Equity Bancshares, Inc. Fourth Quarter Results Highlighted by 6.1% Annualized Loan Growth and Strategic Balance Sheet Repositioning

Company Announces Merger with Bank of Kirksville and Tangible Equity Growth


WICHITA, Kan., Jan. 24, 2024 (GLOBE NEWSWIRE) -- Equity Bancshares, Inc. (NYSE: EQBK), (“Equity”, “the Company”, “we,” “us,” “our”), the Wichita-based holding company of Equity Bank, reported a net loss of $28.3 million or $(1.84) earnings per diluted share for the quarter ended December 31, 2023. Excluding the impact of our previously announced bond repositioning and merger related expenses, operating income would have been $11.9 million or $0.77 earnings per diluted share.

“Our Company entered the fourth quarter positioned to take advantage of market opportunities which we expect will drive our operating growth in the future,” said Brad S. Elliott, Chairman and CEO of Equity.  “With our team’s efforts around capital creation and management, we were able to announce our newest strategic combination with the Bank of Kirksville, Missouri, as well as a repositioning of our bond portfolio.  Each of these transactions reflect our entrepreneurial spirit and, we believe, position our Company for continued success.”

"In addition to the transformative transactions, our teams continued to emphasize core customer creation and service, while maintaining strong credit quality," Mr. Elliott said. "Our classified asset ratio continues to be historically low, while both capital and on balance sheet reserves remain high, positioning Equity to be strategic for organic and acquisitive growth opportunities."

Notable Items:

  • The Company realized linked quarter gross loans held-for-investment expansion of $50.8 million, or 6.1% annualized.  Commercial lending categories were the primary contributors to realized growth.
  • The Company realized linked quarter deposit growth of $63.3 million, including $13.3 million in non-brokered deposit balances.
  • The Company sold $493.6 million in securities par value, realizing gross loss of $50.6 million.  Securities included in the transaction were yielding 1.20% at the date of sale.  Funds received were redeployed in bond purchases, loan production, cash, and the avoidance of high-cost borrowings.
  • Stockholders' Equity increased $34.7 million linked quarter, while tangible book value increased $35.5 million. Tangible book value per share closed the year at $25.37 compared to $23.09 as of September 30, 2023 and $21.67 as of December 31, 2022.
  • The Company announced its planned merger with Rockhold Bancorp, the parent company of Bank of Kirksville (“BoK”) which operates eight banking locations in northcentral Missouri. As of September 30, 2023 BoK reported total assets of $406 million, including $122 million in loans, and $344 million in deposits.
  • Classified assets as a percentage of total risk based capital at Equity Bank closed the period at 7.1% while non-performing assets remained historically low.  The allowance for credit losses closed the quarter at 1.31% of total loans.

Financial Results for the Quarter Ended December 31, 2023

Net loss allocable to common stockholders was $28.3 million, or $(1.84) per diluted share, for the three months ended December 31, 2023, as compared to $12.3 million, or $0.80 per diluted share, for the three months ended September 30, 2023. The decrease during the quarter was primarily driven by a loss on sales of available-for-sale securities of $50.6 million. Excluding the tax-effected impact of loss on sale, operating net income would have been $11.9 million, or $0.77 per diluted share.

Net Interest Income

Net interest income was $39.5 million for the three months ended December 31, 2023, as compared to $41.0 million for the three months ended September 30, 2023, a decrease of $1.5 million, or 3.77%. Net interest margin decreased to 3.49% from 3.51% as the yield on interest-earning assets increased 12 basis points to 5.69% and the cost of interest-bearing deposits increased 18 basis points to 2.83%. Continued increases in loan coupon were offset by a decline in purchase accounting and non-accrual loan costs.

Average deposits declined during the quarter and the Company continued to experience compositional shift from noninterest-bearing deposits into interest-bearing categories. At December 31, 2023, non-interest-bearing deposits declined $38.1 million from September 30, 2023, and $199.8 million from December 31, 2022.  The majority of the decline over the last 12 months is due to deposits migrating to interest-bearing deposit accounts coupled with declining excess liquidity positions of our customer base.

Provision for Credit Losses

During the three months ended December 31, 2023, there was a provision of $711 thousand compared to a provision of $1.2 million in the previous quarter.  The provision for the quarter is the result of increased loss rates within the portfolio as well as realized charge-offs; however, overall we continue to experience positive credit trends. The Company continues to estimate the allowance for credit loss with assumptions that anticipate slower prepayment rates and continued market disruption caused by elevated inflation, supply chain issues and the impact of monetary policy on consumers and businesses.  For the three months ended December 31, 2023, we had net charge-offs of $1.4 million as compared to $1.6 million for the three months ended September 30, 2023.

