ENFC Entegra Financial Corporation

Entegra Financial Corp. (the “Company”) (NASDAQ: ENFC), the holding company for Entegra Bank (the “Bank”), today announced earnings and related data for the three and nine months ended September 30, 2018.

Highlights 

The following tables highlight the trends that the Company believes are most relevant to understanding the performance of the Company.  As further detailed in Appendix A to this press release, adjusted results (which are non-U.S. generally accepted accounting principles, or non-GAAP, financial measures) reflect adjustments for investment gains and losses, investment impairment, and merger-related expenses.

	For the Three Months Ended September 30,
	(Dollars in thousands, except per share data)
	2018								2017								Change (%)
	GAAP				Adjusted				GAAP				Adjusted				GAAP			Adjusted
Net income	$	3,523			$	3,599			$	2,471			$	2,563			42.6	%		40.4	%
Net interest income	$	12,292				N/A			$	10,323				N/A			19.1	%		N/A
Net interest margin (tax equivalent)		3.26	%			N/A				3.30	%			N/A			-1.2	%		N/A
Return on average assets		0.86	%			0.88	%			0.71	%			0.73	%		21.1	%		20.5	%
Return on average equity		9.00	%			11.18	%			6.95	%			7.72	%		29.5	%		44.8	%
Efficiency ratio		66.92	%			66.25	%			65.96	%			64.87	%		1.5	%		2.1	%
Diluted earnings per share	$	0.50			$	0.51			$	0.38			$	0.39			31.6	%		30.8	%

	For the Nine Months Ended September 30,
	(Dollars in thousands, except per share data)
	2018								2017								Change (%)
	GAAP				Adjusted				GAAP				Adjusted				GAAP			Adjusted
Net income	$	10,192			$	11,049			$	5,873			$	6,948			73.5	%		59.0	%
Net interest income	$	36,995				N/A			$	30,163				N/A			22.7	%		N/A
Tax-equivalent net interest margin		3.38	%			N/A				3.32	%			N/A			1.8	%		N/A
Return on average assets		0.84	%			0.91	%			0.57	%			0.67	%		47.4	%		35.8	%
Return on average equity		8.84	%			11.71	%			5.66	%			7.12	%		56.2	%		64.5	%
Efficiency ratio		67.44	%			65.27	%			72.45	%			68.28	%		-6.9	%		-4.4	%
Diluted earnings per share	$	1.45			$	1.57			$	0.90			$	1.06			61.1	%		48.1	%

		As of September 30,				As of December 31,
		2018				2017
		(Dollars in thousands, except per share data)
Asset Quality:
Non-performing loans		$	4,297			$	4,778
Real estate owned		$	2,818			$	2,568
Non-performing assets		$	7,115			$	7,346
Non-performing loans to total loans			0.40	%			0.48	%
Non-performing assets to total assets			0.43	%			0.46	%
Net charge-offs		$	194			$	315
Allowance for loan losses to non-performing loans			273.35	%			227.86	%
Allowance for loan losses to total loans			1.10	%			1.08	%
Other Data:
Book value per share		$	22.74			$	22.00
Tangible book value per share		$	18.73			$	17.90
Closing market price per share		$	26.55			$	29.25
Closing price-to-tangible book value ratio			141.75	%			163.41	%
Equity to assets ratio			9.39	%			9.57	%
Tangible common equity to tangible assets ratio			7.86	%			7.93	%

Management Commentary

Roger D. Plemens, President and Chief Executive Officer of the Company, reported, “We are  pleased with the increase in core deposits during the third quarter of 2018 as the result of a Company-wide deposit campaign which increased core deposits by $28.4 million, or an annualized rate of 15.1%.  Growing our balance sheet with core funding remains a key focus in our desire to continue growing shareholder value.  Looking forward, we remain focused on opportunities to grow our franchise, with an emphasis on growing our commercial banking business.”

Net Interest Income

Net interest income increased $2.0 million, or 19.1%, to $12.3 million for the three months ended September 30, 2018, compared to $10.3 million for the same period in 2017.  Net interest income increased $6.8 million, or 22.7%, to $37.0 million for the nine months ended September 30, 2018, compared to $30.2 million for the same period in 2017.  The increase in net interest income was primarily due to higher volumes in the loan portfolio, as well as an increase in the yields earned on cash, taxable investments and loans partially offset by increased deposit balances and the costs of deposits and borrowings.  Net interest margin was 3.26% for the three months ended September 30, 2018, compared to 3.30% for the same period in 2017, and 3.38% and 3.32% for the nine months ended September 30, 2018 and 2017, respectively.

