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Lakeland Financial Reports Record Annual Performance

GlobeNewswire Inc.

Year-to-Date Record Net Income Improves by 13% to $95.7 Million

WARSAW, Ind., Jan. 25, 2022 (GLOBE NEWSWIRE) -- Lakeland Financial Corporation (Nasdaq Global Select/LKFN), parent company of Lake City Bank, today reported record full year net income of $95.7 million, which represents an increase of $11.4 million, or 13.5%, compared with net income of $84.3 million for 2020. Diluted earnings per share of $3.74 was also a record for 2021, which increased 13.3% compared to $3.30 for 2020. Net income for 2021 benefited from growth in net interest income and lower provision expense as compared to 2020, offset by an increase in noninterest expense.

The company further reported quarterly net income of $24.3 million for the three months ended December 31, 2021 versus $24.6 million for the comparable period of 2020, a decrease of 1.3%. Diluted net income per common share decreased 2.1% to $0.95 for the three months ended December 31, 2021 versus $0.97 for the comparable period of 2020. On a linked quarter basis, net income increased $164,000, or 0.7%, from the third quarter of 2021, of $24.1 million, or $0.94 diluted earnings per share. Pretax pre-provision earnings were $29.8 million for the fourth quarter of 2021, a decrease of 5.7%, or $1.8 million, from $31.6 million for the fourth quarter of 2020. On a linked quarter basis, pretax pre-provision earnings decreased 3.6%, or $1.1 million, from $30.9 million for the third quarter of 2021. The decreases in net income and pretax pre-provision earnings were driven primarily by lower Paycheck Protection Program (PPP) loan income in the fourth quarter of 2021. PPP loan income, which includes both interest income and fee accretion, was $2.2 million for the fourth quarter of 2021 compared to $6.5 million during the comparable quarter of 2020 and $3.9 million for the third quarter of 2021.

“We enter 2022 with great optimism and confidence in the core relationship businesses within Lake City Bank. During the last two years, we have experienced unprecedented growth that has challenged our management of the balance sheet and necessitated a level of flexibility and adaptability by the entire Lake City Bank team. We end 2021 strongly with record net income and a balance sheet ready for future growth. Our highly asset sensitive balance sheet is well-positioned for the interest rate hikes we expect to see in 2022. Further, we believe the liquidity on our balance sheet will prove valuable as we focus on future organic loan growth opportunities,” commented David M. Findlay, President and Chief Executive Officer.

Highlights for the year and quarter are noted below.

Full year 2021 versus 2020 highlights:

  • Total assets of $6.6 billion, an increase of $726.9 million, or 12%

  • Dividend per share increase of 13% to $1.36 from $1.20

  • Return on average equity of 14.19%, compared to 13.51%

  • Return on average assets of 1.56%, compared to 1.55%

  • Average loan growth, excluding PPP loans, of $135.5 million, or 3%

  • Core deposit growth of $703.6 million, or 14%

  • Noninterest bearing demand deposit account growth of $357.2 million, or 23%

  • Net interest margin of 3.07% compared to 3.19%

  • Net interest income increase of $15.1 million, or 9%

  • Revenue growth of $13.0 million, or 6%

  • Noninterest expense increase of $13.1 million, or 14%

  • Provision expense2 of $1.1 million compared to provision expense of $14.8 million, a decrease of $13.7 million

  • Average total equity increase of $50.5 million, or 8%

  • Total risk-based capital ratio improved to 15.34% compared to 14.65%

  • Tangible capital ratio1 of 10.70% compared to 11.21%

Fourth Quarter 2021 versus Fourth Quarter 2020 highlights:

  • Average loan growth, excluding PPP loans, of $101.5 million, or 2%

  • Core deposit growth of $703.6 million, or 14%

  • Noninterest bearing demand deposit account growth of $357.2 million, or 23%

  • Net interest margin of 2.98% compared to 3.28%

  • Net interest income increase of $294,000, or 1%

  • Noninterest expense increase of $14,000, or 0%

  • Provision expense of $0 compared to provision expense of $920,000

  • Average total equity increase of $47.7 million, or 7%

Fourth Quarter 2021 versus Third Quarter 2021 highlights:

  • Return on average equity of 13.91%, compared to 13.90%

  • Average loan growth, excluding PPP loans, of $5.2 million

  • Core deposit growth of $321.8 million, or 6%

  • Noninterest bearing demand deposit account growth of $133.5 million, or 8%

  • Net interest margin of 2.98% compared to 3.13%

  • Provision expense of $0 compared to a provision expense of $1.3 million

  • Nonperforming loans of $15.1 million, a decrease of $15.9 million

  • Average total equity increase of $4.1 million, or 1%

  • Tangible capital ratio1 was 10.70% compared to 10.92%

Return on average total equity for the year ended December 31, 2021 was 14.19%, compared to 13.51% in 2020. Return on average assets was 1.56% in 2021 compared to 1.55% in 2020. The company's total capital as a percent of risk-weighted assets was 15.34% at December 31, 2021 compared to 14.65% at December 31, 2020 and 15.44% at September 30, 2021. The company's tangible common equity to tangible assets ratio1 was 10.70% at December 31, 2021, compared to 11.21% at December 31, 2020 and 10.92% at September 30, 2021.

As previously announced, the board of directors approved a cash dividend for the fourth quarter of $0.40 per share, payable on February 7, 2022, to shareholders of record as of January 25, 2022. The fourth quarter dividend per share represents an 18% increase from the $0.34 dividend per share paid in the third quarter of 2021.

Findlay added, “Our capital structure is exceptionally strong. As a result, we can comfortably provide our shareholders with an 18% increase in the dividend. We are confident in our future growth and performance, and the strength of our balance sheet is critical to our long-term success.”

Average total loans were $4.28 billion in the fourth quarter of 2021, a decrease of $74.8 million, or 2%, from $4.35 billion for the third quarter of 2021, and a decrease of $338.7 million, or 7%, from $4.62 billion for the fourth quarter 2020, due primarily to PPP loan forgiveness. Average PPP loans were $62.9 million during the fourth quarter of 2021, down from $503.0 million during the fourth quarter of 2020. Average loans, excluding PPP loans, were $4.22 billion in the fourth quarter of 2021, compared to $4.11 billion for the fourth quarter of 2020, an increase of $101.5 million, or 2%. On a linked quarter basis, average loans, excluding PPP loans, increased by $5.2 million.

Total loans outstanding decreased by $361.3 million, or 8%, from $4.65 billion as of December 31, 2020 to $4.29 billion as of December 31, 2021, due primarily to PPP loan forgiveness. PPP loans outstanding were $26.2 million as of December 31, 2021, compared to $412.0 million at December 31, 2020. Total loans, excluding PPP loans, were $4.26 billion as of December 31, 2021, representing an increase of $24.5 million, or 1%, as compared to December 31, 2020. On a linked quarter basis, total loans excluding PPP increased $114.1 million, or 3%. The company received PPP forgiveness proceeds and borrower repayments of $709.5 million since the program's inception through December 31, 2021.

Findlay stated, “Commercial organic loan originations reached an all-time high this quarter. During the fourth quarter we originated more than $650 million of commercial loans, yet also experienced elevated levels of paydowns over $600 million. Commercial line utilization continues to incrementally improve, but is still near historic lows. We continue to expand existing relationships and establish new ones as available commercial lines of credit reached a record high of $4.01 billion and outstanding commercial lines grew by 9% during the fourth quarter. The loan pipeline as we entered 2022 was encouraging as we are beginning to see signs of improved loan demand and borrower activity.”

Average total deposits were $5.59 billion for the fourth quarter of 2021, an increase of $626.1 million, or 13%, versus $4.96 billion for the fourth quarter of 2020. On a linked quarter basis, average total deposits increased by $241.3 million, or 5%. Total deposits increased $698.6 million, or 14%, from $5.04 billion as of December 31, 2020 to $5.74 billion as of December 31, 2021. On a linked quarter basis, total deposits increased by $320.8 million, or 6%, from $5.41 billion as of September 30, 2021.

Core deposits, which exclude brokered deposits, increased by $703.6 million, or 14%, from $5.02 billion as of December 31, 2020 to $5.73 billion at December 31, 2021. This increase was due to growth in commercial deposits of $321.9 million, or 17%; growth in retail deposits of $259.5 million, or 14%; and growth in public fund deposits of $122.2 million, or 11%. On a linked quarter basis, core deposits increased by $321.8 million, or 6%. The linked quarter growth resulted from commercial deposit growth of $118.7 million, a 6% increase; retail growth of $208.1 million, an 11% increase; and offset by public fund contraction of $5.0 million.

