1,216,005 1,154,495 1,131,434 1,014,253 954,072
Shareholders’ equity 120,764 113,715 115,164 111,109 106,790
Total Shareholders’ Equity 120,764 113,715 115,164 111,109 106,790
Total Liabilities and Shareholders’ Equity $1,336,769 $1,268,210 $1,246,598 $1,125,362 $1,060,862


FINANCIAL SUMMARY
Three months ended,
March 31,
2017
December 31,
2016
September 30,
2016
June 30,
2016
March 31,
2016
Interest income: (In thousands, except per share data)(Unaudited)
Loans, including fees $11,032 $10,663 $10,229 $9,024 $8,508
Securities 1,134 1,033 1,041 1,042 1,101
Federal funds sold and other 39 53 43 21 19
Total interest income 12,205 11,749 11,313 10,087 9,628
Interest expense:
Deposits 1,211 1,150 1,081 957 940
Federal funds purchased and other borrowed funds 69 61 112 119 93
Subordinated debentures 297 297 297 297 297
Total interest expense 1,577 1,508 1,490 1,373 1,330
Net interest income 10,628 10,241 9,823 8,714 8,298
Provision for loan losses 375 183 383 500
Net interest income after provision for loan losses 10,253 10,058 9,440 8,214 8,298
Noninterest income:
Service charges on deposit accounts 309 285 289 207 204
Gain on sale of loans 9 7
Gain on sale of securities 14 603
Mortgage fee income 116 214 169 109 78
Bargain purchase gain 1,920
Other 532 390 381 315 273
Total noninterest income 957 898 2,773 1,241 555
Noninterest expenses:
Salaries and employee benefits 4,222 4,309 3,812 3,311 3,256
Occupancy and equipment expense 475 548 568 429 437
Data processing 420 267 700 690 257
Professional fees 734 286 369 375 392
Advertising and business development 210 245 328 262 215
Losses on sale and writedowns of foreclosed assets, net 1 31 16
Foreclosed assets expenses, net of rental income 19 26 (99)60 53
Other expense 1,359 1,237 1,380 974 1,310
Total noninterest expense 7,439 6,918 7,059 6,132 5,936
Income before income taxes 3,771 4,038 5,154 3,323 2,917
Income taxes 365 1,358 1,019 1,058 889
Net income applicable to common shareholders $3,406 $2,680 $4,135 $2,265 $2,028
Basic earnings per share $0.19 $0.16 $0.24 $0.13 $0.12
Diluted earnings per share $0.19 $0.15 $0.24 $0.13 $0.12


Three months ended,
March 31, 2017December 31, 2016March 31, 2016
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) $1,013,044 $11,032 4.42%$971,198 $10,663 4.37%$768,983 $8,508 4.45%
Investment securities (2) 203,886 1,134 2.26%199,940 1,033 2.06%206,535 1,101 2.14%
Interest-bearing deposits with other banks 13,566 39 1.17%25,612 53 0.82%13,690 19 0.56%
Total earning assets $1,230,496 $12,205 4.02%$1,196,750 $11,749 3.91%$989,208 $9,628 3.91%
Other assets 61,583 61,777 55,124
Total assets $1,292,079 $1,258,527 $1,044,332
Liabilities
NOW accounts $163,922 $117 0.29%$147,627 $118 0.32%$104,467 $71 0.27%
Money market accounts 284,043 270 0.39%279,110 203 0.29%234,455 162 0.28%
Savings accounts 65,882 16 0.10%63,816 15 0.09%37,194 11 0.12%
Time deposits 325,690 808 1.01%331,025 814 0.98%292,491 696 0.96%
Total interest bearing deposits 839,537 1,211 0.58%821,578 1,150 0.56%668,607 940 0.57%
Securities sold under agreements to repurchase 23,543 10 0.17%26,548 11 0.16%23,902 9 0.15%
Secured borrowings %2,134 22 4.10%10,528 74 2.83%
FHLB borrowings 31,398 59 0.76%21,764 28 0.51%12,067 10 0.33%
Subordinated debentures 15,300 297 7.87%15,300 297 7.72%15,300 297 7.81%
Total interest bearing liabilities $909,778 $1,577 0.70%$887,324 $1,508 0.68%$730,404 $1,330 0.73%
Noninterest bearing deposits 260,632 253,877 205,215
Other liabilities 4,370 3,817 3,051
Total liabilities $1,174,780 $1,145,018 $938,670
Total shareholders’ equity $117,299 $113,509 $105,662
Total liabilities and shareholders’ equity $1,292,079 $1,258,527 $1,044,332
Net interest income $10,628 $10,241 $8,298
Interest rate spread 3.32% 3.23% 3.18%
Net interest margin 3.50% 3.40% 3.37%
Footnotes:
(1) Average loans include nonperforming loans.
(2) No tax-equivalent adjustments were made, as the effect thereof was not material.


