Equity Bancshares, Inc. Reports Fourth Quarter Results, Strong Organic Loan Growth, and Improved Asset Quality Metrics
01/25/2023 - 05:01 PM
Record full year income of $57.7 million ; Net interest income of $42.0 million ; Continued NIM expansion; and Ratio of Non-performing Assets to Assets falls to 37 basis points
WICHITA, Kan., Jan. 25, 2023 (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 $11.6 million and $0.72 earnings per diluted share for the quarter ended December 31, 2022. For the full year ending December 31, 2022, reported net income totaled $57.7 million or $3.51 per diluted share compared to $52.5 million or $3.43 per diluted share for the full year ending December 31, 2021.
"Our Company was able to deliver two records in 2022. First, record net income of $57.7 million and second, record revenue of $197.8 million . These achievements are a testament to the strength of our franchise despite economic uncertainty and changing consumer habits,” said Brad S. Elliott, Chairman and CEO, Equity Bancshares, Inc. “We’ve been able to offer competitive products and rely on our local market leadership to continue to add customer relationships based on value, convenience, and our brand. As we compete for business and consumer relationships, our teams continue working tirelessly to enhance our products and technology while delivering superior customer service.”
Mr. Elliott continued, “We also saw improvement in key credit ratios, including non-performing assets to total assets down to 0.37% from 1.28% year-over-year, thanks to the disciplined work of our bankers. We took the opportunity in 2022 to invest in our people and technology, allowing us to deliver best-in-class banking products and services into the future. Our Equity teams helped us earn regional honors like Best Places to Work by the Wichita Business Journal, and we were recognized as one of Newsweek’s Best Banks in the U.S. With our prudent loan underwriting standards, growing capital base, and diversified deposit portfolio, we are well positioned to continue to generate excellent financial results for our shareholders.”
Notable Items:
The Company’s loan growth, excluding PPP and branch sales, was $56.8 million , or 6.9% linked quarter annualized including 9.25% annualized growth within the commercial and commercial real estate portfolios. Loan growth for the full year of 2022 was $220.0 million or 9.5% as compared to year-end 2021. Total FHLB borrowings declined $47.1 million during the quarter ending December 31, 2022 or 25.3% from $186 million at September 30, 2022. Deposits increased $15.2 million during the fourth quarter, or 0.4% . Book Value per Common Share increased $1.03 linked quarter to $25.74, while Tangible Book Value per Common Share increased $1.08 t o $21.67. During the quarter, the Company realized linked period Net Interest Margin growth of 5 basis points, equating to record Net Interest Income of $42.0 million . Equity repurchased $5.5 million of common stock representing 1.0% of shares outstanding as of the end of the third quarter. During the quarter ending December 31, 2022, the ratio of non-performing assets to total assets improved 22bps linked quarter to 0.4% , and the ratio of Classified Assets to Bank Regulatory Capital improved to 10.0% from 11.0% . Financial Results for the Quarter Ended December 31, 2022
Net income allocable to common stockholders was $11.6 million , or $0.72 per diluted share, for the three months ended December 31, 2022, as compared to $15.2 million , or $0.93 per diluted share, for the three months ended September 30, 2022. The decrease during the quarter was primarily driven by an increase in non-interest expense of $3.0 million as the Company continued to invest in its people, processes and the communities we serve.
Net Interest Income
Net interest income was $42.0 million for the three months ended December 31, 2022, as compared to $41.9 million for the three months ended September 30, 2022, an increase of $87 thousand , or 0.2% . The yield on interest-earning assets increased 49 basis points to 4.7% . The cost of interest-bearing deposits increased by 48 basis points during the quarter, moving from 0.6% at September 30, 2022, to 1.1% at December 31, 2022.
During the quarter, the Company realized the benefit of an emphasis on re-positioning interest earning assets into the loan portfolio with realized expansion of loans as a percentage of average assets. While total average assets were down, driven by the impact of the fair value mark on the investment portfolio, average loans in total and as a percentage of earning assets increased, comprising 72.2% of average earnings assets during the quarter. The Company continues to expect repositioning of investment portfolio assets into the loan portfolio.
Average interest-bearing liabilities moved up slightly during the quarter as the Company experienced a minor compositional shift from noninterest-bearing deposits into interest bearing categories while also paying down the level of debt on the balance sheet. Overall deposit levels increased $15.2 million , or 1.4% annualized linked quarter.
