Form 8-K NEWBRIDGE BANCORP For: Jan 28

January 28, 2015 4:31 PM EST

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Form 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)���January 28, 2015

NEWBRIDGE BANCORP

(Exact Name of Registrant as Specified in Charter)

North Carolina 000-11448 56-1348147
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)

1501 Highwoods Boulevard, Suite 400,
Greensboro North Carolina
27410
(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code���(336) 369-0900

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

���Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

���Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

���Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

���Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

INDEX

Page
Item 2.02 – Results of Operations and Financial Condition 3
Item 9.01 – Financial Statements and Exhibits 3
Signatures 4

2

Item 2.02.Results of Operations and Financial Condition

On January 28, 2015, NewBridge Bancorp issued a press release announcing earnings for the fourth quarter and fiscal year ended December 31, 2014. A copy of the press release is attached to this filing as Exhibit�99.1 and incorporated herein by reference.

Item 9.01.Financial Statements and Exhibits

(c)Exhibits.

The following exhibit is being provided solely for the purposes of providing disclosure pursuant to Item 2.02 – Results of Operations and Financial Condition.

Exhibit No.Description of Exhibit

99.1Press release of NewBridge Bancorp dated January 28, 2015.

3

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

NEWBRIDGE BANCORP
Dated: January 28, 2015 By:� /s/ Ramsey K. Hamadi
Ramsey K. Hamadi,
Chief Financial Officer

4

EXHIBIT INDEX

Exhibit No.Description of Exhibit

99.1Press release of NewBridge Bancorp dated January 28, 2015

5

Exhibit 99.1

NewBridge Bancorp (NASDAQ: NBBC) Announces Solid Fourth Quarter,
Full Year 2014 Results Reflecting 24% Increase in Pre-tax Earnings for the Year

GREENSBORO, N.C., JANUARY 28, 2015 –

Fourth Quarter 2014 Highlights (Quarterly, Year-Over-Year)

Net income available to common shareholders totaled $4.3 million, up from $1.2 million
Net income per diluted share rose to $0.11, up from $0.04
Net interest income grew 26% to $21.3 million
Noninterest-bearing deposits increased 33%, or $78.3 million, and total core deposits grew 16%
Loans held for investment increased by 4.8%, or $83.4 million, during the fourth quarter
Return on average equity was 7.33%, up from 3.45%
Tangible book value per share increased to $5.50, up from $5.04

Year-End 2014 Financial Highlights (December 31, 2014 vs. December 31, 2013)

Total assets increased by $555.0 million to $2.5 billion, driven by acquisitive and organic growth
Total loans held for investment were $1.8 billion, up from $1.4 billion
Nonperforming assets declined to 0.41% of total assets from 0.87%
Wealth management revenues increased 13.6%

Capital Adequacy, Shareholder Value (December 31, 2014 vs. December 31, 2013)

Tier one leverage and total risk-based capital ratios increased to 8.57% and 12.23%, respectively, from 8.30% and 11.67%
Tangible common equity to tangible assets increased to 8.21% from 7.33%
Total shareholders common equity increased to $231.4 million from $151.8 million

Key 2014 Accomplishments

Acquired CapStone Bank resulting in expanded operations in Raleigh, N.C.
Established middle market banking group, reorganized commercial banking operation into specialized teams
Named nation’s #4 lender in the U.S. Treasury Department’s State Small Business Credit Initiative
Opened Charleston and Greenville, S.C. loan production offices
Expanded operations in Charlotte and Winston-Salem, N.C.
Strengthened capital structure, redeeming preferred stock and issuing subordinated debt
Announced planned acquisition of Premier Commercial Bank, a $173 million asset bank based in Greensboro, N.C., to add commercial banking clients and assets, and residential mortgage banking in several North Carolina markets. The acquisition is expected to close in first quarter 2015.

NewBridge Bancorp (the “Company”) today reported earnings for the three and twelve month periods ended December 31, 2014. Net income available to common shareholders totaled $4.3 million, or $0.11 per diluted share, for the quarter, compared to $1.2 million, or $0.04 per diluted share, for the quarter ended December 31, 2013. For the twelve months ended December 31, 2014, net income available to common shareholders totaled $13.6 million compared to $18.9 million for the prior year period. Acquisition related expenses totaled $171,000 for the quarter and $5.1 million for the year ended December 31, 2014 compared to $2.2 million for the quarter and year ended December 31, 2013. Results for 2013 were positively affected by a tax benefit of $3.2 million that resulted from a reversal of a deferred tax asset valuation allowance of $10.5 million. Pre-tax core net operating income, a non-GAAP measure that excludes tax provision and acquisition related expenses, increased 41% to $26.9 million for the twelve months ended December 31, 2014, from $19.1 million in the prior year.

