FCFP First Community Financial Partners, Inc.

Third Quarter 2016 Highlights

First Community Financial Partners, Inc. (NASDAQ:FCFP) (“First Community,” “FCFP” or the “Company”), the parent company of First Community Financial Bank (the “Bank”), today reported financial results as of and for the three and nine months ended September 30, 2016.

Net income applicable to shareholders for the quarter ended September 30, 2016 was $4.1 million, or $0.24 per diluted share, compared with $2.9 million, or $0.17 per diluted share, for the quarter ended September 30, 2015.  Net income for the third quarter of 2016 was positively impacted by a $1.9 million bargain purchase option gain related to the acquisition of Mazon State Bank, partially offset by $643,000 of one-time merger-related expenses.

“We’re very pleased with our performance in the third quarter, which was highlighted by the successful completion of the Mazon State Bank acquisition and continued momentum in organic balance sheet growth,” said Roy Thygesen, Chief Executive Officer of First Community.  “The integration of Mazon has gone very smoothly as we are seeing strong adoption of our expanded offering of products and services by Mazon’s customers, and we are realizing the synergies we projected for this acquisition.”

“We had another strong quarter of business development, resulting in organic loan growth of 24% and organic growth in demand deposits of 43% on an annualized basis.  We are seeing particular strength in commercial loan production due to the expansion of our commercial banking team and our success in capitalizing on market disruption in the Chicagoland area.  We continue to have a strong loan and deposit pipeline that should continue to drive quality balance sheet growth and steady improvement in our core earnings power,” said Mr. Thygesen.

Mazon State Bank Acquisition

The Company closed its previously announced acquisition of Mazon State Bank on July 1, 2016.  Mazon State Bank had $81.7 million in assets, $32.6 million in loans, and $73.1 million in deposits (including $21.5 million of noninterest bearing deposits) as of the closing of the transaction on July 1, 2016.  Mazon State Bank also had $47.1 million in residential real estate loans sold and serviced.

Third Quarter 2016 Financial Results

Loans

At September 30, 2016, total loans were $956.2 million, an increase of  $84.0 million, or 9.63%, since the end of the second quarter of 2016 and $213.2 million, or 28.69%, year-over-year.   Excluding the $32.6 million in loans added through the Mazon State Bank acquisition, total organic loan growth was $51.7 million in the third quarter of 2016, or 23.71% on an annualized basis.  The organic loan growth was the result of a strong loan pipeline along with results produced by the addition of six commercial lenders and one new leasing officer hired during the first quarter of 2016.

Commercial loans grew $35.9 million, or 15.00%, since the end of the second quarter and $94.2 million, or 52.15%, year-over-year.  Commercial real estate loans increased $9.5 million, or 2.31%, since the end of the second quarter, and $51.1 million, or 13.84%, year-over-year.  Residential real estate loans grew $23.1 million, or 16.03%, since the end of the second quarter and $40.7 million, year-over-year.  Construction loans were up $9.4 million, or 30.55%, since the second quarter and $20.8 million, or 106.95%, year-over-year. 

Deposits and Other Borrowings

At September 30, 2016, total deposits were $1.07 billion, an increase of $168.4 million, or 18.78%, since the second quarter.  Excluding the $73.1 million in deposits added through the Mazon State Bank acquisition, total organic deposit growth was $95.3 million in the third quarter of 2016, or 42.6% on an annualized basis.

Noninterest bearing demand deposits increased $43.0 million, or 21.16%, since the end of the second quarter. Interest bearing transactional accounts (NOW, savings and money market accounts) increased $98.2 million ($34.4 million of which was from the acquisition of Mazon State Bank), or 25.68%, during the third quarter 2016.  Time deposits increased $27.3 million ($10.4 million of which was from the acquisition of Mazon State Bank), or 8.75%, to $338.7 million at September 30, 2016, from $311.4 million at June 30, 2016.   The ratio of time deposits to total deposits was 31.79% at September 30, 2016, down from 34.72% at June 30, 2016.  Other borrowings decreased $52.8 million, or 53.14%, since the end of the second quarter as a result of less reliance on FHLB borrowings after the acquisition of Mazon State Bank.

Net Interest Income and Margin

Third quarter 2016 net interest income was up $1.1 million, or 12.73%, from the second quarter of 2016. The increase was primarily attributable to an increase in average loan balances and higher net interest margin. 