Provision for Credit Losses
During the three months ended December 31, 2022, there was a net release of $151 thousand compared to a net release of $136 thousand in the previous quarter. The minimal release of provision for the quarter is the result of continued positive credit trends without realization of meaningful losses. 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 December 31, 2022, we had net charge-offs of $501 thousand as compared to $1.6 million for the three months ended September 30, 2022.
Non-Interest Income
Total non-interest income was $8.3 million for the three months ended December 31, 2022, as compared to $9.0 million for the three months ended September 30, 2022, or a decrease of 7.1% , quarter-over-quarter. The $640 thousand decrease was primarily due to a decrease in loan repurchase obligation reversal of $280 thousand , mortgage banking revenue of $194 thousand , and derivative fair valuation changes of $175 thousand .
Non-Interest Expense
Total non-interest expense for the quarter ended December 31, 2022, was $35.2 million as compared to $32.2 million for the quarter ended September 30, 2022. The $3.0 million change was primarily due to increases in advertising and business development of $712 thousand driven by deposit campaigns, salaries and employee benefits of $671 thousand reflecting higher full-time equivalents reducing our job vacancy rate, write-off of tax credit investments of $537 thousand and an unfavorable change in losses on disposal of repossessed assets of $343 thousand reflecting a $333 thousand gain recognized in the third quarter of 2022.
Income Tax Expense
At December 31, 2022, the full year effective tax rate for 2022 was 17.9% as compared to an expectation of 16.2% as of September 30, 2022. The comparative increase in tax rate resulted in $1.2 million in additive income tax expense during the fourth quarter calculated as the full year’s pre-tax income multiplied by the change in effective tax rate expectation.
The increase in the effective tax rate was driven by the Company’s investment in solar tax credits for which timing of implementation and credit receipt is not certain. During the quarter, the timing on one of the investments moved back compared to expectations as of the end of September, resulting in less credits being received in 2022. The timing issue is expected to be resolved in the first quarter of 2023 with no material impact to the overall return on the investment.
Loans, Total Assets and Funding
Loans held for investments were $3.3 billion at December 31, 2022, increasing 6.9% on an annualized basis compared to previous quarter end. Excluding the impact of PPP loans and loans sold in branch transactions, balances have increased $220.0 million , or 9.5% year-over-year. Included in the annual growth, is $301.7 million within the commercial and industrial and commercial real estate portfolios, or 15.0% . Total assets were $5.0 billion as of December 31, 2022.
Total deposits were $4.2 billion at December 31, 2022, increasing 1.4% annualized compared to previous quarter end. Of this balance, non-interesting bearing accounts comprise approximately 25.9% . Borrowings from the FHLB declined $47.1 million to $138.9 million during the quarter.
Asset Quality
As of December 31, 2022, Equity’s allowance for credit losses to total loans remained materially consistent at 1.4% as compared to September 30, 2022. Nonperforming assets were $18.2 million as of December 31, 2022, or 0.4% of total assets, compared to $29.7 million at September 30, 2022, or 0.6% of total assets. Non-accrual loans were $17.6 million at December 31, 2022, as compared to $23.1 million at September 30, 2022. Total classified assets, including loans rated special mention or worse, other real estate owned, excluding previous branch locations, and other repossessed assets were $58.7 million , or 10.0% of regulatory capital, down from $63.1 million , or 11.0% of regulatory capital as of September 30, 2022.
During the quarter ended December 31, 2022, non-performing assets decreased $11.4 million due to decreases in other real estate owned of $5.7 million , non-accrual loans of $5.5 million and other repossessed assets of $174 thousand .
Capital
During the quarter, the Company realized expansion in both book and tangible capital, as well as book and tangible capital per share as dividends and costs incurred to repurchase shares were outpaced by earnings and partial recovery of the negative fair value mark on the investment portfolio.
The Company’s ratio of common equity tier 1 capital to risk-weighted assets was 12.3% , the total capital to risk-weighted assets was 16.1% and the total leverage ratio was 9.6% at December 31, 2022. At September 30, 2022, 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 16.1% 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 14.5% , a ratio of total capital to risk-weighted assets of 15.7% and a total leverage ratio of 10.8% at December 31, 2022. At September 30, 2022, Equity Bank’s ratio of common equity tier 1 capital to risk-weighted assets was 14.2% , the ratio of total capital to risk-weighted assets was 15.5% and the total leverage ratio was 10.5% .
