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Press Release

SB One Bancorp Reports a 67% Increase in Net Income and Declared a Cash Dividend

Company Release - 10/29/2018 9:23 AM ET

ROCKAWAY, N.J., Oct. 29, 2018 (GLOBE NEWSWIRE) -- SB One Bancorp (the “Company”) (Nasdaq: SBBX), the holding company for SB One Bank (the “Bank”), today reported net income of $3.3 million, or $0.42 per basic share and $0.41 per diluted share, for the quarter ended September 30, 2018, an increase of 67%, as compared to $2.0 million, or $0.33 per basic and diluted share, for the same period last year.  

The Company’s net income, adjusted for tax effected merger-related expenses of $538 thousand, increased $1.8 million, or 89.5%, to $3.8 million, or $0.48 per diluted share, for the quarter ended September 30, 2018, as compared to the same period last year. The Company’s return on average assets, adjusted for tax effected merger-related expenses, for the quarter ended September 30, 2018, was 1.06%, an increase from 0.86% from the quarter ended September 30, 2017. 

The Company reported net income of $7.6 million, or $0.97 per basic share and $0.96 per diluted share, for the nine months ended September 30, 2018, an increase of 46%, as compared to $5.2 million, or $1.00 per basic and diluted share, for the same period last year. The Company’s net income, adjusted for tax effected merger-related expenses and non-recurring rebranding expenses of $3.2 million and $152 thousand, respectively, increased $5.4 million, or 96.5%, to $10.9 million, or $1.39 per diluted share, for the nine months ended September 30, 2018, as compared to the same period last year. The Company’s return on average assets, adjusted for tax effected merger-related expenses and non-recurring rebranding expenses, for the nine months ended September 30, 2018, was 1.05%, an increase from 0.83% for the nine months ended September 30, 2017. 

The increase in net income for the three and nine months ended September 30, 2018 was mainly attributable to the merger with Community Bank of Bergen County (“Community Bank”), continued double digit loan growth, the positive impact from the Tax Cut and Jobs Act, and newly enacted New Jersey tax legislation in the third quarter of 2018 and an increase in SB One Insurance Agency pretax profit of over 50% for both periods.

Third Quarter Highlights (Third quarter 2018 as compared to Second quarter 2018)

  • Pretax net income, excluding SB One Insurance Agency, increased 42.7% for third quarter 2018 as compared to second quarter 2018.
  • Average commercial loans grew at an annualized rate of over 20%, which drove total loan growth approximately 15% annualized.
  • Average deposits grew at an annualized rate of 15.2%, driven by:
    • Strong growth in average non-interest bearing demand deposits of approximately 11.6% annualized, which helped drive retail and business deposit growth of $13.6 million, or 5.9%, annualized.
    • In addition to retail and business deposit growth, the Company utilizes wholesale funding sources to augment the Company’s strong commercial loan growth. Wholesale deposit funding, included in money market and time deposits average balances, grew approximately $26 million and represent a better economic alternative to retail deposit promotions.
  • SB One Insurance Agency’s revenue increased over 20% as compared to the third quarter of 2017. However, revenues were lower in the third quarter of 2018 as compared to the second quarter of 2018 due to the cyclical nature of SB One Insurance Agency revenues.
  • Non-interest expense, excluding merger-related expenses and non-recurring rebranding expenses, declined $570 thousand, to $8.4 million for the third quarter 2018, as compared to the second quarter 2018. The Company realized synergies from the merger and benefited in implementing operational efficiency initiatives.
  • During the third quarter of 2018, the Company entered into $75 million of interest rate hedges with a weighted average life of 3.5 years at 2.89%. Such strategy was executed to mitigate some of the projected market rate increases and was effective in the final two weeks of the third quarter of 2018.
  • Diluted EPS, adjusted for tax effected merger-related expenses, increased 9.1% on a linked quarter basis to $0.48 for the third quarter of 2018.
  • Tangible book value per common share increased to $15.79 at September 30, 2018 as compared to $15.13 at December 31, 2017.