Non-Interest Income

Total non-interest income was $(43.4) million for the three months ended December 31, 2023, as compared to $8.7 million for the three months ended September 30, 2023, or a decrease of 597.0%, quarter-over-quarter.  The $52.1 million decrease was primarily due to an increase in losses on the sale of available-for-sale securities of $50.7 million. During the fourth quarter the Company repositioned it's investment portfolio by selling lower yielding securities and reinvesting into higher yielding assets, resulting in the loss.

Exclusive of the investment portfolio re-positioning, non-interest income was driven down by the fair valuation of portfolio derivatives as market rates trended down in the quarter, as well as a decline in the benefits from specific credits related to the Almena State Bank transaction of $526 thousand. 

Non-Interest Expense

Total non-interest expense for the quarter ended December 31, 2023, was $35.0 million as compared to $34.2 million for the quarter ended September 30, 2023, an increase of $754 thousand. Adjusting for merger expenses, the increase quarter over quarter was $462 thousand due to increased incentive and insurance accruals within the salary and employee benefits line item.

Income Tax Expense

At December 31, 2023, the effective tax rate for the quarter was 28.6% as compared to 13.5% at September 30, 2023. The year-to-date tax rate is (223.9)% compared to 14.1% at September 30, 2023. The increase in the rate linked to the quarter represents additional benefit associated with the sale of bonds generating pre-tax losses recognized in the fourth quarter ending December 31, 2023. The year-to-date tax rate represents the anticipated tax planning benefits and credits amplified by a reduction in pre-tax book income for the year due to the pre-tax losses generated in the fourth quarter related to the sale of bonds.  The anticipated tax rate for the full year, normalized for the sale of the bonds, would have been 12.8%.  

Loans, Total Assets and Funding

Loans held for investment were $3.33 billion at December 31, 2023, increasing $50.8 million compared to the previous quarter. Total assets were $5.03 billion as of December 31, 2023, increasing $89.3 million or 1.8% from September 30, 2023.

Total deposits were $4.1 billion at December 31, 2023, increasing $63.3 million from the previous quarter end and decreasing $96.4 million from the same period end in 2022.  During the fourth quarter, there were increases in brokered deposits of $50.0 million. Excluding the impact of brokered deposits, totals deposits increased $13.3 million as compared to September 30, 2023. Of the total deposit balance, non-interest-bearing accounts comprise approximately 21.7%. Advances from the FHLB and borrowings from the Federal Reserve's Bank Term Funding Program remained unchanged from September 30, 2023.

Asset Quality

As of December 31, 2023, Equity’s allowance for credit losses to total loans remained materially consistent at 1.3% as compared to September 30, 2023.  Nonperforming assets were $26.5 million as of December 31, 2023, or 0.5% of total assets, compared to $20.5 million at September 30, 2023, or 0.4% of total assets.  Non-accrual loans were $25.0 million at December 31, 2023, as compared to $19.4 million at September 30, 2023.  Total classified assets, including loans rated special mention or worse, other real estate owned, excluding previous branch locations, and other repossessed assets were $40.5 million, or 7.1% of regulatory capital, up from $37.6 million, or 6.3% of regulatory capital as of September 30, 2023.

Capital

Quarter over quarter, book capital increased $34.7 million to $452.9 million and tangible capital increased $35.5 million to $391.5 million.  The increase in book and tangible capital is primarily due to a decrease in the unrealized loss position in our investment portfolio of $65.0 million, partially offset by net loss for the quarter of $28.3 million, dividends declared of $1.9 million and a decrease in unrealized gains on cash-flow derivatives of $1.0 million.

The Company’s ratio of common equity tier 1 capital to risk-weighted assets was 11.7%, the total capital to risk-weighted assets was 15.5% and the total leverage ratio was 9.5% at December 31, 2023.  At September 30, 2023, the Company’s common equity tier 1 capital to risk-weighted assets ratio was 12.7%, the total capital to risk-weighted assets ratio was 16.4% and the total leverage ratio was 9.8%.

Equity Bank's ratio of common equity tier 1 capital to risk-weighted assets was 13.9%, total capital to risk-weighted assets was 15.1% and the total leverage ratio was 10.6% at December 31, 2023.  At September 30, 2023, Equity Bank’s ratio of common equity tier 1 capital to risk-weighted assets was 14.7%, the ratio of total capital to risk-weighted assets was 15.9% and the total leverage ratio was 10.8%.

Non-GAAP Financial Measures

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

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

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

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

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

Conference Call and Webcast

Equity’s Chairman and Chief Executive Officer, Brad Elliott, and Chief Financial Officer, Chris Navratil, will hold a conference call and webcast to discuss fourth quarter results on Thursday, January 25, 2024, at 10 a.m. eastern time or 9 a.m. central time.

