Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - FIRST NATIONAL CORP /VA/ | fncform8k05042015.htm |
Exhibit 99.1
Contact:
|
Scott C. Harvard
|
M. Shane Bell
|
||||
|
President and CEO
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Executive Vice President and CFO
|
||||
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(540) 465-9121
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(540) 465-9121
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sharvard@fbvirginia.com
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sbell@fbvirginia.com
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News Release
April 30, 2015
First National Corporation Announces Completion of Six Branch Acquisition and First Quarter Earnings
Strasburg, Virginia (April 30, 2015) --- First National Corporation (the “Company”) (OTCQB: FXNC), the parent company of First Bank (the “Bank”), announced the completion of the acquisition of certain assets and the assumption of $188 million in deposit liabilities from six branch banking operations of Bank of America on April 17, 2015. The Company also reported earnings for the first quarter of 2015. Net income for the quarter totaled $544 thousand, and earnings per basic and diluted share totaled $0.04 for the three months ended March 31, 2015. Earnings for the quarter included the impact of one-time acquisition expenses, as well as increased expenses related to higher staffing levels to support the 35% balance sheet expansion.
Operating Highlights for the First Quarter
|
·
|
Loans increased by $20.1 million during the quarter, largest increase in five years.
|
|
·
|
Net interest income increased by 5% to $4.6 million
|
|
·
|
Net interest margin increased to 3.96%
|
|
·
|
Nonperforming assets decreased by 38%
|
|
·
|
Return on average assets was 0.43%
|
|
·
|
Book value per common share increased from $9.17 to $9.31 during the quarter
|
“During the first quarter, our banking company made significant strides executing on our strategy to build a regional bank that serves small and mid-sized communities in Virginia that value personal service combined with technology driven delivery systems,” said Scott C. Harvard, President and CEO of the Company and the Bank. Harvard continued, “We have successfully added commercial lenders across the system, resulting in more loan growth than we have seen in years. The mortgage division began to achieve higher production levels during the period and we plan to leverage the recent acquisition by integrating First Mortgage with the new branch network. We are pleased with the progress and prospects for First Bank and First National Corporation.”
First Quarter Earnings
Net income totaled $544 thousand for the first quarter of 2015 compared to $1.1 million for the same period of 2014. The return on average assets was 0.43% for the quarter compared to 0.88% for the same quarter one year ago, and the return on average equity was 3.67% compared to 8.53%. Net income was impacted by one-time acquisition expenses that totaled $419 thousand, as well as increased expenses from higher staffing levels needed to support the growth strategy of the Company and the larger balance sheet after the acquisition.
Net interest income increased $206 thousand to $4.6 million for the first quarter compared to $4.4 million for the same period one year ago, which was driven by loan balances that were $39.0 million higher than one year ago. The Bank exceeded its loan growth plans, which resulted in a 24 basis point increase in its net interest margin to 3.96%, compared to 3.72% for the same period of 2014. The higher net interest income and net interest margin was a direct result of increased production and growth of the Bank’s loan portfolio. Noninterest income totaled $1.6 million for the period and was supported by continued revenue growth from the Bank’s Wealth Management division.
Noninterest expense increased to $5.5 million for the quarter compared to $4.6 million for the same period in the prior year. The additional expenses were primarily a result of the execution of the Company’s growth strategy, which included the expansion of its banking franchise into new markets and the creation of new business lines to increase and diversify revenue. Over the last twelve months, the Bank began diversifying revenue through the creation and operation of the First Mortgage division, with new office locations opened in the Cities of Harrisonburg and Staunton, Virginia. The Bank also recently expanded into new markets through the purchase of six bank branch operations located throughout the Shenandoah Valley and the central Virginia regions. Acquisition expenses related to the branch expansion totaled $419 thousand during the three months ended March 31, 2015, which included costs for supplies, data processing and postage. In addition to these one-time costs, salaries and employee benefit costs increased as it expanded staffing levels before completion of the branch acquisition to accommodate the larger balance sheet and organization.
1
The Bank did not record a provision for or recovery of loan losses during the first quarter, which resulted in a total allowance for loan losses of $6.8 million, or 1.70% of total loans, at March 31, 2015. Although total loans increased by $20.1 million during the quarter, no provision for loan loss was required as the general reserve requirement of the allowance for loan losses decreased and the Bank experienced net loan recoveries during the period. This compared to a recovery of loan losses of $200 thousand and an allowance for loan losses of $10.3 million, or 2.86% of total loans, at the end of the same quarter in 2014.
