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Equity Bancshares, Inc. Reports Fourth Quarter Results
Source: Nasdaq GlobeNewswire / 25 Jan 2021 16:31:24 America/Chicago
Equity successfully acquired assets and deposits of Almena State Bank, originates $282.1 million of Main Street Lending Program loans through its continued support programs during the pandemic
and adds $3.93 tangible book value per share in 2020WICHITA, Kan., Jan. 25, 2021 (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 fourth quarter ended December 31, 2020.
Equity reported net income of $12.5 million, or $0.84, per diluted share in the quarter ended December 31, 2020, and a net loss of $75.0 million or $4.97 per share for the year ended December 31, 2020. When excluding the $104.8 million goodwill impairment recognized in the quarter ended September 30, 2020, adjusted net income totaled $23.9 million, or $1.57 per diluted share, for the year ended December 31, 2020. The results in the quarter ended December 31, 2020, reflect the Company’s purchase of assets and deposit liabilities of Almena State Bank, acquired on October 23, 2020, from the Federal Deposit Insurance Corporation (“FDIC”) and the success of Equity’s customers in obtaining forgiveness of Paycheck Protection Program (“PPP”) loans from the Small Business Administration (“SBA”) totaling $102.8 million resulting in a recognition of $3.8 million of fee income.
“No one could have imagined the challenges that our employees, customers and communities faced in 2020 due to the pandemic. The perseverance exhibited in collaborating with our customers through a period of great uncertainty showed the integrity, entrepreneurship and accountability of the Equity team. I am honored to be a part of a team that worked tirelessly for customers when they needed us, and in turn, our customers were able to support our communities in a time of need,” said Brad Elliott, Chairman and CEO of Equity.
“In a year that was dominated by events outside of Equity’s control, we took steps to fundamentally grow our franchise and position the Company for long-term stability and growth. We provided $24.3 million of reserves for potential loan losses, raised $75.0 million of proactive capital through a subordinated debt offering and grew tangible book value $3.93 per share, from $20.75 at December 31, 2019, to $24.68 at December 31, 2020, which is the highest level we have recorded as a publicly traded company.”
Notable Items:
- Tangible book value per common share was $24.68 at December 31, 2020, as compared to $20.75 at December 31, 2019, representing an increase of 18.9% or $3.93 per share. The Company authorized a second stock repurchase program in October 2020, totaling 800,000 shares. During the quarter ended December 31, 2020, the Company repurchased 313,231 shares at a weighted average cost of $20.82, totaling $6.5 million.
- The Company was anticipating adopting ASU 2016-13, also known as Current Expected Credit Losses (“CECL”) at December 31, 2020, effective January 1, 2020. On December 27, 2020, the President signed into law the 2021 Fiscal Year Omnibus Appropriations Bill, which included an option to delay adoption of ASU 2016-13 to January 1, 2022. The Company, after conferring with its advisors, will adopt CECL on January 1, 2021, and will not take the option to further delay adoption.
- During the year ended December 31, 2020, Equity originated $282.1 million of loans through the Main Street Lending Program (“MSLP”). The MSLP program ended at December 31, 2020. Pursuant to the MSLP terms, 95% of the total originations were sold to a special purpose vehicle of the Federal Reserve Bank of Boston.
- Of the $559.3 million of 2020 PPP loans originated, the Company’s customers have successfully had $102.8 million of PPP loans forgiven, resulting in the recognition of fee income totaling $3.8 million and $6.1 million in the three- and twelve-month periods ended December 31, 2020. At December 31, 2020, $253.7 million loans remain from the 2020 PPP with an unrecognized $4.5 million of fee income.
- The Company completed the purchase of assets and assumption of deposit liabilities from the FDIC, as the receiver of Almena State Bank. Consequently, the Company recognized a bargain purchase gain of $2.1 million and $299 thousand of merger related expense in the quarter ended December 31, 2020.
Equity’s Balance Sheet Highlights:
- Total loans held for investment of $2.59 billion at December 31, 2020, as compared to total loans held for investment of $2.56 billion at December 31, 2019.
- Total deposits of $3.45 billion at December 31, 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 $2.82 billion at December 31, 2020, relative to $2.23 billion at December 31, 2019.
- Total assets were $4.01 billion at December 31, 2020, as compared to $3.95 billion at December 31, 2019.
