Equity Bancshares, Inc. Announces Second Quarter Earnings of $0.58 Per Diluted Common Share and Net Income of $9.2 Million

Continues improvements in customer experience platforms including trust & wealth management, deposit and treasury product strategy and commercial lending

Wichita, Kansas, UNITED STATES


WICHITA, Kansas, July 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 June 30, 2019, including net income allocable to common stockholders of $9.2 million, or $0.58 per diluted share. Year-to-date 2019 net income allocable to common stockholders was $5.2 million and $0.32 per diluted share.

“We continue to serve as a trusted bank for entrepreneurial companies, businesses and individuals, and in the second quarter we continued our disciplined approach to lending plus additional focus on providing deposit products and services that appeal across our customer base, while innovating and streamlining our internal processes,” said Brad Elliott, Chairman and CEO of Equity. “Our Equity Trust & Wealth Management group has provided a new service for our customer base and our new Equity Bank online banking solution has proven to be a significant upgrade for business and treasury customers. We continue to prioritize product strategy and our market teams continue to focus on core deposit strategy and household growth.”

“In the first quarter, we recorded a $14.5 million provision for loss against a credit relationship. We do not believe this represents a systemic trend; rather an isolated individual relationship which is unique within our portfolio.”

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 (“MidFirst”) of Oklahoma City, Oklahoma (“the MidFirst acquisition”). 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 income before taxes for the second quarter of 2019 was $11.7 million, or $0.74 per diluted share, compared to net income before taxes of $8.8 million, or $0.56 per diluted share, for the same time period in 2018. Net income before taxes, adjusted to exclude merger expense, was $12.0 million, or $0.75 per diluted share, for the second quarter of 2019, compared to net income before taxes, adjusted to exclude merger expense of $14.0 million, or $0.89 per diluted share, for the second quarter of 2018.
  • Stated diluted income per share in the second quarter of 2019 was $0.58. Merger expenses, adjusted for estimated income tax, were $207 thousand in the second quarter of 2019, or $0.01 per diluted share. Stated diluted income per share for the first six months of 2019 was $0.32. Merger expenses, adjusted for estimated income tax, were $694 thousand in the first six months of 2019, or $0.04 per diluted share.
  • 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. As of June 30, 2019, a total of 277,806 shares have been repurchased under this authorization at an average price of $25.95.

Highlights of Equity’s growth include:

  • Total loans held for investment of $2.68 billion at June 30, 2019, as compared to total loans held for investment of $2.58 billion at December 31, 2018. The increase of $104.6 million includes growth of $98.1 million, or 3.8%, and $6.5 million of loans added in the MidFirst acquisition.
  • Total deposits were $3.19 billion at June 30, 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 $2.19 billion at June 30, 2019, compared to $2.12 billion at December 31, 2018. Organic signature deposit growth was 1.3% for the six months ended June 30, 2019. In addition, the MidFirst acquisition added total deposits of $98.5 million.
  • Total assets of $4.18 billion at June 30, 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 $29.45 at June 30, 2019 and $28.87 at December 31, 2018. Tangible book value per common share of $19.23 at June 30, 2019 and $19.08 at December 31, 2018.

Financial Results for Six Months Ended June 30, 2019

Net income allocable to common stockholders was $5.2 million for the six months ended June 30, 2019, as compared to $15.6 million for the six months ended June 30, 2018, a decrease of $10.4 million, principally related to the non-typical specific impairment of $14.5 million taken during the first quarter of 2019. Results of operations of the MidFirst acquisition are included in Equity’s 2019 results of operations subsequent to the acquisition on February 8, 2019. Equity’s financial results also reflect results of operations of our 2018 mergers subsequent to the merger dates. Equity Bank merged with City Bank and Trust (“CBT”) in Guymon, Oklahoma, on August 23, 2018, and on May 4, 2018, Equity completed mergers with Kansas Bank Corporation (“KBC”), parent company of First National Bank of Liberal/Hugoton (“FNB”) in Liberal, Kansas and Adams Dairy Bancshares, Inc. (“Adams”), parent company of Adams Dairy Bank in Blue Springs, Missouri.

