Equity Bancshares, Inc. Announces First Quarter Results, Completes Acquisition of 3 Bank Locations, Revamps Online Banking Platform, Announces Stock Repurchase Plan and Launches Equity Trust & Wealth Management with Officers in Kansas, Missouri and Oklahoma

Wichita, Kansas, UNITED STATES


WICHITA, Kansas, April 22, 2019 (GLOBE NEWSWIRE) -- Equity Bancshares, Inc. (NASDAQ: EQBK) (“Equity”, “we”, “us”, “our”), the Wichita-based holding company of Equity Bank, reported its unaudited results for the quarter ended March 31, 2019, including net loss allocable to common stockholders of $4.1 million, or $0.26 per diluted share.

“In the first quarter our teams deserve credit for successfully upgrading our footprint, our customer experience, and expanding our service capabilities,” said Brad Elliott, Chairman and CEO of Equity.  “We’re pleased to add additional markets in Oklahoma that supplement our Southwest Kansas and Guymon markets.  Our Equity Trust & Wealth Management brand provides another set of financial products that appeal to customers throughout our markets, and we believe our new Equity Bank online banking solution is best in class for banking.  Throughout 2019, these key additions and improvements to our platform will yield additional opportunities for organic growth, business banking, and community banking.  As we continue to review merger opportunities, upgrades and innovations will help us become the bank of choice throughout our four states and beyond. 

“In the first quarter, we recorded a $14.5 million provision for loss against a credit relationship.  We will discuss this on our earnings call Tuesday, April 23, 2019.  However, it is important for us to convey we do not believe this represents a systemic trend; rather an isolated individual relationship which is unique to our portfolio.”

On April 18, 2019, the Board of Directors of Equity Bancshares, Inc. authorized the repurchase of up to 1,100,000 shares of our Class A Voting Common Stock, par value $0.01 per share, from time to time, beginning April 29, 2019 and concluding October 30, 2020.  The repurchase program does not obligate us to acquire a specific dollar amount or number of shares and it may be extended, modified or discontinued at any time without notice and is subject to no objection from the Federal Reserve Bank.

On February 8, 2019, Equity completed its acquisition of two bank locations in Guymon, Oklahoma, and one bank location in Cordell, Oklahoma, from MidFirst Bank of Oklahoma City, Oklahoma (“MidFirst”).  The acquisition added total assets of $98.6 million, which included total loans of $6.5 million.  There were total deposits of $98.5 million assumed at the time of the acquisition.  Results of operations of the MidFirst acquisition are included in Equity’s 2019 results of operations subsequent to the acquisition.

Notable Items:

  • Net loss before taxes for the first quarter of 2019 was $5.2 million, or $0.33 per diluted share, compared to net income before taxes of $11.2 million, or $0.75 per diluted share, for the same time period in 2018.  Net loss before taxes, adjusted to exclude merger expense, was $4.6 million, or $0.29 per diluted share, for the first quarter of 2019, compared to net income before taxes, adjusted to exclude merger expense of $11.8 million, or $0.79 per diluted share, for the first quarter of 2018.
  • Stated diluted loss per share in the first quarter of 2019 was $0.26.  Merger expenses, adjusted for estimated income tax, were $487 thousand in the first quarter of 2019, or $0.03 per diluted share. 
  • Net loss allocable to common stockholders, adjusted for the identified specific provision, results in $7.2 million of net income allocable to common stockholders, or $0.45 per diluted share in the first quarter of 2019, compared to 2018 first quarter net income allocable to common stockholders of $8.7 million, or $0.58 per diluted share.
  • Net loss allocable to common stockholders, adjusted for identified specific provision and merger expense, results in $7.7 million of net income allocable to common stockholders, or $0.48 per diluted share in the first quarter of 2019, compared to 2018 first quarter net income allocable to common stockholders, adjusted for merger expenses of $9.1 million, or $0.61 per diluted share.

