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CST: 25/03/2019 12:05:34   

County Bancorp, Inc. Announces Record Net Income of $14.3 Million for the Year 2018

42 Days ago

  Highlights

  • Net income of $2.8 million for the fourth quarter of 2018 and $14.3 million for the year 2018
  • Diluted earnings per share of $0.40 for the fourth quarter of 2018 and $2.04 for the year 2018
  • Book value per share of $21.48 as of December 31, 2018, an increase of $1.55, or 7.8%, since December 31, 2017
  • Gross loans serviced increased $20.7 million during the fourth quarter of 2018, an increase of 1.1%, and $119.4 million during the year 2018, an increase of 6.8%
  • Core deposit growth of $36.3 million during the fourth quarter of 2018, an increase of 5.1%, and $69.3 million during the year 2018, an increase of 10.1%

MANITOWOC, Wis., Feb. 11, 2019 (GLOBE NEWSWIRE) -- County Bancorp, Inc. (Nasdaq: ICBK), the holding company of Investors Community Bank (the “Bank”), an agricultural and commercial community bank headquartered in Manitowoc, Wisconsin, reported net income of $2.8 million, or $0.41 diluted earnings per share, for the fourth quarter of 2018, compared to net income of $3.5 million, or $0.50 diluted earnings per share, for the third quarter of 2018 and $2.1 million, or $0.30 diluted earnings per share, for the fourth quarter of 2017.  Net income for the year ended December 31, 2018 was $14.3 million, or $2.04 diluted earnings per share, compared to $10.4 million for the year ended December 31, 2017, or $1.49 diluted earnings per share, an increase of 36.7%.  This represents a return on average assets of 0.96% for the year ended December 31, 2018, compared to 0.80% for the year ended December 31, 2017.

“We are very pleased that we continue to produce solid year-over-year earnings, even with the challenges in the dairy sector,” stated Tim Schneider, President of County Bancorp, Inc. and CEO of the Bank. 

“With the dairy challenges and a flattening to inverted yield curve, we are going to take 2019 to manage our growth and work on the right side of our balance sheet.  We plan to reduce our overall credit exposure during the first half of 2019 and continue to focus on core deposit generation.  This will allow us to work aggressively to reduce our wholesale funding during 2019.  We anticipate another challenging year on the credit side with our classified assets continuing to increase.  We still believe that our classified asset levels are protected overall by the use of Farm Service Agency guarantees on many of our agricultural credits.”

Loans and Total Assets

Total assets at December 31, 2018 were $1.5 billion, an increase of $5.9 million, or 0.4%, and $123.8 million, or 8.9%, over total assets as of September 30, 2018 and December 31, 2017, respectively.  Total loans were $1.2 billion at December 31, 2018, which represents a $58.3 million, or 5.1%, increase over total loans at December 31, 2017.  Loan growth in the fourth quarter of 2018 was $4.4 million, an increase of 0.4%, from September 30, 2018.

In addition to on-balance sheet loan growth, participated loans that we continue to service totaled $661.3 million at December 31, 2018, which is an increase of $60.1 million, or 10.1%, over participated loans that we continued to service at December 31, 2017.  During the fourth quarter of 2018, participated loans that we continue to service increased $16.4 million, or 2.5%, over loans sold and serviced as of September 30, 2018.

Deposits

Total deposits at December 31, 2018 were $1.2 billion, an increase of $14.6 million, or 1.2%, and $113.3 million, or 10.2%, over total deposits as of September 30, 2018 and December 31, 2017, respectively.  Core deposit (demand deposits, money market accounts, and certificates of deposit) increased $69.3 million, or 10.1%, since December 31, 2017, and increased $36.3, or 5.1%, in the fourth quarter of 2018.  We continue to supplement our deposit needs with wholesale deposits, which include brokered deposits and national certificates of deposit.  Brokered deposits and national certificates of deposit at December 31, 2018 were $468.9 million, which was a decrease of $21.8 million, or 4.4%, from September 30, 2018, but was an increase of $43.9 million, or 10.3%, from December 31, 2017.

Due to our deposit growth in 2018, we have been able to decrease our FHLB borrowings by $13.0 million, or 12.7%, since September 30, 2018, and by $32.1 million, or 26.4%, since December 31, 2017. 

