Equity Bancshares, Inc. Results Include Strong Organic Growth While Expanding Kansas Franchise

Company’s third quarter includes loan growth, exclusive of PPP, accompanying successful integration of largest merger in Company’s history and announcement of the Company’s first common stock dividend

WICHITA, Kan., Oct. 19, 2021 (GLOBE NEWSWIRE) -- Equity Bancshares, Inc. (NASDAQ: EQBK), (“Equity”, “the Company”, “we”, “us”, “our”), the Wichita-based holding company of Equity Bank, reported net income of $11.8 million and $0.80 earnings per diluted share for the quarter ended September 30, 2021. Equity’s results occurred as the Company completed its acquisition of American State Bancshares, Inc. on October 1, 2021.

“As the founder of Equity Bank, our results this quarter are particularly satisfying, as we celebrate continued loan growth, excellent earnings and our first cash stock dividend while simultaneously closing the largest acquisition in our history. I am grateful to our loyal employees and stockholders as we continue to grow and improve Equity Bank,” said Brad S. Elliott, Chairman and CEO of Equity.

“I’m pleased with the growth of the Equity Bank brand and the hard work and collaboration of our team members throughout our regions, including our bank employees, lenders, and operations professionals who placed the customer first and executed with open doors, expertise, and availability,” said Mr. Elliott. “We’ve successfully integrated American State Bank & Trust Company into our platform while continuing to provide momentum, support and expertise to our customers throughout our franchise.”

Equity customers successfully had $175.7 million of Paycheck Protection Program (“PPP”) loans forgiven during the quarter, resulting in the recognition of fee income totaling $7.7 million in the three-month period ended September 30, 2021. At September 30, 2021, the total unrecognized fee income associated with PPP loans was $3.0 million.

“Our entrepreneurial culture drives the efficiency of our merger process, assists in building a solid community banking network that is responsive to a diverse customer base and excels at adding core deposits and new households in a changing environment. Our mission as a community bank is to continue to prioritize local customers, local service, and bankers willing to go above and beyond. As we continue to grow, expand and deliver, our focus will drive value for our shareholders,” said Mr. Elliott.

Notable Items:

• Diluted earnings per share of $0.80, adjusted to reflect core operating results, was $0.96 per diluted share. The adjustments to earnings were comprised of the exclusion of merger expenses of $4.0 million, non-accrual interest income of $1.4 million, bank-owned life insurance death benefit of $486 thousand and additional reserving for repurchase obligations associated with the Company’s Federal Deposit Insurance Corporation (“FDIC”) assisted transaction of $771 thousand.
• Linked quarter service fee revenue, including deposit services, mortgage banking, trust and wealth and insurance services increased to $6.7 million from $6.4 million, or 3.7%.
• The Company authorized a second stock repurchase program in the third quarter of 2020 totaling 800,000 shares. During the quarter ended September 30, 2021, the Company repurchased 57,239 shares at a weighted average cost of $30.64 per share, totaling $1.8 million. At the end of the quarter, capacity of 123,448 shares remained under the current repurchase program. The Board authorized the repurchase of up to an additional 1,000,000 shares of Equity’s outstanding common stock, beginning October 29, 2021, and concluding October 28, 2022, subject to non-objection by the Company’s primary regulators.
• The Company announced and paid its first common stock dividend of $0.08 per share to shareholders of record as of September 30, 2021.

Equity’s Balance Sheet Highlights:

• During the quarter total loans decreased from $2.82 billion to $2.69 billion, including a reduction in PPP assets of $175.7 million. Excluding the impact of PPP, organic growth linked quarter was $41.8 million, or 7.1% annualized.
• Total deposits of $3.66 billion at September 30, 2021, as compared to $3.69 billion at June 30, 2021. Checking, savings and money market accounts were $3.08 billion at September 30, 2021, relative to $3.03 billion at June 30, 2021. As compared to December 31, 2020, the Bank has increased non-interest-bearing deposits by $192.8 million, or 24.4%.
• As excess liquidity continues to impact the operating environment at quarter end, securities and interest-earning cash and cash equivalents comprise 31.4% of average earnings assets, up from 28.0% at the end of the linked quarter and 25.0% at the end of the comparable quarter in the previous year.
  

Financial Results for the Quarter Ended September 30, 2021

Net income allocable to common stockholders was $11.8 million, or $0.80 per diluted share, for the three months ended September 30, 2021, as compared to $15.2 million, or $1.03 per diluted share, for the three months ended June 30, 2021, a decrease of $3.4 million. This third quarter decrease was attributable to an increase in non-interest expense of $4.9 million, an increase in provision for credit losses of $2.7 million and a decrease of $1.3 million in non-interest income, partially offset by an increase in net interest income $4.3 million and a decrease in provision for income taxes of $1.1 million.

