Market Overview

Anchor Bancorp Reports Fourth Quarter and Fiscal 2018 Earnings

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LACEY, Wash., July 27, 2018 (GLOBE NEWSWIRE) -- Anchor Bancorp (NASDAQ:ANCB) ("Company"), the holding company for Anchor Bank ("Bank"), today reported net income of $1.2 million or $0.48 per diluted share, for the fourth quarter of its fiscal year ended June 30, 2018 compared to net income of $655,000 or $0.27 per diluted share for the same period last year.  For the fiscal year ended June 30, 2018 the Company reported net income of $2.2 million or $0.90 per diluted share, compared to net income of $2.4 million or $0.97 per diluted share for the fiscal year ended June 30, 2017.  The lower net income for the fiscal year ended June 30, 2018 compared to the prior fiscal year is due to a one-time revaluation adjustment to the Company's deferred tax asset to account for the future impact of lower corporate income tax rates as a result of the Tax Cuts and Job Acts that was enacted on December 22, 2017.  The tax revaluation resulted in a $2.4 million increase in the Company's income tax expense and a reduction in earnings per diluted share for the fiscal year ended June 30, 2018.

"I am pleased with our results for both the current quarter and the year. Over the last year both loans and deposits increased by 3.7% and 4.0% respectively. We ended the year with a strong net interest margin as well as a significant reduction in our non-interest expenses," stated Jerald L. Shaw the Company's President and Chief Executive Officer.

Fiscal Fourth Quarter Highlights

  • Loan receivable, net, increased $14.1 million or 3.7% to $392.0 million at June 30, 2018 from $377.9 million at June 30, 2017;
  • Deposits increased $13.8 million, or 4.0%, to $359.0 million at June 30, 2018 from $345.2 million at June 30, 2017;
  • Nonperforming loans decreased $230,000, or 19.7%, to $936,000 at June 30, 2018 from $1.2 million at March 31, 2018 and decreased $2.8 million or 74.7% from June 30, 2017; and
  • Allowance for loan losses to nonperforming loans increased to 466.9% at June 30, 2018 from 365.1% at March 31, 2018, and 110.8% at June 30, 2017.

In addition, on July 17, 2018, we signed a definitive merger agreement with FS Bancorp, Inc. ("FS Bancorp") pursuant to which FS Bancorp will acquire the Company for stock and cash valued at approximately $77 million.  The merger is currently expected, subject to receipt of Company shareholder, regulatory approvals and other customary closing conditions, to close during the fourth quarter of calendar 2018 or early in the first quarter of calendar 2019.   On the same date, we mutually terminated the merger agreement, as amended, with Washington Federal, Inc. ("Washington Federal").

Balance Sheet Review

Total assets increased by $7.1 million, or 1.5%, to $469.6 million at June 30, 2018 from $462.5 million at June 30, 2017.
Cash and cash equivalents increased $3.4 million, or 23.8%, to $17.6 million at June 30, 2018 from $14.2 million at June 30, 2017 due to an increase in deposits.  Securities available-for-sale and held-to-maturity decreased during the year by $3.4 million, or 16.3%, and $1.4 million, or 27.6%, respectively. The decreases in these portfolios were primarily the result of contractual principal repayments.

