Entegra Financial Corp. Announces Fourth Quarter 2017 Results

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| Source: Entegra Financial Corp.

FRANKLIN, N.C., Jan. 18, 2018 (GLOBE NEWSWIRE) -- Entegra Financial Corp. (the “Company”) (NASDAQ:ENFC), the holding company for Entegra Bank (the “Bank”), today announced earnings and related data for the three months and year ended December 31, 2017.

Highlights 

The following tables highlight the most important trends that the Company believes are relevant to understanding the performance of the Company.  As further detailed in Appendix A, core results (a non-GAAP measure) reflect adjustments for material items including investment gains and losses, investment impairment, merger-related expenses, and changes in the value of net deferred tax assets due to the passing of the Tax Cuts and Jobs Act of 2017. 

  
 For the Three Months Ended December 31,
 (Dollars in thousands, except per share data)
  2017   2016  Change (%)
 GAAP Core GAAP Core GAAP Core
Net income (loss)$(3,294) $3,700  $2,352  $2,470  -240.1% 49.8%
Net interest income$12,682   N/A  $9,219   N/A  37.6% N/A 
Net interest margin 3.61%  N/A   3.25%  N/A  11.1% N/A 
Return on average assets -0.83%  0.94%  0.75%  0.79% -210.7% 19.0%
Return on average equity -8.59%  11.37%  6.91%  7.43% -224.3% 53.0%
Efficiency ratio 81.58%  60.79%  70.34%  68.38% 16.0% -11.1%
Diluted earnings (loss) per share$(0.48) $0.54  $0.36  $0.38  -233.3% 42.1%
 
 For the Year Ended December 31,
 (Dollars in thousands, except per share data)
  2017   2016  Change (%)
 GAAP Core GAAP Core GAAP Core
Net income$2,579  $10,647  $6,376  $7,091  -59.6% 50.1%
Net interest income$42,845   N/A  $34,488   N/A  24.2% N/A 
Net interest margin 3.36%  N/A   3.28%  N/A  2.4% N/A 
Return on average assets 0.18%  0.75%  0.55%  0.61% -67.3% 23.0%
Return on average equity 1.82%  8.18%  4.71%  5.34% -61.4% 53.2%
Efficiency ratio 75.40%  66.54%  76.04%  72.65% -0.8% -8.4%
Diluted earnings per share$0.39  $1.60  $0.98  $1.08  -60.2% 48.1%
                      


     
  As of December 31, As of December 31,
   2017   2016 
  (Dollars in thousands, except per share data)
Asset Quality:    
Non-performing loans $4,778  $6,041 
Real estate owned $2,568  $4,226 
Non-performing assets $7,346  $10,267 
Non-performing loans to total loans  0.48%  0.81%
Non-performing assets to total assets  0.47%  0.79%
Net charge-offs (12 months ended) $315  $430 
Allowance for loan losses to non-performing loans  227.86%  154.03%
Allowance for loan losses to total loans  1.08%  1.25%
     
Other Data:    
Book value per share $22.00  $20.57 
Tangible book value per share $18.72  $20.10 
Closing market price per share $29.25  $20.60 
Closing price-to-tangible book value ratio  156.25%  102.49%
Equity to assets ratio  9.59%  10.29%
Tangible common equity to tangible assets ratio  8.29%  10.08%
         

Management Commentary

Roger D. Plemens, President and CEO of the Company, reported, “The acquisitions we have completed over the last several years continue to reap benefits for our shareholders, achieving significant improvements in profitability and efficiency.  We have been particularly focused on reaching a return on tangible equity of at least 8% in 2017, a benchmark which we surpassed in the fourth quarter on a core basis.  As we look forward to the remainder of 2018 and beyond, we will continue to focus on organic and acquired growth opportunities allowing a return on tangible equity to 10% and greater, while further improving our efficiency ratio.  With a tangible common equity to tangible assets ratio of 8.29% at December 31, 2017, we will also continue to consider opportunities to supplement our existing capital base.”

