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Avenue Financial Holdings, Inc. Announces Record First Quarter Results

First Quarter Net Income Per Share Doubles

Total Assets Exceed $1 Billion Milestone

NASHVILLE, Tenn., April 23, 2015 (GLOBE NEWSWIRE) -- Avenue Financial Holdings, Inc. (Nasdaq:AVNU) ("Avenue Financial" or "the Company") announced record results for the first quarter ended March 31, 2015. Net income available to common stockholders rose 128.5% to $1.43 million compared with $0.62 million for the first quarter of 2014. Net income per diluted share more than doubled to $0.15 in the first quarter of 2015 compared with $0.07 in the first quarter of 2014. Total assets surpassed the $1 billion milestone in the first quarter of 2015 fueled by 16.8% year-over-year growth in loans (including loans held for sale), which rose to a record $749.7 million at March 31, 2015.

"Avenue Financial reported record results for the first quarter of 2015 that were fueled by solid organic loan and demand deposit growth across our lines of business," stated Ronald L. Samuels, Chairman and Chief Executive Officer. "Our growth in net income also benefited from a lower provision for loan losses and strong mortgage originations and sales. We remain very positive about our outlook for 2015 based on the continued strength of Nashville's economy and our focus on commercial and private banking, along with our key vertical markets in music and entertainment and healthcare.

"We strengthened our capital base during the first quarter with the successful completion of our initial public offering (IPO) that raised $17.0 million in primary gross proceeds. We also redeemed our Series C Preferred Stock for $18.9 million from the U.S. Treasury. The proceeds from our IPO in February 2015 and the successful placement of $20 million in subordinated debt in December 2014 strengthened our capital ratios and will play an important part in funding Avenue Financial's continued growth.

"We continue to benefit from broad-based development that is driving growth in commercial and industrial loans and in commercial real estate lending. We expect Avenue Financial's earnings in 2015 to benefit from additional balance sheet growth, strong credit quality and a robust mortgage market," continued Samuels.

Balance Sheet Growth

  • Total assets increased $38.2 million, or 3.8%, to $1.04 billion at March 31, 2015, rising from $998.8 million at December 31, 2014, and $95.0 million, or 10.1%, compared with $941.9 million at March 31, 2014.
  • Loans increased $22.3 million, or 3.2%, to a record $716.3 million at March 31, 2015 compared with $693.9 million at December 31, 2014 and were up $76.7 million from March 31, 2014, for a year-over-year growth rate of 12.0%. Mortgage loans held-for-sale increased $30.8 million to $33.5 million at March 31, 2015, compared with $2.6 million at March 31, 2014.
  • Cash surrender value of company owned life insurance totaled $20.2 million at March, 31, 2015, up $143 thousand, or 0.7%, from December 31, 2014 compared with $16.2 million at March 31, 2014.
  • Deposits totaled $815.9 million at March 31, 2015, an increase of 1.6% compared with $803.2 million at December 31, 2014. Deposits grew $77.8 million, or 10.5%, compared with $738.0 million at March 31, 2014. Demand deposits rose $53.5 million, or 25.8% to $260.5 million at March 31, 2015 compared with $207.0 million at March 31, 2014. For the first quarter of 2015, demand deposits represented 29.3% of average deposits compared with 27.4% for the first quarter of 2014.
  • Avenue Financial completed its initial public stock offering in February 2015, raising $17.0 million in primary gross proceeds. In addition, the Company redeemed its Series C Preferred Stock for $18.9 million from the U.S. Treasury in March 2015.

