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Press Release

Civista Bancshares, Inc. Announces Third Quarter 2018 Earnings

Company Release - 11/2/2018 8:34 AM ET

SANDUSKY, Ohio, Nov. 2, 2018 /PRNewswire/ -- Civista Bancshares, Inc. (NASDAQ: CIVB) ("Civista") reported net loss available to common shareholders of $3.6 million, or ($0.31) per diluted share, for the third quarter of 2018.  This compares to net income available to common shareholders of $3.4 million, or $0.29 per diluted share, for the prior year period. 

For the nine-month period ended September 30, 2018, Civista reported net income available to common shareholders of $5.8 million or $0.51 per diluted share.  This compares to $11.0 million or $0.97 per diluted share, in the same period of 2017.

"The third quarter of 2018 was a very busy quarter.  We closed on the acquisition of United Community Bancorp and completed the integration of their systems.  While those two items are big accomplishments by themselves, we also originated $36.7 million of loans.  With our organic growth and the acquisition, our loans are now over $1.5 billion.  Our annualized organic loan growth was 12.5% for the quarter," said Dennis G. Shaffer, President and CEO of Civista.

Factors Affecting Comparability

Most recently, Civista acquired United Community Bancorp ("UCB") in September 2018.  The financial position and results of operations of UCB prior to its acquisition date are not included in the Company's financial results for periods prior to the acquisition date.

Adjusted Earnings

Financial results for the third quarter and nine months ended September 30, 2018 included $8.8 million and $12.0 million respectively, in acquisition and integration expenses, as well as a loss on sale of securities of $392 thousand.  Excluding these expenses, adjusted earnings were $4.8 million, or $0.37 diluted earnings per share, for the third quarter of 2018 and $16.8 million, or $1.37 diluted earnings per share, for the nine months ended September 30, 2018.

A reconciliation of adjusted earnings to net income according to accounting principles generally accepted in the United States ("GAAP") is provided in the financial tables at the end of this press release.

Results of Operations:

Net interest income increased $2.1 million, or 15.7%, for the third quarter of 2018, and $5.4 million, or 13.6%, for the nine months ended September 30, compared to the same periods of 2017.  Interest income increased $3.1 million, or 20.6%, for the third quarter of 2018 and $7.2 million or 16.9% for the nine-month period ended September 30.  For both periods, an increase in average loans outstanding, as well as an increase in loan yields, contributed to the increase in interest income compared to 2017.  Interest expense increased $906 thousand, or 78.4 %, for the third quarter of 2018 and $1.8 million, or 63.6%, for the nine months ended September 30 compared to the same periods of 2017.  The increase in interest expense is due to both an increase in average balances and an increase in the cost of interest-bearing liabilities.  The tax equivalent net interest margin increased 7 basis points to 4.15% for the third quarter of 2018, compared to 4.08% for the same period a year ago and increased 21 basis points to 4.14% for the nine months ended September 30, 2018, compared to 3.93% for the same period a year ago. 

Mr. Shaffer continued, "We have been positioned for some time for an increase in interest rates.  We have seen the benefits through the increase in our net interest margin.  The addition of UCB provides core low-cost funding for the future."

 

Average Balance Analysis

(Unaudited - Dollars in thousands except share data)










Three Months Ended September 30,


2018


2017


Average


Yield/


Average


Yield/

Assets:

balance

Interest

rate *


balance

Interest

rate *

Interest-earning assets:








Loans

$   1,256,680

$ 15,833

5.00%


$   1,122,131

$ 13,022

4.60%

Taxable securities

145,621

1,042

2.81%


150,534

977

2.61%

Non-taxable securities

107,211

908

4.29%


93,022

812

5.44%

Interest-bearing deposits in other banks

24,527

103

1.67%


11,450

25

0.87%

Total interest-earning assets

$   1,534,039

17,886

4.69%


$   1,377,137

14,836

4.41%

Noninterest-earning assets:








Cash and due from financial institutions

22,399




24,652



Premises and equipment, net

18,219




18,000



Accrued interest receivable

5,120




4,460



Intangible assets

38,920




28,541



Other assets

16,929




10,352



Bank owned life insurance

28,452




24,889



Less allowance for loan losses

(13,303)




(12,988)



Total Asset

$   1,650,775




$   1,475,043











Liabilities and Shareholders Equity:








Interest-bearing liabilities:








Demand and savings

$      653,537

$      317

0.19%


$      594,088

$      160

0.11%

Time

163,236

466

1.13%


194,364

447

0.91%

FHLB advances

180,073

925

2.04%


85,840

276

1.28%

Federal funds purchased

-

-

0.00%


462

2

1.72%

Subordinated debentures

29,427

349

4.71%


29,427

268

3.61%

Repurchase Agreements

18,664

5

0.11%


14,328

3

0.08%

Total interest-bearing liabilities

$   1,044,937

2,062

0.78%


$      918,509

1,156

0.50%

Noninterest-bearing deposits

385,646




363,783



Other liabilities

14,591




12,826



Shareholders' Equity

205,601




179,925



Total Liabilities and Shareholders' Equity

$   1,650,775




$   1,475,043











Net interest income and interest rate spread

$ 15,824

3.91%



$ 13,680

3.91%









Net interest margin



4.15%




4.08%









* - Interest yields are calculated using a 21% tax-equivalent adjustment for 2018 and a 35% tax-equivalent adjustment for 2017

 

 

 

Average Balance Analysis

(Unaudited - Dollars in thousands except share data)










Nine Months Ended September 30,


2018


2017


Average


Yield/


Average


Yield/

Assets:

balance

Interest

rate *


balance

Interest

rate *

Interest-earning assets:








Loans

$   1,188,093

$ 43,615

4.91%


$   1,094,401

$ 37,211

4.55%

Taxable securities

144,036

3,069

2.83%


144,379

2,764

2.59%

Non-taxable securities

103,540

2,672

4.42%


86,713

2,307

5.56%

Interest-bearing deposits in other banks

53,566

614

1.53%


78,576

473

0.80%

Total interest-earning assets

$   1,489,235

49,970

4.55%


$   1,404,069

42,755

4.20%

Noninterest-earning assets:








Cash and due from financial institutions

49,330




53,487



Premises and equipment, net

17,836




18,084



Accrued interest receivable

4,947




4,446



Intangible assets

31,918




28,682



Other assets

14,539




10,164



Bank owned life insurance

26,327




24,747



Less allowance for loan losses

(13,127)




(13,156)



      Total Assets

$   1,621,005




$   1,530,523











Liabilities and Shareholders Equity:








Interest-bearing liabilities:








Demand and savings

$      628,610

$      819

0.17%


$      582,716

$      413

0.09%

Time

163,660

1,241

1.01%


181,931

1,087

0.80%

FHLB

108,239

1,560

1.93%


57,195

534

1.25%

Federal funds purchased

-

-

0.00%


156

2

1.71%

Subordinated debentures

29,427

975

4.43%


29,427

766

3.48%

Repurchase Agreements

17,871

13

0.10%


18,597

14

0.10%

Total interest-bearing liabilities

$      947,807

4,608

0.65%


$      870,022

2,816

0.43%

Noninterest-bearing deposits

465,448




478,137



Other liabilities

14,889




12,881



Shareholders' Equity

192,861




169,483



Total Liabilities and Shareholders' Equity

$   1,621,005




$   1,530,523











Net interest income and interest rate spread

$ 45,362

3.90%



$ 39,939

3.77%









Net interest margin



4.14%




3.93%


* - Interest yields are calculated using a 21% tax-equivalent adjustment for 2018 and a 35% tax-equivalent adjustment for 2017

 

Provision for loan losses was $390 thousand for the nine months ended September 30, 2018.  No provision was recorded during 2017. 