Diluted earnings per share were $0.32 for the six-month period ended June 30, 2019, as compared to $1.02 for the comparable period of 2018. Weighted average fully diluted shares were 15,992,265 and 15,294,387 for the six-month periods ended June 30, 2019 and 2018.

Net interest income was $61.9 million for the six months ended June 30, 2019, as compared to $58.7 million for the six months ended June 30, 2018, an increase of $3.2 million, or a 5.5% increase. The additional net interest income was primarily driven by an increase in yield on interest-earning assets and growth in loans and securities balances, partially offset by higher interest expense as we funded the increase in earning assets with additional deposits and an overall increase in the average cost of funds.

Our net interest margin was 3.46% for the six months ended June 30, 2019, as compared to 3.92% for the six months ended June 30, 2018. The decrease in net interest margin was partly due to an increase in cost of funds, a reduction in loan fees, additional callable bond premium amortization related to the adoption of ASU 2017-08 and the movement of the above mentioned large credit relationship to nonaccrual during the first quarter of 2019.

The provision for loan losses was $16.6 million for the six months ended June 30, 2019, as compared to $1.9 million for the six months ended June 30, 2018. Net charge-offs for the six months ended June 30, 2019 were $10.3 million, as compared to net charge-offs of $335 thousand for the comparable period in 2018. In the first quarter of 2019, we recorded a $14.5 million provision for loss against a credit relationship and subsequently charged off a total of $9.2 million on this credit relationship during the second quarter of 2019.

Total non-interest income was $11.8 million for the six months ended June 30, 2019, as compared to $8.8 million for the six months ended June 30, 2018. The increase is largely attributable to increases in debit card income, service charges and fees and an increase in swap fees. Non-interest income includes the increase in value of bank-owned life insurance of $987 thousand and $1.2 million for the six-month periods ended June 30, 2019 and 2018.

Total non-interest expense was $50.6 million for the six months ended June 30, 2019, as compared to $45.6 million for the six months ended June 30, 2018. These results include 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. Also, data processing costs increased due to more accounts, higher transaction volumes and our new online banking platform. Trust and wealth management infrastructure and an increase in professional fees contributed as well. Non-interest expense also includes merger expenses of $915 thousand ($694 thousand after tax) for the six months ended June 30, 2019. Merger expenses for the six months ended June 30, 2018, totaled $5.8 million ($4.5 million after tax).

Equity’s effective tax rate for the six-month period ended June 30, 2019 was 20.8% as compared to 22.2% for the six-month period ended June 30, 2018. For both of the comparable periods, the estimated annual effective tax rate at which income tax expense was 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. Excess tax benefits associated with the exercise of stock options and the settlement in stock of restricted stock units recorded in the first six months of 2019 were $18 thousand as compared to $6 thousand in the comparable period of 2018.

Financial Results for Quarter Ended June 30, 2019

Net income allocable to common stockholders was $9.2 million for the three months ended June 30, 2019, as compared to net income allocable to common stockholders of $6.9 million for the three months ended June 30, 2018, an increase of $2.4 million.

Diluted earnings per share were $0.58 for the three months ended June 30, 2019, as compared to diluted earnings per share of $0.44 for the comparable period in 2018. Weighted average fully diluted shares were 15,918,274 and 15,690,111 for the three months ended June 30, 2019 and 2018.

Net interest income was $31.3 million for the three months ended June 30, 2019, as compared to $30.9 million for the three months ended June 30, 2018, a $368 thousand, or 1.2%, 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.

