Civista Bancshares (CIVB) 8-K Civista Bancshares, Inc. Announces Third Quarter 2018 Earnings

Exhibit 99.1

Civista Bancshares, Inc. Announces Third Quarter 2018 Earnings

Sandusky, Ohio, November 2, 2018 /PRNewswire/– Civista Bancshares, Inc. (NASDAQ:CIVB) (“Civista”) reported net loss available to common shareholders of $3.6 million, or ($0.31) per diluted share, for the third quarter of 2018. This compares to net income available to common shareholders of $3.4 million, or $0.29 per diluted share, for the prior year period.

For the nine-month period ended September 30, 2018, Civista reported net income available to common shareholders of $5.8 million or $0.51 per diluted share. This compares to $11.0 million or $0.97 per diluted share, in the same period of 2017.

“The third quarter of 2018 was a very busy quarter. We closed on the acquisition of United Community Bancorp and completed the integration of their systems. While those two items are big accomplishments by themselves, we also originated $36.7 million of loans. With our organic growth and the acquisition, our loans are now over $1.5 billion. Our annualized organic loan growth was 12.5% for the quarter,” said Dennis G. Shaffer, President and CEO of Civista.

Factors Affecting Comparability

Most recently, Civista acquired United Community Bancorp (“UCB”) in September 2018. The financial position and results of operations of UCB prior to its acquisition date are not included in the Company’s financial results for periods prior to the acquisition date.

Adjusted Earnings

Financial results for the third quarter and nine months ended September 30, 2018 included $8.8 million and $12.0 million respectively, in acquisition and integration expenses, as well as a loss on sale of securities of $392 thousand. Excluding these expenses, adjusted earnings were $4.8 million, or $0.37 diluted earnings per share, for the third quarter of 2018 and $16.8 million, or $1.37 diluted earnings per share, for the nine months ended September 30, 2018.

A reconciliation of adjusted earnings to net income according to accounting principles generally accepted in the United States (“GAAP”) is provided in the financial tables at the end of this press release.

Results of Operations:

Net interest income increased $2.1 million, or 15.7%, for the third quarter of 2018, and $5.4 million, or 13.6%, for the nine months ended September 30, compared to the same periods of 2017. Interest income increased $3.1 million, or 20.6%, for the third quarter of 2018 and $7.2 million or 16.9% for the nine-month period ended September 30. For both periods, an increase in average loans outstanding, as well as an increase in loan yields, contributed to the increase in interest income compared to 2017. Interest expense increased $906 thousand, or 78.4 %, for the third quarter of 2018 and $1.8 million, or 63.6%, for the nine months ended September 30 compared to the same periods of 2017. The increase in interest expense is due to both an increase in average balances and an increase in the cost of interest-bearing liabilities. The tax equivalent net interest margin increased 7 basis points to 4.15% for the third quarter of 2018, compared to 4.08% for the same period a year ago and increased 21 basis points to 4.14% for the nine months ended September 30, 2018, compared to 3.93% for the same period a year ago.

Mr. Shaffer continued, “We have been positioned for some time for an increase in interest rates. We have seen the benefits through the increase in our net interest margin. The addition of UCB provides corelow-cost funding for the future.”

Average Balance Analysis

(Unaudited - Dollars in thousands except share data)

