CBB Bancorp, Inc. Reports 2019 Second Quarter Results

Second Quarter 2019 Financial Highlights:

Net income of $3.5 million, or $0.33 per diluted share.
Return on average equity of 10.06% and return on average assets of 1.19%.
Net interest margin at 4.05%.
Efficiency ratio at 63.79%.
Nonperforming assets to total assets were 0.21%.
Net charge-offs to average loans were 0.02%.

CBB Bancorp, Inc. ("CBB" or the "Company") CBBI, the holding company of Commonwealth Business Bank (the "Bank"), today announced net income of $3.5 million, or $0.33 per diluted share, for the second quarter of 2019, compared to $3.6 million, or $0.35 per diluted share, for the prior quarter and $4.5 million, or $0.43 per diluted share, for the second quarter of 2018.

For the six months ended June 30, 2019, net income decreased 18.1% to $7.1 million, or $0.68 per diluted share, compared to $8.6 million, or $0.83 per diluted share, for the same period in 2018.

"Our new loan originations were substantially stronger quarter over quarter, both in commercial and SBA lending. However, our net interest margin in the second quarter decreased 11 basis points, reflecting the impact of the rise in our costs of funds which increased 16 basis points. Going forward, our focus will be in managing funding costs aggressively and operating expenses to maximize earnings." said Joanne Kim, President and CEO.

Net Interest Income and Net Interest Margin:

Net interest income was $11.4 million for the second quarter of 2019, an increase of $0.1 million, or 1.3%, compared to $11.3 million for the prior quarter, and a decrease of $0.2 million, or 1.5%, compared to $11.6 million for the same quarter last year. The quarter-over-quarter increase was primarily due to a $526,000 increase in interest earned on loans, which was offset by a $568,000 increase in interest paid on deposits. The quarter-over-quarter increase in interest earned on loans was primarily due to a $2.7 million increase in the average balance of loans, including loans held-for-sale, to $926.4 million from $923.7 million for the prior quarter, combined with a 14 basis point increase in the yield on loans to 6.46% from 6.32% in the prior quarter. The year-over-year quarterly increase was primarily due to a $1.3 million increase in interest earned on loans, and a $318,000 increase in interest earned on deposits at the FRB and other banks, which were offset by a $1.9 million increase in interest expense on deposits. The year-over-year quarterly increase in interest earned on loans was primarily due to a $62.4 million increase in the average balance of loans, combined with 16 basis points increase in the yield on loans to 6.46% from 6.30% in the same quarter last year.

Net interest income was $22.7 million for the six months ended June 30, 2019, an increase of $0.7 million, or 3.5%, compared to $22.0 million for the same period last year. The year-over-year increase was primarily attributable to a $4.0 million increase in interest earned on loans, a $454,000 increase in interest earned on deposits at the FRB and the other banks, which were partially offset by a $3.8 million increase in interest expense on deposits. The year-over-year increase in interest earned on loans was primarily due to a $85.6 million increase in the average balance of loans combined with 30 basis points increase in the yield on loans to 6.39% from 6.09%.

The reported yield on the loan portfolio is impacted by a number of factors, including changes in the average contractual interest rate earned on the portfolio due to change in loan composition and the amount of discount accretion on the retained portion of SBA loans.

The net interest margin was 4.05% for the current quarter, a decrease of 11 basis points, from 4.16% in the prior quarter, and a decrease of 40 basis points from 4.45% in the year ago quarter. The quarter-over-quarter decrease was primarily due to a 14 basis point increase in the yield on loans from 6.32% to 6.46% in the prior quarter, which was offset by a 16 basis point increase in our cost of funds to from 1.76% to 1.92% in the prior quarter. The year-over-year quarterly decrease was primarily due to a 16 basis point increase in the yield on loans from 6.30% in the year ago quarter, which was offset by a 66 basis point increase in our cost of funds from 1.26% in the same period last year. The quarter-over-quarter increase in our cost of funds was primarily due to a 16 basis point increase in our cost of deposits to 1.92% in the current quarter from 1.76% in the prior quarter and the year-over-year quarterly increase in our cost of funds was primarily due to 66 basis points increase in our cost of deposits from 1.25% in the same quarter last year. The increase in the contractual yield on our loans and cost of funds in the current quarter, compared to the year ago quarter was primarily due to increases in short-term market interest rates, with the overnight federal funds rate increasing 50 basis points during the twelve-month period.

For the six months ended June 30, 2019, the net interest margin was 4.10%, a decrease of 20 basis points, compared to 4.30% for the same period last year. The year-over-year decrease was primarily driven by a 38 basis point increase in the yield on interest-earning assets to 5.75% from 5.37% for the same period last year, which was offset by a 67 basis point increase in our cost of funds to 1.84% from 1.17% for the same period last year. The year-over-year increase in CBB's yield on interest-earning assets was primarily due to a 30 basis point increase in the yield on loans to 6.39% from 6.09%, while the annual year-over-year increase in our cost of funds was primarily attributable to a 67 basis point increase in our cost of deposits to 1.84% from 1.17% for the same period last year.

Provision for Loan Losses:

CBB recorded a $300,000 provision for loan losses in the current quarter, compared to no provision for loan losses in the prior quarter and an $800,000 provision for loan losses in the year ago quarter. The quarter-over-quarter increase in provision for loan losses was primarily due to an increase in specific reserves set aside for two impaired loans. For the six months ended June 30, 2019, CBB recorded a $300,000 provision for loan losses, a decrease of $500,000, compared to $800,000 of loan loss provisions in the same period in 2018.

Noninterest Income:

For the current quarter, noninterest income totaled $3.0 million, an increase of $877,000, or 41.4%, and a decrease of $526,000, or 14.9%, from $2.1 million and $3.5 million in the prior and year ago quarters, respectively. The quarter-over-quarter increase was primarily driven by a $942,000 increase in gain on sale of loans. The year-over-year quarterly decrease was primarily due to a $369,000 decrease in gains on sales of loans, which was primarily driven by a 71 basis points decrease in the average premium we received on sales of SBA loans which offset a $1.6 million increase in the amount of SBA loan principal sold.

For the six months ended June 30, 2019, noninterest income decreased $1.7 million, or 25.0% to $5.1 million from $6.8 million in the same period last year. The decrease was primarily due to a $1.6 million decrease in gains on sales of loans. The year-over-year decrease in gains on sales of loans was primarily driven by a 129 basis point decrease in the average premium received from the sale of SBA loans and a volume decrease of $8.8 million in the SBA loan principal sold.

