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Two River Bancorp Reports 2019 First Quarter Financial Results Highlighted by Strong Loan and Deposit Growth

TINTON FALLS, N.J., April 23, 2019 (GLOBE NEWSWIRE) -- Two River Bancorp (TRCB) (the "Company"), the parent company of Two River Community Bank (the "Bank"), today reported financial results for the first quarter ended March 31, 2019, highlighted by improved net income driven by solid loan and deposit growth.

2019 First Quarter Financial Highlights
(comparisons to 2018 first quarter)

  • Net income increased 4.0% to $2.78 million
  • Earnings per diluted share (EPS) increased 3.3% to $0.32
  • Return on average assets of 1.01%, compared to 1.04%
  • Return on average equity of 9.59%, compared to 10.08%
  • Net interest margin decreased by 3 basis points to 3.60%
  • Net interest income increased 6.2% to $9.3 million
  • Non-interest income decreased 11.7% to $1.2 million
  • Efficiency ratio(1) improved to 59.95% from 61.59%

(Totals at March 31, 2019; comparisons to December 31, 2018)

  • Total loans were $948.5 million, an increase of $27.2 million, or 11.8% annualized
  • Total deposits were $959.7 million, an increase of $42.3 million, or 18.4% annualized
  • Total assets increased to a record $1.141 billion, compared to $1.096 billion
  • Tangible book value per share(2) increased to $11.66, compared to $11.43

(1) Efficiency ratio represents the ratio of non-interest expense to the sum of net interest income and non-interest income.
(2) Non-GAAP Financial Information. See “Reconciliation of Non-GAAP Financial Measures” at end of release.

Management Commentary
Mr. William D. Moss, Chairman, President and CEO, stated, “I am very pleased with our growth in the first quarter, as loans increased 11.8% and deposits grew by 18.4% on an annualized basis. Commercial and residential real estate lending drove top-line growth and we continue to convert a strong loan pipeline, driven by long-standing relationships and referrals in our markets. All of our efforts have led to higher net income, which we believe has laid the groundwork for continued growth and profitability throughout 2019.”

Mr. Moss continued, “We continue to focus on optimizing our branch network and to that end, opened a new branch in the Ironbound district of Newark, NJ in Essex County in early April. We were able to reallocate human resources from our former New Brunswick office, which we closed in December 2018. This new branch will build on the existing success we have enjoyed since our entry into this market over the past year.”

Dividend Information
On April 18, 2019, the Company's Board of Directors declared a quarterly cash dividend of $0.07 per share, payable May 30, 2019 to shareholders of record as of the close of business on May 10, 2019. This marks the 25th consecutive quarterly cash dividend, represents a 27% increase from the prior quarter, and is the sixth consecutive year the Company has raised its cash dividend. 

Key Quarterly Performance Metrics

  1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr.
1st Qtr.
  2019
2018
2018
2018
2018
Net Income (in thousands) $ 2,783   $ 3,046   $ 2,834   $ 2,650   $ 2,676  
Earnings per Common Share – Diluted $ 0.32   $ 0.35   $ 0.33   $ 0.30   $ 0.31  
Return on Average Assets   1.01 %   1.10 % 1.04 %   1.00 %   1.04 %
Return on Average Tangible Assets(1)   1.02 %   1.11 % 1.06 %   1.02 %   1.06 %
Return on Average Equity   9.59  %   10.52 % 9.98 %   9.67 %   10.08 %
Return on Average Tangible Equity(1)   11.33 %   12.49 % 11.90 %   11.57 %   12.12 %
Net Interest Margin   3.60 %   3.56 % 3.55 %   3.59 %   3.63 %
Efficiency Ratio(2)   59.95 %   60.69 % 61.78 %   62.59 %   61.59 %
Non-Performing Assets to Total Assets   0.39 %   0.18 % 0.18 %   0.18 %   0.19 %
Allowance as a % of Loans   1.22 %   1.24 % 1.26 %   1.26 %   1.26 %
 
(1)  Non-GAAP Financial Information. See “Reconciliation of Non-GAAP Financial Measures” at end of release.
(2)  Efficiency ratio represents the ratio of non-interest expense to the sum of net interest income and non-interest income.
 