Revenue Growth and Profitability

  • For the first quarter of 2015, net income available to common stockholders rose to $1.43 million, or $0.15 per diluted share, compared with $623.6 thousand or $0.07 per diluted share for the first quarter of 2014. The increase was attributable primarily to growth in loan volume, increased fee income and gain on sale of loans, as well as a lower provision for loan losses compared with the first quarter of 2014.
  • Net interest income increased 10.0% to $7.6 million for the first quarter of 2015, compared with $6.9 million for the first quarter of 2014. The fully tax equivalent net interest margin decreased 7 basis points to 3.23% for the first quarter of 2015 from 3.30% for the first quarter of 2014. The decrease was attributable to a 12 basis point increase in average rate paid on interest bearing liabilities due primarily to the cost of the subordinated debt but partially offset by a 2 basis points increase in the average yield on earning assets as well as a 4 basis point decrease in overall cost of deposits.
  • Non-interest income increased $197 thousand, or 18.7%, to $1.3 million for the first quarter of 2015 compared with $1.1 million for the fourth quarter of 2014, and increased $469 thousand, or 59.5%, from $787 thousand at March 31, 2014. The increase was due primarily to increased loan fee income and higher gain on sale of both secondary market and portfolio loans compared with the first quarter of 2014.
  • The provision for loan losses was $154 thousand for the first quarter of 2015, compared with $456 thousand for the fourth quarter of 2014 and $860 thousand for the first quarter of 2014. The decrease was due primarily to lower net loan growth and an improved loan mix compared with the first quarter of 2014.
  • Non-interest expense for the first quarter of 2015 increased $177 thousand, or 2.8%, to $6.5 million from $6.3 million for the fourth quarter of 2014, and increased $629 thousand from the first quarter of 2014. The increase was due primarily to higher compensation costs due to growth in employee headcount, volume related costs attributable to loans, deposits, franchise fees and data processing, and higher legal, accounting and insurance related to public company expenses.

Asset Quality

  • Nonaccruing loans were $854 thousand, or 0.12% of total loans at March 31, 2015, compared with $695 thousand or 0.10% of total loans, at December 31, 2014. Our ratio of non-performing assets (nonaccruing loans plus other real estate owned) to total assets decreased to 0.35% at March 31, 2015, compared with 0.41% at December 31, 2014 due to a decrease in other real estate owned. Total other real estate owned declined to $2.8 million at March 31, 2015 compared with $3.4 million at December 31, 2014 due to the sale of three properties totaling $569 thousand. Troubled-debt restructurings declined $2.4 million during the first quarter and now total $454 thousand at March 31, 2015.
  • Net loan charge-offs for the first quarter of 2015 were $2 thousand, or 0.00% of average loans for the quarter, compared with $345 thousand, or 0.20% of average loans for the quarter ended December 31, 2014. There were no past dues greater than 30 days at March 31, 2015.
  • The allowance for loan losses was $8.7 million, or 1.21% of loans, at March 31, 2015, compared with $8.5 million, or 1.23% of loans at December 31, 2014 and $8.1 million, or 1.26% of loans at March 31, 2014.

"We are very pleased with our performance in the first quarter," continued Samuels. "We made continued progress in growing our balance sheet while improving our funding mix with growth in non-interest bearing deposits. We also grew fee income, managed our expenses and maintained our superior asset quality. We remain focused on these key areas in 2015 as continued drivers for Avenue Financial's growth in earnings."

About Avenue Financial Holdings, Inc.

Avenue Financial Holdings, Inc., headquartered in Nashville, Tennessee, was formed as a single-bank holding company in 2006 and operates primarily through its subsidiary, Avenue Bank. The Company's operations are concentrated in the Nashville MSA, with the vision of building Nashville's signature bank and serving clients who value creativity, expertise, and an exceptional level of personal service. Avenue Bank embodies Nashville's creative spirit - redefining how clients experience banking through a unique "Concierge Banking" model. The bank provides a wide range of business and personal banking services, including mortgage loans, with a special emphasis on Commercial, Private Client, Healthcare, and Music & Entertainment banking. The Company serves clients through five locations (a corporate headquarters and four retail branches), a limited deposit courier service (mobile branch) for select commercial clients, and mobile and online banking services. The Company's stock is traded on the NASDAQ Global Select Market under the ticker symbol "AVNU."

Forward-Looking Statements

Certain statements in this press release contain forward-looking statements within the meaning of the federal securities laws. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as "may," "should," "could," "predict," "potential," "believe," "will likely result," "expect," "continue," "will," "anticipate," "seek," "estimate," "intend," "plan," "projection," "would," and "outlook," or the negative version of those words or other comparable words of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.

