FOR IMMEDIATE RELEASE
| Contact: | Roger D. Plemens |
| | President and Chief Executive Officer |
| | (828) 524-7000 |
ENTEGRA FINANCIAL CORP. ANNOUNCES
THIRD QUARTER 2017 RESULTS
Franklin, North Carolina, October 19, 2017 — Entegra Financial Corp. (the “Company”) (NASDAQ: ENFC), the holding company for Entegra Bank (the “Bank”), today announced earnings and related data for the three and nine months ended September 30, 2017.
Highlights
The following tables highlight the most important trends that the Company believes are relevant to understanding the performance of the Company. As further detailed in Appendix A, core results (a non-GAAP measure) reflect adjustments for material items including investment gains and losses, investment impairment, and merger and acquisition expenses.
| | | For the Three Months Ended September 30, |
| | | (Dollars in thousands, except per share data) |
| | | 2017 | | 2016 | | Change (%) |
| | | GAAP | | Core | | GAAP | | Core | | GAAP | | Core |
| Net income | | $ | 2,471 | | | $ | 2,562 | | | $ | 1,800 | | | $ | 1,605 | | | | 37.3 | % | | | 59.6 | % |
| Net interest income | | $ | 10,323 | | | | N/A | | | $ | 8,897 | | | | N/A | | | | 16.0 | % | | | N/A | |
| Net interest margin | | | 3.30 | % | | | N/A | | | | 3.29 | % | | | N/A | | | | 0.3 | % | | | N/A | |
| Return on average assets | | | 0.71 | % | | | 0.73 | % | | | 0.60 | % | | | 0.54 | % | | | 18.3 | % | | | 35.2 | % |
| Return on average equity | | | 6.95 | % | | | 7.72 | % | | | 5.21 | % | | | 4.75 | % | | | 33.4 | % | | | 62.5 | % |
| Efficiency ratio | | | 66.62 | % | | | 65.55 | % | | | 71.53 | % | | | 73.28 | % | | | -6.9 | % | | | -10.5 | % |
| Diluted earnings per share | | $ | 0.38 | | | $ | 0.39 | | | $ | 0.28 | | | $ | 0.25 | | | | 35.7 | % | | | 56.0 | % |
| | | For the Nine Months Ended September 30, |
| | | (Dollars in thousands, except per share data) |
| | | 2017 | | 2016 | | Change (%) |
| | | GAAP | | Core | | GAAP | | Core | | GAAP | | Core |
| Net income | | $ | 5,873 | | | $ | 6,948 | | | $ | 4,024 | | | $ | 4,621 | | | | 45.9 | % | | | 50.4 | % |
| Net interest income | | $ | 30,163 | | | | N/A | | | $ | 25,269 | | | | N/A | | | | 19.4 | % | | | N/A | |
| Net interest margin | | | 3.32 | % | | | N/A | | | | 3.28 | % | | | N/A | | | | 1.2 | % | | | N/A | |
| Return on average assets | | | 0.57 | % | | | 0.67 | % | | | 0.47 | % | | | 0.54 | % | | | 21.3 | % | | | 24.1 | % |
| Return on average equity | | | 5.66 | % | | | 7.12 | % | | | 3.97 | % | | | 4.65 | % | | | 42.6 | % | | | 53.1 | % |
| Efficiency ratio | | | 73.01 | % | | | 68.92 | % | | | 78.04 | % | | | 74.20 | % | | | -6.4 | % | | | -7.1 | % |
| Diluted earnings per share | | $ | 0.90 | | | $ | 1.06 | | | $ | 0.62 | | | $ | 0.71 | | | | 45.2 | % | | | 49.3 | % |
| | | As of September 30, | | As of December 31, |
| | | 2017 | | 2016 |
| | | (Dollars in thousands, except per share data) |
| Asset Quality: | | | | | | | | |
| Non-performing loans | | $ | 5,604 | | | $ | 6,041 | |
| Real estate owned | | $ | 2,437 | | | $ | 4,226 | |
| Non-performing assets | | $ | 8,041 | | | $ | 10,267 | |
| Non-performing loans to total loans | | | 0.69 | % | | | 0.81 | % |
| Non-performing assets to total assets | | | 0.57 | % | | | 0.79 | % |
| Net charge-offs (9 and 12 months ended) | | $ | 408 | | | $ | 430 | |
| Allowance for loan losses to non-performing loans | | | 179.46 | % | | | 154.03 | % |
| Allowance for loan losses to total loans | | | 1.23 | % | | | 1.25 | % |
| | | | | | | | | |
| Other Data: | | | | | | | | |
| Book value per share | | $ | 22.22 | | | $ | 20.57 | |
| Tangible book value per share | | $ | 20.75 | | | $ | 20.10 | |
| Closing market price per share | | $ | 24.95 | | | $ | 20.60 | |
| Closing price-to-tangible book value ratio | | | 120.24 | % | | | 102.49 | % |
Management Commentary
Roger D. Plemens, President and CEO of the Company reported, “The third quarter represents another successful quarter for the Company as we continue to improve our earnings and utilize our capital. We are particularly pleased with the improvement in our efficiency ratio as we seek to be better and not simply larger. As previously disclosed, we closed on our acquisition of Chattahoochee Bank of Georgia on October 1, 2017 and are excited about increasing our lending presence in northern Georgia and the impact that will have on our earnings.”
