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Equity Bancshares, Inc. Reports Third Quarter Results; Including Net Interest Margin Growth Driven by Core Deposit Base
المصدر: Nasdaq GlobeNewswire / 17 أكتوبر 2023 15:46:58 America/Chicago
WICHITA, Kan., Oct. 17, 2023 (GLOBE NEWSWIRE) -- Equity Bancshares, Inc. (NYSE: EQBK), (“Equity”, “the Company”, “we,” “us,” “our”), the Wichita-based holding company of Equity Bank, reported net income of $12.3 million and $0.80 earnings per diluted share for the quarter ended September 30, 2023.
“Our Company's success is in large part due to our ability to adapt on behalf of our customers and teams no matter the banking environment. I’m pleased at our team’s ability to deliver unparalleled support and service to our customer base,” said Brad S. Elliott, Chairman and CEO of Equity. “Value creation is crucial for regional banks, and our ability to deliver sophisticated and customized solutions helps build our Company’s organic growth, sustainability, and competitive advantage.”
"During the third quarter our team continued to emphasize credit quality while meeting the needs of our customer base." Mr. Elliott said. "Our classified asset ratio is as low as it has ever been, while both capital and on balance sheet reserves remain high positioning Equity to be strategic as we assess both organic and acquisitive growth opportunities."
Notable Items:
- During the quarter, the Company realized linked period Net Interest Margin growth of 13 basis points, and Net Interest Income growth of $1.6 million.
- Pre-tax, pre-provision net income for the quarter was $15.5 million up $2.3 million linked quarter driven by growth in both net interest income and non-interest income.
- The Company continued to emphasize investor returns through share repurchase and quarterly dividends. The Company’s Board authorized a 20% increase in quarterly dividend to $0.12 per share, and authorized the repurchase of up to 1 million shares. During the quarter, the Company received non-objection from the Federal Reserve Bank of Kansas City related to the repurchase plan.
- Classified loans as a percentage of total risk-based capital at Equity Bank were 6.3%, down from 7.9% as of June 30, 2023, and 10.0% as of December 31, 2022.
During the third quarter, Equity announced two internal promotions to its executive management team. Chris Navratil was promoted to Chief Financial Officer and Krzysztof Slupkowski was promoted to Chief Credit Officer.
Financial Results for the Quarter Ended September 30, 2023
Net income allocable to common stockholders was $12.3 million, or $0.80 per diluted share, for the three months ended September 30, 2023, as compared to $11.5 million, or $0.74 per diluted share, for the three months ended June 30, 2023. The increase during the quarter was primarily driven by increases in interest income of $3.8 million and non-interest income of $1.8 million, partially offset by increases in interest expense of $2.2 million and non-interest expense of $1.1 million.
Net Interest Income
Net interest income was $41.0 million for the three months ended September 30, 2023, as compared to $39.4 million for the three months ended June 30, 2023, an increase of $1.6 million, or 4.01%. Net interest margin improved to 3.51% from 3.38% as the yield on interest-earning assets increased 32 basis points to 5.57% and the cost of interest-bearing deposits increased 26 basis points to 2.40%
The Company maintained an enhanced liquidity position in response to the first quarter market disruption by adding on-balance sheet cash, resulting in an adverse impact to net interest margin due to the increase in average earning assets and negligible impact to net interest income.
Average interest-bearing deposits declined slightly during the quarter and the Company continued to experience compositional shift from noninterest-bearing deposits into interest-bearing categories. At September 30, 2023, non-interest-bearing deposits declined $42.8 million from June 30, 2023 and $280.9 million from September 30, 2022. The majority of the decline over the last 12 months is due to deposits migrating to interest-bearing deposit accounts.
Provision for Credit Losses
During the three months ended September 30, 2023, there was a provision of $1.2 million compared to a provision of $298 thousand in the previous quarter. The provision for the quarter is the result of extended duration within the portfolio as well as realized charge-offs; however, overall we continue to experience positive credit trends. The Company continues to estimate the allowance for credit loss with assumptions that anticipate slower prepayments rates and continued market disruption caused by elevated inflation, supply chain issues and the impact of monetary policy on consumers and businesses. For the three months ended September 30, 2023, we had net charge-offs of $1.6 million as compared to $857 thousand for the three months ended June 30, 2023.
Non-Interest Income
Total non-interest income was $8.7 million for the three months ended September 30, 2023, as compared to $7.0 million for the three months ended June 30, 2023, or an increase of 25.7%, quarter-over-quarter. The $1.8 million increase was primarily due to a decrease in losses on sales of available-for-sale securities of $1.3 million and an increase in other non-interest income of $439 thousand which was driven by increased insurance commission revenue.
Non-Interest Expense
Total non-interest expense for the quarter ended September 30, 2023, was $34.2 million as compared to $33.1 million for the quarter ended June 30, 2023, an increase of $1.1 million. The comparative increase was primarily due to salary and employee benefit expenses as the Company benefited from compensation reversals in the previous quarter which did not repeat.
