Equity Bancshares, Inc. Reports Third Quarter Results

Wichita, Kansas, UNITED STATES


Equity continues stakeholder support programs during pandemic, 
while deferring approximately 1% of commercial loans, maintains Tier 1 Capital ratio of 13.3%
and adds $2.97 tangible book per share year-to-date in 2020

WICHITA, Kan., Oct. 20, 2020 (GLOBE NEWSWIRE) -- Equity Bancshares, Inc. (NASDAQ: EQBK), (“Equity”, “the Company”, “we”, “us”, “our”), the Wichita-based holding company of Equity Bank, reported its unaudited results for the third quarter ended September 30, 2020.

Equity recorded a $104.8 million impairment in the value of goodwill and a resulting net loss of $90.4 million or $6.01 per diluted share in the quarter ended September 30, 2020, while maintaining a Tier 1 capital ratio of 13.3%, growing tangible book value by $2.43 per share and continuing to grow core deposits and relationships. Net income, adjusted to exclude the impairment charge on goodwill, was $9.1 million, or $0.60 per diluted share.

“I’m very proud of our relationship bankers in each of our markets for their continued collaboration and support of our communities. As a result of our collaborative approach with our customers, we currently have approximately 1% of loans on deferral as of September 30, 2020, down from approximately 24% on June 30, 2020. We continue to be positioned for loan opportunities in all regional pipelines,” said Brad Elliott, Chairman and CEO of Equity.

“Despite the non-recurring impact of goodwill impairment on our earnings during the third quarter, our regulatory capital ratios and tangible book value, which grew to $23.72 during the third quarter, are the highest levels we’ve reported as a publicly-traded company and are indicative of a safe and sound bank under the regulatory capital framework. Our capital levels position Equity to support continued growth, long-term stability and core earnings. We continue to support our small business, commercial and family customers and we are confident that our leadership during the pandemic crisis indicates the resolve and importance of community banking and will be a key component of our Equity story.”

Through September 30, 2020, Equity reported net growth of more than 3,389 new consumer core deposit customers and $279.9 million in core deposit growth. Equity’s digital adoption among core banking customers through September 30, 2020, was 48.4% compared to 42.4% at September 30, 2019, with online bill payment and mobile deposit totals of $30.1 million, an 11.0% increase compared to the nine-month period ended September 30, 2019.

“We continue to be responsive and adaptive to our changing customer bases and upgrades to our online banking platform have resulted in continued customer satisfaction, as well as increased treasury service relationships and Equity Trust and Wealth Management customers,” said Mr. Elliott. “Our mission is to deliver sophisticated banking products to customers throughout a diverse range of markets. Upgraded online tools and savvy relationship bankers have helped us provide value to small businesses in our regions as well as consumers accessing their money in new and different ways.

Equity received two local honors for work within our regions and collaboration by our team members. The Company earned the honor of Leaders in Diversity and Inclusion 2020, its second straight year and third overall earning the honor from the Wichita Business Journal. Companies recognized are leading efforts to develop inclusive working environments, products and delivery that are impactful to their communities. Equity was also recognized as one of the Top Innovative Companies in Wichita in 2020, also awarded by the Wichita Business Journal, for its improvement in processes and outcomes for customers, including its digital upgrades and PPP implementation.

Notable Items:

  • Tangible book value per common share was $23.72 at September 30, 2020, as compared to $20.75 at December 31, 2019, representing an increase of 14.3% or $2.97. During the quarter ended September 30, 2020, the Company repurchased 383,523 shares at a weighted average cost of $15.48, totaling $5.9 million
  • At September 30, 2020, $40.2 million of loans were under deferment in connection to the COVID-19 crisis, as compared to $673.9 million, or 24.0% of total loans, under deferment at June 30, 2020.

Equity’s Balance Sheet Highlights:

  • Total loans held for investment of $2.73 billion at September 30, 2020, as compared to total loans held for investment of $2.56 billion at December 31, 2019.
  • Total deposits of $3.13 billion at September 30, 2020, as compared to $3.06 billion at December 31, 2019.  Signature deposits, including core deposits comprised of checking, savings and money market accounts, were $2.51 billion at September 30, 2020, relative to $2.23 billion at December 31, 2019.
  • Total assets were $3.87 billion at September 30, 2020, as compared to $3.95 billion at December 31, 2019.

Financial Results for the Quarter Ended September 30, 2020

Net loss allocable to common stockholders was $90.4 million, or $6.01 per diluted share, for the three months ended September 30, 2020, as compared to net income allocable to common stockholders of $1.7 million, or $0.11 per diluted share, for the three months ended June 30, 2020, a decrease of $92.1 million. This decrease was primarily attributable to a goodwill impairment charge of $104.8 million taken during the quarter. Net income, excluding the goodwill impairment, using a projected 22.5% effective tax rate, for the quarter ended September 30, 2020 totaled $9.1 million, or $0.60 per diluted share.