Loans receivable, net, increased $14.1 million, or 3.7%, to $392.0 million at June 30, 2018 from $377.9 million at June 30, 2017. Construction loans increased $36.7 million, or 74.7%, to $85.9 million at June 30, 2018 from $49.2 million at June 30, 2017.  Our construction loans are for the construction of multi-family and commercial real estate properties and to a lesser extent, loans for the construction of one-to-four family residences. There was $28.6 million in undisbursed construction loan commitments at June 30, 2018.  One-to-four family loans increased $2.4 million, or 4.0%, to $62.1 million at June 30, 2018 from $59.7 million at June 30, 2017.  Commercial business loans decreased $11.3 million, or 35.7%, to $20.3 million at June 30, 2018 from $31.6 million at June 30, 2017 primarily related to the payoff of a $9.0 million loan participation. Commercial real estate loans decreased $5.5 million, or 3.5%, to $150.0 million at June 30, 2018 from $155.5 million at June 30, 2017.  We also reclassified a $2.0 million multi-tenant commercial real estate loan to real estate owned ("REO") and recorded during the year ended June 30, 2018 a $200,000 charge upon transfer to reflect its fair market value.  Multi-family loans decreased $2.9 million, or 4.7%, to $57.6 million at June 30, 2018 from $60.5 million at June 30, 2017.  Land loans decreased $2.5 million, or 31.5%, to $5.5 million at June 30, 2018 from $8.0 million at June 30, 2017.  Consumer loans decreased $2.8 million, or 15.1%, to $15.9 million at June 30, 2018 from $18.7 million at June 30, 2017.

Loans receivable consisted of the following at the dates indicated:

  June 30, 2018   March 31, 2018   June 30, 2017
  (In thousands)
Real estate:          
One-to-four family $ 62,110     $ 62,788     $ 59,735  
Multi-family 57,639     58,847     60,500  
Commercial 150,050     152,928     155,525  
Construction 85,866     85,247     49,151  
Land loans 5,515     6,234     8,054  
Total real estate 361,180     366,044     332,965  
           
Consumer:          
Home equity 12,291     13,309     13,991  
Credit cards 2,284     2,346     2,596  
Automobile 372     392     627  
Other consumer 960     1,310     1,524  
Total consumer 15,907     17,357     18,738  
           
Business:          
Commercial business 20,329     20,575     31,603  
           
Total Loans 397,416     403,976     383,306  
           
Less:          
Deferred loan fees and loan premiums, net 1,002     1,146     1,292  
Allowance for loan losses 4,370     4,257     4,106  
           
Loans receivable, net $ 392,044     $ 398,573     $ 377,908  
           

Total liabilities increased over the last year by $5.5 million to $402.2 million at June 30, 2018 primarily as the result of a $13.8 million increase in deposits partially offset by a $8.5 million decrease in Federal Home Loan Bank advances.   The increase in deposits was primarily due to a $21.0 million increase in certificates of deposit and a $5.3 million increase in demand deposits partially offset by a $13.3 million decrease in money market accounts.  The increase in certificate of deposits was the result of the Bank's deposit marketing campaign, as well as other deposit gathering activities.

Deposits consisted of the following at the dates indicated:

  June 30, 2018   March 31, 2018   June 30, 2017
  Amount   Percent   Amount   Percent   Amount   Percent
  (Dollars in thousands)
Noninterest-bearing demand deposits $ 55,381     15.4 %   $ 57,767     16.0 %   $ 52,606     15.2 %
Interest-bearing demand deposits 34,030     9.5     33,446     9.3     31,464     9.1  
Money market accounts 59,863     16.7     64,344     17.9     73,154     21.2  
Savings deposits 44,271     12.3     45,052     12.5     43,454     12.6  
Certificates of deposit 165,476     46.1     159,610     44.3     144,509     41.9  
Total deposits $ 359,021     100.0 %   $ 360,219     100.0 %   $ 345,187     100.0 %
                       

Credit Quality

Total delinquent loans (past due 30 days or more), decreased $2.1 million, or 51.1%, to $2.0 million at June 30, 2018 from $4.1 million at June 30, 2017. The percentage of nonperforming loans, consisting solely of nonaccrual loans, to total loans decreased to 0.2% at June 30, 2018 from 1.0% at June 30, 2017.  The Company recorded a $105,000 provision for loan losses for the quarter ended June 30, 2018 compared to a $25,000 provision for the quarter ended June 30, 2017 primarily as a result of growth in our constructions loans in our loan portfolio.  The allowance for loan losses of $4.4 million at June 30, 2018 represented 1.1% of total loans and 466.9% of nonperforming loans. This compares to an allowance for loan losses of $4.1 million at June 30, 2017, representing 1.1% of total loans and 110.8% of nonperforming loans.