Income Tax Expense
At September 30, 2023, the effective tax rate for the quarter was 13.5% as compared to 11.5% at June 30, 2023. The year-to-date tax rate is 14.1%. The increase in rate linked quarter is associated with the cumulative increase in federal and state tax benefits related to the implementation of tax planning initiatives taken in the second quarter versus the normal quarterly recognition of these tax planning initiatives taken in the third quarter offset by a return to provision adjustment related to the federal income tax return when taken as a percentage of pre-tax income. These initiatives were anticipated and incorporated in our forecasted full year estimated effective tax rate at June 30, 2023.
Loans, Total Assets and Funding
Loans held for investment were $3.28 billion at September 30, 2023, decreasing $40.6 million compared to the previous quarter. Excluding the impact of PPP loans, balances have increased $32.9 million, or 1.0% year-over-year. Included in the annual growth, is $49.3 million within the commercial and industrial and commercial real estate portfolios, or 2.9%. Total assets were $4.95 billion as of September 30, 2023 decreasing $149.6 million or 2.9% from June 30, 2023.
Total deposits were $4.08 billion at September 30, 2023, decreasing $148.8 million from the previous quarter end and decreasing $144.4 million from the same period end in 2022. During the third quarter, the Company reduced its brokered deposits by $50.0 million; improving the overall mix of the deposit portfolio during the third quarter. In addition to the payoff of brokered funding, the Company also realized seasonal declines in our municipal deposit portfolio accounting for the remaining negative trend linked quarter. Of the total deposit balance, non-interest-bearing accounts comprise approximately 23.6%. Advances from the FHLB and borrowings from the Federal Reserve's Bank Term Funding Program remained unchanged from June 30, 2023.
Asset Quality
As of September 30, 2023, Equity’s allowance for credit losses to total loans remained materially consistent at 1.3% as compared to June 30, 2023. Nonperforming assets were $20.5 million as of September 30, 2023, or 0.4% of total assets, compared to $15.7 million at June 30, 2023, or 0.3% of total assets. Non-accrual loans were $19.4 million at September 30, 2023, as compared to $15.0 million at June 30, 2023. Total classified assets, including loans rated special mention or worse, other real estate owned, excluding previous branch locations, and other repossessed assets were $37.6 million, or 6.3% of regulatory capital, down from $47.1 million, or 7.9% of regulatory capital as of June 30, 2023.
Capital
Quarter over quarter, book and tangible capital as well as book and tangible capital per share were essentially flat. Dividends paid and increase in the unrealized loss position in our investment portfolio of $13.3 million, partially offset by unrealized gains on cash-flow derivatives of $1.5 million, were materially offset by net income in the period.
The Company’s ratio of common equity tier 1 capital to risk-weighted assets was 12.7%, the total capital to risk-weighted assets was 16.4% and the total leverage ratio was 9.8% at September 30, 2023. At June 30, 2023, the Company’s common equity tier 1 capital to risk-weighted assets ratio was 12.2%, the total capital to risk-weighted assets ratio was 16.0% and the total leverage ratio was 9.5%.
The Company’s subsidiary, Equity Bank, had a ratio of common equity tier 1 capital to risk-weighted assets of 14.7%, a ratio of total capital to risk-weighted assets of 15.9% and a total leverage ratio of 10.8% at September 30, 2023. At June 30, 2023, Equity Bank’s ratio of common equity tier 1 capital to risk-weighted assets was 14.3%, the ratio of total capital to risk-weighted assets was 15.5% and the total leverage ratio was 10.7%.
Non-GAAP Financial Measures
In addition to evaluating the Company’s results of operations in accordance with accounting principles generally accepted in the United States of America (“GAAP”), management periodically supplements this evaluation with an analysis of certain non-GAAP financial measures that are intended to provide the reader with additional perspectives on operating results, financial condition and performance trends, while facilitating comparisons with the performance of other financial institutions. Non-GAAP financial measures are not a substitute for GAAP measures, rather, they should be read and used in conjunction with the Company’s GAAP financial information.
The efficiency ratio is a common comparable metric used by banks to understand the expense structure relative to total revenue. In other words, for every dollar of total revenue recognized, how much of that dollar is expended. To improve the comparability of the ratio to our peers, non-core items are excluded. To improve transparency and acknowledging that banks are not consistent in their definition of the efficiency ratio, we include our calculation of this non-GAAP measure.
Return on average assets before income tax provision and provision for loan losses is a measure that the Company uses to understand fundamental operating performance before these expenses. Used as a ratio relative to average assets, we believe it demonstrates “core” performance and can be viewed as an alternative measure of how efficiently the Company services its asset base. Used as a ratio relative to average equity, it can function as an alternative measure of the Company’s earnings performance in relationship to its equity.
Tangible common equity and related measures are non-GAAP financial measures that exclude the impact of intangible assets, net of deferred taxes, and their related amortization. These financial measures are useful for evaluating the performance of a business consistently, whether acquired or developed internally. Return on average tangible common equity is used by management and readers of our financial statements to understand how efficiently the Company is deploying its common equity. Companies that are able to demonstrate more efficient use of common equity are more likely to be viewed favorably by current and prospective investors.
The Company believes that disclosing these non-GAAP financial measures is both useful internally and is expected by our investors and analysts in order to understand the overall performance of the Company. Other companies may calculate and define their non-GAAP financial measures and supplemental data differently. A reconciliation of GAAP financial measures to non-GAAP measures and other performance ratios, as adjusted, are included in Table 6 in the following press release tables.
