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Entegra Financial Corp. Announces Second Quarter 2018 Results

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FRANKLIN, N.C., July 19, 2018 (GLOBE NEWSWIRE) -- Entegra Financial Corp. (the "Company") (NASDAQ:ENFC), the holding company for Entegra Bank (the "Bank"), today announced earnings and related data for the three and six months ended June 30, 2018.

Highlights 

The following tables highlight the trends that the Company believes are most relevant to understanding the performance of the Company.  As further detailed in Appendix A to this press release, core results (which are non-U.S. generally accepted accounting principles, or non-GAAP, financial measures) reflect adjustments for investment gains and losses, investment impairment, and merger-related expenses.

  For the Three Months Ended June 30,
  (Dollars in thousands, except per share data)
  2018   2017   Change (%)
  GAAP   Core   GAAP   Core   GAAP   Core
Net income  $   3,087   $   3,704   $   2,102   $   2,358   46.9%   57.1%
Net interest income $   12,310    N/A    $   10,222    N/A    20.4%   N/A
Net interest margin (tax equivalent) 3.36%    N/A    3.36%    N/A    0.0%   N/A
Return on average assets 0.76%   0.92%   0.61%   0.68%   24.6%   35.3%
Return on average equity  8.04%   11.80%   6.09%   7.35%   32.0%   60.5%
Efficiency ratio  69.36%   64.94%   72.13%   68.88%   -3.8%   -5.7%
Diluted earnings per share $   0.44   $   0.53   $   0.32   $   0.36   37.5%   47.2%


  For the Six Months Ended June 30,
  (Dollars in thousands, except per share data)
  2018   2017   Change (%)
  GAAP   Core   GAAP   Core   GAAP   Core
Net income $   6,669   $   7,450   $   3,402   $   4,385   96.0%   69.9%
Net interest income $   24,703    N/A    $   19,834    N/A    24.5%   N/A
Tax-equivalent net interest margin 3.42%    N/A    3.33%    N/A    2.7%   N/A
Return on average assets 0.83%   0.93%   0.50%   0.65%   66.0%   43.1%
Return on average equity 8.76%   11.99%   4.99%   6.81%   75.6%   76.1%
Efficiency ratio  67.70%   64.77%   75.82%   69.91%   -10.7%   -7.4%
Diluted earnings per share $   0.95   $   1.06   $   0.52   $   0.67   82.7%   58.2%


    As of June 30,   As of December 31,
    2018   2017
    (Dollars in thousands, except per share data)
Asset Quality:        
Non-performing loans   $   4,524   $   4,778
Real estate owned   $   2,802   $   2,568
Non-performing assets    $   7,326   $   7,346
Non-performing loans to total loans    0.43%   0.48%
Non-performing assets to total assets    0.45%   0.46%
Net charge-offs   $   92   $   315
             
Allowance for loan losses to non-performing loans   254.75%   227.86%
Allowance for loan losses to total loans   1.10%   1.08%
         
Other Data:        
Book value per share   $   22.46   $   22.00
Tangible book value per share   $   18.42   $   17.90
Closing market price per share   $   29.30   $   29.25
Closing price-to-tangible book value ratio   159.07%   163.41%
Equity to assets ratio   9.51%   9.57%
Tangible common equity to tangible assets ratio   7.93%   7.93%

Management Commentary

Roger D. Plemens, President and CEO of the Company, reported, "We are pleased with our second quarter results, as they reflect our continued focus on growing net interest income which increased 20.4% from the same quarter in 2017.  We are also pleased with the increase in Small Business Administration ("SBA") gains during the second quarter of 2018 compared to the first quarter of 2017 which reflect the impact of hiring an SBA Director in January 2018.  Looking forward, we remain focused on opportunities to grow our franchise with an emphasis on deposits in rural markets."

Net Interest Income

Net interest income increased $2.1 million, or 20.4%, to $12.3 million for the three months ended June 30, 2018 compared to $10.2 million for the same period in 2017.  Net interest income increased $4.9 million, or 24.5%, to $24.7 million for the six months ended June 30, 2018 compared to $19.8 million for the same period in 2017.  The increase in net interest income was primarily due to higher volumes in the loan portfolio as well as an increase in the yields earned on cash, taxable investments and loans partially offset by increased deposit balances and the costs of deposits and borrowings.  Net interest margin was 3.36% for both the three months ended June 30, 2018 and 2017 and 3.42% and 3.33% for the six months ended June 30, 2018 and 2017, respectively.