Net Interest Income

Net interest income was $32.1 million for the three months ended September 30, 2020, as compared to $32.9 million for the three months ended June 30, 2020, a $784 thousand, or 2.4% decrease. The decrease in net interest income was driven by a decrease in net interest margin of two basis points, declining to 3.47% for the three months ended September 30, 2020 from 3.49% for the three months ended June 30, 2020. The yield on earning assets declined two basis points to 4.01% for the quarter ended September 30, 2020 from 4.03% from the previous quarter. The cost of interest-bearing liabilities declined to 0.70% or one basis point for the quarter ended September 30, 2020 from 0.71% in the quarter ended June 30, 2020. The cost of interest-bearing deposits declined 13 basis points to 0.50% for the three months ended September 30, 2020 from 0.63% in the previous quarter primarily attributed to the decline in the cost of time deposits, which declined 28 basis points between the quarters. The cost of other borrowings increased to 4.45% in the three months ended September 30, 2020 from 2.09% from the quarter ended June 30, 2020, due the addition of subordinated debt issued by the Company in late June and late July, cumulatively adding $75 million of debt with a coupon of 7.0%.

Provision for Loan Losses

The provision for loan losses was $815 thousand for the three months ended September 30, 2020, as compared to $12.5 million for the three months ended June 30, 2020. For the three months ended September 30, 2020, we had net charge-offs of $806 thousand as compared to $337 thousand for three months ended June 30, 2020.

Non-Interest Income

Total non-interest income was $6.5 million for the three months ended September 30, 2020 increasing $753 thousand from the $5.7 million reported for the three months ended June 30, 2020. Service charges and fees were $1.7 million representing an increase of $341 thousand, or 25.0%, from the quarter ended June 30, 2020. The most significant driver of the increase was an improvement in overdraft fees. Debit card income totaled $2.5 million in the quarter ended September 30, 2020, increasing $290 thousand, or 13.2%, from the quarter ended June 30, 2020. Debit card transaction volume increased approximately 12% in the third quarter as compared to the second quarter of 2020.

Non-Interest Expense

Total non-interest expense for the quarter ended September 30, 2020 was $130.8 million; when the goodwill impairment charge of $104.8 million is excluded, pro-forma non-interest expense totals $26.0 million, compared to $23.9 million in the previous quarter. The $2.1 million increase is primarily attributed to a $1.2 million increase in salaries and employee benefits. The most significant contributor to the increase in salaries and benefits was a $791 thousand unfavorable change, due to the effect of salaries and benefits deferred as loan origination costs recognized in the three months ended June 30, 2020, related to PPP loan originations.

Asset Quality

As of September 30, 2020, Equity’s allowance for loan losses to total loans was 1.25%, as compared to 0.48% at December 31, 2019. Total reserves, including purchase discounts, to total loans were approximately 1.61% as of September 30, 2020, as compared to 0.85% at December 31, 2019. Nonperforming assets were $61.7 million as of September 30, 2020, or 1.60% of total assets. Nonperforming assets were $46.9 million at December 31, 2019, or 1.19% of total assets.

Regulatory Capital

The Company’s ratio of common equity tier 1 capital to risk-weighted assets was 12.8%, the total capital to risk-weighted assets was 17.4% and the total leverage ratio was 8.8% at September 30, 2020. At December 31, 2019, the Company’s common equity tier 1 capital to risk-weighted assets ratio was 11.6%, the total capital to risk-weighted assets ratio was 12.6% and the total leverage ratio was 9.0%. The Company’s subsidiary, Equity Bank, had a ratio of common equity tier 1 capital to risk-weighted assets of 14.2%, a ratio of total capital to risk-weighted assets of 15.4% and a total leverage ratio of 9.3% at September 30, 2020. At December 31, 2019, Equity Bank’s ratio of common equity tier 1 capital to risk-weighted assets was 12.0%, their ratio of total capital to risk-weighted assets was 12.5% and their total leverage ratio was 8.9%.

Non-GAAP Financial Measures

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

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

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

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

The Company believes that disclosing these non-GAAP financial measures is both useful internally and is expected by our investors and analysts in order to understand the overall performance of the Company. Other companies may calculate and define their non-GAAP financial measures and supplemental data differently. A reconciliation of GAAP financial measures to non-GAAP measures and other performance ratios, as adjusted, are included in Table 8 in the following press release tables.

Conference Call and Webcast

Equity Chairman and Chief Executive Officer, Brad Elliott, and Executive Vice President and Chief Financial Officer, Eric Newell, will hold a conference call and webcast to discuss third quarter 2020 results on Wednesday, October 21, 2020, at 10:00 a.m. eastern time, 9:00 a.m. central time.

Investors, news media and other participants should register for the call or audio webcast at. On Wednesday, October 21, 2020, 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. 4668766.

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 27, 2020, accessible at (855) 859-2056 with conference ID no. 4668766 at investor.equitybank.com.

About Equity Bancshares, Inc.

