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Equity Bancshares, Inc. Reports First-Quarter Net Income of $15.1 million and $1.02 Earnings Per Diluted Share

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Equity Bancshares, Inc.
·35-min read
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Company experienced 7.6% of annualized loan growth not including Paycheck Protection Program; originated $233 million of new Paycheck Protection Program loans

WICHITA, Kan., April 20, 2021 (GLOBE NEWSWIRE) -- Equity Bancshares, Inc. (NASDAQ: EQBK), (“Equity”, “the Company”, “we”, “us”, “our”), the Wichita-based holding company of Equity Bank, reported net income of $15.1 million and $1.02 per diluted share, including $0.65 of core earnings per diluted share the first quarter ended March 31, 2021.

Core earnings of $0.65 per diluted share for the quarter were driven by non-Paycheck Protection Program (“PPP”) loan growth of $43.7 million, representing growth of 1.9%, or 7.6% annualized growth from December 31, 2020. Further driving results this quarter was the recognition of origination fee income from the successful forgiveness of PPP loans by the SBA; improved operating performance with many of our fee-based initiatives such as wealth management and trust business lines, and debit card and commercial credit card interchange income. Expense control remained a focus with non-interest expenses, excluding merger related expenses, down from the linked-and-comparable-quarters in 2020.

“I’m very proud of the collaboration and entrepreneurial spirit of our Equity teams. Our lending, operations, and customer service teams have worked together to create innovative processes and efficiencies that benefit our customers” said Brad S. Elliott, Chairman and CEO of Equity. “Our teams have worked to onboard new core deposit customers, and we have seen sustained increases in usage of our digital products, including online banking, mobile deposit, and bill pay – while continuing to service customers from fully opened lobbies. Entrepreneurial spirit is one of our core values, and we believe business, commercial, and retail customers continue to choose Equity Bank for our approach.”

“Throughout our footprint, our Equity Bank teams worked incredibly hard on behalf of our customers to secure PPP funds and help our customers maintain their businesses and livelihoods,” said Mr. Elliott. “A community bank prioritizes its customers and delivers dependable, innovative and round the clock service when our customers need it. We’ve remained open, ready and available to our customers to serve loan and business growth needs in all facets.”

In the quarter ended March 31, 2021, Equity originated $233.6 million in total PPP loans, and Equity’s total outstanding PPP loans were $414.1 million at the end of the quarter. The Company’s customers successfully had $99.7 million of PPP loans forgiven during the quarter, resulting in the recognition of fee income totaling $2.3 million in the three-month period ended March 31, 2021. At March 31, 2021, the total unrecognized fee income associated with PPP loans was $12.7 million. Through two rounds of PPP, Equity originated more than $610 million in PPP loans.

The results in the quarter ended December 31, 2020, reflect the Company’s purchase of assets and deposit liabilities of Almena State Bank. Equity completed the data system conversion of Almena State Bank on January 16, 2021, following the acquisition of Almena State Bank branches from the Federal Deposit Insurance Corporation (“FDIC”) in October 2020. Results also reflect Equity customers’ obtaining forgiveness of Paycheck Protection Program (“PPP”) loans from the Small Business Administration (“SBA”) totaling $102.8 million resulting in a recognition of $3.8 million of fee income.

Notable Items:

  • The Company authorized a second stock repurchase program in the third quarter of 2020 totaling 800,000 shares. During the quarter ended March 31, 2021, the Company repurchased 233,012 shares at a weighted average cost of $25.35 per share, totaling $5.9 million. At the end of the quarter, capacity of 253,757 shares remained under the current repurchase program.

  • The Company adopted ASU 2016-13, also known as Current Expected Credit Losses (“CECL”) at January 1, 2021. Upon implementation, the Company recognized a day one after tax $12.4 million reduction in stockholders’ equity and transferred $11.8 million of purchase credit impaired (“PCI”) marks to the allowance for credit losses (“ACL”) as purchase credit deteriorated (“PCD”) reserves. On implementation, the allowance for credit losses, including reserve on unfunded commitments, increased to $62.1 million from $33.7 million at December 31, 2020.

