• NASDAQ : ANCX

  • Price $ 26.27
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Press Release

Access National Grows Deposits and Loans, Hikes Dividend

Company Release - 10/25/2018 6:21 PM ET

RESTON, Va.--(BUSINESS WIRE)-- Access National Corporation (NASDAQ: ANCX) (the “Corporation” or “Access”), parent company for Access National Bank (the “Bank”) and Middleburg Investment Group, reported third quarter 2018 net income of $9.6 million, or $0.46 per diluted share. This represents the Corporation’s 73rd consecutive quarterly profit over its 75 quarter history. Consistent with management’s objective of a 40% dividend payout ratio against level and sustainable earnings, the Board of Directors declared a dividend of $0.17 per share for common shareholders of record as of November 08, 2018 and payable on November 23, 2018. This dividend reflects a $0.01 increase from the prior quarter.

Highlights

  • For the three month period ended September 30, 2018, net income increased 7.2% compared to the preceding period and 37.2% compared to the same period of the prior year;
  • Gross loans held for investment increased $110.1 million (22.2% annualized) during the three-month period to $2.1 billion at September 30, 2018;
  • Excluding brokered deposits, customer deposits increased $131.8 million (25.0% annualized) during the three month period ended September 30, 2018 to $2.2 billion;
  • Demand deposits of $1.2 billion at September 30, 2018 comprised 52.9% of total deposits, inclusive of $757.9 million of non-interest bearing demand deposits or 33.0% of the deposit portfolio. Non-interest bearing demand deposits increased $38.0 million and $47.2 million during the three month and twelve month periods ended September 30, 2018, respectively; and
  • Tangible book value1 per common share was $12.33 at September 30, 2018, an increase of $0.34 from the linked quarter.

According to CEO Michael Clarke, “Third quarter 2018 reflects strong performance against our stated strategic growth and profitability measures as customer deposits and loans exceeded a linked quarter growth rate in excess of $200 million per annum. We experienced strong increases in nominal earnings during the period and exceeded our strategic profitability measures with Return on Tangible Common Average Equity (ROTCAE) of 15.20% compared to the target of 13.25%, and Return on Average Assets of 1.30% compared to the target of 1.25%. Mr. Clarke continued, “The announced merger with Union Bankshares Corporation (“Union”) will enable us to further accelerate growth and opportunity in our markets. We are excited about being an important part of the Union team and the combined positioning as Virginia’s regional bank.”

On a linked quarter basis, the mortgage segment margins increased while origination volume decreased, resulting in pretax earnings of $1.0 million for the three months ended September 30, 2018 compared to $0.9 million for the linked quarter.

During the period, we evaluated the accounting for our low income housing tax credits as well as investments in small business investment company funds (SBICs) and elected to change the policy for these investments. We believe the change better reflects our economic interest in these investments. We believe that the results of this change are immaterial to the results of our operations and they were recorded through the current period as a one-time after-tax gain of $882 thousand or $0.04 per share on a fully diluted basis. This includes $608 thousand ($445 thousand pre-tax credit to income with a $163 thousand credit to income tax provision) related to low income housing tax credits and a $466 thousand pre-tax gain related to equity investments.

The Corporation’s efficiency ratio has improved each quarter during 2018 and is within the stated strategic target threshold of 65% or better at September 30, 2018 at 60.19%.

The net interest margin on a fully tax equivalent (non-GAAP) basis remained consistent at 3.67% when comparing third quarter 2018 to the linked quarter. Net purchase mark accretion included in net interest income was $634 thousand for the third quarter 2018 and $781 thousand for the linked quarter.

Gross loans Held for Investment increased $110.1 million during the quarter to $2.1 billion at September 30, 2018. As of September 30, 2018, commercial and industrial loans as well as owner occupied commercial real estate loans combined to account for 49% of the loan portfolio, reflecting the Corporation’s continued focus on lower-middle-market businesses. The Corporation’s priority focus remains on expanding borrowers in these portfolios as a driver of future growth in the loan portfolio, along with related core deposits.

Noninterest-bearing deposits at September 30, 2018 were $757.9 million, an increase of $38.0 million compared to the second quarter of 2018. Noninterest-bearing deposits remain the largest and most attractive source of funding for the Corporation, comprising 33% of the deposit portfolio. When combined with interest-bearing demand deposit accounts, total transaction accounts comprise 53% of the total deposit portfolio, reducing reliance of non-core and more price sensitive funding.

Total deposits at September 30, 2018 were $2.3 billion, an increase of $168.1 million from the $2.1 billion at June 30, 2018. The increase in interest-bearing deposits was most pronounced in the savings and interest-bearing deposits category. The Corporation’s strategy places a high priority on the maintenance and expansion of core deposits, particularly transaction accounts. Premium interest rates are targeted to existing high value core depositors and used offensively to acquire new accounts in selective market segments.

