Equity Bancshares Inc.

10/04/2021 | Press release | Archived content

Equity Bancshares, Inc. Completes Merger with American State Bancshares, Inc.

October 19, 2021 at 6:17 PM EDT

Company's third quarter includes loan growth, exclusive of PPP, accompanying successful integration of largest merger in Company's history and announcement of the Company's first common stock dividend

WICHITA, Kan., Oct. 19, 2021 (GLOBE NEWSWIRE) -- Equity Bancshares, Inc. (NASDAQ: EQBK), ("Equity", "the Company", "we", "us", "our"), the Wichita-based holding company of Equity Bank, reported net income of $11.8 million and $0.80 earnings per diluted share for the quarter ended September 30, 2021. Equity's results occurred as the Company completed its acquisition of American State Bancshares, Inc. on October 1, 2021.

"As the founder of Equity Bank, our results this quarter are particularly satisfying, as we celebrate continued loan growth, excellent earnings and our first cash stock dividend while simultaneously closing the largest acquisition in our history. I am grateful to our loyal employees and stockholders as we continue to grow and improve Equity Bank," said Brad S. Elliott, Chairman and CEO of Equity.

"I'm pleased with the growth of the Equity Bank brand and the hard work and collaboration of our team members throughout our regions, including our bank employees, lenders, and operations professionals who placed the customer first and executed with open doors, expertise, and availability," said Mr. Elliott. "We've successfully integrated American State Bank & Trust Company into our platform while continuing to provide momentum, support and expertise to our customers throughout our franchise."

Equity customers successfully had $175.7 million of Paycheck Protection Program ("PPP") loans forgiven during the quarter, resulting in the recognition of fee income totaling $7.7 million in the three-month period ended September 30, 2021. At September 30, 2021, the total unrecognized fee income associated with PPP loans was $3.0 million.

"Our entrepreneurial culture drives the efficiency of our merger process, assists in building a solid community banking network that is responsive to a diverse customer base and excels at adding core deposits and new households in a changing environment. Our mission as a community bank is to continue to prioritize local customers, local service, and bankers willing to go above and beyond. As we continue to grow, expand and deliver, our focus will drive value for our shareholders," said Mr. Elliott.

Notable Items:

  • Diluted earnings per share of $0.80, adjusted to reflect core operating results, was $0.96 per diluted share. The adjustments to earnings were comprised of the exclusion of merger expenses of $4.0 million, non-accrual interest income of $1.4 million, bank-owned life insurance death benefit of $486 thousand and additional reserving for repurchase obligations associated with the Company's Federal Deposit Insurance Corporation ("FDIC") assisted transaction of $771 thousand.
  • Linked quarter service fee revenue, including deposit services, mortgage banking, trust and wealth and insurance services increased to $6.7 million from $6.4 million, or 3.7%.
  • The Company authorized a second stock repurchase program in the third quarter of 2020 totaling 800,000 shares. During the quarter ended September 30, 2021, the Company repurchased 57,239 shares at a weighted average cost of $30.64 per share, totaling $1.8 million. At the end of the quarter, capacity of 123,448 shares remained under the current repurchase program. The Board authorized the repurchase of up to an additional 1,000,000 shares of Equity's outstanding common stock, beginning October 29, 2021, and concluding October 28, 2022, subject to non-objection by the Company's primary regulators.
  • The Company announced and paid its first common stock dividend of $0.08 per share to shareholders of record as of September 30, 2021.

Equity's Balance Sheet Highlights:

  • During the quarter total loans decreased from $2.82 billion to $2.69 billion, including a reduction in PPP assets of $175.7 million. Excluding the impact of PPP, organic growth linked quarter was $41.8 million, or 7.1% annualized.
  • Total deposits of $3.66 billion at September 30, 2021, as compared to $3.69 billion at June 30, 2021. Checking, savings and money market accounts were $3.08 billion at September 30, 2021, relative to $3.03 billion at June 30, 2021. As compared to December 31, 2020, the Bank has increased non-interest-bearing deposits by $192.8 million, or 24.4%.
  • As excess liquidity continues to impact the operating environment at quarter end, securities and interest-earning cash and cash equivalents comprise 31.4% of average earnings assets, up from 28.0% at the end of the linked quarter and 25.0% at the end of the comparable quarter in the previous year.

Financial Results for the Quarter Ended September 30, 2021

Net income allocable to common stockholders was $11.8 million, or $0.80 per diluted share, for the three months ended September 30, 2021, as compared to $15.2 million, or $1.03 per diluted share, for the three months ended June 30, 2021, a decrease of $3.4 million. This third quarter decrease was attributable to an increase in non-interest expense of $4.9 million, an increase in provision for credit losses of $2.7 million and a decrease of $1.3 million in non-interest income, partially offset by an increase in net interest income $4.3 million and a decrease in provision for income taxes of $1.1 million.

