Equity Bancshares, Inc. Results Include Strong Organic Growth While Expanding Kansas Franchise

Thursday, 27. January 2022 00:38

WICHITA, Kan., Jan. 26, 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 $10.5 million and $0.61 earnings per diluted share for the quarter ended December 31, 2021. Equity’s results include a full quarter contribution from American State Bancshares, Inc. as a result of the completion of its acquisition on October 1, 2021, by Equity and an increased average outstanding share count.

“As we review 2021, we reached milestones for Equity Bank for our customers, teams, and shareholders,” said Brad Elliott, Chairman and CEO. “We issued the first common stock dividend in our company’s history and we completed and successfully integrated the largest merger in our bank’s history, welcoming American State Bank & Trust teammates into the Equity Bank family. Our teams followed that up with the addition of three branch locations in St. Joseph, Missouri, adding a new market to our Missouri footprint.”

Equity customers successfully had $51.3 million of Paycheck Protection Program (“PPP”) loans forgiven during the quarter, resulting in the recognition of fee income totaling $1.7 million in the three-month period ended December 31, 2021. At December 31, 2021, the total unrecognized fee income associated with PPP loans was $1.3 million.

“Equity was founded on entrepreneurial spirit, and that teamwork and collaboration exists in every new initiative we take on as a company, and I’m thankful to our customer service and operational teams for their hard work assisting a diverse range of customers,” said Mr. Elliott. “In 2022, we expect to continue to strengthen our customer delivery options including online and mobile banking, while continuing to offer the personal approach our customers expect from their community bank.”

Notable Items:

  • Diluted earnings per share of $0.61, adjusted to reflect core operating results, was $0.82 per diluted share. The adjustment to earnings was comprised of the exclusion of merger expenses of $4.6 million.
  • The Company authorized a third stock repurchase program in the third quarter of 2021 totaling 1,000,000 shares. During the quarter ended December 31, 2021, the Company repurchased 132,873 shares at a weighted average cost of $32.99 per share, totaling $4.4 million from this plan as well as 719 shares from the previous authorization that expired on October 29, 2021. At the end of the quarter, capacity of 867,127 shares remained under the current repurchase program.
  • Non-accrual loans declined $35.6 million to $29.4 million for the quarter ended December 31, 2021, as compared to the quarter ended September 30, 2021, representing 0.93% non-accrual loans to total loans at December 31, 2021, the lowest level reported since 2016.

Equity’s Balance Sheet Highlights:

  • During the quarter, total loans increased from $2.69 billion to $3.16 billion, of which $400 million is attributed to American State Bank & Trust (“ASBT”) loans and includes a reduction in PPP assets of $51.0 million. Excluding the impact of ASBT loans and PPP, loan growth linked quarter was $120.7 million or 18.6% annualized.
  • During the quarter total deposits increased to $4.42 billion at December 31, 2021 from $3.66 billion at September 30, 2021. Of the $757.2 million increase in the quarter, $646.5 million is attributed to ASBT deposits.  
  • As excess liquidity continues to impact the operating environment at quarter end, securities and interest-earning cash and cash equivalents comprise 32.5% of average earnings assets, up from 31.4% at the end of the linked quarter and 26.2% at the end of the comparable quarter in the previous year.

Financial Results for the Quarter Ended December 31, 2021

Net income allocable to common stockholders was $10.5 million, or $0.61 per diluted share, for the three months ended December 31, 2021, as compared to $11.8 million, or $0.80 per diluted share, for the three months ended September 30, 2021, a decrease of $1.3 million. This fourth quarter decrease was attributable to an increase in non-interest expense of $7.4 million and a decrease in net interest income of $1.8 million, partially offset by a decrease in provision for credit losses of $3.2 million, an increase of $1.4 million in non-interest income and a decrease in provision for income taxes of $3.2 million.

Net Interest Income

Net interest income was $37.2 million for the three months ended December 31, 2021, as compared to $39.0 million for the three months ended September 30, 2021, a decrease of $1.8 million, or 4.6%. The decrease in net interest income was primarily driven by a decrease in loan fees, due to the forgiveness of PPP assets, of $6.3 million for the quarter ended December 31, 2021, compared to the quarter ended September 30, 2021. The yield on interest-earning assets decreased 77-basis points to 3.43% during the quarter ended December 31, 2021, as compared to 4.20% for the quarter ended September 30, 2021. The cost of interest-bearing deposits declined by 3 basis points to 0.25% for the three months ended December 31, 2021, from 0.28% in the previous quarter.