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 fourth quarter results on Thursday, January 26, 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 registration link
A replay of the call and webcast will be available two hours following the close of the call until February 3, 2023, accessible at investor.equitybank.com
About Equity Bancshares, Inc. 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, except as required by law. 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
Media Contact:
John J. Hanley
Unaudited Financial Tables
Table 1 . Consolidated Statements of IncomeTable 2 . Quarterly Consolidated Statements of IncomeTable 3 . Consolidated Balance SheetsTable 4 . Selected Financial HighlightsTable 5 . Year-To-Date Net Interest Income AnalysisTable 6 . Quarter-To-Date Net Interest Income AnalysisTable 7 . Quarter-Over-Quarter Net Interest Income AnalysisTable 8 . Non-GAAP Financial MeasuresTABLE 1. CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three months ended December 31, Year ended December 31, 2022 2021 2022 2021 Interest and dividend income Loans, including fees $ 46,149 $ 34,942 $ 160,859 $ 137,334 Securities, taxable 5,946 4,754 22,713 15,996 Securities, nontaxable 678 747 2,698 2,843 Federal funds sold and other 651 349 1,978 1,195 Total interest and dividend income 53,424 40,792 188,248 157,368 Interest expense Deposits 8,013 1,939 16,321 8,255 Federal funds purchased and retail repurchase agreements 82 32 232 104 Federal Home Loan Bank advances 1,500 14 2,094 169 Subordinated debt 1,798 1,592 6,771 6,261 Total interest expense 11,393 3,577 25,418 14,789 Net interest income 42,031 37,215 162,830 142,579 Provision (reversal) for credit losses (151 ) (2,125 ) 125 (8,480 ) Net interest income after provision (reversal) for credit losses 42,182 39,340 162,705 151,059 Non-interest income Service charges and fees 2,705 2,471 10,632 8,596 Debit card income 2,557 2,633 10,677 10,236 Mortgage banking 116 722 1,416 3,306 Increase in value of bank-owned life insurance 758 1,060 3,113 3,506 Net gain on acquisition and branch sales 422 — 962 585 Net gains (losses) from securities transactions 14 8 5 406 Other 1,757 2,305 9,152 6,207 Total non-interest income 8,329 9,199 35,957 32,842 Non-interest expense Salaries and employee benefits 16,113 15,119 62,006 54,198 Net occupancy and equipment 2,919 2,967 12,223 10,137 Data processing 4,334 3,867 15,883 13,261 Professional fees 1,404 1,565 4,951 4,713 Advertising and business development 1,903 1,129 5,042 3,370 Telecommunications 517 435 1,916 1,966 FDIC insurance 360 360 1,140 1,665 Courier and postage 533 389 1,881 1,429 Free nationwide ATM cost 510 515 2,103 2,019 Amortization of core deposit intangibles 924 1,080 4,042 4,174 Loan expense 262 308 828 934 Other real estate owned 388 617 589 (188 ) Loss on debt extinguishment — — — 372 Merger expenses 68 4,562 594 9,189 Other 5,014 5,176 15,182 12,226 Total non-interest expense 35,249 38,089 128,380 119,465 Income (loss) before income tax 15,262 10,450 70,282 64,436 Provision for income taxes 3,654 (16 ) 12,594 11,956 Net income (loss) and net income (loss) allocable to common stockholders $ 11,608 $ 10,466 $ 57,688 $ 52,480 Basic earnings (loss) per share $ 0.73 $ 0.62 $ 3.56 $ 3.49 Diluted earnings (loss) per share $ 0.72 $ 0.61 $ 3.51 $ 3.43 Weighted average common shares 15,948,360 16,865,167 16,214,049 15,019,221 Weighted average diluted common shares 16,204,185 17,141,174 16,437,906 15,306,431
