WASHINGTON, N.C., Oct. 20,
2016 /PRNewswire/ -- First South Bancorp, Inc. (NASDAQ: FSBK)
(the "Company"), the parent holding company of First South Bank
(the "Bank"), reports its unaudited operating results for the
quarter and nine months ended September 30,
2016.
2016 Third Quarter Highlights
- Strong earnings performance with net income of $1.9 million, earnings per share of $0.20, ROA of 0.78% and ROE of 8.52%
- Strategic execution as evidenced by highest quarterly EPS since
Q1 2009
- Strong mortgage loan origination, sale and servicing revenue
leads to increased core non-interest income
- Loans and leases held for investment grew at an annualized rate
of over 8%
- Continued to maintain sound asset quality metrics
- Growth in non-interest bearing deposits at an annualized rate
of over 28%
- Completed the purchase of mortgage servicing rights for 452
high-quality Freddie Mac and Fannie Mae loans with an unpaid
principal balance of $84.6 million at
settlement
Net Income. Net income for the 2016 third quarter was
$1.9 million, representing a 17.5%
increase from $1.6 million and a
53.2% increase from $1.2 million for
the linked and comparative 2015 quarter, respectively.
Earnings per diluted common share, return on average assets and
return on average equity for the current quarter were $0.20, 0.78% and 8.52%, respectively, compared
with $0.17, 0.68% and 7.55% for the
linked quarter and $0.13, 0.54% and
5.99% for the comparative 2015 third quarter. The improvement
in quarterly net income is primarily attributable to an increase in
net interest income, coupled with solid core non-interest income
and a reduction in operating expenses. Income tax expense for
the third quarter of 2016 was impacted by a $74,000 adjustment to our deferred tax asset due
to a reduction in the North
Carolina statutory tax rate. In the third quarter of
2015 an $80,000 adjustment was made
for this same circumstance.
The Company showed significant improvement in pre-tax,
pre-provision operating earnings for the 2016 third quarter.
Pre-tax, pre-provision operating earnings, which excludes certain
revenue and expense items as shown under the heading
"Reconciliation of Non-GAAP Measures" on the accompanying table of
Supplemental Financial Data, was $3.0
million for the current quarter, as compared to $2.5 million for the linked 2016 second quarter
and $1.8 million for the comparative
2015 third quarter. Important disclosures about and
reconciliations of non-GAAP measures, including pre-tax,
pre-provision operating earnings to the corresponding GAAP
measures, are provided below and attached to this press
release.
Net income for the first nine months of 2016 increased to
$5.0 million or $0.52 per diluted common share, a 59.4% increase
from the $3.1 million or $0.33 per diluted common share earned during the
first nine months of 2015. Earnings for the current nine
month period were positively impacted by strong increases in net
interest income and core non-interest income, as well as lower
non-interest expenses, while being partially offset by an increase
in the provision for loan losses associated with the strong loan
portfolio growth. During the first nine months of 2015 the
Bank incurred $425,000 of one-time
pre-tax transaction expenses associated with acquiring nine branch
offices.
Bruce Elder, President and CEO,
commented, "First South Bancorp continues to execute our strategy
to enhance shareholder value. The expansion of our deposit
franchise and strong loan growth, leveraging our mortgage servicing
infrastructure and our success in Small Business Administration
(SBA) lending are having a positive impact on the rate at which
earnings are increasing compared to prior year's quarters.
While more work is to be done, we have made steady progress
improving our efficiency ratio from 82.26% for the quarter ended
September 30, 2015, to 73.84% for the
current quarter."
Net Interest Income. Net interest income for the 2016
third quarter increased to $8.3
million from $8.1 million for
the linked 2016 second quarter and $7.4
million for the 2015 third quarter. The tax equivalent
net interest margin fell by 3 basis points to 3.73% for the current
quarter from 3.76% for the linked quarter as the current interest
rate environment presents challenges to maintain or increase yields
on earnings assets as we grow. Compared with the 2015 third
quarter, our current quarter net interest margin improved by 10
basis points from 3.63%. This improvement in the net interest
margin is due to significant growth of our earning assets with cash
flows from lower yielding securities utilized to grow our loan
portfolio, thereby changing the mix of earning assets.
Net interest income for the first nine months of 2016 increased
to $24.2 million, from $21.7 million for the comparative prior year nine
month period. Growth and changes in the mix of our earning
asset base positively impacted net interest income as well as the
net interest margin for the first nine months of 2016 compared to
the prior year period. Net interest income increased by
$2.5 million and the net interest
margin improved to 3.72% from 3.64%. During the comparative
periods average earning assets increased by $68.0 million and the percentage of average loans
outstanding to average earning assets increased to 74.5% from
64.2%.
Asset Quality and Provision for Credit Losses. Total
nonperforming assets declined to $7.7
million or 0.78% of total assets at September 30, 2016, compared to $9.4 million or 1.0% of total assets at
December 31, 2015, and $10.2 million or 1.1% of total assets at
September 30, 2015. Total loans
and leases in non-accrual status were $2.9
million at September 30, 2016,
compared to $3.2 million at
December 31, 2015, and $3.5 million at September
30, 2015. Our level of other real estate owned (OREO)
declined to $4.8 million at
September 30, 2016, from $6.1 million at December
31, 2015, and $6.5 million at
September 30, 2015.