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

A replay of the call and webcast will be available two hours following the close of the call until January 31, 2024, accessible at investor.equitybank.com.

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

Special Note Concerning Forward-Looking Statements

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

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

Investor Contact:

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

Media Contact:

John J. Hanley
Chief Marketing Officer
Equity Bancshares, Inc.
(913) 583-8004
jhanley@equitybank.com

Unaudited Financial Tables

  • Table 1. Consolidated Statements of Income
  • Table 2. Quarterly Consolidated Statements of Income
  • Table 3. Consolidated Balance Sheets
  • Table 4. Selected Financial Highlights
  • Table 5. Year-To-Date Net Interest Income Analysis
  • Table 6. Quarter-To-Date Net Interest Income Analysis
  • Table 7. Quarter-Over-Quarter Net Interest Income Analysis
  • Table 8. Non-GAAP Financial Measures

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

  Three months ended
December 31,
  Year ended
December 31,
 
  2023  2022  2023  2022 
Interest and dividend income            
Loans, including fees $54,932  $46,149  $211,213  $160,859 
Securities, taxable  6,417   5,946   23,873   22,713 
Securities, nontaxable  354   678   1,960   2,698 
Federal funds sold and other  2,591   651   9,666   1,978 
Total interest and dividend income  64,294   53,424   246,712   188,248 
Interest expense            
Deposits  20,074   8,013   70,473   16,321 
Federal funds purchased and retail repurchase agreements  298   82   931   232 
Federal Home Loan Bank advances  1,005   1,500   3,944   2,094 
Federal Reserve Bank borrowings  1,546      4,755    
Subordinated debt  1,904   1,798   7,591   6,771 
Total interest expense  24,827   11,393   87,694   25,418 
             
Net interest income  39,467   42,031   159,018   162,830 
Provision (reversal) for credit losses  711   (151)  1,873   125 
Net interest income after provision (reversal) for credit losses  38,756   42,182   157,145   162,705 
Non-interest income            
Service charges and fees  2,299   2,705   10,187   10,632 
Debit card income  2,524   2,557   10,322   10,677 
Mortgage banking  125   116   652   1,416 
Increase in value of bank-owned life insurance  925   758   4,059   3,113 
Net gain on acquisition and branch sales     422      962 
Net gains (losses) from securities transactions  (50,618)  14   (51,909)  5 
Other  1,331   1,757   7,560   9,152 
Total non-interest income  (43,414)  8,329   (19,129)  35,957 
Non-interest expense            
Salaries and employee benefits  16,598   16,113   64,384   62,006 
Net occupancy and equipment  3,244   2,919   12,325   12,223 
Data processing  4,471   4,334   17,433   15,883 
Professional fees  1,413   1,404   5,754   4,951 
Advertising and business development  1,598   1,903   5,425   5,042 
Telecommunications  460   517   1,963   1,916 
FDIC insurance  660   360   2,195   1,140 
Courier and postage  577   533   2,046   1,881 
Free nationwide ATM cost  508   510   2,073   2,103 
Amortization of core deposit intangibles  739   924   3,374   4,042 
Loan expense  155   262   540   828 
Other real estate owned  224   388   542   589 
Merger expenses  292   68   297   594 
Other  4,059   5,014   17,250   15,182 
Total non-interest expense  34,998   35,249   135,601   128,380 
Income (loss) before income tax  (39,656)  15,262   2,415   70,282 
Provision for income taxes  (11,357)  3,654   (5,406)  12,594 
Net income (loss) and net income (loss) allocable to common stockholders $(28,299) $11,608  $7,821  $57,688 
Basic earnings (loss) per share $(1.84) $0.73  $0.50  $3.56 
Diluted earnings (loss) per share $(1.84) $0.72  $0.50  $3.51 
Weighted average common shares  15,417,200   15,948,360   15,535,772   16,214,049 
Weighted average diluted common shares  15,417,200   16,204,185   15,648,842   16,437,906 
                 

TABLE 2. QUARTERLY CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except per share data)

  As of and for the three months ended 
  December 31,
2023
  September 30,
2023
  June 30,
2023
  March 31,
2023
  December 31,
2022
 
