TINTON FALLS, N.J., Oct. 24, 2017 (GLOBE NEWSWIRE) -- Two River Bancorp (Nasdaq:TRCB) (the "Company"), the parent company of Two River Community Bank ("the Bank"), today reported a 25.5% and 18.6% increase in net income for the three and nine months ended September 30, 2017, respectively, excluding the effect of a Bank Owned Life Insurance ("BOLI") death benefit received during the prior year's third quarter. 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 Third Quarter Operating and Financial Highlights (all comparisons to the same prior year's quarter unless otherwise noted)
  • Net income was $2.24 million, or $0.26 per diluted share, compared to $2.64 million, or $0.31 per diluted share.• The 2016 quarter included in net income a tax-free BOLI death benefit of $862,000, or $0.10 per diluted share. Excluding the BOLI death benefit, net income increased 25.5%. The receipt of this benefit affected several 2016 quarterly and year-to-date metrics.
  • Net interest income increased 12.7% to $8.42 million.
  • Non-interest income decreased 26.7% to $1.45 million, as a result of the BOLI benefit. Mortgage banking revenues increased 13.3% while gains on the sale of SBA loans increased 163.8%.
  • Net interest margin improved to 3.62% from 3.55%, largely due to both higher asset yields and core checking deposits.
  • Tangible book value per share was $10.46 at September 30, 2017, compared to $9.88 at December 31, 2016 and $9.63 at September 30, 2016.
  • Total assets at September 30, 2017 were $1.0 billion, compared to $940.2 million at December 31, 2016.
  • Total loans as of September 30, 2017 were $816.1 million, up 8.4% from $753.1 million at December 31, 2016. 
  • Total deposits as of September 30, 2017 were $821.9 million, up 5.8% from $776.6 million at December 31, 2016. 

Management Commentary William D. Moss, President and CEO, stated, "The Company posted another strong performance during the third quarter, highlighted by linked quarter improvement in all key metrics along with solid growth in loans and deposits. Excluding the BOLI benefit of $0.10 per share in the prior year's quarter, earnings showed considerable growth, increasing to $0.26 from $0.21 in the prior year. Our earnings improvement was driven by high quality loan growth and fee income contributions from both our SBA and mortgage business lines. Loan growth of 11.2% annualized from year-end 2016 was tempered by two residential portfolio adjustable rate mortgage loan sales completed earlier this year, which totaled $8.2 million."

Mr. Moss continued, "The Bank closed and consolidated two branches into a new and more visible location in Sea Girt, NJ at the end of the third quarter, which was a continuation of the Company's strategic plan to maximize the profitability of our branch network. We expect annual pre-tax expense savings of $300,000 from this initiative while expecting this new location to provide better opportunity for growth. We also have continued to see solid increases in deposits, largely as a result of new municipal relationships, and have a number of initiatives in place to gain higher levels of deposits from existing customers."

Dividend Information On October 18, 2017, the Company's Board of Directors declared a quarterly cash dividend of $0.045 per share, payable on November 29, 2017 to shareholders of record as of the close of business on November 8, 2017. This marks the 19 th consecutive quarterly cash dividend, which is in addition to the 5% stock dividend paid in February 2017. 

Key Quarterly Performance Metrics
    3 rd Qtr. 2 nd Qtr. 1 st Qtr. 4 th Qtr. 3 rd Qtr. 9 Mo.Ended 9 Mo.Ended
  2017 2017   2017   2016   2016 9/30/2017 9/30/2016
Net Income (in thousands)   $ 2,237     $  2,128     $ 1,802   $ 2,567   $ 2,644   $ 6,167     $  6,064  
Earnings per Common Share - Diluted   $ 0.26     $  0.25     $ 0.21   $ 0.30   $ 0.31   $ 0.71     $  0.71  
Return on Average Assets     0.89 %     0.87 %     0.76 %   1.08 %   1.16 %   0.84 %     0.91 %
Return on Average Tangible Assets (1)     0.91 %     0.88 %     0.77 %   1.10 %   1.19 %   0.86 %     0.93 %
Return on Average Equity     8.39 %     8.26 %     7.18 %   10.25 %   10.81 %   7.96 %     8.48 %
Return on Average Tangible Equity (1)     10.13 %     10.01 %     8.74 %   12.53 %   13.29 %   9.64 %     10.46 %
Net Interest Margin     3.62 %     3.49 %     3.45 %   3.43 %   3.55 %   3.52 %     3.56 %
Non-Performing Assets to Total Assets     0.23 %     0.32 %     0.18 %   0.19 %   0.20 %   0.23 %     0.20 %
Allowance as a % of Loans     1.25 %     1.25 %     1.25 %   1.27 %   1.25 %   1.25 %     1.25 %
 