Pressley A. Ridgill, President and CEO, commented: “It was an eventful year for NewBridge as we strengthened our foundation for anticipated future growth through prudent acquisitions, organic market expansion, and by optimizing our operating structure. We added teams of highly experienced commercial bankers with the potential to significantly increase revenue. Asset growth of 28% year-over-year reflects our successful strategy to increase our geographic footprint in key selected markets. We have expanded beyond our focus in the Triad region of North Carolina to serve the most rapidly growing commercial markets in North and South Carolina. We enhanced the productivity and efficiency of our commercial and retail banking teams and continue to build upon our low-cost core deposit franchise. The addition of a middle market banking team has been transformative, significantly bolstering our current and projected growth rates. This team has also dramatically improved and expanded our treasury management operations, enabling us to better serve larger corporations in our markets.”

Net Interest Income

Net interest income increased 26.0%, or $4.4 million, to $21.3 million for the quarter ended December 31, 2014 compared to the quarter ended December 31, 2013. This increase was due primarily to a rise in the average balance of earning assets, primarily loans, following the acquisition of CapStone Bank and organic growth during the past year. For the twelve months ended December 31, 2014, net interest income increased to $78.7 million compared to the $63.2 million for the prior year period. For the twelve months ended December 31, 2014, net interest margin declined 19 basis points to 3.70%, compared to the prior year period. Strong interest expense management helped mitigate margin pressure in a continued low interest rate environment.

Noninterest Income

Total noninterest income for the fourth quarter of 2014 was the same as for the fourth quarter of 2013. Quarterly wealth management revenue grew to $771,000 from $638,000, or 20.8%, while retail banking decreased $121,000, or 4.6%, to $2.5 million and mortgage banking decreased $80,000, or 26.9%, to $217,000. For the twelve months ended December 31, 2014, total noninterest income was $16.7 million compared to $17.5 million for the prior year. Retail banking revenues in 2014 increased $196,000, or 1.9%, wealth management revenue climbed $349,000, or 13.6%, and other sources of noninterest income increased $268,000, or 31.6%. Mortgage banking revenue decreased $774,000, or 47.1%, to $870,000 from $1.6 million during the same period last year due to a significantly lower level of mortgage loan production resulting from increases in mortgage interest rates. The Company recognized gains on the sale of investment securities of $736,000 during 2013 while no gains or losses were recognized in 2014.

Noninterest Expense

For the quarter, noninterest expense increased 1.2%, or $218,000, to $18.6 million; this includes $171,000 in acquisition related expenses and a 14.1% increase in personnel expenses, primarily reflecting additional employees from acquisition and new hires as the Company increased its presence within several markets. The quarter’s noninterest expense also reflected an elevated level of several categories of expense including legal and professional fees, other real estate owned write-downs, marketing expense and mortgage buyback and other miscellaneous losses compared to previous quarters of 2014. In total, the excess of these expenses over the previous three quarters averages were $367,000 after-tax, or $0.01 per share. For the year, noninterest expense was $72.7 million, an increase of $12.3 million, or 20.4%, compared to 2013, and included $5.1 million in acquisition related expenses.

Spence H. Broadhurst, Senior EVP and Chief Banking Officer, commented: “We made significant investments during the year to build our team of talented, experienced bankers to serve a greatly expanded market. Simultaneously, we made numerous organizational changes to generate increased productivity and efficiency. We realigned our retail banking operations, which included prudent headcount reductions and improved product and service cross-selling and training. We also revamped our commercial banking organizational structure to align small business, commercial and industrial, real estate and middle market lending into specialized teams. We expect the investments in personnel and operating enhancements to drive revenue growth in the coming periods.”