During the second quarter of 2019, the Company sold $36.7 million of SBA loans, compared to $24.5 million in the preceding quarter and $35.0 million in the same quarter last year. For the six months ended June 30, 2019, the Company sold $61.1 million of SBA loans, compared to $69.9 million in the same period last year. The quarterly average premium on sales of SBA loans for the current quarter was 8.81%, compared to 7.61% in the prior quarter and 9.52% in the year ago quarter. The average premium on sales of SBA loans for the six months ended June 30, 2019 was 8.33%, compared to 9.62% in the same period last year. The amount of SBA loans we sell varies based on the volume of loans we originate, our liquidity needs, and market conditions.

Noninterest Expense:

Noninterest expense for the second quarter of 2019 was $9.2 million, an increase of $837,000, or 10.0%, from $8.4 million in the prior quarter and an increase of $1.2 million, or 15.7%, from $8.0 million in the year ago quarter. The quarter-over-quarter increase was primarily due to a $369,000 increase in salaries and employee benefits and a $469,000 increase in marketing expense, which were partially offset by a $64,000 decrease in professional expense. The quarter-over-quarter increase in salaries and employee benefits was primarily driven by an annual merit increase and a seven person increase in the average number of full-time equivalent employees ("FTEs") to 192 during the current quarter from 185 during the prior quarter. The quarter-over-quarter increase in marketing expense was attributable to our marketing and sponsorship of the LPGA LA Open.

The year-over-year quarterly increase in noninterest expense was primarily due to a $544,000 increase in salaries and employee benefits, a $667,000 increase in marketing and a $215,000 increase in professional expense. The year-over-year quarterly increase in salaries and employee benefits was primarily due to a 20 person increase in the average number of FTEs from 172 during the year ago quarter combined with annual employee compensation adjustments. The increase in marketing was primarily due to the marketing and sponsorship of the LPGA LA Open. Lastly, the increase in professional expense was attributable to an increase in external and internal audit fees related primarily to FDICIA and regulatory reporting requirements.

For the six months ended June 30, 2019, noninterest expense was $17.6 million, an increase of $2.0 million, or 12.5%, from $15.6 million for the same period last year. The increase was primarily due to a $904,000 increase in salaries and employee benefits, $807,000 increase in marketing expense, and $351,000 increase in professional expense. This was partially offset by a $97,000 decrease in other expense. The increase in salaries and employee benefits was primarily due to a 20 person increase in the average number of FTEs to 192 in the six months ended June 30, 2019 from 172 in the same period in 2018, combined with increases in annual employee compensation adjustments. The increases in marketing, professional expense, and other expense were primarily driven by the same reasons mentioned above.

Income Tax Expense:

Income tax expense was $1.4 million for the quarter, or an effective tax rate of 29.26%, compared to $1.5 million, or an effective tax rate of 28.77%, for the prior quarter and $1.9 million, or an effective tax rate of 29.67%, for the year ago quarter. For the six months ended June 30, 2019, the provision for income taxes was $2.9 million, or an effective tax rate of 29.01%, compared to $3.7 million, or an effective tax rate of 30.17%, in the same period last year.

Balance Sheet:

At June 30, 2019, the Company had total assets of $1.20 billion, an increase of $21.2 million, or 1.8%, from $1.18 billion at March 31, 2019, and an increase of $61.5 million, or 5.4%, from $1.14 billion at June 30, 2018. Interest earning assets totaled $1.16 billion at June 30, 2019, an increase of $23.0 million, or 2.0%, from $1.14 billion at March 31, 2019, and an increase of $61.1 million, or 5.5%, from $1.10 billion at June 30, 2018.

Interest-earning Deposits at the FRB and Other Banks:

Interest-earning deposits at the FRB and other banks totaled $127.2 million at the end of the current quarter, an increase of $15.9 million, or 14.3%, compared to $111.3 million at the end of the prior quarter, and an increase of $50.2 million, or 65.2%, compared to $77.0 million at the end of the year ago quarter. The quarter-over-quarter and year on year increases in interest-earning deposits at the FRB and other banks were primarily due to growth in the Bank's customer deposits.

Investment Securities:

Investment securities totaled $99.8 million at the end of the current quarter, a decrease of $2.1 million, or 2.0%, compared to $101.8 million at the end of the prior quarter, and a decrease of $12.3 million, or 10.93%, compared to $112.0 million at the end of the year ago quarter. The year-over-year decrease in investment securities was due principal paydowns.

Loans Receivable:

At June 30, 2019, loans receivable, including loans held-for-sale, were $928.5 million, an increase of $8.9 million, or 1.0%, from $919.6 million at March 31, 2019, and an increase of $21.9 million, or 2.4%, from $906.6 million at June 30, 2018. During the second quarter of 2019, total new loan production, including revolving lines of credit, was $98.7 million, compared to $59.8 million for the prior quarter and $167.8 million for the same quarter last year. For the six months ended June 30, 2019, total new loan production, including revolving lines of credit, was $158.4 million, compared to $271.3 million for the same period last year.

During the second quarter of 2019, $29.2 million of loans paid off, compared to $26.8 million in the prior quarter and $57.5 million in year ago quarter. The year over year quarter decrease was attributable to lower demand related to the acquisition and deposition of property. During the current quarter, we sold $36.7 million of SBA loans, compared to sales of $24.5 million in the prior quarter and sales of $35.0 million in the year ago quarter. During the current, prior and year ago quarters, the Company did not sell any non-SBA loans.

Deposits:

Total deposits were $1.03 billion at the end of the current quarter, an increase of $16.2 million, or 1.6%, compared to $1.02 billion at the end of the prior quarter, and an increase of $45.9 million, or 4.7%, compared to $985.9 million at the end of the year ago quarter. Noninterest-bearing deposits increased $3.7 million, or 1.9%, to $202.7 million at the end of the current quarter from $198.9 million at the end of the prior quarter and increased $5.2 million, or 2.6%, compared to $197.5 million at the end of the year ago quarter. Noninterest-bearing deposits to total deposits were 19.6%, 19.6%, and 20.0% at the end of the current, prior, and year ago quarters, respectively.

ASSET QUALITY:

Loans 30 to 89 days past due and on accrual status at June 30, 2019 were $5.8 million, an increase of $3.3 million from $2.5 million at March 31, 2019, and an increase of $2.5 million from $3.3 million at June 30, 2018. The quarter-over-quarter increase in loans 30 to 89 days past due was primarily due to a $3.4 million loan, which became more than 30 days past due in the quarter. This note is SBA 504 loan with a low loan to value ratio. No loans 90 days or more past due and still accruing at June 30, 2019, March 31, 2019, or June 30, 2018. Nonaccrual loans at June 30, 2019 were $2.5 million, or 0.29% of loans receivable, an increase of $1.5 million, compared to $1.1 million, or 0.12% of loans receivable at March 31, 2019, and an increase of $2.0 million from $0.5 million, or 0.06% of loans receivable at June 30, 2018.

