Civista Bancshares (CIVB) 8-K Civista Bancshares, Inc. Announces Third Quarter 2019 Earnings

Exhibit 99.1

Civista Bancshares, Inc. Announces Third Quarter 2019 Earnings

Sandusky, Ohio, October 25, 2019 /PRNewswire/– Civista Bancshares, Inc. (NASDAQ:CIVB) (“Civista”) reported net income available to common shareholders of $7.5 million, or $0.46 per diluted share, for the quarter ended September 30, 2019, compared to a net loss of $3.6 million, or ($0.31) per diluted share, for the quarter ended September 30, 2018. Net income available to common shareholders for the nine-month period ended September 30, 2019, was $25.5 million or $1.54 per diluted share, compared to $5.8 million or $0.51 per diluted share, in the same period of 2018.

Adjusted Earnings

Financial results for the third quarter and nine months ended September 30, 2018 included $8.8 million and $12.0 million respectively, inpre-tax acquisition and integration expenses, as well as apre-tax loss on sale of securities of $392 thousand, which was part of a restructuring of securities after the United Community Bancorp (“UCB”) acquisition. 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.

“Once again, we have had a great quarter of earnings and growth. Our loan growth for the third quarter was strong, at 12.4% annualized. Our core diluted earnings per share for the quarter are up 24.3% compared to 2018. It has now been a full year since we brought on UCB. The results since the acquisition have exceeded our expectations. We also announced earlier this week that we will be redeeming our convertible preferred shares on December 20^th. We believe that the redemption will assist us in aligning our capital structure more fully with our strategic plan,” said Dennis G. Shaffer, President and CEO of Civista.

Results of Operations:

Net interest income increased $4.6 million, or 29.0% for the third quarter of 2019, and $18.5 million or 40.8% and for the nine months ended September 30, compared to the same periods of 2018. Interest income increased $6.1 million, or 34.3% for the third quarter of 2019 and $23.6 million or 47.2% for the nine-month period ended September 30. Average earning assets increased $487.7 million for the third quarter of 2019 and $519.5 million for the nine-month period ended September 30. The increase in average earning assets resulted in $5.6 million and $18.6 million of the increase

in interest income, for the three and nine-month periods, respectively. Earning asset yields increased 14 basis points for the third quarter and 45 basis points for the nine-month period ended September 30, 2019, accounting for $550 thousand and $5.0 million increase in interest income. Loan yields were impacted by the accretion of UCB related loan purchase accounting adjustments of ($209) thousand for the quarter and $1.8 millionyear-to-date. During the third quarter, we automated our accretion model related to the purchase accounting adjustments of UCB loans and consequently reviewed our assumptions. Through that process, we determined that we needed to adjust the speed of accretion. Accordingly, we made an adjustment during the quarter of ($209) thousand, which decreased our margin to 4.12%. We estimate that the accretion impact on future quarters will be approximately a positive 15 basis points.

Interest expense increased $1.5 million, or 74.8%, for the third quarter of 2019 and $5.0 million, or 109.5%, for the nine months ended September 30 compared to the same periods of 2018. The cost of interest-bearing liabilities increased 25 basis points and 32 basis points, respectively. The increase in interest expense is due to both an increase in average balances and an increase in rates. Average balances for the third quarter increased $340.9 million, resulting in $653 thousand of the increase, and $378.3 million for the nine-month period, resulting in $2.1 million of the increase. The increase in rate accounted for $890 thousand and $2.9 million of the increase in interest expense.

The tax equivalent net interest margin decreased 3 basis points to 4.12% for the third quarter of 2019, compared to 4.15% for the same period a year ago and increased 21 basis points to 4.35% for the nine months ended September 30, 2019, compared to 4.14% for the same period a year ago. Accretion of the purchase accounting adjustments accounted for the 3 basis point reduction for the third quarter margin, due to the automation of our model, and a 14 basis point increase of theyear-to-date margin.

