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) October 21, 2016

Civista Bancshares, Inc.

(Exact name of Registrant as specified in its charter)

Ohio	001-36192	34-1558688
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	( IRS Employer Identification No.)

100 East Water Street, P.O. Box 5016, Sandusky, Ohio 44870

(Address of principle executive offices)

Registrant’s telephone number, including area code: (419) 625-4121

N/A

(Former name or former address, if changed since last report)

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

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

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

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

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

Item 2.02 Results of Operations and Financial Condition

On October 21, 2016, Civista Bancshares, Inc. announced preliminary unaudited earnings for the three and nine-month periods ended September 30, 2016. A copy of the press release is furnished as Exhibit 99.1 to this report and incorporated here by reference.

In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits

(d)     Exhibit 99.1     Press release of Civista Bancshares, Inc. reporting financial results and earnings for the three and nine-month periods ended September 30, 2016.

SIGNATURE

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

	Civista Bancshares, Inc.
	(Registrant)
Date: October 21, 2016	/s/ Todd A. Michel
	Todd A. Michel,
	Senior Vice President & Controller

EX-99.1

Exhibit 99.1

Civista Bancshares, Inc. Announces Third Quarter 2016 Earnings

Sandusky, Ohio, October 21, 2016 /PRNewswire/– Civista Bancshares, Inc. (NASDAQ:CIVB) (“Civista”) reported net income attributable to common shareholders of $3.3 million, or $0.34 per diluted share, for the third quarter of 2016, compared with $2.9 million, or $0.30 per diluted share, for the prior year period. For the nine-month period ended September 30, 2016, Civista reported net income available to common shareholders of $12.4 million or $1.24 per diluted share, compared to $8.4 million, or $0.87 per diluted share, in the same period of 2015. Civista’s 2016 year-to-date performance includes the second quarter receipt of a payoff on a non-performing loan which resulted in a negative provision of $1.3 million and additional interest income of $918 thousand. These two items approximated $1.5 million after tax, or approximately $0.13 per diluted share. Without this transaction, the diluted earnings per share would have been $1.11 for the nine months ended September 30, 2016.

“September 30, 2016 marked the end to another great quarter for Civista. Diluted earnings per share for the quarter are 13% higher than last year and are in line with the linked quarter when removing one-time items. Our annualized loan growth for the year is 6% and our loan pipeline continues to be strong. Noninterest income has been increasing and we have been successful in keeping noninterest expenses in line.” said James O. Miller, Chairman, President and CEO of Civista.

Results of Operations:

Net interest income for the third quarter of 2016 increased $124 thousand, or 1.0% compared to the same period of 2015 and for the nine months ended September 30 increased $2.5 million, or 7.0%, when compared to the same period of 2015. For the three and nine-month periods ended September 30, an increase in average loans outstanding primarily contributed to the increase in interest income compared to 2015. Tax equivalent net interest margin was 4.06% for the third quarter, compared to 4.13% for the same period a year ago and 3.89% for the nine months ended September 30, 2016, compared to 3.91% for the same period a year ago. Year-to-date net interest margin was reduced in both periods due to the impact of additional interest-earning cash on deposit related to the tax refund processing program. Year-to-date average cash related to the tax refund processing program 2016 and 2015 was $93 million and $49 million, respectively. The reduction to net interest margin due to the additional cash from the tax refund processing program was 26 basis points in 2016 and 15 basis points in 2015.

Summary Average Balance Sheet

(Tax-equivalent basis / dollars in thousands)