The net interest margin was 3.42% for the three months ended June 30, 2019, as compared to 3.93% for the three months ended June 30, 2018. The decrease in net interest margin was partly due to a reduction in loan fees, an overall increase in our cost of funds and the movement of the above mentioned large credit relationship to nonaccrual during the first quarter of 2019. Our cost of funds has increased primarily due to increased interest rates for both retail and public fund deposits. The cost of retail deposits has increased as the general level of interest rates has 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 has 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 $974 thousand for the three months ended June 30, 2019, as compared to $750 thousand for the three months ended June 30, 2018. For the three months ended June 30, 2019, we had net charge-offs of $9.5 million, of which $9.2 million was related to the credit relationship for which we provisioned $14.5 million during the first quarter of 2019, as compared to net recoveries of $17 thousand for the same period in 2018.

Total non-interest income for the quarter ended June 30, 2019 was $6.5 million, compared to $4.6 million for the quarter ended June 30, 2018. This increase was largely due to increases in debit card income, service charges and fees and an increase in swap fees. The increases in debit card income and service charges and fees are principally attributable to the addition of accounts and higher transaction volumes. Non-interest income includes the increase in value of bank-owned life insurance of $499 thousand and $508 thousand for the three-month periods ended June 30, 2019 and 2018.

Total non-interest expense was $25.0 million for the quarter ended June 30, 2019, compared to $26.0 million for the quarter ended June 30, 2018. The decrease in non-interest expense is largely due to a decrease in merger expenses, partially offset by increases in salaries and employee benefits, other real estate owned, data processing, professional fees and FDIC insurance expenses. The results reflect added lending, customer service, corporate and operations staff indirectly attributable to mergers and organic growth plus increased data processing costs due to more accounts, higher transaction volumes along with our new online banking platform and trust and wealth management infrastructure and an increase in professional fees. Non-interest expense also includes merger expenses of $276 thousand ($207 thousand after tax) for the three months ended June 30, 2019. Merger expenses for the three months ended June 30, 2018, totaled $5.2 million ($4.0 million after tax).

Equity’s effective tax rate for the quarter ended June 30, 2019 was 21.4% as compared to 21.9% for the quarter ended June 30, 2018. Excess tax benefits associated with the exercise of stock options and the settlement in stock of restricted stock units recorded in the second quarter of 2019 were $10 thousand. No excess tax benefits associated with share-based compensation were recognized in the comparable period of 2018.

Loans, Deposits and Total Assets

Loans held for investment were $2.68 billion at June 30, 2019, as compared to $2.58 billion at December 31, 2018, an increase of $104.6 million. The increase in loans held for investment includes $6.5 million of net loans acquired in the February 2019 MidFirst acquisition plus $98.1 million of additional loan growth.

As of June 30, 2019, Equity’s allowance for loan losses to total loans was 0.66%, as compared to 0.44% at December 31, 2018. Total reserves, including purchase discounts, to total loans were approximately 1.14% as of June 30, 2019, as compared to 1.02% at December 31, 2018. Nonperforming assets of $67.4 million as of June 30, 2019, were 1.61% of total assets. Nonperforming assets at December 31, 2018, were $39.6 million or 0.97% of total assets.

Total deposits were $3.19 billion at June 30, 2019, as compared to $3.12 billion at December 31, 2018. Total deposits increased $62.4 million between December 31, 2018 and June 30, 2019. This increase included $98.5 million assumed in the MidFirst acquisition and a $57.6 million increase in organic savings, NOW and money market deposits, partially offset by a $29.1 million decrease in organic demand deposits and a $64.6 million decrease in organic time deposits. Signature deposits were $2.19 billion at June 30, 2019, as compared to $2.12 billion at December 31, 2018.

At June 30, 2019, Equity had consolidated total assets of $4.18 billion, as compared to $4.06 billion at December 31, 2018, an increase of $118.4 million. The increase in total assets includes $98.6 million of total assets acquired in the MidFirst acquisition.

Borrowings and Capital

At June 30, 2019, borrowings totaled $515.6 million, as compared to $464.7 million at December 31, 2018. The increase in borrowings was principally due to a $59.9 million increase in Federal Home Loan Bank advances, partially offset by a $9.0 million reduction in federal funds purchased and retail repurchase agreements.

