Equity Bancshares, Inc. Announces Third Quarter Earnings of $0.66 per Diluted Common Share and Net Income of $10.4 Million

Company continues focus on product delivery, full-service banking, noninterest income growth, expense reduction and overall efficiency

Wichita, Kansas, UNITED STATES


WICHITA, Kan., Oct. 21, 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 September 30, 2019, including net income allocable to common stockholders of $10.4 million, or $0.66 per diluted share.  Year-to-date 2019 net income allocable to common stockholders was $15.6 million, or $0.98 per diluted share.

“I am pleased with our core earnings results in the third quarter, and two consecutive quarters of delivering growth in earnings per share to our stockholders,” said Brad Elliott, Chairman and CEO of Equity. “Our Company’s focus in reducing expenses, streamlining operations, and effectively evaluating our processes has helped us become more efficient as a four-state, 52-location bank, with positive results to stockholders.”

“Our initiatives in building our full-service banking platform have resulted in additional signature deposit customers in our regions, including key business and treasury management relationships, resulting in noninterest income growth and expansion for our Company,” said Mr. Elliott. “Our teams throughout our regions, including operations, customer service, credit administration and quality care, will continue to prioritize innovation within our products and services, efficient and effective delivery to our markets and to maintain our focus on high credit standards.”

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 third quarter of 2019 was $13.2 million, or $0.84 per diluted share, compared to net income before taxes of $13.3 million, or $0.82 per diluted share, for the same time period in 2018.  Net income before taxes, adjusted to exclude merger expense, was $13.2 million, or $0.84 per diluted share, for the third quarter of 2019, compared to net income before taxes, adjusted to exclude merger expense of $14.0 million, or $0.87 per diluted share, for the third quarter of 2018.
  • Stated diluted income per share in the third quarter of 2019 was $0.66.  There were no merger expenses in the third quarter of 2019.  Stated diluted income per share for the first nine months of 2019 was $0.98.  Merger expenses, adjusted for estimated income tax, were $694 thousand in the first nine months of 2019, or $0.04 per diluted share.
  • During the third quarter, the reserve ratio of the Deposit Insurance Fund reached 1.40% resulting in the application of a credit to our quarterly assessments paid to the Federal Deposit Insurance Corporation.  Application of the credit reduced expense during the three and nine month periods ended September 30, 2019 by $505 thousand ($398 thousand after tax), a benefit of $0.03 per diluted share after tax.
  • 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 September 30, 2019, a total of 421,016 shares have been repurchased under this authorization at an average price of $25.81, including 143,210 shares during the third quarter at an average price of $25.55 per share.

Equity’s Balance Sheet Highlights:

  • Total loans held for investment of $2.60 billion at September 30, 2019, as compared to total loans held for investment of $2.58 billion at December 31, 2018.  The increase of $25.5 million includes growth of $19.0 million, or 0.7%, and $6.5 million of loans added in the MidFirst acquisition.
  • Total deposits were $3.11 billion at September 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 $2.18 billion at September 30, 2019, compared to $2.12 billion at December 31, 2018.  Organic signature deposit growth was 0.7% for the nine months ended September 30, 2019.  In addition, the MidFirst acquisition added total deposits of $98.5 million.
  • Total assets of $4.07 billion at September 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 $30.25 at September 30, 2019 and $28.87 at December 31, 2018. Tangible book value per common share of $19.99 at September 30, 2019 and $19.08 at December 31, 2018.

Financial Results for Nine Months Ended September 30, 2019

Net income allocable to common stockholders was $15.6 million for the nine months ended September 30, 2019, as compared to $25.9 million for the nine months ended September 30, 2018, a decrease of $10.3 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 $0.98 for the nine-month period ended September 30, 2019, as compared to $1.66 for the comparable period of 2018.  Weighted average fully diluted shares were 15,896,605 and 15,578,017 for the nine-month periods ended September 30, 2019 and 2018.

Net interest income was $93.5 million for the nine months ended September 30, 2019, as compared to $91.5 million for the nine months ended September 30, 2018, an increase of $2.0 million, or a 2.2% increase.  The additional net interest income was primarily the result of interest-earning assets growing at a faster rate than interest-bearing liabilities due to increases in non-interest bearing deposits and capital.

