ffbw20190723

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

[X] Current Report Pursuant To Section 13 or 15 (d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 25, 2019

Commission File No. 001-38239

FFBW, Inc.

(Exact name of registrant as specified in its charter)

Federal		82-3027075
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

1360 South Moorland Road Brookfield, Wisconsin		53005
(Address of Principal Executive Offices)		(Zip Code)

(262) 542-4448

(Registrant’s telephone number)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of class		Trading Symbol		Name of exchange on which registered
Common Stock; $0.01 par value		FFBW		The Nasdaq Stock Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company [X]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Section 2 – Financial Information

Item 2.02. Results of Operations and Financial Condition.

On July 25, 2019, FFBW, Inc. issued a press release (the “Press Release”) announcing results for the second quarter ended June 30, 2019. A copy of the Press Release is attached as Exhibit 99.1 to this report. The attached Exhibit 99.1 is furnished pursuant to Item 2.02 of Form 8-K.

The information is this Form 8-K and the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as shall be expressly set forth by specific in such filing.

Section 9 – Financial Statements and Exhibits

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits. The following exhibit is being furnished herewith:

99.1 – Press Release of FFBW, Inc. issued July 25, 2019

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	FFBW, INC.

Date: July 25, 2019	By:	/s/ Nikola B. Schaumberg
		Nikola B. Schaumberg
		Chief Financial Officer

ex_150966.htm

Exhibit 99.1

FFBW, Inc. Announces June 30, 2019 Financial Results

Quarterly Earnings Continue Double-Digit Growth

Brookfield, WI, July 25, 2019 – FFBW, Inc. (Nasdaq: FFBW) (the “Company”), the parent company of First Federal Bank of Wisconsin (the “Bank”), a federally chartered stock savings bank offering full-service commercial banking, retail banking and residential lending, today announced unaudited financial results for the three and six months ended June 30, 2019. The June 30, 2019 results showed significant period-over-period earnings growth, continued strong asset quality, and continued loan portfolio realignment in accordance with strategy. For the quarter ended June 30, 2019, net income was $388,000, or $0.06 per share, compared with net income of $353,000, or $0.06 per share, for the same respective period last year.

“Core earnings continue to improve nicely as we further develop our community bank model serving the commercial and consumer banking needs, as well as the residential lending needs of our customers,” stated Edward H. Schaefer, President and CEO of First Federal Bank of Wisconsin.

Second Quarter 2019 Highlights

•

Continued earnings growth. Quarterly earnings improved 10% to $388,000 in the second quarter of 2019 from $353,000 in the second quarter of 2018. Excluding prior year one-time adjustments⁽¹⁾, quarterly earnings improved more than 55% while year-to-date earnings grew 70%.

•

Continued strong asset quality. Nonperforming assets increased slightly to $1.1 million at June 30, 2019 from $968,000 as of June 30, 2018. Although the nonperforming assets increased slightly, all but one loan is contractually current on payments.

•

Continued balance sheet realignment. Although total loans balances remain steady at June 30, 2019 compared to June 30, 2018, the composition of the portfolio is further diversifying as the Company is executing its strategy as a community bank concentrating on commercial and consumer banking in addition to residential lending. Commercial loans increased $18.2 million, or 23%, while residential real estate and consumer loans decreased by $17.8 million, or 15%, resulting in a shift from 40% commercial loans to 49% of the loan portfolio in the last twelve months.

Income Statement and Balance Sheet Overview

Total interest and dividend income increased $110,000, or 4.1%, to $2.8 million for the second quarter of 2019 compared to $2.7 million for the same quarter in the prior year. Excluding prior year one-time adjustments⁽¹⁾, total interest and dividend income increased $227,000, or 8.4%. Average interest-earning assets decreased $207,000, or 0.08%, to $245.9 million for the quarter ended June 30, 2019 compared to $246.1 million for the quarter ended June 30, 2018, and the weighted average yield on interest-earning assets increased 18 basis points for the same period. Excluding the prior year one-time adjustments⁽¹⁾, the weighted average yield increased 37 basis points quarter to quarter.