The Company’s net interest margin was 3.44% for the third quarter of 2016, compared to 3.39% in the second quarter of 2016.  The increase was primarily attributable to a favorable shift in the mix of earning assets and an increase in noninterest bearing balances as a source of funding.

Noninterest Income and Expense

Third quarter 2016 noninterest income increased $1.5 million, or 123.45%, from the second quarter of 2016 and increased $2.0 million, or 260.60%, from the third quarter of 2015.  The increase was primarily attributable to a $1.9 million bargain purchase option gain related to the acquisition of Mazon State Bank that was recognized within non-interest income.

Service charges on deposits increased $82,000, or 39.61%, from the second quarter of 2016, which was primarily the result of the Mazon State Bank acquisition.  Securities gains of $14,000 were the result of $25.6 million in securities sold during the third quarter to fund loan growth.  Mortgage income was also up $46,000, or 39.66%, for the third quarter of 2016, as compared to the second quarter, as a result of higher mortgage sale volumes.

Third quarter 2016 noninterest expense increased $927,000, or 15.12%, from the second quarter of 2016. The increase from the second quarter was primarily related to the acquisition of Mazon State Bank, which included approximately $643,000 of one-time merger-related expenses.  Staffing expense related to the acquired locations was $349,000 in the third quarter.  In addition, other noninterest expense included $164,000 in stock option expense related to the merger as well as increases in other miscellaneous expenses. 

Asset Quality

Total nonperforming assets increased $4.4 million, or 90.38%, to $9.2 million at September 30, 2016 from June 30, 2016.  The ratio of nonperforming assets to total assets was 0.74% at September 30, 2016 compared to 0.43% at June 30, 2016.  The increase in total nonperforming assets was the result of the addition of one loan relationship to nonaccrual totaling $4.5 million, partially offset by the sales of other real estate owned of $1.5 million during the quarter ended September 30, 2016. 

The Company had net charge-offs on loans of $143,000 in the third quarter of 2016, compared to net recoveries of $209,000 in the second quarter of 2016.

The ratios of the Company’s allowance for loan losses to nonperforming loans and allowance to total loans were 144.93% and 1.28% at September 30, 2016, respectively.

The Company recorded a provision for loan losses in the third quarter of 2016 of $383,000 compared to a reversal of $813,000 for the same period in 2015.  The current year provision was the result of the loan growth experienced during the third quarter of 2016.

About First Community Financial Partners, Inc.: First Community Financial Partners, Inc., headquartered in Joliet, Illinois, is a bank holding company whose common stock trades on the NASDAQ Capital Market (NASDAQ:FCFP). First Community Financial Partners has one bank subsidiary, First Community Financial Bank. First Community Financial Bank, based in Plainfield, Illinois, has locations in Joliet, Plainfield, Homer Glen, Channahon, Naperville, Burr Ridge, Mazon, Braidwood, and Diamond, Illinois. The Bank is dedicated to its founding principles by being actively involved in the communities it serves and providing exceptional personal service delivered by experienced local professionals.

Special Note Concerning Forward-Looking Statements

Any statements in this release other than statements of historical facts, including statements about management’s beliefs and expectations, are forward-looking statements and should be evaluated as such. These statements are made on the basis of management’s views and assumptions regarding future events and business performance. Words such as “estimate,” “believe,” “anticipate,” “expect,” “intend,” “plan,” “target,” “project,” “should,” “may,” “will” and similar expressions are intended to identify forward-looking statements. Forward-looking statements (including oral representations) involve risks and uncertainties that may cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. These risks and uncertainties involve a number of factors related to the businesses of First Community and its wholly owned bank subsidiary, including: risks associated with First Community’s possible pursuit of acquisitions; unexpected results of acquisitions, including the acquisition of Mazon State Bank; economic conditions in First Community’s, and its wholly owned bank subsidiary’s service areas; system failures; losses of large customers; disruptions in relationships with third party vendors; losses of key management personnel and the inability to attract and retain highly qualified management personnel in the future; the impact of legislation and regulatory changes on the banking industry, including the implementation of the Basel III capital reforms; losses related to cyber-attacks; and liability and compliance costs regarding banking regulations; and changes in local, national and international economic conditions. These and other risks and uncertainties are discussed in more detail in First Community’s filings with the Securities and Exchange Commission, including First Community’s Annual Report on Form 10-K filed on March 14, 2016.