Net Interest Income
Net interest income increased $1.4 million, or 16.0%, to $10.3 million for the three months ended September 30, 2017 compared to $8.9 million for the same period in 2016. Net interest income increased $4.9 million, or 19.4%, to $30.2 million for the nine months ended September 30, 2017 compared to $25.3 million for the same period in 2016. The increase in net interest income was primarily due to higher volumes in the loan and investment portfolios as well as an increase in the yields earned on cash and investments. Net interest margin for the three and nine months ended September 30, 2017 improved slightly to 3.30% and 3.32%, respectively, compared to 3.29% and 3.28% for the same periods in 2016.
Provision for Loan Losses
The provision for loan losses was $0.5 million and $1.2 million for the three and nine months ended September 30, 2017, compared to a $0.1 million provision for loan losses for the same periods in 2016. The Company continues to experience modest levels of net charge-offs and non-performing loans.
Noninterest Income
Noninterest income decreased $0.1 million to $2.0 million for the three months ended September 30, 2017 compared to $2.1 million for the same period in 2016. The slight decline was primarily related to reduced mortgage banking income and gains on sales of investments, partially offset by increases in gains on sale of SBA loans, service charges on deposit accounts, interchange fees, and bank-owned life insurance (BOLI).
Noninterest income decreased $1.0 million, or 16.8%, to $5.0 million for the nine months ended September 30, 2017 compared to $6.0 million for the same period in 2016. The decline was primarily related to other than temporary impairment of $0.7 million realized on one investment security as well as decreases in gains from the sale of SBA loans and investments, partially offset by increases in trading securities gains, interchange fees, and BOLI.
Noninterest Expense
Noninterest expense increased $0.4 million, or 4.8%, to $8.2 million for the three months ended September 30, 2017 compared to $7.8 million for the same period in 2016. Noninterest expense increased $1.3 million, or 5.1%, to $25.7 million for the nine months ended September 30, 2017 compared to $24.4 million for the same period in 2016. The three and nine month increases were primarily related to increased compensation and employee benefits and net occupancy expenses as the 2017 period included the full impact of the Oldtown Bank acquisition and the partial impact of the branches acquired from Stearns Bank.
Income Taxes
Income tax expense for the three and nine months ended September 30, 2017 was $1.1 million and $2.5 million, respectively, compared to $1.2 million and $2.8 million for the comparable periods in the prior year. The Company’s effective tax rates of 31.3% and 29.6% for the three and nine months ended September 30, 2017, respectively, improved from 40.4% and 40.6% from the same respective periods in 2016 primarily as the result of increased tax-exempt income related to municipal bond investments and BOLI income.
Balance Sheet
Total assets increased $126.9 million, or an annualized rate of 13.1%, to $1.42 billion at September 30, 2017 from $1.29 billion at December 31, 2016 as the Company continued to leverage its capital with earning assets.
Loans receivable increased $72.7 million, or an annualized rate of 13.0%, to $817.0 million at September 30, 2017 from $744.4 million at December 31, 2016. Loan growth continues to be primarily concentrated in commercial real estate and commercial and industrial loans.
Core deposits increased $112.0 million, or 20.7%, to $652.8 million at September 30, 2017 from $540.8 million at December 31, 2016, including $79.6 million of core deposits assumed in the Stearns Bank branch acquisition. Certificates of deposits increased $62.8 million to $352.0 million at September 30, 2017 from $289.2 million at December 31, 2016, primarily as the result of certificates of deposit assumed from Stearns Bank. Core deposits remained unchanged at 65% of the Company’s deposit portfolio at September 30, 2017 and December 31, 2016.
