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Two River Bancorp Reports 2017 Second Quarter Financial Results Highlighted by a 23.2% Increase in Net Income

TINTON FALLS, N.J., July 25, 2017 (GLOBE NEWSWIRE) -- Two River Bancorp (Nasdaq:TRCB) (the "Company"), the parent company of Two River Community Bank ("the Bank"), today reported financial results for the second quarter and six months ended June 30, 2017. All share and per share data for all referenced reporting periods have been adjusted for a 5% stock dividend paid on February 28, 2017.

2017 Second Quarter Operating and Financial Highlights
(all comparisons to the same prior year’s quarter unless otherwise noted)

  • Net income increased 23.2% to $2.13 million, or $0.25 per diluted share, from $1.73 million, or $0.20 per diluted share. The 2017 quarter included a benefit to income tax expense related to the adoption of ASU 2016-09, Compensation - Stock Compensation, Improvements to Employee Share-Based Payment Accounting, which increased net income by $145,000, or $0.02 per diluted share.
  • Non-interest income increased 31.9% to $1.54 million, as a result of a 68.7% increase in mortgage banking revenue, higher gains on the sale of SBA loans and other loan fees.
  • Return on average assets (ROAA) improved to 0.87%, compared to 0.78%.
  • Return on average equity (ROAE) improved to 8.26%, compared to 7.28%.
  • Non-performing assets to total assets were 0.32% at June 30, 2017, an increase from 0.19% at December 31, 2016 and 0.22% at June 30, 2016.
  • Tangible book value per share was $10.25 at June 30, 2017, compared to $9.88 at December 31, 2016 and $9.34 at June 30, 2016.
  • Total assets at June 30, 2017 were $983.1 million, compared to $940.2 million at December 31, 2016.
  • Total loans as of June 30, 2017 were $794.9 million, up 5.6% from $753.1 million at December 31, 2016.
  • Total deposits as of June 30, 2017 were $810.7 million, up 4.4% from $776.6 million at December 31, 2016.

Management Commentary
William D. Moss, President and CEO, stated, “The Company reported an excellent quarter highlighted by higher net income, loan and deposit growth, and success in increasing non-interest income. We have grown the loan portfolio by $41.8 million since year-end 2016, and will continue to benefit from a strong pipeline within our core markets of Monmouth, Middlesex, Union and Ocean Counties. The largest component continues to be CRE lending, which is expected to be a principal driver of revenues throughout the remainder of 2017. We are also seeing significant contributions from virtually all aspects of our business resulting in, among other things, additional non-interest income. Our mortgage banking business has experienced accelerating growth, which is evidence that our proactive approach in cultivating a vast network of referral sources and improving the Bank’s brand recognition throughout our densely populated marketplace is working. The Company’s gain on sales of SBA loans increased significantly on both a linked quarter and year-to-date basis, and this trend is expected to continue in the current quarter.”

Mr. Moss concluded, “In keeping with our Strategic Plan, which includes optimizing the profitability of our branch network, the Company will be closing two branches and consolidating them into a new location, which will provide cost efficiency and greater market share potential. We expect to open a new branch in Sea Girt, along the Route 35 corridor in Monmouth County, and will integrate the operations of our Allaire office in Wall Township and our office in Manasquan into this branch in the third quarter of 2017. We anticipate annual pre-tax expense savings of approximately $300,000 beginning in the fourth quarter of 2017.”

Dividend Increased to $0.045 per share
On July 19, 2017, the Company’s Board of Directors declared a quarterly cash dividend of $0.045 per share, payable on August 29, 2017 to shareholders of record as of the close of business on August 11, 2017. This marks the 18th consecutive quarterly cash dividend and represents a 12.5% increase from the prior quarter, which is in addition to the 5% stock dividend paid in February 2017.