	Nine months ended September 30,
	2016							2015
	Average balance		Interest		Yield / rate			Average balance		Interest		Yield / rate
Assets
Loans	$	1,019,793	$	35,311		4.63	%	$	976,290	$	33,271		4.56	%
Securities		214,180		4,473		3.58	%		211,090		4,356		3.49	%
Interest-bearing deposits		103,336		376		0.49	%		56,499		98		0.23	%
Total interest earning assets	$	1,337,309	$	40,160		4.14	%	$	1,243,879	$	37,725		4.18	%
Liabilities
Int-bearing demand and savings	$	564,743	$	345		0.08	%	$	544,569	$	315		0.08	%
Time deposits		206,620		1,135		0.73	%		226,109		1,273		0.75	%
FHLB advances and other borrowings		81,530		979		1.60	%		89,624		906		1.35	%
Total interest-bearing liabilities	$	852,893	$	2,459		0.39	%	$	860,302	$	2,494		0.39	%
Noninterest-bearing deposits	$	460,051						$	353,002
Net interest income and interest rate spread			$	37,701		3.75	%			$	35,231		3.79	%
Net interest margin						3.89	%						3.91	%

Summary Average Balance Sheet

(Tax-equivalent basis / dollars in thousands)

	Three months ended September 30,
	2016							2015
	Average balance		Interest		Yield / rate			Average balance		Interest		Yield / rate
Assets
Loans	$	1,042,721	$	11,824		4.51	%	$	1,009,372	$	11,755		4.62	%
Securities		215,470		1,536		3.64	%		210,209		1,463		3.49	%
Interest-bearing deposits		12,878		10		0.31	%		10,668		5		0.19	%
Total interest earning assets	$	1,271,069	$	13,370		4.32	%	$	1,230,249	$	13,223		4.39	%
Liabilities
Int-bearing demand and savings	$	574,322	$	118		0.08	%	$	552,899	$	108		0.08	%
Time deposits		207,947		388		0.74	%		220,726		405		0.73	%
FHLB advances and other borrowings		84,389		338		1.60	%		111,800		308		1.09	%
Total interest-bearing liabilities	$	866,658	$	844		0.39	%	$	885,425	$	821		0.37	%
Noninterest-bearing deposits	$	347,912						$	300,305
Net interest income and interest rate spread			$	12,526		3.93	%			$	12,402		4.02	%
Net interest margin						4.06	%						4.13	%

No provision for loan losses was made for the third quarter of 2016. For the nine months ended September 30, 2016, the provision was a negative $1.3 million due to ongoing improvement in the loan portfolio and recognition of a $1.3 million recovery due to the resolution of a nonperforming loan relationship that paid off. The provision for the three and nine-month periods ended September 30, 2015 was $400 thousand and $1.2 million, respectively.

During the quarter, noninterest income totaled $3.7 million, an increase of $577 thousand, or 18.8%, compared to the prior year’s third quarter. Year-to-date noninterest income totaled $13.0 million, an increase of $1.9 million, or 16.7%, compared to the prior year’s first nine months.

Noninterest income

(dollars in thousands)	Three months ended September 30,					Nine months ended September 30,
	2016		2015			2016		2015
Service charges	$	1,194	$	1,262		$	3,714	$	3,487
Net gain on sale of securities		18		(5	)		20		(5	)
Net gain on sale of loans		541		269			1,341		888
ATM fees		541		520			1,584		1,484
Wealth management fees		688		659			1,989		2,159
Tax refund processing fees		—		—			2,750		2,000
Other		671		371			1,591		1,119
Total noninterest income	$	3,653	$	3,076		$	12,989	$	11,132

Service charge income decreased $68 thousand in the three-month period ended September 30, 2016 compared to 2015, due to reduced overdraft charges. For the nine-month period, service charges increased $227 thousand, primarily due to a new large customer relationship. Gain on sale of loans increased $272 thousand and $453 thousand for the three and nine-month periods ended September 30, respectively. The increase in gain on sale of loans for both periods was due to additional volume of loans sold as well as an increase in the premium on loans sold. Wealth management fees increased $29 thousand for the three-month period, but decreased $170 thousand for the nine-month period. Assets under management have increased $27 million during the year from $397 million at December 31, 2015 to $424 million at September 30, 2016. Average assets under management were $408 million and $429 million for the nine months ended September 31, 2016 and 2015, respectively. Tax refund processing fees increased $750 thousand in the nine-month period due to a higher contract fee to compensate for an increase in the volume of refunds processed.