Nonperforming loans decreased by $230,000 to $936,000 at June 30, 2018 from $1.2 million at March 31, 2018 and were $3.7 million at June 30, 2017.  Nonperforming loans consisted of the following at the dates indicated:

  June 30, 2018   March 31, 2018   June 30, 2017
     
  (In thousands)
Real estate:          
One-to-four family $ 507     $ 682     $ 1,170  
Commercial         1,992  
Total real estate 507     682     3,162  
Consumer:          
Home equity 207     216     242  
Total consumer 207     216     242  
Business:          
Commercial business 222     268     300  
Total $ 936     $ 1,166     $ 3,704  
           

At both June 30, 2018 and March 31, 2018, the Company had two REO properties with an aggregate book value of $737,000 compared to three properties with an aggregate book value of $867,000 at June 30, 2017.

Capital

As of June 30, 2018, the Bank exceeded all regulatory capital requirements with, Tier 1 Leverage-Based Capital, Common Equity Tier 1 Capital (CET1), Tier 1 Risk-Based Capital and Total Risk-Based Capital ratios of 13.5%, 15.5%, 15.5% and 16.6%, respectively.  As of June 30, 2017, these ratios were 13.0%, 14.1%, 14.1%, and 15.1%, respectively.

Anchor Bancorp exceeded all regulatory capital requirements with Tier 1 Leverage-Based Capital, CET1, Tier 1 Risk-Based Capital and Total Risk-Based Capital ratios of 14.4%, 16.6%, 16.6%, and 17.7% as of June 30, 2018.  As of June 30, 2017, these ratios were 14.0%, 15.2%, 15.2%, and 16.2%, respectively.

Operating Results

Net interest income. Net interest income before the provision for loan losses increased $137,000, or 3.0%, to $4.7 million for the quarter ended June 30, 2018 from $4.6 million for the quarter ended June 30, 2017.  For the year ended June 30, 2018, net interest income before the provision for loan losses increased $1.2 million, or 7.5%, to $18.2 million from $17.0 million for fiscal 2017.  For both periods the increase was due primarily to an increase in average loans receivable.  Average loans receivable, net, for the quarter ended June 30, 2018 increased $9.6 million, or 2.4%, to $400.8 million from $391.2 million for the quarter ended June 30, 2017.  For the year ended June 30, 2018, average loans receivable, net, increased $26.8 million, or 7.2%, to $396.5 million from $369.7 million for the year ended June 30, 2017.

The Company's net interest margin increased four basis points to 4.36% for the quarter ended June 30, 2018 compared to 4.32% for the quarter ended June 30, 2017. The average yield on mortgage-backed securities increased to 2.41% from 2.36% for the same period in the prior year primarily as a result of larger principal paydowns.  The average yield on interest-earning assets increased 18 basis points to 5.37% from 5.19% for the quarters ended June 30, 2018 and 2017.  The average cost of interest-bearing liabilities increased 20 basis points to 1.28% for the fourth quarter ended June 30, 2018 compared to 1.08% for the same period in the prior year.  For the year ended June 30, 2018, the Company's net interest margin increased seven basis points to 4.26% compared to 4.19% for the year ended June 30, 2017.  The improvement in our net interest margin compared to the same period last year reflects an increase in average loans receivable during the year, in particular construction loans. The average yield on interest-earning assets increased 21 basis points to 5.22% for the year ended June 30, 2018 compared to 5.01% for the same period in the prior year. The average cost of interest-bearing liabilities increased 16 basis points to 1.19% for the year ended June 30, 2018 compared to 1.03% for the same period of the prior year primarily as a result of increases in short-term interest rates.