  • During the quarter ended March 31, 2021, there was a release of reserve for credit losses of $5.8 million as compared to a $1.0 million provision for loan losses in the quarter ended December 31, 2020.

Equity’s Balance Sheet Highlights:

  • Total loans held for investment of $2.80 billion at March 31, 2021, as compared to total loans held for investment of $2.59 billion at December 31, 2020.

  • Total deposits of $3.63 billion at March 31, 2021, as compared to $3.45 billion at December 31, 2020. Signature deposits, including core deposits comprised of checking, savings and money market accounts, were $3.05 billion at March 31, 2021, relative to $2.82 billion at December 31, 2020. Included in this signature deposit growth was a $180.7 million increase in non-interest-bearing deposits, from $791.6 million at December 31, 2020, to $972.4 million at March 31, 2021.

  • Total assets were $4.20 billion at March 31, 2021, as compared to $4.01 billion at December 31, 2020.

Financial Results for the Quarter Ended March 31, 2021

Net income allocable to common stockholders was $15.1 million, or $1.02 per diluted share, for the three months ended March 31, 2021, as compared to $12.5 million, or $0.84 per diluted share, for the three months ended December 31, 2020, an increase of $2.6 million. This increase was attributable to a release of reserve for credit losses of $5.8 million during the quarter as compared to a provision for loan losses of $1.0 million during the fourth quarter of 2020. This $6.8 million provision improvement as well as the decrease in non-interest expense of $3.6 million and increase in non-interest income, exclusive of gain on acquisition, of $435 thousand were partially offset by a $3.8 million decrease in net interest income, a $2.2 million increase in provision for income taxes and a $2.2 million reduction in gain on acquisition.

Net Interest Income

Net interest income was $31.8 million for the three months ended March 31, 2021, as compared to $35.6 million for the three months ended December 31, 2020, a decrease of $3.8 million, or 10.7%. The decrease in net interest income was primarily driven by a 63-basis point decrease in average rate earned on interest-earning assets, to 3.73% for the quarter ended March 31, 2021, from 4.36% for the quarter ended December 31, 2020. The decline in yield on earning assets was driven, in part, by the success of our forgiveness program with regard to the first round of PPP funding during the fourth quarter of 2020 resulting in a comparative reduction in interest income of $651 thousand; the success of the special assets team in processing program assets in the fourth quarter of 2020 resulting in a comparable decline of $1.1 million; and a reduction in loan fee recognition. The cost of interest-bearing liabilities declined to 0.58% or seven basis points for the quarter ended March 31, 2021 from 0.65% in the quarter ended December 31, 2020. The cost of interest-bearing deposits declined by seven basis points to 0.36% for the three months ended March 31, 2021 from 0.43% in the previous quarter primarily attributed to the reduction in the cost of time deposits, that slipped to 16 basis points between the quarters.

Provision for Credit Losses

During the three months ended March 31, 2021, there was a reversal of $5.8 million in the allowance for credit losses recognized through the provision for credit losses as compared to a $1.0 million provision for loan losses for the three months ended December 31, 2020. For the three months ended March 31, 2021, we had net charge-offs of $65 thousand as compared to $1.4 million for the three months ended December 31, 2020. The reversal is attributed primarily to improved economic inputs into the CECL model and, to a lesser extent, an improvement in historical loss experience and associated impact on the allowance for credit losses.

Non-Interest Income

Total non-interest income was $6.7 million for the three months ended March 31, 2021, as compared to $8.5 million for the three months ended December 31, 2020, or $6.4 million excluding the $2.1 million net gain on the purchase and assumption of Almena State Bank. Other non-interest income was $1.3 million, an increase of $439 thousand, or 51.5%, from the quarter ended December 31, 2020. The largest contributor was a $197 thousand increase from derivative transactions. The first quarter increase in value of bank-owned life insurance was $601 thousand, as compared to $489 thousand during the fourth quarter of 2020.

Non-Interest Expense

Total non-interest expense for the quarter ended March 31, 2021, was $24.9 million as compared to $28.5 million for the quarter ended December 31, 2020. The $3.6 million reduction is attributed to $1.6 million less in other real estate owned expense and a $1.3 million decline in salaries and employee benefits. The most significant contributor to the decrease in other real estate owned expense was a $947 thousand valuation adjustment during the fourth quarter of 2020 on two facilities that were closed in May 2020.