COMMON STOCK DATA
20172016
First
Quarter
Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
(Unaudited)
Market value (1):
End of period $12.75 $11.70 $9.52 $8.80 $8.70
High 13.65 12.15 9.55 9.10 8.84
Low 10.70 9.10 8.35 8.18 7.00
Book value (end of period) 6.79 6.59 6.68 6.47 6.22
Tangible book value (end of period) 6.73 6.53 6.62 6.47 6.22
Shares outstanding (end of period) 17,774,886 17,242,645 17,237,845 17,183,780 17,175,864
Average shares outstanding 17,533,867 17,239,897 17,189,113 17,182,197 17,125,928
Average diluted shares outstanding 18,213,720 17,860,017 17,565,667 17,550,547 17,451,354
(1) The prices shown are as reported on the NASDAQ Capital Market.



ASSET QUALITY DATA
March 31,
2017
December 31,
2016
September 30,
2016
June 30,
2016
March 31,
2016
(Dollars in thousands)(Unaudited)
Loans identified as nonperforming $5,441 $5,856 $8,385 $2,622 $2,146
Other nonperforming loans 91
Total nonperforming loans 5,441 5,856 8,476 2,622 2,146
Foreclosed assets 915 725 725 2,211 5,231
Total nonperforming assets $6,356 $6,581 $9,201 $4,833 $7,377
Allowance for loan losses $11,951 $11,684 $12,284 $12,044 $11,335
Nonperforming assets to total assets 0.48%0.52%0.74%0.43%0.70%
Nonperforming loans to total assets 0.41%0.46%0.68%0.23%0.20%
Allowance for loan losses to nonperforming loans 219.65%199.52%144.93%459.34%528.19%


ALLOWANCE FOR LOAN LOSSES ROLLFORWARD
(Dollars in thousands)(Unaudited) Three months ended,
March 31,
2017
December 31,
2016
September 30,
2016
June 30,
2016
March 31,
2016
Beginning balance $11,684 $12,284 $12,044 $11,335 $11,741
Charge-offs 206 1,363 340 193 506
Recoveries 98 580 197 402 100
Net charge-offs 108 783 143 (209)406
Provision for loan losses 375 183 383 500
Ending balance $11,951 $11,684 $12,284 $12,044 $11,335
Net charge-offs $108 $783 $143 $(209)$406
Net chargeoff percentage annualized 0.04%0.32%0.06%(0.11)%0.21%


OTHER DATA
(Unaudited)
Three months ended,
March 31,
2017
December 31,
2016
September 30,
2016
June 30,
2016
March 31,
2016
Return on average assets 1.05%0.85%1.36%0.84%0.78%
Return on average equity 11.61%9.44%14.50%8.36%7.68%
Net interest margin 3.50%3.42%3.44%3.39%3.36%
Average loans to assets 78.40%77.20%75.50%76.55%73.63%
Average loans to deposits 92.08%90.49%90.92%94.16%88.00%
Average noninterest bearing deposits to total deposits 23.52%23.44%22.51%22.75%23.35%
COMPANY CAPITAL RATIOS
(Unaudited) March 31,
2017
December 31,
2016
September 30,
2016
June 30,
2016
March 31,
2016
Tier 1 leverage ratio 9.26%9.10%9.15%9.77%9.72%
Common equity tier 1 capital ratio 10.33%10.51%10.83%11.26%11.94%
Tier 1 capital ratio 10.33%10.51%10.83%11.26%11.94%
Total capital ratio 12.68%12.99%13.52%14.14%14.99%
Tangible common equity to tangible assets 8.95%8.88%9.24%10.47%10.26%


NON-GAAP MEASURES
Pre-tax pre-provision core income (1)
(In thousands)(Unaudited)
For the three months ended,
March 31,
2017
December 31,
2016
September 30,
2016
June 30,
2016
March 31,
2016
Pre-tax net income$3,771 $4,038 $5,154 $3,323 $2,917
Provision for loan losses375 183 383 500
Gain on sale of securities (14)(603)
Merger related employee retention payments232
Merger related expenses included in professional fees417 24 26 100
Merger related expenses included in data processing fees 14 363 410
Severances paid in relation to the merger 92
Stock options included in other expense 165
Bargain purchase option (1,920)
Losses (gain) on sale and writedowns of foreclosed assets, net 1 31 16
Foreclosed assets expense, net of rental income19 26 (99)60 53
Pre-tax pre-provision core income$4,814 $4,261 $4,149 $3,747 $3,086
(1) This is a non-GAAP financial measure. In compliance with applicable rules of the SEC, 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.