	Three Months Ended September 30,
	2018								2017
	Average balance			Interest		Yield/ rate*			Average balance			Interest		Yield/ rate*
Assets:
Interest-earning assets:
Loans	$	1,256,680		$	15,833		5.00	%	$	1,122,131		$	13,022		4.60	%
Taxable securities		145,621			1,042		2.81	%		150,534			977		2.61	%
Non-taxable securities		107,211			908		4.29	%		93,022			812		5.44	%
Interest-bearing deposits in other banks		24,527			103		1.67	%		11,450			25		0.87	%
Total interest-earning assets	$	1,534,039			17,886		4.69	%	$	1,377,137			14,836		4.41	%
Noninterest-earning assets:
Cash and due from financial institutions		22,399								24,652
Premises and equipment, net		18,219								18,000
Accrued interest receivable		5,120								4,460
Intangible assets		38,920								28,541
Other assets		16,929								10,352
Bank owned life insurance		28,452								24,889
Less allowance for loan losses		(13,303	)							(12,988	)
Total Assets	$	1,650,775							$	1,475,043
Liabilities and Shareholders Equity:
Interest-bearing liabilities:
Demand and savings	$	653,537		$	317		0.19	%	$	594,088		$	160		0.11	%
Time		163,236			466		1.13	%		194,364			447		0.91	%
FHLB advances		180,073			925		2.04	%		85,840			276		1.28	%
Federal funds purchased		—			—		0.00	%		462			2		1.72	%
Subordinated debentures		29,427			349		4.71	%		29,427			268		3.61	%
Repurchase Agreements		18,664			5		0.11	%		14,328			3		0.08	%
Total interest-bearing liabilities	$	1,044,937			2,062		0.78	%	$	918,509			1,156		0.50	%
Noninterest-bearing deposits		385,646								363,783
Other liabilities		14,591								12,826
Shareholders’ Equity		205,601								179,925
Total Liabilities and Shareholders’ Equity	$	1,650,775							$	1,475,043
Net interest income and interest rate spread				$	15,824		3.91	%				$	13,680		3.91	%
Net interest margin							4.15	%							4.08	%

* – Interest yields are calculated using a 21%tax-equivalent adjustment for 2018 and a 35%tax-equivalent adjustment for 2017

Average Balance Analysis

(Unaudited - Dollars in thousands except share data)

	Nine Months Ended September 30,
	2018								2017
	Average balance			Interest		Yield/ rate*			Average balance			Interest		Yield/ rate*
Assets:
Interest-earning assets:
Loans	$	1,188,093		$	43,615		4.91	%	$	1,094,401		$	37,211		4.55	%
Taxable securities		144,036			3,069		2.83	%		144,379			2,764		2.59	%
Non-taxable securities		103,540			2,672		4.42	%		86,713			2,307		5.56	%
Interest-bearing deposits in other banks		53,566			614		1.53	%		78,576			473		0.80	%
Total interest-earning assets	$	1,489,235			49,970		4.55	%	$	1,404,069			42,755		4.20	%
Noninterest-earning assets:
Cash and due from financial institutions		49,330								53,487
Premises and equipment, net		17,836								18,084
Accrued interest receivable		4,947								4,446
Intangible assets		31,918								28,682
Other assets		14,539								10,164
Bank owned life insurance		26,327								24,747
Less allowance for loan losses		(13,127	)							(13,156	)
Total Assets	$	1,621,005							$	1,530,523
Liabilities and Shareholders Equity:
Interest-bearing liabilities:
Demand and savings	$	628,610		$	819		0.17	%	$	582,716		$	413		0.09	%
Time		163,660			1,241		1.01	%		181,931			1,087		0.80	%
FHLB		108,239			1,560		1.93	%		57,195			534		1.25	%
Federal funds purchased		—			—		0.00	%		156			2		1.71	%
Subordinated debentures		29,427			975		4.43	%		29,427			766		3.48	%
Repurchase Agreements		17,871			13		0.10	%		18,597			14		0.10	%
Total interest-bearing liabilities	$	947,807			4,608		0.65	%	$	870,022			2,816		0.43	%
Noninterest-bearing deposits		465,448								478,137
Other liabilities		14,889								12,881
Shareholders’ Equity		192,861								169,483
Total Liabilities and Shareholders’ Equity	$	1,621,005							$	1,530,523
Net interest income and interest rate spread				$	45,362		3.90	%				$	39,939		3.77	%
Net interest margin							4.14	%							3.93	%

* – Interest yields are calculated using a 21%tax-equivalent adjustment for 2018 and a 35%tax-equivalent adjustment for 2017

Provision for loan losses was $390 thousand for the nine months ended September 30, 2018. No provision was recorded during 2017.

