TINTON FALLS, N.J., July 25, 2017 (GLOBE NEWSWIRE) -- Two River Bancorp (Nasdaq:TRCB) (the "Company"), the parent company of Two River Community Bank ("the Bank"), today reported financial results for the second quarter and six months ended June 30, 2017. All share and per share data for all referenced reporting periods have been adjusted for a 5% stock dividend paid on February 28, 2017.

2017 Second Quarter Operating and Financial Highlights (all comparisons to the same prior year's quarter unless otherwise noted)
  • Net income increased 23.2% to $2.13 million, or $0.25 per diluted share, from $1.73 million, or $0.20 per diluted share. The 2017 quarter included a benefit to income tax expense related to the adoption of ASU 2016-09, Compensation - Stock Compensation, Improvements to Employee Share-Based Payment Accounting, which increased net income by $145,000, or $0.02 per diluted share.
  • Non-interest income increased 31.9% to $1.54 million, as a result of a 68.7% increase in mortgage banking revenue, higher gains on the sale of SBA loans and other loan fees.
  • Return on average assets (ROAA) improved to 0.87%, compared to 0.78%.  
  • Return on average equity (ROAE) improved to 8.26%, compared to 7.28%.
  • Non-performing assets to total assets were 0.32% at June 30, 2017, an increase from 0.19% at December 31, 2016 and 0.22% at June 30, 2016.
  • Tangible book value per share was $10.25 at June 30, 2017, compared to $9.88 at December 31, 2016 and $9.34 at June 30, 2016.
  • Total assets at June 30, 2017 were $983.1 million, compared to $940.2 million at December 31, 2016.
  • Total loans as of June 30, 2017 were $794.9 million, up 5.6% from $753.1 million at December 31, 2016. 
  • Total deposits as of June 30, 2017 were $810.7 million, up 4.4% from $776.6 million at December 31, 2016. 

Management Commentary William D. Moss, President and CEO, stated, "The Company reported an excellent quarter highlighted by higher net income, loan and deposit growth, and success in increasing non-interest income. We have grown the loan portfolio by $41.8 million since year-end 2016, and will continue to benefit from a strong pipeline within our core markets of Monmouth, Middlesex, Union and Ocean Counties. The largest component continues to be CRE lending, which is expected to be a principal driver of revenues throughout the remainder of 2017. We are also seeing significant contributions from virtually all aspects of our business resulting in, among other things, additional non-interest income. Our mortgage banking business has experienced accelerating growth, which is evidence that our proactive approach in cultivating a vast network of referral sources and improving the Bank's brand recognition throughout our densely populated marketplace is working. The Company's gain on sales of SBA loans increased significantly on both a linked quarter and year-to-date basis, and this trend is expected to continue in the current quarter."

Mr. Moss concluded, "In keeping with our Strategic Plan, which includes optimizing the profitability of our branch network, the Company will be closing two branches and consolidating them into a new location, which will provide cost efficiency and greater market share potential. We expect to open a new branch in Sea Girt, along the Route 35 corridor in Monmouth County, and will integrate the operations of our Allaire office in Wall Township and our office in Manasquan into this branch in the third quarter of 2017. We anticipate annual pre-tax expense savings of approximately $300,000 beginning in the fourth quarter of 2017."

Dividend Increased to $0.045 per share On July 19, 2017, the Company's Board of Directors declared a quarterly cash dividend of $0.045 per share, payable on August 29, 2017 to shareholders of record as of the close of business on August 11, 2017. This marks the 18 th consecutive quarterly cash dividend and represents a 12.5% increase from the prior quarter, which is in addition to the 5% stock dividend paid in February 2017. 