  (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 September 30, 2017 and December 31, 2016 are as follows:  
     
    (in thousands)
    September 30, 2017     December 31,2016  
Commercial and industrial   $   99,601     $   93,697  
Real estate - construction     118,553       111,914  
Real estate - commercial     507,507       460,685  
Real estate - residential     62,416       59,065  
Consumer     28,773       28,279  
Unearned fees     (772 )     (548 )
      816,078       753,092  
Allowance for loan losses     (10,223 )     (9,565 )
Net Loans   $   805,855     $   743,527  

Deposit Composition The components of the Company's deposits at September 30, 2017 and December 31, 2016 are as follows:  
     
    (in thousands)
    September 30, 2017     December 31,  2016  
Non-interest-bearing   $   163,841     $   160,104  
NOW accounts     208,128       152,771  
Savings deposits     261,766       261,438  
Money market deposits     62,514       62,495  
Listed service CD's     38,971       47,648  
Time deposits / IRA     55,629       56,489  
Wholesale deposits     31,023       35,622  
  Total Deposits   $   821,872     $   776,567  

2017 Third Quarter Financial Review

Net Income Net income for the three months ended September 30, 2017 decreased 15.4% to $2.24 million, or $0.26 per diluted common share, compared to $2.64 million, or $0.31 per diluted common share, for the same period last year. The decrease was a result of the previously mentioned BOLI benefit received in the third quarter of 2016.  Excluding the BOLI benefit, net income increased 25.5%.

On a linked quarter basis, third quarter 2017 net income increased 5.1% from the second quarter of 2017. The second quarter included an income tax benefit related to the adoption of ASU 2016-09, Compensation - Stock Compensation, Improvements to Employee Share-Based Payment Accounting, that positively impacted net income by $145,000, or $0.02 per diluted share, as compared to a benefit of $32,000 in the current quarter. 

Net income for the nine months ended September 30, 2017 increased 1.7% to $6.17 million, or $0.71 per diluted share, compared to $6.06 million, or $0.71 per diluted share, in the same prior year period. Excluding the BOLI benefit, net income increased 18.6%.

Net Interest Income Net interest income for the quarter ended September 30, 2017 was $8.42 million, an increase of 12.7% compared to $7.47 million in the corresponding prior year period. This was largely due to an increase of $84.4 million, or 10.1%, in average interest-earning assets, primarily attributable to growth in the loan portfolio. On a linked quarter basis, net interest income increased $458,000, or 5.8%, from $7.96 million.

For the nine months ended September 30, 2017, net interest income increased 9.8% to $24.0 million from $21.9 million in the prior year period.

Net Interest Margin The Company reported a net interest margin of 3.62% for the third quarter of 2017, compared to 3.49% in the second quarter of 2017 and 3.55% reported for the third quarter of 2016. The net interest margin improvement from the second quarter of 2017 was the result of slightly higher yielding interest-earning assets coupled with a higher level of average core checking deposits.

The net interest margin for the first nine months of 2017 was 3.52%, compared to 3.56% in the prior year period.

Non-Interest Income Non-interest income for the quarter ended September 30, 2017 totaled $1.45 million, a decrease of $530,000, or 26.7%, compared to the same period in 2016. The decrease was the result of the previously mentioned BOLI benefit received in the third quarter of 2016. Residential mortgage banking revenue increased $42,000, or 13.3%, from the prior year period while gains from the sale of SBA loans increased $190,000. Additionally, service fees on deposit accounts increased by $70,000, or 45.5%, mainly due to a realignment of fees on various products.