Highlights of Equity’s growth include:

  • Total loans held for investment of $2.62 billion at March 31, 2019, as compared to total loans held for investment of $2.58 billion at December 31, 2018.  The increase of $43.6 million includes organic growth of $37.1 million, or 1.4%, and $6.5 million of loans added in the MidFirst acquisition.
  • Total deposits were $3.26 billion at March 31, 2019 compared to $3.12 billion at December 31, 2018.  Signature deposits, including core deposits comprised of checking accounts, savings accounts and money market accounts, were $2.22 billion at March 31, 2019, compared to $2.12 billion at December 31, 2018.  Organic signature deposit growth was 2.7% for the quarter.  In addition, the MidFirst acquisition added total deposits of $98.5 million.
  • Total assets of $4.07 billion at March 31, 2019, compared to $4.06 billion at December 31, 2018.  The MidFirst acquisition added total assets of $98.6 million.
  • Book value per common share of $28.66 at March 31, 2019 and $28.87 at December 31, 2018. Tangible book value per common share of $18.55 at March 31, 2019 and $19.08 at December 31, 2018.

Financial Results for Quarter Ended March 31, 2019

Net loss allocable to common stockholders was $4.1 million for the three months ended March 31, 2019, as compared to a net income allocable to common stockholders of $8.7 million for the three months ended March 31, 2018, a decrease of $12.8 million, principally related to the non-typical specific impairment.

Diluted loss per share was $0.26 for the three months ended March 31, 2019, as compared to diluted income per share of $0.58 for the comparable period of 2018.  Weighted average common shares were 15,804,508 and 14,611,379 for the three months ended March 31, 2019 and 2018.  Weighted average fully diluted shares were 16,066,700 and 14,894,180 for the three months ended March 31, 2019 and 2018.  The increase in weighted average fully diluted shares reflects the issuance of 1,164,912 shares in connection with Equity’s May 2018 mergers with Kansas Bank Corporation (“KBC”), based in Liberal, Kansas and Adams Dairy Bancshares, Inc. (“Adams”), based in Blue Springs, Missouri.

Net interest income was $30.6 million for the three months ended March 31, 2019, as compared to $27.8 million for the three months ended March 31, 2018, a $2.9 million, or 10.3% increase.  The additional net interest income was primarily driven by growth in loans and securities balances and, to a lesser extent, an increase in average yield on loans, partially offset by an increase in interest expense as we funded the growth in earning assets with more deposits and borrowings and an overall increase in the average cost of funds.

Our net interest margin was 3.49% for the three months ended March 31, 2019, as compared to 3.91% for the three months ended March 31, 2018.  The decrease in net interest margin was partly due to a reduction in loan fees, additional callable bond premium amortization and the movement to nonaccrual related to a large credit relationship.  Also, our cost of funds has increased primarily due to both retail and public fund deposits.  The cost of retail deposits have increased as the general level of interest rates have risen and from an increased level of market competition for this type of deposit, which are desirable due to their lower level of interest-rate sensitivity.  The cost of public fund deposits have increased due to the level of competition for these deposits, from both other financial institutions and state investment funds, and due to the timing of the investment of these funds in an elevated interest rate environment.

The provision for loan losses was $15.6 million for the three months ended March 31, 2019, reflecting the non-typical specific impairment.  The provision for loan losses was $1.2 million for the three months ended March 31, 2018.  For the three months ended March 31, 2019, we had net charge-offs of $760 thousand, as compared to net charge-offs of $352 thousand for the same period in 2018.

Total non-interest income for the quarter ended March 31, 2019 was $5.3 million, compared to $4.3 million for the quarter ended March 31, 2018.  Increases in service charges and fees and debit card income are principally attributable to the addition of accounts and higher transaction volumes associated with the KBC and Adams mergers.  There were also additional accounts and higher transaction volumes associated with the August 2018 acquisition of City Bank and Trust Company (“City Bank”), based in Guymon, Oklahoma, and the February 2019 acquisition of three MidFirst branches.  Non-interest income includes the increase in value of bank-owned life insurance of $488 thousand and $652 thousand for the three-month periods ended March 31, 2019 and 2018.