Provision for Credit Losses

During the three months ended December 31, 2021, there was a net release of $2.1 million in the allowance for credit losses recognized through the provision for credit losses as compared to a provision of $1.1 million in the allowance for credit losses for the three months ended September 30, 2021. The comparative decrease was primarily driven by a decrease in reserves on specifically assessed assets which was partially offset by improving trends in the Company’s loss experience and moderating economic impacts. For the three months ended December 31, 2021, we had net charge-offs of $7.9 million as compared to $129 thousand for the three months ended September 30, 2021.

Non-Interest Income

Total non-interest income was $9.2 million for the three months ended December 31, 2021, as compared to $7.8 million for the three months ended September 30, 2021, or an increase of 17.5% quarter over quarter. Other non-interest income was $2.3 million, an increase of $1.8 million from the quarter ended September 30, 2021. The increase in other non-interest income was primarily due to the accounting for potential repurchase obligations associated with assets previously purchased through a FDIC assisted transaction. In the third quarter, the Company had identified deterioration of two assets, requiring a reserve and resulting in reduction of income recognition of $771 thousand. Further, the company had an increase of $511 thousand of income related to derivative transactions in quarter ending December 31, 2021.

Non-Interest Expense

Total non-interest expense for the quarter ended December 31, 2021, was $38.1 million as compared to $30.7 million for the quarter ended September 30, 2021. The $7.4 million change is primarily attributed to increases of $2.7 million in other expenses, $1.5 million in salaries and employee benefits driven by the increased headcount related to the American State Bank & Trust merger, and $959 thousand in other real estate owned expense. Included in other expenses is the recognition of $1.4 million of partnership expense related to tax credit activity the Company engaged in with assets being placed into service in the quarter ending December 31, 2021, and also resulted in credits recognized in reduced tax expense.

Asset Quality

As of December 31, 2021, Equity’s allowance for credit losses to total loans was 1.5%, as compared to 2.0% at September 30, 2021.   Nonperforming assets were $66.0 million as of December 31, 2021, or 1.3% of total assets, compared to $74.3 million at September 30, 2021, or 1.7% of total assets. Non-accrual loans were $29.4 million at December 31, 2021, as compared to $65.0 million at September 30, 2021. Total classified assets, including loans rated special mention or worse, other real estate owned and other repossessed assets were $138.5 million, or 25.4% of regulatory capital, up from $112.4 million, or 24.3% of regulatory capital as of September 30, 2021. This increase is from classified loans acquired in the ASBT merger, most of which are performing.

During the quarter, non-performing assets decreased by $8.2 million due to the payoff of a relationship that was previously disclosed in 2019 and contributed to a reversal of allowance for credit losses of $2.7 million. A separate large credit previously discussed in prior quarters was moved to other repossessed assets and subsequently sold in mid-January. This relationship totaled $18.7 million and led to a reduction of $1.3 million in previously recorded specific reserves. The Company had a net release of $2.1 million to the allowance for credit losses, comprised of a decrease in specific reserves, primarily driven by resolution of previously identified non-performing assets and continued improved historical loss performance, partially offset by the continued uncertainty of economic conditions driven by the COVID-19 pandemic.

Regulatory Capital

The Company’s ratio of common equity tier 1 capital to risk-weighted assets was 12.0%, the total capital to risk-weighted assets was 15.9% and the total leverage ratio was 9.0% at December 31, 2021. At December 31, 2020, the Company’s common equity tier 1 capital to risk-weighted assets ratio was 12.8%, the total capital to risk-weighted assets ratio was 17.4% and the total leverage ratio was 9.3%.

The Company’s subsidiary, Equity Bank, had a ratio of common equity tier 1 capital to risk-weighted assets of 14.1%, a ratio of total capital to risk-weighted assets of 15.3% and a total leverage ratio of 10.1% at December 31, 2021. At December 31, 2020, Equity Bank’s ratio of common equity tier 1 capital to risk-weighted assets was 14.5%, the ratio of total capital to risk-weighted assets was 15.7% and the total leverage ratio was 10.1%.

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 used as a common measure by banks as a comparable metric to understand the Company’s expense structure relative to its 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, provision for loan losses and goodwill impairment 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 the “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 8 in the following press release tables.