“I am very excited to report strong double digit growth in all of our key business units as we build momentum going into 2019.  This success has helped produce a 67% increase in net income, driven by 15% annualized growth in both loans and deposits, while our insurance agency grew its pretax profit by 65%,” said Anthony Labozzetta, President and Chief Executive Officer of SB One Bancorp and SB One Bank.  Mr. Labozzetta also stated, “We continue to execute our strategic plan to build a better bank and we have a couple of strategic initiatives that we expect to complete within the next several months: first, our partnership with Enterprise, which we expect to close in December and fully integrate in February 2019; second, we are also very excited about the future opening of our newest regional banking and lending center in Weehawken, NJ (Hudson County NJ), which is targeted for a first quarter 2019 opening.”

Mr. Labozzetta went on to say, “Although the operating environment continues to present its fair share of headwinds, I’m very optimistic that there are equally as many opportunities for us to continue our disciplined growth and outperformance over the short and long run.  We continue to maintain strong pipelines for loans and deposits, which will help us build our earnings into the foreseeable future.”

Previously Announced Merger with Enterprise Bank N.J.
On June 20, 2018, the Company announced the signing of a definitive agreement and plan of merger pursuant to which the Company will acquire Enterprise Bank N.J. (“Enterprise Bank”) in an all-stock transaction.  Based on financials as of June 30, 2018, the combined company will have approximately $1.7 billion in assets, $1.4 billion in gross loans, and $1.3 billion in deposits upon completion of the merger.  The transaction has been unanimously approved by the Boards of Directors of both companies and is expected to be completed during the fourth quarter of 2018, subject to approval by Enterprise Bank’s shareholders, as well as regulatory approvals and other customary closing conditions.

Declaration of Quarterly Dividend
On October 24th, the Company’s Board of Directors declared a quarterly cash dividend of $0.075 per share, which is payable on November 26, 2018 to common shareholders of record as of the close of business on November 12, 2018.

Financial Performance
Net Income. For the quarter ended September 30, 2018, the Company reported net income of $3.3 million, or $0.42 per basic and $0.41 per diluted share, as compared to net income of $2.0 million, or $0.33 per basic and diluted share, for the same period last year.  The Company’s net income, adjusted for tax effected merger-related expenses of $538 thousand, increased $1.8 million, or 89.5%, to $3.8 million, or $0.48 per diluted share, for the quarter ended September 30, 2018, as compared to the same period last year.

The increase in net income for the quarter ended September 30, 2018 was driven by a $3.4 million, or 45.1%, increase in net interest income resulting from strong loan and deposit growth and a $489 thousand increase in non-interest income driven by insurance commissions and fees. The aforementioned increases were partially offset by a $2.7 million increase in non-interest expenses. The changes were largely attributed to the growth of the Company resulting from the merger with Community Bank, along with non-interest expense savings, double digit loan growth, the positive impacts from the Tax Cut and Jobs Act and newly enacted New Jersey tax legislation in 2018, and a 65% increase in SB One’s Insurance pretax income. 

For the nine months ended September 30, 2018, the Company reported net income of $7.6 million, or $0.97 per basic and $0.96 per diluted share, or a 46.2% increase, as compared to net income of $5.2 million, or $1.00 per basic and diluted share, for the same period last year.  The Company’s net income, adjusted from tax effected merger-related expenses of $3.2 million and non-recurring rebrand expenses of $152 thousand, respectively, increased $5.4 million, or 96.5%, to $10.9 million, or $1.39 per diluted share, for the nine months ended September 20, 2018, as compared to the same period last year. The changes were largely attributed to the growth of the Company resulting from the merger with Community Bank, along with non-interest expense savings, double digit loan growth, the positive impacts from the Tax Cut and Jobs Act and newly enacted New Jersey tax legislation in 2018, and a 53% increase in SB One’s Insurance pretax income.

Net Interest Income.  Net interest income on a fully tax equivalent basis increased $3.5 million, or 45.1%, to $11.2 million for the third quarter of 2018, as compared to $7.7 million for the same period in 2017.  The increase in net interest income was largely due to a $456.4 million, or 50.9%, increase in average interest earning assets, principally loans receivable, which increased $373.9 million, or 48.0%. However, the net interest margin decreased by 13 basis points to 3.29% for the third quarter of 2018, as compared to the same period in 2017.  The decrease was primarily driven by an increase in wholesale funding to support loan growth, and a $130 thousand decrease in prepayment penalties on commercial loans.