Key Quarterly Performance Metrics

2nd Qtr.1st Qtr.4th Qtr.3rd Qtr.2nd Qtr.6 Mo.
Ended

6 Mo.
Ended

20172017 2016
2016
2016
6/30/2017
6/30/2016
Net Income (in thousands)$2,128 $1,802 $2,567 $2,644 $1,727 $3,930 $3,420
Earnings per Common Share – Diluted$0.25 $0.21 $0.30 $0.31 $0.20 $0.45 $0.40
Return on Average Assets 0.87% 0.76% 1.08% 1.16% 0.78% 0.81% 0.78%
Return on Average Tangible Assets(1) 0.88% 0.77% 1.10% 1.19% 0.80% 0.83% 0.80%
Return on Average Equity 8.26% 7.18% 10.25% 10.81% 7.28% 7.73% 7.26%
Return on Average Tangible Equity(1) 10.01% 8.74% 12.53% 13.29% 8.98% 9.39% 8.98%
Net Interest Margin 3.49% 3.45% 3.43% 3.55% 3.57% 3.47% 3.57%
Non-Performing Assets to Total Assets 0.32% 0.18% 0.19% 0.20% 0.22% 0.32% 0.22%
Allowance as a % of Loans 1.25% 1.25% 1.27% 1.25% 1.30% 1.25% 1.30%
(1) Non-GAAP Financial Information. See “Reconciliation of Non-GAAP Financial Measures” at end of release.

Loan Composition
The components of the Company’s loan portfolio at June 30, 2017 and December 31, 2016 are as follows:

(in thousands)
June 30,
2017
December 31,
2016
Commercial and industrial $ 99,688 $ 93,697
Real estate – construction 112,102 111,914
Real estate – commercial 496,400 460,685
Real estate – residential 59,624 59,065
Consumer 27,828 28,279
Unearned fees (734) (548)
794,908 753,092
Allowance for loan losses (9,953) (9,565)
Net Loans $ 784,955 $ 743,527

Deposit Composition
The components of the Company’s deposits at June 30, 2017 and December 31, 2016 are as follows:

(in thousands)
June 30,
2017
December 31,
2016
Non-interest-bearing $ 172,737 $ 160,104
NOW accounts 184,534 152,771
Savings deposits 260,715 261,438
Money market deposits 63,474 62,495
Listed service CD’s 41,949 47,648
Time deposits / IRA 56,044 56,489
Wholesale deposits 31,272 35,622
Total Deposits $ 810,725 $ 776,567

2017 Second Quarter Financial Review

Net Income
Net income for the three months ended June 30, 2017 increased 23.2% to $2.13 million, or $0.25 per diluted common share, compared to $1.73 million, or $0.20 per diluted common share, for the same period last year. The increase was largely due to both higher net interest income and non-interest income, coupled with a benefit to income tax expense related to the adoption of ASU 2016-09, Compensation - Stock Compensation, Improvements to Employee Share-Based Payment Accounting, which increased net income by $145,000, or $0.02 per diluted share. On a linked quarter basis, second quarter 2017 net income increased 18.1% from the first quarter of 2017.

Net income for the six months ended June 30, 2017 increased 14.9% to $3.93 million, or $0.45 per diluted share, compared to $3.42 million, or $0.40 per diluted share, in the same prior year period.

Net Interest Income
Net interest income for the quarter ended June 30, 2017 was $7.96 million, an increase of 9.5% compared to $7.27 million in the corresponding prior year period. This was largely due to an increase of $95.3 million, or 11.6%, in average interest-earning assets, primarily attributable to growth in the loan portfolio. On a linked quarter basis, net interest income increased $328,000, or 4.3%, from $7.63 million.

For the first half of 2017, net interest income increased 8.3% to $15.6 million from $14.4 million in the prior year period.

Net Interest Margin
The Company reported a net interest margin of 3.49% for the second quarter of 2017, compared to 3.45% in the first quarter of 2017 and 3.57% reported for the second quarter of 2016. The net interest margin improvement from the first quarter of 2017 was the result of slightly higher yielding interest-earning assets coupled with a higher level of average non-interest-bearing demand deposits.

The net interest margin for the first half of 2017 was 3.47%, compared to 3.57% in the prior year period.

Non-Interest Income
Non-interest income for the quarter ended June 30, 2017 totaled $1.54 million, an increase of $372,000, or 31.9%, compared to the same period in 2016. Residential mortgage banking revenue increased $193,000, or 68.7%, which included an $86,000 gain from the sale of $3.6 million of portfolio adjustable rate mortgages. Additionally, higher gains from the sale of SBA loans and other loan fees, primarily due to higher loan prepayment fees, contributed to the increase.

On a linked quarter basis, non-interest income increased by $413,000, or 36.7%, from the first quarter of 2017, mainly due to higher gains on the sale of SBA loans, residential mortgage banking revenues, and other loan fees.

For the six months ended June 30, 2017, non-interest income increased $604,000, or 29.3%, to $2.7 million from the same period in 2016.