Conference Call and Webcast

Equity Chairman and Chief Executive Officer, Brad Elliott, and Executive Vice President and Chief Financial Officer, Eric Newell, will hold a conference call and webcast to discuss the 2021 fourth quarter results on Thursday, January 27, 2022, at 10:00 a.m. eastern time, 9:00 a.m. central time.

Investors, news media and other participants should register for the call or audio webcast at investor.equitybank.com. On Thursday, January 27, 2021, participants may also dial into the call toll-free at (844) 534-7311 from anywhere in the U.S. or (574) 990-1419 internationally, using conference ID no. 8086496.

Participants are encouraged to dial into the call or access the webcast approximately 10 minutes prior to the start time. Presentation slides to pair with the call or webcast will be posted one hour prior to the call at investor.equitybank.com.

A replay of the call and webcast will be available two hours following the close of the call until February 3, 2022, accessible at (855) 859-2056 with conference ID no. 8086496 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, 2021, 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
December 31,
  Year ended
December 31,
 
  2021  2020  2021  2020 
Interest and dividend income                
Loans, including fees $34,942  $35,383  $137,334  $134,664 
Securities, taxable  4,754   3,408   15,996   15,521 
Securities, nontaxable  747   913   2,843   3,682 
Federal funds sold and other  349   285   1,195   1,694 
Total interest and dividend income  40,792   39,989   157,368   155,561 
Interest expense                
Deposits  1,939   2,755   8,255   16,582 
Federal funds purchased and retail repurchase agreements  32   25   104   105 
Federal Home Loan Bank advances  14   94   169   2,292 
Federal Reserve Bank discount window           6 
Bank stock loan           415 
Subordinated debt  1,592   1,556   6,261   3,509 
Total interest expense  3,577   4,430   14,789   22,909 
                 
Net interest income  37,215   35,559   142,579   132,652 
Provision (reversal) for credit losses  (2,125)  1,000   (8,480)  24,255 
Net interest income after provision (reversal) for credit losses  39,340   34,559   151,059   108,397 
Non-interest income                
Service charges and fees  2,471   1,759   8,596   6,856 
Debit card income  2,633   2,401   10,236   9,136 
Mortgage banking  722   855   3,306   3,153 
Increase in value of bank-owned life insurance  1,060   489   3,506   1,941 
Net gain on acquisition     2,145   585   2,145 
Net gains (losses) from securities transactions  8   (1)  406   11 
Other  2,305   852   6,207   2,781 
Total non-interest income  9,199   8,500   32,842   26,023 
Non-interest expense                
Salaries and employee benefits  15,119   14,053   54,198   54,129 
Net occupancy and equipment  2,967   2,206   10,137   8,784 
Data processing  3,867   2,748   13,261   10,991 
Professional fees  1,565   1,095   4,713   4,282 
Advertising and business development  1,129   801   3,370   2,498 
Telecommunications  435   510   1,966   1,873 
FDIC insurance  360   797   1,665   2,088 
Courier and postage  389   338   1,429   1,441 
Free nationwide ATM cost  515   423   2,019   1,609 
Amortization of core deposit intangibles  1,080   1,044   4,174   3,850 
Loan expense  308   161   934   789 
Other real estate owned  617   1,600   (188)  2,310 
Loss on debt extinguishment        372    
Merger expenses  4,562   299   9,189   299 
Goodwill impairment           104,831 
Other  5,176   2,385   12,226   9,216 
Total non-interest expense  38,089   28,460   119,465   208,990 
Income (loss) before income tax  10,450   14,599   64,436   (74,570)
Provision for income taxes  (16)  2,111   11,956   400 
Net income (loss) and net income (loss) allocable to common stockholders $10,466  $12,488  $52,480  $(74,970)
Basic earnings (loss) per share $0.62  $0.85  $3.49  $(4.97)
Diluted earnings (loss) per share $0.61  $0.84  $3.43  $(4.97)
Weighted average common shares  16,865,167   14,760,810   15,019,221   15,098,512 
Weighted average diluted common shares  14,669,312   14,934,058   15,306,431   15,098,512 

TABLE 2. QUARTERLY CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except per share data)

  As of and for the three months ended 
  December 31,
2021
  September 30,
2021
  June 30,
2021
  March 31,
2021
  December 31,
2020
 