The allowance for loan and lease losses (ALLL) was $8.5 million at September
30, 2016, representing 1.25% of loans and leases held for
investment, compared to $7.9 million
or 1.30% at December 31, 2015, and
$7.6 million or 1.33% at September 30, 2015. The Bank recorded
$220,000 of provision for credit
losses in the 2016 third quarter, $325,000 in the linked second quarter, and
$335,000 in the comparative 2015
third quarter. For the nine months ended September 30, 2016, the Bank recorded
$770,000 of provision for credit
losses compared to $475,000 in the
first nine months of 2015. Management believes the Company is
adequately reserved for potential future credit losses.
Non-Interest Income. Total non-interest income was
$3.7 million for the 2016 third
quarter compared to $3.5 million for
the linked 2016 second quarter and $3.8
million for the 2015 third quarter. Both the linked
and comparative year quarters include gains on sale of investment
securities.
Deposit fees and service charges were $1.9 million for the 2016 third quarter and
represented 51.7% of total non-interest income. The Company
also generated $1.9 million of
deposit fees and service charges for the linked 2016 second quarter
and $2.1 million in the 2015 third
quarter.
Total non-interest income generated from the sale and servicing
of mortgage loans and loan fees increased to $1.2 million for the 2016 third quarter compared
to $842,000 in the linked 2016 second
quarter and $792,000 for the 2015
third quarter. Fee income generated from the servicing of
mortgages improved during the current quarter by $53,000 due to the acquisition of mortgage
servicing rights in July. Revenue from mortgage banking is
subject to the level of activity in the real estate market and
changes in the interest rate environment, as such results will vary
depending on current levels and trends in the market place.
Sales of OREO resulted in a net gain of $77,000 for the 2016 third quarter compared to
net losses of $14,000 for the linked
2016 second quarter and $63,000 for
the 2015 third quarter as the Bank continues its efforts to reduce
its level of nonperforming assets.
The Bank had no net gains from investment securities sales for
the 2016 third quarter compared to $184,000 for the linked quarter and $503,000 for the prior year quarter. We
have sold investment securities in prior periods primarily to fund
growth in our loan and lease portfolios.
Included in other non-interest income is revenue from
investments in Bank-owned life insurance (BOLI) of $142,000 for the 2016 third quarter compared to
$142,000 for the linked 2016 second
quarter and $127,000 for the 2015
third quarter.
Other non-interest income also includes SBA related revenue of
$148,000 for the 2016 third quarter
compared to $142,000 for the 2016
second quarter and $51,000 for the
2015 third quarter. While the Bank has originated some SBA
loans in prior years, we began to actively originate, sell and
service these credits during 2016.
Total core non-interest income, excluding net gains from
securities and OREO sales, continued to improve in the current
quarter to $3.6 million from
$3.4 million for the linked 2016
second quarter and $3.3 million for
the comparative 2015 third quarter, as shown under the heading
"Reconciliation of Non-GAAP Measures" on the accompanying table of
Supplemental Financial Data, primarily due to an increase in
revenues from our mortgage banking activities.
For the first nine months of 2016 total non-interest income
increased to $10.8 million from
$10.6 million for the prior year
period driven by increases in mortgage banking and SBA loan sales
activity. Fees and service charges on deposits were
$5.7 million for the first nine
months of 2016 compared to $6.1
million for the first nine months of 2015. Revenue
generated from the sale and servicing of mortgage loans and loan
fees increased to $2.6 million for
the first nine months of 2016 from $2.3
million for the first nine months of 2015. Gains
realized from the sale of investment securities were $467,000 and $955,000 for the first nine months of 2016 and
2015, respectively. The Bank recognized net gains of
$51,000 and $10,000 on the disposal of OREO during the first
nine months of 2016 and 2015, respectively. BOLI earnings
increased to $419,000 for the first
nine months of 2016 from $382,000 for
the first nine months of 2015. SBA related income increased
to $434,000 for the first nine months
of 2016 from $51,000 for the first
nine months of 2015.
Non-Interest Expense. Total non-interest expense has
remained stable at $8.9 million for
the 2016 third quarter and $9.0
million for both the linked 2016 second quarter and the 2015
third quarter. For the first nine months of 2016, total
non-interest expense declined to $27.1
million from $27.3 million
reported in the first nine months of 2015.
Compensation and benefit expenses, the largest component of
non-interest expenses, were $5.0
million for the 2016 third quarter compared to $4.9 million for both the linked 2016 second
quarter and the 2015 third quarter. For the first nine months
of 2016 compensation expenses were $15.0
million compared to $14.5
million for the prior year period. Expenses in the
first nine months of 2016 included severance costs associated with
branch consolidations during the period. The Bank will
continue to manage overall staffing levels to ensure we meet the
ongoing needs of our customers and support future growth.
FDIC insurance premiums were $157,000 for the 2016 third quarter compared to
$161,000 for the linked 2016 second
quarter and $163,000 for the 2015
third quarter. For the first nine months of 2016 FDIC
insurance costs were $479,000
compared to $455,000 for the first
nine months of 2015. The increase in FDIC insurance premiums
during the first nine months of 2016 was due to the growth in our
balance sheet.
Premises and equipment expense remained relatively stable at
$1.3 million for the 2016 third
quarter compared to $1.4 million for
the linked quarter and $1.3 million
for the 2015 third quarter. For the first nine months of 2016
premises and equipment expense was $4.1
million compared to $4.0
million for the prior year period. In 2016 the Bank
consolidated three existing branches into nearby locations.