During the quarter, noninterest expense totaled $11.2 million, an increase of $529 thousand, or 5.0%, compared to the prior year’s third quarter. Year-to-date noninterest expense increased $950 thousand, or 3.0%, when compared to the nine months of 2015.

Noninterest expense

(dollars in thousands)	Three months ended September 30,				Nine months ended September 30,
	2016		2015		2016		2015
Salaries, Wages and benefits	$	6,375	$	6,025	$	19,053	$	17,732
Net occupancy and equipment		1,202		898		3,167		2,863
Contracted data processing		397		399		1,147		1,392
Taxes and assessments		417		397		1,306		1,315
Professional services		431		597		1,450		1,716
Amortization of intangible assets		172		189		527		522
Marketing		249		298		810		842
Other		1,952		1,863		5,693		5,821
Total noninterest expense	$	11,195	$	10,666	$	33,153	$	32,203

Salaries, wages and benefits expense increased $350 thousand for the third quarter and $1.3 million for the nine-month period ending September 30, 2016. The increases in salaries, wages and benefits expense for both periods were primarily due normal merit increases, increased insurance expense and increased incentive expense. Net occupancy and equipment increased $304 thousand for both the three and nine-month periods ended September 30 2016 due primarily to repair and maintenance and rent expense. Contracted data processing decreased $245 thousand for the nine-month period ended September 30, 2016. Professional services decreased $166 thousand and $266 thousand for the three and nine-month periods ended September 30, 2016. The year-to-date decreases to data processing and professional services were primarily due to expenses related to the acquisition of TCNB Financial Corporation in 2015. Overall acquisition related expenses included in the nine months ended September 30, 2015 approximate $390 thousand.

The year-to-date efficiency ratio was 63.1% during 2016 compared to 66.9% for 2015. The improvement in the efficiency ratio is due to the increase in net interest income, including the $918 thousand recovered interest income, as well as the increase in noninterest income, partially offset by a modest increase in noninterest expense.

Balance Sheet

Total assets increased $57.2 million, or 4.4%, from December 31, 2015 to September 30, 2016, due primarily to loan growth.

Total loans increased $45.4 million or 4.5% from December 31, 2015 to September 30, 2016. The increase in total loans is primarily due to increased Commercial Real Estate – Non-owner Occupied and Residential Real Estate.

End of period loan balances

(dollars in thousands)

	September 30, 2016		December 31, 2015
Commercial and Agriculture	$	129,700	$	124,402
Commercial Real Estate—Owner Occupied		167,564		167,897
Commercial Real Estate—Non-owner Occupied		385,863		348,439
Residential Real Estate		247,174		236,338
Real Estate Construction		56,919		58,898
Farm Real Estate		41,862		46,993
Consumer and Other		17,885		18,560
Total Loans	$	1,046,967	$	1,001,527

Mr. Miller continued, “Our annualized growth in the loan portfolio is 6% for the first nine-months of 2016. In addition, mortgage loans sold increased 32% for the first nine-months of 2016.”

Total deposits increased $82.1 million, or 7.8%, from December 31, 2015 to September 30, 2016, due primarily to increases in public fund deposits, business deposits and brokered deposits. Cash balances remaining related to the tax refund processing program also contributed to the increase.

End of period deposit balances

(dollars in thousands)

	September 30, 2016		December 31, 2015
Noninterest-bearing demand	$	341,653	$	300,615
Interest-bearing demand		192,866		176,303
Savings and money market		380,840		364,067
Time deposits		218,794		211,048
Total Deposits	$	1,134,153	$	1,052,033

Federal Home Loan Bank advances decreased $36.2 million or 50.8% from December 31, 2015 to September 30, 2016, primarily due to the increase in deposits.

Total shareholder’s equity increased $13.1 million, or 10.5%, from December 31, 2015 to September 30, 2016 primarily due to increased retained earnings of $11.2 million and a $1.7 million increase in other comprehensive income, primarily related to unrealized gains in the investment portfolio.

