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

Equity Bancshares, Inc.
Equity Bancshares, Inc.

Strong Tangible and Regulatory Capital Ratios and Positive Credit Quality Trends Continue

WICHITA, Kan., Oct. 17, 2023 (GLOBE NEWSWIRE) -- Equity Bancshares, Inc. (NYSE: EQBK), (“Equity”, “the Company”, “we,” “us,” “our”), the Wichita-based holding company of Equity Bank, reported net income of $12.3 million and $0.80 earnings per diluted share for the quarter ended September 30, 2023.

“Our Company's success is in large part due to our ability to adapt on behalf of our customers and teams no matter the banking environment. I’m pleased at our team’s ability to deliver unparalleled support and service to our customer base,” said Brad S. Elliott, Chairman and CEO of Equity. “Value creation is crucial for regional banks, and our ability to deliver sophisticated and customized solutions helps build our Company’s organic growth, sustainability, and competitive advantage.”

"During the third quarter our team continued to emphasize credit quality while meeting the needs of our customer base." Mr. Elliott said. "Our classified asset ratio is as low as it has ever been, while both capital and on balance sheet reserves remain high positioning Equity to be strategic as we assess both organic and acquisitive growth opportunities."

Notable Items:

  • During the quarter, the Company realized linked period Net Interest Margin growth of 13 basis points, and Net Interest Income growth of $1.6 million.

  • Pre-tax, pre-provision net income for the quarter was $15.5 million up $2.3 million linked quarter driven by growth in both net interest income and non-interest income.

  • The Company continued to emphasize investor returns through share repurchase and quarterly dividends. The Company’s Board authorized a 20% increase in quarterly dividend to $0.12 per share, and authorized the repurchase of up to 1 million shares. During the quarter, the Company received non-objection from the Federal Reserve Bank of Kansas City related to the repurchase plan.

  • Classified loans as a percentage of total risk-based capital at Equity Bank were 6.3%, down from 7.9% as of June 30, 2023, and 10.0% as of December 31, 2022.

During the third quarter, Equity announced two internal promotions to its executive management team. Chris Navratil was promoted to Chief Financial Officer and Krzysztof Slupkowski was promoted to Chief Credit Officer.

Financial Results for the Quarter Ended September 30, 2023

Net income allocable to common stockholders was $12.3 million, or $0.80 per diluted share, for the three months ended September 30, 2023, as compared to $11.5 million, or $0.74 per diluted share, for the three months ended June 30, 2023. The increase during the quarter was primarily driven by increases in interest income of $3.8 million and non-interest income of $1.8 million, partially offset by increases in interest expense of $2.2 million and non-interest expense of $1.1 million.

Net Interest Income

Net interest income was $41.0 million for the three months ended September 30, 2023, as compared to $39.4 million for the three months ended June 30, 2023, an increase of $1.6 million, or 4.01%. Net interest margin improved to 3.51% from 3.38% as the yield on interest-earning assets increased 32 basis points to 5.57% and the cost of interest-bearing deposits increased 26 basis points to 2.40%

The Company maintained an enhanced liquidity position in response to the first quarter market disruption by adding on-balance sheet cash, resulting in an adverse impact to net interest margin due to the increase in average earning assets and negligible impact to net interest income.

Average interest-bearing deposits declined slightly during the quarter and the Company continued to experience compositional shift from noninterest-bearing deposits into interest-bearing categories. At September 30, 2023, non-interest-bearing deposits declined $42.8 million from June 30, 2023 and $280.9 million from September 30, 2022. The majority of the decline over the last 12 months is due to deposits migrating to interest-bearing deposit accounts.

Provision for Credit Losses

During the three months ended September 30, 2023, there was a provision of $1.2 million compared to a provision of $298 thousand in the previous quarter. The provision for the quarter is the result of extended duration within the portfolio as well as realized charge-offs; however, overall we continue to experience positive credit trends. The Company continues to estimate the allowance for credit loss with assumptions that anticipate slower prepayments rates and continued market disruption caused by elevated inflation, supply chain issues and the impact of monetary policy on consumers and businesses. For the three months ended September 30, 2023, we had net charge-offs of $1.6 million as compared to $857 thousand for the three months ended June 30, 2023.

Non-Interest Income

Total non-interest income was $8.7 million for the three months ended September 30, 2023, as compared to $7.0 million for the three months ended June 30, 2023, or an increase of 25.7%, quarter-over-quarter. The $1.8 million increase was primarily due to a decrease in losses on sales of available-for-sale securities of $1.3 million and an increase in other non-interest income of $439 thousand which was driven by increased insurance commission revenue.

Non-Interest Expense

Total non-interest expense for the quarter ended September 30, 2023, was $34.2 million as compared to $33.1 million for the quarter ended June 30, 2023, an increase of $1.1 million. The comparative increase was primarily due to salary and employee benefit expenses as the Company benefited from compensation reversals in the previous quarter which did not repeat.

Income Tax Expense

At September 30, 2023, the effective tax rate for the quarter was 13.5% as compared to 11.5% at June 30, 2023. The year-to-date tax rate is 14.1%. The increase in rate linked quarter is associated with the cumulative increase in federal and state tax benefits related to the implementation of tax planning initiatives taken in the second quarter versus the normal quarterly recognition of these tax planning initiatives taken in the third quarter offset by a return to provision adjustment related to the federal income tax return when taken as a percentage of pre-tax income. These initiatives were anticipated and incorporated in our forecasted full year estimated effective tax rate at June 30, 2023.