On a linked quarter basis, non-interest income decreased by $85,000, or 5.5%, from the second quarter of 2017, which included an $86,000 gain from the sale of $3.6 million of portfolio adjustable rate mortgages compared to no such sale in the current quarter.

For the nine months ended September 30, 2017, non-interest income increased $74,000, or 1.8%, to $4.1 million from the same period in 2016.

Non-Interest Expense Non-interest expense for the quarter ended September 30, 2017 totaled $6.18 million, an increase of $836,000, or 15.7%, from the $5.34 million reported in same period in 2016, primarily due to salary and benefit increases along with a one-time $250,000 expense recovery settlement from an OREO property in the third quarter of 2016. On a linked quarter basis, non-interest expense increased $104,000, or 1.7%.

For the nine months ended September 30, 2017, non-interest expense increased $1.91 million, or 11.8%, to $18.0 million compared to the same prior year period.

Provision for Loan Losses During the quarter, a provision for loan losses of $255,000 was expensed, compared to $470,000 in the same prior year period. The majority of the third quarter 2017 provision was to support the strong loan growth. The Company had $15,000 in net loan recoveries during the quarter, compared to $436,000 in net loan charge-offs during the same period last year. For the nine months ended September 30, 2017, a provision of $855,000 was expensed, compared to $860,000 for the same prior year period. The Company had $197,000 of net loan charge-offs during the first nine months of 2017, compared to $121,000 in net loan charge-offs in the same prior year period.

As of September 30, 2017, the Company's allowance for loan losses was $10.22 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 September 30, 2017 compared to 1.27% at December 31, 2016.

Financial Condition / Balance Sheet

At September 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 9.07%, its common equity Tier 1 to risk weighted assets ratio was 10.09%, its Tier 1 capital to risk weighted assets ratio was 10.09%, and its total capital to risk weighted assets ratio was 12.39%.

Total assets as of September 30, 2017 were $1.0 billion, an increase of 6.4% compared to $940.2 million as of December 31, 2016.

Total loans as of September 30, 2017 were $816.1 million, an increase of 8.4% compared to $753.1 million at December 31, 2016.

Total deposits as of September 30, 2017 were $821.9 million, an increase of 5.8% compared to $776.6 million as of December 31, 2016. Core checking deposits at September 30, 2017 increased to $372.0 million, up $59.1 million, or 18.9% from year-end. This growth was primarily driven by a new municipal relationship in the first nine months of 2017 along with the Company's focus on building core checking account deposit relationships.

Asset Quality The Company's non-performing assets at September 30, 2017 were $2.35 million as compared to $1.81 million at December 31, 2016 and $1.85 million at September 30, 2016. Non-performing assets to total assets at September 30, 2017 were 0.23% compared to 0.19% at December 31, 2016 and 0.20% at September 30, 2016.

Non-accrual loans were $2.35 million at September 30, 2017, compared to $1.55 million at December 31, 2016 and $1.59 million at September 30, 2016.  During the second quarter, three relationships migrated to non-accrual status. These relationships were previously identified as TDRs or exhibited negative financial trends which management had identified. During the third quarter of 2017, one non-accrual loan totaling $548,000 paid off and $75,000 of recaptured interest and legal costs associated with that loan were received.  There was no OREO at September 30, 2017, compared to $259,000 at both December 31, 2016 and September 30, 2016 as the one OREO property was sold for a loss of $17,000 during the current quarter.

Troubled debt restructured loan balances amounted to $8.05 million at September 30, 2017, with all but $1.13 million performing. This compares to $8.23 million at December 31, 2016 and $8.52 million at September 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 14 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.

