8-K

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):January 23, 2017

FIRST COMMUNITY FINANCIAL PARTNERS, INC.

(Exact name of registrant as specified in its charter)

Illinois	001-37505	20-4718752
(State or other jurisdiction of incorporation)	(Commission File No.)	(IRS Employer Identification No.)

2801 Black Road, Joliet, IL	60435
(Address of Principal Executive Offices)	(Zip Code)

(815) 725-0123

Registrant’s telephone number, including area code

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:

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On January 23, 2017, First Community Financial Partners, Inc. (the “Company”) issued a press release to report the Company’s financial results as of and for the three months and year ended December 31, 2016, which is attached to this report as Exhibit 99.1 and is incorporated herein by reference.

The information in this Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933 or the Exchange Act, except as otherwise expressly stated in such filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Description
99.1	Press Release dated January 23, 2017

SIGNATURES

Pursuant to the requirements of the Exchange Act the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

	FIRST COMMUNITY FINANCIAL PARTNERS, INC.
Date: January 23, 2017	/s/ Glen L. Stiteley
	Glen L. Stiteley
	Executive Vice President and Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release dated January 23, 2017

EX-99.1

Exhibit 99.1

News Release

Contact: Glen L. Stiteley, Chief Financial Officer

   (815) 725-1885

Source:   First Community Financial Partners, Inc.

First Community Financial Partners, Inc. Announces Fourth Quarter 2016 Financial Results

Fourth Quarter 2016 Highlights

• Diluted earnings per share (“EPS”) of $0.15

• Asset growth of $21.6 million, or 1.73%, from the end of the third quarter of 2016

• Loan growth of $34.7 million, or 3.62%, from the end of the third quarter of 2016

• Deposit growth of $17.9 million, or 1.68%, from the end of the third quarter of 2016

• Noninterest bearing deposits increase of $1.6 million, or 0.65%, from the end of the third quarter of 2016

JOLIET, IL, January 23, 2017 -- First Community Financial Partners, Inc. (NASDAQ: FCFP) (“First Community,” “FCFP” or the “Company”), the parent company of First Community Financial Bank (the “Bank”), today reported financial results as of and for the three and twelve months ended December 31, 2016.

Net income applicable to shareholders for the quarter ended December 31, 2016 was $2.7 million, or $0.15 per diluted share, compared with $2.9 million, or $0.17 per diluted share, for the quarter ended December 31, 2015. Financial results for the fourth quarter of 2015 were positively impacted by a negative provision for credit losses of $515,000. Pre-tax, pre-provision core income was $4.3 million in the fourth quarter of 2016, an increase of 11.29% from $3.8 million in the same period of the prior year.

“We delivered a strong performance in the fourth quarter, driven by positive trends in revenue, operating efficiencies and asset quality,” said Roy Thygesen, Chief Executive Officer of First Community.

“We had another strong quarter of business development, resulting in organic loan growth of 15% on an annualized basis. We are generating well balanced loan production and seeing solid growth across all of our major lending areas.”

“We were able to create significant franchise value in 2016 through organic growth and the completion of our first acquisition. We intend to continue to execute on our core strategies in 2017, focusing on developing additional commercial banking relationships with small- and middle-market companies and exploring other acquisitions in our existing footprint that can strengthen our core deposit base. We anticipate another year of double-digit organic loan growth, increased operating efficiencies, and stable credit quality in 2017, resulting in further improvement in our overall level of profitability and additional value being created for our shareholders,” said Mr. Thygesen.

Fourth Quarter 2016 Financial Results

Loans

At December 31, 2016, total loans were $991.6 million, an increase of $34.7 million, or 3.62%, since the end of the third quarter of 2016,and $219.3 million, or 28.39%, year-over-year. The loan growth was the result of a continued strong loan pipeline along with results produced by the addition of six commercial lenders and one new leasing officer hired during the first quarter of 2016.