Total non-interest expense was $25.5 million for the quarter ended March 31, 2019, compared to $19.6 million for the quarter ended March 31, 2018.  These results reflect the effect of the May 2018 addition of five locations in southwest Kansas plus one location in Blue Springs, Missouri; the August 2018 addition of one location in Guymon, Oklahoma; and the February 2019 acquisition of two additional locations in Guymon, Oklahoma, and one location in Cordell, Oklahoma.  In addition, the results reflect added lending, customer service, corporate and operations staff indirectly attributable to mergers and organic growth and increased data processing costs due to more accounts, higher transaction volumes and our new online banking platform and trust and wealth management infrastructure.  Non-interest expense also includes merger expenses of $639 thousand ($487 thousand after tax) for the three months ended March 31, 2019.  Merger expenses for the three months ended March 31, 2018, totaled $531 thousand ($436 thousand after tax).

Equity’s effective tax rate for the quarter ended March 31, 2019 was 22.1% as compared to 22.5% for the quarter ended March 31, 2018.  For both of the comparable periods, the estimated annual effective tax rate at which income tax expense (benefits) have been provided reflect, in addition to statutory tax rates, the levels of tax-exempt interest income, non-taxable life insurance income, non-deductible facilitative merger expense and other non-deductible expense in proportion to anticipated annual income before income taxes, as well as federal income tax credits anticipated to be available in each annual period.

Loans, Deposits and Total Assets

Loans held for investment were $2.62 billion at March 31, 2019, as compared to $2.58 billion at December 31, 2018, an increase of $43.6 million.  The increase in loans held for investment includes $6.5 million of net loans acquired in the February 2019 MidFirst acquisition plus $37.1 million of organic loan growth.

As of March 31, 2019, Equity’s allowance for loan losses to total loans was 1.01%, as compared to 0.44% at December 31, 2018.  Total reserves, including purchase discounts, to total loans were approximately 1.53% as of March 31, 2019, as compared to 1.02% at December 31, 2018.  Nonperforming assets of $73.0 million as of March 31, 2019, were 1.80% of total assets.  Nonperforming assets at December 31, 2018, were $39.6 million or 0.97% of total assets.

Total deposits were $3.26 billion at March 31, 2019, as compared to $3.12 billion at December 31, 2018.  Total deposits increased $137.4 million between December 31, 2018 and March 31, 2019.  This increase included $98.5 million assumed in the MidFirst acquisition and $38.9 million in organic growth. Signature deposits were $2.22 billion at March 31, 2019, as compared to $2.12 billion at December 31, 2018.

At March 31, 2019, Equity had consolidated total assets of $4.07 billion, as compared to $4.06 billion at December 31, 2018, an increase of $3.6 million.  The increase in total assets includes $98.6 million of total assets acquired in the MidFirst acquisition.

Borrowings and Capital

At March 31, 2019, borrowings totaled $331.2 million, as compared to $464.7 million at December 31, 2018.  The decrease in borrowings was principally due to a $119.9 million pay down in Federal Home Loan Bank advances, largely from growth in deposits, and a $7.0 million pay down on the bank stock loan.

At March 31, 2019, common stockholders’ equity totaled $453.5 million, $28.66 per common share, compared to $455.9 million, $28.87 per common share, at December 31, 2018.  Tangible common equity was $293.5 million and tangible book value per common share was $18.55 at March 31, 2019.  Tangible common equity was $301.3 million and tangible book value per common share was $19.08 at December 31, 2018.  The ratio of common equity tier 1 capital to risk-weighted assets was approximately 10.46% and the total capital to risk-weighted assets was approximately 11.87% at March 31, 2019.

Non-GAAP Financial Measures

This press release includes certain non-GAAP financial measures intended to supplement, not substitute for, comparable GAAP measures. Reconciliations of non-GAAP financial measures to GAAP financial measures are provided at the end of this press release.

Conference Call and Webcast

Equity Chairman and Chief Executive Officer, Brad Elliott, and Chief Financial Officer, Greg Kossover, will hold a conference call and webcast to discuss first quarter 2019 results on Tuesday, April 23, 2019 at 10 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 Tuesday, April 23, 2019, 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. 8667358.

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 April 30, 2019, accessible at (855) 859-2056 with conference ID no. 8667358 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.

No Offer or Solicitation

This press release shall not constitute an offer to sell, a solicitation of an offer to sell, or the solicitation or an offer to buy any securities. There will be no sale of securities in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirement of Section 10 of the Securities Act of 1933, as amended.