Loans, Total Assets and Funding

Loans held for investment were $3.28 billion at September 30, 2023, decreasing $40.6 million compared to the previous quarter. Excluding the impact of PPP loans, balances have increased $32.9 million, or 1.0% year-over-year. Included in the annual growth, is $49.3 million within the commercial and industrial and commercial real estate portfolios, or 2.9%. Total assets were $4.95 billion as of September 30, 2023 decreasing $149.6 million or 2.9% from June 30, 2023.

Total deposits were $4.08 billion at September 30, 2023, decreasing $148.8 million from the previous quarter end and decreasing $144.4 million from the same period end in 2022. During the third quarter, the Company reduced its brokered deposits by $50.0 million; improving the overall mix of the deposit portfolio during the third quarter. In addition to the payoff of brokered funding, the Company also realized seasonal declines in our municipal deposit portfolio accounting for the remaining negative trend linked quarter. Of the total deposit balance, non-interest-bearing accounts comprise approximately 23.6%. Advances from the FHLB and borrowings from the Federal Reserve's Bank Term Funding Program remained unchanged from June 30, 2023.

Asset Quality

As of September 30, 2023, Equity’s allowance for credit losses to total loans remained materially consistent at 1.3% as compared to June 30, 2023. Nonperforming assets were $20.5 million as of September 30, 2023, or 0.4% of total assets, compared to $15.7 million at June 30, 2023, or 0.3% of total assets. Non-accrual loans were $19.4 million at September 30, 2023, as compared to $15.0 million at June 30, 2023. Total classified assets, including loans rated special mention or worse, other real estate owned, excluding previous branch locations, and other repossessed assets were $37.6 million, or 6.3% of regulatory capital, down from $47.1 million, or 7.9% of regulatory capital as of June 30, 2023.

Capital

Quarter over quarter, book and tangible capital as well as book and tangible capital per share were essentially flat. Dividends paid and increase in the unrealized loss position in our investment portfolio of $13.3 million, partially offset by unrealized gains on cash-flow derivatives of $1.5 million, were materially offset by net income in the period.

The Company’s ratio of common equity tier 1 capital to risk-weighted assets was 12.7%, the total capital to risk-weighted assets was 16.4% and the total leverage ratio was 9.8% at September 30, 2023. At June 30, 2023, the Company’s common equity tier 1 capital to risk-weighted assets ratio was 12.2%, the total capital to risk-weighted assets ratio was 16.0% and the total leverage ratio was 9.5%.

The Company’s subsidiary, Equity Bank, had a ratio of common equity tier 1 capital to risk-weighted assets of 14.7%, a ratio of total capital to risk-weighted assets of 15.9% and a total leverage ratio of 10.8% at September 30, 2023. At June 30, 2023, Equity Bank’s ratio of common equity tier 1 capital to risk-weighted assets was 14.3%, the ratio of total capital to risk-weighted assets was 15.5% and the total leverage ratio was 10.7%.

Non-GAAP Financial Measures

In addition to evaluating the Company’s results of operations in accordance with accounting principles generally accepted in the United States of America (“GAAP”), management periodically supplements this evaluation with an analysis of certain non-GAAP financial measures that are intended to provide the reader with additional perspectives on operating results, financial condition and performance trends, while facilitating comparisons with the performance of other financial institutions. Non-GAAP financial measures are not a substitute for GAAP measures, rather, they should be read and used in conjunction with the Company’s GAAP financial information.

The efficiency ratio is a common comparable metric used by banks to understand the expense structure relative to total revenue. In other words, for every dollar of total revenue recognized, how much of that dollar is expended. To improve the comparability of the ratio to our peers, non-core items are excluded. To improve transparency and acknowledging that banks are not consistent in their definition of the efficiency ratio, we include our calculation of this non-GAAP measure.

Return on average assets before income tax provision and provision for loan losses is a measure that the Company uses to understand fundamental operating performance before these expenses. Used as a ratio relative to average assets, we believe it demonstrates “core” performance and can be viewed as an alternative measure of how efficiently the Company services its asset base. Used as a ratio relative to average equity, it can function as an alternative measure of the Company’s earnings performance in relationship to its equity.

Tangible common equity and related measures are non-GAAP financial measures that exclude the impact of intangible assets, net of deferred taxes, and their related amortization. These financial measures are useful for evaluating the performance of a business consistently, whether acquired or developed internally. Return on average tangible common equity is used by management and readers of our financial statements to understand how efficiently the Company is deploying its common equity. Companies that are able to demonstrate more efficient use of common equity are more likely to be viewed favorably by current and prospective investors.

The Company believes that disclosing these non-GAAP financial measures is both useful internally and is expected by our investors and analysts in order to understand the overall performance of the Company. Other companies may calculate and define their non-GAAP financial measures and supplemental data differently. A reconciliation of GAAP financial measures to non-GAAP measures and other performance ratios, as adjusted, are included in Table 6 in the following press release tables.

Conference Call and Webcast

Equity’s Chairman and Chief Executive Officer, Brad Elliott, and Chief Financial Officer, Chris Navratil, will hold a conference call and webcast to discuss third quarter results on Wednesday, October 18, 2023, at 10 a.m. eastern time or 9 a.m. central time.