Net Interest Income

Net interest income was $39.0 million for the three months ended September 30, 2021, as compared to $34.6 million for the three months ended June 30, 2021, an increase of $4.3 million, or 12.6%. The increase in net interest income was primarily driven by an increase in loan fees, due to the forgiveness of PPP assets, of $2.0 million for the quarter ended September 30, 2021, compared to the quarter ended June 30, 2021. The yield on interest-earning assets increased 32-basis points to 4.20% during the quarter ended September 30, 2021, as compared to 3.88% for the quarter ended June 30, 2021. The cost of interest-bearing deposits declined by 3-basis points to 0.28% for the three months ended September 30, 2021, from 0.31% in the previous quarter.

Provision for Credit Losses

During the three months ended September 30, 2021, there was a provision of $1.1 million in the allowance for credit losses recognized through the provision for credit losses as compared to a net release of $1.7 million of provision for credit losses for the three months ended June 30, 2021. The comparative increase was primarily driven by an increase in reserves on specifically assessed assets which was partially offset by improving trends in the Company’s loss experience and moderating economic impacts. For the three months ended September 30, 2021, we had net charge-offs of $129 thousand as compared to $567 thousand for the three months ended June 30, 2021.

Non-Interest Income

Total non-interest income was $7.8 million for the three months ended September 30, 2021, as compared to $9.1 million for the three months ended June 30, 2021, or a decline of 14.0% quarter over quarter. Other non-interest income was $546 thousand, a decrease of $1.5 million, or 73.6%, from the quarter ended June 30, 2021. The decrease in other non-interest income was primarily due to the accounting for potential repurchase obligations associated with assets previously purchased through a FDIC assisted transaction. In the second quarter, the Company trued up the guarantee on a number of assets resulting in income recognition of $917 thousand. In the third quarter, two unrelated assets were identified to have experienced deterioration requiring the recognition of a reserve, resulting in $771 thousand in expense. The net change in these inputs account for the change in the line item.

During the quarter, service fee revenue, including deposit services, mortgage banking, trust and wealth management, credit cards and insurance increased to $6.7 million from $6.4 million during the second quarter. The growth was driven by increasing transaction activity and insurance commissions and fees.

Non-Interest Expense

Total non-interest expense for the quarter ended September 30, 2021, was $30.7 million as compared to $25.8 million for the quarter ended June 30, 2021. The $4.9 million change is primarily attributed to increases of $3.6 million in merger expenses, $819 thousand in salaries and employee benefits, driven by a comparative reduction in the deferral of cost associated with loan originations, and $372 thousand loss on debt extinguishment, related to the repayment of fixed-rate term advances with Federal Home Loan Bank that were acquired through a prior merger.

Asset Quality

As of September 30, 2021, Equity’s allowance for credit losses to total loans was 2.0%, as compared to 1.8% at June 30, 2021. Nonperforming assets were $74.3 million as of September 30, 2021, or 1.7% of total assets, compared to $66.7 million at June 30, 2021, or 1.6% of total assets. Total classified assets, including loans rated special mention or worse, other real estate owned and other repossessed assets were $112.4 million, or 24.3% of regulatory capital, up from $103.5 million, or 23.2% of regulatory capital as of June 30, 2021.

During the quarter non-performing assets increased by $7.5 million due to the transition of one significant relationship to non-accrual. The Company provided $1.1 million to the allowance for credit losses, comprised of an increase in specific reserves, primarily driven by the migration of this asset to non-accrual, partially offset by improving historical loss performance and the continued moderation of economic conditions following the height of the pandemic.

Regulatory Capital

The Company’s ratio of common equity tier 1 capital to risk-weighted assets was 12.4%, the total capital to risk-weighted assets was 16.6% and the total leverage ratio was 9.0% at September 30, 2021. At December 31, 2020, the Company’s common equity tier 1 capital to risk-weighted assets ratio was 12.8%, the total capital to risk-weighted assets ratio was 17.4% and the total leverage ratio was 9.3%.

The Company’s subsidiary, Equity Bank, had a ratio of common equity tier 1 capital to risk-weighted assets of 14.5%, a ratio of total capital to risk-weighted assets of 15.8% and a total leverage ratio of 10.1% at September 30, 2021. At December 31, 2020, Equity Bank’s ratio of common equity tier 1 capital to risk-weighted assets was 14.5%, the ratio of total capital to risk-weighted assets was 15.7% and the total leverage ratio was 10.1%.

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 recognized, how much of that dollar is expended. To improve the comparability of the ratio to our peers, non-core items are excluded. 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, it can function 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 the 2021 third quarter results on Wednesday, October 20, 2021, at 10:00 a.m. eastern time, 9:00 a.m. central time.

