×

Entegra Financial Corp. Announces Fourth Quarter 2017 Results

FRANKLIN, N.C., Jan. 18, 2018 (GLOBE NEWSWIRE) -- Entegra Financial Corp. (the “Company”) (NASDAQ:ENFC), the holding company for Entegra Bank (the “Bank”), today announced earnings and related data for the three months and year ended December 31, 2017.

Highlights

The following tables highlight the most important trends that the Company believes are relevant to understanding the performance of the Company. As further detailed in Appendix A, core results (a non-GAAP measure) reflect adjustments for material items including investment gains and losses, investment impairment, merger-related expenses, and changes in the value of net deferred tax assets due to the passing of the Tax Cuts and Jobs Act of 2017.

For the Three Months Ended December 31,
(Dollars in thousands, except per share data)
2017 2016 Change (%)
GAAP Core GAAP Core GAAP Core
Net income (loss)$(3,294) $3,700 $2,352 $2,470 -240.1% 49.8%
Net interest income$12,682 N/A $9,219 N/A 37.6% N/A
Net interest margin 3.61% N/A 3.25% N/A 11.1% N/A
Return on average assets -0.83% 0.94% 0.75% 0.79% -210.7% 19.0%
Return on average equity -8.59% 11.37% 6.91% 7.43% -224.3% 53.0%
Efficiency ratio 81.58% 60.79% 70.34% 68.38% 16.0% -11.1%
Diluted earnings (loss) per share$(0.48) $0.54 $0.36 $0.38 -233.3% 42.1%
For the Year Ended December 31,
(Dollars in thousands, except per share data)
2017 2016 Change (%)
GAAP Core GAAP Core GAAP Core
Net income$2,579 $10,647 $6,376 $7,091 -59.6% 50.1%
Net interest income$42,845 N/A $34,488 N/A 24.2% N/A
Net interest margin 3.36% N/A 3.28% N/A 2.4% N/A
Return on average assets 0.18% 0.75% 0.55% 0.61% -67.3% 23.0%
Return on average equity 1.82% 8.18% 4.71% 5.34% -61.4% 53.2%
Efficiency ratio 75.40% 66.54% 76.04% 72.65% -0.8% -8.4%
Diluted earnings per share$0.39 $1.60 $0.98 $1.08 -60.2% 48.1%


As of December 31, As of December 31,
2017 2016
(Dollars in thousands, except per share data)
Asset Quality:
Non-performing loans $4,778 $6,041
Real estate owned $2,568 $4,226
Non-performing assets $7,346 $10,267
Non-performing loans to total loans 0.48% 0.81%
Non-performing assets to total assets 0.47% 0.79%
Net charge-offs (12 months ended) $315 $430
Allowance for loan losses to non-performing loans 227.86% 154.03%
Allowance for loan losses to total loans 1.08% 1.25%
Other Data:
Book value per share $22.00 $20.57
Tangible book value per share $18.72 $20.10
Closing market price per share $29.25 $20.60
Closing price-to-tangible book value ratio 156.25% 102.49%
Equity to assets ratio 9.59% 10.29%
Tangible common equity to tangible assets ratio 8.29% 10.08%

Management Commentary

Roger D. Plemens, President and CEO of the Company, reported, “The acquisitions we have completed over the last several years continue to reap benefits for our shareholders, achieving significant improvements in profitability and efficiency. We have been particularly focused on reaching a return on tangible equity of at least 8% in 2017, a benchmark which we surpassed in the fourth quarter on a core basis. As we look forward to the remainder of 2018 and beyond, we will continue to focus on organic and acquired growth opportunities allowing a return on tangible equity to 10% and greater, while further improving our efficiency ratio. With a tangible common equity to tangible assets ratio of 8.29% at December 31, 2017, we will also continue to consider opportunities to supplement our existing capital base.”

Net Interest Income

Net interest income increased $3.5 million, or 37.6%, to $12.7 million for the three months ended December 31, 2017 compared to $9.2 million for the same period in 2016. Net interest income increased $8.4 million, or 24.2%, to $42.8 million for the year ended December 31, 2017 compared to $34.5 million for the same period in 2016. The increase in net interest income was primarily due to higher volumes in the loan and investment portfolios as well as an increase in the yields earned on cash and investments. Net interest margin for the three months and year ended December 31, 2017 improved to 3.61% and 3.36%, respectively, compared to 3.25% and 3.28% for the same periods in 2016. The net interest margin for the three months ended December 31, 2017 includes approximately 15 basis points of loan fair value accretion income that is not expected to re-occur in the first quarter of 2018.

