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SB One Bancorp Reports a 30% Growth in Core EPS for 2018 and Declares a Cash Dividend

ROCKAWAY, N.J., Feb. 01, 2019 (GLOBE NEWSWIRE) -- SB One Bancorp (the “Company”) (SBBX), the holding company for SB One Bank (the “Bank”), today reported net income of $9.9 million, or $1.26 per basic and $1.25 per diluted share, for the year ended December 31, 2018, an increase of 74.4%, as compared to $5.7 million, or $1.06 per basic share and $1.05 per diluted share, for the year ended December 31, 2017.

The Company closed on two acquisitions during 2018, completing the acquisition of Community Bank of Bergen County (“Community Bank”) with total assets of $365.6 million on January 4, 2018 and the acquisition of Enterprise Bank, NJ (“Enterprise”) with total assets of $279.8 million on December 21, 2018, and engaged in the rebranding of the Company, the Bank and its insurance subsidiary to SB One. The mergers and the double digit organic growth in commercial loans and deposits, drove an 83.5% growth in total assets to $1.8 billion at December 31, 2018 from $979.4 million at December 31, 2017. This growth drove higher core net income, which when adjusted for tax effected merger-related expenses and non-recurring expenses, increased 91.1%. In addition, diluted earnings per share (“diluted EPS”), as adjusted for tax effected merger-related expenses and non-recurring expenses, increased 30.4% for the year ended December 31, 2018 as compared to the year ended December 31, 2017.

The Company’s net income, when adjusted for tax effected merger-related expenses and non-recurring expenses of $4.5 million and $271 thousand, respectively, increased $7.0 million, or 91.1%, to $14.7 million for the year ended December 31, 2018, as compared to the year ended December 31, 2017. Diluted EPS, as adjusted for tax effected merger-related expenses and non-recurring expenses, increased 30.4% to $1.86 for the year ended December 31, 2018 as compared to $1.42 for the year ended December 31, 2017. The Company’s return on average assets, adjusted for tax effected merger-related expenses and non-recurring expenses, for the year ended December 31, 2018, was 1.03%, an increase from 0.84% for the year ended December 31, 2017.

For the quarter ended December 31, 2018, the Company reported net income of $2.4 million, or $0.29 per basic and diluted share, an increase of 358.7%, as compared to $513 thousand, or $0.09 per basic and diluted share, for the same period in 2017. The Company’s net income, adjusted for tax effected merger-related expenses and non-recurring expenses of $1.3 million and $119 thousand, respectively, increased $1.6 million, or 77.1%, to $3.8 million, or $0.47 per diluted share, for the quarter ended December 31, 2018, as compared to the same period in 2017. The Company’s return on average assets, adjusted for tax effected merger-related expenses and non-recurring expenses, for the quarter ended December 31, 2018, was 0.99%, an increase from 0.88% from the quarter ended December 31, 2017.

The increase in net income for the three and twelve months ended December 31, 2018 was mainly attributable to continued double digit organic commercial loan and deposit growth, the merger with Community Bank, the positive impact from the Tax Cuts and Jobs Act, and an increase in SB One Insurance Agency twelve month pretax profit of over 40%.

“2018 was a very successful year for our Company as we nearly doubled our core earnings and total assets. We accomplished this by growing our business lines organically by double digits and completing two mergers,” said Anthony Labozzetta, President and Chief Executive Officer of SB One Bancorp and SB One Bank. Mr. Labozzetta went on to say, “These are very exciting times for our shareholders, customers, and employees and although there may be headwinds ahead of us resulting from the flattening of the yield curve, we continue to be very optimistic that there will be as many opportunities for us to continue our disciplined growth and strong performance over the short and long run. We continue to maintain strong pipelines for loans and deposits, which will help us build our earnings into the foreseeable future.”

Declaration of Quarterly Dividend
On January 23, 2018, the Company’s Board of Directors declared a quarterly cash dividend of $0.075 per share, which is payable on March 6, 2019 to common shareholders of record as of the close of business on February 20, 2019.

Financial Performance
Net Income. For the quarter ended December 31, 2018, the Company reported net income of $2.4 million, or $0.29 per basic and diluted share, as compared to net income of $513 thousand, or $0.09 per basic and diluted share, for the same period in 2017. The Company’s net income, adjusted for tax effected merger-related expenses and non-recurring expenses of $1.3 million and $119 thousand, respectively, increased $1.6 million, or 77.1%, to $3.8 million, or $0.47 per diluted share, for the quarter ended December 31, 2018, as compared to the same period in 2017.

The increase in net income for the quarter ended December 31, 2018 was driven by a $3.5 million, or 44.0%, increase in net interest income resulting from strong loan and deposit growth and a $532 thousand increase in non-interest income driven by insurance commissions and fees, which were partially offset by a $3.5 million increase in non-interest expenses. The changes were largely attributed to double digit organic commercial loan and deposit growth, the growth of the Company resulting from the merger with Community Bank, net of non-interest expense savings, and the positive impacts from the Tax Cuts and Jobs Act.

For the year ended December 31, 2018, the Company reported net income of $9.9 million, or $1.26 per basic and $1.25 per diluted share, or a 74.4% increase, as compared to net income of $5.7 million, or $1.06 per basic share and $1.05 per diluted share, for the year ended December 31, 2017. The Company’s net income, adjusted for tax effected merger-related expenses and non-recurring expenses of $4.5 million and $271 thousand, respectively, increased $7.0 million, or 91.1%, to $14.7 million for the year ended December 31, 2018, as compared to the year ended December 31, 2017. Diluted EPS, as adjusted for tax effected merger-related expenses and non-recurring expenses, increased 30.4% to $1.86 for the year ended December 31, 2018 as compared to $1.42 for the year ended December 31, 2017. The changes were largely attributed to the growth of the Company resulting from the merger with Community Bank, net of non-interest expense savings, double digit organic commercial loan and deposit growth, and the positive impacts from the Tax Cuts and Jobs Act, and a 41% increase in SB One Insurance pretax income.