Net interest income on a fully tax equivalent basis increased $11.7 million, or 53.9%, to $33.4 million for the first nine months of 2018 as compared to $21.7 million for the same period in 2017.  The increase in net interest income was largely due to a $445.6 million, or 51.8%, increase in average interest earning assets, principally loans receivable, which increased $369.5 million, or 49.9%.  The net interest margin increased by 5 basis points to 3.42% for the first nine months of 2018, as compared to the same period in 2017. These increases were largely attributable to the merger with Community Bank.

Provision for Loan Losses. Provision for loan losses decreased $19 thousand, or 5.6%, to $321 thousand for the third quarter of 2018, as compared to $340 thousand for the same period in 2017.

Provision for loan losses increased $100 thousand, or 8.9%, to $1.2 million for the first nine months of 2018, as compared to $1.1 million for the same period in 2017.

Non-interest Income. Non-interest income increased $489 thousand, or 24.1%, to $2.5 million for the third quarter of 2018, as compared to the same period last year.  The increase was largely due to an increase of $264 thousand, or 20.9%, in insurance commissions and fees relating to SB One Insurance Agency. In addition, ATM and debit card fees, service fees on deposit accounts, and bank owned life insurance, increased $56 thousand, $46 thousand, and $46 thousand, respectively.   

The Company’s non-interest income increased $1.9 million, or 30.6%, to $8.3 million for the first nine months of 2018 as compared to the same period last year.  The increase was largely due to growth of $1.1 million in insurance commissions and fees related to SB One Insurance Agency. In addition, other income, bank owned life insurance, service fees on deposit accounts, and ATM and debit card fees, increased $279 thousand, $185 thousand, $147 thousand, and $139 thousand, respectively.

Non-interest Expense. The Company’s non-interest expenses increased $2.7 million to $9.0 million for the third quarter of 2018, as compared to the same period last year. Non-interest expenses, adjusted for merger related expenses of $605 thousand, increased $2.1 million to $8.4 million for the third quarter of 2018 as compared to the same period last year. The increase was largely attributed to the growth of the Company resulting from the merger with Community Bank which represented an estimated $1.4 million in non-interest expenses based on the reported average quarterly non-interest expenses of $2.2 million for the nine months ended September 30, 2017 less approximately 35% in realized projected merger expense savings. The increase in non-interest expenses occurred largely in salaries and employee benefits of $1.3 million, occupancy of $295 thousand, data processing of $145 thousand, which were partially offset by a decrease of $201 thousand in expenses and write-downs related to foreclosed real estate. The merger-related expenses for the third quarter were driven by the announced merger with Enterprise Bank.

The Company’s non-interest expenses increased $11.3 million to $30.1 million for the first nine months of 2018 as compared to the same period last year. Non-interest expenses, adjusted for merger related expenses of $4.3 million, increased $7.5 million to $25.8 million for the first nine months of 2018 as compared to the same period last year. The increase was largely attributed to the growth of the Company resulting from the merger with Community Bank. The increase in non-interest expenses occurred largely in salaries and employee benefits of $4.5 million, data processing of $797 thousand, occupancy of $668 thousand, other expenses of $233 thousand, advertising and promotion of $229 thousand and professional fees of $224 thousand.

Income Tax Expense. The Company’s income tax expenses decreased $49 thousand, or 4.9% to $957 thousand for the third quarter of 2018, as compared to the same period last year. The Company’s effective tax rate for the third quarter of 2018 was 22.6%, as compared to 33.9% for the third quarter of 2017, due to the reduction in the statutory federal tax rate to 21% effective January 1, 2018 and the newly enacted New Jersey tax legislation in 2018.