Interest and dividend income                    
Loans, including fees $34,942  $37,581  $33,810  $31,001  $35,383 
Securities, taxable  4,754   3,920   3,523   3,799   3,408 
Securities, nontaxable  747   655   717   724   913 
Federal funds sold and other  349   290   268   288   285 
Total interest and dividend income  40,792   42,446   38,318   35,812   39,989 
Interest expense                    
Deposits  1,939   1,881   2,025   2,410   2,755 
Federal funds purchased and retail repurchase agreements  32   24   26   22   25 
Federal Home Loan Bank advances  14   10   80   65   94 
Subordinated debt  1,592   1,556   1,557   1,556   1,556 
Total interest expense  3,577   3,471   3,688   4,053   4,430 
                     
Net interest income  37,215   38,975   34,630   31,759   35,559 
Provision (reversal) for credit losses  (2,125)  1,058   (1,657)  (5,756)  1,000 
Net interest income after provision (reversal) for credit losses  39,340   37,917   36,287   37,515   34,559 
Non-interest income                    
Service charges and fees  2,471   2,360   2,169   1,596   1,759 
Debit card income  2,633   2,574   2,679   2,350   2,401 
Mortgage banking  722   801   848   935   855 
Increase in value of bank-owned life insurance  1,060   1,169   676   601   489 
Net gain on acquisition        663   (78)  2,145 
Net gains (losses) from securities transactions  8   381      17   (1)
Other  2,305   546   2,065   1,291   852 
Total non-interest income  9,199   7,831   9,100   6,712   8,500 
Non-interest expense                    
Salaries and employee benefits  15,119   13,588   12,769   12,722   14,053 
Net occupancy and equipment  2,967   2,475   2,327   2,368   2,206 
Data processing  3,867   3,257   3,474   2,663   2,748 
Professional fees  1,565   1,076   999   1,073   1,095 
Advertising and business development  1,129   760   799   682   801 
Telecommunications  435   439   512   580   510 
FDIC insurance  360   465   425   415   797 
Courier and postage  389   344   327   369   338 
Free nationwide ATM cost  515   519   513   472   423 
Amortization of core deposit intangibles  1,080   1,030   1,030   1,034   1,044 
Loan expense  308   207   181   238   161 
Other real estate owned  617   (342)  (468)  5   1,600 
Loss on debt extinguishment     372          
Merger expenses  4,562   4,015   460   152   299 
Other  5,176   2,484   2,458   2,108   2,385 
Total non-interest expense  38,089   30,689   25,806   24,881   28,460 
Income (loss) before income tax  10,450   15,059   19,581   19,346   14,599 
Provision for income taxes (benefit)  (16)  3,286   4,415   4,271   2,111 
Net income (loss) and net income (loss) allocable to common stockholders $10,466  $11,773  $15,166  $15,075  $12,488 
Basic earnings (loss) per share $0.62  $0.82  $1.06  $1.04  $0.85 
Diluted earnings (loss) per share $0.61  $0.80  $1.03  $1.02  $0.84 
Weighted average common shares  16,865,167   14,384,302   14,356,958   14,464,291   14,760,810 
Weighted average diluted common shares  17,141,174   14,669,312   14,674,838   14,734,083   14,934,058 

TABLE 3. CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in thousands)

  December 31,
2021
  September 30,
2021
  June 30,
2021
  March 31,
2021
  December 31,
2020
 
