cstr-ex991

NASHVILLE, TN, July 26, 2018/GlobeNewswire/ -- CapStar Financial Holdings, Inc. (“CapStar”) (NASDAQ:CSTR) reported net income of $3.5 million, or $0.27 per share on a fully diluted basis, for the three months ended June 30, 2018, compared to a net loss of $3.3 million, or ($0.26) per share on a fully diluted basis, for the three months ended June 30, 2017. Net income for the six months ending June 30, 2018 was $6.7 million, or $0.52 per share on a fully diluted basis, compared to a net loss of $3.0 million, or ($0.24) per share on a fully diluted basis, for the six months ended June 30, 2017.

“Our associates followed up on our strong first quarter with a number of accomplishments during the second quarter that continue to demonstrate our focus on delivering sound, profitable growth for our shareholders,” said Claire W. Tucker, CapStar’s president and chief executive officer. “Excluding merger-related charges, operating net income⁽¹⁾ was $3.8 million, or $0.29 per share on a fully diluted basis, for the three months ended June 30, 2018.”

Operating measures exclude merger-related expenses unrelated to CapStar’s normal operations. CapStar believes these measures are useful to investors as they exclude certain costs resulting from acquisition activity and allow investors to more clearly see the economic results of the organization's operations.

(1) For a reconciliation of the non-GAAP operating measures that exclude merger-related costs unrelated to CapStar’s normal operations, see the non-GAAP financial measures section of this document.

“Excluding merger-related expenses, our operating results were in line with our expectations. Delivering a 1.08% Operating ROAA in the second quarter is a step in the right direction towards improving our profitability profile,” said Rob Anderson, chief financial officer and chief administrative officer of CapStar.

In addition, as announced on June 11, 2018, CapStar entered into a definitive merger agreement (the “Merger Agreement”) with Athens Bancshares Corporation (“Athens”). The Merger Agreement provides that Athens will merge with and into CapStar (the “Merger”), with CapStar as the surviving entity in the Merger and that, after the Merger, Athens’ wholly owned bank subsidiary, Athens Federal Community Bank, National Association, will merge with and into CapStar’s wholly owned bank subsidiary, CapStar Bank (the “Bank Merger,” together with the Merger, the “Mergers”), with CapStar Bank as the surviving entity in the Bank Merger.

The Merger Agreement was unanimously approved by the board of directors of each of CapStar and Athens. In the Merger, Athens shareholders will receive 2.864 shares of CapStar common stock for each share of Athens common stock. The all-stock transaction is valued at approximately $113.5 million based on the closing price of CapStar common stock on June 11, 2018.

Athens operates 10 locations in Southeast Tennessee. As of June 30, 2018, Athens had approximately $474 million in total assets, which included approximately $338 million in total loans, and approximately $412 million in total deposits.

CapStar expects to complete the Mergers in the fourth quarter of 2018. However, CapStar can provide no assurances of when or if the Mergers will be completed. CapStar must first obtain the approval of CapStar shareholders and Athens shareholders for the Mergers, as well as obtain necessary regulatory approvals and satisfy certain other closing conditions.

“We believe the second quarter financial results reported by Athens earlier this week support our confidence in the merits of this combination and the value creation potential for all of our shareholders,” said Claire W. Tucker, CapStar’s president and chief executive officer.

CapStar will host a conference call and webcast at 9:00 a.m. Central Time on Friday, July 27, 2018. During the call, management will review the second quarter results and operational highlights. Interested parties may listen to the call by dialing (844) 412-1002. The conference ID number is 7191747. A simultaneous webcast may be accessed on CapStar’s website at ir.capstarbank.com by clicking on “News & Events”. An archived version of the webcast will be available in the same location shortly after the live call has ended.

CapStar Financial Holdings, Inc. is a bank holding company headquartered in Nashville, Tennessee, and operates primarily through its wholly owned subsidiary, CapStar Bank, a Tennessee-chartered state bank. CapStar Bank is a commercial bank that seeks to establish and maintain comprehensive relationships with its clients by delivering customized and creative banking solutions and superior client service. As of June 30, 2018, on a consolidated basis, CapStar had total assets of $1.4 billion, gross loans of $1.0 billion, total deposits of $1.1 billion, and shareholders’ equity of $153.1 million. Visit www.capstarbank.com for more information.