Many of these risks are beyond management’s ability to control or predict. All forward-looking statements attributable to First Community, and its wholly owned bank subsidiary, or persons acting on behalf of each of them are expressly qualified in their entirety by the cautionary statements and risk factors contained in this communication. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. Furthermore, forward-looking statements speak only as of the date they are made. Except as required under the federal securities laws or the rules and regulations of the Securities and Exchange Commission, First Community does not undertake any obligation to update or review any forward-looking information, whether as a result of new information, future events or otherwise.

FINANCIAL SUMMARY
	September 30, 2016			June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015
Period-End Balance Sheet
(In thousands)(Unaudited)
Assets
Cash and due from banks	$	21,622		$	13,777		$	9,132		$	10,699		$	10,110
Interest-bearing deposits in banks	33,349			19,335			30,558			7,406			21,324
Securities available for sale	188,062			179,517			203,874			205,604			215,827
Mortgage loans held for sale	1,331			711			133			400			—
Leases, net	739			448			—			—			—
Commercial real estate	419,958			410,461			378,304			381,098			368,896
Commercial	274,889			239,038			181,142			179,623			180,674
Residential 1-4 family	166,971			143,908			139,208			135,864			126,316
Multifamily	31,880			30,809			31,511			34,272			30,771
Construction and land development	40,253			30,834			27,798			22,082			19,451
Farmland and agricultural production	12,985			9,235			9,060			9,989			8,984
Consumer and other	9,280			7,924			7,250			9,391			7,963
Total loans	956,216			872,209			774,273			772,319			743,055
Allowance for loan losses	12,284			12,044			11,335			11,741			11,753
Net loans	943,932			860,165			762,938			760,578			731,302
Other assets	57,563			51,409			54,227			55,965			44,869
Total Assets	$	1,246,598		$	1,125,362		$	1,060,862		$	1,040,652		$	1,023,432
Liabilities and Shareholders' Equity
Noninterest bearing deposits	$	246,262		$	203,258		$	204,414		$	196,063		$	174,849
Savings deposits	61,399			40,603			38,481			36,206			34,933
NOW accounts	151,243			103,324			104,136			102,882			101,828
Money market accounts	267,667			238,229			237,873			233,315			232,195
Time deposits	338,680			311,416			294,076			297,525			302,892
Total deposits	1,065,251			896,830			878,980			865,991			846,697
Total borrowings	61,879			114,701			72,237			68,315			72,551
Other liabilities	4,304			2,722			2,855			3,305			4,065
Total Liabilities	1,131,434			1,014,253			954,072			937,611			923,313
Shareholders’ equity	115,164			111,109			106,790			103,041			100,119
Total Shareholders’ Equity	115,164			111,109			106,790			103,041			100,119
Total Liabilities and Shareholders’ Equity	$	1,246,598		$	1,125,362		$	1,060,862		$	1,040,652		$	1,023,432

FINANCIAL SUMMARY
	Three months ended,
	September 30,2016			June 30, 2016			March 31, 2016			December 31, 2015			September 30,2015
Interest income:	(In thousands, except per share data)(Unaudited)
Loans, including fees	$	10,229		$	9,024		$	8,508		$	8,401		$	8,218
Securities	1,041			1,042			1,101			1,117			1,103
Federal funds sold and other	43			21			19			19			19
Total interest  income	11,313			10,087			9,628			9,537			9,340
Interest expense:
Deposits	1,081			957			940			986			973
Federal funds purchased and other borrowed funds	112			119			93			87			98
Subordinated debentures	297			297			297			297			297
Total interest expense	1,490			1,373			1,330			1,370			1,368
Net interest income	9,823			8,714			8,298			8,167			7,972
Provision for loan losses	383			500			—			(515		)	(813		)
Net interest income after provision for loan losses	9,440			8,214			8,298			8,682			8,785
Noninterest income:
Service charges on deposit accounts	289			207			204			190			188
Gain on sale of loans	7						—			—			—
Gain on sale of securities	14			603			—			212			251
Mortgage fee income	162			116			78			96			178
Bargain purchase gain	1,920			—			—			—			—
Other	381			315			273			261			152
Total noninterest income	2,773			1,241			555			759			769
Noninterest expenses:
Salaries and employee benefits	3,812			3,311			3,256			3,004			2,841
Occupancy and equipment expense	568			429			437			494			486
Data processing	700			690			257			203			248
Professional fees	369			375			392			68			342
Advertising and business development	328			262			215			219			217
Losses on sale and writedowns of foreclosed assets, net	1			31			16			109			58
Foreclosed assets expenses, net of rental income	(99		)	60			53			50			(61		)
Other expense	1,380			974			1,310			898			1,005
Total noninterest expense	7,059			6,132			5,936			5,045			5,136
Income before income taxes	5,154			3,323			2,917			4,396			4,418
Income taxes	1,019			1,058			889			1,474			1,471
Net income applicable to common shareholders	$	4,135		$	2,265		$	2,028		$	2,922		$	2,947
Basic earnings per share	$	0.24		$	0.13		$	0.12		$	0.17		$	0.17
Diluted earnings per share	$	0.24		$	0.13		$	0.12		$	0.17		$	0.17