Provision for Loan Losses

The provision for loan losses was $0.7 million and $1.9 million for the quarter and year ended December 31, 2017, compared to $0.2 million and $0.3 million for the same periods in 2016. The increased provision for loan losses in 2017 was mainly attributable to loan growth. The Company continues to experience modest levels of net charge-offs and non-performing loans.

Noninterest Income

Noninterest income decreased $0.9 million, or 48.4%, to $0.9 million for the three months ended December 31, 2017 compared to $1.8 million for the same period in 2016 primarily as the result of a decline in the gains on sale of investment securities. The Company sold approximately $45.0 million of tax exempt municipal securities in December 2017, realizing a loss of $1.1 million, in response to the Tax Cuts and Jobs Act of 2017. Increases in mortgage banking, trading securities gains, service charges on deposit accounts, interchange fees, and bank-owned life insurance (BOLI) were partially offset by declines in servicing income and gains on sale of SBA loans.

Noninterest income decreased $1.9 million, or 24.1%, to $6.0 million for the year ended December 31, 2017 compared to $7.8 million for the same period in 2016. The decrease was primarily related to a decline in the gains on sale of investment securities discussed above as well as other than temporary impairment of $0.8 million realized on two investment securities. Increases in mortgage banking, trading securities gains, service charges on deposit accounts, interchange fees, and BOLI were partially offset by declines in servicing income and gains on sale of SBA loans.

Noninterest Expense

Noninterest expense increased $3.3 million, or 43.2%, to $11.1 million for the three months ended December 31, 2017 compared to $7.8 million for the same period in 2016. Noninterest expense increased $4.6 million, or 14.3%, to $36.8 million for the year ended December 31, 2017 compared to $32.2 million for the same period in 2016. The increases were primarily related to increased compensation and employee benefits and net occupancy expenses as the 2017 periods included the full impact of the Oldtown Bank acquisition, the partial impact of the branches acquired from Stearns Bank, and the Chattahoochee Bank of Georgia (Chattahoochee) acquisition. The 2017 periods also included increased merger-related expenses resulting from the Stearns Bank and Chattahoochee transactions.

Income Taxes

Income tax expense for the three months and year ended December 31, 2017 was $5.1 million and $7.5 million, respectively, compared to $0.7 million and $3.5 million for the comparable periods in the prior year. Income tax expense for the 2017 periods was impacted by the recognition of $4.9 million of expense related to the revaluation of deferred tax assets and liabilities at the newly enacted Federal tax rate of 21%. The one-time tax, non-cash, expense related to the revaluation was partially offset during the three and twelve months ended December 31, 2017 by increased tax-exempt income related to municipal bond investments and BOLI income.

Balance Sheet

Total assets increased $284.1 million, or 22.0%, to $1.58 billion at December 31, 2017 from $1.29 billion at December 31, 2016 as the Company continued to leverage its capital with organic and acquired growth.

Loans receivable increased $260.8 million, or 35.0%, to $1.0 billion at December 31, 2017 from $744.4 million at December 31, 2016. Excluding $159.0 million of loans acquired from Chattahoochee, organic loan growth was approximately $101.8 million, or 13.7%, during 2017. Loan growth continues to be primarily concentrated in commercial real estate and commercial and industrial loans.

Core deposits increased $224.6 million, or 41.5%, to $765.4 million at December 31, 2017 from $540.8 million at December 31, 2016, including $79.6 million of core deposits assumed in the Stearns Bank branch acquisition and $105.2 million of core deposits assumed in the Chattahoochee acquisition. Certificates of deposits increased $107.5 million, or 37.2%, to $396.7 million at December 31, 2017 from $289.2 million at December 31, 2016, primarily as the result of certificates of deposit assumed from Stearns Bank and Chattahoochee. Core deposits increased slightly to 66% of the Company’s deposit portfolio at December 31, 2017 from 65% at December 31, 2016.

