Exhibit 99.1
 

Franklin Financial Network Announces Third Quarter Earnings Of $0.70 Per Diluted Share And ROAA Of 1.01%

FRANKLIN, Tenn., Oct. 24, 2018 /PRNewswire/ -- Franklin Financial Network, Inc. (NYSE: FSB), the parent company (the "Company") of Franklin Synergy Bank (the "Bank"), today announced financial results for the quarter ended September 30, 2018. For the quarter, net income available to common shareholders was $10.5 million, up 18.7% from $8.9 million for the third quarter of 2017. Earnings per diluted share increased 7.7% to $0.70 for the third quarter of 2018 from $0.65 for the third quarter last year. Results for third quarter of 2018 include:

  • Return on average assets of 1.01% and return on average equity of 11.91%;
  • Net interest margin decreased four bps to 2.70% from 2.74% for the second quarter of 2018.  The decline in margin was partially offset by a tax benefit generated during the third quarter of 2018 from the Company's investment in Tennessee Community Investment Tax Credit (CITC) qualified loans and securities;
  • A 20.5% comparable-quarter increase in loans, including loans held for sale ("total loans"), to $2.56 billion at September 30, 2018, and a 3.0% (12.1% annualized) sequential-quarter increase;
  • A 19.4% comparable-quarter increase in total deposits to $3.4 billion and 0.8% sequential-quarter decrease (-3.1% annualized) reflecting the seasonality of local government deposits, which peak in the fourth and early first quarter of each year and decline to their annual low points in the third quarter;  Retail deposits (excludes local government and brokered deposits) were up  8.2% in the comparable quarter and 2.6% from the sequential quarter; and,
  • Strong credit quality, with nonperforming loans to total loans, excluding loans held for sale, of 0.16%; allowance for loan losses to total loans, excluding loans held for sale, of 0.88%; and net recoveries to average loans of 0.003%.

For the first nine months of 2018, net income available to common shareholders increased 19.7% to $30.8 million from $25.7 million for the first nine months of 2017. Earnings per diluted share increased 13.4% to $2.11 for the first nine months of 2018 from $1.86 for the same period in 2017.

Richard Herrington, Chairman, President and CEO, remarked, "I'm pleased to report third quarter earnings per share that outpaced expectations, despite temporary headwinds in the current operating environment that contributed to a slight decrease in Net Interest Margin. We built a great deal of positive momentum in the quarter and maintained discipline in credit standards and pricing in the face of fierce competition for both loans and deposits as newer entrants into this attractive market stretch on both measures to buy market share. Thankfully, our team has seen this before and will continue to go after profitable business without sacrificing profit for the sake of growth. I am optimistic going forward as we review our pipelines and prospects.

"Contributing to third quarter results was solid growth in the loan portfolio combined with strong credit quality. Also notable was a decline in our effective tax rate, primarily due to state tax credits resulting in large part from the extension of a significant CRA-qualified loan. These contributions to earnings resulted in an improvement in all capital ratios, again positioning the Company for future growth.

"Given the strength of our capital base, we have begun the process of rotating out of securities and into continued organic loan growth to improve the earning power of our balance sheet. In addition, we will continue to evaluate potential acquisitions with strong asset quality and capital as well as attractive deposit franchises. With our sound balance sheet and strong credit quality, our investments in technology infrastructure and top-shelf talent, and an entrepreneurial and customer-centric team, we believe continued successful execution of our growth strategies will produce long-term growth in shareholder value."

Strong Asset Quality: The Company continues to differentiate itself from peers by its excellent asset quality. For the third quarter of 2018, the provision for loan losses was $0.1 million, a $0.5 million decrease from the third quarter of 2017 and second quarter of 2018. Provision expense for the quarter and year to date in 2018 reflects net recoveries over the preceding year, providing an allowance for loan losses to total loans, excluding loans held for sale, of 0.88%.

Attractive, Growing, Local Markets Support Balance Sheet Expansion: Total assets increased 16.9% to $4.17 billion at quarter end from the same time in 2017 and were essentially flat with the second quarter of 2018. As noted earlier, total loans increased to $2.56 billion at the end of the third quarter, up 20.5% from the same prior-year quarter and 3.0% (12.1% annualized) sequentially.