Net Interest Income

Net interest income was $39.0 million for the three months ended September 30, 2021, as compared to $34.6 million for the three months ended June 30, 2021, an increase of $4.3 million, or 12.6%. The increase in net interest income was primarily driven by an increase in loan fees, due to the forgiveness of PPP assets, of $2.0 million for the quarter ended September 30, 2021, compared to the quarter ended June 30, 2021. The yield on interest-earning assets increased 32-basis points to 4.20% during the quarter ended September 30, 2021, as compared to 3.88% for the quarter ended June 30, 2021. The cost of interest-bearing deposits declined by 3-basis points to 0.28% for the three months ended September 30, 2021, from 0.31% in the previous quarter.

Provision for Credit Losses

During the three months ended September 30, 2021, there was a provision of $1.1 million in the allowance for credit losses recognized through the provision for credit losses as compared to a net release of $1.7 million of provision for credit losses for the three months ended June 30, 2021. The comparative increase was primarily driven by an increase in reserves on specifically assessed assets which was partially offset by improving trends in the Company's loss experience and moderating economic impacts. For the three months ended September 30, 2021, we had net charge-offs of $129 thousand as compared to $567 thousand for the three months ended June 30, 2021.

Non-Interest Income

Total non-interest income was $7.8 million for the three months ended September 30, 2021, as compared to $9.1 million for the three months ended June 30, 2021, or a decline of 14.0% quarter over quarter. Other non-interest income was $546 thousand, a decrease of $1.5 million, or 73.6%, from the quarter ended June 30, 2021. The decrease in other non-interest income was primarily due to the accounting for potential repurchase obligations associated with assets previously purchased through a FDIC assisted transaction. In the second quarter, the Company trued up the guarantee on a number of assets resulting in income recognition of $917 thousand. In the third quarter, two unrelated assets were identified to have experienced deterioration requiring the recognition of a reserve, resulting in $771 thousand in expense. The net change in these inputs account for the change in the line item.

During the quarter, service fee revenue, including deposit services, mortgage banking, trust and wealth management, credit cards and insurance increased to $6.7 million from $6.4 million during the second quarter. The growth was driven by increasing transaction activity and insurance commissions and fees.

Non-Interest Expense

Total non-interest expense for the quarter ended September 30, 2021, was $30.7 million as compared to $25.8 million for the quarter ended June 30, 2021. The $4.9 million change is primarily attributed to increases of $3.6 million in merger expenses, $819 thousand in salaries and employee benefits, driven by a comparative reduction in the deferral of cost associated with loan originations, and $372 thousand loss on debt extinguishment, related to the repayment of fixed-rate term advances with Federal Home Loan Bank that were acquired through a prior merger.

Asset Quality

As of September 30, 2021, Equity's allowance for credit losses to total loans was 2.0%, as compared to 1.8% at June 30, 2021. Nonperforming assets were $74.3 million as of September 30, 2021, or 1.7% of total assets, compared to $66.7 million at June 30, 2021, or 1.6% of total assets. Total classified assets, including loans rated special mention or worse, other real estate owned and other repossessed assets were $112.4 million, or 24.3% of regulatory capital, up from $103.5 million, or 23.2% of regulatory capital as of June 30, 2021.

During the quarter non-performing assets increased by $7.5 million due to the transition of one significant relationship to non-accrual. The Company provided $1.1 million to the allowance for credit losses, comprised of an increase in specific reserves, primarily driven by the migration of this asset to non-accrual, partially offset by improving historical loss performance and the continued moderation of economic conditions following the height of the pandemic.

Regulatory Capital

The Company's ratio of common equity tier 1 capital to risk-weighted assets was 12.4%, the total capital to risk-weighted assets was 16.6% and the total leverage ratio was 9.0% at September 30, 2021. At December 31, 2020, the Company's common equity tier 1 capital to risk-weighted assets ratio was 12.8%, the total capital to risk-weighted assets ratio was 17.4% and the total leverage ratio was 9.3%.

The Company's subsidiary, Equity Bank, had a ratio of common equity tier 1 capital to risk-weighted assets of 14.5%, a ratio of total capital to risk-weighted assets of 15.8% and a total leverage ratio of 10.1% at September 30, 2021. At December 31, 2020, Equity Bank's ratio of common equity tier 1 capital to risk-weighted assets was 14.5%, the ratio of total capital to risk-weighted assets was 15.7% and the total leverage ratio was 10.1%.

Non-GAAP Financial Measures

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

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

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

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

The Company believes that disclosing these non-GAAP financial measures is both useful internally and is expected by our investors and analysts in order to understand the overall performance of the Company. Other companies may calculate and define their non-GAAP financial measures and supplemental data differently. A reconciliation of GAAP financial measures to non-GAAP measures and other performance ratios, as adjusted, are included in Table 8 in the following press release tables.

Conference Call and Webcast

Equity Chairman and Chief Executive Officer, Brad Elliott, and Executive Vice President and Chief Financial Officer, Eric Newell, will hold a conference call and webcast to discuss the 2021 third quarter results on Wednesday, October 20, 2021, at 10:00 a.m. eastern time, 9:00 a.m. central time.

Investors, news media and other participants should register for the call or audio webcast at investor.equitybank.com. On Wednesday, October 20, 2021, participants may also dial into the call toll-free at (844) 534-7311 from anywhere in the U.S. or (574) 990-1419 internationally, using conference ID no. 7698604.