Investment securities were $1.40 billion at December 31, 2021, reflecting an increase of $663.7 million, or 90%, as compared to $734.8 million at December 31, 2020. On a linked quarter basis, investment securities increased $158.8 million, or 13%. Investment securities represent 21% of total assets on December 31, 2021 compared to 13% on December 31, 2020 and 20% on September 30, 2021. The increase in investment securities reflects the deployment of $652 million in excess liquidity that resulted from deposit growth. Deposit growth was impacted by PPP and economic stimulus.

“During the last two years, we have seen core deposits grow by $1.7 billion, a portion of the resulting liquidity has been strategically deployed in our investment securities portfolio as an earning asset alternative while our customers’ deposits remain elevated. We remain focused on core organic loan growth as the primary driver of our balance sheet and are optimistic that we are well-positioned to grow market share as we transition to the next economic growth cycle. Additionally, we remain optimistic that the high percentage of variable rate loans on our balance sheet, coupled with cost of funds at historically low levels, position Lake City Bank with the ability to fund organic loan growth and benefit from the anticipated Federal Reserve Bank rising interest rate cycle,” Findlay commented.

Net interest margin was 3.07% for the full year 2021, down 12 basis points from 3.19% in 2020. Earnings assets yields declined by 44 basis points to 3.33%, offset by a decline of 32 basis points in the cost of funds. The strong 2021 deposit growth funded organic loan growth, and generated excess liquidity. Average investment securities increased by $434.4 million during 2021 and average interest-bearing deposits to the bank grew by $313.6 million. The shift in earning assets generated lower average yields. Net interest margin, excluding PPP loans, was 2.95% for the year ended 2021, down 24 basis points from 3.19% during 2020.

The company’s net interest margin decreased 30 basis points to 2.98% for the fourth quarter of 2021 compared to 3.28% for the fourth quarter of 2020. The lower margin in the fourth quarter of 2021 as compared to the prior year period was due to a slowing of PPP forgiveness as the bank's borrowers actively applied for and received forgiveness throughout the second half of 2020 and the first three quarters of 2021. PPP loan income for the fourth quarter of 2021 was $2.2 million, or $4.3 million less than PPP loan income of $6.5 million during the fourth quarter of 2020. PPP interest and fees represented 11 basis points of fourth quarter 2021 net interest margin compared to 16 basis points for the fourth quarter 2020 net interest margin.

Net interest margin was negatively impacted by the decrease in earning asset yields of 46 basis points from 3.65% for the fourth quarter of 2020 compared to 3.19% for the fourth quarter of 2021. As a result of the excess liquidity on the company's balance sheet, the mix of earning assets included lower yielding earning assets in the investment securities portfolio and cash balances at the Federal Reserve Bank. The lower yield on earning assets was offset by lower cost of funds, which decreased by 16 basis points, from 0.37% for the fourth quarter of 2020 to 0.21% for the fourth quarter of 2021. Net interest margin, excluding PPP loan income, was 2.87%, 25 basis points lower than 3.12% in the fourth quarter of 2020.

Fourth quarter net interest margin was 2.98%, a decline of 15 basis points compared to linked third quarter net interest margin of 3.13%. Net interest margin excluding PPP was 11 basis points lower at 2.87% for the fourth quarter of 2021 compared to 2.95% for the linked third quarter of 2021. Earning asset yields declined by 18 basis points offset by a decline in cost of funds of 3 basis points. Interest expense as a percentage of earning assets decreased to a historical low of 0.21% for the three-month period ended December 31, 2021, down from 0.24% for the three-month period ended September 30, 2021.

Net interest income was $178.1 million for the year ended December 31, 2021, representing an increase of $15.1 million, or 9.3%, as compared to the year ended December 31, 2020. The increase was due primarily to a decrease in interest expense of $15.0 million, or 50%, and an increase in investment securities income of $6.6 million, offset by a $6.6 million decline in loan interest income. PPP loan income, including interest and fees, was $14.9 million during the year ended December 31, 2021, compared to $12.8 million during 2020.

Net interest income was $45.0 million for the three months ended December 31, 2021, representing an increase of $294,000, or 1%, as compared to the three months ended December 31, 2020. On a linked quarter basis, net interest income decreased $734,000, or 2%, from the third quarter of 2021. PPP loan income, including interest and fees, was $2.2 million for the three months ended December 31, 2021, compared to $3.9 million during the third quarter of 2021.

