•

Net income increased 67.58% to $1.7 million for the second quarter from $990,000 for the second quarter of 2017 and increased 84.64% to $3.2 million for the six months ended June 30, 2018 from $1.8 million for the six months ended June 30, 2017;  

•

Net loans increased $7.9 million or 1.59% for the second quarter compared with the first quarter of 2018 and increased $42.3 million or 9.13% when compared with the second quarter of 2017;

•

Net interest margin increased to 3.88% for the second quarter compared with 3.74% and 3.60% for the prior quarter and second quarter of 2017, respectively, and increased from 3.56% for the six months ended June 30, 2017 to 3.81% for the six months ended June 30, 2018;  

•

Return on average assets of 1.02% for the second quarter compared with 0.97% and 0.63% for the prior quarter and second quarter of 2017, respectively, and increased to 0.99% for the six months ended June 30, 2018 from 0.57% for the six months ended June 30, 2017;

•

Return on average equity of 11.66% for the second quarter compared with 11.44% and 7.10% for the prior quarter and second quarter of 2017, respectively, and increased to 11.55% for the six months ended June 30, 2018 from 6.40% for the six months ended June 30, 2017;

•

Noninterest expense as a percentage of total assets increased slightly to 0.85% for the second quarter compared with 0.80% for the prior quarter and second quarter of 2017.  For the six months ended June 30, 2018 and 2017, noninterest expense as a percentage of total assets was 1.70% and 1.63%, respectively; and

•

Regulatory capital remains strong with ratios exceeding the well capitalized thresholds in all categories.  

•

Increasing profitability through net interest income and maintaining a strong net interest margin by focusing on competitive loan and deposit pricing within the markets we serve.

•

Growing the balance sheet through new and existing loan and retail products and services.  Our private banking initiative, online consumer lending platform and retail deposit products offer our customers valuable financial services that will enhance our product offerings and contribute to the growth of the Company.      

•

Analyzing opportunities for noninterest income through our established Wealth Management, Retail and Mortgage Banking teams.  Our Wealth Management Services division was founded in 1919 and provides trust, estate, brokerage, financial planning and private banking services, while one of our newest initiatives, Mortgage Banking, originates residential loans that are sold on the secondary market.  Our ancillary deposit services, which are tied to existing retail products, provide our customers with financial convenience at competitive rates.       

•

Managing and controlling noninterest expenses within established growth parameters.  Management continues to focus on expense controls and has maintained quarterly noninterest expense as a percentage of assets at a rate below total asset growth for the year.       

At or For the Quarter Ended,

(Dollars in thousands, except per share data)

June 30,

2018

March 31,

2018

December 31,

2017

September 30,

2017

June 30,

2017

EARNINGS STATEMENT DATA:

Interest income

$

6,540

$

6,370

$

6,191

$

6,001

$

5,713

Interest expense

686

652

556

515

509

Net interest income

5,854

5,718

5,635

5,486

5,204

Provision for loan losses

12

300

125

110

235

Net interest income after provision for loan losses

5,842

5,418

5,510

5,376

4,969

Noninterest income

1,624

1,863

1,380

1,290

1,393

Noninterest expense

5,574

5,481

5,288

4,998

5,150

Income before income taxes

1,892

1,800

1,602

1,668

1,212

Income taxes

233

214

2,145

387

222

Net income (loss)

$

1,659

$

1,586

$

(543

)

$

1,281

$

990

PER SHARE DATA:

Net income (loss) per share, basic

$

0.44

$

0.42

$

(0.14

)

$

0.34

$

0.26

Net income (loss) per share, diluted

$

0.44

$

0.42

$

(0.14

)

$

0.34

$

0.26

Cash dividends

$

0.12

$

0.12

$

0.12

$

0.12

$

0.12

Weighted average shares outstanding, basic

3,773,739

3,768,197

3,762,677

3,765,359

3,769,201

Weighted average shares outstanding, diluted

3,783,159

3,777,114

3,772,700

3,773,813

3,778,532

Book value

$

15.29

$

15.01

$

14.92

$

15.20

$

14.93

BALANCE SHEET DATA:

Total assets

$

651,529

$

682,120

$

644,613

$

631,717

$

646,265

Loans, net

$

505,623

$

497,691

$

497,705

$

485,326

$

463,309

Securities, including restricted investments

$

75,018

$

72,520

$

73,699

$

68,682

$

65,539

Deposits

$

565,835

$

577,241

$

570,023

$

556,209

$

571,902

Transaction accounts

(demand & interest checking accounts)