Provision for Loan Losses

The provision for loan losses was $0.4 million and $0.7 million for the three and six months ended June 30, 2018, respectively, compared to $0.3 million and $0.6 million for the comparable periods of 2017.  The increases in provision for loan losses are mainly attributable to organic loan growth.  The Company continues to experience modest levels of net charge-offs and non-performing loans.

Noninterest Income

Noninterest income decreased $0.4 million, or 23.3%, to $1.3 million for the three months ended June 30, 2018, compared to $1.7 million for the same period in 2017, primarily as the result of losses on sale of investment securities related to an investment portfolio restructuring.  Increases in gains on sale of SBA loans, interchange fees and income from Small Business Investment Company ("SBIC") holdings were partially offset by decreases in servicing income, mortgage banking, and equity securities gains for the three months ended June 30, 2018 compared to the same period in 2017.  The Company recorded a valuation adjustment against its loan servicing rights of $0.2 million and $0.1 million for the three months ended June 30, 2018 and 2017, respectively.  

Noninterest income increased $0.2 million, or 6.9%, to $2.7 million for the six months ended June 30, 2018, compared to $2.5 million for the same period in 2017, primarily as the result of the other than temporary impairment on one investment security of $0.7 million in 2017 compared to realized losses on sale of investments of $0.5 million in 2018.  Increases in gains on sale of SBA loans, service charges on deposit accounts, interchange fees and income from SBIC holdings were partially offset by decreases in servicing income and equity securities gains. The Company recorded a valuation adjustment against its loan servicing rights of $0.3 million and $0.2 million for the six months ended June 30, 2018 and 2017, respectively.  

Noninterest Expense

Noninterest expense increased $0.8 million, or 9.4%, to $9.4 million for the three months ended June 30, 2018, compared to $8.6 million for the same period in 2017. Noninterest expense increased $1.6 million, or 9.2%, to $18.6 million for the six months ended June 30, 2018, compared to $17.0 million for the same period in 2017. The increases were primarily related to increased compensation and employee benefits, net occupancy expenses, and data processing expenses as the 2018 period included the full impact of the Chattahoochee Bank of Georgia acquisition and the branches acquired from Stearns Bank. 

Income Taxes

Effective tax rates for the three and six months ended June 30, 2018 were 19.0% and 18.0%, respectively, compared to 29.0% and 28.2% for the same periods in 2017.  Income tax expense for the 2018 periods benefitted from the newly enacted federal tax rate of 21%, compared to a federal tax rate of 35% in 2017.  In addition, income tax expense for all periods benefited from tax-exempt income related to municipal bond investments and bank-owned life insurance ("BOLI").

Balance Sheet

Total assets increased $46.8 million, or an annualized rate of 5.9%, to $1.63 billion at June 30, 2018 from $1.58 billion at December 31, 2017.

Loans receivable increased $47.0 million, or an annualized rate of 9.4%, to $1.05 billion at June 30, 2018 from $1.00 billion at December 31, 2017.  Loan growth continues to be primarily concentrated in commercial real estate and commercial and industrial loans. 

Core deposits decreased $9.9 million to $753.5 million at June 30, 2018 from $763.4 million at December 31, 2017.  Retail certificates of deposit decreased $3.3 million to $354.3 million at June 30, 2018 from $357.6 million at December 31, 2017.  Wholesale deposits have been a source of funding loan growth and increased $71.6 million to $112.7 million at June 30, 2018 from $41.1 million at December 31, 2017.  We continue to focus on gathering core deposits, which decreased from 66% of the Company's deposit portfolio at December 31, 2017 to 62% at June, 30 2018.  

Total shareholders' equity increased $3.5 million to $154.8 million at June 30, 2018, compared to $151.3 million at December 31, 2017. This increase was primarily attributable to $6.7 million of net income, offset by a $3.8 million after-tax decline in the market value of investment securities available for sale.  Tangible book value per share, a non-GAAP measure, increased $0.52 to $18.42 at June 30, 2018 from $17.90 at December 31, 2017.  See Appendix A for a reconciliation of our tangible book value per share to the comparable GAAP measure.

Asset Quality

Non-performing loans to total loans and non-performing assets to total assets decreased to 0.43% and 0.45%, respectively, at June 30, 2018 compared to 0.48% and 0.46%, respectively, at December 31, 2017.  Net loan charge-offs continue to remain modest, totaling $0.1 million for the six months ended June 30, 2018.