Balance Sheet
Assets increased by $12.2 million to $530.4 million at March 31, 2015. Gross loans increased by $20.1 million to $398.5 million during the quarter, which represented over 21% annualized growth. Loan balances grew faster in the first quarter of 2015 than any other quarter over the last five years. Growth of the loan portfolio was led by residential real estate loans that increased $9.1 million, followed by multi-family and commercial real estate loans that increased by $7.2 million. Securities increased $7.6 million, or 9%, to $90.9 million. The Company’s interest-bearing deposits in correspondent banks decreased while loan and securities balances increased. This favorable change in the earning asset mix of the balance sheet supported the net interest margin of 3.96%.
Total deposits decreased by $5.6 million to $438.8 million at March 31, 2015. Noninterest-bearing demand deposits increased $4.9 million, while savings and interest-bearing demand deposits and time deposits decreased $5.7 million and $4.8 million, respectively, during the first quarter. The decrease in certain deposit categories during the quarter resulted from strategic balance sheet decisions in anticipation of the branch acquisition. Time deposit balances, the deposit category with the highest cost of funds, was allowed to continue decreasing with the expectation that the branch acquisition would allow the Bank to further improve its funding mix and lower its costs of funds. The Bank temporarily increased other borrowings to $15.0 million to support asset growth and the decrease in time deposits during the quarter, until completion of the branch acquisition. As a result of the changes in the funding mix, the Company experienced a lower cost of funds from higher levels of non-interest bearing deposits and other borrowings, and lower levels of time deposits when compared to the most recent linked quarter end period. These favorable changes in the funding mix also supported the net interest margin during the quarter.
Capital and Asset Quality
Asset quality continued to improve as substandard loans decreased by $6.2 million or 28%, to $15.7 million at the end of the first quarter compared to $21.9 million for the same quarter one year ago. Nonperforming assets, which includes other real estate owned, decreased 38% to $9.1 million at March 31, 2015 compared to $14.7 million one year ago. Other real estate owned decreased to $1.9 million from $3.0 million for the same period one year ago.
Total shareholders’ equity increased $5.3 million to $60.3 million at March 31, 2015, compared to $55.0 million one year ago. The book value per common share was $9.31 at the end of the first quarter. All regulatory capital ratios were higher than the same period one year ago. The total risk-based capital ratio was 19.50% at March 31, 2015.
About the Company
First National Corporation, headquartered in Strasburg, Virginia, is the bank holding company of First Bank, a community bank that first opened for business in 1907. The Bank offers loan, deposit, and wealth management products and services from 18 office locations located throughout the Shenandoah Valley and central regions of Virginia. Banking services are also accessed from the Bank’s website, www.fbvirginia.com, and from a network of ATMs located throughout its market area. The Bank operates divisions under the names First Mortgage and First Bank Wealth Management. First Bank also owns First Bank Financial Services, Inc., which invests in entities that provide investment services and title insurance.
Caution about Forward Looking Statements
Certain information contained in this discussion may include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements relate to the Company’s future operations and are generally identified by phrases such as “the Company expects,” “the Company believes” or words of similar import. Although the Company believes that its expectations with respect to the forward-looking statements are based upon reliable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results, performance or achievements of the Company will not differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. For details on factors that could affect expectations, see the risk factors and other cautionary language included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, and other filings with the Securities and Exchange Commission.