Interest and dividend income               
Loans, including fees $54,932  $55,152  $52,748  $48,381  $46,149 
Securities, taxable  6,417   5,696   5,813   5,947   5,946 
Securities, nontaxable  354   369   568   669   678 
Federal funds sold and other  2,591   3,822   2,127   1,126   651 
Total interest and dividend income  64,294   65,039   61,256   56,123   53,424 
Interest expense               
Deposits  20,074   19,374   17,204   13,821   8,013 
Federal funds purchased and retail repurchase agreements  298   246   192   195   82 
Federal Home Loan Bank advances  1,005   968   953   1,018   1,500 
Federal Reserve Bank borrowings  1,546   1,546   1,528   135    
Subordinated debt  1,904   1,893   1,950   1,844   1,798 
Total interest expense  24,827   24,027   21,827   17,013   11,393 
                
Net interest income  39,467   41,012   39,429   39,110   42,031 
Provision (reversal) for credit losses  711   1,230   298   (366)  (151)
Net interest income after provision (reversal) for credit losses  38,756   39,782   39,131   39,476   42,182 
Non-interest income               
Service charges and fees  2,299   2,690   2,653   2,545   2,705 
Debit card income  2,524   2,591   2,653   2,554   2,557 
Mortgage banking  125   226   213   88   116 
Increase in value of bank-owned life insurance  925   794   757   1,583   758 
Net gain on acquisition and branch sales              422 
Net gains (losses) from securities transactions  (50,618)  (1)  (1,322)  32   14 
Other  1,331   2,435   1,996   1,798   1,757 
Total non-interest income  (43,414)  8,735   6,950   8,600   8,329 
Non-interest expense               
Salaries and employee benefits  16,598   15,857   15,237   16,692   16,113 
Net occupancy and equipment  3,244   3,262   2,940   2,879   2,919 
Data processing  4,471   4,553   4,493   3,916   4,334 
Professional fees  1,413   1,312   1,645   1,384   1,404 
Advertising and business development  1,598   1,419   1,249   1,159   1,903 
Telecommunications  460   502   516   485   517 
FDIC insurance  660   660   515   360   360 
Courier and postage  577   548   463   458   533 
Free nationwide ATM cost  508   516   524   525   510 
Amortization of core deposit intangibles  739   799   918   918   924 
Loan expense  155   132   136   117   262 
Other real estate owned  224   128   71   119   388 
Merger expenses  292            68 
Other  4,059   4,556   4,423   4,217   5,014 
Total non-interest expense  34,998   34,244   33,130   33,229   35,249 
Income (loss) before income tax  (39,656)  14,273   12,951   14,847   15,262 
Provision for income taxes (benefit)  (11,357)  1,932   1,495   2,524   3,654 
Net income (loss) and net income (loss) allocable to common stockholders $(28,299) $12,341  $11,456  $12,323  $11,608 
Basic earnings (loss) per share $(1.84) $0.80  $0.74  $0.78  $0.73 
Diluted earnings (loss) per share $(1.84) $0.80  $0.74  $0.77  $0.72 
Weighted average common shares  15,417,200   15,404,992   15,468,378   15,858,808   15,948,360 
Weighted average diluted common shares  15,417,200   15,507,172   15,554,255   16,028,051   16,204,185 
                     

TABLE 3. CONSOLIDATED BALANCE SHEETS (Unaudited)

(Dollars in thousands)

  December 31,
2023
  September 30,
2023
  June 30,
2023
  March 31,
2023
  December 31,
2022
 