The Company’s income tax expenses decreased $372 thousand, or 15.2%, to $2.1 million for the first nine months of 2018, as compared to the same period last year.  The Company’s effective tax rate for the first nine months of 2018 was 21.5%, as compared to 32.0% for nine months ended September 30, 2017, due to the reduction in the statutory federal tax rate to 21% effective January 1, 2018 and the newly enacted New Jersey tax legislation in 2018.

Financial Condition
At September 30, 2018, the Company’s total assets were $1.5 billion, an increase of $480.3 million, or 49.0%, as compared to total assets of $979.4 million at December 31, 2017.  The increase was largely attributable to the merger with Community Bank.

Total loans receivable, net of unearned income, increased $351.0 million, or 42.8%, to $1.2 billion at September 30, 2018, as compared to $820.7 million at December 31, 2017.  The merger with Community Bank resulted in an increase in total loans of $236.1 million. During the nine months ended September 30, 2018, the Company also had $166.9 million of commercial loan production, which was partly offset by $35.0 million in commercial loan payoffs.

The Company’s total deposits increased $352.2 million, or 46.2%, to $1.1 billion at September 30, 2018, from $762.5 million at December 31, 2017. The merger with Community Bank resulted in an increase in total deposits of $300.2 million. The growth in deposits was mostly due to an increase in interest bearing deposits of $266.5 million, or 43.2%, and non-interest bearing deposits of $85.7 million, or 58.6%, at September 30, 2018, as compared to December 31, 2017, respectively.

At September 30, 2018, the Company’s total stockholders’ equity was $151.2 million, an increase of $57.0 million when compared to December 31, 2017, largely due to the merger with Community Bank.  The Company completed the merger on January 4, 2018 which was the primary driver in an increase in book value per common share of 22.3% from $15.59 at December 31, 2017 to $19.07 at September 30, 2018.  At September 30, 2018, the leverage, Tier I risk-based capital, total risk-based capital and common equity Tier I capital ratios for the Bank were 10.51%, 12.74%, 13.48% and 12.74%, respectively, all in excess of the ratios required to be deemed “well-capitalized.”

Asset and Credit Quality
The ratio of non-performing assets (“NPAs”), which include non-accrual loans, loans 90 days past due and still accruing, troubled debt restructured loans currently performing in accordance with renegotiated terms and foreclosed real estate, to total assets increased to 1.67% at September 30, 2018 from 0.94% at December 31, 2017.  NPAs exclude $3.7 million of Purchased Credit-Impaired (“PCI”) loans acquired through the merger with Community Bank. NPAs increased $15.2 million to $24.4 million at September 30, 2018, as compared to $9.2 million at December 31, 2017.  Non-accrual loans, excluding $3.7 million of PCI loans, increased $13.7 million, or 228.2%, to $19.8 million at September 30, 2018, as compared to $6.0 million at December 31, 2017.  The increase in non-accrual loans was largely attributed to two commercial real estate loans totaling $9.0 million, $1.9 million in loans acquired from Community Bank not classified as PCI, and 7 consumer loans totaling $2.0 million.  Loans past due 30 to 89 days totaled $3.3 million at September 30, 2018, representing a decrease of $3.2 million, or 48.6%, as compared to $6.5 million at December 31, 2017.

The Company continues to actively market its foreclosed real estate properties, the value of which increased $382 thousand to $2.7 million at September 30, 2018 as compared to $2.3 million at December 31, 2017.  At September 30, 2018, the Company’s foreclosed real estate properties had an average carrying value of approximately $242 thousand per property.

The allowance for loan losses increased $1.3 million, or 17.2%, to $8.6 million, or 0.73% of total loans, at September 30, 2018, compared to $7.3 million, or 0.89% of total loans, at December 31, 2017. The decline in allowance coverage was primarily driven by the addition of Community Bank acquired loans with no allowance for loan losses; such loans were recorded at fair value at the acquisition date. The Company’s outstanding credit mark recorded on the legacy Community Bank portfolio of $212 million totaled $5.7 million at September 30, 2018. The Company’s combined coverage of allowance for loan loss and credit mark on the legacy Community Bank portfolio totaled $14.3 million, or 1.21% of the overall loan portfolio, at September 30, 2018. The Company recorded $1.2 million in provision for loan losses for the nine months ended September 30, 2018 as compared to $1.1 million for the nine months ended September 30, 2017.  Additionally, the Company recorded net recoveries of $32 thousand for the nine months ended September 30, 2018, as compared to $321 thousand in net charge-offs for the nine months ended September 30, 2017. The allowance for loan losses as a percentage of non-accrual loans decreased to 43.5% at September 30, 2018 from 121.8% at December 31, 2017.