Conference Call and Webcast
Equity’s Chairman and Chief Executive Officer, Brad Elliott, and Chief Financial Officer, Chris Navratil, will hold a conference call and webcast to discuss third quarter results on Wednesday, October 18, 2023, at 10 a.m. eastern time or 9 a.m. central time.
A live webcast of the call will be available on the Company’s website at investor.equitybank.com. To access the call by phone, please go to this registration link, and you will be provided with dial in details. Investors, news media, and other participants are encouraged to dial into the conference call ten minutes ahead of the scheduled start time.
A replay of the call and webcast will be available two hours following the close of the call until October 25, 2023, accessible at investor.equitybank.com.
About Equity Bancshares, Inc.
Equity Bancshares, Inc. is the holding company for Equity Bank, offering a full range of financial solutions, including commercial loans, consumer banking, mortgage loans, trust and wealth management services and treasury management services, while delivering the high-quality, relationship-based customer service of a community bank. Equity’s common stock is traded on the NYSE National, Inc. under the symbol “EQBK.” Learn more at www.equitybank.com.Special Note Concerning Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements reflect the current views of Equity’s management with respect to, among other things, future events and Equity’s financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “project,” “positioned,” “forecast,” “goal,” “target,” “would” and “outlook,” or the negative variations of those words or other comparable words of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about Equity’s industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond Equity’s control. Accordingly, Equity cautions you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although Equity believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. Factors that could cause actual results to differ materially from Equity’s expectations include COVID-19 related impacts; competition from other financial institutions and bank holding companies; the effects of and changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board; changes in the demand for loans; fluctuations in value of collateral and loan reserves; inflation, interest rate, market and monetary fluctuations; changes in consumer spending, borrowing and savings habits; and acquisitions and integration of acquired businesses; and similar variables. The foregoing list of factors is not exhaustive.
For discussion of these and other risks that may cause actual results to differ from expectations, please refer to “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in Equity’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 9, 2023, and any updates to those risk factors set forth in Equity’s subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K. If one or more events related to these or other risks or uncertainties materialize, or if Equity’s underlying assumptions prove to be incorrect, actual results may differ materially from what Equity anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and Equity does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law. New risks and uncertainties arise from time to time and it is not possible for us to predict those events or how they may affect us. In addition, Equity cannot assess the impact of each factor on Equity’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements, expressed or implied, included in this press release are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that Equity or persons acting on Equity’s behalf may issue.
Investor Contact:
Brian J. Katzfey
VP, Director of Corporate Development and Investor Relations
Equity Bank
(316) 858-3128
bkatzfey@equitybank.comMedia Contact:
John J. Hanley
SVP, Senior Director of Marketing
Equity Bancshares, Inc.
(913) 583-8004
jhanley@equitybank.com
Unaudited Financial Tables- Table 1. Consolidated Statements of Income
- Table 2. Quarterly Consolidated Statements of Income
- Table 3. Consolidated Balance Sheets
- Table 4. Selected Financial Highlights
- Table 5. Year-To-Date Net Interest Income Analysis
- Table 6. Quarter-To-Date Net Interest Income Analysis
- Table 7. Quarter-Over-Quarter Net Interest Income Analysis
- Table 8. Non-GAAP Financial Measures
TABLE 1. CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except per share data)Three months ended