Occupancy expense for the 2016 period includes the retirement of
certain leasehold improvements and other fixed assets at locations
that were consolidated and closed. We will continue to explore
opportunities to gain efficiency and performance improvement from
our branch network.
Advertising expense declined to $151,000 for the 2016 third quarter compared to
$229,000 for the linked 2016 second
quarter and $219,000 for the 2015
third quarter. For the first nine months of 2016 advertising
expense declined to $569,000 from
$598,000 for the first nine months of
2015. The Bank continues to invest in building our brand awareness
throughout our expanded footprint with its advertising and
marketing efforts.
Data processing costs were $757,000 for the 2016 third quarter compared to
$750,000 for the linked 2016 second
quarter and $819,000 for the
comparative 2015 third quarter. For the first nine months of
2016, data processing expense declined to $2.3 million from $2.8
million for the prior year. Data processing expense
for the 2015 nine-month period included $173,000 of one-time expenses associated with a
branch acquisition transaction.
Total amortization of intangible assets, including mortgage
servicing rights and identifiable intangible assets, was
$137,000 for the 2016 third quarter
compared to $134,000 for the linked
2016 second quarter and $130,000 for
the 2015 third quarter. For the first nine months of 2016
amortization of intangible assets was $402,000 compared to $387,000 for the first nine months of 2015.
Total expenses attributable to ongoing maintenance, property
taxes, insurance and valuation adjustments for OREO properties were
$119,000 for the 2016 third quarter
compared to $213,000 for the linked
2016 second quarter and $99,000 for
the 2015 third quarter. For the first nine months of 2016
OREO related expenses were $426,000
compared to $463,000 for the prior
year. Management continuously analyzes the carrying value of
OREO and makes valuation adjustments as necessary. There were
no quarterly valuation adjustments included for the current period
and $103,000 and $10,000, respectively, for the linked and
comparative prior year quarters. For the first nine months of
2016 and 2015 valuation adjustments were $110,000 and $96,000, respectively.
Other non-interest expense remained consistent at $1.3 million for the 2016 third quarter compared
to $1.2 million for the linked 2016
second quarter and $1.3 million for
the 2015 third quarter. For the first nine months of 2016
other non-interest expense declined to $3.8
million from $4.1 million for
the first nine months of 2015. Other non-interest expense included
an $85,000 loss on the disposal of a
former branch location and $180,000
of one-time branch acquisition expenses for the current and prior
year periods, respectively.
Income tax expense increased to $947,000 for the 2016 third quarter from
$665,000 for the linked 2016 second
quarter and $611,000 for the 2015
third quarter. For the first nine months of 2016 income tax
expense increased to $2.2 million
from $1.4 million for the prior
year. The effective income tax rates were 33.3% for the 2016
third quarter, 29.2% for the linked 2016 second quarter and 33.1%
for the 2015 third quarter. The effective income tax rates
were 30.6% and 30.3% for the respective 2016 and 2015 nine-month
periods. As previously noted, income tax expense for the
third quarter of 2016 and 2015 includes a $74,000 and $80,000
expense adjustment, respectively, due a write down of our deferred
tax asset given the declines in the North
Carolina statutory tax rate. Exclusive of the
$74,000 and $80,000 adjustments noted above, the effective
income tax rates were 30.7 % and 29.5% for the three and nine-month
periods ended September 30, 2016,
respectively; and 28.7% and 28.5% for the respective three and
nine-month periods of 2015.
Balance Sheet. Total assets increased at an annualized
growth rate of 5.6% to $985.8 million
at September 30, 2016, from
$946.3 million at December 31, 2015. The increase is
attributable to solid growth in the loan and lease portfolio and in
interest-bearing deposits with banks. This growth was
partially funded by the sale of investment securities as well as a
$48.5 million increase in deposits
over this same nine-month period.
Loans and leases held for investment grew by $75.5 million during the first nine months of
2016. As a result, total loans and leases held for investment
increased to $682.5 million at
September 30, 2016, from $607.0 million at December
31, 2015. Mortgage loans held for sale increased to
$7.3 million at September 30, 2016, from $3.9 million at December
31, 2015. As a result of the Bank's robust loan growth
during 2016 our loans-to-deposits ratio has risen from 75.3% at
December 31, 2015, to 80.2% at
September 30, 2016.
The investment securities portfolio and interest-bearing
deposits totaled $231.7 million at
September 30, 2016, compared to
$267.4 million at December 31, 2015. The cash flows from
these assets were used to support growth in our loan portfolio.
Mortgage servicing rights (MSRs) increased to $2.1 million at September
30, 2016, from $1.3 million at
December 31, 2015. During the
three months ended September 30,
2016, the Bank purchased the MSRs of 452 high-quality
Freddie Mac and Fannie Mae loans with an unpaid principal balance
of $84.6 million. The selection
of these mortgage loans to service was based on their quality as
well as their geographic location. All of the loans acquired
were current as to payment on the purchase date and the Bank had
the ability to push-back any loans that prepaid or became
delinquent within 90 days. In addition, all of these loans
are located in the state of North
Carolina and a significant portion of the borrowers reside
within the Bank's footprint. Mortgage loans serviced
for others increased to $370.6
million at September 30, 2016,
from $297.5 million at December 31, 2015, primarily due to these
acquired MSRs.