Balance Sheet

Total assets grew $77.5 million during the quarter and $555.0 million during the year to $2.52 billion at December 31, 2014. Loans held for investment increased $83.4 million, or 4.8%, for the fourth quarter and $387.7 million, or 27.4%, during the twelve month period, to $1.8 billion at December 31, 2014.� The Company’s success in expanding its loan portfolio is attributed to a balanced strategy of organic and acquired loan growth. In the most recent quarter, the middle market team, which focuses on commercial and industrial loan customers with revenues between $25 million and $250 million, had new loan production totaling $99.7 million, which included $75.7 million of credit relationships previously existing with the team.� The Company’s investment portfolio increased during the year to $496.8 million at December 31, 2014, compared to $368.9 million a year earlier. Growth in the investment portfolio was primarily attributable to increases in U.S. government agency issued securities and select corporate debt securities. At December 31, 2014 the average duration of the investment portfolio declined to 4.08 years from 4.96 years at year-end 2013, and remains liquid, with an average yield of 3.38%.

Total liabilities increased $74.6 million during the quarter and $490.4 million during the twelve month period, including a $278.6 million increase in deposits. Total deposits were $1.83 billion at December 31, 2014. Core transaction, savings and money market accounts were 70% of the Company’s deposits and totaled $1.28 billion at December 31, 2014. Noninterest-bearing deposits increased $8.9 million, or 2.9%, to $319.3 million during the quarter ending December 31, 2014. Time deposits were $549.4 million at December 31, 2014, compared to $451.9 million at December 31, 2013. The average cost of interest bearing liabilities declined to 0.40% at December 31, 2014, from 0.43% at year-end 2013. Total borrowings were $438.5 million at December 31, 2014, compared to $229.8 million at December 31, 2013, with the increase primarily reflecting the Company’s use of attractively priced Federal Home Loan Bank borrowings as part of its overall funding strategy. The Company’s average cost of borrowings in 2014 was 0.99%, down from 1.50% in 2013.

In March 2014, the Company issued $15.5 million of subordinated debt. The subordinated debt was issued as an efficient form of regulatory tier 2 eligible capital, and the proceeds were used to redeem the remaining TARP preferred stock. The weighted average cost of the subordinated debt is 7.25%; however, the after tax cost to common shareholders is below 5.00%.

Shareholders’ equity increased to $231.4 million at December 31, 2014, compared to $166.8 million at December 31, 2013. Retained earnings increased $4.3 million and common equity increased $2.9 million during the fourth quarter. Key events in 2014 that impacted shareholders equity included a first quarter decline of $10.0 million due to the redemption of $15.0 million of preferred stock, partially offset by total comprehensive income of $1.8 million during the quarter, and a $64.2 million increase in the second quarter of 2014 as a result of the acquisition of CapStone Bank and the exercise of stock options previously issued by CapStone Bank. The Company’s tangible book value rose from $5.04 per share at December 31, 2013 to $5.50 at December 31, 2014.

Asset Quality

Asset quality reflected continued improvement throughout 2014. Nonperforming assets at December 31, 2014 declined to $10.3 million from $17.0 million a year earlier. The percentage of nonperforming assets to total assets declined to 0.41% at December 31, 2014, compared to 0.87% a year earlier. Total nonperforming loans declined to $7.2 million at December 31, 2014, compared to $9.4 million at December 31, 2013. As a percentage of total assets, nonperforming loans decreased by 19 basis points, or 39.6% at December 31, 2014, compared to a year earlier. Net chargeoffs were $439,000 for the three month period ending December 31, 2014, or 0.10% of loans on an annualized basis. Net chargeoffs decreased from $4.8 million in 2013 to $3.3 million in 2014. The allowance for credit losses was $22.1 million at December 31, 2014, or 1.23% of total loans held for investment and 306.6% of nonperforming loans.

Outlook

Mr. Ridgill commented on the outlook for NewBridge: “As the Company expanded in 2014, we further established our position as a prudently managed regional franchise in key markets throughout the Carolinas. Improvements in our retail banking operation are expected to take root in the coming year, and we expect to see tangible organic growth in the newer geographic markets we have entered. The addition of our middle market commercial banking team, expansion of the Bank’s treasury management capabilities, and enhanced commercial banking operational structure are expected to demonstrate continued momentum. Concerning additional expansion efforts, we anticipate completing the Premier Commercial Bank acquisition in the first quarter of 2015 and then will focus on integration and gaining efficiencies from the recent initiatives. We operate the Bank with guiding principles that promote excellence throughout the organization, and we expect these deep rooted values to deliver consistent growth in shareholder value.”