Asset Quality

As of March 31, 2021, Equity’s allowance for credit losses, plus reserve for unfunded commitments, to total loans was 2.02%, as compared to 1.30% at December 31, 2020. Total reserves to total loans were approximately 2.30% as of March 31, 2021, as compared to 2.12% at December 31, 2020. Nonperforming assets were $70.1 million as of March 31, 2021, or 1.67% of total assets. Nonperforming assets were $54.6 million at December 31, 2020, or 1.36% of total assets. Total other real estate owned declined to $10.6 million at March 31, 2021 from $11.7 million in the linked quarter. The increase of non-performing assets is attributed to the Company’s adoption of ASC 326 on January 1, 2021, and consequently transferring $11.8 million of PCI loan marks to PCD which is included in the ACL. The PCI marks, primarily attributed to acquired loans associated with Almena State Bank, previously reduced the amortized cost basis of the acquired loans before the January 1, 2021 CECL implementation.

Regulatory Capital

The Company’s ratio of common equity tier 1 capital to risk-weighted assets was 12.5%, the total capital to risk-weighted assets was 17.0% and the total leverage ratio was 8.7% at March 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 14.4%, a ratio of total capital to risk-weighted assets of 15.7% and a total leverage ratio of 9.6% at March 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 first quarter results on Wednesday, April 21, 2021, 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 Wednesday, April 21, 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. 9542529.

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 April 28, 2021, accessible at (855) 859-2056 with conference ID no. 9542529 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.
(816) 505-4063
jhanley@equitybank.com

Unaudited Financial Tables

  • Table 1. Quarterly Consolidated Statements of Operations

  • Table 2. Consolidated Balance Sheets

  • Table 3. Selected Financial Highlights

  • Table 4. Quarter-to-Date Net Interest Income Analysis

  • Table 5. Quarter-Over-Quarter Net Interest Income Analysis

  • Table 6. Non-GAAP Financial Measures

TABLE 1. QUARTERLY CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Dollars in thousands, except per share data)

As of and for the three months ended

March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

March 31,
2020

Interest and dividend income

Loans, including fees

$

31,001

$

35,383

$

32,278

$

32,627

$

34,376

Securities, taxable

3,799

3,408

3,476

4,017

4,620

Securities, nontaxable

724

913

923

880

966

Federal funds sold and other

288

285

405

409

595

Total interest and dividend income

35,812

39,989

37,082

37,933

40,557

Interest expense

Deposits

2,410

2,755

3,064

3,899

6,864

Federal funds purchased and retail repurchase agreements

22

25

25

24

31

Federal Home Loan Bank advances

65

94

471

552

1,175

Federal Reserve Bank discount window

6

Bank stock loan

306

109

Subordinated debentures

1,556

1,556

1,415

255

283

Total interest expense

4,053

4,430

4,975

5,042

8,462

Net interest income

31,759

35,559

32,107

32,891

32,095

Provision for credit losses

(5,756

)

1,000

815

12,500

9,940

Net interest income after provision for credit losses

37,515

34,559

31,292

20,391

22,155

Non-interest income

Service charges and fees

1,596

1,759

1,706

1,365

2,026

Debit card income

2,350

2,401

2,491

2,201

2,043

Mortgage banking

935

855

877

831

590

Increase in value of bank-owned life insurance

601

489

489

481

482

Net gain on acquisition

(78

)

2,145

Net gains (losses) from securities transactions

17

(1

)