Classified loans at June 30, 2019 were $13.7 million, or 1.55% of loans receivable, an increase of $4.6 million, or 51.1%, compared to $9.1 million, or 1.04% of loans receivable at March 31, 2019, and an increase of $2.8 million, or 25.9%, compared to $10.9 million, or 1.26% of loans receivable at June 30, 2018.

The allowance for loan losses at June 30, 2019 was $10.0 million, or 1.14% of loans receivable, compared to $9.8 million, or 1.12% of loans receivable at March 31, 2019, and $9.4 million, or 1.08%, of loans receivable at June 30, 2018. The ratio of allowance for loan losses to nonperforming loans was 395.7%, 899.5%, and 1803.3% at June 30, 2019, March 31, 2019, and June 30, 2018, respectively.

CAPITAL:

At June 30, 2019, CBB and the Bank continued to exceed all minimum regulatory capital requirements and maintained capital conservation buffers in excess of the minimum required to avoid limitations on capital distributions, including dividend payments, and certain discretionary bonus payments. The fully phased-in capital conservation buffer requirement was 2.500% and 1.875% as of January 1, 2019 and December 31, 2018, respectively. The minimum capital conservation buffer increased an additional 0.625% at the beginning of 2019, reaching the fully phased-in minimum of 2.500%. As a result, effective January 1, 2019 bank holding companies and banks will be required to maintain common equity tier 1, tier 1 risk-based and total risk-based capital ratios that are at least 7.00%, 8.50%, and 10.50%, respectively, to avoid the aforementioned limitations on capital distributions and discretionary bonus payments.

About CBB Bancorp, Inc.:

CBB Bancorp, Inc. is the holding company of Commonwealth Business Bank, a full-service commercial bank which specializes in small-to medium-sized businesses and does business as "CBB Bank." The Bank has eight full service branches in Los Angeles and Orange Counties in California, and Dallas County in Texas; two SBA regional offices in Los Angeles and Dallas Counties; and six loan production offices in Texas, Georgia, Colorado, Utah and Washington.

For additional information, please go to www.cbb-bank.com.

FORWARD-LOOKING STATEMENTS:

This news release contains a number of forward-looking statements. These statements may be identified by use of words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "likely," "may," "outlook," "plan," "potential," "predict," "project," "should," "will," "would" and similar terms and phrases, including references to assumptions. Forward-looking statements are based upon various assumptions and analyses made by the Company in light of management's experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate under the circumstances. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors (many of which are beyond the Company's control) that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. You should not place undue reliance on such statements. Factors that could affect our results include, without limitation, the following: the timing and occurrence or non-occurrence of events may be subject to circumstances beyond the Company's control; increases in competitive pressure among financial institutions or from non-financial institutions; changes in the interest rate environment may reduce interest margins; changes in deposit flows, loan demand or real estate values may adversely affect the business of the Company and the Bank; unanticipated or significant increases in loan losses; changes in accounting principles, policies or guidelines may cause the Company's financial condition to be perceived differently; changes in corporate and/or individual income tax laws may adversely affect the Company's financial condition or results of operations; general economic conditions, either nationally or locally in some or all areas in which the Company conducts business, or conditions in the securities markets or the banking industry may be less favorable than the Company currently anticipates; legislation or regulatory changes may adversely affect the Company's business; technological changes may be more difficult or expensive than the Company anticipates; there may be failures or breaches of information technology security systems; success or consummation of new business initiatives may be more difficult or expensive than the Company anticipates; or litigation or other matters before regulatory agencies, whether currently existing or commencing in the future, may delay the occurrence or non-occurrence of events longer than the Company anticipates. The Company undertakes no obligation to revise any forward-looking statement contain herein to reflect any future events or circumstances, except to the extent required by law.

STATEMENT OF INCOME AND PERFORMANCE HIGHLIGHT (Unaudited) - Table 1
	(Dollars in thousands, except per share amounts)

		Three Months Ended																			Six Months Ended
		June 30,			March 31,			$			%		June 30,			$			%		June 30,			June 30,			$			%
			2019			2019		Change			Change			2018		Change			Change			2019			2018		Change			Change

Interest income		$	16,296		$	15,584		$	712		4.6	%	$	14,605		$	1,691		11.6	%	$	31,880		$	27,430		$	4,450		16.2	%
Interest expense			4,865			4,297			568		13.2	%		3,005			1,860		61.9	%		9,162			5,475			3,687		67.3	%
Net interest income			11,431			11,287			144		1.3	%		11,600			(169	)	(1.5	%)		22,718			21,955			763		3.5	%

Provision for loan losses			300			-			300		100.0	%		800			(500	)	(62.5	%)		300			800			(500	)	(62.5	%)
Net interest income after provision for loan losses			11,131			11,287			(156	)	(1.4	%)		10,800			331		3.1	%		22,418			21,155			1,263		6.0	%

Gain on sale of loans			2,109			1,167			942		80.7	%		2,478			(369	)	(14.9	%)		3,276			4,914			(1,638	)	(33.3	%)
Gain (loss) on sale of OREO			(4	)		(10	)		6		60.0	%		-			(4	)	(100.0	%)		(14	)		-			(14	)	(100.0	%)
SBA servicing fee income, net			312			503			(191	)	(38.0	%)		442			(130	)	(29.4	%)		815			803			12		1.5	%
SBA servicing right impairment			-			-			-		-			-			-		-			-			-			-		-
Service charges and other income			577			457			120		26.3	%		600			(23	)	(3.8	%)		1,034			1,099			(65	)	(5.9	%)
Noninterest income			2,994			2,117			877		41.4	%		3,520			(526	)	(14.9	%)		5,111			6,816			(1,705	)	(25.0	%)

Salaries and employee benefits			5,467			5,098			369		7.2	%		4,923			544		11.1	%		10,565			9,661			904		9.4	%
Occupancy and equipment			831			832			(1	)	(0.1	%)		834			(3	)	(0.4	%)		1,663			1,673			(10	)	(0.6	%)
Marketing expense			989			520			469		90.2	%		322			667		207.1	%		1,509			702			807		115.0	%
Professional expense			574			638			(64	)	(10.0	%)		359			215		59.9	%		1,212			861			351		40.8	%
Other expenses			1,340			1,276			64		5.0	%		1,515			(175	)	(11.6	%)		2,616			2,713			(97	)	(3.6	%)
Noninterest expense			9,201			8,364			837		10.0	%		7,953			1,248		15.7	%		17,565			15,610			1,955		12.5	%

Income before income tax expense			4,924			5,040			(116	)	(2.3	%)		6,367			(1,443	)	(22.7	%)		9,964			12,361			(2,397	)	(19.4	%)