Short-term borrowings decreased $77.4 million during the three months ended September 30, 2018. This decrease is primarily attributable to the increase in core deposit accounts seen during the quarter.

Asset quality remained strong for the quarter. Non-performing assets (“NPAs”) increased to $6.1 million at September 30, 2018 from $6.0 million at June 30, 2018, representing 0.20% and 0.21% of total assets, respectively. Included in the NPA total is $644 thousand in other real estate owned. The allowance for loan loss was $17.3 million and $15.8 million at September 30, 2018 and December 31, 2017, respectively, and represented 0.83% of total loans held for investment at the end of the third quarter 2018.

Tangible book value2 per common share increased to $12.33 at September 30, 2018 from $11.52 at December 31, 2017. The tangible common equity ratio for Access National Corporation and its subsidiary bank was 9.09% at September 30, 2018, within the Corporation’s target range of 8.50% to 9.50%.

Access National Corporation is the parent company of Access National Bank and Middleburg Investment Group serving Northern and Central Virginia. Additional information is available on our website at www.AccessNationalBank.com. Shares of Access National Corporation are traded on the NASDAQ Global Market under the symbol "ANCX".

Access National Corporation will hold a conference call on Friday, October 26, 2018 at 9:00 a.m. Eastern Time during which management will review earnings and performance trends. Callers wishing to participate may call toll-free by dialing (844) 348-3796; international callers wishing to participate may do so by dialing (213) 358-0951. The conference ID number is 6696465.

Forward-Looking Statements

Certain statements in this press release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, projections, predictions, expectations, or beliefs about future events or results and are not statements of historical fact. Such statements also include statements as to the anticipated impact of the acquisition by Union Bankshares Corporation (“Union”) of Access. Such forward-looking statements are based on various assumptions as of the time they are made, and are inherently subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are often accompanied by words that convey projected future events or outcomes such as “expect,” “believe,” “estimate,” “plan,” “project,” “anticipate,” “intend,” “will,” “may,” “view,” “opportunity,” “potential,” or words of similar meaning or other statements concerning opinions or judgment of Access or its management about future events. Although Access believes that its expectations with respect to forward-looking statements are based upon reasonable assumptions within the bounds of its existing knowledge of its business and operations, there can be no assurance that actual results, performance, or achievements of Access will not differ materially from any projected future results, performance, or achievements expressed or implied by such forward-looking statements. Actual future results performance, or achievements may differ materially from historical results or those anticipated depending on a variety of factors, including but not limited to, changes in asset quality and credit risk, changes in interest rates and capital markets, competitive conditions, the businesses of Union and Access may not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected, expected revenue synergies and cost savings from the proposed acquisition may not be fully realized or realized within the expected time frame, revenues following the proposed acquisition may be lower than expected, customer and employee relationships and business operations may be disrupted by the proposed acquisition, the diversion of management time on acquisition-related issues, changes in Union’s share price before closing, risks relating to the potential dilutive effect of shares of Union common stock to be issued in the proposed transaction, the ability to obtain regulatory, shareholder or other approvals or other conditions to closing on a timely basis or at all, the ability to close the proposed acquisition on the expected timeframe, or at all, and that closing may be more difficult, time-consuming or costly than expected, the reaction to the proposed acquisition of the companies’ customers, employees and counterparties, and other risk factors, many of which are beyond the control of Union and Access. We refer you to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Access’s Annual Report on Form 10-K for the year ended December 31, 2017 and comparable “risk factors” sections of Access’s Quarterly Reports on Form 10-Q and other filings, which have been filed with the SEC and are available on the SEC’s website at www.sec.gov. All of the forward-looking statements made in this press release are expressly qualified by the cautionary statements contained or referred to herein. The actual results or developments anticipated may not be realized or, even if substantially realized, they may not have the expected consequences to or effects on Access or its business or operations. Readers are cautioned not to rely too heavily on the forward-looking statements contained in this press release. Forward-looking statements speak only as of the date they are made and Access does not undertake any obligation to update, revise or clarify these forward-looking statements, whether as a result of new information, future events or otherwise.

Important Additional Information will be Filed with the SEC

As previously disclosed, Access and Union have entered into an Agreement and Plan of Reorganization pursuant to which Access will merge with and into Union. Union will be the surviving corporation in the merger.

This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval with respect to the proposed acquisition by Union of Access. No offer of securities shall be made except by means of a prospectus meeting the requirements of the Securities Act of 1933, as amended, and no offer to sell or solicitation of an offer to buy shall be made in any jurisdiction in which such offer, solicitation or sale would be unlawful.

In connection with the proposed acquisition, Union will file with the Securities and Exchange Commission (the “SEC”) a Registration Statement on Form S-4 that will include a joint proxy statement of Access and Union and a prospectus of Union (the “Joint Proxy/Prospectus”), and each of Access and Union may file with the SEC other relevant documents concerning the proposed transaction. A definitive Joint Proxy/Prospectus will be sent to the shareholders of Access and Union. Investors and shareholders of Access and Union are urged to read carefully and in their entirety the Registration Statement and Joint Proxy/Prospectus when they become available and any other relevant documents filed with the SEC by Access and Union, as well as any amendments or supplements to those documents, because they will contain important information about the proposed transaction.