A live webcast of the call will be available on the Company’s website at investor.equitybank.com. To access the call by phone, please go to this registration link, and you will be provided with dial in details. Investors, news media, and other participants are encouraged to dial into the conference call ten minutes ahead of the scheduled start time.

A replay of the call and webcast will be available two hours following the close of the call until October 25, 2023, accessible at investor.equitybank.com.

About Equity Bancshares, Inc.
Equity Bancshares, Inc. is the holding company for Equity Bank, offering a full range of financial solutions, including commercial loans, consumer banking, mortgage loans, trust and wealth management services and treasury management services, while delivering the high-quality, relationship-based customer service of a community bank. Equity’s common stock is traded on the NYSE National, Inc. under the symbol “EQBK.” Learn more at www.equitybank.com.

Special Note Concerning Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements reflect the current views of Equity’s management with respect to, among other things, future events and Equity’s financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “project,” “positioned,” “forecast,” “goal,” “target,” “would” and “outlook,” or the negative variations of those words or other comparable words of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about Equity’s industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond Equity’s control. Accordingly, Equity cautions you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although Equity believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. Factors that could cause actual results to differ materially from Equity’s expectations include COVID-19 related impacts; competition from other financial institutions and bank holding companies; the effects of and changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board; changes in the demand for loans; fluctuations in value of collateral and loan reserves; inflation, interest rate, market and monetary fluctuations; changes in consumer spending, borrowing and savings habits; and acquisitions and integration of acquired businesses; and similar variables. The foregoing list of factors is not exhaustive.

For discussion of these and other risks that may cause actual results to differ from expectations, please refer to “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in Equity’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 9, 2023, and any updates to those risk factors set forth in Equity’s subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K. If one or more events related to these or other risks or uncertainties materialize, or if Equity’s underlying assumptions prove to be incorrect, actual results may differ materially from what Equity anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and Equity does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law. New risks and uncertainties arise from time to time and it is not possible for us to predict those events or how they may affect us. In addition, Equity cannot assess the impact of each factor on Equity’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements, expressed or implied, included in this press release are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that Equity or persons acting on Equity’s behalf may issue.

Investor Contact:

Brian J. Katzfey
VP, Director of Corporate Development and Investor Relations
Equity Bank
(316) 858-3128
bkatzfey@equitybank.com

Media Contact:

John J. Hanley
SVP, Senior Director of Marketing
Equity Bancshares, Inc.
(913) 583-8004
jhanley@equitybank.com


Unaudited Financial Tables

  • Table 1. Consolidated Statements of Income

  • Table 2. Quarterly Consolidated Statements of Income

  • Table 3. Consolidated Balance Sheets

  • Table 4. Selected Financial Highlights

  • Table 5. Year-To-Date Net Interest Income Analysis

  • Table 6. Quarter-To-Date Net Interest Income Analysis

  • Table 7. Quarter-Over-Quarter Net Interest Income Analysis

  • Table 8. Non-GAAP Financial Measures

 

 

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

 

 

 

 

 

Three months ended
September 30,

 

 

Nine months ended
September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Interest and dividend income

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

55,152

 

 

$

41,555

 

 

$

156,281

 

 

$

114,710

 

Securities, taxable

 

 

5,696

 

 

 

5,792

 

 

 

17,456

 

 

 

16,767

 

Securities, nontaxable

 

 

369

 

 

 

687

 

 

 

1,606

 

 

 

2,020

 

Federal funds sold and other

 

 

3,822

 

 

 

514

 

 

 

7,075

 

 

 

1,327

 

Total interest and dividend income

 

 

65,039

 

 

 

48,548

 

 

 

182,418

 

 

 

134,824

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

19,374

 

 

 

4,403

 

 

 

50,399

 

 

 

8,308

 

Federal funds purchased and retail repurchase agreements

 

 

246

 

 

 

71

 

 

 

633

 

 

 

150

 

Federal Home Loan Bank advances

 

 

968

 

 

 

409

 

 

 

2,939

 

 

 

594

 

Federal Reserve Bank borrowings

 

 

1,546

 

 

 

 

 

 

3,209

 

 

 

 

Subordinated debt

 

 

1,893

 

 

 

1,721

 

 

 

5,687

 

 

 

4,973

 

Total interest expense

 

 

24,027

 

 

 

6,604

 

 

 

62,867

 

 

 

14,025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

41,012

 

 

 

41,944

 

 

 

119,551

 

 

 

120,799

 

Provision (reversal) for credit losses

 

 

1,230

 

 

 

(136

)

 

 

1,162

 

 

 

276

 

Net interest income after provision (reversal) for credit losses

 

 

39,782

 

 

 

42,080

 

 

 

118,389

 

 

 

120,523

 

Non-interest income

 

 

 

 

 

 

 

 

 

 

 

 

Service charges and fees

 

 

2,690

 

 

 

2,788

 

 

 

7,888

 

 

 

7,927

 

Debit card income

 

 

2,591

 

 

 

2,682

 

 

 

7,798

 

 

 

8,120

 

Mortgage banking

 

 

226

 

 

 

310

 

 

 

527

 

 

 

1,300

 

Increase in value of bank-owned life insurance

 

 

794

 

 

 

754

 

 

 

3,134

 

 

 

2,355

 

Net gain on acquisition and branch sales

 

 

 

 

 

 

 