Income tax expense			1,441			1,450			(9	)	(0.6	%)		1,889			(448	)	(23.7	%)		2,891			3,729			(838	)	(22.5	%)

Net income		$	3,483		$	3,590		$	(107	)	(3.0	%)	$	4,478		$	(995	)	(22.2	%)	$	7,073		$	8,632		$	(1,559	)	(18.1	%)

Effective tax rate			29.3	%		28.8	%		0.5	%	1.7	%		29.7	%		(0.4	%)	(1.4	%)		29.0	%		30.2	%		(1.2	%)	(3.8	%)

Outstanding number of shares¹			10,140,760			10,107,485			33,275		0.3	%		10,037,510			103,250		1.0	%		10,140,760			10,037,510			103,250		1.0	%

Weighted average shares for basic EPS¹			10,125,622			10,102,220			23,402		0.2	%		10,035,545			90,077		0.9	%		10,113,986			10,034,334			79,652		0.8	%
Weighted average shares for diluted EPS¹			10,341,488			10,359,833			(18,345	)	(0.2	%)		10,426,907			(85,419	)	(0.8	%)		10,350,725			10,445,751			(95,026	)	(0.9	%)

Basic EPS¹		$	0.34		$	0.36		$	(0.02	)	-5.6	%	$	0.45		$	(0.11	)	(24.4	%)	$	0.70		$	0.86		$	(0.16	)	(18.6	%)
Diluted EPS¹		$	0.33		$	0.35		$	(0.02	)	-5.7	%	$	0.43		$	(0.10	)	(23.3	%)	$	0.68		$	0.83		$	(0.15	)	(18.1	%)

Return on average assets			1.19	%		1.28	%		(0.09	%)	(7.03	%)		1.65	%		(0.46	%)	(27.9	%)		1.24	%		1.63	%		(0.4	%)	(23.9	%)
Return on average equity			10.06	%		10.84	%		(0.78	%)	(7.20	%)		14.85	%		(4.79	%)	(32.3	%)		10.44	%		14.63	%		(4.2	%)	(28.6	%)

Efficiency ratio²			63.79	%		62.40	%		1.39	%	2.22	%		52.60	%		11.19	%	21.27	%		63.12	%		54.26	%		8.86	%	16.3	%
Yield on interest-earning assets³			5.76	%		5.73	%		0.03	%	0.52	%		5.59	%		0.17	%	3.04	%		5.75	%		5.37	%		0.38	%	7.1	%
Cost of funds			1.92	%		1.76	%		0.16	%	9.09	%		1.26	%		0.66	%	52.19	%		1.84	%		1.18	%		0.67	%	56.7	%
Net interest margin³			4.05	%		4.16	%		(0.11	%)	(2.63	%)		4.45	%		(0.40	%)	(8.96	%)		4.10	%		4.30	%		(0.20	%)	(4.6	%)

¹ Restated for 10% stock dividend declared on 10/02/18

² Represents the ratio of noninterest expense less other real estate owned operations to the sum of net interest income before provision for credit losses and total noninterest income, less gains/(loss) on sale of securities, other-than-temporary impairment recovery/(loss) on investment securities and gain/(loss) from other real estate owned.

³ Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate

BALANCE SHEET, CAPITAL AND OTHER DATA (Unaudited) - Table 2
(Dollars in thousands)

		June 30,			March 31,			$			%		June 30,			$			%
			2019			2019		Change			Change			2018		Change			Change
ASSETS
	Cash and due from banks	$	12,369		$	10,837		$	1,532		14.1	%	$	13,349		$	(980	)	(7.3	%)
	Interest-earning deposits at the FRB and other banks		127,199			111,305			15,894		14.3	%		77,018			50,181		65.2	%
	Investment securities¹		99,758			101,825			(2,067	)	(2.0	%)		112,022			(12,264	)	(10.9	%)
	Loans held-for-sale, at the lower of cost or fair value		46,875			45,275			1,600		3.5	%		39,343			7,532		19.1	%

	Loans receivable		881,614			874,330			7,284		0.8	%		867,280			14,334		1.7	%
	Allowance for loan losses		(10,019	)		(9,760	)		(259	)	(2.7	%)		(9,377	)		(642	)	(6.8	%)
	Loans receivable, net		871,595			864,570			7,025		0.8	%		857,903			13,692		1.6	%

	OREO		11			15			(4	)	(26.7	%)		-			11		100.0	%
	Restricted stock investments		8,194			7,879			315		4.0	%		6,879			1,315		19.1	%
	Servicing assets		10,174			10,303			(129	)	(1.3	%)		11,869			(1,695	)	(14.3	%)
	Other assets		22,662			25,610			(2,948	)	(11.5	%)		18,955			3,707		19.6	%
	Total assets	$	1,198,837		$	1,177,619		$	21,218		1.8	%	$	1,137,338		$	61,499		5.4	%

LIABILITIES AND STOCKHOLDERS' EQUITY
	Noninterest-bearing	$	202,657		$	198,940		$	3,717		1.9	%	$	197,500		$	5,157		2.6	%
	Interest-bearing		829,088			816,603			12,485		1.5	%		788,357			40,731		5.2	%
	Total deposits		1,031,745			1,015,543			16,202		1.6	%		985,857			45,888		4.7	%

	FHLB advances		10,000			10,000			-		-			20,000			(10,000	)	(50.0	%)
	Other liabilities		15,990			15,595			395		2.5	%		8,490			7,500		88.3	%
	Total liabilities		1,057,735			1,041,138			16,597		1.6	%		1,014,347			43,388		4.3	%

	Stockholders' Equity		141,102			136,481			4,621		3.4	%		122,991			18,111		14.7	%
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY		$	1,198,837		$	1,177,619		$	21,218		1.8	%	$	1,137,338		$	61,499		5.4	%