Investors and shareholders may obtain free copies of the Registration Statement and the Joint Proxy/Prospectus (when available) and other documents filed with the SEC by Access and Union through the website maintained by the SEC at www.sec.gov. Free copies of the Registration Statement and the Joint Proxy/Prospectus and other documents filed with the SEC also may be obtained by directing a request by telephone or mail to Access National Corporation, 1800 Robert Fulton Drive, Suite 300, Reston, VA 20191. Attention: Sheila Linton (telephone: (703) 871-2100) or Union Bankshares Corporation, 1051 East Cary Street, Suite 1200, Richmond, Virginia 23219, Attention: Investor Relations (telephone: (804) 633-5031), or by accessing Access’s website at www.accessnationalbank.com under “Investor Relations” or Union’s website at www.bankatunion.com under “Investor Relations.” The information on Access’s and Union’s websites is not, and shall not be deemed to be, a part of this Form 8-K or incorporated into other filings either company makes with the SEC.

Participants in the Solicitation

Access, Union and their respective directors and certain of their executive officers and employees may be deemed to be participants in the solicitation of proxies from the shareholders of Access or Union in connection with the proposed transaction. Information about the directors and executive officers of Access and their ownership of Access Common Stock is set forth in the proxy statement for Access’s 2018 annual meeting of shareholders, which was filed with the SEC on April 12, 2018. Information about the directors and executive officers of Union and their ownership of Union Common Stock is set forth in the proxy statement for Union’s 2018 annual meeting of shareholders, which was filed with the SEC on March 21, 2018. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the Joint Proxy/Prospectus and other relevant materials to be filed with the SEC when they become available. Free copies of these documents may be obtained as described above.

 
___________________________________

1

  Non-GAAP financial information. See “Reconciliation of Non-GAAP Financial Measures” at end of release.
2 Non-GAAP financial information. See “Reconciliation of Non-GAAP Financial Measures” at end of release.
 
       
Access National Corporation
Consolidated Balance Sheet - Unaudited
                 
September 30, June 30, December 31, September 30,
(In Thousands Except for Share and Per Share Data)   2018   2018   2017   2017
 
ASSETS
 
Cash and due from banks $ 14,062 $ 17,346 $ 29,855 $ 12,774
 
Interest-bearing balances and federal funds sold 110,308 105,626 92,458 117,159
 
Investment securities:
Available-for-sale, at fair value 436,484 421,975 406,067 393,650
Marketable equity, at fair value - 1,340 1,379 1,390
Held-to-maturity, amortized cost (fair value of $16,368, $16,419, $16,379, and $16,416, respectively)   16,314       16,350       15,721       15,778  

Total investment securities

452,798 439,665 423,167 410,818
 
Restricted Stock, at amortized cost 21,192 23,742 16,572 14,447
 
Loans held for sale - at fair value 36,600 51,365 31,999 26,234
 

Loans held for investment net of allowance for loan losses of $17,349, $16,543, $15,805, and $15,692, respectively

2,076,921 1,967,646 1,963,104 1,953,968
 
Premises, equipment and land, net 27,768 28,082 27,797 26,400
 
Goodwill and intangible assets, net 184,028 184,838 185,161 182,156
 
Other assets 97,646 102,275 103,781 129,113
             
Total assets $ 3,021,323     $ 2,920,585     $ 2,873,894     $ 2,873,069  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
LIABILITIES
Noninterest-bearing deposits $ 757,900 $ 719,873 $ 744,960 $ 710,691
 
Interest-bearing demand deposits 481,676 477,329 496,677 490,759
 
Savings and interest-bearing deposits 711,262 625,120 623,889 658,799
 
Time deposits   344,026       304,398       368,622       425,963  
 
Total deposits 2,294,864 2,126,720 2,234,148 2,286,212
 
Short-term borrowings 212,561 289,934 145,993 79,527
 
Long-term borrowings 45,000 45,000 40,000 60,000
 
Trust preferred debentures 3,942 3,922 3,883 3,863
 
Other liabilities and accrued expenses 23,013 20,727 28,246 23,294
             
Total Liabilities   2,579,380       2,486,303       2,452,270       2,452,896  
 
SHAREHOLDERS' EQUITY

Common stock $0.835 par value; 60,000,000 authorized; issued and outstanding, 20,920,262, 20,796,193, 20,534,163, and 20,449,738, respectively

17,468 17,365 17,146 17,076
 
Additional paid in capital 317,626 314,367 307,670 305,682
 
Retained earnings 115,973 109,690 98,584 98,607
 
Accumulated other comprehensive loss, net (9,124 ) (7,140 ) (1,776 ) (1,192 )
             
