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Section 1: 8-K (8-K)

Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 26, 2018

HOMETRUST BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
 
Maryland
 
001-35593
 
45-5055422
(State or other jurisdiction of incorporation)
 
(Commission File No.)
 
(IRS Employer Identification Number)

10 Woodfin Street, Asheville, North Carolina
 
 
 
28801
(Address of principal executive offices)
 
 
 
(Zip Code)

Registrant's telephone number, including area code: (828) 259-3939

 
 
Not Applicable
 
 
 
(Former name or former address, if changed since last report)
 


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company
[X]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
[ ]






Item 2.02.  Results of Operations and Financial Condition
 
On July 26, 2018, HomeTrust Bancshares, Inc., the holding company for HomeTrust Bank, issued a press release reporting 2018 financial results.  A copy of the press release, including unaudited financial information released as a part thereof, is attached as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference herein.
 
Item 9.01  Financial Statements and Exhibits
 
(d)           Exhibits
 
99.1






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

HOMETRUST BANCSHARES, INC.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Date: July 26, 2018
 
By:
/s/ Tony J. VunCannon
Tony J. VunCannon
 
 
 
Executive Vice President, Chief Financial Officer, and Treasurer
 
 
 






EXHIBIT INDEX

Exhibit No.
Description
 
 
 
 
99.1

 
 



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


394371020_htbi_imagea05.jpg
HomeTrust Bancshares, Inc. Reports Fourth Quarter and Fiscal Year 2018 Financial Results
ASHEVILLE, N.C., July 26, 2018 - HomeTrust Bancshares, Inc. (NASDAQ: HTBI) ("Company"), the holding company of HomeTrust Bank ("Bank"), today announced preliminary net income of $7.2 million, or $0.38 per diluted share for the quarter ended June 30, 2018, compared to $4.8 million, or $0.25 per diluted share for the same period a year ago. Return on assets was 0.88% for the three months ended June 30, 2018 compared to 0.61% for the same period in fiscal 2017. Net income totaled $8.2 million, or $0.44 per diluted share for the year ended June 30, 2018, compared to $11.8 million, or $0.65 per diluted share for fiscal year 2017. Return on assets was 0.25% for the year ended June 30, 2018, compared to 0.40% in the prior year. Earnings for the year ended June 30, 2018 included a $17.9 million write-down of deferred tax assets following a deferred tax revaluation resulting from enactment of the Tax Cuts and Jobs Act (the "Tax Act”) with no comparable charge in fiscal year 2017, which was partially offset by the absence of merger-related expenses, which totaled $7.8 million in fiscal year 2017.
For the quarter ended June 30, 2018 compared to the corresponding quarter in the previous year and before the write-down of deferred tax assets from the change in the federal tax rate, merger-related expenses, and certain state income tax expenses (non-GAAP):
net income increased 42.0% to $6.8 million from $4.8 million;
diluted earnings per share increased 44.0% to $0.36 from $0.25; and
return on assets increased 36.1% to 0.83% from 0.61%.
For the year ended June 30, 2018 compared to the year ended June 30, 2017 and before the write-down of deferred tax assets from the change in the federal tax rate, merger-related expenses, certain state income tax expenses, and gains from the sale of premises and equipment (non-GAAP):
net income increased 51.3% to $25.9 million from $17.1 million;
diluted earnings per share increased 46.8% to $1.38 from $0.94; and
return on assets increased 37.9% to 0.80% from 0.58%.

The reconciliation of non-GAAP measures, which the Company believes facilitates the assessment of its banking operations and peer comparability, is included in tabular form at the end of this release.

For the year ended June 30, 2018 compared to the year ended June 30, 2017:
commercial loan portfolio originations increased $49.0 million, or 9.0% from $541.5 million to $590.5 million;
retail loan portfolio originations increased $18.2 million, or 5.9% from $305.4 million to $323.6 million;
"Fiscal 2018 was truly an inflection point for our financial performance as evidenced by our core results,” said Dana Stonestreet, Chairman, President and CEO. “We continued our focus on organic loan and deposit growth while remixing our balance sheet to maximize earnings. We enhanced our franchise value by hiring numerous high-performing revenue producers throughout key urban markets; fully developing our new SBA and equipment finance lines of business; and through the opening of a commercial loan production office in Greensboro, NC and a de novo full service branch in Cary, NC. As a result, we had a record year of over $1 billion in loan originations and net organic loan growth of 8%; SBA loan sales generated over $1 million in noninterest income during the year; and our brand new equipment finance line of business had $20 million in originations in the past quarter. We will continue to capitalize on this momentum in fiscal 2019 to enhance our financial performance and create additional shareholder value.”
Income Statement Review
Net interest income increased to $25.6 million for the quarter ended June 30, 2018 compared to $24.6 million for the comparative quarter in fiscal 2017. The $1.0 million, or 4.2% increase was primarily due to a $3.4 million increase in interest and dividend

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income driven by an increase in average interest-earning assets, which was partially offset by a $2.4 million increase in interest expense. Average interest-earning assets increased $180.8 million, or 6.3% to $3.0 billion for the quarter ended June 30, 2018 compared to $2.9 billion for the corresponding quarter in fiscal 2017. For the quarter ended June 30, 2018, the average balance of total loans receivable increased $157.5 million, or 6.8% due to organic loan growth. The average balance of all other interest-earning assets increased $43.3 million, or 8.1% primarily due to increases in commercial paper investments. These increases were mainly funded by increases in average interest-bearing deposits of $125.9 million, or 7.2% and average noninterest bearing deposits of $21.6 million, or 7.3% as compared to the same quarter last year. Net interest margin (on a fully taxable-equivalent basis) for the three months ended June 30, 2018 decreased to 3.43% from 3.53% for the same period a year ago. We continue to utilize our leveraging strategy, where designated short-term Federal Home Loan Bank ("FHLB") borrowings are invested in various short-term liquid assets to generate additional net interest income, as well as the required purchase of additional FHLB stock which generates increased dividend income; however, we have reduced the amount of assets purchased and liabilities assumed as part of the leveraging strategy during the past year and expect to continue reducing these amounts commensurate with anticipated organic loan growth. During the three months ended June 30, 2018 our leveraging strategy produced an additional $1.0 million in interest and dividend income at an average yield of 2.58%, while the average cost of the borrowings was 1.91%, resulting in approximately $263,000 in net interest income. During the same quarter in the prior fiscal year, our leveraging strategy produced an additional $848,000 in interest and dividend income at an average yield of 1.38%, while the average cost of the borrowings was 0.95%, resulting in approximately $265,000 in net interest income. Excluding the effects of the leveraging strategy, the tax equivalent net interest margin would be 3.57% and 3.82% for the quarters ended June 30, 2018 and 2017, respectively.

