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First Business Bank Reports Strong Third Quarter 2021 Net Income of $9.2 Million

·26 min read

-- Continuation of positive trends including top line revenue growth, organic loan growth, and superior asset quality --

MADISON, Wis., October 28, 2021--(BUSINESS WIRE)--First Business Financial Services, Inc. (the "Company", the "Bank", or "First Business Bank") (Nasdaq:FBIZ) reported net income of $9.2 million, or $1.07 diluted earnings per share, in the third quarter 2021. Third quarter net income grew by 11.7% from $8.2 million, or $0.95 per share, in the second quarter of 2021 and more than doubled from $4.3 million, or $0.50, in the third quarter of 2020.

"First Business Bank’s excellent third quarter results include profitable top line revenue growth illustrating the strength and diversification of our fee generating businesses, net interest margin stability, and our team’s ability to organically grow commercial loans," President and Chief Executive Officer Corey Chambas said. "Excluding PPP loans, we achieved another quarter of solid loan growth and our record pipelines continue to support our expectation for double-digit organic loan growth for full-year 2021 and 2022. As expected, our discipline around credit resulted in further improvement to our asset quality metrics, with nonperforming assets declining to just 0.29% of total assets, the lowest level since 2006. Our results were further supported by a loan loss provision benefit in the third quarter and, based on current economic trends, we continue to expect no meaningful provision in the fourth quarter and anticipate continued opportunities to release reserves in 2022."

Quarterly Highlights

  • Continued Loan Growth. Loans, excluding Paycheck Protection Program ("PPP") loans, grew $36.0 million, or 7.1% annualized, from the second quarter of 2021 and $214.0 million, or 11.6%, from the third quarter of 2020, as the Company continued to expand specialized lending offerings for commercial clients and focus on growing our businesses across all products and geographies.

  • Sustained Strong Revenue Growth. Driven by net interest margin stability and fee income growth, top line revenue, the sum of net interest income and non-interest income, grew to $28.2 million, up 8.5% from the third quarter of 2020. Third quarter 2021 non-interest income continued to reflect the strength and diversity of our fee income sources, including record revenue from private wealth management of $2.8 million on $2.7 billion in assets under management and administration for the period.

  • Positive Asset Quality Trends. Non-performing assets ("NPAs") declined 34.4% to $7.6 million, or 0.29% of total assets, marking the fourth consecutive quarterly reduction of more than 25%. NPAs made up 0.30% of total assets, excluding net PPP loans, improving by 12 and 131 basis points from June 30, 2021 and September 30, 2020, respectively.

  • Compounding Tangible Book Value. Tangible Book Value ("TBV") per share grew by 14% annualized in the quarter to $25.11, which is nearly double the long-term growth rate of 8%.

Quarterly Financial Results

(Unaudited)

As of and for the Three Months Ended

As of and for the Nine Months Ended

(Dollars in thousands, except per share amounts)

September 30,
2021

June 30,
2021

September 30,
2020

September 30,
2021

September 30,
2020

Net interest income

$

21,223

$

21,652

$

18,621

$

63,738

$

54,558

Adjusted non-interest income (1)

7,015

6,292

7,408

20,502

20,145

Operating revenue (1)

28,238

27,944

26,029

84,240

74,703

Operating expense (1)

18,546

17,932

16,700

53,928

48,026

Pre-tax, pre-provision adjusted earnings (1)

9,692

10,012

9,329

30,312

26,677

Less:

Provision for loan and lease losses

(2,269

)

(958

)

3,835

(5,295

)

12,487

Net loss (gain) on foreclosed properties

6

(1

)

(121

)

7

329

Amortization of other intangible assets

7

8

9

23

27

SBA recourse (benefit) provision

(69

)

245

57

45

53

Impairment on tax credit investments

113

2,066

Loss on early extinguishment of debt

744

Add:

Net gain (loss) on sale of securities

29

29

(4

)