Investors, news media and other participants should register for the call or audio webcast at investor.equitybank.com. On Wednesday, October 20, 2021, participants may also dial into the call toll-free at [phone] from anywhere in the U.S. or [phone] internationally, using conference ID no. 7698604.

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, 2021, accessible at [phone] with conference ID no. 7698604 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 9, 2021, 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.
[phone]
[e-mail]        

Media Contact:

John J. Hanley
SVP, Senior Director of Marketing
Equity Bancshares, Inc.
[phone]
[e-mail]

Unaudited Financial Tables

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

		Three months ended September 30,								Nine months ended September 30,
		2021				2020				2021				2020
Interest and dividend income
Loans, including fees		$	37,581			$	32,278			$	102,392			$	99,281
Securities, taxable			3,920				3,476				11,242				12,113
Securities, nontaxable			655				923				2,096				2,769
Federal funds sold and other			290				405				846				1,409
Total interest and dividend income			42,446				37,082				116,576				115,572
Interest expense
Deposits			1,881				3,064				6,316				13,827
Federal funds purchased and retail repurchase agreements			24				25				72				80
Federal Home Loan Bank advances			10				471				155				2,198
Federal Reserve Bank discount window			—				—				—				6
Bank stock loan			—				—				—				415
Subordinated debt			1,556				1,415				4,669				1,953
Total interest expense			3,471				4,975				11,212				18,479
Net interest income			38,975				32,107				105,364				97,093
Provision (reversal) for credit losses			1,058				815				(6,355	)			23,255
Net interest income after provision (reversal) for credit losses			37,917				31,292				111,719				73,838
Non-interest income
Service charges and fees			2,360				1,706				6,125				5,097
Debit card income			2,574				2,491				7,603				6,735
Mortgage banking			801				877				2,584				2,298
Increase in value of bank-owned life insurance			1,169				489				2,446				1,452
Net gain on acquisition			—				—				585				—
Net gains (losses) from securities transactions			381			—					398				12
Other			546				922				3,902				1,929
Total non-interest income			7,831				6,485				23,643				17,523
Non-interest expense
Salaries and employee benefits			13,588				13,877				39,079				40,076
Net occupancy and equipment			2,475				2,224				7,170				6,578
Data processing			3,257				2,817				9,394				8,243
Professional fees			1,076				877				3,148				3,187
Advertising and business development			760				598				2,241				1,697
Telecommunications			439				486				1,531				1,363
FDIC insurance			465				360				1,305				1,291
Courier and postage			344				366				1,040				1,103
Free nationwide ATM cost			519				439				1,504				1,186
Amortization of core deposit intangibles			1,030				1,030				3,094				2,806
Loan expense			207				107				626				628
Other real estate owned			(342	)			133				(805	)			710
Loss on debt extinguishment			372				—				372				—
Merger expenses			4,015				—				4,627				—
Goodwill impairment			—				104,831				—				104,831
Other			2,484				2,690				7,050				6,831
Total non-interest expense			30,689				130,835				81,376				180,530
Income (loss) before income tax			15,059				(93,058	)			53,986				(89,169	)
Provision for income taxes			3,286				(2,653	)			11,972				(1,711	)
Net income (loss) and net income (loss) allocable to common stockholders		$	11,773			$	(90,405	)		$	42,014			$	(87,458	)
Basic earnings (loss) per share		$	0.82			$	(6.01	)		$	2.92			$	(5.75	)
Diluted earnings (loss) per share		$	0.80			$	(6.01	)		$	2.86			$	(5.75	)
Weighted average common shares			14,384,302				15,040,407				14,397,146				15,211,901
Weighted average diluted common shares			14,669,312				15,040,407				14,688,092				15,211,901