The Bank's investment in BOLI increased to $17.9 million at September
30, 2016, from $15.6 million
at December 31, 2015. The
investment returns from the BOLI are utilized to offset a portion
of the cost of providing benefits to our employees.
Total deposits increased to $859.8
million at September 30, 2016,
from $811.3 million at December 31, 2015. Total non-maturity
deposits grew to $595.7 million at
September 30, 2016, from $551.3 million at December
31, 2015. This growth in non-maturity deposits during
the first nine months of 2016 includes a $20.3 million or 12.0% increase in non-interest
bearing checking account balances.
Stockholders' equity increased by $6.1
million to $88.3 million at
September 30, 2016, from $82.2 million at December
31, 2015. This increase primarily reflects the
$5.0 million of net income earned for
the first nine months of 2016 and a $1.9
million increase in accumulated other comprehensive income
resulting from the mark-to-market adjustment of the
available-for-sale securities portfolio, net of $807,000 of dividends declared.
The tangible equity to assets ratio increased to 8.36% at
September 30, 2016, from 8.04% at
December 31, 2015. The tangible
book value per common share increased to $8.68 at September 30,
2016, from $8.02 at
December 31, 2015.
Corporate and Investor Information. First South Bank has
been serving the citizens of eastern and central North Carolina since 1902 and offers a variety
of financial products and services to business and individual
customers. The Bank operates through its main office headquartered
in Washington, North Carolina, and currently has 30 full
service branch offices located throughout eastern and central North
Carolina. The Bank also provides a full menu of leasing
services through its wholly-owned subsidiary, First South Leasing,
LLC. In addition, under its First South Wealth Management
division, the Bank makes securities brokerage services available
through an affiliation with an independent broker/dealer.
First South Bank is a wholly-owned subsidiary of First South
Bancorp, Inc.
Additional investor information for the Company and the Bank may
be accessed on our website at www.firstsouthnc.com.
The Company's common stock symbol as listed on the NASDAQ Global
Select Market is "FSBK".
Forward-Looking Statements. Statements contained in this
release, which are not historical facts, are forward-looking
statements as defined in the Private Securities Litigation Reform
Act of 1995. Such forward-looking statements are subject to
risks and uncertainties which could cause actual results to differ
materially from those currently anticipated due to a number of
factors which include the effects of future economic conditions,
governmental fiscal and monetary policies, legislative and
regulatory changes, the risks of changes in interest rates, the
effects of competition, and including without limitation other
factors that could cause actual results to differ materially as
discussed in documents filed by the Company with the Securities and
Exchange Commission from time to time.
Non-GAAP Financial Measures. This press release and the
accompanying Supplemental Financial Data contain financial
information determined by methods other than in accordance with
accounting principles generally accepted in the United States ("GAAP"). Management
uses these "non-GAAP" measures in their analysis of the Company's
performance. Management believes that these non-GAAP
financial measures provide a greater understanding of ongoing
operations and enhance comparability of results with prior periods
as well as demonstrating the effects of significant gains and
charges in the current period. These disclosures should not
be viewed as a substitute for operating results determined in
accordance with GAAP, nor are they necessarily comparable to
non-GAAP performance measures that may be presented by other
companies. See the disclosures above and in the Supplemental
Financial Data for reconciliations of any non-GAAP measures to the
most directly comparable GAAP measure.
(NASDAQ: FSBK)
First South
Bancorp, Inc. and Subsidiary
|
|
|
|
|
|
|
Consolidated
Statements of Financial Condition
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
|
December
31,
|
|
|
|
2016
|
|
|
2015
|
Assets
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Cash and due from
banks
|
|
$
|
19,272,704
|
|
$
|
19,425,747
|
Interest-bearing
deposits with banks
|
|
|
37,936,276
|
|
|
18,565,521
|
Investment securities
available-for-sale, at fair value
|
|
|
193,255,580
|
|
|
248,294,725
|
Investment securities
held-to-maturity
|
|
|
509,328
|
|
|
508,456
|
Mortgage loans held
for sale
|
|
|
7,312,568
|
|
|
3,943,798
|
|
|
|
|
|
|
|
Loans and leases held
for investment
|
|
|
682,465,668
|
|
|
607,014,247
|
Allowance for loan
and lease losses
|
|
|
(8,498,061)
|
|
|
(7,866,523)
|
Net loans and leases held for investment
|
|
|
673,967,607
|
|
|
599,147,724
|
|
|
|
|
|
|
|
Premises and
equipment, net
|
|
|
11,608,966
|
|
|
13,664,937
|
Assets held for
sale
|
|
|
192,720
|
|
|
-
|
Other real estate
owned
|
|
|
4,810,434
|
|
|
6,125,054
|
Federal Home Loan
Bank stock, at cost
|
|
|
1,701,200
|
|
|
2,369,300
|
Accrued interest
receivable
|
|
|
3,118,482
|
|
|
2,874,506
|
Goodwill
|
|
|
4,218,576
|
|
|
4,218,576
|
Mortgage servicing
rights
|
|
|
2,090,680
|
|
|
1,265,589
|
Identifiable
intangible assets