Non-Interest Expense
Non-interest expense for the quarter ended June 30, 2017 totaled $6.07 million, an increase of $692,000, or 12.9%, from the $5.38 million reported in same period in 2016, primarily due to salary increases and higher loan workout expenses. On a linked quarter basis, non-interest expense increased $294,000, or 5.1%, largely due to higher loan workout expenses and other operating expenses.

For the six months ended June 30, 2017, non-interest expense increased $1.07 million, or 9.9%, to $11.8 million compared to the same prior year period.

Provision for Loan Losses
During the quarter, a provision for loan losses of $375,000 was expensed, compared to $390,000 in the same prior year period. The majority of the second quarter 2017 provision was to support the Company’s strong loan growth. The Company had $11,000 in net loan recoveries during the quarter, compared to $65,000 in net loan recoveries during the same period last year. For the first half of 2017, a provision of $600,000 was expensed, compared to $390,000 for the same prior year period. The Company had $212,000 of net loan charge-offs during the first half of 2017, compared to $315,000 in net loan recoveries in the same prior year period.

As of June 30, 2017, the Company's allowance for loan losses was $9.95 million, as compared to $9.57 million as of December 31, 2016. The loss allowance as a percentage of total loans was 1.25% at June 30, 2017 compared to 1.27% at December 31, 2016.

Financial Condition / Balance Sheet

At June 30, 2017, the Company maintained capital ratios that were in excess of regulatory standards for well capitalized institutions. The Company's Tier 1 capital to average assets ratio was 8.95%, its common equity Tier 1 to risk weighted assets ratio was 10.08%, its Tier 1 capital to risk weighted assets ratio was 10.08%, and its total capital to risk weighted assets ratio was 12.40%.

Total assets as of June 30, 2017 were $983.1 million, an increase of 4.6% compared to $940.2 million as of December 31, 2016.

Total loans as of June 30, 2017 were $794.9 million, an increase of 5.6% compared to $753.1 million at December 31, 2016.

Total deposits as of June 30, 2017 were $810.7 million, an increase of 4.4% compared to $776.6 million as of December 31, 2016. Core checking deposits at June 30, 2017 increased to $357.3 million, up $44.4 million, or 14.2% from year-end. This growth was primarily driven by a new municipal relationship in the first half of 2017 and the Company’s focus on building core checking account deposit relationships.

Asset Quality
The Company's non-performing assets at June 30, 2017 were $3.18 million as compared to $1.81 million at December 31, 2016 and $1.96 million at June 30, 2016. Non-performing assets to total assets at June 30, 2017 were 0.32% compared to 0.19% at December 31, 2016 and 0.22% at June 30, 2016.

Non-accrual loans were $2.95 million at June 30, 2017, compared to $1.55 million at December 31, 2016 and $1.70 million at June 30, 2016. During the quarter, three relationships migrated to non-accrual status. These relationships were previously identified as TDRs or exhibited negative financial trends which management had identified. OREO decreased to $233,000 at June 30, 2017, compared to $259,000 at both December 31, 2016 and June 30, 2016 due to a $26,000 writedown taken during the current quarter.

Troubled debt restructured loan balances amounted to $7.95 million at June 30, 2017, with all but $960,000 performing. This compared to $8.23 million at December 31, 2016 and $8.65 million at June 30, 2016.

About the Company
Two River Bancorp is the holding company for Two River Community Bank, which is headquartered in Tinton Falls, New Jersey. Two River Community Bank operates 15 branches along with two Loan Production Offices throughout Monmouth, Middlesex, Union, and Ocean Counties, New Jersey. More information about Two River Community Bank and Two River Bancorp is available at www.tworiverbank.com.

