Equity Bancshares, Inc. Reports Second Quarter Results, Continued Organic Growth
Company saw NIM expansion, organic growth in the loan portfolio and noninterest income, with well managed operating expenses
WICHITA, Kansas, July 19, 2022 (GLOBE NEWSWIRE) -- Equity Bancshares, Inc. (NASDAQ: EQBK), (“Equity”, “the Company”, “we,” “us,” “our”), the Wichita-based holding company of Equity Bank, reported net income of $15.3 million and $0.94 earnings per diluted share for the quarter ended June 30, 2022.“In 2022, we’ve demonstrated our ability to deliver organic growth absent a merger partner. Our 8.5% organic loan growth represents the hard work of our sales and operations teams to provide value to customers,” said Brad S. Elliott, Chairman and CEO, Equity Bancshares, Inc. “We have a great leadership team dedicated to driving loans, treasury services, deposit products, and new products such as our recently introduced healthcare services offerings. These efforts to deliver sophisticated products and customer experience solutions had the effect of increasing earnings, improving net interest margin, increasing fee income and improving our loan to deposit ratio.”
“In the third quarter, we expect to continue to strengthen our loan to deposit ratio and to serve as a resource for our customers as they continue to navigate economic challenges for their businesses and families,” said Mr. Elliott. “Our brand reflects our entrepreneurial spirit, and as we add talent to our leadership teams, new products and services, and new service channels, we’ll continue to operate with our local customers in mind.”
Notable Items:
· During the second quarter, the Company realized continued loan growth excluding the impact of PPP assets and the branch sale, bring annualized loan growth year-to-date to 8.51%.
· During the quarter, the Company realized linked period growth of 5.38% in service fee income, driven by additional debit card revenue and service charges on Equity Bank deposit products.
· The Company closed on the sale of three branches to United Bank & Trust in Belleville, Clyde and Concordia, Kansas, which resulted in a net gain of $540 thousand.
· At June 30, 2022, classified assets to regulatory capital has declined to 13.1% from 17.1% at March 31, 2022.
· The Company continued to emphasize investor returns through repurchase of 355,844 shares during the quarter, at an average price of $31.54, as well as the continuation of our quarterly dividend program at $0.08 per share. Under the currently active repurchase program, the Company is authorized to purchase an additional 126,900 shares.
*Financial Results for the Quarter Ended June 30, 2022*
Net income allocable to common stockholders was $15.3 million, or $0.94 per diluted share, for the three months ended June 30, 2022, as compared to $15.7 million, or $0.93 per diluted share, for the three months ended March 31, 2022. The decrease for the second quarter of 2022 is primarily due to increases in non-interest expense of $2.0 million and provision for credit losses of $1.2 million, partially offset by an increase in non-interest income of $615 thousand and net interest income of $277 thousand.
*Net Interest Income*
Net interest income was $39.6 million for the three months ended June 30, 2022, as compared to $39.3 million for the three months ended March 31, 2022, an increase of $277 thousand, or 0.7%. The yield on interest-earning assets increased 7-basis points to 3.74% during the quarter ended June 30, 2022, as compared to 3.67% for the quarter ended March 31, 2022. The cost of interest-bearing deposits increased by 6 basis points during the quarter, moving from 0.22% at March 31, 2022 to 0.28% at June 30, 2022.
*Provision for Credit Losses*
During the three months ended June 30, 2022, there was a provision to the allowance for credit losses of $824 thousand compared to a net release of $412 thousand in the previous quarter. The comparative increase was primarily driven by the increase in general reserves driven by slowing prepayment speeds and the perceived risk associated with the current economic environment, which includes, significant inflation, supply chain concerns and the impact of monetary policy on consumers and businesses. For the three months ended June 30, 2022, we had net charge-offs of $176 thousand as compared to $362 thousand for the three months ended March 31, 2022.
*Non-Interest Income*
Total non-interest income was $9.6 million for the three months ended June 30, 2022, as compared to $9.0 million for the three months ended March 31, 2022, or an increase of 6.8%, quarter over quarter. The increase was primarily due to an increase in net gain on acquisition and branch sales of $540 thousand.
