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First South Bank

Washington, NC · Cert 31084

FDIC · 28 branches

Q3 2017

$1.1BAssets
$784.5MLoans
$948.1MDeposits
$103.2MEquity
Loan mix
88%RE $508.9M10%C&I $57.8M2%Consumer $12.2MQ3 2016Q3 2017
Deposit mix
94%Interest-bearing $889.1M6%Noninterest $59.0MQ3 2016Q3 2017

NIM

3.53%Q3 ’153.71%Q3 ’163.82%Q3 ’17+4%+2%

Non-interest income vs. expense

3.99%Q3 ’153.69%Q3 ’163.32%Q3 ’17-12%-10%

Market Position · Rocky Mount, NC · 2017 SOD (annual) · 5.1% share · #7 of 11 inst. · $0.1B of $2.1B

21.2% Beaufort
6.1% Nash
2.9% Cumberland
4.6% Craven

Executive Summary

  • Earnings: ROA of 0.93%, up 19 bps year over year; NIM at 3.51%.
  • Asset quality: problem loans at 0.29% of loans (+29 bps YoY), with net recoveries of 0.01%.
  • Capital: tier 1 leverage ratio of 8.96%, up 7 bps from a year ago.
  • Funding: loans stand at 82.75% of deposits as of Q3 2017.

Financial Results

Return on Assets (YTD, annualized)

0.93%+19 bps YoY

Net Interest Margin (YTD, annualized)

3.51%+9 bps YoY

Efficiency Ratio (YTD, annualized)

69.40%-695 bps YoY

Tier 1 Leverage Ratio

8.96%+7 bps YoY

Year to date, annualized, through each quarter.

MetricQ3 2016Q4 2016Q1 2017Q2 2017Q3 2017YoY ΔTrend
Earnings
Return on Assets0.74%0.77%0.79%0.82%0.93%+19 bps
Return on Equity7.48%7.82%8.25%8.55%9.74%+227 bps
Net Interest Margin3.43%3.38%3.50%3.48%3.51%+9 bps
Efficiency Ratio76.35%75.41%73.51%72.11%69.40%-695 bps
Non-Interest Burden2.30%2.23%2.24%2.16%2.06%-24 bps
Growth
Asset Growth (YoY)7.87%4.73%10.60%10.39%8.95%+108 bps
Loan Growth (YoY)20.73%15.51%13.74%16.16%13.74%-700 bps
Deposit Growth (YoY)9.81%7.46%12.44%12.86%10.05%+24 bps
Asset Quality
Nonperforming Loans / Loans0.00%0.00%0.38%0.32%0.29%+29 bps
Net Charge-Offs / Loans0.03%0.02%0.00%0.01%-0.01%-3 bps
Allowance / Loans1.23%1.23%1.23%1.20%1.22%-1 bps
Allowance Coverage of NPLsn/an/a3.2x3.7x4.1xn/a
Capital
Tier 1 Leverage Ratio8.89%8.89%8.89%8.84%8.96%+7 bps
Total Risk-Based Capital13.10%13.01%12.79%12.57%12.95%-15 bps
Equity / Assets9.92%9.71%9.47%9.48%9.61%-30 bps
Liquidity & Funding
Loans / Deposits80.07%80.89%79.20%83.95%82.75%+268 bps
Liquid Assets / Assets3.85%2.35%4.72%1.61%3.44%-41 bps
CRE / Total Capitaln/an/an/an/an/an/an/a