Our net interest margin was 3.44% for the nine months ended September 30, 2019, as compared to 3.86% for the nine months ended September 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 a large credit relationship to nonaccrual during the first quarter of 2019.

The provision for loan losses was $17.3 million for the nine months ended September 30, 2019, as compared to $3.2 million for the nine months ended September 30, 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 net of $10.2 million on this credit relationship during the first nine months of 2019.  Net charge-offs for the nine months ended September 30, 2019, were $697 thousand, exclusive of the net charge offs related to the previously mentioned credit relationship, as compared to net charge-offs of $699 thousand for the comparable period in 2018.

Total non-interest income was $18.3 million for the nine months ended September 30, 2019, as compared to $14.3 million for the nine months ended September 30, 2018.  The variance is largely attributable to increases in debit card income, service charges and fees, mortgage banking income and an increase in swap fees.  Non-interest income includes the increase in value of bank-owned life insurance of $1.5 million and $1.7 million for the nine-month periods ended September 30, 2019 and 2018.

Total non-interest expense was $74.8 million for the nine months ended September 30, 2019, as compared to $69.2 million for the nine months ended September 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 nine months ended September 30, 2019.  Merger expenses for the nine months ended September 30, 2018, totaled $6.5 million ($5.0 million after tax).

Equity’s effective tax rate for the nine-month period ended September 30, 2019 was 21.0% as compared to 22.2% for the nine-month period ended September 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.

Financial Results for Quarter Ended September 30, 2019

Net income allocable to common stockholders was $10.4 million for the three months ended September 30, 2019, as compared to net income allocable to common stockholders of $10.3 million for the three months ended September 30, 2018, an increase of $84 thousand.

Diluted earnings per share were $0.66 for the three months ended September 30, 2019, as compared to diluted earnings per share of $0.64 for the comparable period in 2018.  Weighted average fully diluted shares were 15,708,038 and 16,136,607 for the three months ended September 30, 2019 and 2018.

Net interest income was $31.5 million for the three months ended September 30, 2019, as compared to $32.8 million for the three months ended September 30, 2018, a $1.2 million, or 3.8%, decrease.  The decrease in net interest income was primarily driven by an increase in deposit rates and an overall increase in the average cost of funds, partially offset by an increase in the average volume of loans.

The net interest margin was 3.42% for the three months ended September 30, 2019, as compared to 3.76% for the three months ended September 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 higher 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.

The provision for loan losses was $679 thousand for the three months ended September 30, 2019, as compared to $1.3 million for the three months ended September 30, 2018.  For the three months ended September 30, 2019, we had net charge-offs of $581 thousand, of which $390 thousand was related to the credit relationship for which we provisioned $14.5 million during the first quarter of 2019, as compared to net charge-offs of $364 thousand for the same period in 2018.

Total non-interest income for the quarter ended September 30, 2019 was $6.6 million, compared to $5.4 million for the quarter ended September 30, 2018.  This increase was largely due to increases in debit card income, service charges and fees and an increase in mortgage banking.  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 $507 thousand and $521 thousand for the three-month periods ended September 30, 2019 and 2018.

Total non-interest expense was $24.2 million for the quarter ended September 30, 2019, compared to $23.6 million for the quarter ended September 30, 2018.  The increase in non-interest expense is due largely to increases in salaries and employee benefits, professional fees and data processing, partially offset by decreases in merger expenses, FDIC insurance expense and loan expense.  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 does not include any merger expenses for the three months ended September 30, 2019.  Merger expenses for the three months ended September 30, 2018, totaled $757 thousand ($581 thousand after tax).  During the third quarter of 2019, Equity received a credit of $505 thousand that reduced the quarterly assessments paid to the Federal Deposit Insurance Corporation.

Equity’s effective tax rate for the quarter ended September 30, 2019 was 21.1% as compared to 22.1% for the quarter ended September 30, 2018.