Total deposits at September 30, 2018, increased 19.4% on a comparable-quarter basis to $3.37 billion and decreased 0.8% (3.1% annualized) sequentially, reflecting the seasonality of local government deposits. Noninterest-bearing deposits increased 24.9% and 4.0% (15.9% annualized) on a comparable- and sequential-quarter basis, and interest-bearing deposits increased 18.8% on a comparable-quarter basis and 1.3% (5.0% annualized) on a sequential-quarter basis. Retail deposits, which exclude local government and brokered deposits, increased 8.2% to $1.63 billion on a comparable quarter basis and 2.6% sequentially.

Growth in Loans and Reduced Tax Rate Offset Impact of Interest Rate Environment: Net interest income for the third quarter of 2018 increased 9.2% to $26.6 million compared with the third quarter of 2017 and decreased 1.3% sequentially (5.1% annualized), while net interest margin was 2.70% for the third quarter of 2018, compared with 3.05% for the comparable quarter and 2.74% for the second quarter 2018. The primary factors contributing to the sequential-quarter decline in net interest margin were a 23 bps increase in cost of funds, against a 15 bps increase in yield on interest-earning assets.

Noninterest income was $3.4 million for the third quarter of 2018, a decrease of 3.6% in the comparable quarter and 17.0% decrease from the sequential quarter. The sequential-quarter decrease in noninterest income primarily resulted from a $562 thousand quarter-over-quarter decline in gains on sales of loans, as a rising rate environment has slowed mortgage demand.

Noninterest expense was $18.3 million for the third quarter of 2018, a 19.5% comparable-quarter increase and a 1.1% sequential-quarter increase. The Company's efficiency ratio was 60.83% for the third quarter of 2018, compared with 54.77% for the third quarter of 2017 and 58.13% for the second quarter of 2018. The increase in efficiency ratio was driven by a $1.7 million increase in salary expense for the comparable period and a $455 thousand increase for the sequential quarter, as the Company has taken advantage of strategic opportunities to upgrade its commercial lending, credit analysis and back office support teams.

The Company's effective income tax rate improved significantly to 9.2% for the third quarter of 2018 from 26.1% for the comparable quarter and 15.2% for the nine months ended September 30, 2018, compared with 28.7% for the nine months ended September 30, 2017. This decrease in effective tax rate was due to the positive impact of the Tax Cuts and Jobs Act enacted in December 2017 and the Company's investment in CITC qualified securities and loans that offer state tax credits in exchange for accepting less than market yields on projects to build low income housing.

Webcast and Conference Call Information

The Company will host a webcast and conference call at 8:00 a.m. (CT) on Thursday, October 25, 2018, to discuss operating and financial results for the third quarter of 2018. To access the call for audio only, please call 1-844-378-6480. For the presentation materials and streaming audio, please access the webcast on the Investor Relations page of Franklin Synergy Bank's website at www.FranklinSynergyBank.com. For those unable to participate in the webcast, it will be archived for one year, with audio available for 90 days.

Safe Harbor for Forward-Looking Statements

This media release contains forward-looking statements. Such statements include, but are not limited to, expected operating results, including market share and shareholder value, strategy for growth and profitability, projected sales, gross margin and net income figures, the availability of capital resources, the effect of potential and completed acquisitions, and plans concerning products and market acceptance. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "will," "strategies" and variations of such words and similar expressions are intended to identify such forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Risks and uncertainties that could cause the corporation's actual results to materially differ from those described in forward-looking statements include those discussed in Item 1A of the corporation's Annual Report on Form 10-K for the year ended December 31, 2017 filed with the Securities and Exchange Commission on March 16, 2018. Future events and actual results, financial and otherwise, could differ materially from those set forth in or contemplated by the forward-looking statements herein. Future operating results of the corporation are impossible to predict, and no representation or warranty of any kind can be made respecting the present or future accuracy of such forward-looking statements or the ability of the corporation to meet its obligations, and no such representation or warranty is to be inferred.