Provision expense for 2021 was $1.1 million, down from $14.8 million in 2020. Provision expense for 2020 reflected the increased assessment of risk to the bank’s loan portfolio as a result of the economic downturn that resulted from the pandemic. The company recorded no provision for credit losses2 in the fourth quarter of 2021, compared to $920,000 of provision expense in the fourth quarter of 2020. On a linked quarter basis, the provision expense decreased by $1.3 million from the third quarter of 2021. The company adopted CECL during the first quarter of 2021, effective January 1, 2021. The day one impact of adoption was an increase in the allowance for credit losses2 of $9.1 million, with an offset, net of taxes, to beginning stockholders’ equity.

The credit loss reserve to total loans was 1.58% at December 31, 2021 versus 1.32% at December 31, 2020 and 1.72% at September 30, 2021. The decline in the credit reserve to total loans from September 2021 to December 2021, reflects the impact of charge offs as well as the impact of loan growth during the quarter. The credit loss reserve to total loans excluding PPP loans was 1.59% at December 31, 2021 versus 1.45% at December 31, 2020 and 1.76% at September 30, 2021. PPP loans are guaranteed by the United States Small Business Administration (SBA) and have not been allocated for within the allowance for credit losses2.

Net charge offs in the fourth quarter of 2021 were $5.3 million versus net charge offs of $259,000 in the fourth quarter of 2020 and net recoveries of $35,000 during the linked third quarter of 2021. Annualized net charge offs (recoveries) to average loans were 0.49% for the fourth quarter of 2021 and 0.02% in the fourth quarter of 2020, and 0.00% for the linked third quarter of 2021. Net charge offs to average loans were 0.09% during the full year of 2021 unchanged from 2020.

Nonperforming assets increased $2.9 million, or 23%, to $15.3 million as of December 31, 2021 versus $12.4 million as of December 31, 2020. On a linked quarter basis, nonperforming assets decreased $16.0 million, or 51%, versus $31.3 million as of September 30, 2021. The net decrease in non-performing assets on a linked quarter basis resulted from net charge offs, net upgrades of non-individually analyzed watchlist credits of $3.3 million as well as recurring loan repayments. The company recorded a $5.2 million charge off in the fourth quarter on a commercial borrower that was downgraded to nonperforming status during the third quarter of 2021. The operations of the borrower, a retailer of party and special event supplies, were severely impacted by the economic conditions resulting from the COVID-19 pandemic. There is no remaining credit exposure to this customer. The ratio of nonperforming assets to total assets at December 31, 2021 increased to 0.23% from 0.21% at December 31, 2020 and decreased from 0.50% at September 30, 2021. Total individually analyzed and watch list loans decreased by $51.7 million, or 18%, to $234.5 million at December 31, 2021 versus $286.1 million as of December 31, 2020. On a linked quarter basis, total individually analyzed and watch list loans decreased by $24.1 million, or 9%, from $258.5 million at September 30, 2021.

“We remain cautiously optimistic on the asset quality front. Clearly, our commercial borrowers continue to feel the impact of inflation, supply chain challenges, workforce availability and readiness, and wage pressures. These are widespread and are impacting every sector of our loan portfolio. Yet, borrowers’ balance sheets are generally healthy and while operating margins are being impacted, our clients are managing through the challenges,” commented Findlay.

Noninterest income of $44.7 million decreased by $2.1 million, or 5%, for the year ended December 31, 2021 as compared to $46.8 million in 2020. The decrease was driven by a $4.1 million reduction in interest rate swap fees and a $2.5 million reduction in mortgage banking income, offset by a $1.8 million increase in loan service fees, a $1.6 million increase in wealth advisory fees, and a $615,000 increase in merchant card fee income. Interest rate swap arrangements have seen a decrease in demand during 2021 and the carrying value of mortgage servicing rights has been impacted by increased prepayment speeds, both due to the current interest rate environment. The increases in fee income were driven by higher transaction volumes and increased economic activity.

Noninterest income decreased $2.1 million, or 18%, to $9.7 million for the fourth quarter of 2021, compared to $11.8 million for the fourth quarter of 2020. Noninterest income was affected by a decrease of $1.3 million in mortgage banking income, or 135%, an $883,000 reduction in interest rate swap fee income, or 90%, and a $530,000 reduction in limited partnership income (a component of other income). These reductions were offset by improved loan and service fee income, which increased by $484,000, or 19%, growth in wealth advisory fees of $443,000, or 24%, and growth in merchant and interchange fee income of $322,000, or 68%. These changes were influenced by the same trends summarized in the preceding paragraph.