Commercial loans grew $6.9 million, or 2.52%, since the end of the third quarter and $102.2 million, or 56.89%, year-over-year. Commercial real estate loans increased $6.0 million, or 1.42%, since the end of the third quarter and $44.9 million, or 11.78%, year-over-year. Residential real estate loans grew $8.6 million, or 5.13%, since the end of the third quarter and $40.1 million, or 29.53%, year-over-year. Construction loans were up $7.5 million, or 18.83%, since the third quarter and $25.3 million, or 114.37%, year-over-year.

Deposits and Other Borrowings

At December 31, 2016, total deposits were $1.1 billion, an increase of $17.9 million, or 1.68%, since the end of the third quarter and $217.2 million, or 25.08%, year-over-year.

Noninterest bearing demand deposits increased $1.6 million, or 0.65%, since the end of the third quarter and $51.8 million, or 26.42%, year-over-year. Interest bearing transactional accounts (NOW, savings and money market accounts) increased $28.1 million, or 5.85%, during the fourth quarter of 2016 and $136.0 million, or 36.52%, year-over-year. Time deposits decreased $11.8 million, or 3.48%, to $326.9 million at December 31, 2016, from $338.7 million at September 30, 2016, and increased $29.4 million, or 9.87%, year-over-year. The ratio of time deposits to interest bearing deposits was 39.13% at December 31, 2016, down from 41.35% at September 30, 2016.

Other borrowings increased $4.5 million, or 7.34%, since the end of the third quarter due to higher FHLB borrowings resulting from loan growth during the fourth quarter, partially offset by the payoff of our secured borrowings of $7.0 million during the quarter.

Net Interest Income and Margin

Fourth quarter 2016 net interest income was up $418,000, or 4.26%, from the third quarter of 2016. The increase was primarily attributable to an increase in average loan balances, partially offset by a lower net interest margin.

The Company’s net interest margin was 3.42% for the fourth quarter of 2016, compared to 3.40% in the third quarter of 2016. The increase was due to the effect of the prime rate increase in mid December 2016.

Noninterest Income and Expense

Fourth quarter 2016 noninterest income decreased $1.9 million, or 67.62%, from the third quarter of 2016 and increased $3.0 million, or 54.33%, from the year ended December 31, 2015. The decrease from the third quarter was primarily attributable to a $1.9 million bargain purchase option gain recorded in the third quarter related to the acquisition of Mazon State Bank.

Service charges on deposits decreased $4,000, or 1.38%, from the third quarter of 2016, which was primarily the result of a decrease in overdraft fees, partially offset by an increase in account analysis charges. Mortgage income was also up $45,000, or 26.63%, for the fourth quarter of 2016, compared to the third quarter, as a result of higher mortgage sale volumes.

Fourth quarter 2016 noninterest expense decreased $140,000, or 1.98%, from the third quarter of 2016 due to reduced data processing fees following the integration of Mazon State Bank, partially offset by increased incentive compensation expense.

Salaries and benefits expense increased $497,000, or 13.04%, from the third quarter 2016 due to increased incentive compensation expense, partially offset by cost savings from the integration of Mazon State Bank. Data processing

fees decreased $433,000, or 61.86%, from the third quarter due to lower data processing conversion expenses following the integration of Mazon State Bank.

Asset Quality

Total nonperforming assets decreased $2.6 million, or 28.48%, to $6.6 million at December 31, 2016 from $9.2 million at September 30, 2016. The ratio of nonperforming assets to total assets was 0.52% at December 31, 2016 compared to 0.74% at September 30, 2016. The decrease was the result of the sale of $2.6 million in nonaccrual loans, $1.1 million in loans transferred to loans held for sale, and the charge-offs recorded in the quarter. This outflow was partially offset by new additions to nonaccrual loans.

The Company had net charge-offs on loans of $783,000 in the fourth quarter of 2016, compared to net charge-offs of $143,000 in the third quarter of 2016. The net charge-offs in the fourth quarter of 2016 primarily related to one loan relationship totaling $4.5 million that was placed on non-accrual status during the third quarter of 2016. At year-end 2016, $1.1 million of this relationship remained and was held for sale. This sale took place after year-end and this loan relationship has been paid off in full.