TABLE 2. QUARTERLY CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
As of and for the three months ended December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 December 31, 2021 Interest and dividend income Loans, including fees $ 46,149 $ 41,555 $ 36,849 $ 36,306 $ 34,942 Securities, taxable 5,946 5,792 5,584 5,391 4,754 Securities, nontaxable 678 687 678 655 747 Federal funds sold and other 651 514 513 300 349 Total interest and dividend income 53,424 48,548 43,624 42,652 40,792 Interest expense Deposits 8,013 4,403 2,183 1,722 1,939 Federal funds purchased and retail repurchase agreements 82 71 46 33 32 Federal Home Loan Bank advances 1,500 409 176 9 14 Subordinated debt 1,798 1,721 1,653 1,599 1,592 Total interest expense 11,393 6,604 4,058 3,363 3,577 Net interest income 42,031 41,944 39,566 39,289 37,215 Provision (reversal) for credit losses (151 ) (136 ) 824 (412 ) (2,125 ) Net interest income after provision (reversal) for credit losses 42,182 42,080 38,742 39,701 39,340 Non-interest income Service charges and fees 2,705 2,788 2,617 2,522 2,471 Debit card income 2,557 2,682 2,810 2,628 2,633 Mortgage banking 116 310 428 562 722 Increase in value of bank-owned life insurance 758 754 736 865 1,060 Net gain on acquisition and branch sales 422 — 540 — — Net gains (losses) from securities transactions 14 (17 ) (32 ) 40 8 Other 1,757 2,452 2,538 2,405 2,305 Total non-interest income 8,329 8,969 9,637 9,022 9,199 Non-interest expense Salaries and employee benefits 16,113 15,442 15,383 15,068 15,119 Net occupancy and equipment 2,919 3,127 3,007 3,170 2,967 Data processing 4,334 4,138 3,642 3,769 3,867 Professional fees 1,404 1,265 1,111 1,171 1,565 Advertising and business development 1,903 1,191 972 976 1,129 Telecommunications 517 487 442 470 435 FDIC insurance 360 340 260 180 360 Courier and postage 533 436 489 423 389 Free nationwide ATM cost 510 551 541 501 515 Amortization of core deposit intangibles 924 957 1,111 1,050 1,080 Loan expense 262 174 207 185 308 Other real estate owned 388 188 14 (1 ) 617 Loss on debt extinguishment — — — — — Merger expenses 68 115 88 323 4,562 Other 5,014 3,825 4,169 2,174 5,176 Total non-interest expense 35,249 32,236 31,436 29,459 38,089 Income (loss) before income tax 15,262 18,813 16,943 19,264 10,450 Provision for income taxes (benefit) 3,654 3,642 1,684 3,614 (16 ) Net income (loss) and net income (loss) allocable to common stockholders $ 11,608 $ 15,171 $ 15,259 $ 15,650 $ 10,466 Basic earnings (loss) per share $ 0.73 $ 0.94 $ 0.95 $ 0.94 $ 0.62 Diluted earnings (loss) per share $ 0.72 $ 0.93 $ 0.94 $ 0.93 $ 0.61 Weighted average common shares 15,948,360 16,056,658 16,206,978 16,652,556 16,865,167 Weighted average diluted common shares 16,204,185 16,273,231 16,413,248 16,869,152 17,141,174
TABLE 3. CONSOLIDATED BALANCE SHEETS (Unaudited)
December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 December 31, 2021 ASSETS Cash and due from banks $ 101,662 $ 155,039 $ 103,126 $ 89,764 $ 259,131 Federal funds sold 415 374 458 286 823 Cash and cash equivalents 102,077 155,413 103,584 90,050 259,954 Available-for-sale securities 1,184,390 1,198,962 1,288,180 1,352,894 1,327,442 Held-to-maturity securities 1,948 — — — — Loans held for sale 349 1,518 1,714 1,575 4,214 Loans, net of allowance for credit losses(1) 3,265,701 3,208,524 3,175,208 3,194,987 3,107,262 Other real estate owned, net 4,409 10,412 12,969 9,897 9,523 Premises and equipment, net 101,492 100,566 101,212 103,168 104,038 Bank-owned