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County Bancorp, Inc. Announces Net Income of $3.8 Million for the First Quarter of 2019

Highlights

  • Net income of $3.8 million for the first quarter of 2019
  • Diluted earnings per share of $0.54 for the first quarter of 2019
  • Book value per share of $22.36 as of March 31, 2019, an increase of $0.86, or 4.0%, since December 31, 2018
  • Brokered and national deposits decreased $52.2 million during the first quarter of 2019, a reduction of 11.1% since December 31, 2018

MANITOWOC, Wis., April 18, 2019 (GLOBE NEWSWIRE) -- County Bancorp, Inc. (the “Company”; Nasdaq: ICBK), the holding company of Investors Community Bank (the “Bank”), an agricultural and commercial community bank headquartered in Manitowoc, Wisconsin, reported net income of $3.8 million, or $0.54 diluted earnings per share, for the first quarter of 2019, compared to net income of $2.8 million, or $0.40 diluted earnings per share, for the fourth quarter of 2018 and $4.1 million, or $0.58 diluted earnings per share, for the first quarter of 2018.  This represents an annualized return on average assets of 1.00% for the three months ended March 31, 2019, compared to 1.15% for the three months ended March 31, 2018.

“We are very pleased that we continue to produce solid quarterly earnings, even with the challenges in the dairy sector,” stated Tim Schneider, President of the Company and CEO of the Bank. 

“As we previously announced, we are committed to reducing our wholesale funding which we were able to make significant progress towards in the first quarter through loan participations.  Our core deposit strategies had modest impact on this shift in the first quarter, but we feel longer term our strategies to grow core deposits will be impactful.  Although we saw reduction in our classified assets ratio which was due to completed collection efforts, loan payoffs, and credits which were upgraded through our annual review process, we still have a large portion of our agricultural portfolio remaining to fully review through the credit underwriting process.”

Loans and Total Assets

Total assets at March 31, 2019 were $1.5 billion, a decrease of $29.4 million, or 1.9%, and an increase of $31.1 million, or 2.1%, over total assets as of December 31, 2018 and March 31, 2018, respectively.  Total loans were $1.2 billion at March 31, 2019, which represents a $24.3 million, or 2.0%, decrease over total loans at December 31, 2018, and an $18.4 million, or 1.6%, increase over total loans at March 31, 2018.

During the first quarter of 2019, participated loans that we continue to service increased to $675.3 million at March 31, 2019, which is an increase of $14.0 million, or 2.1%, and $63.9 million, or 10.5%, over participated loans that we serviced at December 31, 2018 and March 31, 2018, respectively.

Deposits

Total deposits at March 31, 2019 were $1.2 billion, a decrease of $47.1 million, or 3.8%, and an increase of $3.8 million, or 0.3%, over total deposits as of December 31, 2018 and March 31, 2018, respectively.  Client deposits (demand deposits, money market accounts, and certificates of deposit) increased $5.2 million, or 0.7%, since December 31, 2018, and increased $89.4 million, or 13.3%, since March 31, 2018. 

Due to the increases in loan participations and client deposit growth, we were able to decrease our reliance on brokered deposits and national certificates of deposit by $52.2 million, or 11.1%, from December 31, 2018, to $416.7 million at March 31, 2019.  This also represents a decrease or $85.5 million, or 17.0%, from March 31, 2018. 

During the first quarter of 2019, we supplemented a portion of our deposit needs with FHLB borrowings.  At March 31, 2019, borrowings from the FHLB totaled $100.4 million, which was an increase of $11.0 million, or 12.3%, from December 31, 2018, but was a decrease of $20.1 million, or 16.7%, from March 31, 2018.

Net Interest Income and Margin

Net interest income was $10.6 million for the three months ended March 31, 2019, which was a $0.1 million, or 1.7%, decrease from the three months ended December 31, 2018, and a $0.3 million, or 2.8%, increase from the three months ended March 31, 2018.  The primary reason for the first quarter decline in net interest income compared to the preceding quarter was the increase in loan participations that resulted in lower average loan balances during the period.