Financial Results for the Quarter Ended December 31, 2020
Net income allocable to common stockholders was $12.5 million, or $0.84 per diluted share, for the three months ended December 31, 2020, as compared to the net loss allocable to common stockholders of $90.4 million, or $6.01 per diluted share, for the three months ended September 30, 2020, an increase of $102.9 million. This increase was primarily attributable to the goodwill impairment charge of $104.8 million taken during the quarter ended September 30, 2020, and a $2.1 million acquisition gain from the Almena State Bank transaction during the quarter ended December 31, 2020. Net income, excluding the gain on acquisition and merger expense, was $10.1 million for the quarter ended December 31, 2020, or $0.67 per diluted share. Net income, excluding the goodwill impairment and using an assumed 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 $35.6 million for the three months ended December 31, 2020, as compared to $32.1 million for the three months ended September 30, 2020, an increase of $3.5 million, or 10.8%. The increase in net interest income was driven by the recognition of fee income from PPP loan forgiveness by the SBA, totaling $3.8 million in the three months ended December 31, 2020, compared to $1.3 million in the three months ended September 30, 2020. As a result of the PPP loan forgiveness, net interest margin increased 41 basis points to 3.88% for the three months ended December 31, 2020 from 3.47% for the three months ended September 30, 2020. The yield on earning assets improved 35 basis points to 4.36% for the quarter ended December 31, 2020 from 4.01% from the previous quarter. The cost of interest-bearing liabilities declined to 0.65% or five basis points for the quarter ended December 31, 2020 from 0.70% in the quarter ended September 30, 2020. The cost of interest-bearing deposits declined seven basis points to 0.43% for the three months ended December 31, 2020 from 0.50% in the previous quarter primarily attributed to the decline in the cost of time deposits, which declined 23 basis points between the quarters. The cost of other borrowings increased to 4.71% in the three months ended December 31, 2020 from 4.45% from the quarter ended September 30, 2020, mainly due to the entire $75.0 million of subordinated debt at 7.0% not being on the balance sheet for the entire third quarter.
Provision for Loan Losses
The provision for loan losses was $1.0 million for the three months ended December 31, 2020, as compared to $815 thousand for the three months ended September 30, 2020. For the three months ended December 31, 2020, we had net charge-offs of $1.4 million as compared to $806 thousand for three months ended September 30, 2020.
Non-Interest Income
Total non-interest income was $8.5 million for the three months ended December 31, 2020, or $6.4 million with the net gain on the purchase and assumption of Almena State Bank excluded, as compared to the $6.5 million reported for the three months ended September 30, 2020. Service charges and fees were $1.8 million representing an increase of $53 thousand, or 3.1%, from the quarter ended September 30, 2020. Debit card income totaled $2.4 million in the quarter ended December 31, 2020, decreasing $90 thousand, or 3.6%, from the quarter ended September 30, 2020.
Non-Interest Expense
Total non-interest expense for the quarter ended December 31, 2020 was $28.5 million, or $28.2 million with merger expense excluded. When the goodwill impairment charge of $104.8 million is excluded from the previous quarter, pro-forma non-interest expense totaled $26.0 million for the quarter ended September 30, 2020. The $2.5 million increase is primarily attributed to a $1.5 million increase in other real estate owned expense and a $437 thousand increase in FDIC insurance assessments. The most significant contributor to the increase in other real estate owned expense was a $947 thousand valuation adjustment on two facilities that were closed in May 2020.
Asset Quality
As of December 31, 2020, Equity’s allowance for loan losses to total loans was 1.30%, as compared to 0.48% at December 31, 2019. Total reserves, including purchase discounts, to total loans were approximately 2.12% as of December 31, 2020, as compared to 0.85% at December 31, 2019. Nonperforming assets were $53.6 million as of December 31, 2020, or 1.34% 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 9.3% at December 31, 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 14.5%, a ratio of total capital to risk-weighted assets of 15.7% and a total leverage ratio of 10.1% at December 31, 2020. At December 31, 2019, Equity Bank’s ratio of common equity tier 1 capital to risk-weighted assets was 12.0%, the ratio of total capital to risk-weighted assets was 12.5% and the 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 fourth quarter 2020 results on Tuesday, January 26, 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. On Tuesday, January 26, 2021, 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. 6781789.
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 February 2, 2021, accessible at (855) 859-2056 with conference ID no. 6781789 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.comMedia Contact:
John J. Hanley
SVP, Senior Director of Marketing
Equity Bancshares, Inc.
