NEXITY FINANCIAL CORPORATION 
By Nexity Financial Corporation (NASDAQ: NXTY):
First Quarter 2007 Highlights:
- Diluted earnings per share of $0.18, up 25.2% from last year
- Net income of $1.57 million, up 19.8% from last year
- Total assets of $881.0 million, up 9.6% from last year's $803.9 million
- Total loans of $585.0 million, up 10.8% from last year's $527.9 million
- Total deposits of $631.5 million, up 3.7% from last year's $608.8 million
- Strong credit quality with annualized net charge-offs of 0.04% and nonperforming loans of 0.10% of total loans
Nexity Financial Corporation (NASDAQ: NXTY) today reported first quarter net income of $1.57 million, or $0.18 per diluted share. Diluted earnings per share grew 25.2% from the same period in 2006 while net income was up 19.8%. The improved earnings were primarily related to rapid growth in noninterest income and a lower provision for loan losses. Noninterest income was up 59.8% from the same period in 2006. A provision for loan losses was not necessary in the first quarter of 2007 because loans were down from year-end compared with a $470,000 provision for loan losses in the first quarter of 2006.
?We continued to build a national correspondent bank during the first quarter of 2007 with the addition of a Midwest office and a Florida office. Our earnings increased significantly versus first quarter of 2006 while we maintained very sound credit quality,? said Greg Lee, Chairman and CEO of Nexity Financial Corporation. ?We are committed to continuing to invest in people, new markets, and new products and services to provide superior correspondent banking services to community banks.?
Return on average assets and return on average equity were 0.75% and 9.62%, respectively, for the first quarter of 2007 compared with 0.68% and 8.28% for the same period in 2006 and 0.76% and 10.12% during the fourth quarter in 2006.
Total assets were $881.0 million at March 31, 2007, up $77.1 million or 9.6% from the $803.9 million reported at March 31, 2006. Total loans were $585.0 million at March 31, 2007, up $57.1 million or 10.8% from the $527.9 million reported at March 31, 2006. Total deposits were $631.5 million at March 31, 2007, up $22.8 million or 3.7% from the $608.8 million reported at March 31, 2006.
Net interest income, the major component of Nexity's income statement was $6.10 million for the first quarter of 2007 versus $6.16 million for the same period in 2006, a slight decrease of 1.0%. This decrease was due to a lower net interest margin. Average interest-earning assets were up 9.2% while the net interest margin decreased from 3.28% in 2006 to 2.97% in 2007. The net interest margin was lower in 2007 primarily due to the increased cost of interest-bearing liabilities, lower loan fees, and a lower level of noninterest bearing sources of funds. Our target level for the net interest margin is 3.00% and we anticipate maintaining this level in 2007.
Average interest-earning assets were higher primarily because of growth in loans. Average loans were up $57.6 million or 11.0%. The mix of earning assets improved as average loans as a percentage of average earning assets improved from 68.8% during the first quarter of 2006 to 69.9% for the same period in 2007.
The provision for loan losses during the first quarter of 2007 was $0 compared with $470,000 during the same period in 2006. The provision for loan losses was lower primarily because of a decrease in loans from year-end. Net charge-offs continue to be at a very favorable level at $53,917 or 0.04% of average loans for the first quarter of 2007 on an annualized basis versus $34,622 or 0.03% for the same period in 2006.
Noninterest income for the first quarter of 2007 was $620,877, up $232,345 or 59.8% from the $388,532 reported for the same period in 2006. Noninterest income was up because of growth in each area of noninterest income which primarily is generated by our correspondent banking business. We experienced substantial revenue growth in our brokerage and investment services division and our clearing and cash management business with correspondent banks. Income from the brokerage and investment services division was up $174,463 or 88.5% during the first quarter of 2007 compared with the same period last year. Income from our clearing and cash management business with correspondent banks was up $15,733 or 31.6% during the first quarter of 2007 compared with the same period last year.
Noninterest expense for the first quarter of 2007 was $4.4 million which was up $428,741 or 10.8% from the $4.0 million reported for the same period in 2006. Noninterest expense was higher than last year primarily due to increases related to the start-up costs of the Midwest and Florida offices and the Wealth Management business. Expenses related to these new initiatives in the first quarter of 2007 were approximately $250,000.
The efficiency ratio was 65.62% for the first quarter of 2007 which was up from the 54.71% reported for the fourth quarter of 2006 and the 60.75% reported for the same period in 2006. The efficiency ratio was adversely affected by the slight decrease in net interest income and the incremental overhead growth associated with the Midwest and Florida expansion and the start-up costs relate to the Wealth Management business. We expect to begin to generate revenues in the Midwest and Florida offices in the second quarter and the Wealth Management business in the third quarter. These efforts will have a negative impact on the efficiency ratio in 2007 and we expect this ratio to be between 63% and 65% for the year.
