SCAM ALERT:  We have seen a rising number of fraud cases in which a person pretending to be a bank employee contacts a customer about a suspected unauthorized transaction. The contact then asks for personal information in order to “clear up” the problem. As a reminder, the bank will NEVER call, text, or email you and ask for personal information. If you receive such a call from your “banker,” do not give personal information and hang up immediately. If you receive a text or email, do not respond. To report suspected fraud on your account, please contact your local branch or call Customer Service at 1-800-492-3221.
Temporary Northern Cambria Hours:  The Northern Cambria drive through lanes are currently unavailable. Our lobby, online and mobile banking solutions, and ATMs are all available during this time.  
Temporary St. Mary's Washington Street branch hours:  The Washington Street branch lobby is temporarily closed. Our drive-up services, online and mobile banking solutions, and ATMs are all available during this time.  You may also visit our Fox Township branch on Route #255, 1104 Million Dollar Hwy.

CNB FINANCIAL CORPORATION REPORTS 17% INCREASE IN FOURTH QUARTER EARNINGS PER SHARE, RESULTING FROM STRONG ORGANIC GROWTH IN LOANS AND DEPOSITS

1/22/2020
 
CNB Financial Corporation (“CNB”) (NASDAQ: CCNE), the parent company of CNB Bank, today announced its earnings for the quarter and year ended December 31, 2019.
 
Joseph B. Bower, Jr., President and CEO, stated, “Our fourth quarter results continued to demonstrate the strength of our diversified business model.  As a result of our focus on our customers, we delivered another quarter of strong growth, while maintaining a consistent credit quality."
 
Earnings are the result of organic growth
 
  • Net income of $10.5 million, or $0.69 per diluted share, in the fourth quarter of 2019, as compared to $8.9 million, or $0.59 per diluted share, in the fourth quarter of 2018, reflecting increases of $1.5 million, or 17.2%, and $0.10 per diluted share, or 16.9%, respectively.
 
  • Net income of $40.1 million, or $2.63 per diluted share, during the twelve months ended December 31, 2019, compared to net income of $33.7 million, or $2.21 per diluted share, during the twelve months ended December 31, 2018, reflecting increases of $6.4 million, or 18.9%, and $0.42 per diluted share, or 19.0%, respectively.
 
Balance sheet growth reflects the strength of our diversified markets
 and focus on core customer acquisition strategies
 
  • Loans totaling $2.8 billion as of December 31, 2019 grew $329 million, or 13.3%, from December 31, 2018. Loan growth was driven primarily by commercial and industrial loans, which increased $130 million, or 14.2%, over the same time period, while commercial real estate loans contributed an increase of $116 million, or 16.7%, over the prior year. Total loan growth was attributable primarily to our Private Banking division and Buffalo market, which increased $79.5 million, or 43.4%, and $155 million, or 59.9%, respectively.
 
  • Deposits totaling $3.1 billion as of December 31, 2019 grew by $492 million, or 18.8%, from December 31, 2018 as a result of our continued focus on attracting and retaining core customer relationships. The overall increase in deposits was driven primarily by our Private Banking division, which grew total deposits by $157 million, or 42.6%, while the deposit portfolio in our Buffalo market increased by $265 million, or 105.4%, over the same period.
 
  • Total households serviced as of December 31, 2019, were 68,892, as compared to 63,920 households at December 31, 2018, representing an organic increase of 7.8%, primarily as a result of our core deposit growth strategies in Private Banking and the Buffalo market, further enhancing the value of their contributions.
 
  • While book value per share was $20.00 as of December 31, 2019, tangible book value per share was $17.45 as of December 31, 2019, reflecting an increase of 18.8% from tangible book value per share of $14.69 as of December 31, 2018.
 
Performance ratios reflect continued focus on profitability
 
  • While return on average equity was 14.05% for the twelve months ended December 31, 2019, return on average tangible equity was 16.28% for the same period, including after-tax merger costs totaling $134 thousand, incurred in the fourth quarter of 2019. Excluding merger costs, adjusted return on average tangible equity was 16.34%, for the year ended December 31, 2019, compared to 16.01% for the year ended December 31, 2018. For the fourth quarter of 2019 annualized return on average equity was 13.79%, in line with the comparable period in 2018. While annualized return on average tangible equity was 15.84% for the fourth quarter of 2019, adjusted return on average tangible equity was 16.04% (excluding after-tax merger costs) for the fourth quarter of 2019, compared to 16.29%, for the same period in 2018.
 