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 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 20, 2019 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, 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.

Media Contact:

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

Investor Contact:

Jacob Willis
Investor Relations Officer
Equity Bancshares, Inc.
(316) 779-1675
jwillis@equitybank.com

Unaudited Financial Tables

  • Table 1. Selected Financial Highlights
  • Table 2. Quarterly Analysis of Changes in Net Interest Income
  • Table 3. Consolidated Balance Sheets
  • Table 4. Consolidated Statements of Income
  • Table 5. Non-GAAP Financial Measures

TABLE 1. SELECTED FINANCIAL HIGHLIGHTS (Unaudited)
(Dollars in thousands, except per share data)

 As of and for the three months ended 
 March 31,  December 31,  September 30,  June 30,  March 31, 
 2019  2018  2018  2018  2018 
Statement of Income Data                   
Net interest income$30,639  $33,336  $32,755  $30,920  $27,787 
Provision for loan losses 15,646   750   1,291   750   1,170 
Net gains (losses) from securities transactions 6   5   (4)  (2)  (8)
Other non-interest income 5,318   5,444   5,437   4,594   4,259 
Total non-interest income 5,324   5,449   5,433   4,592   4,251 
Merger expense 639   938   757   5,236   531 
Other non-interest expense 24,904   24,200   22,890   20,739   19,096 
Total non-interest expense 25,543   25,138   23,647   25,975   19,627 
Income (loss) before income taxes (5,226)  12,897   13,250   8,787   11,241 
Provision for income taxes (benefits) (1,153)  2,972   2,928   1,920   2,530 
Net income (loss) (4,073)  9,925   10,322   6,867   8,711 
Net income (loss) allocable to common stockholders (4,073)  9,925   10,322   6,867   8,711 
Basic earnings (loss) per share (0.26)  0.63   0.65   0.45   0.60 
Diluted earnings (loss) per share (0.26)  0.62   0.64   0.44   0.58 
                    
Balance Sheet Data (at period end)                   
Available-for-sale securities$166,355  $168,875  $172,388  $180,238  $174,717 
Held-to-maturity securities 749,493   748,356   713,899   665,995   522,021 
Gross loans held for investment 2,618,986   2,575,408   2,598,729   2,451,772   2,134,596 
Allowance for loan losses 26,340   11,454   11,010   10,083   9,316 
Intangible assets, net 159,944   154,665   155,430   146,538   115,032 
Total assets 4,065,354   4,061,716   3,931,036   3,712,185   3,176,062 
Total deposits 3,260,870   3,123,447   2,821,246   2,635,048   2,368,297 
Non-time deposits 2,220,110   2,115,541   1,969,715   1,829,902   1,647,105 
Borrowings 331,221   464,676   652,755   631,501   414,415 
Total liabilities 3,611,891   3,605,775   3,487,799   3,278,903   2,794,575 
Total stockholders’ equity 453,463   455,941   443,237   433,282   381,487 
Tangible common equity* 293,519   301,276   287,807   286,744   266,455 
                    
Selected Average Balance Sheet Data (quarterly average)                   
Investment securities$918,804  $893,642  $860,940  $767,038  $699,055 
Total gross loans receivable 2,560,030   2,590,610   2,516,833   2,317,071   2,122,973 
Interest-earnings assets 3,560,815   3,578,487   3,457,871   3,158,187   2,883,960 
Total assets 3,926,359   3,935,722   3,804,114   3,475,786   3,169,131 
Interest-bearing deposits 2,709,596   2,501,227   2,251,937   2,148,361   2,043,784 
Borrowings 269,492   480,417   642,575   495,558   389,120 
Total interest-bearing liabilities 2,979,088   2,981,644   2,894,512   2,643,919   2,432,904 
Total deposits 3,178,164   2,991,657   2,709,741   2,556,982   2,390,648 
Total liabilities 3,466,646   3,486,272   3,364,343   3,062,312   2,791,236 
Total stockholders' equity 459,713   449,450   439,771   413,474   377,895 
Tangible common equity* 302,398   294,506   289,515   279,328   261,261 
                    