September 30,Nine months ended
September 30,2023 2022 2023 2022 Interest and dividend income Loans, including fees $ 55,152 $ 41,555 $ 156,281 $ 114,710 Securities, taxable 5,696 5,792 17,456 16,767 Securities, nontaxable 369 687 1,606 2,020 Federal funds sold and other 3,822 514 7,075 1,327 Total interest and dividend income 65,039 48,548 182,418 134,824 Interest expense Deposits 19,374 4,403 50,399 8,308 Federal funds purchased and retail repurchase agreements 246 71 633 150 Federal Home Loan Bank advances 968 409 2,939 594 Federal Reserve Bank borrowings 1,546 — 3,209 — Subordinated debt 1,893 1,721 5,687 4,973 Total interest expense 24,027 6,604 62,867 14,025 Net interest income 41,012 41,944 119,551 120,799 Provision (reversal) for credit losses 1,230 (136 ) 1,162 276 Net interest income after provision (reversal) for credit losses 39,782 42,080 118,389 120,523 Non-interest income Service charges and fees 2,690 2,788 7,888 7,927 Debit card income 2,591 2,682 7,798 8,120 Mortgage banking 226 310 527 1,300 Increase in value of bank-owned life insurance 794 754 3,134 2,355 Net gain on acquisition and branch sales — — — 540 Net gains (losses) from securities transactions (1 ) (17 ) (1,291 ) (9 ) Other 2,435 2,452 6,229 7,395 Total non-interest income 8,735 8,969 24,285 27,628 Non-interest expense Salaries and employee benefits 15,857 15,442 47,786 45,893 Net occupancy and equipment 3,262 3,127 9,081 9,304 Data processing 4,553 4,138 12,962 11,549 Professional fees 1,312 1,265 4,341 3,547 Advertising and business development 1,419 1,191 3,827 3,139 Telecommunications 502 487 1,503 1,399 FDIC insurance 660 340 1,535 780 Courier and postage 548 436 1,469 1,348 Free nationwide ATM cost 516 551 1,565 1,593 Amortization of core deposit intangibles 799 957 2,635 3,118 Loan expense 132 174 385 566 Other real estate owned 128 188 318 201 Merger expenses — 115 — 526 Other 4,556 3,825 13,196 10,168 Total non-interest expense 34,244 32,236 100,603 93,131 Income (loss) before income tax 14,273 18,813 42,071 55,020 Provision for income taxes 1,932 3,642 5,951 8,940 Net income (loss) and net income (loss) allocable to common stockholders $ 12,341 $ 15,171 $ 36,120 $ 46,080 Basic earnings (loss) per share $ 0.80 $ 0.94 $ 2.32 $ 2.83 Diluted earnings (loss) per share $ 0.80 $ 0.93 $ 2.30 $ 2.79 Weighted average common shares 15,404,992 16,056,658 15,575,731 16,303,586 Weighted average diluted common shares 15,507,172 16,273,231 15,692,305 16,516,787 TABLE 2. QUARTERLY CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in thousands, except per share data) As of and for the three months ended September 30,
2023June 30,
2023March 31,
2023December 31,
2022September 30,
2022Interest and dividend income Loans, including fees $ 55,152 $ 52,748 $ 48,381 $ 46,149 $ 41,555 Securities, taxable 5,696 5,813 5,947 5,946 5,792 Securities, nontaxable 369 568 669 678 687 Federal funds sold and other 3,822 2,127 1,126 651 514 Total interest and dividend income 65,039 61,256 56,123 53,424 48,548 Interest expense Deposits 19,374 17,204 13,821 8,013 4,403 Federal funds purchased and retail repurchase agreements 246 192 195 82 71 Federal Home Loan Bank advances 968 953 1,018 1,500 409 Federal Reserve Bank borrowings 1,546 1,528 135 — — Subordinated debt 1,893 1,950 1,844 1,798 1,721 Total interest expense 24,027 21,827 17,013 11,393 6,604 Net interest income 41,012 39,429 39,110 42,031 41,944 Provision (reversal) for credit losses 1,230 298 (366 ) (151 ) (136 ) Net interest income after provision (reversal) for credit losses 39,782 39,131 39,476 42,182 42,080 Non-interest income Service charges and fees 2,690 2,653 2,545 2,705 2,788 Debit card income 2,591 2,653 2,554 2,557 2,682 Mortgage banking 226 213 88 116 310 Increase in value of bank-owned life insurance 794 757 1,583 758 754 Net gain on acquisition and branch sales — — — 422 — Net gains (losses) from securities transactions (1 ) (1,322 ) 32 14 (17 ) Other 2,435 1,996 1,798 1,757 2,452 Total non-interest income 8,735 6,950 8,600 8,329 8,969 Non-interest expense Salaries and employee benefits 15,857 15,237 16,692 16,113 15,442 Net occupancy and equipment 3,262 2,940 2,879 2,919 3,127 Data processing 4,553 4,493 3,916 4,334 4,138 Professional fees 1,312 1,645 1,384 1,404 1,265 Advertising and business development 1,419 1,249 1,159 1,903 1,191 Telecommunications 502 516 485 517 487 FDIC insurance 660 515 360 360 340 Courier and postage 548 463 458 533 436 Free nationwide ATM cost 516 524 525 510 551 