CORRECTING and REPLACING - Citizens Community Bancorp, Inc. Earns $1.2 Million, or $0.11 Per Share, in 3Q19; Third Quarter Highlighted by Completed Acquisition of F. & M. Bancorp of Tomah, Inc.

EAU CLAIRE, Wis., Oct. 28, 2019 (GLOBE NEWSWIRE) -- In a release issued under the same headline earlier today by Citizens Community Bancorp, Inc. (Nasdaq: CZWI), please note that in the table titled "Loan Composition," under "Acquired Loans," "Residential real estate," all figures in the "One to four family" row have been corrected. The corrected release follows:

Citizens Community Bancorp, Inc. (the "Company") (Nasdaq: CZWI), the parent company of Citizens Community Federal N.A. (the “Bank” or "CCFBank"), today reported earnings of $1.2 million, or $0.11 per diluted share, for the quarter ended September 30, 2019, compared to $4.1 million, or $0.37 per diluted share, for the previous quarter ended June 30, 2019. In the September 2019 quarter, the Company benefited from (1) the full quarter impact of the F. & M. Bancorp. of Tomah, Inc. ("F&M") acquisition, net of merger charge considerations, (2) strong loan fee income from commercial activity, (3) an annual debit card incentive and (4) reduced FDIC insurance assessments due to the FDIC application of Small Bank Assessment Credits to our current quarter invoice. These items were partially offset by (1) increased loan servicing amortization resulting from higher prepayments and (2) higher than normal marketing expenses as CCFBank continues to execute on its plan of brand awareness with recent acquisitions.

Net income as adjusted (non-GAAP)¹ was $3.4 million or $0.30 per diluted share for the quarter ended September 30, 2019 compared to $2.6 million of $0.23 per diluted share for the quarter ended June 30, 2019. The current quarter results were impacted by $2.9 million of acquisition-related expenses which reduced net income by $0.19 per diluted share. Included in GAAP net income and net income as adjusted for the quarter ended September 30, 2019, was the earnings impact from F&M of approximately $0.03 per diluted share, before merger charges. The June 2019 quarter operations reflected a $2.3 million gain on the sale of a branch, or $0.15 per diluted share. This gain was excluded from net income as adjusted and modestly offset by the addition of $206,000 of pre-tax acquisition-related expenses which added $0.01 per diluted share.

The following table reports key financial metric ratios based on a net income and net income as adjusted basis:

"During the third quarter, we focused on successfully integrating our last two bank acquisitions. We believe the financial impact of these successful business combinations is showing in our non-interest income and non-interest expense lines," said Stephen Bianchi, Chairman, President and Chief Executive Officer. Mr. Bianchi added, "Mortgage activity has been strong in our markets dominated by purchase activity and growing refinancing business more recently. We also eliminated our unsecured purchased indirect portfolio of approximately $11 million by selling loans back to the originator at par. No meaningful margin impact is expected and there was no allowance for loan losses associated with the remaining loan portfolio, which reached its peak at $50 million three years ago. Our Community Banking loan growth slowed somewhat, as we balance pricing and growth in this challenging rate environment.  We do, however, still see strong economic activity in our markets and solid pipelines through the early part of 2020, and will remain prudent in our pricing and risk taking."

The Company closed on the acquisition of F&M on July 1, 2019 and completed the F&M data systems conversion on July 14, 2019. The F&M transaction was valued at approximately $24 million and resulted in the creation of $367,000 of goodwill and $1.6 million of a core deposit intangible asset at September 30, 2019, based on preliminary estimates. We expect our analysis to be final at December 31, 2019. At June 30, 2019, F&M had total assets of $192.3 million, gross loans of $130.3 million, and deposits of $148.5 million.

On October 24, 2019, the Board of Directors approved a stock repurchase program. Under this program the Company may repurchase up to approximately 5% of the current outstanding shares of its common stock, from time to time through October 1, 2020. The repurchase program permits shares to be repurchased in open market or private transactions, through block trades, and pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities and Exchange commission.

Repurchases may be made at management's discretion at prices management considers to be attractive and in the best interests of both the Company and its stockholders, subject to the availability of stock, general market conditions, the applicable trading price, future alternative advantageous uses for capital, and the Company's financial performance. Open market purchases will be conducted in accordance with the limitations set forth in Rule 10b-18 of the Securities and Exchange Commission and other applicable legal requirements.