ASSETS                    
Cash and due from banks $259,131  $141,645  $138,869  $136,190  $280,150 
Federal funds sold  823   673   452   498   548 
Cash and cash equivalents  259,954   142,318   139,321   136,688   280,698 
Interest-bearing time deposits in other banks           249   249 
Available-for-sale securities  1,327,442   1,157,423   1,041,613   998,100   871,827 
Loans held for sale  4,214   4,108   6,183   8,609   12,394 
Loans, net of allowance for credit losses(1)  3,107,262   2,633,148   2,763,227   2,740,215   2,557,987 
Other real estate owned, net  9,523   10,267   10,861   10,559   11,733 
Premises and equipment, net  104,038   90,727   90,876   90,322   89,412 
Bank-owned life insurance  120,787   103,431   103,321   102,645   77,044 
Federal Reserve Bank and Federal Home Loan Bank stock  17,510   14,540   18,454   15,174   16,415 
Interest receivable  18,048   15,519   15,064   16,655   15,831 
Goodwill  56,609   31,601   31,601   31,601   31,601 
Core deposit intangibles, net  14,879   12,963   13,993   15,023   16,057 
Other  99,509   47,223   33,702   30,344   32,108 
Total assets $5,139,775  $4,263,268  $4,268,216  $4,196,184  $4,013,356 
LIABILITIES AND STOCKHOLDERS’ EQUITY                    
Deposits                    
Demand $1,244,117  $984,436  $992,565  $972,364  $791,639 
Total non-interest-bearing deposits  1,244,117   984,436   992,565   972,364   791,639 
Savings, NOW and money market  2,522,289   2,092,849   2,035,496   2,074,261   2,029,097 
Time  653,598   585,492   659,494   587,905   626,854 
Total interest-bearing deposits  3,175,887   2,678,341   2,694,990   2,662,166   2,655,951 
Total deposits  4,420,004   3,662,777   3,687,555   3,634,530   3,447,590 
Federal funds purchased and retail repurchase agreements  56,006   39,137   47,184   40,339   36,029 
Federal Home Loan Bank advances        9,208   9,926   10,144 
Subordinated debt  95,885   88,030   87,908   87,788   87,684 
Contractual obligations  17,692   18,771   4,469   4,856   5,189 
Interest payable and other liabilities  49,557   36,804   18,897   20,930   19,071 
Total liabilities  4,639,144   3,845,519   3,855,221   3,798,369   3,605,707 
Commitments and contingent liabilities                    
Stockholders’ equity                    
Common stock  203   178   176   175   174 
Additional paid-in capital  478,862   392,321   389,394   387,939   386,820 
Retained earnings  88,324   79,226   68,625   53,459   50,787 
Accumulated other comprehensive income, net of tax  1,776   9,475   13,450   12,019   19,781 
Employee stock loans              (43)
Treasury stock  (68,534)  (63,451)  (58,650)  (55,777)  (49,870)
Total stockholders’ equity  500,631   417,749   412,995   397,815   407,649 
Total liabilities and stockholders’ equity $5,139,775  $4,263,268  $4,268,216  $4,196,184  $4,013,356 
                     
(1) Allowance for credit losses $48,365  $52,763  $51,834  $55,525  $33,709 

TABLE 4. SELECTED FINANCIAL HIGHLIGHTS (Unaudited)
(Dollars in thousands, except per share data)

  As of and for the three months ended 
  December 31,  September 30,  June 30,  March 31,  December 31, 
  2021  2021  2021  2021  2020 
Loans Held For Investment by Type                    
Commercial real estate $1,486,148  $1,308,707  $1,261,214  $1,218,537  $1,188,696 
Commercial and industrial  567,497   569,513   732,126   820,736   734,495 
Residential real estate  638,087   490,633   503,110   438,503   381,958 
Agricultural real estate  198,330   138,793   129,020   134,944   133,693 
Agricultural  166,976   93,767   97,912   93,764   94,322 
Consumer  98,590   84,498   91,679   89,256   58,532 
Total loans held-for-investment  3,155,628   2,685,911   2,815,061   2,795,740   2,591,696 
Allowance for credit losses  (48,365)  (52,763)  (51,834)  (55,525)  (33,709)
Net loans held for investment $3,107,263  $2,633,148  $2,763,227  $2,740,215  $2,557,987 
                     
                     
Asset Quality Ratios                    
Allowance for credit losses on loans to total loans  1.53%  1.96%  1.84%  1.99%  1.30%
Past due or nonaccrual loans to total loans  1.18%  2.78%  2.09%  2.30%  1.99%
Nonperforming assets to total assets  1.28%  1.74%  1.56%  1.67%  1.36%
Nonperforming assets to total loans plus other
real estate owned
  2.09%  2.76%  2.36%  2.50%  2.10%
Classified assets to bank total regulatory capital  25.35%  24.25%  23.20%  26.45%  25.50%
                     
                     
Selected Average Balance Sheet Data (QTD Average)                    
Investment securities $1,330,267  $1,061,178  $986,986  $947,453  $814,114 
Total gross loans receivable  3,181,281   2,748,202   2,853,145   2,736,918   2,692,223 
Interest-earning assets  4,713,819   4,005,509   3,964,633   3,891,140   3,647,730 
Total assets  5,068,301   4,275,298   4,231,439   4,143,752   3,910,628 
Interest-bearing deposits  3,101,657   2,702,040   2,656,052   2,690,159   2,551,219 
Borrowings  165,941   132,581   171,658   139,360   172,730 
Total interest-bearing liabilities  3,267,598   2,834,621   2,827,710   2,829,519   2,723,949 
Total deposits  4,342,732   3,686,169   3,624,950   3,577,625   2,960,791 
Total liabilities  4,507,113   3,852,419   3,827,400   3,748,114   3,501,056 
Total stockholders' equity  563,023   422,879   404,039   395,638   409,572 
Tangible common equity*  501,814   376,544   356,705   347,262   355,025 
                     