Average Balance Analysis

(Unaudited—Dollars in thousands except share data)

	Three Months Ended September 30,
	2019								2018
	Average					Yield/			Average					Yield/
	balance			Interest		rate *			balance			Interest		rate *
Assets:
Interest-earning assets:
Loans **	$	1,626,010		$	20,776		5.07	%	$	1,256,680		$	15,833		5.00	%
Taxable securities		198,994			1,712		3.50	%		145,621			1,042		2.81	%
Non-taxable securities		180,531			1,449		4.33	%		107,211			908		4.29	%
Interest-bearing deposits in other banks		16,245			86		2.10	%		24,527			103		1.67	%
Total interest-earning assets	$	2,021,780			24,023		4.83	%	$	1,534,039			17,886		4.69	%
Noninterest-earning assets:
Cash and due from financial institutions		29,745								22,399
Premises and equipment, net		21,790								18,219
Accrued interest receivable		6,926								5,120
Intangible assets		85,617								38,920
Other assets		25,432								16,929
Bank owned life insurance		44,579								28,452
Less allowance for loan losses		(13,920	)							(13,303	)
Total Assets	$	2,221,949							$	1,650,775
Liabilities and Shareholders Equity:
Interest-bearing liabilities:
Demand and savings	$	871,673		$	730		0.33	%	$	653,537		$	317		0.19	%
Time		267,959			1,369		2.03	%		163,236			466		1.13	%
FHLB		201,977			1,152		2.26	%		180,073			925		2.04	%
Subordinated debentures		29,427			350		4.72	%		29,427			349		4.71	%
Repurchase Agreements		14,831			4		0.11	%		18,664			5		0.11	%
Total interest-bearing liabilities	$	1,385,867			3,605		1.03	%	$	1,044,937			2,062		0.78	%
Noninterest-bearing deposits		482,895								385,646
Other liabilities		27,084								14,591
Shareholders’ Equity		326,103								205,601
Total Liabilities and Shareholders’ Equity	$	2,221,949							$	1,650,775
Net interest income and interest rate spread				$	20,418		3.80	%				$	15,824		3.91	%
Net interest margin							4.12	%							4.15	%

* - Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and investments, included in the yields above, was $389 thousand and $242 thousand for the periods ended September 30, 2019 and 2018, respectively.

** - Average balance includes nonaccrual loans

Average Balance Analysis

(Unaudited—Dollars in thousands except share data)

	Nine Months Ended September 30,
	2019								2018
	Average					Yield/			Average					Yield/
	balance			Interest		rate *			balance			Interest		rate *
Assets:
Interest-earning assets:
Loans **	$	1,591,477		$	63,395		5.33	%	$	1,188,093		$	43,615		4.91	%
Taxable securities		203,165			5,155		3.44	%		144,036			3,069		2.83	%
Non-taxable securities		169,802			4,208		4.40	%		103,540			2,672		4.42	%
Interest-bearing deposits in other banks		44,287			775		2.34	%		53,566			614		1.53	%
Total interest-earning assets	$	2,008,731			73,533		5.00	%	$	1,489,235			49,970		4.55	%
Noninterest-earning assets:
Cash and due from financial institutions		53,517								49,330
Premises and equipment, net		21,844								17,836
Accrued interest receivable		6,929								4,947
Intangible assets		85,863								31,918
Other assets		22,607								14,539
Bank owned life insurance		44,186								26,327
Less allowance for loan losses		(13,896	)							(13,127	)
Total Assets	$	2,229,781							$	1,621,005
Liabilities and Shareholders Equity:
Interest-bearing liabilities:
Demand and savings	$	862,098		$	2,159		0.33	%	$	628,610		$	819		0.17	%
Time		269,874			3,807		1.89	%		163,660			1,241		1.01	%
FHLB		146,222			2,581		2.36	%		108,239			1,560		1.93	%
Subordinated debentures		29,427			1,094		4.97	%		29,427			975		4.43	%
Repurchase Agreements		18,463			14		0.10	%		17,871			13		0.10	%
Total interest-bearing liabilities	$	1,326,084			9,655		0.97	%	$	947,807			4,608		0.65	%
Noninterest-bearing deposits		567,365								465,448
Other liabilities		21,843								14,889
Shareholders’ Equity		314,489								192,861
Total Liabilities and Shareholders’ Equity	$	2,229,781							$	1,621,005
Net interest income and interest rate spread				$	63,878		4.03	%				$	45,362		3.90	%
Net interest margin							4.35	%							4.14	%

* - Average yields are presented on a tax equivalent basis. The tax equivalent effect associated with loans and investments, included in the yields above, was $1.13 million and $712 thousand for the periods ended September 30, 2019 and 2018, respectively.

