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CST: 24/05/2019 16:00:34   

Level One Bancorp, Inc. reports first quarter 2019 net income of $3.5 million, representing $0.44 of diluted earnings per common share

24 Days ago

FARMINGTON HILLS, Mich., April 30, 2019 (GLOBE NEWSWIRE) -- Level One Bancorp, Inc. (“Level One”) (Nasdaq: LEVL) today reported financial results for the first quarter of 2019, which included net income of $3.5 million, or $0.44 per diluted share. This compares to net income of $4.0 million, or $0.50 per diluted share, in the preceding quarter and $3.2 million, or $0.47 per diluted share, in the first quarter of 2018.

Patrick J. Fehring, President and Chief Executive Officer, commented “We are pleased to announce a solid first quarter with earnings of $3.5 million, representing an increase of 9.43% over the first quarter of 2018.  First quarter fully diluted earnings per share of $0.44 slightly declined from $0.47 in the first quarter of 2018 primarily as a result of our initial public offering of shares in April of 2018. We continue to focus on our strategic priorities to ensure a strong organization for our shareholders, team members, and clients."

He continued, "Earlier this year, we announced the approval of a share repurchase program and repurchased a total of $1.1 million in shares of our common stock during the first quarter. In addition, we announced an increase in our first quarter dividend to $0.04 per share, compared to $0.03 per share paid out during each quarter of 2018. The increase in our first quarter dividend, along with the commencement of the share repurchase program, demonstrate our commitment to return more capital to our shareholders."

First Quarter 2019 Financial Highlights

  • Net income was $3.5 million, or $0.44 per diluted share, for the first quarter of 2019
  • Net interest margin, on a fully taxable equivalent ("FTE") basis, was 3.76%, compared to 3.73% in the preceding quarter
  • Noninterest income increased 66.62% to $2.3 million in the first quarter of 2019, compared to $1.4 million in the first quarter of 2018 mainly due to higher mortgage banking activities income
  • Our quarterly dividend declared increased from $0.03 per common share in the first quarter of 2018 to $0.04 per common share in the first quarter of 2019
  • Total assets increased 11.99% to $1.46 billion at March 31, 2019, compared to $1.30 billion at March 31, 2018
  • Total loans increased 7.58% to $1.13 billion at March 31, 2019, compared to $1.05 billion at March 31, 2018
  • Total deposits increased 3.49% to $1.15 billion at March 31, 2019, compared to $1.11 billion at March 31, 2018
  • Book value per share increased 20.08% to $20.15 per share at March 31, 2019, compared to $16.78 per share at March 31, 2018
  • Tangible book value per share increased 23.64% to $18.88 per share at March 31, 2019, compared to $15.27 per share at March 31, 2018

Balance Sheet Review

Level One's total assets were $1.46 billion at March 31, 2019, an increase of $40.3 million, or 2.85%, from $1.42 billion at December 31, 2018, and up $155.9 million, or 11.99%, from $1.30 billion at March 31, 2018. The increase in total assets from December 31, 2018 was primarily due to an increase in originated loans, mortgage loans held for sale and securities available-for-sale.

The investment securities portfolio was $226.9 million at March 31, 2019, an increase of $22.6 million, or 11.07%, from $204.3 million at December 31, 2018, and up $66.6 million, or 41.49%, from $160.3 million at March 31, 2018.

Total loans were $1.13 billion at March 31, 2019, an increase of $4.5 million, or 0.40%, from $1.13 billion at December 31, 2018, and up $79.7 million, or 7.58%, from $1.05 billion at March 31, 2018. Loan originations during the first quarter of 2019 were strong. However, the originations were nearly offset by high loan payoffs during the quarter which have historically occurred during the first quarter of each year. The growth in total loans compared to March 31, 2018 was primarily due to growth in our commercial and industrial and residential real estate loan portfolios.

Total deposits were $1.15 billion at March 31, 2019, an increase of $16.8 million, or 1.48%, from $1.13 billion at December 31, 2018, and up $38.8 million, or 3.49%, from $1.11 billion at March 31, 2018. Total deposit composition at March 31, 2019 consisted of 30.11% of demand deposit accounts, 27.71% of savings and money market accounts and 42.18% of time deposits.