Asset Quality

Nonperforming assets at September 30, 2016 were $13.1 million, a $205 thousand decrease from December 31, 2015. The Company recorded net charge-offs of $1.1 million for the third quarter of 2016 compared to net charge-offs of $347 thousand for the same period of 2015. The increase in net charge-offs is due to two loan relationships that were not previously considered problem loans. Year-to-date, net recoveries were $390 thousand for 2016 compared to net charge-offs of $708 thousand for the same period of 2015.

Non-performing Assets

(dollars in thousands)	September 30,		December 31,
	2016		2015
Non-accrual loans	$	8,724	$	9,890
Restructured loans		4,309		3,294
Total non-performing loans		13,033		13,184
Other Real Estate Owned		62		116
Total non-performing assets	$	13,095	$	13,300

Civista Bancshares, Inc. is a $1.4 billion financial holding company headquartered in Sandusky, Ohio. The Company’s banking subsidiary, Civista Bank, operates 28 locations in North Central, West Central and Southwestern Ohio.

Civista Bancshares, Inc. may be accessed at www.civb.com. The Company’s common shares are traded on the NASDAQ Capital Market under the symbol “CIVB”. The Company’s depositary shares, each representing a 1/40^th ownership interest in a Series B Preferred Share, are traded on the NASDAQ Capital Market under the symbol “CIVBP”.

This press release may contain forward-looking statements regarding the financial performance, business prospects, growth and operating strategies of Civista. For these statements, Civista claims the protections of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Statements in this press release should be considered in conjunction with the other information available about Civista, including the information in the filings we make with the Securities and Exchange Commission. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance. The forward-looking statements are based on management’s expectations and are subject to a number of risks and uncertainties. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include risk factors relating to the banking industry and the other factors detailed from time to time in Civista’ reports filed with the Securities and Exchange Commission, including those described in “Item 1A Risk Factors” of Part I of Civista’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015. Undue reliance should not be placed on the forward-looking statements, which speak only as of the date hereof. Civista does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions that may be made to update any forward-looking statement to reflect the events or circumstances after the date on which the forward-looking statement is made, or reflect the occurrence of unanticipated events, except to the extent required by law.

For additional information, contact:

James O. Miller

Chairman, President and CEO

Civista Bancshares, Inc.

888-645-4121

Civista Bancshares, Inc.

Financial Highlights

(dollars in thousands, except share amounts)

Consolidated Condensed Statement of Income

	Three Months Ended September 30,						Nine Months Ended September 30,
	(unaudited)						(unaudited)
	2016			2015			2016			2015
Interest income		13,370			13,223			40,160			37,725
Interest expense		844			821			2,459			2,494
Net interest income		12,526			12,402			37,701			35,231
Provision for loan losses		—			400			(1,300	)		1,200
Net interest income after provision		12,526			12,002			39,001			34,031
Noninterest income		3,653			3,076			12,989			11,132
Noninterest expense		11,195			10,666			33,153			32,203
Income before taxes		4,984			4,412			18,837			12,960
Income tax expense		1,304			1,159			5,251			3,414
Net income		3,680			3,253			13,586			9,546
Preferred stock dividends		374			391			1,156			1,186
Net income available to common shareholders		3,306			2,862			12,430			8,360
Dividends per common share	$	0.06		$	0.05		$	0.16		$	0.15
Earnings per common share, basic	$	0.41		$	0.36		$	1.57		$	1.07
diluted	$	0.34		$	0.30		$	1.24		$	0.87
Average shares outstanding, basic		8,042,422			7,843,578			7,922,210			7,815,222
diluted		10,965,031			10,921,823			10,946,922			10,917,159
Selected financial ratios:
Return on average assets		1.07	%		0.98	%		1.24	%		0.95	%
Return on average equity		10.71	%		10.66	%		13.75	%		10.72	%
Dividend payout ratio		13.11	%		12.06	%		9.33	%		12.28	%
Net interest margin (tax equivalent)		4.06	%		4.13	%		3.89	%		3.91	%