Net Interest Income. Net interest income on a fully tax equivalent basis increased $3.6 million, or 44.0%, to $11.6 million for the fourth quarter of 2018, as compared to $8.0 million for the same period in 2017. The increase in net interest income was largely due to a $507.1 million, or 54.9%, increase in average interest earning assets, principally loans receivable, which increased $420.7 million, or 52.3%. The aforementioned was partly offset by a decrease in the net interest margin of 25 basis points to 3.21% for the fourth quarter of 2018, as compared to the same period in 2017. The decrease was primarily driven by the effects of higher market rates on interest bearing liabilities costs, which increased 46 basis points, and was partially offset by an increase in earning asset yields, which grew 13 basis points during the comparison period. The increase in interest bearing liabilities was partly impacted by an increase in wholesale funding to support strong loan growth. The increase in interest earning asset yields was partially attributed to purchase accounting accretion of $311.7 thousand ($233.4 thousand from the Community Bank merger and $78.3 thousand from the Enterprise merger) for the fourth quarter of 2018 as compared to the same period in 2017.

Net interest income on a fully tax equivalent basis increased $15.2 million, or 51.2%, to $45.0 million for the year ended December 31, 2018 as compared to $29.7 million for the same period in 2017. The increase in net interest income was largely due to a $461.1 million, or 52.6%, increase in average interest earning assets, principally loans receivable, which increased $382.4 million, or 50.5%. The aforementioned was partly offset by a decrease in the net interest margin of 3 basis points to 3.36% for the year ended December 31, 2018, as compared to the same period in 2017. The decrease was primarily driven by the effects of higher market rates on interest bearing liabilities costs, which increased 25 basis points, and were partially offset by an increase in earning asset yields, which grew 16 basis points during the comparison period. The increase in interest earning asset yields was partially attributed to purchase accounting accretion of $1.2 million ($1.1 million from the Community Bank merger and $78.3 thousand from the Enterprise merger) for the fiscal year of 2018 as compared to the same period for 2017.

Provision for Loan Losses. Provision for loan losses decreased $249 thousand, or 54.2%, to $210 thousand for the fourth quarter of 2018, as compared to $459 thousand for the same period in 2017.

Provision for loan losses decreased $149 thousand, or 9.4%, to $1.4 million for the year ended December 31, 2018, as compared to $1.6 million for the year ended December 31, 2017.

Non-interest Income. Non-interest income increased $532 thousand, or 27.1%, to $2.5 million for the fourth quarter of 2018, as compared to the same period in 2017. The increase was largely due to an increase of $206 thousand, or 17.6%, in insurance commissions and fees relating to SB One Insurance Agency. In addition, other income, ATM and debit card fees, and bank owned life insurance, increased $132 thousand, $67 thousand, and $54 thousand, respectively, largely due to the completion of the merger with Community Bank.

The Company’s non-interest income increased $2.5 million, or 29.7%, to $10.7 million for the year ended December 31, 2018 as compared to the year ended December 31, 2017. The increase was largely due to growth of $1.3 million in insurance commissions and fees related to SB One Insurance Agency. In addition, other income, bank owned life insurance, ATM and debit card fees and service fees on deposit accounts, increased $411 thousand, $239 thousand, $206 thousand, and $167 thousand, respectively, largely due to the completion of the merger with Community Bank.

Non-interest Expense. The Company’s non-interest expenses increased $3.5 million to $10.3 million for the fourth quarter of 2018, as compared to the same period in 2017. Merger-related expenses increase $755 thousand to $1.5 million in the fourth quarter of 2018 as compared to $705 thousand in the comparable 2017 quarter. The increase was largely attributable to Enterprise merger, which was consummated in December. Non-interest expenses, adjusted to remove the aforementioned merger-related expenses along with other non-recurring expenses of $170 thousand in the fourth quarter of 2018, increased $2.5 million to $8.6 million for the fourth quarter of 2018 as compared to the same period in 2017. In addition, approximately $55 thousand of operating expenses for the period in 2018 that Enterprise was included in the Company’s results. The increase in non-interest expenses occurred largely in salaries and employee benefits of $1.4 million, data processing of $381 thousand, other expenses of $252 thousand, and occupancy of $228 thousand. The growth in operating expenses was largely due to the merger with Community Bank, net of expense savings, and an increase in expenses to support the Company’s growth.

The Company’s non-interest expenses increased $14.8 million to $40.4 million for the year ended December 31, 2018 as compared to the year ended December 31, 2017. Non-interest expenses, adjusted to remove merger related expenses and other non-recurring expenses of $5.8 million and $376 thousand, respectively, in 2018, and $1.2 million and $75 thousand, respectively, in 2017, increased $9.8 million to $34.2 million for the year ended December 31, 2018 as compared to the year ended December 31, 2017. The increase in non-interest expenses occurred largely in salaries and employee benefits of $5.9 million, data processing of $1.2 million, occupancy of $896 thousand, other expenses of $485 thousand, advertising and promotion of $279 thousand, furniture and equipment of $256 thousand and amortization of intangible assets of $247 thousand. The growth in operating expenses was largely due to the merger with Community Bank, net of expense savings, and an increase in expenses to support the Company’s growth.