Total interest and dividend income increased $3.4 million, or 12.5% for the three months ended June 30, 2018 as compared to the same period last year, which was primarily driven by a $2.4 million, or 9.5% increase in loan interest income and a $1.1 million, or 125.0% increase in interest income from certificates of deposit and other interest-bearing deposits, partially offset by a $120,000, or 12.0% decrease in interest income from securities available for sale. The additional loan interest income was primarily due to the increase in the average balance of loans receivable and an increase in loan yields. Average loan yields increased seven basis points to 4.48% for the quarter ended June 30, 2018 from 4.41% in the corresponding quarter from last year primarily due to loans recently originated at higher rates and was partially offset by a $710,000, or 54.3% decrease in the accretion of purchase discounts on acquired loans as a result of reduced prepayments as compared to the same quarter last year. For the quarters ended June 30, 2018 and 2017, the average loan yields included 10 and 23 basis points, respectively, from the accretion of purchase discounts on acquired loans.
Total interest expense increased $2.4 million, or 87.3% for the quarter ended June 30, 2018 compared to the same period last year, which primarily related to deposit gathering initiatives along with an 20 basis point increase in the average cost of deposits. The overall average cost of funds increased 36 basis points to 0.82% for the current quarter as compared to the same quarter last year due primarily to the impact of the recent increases in the federal funds rate on our borrowings.
Net interest income increased $9.4 million or 10.4% to $100.6 million for the year ended June 30, 2018 compared to $91.2 million for the year ended June 30, 2017. Average interest-earning assets increased $292.3 million, or 10.9% to $3.0 billion for the year ended June 30, 2018 compared to $2.7 billion in the prior year. The $338.5 million, or 16.3% increase in average balance of total loans receivable for the year ended June 30, 2018 was due to a full year's impact of the TriSummit Bank acquisition and increased organic loan growth. This increase was mainly funded by the cumulative decrease of $46.2 million, or 7.6% in all other average interest-earning assets, an increase in average interest-bearing deposits of $152.2 million, or 9.2%, and an increase in average borrowings, consisting primarily of short-term FHLB advances of $80.4 million, or 13.9%. Net interest margin (on a fully taxable-equivalent basis) for the year ended June 30, 2018 decreased six basis points to 3.43% from 3.49% for last year. For the year ended June 30, 2018, our leveraging strategy produced an additional $4.1 million in interest and dividend income at an average yield of 1.90%, while the average cost of the borrowings was 1.39%, resulting in approximately $1.1 million in net interest income. Our leveraging strategy produced an additional $3.6 million in interest and dividend income at an average yield of 1.14% during fiscal year 2017, while the average cost of the borrowings was 0.58%, resulting in approximately $1.8 million in net interest income. Excluding the effects of the leveraging strategy, the tax equivalent net interest margin would be 3.66% and 3.88% for the years ended June 30, 2018 and 2017, respectively.
Total interest and dividend income increased $17.3 million, or 17.4% for the year ended June 30, 2018 as compared to the year ended June 30, 2017. The increase was primarily driven by a $15.0 million, or 16.7% increase in loan interest income, a $2.2 million, or 59.4% increase in certificates of deposit and other interest-bearing deposits, and a $354,000, or 21.3% increase in other investment income partially offset by a $315,000, or 7.9% decrease in interest income from securities available for sale. The additional loan interest income was primarily due to the increase in the average balance of loans receivable, which was partially offset by a $3.0 million decrease in the accretion of purchase discounts on acquired loans to $3.2 million for the year ended June 30, 2018 from $6.1 million for fiscal year 2017, as a result of full repayments of several loans with large discounts in the previous year. This decrease caused average loan yields to decrease three basis points to 4.41% for the year ended June 30, 2018 from

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4.44% in fiscal 2017. Excluding the effects of the accretion on purchase discounts on acquired loans, loan yields increased 13 basis points to 4.28% for the year ended June 30, 2018 compared to 4.15% in fiscal 2017.
Total interest expense increased $7.8 million, or 94.9% for the year ended June 30, 2018 compared to the prior fiscal year. This increase was primarily related to the increase in average interest-bearing deposits and borrowings coupled with the increased cost of nine and 78 basis points for the years ended June 30, 2018 and 2017, respectively. The overall cost of funds increased 28 basis points to 0.65% for the year ended June 30, 2018 compared to 0.37% in the last fiscal year.
Noninterest income increased $1.1 million, or 27.1% to $5.4 million for the three months ended June 30, 2018 from $4.2 million for the same period in the previous year. The leading factors of the increase included a $338,000, or 16.6% increase in service charges on deposit accounts as a result of the increase in deposit accounts and related fees; a $628,000, or 66.0% increase in loan income from the gain on sale of mortgage loans and various commercial loan-related fees driven by the commencing of originations and sales of the guaranteed portion of U.S Small Business Administration (“SBA”) commercial loans; and a $215,000, or 30.2% increase in other noninterest income mainly from investments in small business investment companies ("SBIC").
Noninterest income increased $3.6 million, or 22.1% to $19.7 million for the year ended June 30, 2018 from $16.1 million for the year ended June 30, 2017, primarily due to a $1.1 million, or 14.2% increase in service charges on deposit accounts; a $1.8 million, or 49.6% increase in loan income from the gain on sale of mortgage loans and various commercial loan-related fees; and $879,000, or 38.9% increase in other noninterest income. Partially offsetting these increases was a $221,000, or 57.4% decrease in gains from the sale of premises and equipment for the year ended June 30, 2018 compared to last fiscal year.
Noninterest expense for the quarters ended June 30, 2018 and 2017 remained consistent at $21.8 million.
Noninterest expense for the year ended June 30, 2018 decreased $4.9 million, or 5.5% to $85.3 million compared to $90.3 million for the year ended June 30, 2017. The decrease was primarily driven by the absence of the previously mentioned $7.8 million of merger-related expenses; a $192,000, or 11.5% decrease in marketing and advertising; a $210,000, or 3.2% decrease in computer services; and a $222,000, or 15.7% decrease in real estate owned ("REO") related expenses primarily as a result of fewer REO properties held. Partially offsetting these decreases were the additional expenses related to the TriSummit acquisition, a new commercial loan production office in Greensboro, NC, new SBA and equipment finance lines of business, and the opening of a de novo branch in Cary, NC as shown in the cumulative increase of $3.4 million, or 5.0% in salaries and employee benefits; net occupancy expense; telephone, postage, and supplies; and other expenses for the year ended June 30, 2018 compared to last year. Deposit insurance premiums increased $241,000, or 17.5% as the net asset base has increased.
For the quarter ended June 30, 2018, the Company's income tax expense was $2.0 million compared to $2.2 million for the quarter ended June 30, 2017. The decrease was primarily driven by the reduction in the federal corporate tax rate to 27.5% for the quarter ended June 30, 2018 from 34.0% for the quarter ended June 30, 2017. The Company also had a $275,000 benefit related to the revaluation of various state deferred tax assets with no comparable benefit in the corresponding quarter in the prior year. In addition, as a result of the Tax Act, we incurred an additional $103,000 in income tax expense for the quarter ended June 30, 2018 to adjust the tax valuation allowance on our alternative minimum tax ("AMT") credits in accordance with Internal Revenue Service guidelines. Our fiscal year end requires the use of a blended federal tax rate as prescribed by the Internal Revenue Code, which is 27.5% and was used through June 30, 2018. Beginning on July 1, 2018, the Company began using the new federal corporate tax rate of 21%.
For the year ended June 30, 2018, the Company's income tax expense was $26.7 million compared to $5.2 million for the year ended June 30, 2017. The increase was mainly driven by the reduction in the federal corporate tax rate, which required the Company to revalue net deferred tax assets and establish the tax valuation allowance on our AMT credits as discussed above, resulting in a $17.9 million adjustment through income tax expense; and to a lesser extent higher pre-tax income. In addition, for the year ended June 30, 2018, the Company had a benefit of $142,000 and a charge of $490,000 for the year ended June 30, 2017 related to revaluation of various state deferred tax assets.
Balance Sheet Review
Total assets increased $97.6 million, or 3.0% to $3.3 billion at June 30, 2018 from $3.2 billion at June 30, 2017. Total liabilities increased $86.0 million, or 3.1% to $2.9 billion at June 30, 2018 from $2.8 billion at June 30, 2017. Deposit growth of $147.8 million, or 7.2% and the cumulative decrease of $126.3 million, or 30.1% in cash and cash equivalents, certificates of deposit in other financial institutions and investment securities during the year ended June 30, 2018 were used to partially fund the $174.4 million, or 7.4% increase in total loans receivable, the $79.2 million, or 52.9% increase in commercial paper, and reduce borrowings by $61.5 million, or 8.8%. The increase in net loans receivable was driven by $170.5 million of organic loan growth. The $24.8 million, or 43.3% decrease in deferred income taxes was driven primarily by the previously mentioned write-down of deferred tax assets and to a lesser extent, the use of net operating losses as our taxable income increased.