Total interest expense increased $266,000, or 58.1%, to $724,000 for the quarter ended June 30, 2019 compared to $458,000 for the quarter ended June 30, 2018. Average interest-bearing liabilities decreased $1.5 million, or 0.8%, to $177.6 million for the quarter ended June 30, 2019 from $179.1 million for the quarter ended June 30, 2018. The rate paid on interest-bearing liabilities increased 61 basis points to 1.63% for the quarter ended June 30, 2019 compared to 1.02% for the quarter ended June 30, 2018. The increase in average cost of funds was primarily the result of rising interest rates and competition within our market.

Net interest margin was 3.38% for the three months ended June 30, 2019, compared to the adjusted 3.41% for the three months ended June 30, 2018, a decrease of three basis points after backing out the nonaccrual interest in the prior year period⁽¹⁾.

The loan loss provision was $85,000 for the quarter ended June 30, 2019 compared to $189,000 the quarter ended June 30, 2018. At June 30, 2019, our allowance for loan loss was $2.3 million, or 1.15%, of total loans. Management believes the allowance is adequate for future probable losses.

Noninterest income increased $110,000, or 68.3% to $271,000 for the three months ended June 30, 2019 compared to $161,000 for the three months ended June 30, 2018. The increase was due primarily to increased gains from sales of loans to the secondary market.

Noninterest expense decreased $19,000 to $1.8 million for the three months ended June 30, 2019 compared to $1.8 million for the three months ended June 30, 2018. This was primarily due to a decrease of $108,000, or 9.5%, in salaries and employee benefits due to staffing efficiencies and vacancies, partially offset by increases in technology and professional fees.

Total assets decreased $7.6 million to $258.3 million at June 30, 2019 from $265.9 million at June 30, 2018. This decrease was primarily due to the decrease in available for sale securities of $11.7 million, partially offset by increases in cash and cash equivalents of $3.0 million and in loans held for sale of $2.0 million.

Nonaccrual loans increased to $1.1 million, or 0.57% of total loans, at June 30, 2019, from $968,000, or 0.50% of total loans, at June 30, 2018. All but one nonaccrual loan is contractually current. Non-performing assets increased to $1.2 million, or 0.46% of total assets, at June 30, 2019 compared to $968,000, or 0.36% of total assets, at June 30, 2018.

The following table presents the estimated regulatory capital ratios for the Company, the Bank, and the minimum requirements for the Bank at June 30, 2019.

At June 30, 2019	Company			Bank			Minimum Requirement For Capital Adequacy Purposes			Minimum Requirement to Be Well Capitalized Under Prompt Corrective Action Provisions
Tier 1 leverage ratio		23.2	%		19.0	%		4.0	%		5.0	%
Common equity Tier 1 capital ratio		29.8	%		24.5	%		4.5	%		6.5	%
Tier 1 capital ratio		29.8	%		24.5	%		6.0	%		8.0	%
Total capital ratio		31.0	%		25.6	%		8.0	%		10.0	%

(1)	In the second quarter of 2018, the Company received $136,000 of additional interest from loans that had paid off that were previously on nonaccrual status, increasing the weighted yield for the quarter by 29 basis points.

About the Company

FFBW, Inc. is the holding company for First Federal Bank of Wisconsin, a wholly owned subsidiary. The Company’s stock trades on the NASDAQ Capital Market under the symbol “FFBW.” First Federal Bank of Wisconsin is a full-service federally chartered stock savings bank based in Waukesha, Wisconsin, servicing customers in Waukesha and Milwaukee Counties in Wisconsin through four branch locations.