Loans, Deposits and Total Assets

Loans held for investment were $2.60 billion at September 30, 2019, as compared to $2.58 billion at December 31, 2018, an increase of $25.5 million.  The increase in loans held for investment includes $6.5 million of net loans acquired in the February 2019 MidFirst acquisition plus $19.0 million of additional loan growth.

As of September 30, 2019, Equity’s allowance for loan losses to total loans was 0.69%, as compared to 0.44% at December 31, 2018.  Total reserves, including purchase discounts, to total loans were approximately 1.14% as of September 30, 2019, as compared to 1.02% at December 31, 2018.  Nonperforming assets of $57.1 million as of September 30, 2019, were 1.40% of total assets.  Nonperforming assets at December 31, 2018, were $39.6 million or 0.98% of total assets.

Total deposits were $3.11 billion at September 30, 2019, as compared to $3.12 billion at December 31, 2018.  Total deposits decreased $16.5 million between December 31, 2018 and September 30, 2019.  This decrease included a $128.9 million decrease in organic time deposits and a $28.3 million decrease in organic demand deposits, partially offset by $98.5 million assumed in the MidFirst acquisition and a $42.1 million increase in organic savings, NOW and money market deposits.  Signature deposits were $2.18 billion at September 30, 2019, as compared to $2.12 billion at December 31, 2018.

At September 30, 2019, Equity had consolidated total assets of $4.07 billion, as compared to $4.06 billion at December 31, 2018, an increase of $12.9 million.  The increase in total assets includes $98.6 million of total assets acquired in the MidFirst acquisition.

Borrowings and Capital

At September 30, 2019, borrowings totaled $480.0 million, as compared to $464.7 million at December 31, 2018.  The increase in borrowings was principally due to a $25.2 million increase in Federal Home Loan Bank advances, partially offset by a $9.4 million reduction in federal funds purchased and retail repurchase agreements.

At September 30, 2019, common stockholders’ equity totaled $467.1 million, $30.25 per common share, compared to $455.9 million, $28.87 per common share, at December 31, 2018.  Tangible common equity was $308.7 million and tangible book value per common share was $19.99 at September 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 and third quarters of 2019, the company repurchased a total of 421,016 shares of our Class A Voting Common Stock at a total cost of $10.9 million, or $25.81 per share.  The ratio of common equity tier 1 capital to risk-weighted assets was approximately 11.05% and the total capital to risk-weighted assets was approximately 12.19% at September 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 third quarter 2019 results on Tuesday, October 22, 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, October 22, 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. 6064137.

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

A replay of the call and webcast will be available two hours following the close of the call until October 29, 2019, accessible at (855) 859-2056 with conference ID no. 6064137 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 
  September 30,  June 30,  March 31,  December 31,  September 30, 
  2019  2019  2019  2018  2018 
Statement of Income Data                    
Net interest income $31,526  $31,288  $30,639  $33,336  $32,755 
Provision for loan losses  679   974   15,646   750   1,291 
Net gains (losses) from securities transactions  4   7   6   5   (4)
Other non-interest income  6,568   6,444   5,318   5,444   5,437 
Total non-interest income  6,572   6,451   5,324   5,449   5,433 
Merger expense    276   639   938   757 
Other non-interest expense  24,223   24,747   24,904   24,200   22,890 
Total non-interest expense  24,223   25,023   25,543   25,138   23,647 
Income (loss) before income taxes  13,196   11,742   (5,226)  12,897   13,250 
Provision for income taxes (benefits)  2,790   2,510   (1,153)  2,972   2,928 
Net income (loss)  10,406   9,232   (4,073)  9,925   10,322 
Net income (loss) allocable to common stockholders  10,406   9,232   (4,073)  9,925   10,322 
Basic earnings (loss) per share  0.67   0.59   (0.26)  0.63   0.65 
Diluted earnings (loss) per share  0.66   0.58   (0.26)  0.62   0.64 
                     