Net Interest Income and Margin

Net interest income improved to $10.7 million for the three months ended December 31, 2018, which was a $0.1 million, or 1.3%, and $0.5 million, or 5.5%, increase from the three months ended September 30, 2018 and the three months ended December 31, 2017, respectively, primarily due to growth in loans and securities available for sale.

For the year ended December 31, 2018, net interest income improved 8.0% to $42.0 million from $38.9 million for the year ended December 31, 2017.  The increase was primarily due to loan growth and purchases of securities available for sale, which was partially offset by interest expense on subordinated debt issued in 2018 and increased rates paid on deposit accounts.

Net interest margin was 2.91% for the three months ended December 31, 2018, which was an increase from 2.89% for the three months ended September 30, 2018, and a decrease from 3.06% for the three months ended December 31, 2017.  Despite asset yields improving over the linked quarter, only a slight improvement was realized in net interest margin due to continued increased deposits costs.  Year-over-year fourth quarter net interest margin decreased by fifteen basis points primarily due to interest expense related to the $30.0 million of junior subordinated debentures that were issued during the second quarter of 2018 and a forty-eight basis point increase in cost of funds, which was partially offset by a forty basis point improvement in loan yields.

For the year ended December 31, 2018, net interest margin decreased to 2.91% from 3.11% for the year ended December 31, 2017.  Yields on interest earning assets increased by 0.22% between the two years while the cost of interest bearing liabilities increased by 0.47% between the same periods. 

Non-Interest Income and Expense

Non-interest income for the three months ended December 31, 2018 increased by $0.2 million, or 7.6%, to $2.3 million compared to the three months ended September 30, 2018, primarily the result of increased loan servicing rights and fees related to increased volume in loans being serviced.

Non-interest income for the three months ended December 31, 2018 increased $0.3 million, or 16.3%, to $2.3 million compared to $2.0 million for the three months ended December 31, 2017.  For the year ended December 31, 2018, non-interest income increased $1.2 million, or 15.4%, to $8.8 million from the year ended December 31, 2017.  Both the quarterly and annual increases are directly related to increases in loan servicing fees which was the result of higher volumes of loans being serviced.

Non-interest expense for the three months ended December 31, 2018 increased by $0.5 million, or 7.3%, to $7.5 million compared to the three months ended September 30, 2018, and increased $0.4 million, or 5.2% compared to the three months ended December 31, 2017.  The increase was primarily due $0.7 million write-downs on two OREO properties, which was partially offset by a decrease in employee compensation in benefits related to a one-time employment contract payment of $0.2 million that took place in the third quarter.

For the year ended December 31, 2018, non-interest expense increased $2.3 million, or 8.8%, to $28.3 million compared to the year ended December 31, 2017.  The increase is primarily made up of a $1.3 million related to increases in employee compensation and benefits in connection with eight new positions, a $0.4 million increase in occupancy expenses related to relocating our corporate headquarters, and a $0.5 million increase in information processing related to technology investments and implementations made throughout 2018. 

The effective tax rate for the year ended December 31, 2018 was 26.2% compared to 42.8% for the year ended December 31, 2017.  The decline in effective tax rate resulted in a $2.7 million decrease in income tax expense year-over-year, and was the result of the tax reform that was enacted on December 22, 2017.

Asset Quality

Non-performing assets as a percent of total assets decreased to 1.94% at December 31, 2018, from 2.36% at September 30, 2018, but increased from 1.15% at December 31, 2017.  At December 31, 2018, non-performing assets were $29.6 million, down from $35.7 million at September 30, 2018, but up from $16.1 million at December 31, 2017.  During the fourth quarter of 2018, non-performing loans decreased $4.9 million due $1.2 million in charge-offs and $3.7 million in loan payments and collection of collateral.  During the fourth quarter, two OREO properties were written-down and one Farm Service Agency guarantee payment was received, resulting in a decrease of $1.7 million in OREO during the quarter ended December 31, 2018.  This decrease was partially offset by the inclusion of $0.4 million of Bank-owned property adjacent to our Stevens Point branch that is now considered classified as OREO due to the Bank’s five-year holding period.