** - Average balance includes nonaccrual loans

Provision for loan losses was $150 thousand for the three and nine-month periods ended September 30, 2019 and $390 thousand for the three and nine-month periods ended September 30, 2018.

For the third quarter of 2019, noninterest income totaled $5.4 million, an increase of $2.1 million, or 65.1%, compared to the prior year’s third quarter. Noninterest income for the first nine months of 2019 totaled $16.8 million, an increase of $3.5 million, or 26.5%, compared to the prior year’s first nine months.

Noninterest income

(unaudited—dollars in thousands)

	Three months ended September 30,
	2019		2018			$ change		% change
Service charges	$	1,726	$	1,219		$	507		41.6	%
Net gain on sale of securities		115		(365	)		480		131.5	%
Net gain on sale of loans		815		428			387		90.4	%
ATM/Interchange fees		1,014		622			392		63.0	%
Wealth management fees		975		873			102		11.7	%
Bank owned life insurance		254		147			107		72.8	%
Other		530		364			166		45.6	%
Total noninterest income	$	5,429	$	3,288		$	2,141		65.1	%

Noninterest income

(unaudited—dollars in thousands)

	Nine months ended September 30,
	2019		2018			$ change		% change
Service charges	$	4,733	$	3,712		$	1,021		27.5	%
Net gain (loss) on sale of securities		98		(284	)		382		134.5	%
Net gain on sale of loans		1,701		1,235			466		37.7	%
ATM/Interchange fees		2,871		1,764			1,107		62.8	%
Wealth management fees		2,733		2,561			172		6.7	%
Bank owned life insurance		753		432			321		74.3	%
Tax refund processing fees		2,750		2,750			—		0.0	%
Other		1,177		1,123			54		4.8	%
Total noninterest income	$	16,816	$	13,293		$	3,523		26.5	%

The increases in service charge fee income, ATM/Interchange fees and bank owned life insurance income for both the quarter and nine-month periods are primarily attributable to the Company’s acquisition of UCB during the third quarter of 2018. The net gain on sale of securities was affected by a loss of $392 thousand in 2018, which was part of a restructuring of securities after the UCB acquisition. The net gain on sale of loans increased due to an increase in mortgage lending in the third quarter of 2019. During the quarter, mortgage loans sold on the secondary market totaled $36.0 million as a result of lower market rates. The third quarter represented 44.8% of our 2019 volume.

For the third quarter of 2019, noninterest expense totaled $16.7 million, a decrease of $5.4 million, or 24.5%, compared to the prior year’s third quarter. Noninterest expense for the first nine months of 2019 decreased $470 thousand, or 0.9%, when compared to the first nine months of 2018.

Noninterest expense

(unaudited—dollars in thousands)

	Three months ended September 30,
	2019		2018		$ change			% change
Compensation expense	$	9,707	$	12,054	$	(2,347	)		-19.5	%
Net occupancy and equipment		1,463		1,122		341			30.4	%
Contracted data processing		435		3,150		(2,715	)		-86.2	%
Taxes and assessments		498		472		26			5.5	%
Professional services		756		2,198		(1,442	)		-65.6	%
Amortization of intangible assets		235		26		209			803.8	%
Marketing		404		350		54			15.4	%
Other		3,233		2,784		449			16.1	%
Total noninterest expense	$	16,731	$	22,156	$	(5,425	)		-24.5	%

Noninterest expense

(unaudited—dollars in thousands)

