• Equity Bancshares, Inc. Reports Third Quarter Results; Including Net Interest Margin Growth Driven by Core Deposit Base

    来源: Nasdaq GlobeNewswire / 17 10月 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.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
    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,
    2023    		  June 30,
    2023    		  March 31,
    2023    		  December 31,
    2022    		  September 30,
    2022    		 
    Interest 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,
    2023    		  June 30,
    2023    		  March 31,
    2023    		  December 31,
    2022    		  September 30,
    2022    		 
    ASSETS               
    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) annualized    		  11.49%  10.82%  11.89%  11.56%  13.80%
    Return on average tangible common equity
    (ROATCE) annualized    		  14.18%  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%

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