Adverse classified asset ratio (a non-GAAP measure, as calculated on page 10) increased to 57.12% at December 31, 2018 from 51.89% and 51.57% at September 30, 2018 and December 31, 2017, respectively, as the result of the strained agricultural economy and the four-year sustained low prices of class III milk.

A provision for loan losses of $1.6 million was recorded for the three months ended December 31, 2018 compared to a provision of $0.9 million and $12 thousand for the three months ended September 30, 2018 and December 31, 2017, respectively.  The increased provision is directly related to an increase in historical loss history from the $1.2 million charge-offs that occurred during the fourth quarter.

For the year ended December 31, 2018, the provision for loan losses was $3.2 million compared to $2.3 million for the year ended December 31, 2017.  The increase in provision expense year-over-year was primarily the result of an increase of substandard loans totaling $37.7 million between December 31, 2017 and December 31, 2018.

Conference Call

County Bancorp, Inc. will host an earnings call on today, February 11, 2019, at 11:30 a.m., CST, conducted by Tim Schneider, President, and Glen L. Stiteley, CFO.  Shareholders, analysts, and other interested parties are invited to join the call via telephone by dialing (888) 317-6016 or visiting County Bancorp’s website at http://www.investorscommunitybank.com and then clicking on the link “Investor Relations.”  Investors should visit County Bancorp’s website or call in to the dial-in number set forth above at least 10 minutes prior to the scheduled start of the call.

A replay of the earnings call will be available until February 11, 2020, by visiting the County Bancorp’s website at http://www.investorscommunitybank.com and clicking on the link “Investor Relations.”

About County Bancorp, Inc.

County Bancorp, Inc., a Wisconsin corporation and registered bank holding company founded in May 1996, and our wholly-owned subsidiary Investors Community Bank, a Wisconsin-chartered bank, are headquartered in Manitowoc, Wisconsin.  The state of Wisconsin is often referred to as “America’s Dairyland,” and one of the niches we have developed is providing financial services to agricultural businesses statewide, with a primary focus on dairy-related lending.  We also serve business and retail customers throughout Wisconsin, with a focus on northeastern and central Wisconsin.  Our customers are served from our full-service locations in Manitowoc, Appleton, Green Bay, and Stevens Point and our loan production offices in Darlington, Eau Claire, Fond du Lac, and Sheboygan.

Forward-Looking Statements

This press release includes "forward-looking statements” within the meaning of such term in the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. We caution you that the forward-looking statements presented in this press release are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking information contained in this press release.  Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "plan," "seek," "will," "expect," "intend," "estimate," "anticipate," "believe" or "continue" or the negative thereof or variations thereon or similar terminology. Factors that may cause actual results to differ materially from those made or suggested by the forward-looking statements contained in this press release include those identified in County Bancorp, Inc.’s most recent annual report on Form 10-K and subsequent filings with the Securities and Exchange Commission.  Any forward-looking statements presented herein are made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

Investor Relations Contact
Glen L. Stiteley
EVP - CFO, Investors Community Bank
Phone: (920) 686-5658
Email: gstiteley@icbk.com     

County Bancorp, Inc.
Consolidated Financial Summary
(Unaudited)
  December
31,
2018
    September
30,
2018
    June 30,
2018
    March 31,
2018
    December
31,
2017
 
       
    (dollars in thousands, except per share data)  
Period-End Balance Sheet:                                        
  Assets                                        
  Cash and cash equivalents   $ 61,087     $ 49,996     $ 81,044     $ 90,676     $ 66,771  
  Securities available for sale, at fair value     195,945       190,185       187,505       141,360       126,030  
  Loans held for sale     2,949       13,770       11,468       6,407       6,575  
  Agricultural loans     724,508       714,310       702,426       698,106       686,430  
  Commercial loans     415,672       417,146       407,609       406,096       407,036  
  Multi-family real estate loans     62,321       66,403       65,713       54,514       49,133  
  Residential real estate loans     4,522       4,965       5,437       5,512       6,005  
  Installment and consumer other     272       113       339       297       347  
  Total loans     1,207,295       1,202,937       1,181,524       1,164,525       1,148,951  
  Allowance for loan losses     (16,505 )     (16,143 )     (15,129 )     (14,612 )     (13,247 )
  Net loans     1,190,790       1,186,794       1,166,395       1,149,913       1,135,704  
  Other assets     70,057       74,223       72,465       71,901       61,965  
  Total Assets   $ 1,520,828     $ 1,514,968     $ 1,518,877     $ 1,460,257     $ 1,397,045  
                                         