Noninterest income decreased by $1.4 million, or 13%, on a linked quarter from $11.1 million. The linked quarter decrease resulted primarily from decreases in limited partnership income of $656,000, mortgage banking income of $307,000, bank owned life insurance income of $273,000 and other noninterest income of $128,000. Offsetting these decreases was an increase in wealth advisory fee income of $140,000.

Noninterest expense increased by $13.1 million, or 14%, to $104.3 million for the year ended December 31, 2021 as compared to $91.2 million for 2020. Salaries and employee benefits increased by $8.5 million, or 17%, due primarily to increased performance-based compensation, increased salaries and increased health insurance expense. Additionally, increased legal fees and costs associated with the digital platform conversion contributed to an overall increase of $ 1.8 million, or 33%, in professional fees. Corporate and business development expenses increased as the economy re-opened in 2021, and client events and contributions increased in 2021.

Noninterest expense was $24.9 million in the fourth quarter of 2021, up by $14,000 from the fourth quarter of 2020. Corporate and business development expenses increased $285,000, or 37%, due to elevated business development and business contributions as in-person meetings with clients and prospects have resumed. Professional fees expenses increased $198,000, or 11%, over these periods. Offsetting these increases were decreases in salaries and employee benefits expense of $212,000, or 2%, and equipment costs of $154,000, or 10%.

On a linked quarter basis, noninterest expense decreased by $1.0 million, or 4%, from $26.0 million. Salaries and employee benefits decreased by $725,000, or 5%, driven by fluctuations in performance-based incentive compensation expense. Other expense decreased by $631,000, or 23%, due to board semi- annual share grant expense of $421,000 in the third quarter of 2021. Offsetting these decreases was an increase in professional fees of $664,000, or 49%. This was driven primarily by increased legal fees.

The company’s efficiency ratio was 45.6% for the fourth quarter of 2021, compared to 44.1% for the fourth quarter of 2020 and 45.7% for the linked third quarter of 2021. The company's efficiency ratio was 46.8% for the year ended December 31, 2021 compared to 43.5% in the prior year.

Paycheck Protection Program

During 2020 and the first half of 2021, the company funded PPP loans totaling $735.6 million for its customers through the PPP programs. In addition, the bank processed forgiveness applications for PPP loans representing 97% of loans originated. As of December 31, 2021, PPP loans outstanding, net of deferred fees, totaled $26.2 million; $3.8 million from PPP round one and $22.3 million from PPP round two. As of December 31, 2021, the SBA has approved forgiveness of, or the borrower had repaid, $709.5 million in PPP loans; $566.7 million for PPP loans originated during round one and $142.8 million for PPP loans originated during round two. As of December 31, 2021, the company had submitted additional PPP forgiveness applications on behalf of customers in the amount of $8.3 million that were awaiting SBA approval.

December 31, 2021

Originated

Forgiven / Repaid

Outstanding (1)

Number

Amount

Number

Amount

Number

Amount

PPP Round 1

2,409

$

570,500

2,390

$

566,682

19

$

3,818

PPP Round 2

1,192

165,142

1,117

142,809

75

22,333

Total

3,601

$

735,642

3,507

$

709,491

94

$

26,151

(1) Outstanding balance includes deferred loan origination fees, net of costs, and reflects any loans repaid by borrowers.

Information regarding Lakeland Financial Corporation may be accessed on the home page of its subsidiary, Lake City Bank, at lakecitybank.com. The company’s common stock is traded on the Nasdaq Global Select Market under “LKFN.” In addition to the results presented in accordance with generally accepted accounting principles in the United States, this earnings release contains certain non-GAAP financial measures. The company believes that providing non-GAAP financial measures provides investors with information useful to understanding the company’s financial performance. Additionally, these non-GAAP measures are used by management for planning and forecasting purposes, including tangible common equity, tangible assets, tangible book value per share, tangible common equity to tangible assets ratio and pretax pre-provision earnings. A reconciliation of these and other non-GAAP measures to the most comparable GAAP equivalents is included in the attached financial tables where the non-GAAP measures are presented.