Provision for loan losses. In connection with its analysis of the loan portfolio at June 30, 2018, management determined that a $105,000 provision for loan losses was required for the quarter compared to a $25,000 provision for the same period in the prior year.  The provision for loan losses for the year ended June 30, 2018 was $405,000 compared to a $310,000 provision for loan losses recorded in the prior year. primarily due to loan growth during the 2018 fiscal year.

Noninterest income. Noninterest income decreased $139,000, or 12.7%, to $957,000 for the quarter ended June 30, 2018 compared to $1.1 million for the same quarter a year ago.  The decrease in noninterest income was primarily attributable due to a $74,000, or 23.1%, decrease in deposit service fees to $246,000 from $320,000 for the same quarter a year ago as consumers reduced their deposit account overdrafts.  In addition, other income decreased $66,000 in the quarter ended June 30, 2018 to $117,000 compared to $183,000 for the same quarter a year ago primarily due to a decrease of $52,000 for prepayment charges on commercial mortgage loans.  Noninterest income decreased $221,000, or 5.2%, to $4.0 million during the year ended June 30, 2018 compared to $4.3 million for the same period in 2017 primarily due to a $232,000 or 17.4% decrease in deposit service fees income during fiscal 2018 for the same reason discussed above.

Noninterest expense. Noninterest expense decreased $644,000, or 13.7%, to $4.1 million for the quarter ended June 30, 2018 from $4.7 million for the quarter ended June 30, 2017. Merger expenses decreased $399,000, or 98.3%, from $406,000 to $7,000 primarily due to legal and professional fees associated with the terminated proposed merger with Washington Federal incurred during the same period in fiscal 2017.  General and administrative expenses decreased $142,000, or 19.7%, to $579,000 from $721,000 primarily due to a $106,000 reversal in unfunded commitment reserve expense due to a decline in our unfunded commitment reserve reflecting the decrease in undisbursed construction loans during the quarter ended June 30, 2018.

Noninterest expense decreased $1.8 million, or 10.3%, for the year ended June 30, 2018 to $15.7 million from $17.5 million for the year ended June 30, 2017.  The decrease was primarily due to general and administrative expense decreasing $705,000, or 23.9%, from $2.9 million at June 30, 2017 to $2.2 million for the year ended June 30, 2018.  Unfunded commitment reserve expense declined for reasons discussed above.  Merger expenses related to the terminated proposed merger with Washington Federal decreased $343,000, or 84.5%, to $63,000 in fiscal 2018 from $406.000 in fiscal 2017 as the merger was pending throughout fiscal 2018.  Compensation and benefits decreased $321,000, or 3.6%, to $8.7 million from $9.0 million.  The decrease in compensation and benefits expense was primarily due to a reduction of $545,000 of stock based compensation awarded under the Anchor Bancorp 2015 Equity Plan to $91,000 for the year ended June 30, 2018 from $636,000 in the previous year and a $379,000 decrease reflecting reduced staffing partially offset by $581,000 in retention bonuses paid associated with the then pending Washington Federal merger. These decreases were partially offset by a $109,000 increase in real estate holding costs to $157,000 for the year ended June 30, 2018 from $48,000 primarily due to a $200,000 charge upon transfer of a commercial real estate property to REO to reflect its fair market value.

About the Company
Anchor Bancorp is headquartered in Lacey, Washington and is the parent company of Anchor Bank, a community-based savings bank primarily serving Western Washington through its 9 full-service banking offices within Grays Harbor, Thurston, Lewis, and Pierce counties, and one loan production office located in King County, Washington. The Company's common stock is traded on the NASDAQ Global Market under the symbol "ANCB" and is included in the Russell 2000 Index. For more information, visit the Company's web site www.anchornetbank.com.