Non-GAAP Financial Measures

Statements included in this press release include non-GAAP financial measures and should be read along with the accompanying tables in Appendix A, which provide a reconciliation of non-GAAP financial measures to GAAP financial measures. This press release and the accompanying tables discuss financial measures, such as core noninterest expense, core net income, core diluted earnings per share, core return on average assets, core return on tangible average equity, core efficiency ratio, tangible common equity, tangible assets and tangible book value per share, which are all non-GAAP measures. We believe that such non-GAAP measures are useful because they enhance the ability of investors and management to evaluate and compare the Company's operating results from period to period in a meaningful manner. Non-GAAP measures should not be considered as an alternative to any measure of performance as promulgated under GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Investors should consider the Company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company's results or financial condition as reported under GAAP.

About Entegra Financial Corp. and Entegra Bank

Entegra Financial Corp. is the holding company of Entegra Bank. The Company's shares of common stock trade on the NASDAQ Global Market under the symbol "ENFC."

Entegra Bank operates a total of 18 branches located throughout the Western North Carolina counties of Cherokee, Haywood, Henderson, Jackson, Macon, Polk and Transylvania, the Upstate South Carolina counties of Anderson, Greenville, and Spartanburg and the Northern Georgia counties of Pickens and Hall. The Bank also operates loan production offices in Asheville, NC, Clemson, SC, and Duluth, GA. For further information, visit the Bank's website www.entegrabank.com.

Disclosures About Forward-Looking Statements

The discussions included in this press release and its appendices may contain "forward-looking statements." For the purposes of these discussions, any statements that are not statements of historical fact may be deemed to be "forward-looking statements." Such statements are often characterized by the use of qualifying words such as "expects," "anticipates," "believes," "estimates," "plans," "projects," "will," "should," or other statements concerning opinions or judgments of the Company and its management about future events.  Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those anticipated and may adversely affect our results of operations and financial condition. The accuracy of such forward-looking statements could be affected by factors including, but not limited to: the Company's ability to implement aspects of its growth strategy; the financial success or changing conditions or strategies of the Company's customers or vendors; the Company's ability to compete effectively against other financial institutions in its banking markets; fluctuations in interest rates; actions of government regulators; the availability of capital and personnel; and general economic and market conditions. These forward-looking statements express management's current expectations, plans or forecasts of future events, results of operation and financial condition. Additional factors that could cause actual results to differ materially from those anticipated by forward-looking statements are discussed in the Company's reports filed with or furnished to the Securities and Exchange Commission (the "SEC") and available on the SEC's website, including without limitation its annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. These forward-looking statements speak only as of the date of this press release, and the Company undertakes no obligation to revise or update these statements following the date of this press release, except as required by applicable law.

 
 ENTEGRA FINANCIAL CORP. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Amounts in thousands, except per share data)
  Three Months Ended June 30,
  2018   2017
Interest income $   15,329   $   12,024
Interest expense   3,019     1,802
       
Net interest income   12,310     10,222
       
Provision for loan losses   357     325
       
Net interest income after provision for loan losses   11,953     9,897
       
Servicing income, net   39     158
Mortgage banking   283     344
Gain on sale of SBA loans   229     4
Gain (loss) on sale of investments   (508)     36
Equity securities gains    45     100
Service charges on deposit accounts   405     412
Interchange fees   271     243
Bank owned life insurance   194     214
Other   340     182
Total noninterest income   1,298     1,693
       
Compensation and employee benefits   5,652     5,086
Net occupancy   1,122     926
Federal deposit insurance   148     135
Professional and advisory   333     363
Data processsing   566     424
Marketing and advertising   235     226
Net cost of operation of real estate owned   93     81
Merger-related expenses   272     408
Other   1,018     981
Total noninterest expense   9,439     8,630
       
Income before taxes   3,812     2,960
       
Income tax expense    725     858
       
Net income $   3,087   $   2,102
       
Earnings per common share:      
Basic $   0.45   $   0.33
Diluted $   0.44   $   0.32
       
Weighted average common shares outstanding:      
Basic   6,889,743     6,464,572
Diluted   7,039,809     6,549,000
       


 
ENTEGRA FINANCIAL CORP. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Amounts in thousands, except per share data)
 
  Six Months Ended June 30,
  2018   2017
Interest income $   30,171   $   23,361
Interest expense   5,468     3,527
       