Net Interest Income

Net interest income increased $3.5 million, or 37.6%, to $12.7 million for the three months ended December 31, 2017 compared to $9.2 million for the same period in 2016.   Net interest income increased $8.4 million, or 24.2%, to $42.8 million for the year ended December 31, 2017 compared to $34.5 million for the same period in 2016.  The increase in net interest income was primarily due to higher volumes in the loan and investment portfolios as well as an increase in the yields earned on cash and investments.  Net interest margin for the three months and year ended December 31, 2017 improved to 3.61% and 3.36%, respectively, compared to 3.25% and 3.28% for the same periods in 2016. The net interest margin for the three months ended December 31, 2017 includes approximately 15 basis points of loan fair value accretion income that is not expected to re-occur in the first quarter of 2018.

Provision for Loan Losses

The provision for loan losses was $0.7 million and $1.9 million for the quarter and year ended December 31, 2017, compared to $0.2 million and $0.3 million for the same periods in 2016. The increased provision for loan losses in 2017 was mainly attributable to loan growth.  The Company continues to experience modest levels of net charge-offs and non-performing loans.

Noninterest Income

Noninterest income decreased $0.9 million, or 48.4%, to $0.9 million for the three months ended December 31, 2017 compared to $1.8 million for the same period in 2016 primarily as the result of a decline in the gains on sale of investment securities. The Company sold approximately $45.0 million of tax exempt municipal securities in December 2017, realizing a loss of $1.1 million, in response to the Tax Cuts and Jobs Act of 2017.  Increases in mortgage banking, trading securities gains, service charges on deposit accounts, interchange fees, and bank-owned life insurance (BOLI) were partially offset by declines in servicing income and gains on sale of SBA loans.

Noninterest income decreased $1.9 million, or 24.1%, to $6.0 million for the year ended December 31, 2017 compared to $7.8 million for the same period in 2016. The decrease was primarily related to a decline in the gains on sale of investment securities discussed above as well as other than temporary impairment of $0.8 million realized on two investment securities.  Increases in mortgage banking, trading securities gains, service charges on deposit accounts, interchange fees, and BOLI were partially offset by declines in servicing income and gains on sale of SBA loans.

Noninterest Expense

Noninterest expense increased $3.3 million, or 43.2%, to $11.1 million for the three months ended December 31, 2017 compared to $7.8 million for the same period in 2016.  Noninterest expense increased $4.6 million, or 14.3%, to $36.8 million for the year ended December 31, 2017 compared to $32.2 million for the same period in 2016.  The increases were primarily related to increased compensation and employee benefits and net occupancy expenses as the 2017 periods included the full impact of the Oldtown Bank acquisition, the partial impact of the branches acquired from Stearns Bank, and the Chattahoochee Bank of Georgia (Chattahoochee) acquisition.  The 2017 periods also included increased merger-related expenses resulting from the Stearns Bank and Chattahoochee transactions.

Income Taxes

Income tax expense for the three months and year ended December 31, 2017 was $5.1 million and $7.5 million, respectively, compared to $0.7 million and $3.5 million for the comparable periods in the prior year.  Income tax expense for the 2017 periods was impacted by the recognition of $4.9 million of expense related to the revaluation of deferred tax assets and liabilities at the newly enacted Federal tax rate of 21%. The one-time tax, non-cash, expense related to the revaluation was partially offset during the three and twelve months ended December 31, 2017 by increased  tax-exempt income related to municipal bond investments and BOLI income.

Balance Sheet

Total assets increased $284.1 million, or 22.0%, to $1.58 billion at December 31, 2017 from $1.29 billion at December 31, 2016 as the Company continued to leverage its capital with organic and acquired growth.

Loans receivable increased $260.8 million, or 35.0%, to $1.0 billion at December 31, 2017 from $744.4 million at December 31, 2016.  Excluding $159.0 million of loans acquired from Chattahoochee, organic loan growth was approximately $101.8 million, or 13.7%, during 2017.  Loan growth continues to be primarily concentrated in commercial real estate and commercial and industrial loans. 