Income before income tax expense

12,017

10,747

5,436

35,561

10,967

Income tax expense

2,819

2,512

1,143

8,396

73

Net income

$

9,198

$

8,235

$

4,293

$

27,165

$

10,894

Earnings per share, diluted

$

1.07

$

0.95

$

0.50

$

3.15

$

1.27

Book value per share

$

26.56

$

25.70

$

23.45

$

26.56

$

23.45

Tangible book value per share (1)

$

25.11

$

24.28

$

22.05

$

25.11

$

22.05

Net interest margin (2)

3.45

%

3.49

%

3.14

%

3.46

%

3.30

%

Adjusted net interest margin (1)(2)

3.22

%

3.20

%

3.24

%

3.21

%

3.29

%

Efficiency ratio (1)

65.68

%

64.17

%

64.16

%

64.02

%

64.29

%

Return on average assets (2)

1.41

%

1.26

%

0.68

%

1.39

%

0.62

%

Pre-tax, pre-provision adjusted return on average assets (1)(2)

1.49

%

1.53

%

1.47

%

1.55

%

1.51

%

Return on average equity (2)

16.39

%

15.09

%

8.58

%

16.63

%

7.49

%

Period-end loans and leases receivable

$

2,123,306

$

2,143,561

$

2,170,299

$

2,123,306

$

2,170,299

Period-end loans and leases receivable, excluding net PPP loans

$

2,058,852

$

2,022,839

$

1,844,818

$

2,058,852

$

1,844,818

Average loans and leases receivable

$

2,131,099

$

2,223,353

$

2,139,439

$

2,178,947

$

1,952,785

Period-end in-market deposits

$

1,829,644

$

2,016,215

$

1,667,245

$

1,829,644

$

1,667,245

Average in-market deposits

$

1,810,948

$

1,735,393

$

1,644,704

$

1,756,475

$

1,527,561

Allowance for loan and lease losses

$

24,676

$

25,675

$

30,817

$

24,676

$

30,817

Non-performing assets

$

7,605

$

11,601

$

36,663

$

7,605

$

36,663

Allowance for loan and lease losses as a percent of total gross loans and leases

1.16

%

1.20

%

1.41

%

1.16

%

1.41

%

Allowance for loan and lease losses as a percent of total gross loans and leases, excluding net PPP loans

1.20

%

1.27

%

1.67

%

1.20

%

1.67

%

Non-performing assets as a percent of total assets

0.29

%

0.40

%

1.41

%

0.29

%

1.41

%

Non-performing assets as a percent of total assets, excluding net PPP loans

0.30

%

0.42

%

1.61

%

0.30

%

1.61

%

(1)

This is a non-GAAP financial measure. Management believes these measures are meaningful because they reflect adjustments commonly made by management, investors, regulators, and analysts to evaluate financial performance, provide greater understanding of ongoing operations, and enhance comparability of results with prior periods. See the section titled Non-GAAP Reconciliations at the end of this release for a reconciliation of GAAP financial measures to non-GAAP financial measures.

(2)

Calculation is annualized.

Third Quarter 2021 Compared to Second Quarter 2021

Net interest income decreased $429,000, or 2.0%, to $21.2 million.

  • Net interest income decreased primarily due to a reduction in fees in lieu of interest. Fees in lieu of interest, which can vary from quarter to quarter based on client-driven activity, totaled $2.8 million, compared to $3.5 million. Excluding fees in lieu of interest, net interest income increased $268,000, or 1.5%.

  • Average loans and leases receivable, excluding net PPP loans in both periods of comparison, increased $49.4 million, or 9.9% annualized, to $2.044 billion.

  • The yield on average interest-earning assets decreased six basis points to 3.90% from 3.96%. Excluding average net PPP loans, the PPP loan interest income of $221,000, and the aforementioned fees in lieu of interest, the yield earned on average interest-earning assets decreased 11 basis points to 3.53% from 3.64%. The rate paid for average total bank funding decreased three basis point to 0.36% from 0.39%. Total bank funding is defined as total deposits plus Federal Home Loan Bank ("FHLB") advances, and Federal Reserve Discount Window advances.