Credit quality continues to be strong as annualized net charge-offs were 0.04% of average loans during the first quarter of 2007 compared with 0.03% for the same period in 2006 and 0.04% during the fourth quarter of 2006. Nonperforming loans were $562,829 or 0.10% of total loans at March 31, 2007 compared with $2.7 million or 0.50% of total loans at March 31, 2006. Nonperforming assets were $5.2 million or 0.59% of total assets at March 31, 2007 compared with $4.2 million or 0.52% of total assets at March 31, 2006. The allowance for loan losses was 1.26% of total loans at March 31, 2007 and 1.31% of total loans at March 31, 2006.
Nexity's total risk-based capital, tier 1 risk-based capital, and leverage ratios at March 31, 2007 were 12.21%, 11.17%, and 9.28%, respectively, compared with 12.44%, 11.43%, and 10.01, respectively, at March 31, 2006. On March 3, 2006, Nexity announced a stock repurchase program to acquire up to 400,000 shares, or approximately 4.6% of the total common shares outstanding at that time. At March 31, 2007, Nexity had completed the repurchase of the 400,000 shares. On April 24, 2007, Nexity announced a second stock repurchase plan to acquire up to 250,000 shares, or approximately 3.0% of the total common shares outstanding at that time.
Conference Call / Webcast Information
Nexity Financial Corporation will host a conference call on Tuesday, May 1 at 10:00 AM Eastern Daylight Time (EDT) to discuss the first quarter 2007 results. Additional material information, including forward-looking statements such as trends and projections, may be discussed during the presentation. To participate in the conference call or webcast, please follow the instructions listed below.
Webcast: Live via the Internet and Windows Media Player
http://www.nexitybank.com/ then to the Investor
Relations section, to conference in via the web
Then click on "First Quarter 2007 Earnings Release
Conference Call." The Webcast access will be "listen
only."
Webcast URL: http://www.vcall.com/IC/CEPage.asp?ID=115258
Live via telephone to conference in via telephone
1-877-407-8033 (U.S. and Canada)
(201) 689-8033 (International)About Nexity Financial Corporation
Nexity Financial Corporation is an $881 million commercial bank offering deposit products nationwide consisting of money markets, checking accounts and online access. Nexity generates the majority of its income through wholesale correspondent banking activities. Nexity is headquartered in Birmingham, Alabama. Customer Service Representatives can be reached at 1-877-738-6391. To learn more about Nexity Bank please visit www.nexitybank.com.
CAUTION ABOUT FORWARD-LOOKING STATEMENTS
In accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Nexity Financial Corporation notes that any statements in this press release and elsewhere that are not historical facts are ?forward-looking statements.? The words ?expect,? ?anticipate,? ?intend,? ?consider,? ?plan,? ?believe,? ?seek,? ?should,? ?estimate,? and similar expressions are intended to identify such forward-looking statements, but other statements may constitute forward-looking statements. The forward-looking statements involve risks and uncertainties that may cause Nexity's actual results of operations to differ materially from expected results. For a discussion of such risks and uncertainties, see Nexity's Annual Report on Form 10-K for the fiscal year ended December 31, 2006, as well as its other filings with the U.S. Securities and Exchange Commission. Nexity assumes no obligation to update any forward-looking statements contained in this document as a result of new information or future events or developments.
| Nexity Financial Corporation | |||||
| Financial Summary (Unaudited) | |||||
| Three Months Ended | |||||
| March 31, | Percent | ||||
| Income Statement Data | 2007 | 2006 | Change | ||
| Interest income | $15,371,793 | $13,055,677 | 17.7% | ||
| Interest expense | 9,271,346 | 6,890,693 | 34.5 | ||
| Net interest income | 6,100,447 | 6,164,984 | (1.0) | ||
| Provision for loan losses | 0 | 470,000 | (100.0) | ||
| Net interest income after provision for loan losses | |||||
| 6,100,447 | 5,694,984 | 7.1 | |||
| Noninterest income | 620,877 | 388,532 | 59.8 | ||
| Noninterest expense | 4,410,305 | 3,981,564 | 10.8 | ||
| Income before income taxes | 2,311,019 | 2,101,952 | 9.9 | ||
| Applicable income tax expense | 744,699 | 795,000 | (6.3) | ||
| Net income | $1,566,320 | $1,306,952 | 19.8% | ||
| Net income per share - basic | $0.19 | $0.15 | 24.7 | ||
| Net income per share - diluted | $0.18 | $0.14 | 25.2 | ||