You should not place undue reliance on any forward-looking statement. There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but are not limited to, the following: market and economic conditions (including interest rate environment, levels of public offerings, mergers and acquisitions, or M&A, and venture capital financing activities) and the associated impact on us; changes in management personnel; deterioration of our asset quality;our overall management of interest rate risk, including managing the sensitivity of our interest-earning assets and interest-bearing liabilities to interest rates, and the impact to earnings from a change in interest rates; our ability to execute our strategy and to achieve organic loan and deposit growth;the adequacy of reserves (including allowance for loan and lease losses) and the appropriateness of our methodology for calculating such reserves;volatility and direction of market interest rates;the sufficiency of our capital, including sources of capital (such as funds generated through retained earnings) and the extent to which capital may be used or required; our overall investment plans, strategies and activities, including our investment of excess cash/liquidity; operational, liquidity and credit risks associated with our business; increased competition in the financial services industry, nationally, regionally or locally, which may adversely affect pricing and terms; the level of client investment fees and associated margins; changes in the regulatory environment; changes in trade, monetary and fiscal policies and laws; governmental legislation and regulation, including changes in accounting regulation or standards, the nature and timing of the adoption and effectiveness of new requirements under the Dodd-Frank Act, Basel guidelines, capital requirements and other applicable laws and regulations; changes in interpretation of existing law and regulation; further government intervention in the U.S. financial system; and other factors that are discussed under the heading "Risk Factors" in our filings with the Securities and Exchange Commission.

The foregoing factors should not be construed as exhaustive and should be read in conjunction with other cautionary statements that are included in the Company's Form 10-K and subsequent periodic reports filed with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New factors emerge from time to time, and it is not possible for us to predict which will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement.