2
FIRST NATIONAL CORPORATION
Quarterly Performance Summary
(in thousands, except share and per share data)
|
(unaudited)
For the Quarter Ended
|
||||||||||
|
Income Statement
|
March 31, 2015
|
December 31, 2014
|
September 30, 2014
|
June 30, 2014
|
March 31, 2014
|
|||||
|
Interest income
|
||||||||||
|
Interest and fees on loans
|
$ 4,540
|
$ 4,623
|
$ 4,536
|
$ 4,403
|
$ 4,215
|
|||||
|
Interest on deposits in banks
|
5
|
5
|
3
|
14
|
16
|
|||||
|
Interest on securities available for sale
|
422
|
566
|
622
|
657
|
657
|
|||||
|
Dividends on restricted securities
|
21
|
20
|
20
|
21
|
21
|
|||||
|
Total interest income
|
$ 4,988
|
$ 5,214
|
$ 5,181
|
$ 5,095
|
$ 4,909
|
|||||
|
Interest expense
|
||||||||||
|
Interest on deposits
|
$ 300
|
$ 327
|
$ 343
|
$ 372
|
$ 400
|
|||||
|
Interest on federal funds purchased
|
1
|
1
|
2
|
-
|
-
|
|||||
|
Interest on trust preferred capital notes
|
54
|
55
|
55
|
54
|
54
|
|||||
|
Interest on other borrowings
|
1
|
26
|
30
|
30
|
29
|
|||||
|
Total interest expense
|
$ 356
|
$ 409
|
$ 430
|
$ 456
|
$ 483
|
|||||
|
Net interest income
|
$ 4,632
|
$ 4,805
|
$ 4,751
|
$ 4,639
|
$ 4,426
|
|||||
|
Recovery of loan losses
|
-
|
(3,150)
|
(100)
|
(400)
|
(200)
|
|||||
|
Net interest income after recovery of loan losses
|
$ 4,632
|
$ 7,955
|
$ 4,851
|
$ 5,039
|
$ 4,626
|
|||||
|
Noninterest income
|
||||||||||
|
Service charges on deposit accounts
|
$ 547
|
$ 644
|
$ 655
|
$ 643
|
$ 630
|
|||||
|
ATM and check card fees
|
349
|
352
|
367
|
365
|
335
|
|||||
|
Wealth management fees
|
503
|
465
|
494
|
472
|
484
|
|||||
|
Fees for other customer services
|
107
|
90
|
94
|
126
|
87
|
|||||
|
Income from bank owned life insurance
|
75
|
101
|
103
|
89
|
74
|
|||||
|
Net gains on sale of loans
|
55
|
23
|
-
|
-
|
-
|
|||||
|
Net gains (losses) on sale of securities
|
(52)
|
765
|
(91)
|
22
|
-
|
|||||
|
Other operating income
|
7
|
9
|
32
|
8
|
6
|
|||||
|
Total noninterest income
|
$ 1,591
|
$ 2,449
|
$ 1,654
|
$ 1,725
|
$ 1,616
|
|||||
|
Noninterest expense
|
||||||||||
|
Salaries and employee benefits
|
$ 3,125
|
$ 2,855
|
$ 2,668
|
$ 2,554
|
$ 2,509
|
|||||
|
Occupancy
|
317
|
315
|
303
|
278
|
315
|
|||||
|
Equipment
|
281
|
293
|
299
|
295
|
304
|
|||||
|
Marketing
|
97
|
77
|
114
|
126
|
109
|
|||||
|
Stationery and supplies
Legal and professional fees
|
345
212
|
75
320
|
84
250
|
94
247
|
80
202
|
|||||
|
ATM and check card fees
|
155
|
168
|
167
|
163
|
163
|
|||||
|
FDIC assessment
|
67
|
70
|
90
|
122
|
172
|
|||||
|
Bank franchise tax
|
122
|
105
|
106
|
105
|
94
|
|||||
|
Telecommunications expense
|
85
|
81
|
75
|
73
|
71
|
|||||
|
Data processing expense
|
187
|
140
|
129
|
134
|
115
|
|||||
|
Other real estate owned, net
|
(36)
|
(151)
|
(23)
|
(70)
|
31
|
|||||
|
Net loss on disposal of premises and equipment
|
-
|
-
|
-
|
-
|
2
|
|||||
|
Other operating expense
|
530
|
523
|
491
|
427
|
446
|
|||||
|
Total noninterest expense
|
$ 5,487
|
$ 4,871
|
$ 4,753
|
$ 4,548
|
$ 4,613
|
|||||
|
Income before income taxes
|
$ 736
|
$ 5,533
|
$ 1,752
|
$ 2,216
|
$ 1,629
|
|||||
|
Income tax expense
|
192
|
1,837
|
505
|
674
|
483
|
|||||
|
Net income
|
$ 544
|
$ 3,696
|
$ 1,247
|
$ 1,542
|
$ 1,146
|
|||||
|
Effective dividend and accretion on preferred stock
|