In connection with the Mergers, CapStar has filed with the SEC a registration statement on Form S-4 (File Number 333-226112) that includes a joint proxy statement of CapStar and Athens and a prospectus of CapStar, as well as other relevant documents concerning the proposed Mergers. This earnings 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. SHAREHOLDERS OF CAPSTAR AND ATHENS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE JOINT PROXY STATEMENT/PROSPECTUS REGARDING THE MERGERS AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE MERGERS. When filed, this earnings release and other documents relating to the Mergers filed by CapStar with the SEC can be obtained free of charge from the SEC’s website at www.sec.gov. These documents also can be obtained free of charge by accessing CapStar’s website at https://ir.capstarbank.com/ under the tab “Financials & Filings.” Alternatively, these documents, when available, can be obtained free of charge from CapStar upon written request to CapStar Financials Holding, Inc., 1201 Demonbreun Street, Suite 700, Nashville, Tennessee 37203, Attention: Investor Relations or by calling (615) 732-6455.

CapStar, Athens and certain of their respective directors, executive officers and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed Mergers. Information regarding CapStar’s directors and executive officers is available in its definitive proxy statement, which was filed with the SEC on March 19, 2018, and certain of its Current Reports on Form 8-K. Information about the directors and executive officers of Athens is set forth in the joint proxy statement/prospectus when it is filed with the SEC. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, are contained in the joint proxy statement/prospectus and other relevant materials filed with the SEC. Free copies of this document may be obtained as described in the preceding paragraph.

Certain statements in this earnings release are forward-looking statements that reflect CapStar’s current views with respect to, among other things, future events, including, without limitation, the terms, timing and closing of the proposed Mergers and CapStar’s financial and operational performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “aspire,” “achieve,” “estimate,” “intend,” “plan,” “project,” “projection,” “forecast,” “roadmap,” “goal,” “guidance”, “target,” “would,” and “outlook,” or the negative version of those words or other comparable words of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about CapStar’s industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond CapStar’s control. The inclusion of these forward-looking statements should not be regarded as a representation by CapStar or any other person that such expectations, estimates and projections will be achieved. Accordingly, CapStar cautions you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although CapStar believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. There are or will be important factors that could cause CapStar’s actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, any factors identified in this earnings release as well as those factors that are detailed from time to time in CapStar’s periodic and current reports filed with the Securities and Exchange Commission, including those factors included in the

Company’s Annual Report on Form 10-K for the year ended December 31, 2017 under the headings “Item 1A. Risk Factors” and “Cautionary Note Regarding Forward Looking Statements” and in the Company’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. If one or more events related to these or other risks or uncertainties materialize, or if CapStar’s underlying assumptions prove to be incorrect, actual results may differ materially from our forward-looking statements. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date of this earnings release, and CapStar does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law. New risks and uncertainties may emerge from time to time, and it is not possible for CapStar to predict their occurrence or how they will affect CapStar.

This earnings release includes the following financial measures that were prepared other than in accordance with generally accepted accounting principles in the United States (“non-GAAP financial measure”): operating net income, operating diluted net income per share, operating return on average assets, operating return on average tangible equity, tangible book value per share and operating efficiency ratio. These non-GAAP financial measures (i) provide useful information to management and investors that is supplementary to CapStar’s financial condition, results of operations and cash flows computed in accordance with GAAP, (ii) enable a more complete understanding of factors and trends affecting CapStar’s business, and (iii) allow investors to evaluate CapStar’s performance in a manner similar to management, the financial services industry, bank stock analysts and bank regulators; however, CapStar acknowledges that these non-GAAP financial measures have a number of limitations. As such, you should not view these non-GAAP financial measures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other companies use. See below for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measure.