About the Company

Franklin Financial Network, Inc. is a financial holding company headquartered in Franklin, Tennessee. The Company's wholly-owned bank subsidiary, Franklin Synergy Bank, a Tennessee-chartered commercial bank founded in November 2007 and a member of the Federal Reserve System, provides a full range of banking and related financial services with a focus on service to small businesses, corporate entities, local governments and individuals. With consolidated total assets of $4.17 billion at September 30, 2018, the Bank currently operates through 14 branches and one loan production office in the growing Williamson, Rutherford and Davidson Counties, all within the Nashville metropolitan statistical area. Additional information about the Company, which is included in the NYSE Financial-100 Index, the FTSE Russell 2000 Index and the S&P SmallCap 600 Index, is available at www.FranklinSynergyBank.com.

Investor Relations Contact:
Sarah Meyerrose
EVP, Chief Financial Officer
(615) 236-8344
sarah.meyerrose@franklinsynergy.com

FRANKLIN FINANCIAL NETWORK, INC.

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share data)



September 30,
2018


December 31,
2017

ASSETS

(Unaudited)



Cash and due from financial institutions

$        144,660


$        251,543

Certificates of deposit at other financial institutions       

3,104


2,855

Federal funds sold


Securities available for sale      

1,115,187


999,881

Securities held to maturity (fair value 2018—$199,927 and 2017—$227,892)         

204,587


214,856

Loans held for sale, at fair value

14,563


12,024

Loans  

2,550,121


2,256,608

Allowance for loan losses         

(22,479 )


(21,247 )

Net loans     

2,527,642


2,235,361

Restricted equity securities, at cost       

21,793


18,492

Premises and equipment, net    

11,852


11,281

Accrued interest receivable       

14,391


11,947

Bank owned life insurance        

54,859


49,085

Deferred tax asset        

17,366


10,007

Foreclosed assets

1,853


1,503

Servicing rights, net      

3,465


3,620

Goodwill          

18,176


9,124

Core deposit intangible, net      

1,109


1,007

Other assets    

13,206


10,940

Total assets     

$     4,167,813


$     3,843,526

LIABILITIES AND EQUITY




Deposits




Non-interest bearing         

$        321,108


$        272,172

Interest bearing    

3,050,442


2,895,056

Total deposits          

3,371,550


3,167,228

Federal Home Loan Bank advances      

371,500


272,000

Federal funds purchased and repurchase agreements    


31,004

Subordinated notes, net

58,649


58,515

Accrued interest payable          

4,726


2,769

Other liabilities 

5,211


7,357

Total liabilities  

3,811,636


3,538,873

Equity




Preferred stock, no par value: 1,000,000 shares authorized; no shares outstanding at September 30, 2018 and December 31, 2017


Common stock, no par value: 30,000,000 shares authorized; 14,525,351 and 13,237,128 issued at September 30, 2018 and December 31, 2017, respectively

261,623


222,665

Retained earnings         

119,433


88,671

Accumulated other comprehensive loss 

(24,982 )


(6,786 )

Total shareholders' equity     

356,074


304,550

Noncontrolling interest in consolidated subsidiary      

103


103

Total equity      

$        356,177


$        304,653

Total liabilities and equity          

$     4,167,813


$     3,843,526

FRANKLIN FINANCIAL NETWORK, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except per share data)

(Unaudited)



Three Months Ended
September 30,


Nine Months Ended
September 30,


2018


2017


2018


2017

Interest income and dividends








Loans, including fees

$   34,435


$   25,973


$     95,541


$     73,195

Securities:








Taxable

6,460


5,041


19,476


16,358

Tax-Exempt

1,926


2,217


5,770


6,449

Dividends on restricted equity securities

313


269


916


663

Federal funds sold and other

583


280


2,197


667

   Total interest income

43,717


33,780


123,900


97,332

Interest expense








Deposits

14,137


7,311


37,385


19,118

Federal funds purchased and repurchase agreements

69


92


296


309

Federal Home Loan Bank advances

1,867


968


4,390


2,228

Subordinated notes and other borrowings

1,082


1,083


3,246


3,239

   Total interest expense

17,155


9,454


45,317


24,894

Net interest income

26,562


24,326


78,583


72,438

Provision for loan losses

136


590


1,279


3,018

Net interest income after provision for loan losses

26,426


23,736


77,304


69,420

Noninterest income








Service charges on deposit accounts

58


39


151


114

Other service charges and fees

747


787


2,321


2,297

Net gains on sale of loans

1,379


1,517


4,759


5,918

Wealth management

705


643


2,198


1,884

Loan servicing fees, net

111


70


333


230

Gain (loss) on sale or call of securities

(1 )