ASSETS               
Cash and due from banks $363,289  $183,404  $262,604  $249,982  $104,013 
Federal funds sold  15,810   15,613   15,495   384   415 
Cash and cash equivalents  379,099   199,017   278,099   250,366   104,428 
Available-for-sale securities  919,648   1,057,009   1,094,748   1,183,247   1,184,390 
Held-to-maturity securities  2,209   2,212   2,216   1,944   1,948 
Loans held for sale  476   627   2,456   648   349 
Loans, net of allowance for credit losses(1)  3,289,381   3,237,932   3,278,126   3,285,515   3,265,701 
Other real estate owned, net  1,833   3,369   4,362   4,171   4,409 
Premises and equipment, net  112,632   110,271   106,186   104,789   101,492 
Bank-owned life insurance  124,865   124,245   123,451   122,971   123,176 
Federal Reserve Bank and Federal Home Loan Bank stock  20,608   20,780   21,129   33,359   21,695 
Interest receivable  25,497   23,621   21,360   20,461   20,630 
Goodwill  53,101   53,101   53,101   53,101   53,101 
Core deposit intangibles, net  7,222   7,961   8,760   9,678   10,596 
Other  98,021   105,122   100,889   86,466   89,736 
Total assets $5,034,592  $4,945,267  $5,094,883  $5,156,716  $4,981,651 
LIABILITIES AND STOCKHOLDERS’ EQUITY               
Deposits               
Demand $898,129  $936,217  $978,968  $1,012,671  $1,097,899 
Total non-interest-bearing deposits  898,129   936,217   978,968   1,012,671   1,097,899 
Demand, savings and money market  2,483,807   2,397,003   2,397,524   2,334,463   2,329,584 
Time  763,519   748,950   854,458   939,799   814,324 
Total interest-bearing deposits  3,247,326   3,145,953   3,251,982   3,274,262   3,143,908 
Total deposits  4,145,455   4,082,170   4,230,950   4,286,933   4,241,807 
Federal funds purchased and retail repurchase agreements  43,582   39,701   44,770   45,098   46,478 
Federal Home Loan Bank advances and Federal Reserve Bank borrowings  240,000   240,000   240,000   251,222   138,864 
Subordinated debt  96,921   96,787   96,653   96,522   96,392 
Contractual obligations  19,315   29,019   29,608   19,372   15,218 
Interest payable and other liabilities  36,459   39,460   34,467   32,446   32,834 
Total liabilities  4,581,732   4,527,137   4,676,448   4,731,593   4,571,593 
Commitments and contingent liabilities               
Stockholders’ equity               
Common stock  207   207   207   206   205 
Additional paid-in capital  489,187   488,137   487,225   486,658   484,989 
Retained earnings  141,006   171,188   160,715   150,810   140,095 
Accumulated other comprehensive income (loss), net of tax  (57,920)  (122,047)  (110,225)  (101,238)  (113,511)
Treasury stock  (119,620)  (119,355)  (119,487)  (111,313)  (101,720)
Total stockholders’ equity  452,860   418,130   418,435   425,123   410,058 
Total liabilities and stockholders’ equity $5,034,592  $4,945,267  $5,094,883  $5,156,716  $4,981,651 
                
(1) Allowance for credit losses $43,520  $44,186  $44,544  $45,103  $45,847 
                     

TABLE 4. SELECTED FINANCIAL HIGHLIGHTS (Unaudited)
(Dollars in thousands, except per share data)

  As of and for the three months ended 
  December 31,  September 30,  June 30,  March 31,  December 31, 
  2023  2023  2023  2023  2022 
Loans Held For Investment by Type               
Commercial real estate $1,759,855  $1,721,761  $1,764,460  $1,746,834  $1,721,269 
Commercial and industrial  598,327   585,129   583,664   605,576   594,862 
Residential real estate  556,328   558,188   560,389   563,791   570,550 
Agricultural real estate  196,114   205,865   202,317   202,274   199,189 
Agricultural  118,587   103,352   104,510   106,169   120,003 
Consumer  103,690   107,823   107,330   105,974   105,675 
Total loans held-for-investment  3,332,901   3,282,118   3,322,670   3,330,618   3,311,548 
Allowance for credit losses  (43,520)  (44,186)  (44,544)  (45,103)  (45,847)
Net loans held for investment $3,289,381  $3,237,932  $3,278,126  $3,285,515  $3,265,701 
                
                
Asset Quality Ratios               
Allowance for credit losses on loans to total loans  1.31%  1.35%  1.34%  1.35%  1.38%
Past due or nonaccrual loans to total loans  1.10%  1.03%  0.78%  0.66%  0.72%
Nonperforming assets to total assets  0.53%  0.42%  0.31%  0.33%  0.37%
Nonperforming assets to total loans plus other
    real estate owned
  0.79%  0.63%  0.47%  0.51%  0.55%
Classified assets to bank total regulatory capital  7.09%  6.27%  7.94%  10.09%  9.98%
                
                
Selected Average Balance Sheet Data (QTD Average)               
Investment securities $985,591  $1,085,905  $1,155,971  $1,185,482  $1,184,452 
Total gross loans receivable  3,293,755   3,281,483   3,337,497   3,305,681   3,275,284 
Interest-earning assets  4,480,279   4,635,384   4,678,744   4,611,019   4,538,177 
Total assets  4,892,712   5,046,179   5,064,912   4,994,417   4,930,231 
Interest-bearing deposits  3,092,637   3,206,300   3,226,965   3,235,557   3,032,902 
Borrowings  391,691   385,125   385,504   247,932   299,191 
Total interest-bearing liabilities  3,484,328   3,591,425   3,612,469   3,483,489   3,335,557 
Total deposits  4,019,362   4,177,332   4,204,334   4,279,451   4,185,904 
Total liabilities  4,469,505   4,619,919   4,640,050   4,573,917   4,531,961 
Total stockholders' equity  423,207   426,260   424,862   420,500   398,270 
Tangible common equity*  361,451   363,625   361,409   356,053   332,820 
                