  • Return on average assets of 1.17% for the twelve months ended December 31, 2019, and included after-tax merger costs totaling $134 thousand, incurred in the fourth quarter of 2019. Excluding merger costs, adjusted return on average assets of 1.18% for the year ended December 31, 2019, compared to 1.12% for the year ended December 31, 2018. While annualized return on average assets was 1.15% for the fourth quarter of 2019, adjusted return on average assets was 1.16% (excluding after-tax merger costs) for the fourth quarter of 2019, compared to 1.11%, for the same period in 2018.
 
  • Efficiency Ratio was 60.19%% for the twelve months ended December 31, 2019.  Excluding $170 thousand in pre-tax merger costs incurred in the fourth quarter of 2019, adjusted efficiency ratio was 60.07%, for the year ended December 31, 2019, and improved 130 basis points from 61.37% for the comparable period in 2018. While the Efficiency Ratio was 61.52% for the fourth quarter of 2019, the adjusted efficiency ratio was 61.06% (excluding pre-tax merger costs) for the fourth quarter of 2019, compared to 59.77% for the same period in 2018.
 
Revenue reflects organic growth
 
  • Total revenue (comprised of net interest income plus non-interest income) of $142.2 million for the twelve months ended December 31, 2019 increased $16.5 million, or 13.2%, from the year ended December 31, 2018. Total revenue of $36.5 million for the fourth quarter of 2019 increased $4.0 million, or 12.1%, from the same period in 2018 due to the following:
 
  • Net interest income for the twelve months ended December 31, 2019 increased 10.7% to $116.2 million from the twelve months ended December 31, 2018, driven by an overall growth of $384 million, or 13.7%, in average earning assets, partially offset by a reduction of 8 basis points in net interest margin on a fully tax-equivalent basis. When compared to the fourth quarter of 2018, net interest income of $29.7 million increased $1.6 million, or 5.8%, driven by an overall growth of $398 million, or 13.3%, in average earning assets, partially offset by a reduction of 22 basis points in net interest margin on a fully tax-equivalent basis.
 
  • Net interest margin on a fully tax-equivalent basis was 3.69% and 3.77% for the twelve months ended December 31, 2019 and 2018, respectively. The yield on earning assets of 4.93% for the twelve months ended December 31, 2019 increased 20 basis points from 4.73% for the twelve months ended December 31, 2018. The cost of interest-bearing liabilities increased 33 basis points to 1.45% for the twelve months ended December 31, 2019 from 1.12% for the twelve months ended December 31, 2018, primarily as a result of our core deposit acquisition strategies.
 
  • Net interest margin on a fully tax-equivalent basis was 3.54% for the fourth quarter of 2019 compared to 3.76% for the same period in 2018. During the fourth quarter of 2019, our net interest margin on a fully tax-equivalent basis was impacted by the cumulative effect of three Federal Reserve rate reductions, totaling 75 basis points, in the third quarter and early fourth quarter. In addition, we experienced a higher level of liquidity resulting from strong growth in deposits in the fourth quarter, which we expect will support our loan growth goals 2020.
 
  • Total non-interest income of $26.0 million for the twelve months ended December 31, 2019 increased $5.3 million, or 25.3%, from the same period in 2018.
 
  • Total non-interest income includes gains associated with the sale of available for sale securities, net realized and unrealized gains on trading securities and realized gains on the sale of Visa Class B shares, which combined totaled $2.5 million for the year ended December 31, 2019 compared to a loss of $451 thousand for the year ended December 31, 2018.
 
  • Excluding the items discussed above, non-interest income for the twelve months ended December 31, 2019 totaled $23.5 million, an increase of $2.3 million, or 10.9%, from the same period in 2018. As a result of our continued organic growth, we experienced an increase in service charges in deposit accounts of $643 thousand, or 11.2% for the year ended December 31, 2019 compared to the year ended December 31, 2018. In addition, Wealth and Asset Management fees increased $455 thousand, or 10.9%, due to growth in assets under management.
 