The foregoing contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management's confidence and strategies and management's current views and expectations about new and existing programs and products, relationships, opportunities, technology and market conditions. These statements may be identified by such forward-looking terminology as "continue," "expect," "look," "believe," "anticipate," "may," "will," "should," "projects," "strategy" or similar statements. Actual results may differ materially from such forward-looking statements, and no reliance should be placed on any forward-looking statement. Factors that may cause results to differ materially from such forward-looking statements include, but are not limited to, unanticipated changes in the financial markets and the direction of interest rates; volatility in earnings due to certain financial assets and liabilities held at fair value; competition levels; loan and investment prepayments differing from our assumptions; insufficient allowance for credit losses; a higher level of loan charge-offs and delinquencies than anticipated; material adverse changes in our operations or earnings; a decline in the economy in our market areas; changes in relationships with major customers; changes in effective income tax rates; higher or lower cash flow levels than anticipated; inability to hire or retain qualified employees; a decline in the levels of deposits or loss of alternate funding sources; a decrease in loan origination volume or an inability to close loans currently in the pipeline; changes in laws and regulations; adoption, interpretation and implementation of accounting pronouncements; operational risks, including the risk of fraud by employees, customers or outsiders; and the inability to successfully implement or expand new lines of business or new products and services. For a list of other factors which would affect our results, see the Company's filings with the Securities and Exchange Commission, including those risk factors identified in the "Risk Factor" section and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2016. The statements in this press release are made as of the date of this press release, even if subsequently made available by the Company on its website or otherwise. The Company assumes no obligation for updating any such forward-looking statements at any time, except as required by law.



TWO RIVER BANCORP
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the Three Months and Six Months Ended June 30, 2017 and 2016
(in thousands, except per share data)
Three Months Ended
June 30,
Six Months Ended
June 30,
2017 2016 2017 2016
INTEREST INCOME:
Loans, including fees $ 8,733 $ 8,085 $ 17,136 $ 15,998
Securities:
Taxable 235 192 468 384
Tax-exempt 279 230 564 430
Interest-bearing deposits 102 32 174 65
Total Interest Income 9,349 8,539 18,342 16,877
INTEREST EXPENSE:
Deposits 1,063 945 2,101 1,828
Securities sold under agreements to repurchase 17 15 32 29
Federal Home Loan Bank ("FHLB") and other borrowings 147 147 292 295
Subordinated debt 164 163 329 328
Total Interest Expense 1,391 1,270 2,754 2,480
Net Interest Income 7,958 7,269 15,588 14,397
PROVISION FOR LOAN LOSSES 375 390 600 390
Net Interest Income after Provision for Loan Losses 7,583 6,879 14,988 14,007
NON-INTEREST INCOME:
Service fees on deposit accounts 161 137 311 273
Mortgage banking 474 281 900 515
Other loan fees 122 62 214 123
Earnings from investment in bank owned life insurance 138 110 274 219
Gain on sale of SBA loans 394 365 511 459
Net gain on sale of securities - - - 72
Other income 249 211 453 398
Total Non-Interest Income 1,538 1,166 2,663 2,059
NON-INTEREST EXPENSES:
Salaries and employee benefits 3,460 3,195 6,913 6,300
Occupancy and equipment 1,049 1,033 2,103 2,028
Professional 395 280 736 615
Insurance 53 57 101 104
FDIC insurance and assessments 108 105 231 210
Advertising 125 120 235 230
Data processing 125 135 255 270
Outside services fees 124 115 227 238
Amortization of identifiable intangibles - - - 9
OREO expenses, impairment and sales, net 22 (45) 19 (26)
Loan workout expenses 139 18 166 98
Other operating 471 366 862 700
Total Non-Interest Expenses 6,071 5,379 11,848 10,776
Income before Income Taxes 3,050 2,666 5,803 5,290
INCOME TAX EXPENSE 922 939 1,873 1,870
Net Income $ 2,128 $ 1,727 $ 3,930 $ 3,420
EARNINGS PER COMMON SHARE:
Basic $ 0.25 $ 0.21 $ 0.47 $ 0.41
Diluted $ 0.25 $ 0.20 $ 0.45 $ 0.40
Weighted average common shares outstanding:
Basic 8,372 8,323 8,363 8,319
Diluted 8,654 8,516 8,642 8,506


