RBNC Reliant Bancorp Inc

Loans Increase 12.0% to a Record $697.6 Million

Deposits Increase 25.6% to a Record of $826.2 Million

Commerce Union Bancshares, Inc. (NASDAQ: CUBN), parent of Reliant Bank, today announced its results for the first quarter of 2017, including growth in loans to $697.6 million – an increase of 12.0% since March 31, 2016, and 4.6% since December 31, 2016, – and deposits of $826.2 million – an increase of 25.6% over the prior year and 8.2% since December 31, 2016. First quarter net income attributable to common shareholders was $2.1 million, or $0.26 per fully diluted share, compared to $2.2 million, or $0.30 per fully diluted share, recorded in the first quarter of 2016.

“Our first quarter results highlight our increased momentum in loan and deposit growth since last year,” said William R. DeBerry, Chairman and CEO of Commerce Union Bancshares. “We expect continued growth in 2017 due to the strong economy across our markets, our expansion into the fast growing Chattanooga market, and the recent addition of a new branch in the deposit-rich Green Hills area in Nashville.”

Commenting on the results, DeVan Ard, CEO of Reliant Bank and President of the Company, said, “Our loan production hit $85.3 million in the first quarter, a new quarterly record for Reliant Bank, and a 31.8% increase over last year’s first quarter loan production. Nashville’s economy is expanding with job growth and business expansion that is driving our loan growth. We are also benefiting from robust residential and commercial real estate development, and record highs relevant to median home prices in our key markets of Williamson, Davidson and Sumner counties in Middle Tennessee. In fact, our three primary markets have shown the highest job growth in the Nashville region over the past five years, with Williamson County leading the way at 29%.”

Ard further stated, “Our focus remains on quality loan production and we continue to be cautious about lending to certain market sectors due to potential over-building combined with the sharp rise in real estate prices over the past three years. We remain positive that the strong economic dynamics of the greater Nashville market combined with our expansion into Chattanooga will continue to support our growth and profitability goals in 2017.”

First Quarter Activities Set Stage for Future Growth

Reliant’s key activities during the first quarter that impacted earnings and set the stage for future growth included:

• Expanding outside Middle Tennessee into Chattanooga, one of the state’s fastest growing metropolitan markets – opening a new office in the city and hiring a new lending team to expand loans, deposits and treasury management opportunities.
• Opening a new, full-service branch in deposit-rich Green Hills, an affluent area in Nashville, Tennessee. The branch is strategically located on the main corridor in Green Hills that connects Franklin to Nashville on Hillsboro Road.
• Adding five new commercial lenders, including seasoned lenders at Green Hills and the Chattanooga team referred to above.
• Adding key positions to Reliant’s management team including a Chief Strategy Officer to oversee the creation and implementation of strategic initiatives that advance growth opportunities, and a Chief Risk Officer to navigate through the web of regulations and procedures that depository institutions must follow, while connecting operational risk frameworks to key decisions that drive strategic growth.
• Proactively laying the groundwork for strategic investments with the March 2017 filing of a $75 million shelf registration.

“The overarching goal of the Reliant Bank team is to create an organization that readily adapts to change and is positioned for long-lasting success and prosperity. We recognize the importance of a careful strategy to build market share,” said Ard. “Our first-quarter results reflect the commitment to that goal.”

Balance Sheet Growth

Our recent balance sheet growth is summarized below:

 

 

Q1 2017

     

Q4 2016

     

% Change

     

Q1 2016

     

% Change

Total assets $ 962,465 $ 911,984 5.5 % $ 868,545 10.8 % Earning assets 909,171 851,136 6.8 817,129 11.3 Loans held for investment 697,632 666,783 4.6 622,733 12.0 Loans held for sale 9,798 11,831 (17.2 ) 24,682 (60.3 ) Total deposits 826,183 763,834 8.2 657,777 25.6 Demand deposits 135,939 134,792 0.9 116,362 16.8

Related financial highlights of the quarter consisted of the following:

• Total assets increased $50.5 million or 5.5%, to $962.5 million at March 31, 2017, rising from $912.0 million at December 31, 2016, and $868.6 million at March 31, 2016. The increase in assets was due primarily to earning asset growth in both loans and investments.
• The Bank’s earning assets grew $58.0 million in the first quarter, including $30.9 million in loans and $32.5 million in investment securities. Earning assets grew 11.3% from the prior year.
• Loans increased 4.6% from December 31, 2016, to a record $697.6 million at March 31, 2017, and were up 12.0% over the prior year.
• Asset quality remained sound with a delinquency ratio of 0.29% and a drop in the ratio of non- performing assets to 0.79% at March 31, 2017, compared to 0.84% at December 31, 2016. The bank had no other real estate owned at March 31, 2017.
• Deposits rose to a record $826.2 million at March 31, 2017, an increase of 8.2% from December 31, 2016, and 25.6% over the prior year.
• Demand deposit growth reflects our ongoing emphasis on raising low-cost deposits in our market.
• Mortgage loans held for sale declined to $9.8 million at March 31, 2017, compared to $11.8 million at December 31, 2016. The Company’s mortgage subsidiary is operated under a joint venture arrangement.

Revenue Growth and Profitability

Our Revenue Growth and Profitability is summarized below:

 

   

Q1 2017

   

Q4 2016

   

% Change

   

Q1 2016

   

% Change

Net income attributable to common shareholders $ 2,058 $ 1,971 4.4 % $ 2,237 (8.0 )% Fully diluted EPS 0.26 0.25 4.0 0.30 (13.3 ) Net interest income 7,971 8,043

(0.9

) 8,082 (1.4 ) Net interest margin 4.01 % 4.03 %

(2BP

)

4.08 %

(7BP

)

Provision for loan losses $ 410 $ 208 97.1 $ 165 148.5 Non-interest income 1,139 869 31.1 3,846 (70.4 ) Non-interest expense 6,869 6,827 0.6 8,637 (20.5 )

Related financial highlights of the quarter consisted of the following:

• Net income attributable to common shareholders amounted to $2.1 million in the first quarter of 2017, compared to $2.2 million in the first quarter of 2016, and $2.0 million in the fourth quarter of 2016. The slight decrease in earnings from the prior year was due to the increase in the provision for loan losses, lower net discount accretion associated with the merger of Commerce Union Bank and Reliant Bank, and higher personnel costs related to the expansion into Chattanooga and the staffing of the new Green Hills office. The slight increase in earnings from the fourth quarter of 2016 was driven mainly by investment security gains recognized in the first quarter of 2017 vs. losses recognized in the fourth quarter of 2016 in connection with our bond replacement strategy executed late in the fourth quarter of 2016 and completed in the first quarter of 2017, as well as a reduction in income tax expense discussed further below. In addition to the bond replacement strategy anticipated to provide better yields, we added approximately $20.9 million of investment securities in the first quarter of 2017 that are expected to provide additional interest income.
• Return on average assets for the three months ended March 31, 2017, was 0.89%, compared to 1.03% for the first quarter of 2016, and 0.87% for the fourth quarter of 2016.
• Return on average equity for the three months ended March 31, 2017, was 7.71%, compared to 9.02% in the first quarter of 2016, and 7.33% the fourth quarter of 2016.
• The net interest margin for the three months ended March 31, 2017, was 4.01%, compared to 4.08% in the first quarter of 2016, and 4.03% for the fourth quarter of 2016. The decline in net interest margin was due to lower yields on new loans, and a reduction in purchase accounting discount accretion, partially offset by higher yields on investment securities.
• The efficiency ratio (excluding its mortgage subsidiary) for the three months ended March 31, 2017, was 60.5% compared to 58.9% in the first quarter of 2016, and 58.0% for the fourth quarter of 2016. The change in our efficiency ratio was primarily driven by our expansionary activities discussed earlier in this release.
• Total interest income rose to $9.0 million in the first quarter of 2017, up 0.7%, compared to the first quarter of 2016, and up 0.3% compared to the fourth quarter of 2016. The increase was driven by growth in earning assets, including loans and investment securities.
• Net interest income was $8.0 million in the first quarter of 2017, down 1.4% from the prior year and 0.9% from the previous quarter. The decrease was primarily attributable to lower discount accretion referred to above and an increase in funding costs.
• Provision for loan losses was $410,000 for the first quarter of 2017, compared to $165,000 in the prior year, and $208,000 in the fourth quarter of 2016. This increase was driven both by our growth in loans and slight increase in charge offs compared to previous quarters.
• Noninterest income was $1.1 million in the first quarter of 2017, compared to $3.8 million in the first quarter of 2016 and $0.9 million in the fourth quarter of 2016. The decline in mortgage related income compared to the prior year was due to lower sales of mortgage loans from the transition of the majority of out-of-market mortgage offices to another bank early in the second quarter of 2016. The growth in noninterest income from the fourth quarter of 2016 was due primarily to the loss on the sale of securities being recorded in the fourth quarter of 2016, compared to a small gain recorded in the first quarter of 2017.
• Noninterest expenses were $6.9 million in the first quarter of 2017, compared to $8.6 million in the prior year, and $6.8 million in the fourth quarter of 2016. A substantial portion of the decline from the prior year was driven by a reduction of mortgage personnel due to the transition of out-of-market offices referred to above. The slight first quarter increase was mainly related to our expansionary activities previously referred to above.