For the third quarter of 2018, noninterest income totaled $3.3 million, a decrease of $177 thousand, or 5.1%, compared to the prior year's third quarter.  Noninterest income for the first nine months of 2018 totaled $13.3 million, an increase of $589 thousand, or 4.6%, compared to the prior year's first nine months.     

 

Noninterest income








(dollars in thousands)

Three months ended
September 30,


Nine months ended
September 30,


2018


2017


2018


2017

Service charges

$    1,219


$    1,177


$    3,712


$    3,609

Net gain on sale of securities

(392)


(9)


(386)


(9)

Net gain on equity securities

27


-


102


-

Net gain on sale of loans

428


472


1,235


1,207

ATM/Interchange fees

622


567


1,764


1,643

Wealth management fees

873


787


2,561


2,233

Bank owned life insurance

147


142


432


429

Tax refund processing fees

-


-


2,750


2,750

Other

364


329


1,123


842

Total noninterest income

$    3,288


$    3,465


$  13,293


$  12,704

 

For the third quarter of 2018, we recorded a loss on securities sold of $392 thousand as a result of selling three securities to improve the structure and to gain future yield.  ATM/Interchange fees increased $55 thousand, or 9.7%, and $121 thousand, or 7.4%, for the third quarter and nine-month periods ended September 30, 2018 and 2017, primarily due to increased interchange income.  Wealth management fees increased $86 thousand, or 10.9%, and $328 thousand, or 14.7%, for the third quarter and nine-month period ended September 30, 2018 and 2017.  Assets under management totaled $468.2 million, representing an increase of $2.8 million in the third quarter of 2018 and $5.0 million, or 1.1%, since the end of the third quarter 2017.  Other noninterest income increased for the nine-month period due primarily to an increase in swap related income of $164 thousand.   

Mr. Shaffer continued, "During the third quarter we took a look at our investment portfolio and determined that by repositioning a couple of securities we could improve the structure of our portfolio as well as add yield.  In the short-term, that resulted in a $392 thousand loss.  In the long-term, this transaction should result in the pick-up of approximately 146 basis points in yield."

For the third quarter of 2018, noninterest expense totaled $22.2 million, an increase of $10.0 million, or 82.1%, compared to the prior year's third quarter.  Noninterest expense for the first nine months of 2018 increased $14.1 million, or 38.9%, when compared to the first nine months of 2017.

 

Noninterest expense








(dollars in thousands)

Three months ended
September 30,


Nine months ended
September 30,


2018


2017


2018


2017

Compensation expense

$  12,054


$    7,389


$  26,812


$  21,313

Net occupancy and equipment 

1,122


1,040


3,444


3,099

Contracted data processing

3,150


357


6,237


1,174

Taxes and assessments

472


370


1,419


1,181

Professional services

2,198


534


4,233


1,718

Amortization of intangible assets

26


158


85


483

Marketing

350


240


988


768

Other

2,784


2,079


7,070


6,481

Total noninterest expense

$  22,156


$  12,167


$  50,288


$  36,217

 

Compensation expense increased $4.6 million and $5.5 million for the three and nine-month periods ending September 30, 2018.  Both 2018 periods included $4.2 million of acquisition related expenses. The remaining increases were due to an increase in employee salaries and incentives of $388 thousand for the three months and $878 thousand for the nine months ended September 30, 2018 compared to last year.  Additionally, employee insurance increased $69 thousand for the three months and $284 thousand for the nine months ended September 30, 2018 compared to last year.  Net occupancy and equipment expense increased $82 thousand, or 7.9%, and $345 thousand, or 11.1%, for the three and nine-month periods ended September 30, 2018.  The increase for the nine-month period is primarily due to increases in grounds maintenance and utilities, as a result of the extended winter weather we experienced in our region.  Contracted data processing expenses increased $2.8 million and $5.1 million for the three and nine-month periods ended September 30, 2018, due to $2.8 million for three months and $5.3 million for nine months, incurred for data processing conversion expenses of UCB.  Professional services costs increased $1.7 million and $2.5 million for the three and nine-month periods ended September 30, 2018, respectively.  The increase includes $1.6 million and $2.3 million of legal and consulting expenses related to the UCB acquisition, respectively.    