Selected Balance Sheet Items

	September 30, 2016			December 31, 2015
	(unaudited)			(unaudited)
Cash and due from financial institutions	$	33,229		$	35,561
Investment securities		200,967			196,249
Loans held for sale		2,827			2,698
Loans		1,046,967			1,001,527
Less allowance for loan losses		13,451			14,361
Net loans		1,033,516			987,166
Other securities		13,926			13,452
Fixed assets		17,340			16,944
Goodwill and other intangibles		29,038			29,504
Bank owned life insurance		24,404			20,104
Other assets		17,033			13,363
Total assets	$	1,372,280		$	1,315,041
Total deposits	$	1,134,153		$	1,052,033
Federal Home Loan Bank advances		35,000			71,200
Securities sold under agreements to repurchase		21,713			25,040
Subordinated debentures		29,427			29,427
Accrued expenses and other liabilities		13,678			12,168
Total shareholders’ equity		138,309			125,173
Total liabilities and shareholders’ equity	$	1,372,280		$	1,315,041
Shares outstanding at period end		8,231,851			7,843,578
Book value per share	$	14.40		$	13.12
Tangible book value per share		10.87			9.36
Equity to asset ratio		10.08	%		9.52	%
Selected asset quality ratios:
Allowance for loan losses to total loans		1.28	%		1.43	%
Non-performing assets to total assets		0.95	%		1.01	%
Allowance for loan losses to non-performing loans		103.21	%		108.93	%
Non-performing asset analysis
Nonaccrual loans	$	8,724		$	9,890
Troubled debt restructurings		4,309			3,294
Other real estate owned		62			116
Total	$	13,095		$	13,300

Average Balance Analysis

(Unaudited—Dollars in thousands except share data)

	Nine Months Ended September 30,
	2016								2015
Assets:	Average balance			Interest		Yield/ rate *			Average balance			Interest		Yield/ rate *
Interest-earning assets:
Loans	$	1,019,793		$	35,311		4.63	%	$	976,290		$	33,271		4.56	%
Taxable securities		138,374			2,494		2.45	%		140,311			2,439		2.36	%
Non-taxable securities		75,806			1,979		5.64	%		70,779			1,917		5.73	%
Interest-bearing deposits in other banks		103,336			376		0.49	%		56,499			98		0.23	%
Total interest-earning assets	$	1,337,309			40,160		4.14	%	$	1,243,879			37,725		4.18	%
Noninterest-earning assets:
Cash and due from financial institutions		58,864								38,735
Premises and equipment, net		16,860								15,807
Accrued interest receivable		4,262								4,261
Intangible assets		29,289								28,214
Other assets		9,986								10,282
Bank owned life insurance		23,111								19,795
Less allowance for loan losses		(14,516	)							(14,676	)
Total Assets	$	1,465,165							$	1,346,297
Liabilities and Shareholders Equity:
Interest-bearing liabilities:
Demand and savings	$	564,743		$	345		0.08	%	$	544,569		$	315		0.08	%
Time		206,620			1,135		0.73	%		226,109			1,273		0.75	%
FHLB		30,933			312		1.35	%		40,922			326		1.07	%
Federal funds purchased		155			1		0.86	%		92			—		0.00	%
Subordinated debentures		29,427			650		2.95	%		29,427			565		2.57	%
Repurchase Agreements		21,015			16		0.10	%		19,183			15		0.10	%
Total interest-bearing liabilities	$	852,893			2,459		0.39	%	$	860,302			2,494		0.39	%
Noninterest-bearing deposits		460,051								353,002
Other liabilities		20,211								13,881
Shareholders’ Equity		132,010								119,112
Total Liabilities and Shareholders’ Equity	$	1,465,165							$	1,346,297
Net interest income and interest rate spread				$	37,701		3.75	%				$	35,231		3.79	%
Net interest margin							3.89	%							3.91	%

* - All yields and costs are presented on an annualized basis

Average Balance Analysis

(Unaudited—Dollars in thousands except share data)