 

 

 

 

540

 

Net gains (losses) from securities transactions

 

 

(1

)

 

 

(17

)

 

 

(1,291

)

 

 

(9

)

Other

 

 

2,435

 

 

 

2,452

 

 

 

6,229

 

 

 

7,395

 

Total non-interest income

 

 

8,735

 

 

 

8,969

 

 

 

24,285

 

 

 

27,628

 

Non-interest expense

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

15,857

 

 

 

15,442

 

 

 

47,786

 

 

 

45,893

 

Net occupancy and equipment

 

 

3,262

 

 

 

3,127

 

 

 

9,081

 

 

 

9,304

 

Data processing

 

 

4,553

 

 

 

4,138

 

 

 

12,962

 

 

 

11,549

 

Professional fees

 

 

1,312

 

 

 

1,265

 

 

 

4,341

 

 

 

3,547

 

Advertising and business development

 

 

1,419

 

 

 

1,191

 

 

 

3,827

 

 

 

3,139

 

Telecommunications

 

 

502

 

 

 

487

 

 

 

1,503

 

 

 

1,399

 

FDIC insurance

 

 

660

 

 

 

340

 

 

 

1,535

 

 

 

780

 

Courier and postage

 

 

548

 

 

 

436

 

 

 

1,469

 

 

 

1,348

 

Free nationwide ATM cost

 

 

516

 

 

 

551

 

 

 

1,565

 

 

 

1,593

 

Amortization of core deposit intangibles

 

 

799

 

 

 

957

 

 

 

2,635

 

 

 

3,118

 

Loan expense

 

 

132

 

 

 

174

 

 

 

385

 

 

 

566

 

Other real estate owned

 

 

128

 

 

 

188

 

 

 

318

 

 

 

201

 

Merger expenses

 

 

 

 

 

115

 

 

 

 

 

 

526

 

Other

 

 

4,556

 

 

 

3,825

 

 

 

13,196

 

 

 

10,168

 

Total non-interest expense

 

 

34,244

 

 

 

32,236

 

 

 

100,603

 

 

 

93,131

 

Income (loss) before income tax

 

 

14,273

 

 

 

18,813

 

 

 

42,071

 

 

 

55,020

 

Provision for income taxes

 

 

1,932

 

 

 

3,642

 

 

 

5,951

 

 

 

8,940

 

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

 

$

12,341

 

 

$

15,171

 

 

$

36,120

 

 

$

46,080

 

Basic earnings (loss) per share

 

$

0.80

 

 

$

0.94

 

 

$

2.32

 

 

$

2.83

 

Diluted earnings (loss) per share

 

$

0.80

 

 

$

0.93

 

 

$

2.30

 

 

$

2.79

 

Weighted average common shares

 

 

15,404,992

 

 

 

16,056,658

 

 

 

15,575,731

 

 

 

16,303,586

 

Weighted average diluted common shares

 

 

15,507,172

 

 

 

16,273,231

 

 

 

15,692,305

 

 

 

16,516,787

 


TABLE 2. QUARTERLY CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

 

(Dollars in thousands, except per share data)

 

 

 

As of and for the three months ended

 

 

 

September 30,
2023

 

 

June 30,
2023

 

 

March 31,
2023

 

 

December 31,
2022

 

 

September 30,
2022

 

Interest and dividend income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

55,152

 

 

$

52,748

 

 

$

48,381

 

 

$

46,149

 

 

$

41,555

 

Securities, taxable

 

 

5,696

 

 

 

5,813

 

 

 

5,947

 

 

 

5,946

 

 

 

5,792

 

Securities, nontaxable

 

 

369

 

 

 

568

 

 

 

669

 

 

 

678

 

 

 

687

 

Federal funds sold and other

 

 

3,822

 

 

 

2,127

 

 

 

1,126

 

 

 

651

 

 

 

514

 

Total interest and dividend income

 

 

65,039

 

 

 

61,256

 

 

 

56,123

 

 

 

53,424

 

 

 

48,548

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

19,374

 

 

 

17,204

 

 

 

13,821

 

 

 

8,013

 

 

 

4,403

 

Federal funds purchased and retail repurchase agreements

 

 

246

 

 

 

192

 

 

 

195

 

 

 

82

 

 

 

71

 

Federal Home Loan Bank advances

 

 

968

 

 

 

953

 

 

 

1,018

 

 

 

1,500

 

 

 

409

 

Federal Reserve Bank borrowings

 

 

1,546

 

 

 

1,528

 

 

 

135

 

 

 

 

 

 

 

Subordinated debt

 

 

1,893

 

 

 

1,950

 

 

 

1,844

 

 

 

1,798

 

 

 

1,721

 

Total interest expense

 

 

24,027

 

 

 

21,827

 

 

 

17,013

 

 

 

11,393

 

 

 

6,604

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

41,012

 

 

 

39,429

 

 

 

39,110

 

 

 

42,031

 

 

 

41,944

 

Provision (reversal) for credit losses

 

 

1,230

 

 

 

298

 

 

 

(366

)

 

 

(151

)

 

 

(136

)

Net interest income after provision (reversal) for credit losses

 

 

39,782

 

 

 

39,131

 

 

 

39,476

 

 

 

42,182

 

 

 

42,080

 

Non-interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges and fees

 

 

2,690

 

 

 

2,653

 

 

 

2,545

 

 

 