Key Quarterly Performance Metrics
  2 nd Qtr. 1 st Qtr. 4 th Qtr. 3 rd Qtr. 2 nd Qtr. 6 Mo. Ended 6 Mo. Ended
  2017 2017   2016   2016   2016 6/30/2017 6/30/2016
Net Income (in thousands) $ 2,128   $ 1,802   $ 2,567   $ 2,644   $ 1,727   $ 3,930   $ 3,420  
Earnings per Common Share - Diluted $ 0.25   $ 0.21   $ 0.30   $ 0.31   $ 0.20   $ 0.45   $ 0.40  
Return on Average Assets   0.87 %   0.76 %   1.08 %   1.16 %   0.78 %   0.81 %   0.78 %
Return on Average Tangible Assets (1)   0.88 %   0.77 %   1.10 %   1.19 %   0.80 %   0.83 %   0.80 %
Return on Average Equity   8.26 %   7.18 %   10.25 %   10.81 %   7.28 %   7.73 %   7.26 %
Return on Average Tangible Equity (1)   10.01 %   8.74 %   12.53 %   13.29 %   8.98 %   9.39 %   8.98 %
Net Interest Margin   3.49 %   3.45 %   3.43 %   3.55 %   3.57 %   3.47 %   3.57 %
Non-Performing Assets to Total Assets   0.32 %   0.18 %   0.19 %   0.20 %   0.22 %   0.32 %   0.22 %
Allowance as a % of Loans   1.25 %   1.25 %   1.27 %   1.25 %   1.30 %   1.25 %   1.30 %
 
(1)  Non-GAAP Financial Information. See "Reconciliation of Non-GAAP Financial Measures" at end of release.

Loan Composition The components of the Company's loan portfolio at June 30, 2017 and December 31, 2016 are as follows:  
    (in thousands)
    June 30, 2017     December 31, 2016  
Commercial and industrial   $   99,688     $   93,697  
Real estate - construction     112,102       111,914  
Real estate - commercial     496,400       460,685  
Real estate - residential     59,624       59,065  
Consumer     27,828       28,279  
Unearned fees     (734 )     (548 )
      794,908       753,092  
Allowance for loan losses     (9,953 )     (9,565 )
Net Loans   $   784,955     $   743,527  

Deposit Composition The components of the Company's deposits at June 30, 2017 and December 31, 2016 are as follows:  
    (in thousands)
    June 30, 2017     December 31,  2016  
Non-interest-bearing   $   172,737     $   160,104  
NOW accounts     184,534       152,771  
Savings deposits     260,715       261,438  
Money market deposits     63,474       62,495  
Listed service CD's     41,949       47,648  
Time deposits / IRA     56,044       56,489  
Wholesale deposits     31,272       35,622  
Total Deposits   $   810,725     $   776,567  

2017 Second Quarter Financial Review

Net Income Net income for the three months ended June 30, 2017 increased 23.2% to $2.13 million, or $0.25 per diluted common share, compared to $1.73 million, or $0.20 per diluted common share, for the same period last year. The increase was largely due to both higher net interest income and non-interest income, coupled with a benefit to income tax expense related to the adoption of ASU 2016-09, Compensation - Stock Compensation, Improvements to Employee Share-Based Payment Accounting, which increased net income by $145,000, or $0.02 per diluted share.  On a linked quarter basis, second quarter 2017 net income increased 18.1% from the first quarter of 2017.

Net income for the six months ended June 30, 2017 increased 14.9% to $3.93 million, or $0.45 per diluted share, compared to $3.42 million, or $0.40 per diluted share, in the same prior year period.

Net Interest Income Net interest income for the quarter ended June 30, 2017 was $7.96 million, an increase of 9.5% compared to $7.27 million in the corresponding prior year period. This was largely due to an increase of $95.3 million, or 11.6%, in average interest-earning assets, primarily attributable to growth in the loan portfolio. On a linked quarter basis, net interest income increased $328,000, or 4.3%, from $7.63 million.

For the first half of 2017, net interest income increased 8.3% to $15.6 million from $14.4 million in the prior year period.

Net Interest Margin The Company reported a net interest margin of 3.49% for the second quarter of 2017, compared to 3.45% in the first quarter of 2017 and 3.57% reported for the second quarter of 2016. The net interest margin improvement from the first quarter of 2017 was the result of slightly higher yielding interest-earning assets coupled with a higher level of average non-interest-bearing demand deposits.

The net interest margin for the first half of 2017 was 3.47%, compared to 3.57% in the prior year period.