Participants are encouraged to dial into the call or access the webcast approximately 10 minutes prior to the start time. Presentation slides to pair with the call or webcast will be posted one hour prior to the call at investor.equitybank.com.

A replay of the call and webcast will be available two hours following the close of the call until October 27, 2021, accessible at (855) 859-2056 with conference ID no. 7698604 at investor.equitybank.com.

About Equity Bancshares, Inc.

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

Special Note Concerning Forward-Looking Statements

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

For discussion of these and other risks that may cause actual results to differ from expectations, please refer to "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors" in Equity's Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 9, 2021, and any updates to those risk factors set forth in Equity's subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K. If one or more events related to these or other risks or uncertainties materialize, or if Equity's underlying assumptions prove to be incorrect, actual results may differ materially from what Equity anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and Equity does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New risks and uncertainties arise from time to time, such as COVID-19, and it is not possible for us to predict those events or how they may affect us. In addition, Equity cannot assess the impact of each factor on Equity's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements, expressed or implied, included in this press release are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that Equity or persons acting on Equity's behalf may issue.

Investor Contact:

Chris Navratil
SVP, Finance
Equity Bancshares, Inc.
(316) 612-6014
[email protected]

Media Contact:

John J. Hanley
SVP, Senior Director of Marketing
Equity Bancshares, Inc.
(913) 583-8004
[email protected]

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,
2021 2020 2021 2020
Interest and dividend income
Loans, including fees $ 37,581 $ 32,278 $ 102,392 $ 99,281
Securities, taxable 3,920 3,476 11,242 12,113
Securities, nontaxable 655 923 2,096 2,769
Federal funds sold and other 290 405 846 1,409
Total interest and dividend income 42,446 37,082 116,576 115,572
Interest expense
Deposits 1,881 3,064 6,316 13,827
Federal funds purchased and retail repurchase agreements 24 25 72 80
Federal Home Loan Bank advances 10 471 155 2,198
Federal Reserve Bank discount window - - - 6
Bank stock loan - - - 415
Subordinated debt 1,556 1,415 4,669 1,953
Total interest expense 3,471 4,975 11,212 18,479
Net interest income 38,975 32,107 105,364 97,093
Provision (reversal) for credit losses 1,058 815 (6,355 ) 23,255
Net interest income after provision (reversal) for credit losses 37,917 31,292 111,719 73,838
Non-interest income
Service charges and fees 2,360 1,706 6,125 5,097
Debit card income 2,574 2,491 7,603 6,735
Mortgage banking 801 877 2,584 2,298
Increase in value of bank-owned life insurance 1,169 489 2,446 1,452
Net gain on acquisition - - 585 -
Net gains (losses) from securities transactions 381 - 398 12
Other 546 922 3,902 1,929
Total non-interest income 7,831 6,485 23,643 17,523
Non-interest expense
Salaries and employee benefits 13,588 13,877 39,079 40,076
Net occupancy and equipment 2,475 2,224 7,170 6,578
Data processing 3,257 2,817 9,394 8,243
Professional fees 1,076 877 3,148 3,187
Advertising and business development 760 598 2,241 1,697
Telecommunications 439 486 1,531 1,363
FDIC insurance 465 360 1,305 1,291
Courier and postage 344 366 1,040 1,103
Free nationwide ATM cost 519 439 1,504 1,186
Amortization of core deposit intangibles 1,030 1,030 3,094 2,806
Loan expense 207 107 626 628
Other real estate owned (342 ) 133 (805 ) 710
Loss on debt extinguishment 372 - 372 -
Merger expenses 4,015 - 4,627 -
Goodwill impairment - 104,831 - 104,831
Other 2,484 2,690 7,050 6,831
Total non-interest expense 30,689 130,835 81,376 180,530
Income (loss) before income tax 15,059 (93,058 ) 53,986 (89,169 )
Provision for income taxes 3,286 (2,653 ) 11,972 (1,711 )
Net income (loss) and net income (loss) allocable to common stockholders $ 11,773 $ (90,405 ) $ 42,014 $ (87,458 )
Basic earnings (loss) per share $ 0.82 $ (6.01 ) $ 2.92 $ (5.75 )
Diluted earnings (loss) per share $ 0.80 $ (6.01 ) $ 2.86 $ (5.75 )
Weighted average common shares 14,384,302 15,040,407 14,397,146 15,211,901
Weighted average diluted common shares 14,669,312 15,040,407 14,688,092 15,211,901