Operating Results

Level One's net interest income decreased $95 thousand, or 0.73%, to $12.7 million in the first quarter of 2019, compared to $12.8 million in the preceding quarter, primarily as a result of higher costs of funds, and increased $591 thousand, or 4.87%, compared to $12.1 million in the first quarter of 2018, primarily as a result of increased income on originated loans, partially offset by increased interest expense on deposits.

Level One’s net interest margin, on a FTE basis, was 3.76% in the first quarter of 2019, compared to 3.73% in the preceding quarter and 4.03% in the first quarter of 2018. This improvement in the net interest margin compared to the preceding quarter was primarily as a result of higher average loan yield from the fourth quarter of 2018 to the first quarter of 2019, partially offset by higher cost of funds as a result of customers gravitating towards interest-bearing accounts. The decrease in net interest margin year over year was primarily due to higher cost of funds.

Level One's noninterest income increased $914 thousand, or 66.62%, compared to $1.4 million in the first quarter of 2018, and remained consistent from the first quarter of 2019 compared to the preceding quarter. The increase in noninterest income year over year was primarily due to a $884 thousand increase in mortgage banking activities mainly as a result of higher gains on sales of loans.

Level One’s noninterest expenses remained stable in the first quarter of 2019 compared to the preceding quarter, and increased $1.2 million, or 13.50%, compared to $9.1 million in the first quarter of 2018. The increase in noninterest expenses year over year was primarily a result of increased salary and employee benefits due to the overall growth in team member headcount, including the doubling in size of the mortgage division during the third quarter of 2018. The efficiency ratio, which is a measure of operating expenses as a percentage of net interest income and noninterest income, for the first quarter of 2019 was 69.10%, compared to 68.68% for the preceding quarter and 67.67% in the first quarter of 2018.

Level One's income tax provision was $747 thousand, or 17.73% of pretax income, in the first quarter of 2019, as compared to $836 thousand, or 17.46% of pretax income, in the preceding quarter and $642 thousand, or 16.85% of pretax income, in the first quarter of 2018.

Asset Quality

Nonperforming loans were $16.6 million, or 1.47% of total loans, at March 31, 2019, a decrease of $1.8 million from nonperforming loans of $18.4 million, or 1.64% of total loans, at December 31, 2018, and an increase of $3.6 million from nonperforming loans of $13.0 million, or 1.23% of total loans, at March 31, 2018. The decrease in nonperforming loans from the fourth quarter 2018 is primarily due to the pay off of a large loan relationship on nonaccrual status during the first quarter 2019. The increase in nonperforming loans compared to first quarter 2018 was primarily due to two commercial loan relationships totaling $8.0 million moving to nonaccrual status, partially offset by commercial loan payoffs of $5.3 million.

Level One had $373 thousand of other real estate owned assets at March 31, 2019, compared to $0 other real estate owned assets at December 31, 2018 and March 31, 2018. Nonperforming assets, consisting of nonaccrual loans and other real estate owned, as a percentage of total assets were 1.17% at March 31, 2019, compared to 1.30% at December 31, 2018, and 1.00% at March 31, 2018.

In addition, we had $453 thousand of loans 90 days or more past due and still accruing at March 31, 2019, compared to $243 thousand at December 31, 2018 and $263 thousand at March 31, 2018, all of which consisted of purchase credit impaired loans.

Performing troubled debt restructured loans that were not included in nonaccrual loans at March 31, 2019 were $925 thousand, compared to $931 thousand at December 31, 2018 and $2.4 million at March 31, 2018. Borrowers who are in financial difficulty and who have been granted concessions that may include interest rate reductions, forbearance agreements, and principal deferral or reduction, are categorized as troubled debt restructured loans.