This document contains, and future oral and written statements of the company and its management may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance and business of the company. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of the company’s management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “continue,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should” or other similar expressions. The company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain and, accordingly, the reader is cautioned not to place undue reliance on any forward-looking statements made by the company. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the company undertakes no obligation to update any statement in light of new information or future events. Numerous factors could cause the company’s actual results to differ from those reflected in forward-looking statements, including the effects of the COVID-19 pandemic, including its effects on our customers, local economic conditions, our operations and vendors, and the responses of federal, state and local governmental authorities, as well as those identified in the company’s filings with the Securities and Exchange Commission, including the company’s Annual Report on Form 10-K and quarterly reports on Form 10-Q.

Contact
Lisa M. O’Neill
Executive Vice President and Chief Financial Officer
(574) 267-9125
lisa.oneill@lakecitybank.com

  1. Non-GAAP financial measure – see “Reconciliation of Non-GAAP Financial Measures”

  2. Beginning January 1, 2021 calculation is based on the Current Expected Credit Loss methodology (CECL). Prior to January 1, 2021 calculation was based on the incurred loss methodology.


LAKELAND FINANCIAL CORPORATION
FOURTH QUARTER 2021 FINANCIAL HIGHLIGHTS

Three Months Ended

Twelve Months Ended

(Unaudited – Dollars in thousands, except per share data)

December 31,

September 30,

December 31,

December 31,

December 31,

END OF PERIOD BALANCES

2021

2021

2020

2021

2020

Assets

$

6,557,323

$

6,222,916

$

5,830,435

$

6,557,323

$

5,830,435

Deposits

5,735,407

5,414,638

5,036,805

5,735,407

5,036,805

Brokered Deposits

10,003

11,012

15,002

10,003

15,002

Core Deposits (1)

5,725,404

5,403,626

5,021,803

5,725,404

5,021,803

Loans

4,287,841

4,239,453

4,649,156

4,287,841

4,649,156

Paycheck Protection Program (PPP) Loans

26,151

91,897

412,007

26,151

412,007

Allowance for Credit Losses (2)

67,773

73,048

61,408

67,773

61,408

Total Equity

704,906

683,202

657,184

704,906

657,184

Goodwill net of deferred tax assets

3,794

3,794

3,794

3,794

3,794

Tangible Common Equity (3)

701,112

679,408

653,390

701,112

653,390

AVERAGE BALANCES

Total Assets

$

6,397,397

$

6,153,334

$

5,747,818

$

6,153,780

$

5,424,796

Earning Assets

6,148,085

5,909,834

5,501,505

5,906,640

5,184,836

Investments - available-for-sale

1,336,492

1,201,657

657,990

1,068,325

633,957

Loans

4,279,262

4,354,104

4,617,912

4,421,094

4,424,472

Paycheck Protection Program (PPP) Loans

62,910

142,917

503,041

237,951

376,785

Total Deposits

5,585,537

5,344,272

4,959,443

5,357,284

4,650,597

Interest Bearing Deposits

3,784,837

3,662,707

3,477,431

3,686,112

3,340,696

Interest Bearing Liabilities

3,859,971

3,737,707

3,568,572

3,761,520

3,437,338

Total Equity

692,396

688,252

644,677

674,637

624,174

INCOME STATEMENT DATA

Net Interest Income

$

45,007

$

45,741

$

44,713

$

178,088

$

163,008

Net Interest Income-Fully Tax Equivalent

46,140

46,717

45,362

181,675

165,454

Provision for Credit Losses (2)

0

1,300

920

1,077

14,770

Noninterest Income

9,709

11,114

11,782

44,720

46,843

Noninterest Expense

24,926

25,967

24,912

104,287

91,205

Net Income

24,283

24,119

24,592

95,733

84,337

Pretax Pre-Provision Earnings (3)

29,790

30,888

31,583

118,521

118,646

PER SHARE DATA

Basic Net Income Per Common Share

$

0.95

$

0.95

$

0.97

$

3.76

$

3.31

Diluted Net Income Per Common Share

0.95

0.94

0.97

3.74

3.30

Cash Dividends Declared Per Common Share

0.34

0.34

0.30

1.36

1.20

Dividend Payout

35.79

%

36.17

%

30.93

%

36.36

%

36.36

%

Book Value Per Common Share (equity per share issued)

27.65

26.80

25.85

27.65

25.85

Tangible Book Value Per Common Share (3)