Non-Interest Income Non-interest income for the quarter ended June 30, 2017 totaled $1.54 million, an increase of $372,000, or 31.9%, compared to the same period in 2016. Residential mortgage banking revenue increased $193,000, or 68.7%, which included an $86,000 gain from the sale of $3.6 million of portfolio adjustable rate mortgages.  Additionally, higher gains from the sale of SBA loans and other loan fees, primarily due to higher loan prepayment fees, contributed to the increase.

On a linked quarter basis, non-interest income increased by $413,000, or 36.7%, from the first quarter of 2017, mainly due to higher gains on the sale of SBA loans, residential mortgage banking revenues, and other loan fees.

For the six months ended June 30, 2017, non-interest income increased $604,000, or 29.3%, to $2.7 million from the same period in 2016.

Non-Interest Expense Non-interest expense for the quarter ended June 30, 2017 totaled $6.07 million, an increase of $692,000, or 12.9%, from the $5.38 million reported in same period in 2016, primarily due to salary increases and higher loan workout expenses. On a linked quarter basis, non-interest expense increased $294,000, or 5.1%, largely due to higher loan workout expenses and other operating expenses.

For the six months ended June 30, 2017, non-interest expense increased $1.07 million, or 9.9%, to $11.8 million compared to the same prior year period.

Provision for Loan Losses During the quarter, a provision for loan losses of $375,000 was expensed, compared to $390,000 in the same prior year period. The majority of the second quarter 2017 provision was to support the Company's strong loan growth. The Company had $11,000 in net loan recoveries during the quarter, compared to $65,000 in net loan recoveries during the same period last year. For the first half of 2017, a provision of $600,000 was expensed, compared to $390,000 for the same prior year period. The Company had $212,000 of net loan charge-offs during the first half of 2017, compared to $315,000 in net loan recoveries in the same prior year period.

As of June 30, 2017, the Company's allowance for loan losses was $9.95 million, as compared to $9.57 million as of December 31, 2016. The loss allowance as a percentage of total loans was 1.25% at June 30, 2017 compared to 1.27% at December 31, 2016. 

Financial Condition / Balance Sheet

At June 30, 2017, the Company maintained capital ratios that were in excess of regulatory standards for well capitalized institutions. The Company's Tier 1 capital to average assets ratio was 8.95%, its common equity Tier 1 to risk weighted assets ratio was 10.08%, its Tier 1 capital to risk weighted assets ratio was 10.08%, and its total capital to risk weighted assets ratio was 12.40%.

Total assets as of June 30, 2017 were $983.1 million, an increase of 4.6% compared to $940.2 million as of December 31, 2016.

Total loans as of June 30, 2017 were $794.9 million, an increase of 5.6% compared to $753.1 million at December 31, 2016.

Total deposits as of June 30, 2017 were $810.7 million, an increase of 4.4% compared to $776.6 million as of December 31, 2016. Core checking deposits at June 30, 2017 increased to $357.3 million, up $44.4 million, or 14.2% from year-end. This growth was primarily driven by a new municipal relationship in the first half of 2017 and the Company's focus on building core checking account deposit relationships.

Asset Quality The Company's non-performing assets at June 30, 2017 were $3.18 million as compared to $1.81 million at December 31, 2016 and $1.96 million at June 30, 2016. Non-performing assets to total assets at June 30, 2017 were 0.32% compared to 0.19% at December 31, 2016 and 0.22% at June 30, 2016.

Non-accrual loans were $2.95 million at June 30, 2017, compared to $1.55 million at December 31, 2016 and $1.70 million at June 30, 2016.  During the quarter, three relationships migrated to non-accrual status.  These relationships were previously identified as TDRs or exhibited negative financial trends which management had identified. OREO decreased to $233,000 at June 30, 2017, compared to $259,000 at both December 31, 2016 and June 30, 2016 due to a $26,000 writedown taken during the current quarter. 

Troubled debt restructured loan balances amounted to $7.95 million at June 30, 2017, with all but $960,000 performing. This compared to $8.23 million at December 31, 2016 and $8.65 million at June 30, 2016.