Income tax expense totaled $272,000 in the first quarter of 2017, compared to $568,000 in the first quarter of 2016, and $438,000 in the fourth quarter of 2016. The tax rate was favorably impacted by an increase in income from tax-exempt securities, excess tax benefits recognized relating to the exercise of stock options and the addition of certain state tax credits on interest-free loans.

Strong Capital Position

Reliant Bank’s capital position remained strong at March 31, 2017. During the first quarter, the Company raised $411,000 of capital through the exercise of Company stock options. The additional capital was pushed-down to the Bank. Despite the $50.5 million increase in assets, the Bank maintained a March 31, 2017, Tier 1 leverage ratio of 10.69%, compared to 10.75% at December 31, 2016. Stockholders’ equity rose to $109.6 million and tangible book value per share grew to $12.36 at March 31, 2017. The Bank’s capital ratios are expected to be maintained significantly above the ratios of a “well-capitalized” institution.

“Our outlook for 2017 remains very positive based on our strong pipeline for loans, a solid economy that supports our markets and the opening of new offices in fast growing markets. We expect continued improvements in our operating efficiency and remain focused on maintaining our asset quality as a key part of building long-term shareholder value,” concluded Ard.

Accounting Treatment for the Mortgage Venture

The consolidated balance sheets and statements of operations include the operation of the Bank’s majority-controlled subsidiary, Reliant Mortgage Ventures, LLC. For financial accounting purposes the subsidiary is treated as a variable interest entity for which the Bank is deemed to be the primary beneficiary. The venture is operated under a joint venture arrangement. The Bank receives 30% of the net income from the subsidiary once the noncontrolling member has recovered any previous losses incurred by the venture. The Bank does not absorb any losses incurred by the venture. Revenue and expenses related to the subsidiary are included in noninterest income and expenses of the Bank and the noncontrolling portion of the net income or loss of the subsidiary is reflected in the “noncontrolling interest in net (income) loss of the subsidiary” on the Consolidated Statements of Operations. For the first quarter of 2017, the mortgage subsidiary generated a net loss of $(499,000) compared with net loss of $(532,000) for the fourth quarter of 2016 and a net income of $321,000 for the first quarter of 2016.