Loan Composition
The components of the Company’s loan portfolio at March 31, 2019 and December 31, 2018 are as follows:  

                       
    (in thousands)    
    March 31,
2019
    December 31,
2018
  %
Change
   
Commercial and industrial   $ 112,157     $ 109,362   2.6   %
Real estate – construction     140,279       144,865   (3.2 ) %
Real estate – commercial     577,270       552,549   4.5   %
Real estate – residential     89,455       84,123   6.3   %
Consumer     30,122       31,144   (3.3 ) %
Unearned fees     (790 )     (742 ) 6.6   %
      948,493       921,301   3.0   %
Allowance for loan losses     (11,582 )     (11,398 ) 1.6   %
Net Loans   $ 936,911     $ 909,903   3.0   %
                       

Deposit Composition
The components of the Company’s deposits at March 31, 2019 and December 31, 2018 are as follows:  


 
                     
    (in thousands)    
    March 31,
2019
    December 31,
 2018
  % Change    
Non-interest-bearing   $ 177,938     $ 176,655   0.7   %
NOW accounts     200,513       193,347   3.7   %
Savings deposits     256,527       258,666   (0.8 ) %
Money market deposits     41,742       43,936   (5.0 ) %
Listed service CD’s     46,259       39,807   16.2   %
Time deposits / IRA     153,918       130,863   17.6   %
Wholesale deposits     82,758       74,080   11.7   %
Total Deposits   $ 959,655     $ 917,354   4.6   %
                       

2019 First Quarter Financial Review

Net Income
Net income for the three months ended March 31, 2019 was $2.8 million, or $0.32 per diluted common share, compared to $2.7 million, or $0.31 per diluted common share, for the same period last year, an increase of 4.0%. The increase was due primarily to higher net interest income, partially offset by lower non-interest income and a higher effective tax rate of 26.4% compared to 23.2% during the same period last year.

Net Interest Income
Net interest income for the quarter ended March 31, 2019 was $9.3 million, an increase of 6.2% compared to $8.8 million in the corresponding prior year period. This was largely due to an increase of $66.8 million, or 6.8%, in average interest earning assets, primarily driven from strong growth in the loan portfolio.  

Net Interest Margin
The Company reported a net interest margin of 3.60% for the first quarter of 2019, compared to the 3.56% reported in the fourth quarter of 2018 and 3.63% reported in the first quarter of 2018. The 4 basis point improvement from the fourth quarter of 2018 was primarily the result of higher yielding interest-earning assets. The 3 basis point decline from the first quarter of 2018 was primarily the result of higher cost of funds.

Non-Interest Income
Non-interest income for the quarter ended March 31, 2019 totaled $1.2 million, a decrease of $153,000, or 11.7%, compared to $1.3 million in the corresponding prior-year period. This was largely the result of lower gains on the sale of SBA loans, mortgage banking revenues and service fees on deposit accounts, partially offset by higher other loan fees, primarily due to loan prepayment fees.

Non-Interest Expense
Non-interest expense for the quarter ended March 31, 2019 totaled $6.3 million, an increase of $68,000, or 1.1%, compared to the same period in 2018, mainly due to higher professional fees, partially offset by lower salaries and benefits and occupancy and equipment costs. The Company’s efficiency ratio was 59.95% for the quarter, compared to 61.59% for the same period in 2018.

Income Tax Expense
The Company’s effective tax rate increased to 26.4% for the three months ended March 31, 2019 compared to 23.2% for the same period last year. This was due to a lower tax benefit related to the accounting treatment of equity-based compensation, in which a $41,000 benefit was recognized in the first quarter of 2019 compared to a $90,000 benefit from the same period last year. Additionally, New Jersey enacted a Corporation Business Tax surtax of 2.5%, which did not take effect until July 1, 2018 and, as such, negatively impacted income tax expense by approximately $75,000 in the first quarter of 2019 compared to the same period in 2018.

At the present time, the Company is anticipating a 2019 effective tax rate of 28%.

