Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Introduction
MBT Financial Corp. (the “Company”) is a bank holding company with one commercial bank subsidiary, Monroe Bank & Trust (the “Bank”). The Bank operates 14 branch offices in Monroe County, Michigan and 6 branch offices in Wayne County, Michigan, and 1 loan and wealth management office in Wayne County, Michigan.
The Bank’s primary source of income is Net Interest Income (interest income on loans and investments less interest expense on deposits and borrowings), and its primary expense is the compensation of its employees. The discussion and analysis should be read in conjunction with the accompanying consolidated statements and footnotes.
On October 9, 2018, the Company and First Merchants Corporation (“First Merchants”) signed an Agreement and Plan of Reorganization and Merger (the “Merger Agreement”), pursuant to which the Company will merge with and into First Merchants. Subject to the terms and conditions of the Merger Agreement, each share of the Company will be converted into 0.275 shares of First Merchants common stock. Consummation of the merger is subject to various conditions, including, among others, requisite regulatory approval and approval of the Company’s shareholders. For additional information regarding the Merger Agreement and the related proposed merger transaction, please see the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on October 10, 2018.
Executive Overview
The Bank is operated as a community bank, primarily providing loan, deposit, and wealth management products and services to the people, businesses, and communities in its market area. In addition to our commitment to our mission of serving the needs of our local communities, we are focused on improving asset quality, increasing net interest income, and improving non-interest income and expenses.
The net profit of $4,974,000 for the third quarter of 2018 was an increase of $1,041,000 or 26.5% compared to the third quarter of 2017. The increase was mainly the result of an increase of $986,000 in the net interest income and a decrease of $256,000 in the federal income tax expense. For the first nine months of 2018, net income is up $3,068,000, or 28.5% compared to 2017. The year to date improvement is due to the increase of $2,896,000 in net interest income and the decrease of $1,384,000 in federal income tax expense. The effect of these items was mitigated by an increase of $1,114,000 in non-interest expenses, which was primarily due to higher salaries and employee benefits.
The national economic condition is good, and the economy in southeast Michigan is continuing to recover. State and local unemployment rates are holding steady near their lowest post-recession levels, and are now comparable to the national average. Commercial and residential development property values continue to improve, with most values reaching or exceeding their pre-recession levels. Our total classified assets, which include internal watch list loans, other real estate owned, and nonperforming and watch list investment securities, have been improving steadily since 2014, but increased slightly in the third quarter of 2018. Classified assets increased $1.0 million, or 9.3% compared to a year ago. Net recoveries were $420,000, or 0.08% of loans, annualized, in the first three quarters of 2018, compared to net charge offs of $248,000, or 0.05% in the first three quarters of 2017. Due to improving loan quality metrics and net recoveries, we were able to reduce our Allowance for Loan and Lease Losses (ALLL) as a percent of loans from 1.15% at September 30, 2017 to 1.06% as of September 30, 2018. Even though the ALLL decreased as a percent of loans outstanding, the growth in the loan portfolio necessitated an increase in the size of the ALLL. The ALLL increased $320,000 during the first nine months of 2018 due to the net recoveries of $420,000, offset by the year to date negative provision of $100,000. We assess the adequacy of our ALLL each quarter, and adjust it as necessary by debiting or crediting the provision expense. The allowance includes $931,000 of specific allocations on $12.1 million of loans evaluated for impairment and $7.1 million of general allocations on the remainder of the portfolio. The general allocation is based on the historical charge off experience of the previous 20 quarters. The improvement in the historical loss rates is slowing and loan growth is continuing, so we do not expect negative provisions to continue.
The $986,000 increase in Net Interest Income in the third quarter of 2018 compared to the third quarter of 2017 was due to the increase in the net interest margin from 3.38% to 3.62%, and the increase of $17.6 million in the amount of average earning assets. The net interest margin increased because the yield on earnings assets increased 35 basis points while the cost of interest bearing liabilities only increased 10 basis points. Non-interest income for the quarter increased $5,000 and non-interest expenses increased $206,000.
Critical Accounting Policies
The Company’s Allowance for Loan Losses and Fair Value of Investment Securities are “critical accounting estimates” because they are estimates that are based on assumptions that are highly uncertain, and if different assumptions were used or if any of the assumptions used were to change, there could be a material impact on the presentation of the Company’s financial condition. These assumptions include, but are not limited to, collateral values, the effect of economic conditions on the financial condition of the borrowers, the Company, and the issuers of investment securities, market interest rates, and projected earnings for the Company.