                     
Performance ratios                    
Return on average assets (ROAA) annualized  0.82%  1.09%  1.44%  1.48%  1.27%
Return on average assets before income tax,
provision for loan losses and goodwill
impairment*
  0.65%  1.50%  1.70%  1.33%  1.59%
Return on average equity (ROAE) annualized  7.37%  11.05%  15.06%  15.45%  12.13%
Return on average equity before income tax,
provision for loan losses and goodwill
impairment*
  5.87%  15.12%  17.79%  13.93%  15.15%
Return on average tangible common equity
(ROATCE) annualized*
  8.97%  13.27%  17.98%  18.57%  14.93%
Return on average tangible common equity
adjusted for goodwill impairment*
  8.97%  13.27%  17.98%  18.57%  14.93%
Yield on loans annualized  4.36%  5.43%  4.75%  4.59%  5.23%
Cost of interest-bearing deposits annualized  0.25%  0.28%  0.31%  0.36%  0.43%
Cost of total deposits annualized  0.18%  0.20%  0.22%  0.27%  0.37%
Net interest margin annualized  3.13%  3.86%  3.50%  3.31%  3.88%
Efficiency ratio*  72.25%  56.65%  58.85%  64.18%  67.19%
Non-interest income / average assets  0.72%  0.73%  0.86%  0.66%  0.86%
Non-interest expense / average assets  2.98%  2.85%  2.45%  2.44%  2.90%
                     
                     
Capital Ratios                    
Tier 1 Leverage Ratio  9.05%  9.02%  8.88%  8.73%  9.30%
Common Equity Tier 1 Capital Ratio  12.00%  12.39%  12.41%  12.53%  12.82%
Tier 1 Risk Based Capital Ratio  12.65%  12.90%  12.93%  13.08%  13.37%
Total Risk Based Capital Ratio  15.94%  16.63%  16.74%  17.02%  17.35%
Total stockholders' equity to total assets  9.74%  9.80%  9.68%  9.48%  10.16%
Tangible common equity to tangible assets*  8.44%  8.82%  8.68%  8.44%  9.05%
Book value per common share $29.84  $29.08  $28.76  $27.66  $28.04 
Tangible book value per common share* $25.49  $25.90  $25.51  $24.34  $24.68 
Tangible book value per diluted common share* $25.09  $25.42  $24.98  $23.87  $24.32 

* The value noted is considered a Non-GAAP financial measure. For a reconciliation of Non-GAAP financial measures, see Table 8. Non-GAAP Financial Measures

TABLE 5. YEAR-TO-DATE NET INTEREST INCOME ANALYSIS (Unaudited)
(Dollars in thousands)

 For the year ended  For the year ended 
 December 31, 2021  December 31, 2020 
 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$714,561  $41,580   5.82% $763,971  $35,601   4.66%
Commercial real estate 1,040,443   48,676   4.68%  952,083   50,667   5.32%
Real estate construction 277,307   10,256   3.70%  238,015   10,947   4.60%
Residential real estate 498,164   19,341   3.88%  449,789   19,894   4.42%
Agricultural real estate 153,607   8,122   5.29%  133,813   8,008   5.98%
Agricultural 108,276   5,361   4.95%  88,206   4,944   5.61%
Consumer 88,383   3,998   4.52%  70,064   4,603   6.57%
Total loans 2,880,741   137,334   4.77%  2,695,941   134,664   5.00%
Securities                       
Taxable securities 976,942   15,996   1.64%  727,452   15,521   2.13%
Nontaxable securities 105,522   2,843   2.69%  122,783   3,682   3.00%
Total securities 1,082,464   18,839   1.74%  850,235   19,203   2.26%
Federal funds sold and other 182,443   1,195   0.65%  112,053   1,694   1.51%
Total interest-earning assets$4,145,648   157,368   3.80% $3,658,229   155,561   4.25%
Interest-bearing liabilities                       
Savings, NOW and money market deposits$2,162,807   3,705   0.17% $1,795,108   5,893   0.33%
Time deposits 625,562   4,550   0.73%  704,921   10,689   1.52%
Total interest-bearing deposits 2,788,369   8,255   0.30%  2,500,029   16,582   0.66%
FHLB advances 16,797   169   1.01%  213,155   2,292   1.08%
Other borrowings 135,607   6,365   4.69%  109,064   4,035   3.70%
Total interest-bearing liabilities$2,940,773   14,789   0.50% $2,822,248   22,909   0.81%
                        