Provision / Allowance for Loan Losses
During the quarter, the Company reported a $425,000 provision for loan losses, compared to $400,000 in the prior year period. The increase was largely due to the strong loan growth during the period. The Company also had $241,000 in net loan charge-offs during the quarter, compared to $106,000 of net loan charge-offs in the same period last year. The charge-offs during the first quarter of 2019 were primarily related to a $242,000 partial writedown on a $2.9 million residential construction loan, which was placed into non-accrual status during the quarter.

As of March 31, 2019, the Company's allowance for loan losses was $11.6 million, compared to $11.4 million at December 31, 2018. The loss allowance as a percentage of total loans was 1.22% at March 31, 2019, compared to 1.24% at December 31, 2018.

Financial Condition / Balance Sheet
At March 31, 2019, the Bank maintained capital ratios that were in excess of regulatory standards for well-capitalized institutions. The Bank’s Tier 1 capital to average assets ratio was 10.03%, common equity Tier 1 to risk weighted assets ratio was 11.00%, Tier 1 capital to risk weighted assets ratio was 11.00%, and total capital to risk weighted assets ratio was 12.16%. Due to the adoption of ASU 2016-02 (Topic 842), Leases, the Company recognized an operating right-of-use asset of $5.0 million and a lease liability of $5.1 million on its balance sheet as of March 31, 2019. This negatively impacted the Company’s capital ratios by approximately 5 basis points compared to December 31, 2018.

Total assets as of March 31, 2019 were $1.141 billion, compared to $1.096 billion at December 31, 2018 and $1.042 billion at March 31, 2018.

Total loans as of March 31, 2019 grew to $948.5 million, compared to $921.3 million reported at December 31, 2018 and $872.3 million at March 31, 2018. This loan growth was funded primarily from the increase in deposits.

Total deposits as of March 31, 2019 grew to $959.7 million, compared to $917.4 million as of December 31, 2018 and $870.9 million at March 31, 2018. Core checking deposits at March 31, 2019 were $378.5 million, compared to $370.0 million at December 31, 2018 and $375.9 million at March 31, 2018. The Company continues to focus on building core checking account relationships, which can vary from quarter to quarter due to seasonality in municipal and other relationships.

Asset Quality
The Company's non-performing assets at March 31, 2019 were $4.5 million, compared to $2.0 million at both December 31, 2018 and March 31, 2018. Non-performing assets to total assets at March 31, 2019 were 0.39%, compared to 0.18% at December 31, 2018 and 0.19% at March 31, 2018.

Non-accrual loans were $3.9 million at March 31, 2019, compared to $1.4 million at December 31, 2018 and $2.0 million at March 31, 2018. As previously mentioned, a $2.9 million residential construction loan was placed into non-accrual status during the current quarter and the Company subsequently recorded a $242,000 partial writedown on the loan. OREO was $585,000 at March 31, 2019 and December 31, 2018, compared to no OREO at March 31, 2018.

Troubled debt restructured loan balances amounted to $7.4 million at March 31, 2019, with all but $711,000 performing. This compared to $7.7 million at December 31, 2018 and $6.8 million at March 31, 2018.

About the Company
Two River Bancorp is the holding company for Two River Community Bank, which is headquartered in Tinton Falls, New Jersey. Two River Community Bank operates 14 branches along with two loan production offices throughout Monmouth, Union, Essex, and Ocean Counties, New Jersey. More information about Two River Community Bank and Two River Bancorp is available at www.tworiver.bank.