To determine the Allowance for Loan Losses, the Company estimates losses on all loans that are not classified as non-accrual or renegotiated by applying historical loss rates, adjusted for current conditions, to those loans. In addition, all non-accrual loan relationships over $250,000 that are classified by Management as nonperforming as well as selected performing accounts and all renegotiated loans are individually tested for impairment. Any amount of monetary impairment is included in the Allowance for Loan Losses.
To determine the fair value of investment securities, the Company utilizes quoted prices in active markets for identical assets, quoted prices for similar assets in active markets, or discounted cash flow calculations for investments where there is little, if any, market activity for the asset.
Financial Condition
The regional economic conditions remained strong this quarter, with steady local unemployment rates and increasing property values. Management efforts remain focused on improving asset quality, increasing net interest income, and improving non-interest income and expenses.
With respect to asset quality, our nonperforming assets (“NPAs”) decreased 12.9% during the nine months, from $14.7 million to $12.8 million, while total classified assets increased from $9.7 million to $11.9 million. Loan delinquencies increased from $4.2 million 30 days or more past due as of December 31, 2017 to $4.6 million as of September 30, 2018 and the delinquency percentage increased from 0.60% to 0.61% of the total loans. Over the last twelve months, NPAs decreased $1.8 million, or 12.3%, with nonperforming loans decreasing 14.3% from $13.3 million to $11.4 million, and Other Real Estate Owned and Other Assets(“OREO”) unchanged at $1.45 million. Total classified assets, which include internally classified watch list loans, other real estate, and watch list investment securities, increased $2.2 million, or 22.4%. The amount required in the Allowance for Loan and Lease Losses (“ALLL”) was unchanged at $8.0 million compared to a year ago because the improvement in the quality of the assets in the loan portfolio and the decrease in the historical loss rates were offset by the increase in the size of the loan portfolio. The ALLL is now 1.06% of loans, down from 1.15% at September 30, 2017. The ALLL is 70.34% of nonperforming loans (“NPLs”), compared to 57.70% at year end and 62.03% at September 30, 2017. In light of current economic conditions, we believe that this level of ALLL adequately estimates the potential losses in the loan portfolio.
Since December 31, 2017, total loans held for investment increased $57.7 million as new loan activity exceeded payments received and other reductions in the period. Even with the increase in loans, our pipeline of loans in process remained steady, and we expect new loan production to continue to exceed run off, resulting in an increase in loans outstanding in the fourth quarter of 2018.
Since December 31, 2017, deposits decreased $31.9 million, borrowed funds increased $35.0 million, other liabilities decreased $0.1 million, and capital decreased $11.3 million, and as a result our total assets decreased $8.3 million, or 0.6%. Deposits decreased during the first half of 2018 as some of our local competitors increased their deposit interest rates faster than we did. We monitor the competition closely, and adjusted some of our pricing in order to preserve our strong deposit base while still controlling our interest expense. This resulted in a small amount of deposit funding growth in the third quarter of 2018. We will continue to price our deposit products competitively, but we have adequate on and off balance sheet liquidity to fund our continued loan growth without needing to actively grow deposits. The total capital decreased $11.3 million since December 31, 2017, mainly because dividends paid exceeded earnings by $5.2 million due to the special dividend of $13.8 million paid in the first quarter of 2018. Capital also decreased due to an increase of $6.7 million in the Accumulated Other Comprehensive Loss, which was due to the decrease in the market value of securities available for sale. Capital decreased at a higher rate than assets, causing the capital to assets ratio to decrease from 9.85% at December 31, 2017 to 9.06% at September 30, 2018.
Results of Operations –
Thir
d
Quarter 201
8
vs.