The ratios of the Company’s allowance for loan losses to nonperforming loans and allowance for loan losses to total loans were 199.52% and 1.18% at December 31, 2016, respectively.

The Company recorded a provision for loan losses in the fourth quarter of 2016 of $183,000, primarily as a result of the growth in the loan portfolio.

About First Community Financial Partners, Inc.: First Community Financial Partners, Inc., headquartered in Joliet, Illinois, is a bank holding company whose common stock trades on the NASDAQ Capital Market (NASDAQ: FCFP). First Community Financial Partners has one bank subsidiary, First Community Financial Bank. First Community Financial Bank, based in Plainfield, Illinois, has locations in Joliet, Plainfield, Homer Glen, Channahon, Naperville, Burr Ridge, Mazon, Braidwood, and Diamond, Illinois. The Bank is dedicated to its founding principles by being actively involved in the communities it serves and providing exceptional personal service delivered by experienced local professionals.

Special Note Concerning Forward-Looking Statements

---------------------------------------------------------------------

Any statements in this release other than statements of historical facts, including statements about management’s beliefs and expectations, are forward-looking statements and should be evaluated as such. These statements are made on the basis of management’s views and assumptions regarding future events and business performance. Words such as “estimate,” “believe,” “anticipate,” “expect,” “intend,” “plan,” “target,” “project,” “should,” “may,” “will” and similar expressions are intended to identify forward-looking statements. Forward-looking statements (including oral representations) involve risks and uncertainties that may cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. These risks and uncertainties involve a number of factors related to the businesses of First Community and its wholly owned bank subsidiary, including: risks associated with First Community’s possible pursuit of acquisitions; unexpected results of acquisitions, including the acquisition of Mazon State Bank; economic conditions in First Community’s, and its wholly owned bank subsidiary’s service areas; system failures; losses of large customers; disruptions in relationships with third party vendors; losses of key management personnel and the inability to attract and retain highly qualified management personnel in the future; the impact of legislation and regulatory changes on the banking industry, including the implementation of the Basel III capital reforms; losses related to cyber-attacks; and liability and compliance costs regarding banking regulations; and changes in local, national and international economic conditions. These and other risks and uncertainties are discussed in more detail in First Community’s filings with the Securities and Exchange Commission, including First Community’s Annual Report on Form 10-K filed on March 14, 2016.

Many of these risks are beyond management’s ability to control or predict. All forward-looking statements attributable to First Community, and its wholly owned bank subsidiary, or persons acting on behalf of each of them are expressly qualified in their entirety by the cautionary statements and risk factors contained in this communication. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. Furthermore, forward-looking statements speak only as of the date they are made. Except as required under the federal securities laws or the rules and regulations of the Securities and Exchange Commission, First Community does not undertake any obligation to update or review any forward-looking information, whether as a result of new information, future events or otherwise.