AVENUE FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets
(unaudited)
March 31,
2015
December 31, 2014 March 31, 2014
Assets
Cash and due from banks $ 31,136,574 $ 17,765,493 $ 22,567,954
Federal funds sold -- -- --
Cash and cash equivalents 31,136,574 17,765,493 22,567,954
Interest-bearing deposits in banks 214,748 210,754 335,754
Securities available-for-sale, at fair value 218,118,191 220,461,939 240,099,823
Securities held-to-maturity (fair value of $2,830,932 and $2,780,757 as of March 31, 2015 and December 31, 2014, respectively) 2,714,706 2,716,908 2,723,413
Mortgage loans held-for-sale 33,484,272 27,237,457 2,636,402
Loans, net of deferred fees 716,252,963 693,907,951 639,522,094
Less allowance for loan losses (8,669,356) (8,517,744) (8,070,287)
Net loans 707,583,607 685,390,207 631,451,807
Accrued interest receivable 2,318,186 2,389,997 2,344,296
Federal Home Loan Bank stock, at cost 3,320,400 2,924,400 2,674,100
Premises and equipment, net 3,123,566 3,280,186 3,640,811
Other real estate owned 2,807,201 3,375,811 3,382,076
Deferred tax assets 6,687,361 7,377,355 9,094,894
Cash surrender value of company owned life insurance 20,179,159 20,035,752 16,161,129
Goodwill 2,966,063 2,966,063 2,966,063
Other assets 2,304,530 2,657,381 1,849,961
Total assets $ 1,036,958,564 $ 998,789,703 $ 941,928,483
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing demand deposits $ 200,316,324 $ 170,647,052 $ 162,022,796
Interest-bearing demand deposits 60,134,832 55,652,417 44,957,917
Savings and money market accounts 398,767,825 415,779,182 389,957,669
Time 156,665,732 161,092,912 141,106,343
Total deposits 815,884,713 803,171,563 738,044,725
Accrued interest payable 539,448 169,913 153,779
Federal funds purchased 2,716,360 4,485,093 33,335,243
Federal Home Loan Bank advances 99,300,000 70,300,000 79,000,000
Subordinated debt 20,000,000 20,000,000 --
Other liabilities 8,584,829 9,047,027 6,527,894
947,025,350 907,173,596 857,061,641
Stockholders' equity:
Preferred Stock, no par value; 10,000,000 shares authorized, Series C, senior noncumulative perpetual preferred stock; 0 and 18,950 issued and outstanding at March 31, 2015 and December 31, 2014, respectively -- 18,950,000 18,950,000
Common Stock, no par value. Authorized 100,000,000 shares: issued and outstanding 10,227,340 and 8,636,682 shares at March 31, 2015 and December 31, 2014, respectively 89,947,978 75,407,157 75,407,157
Additional paid-in-capital 1,498,742 1,325,445 985,267
Accumulated deficit (156,469) (1,581,649) (6,381,064)
Accumulated other comprehensive loss (1,357,037) (2,484,846) (4,094,518)
Total stockholders' equity 89,933,214 91,616,107 84,866,842
Total liabilities and stockholders' equity $ 1,036,958,564 $ 998,789,703 $ 941,928,483
The information is preliminary and based on company data available at the time of the presentation.
AVENUE FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Income
(unaudited)
Three Months Ended
March 31, December 31, March 31,
2015 2014 2014
Interest and dividend income:
Loans, including fees $ 7,668,662 $ 7,354,666 $ 6,424,268
Investment securities 1,135,283 1,110,396 1,365,869
Federal Funds sold and other 30,132 32,704 30,421
Total interest and dividend income 8,834,077 8,497,766 7,820,558
Interest expense:
Deposits 761,386 782,191 755,940
Other borrowings 507,700 155,815 188,125
Total interest expense 1,269,086 938,006 944,065
Net interest income 7,564,991 7,559,760 6,876,493
Provision for loan losses 153,537 456,059 860,342
Net interest income after provision for loan losses 7,411,454 7,103,701 6,016,151
Noninterest income:
Customer service fees 670,530 499,279 615,848
Mortgage banking fees, net of commissions 205,267 412,541 37,545
Increase in cash surrender value of life insurance 143,407 132,159 119,742
Net gain on sale of loans 236,473 14,294 --
Net gain on sale of available-for-sale securities -- -- 14,055
Total noninterest income 1,255,677 1,058,273 787,190
Noninterest expenses:
Salaries and employee benefits 3,914,018 3,558,696 3,494,759
Equipment and occupancy 839,813 807,598 890,849
Other real estate (income) expense (40,190) (2,407) 13,158
Data processing 428,482 378,727 326,660
Advertising, promotion, and public relations 183,410 195,325 148,143
Legal and accounting 275,788 232,954 186,499
FDIC insurance and other regulatory assessments 192,457 186,953 179,325
Other expenses 680,063 939,346 605,366