4

8

Other

1,291

852

922

850

157

Total non-interest income

6,712

8,500

6,485

5,732

5,306

Non-interest expense

Salaries and employee benefits

12,722

14,053

13,877

12,695

13,504

Net occupancy and equipment

2,368

2,206

2,224

2,119

2,235

Data processing

2,663

2,748

2,817

2,763

2,663

Professional fees

1,073

1,095

877

943

1,367

Advertising and business development

682

801

598

403

696

Telecommunications

580

510

486

390

487

FDIC insurance

415

797

360

414

517

Courier and postage

369

338

366

353

384

Free nationwide ATM cost

472

423

439

327

420

Amortization of core deposit intangibles

1,034

1,044

1,030

974

802

Loan expense

238

161

107

287

234

Other real estate owned

5

1,600

133

269

308

Merger expenses

152

299

Goodwill impairment

104,831

Other

2,108

2,385

2,690

2,000

2,141

Total non-interest expense

24,881

28,460

130,835

23,937

25,758

Income (loss) before income tax

19,346

14,599

(93,058

)

2,186

1,703

Provision for income taxes (benefit)

4,271

2,111

(2,653

)

497

445

Net income (loss) and net income (loss) allocable to common stockholders

$

15,075

$

12,488

$

(90,405

)

$

1,689

$

1,258

Basic earnings (loss) per share

$

1.04

$

0.85

$

(6.01

)

$

0.11

$

0.08

Diluted earnings (loss) per share

$

1.02

$

0.84

$

(6.01

)

$

0.11

$

0.08

Weighted average common shares

14,464,291

14,760,810

15,040,407

15,209,483

15,387,697

Weighted average diluted common shares

14,734,083

14,934,058

15,040,407

15,304,009

15,595,024

TABLE 2. CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in thousands)

March 31,
2021

December 31,
2020

September 30,
2020

June 30,
2020

March 31,
2020

ASSETS

Cash and due from banks

$

136,190

$

280,150

$

65,534

$

178,045

$

141,989

Federal funds sold

498

548

305

245

263

Cash and cash equivalents

136,688

280,698

65,839

178,290

142,252

Interest-bearing time deposits in other banks

249

249

499

2,248

2,498

Available-for-sale securities

998,100

871,827

798,576

177,228

187,812

Held-to-maturity securities(1)

662,522

721,992

Loans held for sale

8,609

12,394

9,053

4,802

6,494

Loans, net of allowance for credit losses(2)

2,740,215

2,557,987

2,691,626

2,772,256

2,485,208

Other real estate owned, net

10,559

11,733

8,727

7,374

5,870

Premises and equipment, net

90,322

89,412

86,087

87,055

84,732

Bank-owned life insurance

102,645

77,044

76,555

76,066

75,585

Federal Reserve Bank and Federal Home Loan Bank stock

15,174

16,415

32,545

31,832

31,662

Interest receivable

16,655

15,831

18,110

19,598

15,549

Goodwill

31,601

31,601

31,601

136,432

136,432

Core deposit intangibles, net

15,023

16,057

17,101

18,131

19,105

Other

30,344

32,108

29,252

31,435

28,641

Total assets

$

4,196,184

$

4,013,356

$

3,865,571

$

4,205,269

$

3,943,832

LIABILITIES AND STOCKHOLDERS’ EQUITY

Deposits

Demand

$

972,364

$

791,639

$

693,967

$

756,613

$

508,441

Total non-interest-bearing deposits

972,364

791,639

693,967

756,613

508,441

Savings, NOW and money market

2,074,261

2,029,097

1,816,307

1,800,132

1,668,145

Time

587,905

626,854

623,344

690,522

783,811

Total interest-bearing deposits

2,662,166

2,655,951

2,439,651

2,490,654

2,451,956

Total deposits

3,634,530

3,447,590

3,133,618

3,247,267

2,960,397

Federal funds purchased and retail repurchase agreements

40,339

36,029

46,295

51,557

37,113

Federal Home Loan Bank advances

9,926

10,144

167,862

344,900

389,620

Bank stock loan

40,000

Subordinated debentures

87,788

87,684

87,537

55,575

14,638

Contractual obligations

4,856

5,189

5,478

5,571

5,781

Interest payable and other liabilities

20,930

19,071

22,609

20,633

18,932

Total liabilities

3,798,369

3,605,707

3,463,399

3,725,503

3,466,481

Commitments and contingent liabilities

Stockholders’ equity

Common stock

175

174

174

174

174

Additional paid-in capital

387,939

386,820

386,017

384,955

383,850

Retained earnings

53,459

50,787

38,299

128,704

127,015

Accumulated other comprehensive income (loss)