Core deposits increased $224.6 million, or 41.5%, to $765.4 million at December 31, 2017 from $540.8 million at December 31, 2016, including $79.6 million of core deposits assumed in the Stearns Bank branch acquisition and $105.2 million of core deposits assumed in the Chattahoochee acquisition.  Certificates of deposits increased $107.5 million, or 37.2%, to $396.7 million at December 31, 2017 from $289.2 million at December 31, 2016, primarily as the result of certificates of deposit assumed from Stearns Bank and Chattahoochee.  Core deposits increased slightly to 66% of the Company’s deposit portfolio at December 31, 2017 from 65% at December 31, 2016.

Total equity increased $18.2 million, or 13.7%, to $151.3 million at December 31, 2017 compared to $133.1 million at December 31, 2016. This increase was primarily attributable to the issuance of approximately 396,000 shares valued at $9.9 million related to the Chattahoochee acquisition, $2.6 million of net income, $0.9 million of stock-based compensation expense, and a $5.4 million after tax improvement in the market value of investment securities, partially offset by $0.5 million of share repurchases.  Tangible book value per share, a non-GAAP measure, decreased $1.38 from $20.10 at December 31, 2016 to $18.72 at December 31, 2017 as a result of dilution from the Stearns Bank branch and Chattahoochee acquisitions, partially offset by operating results for the period.

Asset Quality

Non-performing assets decreased $2.9 million to $7.3 million at December 31, 2017 from $10.3 million at December 31, 2016 primarily as a result of the liquidation of several large real estate owned balances during the period and the resolution of non-performing loans.   Net loan charge-offs continue to remain modest totaling $0.3 million for the year ended December 31, 2017.

Non-GAAP Financial Measures

Statements included in this press release include non-GAAP financial measures and should be read along with the accompanying tables in Appendix A, which provide a reconciliation of non-GAAP financial measures to GAAP financial measures. This press release and the accompanying tables discuss financial measures, such as core noninterest expense, core net income, core diluted earnings per share, core return on average assets, core return on tangible average equity, core efficiency ratio, tangible book value, tangible assets and tangible book value per share, which are 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. 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 trade on the NASDAQ Global Market under the symbol “ENFC”.

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

Disclosures About Forward-Looking Statements

The discussions included in this document and its exhibits may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. 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,” or other statements concerning opinions or judgments of the Company and its management about future events. 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; fluctuations in interest rates; actions of government regulators; the availability of capital and personnel; and general economic conditions. These forward looking statements express management’s current expectations, plans or forecasts of future events, results and condition, including financial and other estimates. Additional factors that could cause actual results to differ materially from those anticipated by forward looking statements are discussed in the Company’s filings with the Securities and Exchange Commission, including without limitation its annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. The Company undertakes no obligation to revise or update these statements following the date of this press release.

   
ENTEGRA FINANCIAL CORP. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Amounts in thousands, except per share data)
 
   
 Three Months Ended December 31, 
  2017   2016 
Interest income$14,908  $10,826 
Interest expense 2,226   1,607 
     
Net interest income 12,682   9,219 
     
Provision for loan losses 737   174 
     
Net interest income after provision for loan losses 11,945   9,045 
     
Servicing income, net 89   224 
Mortgage banking 347   157 
Gain on sale of SBA loans 110   186 
Gain (loss) on sale of investments (1,121)  111 
Trading securities gains 241   57 
Other than temporary impairment on available-for-sale securities (57)  - 
Service charges on deposit accounts 433   386 
Interchange fees 490   398 
Bank owned life insurance 200   178 
Other 199   109 
Total noninterest income 931   1,806 
     
Compensation and employee benefits 5,309   4,426 
Net occupancy 1,238   954 
Federal Home Loan Bank prepayment penalties -   118 
Federal deposit insurance 134   94 
Professional and advisory 308   246 
Data processing 469   397 
Marketing and advertising 226   259 
Net cost of  (income from ) operation of real estate owned 119   67 
Merger-related expenses 2,114   174 
Other 1,189   1,020 
Total noninterest expense 11,106   7,755 
     
Income before taxes 1,770   3,096 
     
Income tax expense 5,064   744 
     
Net income (loss)$(3,294) $2,352 
     
Earnings (loss) per common share:   
Basic$(0.48) $0.36 
Diluted$(0.48) $0.36 
     
Weighted average common shares outstanding:    
Basic 6,863   6,458 
Diluted 6,863   6,468 
     