	Nine months ended September 30,
	2016			2015
Interest income:	(dollars in thousands, except per share data)(unaudited)
Loans, including fees	$	27,761		$	24,124
Securities	3,184			3,017
Federal funds sold and other	83			47
Total interest  income	31,028			27,188
Interest expense:
Deposits	2,978			2,937
Federal funds purchased and other borrowed funds	324			129
Subordinated debentures	891			1,503
Total interest expense	4,193			4,569
Net interest income	26,835			22,619
Provision for loan losses	883			(1,562		)
Net interest income after provision for loan losses	25,952			24,181
Noninterest income:
Service charges on deposit accounts	700			565
Gain on sale of securities	617			272
Mortgage fee income	356			435
Bargain purchase gain	1,920			—
Other	969			465
	4,569			1,737
Noninterest expenses:
Salaries and employee benefits	10,379			8,535
Occupancy and equipment expense	1,434			1,483
Data processing	1,647			710
Professional fees	1,136			1,134
Advertising and business development	805			633
Losses on sale and writedowns of foreclosed assets, net	14			78
Foreclosed assets expenses, net of rental income	50			80
Other expense	3,663			2,840
	19,128			15,493
Income before income taxes	11,393			10,425
Income taxes	2,966			3,527
Net income	$	8,427		$	6,898
Basic earnings per share	$	0.49		$	0.41
Diluted earnings per share	$	0.48		$	0.40

	Three months ended,
	September 30, 2016								June 30, 2016								September 30, 2015
	Average Balances			Income/ Expense			Yields/ Rates		Average Balances			Income/ Expense			Yields/ Rates		Average Balances			Income/ Expense			Yields/ Rates
Assets	(Dollars in thousands)(Unaudited)
Loans (1)	$	919,777		$	10,229		4.45	%	$	826,416		$	9,024		4.37	%	$	731,871		$	8,218		4.49	%
Investment securities (2)	199,139			1,041			2.09	%	190,924			1,042			2.18	%	207,843			1,103			2.12	%
Interest-bearing deposits with other banks	24,580			43			0.70	%	11,465			21			0.73	%	23,790			19			0.32	%
Total earning assets	$	1,143,496		$	11,313		3.96	%	$	1,028,805		$	10,087		3.92	%	$	963,504		$	9,340		3.88	%
Other assets	74,740								50,707								47,787
Total assets	$	1,218,236							$	1,079,512							$	1,011,291
Liabilities
NOW accounts	$	122,727		$	90		0.29	%	$	109,354		$	81		0.30	%	$	98,915		$	64		0.26	%
Money market accounts	260,070			190			0.29	%	232,004			162			0.28	%	234,898			166			0.28	%
Savings accounts	62,179			15			0.10	%	39,525			12			0.12	%	34,447			15			0.17	%
Time deposits	326,860			786			0.96	%	292,811			702		0.96	%	300,476			728			0.97	%
Total interest bearing deposits	771,836			1,081			0.56	%	673,694			957			0.57	%	668,736			973			0.58	%
Securities sold under agreements to repurchase	23,339			10			0.17	%	21,650			9			0.17	%	33,112			11			0.13	%
Secured borrowings	7,752			58			2.99	%	9,261			66			2.85	%	13,406			86			2.57	%
Mortgage payable	—			—			—	%	—			—			—	%	—			—			—	%
FHLB borrowings	42,391			44			0.42	%	44,615			44			0.33	%	1,413			1			0.28	%
Subordinated debentures	15,300			297			7.76	%	15,300			297			7.76	%	15,300			297			7.76	%
Total interest bearing liabilities	$	860,618		$	1,490		0.69	%	$	764,520		$	1,373		0.72	%	$	731,967		$	1,368		0.75	%
Noninterest bearing deposits	239,802								204,016								176,040
Other liabilities	3,726								2,544								5,117
Total liabilities	$	1,104,146							$	971,080							$	913,124
Total shareholders’ equity	$	114,090							$	108,432							$	98,167
Total liabilities and shareholders’ equity	$	1,218,236							$	1,079,512							$	1,011,291
Net interest income				$	9,823							$	8,714							$	7,972
Interest rate spread							3.27	%							3.20	%							3.13	%
Net interest margin							3.44	%							3.39	%							3.31	%