*Non-Interest Expense*
Total non-interest expense for the quarter ended June 30, 2022, was $31.4 million as compared to $29.5 million for the quarter ended March 31, 2022. The $2.0 million change was primarily due to increases in other non-interest expense of $2.0 million driven by a provision to reserve for unfunded commitments of $288 thousand for the quarter ended June 30, 2022, compared to a release of reserve for unfunded commitments of $1.0 million for the quarter ended March 31, 2022.
*Asset Quality*
As of June 30, 2022, Equity’s allowance for credit losses to total loans remained constant at 1.5%, as compared to March 31, 2022. Nonperforming assets were $37.0 million as of June 30, 2022, or 0.7% of total assets, compared to $37.5 million at March 31, 2022, or 0.7% of total assets. Non-accrual loans were $18.9 million at June 30, 2022, as compared to $20.7 million at March 31, 2022. Total classified assets, including loans rated special mention or worse, other real estate owned and other repossessed assets were $72.1 million, or 13.1% of regulatory capital, down from $94.2 million, or 17.1% of regulatory capital as of March 31, 2022.
During the quarter ended June 30, 2022, non-performing assets decreased $500 thousand due to decreases in non-accrual loans of $1.8 million partially offset by increases in closed bank branches classified as other real estate owned of $881 thousand and other repossessed assets of $83 thousand.
*Regulatory Capital*
The Company’s ratio of common equity tier 1 capital to risk-weighted assets was 12.1%, the total capital to risk-weighted assets was 16.0% and the total leverage ratio was 9.1% at June 30, 2022. At March 31, 2022, the Company’s common equity tier 1 capital to risk-weighted assets ratio was 11.8%, the total capital to risk-weighted assets ratio was 15.7% and the total leverage ratio was 9.1%.
The Company’s subsidiary, Equity Bank, had a ratio of common equity tier 1 capital to risk-weighted assets of 13.9%, a ratio of total capital to risk-weighted assets of 15.1% and a total leverage ratio of 9.9% at June 30, 2022. At March 31, 2022, Equity Bank’s ratio of common equity tier 1 capital to risk-weighted assets was 13.7%, the ratio of total capital to risk-weighted assets was 14.9% and the total leverage ratio was 10.0%.
*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, Eric Newell, will hold a conference call and webcast to discuss second quarter results on Wednesday, July 20, 2022 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 July 27, 2022, 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 NASDAQ Global Select Market 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,” “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, 2022, 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. New risks and uncertainties arise from time to time, such as COVID-19, 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:*
Chris Navratil
SVP, Finance
Equity Bancshares, Inc.
(316) 612-6014
cnavratil@equitybank.com
*Media 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*
*June 30,* *Six months ended*
*June 30,* *2022* *2021* *2022* *2021*
Interest and dividend income
Loans, including fees $ 36,849 $ 33,810 $ 73,155 $ 64,811
Securities, taxable 5,584 3,523 10,975 7,322
Securities, nontaxable 678 717 1,333 1,441
Federal funds sold and other 513 268 813 556
Total interest and dividend income 43,624 38,318 86,276 74,130
Interest expense
Deposits 2,183 2,025 3,905 4,435
Federal funds purchased and retail repurchase agreements 46 26 79 48
Federal Home Loan Bank advances 176 80 185 145
Subordinated debt 1,653 1,557 3,252 3,113