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Total deposits increased $147.8 million, or 7.2%, during the year ended June 30, 2018 to $2.2 billion. The increase was primarily due to a $93.8 million increase in our core deposits (which exclude certificates of deposit) from growth initiatives and a $54.0 million increase in certificates of deposit, which primarily related to additional brokered deposits.
Stockholders' equity at June 30, 2018 increased $11.2 million, or 2.8% to $409.2 million from $397.6 million at June 30, 2017. The increase was primarily driven by $8.2 million in net income, $3.0 million in stock-based compensation, and $680,000 in a cumulative adjustment for the adoption of Accounting Standard Update 2016-09, "Improvements to Employee Share-Based Payment Accounting," partially offset by a $1.9 million decrease in other comprehensive income representing unrealized losses on investment securities, net of tax. As of June 30, 2018, HomeTrust Bank was considered "well capitalized" in accordance with its regulatory capital guidelines and exceeded all regulatory capital requirements with Common Equity Tier 1, Tier 1 Risk-Based, Total Risk-Based, and Tier 1 Leverage capital ratios of 11.70%, 11.70%, 12.45%, and 10.33%, respectively.  In addition, the Company exceeded all regulatory capital requirements as of that date. The $17.9 million deferred tax revaluation did not have a material impact on the Company's regulatory capital ratios.
Asset Quality
The allowance for loan losses was $21.1 million, or 0.83% of total loans, at June 30, 2018 compared to $21.2 million, or 0.90% of total loans, at June 30, 2017. The allowance for loan losses to gross loans, excluding acquired loans, was 0.91% at June 30, 2018, compared to 1.03% at June 30, 2017.
There was no provision for losses on loans for the three months or year ended June 30, 2018 and 2017 reflecting continued improvements in our asset quality, offset by loan growth. Net loan charge-offs totaled $412,000 for the three months ended June 30, 2018 as compared to $54,000 in net recoveries for the same period during the prior fiscal year. Net loan charge-offs decreased to $91,000 for the year ended June 30, 2018 from $141,000 for fiscal 2017. Net charge-offs as a percentage of average loans were 0.07% for the quarter ended June 30, 2018 compared to net recoveries of (0.01)% for the same period last fiscal year. Net charge-offs as a percentage of average loans decreased to 0.00% for the year ended June 30, 2018 from 0.01% for last fiscal year. Our year over year improvements across all credit metrics continue to demonstrate our commitment to growing and maintaining a high quality loan portfolio.
Nonperforming assets decreased 27.0% to $14.6 million, or 0.44% of total assets, at June 30, 2018, compared to $20.0 million, or 0.62% of total assets, at June 30, 2017. Nonperforming assets included $10.9 million in nonaccruing loans and $3.7 million in REO at June 30, 2018, compared to $13.7 million and $6.3 million, in nonaccruing loans and REO, respectively, at June 30, 2017.  Included in nonperforming loans are $4.2 million of loans restructured from their original terms of which $2.6 million were current at June 30, 2018, with respect to their modified payment terms. The decrease in nonaccruing loans was primarily due to continued improvement in credit quality throughout the loan portfolio and loans returning to performing status as payment history and the borrower's financial status improved. At June 30, 2018, $5.6 million, or 51.6%, of nonaccruing loans were current on their required loan payments. Purchased impaired loans aggregating $3.4 million acquired from prior acquisitions are excluded from nonaccruing loans due to the accretion of discounts established in accordance with the acquisition method of accounting for business combinations. Nonperforming loans to total loans decreased to 0.43% at June 30, 2018 from 0.58% at June 30, 2017.
The ratio of classified assets to total assets decreased to 1.00% at June 30, 2018 from 1.57% at June 30, 2017. Classified assets decreased 34.2% to $33.1 million at June 30, 2018 compared to $50.2 million at June 30, 2017.


