BIRMINGHAM, Ala., Jan. 28, 2019 (GLOBE NEWSWIRE) -- First US Bancshares, Inc. (Nasdaq: FUSB) (the “Company”) today announced unaudited results as of and for the fourth quarter ended December 31, 2018.  Net income totaled $1.5 million, or $0.22 per diluted share, for the quarter, an improvement of $0.19 per diluted share compared to the third quarter of 2018.  The improvement in earnings resulted primarily from additional earning assets acquired by the Company through the previously announced acquisition of The Peoples Bank (“TPB”).  TPB was acquired by the Company and merged with the Company’s wholly-owned subsidiary, First US Bank (the “Bank”), on August 31, 2018.

“We are pleased to report significantly improved results due to our first full quarter of operations following the acquisition,” stated James F. House, President and CEO of the Company.  “The fourth quarter was very active for our institution as we continued to integrate our banking teams and completed conversion of the assets and liabilities of The Peoples Bank into our core operating system.  We are excited as we move into 2019 with a larger and more diverse platform from which to grow,” continued Mr. House. 

For the year ended December 31, 2018, the Company’s net income totaled $2.5 million, or $0.37 per diluted share, compared to a net loss of $0.4 million, or ($0.06) per diluted share, for the year ended December 31, 2017. The 2018 full year results were positively impacted by four months of earnings following the acquisition of TPB. A table summarizing the assets acquired and liabilities assumed from TPB, along with the purchase accounting adjustments, is included in the financial tables herein. The net loss during 2017 was due to a one-time, non-cash charge of $2.5 million that resulted from the adjustment of deferred tax assets upon the enactment of the Tax Cuts and Jobs Act of 2017.

Other Fourth Quarter Financial Highlights

Growth in Net Interest Income – Net interest income increased by $1.3 million, or 15.8%, in the fourth quarter of 2018 compared to the third quarter of 2018.  Compared to the fourth quarter of 2017, net interest income increased by $2.4 million, or 32.4%. Net yield on interest-earning assets increased to 5.27% during the fourth quarter of 2018, compared to 5.25% during the third quarter of 2018 and 5.09% during the fourth quarter of 2017.  Net income was enhanced by accretion of discounts and premiums on loans and time deposits acquired in the TPB transaction totaling $0.4 million during the fourth quarter of 2018, compared to $0.1 million during the previous quarter.

Improvement in Asset Quality – Non-performing assets, including loans in non-accrual status and other real estate owned (OREO), decreased to $4.3 million as of December 31, 2018, compared to $5.3 million as of September 30, 2018, primarily due to the resolution during the fourth quarter of certain impaired loans acquired from TPB.  As a percentage of total assets, non-performing assets totaled 0.54% as of December 31, 2018, compared to 0.66% of total assets as of September 30, 2018 and 0.96% of total assets as of December 31, 2017.

Provision for Loan and Lease Losses The provision for loan and lease losses was $0.5 million during the fourth quarter of 2018, compared to $0.8 million during the third quarter of 2018 and $0.5 million during the fourth quarter of 2017.  Provisioning decreased during the fourth quarter of 2018 in part due to reductions in loan volume at both the Bank and the Bank’s wholly-owned subsidiary, Acceptance Loan Company (“ALC”).  Net loans at the Bank decreased $2.3 million during the fourth quarter, while net loans at ALC decreased by $2.7 million.  The decrease in net loans at the Bank resulted primarily from the resolution of certain impaired loans acquired from TPB.  At ALC, loan volume reductions resulted primarily from seasonal impacts in ALC’s indirect lending portfolio. 