Footnotes:

(1) Average loans include nonperforming loans.

(2) No tax-equivalent adjustments were made, as the effect thereof was not material.

	Nine months ended September 30,
	September 30, 2016								September 30, 2015
	Average Balances			Income/ Expense			Yields/ Rates		Average Balances			Income/ Expense			Yields/ Rates
Assets	(Dollars in thousands)(Unaudited)
Loans (1)	$	830,640		$	27,761		4.46	%	$	717,473		$	24,124		4.48	%
Investment securities (2)	198,867			3,184			2.13	%	193,212			3,017			2.08	%
Federal funds sold	—			—			—	%	—			—			—	%
Interest-bearing deposits with other banks	16,464			83			0.67	%	16,892			47			0.37	%
Total earning assets	$	1,045,971		$	31,028		3.96	%	$	927,577		$	27,188		3.91	%
Other assets	68,064								45,933
Total assets	$	1,114,035							$	973,510
Liabilities
NOW accounts	$	112,221		$	242		0.29	%	$	87,578		$	139		0.21	%
Money market accounts	242,098			514			0.28	%	220,448			457			0.28	%
Savings accounts	46,357			38			0.11	%	33,074			42			0.17	%
Time deposits	304,138			2,184			0.96	%	303,240			2,299			1.01	%
Total interest bearing deposits	704,814			2,978			0.56	%	644,340			2,937			0.61	%
Securities sold under agreements to repurchase	22,965			27			0.16	%	30,355			25			0.11	%
Secured borrowings	9,175			200			2.91	%	4,569			88			2.57	%
Mortgage payable	—			—			—	%	241			14			7.75	%
FHLB borrowings	33,059			97			0.39	%	1,154			2			0.23	%
Subordinated debentures	15,300			891			7.76	%	24,424			1,503			8.21	%
Total interest bearing liabilities	$	785,313		$	4,193		0.71	%	$	705,083		$	4,569		0.86	%
Noninterest bearing deposits	216,430								168,316
Other liabilities	3,113								4,221
Total liabilities	$	1,004,856							$	877,620
Total shareholders’ equity	$	109,179							$	95,890
Total liabilities and shareholders’ equity	$	1,114,035							$	973,510
Net interest income				$	26,835							$	22,619
Interest rate spread							3.25	%							3.05	%
Net interest margin							3.42	%							3.25	%

Footnotes:

(1) Average loans include nonperforming loans.

(2) No tax-equivalent adjustments were made, as the effect thereof was not material.

COMMON STOCK DATA
	2016									2015
	Third Quarter			Second Quarter			First Quarter			Fourth Quarter			Third Quarter
	(Unaudited)
Market value (1):
End of period	$	9.52		$	8.80		$	8.70		$	7.24		$	6.51
High	9.55			9.10			8.84			7.31			7.00
Low	8.35			8.18			7.00			6.26			6.25
Book value (end of period)	6.68			6.47			6.22			6.05			5.88
Tangible book value (end of period)	6.62			6.47			6.22			6.05			5.88
Shares outstanding (end of period)	17,237,845			17,183,780			17,175,864			17,026,941			17,017,441
Average shares outstanding	17,189,113			17,182,197			17,125,928			16,939,010			16,993,822
Average diluted shares outstanding	17,565,667			17,550,547			17.451354			17,085,752			17,161,783