At June 30, 2019, common stockholders’ equity totaled $458.4 million, $29.45 per common share, compared to $455.9 million, $28.87 per common share, at December 31, 2018. Tangible common equity was $299.3 million and tangible book value per common share was $19.23 at June 30, 2019. Tangible common equity was $301.3 million and tangible book value per common share was $19.08 at December 31, 2018. During the second quarter of 2019, the company repurchased a total of 277,806 shares of our Class A Voting Common Stock at a total cost of $7.2 million, or $25.95 per share. The ratio of common equity tier 1 capital to risk-weighted assets was approximately 10.47% and the total capital to risk-weighted assets was approximately 11.57% at June 30, 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 second quarter 2019 results on Tuesday, July 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, July 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. 1869113.

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 July 30, 2019, accessible at (855) 859-2056 with conference ID no. 1869113 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.

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. Selected Financial Highlights
  • Table 2. Year-to-Date Analysis of Changes in Net Interest Income
  • Table 3. Quarterly Analysis of Changes in Net Interest Income
  • Table 4. Consolidated Balance Sheets
  • Table 5. Consolidated Statements of Income
  • Table 6. 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 
  June 30,  March 31,  December 31,  September 30,  June 30, 
  2019  2019  2018  2018  2018 
Statement of Income Data                    
Net interest income $31,288  $30,639  $33,336  $32,755  $30,920 
Provision for loan losses  974   15,646   750   1,291   750 
Net gains (losses) from securities transactions  7   6   5   (4)  (2)
Other non-interest income  6,444   5,318   5,444   5,437   4,594 
Total non-interest income  6,451   5,324   5,449   5,433   4,592 
Merger expense  276   639   938   757   5,236 
Other non-interest expense  24,747   24,904   24,200   22,890   20,739 
Total non-interest expense  25,023   25,543   25,138   23,647   25,975 
Income (loss) before income taxes  11,742   (5,226)  12,897   13,250   8,787 
Provision for income taxes (benefits)  2,510   (1,153)  2,972   2,928   1,920 
Net income (loss)  9,232   (4,073)  9,925   10,322   6,867 
Net income (loss) allocable to common stockholders  9,232   (4,073)  9,925   10,322   6,867 
Basic earnings (loss) per share  0.59   (0.26)  0.63   0.65   0.45 
Diluted earnings (loss) per share  0.58   (0.26)  0.62   0.64   0.44 
                     
Balance Sheet Data (at period end)                    
Available-for-sale securities $161,082  $166,355  $168,875  $172,388  $180,238 
Held-to-maturity securities  766,950   749,493   748,356   713,899   665,995 
Gross loans held for investment  2,679,985   2,618,986   2,575,408   2,598,729   2,451,772 
Allowance for loan losses  17,777   26,340   11,454   11,010   10,083 
Intangible assets, net  159,147   159,944   154,665   155,430   146,538 
Total assets  4,180,074   4,065,354   4,061,716   3,931,036   3,712,185 
Total deposits  3,185,893   3,260,870   3,123,447   2,821,246   2,635,048 
Non-time deposits  2,192,534   2,220,110   2,115,541   1,969,715   1,829,902 
Borrowings  515,582   331,221   464,676   652,755   631,501 
Total liabilities  3,721,668   3,611,891   3,605,775   3,487,799   3,278,903 
Total stockholders’ equity  458,406   453,463   455,941   443,237   433,282 
Tangible common equity*  299,259   293,519   301,276   287,807   286,744 
                     