As of both December 31, 2018 and September 30, 2018, the allowance for loan and lease losses totaled $5.1 million, or 0.97% of gross loans outstanding, representing a decrease from 1.36% as of December 31, 2017. In accordance with generally accepted accounting principles for acquisition accounting, the loans acquired through the acquisition of TPB were recorded at fair value; accordingly, there was no allowance for loan losses associated with the acquired loan portfolio at the acquisition date.  Management continues to evaluate the need for an allowance on the acquired portfolio, factoring in the remaining net discount on the loans, which totaled $1.9 million, or 1.27% of gross purchased loans, as of December 31, 2018. The allowance for loan and lease losses as a percentage of gross loans outstanding less gross purchased loans was 1.36% as of December 31, 2018. 

Non-interest Income – Non-interest income totaled $1.2 million during the fourth quarter of 2018, compared to $2.1 million during the third quarter of 2018 and $1.3 million during the fourth quarter of 2017. During the third quarter of 2018, the Bank generated $1.0 million in pre-tax gains on the settlement of derivative contracts that were not generated during the fourth quarter of 2018.  

Non-interest Expense – Non-interest expense totaled $8.4 million during the fourth quarter of 2018, compared to $9.1 million during the third quarter of 2018 and $7.4 million during the fourth quarter of 2017.  The decrease in expense compared to the third quarter of 2018 resulted primarily from a decrease in acquisition-related expenses of $1.3 million, offset in part by increases in salaries and employee benefits and other expenses that netted to increased expense of $0.6 million.  These increases were primarily the result of a full quarter of inclusion of TPB in operations.  Comparing the fourth quarter of 2018 to the fourth quarter of 2017, non-interest expense increased by $1.0 million, primarily the result of a $0.7 million increase in salaries and employee benefits expenses due to the addition of employees from TPB, as well as merit and routine cost of living salary increases for legacy employees of the Company. In addition, acquisition-related expenses and other non-interest expense led to an increase in non-interest expense of approximately $0.2 million, comparing the fourth quarter of 2018 to the fourth quarter of 2017.

Provision for Income Taxes – The provision for income taxes totaled $0.5 million during the fourth quarter of 2018, representing an effective tax rate of 24.1% for the quarter, compared to an effective tax rate of 52.8% for the third quarter of 2018. The tax provisioning during the third and fourth quarters of 2018 was impacted by the incurrence of acquisition-related expenses, a portion of which are non-deductible under IRS regulations. 

Cash Dividend – The Company declared a cash dividend of $0.02 per share on its common stock in the fourth quarter of 2018. This amount is consistent with the Company’s quarterly dividend declarations for the first, second and third quarters of 2018 and each quarter of 2017.

Regulatory Capital – As of December 31, 2018, the Bank’s common equity Tier 1 capital and Tier 1 risk-based capital ratios were each 12.62%.  Its total capital ratio was 13.53%, and its Tier 1 leverage ratio was 8.96%.  These ratios are lower than those reported prior to the TPB transaction due to changes in the composition of risk-weighted assets and tangible capital resulting from the acquisition.  However, throughout the fourth quarter of 2018 and as of December 31, 2018, the Bank continued to maintain capital ratios at higher levels than the ratios required to be considered a “well-capitalized” institution under applicable banking regulations.

About First US Bancshares, Inc.

First US Bancshares, Inc. is a bank holding company that operates banking offices in Alabama, Tennessee and Virginia through First US Bank.  In addition, the Company’s operations include Acceptance Loan Company, Inc., a consumer loan company, and FUSB Reinsurance, Inc., an underwriter of credit life and credit accident and health insurance policies sold to the Bank’s and ALC’s consumer loan customers. The Company files periodic reports with the U.S. Securities and Exchange Commission (the “SEC”). Copies of its filings may be obtained through the SEC’s website at www.sec.gov or at www.firstusbank.com. More information about the Company and the Bank may be obtained at www.firstusbank.com. The Company’s stock is traded on the Nasdaq Capital Market under the symbol “FUSB.”