Net chargeoffs in the first quarter of 2019 were $29 thousand, or 0.01% of average loans on an annualized basis, compared to $274 thousand of net chargeoffs, or 0.10% of average loans on an annualized basis, for the preceding quarter and $755 thousand of net chargeoffs, or 0.29% of average loans on an annualized basis, for the quarter ended March 31, 2018.

Level One's first quarter of 2019 provision for loan losses was a provision expense of $422 thousand, compared to a provision benefit of $51 thousand in the preceding quarter and a provision expense of $554 thousand in the first quarter of 2018.  The change in provision for loan losses compared to fourth quarter 2018 was primarily due to $229 thousand of new specific reserves on two commercial loan relationships as well as the organic growth in the loan portfolio quarter over quarter. The allowance for loan losses was $12.0 million, or 1.06% of total loans, at March 31, 2019, compared to $11.6 million, or 1.03% of total loans, at December 31, 2018, and $11.5 million, or 1.09% of total loans, at March 31, 2018. As of March 31, 2019, the allowance for loan losses as a percentage of nonperforming loans was 71.85%, compared to 62.70% at December 31, 2018, and 88.67% at March 31, 2018.

Capital

Total shareholders’ equity was $156.1 million at March 31, 2019, an increase of $4.3 million, or 2.87%, compared with $151.8 million at December 31, 2018, primarily as a result of increased retained earnings and accumulated other comprehensive income.  Total shareholders' equity increased $45.6 million, or 41.25%, from $110.5 million at March 31, 2018, primarily as a result of our initial public offering of 1,150,765 shares of common stock in April of 2018.

Recent Developments

First Quarter Dividend: On March 21, 2019, Level One’s Board of Directors declared a quarterly cash dividend of $0.04 per share. This dividend was paid out on April 15, 2019, to stockholders of record at the close of business on March 31, 2019.

About Level One Bancorp, Inc.

Level One Bancorp, Inc. is the holding company for Level One Bank, a full-service commercial and consumer bank headquartered in Michigan with assets of approximately $1.46 billion as of March 31, 2019. It operates twelve banking centers throughout southeast Michigan and west Michigan. Level One Bank's success has been recognized both locally and nationally as the U.S. Small Business Administration's (SBA) "Community Lender of the Year" and "Export Finance Lender of the Year" and one of S&P Global's Top 10 "Best-Performing Community Banks" in the nation. Level One's commercial division provides a menu of products including lines of credit, term loans, leases, commercial mortgages, SBA loans, export-import financing, and a full suite of treasury management and private banking services. The consumer division offers personal savings and checking accounts and a complete array of consumer loan products including residential mortgages, home equity, auto, and credit card services. Level One Bank offers a variety of online banking services and a robust mobile banking application for individuals and businesses.  Level One Bank offers the sophistication of a big bank, the heart of a community bank, and the spirit of an entrepreneur. For more information, visit www.levelonebank.com.

Forward-Looking Statements

This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect management’s current views of future events and operations. These forward-looking statements are based on the information currently available to the Company as of the date of this release. It is important to note that these forward-looking statements are not guarantees of future performance and involve risk and uncertainties, including, but not limited to, the ability of the Company to implement its strategy and expand its lending operations, changes in interest rates and other general economic, business and political conditions, including changes in the financial markets, as well as other risks described in the Company's filings with the Securities and Exchange Commission. The Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