  

  
ENTEGRA FINANCIAL CORP. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Amounts in thousands, except per share data)
  
 Year Ended December 31,
  2017   2016
Interest income$  50,529  $  40,520
Interest expense   7,684     6,032
    
Net interest income   42,845     34,488
    
Provision for loan losses   1,897     274
    
Net interest income after provision for loan losses   40,948     34,214
    
Servicing income, net   401     487
Mortgage banking   1,118     904
Gain on sale of SBA loans   546     928
Gain (loss) on sale of investments   (1,102)    1,216
Trading securities gains   686     328
Other than temporary impairment on available-for-sale securities   (757)    - 
Service charges on deposit accounts   1,672     1,537
Interchange fees   1,864     1,507
Bank owned life insurance   803     489
Other   726     450
Total noninterest income   5,957     7,846
    
Compensation and employee benefits   20,168     17,164
Net occupancy   4,089     3,534
Federal Home Loan Bank prepayment penalties   -      118
Federal deposit insurance   513     562
Professional and advisory   1,237     959
Data processing   1,684     1,554
Marketing and advertising   953     1,070
Net cost of operation of real estate owned   213     730
Merger-related expenses   3,086     2,197
Other   4,855     4,301
Total noninterest expense   36,798     32,189
    
Income before taxes   10,107     9,871
    
Income tax expense    7,528     3,495
    
Net income$  2,579  $  6,376
    
Earnings per common share:  
Basic$  0.39  $  0.98
Diluted$  0.39  $  0.98
    
Weighted average common shares outstanding:   
Basic   6,562     6,477
Diluted   6,659     6,490
    

  

    
ENTEGRA FINANCIAL CORP. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
    
  December 31, 2017   December 31, 2016 
  (Unaudited)   (Audited) 
Assets   
    
Cash and cash equivalents$109,467  $43,294 
Investments - trading 6,095   5,211 
Investments - available for sale 342,863   398,291 
Other investments 12,386   15,261 
Loans held for sale 3,845   4,584 
Loans receivable 1,005,139   744,361 
Allowance for loan losses (10,887)  (9,305)
Real estate owned 2,568   4,226 
Fixed assets, net 24,113   20,209 
Bank owned life insurance 32,150   31,347 
Net deferred tax asset 8,831   18,985 
Goodwill 18,235   2,065 
Core deposit intangibles, net 4,269   979 
Other assets 18,065   13,369 
    
Total assets$1,577,139  $1,292,877 
    
Liabilities and Shareholders' Equity   
    
Liabilities   
Core deposits$765,442  $540,808 
Certificates of deposit 396,735   289,205 
Federal Home Loan Bank advances 223,500   298,500 
Junior subordinated notes 14,433   14,433 
Post employment benefits 10,174   10,211 
Other liabilities 15,542   6,652 
Total liabilities$1,425,826  $1,159,809 
    
Total shareholders' equity 151,313   133,068 
    
Total liabilities and shareholders' equity$1,577,139  $1,292,877 
    

  

      
APPENDIX A – RECONCILIATION OF NON-GAAP MEASURES (UNAUDITED)
      
  Three Months Ended December 31, Year Ended December 31,
  2017   2016   2017   2016 
 (Dollars in thousands, except per share data)
        
Core Noninterest Expense       
Noninterest expense (GAAP)$11,106  $7,755  $36,798  $32,189 
FHLB prepayment penalty -   (118)  -   (118)
Merger-related expenses (2,114)  (174)  (3,086)  (2,197)
Core noninterest expense (Non-GAAP)$8,992  $7,463  $33,712  $29,874 
                 
Core Net Income       
Net income (loss) (GAAP)$(3,294) $2,352  $2,579  $6,376 
FHLB prepayment penalty -   77   -   77 
Loss (gain) on sale of investments 729   (72)  716   (790)
Other than temporary impairment of investment securities available for sale 37   -   492   - 
Merger-related expenses 1,374   113   2,006   1,428 
Deferred tax asset revaluation due to new enacted tax rate of 21% 4,854   -   4,854   - 
Core net income (Non-GAAP)$3,700  $2,470  $10,647  $7,091 
        