Forward-Looking Statements

This press release contains forward-looking statements, as defined by federal securities laws. Statements contained in this press release that are not historical facts are forward-looking statements. These statements may address issues that involve significant risks, uncertainties, estimates and assumptions made by management. The Company undertakes no obligation to update these statements following the date of this press release, except as required by law. In addition, the Company, through its senior management, may make from time to time forward-looking public statements concerning the matters described herein. Such forward-looking statements are necessarily estimates reflecting the best judgment of the Company’s senior management based upon current information and involve a number of risks and uncertainties. Certain factors that could affect the accuracy of such forward-looking statements are identified in the public filings made by the Company with the SEC, and forward-looking statements contained in this press release or in other public statements of the Company or its senior management should be considered in light of those factors. Specifically, with respect to statements relating to the sufficiency of the allowance for loan and lease losses, loan demand, cash flows, growth and earnings potential and expansion, these factors include, but are not limited to, the rate of growth (or lack thereof) in the economy generally and in the Bank’s and ALC’s service areas, market conditions and investment returns, the availability of quality loans in the Bank’s and ALC’s service areas, the relative strength and weakness in the consumer and commercial credit sectors and in the real estate markets and collateral values. With respect to statements relating to the Company’s acquisition of TPB, these factors include, but are not limited to, difficulties, delays and unanticipated costs in integrating the organizations’ businesses or realized expected cost savings and other benefits; business disruptions as a result of the integration of the organizations, including possible loss of customers; diversion of management time to address acquisition-related issues; and changes in asset quality and credit risk as a result of the acquisition. There can be no assurance that such factors or other factors will not affect the accuracy of such forward-looking statements.

FIRST US BANCSHARES, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA – LINKED QUARTERS
(Dollars in Thousands, Except Per Share Data)

 Quarter Ended
 Year Ended
 2018
 2017 2018 2017
 December 
31,
 September 
30,
 June 
30,
 March 
31,
 December 
31,
 December 
31,
 December 
31,
                            
 (Unaudited)
 (Unaudited)
    
Results of Operations:                           
Interest income$11,177  $9,452  $8,390  $8,119  $8,087  $37,138  $31,100 
Interest expense 1,533   1,124   888   805   804   4,350   2,706 
                            
Net interest income 9,644   8,328   7,502   7,314   7,283   32,788   28,394 
Provision for loan and lease losses 473   789   702   658   523   2,622   1,987 
                            
Net interest income after provision for loan and lease losses 9,171   7,539   6,800   6,656   6,760   30,166   26,407 
Non-interest income 1,158   2,112   1,132   1,140   1,333   5,542   4,666 
Non-interest expense 8,382   9,142   7,492   7,301   7,359   32,317   28,449 
                            
Income (loss) before income taxes 1,947   509   440   495   734   3,391   2,624 
Provision for (benefit from) income taxes 470   269   81   81   2,600   901   3,035 
                            
Net income (loss)$1,477  $240  $359  $414  $(1,866) $2,490  $(411)
                            
Per Share Data:                           
Basic net income (loss) per share$0.23  $0.04  $0.06  $0.07  $(0.30) $0.40  $(0.07)
                            
Diluted net income (loss) per share$0.22  $0.03  $0.06  $0.06  $(0.29) $0.37  $(0.06)
                            