2,705

 

 

 

2,788

 

Debit card income

 

 

2,591

 

 

 

2,653

 

 

 

2,554

 

 

 

2,557

 

 

 

2,682

 

Mortgage banking

 

 

226

 

 

 

213

 

 

 

88

 

 

 

116

 

 

 

310

 

Increase in value of bank-owned life insurance

 

 

794

 

 

 

757

 

 

 

1,583

 

 

 

758

 

 

 

754

 

Net gain on acquisition and branch sales

 

 

 

 

 

 

 

 

 

 

 

422

 

 

 

 

Net gains (losses) from securities transactions

 

 

(1

)

 

 

(1,322

)

 

 

32

 

 

 

14

 

 

 

(17

)

Other

 

 

2,435

 

 

 

1,996

 

 

 

1,798

 

 

 

1,757

 

 

 

2,452

 

Total non-interest income

 

 

8,735

 

 

 

6,950

 

 

 

8,600

 

 

 

8,329

 

 

 

8,969

 

Non-interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

15,857

 

 

 

15,237

 

 

 

16,692

 

 

 

16,113

 

 

 

15,442

 

Net occupancy and equipment

 

 

3,262

 

 

 

2,940

 

 

 

2,879

 

 

 

2,919

 

 

 

3,127

 

Data processing

 

 

4,553

 

 

 

4,493

 

 

 

3,916

 

 

 

4,334

 

 

 

4,138

 

Professional fees

 

 

1,312

 

 

 

1,645

 

 

 

1,384

 

 

 

1,404

 

 

 

1,265

 

Advertising and business development

 

 

1,419

 

 

 

1,249

 

 

 

1,159

 

 

 

1,903

 

 

 

1,191

 

Telecommunications

 

 

502

 

 

 

516

 

 

 

485

 

 

 

517

 

 

 

487

 

FDIC insurance

 

 

660

 

 

 

515

 

 

 

360

 

 

 

360

 

 

 

340

 

Courier and postage

 

 

548

 

 

 

463

 

 

 

458

 

 

 

533

 

 

 

436

 

Free nationwide ATM cost

 

 

516

 

 

 

524

 

 

 

525

 

 

 

510

 

 

 

551

 

Amortization of core deposit intangibles

 

 

799

 

 

 

918

 

 

 

918

 

 

 

924

 

 

 

957

 

Loan expense

 

 

132

 

 

 

136

 

 

 

117

 

 

 

262

 

 

 

174

 

Other real estate owned

 

 

128

 

 

 

71

 

 

 

119

 

 

 

388

 

 

 

188

 

Merger expenses

 

 

 

 

 

 

 

 

 

 

 

68

 

 

 

115

 

Other

 

 

4,556

 

 

 

4,423

 

 

 

4,217

 

 

 

5,014

 

 

 

3,825

 

Total non-interest expense

 

 

34,244

 

 

 

33,130

 

 

 

33,229

 

 

 

35,249

 

 

 

32,236

 

Income (loss) before income tax

 

 

14,273

 

 

 

12,951

 

 

 

14,847

 

 

 

15,262

 

 

 

18,813

 

Provision for income taxes (benefit)

 

 

1,932

 

 

 

1,495

 

 

 

2,524

 

 

 

3,654

 

 

 

3,642

 

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

 

$

12,341

 

 

$

11,456

 

 

$

12,323

 

 

$

11,608

 

 

$

15,171

 

Basic earnings (loss) per share

 

$

0.80

 

 

$

0.74

 

 

$

0.78

 

 

$

0.73

 

 

$

0.94

 

Diluted earnings (loss) per share

 

$

0.80

 

 

$

0.74

 

 

$

0.77

 

 

$

0.72

 

 

$

0.93

 

Weighted average common shares

 

 

15,404,992

 

 

 

15,468,378

 

 

 

15,858,808

 

 

 

15,948,360

 

 

 

16,056,658

 

Weighted average diluted common shares

 

 

15,507,172

 

 

 

15,554,255

 

 

 

16,028,051

 

 

 

16,204,185

 

 

 

16,273,231

 


 

 

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

 

 

 

 

 

September 30,
2023

 

 

June 30,
2023

 

 

March 31,
2023

 

 

December 31,
2022

 

 

September 30,
2022

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

183,404

 

 

$

262,604

 

 

$

249,982

 

 

$

104,013

 

 

$

155,039

 

Federal funds sold

 

 

15,613

 

 

 

15,495

 

 

 

384

 

 

 

415

 

 

 

374

 

Cash and cash equivalents

 

 

199,017

 

 

 

278,099

 

 

 

250,366

 

 

 

104,428

 

 

 

155,413

 

Available-for-sale securities

 

 

1,057,009

 

 

 

1,094,748

 

 

 

1,183,247

 

 

 

1,184,390

 

 

 

1,198,962

 

Held-to-maturity securities

 

 

2,212

 

 

 

2,216

 

 

 

1,944

 

 

 

1,948

 

 

 

 

Loans held for sale

 

 

627

 

 

 

2,456

 

 

 

648

 

 

 

349

 

 

 

1,518

 

Loans, net of allowance for credit losses(1)

 

 

3,237,932

 

 

 

3,278,126

 

 

 

3,285,515

 

 

 

3,265,701

 

 

 

3,208,524

 

Other real estate owned, net

 

 

3,369

 

 

 

4,362

 