The efficiency ratio was 84.7% for the nine months ended September 30, 2018 compared to 67.3% for the nine months ended September 30, 2017.  The increase in the efficiency ratio is due primarily to $12.0 million of expenses related to the merger with UCB, partially offset by an increase in net interest income.  Excluding the merger related expenses, the efficiency ratio was 64.2% for the nine months ended September 30, 2018.  Please see the non-GAAP reconciliation at the end of this document.      

Civista's effective income tax rate for the third quarter and nine-month period ended September 30, 2018 was 0.0% and 17.6%, respectively.    

Balance Sheet

Total assets increased $559.7 million, or 36.7%, from December 31, 2017 to September 30, 2018, primarily due to the acquisition of United Community Bancorp.     

End of period loan balances








(dollars in thousands)









September 30,


December 31,






2018


2017


$ Change


% Change

Commercial and Agriculture

$           169,686


$           152,473


$    17,213


11.3%

Commercial Real Estate:








Owner Occupied

203,087


164,099


38,988


23.8%

Non-owner Occupied

499,240


425,623


73,617


17.3%

Residential Real Estate

459,021


268,735


190,286


70.8%

Real Estate Construction

126,288


97,531


28,757


29.5%

Farm Real Estate

38,038


39,461


(1,423)


-3.6%

Consumer and Other

20,284


16,739


3,545


21.2%

Total Loans

$        1,515,644


$        1,164,661


$  350,983


30.1%

 

The acquisition of UCB contributed $298.9 million, or 85.2%, of the increase in the loan portfolio.  Organic loan growth during 2018 totaled $52.1 million with increases of $23.2 million in the Commercial Real Estate, $13.6 million in the Residential Real Estate and $17.4 million in the Real Estate Construction loan portfolios.   

Total deposits increased $372.8 million, or 30.9%, from December 31, 2017 to September 30, 2018.  The acquisition of UCB added $475.9 million in deposits.  Organic deposits decreased $103.1 million due to a shift from brokered deposits to borrowings. 

End of period deposit balances








(dollars in thousands)









September 30,


December 31,






2018


2017


$ Change


% Change

Noninterest-bearing demand

$             466,527


$             361,964


$    104,563


28.9%

Interest-bearing demand

261,248


183,680


77,568


42.2%

Savings and money market

572,589


404,690


167,899


41.5%

Time deposits

259,394


133,853


125,541


93.8%

Brokered deposits

17,997


120,736


(102,739)


-85.1%

Total Deposits

$         1,577,755


$         1,204,923


$    372,832


30.9%

 

The increase in noninterest-bearing demand is due to an increase in deposits from the acquisition of $112.8 million, which was partially offset by cash paid by the Company related to the UCB acquisition.  Interest-bearing demand deposits increased due to an $86.1 million increase related to the UCB acquisition.  Savings and money market deposits increased primarily due to a $148.5 million increase related to the UCB acquisition.  Time deposits would have decreased $3.1 million if not for the increase related to the UCB acquisition.  The decrease in brokered deposits was due to a shift in wholesale funding sources.      

Federal Home Loan Bank advances increased $73.2 million to $145.1 million at September 30, 2018, or 101.8%, from December 31, 2017, due to a short term shift in wholesale funding sources.

Total shareholders' equity increased $104.9 million, or 56.9%, from December 31, 2017 to September 30, 2018.  The acquisition of UCB resulted in the issuance of 4.3 million shares of stock totaling $104.7 million.  In addition, retained earnings increased $3.5 million, partially offset by a $4.1 million decrease in accumulated other comprehensive income.  During 2018, $6.5 million of preferred stock was converted to 896 thousand shares of common stock.  Since issuance in December 2013, approximately $12.3 million has been converted from preferred stock to common stock.    

