Equity successfully acquired assets and deposits of Almena State Bank, originates $282.1 million of Main Street Lending Program loans through its continued support programs during the pandemic 
and adds $3.93 tangible book value per share in 2020

WICHITA, Kan., Jan. 25, 2021 (GLOBE NEWSWIRE) -- Equity Bancshares, Inc. (NASDAQ: EQBK), (“Equity”, “the Company”, “we”, “us”, “our”), the Wichita-based holding company of Equity Bank, reported its unaudited results for the fourth quarter ended December 31, 2020.

Equity reported net income of $12.5 million, or $0.84, per diluted share in the quarter ended December 31, 2020, and a net loss of $75.0 million or $4.97 per share for the year ended December 31, 2020. When excluding the $104.8 million goodwill impairment recognized in the quarter ended September 30, 2020, adjusted net income totaled $23.9 million, or $1.57 per diluted share, for the year ended December 31, 2020. The results in the quarter ended December 31, 2020, reflect the Company’s purchase of assets and deposit liabilities of Almena State Bank, acquired on October 23, 2020, from the Federal Deposit Insurance Corporation (“FDIC”) and the success of Equity’s customers in obtaining forgiveness of Paycheck Protection Program (“PPP”) loans from the Small Business Administration (“SBA”) totaling $102.8 million resulting in a recognition of $3.8 million of fee income.

“No one could have imagined the challenges that our employees, customers and communities faced in 2020 due to the pandemic. The perseverance exhibited in collaborating with our customers through a period of great uncertainty showed the integrity, entrepreneurship and accountability of the Equity team. I am honored to be a part of a team that worked tirelessly for customers when they needed us, and in turn, our customers were able to support our communities in a time of need,” said Brad Elliott, Chairman and CEO of Equity.

“In a year that was dominated by events outside of Equity’s control, we took steps to fundamentally grow our franchise and position the Company for long-term stability and growth. We provided $24.3 million of reserves for potential loan losses, raised $75.0 million of proactive capital through a subordinated debt offering and grew tangible book value $3.93 per share, from $20.75 at December 31, 2019, to $24.68 at December 31, 2020, which is the highest level we have recorded as a publicly traded company.”

Notable Items:

  • Tangible book value per common share was $24.68 at December 31, 2020, as compared to $20.75 at December 31, 2019, representing an increase of 18.9% or $3.93 per share. The Company authorized a second stock repurchase program in October 2020, totaling 800,000 shares. During the quarter ended December 31, 2020, the Company repurchased 313,231 shares at a weighted average cost of $20.82, totaling $6.5 million.
  • The Company was anticipating adopting ASU 2016-13, also known as Current Expected Credit Losses (“CECL”) at December 31, 2020, effective January 1, 2020. On December 27, 2020, the President signed into law the 2021 Fiscal Year Omnibus Appropriations Bill, which included an option to delay adoption of ASU 2016-13 to January 1, 2022. The Company, after conferring with its advisors, will adopt CECL on January 1, 2021, and will not take the option to further delay adoption.
  • During the year ended December 31, 2020, Equity originated $282.1 million of loans through the Main Street Lending Program (“MSLP”). The MSLP program ended at December 31, 2020. Pursuant to the MSLP terms, 95% of the total originations were sold to a special purpose vehicle of the Federal Reserve Bank of Boston.
  • Of the $559.3 million of 2020 PPP loans originated, the Company’s customers have successfully had $102.8 million of PPP loans forgiven, resulting in the recognition of fee income totaling $3.8 million and $6.1 million in the three- and twelve-month periods ended December 31, 2020. At December 31, 2020, $253.7 million loans remain from the 2020 PPP with an unrecognized $4.5 million of fee income.
  • The Company completed the purchase of assets and assumption of deposit liabilities from the FDIC, as the receiver of Almena State Bank. Consequently, the Company recognized a bargain purchase gain of $2.1 million and $299 thousand of merger related expense in the quarter ended December 31, 2020.

Equity’s Balance Sheet Highlights:

  • Total loans held for investment of $2.59 billion at December 31, 2020, as compared to total loans held for investment of $2.56 billion at December 31, 2019.
  • Total deposits of $3.45 billion at December 31, 2020, as compared to $3.06 billion at December 31, 2019.  Signature deposits, including core deposits comprised of checking, savings and money market accounts, were $2.82 billion at December 31, 2020, relative to $2.23 billion at December 31, 2019.
  • Total assets were $4.01 billion at December 31, 2020, as compared to $3.95 billion at December 31, 2019.