Net interest income   24,703     19,834
       
Provision for loan losses   718     640
       
Net interest income after provision for loan losses   23,985     19,194
       
Servicing income, net   133     253
Mortgage banking   522     564
Gain on sale of SBA loans   290     146
Gain (loss) on sale of investments   (520)     43
Equity securities gains (losses)   (8)     313
Other than temporary impairment on available-for-sale securities   -      (700)
Service charges on deposit accounts   836     803
Interchange fees   519     409
Bank owned life insurance   394     395
Other   548     312
Total noninterest income   2,714     2,538
       
Compensation and employee benefits   11,269     9,922
Net occupancy   2,214     1,877
Federal deposit insurance   427     239
Professional and advisory   610     637
Data processsing   1,075     825
Marketing and advertising   444     474
Net cost of operation of real estate owned   143     215
Merger-related expenses   468     856
Other   1,912     1,948
Total noninterest expense   18,562     16,993
       
Income before taxes   8,137     4,739
       
Income tax expense    1,468     1,337
       
Net income $   6,669   $   3,402
       
Earnings per common share:      
Basic $   0.97   $   0.53
Diluted $   0.95   $   0.52
       
Weighted average common shares outstanding:      
Basic   6,887,838     6,460,693
Diluted   7,034,316     6,540,524
       



ENTEGRA FINANCIAL CORP. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
 
   June 30, 2018     December 31, 2017 
   (Unaudited)     (Unaudited) 
Assets      
       
Cash and cash equivalents $   113,119   $   109,467
Investments - equity securities   6,696     6,095
Investments - available for sale   334,344     342,863
Other investments   12,039     12,386
Loans held for sale (includes $3,978 and $0 at fair value)   5,113     3,845
Loans receivable   1,052,172     1,005,139
Allowance for loan losses   (11,525)     (10,887)
Real estate owned   2,802     2,568
Fixed assets, net   24,419     24,113
Bank owned life insurance   32,543     32,150
Net deferred tax asset   8,515     8,831
Goodwill   23,903     23,903
Core deposit intangibles, net   3,923     4,269
Other assets   20,231     16,707
       
Total assets $   1,628,294   $   1,581,449
       
Liabilities and Shareholders' Equity      
       
Liabilities      
Core deposits $   753,544   $   763,422
Retail certificates of deposit   354,348     357,629
Wholesale deposits   112,686     41,126
Federal Home Loan Bank advances   213,500     223,500
Junior subordinated notes   14,433     14,433
Holding company line of credit   5,000     5,000
Post employment benefits   9,941     10,174
Other liabilities   10,056     14,852
Total liabilities $   1,473,508   $   1,430,136
       
Total shareholders' equity   154,786     151,313
       
Total liabilities and shareholders' equity $   1,628,294   $   1,581,449
       
       

APPENDIX A – RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)

    Three Months Ended June 30,  
    2018   2017  
(Dollars in thousands, except per share data)          
           
Core Noninterest Expense          
Noninterest expense (GAAP)   $   9,439   $   8,630  
Merger-related expenses     (272)     (408)  
Core noninterest expense (Non-GAAP)   $   9,167   $   8,222  
           
Core Net Income          
Net income (GAAP)   $   3,087   $   2,102  
Loss (gain) on sale of investments     402     (23)  
Other than temporary impairment of investment securities available for sale     -     14  
Merger-related expenses     215     265  
Core net income (Non-GAAP)   $   3,704   $   2,358  
           
Core Diluted Earnings Per Share          
Diluted earnings per share (GAAP)   $   0.44   $   0.32  
Loss (gain) on sale of investments     0.06     -   
Other than temporary impairment of investment securities available for sale     -      -   
Merger-related expenses     0.03     0.04  
Core diluted earnings per share (Non-GAAP)   $   0.53   $   0.36  
           
Core Return on Average Assets          
Return on Average Assets (GAAP)   0.76%   0.61%  
Gain(loss) on sale of investments   0.10%   -0.01%  
Other than temporary impairment of investment securities available for sale   0.00%   0.00%  
Merger-related expenses   0.06%   0.08%  
Core Return on Average Assets (Non-GAAP)   0.92%   0.68%  
           
Core Return on Tangible Average Equity          
Return on Average Equity (GAAP)   8.04%   6.09%  
Loss (gain) on sale of investments   1.05%   -0.07%  
Other than temporary impairment of investment securities available for sale   0.00%   0.04%  
Merger-related expenses   0.56%   0.77%  
Effect of goodwill and intangibles   2.15%   0.51%  
Core Return on Average Tangible Equity (Non-GAAP)   11.80%   7.35%  
           