Total equity increased $18.2 million, or 13.7%, to $151.3 million at December 31, 2017 compared to $133.1 million at December 31, 2016. This increase was primarily attributable to the issuance of approximately 396,000 shares valued at $9.9 million related to the Chattahoochee acquisition, $2.6 million of net income, $0.9 million of stock-based compensation expense, and a $5.4 million after tax improvement in the market value of investment securities, partially offset by $0.5 million of share repurchases. Tangible book value per share, a non-GAAP measure, decreased $1.38 from $20.10 at December 31, 2016 to $18.72 at December 31, 2017 as a result of dilution from the Stearns Bank branch and Chattahoochee acquisitions, partially offset by operating results for the period.

Asset Quality

Non-performing assets decreased $2.9 million to $7.3 million at December 31, 2017 from $10.3 million at December 31, 2016 primarily as a result of the liquidation of several large real estate owned balances during the period and the resolution of non-performing loans. Net loan charge-offs continue to remain modest totaling $0.3 million for the year ended December 31, 2017.

Non-GAAP Financial Measures

Statements included in this press release include non-GAAP financial measures and should be read along with the accompanying tables in Appendix A, which provide a reconciliation of non-GAAP financial measures to GAAP financial measures. This press release and the accompanying tables discuss financial measures, such as core noninterest expense, core net income, core diluted earnings per share, core return on average assets, core return on tangible average equity, core efficiency ratio, tangible book value, tangible assets and tangible book value per share, which are non-GAAP measures. We believe that such non-GAAP measures are useful because they enhance the ability of investors and management to evaluate and compare the Company’s operating results from period to period in a meaningful manner. Non-GAAP measures should not be considered as an alternative to any measure of performance as promulgated under GAAP. Investors should consider the Company’s performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company's results or financial condition as reported under GAAP.

About Entegra Financial Corp. and Entegra Bank

Entegra Financial Corp. is the holding company of Entegra Bank. The Company’s shares trade on the NASDAQ Global Market under the symbol “ENFC”.

Entegra Bank operates a total of 18 branches located throughout the Western North Carolina counties of Cherokee, Haywood, Henderson, Jackson, Macon, Polk and Transylvania, the Upstate South Carolina counties of Anderson, Greenville, and Spartanburg and the Northern Georgia counties of Pickens and Hall. The Bank also operates loan production offices in Asheville, NC, Clemson, SC, and Duluth, GA. For further information, visit the Bank’s website www.entegrabank.com.

Disclosures About Forward-Looking Statements

The discussions included in this document and its exhibits may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. For the purposes of these discussions, any statements that are not statements of historical fact may be deemed to be “forward-looking statements.” Such statements are often characterized by the use of qualifying words such as “expects,” “anticipates,” “believes,” “estimates,” “plans,” “projects,” or other statements concerning opinions or judgments of the Company and its management about future events. The accuracy of such forward looking statements could be affected by factors including, but not limited to: the Company’s ability to implement aspects of its growth strategy; the financial success or changing conditions or strategies of the Company’s customers or vendors; fluctuations in interest rates; actions of government regulators; the availability of capital and personnel; and general economic conditions. These forward looking statements express management’s current expectations, plans or forecasts of future events, results and condition, including financial and other estimates. Additional factors that could cause actual results to differ materially from those anticipated by forward looking statements are discussed in the Company’s filings with the Securities and Exchange Commission, including without limitation its annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. The Company undertakes no obligation to revise or update these statements following the date of this press release.

ENTEGRA FINANCIAL CORP. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Amounts in thousands, except per share data)
Three Months Ended December 31,
2017 2016
Interest income$14,908 $10,826
Interest expense 2,226 1,607
Net interest income 12,682 9,219
Provision for loan losses 737 174
Net interest income after provision for loan losses 11,945 9,045
Servicing income, net 89 224
Mortgage banking 347 157
Gain on sale of SBA loans 110 186
Gain (loss) on sale of investments (1,121) 111
Trading securities gains 241 57
Other than temporary impairment on available-for-sale securities (57) -
Service charges on deposit accounts 433 386
Interchange fees 490 398
Bank owned life insurance 200 178
Other 199 109
Total noninterest income 931 1,806
Compensation and employee benefits 5,309 4,426
Net occupancy 1,238 954
Federal Home Loan Bank prepayment penalties - 118
Federal deposit insurance 134 94
Professional and advisory 308 246
Data processing 469 397
Marketing and advertising 226 259
Net cost of (income from ) operation of real estate owned 119 67
Merger-related expenses 2,114 174
Other 1,189 1,020
Total noninterest expense 11,106 7,755
Income before taxes 1,770 3,096
Income tax expense 5,064 744
Net income (loss)$(3,294) $2,352
Earnings (loss) per common share:
Basic$(0.48) $0.36
Diluted$(0.48) $0.36
Weighted average common shares outstanding:
Basic 6,863 6,458
Diluted 6,863 6,468