Net interest income    $142,579          $132,652     
Interest rate spread         3.30%          3.44%
                        
Net interest margin (2)         3.44%          3.63%
                        
(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 
 December 31, 2021  December 31, 2020 
 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$601,103  $6,971   4.60% $782,433  $10,943   5.56%
Commercial real estate 1,187,747   13,732   4.59%  980,686   12,647   5.13%
Real estate construction 315,774   3,062   3.85%  216,714   2,301   4.22%
Residential real estate 618,057   5,174   3.32%  406,450   5,005   4.90%
Agricultural real estate 206,462   2,919   5.61%  135,337   2,244   6.60%
Agricultural 151,589   1,929   5.05%  92,173   1,163   5.02%
Consumer 100,547   1,155   4.56%  78,430   1,080   5.48%
Total loans 3,181,279   34,942   4.36%  2,692,223   35,383   5.23%
Securities                       
Taxable securities 1,209,826   4,754   1.56%  698,985   3,408   1.94%
Nontaxable securities 120,441   747   2.46%  115,129   913   3.15%
Total securities 1,330,267   5,501   1.64%  814,114   4,321   2.11%
Federal funds sold and other 202,271   348   0.68%  141,393   285   0.80%
Total interest-earning assets$4,713,817   40,791   3.43% $3,647,730   39,989   4.36%
Interest-bearing liabilities                       
Savings, NOW and money market deposits$2,418,492   978   0.16% $1,915,280   970   0.20%
Time deposits 683,165   962   0.56%  635,939   1,785   1.12%
Total interest-bearing deposits 3,101,657   1,940   0.25%  2,551,219   2,755   0.43%
FHLB advances 18,197   15   0.32%  39,245   94   0.95%
Other borrowings 147,744   1,624   4.36%  133,485   1,581   4.71%
Total interest-bearing liabilities$3,267,598   3,579   0.43% $2,723,949   4,430   0.65%
                        
Net interest income    $37,212          $35,559     
Interest rate spread         3.00%          3.71%
                        
Net interest margin (2)         3.13%          3.88%
                        
(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 
 December 31, 2021  September 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$601,103  $6,971   4.60% $630,622  $13,646   8.59%
Commercial real estate 1,187,747   13,732   4.59%  1,009,141   12,072   4.75%
Real estate construction 315,774   3,062   3.85%  283,106   2,664   3.73%
Residential real estate 618,057   5,174   3.32%  512,135   5,073   3.93%
Agricultural real estate 206,462   2,919   5.61%  134,673   1,819   5.36%
Agricultural 151,589   1,929   5.05%  91,878   1,370   5.92%
Consumer 100,547   1,155   4.56%  86,647   937   4.29%
Total loans 3,181,279   34,942   4.36%  2,748,202   37,581   5.43%
Securities                       
Taxable securities 1,209,826   4,754   1.56%  966,651   3,920   1.61%
Nontaxable securities 120,441   747   2.46%  94,527   655   2.75%
Total securities 1,330,267   5,501   1.64%  1,061,178   4,575   1.71%
Federal funds sold and other 202,271   348   0.68%  196,129   290   0.59%
Total interest-earning assets$4,713,817   40,791   3.43% $4,005,509   42,446   4.20%
Interest-bearing liabilities                       
Savings, NOW and money market deposits$2,418,492   978   0.16% $2,082,515   862   0.16%
Time deposits 683,165   962   0.56%  619,525   1,019   0.65%
Total interest-bearing deposits 3,101,657   1,940   0.25%  2,702,040   1,881   0.28%
FHLB advances 18,197   15   0.32%  1,401   10   2.78%
Other borrowings 147,744   1,624   4.36%  131,180   1,580   4.78%
Total interest-bearing liabilities$3,267,598   3,579   0.43% $2,834,621   3,471   0.49%
                        
Net interest income    $37,212          $38,975     
Interest rate spread         3.00%          3.71%
                        
Net interest margin (2)         3.13%          3.86%
                        
(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)

  As of and for the three months ended 
  December 31,  September 30,  June 30,  March 31,  December 31, 
  2021  2021  2021  2021  2020 
                     