Total shareholders' equity   441,943       434,282       421,624       420,173  
             
Total liabilities and shareholders' equity $ 3,021,323     $ 2,920,585     $ 2,873,894     $ 2,873,069  
 
         
Access National Corporation
Consolidated Statement of Operations - Unaudited
                     
Three Months Ended Nine Months Ended
(In Thousands Except for Share and Per Share Data)   September 30, 2018   June 30, 2018   September 30, 2017   September 30, 2018   September 30, 2017
 
INTEREST INCOME
Interest and fees on loans $ 25,687 $ 24,143 $ 24,306 $ 73,241 $ 60,251
 
Interest on federal funds sold and bank balances 578 437 394 1,532 746
 
Interest and dividends on securities   3,047   2,642   2,992   8,369   7,388
Total interest income 29,312 27,222 27,692 83,142 68,385
 
INTEREST EXPENSE
Interest on deposits 3,902 3,017 2,639 9,717 6,560
 
Interest on other borrowings   1,345   1,190   459   3,100   1,366
Total interest expense   5,247   4,207   3,098   12,817   7,926
Net interest income 24,065 23,015 24,594 70,325 60,459
 
Provision for loan losses   700   652   900   2,102   3,200
Net interest income after provision for loan losses 23,365 22,363 23,694 68,223 57,259
 
NONINTEREST INCOME
Service charges and fees 485 494 560 1,456 1,509
 
Gain on sale of loans 4,465 4,196 5,594 11,453 14,985
 
Other Income   2,494   4,400   2,369   11,020   6,917
Total noninterest income 7,444 9,090 8,523 23,929 23,411
 
NONINTEREST EXPENSE
Salaries and benefits 11,113 12,529 11,100 35,370 31,800
 
Occupancy and equipment 2,000 1,640 3,019 5,881 5,820
 
Other operating expense   5,853   6,257   8,674   18,115   23,594
Total noninterest expense   18,966   20,426   22,793   59,366   61,214
Income before income tax 11,843 11,027 9,424 32,786 19,456
 
Income tax expense   2,233   2,065   2,422   6,128   6,001
NET INCOME   9,610   8,962   7,002   26,658   13,455
 
Earnings per common share:
Basic $ 0.46 $ 0.43 $ 0.34 $ 1.28 $ 0.77
Diluted $ 0.46 $ 0.43 $ 0.34 $ 1.28 $ 0.77
 
Average outstanding shares:
Basic 20,847,319 20,736,727 20,409,696 20,734,621 17,156,521
Diluted 20,925,247 20,822,853 20,508,875 20,821,096 17,273,367
 
             
Performance and Capital Ratios - Unaudited
                             
Three Months Three Months Three Months Three Months Nine Months Nine Months Twelve Months
Ended Ended Ended Ended Ended Ended Ended
September 30, June 30, March 31, September 30, September 30, September 30, December 31
(Dollars In Thousands)   2018   2018   2018   2017   2018   2017   2017
 
Return on average assets (annualized) 1.30 % 1.26 % 1.13 % 0.96 % 1.23 % 0.75 % 0.67 %
Return on average tangible equity (annualized) (1) 15.20 % 14.73 % 13.57 % 11.47 % 14.52 % 9.33 % 8.15 %
Net interest margin - fully tax equivalent basis (1) 3.67 % 3.67 % 3.70 % 3.86 % 3.68 % 3.91 % 3.88 %
Net interest margin 3.62 % 3.62 % 3.65 % 3.76 % 3.63 % 3.84 % 3.81 %
Cost of funds 1.17 % 0.98 % 0.79 % 0.70 % 0.98 % 0.73 % 0.73 %
Access National Bank efficiency ratio (2) 53.14 % 57.36 % 59.65 % 57.56 % 56.45 % 57.41 % 55.72 %
Access National Corporation efficiency ratio (2) 60.19 % 63.62 % 65.19 % 68.82 % 62.99 % 72.99 % 69.61 %
Total average equity to earning assets 16.47 % 16.86 % 16.59 % 16.00 % 16.64 % 18.10 % 14.82 %
Tangible common equity ratio (1) 9.09 % 9.12 % 9.10 % 8.85 % 9.09 % 8.85 % 8.79 %
 