The repurchase program may be suspended, terminated or modified at any time for any reason, including market conditions, the cost of repurchasing shares, the availability of alternative investment opportunities, liquidity, and other factors deemed appropriate. These factors may also affect the timing and amount of share repurchases. The repurchase program does not obligate the Company to repurchase any particular number of shares.

September 30, 2019 Highlights: (as of or for the periods ended September 30, 2019, compared to June 30, 2019)

• Total assets increased to $1.48 billion at September 30, 2019 from $1.35 billion at June 30, 2019. The increased asset base reflected the acquisition of assets from F&M.
   
• Loans receivable increased to $1.12 billion at September 30, 2019 from $1.02 billion at June 30, 2019. The loan growth of $108.1 million was due to the F&M acquisition of $130.3 million and originated commercial loan growth, partially offset by the paydown and sale of the Bank's unsecured purchased indirect loan portfolio and reductions in the Legacy loan portfolio consisting of originated indirect paper and one-to-four family loans.
   
• Book value per share increased to $13.13 at September 30, 2019 from $13.04 at June 30, 209. Tangible book value per share (non-GAAP)⁵ increased to $9.60 at September 30, 2019 from $9.56 at June 30, 2019, reflecting earnings, increased market value in the available for sale portfolio and intangible amortization, net of the intangibles created in the F&M acquisition.
   
• The net interest margin increased to 3.34% for the quarter ended September 30, 2019 from 3.30% the prior quarter. The increase was largely due to lower borrowing costs as management entered into lower cost FHLB callable debt in the quarter. The changes in the Company's net interest margin, along with the impact of the F&M acquisition was neutral to the margin and purchase accounting accretion from F&M was more than offset by an increase in holding company interest expense to pay for the cash portion of the acquisition.

• Loan loss provisions increased to $575,000 for the quarter ended September 30, 2019 from $325,000 for the quarter ended June 30, 2019. The provisions for each period were primarily due to continued new originated loan growth, charge-offs without specific reserves associated with the underlying loans ($157,000 in the third quarter compared to $48,000 in the second quarter) and in the third quarter, an approximately $150,000 increase in specific reserves primarily related to certain specific residential loans.
   
• Non-interest income increased to $3.6 million for the third quarter ended September 30, 2019 from $2.9 million for the second quarter of 2019, excluding the gain on the sale of a branch office in the second quarter of 2019. The relative increase in non-interest income in the third quarter reflects higher loan fees driven by commercial activity and gains on sale of mortgage loans driven by refinancing activities and an $94,000 incentive payment from a card provider due to increased debit card activity. Additionally, service charges on deposit accounts, interchange income and BOLI income (recorded in other non-interest income) all increased primarily due to the F&M acquisition.
   
• Total non-interest expense was $13.0 million for the third quarter of 2019, compared to $9.4 million in the prior quarter and $7.6 million for the quarter ended September 30, 2018. Total non-interest expense for the current quarter reflects $2.9 million in merger related expenses versus $206,000 in the second quarter of 2019 and $131,000 in the third quarter of 2018. Third quarter 2019 also includes a full quarter impact of operating expenses from the F&M acquisition of approximately $900,000.
   
• The third quarter ended September 30, 2019 was favorably impacted by the FDIC application of the Small Bank Assessment Credits to our current quarter deposit insurance invoice totaling $150,000.
   
• Nonperforming assets increased to $21.5 million at September 30, 2019 or 1.46% of total assets compared to $15.9 million at June 30, 2019 or 1.18% of total assets. Nonperforming assets related to F&M were $5.9 million. Classified assets increased to $39.9 million at September 30, 2019, from $32.6 million at June 30, 2019. Classified assets from the F&M acquisition were $7.5 million.

Estimated Bank and Company capital ratios exceeded regulatory guidelines for a well-capitalized financial institution under the Basel III regulatory requirements at September 30, 2019:

Balance Sheet and Asset Quality Review

Asset growth continued in the quarter ended September 30, 2019, fueled primarily by the acquisition of F&M along with new loan originations. Asset growth, however, was tempered by a loan sale and acquired loan portfolio repayments and payoffs. Total assets were $1.48 billion at September 30, 2019, compared to $1.35 billion at June 30, 2019 and $975.4 million one year earlier.

In the quarter, securities available for sale ("AFS") increased $28.2 million. The Bank purchased $19.6 million of floating-rate securities with an estimated yield of 3.00% and purchased $15.5 million of fixed-rate securities with an estimated yield of 2.88%. The estimated repricing duration of the AFS portfolio changed from 2.09 years at June 30, 2019 to 2.05 years at September 30, 2019. The Bank liquidated the F&M securities portfolio in early July and there were no gains or losses on the sale of these securities.