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

Special Note Concerning Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements reflect the current views of Equity’s management with respect to, among other things, future events and Equity’s financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “project,” “forecast,” “goal,” “target,” “would” and “outlook,” or the negative variations of those words or other comparable words of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about Equity’s industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond Equity’s control. Accordingly, Equity cautions you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although Equity believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. Factors that could cause actual results to differ materially from Equity’s expectations include COVID-19 related impacts; competition from other financial institutions and bank holding companies; the effects of and changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board; changes in the demand for loans; fluctuations in value of collateral and loan reserves; inflation, interest rate, market and monetary fluctuations; changes in consumer spending, borrowing and savings habits; and acquisitions and integration of acquired businesses; and similar variables. The foregoing list of factors is not exhaustive.

For discussion of these and other risks that may cause actual results to differ from expectations, please refer to “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in Equity’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 10, 2020, and any updates to those risk factors set forth in Equity’s subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K. If one or more events related to these or other risks or uncertainties materialize, or if Equity’s underlying assumptions prove to be incorrect, actual results may differ materially from what Equity anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and Equity does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New risks and uncertainties arise from time to time, such as COVID-19, and it is not possible for us to predict those events or how they may affect us. In addition, Equity cannot assess the impact of each factor on Equity’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements, expressed or implied, included in this press release are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that Equity or persons acting on Equity’s behalf may issue.

Investor Contact:

Chris Navratil
SVP, Finance
Equity Bancshares, Inc.
(316) 612-6014
cnavratil@equitybank.com        

Media Contact:

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

Unaudited Financial Tables

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


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

 Three months ended
September 30,
  Nine months ended
September 30,
 
 2020  2019  2020  2019 
Interest and dividend income               
Loans, including fees$32,278  $38,051  $99,281  $112,611 
Securities, taxable 3,476   4,673   12,113   14,724 
Securities, nontaxable 923   1,045   2,769   3,143 
Federal funds sold and other 405   780   1,409   2,037 
Total interest and dividend income 37,082   44,549   115,572   132,515 
Interest expense               
Deposits 3,064   10,507   13,827   32,381 
Federal funds purchased and retail repurchase agreements 25   50   80   116 
Federal Home Loan Bank advances 471   1,957   2,198   5,103 
Federal Reserve Bank discount window       6    
Bank stock loan    198   415   507 
Subordinated debentures 1,415   311   1,953   955 
Total interest expense 4,975   13,023   18,479   39,062 
                
Net interest income 32,107   31,526   97,093   93,453 
Provision for loan losses 815   679   23,255   17,299 
Net interest income after provision for loan losses 31,292   30,847   73,838   76,154 
Non-interest income               
Service charges and fees 1,706   2,268   5,097   6,431 
Debit card income 2,491   2,205   6,735   6,129 
Mortgage banking 877   820   2,298   1,699 
Increase in value of bank-owned life insurance 489   507   1,452   1,494 
Net gains from securities transactions    4   12   17 
Other 922   768   1,929   2,577 
Total non-interest income 6,485   6,572   17,523   18,347 
Non-interest expense               
Salaries and employee benefits 13,877   13,039   40,076   40,204 
Net occupancy and equipment 2,224   2,177   6,578   6,332 
Data processing 2,817   2,673   8,243   7,436 
Professional fees 877   991   3,187   3,375 
Advertising and business development 598   806   1,697   2,174 
Telecommunications 486   523   1,363   1,593 
FDIC insurance 360   111   1,291   1,119 
Courier and postage 366   352   1,103   1,020 
Free nationwide ATM cost 439   459   1,186   1,240 
Amortization of core deposit intangibles 1,030   784   2,806   2,348 
Loan expense 107   165   628   608 
Other real estate owned 133   (88)  710   326 
Merger expenses          915 
Goodwill impairment 104,831      104,831    
Other 2,690   2,231   6,831   6,099 
Total non-interest expense 130,835   24,223   180,530   74,789 
Income (loss) before income tax (93,058)  13,196   (89,169)  19,712 
Provision for income taxes (benefit) (2,653)  2,790   (1,711)  4,147 
Net income (loss) and net income (loss) allocable to common stockholders$(90,405) $10,406  $(87,458) $15,565 
Basic earnings (loss) per share$(6.01) $0.67  $(5.75) $0.99 
Diluted earnings (loss) per share$(6.01) $0.66  $(5.75) $0.98 
Weighted average common shares 15,040,407   15,514,042   15,211,901   15,679,556 
Weighted average diluted common shares 15,040,407   15,708,038   15,211,901   15,896,605 

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

 As of and for the three months ended 
 September 30,
2020
  June 30,
2020
  March 31,
2020
  December 31,
2019
  September 30,
2019
 