	Nine months ended September 30,
	2019		2018		$ change			% change
Compensation expense	$	29,059	$	26,812	$	2,247			8.4	%
Net occupancy and equipment		4,410		3,444		966			28.0	%
Contracted data processing		1,301		6,237		(4,936	)		-79.1	%
Taxes and assessments		1,695		1,419		276			19.5	%
Professional services		2,151		4,233		(2,082	)		-49.2	%
Amortization of intangible assets		710		85		625			735.3	%
Marketing		1,111		988		123			12.4	%
Other		9,381		7,070		2,311			32.7	%
Total noninterest expense	$	49,818	$	50,288	$	(470)			-0.9	%

Compensation expense for both periods of 2018 includes $4.2 million of acquisition related expenses. The $2.3 million decrease in compensation expense for the three months was partially offset by increases in salaries, incentives and employee insurance. The $2.2 million increase for the nine months included increases to salaries, commissions and incentives, and employee insurance, which were partially offset by the acquisition expenses. The increases for both periods are primarily due to the increased size of the company due to the UCB acquisition.Year-to-date average FTE employees were 440.8 at September 30, 2019, an increase of 90.4 FTEs over 2018. Net occupancy and equipment expense increased for the three and nine-month periods ended September 30, 2019, primarily due to the addition of 9 locations from the UCB acquisition. The decrease in contracted data processing expenses for the three and nine-month periods ended September 30, 2019, was primarily due to expenses incurred in 2018 for the data processing conversion of UCB, which totaled approximately $2.8 million for the three-month and $5.3 million for the nine-month periods. The decrease in professional services costs, for the third quarter and nine-month period ended September 30, 2019 is primarily due to legal and consulting expenses

related to the UCB acquisition of approximately $1.6 million and $2.1 million, respectively which were included in the 2018 periods.

The efficiency ratio was 60.9% for the nine months ended September 30, 2019, compared to 84.7% for the nine months ended September 30, 2018. The improvement in the efficiency ratio is due primarily to $12.0 million ofpre-tax expenses related to the merger with UCB, as well as an increase in net interest income. Without the merger related expenses in 2018, the efficiency ratio would have improved from 64.2% to 60.9%. See theNon-GAAP reconciliation at the end of this press release.

Civista’s effective income tax rate for the nine months ended September 30, 2019 was 15.3% compared to 17.6% for the same period in 2018. The effective income tax rate for third quarter 2019 was 14.0% compared to 0.0% in 2018. The 2018 effective tax rate was affected by expenses incurred related to the UCB acquisition.

Balance Sheet

Total assets increased $130.1 million, or 6.1%, from December 31, 2018 to September 30, 2019, primarily due to increases in cash and cash equivalents of $19.4 million, investment securities of $9.1 million, loans held for sale of $7.6 million, loans of $86.7 million and other assets of $7.4 million.

End of period loan balances

(unaudited—dollars in thousands)

	September 30, 2019		December 31, 2018		$ Change			% Change
Commercial and Agriculture	$	196,833	$	177,101	$	19,732			11.1	%
Commercial Real Estate:
Owner Occupied		226,501		210,121		16,380			7.8	%
Non-owner Occupied		558,804		523,598		35,206			6.7	%
Residential Real Estate		465,455		457,850		7,605			1.7	%
Real Estate Construction		149,018		135,195		13,823			10.2	%
Farm Real Estate		36,286		38,513		(2,227	)		-5.8	%
Consumer and Other		15,743		19,563		(3,820	)		-19.5	%
Total Loans	$	1,648,640	$	1,561,941	$	86,699			5.6	%

There continues to be strong growth across all commercial areas. The new focus on treasury management has aided in the substantial increase in commercial and agriculture loans. The commercial real estate and real estate construction loan growth has been led by the urban markets, including better than expected growth from the Cincinnati MSA.

Total deposits increased $52.7 million, or 3.3%, from December 31, 2018 to September 30, 2019. The increase was due primarily to increases in both noninterest-bearing and interest-bearing demand deposits. A reduction of brokered deposits partially offset these increases.