About SB One Bancorp

SB One Bancorp (Nasdaq: SBBX), is the holding company for SB One Bank, a full-service, commercial bank that operates regionally with 14 branch locations in New Jersey and New York. Established in 1975, SB One Bank's strength is in its ability to build strong personal relationships with its customers and to serve the communities in which it operates. In addition to its branches and loan production offices, SB One Bank offers a full-service insurance agency, SB One Insurance Agency, Inc. and wealth services through SB One Wealth. SB One Bank reinforces its commitment to the communities in which it lives and serves through the SB One Foundation, Inc. which supports various local charitable organizations.

SB One Bancorp was recently added to the Russell 2000® Index and Russell 3000® Index. In 2017, it was recognized as one of the top 29 banks and thrifts nationwide and one of three from New Jersey that comprise the Sandler O’Neill Sm-All Stars Class of 2017. SB One Bancorp is one of the 50 Fastest Growing Companies in New Jersey as ranked by NJBIZ Magazine. SB One Bancorp President and Chief Executive Officer, Anthony Labozzetta, was named one of America’s Business Leaders in Banking by Forbes magazine and American Banker’s Community Banker of the Year in 2016.

For more details on SB One Bank, visit: www.SBOne.bank

Forward-Looking Statements

This press release contains statements that are forward looking and are made pursuant to the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, (i) statements about the benefits of the merger between SB One Bancorp and Community Bank, including future financial and operating results, cost savings and accretion to reported earnings that may be realized from the merger; and (ii) statements that may be identified by the use of words such as "expect," "estimate," “assume,” "believe," "anticipate," "will," "forecast," "plan," "project" or similar words. Such statements are based on SB One Bancorp’s current expectations and are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, (1) difficulties and delays in integrating the business or fully realizing cost savings and other benefits; (2) operating costs, customer loss and business disruption following the merger with Community Bank, including adverse effects on relationships with employees, may be greater than expected; (3) changes to interest rates; (4) the ability to control costs and expenses; (5) general economic conditions; (6) the success of SB One Bancorp’s efforts to diversify its revenue base by developing additional sources of non-interest income while continuing to manage its existing fee-based business; (7) risks associated with the quality of SB One Bancorp’s assets and the ability of its borrowers to comply with repayment terms, (8) governmental approvals of the merger with Enterprise Bank may not be obtained, or adverse regulatory conditions may be imposed in connection with governmental approvals of the merger; and (9) the stockholders of Enterprise Bank may fail to approve the merger. Further information about these and other relevant risks and uncertainties may be found in SB One Bancorp’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and in subsequent filings with the Securities and Exchange Commission. SB One Bancorp undertakes no obligation to publicly release the results of any revisions to those forward looking statements that may be made to reflect events or circumstances after this date or to reflect the occurrence of unanticipated events.

SB ONE BANCORP
Anthony Labozzetta, President/CEO
Steve Fusco, CFO
(p) 844-256-7328

SB ONE BANCORP 
SUMMARY FINANCIAL HIGHLIGHTS 
(In Thousands, Except Percentages and Per Share Data) 
(Unaudited) 
                           
             9/30/2018 VS. 
  9/30/2018 6/30/2018 12/31/2017 9/30/2017  6/30/2018 12/31/2017 9/30/2017 
 BALANCE SHEET HIGHLIGHTS - Period End Balances                        
Total securities $177,547  $179,943  $104,034  $109,053    (1.3) %  70.7 %  62.8 % 
Total loans  1,171,738   1,136,546   820,700   795,124    3.1 %  42.8 %  47.4 % 
Allowance for loan losses  (8,594)   (8,264)   (7,335)   (7,502)    4.0 %  17.2 %  14.6 % 
Total assets  1,459,642   1,437,302   979,383   956,802    1.6 %  49.0 %  52.6 % 
Total deposits  1,114,646   1,061,599   762,491   741,928    5.0 %  46.2 %  50.2 % 
Total borrowings and junior subordinated debt  187,756   215,793   118,198   116,556    (13.0) %  58.8 %  61.1 % 
Total shareholders' equity  151,222   148,823   94,193   93,944    1.6 %  60.5 %  61.0 % 
                           