life insurance 123,176 122,418 121,665 120,928 120,787 Federal Reserve Bank and Federal Home Loan Bank stock 21,695 24,428 21,479 19,890 17,510 Interest receivable 20,630 18,497 16,519 16,923 18,048 Goodwill 53,101 53,101 53,101 54,465 54,465 Core deposit intangibles, net 10,596 11,598 12,554 13,830 14,879 Other 92,087 94,978 93,971 100,016 99,509 Total assets $ 4,981,651 $ 5,000,415 $ 5,002,156 $ 5,078,623 $ 5,137,631 LIABILITIES AND STOCKHOLDERS’ EQUITY Deposits Demand $ 1,097,899 $ 1,217,094 $ 1,194,863 $ 1,255,793 $ 1,244,117 Total non-interest-bearing deposits 1,097,899 1,217,094 1,194,863 1,255,793 1,244,117 Demand, savings and money market 2,329,584 2,335,847 2,445,545 2,511,478 2,522,289 Time 814,324 673,670 651,363 612,399 653,598 Total interest-bearing deposits 3,143,908 3,009,517 3,096,908 3,123,877 3,175,887 Total deposits 4,241,807 4,226,611 4,291,771 4,379,670 4,420,004 Federal funds purchased and retail repurchase agreements 46,478 47,443 52,750 48,199 56,006 Federal Home Loan Bank advances 138,864 186,001 80,000 50,000 — Subordinated debt 96,392 96,263 96,135 96,010 95,885 Contractual obligations 15,218 15,562 15,813 17,307 17,692 Interest payable and other liabilities 32,834 32,729 37,572 35,422 47,413 Total liabilities 4,571,593 4,604,609 4,574,041 4,626,608 4,637,000 Commitments and contingent liabilities Stockholders’ equity Common stock 205 204 204 204 203 Additional paid-in capital 484,989 482,668 480,897 480,106 478,862 Retained earnings 140,095 130,114 116,576 102,632 88,324 Accumulated other comprehensive income (loss), net of tax (113,511 ) (120,918 ) (77,426 ) (50,012 ) 1,776 Treasury stock (101,720 ) (96,262 ) (92,136 ) (80,915 ) (68,534 ) Total stockholders’ equity 410,058 395,806 428,115 452,015 500,631 Total liabilities and stockholders’ equity $ 4,981,651 $ 5,000,415 $ 5,002,156 $ 5,078,623 $ 5,137,631 (1) Allowance for credit losses$ 45,847 $ 46,499 $ 48,238 $ 47,590 $ 48,365
TABLE 4. SELECTED FINANCIAL HIGHLIGHTS (Unaudited)
As of and for the three months ended December 31, September 30, June 30, March 31, December 31, 2022 2022 2022 2022 2021 Loans Held For Investment by Type Commercial real estate $ 1,721,269 $ 1,655,646 $ 1,643,068 $ 1,552,134 $ 1,486,148 Commercial and industrial 594,862 607,722 578,899 629,181 567,497 Residential real estate 570,550 573,431 578,936 613,928 638,087 Agricultural real estate 199,189 200,415 197,938 198,844 198,330 Agricultural 120,003 115,048 124,753 150,077 166,975 Consumer 105,675 102,761 99,852 98,413 98,590 Total loans held-for-investment 3,311,548 3,255,023 3,223,446 3,242,577 3,155,627 Allowance for credit losses (45,847 ) (46,499 ) (48,238 ) (47,590 ) (48,365 ) Net loans held for investment $ 3,265,701 $ 3,208,524 $ 3,175,208 $ 3,194,987 $ 3,107,262 Asset Quality Ratios Allowance for credit losses on loans to total loans 1.38 % 1.43 % 1.50 % 1.47 % 1.53 % Past due or nonaccrual loans to total loans 0.72 % 0.94 % 0.78 % 0.82 % 1.18 % Nonperforming assets to total assets 0.37 % 0.59 % 0.74 % 0.74 % 1.28 % Nonperforming assets to total loans plus other 0.55 % 0.91 % 1.14 % 1.15 % 2.07 % Classified assets to bank total regulatory capital 9.98 % 11.03 % 13.08 % 17.12 % 25.34 % Selected Average Balance Sheet Data (QTD Average) Investment securities $ 1,184,452 $ 1,272,414 $ 1,319,099 $ 1,397,421 $ 1,330,267 Total gross loans receivable 3,275,284 3,240,998 3,216,853 3,195,787 3,181,279 Interest-earning assets 4,538,177 4,602,568 4,675,967 4,715,389 4,713,817 Total