Provision for Loan Losses

The provision for loan losses was $0.3 million and $1.1 million for the three and nine months ended September 30, 2018, respectively, compared to $0.5 million and $1.2 million for the comparable periods of 2017.  The provisions for loan losses are mainly attributable to organic loan growth.  The Company continues to experience modest levels of net charge-offs and non-performing loans.

Noninterest Income

Noninterest income increased $0.2 million, or 10.7%, to $2.0 million for the three months ended September 30, 2018, compared to $1.8 million for the same period in 2017. Increases in servicing income, mortgage banking, equity securities gains, and net interchange fees were partially offset by decreases in gains on sale of Small Business Administration (“SBA”) loans and service charges on deposit accounts.  The Company recorded a valuation adjustment against its loan servicing rights of $44 thousand and $0.2 million for the three months ended September 30, 2018 and 2017, respectively.  

Noninterest income increased $0.4 million, or 8.6%, to $4.7 million for the nine months ended September 30, 2018, compared to $4.3 million for the same period in 2017, primarily as the result of the other than temporary impairment on one investment security of $0.7 million in 2017,  compared to realized losses on sale of investments of $0.5 million in 2018.  Increases in gains on sale of SBA loans, net interchange fees and income from Small Business Investment Company (“SBIC”) holdings were partially offset by decreases in mortgage banking and equity securities gains. The Company recorded a valuation adjustment against its loan servicing rights of $0.4 million and $0.3 million for the nine months ended September 30, 2018 and 2017, respectively.  

Noninterest Expense

Noninterest expense increased $1.5 million, or 19.6%, to $9.5 million for the three months ended September 30, 2018, compared to $8.0 million for the same period in 2017. Noninterest expense increased $3.1 million, or 12.5%, to $28.1 million for the nine months ended September 30, 2018, compared to $25.0 million for the same period in 2017. The increases were primarily related to increased compensation and employee benefits, net occupancy expenses, and data processing expenses, as the 2018 period included the full impact of the Chattahoochee Bank of Georgia acquisition and the branches acquired from Stearns Bank. 

Income Taxes

Effective tax rates for the three and nine months ended September 30, 2018 were 19.6% and 18.6%, respectively, compared to 31.3% and 29.6% for the corresponding periods in 2017.  Income tax expense for the 2018 periods benefitted from the newly enacted federal tax rate of 21%, compared to a federal tax rate of 35% in 2017.  In addition, income tax expense for all periods benefited from tax-exempt income related to municipal bond investments and bank-owned life insurance (“BOLI”).  The effective tax rate for the third quarter of 2018 was slightly higher than previous quarters as a result of a change in state income tax apportionment.

Balance Sheet

Total assets increased $88.1 million, or an annualized rate of 7.4%, to $1.67 billion at September 30, 2018 from $1.58 billion at December 31, 2017.

Loans receivable increased $62.9 million, or an annualized rate of 8.3%, to $1.07 billion at September 30, 2018 from $1.00 billion at December 31, 2017.  Loan growth continues to be primarily concentrated in commercial real estate and commercial and industrial loans. 

Core deposits increased $18.5 million to $781.9 million at September 30, 2018 from $763.4 million at December 31, 2017.  In the third quarter of 2018, core deposits increased $28.4 million, or an annualized rate of 15.1%, as a result of the promotion of a more aggressive money market rate.  Retail certificates of deposit decreased $4.9 million to $352.7 million at September 30, 2018 from $357.6 million at December 31, 2017.  Wholesale deposits have been a source of funding loan growth and increased $80.3 million to $121.5 million at September 30, 2018 from $41.1 million at December 31, 2017.  We continue to focus on gathering core deposits, which decreased from 66% of the Company’s deposit portfolio at December 31, 2017 to 62% at September, 30 2018.  

Total shareholders’ equity increased $5.4 million to $156.7 million at September 30, 2018, compared to $151.3 million at December 31, 2017. This increase was primarily attributable to $10.2 million of net income, offset by a $5.6 million after-tax decline in the market value of investment securities available for sale.  Tangible book value per share, a non-GAAP measure, increased $0.83 to $18.73 at September 30, 2018 from $17.90 at December 31, 2017.  See Appendix A for a reconciliation of our tangible book value per share to the comparable GAAP measure.