Investor Contact:Adam Prior, Senior Vice PresidentThe Equity Group Inc.Phone: (212) 836-9606E-mail: aprior@equityny.com

Media Contact:Adam Cadmus, Marketing DirectorPhone: (732) 982-2167Email: acadmus@tworiverbank.com

TWO RIVER BANCORP
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the Three Months and Nine Months Ended September 30, 2017 and 2016
     (in thousands, except per share data)
 
    Three Months Ended September 30,   Nine Months Ended September 30,    
      2017       2016     2017       2016  
INTEREST INCOME:                      
Loans, including fees   $   9,227     $   8,337   $   26,363     $   24,335  
Securities:                      
 Taxable     247       187     715       571  
 Tax-exempt     267       234     831       664  
Interest-bearing deposits     83       19     257       84  
Total Interest Income     9,824       8,777     28,166       25,654  
INTEREST EXPENSE:                      
Deposits     1,069       972     3,170       2,800  
Securities sold under agreements to repurchase     18       15     50       44  
Federal Home Loan Bank ("FHLB") and other borrowings     157       157     449       452  
Subordinated debt     164       164     493       492  
Total Interest Expense     1,408       1,308     4,162       3,788  
Net Interest Income     8,416       7,469     24,004       21,866  
PROVISION FOR LOAN LOSSES     255       470     855       860  
Net Interest Income after Provision for Loan Losses     8,161       6,999     23,149       21,006  
NON-INTEREST INCOME:                      
Service fees on deposit accounts     224       154     535       427  
Mortgage banking     358       316     1,258       831  
Other loan fees     188       188     402       311  
Earnings from investment in bank owned life insurance     137       118     411       337  
Death benefit on bank owned life insurance     -       862     -       862  
Gain on sale of SBA loans     306       116     817       575  
Net gain on sale of securities     -       -     -       72  
Other income     240       229     693       627  
Total Non-Interest Income     1,453       1,983     4,116       4,042  
NON-INTEREST EXPENSES:                      
Salaries and employee benefits     3,641       3,309     10,554       9,609  
Occupancy and equipment     1,112       1,056     3,215       3,084  
Professional     366       273     1,102       888  
Insurance     57       56     158       160  
FDIC insurance and assessments     123       114     354       324  
Advertising     110       85     345       315  
Data processing     151       135     406       405  
Outside services fees     120       131     347       369  
Amortization of identifiable intangibles     -       -     -       9  
OREO expenses, impairment and sales, net     25       (245 )   44       (271 )
Loan workout expenses     8       44     174       142  
Other operating     462       381     1,324       1,081  
Total Non-Interest Expenses     6,175       5,339     18,023       16,115  
Income before Income Taxes     3,439       3,643     9,242       8,933  
INCOME TAX EXPENSE     1,202       999     3,075       2,869  
Net Income   $   2,237     $   2,644   $   6,167     $   6,064  
EARNINGS PER COMMON SHARE:                      
Basic   $   0.27     $   0.32   $   0.74     $   0.73  
Diluted   $   0.26     $   0.31   $   0.71     $   0.71  
Weighted average common shares outstanding:                      
Basic     8,393       8,323     8,373       8,319  
Diluted     8,656       8,537     8,647       8,515  

TWO RIVER BANCORP
CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands, except share data)
 
    September 30,   December 31,  
    2017   2016  
ASSETS              
  Cash and due from banks   $ 24,858   $ 19,844  
  Interest-bearing deposits in bank     21,445     22,233  
   Cash and cash equivalents     46,303     42,077  
               
  Securities available for sale     30,061     34,464  
  Securities held to maturity     57,058     57,843  
  Restricted investments, at cost     5,522     4,805  
  Loans held for sale     1,082     4,537  
  Loans     816,078     753,092  
  Allowance for loan losses     (10,223 )   (9,565 )
  Net loans     805,855     743,527  
               
 OREO     -     259  
 Bank owned life insurance     21,440     21,029  
 Premises and equipment, net     5,350     4,662  
 Accrued interest receivable     2,313     2,234  
 Goodwill     18,109     18,109  
 Other assets     7,152     6,665  
               
TOTAL ASSETS   $ 1,000,245   $ 940,211  
               
LIABILITIES              
  Deposits:              
Non-interest-bearing   $ 163,841   $ 160,104  
Interest-bearing     658,031     616,463  
Total Deposits     821,872     776,567  
               
  Securities sold under agreements to repurchase     22,576     19,915  
  FHLB and other borrowings     30,300     25,300  
  Subordinated debt     9,879     9,855  
  Accrued interest payable     114     100  
  Other liabilities     8,937     7,758  
               