About NewBridge Bancorp

NewBridge Bancorp is the bank holding company for NewBridge Bank, a full service, state-chartered community bank headquartered in Greensboro, North Carolina.� The stock of NewBridge Bancorp trades on the NASDAQ Global Select Market under the symbol “NBBC.”

As one of the largest community banks headquartered in North Carolina, NewBridge Bank serves small to midsize businesses, professionals and consumers with a comprehensive array of financial services, including retail and commercial banking, private banking, wealth management and mortgage banking.� NewBridge Bank has assets of approximately $2.5 billion and�40 branches and several loan production offices.

Disclosures About Forward Looking Statements

The discussions included in this document and its exhibits may contain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including Section 21E of the Securities Exchange Act of 1934 and Section�27A of the Securities Act of 1933.� Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially.� For the purposes of these discussions, any statements that are not statements of historical fact may be deemed to be forward looking statements.� Such statements are often characterized by the use of qualifying words such as “expects,” “anticipates,” “believes,” “estimates,” “plans,” “projects,” or other statements concerning opinions or judgments of NewBridge and its management about future events.� The accuracy of such forward looking statements could be affected by factors including, but not limited to, the financial success or changing conditions or strategies of NewBridge’s customers or vendors, fluctuations in interest rates, actions of government regulators, the availability of capital and personnel or general economic conditions.� These forward looking statements express management’s current expectations, plans or forecasts of future events, results and condition, including financial and other estimates and expectations regarding recently completed or proposed acquisitions and the general business strategy of engaging in bank acquisitions.� Additional factors that could cause actual results to differ materially from those anticipated by forward looking statements are discussed in NewBridge’s filings with the Securities and Exchange Commission, including without limitation its annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.� NewBridge undertakes no obligation to revise or update these statements following the date of this press release.

Investors may contact:

Ramsey Hamadi, Chief Financial Officer 336-369-0975
Richard Cobb, Controller & Chief Accounting Officer 336-369-0914

FINANCIAL SUMMARY

Three Months Ended
December 31
Twelve Months Ended
December 31
2014 2013 2014 2013
Income Statement Data
(Dollars in thousands, except share data)
Interest income:
Loans(1) $19,157 $15,482 $71,230 $56,617
Investment securities 4,055 3,057 14,468 12,179
Other 38 8 118 23
Total interest income 23,250 18,547 85,816 68,819
Interest expense:
Deposits 1,060 869 4,000 3,116
Borrowings from the FHLB 230 427 801 1,195
Other 656 338 2,344 1,332
Total interest expense 1,946 1,634 7,145 5,643
Net interest income 21,304 16,913 78,671 63,176
Provision for credit losses 50 642 883 2,691
Net interest income after provision for credit losses 21,254 16,271 77,788 60,485
Noninterest income:
Retail banking 2,515 2,636 10,424 10,228
Mortgage banking services 217 297 870 1,644
Wealth management services 771 638 2,919 2,570
Gain on sale of investment securities - - - 736
Bank-owned life insurance 316 322 1,385 1,429
Other 258 176 1,115 847
Total noninterest income 4,077 4,069 16,713 17,454
Noninterest expense:
Personnel 9,946 8,717 36,617 32,104
Occupancy 1,218 1,135 4,910 4,208
Furniture and equipment 1,003 991 3,806 3,501
Technology and data processing 1,228 1,121 4,727 4,192
Legal and professional 816 652 2,994 2,683
FDIC insurance 382 236 1,602 1,565
Other real estate owned 376 159 870 (126)
Acquisition related expenses 171 2,163 5,081 2,232
Other 3,468 3,216 12,099 10,025
Total noninterest expense 18,608 18,390 72,706 60,384
Income before income taxes 6,723 1,950 21,795 17,555
Income tax expense (benefit) 2,458 524 7,819 (3,216)
Net income 4,265 1,426 13,976 20,771
Dividends and accretion on preferred stock - (237) (337) (1,854)
Net income available to common shareholders $4,265 $1,189 $13,639 $18,917
Net income per share - basic $0.11 $0.04 $0.39 $0.71
Net income per share - diluted $0.11 $0.04 $0.38 $0.65

(1)Includes accelerated accretion (amortization) on purchased loans of $85,000 and $(44,000) for the three months ended December 31, 2014 and 2013, respectively, and $(115,000) and $(44,000) for the twelve months ended December 31, 2014 and 2013, respectively.