For the third quarter of 2018, noninterest income totaled $3.3 million, a decrease of $177 thousand, or 5.1%, compared to the prior year’s third quarter. Noninterest income for the first nine months of 2018 totaled $13.3 million, an increase of $589 thousand, or 4.6%, compared to the prior year’s first nine months.

Noninterest income

(dollars in thousands)	Three months ended September 30,						Nine months ended September 30,
	2018			2017			2018			2017
Service charges	$	1,219		$	1,177		$	3,712		$	3,609
Net gain on sale of securities		(392	)		(9	)		(386	)		(9	)
Net gain on equity securities		27			—			102			—
Net gain on sale of loans		428			472			1,235			1,207
ATM/Interchange fees		622			567			1,764			1,643
Wealth management fees		873			787			2,561			2,233
Bank owned life insurance		147			142			432			429
Tax refund processing fees		—			—			2,750			2,750
Other		364			329			1,123			842
Total noninterest income	$	3,288		$	3,465		$	13,293		$	12,704

For the third quarter of 2018, we recorded a loss on securities sold of $392 thousand as a result of selling three securities to improve the structure and to gain future yield. ATM/Interchange fees increased $55 thousand, or 9.7%, and $121 thousand, or 7.4%, for the third quarter and nine-month periods ended September 30, 2018 and 2017, primarily due to increased interchange income. Wealth management fees increased $86 thousand, or 10.9%, and $328 thousand, or 14.7%, for the third quarter and nine-month period ended September 30, 2018 and 2017. Assets under management totaled $468.2 million, representing an increase of $2.8 million in the third quarter of 2018 and $5.0 million, or 1.1%, since the end of the third quarter 2017. Other noninterest income increased for the nine-month period due primarily to an increase in swap related income of $164 thousand.

Mr. Shaffer continued, “During the third quarter we took a look at our investment portfolio and determined that by repositioning a couple of securities we could improve the structure of our portfolio as well as add yield. In the short-term, that resulted in a $392 thousand loss. In the long-term, this transaction should result in thepick-up of approximately 146 basis points in yield.”

For the third quarter of 2018, noninterest expense totaled $22.2 million, an increase of $10.0 million, or 82.1%, compared to the prior year’s third quarter. Noninterest expense for the first nine months of 2018 increased $14.1 million, or 38.9%, when compared to the first nine months of 2017.

Noninterest expense (dollars in thousands)	Three months ended September 30,				Nine months ended September 30,
	2018		2017		2018		2017
Compensation expense	$	12,054	$	7,389	$	26,812	$	21,313
Net occupancy and equipment		1,122		1,040		3,444		3,099
Contracted data processing		3,150		357		6,237		1,174
Taxes and assessments		472		370		1,419		1,181
Professional services		2,198		534		4,233		1,718
Amortization of intangible assets		26		158		85		483
Marketing		350		240		988		768
Other		2,784		2,079		7,070		6,481
Total noninterest expense	$	22,156	$	12,167	$	50,288	$	36,217

Compensation expense increased $4.6 million and $5.5 million for the three and nine-month periods ending September 30, 2018. Both 2018 periods included $4.2 million of acquisition related expenses. The remaining increases were due to an increase in employee salaries and incentives of $388 thousand for the three months and $878 thousand for the nine months ended September 30, 2018 compared to last year. Additionally, employee insurance increased $69 thousand for the three months and $284 thousand for the nine months ended September 30, 2018 compared to last year. Net occupancy and equipment expense increased $82 thousand, or 7.9%, and $345 thousand, or 11.1%, for the three and nine-month periods ended September 30, 2018. The increase for the nine-month period is primarily due to increases in grounds maintenance and utilities, as a result of the extended winter weather we experienced in our region. Contracted data processing expenses increased $2.8 million and $5.1 million for the three and nine-month periods ended September 30, 2018, due to $2.8 million for three months and $5.3 million for nine months, incurred for data processing conversion expenses of UCB. Professional services costs increased $1.7 million and $2.5 million for the three and nine-month periods ended September 30, 2018, respectively. The increase includes $1.6 million and $2.3 million of legal and consulting expenses related to the UCB acquisition, respectively.