12,019

19,781

21,074

3,390

3,769

Employee stock loans

(43

)

(43

)

(43

)

(43

)

Treasury stock

(55,777

)

(49,870

)

(43,349

)

(37,414

)

(37,414

)

Total stockholders’ equity

397,815

407,649

402,172

479,766

477,351

Total liabilities and stockholders’ equity

$

4,196,184

$

4,013,356

$

3,865,571

$

4,205,269

$

3,943,832

(1) Fair market value of held-to-maturity securities

$

$

$

$

689,206

$

750,900

(2) Allowance for credit losses

55,525

33,709

34,087

34,078

21,915

TABLE 3. SELECTED FINANCIAL HIGHLIGHTS (Unaudited)
(Dollars in thousands, except per share data)

As of and for the three months ended

March 31,

December 31,

September 30,

June 30,

March 31,

2021

2020

2020

2020

2020

Loans Held-For-Investment by Type

Commercial real estate

$

1,218,545

$

1,188,696

$

1,188,329

$

1,191,336

$

1,200,762

Commercial and industrial

820,728

734,495

857,244

883,355

542,571

Residential real estate

438,503

381,958

402,242

442,486

480,603

Agricultural real estate

134,944

133,693

127,349

129,080

130,795

Consumer

89,256

58,532

67,465

71,037

64,799

Agricultural

93,764

94,322

83,084

89,040

87,593

Total loans held-for-investment

2,795,740

2,591,696

2,725,713

2,806,334

2,507,123

Allowance for credit losses

(55,525

)

(33,709

)

(34,087

)

(34,078

)

(21,915

)

Net loans held-for-investment

$

2,740,215

$

2,557,987

$

2,691,626

$

2,772,256

$

2,485,208

Asset Quality Ratios

Allowance for credit losses on loans and
unfunded commitments to total loans

2.02

%

1.30

%

1.25

%

1.21

%

0.87

%

Past due or nonaccrual loans to total loans

2.58

%

1.99

%

2.12

%

1.88

%

2.47

%

Nonperforming assets to total assets

1.67

%

1.36

%

1.55

%

1.37

%

1.22

%

Nonperforming assets to total loans plus other
real estate owned

2.50

%

2.10

%

2.19

%

2.05

%

1.92

%

Classified assets to bank total regulatory capital

26.45

%

25.50

%

18.35

%

20.81

%

19.50

%

Selected Average Balance Sheet Data (QTD Average)

Investment securities

$

947,453

$

814,114

$

802,525

$

877,308

$

907,910

Total gross loans receivable

2,736,918

2,692,223

2,758,680

2,806,865

2,525,344

Interest-earning assets

3,891,140

3,647,730

3,679,168

3,786,629

3,519,267

Total assets

4,143,752

3,910,628

4,041,187

4,159,336

3,888,205

Interest-bearing deposits

2,690,159

2,551,219

2,430,407

2,487,187

2,531,508

Borrowings

139,360

172,730

377,158

384,727

355,303

Total interest-bearing liabilities

2,829,519

2,723,949

2,807,565

2,871,914

2,886,811

Total deposits

3,577,625

2,960,791

3,145,810

3,257,631

3,021,181

Total liabilities

3,748,114

3,501,056

3,558,099

3,675,731

3,405,638

Total stockholders' equity

395,638

409,572

483,088

483,605

482,567

Tangible common equity*

347,262

355,025

329,039

327,411

325,470

Performance ratios

Return on average assets (ROAA) annualized

1.48

%

1.27

%

(8.90

)%

0.16

%

0.13

%

Return on average assets before income tax,
provision for loan losses and goodwill
impairment*

1.33

%

1.59

%

1.24

%

1.42

%

1.20

%

Return on average equity (ROAE) annualized

15.45

%

12.13

%

(74.45

)%

1.40

%

1.05

%

Return on average equity before income tax,
provision for loan losses and goodwill
impairment*