Balance Sheet Data (at period end)                    
Available-for-sale securities $152,680  $161,082  $166,355  $168,875  $172,388 
Held-to-maturity securities  764,163   766,950   749,493   748,356   713,899 
Gross loans held for investment  2,600,924   2,679,985   2,618,986   2,575,408   2,598,729 
Allowance for loan losses  17,875   17,777   26,340   11,454   11,010 
Intangible assets, net  158,350   159,147   159,944   154,665   155,430 
Total assets  4,074,663   4,180,074   4,065,354   4,061,716   3,931,036 
Total deposits  3,106,929   3,185,893   3,260,870   3,123,447   2,821,246 
Non-time deposits  2,177,820   2,192,534   2,220,110   2,115,541   1,969,715 
Borrowings  480,000   515,582   331,221   464,676   652,755 
Total liabilities  3,607,613   3,721,668   3,611,891   3,605,775   3,487,799 
Total stockholders’ equity  467,050   458,406   453,463   455,941   443,237 
Tangible common equity*  308,700   299,259   293,519   301,276   287,807 
                     
Selected Average Balance Sheet Data (quarterly average)                    
Investment securities $926,839  $924,914  $918,804  $893,642  $860,940 
Total gross loans receivable  2,646,454   2,655,256   2,560,030   2,590,610   2,516,833 
Interest-earnings assets  3,657,970   3,665,618   3,560,815   3,578,487   3,457,871 
Total assets  4,030,606   4,025,764   3,926,359   3,935,722   3,804,114 
Interest-bearing deposits  2,673,007   2,726,443   2,709,596   2,501,227   2,251,937 
Borrowings  390,562   347,103   269,492   480,417   642,575 
Total interest-bearing liabilities  3,063,569   3,073,546   2,979,088   2,981,644   2,894,512 
Total deposits  3,152,785   3,200,624   3,178,164   2,991,657   2,709,741 
Total liabilities  3,567,354   3,568,661   3,466,646   3,486,272   3,364,343 
Total stockholders' equity  463,252   457,103   459,713   449,450   439,771 
Tangible common equity*  304,492   297,541   302,398   294,506   289,515 
                     
Performance ratios                    
Return on average assets (ROAA) annualized  1.02%  0.92%  (0.42)%  1.00%  1.08%
Return on average equity (ROAE) annualized  8.91%  8.10%  (3.59)%  8.76%  9.31%
Return on average tangible common equity (ROATCE) annualized*  14.38%  13.29%  (4.62)%  14.17%  14.91%
Yield on loans annualized  5.70%  5.74%  5.79%  5.91%  5.73%
Cost of interest-bearing deposits annualized  1.56%  1.64%  1.61%  1.45%  1.15%
Cost of total deposits annualized  1.32%  1.40%  1.37%  1.21%  0.95%
Net interest margin annualized  3.42%  3.42%  3.49%  3.70%  3.76%
Efficiency ratio*  63.59%  65.59%  69.26%  62.40%  59.93%
Non-interest income / average assets  0.65%  0.64%  0.55%  0.55%  0.57%
Non-interest expense / average assets  2.38%  2.49%  2.64%  2.53%  2.47%
                     
Capital Ratios                    
Tier 1 Leverage Ratio  8.48%  8.26%  8.37%  8.60%  8.60%
Common Equity Tier 1 Capital Ratio  11.05%  10.46%  10.46%  10.95%  10.49%
Tier 1 Risk Based Capital Ratio  11.56%  10.95%  10.96%  11.45%  10.99%
Total Risk Based Capital Ratio  12.19%  11.56%  11.87%  11.86%  11.37%
Total stockholders' equity to total assets  11.46%  10.97%  11.15%  11.23%  11.28%
Tangible common equity to tangible assets*  7.88%  7.44%  7.52%  7.71%  7.62%
Book value per common share $30.25  $29.45  $28.66  $28.87  $28.07 
Tangible book value per common share* $19.99  $19.23  $18.55  $19.08  $18.22 
Tangible book value per diluted common share* $19.73  $18.99  $18.30  $18.73  $17.86 

* 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)