TWO RIVER BANCORP
CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands, except share data)
June 30, December 31,
2017 2016
ASSETS
Cash and due from banks$21,267 $19,844
Interest-bearing deposits in bank 23,431 22,233
Cash and cash equivalents 44,698 42,077
Securities available for sale 31,598 34,464
Securities held to maturity 55,750 57,843
Restricted investments, at cost 5,286 4,805
Loans held for sale 6,786 4,537
Loans 794,908 753,092
Allowance for loan losses (9,953) (9,565)
Net loans 784,955 743,527
OREO 233 259
Bank owned life insurance 21,303 21,029
Premises and equipment, net 5,215 4,662
Accrued interest receivable 2,337 2,234
Goodwill 18,109 18,109
Other assets 6,829 6,665
TOTAL ASSETS$983,099 $940,211
LIABILITIES
Deposits:
Non-interest-bearing$172,737 $160,104
Interest-bearing 637,988 616,463
Total Deposits 810,725 776,567
Securities sold under agreements to repurchase 25,823 19,915
FHLB and other borrowings 24,300 25,300
Subordinated debt 9,871 9,855
Accrued interest payable 94 100
Other liabilities 7,762 7,758
Total Liabilities 878,575 839,495
SHAREHOLDERS' EQUITY
Preferred stock, no par value; 6,500,000 shares authorized, no shares issued and outstanding - -
Common stock, no par value; 25,000,000 shares authorized;
Issued – 8,740,865 and 8,677,536 at June 30, 2017 and December 31, 2016, respectively
Outstanding – 8,428,771 and 8,365,442 at June 30, 2017 and December 31, 2016 respectively 79,394 79,056
Retained earnings 27,722 24,447
Treasury stock, at cost; 312,094 shares at June 30, 2017 and December 31, 2016 (2,396) (2,396)
Accumulated other comprehensive loss (196) (391)
Total Shareholders' Equity 104,524 100,716
TOTAL LIABILITIES and SHAREHOLDERS’ EQUITY$983,099 $940,211


TWO RIVER BANCORP
Selected Consolidated Financial Data (Unaudited)
Selected Consolidated Earnings Data
(in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
Selected Consolidated Earnings Data: 2017 2017 2016 2017 2016
Total Interest Income$ 9,349 $ 8,993 $ 8,539 $ 18,342 $ 16,877
Total Interest Expense 1,391 1,363 1,270 2,754 2,480
Net Interest Income 7,958 7,630 7,269 15,588 14,397
Provision for Loan Losses 375 225 390 600 390
Net Interest Income after Provision for Loan Losses 7,583 7,405 6,879 14,988 14,007
Other Non-Interest Income 1,538 1,125 1,166 2,663 2,059
Other Non-Interest Expenses 6,071 5,777 5,379 11,848 10,776
Income before Income Taxes 3,050 2,753 2,666 5,803 5,290
Income Tax Expense 922 951 939 1,873 1,870
Net Income$ 2,128 $ 1,802 $ 1,727 $ 3,930 $ 3,420
Per Common Share Data:
Basic Earnings$ 0.25 $ 0.22 $ 0.21 $ 0.47 $ 0.41
Diluted Earnings$ 0.25 $ 0.21 $ 0.20 $ 0.45 $ 0.40
Book Value$ 12.40 $ 12.21 $ 11.51 $ 12.40 $ 11.51
Tangible Book Value(1)$ 10.25 $ 10.05 $ 9.34 $ 10.25 $ 9.34
Average Common Shares Outstanding (in thousands):
Basic 8,372 8,341 8,323 8,363 8,319
Diluted 8,654 8,618 8,516 8,642 8,506
(1) Non-GAAP Financial Information. See “Reconciliation of Non-GAAP Financial Measures” at end of release.




Selected Period End Balances
(in thousands)
June 30, March 31, Dec. 31, Sept. 30, June 30,
2017 2017 2016 2016 2016
Total Assets$ 983,099 $ 967,073 $ 940,211 $ 909,170 $ 884,700
Investment Securities and Restricted Stock 92,634 94,850 97,112 82,677 84,246
Total Loans 794,908 762,687 753,092 753,982 726,414
Allowance for Loan Losses (9,953) (9,567) (9,565) (9,452) (9,418)
Goodwill and Other Intangible Assets 18,109 18,109 18,109 18,109 18,109
Total Deposits 810,725 799,705 776,567 739,247 726,264
Repurchase Agreements 25,823 21,437 19,915 18,645 21,683
FHLB and Other Borrowings 24,300 24,300 25,300 35,300 23,800
Subordinated Debt 9,871 9,863 9,855 9,847 9,839
Shareholders' Equity 104,524 102,406 100,716 98,594 96,293


Asset Quality Data (by Quarter)
(dollars in thousands)
June 30, March 31, Dec. 31, Sept. 30, June 30,
2017 2017 2016 2016 2016
Nonaccrual Loans$ 2,946 $ 1,511 $ 1,548 $ 1,587 $ 1,697
OREO 233 259 259 259 259
Total Non-Performing Assets 3,179 1,770 1,807 1,846 1,956
Troubled Debt Restructured Loans:
Performing 6,990 7,754 8,075 8,366 8,492
Non-Performing 960 405 157 157 158
Non-Performing Loans to Total Loans 0.37% 0.20% 0.21% 0.21% 0.23%
Non-Performing Assets to Total Assets 0.32% 0.18% 0.19% 0.20% 0.22%
Allowance as a % of Loans 1.25% 1.25% 1.27% 1.25% 1.30%