	Three Months Ended September 30,
	2016								2015
Assets:	Average balance			Interest		Yield/ rate *			Average balance			Interest		Yield/ rate *
Interest-earning assets:
Loans	$	1,042,721		$	11,824		4.51	%	$	1,009,372		$	11,755		4.62	%
Taxable securities		138,092			872		2.56	%		138,129			810		2.36	%
Non-taxable securities		77,378			664		5.56	%		72,080			653		5.65	%
Interest-bearing deposits in other banks		12,878			10		0.31	%		10,668			5		0.19	%
Total interest-earning assets	$	1,271,069			13,370		4.32	%	$	1,230,249			13,223		4.39	%
Noninterest-earning assets:
Cash and due from financial institutions		24,591								23,793
Premises and equipment, net		16,975								16,338
Accrued interest receivable		4,134								4,330
Intangible assets		29,136								29,589
Other assets		10,196								10,574
Bank owned life insurance		24,308								19,910
Less allowance for loan losses		(14,424	)							(14,983	)
Total Assets	$	1,365,985							$	1,319,800
Liabilities and Shareholders Equity:
Interest-bearing liabilities:
Demand and savings	$	574,322		$	118		0.08	%	$	552,899		$	108		0.08	%
Time		207,947			388		0.74	%		220,726			405		0.73	%
FHLB		35,673			111		1.24	%		62,057			111		0.71	%
Federal funds purchased		462			1		0.86	%		272			—		0.00	%
Subordinated debentures		29,427			221		2.99	%		29,427			192		2.59	%
Repurchase Agreements		18,827			5		0.11	%		20,044			5		0.10	%
Total interest-bearing liabilities	$	866,658			844		0.39	%	$	885,425			821		0.37	%
Noninterest-bearing deposits		347,912								300,305
Other liabilities		14,678								13,013
Shareholders’ Equity		136,737								121,057
Total Liabilities and Shareholders’ Equity	$	1,365,985							$	1,319,800
Net interest income and interest rate spread				$	12,526		3.93	%				$	12,402		4.02	%
Net interest margin							4.06	%							4.13	%

* - All yields and costs are presented on an annualized basis

Supplemental Financial Information

(Unaudited—Dollars in thousands except share data)

	September 30,			June 30,			March 31,			December 31,			September 30,
End of Period Balances	2016			2016			2016			2015			2015
Assets
Cash and due from banks	$	33,229		$	41,772		$	214,407		$	35,561		$	33,619
Securities available for sale		200,967			200,643			201,786			196,249			198,655
Loans held for sale		2,827			5,167			2,193			2,698			1,223
Loans		1,046,967			1,028,922			1,005,803			1,001,527			1,000,275
Allowance for loan losses		(13,451	)		(14,547	)		(14,433	)		(14,361	)		(14,760	)
Net Loans		1,033,516			1,014,375			991,370			987,166			985,515
Other securities		13,926			13,734			13,550			13,452			13,324
Fixed assets		17,340			16,711			16,773			16,944			16,200
Goodwill and other intangibles		29,038			29,186			29,337			29,504			29,683
Bank owned life insurance		24,404			24,255			23,218			20,104			19,987
Other assets		17,033			14,068			14,262			13,363			15,125
Total Assets	$	1,372,280		$	1,359,911		$	1,506,896		$	1,315,041		$	1,313,331
Liabilities
Total Deposits	$	1,134,153		$	1,115,007		$	1,279,780		$	1,052,033		$	1,055,959
Federal Home Loan Bank advances		35,000			47,300			17,500			71,200			72,200
Securities sold under agreement to repurchase		21,713			17,725			24,272			25,040			20,887
Subordinated debentures		29,427			29,427			29,427			29,427			29,427
Accrued expenses and other liabilities		13,678			14,249			25,377			12,168			11,521
Total liabilities		1,233,971			1,223,708			1,376,356			1,189,868			1,189,994
Shareholders’ equity
Preferred shares, Series B		19,776			22,124			22,273			22,273			22,273
Common Stock		118,126			115,750			115,442			115,330			115,267
Accumulated earnings		16,471			13,640			9,242			5,300			2,884
Treasury stock		(17,235	)		(17,235	)		(17,235	)		(17,235	)		(17,235	)
Accumulated other comprehensive income (loss)		1,171			1,924			818			(495	)		148
Total shareholders’ equity		138,309			136,203			130,540			125,173			123,337
Total liabilities and shareholders’ equity	$	1,372,280		$	1,359,911		$	1,506,896		$	1,315,041		$	1,313,331
Quarterly Average Balances
Assets:
Earning assets	$	1,271,069		$	1,301,101		$	1,440,453		$	1,218,797		$	1,230,249
Securities		215,470			215,059			211,995			212,463			210,209
Loans		1,042,721			1,015,687			1,000,720			996,861			1,009,372
Liabilities and shareholders’ equity
Total deposits	$	1,130,181		$	1,191,298		$	1,373,875		$	1,059,271		$	1,073,930
Interest-bearing deposits		782,269			765,908			765,790			756,422			773,625
Interest-bearing liabilities		84,389			68,445			91,724			111,481			111,797
Total shareholders’ equity		136,737			132,267			126,976			124,025			121,057