The foregoing contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management's confidence and strategies and management's current views and expectations about new and existing programs and products, relationships, opportunities, technology and market conditions. These statements may be identified by such forward-looking terminology as "continuing," "expect," "look," "believe," "anticipate," "may," "will," "should," "projects," "strategy," or similar statements. Actual results may differ materially from such forward-looking statements, and no reliance should be placed on any forward-looking statement. Factors that may cause results to differ materially from such forward-looking statements include, but are not limited to, unanticipated changes in the financial markets and the direction of interest rates; volatility in earnings due to certain financial assets and liabilities held at fair value; competition levels; loan and investment prepayments differing from our assumptions; insufficient allowance for credit losses; a higher level of loan charge-offs and delinquencies than anticipated; material adverse changes in our operations or earnings; a decline in the economy in our market areas; changes in relationships with major customers; changes in effective income tax rates; higher or lower cash flow levels than anticipated; inability to hire or retain qualified employees; a decline in the levels of deposits or loss of alternate funding sources; a decrease in loan origination volume or an inability to close loans currently in the pipeline; changes in laws and regulations; adoption, interpretation and implementation of accounting pronouncements; operational risks, including the risk of fraud by employees, customers or outsiders; unanticipated effects of our new banking platform; and the inability to successfully implement or expand new lines of business or new products and services. For a list of other factors which would affect our results, see the Company's filings with the Securities and Exchange Commission, including those risk factors identified in the "Risk Factor" section and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2018. The statements in this press release are made as of the date of this press release, even if subsequently made available by the Company on its website or otherwise. The Company assumes no obligation for updating any such forward-looking statements at any time, except as required by law.

Investor Contact: Media Contact:
Adam Prior, Senior Vice President Adam Cadmus, Marketing Director
The Equity Group Inc. Two River Community Bank
Phone: (212) 836-9606 Phone: (732) 982-2167
Email: aprior@equityny.com Email: acadmus@tworiverbank.com
   


 
TWO RIVER BANCORP
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the Three Months Ended March 31, 2019 and 2018
(in thousands, except per share data)
       
    Three Months Ended
March 31,
 
    2019     2018  
Interest Income:            
Loans, including fees   $   11,312     $ 9,821  
Securities:            
Taxable     331       297  
Tax-exempt     239       282  
Interest-bearing deposits     187       67  
Total Interest Income     12,069       10,467  
Interest Expense:            
Deposits     2,418       1,358  
Securities sold under agreements to repurchase     11       14  
Federal Home Loan Bank (“FHLB”) and other borrowings     132       130  
Subordinated debt     165       165  
Total Interest Expense     2,726       1,667  
Net Interest Income     9,343       8,800  
Provision for Loan Losses        425       400  
Net Interest Income after Provision for Loan Losses     8,918       8,400  
Non-Interest Income:            
Service fees on deposit accounts     166       238  
Mortgage banking     280       338  
Other loan fees     160       111  
Earnings from investment in bank owned life insurance     143       130  
Gain on sale of SBA loans        206       331  
Other income        202       162  
Total Non-Interest Income     1,157       1,310  
Non-Interest Expenses:            
Salaries and employee benefits       3,841       3,885  
Occupancy and equipment       1,042       1,090  
Professional        434       340  
Insurance       65       57  
FDIC insurance and assessments        124       123  
Advertising        70       60  
Data processing        188       152  
Outside service fees        54       81  
OREO expenses, impairment and sales, net       4       (1 )
Loan workout expenses     (8 )     51  
Other operating        481       389  
Total Non-Interest Expenses     6,295       6,227  
Income before Income Taxes     3,780       3,483  
Income Tax Expense     997       807  
Net Income   $   2,783     $ 2,676  
Earnings Per Common Share:            
Basic   $   0.32     $ 0.32  
Diluted   $   0.32     $ 0.31  
Weighted average common shares outstanding:            
Basic     8,583       8,447  
Diluted     8,712       8,675  
             


 
TWO RIVER BANCORP
CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands, except share data)
         
  March 31,   December 31,  
  2019   2018  
ASSETS            
Cash and due from banks $ 15,945   $ 24,067  
Interest-bearing deposits in bank   46,743     24,059  
Cash and cash equivalents   62,688     48,126  
             
Securities available for sale   23,552     24,407  
Securities held to maturity   45,838     47,455  
Equity securities   2,497     2,451  
Restricted investments, at cost   6,017     6,082  
Loans held for sale      1,496     1,496  
Loans   948,493     921,301  
Allowance for loan losses   (11,582 )   (11,398 )
Net loans   936,911     909,903  
             