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,
2021 		June 30,
2021 		March 31,
2021 		December 31,
2020 		September 30,
2020
Interest and dividend income
Loans, including fees $ 37,581 $ 33,810 $ 31,001 $ 35,383 $ 32,278
Securities, taxable 3,920 3,523 3,799 3,408 3,476
Securities, nontaxable 655 717 724 913 923
Federal funds sold and other 290 268 288 285 405
Total interest and dividend income 42,446 38,318 35,812 39,989 37,082
Interest expense
Deposits 1,881 2,025 2,410 2,755 3,064
Federal funds purchased and retail repurchase agreements 24 26 22 25 25
Federal Home Loan Bank advances 10 80 65 94 471
Subordinated debt 1,556 1,557 1,556 1,556 1,415
Total interest expense 3,471 3,688 4,053 4,430 4,975
Net interest income 38,975 34,630 31,759 35,559 32,107
Provision (reversal) for credit losses 1,058 (1,657 ) (5,756 ) 1,000 815
Net interest income after provision (reversal) for credit losses 37,917 36,287 37,515 34,559 31,292
Non-interest income
Service charges and fees 2,360 2,169 1,596 1,759 1,706
Debit card income 2,574 2,679 2,350 2,401 2,491
Mortgage banking 801 848 935 855 877
Increase in value of bank-owned life insurance 1,169 676 601 489 489
Net gain on acquisition - 663 (78 ) 2,145 -
Net gains (losses) from securities transactions 381 - 17 (1 ) -
Other 546 2,065 1,291 852 922
Total non-interest income 7,831 9,100 6,712 8,500 6,485
Non-interest expense
Salaries and employee benefits 13,588 12,769 12,722 14,053 13,877
Net occupancy and equipment 2,475 2,327 2,368 2,206 2,224
Data processing 3,257 3,474 2,663 2,748 2,817
Professional fees 1,076 999 1,073 1,095 877
Advertising and business development 760 799 682 801 598
Telecommunications 439 512 580 510 486
FDIC insurance 465 425 415 797 360
Courier and postage 344 327 369 338 366
Free nationwide ATM cost 519 513 472 423 439
Amortization of core deposit intangibles 1,030 1,030 1,034 1,044 1,030
Loan expense 207 181 238 161 107
Other real estate owned (342 ) (468 ) 5 1,600 133
Loss on debt extinguishment 372 - - - -
Merger expenses 4,015 460 152 299 -
Goodwill impairment - - - - 104,831
Other 2,484 2,458 2,108 2,385 2,690
Total non-interest expense 30,689 25,806 24,881 28,460 130,835
Income (loss) before income tax 15,059 19,581 19,346 14,599 (93,058 )
Provision for income taxes (benefit) 3,286 4,415 4,271 2,111 (2,653 )
Net income (loss) and net income (loss) allocable to common stockholders $ 11,773 $ 15,166 $ 15,075 $ 12,488 $ (90,405 )
Basic earnings (loss) per share $ 0.82 $ 1.06 $ 1.04 $ 0.85 $ (6.01 )
Diluted earnings (loss) per share $ 0.80 $ 1.03 $ 1.02 $ 0.84 $ (6.01 )
Weighted average common shares 14,384,302 14,356,958 14,464,291 14,760,810 15,040,407
Weighted average diluted common shares 14,669,312 14,674,838 14,734,083 14,934,058 15,040,407



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

September 30,
2021 		June 30,
2021 		March 31,
2021 		December 31,
2020 		September 30,
2020
ASSETS
Cash and due from banks $ 141,645 $ 138,869 $ 136,190 $ 280,150 $ 65,534
Federal funds sold 673 452 498 548 305
Cash and cash equivalents 142,318 139,321 136,688 280,698 65,839
Interest-bearing time deposits in other banks - - 249 249 499
Available-for-sale securities 1,157,423 1,041,613 998,100 871,827 798,576
Loans held for sale 4,108 6,183 8,609 12,394 9,053
Loans, net of allowance for credit losses(1) 2,633,148 2,763,227 2,740,215 2,557,987 2,691,626
Other real estate owned, net 10,267 10,861 10,559 11,733 8,727
Premises and equipment, net 90,727 90,876 90,322 89,412 86,087
Bank-owned life insurance 103,431 103,321 102,645 77,044 76,555
Federal Reserve Bank and Federal Home Loan Bank stock 14,540 18,454 15,174 16,415 32,545
Interest receivable 15,519 15,064 16,655 15,831 18,110
Goodwill 31,601 31,601 31,601 31,601 31,601
Core deposit intangibles, net 12,963 13,993 15,023 16,057 17,101
Other 47,223 33,702 30,344 32,108 29,252
Total assets $ 4,263,268 $ 4,268,216 $ 4,196,184 $ 4,013,356 $ 3,865,571
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Demand $ 984,436 $ 992,565 $ 972,364 $ 791,639 $ 693,967
Total non-interest-bearing deposits 984,436 992,565 972,364 791,639 693,967
Savings, NOW and money market 2,092,849 2,035,496 2,074,261 2,029,097 1,816,307
Time 585,492 659,494 587,905 626,854 623,344
Total interest-bearing deposits 2,678,341 2,694,990 2,662,166 2,655,951 2,439,651
Total deposits 3,662,777 3,687,555 3,634,530 3,447,590 3,133,618
Federal funds purchased and retail repurchase agreements 39,137 47,184 40,339 36,029 46,295
Federal Home Loan Bank advances - 9,208 9,926 10,144 167,862
Subordinated debt 88,030 87,908 87,788 87,684 87,537
Contractual obligations 18,771 4,469 4,856 5,189 5,478
Interest payable and other liabilities 36,804 18,897 20,930 19,071 22,609
Total liabilities 3,845,519 3,855,221 3,798,369 3,605,707 3,463,399
Commitments and contingent liabilities
Stockholders' equity
Common stock 178 176 175 174 174
Additional paid-in capital 392,321 389,394 387,939 386,820 386,017
Retained earnings 79,226 68,625 53,459 50,787 38,299
Accumulated other comprehensive income, net of tax 9,475 13,450 12,019 19,781 21,074
Employee stock loans - - - (43 ) (43 )
Treasury stock (63,451 ) (58,650 ) (55,777 ) (49,870 ) (43,349 )
Total stockholders' equity 417,749 412,995 397,815 407,649 402,172
Total liabilities and stockholders' equity $ 4,263,268 $ 4,268,216 $ 4,196,184 $ 4,013,356 $ 3,865,571
(1) Allowance for credit losses $ 52,763 $ 51,834 $ 55,525 $ 33,709 $ 34,087