 For the nine months ended  For the nine months ended 
 September 30, 2019  September 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)$2,620,897 $112,611 5.74% $2,320,402 $98,484  5.67%
Total securities 923,548  17,867 2.59%  776,271  15,672  2.70%
Federal funds sold and other 84,045  2,037 3.24%  72,102  1,820  3.38%
Total interest-earning assets 3,628,490  132,515 4.88%  3,168,775  115,976  4.89%
Interest-bearing liabilities                  
Total interest-bearing demand and savings 1,705,612  16,914 1.33%  1,359,657  8,155  0.80%
Certificates of deposit 997,270  15,467 2.07%  789,133  8,411  1.43%
Total interest-bearing deposits 2,702,882  32,381 1.60%  2,148,790  16,566  1.03%
FHLB advances & LOC 266,118  5,103 2.56%  442,370  6,548  1.98%
Other borrowings 70,044  1,578 3.01%  67,644  1,400  2.77%
Total interest-bearing liabilities 3,039,044  39,062 1.72%  2,658,804  24,514  1.23%
                   
Net interest income   $93,453       $91,462    
Interest rate spread      3.16%        3.66%
                   
Net interest margin (2)      3.44%        3.86%
                   
(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 nine months ended 
 September 30, 2019 vs. 2018 
 Total Increase/(Decrease) 
 Volume Variance (1) Yield/Rate Variance
(1)
 Total Variance 
Interest-earning assets         
Loans$12,897 $1,230 $14,127 
Total securities 2,835  (640) 2,195 
Federal funds sold and other 292  (75) 217 
Total interest-earning assets 16,024  515  16,539 
Interest-bearing liabilities         
Total interest-bearing demand and savings 2,485  6,274  8,759 
Certificates of deposit 2,589  4,467  7,056 
Total interest-bearing deposits 5,074  10,741  15,815 
FHLB advances & LOC (3,052) 1,607  (1,445)
Other borrowings 43  135  178 
Total interest-bearing liabilities 2,065  12,483  14,548 
          
Net interest income$13,959 $(11,968)$1,991 
          
(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)

 For the three months ended  For the three months ended 
 September 30, 2019  September 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)$2,646,454 $38,051 5.70% $2,516,833 $36,335 5.73%
Total securities 926,839  5,718 2.45%  860,940  5,933 2.73%
Federal funds sold and other 84,677  780 3.66%  80,098  754 3.74%
Total interest-earning assets 3,657,970  44,549 4.83%  3,457,871  43,022 4.94%
Interest-bearing liabilities                 
Total interest-bearing demand and savings 1,707,459  5,389 1.25%  1,438,616  3,342 0.92%
Certificates of deposit 965,548  5,118 2.10%  813,321  3,168 1.55%
Total interest-bearing deposits 2,673,007  10,507 1.56%  2,251,937  6,510 1.15%
FHLB advances & LOC 320,528  1,957 2.42%  565,715  3,155 2.21%
Other borrowings 70,034  559 3.16%  76,860  602 3.11%
Total interest-bearing liabilities 3,063,569  13,023 1.69%  2,894,512  10,267 1.41%
                  
Net interest income   $31,526       $32,755   
Interest rate spread      3.14%       3.53%
                  
Net interest margin (2)      3.42%       3.76%
(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 
 September 30, 2019 vs. 2018 
 Total Increase/(Decrease) 
 Volume Variance (1) Yield/Rate Variance
(1)
 Total Variance 
Interest-earning assets         
Loans$1,864 $(148)$1,716 
Total securities 421  (636) (215)
Federal funds sold and other 42  (16) 26 
Total interest-earning assets 2,327  (800) 1,527 
Interest-bearing liabilities         
Total interest-bearing demand and savings 726  1,321  2,047 
Certificates of deposit 666  1,284  1,950 
Total interest-bearing deposits 1,392  2,605  3,997 
FHLB advances & LOC (1,474) 276  (1,198)
Other borrowings (73) 30  (43)
Total interest-bearing liabilities (155) 2,911  2,756 
          
Net interest income$2,482 $(3,711)$(1,229)
          
(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)