Amortization of core deposit intangibles 799 918 918 924 957 Loan expense 132 136 117 262 174 Other real estate owned 128 71 119 388 188 Merger expenses — — — 68 115 Other 4,556 4,423 4,217 5,014 3,825 Total non-interest expense 34,244 33,130 33,229 35,249 32,236 Income (loss) before income tax 14,273 12,951 14,847 15,262 18,813 Provision for income taxes (benefit) 1,932 1,495 2,524 3,654 3,642 Net income (loss) and net income (loss) allocable to common stockholders $ 12,341 $ 11,456 $ 12,323 $ 11,608 $ 15,171 Basic earnings (loss) per share $ 0.80 $ 0.74 $ 0.78 $ 0.73 $ 0.94 Diluted earnings (loss) per share $ 0.80 $ 0.74 $ 0.77 $ 0.72 $ 0.93 Weighted average common shares 15,404,992 15,468,378 15,858,808 15,948,360 16,056,658 Weighted average diluted common shares 15,507,172 15,554,255 16,028,051 16,204,185 16,273,231 TABLE 3. CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in thousands)September 30,
2023June 30,
2023March 31,
2023December 31,
2022September 30,
2022ASSETS Cash and due from banks $ 183,404 $ 262,604 $ 249,982 $ 104,013 $ 155,039 Federal funds sold 15,613 15,495 384 415 374 Cash and cash equivalents 199,017 278,099 250,366 104,428 155,413 Available-for-sale securities 1,057,009 1,094,748 1,183,247 1,184,390 1,198,962 Held-to-maturity securities 2,212 2,216 1,944 1,948 — Loans held for sale 627 2,456 648 349 1,518 Loans, net of allowance for credit losses(1) 3,237,932 3,278,126 3,285,515 3,265,701 3,208,524 Other real estate owned, net 3,369 4,362 4,171 4,409 10,412 Premises and equipment, net 110,271 106,186 104,789 101,492 100,566 Bank-owned life insurance 124,245 123,451 122,971 123,176 122,418 Federal Reserve Bank and Federal Home Loan Bank stock 20,780 21,129 33,359 21,695 24,428 Interest receivable 23,621 21,360 20,461 20,630 18,497 Goodwill 53,101 53,101 53,101 53,101 53,101 Core deposit intangibles, net 7,961 8,760 9,678 10,596 11,598 Other 105,122 100,889 86,466 89,736 94,978 Total assets $ 4,945,267 $ 5,094,883 $ 5,156,716 $ 4,981,651 $ 5,000,415 LIABILITIES AND STOCKHOLDERS’ EQUITY Deposits Demand $ 936,217 $ 978,968 $ 1,012,671 $ 1,097,899 $ 1,217,094 Total non-interest-bearing deposits 936,217 978,968 1,012,671 1,097,899 1,217,094 Demand, savings and money market 2,397,003 2,397,524 2,334,463 2,329,584 2,335,847 Time 748,950 854,458 939,799 814,324 673,670 Total interest-bearing deposits 3,145,953 3,251,982 3,274,262 3,143,908 3,009,517 Total deposits 4,082,170 4,230,950 4,286,933 4,241,807 4,226,611 Federal funds purchased and retail repurchase agreements 39,701 44,770 45,098 46,478 47,443 Federal Home Loan Bank advances and Federal Reserve Bank borrowings 240,000 240,000 251,222 138,864 186,001 Subordinated debt 96,787 96,653 96,522 96,392 96,263 Contractual obligations 29,019 29,608 19,372 15,218 15,562 Interest payable and other liabilities 39,460 34,467 32,446 32,834 32,729 Total liabilities 4,527,137 4,676,448 4,731,593 4,571,593 4,604,609 Commitments and contingent liabilities Stockholders’ equity Common stock 207 207 206 205 204 Additional paid-in capital 488,137 487,225 486,658 484,989 482,668 Retained earnings 171,188 160,715 150,810 140,095 130,114 Accumulated other comprehensive income (loss), net of tax (122,047 ) (110,225 ) (101,238 ) (113,511 ) (120,918 ) Treasury stock (119,355 ) (119,487 ) (111,313 ) (101,720 ) (96,262 ) Total stockholders’ equity 418,130 418,435 425,123 410,058 395,806 Total liabilities and stockholders’ equity $ 4,945,267 $ 5,094,883 $ 5,156,716 $ 4,981,651 $ 5,000,415 (1) Allowance for credit losses $ 44,186 $ 44,544 $ 45,103 $ 45,847 $ 46,499 TABLE 4. SELECTED FINANCIAL HIGHLIGHTS (Unaudited) (Dollars in thousands, except per share data) As of and for the three months ended September 30, June 30, March 31, December 31, September 30, 2023 2023 2023 2022 2022 Loans Held For Investment by Type Commercial real estate $ 1,721,761 $ 1,764,460 $ 1,746,834 $ 1,721,269 $ 1,655,646 Commercial and industrial 585,129 583,664 605,576 594,862 607,722 Residential real estate 558,188 560,389 563,791 570,550 573,431 Agricultural real estate 205,865 202,317 202,274 199,189 200,415 Agricultural 103,352 104,510 106,169 120,003 115,048 Consumer 107,823 107,330 105,974 105,675 102,761 Total loans held-for-investment 3,282,118 3,322,670 3,330,618 3,311,548 3,255,023 Allowance for credit losses (44,186 ) (44,544 ) (45,103 ) (45,847 ) (46,499 ) Net loans held for investment $ 3,237,932 $ 3,278,126 $ 3,285,515 $ 3,265,701 $ 3,208,524 Asset Quality Ratios Allowance for credit losses