About the CompanyTwo River Bancorp is the holding company for Two River Community Bank, which is headquartered in Tinton Falls, New Jersey. Two River Community Bank operates 15 branches along with two Loan Production Offices throughout Monmouth, Middlesex, Union, and Ocean Counties, New Jersey. More information about Two River Community Bank and Two River Bancorp is available at  www.tworiverbank.com.

The foregoing contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management's confidence and strategies and management's current views and expectations about new and existing programs and products, relationships, opportunities, technology and market conditions. These statements may be identified by such forward-looking terminology as "continue," "expect," "look," "believe," "anticipate," "may," "will," "should," "projects," "strategy" or similar statements. Actual results may differ materially from such forward-looking statements, and no reliance should be placed on any forward-looking statement. Factors that may cause results to differ materially from such forward-looking statements include, but are not limited to, unanticipated changes in the financial markets and the direction of interest rates; volatility in earnings due to certain financial assets and liabilities held at fair value; competition levels; loan and investment prepayments differing from our assumptions; insufficient allowance for credit losses; a higher level of loan charge-offs and delinquencies than anticipated; material adverse changes in our operations or earnings; a decline in the economy in our market areas; changes in relationships with major customers; changes in effective income tax rates; higher or lower cash flow levels than anticipated; inability to hire or retain qualified employees; a decline in the levels of deposits or loss of alternate funding sources; a decrease in loan origination volume or an inability to close loans currently in the pipeline; changes in laws and regulations; adoption, interpretation and implementation of accounting pronouncements; operational risks, including the risk of fraud by employees, customers or outsiders; and the inability to successfully implement or expand new lines of business or new products and services. For a list of other factors which would affect our results, see the Company's filings with the Securities and Exchange Commission, including those risk factors identified in the "Risk Factor" section and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2016. The statements in this press release are made as of the date of this press release, even if subsequently made available by the Company on its website or otherwise. The Company assumes no obligation for updating any such forward-looking statements at any time, except as required by law.

TWO RIVER BANCORP
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the Three Months and Six Months Ended June 30, 2017 and 2016
(in thousands, except per share data)
 
    Three Months Ended June 30,   Six Months Ended June 30,  
      2017       2016     2017       2016  
INTEREST INCOME:                      
Loans, including fees   $   8,733     $   8,085   $   17,136     $    15,998  
Securities:                      
Taxable     235       192     468       384  
Tax-exempt     279       230     564       430  
Interest-bearing deposits     102       32     174       65  
Total Interest Income     9,349       8,539     18,342       16,877  
INTEREST EXPENSE:                      
Deposits     1,063       945     2,101       1,828  
Securities sold under agreements to repurchase     17       15     32       29  
Federal Home Loan Bank ("FHLB") and other borrowings     147       147     292       295  
Subordinated debt     164       163     329       328  
Total Interest Expense     1,391       1,270     2,754       2,480  
Net Interest Income     7,958       7,269     15,588       14,397  
PROVISION FOR LOAN LOSSES     375       390     600       390  
Net Interest Income after Provision for Loan Losses     7,583       6,879     14,988       14,007  
NON-INTEREST INCOME:                      
Service fees on deposit accounts     161       137     311       273  
Mortgage banking     474       281     900       515  
Other loan fees     122       62     214       123  
Earnings from investment in bank owned life insurance     138       110     274       219  
Gain on sale of SBA loans     394       365     511       459  
Net gain on sale of securities     -       -     -       72  
Other income     249       211     453       398  
Total Non-Interest Income     1,538       1,166     2,663       2,059  
NON-INTEREST EXPENSES:                      
Salaries and employee benefits     3,460       3,195     6,913       6,300  
Occupancy and equipment     1,049       1,033     2,103       2,028  
Professional     395       280     736       615  
Insurance     53       57     101       104  
FDIC insurance and assessments     108       105     231       210  
Advertising     125       120     235       230  
Data processing     125       135     255       270  
Outside services fees     124       115     227       238  
Amortization of identifiable intangibles     -       -     -       9  
OREO expenses, impairment and sales, net     22       (45 )   19       (26 )
Loan workout expenses     139       18     166       98  
Other operating     471       366     862       700  
Total Non-Interest Expenses     6,071       5,379     11,848       10,776  
Income before Income Taxes     3,050       2,666     5,803       5,290  
INCOME TAX EXPENSE     922       939     1,873       1,870  
Net Income   $   2,128     $   1,727   $   3,930     $   3,420  
EARNINGS PER COMMON SHARE:                      
Basic   $   0.25     $   0.21   $   0.47     $   0.41  
Diluted   $   0.25     $   0.20   $   0.45     $   0.40  
Weighted average common shares outstanding:                      
Basic     8,372       8,323     8,363       8,319  
Diluted     8,654       8,516     8,642       8,506  

