Farmers Capital Bank Corp. (FFKT, Financial) filed Quarterly Report for the period ended 2012-06-30.
Farmers Capital Bank Corp has a market cap of $59.6 million; its shares were traded at around $8.17 with a P/E ratio of 9.9 and P/S ratio of 0.6.
Interest income and interest expense related to nearly all categories of the Company s earning assets and interest paying liabilities have declined in the quarterly comparison. The $2.0 million decrease from interest income in the comparison is primarily made up of lower interest on loans and investment securities of $1.6 million or 10.2% and $412 thousand or 9.4%, respectively. The decrease in interest on loans was driven primarily by a $102 million or 8.9% decrease in average volume and, to a lesser extent, a decrease in the average rate earned of six basis points to 5.5% from 5.6%. For investment securities, the decrease in interest income is rate driven, as a 66 basis point decrease in the average rate earned of 2.6% more than offset a higher average balance outstanding of $85.4 million or 15.4%.
Net interest income was $26.6 million for the first six months of 2012, a decrease of $904 thousand or 3.3% compared to $27.5 million for the first six months of 2011. The decrease in net interest income is attributed to a $3.8 million or 9.4% decrease in interest income, primarily on loans, which was partially offset by a $2.9 million or 22.6% decrease in interest expense, primarily on deposits. Similar to that of the quarterly comparison, the decrease in total interest income and interest expense is mainly attributed to both rate and volume declines related to loans and deposits and are the result of both an overall weak economic environment and the Company s balance sheet management strategy. This strategy includes being more selective in pricing deposits and extending loans in an effort to improve net interest margin, overall profitability, and capital position. The Company is generally earning and paying less interest from its earning assets and funding sources as the average rates earned and paid have decreased. This includes repricing of variable and floating rate assets and liabilities that have reset to net overall lower amounts since their previous repricing date as well as activity related to new earning assets and funding sources. Moreover, an increase in available funds has been invested in lower yielding investment securities or cash equivalents in response to a decrease in high quality loan demand.
The net amortized cost amount of investment securities increased $17.9 million or 3.1% and the net unrealized gain related to investments in the available for sale portfolio increased $1.2 million or 8.5%. The increase in amortized cost amounts is the result of net purchase activity, which exceeded activity related to sales, maturities, and calls of securities. During the first six months of 2012, the Company purchased $185 million of available for sale investment securities which exceeded the amounts sold, matured, and called of $66.5 million, $5.9 million, and $92.9 million, respectively. The increase in the net unrealized gain was driven by a downward movement in longer-term market interest rates. As market interest rates decrease, the value of fixed rate investments increases.
Net cash provided by operating activities was $12.4 million for the first six months of 2012, a decrease of $384 thousand or 3.0% compared to $12.8 million for the same period of 2011. Net cash provided by investing activities was $7.9 million for 2012 compared to a net use of cash in 2011 of $88.9 million. The $96.8 million change is mainly related to investment securities and loan activity. For investment securities, the Company had net cash outflows in 2012 of $19.7 million, which represents a decrease of $117 million compared to net cash outflows of $137 million for 2011. Net cash outflows for investment securities represent purchases made during the period, net of proceeds from the sales, maturities, and calls. For loans, the Company had net principal collections of $21.8 million for 2012, a decrease of $22.0 million compared to $43.7 million for 2011. These cash flow activities correlate to the overall increase in investment securities and decrease in outstanding loan balances in their respective six month periods.
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Farmers Capital Bank Corp has a market cap of $59.6 million; its shares were traded at around $8.17 with a P/E ratio of 9.9 and P/S ratio of 0.6.