Supplemental Financial Information

(Unaudited—Dollars in thousands except share data)

	Three Months Ended
Income statement	September 30, 2016			June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015
Total interest income	$	13,370		$	13,739		$	13,053		$	12,976		$	13,223
Total interest expense		844			799			818			815			821
Net interest income		12,526			12,940			12,235			12,161			12,402
Provision for loan losses		—			(1,300	)		—			—			400
Noninterest income		3,653			4,075			5,260			3,146			3,076
Noninterest expense		11,195			11,050			10,907			10,741			10,666
Income before taxes		4,984			7,265			6,588			4,566			4,412
Income tax expense		1,304			2,084			1,863			1,367			1,159
Net income		3,680			5,181			4,725			3,199			3,253
Preferred stock dividends		374			391			391			391			391
Net income available to common shareholders	$	3,306		$	4,790		$	4,334		$	2,808		$	2,862
Common stock dividend paid	$	474		$	392		$	392		$	392		$	392
Per share data
Basic net income per common share	$	0.41		$	0.61		$	0.55		$	0.36		$	0.36
Diluted net income per common share		0.34			0.47			0.43			0.29			0.30
Dividends per common share		0.06			0.05			0.05			0.05			0.05
Average common shares outstanding—basic		8,042,422			7,877,119			7,845,768			7,843,578			7,843,578
Average common shares outstanding—diluted		10,965,031			10,951,521			10,924,013			10,921,823			10,921,823
Asset quality
Allowance for loan losses, beginning of period	$	14,547		$	14,433		$	14,361		$	14,760		$	14,707
Charge-offs		(1,183	)		(230	)		(126	)		(525	)		(634	)
Recoveries		87			1,644			198			126			287
Provision		—			(1,300	)		—			—			400
Allowance for loan losses, end of period	$	13,451		$	14,547		$	14,433		$	14,361		$	14,760
Ratios
Allowance to total loans		1.28	%		1.41	%		1.43	%		1.43	%		1.48	%
Allowance to nonperforming assets		102.71	%		105.20	%		93.12	%		107.98	%		102.90	%
Allowance to nonperforming loans		103.21	%		106.02	%		93.46	%		108.93	%		106.57	%
Nonperforming assets
Nonperforming loans	$	13,033		$	13,721		$	15,443		$	13,184		$	13,851
Other real estate owned		62			107			56			116			494
Total nonperforming assets	$	13,095		$	13,828		$	15,499		$	13,300		$	14,345
Capital and liquidity
Tier 1 leverage ratio		10.38	%		9.85	%		8.24	%		9.96	%		9.68	%
Tier 1 risk-based capital ratio		12.84	%		12.76	%		12.52	%		12.70	%		12.47	%
Total risk-based capital ratio		14.08	%		14.01	%		13.77	%		13.96	%		13.72	%
Tangible common equity ratio		6.66	%		6.38	%		5.34	%		5.71	%		5.56	%