Consolidated Statements of Income (unaudited) (dollars in thousands, except share data)

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2018		2017			2018		2017
Interest income:
Loans, including fees	$	13,796	$	11,373		$	26,030	$	21,840
Securities:
Taxable		939		983			1,815		1,987
Tax-exempt		261		317			546		642
Federal funds sold		19		16			39		18
Restricted equity securities		128		86			257		163
Interest-bearing deposits in financial institutions		211		115			411		219
Total interest income		15,354		12,890			29,098		24,869
Interest expense:
Interest-bearing deposits		892		586			1,646		1,204
Savings and money market accounts		1,413		773			2,418		1,587
Time deposits		834		574			1,483		1,046
Federal funds purchased		1		7			1		11
Federal Home Loan Bank advances		627		379			1,117		519
Total interest expense		3,767		2,319			6,665		4,367
Net interest income		11,587		10,571			22,433		20,502
Provision for loan losses		169		9,690			846		13,094
Net interest income after provision for loan losses		11,418		881			21,587		7,408
Noninterest income:
Treasury management and other deposit service charges		427		342			829		670
Loan commitment fees		185		187			572		423
Net gain on sale of securities		3		40			3		34
Tri-Net fees		325		297			853		382
Mortgage banking income		1,383		1,370			2,695		2,587
Other noninterest income		442		430			902		703
Total noninterest income		2,765		2,666			5,854		4,799
Noninterest expense:
Salaries and employee benefits		6,340		4,784			12,598		9,870
Data processing and software		810		711			1,608		1,331
Professional fees		344		350			819		714
Occupancy		535		539			1,056		987
Equipment		602		544			1,141		1,040
Regulatory fees		233		301			436		608
Merger related expenses		335		—			335		—
Other operating		806		988			1,593		2,042
Total noninterest expense		10,005		8,217			19,586		16,592
Income (loss) before income taxes		4,178		(4,670	)		7,855		(4,385	)
Income tax (benefit) expense		665		(1,328	)		1,148		(1,375	)
Net income (loss)	$	3,513	$	(3,342	)	$	6,707	$	(3,010	)
Per share information:
Basic net income (loss) per share of common stock	$	0.30	$	(0.30	)	$	0.57	$	(0.27	)
Diluted net income (loss) per share of common stock	$	0.27	$	(0.26	)	$	0.52	$	(0.24	)
Weighted average shares outstanding:
Basic		11,845,822		11,226,216			11,755,535		11,218,624
Diluted		13,067,223		12,740,104			13,021,744		12,761,989

This information is preliminary and based on company data available at the time of the presentation.

Selected Quarterly Financial Data (unaudited) (dollars in thousands, except share data)