Total interest expense 4,058 3,688 7,421 7,741
*Net interest income* 39,566 34,630 78,855 66,389
Provision (reversal) for credit losses 824 (1,657 ) 412 (7,413 )
*Net interest income after provision (reversal) for credit losses* 38,742 36,287 78,443 73,802
Non-interest income
Service charges and fees 2,617 2,169 5,139 3,765
Debit card income 2,810 2,679 5,438 5,029
Mortgage banking 428 848 990 1,783
Increase in value of bank-owned life insurance 736 676 1,601 1,277
Net gain on acquisition and branch sales 540 663 540 585
Net gains (losses) from securities transactions (32 ) — 8 17
Other 2,538 2,065 4,943 3,356
*Total non-interest income* 9,637 9,100 18,659 15,812
Non-interest expense
Salaries and employee benefits 15,383 12,769 30,451 25,491
Net occupancy and equipment 3,007 2,327 6,177 4,695
Data processing 3,642 3,474 7,411 6,137
Professional fees 1,111 999 2,282 2,072
Advertising and business development 972 799 1,948 1,481
Telecommunications 442 512 912 1,092
FDIC insurance 260 425 440 840
Courier and postage 489 327 912 696
Free nationwide ATM cost 541 513 1,042 985
Amortization of core deposit intangibles 1,111 1,030 2,161 2,064
Loan expense 207 181 392 419
Other real estate owned 14 (468 ) 13 (463 )
Merger expenses 88 460 411 612
Other 4,169 2,458 6,343 4,566
*Total non-interest expense* 31,436 25,806 60,895 50,687
Income (loss) before income tax 16,943 19,581 36,207 38,927
Provision for income taxes 1,684 4,415 5,298 8,686
*Net income (loss) and net income (loss) allocable to common stockholders* $ 15,259 $ 15,166 $ 30,909 $ 30,241
Basic earnings (loss) per share $ 0.95 $ 1.06 $ 1.88 $ 2.10
Diluted earnings (loss) per share $ 0.94 $ 1.03 $ 1.86 $ 2.06
Weighted average common shares 16,106,683 14,356,958 16,428,535 14,410,328
Weighted average diluted common shares 16,312,953 14,674,838 16,639,970 14,704,240
*TABLE 2. QUARTERLY CONSOLIDATED STATEMENTS OF INCOME *(Unaudited)
(Dollars in thousands, except per share data)
*As of and for the three months ended* *June 30,*
*2022* *March 31,*
*2022* *December 31,*
*2021* *September 30,*
*2021* *June 30,*
*2021*
Interest and dividend income
Loans, including fees $ 36,849 $ 36,306 $ 34,942 $ 37,581 $ 33,810
Securities, taxable 5,584 5,391 4,754 3,920 3,523
Securities, nontaxable 678 655 747 655 717
Federal funds sold and other 513 300 349 290 268
Total interest and dividend income 43,624 42,652 40,792 42,446 38,318
Interest expense
Deposits 2,183 1,722 1,939 1,881 2,025
Federal funds purchased and retail repurchase agreements 46 33 32 24 26
Federal Home Loan Bank advances 176 9 14 10 80
Subordinated debt 1,653 1,599 1,592 1,556 1,557
Total interest expense 4,058 3,363 3,577 3,471 3,688
*Net interest income* 39,566 39,289 37,215 38,975 34,630
Provision (reversal) for credit losses 824 (412 ) (2,125 ) 1,058 (1,657 )
*Net interest income after provision (reversal) for credit losses* 38,742 39,701 39,340 37,917 36,287
Non-interest income
Service charges and fees 2,617 2,522 2,471 2,360 2,169
Debit card income 2,810 2,628 2,633 2,574 2,679
Mortgage banking 428 562 722 801 848
Increase in value of bank-owned life insurance 736 865 1,060 1,169 676
Net gain on acquisition and branch sales 540 — — — 663
Net gains (losses) from securities transactions (32 ) 40 8 381 —
Other 2,538 2,405 2,305 546 2,065
*Total non-interest income* 9,637 9,022 9,199 7,831 9,100
Non-interest expense
Salaries and employee benefits 15,383 15,068 15,119 13,588 12,769
Net occupancy and equipment 3,007 3,170 2,967 2,475 2,327
Data processing 3,642 3,769 3,867 3,257 3,474
Professional fees 1,111 1,171 1,565 1,076 999