Income Tax Expense. The Company’s income tax expenses decreased $1.0 million, or 51.4% to $991 thousand for the fourth quarter of 2018, as compared to the same period last year. The Company’s effective tax rate for the fourth quarter of 2018 was 29.6%, as compared to 79.9% for the fourth quarter of 2017, due to the reduction in the statutory federal tax rate to 21% effective January 1, 2018 and the newly enacted New Jersey tax legislation in 2018. The Company’s re-measurement of its net deferred tax asset resulted in additional income tax expense of $942 thousand in the quarter ended December 31, 2017.

The Company’s income tax expenses decreased $1.4 million, or 31.7%, to $3.1 million for the year ended December 31, 2018, as compared to the year ended December 31, 2017. The Company’s effective tax rate for the year ended December 31, 2018 was 23.6%, as compared to 44.0% for the year ended December 31, 2017, due to the reduction in the statutory federal tax rate to 21% effective January 1, 2018 and the newly enacted New Jersey tax legislation in 2018. The Company’s re-measurement of its net deferred tax asset resulted in additional income tax expense of $942 thousand in year ended December 31, 2017.

Financial Condition
At December 31, 2018, the Company’s total assets were $1.8 billion, an increase of $817.4 million, or 83.5%, as compared to total assets of $979.4 million at December 31, 2017. The increase was largely attributable to the mergers with Community Bank and Enterprise, of $365.6 million and $279.8 million, respectively, of total assets at the closing date of each of the merger transactions.

Total loans receivable, net of unearned income, increased $654.1 million, or 79.7%, to $1.5 billion at December 31, 2018, as compared to $820.7 million at December 31, 2017. The mergers with Community Bank and Enterprise resulted in an increase in total loans of $236.1 million and $258.8 million, respectively. During the twelve months ended December 31, 2018, the Company also had $220.1 million of commercial loan production, which was partly offset by $52.8 million in commercial loan payoffs.

The Company’s total deposits increased $591.4 million, or 77.6%, to $1.4 billion at December 31, 2018, from $762.5 million at December 31, 2017. The mergers with Community Bank and Enterprise resulted in an increase in total deposits of $300.2 million and $196.2 million, respectively. The growth in deposits was mostly due to an increase in interest bearing deposits of $477.7 million, or 77.5%, and non-interest bearing deposits of $113.6 million, or 77.7%, at December 31, 2018, as compared to December 31, 2017, respectively.

At December 31, 2018, the Company’s total stockholders’ equity was $185.4 million, an increase of $91.2 million when compared to December 31, 2017, largely due to the merger with Community Bank and Enterprise. The Company completed the Community Bank merger on January 4, 2018 which was the primary driver in an increase in book value per common share of 24.8% from $15.59 at December 31, 2017 to $19.45 at December 31, 2018. At December 31, 2018, the leverage, Tier I risk-based capital, total risk-based capital and common equity Tier I capital ratios for the Bank were 12.06%, 12.34%, 12.94% and 12.34%, respectively, all in excess of the ratios required to be deemed “well-capitalized.”

Asset and Credit Quality
The ratio of non-performing assets (“NPAs”), which include non-accrual loans, loans 90 days past due and still accruing, troubled debt restructured loans currently performing in accordance with renegotiated terms and foreclosed real estate, to total assets increased to 1.40% at December 31, 2018 from 0.94% at December 31, 2017. NPAs exclude $3.3 million of Purchased Credit-Impaired (“PCI”) loans acquired through the merger with Community Bank. NPAs increased $16.0 million to $25.2 million at December 31, 2018, as compared to $9.2 million at December 31, 2017. Non-accrual loans, excluding $3.3 million of PCI loans, increased $14.2 million, or 235.1%, to $20.2 million at December 31, 2018, as compared to $6.0 million at December 31, 2017. The increase in non-accrual loans was largely attributed to two commercial real estate loans totaling $8.9 million, $2.5 million in loans acquired from Community Bank not classified as PCI, and consumer loans totaling $3.1 million. Loans past due 30 to 89 days totaled $3.8 million at December 31, 2018, representing a decrease of $2.7 million, or 41.7%, as compared to $6.5 million at December 31, 2017.

The Company continues to actively market its foreclosed real estate properties, the value of which increased $1.9 million to $4.1 million at December 31, 2018 as compared to $2.3 million at December 31, 2017. The mergers with Community Bank and Enterprise resulted in an increase in foreclosed real estate properties of $1.1 million and $1.3 million, respectively. At December 31, 2018, the Company’s foreclosed real estate properties had an average carrying value of approximately $319 thousand per property.

The allowance for loan losses increased $1.4 million, or 19.6%, to $8.8 million, or 0.60% of total loans, at December 31, 2018, compared to $7.3 million, or 0.89% of total loans, at December 31, 2017. The decline in allowance coverage was primarily driven by the addition of Community Bank and Enterprise acquired loans with no allowance for loan losses; such loans were recorded at fair value at their acquisition dates. The Company’s outstanding credit mark recorded on the legacy Community Bank portfolio of $203.6 million totaled $5.2 million at December 31, 2018. The Company’s outstanding credit mark recorded on the legacy Enterprise portfolio of $261.6 million totaled $3.8 million at December 31, 2018. The Company’s combined coverage of allowance for loan loss and credit mark on the legacy Community Bank and Enterprise portfolios totaled $17.8 million, or 1.20% of the overall loan portfolio, at December 31, 2018. The Company recorded $1.4 million in provision for loan losses for the twelve months ended December 31, 2018 as compared to $1.6 million for the twelve months ended December 31, 2017. Additionally, the Company recorded net recoveries of $3 thousand for the twelve months ended December 31, 2018, as compared to $947 thousand in net charge-offs for the twelve months ended December 31, 2017. The allowance for loan losses as a percentage of non-accrual loans decreased to 43.5% at December 31, 2018 from 121.8% at December 31, 2017.