Financial Results for the Quarter Ended December 31, 2020

Net income allocable to common stockholders was $12.5 million, or $0.84 per diluted share, for the three months ended December 31, 2020, as compared to the net loss allocable to common stockholders of $90.4 million, or $6.01 per diluted share, for the three months ended September 30, 2020, an increase of $102.9 million. This increase was primarily attributable to the goodwill impairment charge of $104.8 million taken during the quarter ended September 30, 2020, and a $2.1 million acquisition gain from the Almena State Bank transaction during the quarter ended December 31, 2020.   Net income, excluding the gain on acquisition and merger expense, was $10.1 million for the quarter ended December 31, 2020, or $0.67 per diluted share. Net income, excluding the goodwill impairment and using an assumed 22.5% effective tax rate for the quarter ended September 30, 2020, totaled $9.1 million, or $0.60 per diluted share.

Net Interest Income

Net interest income was $35.6 million for the three months ended December 31, 2020, as compared to $32.1 million for the three months ended September 30, 2020, an increase of $3.5 million, or 10.8%. The increase in net interest income was driven by the recognition of fee income from PPP loan forgiveness by the SBA, totaling $3.8 million in the three months ended December 31, 2020, compared to $1.3 million in the three months ended September 30, 2020. As a result of the PPP loan forgiveness, net interest margin increased 41 basis points to 3.88% for the three months ended December 31, 2020 from 3.47% for the three months ended September 30, 2020. The yield on earning assets improved 35 basis points to 4.36% for the quarter ended December 31, 2020 from 4.01% from the previous quarter. The cost of interest-bearing liabilities declined to 0.65% or five basis points for the quarter ended December 31, 2020 from 0.70% in the quarter ended September 30, 2020. The cost of interest-bearing deposits declined seven basis points to 0.43% for the three months ended December 31, 2020 from 0.50% in the previous quarter primarily attributed to the decline in the cost of time deposits, which declined 23 basis points between the quarters. The cost of other borrowings increased to 4.71% in the three months ended December 31, 2020 from 4.45% from the quarter ended September 30, 2020, mainly due to the entire $75.0 million of subordinated debt at 7.0% not being on the balance sheet for the entire third quarter.

Provision for Loan Losses

The provision for loan losses was $1.0 million for the three months ended December 31, 2020, as compared to $815 thousand for the three months ended September 30, 2020. For the three months ended December 31, 2020, we had net charge-offs of $1.4 million as compared to $806 thousand for three months ended September 30, 2020.

Non-Interest Income

Total non-interest income was $8.5 million for the three months ended December 31, 2020, or $6.4 million with the net gain on the purchase and assumption of Almena State Bank excluded, as compared to the $6.5 million reported for the three months ended September 30, 2020. Service charges and fees were $1.8 million representing an increase of $53 thousand, or 3.1%, from the quarter ended September 30, 2020. Debit card income totaled $2.4 million in the quarter ended December 31, 2020, decreasing $90 thousand, or 3.6%, from the quarter ended September 30, 2020.

Non-Interest Expense

Total non-interest expense for the quarter ended December 31, 2020 was $28.5 million, or $28.2 million with merger expense excluded. When the goodwill impairment charge of $104.8 million is excluded from the previous quarter, pro-forma non-interest expense totaled $26.0 million for the quarter ended September 30, 2020. The $2.5 million increase is primarily attributed to a $1.5 million increase in other real estate owned expense and a $437 thousand increase in FDIC insurance assessments. The most significant contributor to the increase in other real estate owned expense was a $947 thousand valuation adjustment on two facilities that were closed in May 2020.

Asset Quality

As of December 31, 2020, Equity’s allowance for loan losses to total loans was 1.30%, as compared to 0.48% at December 31, 2019. Total reserves, including purchase discounts, to total loans were approximately 2.12% as of December 31, 2020, as compared to 0.85% at December 31, 2019. Nonperforming assets were $53.6 million as of December 31, 2020, or 1.34% of total assets. Nonperforming assets were $46.9 million at December 31, 2019, or 1.19% of total assets.

Regulatory Capital

The Company’s ratio of common equity tier 1 capital to risk-weighted assets was 12.8%, the total capital to risk-weighted assets was 17.4% and the total leverage ratio was 9.3% at December 31, 2020. At December 31, 2019, the Company’s common equity tier 1 capital to risk-weighted assets ratio was 11.6%, the total capital to risk-weighted assets ratio was 12.6% and the total leverage ratio was 9.0%. 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 15.7% and a total leverage ratio of 10.1% at December 31, 2020. At December 31, 2019, Equity Bank’s ratio of common equity tier 1 capital to risk-weighted assets was 12.0%, the ratio of total capital to risk-weighted assets was 12.5% and the total leverage ratio was 8.9%.