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About HomeTrust Bancshares, Inc.
HomeTrust Bancshares, Inc. is the holding company for HomeTrust Bank. As of June 30, 2018, the Company had assets of $3.3 billion. The Bank, founded in 1926, is a North Carolina state chartered, community-focused financial institution committed to providing value added relationship banking through 43 locations as well as online/mobile channels. Locations include: North Carolina (including the Asheville metropolitan area, the "Piedmont" region, Charlotte, Cary, and Raleigh), Upstate South Carolina (Greenville), East Tennessee (including Kingsport/Johnson City/Bristol, Knoxville, and Morristown) and Southwest Virginia (including the Roanoke Valley). The Bank is the 2nd largest community bank headquartered in North Carolina.
Forward-Looking Statements
This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements often include words such as "believe," "expect," "anticipate," "estimate," and "intend" or future or conditional verbs such as "will," "would," "should," "could," or "may." Forward-looking statements are not historical facts but instead represent management's current expectations and forecasts regarding future events, many of which are inherently uncertain and outside of our control. Actual results may differ, possibly materially, from those currently expected or projected in these forward-looking statements. Factors that could cause our actual results to differ materially from those described in the forward-looking statements, include expected cost savings, synergies and other financial benefits from our acquisitions might not be realized within the expected time frames or at all, and costs or difficulties relating to integration matters might be greater than expected; increased competitive pressures; changes in the interest rate environment; changes in general economic conditions and conditions within the securities markets; legislative and regulatory changes; and other factors described in HomeTrust's latest annual Report on Form 10-K and Quarterly Reports on Form 10-Q and other documents filed with or furnished to the Securities and Exchange Commission - which are available on our website at www.hometrustbanking.com and on the SEC's website at www.sec.gov. Any of the forward-looking statements that we make in this press release or the documents we file with or furnish to the SEC are based upon management's beliefs and assumptions at the time they are made and may turn out to be wrong because of inaccurate assumptions we might make, because of the factors described above or because of other factors that we cannot foresee. We do not undertake and specifically disclaim any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. These risks could cause our actual results for fiscal 2018 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of, us and could negatively affect our operating and stock performance.


WEBSITE: WWW.HOMETRUSTBANCSHARES.COM
Contact:
Dana L. Stonestreet – Chairman, President and Chief Executive Officer
Tony J. VunCannon – Executive Vice President, Chief Financial Officer, and Treasurer
828-259-3939


5



Consolidated Balance Sheets (Unaudited)
(Dollars in thousands)
June 30, 2018
 
March 31, 2018
 
December 31, 2017
 
September 30,
2017
 
June 30, 2017 (2)
Assets
 
 
 
 
 
 
 
 
 
Cash
$
45,222

 
$
38,100

 
$
46,743

 
$
38,162

 
$
41,982

Interest-bearing deposits
25,524

 
41,296

 
51,922

 
40,809

 
45,003

Cash and cash equivalents
70,746

 
79,396

 
98,665

 
78,971

 
86,985

Commercial paper
229,070

 
239,435

 
199,722

 
199,774

 
149,863

Certificates of deposit in other financial institutions
66,937

 
84,218

 
100,349

 
110,454

 
132,274

Securities available for sale, at fair value
154,993

 
160,971

 
167,669

 
182,053

 
199,667

Other investments, at cost
37,214

 
36,783

 
38,877

 
38,651

 
39,355

Loans held for sale
5,873

 
6,071

 
7,072

 
7,793

 
5,607

Total loans, net of deferred loan fees
2,525,852

 
2,445,755

 
2,418,014

 
2,394,755

 
2,351,470

Allowance for loan losses
(21,060
)
 
(21,472
)
 
(21,090
)
 
(21,997
)
 
(21,151
)
Net loans
2,504,792

 
2,424,283

 
2,396,924

 
2,372,758

 
2,330,319

Premises and equipment, net
62,537

 
62,725

 
62,435

 
62,614

 
63,648

Accrued interest receivable
9,344

 
9,216

 
9,371

 
9,340

 
8,758

Real estate owned ("REO")
3,684

 
5,053

 
4,818

 
5,941

 
6,318

Deferred income taxes
32,565

 
34,311

 
36,526

 
55,653

 
57,387

Bank owned life insurance ("BOLI")
88,028

 
87,532

 
86,984

 
86,561

 
85,981

Goodwill
25,638

 
25,638

 
25,638

 
25,638

 
25,638

Core deposit intangibles
4,528

 
5,131

 
5,773

 
6,454

 
7,173

Other assets
8,220

 
10,100

 
9,765

 
7,343

 
7,560

Total Assets
$
3,304,169

 
$
3,270,863

 
$
3,250,588

 
$
3,249,998

 
$
3,206,533

Liabilities and Stockholders' Equity
 

 
 

 
 

 
 

 
 

Liabilities
 

 
 

 
 

 
 

 
 

Deposits
$
2,196,253

 
$
2,180,324

 
$
2,108,208

 
$
2,100,310

 
$
2,048,451

Borrowings
635,000

 
625,000

 
685,000

 
679,800

 
696,500

Capital lease obligations
1,914

 
1,920

 
1,925

 
1,931

 
1,937

Other liabilities
61,760

 
62,066

 
60,094

 
62,458

 
61,998

Total liabilities
2,894,927

 
2,869,310

 
2,855,227

 
2,844,499

 
2,808,886

Stockholders' Equity
 

 
 

 
 

 
 

 
 

Preferred stock, $0.01 par value, 10,000,000 shares authorized, none issued or outstanding

 

 

 

 

Common stock, $0.01 par value, 60,000,000 shares authorized (1)
191

 
190

 
190

 
190

 
190

Additional paid in capital
217,480

 
216,712

 
215,928

 
214,827

 
213,459

Retained earnings
200,575

 
193,368

 
187,241

 
197,907

 
191,660

Unearned Employee Stock Ownership Plan ("ESOP") shares
(7,406
)
 
(7,538
)
 
(7,670
)
 
(7,803
)
 
(7,935
)
Accumulated other comprehensive income (loss)
(1,598
)
 
(1,179
)
 
(328
)
 
378

 
273

Total stockholders' equity
409,242

 
401,553

 
395,361

 
405,499

 
397,647

Total Liabilities and Stockholders' Equity
$
3,304,169

 
$
3,270,863

 
$
3,250,588

 
$
3,249,998

 
$
3,206,533

_________________________________
(1)
Shares of common stock issued and outstanding at June 30, 2018 was 19,041,668; March 31, 2018 was 19,034,868; December 31, 2017 was 18,967,175; at September 30, 2017 was 18,968,675; and at June 30, 2017 was 18,967,875.
(2)
Derived from audited financial statements.