The efficiency ratio was 84.7% for the nine months ended September 30, 2018 compared to 67.3% for the nine months ended September 30, 2017. The increase in the efficiency ratio is due primarily to $12.0 million of expenses related to the merger with UCB, partially offset by an increase in net interest income. Excluding the merger related expenses, the efficiency ratio was 64.2% for the nine months ended September 30, 2018. Please see thenon-GAAP reconciliation at the end of this document.

Civista’ s effective income tax rate for the third quarter and nine-month period ended September 30, 2018 was 0.0% and 17.6%, respectively.

Balance Sheet

Total assets increased $559.7 million, or 36.7%, from December 31, 2017 to September 30, 2018, primarily due to the acquisition of United Community Bancorp.

End of period loan balances

(dollars in thousands)	September 30, 2018		December 31, 2017		$ Change			% Change
Commercial and Agriculture	$	169,686	$	152,473	$	17,213			11.3	%
Commercial Real Estate:
Owner Occupied		203,087		164,099		38,988			23.8	%
Non-owner Occupied		499,240		425,623		73,617			17.3	%
Residential Real Estate		459,021		268,735		190,286			70.8	%
Real Estate Construction		126,288		97,531		28,757			29.5	%
Farm Real Estate		38,038		39,461		(1,423	)		-3.6	%
Consumer and Other		20,284		16,739		3,545			21.2	%
Total Loans	$	1,515,644	$	1,164,661	$	350,983			30.1	%

The acquisition of UCB contributed $298.9 million, or 85.2%, of the increase in the loan portfolio. Organic loan growth during 2018 totaled $52.1 million with increases of $23.2 million in the Commercial Real Estate, $13.6 million in the Residential Real Estate and $17.4 million in the Real Estate Construction loan portfolios.

Total deposits increased $372.8 million, or 30.9%, from December 31, 2017 to September 30, 2018. The acquisition of UCB added $475.9 million in deposits. Organic deposits decreased $103.1 million due to a shift from brokered deposits to borrowings.

End of period deposit balances

(dollars in thousands)	September 30, 2018		December 31, 2017		$ Change			% Change
Noninterest-bearing demand	$	466,527	$	361,964	$	104,563			28.9	%
Interest-bearing demand		261,248		183,680		77,568			42.2	%
Savings and money market		572,589		404,690		167,899			41.5	%
Time deposits		259,394		133,853		125,541			93.8	%
Brokered deposits		17,997		120,736		(102,739	)		-85.1	%
Total Deposits	$	1,577,755	$	1,204,923	$	372,832			30.9	%

The increase in noninterest-bearing demand is due to an increase in deposits from the acquisition of $112.8 million, which was partially offset by cash paid by the Company related to the UCB acquisition. Interest-bearing demand deposits increased due to an $86.1 million increase related to the UCB acquisition. Savings and money market deposits increased primarily due to a $148.5 million increase related to the UCB acquisition. Time deposits would have decreased $3.1 million if not for the increase related to the UCB acquisition. The decrease in brokered deposits was due to a shift in wholesale funding sources.

Federal Home Loan Bank advances increased $73.2 million to $145.1 million at September 30, 2018, or 101.8%, from December 31, 2017, due to a short term shift in wholesale funding sources.

Total shareholders’ equity increased $104.9 million, or 56.9%, from December 31, 2017 to September 30, 2018. The acquisition of UCB resulted in the issuance of 4.3 million shares of stock totaling $104.7 million. In addition, retained earnings increased $3.5 million, partially offset by a $4.1 million decrease in accumulated other comprehensive income. During 2018, $6.5 million of preferred stock was converted to 896 thousand shares of common stock. Since issuance in December 2013, approximately $12.3 million has been converted from preferred stock to common stock.