Third
Quarter 201
7
Net Interest Income - A comparison of the income statements for the three months ended September 30, 2018 and 2017 shows an increase of $986,000, or 9.6%, in Net Interest Income. Interest income on loans increased $1,069,000, or 13.2% as the average loans outstanding increased $64.7 million and the average yield on loans increased from 4.68% to 4.84%. The average loans outstanding increased due to the purchases of consumer loans and syndicated commercial loans, and organic growth in our local markets. The interest income on investments, fed funds sold, and interest bearing balances due from banks increased $165,000 even though the average amount of investments, fed funds sold, and interest bearing balances due from banks decreased $47.0 million as the yield increased from 1.90% to 2.22%. The Company continues to maintain a high level of liquidity, but some of that liquidity is being used by redeploying earning assets from low yielding short term investments and deposits in the Federal Reserve Bank into higher yielding loans. The interest expense on deposits increased $29,000, or 6.8% even though the average deposits decreased $11.5 million as the average cost of deposits increased from 0.14% to 0.15%. Due to the growth in loans and the decrease in deposit funding, average borrowed funds increased $36.8 million, and the cost of borrowed funds increased $219,000 compared to the third quarter of 2017. Average total interest bearing liabilities increased $12.7 million, and the cost of interest bearing liabilities increased from 0.19% in the third quarter of 2017 to 0.29% in the third quarter of 2018. As a result, interest expense increased $248,000, or 58.1%.
Provision for Loan Losses - The Company did not record a Provision for Loan Losses expense in the third quarter of 2017 or the third quarter of 2018. We charged off $97,000 of principal while recovering $125,000 of previously charged off loans in the third quarter of 2018, for a net recovery total of $28,000, or 0.01% of loans, annualized. Each quarter, the Company conducts a review and analysis of its ALLL to determine its adequacy. This analysis involves specific allocations for impaired credits and a general allocation for losses expected based on historical experience adjusted for current conditions. Even though the portfolio risk indicators improved, growth in the portfolio resulted in the need for an increase in the amount of ALLL required. The net recoveries of $28,000 enabled us to achieve the required ALLL without recording a provision expense. The allowance includes $931,000 of specific allocations and $7.1 million of general allocations. The general allocation is based on the historical charge off experience of the previous 20 quarters. The historical charge off rate is not expected to continue to improve significantly, and if loan growth continues as expected, provision expenses may be required in the future.
Other Income – Non interest income increased $5,000, or 0.1% compared to the third quarter of 2017. Increases in Wealth Management income, Debit Card income, and Other non-interest income were offset by the decrease in gains on securities transactions. Origination fees on mortgage loans sold increased $65,000 because we retained more of our fixed rate mortgage loan originations in the third quarter of 2018.
Other Expenses – Total non-interest expenses increased $206,000, or 2.3% compared to the third quarter of 2017. Salaries and Employee Benefits increased $68,000, or 1.2% mainly due to higher retirement and healthcare benefit expenses. Occupancy expense decreased $34,000 due to lower depreciation and maintenance costs. Equipment expense increased $98,000 due to higher computer expense, which includes expenses related to a wealth management system conversion that was completed in the third quarter of 2018.
As a result of the above activity, the Profit Before Income Taxes in the third quarter of 2018 was $6,101,000, an increase of $785,000 compared to the pre-tax profit of $5,316,000 in the third quarter of 2017. The Company recorded a federal income tax expense of $1,127,000 in the third quarter of 2018, reflecting an effective tax rate of 18.5%, compared to the tax expense of $1,383,000 in the third quarter of 2017, which reflected an effective rate of 26.0%. The tax expense in the third quarter of 2018 reflects the decrease in our statutory rate from 34% to 21% resulting from the Tax Cuts and Jobs Act. The Net profit for the third quarter of 2018 was $4,974,000, an increase of 26.5% compared to the net profit of $3,933,000 in the third quarter of 2017.
Results of Operations –
First T
hree
Quarters 2018
vs.