Non-GAAP Financial Measures

This document contains non-GAAP financial measures. The non-GAAP measures in this release below include “adjusted net interest margin” and “efficiency ratio.” We believe these non-GAAP measures provide useful information to investors because these are among the measures used by our management team to evaluate our operating performance and make day-to-day operating decisions. In addition, we believe certain purchase accounting adjustments and non-recurring income relating to the payoff of a purchased credit impaired loan in the second quarter of 2016 do not reflect the operational performance of the business in this period; accordingly, it is useful to consider these line items with and without such adjustments. We believe this presentation also increases comparability of period-to-period results.

Other companies may use similarly titled non-GAAP financial measures that are calculated differently from the way we calculate such measures. Accordingly, our non-GAAP financial measures may not be comparable to similar measures used by other companies. We caution investors not to place undue reliance on such non-GAAP measures, but instead to consider them with the most directly comparable GAAP measure. Non-GAAP financial measures have limitations as analytical tools, and should not be considered in isolation, or as a substitute for our results as reported under generally accepted accounting principles.

About Commerce Union Bancshares, Inc. and Reliant Bank

Commerce Union Bancshares, Inc. (NASDAQ: CUBN) is a Brentwood, Tennessee-based bank holding company which operates banking centers in Davidson, Robertson, Sumner and Williamson counties, Tennessee along with loan and deposit production offices in Rutherford County and the recently opened loan production and deposit production office in Chattanooga, Tennessee through its wholly-owned subsidiary Reliant Bank. Reliant Bank is a full-service commercial bank that offers a variety of deposit, lending and mortgage products and services to business and consumer customers. For additional information, locations and hours of operation, please visit our website found at www.reliantbank.com.

Forward-Looking Statements

Statements in this press release relating to Commerce Union Bancshares Inc.’s plans, objectives, expectations or future performance are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words “believe,” “may,” “should,” “anticipate,” “estimate,” “expect,” “intend,” “objective,” “possible,” “seek,” “plan,” “strive” or similar words, or negatives of these words, identify forward-looking statements. These forward-looking statements are based on management’s current expectations. The Company’s actual results in future periods may differ materially from those indicated by forward-looking statements due to various risks and uncertainties, including those related to the combination of Commerce Union Bank and Reliant Bank following the merger. These and other risks and uncertainties are described in greater detail under “Risk Factors” in the Company’s 10-K and subsequent periodic reports filed with the Securities and Exchange Commission. The forward-looking statements and other statements in this press release are made as of the date of the release and the Company does not assume any responsibility to update these statements. The information included in this release is preliminary and based on Company data available at the time of this release.

     

COMMERCE UNION BANCSHARES, INC.

CONSOLIDATED BALANCE SHEETS

MARCH 31, 2017, DECEMBER 31, 2016 AND MARCH 31, 2016

(Dollar Amounts In Thousands)

   

ASSETS

March 31,2017

December 31,2016

March 31,2016

Unaudited Audited Unaudited Cash and due from banks $ 18,290 $ 23,413 $ 26,107 Federal funds sold   50     830     434   Total cash and cash equivalents 18,340 24,243 26,541 Securities available for sale 179,266 146,813 139,899 Loans, net of unearned income 697,632 666,783 622,733 Allowance for loan losses   (9,090 )   (9,082 )   (8,090 ) Loans, net 688,542 657,701 614,643 Mortgage loans held for sale, net 9,798 11,831 24,682 Accrued interest receivable 3,921 3,786 3,035 Premises and equipment, net 9,688 9,093 9,213 Restricted equity securities, at cost 7,140 7,133 6,244 Other real estate, net - - 1,139 Cash surrender value of life insurance contracts 25,013 24,827 24,247 Deferred tax assets, net 3,336 3,437 2,274 Goodwill 11,404 11,404 11,404 Core deposit intangibles 1,493 1,582 1,849 Other assets   4,524     10,134     3,375     TOTAL ASSETS $ 962,465   $ 911,984   $ 868,545    