Net loans were $1.12 billion at September 30, 2019 compared to $1.02 billion at June 30, 2019. The Community Banking loan portfolio consisting of commercial, agricultural and consumer loans grew to $903.7 million or 79.6%, of gross loans, largely due to the F&M acquisition.  The Bank's agricultural real estate loans totaled $89.4 million or 7.9% of gross loans and agricultural non-real estate loans totaled $39.8 million or 3.5% of gross loans at September 30, 2019. The total agricultural portfolio is split by approximately 48% of secured real estate, 28% term debt and 24% of operating lines. The total agricultural portfolio is approximately 35% row crop, 27% owned and rented land, 25% dairy and 13% other.

The Legacy loan portfolio consisting of indirect paper and one-to-four family loans decreased $19.4 million to $231 million at September 30, 2019 or 20.4% of total loans, from $250.4 million at June 30, 2019. The decline in Legacy loans reflect the sale of all purchased indirect paper loans and the planned runoff of originated indirect paper and one-to-four family residential real estate loans.

The allowance for loan and lease losses increased to $9.2 million, at September 30, 2019, representing 0.82% of total loans, compared to $8.8 million and 0.86% of total loans at June 30, 2019. Approximately 36.1% of the Bank's loan portfolio represents acquired performing loans and marked to fair value as of the acquisition date. Associated with the acquired loan portfolio, is $6.7 million of purchase-discount related to credit impaired acquired loans. Net charge offs were $157,000 for the quarter ended September 30, 2019, compared to $273,000 for the quarter ended June 30, 2019. The second quarter charge offs include $225,000 of charge-offs with specific reserves.

Nonperforming assets increased to $21.5 million, or 1.46% of total assets at September 30, 2019, compared to $15.9 million or 1.18% at June 30, 2019.  The increase in the most recent quarter primarily related to the F&M acquisition, which added $5.9 million to nonperforming assets. Classified assets increased $7.3 million during the current quarter to $39.9 million. The increase is largely due to the $7.5 million of classified assets related to the F&M acquisition at September 30, 2019. Included in classified assets, are agricultural real estate loans of approximately $7.7 million at September 30, 2019 compared to $7.8 million at June 30, 2019 and agricultural non- real estate loans of approximately $2.0 million at September 30, 2019 or flat compared with June 30, 2019.

Fixed assets grew in the current quarter due to the purchase of two previously leased branches and the addition of F&M's two branch offices. The Bank purchased a third previously leased branch in the second quarter. The purchase of these three branches resulted in decreases in other assets and other liabilities due to the impact of eliminating these branches from the right of use asset and lease liability recorded in the first quarter of 2019.

Deposits increased $146.3 million to $1.16 billion at September 30, 2019 from $1.02 billion at June 30, 2019. The increase in deposits was largely due to the F&M acquisition. The F&M acquisition increased non-maturity deposits as a percent of total deposits.

Federal Home Loan Bank advances decreased to $113.5 million at September 30, 2019 from $135.8 million at June 30, 2019. In addition to reducing outstanding advances related to the runoff of the acquired loan portfolio, the Bank repaid short-term existing FHLB advances and entered into $32.5 million of lower costing FHLB callable debt. At September 30, 2019, the Bank had $42.5 million of a 10-year maturity at a weighted average cost of 1.03% and the FHLB can call the debt quarterly until maturity.

Total stockholders’ equity increased to $148.0 million at September 30, 2019, from $143.2 million one quarter earlier, as the Company benefitted from the addition of earnings and a reduction in accumulated other comprehensive loss, mainly due to lower long-term interest rates. Tangible book value per share (non-GAAP)⁵ was $9.60 at September 30, 2019, compared to $9.56 at June 30, 2019. Stockholders' equity as a percent of total assets was 10.03% at September 30, 2019, compared to 10.62% at June 30, 2019. Tangible common equity (non-GAAP)⁵ as a percent of tangible assets (non-GAAP) was 7.54% at September 30, 2019, compared to 8.01% at June 30, 2019.

Review of Operations

Net interest income was $11.6 million for the third quarter of 2019, compared to $10.1 million for the second quarter of 2019, and $7.9 million for the quarter ended September 30, 2018. The net interest margin (“NIM”) increased to 3.34% for the third quarter of 2019 compared to 3.30% in the preceding quarter and 3.45% for the like quarter one year earlier.