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

		As of and for the three months ended
		September 30, 2021				June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020
Interest and dividend income
Loans, including fees		$	37,581			$	33,810			$	31,001			$	35,383			$	32,278
Securities, taxable			3,920				3,523				3,799				3,408				3,476
Securities, nontaxable			655				717				724				913				923
Federal funds sold and other			290				268				288				285				405
Total interest and dividend income			42,446				38,318				35,812				39,989				37,082
Interest expense
Deposits			1,881				2,025				2,410				2,755				3,064
Federal funds purchased and retail repurchase agreements			24				26				22				25				25
Federal Home Loan Bank advances			10				80				65				94				471
Subordinated debt			1,556				1,557				1,556				1,556				1,415
Total interest expense			3,471				3,688				4,053				4,430				4,975
Net interest income			38,975				34,630				31,759				35,559				32,107
Provision (reversal) for credit losses			1,058				(1,657	)			(5,756	)			1,000				815
Net interest income after provision (reversal) for credit losses			37,917				36,287				37,515				34,559				31,292
Non-interest income
Service charges and fees			2,360				2,169				1,596				1,759				1,706
Debit card income			2,574				2,679				2,350				2,401				2,491
Mortgage banking			801				848				935				855				877
Increase in value of bank-owned life insurance			1,169				676				601				489				489
Net gain on acquisition			—				663				(78	)			2,145				—
Net gains (losses) from securities transactions			381				—				17				(1	)			—
Other			546				2,065				1,291				852				922
Total non-interest income			7,831				9,100				6,712				8,500				6,485
Non-interest expense
Salaries and employee benefits			13,588				12,769				12,722				14,053				13,877
Net occupancy and equipment			2,475				2,327				2,368				2,206				2,224
Data processing			3,257				3,474				2,663				2,748				2,817
Professional fees			1,076				999				1,073				1,095				877
Advertising and business development			760				799				682				801				598
Telecommunications			439				512				580				510				486
FDIC insurance			465				425				415				797				360
Courier and postage			344				327				369				338				366
Free nationwide ATM cost			519				513				472				423				439
Amortization of core deposit intangibles			1,030				1,030				1,034				1,044				1,030
Loan expense			207				181				238				161				107
Other real estate owned			(342	)			(468	)			5				1,600				133
Loss on debt extinguishment			372				—				—				—				—
Merger expenses			4,015				460				152				299				—
Goodwill impairment			—				—				—				—				104,831
Other			2,484				2,458				2,108				2,385				2,690
Total non-interest expense			30,689				25,806				24,881				28,460				130,835
Income (loss) before income tax			15,059				19,581				19,346				14,599				(93,058	)
Provision for income taxes (benefit)			3,286				4,415				4,271				2,111				(2,653	)
Net income (loss) and net income (loss) allocable to common stockholders		$	11,773			$	15,166			$	15,075			$	12,488			$	(90,405	)
Basic earnings (loss) per share		$	0.82			$	1.06			$	1.04			$	0.85			$	(6.01	)
Diluted earnings (loss) per share		$	0.80			$	1.03			$	1.02			$	0.84			$	(6.01	)
Weighted average common shares			14,384,302				14,356,958				14,464,291				14,760,810				15,040,407
Weighted average diluted common shares			14,669,312				14,674,838				14,734,083				14,934,058				15,040,407

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

		September 30, 2021				June 30, 2021				March 31, 2021				December 31, 2020				September 30, 2020
ASSETS
Cash and due from banks		$	141,645			$	138,869			$	136,190			$	280,150			$	65,534
Federal funds sold			673				452				498				548				305
Cash and cash equivalents			142,318				139,321				136,688				280,698				65,839
Interest-bearing time deposits in other banks			—				—				249				249				499
Available-for-sale securities			1,157,423				1,041,613				998,100				871,827				798,576
Loans held for sale			4,108				6,183				8,609				12,394				9,053
Loans, net of allowance for credit losses(1)			2,633,148				2,763,227				2,740,215				2,557,987				2,691,626
Other real estate owned, net			10,267				10,861				10,559				11,733				8,727
Premises and equipment, net			90,727				90,876				90,322				89,412				86,087
Bank-owned life insurance			103,431				103,321				102,645				77,044				76,555
Federal Reserve Bank and Federal Home Loan Bank stock			14,540				18,454				15,174				16,415				32,545
Interest receivable			15,519				15,064				16,655				15,831				18,110
Goodwill			31,601				31,601				31,601				31,601				31,601
Core deposit intangibles, net			12,963				13,993				15,023				16,057				17,101
Other			47,223				33,702				30,344				32,108				29,252
Total assets		$	4,263,268			$	4,268,216			$	4,196,184			$	4,013,356			$	3,865,571
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Demand		$	984,436			$	992,565			$	972,364			$	791,639			$	693,967
Total non-interest-bearing deposits			984,436				992,565				972,364				791,639				693,967
Savings, NOW and money market			2,092,849				2,035,496				2,074,261				2,029,097				1,816,307
Time			585,492				659,494				587,905				626,854				623,344
Total interest-bearing deposits			2,678,341				2,694,990				2,662,166				2,655,951				2,439,651
Total deposits			3,662,777				3,687,555				3,634,530				3,447,590				3,133,618
Federal funds purchased and retail repurchase agreements			39,137				47,184				40,339				36,029				46,295
Federal Home Loan Bank advances			—				9,208				9,926				10,144				167,862
Subordinated debt			88,030				87,908				87,788				87,684				87,537
Contractual obligations			18,771				4,469				4,856				5,189				5,478
Interest payable and other liabilities			36,804				18,897				20,930				19,071				22,609
Total liabilities			3,845,519				3,855,221				3,798,369				3,605,707				3,463,399
Commitments and contingent liabilities
Stockholders’ equity
Common stock			178				176				175				174				174
Additional paid-in capital			392,321				389,394				387,939				386,820				386,017
Retained earnings			79,226				68,625				53,459				50,787				38,299
Accumulated other comprehensive income, net of tax			9,475				13,450				12,019				19,781				21,074
Employee stock loans			—				—				—				(43	)			(43	)
Treasury stock			(63,451	)			(58,650	)			(55,777	)			(49,870	)			(43,349	)
Total stockholders’ equity			417,749				412,995				397,815				407,649				402,172
Total liabilities and stockholders’ equity		$	4,263,268			$	4,268,216			$	4,196,184			$	4,013,356			$	3,865,571
(1) Allowance for credit losses		$	52,763			$	51,834			$	55,525			$	33,709			$	34,087