  • Net interest margin decreased four basis points to 3.45% from 3.49%. Adjusted net interest margin was 3.22%, compared to 3.20% in the linked quarter. Adjusted net interest margin is a non-GAAP measure representing net interest income excluding the fees in lieu of interest and other recurring but volatile components of net interest margin divided by average interest-earning assets less average net PPP loans, if any, and other recurring but volatile components of average interest-earning assets such as excess liquidity and non-accrual loans.

The Company reported a net benefit to provision for loan and lease losses of $2.3 million, compared to a net benefit of $1.0 million in the second quarter.

  • The decrease in the provision for loan and lease losses was primarily due to a $923,000 reduction in the general reserve from improving historical loss rates, $1.3 million in net recoveries, and a $451,000 decrease in specific reserves. These decreases were partially offset by a $426,000 increase in the general reserve due to loan growth.

Non-interest income increased $694,000, or 11.0%, to $7.0 million.

  • Private wealth management fee income increased $15,000, or 0.5% to $2.8 million. Private wealth and trust assets under management and administration measured a record $2.694 billion at September 30, 2021, up $129.8 million, or 20.2% annualized, primarily due to growth from new and existing clients.

  • Gains on sale of SBA loans decreased $482,000 to $721,000. Management expects this revenue stream to return to levels consistent with the first half of the year in the coming quarters and continues to believe gains on sale of traditional SBA loans (i.e., SBA loans unrelated to PPP loans), while variable based on timing of closings, will continue to increase annually at a measured pace.

  • During the third and second quarters of 2021 there was no commercial loan interest rate swap fee income. Swap fee income can vary from period to period based on client demand and the interest rate environment in any given quarter. Subsequent to September 30, 2021, the Company completed two commercial loan interest rate swap transactions which generated swap fees totaling $684,000.

  • Other fee income increased $1.0 million to $1.9 million, compared to $835,000 in the second quarter, reflecting higher than typical returns from the Company’s investments in mezzanine funds.

Non-interest expense increased $306,000, or 1.7%, to $18.5 million. Operating expense increased $614,000, or 3.4%, to $18.5 million.

  • Compensation expense, the largest component of the Company’s non-interest expense, increased $96,000, or 0.7%, to $13.4 million, primarily for performance-based incentive compensation accruals reflecting strong company performance relative to bonus criteria.

  • Other non-interest expense increased $543,000 to $719,000. Other non-interest expense for the second quarter of 2021 included a $206,000 and $78,000 benefit in the Company’s swap credit valuation and loan servicing impairment valuation, respectively. The remaining variance was generally attributable to higher travel costs.

Total period-end loans and leases receivable, excluding net PPP loans in both periods of comparison, increased $36.0 million, or 7.1% annualized, to $2.059 billion.

  • Commercial and industrial ("C&I") loans, excluding net PPP loans, increased $41.9 million, or 29.2% annualized, led by First Business Bank’s specialized lending commercial business lines. Management believes the timely prior-period investments in our specialized lending business lines, such as dealer floorplan financing, small-ticket equipment vendor financing, and accounts receivable financing, have positioned C&I lending to increase throughout the current economic cycle.

  • Commercial real estate ("CRE") loans decreased by $4.3 million to $1.388 billion, compared to $1.392 billion, as new production was offset by payoffs and paydowns.

Total period-end in-market deposits decreased $186.6 million to $1.830 billion, compared to $2.016 billion, and the average rate paid decreased one basis point to 0.14%.

  • As previously disclosed, in-market deposits on June 30, 2021 included a temporary balance associated with the proceeds of a commercial client’s business sale late in the second quarter, the majority of which was moved off the balance sheet in early July. Excluding this temporary deposit, total period-end in-market deposits increased by $38.4 million, or 8.6% annualized.

  • Excluding the temporary deposit, money market accounts, interest-bearing transaction accounts, and certificates of deposit increased $43.6 million, $5.6 million, and $12.5 million, respectively, while non-interest bearing transaction accounts decreased $23.2 million.