Selected Average Balance Sheet Data (quarterly average)                    
Investment securities $924,914  $918,804  $893,642  $860,940  $767,038 
Total gross loans receivable  2,655,256   2,560,030   2,590,610   2,516,833   2,317,071 
Interest-earnings assets  3,665,618   3,560,815   3,578,487   3,457,871   3,158,187 
Total assets  4,025,764   3,926,359   3,935,722   3,804,114   3,475,786 
Interest-bearing deposits  2,726,443   2,709,596   2,501,227   2,251,937   2,148,361 
Borrowings  347,103   269,492   480,417   642,575   495,558 
Total interest-bearing liabilities  3,073,546   2,979,088   2,981,644   2,894,512   2,643,919 
Total deposits  3,200,624   3,178,164   2,991,657   2,709,741   2,556,982 
Total liabilities  3,568,661   3,466,646   3,486,272   3,364,343   3,062,312 
Total stockholders' equity  457,103   459,713   449,450   439,771   413,474 
Tangible common equity*  297,541   302,398   294,506   289,515   279,328 
                     
Performance ratios                    
Return on average assets (ROAA) annualized  0.92%  (0.42)%  1.00%  1.08%  0.79%
Return on average equity (ROAE) annualized  8.10%  (3.59)%  8.76%  9.31%  6.66%
Return on average tangible common equity (ROATCE) annualized*  13.29%  (4.62)%  14.17%  14.91%  10.58%
Yield on loans annualized  5.74%  5.79%  5.91%  5.73%  5.73%
Cost of interest-bearing deposits annualized  1.64%  1.61%  1.45%  1.15%  1.00%
Cost of total deposits annualized  1.40%  1.37%  1.21%  0.95%  0.84%
Net interest margin annualized  3.42%  3.49%  3.70%  3.76%  3.93%
Efficiency ratio*  65.59%  69.26%  62.40%  59.93%  58.40%
Non-interest income / average assets  0.64%  0.55%  0.55%  0.57%  0.53%
Non-interest expense / average assets  2.49%  2.64%  2.53%  2.47%  3.00%
                     
Capital Ratios                    
Tier 1 Leverage Ratio  8.26%  8.36%  8.60%  8.60%  9.36%
Common Equity Tier 1 Capital Ratio  10.47%  10.46%  10.95%  10.49%  11.04%
Tier 1 Risk Based Capital Ratio  10.96%  10.95%  11.45%  11.00%  11.56%
Total Risk Based Capital Ratio  11.57%  11.87%  11.86%  11.37%  11.94%
Total stockholders' equity to total assets  10.97%  11.15%  11.23%  11.28%  11.67%
Tangible common equity to tangible assets*  7.44%  7.52%  7.71%  7.62%  8.04%
Book value per common share $29.45  $28.66  $28.87  $28.07  $27.44 
Tangible book value per common share* $19.23  $18.55  $19.08  $18.22  $18.16 
Tangible book value per diluted common share* $18.99  $18.30  $18.73  $17.86  $17.78 

* 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 2. YEAR-TO-DATE ANALYSIS OF CHANGES IN NET INTEREST INCOME (Unaudited)
(Dollars in thousands)

 Year-to-date 06/30/2019  Year-to-date 06/30/2018 
 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)$2,607,906  $74,560   5.77% $2,220,559  $62,149   5.64%
Total securities 921,876   12,149   2.66%  733,234   9,739   2.68%
Federal funds sold and other 83,723   1,257   3.03%  68,038   1,066   3.16%
Total interest-earning assets 3,613,505   87,966   4.91%  3,021,831   72,954   4.87%
Interest-bearing liabilities                       
Total interest-bearing demand and savings 1,704,672   11,525   1.36%  1,319,523   4,814   0.74%
Certificates of deposit 1,013,394   10,349   2.06%  776,839   5,242   1.36%
Total interest-bearing deposits 2,718,066   21,874   1.62%  2,096,362   10,056   0.97%
FHLB advances & LOC 238,462   3,146   2.66%  379,675   3,393   1.80%
Other borrowings 70,049   1,019   2.94%  62,959   798   2.56%
Total interest-bearing liabilities 3,026,577   26,039   1.74%  2,538,996   14,247   1.13%
                        
Net interest income    $61,927          $58,707     
Interest rate spread         3.17%          3.74%
                        
