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 nine months ended September 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, adjusted 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 September 30, |
|
(Dollars in thousands,
except per share data) |
|
2018 |
|
2017 |
|
Change (%) |
|
GAAP |
|
Adjusted |
|
GAAP |
|
Adjusted |
|
GAAP |
|
Adjusted |
Net income |
$ |
3,523 |
|
|
$ |
3,599 |
|
|
$ |
2,471 |
|
|
$ |
2,563 |
|
|
42.6 |
% |
|
40.4 |
% |
Net interest income |
$ |
12,292 |
|
|
|
N/A |
|
|
$ |
10,323 |
|
|
|
N/A |
|
|
19.1 |
% |
|
N/A |
Net interest margin (tax equivalent) |
|
3.26 |
% |
|
|
N/A |
|
|
|
3.30 |
% |
|
|
N/A |
|
|
-1.2 |
% |
|
N/A |
Return on average assets |
|
0.86 |
% |
|
|
0.88 |
% |
|
|
0.71 |
% |
|
|
0.73 |
% |
|
21.1 |
% |
|
20.5 |
% |
Return on average equity |
|
9.00 |
% |
|
|
11.18 |
% |
|
|
6.95 |
% |
|
|
7.72 |
% |
|
29.5 |
% |
|
44.8 |
% |
Efficiency ratio |
|
66.92 |
% |
|
|
66.25 |
% |
|
|
65.96 |
% |
|
|
64.87 |
% |
|
1.5 |
% |
|
2.1 |
% |
Diluted earnings per share |
$ |
0.50 |
|
|
$ |
0.51 |
|
|
$ |
0.38 |
|
|
$ |
0.39 |
|
|
31.6 |
% |
|
30.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months
Ended September 30, |
|
(Dollars in thousands,
except per share data) |
|
2018 |
|
2017 |
|
Change (%) |
|
GAAP |
|
Adjusted |
|
GAAP |
|
Adjusted |
|
GAAP |
|
Adjusted |
Net
income |
$ |
10,192 |
|
|
$ |
11,049 |
|
|
$ |
5,873 |
|
|
$ |
6,948 |
|
|
73.5 |
% |
|
59.0 |
% |
Net
interest income |
$ |
36,995 |
|
|
|
N/A |
|
|
$ |
30,163 |
|
|
|
N/A |
|
|
22.7 |
% |
|
N/A |
Tax-equivalent net interest margin |
|
3.38 |
% |
|
|
N/A |
|
|
|
3.32 |
% |
|
|
N/A |
|
|
1.8 |
% |
|
N/A |
Return on average assets |
|
0.84 |
% |
|
|
0.91 |
% |
|
|
0.57 |
% |
|
|
0.67 |
% |
|
47.4 |
% |
|
35.8 |
% |
Return on average equity |
|
8.84 |
% |
|
|
11.71 |
% |
|
|
5.66 |
% |
|
|
7.12 |
% |
|
56.2 |
% |
|
64.5 |
% |
Efficiency ratio |
|
67.44 |
% |
|
|
65.27 |
% |
|
|
72.45 |
% |
|
|
68.28 |
% |
|
-6.9 |
% |
|
-4.4 |
% |
Diluted earnings per share |
$ |
1.45 |
|
|
$ |
1.57 |
|
|
$ |
0.90 |
|
|
$ |
1.06 |
|
|
61.1 |
% |
|
48.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September
30, |
|
As of December
31, |
|
|
2018 |
|
2017 |
|
|
(Dollars in thousands,
except per share data) |
Asset Quality: |
|
|
|
|
Non-performing loans |
|
$ |
4,297 |
|
|
$ |
4,778 |
|
Real estate owned |
|
$ |
2,818 |
|
|
$ |
2,568 |
|
Non-performing assets |
|
$ |
7,115 |
|
|
$ |
7,346 |
|
Non-performing loans to total loans |
|
|
0.40 |
% |
|
|
0.48 |
% |
Non-performing assets to total assets |
|
|
0.43 |
% |
|
|
0.46 |
% |
Net charge-offs |
|
$ |
194 |
|
|
$ |
315 |
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses to non-performing
loans |
|
|
273.35 |
% |
|
|
227.86 |
% |
Allowance for loan losses to total loans |
|
|
1.10 |
% |
|
|
1.08 |
% |
|
|
|
|
|
Other Data: |
|
|
|
|
Book value per share |
|
$ |
22.74 |
|
|
$ |
22.00 |
|
Tangible book value per share |
|
$ |
18.73 |
|
|
$ |
17.90 |
|
Closing market price per share |
|
$ |
26.55 |
|
|
$ |
29.25 |
|
Closing price-to-tangible book value ratio |
|
|
141.75 |
% |
|
|
163.41 |
% |
Equity to assets ratio |
|
|
9.39 |
% |
|
|
9.57 |
% |
Tangible common equity to tangible assets ratio |
|
|
7.86 |
% |
|
|
7.93 |
% |
|
|
|
|
|
|
|
|
|
Management Commentary
Roger D. Plemens, President and Chief Executive
Officer of the Company, reported, “We are pleased with the
increase in core deposits during the third quarter of 2018 as the
result of a Company-wide deposit campaign which increased core
deposits by $28.4 million, or an annualized rate of 15.1%.