Core Diluted Earnings Per Share       
Diluted earnings (loss) per share (GAAP)$(0.48) $0.36  $0.39  $0.98 
FHLB prepayment penalty -   0.01   -   0.01 
Loss (gain) on sale of investments 0.11   (0.01)  0.11   (0.13)
Other than temporary impairment of investment securities available for sale 0.01   -   0.07   - 
Merger-related expenses 0.20   0.02   0.30   0.22 
Deferred tax asset revaluation due to new enacted tax rate of 21% 0.70   -   0.73   - 
Core diluted earnings per share (Non-GAAP)$0.54  $0.38  $1.60  $1.08 
        
Core Return on Average Assets       
Return on Average Assets (GAAP) -0.83%  0.75%  0.18%  0.55%
FHLB prepayment penalty -   0.02%  -   0.01%
Gain on sale of investments 0.18%  -0.02%  0.05%  -0.07%
Other than temporary impairment of investment securities available for sale 0.01%  -   0.03%  - 
Merger-related expenses 0.35%  0.04%  0.14%  0.12%
Deferred tax asset revaluation due to new enacted tax rate of 21% 1.23%  -   0.35%  - 
Core Return on Average Assets (Non-GAAP) 0.94%  0.79%  0.75%  0.61%
        
Core Return on Tangible Average Equity      
Return on Average Equity (GAAP) -8.59%  6.91%  1.82%  4.71%
FHLB prepayment penalty -   0.23%  -   0.06%
Loss (gain) on sale of investments 1.90%  -0.21%  0.50%  -0.58%
Other than temporary impairment of investment securities available for sale 0.10%  -   0.35%  - 
Merger-related expenses 3.58%  0.33%  1.41%  1.05%
Deferred tax asset revaluation due to new enacted tax rate of 21% 12.66%  -   3.42%  - 
Effect of goodwill and intangibles 1.72%  0.17%  0.68%  0.10%
Core Return on Average Tangible Equity (Non-GAAP) 11.37%  7.43%  8.18%  5.34%
        
Core Efficiency Ratio       
Efficiency ratio (GAAP) 81.58%  70.34%  75.40%  76.04%
FHLB prepayment penalty -   -1.07%  -   -0.28%
Gain (loss) on sale of investments -6.21%  0.69%  -2.21%  2.08%
Other than temporary impairment of investment securities available for sale -0.34%  -   -1.53%  - 
Merger-related expenses -14.24%  -1.58%  -5.12%  -5.19%
Core Efficiency Ratio (Non-GAAP) 60.79%  68.38%  66.54%  72.65%
        
       
 As Of
        
 December 31, 2017
 December 31, 2016
        
 (Dollars in thousands, except share data)
        
Tangible Book Value Per Share               
Book Value (GAAP)$151,313  $133,068         
Goodwill and intangibles (22,504)  (3,044)        
Book Value (Tangible)$128,809  $130,024         
Outstanding shares 6,879,191   6,467,550         
Tangible Book Value Per Share$18.72  $20.10         
                

 

   
APPENDIX B – TAX EQUIVALENT NET INTEREST MARGIN ANALYSIS (UNAUDITED)
   
  For the Three Months Ended December 31,
   2017   2016 
  Average
Outstanding
Balance
 Interest Yield/ Rate Average
Outstanding
Balance
 Interest Yield/ Rate
  (Dollars in thousands)
Interest-earning assets:            
Loans, including loans held for sale $974,576  $12,026 4.90% $723,120  $8,439 4.63%
Loans, tax exempt (1)  16,062   146 3.61%  15,487   146 3.74%
Investments - taxable  260,057   1,658 2.55%  272,278   1,454 2.14%
Investment tax exempt (1)  119,806   1,186 3.96%  100,658   968 3.85%
Interest earning deposits  62,161   217 1.38%  48,355   58 0.48%
Other investments, at cost  12,395   141 4.51%  12,960   151 4.62%
             
Total interest-earning assets  1,445,057   15,374 4.22%  1,172,858   11,216 3.79%
             