Period-end wholesale funding, including FHLB advances, Federal Reserve Discount Window advances, brokered deposits, and deposits gathered through internet deposit listing services, decreased $99.9 million to $432.4 million.

  • Wholesale deposits decreased $69.9 million to $74.6 million. The average rate paid on wholesale deposits increased 18 basis points to 0.92% and the weighted average original maturity of brokered certificates of deposit increased to 3.7 years from 3.5 years.

  • FHLB advances decreased $30.0 million to $357.8 million. The average rate paid on FHLB advances increased two basis points to 1.29% and the weighted average original maturity increased to 6.2 years from 6.1 years.

Non-performing assets decreased $4.0 million, or 34.4%, to $7.6 million, or 0.29% of total assets, compared to $11.6 million, or 0.40% of total assets. The reduction in non-performing assets was due to loan payoffs. Excluding net PPP loans, non-performing assets were 0.30% of total assets as of September 30, 2021, compared to 0.42% as of June 30, 2021.

The allowance for loan and lease losses decreased $1.0 million, or 3.9%, as an increase in the general reserve from loan growth was more than offset by a decrease in the historical loss rate and reduction in specific reserves.

  • The allowance for loan and lease losses as a percent of total gross loans and leases was 1.16% compared to 1.20% as of June 30, 2021.

  • Excluding net PPP loans, the allowance for loan and leases losses as a percent of total gross loans and leases was 1.20%, compared to 1.27% as of June 30, 2021.

Third Quarter 2021 Compared to Third Quarter 2020

Net interest income increased $2.6 million, or 14.0%, to $21.2 million.

  • The increase in net interest income reflects expanded yields on average gross loans and leases, which were relatively consistent between periods, and lower deposit costs. Excluding fees collected in lieu of interest and interest income from PPP loans, net interest income increased $1.9 million, or 11.4%. Excluding net PPP loans, average gross loans and leases increased $227.2 million, or 12.5%.

  • The yield on average interest-earning assets measured 3.90% compared to 3.75%. Excluding fees collected in lieu of interest, PPP loan interest income and net PPP loans, the yield on average interest-earning assets measured 3.53%, compared to 3.89%. This decrease in yield was primarily due to the decrease in LIBOR and Prime rates and related impact on variable-rate loans, in addition to the renewal of fixed-rate loans and reinvestment of cash flows from the securities portfolio at historically low interest rates. The rate paid for average total bank funding decreased 18 basis points to 0.36% from 0.54%.

  • Net interest margin increased 31 basis points to 3.45% from 3.14%. Adjusted net interest margin decreased 2 basis points to 3.22% from 3.24%.

The Company reported a net benefit to provision for loan and lease losses of $2.3 million, compared to a $3.8 million expense in the third quarter of 2020.

Non-interest income of $7.0 million compares to $7.4 million in the prior year period.

  • Private wealth management fee income increased $592,000, or 27.3%, to $2.8 million. Private wealth and trust assets under management and administration measured a record $2.694 billion at September 30, 2021, up $676.6 million, or 33.5%.

  • Loan fees of $713,000 increased by $235,000, or 49.2%, primarily due to an increase in floorplan financing curtailment fees and miscellaneous asset-based lending fees.

  • Gains on sale of SBA loans decreased $39,000 to $721,000. Management expects this revenue stream to return to levels consistent with the first half of the year in the coming quarters and continues to believe gains on sale of traditional SBA loans (i.e., SBA loans unrelated to PPP loans), while variable based on timing of closings, will continue to increase annually at a measured pace.

  • During the third quarter of 2021, there was no commercial loan interest rate swap fee income activity, compared to $2.4 million in the year-ago period. Swap fee income can vary from period to period based on client demand and the interest rate environment in any given quarter.

  • Other fee income increased $1.2 million, or 176.0%, to $1.9 million compared to $676,000, reflecting higher than typical returns from the Company’s investments in mezzanine funds in the third quarter of 2021.

Non-interest expense increased $1.7 million, or 10.3%, to $18.5 million. Operating expense increased $1.8 million, or 11.1%, to $18.5 million.