329
|
328
|
329
|
261
|
220
|
|||||
|
Net income available to common shareholders
|
$ 215
|
$ 3,368
|
$ 918
|
$ 1,281
|
$ 926
|
|||||
|
Common Share and Per Common Share Data
|
||||||||||
|
Net income, basic
|
$ 0.04
|
$ 0.68
|
$ 0.19
|
$ 0.26
|
$ 0.19
|
|||||
|
Weighted average shares, basic
|
4,906,981
|
4,903,748
|
4,902,716
|
4,901,599
|
4,901,464
|
|||||
|
Net income, diluted
|
$ 0.04
|
$ 0.68
|
$ 0.19
|
$ 0.26
|
$ 0.19
|
|||||
|
Weighted average shares, diluted
|
4,911,044
|
4,903,748
|
4,902,716
|
4,901,599
|
4,901,464
|
|||||
|
Shares outstanding at period end
|
4,909,714
|
4,904,577
|
4,903,612
|
4,902,582
|
4,901,464
|
|||||
|
Book value at period end
|
$ 9.31
|
$ 9.17
|
$ 8.77
|
$ 8.58
|
$ 8.24
|
|||||
|
Cash dividends
|
$ 0.025
|
$ 0.025
|
$ 0.025
|
$ 0.025
|
$ -
|
|||||
3
FIRST NATIONAL CORPORATION
Quarterly Performance Summary
(in thousands, except share and per share data)
|
(unaudited)
For the Quarter Ended
|
||||||||||||
|
March 31,
2015
|
December 31,
2014
|
September 30,
2014
|
June 30,
2014
|
March 31, 2014
|
||||||||
|
Key Performance Ratios
|
||||||||||||
|
Return on average assets
|
0.43%
|
2.81%
|
0.95%
|
1.16%
|
0.88%
|
|||||||
|
Return on average equity
|
3.67%
|
25.03%
|
8.64%
|
11.05%
|
8.53%
|
|||||||
|
Net interest margin
|
3.96%
|
3.96%
|
3.92%
|
3.81%
|
3.72%
|
|||||||
|
Efficiency ratio (1)
|
87.20%
|
76.61%
|
72.74%
|
71.94%
|
74.87%
|
|||||||
|
Average Balances
|
||||||||||||
|
Average assets
|
$ 516,260
|
$ 521,889
|
$ 521,622
|
$ 531,250
|
$ 525,304
|
|||||||
|
Average earning assets
|
480,490
|
487,591
|
487,541
|
496,304
|
490,521
|
|||||||
|
Average shareholders’ equity
|
60,040
|
58,583
|
57,217
|
55,965
|
54,427
|
|||||||
|
Asset Quality
|
||||||||||||
|
Loan charge-offs
|
$ 113
|
$ 80
|
$ 302
|
$ 306
|
$ 239
|
|||||||
|
Loan recoveries
|
165
|
231
|
112
|
429
|
79
|
|||||||
|
Net charge-offs (recoveries)
|
(52)
|
(151)
|
190
|
(123)
|
160
|
|||||||
|
Non-accrual loans
|
7,170
|
8,000
|
8,673
|
11,221
|
11,696
|
|||||||
|
Other real estate owned, net
|
1,949
|
1,888
|
1,807
|
2,221
|
2,992
|
|||||||
|
Nonperforming assets
|
9,119
|
9,888
|
10,480
|
13,443
|
14,688
|
|||||||
|
Loans over 90 days past due, still accruing
|
71
|
-
|
2,148
|
325
|
111
|
|||||||
|
Troubled debt restructurings, accruing
|
782
|
790
|
796
|
978
|
986
|
|||||||
|
Special mention loans
|
22,550
|
23,259
|
18,411
|
19,807
|
20,606
|
|||||||
|
Substandard loans, accruing
|
15,741
|
15,792
|
20,088
|
20,315
|
21,917
|
|||||||
|
Doubtful loans
|
-
|
-
|
-
|
-
|
-
|
|||||||
|
Capital Ratios
|
||||||||||||
|
Total capital
|
$ 75,363
|
$ 75,045
|
$ 71,084
|
$ 69,455
|
$ 67,687
|
|||||||
|
Tier 1 capital
|
70,509
|
70,312
|
66,325
|
64,732
|
63,041
|
|||||||
|
Common equity tier 1 capital
|
46,635
|
46,438
|
42,451
|
40,858
|
39,167
|
|||||||
|
Total capital to risk-weighted assets
|
19.50%
|
19.93%
|
18.92%
|
18.64%
|
18.49%
|
|||||||
|
Tier 1 capital to risk-weighted assets
|
18.25%
|
18.67%
|
17.65%
|
17.38%
|
17.22%
|
|||||||
|
Common equity tier 1 capital to risk-weighted assets
|
12.07%
|
12.33%
|
11.30%
|
10.97%
|
10.70%
|
|||||||
|
Leverage ratio
|
13.66%
|
13.47%
|
12.74%
|
12.22%
|
12.05%
|
|||||||
|
Balance Sheet
|
||||||||||||
|
Cash and due from banks
|
$ 7,529
|
$ 6,043
|