Advertising and business development 972 976 1,129 760 799
Telecommunications 442 470 435 439 512
FDIC insurance 260 180 360 465 425
Courier and postage 489 423 389 344 327
Free nationwide ATM cost 541 501 515 519 513
Amortization of core deposit intangibles 1,111 1,050 1,080 1,030 1,030
Loan expense 207 185 308 207 181
Other real estate owned 14 (1 ) 617 (342 ) (468 )
Loss on debt extinguishment — — — 372 —
Merger expenses 88 323 4,562 4,015 460
Other 4,169 2,174 5,176 2,484 2,458
*Total non-interest expense* 31,436 29,459 38,089 30,689 25,806
Income (loss) before income tax 16,943 19,264 10,450 15,059 19,581
Provision for income taxes (benefit) 1,684 3,614 (16 ) 3,286 4,415
*Net income (loss) and net income (loss) allocable to common stockholders* $ 15,259 $ 15,650 $ 10,466 $ 11,773 $ 15,166
Basic earnings (loss) per share $ 0.95 $ 0.94 $ 0.62 $ 0.82 $ 1.06
Diluted earnings (loss) per share $ 0.94 $ 0.93 $ 0.61 $ 0.80 $ 1.03
Weighted average common shares 16,106,683 16,652,556 16,865,167 14,384,302 14,356,958
Weighted average diluted common shares 16,312,953 16,869,152 17,141,174 14,669,312 14,674,838
*TABLE 3. CONSOLIDATED BALANCE SHEETS* (Unaudited)
(Dollars in thousands)
*June 30,*
*2022* *March 31,*
*2022* *December 31,*
*2021* *September 30,*
*2021* *June 30,*
*2021*
*ASSETS*
Cash and due from banks $ 103,126 $ 89,764 $ 259,131 $ 141,645 $ 138,869
Federal funds sold 458 286 823 673 452
Cash and cash equivalents 103,584 90,050 259,954 142,318 139,321
Available-for-sale securities 1,288,180 1,352,894 1,327,442 1,157,423 1,041,613
Loans held for sale 1,714 1,575 4,214 4,108 6,183
Loans, net of allowance for credit losses^(1) 3,175,208 3,194,987 3,107,262 2,633,148 2,763,227
Other real estate owned, net 12,969 9,897 9,523 10,267 10,861
Premises and equipment, net 101,212 103,168 104,038 90,727 90,876
Bank-owned life insurance 121,665 120,928 120,787 103,431 103,321
Federal Reserve Bank and Federal Home Loan Bank stock 21,479 19,890 17,510 14,540 18,454
Interest receivable 16,519 16,923 18,048 15,519 15,064
Goodwill 53,101 54,465 54,465 31,601 31,601
Core deposit intangibles, net 12,554 13,830 14,879 12,963 13,993
Other 93,971 100,016 99,509 47,223 33,702
Total assets $ 5,002,156 $ 5,078,623 $ 5,137,631 $ 4,263,268 $ 4,268,216
*LIABILITIES AND STOCKHOLDERS’ EQUITY*
Deposits
Demand $ 1,194,863 $ 1,255,793 $ 1,244,117 $ 984,436 $ 992,565
Total non-interest-bearing deposits 1,194,863 1,255,793 1,244,117 984,436 992,565
Demand, savings and money market 2,445,545 2,511,478 2,522,289 2,092,849 2,035,496
Time 651,363 612,399 653,598 585,492 659,494
Total interest-bearing deposits 3,096,908 3,123,877 3,175,887 2,678,341 2,694,990
Total deposits 4,291,771 4,379,670 4,420,004 3,662,777 3,687,555
Federal funds purchased and retail repurchase agreements 52,750 48,199 56,006 39,137 47,184
Federal Home Loan Bank advances 80,000 50,000 — — 9,208
Subordinated debt 96,135 96,010 95,885 88,030 87,908
Contractual obligations 15,813 17,307 17,692 18,771 4,469
Interest payable and other liabilities 37,572 35,422 47,413 36,804 18,897
Total liabilities 4,574,041 4,626,608 4,637,000 3,845,519 3,855,221
Commitments and contingent liabilities
Stockholders’ equity
Common stock 204 204 203 178 176
Additional paid-in capital 480,897 480,106 478,862 392,321 389,394
Retained earnings 116,576 102,632 88,324 79,226 68,625
Accumulated other comprehensive income, net of tax (77,426 ) (50,012 ) 1,776 9,475 13,450
Treasury stock (92,136 ) (80,915 ) (68,534 ) (63,451 ) (58,650 )
Total stockholders’ equity 428,115 452,015 500,631 417,749 412,995