The yield on interest earnings assets decreased one basis point to 4.67% for the third quarter of 2019 from 4.68% the previous quarter and increased 18 basis points from the third quarter one year earlier. Meanwhile, the cost of interest-bearing liabilities decreased 7 basis points to 1.56% for the third quarter from 1.63% one quarter earlier and increased 30 basis points from one year earlier. The primary decrease in funding costs was due to lower FHLB advances and other borrowing costs.

For the quarter ended September 30, 2019, the Company’s net interest margin benefited from $50,000 of purchased loan accretion, or two basis points compared to $54,000, or two basis points in the prior quarter. Scheduled accretion for acquired loans, was $234,000, $194,000, and $142,000 for the quarters ended September 30, 2019, June 30, 2019 and September 30, 2018, respectively.

“The growth in our margin was largely due to the refinancing of the FHLB debt discussed above, The modest increase in loan accretion was more than offset by the interest expense on the $19.9 million of holding company debt to fund the F&M acquisition," said Jim Broucek, Chief Financial Officer.

Loan loss provisions increased to $575,000 for the quarter ended September 30, 2019 from $325,000 for the quarter ended June 30, 2019. The provisions for each period were primarily due to continued new originated loan growth, charge-offs without specific reserves associated with the underlying loans ($157,000 in third quarter compared to $48,000 in the second quarter) and in the third quarter, an approximately $150,000 increase in specific reserves primarily related to certain residential loans.

Total non-interest income was $3.6 million for the third quarter compared to $5.2 million for the preceding quarter and $2.0 million for the quarter ended September 30, 2018. The second quarter reflected a $2.3 million gain on the sale of the Rochester Hills branch. Excluding the branch sale gain, total non-interest income would have been $2.9 million in the second quarter. The relative increase in non-interest income in the third quarter reflects higher loan fees driven by commercial activity and gains on sale of mortgage loans driven by refinancing activities and an $94,000 incentive payment from a card provider due to increased debit card activity. Additionally, service charges on deposit accounts, interchange income and loan servicing income all increased primarily due to the F&M acquisition.

Total non-interest expense was $13.0 million for the third quarter of 2019, compared to $9.4 million in the prior quarter and $7.6 million for the quarter ended September 30, 2018. Total non-interest expense for the current quarter reflects $2.9 million in merger related expenses versus $206,000 in the second quarter of 2019 and $131,000 in the third quarter of 2018 and a full quarter impact of expenses due to the F&M acquisition of approximately $900,000.

Compensation and benefits expense increased to $5.3 million for the third quarter of 2019 from $4.6 million the previous quarter largely due to the F&M acquisition. Due to the two weeks between the F&M acquisition close and computer conversion, cost savings were realized early in the quarter. In the fourth quarter, no material changes in compensation due to cost savings are expected.

Data processing expenses increased to $1.1 million for the third quarter of 2019 from $874,000 during the prior quarter due in part to a larger number of deposit and loan accounts serviced through our core processor, largely due to the F&M acquisition.

Amortization of mortgage servicing rights increased during the quarter ended September 30, 2019 from $306,000 in the prior quarter to $325,000 during the current quarter due to increased prepayments in the Company’s servicing portfolio related to the lower interest rate environment.

Advertising, marketing and public relations expenses decreased to $315,000 during the third quarter from $456,000 in the prior quarter. Although these costs declined from the prior period, the expenses remain elevated over historical run rates. We would expect fourth quarter marketing expenses to remain consistent with third quarter as there was some spill-over of marketing costs from the third quarter to the fourth quarter. We anticipate a decrease to the $225,000 to $250,000 range in 2020, which approximates the historic run rates for CCFBank as adjusted for the marketing costs in the acquired bank markets.

Merger related expenses incurred in the current quarter and included in the consolidated statement of operations consisted of the following: (1) $200,000 recorded in professional services and (2) $2.7 million recorded in other non-interest expense.

Merger related expenses incurred in the quarter ended June 30, 2019 and included in the consolidated statement of operations consisted of the following: (1) $126,000 recorded in professional services and (2) $80,000 recorded in other non-interest expense.