Asset Quality

Non-performing loans to total loans and non-performing assets to total assets decreased to 0.40% and 0.43%, respectively, at September 30, 2018, compared to 0.48% and 0.46%, respectively, at December 31, 2017.  Net loan charge-offs continue to remain modest, totaling $0.2 million for the nine months ended September 30, 2018.

Non-GAAP Financial Measures

Statements included in this press release include non-GAAP financial measures and should be read along with the accompanying tables in Appendix A, which provide a reconciliation of non-GAAP financial measures to GAAP financial measures. This press release and the accompanying tables discuss financial measures, such as adjusted noninterest expense, adjusted net income, adjusted diluted earnings per share, adjusted return on average assets, adjusted return on tangible average equity, adjusted efficiency ratio, tangible common equity, tangible assets and tangible book value per share, which are all non-GAAP measures. We believe that such non-GAAP measures are useful because they enhance the ability of investors and management to evaluate and compare the Company’s operating results from period to period in a meaningful manner. Non-GAAP measures should not be considered as an alternative to any measure of performance as promulgated under GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Investors should consider the Company’s performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company’s results or financial condition as reported under GAAP.

About Entegra Financial Corp. and Entegra Bank

Entegra Financial Corp. is the holding company of Entegra Bank. The Company’s shares of common stock trade on the NASDAQ Global Market under the symbol “ENFC.”

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

Disclosures About Forward-Looking Statements

The discussions included in this press release and its appendices may contain “forward-looking statements.” For the purposes of these discussions, any statements that are not statements of historical fact may be deemed to be “forward-looking statements.” Such statements are often characterized by the use of qualifying words such as “expects,” “anticipates,” “believes,” “estimates,” “plans,” “projects,” “will,” “should,” or other statements concerning opinions or judgments of the Company and its management about future events.  Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those anticipated and may adversely affect our results of operations and financial condition. The accuracy of such forward-looking statements could be affected by factors including, but not limited to: the Company’s ability to implement aspects of its growth strategy; the financial success or changing conditions or strategies of the Company’s customers or vendors; the Company’s ability to compete effectively against other financial institutions in its banking markets; fluctuations in interest rates; actions of government regulators; the availability of capital and personnel; and general economic and market conditions. These forward-looking statements express management’s current expectations, plans or forecasts of future events, results of operation and financial condition. Additional factors that could cause actual results to differ materially from those anticipated by forward-looking statements are discussed in the Company’s reports filed with or furnished to the Securities and Exchange Commission (the “SEC”) and available on the SEC’s website, including without limitation its annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. These forward-looking statements speak only as of the date of this press release, and the Company undertakes no obligation to revise or update these statements following the date of this press release, except as required by applicable law.

ENTEGRA FINANCIAL CORP. AND SUBSIDIARYCONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)(Amounts in thousands, except per share data)

	Three Months Ended September 30,
	2018			2017
Interest income	$	15,978		$	12,254
Interest expense	3,686			1,931
Net interest income	12,292			10,323
Provision for loan losses	336			520
Net interest income after provision for loan losses	11,956			9,803
Servicing income, net	180			59
Mortgage banking	233			207
Gain on sale of SBA loans	257			290
Gain (loss) on sale of investments	-			(24		)
Equity securities gains	191			138
Service charges on deposit accounts	406			436
Interchange fees	276			246
Bank owned life insurance	195			208
Other	227			215
Total noninterest income	1,965			1,775
Compensation and employee benefits	5,882			4,937
Net occupancy	1,128			974
Federal deposit insurance	191			140
Professional and advisory	413			292
Data processing	532			390
Marketing and advertising	227			253
Net cost of operation of real estate owned	59			(121		)
Merger-related expenses	96			116
Other	1,013			999
Total noninterest expense	9,541			7,980
Income before taxes	4,380			3,598
Income tax expense	857			1,127
Net income	$	3,523		$	2,471
Earnings per common share:
Basic	$	0.51		$	0.38
Diluted	$	0.50		$	0.38
Weighted average common shares outstanding:
Basic	6,891,672			6,458,679
Diluted	7,031,150			6,548,530

ENTEGRA FINANCIAL CORP. AND SUBSIDIARYCONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)(Amounts in thousands, except per share data)