$

345,063

$

351,485

$

361,246

$

348,005

$

359,725

Shareholders' equity

$

57,698

$

56,666

$

56,142

$

57,185

$

56,259

PERFORMANCE RATIOS:

Net interest margin ⁽¹⁾

3.88

%

3.74

%

3.75

%

3.75

%

3.60

%

Return (loss) on average assets

1.02

%

0.97

%

(0.33

)%

0.80

%

0.63

%

Return (loss) on average equity

11.66

%

11.44

%

(3.77

)%

8.96

%

7.10

%

Efficiency ratio ⁽²⁾

77.16

%

77.24

%

74.35

%

72.62

%

76.81

%

Yield on earning assets

4.33

%

4.16

%

4.12

%

4.09

%

3.94

%

Cost of interest bearing liabilities

0.58

%

0.54

%

0.47

%

0.45

%

0.45

%

⁽¹⁾

Net interest margin is calculated as fully taxable equivalent net interest income divided by average earning assets and represents the Company's net yield on its earning assets.

⁽²⁾

Efficiency ratio is computed by dividing noninterest expense by the sum of fully taxable equivalent net interest income and noninterest income, net of securities gains or losses.

At or For the Quarter Ended,

(Dollars in thousands, except for ratios)

June 30,

2018

March 31,

2018

December 31,

2017

September 30,

2017

June 30,

2017

ASSET QUALITY RATIOS:

Nonaccrual loans

$

2,661

$

3,688

$

3,180

$

2,431

$

2,322

Restructured loans still accruing

3,442

3,744

4,182

4,361

4,506

Student loans greater than 90 days past due

and accruing

1,176

1,330

1,616

2,129

2,397

Loans greater than 90 days past due

and accruing

489

772

49

565

104

Total nonperforming loans

7,768

9,534

9,027

9,486

9,329

Other real estate owned, net

1,356

1,356

1,356

1,356

1,356

Total nonperforming assets

$

9,124

$

10,890

$

10,383

$

10,842

$

10,685

Allowance for loan losses

$

4,978

$

5,400

$

5,094

$

4,428

$

4,279

Allowance for loan losses to total loans

0.98

%

1.07

%

1.01

%

0.90

%

0.92

%

Nonaccrual loans to total loans

0.52

%

0.73

%

0.63

%

0.50

%

0.50

%

Allowance for loan losses to

nonperforming loans

64.08

%

56.64

%

56.43

%

46.68

%

45.87

%

Nonperforming loans to total loans

1.52

%

1.90

%

1.80

%

1.94

%

2.00

%

Nonperforming assets to total assets

1.40

%

1.60

%

1.61

%

1.72

%

1.65

%

Net loan charge-offs (recoveries)

$

434

$

(7

)

$

(541

)

$

(39

)

$

434

Net loan charge-offs (recoveries) to

average loans

0.09

%

—

(0.11

)%

(0.01

)%

0.09

%

(Dollars in thousands, except per share data)

For the Six Months Ended,

June 30, 2018

June 30, 2017

EARNINGS STATEMENT DATA:

Interest income

$

12,910

$

11,128

Interest expense

1,338

978

Net interest income

11,572

10,150

Provision for loan losses

312

285

Net interest income after provision for loan losses

11,260

9,865

Noninterest income

3,487

2,805

Noninterest expense

11,055

10,565

Income before income taxes

3,692

2,105

Income taxes

447

347

Net income

$

3,245

$

1,758

PER SHARE DATA:

Net income per share, basic

$

0.86

$

0.47

Net income per share, diluted

$

0.86

$

0.47

Cash dividends

$

0.24

$

0.24

Weighted average shares outstanding, basic

3,770,983

3,765,372

Weighted average shares outstanding, diluted

3,779,973

3,773,625

PERFORMANCE RATIOS:

Net interest margin ⁽¹⁾

3.81

%

3.56

%

Return on average assets

0.99

%

0.57

%

Return on average equity

11.55

%

6.40

%

Efficiency ratio ⁽²⁾

77.20

%

80.32

%

Net loan charge-offs

$

427

$

531

Net loan charge-offs to average loans

0.08

%

0.11

%

⁽¹⁾

Net interest margin is calculated as fully taxable equivalent net interest income divided by average earning assets and represents the Company's net yield on its earning assets.

⁽²⁾

Efficiency ratio is computed by dividing noninterest expense by the sum of fully taxable equivalent net interest income and noninterest income, net of securities gains or losses.