CAPITAL RATIOS
	Leverage ratio
	Company		11.93	%		11.96	%		(0.03	%)	(0.25	%)		11.39	%		0.54	%	4.74	%
	Bank		11.89	%		11.94	%		(0.05	%)	(0.42	%)		11.37	%		0.52	%	4.57	%
	Common equity tier 1 risk-based capital ratio
	Company		14.69	%		14.54	%		0.15	%	1.03	%		13.25	%		1.44	%	10.87	%
	Bank		14.65	%		14.51	%		0.14	%	0.96	%		13.22	%		1.43	%	10.82	%
	Tier 1 risk-based capital ratio
	Company		14.69	%		14.54	%		0.15	%	1.03	%		13.25	%		1.44	%	10.87	%
	Bank		14.65	%		14.51	%		0.14	%	0.96	%		13.22	%		1.43	%	10.82	%
	Total risk-based capital ratio
	Company		15.81	%		15.65	%		0.16	%	1.02	%		14.36	%		1.45	%	10.10	%
	Bank		15.76	%		15.62	%		0.14	%	0.90	%		14.34	%		1.42	%	9.90	%
	Book value per share²	$	13.91		$	13.50		$	0.41		3.0	%	$	12.25		$	1.66		13.6	%
	Loan-to-Deposit (LTD) ratio		85.45	%		86.09	%		(0.64	%)	(0.75	%)		88.0	%		(2.52	%)	(2.87	%)
	Nonperforming assets		2,532			1,085			1,447		133.4	%		520		$	2,012		386.9	%
	Nonperforming assets as a % of loans receivable		0.29	%		0.12	%		0.17	%	141.67	%		0.06	%		0.23	%	383.33	%
	ALLL as a % of loans receivable		1.14	%		1.12	%		0.02	%	1.79	%		1.08	%		0.06	%	5.56	%


¹ Includes AFS and HTM
² Restated for 10% stock dividend declared on 10/02/18

FIVE-QUARTER STATEMENT OF INCOME (Unaudited) - Table 3
(Dollars in thousands, except per share amounts)

	Three Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
		2019			2019			2018			2018			2018

Interest income	$	16,296		$	15,584		$	16,256		$	15,661		$	14,605
Interest expense		4,865			4,297			4,035			3,678			3,005
Net interest income		11,431			11,287			12,221			11,983			11,600

Provision for loan losses		300			-			170			400			800
Net interest income after provision for loan losses		11,131			11,287			12,051			11,583			10,800

Gain on sale of loans		2,109			1,167			996			1,937			2,478
Gain (loss) on sale of OREO		(4	)		(10	)		-			(43	)		-
SBA servicing fee income, net		312			503			179			304			442
SBA servicing right impairment		-			-			(374	)		(534	)		-
Service charges and other income		577			457			484			573			600
Noninterest income		2,994			2,117			1,285			2,237			3,520

Salaries and employee benefits		5,467			5,098			4,988			4,956			4,923
Occupancy and equipment		831			832			886			886			834
Marketing expense		989			520			433			342			322
Professional expense		574			638			1,195			537			359
Other expenses		1,340			1,276			901			1,302			1,515
Noninterest expense		9,201			8,364			8,403			8,023			7,953

Income before income tax expense		4,924			5,040			4,933			5,797			6,367

Income tax expense		1,441			1,450			1,278			1,426			1,889

Net income	$	3,483		$	3,590		$	3,655		$	4,371		$	4,478

Effective tax rate		29.3	%		28.8	%		25.9	%		24.6	%		29.7	%

Outstanding number of shares¹		10,140,760			10,107,485			10,102,161			10,091,294			10,037,510

Weighted average shares for basic EPS¹		10,125,622			10,102,220			10,098,618			10,038,095			10,035,545
Weighted average shares for diluted EPS¹		10,341,488			10,359,833			10,390,326			10,389,263			10,426,907

Basic EPS¹	$	0.34		$	0.36		$	0.36		$	0.44		$	0.45
Diluted EPS¹	$	0.33		$	0.35		$	0.35		$	0.42		$	0.43

¹ Restated for 10% stock dividend declared on 10/02/18


QUARTERLY SALARIES BENEFIT METRICS (Unaudited) - Table 4
(Dollars in thousands)

	At or for the Three Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
		2019			2019			2018			2018			2018

Salaries and benefits	$	5,467		$	5,098		$	4,988		$	4,956		$	4,923
FTE at the end of period		192			186			187			175			173
Average FTE during the period		192			185			185			177			172
Salaries and benefits/average FTE¹	$	114		$	112		$	107		$	111		$	115
Salaries and benefits/average assets¹		1.87	%		1.82	%		1.71	%		1.71	%		1.82	%
Noninterest expense/average assets¹		3.15	%		2.99	%		2.87	%		2.77	%		2.94	%

¹ Annualized

FIVE-QUARTER BALANCE SHEET (Unaudited) - Table 5
(Dollars in thousands)

		June 30,			March 31,			December 31,			September 30,			June 30,
			2019			2019			2018			2018			2018
ASSETS
	Cash and due from banks	$	12,369		$	10,837		$	11,029		$	12,228		$	13,349
	Interest-earning deposits at the FRB and other banks		127,199			111,305			97,211			119,246			77,018
	Investment securities¹		99,758			101,825			104,431			107,406			112,022
	Loans held-for-sale, at the lower of cost or fair value		46,875			45,275			45,665			38,007			39,343

	Loans receivable		881,614			874,330			875,797			896,580			867,280
	Allowance for loan losses		(10,019	)		(9,760	)		(10,023	)		(9,814	)		(9,377	)
	Loans receivable, net		871,595			864,570			865,774			886,766			857,903

	OREO		11			15			25			25			-
	Restricted stock investments		8,194			7,879			7,879			6,879			6,879
	Servicing assets		10,174			10,303			10,541			11,403			11,869
	Other assets		22,662			25,610			18,519			22,346			18,955
	Total assets	$	1,198,837		$	1,177,619		$	1,161,074		$	1,204,306		$	1,137,338


LIABILITIES AND STOCKHOLDERS' EQUITY
	Noninterest-bearing	$	202,657		$	198,940		$	206,764		$	222,018		$	197,500
	Interest-bearing		829,088			816,603			801,830			835,110			788,357
	Total deposits		1,031,745			1,015,543			1,008,594			1,057,128			985,857

	FHLB advances		10,000			10,000			10,000			10,000			20,000
	Other liabilities		15,990			15,595			10,567			9,585			8,490
	Total liabilities		1,057,735			1,041,138			1,029,161			1,076,713			1,014,347

	Stockholders' Equity		141,102			136,481			131,913			127,593			122,991
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY		$	1,198,837		$	1,177,619		$	1,161,074		$	1,204,306		$	1,137,338

¹ Includes AFS and HTM

FIVE-QUARTER LOANS RECEIVABLE COMPONENTS (Unaudited) - Table 6
(Dollars in thousands)

	June 30, 2019				March 31, 2019				December 31, 2018				September 30, 2018				June 30, 2018
	Balance		%		Balance		%		Balance		%		Balance		%		Balance		%

Construction	$	17,853	2.0	%	$	15,043	1.7	%	$	12,327	1.4	%	$	13,168	1.5	%	$	10,508	1.2	%
Commercial real estate		691,859	78.5	%		695,367	79.5	%		703,088	80.3	%		728,322	81.2	%		706,360	81.4	%
Commercial and industrial		164,089	18.6	%		156,352	17.9	%		152,381	17.4	%		150,892	16.8	%		146,654	16.9	%
Consumer		5,366	0.6	%		5,015	0.6	%		5,548	0.6	%		2,362	0.3	%		1,907	0.2	%
Gross loans		879,167	99.7	%		871,777	99.7	%		873,344	99.7	%		894,744	99.8	%		865,429	99.8	%