Total Liabilities     893,678     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 -  8,766,577 and 8,677,536 at September 30, 2017 and December 31, 2016, respectively              
Outstanding -  8,454,483 and 8,365,442 at September 30, 2017 and December 31, 2016 respectively     79,576     79,056  
Retained earnings     29,580     24,447  
Treasury stock, at cost; 312,094 shares at September 30, 2017 and December 31, 2016     (2,396 )   (2,396 )
Accumulated other comprehensive loss     (193 )   (391 )
Total Shareholders' Equity     106,567     100,716  
               
TOTAL LIABILITIES and SHAREHOLDERS' EQUITY   $ 1,000,245   $ 940,211  

    

TWO RIVER BANCORP
Selected Consolidated Financial Data (Unaudited)
 
Selected Consolidated Earnings Data
(in thousands, except per share data)
 
 
     Three Months Ended   Nine Months Ended  
    Sept. 30,   June 30,   Sept. 30,   Sept. 30,   Sept 30,  
Selected Consolidated Earnings Data:     2017     2017     2016     2017     2016  
Total Interest Income   $   9,824   $   9,349   $   8,777   $   28,166   $   25,654  
Total Interest Expense     1,408     1,391     1,308     4,162     3,788  
Net Interest Income     8,416     7,958     7,469     24,004     21,866  
Provision for Loan Losses     255     375     470     855     860  
Net Interest Income after Provision for Loan Losses     8,161     7,583     6,999     23,149     21,006  
Other Non-Interest Income     1,453     1,538     1,983     4,116     4,042  
Other Non-Interest Expenses     6,175     6,071     5,339     18,023     16,115  
Income before Income Taxes     3,439     3,050     3,643     9,242     8,933  
Income Tax Expense     1,202     922     999     3,075     2,869  
Net Income   $   2,237   $   2,128   $   2,644   $   6,167   $   6,064  
                       
Per Common Share Data:                      
Basic Earnings   $   0.27   $   0.25   $   0.32   $   0.74   $   0.73  
Diluted Earnings   $    0.26   $   0.25   $   0.31   $   0.71   $   0.71  
Book Value   $   12.60   $   12.40   $   11.80   $   12.60   $   11.80  
Tangible Book Value (1)   $    10.46   $    10.25   $   9.63   $   10.46   $   9.63  
Average Common Shares Outstanding (in thousands):                      
Basic     8,393     8,372     8,322     8,373     8,319  
Diluted     8,656     8,654     8,538     8,647     8,514  

(1) Non-GAAP Financial Information. See "Reconciliation of Non-GAAP Financial Measures" at end of release.

Selected Period End Balances

(in thousands)
    Sept. 30,   June 30,   March 31,   Dec. 31,   Sept. 30,    
      2017     2017     2017     2016     2016    
Total Assets   $   1,000,245   $   983,099   $    967,073   $   940,211   $   909,170    
Investment Securities and Restricted Stock     92,641     92,634     94,850     97,112     82,677    
Total Loans     816,078     794,908     762,687     753,092     753,982    
Allowance for Loan Losses     (10,223 )   (9,953 )   (9,567 )   (9,565 )   (9,452 )  
Goodwill and Other Intangible Assets     18,109     18,109     18,109     18,109     18,109    
Total Deposits     821,872     810,725     799,705     776,567     739,247    
Repurchase Agreements     22,576     25,823     21,437     19,915     18,645    
FHLB and Other Borrowings     30,300     24,300     24,300     25,300     35,300    
Subordinated Debt     9,879     9,871     9,863     9,855     9,847    
Shareholders' Equity     106,567     104,524     102,406     100,716     98,594    
                         
Asset Quality Data (by Quarter)                        
(dollars in thousands)   Sept. 30,   June 30,   March 31,   Dec. 31,   Sept. 30,    
      2017     2017     2017     2016     2016    
Nonaccrual Loans   $   2,345   $   2,946   $   1,511   $   1,548   $   1,587    
OREO     -     233     259     259     259    
Total Non-Performing Assets     2,345     3,179     1,770     1,807     1,846    
                         