	Five Quarter Comparison
	6/30/18			3/31/18			12/31/17			9/30/17			6/30/17
Income Statement Data:
Net interest income	$	11,587		$	10,846		$	10,518		$	10,843		$	10,571
Provision for loan losses		169			678			(30	)		(195	)		9,690
Net interest income after provision for loan losses		11,418			10,168			10,548			11,038			881
Treasury management and other deposit service charges		427			402			419			427			342
Loan commitment fees		185			387			124			224			188
Net gain (loss) on sale of securities		3			—			(108	)		9			40
Tri-Net fees		325			528			254			367			297
Mortgage banking income		1,383			1,313			1,621			2,030			1,370
Other noninterest income		442			458			426			315			429
Total noninterest income		2,765			3,088			2,736			3,372			2,666
Salaries and employee benefits		6,340			6,257			5,411			5,119			4,784
Data processing and software		810			798			746			709			711
Professional fees		344			474			473			336			350
Occupancy		535			521			507			531			539
Equipment		602			539			467			564			544
Regulatory fees		233			203			234			270			301
Merger related expenses		335			—			—			—			—
Other operating		806			788			861			945			988
Total noninterest expense		10,005			9,580			8,699			8,474			8,217
Net income (loss) before income tax expense		4,178			3,676			4,585			5,936			(4,670	)
Income tax (benefit) expense		665			483			4,494			1,516			(1,328	)
Net income (loss)	$	3,513		$	3,193		$	91		$	4,420		$	(3,342	)
Weighted average shares - basic		11,845,822			11,664,467			11,403,689			11,279,364			11,226,216
Weighted average shares - diluted		13,067,223			12,975,981			12,938,288			12,750,423			12,740,104
Net income (loss) per share, basic	$	0.30		$	0.27		$	0.01		$	0.39		$	(0.30	)
Net income (loss) per share, diluted		0.27			0.25			0.01			0.35			(0.26	)
Balance Sheet Data (at period end):
Cash and cash equivalents	$	58,222		$	51,125		$	82,797		$	69,789		$	48,093
Securities available-for-sale		183,364			189,580			192,621			146,600			155,663
Securities held-to-maturity		3,746			3,752			3,759			45,635			46,458
Loans held for sale		65,320			62,286			74,093			53,225			73,573
Total loans		1,046,525			1,031,821			947,537			974,530			996,617
Allowance for loan losses		(14,705	)		(14,563	)		(13,721	)		(14,122	)		(12,454	)
Total assets		1,401,181			1,382,745			1,344,429			1,338,559			1,371,626
Non-interest-bearing deposits		223,579			258,161			301,742			250,007			231,169
Interest-bearing deposits		921,435			869,393			818,124			841,488			889,816
Federal Home Loan Bank advances		95,000			100,000			70,000			95,000			105,000
Total liabilities		1,248,035			1,234,052			1,197,483			1,194,355			1,233,596
Shareholders' equity	$	153,146		$	148,693		$	146,946		$	144,204		$	138,031
Total shares of common stock outstanding		11,931,131			11,773,358			11,582,026			11,346,498			11,235,255
Total shares of preferred stock outstanding		878,049			878,049			878,049			878,049			878,049
Book value per share of common stock	$	12.08		$	11.87		$	11.91		$	11.92		$	11.48
Tangible book value per share of common stock*		11.56			11.34			11.37			11.36			10.93
Market value per share of common stock	$	18.53		$	18.83		$	20.77		$	19.58		$	17.74
Capital ratios:
Total risk based capital		12.45	%		12.22	%		12.52	%		12.41	%		11.51	%
Tier 1 risk based capital		11.33	%		11.11	%		11.41	%		11.28	%		10.54	%
Common equity tier 1 capital		10.66	%		10.43	%		10.70	%		10.58	%		9.86	%
Leverage		10.87	%		10.91	%		10.77	%		10.36	%		9.77	%

*This metric is a non-GAAP financial measure. See below for reconciliation to the most directly comparable GAAP financial measure.

This information is preliminary and based on company data available at the time of the presentation.

Selected Quarterly Financial Data (unaudited) (dollars in thousands, except share data)