Total equity increased $10.5 million, or 7.9%, to $143.5 million at September 30, 2017 compared to $133.1 million at December 31, 2016. This increase was primarily attributable to $5.9 million of net income, $0.7 million of stock-based compensation expense, and a $4.2 million improvement in the market value of investment securities, partially offset by $0.3 million of share repurchases. Tangible book value per share, a non-GAAP measure, increased $0.65 from $20.10 at December 31, 2016 to $20.75 at September 30, 2017 as a result of operating results for the period, partially offset by $1.01 per share dilution from the Stearns Bank branch acquisition.
Asset Quality
Non-performing assets decreased $2.2 million to $8.0 million at September 30, 2017 from $10.3 million at December 31, 2016 primarily as a result of the liquidation of several large real estate owned balances during the period. Net loan charge-offs continue to remain modest totaling $0.4 million for the nine months ended September 30, 2017.
Non-GAAP Financial Measures
Statements included in this press release include non-GAAP financial measures and should be read along with the accompanying tables in Appendix A, which provide a reconciliation of non-GAAP financial measures to GAAP financial measures. This press release and the accompanying tables discuss financial measures, such as core noninterest expense, core net income, core diluted earnings per share, core return on average assets, core return on tangible average equity, core efficiency ratio, and tangible book value per share, which are non-GAAP measures. We believe that such non-GAAP measures are useful because they enhance the ability of investors and management to evaluate and compare the Company’s operating results from period to period in a meaningful manner. Non-GAAP measures should not be considered as an alternative to any measure of performance as promulgated under GAAP. Investors should consider the Company’s performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company’s results or financial condition as reported under GAAP.
About Entegra Financial Corp. and Entegra Bank
Entegra Financial Corp. is the holding company of Entegra Bank. The Company’s shares began trading on the NASDAQ Global Market on October 1, 2014 under the symbol “ENFC”.
Entegra Bank now operates a total of 18 branches located throughout the Western North Carolina counties of Cherokee, Haywood, Henderson, Jackson, Macon, Polk and Transylvania, the Upstate South Carolina counties of Anderson, Greenville, and Spartanburg and the Northern Georgia counties of Pickens and Hall. The Bank also operates loan production offices in Asheville, NC, Clemson, SC, and Duluth, GA. For further information, visit the Entegra’s website www.entegrabank.com.
Disclosures About Forward-Looking Statements
The discussions included in this document and its exhibits may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. For the purposes of these discussions, any statements that are not statements of historical fact may be deemed to be “forward-looking statements.” Such statements are often characterized by the use of qualifying words such as “expects,” “anticipates,” “believes,” “estimates,” “plans,” “projects,” or other statements concerning opinions or judgments of the Company and its management about future events. The accuracy of such forward looking statements could be affected by factors including, but not limited to: the Company’s ability to implement aspects of its growth strategy; the financial success or changing conditions or strategies of the Company’s customers or vendors; fluctuations in interest rates; actions of government regulators; the availability of capital and personnel; and general economic conditions. These forward looking statements express management’s current expectations, plans or forecasts of future events, results and condition, including financial and other estimates. Additional factors that could cause actual results to differ materially from those anticipated by forward looking statements are discussed in the Company’s filings with the Securities and Exchange Commission (the “SEC”), including without limitation its annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. The Company undertakes no obligation to revise or update these statements following the date of this press release.