Net interest margin (2)         3.46%          3.92%
                        
(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 six months ended 
 June 30, 2019 vs. 2018 
 Total Increase/(Decrease) 
 Volume Variance (1)  Yield/Rate Variance (1)  Total Variance 
Interest-earning assets           
Loans$11,049  $1,362  $12,411 
Total securities 2,469   (59)  2,410 
Federal funds sold and other 237   (46)  191 
Total interest-earning assets 13,755   1,257   15,012 
Interest-bearing liabilities           
Total interest-bearing demand and savings 1,701   5,010   6,711 
Certificates of deposit 1,902   3,205   5,107 
Total interest-bearing deposits 3,603   8,215   11,818 
FHLB advances & LOC (1,526)  1,279   (247)
Other borrowings 117   104   221 
Total interest-bearing liabilities 2,194   9,598   11,792 
            
Net interest income$11,561  $(8,341) $3,220 
            
(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. QUARTERLY ANALYSIS OF CHANGES IN NET INTEREST INCOME (Unaudited)
(Dollars in thousands)

 Quarter ended 06/30/2019  Quarter ended 06/30/2018 
 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)$2,655,256  $38,027   5.74% $2,317,071  $33,101   5.73%
Total securities 924,914   6,114   2.65%  767,038   5,137   2.69%
Federal funds sold and other 85,448   623   2.92%  74,078   593   3.21%
Total interest-earning assets 3,665,618   44,764   4.90%  3,158,187   38,831   4.93%
Interest-bearing liabilities                       
Total interest-bearing demand and savings 1,715,991   5,857   1.37%  1,367,544   2,591   0.76%
Certificates of deposit 1,010,452   5,287   2.10%  780,817   2,747   1.41%
Total interest-bearing deposits 2,726,443   11,144   1.64%  2,148,361   5,338   1.00%
FHLB advances & LOC 278,864   1,841   2.65%  426,392   2,094   1.97%
Other borrowings 68,239   491   2.89%  69,166   479   2.78%
Total interest-bearing liabilities 3,073,546   13,476   1.76%  2,643,919   7,911   1.20%
                        
Net interest income    $31,288          $30,920     
Interest rate spread         3.14%          3.73%
Net interest margin (2)         3.42%          3.93%
(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 
 June 30, 2019 vs. 2018 
 Total Increase/(Decrease) 
 Volume Variance (1)  Yield/Rate  Variance (1)  Total Variance 
Interest-earning assets           
Loans$4,842  $84  $4,926 
Total securities 1,018   (41)  977 
Federal funds sold and other 86   (56)  30 
Total interest-earning assets 5,946   (13)  5,933 
Interest-bearing liabilities           
Total interest-bearing demand and savings 781   2,485   3,266 
Certificates of deposit 957   1,583   2,540 
Total interest-bearing deposits 1,738   4,068   5,806 
FHLB advances & LOC (850)  597   (253)
Other borrowings (22)  34   12 
Total interest-bearing liabilities 866   4,699   5,565 
            
Net interest income$5,080  $(4,712) $368 
            
(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 4. CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in thousands)