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 we recognize, how much of that dollar is expended. In order to improve the comparability of the ratio to our peers, we remove non-core items. 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 we believe it can be used 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 fourth quarter 2020 results on Tuesday, January 26, 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. On Tuesday, January 26, 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. 6781789.

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 February 2, 2021, accessible at (855) 859-2056 with conference ID no. 6781789 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 10, 2020, 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
cnavratil@equitybank.com        

Media Contact:

John J. Hanley
SVP, Senior Director of Marketing
Equity Bancshares, Inc.
(816) 505-4063
jhanley@equitybank.com

Unaudited Financial Tables

  • Table 1. Consolidated Statements of Operations
  • Table 2. Quarterly Consolidated Statements of Operations
  • 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 OPERATIONS (Unaudited)
(Dollars in thousands, except per share data)

  Three months ended
December 31,
  Year ended
December 31,
 
  2020  2019  2020  2019 
Interest and dividend income                
Loans, including fees $35,383  $36,687  $134,664  $149,298 
Securities, taxable  3,408   4,615   15,521   19,339 
Securities, nontaxable  913   1,037   3,682   4,180 
Federal funds sold and other  285   645   1,694   2,682 
Total interest and dividend income  39,989   42,984   155,561   175,499 
Interest expense                
Deposits  2,755   8,533   16,582   40,914 
Federal funds purchased and retail repurchase agreements  25   39   105   155 
Federal Home Loan Bank advances  94   1,564   2,292   6,667 
Federal Reserve Bank discount window        6    
Bank stock loan     147   415   654 
Subordinated debt  1,556   296   3,509   1,251 
Total interest expense  4,430   10,579   22,909   49,641 
                 
Net interest income  35,559   32,405   132,652   125,858 
Provision for loan losses  1,000   1,055   24,255   18,354 
Net interest income after provision for loan losses  34,559   31,350   108,397   107,504 
Non-interest income                
Service charges and fees  1,759   2,241   6,856   8,672 
Debit card income  2,401   2,101   9,136   8,230 
Mortgage banking  855   769   3,153   2,468 
Increase in value of bank-owned life insurance  489   504   1,941   1,998 
Net gain on acquisition  2,145      2,145    
Net gains (losses) from securities transactions  (1)  (3)  11   14 
Other  852   1,029   2,781   3,606 
Total non-interest income  8,500   6,641   26,023   24,988 
Non-interest expense                
Salaries and employee benefits  14,053   11,918   54,129   52,122 
Net occupancy and equipment  2,206   2,342   8,784   8,674 
Data processing  2,748   2,688   10,991   10,124 
Professional fees  1,095   1,359   4,282   4,734 
Advertising and business development  801   901   2,498   3,075 
Telecommunications  510   486   1,873   2,079 
FDIC insurance  797   109   2,088   1,228 
Courier and postage  338   328   1,441   1,348 
Free nationwide ATM cost  423   440   1,609   1,680 
Amortization of core deposit intangibles  1,044   820   3,850   3,168 
Loan expense  161   267   789   875 
Other real estate owned  1,600   381   2,310   707 
Merger expenses  299      299   915 
Goodwill impairment        104,831    
Other  2,385   2,807   9,216   8,906 
Total non-interest expense  28,460   24,846   208,990   99,635 
Income (loss) before income tax  14,599   13,145   (74,570)  32,857 
Provision for income taxes  2,111   3,131   400   7,278 
Net income (loss) and net income (loss) allocable to common stockholders $12,488  $10,014  $(74,970) $25,579 
Basic earnings (loss) per share $0.85  $0.65  $(4.97) $1.64 
Diluted earnings (loss) per share $0.84  $0.64  $(4.97) $1.61 
Weighted average common shares  14,760,810   15,442,841   15,098,512   15,619,891 
Weighted average diluted common shares  14,934,058   15,684,673   15,098,512   15,843,139 

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

  As of and for the three months ended 
  December 31,
2020
  September 30,
2020
  June 30,
2020
  March 31,
2020
  December 31,
2019
 