Net deferred loan fees/costs		2,447	0.3	%		2,553	0.3	%		2,453	0.3	%		1,836	0.2	%		1,851	0.2	%
Loans receivable	$	881,614	100.0	%	$	874,330	100.0	%	$	875,797	100.0	%	$	896,580	100.0	%	$	867,280	100.0	%

Loans held-for-sale	$	46,875			$	45,275			$	45,665			$	38,007			$	39,343
Loans receivable, including loans held-for-sale	$	928,489			$	919,605			$	921,462			$	934,587			$	906,623

SBA LOAN PRODUCTIONS/SALES DATA (Unaudited) - Table 7
(Dollars in thousands)

	Three Months Ended															Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
	2019			2019			2018			2018			2018			2019			2018

SBA loans held-for-sale at beginning of the quarter/year	$	45,275		$	45,665		$	38,007		$	39,343		$	23,608		$	45,665		$	28,346
SBA loans originated/transferred from/to held-for-
investment during the quarter/year		38,785			24,496			31,640			33,832			50,856			63,281			81,233
SBA loans sold during the quarter/year		(36,653	)		(24,490	)		(23,766	)		(34,745	)		(35,015	)		(61,143	)		(69,938	)
SBA loans principal payment, net of advance		(532	)		(396	)		(216	)		(423	)		(106	)		(928	)		(298	)
SBA loans held-for-sale at end of the quarter/year	$	46,875		$	45,275		$	45,665		$	38,007		$	39,343		$	46,875		$	39,343

Gain on sale of SBA loans	$	2,109		$	1,167		$	996		$	1,937		$	2,478		$	3,276		$	4,914
Premium on sale (weighted average)		8.8	%		7.6	%		6.3	%		8.1	%		9.5	%		8.3	%		9.6	%

SBA loan production	$	48,497		$	27,687		$	50,054		$	41,685		$	62,003		$	76,184		$	97,684


SBA SERVICING ASSETS AND SERVICING FEES (Unaudited) - Table 8
(Dollars in thousands)

	Three Months Ended															Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
	2019			2019			2018			2018			2018			2019			2018


SBA servicing assets @ beginning of the quarter/year	$	10,303		$	10,541		$	11,403		$	11,869		$	11,610		$	10,541		$	11,377

Newly added SBA servicing assets from SBA loans sold		806			447			559			995			1,016			1,253			2,014
Regular quarterly/annual servicing assets amortization		(397	)		(393	)		(404	)		(399	)		(398	)		(790	)		(778	)
SBA servicing assets amortized from SBA loans paid off/charged off		(538	)		(292	)		(641	)		(544	)		(360	)		(830	)		(744	)

Subtotal before impairment		10,174			10,303			10,917			11,921			11,869			10,174			11,869

SBA servicing assets impairment		-			-			(376	)		(519	)		-			-			-
SBA servicing liability impairment		-			-			2			(15	)					-			-

SBA servicing assets @ end of the quarter/year	$	10,174		$	10,303		$	10,541		$	11,403		$	11,869		$	10,174		$	11,869

FIVE-QUARTER DEPOSIT COMPONENTS (Unaudited) - Table 9
(Dollars in thousands)

	June 30, 2019				March 31, 2019				December 31, 2018				September 30, 2018				June 30, 2018
	Balance		%		Balance		%		Balance		%		Balance		%		Balance		%

Noninterest-bearing demand	$	202,657	19.6	%	$	198,940	19.6	%	$	206,764	20.5	%	$	222,018	21.0	%	$	197,500	20.0	%
NOW & MMDA		146,654	14.2	%		168,490	16.6	%		175,843	17.4	%		177,961	16.8	%		196,432	19.9	%
Savings		48,066	4.7	%		25,839	2.5	%		19,102	1.9	%		17,460	1.7	%		19,211	1.9	%
TCDs of $250K and under		356,563	34.6	%		343,051	33.8	%		333,325	33.1	%		347,873	32.9	%		290,449	29.5	%
TCDs of $250K over		172,060	16.7	%		163,483	16.1	%		154,748	15.3	%		157,126	14.9	%		125,687	12.7	%
Wholesale TCDs		105,745	10.2	%		115,740	11.4	%		118,812	11.8	%		134,690	12.7	%		156,578	15.9	%
Total Deposits	$	1,031,745	100.0	%	$	1,015,543	100.0	%	$	1,008,594	100.0	%	$	1,057,128	100.0	%	$	985,857	100.0	%

Recap:
Noninterest-bearing demand	$	202,657	19.6	%	$	198,940	19.6	%	$	206,764	20.5	%	$	222,018	21.0	%	$	197,500	20.0	%
NOW & MMDA		146,654	14.2	%		168,490	16.6	%		175,843	17.4	%		177,961	16.8	%		196,432	19.9	%
Savings		48,066	4.7	%		25,839	2.5	%		19,102	1.9	%		17,460	1.7	%		19,211	1.9	%
TCDs of $250K and under		356,563	34.6	%		343,051	33.8	%		333,325	33.1	%		347,873	32.9	%		290,449	29.5	%
Core Deposits		753,940	73.1	%		736,320	72.5	%		735,034	72.9	%		765,312	72.4	%		703,592	71.4	%

TCDs of $250K over		172,060	16.7	%		163,483	16.1	%		154,748	15.3	%		157,126	14.9	%		125,687	12.7	%
Wholesale TCDs		105,745	10.2	%		115,740	11.4	%		118,812	11.8	%		134,690	12.7	%		156,578	15.9	%
Noncore Deposits		277,805	26.9	%		279,223	27.5	%		273,560	27.1	%		291,816	27.6	%		282,265	28.6	%
Total Deposits	$	1,031,745	100.0	%	$	1,015,543	100.0	%	$	1,008,594	100.0	%	$	1,057,128	100.0	%	$	985,857	100.0	%

SELECTED LOAN AND ASSET QUALITY HIGHLIGHTS (Unaudited) - Table 10
(Dollars in thousands)

	2nd Qtr.			1st Qtr.			4th Qtr.			3rd Qtr.			2nd Qtr.
		2019			2019			2018			2018			2018
Allowance for Loan Losses
Balance at beginning of period	$	9,760		$	10,023		$	9,814		$	9,377		$	8,556
Provision for loan losses		300			-			170			400			800
Charge-offs		(100	)		(295	)		-			(3	)		(92	)
Recoveries		59			32			39			40			113
Balance at the end of period	$	10,019		$	9,760		$	10,023		$	9,814		$	9,377