Summary Consolidated Financial Information
(Unaudited)
As of or for the three months ended,
(Dollars in thousands, except per share data) March 31,  2019
  December 31, 2018
  September 30,  2018
  June 30,  2018
  March 31,  2018
Earnings Summary                                      
Interest income $ 17,442     $ 17,041     $ 16,629     $ 15,380     $ 14,774  
Interest expense 4,724     4,228     3,560     2,965     2,647  
Net interest income 12,718     12,813     13,069     12,415     12,127  
Provision (benefit) for loan losses 422     (51 )   619     (710 )   554  
Noninterest income 2,286     2,307     1,924     1,452     1,372  
Noninterest expense 10,368     10,384     10,454     9,705     9,135  
Income before income taxes 4,214     4,787     3,920     4,872     3,810  
Income tax provision 747     836     665     860     642  
Net income $ 3,467     $ 3,951     $ 3,255     $ 4,012     $ 3,168  
Per Share Data                  
Basic earnings per common share $ 0.45     $ 0.51     $ 0.42     $ 0.54     $ 0.48  
Diluted earnings per common share 0.44     0.50     0.41     0.53     0.47  
Book value per common share 20.15     19.58     18.77     18.51     16.78  
Tangible book value per share (1) 18.88     18.31     17.50     17.23     15.27  
Shares outstanding (in thousands) 7,749     7,750     7,749     7,749     6,585  
Average basic common shares (in thousands) 7,752     7,750     7,749     7,456     6,539  
Average diluted common shares (in thousands) 7,869     7,893     7,901     7,613     6,699  
Selected Period End Balances                  
Total assets $ 1,456,552     $ 1,416,215     $ 1,446,269     $ 1,322,913     $ 1,300,629  
Securities available-for-sale 226,874     204,258     199,051     196,047     160,349  
Total loans 1,131,097     1,126,565     1,114,999     1,045,789     1,051,354  
Total deposits 1,151,463     1,134,635     1,130,311     1,065,216     1,112,644  
Total liabilities 1,300,433     1,264,455     1,300,810     1,179,468     1,190,106  
Total shareholders' equity 156,119     151,760     145,459     143,445     110,523  
Tangible shareholders' equity (1) 146,337     141,926     135,570     133,501     100,524  
Performance and Capital Ratios                  
Return on average assets (annualized) 0.96 %   1.11 %   0.95 %   1.23 %   1.00 %
Return on average equity (annualized) 8.99     10.69     8.95     11.97     11.64  
Net interest margin (fully taxable equivalent)(2) 3.76     3.73     3.97     3.99     4.03  
Efficiency ratio (noninterest expense/net interest income plus noninterest income) 69.10     68.68     69.73     69.99     67.67  
Dividend payout ratio (3) 6.72     5.87     7.13     5.78      
Total shareholders' equity to total assets 10.72     10.72     10.06     10.84     8.50  
Tangible equity to tangible assets (1) 10.11     10.09     9.44     10.17     7.79  
Common equity tier 1 to risk-weighted assets 11.78     11.82     11.75     12.11     9.47  
Tier 1 capital to risk-weighted assets 11.78     11.82     11.75     12.11     9.47  
Total capital to risk-weighted assets 13.95     14.00     13.99     14.44     11.87  
Tier 1 capital to average assets (leverage ratio) 10.19     10.21     10.31     10.60     8.15  
Asset Quality Ratios:                  
Net charge-offs (recoveries) to average loans 0.01 %   0.10 %   0.07 %   (0.26 )%   0.29 %
Nonperforming assets as a percentage of total assets 1.17     1.30     0.89     0.85     1.00  
Nonperforming loans as a percent of total loans 1.47     1.64     1.15     1.08     1.23  
Allowance for loan losses as a percentage of period-end loans 1.06     1.03     1.07     1.10     1.09  
Allowance for loan losses as a percentage of nonperforming loans 71.85     62.70     92.36     101.67     88.67  
Allowance for loan losses as a percentage of nonperforming loans, excluding allowance allocated to loans accounted for under ASC 310-30 66.33     57.71     84.72     92.93     80.36  
                             

(1) See section entitled "GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures" below.
(2) Presented on a tax equivalent basis using a 21% tax rate.
(3) The dividend payout ratio of 0 for the three months ended March 31, 2018 was due to the timing difference between the declaration date and payout date of the dividend. The Company declared a $0.03 dividend on March 15, 2018 but it was not paid out until April 16, 2018.

GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

Some of the financial measures included in this earnings release are not measures of financial performance recognized by GAAP. These non-GAAP financial measures include tangible shareholders' equity, tangible book value per share, and the ratio of tangible shareholders' equity to tangible assets. Our management uses these non-GAAP financial measures in its analysis of our performance, and we believe financial analysts and others frequently use these measures, and other similar measures, to evaluate capital adequacy. We calculate: (i) tangible shareholders' equity as total shareholders' equity less core deposit intangibles and goodwill; (ii) tangible book value per share as tangible shareholders' equity divided by shares of common stock outstanding; and (iii) tangible assets as total assets, less core deposit intangibles and goodwill.