First T
hree
Quarters 2017
Net Interest Income - A comparison of the income statements for the nine months ended September 30, 2018 and 2017 shows an increase of $2,896,000, or 9.8%, in Net Interest Income. Interest income on loans increased $2,949,000, or 12.7% as the average loans outstanding increased $56.0 million and the average yield on loans increased from 4.61% to 4.80%. The average loans outstanding increased due to the purchase of a pool of consumer loans related to the refinance of student debt, purchases of syndicated loans, and organic growth in our local markets. The interest income on investments, fed funds sold, and interest bearing balances due from banks increased $213,000 even though the average amount of investments, fed funds sold, and interest bearing balances due from banks decreased $54.7 million because the investment portfolio yield increased from 1.91% to 2.17%. The Company continues to maintain a high level of liquidity, but some of that liquidity is being used by redeploying earning assets from low yielding short term investments and deposits in the Federal Reserve Bank into higher yielding loans. The interest expense on deposits decreased $47,000, or 3.6% as the average deposits decreased $10.3 million and the average cost of deposits decreased from 0.15% to 0.14%. The average cost of deposits decreased because maturing time deposits are either resetting at lower rates or customers are moving the funds to non-interest bearing demand deposit accounts or low cost non maturity deposits due to the flat yield curve interest rate environment. Due to the increase in loans and the decrease in deposit funding, the Bank increased its average use of borrowed funds by $18.3 million. The cost of the borrowed funds increased from 0.96% in the first nine months of 2017 to 2.25% in the first nine months of 2018, resulting in an increase of $313,000 in interest expense on borrowed funds. The cost of all interest bearing liabilities increased from 0.19% for the first nine months of 2017 to 0.24% for the first nine months of 2018.
Provision for Loan Losses - The Provision for Loan Losses increased $100,000 compared to the first nine months of 2017 as a $100,000 credit to provision expense was recorded in the first quarter of 2018, compared to a negative provision expense of $200,000 that was recorded in the first quarter of 2017. We charged off $160,000 of principal while recovering $580,000 of previously charged off loans in the first three quarters of 2018, for a net recovery total of $420,000, or 0.08% of loans, annualized. Each quarter, the Company conducts a review and analysis of its ALLL to determine its adequacy. This analysis involves specific allocations for impaired credits and a general allocation for losses expected based on historical experience adjusted for current conditions. Even though the portfolio grew, the risk indicators improved, resulting in the need for an increase of $320,000 in the amount of ALLL required. The net recoveries of $420,000 enabled us to achieve the required ALLL by recording the negative provision expense of $100,000. The historical charge off rate is not expected to continue to improve significantly, and if loan growth continues as expected, provision expenses may be required.
Other Income – Non interest income was $12.2 million in the first three quarters of 2018 and 2017. Wealth management fees decreased $274,000 due to an accrual adjustment of $389,000 in 2017. Service charges on deposit accounts decreased $242,000 due to lower overdraft activity and higher earnings credits on certain business checking accounts. Gains on securities transactions decreased $420,000 due to losses in 2018 related to some portfolio restructuring transactions, and gains in 2017. Gains on other real estate transactions increased $625,000 due to gains on sales in 2018 compared to losses on sales in 2017. Debit card income increased $122,000, or 5.7% due to increased customer debit card usage.
Other Expenses – Total non-interest expenses increased $1,114,000, or 4.1% compared to the first three quarters of 2017. Salaries and Employee Benefits increased $694,000, or 4.3% due to higher salaries, a larger incentive compensation accrual, and an adjustment to the stock based compensation accrual related to the special dividend in the first half of 2018. Also, the 401k matching contribution increased due to higher employee deferrals, health insurance benefits expense increased, and payroll tax expense was higher. Equipment expense increased $277,000 due to higher computer expense, which included PC network hardware replacement and expenses related to a wealth management system conversion in 2018. Marketing expenses increased $272,000, or 28.3% due to increased advertising and other expenses related to our branding initiative.
As a result of the above activity, the Profit Before Income Taxes in the first three quarters of 2018 was $16,779,000, an increase of $1,684,000 compared to the pre-tax profit of $15,095,000 in the first three quarters of 2017. The Company recorded a federal income tax expense of $2,958,000 in the first three quarters of 2018, reflecting an effective tax rate of 17.6%, compared to the tax expense of $4,342,000 in the first three quarters of 2017, which reflected an effective rate of 28.8%. The tax expense in 2018 reflects the decrease in our statutory rate from 34% to 21% resulting from the Tax Cuts and Jobs Act, and also includes a tax benefit related to our stock based compensation program. The Net profit for the first three quarters of 2018 was $13,821,000, an increase of 28.5% compared to the net profit of $10,753,000 in the first three quarters of 2017.