LIABILITIES AND STOCKHOLDERS’ EQUITY

  LIABILITIES Deposits Demand $ 135,939 $ 134,792 $ 116,362 Interest-bearing demand 84,061 85,478 90,622 Savings and money market deposit accounts 210,952 183,788 199,988 Time   395,231     359,776     250,805   Total deposits 826,183 763,834 657,777 Accrued interest payable 158 107 139 Short term borrowings - 3,671 - Federal Home Loan Bank advances 24,099 32,287 104,798 Dividends payable - 1,711 - Other liabilities   2,430     3,455     3,809     TOTAL LIABILITIES   852,870     805,065     766,523     STOCKHOLDERS’ EQUITY Preferred stock, $1 par value; 10,000,000 shares authorized; no shares issued to date - - -

Common stock, $1 par value; 30,000,000 shares authorized; 7,826,450, 7,778,309 and 7,560,594 shares issued and outstanding at March 31, 2017, December 31, 2016 and March 31, 2016, respectively

7,826 7,778 7,561 Additional paid-in capital 89,497 89,045 87,098 Retained earnings 14,270 12,212 7,224 Accumulated other comprehensive income (loss)   (1,998 )   (2,116 )   139     TOTAL STOCKHOLDERS’ EQUITY   109,595     106,919     102,022     TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 962,465   $ 911,984   $ 868,545      

COMMERCE UNION BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE PERIODS INDICATED

(Dollar Amounts In Thousands, Except Per Share Amounts)

(Unaudited)

  Three Months Ended March 31,   December 31, March 31,   2017   2016     2016   INTEREST INCOME Interest and fees on loans $ 7,782 $ 7,894 $ 7,770 Interest and fees on loans held for sale 94 110 368 Interest on investment securities, taxable 149 135 236 Interest on investment securities, nontaxable 828 705 438 Federal funds sold and other   120   104     102     TOTAL INTEREST INCOME   8,973   8,948     8,914     INTEREST EXPENSE Deposits Demand 43 45 44 Savings and money market deposit accounts 150 152 166 Time 693 575 423 Federal Home Loan Bank advances and other   116   133     199     TOTAL INTEREST EXPENSE   1,002   905     832     NET INTEREST INCOME 7,971 8,043 8,082   PROVISION FOR LOAN LOSSES   410   208     165     NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES   7,561   7,835     7,917     NONINTEREST INCOME Service charges on deposit accounts 310 313 285 Gains on mortgage loans sold, net 542 642 3,342 Gain (loss) on securities transactions, net 36 (320 ) - Gain on sale of other real estate 24 - - Other   227   234     219     TOTAL NONINTEREST INCOME   1,139   869     3,846     NONINTEREST EXPENSE Salaries and employee benefits 4,269 3,962 5,394 Occupancy 762 768 829 Information technology 513 637 627 Advertising and public relations 75 160 265 Audit, legal and consulting 293 294 281 Federal deposit insurance 99 89 114 Provision for losses on other real estate - - 26 Other operating   858   917     1,101     TOTAL NONINTEREST EXPENSE   6,869   6,827     8,637     INCOME BEFORE PROVISION FOR INCOME TAXES 1,831 1,877 3,126   INCOME TAX EXPENSE   272   438     568     CONSOLIDATED NET INCOME   1,559   1,439     2,558     NONCONTROLLING INTEREST IN NET (INCOME) LOSS OF SUBSIDIARY   499   532     (321 )   NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 2,058 $ 1,971   $ 2,237     Basic net income attributable to common shareholders, per share $ 0.27 $ 0.26   $ 0.30   Diluted net income attributable to common shareholders, per share $ 0.26 $ 0.25   $ 0.30    

COMMERCE UNION BANCSHARES, INC.