Asset Quality

The Company recorded net charge-offs of $193 thousand for the nine months of 2018 compared to $359 thousand for the same period of 2017.    

Allowance for Loan Losses




(dollars in thousands)





September 30,


September 30,


2018


2017

Beginning of period

$         13,134


$         13,305

Charge-offs

(784)


(797)

Recoveries

591


438

Provision

390


-

End of period

$         13,331


$         12,946

 

The allowance for loan losses to loans was 0.88% for 2018 and 1.13% for 2017.  The non-performing assets to assets ratio decreased to 0.48% from 0.74% in 2017.  The allowance for loan losses to non-performing loans decreased to 132.86% from 168.36% in 2017.  The decreases in these ratios is primarily due to the UCB acquisition. 

Non-performing assets at September 30, 2018 were $10.0 million, a 5.0% increase from December 31, 2017. 

Non-performing Assets




(dollars in thousands)

September 30,


December 31,


2018


2017

Non-accrual loans

$          6,505


$          6,648

Restructured loans

3,529


2,888

Total non-performing loans

10,034


9,536

Other Real Estate Owned

-


16

Total non-performing assets

$        10,034


$          9,552

 

Conference Call and Webcast
Civista Bancshares, Inc. will also host a conference call to discuss the Company's financial results for the third quarter of 2018 at 1:00 p.m. ET on Friday, November 2, 2018.  Interested parties can access the live webcast of the conference call through the Investor Relations section of the Company's website, www.civb.com. Participants can also listen to the conference call by dialing 855-238-2712 and ask to be joined into the Civista Bancshares, Inc. Third Quarter 2018 Earnings call.  Please log in or dial in at least 10 minutes prior to the start time to ensure a connection.

An archive of the webcast will be available for one year on the Investor Relations section of the Company's website (www.civb.com).

Non-GAAP Financial Measures
Some of the financial measures included in this press release are not measures of financial performance recognized in accordance with GAAP.  These non-GAAP financial measures include "Adjusted Earnings," and "Adjusted Efficiency Ratio."  The Company believes these non-GAAP financial measures provide both management and investors a more complete understanding of the Company's profitability.  These non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP financial measures.  Not all companies use the same calculation of these measures; therefore, this presentation may not be comparable to other similarly titled measures as presented by other companies.

Forward Looking Statements
This press release may contain forward-looking statements regarding the financial performance, business prospects, growth and operating strategies of Civista.  For these statements, Civista claims the protections of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.   Statements in this press release should be considered in conjunction with the other information available about Civista, including the information in the filings we make with the Securities and Exchange Commission.  Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance.  The forward-looking statements are based on management's expectations and are subject to a number of risks and uncertainties.  We have tried, wherever possible, to identify such statements by using words such as "anticipate," "estimate," "project," "intend," "plan," "believe," "will" and similar expressions in connection with any discussion of future operating or financial performance. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements.  Risks and uncertainties that could cause actual results to differ materially include risk factors relating to the banking industry and the other factors detailed from time to time in Civista' reports filed with the Securities and Exchange Commission, including those described in "Item 1A Risk Factors" of Part I of Civista's Annual Report on Form 10-K for the fiscal year ended December 31, 2017.  Undue reliance should not be placed on the forward-looking statements, which speak only as of the date hereof.  Civista does not undertake, and specifically disclaims any obligation, to update any forward-looking statement to reflect the events or circumstances after the date on which the forward-looking statement is made, or reflect the occurrence of unanticipated events, except to the extent required by law.

Civista Bancshares, Inc. is a $2.1 billion financial holding company headquartered in Sandusky, Ohio.  The Company's banking subsidiary, Civista Bank, operates 38 locations in Northern, Central and Southwestern Ohio, Southeastern Indiana and Northern Kentucky.  Civista Bancshares, Inc. may be accessed at HUwww.civb.comUH.  The Company's common shares are traded on the NASDAQ Capital Market under the symbol "CIVB."  The Company's depositary shares, each representing a 1/40th ownership interest in a Series B Preferred Share, are traded on the NASDAQ Capital Market under the symbol "CIVBP."