                
Performance ratios               
Return on average assets (ROAA) annualized  (2.29)%  0.97%  0.91%  1.00%  0.93%
Return on average assets before income tax and
   provision for loan losses*
  (3.16)%  1.22%  1.05%  1.18%  1.22%
Return on average equity (ROAE) annualized  (26.53)%  11.49%  10.82%  11.89%  11.57%
Return on average equity before income tax and
   provision for loan losses*
  (36.51)%  14.43%  12.51%  13.97%  15.05%
Return on average tangible common equity
   (ROATCE) annualized*
  (30.39)%  14.18%  13.55%  14.89%  14.74%
Yield on loans annualized  6.62%  6.67%  6.34%  5.94%  5.59%
Cost of interest-bearing deposits annualized  2.58%  2.40%  2.14%  1.73%  1.05%
Cost of total deposits annualized  1.98%  1.84%  1.64%  1.31%  0.76%
Net interest margin annualized  3.49%  3.51%  3.38%  3.44%  3.67%
Efficiency ratio*  74.35%  68.83%  69.44%  70.00%  70.47%
Non-interest income / average assets  (3.52)%  0.69%  0.55%  0.74%  0.67%
Non-interest expense / average assets  2.84%  2.69%  2.62%  2.74%  2.84%
                
                
Capital Ratios               
Tier 1 Leverage Ratio  9.46%  9.77%  9.54%  9.60%  9.61%
Common Equity Tier 1 Capital Ratio  11.74%  12.65%  12.23%  12.21%  12.26%
Tier 1 Risk Based Capital Ratio  12.36%  13.28%  12.84%  12.83%  12.88%
Total Risk Based Capital Ratio  15.48%  16.42%  15.96%  15.98%  16.08%
Total stockholders' equity to total assets  8.99%  8.46%  8.21%  8.24%  8.23%
Tangible common equity to tangible assets*  7.87%  7.29%  7.06%  7.09%  7.02%
Dividend payout ratio  (6.65)%  15.13%  13.53%  10.49%  14.01%
Book value per common share $29.35  $27.13  $27.18  $27.03  $25.74 
Tangible book value per common share* $25.37  $23.09  $23.08  $22.96  $21.67 
Tangible book value per diluted common share* $25.05  $22.96  $22.98  $22.83  $21.35 
                
* The value noted is considered a Non-GAAP financial measure. For a reconciliation of Non-GGAP financial measures, see Table 8. Non-GAAP Financial Measures. 
  

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

 For the year ended  For the year ended 
 December 31, 2023  December 31, 2022 
 Average Outstanding Balance  Interest
Income/
Expense
  Average
Yield/Rate(3)(4)
  Average Outstanding Balance  Interest
Income/
Expense
  Average
Yield/Rate(3)(4)
 
Interest-earning assets                 
Loans (1)                 
Commercial and industrial$580,451  $42,901   7.39% $583,295  $32,258   5.53%
Commercial real estate 1,302,568   83,441   6.41%  1,259,257   65,122   5.17%
Real estate construction 447,516   33,764   7.54%  363,902   18,269   5.02%
Residential real estate 565,711   23,799   4.21%  597,196   22,004   3.68%
Agricultural real estate 201,326   13,820   6.86%  201,295   11,399   5.66%
Agricultural 100,394   6,966   6.94%  125,342   6,697   5.34%
Consumer 106,542   6,522   6.12%  102,185   5,110   5.00%
Total loans 3,304,508   211,213   6.39%  3,232,472   160,859   4.98%
Securities                 
Taxable securities 1,027,726   23,873   2.32%  1,185,750   22,713   1.92%
Nontaxable securities 74,917   1,960   2.62%  106,955   2,698   2.52%
Total securities 1,102,643   25,833   2.34%  1,292,705   25,411   1.97%
Federal funds sold and other 193,941   9,666   4.98%  107,278   1,978   1.84%
Total interest-earning assets$4,601,092   246,712   5.36% $4,632,455   188,248   4.06%
Interest-bearing liabilities                 
Demand, savings and money market deposits$2,362,365   46,206   1.96% $2,433,364   10,797   0.44%
Time deposits 827,652   24,267   2.93%  663,790   5,524   0.83%
Total interest-bearing deposits 3,190,017   70,473   2.21%  3,097,154   16,321   0.53%
FHLB advances 98,380   3,944   4.01%  79,775   2,094   2.63%
Other borrowings 254,666   13,277   5.21%  151,172   7,003   4.63%
Total interest-bearing liabilities$3,543,063   87,694   2.48% $3,328,101   25,418   0.76%
                  
Net interest income   $159,018        $162,830    
Interest rate spread       2.88%        3.30%
                  