Dividends declared$0.02  $0.02  $0.02  $0.02  $0.02  $0.08  $0.08 
                            
                            
Key Measures (Period End):                           
Total assets$791,939  $802,595  $634,036  $627,319  $625,581    
Tangible assets 782,627   793,038   634,036   627,319   625,581    
Loans, net of allowance for loan losses 514,867   519,822   355,529   353,805   346,121    
Allowance for loan losses 5,055   5,116   4,952   4,829   4,774    
Investment securities, net 153,949   159,496   165,740   181,942   180,150    
Total deposits 704,725   715,761   531,428   525,273   517,079    
Short-term borrowings 527   192   10,366   10,298   15,594    
Long-term debt       10,000   10,000   10,000    
Total shareholders’ equity 79,437   77,470   75,634   75,525   76,208    
Tangible common equity 70,125   67,913   75,634   75,525   76,208    
Book value per common share 12.61   12.30   12.41   12.41   12.53    
Tangible book value per common share 11.13   10.79   12.41   12.41   12.53    
Key Ratios:       
Return on average assets (annualized) 0.74%  0.14%  0.23%  0.27%  (1.18%)  0.36%  (0.07%)
Return on average common equity (annualized) 7.49%  1.25%  1.91%  2.21%  (9.38%)  3.26%  (0.52%)
Return on average tangible common equity (annualized) 8.52%  1.30%  1.91%  2.21%  (9.38%)  3.40%  (0.52%)
Net yield on interest-earning assets 5.27%  5.25%  5.31%  5.24%  5.09%  5.27%  5.08%
Efficiency ratio 77.6%  87.6%  86.8%  86.4%  85.4%  84.3%  86.1%
Net loans to deposits 73.1%  72.6%  66.9%  67.4%  66.9%   
Net loans to assets 65.0%  64.8%  56.1%  56.4%  55.3%   
Tangible common equity to tangible assets 8.96%  8.56%  11.93%  12.04%  12.18%   
Allowance for loan losses as % of loans 0.97%  0.97%  1.37%  1.35%  1.36%   
Nonperforming assets as % of total assets 0.54%  0.66%  0.61%  0.86%  0.96%   
        

FIRST US BANCSHARES, INC. AND SUBSIDIARIES
NET YIELD ON INTEREST-EARNING ASSETS
(Dollars in Thousands)

 Three Months Ended Three Months Ended
 December 31, 2018
 December 31, 2017
 Average 
Balance
InterestAnnualized
Yield/ 
Rate %
 Average 
Balance
InterestAnnualized
Yield/ 
Rate %
ASSETS       
Interest-earning assets:       
Loans – Bank$419,527$5,6065.30% $252,364$2,7224.28%
Loans – ALC 104,353 4,47817.02%  92,394 4,34618.66%
Taxable investment securities 155,066 8182.09%  177,115 8281.85%
Non-taxable investment securities 2,203 162.88%  6,474 593.62%
Federal funds sold 6,726 382.24%  5,054 201.57%
Interest-bearing deposits in banks 38,121 2212.30%  34,461 1121.29%
Total interest-earning assets 725,996 11,1776.11%  567,862 8,0875.65%
Non-interest-earning assets:       
Other assets 68,528    59,340  
Total$794,524   $627,202  
        
        
LIABILITIES AND
SHAREHOLDERS’ EQUITY
       
Interest-bearing liabilities:       
Demand deposits$165,743$2050.49% $164,432$1680.41%
Savings deposits 167,207 4070.97%  84,553 670.32%
Time deposits 265,696 9201.37%  184,175 4590.99%
Borrowings 521 10.76%  27,490 1101.59%
Total interest-bearing liabilities 599,167 1,5331.02%  460,650 8040.69%
Non-interest-bearing liabilities:       
Demand deposits 108,469    80,487  
Other liabilities 8,613    7,105  
Shareholders’ equity 78,275    78,960  
Total$794,524   $627,202  
        
Net interest income $9,644   $7,283 
Net yield on interest-earning assets  5.27%   5.09%
        
        

FIRST US BANCSHARES, INC. AND SUBSIDIARIES
NET ASSETS ACQUIRED FROM THE PEOPLES BANK
AUGUST 31, 2018
(Dollars in Thousands)

         
 Acquired from
TPB
 Fair Value
Adjustments
 Fair Value as of
August 31, 2018
Assets Acquired:     
Cash and cash equivalents$3,085  $  $3,085
Investment securities 5,977      5,977
Federal Home Loan Bank stock, at cost 565      565
Loans 156,772   (2,195)  154,577
Allowance for loan losses (1,702)  1,702  
Net loans 155,070   (493)  154,577
Premises and equipment, net 1,198   17   1,215
Other real estate owned 85      85
Other assets 551   (328)  223
Core deposit intangible    2,048   2,048
Total assets acquired$166,531  $1,244  $167,775
      