Capital Ratios
June 30, 2017 December 31, 2016
CET 1
Capital
to Risk Weighted
Assets
Ratio
Tier 1
Capital
to
Average
Assets
Ratio
Tier 1
Capital
to Risk
Weighted
Assets
Ratio
Total
Capital
to Risk Weighted
Assets
Ratio
CET 1
Capital

to Risk Weighted
Assets
Ratio
Tier 1
Capital
to
Average Assets
Ratio
Tier 1
Capital
to Risk Weighted
Assets
Ratio
Total
Capital to
Risk Weighted
Assets
Ratio
Two River Bancorp10.08%8.95%10.08%12.40% 10.33%8.94%10.33%12.76%
Two River Community Bank11.14%9.90%11.14%12.30%
11.49%9.95%11.49%12.68%
"Well capitalized" institution (under prompt corrective action regulations.)*6.50%5.00%8.00%10.00%
6.50%5.00%8.00%10.00%
*Applies to Bank only. For the Company to be “well capitalized,” the Tier 1 Capital to Risk Weighted Assets has to be at least 6.00%.



Consolidated Average Balance Sheets & Yields
With Resultant Interest and Average Rates
Three Months Ended Three Months Ended
(dollars in thousands)June 30, 2017 June 30, 2016
Interest /
Income
Expense
Interest /
Income
Expense
ASSETS Average
Balance
Average
Yield /
Rate
Average
Balance
Average
Yield /
Rate
Interest-Earning Assets:
Interest-bearing due from banks$40,442 $102 1.01% $19,378 $32 0.66%
Investment securities94,123 514 2.18% 84,308 422 2.00%
Loans, net of unearned fees(1) (2)779,508 8,733 4.49% 715,114 8,085 4.55%
Total Interest-Earning Assets914,073 9,349 4.10% 818,800 8,539 4.19%
Non-Interest-Earning Assets:
Allowance for loan losses(9,698) (9,031)
All other assets80,633 79,644
Total Assets$985,008 $889,413
LIABILITIES & SHAREHOLDERS' EQUITY
Interest-Bearing Liabilities:
NOW deposits$197,949 231 0.47% $154,633 173 0.45%
Savings deposits259,860 336 0.52% 226,545 275 0.49%
Money market deposits63,841 26 0.16% 74,726 30 0.16%
Time deposits131,209 470 1.44% 131,407 467 1.43%
Securities sold under agreements to repurchase23,577 17 0.29% 19,440 15 0.31%
FHLB and other borrowings24,303 147 2.43% 23,800 147 2.48%
Subordinated debt9,868 164 6.65% 9,836 163 6.63%
Total Interest-Bearing Liabilities710,607 1,391 0.79% 640,387 1,270 0.80%
Non-Interest-Bearing Liabilities:
Demand deposits163,198 146,667
Other liabilities7,854 6,901
Total Non-Interest-Bearing Liabilities171,052 153,568
Stockholders’ Equity103,349 95,458
Total Liabilities and Shareholders’ Equity$985,008 $889,413
NET INTEREST INCOME $7,958 $7,269
NET INTEREST SPREAD(3) 3.31% 3.39%
NET INTEREST MARGIN(4) 3.49% 3.57%
(1) Included in interest income on loans are loan fees.
(2) Includes non-performing loans.
(3) The interest rate spread is the difference between the weighted average yield on average interest-earning and the weighted average cost of average interest-bearing liabilities.
(4) The interest rate margin is calculated by dividing annualized net interest income by average interest earning assets.



