Aquesta Financial Holdings, Inc Announces Record Earnings and Excellent Growth for the Third Quarter of 2016

CORNELIUS, N.C., Oct. 25, 2016 -- Aquesta Financial Holdings, Inc and subsidiaries – including its primary subsidiary Aquesta Bank (“Aquesta”) (OTC Market:AQFH) announced today record earnings and excellent loan growth for the third quarter of 2016 (three month period ending September 30, 2016). For the third quarter, Aquesta had unaudited net income of $635,000 (21 cents per share) compared to third quarter of 2015 net income of $507,000 (17 cents per share).

Jim Engel, CEO & President of Aquesta said, “I’m very happy to announce continued excellent earnings combined with excellent loan growth. Our strategy of investing in our people and our commitment to providing the very best banking services are allowing Aquesta to capture both increased market share and profitability.”

Key Highlights

Excellent loan and deposit growth of over 30% annualized
Solid asset quality
Earnings growth for current quarter over prior year quarter of over 30 %
Combined offices of the Wilmington insurance office into the Wilmington bank branch. Grand opening on November 5^th

Excellent Balance Sheet Growth

At September 30, 2016, Aquesta’s total assets were $346.5 million compared to $293.1 million at December 31, 2015. This represents an annualized increase of 24%. Total loans were $240.1 million at September 30, 2016 compared to $195.6 million at December 31, 2015 or a 30% annualized increase. Core deposits were $183.9 million at September 30, 2016 compared to $147.4 million at December 31, 2015 or an annualized increase of 33%.

Strong Asset Quality

Asset quality remains very strong. Nonperforming assets decreased to $1.8 million as of September 30, 2016 as compared to $2.3 million at June 31, 2016. Other real estate owned (i.e., foreclosed property) was $1.7 million at September 30, 2016.

Net Interest Income
Net interest income was $2.9 million as of September 30, 2016 compared to $2.6 million as of September 30, 2015. This is an increase of $304 thousand or 12%. The increase in net interest income continues to be directly associated with the Company’s loan growth over the past year.

Non Interest Expense

Non-interest expense was $3.2 million for the third quarter of 2016 compared to $2.8 million for the third quarter of 2015. The increase in expense was due to the additional personnel and occupancy cost associated with the addition of two new branches.

Personnel expense was at $2.0 million for the third quarter of 2016 compared to $1.6 million for the third quarter of 2015.

Occupancy expense increased $56 thousand for the third quarter of 2016 compared to the second quarter of 2016. This was mainly due to the addition of the SouthPark and Wilmington branches. Aquesta had losses on OREO of $35 thousand as compared to no OREO losses for the third quarter of 2015. The losses recognized during the third quarter 2016 were due to the sale of a piece of OREO property.

Below are the following financial highlights for comparison:

Aquesta Financial Holdings, Inc.
Select Financial Highlights
(Dollars in thousands, except per share data)

		09/30/16		12/31/15
		(unaudited)		(audited)
Period End Balance Sheet Data:
Loans	$	240,057	$	195,638
Allowance for loan and lease losses		2,564		2,561
Investment securities		70,236		65,275
Goodwill		687		687
Insurance agency intangible		1,851		1,067
Total assets		346,542		293,065
Core deposits		183,892		147,435
CDs and IRAs		63,858		64,458
Shareholders equity		25,500		23,461

Ending shares outstanding		3,075,852		3,048,170
Book value per share		8.29		7.70
Tangible book value per share		7.46		7.12

		For the three months ended				For the nine months ended
		09/30/16		09/30/15		09/30/16		09/30/15
		(unaudited)		(audited)		(unaudited)		(audited)
Income and Per Share Data:
Interest income	$	3,424	$	2,899	$	9,555	$	8,319
Interest expense		569		348		1,479		1,063
Net interest income		2,855		2,551		8,076		7,256
Provision for loan losses		156		50		196		186
Net interest income after provision for loan losses		2,699		2,501		7,880		7,070
Non interest income		1,447		1,044		3,938		2,974
Non interest expense		3,170		2,755		9,331		7,511
Income before income taxes		976		790		2,487		2,533
Income tax expense		341		283		861		935
Net income	$	635	$	507	$	1,626	$	1,598

Earnings per share - basic	$	0.21	$	0.17	$	0.53	$	0.52
Earnings per share - diluted		0.20		0.16		0.51		0.51
Weighted average shares - basic		3,075,092		3,072,005		3,059,074		3,073,573
Weighted average shares - diluted		3,215,241		3,133,250		3,199,223		3,134,818

		09/30/16				12/31/15
		(unaudited)				(audited)
Select performance ratios:
Return on average assets			0.68	%			0.76	%
Return on average equity			8.86	%			8.75	%

Asset quality data:
90 days or more and accruing	$		-		$		-
Non accrual loans			122				-
Other real estate loans			1,689				900
Total non performing assets			1,811				900

Troubled debt restructurings	$		227		$		277

Non performing assets / total assets			0.52	%			0.31	%
Allowance for loan losses / total loans			1.07	%			1.31	%

Aquesta Financial Holdings, Inc. is the holding company to its wholly owned subsidiaries, Aquesta Bank and Aquesta Insurance Services, Inc. Aquesta Bank is a full service community bank headquartered in Cornelius, North Carolina about 20 miles north of Charlotte with 8 full service locations. Aquesta Insurance Services, Inc. offers property, casualty and health insurance products as an independent agency. Aquesta Financial Holdings Inc. common stock is publicly traded and is quoted on OTC under the symbol “AQFH”.

For additional information, please contact Kristin Couch (Executive Vice President and Chief Financial Officer) at 704-439-4343 or visit us online at www.aquesta.com.

Aquesta Financial Holdings, Inc Announces Record Earnings and Excellent Growth for the Third Quarter of 2016

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