ENTEGRA FINANCIAL CORP. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands, except per share data)
| | | Three Months Ended September 30, |
| | | 2017 | | 2016 |
| Interest income | | $ | 12,254 | | | $ | 10,444 | |
| Interest expense | | | 1,931 | | | | 1,547 | |
| | | | | | | | | |
| Net interest income | | | 10,323 | | | | 8,897 | |
| | | | | | | | | |
| Provision for loan losses | | | 520 | | | | 100 | |
| | | | | | | | | |
| Net interest income after provision for loan losses | | | 9,803 | | | | 8,797 | |
| | | | | | | | | |
| Servicing income, net | | | 59 | | | | 72 | |
| Mortgage banking | | | 207 | | | | 387 | |
| Gain on sale of SBA loans | | | 290 | | | | 124 | |
| Gain (loss) on sale of investments | | | (24 | ) | | | 407 | |
| Trading securities gains | | | 138 | | | | 93 | |
| Service charges on deposit accounts | | | 436 | | | | 370 | |
| Interchange fees | | | 484 | | | | 385 | |
| Bank owned life insurance | | | 208 | | | | 110 | |
| Other | | | 215 | | | | 118 | |
| Total noninterest income | | | 2,013 | | | | 2,066 | |
| | | | | | | | | |
| Compensation and employee benefits | | | 4,937 | | | | 4,471 | |
| Net occupancy | | | 974 | | | | 929 | |
| Federal deposit insurance | | | 140 | | | | 108 | |
| Professional and advisory | | | 292 | | | | 208 | |
| Data processsing | | | 390 | | | | 406 | |
| Marketing and advertising | | | 253 | | | | 309 | |
| Net cost of (income from ) operation of real estate owned | | | (121 | ) | | | 167 | |
| Merger-related expenses | | | 116 | | | | 107 | |
| Other | | | 1,237 | | | | 1,137 | |
| Total noninterest expense | | | 8,218 | | | | 7,842 | |
| | | | | | | | | |
| Income before taxes | | | 3,598 | | | | 3,021 | |
| | | | | | | | | |
| Income tax expense | | | 1,127 | | | | 1,221 | |
| | | | | | | | | |
| Net income | | $ | 2,471 | | | $ | 1,800 | |
| | | | | | | | | |
| Earnings per common share: | | | | | | | | |
| Basic | | $ | 0.38 | | | $ | 0.28 | |
| Diluted | | $ | 0.38 | | | $ | 0.28 | |
| | | | | | | | | |
| Weighted average common shares outstanding: | | | | | | | | |
| Basic | | | 6,458,679 | | | | 6,466,375 | |
| Diluted | | | 6,548,530 | | | | 6,484,226 | |
ENTEGRA FINANCIAL CORP. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollars in thousands, except per share data)
| | | Nine Months Ended September 30, |
| | | 2017 | | 2016 |
| Interest income | | $ | 35,621 | | | $ | 29,694 | |
| Interest expense | | | 5,458 | | | | 4,425 | |
| | | | | | | | | |
| Net interest income | | | 30,163 | | | | 25,269 | |
| | | | | | | | | |
| Provision for loan losses | | | 1,160 | | | | 100 | |
| | | | | | | | | |
| Net interest income after provision for loan losses | | | 29,003 | | | | 25,169 | |
| | | | | | | | | |
| Servicing income, net | | | 312 | | | | 263 | |
| Mortgage banking | | | 771 | | | | 747 | |
| Gain on sale of SBA loans | | | 436 | | | | 742 | |
| Gain on sale of investments | | | 19 | | | | 1,105 | |
| Trading securities gains | | | 445 | | | | 271 | |
| Other than temporary impairment on available-for-sale securities | | | (700 | ) | | | — | |
| Service charges on deposit accounts | | | 1,239 | | | | 1,151 | |
| Interchange fees | | | 1,374 | | | | 1,109 | |
| Bank owned life insurance | | | 603 | | | | 311 | |
| Other | | | 527 | | | | 341 | |
| Total noninterest income | | | 5,026 | | | | 6,040 | |
| | | | | | | | | |
| Compensation and employee benefits | | | 14,859 | | | | 12,738 | |
| Net occupancy | | | 2,851 | | | | 2,580 | |
| Federal deposit insurance | | | 379 | | | | 468 | |
| Professional and advisory | | | 929 | | | | 713 | |
| Data processsing | | | 1,215 | | | | 1,157 | |