Total liabilities and stockholders’ equity $ 5,002,156 $ 5,078,623 $ 5,137,631 $ 4,263,268 $ 4,268,216
^(1) Allowance for credit losses $ 48,238 $ 47,590 $ 48,365 $ 52,763 $ 51,834
*TABLE 4. SELECTED FINANCIAL HIGHLIGHTS *(Unaudited)
(Dollars in thousands, except per share data)
*As of and for the three months ended* *June 30,* *March 31,* *December 31,* *September 30,* *June 30,* *2022* *2022* *2021* *2021* *2021*
*Loans Held For Investment by Type*
Commercial real estate $ 1,643,068 $ 1,552,134 $ 1,486,148 $ 1,308,707 $ 1,261,214
Commercial and industrial 578,899 629,181 567,497 569,513 732,126
Residential real estate 578,936 613,928 638,087 490,633 503,110
Agricultural real estate 197,938 198,844 198,330 138,793 129,020
Agricultural 124,753 150,077 166,975 93,767 97,912
Consumer 99,852 98,413 98,590 84,498 91,679
Total loans held-for-investment 3,223,446 3,242,577 3,155,627 2,685,911 2,815,061
Allowance for credit losses (48,238 ) (47,590 ) (48,365 ) (52,763 ) (51,834 )
Net loans held for investment $ 3,175,208 $ 3,194,987 $ 3,107,262 $ 2,633,148 $ 2,763,227
*Asset Quality Ratios*
Allowance for credit losses on loans to total loans 1.50 % 1.47 % 1.53 % 1.96 % 1.84 %
Past due or nonaccrual loans to total loans 0.78 % 0.82 % 1.18 % 2.78 % 2.09 %
Nonperforming assets to total assets 0.74 % 0.74 % 1.28 % 1.74 % 1.56 %
Nonperforming assets to total loans plus other
real estate owned 1.14 % 1.15 % 2.07 % 2.76 % 2.36 %
Classified assets to bank total regulatory capital 13.08 % 17.12 % 25.34 % 24.25 % 23.20 %
*Selected Average Balance Sheet Data (QTD Average)*
Investment securities $ 1,319,099 $ 1,397,421 $ 1,330,267 $ 1,061,178 $ 986,986
Total gross loans receivable 3,216,853 3,195,787 3,181,279 2,748,202 2,853,145
Interest-earning assets 4,675,967 4,715,389 4,713,817 4,005,509 3,964,633
Total assets 5,067,686 5,108,120 5,068,278 4,275,298 4,231,439
Interest-bearing deposits 3,112,300 3,163,777 3,101,657 2,702,040 2,656,052
Borrowings 238,062 160,094 165,941 132,581 171,658
Total interest-bearing liabilities 3,350,362 3,323,871 3,267,598 2,834,621 2,827,710
Total deposits 4,340,196 4,393,879 4,342,732 3,686,169 3,624,950
Total liabilities 4,630,204 4,615,521 4,505,232 3,852,419 3,827,400
Total stockholders' equity 437,483 492,599 563,046 422,879 404,039
Tangible common equity^* 368,505 422,418 501,860 376,544 356,705
*Performance ratios*
Return on average assets (ROAA) annualized 1.21 % 1.24 % 0.82 % 1.09 % 1.44 %
Return on average assets before income tax and
provision for loan losses* 1.41 % 1.50 % 0.65 % 1.50 % 1.70 %
Return on average equity (ROAE) annualized 13.99 % 12.88 % 7.37 % 11.05 % 15.06 %
Return on average equity before income tax and
provision for loan losses* 16.29 % 15.52 % 5.87 % 15.12 % 17.79 %
Return on average tangible common equity
(ROATCE) annualized^* 17.60 % 15.85 % 8.97 % 13.27 % 17.98 %
Yield on loans annualized 4.59 % 4.61 % 4.36 % 5.43 % 4.75 %
Cost of interest-bearing deposits annualized 0.28 % 0.22 % 0.25 % 0.28 % 0.31 %
Cost of total deposits annualized 0.20 % 0.16 % 0.18 % 0.20 % 0.22 %
Net interest margin annualized 3.39 % 3.38 % 3.13 % 3.86 % 3.50 %
Efficiency ratio^* 64.38 % 60.36 % 72.25 % 56.65 % 58.85 %
Non-interest income / average assets 0.76 % 0.72 % 0.72 % 0.73 % 0.86 %
Non-interest expense / average assets 2.49 % 2.34 % 2.98 % 2.85 % 2.45 %
*Capital Ratios*
Tier 1 Leverage Ratio 9.11 % 9.07 % 9.09 % 9.02 % 8.88 %
Common Equity Tier 1 Capital Ratio 12.08 % 11.81 % 12.03 % 12.39 % 12.41 %
Tier 1 Risk Based Capital Ratio 12.71 % 12.43 % 12.67 % 12.90 % 12.93 %
Total Risk Based Capital Ratio 15.97 % 15.66 % 15.96 % 16.63 % 16.74 %