 

   

Civista Bancshares, Inc.

 Financial Highlights

(dollars in thousands, except share amounts)


Consolidated Condensed Statement of Income










Three Months Ended


Nine Months Ended


September 30,


September 30,


(unaudited)


(unaudited)


2018


2017


2018


2017









Interest income

17,886


14,836


49,970


42,755

Interest expense

2,062


1,156


4,608


2,816

Net interest income

15,824


13,680


45,362


39,939

Provision for loan losses

390


-


390


-

Net interest income after provision

15,434


13,680


44,972


39,939

Noninterest income

3,288


3,465


13,293


12,704

Noninterest expense

22,156


12,167


50,288


36,217

Income (loss) before taxes

(3,434)


4,978


7,977


16,426

Income tax expense

(1)


1,318


1,407


4,534

Net income (loss)

(3,433)


3,660


6,570


11,892

Preferred stock dividends 

192


308


794


935

Net income (loss) available 








to common shareholders

(3,625)


3,352


5,776


10,957









Dividends per common share

$             0.09


$             0.06


$             0.25


$             0.18









Earnings (loss) per common share,








basic

$            (0.31)


$             0.33


$             0.54


$             1.12

diluted

$            (0.31)


$             0.29


$             0.51


$             0.97









Average shares outstanding,








basic

11,627,093


10,170,734


10,775,577


9,815,118

diluted

13,271,073


12,597,299


12,830,402


12,270,126









Selected financial ratios:








Return on average assets

-0.83%


0.98%


0.54%


1.04%

Return on average equity

-6.62%


8.07%


4.55%


9.38%

Dividend payout ratio

-30.48%


16.67%


41.00%


14.86%

Net interest margin (tax equivalent)

4.15%


4.08%


4.14%


3.93%

 

 

 Selected Balance Sheet Items 






 September 30, 


 December 31, 


2018


2017






 (unaudited) 


 (unaudited) 

 Cash and due from financial institutions 

$                  64,754


$                  40,519

 Investment securities 

318,112


231,062

 Loans held for sale 

4,025


2,197

 Loans 

1,515,644


1,164,661

 Less allowance for loan losses 

13,331


13,134

 Net loans 

1,502,313


1,151,527

 Other securities 

17,774


14,247

 Fixed assets 

22,518


17,611

 Goodwill and other intangibles 

85,964


28,374

 Bank owned life insurance 

42,750


25,125

 Other assets 

27,325


15,195

 Total assets 

$            2,085,535


$            1,525,857





 Total deposits 

$            1,577,755


$            1,204,923

 Federal Home Loan Bank advances 

145,100


71,900

 Securities sold under agreements to repurchase 

18,515


21,755

 Subordinated debentures 

29,427


29,427

 Accrued expenses and other liabilities 

25,350


13,391

 Total shareholders' equity 

289,388


184,461

 Total liabilities and shareholders' equity 

$            2,085,535


$            1,525,857





 Shares outstanding at period end 

15,395,064


10,198,475





 Book value per share 

$                    18.09


$                    16.39

 Equity to asset ratio 

13.88%


12.09%





Selected asset quality ratios:




Allowance for loan losses to total loans

0.88%


1.13%

Non-performing assets to total assets

0.48%


0.63%

Allowance for loan losses to non-performing loans

132.86%


137.73%





Non-performing asset analysis




Nonaccrual loans

$                    6,505


$                    6,648

Troubled debt restructurings

3,529


2,888

Other real estate owned

-


16

Total

$                  10,034


$                    9,552

 

 

Supplemental Financial Information

(Unaudited - Dollars in thousands except share data)