Nonperforming Assets:¹
Over 90 days still accruing	$	-		$	-		$	-		$	-		$	-
Nonaccrual loans		2,521			1,070			385			439			520
Total nonperforming loans		2,521			1,070			385			439			520

Other real estate owned		11			15			25			25			-
Total nonperforming assets	$	2,532		$	1,085		$	410		$	464		$	520

Classified Assets:¹
Substandard	$	13,708		$	9,072		$	15,984		$	16,617		$	10,889
Doubtful		-			-			-			-			-
Loss		-			-			-			-			-
Total classified loans	$	13,708		$	9,072		$	15,984		$	16,617		$	10,889

Other real estate owned		11			15			25			25			-
Total classified assets	$	13,719		$	9,087		$	16,009		$	16,642		$	10,889

Performing TDR loans:	$	5,030		$	4,005		$	5,144		$	4,325		$	2,148

Delinquent Loans:¹
Loans 30-89 days past due	$	5,764		$	2,468		$	3,551		$	231		$	3,307
90 days or more past due and still accruing		-			-			-			-			-
Nonaccrual		2,521			1,070			385			439			520
Total delinquent loans	$	8,285		$	3,538		$	3,936		$	670		$	3,827

Asset Quality Ratios:
Net charge-offs to average loans²		(0.07	%)		0.12	%		(0.02	%)		(0.02	%)		(0.01	%)
Nonaccrual loans to loans receivable		0.29	%		0.12	%		0.04	%		0.05	%		0.06	%
Nonperforming loans to loans receivable		0.29	%		0.12	%		0.04	%		0.05	%		0.06	%
Nonperforming assets to total assets		0.21	%		0.09	%		0.04	%		0.04	%		0.05	%
Classified loans to loans receivable		1.55	%		1.04	%		1.83	%		1.85	%		1.26	%
Classified loans to Tier 1 and ALLL		9.07	%		6.20	%		11.26	%		12.09	%		8.23	%
Classified assets to total assets		1.14	%		0.77	%		1.38	%		1.38	%		0.96	%
Classified assets to Tier 1 and ALLL		9.08	%		6.21	%		11.28	%		12.11	%		8.23	%
ALLL to loans receivable		1.14	%		1.12	%		1.14	%		1.09	%		1.08	%
ALLL to nonaccrual loans		397.4	%		912.2	%		2603.4	%		2235.5	%		1803.3	%
ALLL to nonperforming loans		397.4	%		912.2	%		2603.4	%		2235.5	%		1803.3	%
ALLL to nonperforming assets		395.7	%		899.5	%		2444.6	%		2115.1	%		1803.3	%
Texas ratio ³		1.68	%		0.74	%		0.29	%		0.34	%		0.39	%

¹ Net of SBA guaranteed balance
² Includes loans held-for-sale
³ Nonperforming assets divided by tangible common equity and ALLL

FIVE-QUARTER CAPITAL RATIOS (Unaudited) - Table 11

	Well Capitalized	Adequately Capitalized
	Regulatory	BASEL III	June 30,	March 31,	December 31,	September 30,	June 30,
	Requirement	Fully Phased In	2019	2019	2018	2018	2018

Leverage ratio
Company	N/A	N/A	11.93%	11.96%	11.39%	11.19%	11.39%
Bank	5.00%	4.00%	11.89%	11.94%	11.36%	11.14%	11.37%
Common equity tier 1 risk-based capital ratio
Company	N/A	N/A	14.69%	14.54%	14.27%	13.47%	13.25%
Bank	6.50%	7.00%	14.65%	14.51%	14.24%	13.42%	13.22%
Tier 1 risk-based capital ratio
Company	N/A	N/A	14.69%	14.54%	14.27%	13.47%	13.25%
Bank	8.00%	8.50%	14.65%	14.51%	14.24%	13.42%	13.22%
Total risk-based capital ratio
Company	N/A	N/A	15.81%	15.65%	15.42%	14.61%	14.36%
Bank	10.00%	10.50%	15.76%	15.62%	15.38%	14.56%	14.34%
Common equity/total assets			11.77%	11.59%	11.36%	10.59%	10.81%
Common equity per share¹			$ 13.91	$ 13.50	$ 13.06	$ 12.64	$ 12.25


¹ Restated for 10% stock dividend declared on 10/02/18


MARGIN ANALYSIS (Unaudited) -Table 12
(Dollars in thousands)

	Three Months Ended
	June 30, 2019							March 31, 2019							December 31, 2018							September 30, 2018							June 30, 2018
	Avg Balance			Interest		Yield		Avg Balance			Interest		Yield		Avg Balance			Interest		Yield		Avg Balance			Interest		Yield		Avg Balance			Interest		Yield

INTEREST-EARNING ASSETS
Loans ¹	$	926,425		$	14,926	6.46	%	$	923,727		$	14,400	6.32	%	$	922,000		$	14,903	6.41	%	$	926,542		$	14,578	6.24	%	$	864,073		$	13,579	6.30	%
Investment securities²		100,802			675	2.69	%		103,011			695	2.74	%		105,595			693	2.60	%		110,205			683	2.46	%		115,447			692	2.40	%
Interest-earning deposits at the FRB and other banks		101,901			601	2.37	%		71,071			416	2.37	%		93,372			521	2.21	%		69,127			333	1.91	%		64,553			283	1.76	%
Other earning assets		8,122			141	6.96	%		7,879			121	6.23	%		6,933			187	10.70	%		6,879			114	6.57	%		6,750			100	5.94	%
Total interest-earning assets ²		1,137,250			16,343	5.76	%		1,105,688			15,632	5.73	%		1,127,900			16,304	5.73	%		1,112,753			15,708	5.60	%		1,050,823			14,654	5.59	%

NONINTEREST-EARNING ASSETS
Cash and due from banks		11,758							12,142							12,277							13,801							12,900
Other noninterest-earning assets		32,474							28,024							29,605							30,750							30,356
Total noninterest-earning assets		44,232							40,166							41,882							44,551							43,256

Less: Allowance for loan losses		(9,775	)						(9,976	)						(9,829	)						(9,409	)						(8,619	)