Noninterest-earning assets  133,631       88,682     
             
Total assets $1,578,688      $1,261,540     
             
Interest-bearing liabilities:            
Savings accounts $50,480  $15 0.12% $38,641  $11 0.11%
Time deposits  404,542   835 0.82%  295,387   716 0.96%
Money market accounts  314,617   318 0.40%  245,358   223 0.36%
Interest bearing transaction accounts  202,976   79 0.15%  118,976   33 0.11%
Total interest bearing deposits  972,615   1,247 0.51%  698,362   983 0.56%
             
FHLB advances  223,717   730 1.28%  254,043   454 0.71%
Junior subordinated debentures  14,433   139 3.77%  14,433   138 3.79%
Other borrowings  8,726   110 5.00%  2,653   31 4.64%
             
Total interest-bearing liabilities  1,219,491   2,226 0.72%  969,491   1,606 0.66%
             
Noninterest-bearing deposits  190,182       141,418     
             
Other non interest bearing liabilities  15,650       14,543     
             
Total liabilities  1,425,323       1,125,452     
Total equity  153,365       136,088     
             
Total liabilities and equity $1,578,688      $1,261,540     
             
             
Tax-equivalent net interest income   $13,148     $9,609  
             
             
Net interest-earning assets (2) $225,566      $203,367     
             
Average interest-earning assets to interest-bearing liabilities  1.18%      1.21%    
             
Tax-equivalent net interest rate spread (3)    3.50%     3.14%
Tax-equivalent net interest margin (4)     3.61%     3.25%
             
(1) Tax exempt loans and investments are calculated giving effect to a 35% federal tax rate.
(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 Year Ended December 31,
   2017   2016 
  Average
Outstanding
Balance
 Interest Yield/ Rate Average
Outstanding
Balance
 Interest Yield/ Rate
  (Dollars in thousands)
Interest-earning assets:            
Loans, including loans held for sale $818,431  $38,712 4.73% $693,743  $32,324 4.66%
Loans, tax exempt (1)  15,945   585 3.67%  13,516   518 3.83%
Investments - taxable  290,839   7,025 2.42%  259,036   5,628 2.17%
Investment tax exempt (1)  118,461   4,795 4.05%  60,685   2,323 3.83%
Interest earning deposits  73,149   676 0.92%  41,762   210 0.50%
Other investments, at cost  13,379   619 4.63%  10,351   511 4.92%
             
Total interest-earning assets  1,330,204   52,412 3.94%  1,079,093   41,515 3.84%
             
Noninterest-earning assets  94,209       85,126     
             
Total assets  1,424,413         1,164,219     
             
Interest-bearing liabilities:            
Savings accounts $47,754  $53 0.11% $37,470  $49 0.13%
Time deposits  363,285   3,171 0.87%  296,456   2,985 1.00%
Money market accounts  270,036   1,022 0.38%  227,838   770 0.34%
Interest bearing transaction accounts  170,366   228 0.13%  112,805   160 0.14%
Total interest bearing deposits  851,441   4,474 0.53%  674,569   3,964 0.59%
             
FHLB advances  236,308   2,443 1.03%  194,662   1,419 0.73%
Junior subordinated debentures  14,433   557 3.86%  14,433   532 3.68%
Other borrowings  4,567   210 4.60%  2,528   117 4.62%
             
Total interest-bearing liabilities 1,106,749   7,684 0.69%  886,192   6,032 0.68%
             
Noninterest-bearing deposits  161,006       129,219     
             
Other non interest bearing liabilities  14,568       13,353     
             
Total liabilities  1,282,323       1,028,764     
Total equity  142,090       135,455     
             
Total liabilities and equity $1,424,413        $1,164,219     
             
             
Tax-equivalent net interest income   $44,728     $35,483  
             
             
Net interest-earning assets (2) $223,455      $192,901     
             
Average interest-earning assets to interest-bearing liabilities  120.19%      121.77%    
             
Tax-equivalent net interest rate spread (3)  3.25%     3.16%
Tax-equivalent net interest margin (4)     3.36%     3.28%
             
(1) Tax exempt loans and investments are calculated giving effect to a 35% federal tax rate.
(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.
 

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