  • Total non-interest income of $6.8 million for the fourth quarter of 2019 increased $2.3 million, or 52.4%, from the same period in 2018. Excluding the activity related to net realized and unrealized gains on trading securities, total non-interest income of $6.1 million for the fourth quarter of 2019 increased $498 thousand, or 9.0%, from the same period in 2018, driven primarily by growth in Wealth and Asset Management fees of $124 thousand, or 12.1%, mortgage banking income of $177 thousand, or 81.2% and a combined increase of $197 thousand in various other categories resulting from growth in loans and deposits.
 
Non-Interest Expense reflects organic growth and a focus on efficiency
 
  • Total non-interest expenses were $22.9 million for the three months ended December 31, 2019, compared to $20.0 million for the same period in 2018. For the year ended December 31, 2019, total non-interest expense of $87.5 million increased $8.2 million, or 10.3%, from the year ended December 31, 2018, primarily as a result of expansion of staffing levels in several areas including business development, customer service and risk management, as well as other costs required to service a larger customer base.
 
 
Income taxes
 
  • Income tax expense of $8.6 million for the year ended December 31, 2019 increased $2.1 million, or 31.5%, from the year ended December 31, 2018. Our effective tax rate was 17.6% for the year ended December 31, 2019 compared to 16.2% for the year ended December 31, 2018. The increase in the effective tax rate was driven by the fact that our growth was primarily generated by taxable activities. Income tax expense for the fourth quarter of 2019 totaled $2.3 million at an effective tax rate of 18.0%, compared to income tax expense of $2.2 million and an effective tax rate of 19.4% for the same period in 2018.
 
Asset quality reflects strength in underwriting and risk profile
 
  • Asset quality continued to be a source of strength as total non-performing assets of $18.4 million, or 0.49%, of total assets as of December 31, 2019 compared to $16.8 million, or 0.48%, of total assets as of September 30, 2019 and $15.6 million, or 0.48%, of total assets as of December 31, 2018. In addition, the allowance for loan losses as measured as a percentage of loans net of unearned income as of December 31, 2019 was 0.69%, compared to 0.73% as of September 30, 2019 and 0.80% as of December 31, 2018. The reduction was primarily a result of charge-offs of reserves previously recorded for individually evaluated loan relationships.
 
  • For the three months ended December 31, 2019, net loan charge-offs totaled $1.5 million, or 0.22%, of total average loans compared to $4.2 million, or 0.69%, of total average loans for the three months ended December 31, 2018. The fourth quarter of 2018 included a charge-off of $3.3 million of a fully reserved commercial real estate loan. For the year ended December 31, 2019, net loan charge-offs were $6.3 million, or 0.24%, of total average loans, compared to $6.1 million, or 0.26%, of total average loans during the comparable period in 2018. The fourth quarter of 2019 included a charge-off totaling $739 thousand related to one commercial real estate loan relationship, which had been previously fully reserved.
 
  • During the three and twelve months ended December 31, 2019, provision for loan losses totaled $812 thousand and $6.0 million, respectively, compared to provision for loan losses of $1.4 million and $6.1 million for the three and twelve months ended December 31, 2018, respectively.
 
Capital provides source of strength
 
  • As of December 31, 2019 CNB’s total shareholders’ equity of $305 million increased $42.1 million, or 16.0%, from December 31, 2018 as a result of an increase in accumulated other comprehensive income combined with organic earnings, partially offset by the payment of common stock dividends to our shareholders and 40,000 shares repurchased during the year ended December 31, 2019.
 
  • During the fourth quarter of 2019, CNB launched an "at the market" offering pursuant to which CNB may issue and sell up to $40.0 million in common equity.  This initiative is currently underway and CNB intends to use any proceeds of the offering to support its long-term growth strategies.
 