Highlight of Business Operations:
Net interest income was $13.4 million for the current quarter, a decrease of $455 thousand or 3.3% compared to $13.8 million for the prior-year second quarter. The decrease in net interest income is attributed mainly to a $2.0 million or 10.2% decrease in interest income, primarily on loans, which was partially offset by a $1.6 million or 25.2% decrease in interest expense, primarily on deposits. The decrease in total interest income and interest expense is attributed to both rate and volume declines related mainly to loans and deposits and are the result of the overall weak economic environment combined with the Company s balance sheet management strategy. The overall weak economy has generally driven interest rates downward while the Company has become more selective in pricing deposits and extending loans, chiefly to reduce its costs of funds and improve net interest margin, overall profitability, and its capital position. The Company is generally earning and paying less interest from its earning assets and funding sources as the average rates earned and paid have decreased. This includes repricing of variable and floating rate assets and liabilities that have reset to overall lower amounts since their previous repricing date as well as activity related to new earning assets and funding sources. Additionally, an increase in available funds has been invested in lower yielding investment securities or cash equivalents in response to a decrease in high quality loan demand.Interest income and interest expense related to nearly all categories of the Company s earning assets and interest paying liabilities have declined in the quarterly comparison. The $2.0 million decrease from interest income in the comparison is primarily made up of lower interest on loans and investment securities of $1.6 million or 10.2% and $412 thousand or 9.4%, respectively. The decrease in interest on loans was driven primarily by a $102 million or 8.9% decrease in average volume and, to a lesser extent, a decrease in the average rate earned of six basis points to 5.5% from 5.6%. For investment securities, the decrease in interest income is rate driven, as a 66 basis point decrease in the average rate earned of 2.6% more than offset a higher average balance outstanding of $85.4 million or 15.4%.
Net interest income was $26.6 million for the first six months of 2012, a decrease of $904 thousand or 3.3% compared to $27.5 million for the first six months of 2011. The decrease in net interest income is attributed to a $3.8 million or 9.4% decrease in interest income, primarily on loans, which was partially offset by a $2.9 million or 22.6% decrease in interest expense, primarily on deposits. Similar to that of the quarterly comparison, the decrease in total interest income and interest expense is mainly attributed to both rate and volume declines related to loans and deposits and are the result of both an overall weak economic environment and the Company s balance sheet management strategy. This strategy includes being more selective in pricing deposits and extending loans in an effort to improve net interest margin, overall profitability, and capital position. The Company is generally earning and paying less interest from its earning assets and funding sources as the average rates earned and paid have decreased. This includes repricing of variable and floating rate assets and liabilities that have reset to net overall lower amounts since their previous repricing date as well as activity related to new earning assets and funding sources. Moreover, an increase in available funds has been invested in lower yielding investment securities or cash equivalents in response to a decrease in high quality loan demand.
The net amortized cost amount of investment securities increased $17.9 million or 3.1% and the net unrealized gain related to investments in the available for sale portfolio increased $1.2 million or 8.5%. The increase in amortized cost amounts is the result of net purchase activity, which exceeded activity related to sales, maturities, and calls of securities. During the first six months of 2012, the Company purchased $185 million of available for sale investment securities which exceeded the amounts sold, matured, and called of $66.5 million, $5.9 million, and $92.9 million, respectively. The increase in the net unrealized gain was driven by a downward movement in longer-term market interest rates. As market interest rates decrease, the value of fixed rate investments increases.
Net cash provided by operating activities was $12.4 million for the first six months of 2012, a decrease of $384 thousand or 3.0% compared to $12.8 million for the same period of 2011. Net cash provided by investing activities was $7.9 million for 2012 compared to a net use of cash in 2011 of $88.9 million. The $96.8 million change is mainly related to investment securities and loan activity. For investment securities, the Company had net cash outflows in 2012 of $19.7 million, which represents a decrease of $117 million compared to net cash outflows of $137 million for 2011. Net cash outflows for investment securities represent purchases made during the period, net of proceeds from the sales, maturities, and calls. For loans, the Company had net principal collections of $21.8 million for 2012, a decrease of $22.0 million compared to $43.7 million for 2011. These cash flow activities correlate to the overall increase in investment securities and decrease in outstanding loan balances in their respective six month periods.
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