Interest and dividend income                    
Loans, including fees $35,383  $32,278  $32,627  $34,376  $36,687 
Securities, taxable  3,408   3,476   4,017   4,620   4,615 
Securities, nontaxable  913   923   880   966   1,037 
Federal funds sold and other  285   405   409   595   645 
Total interest and dividend income  39,989   37,082   37,933   40,557   42,984 
Interest expense                    
Deposits  2,755   3,064   3,899   6,864   8,533 
Federal funds purchased and retail repurchase agreements  25   25   24   31   39 
Federal Home Loan Bank advances  94   471   552   1,175   1,564 
Federal Reserve Bank discount window        6       
Bank stock loan        306   109   147 
Subordinated debentures  1,556   1,415   255   283   296 
Total interest expense  4,430   4,975   5,042   8,462   10,579 
                     
Net interest income  35,559   32,107   32,891   32,095   32,405 
Provision for loan losses  1,000   815   12,500   9,940   1,055 
Net interest income after provision for loan losses  34,559   31,292   20,391   22,155   31,350 
Non-interest income                    
Service charges and fees  1,759   1,706   1,365   2,026   2,241 
Debit card income  2,401   2,491   2,201   2,043   2,101 
Mortgage banking  855   877   831   590   769 
Increase in value of bank-owned life insurance  489   489   481   482   504 
Net gain on acquisition  2,145             
Net gains (losses) from securities transactions  (1)     4   8   (3)
Other  852   922   850   157   1,029 
Total non-interest income  8,500   6,485   5,732   5,306   6,641 
Non-interest expense                    
Salaries and employee benefits  14,053   13,877   12,695   13,504   11,918 
Net occupancy and equipment  2,206   2,224   2,119   2,235   2,342 
Data processing  2,748   2,817   2,763   2,663   2,688 
Professional fees  1,095   877   943   1,367   1,359 
Advertising and business development  801   598   403   696   901 
Telecommunications  510   486   390   487   486 
FDIC insurance  797   360   414   517   109 
Courier and postage  338   366   353   384   328 
Free nationwide ATM cost  423   439   327   420   440 
Amortization of core deposit intangibles  1,044   1,030   974   802   820 
Loan expense  161   107   287   234   267 
Other real estate owned  1,600   133   269   308   381 
Merger expenses  299             
Goodwill impairment     104,831          
Other  2,385   2,690   2,000   2,141   2,807 
Total non-interest expense  28,460   130,835   23,937   25,758   24,846 
Income (loss) before income tax  14,599   (93,058)  2,186   1,703   13,145 
Provision for income taxes (benefit)  2,111   (2,653)  497   445   3,131 
Net income (loss) and net income (loss) allocable to common stockholders $12,488  $(90,405) $1,689  $1,258  $10,014 
Basic earnings (loss) per share $0.85  $(6.01) $0.11  $0.08  $0.65 
Diluted earnings (loss) per share $0.84  $(6.01) $0.11  $0.08  $0.64 
Weighted average common shares  14,760,810   15,040,407   15,209,483   15,387,697   15,442,841 
Weighted average diluted common shares  14,934,058   15,040,407   15,304,009   15,595,024   15,684,673 

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

  December 31,
2020
  September 30,
2020
  June 30,
2020
  March 31,
2020
  December 31,
2019
 