(816) 505-4063
jhanley@equitybank.comUnaudited 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
December 31,Year ended
December 31,2020 2019 2020 2019 Interest and dividend income Loans, including fees $ 35,383 $ 36,687 $ 134,664 $ 149,298 Securities, taxable 3,408 4,615 15,521 19,339 Securities, nontaxable 913 1,037 3,682 4,180 Federal funds sold and other 285 645 1,694 2,682 Total interest and dividend income 39,989 42,984 155,561 175,499 Interest expense Deposits 2,755 8,533 16,582 40,914 Federal funds purchased and retail repurchase agreements 25 39 105 155 Federal Home Loan Bank advances 94 1,564 2,292 6,667 Federal Reserve Bank discount window — — 6 — Bank stock loan — 147 415 654 Subordinated debt 1,556 296 3,509 1,251 Total interest expense 4,430 10,579 22,909 49,641 Net interest income 35,559 32,405 132,652 125,858 Provision for loan losses 1,000 1,055 24,255 18,354 Net interest income after provision for loan losses 34,559 31,350 108,397 107,504 Non-interest income Service charges and fees 1,759 2,241 6,856 8,672 Debit card income 2,401 2,101 9,136 8,230 Mortgage banking 855 769 3,153 2,468 Increase in value of bank-owned life insurance 489 504 1,941 1,998 Net gain on acquisition 2,145 — 2,145 — Net gains (losses) from securities transactions (1 ) (3 ) 11 14 Other 852 1,029 2,781 3,606 Total non-interest income 8,500 6,641 26,023 24,988 Non-interest expense Salaries and employee benefits 14,053 11,918 54,129 52,122 Net occupancy and equipment 2,206 2,342 8,784 8,674 Data processing 2,748 2,688 10,991 10,124 Professional fees 1,095 1,359 4,282 4,734 Advertising and business development 801 901 2,498 3,075 Telecommunications 510 486 1,873 2,079 FDIC insurance 797 109 2,088 1,228 Courier and postage 338 328 1,441 1,348 Free nationwide ATM cost 423 440 1,609 1,680 Amortization of core deposit intangibles 1,044 820 3,850 3,168 Loan expense 161 267 789 875 Other real estate owned 1,600 381 2,310 707 Merger expenses 299 — 299 915 Goodwill impairment — — 104,831 — Other 2,385 2,807 9,216 8,906 Total non-interest expense 28,460 24,846 208,990 99,635 Income (loss) before income tax 14,599 13,145 (74,570 ) 32,857 Provision for income taxes 2,111 3,131 400 7,278 Net income (loss) and net income (loss) allocable to common stockholders $ 12,488 $ 10,014 $ (74,970 ) $ 25,579 Basic earnings (loss) per share $ 0.85 $ 0.65 $ (4.97 ) $ 1.64 Diluted earnings (loss) per share $ 0.84 $ 0.64 $ (4.97 ) $ 1.61 Weighted average common shares 14,760,810 15,442,841 15,098,512 15,619,891 Weighted average diluted common shares 14,934,058 15,684,673 15,098,512 15,843,139 TABLE 2. QUARTERLY CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Dollars in thousands, except per share data)As of and for the three months ended December 31,
2020September 30,
2020June 30,
2020March 31,
2020December 31,
2019Interest and dividend income Loans, including fees $ 35,383 $ 32,278 $ 32,627 $ 34,376 $ 36,687 Securities, taxable 3,408 3,476 4,017 4,620 4,615 Securities, nontaxable 913 923 880 966 1,037 Federal funds sold and other 285 405 409 595 645 Total interest and dividend income 39,989 37,082 37,933 40,557 42,984 Interest expense Deposits 2,755 3,064 3,899 6,864 8,533 Federal funds purchased and retail repurchase agreements 25 25 24 31 39 Federal Home Loan Bank advances 94 471 552 1,175 1,564 Federal Reserve Bank discount window — — 6 — — Bank stock loan — — 306 109 147 Subordinated debentures 1,556 1,415 