 FINANCIAL DATA - QUARTER ENDED:                           
Net interest income (tax equivalent) (a) $11,217  $11,214  $8,038  $7,732    0.0 %  39.5 %  45.1 % 
Provision for loan losses  321   398   459   340    (19.3) %  (30.1) %  (5.6) % 
Total other income  2,518   2,881   1,961   2,029    (12.6) %  28.4 %  24.1 % 
Total other expenses  8,963   9,580   6,820   6,294    (6.4) %  31.4 %  42.4 % 
Income before provision for income taxes (tax equivalent)  4,451   4,117   2,720   3,127    8.1 %  63.6 %  42.3 % 
Provision for income taxes  957   896   2,039   1,006    6.8 %  (53.1) %  (4.9) % 
Taxable equivalent adjustment (a)  224   229   168   158    (2.2) %  33.3 %  41.8 % 
Net income $3,270  $2,992  $513  $1,963    9.3 %  537.4 %  66.6 % 
                           
 Net income per common share - Basic $0.42  $0.38  $0.09  $0.33      9.3 %    362.2 %    26.1 % 
 Net income per common share - Diluted $0.41  $0.38  $0.09  $0.33      8.4 %    359.3 %    25.3 % 
                           
Return on average assets  0.91 % 0.85 % 0.21 % 0.84 %  6.1 %   325.8 %   8.2 %  
Return on average equity  8.67 % 8.10 % 2.16 % 8.40 %  7.0 %   302.0 %   3.2 %  
Efficiency ratio (b)  66.34 % 69.09 % 69.37 % 65.54 %  (4.0) %   (4.4) %   1.2 %  
Net interest margin (tax equivalent)  3.29 % 3.43 % 3.46 % 3.42 %  (4.1) %   (4.9) %   (3.8) %  
Avg. interest earning assets/Avg. interest bearing liabilities  1.28   1.28   1.29   1.29    0.3
 %   (0.7) %  (0.7) % 
                           
 FINANCIAL DATA - YEAR TO DATE:                           
 Net interest income (tax equivalent) (a) $33,393        $21,694              53.9 % 
 Provision for loan losses  1,227         1,127              8.9 % 
 Total other income    8,256           6,324              30.6 % 
 Total other expenses  30,137         18,797              60.3 % 
 Income before provision for income taxes (tax equivalent)    10,285           8,094              27.1 % 
 Provision for income taxes    2,068           2,440              (15.2) % 
 Taxable equivalent adjustment (a)    647           476              35.9 % 
 Net income  $  7,570        $  5,178              46.2 % 
                           
 Net income per common share - Basic $0.97        $1.00              (3.0) % 
 Net income per common share - Diluted $0.96        $1.00              (4.0) % 
                           
Return on average assets  0.72 %       0.77 %          (5.9) %  
Return on average equity  6.84 %       9.33 %          (26.7) %  
Efficiency ratio (b)  73.50 %       68.25 %          7.7 %  
Net interest margin (tax equivalent)  3.42 %       3.37 %          1.5 %  
Avg. interest earning assets/Avg. interest bearing liabilities  1.28         1.26            1.5 % 
                           
 SHARE INFORMATION:                           
Book value per common share $19.07  $18.77  $15.59  $15.55    1.6 %  22.3 %   22.6 % 
Tangible book value per common share  15.79   15.48   15.13   15.09    2.0 %  4.4 %   4.7 % 
Outstanding shares- period ending  7,929,613   7,929,613   6,040,564   6,040,180    - %  31.3 %   31.3 % 
Average diluted shares outstanding (year to date)  7,868,280   7,848,468   5,404,381   5,200,466    0.3 %  45.6 %   51.3 % 
                            