Net interest margin was 2.94% for the three months ended March 31, 2019, which was an increase from 2.91% for the three months ended December 31, 2018, and a decrease from 3.01% for the three months ended March 31, 2018.  A slight improvement in net interest margin was realized over the linked quarter because while loan yields remained steady, interest rates on deposits due from other banks outpaced the increase in cost of funds.  Year-over-year first quarter net interest margin decreased by seven basis points primarily due to interest expense related to the $30.0 million of junior subordinated debentures that were issued during the second quarter of 2018 and a fifty-one basis point increase in cost of funds, which was partially offset by a forty-seven basis point improvement in loan yields.

Non-Interest Income and Expense

Non-interest income for the three months ended March 31, 2019 increased by $0.5 million, or 18.5%, to $2.8 million compared to the three months ended December 31, 2018, primarily due to the reduction of the allowance for unused commitments of $0.5 million, included in other non-interest income, in the first quarter.  The Company evaluated the need for this allowance during the first quarter and concluded there was no sufficient evidence that represented credit loss inherent in these commitments to substantiate the necessity of this reserve at March 31, 2019 and concluded to eliminate it.  The Company will continue to evaluate credit risk on these off-balance sheet commitments going forward.  During the first quarter, the Company also reduced a valuation allowance on its loan servicing rights portfolio which resulted in an increase of $0.2 million of loan servicing rights.  The reduction of the valuation allowance is expected to continue throughout the remaining quarters of 2019.

Non-interest income for the three months ended March 31, 2019 increased $0.7 million, or 34.8%, compared to $2.0 million for the three months ended March 31, 2018.  The year-over-year increase was primarily due to the elimination of the allowance for unused commitments and valuation allowance reduction discussed above and increases in loan servicing fees and rights which were the result of higher volumes of loans being serviced.

Non-interest expense for the three months ended March 31, 2019 decreased by $0.2 million, or 3.1%, to $7.3 million compared to the three months ended December 31, 2018, and increased $0.5 million, or 7.7%, compared to the three months ended March 31, 2018.  The quarter-over-quarter decrease was primarily due $0.7 million of write-downs on two OREO properties that took place during the fourth quarter of 2018, which was partially offset by a $0.3 million, or 6.3% increase in employee compensation and benefits which was primarily the result of a 24.1% increase in the premium cost of employee benefits.

Asset Quality

Non-performing assets as a percent of total assets increased to 2.07% at March 31, 2019, from 1.94% at December 31, 2018, and 1.83% at March 31, 2018.  At March 31, 2019, non-performing assets were $30.9 million, an increase of $1.3 million and $4.2 million at December 31, 2018 and March 31, 2018, respectively.  During the first quarter of 2019, non-performing loans increased by $2.9 million; however, three OREO properties were sold resulting in a decrease of $1.5 million in OREO during the quarter ended March 31, 2019.

Substandard loans were $107.5 million at March 31, 2019, compared to $120.9 million at December 31, 2018 and $82.6 million at March 31, 2018.  Adverse classified asset ratio (a non-GAAP measure) decreased to 48.59% at March 31, 2019 from 57.12% and 53.44% at December 31, 2018 and March 31, 2018, respectively.  Despite Wisconsin’s strained agricultural economy and the four-year sustained low prices of class III milk, the improvement in this ratio is the result of the active management of the substandard credits within the Bank’s loan portfolio as well as sales of OREO during the quarter.

A provision for loan losses of $0.8 million was recorded for the three months ended March 31, 2019 compared to a provision of $1.6 million and $0.1 million for the three months ended December 31, 2018 and March 31, 2018, respectively.  The decrease in provision in the linked quarter is directly related to the $24.3 million reduction in total loans and the $0.2 million of net recoveries that occurred during the first quarter of 2019.

The allowance for loan losses was $17.5 million at March 31, 2019 compared to $16.5 million at December 31, 2018.  The $1.0 million increase in the allowance during the first quarter of 2019 was the result of a $2.1 million increase in specific impairments on substandard loans which was offset in part by a $1.1 million reduction in general reserves due to the decreases in both adversely classified and total loans and improvement of qualitative factors.