Total noninterest expenses 6,473,841 6,297,192 5,844,759
Income before taxes 2,193,290 1,864,782 958,582
Income tax expense 736,000 572,639 287,575
Net income 1,457,290 1,292,143 671,007
Preferred stock dividends (32,110) (47,375) (47,375)
Net income available to common stockholders $ 1,425,180 $ 1,244,768 $ 623,632
Per share information:
Basic net income per common share available to common stockholders $ 0.15 $ 0.15 $ 0.07
Diluted net income per common share available to common stockholders $ 0.15 $ 0.15 $ 0.07
Weighted average common shares outstanding:
Basic 9,319,312 8,487,515 8,480,478
Diluted 9,656,971 8,540,856 8,480,478
The information is preliminary and based on company data available at the time of the presentation.
AVENUE FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
SELECTED QUARTERLY FINANCIAL DATA
(unaudited)
At or for the Three Months
March 31, December 31, September 30, June 30, March 31, December 31,
2015 2014 2014 2014 2014 2013
(Dollars in thousands, except employee data)
SELECTED INCOME STATEMENT DATA
Interest income $ 8,834 $ 8,498 $ 8,468 $ 8,237 $ 7,821 $ 7,381
Interest expense 1,269 938 935 952 944 923
Net interest income 7,565 7,560 7,533 7,285 6,877 6,458
Provision for loan losses 154 456 (222) 549 860 631
Net interest income after provision for loan losses 7,411 7,104 7,755 6,736 6,017 5,827
Non-interest income 1,256 1,059 1,904 915 787 905
Non-interest expense 6,474 6,297 6,122 5,862 5,845 5,476
Income tax expense 736 573 1,122 555 288 648
Net income 1,457 1,293 2,415 1,234 671 608
Dividends on preferred shares (32) (48) (47) (48) (47) (47)
Net income available to common stockholders $ 1,425 $ 1,245 $ 2,368 $ 1,186 $ 624 $ 561
PER COMMON SHARE DATA:
Basic earnings per share $ 0.15 $ 0.15 $ 0.28 $ 0.14 $ 0.07 $ 0.07
Diluted earnings per share 0.15 0.15 0.28 0.14 0.07 0.07
Book value per common share 8.79 8.41 8.18 7.96 7.65 7.41
Tangible book value per common share (1) 8.50 8.07 7.84 7.62 7.30 7.06
Basic weighted average common shares 9,319,312 8,487,515 8,487,516 8,487,516 8,480,478 8,452,597
Diluted weighted average common shares 9,656,971 8,540,856 8,528,926 8,487,516 8,480,478 8,452,597
Common shares outstanding at period end 10,227,340 8,636,682 8,633,588 8,619,588 8,619,588 8,567,912
SELECTED BALANCE SHEET DATA
Total assets $ 1,036,959 $ 998,790 $ 973,371 $ 955,100 $ 941,928 $ 889,578
Residential real estate - Mortgage 103,728 110,929 122,128 127,462 109,909 94,238
Residential real estate - Multi-family 13,480 11,310 20,960 15,605 13,282 2,964
Commercial and industrial 247,722 235,911 181,688 188,421 181,518 170,662
Commercial real estate 289,404 271,001 268,907 275,526 262,696 236,030
Construction and land development 54,515 58,843 55,174 65,874 70,081 67,483
Consumer 7,319 5,915 4,221 4,817 1,881 1,879
Other 85 (1) 157 130 155 174
Total loans, net of deferred fees 716,253 693,908 653,235 677,835 639,522 573,430
Allowance for loan losses (8,669) (8,518) (8,407) (8,625) (8,070) (7,204)
Securities available for sale 218,118 220,462 211,500 217,478 240,100 257,797
Mortgage loans held for sale 33,484 27,237 5,036 7,457 2,636 27,237
Goodwill and other intangible assets 2,966 2,966 2,966 2,966 2,966 2,966
Demand deposits 200,316 170,647 186,209 166,181 162,023 142,259
Interest checking accounts 60,135 55,653 52,673 51,675 44,958 51,629
Savings accounts 15,197 11,919 10,613 8,434 8,412 7,738
Money market accounts 227,999 240,646 263,947 268,417 275,768 295,985
Reciprocal ICS Money Market 155,572 163,214 147,870 139,017 105,777 84,363
CDs 70,064 82,012 82,075 82,116 87,230 79,528
Reciprocal CDARs 51,602 44,081 41,662 39,780 27,827 23,291
Brokered CDs 35,000 35,000 35,832 29,097 26,049 21,001
Total Deposits 815,885 803,172 820,881 784,717 738,044 705,794
Advances from FHLB/FRB 99,300 70,300 55,000 75,500 79,000 79,250
Subordinated debt 20,000 20,000 -- -- -- --
Preferred stock -- 18,950 18,950 18,950 18,950 18,950
Tangible common stockholders' equity (1) 86,967 69,700 67,699 65,661 62,951 60,502
Total stockholders' equity 89,933 91,616 89,615 87,577 84,867 82,418
Average total assets 1,014,663 976,497 952,248 932,603 906,855 865,400
Average common stockholders' equity 94,659 72,447 69,902 66,973 65,703 65,417
Full time employees 132 134 130 125 120 120
SELECTED PERFORMANCE RATIOS
Return on average assets (2) (5) 0.57 % 0.51 % 0.99 % 0.51 % 0.28 % 0.26 %