ENTEGRA FINANCIAL CORP. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Amounts in thousands, except per share data)
Year Ended December 31,
2017 2016
Interest income$ 50,529 $ 40,520
Interest expense 7,684 6,032
Net interest income 42,845 34,488
Provision for loan losses 1,897 274
Net interest income after provision for loan losses 40,948 34,214
Servicing income, net 401 487
Mortgage banking 1,118 904
Gain on sale of SBA loans 546 928
Gain (loss) on sale of investments (1,102) 1,216
Trading securities gains 686 328
Other than temporary impairment on available-for-sale securities (757) -
Service charges on deposit accounts 1,672 1,537
Interchange fees 1,864 1,507
Bank owned life insurance 803 489
Other 726 450
Total noninterest income 5,957 7,846
Compensation and employee benefits 20,168 17,164
Net occupancy 4,089 3,534
Federal Home Loan Bank prepayment penalties - 118
Federal deposit insurance 513 562
Professional and advisory 1,237 959
Data processing 1,684 1,554
Marketing and advertising 953 1,070
Net cost of operation of real estate owned 213 730
Merger-related expenses 3,086 2,197
Other 4,855 4,301
Total noninterest expense 36,798 32,189
Income before taxes 10,107 9,871
Income tax expense 7,528 3,495
Net income$ 2,579 $ 6,376
Earnings per common share:
Basic$ 0.39 $ 0.98
Diluted$ 0.39 $ 0.98
Weighted average common shares outstanding:
Basic 6,562 6,477
Diluted 6,659 6,490

ENTEGRA FINANCIAL CORP. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
December 31, 2017 December 31, 2016
(Unaudited) (Audited)
Assets
Cash and cash equivalents$109,467 $43,294
Investments - trading 6,095 5,211
Investments - available for sale 342,863 398,291
Other investments 12,386 15,261
Loans held for sale 3,845 4,584
Loans receivable 1,005,139 744,361
Allowance for loan losses (10,887) (9,305)
Real estate owned 2,568 4,226
Fixed assets, net 24,113 20,209
Bank owned life insurance 32,150 31,347
Net deferred tax asset 8,831 18,985
Goodwill 18,235 2,065
Core deposit intangibles, net 4,269 979
Other assets 18,065 13,369
Total assets$1,577,139 $1,292,877
Liabilities and Shareholders' Equity
Liabilities
Core deposits$765,442 $540,808
Certificates of deposit 396,735 289,205
Federal Home Loan Bank advances 223,500 298,500
Junior subordinated notes 14,433 14,433
Post employment benefits 10,174 10,211
Other liabilities 15,542 6,652
Total liabilities$1,425,826 $1,159,809
Total shareholders' equity 151,313 133,068
Total liabilities and shareholders' equity$1,577,139 $1,292,877