End of period deposit balances

(unaudited—dollars in thousands)

	September 30, 2019		December 31, 2018		$ Change			% Change
Noninterest-bearing demand	$	497,244	$	468,083	$	29,161			6.2	%
Interest-bearing demand		297,144		261,996		35,148			13.4	%
Savings and money market		571,308		582,128		(10,820	)		-1.9	%
Time deposits		263,201		258,832		4,369			1.7	%
Brokered deposits		3,725		8,854		(5,129	)		-57.9	%
Total Deposits	$	1,632,622	$	1,579,893	$	52,729			3.3	%

The increase in noninterest-bearing demand is due to an increase in business and public fund demand deposits, primarily in Northern Ohio. Interest-bearing demand deposits increased due to a $30.8 million increase in public funds accounts, primarily in Northern Ohio and Southeastern Indiana. Brokered deposits decreased $5.1 million and Federal Home Loan Bank advances increased $42.5 million due to a shift in wholesale funding.

Stock Repurchase Program

During the third quarter, Civista repurchased 188,200 shares for $3.9 million, which equates to an average price of $20.77 per share. The repurchases are a part of the share repurchase program that was approved in December 2018. There are 281,800 shares that remain as part of the current approved repurchase program.

Mr. Shaffer added, “Since the stock repurchase program was approved last December, we have beenup-front that we believe stock repurchases to be another tool in ourtool-box to maximize shareholder value. We will continue to be opportunistic while maintaining sufficient liquidity and capital to execute our other business strategies.”

Asset Quality

The Company recorded net recoveries of $315 thousand for the first nine months of 2019 compared to net charge-offs $193 thousand for the same period of 2018.

Allowance for Loan Losses
(dollars in thousands)
	September 30, 2019			September 30, 2018
Beginning of period	$	13,679		$	13,134
Charge-offs		(431	)		(784	)
Recoveries		746			591
Provision		150			390
End of period	$	14,144		$	13,331

The allowance for loan losses to loans was 0.86% at September 30, 2019 and 0.88% at December 31, 2018. Thenon-performing assets to assets ratio decreased to 0.42% from 0.46% in 2018. The allowance for loan losses tonon-performing loans increased to 149.9% from 137.9% in 2018.

Non-performing assets at September 30, 2019 were $9.4 million, a 4.9% decrease from December 31, 2018. Nonaccrual loans include $533 thousand and $1.0 million of purchased credit-impaired (“PCI”) loans at September 30, 2019 and December 31, 2018, respectively.

Non-performing Assets
(dollars in thousands)
	September 30, 2019		December 31, 2018
Non-accrual loans	$	6,154	$	6,898
Restructured loans		3,281		3,024
Totalnon-performing loans		9,435		9,922
Other Real Estate Owned		—		—
Totalnon-performing assets	$	9,435	$	9,922

Mr. Shaffer concluded, “During the third quarter, we closed a limited service branch in Urbana, Ohio and are set to migrate our loan production office in Mayfield Heights, Ohio into a full service branch in Beachwood, Ohio. That transition will occur in the last week of October. We are very pleased to make the transition to a full-service branch in Cuyahoga County and are excited for its potential.”

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 2019 at 1:00 p.m. ET on Friday, October 25, 2019. 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 2019 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).

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, 2018. 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 $2.3 billion financial holding company headquartered in Sandusky, Ohio. The Company’s banking subsidiary, Civista Bank, operates 37 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

(unaudited—dollars in thousands, except share amounts)