	Nine Months Ended September 30,
	2018				2017
Interest income	$	46,149			$	35,621
Interest expense		9,154				5,458
Net interest income		36,995				30,163
Provision for loan losses		1,054				1,160
Net interest income after provision for loan losses		35,941				29,003
Servicing income, net		313				312
Mortgage banking		755				771
Gain on sale of SBA loans		547				436
Gain (loss) on sale of investments		(520	)			19
Equity securities gains		183				445
Other than temporary impairment on available-for-sale securities		-				(700	)
Service charges on deposit accounts		1,242				1,239
Interchange fees, net		795				655
Bank owned life insurance		589				603
Other		775				527
Total noninterest income		4,679				4,307
Compensation and employee benefits		17,151				14,859
Net occupancy		3,342				2,851
Federal deposit insurance		618				379
Professional and advisory		1,023				929
Data processing		1,607				1,215
Marketing and advertising		671				727
Net cost of operation of real estate owned		202				94
Merger-related expenses		564				972
Other		2,925				2,947
Total noninterest expense		28,103				24,973
Income before taxes		12,517				8,337
Income tax expense		2,325				2,464
Net income	$	10,192			$	5,873
Earnings per common share:
Basic	$	1.48			$	0.91
Diluted	$	1.45			$	0.90
Weighted average common shares outstanding:
Basic		6,889,130				6,460,015
Diluted		7,023,714				6,542,261

ENTEGRA FINANCIAL CORP. AND SUBSIDIARYCONDENSED CONSOLIDATED BALANCE SHEETS(Dollars in thousands)

	September 30, 2018				December 31, 2017
	(Unaudited)				(Unaudited)
Assets
Cash and cash equivalents	$	117,265			$	109,467
Investments - equity securities		6,983				6,095
Investments - available for sale		353,759				342,863
Other investments, at cost		12,039				12,386
Loans held for sale (includes $1,821 and $0 at fair value)		3,970				3,845
Loans receivable		1,068,012				1,005,139
Allowance for loan losses		(11,746	)			(10,887	)
Real estate owned		2,818				2,568
Fixed assets, net		26,605				24,113
Bank owned life insurance		32,738				32,150
Net deferred tax asset		8,672				8,831
Goodwill		23,903				23,903
Core deposit intangibles, net		3,750				4,269
Other assets		20,798				16,707
Total assets	$	1,669,566			$	1,581,449
Liabilities and Shareholders' Equity
Liabilities
Core deposits	$	781,899			$	763,422
Retail certificates of deposit		352,658				357,629
Wholesale deposits		121,475				41,126
Federal Home Loan Bank advances		213,500				223,500
Junior subordinated notes		14,433				14,433
Holding company line of credit		5,000				5,000
Post employment benefits		9,887				10,174
Other liabilities		13,984				14,852
Total liabilities	$	1,512,836			$	1,430,136
Total shareholders' equity		156,730				151,313
Total liabilities and shareholders' equity	$	1,669,566			$	1,581,449

APPENDIX A – RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)

		Three Months Ended September 30,
		2018				2017
(Dollars in thousands, except per share data)
Adjusted Noninterest Expense
Noninterest expense (GAAP)		$	9,541			$	7,980
Merger-related expenses			(96	)			(116	)
Adjusted noninterest expense (Non-GAAP)		$	9,445			$	7,864
Adjusted Net Income
Net income (GAAP)		$	3,523			$	2,471
Loss (gain) on sale of investments			-				16
Other than temporary impairment of investment securities available for sale			-				-
Merger-related expenses			76				76
Adjusted net income (Non-GAAP)		$	3,599			$	2,563
Adjusted Diluted Earnings Per Share
Diluted earnings per share (GAAP)		$	0.50			$	0.38
Loss (gain) on sale of investments			-				-
Other than temporary impairment of investment securities available for sale			-				-
Merger-related expenses			0.01				0.01
Adjusted diluted earnings per share (Non-GAAP)		$	0.51			$	0.39
Adjusted Return on Average Assets
Return on Average Assets (GAAP)			0.86	%			0.71	%
Gain on sale of investments			0.00	%			0.00	%
Other than temporary impairment of investment securities available for sale			0.00	%			0.00	%
Merger-related expenses			0.02	%			0.02	%
Adjusted Return on Average Assets (Non-GAAP)			0.88	%			0.73	%
Adjusted Return on Tangible Average Equity
Return on Average Equity (GAAP)			9.00	%			6.95	%
Loss (gain) on sale of investments			0.00	%			0.04	%
Other than temporary impairment of investment securities available for sale			0.00	%			0.00	%
Merger-related expenses			0.19	%			0.21	%
Effect of goodwill and intangibles			1.98	%			0.52	%
Adjusted Return on Average Tangible Equity (Non-GAAP)			11.18	%			7.72	%
Adjusted Efficiency Ratio
Efficiency ratio (GAAP)			66.92	%			65.96	%
Gain (loss) on sale of investments			0.00	%			-0.19	%
Other than temporary impairment of investment securities available for sale			0.00	%			0.00	%
Merger-related expenses			-0.67	%			-0.90	%
Adjusted Efficiency Ratio (Non-GAAP)			66.25	%			64.87	%
		As Of
		September 30, 2018				December 31, 2017
		(Dollars in thousands, except share data)
Tangible Assets
Total Assets		$	1,669,566			$	1,581,449
Goodwill and Intangibles			(27,653	)			(28,172	)
Tangible Assets		$	1,641,913			$	1,553,277
Tangible Book Value Per Share
Book Value (GAAP)		$	156,730			$	151,313
Goodwill and intangibles			(27,653	)			(28,172	)
Book Value (Tangible)		$	129,077			$	123,141
Outstanding shares			6,891,672				6,879,191
Tangible Book Value Per Share		$	18.73			$	17.90