Cash Flows
Cash flows provided by operating activities increased $6,862,000 compared to the first nine months of 2017 mainly because the net income was $3,068,000 higher in 2018 and $3,299,000 more cash was provided by reducing interest receivable and other assets. The cash flow used for investing activities in the first nine months of 2018 was $17.4 million because the cash provided by sales, maturities, and redemption of securities, net of purchases of investment securities was $38.8 million while the cash used to increase loans was $57.9 million. The cash flow used for investing activities in the first nine months of 2017 was $11.7 million because the cash provided by sales, maturities, and redemption of securities, net of purchases of investment securities was $39.4 million while the cash used to increase loans and bank owned life insurance was $42.0 million and $4.4 million, respectively. The amount of cash provided by the investment portfolio decreased because the higher rate environment has slowed the prepayments of mortgage backed securities and callable debt securities. The bank is actively growing its loan portfolio, and primarily funding that growth with cash flow from the investment portfolio. The amount of cash used for financing activities was $8.1 million lower in the first nine months of 2018 than it was in the first nine months of 2017 even though deposits decreased by $27.5 million more in the first nine months of 2018 because cash provided by borrowing, net of repayments of borrowings, was $35.0 million higher. The amount of cash used to pay dividends decreased by $0.6 million as the dividend payout ratio decreased from 182.7% in 2017 to 137.8% in 2018. In the first nine months of 2018, the cash used for investing and financing activities exceeded the cash provided by operating activities, and the amount of cash and cash equivalents decreased by $15.0 million during the period. In the first nine months of 2017, the cash used for investing and financing activities exceeded the cash provided by operating activities, resulting in a decrease of $24.3 million in cash and cash equivalents during the first nine months of 2017. We expect cash flows from redemptions of investment securities and deposit growth to exceed our uses for loan growth in the fourth quarter of 2018, and as a result we plan to utilize that cash flow to reduce borrowings. We anticipate that we will maintain our current level of cash and cash equivalents through the end of the year.
Liquidity and Capital
The Company believes it has sufficient liquidity to fund its lending activity and allow for fluctuations in deposit levels. Internal sources of liquidity include the maturities of loans and securities in the ordinary course of business as well as our available for sale securities portfolio. External sources of liquidity include a line of credit with the Federal Home Loan Bank of Indianapolis, the Federal funds line that has been established with our correspondent bank, and Repurchase Agreements with money center banks that allow us to pledge securities as collateral for borrowings. As of September 30, 2018, the Bank was utilizing $35 million of its authorized limit of $255 million with the Federal Home Loan Bank of Indianapolis, $0 of its $20 million overdraft line of credit with the Federal Home Loan Bank of Indianapolis, and $0 of its $25 million federal funds line with a correspondent bank. The Company periodically draws on its overdraft and fed funds lines to ensure that funding will be available if needed.
The Company’s Funds Management Policy includes guidelines for desired amounts of liquidity and capital. The Funds Management Policy also includes contingency plans for liquidity and capital that specify actions to take if liquidity and capital ratios fall below the levels contained in the policy. Throughout the first nine months of 2018 the Company was in compliance with its Funds Management Policy regarding liquidity and capital.
Total stockholders’ equity of the Company was $121.4 million at September 30, 2018 and $132.7 million at December 31, 2017. Retained earnings decreased $5.2 million as the year to date profit was exceeded by the payment of cash dividends on the common stock, and the Accumulated Other Comprehensive Loss (AOCL) increased due to a decrease in the value of our securities that are classified as Available For Sale. Total equity decreased $11.3 million while total assets decreased $8.3 million, so the ratio of equity to assets decreased from 9.85% at December 31, 2017 to 9.06% at September 30, 2018.
Federal bank regulatory agencies have set capital adequacy standards for Total Risk Based Capital, Tier 1 Risk Based Capital, and Leverage Capital. These standards require banks to maintain a Total Risk Based Capital ratio of at least 8%, a Tier 1 Risk Based Capital ratio of at least 6%, and a Tier 1 Leverage Ratio of at least 4% to be adequately capitalized. The regulatory agencies consider a bank to be well capitalized if its Total Risk Based Capital is at least 10% of Risk Weighted Assets, Tier 1 Risk Based Capital is at least 8% of Risk Weighted Assets, and the Tier 1 Leverage Capital ratio is at least 5%. Basel III implemented the new Common Equity Tier 1 Capital to Risk Weighted Assets ratio, with a minimum of 4.5% to be considered adequately capitalized and a minimum of 6.5% required to be considered well capitalized.