FINANCIAL SUMMARY

2014 2013
Fourth Third Second First Fourth
Quarter Quarter Quarter Quarter Quarter
Period-End Balance Sheet
(Dollars in thousands)
Assets
Loans held for sale $6,181 $3,303 $5,733 $3,486 $3,530
Commercial loans 928,761 839,696 835,248 684,643 656,440
Real estate - construction loans 168,109 157,841 151,078 115,748 115,396
Real estate - mortgage loans 672,574 689,356 703,390 610,365 610,179
Consumer loans 26,164 26,794 28,770 25,094 26,437
Other loans 8,798 7,277 8,064 7,991 8,251
Total loans held for investment 1,804,406 1,720,964 1,726,550 1,443,841 1,416,703
Allowance for credit losses (22,112) (22,501) (22,944) (24,435) (24,550)
Net loans held for investment 1,782,294 1,698,463 1,703,606(1) 1,419,406 1,392,153
Investment securities 496,798 496,914 469,198 410,122 368,866
Other earning assets 17,131 19,077 19,679 4,075 3,915
Intangible assets 26,679 27,108 27,942 8,046 8,388
Other non-earning assets 191,149 197,885 202,935 193,134 188,380
Total Assets $2,520,232 $2,442,750 $2,429,093 $2,038,269 $1,965,232
Liabilities and Shareholders’ Equity
Noninterest-bearing deposits $319,327 $310,441 $301,038 $258,058 $240,979
Savings deposits 67,639 66,521 67,554 65,386 62,353
NOW accounts 509,450 499,184 477,372 454,198 439,624
Money market accounts 386,733 405,369 404,801 351,797 359,174
Time deposits 549,415 543,619 604,818 492,809 451,866
Total deposits 1,832,564 1,825,134 1,855,583(2) 1,622,248 1,553,996
Total borrowings 438,474 373,974 332,274 244,774 229,774
Other liabilities 17,839 15,211 16,585 14,422 14,670
Shareholders’ equity - preferred - - - - 15,000
Shareholders’ equity - common 231,355 228,431 224,651 156,825 151,792
Total Liabilities and Shareholders’ Equity $2,520,232 $2,442,750 $2,429,093 $2,038,269 $1,965,232

(1)Includes $260.7 million from CapStone Bank acquisition.
(2)Includes $229.3 million from CapStone Bank acquisition.

COMMON STOCK DATA

2014 2013
Fourth Third Second First Fourth
Quarter Quarter Quarter Quarter Quarter
Market value:
End of period $8.71 $7.59 $8.06 $7.14 $7.43
High 8.98 8.46 8.69 7.62 7.92
Low 7.34 7.20 6.99 6.55 6.40
Book value 6.22 6.14 6.05 5.50 5.33
Tangible book value 5.50 5.41 5.30 5.22 5.04
Average shares outstanding 37,195,303 37,166,736 36,808,785 28,487,709 28,478,316
Average diluted shares outstanding 37,655,766 37,576,669 37,382,568 28,597,530 28,584,755
Class A shares at end of period 34,008,795 34,007,093 33,949,443 25,303,820 25,291,568
Class B shares at end of period 3,186,748 3,186,748 3,186,748 3,186,748 3,186,748

INVESTMENT PORTFOLIO

(Dollars in thousands) As of December 31, 2014
Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Estimated Fair Value Average Yield (%) Average Duration (years)
Available for Sale(1)
US Agency $49,599 $- $(1,485) $48,114 2.05% 6.80
Agency mortgage backed securities 19,314 1,255 - 20,569 3.78 3.46
Collateralized mortgage obligations 10,492 217 - 10,709 3.81 3.72
Commercial mortgage backed securities 33,646 1,179 - 34,825 3.40 2.62
Covered bonds 49,976 2,017 (73) 51,920 3.49 1.98
Corporate bonds 128,798 3,612 (535) 131,875 3.78 3.50
Municipal obligations 33,930 1,204 (4) 35,130 5.17(2) 3.75
Total debt securities 325,755 9,484 (2,097) 333,142 3.58(2) 3.71
Federal Home Loan Bank stock 17,712 - - 17,712
Federal Reserve Bank stock 5,702 - - 5,702
Other 9,336 361 (156) 9,541
Total Available for Sale $358,505 $9,845 $(2,253) $366,097