  September 30,  December 31, 
  2019  2018 
ASSETS        
Cash and due from banks $167,895  $192,735 
Federal funds sold  158   83 
Cash and cash equivalents  168,053   192,818 
Interest-bearing time deposits in other banks  3,497   4,991 
Available-for-sale securities  152,680   168,875 
Held-to-maturity securities, fair value of $778,966 and $739,989  764,163   748,356 
Loans held for sale  8,784   2,972 
Loans, net of allowance for loan losses of $17,875 and $11,454  2,583,049   2,563,954 
Other real estate owned, net  5,944   6,372 
Premises and equipment, net  84,481   80,442 
Bank-owned life insurance  74,599   73,105 
Federal Reserve Bank and Federal Home Loan Bank stock  31,710   29,214 
Interest receivable  16,994   17,372 
Goodwill  136,432   131,712 
Core deposit intangibles, net  20,727   21,725 
Other  23,550   19,808 
Total assets $4,074,663  $4,061,716 
LIABILITIES AND STOCKHOLDERS’ EQUITY        
Deposits        
Demand $488,214  $503,831 
Total non-interest-bearing deposits  488,214   503,831 
Savings, NOW and money market  1,689,606   1,611,710 
Time  929,109   1,007,906 
Total interest-bearing deposits  2,618,715   2,619,616 
Total deposits  3,106,929   3,123,447 
Federal funds purchased and retail repurchase agreements  40,652   50,068 
Federal Home Loan Bank advances  410,093   384,898 
Bank stock loan  14,770   15,450 
Subordinated debentures  14,485   14,260 
Contractual obligations  3,744   3,965 
Interest payable and other liabilities  16,940   13,687 
Total liabilities  3,607,613   3,605,775 
Commitments and contingent liabilities        
Stockholders’ equity        
Common stock  174   173 
Additional paid-in capital  382,155   379,085 
Retained earnings  115,743   101,326 
Accumulated other comprehensive loss  (423)  (4,867)
Employee stock loans  (77)  (121)
Treasury stock  (30,522)  (19,655)
Total stockholders’ equity  467,050   455,941 
Total liabilities and stockholders’ equity $4,074,663  $4,061,716 

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

  Three months ended September 30,  Nine months ended September 30, 
  2019  2018  2019  2018 
Interest and dividend income                
Loans, including fees $38,051  $36,335  $112,611  $98,484 
Securities, taxable  4,673   4,836   14,724   12,671 
Securities, nontaxable  1,045   1,097   3,143   3,001 
Federal funds sold and other  780   754   2,037   1,820 
Total interest and dividend income  44,549   43,022   132,515   115,976 
Interest expense                
Deposits  10,507   6,510   32,381   16,566 
Federal funds purchased and retail repurchase agreements  50   30   116   77 
Federal Home Loan Bank advances  1,957   3,155   5,103   6,548 
Bank stock loan  198   265   507   448 
Subordinated debentures  311   307   955   875 
Total interest expense  13,023   10,267   39,062   24,514 
                 
Net interest income  31,526   32,755   93,453   91,462 
Provision for loan losses  679   1,291   17,299   3,211 
Net interest income after provision for loan losses  30,847   31,464   76,154   88,251 
Non-interest income                
Service charges and fees  2,268   1,912   6,431   5,221 
Debit card income  2,205   1,667   6,129   4,442 
Mortgage banking  820   392   1,699   1,017 
Increase in value of bank-owned life insurance  506   521   1,493   1,681 
Net gains (losses) from securities transactions  4   (4)  17   (14)
Other  769   945   2,578   1,929 
Total non-interest income  6,572   5,433   18,347   14,276 
Non-interest expense                
Salaries and employee benefits  13,039   12,361   40,204   34,881 
Net occupancy and equipment  2,177   2,125   6,332   5,938 
Data processing  2,673   2,195   7,436   5,837 
Professional fees  991   686   3,375   2,245 
Advertising and business development  806   802   2,174   2,086 
Telecommunications  523   451   1,593   1,252 
FDIC insurance  111   457   1,119   1,211 
Courier and postage  352   321   1,020   879 
Free nationwide ATM cost  459   364   1,240   986 
Amortization of core deposit intangibles  784   694   2,348   1,703 
Loan expense  165   319   608   810 
Other real estate owned  (88)  355   326   (48)
Merger expenses     757   915   6,524 
Other  2,231   1,760   6,099   4,945 
Total non-interest expense  24,223   23,647   74,789   69,249 
Income before income tax  13,196   13,250   19,712   33,278 
Provision for income taxes  2,790   2,928   4,147   7,378 
Net income and net income allocable to common stockholders $10,406  $10,322  $15,565  $25,900 
Basic earnings per share $0.67  $0.65  $0.99  $1.70 
Diluted earnings per share $0.66  $0.64  $0.98  $1.66 