| Marketing and advertising | | | 727 | | | | 811 | |
| Net cost of operation of real estate owned | | | 94 | | | | 663 | |
| Merger-related expenses | | | 972 | | | | 2,023 | |
| Other | | | 3,666 | | | | 3,281 | |
| Total noninterest expense | | | 25,692 | | | | 24,434 | |
| | | | | | | | | |
| Income before taxes | | | 8,337 | | | | 6,775 | |
| | | | | | | | | |
| Income tax expense | | | 2,464 | | | | 2,751 | |
| | | | | | | | | |
| Net income | | $ | 5,873 | | | $ | 4,024 | |
| | | | | | | | | |
| Earnings per common share: | | | | | | | | |
| Basic | | $ | 0.91 | | | $ | 0.62 | |
| Diluted | | $ | 0.90 | | | $ | 0.62 | |
| | | | | | | | | |
| Weighted average common shares outstanding: | | | | | | | | |
| Basic | | | 6,460,015 | | | | 6,483,535 | |
| Diluted | | | 6,542,261 | | | | 6,500,198 | |
ENTEGRA FINANCIAL CORP. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
| | | September 30, 2017 | | December 31, 2016 |
| | | (Unaudited) | | (Audited) |
| Assets | | | | |
| | | | | |
| Cash and cash equivalents | | $ | 94,498 | | | $ | 43,294 | |
| Investments - trading | | | 5,840 | | | | 5,211 | |
| Investments - available for sale | | | 401,226 | | | | 398,291 | |
| Other investments | | | 12,633 | | | | 15,261 | |
| Loans held for sale | | | 3,818 | | | | 4,584 | |
| Loans receivable | | | 817,034 | | | | 744,361 | |
| Allowance for loan losses | | | (10,057 | ) | | | (9,305 | ) |
| Real estate owned | | | 2,437 | | | | 4,226 | |
| Fixed assets, net | | | 20,888 | | | | 20,209 | |
| Bank owned life insurance | | | 31,950 | | | | 31,347 | |
| Net deferred tax asset | | | 14,478 | | | | 18,985 | |
| Goodwill | | | 7,144 | | | | 2,065 | |
| Core deposit intangibles, net | | | 2,371 | | | | 979 | |
| Other assets | | | 15,573 | | | | 13,369 | |
| | | | | | | | | |
| Total assets | | $ | 1,419,833 | | | $ | 1,292,877 | |
| | | | | | | | | |
| Liabilities and Shareholders’ Equity | | | | | | | | |
| | | | | | | | | |
| Liabilities | | | | | | | | |
| Deposits | | $ | 1,004,839 | | | $ | 830,013 | |
| Federal Home Loan Bank advances | | | 233,500 | | | | 298,500 | |
| Junior subordinated notes | | | 14,433 | | | | 14,433 | |
| Post employment benefits | | | 10,145 | | | | 10,211 | |
| Other liabilities | | | 13,391 | | | | 6,652 | |
| Total liabilities | | $ | 1,276,308 | | | $ | 1,159,809 | |
| | | | | | | | | |
| Total shareholders’ equity | | | 143,525 | | | | 133,068 | |
| | | | | | | | | |
| Total liabilities and shareholders’ equity | | $ | 1,419,833 | | | $ | 1,292,877 | |
APPENDIX A – RECONCILIATION OF NON-GAAP MEASURES (UNAUDITED)
| | | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | | 2017 | | 2016 | | 2017 | | 2016 |
| | | (Dollars in thousands, except per share data) |
| | | | | | | | | |
| Core Noninterest Expense | | | | | | | | | | | | | | | | |
| Noninterest expense (GAAP) | | $ | 8,218 | | | $ | 7,842 | | | $ | 25,692 | | | $ | 24,434 | |
| Merger-related expenses | | | (116 | ) | | | (107 | ) | | | (972 | ) | | | (2,023 | ) |
| Core noninterest expense (Non-GAAP) | | $ | 8,102 | | | $ | 7,735 | | | $ | 24,720 | | | $ | 22,411 | |
| | | | | | | | | | | | | | | | | |
| Core Net Income | | | | | | | | | | | | | | | | |
| Net income (GAAP) | | $ | 2,471 | | | $ | 1,800 | | | $ | 5,873 | | | $ | 4,024 | |
| Loss (gain) on sale of investments | | | 16 | | | | (265 | ) | | | (12 | ) | | | (718 | ) |
| Other than temporary impairment of investment securities available for sale | | | — | | | | — | | | | 455 | | | | — | |
| Merger-related expenses | | | 76 | | | | 70 | | | | 632 | | | | 1,315 | |