Consolidated Condensed Statement of Income

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Interest income		24,023			17,886			73,533			49,970
Interest expense		3,605			2,062			9,655			4,608
Net interest income		20,418			15,824			63,878			45,362
Provision for loan losses		150			390			150			390
Net interest income after provision		20,268			15,434			63,728			44,972
Noninterest income		5,429			3,288			16,816			13,293
Noninterest expense		16,731			22,156			49,818			50,288
Income (loss) before taxes		8,966			(3,434	)		30,726			7,977
Income tax expense (benefit)		1,258			(1	)		4,688			1,407
Net income (loss)		7,708			(3,433	)		26,038			6,570
Preferred stock dividends		162			192			490			794
Net income (loss) available to common shareholders		7,546			(3,625	)		25,548			5,776
Dividends per common share	$	0.11		$	0.09		$	0.31		$	0.23
Earnings per common share,
basic	$	0.48		$	(0.31	)	$	1.64		$	0.54
diluted	$	0.46		$	(0.31	)	$	1.54		$	0.51
Average shares outstanding,
basic		15,577,371			11,627,093			15,604,410			10,775,577
diluted		16,849,887			13,271,073			16,891,286			12,830,402
Selected financial ratios:
Return on average assets		1.38	%		-0.83	%		1.56	%		0.54	%
Return on average equity		9.38	%		-6.62	%		11.07	%		4.55	%
Dividend payout ratio		22.23	%		-30.48	%		18.58	%		37.72	%
Net interest margin (tax equivalent)		4.12	%		4.15	%		4.35	%		4.14	%

Selected Balance Sheet Items

(unaudited—dollars in thousands, except share amounts)

	September 30, 2019			December 31, 2018
	(unaudited)			(unaudited)
Cash and due from financial institutions	$	62,219		$	42,779
Investment securities		356,439			347,364
Loans held for sale		8,983			1,391
Loans		1,648,640			1,561,941
Less allowance for loan losses		14,144			13,679
Net loans		1,634,496			1,548,262
Other securities		20,280			21,021
Premises and equipment, net		22,201			22,021
Goodwill and other intangibles		85,461			86,203
Bank owned life insurance		44,745			43,037
Other assets		34,241			26,876
Total assets	$	2,269,065		$	2,138,954
Total deposits	$	1,632,621		$	1,579,893
Federal Home Loan Bank advances		236,100			193,600
Securities sold under agreements to repurchase		15,088			22,199
Subordinated debentures		29,427			29,427
Accrued expenses and other liabilities		26,566			14,937
Total shareholders’ equity		329,263			298,898
Total liabilities and shareholders’ equity	$	2,269,065		$	2,138,954
Shares outstanding at period end		15,473,275			15,603,499
Book value per share	$	20.69		$	18.56
Equity to asset ratio		14.51	%		13.97	%
Selected asset quality ratios:
Allowance for loan losses to total loans		0.86	%		0.88	%
Non-performing assets to total assets		0.42	%		0.46	%
Allowance for loan losses tonon-performing loans		149.91	%		137.87	%
Non-performing asset analysis:
Nonaccrual loans	$	6,154		$	6,898
Troubled debt restructurings		3,281			3,024
Other real estate owned		—			—
Total	$	9,435		$	9,922

Supplemental Financial Information

(Unaudited—Dollars in thousands except share data)