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,
2021 2021 2021 2020 2020
Loans Held For Investment by Type
Commercial real estate $ 1,308,707 $ 1,261,214 $ 1,218,537 $ 1,188,696 $ 1,188,329
Commercial and industrial 569,513 732,126 820,736 734,495 857,244
Residential real estate 490,633 503,110 438,503 381,958 402,242
Agricultural real estate 138,793 129,020 134,944 133,693 127,349
Agricultural 93,767 97,912 93,764 94,322 83,084
Consumer 84,498 91,679 89,256 58,532 67,465
Total loans held-for-investment 2,685,911 2,815,061 2,795,740 2,591,696 2,725,713
Allowance for credit losses (52,763 ) (51,834 ) (55,525 ) (33,709 ) (34,087 )
Net loans held for investment $ 2,633,148 $ 2,763,227 $ 2,740,215 $ 2,557,987 $ 2,691,626
Asset Quality Ratios
Allowance for credit losses on loans to total loans 1.96 % 1.84 % 1.99 % 1.30 % 1.25 %
Past due or nonaccrual loans to total loans 2.78 % 2.09 % 2.30 % 1.99 % 2.12 %
Nonperforming assets to total assets 1.74 % 1.56 % 1.67 % 1.36 % 1.55 %
Nonperforming assets to total loans plus other real estate owned 2.76 % 2.36 % 2.50 % 2.10 % 2.19 %
Classified assets to bank total regulatory capital 24.25 % 23.20 % 26.45 % 25.50 % 18.35 %
Selected Average Balance Sheet Data (QTD Average)
Investment securities $ 1,061,178 $ 986,986 $ 947,453 $ 814,114 $ 802,525
Total gross loans receivable 2,748,202 2,853,145 2,736,918 2,692,223 2,758,680
Interest-earning assets 4,005,509 3,964,633 3,891,140 3,647,730 3,679,168
Total assets 4,275,298 4,231,439 4,143,752 3,910,628 4,041,187
Interest-bearing deposits 2,702,040 2,656,052 2,690,159 2,551,219 2,430,407
Borrowings 132,581 171,658 139,360 172,730 377,158
Total interest-bearing liabilities 2,834,621 2,827,710 2,829,519 2,723,949 2,807,565
Total deposits 3,686,169 3,624,950 3,577,625 2,960,791 3,145,810
Total liabilities 3,852,419 3,827,400 3,748,114 3,501,056 3,558,099
Total stockholders' equity 422,879 404,039 395,638 409,572 483,088
Tangible common equity* 376,544 356,705 347,262 355,025 329,039
Performance ratios
Return on average assets (ROAA) annualized 1.09 % 1.44 % 1.48 % 1.27 % (8.90 )%
Return on average assets before income tax, provision for loan losses and goodwill impairment* 1.50 % 1.70 % 1.33 % 1.59 % 1.24 %
Return on average equity (ROAE) annualized 11.05 % 15.06 % 15.45 % 12.13 % (74.45 )%
Return on average equity before income tax, provision for loan losses and goodwill impairment* 15.12 % 17.79 % 13.93 % 15.15 % 10.37 %
Return on average tangible common equity
(ROATCE) annualized* 		13.27 % 17.98 % 18.57 % 14.93 % (108.31 )%
Return on average tangible common equity adjusted for goodwill impairment* 13.27 % 17.98 % 18.57 % 14.93 % 12.01 %
Yield on loans annualized 5.43 % 4.75 % 4.59 % 5.23 % 4.65 %
Cost of interest-bearing deposits annualized 0.28 % 0.31 % 0.36 % 0.43 % 0.50 %
Cost of total deposits annualized 0.20 % 0.22 % 0.27 % 0.37 % 0.39 %
Net interest margin annualized 3.86 % 3.50 % 3.31 % 3.88 % 3.47 %
Efficiency ratio* 56.65 % 58.85 % 64.18 % 67.19 % 67.38 %
Non-interest income / average assets 0.73 % 0.86 % 0.66 % 0.86 % 0.64 %
Non-interest expense / average assets 2.85 % 2.45 % 2.44 % 2.90 % 12.88 %
Capital Ratios
Tier 1 Leverage Ratio 9.02 % 8.88 % 8.73 % 9.30 % 8.76 %
Common Equity Tier 1 Capital Ratio 12.39 % 12.41 % 12.53 % 12.82 % 12.76 %
Tier 1 Risk Based Capital Ratio 12.90 % 12.93 % 13.08 % 13.37 % 13.32 %
Total Risk Based Capital Ratio 16.63 % 16.73 % 17.02 % 17.35 % 17.35 %
Total stockholders' equity to total assets 9.80 % 9.68 % 9.48 % 10.16 % 10.40 %
Tangible common equity to tangible assets* 8.82 % 8.68 % 8.44 % 9.05 % 9.23 %
Book value per common share $ 29.08 $ 28.76 $ 27.66 $ 28.04 $ 27.08
Tangible book value per common share* $ 25.90 $ 25.51 $ 24.34 $ 24.68 $ 23.72
Tangible book value per diluted common share* $ 25.42 $ 24.98 $ 23.87 $ 24.32 $ 23.57