  June 30,  December 31, 
  2019  2018 
ASSETS        
Cash and due from banks $180,827  $192,735 
Federal funds sold  591   83 
Cash and cash equivalents  181,418   192,818 
Interest-bearing time deposits in other banks  4,742   4,991 
Available-for-sale securities  161,082   168,875 
Held-to-maturity securities, fair value of $778,051 and $739,989  766,950   748,356 
Loans held for sale  6,761   2,972 
Loans, net of allowance for loan losses of $17,777 and $11,454  2,662,208   2,563,954 
Other real estate owned, net  5,764   6,372 
Premises and equipment, net  84,942   80,442 
Bank-owned life insurance  74,092   73,105 
Federal Reserve Bank and Federal Home Loan Bank stock  33,226   29,214 
Interest receivable  16,702   17,372 
Goodwill  136,432   131,712 
Core deposit intangibles, net  21,512   21,725 
Other  24,243   19,808 
Total assets $4,180,074  $4,061,716 
LIABILITIES AND STOCKHOLDERS’ EQUITY        
Deposits        
Demand $487,430  $503,831 
Total non-interest-bearing deposits  487,430   503,831 
Savings, NOW and money market  1,705,104   1,611,710 
Time  993,359   1,007,906 
Total interest-bearing deposits  2,698,463   2,619,616 
Total deposits  3,185,893   3,123,447 
Federal funds purchased and retail repurchase agreements  41,047   50,068 
Federal Home Loan Bank advances  444,818   384,898 
Bank stock loan  15,308   15,450 
Subordinated debentures  14,409   14,260 
Contractual obligations  3,744   3,965 
Interest payable and other liabilities  16,449   13,687 
Total liabilities  3,721,668   3,605,775 
Commitments and contingent liabilities        
Stockholders’ equity        
Common stock  173   173 
Additional paid-in capital  381,133   379,085 
Retained earnings  105,337   101,326 
Accumulated other comprehensive loss  (1,291)  (4,867)
Employee stock loans  (83)  (121)
Treasury stock  (26,863)  (19,655)
Total stockholders’ equity  458,406   455,941 
     Total liabilities and stockholders’ equity $4,180,074  $4,061,716 


TABLE 5. CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except per share data)

  Three months ended June 30,  Six months ended June 30, 
  2019  2018  2019  2018 
Interest and dividend income                
Loans, including fees $38,027  $33,101  $74,560  $62,149 
Securities, taxable  4,969   4,112   10,051   7,835 
Securities, nontaxable  1,145   1,025   2,098   1,904 
Federal funds sold and other  623   593   1,257   1,066 
Total interest and dividend income  44,764   38,831   87,966   72,954 
Interest expense                
Deposits  11,144   5,338   21,874   10,056 
Federal funds purchased and retail repurchase agreements  34   24   66   47 
Federal Home Loan Bank advances  1,841   2,094   3,146   3,393 
Bank stock loan  147   156   309   183 
Subordinated debentures  310   299   644   568 
Total interest expense  13,476   7,911   26,039   14,247 
                 
Net interest income  31,288   30,920   61,927   58,707 
Provision for loan losses  974   750   16,620   1,920 
Net interest income after provision for loan losses  30,314   30,170   45,307   56,787 
Non-interest income                
Service charges and fees  2,240   1,729   4,163   3,309 
Debit card income  2,186   1,522   3,924   2,775 
Mortgage banking  562   312   879   625 
Increase in value of bank-owned life insurance  499   508   987   1,160 
Net gains (losses) from securities transactions  7   (2)  13   (10)
Other  957   523   1,809   984 
Total non-interest income  6,451   4,592   11,775   8,843 
Non-interest expense                
Salaries and employee benefits  13,067   11,629   27,165   22,520 
Net occupancy and equipment  2,188   2,011   4,155   3,813 
Data processing  2,358   1,968   4,763   3,642 
Professional fees  1,228   844   2,384   1,559 
Advertising and business development  722   665   1,368   1,284 
Telecommunications  485   432   1,070   801 
FDIC insurance  730   510   1,008   754 
Courier and postage  341   303   668   558 
Free nationwide ATM cost  420   330   781   622 
Amortization of core deposit intangibles  785   625   1,564   1,009 
Loan expense  175   145   443   491 
Other real estate owned  302   (671)  414   (403)
Merger expenses  276   5,236   915   5,767 
Other  1,946   1,948   3,868   3,185 
Total non-interest expense  25,023   25,975   50,566   45,602 
Income before income tax  11,742   8,787   6,516   20,028 
Provision for income taxes  2,510   1,920   1,357   4,450 
Net income and net income allocable to common stockholders $9,232  $6,867  $5,159  $15,578 
Basic earnings per share $0.59  $0.45  $0.33  $1.04 
Diluted earnings per share $0.58  $0.44  $0.32  $1.02 