|
|
|
1,682,269
|
|
|
1,895,514
|
Bank-owned life
insurance
|
|
|
17,937,292
|
|
|
15,635,140
|
Prepaid expenses and
other assets
|
|
|
6,180,717
|
|
|
8,348,385
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
985,795,399
|
|
$
|
946,282,972
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
Non-interest
bearing demand
|
|
$
|
189,872,662
|
|
$
|
169,545,849
|
Interest
bearing demand
|
|
|
264,114,729
|
|
|
246,376,521
|
Savings
|
|
|
141,701,335
|
|
|
135,369,668
|
Large
denomination certificates of deposit
|
|
|
124,416,507
|
|
|
116,299,196
|
Other time
deposits
|
|
|
139,725,846
|
|
|
143,730,993
|
Total deposits
|
|
|
859,831,079
|
|
|
811,322,227
|
|
|
|
|
|
|
|
Borrowings
|
|
|
20,000,000
|
|
|
37,000,000
|
Junior subordinated
debentures
|
|
|
10,310,000
|
|
|
10,310,000
|
Other
liabilities
|
|
|
7,360,372
|
|
|
5,479,971
|
Total liabilities
|
|
|
897,501,451
|
|
|
864,112,198
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, $.01
par value, 25,000,000 shares authorized;
|
|
|
|
|
|
9,494,935 and 9,489,222 shares outstanding,
respectively
|
|
94,949
|
|
|
94,892
|
Additional paid-in
capital
|
|
|
35,998,472
|
|
|
35,936,911
|
Retained
earnings
|
|
|
47,851,299
|
|
|
43,691,073
|
Accumulated other
comprehensive income
|
|
|
4,349,228
|
|
|
2,447,898
|
Total stockholders' equity
|
|
|
88,293,948
|
|
|
82,170,774
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
985,795,399
|
|
$
|
946,282,972
|
|
|
|
|
|
|
|
First South
Bancorp, Inc. and Subsidiary
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Statements of Operations
|
|
|
|
|
|
|
|
|
|
|
Three and Nine
Months Ended September 30, 2016 and 2015
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Nine Months
Ended
|
|
|
|
|
September
30,
|
|
|
September
30,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and
fees on loans
|
|
|
$
|
7,915,133
|
|
$
|
6,639,177
|
|
$
|
22,748,826
|
|
$
|
18,834,471
|
Interest on
investments and deposits
|
|
|
1,295,051
|
|
|
1,577,440
|
|
|
4,131,333
|
|
|
5,047,181
|
Total interest income
|
|
|
9,210,184
|
|
|
8,216,617
|
|
|
26,880,159
|
|
|
23,881,652
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on
deposits
|
|
|
|
728,106
|
|
|
598,081
|
|
|
2,094,809
|
|
|
1,730,070
|
Interest on
borrowings
|
|
|
|
55,886
|
|
|
54,077
|
|
|
187,683
|
|
|
61,593
|
Interest on
junior subordinated notes
|
|
|
127,011
|
|
|
141,578
|
|
|
408,628
|
|
|
421,656
|
Total interest expense
|
|
|
911,003
|
|
|
793,736
|
|
|
2,691,120
|
|
|
2,213,319
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
income
|
|
|
|
8,299,181
|
|
|
7,422,881
|
|
|
24,189,039
|
|
|
21,668,333
|
Provision for credit
losses
|
|
|
|
220,000
|
|
|
335,000
|
|
|
770,000
|
|
|
475,000
|
Net interest income after provision for credit losses
|
|
8,079,181
|
|
|
7,087,881
|
|
|
23,419,039
|
|
|
21,193,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposit fees
and service charges
|
|
|
1,907,878
|
|
|
2,093,101
|
|
|
5,746,336
|
|
|
6,067,959
|
Loan fees and
charges
|
|
|
|
72,578
|
|
|
62,960
|
|
|
268,212
|
|
|
179,196
|
Mortgage loan
servicing fees
|
|
|
343,081
|
|
|
263,679
|
|
|
850,770
|
|
|
807,126
|
Gain on sale
and other fees on mortgage loans
|
|
812,754
|
|
|
528,745
|
|
|
1,795,017
|
|
|
1,486,278
|
Gain (loss) on
sale of other real estate, net
|
|
|
77,416
|
|
|
(63,402)
|
|
|
50,932
|
|
|
9,814
|
Gain on sale
of investment securities
|
|
|
-
|
|
|
502,576
|
|
|
467,470
|
|
|
954,514
|
Other
income
|
|
|
|
477,343
|
|
|
378,574
|
|
|
1,636,428
|
|
|
1,057,395
|
Total non-interest income
|
|
|
3,691,050
|
|
|
3,766,233
|
|
|
10,815,165
|
|
|
10,562,282
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
and fringe benefits
|
|
|
4,970,846
|
|
|
4,935,133
|
|
|
14,955,785
|
|
|
14,475,105
|
Federal
deposit insurance premiums
|
|
|
157,142
|
|
|
163,200
|
|
|
479,276
|
|
|
445,081
|
Premises and
equipment
|
|
|
|
1,349,243
|
|
|
1,312,123
|
|
|
4,103,726
|
|
|
3,976,577
|
Advertising
|
|
|
|
151,304
|
|
|
218,827
|
|
|
568,556
|
|
|
598,477
|
Data
processing
|
|
|
|
757,200
|
|
|
818,680
|
|
|
2,303,418
|
|
|
2,805,101
|
Amortization
of intangible assets
|
|
|
136,882
|
|
|
129,527
|
|
|
401,981
|
|
|
386,597
|
Other real
estate owned expense
|
|
|
119,065
|
|
|
99,234
|
|
|
425,622
|
|
|
462,825
|
Other
|
|
|
|
1,286,741
|
|
|
1,330,098
|
|
|
3,842,879
|
|
|
4,137,281
|
Total non-interest expense
|
|
|
8,928,423
|
|
|
9,006,822
|
|
|
27,081,243
|
|
|
27,287,044
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
tax expense
|
|
|
2,841,808
|
|
|
1,847,292
|
|
|
7,152,961
|
|
|
4,468,571
|
Income tax
expense
|
|
|
|
947,496
|
|
|
610,680
|
|
|
2,185,841
|
|
|
1,352,983
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCOME
|
|
|
$
|
1,894,312
|
|
$
|
1,236,612
|
|
$
|
4,967,120
|
|
$
|
3,115,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share
data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
|
|
$
|
0.20
|
|
$
|
0.13
|
|
$
|
0.52
|
|
$
|
0.33
|
Diluted earnings per
share
|
|
|
$
|
0.20
|
|
$
|
0.13
|
|
$
|
0.52
|
|
$
|
0.33
|
Dividends per
share
|
|
|
$
|
0.030
|
|
$
|
0.025
|
|
$
|
0.085
|
|
$
|
0.075
|
Average basic shares
outstanding
|
|
|
9,494,861
|
|
|
9,500,885
|
|
|
9,493,285
|
|
|
9,532,393
|
Average diluted
shares outstanding
|
|
|
9,525,302
|
|
|
9,520,943
|
|
|
9,520,216
|
|
|
9,552,298
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First South
Bancorp, Inc.