Liabilities Assumed:     
Deposits 140,033   342   140,375
Short-term borrowings 10,000      10,000
Other liabilities 437      437
Total liabilities assumed 150,470   342   150,812
      
Shareholders’ Equity Assumed:     
Common stock 1,027   (1,027) 
Surplus 5,280   (5,280) 
Accumulated other comprehensive income, net of tax 17   (17) 
Retained earnings 9,737   (9,737) 
Total shareholders’ equity assumed 16,061   (16,061) 
      
Total liabilities and shareholders’ equity assumed$166,531  $(15,719) $150,812
       
       
 Net assets acquired $16,963
 Purchase price  24,398
 Goodwill $7,435
     

Fair Value Adjustments and Resulting Changes to Goodwill

The acquisition of TPB was accounted for using the purchase method of accounting in accordance with ASC 805, Business Combinations. Assets acquired, liabilities assumed and consideration exchanged were recorded at their respective acquisition date fair values. Due to the significant judgments regarding the methods and assumptions used in the determination, fair values are preliminary and subject to refinement for up to one year after the closing date of the acquisition as additional information regarding the closing date fair values becomes available. During the fourth quarter of 2018, certain refinements were made to loan and deferred tax valuations that resulted in a net reduction to goodwill of approximately $0.1 million.

FIRST US BANCSHARES, INC. AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands, Except Per Share Data)

 December
31,
 December
31,
 2018 2017
 (Unaudited)  
ASSETS
Cash and due from banks$9,796  $7,577 
Interest-bearing deposits in banks 39,803   19,547 
Total cash and cash equivalents 49,599   27,124 
Federal funds sold 8,354   15,000 
Investment securities available-for-sale, at fair value 132,487   153,871 
Investment securities held-to-maturity, at amortized cost 21,462   26,279 
Federal Home Loan Bank stock, at cost 703   1,609 
Loans and leases, net of allowance for loan and lease losses of $5,055 and $4,774, respectively 514,867   346,121 
Premises and equipment, net 27,643   26,433 
Cash surrender value of bank-owned life insurance 15,237   14,923 
Accrued interest receivable 2,816   2,057 
Goodwill and core deposit intangible, net 9,312    
Other real estate owned 1,505   3,792 
Other assets 7,954   8,372 
Total assets$791,939  $625,581 
    
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits$704,725  $517,079 
Accrued interest expense 424   381 
Other liabilities 6,826   6,319 
Short-term borrowings 527   15,594 
Long-term debt    10,000 
Total liabilities 712,502   549,373 
    
Shareholders’ equity:   
Common stock, par value $0.01 per share, 10,000,000 shares authorized;   
7,562,264 and 7,345,946 shares issued, respectively; 6,298,062 and 6,081,744 shares outstanding, respectively 75   73 
Surplus 13,496   10,755 
Accumulated other comprehensive income (loss), net of tax (2,377)  (868)
Retained earnings 88,668   86,673 
Less treasury stock: 1,264,202 shares at cost (20,414)  (20,414)
Noncontrolling interest (11)  (11)
Total shareholders’ equity 79,437   76,208 
    
Total liabilities and shareholders’ equity$791,939  $625,581 
    

FIRST US BANCSHARES, INC. AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Data)

 Three Months Ended Year Ended
 December 31, December 31,
 2018
 2017 2018  2017
 (Unaudited)
  (Unaudited)
    
Interest income:               
Interest and fees on loans$10,084  $7,068  $32,899  $26,996 
Interest on investment securities 1,093   1,019   4,239   4,104 
Total interest income 11,177   8,087   37,138   31,100 
                
Interest expense:               
Interest on deposits 1,532   694   4,151   2,407 
Interest on borrowings 1   110   199   299 
Total interest expense 1,533   804   4,350   2,706 
                
Net interest income 9,644   7,283   32,788   28,394 
                
Provision for loan and lease losses 473   523   2,622   1,987 
                
Net interest income after provision for loan and lease losses 9,171   6,760   30,166   26,407 
                