About SB One Bancorp

SB One Bancorp (SBBX), is the holding company for SB One Bank, a full-service, commercial bank that operates regionally with 18 branch locations in New Jersey and New York. Established in 1975, SB One Bank's strength is in its ability to build strong personal relationships with its customers and to serve the communities in which it operates. In addition to its branches and loan production offices, SB One Bank offers a full-service insurance agency, SB One Insurance Agency, Inc. and wealth services through SB One Wealth. SB One Bank reinforces its commitment to the communities in which it lives and serves through the SB One Foundation, Inc. which supports various local charitable organizations.

SB One Bancorp was recently added to the Russell 2000® Index and Russell 3000® Index. In 2017, it was recognized as one of the top 29 banks and thrifts nationwide and one of three from New Jersey that comprise the Sandler O’Neill Sm-All Stars Class of 2017. SB One Bancorp is one of the 50 Fastest Growing Companies in New Jersey as ranked by NJBIZ Magazine. SB One Bancorp President and Chief Executive Officer, Anthony Labozzetta, was named one of America’s Business Leaders in Banking by Forbes magazine and American Banker’s Community Banker of the Year in 2016.

For more details on SB One Bank, visit: www.SBOne.bank

Forward-Looking Statements


This press release contains statements that are forward looking and are made pursuant to the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, (i) statements about the benefits of the merger between SB One Bancorp and Community Bank, including future financial and operating results, cost savings and accretion to reported earnings that may be realized from the merger; and (ii) statements that may be identified by the use of words such as "expect," "estimate," “assume,” "believe," "anticipate," "will," "forecast," "plan," "project" or similar words. Such statements are based on SB One Bancorp’s current expectations and are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, (1) difficulties and delays in integrating the business or fully realizing cost savings and other benefits; (2) operating costs, customer loss and business disruption following the mergers with Community Bank and Enterprise, including adverse effects on relationships with employees, may be greater than expected; (3) changes to interest rates; (4) the ability to control costs and expenses; (5) general economic conditions; (6) the success of SB One Bancorp’s efforts to diversify its revenue base by developing additional sources of non-interest income while continuing to manage its existing fee-based business; and (7) risks associated with the quality of SB One Bancorp’s assets and the ability of its borrowers to comply with repayment. Further information about these and other relevant risks and uncertainties may be found in SB One Bancorp’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and in subsequent filings with the Securities and Exchange Commission. SB One Bancorp undertakes no obligation to publicly release the results of any revisions to those forward looking statements that may be made to reflect events or circumstances after this date or to reflect the occurrence of unanticipated events.

SB ONE BANCORP
Anthony Labozzetta, President/CEO
Steve Fusco, CFO
(p) 844-256-7328

SB ONE BANCORP

SUMMARY FINANCIAL HIGHLIGHTS

(In Thousands, Except Percentages and Per Share Data)

(Unaudited)

12/31/2018 VS.

12/31/2018

9/30/2018

12/31/2017

9/30/2018

12/31/2017

BALANCE SHEET HIGHLIGHTS - Period End Balances

Total securities

$

186,217

$

177,547

$

104,034

4.9

%

79.0

%

Total loans

1,474,775

1,171,738

820,700

25.9

%

79.7

%

Allowance for loan losses

(8,775

)

(8,594

)

(7,335

)

2.1

%

19.6

%

Total assets

1,796,827

1,459,642

979,383

23.1

%

83.5

%

Total deposits

1,353,939

1,114,646

762,491

21.5

%

77.6

%

Total borrowings and junior subordinated debt

247,765

187,756

118,198

32.0

%

109.6

%

Total shareholders' equity

185,383

151,222

94,193

22.6

%

96.8

%

FINANCIAL DATA - QUARTER ENDED:

Net interest income (tax equivalent) (a)

$

11,575

$

11,217

$

8,038

3.2

%

44.0

%

Provision for loan losses

210

321

459

(34.6

)

%

(54.2

)

%

Total other income

2,493

2,518

1,961

(1.0

)

%

27.1

%

Total other expenses

10,273

8,963

6,820

14.6

%

50.6

%

Income before provision for income taxes (tax equivalent)

3,585

4,451

2,720

(19.5

)

%

31.8

%

Provision for income taxes

991

957

2,039

3.6

%

(51.4

)

%

Taxable equivalent adjustment (a)

241

224

168

7.6

%

43.5

%

Net income

$

2,353

$

3,270

$

513

(28.0

)

%

358.7

%

Net income per common share - Basic

$

0.29

$

0.42

$

0.09

225.5

%

225.5

%

Net income per common share - Diluted

$

0.29

$

0.41

$

0.09

223.5

%

223.5

%

Return on average assets

0.62

%

0.91

%

0.21

%

(31.7

)

%

190.8

%

Return on average equity

6.00

%

8.67

%

2.16

%

(30.8

)

%

178.1

%

Efficiency ratio (b)

74.30

%

66.34

%

69.37

%

12.0

%

7.1

%

Net interest margin (tax equivalent)

3.21

%

3.29

%

3.46

%

(2.4

)

%

(7.2

)

%

Avg. interest earning assets/Avg. interest bearing liabilities

1.27

1.28

1.29

(0.5

)