September 30,


June 30,


March 31,


December 31,


September 30,

End of Period Balances

2018


2018


2018


2017


2017











Assets










Cash and due from banks

$       64,754


$       41,156


$     118,970


$       40,519


$        33,394

Securities available for sale

318,112


231,013


234,915


231,062


229,419

Loans held for sale

4,025


4,058


2,379


2,197


4,662

Loans

1,515,644


1,180,032


1,153,758


1,164,661


1,141,992

Allowance for loan losses

(13,331)


(12,867)


(12,814)


(13,134)


(12,946)

Net Loans

1,502,313


1,167,165


1,140,944


1,151,527


1,129,046

Other securities

17,774


15,154


14,247


14,247


14,247

Fixed assets

22,518


17,308


17,424


17,611


17,688

Goodwill and other intangibles

85,964


28,342


28,354


28,374


28,455

Bank owned life insurance

42,750


25,411


25,267


25,125


24,981

Other assets

27,325


18,700


17,805


15,195


14,196

Total Assets

$  2,085,535


$  1,548,307


$  1,600,305


$  1,525,857


$  1,496,088











Liabilities










Total deposits

$  1,577,755


$  1,146,172


$  1,290,671


$  1,204,923


$  1,201,289

Federal Home Loan Bank advances

145,100


156,200


60,000


71,900


56,750

Securities sold under agreement to repurchase

18,515


14,230


17,452


21,755


15,148

Subordinated debentures

29,427


29,427


29,427


29,427


29,427

Accrued expenses and other liabilities

25,350


12,430


14,712


13,391


11,493

Total liabilities

1,796,147


1,358,459


1,412,262


1,341,396


1,314,107











Shareholders' Equity










Preferred shares, Series B

10,878


13,250


17,034


17,358


17,557

Common stock

265,324


158,191


154,170


153,810


153,562

Accumulated earnings

35,302


39,898


37,902


31,652


28,494

Treasury stock

(17,235)


(17,235)


(17,235)


(17,235)


(17,235)

Accumulated other comprehensive income (loss)

(4,881)


(4,256)


(3,828)


(1,124)


(397)

Total shareholders' equity

289,388


189,848


188,043


184,461


181,981











Total Liabilities and Shareholders' Equity

$  2,085,535


$  1,548,307


$  1,600,305


$  1,525,857


$  1,496,088











Quarterly Average Balances










Assets:










Earning assets

$  1,534,039


$  1,427,953


$  1,502,943


$  1,408,479


$  1,377,137

Securities

252,832


247,301


242,477


243,623


243,556

Loans

1,256,680


1,158,956


1,147,441


1,152,595


1,122,131

Liabilities and Shareholders' Equity










Total deposits

$  1,202,419


$  1,190,415


$  1,380,413


$  1,218,502


$  1,152,235

Interest-bearing deposits

816,773


756,289


803,604


849,423


788,452

Interest-bearing liabilities

228,164


149,433


87,467


91,515


130,057

Total shareholders' equity

205,601


188,330


184,432


182,495


179,925

 

 

Supplemental Financial Information

(Unaudited - Dollars in thousands except share data)












Three Months Ended


September 30,


June 30,


March 31,


December 31,


September 30,

Income statement

2018


2018


2018


2017


2017











Total interest income

$         17,886


$         16,160


$         15,924


$         15,839


$         14,836

Total interest expense

2,062


1,394


1,152


1,276


1,156

Net interest income

15,824


14,766


14,772


14,563


13,680

Provision for loan losses

390


-


-


-


-

Noninterest income

3,288


4,390


5,616


3,630


3,465

Noninterest expense

22,156


15,928


12,205


12,387


12,167

Income (loss) before taxes

(3,434)


3,228


8,183


5,806


4,978

Income tax expense

(1)


214


1,194


1,826


1,318

Net income (loss)

(3,433)


3,014


6,989


3,980


3,660

Preferred stock dividends

192


299


303


308


308

Net income (loss) available to 










common shareholders

$          (3,625)