Growing our balance sheet with core funding remains a key focus in
our desire to continue growing shareholder value. Looking
forward, we remain focused on opportunities to grow our franchise,
with an emphasis on growing our commercial banking business.”
Net Interest Income
Net interest income increased $2.0 million, or
19.1%, to $12.3 million for the three months ended September 30,
2018, compared to $10.3 million for the same period in 2017.
Net interest income increased $6.8 million, or 22.7%, to $37.0
million for the nine months ended September 30, 2018, compared to
$30.2 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 3.26% for the three months ended September 30,
2018, compared to 3.30% for the same period in 2017, and 3.38% and
3.32% for the nine months ended September 30, 2018 and 2017,
respectively.
Provision for Loan Losses
The provision for loan losses was $0.3 million
and $1.1 million for the three and nine months ended September 30,
2018, respectively, compared to $0.5 million and $1.2 million for
the comparable periods of 2017. The provisions 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 increased $0.2 million, or
10.7%, to $2.0 million for the three months ended September 30,
2018, compared to $1.8 million for the same period in 2017.
Increases in servicing income, mortgage banking, equity securities
gains, and net interchange fees were partially offset by decreases
in gains on sale of Small Business Administration (“SBA”) loans and
service charges on deposit accounts. The Company recorded a
valuation adjustment against its loan servicing rights of $44
thousand and $0.2 million for the three months ended September 30,
2018 and 2017, respectively.
Noninterest income increased $0.4 million, or
8.6%, to $4.7 million for the nine months ended September 30, 2018,
compared to $4.3 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, net interchange fees and income from
Small Business Investment Company (“SBIC”) holdings were partially
offset by decreases in mortgage banking and equity securities
gains. The Company recorded a valuation adjustment against its loan
servicing rights of $0.4 million and $0.3 million for the nine
months ended September 30, 2018 and 2017,
respectively.
Noninterest Expense
Noninterest expense increased $1.5 million, or
19.6%, to $9.5 million for the three months ended September 30,
2018, compared to $8.0 million for the same period in 2017.
Noninterest expense increased $3.1 million, or 12.5%, to $28.1
million for the nine months ended September 30, 2018, compared to
$25.0 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 nine
months ended September 30, 2018 were 19.6% and 18.6%, respectively,
compared to 31.3% and 29.6% for the corresponding 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”). The
effective tax rate for the third quarter of 2018 was slightly
higher than previous quarters as a result of a change in state
income tax apportionment.
Balance Sheet
Total assets increased $88.1 million, or an
annualized rate of 7.4%, to $1.67 billion at September 30, 2018
from $1.58 billion at December 31, 2017.
Loans receivable increased $62.9 million, or an
annualized rate of 8.3%, to $1.07 billion at September 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 increased $18.5 million to $781.9
million at September 30, 2018 from $763.4 million at December 31,
2017. In the third quarter of 2018, core deposits increased
$28.4 million, or an annualized rate of 15.1%, as a result of the
promotion of a more aggressive money market rate. Retail
certificates of deposit decreased $4.9 million to $352.7 million at
September 30, 2018 from $357.6 million at December 31, 2017.
Wholesale deposits have been a source of funding loan growth and
increased $80.3 million to $121.5 million at September 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
September, 30 2018.