ASSETS                    
Cash and due from banks $280,150  $65,534  $178,045  $141,989  $88,973 
Federal funds sold  548   305   245   263   318 
Cash and cash equivalents  280,698   65,839   178,290   142,252   89,291 
Interest-bearing time deposits in other banks  249   499   2,248   2,498   2,498 
Available-for-sale securities  871,827   798,576   177,228   187,812   142,067 
Held-to-maturity securities(1)        662,522   721,992   769,059 
Loans held for sale  12,394   9,053   4,802   6,494   5,933 
Loans, net of allowance for loan losses(2)  2,557,987   2,691,626   2,772,256   2,485,208   2,544,420 
Other real estate owned, net  11,733   8,727   7,374   5,870   8,293 
Premises and equipment, net  89,412   86,087   87,055   84,732   84,478 
Bank-owned life insurance  77,044   76,555   76,066   75,585   75,103 
Federal Reserve Bank and Federal Home Loan Bank stock  16,415   32,545   31,832   31,662   31,137 
Interest receivable  15,831   18,110   19,598   15,549   15,738 
Goodwill  31,601   31,601   136,432   136,432   136,432 
Core deposit intangibles, net  16,057   17,101   18,131   19,105   19,907 
Other  32,108   29,252   31,435   28,641   25,222 
Total assets $4,013,356  $3,865,571  $4,205,269  $3,943,832  $3,949,578 
LIABILITIES AND STOCKHOLDERS’ EQUITY                    
Deposits                    
Demand $791,639  $693,967  $756,613  $508,441  $481,298 
Total non-interest-bearing deposits  791,639   693,967   756,613   508,441   481,298 
Savings, NOW and money market  2,029,097   1,816,307   1,800,132   1,668,145   1,749,048 
Time  626,854   623,344   690,522   783,811   833,170 
Total interest-bearing deposits  2,655,951   2,439,651   2,490,654   2,451,956   2,582,218 
Total deposits  3,447,590   3,133,618   3,247,267   2,960,397   3,063,516 
Federal funds purchased and retail repurchase agreements  36,029   46,295   51,557   37,113   35,708 
Federal Home Loan Bank advances  10,144   167,862   344,900   389,620   324,373 
Bank stock loan           40,000   8,990 
Subordinated debentures  87,684   87,537   55,575   14,638   14,561 
Contractual obligations  5,189   5,478   5,571   5,781   5,836 
Interest payable and other liabilities  19,071   22,609   20,633   18,932   18,534 
Total liabilities  3,605,707   3,463,399   3,725,503   3,466,481   3,471,518 
Commitments and contingent liabilities                    
Stockholders’ equity                    
Common stock  174   174   174   174   174 
Additional paid-in capital  386,820   386,017   384,955   383,850   382,731 
Retained earnings  50,787   38,299   128,704   127,015   125,757 
Accumulated other comprehensive income (loss)  19,781   21,074   3,390   3,769   (3)
Employee stock loans  (43)  (43)  (43)  (43)  (77)
Treasury stock  (49,870)  (43,349)  (37,414)  (37,414)  (30,522)
Total stockholders’ equity  407,649   402,172   479,766   477,351   478,060 
Total liabilities and stockholders’ equity $4,013,356  $3,865,571  $4,205,269  $3,943,832  $3,949,578 
                     
(1) Fair market value of held-to-maturity securities $  $  $689,206  $750,900  $783,911 
(2) Allowance for loan losses  33,709   34,087   34,078   21,915   12,232 

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, 
  2020  2020  2020  2020  2019 
Loans Held-For-Investment by Type                    
Commercial real estate $1,188,696  $1,188,329  $1,191,336  $1,200,762  $1,158,022 
Commercial and industrial  734,495   857,244   883,355   542,571   592,052 
Residential real estate  382,026   402,242   442,486   480,603   503,439 
Agricultural real estate  133,693   127,349   129,080   130,795   141,868 
Consumer  58,464   67,465   71,037   64,799   68,378 
Agricultural  94,322   83,084   89,040   87,593   92,893 
Total loans held-for-investment  2,591,696   2,725,713   2,806,334   2,507,123   2,556,652 
Allowance for loan losses  (33,709)  (34,087)  (34,078)  (21,915)  (12,232)
Net loans held-for-investment $2,557,987  $2,691,626  $2,772,256  $2,485,208  $2,544,420 
                     
                     
Asset Quality Ratios                    
Allowance for loan losses to total loans  1.30%  1.25%  1.21%  0.87%  0.48%
Past due or nonaccrual loans to total loans  2.11%  2.12%  1.88%  2.47%  1.66%
Nonperforming assets to total assets  1.34%  1.55%  1.37%  1.22%  1.19%
Nonperforming assets to total loans plus other real estate owned  2.06%  2.19%  2.05%  1.92%  1.83%
Classified assets to bank total regulatory capital  25.50%  18.35%  20.81%  19.50%  21.24%
                     
                     
Selected Average Balance Sheet Data (QTD Average)                    
Investment securities $814,114  $802,525  $877,308  $907,910  $911,923 
Total gross loans receivable  2,692,223   2,758,680   2,806,865   2,525,344   2,568,301 
Interest-earning assets  3,647,730   3,679,168   3,786,629   3,519,267   3,563,642 
Total assets  3,910,628   4,041,187   4,159,336   3,888,205   3,932,909 
Interest-bearing deposits  2,551,219   2,430,407   2,487,187   2,531,508   2,563,519 
Borrowings  172,730   377,158   384,727   355,303   377,561 
Total interest-bearing liabilities  2,723,949   2,807,565   2,871,914   2,886,811   2,941,080 
Total deposits  2,960,791   3,145,810   3,257,631   3,021,181   3,055,275 
Total liabilities  3,501,055   3,558,100   3,675,731   3,405,638   3,459,347 
Total stockholders' equity  409,572   483,088   483,605   482,567   473,562 
Tangible common equity*  355,025   329,039   327,411   325,470   315,569 
                     