OREO   585     585  
Bank owned life insurance   22,060     22,098  
Premises and equipment, net      6,173     5,917  
Operating right-of-use asset   4,997     -  
Accrued interest receivable    2,793     2,583  
Goodwill    18,109     18,109  
Other assets     6,805     7,207  
             
Total Assets $   1,140,521   $ 1,096,419  
             
LIABILITIES AND SHAREHOLDERS’ EQUITY            
Liabilities:            
Deposits:            
Non-interest-bearing $ 177,938   $ 176,655  
Interest-bearing     781,717     740,699  
Total Deposits     959,655     917,354  
             
Securities sold under agreements to repurchase    15,185     19,402  
FHLB and other borrowings     20,700     22,500  
Subordinated debt    9,932     9,923  
Accrued interest payable     153     119  
Lease liability   5,127     -  
Other liabilities     10,613     10,623  
             
Total Liabilities   1,021,365     979,921  
             
Shareholders’ Equity            
Preferred stock, no par value; 6,500,000 shares authorized, no shares issued and outstanding      -       -  
Common stock, no par value; 25,000,000 shares authorized;            
Issued – 8,996,545 and 8,935,437 at March 31, 2019 and December 31, 2018, respectively            
Outstanding – 8,668,100 and 8,606,992 at March 31, 2019 and December 31, 2018, respectively   80,759     80,481  
Retained earnings     41,416     39,109  
Treasury stock, at cost; 328,445 shares at March 31, 2019 and December 31, 2018    (2,647 )   (2,647 )
Accumulated other comprehensive loss     (372 )   (445 )
Total Shareholders' Equity    119,156     116,498  
             
Total Liabilities and Shareholders’ Equity $ 1,140,521   $ 1,096,419  
             


 
TWO RIVER BANCORP
Selected Consolidated Financial Data (Unaudited)
 
Selected Consolidated Earnings Data
(in thousands, except per share data)
     
   Three Months Ended  
  March 31,   December 31,   March 31,  
Selected Consolidated Earnings Data: 2019   2018   2018  
Total Interest Income $ 12,069   $ 11,776   $ 10,467  
Total Interest Expense   2,726     2,523     1,667  
Net Interest Income   9,343     9,253     8,800  
Provision for Loan Losses   425     -     400  
Net Interest Income after Provision for Loan Losses   8,918     9,253     8,400  
Other Non-Interest Income   1,157     1,370     1,310  
Other Non-Interest Expenses   6,295     6,447     6,227  
Income before Income Taxes   3,780     4,176     3,483  
Income Tax Expense   997     1,130     807  
Net Income $ 2,783   $ 3,046   $ 2,676  
             
Per Common Share Data:            
Basic Earnings $ 0.32   $ 0.36   $ 0.32  
Diluted Earnings $ 0.32   $ 0.35   $ 0.31  
Book Value $ 13.75   $ 13.54   $ 12.78  
Tangible Book Value(1) $ 11.66   $ 11.43   $ 10.66  
Average Common Shares Outstanding (in thousands):            
Basic   8,583     8,536     8,447  
Diluted   8,712     8,693     8,675  
                   

 (1)  Non-GAAP Financial Information. See “Reconciliation of Non-GAAP Financial Measures” at end of release.

 
Selected Period End Balances
(in thousands)
                     
  March 31,   Dec. 31,   Sept. 30,   June 30,   March 31,  
  2019   2018   2018   2018   2018  
Total Assets $    1,140,521   $ 1,096,419   $ 1,086,299   $ 1,055,527   $ 1,042,277  
Investment Securities and Restricted Stock   77,904     80,395     91,296     94,449     96,251  
Total Loans   948,493     921,301     900,895     890,369     872,327  
Allowance for Loan Losses   (11,582 )   (11,398 )   (11,390 )   (11,201 )   (10,962 )
Goodwill and Other Intangible Assets   18,109     18,109     18,109     18,109     18,109  
Total Deposits   959,655     917,354     905,745     880,879     870,904  
Repurchase Agreements   15,185     19,402     22,153     19,878     18,472  
FHLB and Other Borrowings   20,700     22,500     24,500     24,500     24,500  
Subordinated Debt   9,932     9,923     9,914     9,905     9,896  
Shareholders' Equity   119,156     116,498     113,891     111,347     108,980  
                     