TWO RIVER BANCORP  
CONSOLIDATED BALANCE SHEETS (Unaudited)  
(in thousands, except share data)  
   
  June 30,   December 31,  
  2017   2016  
ASSETS            
Cash and due from banks $ 21,267   $ 19,844  
Interest-bearing deposits in bank   23,431     22,233  
Cash and cash equivalents   44,698     42,077  
             
Securities available for sale   31,598     34,464  
Securities held to maturity   55,750     57,843  
Restricted investments, at cost   5,286     4,805  
Loans held for sale   6,786     4,537  
Loans   794,908     753,092  
Allowance for loan losses   (9,953 )   (9,565 )
Net loans   784,955     743,527  
             
OREO   233     259  
Bank owned life insurance   21,303     21,029  
Premises and equipment, net   5,215     4,662  
Accrued interest receivable   2,337     2,234  
Goodwill   18,109     18,109  
Other assets   6,829     6,665  
             
  TOTAL ASSETS $ 983,099   $ 940,211  
             
LIABILITIES            
Deposits:            
Non-interest-bearing $ 172,737   $ 160,104  
Interest-bearing   637,988     616,463  
Total Deposits   810,725     776,567  
             
Securities sold under agreements to repurchase   25,823     19,915  
FHLB and other borrowings   24,300     25,300  
Subordinated debt   9,871     9,855  
Accrued interest payable   94     100  
Other liabilities   7,762     7,758  
             
Total Liabilities   878,575     839,495  
             
SHAREHOLDERS' EQUITY            
Preferred stock, no par value; 6,500,000 shares authorized, no shares issued and outstanding   -     -  
Common stock, no par value; 25,000,000 shares authorized;            
Issued -  8,740,865 and 8,677,536 at June 30, 2017 and December 31, 2016, respectively            
Outstanding -  8,428,771 and 8,365,442 at June 30, 2017 and December 31, 2016 respectively   79,394     79,056  
Retained earnings   27,722     24,447  
Treasury stock, at cost; 312,094 shares at June 30, 2017 and December 31, 2016   (2,396 )   (2,396 )
Accumulated other comprehensive loss   (196 )   (391 )
Total Shareholders' Equity   104,524     100,716  
             
TOTAL LIABILITIES and SHAREHOLDERS' EQUITY $ 983,099   $ 940,211  

    

TWO RIVER BANCORP  
Selected Consolidated Financial Data (Unaudited)  
   
Selected Consolidated Earnings Data  
(in thousands, except per share data)  
   
   Three Months Ended   Six Months Ended  
  June 30,   March 31,   June 30,   June 30,   June 30,  
Selected Consolidated Earnings Data:   2017     2017     2016     2017     2016  
Total Interest Income $   9,349   $   8,993   $   8,539   $   18,342   $   16,877  
Total Interest Expense   1,391     1,363     1,270     2,754     2,480  
Net Interest Income   7,958     7,630     7,269     15,588     14,397  
Provision for Loan Losses   375     225     390     600     390  
Net Interest Income after Provision for Loan Losses   7,583     7,405     6,879     14,988     14,007  
Other Non-Interest Income   1,538     1,125     1,166     2,663     2,059  
Other Non-Interest Expenses   6,071     5,777     5,379     11,848     10,776  
Income before Income Taxes   3,050     2,753     2,666     5,803     5,290  
Income Tax Expense   922     951     939     1,873     1,870  
Net Income $   2,128   $   1,802   $   1,727   $   3,930   $   3,420  
                     