	Five Quarter Comparison
	6/30/18			3/31/18			12/31/17			9/30/17			6/30/17
Average Balance Sheet Data:
Cash and cash equivalents	$	63,064		$	60,965		$	64,850		$	59,352		$	62,002
Investment securities		197,933			203,274			202,818			207,926			227,431
Loans held for sale		58,297			68,084			66,311			67,886			34,690
Loans		1,041,835			983,496			956,441			991,238			1,028,968
Assets		1,396,359			1,351,129			1,329,621			1,367,993			1,393,331
Interest bearing deposits		901,076			840,871			827,732			857,344			882,721
Deposits		1,138,400			1,111,182			1,081,380			1,094,500			1,111,833
Federal Home Loan Bank advances		99,121			84,533			92,554			123,315			128,901
Liabilities		1,244,824			1,202,854			1,181,954			1,226,438			1,250,544
Shareholders' equity		151,535			148,276			147,667			141,556			142,787
Performance Ratios:
Annualized return on average assets		1.01	%		0.96	%		0.03	%		1.28	%		-0.96	%
Annualized return on average equity		9.30	%		8.74	%		0.25	%		12.38	%		-9.39	%
Net interest margin (1)		3.46	%		3.39	%		3.31	%		3.31	%		3.20	%
Annualized Non-interest income to average assets		0.79	%		0.93	%		0.82	%		0.98	%		0.77	%
Efficiency ratio		69.7	%		68.8	%		65.6	%		59.6	%		62.1	%
Loans by Type (at period end):
Commercial and industrial	$	386,065		$	408,353		$	373,248		$	394,600		$	406,636
Commercial real estate - owner occupied		121,475			131,741			101,132			103,183			97,634
Commercial real estate - non-owner occupied		286,769			258,016			249,489			263,594			288,124
Construction and development		96,580			91,953			82,586			79,951			62,152
Consumer real estate		109,915			104,224			102,581			100,811			99,750
Consumer		9,671			9,524			6,862			6,289			4,096
Other		36,428			28,750			31,984			26,461			38,784
Asset Quality Data:
Allowance for loan losses to total loans		1.41	%		1.41	%		1.45	%		1.45	%		1.25	%
Allowance for loan losses to non-performing loans		271	%		1096	%		509	%		446	%		386	%
Nonaccrual loans	$	5,419		$	1,329		$	2,695		$	3,165		$	3,229
Troubled debt restructurings		1,173			1,190			1,206			1,222			1,239
Loans - over 89 days past due and accruing		216			-			231			27			15
Total non-performing loans		5,419			1,329			2,695			3,165			3,229
OREO and repossessed assets		-			-			-			-			-
Total non-performing assets		5,419			1,329			2,695			3,165			3,229
Non-performing loans to total loans		0.52	%		0.13	%		0.28	%		0.32	%		0.32	%
Non-performing assets to total assets		0.39	%		0.10	%		0.20	%		0.24	%		0.24	%
Non-performing assets to total loans and OREO		0.52	%		0.13	%		0.28	%		0.32	%		0.32	%
Annualized net charge-offs (recoveries) to average loans		0.01	%		-0.07	%		0.15	%		-0.75	%		4.38	%
Net charge-offs (recoveries)	$	27		$	(165	)	$	372		$	(1,863	)	$	11,233
Interest Rates and Yields:
Loans		5.04	%		4.74	%		4.54	%		4.55	%		4.29	%
Securities (1)		2.82	%		2.69	%		2.84	%		2.72	%		2.74	%
Total interest-earning assets (1)		4.58	%		4.29	%		4.11	%		4.12	%		3.90	%
Deposits		1.11	%		0.88	%		0.78	%		0.77	%		0.70	%
Borrowings and repurchase agreements		2.53	%		2.35	%		2.04	%		1.81	%		1.18	%
Total interest-bearing liabilities		1.51	%		1.27	%		1.12	%		1.08	%		0.92	%
Other Information:
Full-time equivalent employees		183			182			175			168			169

This information is preliminary and based on company data available at the time of the presentation.

(1) Net Interest Margin, Securities yields, and Total interest-earning asset yields are calculated on a tax-equivalent basis

Analysis of Interest Income and Expense, Rates and Yields (unaudited) (dollars in thousands)

	For the Three Months Ended June 30,
	2018							2017
	Average Outstanding Balance		Interest Income/ Expense		Average Yield/ Rate			Average Outstanding Balance		Interest Income/ Expense		Average Yield/ Rate
Interest-Earning Assets
Loans (1)	$	1,041,835	$	13,090		5.04	%	$	1,028,968	$	11,011		4.29	%
Loans held for sale		58,297		706		4.86	%		34,690		362		4.18	%
Securities:
Taxable investment securities (2)		155,552		1,067		2.74	%		174,075		1,069		2.46	%
Investment securities exempt from federal income tax (3)		42,381		261		3.12	%		53,356		317		3.66	%
Total securities		197,933		1,328		2.82	%		227,431		1,386		2.74	%
Cash balances in other banks		50,335		211		1.68	%		49,735		115		0.93	%
Funds sold		2,898		19		2.57	%		3,637		16		1.78	%
Total interest-earning assets		1,351,298		15,354		4.58	%		1,344,461		12,890		3.90	%
Noninterest-earning assets		45,061							48,870
Total assets	$	1,396,359						$	1,393,331
Interest-Bearing Liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts	$	279,705		892		1.28	%	$	302,532		586		0.78	%
Savings and money market deposits		428,330		1,413		1.32	%		379,800		773		0.82	%
Time deposits		193,041		834		1.73	%		200,389		574		1.15	%
Total interest-bearing deposits		901,076		3,139		1.40	%		882,721		1,933		0.88	%
Borrowings and repurchase agreements		99,286		628		2.53	%		130,824		386		1.18	%
Total interest-bearing liabilities		1,000,362		3,767		1.51	%		1,013,545		2,319		0.92	%
Noninterest-bearing deposits		237,324							229,111
Total funding sources		1,237,686							1,242,656
Noninterest-bearing liabilities		7,138							7,888
Shareholders’ equity		151,535							142,787
Total liabilities and shareholders’ equity	$	1,396,359						$	1,393,331
Net interest spread (4)						3.07	%						2.98	%
Net interest income/margin (5)			$	11,587		3.46	%			$	10,571		3.20	%