Return on average common stockholders' equity (2) (5) 6.11 6.82 13.44 7.10 3.85 3.40
Net interest margin (fully tax equivalent) (2) 3.23 3.37 3.38 3.34 3.30 3.04
Efficiency ratio (1) (3) 75.4 73.2 71.3 71.5 76.4 74.6
The information is preliminary and based on company data available at the time of the presentation.
AVENUE FINANCIAL HOLDINGS, INC. AND SUBSIDIARY
SELECTED QUARTERLY FINANCIAL DATA
(unaudited)
At or for the Three Months
March 31, December 31, September 30, June 30, March 31, December 31,
2015 2014 2014 2014 2014 2013
(Dollars in thousands, except per share data)
SELECTED ASSET QUALITY DATA
Nonaccruing loans $ 854 $ 695 $ 889 $ 897 $ 584 $ 591
Past due loans over 90 days and still accruing interest -- -- -- -- -- --
Net loans charge-offs 2 345 (5) (5) (6) 180
Nonaccruing loans to total loans 0.12 % 0.10 % 0.14 % 0.13 % 0.09 % 0.10 %
Nonaccruing loans and loans past due 90 days and still accruing to total loans 0.12 0.10 0.14 0.13 0.09 0.10
Non-performing assets to total assets (4) 0.35 0.41 0.28 0.30 0.42 0.45
Nonperforming assets to loans and OREO 0.51 0.58 0.42 0.42 0.62 0.70
Allowance for loan losses to total loans 1.21 1.23 1.29 1.27 1.26 1.26
Allowance for loan losses to nonaccruing loans 1,015.15 1,224.87 945.67 961.54 1,381.85 1,219.43
Net loan charge-offs to average loans (2) 0.00 0.20 (0.00) (0.00) (0.00) 0.13
CAPITAL RATIOS (Consolidated)
Tier 1 Leverage ratio (6) 10.64 % 9.21 % 9.16 % 8.78 % 8.81 % 9.12 %
Tier 1 Risk-based capital ratio (6) 13.30 10.62 11.38 10.65 10.77 11.46
Total Risk-based capital ratio (6) 14.39 14.00 12.49 11.77 11.86 12.52
Tangible common stockholders' equity to tangible assets (1) 8.41 7.00 6.98 6.90 6.70 6.82
The information set forth above contains certain financial information determined by methods other than in accordance with GAAP. These non-GAAP financial measures are "tangible book value per common share," "tangible common stockholders' equity," "efficiency ratio," and "tangible common stockholders' equity to tangible assets." Although we believe these non-GAAP financial measures provide a greater understanding of our business, these measures are not necessarily comparable to similar measures that may be presented by other companies.
"Efficiency ratio" is defined as non-interest expenses divided by our operating revenue, which is equal to net interest income plus non-interest income excluding gains and losses on sales of securities. In our judgment, the adjustments made to operating revenue allow investors and analysts to better assess our operating expenses in relation to our core operating revenue by removing the volatility that is associated with certain non-recurring items and other discrete items that are unrelated to our core business.
"Tangible common stockholders' equity" is defined as common stockholders' equity reduced by goodwill. We believe that this measure is important to many investors in the marketplace who are interested in changes from period to period in common stockholders' equity exclusive of changes in intangible assets. Goodwill, an intangible asset that is recorded in a purchase business combination, has the effect of increasing both common stockholders' equity and assets while not increasing our tangible common stockholders' equity or tangible assets.
"Tangible common stockholders' equity to tangible assets" is defined as the ratio of common stockholders' equity reduced by goodwill divided by total assets reduced by goodwill. 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 stockholders' equity and total assets, each exclusive of changes in intangible assets. Goodwill, an intangible asset that is recorded in a purchase business combination, has the effect of increasing both common stockholders' equity and assets while not increasing our tangible common equity or tangible assets.
"Tangible book value per common share" is defined as tangible common stockholders' equity divided by total common shares outstanding. We believe that this measure is important to many investors in the marketplace who are interested in changes from period to period in book value per common share exclusive of changes in intangible assets. Goodwill, an intangible asset that is recorded in a purchase business combination, has the effect of increasing book value while not increasing our tangible book value.