End of Period Balances	September 30, 2019			June 30, 2019			March 31, 2019			December 31, 2018			September 30, 2018
Assets
Cash and due from banks	$	62,219		$	49,839		$	164,094		$	42,779		$	64,754
Investment securities		356,439			360,512			351,006			347,364			318,112
Loans held for sale		8,983			2,563			1,444			1,391			4,025
Loans		1,648,640			1,598,770			1,573,193			1,561,941			1,515,644
Allowance for loan losses		(14,144	)		(13,786	)		(13,822	)		(13,679	)		(13,331	)
Net Loans		1,634,496			1,584,984			1,559,371			1,548,262			1,502,313
Other securities		20,280			20,280			20,280			21,021			17,774
Premises and equipment, net		22,201			21,720			21,772			22,021			22,518
Goodwill and other intangibles		85,461			85,706			85,955			86,203			85,964
Bank owned life insurance		44,745			44,491			44,239			43,037			42,750
Other assets		34,241			32,900			29,541			26,876			27,325
Total Assets	$	2,269,065		$	2,202,995		$	2,277,702		$	2,138,954		$	2,085,535
Liabilities
Total deposits	$	1,632,621		$	1,632,720		$	1,765,801		$	1,579,893		$	1,577,755
Federal Home Loan Bank advances		236,100			176,300			127,100			193,600			145,100
Securities sold under agreement to repurchase		15,088			15,554			21,970			22,199			18,515
Subordinated debentures		29,427			29,427			29,427			29,427			29,427
Accrued expenses and other liabilities		26,566			24,782			21,347			14,937			25,350
Total liabilities		1,939,802			1,878,783			1,965,645			1,840,056			1,796,147
Shareholders’ Equity
Preferred shares, Series B		9,158			9,364			9,364			9,364			10,878
Common shares		267,559			267,275			266,990			266,901			265,324
Accumulated earnings		62,023			56,199			49,421			41,320			35,302
Treasury shares		(21,144	)		(17,235	)		(17,235	)		(17,235	)		(17,235	)
Accumulated other comprehensive income(loss)		11,667			8,609			3,517			(1,452	)		(4,881	)
Total shareholders’ equity		329,263			324,212			312,057			298,898			289,388
Total Liabilities and Shareholders’ Equity	$	2,269,065		$	2,202,995		$	2,277,702		$	2,138,954		$	2,085,535
Quarterly Average Balances
Assets:
Earning assets	$	2,021,780		$	1,986,841		$	2,017,523		$	1,907,966		$	1,534,039
Securities		379,525			373,999			365,219			352,412			252,832
Loans		1,626,010			1,583,533			1,564,208			1,532,012			1,256,680
Liabilities and Shareholders’ Equity
Total deposits	$	1,622,527		$	1,670,247		$	1,807,102		$	1,591,521		$	1,202,419
Interest-bearing deposits		1,139,632			1,129,964			1,126,173			1,120,876			816,773
Other interest-bearing liabilities		246,235			186,140			148,891			204,002			228,164
Total shareholders’ equity		326,103			315,438			301,656			290,096			205,601

Supplemental Financial Information

(Unaudited—Dollars in thousands except share data)

	Three Months Ended
Income statement	September 30, 2019			June 30, 2019			March 31, 2019			December 31, 2018			September 30, 2018
Total interest and dividend income	$	24,023		$	24,926		$	24,584		$	23,707		$	17,886
Total interest expense		3,605			3,184			2,865			2,962			2,062
Net interest income		20,418			21,742			21,719			20,745			15,824
Provision for loan losses		150			—			—			390			390
Noninterest income		5,429			5,104			6,284			4,838			3,288
Noninterest expense		16,731			16,639			16,449			16,391			22,156
Income (loss) before taxes		8,966			10,207			11,554			8,802			(3,434	)
Income tax expense (benefit)		1,258			1,546			1,885			1,233			(1	)
Net income (loss)		7,708			8,661			9,669			7,569			(3,433	)
Preferred stock dividends		162			164			164			165			192
Net income (loss) available to common shareholders	$	7,546		$	8,497		$	9,505		$	7,404		$	(3,625	)
Common shares dividend paid	$	1,722		$	1,719		$	1,404		$	1,386		$	971
Per share data
Basic earnings per common share	$	0.48		$	0.54		$	0.61		$	0.48		$	(0.31	)
Diluted earnings per common share		0.46			0.51			0.57			0.45			(0.31	)
Dividends per common share		0.11			0.11			0.09			0.09			0.09
Average common shares outstanding—basic		15,577,371			15,628,537			15,607,655			15,521,404			11,627,093
Average common shares outstanding—diluted		16,849,887			16,922,712			16,901,830			16,898,186			13,271,073
Asset quality
Allowance for loan losses, beginning of period	$	13,786		$	13,822		$	13,679		$	13,331		$	12,867
Charge-offs		(36	)		(156	)		(239	)		(119	)		(133	)
Recoveries		244			120			382			77			207
Provision		150			—			—			390			390
Allowance for loan losses, end of period	$	14,144		$	13,786		$	13,822		$	13,679		$	13,331
Ratios
Allowance to total loans		0.86	%		0.86	%		0.88	%		0.88	%		0.88	%
Allowance to nonperforming assets		149.91	%		164.69	%		150.60	%		137.87	%		132.86	%
Allowance to nonperforming loans		149.91	%		164.69	%		150.60	%		137.87	%		132.86	%
Nonperforming assets
Nonperforming loans	$	9,435		$	8,371		$	9,178		$	9,140		$	10,034
Other real estate owned		—			—			—			—			—
Total nonperforming assets	$	9,435		$	8,371		$	9,178		$	9,140		$	10,034
Capital and liquidity
Tier 1 leverage ratio		12.37	%		12.44	%		11.64	%		12.22	%		15.37	%
Tier 1 risk-based capital ratio		15.50	%		15.94	%		15.64	%		15.30	%		15.43	%
Total risk-based capital ratio		16.32	%		16.78	%		16.48	%		16.15	%		16.29	%
Tangible common equity ratio(1)		10.81	%		10.89	%		9.96	%		9.98	%		9.71	%