Consolidated Average Balance Sheets & Yields
With Resultant Interest and Average Rates
Six Months Ended Six Months Ended
(dollars in thousands)June 30, 2017 June 30, 2016
Interest /
Income
Expense
Interest /
Income
Expense
ASSETS Average
Balance
Average
Yield /
Rate
Average
Balance
Average
Yield /
Rate
Interest-Earning Assets:
Interest-bearing due from banks$39,359 $174 0.89% $24,550 $65 0.53%
Investment securities95,072 1,032 2.17% 81,738 814 1.99%
Loans, net of unearned fees(1) (2)770,860 17,136 4.48% 704,964 15,998 4.56%
Total Interest-Earning Assets905,291 18,342 4.09% 811,252 16,877 4.18%
Non-Interest-Earning Assets:
Allowance for loan losses(9,671) (8,913)
All other assets78,119 77,860
Total Assets$973,739 $880,199
LIABILITIES & SHAREHOLDERS' EQUITY
Interest-Bearing Liabilities:
NOW deposits$194,943 443 0.46% $152,631 324 0.43%
Savings deposits258,189 663 0.52% 225,871 548 0.49%
Money market deposits62,760 52 0.17% 74,293 60 0.16%
Time deposits133,827 943 1.42% 127,420 896 1.41%
Securities sold under agreements to repurchase21,488 32 0.30% 18,570 29 0.31%
FHLB and other borrowings24,374 292 2.42% 23,983 295 2.47%
Subordinated debt9,864 329 6.67% 9,832 328 6.67%
Total Interest-Bearing Liabilities705,445 2,754 0.79% 632,600 2,480 0.79%
Non-Interest-Bearing Liabilities:
Demand deposits158,219 145,544
Other liabilities7,522 7,342
Total Non-Interest-Bearing Liabilities165,741 152,886
Shareholders’ Equity102,553 94,713
Total Liabilities and Shareholders’ Equity$973,739 $880,199
NET INTEREST INCOME $15,588 $14,397
NET INTEREST SPREAD(3) 3.30% 3.39%
NET INTEREST MARGIN(4) 3.47% 3.57%
(1) Included in interest income on loans are loan fees.
(2) Includes non-performing loans.
(3) The interest rate spread is the difference between the weighted average yield on average interest-earning and the weighted average cost of average interest-bearing liabilities.
(4) The interest rate margin is calculated by dividing annualized net interest income by average interest earning assets.


Reconciliation of Non-GAAP Financial Measures

The press release contains certain financial information determined by methods other than in accordance with generally accepted accounting policies in the United States (GAAP). These non-GAAP financial measures are "book value per common share," "tangible book value per common share," "return on average tangible assets," and "return on average tangible equity." This non-GAAP disclosure has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies. Our management uses these non-GAAP measures in its analysis of our performance because it believes these measures are material and will be used as a measure of our performance by investors.

(in thousands, except per share data)
As of and for the Three Months Ended As of and for the
Six Months Ended
June 30, March 31, Dec. 31, Sept. 30, June 30, June 30, June 30,
2017 2017 2016 2016 2016 2017 2016
Total shareholders' equity$104,524 $102,406 $100,716 $98,594 $96,293 $104,524 $96,293
Less: goodwill and other tangibles (18,109) (18,109) (18,109) (18,109) (18,109) (18,109) (18,109)
Tangible common shareholders’ equity$86,415 $84,297 $82,607 $80,485 $78,184 $86,415 $78,184
Common shares outstanding 8,429 8,389 8,365 8,358 8,366 8,429 8,366
Book value per common share$12.40 $12.21 $12.04 $11.80 $11.51 $12.40 $11.51
Book value per common share$12.40 $12.21 $12.04 $11.80 $11.51 $12.40 $11.51
Effect of intangible assets (2.15) (2.16) (2.16) (2.17) (2.17) (2.15) (2.17)
Tangible book value per common share$10.25 $10.05 $9.88 $9.63 $9.34 $10.25 $9.34
Return on average assets0.87%0.76%1.08%1.16%0.78%0.81%0.78%
Effect of average intangible assets0.01%0.01%0.02%0.03%0.02%0.02%0.02%
Return on average tangible assets0.88%0.77%1.10%1.19%0.80%0.83%0.80%
Return on average equity8.26%7.18%10.25%10.81%7.28%7.73%7.26%
Effect of average intangible assets1.75%1.56%2.28%2.48%1.70%1.66%1.72%
Return on average tangible equity10.01%8.74%12.53%13.29%8.98%9.39%8.98%


Investor Contact: Adam Prior, Senior Vice President The Equity Group Inc. Phone: (212) 836-9606 E-mail: aprior@equityny.com Media Contact: Adam Cadmus, Marketing Director Phone: (732) 982-2167 Email: acadmus@tworiverbank.com

Source: Two River Bancorp