13.93

%

15.15

%

10.37

%

12.21

%

9.70

%

Return on average tangible common equity
(ROATCE) annualized*

18.57

%

14.93

%

(108.31

)%

3.03

%

2.35

%

Return on average tangible common equity
adjusted for goodwill impairment*

18.57

%

14.93

%

12.01

%

3.03

%

2.35

%

Yield on loans annualized

4.59

%

5.23

%

4.65

%

4.68

%

5.47

%

Cost of interest-bearing deposits annualized

0.36

%

0.43

%

0.50

%

0.63

%

1.09

%

Cost of total deposits annualized

0.27

%

0.37

%

0.39

%

0.48

%

0.91

%

Net interest margin annualized

3.31

%

3.88

%

3.47

%

3.49

%

3.67

%

Efficiency ratio*

64.18

%

67.19

%

67.38

%

61.98

%

68.88

%

Non-interest income / average assets

0.66

%

0.86

%

0.64

%

0.55

%

0.55

%

Non-interest expense / average assets

2.44

%

2.90

%

12.88

%

2.31

%

2.66

%

Capital Ratios

Tier 1 Leverage Ratio

8.73

%

9.30

%

8.76

%

8.52

%

9.02

%

Common Equity Tier 1 Capital Ratio

12.52

%

12.82

%

12.76

%

12.02

%

11.67

%

Tier 1 Risk Based Capital Ratio

13.07

%

13.37

%

13.32

%

12.57

%

12.20

%

Total Risk Based Capital Ratio

17.02

%

17.35

%

17.35

%

15.33

%

13.00

%

Total stockholders' equity to total assets

9.48

%

10.16

%

10.40

%

11.41

%

12.10

%

Tangible common equity to tangible assets*

8.44

%

9.05

%

9.23

%

8.00

%

8.47

%

Book value per common share

$

27.66

$

28.04

$

27.08

$

31.53

$

31.41

Tangible book value per common share*

$

24.34

$

24.68

$

23.72

$

21.29

$

21.10

Tangible book value per diluted common share*

$

23.87

$

24.32

$

23.57

$

21.13

$

20.96

* The value noted is considered a Non-GAAP financial measure. For a reconciliation of Non-GAAP financial measures, see Table 6. Non-GAAP Financial Measures

TABLE 4. QUARTER-TO-DATE NET INTEREST INCOME ANALYSIS (Unaudited)
(Dollars in thousands)

For the three months ended

For the three months ended

March 31, 2021

March 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

$

803,012

$

9,234

4.66

%

$

555,927

$

7,881

5.70

%

Commercial real estate

971,825

11,441

4.77

%

913,065

12,942

5.70

%

Real estate construction

255,677

2,178

3.45

%

267,388

3,575

5.38

%

Residential real estate

394,329

4,452

4.58

%

496,186

5,302

4.30

%

Agricultural real estate

140,875

1,696

4.88

%

137,664

2,091

6.11

%

Consumer

76,413

963

5.11

%

67,160

1,275

7.64

%

Agricultural

94,787

1,037

4.44

%

87,954

1,310

5.99

%

Total loans

2,736,918

31,001

4.59

%

2,525,344

34,376

5.47

%

Securities

Taxable securities

839,349

3,799

1.84

%

774,653

4,620

2.40

%

Nontaxable securities

108,104

724

2.72

%

133,257

966

2.92

%

Total securities

947,453

4,523

1.94

%

907,910

5,586

2.47

%

Federal funds sold and other

206,769

288

0.56

%

86,013

595

2.78

%

Total interest-earning assets

$

3,891,140

35,812

3.73

%

$

3,519,267

40,557

4.64

%

Interest-bearing liabilities

Savings, NOW and money market deposits

$

2,079,057

971

0.19

%

$

1,724,774

3,125

0.73

%

Time deposits

611,102

1,439

0.96

%

806,734

3,739

1.86

%

Total interest-bearing deposits

2,690,159

2,410

0.36

%

2,531,508

6,864

1.09

%

FHLB advances

10,013

65

2.63

%

295,677

1,175

1.60

%

Other borrowings

129,347

1,578

4.95

%

59,626

423

2.85

%

Total interest-bearing liabilities

$

2,829,519

4,053

0.58

%

$

2,886,811

8,462

1.18

%

Net interest income

$

31,759

$

32,095

Interest rate spread

3.15

%

3.46

%

Net interest margin (2)