SEGMENT FINANCIAL INFORMATION

FOR THE PERIODS INDICATED

(Dollar Amounts In Thousands)

(Unaudited)

 

Retail Banking

Three Months Ended March 31,  

December 31,

  March 31,   2017     2016     2016   Net interest income $ 7,896 $ 7,953 $ 7,788 Provision for loan losses 410 208 165 Noninterest income 594 228 502 Noninterest expense 5,719 5,527 5,342 Income tax expense   303     475     546   Net income attributable to common shareholders $ 2,058   $ 1,971   $ 2,237      

Residential Mortgage Banking

Three Months Ended March 31, December 31, March 31,   2017     2016     2016   Net interest income $ 75 $ 90 $ 294 Provision for loan losses - - - Noninterest income 545 641 3,344 Noninterest expense 1,150 1,300 3,295 Income tax expense   (31 )   (37 )   22   Net income (loss) (499 ) (532 ) 321 Noncontrolling interest in net (income) loss of subsidiary   499     532     (321 ) Net income attributable to common shareholders $ -   $ -   $ -    

The above financial information is presented, net of intercompany eliminations.

         

COMMERCE UNION BANCSHARES, INC.

SELECTED QUARTERLY FINANCIAL DATA

AT OR FOR THE THREE MONTHS ENDED

(Dollar Amounts In Thousands, Except Per Share Amounts)

(Unaudited)

 

March 31, December 31, September 30, June 30, March 31,   2017   2016   2016   2016   2016   Selected Income Statement Data Total interest income $ 8,973 $ 8,948 $ 8,656 $ 9,497 $ 8,914 Total interest expense 1,002 905 821 805 832 Net interest income 7,971 8,043 7,835 8,692 8,082 Provision for loan losses 410 208 145 450 165

Net interest income after provision for loan losses

7,561 7,835 7,690 8,242 7,917 Noninterest income 1,139 869 1,575 2,510 3,846 Noninterest expense 6,869 6,827 6,883 8,027 8,637 Income tax expense 272 438 619 588 568 Consolidated net income 1,559 1,439 1,763 2,137 2,558

Noncontrolling interest in net (income) loss of subsidiary

499 532 605 223 (321 ) Net income attributable to common shareholders 2,058 1,971 2,368 2,360 2,237   Per Common Share Data

Net income attributable to common shareholders, per share

Basic $ 0.27 $ 0.26 $ 0.31 $ 0.31 $ 0.30 Diluted $ 0.26 $ 0.25 $ 0.30 $ 0.31 $ 0.30 Book value per common share $ 14.00 $ 13.75 $ 14.07 $ 13.90 $ 13.49 Tangible book value per common share $ 12.36 $ 12.08 $ 12.39 $ 12.17 $ 11.74 Basic weighted average common shares 7,741,305 7,719,126 7,673,347 7,560,503 7,450,400 Diluted weighted average common shares 7,876,978 7,853,581 7,768,792 7,678,508 7,563,666 Common shares outstanding at period end 7,826,450 7,778,309 7,763,351 7,627,777 7,560,594   Selected Balance Sheet Data Total assets $ 962,465 $ 911,984 $ 920,020 $ 883,204 $ 868,545 Securities available for sale 179,266 146,813 154,816 147,675 139,899 Loans, net of unearned income 697,632 666,783 661,246 649,277 622,733 Allowance for loan losses 9,090 9,082 8,801 8,688 8,090 Mortgage loans held for sale 9,798 11,831 14,649 14,961 24,682 Other real estate - - - 475 1,139 Goodwill 11,404 11,404 11,404 11,404 11,404 Core deposit intangibles 1,493 1,582 1,671 1,760 1,849 Non-interest bearing deposits 135,939 134,792 139,720 134,515 116,362 Total deposits 826,183 763,834 659,856 647,851 657,777 Federal Home Loan Bank advances 24,099 32,287 144,680 124,871 104,798 Total stockholders' equity 109,595 106,919 109,232 106,024 102,022 Average loans 673,036 657,203 649,778 637,787 617,600 Average earnings assets (1) 870,386 851,652 836,487 830,501 821,181 Average total assets 926,282 902,547 885,127 880,657 871,961 Average stockholders' equity 106,726 107,529 106,778 103,297 99,237  

(1) Average earning assets is the daily average of earning assets. Earning assets consists of loans, mortgage loans held for sale, federal funds sold, deposits with banks, investment securities and restricted equity securities

           

COMMERCE UNION BANCSHARES, INC.