Forward-Looking Statements:
Certain matters discussed in this press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to, among other things, expectations of the business environment in which we operate, projections of future performance, perceived opportunities in the market, potential future credit experience, and statements regarding our mission and vision. These forward-looking statements are based upon current management expectations and may, therefore, involve risks and uncertainties. Our actual results, performance, or achievements may differ materially from those suggested, expressed, or implied by forward-looking statements as a result of a wide variety or range of factors including, but not limited to: the Agreement and Plan of Merger ("Merger Agreement") with FS Bancorp may be terminated in accordance with its terms, and the merger may not be completed; governmental approval of our pending merger with FS Bancorp may not be obtained or adverse regulatory conditions may be imposed in connection with governmental approvals of the merger; conditions to the closing of the pending merger with FS Bancorp may not be satisfied, including the approval by our shareholders; delays in closing our pending merger with FS Bancorp; termination of the Merger Agreement could negatively impact us; we will be subject to business uncertainties and contractual restrictions while the merger is pending; the Merger Agreement limits our ability to pursue an alternative acquisition proposal and requires us to pay a termination fee of $2.7 million under limited circumstances relating to alternative acquisition proposals; increased competitive pressures; changes in the interest rate environment; the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs that may be impacted by deterioration in the housing and commercial real estate markets and may lead to increased losses and nonperforming assets in our loan portfolio, and may result in our allowance for loan losses not being adequate to cover actual losses, and require us to materially increase our reserves; changes in general economic conditions and conditions within the securities markets; legislative and regulatory changes; results of examinations of us by the Federal Reserve Bank of San Francisco and our bank subsidiary by the Federal Deposit Insurance Corporation, the Washington State Department of Financial Institutions, Division of Banks or other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our reserve for loan losses, write-down assets, change our regulatory capital position or affect our ability to borrow funds or maintain or increase deposits, which could adversely affect our liquidity and earnings and other factors described in the Company's latest annual Report on Form 10-K and Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission-which are available on our website at www.anchornetbank.com and on the SEC's website at www.sec.gov. Any of the forward-looking statements that we make in this Press Release and in the other public statements we make may turn out to be wrong because of the inaccurate assumptions we might make, because of the factors illustrated above or because of other factors that we cannot foresee. Because of these and other uncertainties, our actual future results may be materially different from those expressed or implied in any forward-looking statements made by or on our behalf and the Company's operating and stock price performance may be negatively affected. Therefore, these factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements. We do not undertake and specifically disclaim any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.  These risks could cause our actual results for fiscal 2019 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of us, and could negatively affect the Company's operations and stock price performance.

ANCHOR BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands), (unaudited)

June 30, 2018   March 31, 2018   June 30, 2017
ASSETS          
Cash and cash equivalents $ 17,568     $ 20,272     $ 14,194  
Securities available-for-sale, at fair value 17,725     18,714     21,170  
Securities held-to-maturity, at amortized cost 3,584     3,740     4,949  
Loans held for sale 98         1,551  
Loans receivable, net of allowance for loan losses of $4,370, $4,257 and $4,106 392,044     398,573     377,908  
Life insurance investment, net of surrender charges 20,546     20,417     20,030  
Accrued interest receivable 1,423     1,459     1,332  
Real estate owned, net 737     737     867  
Federal Home Loan Bank (FHLB) stock, at cost 2,047     2,407     2,348  
Property, premises and equipment, net 8,664     8,785     9,360  
Deferred tax asset, net 4,409     4,589     8,011  
Prepaid expenses and other assets 809     516     805  
Total assets $ 469,654     $ 480,209     $ 462,525  
LIABILITIES AND STOCKHOLDERS' EQUITY          
LIABILITIES          
Deposits:          
Noninterest-bearing $ 55,381     $ 57,767     $ 52,606  
Interest-bearing 303,640     302,452     292,581  
Total deposits 359,021     360,219     345,187  
           
FHLB advances 37,000     46,000     45,500  
Advance payments by borrowers for taxes and insurance 1,077     2,144     1,195  
Supplemental Executive Retirement Plan liability 1,738     1,731     1,709  
Accounts payable and other liabilities 3,374     3,862     3,083  
Total liabilities 402,210     413,956     396,674  
           