3.31

%

3.67

%

(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 5. QUARTER-OVER-QUARTER NET INTEREST INCOME ANALYSIS (Unaudited)
(Dollars in thousands)

For the three months ended

For the three months ended

March 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

$

803,012

$

9,234

4.66

%

$

782,433

$

10,943

5.56

%

Commercial real estate

971,825

11,441

4.77

%

980,686

12,647

5.13

%

Real estate construction

255,677

2,178

3.45

%

216,714

2,301

4.22

%

Residential real estate

394,329

4,452

4.58

%

406,450

5,005

4.90

%

Agricultural real estate

140,875

1,696

4.88

%

135,337

2,244

6.60

%

Consumer

76,413

963

5.11

%

78,430

1,080

5.48

%

Agricultural

94,787

1,037

4.44

%

92,173

1,163

5.02

%

Total loans

2,736,918

31,001

4.59

%

2,692,223

35,383

5.23

%

Securities

Taxable securities

839,349

3,799

1.84

%

698,985

3,408

1.94

%

Nontaxable securities

108,104

724

2.72

%

115,129

913

3.15

%

Total securities

947,453

4,523

1.94

%

814,114

4,321

2.11

%

Federal funds sold and other

206,769

288

0.56

%

141,393

285

0.80

%

Total interest-earning assets

$

3,891,140

35,812

3.73

%

$

3,647,730

39,989

4.36

%

Interest-bearing liabilities

Savings, NOW and money market deposits

$

2,079,057

971

0.19

%

$

1,915,280

970

0.20

%

Time deposits

611,102

1,439

0.96

%

635,939

1,785

1.12

%

Total interest-bearing deposits

2,690,159

2,410

0.36

%

2,551,219

2,755

0.43

%

FHLB advances

10,013

65

2.63

%

39,245

94

0.95

%

Other borrowings

129,347

1,578

4.95

%

133,485

1,581

4.71

%

Total interest-bearing liabilities

$

2,829,519

4,053

0.58

%

$

2,723,949

4,430

0.65

%

Net interest income

$

31,759

$

35,559

Interest rate spread

3.15

%

3.71

%

Net interest margin (2)

3.31

%

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 6. NON-GAAP FINANCIAL MEASURES (Unaudited)
(Dollars in thousands, except per share data)

As of and for the three months ended

March 31,

December 31,

September 30,

June 30,

March 31,

2021

2020

2020

2020

2020

Income before income taxes

$

19,346

$

14,599

$

(93,058

)