 CAPITAL RATIOS:                           
Total equity to total assets  10.36 % 10.35 % 9.62 % 9.82 %  0.1 %   7.7 %   5.5 %  
 Leverage ratio (c)  10.51 % 10.62 % 11.86 % 12.14 %    (1.0) %     (11.4) %     (13.4) %  
Tier 1 risk-based capital ratio (c)  12.74 % 12.87 % 14.26 % 14.82 %  (1.0) %   (10.7) %   (14.0) %  
Total risk-based capital ratio (c)  13.48 % 13.60 % 15.17 % 15.80 %  (0.9) %   (11.1) %   (14.7) %  
Common equity Tier 1 capital ratio (c)  12.74 % 12.87 % 14.26 % 14.82 %  (1.0) %   (10.7) %   (14.0) %  
                           
 ASSET QUALITY:                           
Non-accrual loans (e) $19,758  $18,601  $6,020  $6,604    6.2 %  228.2 %  199.2 % 
Loans 90 days past due and still accruing  -   -   -   -    - %  - %  - % 
Troubled debt restructured loans ("TDRs") (d)  1,986   1,784   932   939    11.3 %  113.1 %  111.5 % 
Foreclosed real estate  2,657   3,414   2,275   2,275    (22.2) %  16.8 %  16.8 % 
Non-performing assets ("NPAs") $24,401  $23,799  $9,227  $9,818    2.5 %  164.5 %  148.5 % 
                           
Foreclosed real estate, criticized and classified assets (e) $22,945  $22,529  $18,992  $20,285    1.8 %  20.8 %  13.1 % 
Loans past due 30 to 89 days $3,339  $2,868  $6,497  $1,628    16.4 %  (48.6) %  105.1 % 
Charge-offs (Recoveries) , net (quarterly) $(9)  $(38)  $626  $3    (76.3) %  (101.4) %  (400.0) % 
Charge-offs (Recoveries) , net as a % of average loans (annualized)  (0.00) % (0.01) % 0.31 % 0.00 %  (77.1) %   (101.0) %   (302.7) %  
Non-accrual loans to total loans  1.69 % 1.64 % 0.73 % 0.83 %  3.0 %   129.9 %   103.0 %  
NPAs to total assets  1.67 % 1.66 % 0.94 % 1.03 %  1.0 %   77.4 %   62.9 %  
NPAs excluding TDR loans (d) to total assets  1.54 % 1.53 % 0.85 % 0.93 %  0.3 %   81.3 %   65.5 %  
Non-accrual loans to total assets  1.35 % 1.29 % 0.61 % 0.69 %  4.6 %   120.2 %   96.1 %  
Allowance for loan losses as a % of non-accrual loans  43.50 % 44.43 % 121.84 % 113.60 %  (2.1) %   (64.3) %   (61.7) %  
Allowance for loan losses to total loans  0.73 % 0.73 % 0.89 % 0.94 %  0.9 %   (17.9) %   (22.3) %  
                           
 (a) Full taxable equivalent basis, using a 21% effective tax rate and adjusted for TEFRA (Tax and Equity Fiscal Responsibility Act) interest expense disallowance  
 (b) Efficiency ratio calculated non-interest expense divided by net interest income plus non-interest income  
 (c) SB One Bank capital ratios  
 (d) Troubled debt restructured loans currently performing in accordance with renegotiated terms  
 (e) PCI loans acquired through merger with Community Bank excluded from non-accrual loans and criticized and classified assets totaled $3.7 million  


SB ONE BANCORP
CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
     
ASSETSSeptember 30, 2018  December 31, 2017
     
Cash and due from banks$  8,394  $  3,270
Interest-bearing deposits with other banks   6,316     8,376
Cash and cash equivalents   14,710     11,646
     
Interest bearing time deposits with other banks   200     100
Securities available for sale, at fair value   172,658     98,730
Securities held to maturity   4,889     5,304
Other Bank Stock, at cost   8,804     4,925
     