Total stockholders' equity to total assets 8.56 % 8.90 % 9.74 % 9.80 % 9.68 %
Tangible common equity to tangible assets^* 7.32 % 7.63 % 8.48 % 8.82 % 8.68 %
Dividend payout ratio 8.61 % 8.58 % 13.05 % 9.96 % 0.00 %
Book value per common share $ 26.58 $ 27.47 $ 29.87 $ 29.08 $ 28.76
Tangible book value per common share^* $ 22.42 $ 23.24 $ 25.65 $ 25.90 $ 25.51
Tangible book value per diluted common share^* $ 22.17 $ 22.95 $ 25.22 $ 25.42 $ 24.98
*TABLE 5. YEAR-TO-DATE NET INTEREST INCOME ANALYSIS *(Unaudited)
(Dollars in thousands)
*For the six months ended* *For the six months ended* *June 30, 2022* *June 30, 2021* *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 $ 581,880 $ 15,244 5.28 % $ 814,895 $ 20,962 5.19 %
Commercial real estate 1,200,212 27,972 4.70 % 981,482 22,873 4.70 %
Real estate construction 363,542 7,596 4.21 % 254,807 4,531 3.59 %
Residential real estate 615,035 10,872 3.56 % 430,123 9,093 4.26 %
Agricultural real estate 202,091 5,306 5.29 % 136,366 3,384 5.00 %
Agricultural 142,210 3,849 5.46 % 94,596 2,062 4.40 %
Consumer 101,409 2,316 4.60 % 83,083 1,906 4.63 %
Total loans 3,206,379 73,155 4.60 % 2,795,352 64,811 4.68 %
Securities
Taxable securities 1,248,178 10,975 1.77 % 863,801 7,322 1.71 %
Nontaxable securities 109,866 1,333 2.45 % 103,529 1,441 2.81 %
Total securities 1,358,044 12,308 1.83 % 967,330 8,763 1.83 %
Federal funds sold and other 131,148 813 1.25 % 165,408 556 0.68 %
Total interest-earning assets $ 4,695,571 86,276 3.71 % $ 3,928,090 74,130 3.81 %
*Interest-bearing liabilities*
Demand savings and money market deposits $ 2,507,707 2,342 0.19 % $ 2,073,658 1,865 0.18 %
Time deposits 630,189 1,563 0.50 % 599,353 2,570 0.86 %
Total interest-bearing deposits 3,137,896 3,905 0.25 % 2,673,011 4,435 0.33 %
FHLB advances 45,299 185 0.82 % 23,911 145 1.22 %
Other borrowings 153,995 3,331 4.36 % 131,687 3,161 4.84 %
Total interest-bearing liabilities $ 3,337,190 7,421 0.45 % $ 2,828,609 7,741 0.55 %
Net interest income $ 78,855 $ 66,389
Interest rate spread 3.26 % 3.26 %
Net interest margin ^(2) 3.39 % 3.41 %
^(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* *June 30, 2022* *June 30, 2021* *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 $ 588,126 $ 7,483 5.10 % $ 826,647 $ 11,729 5.69 %
Commercial real estate 1,210,185 14,521 4.81 % 991,033 11,433 4.63 %
Real estate construction 384,317 4,297 4.48 % 253,947 2,352 3.71 %
Residential real estate 597,680 5,206 3.49 % 465,525 4,642 4.00 %
Agricultural real estate 202,038 2,643 5.25 % 131,906 1,687 5.13 %
Agricultural 134,826 1,533 4.56 % 94,407 1,024 4.35 %
Consumer 99,680 1,166 4.69 % 89,680 943 4.22 %
Total loans 3,216,852 36,849 4.59 % 2,853,145 33,810 4.75 %
Securities
Taxable securities 1,210,828 5,584 1.85 % 887,983 3,523 1.59 %
Nontaxable securities 108,271 678 2.51 % 99,003 717 2.90 %
Total securities 1,319,099 6,262 1.90 % 986,986 4,240 1.72 %
Federal funds sold and other 140,016 513 1.47 % 124,502 268 0.86 %
Total interest-earning assets $ 4,675,967 43,624 3.74 % $ 3,964,633 38,318 3.88 %
*Interest-bearing liabilities*
Demand savings and money market deposits $ 2,481,602 1,346 0.22 % $ 2,068,319 895 0.17 %
Time deposits 630,698 837 0.53 % 587,733 1,130 0.77 %
Total interest-bearing deposits 3,112,300 2,183 0.28 % 2,656,052 2,025 0.31 %
FHLB advances 80,266 176 0.88 % 37,656 80 0.86 %
Other borrowings 157,796 1,699 4.32 % 134,002 1,583 4.74 %
Total interest-bearing liabilities $ 3,350,362 4,058 0.49 % $ 2,827,710 3,688 0.52 %
Net interest income $ 39,566 $ 34,630
Interest rate spread 3.25 % 3.36 %
Net interest margin ^(2) 3.39 % 3.50 %
^(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.