6



Consolidated Statement of Income (Unaudited)
 
Three Months Ended
 
Year Ended
 
June 30,
 
March 31,
 
June 30,
 
June 30,
 
June 30,
(Dollars in thousands)
2018
 
2018
 
2017
 
2018
 
2017 (1)
Interest and Dividend Income
 
 
 
 
 
 
 
 
 
Loans
$
27,337

 
$
26,355

 
$
24,971

 
$
105,082

 
$
90,069

Securities available for sale
877

 
916

 
997

 
3,668

 
3,983

Certificates of deposit and other interest-bearing deposits
1,969

 
1,498

 
875

 
5,939

 
3,725

Other investments
510

 
496

 
448

 
2,013

 
1,659

Total interest and dividend income
30,693

 
29,265

 
27,291

 
116,702

 
99,436

Interest Expense
 
 
 
 
 
 
 
 
 
Deposits
2,249

 
1,622

 
1,233

 
6,758

 
4,588

Borrowings
2,854

 
2,414

 
1,491

 
9,314

 
3,657

Total interest expense
5,103

 
4,036

 
2,724

 
16,072

 
8,245

Net Interest Income
25,590

 
25,229

 
24,567

 
100,630

 
91,191

Provision for Loan Losses

 

 

 

 

Net Interest Income after Provision for Loan Losses
25,590

 
25,229

 
24,567

 
100,630

 
91,191

Noninterest Income
 
 
 
 
 
 
 

 
 

Service charges and fees on deposit accounts
2,376

 
2,202

 
2,038

 
8,802

 
7,709

Loan income and fees
1,579

 
1,410

 
951

 
5,452

 
3,645

BOLI income
501

 
536

 
512

 
2,117

 
2,088

Gain from sale of premises and equipment

 

 

 
164

 
385

Gain from sales of securities available for sale

 

 
22

 

 
22

Other, net
926

 
778

 
711

 
3,137

 
2,258

Total noninterest income
5,382

 
4,926

 
4,234

 
19,672

 
16,107

Noninterest Expense
 
 
 
 
 
 
 

 
 

Salaries and employee benefits
11,918

 
11,927

 
11,725

 
48,170

 
46,446

Net occupancy expense
2,478

 
2,389

 
2,583

 
9,689

 
9,121

Marketing and advertising
372

 
334

 
407

 
1,478

 
1,670

Telephone, postage, and supplies
777

 
748

 
817

 
2,958

 
2,732

Deposit insurance premiums
373

 
413

 
493

 
1,619

 
1,378

Computer services
1,700

 
1,600

 
1,854

 
6,440

 
6,650

Loss (gain) on sale and impairment of REO
(25
)
 
194

 
13

 
127

 
300

REO expense
308

 
311

 
144

 
1,065

 
1,114

Core deposit intangible amortization
603

 
642

 
758

 
2,645

 
2,823

Merger-related expenses

 

 
69

 

 
7,805

Other
3,250

 
2,763

 
2,972

 
11,140

 
10,220

Total noninterest expense
21,754

 
21,321

 
21,835

 
85,331

 
90,259

Income Before Income Taxes
9,218

 
8,834

 
6,966

 
34,971

 
17,039

Income Tax Expense
2,011

 
2,707

 
2,200

 
26,736

 
5,192

Net Income
$
7,207

 
$
6,127

 
$
4,766

 
$
8,235

 
$
11,847

_________________________________
(1)
Derived from audited financial statements.

 
 
 
 
 
 
 
 
 
 
 
 
 


7



Per Share Data
 
 
Three Months Ended 
 
Year Ended
 
 
June 30,
 
March 31,
 
June 30,
 
June 30,
 
June 30,
 
 
2018
 
2018
 
2017
 
2018
 
2017
Net income per common share:(1)
 
 
 
 
 
 
 
 
 
 
Basic
 
$
0.40

 
$
0.34

 
$
0.26

 
$
0.45

 
$
0.66

Diluted
 
$
0.38

 
$
0.32

 
$
0.25

 
$
0.44

 
$
0.65

Adjusted net income per common share:(2)
 
 
 
 
 
 
 
 
 
 
Basic
 
$
0.38

 
$
0.36

 
$
0.26

 
$
1.44

 
$
0.96

Diluted
 
$
0.36

 
$
0.34

 
$
0.25

 
$
1.38

 
$
0.94

Average shares outstanding:
 
 
 
 
 
 
 
 
 
 
Basic
 
18,121,690

 
18,052,000

 
17,936,511

 
18,028,854

 
17,379,487

Diluted
 
18,847,279

 
18,761,586

 
18,568,587

 
18,726,431

 
17,956,443

Book value per share at end of period
 
$
21.49

 
$
21.10

 
$
20.96

 
$
21.49

 
$
20.96

Tangible book value per share at end of period (2)
 
$
19.96

 
$
19.54

 
$
19.37

 
$
19.96

 
$
19.37

Total shares outstanding at end of period
 
19,041,668

 
19,034,868

 
18,967,875

 
19,041,668

 
18,967,875

__________________________________________________
(1)
Basic and diluted net income per common share have been prepared in accordance with the two-class method.
(2)
See Non-GAAP reconciliation for adjustments.

Selected Financial Ratios and Other Data
 
 
Three Months Ended
 
Year Ended
 
 
June 30, 2018
 
March 31, 2018
 
June 30, 2017
 
June 30, 2018
 
June 30, 2017
Performance ratios:(1)
 
 
 
 
 
 
Return on assets (ratio of net income to average total assets)
 
0.88
%
 
0.76
%
 
0.61
%
 
0.25
%
 
0.40
%
Return on assets - adjusted(2)
 
0.83

 
0.80

 
0.61

 
0.80

 
0.58

Return on equity (ratio of net income to average equity)
 
7.12

 
6.16

 
4.83

 
2.05

 
3.14

Return on equity - adjusted(2)
 
6.75

 
6.47

 
4.88

 
6.43

 
4.54

Tax equivalent yield on earning assets(3)
 
4.10

 
3.99

 
3.91

 
3.97

 
3.79

Rate paid on interest-bearing liabilities
 
0.82

 
0.65

 
0.46

 
0.65

 
0.37

Tax equivalent average interest rate spread(3)
 
3.28

 
3.34

 
3.45

 
3.32

 
3.42

Tax equivalent net interest margin(3) (4)
 
3.43

 
3.44

 
3.53

 
3.43

 
3.49

Tax equivalent net interest margin - adjusted(2)
 
3.57

 
3.65

 
3.82

 
3.66

 
3.88

Average interest-earning assets to average interest-bearing liabilities
 
121.27

 
120.71

 
119.99

 
120.77

 
120.26

Operating expense to average total assets
 
2.65

 
2.63

 
2.79

 
2.63

 
3.06

Efficiency ratio
 
70.24

 
70.70

 
75.81

 
70.93

 
84.12

Efficiency ratio - adjusted(2)
 
69.36

 
69.77

 
74.14

 
70.12

 
75.48

__________________________________
(1)
Ratios are annualized where appropriate.
(2)
See Non-GAAP reconciliation for adjustments.
(3)
For the three months and year ended June 30, 2017 the weighted average rate for municipal leases is adjusted for a 37% combined federal and state tax rate since the interest from these leases is tax exempt. All other periods were at 30%.
(4)
Net interest income divided by average interest-earning assets.