The following presents these non-GAAP financial measures along with their most directly comparable financial measure calculated in accordance with GAAP:

Reconciliation of Non-GAAP Financial Measures As of
  March 31,   December 31,   September 30,   June 30,   March 31,
(Dollars in thousands, except per share data) 2019 2018 2018 2018 2018
  (Unaudited)       (Unaudited)   (Unaudited)   (Unaudited)
Total shareholders' equity $ 156,119     $ 151,760     $ 145,459     $ 143,445     $ 110,523  
Less:                  
Goodwill 9,387     9,387     9,387     9,387     9,387  
Core deposit intangibles 395     447     502     557     612  
Tangible shareholders' equity $ 146,337     $ 141,926     $ 135,570     $ 133,501     $ 100,524  
                   
Shares outstanding (in thousands) 7,749     7,750     7,749     7,749     6,585  
Tangible book value per share $ 18.88     $ 18.31     $ 17.5     $ 17.23     $ 15.27  
                   
Total assets $ 1,456,552     $ 1,416,215     $ 1,446,269     $ 1,322,913     $ 1,300,629  
Less:                  
Goodwill 9,387     9,387     9,387     9,387     9,387  
Core deposit intangibles 395     447     502     557     612  
Tangible assets $ 1,446,770     $ 1,406,381     $ 1,436,380     $ 1,312,969     $ 1,290,630  
                   
Tangible equity to tangible assets 10.11 %   10.09 %   9.44 %   10.17 %   7.79 %
                             


Consolidated Balance Sheets As of
  March 31,     December 31,     March 31,  
(Dollars in thousands) 2019     2018     2018  
Assets (Unaudited)           (Unaudited)  
Cash and cash equivalents $ 35,982     $ 33,296     $ 39,882  
Securities available-for-sale 226,874     204,258     160,349  
Federal Home Loan Bank stock 8,325     8,325     8,303  
Mortgage loans held for sale, at fair value 14,043     5,595     1,871  
Loans:                
Originated loans 1,051,169     1,041,898     946,179  
Acquired loans 79,928     84,667     105,175  
Total loans 1,131,097     1,126,565     1,051,354  
Less: Allowance for loan losses   (11,960 )     (11,566 )     (11,506 )
Net loans 1,119,137     1,114,999     1,039,848  
Premises and equipment, net 13,172     13,242     13,282  
Goodwill 9,387     9,387     9,387  
Other intangible assets, net 395     447     612  
Bank-owned life insurance 11,945     11,866     11,622  
Income tax benefit 1,589     2,467     3,026  
Other assets 15,703     12,333     12,447  
Total assets $ 1,456,552     $ 1,416,215     $ 1,300,629  
Liabilities                
Deposits:                
Noninterest-bearing demand deposits $ 293,217     $ 309,384     $ 298,917  
Interest-bearing demand deposits 53,538     52,804     68,479  
Money market and savings deposits 319,028     287,575     278,042  
Time deposits 485,680     484,872     467,206  
Total deposits 1,151,463     1,134,635     1,112,644  
Borrowings 117,907     99,574     52,783  
Subordinated notes 14,905     14,891     14,853  
Other liabilities 16,158     15,355     9,826  
Total liabilities 1,300,433     1,264,455     1,190,106  
Shareholders' equity                
Common stock, no par value per share:                
Authorized - 20,000,000 shares                
Issued and outstanding - 7,749,331 shares at 3/31/19, 7,750,216 shares at 12/31/18, and 6,584,676 shares at 3/31/2018 90,857     90,621     60,886  
Treasury stock - 46,626 shares at 3/31/19 and 0 shares at 12/31/18 and 3/31/18   (1,104 )        
Retained earnings 66,049     62,891     52,568  
Accumulated other comprehensive income (loss), net of tax 317       (1,752 )     (2,931 )
Total shareholders' equity 156,119     151,760     110,523  
Total liabilities and shareholders' equity $ 1,456,552     $ 1,416,215     $ 1,300,629  
                       