*TABLE 7. QUARTER-OVER-QUARTER NET INTEREST INCOME ANALYSIS *(Unaudited)
(Dollars in thousands)
*For the three months ended* *For the three months ended* *June 30, 2022* *March 31, 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 $ 588,126 $ 7,483 5.10 % $ 575,563 $ 7,761 5.47 %
Commercial real estate 1,210,185 14,521 4.81 % 1,190,128 13,451 4.58 %
Real estate construction 384,317 4,297 4.48 % 342,536 3,299 3.91 %
Residential real estate 597,680 5,206 3.49 % 632,581 5,665 3.63 %
Agricultural real estate 202,038 2,643 5.25 % 202,145 2,663 5.34 %
Agricultural 134,826 1,533 4.56 % 149,676 2,316 6.28 %
Consumer 99,680 1,166 4.69 % 103,158 1,151 4.53 %
Total loans 3,216,852 36,849 4.59 % 3,195,787 36,306 4.61 %
Securities
Taxable securities 1,210,828 5,584 1.85 % 1,285,942 5,391 1.70 %
Nontaxable securities 108,271 678 2.51 % 111,479 655 2.38 %
Total securities 1,319,099 6,262 1.90 % 1,397,421 6,046 1.75 %
Federal funds sold and other 140,016 513 1.47 % 122,181 300 1.00 %
Total interest-earning assets $ 4,675,967 43,624 3.74 % $ 4,715,389 42,652 3.67 %
*Interest-bearing liabilities*
Demand savings and money market deposits $ 2,481,602 1,346 0.22 % $ 2,534,102 996 0.16 %
Time deposits 630,698 837 0.53 % 629,675 726 0.47 %
Total interest-bearing deposits 3,112,300 2,183 0.28 % 3,163,777 1,722 0.22 %
FHLB advances 80,266 176 0.88 % 9,943 9 0.38 %
Other borrowings 157,796 1,699 4.32 % 150,151 1,632 4.41 %
Total interest-bearing liabilities $ 3,350,362 4,058 0.49 % $ 3,323,871 3,363 0.41 %
Net interest income $ 39,566 $ 39,289
Interest rate spread 3.25 % 3.26 %
Net interest margin ^(2) 3.39 % 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.