Total shareholders’ equity increased $5.4
million to $156.7 million at September 30, 2018, compared to $151.3
million at December 31, 2017. This increase was primarily
attributable to $10.2 million of net income, offset by a $5.6
million after-tax decline in the market value of investment
securities available for sale. Tangible book value per share,
a non-GAAP measure, increased $0.83 to $18.73 at September 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 0.40% and 0.43%,
respectively, at September 30, 2018, compared to 0.48% and 0.46%,
respectively, at December 31, 2017. Net loan charge-offs
continue to remain modest, totaling $0.2 million for the nine
months ended September 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 adjusted noninterest expense, adjusted
net income, adjusted diluted earnings per share, adjusted return on
average assets, adjusted return on tangible average equity,
adjusted 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,
and Clemson, SC. 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
SUBSIDIARYCONDENSED CONSOLIDATED STATEMENTS OF
INCOME (UNAUDITED)(Amounts in thousands, except
per share data)
|
Three Months Ended
September 30, |
|
2018 |
|
2017 |
|
Interest income |
$ |
15,978 |
|
$ |
12,254 |
|
Interest expense |
3,686 |
|
1,931 |
|
|
|
|
|
Net interest income |
12,292 |
|
10,323 |
|
|
|
|
|
Provision for loan losses |
336 |
|
520 |
|
|
|
|
|
Net interest income after provision for loan losses |
11,956 |
|
9,803 |
|
|
|
|
|
Servicing income, net |
180 |
|
59 |
|
Mortgage banking |
233 |
|
207 |
|
Gain on sale of SBA loans |
257 |
|
290 |
|
Gain (loss) on sale of investments |
- |
|
(24 |
) |
Equity securities gains |
191 |
|
138 |
|
Service charges on deposit accounts |
406 |
|
436 |
|
Interchange fees |
276 |
|
246 |
|
Bank owned life insurance |
195 |
|
208 |
|
Other |
227 |
|
215 |
|
Total noninterest income |
1,965 |
|
1,775 |
|
|
|
|
|
Compensation and employee benefits |
5,882 |
|
4,937 |
|
Net occupancy |
1,128 |
|
974 |
|
Federal deposit insurance |
191 |
|
140 |
|
Professional and advisory |
413 |
|
292 |
|
Data processing |
532 |
|
390 |
|
Marketing and advertising |
227 |
|
253 |
|
Net cost of operation of real estate owned |
59 |
|
(121 |
) |
Merger-related expenses |
96 |
|
116 |
|
Other |
1,013 |
|
999 |
|
Total noninterest expense |
9,541 |
|
7,980 |
|
|
|
|
|
Income before taxes |
4,380 |
|
3,598 |
|
|
|
|
|
Income tax expense |
857 |
|
1,127 |
|
|
|
|
|
Net income |
$ |
3,523 |
|
$ |
2,471 |
|
|
|
|
|
Earnings per common share: |
|
|
|
Basic |
$ |
0.51 |
|
$ |
0.38 |
|
Diluted |
$ |
0.50 |
|
$ |
0.38 |
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
Basic |
6,891,672 |
|
6,458,679 |
|
Diluted |
7,031,150 |
|
6,548,530 |
|
|
|
|
|
|
ENTEGRA FINANCIAL CORP. AND
SUBSIDIARYCONDENSED CONSOLIDATED STATEMENTS OF
INCOME (UNAUDITED)(Amounts in thousands, except
per share data)
|
Nine Months Ended
September 30, |
|
2018 |
|
2017 |
Interest income |
$ |
46,149 |
|
|
$ |
35,621 |
|
Interest expense |
|
9,154 |
|
|
|
5,458 |
|
|
|
|
|
Net interest income |
|
36,995 |
|
|
|
30,163 |
|
|
|
|
|
Provision for loan losses |
|
1,054 |
|
|
|
1,160 |
|
|