 

 

4,171

 

 

 

4,409

 

 

 

10,412

 

Premises and equipment, net

 

 

110,271

 

 

 

106,186

 

 

 

104,789

 

 

 

101,492

 

 

 

100,566

 

Bank-owned life insurance

 

 

124,245

 

 

 

123,451

 

 

 

122,971

 

 

 

123,176

 

 

 

122,418

 

Federal Reserve Bank and Federal Home Loan Bank stock

 

 

20,780

 

 

 

21,129

 

 

 

33,359

 

 

 

21,695

 

 

 

24,428

 

Interest receivable

 

 

23,621

 

 

 

21,360

 

 

 

20,461

 

 

 

20,630

 

 

 

18,497

 

Goodwill

 

 

53,101

 

 

 

53,101

 

 

 

53,101

 

 

 

53,101

 

 

 

53,101

 

Core deposit intangibles, net

 

 

7,961

 

 

 

8,760

 

 

 

9,678

 

 

 

10,596

 

 

 

11,598

 

Other

 

 

105,122

 

 

 

100,889

 

 

 

86,466

 

 

 

89,736

 

 

 

94,978

 

Total assets

 

$

4,945,267

 

 

$

5,094,883

 

 

$

5,156,716

 

 

$

4,981,651

 

 

$

5,000,415

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand

 

$

936,217

 

 

$

978,968

 

 

$

1,012,671

 

 

$

1,097,899

 

 

$

1,217,094

 

Total non-interest-bearing deposits

 

 

936,217

 

 

 

978,968

 

 

 

1,012,671

 

 

 

1,097,899

 

 

 

1,217,094

 

Demand, savings and money market

 

 

2,397,003

 

 

 

2,397,524

 

 

 

2,334,463

 

 

 

2,329,584

 

 

 

2,335,847

 

Time

 

 

748,950

 

 

 

854,458

 

 

 

939,799

 

 

 

814,324

 

 

 

673,670

 

Total interest-bearing deposits

 

 

3,145,953

 

 

 

3,251,982

 

 

 

3,274,262

 

 

 

3,143,908

 

 

 

3,009,517

 

Total deposits

 

 

4,082,170

 

 

 

4,230,950

 

 

 

4,286,933

 

 

 

4,241,807

 

 

 

4,226,611

 

Federal funds purchased and retail repurchase agreements

 

 

39,701

 

 

 

44,770

 

 

 

45,098

 

 

 

46,478

 

 

 

47,443

 

Federal Home Loan Bank advances and Federal Reserve Bank borrowings

 

 

240,000

 

 

 

240,000

 

 

 

251,222

 

 

 

138,864

 

 

 

186,001

 

Subordinated debt

 

 

96,787

 

 

 

96,653

 

 

 

96,522

 

 

 

96,392

 

 

 

96,263

 

Contractual obligations

 

 

29,019

 

 

 

29,608

 

 

 

19,372

 

 

 

15,218

 

 

 

15,562

 

Interest payable and other liabilities

 

 

39,460

 

 

 

34,467

 

 

 

32,446

 

 

 

32,834

 

 

 

32,729

 

Total liabilities

 

 

4,527,137

 

 

 

4,676,448

 

 

 

4,731,593

 

 

 

4,571,593

 

 

 

4,604,609

 

Commitments and contingent liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

207

 

 

 

207

 

 

 

206

 

 

 

205

 

 

 

204

 

Additional paid-in capital

 

 

488,137

 

 

 

487,225

 

 

 

486,658

 

 

 

484,989

 

 

 

482,668

 

Retained earnings

 

 

171,188

 

 

 

160,715

 

 

 

150,810

 

 

 

140,095

 

 

 

130,114

 

Accumulated other comprehensive income (loss), net of tax

 

 

(122,047

)

 

 

(110,225

)

 

 

(101,238

)

 

 

(113,511

)

 

 

(120,918

)

Treasury stock

 

 

(119,355

)

 

 

(119,487

)

 

 

(111,313

)

 

 

(101,720

)

 

 

(96,262

)

Total stockholders’ equity

 

 

418,130

 

 

 

418,435

 

 

 

425,123

 

 

 

410,058

 

 

 

395,806

 

Total liabilities and stockholders’ equity

 

$

4,945,267

 

 

$

5,094,883

 

 

$

5,156,716

 

 

$

4,981,651

 

 

$

5,000,415

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Allowance for credit losses

 

$

44,186

 

 

$

44,544

 

 

$

45,103

 

 

$

45,847

 

 

$

46,499

 


TABLE 4. SELECTED FINANCIAL HIGHLIGHTS (Unaudited)

 

(Dollars in thousands, except per share data)

 

 

 

As of and for the three months ended

 

 

 

September 30,

 

 

June 30,

 

 

March 31,

 

 

December 31,

 

 

September 30,

 

 

 

2023

 

 

2023

 

 

2023

 

 

2022

 

 

2022

 

Loans Held For Investment by Type

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

$

1,721,761

 

 

$

1,764,460

 

 

$

1,746,834

 

 

$

1,721,269

 

 

$

1,655,646

 

Commercial and industrial

 

 

585,129

 

 

 

583,664

 

 

 

605,576

 

 

 

594,862

 

 

 

607,722

 

Residential real estate

 

 

558,188

 

 

 

560,389

 

 

 

563,791

 

 

 

570,550

 