About CNB Financial Corporation
 
CNB Financial Corporation is a financial holding company with consolidated assets of approximately $3.8 billion. CNB Financial Corporation conducts business primarily through its principal subsidiary, CNB Bank. CNB Bank is a full-service bank engaging in a full range of banking activities and services, including trust and wealth management services, for individual, business, governmental, and institutional customers. CNB Bank operations include a private banking division and 42 full-service offices in Pennsylvania, Ohio, and New York. CNB Bank’s divisions include ERIEBANK, based in Erie, Pennsylvania, with offices in northwest Pennsylvania and northeast Ohio; FCBank, based in Worthington, Ohio, with offices in central Ohio; and BankOnBuffalo, based in Buffalo, New York, with offices in northern New York. CNB Bank is headquartered in Clearfield, Pennsylvania, with offices in central and north central Pennsylvania. Additional information about CNB Financial Corporation may be found at www.CNBBank.bank.
 
 
 
Forward-Looking Statements
 
This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to CNB’s financial condition, liquidity, results of operations, future performance and business. These forward-looking statements are intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those that are not historical facts. Forward-looking statements include statements with respect to beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions that are subject to significant risks and uncertainties and are subject to change based on various factors (some of which are beyond CNB’s control). Forward-looking statements often include the words “believes,” “expects,” “anticipates,” “estimates,” “forecasts,” “intends,” “plans,” “targets,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future conditional verbs such as “may,” “will,” “should,” “would” and “could.” CNB’s actual results may differ materially from those contemplated by the forward-looking statements, which are neither statements of historical fact nor guarantees or assurances of future performance. For more information about factors that could cause actual results to differ from those discussed in the forward-looking statements, please refer to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of and the forward-looking statement disclaimers in CNB’s annual and quarterly reports.
 
The forward-looking statements are based upon management’s beliefs and assumptions and are made as of the date of this press release. CNB undertakes no obligation to publicly update or revise any forward-looking statements included in this press release or to update the reasons why actual results could differ from those contained in such statements, whether as a result of new information, future events or otherwise, except to the extent required by law. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this press release might not occur and you should not put undue reliance on any forward-looking statements.
 
Financial Tables
 
The following tables supplement the financial highlights described previously for CNB. All dollars are stated in thousands, except share and per share data.
 
    (unaudited)    
    Three Months Ended   Twelve Months Ended
    December 31,   December 31,
            (unaudited)    
        %       %
    2019 2018 change   2019 2018 change
Income Statement              
Interest income $ 40,608    $ 36,344    11.7  %   $ 155,728    $ 131,870    18.1  %
Interest expense 10,863    8,228    32.0  %   39,530    26,950    46.7  %
Net interest income 29,745    28,116    5.8  %   116,198    104,920    10.7  %
Provision for loan losses 812    1,441    (43.7) %   6,024    6,072    (0.8) %
Net interest income after provision for loan losses 28,933    26,675    8.5  %   110,174    98,848    11.5  %
                 
Non-interest income              
Service charges on deposit accounts 1,676    1,657    1.1  %   6,402    5,759    11.2  %
Other service charges and fees 775    760    2.0  %   2,930    2,833    3.4  %
Wealth and asset management fees 1,145    1,021    12.1  %   4,627    4,172    10.9  %
Net realized gains on available-for-sale securities     NA   148      NA
Net realized and unrealized gains (losses) on trading securities 700    (1,123)   NA   1,888    (451)   NA
Realized gains on Visa Class B shares     NA   463      NA
Mortgage banking 395    218    81.2  %   1,412    1,019    38.6  %
Bank owned life insurance 315    335    (6.0) %   1,317    1,408    (6.5) %
Card processing and interchange income 1,196    1,121    6.7  %   4,641    4,261    8.9  %
Other 552    444    24.3  %   2,147    1,722    24.7  %
Total non-interest income 6,754    4,433    52.4  %   25,975    20,723    25.3  %
                 
                 
                 
                 
Non-interest expenses              
Salaries and benefits 12,365    10,761    14.9  %   46,405    41,856    10.9  %
Net occupancy expense of premises 2,977    2,501    19.0  %   11,221    10,281    9.1  %
FDIC insurance premiums 350    359    (2.5) %   1,252    1,396    (10.3) %
Core Deposit Intangible amortization 97    180    (46.1) %   567    898    (36.9) %
Card processing and interchange expenses 711    695    2.3  %   2,891    2,834    2.0  %
Other (5) 6,405    5,510    16.2  %   25,172    22,077    14.0  %
Total non-interest expenses 22,905    20,006    14.5  %   87,508    79,342    10.3  %
                 