|
|
|
Net interest income after provision for loan losses |
|
35,941 |
|
|
|
29,003 |
|
|
|
|
|
Servicing income, net |
|
313 |
|
|
|
312 |
|
Mortgage banking |
|
755 |
|
|
|
771 |
|
Gain on sale of SBA loans |
|
547 |
|
|
|
436 |
|
Gain (loss) on sale of investments |
|
(520 |
) |
|
|
19 |
|
Equity securities gains |
|
183 |
|
|
|
445 |
|
Other than temporary impairment on available-for-sale
securities |
|
- |
|
|
|
(700 |
) |
Service charges on deposit accounts |
|
1,242 |
|
|
|
1,239 |
|
Interchange fees, net |
|
795 |
|
|
|
655 |
|
Bank owned life insurance |
|
589 |
|
|
|
603 |
|
Other |
|
775 |
|
|
|
527 |
|
Total noninterest income |
|
4,679 |
|
|
|
4,307 |
|
|
|
|
|
Compensation and employee benefits |
|
17,151 |
|
|
|
14,859 |
|
Net occupancy |
|
3,342 |
|
|
|
2,851 |
|
Federal deposit insurance |
|
618 |
|
|
|
379 |
|
Professional and advisory |
|
1,023 |
|
|
|
929 |
|
Data processing |
|
1,607 |
|
|
|
1,215 |
|
Marketing and advertising |
|
671 |
|
|
|
727 |
|
Net cost of operation of real estate owned |
|
202 |
|
|
|
94 |
|
Merger-related expenses |
|
564 |
|
|
|
972 |
|
Other |
|
2,925 |
|
|
|
2,947 |
|
Total noninterest expense |
|
28,103 |
|
|
|
24,973 |
|
|
|
|
|
Income before taxes |
|
12,517 |
|
|
|
8,337 |
|
|
|
|
|
Income tax expense |
|
2,325 |
|
|
|
2,464 |
|
|
|
|
|
Net income |
$ |
10,192 |
|
|
$ |
5,873 |
|
|
|
|
|
Earnings per common share: |
|
|
|
Basic |
$ |
1.48 |
|
|
$ |
0.91 |
|
Diluted |
$ |
1.45 |
|
|
$ |
0.90 |
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
Basic |
|
6,889,130 |
|
|
|
6,460,015 |
|
Diluted |
|
7,023,714 |
|
|
|
6,542,261 |
|
|
|
|
|
|
|
|
|
ENTEGRA FINANCIAL CORP. AND
SUBSIDIARYCONDENSED CONSOLIDATED BALANCE
SHEETS(Dollars in thousands)
|
September 30,
2018 |
|
December 31,
2017 |
|
(Unaudited) |
|
(Unaudited) |
Assets |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
117,265 |
|
|
$ |
109,467 |
|
Investments - equity securities |
|
6,983 |
|
|
|
6,095 |
|
Investments - available for sale |
|
353,759 |
|
|
|
342,863 |
|
Other investments, at cost |
|
12,039 |
|
|
|
12,386 |
|
Loans held for sale (includes $1,821 and $0 at fair value) |
|
3,970 |
|
|
|
3,845 |
|
Loans receivable |
|
1,068,012 |
|
|
|
1,005,139 |
|
Allowance for loan losses |
|
(11,746 |
) |
|
|
(10,887 |
) |
Real estate owned |
|
2,818 |
|
|
|
2,568 |
|
Fixed assets, net |
|
26,605 |
|
|
|
24,113 |
|
Bank owned life insurance |
|
32,738 |
|
|
|
32,150 |
|
Net deferred tax asset |
|
8,672 |
|
|
|
8,831 |
|
Goodwill |
|
23,903 |
|
|
|
23,903 |
|
Core deposit intangibles, net |
|
3,750 |
|
|
|
4,269 |
|
Other assets |
|
20,798 |
|
|
|
16,707 |
|
|
|
|
|
Total assets |
$ |
1,669,566 |
|
|
$ |
1,581,449 |
|
|
|
|
|
Liabilities and Shareholders' Equity |
|
|
|
|
|
|
|
Liabilities |
|
|
|
Core deposits |
$ |
781,899 |
|
|
$ |
763,422 |
|
Retail certificates of deposit |
|
352,658 |
|
|
|
357,629 |
|
Wholesale deposits |
|
121,475 |
|
|
|
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 |
|
9,887 |
|
|
|
10,174 |
|
Other liabilities |
|
13,984 |
|
|
|
14,852 |
|
Total liabilities |
$ |
1,512,836 |
|
|
$ |
1,430,136 |
|
|
|
|
|
Total shareholders' equity |
|
156,730 |
|
|
|
151,313 |