350



470

Net gain (loss) on sale of foreclosed assets

3


(16 )


9


(10 )

Other

440


179


1,274


554

   Total noninterest income

3,442


3,569


11,045


11,457

Noninterest expense








Salaries and employee benefits

10,723


9,011


30,179


26,172

Occupancy and equipment

2,933


2,399


8,412


6,689

FDIC assessment expense

1,020


900


2,458


2,675

Marketing

306


192


855


744

Professional fees

1,023


821


3,254


2,558

Amortization of core deposit intangible

169


115


455


363

Other

2,077


1,840


6,176


5,636

   Total noninterest expense

18,251


15,278


51,789


44,837

Income before income tax expense

11,617


12,027


36,560


36,040

Income tax expense

1,068


3,138


5,790


10,343

Net income

10,549


8,889


30,770


25,697

Earnings attributable to non-controlling interest



(8 )


(8 )

Net income available to common shareholders

$   10,549


$    8,889


$     30,762


$     25,689

Earnings per share:








Basic

$      0.73


$      0.67


$          2.19


$          1.96

Diluted

0.70


0.65


2.11


1.86

FRANKLIN FINANCIAL NETWORK, INC.

AVERAGE BALANCES — ANALYSIS OF YIELDS & RATES (UNAUDITED)

(Amounts in thousands, except percentages)



Three Months Ended September 30,


2018


2017


Average

Balance(7)


Interest

Inc / Exp


Average

Yield / Rate


Average

Balance(7)


Interest

Inc / Exp


Average

Yield / Rate

ASSETS:












Loans(1)(6)

$    2,528,604


$   34,457


5.41 %


$  2,049,575


$   26,006


5.03 %

Securities available for sale(6)

1,133,536


7,141


2.50 %


972,988


6,405


2.61 %

Securities held to maturity(6)

207,419


1,924


3.68 %


220,313


2,283


4.11 %

Dividends on restricted equity securities

21,067


313


5.89 %


17,396


269


6.13 %

Certificates of deposit at other financial institutions

3,113


16


2.04 %


2,412


9


1.48 %

Federal funds sold and other(2)

107,872


567


2.09 %


88,737


271


1.21 %

TOTAL INTEREST EARNING ASSETS

$    4,001,611


$   44,418


4.40 %


$  3,351,421


$   35,243


4.17 %

Allowance for loan losses

(22,588 )






(18,891 )





All other assets

153,478






94,334





TOTAL ASSETS

$    4,132,501






$  3,426,864





LIABILITIES & EQUITY












Deposits:












Interest checking

$       790,733


$    3,406


1.71 %


$    552,502


$    1,285


0.92 %

Money market

736,157


3,489


1.88 %


604,416


1,703


1.12 %

Savings

46,589


34


0.29 %


54,921


42


0.30 %

Time deposits

1,466,903


7,208


1.95 %


1,259,452


4,281


1.35 %

Federal Home Loan Bank advances

351,228


1,867


2.11 %


289,228


968


1.33 %

Federal funds purchased and other(3)

12,805


69


2.14 %


37,374


92


0.98 %

Subordinated notes and other borrowings

58,622


1,082


7.32 %


58,444


1,083


7.35 %

TOTAL INTEREST BEARING LIABILITIES

$    3,463,037


$   17,155


1.97%


$  2,856,337


$    9,454


1.31 %

Demand deposits

305,432






261,127





Other liabilities

12,739






11,312





Total equity

351,293






298,088





TOTAL LIABILITIES AND EQUITY

$    4,132,501






$  3,426,864





NET INTEREST SPREAD(4)





2.44 %






2.86 %

NET INTEREST INCOME



$   27,263






$   25,789



NET INTEREST MARGIN(5)





2.70 %






3.05 %

(1)

Loan balances include both loans held in the Bank's portfolio and mortgage loans held for sale and are net of deferred origination fees and costs.  Non-accrual loans are included in total loan balances.