Troubled Debt Restructured Loans:                        
Performing     6,925     6,990     7,754     8,075     8,366    
Non-Performing     1,129     960     405     157     157    
                         
Non-Performing Loans to Total Loans     0.29 %   0.37 %   0.20 %   0.21 %   0.21 %  
Non-Performing Assets to Total Assets     0.23 %   0.32 %   0.18 %   0.19 %   0.20 %  
Allowance as a % of Loans     1.25 %   1.25 %   1.25 %   1.27 %   1.25 %  
                         

Capital Ratios
    September 30, 2017   December 31, 2016  
  CET 1Capital to RiskWeighted AssetsRatio   Tier 1 Capital to Average Assets Ratio   Tier 1 Capital to Risk Weighted AssetsRatio   Total Capital to RiskWeighted Assets Ratio   CET 1Capital to RiskWeighted AssetsRatio   Tier 1 Capital to AverageAssets Ratio   Tier 1 Capital to RiskWeighted AssetsRatio   Total Capital to RiskWeighted Assets Ratio  
                 
                 
Two River Bancorp 10.09 % 9.07 % 10.09 % 12.39 % 10.33% 8.94% 10.33 % 12.76 %
Two River Community Bank 11.11 % 10.00 % 11.11 % 12.27 % 11.49% 9.95% 11.49 % 12.68 %
"Well capitalized" institution(under prompt corrective actionregulations)* 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)   September 30, 2017   September 30, 2016
      Interest /IncomeExpense       Interest /IncomeExpense  
ASSETS   AverageBalance     AverageYield /Rate   AverageBalance     AverageYield /Rate
Interest-Earning Assets:            
Interest-bearing due from banks   $ 25,901   $ 83   1.27 %   $ 18,179   $ 19   0.42 %
Investment securities   92,257   514   2.23 %   83,541   421   2.02 %
Loans, net of unearned fees (1) (2)   803,553   9,227   4.56 %   735,626   8,337   4.51 %
                             
Total Interest-Earning Assets   921,711   9,824   4.23 %   837,346   8,777   4.17 %
                             
Non-Interest-Earning Assets:                            
Allowance for loan losses   (10,056 )           (9,519 )        
All other assets   83,244             75,277          
                             
Total Assets   $ 994,899               $ 903,104            
                             
LIABILITIES & SHAREHOLDERS' EQUITY                            
Interest-Bearing Liabilities:                            
NOW deposits   $ 200,298   239   0.47 %   $ 148,664   167   0.45 %
Savings deposits   260,919   340   0.52 %   228,862   281   0.49 %
Money market deposits   63,557   27   0.17 %   73,031   31   0.17 %
Time deposits   126,566   463   1.45 %   139,052   493   1.41 %
Securities sold under agreements to repurchase   23,167   18   0.31 %   18,995   15   0.31 %
FHLB and other borrowings   26,159   157   2.38 %   26,967   157   2.32 %
Subordinated debt   9,876   164   6.64 %   9,844   164   6.66 %
                             
Total Interest-Bearing Liabilities   710,542   1,408   0.79 %   645,415   1,308   0.81 %
                             
Non-Interest-Bearing Liabilities:                            
Demand deposits   170,267             153,274          
Other liabilities   8,351             7,144          
                             
Total Non-Interest-Bearing Liabilities   178,618             160,418          
                             
Stockholders' Equity   105,739             97,271          
                             
Total Liabilities and Shareholders' Equity   $ 994,899               $ 903,104            
                             
NET INTEREST INCOME       $ 8,416             $ 7,469      
                             
NET INTEREST SPREAD (3)           3.44 %           3.36 %
                             
NET INTEREST MARGIN (4)           3.62 %           3.55 %

(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

    Nine Months Ended   Nine Months Ended
(dollars in thousands)   September 30, 2017   September 30, 2016
      Interest /IncomeExpense       Interest /IncomeExpense  
ASSETS   AverageBalance     AverageYield /Rate   AverageBalance     AverageYield /Rate
Interest-Earning Assets:            
Interest-bearing due from banks   $ 34,824   $ 257   0.99 %   $ 22,411   $ 84   0.50 %
Investment securities   94,120   1,546   2.19 %   82,346   1,235   2.00 %
Loans, net of unearned fees (1) (2)   781,861   26,363   4.51 %   715,260   24,335   4.54 %
                             