%

(1.2

)

%

FINANCIAL DATA - YEAR TO DATE:

Net interest income (tax equivalent) (a)

$

44,968

$

29,732

51.2

%

Provision for loan losses

1,437

1,586

(9.4

)

%

Total other income

10,749

8,285

29.7

%

Total other expenses

40,410

25,617

57.7

%

Income before provision for income taxes (tax equivalent)

13,870

10,814

28.3

%

Provision for income taxes

3,059

4,479

(31.7

)

%

Taxable equivalent adjustment (a)

888

644

37.9

%

Net income

$

9,923

$

5,691

74.4

%

Net income per common share - Basic

$

1.26

$

1.06

18.9

%

Net income per common share - Diluted

$

1.25

$

1.05

19.0

%

Return on average assets

0.70

%

0.62

%

11.8

%

Return on average equity

6.62

%

7.17

%

(7.7

)

%

Efficiency ratio (b)

73.70

%

68.54

%

7.5

%

Net interest margin (tax equivalent)

3.36

%

3.39

%

(0.9

)

%

Avg. interest earning assets/Avg. interest bearing liabilities

1.28

1.27

0.8

%

SHARE INFORMATION:

Book value per common share

$

19.45

$

19.07

$

15.59

2.4

%

24.7

%

Tangible book value per common share

16.36

15.79

11.29

(12.3

)

%

44.9

%

Outstanding shares- period ending

9,532,943

7,929,613

6,040,564

19.8

%

57.8

%

Average diluted shares outstanding (year to date)

7,921,269

7,868,280

5,404,381

0.7

%

46.6

%

CAPITAL RATIOS:

Total equity to total assets

10.32

%

10.36

%

9.62

%

(0.4

)

%

7.3

%

Leverage ratio (c)

12.06

%

10.51

%

11.86

%

14.7

%

1.7

%

Tier 1 risk-based capital ratio (c)

12.34

%

12.74

%

14.26

%

(3.1

)

%

(13.5

)

%

Total risk-based capital ratio (c)

12.94

%

13.48

%

15.17

%

(4.0

)

%

(14.7

)

%

Common equity Tier 1 capital ratio (c)

12.34

%

12.74

%

14.26

%

(3.1

)

%

(13.5

)

%

ASSET QUALITY:

Non-accrual loans (e)

$

20,170

$

19,758

$

6,020

2.1

%

235.0

%

Loans 90 days past due and still accruing

-

-

-

-

%

-

%

Troubled debt restructured loans ("TDRs") (d)

905

1,986

932

(54.4

)

%

(2.9

)

%

Foreclosed real estate

4,149

2,657

2,275

56.2

%

82.4

%

Non-performing assets ("NPAs")

$

25,224

$

24,401

$

9,227

3.4

%

173.4

%

Foreclosed real estate, criticized and classified assets (e)

$

24,006

$

22,945

$

18,992

4.6

%

26.4

%

Loans past due 30 to 89 days

$

3,787

$

3,339

$

6,497

13.4

%

(41.7

)

%

Charge-offs (Recoveries) , net (quarterly)

$

30

$

(9

)

$

626

(433.3

)

%

(95.2

)

%

Charge-offs (Recoveries) , net as a % of average loans (annualized)

0.01

%

(0.00

)

%

0.31

%

(413.4

)

%

(96.9

)

%

Non-accrual loans to total loans

1.37

%

1.69

%

0.73

%

(18.9

)

%

86.5

%

NPAs to total assets

1.40

%

1.67

%

0.94

%

(16.0

)

%

49.0

%

NPAs excluding TDR loans (d) to total assets

1.35

%

1.54

%

0.85

%

(11.9

)

%

59.8

%

Non-accrual loans to total assets

1.12

%

1.35

%

0.61

%

(17.1

)

%

82.6

%

Allowance for loan losses as a % of non-accrual loans

43.51

%

43.50

%

121.84

%

0.0

%

(64.3

)

%

Allowance for loan losses to total loans

0.60

%

0.73

%

0.89

%

(18.9

)

%

(33.4

)

%

(a) Full taxable equivalent basis, using a 21% effective tax rate and adjusted for TEFRA (Tax and Equity Fiscal Responsibility Act) interest expense disallowance

(b) Efficiency ratio calculated non-interest expense divided by net interest income plus non-interest income

(c) SB One Bank capital ratios

(d) Troubled debt restructured loans currently performing in accordance with renegotiated terms

(e) PCI loans acquired through merger with Community Bank excluded from non-accrual loans and criticized and classified assets totaled $3.3 million

SB ONE BANCORP

CONSOLIDATED BALANCE SHEETS

(Dollars In Thousands)

ASSETS

December 31, 2018

December 31, 2017

Cash and due from banks

$

11,768

$

3,270

Interest-bearing deposits with other banks

14,910

8,376

Cash and cash equivalents

26,678

11,646

Interest bearing time deposits with other banks

200

100

Securities available for sale, at fair value

182,139

98,730

Securities held to maturity

4,078

5,304

Other Bank Stock, at cost

11,764

4,925

Loans receivable, net of unearned income

1,474,775

820,700

Less: allowance for loan losses

8,775

7,335

Net loans receivable

1,466,000

813,365

Foreclosed real estate

4,149

2,275

Premises and equipment, net

19,215

8,389

Accrued interest receivable

6,546

2,472

Goodwill and intangibles

29,446

2,820

Bank-owned life insurance

35,778

22,054

Other assets

10,834

7,303

Total Assets

$

1,796,827

$

979,383

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:

Deposits:

Non-interest bearing

$

259,807

$

146,167

Interest bearing

1,094,132

616,324

Total Deposits

1,353,939

762,491

Borrowings

219,906

90,350

Accrued interest payable and other liabilities

9,740

4,501

Subordinated debentures

27,859

27,848

Total Liabilities

1,611,444

885,190

Total Stockholders' Equity

185,383

94,193

Total Liabilities and Stockholders' Equity

$

1,796,827

$

979,383

SB ONE BANCORP

CONSOLIDATED STATEMENTS OF INCOME

(Dollars In Thousands Except Per Share Data)

(Unaudited)

Three Months Ended December 31,

Year Ended December 31,

2018

2017

2018

2017

INTEREST INCOME

Loans receivable, including fees

$

13,888

$

8,923

$

51,359

$

32,953

Securities:

Taxable

1,031

373

3,507

1,437

Tax-exempt

472

331

1,744

1,274

Interest bearing deposits

30

7

99

35

Total Interest Income

15,421

9,634

56,709

35,699

INTEREST EXPENSE

Deposits

2,805

1,052

8,078

3,584

Borrowings

965

391

3,288

1,749

Junior subordinated debentures

317

321

1,263

1,278

Total Interest Expense

4,087

1,764

12,629

6,611

Net Interest Income

11,334

7,870

44,080

29,088

PROVISION FOR LOAN LOSSES

210

459

1,437

1,586

Net Interest Income after Provision for Loan Losses

11,124

7,411

42,643

27,502

OTHER INCOME

Service fees on deposit accounts

331

311

1,290

1,123

ATM and debit card fees

266

199

983

777

Bank owned life insurance

198

144

761

522

Insurance commissions and fees

1,379

1,173

6,640

5,326

Investment brokerage fees

12

12

104

24

(Loss) gain on securities transactions

-

(60

)

36

(9

)

Gain (loss) on disposal of fixed assets

-

7

9

7

Other

307

175

926

515

Total Other Income

2,493

1,961

10,749

8,285

OTHER EXPENSES

Salaries and employee benefits

5,208

3,783

20,710

14,773

Occupancy, net

690

462

2,776

1,880

Data processing

911

530

3,351

2,173

Furniture and equipment

301

233

1,194

938

Advertising and promotion

99

49

587

308

Professional fees

410

395

1,412

1,173

Director fees

140

109

550

399

FDIC assessment

136

70

529

263

Insurance

28

77

210

279

Stationary and supplies

80

30

285

148

Merger-related expenses

1,460

705

5,804

1,187

Loan collection costs

52

47

255

122

Expenses and write-downs related to foreclosed real estate

96

(15

)

324

283

Amortization of intangible assets

65

-

247

-

Other

597

345

2,176

1,691

Total Other Expenses

10,273

6,820

40,410

25,617

Income before Income Taxes

3,344

2,552

12,982

10,170

INCOME TAX EXPENSE

991

2,039

3,059

4,479

Net Income

$

2,353

$

513

$

9,923

$

5,691

EARNINGS PER SHARE

Basic

$

0.29

$

0.09

$

1.26

$

1.06

Diluted

$

0.29

$

0.09

$

1.25

$

1.05

SB ONE BANCORP

COMPARATIVE AVERAGE BALANCES AND AVERAGE INTEREST RATES

(Dollars In Thousands)

(Unaudited)

Three Months Ended December 31,

2018

2017

Average

Average

Average

Average

Balance

Interest

Rate (2)

Balance

Interest

Rate (2)

Earning Assets:

Securities:

Tax exempt (3)

$

63,114

$

713

4.48

%

$

47,223

$

499

4.19

%

Taxable

130,105

1,031

3.14

%

63,055

373

2.35

%

Total securities

193,219

1,744

3.58

%

110,278

872

3.14

%

Total loans receivable (1) (4)

1,225,917

13,888

4.49

%

805,179

8,923

4.40

%

Other interest-earning assets

10,973

30

1.08

%

7,527

7

0.37

%

Total earning assets

1,430,109

15,662

4.34

%

922,984

9,802

4.21

%

Non-interest earning assets

98,408

48,143

Allowance for loan losses

(8,753

)

(7,528

)

Total Assets

$

1,519,764

$

963,599

Sources of Funds:

Interest bearing deposits:

NOW

$

261,737

$

417

0.63

%

$

192,595

$

185

0.38

%

Money market

185,419

879

1.88

%

99,115

250

1.00

%

Savings

210,092

284

0.54

%

134,803

70

0.21

%

Time

292,389

1,225

1.66

%

186,896

547

1.16

%

Total interest bearing deposits

949,637

2,805

1.17

%

613,409

1,052

0.68

%

Borrowed funds

144,703

965

2.65

%

74,255

391

2.09

%

Subordinated debentures

27,857

317

4.51

%

27,847

321

4.57

%

Total interest bearing liabilities

1,122,197

4,087

1.44

%

715,511

1,764

0.98

%

Non-interest bearing liabilities:

Demand deposits

235,342

148,420

Other liabilities

5,304

4,515

Total non-interest bearing liabilities

240,646

152,935

Stockholders' equity

156,921

95,153

Total Liabilities and Stockholders' Equity

$

1,519,764

$

963,599

Net Interest Income and Margin (5)

11,575

3.21

%

8,038

3.46

%

Tax-equivalent basis adjustment

(241

)

(168

)

Net Interest Income

$

11,334

$

7,870

(1) Includes loan fee income

(2) Average rates on securities are calculated on amortized costs

(3) Full taxable equivalent basis, using an effective tax rate of 21% in 2018 and 39% in 2017 and adjusted for TEFRA (Tax and Equity Fiscal Responsibility Act) interest expense disallowance