assets 4,930,231 4,988,755 5,067,686 5,108,120 5,068,278 Interest-bearing deposits 3,032,902 3,081,245 3,112,300 3,163,777 3,101,657 Borrowings 299,191 221,514 238,062 160,094 165,941 Total interest-bearing liabilities 3,335,557 3,302,759 3,350,362 3,323,871 3,267,598 Total deposits 4,185,904 4,283,855 4,340,196 4,393,879 4,342,732 Total liabilities 4,531,959 4,552,564 4,630,204 4,615,521 4,505,232 Total stockholders' equity 398,270 436,191 437,483 492,599 563,046 Tangible common equity* 332,820 369,746 368,505 422,418 501,860 Performance ratios Return on average assets (ROAA) annualized 0.93 % 1.21 % 1.21 % 1.24 % 0.82 % Return on average assets before income tax and 1.22 % 1.49 % 1.41 % 1.50 % 0.65 % Return on average equity (ROAE) annualized 11.56 % 13.80 % 13.99 % 12.88 % 7.37 % Return on average equity before income tax and 15.05 % 16.99 % 16.29 % 15.52 % 5.87 % Return on average tangible common equity * 14.74 % 17.12 % 17.60 % 15.85 % 8.97 % Yield on loans annualized 5.59 % 5.09 % 4.59 % 4.61 % 4.36 % Cost of interest-bearing deposits annualized 1.05 % 0.57 % 0.28 % 0.22 % 0.25 % Cost of total deposits annualized 0.76 % 0.41 % 0.20 % 0.16 % 0.18 % Net interest margin annualized 3.67 % 3.62 % 3.39 % 3.38 % 3.13 % Efficiency ratio* 70.47 % 63.07 % 64.38 % 60.36 % 72.25 % Non-interest income / average assets 0.67 % 0.71 % 0.76 % 0.72 % 0.72 % Non-interest expense / average assets 2.84 % 2.56 % 2.49 % 2.34 % 2.98 % Capital Ratios Tier 1 Leverage Ratio 9.61 % 9.46 % 9.11 % 9.07 % 9.09 % Common Equity Tier 1 Capital Ratio 12.26 % 12.15 % 12.08 % 11.81 % 12.03 % Tier 1 Risk Based Capital Ratio 12.88 % 12.77 % 12.71 % 12.43 % 12.67 % Total Risk Based Capital Ratio 16.08 % 15.99 % 15.97 % 15.66 % 15.96 % Total stockholders' equity to total assets 8.23 % 7.92 % 8.56 % 8.90 % 9.74 % Tangible common equity to tangible assets* 7.02 % 6.68 % 7.32 % 7.63 % 8.48 % Dividend payout ratio 14.01 % 10.78 % 8.61 % 8.58 % 13.05 % Book value per common share $ 25.74 $ 24.71 $ 26.58 $ 27.47 $ 29.87 Tangible book value per common share* $ 21.67 $ 20.59 $ 22.42 $ 23.24 $ 25.65 Tangible book value per diluted common share* $ 21.35 $ 20.33 $ 22.17 $ 22.95 $ 25.22
TABLE 5. YEAR-TO-DATE NET INTEREST INCOME ANALYSIS (Unaudited)
For the year ended For the year ended December 31, 2022 December 31, 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 $ 583,295 $ 32,258 5.53 % $ 714,561 $ 41,580 5.82 % Commercial real estate 1,259,257 65,122 5.17 % 1,040,443 48,676 4.68 % Real estate construction 363,902 18,269 5.02 % 277,307 10,256 3.70 % Residential real estate 597,196 22,004 3.68 % 498,164 19,341 3.88 % Agricultural real estate 201,295 11,399 5.66 % 153,607 8,122 5.29 % Agricultural 125,342 6,697 5.34 % 108,276 5,361 4.95 % Consumer 102,185 5,110 5.00 % 88,383 3,998 4.52 % Total loans 3,232,472 160,859 4.98 % 2,880,741 137,334 4.77 % Securities Taxable securities 1,185,750 22,713 1.92 % 976,942 15,996 1.64 % Nontaxable securities 106,955 2,698 2.52 % 105,522 2,843 2.69 % Total securities 1,292,705 25,411 1.97 % 1,082,464 18,839 1.74 % Federal funds sold and other 107,278 1,978 1.84 % 182,443 1,195 0.65 % Total interest-earning assets $ 4,632,455 188,248 4.06 % $ 4,145,648 157,368 3.80 % Interest-bearing liabilities Demand, savings and money market deposits $ 2,433,364 10,797 0.44 % $ 2,162,807 3,705 0.17 % Time deposits 663,790 5,524 0.83 % 625,562 4,550 0.73 % Total interest-bearing deposits 3,097,154 16,321 0.53 % 2,788,369 8,255 0.30 % FHLB advances 79,775 2,094 2.63 % 16,797 169 1.01 % Other borrowings 151,172 7,003 4.63 % 135,607 6,365 4.69 % Total interest-bearing liabilities $ 3,328,101 25,418 0.76 % $ 2,940,773 14,789 0.50 % Net interest income $ 162,830 $ 142,579 Interest rate spread 3.30 % 3.30 % Net interest margin (2) 3.52 % 3.44 % (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)