FINANCIAL SUMMARY
	December 31, 2016		September 30, 2016		June 30, 2016		March 31, 2016		December 31, 2015
Period-End Balance Sheet
(In thousands)(Unaudited)
Assets
Cash and due from banks	$	16,225	$	21,622	$	13,777	$	9,132	$	10,699
Interest-bearing deposits in banks	8,548		33,349		19,335		30,558		7,406
Securities available for sale	202,198		188,062		179,517		203,874		205,604
Mortgage loans held for sale	1,230		1,331		711		133		400
Loans held for sale	1,085		—		—		—		—
Commercial real estate	425,910		419,958		410,461		378,304		381,098
Commercial	281,804		274,889		239,038		181,142		179,623
Residential 1-4 family	175,978		167,388		143,908		139,208		135,864
Multifamily	36,703		31,880		30,809		31,511		34,272
Construction and land development	47,338		39,836		30,834		27,798		22,082
Farmland and agricultural production	12,628		12,985		9,235		9,060		9,989
Consumer and other	7,967		9,280		7,924		7,250		9,391
Leases	3,290		739		448		—		—
Total loans and leases	991,618		956,955		872,657		774,273		772,319
Allowance for loan and lease losses	11,684		12,284		12,044		11,335		11,741
Net loans and leases	979,934		944,671		860,613		762,938		760,578
Other assets	58,990		57,563		51,409		54,227		55,965
Total Assets	$	1,268,210	$	1,246,598	$	1,125,362	$	1,060,862	$	1,040,652
Liabilities and Shareholders' Equity
Noninterest bearing deposits	$	247,856	$	246,262	$	203,258	$	204,414	$	196,063
Savings deposits	64,695		61,399		40,603		38,481		36,206
NOW accounts	160,862		151,243		103,324		104,136		102,882
Money market accounts	282,865		267,667		238,229		237,873		233,315
Time deposits	326,878		338,680		311,416		294,076		297,525
Total deposits	1,083,156		1,065,251		896,830		878,980		865,991
Total borrowings	66,419		61,879		114,701		72,237		68,315
Other liabilities	4,920		4,304		2,722		2,855		3,305
Total Liabilities	1,154,495		1,131,434		1,014,253		954,072		937,611
Shareholders’ equity	113,715		115,164		111,109		106,790		103,041
Total Shareholders’ Equity	113,715		115,164		111,109		106,790		103,041
Total Liabilities and Shareholders’ Equity	$	1,268,210	$	1,246,598	$	1,125,362	$	1,060,862	$	1,040,652

FINANCIAL SUMMARY
	Three months ended,
	December 31, 2016		September 30, 2016			June 30, 2016		March 31, 2016		December 31, 2015
Interest income:	(In thousands, except per share data)(Unaudited)
Loans, including fees	$	10,663	$	10,229		$	9,024	$	8,508	$	8,401
Securities	1,033		1,041			1,042		1,101		1,117
Federal funds sold and other	53		43			21		19		19
Total interest income	11,749		11,313			10,087		9,628		9,537
Interest expense:
Deposits	1,150		1,081			957		940		986
Federal funds purchased and other borrowed funds	61		112			119		93		87
Subordinated debentures	297		297			297		297		297
Total interest expense	1,508		1,490			1,373		1,330		1,370
Net interest income	10,241		9,823			8,714		8,298		8,167
Provision for loan losses	183		383			500		—		(515		)
Net interest income after provision for loan losses	10,058		9,440			8,214		8,298		8,682
Noninterest income:
Service charges on deposit accounts	285		289			207		204		190
Gain on sale of loans	9		—			7		—		—
Gain on sale of securities	—		14			603		—		212
Mortgage fee income	214		169			109		78		96
Bargain purchase gain	—		1,920			—		—		—
Other	390		381			315		273		261
Total noninterest income	898		2,773			1,241		555		759
Noninterest expenses:
Salaries and employee benefits	4,309		3,812			3,311		3,256		3,004
Occupancy and equipment expense	548		568			429		437		494
Data processing	267		700			690		257		203
Professional fees	286		369			375		392		68
Advertising and business development	245		328			262		215		219
Losses on sale and writedowns of foreclosed assets, net	—		1			31		16		109
Foreclosed assets expenses, net of rental income	26		(99		)	60		53		50
Other expense	1,238		1,380			974		1,310		898
Total noninterest expense	6,919		7,059			6,132		5,936		5,045
Income before income taxes	4,037		5,154			3,323		2,917		4,396
Income taxes	1,358		1,019			1,058		889		1,474
Net income	$	2,679	$	4,135		$	2,265	$	2,028	$	2,922
Basic earnings per share	$	0.16	$	0.24		$	0.13	$	0.12	$	0.17
Diluted earnings per share	$	0.15	$	0.24		$	0.13	$	0.12	$	0.17