Asset Quality

The Company recorded net charge-offs of $193 thousand for the nine months of 2018 compared to $359 thousand for the same period of 2017.

Allowance for Loan Losses

(dollars in thousands)	September 30, 2018			September 30, 2017
Beginning of period	$	13,134		$	13,305
Charge-offs		(784	)		(797	)
Recoveries		591			438
Provision		390			—
End of period	$	13,331		$	12,946

The allowance for loan losses to loans was 0.88% for 2018 and 1.13% for 2017. Thenon-performing assets to assets ratio decreased to 0.48% from 0.74% in 2017. The allowance for loan losses tonon-performing loans decreased to 132.86% from 168.36% in 2017. The decreases in these ratios is primarily due to the UCB acquisition.

Non-performing assets at September 30, 2018 were $10.0 million, a 5.0% increase from December 31, 2017.

Non-performing Assets

(dollars in thousands)	September 30, 2018		December 31, 2017
Non- accrual loans	$	6,505	$	6,648
Restructured loans		3,529		2,888
Totalnon-performing loans		10,034		9,536
Other Real Estate Owned		—		16
Totalnon-performing assets	$	10,034	$	9,552

Conference Call and Webcast

Civista Bancshares, Inc. will also host a conference call to discuss the Company’s financial results for the third quarter of 2018 at 1:00 p.m. ET on Friday, November 2, 2018. Interested parties can access the live webcast of the conference call through the Investor Relations section of the Company’s website, www.civb.com. Participants can also listen to the conference call by dialing855-238-2712 and ask to be joined into the Civista Bancshares, Inc. Third Quarter 2018 Earnings call. Please log in or dial in at least 10 minutes prior to the start time to ensure a connection.

An archive of the webcast will be available for one year on the Investor Relations section of the Company’s website (www.civb.com).

Non-GAAP Financial Measures

Some of the financial measures included in this press release are not measures of financial performance recognized in accordance with GAAP. Thesenon-GAAP financial measures include “Adjusted Earnings,” and “Adjusted Efficiency Ratio.” The Company believes thesenon-GAAP financial measures provide both management and investors a more complete understanding of the Company’s profitability. Thesenon-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP financial measures. Not all companies use the same calculation of these measures; therefore, this presentation may not be comparable to other similarly titled measures as presented by other companies.

Forward Looking Statements

This press release may contain forward-looking statements regarding the financial performance, business prospects, growth and operating strategies of Civista. For these statements, Civista claims the protections of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Statements in this press release should be considered in conjunction with the other information available about Civista, including the information in the filings we make with the Securities and Exchange Commission. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forward-looking statements are based on management’s expectations and are subject to a number of risks and uncertainties. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include risk factors relating to the banking industry and the other factors detailed from time to time in Civista’ reports filed with the Securities and Exchange Commission, including those described in “Item 1A Risk Factors” of Part I of Civista’s Annual Report on Form10-K for the fiscal year ended December 31, 2017. Undue reliance should not be placed on the forward-looking statements, which speak only as of the date hereof. Civista does not undertake, and specifically disclaims any obligation, to update any forward-looking statement to reflect the events or circumstances after the date on which the forward-looking statement is made, or reflect the occurrence of unanticipated events, except to the extent required by law.

Civista Bancshares, Inc. is a $2.1 billion financial holding company headquartered in Sandusky, Ohio. The Company’s banking subsidiary, Civista Bank, operates 38 locations in Northern, Central and Southwestern Ohio, Southeastern Indiana and Northern Kentucky. Civista Bancshares, Inc. may be accessed at HUwww.civb.comUH. The Company’s common shares are traded on the NASDAQ Capital Market under the symbol “CIVB”. The Company’s depositary shares, each representing a 1/40^th ownership interest in a Series B Preferred Share, are traded on the NASDAQ Capital Market under the symbol “CIVBP”.