(2)

Includes federal funds sold, capital stock in the Federal Reserve Bank and Federal Home Loan Bank, and interest-bearing deposits at the Federal Reserve Bank and the Federal Home Loan Bank.

(3)

Includes repurchase agreements.

(4)

Represents the average rate earned on interest-earning assets minus the average rate paid on interest-bearing liabilities.

(5)

Represents net interest income (annualized) divided by total average earning assets.

(6)

Interest income and rates include the effects of tax-equivalent adjustments to adjust tax-exempt interest income on tax-exempt loans and investment securities to a fully taxable basis.

(7)

Average balances are average daily balances.


Nine Months Ended September 30,


2018


2017


Average

Balance(7)


Interest

Inc / Exp


Average

Yield / Rate


Average

Balance(7)


Interest

Inc / Exp


Average

Yield / Rate

ASSETS:












Loans(1)(6)

$    2,433,683


$   95,601


5.25 %


$  1,975,592


$   73,274


4.96 %

Securities available for sale(6)

1,135,915


21,372


2.52 %


1,002,118


19,958


2.66 %

Securities held to maturity(6)

211,031


5,915


3.75 %


224,174


7,012


4.18 %

Dividends on restricted equity securities

20,123


916


6.09 %


15,830


663


5.60 %

Certificates of deposit at other financial institutions

3,130


46


1.96 %


2,178


24


1.47 %

Federal funds sold and other(2)

164,027


2,151


1.75 %


84,666


643


1.02 %

TOTAL INTEREST EARNING ASSETS

$    3,967,909


$ 126,001


4.25 %


$  3,304,558


$ 101,574


4.11 %

Allowance for loan losses

(22,092 )






(18,182 )





All other assets

146,044






92,425





TOTAL ASSETS

$    4,091,861






$  3,378,801





LIABILITIES & EQUITY












Deposits:












Interest checking

$       856,299


$    9,901


1.55 %


$     631,582


$    3,586


0.76 %

Money market

750,857


9,137


1.63 %


608,670


4,412


0.97 %

Savings

48,265


109


0.30 %


55,569


127


0.31 %

Time deposits

1,385,931


18,238


1.76 %


1,196,675


10,993


1.23 %

Federal Home Loan Bank advances

326,418


4,390


1.80 %


242,549


2,228


1.23 %

Federal funds purchased and other(3)

25,056


296


1.58 %


45,745


309


0.90 %

Subordinated notes and other borrowings

58,577


3,246


7.41 %


58,398


3,239


7.42 %

TOTAL INTEREST BEARING LIABILITIES

$    3,451,403


$   45,317


1.76 %


$  2,839,188


$   24,894


1.17 %

Demand deposits

296,893






246,675





Other liabilities

12,940






7,358





Total equity

330,625






285,580





TOTAL LIABILITIES AND EQUITY

$    4,091,861






$  3,378,801





NET INTEREST SPREAD(4)





2.49 %






2.94 %

NET INTEREST INCOME



$   80,684






$   76,680



NET INTEREST MARGIN(5)





2.72 %






3.10 %

(1)

Loan balances include both loans held in the Bank's portfolio and mortgage loans held for sale and are net of deferred origination fees and costs.  Non-accrual loans are included in total loan balances.

(2)

Includes federal funds sold, capital stock in the Federal Reserve Bank and Federal Home Loan Bank, and interest-bearing deposits at the Federal Reserve Bank and the Federal Home Loan Bank.

(3)

Includes repurchase agreements.

(4)

Represents the average rate earned on interest-earning assets minus the average rate paid on interest-bearing liabilities.

(5)

Represents net interest income (annualized) divided by total average earning assets.

(6)

Interest income and rates include the effects of tax-equivalent adjustments to adjust tax-exempt interest income on tax-exempt loans and investment securities to a fully taxable basis.

(7)

Average balances are average daily balances.

FRANKLIN FINANCIAL NETWORK, INC.