  • Compensation expense increased $1.5 million, or 12.6%, to $13.4 million. The increase resulted from new hires and an increase in performance-based incentive compensation accruals reflecting strong company performance relative to bonus criteria.. Average full-time equivalent employees increased to 311, up 5.4% for the quarter ended September 30, 2021, compared to 295 for the quarter ended September 30, 2020.

Total period-end loans and leases receivable, excluding net PPP loans in both periods of comparison, increased $214.0 million, or 11.6%, to $2.059 billion.

  • C&I loans, excluding net PPP loans, increased $151.7 million, or 32.6%.

  • CRE loans increased $61.2 million, or 4.6%, as increases in the non-owner occupied and multi-family portfolios were partially offset by reductions in the land development and 1-4 family portfolios.

Total period-end in-market deposits increased $162.4 million, or 9.7%, to $1.830 billion and the average rate paid decreased 13 basis points to 0.14%.

  • Transaction and money market accounts increased $106.3 million and $91.9 million, respectively, while certificates of deposits decreased $35.7 million.

Period-end wholesale funding decreased $180.8 million to $432.4 million.

  • Wholesale deposits decreased $79.5 million to $74.6 million, compared to $154.1 million, as the existing portfolio runoff was replaced by in-market deposits. The average rate paid on brokered certificates of deposit decreased 41 basis points to 0.92% and the weighted average original maturity decreased to 3.7 years from 4.3 years.

  • FHLB advances decreased $71.7 million to $357.8 million. The average rate paid on FHLB advances increased 14 basis points to 1.29% and the weighted average original maturity increased to 6.2 years from 5.1 years.

Non-performing assets decreased to $7.6 million, or 0.29% of total assets, compared to $36.7 million, or 1.41% of total assets. Excluding net PPP loans, non-performing assets were 0.30% of total assets as of September 30, 2021 compared to 1.61% one year prior.

The allowance for loan and lease losses decreased $6.1 million to $24.7 million, compared to $30.8 million.

  • The allowance for loan and lease losses as a percent of total gross loans and leases was 1.16% compared to 1.41%.

  • Excluding net PPP loans, the allowance for loan and leases losses as a percent of total gross loans and leases was 1.20% as of September 30, 2021 compared to 1.67% one year prior.

COVID-19 Update

In the second quarter of 2021, the Company communicated return to office plans to employees. Based on the national and local guidelines, the Company developed a phased-in approach for returning to the office. Under this phased-in approach, more employees returned to the office in early June 2021. The return to office included enhanced safety protocols and processes to provide the best working environment possible for employees. In addition, the Company has adopted workplace flexibility strategies in response to ever-changing circumstances and expectations. Remote, hybrid and hoteling options are available for most positions. These options cultivate a more flexible work environment that is very attractive to our employees.

Paycheck Protection Program

As of September 30, 2021, the Company had $65.9 million in gross PPP loans outstanding and deferred processing fees outstanding of $1.4 million. The processing fees are deferred and recognized over the contractual life of the loan, or accelerated at forgiveness, as an adjustment of yield using the interest method. During the three and nine months ended September 30, 2021, the Company recognized $1.7 million and $6.4 million, respectively, of processing fees in loans and leases interest income in the unaudited Consolidated Statements of Income. The SBA provides a guaranty to the lender of 100% of principal and interest, unless the lender violated an obligation under the agreement. Since loan losses are expected to be immaterial, if at all due to the government guarantee, management excluded the PPP loans from the allowance for loan and lease losses calculation. These short-term loans were funded primarily through a combination of excess cash held at the Federal Reserve and from an increase in in-market deposits.

Deferral Requests

The Company provided loan modifications deferring payments for certain borrowers impacted by COVID-19 who were current in their payments at the inception of the Company’s loan modification program. Excluding gross PPP loans, as of September 30, 2021, the Company had five deferred loans outstanding in an aggregate amount of $24.1 million, or 1.2% of gross loans and leases, compared to $131.5 million, or 7.2% of gross loans and leases as of September 30, 2020. Of the $24.1 million of deferred loans outstanding, $23.5 million is related to three hospitality credits which received principal deferrals and are accruing and current on interest payments. Management believes there will be no losses associated with these credits.