8



 
 
At or For the Three Months Ended
 
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
 
2018
 
2018
 
2017
 
2017
 
2017
Asset quality ratios:
 
 
 
 
 
 
 
 
 
 
Nonperforming assets to total assets(1)
 
0.44
%
 
0.54
 %
 
0.59
%
 
0.62
 %
 
0.62
 %
Nonperforming loans to total loans(1)
 
0.43

 
0.52

 
0.59

 
0.59

 
0.58

Total classified assets to total assets
 
1.00

 
1.29

 
1.38

 
1.50

 
1.57

Allowance for loan losses to nonperforming loans(1)
 
192.96

 
169.71

 
146.79

 
156.17

 
154.77

Allowance for loan losses to total loans
 
0.83

 
0.88

 
0.87

 
0.92

 
0.90

Allowance for loan losses to total gross loans excluding acquired loans(2)
 
0.91

 
0.97

 
0.97

 
1.01

 
1.03

Net charge-offs (recoveries) to average loans (annualized)
 
0.07

 
(0.06
)
 
0.15

 
(0.14
)
 
(0.01
)
Capital ratios:
 
 
 
 
 
 
 
 
 
 
Equity to total assets at end of period
 
12.39
%
 
12.28
 %
 
12.16
%
 
12.48
 %
 
12.40
 %
Tangible equity to total tangible assets(2)
 
11.61

 
11.48

 
11.34

 
11.67

 
11.57

Average equity to average assets
 
12.31

 
12.30

 
12.49

 
12.55

 
12.59

__________________________________________
(1)
Nonperforming assets include nonaccruing loans, consisting of certain restructured loans, and REO. There were no accruing loans more than 90 days past due at the dates indicated.  At June 30, 2018, there were $4.2 million of restructured loans included in nonaccruing loans and $5.6 million, or 51.6%, of nonaccruing loans were current on their loan payments. Purchased impaired loans acquired through bank acquisitions are excluded from nonaccruing loans due to the accretion of discounts in accordance with the acquisition method of accounting for business combinations.
(2)
See Non-GAAP reconciliation for adjustments.


9



Average Balance Sheet Data
 
Three Months Ended June 30,
 
2018
 
2017
(Dollars in thousands)
Average
Balance
Outstanding
 
Interest
Earned/
Paid
(2)
 
Yield/
Rate
(2)
 
Average
Balance
Outstanding
 
Interest
Earned/
Paid
(2)
 
Yield/
Rate
(2)
Assets:
 
 
 
 
 
 
 
 
 
 
 
Interest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
Loans receivable (1)
$
2,476,524

 
$
27,727

 
4.48
%
 
$
2,319,063

 
$
25,550

 
4.41
%
Deposits in other financial institutions
110,819

 
440

 
1.59
%
 
165,702

 
472

 
1.14
%
Investment securities
159,667

 
877

 
2.20
%
 
207,561

 
997

 
1.92
%
Other interest-earning assets(3)
286,524

 
2,039

 
2.85
%
 
160,409

 
851

 
2.12
%
Total interest-earning assets
3,033,534

 
31,083

 
4.10
%
 
2,852,734

 
27,870

 
3.91
%
Other assets
255,903

 
 
 
 
 
281,264

 
 
 
 
Total Assets
3,289,437

 
 
 
 
 
3,133,998

 
 
 
 
Liabilities and equity:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing checking accounts
480,688

 
282

 
0.24
%
 
466,274

 
211

 
0.18
%
Money market accounts
670,486

 
746

 
0.45
%
 
565,213

 
371

 
0.26
%
Savings accounts
216,058

 
70

 
0.13
%
 
242,241

 
81

 
0.13
%
Certificate accounts
509,543

 
1,151

 
0.90
%
 
477,114

 
571

 
0.48
%
Total interest-bearing deposits
1,876,775

 
2,249

 
0.48
%
 
1,750,842

 
1,233

 
0.28
%
Borrowings
624,725

 
2,854

 
1.83
%
 
626,631

 
1,491

 
0.95
%
Total interest-bearing liabilities
2,501,500

 
5,103

 
0.82
%
 
2,377,473

 
2,724

 
0.46
%
Noninterest-bearing deposits
317,356

 
 
 
 
 
295,763

 
 
 
 
Other liabilities
65,678

 
 
 
 
 
66,236

 
 
 
 
Total liabilities
2,884,534

 
 
 
 
 
2,739,471

 
 
 
 
Stockholders' equity
404,903

 
 
 
 
 
394,527

 
 
 
 
Total liabilities and stockholders' equity
3,289,437

 
 
 
 
 
3,133,998

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earning assets
$
532,034

 
 
 
 
 
$
475,262

 
 
 
 
Average interest-earning assets to average interest-bearing liabilities
121.27
%
 
 
 
 
 
119.99
%
 
 
 
 
Tax-equivalent:
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
 
$
25,980

 
 
 
 
 
$
25,146

 
 
Interest rate spread
 
 
 
 
3.28
%
 
 
 
 
 
3.45
%
Net interest margin(4)
 
 
 
 
3.43
%
 
 
 
 
 
3.53
%
Non-tax-equivalent:
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
 
$
25,590

 
 
 
 
 
$
24,567

 
 
Interest rate spread
 
 
 
 
3.23
%
 
 
 
 
 
3.37
%
Net interest margin(4)
 
 
 
 
3.37
%
 
 
 
 
 
3.44
%
_________________________________________________
(1) The average loans receivable, net balances include loans held for sale and nonaccruing loans.
(2) Interest income used in the average interest earned and yield calculation includes the tax equivalent adjustment of $390 and $579 for the three months ended June 30, 2018 and 2017, respectively, calculated based on a combined federal and state tax rate of 30% and 37%, respectively.
(3) The average other interest-earning assets consists of FRB stock, FHLB stock, and commercial paper.
(4) Net interest income divided by average interest-earning asset.