STOCKHOLDERS' EQUITY          
Preferred stock, $0.01 par value per share authorized 5,000,000 shares; no shares issued or outstanding          
Common stock, $0.01 par value per share, authorized 45,000,000 shares; 2,484,030 issued and outstanding at June 30, 2018, and 2,484,030 issued and outstanding at March 31, 2018, and 2,504,740 issued and outstanding at June 30, 2017 25     25     25  
Additional paid-in capital 22,298     22,258     22,619  
Retained earnings 46,776     45,614     44,585  
Unearned Employee Stock Ownership Plan (ESOP) shares (540 )   (556 )   (607 )
Accumulated other comprehensive loss, net of tax (1,115 )   (1,088 )   (771 )
Total stockholders' equity 67,444     66,253     65,851  
Total liabilities and stockholders' equity $ 469,654     $ 480,209     $ 462,525  


ANCHOR BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data) (unaudited)
Three Months Ended     
June 30,
  Year Ended
June 30,
  2018   2017   2018   2017
Interest income:              
Loans receivable, including fees $ 5,626     $ 5,324     $ 21,651     $ 19,580  
Securities 56     24     146     105  
Mortgage-backed securities 131     155     507     594  
Total interest income 5,813     5,503     22,304     20,279  
Interest expense:              
Deposits 905     770     3,436     2,758  
FHLB advances 190     152     642     563  
Total interest expense 1,095     922     4,078     3,321  
Net interest income before provision for loan losses 4,718     4,581     18,226     16,958  
Provision for loan losses 105     25     405     310  
Net interest income after provision for loan losses 4,613     4,556     17,821     16,648  
Noninterest income:              
Deposit service fees 246     320     1,098     1,330  
Other deposit fees 196     193     777     751  
Other loan fees 265     214     877     832  
Gain on sale of loans 4     59     175     183  
Bank owned life insurance 129     127     516     515  
Other income 117     183     600     653  
Total noninterest income 957     1,096     4,043     4,264  
Noninterest expense:              
Compensation and benefits 2,280     2,222     8,698     9,019  
General and administrative expenses 579     721     2,239     2,944  
Merger expenses 7     406     63     406  
Real estate owned holding costs 19     11     157     48  
Federal Deposit Insurance Corporation insurance premiums 58     39     190     145  
Information technology 491     571     2,024     2,105  
Occupancy and equipment 436     456     1,741     1,889  
Deposit services 101     111     394     462  
Marketing 90     167     364     564  
Gain on sale of property, premises and equipment (1 )       (11 )    
Gain on sale of real estate owned         (148 )   (59 )
Total noninterest expense 4,060     4,704     15,711     17,523  
Income before provision for income taxes 1,510     948     6,153     3,389  
Provision for income taxes 348     293     3,962     1,039  
Net income $ 1,162     $ 655     $ 2,191     $ 2,350  
Basic earnings per share $ 0.48     $ 0.27     $ 0.90     $ 0.98  
Diluted earnings per share $ 0.48     $ 0.27     $ 0.90     $ 0.97  


  As of or For the
 Quarter Ended
(unaudited)
  June 30, 2018   March 31, 2018   December 31, 2017   June 30, 2017
  (Dollars in thousands)
SELECTED PERFORMANCE RATIOS              
Return (loss) on average assets (1) 1.00   1.19   (1.22 )%    0.58
Return (loss) on average equity (2) 7.75     9.24     (9.31 )   4.48  
Average equity-to-average assets (3) 12.89     12.90     13.12     12.85  
Interest rate spread(4) 4.09     4.04     4.05     4.11  
Net interest margin (5) 4.36     4.28     4.27     4.32  
Efficiency ratio (6) 71.5     67.3     72.1     82.9  
Average interest-earning assets to average
interest-bearing liabilities
126.1     124.4     124.1     124.2  
Other operating expenses as a percent of average  total assets 3.5   3.2   3.5   4.1
Book value per common share $ 27.15     $ 26.67     $ 26.19     $ 26.29  
Tangible book value per common share (7) $ 27.05     $ 26.57     $ 26.09     $ 26.2  
               