For the three months ended For the three months ended December 31, 2022 December 31, 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 $ 594,221 $ 9,264 6.19 % $ 601,103 $ 6,971 4.60 % Commercial real estate 1,327,438 19,127 5.72 % 1,187,747 13,732 4.59 % Real estate construction 367,935 5,827 6.28 % 315,774 3,062 3.85 % Residential real estate 576,357 5,667 3.90 % 618,057 5,174 3.32 % Agricultural real estate 200,492 3,353 6.64 % 206,462 2,919 5.61 % Agricultural 104,146 1,443 5.50 % 151,589 1,929 5.05 % Consumer 104,695 1,468 5.57 % 100,547 1,155 4.56 % Total loans 3,275,284 46,149 5.59 % 3,181,279 34,942 4.36 % Securities Taxable securities 1,083,986 5,946 2.18 % 1,209,826 4,754 1.56 % Nontaxable securities 100,466 678 2.68 % 120,441 747 2.46 % Total securities 1,184,452 6,624 2.22 % 1,330,267 5,501 1.64 % Federal funds sold and other 78,441 651 3.29 % 202,271 348 0.68 % Total interest-earning assets $ 4,538,177 53,424 4.67 % $ 4,713,817 40,791 3.43 % Interest-bearing liabilities Demand, savings and money market deposits $ 2,294,639 5,336 0.92 % $ 2,418,492 978 0.16 % Time deposits 738,263 2,677 1.44 % 683,165 962 0.56 % Total interest-bearing deposits 3,032,902 8,013 1.05 % 3,101,657 1,940 0.25 % FHLB advances 155,964 1,500 3.82 % 18,197 15 0.32 % Other borrowings 146,691 1,880 5.09 % 147,744 1,624 4.36 % Total interest-bearing liabilities $ 3,335,557 11,393 1.36 % $ 3,267,598 3,579 0.43 % Net interest income $ 42,031 $ 37,212 Interest rate spread 3.31 % 3.00 % Net interest margin (2) 3.67 % 3.13 % (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)
For the three months ended For the three months ended December 31, 2022 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 $ 594,221 $ 9,264 6.19 % $ 575,149 $ 7,750 5.35 % Commercial real estate 1,327,438 19,127 5.72 % 1,307,244 18,023 5.47 % Real estate construction 367,935 5,827 6.28 % 360,579 4,847 5.33 % Residential real estate 576,357 5,667 3.90 % 582,938 5,464 3.72 % Agricultural real estate 200,492 3,353 6.64 % 200,534 2,740 5.42 % Agricultural 104,146 1,443 5.50 % 113,351 1,406 4.92 % Consumer 104,695 1,468 5.57 % 101,203 1,325 5.20 % Total loans 3,275,284 46,149 5.59 % 3,240,998 41,555 5.09 % Securities Taxable securities 1,083,986 5,946 2.18 % 1,164,697 5,793 1.97 % Nontaxable securities 100,466 678 2.68 % 107,717 687 2.53 % Total securities 1,184,452 6,624 2.22 % 1,272,414 6,480 2.02 % Federal funds sold and other 78,441 651 3.29 % 89,156 513 2.29 % Total interest-earning assets $ 4,538,177 53,424 4.67 % $ 4,602,568 48,548 4.18 % Interest-bearing liabilities Demand savings and money market deposits $ 2,294,639 5,336 0.92 % $ 2,425,824 3,118 0.51 % Time deposits 738,263 2,677 1.44 % 655,421 1,285 0.78 % Total interest-bearing deposits 3,032,902 8,013 1.05 % 3,081,245 4,403 0.57 % FHLB advances 155,964 1,500 3.82 % 71,415 409 2.27 % Other borrowings 146,691 1,880 5.09 % 150,099 1,792 4.74 % Total interest-bearing liabilities $ 3,335,557 11,393 1.36 % $ 3,302,759 6,604 0.79 % Net interest income $ 42,031 $ 41,944 Interest rate spread 3.31 % 3.39 % Net interest margin (2) 3.67 % 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.