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

  As of and for the three months ended 
  September 30,  June 30,  March 31,  December 31,  September 30, 
  2019  2019  2019  2018  2018 
Total stockholders' equity $467,050  $458,406  $453,463  $455,941  $443,237 
Less: goodwill  136,432   136,432   136,432   131,712   131,723 
Less: core deposit intangibles, net  20,727   21,512   22,296   21,725   22,466 
Less: mortgage servicing asset, net  7   8   10   11   13 
Less: naming rights, net  1,184   1,195   1,206   1,217   1,228 
Tangible common equity $308,700  $299,259  $293,519  $301,276  $287,807 
Common shares issued at period end  15,440,334   15,563,873   15,820,303   15,793,095   15,792,695 
RSU shares vested        108       
Common shares outstanding at period end  15,440,334   15,563,873   15,820,411   15,793,095   15,792,695 
Diluted common shares outstanding at period end  15,647,456   15,758,747   16,036,700   16,085,729   16,118,067 
Book value per common share $30.25  $29.45  $28.66  $28.87  $28.07 
Tangible book value per common share $19.99  $19.23  $18.55  $19.08  $18.22 
Tangible book value per diluted common share $19.73  $18.99  $18.30  $18.73  $17.86 
                     
Total assets $4,074,663  $4,180,074  $4,065,354  $4,061,716  $3,931,036 
Less: goodwill  136,432   136,432   136,432   131,712   131,723 
Less: core deposit intangibles, net  20,727   21,512   22,296   21,725   22,466 
Less: mortgage servicing asset, net  7   8   10   11   13 
Less: naming rights, net  1,184   1,195   1,206   1,217   1,228 
Tangible assets $3,916,313  $4,020,927  $3,905,410  $3,907,051  $3,775,606 
Total stockholders' equity to total assets  11.46%  10.97%  11.15%  11.23%  11.28%
Tangible common equity to tangible assets  7.88%  7.44%  7.52%  7.71%  7.62%
Total average stockholders' equity $463,252  $457,103  $459,713  $449,450  $439,771 
Less: average intangible assets  158,760   159,562   157,315   154,944   150,256 
Average tangible common equity $304,492  $297,541  $302,398  $294,506  $289,515 
Net income (loss) allocable to common stockholders $10,406  $9,232  $(4,073) $9,925  $10,322 
Amortization of intangible assets  797   797   791   752   707 
Less: tax effect of intangible assets amortization  167   167   166   158   148 
Adjusted net income (loss) allocable to common stockholders $11,036  $9,862  $(3,448) $10,519  $10,881 
Return on total average stockholders' equity (ROAE) annualized  8.91%  8.10%  (3.59)%  8.76%  9.31%
Return on average tangible common equity (ROATCE) annualized  14.38%  13.29%  (4.62)%  14.17%  14.91%
Non-interest expense $24,223  $25,023  $25,543  $25,138  $23,647 
Less: merger expenses     276   639   938   757 
Non-interest expense, excluding merger expenses $24,223  $24,747  $24,904  $24,200  $22,890 
Net interest income $31,526  $31,288  $30,639  $33,336  $32,755 
Non-interest income  6,572   6,451   5,324   5,449   5,433 
Less: net gains (losses) from securities transactions  4   7   6   5   (4)
Non-interest income, excluding gains (losses) from securities transactions $6,568  $6,444  $5,318  $5,444  $5,437 
Net interest income plus non-interest income, excluding net gains (losses) from securities transactions $38,094  $37,732  $35,957  $38,780  $38,192 
Non-interest expense to net interest income plus non-interest income  63.58%  66.31%  71.03%  64.81%  61.92%
Efficiency ratio  63.59%  65.59%  69.26%  62.40%  59.93%