Income before income taxes 12,782    11,102    15.1  %   48,641    40,229    20.9  %
Income tax expense 2,298    2,157    6.5  %   8,560    6,510    31.5  %
Net income $ 10,484    $ 8,945    17.2  %   $ 40,081    $ 33,719    18.9  %
                 
Average diluted shares outstanding 15,178,128    15,200,651        15,164,280    15,210,344     
                 
Diluted earnings per share $ 0.69    $ 0.59    16.9  %   $ 2.63    $ 2.21    19.0  %
Cash dividends per share $ 0.17    $ 0.17    0.0  %   $ 0.68    $ 0.67    1.5  %
                 
Payout ratio 25  % 29  %     26  % 30  %  
                 
    (unaudited)        
    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,  
            (unaudited)    
    2019 2018     2019 2018  
Average Balances (3)              
Loans, net of unearned income $ 2,764,173    $ 2,447,960        2,630,110    2,328,344     
Investment securities 547,386    544,116        540,127    482,335     
Total earning assets 3,390,416    2,992,076        3,194,911    2,810,679     
Total assets 3,616,347    3,187,503        3,413,737    3,008,302     
Non interest-bearing deposits 373,289    352,488        360,208    327,014     
Interest-bearing deposits 2,588,202    2,208,770        2,402,361    2,043,030     
Shareholders' equity 301,605    257,366        285,324    250,496     
Tangible shareholders' equity (1) 262,656    217,802        246,161    210,590     
                 
Average Yields (3)              
Loans, net of unearned income 5.28  % 5.28  %     5.35  % 5.11  %  
Investment securities 2.88  % 2.93  %     2.99  % 2.91  %  
Total earning assets 4.81  % 4.85  %     4.93  % 4.73  %  
Interest-bearing deposits 1.32  % 1.04  %     1.26  % 0.84  %  
Interest-bearing liabilities 1.49  % 1.28  %     1.45  % 1.12  %  
                 
Performance Ratios (annualized)              
Return on average assets (3) 1.15  % 1.11  %     1.17  % 1.12  %  
Return on average assets, net of merger costs (1) (3)   1.16  % 1.11  %     1.18  % 1.12  %  
Return on average equity (3) 13.79  % 13.79  %     14.05  % 13.46  %  
Return on average equity, net of merger costs (1) (3)   13.97  % 13.79  %     14.09  % 13.46  %  
Return on average tangible equity (1) (3) 15.84  % 16.29  %     16.28  % 16.01  %  
Return on average tangible equity, net of merger costs (1) (3)   16.04  % 16.29  %     16.34  % 16.01  %  
Net interest margin, fully tax equivalent basis (3) 3.54  % 3.76  %     3.69  % 3.77  %  
Efficiency Ratio 61.52  % 59.77  %     60.19  % 61.37  %  
Efficiency Ratio, net of merger costs (1) 61.06  % 59.77  %     60.07  % 61.37  %  
                 
Net Loan Charge-Offs              
CNB Bank net loan charge-offs   $ 1,043    $ 3,720        $ 4,384    $ 4,156     
Holiday Financial net loan charge-offs   503    527        1,871    1,905     
Total net loan charge-offs   $ 1,546    $ 4,247        $ 6,255    $ 6,061     
                 
Net loan charge-offs / average loans (3)   0.22  % 0.69  %     0.24  % 0.26  %  
 
  (unaudited) (unaudited)        
  December 31, September 30, December 31,   % change versus
  2019 2019 2018   9/30/19 12/31/18
         
Ending Balance Sheet            
Loans, net of unearned income $ 2,804,035    $ 2,749,502    $ 2,474,557      2.0  % 13.3  %
Loans held for sale 930    1,279    367      (27.3) % 153.4  %
Investment securities 552,122    538,955    524,649      2.4  % 5.2  %
FHLB and other equity interests 11,354    12,383    13,183      (8.3) % (13.9) %
Other earning assets 150,601    2,437    3,161      6079.8  % 4664.3  %
   Total earning assets 3,519,042    3,304,556    3,015,917      6.5  % 16.7  %
             