Interest and dividend income                   
Loans, including fees$32,278  $32,627  $34,376  $36,687  $38,051 
Securities, taxable 3,476   4,017   4,620   4,615   4,673 
Securities, nontaxable 923   880   966   1,037   1,045 
Federal funds sold and other 405   409   595   645   780 
Total interest and dividend income 37,082   37,933   40,557   42,984   44,549 
Interest expense                   
Deposits 3,064   3,899   6,864   8,533   10,507 
Federal funds purchased and retail repurchase agreements 25   24   31   39   50 
Federal Home Loan Bank advances 471   552   1,175   1,564   1,957 
Federal Reserve Bank discount window    6          
Bank stock loan    306   109   147   198 
Subordinated debentures 1,415   255   283   296   311 
Total interest expense 4,975   5,042   8,462   10,579   13,023 
                    
Net interest income 32,107   32,891   32,095   32,405   31,526 
Provision for loan losses 815   12,500   9,940   1,055   679 
Net interest income after provision for loan losses 31,292   20,391   22,155   31,350   30,847 
Non-interest income                   
Service charges and fees 1,706   1,365   2,026   2,241   2,268 
Debit card income 2,491   2,201   2,043   2,101   2,205 
Mortgage banking 877   831   590   769   820 
Increase in value of bank-owned life insurance 489   481   482   504   507 
Net gains (losses) from securities transactions    4   8   (3)  4 
Other 922   850   157   1,029   768 
Total non-interest income 6,485   5,732   5,306   6,641   6,572 
Non-interest expense                   
Salaries and employee benefits 13,877   12,695   13,504   11,918   13,039 
Net occupancy and equipment 2,224   2,119   2,235   2,342   2,177 
Data processing 2,817   2,763   2,663   2,688   2,673 
Professional fees 877   943   1,367   1,359   991 
Advertising and business development 598   403   696   901   806 
Telecommunications 486   390   487   486   523 
FDIC insurance 360   414   517   109   111 
Courier and postage 366   353   384   328   352 
Free nationwide ATM cost 439   327   420   440   459 
Amortization of core deposit intangibles 1,030   974   802   820   784 
Loan expense 107   287   234   267   165 
Other real estate owned 133   269   308   381   (88)
Goodwill impairment 104,831             
Other 2,690   2,000   2,141   2,807   2,231 
Total non-interest expense 130,835   23,937   25,758   24,846   24,223 
Income (loss) before income tax (93,058)  2,186   1,703   13,145   13,196 
Provision for income taxes (benefit) (2,653)  497   445   3,131   2,790 
Net income (loss) and net income (loss) allocable to common stockholders$(90,405) $1,689  $1,258  $10,014  $10,406 
Basic earnings (loss) per share$(6.01) $0.11  $0.08  $0.65  $0.67 
Diluted earnings (loss) per share$(6.01) $0.11  $0.08  $0.64  $0.66 
Weighted average common shares 15,040,407   15,209,483   15,387,697   15,442,841   15,514,042 
Weighted average diluted common shares 15,040,407   15,304,009   15,595,024   15,684,673   15,708,038 

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

 September 30,
2020
  June 30,
2020
  March 31,
2020
  December 31,
2019
  September 30,
2019
 
ASSETS                   
Cash and due from banks$65,534  $178,045  $141,989  $88,973  $167,895 
Federal funds sold 305   245   263   318   158 
Cash and cash equivalents 65,839   178,290   142,252   89,291   168,053 
Interest-bearing time deposits in other banks 499   2,248   2,498   2,498   3,497 
Available-for-sale securities 798,576   177,228   187,812   142,067   152,680 
Held-to-maturity securities(1)    662,522   721,992   769,059   764,163 
Loans held for sale 9,053   4,802   6,494   5,933   8,784 
Loans, net of allowance for loan losses(2) 2,691,626   2,772,256   2,485,208   2,544,420   2,583,049 
Other real estate owned, net 8,727   7,374   5,870   8,293   5,944 
Premises and equipment, net 86,087   87,055   84,732   84,478   84,481 
Bank-owned life insurance 76,555   76,066   75,585   75,103   74,599 
Federal Reserve Bank and Federal Home Loan Bank stock 32,545   31,832   31,662   31,137   31,710 
Interest receivable 18,110   19,598   15,549   15,738   16,994 
Goodwill 31,601   136,432   136,432   136,432   136,432 
Core deposit intangibles, net 17,101   18,131   19,105   19,907   20,727 
Other 29,252   31,435   28,641   25,222   23,550 
Total assets$3,865,571  $4,205,269  $3,943,832  $3,949,578  $4,074,663 
LIABILITIES AND STOCKHOLDERS’ EQUITY                   
Deposits                   
Demand$693,967  $756,613  $508,441  $481,298  $488,214 
Total non-interest-bearing deposits 693,967   756,613   508,441   481,298   488,214 
Savings, NOW and money market 1,816,307   1,800,132   1,668,145   1,749,048   1,689,606 
Time 623,344   690,522   783,811   833,170   929,109 
Total interest-bearing deposits 2,439,651   2,490,654   2,451,956   2,582,218   2,618,715 
Total deposits 3,133,618   3,247,267   2,960,397   3,063,516   3,106,929 
Federal funds purchased and retail repurchase agreements 46,295   51,557   37,113   35,708   40,652 
Federal Home Loan Bank advances 167,862   344,900   389,620   324,373   410,093 
Bank stock loan       40,000   8,990   14,770 
Subordinated debentures 87,537   55,575   14,638   14,561   14,485 
Contractual obligations 5,478   5,571   5,781   5,836   3,744 
Interest payable and other liabilities 22,609   20,633   18,932   18,534   16,940 
Total liabilities 3,463,399   3,725,503   3,466,481   3,471,518   3,607,613 
Commitments and contingent liabilities                   
Stockholders’ equity                   
Common stock 174   174   174   174   174 
Additional paid-in capital 386,016   384,955   383,850   382,731   382,155 
Retained earnings 38,300   128,704   127,015   125,757   115,743 
Accumulated other comprehensive income (loss) 21,074   3,390   3,769   (3)  (423)
Employee stock loans (43)  (43)  (43)  (77)  (77)
Treasury stock (43,349)  (37,414)  (37,414)  (30,522)  (30,522)
Total stockholders’ equity 402,172   479,766   477,351   478,060   467,050 
Total liabilities and stockholders’ equity$3,865,571  $4,205,269  $3,943,832  $3,949,578  $4,074,663 
                    