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,
		2021				2021				2021				2020				2020
Loans Held For Investment by Type
Commercial real estate		$	1,308,707			$	1,261,214			$	1,218,537			$	1,188,696			$	1,188,329
Commercial and industrial			569,513				732,126				820,736				734,495				857,244
Residential real estate			490,633				503,110				438,503				381,958				402,242
Agricultural real estate			138,793				129,020				134,944				133,693				127,349
Agricultural			93,767				97,912				93,764				94,322				83,084
Consumer			84,498				91,679				89,256				58,532				67,465
Total loans held-for-investment			2,685,911				2,815,061				2,795,740				2,591,696				2,725,713
Allowance for credit losses			(52,763	)			(51,834	)			(55,525	)			(33,709	)			(34,087	)
Net loans held for investment		$	2,633,148			$	2,763,227			$	2,740,215			$	2,557,987			$	2,691,626
Asset Quality Ratios
Allowance for credit losses on loans to total loans			1.96	%			1.84	%			1.99	%			1.30	%			1.25	%
Past due or nonaccrual loans to total loans			2.78	%			2.09	%			2.30	%			1.99	%			2.12	%
Nonperforming assets to total assets			1.74	%			1.56	%			1.67	%			1.36	%			1.55	%
Nonperforming assets to total loans plus other real estate owned			2.76	%			2.36	%			2.50	%			2.10	%			2.19	%
Classified assets to bank total regulatory capital			24.25	%			23.20	%			26.45	%			25.50	%			18.35	%
Selected Average Balance Sheet Data (QTD Average)
Investment securities		$	1,061,178			$	986,986			$	947,453			$	814,114			$	802,525
Total gross loans receivable			2,748,202				2,853,145				2,736,918				2,692,223				2,758,680
Interest-earning assets			4,005,509				3,964,633				3,891,140				3,647,730				3,679,168
Total assets			4,275,298				4,231,439				4,143,752				3,910,628				4,041,187
Interest-bearing deposits			2,702,040				2,656,052				2,690,159				2,551,219				2,430,407
Borrowings			132,581				171,658				139,360				172,730				377,158
Total interest-bearing liabilities			2,834,621				2,827,710				2,829,519				2,723,949				2,807,565
Total deposits			3,686,169				3,624,950				3,577,625				2,960,791				3,145,810
Total liabilities			3,852,419				3,827,400				3,748,114				3,501,056				3,558,099
Total stockholders' equity			422,879				404,039				395,638				409,572				483,088
Tangible common equity*			376,544				356,705				347,262				355,025				329,039
Performance ratios
Return on average assets (ROAA) annualized			1.09	%			1.44	%			1.48	%			1.27	%			(8.90	)%
Return on average assets before income tax, provision for loan losses and goodwill impairment*			1.50	%			1.70	%			1.33	%			1.59	%			1.24	%
Return on average equity (ROAE) annualized			11.05	%			15.06	%			15.45	%			12.13	%			(74.45	)%
Return on average equity before income tax, provision for loan losses and goodwill impairment*			15.12	%			17.79	%			13.93	%			15.15	%			10.37	%
Return on average tangible common equity (ROATCE) annualized*			13.27	%			17.98	%			18.57	%			14.93	%			(108.31	)%
Return on average tangible common equity adjusted for goodwill impairment*			13.27	%			17.98	%			18.57	%			14.93	%			12.01	%
Yield on loans annualized			5.43	%			4.75	%			4.59	%			5.23	%			4.65	%
Cost of interest-bearing deposits annualized			0.28	%			0.31	%			0.36	%			0.43	%			0.50	%
Cost of total deposits annualized			0.20	%			0.22	%			0.27	%			0.37	%			0.39	%
Net interest margin annualized			3.86	%			3.50	%			3.31	%			3.88	%			3.47	%
Efficiency ratio*			56.65	%			58.85	%			64.18	%			67.19	%			67.38	%
Non-interest income / average assets			0.73	%			0.86	%			0.66	%			0.86	%			0.64	%
Non-interest expense / average assets			2.85	%			2.45	%			2.44	%			2.90	%			12.88	%
Capital Ratios
Tier 1 Leverage Ratio			9.02	%			8.88	%			8.73	%			9.30	%			8.76	%
Common Equity Tier 1 Capital Ratio			12.39	%			12.41	%			12.53	%			12.82	%			12.76	%
Tier 1 Risk Based Capital Ratio			12.90	%			12.93	%			13.08	%			13.37	%			13.32	%
Total Risk Based Capital Ratio			16.63	%			16.73	%			17.02	%			17.35	%			17.35	%
Total stockholders' equity to total assets			9.80	%			9.68	%			9.48	%			10.16	%			10.40	%
Tangible common equity to tangible assets*			8.82	%			8.68	%			8.44	%			9.05	%			9.23	%
Book value per common share		$	29.08			$	28.76			$	27.66			$	28.04			$	27.08
Tangible book value per common share*		$	25.90			$	25.51			$	24.34			$	24.68			$	23.72
Tangible book value per diluted common share*		$	25.42			$	24.98			$	23.87			$	24.32			$	23.57