 

Consolidated Statements of Income          
(Unaudited) Three months ended
  March 31,   December 31,   March 31,
(In thousands, except per share data) 2019   2018   2018
Interest income          
Originated loans, including fees $ 13,894     $ 13,412     $ 11,178
Acquired loans, including fees 1,757     2,013     2,426
Securities:          
Taxable 936     882     574
Tax-exempt 545     476     351
Federal funds sold and other 310     258     245
Total interest income 17,442     17,041     14,774
Interest Expense          
Deposits 4,121     3,588     2,178
Borrowed funds 353     384     219
Subordinated notes 250     256     250
Total interest expense 4,724     4,228     2,647
Net interest income 12,718     12,813     12,127
Provision expense (benefit) for loan losses 422     (51 )   554
Net interest income after provision for loan losses 12,296     12,864     11,573
Noninterest income          
Service charges on deposits 625     641     642
Net loss on sales of securities (7 )   (71 )  
Mortgage banking activities 1,120     936     236
Other charges and fees 548     801     494
Total noninterest income 2,286     2,307     1,372
Noninterest expense          
Salary and employee benefits 6,913     6,768     5,956
Occupancy and equipment expense 1,204     1,132     1,046
Professional service fees 362     441     266
Marketing expense 176     336     142
Printing and supplies expense 68     98     104
Data processing expense 595     634     436
Other expense 1,050     975     1,185
Total noninterest expense 10,368     10,384     9,135
Income before income taxes 4,214     4,787     3,810
Income tax provision 747     836     642
Net income $ 3,467     $ 3,951     $ 3,168
Earnings per common share:          
Basic earnings per common share $ 0.45     $ 0.51     $ 0.48
Diluted earnings per common share $ 0.44     $ 0.5     $ 0.47
Cash dividends declared per common share $ 0.04     $ 0.03     $ 0.03
Weighted average common shares outstanding—basic 7,752     7,750     6,539
Weighted average common shares outstanding—diluted 7,869     7,893     6,699
               


Net Interest Income and Net Interest Margin
(Unaudited) For the three months ended,
  March 31, 2019   December 31, 2018   March 31, 2018
(Dollars in thousands) Average Balance Interest (1) Average Rate (2)   Average Balance Interest (1) Average Rate (2)   Average Balance Interest (1) Average Rate (2)
Interest-earning assets:                      
Gross loans (3) $ 1,125,213   $ 15,651   5.64 %   $ 1,131,705   $ 15,425   5.41 %   $ 1,037,045   $ 13,604   5.32 %
Investment securities (4):                      
Taxable 141,282   936   2.69     133,817   882   2.61     102,135   574   2.28  
Tax-exempt 80,760   545   3.17     71,025   476   3.13     54,996   351   3.16  
Interest earning cash balances 28,076   176   2.54     27,107   164   2.39     27,090   106   1.59  
Federal Home Loan Bank Stock 8,325   134   6.53     8,325   94   4.48     8,303   139   6.78  
Total interest-earning assets $ 1,383,656   $ 17,442   5.14 %   $ 1,371,979   $ 17,041   4.95 %   $ 1,229,569   $ 14,774   4.9 %
Non-earning assets:                      
Cash and due from banks 24,794         23,459         18,531      
Premises and equipment 13,289         13,376         13,362      
Goodwill 9,387         9,387         9,387      
Other intangible assets, net 425         476         644      
Bank-owned life insurance 11,893         11,813         11,570      
Allowance for loan losses (11,563 )       (11,880 )       (11,822 )    
Other non-earning assets 11,841         8,665         12,195      
Total assets $ 1,443,722         $ 1,427,275         $ 1,283,436      
Interest-bearing liabilities:                      
  Interest-bearing demand deposits $ 53,299   $ 48   0.37 %   $ 53,009   $ 47   0.35 %   $ 63,501   $ 51   0.33 %
  Money market and savings deposits 306,496   1,094   1.45     259,160   759   1.16     273,699   548   0.81  
  Time deposits 544,130   2,979   2.22     542,047   2,782   2.04     456,555   1,579   1.4  
  Borrowings 55,814   353   2.57     66,491   384   2.29     56,819   219   1.56  
  Subordinated notes 14,896   250   6.81     14,888   256   6.82     14,844   250   6.83  
Total interest-bearing liabilities $ 974,635   $ 4,724   1.97 %   $ 935,595   $ 4,228   1.79 %   $ 865,418   $ 2,647   1.24 %
Noninterest-bearing liabilities and shareholders' equity:                      
  Noninterest bearing demand deposits 300,680         331,867         298,681      
  Other liabilities 14,136         11,905         8,931      
  Shareholders' equity 154,271         147,908         110,406      
Total liabilities and shareholders' equity $ 1,443,722         $ 1,427,275         $ 1,283,436      
Net interest income   $ 12,718         $ 12,813         $ 12,127    
Interest spread     3.17 %       3.16 %       3.66 %
Net interest margin (5)     3.73         3.71         4  
Tax equivalent effect     0.03         0.02         0.03  
Net interest margin on a fully tax equivalent basis     3.76 %       3.73 %       4.03 %
                             