Held to Maturity(1)
US Agency $32,772 $95 $(416) $32,451 2.16% 4.75
Agency mortgage backed securities 54,339 1,352 - 55,691 2.58 4.43
Covered bonds 4,984 25 - 5,009 2.08 3.92
Corporate bonds 23,455 123 (64) 23,514 2.72 4.19
Subordinated debt issues 14,000 50 (17) 14,033 6.26 9.35
Municipal obligations 1,151 66 - 1,217 4.28(2) 7.60
Total Held to Maturity $130,701 $1,711 $(497) $131,915 2.89(2) 5.00
Total Investment Portfolio $489,206 $11,556 $(2,750) $498,012 3.38(2) 4.08

(Dollars in thousands) As of December 31, 2013
Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Estimated Fair Value Average Yield (%) Average Duration (years)
Available for Sale(1)
US Agency $49,094 $- $(4,562) $44,532 2.07% 7.67
Agency mortgage backed securities 14,217 1,261 - 15,478 5.09 2.83
Collateralized mortgage obligations 6,611 163 - 6,774 5.63 2.60
Commercial mortgage backed securities 38,367 1,123 (102) 39,388 3.32 3.36
Covered bonds 49,937 2,924 (233) 52,628 3.49 2.90
Corporate bonds 105,772 4,066 (572) 109,266 3.83 4.13
Municipal obligations 15,836 161 (301) 15,696 6.46(2) 7.94
Total debt securities 279,834 9,698 (5,770) 283,762 3.65(2) 4.55
Federal Home Loan Bank stock 9,988 - - 9,988
Other 7,672 596 (469) 7,799
Total Available for Sale $297,494 $10,294 $(6,239) $301,549
Held to Maturity(1)
US Agency $28,729 $- $(1,920) $26,809 2.13% 6.73
Agency mortgage backed securities 32,439 171 (34) 32,576 2.64 5.90
Subordinated debt issues 5,000 - - 5,000 7.63 9.61
Municipal obligations 1,149 - (95) 1,054 4.25(2) 13.58
Total Held to Maturity $67,317 $171 $(2,049) $65,439 2.81(2) 6.66
Total Investment Portfolio $364,811 $10,465 $(8,288) $366,988 3.49(2) 4.96

(1)Available for sale securities are carried at fair value on the balance sheet while held to maturity securities are carried at amortized cost.
(2)Fully taxable equivalent basis.

ANALYSIS OF YIELDS AND RATES

Three Months Ended
December 31, 2014
Three Months Ended
December 31, 2013
Average Interest Income/ Average Yield/ Average Interest Income/ Average Yield/
Balance Expense(1) Rate Balance Expense Rate
(Fully taxable equivalent basis, dollars in thousands)
Earning Assets
Loans receivable $1,786,411 $19,157 4.25% $1,409,800 $15,482 4.36%
Investment securities 499,265 4,193 3.36% 359,510 3,140 3.49%
Other earning assets 18,430 38 0.82% 10,173 8 0.31%
Total Earning Assets 2,304,106 23,388 4.03% 1,779,483 18,630 4.15%
Non-Earning Assets 194,708 166,517
Total Assets $2,498,814 23,388 $1,946,000 18,630
Interest-Bearing Liabilities
Deposits $1,522,435 1,060 0.28% $1,313,088 869 0.26%
Borrowings 407,593 886 0.86% 197,630 765 1.54%
Total Interest-Bearing Liabilities 1,930,028 1,946 0.40% 1,510,718 1,634 0.43%
Noninterest-bearing deposits 322,123 252,320
Other liabilities 15,840 18,949
Shareholders' equity 230,823 164,013
Total Liabilities and
Shareholders' Equity $2,498,814 1,946 $1,946,000 1,634
Net Interest Income $21,442 $16,996
Net Interest Margin 3.69% 3.79%
Interest Rate Spread 3.63% 3.72%

