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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