Performance ratios                   
Return on average assets (ROAA) annualized (0.42)%  1.00%  1.08%  0.79%  1.11%
Return on average equity (ROAE) annualized (3.59)%  8.76%  9.31%  6.66%  9.35%
Return on average tangible common equity (ROATCE) annualized* (4.62)%  14.17%  14.91%  10.58%  14.01%
Yield on loans annualized 5.79%  5.91%  5.73%  5.73%  5.55%
Cost of interest-bearing deposits annualized 1.61%  1.45%  1.15%  1.00%  0.94%
Cost of total deposits annualized 1.37%  1.21%  0.95%  0.84%  0.80%
Net interest margin annualized 3.49%  3.70%  3.76%  3.93%  3.91%
Efficiency ratio* 69.26%  62.40%  59.93%  58.40%  59.59%
Non-interest income / average assets 0.55%  0.55%  0.57%  0.53%  0.54%
Non-interest expense / average assets 2.64%  2.53%  2.47%  3.00%  2.51%
                    
Capital Ratios                   
Tier 1 Leverage Ratio 8.36%  8.60%  8.60%  9.36%  9.45%
Common Equity Tier 1 Capital Ratio 10.46%  10.95%  10.49%  11.04%  11.78%
Tier 1 Risk Based Capital Ratio 10.95%  11.45%  11.00%  11.56%  12.38%
Total Risk Based Capital Ratio 11.87%  11.86%  11.37%  11.94%  12.78%
Total stockholders' equity to total assets 11.15%  11.23%  11.28%  11.67%  12.01%
Tangible common equity to tangible assets* 7.52%  7.71%  7.62%  8.04%  8.70%
Book value per common share$28.66  $28.87  $28.07  $27.44  $26.09 
Tangible book value per common share*$18.55  $19.08  $18.22  $18.16  $18.22 
Tangible book value per diluted common share*$18.30  $18.73  $17.86  $17.78  $17.85 
                    

* The value noted is considered a Non-GAAP financial measure.  For a reconciliation of Non-GAAP financial measures, see Table 5. Non-GAAP Financial Measures

TABLE 2. QUARTERLY ANALYSIS OF CHANGES IN NET INTEREST INCOME (Unaudited)
(Dollars in thousands)

 Quarter ended 03/31/2019  Quarter ended 03/31/2018 
 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)$2,560,030  $36,533   5.79% $2,122,973  $29,048   5.55%
Total securities 918,804   6,035   2.66%  699,055   4,602   2.67%
Federal funds sold and other 81,981   634   3.14%  61,932   473   3.10%
Total interest-earning assets 3,560,815   43,202   4.92%  2,883,960   34,123   4.80%
Interest-bearing liabilities                       
Total interest-bearing demand and savings 1,693,227   5,667   1.36%  1,270,968   2,223   0.71%
Certificates of deposit 1,016,369   5,063   2.02%  772,816   2,495   1.31%
Total interest-bearing deposits 2,709,596   10,730   1.61%  2,043,784   4,718   0.94%
FHLB advances & LOC 197,610   1,305   2.68%  332,438   1,299   1.59%
Other borrowings 71,882   528   2.98%  56,682   319   2.28%
Total interest-bearing liabilities 2,979,088   12,563   1.71%  2,432,904   6,336   1.06%
                        
Net interest income    $30,639          $27,787     
Interest rate spread         3.21%          3.74%
Net interest margin (2)         3.49%          3.91%
(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. 
  


 For the three months ended 
 March 31, 2019 vs. 2018 
 Total Increase/(Decrease) 
 Volume Variance (1)  Yield/Rate Variance (1)  Total Variance 
Interest-earning assets           
Loans$6,193  $1,292  $7,485 
Total securities 1,449   (16)  1,433 
Federal funds sold and other 155   6   161 
Total interest-earning assets 7,797   1,282   9,079 
Interest-bearing liabilities           
Total interest-bearing demand and savings 916   2,528   3,444 
Certificates of deposit 943   1,625   2,568 
Total interest-bearing deposits 1,859   4,153   6,012 
FHLB advances & LOC (661)  667   6 
Other borrowings 138   71   209 
Total interest-bearing liabilities 1,336   4,891   6,227 
            
Net interest income$6,461  $(3,609) $2,852 
            
(1) The effect of changes in volume is determined by multiplying the change in volume by the previous year's average rate. Similarly, the effect of rate changes is calculated by multiplying the change in average rate by the prior year's volume. The changes attributable to both volume and rate, which cannot be segregated, have been allocated to the volume variance and the rate variance in proportion to the relationship of the absolute dollar amount of the change in each. 
  