|
Supplemental
Financial Data (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter to
Date
|
|
Year to
Date
|
|
|
|
|
9/30/2016
|
|
6/30/2016
|
|
3/31/2016
|
|
12/31/2015
|
|
9/30/2015
|
|
9/30/2016
|
|
9/30/2015
|
|
|
|
(dollars in thousands except per share data)
|
Consolidated balance
sheet data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
985,795
|
$
|
961,479
|
$
|
940,108
|
$
|
946,283
|
$
|
913,368
|
$
|
985,795
|
$
|
913,368
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans held for
sale:
|
$
|
7,313
|
$
|
5,252
|
$
|
2,490
|
$
|
3,944
|
$
|
4,029
|
$
|
7,313
|
$
|
4,029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans held for
investment (HFI):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage
|
|
$
|
74,710
|
$
|
73,100
|
$
|
73,412
|
$
|
71,866
|
$
|
71,148
|
$
|
74,710
|
$
|
71,148
|
|
Commercial
|
|
518,265
|
|
510,678
|
|
482,779
|
|
454,877
|
|
419,784
|
|
518,265
|
|
419,784
|
|
Consumer
|
|
69,039
|
|
66,138
|
|
64,521
|
|
63,036
|
|
61,934
|
|
69,039
|
|
61,934
|
|
Leases
|
|
|
20,452
|
|
18,927
|
|
18,333
|
|
17,235
|
|
14,438
|
|
20,452
|
|
14,438
|
|
Total loans held for investment
|
|
682,466
|
|
668,843
|
|
639,045
|
|
607,014
|
|
567,304
|
|
682,466
|
|
567,304
|
Allowance for loan
and lease losses
|
|
(8,498)
|
|
(8,338)
|
|
(8,135)
|
|
(7,867)
|
|
(7,570)
|
|
(8,498)
|
|
(7,570)
|
Net loans held for
investment
|
$
|
673,968
|
$
|
660,505
|
$
|
630,910
|
$
|
599,147
|
$
|
559,734
|
$
|
673,968
|
$
|
559,734
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash & interest
bearing deposits
|
$
|
57,209
|
$
|
40,734
|
$
|
36,115
|
$
|
37,991
|
$
|
42,686
|
$
|
57,209
|
$
|
42,686
|
Investment
securities
|
|
193,765
|
|
200,364
|
|
213,520
|
|
248,803
|
|
248,861
|
|
193,765
|
|
248,861
|
Premises and
equipment
|
|
11,609
|
|
11,671
|
|
12,144
|
|
13,665
|
|
15,290
|
|
11,609
|
|
15,290
|
Goodwill
|
|
|
4,219
|
|
4,219
|
|
4,219
|
|
4,219
|
|
4,219
|
|
4,219
|
|
4,219
|
Identifiable
intangible asset
|
|
1,682
|
|
1,753
|
|
1,824
|
|
1,896
|
|
1,967
|
|
1,682
|
|
1,967
|
Mortgage servicing
rights
|
|
2,091
|
|
1,273
|
|
1,247
|
|
1,266
|
|
1,229
|
|
2,091
|
|
1,229
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest
checking
|
$
|
189,873
|
$
|
177,281
|
$
|
164,244
|
$
|
169,546
|
$
|
157,609
|
$
|
189,873
|
$
|
157,609
|
Interest
checking
|
|
176,034
|
|
170,153
|
|
171,323
|
|
173,934
|
|
167,673
|
|
176,034
|
|
167,673
|
Money
market
|
|
|
88,081
|
|
72,054
|
|
73,000
|
|
72,442
|
|
68,443
|
|
88,081
|
|
68,443
|
Savings