                     
Performance ratios                    
Return on average assets (ROAA) annualized  1.27%  (8.90)%  0.16%  0.13%  1.01%
Return on average assets before income tax,
provision for loan losses and goodwill
impairment*
  1.59%  1.24%  1.42%  1.20%  1.43%
Return on average equity (ROAE) annualized  12.13%  (74.45)%  1.40%  1.05%  8.39%
Return on average equity before income tax,
provision for loan losses and goodwill
impairment*
  15.15%  10.37%  12.21%  9.70%  11.90%
Return on average tangible common equity
(ROATCE) annualized*
  14.93%  (108.31)%  3.03%  2.35%  13.42%
Return on average tangible common equity
adjusted for goodwill impairment*
  14.93%  12.02%  3.03%  2.35%  13.42%
Yield on loans annualized  5.23%  4.65%  4.68%  5.47%  5.67%
Cost of interest-bearing deposits annualized  0.43%  0.50%  0.63%  1.09%  1.32%
Cost of total deposits annualized  0.37%  0.39%  0.48%  0.91%  1.11%
Net interest margin annualized  3.88%  3.47%  3.49%  3.67%  3.61%
Efficiency ratio*  67.19%  67.38%  61.98%  68.88%  63.63%
Non-interest income / average assets  0.86%  0.64%  0.55%  0.55%  0.67%
Non-interest expense / average assets  2.90%  12.88%  2.31%  2.66%  2.51%
                     
                     
Capital Ratios                    
Tier 1 Leverage Ratio  9.30%  8.76%  8.52%  9.02%  9.02%
Common Equity Tier 1 Capital Ratio  12.82%  12.76%  12.02%  11.67%  11.63%
Tier 1 Risk Based Capital Ratio  13.38%  13.32%  12.57%  12.20%  12.15%
Total Risk Based Capital Ratio  17.36%  17.35%  15.33%  13.00%  12.59%
Total stockholders' equity to total assets  10.16%  10.40%  11.41%  12.10%  12.10%
Tangible common equity to tangible assets*  9.05%  9.23%  8.00%  8.47%  8.45%
Book value per common share $28.04  $27.08  $31.53  $31.41  $30.95 
Tangible book value per common share* $24.68  $23.72  $21.29  $21.10  $20.75 
Tangible book value per diluted common share* $24.32  $23.57  $21.13  $20.96  $20.39 

* The value noted is considered a Non-GAAP financial measure. For a reconciliation of Non-GAAP financial measures, see Table 6. 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, 2020  December 31, 2019 
 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$763,971  $35,601   4.66% $567,215  $34,225   6.03%
Commercial real estate 952,083   50,667   5.32%  1,012,146   57,316   5.66%
Real estate construction 238,015   10,947   4.60%  212,658   13,776   6.48%
Residential real estate 449,789   19,894   4.42%  519,119   24,338   4.69%
Agricultural real estate 133,813   8,008   5.98%  140,365   8,496   6.05%
Consumer 70,064   4,603   6.57%  70,390   5,563   7.90%
Agricultural 88,206   4,944   5.61%  85,747   5,584   6.51%
Total loans 2,695,941   134,664   5.00%  2,607,640   149,298   5.73%
Securities                       
Taxable securities 727,452   15,521   2.13%  777,802   19,339   2.49%
Nontaxable securities 122,783   3,682   3.00%  142,816   4,180   2.93%
Total securities 850,235   19,203   2.26%  920,618   23,519   2.55%
Federal funds sold and other 112,053   1,694   1.51%  83,887   2,682   3.20%
Total interest-earning assets$3,658,229   155,561   4.25% $3,612,145   175,499   4.86%
Interest-bearing liabilities                       
Savings, NOW and money market deposits$1,795,108   5,893   0.33% $1,699,952   21,008   1.24%
Time deposits 704,921   10,689   1.52%  967,803   19,906   2.06%
Total interest-bearing deposits 2,500,029   16,582   0.66%  2,667,755   40,914   1.53%
FHLB advances 213,155   2,292   1.08%  277,328   6,667   2.40%
Other borrowings 109,064   4,035   3.70%  69,270   2,060   2.97%
Total interest-bearing liabilities$2,822,248   22,909   0.81% $3,014,353   49,641   1.65%
                        
Net interest income    $132,652          $125,858     
Interest rate spread         3.44%          3.21%
                        