Per Common Share Data:                    
Basic Earnings $   0.25   $   0.22   $   0.21   $   0.47   $   0.41  
Diluted Earnings $   0.25   $   0.21   $   0.20   $   0.45   $   0.40  
Book Value $   12.40   $   12.21   $   11.51   $   12.40   $   11.51  
Tangible Book Value (1) $    10.25   $    10.05   $   9.34   $   10.25   $   9.34  
Average Common Shares Outstanding (in thousands):                    
Basic   8,372     8,341     8,323     8,363     8,319  
Diluted   8,654     8,618     8,516     8,642     8,506  
                               
(1) Non-GAAP Financial Information. See "Reconciliation of Non-GAAP Financial Measures" at end of release.

Selected Period End Balances
(in thousands)
 
  June 30,   March 31,   Dec. 31,   Sept. 30,   June 30,  
    2017     2017     2016     2016     2016  
Total Assets $    983,099   $   967,073   $   940,211   $   909,170   $   884,700  
Investment Securities and Restricted Stock   92,634     94,850     97,112     82,677     84,246  
Total Loans   794,908     762,687     753,092     753,982     726,414  
Allowance for Loan Losses   (9,953 )   (9,567 )   (9,565 )   (9,452 )   (9,418 )
Goodwill and Other Intangible Assets   18,109     18,109     18,109     18,109     18,109  
Total Deposits   810,725     799,705     776,567     739,247     726,264  
Repurchase Agreements   25,823     21,437     19,915     18,645     21,683  
FHLB and Other Borrowings   24,300     24,300     25,300     35,300     23,800  
Subordinated Debt   9,871     9,863     9,855     9,847     9,839  
Shareholders' Equity   104,524     102,406     100,716     98,594     96,293  

Asset Quality Data (by Quarter)
(dollars in thousands)
 
  June 30,   March 31,   Dec. 31,   Sept. 30,   June 30,    
    2017     2017     2016     2016     2016    
Nonaccrual Loans $   2,946   $   1,511   $   1,548   $   1,587   $   1,697    
OREO   233     259     259     259     259    
Total Non-Performing Assets   3,179     1,770     1,807     1,846     1,956    
                       
Troubled Debt Restructured Loans:                      
Performing   6,990     7,754     8,075     8,366     8,492    
Non-Performing   960     405     157     157     158    
                       
Non-Performing Loans to Total Loans   0.37 %   0.20 %   0.21 %   0.21 %   0.23 %  
Non-Performing Assets to Total Assets   0.32 %   0.18 %   0.19 %   0.20 %   0.22 %  
Allowance as a % of Loans   1.25 %   1.25 %   1.27 %   1.25 %   1.30 %  

Capital Ratios  
   
  June 30, 2017   December 31, 2016
  CET 1 Capital to Risk Weighted Assets Ratio   Tier 1 Capital to Average Assets Ratio   Tier 1 Capital to Risk Weighted Assets Ratio   Total Capital to Risk Weighted Assets Ratio     CET 1 Capital to Risk Weighted Assets Ratio   Tier 1 Capital to Average Assets Ratio   Tier 1 Capital to Risk Weighted Assets Ratio   Total Capital to Risk Weighted Assets Ratio  
Two River Bancorp 10.08 % 8.95 % 10.08 % 12.40 %   10.33 % 8.94 % 10.33 % 12.76 %
Two River Community Bank 11.14 % 9.90 % 11.14 % 12.30 %   11.49 % 9.95 % 11.49 % 12.68 %
"Well capitalized" institution (under prompt corrective action regulations.)* 6.50 % 5.00 % 8.00 % 10.00 %   6.50 % 5.00 % 8.00 % 10.00 %
                                 
*Applies to Bank only.  For the Company to be "well capitalized," the Tier 1 Capital to Risk Weighted Assets has to be at least 6.00%.