Averages
Assets $ 2,953,987 $ 2,848,307 $ 2,856,201 $ 2,922,105 $ 2,886,998 $ 2,396,103 $ 2,453,894
Loans held for investment, gross 2,038,292 1,935,422 1,950,077 2,002,842 1,974,914 1,614,893 1,704,040
Loans held for sale 36,672 41,515 21,257 28,734 33,205 27,165 27,881
Interest-bearing deposits & federal funds sold 110,140 110,800 136,969 136,222 119,205 105,360 104,566
Investment securities 461,708 444,779 434,003 437,628 446,932 343,360 362,614
Earning assets 2,656,213 2,541,454 2,548,836 2,617,443 2,582,555 2,101,947 2,212,020
Interest-bearing deposits 1,502,982 1,440,998 1,517,030 1,566,286 1,486,956 1,257,364 1,327,262
Total deposits 2,201,473 2,114,617 2,215,222 2,277,760 2,177,107 1,810,139 1,922,249
Repurchase agreements & federal funds purchased 50,135 56,693 57,344 58,149 54,698 46,209 48,378
FHLB short term borrowings 193,784 180,348 91,002 59,697 155,421 67,774 67,907
FHLB long-term borrowings 45,000 42,088 40,000 82,790 42,381 73,040 66,329
Trust Preferred debt 3,930 3,911 3,891 3,029 3,911 2,289 2,691
Equity 437,398 428,590 422,780 418,678 429,642 380,378 327,738
Tangible equity (1) $ 252,864 $ 243,232 $ 238,381 $ 243,974 $ 244,868 $ 192,150 $ 202,408
 
Allowance for loan losses $ 17,349 $ 16,543 $ 15,928 $ 15,692 $ 17,349 $ 15,692 $ 15,805
Allowance for loan losses/loans held for investment 0.83 % 0.83 % 0.83 % 0.80 % 0.83 % 0.80 % 0.80 %
Remaining purchase marks on performing loans $ 8,838 $ 9,615 $ 10,415 $ 12,444 $ 8,838 $ 12,444 $ 11,241
Purchased credit impaired loans $ 4,509 $ 4,632 $ 4,702 $ 5,184 $ 4,509 $ 5,184 $ 4,969
Remaining purchase marks on credit impaired loans $ 1,592 $ 1,720 $ 1,749 $ 694 $ 1,592 $ 694 $ 1,175
Total NPA $ 6,106 $ 6,049 $ 7,453 $ 7,817 $ 6,106 $ 7,817 $ 5,270
NPA to total assets 0.20 % 0.21 % 0.26 % 0.27 % 0.20 % 0.27 % 0.18 %
 
Mortgage loan originations and brokered loans $ 85,087 $ 123,157 $ 84,411 $ 107,706 $ 292,655 $ 319,164 $ 432,678
Gain on sale of mortgage loans net hedging activity $ 4,137 $ 4,251 $ 3,273 $ 5,371 $ 11,661 $ 14,208 $ 19,192
Allowance for losses on mortgage loans sold $ 953 $ 953 $ 953 $ 987 $ 953 $ 987 $ 953
 
Wealth Services segment - assets under management $ 2,012,526 $ 1,949,992 $ 1,942,526 $ 1,935,780 $ 2,012,526 $ 1,935,780 $ 1,955,720
 
Book value per common share $ 21.13 $ 20.88 $ 20.62 $ 20.55 $ 21.13 $ 20.55 $ 20.53
 
Tangible book value per common share (1) $ 12.33 $ 11.99 $ 11.65 $ 11.64 $ 12.33 $ 11.64 $ 11.52

 

 

(1) Non-GAAP financial information. See "Reconciliation of Non-GAAP Financial Measures" at end of release.
(2) Efficiency ratio is non-interest expense divided by the sum of net interest income and non-interest income
 
               
Composition of Loan Portfolio - Unaudited
                                         
    September 30, 2018   June 30, 2018   March 31, 2018   December 31, 2017   September 30, 2017
(Dollars In Thousands)   Amount  

Percentage
of Total

  Amount  

Percentage
of Total

  Amount  

Percentage
of Total

  Amount  

Percentage
of Total

  Amount  

Percentage
of Total

   
Commercial real estate - owner occupied $ 525,047 25.07 % $ 478,928 24.13 % $ 462,298 24.02 % $ 467,082 23.60 % $ 443,128 22.50 %
Commercial real estate - non-owner occupied 467,495 22.32 457,940 23.08 419,139 21.77 436,083 22.04 435,181 22.09
Residential real estate 459,989 21.96 460,269 23.20 476,366 24.75 489,669 24.74 512,621 26.03
Commercial 507,269 24.22 464,270 23.40 437,287 22.72 463,652 23.43 449,450 22.82
Real estate construction 113,790 5.43 99,164 5.00 104,528 5.43 97,481 4.93 104,193 5.29
Consumer   20,680   1.00     23,618   1.19     25,293   1.31     24,942   1.26     25,087   1.27  
Total loans $ 2,094,270 100.00 % $ 1,984,189 100.00   $ 1,924,911 100.00 % $ 1,978,909 100.00 % $ 1,969,660 100.00 %
Less allowance for loan losses   17,349   16,543   15,928   15,805   15,692
$ 2,076,921 $ 1,967,646 $ 1,908,983 $ 1,963,104 $ 1,953,968
 
               
Composition of Deposits - Unaudited
                                                       
                  September 30, 2018   June 30, 2018   March 31, 2018   December 31, 2017   September 30, 2017
(Dollars In Thousands)                 Amount  