Asset Quality Data (by Quarter)                    
(dollars in thousands) March 31,   Dec. 31,   Sept. 30,   June 30,   March 31,  
  2019   2018   2018   2018   2018  
Nonaccrual Loans $   3,908   $ 1,390   $ 1,390   $ 1,930   $ 1,972  
OREO   585     585     585     -     -  
Total Non-Performing Assets   4,493     1,975     1,975     1,930     1,972  
                     
Troubled Debt Restructured Loans:                    
Performing   6,726     6,842     5,678     5,831     5,965  
Non-Performing   711     877     877     877     878  
                     
Non-Performing Loans to Total Loans   0.41 %   0.15 %   0.15 %   0.22 %   0.23 %
Non-Performing Assets to Total Assets   0.39 %   0.18 %   0.18 %   0.18 %   0.19 %
Allowance as a % of Loans   1.22 %   1.24 %   1.26 %   1.26 %   1.26 %
                     


           
Capital Ratios          
  March 31, 2019   December 31, 2018  
  CET 1
Capital

to Risk
Weighted

Assets
Ratio
  Tier 1
Capital
to
Average
Assets
Ratio
  Tier 1
Capital
to Risk
Weighted
Assets
Ratio
  Total
Capital
to Risk
Weighted

Assets
Ratio
    CET 1
Capital

to Risk
Weighted

Assets
Ratio
  Tier 1
Capital
to
Average
Assets

Ratio
  Tier 1
Capital
to Risk
Weighted

Assets
Ratio
  Total
Capital to
Risk
Weighted

Assets
Ratio
 
Two River Bancorp 10.10 % 9.20 % 10.10 % 12.25 % 10.14 % 9.10 % 10.14 % 12.34 %
Two River Community Bank 11.00 % 10.03 % 11.00 % 12.16 % 11.09 % 9.95 % 11.09 % 12.26 %
"Well capitalized" institution (under prompt corrective action regulations)* 6.50 % 5.00 % 8.00 % 10.00 % 6.50 % 5.00 % 8.00 % 10.00 %
 
*Applies to Bank only. For the Company to be “well capitalized” under the Federal Reserve definitions for bank holding companies, the Company is only required to have a Tier 1 Capital to Risk Weighted Assets ratio of at least 6.00% and a Total Capital to Risk Weighted Assets ratio of at least 10.0%.
 


 
Net Loan Charge-offs
(dollars in thousands)
                                         
  Three Months Ended      
  March 31,     Dec. 31,     Sept. 30,     June 30,     March 31,    
  2019     2018     2018     2018     2018    
Net loan (charge-offs) recoveries:                              
Charge-offs $ (247 )   $ -     $ -     $ (13 )   $ (115 )  
Recoveries   6       8       39       27       9    
Net loan (charge-offs) recoveries $ (241 )   $ 8     $ 39     $ 14     $ (106 )  
Net loan (charge-offs) recoveries to average loans (annualized)   (0.10 ) %   0.00   %   0.02   %   0.01   %   (0.05 ) %
                                         


 
Consolidated Average Balance Sheets & Yields
With Resultant Interest and Average Rates
       
  Three Months Ended   Three Months Ended
(dollars in thousands) March 31, 2019   March 31, 2018
                   
ASSETS                                  
Interest-Earning Assets: Average
Balance
  Interest /
Income
Expense

  Average
Yield /
Rate

  Average
Balance

  Interest /
Income
Expense
  Average
Yield /
Rate
Interest-bearing deposits in banks $ 30,370   $ 187   2.50 %   $ 18,135   $ 67   1.50 %
Investment securities 79,234   570   2.88 %   97,625   579   2.37 %
Loans, net of unearned fees(1) (2) 941,488   11,312   4.87 %   868,544   9,821   4.59 %
                           
Total Interest-Earning Assets 1,051,092   12,069   4.66 %   984,304   10,467   4.31 %
                           