CAPITAL RATIOS (Anchor Bank)
             
Tier 1 leverage 13.5   13.2   13.0   13.0
Common equity Tier 1 capital 15.5     14.7     14.1     14.1  
Tier 1 risk-based 15.5     14.7     14.1     14.1  
Total risk-based 16.6     15.8     15.1     15.1  
               
ASSET QUALITY              
Nonperforming and loans as a percent of total loans 0.2   0.3   0.4   1.0
Allowance for loan losses as a percent of total loans 1.1     1.1     1.0     1.1  
Allowance as a percent of total nonperforming loans 466.9     365.1     283.3     110.8  
Nonperforming assets as a percent of total assets 0.4     0.4     1.0     1.0  
Net charge-offs (recoveries) to average   outstanding loans 0.00   (0.002 )%    0.00   (0.03 )% 
Classified loans $ 936     $ 1,154     $ 1,449     $ 3,721  
_____________________              

(1)             Net income (loss) divided by average total assets, annualized.
(2)             Net income (loss) divided by average equity, annualized.
(3)             Average equity divided by average total assets.
(4)             Difference between weighted average yield on interest-earning assets and weighted average rate on interest-bearing liabilities.
(5)             Net interest income as a percentage of average interest-earning assets.
(6)             Noninterest expense divided by the sum of net interest income and noninterest income.
(7)             Tangible book value per common share excludes intangible assets. Tangible assets excludes intangible assets. This ratio represents a non-GAAP financial measure. See also Non-GAAP Financial Measures reconciliation tables below.

Non-GAAP Financial Measures:
In addition to results presented in accordance with generally accepted accounting principles utilized in the United States ("GAAP"), this earnings release contains the tangible book value per share, a non-GAAP financial measure. We calculate tangible common equity by excluding intangible assets from stockholders' equity. We calculate tangible book value per share by dividing tangible common equity by the number of common shares outstanding.  We calculate tangible common equity by excluding intangible assets from stockholders' equity. The Company believes that this measure is consistent with the capital treatment by our bank regulatory agencies, which excludes intangible assets from the calculation of risk-based capital ratios and presents this measure to facilitate comparison of the quality and composition of the Company's capital over time and in comparison to its competitors. This non-GAAP financial measure has inherent limitations, is not required to be uniformly applied and is not audited. Further, the non-GAAP financial measure should not be considered in isolation or as a substitute for book value per share or total stockholders' equity determined in accordance with GAAP and may not be comparable to similarly titled measures reported by other companies. Reconciliations of the GAAP and non-GAAP financial measures is presented below.

  June 30, 2018   March 31, 2018   December 31, 2017   June 30, 2017
  (In thousands)
               
Stockholders' equity $ 67,444     $ 66,253     $ 65,197     $ 65,851  
Less: intangible assets 250     257     260     232  
Tangible common stockholders' equity $ 67,194     $ 65,996     $ 64,937     $ 65,619  
               
Total assets $ 469,654     $ 480,209     $ 472,792     $ 462,525  
Less: intangible assets 250     257     260     232  
Tangible assets $ 469,404     $ 479,952     $ 472,532     $ 462,293  
               
               
Tangible common stockholders' equity $ 67,194     $ 65,996     $ 64,937     $ 65,619  
Common shares outstanding at end of period 2,484,030     2,484,030     2,489,030     2,504,740  
Common stockholders' equity (book value) per share (GAAP) $ 27.15     $ 26.67     $ 26.19     $ 26.29  
Tangible common stockholders' equity (tangible book value) per share (non-GAAP) $ 27.05     $ 26.57     $ 26.09     $ 26.20  

Contact:
Jerald L. Shaw, President and Chief Executive Officer
Terri L. Degner, EVP and Chief Financial Officer
Anchor Bancorp
(360) 491-2250

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