27.50

26.66

25.70

27.50

25.70

Market Value – High

80.77

73.04

56.28

80.77

56.28

Market Value – Low

71.19

56.06

40.57

50.71

30.49

Three Months Ended

Twelve Months Ended

December 31,

September 30,

December 31,

December 31,

December 31,

2021

2021

2020

2021

2020

Basic Weighted Average Common Shares Outstanding

25,486,484

25,479,654

25,424,307

25,475,994

25,469,242

Diluted Weighted Average Common Shares Outstanding

25,669,042

25,635,288

25,519,643

25,620,105

25,573,941

KEY RATIOS

Return on Average Assets

1.51

%

1.56

%

1.70

%

1.56

%

1.55

%

Return on Average Total Equity

13.91

13.90

15.18

14.19

13.51

Average Equity to Average Assets

10.82

11.19

11.22

10.96

11.51

Net Interest Margin

2.98

3.13

3.28

3.07

3.19

Net Interest Margin, Excluding PPP Loans (3)

2.87

2.95

3.12

2.95

3.19

Efficiency (Noninterest Expense / Net Interest Income plus Noninterest Income)

45.56

45.67

44.10

46.81

43.46

Tier 1 Leverage (4)

10.72

10.91

10.93

10.72

10.93

Tier 1 Risk-Based Capital (4)

14.09

14.18

13.39

14.09

13.39

Common Equity Tier 1 (CET1) (4)

14.09

14.18

13.39

14.09

13.39

Total Capital (4)

15.34

15.44

14.65

15.34

14.65

Tangible Capital (3) (4)

10.70

10.92

11.21

10.70

11.21

ASSET QUALITY

Loans Past Due 30 - 89 Days

$

729

$

1,245

$

1,263

$

729

$

1,263

Loans Past Due 90 Days or More

117

18

116

117

116

Non-accrual Loans

14,973

30,978

11,986

14,973

11,986

Nonperforming Loans (includes nonperforming TDRs)

15,090

30,996

12,102

15,090

12,102

Other Real Estate Owned

196

316

316

196

316

Other Nonperforming Assets

0

20

6

0

6

Total Nonperforming Assets

15,286

31,332

12,424

15,286

12,424

Performing Troubled Debt Restructurings

5,121

4,973

5,237

5,121

5,237

Nonperforming Troubled Debt Restructurings (included in nonperforming loans)

6,218

6,093

6,476

6,218

6,476

Total Troubled Debt Restructurings

11,339

11,066

11,713

11,339

11,713

Individually Analyzed Loans

25,581

41,148

20,177

25,581

20,177

Non-Individually Analyzed Watch List Loans

208,881

217,386

265,970

208,881

265,970

Total Individually Analyzed and Watch List Loans

234,462

258,534

286,147

234,462

286,147

Gross Charge Offs

5,390

90

688

5,983

5,253

Recoveries

115

125

429

2,221

1,239

Net Charge Offs/(Recoveries)

5,275

(35

)

259

3,762

4,014

Net Charge Offs/(Recoveries) to Average Loans

0.49

%

0.00

%

0.02

%

0.09

%

0.09

%

Credit Loss Reserve to Loans (2)

1.58

%

1.72

%

1.32

%

1.58

%

1.32

%

Credit Loss Reserve to Loans, Excluding PPP Loans (2) (3)

1.59

%

1.76

%

1.45

%

1.59

%

1.45

%

Credit Loss Reserve to Nonperforming Loans (2)

449.13

%

235.67

%

507.42

%

449.13

%

507.42

%

Three Months Ended

Twelve Months Ended

December 31,

September 30,

December 31,

December 31,

December 31,

2021

2021

2020

2021

2020

Credit Loss Reserve to Nonperforming Loans and Performing TDRs (2)

335.33

%

203.08

%

354.17

%

335.33

%

354.17

%

Nonperforming Loans to Loans

0.35

%

0.73

%

0.26

%

0.35

%

0.26

%

Nonperforming Assets to Assets

0.23

%

0.50

%

0.21

%

0.23

%

0.21

%

Total Individually Analyzed and Watch List Loans to Total Loans

5.47

%

6.10

%

6.15

%

5.47

%

6.15

%

Total Individually Analyzed and Watch List Loans to Total Loans, Excluding PPP Loans (3)

5.50

%

6.23

%

6.75

%

5.50

%

6.75

%

OTHER DATA

Full Time Equivalent Employees

582

592

585

582

585

Offices

51

51

50

51

50

(1) Core deposits equals deposits less brokered deposits
(2) Beginning January 1, 2021 calculation is based on the current expected credit loss methodology. Prior to January 1, 2021 calculation was based on the incurred loss methodology.
(3) Non-GAAP financial measure - see "Reconciliation of Non-GAAP Financial Measures"
(4) Capital ratios for December 31, 2021 are preliminary until the Call Report is filed.