This information is preliminary and based on company data available at the time of the presentation.

Analysis of Interest Income and Expense, Rates and Yields (unaudited) (dollars in thousands)

	For the Six Months Ended June 30,
	2018							2017
	Average Outstanding Balance		Interest Income/ Expense		Average Yield/ Rate			Average Outstanding Balance		Interest Income/ Expense		Average Yield/ Rate
Interest-Earning Assets
Loans (1)	$	1,012,827	$	24,574		4.89	%	$	1,001,810	$	21,205		4.27	%
Loans held for sale		63,163		1,456		4.65	%		31,542		635		4.06	%
Securities:
Taxable investment securities (2)		155,918		2,072		2.66	%		177,840		2,150		2.42	%
Investment securities exempt from federal income tax (3)		44,671		546		3.09	%		54,391		642		3.63	%
Total securities		200,589		2,618		2.75	%		232,231		2,792		2.70	%
Cash balances in other banks		49,465		411		1.68	%		48,893		219		0.91	%
Funds sold		3,216		39		2.41	%		2,689		18		1.39	%
Total interest-earning assets		1,329,260		29,098		4.44	%		1,317,165		24,869		3.86	%
Noninterest-earning assets		44,610							49,766
Total assets	$	1,373,870						$	1,366,931
Interest-Bearing Liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts	$	283,002		1,646		1.17	%	$	316,502		1,204		0.77	%
Savings and money market deposits		404,064		2,418		1.21	%		406,937		1,587		0.79	%
Time deposits		184,074		1,483		1.62	%		184,446		1,046		1.14	%
Total interest-bearing deposits		871,140		5,547		1.28	%		907,885		3,837		0.85	%
Borrowings and repurchase agreements		92,006		1,118		2.45	%		88,206		530		1.21	%
Total interest-bearing liabilities		963,146		6,665		1.40	%		996,091		4,367		0.88	%
Noninterest-bearing deposits		253,727							219,762
Total funding sources		1,216,873							1,215,853
Noninterest-bearing liabilities		7,083							8,905
Shareholders’ equity		149,914							142,173
Total liabilities and shareholders’ equity	$	1,373,870						$	1,366,931
Net interest spread (4)						3.04	%						2.98	%
Net interest income/margin (5)			$	22,433		3.43	%			$	20,502		3.19	%

This information is preliminary and based on company data available at the time of the presentation.

Non-GAAP Financial Measures (unaudited) (dollars in thousands except share data)

	Three Months Ended
	June 30, 2018			March 31, 2018			December 31, 2017			September 31, 2017			June 30, 2017
Operating net income (loss):
Net income (loss)	$	3,513		$	3,193		$	91		$	4,420		$	(3,342	)
Add: merger related expenses		335			—			—			—			—
Less: income tax impact of merger related expenses		(88	)		—			—			—			—
Operating net income (loss)	$	3,760		$	3,193		$	91		$	4,420		$	(3,342	)

Operating diluted net income (loss) per share of common stock:
Operating net income (loss)	$	3,760		$	3,193		$	91		$	4,420		$	(3,342	)
Weighted average shares - diluted		13,067,223			12,975,981			12,938,288			12,750,423			12,740,104
Operating diluted net income (loss) per share of common stock	$	0.29		$	0.25		$	0.01		$	0.35		$	(0.26	)