Conference Call

The Company will host an earnings call today, April 18, 2019, at 1:30 p.m., CDT, conducted by Tim Schneider, President, and Glen L. Stiteley, CFO.  The earnings call will be broadcast over the Internet on the Company’s website at www.ICBK.com then clicking on the link “Investor Relations,” and selecting “News”, then “Event Calendar.”  In addition, you may listen to the Company’s earnings call via telephone by dialing (888) 317-6016.  Investors should visit the Company’s website or call in to the dial-in number set forth above at least 10 minutes prior to the scheduled start of the call.  

A replay of the earnings call will be available until April 18, 2020, by visiting the Company’s website at http://www.icbk.com  and clicking on the link “Investor Relations.”

About County Bancorp, Inc.

County Bancorp, Inc., a Wisconsin corporation and registered bank holding company founded in May 1996, and our wholly-owned subsidiary Investors Community Bank, a Wisconsin-chartered bank, are headquartered in Manitowoc, Wisconsin.  The state of Wisconsin is often referred to as “America’s Dairyland,” and one of the niches we have developed is providing financial services to agricultural businesses statewide, with a primary focus on dairy-related lending.  We also serve business and retail customers throughout Wisconsin, with a focus on northeastern and central Wisconsin.  Our customers are served from our full-service locations in Manitowoc, Appleton, Green Bay, and Stevens Point and our loan production offices in Darlington, Eau Claire, Fond du Lac, and Sheboygan.

Forward-Looking Statements

This press release includes "forward-looking statements” within the meaning of such term in the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. We caution you that the forward-looking statements presented in this press release are not a guarantee of future events, and that actual events may differ materially from those made in or suggested by the forward-looking information contained in this press release.  Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "plan," "seek," "will," "expect," "intend," "estimate," "anticipate," "believe" or "continue" or the negative thereof or variations thereon or similar terminology. Factors that may cause actual results to differ materially from those made or suggested by the forward-looking statements contained in this press release include those identified in the Company’s most recent annual report on Form 10-K and subsequent filings with the Securities and Exchange Commission.  Any forward-looking statements presented herein are made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

Investor Relations Contact
Glen L. Stiteley
EVP - CFO, Investors Community Bank
Phone: (920) 686-5658
Email: gstiteley@icbk.com     

County Bancorp, Inc.
Consolidated Financial Summary
(Unaudited)
  March 31,
2019
    December
31,
2018
    September
30,
2018
    June 30,
2018
    March 31,
2018
 
       
    (dollars in thousands, except per share data)  
Period-End Balance Sheet:                                        
Assets                                        
Cash and cash equivalents   $ 62,426     $ 61,087     $ 49,996     $ 81,044     $ 90,676  
Securities available for sale, at fair value     192,210       195,945       190,185       187,505       141,360  
Loans held for sale     2,998       2,949       13,770       11,468       6,407  
Agricultural loans     722,107       724,508       714,310       702,426       698,106  
Commercial loans     403,490       415,672       417,146       407,609       406,096  
Multi-family real estate loans     52,974       62,321       66,403       65,713       54,514  
Residential real estate loans     4,172       4,522       4,965       5,437       5,512  
Installment and consumer other     220       272       113       339       297  
Total loans     1,182,963       1,207,295       1,202,937       1,181,524       1,164,525  
Allowance for loan losses     (17,493 )     (16,505 )     (16,143 )     (15,129 )     (14,612 )
Net loans     1,165,470       1,190,790       1,186,794       1,166,395       1,149,913  
Other assets     68,284       70,057       74,223       72,465       71,901  
Total Assets   $ 1,491,388     $ 1,520,828     $ 1,514,968     $ 1,518,877     $ 1,460,257  
                                         
Liabilities and Shareholders' Equity                                        
Demand deposits   $ 101,434     $ 121,436     $ 103,862     $ 95,459     $ 101,167  
NOW accounts and interest checking     49,902       51,779       46,811       51,674       48,212  
Savings     6,210       5,770       6,616       6,833       6,189  
Money market accounts     225,975       218,929       208,233       204,332       199,834  
Time deposits     376,034       356,484       352,531       344,619       314,766  
Brokered deposits     269,917       308,504       317,291       323,561       319,692  
National time deposits     146,805       160,445       173,440       183,953       182,530  
Total deposits     1,176,277       1,223,347       1,208,784       1,210,431       1,172,390  
FHLB advances     100,400       89,400       102,400       108,200       120,500  
Subordinated debentures     44,742       44,703       44,663       44,725       15,540  
Other liabilities     11,952       11,293       11,134       9,439       9,013  
Total Liabilities     1,333,371       1,368,743       1,366,981       1,372,795       1,317,443  
                                         