|
|
|
141,701
|
|
142,151
|
|
146,255
|
|
135,370
|
|
133,570
|
|
141,701
|
|
133,570
|
Certificates
|
|
|
264,142
|
|
263,823
|
|
263,845
|
|
260,030
|
|
256,016
|
|
264,142
|
|
256,016
|
|
Total
deposits
|
$
|
859,831
|
$
|
825,462
|
$
|
818,667
|
$
|
811,322
|
$
|
783,311
|
$
|
859,831
|
$
|
783,311
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings
|
|
$
|
20,000
|
$
|
32,500
|
$
|
21,500
|
$
|
37,000
|
$
|
33,000
|
$
|
20,000
|
$
|
33,000
|
Junior subordinated
debentures
|
|
10,310
|
|
10,310
|
|
10,310
|
|
10,310
|
|
10,310
|
|
10,310
|
|
10,310
|
Stockholders'
equity
|
|
88,294
|
|
87,327
|
|
84,179
|
|
82,171
|
|
81,623
|
|
88,294
|
|
81,623
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated earnings
summary:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
$
|
9,210
|
$
|
8,998
|
$
|
8,672
|
$
|
8,569
|
$
|
8,217
|
$
|
26,880
|
$
|
23,882
|
Interest
expense
|
|
911
|
|
898
|
|
882
|
|
841
|
|
794
|
|
2,691
|
|
2,213
|
Net interest
income
|
|
8,299
|
|
8,100
|
|
7,790
|
|
7,728
|
|
7,423
|
|
24,189
|
|
21,669
|
Provision for credit
losses
|
|
220
|
|
325
|
|
225
|
|
325
|
|
335
|
|
770
|
|
475
|
Noninterest
income
|
|
3,691
|
|
3,548
|
|
3,576
|
|
3,736
|
|
3,766
|
|
10,815
|
|
10,562
|
Noninterest
expense
|
|
8,929
|
|
9,046
|
|
9,106
|
|
9,087
|
|
9,007
|
|
27,081
|
|
27,287
|
Income before
taxes
|
|
2,841
|
|
2,277
|
|
2,035
|
|
2,052
|
|
1,847
|
|
7,153
|
|
4,469
|
Income tax
expense
|
|
947
|
|
665
|
|
574
|
|
484
|
|
610
|
|
2,186
|
|
1,353
|
Net income
|
|
$
|
1,894
|
$
|
1,612
|
$
|
1,461
|
$
|
1,568
|
$
|
1,237
|
$
|
4,967
|
$
|
3,116
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
$
|
0.20
|
$
|
0.17
|
$
|
0.15
|
$
|
0.17
|
$
|
0.13
|
$
|
0.52
|
$
|
0.33
|
Diluted earnings per
share
|
$
|
0.20
|
$
|
0.17
|
$
|
0.15
|
$
|
0.16
|
$
|
0.13
|
$
|
0.52
|
$
|
0.33
|
Dividends per
share
|
$
|
0.030
|
$
|
0.030
|
$
|
0.025
|
$
|
0.025
|
$
|
0.025
|
$
|
0.085
|
$
|
0.075
|
Book value per
share
|
$
|
9.30
|
$
|
9.20
|
$
|
8.87
|
$
|
8.66
|
$
|
8.60
|
$
|
9.30
|
$
|
8.60
|
Tangible book value
per share
|
$
|
8.68
|
$
|
8.57
|
$
|
8.23
|
$
|
8.02
|
$
|
7.95
|
$
|
8.68
|
$
|
7.95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average basic
shares
|
|
9,494,861
|
|
9,493,776
|
|
9,491,201
|
|
9,489,222
|
|
9,500,885
|
|
9,493,285
|
|
9,532,293
|
Average diluted
shares
|
|
9,525,302
|
|
9,519,565
|
|
9,514,797
|
|
9,513,916
|
|
9,520,943
|
|
9,520,216
|
|
9,552,298
|
|
|
|
|
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First South
Bancorp, Inc.