APPENDIX A – RECONCILIATION OF NON-GAAP MEASURES (UNAUDITED)
Three Months Ended December 31, Year Ended December 31,
2017 2016 2017 2016
(Dollars in thousands, except per share data)
Core Noninterest Expense
Noninterest expense (GAAP)$11,106 $7,755 $36,798 $32,189
FHLB prepayment penalty - (118) - (118)
Merger-related expenses (2,114) (174) (3,086) (2,197)
Core noninterest expense (Non-GAAP)$8,992 $7,463 $33,712 $29,874
Core Net Income
Net income (loss) (GAAP)$(3,294) $2,352 $2,579 $6,376
FHLB prepayment penalty - 77 - 77
Loss (gain) on sale of investments 729 (72) 716 (790)
Other than temporary impairment of investment securities available for sale 37 - 492 -
Merger-related expenses 1,374 113 2,006 1,428
Deferred tax asset revaluation due to new enacted tax rate of 21% 4,854 - 4,854 -
Core net income (Non-GAAP)$3,700 $2,470 $10,647 $7,091
Core Diluted Earnings Per Share
Diluted earnings (loss) per share (GAAP)$(0.48) $0.36 $0.39 $0.98
FHLB prepayment penalty - 0.01 - 0.01
Loss (gain) on sale of investments 0.11 (0.01) 0.11 (0.13)
Other than temporary impairment of investment securities available for sale 0.01 - 0.07 -
Merger-related expenses 0.20 0.02 0.30 0.22
Deferred tax asset revaluation due to new enacted tax rate of 21% 0.70 - 0.73 -
Core diluted earnings per share (Non-GAAP)$0.54 $0.38 $1.60 $1.08
Core Return on Average Assets
Return on Average Assets (GAAP) -0.83% 0.75% 0.18% 0.55%
FHLB prepayment penalty - 0.02% - 0.01%
Gain on sale of investments 0.18% -0.02% 0.05% -0.07%
Other than temporary impairment of investment securities available for sale 0.01% - 0.03% -
Merger-related expenses 0.35% 0.04% 0.14% 0.12%
Deferred tax asset revaluation due to new enacted tax rate of 21% 1.23% - 0.35% -
Core Return on Average Assets (Non-GAAP) 0.94% 0.79% 0.75% 0.61%
Core Return on Tangible Average Equity
Return on Average Equity (GAAP) -8.59% 6.91% 1.82% 4.71%
FHLB prepayment penalty - 0.23% - 0.06%
Loss (gain) on sale of investments 1.90% -0.21% 0.50% -0.58%
Other than temporary impairment of investment securities available for sale 0.10% - 0.35% -
Merger-related expenses 3.58% 0.33% 1.41% 1.05%
Deferred tax asset revaluation due to new enacted tax rate of 21% 12.66% - 3.42% -
Effect of goodwill and intangibles 1.72% 0.17% 0.68% 0.10%
Core Return on Average Tangible Equity (Non-GAAP) 11.37% 7.43% 8.18% 5.34%
Core Efficiency Ratio
Efficiency ratio (GAAP) 81.58% 70.34% 75.40% 76.04%
FHLB prepayment penalty - -1.07% - -0.28%
Gain (loss) on sale of investments -6.21% 0.69% -2.21% 2.08%
Other than temporary impairment of investment securities available for sale -0.34% - -1.53% -
Merger-related expenses -14.24% -1.58% -5.12% -5.19%
Core Efficiency Ratio (Non-GAAP) 60.79% 68.38% 66.54% 72.65%
As Of
December 31, 2017
December 31, 2016
(Dollars in thousands, except share data)
Tangible Book Value Per Share
Book Value (GAAP)$151,313 $133,068
Goodwill and intangibles (22,504) (3,044)
Book Value (Tangible)$128,809 $130,024
Outstanding shares 6,879,191 6,467,550
Tangible Book Value Per Share$18.72 $20.10