(1) Fair market value of held-to-maturity securities$  $689,206  $750,900  $783,911  $778,966 
(2) Allowance for loan losses 34,087   34,078   21,915   12,232   17,875 

TABLE 4. 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, 
 2020  2020  2020  2019  2019 
Loans Held-For-Investment by Type                   
Commercial real estate$1,188,329  $1,191,336  $1,200,762  $1,158,022  $1,183,305 
Commercial and industrial 857,244   883,355   542,571   592,052   585,797 
Residential real estate 402,242   442,486   480,603   503,439   531,257 
Agricultural real estate 127,349   129,080   130,795   141,868   143,718 
Consumer 67,465   71,037   64,799   68,378   70,944 
Agricultural 83,084   89,040   87,593   92,893   85,903 
Total loans held-for-investment 2,725,713   2,806,334   2,507,123   2,556,652   2,600,924 
Allowance for loan losses (34,087)  (34,078)  (21,915)  (12,232)  (17,875)
Net loans held-for-investment$2,691,626  $2,772,256  $2,485,208  $2,544,420  $2,583,049 
                    
                    
Asset Quality Ratios                   
Allowance for loan losses to total loans 1.25%  1.21%  0.87%  0.48%  0.69%
Past due or nonaccrual loans to total loans 2.12%  1.88%  2.47%  1.66%  2.23%
Nonperforming assets to total assets 1.60%  1.37%  1.22%  1.19%  1.40%
Nonperforming assets to total loans plus other real estate owned 2.26%  2.05%  1.92%  1.83%  2.19%
Classified assets to bank total regulatory capital 18.85%  20.81%  19.50%  21.24%  29.79%
                    
                    
Selected Average Balance Sheet Data (QTD Average)                   
Investment securities$802,525  $877,308  $907,910  $911,923  $926,839 
Total gross loans receivable 2,758,680   2,806,865   2,525,344   2,568,301   2,646,454 
Interest-earning assets 3,679,168   3,786,629   3,519,267   3,563,642   3,657,970 
Total assets 4,041,187   4,159,336   3,888,205   3,932,909   4,030,606 
Interest-bearing deposits 2,430,407   2,487,187   2,531,508   2,563,519   2,673,007 
Borrowings 377,158   384,727   355,303   377,561   390,562 
Total interest-bearing liabilities 2,807,565   2,871,914   2,886,811   2,941,080   3,063,569 
Total deposits 3,145,810   3,257,631   3,021,181   3,055,275   3,152,785 
Total liabilities 3,558,099   3,675,731   3,405,638   3,459,347   3,567,354 
Total stockholders' equity 483,088   483,605   482,567   473,562   463,252 
Tangible common equity* 329,039   327,411   325,470   315,569   304,492 
                    
                    
Performance ratios                   
Return on average assets (ROAA) annualized (8.90)%  0.16%  0.13%  1.01%  1.02%
Return on average assets before income tax,
provision for loan losses and goodwill
impairment*
 1.24%  1.42%  1.20%  1.43%  1.37%
Return on average equity (ROAE) annualized (74.45)%  1.40%  1.05%  8.39%  8.91%
Return on average equity before income tax,
provision for loan losses and goodwill
impairment*
 10.37%  12.21%  9.70%  11.90%  11.88%
Return on average tangible common equity
(ROATCE) annualized*
 (108.31)%  3.03%  2.35%  13.42%  14.38%
Return on average tangible common equity
adjusted for goodwill impairment*
 12.02%  3.03%  2.35%  13.42%  14.38%
Yield on loans annualized 4.65%  4.68%  5.47%  5.67%  5.70%
Cost of interest-bearing deposits annualized 0.50%  0.63%  1.09%  1.32%  1.56%
Cost of total deposits annualized 0.39%  0.48%  0.91%  1.11%  1.32%
Net interest margin annualized 3.47%  3.49%  3.67%  3.61%  3.42%
Efficiency ratio* 67.38%  61.98%  68.88%  63.63%  63.59%
Non-interest income / average assets 0.64%  0.55%  0.55%  0.67%  0.65%
Non-interest expense / average assets 12.88%  2.31%  2.66%  2.51%  2.38%
                    