Shareholders' equity     158,017       152,085       147,987       146,082       142,814  
Total Liabilities and Shareholders'
  Equity
  $ 1,491,388     $ 1,520,828     $ 1,514,968     $ 1,518,877     $ 1,460,257  
                                         
Stock Price Information:                                        
High - Quarter-to-date   $ 19.69     $ 26.00     $ 28.20     $ 29.26     $ 33.76  
Low - Quarter-to-date   $ 16.74     $ 17.37     $ 24.29     $ 25.72     $ 26.61  
Market price - Quarter-end   $ 17.60     $ 17.37     $ 25.10     $ 27.50     $ 29.21  
Book value per share   $ 22.36     $ 21.50     $ 20.91     $ 20.63     $ 20.17  
Tangible book value per share (1)   $ 21.54     $ 20.65     $ 20.07     $ 19.77     $ 19.29  
Common shares outstanding     6,709,254       6,709,480       6,694,230       6,693,447       6,684,923  

(1) This is a non-GAAP financial measure.  A reconciliation to GAAP is included below.

                               
    March 31,
2019
    December
31,
2018
    September
30,
2018
    June 30,
2018
    March 31,
2018
 
       
    (dollars in thousands)  
Loans by risk category:                                        
Sound/Acceptable/Satisfactory/
  Low Satisfactory
  $ 896,328     $ 908,172     $ 901,643     $ 896,509     $ 891,062  
Watch     174,642       171,670       171,890       186,399       185,179  
Special Mention     4,501       6,566       11,036       4,783       5,636  
Substandard Performing     46,075       65,501       61,851       46,751       45,261  
Substandard Impaired     61,417       55,386       56,517       47,082       37,387  
Total loans     1,182,963       1,207,295       1,202,937       1,181,524       1,164,525  
Loan sold with servicing retained     675,268       661,257       644,879       628,435       611,358  
Total loans and loans sold with
  servicing retained
  $ 1,858,231     $ 1,868,552     $ 1,847,816     $ 1,809,959     $ 1,775,883  
                                         
Non-Performing Assets:                                        
Nonaccrual loans   $ 25,880     $ 22,983     $ 27,881     $ 26,305     $ 17,746  
Other real estate owned (2)     5,019       6,568       7,851       8,607       8,982  
Total non-performing assets   $ 30,899     $ 29,551     $ 35,732     $ 34,912     $ 26,728  
                                         
Performing TDRs not on nonaccrual   $ 21,111     $ 18,258     $ 11,863     $ 11,173     $ 10,488  
                                         
Non-performing assets as a % of total loans     2.61 %     2.45 %     2.97 %     2.95 %     2.30 %
Non-performing assets as a % of total assets     2.07 %     1.94 %     2.36 %     2.30 %     1.83 %
Adverse classified asset ratio (1)     48.59 %     57.12 %     51.89 %     47.34 %     53.44 %
Allowance for loan losses as a % of
  nonaccrual loans
    67.59 %     71.81 %     57.90 %     57.51 %     82.34 %
Allowance for loan losses as a % of total
  loans
    1.48 %     1.37 %     1.34 %     1.28 %     1.25 %
Net charge-offs (recoveries) quarter-to-date   $ (236 )   $ 1,210     $ (21 )   $ 16     $ (1,268 )
Provision for loan loss quarter-to-date   $ 752     $ 1,572     $ 993     $ 533     $ 97  

(1) This is a non-GAAP financial measure.  A reconciliation to GAAP is included below.
(2) For the quarters ending March 31, 2018 through September 30, 2018, does not include $0.4 million of bank property transferred from premises and equipment, which is not considered a non-performing asset.  As of March 31, 2019 and December 31, 2018, that bank property is considered classified due to the length of the holding period.