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


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

For the nine months ended For the nine months ended
September 30, 2021 September 30, 2020
Average Outstanding Balance Interest Income/ Expense Average
Yield/Rate(3)(4) 		Average Outstanding Balance Interest Income/ Expense Average
Yield/Rate(3)(4)
Interest-earning assets
Loans (1)
Commercial and industrial $ 752,795 $ 34,609 6.15 % $ 757,773 $ 26,789 4.72 %
Commercial real estate 990,803 34,943 4.72 % 942,478 36,533 5.18 %
Real estate construction 264,344 7,195 3.64 % 245,167 8,644 4.71 %
Residential real estate 457,761 14,167 4.14 % 464,340 14,528 4.18 %
Agricultural real estate 135,795 5,203 5.12 % 133,302 5,574 5.59 %
Agricultural 93,680 3,432 4.90 % 86,873 3,752 5.77 %
Consumer 84,285 2,843 4.51 % 67,255 3,461 6.87 %
Total loans 2,779,463 102,392 3.94 % 2,697,188 99,281 4.92 %
Securities
Taxable securities 898,461 11,242 1.67 % 737,009 12,113 2.20 %
Nontaxable securities 100,495 2,096 2.79 % 125,352 2,769 2.95 %
Total securities 998,956 13,338 1.79 % 862,361 14,882 2.31 %
Federal funds sold and other 175,761 846 0.64 % 102,202 1,409 1.84 %
Total interest-earning assets $ 3,954,180 116,576 3.94 % $ 3,661,751 115,572 4.22 %
Interest-bearing liabilities
Savings, NOW and money market deposits $ 2,076,643 2,728 0.18 % $ 1,754,759 4,923 0.37 %
Time deposits 606,151 3,588 0.79 % 728,083 8,904 1.63 %
Total interest-bearing deposits 2,682,794 6,316 0.31 % 2,482,842 13,827 0.74 %
FHLB advances 16,325 155 1.27 % 271,548 2,198 0.24 %
Other borrowings 131,516 4,741 4.82 % 100,865 2,454 3.25 %
Total interest-bearing liabilities $ 2,830,635 11,212 0.53 % $ 2,855,255 18,479 0.86 %
Net interest income $ 105,364 $ 97,093
Interest rate spread 3.41 % 3.36 %
Net interest margin (2) 3.56 % 3.54 %
(1) Average loan balances include nonaccrual loans.
(2) Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets for the period.
(3) Tax exempt income is not included in the above table on a tax-equivalent basis.
(4) Actual unrounded values are used to calculate the reported yield or rate disclosed. Accordingly, recalculations using the amounts in thousands as disclosed in this report may not produce the same amounts.


TABLE 6. QUARTER-TO-DATE NET INTEREST INCOME ANALYSIS (Unaudited)
(Dollars in thousands)

For the three months ended For the three months ended
September 30, 2021 September 30, 2020
Average Outstanding Balance Interest Income/ Expense Average
Yield/Rate(3)(4) 		Average Outstanding Balance Interest Income/ Expense Average
Yield/Rate(3)(4)
Interest-earning assets
Loans (1)
Commercial and industrial $ 630,622 $ 13,646 8.59 % $ 848,096 $ 8,400 3.94 %
Commercial real estate 1,009,141 12,072 4.75 % 979,775 12,886 5.23 %
Real estate construction 283,106 2,664 3.73 % 214,775 2,233 4.14 %
Residential real estate 512,135 5,073 3.93 % 429,965 4,733 4.38 %
Agricultural real estate 134,673 1,819 5.36 % 131,725 1,718 5.19 %
Agricultural 91,878 1,370 5.92 % 84,859 1,204 5.65 %
Consumer 86,647 937 4.29 % 69,485 1,104 6.32 %
Total loans 2,748,202 37,581 5.43 % 2,758,680 32,278 4.65 %
Securities
Taxable securities 966,651 3,920 1.61 % 683,630 3,476 2.02 %
Nontaxable securities 94,527 655 2.75 % 118,895 923 3.09 %
Total securities 1,061,178 4,575 1.71 % 802,525 4,399 2.18 %
Federal funds sold and other 196,129 290 0.59 % 117,963 405 1.36 %
Total interest-earning assets $ 4,005,509 42,446 4.20 % $ 3,679,168 37,082 4.01 %
Interest-bearing liabilities
Savings, NOW and money market deposits $ 2,082,515 862 0.16 % $ 1,784,891 875 0.19 %
Time deposits 619,525 1,019 0.65 % 645,516 2,189 1.35 %
Total interest-bearing deposits 2,702,040 1,881 0.28 % 2,430,407 3,064 0.50 %
FHLB advances 1,401 10 2.78 % 248,437 471 0.75 %
Other borrowings 131,180 1,580 4.78 % 128,721 1,440 4.45 %
Total interest-bearing liabilities $ 2,834,621 3,471 0.49 % $ 2,807,565 4,975 0.70 %
Net interest income $ 38,975 $ 32,107
Interest rate spread 3.71 % 3.31 %
Net interest margin (2) 3.86 % 3.47 %
(1) Average loan balances include nonaccrual loans.
(2) Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets for the period.
(3) Tax exempt income is not included in the above table on a tax-equivalent basis.