Net interest margin (2)         3.63%          3.48%
                        
(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, 2020  December 31, 2019 
 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$782,433  $10,943   5.56% $568,868  $8,657   6.04%
Commercial real estate 980,686   12,647   5.13%  942,447   13,966   5.88%
Real estate construction 216,714   2,301   4.22%  236,447   3,308   5.55%
Residential real estate 406,450   5,005   4.90%  522,113   5,815   4.42%
Agricultural real estate 135,337   2,244   6.60%  144,824   2,236   6.13%
Consumer 78,430   1,080   5.48%  69,980   1,385   7.85%
Agricultural 92,173   1,163   5.02%  83,622   1,320   6.26%
Total loans 2,692,223   35,383   5.23%  2,568,301   36,687   5.67%
Securities                       
Taxable securities 698,985   3,408   1.94%  768,867   4,615   2.38%
Nontaxable securities 115,129   913   3.15%  143,056   1,037   2.88%
Total securities 814,114   4,321   2.11%  911,923   5,652   2.46%
Federal funds sold and other 141,393   285   0.80%  83,418   645   3.07%
Total interest-earning assets$3,647,730   39,989   4.36% $3,563,642   42,984   4.79%
Interest-bearing liabilities                       
Savings, NOW and money market deposits$1,915,280   970   0.20% $1,683,157   4,094   0.97%
Time deposits 635,939   1,785   1.12%  880,362   4,438   2.00%
Total interest-bearing deposits 2,551,219   2,755   0.43%  2,563,519   8,533   1.32%
FHLB advances 39,245   94   0.95%  310,592   1,564   2.00%
Other borrowings 133,485   1,581   4.71%  66,969   482   2.86%
Total interest-bearing liabilities$2,723,949   4,430   0.65% $2,941,080   10,579   1.43%
                        
Net interest income    $35,559          $32,405     
Interest rate spread         3.71%          3.36%
                        
Net interest margin (2)         3.88%          3.61%
                        
(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 
 December 31, 2020  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$782,433  $10,943   5.56% $848,096  $8,400   3.94%
Commercial real estate 980,686   12,647   5.13%  979,775   12,886   5.23%
Real estate construction 216,714   2,301   4.22%  214,775   2,233   4.14%
Residential real estate 406,450   5,005   4.90%  429,965   4,733   4.38%
Agricultural real estate 135,337   2,244   6.60%  131,725   1,718   5.19%
Consumer 78,430   1,080   5.48%  69,485   1,104   6.32%
Agricultural 92,173   1,163   5.02%  84,859   1,204   5.65%
Total loans 2,692,223   35,383   5.23%  2,758,680   32,278   4.65%
Securities                       
Taxable securities 698,985   3,408   1.94%  683,630   3,476   2.02%
Nontaxable securities 115,129   913   3.15%  118,895   923   3.09%
Total securities 814,114   4,321   2.11%  802,525   4,399   2.18%
Federal funds sold and other 141,393   285   0.80%  117,963   405   1.36%
Total interest-earning assets$3,647,730   39,989   4.36% $3,679,168   37,082   4.01%
Interest-bearing liabilities                       
Savings, NOW and money market deposits$1,915,280   970   0.20% $1,784,891   875   0.19%
Time deposits 635,939   1,785   1.12%  645,516   2,189   1.35%
Total interest-bearing deposits 2,551,219   2,755   0.43%  2,430,407   3,064   0.50%
FHLB advances 39,245   94   0.95%  248,437   471   0.75%
Other borrowings 133,485   1,581   4.71%  128,721   1,440   4.45%
Total interest-bearing liabilities$2,723,949   4,430   0.65% $2,807,565   4,975   0.70%
                        
Net interest income    $35,559          $32,107     
Interest rate spread         3.71%          3.31%
                        
Net interest margin (2)         3.88%          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 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, 
  2020  2020  2020  2020  2019 
                     
Income before income taxes $14,599  $(93,058) $2,186  $1,703  $13,145 
Add: goodwill impairment     104,831          
Less: tax effect  2,111   2,652   497   445   3,131 
Adjusted income $12,488  $9,121  $1,689  $1,258  $10,014 
Weighted average common shares outstanding  14,760,810   15,040,407   15,209,483   15,387,697   15,442,841 
Effect of weighted average dilutive shares assuming positive net income  173,248   82,804   94,526   207,327   241,832 
Weighted average diluted shares  14,934,058   15,123,211   15,304,009   15,595,024   15,684,673 
Diluted earnings per share adjusted for goodwill impairment $0.84  $0.60  $0.11  $0.08  $0.64 
                     