255 283 296 Total interest expense 4,430 4,975 5,042 8,462 10,579 Net interest income 35,559 32,107 32,891 32,095 32,405 Provision for loan losses 1,000 815 12,500 9,940 1,055 Net interest income after provision for loan losses 34,559 31,292 20,391 22,155 31,350 Non-interest income Service charges and fees 1,759 1,706 1,365 2,026 2,241 Debit card income 2,401 2,491 2,201 2,043 2,101 Mortgage banking 855 877 831 590 769 Increase in value of bank-owned life insurance 489 489 481 482 504 Net gain on acquisition 2,145 — — — — Net gains (losses) from securities transactions (1 ) — 4 8 (3 ) Other 852 922 850 157 1,029 Total non-interest income 8,500 6,485 5,732 5,306 6,641 Non-interest expense Salaries and employee benefits 14,053 13,877 12,695 13,504 11,918 Net occupancy and equipment 2,206 2,224 2,119 2,235 2,342 Data processing 2,748 2,817 2,763 2,663 2,688 Professional fees 1,095 877 943 1,367 1,359 Advertising and business development 801 598 403 696 901 Telecommunications 510 486 390 487 486 FDIC insurance 797 360 414 517 109 Courier and postage 338 366 353 384 328 Free nationwide ATM cost 423 439 327 420 440 Amortization of core deposit intangibles 1,044 1,030 974 802 820 Loan expense 161 107 287 234 267 Other real estate owned 1,600 133 269 308 381 Merger expenses 299 — — — — Goodwill impairment — 104,831 — — — Other 2,385 2,690 2,000 2,141 2,807 Total non-interest expense 28,460 130,835 23,937 25,758 24,846 Income (loss) before income tax 14,599 (93,058 ) 2,186 1,703 13,145 Provision for income taxes (benefit) 2,111 (2,653 ) 497 445 3,131 Net income (loss) and net income (loss) allocable to common stockholders $ 12,488 $ (90,405 ) $ 1,689 $ 1,258 $ 10,014 Basic earnings (loss) per share $ 0.85 $ (6.01 ) $ 0.11 $ 0.08 $ 0.65 Diluted earnings (loss) per share $ 0.84 $ (6.01 ) $ 0.11 $ 0.08 $ 0.64 Weighted average common shares 14,760,810 15,040,407 15,209,483 15,387,697 15,442,841 Weighted average diluted common shares 14,934,058 15,040,407 15,304,009 15,595,024 15,684,673 TABLE 3. CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in thousands)December 31,
2020September 30,
2020June 30,
2020March 31,
2020December 31,
2019ASSETS Cash and due from banks $ 280,150 $ 65,534 $ 178,045 $ 141,989 $ 88,973 Federal funds sold 548 305 245 263 318 Cash and cash equivalents 280,698 65,839 178,290 142,252 89,291 Interest-bearing time deposits in other banks 249 499 2,248 2,498 2,498 Available-for-sale securities 871,827 798,576 177,228 187,812 142,067 Held-to-maturity securities(1) — — 662,522 721,992 769,059 Loans held for sale 12,394 9,053 4,802 6,494 5,933 Loans, net of allowance for loan losses(2) 2,557,987 2,691,626 2,772,256 2,485,208 2,544,420 Other real estate owned, net 11,733 8,727 7,374 5,870 8,293 Premises and equipment, net 89,412 86,087 87,055 84,732 84,478 Bank-owned life insurance 77,044 76,555 76,066 75,585 75,103 Federal Reserve Bank and Federal Home Loan Bank stock 16,415 32,545 31,832 31,662 31,137 Interest receivable 15,831 18,110 19,598 15,549 15,738 Goodwill 31,601 31,601 136,432 136,432 136,432 Core deposit intangibles, net 16,057 17,101 18,131 19,105 19,907 Other 32,108 29,252 31,435 28,641 25,222 Total assets $ 4,013,356 $ 3,865,571 $ 4,205,269 $ 3,943,832 $ 3,949,578 LIABILITIES AND STOCKHOLDERS’ EQUITY Deposits Demand $ 791,639 $ 693,967 $ 756,613 $ 508,441 $ 481,298 Total non-interest-bearing deposits 791,639 693,967 756,613 508,441 481,298 Savings, NOW