		Nine Months Ended September 30,
		2018				2017
(Dollars in thousands, except per share data)
Adjusted Noninterest Expense
Noninterest expense (GAAP)		$	28,103			$	24,973
Merger-related expenses			(564	)			(972	)
Adjusted noninterest expense (Non-GAAP)		$	27,539			$	24,001
Adjusted Net Income
Net income (GAAP)		$	10,192			$	5,873
Loss (gain) on sale of investments			411				(12	)
Other than temporary impairment of investment securities available for sale			-				455
Merger-related expenses			446				632
Adjusted net income (Non-GAAP)		$	11,049			$	6,948
Adjusted Diluted Earnings Per Share
Diluted earnings per share (GAAP)		$	1.45			$	0.90
Loss (gain) on sale of investments			0.06				-
Other than temporary impairment of investment securities available for sale			-				0.06
Merger-related expenses			0.06				0.10
Adjusted diluted earnings per share (Non-GAAP)		$	1.57			$	1.06
Adjusted Return on Average Assets
Return on Average Assets (GAAP)			0.84	%			0.57	%
Gain on sale of investments			0.03	%			-
Other than temporary impairment of investment securities available for sale			0.00	%			0.04	%
Merger-related expenses			0.04	%			0.06	%
Adjusted Return on Average Assets (Non-GAAP)			0.91	%			0.67	%
Adjusted Return on Tangible Average Equity
Return on Average Equity (GAAP)			8.84	%			5.66	%
Loss (gain) on sale of investments			0.36	%			-0.01	%
Other than temporary impairment of investment securities available for sale			0.00	%			0.43	%
Merger-related expenses			0.39	%			0.61	%
Effect of goodwill and intangibles			2.13	%			0.43	%
Adjusted Return on Average Tangible Equity (Non-GAAP)			11.71	%			7.12	%
Adjusted Efficiency Ratio
Efficiency ratio (GAAP)			67.44	%			72.45	%
Gain (loss) on sale of investments			-1.23	%			0.05	%
Other than temporary impairment of investment securities available for sale			0.00	%			-1.38	%
Merger-related expenses			-0.94	%			-2.84	%
Adjusted Efficiency Ratio (Non-GAAP)			65.27	%			68.28	%

APPENDIX B – TAX EQUIVALENT NET INTEREST MARGIN ANALYSIS (UNAUDITED)