Percentage
of Total

  Amount  

Percentage
of Total

  Amount  

Percentage
of Total

  Amount  

Percentage
of Total

  Amount  

Percentage
of Total

                 
Demand deposits $ 757,900 33.03 % $ 719,873 33.85 % $ 706,128 32.14 % $ 744,960 33.34 % $ 710,691 31.09 %
Interest-bearing demand deposits 455,769 19.86 462,355 21.74 501,745 22.84 486,621 21.78 480,620 21.02
Savings and money market 670,497 29.22 585,673 27.54 616,879 28.08 580,827 26.00 616,596 26.97
CDARS time deposits 17,050 0.74 13,666 0.64 17,247 0.78 21,582 0.97 37,836 1.65
CDARS/ICS non-maturity deposits 66,604 2.90 53,233 2.50 50,233 2.29 48,011 2.15 47,219 2.07
Brokered deposits 53,900 2.35 17,590 0.83 23,244 1.06 51,028 2.28 71,090 3.11
Time deposits   273,144   11.90       274,330   12.90       281,452   12.81       301,119   13.48       322,160   14.09  
Total Deposits $ 2,294,864   100.00 %   $ 2,126,720   100.00 %   $ 2,196,928   100.00 %   $ 2,234,148   100.00 %   $ 2,286,212   100.00 %
 
                         
Yield on Average Earning Assets and Rates on Average Interest-Bearing Liabilities
Three Months Ended - Unaudited
 
 
    September 30, 2018       June 30, 2018       September 30, 2017
Average Income / Yield / Average Income / Yield / Average Income / Yield /
(Dollars In Thousands)   Balance   Expense   Rate       Balance   Expense   Rate       Balance   Expense   Rate
 
Assets:
Interest-earning assets:
Securities $ 471,109 $ 3,047 2.59 % $ 453,717 $ 2,642 2.33 % $ 449,645 $ 2,992 2.66 %
Loans held for sale 36,672 450 4.91 % 41,515 477 4.59 % 28,734 299 4.16 %
Loans(1) 2,038,292 25,237 4.95 % 1,935,422 23,666 4.89 % 2,002,842 24,007 4.79 %
Interest-bearing balances and federal funds sold   110,140       578   2.10 %         110,800       437   1.59 %         136,222       394   1.16 %
Total interest-earning assets   2,656,213   29,312 4.41 %   2,541,454   27,222 4.28 %   2,617,443   27,692 4.23 %
Noninterest-earning assets:
Cash and due from banks 15,050 15,953 36,260
Premises, land and equipment 27,996 28,087 30,382
Other assets 271,592 279,127 253,424
Less: allowance for loan losses   (16,864 )   (16,314 )   (15,404 )
Total noninterest-earning assets   297,774     306,853     304,662  
Total Assets $ 2,953,987   $ 2,848,307   $ 2,922,105  
 
Liabilities and Shareholders' Equity:
Interest-bearing deposits:
Interest-bearing demand deposits $ 494,436 $ 797 0.64 % $ 490,619 $ 680 0.55 % $ 483,370 $ 412 0.34 %
Money market deposit accounts 507,888 1,483 1.17 % 466,538 1,047 0.90 % 435,241 821 0.75 %
Savings accounts 165,937 242 0.58 % 174,392 233 0.53 % 199,109 90 0.18 %
Time deposits   334,721       1,380   1.65 %         309,449       1,057   1.37 %         448,566       1,316   1.17 %
Total interest-bearing deposits 1,502,982 3,902 1.04 % 1,440,998 3,017 0.84 % 1,566,286 2,639 0.67 %
Borrowings:
FHLB short-term borrowings 193,784 976 2.01 % 180,348 866 1.92 % 59,697 207 1.39 %
Securities sold under agreements to repurchase and federal funds purchased 50,135 13 0.10 % 56,693 14 0.10 % 58,149 16 0.11 %
Subordinated debentures 3,930 87 8.81 % 3,911 84 8.63 % 3,029 35 4.62 %
FHLB long-term borrowings   45,000       269   2.39 %         42,088       226   2.14 %         82,790       201   0.97 %
Total borrowings   292,849       1,345   1.84 %         283,040       1,190   1.68 %         203,665       459   0.90 %
Total interest-bearing deposits and borrowings 1,795,831 5,247 1.17 % 1,724,038 4,207 0.98 % 1,769,951 3,098 0.70 %
Noninterest-bearing liabilities:
Demand deposits 698,491 673,619 711,474
Other liabilities   22,267     22,060     22,002  
Total liabilities 2,516,589 2,419,717 2,503,427
Shareholders' Equity   437,398     428,590     418,678  
Total Liabilities and Shareholders' Equity $ 2,953,987   $ 2,848,307   $ 2,922,105  
 
Interest Spread(2) 3.25 % 3.30 % 3.53 %
 
Net Interest Margin(3) $ 24,065   3.62 % $ 23,015   3.62 % $ 24,594   3.76 %
                                                         
 

(1)

Loans placed on nonaccrual status are included in loan balances.