APPENDIX B – TAX EQUIVALENT NET INTEREST MARGIN ANALYSIS (UNAUDITED)
For the Three Months Ended December 31,
2017 2016
Average
Outstanding
Balance
Interest Yield/ Rate Average
Outstanding
Balance
Interest Yield/ Rate
(Dollars in thousands)
Interest-earning assets:
Loans, including loans held for sale $974,576 $12,026 4.90% $723,120 $8,439 4.63%
Loans, tax exempt (1) 16,062 146 3.61% 15,487 146 3.74%
Investments - taxable 260,057 1,658 2.55% 272,278 1,454 2.14%
Investment tax exempt (1) 119,806 1,186 3.96% 100,658 968 3.85%
Interest earning deposits 62,161 217 1.38% 48,355 58 0.48%
Other investments, at cost 12,395 141 4.51% 12,960 151 4.62%
Total interest-earning assets 1,445,057 15,374 4.22% 1,172,858 11,216 3.79%
Noninterest-earning assets 133,631 88,682
Total assets $1,578,688 $1,261,540
Interest-bearing liabilities:
Savings accounts $50,480 $15 0.12% $38,641 $11 0.11%
Time deposits 404,542 835 0.82% 295,387 716 0.96%
Money market accounts 314,617 318 0.40% 245,358 223 0.36%
Interest bearing transaction accounts 202,976 79 0.15% 118,976 33 0.11%
Total interest bearing deposits 972,615 1,247 0.51% 698,362 983 0.56%
FHLB advances 223,717 730 1.28% 254,043 454 0.71%
Junior subordinated debentures 14,433 139 3.77% 14,433 138 3.79%
Other borrowings 8,726 110 5.00% 2,653 31 4.64%
Total interest-bearing liabilities 1,219,491 2,226 0.72% 969,491 1,606 0.66%
Noninterest-bearing deposits 190,182 141,418
Other non interest bearing liabilities 15,650 14,543
Total liabilities 1,425,323 1,125,452
Total equity 153,365 136,088
Total liabilities and equity $1,578,688 $1,261,540
Tax-equivalent net interest income $13,148 $9,609
Net interest-earning assets (2) $225,566 $203,367
Average interest-earning assets to interest-bearing liabilities 1.18% 1.21%
Tax-equivalent net interest rate spread (3) 3.50% 3.14%
Tax-equivalent net interest margin (4) 3.61% 3.25%
(1) Tax exempt loans and investments are calculated giving effect to a 35% federal tax rate.
(2) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
(3) Tax-equivalent net interest rate spread represents the difference between the tax equivalent yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(4) Tax-equivalent net interest margin represents tax equivalent net interest income divided by average total interest-earning assets.

For the Year Ended December 31,
2017 2016
Average
Outstanding
Balance
Interest Yield/ Rate Average
Outstanding
Balance
Interest Yield/ Rate
(Dollars in thousands)
Interest-earning assets:
Loans, including loans held for sale $818,431 $38,712 4.73% $693,743 $32,324 4.66%
Loans, tax exempt (1) 15,945 585 3.67% 13,516 518 3.83%
Investments - taxable 290,839 7,025 2.42% 259,036 5,628 2.17%
Investment tax exempt (1) 118,461 4,795 4.05% 60,685 2,323 3.83%
Interest earning deposits 73,149 676 0.92% 41,762 210 0.50%
Other investments, at cost 13,379 619 4.63% 10,351 511 4.92%
Total interest-earning assets 1,330,204 52,412 3.94% 1,079,093 41,515 3.84%
Noninterest-earning assets 94,209 85,126
Total assets 1,424,413 1,164,219
Interest-bearing liabilities:
Savings accounts $47,754 $53 0.11% $37,470 $49 0.13%
Time deposits 363,285 3,171 0.87% 296,456 2,985 1.00%
Money market accounts 270,036 1,022 0.38% 227,838 770 0.34%
Interest bearing transaction accounts 170,366 228 0.13% 112,805 160 0.14%
Total interest bearing deposits 851,441 4,474 0.53% 674,569 3,964 0.59%
FHLB advances 236,308 2,443 1.03% 194,662 1,419 0.73%
Junior subordinated debentures 14,433 557 3.86% 14,433 532 3.68%
Other borrowings 4,567 210 4.60% 2,528 117 4.62%
Total interest-bearing liabilities 1,106,749 7,684 0.69% 886,192 6,032 0.68%
Noninterest-bearing deposits 161,006 129,219
Other non interest bearing liabilities 14,568 13,353
Total liabilities 1,282,323 1,028,764
Total equity 142,090 135,455
Total liabilities and equity $1,424,413 $1,164,219
Tax-equivalent net interest income $44,728 $35,483
Net interest-earning assets (2) $223,455 $192,901
Average interest-earning assets to interest-bearing liabilities 120.19% 121.77%
Tax-equivalent net interest rate spread (3) 3.25% 3.16%
Tax-equivalent net interest margin (4) 3.36% 3.28%
(1) Tax exempt loans and investments are calculated giving effect to a 35% federal tax rate.
(2) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
(3) Tax-equivalent net interest rate spread represents the difference between the tax equivalent yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(4) Tax-equivalent net interest margin represents tax equivalent net interest income divided by average total interest-earning assets.

Contact: Roger D. Plemens
President and Chief Executive Officer
(828) 524-7000

Source:Entegra Financial Corp.