Aquesta Bank : Financial Holdings, Inc. Announces Results of Operations for Fourth Quarter 2017

PRESS RELEASE

______________________________________________________________________________ FOR IMMEDIATE RELEASE:

Aquesta Financial Holdings, Inc Announces Results of Operations for the

Fourth Quarter of 2017

CORNELIUS, NC - January 26, 2018 -- Aquesta Financial Holdings, Inc and subsidiaries ("Aquesta") (OTC Market symbol AQFH) - including its primary subsidiary Aquesta Bank announced today excellent earnings and loan growth for the fourth quarter of 2017 (three month period ending December 31, 2017). For the fourth quarter of 2017, Aquesta had unaudited net income of $204,000 (6 cents per share) compared to fourth quarter of 2016 net income of $529,000 (16 cents per share). For the twelve months ended December 31, 2017 net income was $1.9 million (58 cents per share) compared to the twelve months ended December 31, 2016 of $2.2 million (69 cents per share).

The decrease in Aquesta's 2017 net income was due to a one-time tax adjustment relating to The Tax Cuts and Jobs Act. Because of a change in tax rates, Aquesta booked a one-time decrease to its deferred tax asset and a corresponding increase of $404,000 to tax expense. The Tax Act lowered Aquesta's federal corporate tax rate from 34% to 21%, which should result in reduced taxes and higher earnings going forward. Net Income for the twelve months ended December 31, 2017 excluding this one-time adjustment was $2.3 million, a new record for Aquesta earnings.

Jim Engel, CEO & President of Aquesta said, "I am pleased to announce continued excellent earnings excluding a one-time charge combined with excellent growth for the year. Our almost 22 percent loan growth for the year reflects positively on our people and our strategy. While this quarter's net income was negatively impacted by the accounting adjustment resulting from Tax Reform, we believe the reduced tax expense going forward will quickly repay the adjustment. "

Key Highlights

• • Loan growth of $54.5 million for the twelve months ended December 31, 2017 or 21.7 percent

• • Core deposit growth of $38.6 million for the twelve months ended December 31, 2017 or 18.8 percent

• • Continued solid asset quality with low nonperforming loans and no foreclosed property

• • Paid the fifth annual consecutive cash dividend to shareholders

• • Purchase of the assets of Paladin Insurance Group, LLC located in Murrells Inlet, SC

• • Expanded Aquesta's South Carolina presence into the Charleston market

Solid Balance Sheet Growth

At December 31, 2017, Aquesta's total assets were $408.6 million compared to $353.1 million at December 31, 2016. Total loans were $305.3 million at December 31, 2017 compared to $250.8 million at December 31, 2016. Core deposits were $243.9 million at December 31, 2017 compared to $205.3 million at December 31, 2016.

Strong Asset Quality

Asset quality remains very strong. Nonperforming assets as of December 31, 2017 were at $27 thousand compared to $1.7 million as of December 31, 2016 Aquesta had $27 thousand in nonaccrual loans as ofDecember 31, 2017 compared to $122 thousand in nonaccrual loans as of December 31, 2016. Aquesta had no foreclosed property at the end of 2017 compared to $1.5 million at the end of 2016.

Net Interest Income

Net interest income was $12.6 million for the twelve months ended December 31, 2017 compared to $11.0 million for the twelve months ended December 31, 2016. This is an increase of $1.6 million or 14.1%. The increase in net interest income continues to be directly associated with Aquesta's continued loan growth.

Non Interest Income

Non interest income was $3.8 million for the twelve months ended December 31, 2017 compared to $5.2 million for the twelve months ended December 31, 2016. This decrease is primarily due to reduced gains on sales of investment securities and SBA loans.

Non Interest Expense

Non interest expense was $12.6 million for the twelve months ended December 31, 2017 compared to $12.6 million for the twelve months ended December 31, 2016. Non interest expense stayed consistent even as Aquesta continues to expand. Personnel expense was at $8.0 million for the twelve months ended December 31, 2017 compared to $7.8 million for the twelve months ended December 31, 2016.

Occupancy expense decreased by $82 thousand for the twelve months ended December 31, 2017 compared to the twelve months ending December 31, 2016. The decrease in occupancy expense was due to the consolidation of the Wilmington bank branch and insurance agency offices. Aquesta had $60 thousand in OREO losses for the twelve months ended December 31, 2017 as compared to $243 thousand for the twelve months ending December 31, 2016.

Below are the following financial highlights for comparison:

Aquesta Financial Holdings, Inc.

Select Financial Highlights

(Dollars in thousands, except per share data)

12/31/17 (unaudited)

12/31/16 (audited)

Period End Balance Sheet Data: Loans

$

305,319 $ 250,808

Allowance for loan and lease losses Investment securities

2,817 2,650

61,911 65,137

Goodwill

895 687

Insurance agency intangible

1,678 1,752

Total assets 408,642 353,108

Core deposits 243,906 205,302

CDs and IRAs Shareholders equity

61,183 64,004 29,772 27,203

Ending shares outstanding Book value per share Tangible book value per share

3,310,633

3,280,314

8.99 8.29

8.22 7.55

For the three months endedFor the twelve months ended

12/31/17 (unaudited)

12/31/16 (audited)

12/31/17 (unaudited)

12/31/16 (audited)

Income and Per Share Data: Interest income

$

4,190 $

3,482

$

15,212 $ 13,037

Interest expense Net interest income Provision for loan losses Net interest income after provision for loan losses Non interest income

821

545

2,644 2,024

3,369

2,937

-

64

3,369

2,873

12,568 170 12,398

11,013 260 10,753

916

1,176

3,759 5,175

Non interest expense Income before income taxes

3,229

3,254

12,638 12,645

1,056

795

Income tax expense DTA writedown Income tax expense

404

-

448

266

3,519 404 1,211

3,283 - 1,127

Net income

$ $

204

529

$ $

1,904

2,156

Earnings per share - basic Earnings per share - diluted Weighted average shares - basic Weighted average shares - diluted

$

0.06 0.06 3,310,599 3,574,24112/31/17 (unaudited)

$

• 0.16 $ 0.16 3,231,591 3,406,84612/31/16 (audited)

0.58 $ 0.69

0.54 0.66

• 3,303,607 3,110,909

• 3,528,915 3,286,164

Select performance ratios: Return on average assets Return on average equity

0.50% 0.67%

6.68% 8.49%

Asset quality data: 90 days or more and accruing Non accrual loans

$

Other real estate loans Total non performing assets

- 27 - 27

$

- 122 1,539 1,661

Troubled debt restructurings

$

55 $ 293

Non performing assets / total assets Allowance for loan losses / total loans

0.01% 0.48%

0.92% 1.06%

Aquesta Financial Holdings, Inc. is the holding company to its wholly owned subsidiary, Aquesta Bank. Aquesta Bank is a fullservice community bank headquartered in Cornelius, North Carolina with seven branches in the Charlotte, Lake Norman and Wilmington areas and loan production offices in Greenville and Charleston, South Carolina. In addition, Aquesta offers property, casualty and health insurance products through its wholly owned subsidiary, Aquesta Insurance Services, Inc. an independent agency.

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

Information in this press release may contain forward looking statements that might involve risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include without limitation, the effects of future economic conditions, governmental fiscal and monetary policies, legislative and regulatory changes, and changes in interest rates.