Consolidated Average Balance Sheets & Yields
With Resultant Interest and Average Rates
 
  Three Months Ended   Three Months Ended
(dollars in thousands) June 30, 2017   June 30, 2016
    Interest / Income Expense       Interest / Income Expense  
ASSETS Average Balance     Average Yield / Rate   Average Balance     Average Yield / Rate
Interest-Earning Assets:          
Interest-bearing due from banks $ 40,442   $ 102   1.01 %   $ 19,378   $ 32   0.66 %
Investment securities 94,123   514   2.18 %   84,308   422   2.00 %
Loans, net of unearned fees (1) (2) 779,508   8,733   4.49 %   715,114   8,085   4.55 %
                           
Total Interest-Earning Assets 914,073   9,349   4.10 %   818,800   8,539   4.19 %
                           
Non-Interest-Earning Assets:                          
Allowance for loan losses (9,698 )           (9,031 )        
All other assets 80,633             79,644          
                           
Total Assets $ 985,008               $ 889,413            
                           
LIABILITIES & SHAREHOLDERS' EQUITY                          
Interest-Bearing Liabilities:                          
NOW deposits $ 197,949   231   0.47 %   $ 154,633   173   0.45 %
Savings deposits 259,860   336   0.52 %   226,545   275   0.49 %
Money market deposits 63,841   26   0.16 %   74,726   30   0.16 %
Time deposits 131,209   470   1.44 %   131,407   467   1.43 %
Securities sold under agreements to repurchase 23,577   17   0.29 %   19,440   15   0.31 %
FHLB and other borrowings 24,303   147   2.43 %   23,800   147   2.48 %
Subordinated debt 9,868   164   6.65 %   9,836   163   6.63 %
                           
Total Interest-Bearing Liabilities 710,607   1,391   0.79 %   640,387   1,270   0.80 %
                           
Non-Interest-Bearing Liabilities:                          
Demand deposits 163,198             146,667          
Other liabilities 7,854             6,901          
                           
Total Non-Interest-Bearing Liabilities 171,052             153,568          
                           
Stockholders' Equity 103,349             95,458          
                           
Total Liabilities and Shareholders' Equity $ 985,008               $ 889,413            
                           
NET INTEREST INCOME     $ 7,958             $ 7,269      
                           
NET INTEREST SPREAD (3)         3.31 %           3.39 %
                           
NET INTEREST MARGIN (4)         3.49 %           3.57 %
                           
(1) Included in interest income on loans are loan fees.
(2) Includes non-performing loans.
(3) The interest rate spread is the difference between the weighted average yield on average interest-earning and the weighted average cost of average interest-bearing liabilities.
(4) The interest rate margin is calculated by dividing annualized net interest income by average interest earning assets.

Consolidated Average Balance Sheets & Yields
With Resultant Interest and Average Rates
 
  Six Months Ended   Six Months Ended
(dollars in thousands) June 30, 2017   June 30, 2016
    Interest / Income Expense       Interest / Income Expense  
ASSETS Average Balance     Average Yield / Rate   Average Balance     Average Yield / Rate
Interest-Earning Assets:          
Interest-bearing due from banks $ 39,359   $ 174   0.89 %   $ 24,550   $ 65   0.53 %
Investment securities 95,072   1,032   2.17 %   81,738   814   1.99 %
Loans, net of unearned fees (1) (2) 770,860   17,136   4.48 %   704,964   15,998   4.56 %
                           
Total Interest-Earning Assets 905,291   18,342   4.09 %   811,252   16,877   4.18 %
                           
Non-Interest-Earning Assets:                          
Allowance for loan losses (9,671 )           (8,913 )        
All other assets 78,119             77,860          
                           
Total Assets $ 973,739               $ 880,199            
                           
LIABILITIES & SHAREHOLDERS' EQUITY                          
Interest-Bearing Liabilities:                          
NOW deposits $ 194,943   443   0.46 %   $ 152,631   324   0.43 %
Savings deposits 258,189   663   0.52 %   225,871   548   0.49 %
Money market deposits 62,760   52   0.17 %   74,293   60   0.16 %
Time deposits 133,827   943   1.42 %   127,420   896   1.41 %
Securities sold under agreements to repurchase 21,488   32   0.30 %   18,570   29   0.31 %
FHLB and other borrowings 24,374   292   2.42 %   23,983   295   2.47 %
Subordinated debt 9,864   329   6.67 %   9,832   328   6.67 %
                           