and money market 2,029,097 1,816,307 1,800,132 1,668,145 1,749,048 Time 626,854 623,344 690,522 783,811 833,170 Total interest-bearing deposits 2,655,951 2,439,651 2,490,654 2,451,956 2,582,218 Total deposits 3,447,590 3,133,618 3,247,267 2,960,397 3,063,516 Federal funds purchased and retail repurchase agreements 36,029 46,295 51,557 37,113 35,708 Federal Home Loan Bank advances 10,144 167,862 344,900 389,620 324,373 Bank stock loan — — — 40,000 8,990 Subordinated debentures 87,684 87,537 55,575 14,638 14,561 Contractual obligations 5,189 5,478 5,571 5,781 5,836 Interest payable and other liabilities 19,071 22,609 20,633 18,932 18,534 Total liabilities 3,605,707 3,463,399 3,725,503 3,466,481 3,471,518 Commitments and contingent liabilities Stockholders’ equity Common stock 174 174 174 174 174 Additional paid-in capital 386,820 386,017 384,955 383,850 382,731 Retained earnings 50,787 38,299 128,704 127,015 125,757 Accumulated other comprehensive income (loss) 19,781 21,074 3,390 3,769 (3 ) Employee stock loans (43 ) (43 ) (43 ) (43 ) (77 ) Treasury stock (49,870 ) (43,349 ) (37,414 ) (37,414 ) (30,522 ) Total stockholders’ equity 407,649 402,172 479,766 477,351 478,060 Total liabilities and stockholders’ equity $ 4,013,356 $ 3,865,571 $ 4,205,269 $ 3,943,832 $ 3,949,578 (1) Fair market value of held-to-maturity securities $ — $ — $ 689,206 $ 750,900 $ 783,911 (2) Allowance for loan losses 33,709 34,087 34,078 21,915 12,232 TABLE 4. SELECTED FINANCIAL HIGHLIGHTS (Unaudited)
(Dollars in thousands, except per share data)As of and for the three months ended December 31, September 30, June 30, March 31, December 31, 2020 2020 2020 2020 2019 Loans Held-For-Investment by Type Commercial real estate $ 1,188,696 $ 1,188,329 $ 1,191,336 $ 1,200,762 $ 1,158,022 Commercial and industrial 734,495 857,244 883,355 542,571 592,052 Residential real estate 382,026 402,242 442,486 480,603 503,439 Agricultural real estate 133,693 127,349 129,080 130,795 141,868 Consumer 58,464 67,465 71,037 64,799 68,378 Agricultural 94,322 83,084 89,040 87,593 92,893 Total loans held-for-investment 2,591,696 2,725,713 2,806,334 2,507,123 2,556,652 Allowance for loan losses (33,709 ) (34,087 ) (34,078 ) (21,915 ) (12,232 ) Net loans held-for-investment $ 2,557,987 $ 2,691,626 $ 2,772,256 $ 2,485,208 $ 2,544,420 Asset Quality Ratios Allowance for loan losses to total loans 1.30 % 1.25 % 1.21 % 0.87 % 0.48 % Past due or nonaccrual loans to total loans 2.11 % 2.12 % 1.88 % 2.47 % 1.66 % Nonperforming assets to total assets 1.34 % 1.55 % 1.37 % 1.22 % 1.19 % Nonperforming assets to total loans plus other real estate owned 2.06 % 2.19 % 2.05 % 1.92 % 1.83 % Classified assets to bank total regulatory capital 25.50 % 18.35 % 20.81 % 19.50 % 21.24 % Selected Average Balance Sheet Data (QTD Average) Investment securities $ 814,114 $ 802,525 $ 877,308 $ 907,910 $ 911,923 Total gross loans receivable 2,692,223 2,758,680 2,806,865 2,525,344 2,568,301 Interest-earning assets 3,647,730 3,679,168 3,786,629 3,519,267 3,563,642 Total assets 3,910,628 4,041,187 4,159,336 3,888,205 3,932,909 Interest-bearing deposits 2,551,219 2,430,407 2,487,187 2,531,508 2,563,519 Borrowings 172,730 377,158 384,727 355,303 377,561 Total interest-bearing liabilities 2,723,949 2,807,565 2,871,914 2,886,811 2,941,080 Total deposits 2,960,791 3,145,810 3,257,631 3,021,181 3,055,275 Total liabilities 3,501,055 3,558,100 3,675,731 3,405,638 3,459,347 Total stockholders' equity 409,572 483,088 483,605 482,567 473,562 Tangible common equity* 355,025 329,039 327,411 325,470 315,569 Performance ratios Return on average assets (ROAA) annualized 1.27 % (8.90 )% 0.16 % 0.13 % 1.01 % Return on average assets before income tax,
