The Company's net income for the nine-month period ended March 31, 2018 was also impacted negatively by a one-time adjustment to the net deferred tax asset in the amount of $683,000 due to the effect of the tax law changes established by the Tax Cuts and Jobs Act (the "Act"), which was signed into law by the President on December 22, 2017. The Act reduced the federal corporate tax rate to 21%. This change required the Company to revalue its net deferred tax asset, which represents corporate tax benefits anticipated to be realized in the future. The reduction in the federal corporate tax rate reduces the tax benefits of the net deferred tax asset. While the one-time adjustment caused a reduction in after-tax net income during the current fiscal year, the reduction of the corporate income tax rate from 34% to 21% is expected to be favorable to the Company in future periods.

Net interest income totaled $3.9 million for the quarter ended March 31, 2018, which represents an increase of $308,000, or 8.7%, when compared to the quarter ended March 31, 2017. The growth in the Company's core business was the result of an increase in interest income of $350,000 partially offset by an increase in interest expense of $42,000. Interest income increased due to a $14.1 million increase in the average balance of loans, an increase in the average rate earned on loans from 4.26% in the prior year quarter to 4.36% in the current year quarter, and an increase in the average rate earned on investment securities from 2.30% in the prior year quarter to 2.61% in the current year quarter, partially offset by a $4.8 million decrease in the average balance of investment securities. The increase in loan balances is primarily the result of the continued execution of our controlled growth strategy in mortgage and commercial lending. Interest expense increased due to a $13.7 million increase in the average balance of deposits and an increase in the average rate paid on deposits from 0.43% in the prior year quarter to 0.46% in the current year quarter.

Nonperforming assets as a percentage of total assets decreased from 0.19% at December 31, 2017 to 0.13% at March 31, 2018. Nonperforming loans as a percentage of total loans decreased from 0.36% at December 31, 2017 to 0.21% at March 31, 2018. The Company remains focused on improving asset quality and continues to review all available options to decrease nonperforming assets. The provision for loan losses was $7,000 for the quarter ended December 31, 2017, which represents a decrease of $4,000 compared to the prior year quarter.

Noninterest income totaled $1.1 million for the quarter ended March 31, 2018, which represents an increase of $67,000, or 6.5%, when compared to the prior year quarter. The increase was primarily due to a $77,000 increase in the market value of mortgage servicing rights during the quarter, which compares to a $25,000 decrease in the prior year quarter for a net change of $102,000. The increase is also partially due to a $25,000 increase in service charge income on deposit accounts. These increases were partially offset by a $55,000 decrease in gain on the sale of mortgage loans due to a decrease in sales volume.

Net interest income totaled $11.3 million for the nine months ended March 31, 2018, which represents an increase of $1.1 million, or 10.5%, when compared to the prior year period. The growth in the Company's core business was due to a $1.2 million increase in interest income, partially offset by a $101,000 increase in interest expense. Interest income increased primarily due to a $14.2 million increase in the average balance of loans, an increase in the average rate earned on loans from 4.28% in the prior year period to 4.41% in the current year period, and an increase in the average rate earned on investment securities from 2.19% in the prior year period to 2.47% in the current year period. Interest expense increased primarily as a result of a $14.5 million increase in the average balance of deposits and an increase in the average rate paid on deposits from 0.46% in the prior year period to 0.48% in the current year period.

Nonperforming assets as a percentage of total assets decreased from 0.56% at June 30, 2017 to 0.13% at March 31, 2018. Nonperforming loans as a percentage of total loans decreased from 1.02% at June 30, 2017 to 0.21% at March 31, 2018. The Company remains focused on improving asset quality and continues to review all available options to decrease nonperforming assets. The provision for loan losses was $30,000 for the nine months ended March 31, 2018, which represents a decrease of $13,000 compared to the prior year period.

Noninterest income totaled $3.3 million for the nine months ended March 31, 2018, which represents a decrease of $281,000, or 7.8%, compared to the prior year period. The decrease was primarily due to a $320,000 decrease in gain on the sale of mortgage loans, resulting from a decrease in sales volume, and a $70,000 decrease in gain on the sale of investment securities. These decreases were partially offset by a $72,000 gain on the sale of other real estate owned and a $68,000 increase in service charge income on deposit accounts.

Noninterest expense totaled $11.5 million for the nine months ended March 31, 2018, which represented an increase of $726,000, or 6.8%, compared to the prior year period. The increase in noninterest expense was primarily the result of $650,000 in pre-tax merger related expenses incurred during the period with no such corresponding expense in the prior year period, and a $76,000 increase in compensation expense. These increases were partially offset by a $75,000 decrease in professional fees.

Stockholders' equity totaled $71.2 million as of March 31, 2018, which represented a decrease of $116,000 when compared to June 30, 2017. The decrease was primarily due to a $1.9 million decrease in accumulated other comprehensive income and dividends declared totaling $1.2 million. These were partially offset by net income of $2.1 million. The decrease in accumulated other comprehensive income was the result of increasing market interest rates during the period. In connection with the preparation of the financial statements for the quarter ended March 31, 2018, management evaluated the credit quality of the investment portfolio and believes all unrealized losses to be temporary. Management has the intent and the ability to hold these securities until the value recovers or until maturity.

This news release may contain forward-looking statements, which can be identified by the use of words such as "believes," "expects," "anticipates," "estimates" or similar expressions. Such forward-looking statements and all other statements that are not historic facts are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors. These factors include, but are not limited to, general economic conditions, changes in the interest rate environment, legislative or regulatory changes that may affect our business, such as those changes caused by the Tax Cuts and Jobs Act, changes in accounting policies and practices, changes in competition and demand for financial services, adverse changes in the securities markets, changes in deposit flows, changes in the quality or composition of the Company's loan or investment portfolios, and the ability to complete the previously announced merger with Civista Bancshares, Inc. within the expected timeframe. Additionally, other risks and uncertainties may be described in the Company's annual report on Form 10-K for the year ended June 30, 2017 filed with the SEC on September 26, 2017 which is available through the SEC's website at www.sec.gov. Should one or more of these risks materialize, actual results may vary from those anticipated, estimated or projected. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as may be required by applicable law or regulation, the Company assumes no obligation to update any forward-looking statements.