| Core net income (Non-GAAP) | | $ | 2,562 | | | $ | 1,605 | | | $ | 6,948 | | | $ | 4,621 | |
| | | | | | | | | | | | | | | | | |
| Core Diluted Earnings Per Share | | | | | | | | | | | | | | | | |
| Diluted earnings per share (GAAP) | | $ | 0.38 | | | $ | 0.28 | | | $ | 0.90 | | | $ | 0.62 | |
| Gain on sale of investments | | | — | | | | (0.04 | ) | | | — | | | | (0.11 | ) |
| Other than temporary impairment of investment securities available for sale | | | — | | | | — | | | | 0.06 | | | | — | |
| Merger-related expenses | | | 0.01 | | | | 0.01 | | | | 0.10 | | | | 0.20 | |
| Core diluted earnings per share (Non-GAAP) | | $ | 0.39 | | | $ | 0.25 | | | $ | 1.06 | | | $ | 0.71 | |
| | | | | | | | | | | | | | | | | |
| Core Return on Average Assets | | | | | | | | | | | | | | | | |
| Return on Average Assets (GAAP) | | | 0.71 | % | | | 0.60 | % | | | 0.57 | % | | | 0.47 | % |
| Gain on sale of investments | | | — | | | | -0.09 | % | | | — | | | | — | |
| Other than temporary impairment of investment securities available for sale | | | — | | | | — | | | | 0.04 | % | | | — | |
| Merger-related expenses | | | 0.02 | % | | | 0.03 | % | | | 0.06 | % | | | 0.16 | % |
| Core Return on Average Assets (Non-GAAP) | | | 0.73 | % | | | 0.54 | % | | | 0.67 | % | | | 0.63 | % |
| | | | | | | | | | | | | | | | | |
| Core Return on Tangible Average Equity | | | | | | | | | | | | | | | | |
| Return on Average Equity (GAAP) | | | 6.95 | % | | | 5.21 | % | | | 5.66 | % | | | 3.97 | % |
| Loss (gain) on sale of investments | | | 0.04 | % | | | -0.77 | % | | | -0.01 | % | | | -0.71 | % |
| Other than temporary impairment of investment securities available for sale | | | — | | | | — | | | | 0.43 | % | | | — | |
| Merger-related expenses | | | 0.21 | % | | | 0.20 | % | | | 0.61 | % | | | 1.30 | % |
| Effect of goodwill and intangibles | | | 0.52 | % | | | 0.10 | % | | | 0.43 | % | | | 0.09 | % |
| Core Return on Average Tangible Equity (Non-GAAP) | | | 7.72 | % | | | 4.75 | % | | | 7.12 | % | | | 4.65 | % |
| | | | | | | | | | | | | | | | | |
| Core Efficiency Ratio | | | | | | | | | | | | | | | | |
| Efficiency ratio (GAAP) | | | 66.62 | % | | | 71.53 | % | | | 73.01 | % | | | 78.04 | % |
| Gain (loss) on sale of investments | | | -0.19 | % | | | 2.72 | % | | | 0.05 | % | | | 2.62 | % |
| Other than temporary impairment of investment securities available for sale | | | — | | | | — | | | | -1.38 | % | | | — | |
| Merger-related expenses | | | -0.88 | % | | | -0.97 | % | | | -2.76 | % | | | -6.46 | % |
| Core Efficiency Ratio (Non-GAAP) | | | 65.55 | % | | | 73.28 | % | | | 68.92 | % | | | 74.20 | % |
| | | As Of | | | | |
| | | September 30,
2017 | | December 31,
2016 | | | | |
| | | (Dollars in thousands, except share data) | | | | |
| Tangible Book Value Per Share | | | | | | | | |
| Book Value (GAAP) | | $ | 143,525 | | | $ | 133,068 | | | | | | | | | |
| Goodwill and intangibles | | | (9,516 | ) | | | (3,044 | ) | | | | | | | | |
| Book Value (Tangible) | | $ | 134,009 | | | $ | 130,024 | | | | | | | | | |
| Outstanding shares | | | 6,458,679 | | | | 6,467,550 | | | | | | | | | |
| Tangible Book Value Per Share | | $ | 20.75 | | | $ | 20.10 | | | | | | | | | |
APPENDIX B – TAX EQUIVALENT NET INTEREST MARGIN ANALYSIS (UNAUDITED)
| | | For the Three Months Ended September 30, |
| | | 2017 | | 2016 |
| | | Average Outstanding Balance | | Interest | | Yield/ Rate | | Average Outstanding Balance | | Interest | | Yield/ Rate |
| | | (Dollars in thousands) |
| Interest-earning assets: | | | | | | | | | | | | | | | | | | | | | | | | |