10



 
Years Ended June 30,
 
2018
 
2017
 
(Dollars in thousands)
Average
Balance
Outstanding
 
Interest
Earned/
Paid
(2)
 
Yield/
Rate
(2)
 
Average
Balance
Outstanding
 
Interest
Earned/
Paid
(2)
 
Yield/
Rate
(2)
 
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
Interest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
 
Loans receivable (1)
$
2,418,946

 
$
106,641

 
4.41
%
 
$
2,080,490

 
$
92,423

 
4.44
%
 
Deposits in other financial institutions
137,026

 
1,934

 
1.41
%
 
177,753

 
1,900

 
1.07
%
 
Investment securities
172,461

 
3,668

 
2.13
%
 
202,866

 
3,983

 
1.96
%
 
Other interest-earning assets(3)
247,829

 
6,018

 
2.43
%
 
222,847

 
3,484

 
1.56
%
 
Total interest-earning assets
2,976,262

 
118,261

 
3.97
%
 
2,683,956

 
101,790

 
3.79
%
 
Other assets
267,399

 
 
 
 
 
261,410

 
 
 
 
 
Total Assets
3,243,661

 
 
 
 
 
2,945,366

 
 
 
 
 
Liabilities and equity:
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing checking accounts
473,880

 
970

 
0.20
%
 
430,527

 
772

 
0.18
%
 
Money market accounts
644,331

 
2,442

 
0.38
%
 
541,030

 
1,405

 
0.26
%
 
Savings accounts
224,582

 
295

 
0.13
%
 
228,360

 
308

 
0.13
%
 
Certificate accounts
463,306

 
3,051

 
0.66
%
 
453,994

 
2,103

 
0.46
%
 
Total interest-bearing deposits
1,806,099

 
6,758

 
0.37
%
 
1,653,911

 
4,588

 
0.28
%
 
Borrowings
658,240

 
9,314

 
1.41
%
 
577,848

 
3,657

 
0.63
%
 
Total interest-bearing liabilities
2,464,339

 
16,072

 
0.65
%
 
2,231,759

 
8,245

 
0.37
%
 
Noninterest-bearing deposits
311,210

 
 
 
 
 
271,477

 
 
 
 
 
Other liabilities
65,489

 
 
 
 
 
65,160

 
 
 
 
 
Total liabilities
2,841,038

 
 
 
 
 
2,568,396

 
 
 
 
 
Stockholders' equity
402,623

 
 
 
 
 
376,970

 
 
 
 
 
Total liabilities and stockholders' equity
3,243,661

 
 
 
 
 
2,945,366

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earning assets
$
511,923

 
 
 
 
 
$
452,197

 
 
 
 
 
Average interest-earning assets to average interest-bearing liabilities
120.77
%
 
 
 
 
 
120.26
%
 
 
 
 
 
Tax-equivalent:
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
 
$
102,189

 
 
 
 
 
$
93,545

 
 
 
Interest rate spread
 
 
 
 
3.32
%
 
 
 
 
 
3.42
%
 
Net interest margin(4)
 
 
 
 
3.43
%
 
 
 
 
 
3.49
%
 
Non-tax-equivalent:
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
 
$
100,630

 
 
 
 
 
$
91,191

 
 
 
Interest rate spread
 
 
 
 
3.27
%
 
 
 
 
 
3.34
%
 
Net interest margin(4)
 
 
 
 
3.38
%
 
 
 
 
 
3.40
%
 
__________________
(1) The average loans receivable, net balances include loans held for sale and nonaccruing loans.
(2) Interest income used in the average interest earned and yield calculation includes the tax equivalent adjustment of $1,559 and $2,354 for the year ended June 30, 2018 and 2017, respectively, calculated based on a combined federal and state tax rate of 30% and 37%, respectively.
(3) The average other interest-earning assets consists of FRB stock, FHLB stock, and commercial paper.
(4) Net interest income divided by average interest-earning assets.


11



Loans
(Dollars in thousands)
June 30, 2018
 
March 31, 2018
 
December 31, 2017
 
September 30, 2017
 
June 30, 2017
Retail consumer loans:
 
 
 
 
 
 
 
 
 
     One-to-four family
$
664,289

 
$
670,036

 
$
686,229

 
$
684,956

 
$
684,089

     HELOCs - originated
137,564

 
143,049

 
150,084

 
152,979

 
157,068

     HELOCs - purchased
166,276

 
165,680

 
162,181

 
162,518

 
162,407

     Construction and land/lots
65,601

 
68,121

 
60,805

 
54,969

 
50,136

     Indirect auto finance
173,095

 
160,664

 
150,042

 
142,915

 
140,879

     Consumer
12,379

 
11,317

 
9,699

 
8,814

 
7,900

Total retail consumer loans
1,219,204

 
1,218,867

 
1,219,040

 
1,207,151

 
1,202,479

Commercial loans:
 
 
 
 
 
 
 
 
 
     Commercial real estate
857,315

 
810,332

 
786,381

 
753,857

 
730,408

     Construction and development
192,102

 
184,179

 
185,921

 
209,672

 
197,966

     Commercial and industrial
148,823

 
132,337

 
127,709

 
124,722

 
120,387

     Municipal leases
109,172

 
101,108

 
100,205

 
100,638

 
101,175

Total commercial loans
1,307,412

 
1,227,956

 
1,200,216

 
1,188,889

 
1,149,936

Total loans
2,526,616

 
2,446,823

 
2,419,256

 
2,396,040

 
2,352,415

     Deferred loan fees, net
(764
)
 
(1,068
)
 
(1,242
)
 
(1,285
)
 
(945
)
Total loans, net of deferred loan fees
2,525,852

 
2,445,755

 
2,418,014

 
2,394,755

 
2,351,470

     Allowance for loan losses
(21,060
)
 
(21,472
)
 
(21,090
)
 
(21,997
)
 
(21,151
)
Loans, net
$
2,504,792

 
$
2,424,283

 
$
2,396,924

 
$
2,372,758

 
$
2,330,319

Deposits
(Dollars in thousands)
June 30, 2018
 
March 31, 2018
 
December 31, 2017
 
September 30, 2017
 
June 30, 2017
Core deposits:
 
 
 
 
 
 
 
 
 
    Noninterest-bearing accounts
$
317,822

 
$
303,875

 
$
313,493

 
$
304,144

 
$
310,172

    NOW accounts
471,364

 
496,934

 
489,668

 
464,993

 
469,377

    Money market accounts
677,665

 
659,791

 
638,259

 
642,351

 
569,607

    Savings accounts
213,250

 
220,497

 
224,732

 
230,943

 
237,149

Total core deposits
1,680,101

 
1,681,097

 
1,666,152

 
1,642,431

 
1,586,305

Certificates of deposit
516,152

 
499,227

 
442,056

 
457,879

 
462,146

Total
$
2,196,253

 
$
2,180,324

 
$
2,108,208

 
$
2,100,310

 
$
2,048,451

Non-GAAP Reconciliations
In addition to results presented in accordance with generally accepted accounting principles utilized in the United States ("GAAP"), this earnings release contains certain non-GAAP financial measures, which include: the efficiency ratio; tangible book value; tangible book value per share; tangible equity to tangible assets ratio; net income excluding merger-related expenses, certain state income tax expense, adjustments for the change in federal tax law, and gain from the sale of premises and equipment; earnings per share ("EPS"), return on assets ("ROA"), and return on equity ("ROE") excluding merger-related expenses, certain state income tax expense, adjustments for the change in federal tax law, and gain from the sale of premises and equipment; and the ratio of the allowance for loan losses to total loans excluding acquired loans. The Company believes these non-GAAP financial measures and ratios as presented are useful for both investors and management to understand the effects of certain items and provides an alternative view of the Company's performance over time and in comparison to the Company's competitors.