(1)  The prices shown are as reported on the NASDAQ Capital Market

ASSET QUALITY DATA
	September 30, 2016			June 30, 2016			March 31, 2016			December 31, 2015			September 30,2015
(Dollars in thousands)(Unaudited)
Loans identified as nonperforming	$	8,385		$	2,622		$	2,146		$	1,411		$	3,117
Other nonperforming loans	91			—			—			67			55
Total nonperforming loans	8,476			2,622			2,146			1,478			3,172
Foreclosed assets	725			2,211			5,231			5,487			4,109
Total nonperforming assets	$	9,201		$	4,833		$	7,377		$	6,965		$	7,281
Allowance for loan losses	$	12,284		$	12,044		$	11,335		$	11,741		$	11,753
Nonperforming assets to total assets	0.74		%	0.43		%	0.70		%	0.67		%	0.71		%
Nonperforming loans to total assets	0.68		%	0.23		%	0.20		%	0.14		%	0.31		%
Allowance for loan losses to nonperforming loans	144.93		%	459.34		%	528.19		%	794.38		%	370.52		%

ALLOWANCE FOR LOAN LOSSES ROLLFORWARD
(Dollars in thousands)(Unaudited)	Three months ended,
	September 30, 2016			June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015
Beginning balance	$	12,044		$	11,335		$	11,741		$	11,753		$	12,420
Charge-offs	340			193			506			133			654
Recoveries	197			402			100			636			800
Net charge-offs	143			(209		)	406			(503		)	(146		)
Provision for loan losses	383			500			—			(515		)	(813		)
Ending balance	$	12,284		$	12,044		$	11,335		$	11,741		$	11,753
Net charge-offs	$	143		$	(209	)	$	406		$	(503	)	$	(146	)
Net chargeoff percentage annualized	0.06		%	(0.11		)%	0.21		%	(0.26		)%	(0.08		)%

OTHER DATA
(Unaudited)
	Three months ended,
	September 30, 2016		June 30, 2016		March 31, 2016		December 31, 2015		September 30, 2015
Return on average assets	1.36	%	0.84	%	0.78	%	1.11	%	1.17	%
Return on average equity	14.50	%	8.36	%	7.68	%	11.48	%	12.01	%
Net interest margin	3.44	%	3.39	%	3.36	%	3.29	%	3.31	%
Average loans to assets	75.50	%	76.55	%	73.63	%	72.12	%	72.37	%
Average loans to deposits	90.92	%	94.16	%	88.00	%	85.95	%	86.63	%
Average noninterest bearing deposits to total deposits	22.51	%	22.75	%	23.35	%	23.45	%	20.79	%
COMPANY CAPITAL RATIOS
(Unaudited)	September 30, 2016		June 30, 2016		March 31, 2016		December 31, 2015		September 30, 2015
Tier 1 leverage ratio	9.15	%	9.77	%	9.72	%	9.36	%	9.39	%
Common equity tier 1 capital ratio	10.84	%	11.26	%	11.94	%	11.62	%	11.57	%
Tier 1 capital ratio	10.84	%	11.26	%	11.94	%	11.62	%	11.57	%
Total capital ratio	13.52	%	14.14	%	14.99	%	14.69	%	14.71	%
Tangible common equity to tangible assets	9.24	%	10.47	%	10.26	%	10.07	%	10.07	%

NON-GAAP MEASURES
Pre-tax pre-provision core income (1)
(In thousands)(Unaudited)
	For the three months ended,
	September 30, 2016			June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015
Pre-tax net income	$	5,154		$	3,323		$	2,917		$	4,396		$	4,418
Provision for loan losses	383			500			—			(515		)	(813		)
Gain on sale of securities	(14		)	(603		)	—			(212		)	(251		)
Merger related expenses included in professional fees	24			26			100			—			—
Merger related expenses included in data processing fees	363			410			—			—			—
Severances paid in relation to the merger	92			—			—			—			—
Stock options included in other expense	164
Bargain purchase option	(1,920		)	—			—			—			—
Losses (gain) on sale and writedowns of foreclosed assets, net	1			31			16			109			58
Foreclosed assets expense, net of rental income	(99		)	60			53			50			(61		)
Pre-tax pre-provision core income	$	4,148		$	3,747		$	3,086		$	3,828		$	3,351

(1) This is a non-GAAP financial measure.  In compliance with applicable rules of the Securities and Exchange Commission, this non-GAAP measure is reconciled to pre-tax net income, which is the most directly comparable GAAP financial measure.  The Company’s management believes the presentation of pre-tax pre-provision core income provides investors with a greater understanding of the Company’s operating results, in addition to the results measured in accordance with GAAP.

Contact: Glen L. Stiteley, Chief Financial Officer - (815) 725-1885