on loans to total loans 1.35 % 1.34 % 1.35 % 1.38 % 1.43 % Past due or nonaccrual loans to total loans 1.03 % 0.78 % 0.66 % 0.72 % 0.94 % Nonperforming assets to total assets 0.41 % 0.31 % 0.33 % 0.37 % 0.59 % Nonperforming assets to total loans plus other real estate owned 0.62 % 0.47 % 0.51 % 0.55 % 0.91 % Classified assets to bank total regulatory capital 6.27 % 7.94 % 10.09 % 9.98 % 11.03 % Selected Average Balance Sheet Data (QTD Average) Investment securities $ 1,085,905 $ 1,155,971 $ 1,185,482 $ 1,184,452 $ 1,272,414 Total gross loans receivable 3,281,483 3,337,497 3,305,681 3,275,284 3,240,998 Interest-earning assets 4,635,384 4,678,744 4,611,019 4,538,177 4,602,568 Total assets 5,046,179 5,064,912 4,994,417 4,930,231 4,988,755 Interest-bearing deposits 3,206,300 3,226,965 3,235,557 3,032,902 3,081,245 Borrowings 385,125 385,504 247,932 299,191 221,514 Total interest-bearing liabilities 3,591,425 3,612,469 3,483,489 3,335,557 3,302,759 Total deposits 4,177,332 4,204,334 4,279,451 4,185,904 4,283,855 Total liabilities 4,619,919 4,640,050 4,573,917 4,531,961 4,552,564 Total stockholders' equity 426,260 424,862 420,500 398,270 436,191 Tangible common equity* 363,625 361,409 356,053 332,820 369,746 Performance ratios Return on average assets (ROAA) annualized 0.97 % 0.91 % 1.00 % 0.93 % 1.21 % Return on average assets before income tax and
provision for loan losses*1.22 % 1.05 % 1.18 % 1.22 % 1.49 % Return on average equity (ROAE) annualized 11.49 % 10.82 % 11.89 % 11.57 % 13.80 % Return on average equity before income tax and
provision for loan losses*14.43 % 12.51 % 13.97 % 15.05 % 16.99 % Return on average tangible common equity
(ROATCE) annualized*14.18 % 13.55 % 14.89 % 14.74 % 17.12 % Yield on loans annualized 6.67 % 6.34 % 5.94 % 5.59 % 5.09 % Cost of interest-bearing deposits annualized 2.40 % 2.14 % 1.73 % 1.05 % 0.57 % Cost of total deposits annualized 1.84 % 1.64 % 1.31 % 0.76 % 0.41 % Net interest margin annualized 3.51 % 3.38 % 3.44 % 3.67 % 3.62 % Efficiency ratio* 68.83 % 69.44 % 70.00 % 70.47 % 63.07 % Non-interest income / average assets 0.69 % 0.55 % 0.74 % 0.67 % 0.71 % Non-interest expense / average assets 2.69 % 2.62 % 2.74 % 2.84 % 2.56 % Capital Ratios Tier 1 Leverage Ratio 9.77 % 9.54 % 9.60 % 9.61 % 9.46 % Common Equity Tier 1 Capital Ratio 12.65 % 12.23 % 12.21 % 12.26 % 12.15 % Tier 1 Risk Based Capital Ratio 13.28 % 12.84 % 12.83 % 12.88 % 12.77 % Total Risk Based Capital Ratio 16.42 % 15.96 % 15.98 % 16.08 % 15.99 % Total stockholders' equity to total assets 8.46 % 8.21 % 8.24 % 8.23 % 7.92 % Tangible common equity to tangible assets* 7.29 % 7.06 % 7.09 % 7.02 % 6.68 % Dividend payout ratio 15.13 % 13.53 % 10.49 % 14.01 % 10.78 % Book value per common share $ 27.13 $ 27.18 $ 27.03 $ 25.74 $ 24.71 Tangible book value per common share* $ 23.09 $ 23.08 $ 22.96 $ 21.67 $ 20.59 Tangible book value per diluted common share* $ 22.96 $ 22.98 $ 22.83 $ 21.35 $ 20.33 * The value noted is considered a Non-GAAP financial measure. For a reconciliation of Non-GGAP financial measures, see Table 8. Non-GAAP Financial Measures. TABLE 5. YEAR-TO-DATE NET INTEREST INCOME ANALYSIS (Unaudited)
(Dollars in thousands)For nine months ended For nine months ended September 30, 2023 September 30, 2022 Average Outstanding Balance Interest Income/ Expense Average
Yield/Rate(3)(4)Average Outstanding Balance Interest Income/ Expense Average
Yield/Rate(3)(4)Interest-earning assets Loans (1) Commercial and industrial $ 580,359 $ 31,503 7.26 % $ 579,610 $ 22,994 5.30 % Commercial real estate 1,300,202 61,811 6.36 % 1,236,282 45,995 4.97 % Real estate construction 450,147 24,764 7.36 % 362,543 12,443 4.59 % Residential real estate 567,169 17,933 4.23 % 604,218 16,336 3.61 % Agricultural real estate 202,963 10,399 6.85 % 201,566 8,046 5.34 % Agricultural 100,450 5,039 6.71 % 132,485 5,254 5.30 % Consumer 106,841 4,832 6.05 % 101,341 3,642 4.80 % Total loans 3,308,131 156,281 6.32 % 3,218,045 114,710 4.77 % Securities Taxable securities 1,059,858 17,456 2.20 % 1,220,045 16,767 1.84 % Nontaxable securities 82,230 1,606 2.61 % 109,142 2,020 2.47 % Total securities 1,142,088 19,062 2.23 % 1,329,187 18,787 1.89 % Federal funds sold and other 191,585 7,075 4.94 % 116,997 1,327 1.52 % Total interest-earning assets $ 4,641,804 182,418 5.25 % $ 4,664,229 134,824 3.86 % Interest-bearing liabilities Demand, savings and money market deposits $ 2,365,972 32,288 1.82 % $ 2,480,113 5,461 0.29 % Time deposits 856,862 18,111 2.83 % 638,692 2,847 0.60 % Total interest-bearing deposits 3,222,834 50,399 2.09 % 3,118,805 8,308 0.36 % FHLB advances 97,014 2,939 4.05 % 54,100 594 1.47 % Other borrowings 243,007 9,529 5.24 % 152,682 5,123 4.49 % Total interest-bearing liabilities $ 3,562,855 62,867 2.36 % $ 3,325,587 14,025 0.56 % Net interest income $ 119,551 $ 120,799 Interest rate spread 2.89 % 3.30 % Net interest margin (2) 3.44 % 3.46 % (1) Average loan balances include nonaccrual loans. (2) Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets for the period. (3) Tax exempt income is not included in the above table on a tax-equivalent basis. (4) Actual unrounded values are used to calculate the reported yield or rate disclosed. Accordingly, recalculations using the amounts in thousands as disclosed in this report may not produce the same amounts. TABLE 6. QUARTER-TO-DATE NET INTEREST INCOME ANALYSIS (Unaudited)
(Dollars in thousands)For the three months ended For the three months ended September 30, 2023 September 30, 2022 Average Outstanding Balance Interest Income/ Expense Average
Yield/Rate(3)(4)Average Outstanding Balance Interest Income/ Expense Average
Yield/Rate(3)(4)Interest-earning assets Loans (1) Commercial and industrial $ 573,039 $ 10,984 7.60 % $ 575,149 $ 7,750 5.35 % Commercial real estate 1,253,362 20,824 6.59 % 1,307,244 18,023 5.47 % Real estate construction 480,355 9,838 8.13 % 360,579 4,847 5.33 % Residential real estate 564,138 6,085 4.28 % 582,938 5,464 3.72 % Agricultural real estate 203,399 3,898 7.60 % 200,534 2,740 5.42 % Agricultural 99,773 1,856 7.38 % 113,351 1,406 4.92 % Consumer 107,417 1,667 6.16 % 101,203 1,325 5.20 % Total loans 3,281,483 55,152 6.67 % 3,240,998 41,555 5.09 % Securities Taxable securities 1,027,889 5,696 2.20 % 1,164,697 5,792 1.97 % Nontaxable securities 58,016 369 2.52 % 107,717 687 2.53 % Total securities 1,085,905 6,065 2.22 % 1,272,414 6,479 2.02 % Federal funds sold and other 267,996 3,822 5.66 % 89,156 514 2.29 % Total interest-earning assets $ 4,635,384 65,039 5.57 % $ 4,602,568 48,548 4.18 % Interest-bearing liabilities Demand, savings and money market deposits $ 2,423,380 13,331 2.18 % $ 2,425,824 3,118 0.51 % Time deposits 782,920 6,043 3.06 % 655,421 1,285 0.78 % Total interest-bearing deposits 3,206,300 19,374 2.40 % 3,081,245 4,403 0.57 % FHLB advances 100,000 968 3.84 % 71,415 409 2.27 % Other borrowings 285,125 3,685 5.13 % 150,099 1,792 4.74 % Total interest-bearing liabilities $ 3,591,425 24,027 2.65 % $ 3,302,759 6,604 0.79 % Net interest income $ 41,012 $ 41,944 Interest rate spread 2.92 % 3.39 % Net interest margin (2) 3.51 % 3.62 % (1) Average loan balances include nonaccrual loans. (2) Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets for the period. (3) Tax exempt income is not included in the above table on a tax-equivalent basis. (4) Actual unrounded values are used to calculate the reported yield or rate disclosed. Accordingly, recalculations using the amounts in thousands as disclosed in this report may not produce the same amounts. TABLE 7. QUARTER-OVER-QUARTER NET INTEREST INCOME ANALYSIS (Unaudited)
(Dollars in thousands)For the three months ended For the three months ended September 30, 2023 June 30, 2023 Average Outstanding Balance Interest Income/ Expense Average
Yield/Rate(3)(4)Average Outstanding Balance Interest Income/ Expense Average
Yield/Rate(3)(4)Interest-earning assets Loans (1) Commercial and industrial $ 573,039 $ 10,984 7.60 % $ 590,634 $ 10,885 7.39 % Commercial real estate 1,253,362 20,824 6.59 % 1,303,520 20,875 6.42 % Real estate construction 480,355 9,838 8.13 % 465,231 8,231 7.10 % Residential real estate 564,138 6,085 4.28 % 567,297 6,048 4.28 % Agricultural real estate 203,399 3,898 7.60 % 202,584 3,387 6.71 % Agricultural 99,773 1,856 7.38 % 101,333 1,704 6.74 % Consumer 107,417 1,667 6.16 % 106,898 1,618 6.07 % Total loans 3,281,483 55,152 6.67 % 3,337,497 52,748 6.34 % Securities Taxable securities 1,027,889 5,696 2.20 % 1,068,653 5,813 2.18 % Nontaxable securities 58,016 369 2.52 % 87,318 568 2.61 % Total securities 1,085,905 6,065 2.22 % 1,155,971 6,381 2.21 % Federal funds sold and other 267,996 3,822 5.66 % 185,276 2,127 4.61 % Total interest-earning assets $ 4,635,384 65,039 5.57 % $ 4,678,744 61,256 5.25 % Interest-bearing liabilities Demand savings and money market deposits $ 2,423,380 13,331 2.18 % $ 2,323,685 10,503 1.81 % Time deposits 782,920 6,043 3.06 % 903,280 6,701 2.98 % Total interest-bearing deposits 3,206,300 19,374 2.40 % 3,226,965 17,204 