	Years Ended December 31,
	2016		2015
Interest income:	(in thousands, except share data) (unaudited)
Loans, including fees	$	38,424	$	32,525
Securities	4,217		4,134
Federal funds sold and other	136		66
Total interest income	42,777		36,725
Interest expense:
Deposits	4,128		3,923
Federal funds purchased and other borrowed funds	385		215
Subordinated debt	1,188		1,800
Total interest expense	5,701		5,938
Net interest income	37,076		30,787
Provision for loan losses	1,066		(2,077		)
Net interest income after provision for loan losses	36,010		32,864
Noninterest income:
Service charges on deposit accounts	985		756
Gain on sale of loans	16		—
Gain on sale of securities	617		484
Gain on foreclosed assets, net	—		—
Mortgage fee income	570		531
Bargain purchase gain	1,920		—
Other	1,359		726
	5,467		2,497
Noninterest expenses:
Salaries and employee benefits	14,688		11,538
Occupancy and equipment expense	1,982		1,977
Data processing	1,914		912
Professional fees	1,422		1,201
Advertising and business development	1,050		853
Losses on sale and writedowns of foreclosed assets, net	48		187
Foreclosed assets expenses, net of rental income	40		130
Other expense	4,902		3,744
	26,046		20,542
Income before income taxes	15,431		14,819
Income taxes	4,324		5,000
Net income	$	11,107	$	9,819
Common share data
Basic earnings per common share	$	0.65	$	0.58
Diluted earnings per common share	0.64		0.57
Weighted average common shares outstanding for basic earnings per common share	17,184,432		16,939,010
Weighted average common shares outstanding for diluted earnings per common share	17,630,600		17,085,752

	Three months ended,
	December 31, 2016						September 30, 2016						December 31, 2015
	Average Balances		Income/ Expense		Yields/ Rates		Average Balances		Income/ Expense		Yields/ Rates		Average Balances		Income/ Expense		Yields/ Rates
Assets	(Dollars in thousands)(Unaudited)
Loans (1)	$	973,149	$	10,663	4.38	%	$	932,047	$	10,229	4.39	%	$	760,332	$	8,401	4.42	%
Investment securities (2)	199,940		1,033		2.07	%	199,139		1,041		2.09	%	209,936		1,117		2.13	%
Interest-bearing deposits with other banks	25,612		53		0.83	%	24,580		43		0.70	%	22,378		19		0.34	%
Total earning assets	$	1,198,701	$	11,749	3.92	%	$	1,155,766	$	11,313	3.92	%	$	992,646	$	9,537	3.84	%
Other assets	61,777						62,470						61,572
Total assets	$	1,260,478					$	1,218,236					$	1,054,218
Liabilities
NOW accounts	$	147,627	$	118	0.32	%	$	122,727	$	90	0.29	%	$	102,783	$	66	0.26	%
Money market accounts	279,110		203		0.29	%	260,070		190		0.29	%	237,818		163		0.27	%
Savings accounts	63,816		15		0.09	%	62,179		15		0.10	%	36,015		14		0.16	%
Time deposits	331,025		814		0.98	%	326,860		786		0.96	%	304,941		743		0.97	%
Total interest bearing deposits	821,578		1,150		0.56	%	771,836		1,081		0.56	%	681,557		986		0.58	%
Securities sold under agreements to repurchase	26,548		11		0.17	%	23,339		10		0.17	%	32,315		12		0.15	%
Secured borrowings	2,134		22		4.12	%	7,752		58		2.99	%	12,875		73		2.27	%
FHLB borrowings	21,764		28		0.51	%	42,391		44		0.42	%	3,261		2		0.25	%
Subordinated debentures	15,300		297		7.76	%	15,300		297		7.76	%	15,300		297		7.76	%
Total interest bearing liabilities	$	887,324	$	1,508	0.68	%	$	860,618	$	1,490	0.69	%	$	745,308	$	1,370	0.74	%
Noninterest bearing deposits	253,877						239,802						203,108
Other liabilities	3,817						3,726						3,963
Total liabilities	$	1,145,018					$	1,104,146					$	952,379
Total shareholders’ equity	$	113,509					$	114,090					$	101,839
Total liabilities and shareholders’ equity	$	1,258,527					$	1,218,236					$	1,054,218
Net interest income			$	10,241					$	9,823					$	8,167
Interest rate spread					3.24	%					3.23	%					3.10	%
Net interest margin					3.42	%					3.40	%					3.29	%

Footnotes:

⁽¹⁾ Average loans include nonperforming loans.