Allowance for loan losses (19,473)   (20,207)   (19,704)     (3.6) % (1.2) %
Goodwill 38,730    38,730    38,730      0.0  % 0.0  %
Core deposit intangible 160    257    727      (37.7) % (78.0) %
Other assets 225,200    217,834    185,851      3.4  % 21.2  %
   Total assets $ 3,763,659    $ 3,541,170    $ 3,221,521      6.3  % 16.8  %
             
Non interest-bearing deposits $ 382,259    $ 370,761    $ 356,797      3.1  % 7.1  %
Interest-bearing deposits 2,720,068    2,504,834    2,253,989      8.6  % 20.7  %
   Total deposits 3,102,327    2,875,595    2,610,786      7.9  % 18.8  %
             
Borrowings 227,907    248,101    245,117      (8.1) % (7.0) %
Subordinated debt 70,620    70,620    70,620      0.0  % 0.0  %
Other liabilities 57,839    49,821    32,168      16.1  % 79.8  %
             
Common stock         NA NA
Additional paid in capital 99,335    97,690    97,602      1.7  % 1.8  %
Retained earnings 201,503    193,612    171,780      4.1  % 17.3  %
Treasury stock (2,811)   (2,799)   (2,556)     0.4  % 10.0  %
Accumulated other comprehensive income (loss) 6,939    8,530    (3,996)     (18.7) % NA
   Total shareholders' equity 304,966    297,033    262,830      2.7  % 16.0  %
             
   Total liabilities and shareholders' equity $ 3,763,659    $ 3,541,170    $ 3,221,521      6.3  % 16.8  %
             
Ending shares outstanding 15,247,985    15,195,571    15,207,281         
             
Book value per share $ 20.00    $ 19.55    $ 17.28      2.3  % 15.7  %
Tangible book value per share (1) $ 17.45    $ 16.98    $ 14.69      2.8  % 18.8  %
             
Capital Ratios            
Tangible common equity / tangible assets (1) 7.14  % 7.37  % 7.02  %      
Tier 1 leverage ratio 7.86  % 7.95  % 7.87  %      
Common equity tier 1 ratio 9.32  % 9.28  % 9.50  %      
Tier 1 risk based ratio 10.03  % 10.02  % 10.33  %      
Total risk based ratio 12.51  % 12.61  % 13.21  %      
             
Asset Quality (4)            
Non-accrual loans $ 16,737    $ 14,809    $ 14,262         
Loans 90+ days past due and accruing 61    550    887         
   Total non-performing loans 16,798    15,359    15,149         
Other real estate owned 1,633    1,473    418         
   Total non-performing assets $ 18,431    $ 16,832    $ 15,567         
             
Loans modified in a troubled debt restructuring (TDR):            
   Performing TDR loans $ 7,359    $ 7,746    $ 8,201         
   Non-performing TDR loans (2) 2,443    2,453    6,425         
        Total TDR loans $ 9,802    $ 10,199    $ 14,626         
             
Non-performing assets / Loans + OREO 0.66  % 0.61  % 0.63  %      
Non-performing assets / Total assets 0.49  % 0.48  % 0.48  %      
Allowance for loan losses / Loans 0.69  % 0.73  % 0.80  %      
             
(1) - The Company uses non-GAAP (Generally Accepted Accounting Principles) financial information in its analysis of the Company’s performance. The Company’s management believes that these non-GAAP measures provide a greater understanding of ongoing operations, enhance comparability of results of operations with prior periods and show the effects of significant gains and charges in the periods presented. The Company’s management believes that investors may use these non-GAAP measures to analyze the Company’s financial performance without the impact of unusual items or events that may obscure trends in the Company’s underlying performance. This non-GAAP data should be considered in addition to results prepared in accordance with GAAP, and is not a substitute for, or superior to, GAAP results. For a reconciliation of these and other non-GAAP measures to their comparable GAAP measures, see pages. A reconciliation of these non-GAAP financial measures is provided below (dollars in thousands, except per share data).    
(2) - Nonperforming TDR loans are also included in the balance of non-accrual loans in the previous table.    
(3) - The average balances, average yields, performance ratios and total net loan charge-offs / average loans annualized returns calculation were refined. Prior periods were adjusted to be comparative to the current period. The impact of the change was immaterial.    
(4) - The asset quality table data was refined to reflect deferred fees and costs as well as interest paid to principal. Prior periods were adjusted to be comparative to the current period. The impact of the change was immaterial.    
(5) - Includes $170 in merger related expenses.    
             