* The value noted is considered a Non-GAAP financial measure. For a reconciliation of Non-GAAP financial measures, see Table 8. 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, 2021												September 30, 2020
	Average Outstanding Balance				Interest Income/ Expense				Average Yield/Rate(3)(4)				Average Outstanding Balance				Interest Income/ Expense				Average Yield/Rate(3)(4)
Interest-earning assets
Loans (1)
Commercial and industrial	$	752,795			$	34,609				6.15	%		$	757,773			$	26,789				4.72	%
Commercial real estate		990,803				34,943				4.72	%			942,478				36,533				5.18	%
Real estate construction		264,344				7,195				3.64	%			245,167				8,644				4.71	%
Residential real estate		457,761				14,167				4.14	%			464,340				14,528				4.18	%
Agricultural real estate		135,795				5,203				5.12	%			133,302				5,574				5.59	%
Agricultural		93,680				3,432				4.90	%			86,873				3,752				5.77	%
Consumer		84,285				2,843				4.51	%			67,255				3,461				6.87	%
Total loans		2,779,463				102,392				3.94	%			2,697,188				99,281				4.92	%
Securities
Taxable securities		898,461				11,242				1.67	%			737,009				12,113				2.20	%
Nontaxable securities		100,495				2,096				2.79	%			125,352				2,769				2.95	%
Total securities		998,956				13,338				1.79	%			862,361				14,882				2.31	%
Federal funds sold and other		175,761				846				0.64	%			102,202				1,409				1.84	%
Total interest-earning assets	$	3,954,180				116,576				3.94	%		$	3,661,751				115,572				4.22	%
Interest-bearing liabilities
Savings, NOW and money market deposits	$	2,076,643				2,728				0.18	%		$	1,754,759				4,923				0.37	%
Time deposits		606,151				3,588				0.79	%			728,083				8,904				1.63	%
Total interest-bearing deposits		2,682,794				6,316				0.31	%			2,482,842				13,827				0.74	%
FHLB advances		16,325				155				1.27	%			271,548				2,198				0.24	%
Other borrowings		131,516				4,741				4.82	%			100,865				2,454				3.25	%
Total interest-bearing liabilities	$	2,830,635				11,212				0.53	%		$	2,855,255				18,479				0.86	%
Net interest income					$	105,364											$	97,093
Interest rate spread										3.41	%											3.36	%
Net interest margin (2)										3.56	%											3.54	%
(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, 2021												September 30, 2020
	Average Outstanding Balance				Interest Income/ Expense				Average Yield/Rate(3)(4)				Average Outstanding Balance				Interest Income/ Expense				Average Yield/Rate(3)(4)
Interest-earning assets
Loans (1)
Commercial and industrial	$	630,622			$	13,646				8.59	%		$	848,096			$	8,400				3.94	%
Commercial real estate		1,009,141				12,072				4.75	%			979,775				12,886				5.23	%
Real estate construction		283,106				2,664				3.73	%			214,775				2,233				4.14	%
Residential real estate		512,135				5,073				3.93	%			429,965				4,733				4.38	%
Agricultural real estate		134,673				1,819				5.36	%			131,725				1,718				5.19	%
Agricultural		91,878				1,370				5.92	%			84,859				1,204				5.65	%
Consumer		86,647				937				4.29	%			69,485				1,104				6.32	%
Total loans		2,748,202				37,581				5.43	%			2,758,680				32,278				4.65	%
Securities
Taxable securities		966,651				3,920				1.61	%			683,630				3,476				2.02	%
Nontaxable securities		94,527				655				2.75	%			118,895				923				3.09	%
Total securities		1,061,178				4,575				1.71	%			802,525				4,399				2.18	%
Federal funds sold and other		196,129				290				0.59	%			117,963				405				1.36	%
Total interest-earning assets	$	4,005,509				42,446				4.20	%		$	3,679,168				37,082				4.01	%
Interest-bearing liabilities
Savings, NOW and money market deposits	$	2,082,515				862				0.16	%		$	1,784,891				875				0.19	%
Time deposits		619,525				1,019				0.65	%			645,516				2,189				1.35	%
Total interest-bearing deposits		2,702,040				1,881				0.28	%			2,430,407				3,064				0.50	%
FHLB advances		1,401				10				2.78	%			248,437				471				0.75	%
Other borrowings		131,180				1,580				4.78	%			128,721				1,440				4.45	%
Total interest-bearing liabilities	$	2,834,621				3,471				0.49	%		$	2,807,565				4,975				0.70	%
Net interest income					$	38,975											$	32,107
Interest rate spread										3.71	%											3.31	%
Net interest margin (2)										3.86	%											3.47	%
(1) Average loan balances include nonaccrual loans.
(2) Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets for the period.
(3) Tax exempt income is not included in the above table on a tax-equivalent basis.