|
|
|
|
|
Total liabilities and shareholders' equity |
$ |
1,669,566 |
|
|
$ |
1,581,449 |
|
|
|
|
|
|
|
|
|
APPENDIX A – RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES (UNAUDITED)
|
|
Three Months Ended
September 30, |
|
|
2018 |
|
2017 |
(Dollars in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
Adjusted Noninterest Expense |
|
|
|
|
Noninterest expense (GAAP) |
|
$ |
9,541 |
|
|
$ |
7,980 |
|
Merger-related expenses |
|
|
(96 |
) |
|
|
(116 |
) |
Adjusted noninterest expense (Non-GAAP) |
|
$ |
9,445 |
|
|
$ |
7,864 |
|
|
|
|
|
|
Adjusted Net Income |
|
|
|
|
Net income (GAAP) |
|
$ |
3,523 |
|
|
$ |
2,471 |
|
Loss (gain) on sale of investments |
|
|
- |
|
|
|
16 |
|
Other than temporary impairment of investment securities available
for sale |
|
|
- |
|
|
|
- |
|
Merger-related expenses |
|
|
76 |
|
|
|
76 |
|
Adjusted net income (Non-GAAP) |
|
$ |
3,599 |
|
|
$ |
2,563 |
|
|
|
|
|
|
Adjusted Diluted Earnings Per Share |
|
|
|
|
Diluted earnings per share (GAAP) |
|
$ |
0.50 |
|
|
$ |
0.38 |
|
Loss (gain) on sale of investments |
|
|
- |
|
|
|
- |
|
Other than temporary impairment of investment securities available
for sale |
|
|
- |
|
|
|
- |
|
Merger-related expenses |
|
|
0.01 |
|
|
|
0.01 |
|
Adjusted diluted earnings per share (Non-GAAP) |
|
$ |
0.51 |
|
|
$ |
0.39 |
|
|
|
|
|
|
Adjusted Return on Average Assets |
|
|
|
|
Return on Average Assets (GAAP) |
|
|
0.86 |
% |
|
|
0.71 |
% |
Gain on sale of investments |
|
|
0.00 |
% |
|
|
0.00 |
% |
Other than temporary impairment of investment securities available
for sale |
|
|
0.00 |
% |
|
|
0.00 |
% |
Merger-related expenses |
|
|
0.02 |
% |
|
|
0.02 |
% |
Adjusted Return on Average Assets (Non-GAAP) |
|
|
0.88 |
% |
|
|
0.73 |
% |
|
|
|
|
|
Adjusted Return on Tangible Average Equity |
|
|
|
|
Return on Average Equity (GAAP) |
|
|
9.00 |
% |
|
|
6.95 |
% |
Loss (gain) on sale of investments |
|
|
0.00 |
% |
|
|
0.04 |
% |
Other than temporary impairment of investment securities available
for sale |
|
|
0.00 |
% |
|
|
0.00 |
% |
Merger-related expenses |
|
|
0.19 |
% |
|
|
0.21 |
% |
Effect of goodwill and intangibles |
|
|
1.98 |
% |
|
|
0.52 |
% |
Adjusted Return on Average Tangible Equity (Non-GAAP) |
|
|
11.18 |
% |
|
|
7.72 |
% |
|
|
|
|
|
Adjusted Efficiency Ratio |
|
|
|
|
Efficiency ratio (GAAP) |
|
|
66.92 |
% |
|
|
65.96 |
% |
Gain (loss) on sale of investments |
|
|
0.00 |
% |
|
|
-0.19 |
% |
Other than temporary impairment of investment securities available
for sale |
|
|
0.00 |
% |
|
|
0.00 |
% |
Merger-related expenses |
|
|
-0.67 |
% |
|
|
-0.90 |
% |
Adjusted Efficiency Ratio (Non-GAAP) |
|
|
66.25 |
% |
|
|
64.87 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
As Of |
|
|
September 30,
2018 |
|
December 31,
2017 |
|
|
(Dollars in thousands,
except share data) |
Tangible Assets |
|
|
|
|
Total Assets |
|
$ |
1,669,566 |
|
|
$ |
1,581,449 |
|
Goodwill and Intangibles |
|
|
(27,653 |
) |
|
|
(28,172 |
) |
Tangible Assets |
|
$ |
1,641,913 |
|
|
$ |
1,553,277 |
|
|
|
|
|
|
Tangible Book Value Per Share |
|
|
|
|
Book Value (GAAP) |
|
$ |
156,730 |
|
|
$ |
151,313 |
|
Goodwill and intangibles |
|
|
(27,653 |
) |
|