$            2,715


$            6,686


$            3,672


$            3,352











Common shares dividend paid

$               971


$               719


$               714


$               712


$               610











Per share data




















Basic net income (loss) per common share

$            (0.31)


$              0.26


$              0.65


$              0.36


$              0.33

Diluted net income (loss) per common share

(0.31)


0.24


0.55


0.32


0.29

Dividends per common share

0.09


0.07


0.07


0.06


0.06

Average common shares outstanding - basic

11,627,093


10,470,839


10,213,264


10,179,079


10,170,734

Average common shares outstanding - diluted

13,271,073


12,615,336


12,597,394


12,597,396


12,597,299











Asset quality










Allowance for loan losses, beginning of period

$         12,867


$         12,814


$         13,134


$         12,946


$         13,047

Charge-offs

(133)


(226)


(425)


(145)


(309)

Recoveries

207


279


105


333


208

Provision

390


-


-


-


-

Allowance for loan losses, end of period

$         13,331


$         12,867


$         12,814


$         13,134


$         12,946











Ratios










Allowance to total loans

0.88%


1.09%


1.11%


1.13%


1.13%

Allowance to nonperforming assets

132.86%


168.36%


154.21%


137.50%


117.19%

Allowance to nonperforming loans

132.86%


168.36%


154.41%


137.73%


117.47%











Nonperforming assets










Nonperforming loans

$         10,034


$            7,642


$            8,298


$            9,536


$         11,021

Other real estate owned

-


-


11


16


27

Total nonperforming assets

$         10,034


$            7,642


$            8,309


$            9,552


$         11,048











Capital and liquidity










Tier 1 leverage ratio

15.37%


12.96%


11.82%


12.69%


12.74%

Tier 1 risk-based capital ratio

15.43%


15.71%


15.87%


15.45%


15.54%

Total risk-based capital ratio

16.29%


16.74%


16.92%


16.53%


16.63%

Tangible common equity ratio

9.70%


9.80%


9.12%


9.33%


9.31%

 

 

Reconciliation of Non-GAAP Financial Measures

(Unaudited - Dollars in thousands except share data)










Three Months
Ended


Three Months
Ended


Nine Months
Ended


Nine Months
Ended


September 30,


September 30,


September 30,


September 30,

Adjusted earnings

2018


2017


2018


2017









Income before taxes (GAAP)

(3,434)


4,978


7,977


16,426

Loss on sale of investment securities

(392)


-


(392)


-

Acquisition and integration expenses

8,801


-


11,952


-

Adjusted earnings, pretax

5,759


4,978


20,321


16,426

Adjusted income tax expense

821


1,318


2,897


4,534

Adjusted net income (Non-GAAP)

4,938


3,660


17,424


11,892

Preferred stock dividends

192


308


794


936

Adjusted net income available to 








common shareholders

$               4,746


$               3,352


$            16,630


$            10,956









Adjusted earnings per common share - basic

$                 0.41


$                 0.33


$                 1.54


$                 1.12

Adjusted earnings per common share - diluted

0.37


0.29


1.36


0.97

Average common shares outstanding - basic

11,627,093


10,170,734


10,775,577


9,815,118

Average common shares outstanding - diluted

13,271,073


12,597,299


12,830,402


12,270,126









Adjusted Efficiency ratio

















Nine Months
Ended


Nine Months
Ended






September 30,


September 30,






2018


2017













Noninterest expense (GAAP)

50,288


36,217





Acquisition and integration expense

(11,952)


-





Adjusted noninterest expense

38,336


36,217













Net interest income (GAAP)

45,362


39,939





Effect of tax-exempt income

712


1,187





Adjusted net interest income

46,074


41,126













Noninterest Income - GAAP

13,293


12,704





Loss(gain) on sales of investment securities, net

392


-





Adjusted Non-interest Income

13,685


12,704













Adjusted total revenue

59,759


53,830













Adjusted Efficiency ratio

64.2%


67.3%





 

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