Twelve Months Ended
December 31, 2014
Twelve Months Ended
December 31, 2013
Average Interest Income/ Average Yield/ Average Interest Income/ Average Yield/
Balance Expense(1) Rate Balance Expense Rate
(Fully taxable equivalent basis, dollars in thousands)
Earning Assets
Loans receivable $1,670,113 $71,230 4.26% $1,247,095 $56,617 4.54%
Investment securities 455,262 14,965 3.29% 379,014 12,549 3.31%
Other earning assets 14,763 118 0.80% 7,656 23 0.30%
Total Earning Assets 2,140,138 86,313 4.04% 1,633,765 69,189 4.24%
Non-Earning Assets 192,412 144,304
Total Assets $2,332,550 86,313 $1,778,069 69,189
Interest-Bearing Liabilities
Deposits $1,489,293 4,000 0.27% $1,184,485 3,116 0.26%
Borrowings 318,858 3,145 0.99% 168,909 2,527 1.50%
Total Interest-Bearing Liabilities 1,808,151 7,145 0.40% 1,353,394 5,643 0.42%
Noninterest-bearing deposits 294,704 228,635
Other liabilities 15,537 19,302
Shareholders’ equity 214,158 176,738
Total Liabilities and
Shareholders’ Equity $2,332,550 7,145 $1,778,069 5,643
Net Interest Income $79,168 $63,546
Net Interest Margin 3.70% 3.89%
Interest Rate Spread 3.64% 3.82%

(1)Income related to securities exempt from federal income taxes is stated on a fully taxable-equivalent basis, assuming a federal income tax rate of 35%, and is then reduced by the non-deductible portion of interest expense. For the three months ended December 31, 2014, the adjustments made to convert to a fully taxable-equivalent basis were $138 for 2014 and $83 for 2013. For the twelve months ended December 31, 2014, the adjustments made to convert to a fully taxable-equivalent basis were $497 for 2014 and $370 for 2013.

ASSET QUALITY DATA

2014 2013
Fourth Third Second First Fourth
Quarter Quarter Quarter Quarter Quarter
(Dollars in thousands)
Loans identified as impaired $4,227 $3,947 $8,025 $8,954 $5,879
Other nonperforming loans 2,985 3,882 3,268 3,883 3,519
Total nonperforming loans 7,212 7,829 11,293 12,837 9,398
Other real estate owned 3,057 3,580 3,585 5,633 7,620
Total nonperforming assets $10,269 $11,409 $14,878 $18,470 $17,018
Net chargeoffs $439 $532 $2,091 $259 $1,477
Allowance for credit losses 22,112 22,501 22,944 24,435 24,550
Allowance for credit losses to loans held for investment 1.23% 1.31% 1.33% 1.69% 1.73%
Nonperforming loans to loans held for investment 0.40 0.45 0.65 0.89 0.66
Nonperforming assets to total assets 0.41 0.47 0.61 0.91 0.87
Nonperforming loans to total assets 0.29 0.32 0.46 0.63 0.48
Net chargeoff percentage (annualized) 0.10 0.12 0.48 0.07 0.42
Allowance for credit losses to nonperforming loans 306.60 287.41 203.17 190.35 261.23

Allowance for credit losses rollforward Three Months Ended
December 31
Twelve Months Ended
December 31
2014 2013 2014 2013
Beginning balance $22,501 $25,385 $24,550 $26,630
Chargeoffs 1,344 2,621 7,408 8,526
Recoveries 905 1,144 4,087 3,755
Net chargeoffs 439 1,477 3,321 4,771
Provision for credit losses 50 642 883 2,691
Ending balance $22,112 $24,550 $22,112 $24,550

OTHER DATA

Three Months Ended
December 31
Twelve Months Ended
December 31
2014 2013 2014 2013
Tangible common equity $204,676 $143,404 $204,676 $143,404
Return on average assets 0.68% 0.29% 0.60% 1.17%
Return on average equity 7.33 3.45 6.53 11.75
Net yield on earning assets 3.69 3.79 3.70 3.89
Average loans to assets 71.49 72.45 71.60 70.14
Average loans to deposits 96.85 90.06 93.62 88.25
Average noninterest - bearing deposits to total deposits 17.46 16.12 16.52 16.18
Average equity to assets 9.24 8.43 9.18 9.94
Total capital as a percentage of total risk weighted assets 12.23 11.67 12.23 11.67
Tangible common equity as a percentage of tangible assets 8.21 7.33 8.21 7.33
Tangible common equity as a percentage of total risk weighted assets 10.13 9.44 10.13 9.44

OTHER NON-GAAP MEASURES

Pre-tax core net operating income

(Dollars in thousands)

Three Months Ended
December 31
Twelve Months Ended
December 31
2014 2013 2014 2013
Pre-tax net income $6,723 $1,950 $21,795 $17,555
Gain on sale of investment securities - - - (736)
Acquisition related expenses 171 2,163 5,081 2,232
Pre-tax core net operating income $6,894 $4,113 $26,876 $19,051



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