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, 2022 2022 2022 2022 2021 Total stockholders' equity $ 410,058 $ 395,806 $ 428,115 $ 452,015 $ 500,631 Less: goodwill 53,101 53,101 53,101 54,465 54,465 Less: core deposit intangibles, net 10,596 11,598 12,554 13,830 14,879 Less: mortgage servicing rights, net 176 201 226 251 276 Less: naming rights, net 1,044 1,054 1,065 1,076 1,087 Tangible common equity $ 345,141 $ 329,852 $ 361,169 $ 382,393 $ 429,924 Common shares outstanding at period end 15,930,112 16,017,834 16,106,818 16,454,966 16,760,115 Diluted common shares outstanding at period end 16,163,253 16,225,591 16,289,635 16,662,779 17,050,115 Book value per common share $ 25.74 $ 24.71 $ 26.58 $ 27.47 $ 29.87 Tangible book value per common share $ 21.67 $ 20.59 $ 22.42 $ 23.24 $ 25.65 Tangible book value per diluted common share $ 21.35 $ 20.33 $ 22.17 $ 22.95 $ 25.22 Total assets $ 4,981,651 $ 5,000,415 $ 5,002,156 $ 5,078,623 $ 5,137,631 Less: goodwill 53,101 53,101 53,101 54,465 54,465 Less: core deposit intangibles, net 10,596 11,598 12,554 13,830 14,879 Less: mortgage servicing rights, net 176 201 226 251 276 Less: naming rights, net 1,044 1,054 1,065 1,076 1,087 Tangible assets $ 4,916,734 $ 4,934,461 $ 4,935,210 $ 5,009,001 $ 5,066,924 Total stockholders' equity to total assets 8.23 % 7.92 % 8.56 % 8.90 % 9.74 % Tangible common equity to tangible assets 7.02 % 6.68 % 7.32 % 7.63 % 8.48 % Total average stockholders' equity $ 398,270 $ 436,191 $ 437,483 $ 492,599 $ 563,046 Less: average intangible assets 65,450 66,445 68,978 70,181 61,186 Average tangible common equity $ 332,820 $ 369,746 $ 368,505 $ 422,418 $ 501,860 Net income (loss) allocable to common stockholders $ 11,608 $ 15,171 $ 15,259 $ 15,650 $ 10,466 Add: amortization of intangible assets 961 992 1,148 1,085 1,116 Less: tax effect of intangible assets amortization 202 208 241 228 234 Adjusted net income (loss) allocable to common stockholders $ 12,367 $ 15,955 $ 16,166 $ 16,507 $ 11,348 Return on total average stockholders' equity (ROAE) annualized 11.56 % 13.80 % 13.99 % 12.88 % 7.37 % Return on average tangible common equity (ROATCE) annualized 14.74 % 17.12 % 17.60 % 15.85 % 8.97 % Non-interest expense $ 35,248 $ 32,236 $ 31,436 $ 29,459 $ 38,089 Less: loss on debt extinguishment — — — — — Less: merger expense 68 115 88 323 4,562 Adjusted non-interest expense $ 35,180 $ 32,121 $ 31,348 $ 29,136 $ 33,527 Net interest income $ 42,031 $ 41,944 $ 39,566 $ 39,289 $ 37,215 Non-interest income 8,330 8,969 9,637 9,022 9,199 Less: net gain on acquisition and branch sales 422 — 540 — — Less: net gains (losses) from securities transactions 14 (17 ) (32 ) 40 8 Adjusted non-interest income $ 7,894 $ 8,986 $ 9,129 $ 8,982 $ 9,191 Net interest income plus adjusted non-interest income $ 49,925 $ 50,930 $ 48,695 $ 48,271 $ 46,406 Non-interest expense to net interest income plus non-interest income 69.99 % 63.32 % 63.89 % 60.98 % 82.06 % Efficiency ratio 70.47 % 63.07 % 64.38 % 60.36 % 72.25 % Net income (loss) allocable to common stockholders $ 11,608 $ 15,171 $ 15,259 $ 15,650 $ 10,466 Add: income tax provision 3,654 3,642 1,684 3,614 (16 ) Add: provision (reversal) of credit losses (151 ) (136 ) 824 (412 ) (2,125 ) Pre-tax, pre-provision income $ 15,111 $ 18,677 $ 17,767 $ 18,852 $ 8,325 Total average assets $ 4,930,231 $ 4,988,755 $ 5,067,687 $ 5,108,120 $ 5,068,301 Total average stockholders' equity $ 398,270 $ 436,191 $ 437,483 $ 492,599 $ 563,023 Return on average assets (ROAA) annualized 0.93 % 1.21 % 1.21 % 1.24 % 0.82 % Adjusted return on average assets 1.22 % 1.49 % 1.41 % 1.50 % 0.65 % Adjusted return on average equity 15.05 % 16.99 % 16.29 % 15.52 % 5.87 %