$ 6,862
|
$ 6,587
|
$ 7,106
|
|||||||
|
Interest-bearing deposits in banks
|
1,645
|
18,802
|
3,885
|
12,735
|
27,017
|
|||||||
|
Securities available for sale, at fair value
|
90,855
|
83,292
|
104,710
|
108,884
|
110,561
|
|||||||
|
Restricted securities, at cost
|
1,999
|
1,366
|
1,636
|
1,636
|
1,636
|
|||||||
|
Loans held for sale
|
-
|
328
|
181
|
-
|
-
|
|||||||
|
Loans, net of allowance for loan losses
|
391,746
|
371,692
|
364,974
|
357,484
|
349,250
|
|||||||
|
Other real estate owned, net of valuation allowance
|
1,949
|
1,888
|
1,807
|
2,221
|
2,992
|
|||||||
|
Premises and equipment, net
|
16,298
|
16,126
|
16,175
|
16,305
|
16,470
|
|||||||
|
Accrued interest receivable
|
1,256
|
1,261
|
1,327
|
1,258
|
1,305
|
|||||||
|
Bank owned life insurance
|
11,431
|
11,357
|
11,244
|
11,141
|
11,052
|
|||||||
|
Other assets
|
5,701
|
6,010
|
6,609
|
7,072
|
7,206
|
|||||||
|
Total assets
|
$ 530,409
|
$ 518,165
|
$ 519,410
|
$ 525,323
|
$ 534,595
|
|||||||
|
Noninterest-bearing demand deposits
|
$ 109,927
|
$ 104,986
|
$ 103,019
|
$ 99,396
|
$ 101,813
|
|||||||
|
Savings and interest-bearing demand deposits
|
231,885
|
237,618
|
224,655
|
235,929
|
239,725
|
|||||||
|
Time deposits
|
96,974
|
101,734
|
111,245
|
115,873
|
120,151
|
|||||||
|
Total deposits
|
$ 438,786
|
$ 444,338
|
$ 438,919
|
$ 451,198
|
$ 461,689
|
|||||||
|
Federal funds purchased
|
1,955
|
52
|
5,325
|
-
|
-
|
|||||||
|
Other borrowings
|
15,020
|
26
|
6,033
|
6,039
|
6,046
|
|||||||
|
Trust preferred capital notes
|
9,279
|
9,279
|
9,279
|
9,279
|
9,279
|
|||||||
|
Accrued interest payable and other
liabilities
|
5,057
|
4,906
|
2,232
|
2,151
|
2,614
|
|||||||
|
Total liabilities
|
$ 470,097
|
$ 458,601
|
$ 461,788
|
$ 468,667
|
$ 479,628
|
|||||||
4
|
FIRST NATIONAL CORPORATION
Quarterly Performance Summary
(in thousands, except share and per share data)
|
|||||||||||||||||||||
|
(unaudited)
|
|||||||||||||||||||||
|
For the Quarter Ended
|
|||||||||||||||||||||
|
March 31,
2015
|
December 31,
2014
|
September 30,
2014
|
June 30,
2014
|
March 31,
2014
|
|||||||||||||||||
|
Balance Sheet (continued)
|
|||||||||||||||||||||
|
Preferred stock
|
$ 14,595
|
$ 14,595
|
$ 14,595
|
$ 14,595
|
$ 14,595
|
||||||||||||||||
|
Common stock
|
6,137
|
6,131
|
6,130
|
6,128
|
6,127
|
||||||||||||||||
|
Surplus
|
6,881
|
6,835
|
6,828
|
6,821
|
6,813
|
||||||||||||||||
|
Retained earnings
|
33,649
|
33,557
|
30,312
|
29,516
|
28,286
|
||||||||||||||||
|
Accumulated other comprehensive loss, net
|
(950)
|
(1,554)
|
(243)
|
(404)
|
(854)
|
||||||||||||||||
|
Total shareholders’ equity
|
$ 60,312
|
$ 59,564
|
$ 57,622
|
$ 56,656
|
$ 54,967
|
||||||||||||||||
|
Total liabilities and shareholders’ equity
|
$ 530,409
|
$ 518,165
|
$ 519,410
|
$ 525,323
|
$ 534,595
|
||||||||||||||||
|
Loan Data
|
|||||||||||||||||||||
|
Mortgage loans on real estate:
|
|||||||||||||||||||||
|
Construction and land development
|
$ 33,344
|
$ 29,475
|
$ 29,862
|
$ 32,795
|
$ 33,876
|
||||||||||||||||
|
Secured by farm land
|
1,066
|
1,129
|
1,193
|
1,234
|
1,257
|
||||||||||||||||
|
Secured by 1-4 family residential
|
172,874
|
163,727
|
155,298
|
151,043
|
147,541
|
||||||||||||||||
|
Other real estate loans
|
157,829
|
150,673
|
153,576
|
145,249
|
141,462
|