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

	For the three months ended												For the three months ended
	September 30, 2021												June 30, 2021
	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	$	630,622			$	13,646				8.59	%		$	826,647			$	11,729				5.69	%
Commercial real estate		1,009,141				12,072				4.75	%			991,033				11,433				4.63	%
Real estate construction		283,106				2,664				3.73	%			253,947				2,352				3.71	%
Residential real estate		512,135				5,073				3.93	%			465,525				4,642				4.00	%
Agricultural real estate		134,673				1,819				5.36	%			131,906				1,687				5.13	%
Agricultural		91,878				1,370				5.92	%			94,407				1,024				4.35	%
Consumer		86,647				937				4.29	%			89,680				943				4.22	%
Total loans		2,748,202				37,581				5.43	%			2,853,145				33,810				4.75	%
Securities
Taxable securities		966,651				3,920				1.61	%			887,983				3,523				1.59	%
Nontaxable securities		94,527				655				2.75	%			99,003				717				2.90	%
Total securities		1,061,178				4,575				1.71	%			986,986				4,240				1.72	%
Federal funds sold and other		196,129				290				0.59	%			124,502				268				0.86	%
Total interest-earning assets	$	4,005,509				42,446				4.20	%		$	3,964,633				38,318				3.88	%
Interest-bearing liabilities
Savings, NOW and money market deposits	$	2,082,515				862				0.16	%		$	2,068,319				895				0.17	%
Time deposits		619,525				1,019				0.65	%			587,733				1,130				0.77	%
Total interest-bearing deposits		2,702,040				1,881				0.28	%			2,656,052				2,025				0.31	%
FHLB advances		1,401				10				2.78	%			37,656				80				0.86	%
Other borrowings		131,180				1,580				4.78	%			134,002				1,583				4.74	%
Total interest-bearing liabilities	$	2,834,621				3,471				0.49	%		$	2,827,710				3,688				0.52	%
Net interest income					$	38,975											$	34,630
Interest rate spread										3.71	%											3.36	%
Net interest margin (2)										3.86	%											3.50	%
(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,
		2021				2021				2021				2020				2020
Income before income taxes		$	15,059			$	19,581			$	19,346			$	14,599			$	(93,058	)
Add: goodwill impairment			—				—				—				—				104,831
Less: tax effect			3,286				4,415				4,271				2,111				2,652
Adjusted income		$	11,773			$	15,166			$	15,075			$	12,488			$	9,121
Weighted average common shares outstanding			14,384,302				14,356,958				14,464,291				14,760,810				15,040,407
Effect of weighted average dilutive shares assuming positive net income			285,010				317,880				269,792				173,248				82,804
Weighted average diluted shares			14,669,312				14,674,838				14,734,083				14,934,058				15,123,211
Diluted earnings per share adjusted for goodwill impairment		$	0.80			$	1.03			$	1.02			$	0.84			$	0.60
Total stockholders' equity		$	417,749			$	412,995			$	397,815			$	407,649			$	402,172
Less: goodwill			31,601				31,601				31,601				31,601				31,601
Less: core deposit intangibles, net			12,963				13,993				15,023				16,057				17,101
Less: mortgage servicing asset, net			—				—				—				—				1
Less: naming rights, net			1,098				1,109				1,119				1,130				1,141
Tangible common equity		$	372,087			$	366,292			$	350,072			$	358,861			$	352,328
Common shares issued at period end			14,365,785				14,360,172				14,383,913				14,540,556				14,853,487
Diluted common shares outstanding at period end			14,637,306				14,664,603				14,668,287				14,756,378				14,945,282
Book value per common share		$	29.08			$	28.76			$	27.66			$	28.04			$	27.08
Tangible book value per common share		$	25.90			$	25.51			$	24.34			$	24.68			$	23.72
Tangible book value per diluted common share		$	25.42			$	24.98			$	23.87			$	24.32			$	23.57
Total assets		$	4,263,268			$	4,268,216			$	4,196,184			$	4,013,356			$	3,865,571