The following tables represent a breakdown of the deferred loan balances by industry segment and collateral type:

As of

September 30, 2021

Collateral Type

Industries Description

Balance

Real Estate

Non-Real Estate

(In thousands)

Accommodation and Food Services

$

23,521

$

23,521

$

Manufacturing

428

428

Retail Trade

115

115

Total deferred loan balances

$

24,064

$

23,521

$

543

Exposure to Stressed Industries

Certain industries have been and are expected to be particularly impacted by social distancing, quarantines, and the economic impact of the COVID-19 pandemic, such as the following:

As of

September 30, 2021

December 31, 2020

Industries:

Balance

% Gross Loans and Leases (1)

Balance

% Gross Loans and Leases (1)

(Dollars in Thousands)

Retail (2) (3)

$

76,635

3.7

%

$

62,719

3.3

%

Hospitality

77,286

3.7

%

80,832

4.2

%

Entertainment

13,533

0.7

%

14,208

0.7

%

Restaurants & food service

22,393

1.1

%

24,854

1.3

%

Total outstanding exposure

$

189,847

9.2

%

$

182,613

9.5

%

(1)

Excluding net PPP loans.

(2)

Includes $39.6 million and $48.9 million in loans secured by commercial real estate as of September 30, 2021 and December 31, 2020, respectively.

(3)

Includes $23.2 million and $7.7 million in fully collateralized asset-based loans as of September 30, 2021 and December 31, 2020, respectively.

Because of the uncertainties related to the ultimate duration of the COVID-19 pandemic and its effects on our clients and prospects, and on the national and local economies as a whole, there can be no assurances as to the future effect of the ongoing pandemic on the Company’s loan portfolio.

Share Repurchase Program Update

During the third quarter the Company repurchased a total of 129,600 shares for approximately $3.5 million at an average cost of $27.40 per share. The Company had $717,000 of repurchase authority as of September 30, 2021 remaining in its previously disclosed share repurchase program.

About First Business Financial Services, Inc.

First Business Financial Services, Inc., (Nasdaq: FBIZ) is the parent company of First Business Bank. First Business Bank specializes in Business Banking, including Commercial Banking and Specialized Lending, Private Wealth, and Bank Consulting services, and through its refined focus, delivers unmatched expertise, accessibility, and responsiveness. Specialized Lending solutions are delivered through First Business Bank’s wholly owned subsidiary First Business Specialty Finance, LLC. For additional information, visit www.firstbusiness.bank.

This release may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, which reflect First Business Bank’s current views with respect to future events and financial performance. Forward-looking statements are not based on historical information, but rather are related to future operations, strategies, financial results, or other developments. Forward-looking statements are based on management’s expectations as well as certain assumptions and estimates made by, and information available to, management at the time the statements are made. Those statements are based on general assumptions and are subject to various risks, uncertainties, and other factors that may cause actual results to differ materially from the views, beliefs, and projections expressed in such statements. Such statements are subject to risks and uncertainties, including among other things:

  • Adverse changes in the economy or business conditions, either nationally or in our markets, including, without limitation, the adverse effects of the COVID-19 pandemic on the global, national, and local economy.

  • The effect of the COVID-19 pandemic on the Company’s credit quality, revenue, and business operations.

  • Competitive pressures among depository and other financial institutions nationally and in our markets.

  • Increases in defaults by borrowers and other delinquencies.

  • Our ability to manage growth effectively, including the successful expansion of our client service, administrative infrastructure, and internal management systems.

  • Fluctuations in interest rates and market prices.

  • Changes in legislative or regulatory requirements applicable to us and our subsidiaries.

  • Changes in tax requirements, including tax rate changes, new tax laws, and revised tax law interpretations.

  • Fraud, including client and system failure or breaches of our network security, including our internet banking activities.