Management elected to utilize short-term FHLB borrowings beginning in November 2014 as part of a leverage strategy to increase net interest income. The Company believes that showing the effects of these borrowings on net interest income and net interest margin is useful to both management and investors as these measures are commonly used to measure financial institution's performance and against peers.

The Company believes these measures facilitate comparison of the quality and composition of the Company's capital and earnings ability over time and in comparison to its competitors. These non-GAAP measures have inherent limitations, are not required to be uniformly applied and are not audited. They should not be considered in isolation or as a substitute for total stockholders' equity or operating results determined in accordance with GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies. 


12



Set forth below is a reconciliation to GAAP of our efficiency ratio:
 
 
Three Months Ended
 
Year Ended
(Dollars in thousands)
 
June 30,
 
March 31,
 
June 30,
 
June 30,
 
 
2018
 
2018
 
2017
 
2018
 
2017
Noninterest expense
 
$
21,754

 
$
21,321

 
$
21,835

 
$
85,331

 
$
90,259

Less merger-related expenses
 

 

 
69

 

 
7,805

Noninterest expense – as adjusted
 
$
21,754

 
$
21,321

 
$
21,766

 
$
85,331

 
$
82,454

 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
$
25,590

 
$
25,229

 
$
24,567

 
$
100,630

 
$
91,191

Plus noninterest income
 
5,382

 
4,926

 
4,234

 
19,672

 
16,107

Plus tax equivalent adjustment
 
390

 
406

 
579

 
1,559

 
2,354

Less realized gain on securities
 

 

 
22

 

 
22

Less gain on sale of fixed assets
 

 

 

 
164

 
385

Net interest income plus noninterest income – as adjusted
 
$
31,362

 
$
30,561

 
$
29,358

 
$
121,697

 
$
109,245

Efficiency ratio - adjusted
 
69.36
%
 
69.77
%
 
74.14
%
 
70.12
%
 
75.48
%
Efficiency ratio (without adjustments)
 
70.24
%
 
70.70
%
 
75.81
%
 
70.93
%
 
84.12
%
Set forth below is a reconciliation to GAAP of tangible book value and tangible book value per share:
 
 
As of
(Dollars in thousands, except per share data)
 
June 30, 2018
 
March 31, 2018
 
December 31, 2017
 
September 30, 2017
 
June 30, 2017
Total stockholders' equity
 
$
409,242

 
$
401,553

 
$
395,361

 
$
405,499

 
$
397,647

Less: goodwill, core deposits intangibles, net of taxes
 
29,125

 
29,589

 
30,083

 
29,704

 
30,157

Tangible book value (1)
 
$
380,117

 
$
371,964

 
$
365,278

 
$
375,795

 
$
367,490

Common shares outstanding
 
19,041,668

 
19,034,868

 
18,967,175

 
18,968,675

 
18,967,875

Tangible book value per share
 
$
19.96

 
$
19.54

 
$
19.26

 
$
19.81

 
$
19.37

Book value per share
 
$
21.49

 
$
21.10

 
$
20.84

 
$
21.38

 
$
20.96

_________________________________________________________________
(1)    Tangible book value is equal to total stockholders' equity less goodwill and core deposit intangibles, net of related deferred tax liabilities.

Set forth below is a reconciliation to GAAP of tangible equity to tangible assets:
 
 
As of
 
 
June 30, 2018
 
March 31, 2018
 
December 31, 2017
 
September 30, 2017
 
June 30, 2017
(Dollars in thousands)
 
 
Tangible equity(1)
 
$
380,117

 
$
371,964

 
$
365,278

 
$
375,795

 
$
367,490

Total assets
 
$
3,304,169

 
$
3,270,863

 
$
3,250,588

 
$
3,249,998

 
$
3,206,533

Less: goodwill and core deposit intangibles, net of taxes
 
29,125

 
29,589

 
30,083

 
29,704

 
30,157

Total tangible assets(2)
 
$
3,275,044

 
$
3,241,274

 
$
3,220,505

 
$
3,220,294

 
$
3,176,376

Tangible equity to tangible assets
 
11.61
%
 
11.48
%
 
11.34
%
 
11.67
%
 
11.57
%
_________________________________________________________________
(1)    Tangible equity (or tangible book value) is equal to total stockholders' equity less goodwill and core deposit intangibles, net of related deferred tax liabilities.
(2)    Total tangible assets is equal to total assets less goodwill and core deposit intangibles, net of related deferred tax liabilities.


13



Set forth below is a reconciliation to GAAP net interest income and net interest margin as adjusted to exclude additional FHLB borrowings and proceeds from such borrowings:
 
 
Three Months Ended June 30, 2018
 
Three Months Ended June 30, 2017
(Dollars in thousands)
 
Average Balance Outstanding
 
Interest Earned / Paid
 
Yield/ Rate
 
Average Balance Outstanding
 
Interest Earned / Paid
 
Yield/ Rate
Interest-earning assets
 
$
3,033,535

 
$
31,083

 
4.10
 %
 
$
2,852,735

 
$
27,870

 
3.91
 %
Less: Interest-earning assets funded by additional FHLB borrowings (1)
 
155,000

 
1,001

 
2.58
 %
 
245,000

 
848

 
1.38
 %
Interest-earning assets - adjusted
 
$
2,878,535

 
$
30,082

 
4.18
 %
 
$
2,607,735

 
$
27,022

 
4.15
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities
 
$
2,501,500

 
$
5,103

 
0.82
 %
 
$
2,377,473

 
$
2,724

 
0.46
 %
Additional FHLB borrowings
 
155,000

 
738

 
1.91
 %
 
245,000

 
583

 
0.95
 %
Interest-bearing liabilities - adjusted
 
$
2,346,500

 
$
4,365

 
0.74
 %
 
$
2,132,473

 
$
2,141

 
0.40
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income and net interest margin
 
 
 
$
25,980

 
3.43
 %
 
 
 
$
25,146

 
3.53
 %
Net interest income and net interest margin - adjusted
 
 
 
25,717

 
3.57
 %
 
 
 
24,881

 
3.82
 %
Difference
 
 
 
$
263

 
(0.14
)%
 
 
 
$
265

 
(0.29
)%

 
 
Year Ended June 30, 2018
 
Year Ended June 30, 2017
(Dolla