TABLE 7. QUARTER-OVER-QUARTER NET INTEREST INCOME ANALYSIS (Unaudited)
(Dollars in thousands)

For the three months ended For the three months ended
September 30, 2021 June 30, 2021
Average Outstanding Balance Interest Income/ Expense Average
Yield/Rate(3)(4) 		Average Outstanding Balance Interest Income/ Expense Average
Yield/Rate(3)(4)
Interest-earning assets
Loans (1)
Commercial and industrial $ 630,622 $ 13,646 8.59 % $ 826,647 $ 11,729 5.69 %
Commercial real estate 1,009,141 12,072 4.75 % 991,033 11,433 4.63 %
Real estate construction 283,106 2,664 3.73 % 253,947 2,352 3.71 %
Residential real estate 512,135 5,073 3.93 % 465,525 4,642 4.00 %
Agricultural real estate 134,673 1,819 5.36 % 131,906 1,687 5.13 %
Agricultural 91,878 1,370 5.92 % 94,407 1,024 4.35 %
Consumer 86,647 937 4.29 % 89,680 943 4.22 %
Total loans 2,748,202 37,581 5.43 % 2,853,145 33,810 4.75 %
Securities
Taxable securities 966,651 3,920 1.61 % 887,983 3,523 1.59 %
Nontaxable securities 94,527 655 2.75 % 99,003 717 2.90 %
Total securities 1,061,178 4,575 1.71 % 986,986 4,240 1.72 %
Federal funds sold and other 196,129 290 0.59 % 124,502 268 0.86 %
Total interest-earning assets $ 4,005,509 42,446 4.20 % $ 3,964,633 38,318 3.88 %
Interest-bearing liabilities
Savings, NOW and money market deposits $ 2,082,515 862 0.16 % $ 2,068,319 895 0.17 %
Time deposits 619,525 1,019 0.65 % 587,733 1,130 0.77 %
Total interest-bearing deposits 2,702,040 1,881 0.28 % 2,656,052 2,025 0.31 %
FHLB advances 1,401 10 2.78 % 37,656 80 0.86 %
Other borrowings 131,180 1,580 4.78 % 134,002 1,583 4.74 %
Total interest-bearing liabilities $ 2,834,621 3,471 0.49 % $ 2,827,710 3,688 0.52 %
Net interest income $ 38,975 $ 34,630
Interest rate spread 3.71 % 3.36 %
Net interest margin (2) 3.86 % 3.50 %
(1) Average loan balances include nonaccrual loans.
(2) Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets for the period.
(3) Tax exempt income is not included in the above table on a tax-equivalent basis.