SELECTED QUARTERLY FINANCIAL DATA

AT OR FOR THE THREE MONTHS ENDED

(Dollar Amounts In Thousands, Except Per Share Amounts)

(Unaudited)

  March 31, December 31, September 30, June 30, March 31,   2017     2016     2016     2016     2016   Selected Asset Quality Measures Nonaccrual loans $ 5,497 $ 5,634 $ 6,122 $ 4,126 $ 4,342 Total nonperforming assets (1) 5,497 5,634 6,122 4,601 5,481 Net charge offs (recoveries) 401 (74 ) 33 (149 ) (102 ) Nonaccrual loans to total loans 0.79 % 0.84 % 0.93 % 0.64 % 0.70 % Nonperforming assets to total assets 0.57 % 0.62 % 0.67 % 0.52 % 0.63 % Nonperforming assets to total loans and other real estate 0.79 % 0.84 % 0.93 % 0.71 % 0.88 % Allowance for loan losses to total loans 1.30 % 1.36 % 1.33 % 1.34 % 1.30 % Allowance for loan losses to nonaccrual loans 165.36 % 161.20 % 143.76 % 210.57 % 186.32 % Net charge offs (recoveries) to average loans (2) 0.24 % (0.05 %) 0.02 % (0.09 %) (0.07 %)   Capital Ratios (Bank Subsidiary Only) Tier 1 leverage 10.69 % 10.75 % 10.94 % 10.59 % 10.34 % Common equity tier 1 12.50 % 12.89 % 12.96 % 12.49 % 12.75 % Tier 1 risk-based capital 12.50 % 12.89 % 12.96 % 12.49 % 12.75 % Total risk-based capital 13.67 % 14.11 % 14.16 % 13.67 % 13.91 %   Selected Performance Ratios (2) (3) Return on average assets 0.89 % 0.87 % 1.07 % 1.07 % 1.03 % Return on average stockholders' equity 7.71 % 7.33 % 8.87 % 9.14 % 9.02 % Net interest margin 4.01 % 4.03 % 3.98 % 4.42 % 4.08 %   NON-GAAP FINANCIAL MEASURES Adjusted net interest margin (4) Net interest income $ 7,971 $ 8,043 $ 7,835 $ 8,692 $ 8,082 Purchase accounting adjustments (118 ) (162 ) (368 ) (442 ) (442 )

Interest income recognized on payoff of purchased credit impaired loan

  -     -     -     (619 )   -   Adjusted net interest income $ 7,853 $ 7,881 $ 7,467 $ 7,631 $ 7,640 Adjusted net interest margin 3.96 % 3.95 % 3.80 % 3.91 % 3.86 %  

Efficiency ratio (subsidiary bank only excluding mortgage segment) (4)

Non-interest expense $ 5,387 $ 5,169 $ 5,294 $ 5,499 $ 5,039   Net interest income 7,896 7,953 7,750 8,545 7,788 Tax equivalent adjustment for tax exempt interest income 474 414 354 308 286 Non-interest income 594 228 1,024 728 502 Less gain on sale of other real estate and other assets (24 ) - (145 ) (130 ) (20 ) Less (gain) loss on sale of securities   (36 )   320     (296 )   (60 )   -   Adjusted operating income $ 8,904 $ 8,915 $ 8,687 $ 9,391 $ 8,556   Efficiency Ratio 60.50 % 57.98 % 60.94 % 58.56 % 58.89 %  

(1) Nonperforming assets consist of nonaccrual loans and other real estate

(2) Data has been annualized

(3) Return on average assets is defined as net income attributable to common shareholders divided by average total assets; return on average stockholders’ equity is defined as net income attributable to common shareholders divided by average stockholders’ equity; net interest margin is defined as net interest income calculated on a tax-equivalent basis divided by average earning assets

(4) Not a recognized measure under generally accepted accounting principles (GAAP)

           

 

COMMERCE UNION BANCSHARES, INC.