| Loans, including loans held for sale | | $ | 788,021 | | | $ | 9,175 | | | | 4.62 | % | | $ | 714,665 | | | $ | 8,424 | | | | 4.68 | % |
| Loans, tax exempt (1) | | | 16,607 | | | | 151 | | | | 3.60 | % | | | 16,232 | | | | 152 | | | | 3.72 | % |
| Investments - taxable | | | 295,516 | | | | 1,787 | | | | 2.42 | % | | | 248,171 | | | | 1,294 | | | | 2.09 | % |
| Investment tax exempt (1) | | | 124,016 | | | | 1,257 | | | | 4.05 | % | | | 71,323 | | | | 664 | | | | 3.73 | % |
| Interest earning deposits | | | 63,262 | | | | 216 | | | | 1.35 | % | | | 46,582 | | | | 62 | | | | 0.53 | % |
| Other investments, at cost | | | 11,822 | | | | 161 | | | | 5.40 | % | | | 10,415 | | | | 132 | | | | 5.03 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total interest-earning assets | | | 1,299,244 | | | | 12,747 | | | | 3.89 | % | | | 1,107,388 | | | | 10,728 | | | | 3.84 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest-earning assets | | | 100,731 | | | | | | | | | | | | 86,098 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total assets | | $ | 1,399,975 | | | | | | | | | | | $ | 1,193,486 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | | | | | | | |
| Savings accounts | | $ | 49,146 | | | $ | 14 | | | | 0.11 | % | | $ | 37,847 | | | $ | 12 | | | | 0.13 | % |
| Time deposits | | | 358,327 | | | | 796 | | | | 0.88 | % | | | 304,406 | | | | 745 | | | | 0.97 | % |
| Money market accounts | | | 260,804 | | | | 248 | | | | 0.38 | % | | | 238,923 | | | | 217 | | | | 0.36 | % |
| Interest bearing transaction accounts | | | 174,945 | | | | 56 | | | | 0.13 | % | | | 115,372 | | | | 33 | | | | 0.11 | % |
| Total interest bearing deposits | | | 843,222 | | | | 1,114 | | | | 0.52 | % | | | 696,548 | | | | 1,007 | | | | 0.57 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| FHLB advances | | | 223,826 | | | | 641 | | | | 1.14 | % | | | 193,826 | | | | 371 | | | | 0.76 | % |
| Junior subordinated debentures | | | 14,433 | | | | 140 | | | | 3.85 | % | | | 14,433 | | | | 140 | | | | 3.85 | % |
| Other borrowings | | | 3,652 | | | | 36 | | | | 3.91 | % | | | 2,680 | | | | 29 | | | | 4.29 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total interest-bearing liabilities | | | 1,085,133 | | | | 1,931 | | | | 0.71 | % | | | 907,487 | | | | 1,547 | | | | 0.68 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest-bearing deposits | | | 157,870 | | | | | | | | | | | | 133,268 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Other non interest bearing liabilities | | | 14,667 | | | | | | | | | | | | 14,627 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total liabilities | | | 1,257,670 | | | | | | | | | | | | 1,055,382 | | | | | | | | | |
| Total equity | | | 142,305 | | | | | | | | | | | | 138,104 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total liabilities and equity | | $ | 1,399,975 | | | | | | | | | | | $ | 1,193,486 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Tax-equivalent net interest income | | | | | | $ | 10,816 | | | | | | | | | | | $ | 9,181 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest-earning assets(2) | | $ | 214,111 | | | | | | | | | | | $ | 199,901 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Average interest-earning assets to interest-bearing liabilities | | | 1.20 | % | | | | | | | | | | | 1.22 | % | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Tax-equivalent net interest rate spread(3) | | | | | | | | | | | 3.19 | % | | | | | | | | | | | 3.17 | % |
| Tax-equivalent net interest margin(4) | | | | | | | | | | | 3.30 | % | | | | | | | | | | | 3.29 | % |
(1) Tax exempt loans and investments are calculated giving effect to a 35% federal tax rate.