Net interest margin (2)       3.46%        3.51%
                  
(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 
 December 31, 2023  December 31, 2022 
 Average
Outstanding
Balance
  Interest
Income/
Expense
  Average
Yield/Rate(3)(4)
  Average
Outstanding
Balance
  Interest
Income/
Expense
  Average
Yield/Rate(3)(4)
 
Interest-earning assets                 
Loans (1)                 
Commercial and industrial$580,726  $11,397   7.79% $594,221  $9,264   6.19%
Commercial real estate 1,309,588   21,630   6.55%  1,327,438   19,127   5.72%
Real estate construction 439,708   9,000   8.12%  367,935   5,827   6.28%
Residential real estate 561,382   5,866   4.15%  576,357   5,667   3.90%
Agricultural real estate 196,468   3,421   6.91%  200,492   3,353   6.64%
Agricultural 100,226   1,928   7.63%  104,146   1,443   5.50%
Consumer 105,657   1,690   6.35%  104,695   1,468   5.57%
Total loans 3,293,755   54,932   6.62%  3,275,284   46,149   5.59%
Securities                 
Taxable securities 932,376   6,417   2.73%  1,083,986   5,946   2.18%
Nontaxable securities 53,215   354   2.64%  100,466   678   2.68%
Total securities 985,591   6,771   2.73%  1,184,452   6,624   2.22%
Federal funds sold and other 200,933   2,591   5.12%  78,441   651   3.29%
Total interest-earning assets$4,480,279   64,294   5.69% $4,538,177   53,424   4.67%
Interest-bearing liabilities                 
Demand, savings and money market deposits$2,351,663   13,918   2.35% $2,294,639   5,336   0.92%
Time deposits 740,974   6,156   3.30%  738,263   2,677   1.44%
Total interest-bearing deposits 3,092,637   20,074   2.58%  3,032,902   8,013   1.05%
FHLB advances 102,432   1,005   3.89%  155,964   1,500   3.82%
Other borrowings 289,259   3,748   5.14%  146,691   1,880   5.09%
Total interest-bearing liabilities$3,484,328   24,827   2.83% $3,335,557   11,393   1.36%
                  
Net interest income   $39,467        $42,031    
Interest rate spread       2.86%        3.31%
                  
Net interest margin (2)       3.49%        3.67%
                  
(1) Average loan balances include nonaccrual loans. 
(2) Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets for the period. 
(3) Tax exempt income is not included in the above table on a tax-equivalent basis. 
(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 7. QUARTER-OVER-QUARTER NET INTEREST INCOME ANALYSIS (Unaudited)

(Dollars in thousands)

 For the three months ended  For the three months ended 
 December 31, 2023  September 30, 2023 
 Average
Outstanding
Balance
  Interest
Income/
Expense
  Average
Yield/Rate(3)(4)
  Average
Outstanding
Balance
  Interest
Income/
Expense
  Average
Yield/Rate(3)(4)
 
Interest-earning assets                 
Loans (1)                 
Commercial and industrial$580,726  $11,397   7.79% $573,039  $10,984   7.60%
Commercial real estate 1,309,588   21,630   6.55%  1,253,362   20,824   6.59%
Real estate construction 439,708   9,000   8.12%  480,355   9,838   8.13%
Residential real estate 561,382   5,866   4.15%  564,138   6,085   4.28%
Agricultural real estate 196,468   3,421   6.91%  203,399   3,898   7.60%
Agricultural 100,226   1,928   7.63%  99,773   1,856   7.38%
Consumer 105,657   1,690   6.35%  107,417   1,667   6.16%
Total loans 3,293,755   54,932   6.62%  3,281,483   55,152   6.67%
Securities                 
Taxable securities 932,376   6,417   2.73%  1,027,889   5,696   2.20%
Nontaxable securities 53,215   354   2.64%  58,016   369   2.52%
Total securities 985,591   6,771   2.73%  1,085,905   6,065   2.22%
Federal funds sold and other 200,933   2,591   5.12%  267,996   3,822   5.66%
Total interest-earning assets$4,480,279   64,294   5.69% $4,635,384   65,039   5.57%
Interest-bearing liabilities                 
Demand savings and money market deposits$2,351,663   13,918   2.35% $2,423,380   13,331   2.18%
Time deposits 740,974   6,156   3.30%  782,920   6,043   3.06%
Total interest-bearing deposits 3,092,637   20,074   2.58%  3,206,300   19,374   2.40%
FHLB advances 102,432   1,005   3.89%  100,000   968   3.84%
Other borrowings 289,259   3,748   5.14%  285,125   3,685   5.13%
Total interest-bearing liabilities$3,484,328   24,827   2.83% $3,591,425   24,027   2.65%
                  
Net interest income   $39,467        $41,012    
Interest rate spread       2.86%        2.92%
                  