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Supplemental
Financial Data (Unaudited)
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Quarter to
Date
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Year to
Date
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9/30/2016
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6/30/2016
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3/31/2016
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12/31/2015
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9/30/2015
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9/30/2016
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9/30/2015
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(dollars in thousands
except per share data)
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Performance ratios
(tax equivalent):
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Yield on average
earning assets
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4.13%
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4.17%
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4.07%
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4.03%
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4.01%
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4.12%
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4.00%
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Cost of interest
bearing liabilities
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0.52%
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0.52%
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0.52%
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0.49%
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0.48%
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0.52%
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0.46%
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Net interest
spread
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3.61%
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3.64%
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3.55%
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3.54%
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3.53%
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3.60%
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3.54%
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Net interest
margin
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3.73%
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3.76%
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3.66%
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3.64%
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3.63%
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3.72%
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3.64%
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Avg earning assets to
total avg assets
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92.42%
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92.38%
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92.20%
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92.19%
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91.65%
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92.33%
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91.39%
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Return on average
assets (annualized)
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0.78%
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0.68%
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0.63%
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0.67%
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0.54%
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0.70%
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0.47%
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Return on average
equity (annualized)
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8.52%
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7.55%
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6.97%
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7.52%
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5.99%
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7.69%
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5.08%
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Efficiency
ratio
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73.84%
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77.59%
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80.74%
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81.41%
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82.26%
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77.31%
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85.63%
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Average
assets
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$
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968,729
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$
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947,761
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$
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938,702
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$
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930,978
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$
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904,017
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$
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951,731
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$
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887,170
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Average earning
assets
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$
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895,290
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$
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875,529
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$
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865,463
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$
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858,243
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$
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828,538
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$
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878,761
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$
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810,774
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Average
equity
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$
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88,481
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$
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85,927
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$
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84,265
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$
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82,713
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$
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81,975
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$
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86,225
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$
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81,990
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Equity/Assets
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8.96%
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9.08%
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8.95%
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8.68%
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8.94%
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8.96%
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8.94%
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Tangible
Equity/Assets
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8.36%
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8.46%
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8.31%
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8.04%
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8.26%
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8.36%
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8.26%
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Asset quality data
and ratios:
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Nonaccrual
loans:
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Non-TDR nonaccrual
loans
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Earning
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$
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661
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$
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555
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$
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945
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$
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985
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$
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799
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$
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661
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$
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799
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Non-Earning
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1,289
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1,075
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895
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710
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964
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1,289
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964
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Total Non-TDR nonaccrual
loans
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$
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1,950
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$
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1,630
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$
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1,840
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$
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1,695
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$
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1,763
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$
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1,950
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$
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1,763
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TDR nonaccrual
loans
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Current
TDRs
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$
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700
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$
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706
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$
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847
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$
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1,343
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$
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1,250
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$
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700
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$
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1,250
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Past Due
TDRs
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248
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250
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154
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159
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463
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248
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463
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Total TDR nonaccrual
loans
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$
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948
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$
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956
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$
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1,001
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$
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1,502
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$
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1,713
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$
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948
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$
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1,713
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Total nonaccrual
loans
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$
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2,898
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$
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2,586
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$
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2,841
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$
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3,197
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$
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3,476
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$
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2,898
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$
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3,476
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Loans >90 days
past due, still accruing
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0
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218
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153
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115
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183
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0
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183
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Other real estate
owned
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4,810
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5,541
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5,956
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6,125
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6,506
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4,810
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6,506
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Total nonperforming
assets
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$
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7,708
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$
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8,345
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$
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8,950
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$
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9,437
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$
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10,165
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$
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7,708
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$
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10,165
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Allowance for loan
and lease losses to
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loans held for
investment
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1.25%
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1.25%
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1.27%
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1.30%
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1.33%
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1.25%
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1.33%
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Net charge-offs
(recoveries)
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$
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60
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$
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122
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$
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(44)
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$
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28
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$
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129
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$
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138
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$
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425
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Net charge-offs
(recoveries) to total loans
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0.01%
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0.02%
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-0.01%
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0.00%
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0.02%
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0.02%
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0.07%
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Total nonaccrual
loans to total loans HFI
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0.42%
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0.39%
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0.44%
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0.53%
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0.61%
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0.42%
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0.61%
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Total nonperforming
assets to total assets
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0.78%
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0.87%
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0.95%
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1.00%
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1.11%
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0.78%
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1.11%
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Total loans to total
deposits
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80.22%
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81.66%
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78.36%
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75.30%
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72.94%
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80.22%
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72.94%
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Total loans to total
assets
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69.97%
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70.11%
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68.24%
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64.56%
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62.55%
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69.97%
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62.55%
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Loans serviced for
others
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$
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370,606
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$
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292,222
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$
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293,548
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$
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297,494
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$
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297,764
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$
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370,606
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$
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297,764
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Reconciliation of
Non-GAAP Measures:
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Pre-tax pre-provision
operating
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earnings
(non-GAAP):
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Income before taxes
(GAAP)
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$
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2,841
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$
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2,277
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$
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2,035
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$
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2,052
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$
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1,847
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$
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7,153
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$
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4,469
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Provision for credit
losses
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220
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325
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225
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325
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335
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770
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|
475
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Pre-tax pre-provision
net income
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3,061
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2,602
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2,260
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2,377
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2,182
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7,923
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4,944
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Securities (gains)
losses, net
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0
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(184)
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(284)
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(463)
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(503)
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(467)
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(955)
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OREO
valuations
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0
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103
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7
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100
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10
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110
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95
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OREO (gains) losses,
(net)
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(77)
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14
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12
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(30)
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63
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(51)
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(10)
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Pre-tax pre-provision
operating
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earnings
(non-GAAP)
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$
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2,984
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$
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2,535
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$
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1,995
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$
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1,984
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$
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1,752
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$
|
7,515
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$
|
4,074
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Total core
non-interest income (non-GAAP):
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Non-interest income
(GAAP)
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$
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3,691
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$
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3,548
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$
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3,576
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$
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3,736
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$
|
3,766
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$
|
10,815
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$
|
10,562
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Securities (gains)
losses, net
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0
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(184)
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|
(284)
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|
(463)
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|
(503)
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(467)
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(955)
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OREO (gains) losses,
(net)
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(77)
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|
14
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|
12
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(30)
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63
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(51)
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(10)
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Total core
non-interest income (non-GAAP)
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$
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3,614
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$
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3,378
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$
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3,304
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$
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3,243
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$
|
3,326
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$
|
10,297
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$
|
9,597
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For more information contact:
First South Bancorp,
Inc.
Bruce Elder (CEO)
(252) 940-4936
Scott McLean (CFO)
(252) 940-5016
Website: www.firstsouthnc.com
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/first-south-bancorp-inc-reports-53-and-59-increase-in-quarterly-and-ytd-earnings-for-the-periods-ended-september-30-2016-300348521.html
SOURCE First South Bancorp, Inc.