(2) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
(3) Tax-equivalent net interest rate spread represents the difference between the tax equivalent yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(4) Tax-equivalent net interest margin represents tax equivalent net interest income divided by average total interest-earning assets.
| | | For the Nine Months Ended September 30, |
| | | 2017 | | 2016 |
| | | Average Outstanding Balance | | Interest | | Yield/ Rate | | Average Outstanding Balance | | Interest | | Yield/ Rate |
| | | (Dollars in thousands) |
| Interest-earning assets: | | | | | | | | | | | | | | | | | | | | | | | | |
| Loans, including loans held for sale | | $ | 765,810 | | | $ | 26,686 | | | | 4.66 | % | | $ | 683,879 | | | $ | 23,885 | | | | 4.65 | % |
| Loans, tax exempt (1) | | | 15,906 | | | | 438 | | | | 3.69 | % | | | 12,855 | | | | 372 | | | | 3.86 | % |
| Investments - taxable | | | 301,823 | | | | 5,367 | | | | 2.37 | % | | | 256,299 | | | | 4,174 | | | | 2.17 | % |
| Investment tax exempt (1) | | | 118,008 | | | | 3,609 | | | | 4.08 | % | | | 47,264 | | | | 1,355 | | | | 3.82 | % |
| Interest earning deposits | | | 58,067 | | | | 459 | | | | 1.06 | % | | | 39,546 | | | | 152 | | | | 0.51 | % |
| Other investments, at cost | | | 12,491 | | | | 478 | | | | 5.12 | % | | | 9,514 | | | | 359 | | | | 5.03 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total interest-earning assets | | | 1,272,105 | | | | 37,038 | | | | 3.89 | % | | | 1,049,357 | | | | 30,297 | | | | 3.85 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest-earning assets | | | 100,321 | | | | | | | | | | | | 83,071 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total assets | | $ | 1,372,426 | | | | | | | | | | | $ | 1,132,428 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | | | | | | | |
| Savings accounts | | $ | 46,835 | | | $ | 39 | | | | 0.11 | % | | $ | 37,077 | | | $ | 38 | | | | 0.14 | % |
| Time deposits | | | 349,381 | | | | 2,335 | | | | 0.89 | % | | | 296,816 | | | | 2,268 | | | | 1.02 | % |
| Money market accounts | | | 255,013 | | | | 704 | | | | 0.37 | % | | | 221,956 | | | | 548 | | | | 0.33 | % |
| Interest bearing transaction accounts | | | 159,377 | | | | 149 | | | | 0.12 | % | | | 110,732 | | | | 127 | | | | 0.15 | % |
| Total interest bearing deposits | | | 810,606 | | | | 3,227 | | | | 0.53 | % | | | 666,581 | | | | 2,981 | | | | 0.60 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| FHLB advances | | | 240,551 | | | | 1,713 | | | | 0.95 | % | | | 174,723 | | | | 965 | | | | 0.74 | % |
| Junior subordinated debentures | | | 14,433 | | | | 418 | | | | 3.87 | % | | | 14,433 | | | | 394 | | | | 3.64 | % |
| Other borrowings | | | 3,165 | | | | 100 | | | | 4.22 | % | | | 2,490 | | | | 85 | | | | 4.55 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total interest-bearing liabilities | | | 1,068,755 | | | | 5,458 | | | | 0.68 | % | | | 858,227 | | | | 4,425 | | | | 0.69 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest-bearing deposits | | | 151,174 | | | | | | | | | | | | 125,120 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Other non interest bearing liabilities | | | 14,204 | | | | | | | | | | | | 13,839 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total liabilities | | | 1,234,133 | | | | | | | | | | | | 997,186 | | | | | | | | | |
| Total equity | | | 138,293 | | | | | | | | | | | | 135,242 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total liabilities and equity | | $ | 1,372,426 | | | | | | | | | | | $ | 1,132,428 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Tax-equivalent net interest income | | | | | | $ | 31,580 | | | | | | | | | | | $ | 25,872 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest-earning assets(2) | | $ | 203,350 | | | | | | | | | | | $ | 191,130 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Average interest-earning assets to interest-bearing liabilities | | | 119.03 | % | | | | | | | | | | | 122.27 | % | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Tax-equivalent net interest rate spread(3) | | | | | | | | | | | 3.21 | % | | | | | | | | | | | 3.16 | % |
| Tax-equivalent net interest margin(4) | | | | | | | | | | | 3.32 | % | | | | | | | | | | | 3.28 | % |
(1) Tax exempt loans and investments are calculated giving effect to a 35% federal tax rate.
(2) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
(3) Tax-equivalent net interest rate spread represents the difference between the tax equivalent yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(4) Tax-equivalent net interest margin represents tax equivalent net interest income divided by average total interest-earning assets.