(4) Loans outstanding include non-accrual loans

(5) Represents the difference between interest earned and interest paid, divided by average total interest-earning assets

SB ONE BANCORP

COMPARATIVE AVERAGE BALANCES AND AVERAGE INTEREST RATES

(Dollars In Thousands)

(Unaudited)

Three Months Ended December 31, 2018

Three Months Ended September 30, 2018

Average

Average

Average

Average

Balance

Interest

Rate (2)

Balance

Interest

Rate (2)

Earning Assets:

Securities:

Tax exempt (3)

$

63,114

$

713

4.48

%

$

63,752

$

666

4.14

%

Taxable

130,105

1,031

3.14

%

126,961

936

2.92

%

Total securities

193,219

1,744

3.58

%

190,713

1,602

3.33

%

Total loans receivable (1) (4)

1,225,917

13,888

4.49

%

1,152,741

13,009

4.48

%

Other interest-earning assets

10,973

30

1.08

%

10,219

23

0.89

%

Total earning assets

1,430,109

15,662

4.34

%

1,353,673

14,634

4.29

%

Non-interest earning assets

98,408

97,181

Allowance for loan losses

(8,753

)

(8,388

)

Total Assets

$

1,519,764

$

1,442,466

Sources of Funds:

Interest bearing deposits:

NOW

$

261,737

$

417

0.63

%

$

257,671

$

365

0.56

%

Money market

185,419

879

1.88

%

125,430

538

1.70

%

Savings

210,092

284

0.54

%

213,152

266

0.50

%

Time

292,389

1,225

1.66

%

262,244

987

1.49

%

Total interest bearing deposits

949,637

2,805

1.17

%

858,497

2,156

1.00

%

Borrowed funds

144,703

965

2.65

%

170,168

943

2.20

%

Subordinated debentures

27,857

317

4.51

%

27,854

318

4.53

%

Total interest bearing liabilities

1,122,197

4,087

1.44

%

1,056,519

3,417

1.28

%

Non-interest bearing liabilities:

Demand deposits

235,342

228,993

Other liabilities

5,304

6,081

Total non-interest bearing liabilities

240,646

235,074

Stockholders' equity

156,921

150,873

Total Liabilities and Stockholders' Equity

$

1,519,764

$

1,442,466

Net Interest Income and Margin (5)

11,575

3.21

%

11,217

3.29

%

Tax-equivalent basis adjustment

(241

)

(224

)

Net Interest Income

$

11,334

$

10,993

(1) Includes loan fee income

(2) Average rates on securities are calculated on amortized costs

(3) Full taxable equivalent basis, using an effective tax rate of 21% in 2018 and adjusted for TEFRA (Tax and Equity Fiscal Responsibility Act) interest expense disallowance

(4) Loans outstanding include non-accrual loans

(5) Represents the difference between interest earned and interest paid, divided by average total interest-earning assets

SB ONE BANCORP

COMPARATIVE AVERAGE BALANCES AND AVERAGE INTEREST RATES

(Dollars In Thousands)

(Unaudited)

Year Ended December 31,

2018

2017

Average

Average

Average

Average

Balance

Interest

Rate (2)

Balance

Interest

Rate (2)

Earning Assets:

Securities:

Tax exempt (3)

$

61,673

$

2,632

4.27

%

$

46,449

$

1,918

4.13

%

Taxable

126,104

3,507

2.78

%

64,636

1,437

2.22

%

Total securities

187,777

6,139

3.27

%

111,085

3,355

3.02

%

Total loans receivable (1) (4)

1,139,199

51,359

4.51

%

756,766

32,953

4.35

%

Other interest-earning assets

10,586

99

0.94

%

8,611

35

0.41

%

Total earning assets

1,337,562

57,597

4.31

%

876,462

36,343

4.15

%

Non-interest earning assets

97,078

45,398

Allowance for loan losses

(8,185

)

(7,113

)

Total Assets

$

1,426,455

$

914,747

Sources of Funds:

Interest bearing deposits:

NOW

$

257,314

$

1,527

0.59

%

$

183,457

$

584

0.32

%

Money market

124,973

1,952

1.56

%

93,505

843

0.90

%

Savings

216,275

818

0.38

%

137,120

285

0.21

%

Time

270,807

3,781

1.40

%

171,163

1,872

1.09

%

Total interest bearing deposits

869,369

8,078

0.93

%

585,245

3,584

0.61

%

Borrowed funds

150,294

3,288

2.19

%

78,551

1,749

2.23

%

Subordinated debentures

27,853

1,263

4.53

%

27,844

1,278

4.59

%

Total interest bearing liabilities

1,047,516

12,629

1.21

%

691,640

6,611

0.96

%

Non-interest bearing liabilities:

Demand deposits

223,984

139,611

Other liabilities

5,060

4,167

Total non-interest bearing liabilities

229,044

143,778

Stockholders' equity

149,895

79,329

Total Liabilities and Stockholders' Equity

$

1,426,455

$

914,747

Net Interest Income and Margin (5)

44,968

3.36

%

29,732

3.39

%

Tax-equivalent basis adjustment

(888

)

(644

)

Net Interest Income

$

44,080

$

29,088

(1) Includes loan fee income

(2) Average rates on securities are calculated on amortized costs

(3) Full taxable equivalent basis, using an effective tax rate of 21% in 2018 and 39% in 2017 and adjusted for TEFRA (Tax and Equity Fiscal Responsibility Act) interest expense disallowance