Total stockholders' equity $500,631  $417,749  $412,995  $397,815  $407,649 
Less: goodwill  56,609   31,601   31,601   31,601   31,601 
Less: core deposit intangibles, net  14,879   12,963   13,993   15,023   16,057 
Less: mortgage servicing asset, net  276             
Less: naming rights, net  1,087   1,098   1,109   1,119   1,130 
Tangible common equity $427,780  $372,087  $366,292  $350,072  $358,861 
Common shares issued at period end  16,779,029   14,365,785   14,360,172   14,383,913   14,540,556 
Diluted common shares outstanding at period end  17,050,115   14,637,306   14,664,603   14,668,287   14,756,378 
Book value per common share $29.84  $29.08  $28.76  $27.66  $28.04 
Tangible book value per common share $25.49  $25.90  $25.51  $24.34  $24.68 
Tangible book value per diluted common share $25.09  $25.42  $24.98  $23.87  $24.32 
                     
Total assets $5,139,775  $4,263,268  $4,268,216  $4,196,184  $4,013,356 
Less: goodwill  56,609   31,601   31,601   31,601   31,601 
Less: core deposit intangibles, net  14,879   12,963   13,993   15,023   16,057 
Less: mortgage servicing asset, net  276             
Less: naming rights, net  1,087   1,098   1,109   1,119   1,130 
Tangible assets $5,066,924  $4,217,606  $4,221,513  $4,148,441  $3,964,568 
Total stockholders' equity to total assets  9.74%  9.80%  9.68%  9.48%  10.16%
Tangible common equity to tangible assets  8.44%  8.82%  8.68%  8.44%  9.05%
                     
Total average stockholders' equity $563,023  $422,879  $404,039  $395,638  $409,572 
Less: average intangible assets  61,209   46,335   47,334   48,376   54,547 
Average tangible common equity $501,814  $376,544  $356,705  $347,262  $355,025 
Net income (loss) allocable to common stockholders $10,466  $11,773  $15,166  $15,075  $12,488 
Amortization of intangible assets  1,116   1,040   1,041   1,045   1,055 
Less: tax effect of intangible assets amortization  234   218   219   219   222 
Adjusted net income (loss) allocable to common
stockholders
 $11,348  $12,595  $15,988  $15,901  $13,321 
Return on total average stockholders' equity
(ROAE) annualized
  7.37%  11.05%  15.06%  15.45%  12.13%
Return on average tangible common equity
(ROATCE) annualized
  8.97%  13.27%  17.98%  18.57%  14.93%
                     
Non-interest expense $38,089  $30,689  $25,806  $24,881  $28,460 
Less: merger expense  4,562   4,015   460   152   299 
Non-interest expense, excluding merger expense and loss
on debt extinguishment
 $33,527  $26,674  $25,346  $24,729  $28,161 
Net interest income $37,215  $38,975  $34,630  $31,759  $35,559 
Non-interest income  9,199   7,831   9,100   6,712   8,500 
Less: net gain on acquisition        663   (78)  2,145 
Less: net gains (losses) from securities transactions  8   381      17   (1)
Non-interest income, excluding gains (losses) from
securities transactions
 $9,191  $7,450  $8,437  $6,773  $6,356 
Net interest income plus non-interest income,
excluding net gain on acquisition and net gains
(losses) from securities transactions
 $46,406  $46,425  $43,067  $38,532  $41,915 
Non-interest expense to
net interest income plus non-interest income
  82.06%  65.57%  59.01%  64.67%  64.60%
Efficiency ratio  72.25%  57.46%  58.85%  64.18%  67.19%
Net income (loss) allocable to common stockholders $10,466  $11,773  $15,166  $15,075  $12,488 
Add: income tax provision  (16)  3,286   4,415   4,271   2,111 
Add: provision (reversal) of credit losses  (2,125)  1,058   (1,657)  (5,756)  1,000 
Adjusted net income $8,325  $16,117  $17,924  $13,590  $15,599 
Total average assets $5,068,301  $4,275,298  $4,231,439  $4,143,752  $3,910,628 
Total average stockholders' equity $563,023  $422,879  $404,039  $395,638  $409,572 
Return on average assets (ROAA) annualized  0.82%  1.09%  1.44%  1.48%  1.27%
Adjusted return on average assets  0.65%  1.50%  1.70%  1.33%  1.59%
Adjusted return on average equity  5.87%  15.12%  17.79%  13.93%  15.15%


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