       
    For the Three Months Ended  
    March 31,
2019
    December
31,
2018
    September
30,
2018
    June 30,
2018
    March 31,
2018
 
       
    (dollars in thousands, except per share data)  
Selected Income Statement Data:                                        
Interest and Dividend Income                                        
Loans, including fees   $ 15,501     $ 15,536     $ 15,113     $ 14,366     $ 13,691  
Taxable securities     1,186       1,168       945       982       632  
Tax-exempt securities     175       183       344       14       157  
Federal funds sold and other     264       223       249       401       213  
Total interest and dividend
  income
    17,126       17,110       16,651       15,763       14,693  
                                         
Interest Expense                                        
Deposits     5,424       5,273       4,980       4,600       3,796  
FHLB advances and other borrowed
  funds
    464       427       411       487       484  
Subordinated debentures     678       667       656       338       143  
Total interest expense     6,566       6,367       6,047       5,425       4,423  
Net interest income     10,560       10,743       10,604       10,338       10,270  
Provision for loan losses     752       1,572       993       533       97  
Net interest income after provision
  for loan losses
    9,808       9,171       9,611       9,805       10,173  
                                         
Non-Interest Income                                        
Services charges     353       470       394       445       365  
Gain (loss) on sale of loans, net     (1 )     54       41       45       32  
Loan servicing fees     1,519       1,553       1,521       1,486       1,452  
Loan servicing right origination     228       7       (46 )     127       10  
Income on OREO     26       83       96       45       32  
Other     625       153       151       168       149  
Total non-interest income     2,750       2,320       2,157       2,316       2,040  
                                         
Non-Interest Expense                                        
Employee compensation and
  benefits
    4,482       4,059       4,394       4,114       4,218  
Occupancy     389       245       332       278       204  
Information processing     563       641       529       529       465  
Professional fees     399       497       351       359       315  
Business development     325       259       258       260       299  
OREO expenses     51       106       46       152       140  
Writedown of OREO     -       688       81       104       -  
Net gain on sale of OREO     (136 )     (54 )     (28 )     (149 )     -  
Depreciation and amortization     337       408       302       324       314  
Other     895       689       758       966       830  
Total non-interest expense     7,305       7,538       7,023       6,937       6,785  
Income before income taxes     5,253       3,953       4,745       5,184       5,428  
Income tax expense     1,491       1,123       1,228       1,334       1,374  
NET INCOME   $ 3,762     $ 2,830     $ 3,517     $ 3,850     $ 4,054  
                                         
Basic   $ 0.54     $ 0.41     $ 0.51     $ 0.56     $ 0.59  
Diluted   $ 0.54     $ 0.40     $ 0.50     $ 0.55     $ 0.58  
Dividends declared   $ 0.05     $ 0.07     $ 0.07     $ 0.07     $ 0.07  


    For the Three Months Ended  
    March 31,
2019
    December
31,
2018
    September
30,
2018
    June 30,
2018
    March 31,
2018
 
       
    (dollars in thousands, except share data)  
Other Data:                                        
Return on average assets     1.00 %     0.75 %     0.94 %     1.04 %     1.15 %
Return on average shareholders'
  equity
    9.78 %     7.58 %     9.51 %     10.63 %     11.62 %
Return on average common
  shareholders' equity (1)
    9.99 %     7.70 %     9.75 %     10.96 %     12.04 %
Efficiency ratio (1)     55.91 %     52.85 %     54.62 %     55.18 %     55.12 %
Tangible common equity to
  tangible assets (1)
    9.73 %     9.14 %     8.90 %     8.75 %     8.87 %
                                         
Common Share Data:                                        
Net income from continuing
  operations
  $ 3,762     $ 2,830     $ 3,517     $ 3,850     $ 4,054  
Less:  Preferred stock dividends     117       111       106       99       97  
Income available to common
  shareholders
  $ 3,645     $ 2,719     $ 3,411     $ 3,751     $ 3,957  
                                         
Weighted average number of common
  shares issued
    7,188,817       7,184,946       7,167,276       7,163,362       7,152,970  
Less: Weighted average treasury
  shares
    443,729       443,694       443,140       442,102       439,833  
Less: Weighted average non-
  vested restricted units
  awards
    19,383       28,701       29,537       30,692       34,976  
Weighted average number of
  common shares outstanding
    6,725,705       6,712,551       6,694,599       6,690,568       6,678,161  
Effect of dilutive options     21,323       45,116       63,346       79,368       90,804  
Weighted average number of
  common shares outstanding
  used to calculate diluted
  earnings per common share
    6,747,028       6,757,667       6,757,945       6,769,936       6,768,965  
                                         

(1) This is a non-GAAP financial measure.  A reconciliation to GAAP is included below.