  Liabilities and Shareholders' Equity                                        
  Demand deposits   $ 121,436     $ 103,862     $ 95,459     $ 101,167     $ 125,584  
  NOW accounts and interest checking     51,779       46,811       51,674       48,212       51,613  
  Savings     5,770       6,616       6,833       6,189       6,751  
  Money market accounts     218,929       208,233       204,332       199,834       199,118  
  Time deposits     356,484       352,531       344,619       314,766       302,004  
  Brokered deposits     308,504       317,291       323,561       319,692       282,616  
  National time deposits     160,445       173,440       183,953       182,530       142,391  
  Total deposits     1,223,347       1,208,784       1,210,431       1,172,390       1,110,077  
  FHLB advances     89,400       102,400       108,200       120,500       121,500  
  Subordinated debentures     44,703       44,663       44,725       15,540       15,523  
  Other liabilities     11,293       11,134       9,439       9,013       8,959  
  Total Liabilities     1,368,743       1,366,981       1,372,795       1,317,443       1,256,059  
                                         
  Shareholders' equity     152,085       147,987       146,082       142,814       140,986  
  Total Liabilities and Shareholders'
  Equity
  $ 1,520,828     $ 1,514,968     $ 1,518,877     $ 1,460,257     $ 1,397,045  
                                         
Stock Price Information:                                        
  High - Quarter-to-date   $ 26.00     $ 28.20     $ 29.26     $ 33.76     $ 33.94  
  Low - Quarter-to-date   $ 17.37     $ 24.29     $ 25.72     $ 26.61     $ 27.77  
  Market price - Quarter-end   $ 17.37     $ 25.10     $ 27.50     $ 29.21     $ 29.76  
  Book value per share   $ 21.48     $ 20.91     $ 20.63     $ 20.17     $ 19.93  
  Tangible book value per share (1)   $ 20.65     $ 20.07     $ 19.77     $ 19.29     $ 19.04  
  Common shares outstanding     6,709,480       6,694,230       6,693,447       6,684,923       6,673,381  

(1) This is a non-GAAP financial measure.  A reconciliation to GAAP is included below.

    December
31,
2018
    September
30,
2018
    June 30,
2018
    March 31,
2018
    December
31,
2017
 
       
    (dollars in thousands)  
Loans by risk category:                                        
  Sound/Acceptable/Satisfactory/
  Low Satisfactory
  $ 908,172     $ 901,643     $ 896,509     $ 891,062     $ 873,801  
  Watch     171,670       171,890       186,399       185,179       183,022  
  Special Mention     6,566       11,036       4,783       5,636       8,902  
  Substandard Performing     65,501       61,851       46,751       45,261       50,224  
  Substandard Impaired     55,386       56,517       47,082       37,387       33,002  
  Total loans     1,207,295       1,202,937       1,181,524       1,164,525       1,148,951  
  Loan sold with servicing retained     661,257       644,879       628,435       611,358       600,666  
  Total loans and loans sold with
  servicing retained
  $ 1,868,552     $ 1,847,816     $ 1,809,959     $ 1,775,883     $ 1,749,617  
                                         
Non-Performing Assets:                                        
  Nonaccrual loans   $ 22,983     $ 27,881     $ 26,305     $ 17,746     $ 11,559  
  Other real estate owned (2)     6,568       7,851       8,607       8,982       4,565  
  Total non-performing assets   $ 29,551     $ 35,732     $ 34,912     $ 26,728     $ 16,124  
                                         
Performing TDRs not on nonaccrual   $ 18,258     $ 11,863     $ 11,173     $ 10,488     $ 9,019  
                                         