(1) Interest income is shown on actual basis and does not include taxable equivalent adjustments.
(2) Average rates and yields are presented on an annual basis and includes a taxable equivalent adjustment to interest income of $87 thousand, $83 thousand, and $78 thousand on tax-exempt securities for the three months ended March 31, 2019, December 31, 2018 and March 31, 2018, respectively, using a federal income tax rate of 21%.
(3) Includes nonaccrual loans.
(4) For presentation in this table, average balances and the corresponding average rates for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts.
(5) Net interest margin represents net interest income divided by average total interest-earning assets.

Loan Composition As of
  March 31,   December 31,   September 30,   June 30,   March 31,
(Dollars in thousands) 2019   2018   2018   2018   2018
Commercial real estate (Unaudited)       (Unaudited)   (Unaudited)   (Unaudited)
Non-owner occupied $ 361,066   $ 367,671   $ 362,450   $ 361,341   $ 360,014
Owner-occupied 187,001   194,422   190,131   172,615   172,608
Total commercial real estate 548,067   562,093   552,581   533,956   532,622
Commercial and industrial 401,588   383,455   397,060   363,239   371,464
Residential real estate 180,386   180,018   164,356   147,763   146,436
Consumer 1,056   999   1,002   831   832
Total loans $ 1,131,097   $ 1,126,565   $ 1,114,999   $ 1,045,789   $ 1,051,354
                             


Impaired Assets As of
  March 31,   December 31,   September 30,   June 30,   March 31,
(Dollars in thousands) 2019   2018   2018   2018   2018
Nonaccrual loans (Unaudited)       (Unaudited)   (Unaudited)   (Unaudited)
Commercial real estate $ 2,694     $ 5,927     $ 4,559     $ 2,557     $ 1,946  
Commercial and industrial 10,495     9,605     5,763     5,983     8,192  
Residential real estate 3,456     2,915     2,546     2,737     2,838  
Consumer         5          
Total nonaccrual loans 16,645     18,447     12,873     11,277     12,976  
Other real estate owned 373                  
Total nonperforming assets 17,018     18,447     12,873     11,277     12,976  
Performing troubled debt restructurings                  
Commercial real estate         1,511     1,517     1,525  
Commercial and industrial 562     568     574     578     582  
Residential real estate 363     363     365     364     258  
Total performing troubled debt restructurings 925     931     2,450     2,459     2,365  
Total impaired assets $ 17,943     $ 19,378     $ 15,323     $ 13,736     $ 15,341  
                   
Loans 90 days or more past due and still accruing $ 453     $ 243     $ 354     $ 259     $ 263  
                                       
Media Contact:
Nicole Ransom
(248) 538-2183

Investor Relations Contact:
Peter Root
(248) 538-2186

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