(2)

Interest spread is the average yield earned on earning assets, less the average rate incurred on interest-bearing liabilities.

(3)

Net interest margin is net interest income, expressed as a percentage of average earning assets.

 
 
Yield on Average Earning Assets and Rates on Average Interest-Bearing Liabilities
Nine Months Ended - Unaudited
                         
    September 30, 2018   September 30, 2017
  Average   Income /   Yield /   Average   Income /   Yield /
(Dollars In Thousands)   Balance   Expense   Rate   Balance   Expense   Rate
 
Assets:
Interest-earning assets:
Securities $ 455,231 $ 8,369 2.45 % $ 354,529 $ 7,388 2.78 %
Loans held for sale 33,205 1,154 4.63 % 27,165 846 4.15 %
Loans(1) 1,974,914 72,087 4.87 % 1,614,893 59,405 4.90 %
Interest-bearing balances and federal funds sold   119,205       1,532   1.71 %   105,360       746   0.94 %
Total interest-earning assets   2,582,555   83,142 4.29 %   2,101,947   68,385 4.34 %
Noninterest-earning assets:
Cash and due from banks 16,409 21,552
Premises, land and equipment 28,138 21,692
Other assets 276,307 265,578
Less: allowance for loan losses   (16,411 )   (14,666 )
Total noninterest-earning assets   304,442     294,156  
Total Assets $ 2,886,998   $ 2,396,103  
 
Liabilities and Shareholders' Equity:
Interest-bearing deposits:
Interest-bearing demand deposits $ 495,862 $ 2,067 0.56 % $ 352,647 $ 910 0.34 %
Money market deposit accounts 489,764 3,460 0.94 % 352,525 1,644 0.62 %
Savings accounts 171,256 684 0.53 % 146,773 392 0.36 %
Time deposits   330,074       3,506   1.42 %   405,419       3,614   1.19 %
Total interest-bearing deposits 1,486,956 9,717 0.87 % 1,257,364 6,560 0.70 %
Borrowings:
FHLB short-term borrowings 155,421 2,192 1.88 % 67,774 593 1.17 %
Securities sold under agreements to repurchase and federal funds purchased 54,698 41 0.10 % 46,209 58 0.17 %
Subordinated debentures 3,911 246 8.37 % 2,289 146 8.50 %
FHLB long-term borrowings   42,381       621   1.95 %   73,040       569   1.04 %
Total borrowings   256,412       3,100   1.61 %   189,312       1,366   0.96 %
Total interest-bearing deposits and borrowings 1,743,367 12,817 0.98 % 1,446,676 7,926 0.73 %
Noninterest-bearing liabilities:
Demand deposits 690,151 552,775
Other liabilities   23,838     16,274  
Total liabilities 2,457,356 2,015,725
Shareholders' Equity   429,642     380,378  
Total Liabilities and Shareholders' Equity $ 2,886,998   $ 2,396,103  
 
Interest Spread(2) 3.31 % 3.61 %
 
Net Interest Margin(3) $ 70,325   3.63 % $ 60,459   3.84 %
                                 
 

(1)

Loans placed on nonaccrual status are included in loan balances.

(2)

Interest spread is the average yield earned on earning assets, less the average rate incurred on interest-bearing liabilities.

(3)

Net interest margin is net interest income, expressed as a percentage of average earning assets.

 
                     
Segment Reporting - Unaudited
           
Three Months Ended Commercial Mortgage Trust & Wealth Consolidated
September 30, 2018   Banking Banking Management Other Eliminations Totals
(In Thousands)
Revenues:
Interest income $ 28,957 $ 450

$

4 $ 10

$

(109 ) $ 29,312
Gain on sale of loans - 4,465 - - - 4,465
Other revenues   2,152   (743 )   1,688     219     (337 )   2,979
Total revenues   31,109   4,172     1,692     229     (446 )   36,756
 
Expenses:
Interest expense 5,169 41 - 146 (109 ) 5,247
Salaries and employee benefits 7,800 2,284 979 - 50 11,113
Other expenses   6,684   819     552     885     (387 )   8,553
Total operating expenses   19,653   3,144     1,531     1,031     (446 )   24,913
 
Income (loss) before income taxes $ 11,456 $ 1,027   $ 161   $ (802 ) $ -   $ 11,843
 
Total assets $ 2,978,843   $ 38,763     $ 13,166     $ 26,808     $ (36,257 ) $ 3,021,323
 
 
Three Months Ended Commercial Mortgage Trust & Wealth Consolidated
June 30, 2018   Banking Banking Management Other Eliminations Totals
(In Thousands)
Revenues:
Interest income $ 26,841 $ 477 $ 3 $ 6 $ (105 ) $ 27,222
Gain on sale of loans - 4,196 - - - 4,196
Other revenues   1,634   373     2,726     491     (330 )   4,894
Total revenues   28,475   5,046     2,729     497     (435 )   36,312
 