Non-performing assets as a % of total loans     2.45 %     2.97 %     2.95 %     2.30 %     1.40 %
Non-performing assets as a % of total assets     1.94 %     2.36 %     2.30 %     1.83 %     1.15 %
Adverse classified asset ratio (1)     57.12 %     51.89 %     47.34 %     53.44 %     51.57 %
Allowance for loan losses as a % of
  nonaccrual loans
    71.81 %     57.90 %     57.51 %     82.34 %     114.60 %
Allowance for loan losses as a % of total
  loans
    1.37 %     1.34 %     1.28 %     1.25 %     1.15 %
Net charge-offs (recoveries) quarter-to-date   $ 1,210     $ (21 )   $ 16     $ (1,268 )   $ 390  
Provision for loan loss quarter-to-date   $ 1,572     $ 993     $ 533     $ 97     $ 12  

(1)This is a non-GAAP financial measure.  A reconciliation to GAAP is included below.

(2)For the quarters ending December 31, 2017 through September 30, 2018, does not include $0.4 million of bank property transferred from premises and equipment, which is not considered a non-performing asset.  As of December 31, 2018, that bank property is considered classified due to the length of the holding period.

    For the Three Months Ended     For the Year Ended  
    December
31,
2018
    September
30,
2018
    June 30,
2018
    March 31,
2018
    December
31,
2017
    December
31,
2018
    December
31,
2017
 
       
    (dollars in thousands, except per share data)  
Selected Income Statement Data:                                                        
Interest and Dividend Income                                                        
Loans, including fees   $ 15,536     $ 15,113     $ 14,366     $ 13,691     $ 13,443     $ 58,706     $ 50,395  
Taxable securities     1,168       945       982       632       462       3,727       1,808  
Tax-exempt securities     183       344       14       157       88       698       350  
Federal funds sold and other     223       249       401       213       256       1,086       499  
Total interest and dividend
  income
    17,110       16,651       15,763       14,693       14,249       64,217       53,052  
                                                         
Interest Expense                                                        
Deposits     5,273       4,980       4,600       3,796       3,464       18,649       11,815  
FHLB advances and other borrowed
  funds
    427       411       487       484       481       1,809       1,837  
Subordinated debentures     667       656       338       143       135       1,804       515  
Total interest expense     6,367       6,047       5,425       4,423       4,080       22,262       14,167  
Net interest income     10,743       10,604       10,338       10,270       10,169       41,955       38,885  
Provision for loan losses     1,572       993       533       97       12       3,195       2,330  
Net interest income after provision
  for loan losses
    9,171       9,611       9,805       10,173       10,157       38,760       36,555  
                                                         
Non-Interest Income                                                        
Services charges     470       394       445       365       332       1,674       1,406  
Gain on sale of loans, net     54       41       45       32       22       172       118  
Loan servicing fees     1,553       1,521       1,486       1,452       1,483       6,012       5,799  
Loan servicing rights     7       (46 )     127       10       (37 )     98       (315 )
Income on OREO     83       96       45       32       16       256       73  
Other     153       151       168       149       178       621       572  
Total non-interest income     2,320       2,157       2,316       2,040       1,994       8,833       7,653  
                                                         
Non-Interest Expense                                                        
Employee compensation and
  benefits
    4,059       4,394       4,114       4,218       3,702       16,785       15,437  
Occupancy     245       332       278       204       135       1,059       654  
Information processing     641       529       529       465       423       2,164       1,632  
Professional fees     497       351       359       315       406       1,522       1,657  
Business development     259       258       260       299       210       1,076       941  
OREO expenses     106       46       152       140       17       444       174  
Writedown of OREO     688       81       104       -       820       873       905  
Net loss (gain) on OREO     (54 )     (28 )     (149 )     -       10       (231 )     (353 )
Depreciation and amortization     408       302       324       314       319       1,348       1,307  
Other     689       758       966       830       1,123       3,243       3,638  
Total non-interest expense     7,538       7,023       6,937       6,785       7,165       28,283       25,992  
  Income before income taxes     3,953       4,745       5,184       5,428       4,986       19,310       18,216  
  Income tax expense     1,123       1,228       1,334       1,374       2,855       5,059       7,791  
  NET INCOME   $ 2,830     $ 3,517     $ 3,850     $ 4,054     $ 2,131     $ 14,251     $ 10,425  
                                                         