Provisions for income taxes declined to $430,000 for the third quarter ended September 30, 2019 from $1.5 million during the preceding quarter. The effective tax rate for the third quarter was 25.8% compared to 26.8% during the prior quarter. The third quarter tax rate reflects the Company's estimated tax position at September 30, 2019. We anticipate that the fourth quarter tax rate should be similar to the third quarter based on current tax positions, which will be reviewed in the fourth quarter after our 2018 tax return is filed in October. The impact of lower non- deductible merger expenses contributed to the lower tax rate.

These financial results are preliminary until the Form 10-Q is filed in November 2019.

About the Company

Citizens Community Bancorp, Inc. (NASDAQ: “CZWI”) is the holding company of the Bank, a national bank based in Altoona, Wisconsin, currently serving customers primarily in Wisconsin and Minnesota through 28 branch locations. Its primary markets include the Chippewa Valley Region in Wisconsin, the Twin Cities and Mankato markets in Minnesota, and various rural communities around these areas. The Bank offers traditional community banking services to businesses, Ag operators and consumers, including one-to-four family mortgages.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements contained in this release are considered "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified using forward-looking words or phrases such as "anticipate," "believe," "could," "expect," "estimates," "intend," "may," "preliminary," "planned," "potential," "should," "will," "would" or the negative of those terms or other words of similar meaning. Such forward-looking statements in this release are inherently subject to many uncertainties arising in the operations and business environment of the Company and the Bank. These uncertainties include the conditions in the financial markets and economic conditions generally; the possibility of a deterioration in the residential real estate markets; interest rate risk; lending risk; the sufficiency of loan allowances; changes in the fair value or ratings downgrades of our securities; competitive pressures among depository and other financial institutions; our ability to realize the benefits of net deferred tax assets; our ability to maintain or increase our market share; acts of terrorism and political or military actions by the United States or other governments; legislative or regulatory changes or actions, or significant litigation, adversely affecting the Company or Bank; increases in FDIC insurance premiums or special assessments by the FDIC; disintermediation risk; our inability to obtain needed liquidity; risks related to the success of the acquisition of F. & M. Bancorp. of Tomah, Inc. ("F&M") through merger (the “F&M Merger”) and integration of F&M into the Company’s operations; the risk that the combined company may be unable to retain the Company and/or F&M personnel successfully after the F&M Merger is completed; our ability to successfully execute our acquisition growth strategy; risks posed by acquisitions and other expansion opportunities, including difficulties and delays in integrating the acquired business operations or fully realizing the cost savings and other benefits; our ability to raise capital needed to fund growth or meet regulatory requirements; the possibility that our internal controls and procedures could fail or be circumvented; our ability to attract and retain key personnel; our ability to keep pace with technological change; cybersecurity risks; changes in federal or state tax laws; changes in accounting principles, policies or guidelines and their impact on financial performance; restrictions on our ability to pay dividends; and the potential volatility of our stock price. Stockholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. Such uncertainties and other risks that may affect the Company’s performance are discussed further in Part I, Item 1A, “Risk Factors,” in the Company’s Form 10-K, for the transition period ended December 31, 2018 filed with the Securities and Exchange Commission ("SEC") on March 8, 2019 and the Company's subsequent filings with the SEC. The Company undertakes no obligation to make any revisions to the forward-looking statements contained in this news release or to update them to reflect events or circumstances occurring after the date of this release.

Non-GAAP Financial Measures

This press release contains non-GAAP financial measures, such as net income as adjusted, tangible book value per share and tangible common equity as a percent of tangible assets, which management believes may be helpful in understanding the Company's results of operations or financial position and comparing results over different periods.

Net income as adjusted is a non-GAAP measure that eliminates the impact of certain expenses such as acquisition and branch closure costs and related data processing termination fees, legal costs, severance pay, accelerated depreciation expense and lease termination fees, the gain on sale of branch deposits and fixed assets and the net impact of the Tax Cuts and Jobs Act of 2017, which management believes enhances investors' ability to better understand the underlying business performance and trends related to core business activities. Merger related charges represent expenses to either satisfy contractual obligations of acquired entities without any useful benefit to the Company or to convert and consolidate customer records onto the Company platforms. These costs are unique to each transaction based on the contracts in existence at the merger date. Tangible book value per share and tangible common equity as a percent of tangible assets are non-GAAP measures that eliminate the impact of preferred stock equity, goodwill and intangible assets on our financial position. Management believes these measures are useful in assessing the strength of our financial position.

Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other banks and financial institutions.