The information provided below reconciles each non-GAAP measure to its most comparable GAAP measure.
NON-GAAP FINANCIAL MEASURES
Efficiency Ratio
Non-interest expense (numerator) $ 6,474 $ 6,297 $ 6,122 $ 5,862 $ 5,845 $ 5,476
Net interest income 7,565 7,560 7,533 7,285 6,877 6,458
Non-interest income 1,256 1,059 1,904 915 787 905
Less: gains on sale of loans (236) (14) (852) -- -- (22)
Less: gains (losses) on sales of securities -- -- -- 2 (14) --
Adjusted operating revenue (denominator) 8,585 8,605 8,585 8,202 7,650 7,341
Efficiency Ratio 75.41 % 73.18 % 71.31 % 71.47 % 76.41 % 74.59 %
Tangible Common Stockholders' Equity and Tangible Common Stockholders' Equity/Tangible Assets
Common equity $ 89,933 $ 72,666 $ 70,665 $ 68,627 $ 65,917 $ 63,468
Less: intangible assets (2,966) (2,966) (2,966) (2,966) (2,966) (2,966)
Tangible common stockholders' equity 86,967 69,700 67,699 65,661 62,951 60,502
Total assets 1,036,959 998,790 973,371 955,100 941,928 889,578
Less: Intangible assets (2,966) (2,966) (2,966) (2,966) (2,966) (2,966)
Tangible assets 1,033,993 995,824 970,405 952,134 938,962 886,612
Tangible Common Stockholders' Equity/Tangible Assets 8.41 % 7.00 % 6.98 % 6.90 % 6.70 % 6.82 %
Tangible Book Value per Common Share
Book Value Per Common Share $ 8.79 $ 8.41 $ 8.18 $ 7.96 $ 7.65 $ 7.41
Less: Effects of intangible assets (0.29) (0.34) (0.34) (0.34) (0.34) (0.35)
Tangible Book Value per Common Share 8.50 8.07 7.84 7.62 7.30 7.06
(1) These measures are not measures recognized under generally accepted accounting principles (United States) ("GAAP"), and are therefore considered to be non-GAAP financial measures.
(2) Data has been annualized.
(3) Efficiency ratio is total non-interest expense divided by the sum of net interest income and total non-interest income, (excluding securities and loan sale gains/(losses)) and is not a GAAP measure.
(4) Non-performing assets are deemed to be nonaccruing loans and OREO.
(5) Return on average assets is defined as net income available to common stockholders divided by average total assets; Return on average common stockholders equity is defined by net income available to common stockholders divided by average common stockholders' equity.
(6) Capital ratios as of March 31, 2015 are estimated.
The information is preliminary and based on company data available at the time of the presentation.
Average Balance Sheets and Net Interest Analysis
On a Fully Taxable-Equivalent Basis
Three Months Ended March 31,
(In thousands, except Average Yields and Rates)
2015 2014
Average
Balance
Interest
Earned /
Paid
Average
Yield /
Rate
Average
Balance
Interest
Earned /
Paid
Average
Yield /
Rate
Assets:
Interest earning assets:
Interest-bearing deposits in banks $ 211 $ 0 0.77 % $ 959 $ 3 1.34 %
Investments (1) (3) 224,903 1,271 2.29 263,155 1,535 2.37
Federal funds sold 359 0 0.28 466 0 0.24
Loans held for sale 35,498 307 3.51 -- -- --
Total loans (2) 701,471 7,362 4.26 597,090 6,424 4.36
Total interest earning assets 962,442 8,940 3.77 861,670 7,962 3.75
Allowance for loan losses (8,725) (7,414)
Non-interest earning assets 60,946 52,599
Total assets $ 1,014,663 $ 906,855
Interest bearing liabilities:
Interest bearing deposits:
Checking $ 56,560 $ 49 0.35 % $ 48,351 $ 52 0.43 %
Savings 13,734 4 0.11 8,107 3 0.15
Money market 392,335 386 0.40 389,933 470 0.49
Time deposits 161,739 322 0.81 129,468 231 0.72
Federal funds purchased 4,847 7 0.60 13,567 23 0.68
Other borrowings 103,600 501 1.96 75,548 166 0.89
Total interest bearing liabilities 732,815 1,269 0.70 664,974 945 0.58
Non-interest bearing checking 179,199 150,839
Other liabilities 7,990 6,389
Stockholders' equity 94,659 84,653
Total liabilities and stockholders' equity $ 1,014,663 $ 906,855
Net interest spread 3.07 % 3.17 %
Net interest margin 3.23 3.30
(1) Interest income and yields are presented on a fully taxable equivalent basis using a tax rate of 34%.
(2) Non-accrual loans are included in average loan balances in all periods. Loan fees of $199,000 and $133,000 are included in interest income in
2015 and 2014, respectively
(3) Unrealized gains/(losses) of $301,000 and ($4,466,000) are excluded from the yield calculation in 2015 and 2014, respectively.
The information is preliminary and based on company data available at the time of the presentation.

CONTACT: Barbara J. Zipperian Chief Financial Officer (615) 736-7786Source:Avenue Financial Holdings, Inc.