 

 

573,431

 

Agricultural real estate

 

 

205,865

 

 

 

202,317

 

 

 

202,274

 

 

 

199,189

 

 

 

200,415

 

Agricultural

 

 

103,352

 

 

 

104,510

 

 

 

106,169

 

 

 

120,003

 

 

 

115,048

 

Consumer

 

 

107,823

 

 

 

107,330

 

 

 

105,974

 

 

 

105,675

 

 

 

102,761

 

Total loans held-for-investment

 

 

3,282,118

 

 

 

3,322,670

 

 

 

3,330,618

 

 

 

3,311,548

 

 

 

3,255,023

 

Allowance for credit losses

 

 

(44,186

)

 

 

(44,544

)

 

 

(45,103

)

 

 

(45,847

)

 

 

(46,499

)

Net loans held for investment

 

$

3,237,932

 

 

$

3,278,126

 

 

$

3,285,515

 

 

$

3,265,701

 

 

$

3,208,524

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset Quality Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses on loans to total loans

 

 

1.35

%

 

 

1.34

%

 

 

1.35

%

 

 

1.38

%

 

 

1.43

%

Past due or nonaccrual loans to total loans

 

 

1.03

%

 

 

0.78

%

 

 

0.66

%

 

 

0.72

%

 

 

0.94

%

Nonperforming assets to total assets

 

 

0.41

%

 

 

0.31

%

 

 

0.33

%

 

 

0.37

%

 

 

0.59

%

Nonperforming assets to total loans plus other real estate owned

 

 

0.62

%

 

 

0.47

%

 

 

0.51

%

 

 

0.55

%

 

 

0.91

%

Classified assets to bank total regulatory capital

 

 

6.27

%

 

 

7.94

%

 

 

10.09

%

 

 

9.98

%

 

 

11.03

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected Average Balance Sheet Data (QTD Average)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment securities

 

$

1,085,905

 

 

$

1,155,971

 

 

$

1,185,482

 

 

$

1,184,452

 

 

$

1,272,414

 

Total gross loans receivable

 

 

3,281,483

 

 

 

3,337,497

 

 

 

3,305,681

 

 

 

3,275,284

 

 

 

3,240,998

 

Interest-earning assets

 

 

4,635,384

 

 

 

4,678,744

 

 

 

4,611,019

 

 

 

4,538,177

 

 

 

4,602,568

 

Total assets

 

 

5,046,179

 

 

 

5,064,912

 

 

 

4,994,417

 

 

 

4,930,231

 

 

 

4,988,755

 

Interest-bearing deposits

 

 

3,206,300

 

 

 

3,226,965

 

 

 

3,235,557

 

 

 

3,032,902

 

 

 

3,081,245

 

Borrowings

 

 

385,125

 

 

 

385,504

 

 

 

247,932

 

 

 

299,191

 

 

 

221,514

 

Total interest-bearing liabilities

 

 

3,591,425

 

 

 

3,612,469

 

 

 

3,483,489

 

 

 

3,335,557

 

 

 

3,302,759

 

Total deposits

 

 

4,177,332

 

 

 

4,204,334

 

 

 

4,279,451

 

 

 

4,185,904

 

 

 

4,283,855

 

Total liabilities

 

 

4,619,919

 

 

 

4,640,050

 

 

 

4,573,917

 

 

 

4,531,961

 

 

 

4,552,564

 

Total stockholders' equity

 

 

426,260

 

 

 

424,862

 

 

 

420,500

 

 

 

398,270

 

 

 

436,191

 

Tangible common equity*

 

 

363,625

 

 

 

361,409

 

 

 

356,053

 

 

 

332,820

 

 

 

369,746

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performance ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (ROAA) annualized

 

 

0.97

%

 

 

0.91

%

 

 

1.00

%

 

 

0.93

%

 

 

1.21

%

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

 

 

1.22

%

 

 

1.05

%

 

 

1.18

%

 

 

1.22

%

 

 

1.49

%

Return on average equity (ROAE) annualized

 

 

11.49

%

 

 

10.82

%

 

 

11.89

%

 

 

11.57

%

 

 

13.80

%

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

 

 

14.43

%

 

 

12.51

%

 

 

13.97

%

 

 

15.05

%

 

 

16.99

%

Return on average tangible common equity
(ROATCE) annualized*

 

 

14.18

%

 

 

13.55

%

 

 

14.89

%

 

 

14.74

%

 

 

17.12

%

Yield on loans annualized

 

 

6.67

%

 

 

6.34

%

 

 

5.94

%

 

 

5.59

%

 

 

5.09

%

Cost of interest-bearing deposits annualized

 

 

2.40

%

 

 

2.14

%

 

 

1.73

%

 

 

1.05

%

 

 

0.57

%

Cost of total deposits annualized

 

 

1.84

%

 

 

1.64

%

 

 

1.31

%

 

 

0.76

%

 

 

0.41

%

Net interest margin annualized

 

 

3.51

%

 

 

3.38

%

 

 

3.44

%

 

 

3.67

%

 

 

3.62

%

Efficiency ratio*

 

 

68.83

%

 

 

69.44

%

 

 

70.00

%

 

 

70.47

%

 

 

63.07

%

Non-interest income / average assets

 

 

0.69

%

 

 

0.55

%

 

 

0.74

%

 

 

0.67

%

 

 