|
(28,172 |
) |
Book Value (Tangible) |
|
$ |
129,077 |
|
|
$ |
123,141 |
|
Outstanding shares |
|
|
6,891,672 |
|
|
|
6,879,191 |
|
Tangible Book Value Per Share |
|
$ |
18.73 |
|
|
$ |
17.90 |
|
|
|
Nine Months Ended
September 30, |
|
|
2018 |
|
2017 |
(Dollars in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
Adjusted Noninterest Expense |
|
|
|
|
Noninterest expense (GAAP) |
|
$ |
28,103 |
|
|
$ |
24,973 |
|
Merger-related expenses |
|
|
(564 |
) |
|
|
(972 |
) |
Adjusted noninterest expense (Non-GAAP) |
|
$ |
27,539 |
|
|
$ |
24,001 |
|
|
|
|
|
|
Adjusted Net Income |
|
|
|
|
Net income (GAAP) |
|
$ |
10,192 |
|
|
$ |
5,873 |
|
Loss (gain) on sale of investments |
|
|
411 |
|
|
|
(12 |
) |
Other than temporary impairment of investment securities available
for sale |
|
|
- |
|
|
|
455 |
|
Merger-related expenses |
|
|
446 |
|
|
|
632 |
|
Adjusted net income (Non-GAAP) |
|
$ |
11,049 |
|
|
$ |
6,948 |
|
|
|
|
|
|
Adjusted Diluted Earnings Per Share |
|
|
|
|
Diluted earnings per share (GAAP) |
|
$ |
1.45 |
|
|
$ |
0.90 |
|
Loss (gain) on sale of investments |
|
|
0.06 |
|
|
|
- |
|
Other than temporary impairment of investment securities available
for sale |
|
|
- |
|
|
|
0.06 |
|
Merger-related expenses |
|
|
0.06 |
|
|
|
0.10 |
|
Adjusted diluted earnings per share (Non-GAAP) |
|
$ |
1.57 |
|
|
$ |
1.06 |
|
|
|
|
|
|
Adjusted Return on Average Assets |
|
|
|
|
Return on Average Assets (GAAP) |
|
|
0.84 |
% |
|
|
0.57 |
% |
Gain on sale of investments |
|
|
0.03 |
% |
|
|
- |
|
Other than temporary impairment of investment securities available
for sale |
|
|
0.00 |
% |
|
|
0.04 |
% |
Merger-related expenses |
|
|
0.04 |
% |
|
|
0.06 |
% |
Adjusted Return on Average Assets (Non-GAAP) |
|
|
0.91 |
% |
|
|
0.67 |
% |
|
|
|
|
|
Adjusted Return on Tangible Average Equity |
|
|
|
|
Return on Average Equity (GAAP) |
|
|
8.84 |
% |
|
|
5.66 |
% |
Loss (gain) on sale of investments |
|
|
0.36 |
% |
|
|
-0.01 |
% |
Other than temporary impairment of investment securities available
for sale |
|
|
0.00 |
% |
|
|
0.43 |
% |
Merger-related expenses |
|
|
0.39 |
% |
|
|
0.61 |
% |
Effect of goodwill and intangibles |
|
|
2.13 |
% |
|
|
0.43 |
% |
Adjusted Return on Average Tangible Equity (Non-GAAP) |
|
|
11.71 |
% |
|
|
7.12 |
% |
|
|
|
|
|
Adjusted Efficiency Ratio |
|
|
|
|
Efficiency ratio (GAAP) |
|
|
67.44 |
% |
|
|
72.45 |
% |
Gain (loss) on sale of investments |
|
|
-1.23 |
% |
|
|
0.05 |
% |
Other than temporary impairment of investment securities available
for sale |
|
|
0.00 |
% |
|
|
-1.38 |
% |
Merger-related expenses |
|
|
-0.94 |
% |
|
|
-2.84 |
% |
Adjusted Efficiency Ratio (Non-GAAP) |
|
|
65.27 |
% |
|
|
68.28 |
% |
|
|
|
|
|
|
|
|
|
APPENDIX B – TAX EQUIVALENT NET INTEREST
MARGIN ANALYSIS (UNAUDITED)
|
|
For the Three Months
Ended September 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 |
|
$ |
1,050,667 |
|
|
$ |
12,622 |
|
4.77 |
% |
|
$ |
788,021 |
|
|
$ |
9,175 |
|
4.62 |
% |
Loans, tax exempt (1) |
|
|
16,757 |
|
|
|
134 |
|
3.18 |
% |
|
|
16,607 |
|
|
|
151 |
|
3.60 |
% |
Investments - taxable |
|
|
248,077 |
|
|
|
1,827 |
|
2.95 |
% |
|
|
295,516 |
|
|
|
1,787 |
|
2.42 |
% |