Non-GAAP Reconciliations (1):    
  (unaudited) (unaudited)        
  December 31, September 30, December 31,      
  2019 2019 2018      
             
Shareholders' equity $ 304,966    $ 297,033    $ 262,830         
     Less goodwill 38,730    38,730    38,730         
     Less core deposit intangible 160    257    727         
Tangible common equity $ 266,076    $ 258,046    $ 223,373         
             
Total assets $ 3,763,659    $ 3,541,170    $ 3,221,521         
     Less goodwill 38,730    38,730    38,730         
     Less core deposit intangible 160    257    727         
Tangible assets $ 3,724,769    $ 3,502,183    $ 3,182,064         
             
Ending shares outstanding 15,247,985    15,195,571    15,207,281         
             
Tangible book value per share $ 17.45    $ 16.98    $ 14.69         
Tangible common equity/Tangible assets 7.14  % 7.37  % 7.02  %      
 
 
 
Non-GAAP Reconciliations (1):
    (unaudited)    
    Three Months Ended   Twelve Months Ended
    December 31,   December 31,
          (unaudited)  
Calculation of adjusted efficiency ratio, net of merger costs:            
    2019 2018   2019 2018
Non-interest expense $ 22,905    $ 20,006      $ 87,508    $ 79,342   
Less: core deposit intangible amortization 97    180      567    898   
Less: merger costs 170        170     
Adjusted non-interest expense (non-GAAP) $ 22,638    $ 19,826      $ 86,771    $ 78,444   
             
Non-interest income $ 6,754    $ 4,433      $ 25,975    $ 20,723   
             
Net interest income $ 29,745    $ 28,116      $ 116,198    $ 104,920   
Less: tax exempt investment and loan income, net of TEFRA (non-GAAP) 1,731    1,762      6,664    6,572   
Add: tax exempt investment and loan income (non-GAAP) (tax-equivalent) 2,306    2,384      8,946    8,759   
Adjusted net interest income (non-GAAP) 30,320    28,738      118,480    107,107   
Adjusted net revenue (non-GAAP) (tax-equivalent) $ 37,074    $ 33,171      $ 144,455    $ 127,830   
Adjusted efficiency ratio, net of merger costs 61.06  % 59.77  %   60.07  % 61.37  %
             
Calculation of adjusted return on average total assets, net of merger costs:            
Net Income   $ 10,484    $ 8,945      $ 40,081    $ 33,719   
Add: merger costs (net of tax)   134        134     
Adjusted net income (non-GAAP)(net of tax)   $ 10,618    $ 8,945      $ 40,215    $ 33,719   
Average total assets $ 3,616,347    $ 3,187,503      $ 3,413,737    $ 3,008,302   
Adjusted return on average total assets, net of merger costs (non-GAAP)(annualized where applicable) 1.16  % 1.11  %   1.18  % 1.12  %
           
Calculation of adjusted return on average equity, net of merger costs:            
Net Income   $ 10,484    $ 8,945      $ 40,081    $ 33,719   
Add: merger costs (net of tax)   134        134     
Adjusted net income (non-GAAP)(net of tax)   $ 10,618    $ 8,945      $ 40,215    $ 33,719   
Average shareholders' equity $ 301,605    $ 257,366      $ 285,324    $ 250,496   
Adjusted return on average equity, net of merger costs (non-GAAP)(annualized where applicable) 13.97  % 13.79  %   14.09  % 13.46  %
           
Calculation of adjusted return on average tangible equity, net of merger costs:            
Net Income   $ 10,484    $ 8,945      $ 40,081    $ 33,719   
Add: merger costs (net of tax)   134        134     
Adjusted net income (non-GAAP)(net of tax)   $ 10,618    $ 8,945      $ 40,215    $ 33,719   
Average tangible shareholders' equity $ 262,656    $ 217,802      $ 246,161    $ 210,590   
Adjusted return on average tangible equity, net of merger costs (non-GAAP)(annualized where applicable) 16.04  % 16.29  %   16.34  % 16.01  %
 

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