| Weighted average shares outstanding - basic | 8,373,973 | 8,714,408 | (3.9) | ||
| Weighted average shares outstanding - diluted | 8,887,879 | 9,286,534 | (4.3) | ||
Performance Ratios (Annualized(a)) | |||||
Return on average assets(a) | 0.75% | 0.68% | 8.9% | ||
Return on average stockholders' equity(a) | 9.62 | 8.28 | 16.2 | ||
Net yield on average interest-earning assets (tax equivalent)(a) | |||||
| 2.97 | 3.28 | (9.4) | |||
| Efficiency ratio | 65.62 | 60.75 | 8.0 | ||
| Selected Average Balances | |||||
| (In thousands) | |||||
| Total assets | $852,515 | $774,358 | 10.1% | ||
| Interest-earning assets | 832,921 | 762,614 | 9.2 | ||
| Loans-net of unearned income | 582,086 | 524,524 | 11.0 | ||
| Investment securities | 241,143 | 212,855 | 13.3 | ||
| Deposits | 639,763 | 583,177 | 9.7 | ||
| Noninterest-bearing deposits | 7,262 | 3,792 | 91.5 | ||
| Interest-bearing deposits | 632,501 | 579,385 | 9.2 | ||
| Interest-bearing liabilities | 768,656 | 699,012 | 10.0 | ||
| Stockholders' equity | 66,034 | 64,024 | 3.1 | ||
| Nexity Financial Corporation | ||||||
| Financial Summary (Unaudited) | ||||||
Selected Financial Data at Period-End | ||||||
March 31, | Percent | |||||
(In thousands) | 2007 | 2006 | Change | |||
| Total assets | $881,015 | $803,867 | 9.6% | |||
| Interest-earning assets | 855,279 | 788,048 | 8.5 | |||
| Loans-net of unearned income | 584,965 | 527,861 | 10.8 | |||
| Allowance for loan losses | 7,358 | 6,902 | 6.6 | |||
| Investment securities | 242,874 | 217,362 | 11.7 | |||
| Deposits | 631,543 | 608,789 | 3.7 | |||
| Stockholders' equity | 66,923 | 63,269 | 5.8 | |||
| Average loans to average deposits | 90.98% | 89.94% | 1.2% | |||
| Total loans to interest-earning assets |
|
|
| |||
68.39 | 66.98 | 2.1 | ||||
| Average stockholders' equity to average assets | ||||||
| 7.75 | 8.27 | (6.3) | ||||
| Tier 1 capital to average assets (Leverage ratio) | ||||||
| 9.28 | 10.01 | (7.3) | ||||
| Risk-based capital ratios: | ||||||
| Tier 1 capital | 11.17 | 11.43 | (2.3) | |||
| Total capital | 12.21 | 12.44 | (1.8) | |||
| Book value per common share | $8.02 | $7.26 | 10.5 | |||
| Tangible book value per common share | ||||||
| $7.91 | $7.15 | 10.6 | ||||
| Total common shares outstanding | ||||||
| 8,340,680 | 8,716,425 | (4.3) | ||||
| Credit Quality Data | ||||||
| Nonperforming assets | $5,230,229 | $4,150,356 | 26.0% | |||
| Nonperforming loans | 562,829 | 2,650,356 | (78.8) | |||
| Net charge-offs | 53,917 | 34,622 | 55.7 | |||
| Nonperforming assets to total assets | 0.59% | 0.52% | 15.0 | |||
| Annualized net charge-offs to average total loans (YTD) | ||||||
| 0.04 | 0.03 | 40.3 | ||||
| Allowance for loan losses to total loans | ||||||
| 1.26 | 1.31 | (3.8) | ||||
| Allowance for loan losses to nonperforming loans | ||||||
| 1,307.30 | 260.42 | 402.0 | ||||
| Nexity Financial Corporation | |||||||||||||||||||||||||||||||||||||||
| Financial Summary (Unaudited) | |||||||||||||||||||||||||||||||||||||||
| Consolidated Balance Sheets | |||||||||||||||||||||||||||||||||||||||
| (In thousands) | 3/31/07 | 12/31/06 | 9/30/06 | 6/30/06 | 3/31/06 | ||||||||||||||||||||||||||||||||||
| ASSETS | |||||||||||||||||||||||||||||||||||||||
| Cash and due from banks | $ | 5,336 | $ | 5,591 | $ | 4,237 | $ | 3,496 | $ | 3,501 | |||||||||||||||||||||||||||||
| Interest-bearing deposits in other banks | 2,575 | 1,905 | 925 | 1,223 | 2,271 | ||||||||||||||||||||||||||||||||||
| Federal funds sold | 24,865 | 19,977 | 43,250 | 55,083 | 40,554 | ||||||||||||||||||||||||||||||||||
| Investment securities available-for-sale, at fair value | 242,874 | 239,533 | 235,021 | 223,850 | 217,362 | ||||||||||||||||||||||||||||||||||
| Trading securities, at fair value | 0 | 1,998 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||||
| Loans, net of unearned income | 584,965 | 605,953 | Share
© Business Wire - 2007
Nexity Financial Corporation is bank holding company and financial holding company The Company operates a wholly owned subsidiary bank, Nexity Bank, which is headquartered in Birmingham, Alabama, with additional correspondent banking offices in Atlanta, Georgia; Myrtle Beach and Columbia, South Carolina; Dallas, Texas; Orlando, Florida; Milwaukee, Wisconsin, and Charlotte and Raleigh, North Carolina. Nexity Bank is an Alabama state chartered bank. The Company conducts deposit business in all 50 states in the United States and conduct loan business primarily in the southeastern United States and Texas. As of December 31, 2007, The Company had total loans of $644.9 million and total deposits of $709.2 million.
Sector
Banks
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