YIELD TABLES

FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016

(Dollar Amounts In Thousands)

(Unaudited)

 

The following table sets forth the amount of our average balances, interest income or interest expense for each category of interest-earning assets and interest-bearing liabilities and the average interest rate for interest-earning assets and interest-bearing liabilities, net interest spread and net interest margin for the three months ended March 31, 2017, and 2016:

  Three Months Ended March 31, 2017 Three Months Ended March 31, 2016 Change

AverageBalances

 

Rates /Yields(%)

 

InterestIncome /Expense

AverageBalances

 

Rates /Yields(%)

 

InterestIncome /Expense

Due toVolume

 

Due toRate

  Total Interest Earning Assets         Loans $ 673,036 4.48 $ 7,263 $ 617,600 4.76 $ 7,307 $ 2,063 $ (2,107 ) $ (44 ) Loan fees   -   0.31       519   -   0.30       463     56       -       56   Loans with fees 673,036 4.79 7,782 617,600 5.06 7,770 2,119 (2,107 ) 12 Mortgage loans held for sale 10,478 3.64 94 39,514 3.75 368 (264 ) (10 ) (274 ) Deposits with banks 15,092 0.64 24 21,143 0.36 19 (31 ) 36 5 Investment securities - taxable 31,093 1.94 149 49,255 1.93 236 (96 ) 9 (87 ) Investment securities - tax-exempt 133,550 5.99 828 87,116 3.06 438 139 251 390 Fed funds sold and other   7,770   5.01       96   6,553   5.09       83   21       (8 )     13   Total earning assets   871,019   4.18       8,973   821,181   4.48       8,914   1,888       (1,829 )     59   Nonearning Assets   55,263   50,780 Total assets $ 926,282 $ 871,961 Interest Bearing Liabilities Interest bearing demand $ 82,780 0.21 43 $ 89,856 0.20 44 (12 ) 11 (1 ) Savings and money market 184,872 0.33 150 193,715 0.34 166 (10 ) (6 ) (16 ) Time deposits - retail 291,594 0.70 506 140,508 0.70 245 261 - 261 Time deposits - wholesale   81,975   0.93       187   115,766   0.62       178   (262 )     271       9   Total interest bearing deposits 641,221 0.56 886 539,845 0.47 633 (23 ) 276 253 Federal Home Loan Bank advances   45,974   1.02       116   117,224   0.68       199   (483 )     400       (83 ) Total interest-bearing liabilities   687,195 0.59     1,002   657,069   0.51       832   (506 )     676       170   Net interest rate spread (%) / Net interest income ($) 3.59     $ 7,971 3.97     $ 8,082 $ 2,394     $ (2,505 )   $ (111 ) Non-interest bearing deposits 129,385 (0.09 ) 110,060 (0.08 ) Other non-interest bearing liabilities 2,976 5,595 Stockholders' equity   106,726   99,237 Total liabilities and stockholders' equity $ 926,282 $ 871,961 Cost of funds 0.50   0.43   Net Interest Margin 4.01   4.08  

Yield Table Assumptions - Average loan balances are inclusive of nonperforming loans. Yields computed on tax-exempt instruments are on a tax equivalent basis. Net interest spread is calculated as the yields realized on interest-bearing assets less the rates paid on interest-bearing liabilities. Net interest margin is the result of net interest income calculated on a tax-equivalent basis divided by average interest earning assets for the period. Changes in net interest income are attributed to either changes in average balances (volume change) or changes in average rates (rate change) for earning assets and sources of funds on which interest is received or paid. Volume change is calculated as change in volume times the previous rate while rate change is change in rate times the previous volume. Changes not due solely to volume or rate changes have been allocated to volume change and rate change in proportion to the relationship of the absolute dollar amounts of the change in each category.

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Commerce Union Bancshares, Inc.DeVan Ard, 615-221-2020President, Commerce Union Bancshares, Inc.President and Chief Executive Officer, Reliant BankorRon DeBerry, 615-433-7200Chairman and Chief Executive Officer, Commerce Union Bancshares, Inc.