                    
Capital Ratios                   
Tier 1 Leverage Ratio 8.76%  8.52%  9.02%  9.02%  8.49%
Common Equity Tier 1 Capital Ratio 12.76%  12.02%  11.67%  11.63%  11.08%
Tier 1 Risk Based Capital Ratio 13.32%  12.57%  12.20%  12.15%  11.59%
Total Risk Based Capital Ratio 17.35%  15.33%  13.00%  12.59%  12.21%
Total stockholders' equity to total assets 10.40%  11.41%  12.10%  12.10%  11.46%
Tangible common equity to tangible assets* 9.23%  8.00%  8.47%  8.45%  7.88%
Book value per common share$27.08  $31.53  $31.41  $30.95  $30.25 
Tangible book value per common share*$23.72  $21.29  $21.10  $20.75  $19.99 
Tangible book value per diluted common share*$23.57  $21.13  $20.96  $20.39  $19.73 

* The value noted is considered a Non-GAAP financial measure. For a reconciliation of Non-GAAP financial measures, see Table 6. Non-GAAP Financial Measures

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

 For the nine months ended  For the nine months ended 
 September 30, 2020  September 30, 2019 
 Average
Outstanding
Balance
  Interest
Income/
Expense
  Average
Yield/Rate(3)(4)
  Average
Outstanding
Balance
  Interest
Income/
Expense
  Average
Yield/Rate(3)(4)
 
Interest-earning assets                       
Loans (1)                       
Commercial and industrial$757,772  $26,788   4.72% $566,658  $28,221   6.66%
Commercial real estate 942,478   36,533   5.18%  1,035,634   41,401   5.34%
Real estate construction 245,167   8,644   4.71%  204,642   10,449   6.83%
Residential real estate 464,340   14,528   4.18%  518,110   18,192   4.69%
Agricultural real estate 133,302   5,574   5.59%  138,861   6,105   5.88%
Consumer 67,255   3,461   6.87%  70,529   4,060   7.70%
Agricultural 86,874   3,753   5.77%  86,463   4,183   6.47%
Total loans 2,697,188   99,281   4.92%  2,620,897   112,611   5.74%
Securities                       
Taxable securities 737,010   12,113   2.20%  780,813   14,724   2.52%
Nontaxable securities 125,352   2,769   2.95%  142,735   3,143   2.94%
Total securities 862,362   14,882   2.31%  923,548   17,867   2.59%
Federal funds sold and other 102,202   1,409   1.84%  84,045   2,037   3.24%
Total interest-earning assets$3,661,752   115,572   4.22% $3,628,490   132,515   4.88%
Interest-bearing liabilities                       
Savings, NOW and money market deposits$1,754,759   4,923   0.37% $1,705,612   16,914   1.33%
Time deposits 728,083   8,904   1.63%  997,270   15,467   2.07%
Total interest-bearing deposits 2,482,842   13,827   0.74%  2,702,882   32,381   1.60%
FHLB advances 271,548   2,198   1.08%  266,118   5,103   2.56%
Other borrowings 100,864   2,454   3.25%  70,044   1,578   3.01%
Total interest-bearing liabilities$2,855,254   18,479   0.86% $3,039,044   39,062   1.72%
                        
Net interest income    $97,093          $93,453     
Interest rate spread         3.36%          3.16%
                        
Net interest margin (2)         3.54%          3.44%
                        
(1) Average loan balances include nonaccrual loans. 
(2) Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets for the period. 
(3) Tax exempt income is not included in the above table on a tax-equivalent basis. 
(4) Actual unrounded values are used to calculate the reported yield or rate disclosed. Accordingly, recalculations using the amounts in thousands as disclosed in this report may not produce the same amounts. 

TABLE 6. QUARTER-TO-DATE NET INTEREST INCOME ANALYSIS (Unaudited)
(Dollars in thousands)

 For the three months ended  For the three months ended 
 September 30, 2020  September 30, 2019 
 Average
Outstanding
Balance
  Interest
Income/
Expense
  Average
Yield/Rate(3)(4)
  Average
Outstanding
Balance
  Interest
Income/
Expense
  Average
Yield/Rate(3)(4)
 