The following table summarizes the capital ratios of the Company and the Bank:
|
|
Actual
|
|
|
Minimum to Qualify as
Well Capitalized
|
|
|
|
Amount
|
|
|
Ratio
|
|
|
Amount
|
|
|
Ratio
|
|
As of September 30, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital to Risk-Weighted Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
$
|
144,047
|
|
|
|
15.76
|
%
|
|
$
|
91,419
|
|
|
|
10.0
|
%
|
Monroe Bank & Trust
|
|
|
142,676
|
|
|
|
15.63
|
%
|
|
|
91,288
|
|
|
|
10.0
|
%
|
Tier 1 Capital to Risk-Weighted Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
135,726
|
|
|
|
14.85
|
%
|
|
|
73,135
|
|
|
|
8.0
|
%
|
Monroe Bank & Trust
|
|
|
134,355
|
|
|
|
14.72
|
%
|
|
|
73,030
|
|
|
|
8.0
|
%
|
Common Equity Tier 1 Capital to Risk-Weighted Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
135,726
|
|
|
|
14.85
|
%
|
|
|
59,422
|
|
|
|
6.5
|
%
|
Monroe Bank & Trust
|
|
|
134,355
|
|
|
|
14.72
|
%
|
|
|
59,337
|
|
|
|
6.5
|
%
|
Tier 1 Capital to Average Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
135,726
|
|
|
|
9.96
|
%
|
|
|
68,160
|
|
|
|
5.0
|
%
|
Monroe Bank & Trust
|
|
|
134,355
|
|
|
|
9.86
|
%
|
|
|
68,109
|
|
|
|
5.0
|
%
|
|
|
Actual
|
|
|
Minimum to Qualify as
Well Capitalized
|
|
|
|
Amount
|
|
|
Ratio
|
|
|
Amount
|
|
|
Ratio
|
|
As of December 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital to Risk-Weighted Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
$
|
148,387
|
|
|
|
17.39
|
%
|
|
$
|
85,350
|
|
|
|
10.0
|
%
|
Monroe Bank & Trust
|
|
|
146,842
|
|
|
|
17.21
|
%
|
|
|
85,343
|
|
|
|
10.0
|
%
|
Tier 1 Capital to Risk-Weighted Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
140,364
|
|
|
|
16.45
|
%
|
|
|
68,280
|
|
|
|
8.0
|
%
|
Monroe Bank & Trust
|
|
|
138,819
|
|
|
|
16.27
|
%
|
|
|
68,274
|
|
|
|
8.0
|
%
|
Common Equity Tier 1 Capital to Risk-Weighted Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
140,364
|
|
|
|
16.45
|
%
|
|
|
55,477
|
|
|
|
6.5
|
%
|
Monroe Bank & Trust
|
|
|
138,819
|
|
|
|
16.27
|
%
|
|
|
55,473
|
|
|
|
6.5
|
%
|
Tier 1 Capital to Average Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
140,364
|
|
|
|
10.44
|
%
|
|
|
67,229
|
|
|
|
5.0
|
%
|
Monroe Bank & Trust
|
|
|
138,819
|
|
|
|
10.33
|
%
|
|
|
67,216
|
|
|
|
5.0
|
%
|
Market risk for the Bank, as is typical for most banks, consists mainly of interest rate risk and market price risk. The Bank’s earnings and the economic value of its equity are exposed to interest rate risk and market price risk, and monitoring this risk is the responsibility of the Asset/Liability Management Committee (ALCO) of the Bank. The Bank’s market risk is monitored quarterly and it has not changed significantly since year-end 2017.
Forward-Looking Statements
Certain statements contained herein are not based on historical facts and are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements which are based on various assumptions (some of which are beyond the Company's control), may be identified by reference to a future period or periods, or by the use of forward-looking terminology, such as "may," "will," "believe," "expect," "estimate," "anticipate," "continue," or similar terms or variations on those terms, or the negative of these terms. Actual results could differ materially from those set forth in forward-looking statements, due to a variety of factors, including, but not limited to, those related to the economic environment, particularly in the market areas in which the Company operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, acquisitions and the integration of acquired businesses, credit risk management, asset/liability management, changes in the financial and securities markets, including changes with respect to the market value of our financial assets, the availability of and costs associated with sources of liquidity, and the ability of the Company to resolve or dispose of problem loans.
The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.