Cautionary Statement Regarding Forward-Looking Statements

This release contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,” “seek,” “expect” and words of similar meaning. These forward-looking statements include but are not limited to: statements of our goals, intentions and expectations; statements regarding our business plans, prospects, growth and operating strategies; statements regarding the quality of our loan and investment portfolios; and estimates of our risks and future costs and benefits. These forward-looking statements are based on current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: general economic conditions, either nationally or in our market areas, that are worse than expected; changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses; our ability to access cost-effective funding; fluctuations in real estate values and both residential and commercial real estate market conditions; demand for loans and deposits in our market area; our ability to implement and change our business strategies; competition among depository and other financial institutions; inflation and changes in the interest rate environment that reduce our margins and yields, our mortgage banking revenues, the fair value of financial instruments or our level of loan originations, or increase the level of defaults, losses and prepayments on loans we have made and make; adverse changes in the securities or secondary mortgage markets; changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements, including as a result of Basel III; the impact of the Dodd-Frank Act and the implementing regulations; changes in the quality or composition of our loan or investment portfolios; technological changes that may be more difficult or expensive than expected; the inability of third-party providers to perform as expected; our ability to manage market risk, credit risk and operational risk in the current economic environment; our ability to enter new markets successfully and capitalize on growth opportunities; our ability to successfully integrate into our operations any assets, liabilities, customers, systems and management personnel we may acquire and our ability to realize related revenue synergies and cost savings within expected time frames, and any goodwill charges related thereto; changes in consumer spending, borrowing and savings habits; changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board; our ability to retain key employees; our compensation expense associated with equity allocated or awarded to our employees; and changes in the financial condition, results of operations or future prospects of issuers of securities that we own. Because of these and a wide variety of other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements.

Contact: Nikola B. Schaumberg, CFO

(262) 542-4448

FFBW, Inc.

Balance Sheets

June 30, 2019 (Unaudited) and December 31, 2018

(In thousands, except share data)

	June 30,			December 31,
Assets	2019			2018
Cash and due from banks	$	4,351		$	1,746
Fed funds sold		1,046			2,742
Cash and cash equivalents		5,397			4,488
Available for sale securities, stated at fair value		43,478			43,751
Loans held for sale		1,951			679
Loans, net of allowance for loan and lease losses of $2,252 and $2,118, respectively		193,001			198,694
Premises and equipment, net		4,888			5,057
Foreclosed assets		84			69
FHLB stock, at cost		609			739
Accrued interest receivable		777			768
Cash value of life insurance		7,105			7,007
Other assets		1,034			1,474
TOTAL ASSETS	$	258,324		$	262,726

Liabilities and Equity

Deposits	$	177,553		$	183,205
Advance payments by borrowers for taxes and insurance		771			55
FHLB advances		15,750			17,750
Accrued interest payable		620			70
Other liabilities		2,446			1,284
Total liabilities	$	197,140		$	202,364
Preferred stock ($0.01 par value, 1,000,000 authorized, no shares issued or outstanding as of June 30, 2019 and December 31, 2018, respectively)	$	-		$	-
Common stock ($0.01 par value, 19,000,000 authorized, 6,706,742 issued and outstanding as of June 30, 2019 and December 31, 2018, respectively)		67			67
Additional paid in capital		28,489			28,326
Unallocated common stock of Employee Stock Ownership Plan ("ESOP") (236,823 and 243,303 shares at June 30, 2019 and December 31, 2018, respectively)		(2,368	)		(2,433	)
Retained earnings		35,632			34,995
Accumulated other comprehensive income (loss), net of income taxes		235			(593	)
Less common stock repurchased, 82,055 and 0 shares at cost, at June 30, 2019 and December 31, 2018, respectively		(871	)		-
Total equity	$	61,184		$	60,362
TOTAL LIABILITIES AND EQUITY	$	258,324		$	262,726

FFBW, Inc.

Statements of Income

Three and Six Months Ended June 30, 2019 and 2018 (Unaudited)

(In thousands, except share data)

