EX-99.1 2 e18394_ex99-1.htm

FOR IMMEDIATE RELEASE

 

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

 

 

ENTEGRA FINANCIAL CORP. ANNOUNCES

THIRD QUARTER 2018 RESULTS

 

 

Franklin, North Carolina, October 18, 2018 — Entegra Financial Corp. (the “Company”) (NASDAQ: ENFC), the holding company for Entegra Bank (the “Bank”), today announced earnings and related data for the three and nine months ended September 30, 2018.

 

Highlights

 

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

 

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

 

 

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

 

 

 

 

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

 

Management Commentary

 

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

 

Net Interest Income

 

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

 

Provision for Loan Losses

 

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

 

Noninterest Income

 

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

 

 

 

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

 

Noninterest Expense

 

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

 

Income Taxes

 

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

 

Balance Sheet

 

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

 

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

 

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

 

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

 

 

 

Asset Quality

 

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

 

Non-GAAP Financial Measures

 

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

 

About Entegra Financial Corp. and Entegra Bank

 

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

 

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

 

Disclosures About Forward-Looking Statements

 

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

 

 

 

ENTEGRA FINANCIAL CORP. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(Amounts in thousands, except per share data)

 

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

 

 

 

ENTEGRA FINANCIAL CORP. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(Amounts in thousands, except per share data)

 

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

 

 

 

ENTEGRA FINANCIAL CORP. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

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

 

 

 

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

 

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

 

 

 

 

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

 

 

 

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

 

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

 

(1) Tax exempt loans and investments are calculated giving effect to a 21% federal tax rate in 2018 and a 35% federal tax rate in 2017.

(2) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.

(3) Tax-equivalent net interest rate spread represents the difference between the tax equivalent yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(4) Tax-equivalent net interest margin represents tax equivalent net interest income divided by average total interest-earning assets.

 

 

 

 

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

 

(1) Tax exempt loans and investments are calculated giving effect to a 21% federal tax rate in 2018 and a 35% federal tax rate in 2017.

(2) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.

(3) Tax-equivalent net interest rate spread represents the difference between the tax equivalent yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(4) Tax-equivalent net interest margin represents tax equivalent net interest income divided by average total interest-earning assets.