Contact: Steve Bianchi, CEO
(715)-836-9994

CITIZENS COMMUNITY BANCORP, INC.
Consolidated Balance Sheets
(in thousands)

Note: Certain items previously reported were reclassified for consistency with the current presentation.

CITIZENS COMMUNITY BANCORP, INC.
Consolidated Statements of Operations (unaudited)
(in thousands, except per share data)

Note: Certain items previously reported were reclassified for consistency with the current presentation.

Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP)
(in thousands, except per share data)

(1) Costs incurred are included as professional fees and other non-interest expense in the consolidated statement of operations and include costs of $61,000, $160,000 and $118,000 for the quarters ended September 30, 2019, June 30, 2019 and September 30, 2018, respectively, and $341,000 and $350,000 for the nine months ended September 30, 2019 and 2018, respectively, which are nondeductible expenses for federal income tax purposes.
(2) Branch closure costs include severance pay recorded in compensation and benefits, accelerated depreciation expense and lease termination fees included in occupancy and other costs included in other non-interest expense in the consolidated statement of operations.
(3) Audit and financial reporting costs include additional audit and professional fees related to the change in our year end from September 30 to December 31.
(4) Net income as adjusted is a non-GAAP measure that management believes enhances the market's ability to assess the underlying business performance and trends related to core business activities.
(5) Provision for income tax on net income as adjusted is calculated at our effective tax rate for each respective period presented.

Nonperforming Assets:
(in thousands, except ratios)

Nonaccrual Loans Rollforward:
(in thousands)

Other Real Estate Owned Rollforward:
(in thousands)

Troubled Debt Restructurings in Accrual Status
(in thousands, except number of modifications)

Loan Composition - Detail
(in thousands)

To help better understand the Bank's loan trends, we have added the table below. The loan categories and amounts shown are the same as on the following page and are presented in a different format. The Community Banking loan portfolios reflect the Bank's strategy to grow its commercial banking business and consumer lending. The Legacy loan portfolios reflect the Bank's strategy to sell substantially all newly originated one to four family loans in the secondary market and the discontinuation of originated and purchased indirect paper loans, effective in the first quarter of fiscal 2017. 

Deposit Composition:
(in thousands)

Average balances, Interest Yields and Rates:
(in thousands, except yields and rates)

(1) Fully taxable equivalent (FTE). The average yield on tax exempt securities is computed on a tax equivalent basis using a tax rate of 21% for the quarters ended September 30, 2019 and June 30, 2019 and 24.5% for the quarter ended September 30, 2018. The FTE adjustment to net interest income included in the rate calculations totaled $27,000, $35,000 and $51,000 for the three months ended September 30, 2019, June 30, 2019 and September 30, 2018, respectively

CITIZENS COMMUNITY FEDERAL N.A.
Selected Capital Composition Highlights (unaudited)

Reconciliation of Return on Average Assets as Adjusted (non-GAAP):
(in thousands, except ratios)

Reconciliation of Return on Average Equity as Adjusted (non-GAAP):
(in thousands, except ratios)

Reconciliation of Efficiency Ratio as Adjusted (non-GAAP):
(in thousands, except ratios)

Reconciliation of tangible book value per share (non-GAAP):
(in thousands, except per share data)

Reconciliation of tangible common equity as a percent of tangible assets (non-GAAP):
(in thousands, except ratios)

¹Net income as adjusted is a non-GAAP measure that management believes enhances investors' ability to better understand the underlying business performance and trends related to core business activities. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table "Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP)".

²Return on average assets as adjusted is a non-GAAP measure that management believes enhances investors' ability to better understand the underlying business performance and trends relative to average assets. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table "Reconciliation of Return on Average Assets as Adjusted (non-GAAP)".

³Return on average equity as adjusted is a non-GAAP measure that management believes enhances investors' ability to better understand the underlying business performance and trends relative to average equity. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table "Reconciliation of Return on Average Equity as Adjusted (non-GAAP)".

⁴The efficiency ratio as adjusted (non-GAAP) is a non-GAAP measure that management believes enhances investors' ability to better understand the underlying business performance and the Company's ability to use what it has to generate the most profit possible for shareholders relative to core business activities. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table "Reconciliation of Efficiency Ratio as Adjusted (non-GAAP)".

⁵Tangible book value per share and tangible common equity as a percent of tangible assets are non-GAAP measure that management believes enhances investors' ability to better understand the Company's financial position. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table "Reconciliation of tangible book value per share (non-GAAP)" and "Reconciliation of tangible common equity as a percent of tangible assets (non-GAAP)".