⁽²⁾ No tax-equivalent adjustments were made, as the effect thereof was not material.

	Year ended December 31,
	2016						2015
	Average Balances		Income/ Expense		Yields/ Rates		Average Balances		Income/ Expense		Yields/ Rates
Assets	(Dollars in thousands)(Unaudited)
Loans (1)	$	842,580	$	38,424	4.56	%	$	728,276	$	32,525	4.47	%
Investment securities (2)	198,867		4,217		2.12	%	197,427		4,134		2.09	%
Federal funds sold	—		—		—	%	—		—		—	%
Interest-bearing deposits with other banks	17,256		136		0.79	%	18,087		66		0.36	%
Total earning assets	$	1,058,703	$	42,777	4.04	%	$	943,790	$	36,725	3.89	%
Other assets	56,124						49,879
Total assets	$	1,114,827					$	993,669
Liabilities
NOW accounts	$	112,221	$	360	0.32	%	$	91,410	$	204	0.22	%
Money market accounts	242,890		716		0.29	%	224,640		620		0.28	%
Savings accounts	46,357		53		0.11	%	33,815		56		0.17	%
Time deposits	304,138		2,999		0.99	%	303,668		3,043		1.00	%
Total interest bearing deposits	705,606		4,128		0.59	%	653,533		3,923		0.60	%
Securities sold under agreements to repurchase	22,966		38		0.17	%	30,849		39		0.13	%
Secured borrowings	9,175		221		2.41	%	6,662		160		2.40	%
Mortgage payable	—		—		—	%	180		13		7.22	%
FHLB borrowings	33,058		126		0.38	%	1,686		3		0.18	%
Subordinated debentures	15,300		1,188		7.76	%	22,124		1,800		8.14	%
Total interest bearing liabilities	$	786,105	$	5,701	0.73	%	$	715,034	$	5,938	0.83	%
Noninterest bearing deposits	216,430						177,085
Other liabilities	3,113						4,157
Total liabilities	$	1,005,648					$	896,276
Total shareholders’ equity	$	109,179					$	97,393
Total liabilities and shareholders’ equity	$	1,114,827					$	993,669
Net interest income			$	37,076					$	30,787
Interest rate spread					3.31	%					3.06	%
Net interest margin					3.50	%					3.26	%

Footnotes:

(1) Average loans include nonperforming loans.

(2) No tax-equivalent adjustments were made, as the effect thereof was not material.

COMMON STOCK DATA
	2016								2015
	Fourth Quarter		Third Quarter		Second Quarter		First Quarter		Fourth Quarter
	(Unaudited)
Market value (1):
End of period	$	11.70	$	9.52	$	8.80	$	8.70	$	7.24
High	12.15		9.55		9.10		8.84		7.31
Low	9.10		8.35		8.18		7.00		6.26
Book value (end of period)	6.59		6.68		6.47		6.22		6.05
Tangible book value (end of period)	6.53		6.62		6.47		6.22		6.05
Shares outstanding (end of period)	17,242,645		17,237,845		17,183,780		17,175,864		17,026,941
Average shares outstanding	17,239,897		17,189,113		17,182,197		17,125,928		16,939,010
Average diluted shares outstanding	17,860,017		17,565,667		17,550,547		17,451,354		17,085,752

(1) The prices shown are as reported on the NASDAQ Capital Market

ASSET QUALITY DATA
	December 31, 2016			September 30, 2016			June 30, 2016			March 31, 2016			December 31, 2015
(Dollars in thousands)(Unaudited)
Loans identified as nonperforming	$	5,856		$	8,385		$	2,622		$	2,146		$	1,411
Other nonperforming loans	—			91			—			—			67
Total nonperforming loans	5,856			8,476			2,622			2,146			1,478
Foreclosed assets	725			725			2,211			5,231			5,487
Total nonperforming assets	$	6,581		$	9,201		$	4,833		$	7,377		$	6,965
Allowance for loan and lease losses	$	11,684		$	12,284		$	12,044		$	11,335		$	11,741
Nonperforming assets to total assets	0.52		%	0.74		%	0.43		%	0.70		%	0.67		%
Nonperforming loans to total assets	0.46		%	0.68		%	0.23		%	0.20		%	0.14		%
Allowance for loan and lease losses to nonperforming loans	199.52		%	144.93		%	459.34		%	528.19		%	794.38		%