For additional information, contact:

Dennis G. Shaffer

President and CEO

Civista Bancshares, Inc.

888-645-4121

Civista Bancshares, Inc.

Financial Highlights

(dollars in thousands, except share amounts)

Consolidated Condensed Statement of Income

	Three Months Ended September 30, (unaudited)						Nine Months Ended September 30, (unaudited)
	2018			2017			2018			2017
Interest income		17,886			14,836			49,970			42,755
Interest expense		2,062			1,156			4,608			2,816
Net interest income		15,824			13,680			45,362			39,939
Provision for loan losses		390			—			390			—
Net interest income after provision		15,434			13,680			44,972			39,939
Noninterest income		3,288			3,465			13,293			12,704
Noninterest expense		22,156			12,167			50,288			36,217
Income (loss) before taxes		(3,434	)		4,978			7,977			16,426
Income tax expense		(1	)		1,318			1,407			4,534
Net income (loss)		(3,433	)		3,660			6,570			11,892
Preferred stock dividends		192			308			794			935
Net income (loss) available to common shareholders		(3,625	)		3,352			5,776			10,957
Dividends per common share	$	0.09		$	0.06		$	0.25		$	0.18
Earnings (loss) per common share,
basic	$	(0.31	)	$	0.33		$	0.54		$	1.12
diluted	$	(0.31	)	$	0.29		$	0.51		$	0.97
Average shares outstanding,
basic		11,627,093			10,170,734			10,775,577			9,815,118
diluted		13,271,073			12,597,299			12,830,402			12,270,126
Selected financial ratios:
Return on average assets		-0.83	%		0.98	%		0.54	%		1.04	%
Return on average equity		-6.62	%		8.07	%		4.55	%		9.38	%
Dividend payout ratio		-30.48	%		16.67	%		41.00	%		14.86	%
Net interest margin (tax equivalent)		4.15	%		4.08	%		4.14	%		3.93	%

Selected Balance Sheet Items

	September 30, 2018			December 31, 2017
	(unaudited)			(unaudited)
Cash and due from financial institutions	$	64,754		$	40,519
Investment securities		318,112			231,062
Loans held for sale		4,025			2,197
Loans		1,515,644			1,164,661
Less allowance for loan losses		13,331			13,134
Net loans		1,502,313			1,151,527
Other securities		17,774			14,247
Fixed assets		22,518			17,611
Goodwill and other intangibles		85,964			28,374
Bank owned life insurance		42,750			25,125
Other assets		27,325			15,195
Total assets	$	2,085,535		$	1,525,857
Total deposits	$	1,577,755		$	1,204,923
Federal Home Loan Bank advances		145,100			71,900
Securities sold under agreements to repurchase		18,515			21,755
Subordinated debentures		29,427			29,427
Accrued expenses and other liabilities		25,350			13,391
Total shareholders’ equity		289,388			184,461
Total liabilities and shareholders’ equity	$	2,085,535		$	1,525,857
Shares outstanding at period end		15,395,064			10,198,475
Book value per share	$	18.09		$	16.39
Equity to asset ratio		13.88	%		12.09	%
Selected asset quality ratios:
Allowance for loan losses to total loans		0.88	%		1.13	%
Non-performing assets to total assets		0.48	%		0.63	%
Allowance for loan losses tonon-performing loans		132.86	%		137.73	%
Non-performing asset analysis
Nonaccrual loans	$	6,505		$	6,648
Troubled debt restructurings		3,529			2,888
Other real estate owned		—			16
Total	$	10,034		$	9,552

Supplemental Financial Information

(Unaudited – Dollars in thousands except share data)