Total Interest-Earning Assets   910,805   28,166   4.13 %   820,017   25,654   4.18 %
                             
Non-Interest-Earning Assets:                            
Allowance for loan losses   (9,801 )           (9,117 )        
All other assets   79,867             77,185          
                             
Total Assets   $ 980,871               $ 888,085            
                             
LIABILITIES & SHAREHOLDERS' EQUITY                            
Interest-Bearing Liabilities:                            
NOW deposits   $ 196,748   682   0.46 %   $ 151,299   491   0.43 %
Savings deposits   259,109   1,004   0.52 %   226,877   829   0.49 %
Money market deposits   63,029   80   0.17 %   73,869   91   0.16 %
Time deposits   131,380   1,404   1.43 %   131,325   1,389   1.41 %
Securities sold under agreements to repurchase   22,054   50   0.30 %   18,713   44   0.31 %
FHLB and other borrowings   24,976   449   2.40 %   24,985   452   2.42 %
Subordinated debt   9,868   493   6.68 %   9,836   492   6.67 %
                             
Total Interest-Bearing Liabilities   707,164   4,162   0.79 %   636,904   3,788   0.79 %
                             
Non-Interest-Bearing Liabilities:                            
Demand deposits   162,279             148,139          
Other liabilities   7,801             7,470          
                             
Total Non-Interest-Bearing Liabilities   170,080             155,609          
                             
Shareholders' Equity   103,627             95,572          
                             
Total Liabilities and Shareholders' Equity   $ 980,871               $ 888,085            
                             
NET INTEREST INCOME       $ 24,004             $ 21,866      
                             
NET INTEREST SPREAD (3)           3.34 %           3.39 %
                             
NET INTEREST MARGIN (4)           3.52 %           3.56 %

(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 theNine Months Ended  
    Sept. 30,   June 30,   March 31,   Dec. 31,   Sept. 30,   Sept. 30,   Sept. 30,  
    2017   2017   2017   2016   2016   2017   2016  
Total shareholders' equity   $ 106,567   $ 104,524   $ 102,406   $ 100,716   $ 98,594   $ 102,406   $ 98,594  
Less: goodwill and other tangibles     (18,109 )   (18,109 )   (18,109 )   (18,109 )   (18,109 )   (18,109 )   (18,109 )
Tangible common shareholders' equity   $ 88,458   $ 86,415   $ 84,297   $ 82,607   $ 80,485   $ 84,297   $ 80,485  
                                             
Common shares outstanding     8,454     8,429     8,389     8,365     8,358     8,454     8,358  
Book value per common share   $ 12.60   $ 12.40   $ 12.21   $ 12.04   $ 11.80   $ 12.60   $ 11.80  
                                             
Book value per common share   $ 12.60   $ 12.40   $ 12.21   $ 12.04   $ 11.80   $ 12.60   $ 11.80  
Effect of intangible assets     (2.14 )   (2.15 )   (2.16 )   (2.16 )   (2.17 )   (2.14 )   (2.17 )
Tangible book value per common share   $ 10.46   $ 10.25   $ 10.05   $ 9.88   $ 9.63   $ 10.46   $ 9.63  
                               
Return on average assets   0.89 % 0.87 % 0.76 % 1.08 % 1.16 % 0.84 % 0.91 %
Effect of average intangible assets   0.02 % 0.01 % 0.01 % 0.02 % 0.03 % 0.02 % 0.02 %
Return on average tangible assets   0.91 % 0.88 % 0.77 % 1.10 % 1.19 % 0.86 % 0.93 %
                               
Return on average equity   8.39 % 8.26 % 7.18 % 10.25 % 10.81 % 7.96 % 8.48 %
Effect of average intangible assets   1.74 % 1.75 % 1.56 % 2.28 % 2.48 % 1.68 % 1.98 %
Return on average tangible equity   10.13 % 10.01 % 8.74 % 12.53 % 13.29 % 9.64 % 10.46 %

 

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