  • Failure to comply with the applicable SBA regulations in order to maintain the eligibility of the guaranteed portion of SBA loans.

For further information about the factors that could affect the Company’s future results, please see the Company’s annual report on Form 10-K for the year ended December 31, 2020 and other filings with the Securities and Exchange Commission.

SELECTED FINANCIAL CONDITION DATA

(Unaudited)

As of

(in thousands)

September 30,
2021

June 30,
2021

March 31,
2021

December 31,
2020

September 30,
2020

Assets

Cash and cash equivalents

$

110,624

$

389,977

$

58,874

$

56,909

$

51,728

Securities available-for-sale, at fair value

194,056

171,219

173,261

183,925

179,274

Securities held-to-maturity, at amortized cost

21,196

22,382

24,783

26,374

28,897

Loans held for sale

5,603

6,059

6,576

8,695

15,049

Loans and leases receivable

2,123,306

2,143,561

2,235,112

2,145,970

2,170,299

Allowance for loan and lease losses

(24,676

)

(25,675

)

(28,982

)

(28,521

)

(30,817

)

Loans and leases receivable, net

2,098,630

2,117,886

2,206,130

2,117,449

2,139,482

Premises and equipment, net

1,700

1,747

1,923

1,998

2,130

Foreclosed properties

172

179

31

34

613

Right-of-use assets

5,263

5,472

5,486

5,814

6,141

Bank-owned life insurance

53,244

52,887

52,537

52,188

51,798

Federal Home Loan Bank stock, at cost

12,351

13,451

14,941

13,578

15,153

Goodwill and other intangible assets

12,229

12,178

12,055

12,018

12,024

Derivatives

28,678

32,377

26,104

49,377

58,210

Accrued interest receivable and other assets

40,664

39,855

38,017

39,478

41,348

Total assets

$

2,584,410

$

2,865,669

$

2,620,718

$

2,567,837

$

2,601,847

Liabilities and Stockholders’ Equity

In-market deposits

$

1,829,644

$

2,016,215

$

1,737,226

$

1,683,008

$

1,667,245

Wholesale deposits

74,638

144,492

165,492

172,508

154,130

Total deposits

1,904,282

2,160,707

1,902,718

1,855,516

1,821,375

Federal Home Loan Bank advances and other borrowings

394,090

420,113

448,417

419,167

483,517

Junior subordinated notes

10,072

10,069

10,065

10,062

10,058

Lease liabilities

5,780

6,005

6,040

6,386

6,728

Derivatives

31,890

36,109

29,565

54,927

64,403

Accrued interest payable and other liabilities

13,016

11,214

9,422

15,617

14,981

Total liabilities

2,359,130

2,644,217

2,406,227

2,361,675

2,401,062

Total stockholders’ equity

225,280

221,452

214,491

206,162

200,785

Total liabilities and stockholders’ equity

$

2,584,410

$

2,865,669

$

2,620,718

$

2,567,837

$

2,601,847

STATEMENTS OF INCOME

(Unaudited)

As of and for the Three Months Ended

As of and for the Nine Months Ended

(Dollars in thousands, except per share amounts)

September 30,
2021

June 30,
2021

March 31,
2021

December 31,
2020

September 30,
2020

September 30,
2021

September 30,
2020

Total interest income

$

24,014

$

24,599

$

23,806

$

25,770

$

22,276

$

72,420

$

68,408

Total interest expense

2,791

2,947

2,943

3,258

3,655

8,682

13,850

Net interest income

21,223

21,652

20,863

22,512

18,621

63,738

54,558

Provision for loan and lease losses

(2,269

)

(958

)

(2,068

)

4,322

3,835

(5,295

)

12,487

Net interest income after provision for loan and lease losses

23,492

22,610

22,931

18,190

14,786

69,033

42,071

Private wealth management service fees

2,759

2,744

2,407

2,208

...

2,167

7,910

6,402

Gain on sale of SBA loans

721

1,203

1,078

1,300

760

3,002

1,598

Service charges on deposits

956

941

917

887

...