	Three months ended June 30,					Six months ended June 30,
	2019		2018			2019			2018
Interest and dividend income:
Loans, including fees	$	2,497	$	2,326		$	4,945		$	4,294
Securities
Taxable		282		339			557			679
Tax-exempt		4		14			6			37
Other		21		15			46			31
Total interest and dividend income		2,804		2,694			5,554			5,041
Interest expense:
Interest-bearing deposits		633		342			1,232			688
Borrowed funds		91		116			179			169
Total interest expense		724		458			1,411			857
Net interest income		2,080		2,236			4,143			4,184
Provision for loan losses		85		189			155			304
Net interest income after provision for loan losses		1,995		2,047			3,988			3,880
Noninterest income:
Service charges and other fees		64		51			99			111
Net gain on sale of loans		127		36			168			75
Net gain (loss) on sale of securities		5		1			(3	)		9
Increase in cash surrender value of insurance		51		49			98			95
Other noninterest income		24		24			49			47
Total noninterest income		271		161			411			337
Noninterest expense:
Salaries and employee benefits		1,031		1,139			2,128			2,196
Occupancy and equipment		242		226			484			459
Data processing		169		158			344			310
Technology		79		49			157			104
Foreclosed assets, net		1		(9	)		2			37
Professional fees		104		57			216			175
Other noninterest expense		126		151			229			323
Total noninterest expense		1,752		1,771			3,560			3,604
Income before income taxes		514		437			839			613
Provision for income taxes		126		84			202			137
Net income	$	388	$	353		$	637		$	476

Earnings per share
Basic	$	0.06	$	0.06		$	0.10		$	0.07
Diluted	$	0.06	$	0.06		$	0.10		$	0.07

FFBW, Inc.

Statements of Income

(In thousands, except share data)

	For the Quarter Ended
	June 30, 2019		March 31, 2019		December 31, 2018		September 30, 2018		June 30, 2018
Total interest and dividend income	$	2,804	$	2,750	$	2,817	$	2,738	$	2,700
Total interest expense		724		687		645		607		458
Net interest income		2,080		2,063		2,172		2,131		2,242
Provision for loan losses		85		70		98		111		189
Net interest income after provision for loan losses		1,995		1,993		2,074		2,020		2,053
Total noninterest income		271		140		39		250		200
Total noninterest expense		1,752		1,808		1,810		1,810		1,816
Income before income taxes		514		325		303		460		437
Provision for income taxes		126		76		70		111		84
Net income	$	388	$	249	$	233	$	349	$	353

Earnings per share
Basis	$	0.06	$	0.04	$	0.04	$	0.05	$	0.06
Diluted	$	0.06	$	0.04	$	0.04	$	0.05	$	0.06

FFBW, Inc.

Non-performing Assets

(In thousands)

	June 30, 2019 and Six Months Then Ended			December 31, 2018 and Twelve Months Then Ended			December 31, 2017 and Twelve Months Then Ended

Nonperforming assets:
Nonaccrual loans	$	1,117		$	720		$	1,243
Accruing loans past due 90 days or more		-			-			-
Total nonperforming loans ("NPLs")		1,117			720			1,243
Foreclosed assets		84			69			619
Total nonperforming assets ("NPAs")	$	1,201		$	789		$	1,862
Troubled Debt Restructurings ("TDRs")	$	1,400		$	1,201		$	1,630
Nonaccrual TDRs	$	1,100		$	700		$	969
Average outstanding loan balance	$	200,246		$	189,233		$	170,577
Loans, end of period	$	195,405		$	200,898		$	173,229
ALLL, at beginning of period	$	2,118		$	1,800		$	1,478
Loans charged off:
Commercial		-			(24	)		-
Residential real estate and consumer		(21	)		(172	)		(133	)
Total loans charged off		(21	)		(196	)		(133	)
Recoveries of loans previously charged off:
Commercial		-			-			-
Residential real estate and consumer		-			1			36
Total recoveries of loans previously charged off		-			1			36
Net loans charged off ("NCOs'")		(21	)		(195	)		(97	)
Additions to ALLL via provision for loan losses charged to operations		155			513			419
ALLL, at end of period	$	2,252		$	2,118		$	1,800
Ratios:
ALLL to NCOs (annualized)		5440.34	%		1086.15	%		1855.67	%
NCOs (annualized) to average loans		0.02	%		0.10	%		0.06	%
ALLL to total loans		1.15	%		1.05	%		1.04	%
NPL to total loans		0.57	%		0.36	%		0.72	%
NPAs to total assets		0.46	%		0.30	%		0.73	%
Total Assets	$	258,324		$	262,726		$	256,481

FFBW, Inc.