provision for loan losses and goodwill
impairment*1.59 % 1.24 % 1.42 % 1.20 % 1.43 % Return on average equity (ROAE) annualized 12.13 % (74.45 )% 1.40 % 1.05 % 8.39 % Return on average equity before income tax,
provision for loan losses and goodwill
impairment*15.15 % 10.37 % 12.21 % 9.70 % 11.90 % Return on average tangible common equity
(ROATCE) annualized*14.93 % (108.31 )% 3.03 % 2.35 % 13.42 % Return on average tangible common equity
adjusted for goodwill impairment*14.93 % 12.02 % 3.03 % 2.35 % 13.42 % Yield on loans annualized 5.23 % 4.65 % 4.68 % 5.47 % 5.67 % Cost of interest-bearing deposits annualized 0.43 % 0.50 % 0.63 % 1.09 % 1.32 % Cost of total deposits annualized 0.37 % 0.39 % 0.48 % 0.91 % 1.11 % Net interest margin annualized 3.88 % 3.47 % 3.49 % 3.67 % 3.61 % Efficiency ratio* 67.19 % 67.38 % 61.98 % 68.88 % 63.63 % Non-interest income / average assets 0.86 % 0.64 % 0.55 % 0.55 % 0.67 % Non-interest expense / average assets 2.90 % 12.88 % 2.31 % 2.66 % 2.51 % Capital Ratios Tier 1 Leverage Ratio 9.30 % 8.76 % 8.52 % 9.02 % 9.02 % Common Equity Tier 1 Capital Ratio 12.82 % 12.76 % 12.02 % 11.67 % 11.63 % Tier 1 Risk Based Capital Ratio 13.38 % 13.32 % 12.57 % 12.20 % 12.15 % Total Risk Based Capital Ratio 17.36 % 17.35 % 15.33 % 13.00 % 12.59 % Total stockholders' equity to total assets 10.16 % 10.40 % 11.41 % 12.10 % 12.10 % Tangible common equity to tangible assets* 9.05 % 9.23 % 8.00 % 8.47 % 8.45 % Book value per common share $ 28.04 $ 27.08 $ 31.53 $ 31.41 $ 30.95 Tangible book value per common share* $ 24.68 $ 23.72 $ 21.29 $ 21.10 $ 20.75 Tangible book value per diluted common share* $ 24.32 $ 23.57 $ 21.13 $ 20.96 $ 20.39 * 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 year ended For the year ended December 31, 2020 December 31, 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 $ 763,971 $ 35,601 4.66 % $ 567,215 $ 34,225 6.03 % Commercial real estate 952,083 50,667 5.32 % 1,012,146 57,316 5.66 % Real estate construction 238,015 10,947 4.60 % 212,658 13,776 6.48 % Residential real estate 449,789 19,894 4.42 % 519,119 24,338 4.69 % Agricultural real estate 133,813 8,008 5.98 % 140,365 8,496 6.05 % Consumer 70,064 4,603 6.57 % 70,390 5,563 7.90 % Agricultural 88,206 4,944 5.61 % 85,747 5,584 6.51 % Total loans 2,695,941 134,664 5.00 % 2,607,640 149,298 5.73 % Securities Taxable securities 727,452 15,521 2.13 % 777,802 19,339 2.49 % Nontaxable securities 122,783 3,682 3.00 % 142,816 4,180 2.93 % Total securities 850,235 19,203 2.26 % 920,618 23,519 2.55 % Federal funds sold and other 112,053 1,694 1.51 % 83,887 2,682 3.20 % Total interest-earning assets $ 3,658,229 155,561 4.25 % $ 3,612,145 175,499 4.86 % Interest-bearing liabilities Savings, NOW and money market deposits $ 1,795,108 5,893 0.33 % $ 1,699,952 21,008 1.24 % Time deposits 704,921 10,689 1.52 % 967,803 19,906 2.06 % Total interest-bearing deposits 2,500,029 16,582 0.66 % 2,667,755 40,914 1.53 % FHLB advances 213,155 2,292 1.08 % 277,328 6,667 2.40 % Other borrowings 109,064 4,035 3.70 % 69,270 2,060 2.97 % Total interest-bearing liabilities $ 2,822,248 22,909 0.81 % $ 3,014,353 49,641 1.65 % Net interest income $ 