  Basic   $ 0.41     $ 0.51     $ 0.56     $ 0.59     $ 0.31     $ 2.06     $ 1.52  
  Diluted   $ 0.40     $ 0.50     $ 0.55     $ 0.58     $ 0.30     $ 2.04     $ 1.49  
  Dividends declared   $ 0.07     $ 0.07     $ 0.07     $ 0.07     $ 0.06     $ 0.28     $ 0.24  


     For the Three Months Ended     For the Year Ended  
    December
31,
2018
    September
30,
2018
    June 30,
2018
    March 31,
2018
    December
31,
2017
    December
31,
2018
    December
31,
2017
 
       
    (dollars in thousands, except share data)  
Other Data:                                                        
  Return on average assets     0.75 %     0.94 %     1.04 %     1.15 %     0.62 %     0.96 %     0.80 %
  Return on average shareholders'
  equity
    7.58 %     9.51 %     10.63 %     11.62 %     6.05 %     9.50 %     7.58 %
  Return on average common
  shareholders' equity (1)
    7.70 %     9.75 %     10.96 %     12.04 %     6.12 %     9.74 %     7.77 %
  Efficiency ratio (1)     52.85 %     54.62 %     55.18 %     55.12 %     52.11 %     54.42 %     54.63 %
  Tangible common equity to
  tangible assets (1)
    9.14 %     8.90 %     8.75 %     8.87 %     9.13 %     9.14 %     9.13 %
                                                         
Common Share Data:                                                        
  Net income from continuing
  operations
  $ 2,830     $ 3,517     $ 3,850     $ 4,054     $ 2,131     $ 14,251     $ 10,425  
  Less:  Preferred stock dividends     111       106       99       97       96       413       353  
  Income available to common
  shareholders
  $ 2,719     $ 3,411     $ 3,751     $ 3,957     $ 2,035     $ 13,838     $ 10,072  
                                                         
  Average number of common
  shares issued
    7,184,946       7,167,276       7,163,362       7,152,970       7,150,424       7,177,212       7,110,099  
  Less: Weighted average treasury
  shares
    443,694       443,140       442,102       439,833       437,901       442,206       433,976  
  Less: Weighted average non-
  vested restricted units
  awards
    28,701       29,537       30,692       34,976       41,217       30,955       40,740  
  Weighted average number of
  common shares outstanding
    6,712,551       6,694,599       6,690,568       6,678,161       6,671,306       6,704,051       6,635,383  
  Effect of dilutive options     45,116       63,346       79,368       90,804       97,633       68,876       111,463  
  Weighted average number of
  common shares outstanding
  used to calculate diluted
  earnings per common share
    6,757,667       6,757,945       6,769,936       6,768,965       6,768,939       6,772,927       6,746,846  

(1) This is a non-GAAP financial measure.  A reconciliation to GAAP is included below.

      For the Three Months Ended     For the Year Ended  
Non-GAAP Financial Measures:   December
31,
2018
    September
30,
2018
    June 30,
2018
    March
31,
2018
    December
31,
2017
    December
31,
2018
    December
31,
2017
 
       
    (dollars in thousands)  
Return on average common
  shareholders' equity
  reconciliation:
                                                       
  Return on average shareholders'
  equity
    7.58 %     9.51 %     10.63 %     11.62 %     6.05 %     9.50 %     7.58 %
  Effect of excluding average
  preferred shareholders'
  equity
    0.12 %     0.24 %     0.33 %     0.42 %     0.07 %     0.24 %     0.19 %
  Return on average common
  shareholders' equity
    7.70 %     9.75 %     10.96 %     12.04 %     6.12 %     9.74 %     7.77 %
                                                         
Efficiency ratio GAAP to non-GAAP
  reconciliation:
                                                       
  Non-interest expense   $ 7,538     $ 7,023     $ 6,937     $ 6,785     $ 7,165     $ 28,283     $ 25,992  
  Less: net gain (loss) on sales and
  write-downs of OREO
    (634 )     (53 )     45       -       (830 )     (642 )     (552 )
  Adjusted non-interest expense
   (non-GAAP)
  $ 6,904     $ 6,970     $ 6,982     $ 6,785     $ 6,335     $ 27,641     $ 25,440  
                                                         