Yield and Cost

	For the Three Months Ended June 30,
	2019								2018
	Average Outstanding Balance			Interest		Yield/ Rate			Average Outstanding Balance			Interest		Yield/ Rate
	(in thousands)								(in thousands)
Interest-earning assets:
Loans	$	199,235		$	2,497		5.01	%	$	185,665		$	2,326		5.01	%
Available for sale securities		43,501			286		2.63	%		57,490			353		2.46	%
Interest-bearing deposits		2,486			13		2.09	%		2,071			3		0.58	%
FHLB stock		638			8		5.02	%		841			12		5.71	%
Total interest-earning assets		245,860			2,804		4.56	%		246,067			2,694		4.38	%
Noninterest-earning assets		15,891								15,901
Allowance for loan losses		(2,219	)							(1,855	)
Total assets	$	259,532							$	260,113

Interest-bearing liabilities:
Demand accounts	$	8,662			26		1.20	%	$	4,817			4		0.33	%
Money market accounts		40,373			132		1.31	%		52,327			103		0.79	%
Savings accounts		13,755			4		0.12	%		15,196			7		0.18	%
Health savings accounts		11,199			8		0.29	%		11,642			6		0.21	%
Certificates of deposit		87,112			463		2.13	%		69,890			222		1.27	%
Total interest-bearing deposits		161,101			633		1.57	%		153,872			342		0.89	%
Borrowings		16,492			91		2.21	%		25,197			116		1.84	%
Total interest-bearing liabilities		177,593			724		1.63	%		179,069			458		1.02	%
Noninterest-bearing deposits		18,790								20,783
Other non-interest bearing liabilities		2,188								1,123
Total liabilities		198,571								200,975
Equity		60,961								59,138
Total liabilities and equity	$	259,532							$	260,113

Net interest income					2,080								2,236
Net interest rate spread⁽¹⁾							2.93	%							3.36	%
Net interest-earning assets⁽²⁾		68,267								66,998
Net interest margin⁽³⁾							3.38	%							3.63	%
Average of interest-earning assets to interest-bearing liabilities		138	%							137	%

(1)	Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(2)	Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.

(3)	Net interest margin represents net interest income divided by total interest-earning assets.

	For the Six Months Ended June 30,
	2019								2018
	Average Outstanding Balance			Interest		Yield/ Rate			Average Outstanding Balance			Interest		Yield/ Rate
	(in thousands)								(in thousands)
Interest-earning assets:
Loans	$	200,246		$	4,945		4.94	%	$	180,390		$	4,294		4.76	%
Available for sale securities		43,579			563		2.58	%		58,451			716		2.45	%
Interest-bearing deposits		2,540			29		2.28	%		3,293			15		0.91	%
FHLB stock		642			17		5.30	%		700			16		4.57	%
Total interest-earning assets		247,007			5,554		4.50	%		242,834			5,041		4.15	%
Noninterest-earning assets		16,683								16,414
Allowance for loan losses		(2,182	)							(1,835	)
Total assets	$	260,885							$	257,413

Interest-bearing liabilities:
Demand accounts	$	9,168			57		1.24	%	$	4,502			7		0.31	%
Money market accounts		40,785			243		1.19	%		52,764			185		0.70	%
Savings accounts		14,245			9		0.13	%		15,329			15		0.20	%
Health savings accounts		11,284			17		0.30	%		11,596			13		0.22	%
Certificates of deposit		87,689			906		2.07	%		72,493			468		1.29	%
Total interest-bearing deposits		163,171			1,232		1.51	%		156,684			688		0.88	%
Borrowings		16,544			179		2.16	%		19,862			169		1.70	%
Total interest-bearing liabilities		179,715			1,411		1.57	%		176,546			857		0.97	%
Noninterest-bearing deposits		18,256								20,538
Other non-interest bearing liabilities		1,406								1,199
Total liabilities		200,050								198,283
Equity		60,835								59,130
Total liabilities and equity	$	260,885							$	257,413

Net interest income					4,143								4,184
Net interest rate spread⁽¹⁾							2.93	%							3.18	%
Net interest-earning assets⁽²⁾		67,292								66,288
Net interest margin⁽³⁾							3.35	%							3.45	%
Average of interest-earning assets to interest-bearing liabilities		137	%							138	%

(1)	Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(2)	Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.

(3)	Net interest margin represents net interest income divided by total interest-earning assets.