End of Period Balances	September 30, 2018			June 30, 2018			March 31, 2018			December 31, 2017			September 30, 2017
Assets
Cash and due from banks	$	64,754		$	41,156		$	118,970		$	40,519		$	33,394
Securities available for sale		318,112			231,013			234,915			231,062			229,419
Loans held for sale		4,025			4,058			2,379			2,197			4,662
Loans		1,515,644			1,180,032			1,153,758			1,164,661			1,141,992
Allowance for loan losses		(13,331	)		(12,867	)		(12,814	)		(13,134	)		(12,946	)
Net Loans		1,502,313			1,167,165			1,140,944			1,151,527			1,129,046
Other securities		17,774			15,154			14,247			14,247			14,247
Fixed assets		22,518			17,308			17,424			17,611			17,688
Goodwill and other intangibles		85,964			28,342			28,354			28,374			28,455
Bank owned life insurance		42,750			25,411			25,267			25,125			24,981
Other assets		27,325			18,700			17,805			15,195			14,196
Total Assets	$	2,085,535		$	1,548,307		$	1,600,305		$	1,525,857		$	1,496,088
Liabilities
Total deposits	$	1,577,755		$	1,146,172		$	1,290,671		$	1,204,923		$	1,201,289
Federal Home Loan Bank advances		145,100			156,200			60,000			71,900			56,750
Securities sold under agreement to repurchase		18,515			14,230			17,452			21,755			15,148
Subordinated debentures		29,427			29,427			29,427			29,427			29,427
Accrued expenses and other liabilities		25,350			12,430			14,712			13,391			11,493
Total liabilities		1,796,147			1,358,459			1,412,262			1,341,396			1,314,107
Shareholders’ Equity
Preferred shares, Series B		10,878			13,250			17,034			17,358			17,557
Common stock		265,324			158,191			154,170			153,810			153,562
Accumulated earnings		35,302			39,898			37,902			31,652			28,494
Treasury stock		(17,235	)		(17,235	)		(17,235	)		(17,235	)		(17,235	)
Accumulated other comprehensive income (loss)		(4,881	)		(4,256	)		(3,828	)		(1,124	)		(397	)
Total shareholders’ equity		289,388			189,848			188,043			184,461			181,981
Total Liabilities and Shareholders’ Equity	$	2,085,535		$	1,548,307		$	1,600,305		$	1,525,857		$	1,496,088
Quarterly Average Balances
Assets:
Earning assets	$	1,534,039		$	1,427,953		$	1,502,943		$	1,408,479		$	1,377,137
Securities		252,832			247,301			242,477			243,623			243,556
Loans		1,256,680			1,158,956			1,147,441			1,152,595			1,122,131
Liabilities and Shareholders’ Equity
Total deposits	$	1,202,419		$	1,190,415		$	1,380,413		$	1,218,502		$	1,152,235
Interest-bearing deposits		816,773			756,289			803,604			849,423			788,452
Interest-bearing liabilities		228,164			149,433			87,467			91,515			130,057
Total shareholders’ equity		205,601			188,330			184,432			182,495			179,925

Supplemental Financial Information

(Unaudited – Dollars in thousands except share data)