     For the Three Months Ended  
Non-GAAP Financial Measures:   March 31,
2019
    December
31,
2018
    September
30,
2018
    June 30,
2018
    March 31,
2018
 
       
    (dollars in thousands)  
Return on average common
  shareholders' equity
  reconciliation:
                                       
Return on average shareholders'
  equity
    9.78 %     7.58 %     9.51 %     10.63 %     11.62 %
Effect of excluding average
  preferred shareholders'
  equity
    0.21 %     0.12 %     0.24 %     0.33 %     0.42 %
Return on average common
  shareholders' equity
    9.99 %     7.70 %     9.75 %     10.96 %     12.04 %
                                         
Efficiency ratio GAAP to non-GAAP
  reconciliation:
                                       
Non-interest expense   $ 7,305     $ 7,538     $ 7,023     $ 6,937     $ 6,785  
Less: net gain (loss) on sales and
  write-downs of OREO
    136       (634 )     (53 )     45       -  
Adjusted non-interest expense
  (non-GAAP)
  $ 7,441     $ 6,904     $ 6,970     $ 6,982     $ 6,785  
                                         
Net interest income   $ 10,560     $ 10,743     $ 10,604     $ 10,338     $ 10,270  
Non-interest income     2,750       2,320       2,157       2,316       2,040  
Operating revenue   $ 13,310     $ 13,063     $ 12,761     $ 12,654     $ 12,310  
Efficiency ratio     55.91 %     52.85 %     54.62 %     55.18 %     55.12 %

               

    March 31,
2019
    December
31,
2018
    September
30,
2018
    June 30,
2018
    March 31,
2018
 
       
    (dollars in thousands, except per share data)  
Tangible book value per share and
  tangible common equity to tangible
  assets reconciliation:
                                       
Common equity   $ 150,017     $ 144,085     $ 139,987     $ 138,082     $ 134,814  
Less: Goodwill     5,038       5,038       5,038       5,038       5,038  
Less: Core deposit intangible, net of
  amortization
    430       513       603       701       806  
Tangible common equity (non-GAAP)   $ 144,549     $ 138,534     $ 134,346     $ 132,343     $ 128,970  
Common shares outstanding     6,709,254       6,709,480       6,694,230       6,693,447       6,684,923  
Tangible book value per share   $ 21.54     $ 20.65     $ 20.07     $ 19.77     $ 19.29  
                                         
Total assets   $ 1,491,388     $ 1,520,828     $ 1,514,968     $ 1,518,877     $ 1,460,257  
Less: Goodwill     5,038       5,038       5,038       5,038       5,038  
Less: Core deposit intangible, net of
  amortization
    430       513       603       701       806  
Tangible assets (non-GAAP)   $ 1,485,920     $ 1,515,277     $ 1,509,327     $ 1,513,138     $ 1,454,413  
Tangible common equity to tangible assets     9.73 %     9.14 %     8.90 %     8.75 %     8.87 %
                                         
Adverse classified asset ratio:                                        
Substandard loans   $ 107,492     $ 120,887     $ 118,368     $ 93,833     $ 82,648  
Less: Impaired performing restructured loans     (6,382 )     (5,078 )     (13,657 )     (2,081 )     (1,164 )
Net substandard loans   $ 101,110     $ 115,809     $ 104,711     $ 91,752     $ 81,484  
Other real estate owned     5,019       6,568       7,851       8,607       8,982  
Substandard unused commitments     976       1,625       1,191       959       2,309  
Less: Substandard government guarantees     (5,864 )     (7,111 )     (9,374 )     (8,356 )     (3,605 )
Total adverse classified assets (non-GAAP)   $ 101,241     $ 116,891     $ 104,379     $ 92,962     $ 89,170  
                                         