*TABLE 8. NON-GAAP FINANCIAL MEASURES *(Unaudited)
(Dollars in thousands, except per share data)
*As of and for the three months ended* *June 30,* *March 31,* *December 31,* *September 30,* *June 30,* *2022* *2022* *2021* *2021* *2021*
Total stockholders' equity $ 428,115 $ 452,015 $ 500,631 $ 417,749 $ 412,995
Less: goodwill 53,101 54,465 54,465 31,601 31,601
Less: core deposit intangibles, net 12,554 13,830 14,879 12,963 13,993
Less: mortgage servicing asset, net 226 251 276 — —
Less: naming rights, net 1,065 1,076 1,087 1,098 1,109
*Tangible common equity* $ 361,169 $ 382,393 $ 429,924 $ 372,087 $ 366,292
Common shares issued at period end 16,106,818 16,454,966 16,760,115 14,365,785 14,360,172
Diluted common shares outstanding at period end 16,289,635 16,662,779 17,050,115 14,637,306 14,664,603
*Book value per common share* $ 26.58 $ 27.47 $ 29.87 $ 29.08 $ 28.76
*Tangible book value per common share* $ 22.42 $ 23.24 $ 25.65 $ 25.90 $ 25.51
*Tangible book value per diluted common share* $ 22.17 $ 22.95 $ 25.22 $ 25.42 $ 24.98
Total assets $ 5,002,156 $ 5,078,623 $ 5,137,631 $ 4,263,268 $ 4,268,216
Less: goodwill 53,101 54,465 54,465 31,601 31,601
Less: core deposit intangibles, net 12,554 13,830 14,879 12,963 13,993
Less: mortgage servicing asset, net 226 251 276 — —
Less: naming rights, net 1,065 1,076 1,087 1,098 1,109
*Tangible assets* $ 4,935,210 $ 5,009,001 $ 5,066,924 $ 4,217,606 $ 4,221,513
*Total stockholders' equity to total assets* 8.56 % 8.90 % 9.74 % 9.80 % 9.68 %
*Tangible common equity to tangible assets* 7.32 % 7.63 % 8.48 % 8.82 % 8.68 %
Total average stockholders' equity $ 437,483 $ 492,599 $ 563,046 $ 422,879 $ 404,039
Less: average intangible assets 68,978 70,181 61,186 46,335 47,334
*Average tangible common equity* $ 368,505 $ 422,418 $ 501,860 $ 376,544 $ 356,705
Net income (loss) allocable to common stockholders $ 15,259 $ 15,650 $ 10,466 $ 11,773 $ 15,166
Amortization of intangible assets 1,148 1,085 1,116 1,040 1,041
Less: tax effect of intangible assets amortization 241 228 234 218 219
*Adjusted net income (loss) allocable to common*
* stockholders* $ 16,166 $ 16,507 $ 11,348 $ 12,595 $ 15,988
*Return on total average stockholders' equity*
* (ROAE) annualized* 13.99 % 12.88 % 7.37 % 11.05 % 15.06 %
*Return on average tangible common equity*
* (ROATCE) annualized* 17.60 % 15.85 % 8.97 % 13.27 % 17.98 %
Non-interest expense $ 31,436 $ 29,459 $ 38,089 $ 30,689 $ 25,806
Loss on debt extinguishment — — — $ 372 —
Less: merger expense 88 323 4,562 4,015 460
Non-interest expense $ 31,348 $ 29,136 $ 33,527 $ 26,302 $ 25,346
Net interest income $ 39,566 $ 39,289 $ 37,215 $ 38,975 $ 34,630
Non-interest income 9,637 9,022 9,199 7,831 9,100
Less: net gain on acquisition and branch sales 540 — — — 663
Less: net gains (losses) from securities transactions (32 ) 40 8 381 —
Adjusted non-interest income, adjusted $ 9,129 $ 8,982 $ 9,191 $ 7,450 $ 8,437
*Net interest income plus adjusted non-interest income* $ 48,695 $ 48,271 $ 46,406 $ 46,425 $ 43,067
*Non-interest expense to*
* net interest income plus non-interest income* 63.89 % 60.98 % 82.06 % 65.57 % 59.01 %
*Efficiency ratio* 64.38 % 60.36 % 72.25 % 56.65 % 58.85 %
Net income (loss) allocable to common stockholders $ 15,259 $ 15,650 $ 10,466 $ 11,773 $ 15,166
Add: income tax provision 1,684 3,614 (16 ) 3,286 4,415
Add: provision (reversal) of credit losses 824 (412 ) (2,125 ) 1,058 (1,657 )
*Adjusted net income* $ 17,767 $ 18,852 $ 8,325 $ 16,117 $ 17,924
Total average assets $ 5,067,687 $ 5,108,120 $ 5,068,301 $ 4,275,298 $ 4,231,439
Total average stockholders' equity $ 437,483 $ 492,599 $ 563,023 $ 422,879 $ 404,039
*Return on average assets (ROAA) annualized* 1.21 % 1.24 % 0.82 % 1.09 % 1.44 %
*Adjusted return on average assets* 1.41 % 1.50 % 0.65 % 1.50 % 1.70 %
*Adjusted return on average equity* 16.29 % 15.52 % 5.87 % 15.12 % 17.79 %