Interest-earning assets                       
Loans (1)                       
Commercial and industrial$848,096  $8,400   3.94% $562,399  $8,845   6.24%
Commercial real estate 979,775   12,886   5.23%  1,012,393   14,678   5.75%
Real estate construction 214,775   2,233   4.14%  211,235   3,191   6.00%
Residential real estate 429,965   4,733   4.38%  561,423   6,402   4.52%
Agricultural real estate 131,725   1,718   5.19%  140,693   2,115   5.96%
Consumer 69,485   1,104   6.32%  71,688   1,441   7.97%
Agricultural 84,859   1,204   5.65%  86,623   1,379   6.32%
Total loans 2,758,680   32,278   4.65%  2,646,454   38,051   5.70%
Securities                       
Taxable securities 683,630   3,476   2.02%  782,994   4,673   2.37%
Nontaxable securities 118,895   923   3.09%  143,845   1,045   2.88%
Total securities 802,525   4,399   2.18%  926,839   5,718   2.45%
Federal funds sold and other 117,963   405   1.36%  84,677   780   3.66%
Total interest-earning assets$3,679,168   37,082   4.01% $3,657,970   44,549   4.83%
Interest-bearing liabilities                       
Savings, NOW and money market deposits$1,784,891   875   0.19% $1,707,459   5,389   1.25%
Time deposits 645,516   2,189   1.35%  965,548   5,118   2.10%
Total interest-bearing deposits 2,430,407   3,064   0.50%  2,673,007   10,507   1.56%
FHLB advances 248,437   471   0.75%  320,528   1,957   2.42%
Other borrowings 128,721   1,440   4.45%  70,034   559   3.17%
Total interest-bearing liabilities$2,807,565   4,975   0.70% $3,063,569   13,023   1.69%
                        
Net interest income    $32,107          $31,526     
Interest rate spread         3.31%          3.14%
                        
Net interest margin (2)         3.47%          3.42%
                        
(1) Average loan balances include nonaccrual loans. 
(2) Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets for the period. 
(3) Tax exempt income is not included in the above table on a tax-equivalent basis. 

TABLE 7. QUARTER-OVER-QUARTER NET INTEREST INCOME ANALYSIS (Unaudited)
(Dollars in thousands)

 For the three months ended  For the three months ended 
 September 30, 2020  June 30, 2020 
 Average
Outstanding
Balance
  Interest
Income/
Expense
  Average
Yield/Rate(3)(4)
  Average
Outstanding
Balance
  Interest
Income/
Expense
  Average
Yield/Rate(3)(4)
 
Interest-earning assets                       
Loans (1)                       
Commercial and industrial$848,096  $8,400   3.94% $868,302  $8,378   3.88%
Commercial real estate 979,775   12,886   5.23%  934,186   12,192   5.25%
Real estate construction 214,775   2,233   4.14%  253,672   2,837   4.50%
Residential real estate 429,965   4,733   4.38%  467,246   4,854   4.18%
Agricultural real estate 131,725   1,718   5.19%  130,533   1,955   6.02%
Consumer 69,485   1,104   6.32%  65,096   1,145   7.07%
Agricultural 84,859   1,204   5.65%  87,830   1,266   5.80%
Total loans 2,758,680   32,278   4.65%  2,806,865   32,627   4.68%
Securities                       
Taxable securities 683,630   3,476   2.02%  753,332   4,017   2.14%
Nontaxable securities 118,895   923   3.09%  123,976   880   2.86%
Total securities 802,525   4,399   2.18%  877,308   4,897   2.24%
Federal funds sold and other 117,963   405   1.36%  102,456   409   1.61%
Total interest-earning assets$3,679,168   37,082   4.01% $3,786,629   37,933   4.03%
Interest-bearing liabilities                       
Savings, NOW and money market deposits$1,784,891   875   0.19% $1,754,280   923   0.21%
Time deposits 645,516   2,189   1.35%  732,907   2,976   1.63%
Total interest-bearing deposits 2,430,407   3,064   0.50%  2,487,187   3,899   0.63%
FHLB advances 248,437   471   0.75%  270,785   552   0.82%
Other borrowings 128,721   1,440   4.45%  113,942   591   2.08%
Total interest-bearing liabilities$2,807,565   4,975   0.70% $2,871,914   5,042   0.71%
                        
Net interest income    $32,107          $32,891     
Interest rate spread         3.31%          3.32%
                        
Net interest margin (2)         3.47%          3.49%
                        
(1) Average loan balances include nonaccrual loans. 
(2) Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets for the period. 
(3) Tax exempt income is not included in the above table on a tax-equivalent basis. 