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

 March 31,  December 31, 
 2019  2018 
ASSETS       
Cash and due from banks$167,016  $192,735 
Federal funds sold 437   83 
Cash and cash equivalents 167,453   192,818 
Interest-bearing time deposits in other banks 4,742   4,991 
Available-for-sale securities 166,355   168,875 
Held-to-maturity securities, fair value of $752,207 and $739,989 749,493   748,356 
Loans held for sale 2,140   2,972 
Loans, net of allowance for loan losses of $26,340 and $11,454 2,592,646   2,563,954 
Other real estate owned, net 6,382   6,372 
Premises and equipment, net 81,496   80,442 
Bank-owned life insurance 73,594   73,105 
Federal Reserve Bank and Federal Home Loan Bank stock 22,569   29,214 
Interest receivable 16,423   17,372 
Goodwill 136,432   131,712 
Core deposit intangibles, net 22,296   21,725 
Other 23,333   19,808 
Total assets$4,065,354  $4,061,716 
LIABILITIES AND STOCKHOLDERS’ EQUITY       
Deposits       
Demand$483,107  $503,831 
Total non-interest-bearing deposits 483,107   503,831 
Savings, NOW and money market 1,737,003   1,611,710 
Time 1,040,760   1,007,906 
Total interest-bearing deposits 2,777,763   2,619,616 
Total deposits 3,260,870   3,123,447 
Federal funds purchased and retail repurchase agreements 43,433   50,068 
Federal Home Loan Bank advances 264,954   384,898 
Bank stock loan 8,500   15,450 
Subordinated debentures 14,334   14,260 
Contractual obligations 3,964   3,965 
Interest payable and other liabilities 15,836   13,687 
Total liabilities 3,611,891   3,605,775 
Commitments and contingent liabilities       
Stockholders’ equity       
Common stock 173   173 
Additional paid-in capital 379,931   379,085 
Retained earnings 95,868   101,326 
Accumulated other comprehensive loss (2,767)  (4,867)
Employee stock loans (87)  (121)
Treasury stock (19,655)  (19,655)
Total stockholders’ equity 453,463   455,941 
Total liabilities and stockholders’ equity$4,065,354  $4,061,716 
        

TABLE 4. CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except per share data)

 Three months ended March 31, 
 2019  2018 
Interest and dividend income       
Loans, including fees$36,533  $29,048 
Securities, taxable 5,082   3,723 
Securities, nontaxable 953   879 
Federal funds sold and other 634   473 
Total interest and dividend income 43,202   34,123 
Interest expense       
Deposits 10,730   4,718 
Federal funds purchased and retail repurchase agreements 32   23 
Federal Home Loan Bank advances 1,305   1,299 
Bank stock loan 162   27 
Subordinated debentures 334   269 
Total interest expense 12,563   6,336 
        
Net interest income 30,639   27,787 
Provision for loan losses 15,646   1,170 
Net interest income after provision for loan losses 14,993   26,617 
Non-interest income       
Service charges and fees 1,923   1,580 
Debit card income 1,738   1,253 
Mortgage banking 317   313 
Increase in value of bank-owned life insurance 488   652 
Net gains (losses) from securities transactions 6   (8)
Other 852   461 
Total non-interest income 5,324   4,251 
Non-interest expense       
Salaries and employee benefits 14,098   10,891 
Net occupancy and equipment 1,967   1,802 
Data processing 2,405   1,674 
Professional fees 1,156   715 
Advertising and business development 646   619 
Telecommunications 585   369 
FDIC insurance 278   244 
Courier and postage 327   255 
Free nationwide ATM cost 361   292 
Amortization of core deposit intangibles 779   384 
Loan expense 268   346 
Other real estate owned 112   268 
Merger expenses 639   531 
Other 1,922   1,237 
Total non-interest expense 25,543   19,627 
Income (loss) before income tax (5,226)  11,241 
Provision for income taxes (benefits) (1,153)  2,530 
Net income (loss) and net income (loss) allocable to common stockholders$(4,073) $8,711 
Basic earnings (loss) per share$(0.26) $0.60 
Diluted earnings (loss) per share$(0.26) $0.58 
        