Total equity (Bank)   $ 191,287     $ 185,458     $ 180,359     $ 177,911     $ 149,105  
Accumulated other comprehensive loss
  (gain) on available for sale securities
    (436 )     2,221       4,152       2,795       2,603  
Allowance for loan losses     17,493       16,505       16,143       15,129       14,612  
Allowance for unused commitments     -       475       510       522       553  
Adjusted total equity (non-GAAP)   $ 208,344     $ 204,659     $ 201,164     $ 196,357     $ 166,873  
Adverse classified asset ratio     48.59 %     57.12 %     51.89 %     47.34 %     53.44 %


    For the Three Months Ended  
    March 31, 2019     December 31, 2018     March 31, 2018  
    Average
Balance (1)
    Income/
Expense
    Yields/
Rates
    Average
Balance (1)
    Income/
Expense
    Yields/
Rates
    Average
Balance (1)
    Income/
Expense
    Yields/
Rates
 
       
    (dollars in thousands)  
Assets                                                                        
Investment securities   $ 192,963     $ 1,361       2.82 %   $ 191,955     $ 1,351       2.82 %   $ 136,722     $ 789       2.31 %
Loans (2)     1,207,240       15,501       5.14 %     1,207,883       15,536       5.14 %     1,172,786       13,691       4.67 %
Interest bearing deposits due from
  other banks
    36,227       264       2.92 %     67,153       223       1.33 %     55,784       213       1.53 %
Total interest-earning assets   $ 1,436,430     $ 17,126       4.77 %   $ 1,466,991     $ 17,110       4.67 %   $ 1,365,292     $ 14,693       4.30 %
                                                                         
Allowance for loan losses     (17,005 )                     (16,034 )                     (13,722 )                
Other assets     78,654                       61,316                       62,000                  
Total assets   $ 1,498,079                     $ 1,512,273                     $ 1,413,570                  
                                                                         
Liabilities                                                                        
Savings, NOW, money market,
  interest checking
  $ 295,418     $ 1,184       1.60 %   $ 287,420     $ 1,043       1.45 %   $ 282,313     $ 640       0.91 %
Time deposits     797,476       4,240       2.13 %     820,515       4,230       2.06 %     742,465       3,156       1.70 %
Total interest-bearing deposits   $ 1,092,894     $ 5,424       1.99 %   $ 1,107,935     $ 5,273       1.90 %   $ 1,024,778     $ 3,796       1.48 %
Other borrowings     844       11       5.27 %     837       10       4.62 %     1,286       16       4.97 %
FHLB advances     92,900       453       1.95 %     90,509       417       1.84 %     121,067       468       1.55 %
Junior subordinated debentures     44,606       678       6.08 %     44,681       667       5.97 %     15,529       143       3.68 %
Total interest-bearing
  liabilities
  $ 1,231,244     $ 6,566       2.13 %   $ 1,243,962     $ 6,367       2.05 %   $ 1,162,660     $ 4,423       1.52 %
                                                                         
Non-interest-bearing deposits     101,532                       108,140                       103,669                  
Other liabilities     11,362                       10,913                       7,743                  
Total liabilities   $ 1,344,138                     $ 1,363,015                     $ 1,274,072                  
                                                                         
Shareholders' equity     153,941                       149,258                       139,498                  
Total liabilities and equity   $ 1,498,079                     $ 1,512,273                     $ 1,413,570                  
                                                                         
Net interest income           $ 10,560                     $ 10,743                     $ 10,270          
Interest rate spread (3)                     2.64 %                     2.62 %                     2.78 %
Net interest margin (4)                     2.94 %                     2.91 %                     3.01 %
Ratio of interest-earning assets to
  interest-bearing liabilities
    1.17                       1.18                       1.17                  

(1) Average balances are calculated on amortized cost.
(2) Includes loan fee income, nonaccruing loan balances, and interest received on such loans.
(3) Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(4) Net interest margin represents net interest income divided by average total interest-earning assets.