Total stockholders' equity $407,649  $402,172  $479,766  $477,351  $478,060 
Less: goodwill  31,601   31,601   136,432   136,432   136,432 
Less: core deposit intangibles, net  16,057   17,101   18,131   19,105   19,907 
Less: mortgage servicing asset, net     1   2   4   5 
Less: naming rights, net  1,130   1,141   1,152   1,163   1,174 
Tangible common equity $358,861  $352,328  $324,049  $320,647  $320,542 
Common shares issued at period end  14,540,556   14,853,487   15,218,301   15,198,986   15,444,434 
Diluted common shares outstanding at period end  14,756,378   14,945,282   15,333,977   15,297,319   15,719,810 
Book value per common share $28.04  $27.08  $31.53  $31.41  $30.95 
Tangible book value per common share $24.68  $23.72  $21.29  $21.10  $20.75 
Tangible book value per diluted common share $24.32  $23.57  $21.13  $20.96  $20.39 
                     
Total assets $4,013,356  $3,865,571  $4,205,269  $3,943,832  $3,949,578 
Less: goodwill  31,601   31,601   136,432   136,432   136,432 
Less: core deposit intangibles, net  16,057   17,101   18,131   19,105   19,907 
Less: mortgage servicing asset, net     1   2   4   5 
Less: naming rights, net  1,130   1,141   1,152   1,163   1,174 
Tangible assets $3,964,568  $3,815,727  $4,049,552  $3,787,128  $3,792,060 
Total stockholders' equity to total assets  10.16%  10.40%  11.41%  12.10%  12.10%
Tangible common equity to tangible assets  9.05%  9.23%  8.00%  8.47%  8.45%
                     
Total average stockholders' equity $409,572  $483,088  $483,605  $482,567  $473,562 
Less: average intangible assets  54,547   154,049   156,194   157,097   157,993 
Average tangible common equity $355,025  $329,039  $327,411  $325,470  $315,569 
Net income (loss) allocable to common stockholders $12,488  $(90,405) $1,689  $1,258  $10,014 
Add: goodwill impairment $  $104,831  $  $  $ 
Less: tax effect of goodwill impairment $  $5,305  $  $  $ 
Adjusted net income (loss) plus goodwill impairment $12,488  $9,121  $1,689  $1,258  $10,014 
Amortization of intangible assets  1,055   1,043   986   814   833 
Less: tax effect of intangible assets amortization  222   234   207   171   175 
Adjusted net income (loss) allocable to common stockholders $13,321  $9,930  $2,468  $1,901  $10,672 
Return on total average stockholders' equity (ROAE) annualized  12.13%  (74.45)%  1.40%  1.05%  8.39%
Return on average tangible common equity (ROATCE) annualized  14.93%  (108.31)%  3.03%  2.35%  13.42%
Adjusted return on average tangible common equity  14.93%  12.01%  3.03%  2.35%  13.42%
                     
                     
                     
Non-interest expense $28,460  $130,835  $23,937  $25,758  $24,846 
Less: merger expense  299             
Less: goodwill impairment     104,831          
Non-interest expense, excluding goodwill impairment $28,161  $26,004  $23,937  $25,758  $24,846 
Net interest income $35,559  $32,107  $32,891  $32,095  $32,405 
Non-interest income  8,500   6,485   5,732   5,306   6,641 
Less: net gain on acquisition  2,145             
Less: net gains (losses) from securities transactions  (1)     4   8   (3)
Non-interest income, excluding gains (losses) from securities transactions $6,356  $6,485  $5,728  $5,298  $6,644 
Net interest income plus non-interest income, excluding net gains (losses) from securities transactions $41,915  $38,592  $38,619  $37,393  $39,049 
Non-interest expense to net interest income plus non-interest income  64.60%  339.02%  61.98%  68.87%  63.63%
Efficiency ratio  67.19%  67.38%  61.98%  68.88%  63.63%
Net income (loss) allocable to common stockholders $12,488  $(90,405) $1,689  $1,258  $10,014 
Add: income tax provision  2,111   (2,653)  497   445   3,131 
Add: provision for loan losses  1,000   815   12,500   9,940   1,055 
Add: goodwill impairment     104,831          
Adjusted net income $15,599  $12,588  $14,686  $11,643  $14,200 
Total average assets $3,910,628  $4,041,187  $4,159,336  $3,888,205  $3,932,909 
Total average stockholders' equity $409,572  $483,088  $483,605  $482,567  $473,562 
Return on average assets (ROAA) annualized  1.27%  (8.90)%  0.16%  0.13%  1.01%
Adjusted return on average assets  1.59%  1.24%  1.42%  1.20%  1.43%
Adjusted return on average equity  15.15%  10.37%  12.21%  9.70%  11.90%