TABLE 5. Non-GAAP Financial Measures (Unaudited)
(Dollars in thousands, except per share data)

 As of and for the three months ended 
 March 31,  December 31,  September 30,  June 30,  March 31, 
 2019  2018  2018  2018  2018 
Total stockholders' equity$453,463  $455,941  $443,237  $433,282  $381,487 
Less: goodwill 136,432   131,712   131,723   125,485   103,412 
Less: core deposit intangibles, net 22,296   21,725   22,466   19,800   10,355 
Less: mortgage servicing asset, net 10   11   13   14   16 
Less: naming rights, net 1,206   1,217   1,228   1,239   1,249 
Tangible common equity$293,519  $301,276  $287,807  $286,744  $266,455 
Common shares issued at period end 15,820,303   15,793,095   15,792,695   15,780,777   14,609,414 
RSU shares vested 108         6,768   11,844 
Common shares outstanding at period end 15,820,411   15,793,095   15,792,695   15,787,545   14,621,258 
Diluted common shares outstanding at period end 16,036,700   16,085,729   16,118,067   16,131,096   14,923,798 
Book value per common share$28.66  $28.87  $28.07  $27.44  $26.09 
Tangible book value per common share$18.55  $19.08  $18.22  $18.16  $18.22 
Tangible book value per diluted common share$18.30  $18.73  $17.86  $17.78  $17.85 
                    
Total assets$4,065,354  $4,061,716  $3,931,036  $3,712,185  $3,176,062 
Less: goodwill 136,432   131,712   131,723   125,485   103,412 
Less: core deposit intangibles, net 22,296   21,725   22,466   19,800   10,355 
Less: mortgage servicing asset, net 10   11   13   14   16 
Less: naming rights, net 1,206   1,217   1,228   1,239   1,249 
Tangible assets$3,905,410  $3,907,051  $3,775,606  $3,565,647  $3,061,030 
Total stockholders' equity to total assets 11.15%  11.23%  11.28%  11.67%  12.01%
Tangible common equity to tangible assets 7.52%  7.71%  7.62%  8.04%  8.70%
Total average stockholders' equity$459,713  $449,450  $439,771  $413,474  $377,895 
Less: average intangible assets 157,315   154,944   150,256   134,146   116,634 
Average tangible common equity$302,398  $294,506  $289,515  $279,328  $261,261 
Net income (loss) allocable to common stockholders$(4,073) $9,925  $10,322  $6,867  $8,711 
Amortization of intangible assets 791   752   707   637   396 
Less: tax effect of intangible assets amortization 166   158   148   134   83 
Adjusted net income (loss) allocable to common stockholders$(3,448) $10,519  $10,881  $7,370  $9,024 
Return on total average stockholders' equity (ROAE) annualized (3.59)%  8.76%  9.31%  6.66%  9.35%
Return on average tangible common equity (ROATCE) annualized (4.62)%  14.17%  14.91%  10.58%  14.01%
Non-interest expense$25,543  $25,138  $23,647  $25,975  $19,627 
Less: merger expenses 639   938   757   5,236   531 
Non-interest expense, excluding merger expenses$24,904  $24,200  $22,890  $20,739  $19,096 
Net interest income$30,639  $33,336  $32,755  $30,920  $27,787 
Non-interest income 5,324   5,449   5,433   4,592   4,251 
Less: net gains (losses) from securities transactions 6   5   (4)  (2)  (8)
Non-interest income, excluding gains (losses) from securities transactions$5,318  $5,444  $5,437  $4,594  $4,259 
Net interest income plus non-interest income, excluding net gains (losses) from securities transactions$35,957  $38,780  $38,192  $35,514  $32,046 
Non-interest expense to net interest income plus non-interest income 71.03%  64.81%  61.92%  73.14%  61.26%
Efficiency ratio 69.26%  62.40%  59.93%  58.40%  59.59%