TABLE 8. NON-GAAP FINANCIAL MEASURES (Unaudited)
(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,
2021 2021 2021 2020 2020
Income before income taxes $ 15,059 $ 19,581 $ 19,346 $ 14,599 $ (93,058 )
Add: goodwill impairment - - - - 104,831
Less: tax effect 3,286 4,415 4,271 2,111 2,652
Adjusted income $ 11,773 $ 15,166 $ 15,075 $ 12,488 $ 9,121
Weighted average common shares outstanding 14,384,302 14,356,958 14,464,291 14,760,810 15,040,407
Effect of weighted average dilutive shares assuming positive net income 285,010 317,880 269,792 173,248 82,804
Weighted average diluted shares 14,669,312 14,674,838 14,734,083 14,934,058 15,123,211
Diluted earnings per share adjusted for goodwill impairment $ 0.80 $ 1.03 $ 1.02 $ 0.84 $ 0.60
Total stockholders' equity $ 417,749 $ 412,995 $ 397,815 $ 407,649 $ 402,172
Less: goodwill 31,601 31,601 31,601 31,601 31,601
Less: core deposit intangibles, net 12,963 13,993 15,023 16,057 17,101
Less: mortgage servicing asset, net - - - - 1
Less: naming rights, net 1,098 1,109 1,119 1,130 1,141
Tangible common equity $ 372,087 $ 366,292 $ 350,072 $ 358,861 $ 352,328
Common shares issued at period end 14,365,785 14,360,172 14,383,913 14,540,556 14,853,487
Diluted common shares outstanding at period end 14,637,306 14,664,603 14,668,287 14,756,378 14,945,282
Book value per common share $ 29.08 $ 28.76 $ 27.66 $ 28.04 $ 27.08
Tangible book value per common share $ 25.90 $ 25.51 $ 24.34 $ 24.68 $ 23.72
Tangible book value per diluted common share $ 25.42 $ 24.98 $ 23.87 $ 24.32 $ 23.57
Total assets $ 4,263,268 $ 4,268,216 $ 4,196,184 $ 4,013,356 $ 3,865,571
Less: goodwill 31,601 31,601 31,601 31,601 31,601
Less: core deposit intangibles, net 12,963 13,993 15,023 16,057 17,101
Less: mortgage servicing asset, net - - - - 1
Less: naming rights, net 1,098 1,109 1,119 1,130 1,141
Tangible assets $ 4,217,606 $ 4,221,513 $ 4,148,441 $ 3,964,568 $ 3,815,727
Total stockholders' equity to total assets 9.80 % 9.68 % 9.48 % 10.16 % 10.40 %
Tangible common equity to tangible assets 8.82 % 8.68 % 8.44 % 9.05 % 9.23 %
Total average stockholders' equity $ 422,879 $ 404,039 $ 395,638 $ 409,572 $ 483,088
Less: average intangible assets 46,335 47,334 48,376 54,547 154,049
Average tangible common equity $ 376,544 $ 356,705 $ 347,262 $ 355,025 $ 329,039
Net income (loss) allocable to common stockholders $ 11,773 $ 15,166 $ 15,075 $ 12,488 $ (90,405 )
Add: goodwill impairment - - - - 104,831
Less: tax effect of goodwill impairment - - - - 5,305
Adjusted net income (loss) plus goodwill impairment 11,773 15,166 15,075 12,488 9,121
Amortization of intangible assets 1,040 1,041 1,045 1,055 1,043
Less: tax effect of intangible assets amortization 218 219 219 222 234
Adjusted net income (loss) allocable to common stockholders $ 12,595 $ 15,988 $ 15,901 $ 13,321 $ 9,930
Return on total average stockholders' equity
(ROAE) annualized 		11.05 % 15.06 % 15.45 % 12.13 % (74.45 )%
Return on average tangible common equity
(ROATCE) annualized 		13.27 % 17.98 % 18.57 % 14.93 % (108.31 )%
Adjusted return on average tangible common equity 13.27 % 17.98 % 18.57 % 14.93 % 12.01 %
Non-interest expense $ 30,689 $ 25,806 $ 24,881 $ 28,460 $ 130,835
Less: merger expense 4,015 460 152 299 -
Less: loss on debt extinguishment 372 - - - -
Less: goodwill impairment - - - - 104,831
Non-interest expense, excluding merger expense, loss on debt extinguishment and goodwill impairment $ 26,302 $ 25,346 $ 24,729 $ 28,161 $ 26,004
Net interest income $ 38,975 $ 34,630 $ 31,759 $ 35,559 $ 32,107
Non-interest income 7,831 9,100 6,712 8,500 6,485
Less: net gain on acquisition - 663 (78 ) 2,145 -
Less: net gains (losses) from securities transactions 381 - 17 (1 ) -
Non-interest income, excluding gains (losses) from
securities transactions 		$ 7,450 $ 8,437 $ 6,773 $ 6,356 $ 6,485
Net interest income plus non-interest income, excluding net gain on acquisition and net gains (losses) from securities transactions $ 46,425 $ 43,067 $ 38,532 $ 41,915 $ 38,592
Non-interest expense less goodwill impairment to net interest income plus non-interest income 65.57 % 59.01 % 64.67 % 64.60 % 67.38 %
Efficiency ratio 56.65 % 58.85 % 64.18 % 67.19 % 67.38 %
Net income (loss) allocable to common stockholders $ 11,773 $ 15,166 $ 15,075 $ 12,488 $ (90,405 )
Add: income tax provision 3,286 4,415 4,271 2,111 (2,653 )
Add: provision (reversal) of credit losses 1,058 (1,657 ) (5,756 ) 1,000 815
Add: goodwill impairment - - - - 104,831
Adjusted net income $ 16,117 $ 17,924 $ 13,590 $ 15,599 $ 12,588
Total average assets $ 4,275,298 $ 4,231,439 $ 4,143,752 $ 3,910,628 $ 4,041,187
Total average stockholders' equity $ 422,879 $ 404,039 $ 395,638 $ 409,572 $ 483,088
Return on average assets (ROAA) annualized 1.09 % 1.44 % 1.48 % 1.27 % (8.90 )%
Adjusted return on average assets 1.50 % 1.70 % 1.33 % 1.59 % 1.24 %
Adjusted return on average equity 15.12 % 17.79 % 13.93 % 15.15 % 10.37 %