  Net interest income   $ 10,743     $ 10,604     $ 10,338     $ 10,270     $ 10,169     $ 41,955     $ 38,885  
  Non-interest income     2,320       2,157       2,316       2,040       1,994       8,833       7,653  
  Less: net loss (gain) on sales of
  securities
    -       -       -       -       (6 )     -       31  
  Operating revenue   $ 13,063     $ 12,761     $ 12,654     $ 12,310     $ 12,157     $ 50,788     $ 46,569  
  Efficiency ratio     52.85 %     54.62 %     55.18 %     55.12 %     52.11 %     54.42 %     54.63 %

               

    December
31,
2018
    September
30,
2018
    June 30,
2018
    March 31,
2018
    December
31,
2017
 
       
    (dollars in thousands, except per share data)  
Tangible book value per share and
  tangible common equity to tangible
  assets reconciliation:
                                       
  Common equity   $ 144,085     $ 139,987     $ 138,082     $ 134,814     $ 132,986  
  Less: Goodwill     5,038       5,038       5,038       5,038       5,038  
  Less: Core deposit intangible, net of
  amortization
    513       603       701       806       919  
  Tangible common equity (non-GAAP)   $ 138,534     $ 134,346     $ 132,343     $ 128,970     $ 127,029  
  Common shares outstanding     6,709,480       6,694,230       6,693,447       6,684,923       6,673,381  
  Tangible book value per share   $ 20.65     $ 20.07     $ 19.77     $ 19.29     $ 19.04  
                                         
  Total assets   $ 1,520,828     $ 1,514,968     $ 1,518,877     $ 1,460,257     $ 1,397,045  
  Less: Goodwill     5,038       5,038       5,038       5,038       5,038  
  Less: Core deposit intangible, net of
  amortization
    513       603       701       806       919  
  Tangible assets (non-GAAP)   $ 1,515,277     $ 1,509,327     $ 1,513,138     $ 1,454,413     $ 1,391,088  
  Tangible common equity to tangible assets     9.14 %     8.90 %     8.75 %     8.87 %     9.13 %
                                         
Adverse classified asset ratio:                                        
  Substandard loans   $ 120,887     $ 118,368     $ 93,833     $ 82,648     $ 83,226  
  Less: Non-impaired restructured loans     (5,078 )     (13,657 )     (2,081 )     (1,164 )     (1,072 )
  Net substandard loans   $ 115,809     $ 104,711     $ 91,752     $ 81,484     $ 82,154  
  Other real estate owned     6,568       7,851       8,607       8,982       4,565  
  Substandard unused commitments     1,625       1,191       959       2,309       799  
  Less: Substandard government guarantees     (7,111 )     (9,374 )     (8,356 )     (3,605 )     (4,289 )
  Total adverse classified assets (non-GAAP)   $ 116,891     $ 104,379     $ 92,962     $ 89,170     $ 83,229  
                                         
  Total equity (Bank)   $ 185,458     $ 180,359     $ 177,911     $ 149,105     $ 146,937  
  Unrealized loss on available for
  sale securities
    2,221       4,152       2,795       2,603       627  
  Allowance for loan losses     16,505       16,143       15,129       14,612       13,247  
  Allowance for unused commitments     475       510       522       553       564  
  Adjusted total equity (non-GAAP)   $ 204,659     $ 201,164     $ 196,357     $ 166,873     $ 161,375  
  Adverse classified asset ratio     57.12 %     51.89 %     47.34 %     53.44 %     51.57 %


    For the Three Months Ended  
    December 31, 2018     December 31, 2017  
    Average
Balance (1)
    Income/
Expense
    Yields/
Rates
    Average
Balance (1)
    Income/
Expense
    Yields/
Rates
 
       
       
    (dollars in thousands)  
Assets                                                
Investment securities   $ 191,955     $ 1,351       2.82 %   $ 106,173     $ 550       2.07 %
Loans (2)     1,207,883       15,536       5.14 %     1,134,822       13,443       4.74 %
Interest bearing deposits due from other
  banks
    67,153       223       1.33 %     88,742       256       1.15 %
Total interest-earning assets   $ 1,466,991     $ 17,110       4.67 %   $ 1,329,737     $ 14,249       4.29 %
                                                 
Allowance for loan losses     (16,034 )                     (13,474 )                
Other assets     61,316                       61,741                  
Total assets   $ 1,512,273                     $ 1,378,004                  
                                                 