Non-interest income:               
Service and other charges on deposit accounts 495   474   1,895   1,880 
Credit insurance income 117   256   633   715 
Net gain on sales and prepayments of investment securities 13   1   118   229 
Net gain on settlement of derivative contracts       981    
Mortgage fees from secondary market 118   64   507   211 
Other income, net 415   538   1,408   1,631 
Total non-interest income 1,158   1,333   5,542   4,666 
                
Non-interest expense:               
Salaries and employee benefits 5,028   4,326   18,771   17,374 
Net occupancy and equipment 864   888   3,609   3,164 
Computer services 363   348   1,300   1,384 
Fees for professional services 250   163   1,031   813 
Acquisition expenses 149      1,641    
Other expense 1,728   1,634   5,965   5,714 
Total non-interest expense 8,382   7,359   32,317   28,449 
                
Income before income taxes 1,947   734   3,391   2,624 
Provision for income taxes 470   2,600   901   3,035 
Net income$1,477  $(1,866) $2,490  $(411)
Basic net income per share$0.23  $(0.30) $0.40  $(0.07)
Diluted net income per share$0.22  $(0.29) $0.37  $(0.06)
Dividends per share$0.02  $0.02  $0.08  $0.08 
                

Non-GAAP Financial Measures

In addition to the financial results presented in this press release that have been prepared in accordance with U.S. generally accepted accounting principles (GAAP), the Company’s management believes that certain non-GAAP financial measures and ratios are beneficial to the reader.  These non-GAAP measures have been provided to enhance overall understanding of the Company’s current financial performance and position. Management believes that these presentations provide meaningful comparisons of financial performance and position in various periods and can be used as a supplement to the GAAP-based measures presented in this press release. The non-GAAP financial results presented should not be considered a substitute for the GAAP-based results.  Management believes that both GAAP measures of the Company’s financial performance and the respective non-GAAP measures should be considered together.

The non-GAAP measures and ratios that have been provided in this press release include measures of operating income, tangible assets and equity, and certain ratios that include tangible assets and equity.  Discussion of these measures and ratios is included below, along with reconciliations of each relevant non-GAAP measure to GAAP-based measures included in the financial statements previously presented in the press release.

Operating Income
Operating income is a non-GAAP financial measure that adjusts net income for the following non-operating items:

  • Provision for (benefit from) income taxes
  • Gains (losses) on sales and prepayments of investment securities
  • Gains (losses) on settlements of derivative contracts
  • Gains (losses) on sales of foreclosed real estate
  • Provision for loan and lease losses
  • Acquisition expenses
  • Accretion of discount on purchased loans
  • Accretion of premium on purchased time deposits
  • Amortization of core deposit intangible asset

A reconciliation of the Company’s net income to its operating income for each of the most recent five quarters as of December 31, 2018 is set forth below.  A limitation of the non-GAAP financial measures presented below is that the adjustments include gains, losses or expenses that the Company does not expect to continue to recognize at a consistent level in the future; the adjustments of these items should not be construed as an inference that these gains, losses or expenses are unusual, infrequent or nonrecurring.

 Quarter Ended
(Dollars in Thousands)
 2018
 2017
 December
31,
 September
30,
 June
30,

 March
31,
 December
31,
                    
 (Unaudited)
                    
Net income (loss)$1,477  $240  $359  $414  $(1,866)
Add back:                   
Provision for (benefit from) income taxes 470   269   81   81   2,600 
                    
Income before income taxes 1,947   509   440   495   734 
Add back (subtract) adjustments to net interest income:                   
Accretion of discount on purchased loans (249)  (77)         
Accretion of premium on purchased time deposits (129)  (59)         
                    
Net adjustments to net interest income (378)  (136)         
Add back (subtract) non-interest adjustments:                   
Net gain on sales and prepayments of investment securities (13)     (102)  (3)  (1)
Net gain on settlement of derivative contracts    (981)         
Net loss (gain) on sales of foreclosed real estate 65   (79)  152   (51)  27 
Provision for loan and lease losses 473   789   702   658   523 
Amortization of core deposit intangible 128   43          
Acquisition expenses 149   1,492          
                    