SUMMARY QUARTERLY CONSOLIDATED FINANCIAL DATA (UNAUDITED)

(Amounts in thousands, except per share data and percentages)



As of and for the three months ended



Sept 30,
2018

Jun 30,
2018

Mar 31,
2018

Dec 31,
2017

Sept 30,
2017


Income Statement Data ($):







  Interest income

43,717

42,136

38,047

35,121

33,780


  Interest expense

17,155

15,231

12,931

10,513

9,454


  Net interest income

26,562

26,905

25,116

24,608

24,326


  Provision for loan losses

136

570

573

1,295

590


  Noninterest income

3,442

4,147

3,456

3,264

3,569


  Noninterest expense

18,251

18,050

15,488

15,987

15,278


  Net income before taxes

11,617

12,432

12,511

10,590

12,027


  Income tax expense

1,068

2,263

2,459

8,188

3,138


  Net income

10,549

10,169

10,052

2,402

8,889


  Earnings before interest and taxes

28,722

27,663

25,442

21,103

21,481


  Net income available to common shareholders

10,549

10,161

10,052

2,394

8,889


  Weighted average diluted common shares

15,077,291

14,981,440

13,766,394

13,767,949

13,773,539


  Earnings per share, basic

0.73

0.71

0.76

0.18

0.67


  Earnings per share, diluted

0.70

0.68

0.73

0.17

0.65


Profitability (%)







  Return on average assets

1.01

0.98

1.03

0.26

1.03


  Return on average equity

11.91

11.99

13.60

3.13

11.83


  Return on average tangible common equity(4)

12.61

12.72

14.07

3.22

12.26


  Efficiency ratio(4)

60.83

58.13

54.21

57.36

54.77


  Net interest margin(1)

2.70

2.74

2.71

2.92

3.05


Balance Sheet Data ($):







  Loans (including HFS)

2,564,684

2,488,862

2,322,889

2,268,632

2,127,753


  Loan loss reserve

22,479

22,341

21,738

21,247

19,944


  Cash

144,660

176,870

246,164

251,543

155,842


  Securities

1,319,774

1,357,918

1,399,801

1,214,737

1,198,049


  Goodwill

18,176

18,176

9,124

9,124

9,124


  Intangible assets (Sum of core deposit intangible and SBA servicing rights)

1,151

1,323

950

1,057

1,170


  Assets

4,167,813

4,165,238

4,083,663

3,843,526

3,565,278


  Deposits

3,371,550

3,398,025

3,355,153

3,167,228

2,824,825


  Liabilities

3,811,636

3,817,076

3,778,798

3,538,873

3,261,581


  Total equity

356,177

348,162

304,865

304,653

303,697


  Common equity

356,074

348,059

304,762

304,550

303,594


  Tangible common shareholders' equity(4)

336,747

328,560

294,688

294,369

293,300


Asset Quality (%)







  Nonperforming loans / total loans(2)

0.16

0.14

0.15

0.13

0.14


  Nonperforming assets / (total loans(2) + foreclosed assets)

0.23

0.21

0.22

0.20

0.21


  Loan loss reserve / total loans(2)

0.88

0.90

0.94

0.94

0.94


  Net charge-offs (recoveries) / average loans

0.00

(0.0)

0.01

0.00

(0.13 )


Capital (%)







  Tangible common shareholders' equity to tangible assets(4)

8.12

7.93

7.23

7.68

8.25


  Leverage ratio(3)

8.70

8.31

7.80

8.25

8.58


  Common Equity Tier 1 ratio(3)

12.24

12.14

11.45

11.37

11.58


  Tier 1 risk-based capital ratio(3)

12.24

12.14

11.45

11.37

11.58


  Total risk-based capital ratio(3)

15.02

14.98

14.42

14.40

14.68

(1)

Net interest margins shown in the table above include tax-equivalent adjustments to adjust interest income on tax-exempt loans and tax-exempt investment securities to a fully taxable basis.

(2)

Total loans in this ratio exclude loans held for sale.

(3)

Capital ratios come from the Company's regulatory filings with the Board of Governors of the Federal Reserve System, and for September 30, 2018 the ratios are estimates since the Company's quarterly regulatory reports have not yet been filed.

(4)

See Non-GAAP table in the pages that follow.

GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

Some of the financial data included in this earnings release and our selected historical consolidated financial information are not measures of financial performance recognized by GAAP. Our management uses these non-GAAP financial measures in its analysis of our performance:

  • "Common shareholders' equity" is defined as total shareholders' equity at end of period less the liquidation preference value of the preferred stock;
  • "Tangible common shareholders' equity" is common shareholders' equity less goodwill and other intangible assets;
  • Total tangible assets" is defined as total assets less goodwill and other intangible assets;
  • "Other intangible assets" is defined as the sum of core deposit intangible and SBA servicing rights;
  • "Tangible book value per share" is defined as tangible common shareholders' equity divided by total common shares outstanding. This measure is important to investors interested in changes from period-to-period in book value per share exclusive of changes in intangible assets;
  • "Tangible common shareholders' equity ratio" is defined as the ratio of tangible common shareholders' equity divided by total tangible assets. We believe that this measure is important to many investors in the marketplace who are interested in relative changes from period-to period in common equity and total assets, each exclusive of changes in intangible assets;
  • "Return on Average Tangible Common Equity" is defined as annualized net income available to common shareholders divided by average tangible common shareholders' equity; and
  • "Efficiency ratio" is defined as noninterest expenses divided by our operating revenue, which is equal to net interest income plus noninterest income.

We believe these non-GAAP financial measures provide useful information to management and investors that is supplementary to our financial condition, results of operations and cash flows computed in accordance with GAAP; however, we acknowledge that our non-GAAP financial measures have a number of limitations. As such, you should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other companies use. The following reconciliation table provides a more detailed analysis of these non-GAAP financial measures:

(Amounts in thousands, except share/per share data and percentages)

As of or for the Three Months Ended

Sept 30,

2018

Jun 30,

2018

Mar 31,

2018

Dec 31,

2017

Sept 30,

2017

Total shareholders' equity

$    356,074

$    348,059

$    304,762

$    304,550

$    303,594

Less: Preferred stock

Total common shareholders' equity

356,074

348,059

304,762

304,550

303,594

Common shares outstanding

14,525,351

14,480,240

13,258,142

13,237,128

13,209,055

Book value per share

$        24.51

$        24.04

$        22.99

$        23.01

$        22.98

Total common shareholders' equity

$    356,074

$    348,059

$    304,762

$    304,550

$    303,594

Less: Goodwill and other intangible assets

19,327

19,499

10,074

10,181

10,294

Tangible common shareholders' equity

336,747

328,560

294,688

294,369

293,300

Common shares outstanding

14,525,351

14,480,240

13,258,142

13,237,128

13,209,055

Tangible book value per share

$        23.18

$        22.69

$        22.23

$        22.24

$        22.20







Tangible common shareholders' equity

$   336,747

$    328,560

$   294,688

$    294,369

$    293,300

Divided by: tangible assets






Total assets

4,167,813

4,165,238

4,083,663

3,844,356

3,565,278

Less: Goodwill and other intangible assets

19,327

19,499

10,074

10,181

10,294

Tangible assets

4,148,486

4,145,739

4,073,589

3,834,175

3,554,984

Tangible common shareholders' equity to tangible assets

8.12 %

7.93 %

7.23 %

7.68 %

8.25 %







Average total common shareholders' equity

$   351,293

$   340,175

$   299,840

$   304,847

$   298,088

Less: Average Preferred stock

Less: Average Goodwill and other intangible assets

19,433

19,860

10,136

10,247

10,321

Average tangible common shareholders' equity

331,860

320,315

289,704

294,600

287,767







Net income available to common shareholders

10,549

10,161

10,052

2,394

8,889

Average tangible common shareholders' equity

331,860

320,315

289,704

294,600

287,767

Return on average tangible common shareholders' equity

12.61%

12.72 %

14.07 %

3.22 %

12.26 %







Efficiency Ratio:






Net interest income

$      26,562

$      26,905

$      25,116

$      24,608

$      24,326

Noninterest income

3,442

4,147

3,456

3,264

3,569

Operating revenue

30,004

31,052

28,572

27,872

27,895

Expense






Total noninterest expense

18,251

18,050

15,488

15,987

15,278

Efficiency ratio

60.83 %

58.13 %

54.21 %

57.36 %

54.77 %



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