(4) Loans outstanding include non-accrual loans

(5) Represents the difference between interest earned and interest paid, divided by average total interest-earning assets

SB ONE BANCORP

Segment Reporting

(Dollars In Thousands)

(Unaudited)

Three Months Ended December 31, 2018

Three Months Ended December 31, 2017

Banking and

Banking and

Financial

Insurance

Financial

Insurance

Services

Services

Total

Services

Services

Total

Net interest income from external sources

$

11,334

$

-

$

11,334

$

7,870

$

-

$

7,870

Other income from external sources

1,074

1,419

2,493

723

1,238

1,961

Depreciation and amortization

376

8

384

257

5

262

Income before income taxes

3,178

166

3,344

2,333

219

2,552

Income tax expense (1)

925

66

991

1,952

87

2,039

Total assets

1,791,975

4,852

1,796,827

975,123

4,260

979,383

Three Months Ended December 31, 2018

Three Months Ended September 30, 2018

Banking and

Banking and

Financial

Insurance

Financial

Insurance

Services

Services

Total

Services

Services

Total

Net interest income from external sources

$

11,334

$

-

$

11,334

$

10,993

$

-

$

10,993

Other income from external sources

1,074

1,419

2,493

967

1,551

2,518

Depreciation and amortization

376

8

384

455

7

462

Income before income taxes

3,178

166

3,344

3,907

320

4,227

Income tax expense (1)

925

66

991

829

128

957

Total assets

1,791,975

4,852

1,796,827

1,453,536

6,106

1,459,642

Year Ended December 31, 2018

Year Ended December 31, 2017

Banking and

Banking and

Financial

Insurance

Financial

Insurance

Services

Services

Total

Services

Services

Total

Net interest income from external sources

$

44,080

$

-

$

44,080

$

29,088

$

-

$

29,088

Other income from external sources

3,975

6,774

10,749

2,864

5,421

8,285

Depreciation and amortization

1,723

27

1,750

1,037

24

1,061

Income before income taxes

10,987

1,995

12,982

8,757

1,413

10,170

Income tax expense (1)

2,261

798

3,059

3,914

565

4,479

Total assets

1,791,975

4,852

1,796,827

975,123

4,260

979,383

(1) Calculated at statutory tax rate of 28.1% in 2018 and 39.9% in 2017 for the insurance services segment

SB ONE BANCORP

Non-GAAP Reporting

(Dollars In Thousands)

(Unaudited)

Three Months Ended December 31,

2018

2017

Net income (GAAP)

$

2,353

$

513

Merger related expenses net of tax (1)

1,301

676

Tax Cuts and Jobs Act adjusted (2)

-

942

Non-recurring expenses net of tax (3)

119

-

Net income, as adjusted

$

3,773

$

2,131

Average diluted shares outstanding (GAAP)

8,082,270

6,011,574

Average diluted shares outstanding, as adjusted

8,082,270

6,011,574

Diluted EPS, as adjusted

$

0.47

$

0.35

Return on average assets, as adjusted

0.99

%

0.88

%

Return on average equity, as adjusted

9.62

%

8.96

%

(1) Merger related expense net of tax expense of $160 thousand QTD 2018 and $30 thousand in 2017.

(2) Represents acceleration of $942 thousand of deferred tax assets into expense due to recent enactment of the Tax Cuts and Jobs Act

(3) Non-recurring expenses net of tax expense of $51 thousand QTD 2018

Three Months Ended

December 31, 2018

September 30, 2018

Net income (GAAP)

$

2,353

$

3,270

Merger related expenses net of tax (1)

1,301

538

Non-recurring expenses net of tax (2)

119

-

Net income, as adjusted

$

3,773

$

3,808

Average diluted shares outstanding (GAAP)

8,082,270

7,910,449

Average diluted shares from capital raise (2)

-

-

Average diluted shares outstanding, as adjusted

8,082,270

7,910,449

Diluted EPS, as adjusted

$

0.47

$

0.48

Return on average assets, as adjusted

0.99

%

1.06

%

Return on average equity, as adjusted

9.62

%

10.10

%

(1) Merger related expense net of tax expense of $160 thousand QTD December 2018, $67 thousand QTD September 2018.

(2) Non-recurring expenses net of tax expense of $51 thousand QTD 2018

Year Ended December 31,

2018

2017

Net income (GAAP)

$

9,923

$

5,691

Merger related expenses net of tax (1)

4,521

1,021

Non-recurring expenses inclusive of rebrand net of tax (3)

271

S-3 Registration filing expenses net of tax (1)

-

45

Tax Cuts and Jobs Act adjusted (2)

-

942

Net income, as adjusted

$

14,715

$

7,699

Average diluted shares outstanding (GAAP)

7,921,269

5,404,381

Average diluted shares outstanding, as adjusted

7,921,269

5,404,381

Diluted EPS, as adjusted

$

1.86

$

1.42

Return on average assets, as adjusted

1.03

%

0.84

%

Return on average equity, as adjusted

9.82

%

9.71

%

(1) Merger related expenses net of tax expenses $1.3 million YTD 2018 and $137 thousand YTD 2017; S-3 registration filing net of tax expenses of $30 thousand in 2017.

(2) Represents acceleration of $942 thousand of deferred tax assets into expense due to recent enactment of the Tax Cuts and Jobs Act

(3) Non-recurring rebrand expenses net of tax expense of $54 thousand and non-recurring expenses of $51 thousand

(4) Calculation is based on 1,249,999 common stock shares issued and outstanding as part of the capital raise completed on June 21, 2017 divided by the number of days in the period.