TABLE 8. NON-GAAP FINANCIAL MEASURES (Unaudited)
(Dollars in thousands, except per share data)

 As of and for the three months ended 
 September 30,  June 30,  March 31,  December 31,  September 30, 
 2020  2020  2020  2019  2019 
                    
Income before income taxes$(93,058) $2,186  $1,703  $13,145  $13,196 
Add: goodwill impairment 104,831             
Less: tax effect 2,649   497   445   3,131   2,790 
Adjusted income$9,124  $1,689  $1,258  $10,014  $10,406 
Weighted average common shares outstanding 15,040,407   15,209,483   15,387,697   15,442,841   15,514,042 
Effect of weighted average dilutive shares assuming positive net income 82,804   94,526   207,327   241,832   193,996 
Weighted average diluted shares 15,123,211   15,304,009   15,595,024   15,684,673   15,708,038 
Diluted earnings per share adjusted for goodwill impairment$0.60  $0.11  $0.08  $0.64  $0.66 
                    
Total stockholders' equity$402,172  $479,766  $477,351  $478,060  $467,050 
Less: goodwill 31,601   136,432   136,432   136,432   136,432 
Less: core deposit intangibles, net 17,101   18,131   19,105   19,907   20,727 
Less: mortgage servicing asset, net 1   2   4   5   7 
Less: naming rights, net 1,141   1,152   1,163   1,174   1,184 
Tangible common equity$352,328  $324,049  $320,647  $320,542  $308,700 
Common shares issued at period end 14,853,487   15,218,301   15,198,986   15,444,434   15,440,334 
Diluted common shares outstanding at period end 14,945,282   15,333,977   15,297,319   15,719,810   15,647,456 
Book value per common share$27.08  $31.53  $31.41  $30.95  $30.25 
Tangible book value per common share$23.72  $21.29  $21.10  $20.75  $19.99 
Tangible book value per diluted common share$23.57  $21.13  $20.96  $20.39  $19.73 
                    
Total assets$3,865,571  $4,205,269  $3,943,832  $3,949,578  $4,074,663 
Less: goodwill 31,601   136,432   136,432   136,432   136,432 
Less: core deposit intangibles, net 17,101   18,131   19,105   19,907   20,727 
Less: mortgage servicing asset, net 1   2   4   5   7 
Less: naming rights, net 1,141   1,152   1,163   1,174   1,184 
Tangible assets$3,815,727  $4,049,552  $3,787,128  $3,792,060  $3,916,313 
Total stockholders' equity to total assets 10.40%  11.41%  12.10%  12.10%  11.46%
Tangible common equity to tangible assets 9.23%  8.00%  8.47%  8.45%  7.88%
                    
Total average stockholders' equity$483,088  $483,605  $482,567  $473,562  $463,252 
Less: average intangible assets 154,049   156,194   157,097   157,993   158,760 
Average tangible common equity$329,039  $327,411  $325,470  $315,569  $304,492 
Net income (loss) allocable to common stockholders$(90,405) $1,689  $1,258  $10,014  $10,406 
Add: goodwill impairment$104,831  $  $  $  $ 
Less: tax effect of goodwill impairment$5,305  $  $  $  $ 
Adjusted net income (loss) plus goodwill impairment$9,121  $1,689  $1,258  $10,014  $10,406 
Amortization of intangible assets 1,043   986   814   833   797 
Less: tax effect of intangible assets amortization 234   207   171   175   167 
Adjusted net income (loss) allocable to common stockholders$9,930  $2,468  $1,901  $10,672  $11,036 
Return on total average stockholders' equity (ROAE) annualized (74.45)%  1.40%  1.05%  8.39%  8.91%
Return on average tangible common equity (ROATCE) annualized (108.31)%  3.03%  2.35%  13.42%  14.38%
Adjusted return on average tangible common equity 12.01%  3.03%  2.35%  13.42%  14.38%
                    
                    
                    
Non-interest expense$130,835  $23,937  $25,758  $24,846  $24,223 
Less: goodwill impairment 104,831             
Non-interest expense, excluding goodwill impairment$26,004  $23,937  $25,758  $24,846  $24,223 
Net interest income$32,107  $32,891  $32,095  $32,405  $31,526 
Non-interest income 6,485   5,732   5,306   6,641   6,572 
Less: net gains (losses) from securities transactions    4   8   (3)  4 
Non-interest income, excluding gains (losses) from securities transactions$6,485  $5,728  $5,298  $6,644  $6,568 
Net interest income plus non-interest income, excluding net gains (losses) from securities transactions$38,592  $38,619  $37,393  $39,049  $38,094 
Non-interest expense to net interest income plus non-interest income 339.02%  61.98%  68.87%  63.63%  63.58%
Efficiency ratio 67.38%  61.98%  68.88%  63.63%  63.59%
Net income (loss) allocable to common stockholders$(90,405) $1,689  $1,258  $10,014  $10,406 
Add: income tax provision (2,653)  497   445   3,131   2,790 
Add: provision for loan losses 815   12,500   9,940   1,055   679 
Add: goodwill impairment 104,831             
Adjusted net income$12,588  $14,686  $11,643  $14,200  $13,875 
Total average assets$4,041,187  $4,159,336  $3,888,205  $3,932,909  $4,030,606 
Total average stockholders' equity$483,088  $483,605  $482,567  $473,562  $463,252 
Return on average assets (ROAA) annualized (8.90)%  0.16%  0.13%  1.01%  1.02%
Adjusted return on average assets 1.24%  1.42%  1.20%  1.43%  1.37%
Adjusted return on average equity 10.37%  12.21%  9.70%  11.90%  11.88%