Investment tax exempt (1) |
|
|
94,019 |
|
|
|
880 |
|
3.74 |
% |
|
|
124,016 |
|
|
|
1,257 |
|
4.05 |
% |
Interest earning deposits |
|
|
99,572 |
|
|
|
528 |
|
2.10 |
% |
|
|
63,262 |
|
|
|
216 |
|
1.35 |
% |
Other investments, at cost |
|
|
12,039 |
|
|
|
201 |
|
6.62 |
% |
|
|
11,822 |
|
|
|
161 |
|
5.40 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-earning assets |
|
|
1,521,131 |
|
|
|
16,192 |
|
4.22 |
% |
|
|
1,299,244 |
|
|
|
12,747 |
|
3.89 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-earning assets |
|
|
123,662 |
|
|
|
|
|
|
|
100,731 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
1,644,793 |
|
|
|
|
|
|
$ |
1,399,975 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Savings accounts |
|
$ |
53,287 |
|
|
$ |
15 |
|
0.11 |
% |
|
$ |
49,146 |
|
|
$ |
14 |
|
0.11 |
% |
Time deposits |
|
|
423,419 |
|
|
|
1,404 |
|
1.32 |
% |
|
|
358,327 |
|
|
|
796 |
|
0.88 |
% |
Money market accounts |
|
|
355,057 |
|
|
|
814 |
|
0.91 |
% |
|
|
260,804 |
|
|
|
248 |
|
0.38 |
% |
Interest bearing transaction accounts |
|
|
205,732 |
|
|
|
98 |
|
0.19 |
% |
|
|
174,945 |
|
|
|
56 |
|
0.13 |
% |
Total interest bearing deposits |
|
|
1,037,495 |
|
|
|
2,331 |
|
0.89 |
% |
|
|
843,222 |
|
|
|
1,114 |
|
0.52 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
FHLB advances |
|
|
213,500 |
|
|
|
1,091 |
|
2.00 |
% |
|
|
223,826 |
|
|
|
641 |
|
1.14 |
% |
Junior subordinated debentures |
|
|
14,433 |
|
|
|
141 |
|
3.82 |
% |
|
|
14,433 |
|
|
|
140 |
|
3.85 |
% |
Other borrowings |
|
|
9,399 |
|
|
|
123 |
|
5.19 |
% |
|
|
3,652 |
|
|
|
36 |
|
3.91 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-bearing liabilities |
|
|
1,274,827 |
|
|
|
3,686 |
|
1.15 |
% |
|
|
1,085,133 |
|
|
|
1,931 |
|
0.71 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing deposits |
|
|
198,001 |
|
|
|
|
|
|
|
157,870 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other non interest bearing liabilities |
|
|
15,431 |
|
|
|
|
|
|
|
14,667 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
1,488,259 |
|
|
|
|
|
|
|
1,257,670 |
|
|
|
|
|
Total equity |
|
|
156,534 |
|
|
|
|
|
|
|
142,305 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity |
|
$ |
1,644,793 |
|
|
|
|
|
|
$ |
1,399,975 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax-equivalent net interest income |
|
|
|
$ |
12,506 |
|
|
|
|
|
$ |
10,816 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest-earning assets (2) |
|
$ |
246,304 |
|
|
|
|
|
|
$ |
214,111 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average interest-earning assets to interest-bearing
liabilities |
|
|
119.32 |
% |
|
|
|
|
|
|
119.73 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax-equivalent net interest rate spread (3) |
|
|
|
|
|
3.08 |
% |
|
|
|
|
|
3.19 |
% |
Tax-equivalent net interest margin (4) |
|
|
|
|
|
3.26 |
% |
|
|
|
|
|
3.30 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 Nine Months Ended
September 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 |
|
$ |
1,030,421 |
|
|
$ |
36,981 |
|
4.80 |
% |
|
$ |
765,810 |
|
|
$ |
26,686 |
|
4.66 |
% |
Loans, tax exempt (1) |
|
|
15,947 |
|
|
|
367 |
|
3.08 |
% |
|
|
15,906 |
|
|
|