TOTAL ASSETS	$	1,171,707						$	1,135,878						$	1,159,953						$	1,147,895						$	1,085,460

INTEREST-BEARING DEPOSITS
Interest-bearing demand	$	9,423		$	6	0.25	%	$	8,048		$	5	0.25	%	$	6,936		$	4	0.25	%	$	1,861		$	1	0.25	%	$	1,702		$	1	0.24	%
Money market		149,276			722	1.94	%		166,563			766	1.87	%		167,659			671	1.59	%		181,302			664	1.45	%		166,317			556	1.34	%
Savings		37,566			197	2.10	%		21,517			102	1.92	%		18,309			79	1.71	%		17,628			73	1.64	%		19,075			75	1.58	%
Time deposits		629,147			3,899	2.49	%		599,064			3,383	2.29	%		615,224			3,239	2.09	%		596,306			2,836	1.89	%		561,875			2,301	1.64	%
Total interest-bearing deposits		825,412			4,824	2.34	%		795,192			4,256	2.17	%		808,128			3,993	1.96	%		797,097			3,574	1.78	%		748,969			2,933	1.57	%

Borrowings		10,000			41	1.64	%		10,050			41	1.65	%		10,000			42	1.67	%		22,066			104	1.87	%		16,490			72	1.75	%
Total interest-bearing liabilities		835,412			4,865	2.34	%		805,242			4,297	2.16	%		818,128			4,035	1.96	%		819,163			3,678	1.78	%		765,459			3,005	1.57	%

Noninterest-bearing deposits		181,326							185,319							201,701							193,730							190,308
Other liabilities		16,091							11,030							10,235							9,094							8,728

Stockholders' equity		138,878							134,287							129,889							125,908							120,965
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$	1,171,707						$	1,135,878						$	1,159,953						$	1,147,895						$	1,085,460

Net interest income²				$	11,478						$	11,335						$	12,269						$	12,030						$	11,649

Net interest spread						3.42	%						3.57	%						3.77	%						3.82	%						4.02	%

Effect of noninterest-bearing sources						0.63	%						0.59	%						0.55	%						0.47	%						0.43	%

Net interest margin²						4.05	%						4.16	%						4.32	%						4.29	%						4.45	%


Cost of deposits	$	1,006,738		$	4,824	1.92	%	$	980,511		$	4,256	1.76	%	$	1,009,829		$	3,993	1.57	%	$	990,827		$	3,574	1.43	%	$	939,277		$	2,933	1.25	%

Cost of funds	$	1,016,738		$	4,865	1.92	%	$	990,561		$	4,297	1.76	%	$	1,019,829		$	4,035	1.57	%	$	1,012,893		$	3,678	1.44	%	$	955,767		$	3,005	1.26	%

¹Includes loans held-for-sale
² Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate


COMPONENTS OF YIELD ON LOANS (Unaudited) - Table 13
(Dollars in thousands)

	Three Months Ended
	June 30, 2019					March 31, 2019					December 31, 2018					September 30, 2018					June 30, 2018
	Amount			Yield		Amount			Yield		Amount			Yield		Amount			Yield		Amount			Yield

Contractual yield	$	13,670		5.92	%	$	13,572		5.96	%	$	13,540		5.83	%	$	13,313		5.70	%	$	12,064		5.60	%
SBA discount accretion		1,295		0.56	%		951		0.42	%		1,364		0.59	%		1,370		0.59	%		1,096		0.51	%
Prepayment penalties & late fees		66		0.03	%		45		0.01	%		101		0.04	%		45		0.02	%		81		0.03	%
Amortization of net deferred costs		(208	)	(0.09	%)		(168	)	(0.07	%)		(102	)	(0.05	%)		(150	)	(0.07	%)		(197	)	(0.09	%)
Interest recognized on nonaccrual loans		103		0.04	%		-		-			-		-			-		-			535		0.25	%
As reported yield on loans	$	14,926		6.46	%	$	14,400		6.32	%	$	14,903		6.41	%	$	14,578		6.24	%	$	13,579		6.30	%

MARGIN ANALYSIS (Unaudited) - Table 14
(Dollars in thousands)

	Six Months Ended
	June 30, 2019							June 30, 2018
	Avg Balance			Interest		Yield		Avg Balance			Interest		Yield

INTEREST-EARNING ASSETS
Loans ¹	$	925,083		$	29,326	6.39	%	$	839,473		$	25,366	6.09	%
Investment securities²		101,901			1,370	2.71	%		118,181			1,391	2.37	%
Interest-earning deposits at the FRB and other banks		86,571			1,017	2.37	%		69,983			563	1.62	%
Other earning assets		8,001			262	6.60	%		6,507			207	6.42	%
Total interest-earning assets ²		1,121,556			31,975	5.75	%		1,034,144			27,527	5.37	%

NONINTEREST-EARNING ASSETS
Cash and due from banks		11,949							12,445
Other noninterest-earning assets		30,262							29,311
Total noninterest-earning assets		42,211							41,756

Less: Allowance for loan losses		(9,875	)						(8,635	)

TOTAL ASSETS	$	1,153,892						$	1,067,265

INTEREST-BEARING DEPOSITS
Interest-bearing demand	$	8,739		$	11	0.25	%	$	1,568		$	2	0.20	%
Money market		157,872			1,488	1.90	%		167,195			979	1.18	%
Savings		29,586			299	2.04	%		18,152			140	1.56	%
Time deposits		614,189			7,282	2.39	%		544,748			4,166	1.54	%
Total interest-bearing deposits		810,386			9,080	2.26	%		731,663			5,287	1.46	%

Borrowings		10,025			82	1.65	%		23,650			188	1.60	%
Total interest-bearing liabilities		820,411			9,162	2.25	%		755,313			5,475	1.46	%

Noninterest-bearing deposits		183,311							184,277
Other Liabilities		13,575							8,672

Stockholders' equity		136,595							119,003

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$	1,153,892						$	1,067,265

Net interest income²				$	22,813						$	22,052

Net interest spread						3.50	%						3.91	%

Effect of noninterest-bearing sources						0.60	%						0.39	%

Net interest margin²						4.10	%						4.30	%


Cost of deposits	$	993,697		$	9,080	1.84	%	$	915,940		$	5,287	1.16	%

Cost of funds	$	1,003,722		$	9,162	1.84	%	$	939,590		$	5,475	1.18	%

¹ Includes loans held-for-sale
² Amounts calculated on a fully taxable equivalent basis using the current statutory federal tax rate


COMPONENTS OF YIELD ON LOANS (Unaudited) - Table 15
(Dollars in thousands)

	Six Months Ended
	June 30, 2019					June 30, 2018
	Amount			Yield		Amount			Yield

Contractual yield	$	27,242		5.94	%	$	22,889		5.50	%
SBA discount accretion		2,246		0.49	%		2,202		0.53	%
Prepayment penalties & late fees		111		0.02	%		104		0.02	%
Amortization of net deferred costs		(376	)	(0.08	%)		(364	)	-0.09	%
Interest recognized on nonaccrual loans		103		0.02	%		535		0.13	%
As reported yield on loans	$	29,326		6.39	%	$	25,366		6.09	%

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