Expenses:
Interest expense 4,130 39 - 143 (105 ) 4,207
Salaries and employee benefits 8,324 3,130 1,075 - - 12,529
Other expenses   6,292   971     660     956     (330 )   8,549
Total operating expenses   18,746   4,140     1,735     1,099     (435 )   25,285
 
Income (loss) before income taxes $ 9,729 $ 906   $ 994   $ (602 ) $ -   $ 11,027
 
Total assets $ 2,871,045   $ 40,293     $ 12,301     $ 23,435     $ (26,489 ) $ 2,920,585
 
 
Three Months Ended Commercial Mortgage Trust & Wealth Consolidated
September 30, 2017   Banking Banking Management Other Eliminations Totals
(In Thousands)
Revenues:
Interest income $ 27,429 $ 299 $ 4 $ 5 $ (45 ) $ 27,692
Gain on sale of loans - 5,594 - - - 5,594
Other revenues   1,977   (740 )   1,617     312     (237 )   2,929
Total revenues   29,406   5,153     1,621     317     (282 )   36,215
 
Expenses:
Interest expense 3,072 (25 ) - 96 (45 ) 3,098
Salaries and employee benefits 7,334 2,898 868 - - 11,100
Other expenses   8,724   1,149     1,850     1,107     (237 )   12,593
Total operating expenses   19,130   4,022     2,718     1,203     (282 )   26,791
 
Income (loss) before income taxes $ 10,276 $ 1,131   $ (1,097 ) $ (886 ) $ -   $ 9,424
 
Total assets $ 2,810,037   $ 26,485     $ 41,002     $ 19,756     $ (24,211 ) $ 2,873,069
 
     
Segment Reporting - Unaudited
           
Nine Months Ended Commercial Mortgage Trust & Wealth Consolidated
September 30, 2018   Banking Banking Management Other Eliminations Totals
 
Revenues:
Interest income $ 82,085 $ 1,154 $ 9 $ 22 $ (128 ) $ 83,142
Gain on sale of loans - 11,453 - - - 11,453
Other revenues   5,291   899     6,155     1,128     (997 )   12,476
Total revenues   87,376   13,506     6,164     1,150     (1,125 )   107,071
 
Expenses:
Interest expense 12,593 (72 ) - 424 (128 ) 12,817
Salaries and employee benefits 24,052 8,291 3,002 - 25 35,370
Other expenses   20,261   2,496     1,694     2,669     (1,022 )   26,098
Total operating expenses   56,906   10,715     4,696     3,093     (1,125 )   74,285
 
Income (loss) before income taxes $ 30,470 $ 2,791   $ 1,468   $ (1,943 ) $ -   $ 32,786
 
Total assets $ 2,978,843   $ 38,763     $ 13,166     $ 26,808     $ (36,257 ) $ 3,021,323
 
 
Nine Months Ended Commercial Mortgage Trust & Wealth Consolidated
September 30, 2017   Banking Banking Management Other Eliminations Totals
 
Revenues:
Interest income $ 67,740 $ 846 $ 7 $ 17 $ (225 ) $ 68,385
Gain on sale of loans - 14,985 - - - 14,985
Other revenues   4,445   (306 )   4,195     975     (883 )   8,426
Total revenues   72,185   15,525     4,202     992     (1,108 )   91,796
 
Expenses:
Interest expense 7,796 18 - 337 (225 ) 7,926
Salaries and employee benefits 19,992 9,122 2,686 - - 31,800
Other expenses   20,173   3,246     2,541     7,537     (883 )   32,614
Total operating expenses   47,961   12,386     5,227     7,874     (1,108 )   72,340
 
Income (loss) before income taxes $ 24,224 $ 3,139   $ (1,025 ) $ (6,882 ) $ -   $ 19,456
 
Total assets $ 2,810,037   $ 26,485     $ 41,002     $ 19,756     $ (24,211 ) $ 2,873,069
 
 

Reconciliation of Non-GAAP Financial Measures - Unaudited

 
The press release contains certain financial information determined by methods other than in accordance with generally accepted accounting policies in the United States (GAAP). These non-GAAP financial measures are “tangible book value per common shares”, “tangible common equity ratio”, and “net interest margin on a fully tax equivalent basis.” This non-GAAP disclosure has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of the Corporation’s results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies. Management uses these non-GAAP measures in its analysis of our performance because it believes these measures are material and will be used as a measure of our performance by investors.
 
             
Three Months Three Months Three Months Three Months Nine Months Nine Months Twelve Months
Ended Ended Ended Ended Ended Ended Ended
September 30, June 30, March 31, September 30, September 30, September 30, December 31,
(Dollars In Thousands)   2018   2018   2018   2017   2018   2017   2017
 
 
Book value per common share