438 |
|
3.69 |
% |
Investments - taxable |
|
|
253,129 |
|
|
|
5,173 |
|
2.72 |
% |
|
|
301,823 |
|
|
|
5,367 |
|
2.37 |
% |
Investment tax exempt (1) |
|
|
84,890 |
|
|
|
2,344 |
|
3.68 |
% |
|
|
118,008 |
|
|
|
3,609 |
|
4.08 |
% |
Interest earning deposits |
|
|
91,400 |
|
|
|
1,309 |
|
1.91 |
% |
|
|
58,067 |
|
|
|
459 |
|
1.06 |
% |
Other investments, at cost |
|
|
12,259 |
|
|
|
544 |
|
5.93 |
% |
|
|
12,491 |
|
|
|
478 |
|
5.12 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-earning assets |
|
|
1,488,046 |
|
|
|
46,718 |
|
4.20 |
% |
|
|
1,272,105 |
|
|
|
37,037 |
|
3.89 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-earning assets |
|
|
127,331 |
|
|
|
|
|
|
|
100,321 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
1,615,377 |
|
|
|
|
|
|
$ |
1,372,426 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Savings accounts |
|
$ |
52,222 |
|
|
$ |
44 |
|
0.11 |
% |
|
$ |
46,835 |
|
|
$ |
39 |
|
0.11 |
% |
Time deposits |
|
|
414,802 |
|
|
|
3,527 |
|
1.14 |
% |
|
|
349,381 |
|
|
|
2,335 |
|
0.89 |
% |
Money market accounts |
|
|
335,722 |
|
|
|
1,687 |
|
0.67 |
% |
|
|
255,013 |
|
|
|
704 |
|
0.37 |
% |
Interest bearing transaction accounts |
|
|
208,550 |
|
|
|
282 |
|
0.18 |
% |
|
|
159,377 |
|
|
|
149 |
|
0.12 |
% |
Total interest bearing deposits |
|
|
1,011,296 |
|
|
|
5,540 |
|
0.73 |
% |
|
|
810,606 |
|
|
|
3,227 |
|
0.53 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
FHLB advances |
|
|
219,178 |
|
|
|
2,841 |
|
1.71 |
% |
|
|
240,551 |
|
|
|
1,713 |
|
0.95 |
% |
Junior subordinated debentures |
|
|
14,433 |
|
|
|
421 |
|
3.85 |
% |
|
|
14,433 |
|
|
|
418 |
|
3.87 |
% |
Other borrowings |
|
|
9,113 |
|
|
|
352 |
|
5.16 |
% |
|
|
3,165 |
|
|
|
100 |
|
4.22 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-bearing liabilities |
|
|
1,254,020 |
|
|
|
9,154 |
|
0.98 |
% |
|
|
1,068,755 |
|
|
|
5,458 |
|
0.68 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing deposits |
|
|
190,902 |
|
|
|
|
|
|
|
151,174 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other non interest bearing liabilities |
|
|
16,719 |
|
|
|
|
|
|
|
14,204 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
1,461,641 |
|
|
|
|
|
|
|
1,234,133 |
|
|
|
|
|
Total equity |
|
|
153,736 |
|
|
|
|
|
|
|
138,293 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity |
|
$ |
1,615,377 |
|
|
|
|
|
|
$ |
1,372,426 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax-equivalent net interest income |
|
|
|
$ |
37,564 |
|
|
|
|
|
$ |
31,579 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest-earning assets (2) |
|
$ |
234,026 |
|
|
|
|
|
|
$ |
203,350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average interest-earning assets to interest-bearing
liabilities |
|
|
118.66 |
% |
|
|
|
|
|
|
119.03 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax-equivalent net interest rate spread (3) |
|
|
|
|
|
3.22 |
% |
|
|
|
|
|
3.21 |
% |
Tax-equivalent net interest margin (4) |
|
|
|
|
|
3.38 |
% |
|
|
|
|
|
3.32 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.
PlemensPresident and Chief Executive Officer(828) 524-7000 |
|
|
|
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