TABLE 6. Non-GAAP Financial Measures (Unaudited)
(Dollars in thousands, except per share data)

  As of and for the three months ended 
  June 30,  March 31,  December 31,  September 30,  June 30, 
  2019  2019  2018  2018  2018 
Total stockholders' equity $458,406  $453,463  $455,941  $443,237  $433,282 
Less: goodwill  136,432   136,432   131,712   131,723   125,485 
Less: core deposit intangibles, net  21,512   22,296   21,725   22,466   19,800 
Less: mortgage servicing asset, net  8   10   11   13   14 
Less: naming rights, net  1,195   1,206   1,217   1,228   1,239 
Tangible common equity $299,259  $293,519  $301,276  $287,807  $286,744 
Common shares issued at period end  15,563,873   15,820,303   15,793,095   15,792,695   15,780,777 
RSU shares vested     108         6,768 
Common shares outstanding at period end  15,563,873   15,820,411   15,793,095   15,792,695   15,787,545 
Diluted common shares outstanding at period end  15,758,747   16,036,700   16,085,729   16,118,067   16,131,096 
Book value per common share $29.45  $28.66  $28.87  $28.07  $27.44 
Tangible book value per common share $19.23  $18.55  $19.08  $18.22  $18.16 
Tangible book value per diluted common share $18.99  $18.30  $18.73  $17.86  $17.78 
                     
Total assets $4,180,074  $4,065,354  $4,061,716  $3,931,036  $3,712,185 
Less: goodwill  136,432   136,432   131,712   131,723   125,485 
Less: core deposit intangibles, net  21,512   22,296   21,725   22,466   19,800 
Less: mortgage servicing asset, net  8   10   11   13   14 
Less: naming rights, net  1,195   1,206   1,217   1,228   1,239 
Tangible assets $4,020,927  $3,905,410  $3,907,051  $3,775,606  $3,565,647 
Total stockholders' equity to total assets  10.97%  11.15%  11.23%  11.28%  11.67%
Tangible common equity to tangible assets  7.44%  7.52%  7.71%  7.62%  8.04%
Total average stockholders' equity $457,103  $459,713  $449,450  $439,771  $413,474 
Less: average intangible assets  159,562   157,315   154,944   150,256   134,146 
Average tangible common equity $297,541  $302,398  $294,506  $289,515  $279,328 
Net income (loss) allocable to common stockholders $9,232  $(4,073) $9,925  $10,322  $6,867 
Amortization of intangible assets  797   791   752   707   637 
Less: tax effect of intangible assets amortization  167   166   158   148   134 
Adjusted net income (loss) allocable to common stockholders $9,862  $(3,448) $10,519  $10,881  $7,370 
Return on total average stockholders' equity (ROAE) annualized  8.10%  (3.59)%  8.76%  9.31%  6.66%
Return on average tangible common equity (ROATCE) annualized  13.29%  (4.62)%  14.17%  14.91%  10.58%
Non-interest expense $25,023  $25,543  $25,138  $23,647  $25,975 
Less: merger expenses  276   639   938   757   5,236 
Non-interest expense, excluding merger expenses $24,747  $24,904  $24,200  $22,890  $20,739 
Net interest income $31,288  $30,639  $33,336  $32,755  $30,920 
Non-interest income  6,451   5,324   5,449   5,433   4,592 
Less: net gains (losses) from securities transactions  7   6   5   (4)  (2)
Non-interest income, excluding gains (losses) from securities transactions $6,444  $5,318  $5,444  $5,437  $4,594 
Net interest income plus non-interest income, excluding net gains (losses) from securities transactions $37,732  $35,957  $38,780  $38,192  $35,514 
Non-interest expense to net interest income plus non-interest income  66.31%  71.03%  64.81%  61.92%  73.14%
Efficiency ratio  65.59%  69.26%  62.40%  59.93%  58.40%