ALLOWANCE FOR LOAN AND LEASE LOSSES ROLLFORWARD
(Dollars in thousands)(Unaudited)	Three months ended,
	December 31, 2016			September 30, 2016			June 30, 2016			March 31, 2016			December 31, 2015
Beginning balance	$	12,284		$	12,044		$	11,335		$	11,741		$	11,753
Charge-offs	1,363			340			193			506			133
Recoveries	580			197			402			100			636
Net charge-offs (recoveries)	783			143			(209		)	406			(503		)
Provision for loan losses	183			383			500			—			(515		)
Ending balance	$	11,684		$	12,284		$	12,044		$	11,335		$	11,741
Net chargeoff percentage annualized	0.32		%	0.06		%	(0.11		)%	0.21		%	(0.26		)%

OTHER DATA
(Unaudited)
	Three months ended,
	December 31, 2016		September 30, 2016		June 30, 2016		March 31, 2016		December 31, 2015
Return on average assets	0.85	%	1.36	%	0.84	%	0.78	%	1.11	%
Return on average equity	9.44	%	14.50	%	8.36	%	7.68	%	11.48	%
Net interest margin	3.42	%	3.44	%	3.39	%	3.36	%	3.29	%
Average loans to assets	77.20	%	75.50	%	76.55	%	73.63	%	72.12	%
Average loans to deposits	90.49	%	90.92	%	94.16	%	88.00	%	85.95	%
Average noninterest bearing deposits to total deposits	23.44	%	22.51	%	22.75	%	23.35	%	23.45	%
COMPANY CAPITAL RATIOS
(Unaudited)	December 31, 2016		September 30, 2016		June 30, 2016		March 31, 2016		December 31, 2015
Tier 1 leverage ratio	9.10	%	9.15	%	9.77	%	9.72	%	9.36	%
Common equity tier 1 capital ratio	10.51	%	10.83	%	11.26	%	11.94	%	11.62	%
Tier 1 capital ratio	10.51	%	10.83	%	11.26	%	11.94	%	11.62	%
Total capital ratio	12.99	%	13.52	%	14.14	%	14.99	%	14.69	%
Tangible common equity to tangible assets	8.88	%	9.24	%	10.47	%	10.26	%	10.07	%

NON-GAAP MEASURES
Pre-tax pre-provision core income (1)
(In thousands)(Unaudited)
			For the three months ended,
	December 31, 2016		September 30, 2016			June 30, 2016			March 31, 2016		December 31, 2015
Income before income taxes	$	4,037	$	5,154		$	3,323		$	2,917	$	4,396
Provision for loan losses	183		383			500			—		(515		)
Gain on sale of securities	—		(14		)	(603		)	—		(212		)
Merger related expenses included in professional fees	—		24			26			100		—
Merger related expenses included in data processing fees	14		363			410			—		—
Severances paid in relation to the merger	—		92			—			—		—
Stock options included in other expense	—		164
Bargain purchase option			(1,920		)	—			—		—
Losses (gain) on sale and writedowns of foreclosed assets, net	—		1			31			16		109
Foreclosed assets expense, net of rental income	26		(99		)	60			53		50
Pre-tax pre-provision core income	$	4,260	$	4,148		$	3,747		$	3,086	$	3,828

⁽¹⁾  This is a non-GAAP financial measure. In compliance with applicable rules of the Securities and Exchange Commission, this non-GAAP measure is reconciled to pre-tax net income, which is the most directly comparable GAAP financial measure. The Company’s management believes the presentation of pre-tax pre-provision core income provides investors with a greater understanding of the Company’s operating results, in addition to the results measured in accordance with GAAP.