CONSOLIDATED BALANCE SHEETS (in thousands, except share data)

December 31,
2021

December 31,
2020

(Unaudited)

ASSETS

Cash and due from banks

$

51,830

$

74,457

Short-term investments

631,410

175,470

Total cash and cash equivalents

683,240

249,927

Securities available-for-sale (carried at fair value)

1,398,558

734,845

Real estate mortgage loans held-for-sale

7,470

11,218

Loans, net of allowance for credit losses* of $67,773 and $61,408

4,220,068

4,587,748

Land, premises and equipment, net

59,309

59,298

Bank owned life insurance

97,652

95,227

Federal Reserve and Federal Home Loan Bank stock

13,772

13,772

Accrued interest receivable

17,674

18,761

Goodwill

4,970

4,970

Other assets

54,610

54,669

Total assets

$

6,557,323

$

5,830,435

LIABILITIES

Noninterest bearing deposits

$

1,895,481

$

1,538,331

Interest bearing deposits

3,839,926

3,498,474

Total deposits

5,735,407

5,036,805

Borrowings

Federal Home Loan Bank advances

75,000

75,000

Miscellaneous borrowings

0

10,500

Total borrowings

75,000

85,500

Accrued interest payable

2,619

5,959

Other liabilities

39,391

44,987

Total liabilities

5,852,417

5,173,251

STOCKHOLDERS’ EQUITY

Common stock: 90,000,000 shares authorized, no par value

25,777,609 shares issued and 25,300,793 outstanding as of December 31, 2021

25,713,408 shares issued and 25,239,748 outstanding as of December 31, 2020

120,615

114,927

Retained earnings

583,134

529,005

Accumulated other comprehensive income

16,093

27,744

Treasury stock, at cost (476,816 shares and 473,660 shares as of December 31, 2021 and 2020, respectively)

(15,025

)

(14,581

)

Total stockholders’ equity

704,817

657,095

Noncontrolling interest

89

89

Total equity

704,906

657,184

Total liabilities and equity

$

6,557,323

$

5,830,435


  • Beginning January 1, 2021 calculation is based on the current expected credit loss methodology. Prior to January 1, 2021 calculation was based on the incurred loss methodology.

CONSOLIDATED STATEMENTS OF INCOME (unaudited - in thousands, except share and per share data)

Three Months Ended
December 31,

Twelve Months Ended
December 31,

2021

2020

2021

2020

NET INTEREST INCOME

Interest and fees on loans

Taxable

$

41,253

$

45,779

$

170,081

$

176,538

Tax exempt

146

105

470

647

Interest and dividends on securities

Taxable

2,604

1,554

9,086

6,973

Tax exempt

4,118

2,340

13,033

8,577

Other interest income

201

76

549

368

Total interest income

48,322

49,854

193,219

193,103

Interest on deposits

3,240

5,018

14,827

29,342

Interest on borrowings

Short-term

0

48

7

506

Long-term

75

75

297

247

Total interest expense

3,315

5,141

15,131

30,095

NET INTEREST INCOME

45,007

44,713

178,088

163,008

Provision for credit losses*

0

920

1,077

14,770

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES

45,007

43,793

177,011

148,238

NONINTEREST INCOME

Wealth advisory fees

2,317

1,874

8,750

7,468

Investment brokerage fees

415

522

1,975

1,670

Service charges on deposit accounts

2,840

2,658

10,608

10,110

Loan and service fees

3,099

2,615

11,922

10,085

Merchant card fee income

797

475

3,023

2,408

Bank owned life insurance income

366

629

2,467

2,105

Interest rate swap fee income

101

984

1,035

5,089

Mortgage banking income (loss)

(338

)

966

1,418

3,911

Net securities gains

0

70

797

433

Other income

112

989

2,725

3,564

Total noninterest income

9,709

11,782

44,720

46,843