Operating annualized return on average assets:
Operating net income (loss)	$	3,760		$	3,193		$	91		$	4,420		$	(3,342	)
Average assets	$	1,396,359		$	1,351,129		$	1,329,621		$	1,367,993		$	1,393,331
Operating annualized return on average assets		1.08	%		0.96	%		0.03	%		1.28	%		-0.96	%

Operating annualized return on average tangible equity:
Average total shareholders' equity	$	151,535		$	148,276		$	147,667		$	141,556		$	142,787
Less: average intangible assets		(6,228	)		(6,238	)		(6,248	)		(6,258	)		(6,271	)
Average tangible equity		145,307			142,038			141,419			135,298			136,516
Operating net income (loss)	$	3,760		$	3,193		$	91		$	4,420		$	(3,342	)
Operating annualized return on average tangible equity		10.38	%		9.12	%		0.26	%		12.96	%		-9.82	%

Operating efficiency ratio:
Total noninterest expense	$	10,005		$	9,580		$	8,699		$	8,474		$	8,217
Less: merger related expenses		(335	)		—			—			—			—
Total operating noninterest expense		9,670			9,580			8,699			8,474			8,217
Net interest income		11,587			10,846			10,518			10,843			10,571
Total noninterest income		2,765			3,088			2,736			3,372			2,666
Total revenues	$	14,352		$	13,934		$	13,254		$	14,215		$	13,237
Operating efficiency ratio:		67.38	%		68.75	%		65.63	%		59.61	%		62.08	%

	June 30, 2018			March 31, 2018			December 31, 2017			September 31, 2017			June 30, 2017
Tangible Equity:
Total shareholders' equity	$	153,146		$	148,693		$	146,946		$	144,204		$	138,031
Less: intangible assets		(6,228	)		(6,238	)		(6,248	)		(6,258	)		(6,271	)
Tangible equity	$	146,918		$	142,455		$	140,698		$	137,946		$	131,760

Tangible Common Equity:
Tangible equity	$	146,918		$	142,455		$	140,698		$	137,946		$	131,760
Less: preferred equity		(9,000	)		(9,000	)		(9,000	)		(9,000	)		(9,000	)
Tangible common equity	$	137,918		$	133,455		$	131,698		$	128,946		$	122,760

Tangible Book Value per Share of Common Stock:
Tangible common equity	$	137,918		$	133,455		$	131,698		$	128,946		$	122,760
Total shares of common stock outstanding		11,931,131			11,773,358			11,582,026			11,346,498			11,235,255
Tangible book value per share of common stock	$	11.56		$	11.34		$	11.37		$	11.36		$	10.93

Non-GAAP Financial Measures (unaudited) (dollars in thousands except share data)

	Six Months Ended
	June 30, 2018			June 30, 2017
Operating net income (loss):
Net income (loss)	$	6,707		$	(3,010	)
Add: merger related expenses		335			—
Less: income tax impact of merger related expenses		(88	)		—
Operating net income (loss)	$	6,954		$	(3,010	)

Operating diluted net income (loss) per share of common stock:
Operating net income (loss)	$	6,954		$	(3,010	)
Weighted average shares - diluted		13,021,744			12,761,989
Operating diluted net income (loss) per share of common stock	$	0.53		$	(0.24	)

Operating annualized return on average assets:
Operating net income (loss)	$	6,954		$	(3,010	)
Average assets	$	1,373,869		$	1,366,931
Operating annualized return on average assets		1.02	%		-0.44	%

Operating annualized return on average tangible equity:
Average total shareholders' equity	$	149,914		$	142,173
Less: average intangible assets		(6,233	)		(6,278	)
Average tangible equity		143,681			135,895
Operating net income (loss)	$	6,954		$	(3,010	)
Operating annualized return on average tangible equity		9.76	%		-4.47	%

Operating efficiency ratio:
Total noninterest expense	$	19,586		$	16,592
Less: merger related expenses		(335	)		—
Total operating noninterest expense		19,251			16,592
Net interest income		22,433			20,502
Total noninterest income		5,854			4,799
Total revenues	$	28,287		$	25,301
Operating efficiency ratio:		68.06	%		65.58	%