Core Efficiency Ratio          
Efficiency ratio (GAAP)   69.36%   72.43%  
Gain (loss) on sale of investments   -2.51%   0.04%  
Other than temporary impairment of investment securities available for sale   0.00%   0.00%  
Merger-related expenses   -1.91%   -3.26%  
Core Efficiency Ratio (Non-GAAP)   64.94%   69.21%  
           
           
    As Of  
    June 30, 2018   December 31, 2017  
    (Dollars in thousands, except share data)
Tangible Assets          
Total Assets   $   1,628,294   $   1,581,449  
Goodwill and Intangibles     (27,826)     (28,172)  
Tangible Assets   $   1,600,468   $   1,553,277  
           
Tangible Book Value Per Share          
Book Value (GAAP)   $   154,786   $   151,313  
Goodwill and intangibles     (27,826)     (28,172)  
Book Value (Tangible)   $   126,960   $   123,141  
Outstanding shares     6,891,672     6,879,191  
Tangible Book Value Per Share   $   18.42   $   17.90  
           


      Six Months Ended June 30,
      2018   2017
(Dollars in thousands, except per share data)          
           
Core Noninterest Expense          
Noninterest expense (GAAP)     $   18,562   $   16,993
Merger-related expenses       (468)     (856)
Core noninterest expense (Non-GAAP)     $   18,094   $   16,137
           
Core Net Income          
Net income (GAAP)     $   6,669   $   3,402
Loss (gain) on sale of investments       411     (28)
Other than temporary impairment of investment securities available for sale       -      455
Merger-related expenses       370     556
Core net income (Non-GAAP)     $   7,450   $   4,385
           
Core Diluted Earnings Per Share          
Diluted earnings per share (GAAP)     $   0.95   $   0.52
Loss (gain) on sale of investments       0.06     - 
Other than temporary impairment of investment securities available for sale       -      0.06
Merger-related expenses       0.05     0.09
Core diluted earnings per share (Non-GAAP)     $   1.06   $   0.67
           
Core Return on Average Assets          
Return on Average Assets (GAAP)     0.83%   0.50%
Gain on sale of investments     0.05%     - 
Other than temporary impairment of investment securities available for sale     0.00%   0.07%
Merger-related expenses     0.05%   0.08%
Core Return on Average Assets (Non-GAAP)     0.93%   0.65%
           
Core Return on Tangible Average Equity          
Return on Average Equity (GAAP)     8.76%   4.99%
Loss (gain) on sale of investments     0.54%   -0.04%
Other than temporary impairment of investment securities available for sale     0.00%   0.67%
Merger-related expenses     0.49%   0.82%
Effect of goodwill and intangibles     2.20%   0.37%
Core Return on Average Tangible Equity (Non-GAAP)     11.99%   6.81%
           
Core Efficiency Ratio          
Efficiency ratio (GAAP)     67.70%   75.82%
Gain (loss) on sale of investments     -1.86%   0.19%
Other than temporary impairment of investment securities available for sale     0.00%   -2.97%
Merger-related expenses     -1.07%   -2.97%
Core Efficiency Ratio (Non-GAAP)     64.77%   70.07%
           
           
           

APPENDIX B – TAX EQUIVALENT NET INTEREST MARGIN ANALYSIS (UNAUDITED)

    Average
Outstanding
Balance
  Interest   Yield/ Rate   Average
Outstanding
Balance
  Interest   Yield/ Rate
    (Dollars in thousands)
Interest-earning assets:                        
Loans, including loans held for sale   $   1,032,053   $   12,468   4.85%   $   765,764   $   9,035   4.73%
Loans, tax exempt (1)     15,282     116   3.06%     16,183     151   3.73%
Investments - taxable     249,493     1,557   2.50%     313,653     1,822   2.29%
Investment tax exempt (1)     84,325     768   3.64%     118,437     1,227   4.11%
Interest earning deposits     99,284     431   1.74%     52,993     127   0.96%
Other investments, at cost     12,352     174   5.65%     11,808     144   4.89%
                         
Total interest-earning assets     1,492,789     15,515   4.17%     1,278,838     12,506   3.92%
                         
Noninterest-earning assets     122,152             103,141        
                         
Total assets   $   1,614,941           $  1,381,979        
                         
Interest-bearing liabilities:                        
Savings accounts   $   52,232   $   14   0.11%   $   48,280   $   13   0.11%
Time deposits     417,482     1,209   1.16%     360,885     783   0.87%
Money market accounts     332,366     507   0.61%     257,457     236   0.37%
Interest bearing transaction accounts     207,625     97   0.19%     167,487     53   0.13%
Total interest bearing deposits     1,009,705     1,827   0.73%     834,109     1,085   0.52%
                         