		For the Three Months Ended September 30,
		2018										2017
		Average Outstanding Balance				Interest			Yield/ Rate			Average Outstanding Balance				Interest			Yield/ Rate
		(Dollars in thousands)
Interest-earning assets:
Loans, including loans held for sale		$	1,050,667			$	12,622		4.77	%		$	788,021			$	9,175		4.62	%
Loans, tax exempt (1)			16,757				134		3.18	%			16,607				151		3.60	%
Investments - taxable			248,077				1,827		2.95	%			295,516				1,787		2.42	%
Investment tax exempt (1)			94,019				880		3.74	%			124,016				1,257		4.05	%
Interest earning deposits			99,572				528		2.10	%			63,262				216		1.35	%
Other investments, at cost			12,039				201		6.62	%			11,822				161		5.40	%
Total interest-earning assets			1,521,131				16,192		4.22	%			1,299,244				12,747		3.89	%
Noninterest-earning assets			123,662										100,731
Total assets		$	1,644,793									$	1,399,975
Interest-bearing liabilities:
Savings accounts		$	53,287			$	15		0.11	%		$	49,146			$	14		0.11	%
Time deposits			423,419				1,404		1.32	%			358,327				796		0.88	%
Money market accounts			355,057				814		0.91	%			260,804				248		0.38	%
Interest bearing transaction accounts			205,732				98		0.19	%			174,945				56		0.13	%
Total interest bearing deposits			1,037,495				2,331		0.89	%			843,222				1,114		0.52	%
FHLB advances			213,500				1,091		2.00	%			223,826				641		1.14	%
Junior subordinated debentures			14,433				141		3.82	%			14,433				140		3.85	%
Other borrowings			9,399				123		5.19	%			3,652				36		3.91	%
Total interest-bearing liabilities			1,274,827				3,686		1.15	%			1,085,133				1,931		0.71	%
Noninterest-bearing deposits			198,001										157,870
Other non interest bearing liabilities			15,431										14,667
Total liabilities			1,488,259										1,257,670
Total equity			156,534										142,305
Total liabilities and equity		$	1,644,793									$	1,399,975
Tax-equivalent net interest income						$	12,506									$	10,816
Net interest-earning assets (2)		$	246,304									$	214,111
Average interest-earning assets to interest-bearing liabilities			119.32	%									119.73	%
Tax-equivalent net interest rate spread (3)									3.08	%									3.19	%
Tax-equivalent net interest margin (4)									3.26	%									3.30	%
(1) Tax exempt loans and investments are calculated giving effect to a 21% federal tax rate in 2018 and a 35% federal tax rate in 2017.
(2) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
(3) Tax-equivalent net interest rate spread represents the difference between the tax equivalent yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(4) Tax-equivalent net interest margin represents tax equivalent net interest income divided by average total interest-earning assets.

		For the Nine Months Ended September 30,
		2018										2017
		Average Outstanding Balance				Interest			Yield/ Rate			Average Outstanding Balance				Interest			Yield/ Rate
		(Dollars in thousands)
Interest-earning assets:
Loans, including loans held for sale		$	1,030,421			$	36,981		4.80	%		$	765,810			$	26,686		4.66	%
Loans, tax exempt (1)			15,947				367		3.08	%			15,906				438		3.69	%
Investments - taxable			253,129				5,173		2.72	%			301,823				5,367		2.37	%
Investment tax exempt (1)			84,890				2,344		3.68	%			118,008				3,609		4.08	%
Interest earning deposits			91,400				1,309		1.91	%			58,067				459		1.06	%
Other investments, at cost			12,259				544		5.93	%			12,491				478		5.12	%
Total interest-earning assets			1,488,046				46,718		4.20	%			1,272,105				37,037		3.89	%
Noninterest-earning assets			127,331										100,321
Total assets		$	1,615,377									$	1,372,426
Interest-bearing liabilities:
Savings accounts		$	52,222			$	44		0.11	%		$	46,835			$	39		0.11	%
Time deposits			414,802				3,527		1.14	%			349,381				2,335		0.89	%
Money market accounts			335,722				1,687		0.67	%			255,013				704		0.37	%
Interest bearing transaction accounts			208,550				282		0.18	%			159,377				149		0.12	%
Total interest bearing deposits			1,011,296				5,540		0.73	%			810,606				3,227		0.53	%
FHLB advances			219,178				2,841		1.71	%			240,551				1,713		0.95	%
Junior subordinated debentures			14,433				421		3.85	%			14,433				418		3.87	%
Other borrowings			9,113				352		5.16	%			3,165				100		4.22	%
Total interest-bearing liabilities			1,254,020				9,154		0.98	%			1,068,755				5,458		0.68	%
Noninterest-bearing deposits			190,902										151,174
Other non interest bearing liabilities			16,719										14,204
Total liabilities			1,461,641										1,234,133
Total equity			153,736										138,293
Total liabilities and equity		$	1,615,377									$	1,372,426
Tax-equivalent net interest income						$	37,564									$	31,579
Net interest-earning assets (2)		$	234,026									$	203,350
Average interest-earning assets to interest-bearing liabilities			118.66	%									119.03	%
Tax-equivalent net interest rate spread (3)									3.22	%									3.21	%
Tax-equivalent net interest margin (4)									3.38	%									3.32	%
(1) Tax exempt loans and investments are calculated giving effect to a 21% federal tax rate in 2018 and a 35% federal tax rate in 2017.
(2) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
(3) Tax-equivalent net interest rate spread represents the difference between the tax equivalent yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(4) Tax-equivalent net interest margin represents tax equivalent net interest income divided by average total interest-earning assets.

Contact:		Roger D. PlemensPresident and Chief Executive Officer(828) 524-7000