$

2,186

$

1,703

Add: goodwill impairment

104,831

Less: tax effect

4,271

2,111

2,652

497

445

Adjusted income

$

15,075

$

12,488

$

9,121

$

1,689

$

1,258

Weighted average common shares outstanding

14,464,291

14,760,810

15,040,407

15,209,483

15,387,697

Effect of weighted average dilutive shares assuming positive net income

269,792

173,248

82,804

94,526

207,327

Weighted average diluted shares

14,734,083

14,934,058

15,123,211

15,304,009

15,595,024

Diluted earnings per share adjusted for goodwill impairment

$

1.02

$

0.84

$

0.60

$

0.11

$

0.08

Total stockholders' equity

$

397,815

$

407,649

$

402,172

$

479,766

$

477,351

Less: goodwill

31,601

31,601

31,601

136,432

136,432

Less: core deposit intangibles, net

15,023

16,057

17,101

18,131

19,105

Less: mortgage servicing asset, net

1

2

4

Less: naming rights, net

1,119

1,130

1,141

1,152

1,163

Tangible common equity

$

350,072

$

358,861

$

352,328

$

324,049

$

320,647

Common shares issued at period end

14,383,913

14,540,556

14,853,487

15,218,301

15,198,986

Diluted common shares outstanding at period end

14,668,287

14,756,378

14,945,282

15,333,977

15,297,319

Book value per common share

$

27.66

$

28.04

$

27.08

$

31.53

$

31.41

Tangible book value per common share

$

24.34

$

24.68

$

23.72

$

21.29

$

21.10

Tangible book value per diluted common share

$

23.87

$

24.32

$

23.57

$

21.13

$

20.96

Total assets

$

4,196,184

$

4,013,356

$

3,865,571

$

4,205,269

$

3,943,832

Less: goodwill

31,601

31,601

31,601

136,432

136,432

Less: core deposit intangibles, net

15,023

16,057

17,101

18,131

19,105

Less: mortgage servicing asset, net

1

2

4

Less: naming rights, net

1,119

1,130

1,141

1,152

1,163

Tangible assets

$

4,148,441

$

3,964,568

$

3,815,727

$

4,049,552

$

3,787,128

Total stockholders' equity to total assets

9.48

%

10.16

%

10.40

%

11.41

%

12.10

%

Tangible common equity to tangible assets

8.44

%

9.05

%

9.23

%

8.00

%

8.47

%

Total average stockholders' equity

$

395,638

$

409,572

$

483,088

$

483,605

$

482,567

Less: average intangible assets

48,376

54,547

154,049

156,194

157,097

Average tangible common equity

$

347,262

$

355,025

$

329,039

$

327,411

$

325,470

Net income (loss) allocable to common stockholders

$

15,075

$

12,488

$

(90,405

)

$

1,689

$

1,258

Add: goodwill impairment

104,831

Less: tax effect of goodwill impairment

5,305

Adjusted net income (loss) plus goodwill impairment

15,075

12,488

9,121

1,689

1,258

Amortization of intangible assets

1,045

1,055

1,043

986

814

Less: tax effect of intangible assets amortization

219

222

234

207

171

Adjusted net income (loss) allocable to common stockholders

$

15,901

$

13,321

$

9,930

$

2,468

$

1,901

Return on total average stockholders' equity (ROAE) annualized

15.45

%

12.13

%

(74.45

)%

1.40

%

1.05

%

Return on average tangible common equity (ROATCE) annualized

18.57

%

14.93

%

(108.31

)%

3.03

%

2.35

%

Adjusted return on average tangible common equity

18.57

%

14.93

%

12.01

%

3.03

%

2.35

%

Non-interest expense

$

24,881

$

28,460

$

130,835

$

23,937

$

25,758

Less: merger expense

152

299

Less: goodwill impairment

104,831

Non-interest expense, excluding merger expense and goodwill impairment

$

24,729

$

28,161

$

26,004

$

23,937

$

25,758

Net interest income

$

31,759

$

35,559

$

32,107

$

32,891

$

32,095

Non-interest income

6,712

8,500

6,485

5,732

5,306

Less: net gain on acquisition

(78

)

2,145

Less: net gains (losses) from securities transactions

17

(1

)

4

8

Non-interest income, excluding gains (losses) from securities transactions

$

6,773

$

6,356

$

6,485

$

5,728

$

5,298

Net interest income plus non-interest income, excluding net gains (losses) from securities transactions

$

38,532

$

41,915

$

38,592

$

38,619

$

37,393

Non-interest expense to net interest income plus non-interest income

64.67

%

64.60

%

339.02

%

61.98

%

68.87

%

Efficiency ratio

64.18

%

67.19

%

67.38

%

61.98

%

68.88

%

Net income (loss) allocable to common stockholders

$

15,075

$

12,488

$

(90,405

)

$

1,689

$

1,258

Add: income tax provision

4,271

2,111

(2,653

)

497

445

Add: provision for loan losses

(5,756

)

1,000

815

12,500

9,940

Add: goodwill impairment

104,831

Adjusted net income

$

13,590

$

15,599

$

12,588

$

14,686

$

11,643

Total average assets

$

4,143,752

$

3,910,628

$

4,041,187

$

4,159,336

$

3,888,205

Total average stockholders' equity

$

395,638

$

409,572

$

483,088

$

483,605

$

482,567

Return on average assets (ROAA) annualized

1.48

%

1.27

%

(8.90

)%

0.16

%

0.13

%

Adjusted return on average assets

1.33

%

1.59

%

1.24

%

1.42

%

1.20

%

Adjusted return on average equity

13.93

%

15.15

%

10.37

%

12.21

%

9.70

%