||||||||||||||||
|
Loans to farmers (except those secured by real estate)
|
2,761
|
2,975
|
2,905
|
3,067
|
3,060
|
||||||||||||||||
|
Commercial and industrial loans (except those secured by real estate)
|
18,660
|
18,191
|
20,038
|
21,730
|
20,321
|
||||||||||||||||
|
Consumer installment loans
|
4,713
|
4,785
|
4,881
|
4,859
|
4,816
|
||||||||||||||||
|
Deposit overdrafts
|
194
|
285
|
248
|
229
|
213
|
||||||||||||||||
|
All other loans
|
7,076
|
7,170
|
6,689
|
7,284
|
6,987
|
||||||||||||||||
|
Total loans
|
$ 398,517
|
$ 378,410
|
$ 374,690
|
$ 367,490
|
$ 359,533
|
||||||||||||||||
|
Allowance for loan losses
|
(6,771)
|
(6,718)
|
(9,716)
|
(10,006)
|
(10,283)
|
||||||||||||||||
|
Loans, net
|
$ 391,746
|
$ 371,692
|
$ 364,974
|
$ 357,484
|
$ 349,250
|
||||||||||||||||
|
Reconciliation of Tax-Equivalent Net Interest Income
|
|||||||||||||||||||||
|
GAAP measures:
|
|||||||||||||||||||||
|
Interest income – loans
|
$ 4,540
|
$ 4,623
|
$ 4,536
|
$ 4,403
|
$ 4,215
|
||||||||||||||||
|
Interest income – investments and other
|
448
|
591
|
645
|
692
|
694
|
||||||||||||||||
|
Interest expense – deposits
|
300
|
327
|
343
|
372
|
400
|
||||||||||||||||
|
Interest expense – other borrowings
|
1
|
26
|
30
|
30
|
29
|
||||||||||||||||
|
Interest expense – trust preferred capital notes
|
54
|
55
|
55
|
54
|
54
|
||||||||||||||||
|
Interest expense – other
|
1
|
1
|
2
|
-
|
-
|
||||||||||||||||
|
Total net interest income
|
$ 4,632
|
$ 4,805
|
$ 4,751
|
$ 4,639
|
$ 4,426
|
||||||||||||||||
|
Non-GAAP measures:
|
|||||||||||||||||||||
|
Tax benefit realized on non-taxable interest income – loans
|
$ 26
|
$ 24
|
$ 27
|
$ 28
|
$ 29
|
||||||||||||||||
|
Tax benefit realized on non-taxable interest income – municipal securities
|
33
|
42
|
44
|
49
|
49
|
||||||||||||||||
|
Total tax benefit realized on non-taxable interest income
|
$ 59
|
$ 66
|
$ 71
|
$ 77
|
$ 78
|
||||||||||||||||
|
Total tax-equivalent net interest income
|
$ 4,691
|
$ 4,871
|
$ 4,822
|
$ 4,716
|
$ 4,504
|
||||||||||||||||
|
|
|||||||||||||||||||||
(1) The efficiency ratio is computed by dividing noninterest expense excluding other real estate owned income/expense and net loss on disposal of premises and equipment by the sum of net interest income on a tax-equivalent basis and noninterest income, excluding gains and losses on sales of securities. Tax-equivalent net interest income is calculated by adding the tax benefit realized from interest income that is nontaxable to total interest income then subtracting total interest expense. The tax rate utilized in calculating the tax benefit is 34%. See the table above for the quarterly tax-equivalent net interest income and a reconciliation of net interest income to tax-equivalent net interest income. The efficiency ratio is a non-GAAP financial measure that management believes provides investors with important information regarding operational efficiency. Such information is not prepared in accordance with U.S. generally accepted accounting principles (GAAP) and should not be construed as such. Management believes, however, such financial information is meaningful to the reader in understanding operational performance, but cautions that such information not be viewed as a substitute for GAAP.
5