2.14 % FHLB advances 100,000 968 3.84 % 101,845 953 3.75 % Other borrowings 285,125 3,685 5.13 % 283,659 3,670 5.19 % Total interest-bearing liabilities $ 3,591,425 24,027 2.65 % $ 3,612,469 21,827 2.42 % Net interest income $ 41,012 $ 39,429 Interest rate spread 2.92 % 2.83 % Net interest margin (2) 3.51 % 3.38 % (1) Average loan balances include nonaccrual loans. (2) Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets for the period. (3) Tax exempt income is not included in the above table on a tax-equivalent basis. (4) Actual unrounded values are used to calculate the reported yield or rate disclosed. Accordingly, recalculations using the amounts in thousands as disclosed in this report may not produce the same amounts. TABLE 8. NON-GAAP FINANCIAL MEASURES (Unaudited) (Dollars in thousands, except per share data) As of and for the three months ended September 30, June 30, March 31, December 31, September 30, 2023 2023 2023 2022 2022 Total stockholders' equity $ 418,130 $ 418,435 $ 425,123 $ 410,058 $ 395,806 Less: goodwill 53,101 53,101 53,101 53,101 53,101 Less: core deposit intangibles, net 7,961 8,760 9,678 10,596 11,598 Less: mortgage servicing rights, net 100 126 151 176 201 Less: naming rights, net 1,011 1,022 1,033 1,044 1,054 Tangible common equity $ 355,957 $ 355,426 $ 361,160 $ 345,141 $ 329,852 Common shares outstanding at period end 15,413,064 15,396,739 15,730,257 15,930,112 16,017,834 Diluted common shares outstanding at period end 15,500,749 15,468,319 15,822,536 16,163,253 16,225,591 Book value per common share $ 27.13 $ 27.18 $ 27.03 $ 25.74 $ 24.71 Tangible book value per common share $ 23.09 $ 23.08 $ 22.96 $ 21.67 $ 20.59 Tangible book value per diluted common share $ 22.96 $ 22.98 $ 22.83 $ 21.35 $ 20.33 Total assets $ 4,945,267 $ 5,094,883 $ 5,156,716 $ 4,981,651 $ 5,000,415 Less: goodwill 53,101 53,101 53,101 53,101 53,101 Less: core deposit intangibles, net 7,961 8,760 9,678 10,596 11,598 Less: mortgage servicing rights, net 100 126 151 176 201 Less: naming rights, net 1,011 1,022 1,033 1,044 1,054 Tangible assets $ 4,883,094 $ 5,031,874 $ 5,092,753 $ 4,916,734 $ 4,934,461 Total stockholders' equity to total assets 8.46 % 8.21 % 8.24 % 8.23 % 7.92 % Tangible common equity to tangible assets 7.29 % 7.06 % 7.09 % 7.02 % 6.68 % Total average stockholders' equity $ 426,260 $ 424,862 $ 420,500 $ 398,270 $ 436,191 Less: average intangible assets 62,635 63,453 64,447 65,450 66,445 Average tangible common equity $ 363,625 $ 361,409 $ 356,053 $ 332,820 $ 369,746 Net income (loss) allocable to common stockholders $ 12,341 $ 11,456 $ 12,323 $ 11,608 $ 15,171 Add: amortization of intangible assets 835 954 954 961 992 Less: tax effect of intangible assets amortization 175 200 200 202 208 Adjusted net income (loss) allocable to common stockholders $ 13,001 $ 12,210 $ 13,077 $ 12,367 $ 15,955 Return on total average stockholders' equity
(ROAE) annualized11.49 % 10.82 % 11.89 % 11.56 % 13.80 % Return on average tangible common equity
(ROATCE) annualized14.18 % 13.55 % 14.89 % 14.74 % 17.12 % Non-interest expense $ 34,244 $ 33,130 $ 33,229 $ 35,248 $ 32,236 Less: merger expense — — — 68 115 Adjusted non-interest expense $ 34,244 $ 33,130 $ 33,229 $ 35,180 $ 32,121 Net interest income $ 41,012 $ 39,429 $ 39,110 $ 42,031 $ 41,944 Non-interest income 8,735 6,950 8,600 8,330 8,969 Less: net gain on acquisition and branch sales — — — 422 — Less: net gains (losses) from securities transactions (1 ) (1,322 ) 32 14 (17 ) Adjusted non-interest income $ 8,736 $ 8,272 $ 8,568 $ 7,894 $ 8,986 Net interest income plus adjusted non-interest income $ 49,748 $ 47,701 $ 47,678 $ 49,925 $ 50,930 Non-interest expense to net interest income plus non-interest income 68.84 % 71.43 % 69.65 % 69.99 % 63.32 % Efficiency ratio 68.83 % 69.45 % 69.69 % 70.47 % 63.07 % Net income (loss) allocable to common stockholders $ 12,341 $ 11,456 $ 12,323 $ 11,608 $ 15,171 Add: income tax provision 1,932 1,495 2,524 3,654 3,642 Add: provision (reversal) of credit losses 1,230 298 (366 ) (151 ) (136 ) Pre-tax, pre-provision income $ 15,503 $ 13,249 $ 14,481 $ 15,111 $ 18,677 Total average assets $ 5,046,179 $ 5,064,912 $ 4,994,417 $ 4,930,231 $ 4,988,755 Total average stockholders' equity $ 426,620 $ 424,862 $ 420,500 $ 398,270 $ 436,191 Return on average assets (ROAA) annualized 0.97 % 0.91 % 1.00 % 0.93 % 1.21 % Adjusted return on average assets 1.22 % 1.05 % 1.18 % 1.22 % 1.49 % Adjusted return on average equity 14.43 % 12.51 % 13.97 % 15.05 % 16.99 %