FHLB advances     220,698     930   1.67%     223,500     542   0.97%
Junior subordinated debentures     14,433     142   3.89%     14,433     141   3.92%
Other borrowings     9,170     120   5.25%     3,044     34   4.48%
                         
Total interest-bearing liabilities     1,254,006     3,019   0.97%     1,075,086     1,802   0.67%
                         
Noninterest-bearing deposits     191,471             154,898        
                         
Other non interest bearing liabilities     15,940             13,999        
                         
Total liabilities     1,461,417             1,243,983        
Total equity     153,524             137,996        
                         
Total liabilities and equity   $   1,614,941           $  1,381,979        
                         
                         
Tax-equivalent net interest income       $   12,496           $   10,704    
                         
                         
Net interest-earning assets (2)   $   238,783           $   203,752        
                         
Average interest-earning assets to interest-bearing liabilities   119.04%           118.95%        
                         
Tax-equivalent net interest rate spread (3)           3.20%           3.25%
Tax-equivalent net interest margin (4)           3.36%           3.36%
                         
(1) Tax exempt loans and investments are calculated giving effect to a 21% federal tax rate in 2018 and a 35% federal tax rate in 2017.
(2) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
(3) Tax-equivalent net interest rate spread represents the difference between the tax equivalent yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(4) Tax-equivalent net interest margin represents tax equivalent net interest income divided by average total interest-earning assets.
                         
                         


    For the Six Months Ended June 30,
    2018   2017
    Average
Outstanding
Balance
  Interest   Yield/ Rate   Average
Outstanding
Balance
  Interest   Yield/ Rate
    (Dollars in thousands)
Interest-earning assets:                        
Loans, including loans held for sale   $  1,020,132   $   24,360   4.82%   $   754,521   $   17,511   4.68%
Loans, tax exempt (1)     15,535     233   3.02%     15,549     288   3.73%
Investments - taxable     255,697     3,346   2.62%     305,029     3,581   2.35%
Investment tax exempt (1)     80,250     1,465   3.65%     114,954     2,352   4.09%
Interest earning deposits     93,031     778   1.69%     55,427     243   0.88%
Other investments, at cost     12,371     345   5.62%     12,831     316   4.97%
                         
Total interest-earning assets     1,477,016     30,526   4.17%     1,258,311     24,291   3.89%
                         
Noninterest-earning assets     123,411             100,113        
                         
Total assets   $  1,600,427           $   1,358,424        
                         
Interest-bearing liabilities:                        
Savings accounts   $   51,681   $   29   0.11%   $   45,661   $   25   0.11%
Time deposits     410,422     2,123   1.04%     344,834     1,540   0.90%
Money market accounts     325,895     873   0.54%     252,069     455   0.36%
Interest bearing transaction accounts     209,982     184   0.18%     151,464     93   0.12%
Total interest bearing deposits     997,980     3,209   0.65%     794,028     2,113   0.54%
                         
FHLB advances     222,092     1,750   1.57%     249,052     1,072   0.87%
Junior subordinated debentures     14,433     280   3.86%     14,433     278   3.88%
Other borrowings     8,967     229   5.15%     2,917     64   4.42%
                         
Total interest-bearing liabilities     1,243,472     5,468   0.89%     1,060,430     3,527   0.67%
                         
Noninterest-bearing deposits     187,294             147,770        
                         
Other non interest bearing liabilities     17,348             13,968        
                         
Total liabilities     1,448,114             1,222,168        
Total equity     152,313             136,256        
                         
Total liabilities and equity   $  1,600,427           $   1,358,424        
                         
                         
Tax-equivalent net interest income       $   25,058           $   20,764    
                         
                         
Net interest-earning assets (2)   $   233,544           $   197,881        
                         
Average interest-earning assets to interest-bearing liabilities   118.78%           118.66%        
                         
Tax-equivalent net interest rate spread (3)           3.28%           3.22%
Tax-equivalent net interest margin (4)           3.42%           3.33%
                         
(1) Tax exempt loans and investments are calculated giving effect to a 21% federal tax rate in 2018 and a 35% federal tax rate in 2017.
(2) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
(3) Tax-equivalent net interest rate spread represents the difference between the tax equivalent yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(4) Tax-equivalent net interest margin represents tax equivalent net interest income divided by average total interest-earning assets.


Contact:         
Roger D. Plemens
President and Chief Executive Officer
(828) 524-7000



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