Non-Interest-Earning Assets:                          
Allowance for loan losses (11,434 )           (10,840 )        
All other assets 79,742             72,889          
                           
Total Assets $ 1,119,400               $ 1,046,353            
                           
LIABILITIES & SHAREHOLDERS' EQUITY                          
Interest-Bearing Liabilities:                          
NOW deposits $ 205,693   413   0.81 %   $ 236,674   310   0.53 %
Savings deposits 255,687   592   0.94 %   248,488   354   0.58 %
Money market deposits 41,580   23   0.22 %   58,348   25   0.17 %
Time deposits 256,603   1,390   2.20 %   168,327   669   1.61 %
Securities sold under agreements to repurchase 15,549   11   0.29 %   19,636   14   0.29 %
FHLB and other borrowings 25,711   132   2.08 %   28,217   130   1.87 %
Subordinated debt 9,929   165   6.65 %   9,893   165   6.67 %
                           
Total Interest-Bearing Liabilities 810,752   2,726   1.36 %   769,583   1,667   0.88 %
                           
Non-Interest-Bearing Liabilities:                          
Demand deposits 174,822             160,060          
Other liabilities 16,075             9,033          
                           
Total Non-Interest-Bearing Liabilities 190,897             169,093          
                           
Shareholders’ Equity 117,751             107,677          
                           
Total Liabilities and Shareholders’ Equity $ 1,119,400               $ 1,046,353            
                           
NET INTEREST INCOME     $ 9,343             $ 8,800      
                           
NET INTEREST SPREAD(3)         3.30 %           3.43 %
                           
NET INTEREST MARGIN(4)         3.60 %           3.63 %

(1)  Included in interest income on loans are net unearned loan fees.
(2)  Includes non-performing loans.
(3)  The interest rate spread is the difference between the weighted average yield on average interest-earning and the weighted average cost of average interest-bearing liabilities.
(4)  The interest rate margin is calculated by dividing annualized net interest income by average interest earning assets.

Reconciliation of Non-GAAP Financial Measures

The press release contains certain financial information determined by methods other than in accordance with generally accepted accounting policies in the United States (GAAP). These non-GAAP financial measures are "book value per common share," "tangible book value per common share," "return on average tangible assets," and "return on average tangible equity." This non-GAAP disclosure has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies. Our management uses these non-GAAP measures in its analysis of our performance because it believes these measures are material and will be used as a measure of our performance by investors.

     
(in thousands, except per share data)    
  As of and for the Three Months Ended  
  March 31,   Dec. 31,   Sept. 30,   June 30,   March 31,  
  2019   2018   2018   2018   2018  
Total shareholders' equity $ 119,156   $ 116,498   $ 113,891   $ 111,347   $ 108,980  
Less: goodwill and other tangibles   (18,109 )   (18,109 )   (18,109 )   (18,109 )   (18,109 )
Tangible common shareholders’ equity $ 101,047   $ 98,389   $ 95,782   $ 93,238   $ 90,871  
                               
Common shares outstanding   8,668     8,607     8,584     8,555     8,525  
Book value per common share $ 13.75   $ 13.54   $ 13.27   $ 13.02   $ 12.78  
                               
Book value per common share $ 13.75   $ 13.54   $ 13.27   $ 13.02   $ 12.78  
Effect of intangible assets   (2.09 )   (2.11 )   (2.11 )   (2.12 )   (2.12 )
Tangible book value per common share $ 11.66   $ 11.43   $ 11.16   $ 10.90   $ 10.66  
                     
Return on average assets 1.01 % 1.10 % 1.04 % 1.00 % 1.04 %
Effect of average intangible assets 0.01 % 0.01 % 0.02 % 0.02 % 0.02 %
Return on average tangible assets 1.02 % 1.11 % 1.06 % 1.02 % 1.06 %
                     
Return on average equity 9.59 % 10.52 % 9.98 % 9.67 % 10.08 %
Effect of average intangible assets 1.74 % 1.97 % 1.92 % 1.90 % 2.04 %
Return on average tangible equity 11.33 % 12.49 % 11.90 % 11.57 % 12.12 %