Total Interest-Bearing Liabilities 705,445   2,754   0.79 %   632,600   2,480   0.79 %
                           
Non-Interest-Bearing Liabilities:                          
Demand deposits 158,219             145,544          
Other liabilities 7,522             7,342          
                           
Total Non-Interest-Bearing Liabilities 165,741             152,886          
                           
Shareholders' Equity 102,553             94,713          
                           
Total Liabilities and Shareholders' Equity $ 973,739               $ 880,199            
                           
NET INTEREST INCOME     $ 15,588             $ 14,397      
                           
NET INTEREST SPREAD (3)         3.30 %           3.39 %
                           
NET INTEREST MARGIN (4)         3.47 %           3.57 %
 
(1) Included in interest income on loans are loan fees.
(2) Includes non-performing loans.
(3) The interest rate spread is the difference between the weighted average yield on average interest-earning and the weighted average cost of average interest-bearing liabilities.
(4) The interest rate margin is calculated by dividing annualized net interest income by average interest earning assets.

Reconciliation of Non-GAAP Financial Measures

The press release contains certain financial information determined by methods other than in accordance with generally accepted accounting policies in the United States (GAAP). These non-GAAP financial measures are "book value per common share," "tangible book value per common share," "return on average tangible assets," and "return on average tangible equity." This non-GAAP disclosure has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies. Our management uses these non-GAAP measures in its analysis of our performance because it believes these measures are material and will be used as a measure of our performance by investors.
(in thousands, except per share data)        
  As of and for the Three Months Ended   As of and for the Six Months Ended  
  June 30,   March 31,   Dec. 31,   Sept. 30,   June 30,   June 30,   June 30,  
  2017   2017   2016   2016   2016   2017   2016  
Total shareholders' equity $ 104,524   $ 102,406   $ 100,716   $ 98,594   $ 96,293   $ 104,524   $ 96,293  
Less: goodwill and other tangibles   (18,109 )   (18,109 )   (18,109 )   (18,109 )   (18,109 )   (18,109 )   (18,109 )
Tangible common shareholders' equity $ 86,415   $ 84,297   $ 82,607   $ 80,485   $ 78,184   $ 86,415   $ 78,184  
                                           
Common shares outstanding   8,429     8,389     8,365     8,358     8,366     8,429     8,366  
Book value per common share $ 12.40   $ 12.21   $ 12.04   $ 11.80   $ 11.51   $ 12.40   $ 11.51  
                                           
Book value per common share $ 12.40   $ 12.21   $ 12.04   $ 11.80   $ 11.51   $ 12.40   $ 11.51  
Effect of intangible assets   (2.15 )   (2.16 )   (2.16 )   (2.17 )   (2.17 )   (2.15 )   (2.17 )
Tangible book value per common share $ 10.25   $ 10.05   $ 9.88   $ 9.63   $ 9.34   $ 10.25   $ 9.34  
                             
Return on average assets 0.87 % 0.76 % 1.08 % 1.16 % 0.78 % 0.81 % 0.78 %
Effect of average intangible assets 0.01 % 0.01 % 0.02 % 0.03 % 0.02 % 0.02 % 0.02 %
Return on average tangible assets 0.88 % 0.77 % 1.10 % 1.19 % 0.80 % 0.83 % 0.80 %
                             
Return on average equity 8.26 % 7.18 % 10.25 % 10.81 % 7.28 % 7.73 % 7.26 %
Effect of average intangible assets 1.75 % 1.56 % 2.28 % 2.48 % 1.70 % 1.66 % 1.72 %
Return on average tangible equity 10.01 % 8.74 % 12.53 % 13.29 % 8.98 % 9.39 % 8.98 %

 
Investor Contact:Adam Prior, Senior Vice PresidentThe Equity Group Inc.Phone: (212) 836-9606E-mail: aprior@equityny.comMedia Contact:Adam Cadmus, Marketing DirectorPhone: (732) 982-2167Email: acadmus@tworiverbank.com

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