(1) See reconciliation of GAAP measures at the end of this press release.

Non-GAAP Reconciliation

Tangible Common Equity and Tangible Assets

(Unaudited—Dollars in thousands except share data)

	Three Months Ended
Tangible Common Equity	September 30, 2019			June 30, 2019			March 31, 2019			December 31, 2018			September 30, 2018
Total Equity	$	329,263		$	324,212		$	312,057		$	298,898		$	289,388
Less: Preferred Equity		9,158			9,364			9,364			9,364			10,878
Less: Goodwill and intangible assets		83,829			84,065			84,299			84,540			84,286
Tangible common equity	$	236,276		$	230,783		$	218,394		$	204,994		$	194,224
Total Shares Outstanding		15,473,275			15,633,059			15,624,113			15,603,499			15,395,064
Tangible book value per share	$	15.27		$	14.76		$	13.98		$	13.14		$	12.62
Tangible Assets
Total Assets	$	2,269,065		$	2,202,995		$	2,277,702		$	2,138,954		$	2,085,535
Less: Goodwill and intangible assets		83,829			84,065			84,299			84,540			84,286
Tangible assets	$	2,185,236		$	2,118,930		$	2,193,403		$	2,054,414		$	2,001,249
Tangible common equity ratio		10.81	%		10.89	%		9.96	%		9.98	%		9.71	%

Reconciliation ofNon-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, 2019			September 30, 2018			September 30, 2019		September 30, 2018
Income before taxes (GAAP)		8,966			(3,434	)		30,735		7,977
Loss on sale of investment securities		—			(392	)		—		(392	)
Acquisition and integration expenses		—			8,801			—		11,952
Adjusted earnings, pretax		8,966			5,759			30,735		20,321
Adjusted income tax expense		1,258			821			4,690		2,897
Adjusted net income(Non-GAAP)		7,708			4,938			26,045		17,424
Preferred stock dividends		162			192			490		794
Adjusted net income available to common shareholders	$	7,546		$	4,746		$	25,555	$	16,630
Adjusted earnings per common share—basic	$	0.48		$	0.41		$	1.64	$	1.54
Adjusted earnings per common share—diluted		0.46			0.37			1.54		1.36
Average common shares outstanding—basic		15,577,371			11,627,093			15,604,410		10,775,577
Average common shares outstanding—diluted		16,849,887			13,271,073			16,891,286		12,830,402
Adjusted Efficiency ratio
	Nine Months Ended			Nine Months Ended
	September 30, 2019			September 30, 2018
Noninterest expense (GAAP)		49,818			50,288
Acquisition and integration expense		—			(11,952	)
Adjusted noninterest expense		49,818			38,336
Net interest income (GAAP)		63,878			45,362
Effect oftax-exempt income		1,130			712
Adjusted net interest income		65,008			46,074
Noninterest Income—GAAP		16,816			13,293
Loss(gain) on sales of investment securities, net		—			392
AdjustedNon-interest Income		16,816			13,685
Adjusted total revenue		81,824			59,759
Adjusted Efficiency ratio		60.9	%		64.2	%