Net non-interest adjustments 802   1,264   752   604   549 
                    
Operating income$2,371  $1,637  $1,192  $1,099  $1,283 
                    

Tangible Balances and Measures

In addition to capital ratios defined by GAAP and banking regulators, the Company utilizes various tangible common equity measures when evaluating capital utilization and adequacy. These measures, which are presented in the financial tables in this press release, may also include calculations of tangible assets. As defined by the Company, tangible common equity represents shareholders’ equity less goodwill and identifiable intangible assets, while tangible assets represent total assets less goodwill and identifiable intangible assets.  

Management believes that the measures of tangible equity are important because they reflect the level of capital available to withstand unexpected market conditions.  In addition, presentation of these measures allows readers to compare certain aspects of the Company’s capitalization to other organizations.  In management’s experience, many stock analysts use tangible common equity measures in conjunction with more traditional bank capital ratios to compare capital adequacy of banking organizations with significant amounts of goodwill or other intangible assets that typically result from the use of the purchase accounting method in accounting for mergers and acquisitions.

These calculations are intended to complement the capital ratios defined by GAAP and banking regulators.  Because GAAP does not include these measures, management believes that there are no comparable GAAP financial measures to the tangible common equity ratios that the Company utilizes.  Despite the importance of these measures to the Company, there are no standardized definitions for the measures, and, therefore, the Company’s calculations may not be comparable with other organizations.  In addition, there may be limits to the usefulness of these measures to investors. Accordingly, management encourages readers to consider the Company’s consolidated financial statements in their entirety and not to rely on any single financial measure.  The table below reconciles the Company’s calculations of these measures to amounts reported in accordance with GAAP.

    Quarter Ended
 Twelve Months Ended
    2018
 2017 2018 2017
    December
31,
 September
30,
 June
30,
 March
31,
 December
31,
 December
31,
 December
31,
                               
    (Dollars in Thousands, Except Per Share Data)
    (Unaudited)
                               
TANGIBLE BALANCES                              
Total assets   $791,939  $802,595  $634,036  $627,319  $625,581         
Less: Goodwill    7,435   7,552                  
Less: Core deposit intangible    1,877   2,005                  
                               
Tangible assets (a) $782,627  $793,038  $634,036  $627,319  $625,581         
                               
Total shareholders’ equity   $79,437  $77,470  $75,634  $75,525  $76,208         
Less: Goodwill    7,435   7,552                  
Less: Core deposit intangible    1,877   2,005                  
                               
Tangible common equity (b) $70,125  $67,913  $75,634  $75,525  $76,208         
                               
Average shareholders’ equity   $78,275  $76,303  $75,447  $75,824  $78,960  $76,468  $78,268 
Less: Average goodwill    7,551   2,517            2,548    
Less: Average core deposit intangible    1,960   676            659    
                               
Average tangible shareholders’ equity (c) $68,764  $73,110  $75,447  $75,824  $78,960  $73,261  $78,268 
                               
Net income (d) $1,477  $240  $359  $414  $(1,866) $2,490  $(411)
Common shares outstanding (e)  6,298   6,297   6,092   6,087   6,082         
                               
TANGIBLE MEASUREMENTS                              
Tangible book value per common share (b)/(e) $11.13  $10.79  $12.41  $12.41  $12.53         
                               
Tangible common equity to tangible assets (b)/(a)  8.96%  8.56%  11.93%  12.04%  12.18%        
Return on average tangible common equity (annualized) (1)  8.52%  1.30%  1.91%  2.21%  (9.38%)  3.40%  (0.52%)
                               

(1) Calculation = ((net income (d) / number of days in period) * number of days in year) / average tangible shareholders’ equity (c)

Thomas S. Elley
205-582-1200