	Three Months Ended
Income statement	September 30, 2018			June 30, 2018			March 31, 2018			December 31, 2017			September 30, 2017
Total interest income	$	17,886		$	16,160		$	15,924		$	15,839		$	14,836
Total interest expense		2,062			1,394			1,152			1,276			1,156
Net interest income		15,824			14,766			14,772			14,563			13,680
Provision for loan losses		390			—			—			—			—
Noninterest income		3,288			4,390			5,616			3,630			3,465
Noninterest expense		22,156			15,928			12,205			12,387			12,167
Income (loss) before taxes		(3,434	)		3,228			8,183			5,806			4,978
Income tax expense		(1	)		214			1,194			1,826			1,318
Net income (loss)		(3,433	)		3,014			6,989			3,980			3,660
Preferred stock dividends		192			299			303			308			308
Net income (loss) available to common shareholders	$	(3,625	)	$	2,715		$	6,686		$	3,672		$	3,352
Common shares dividend paid	$	971		$	719		$	714		$	712		$	610
Per share data
Basic net income (loss) per common share	$	(0.31	)	$	0.26		$	0.65		$	0.36		$	0.33
Diluted net income (loss) per common share		(0.31	)		0.24			0.55			0.32			0.29
Dividends per common share		0.09			0.07			0.07			0.06			0.06
Average common shares outstanding – basic		11,627,093			10,470,839			10,213,264			10,179,079			10,170,734
Average common shares outstanding – diluted		13,271,073			12,615,336			12,597,394			12,597,396			12,597,299
Asset quality
Allowance for loan losses, beginning of period	$	12,867		$	12,814		$	13,134		$	12,946		$	13,047
Charge-offs		(133	)		(226	)		(425	)		(145	)		(309	)
Recoveries		207			279			105			333			208
Provision		390			—			—			—			—
Allowance for loan losses, end of period	$	13,331		$	12,867		$	12,814		$	13,134		$	12,946
Ratios
Allowance to total loans		0.88	%		1.09	%		1.11	%		1.13	%		1.13	%
Allowance to nonperforming assets		132.86	%		168.36	%		154.21	%		137.50	%		117.19	%
Allowance to nonperforming loans		132.86	%		168.36	%		154.41	%		137.73	%		117.47	%
Nonperforming assets
Nonperforming loans	$	10,034		$	7,642		$	8,298		$	9,536		$	11,021
Other real estate owned		—			—			11			16			27
Total nonperforming assets	$	10,034		$	7,642		$	8,309		$	9,552		$	11,048
Capital and liquidity
Tier 1 leverage ratio		15.37	%		12.96	%		11.82	%		12.69	%		12.74	%
Tier 1 risk-based capital ratio		15.43	%		15.71	%		15.87	%		15.45	%		15.54	%
Total risk-based capital ratio		16.29	%		16.74	%		16.92	%		16.53	%		16.63	%
Tangible common equity ratio		9.70	%		9.80	%		9.12	%		9.33	%		9.31	%

Reconciliation of Non-GAAP Financial Measures

(Unaudited – Dollars in thousands except share data)

	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
Adjusted earnings	September 30, 2018			September 30, 2017			September 30, 2018			September 30, 20 17
Income before taxes (GAAP)		(3,434	)		4,978			7,977			16,426
Loss on sale of investment securities		(392	)		—			(392	)		—
Acquisition and integration expenses		8,801			—			11,952			—
Adjusted earnings, pretax		5,759			4,978			20,321			16,426
Adjusted income tax expense		821			1,318			2,897			4,534
Adjusted net income(Non-GAAP)		4,938			3,660			17,424			11,892
Preferred stock dividends		192			308			794			936
Adjusted net income available to common shareholders	$	4,746		$	3,352		$	16,630		$	10,956
Adjusted earnings per common share – basic	$	0.41		$	0.33		$	1.54		$	1.12
Adjusted earnings per common share – diluted		0.37			0.29			1.36			0.97
Average common shares outstanding – basic		11,627,093			10,170,734			10,775,577			9,815,118
Average common shares outstanding – diluted		13,271,073			12,597,299			12,830,402			12,270,126
Adjusted Efficiency ratio
	Nine Months Ended			Nine Months Ended
	September 30, 2018			September 30, 2017
Noninterest expense (GAAP)		50,288			36,217
Acquisition and integration expense		(11,952	)		—
Adjusted noninterest expense		38,336			36,217
Net interest income (GAAP)		45,362			39,939
Effect oftax-exempt income		712			1,187
Adjusted net interest income		46,074			41,126
Noninterest Income – GAAP		13,293			12,704
Loss(gain) on sales of investment securities, net		392			—
AdjustedNon-interest Income		13,685			12,704
Adjusted total revenue		59,759			53,830
Adjusted Efficiency ratio		64.2	%		67.3	%