0.71

%

Non-interest expense / average assets

 

 

2.69

%

 

 

2.62

%

 

 

2.74

%

 

 

2.84

%

 

 

2.56

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier 1 Leverage Ratio

 

 

9.77

%

 

 

9.54

%

 

 

9.60

%

 

 

9.61

%

 

 

9.46

%

Common Equity Tier 1 Capital Ratio

 

 

12.65

%

 

 

12.23

%

 

 

12.21

%

 

 

12.26

%

 

 

12.15

%

Tier 1 Risk Based Capital Ratio

 

 

13.28

%

 

 

12.84

%

 

 

12.83

%

 

 

12.88

%

 

 

12.77

%

Total Risk Based Capital Ratio

 

 

16.42

%

 

 

15.96

%

 

 

15.98

%

 

 

16.08

%

 

 

15.99

%

Total stockholders' equity to total assets

 

 

8.46

%

 

 

8.21

%

 

 

8.24

%

 

 

8.23

%

 

 

7.92

%

Tangible common equity to tangible assets*

 

 

7.29

%

 

 

7.06

%

 

 

7.09

%

 

 

7.02

%

 

 

6.68

%

Dividend payout ratio

 

 

15.13

%

 

 

13.53

%

 

 

10.49

%

 

 

14.01

%

 

 

10.78

%

Book value per common share

 

$

27.13

 

 

$

27.18

 

 

$

27.03

 

 

$

25.74

 

 

$

24.71

 

Tangible book value per common share*

 

$

23.09

 

 

$

23.08

 

 

$

22.96

 

 

$

21.67

 

 

$

20.59

 

Tangible book value per diluted common share*

 

$

22.96

 

 

$

22.98

 

 

$

22.83

 

 

$

21.35

 

 

$

20.33

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 


 

 

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

 

 

 

 

For nine months ended

 

 

For nine months ended

 

 

September 30, 2023

 

 

September 30, 2022

 

 

Average Outstanding Balance

 

 

Interest Income/ Expense

 

 

Average
Yield/Rate(3)(4)

 

 

Average Outstanding Balance

 

 

Interest Income/ Expense

 

 

Average
Yield/Rate(3)(4)

 

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

$

580,359

 

 

$

31,503

 

 

 

7.26

%

 

$

579,610

 

 

$

22,994

 

 

 

5.30

%

Commercial real estate

 

1,300,202

 

 

 

61,811

 

 

 

6.36

%

 

 

1,236,282

 

 

 

45,995

 

 

 

4.97

%

Real estate construction

 

450,147

 

 

 

24,764

 

 

 

7.36

%

 

 

362,543

 

 

 

12,443

 

 

 

4.59

%

Residential real estate

 

567,169

 

 

 

17,933

 

 

 

4.23

%

 

 

604,218

 

 

 

16,336

 

 

 

3.61

%

Agricultural real estate

 

202,963

 

 

 

10,399

 

 

 

6.85

%

 

 

201,566

 

 

 

8,046

 

 

 

5.34

%

Agricultural

 

100,450

 

 

 

5,039

 

 

 

6.71

%

 

 

132,485

 

 

 

5,254

 

 

 

5.30

%

Consumer

 

106,841

 

 

 

4,832

 

 

 

6.05

%

 

 

101,341

 

 

 

3,642

 

 

 

4.80

%

Total loans

 

3,308,131

 

 

 

156,281

 

 

 

6.32

%

 

 

3,218,045

 

 

 

114,710

 

 

 

4.77

%

Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable securities

 

1,059,858

 

 

 

17,456

 

 

 

2.20

%

 

 

1,220,045

 

 

 

16,767

 

 

 

1.84

%

Nontaxable securities

 

82,230

 

 

 

1,606

 

 

 

2.61

%

 

 

109,142

 

 

 

2,020

 

 

 

2.47

%

Total securities

 

1,142,088

 

 

 

19,062

 

 

 

2.23

%

 

 

1,329,187

 

 

 

18,787

 

 

 

1.89

%

Federal funds sold and other

 

191,585

 

 

 

7,075

 

 

 

4.94

%

 

 

116,997

 

 

 

1,327

 

 

 

1.52

%

Total interest-earning assets

$

4,641,804

 

 

 

182,418

 

 

 

5.25

%

 

$

4,664,229

 

 

 

134,824

 

 

 

3.86

%

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Demand, savings and money market deposits

$

2,365,972

 

 

 

32,288

 

 

 

1.82

%

 

$

2,480,113

 

 

 

5,461

 

 

 

0.29

%

Time deposits

 

856,862

 

 

 

18,111

 

 

 

2.83

%

 

 

638,692

 

 

 

2,847

 

 

 

0.60

%

Total interest-bearing deposits

 

3,222,834

 

 

 

50,399

 

 

 

2.09

%

 

 

3,118,805

 

 

 

8,308

 

 

 

0.36

%

FHLB advances

 

97,014

 

 

 

2,939

 

 

 

4.05

%

 

 

54,100

 

 

 

594

 

 

 

1.47

%

Other borrowings

 

243,007

 

 

 

9,529

 

 

 

5.24

%

 

 

152,682

 

 

 

5,123

 

 

 

4.49

%

Total interest-bearing liabilities

$

3,562,855

 

 

 

62,867

 

 

 

2.36

%

 

$

3,325,587

 

 

 

14,025

 

 

 

0.56

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income