Net interest margin (2)       3.49%        3.51%
                  
(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 8. NON-GAAP FINANCIAL MEASURES (Unaudited)
(Dollars in thousands, except per share data)

  As of and for the three months ended 
  December 31,  September 30,  June 30,  March 31,  December 31, 
  2023  2023  2023  2023  2022 
                
Total stockholders' equity $452,860  $418,130  $418,435  $425,123  $410,058 
Less: goodwill  53,101   53,101   53,101   53,101   53,101 
Less: core deposit intangibles, net  7,222   7,961   8,760   9,678   10,596 
Less: mortgage servicing rights, net  75   100   126   151   176 
Less: naming rights, net  1,000   1,011   1,022   1,033   1,044 
Tangible common equity $391,462  $355,957  $355,426  $361,160  $345,141 
Common shares outstanding at period end  15,428,251   15,413,064   15,396,739   15,730,257   15,930,112 
Diluted common shares outstanding at period end  15,629,185   15,500,749   15,468,319   15,822,536   16,163,253 
Book value per common share $29.35  $27.13  $27.18  $27.03  $25.74 
Tangible book value per common share $25.37  $23.09  $23.08  $22.96  $21.67 
Tangible book value per diluted common share $25.05  $22.96  $22.98  $22.83  $21.35 
                
Total assets $5,034,592  $4,945,267  $5,094,883  $5,156,716  $4,981,651 
Less: goodwill  53,101   53,101   53,101   53,101   53,101 
Less: core deposit intangibles, net  7,222   7,961   8,760   9,678   10,596 
Less: mortgage servicing rights, net  75   100   126   151   176 
Less: naming rights, net  1,000   1,011   1,022   1,033   1,044 
Tangible assets $4,973,194  $4,883,094  $5,031,874  $5,092,753  $4,916,734 
Total stockholders' equity to total assets  8.99%  8.46%  8.21%  8.24%  8.23%
Tangible common equity to tangible assets  7.87%  7.29%  7.06%  7.09%  7.02%
                
Total average stockholders' equity $423,207  $426,260  $424,862  $420,500  $398,270 
Less: average intangible assets  61,756   62,635   63,453   64,447   65,450 
Average tangible common equity $361,451  $363,625  $361,409  $356,053  $332,820 
Net income (loss) allocable to common stockholders $(28,299) $12,341  $11,456  $12,323  $11,608 
Add: amortization of intangible assets  775   835   954   954   961 
Less: tax effect of intangible assets amortization  163   175   200   200   202 
Adjusted net income (loss) allocable to common
    stockholders
 $(27,687) $13,001  $12,210  $13,077  $12,367 
Return on total average stockholders' equity
    (ROAE) annualized
  (26.53)%  11.49%  10.82%  11.89%  11.57%
Return on average tangible common equity
    (ROATCE) annualized
  (30.39)%  14.18%  13.55%  14.89%  14.74%
                
Non-interest expense $34,998  $34,244  $33,130  $33,229  $35,249 
Less: merger expense  297            68 
Adjusted non-interest expense $34,701  $34,244  $33,130  $33,229  $35,181 
Net interest income $39,467  $41,012  $39,429  $39,110  $42,031 
Non-interest income  (43,414)  8,735   6,950   8,600   8,329 
Less: net gain on acquisition and branch sales              422 
Less: net gains (losses) from securities transactions  (50,618)  (1)  (1,322)  32   14 
Adjusted non-interest income $7,204  $8,736  $8,272  $8,568  $7,893 
Net interest income plus adjusted non-interest income $46,671  $49,748  $47,701  $47,678  $49,924 
Non-interest expense to
    net interest income plus non-interest income
  (886.70)%  68.84%  71.43%  69.65%  69.99%
Efficiency ratio  74.35%  68.83%  69.45%  69.69%  70.47%
Net income (loss) allocable to common stockholders $(28,299) $12,341  $11,456  $12,323  $11,608 
Add: income tax provision  (11,357)  1,932   1,495   2,524   3,654 
Add: provision (reversal) of credit losses  711   1,230   298   (366)  (151)
Pre-tax, pre-provision income $(38,945) $15,503  $13,249  $14,481  $15,111 
Total average assets $4,892,712  $5,046,179  $5,064,912  $4,994,417  $4,930,231 
Total average stockholders' equity $423,207  $426,620  $424,862  $420,500  $398,270 
Return on average assets (ROAA) annualized  (2.29)%  0.97%  0.91%  1.00%  0.93%
Adjusted return on average assets  (3.16)%  1.22%  1.05%  1.18%  1.22%
Adjusted return on average equity  (36.51)%  14.43%  12.51%  13.97%  15.05%