Loans receivable, net of unearned income   1,171,738     820,700
Less:  allowance for loan losses   8,594     7,335
Net loans receivable   1,163,144     813,365
     
Foreclosed real estate   2,657     2,275
Premises and equipment, net   18,520     8,389
Accrued interest receivable   5,323     2,472
Goodwill and intangibles   25,987     2,820
Bank-owned life insurance   30,580     22,054
Other assets   12,170     7,303
     
Total Assets$  1,459,642  $  979,383
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
     
Liabilities:    
Deposits:    
Non-interest bearing$  231,846  $  146,167
Interest bearing   882,800     616,324
Total Deposits   1,114,646     762,491
     
Borrowings   159,900     90,350
Accrued interest payable and other liabilities   6,018     4,501
Subordinated debentures   27,856     27,848
     
Total Liabilities   1,308,420     885,190
     
Total Stockholders' Equity   151,222     94,193
     
Total Liabilities and Stockholders' Equity$  1,459,642  $  979,383
     


SB ONE BANCORP
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Dollars In Thousands Except Per Share Data)
(Unaudited)
 
 Three Months Ended September 30, Nine Months Ended September 30,
  2018   2017   2018   2017 
INTEREST INCOME        
        
Loans receivable, including fees$  13,009  $  8,556  $  37,471  $  24,030 
Securities:       
Taxable   936     379     2,476     1,064 
Tax-exempt   442     314     1,272     943 
Interest bearing deposits   23     6     69     28 
Total Interest Income   14,410     9,255     41,288     26,065 
        
INTEREST EXPENSE       
Deposits   2,156     963     5,273     2,532 
Borrowings   943     398     2,323     1,358 
Junior subordinated debentures   318     320     946     957 
Total Interest Expense   3,417     1,681     8,542     4,847 
        
Net Interest Income   10,993     7,574     32,746     21,218 
PROVISION FOR LOAN LOSSES   321     340     1,227     1,127 
Net Interest Income after Provision for Loan Losses   10,672     7,234     31,519     20,091 
        
OTHER INCOME       
Service fees on deposit accounts   320     274     959     812 
ATM and debit card fees   254     198     717     578 
Bank owned life insurance   190     144     563     378 
Insurance commissions and fees   1,527     1,263     5,261     4,153 
Investment brokerage fees   29     9     92     12 
(Loss) gain on securities transactions   -     (26)    36     51 
Gain (loss) on disposal of fixed assets   -     -     9     - 
Other   198     167     619     340 
Total Other Income   2,518     2,029     8,256     6,324 
        
OTHER EXPENSES       
Salaries and employee benefits   5,033     3,755     15,502     10,990 
Occupancy, net   757     462     2,086     1,418 
Data processing   710     565     2,440     1,643 
Furniture and equipment   286     231     893     705 
Advertising and promotion   147     64     488     259 
Professional fees   383     303     1,002     778 
Director fees   121     94     410     290 
FDIC assessment   183     49     393     193 
Insurance   35     70     182     202 
Stationary and supplies   59     42     205     118 
Merger-related expenses   605     1     4,344     482 
Loan collection costs   53     23     203     75 
Expenses and write-downs related to foreclosed real estate   20     221     228     298 
Amortization of intangible assets   61     -     182     - 
Other   510     414     1,579     1,346 
Total Other Expenses   8,963     6,294     30,137     18,797 
        
Income before Income Taxes   4,227     2,969     9,638     7,618 
INCOME TAX EXPENSE    957     1,006     2,068     2,440 
Net Income $  3,270  $  1,963  $  7,570  $  5,178 
        
OTHER COMPREHENSIVE INCOME (LOSS):       
Unrealized (loss) gains on available for sale securities arising during the period$  (1,383) $  (10)    (3,903) $  1,810 
Fair value adjustments on derivatives   779     (63)    2,214     (478)
Reclassification adjustment for net loss (gain) on securities transactions included in net income   -     26     (36)    (51)
Income tax related to items of other comprehensive income (loss)   106     18     400     (513)
Other comprehensive (loss) income, net of income taxes   (498)    (29)    (1,325)    768 
Comprehensive income$  2,772