Liabilities                                                
Savings, NOW, money market, interest
  checking
  $ 287,420       1,043       1.45 %   $ 265,309       531       0.80 %
Time deposits     820,515       4,230       2.06 %     713,718       2,933       1.64 %
Total interest-bearing deposits   $ 1,107,935     $ 5,273       1.90 %   $ 979,027     $ 3,464       1.42 %
Other borrowings     837       10       4.62 %     1,328       18       5.53 %
FHLB advances     90,509       417       1.84 %     126,261       463       1.47 %
Junior subordinated debentures     44,681       667       5.97 %     15,523       135       3.48 %
Total interest-bearing liabilities   $ 1,243,962     $ 6,367       2.05 %   $ 1,122,139     $ 4,080       1.45 %
                                                 
Non-interest-bearing deposits     108,140                       104,718                  
Other liabilities     10,913                       10,242                  
Total liabilities   $ 1,363,015                     $ 1,237,099                  
                                                 
Shareholders' equity     149,258                       140,905                  
Total liabilities and equity   $ 1,512,273                     $ 1,378,004                  
                                                 
Net interest income           $ 10,743                     $ 10,169          
Interest rate spread (3)                     2.62 %                     2.84 %
Net interest margin (4)                     2.91 %                     3.06 %
Ratio of interest-earning assets to interest-
  bearing liabilities
    1.18                       1.19                  

(1) Average balances are calculated on amortized cost.
(2) Includes loan fee income, nonaccruing loan balances, and interest received on such loans.
(3) Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(4) Net interest margin represents net interest income divided by average total interest-earning assets.

     For the Year Ended  
    December 31, 2018     December 31, 2017  
    Average
Balance (1)
    Income/
Expense
    Yields/
Rates
    Average
Balance (1)
    Income/
Expense
    Yields/
Rates
 
       
    (dollars in thousands)  
Assets                                                
Investment securities   $ 169,302     $ 4,425       2.61 %   $ 112,439     $ 2,158       1.92 %
Loans (2)     1,193,254       58,706       4.92 %     1,086,836       50,395       4.64 %
Interest bearing deposits due from other
  banks
    77,545       1,086       1.40 %     52,786       499       0.95 %
Total interest-earning assets   $ 1,440,101     $ 64,217       4.46 %   $ 1,252,061     $ 53,052       4.24 %
                                                 
Allowance for loan losses     (15,037 )                     (13,550 )                
Other assets     59,291                       56,615                  
Total assets   $ 1,484,355                     $ 1,295,126                  
                                                 
Liabilities                                                
Savings, NOW, money market, interest
  checking
  $ 282,746       3,398       1.20 %   $ 245,851       1,643       0.67 %
Time deposits     801,892       15,251       1.90 %     661,784       10,172       1.54 %
Total interest-bearing deposits   $ 1,084,638     $ 18,649       1.72 %   $ 907,635     $ 11,815       1.30 %
Other borrowings     1,027       50       4.81 %     1,545       89       5.77 %
FHLB advances     105,218       1,759       1.67 %     127,635       1,748       1.37 %
Junior subordinated debentures     32,721       1,804       5.51 %     15,492       515       3.32 %
Total interest-bearing liabilities   $ 1,223,604     $ 22,262       1.82 %   $ 1,052,307     $ 14,167       1.35 %
                                                 
Non-interest-bearing deposits     100,819                       96,172                  
Other liabilities     9,883                       9,059                  
Total liabilities   $ 1,334,306                     $ 1,157,538                  
                                                 
Shareholders' equity     150,049                       137,588                  
Total liabilities and equity   $ 1,484,355                     $ 1,295,126                  
                                                 
Net interest income           $ 41,955                     $ 38,885          
Interest rate spread (3)                     2.64 %                     2.89 %
Net interest margin (4)                     2.91 %                     3.11 %
Ratio of interest-earning assets to interest-
  bearing liabilities
    1.18                       1.19                  

(1) Average balances are calculated on amortized cost.
(2) Includes loan fee income, nonaccruing loan balances, and interest received on such loans.
(3)Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(4) Net interest margin represents net interest income divided by average total interest-earning assets.

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