Less: goodwill			31,601				31,601				31,601				31,601				31,601
Less: core deposit intangibles, net			12,963				13,993				15,023				16,057				17,101
Less: mortgage servicing asset, net			—				—				—				—				1
Less: naming rights, net			1,098				1,109				1,119				1,130				1,141
Tangible assets		$	4,217,606			$	4,221,513			$	4,148,441			$	3,964,568			$	3,815,727
Total stockholders' equity to total assets			9.80	%			9.68	%			9.48	%			10.16	%			10.40	%
Tangible common equity to tangible assets			8.82	%			8.68	%			8.44	%			9.05	%			9.23	%
Total average stockholders' equity		$	422,879			$	404,039			$	395,638			$	409,572			$	483,088
Less: average intangible assets			46,335				47,334				48,376				54,547				154,049
Average tangible common equity		$	376,544			$	356,705			$	347,262			$	355,025			$	329,039
Net income (loss) allocable to common stockholders		$	11,773			$	15,166			$	15,075			$	12,488			$	(90,405	)
Add: goodwill impairment			—				—				—				—				104,831
Less: tax effect of goodwill impairment			—				—				—				—				5,305
Adjusted net income (loss) plus goodwill impairment			11,773				15,166				15,075				12,488				9,121
Amortization of intangible assets			1,040				1,041				1,045				1,055				1,043
Less: tax effect of intangible assets amortization			218				219				219				222				234
Adjusted net income (loss) allocable to common stockholders		$	12,595			$	15,988			$	15,901			$	13,321			$	9,930
Return on total average stockholders' equity (ROAE) annualized			11.05	%			15.06	%			15.45	%			12.13	%			(74.45	)%
Return on average tangible common equity (ROATCE) annualized			13.27	%			17.98	%			18.57	%			14.93	%			(108.31	)%
Adjusted return on average tangible common equity			13.27	%			17.98	%			18.57	%			14.93	%			12.01	%
Non-interest expense		$	30,689			$	25,806			$	24,881			$	28,460			$	130,835
Less: merger expense			4,015				460				152				299				—
Less: loss on debt extinguishment			372				—				—				—				—
Less: goodwill impairment			—				—				—				—				104,831
Non-interest expense, excluding merger expense, loss on debt extinguishment and goodwill impairment		$	26,302			$	25,346			$	24,729			$	28,161			$	26,004
Net interest income		$	38,975			$	34,630			$	31,759			$	35,559			$	32,107
Non-interest income			7,831				9,100				6,712				8,500				6,485
Less: net gain on acquisition			—				663				(78	)			2,145				—
Less: net gains (losses) from securities transactions			381				—				17				(1	)			—
Non-interest income, excluding gains (losses) from securities transactions		$	7,450			$	8,437			$	6,773			$	6,356			$	6,485
Net interest income plus non-interest income, excluding net gain on acquisition and net gains (losses) from securities transactions		$	46,425			$	43,067			$	38,532			$	41,915			$	38,592
Non-interest expense less goodwill impairment to net interest income plus non-interest income			65.57	%			59.01	%			64.67	%			64.60	%			67.38	%
Efficiency ratio			56.65	%			58.85	%			64.18	%			67.19	%			67.38	%
Net income (loss) allocable to common stockholders		$	11,773			$	15,166			$	15,075			$	12,488			$	(90,405	)
Add: income tax provision			3,286				4,415				4,271				2,111				(2,653	)
Add: provision (reversal) of credit losses			1,058				(1,657	)			(5,756	)			1,000				815
Add: goodwill impairment			—				—				—				—				104,831
Adjusted net income		$	16,117			$	17,924			$	13,590			$	15,599			$	12,588
Total average assets		$	4,275,298			$	4,231,439			$	4,143,752			$	3,910,628			$	4,041,187
Total average stockholders' equity		$	422,879			$	404,039			$	395,638			$	409,572			$	483,088
Return on average assets (ROAA) annualized			1.09	%			1.44	%			1.48	%			1.27	%			(8.90	)%
Adjusted return on average assets			1.50	%			1.70	%			1.33	%			1.59	%			1.24	%
Adjusted return on average equity			15.12	%			17.79	%			13.93	%			15.15	%			10.37	%