132,652 $ 125,858 Interest rate spread 3.44 % 3.21 % Net interest margin (2) 3.63 % 3.48 % (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 December 31, 2020 December 31, 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 $ 782,433 $ 10,943 5.56 % $ 568,868 $ 8,657 6.04 % Commercial real estate 980,686 12,647 5.13 % 942,447 13,966 5.88 % Real estate construction 216,714 2,301 4.22 % 236,447 3,308 5.55 % Residential real estate 406,450 5,005 4.90 % 522,113 5,815 4.42 % Agricultural real estate 135,337 2,244 6.60 % 144,824 2,236 6.13 % Consumer 78,430 1,080 5.48 % 69,980 1,385 7.85 % Agricultural 92,173 1,163 5.02 % 83,622 1,320 6.26 % Total loans 2,692,223 35,383 5.23 % 2,568,301 36,687 5.67 % Securities Taxable securities 698,985 3,408 1.94 % 768,867 4,615 2.38 % Nontaxable securities 115,129 913 3.15 % 143,056 1,037 2.88 % Total securities 814,114 4,321 2.11 % 911,923 5,652 2.46 % Federal funds sold and other 141,393 285 0.80 % 83,418 645 3.07 % Total interest-earning assets $ 3,647,730 39,989 4.36 % $ 3,563,642 42,984 4.79 % Interest-bearing liabilities Savings, NOW and money market deposits $ 1,915,280 970 0.20 % $ 1,683,157 4,094 0.97 % Time deposits 635,939 1,785 1.12 % 880,362 4,438 2.00 % Total interest-bearing deposits 2,551,219 2,755 0.43 % 2,563,519 8,533 1.32 % FHLB advances 39,245 94 0.95 % 310,592 1,564 2.00 % Other borrowings 133,485 1,581 4.71 % 66,969 482 2.86 % Total interest-bearing liabilities $ 2,723,949 4,430 0.65 % $ 2,941,080 10,579 1.43 % Net interest income $ 35,559 $ 32,405 Interest rate spread 3.71 % 3.36 % Net interest margin (2) 3.88 % 3.61 % (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 December 31, 2020 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 $ 782,433 $ 10,943 5.56 % $ 848,096 $ 8,400 3.94 % Commercial real estate 980,686 12,647 5.13 % 979,775 12,886 5.23 % Real estate construction 216,714 2,301 4.22 % 214,775 2,233 4.14 % Residential real estate 406,450 5,005 4.90 % 429,965 4,733 4.38 % Agricultural real estate 135,337 2,244 6.60 % 131,725 1,718 5.19 % Consumer 78,430 1,080 5.48 % 69,485 1,104 6.32 % Agricultural 92,173 1,163 5.02 % 84,859 1,204 5.65 % Total loans 2,692,223 35,383 5.23 % 2,758,680 32,278 4.65 % Securities Taxable securities 698,985 3,408 1.94 % 683,630 3,476 2.02 % Nontaxable securities 115,129 913 3.15 % 118,895 923 3.09 % Total securities 814,114 4,321 2.11 % 802,525 4,399 2.18 % Federal funds sold and other 141,393 285 0.80 % 117,963 405 1.36 % Total interest-earning assets $ 3,647,730 39,989 4.36 % $ 3,679,168 37,082 4.01 % Interest-bearing liabilities Savings, NOW and money market deposits $ 1,915,280 970 0.20 % $ 1,784,891 875 0.19 % Time deposits 635,939 1,785 1.12 % 645,516 2,189 1.35 % Total interest-bearing deposits 2,551,219 2,755 0.43 % 2,430,407 3,064 0.50 % FHLB advances 39,245 94 0.95 % 248,437 471 0.75 % Other borrowings 133,485 1,581 4.71 % 128,721 1,440 4.45 % Total interest-bearing liabilities $ 2,723,949 4,430 0.65 % $ 2,807,565 4,975 0.70 % Net interest income $ 35,559 $ 32,107 Interest rate spread 3.71 % 3.31 % Net interest margin (2) 3.88 % 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 8. NON-GAAP FINANCIAL MEASURES (Unaudited)
(Dollars in thousands, except per share data)As of and for the three months ended December 31, September 30, June 30, March 31, December 31, 2020 2020 2020 2020 2019 Income before income taxes $ 14,599 $ (93,058 ) $ 2,186 $ 1,703 $ 13,145 Add: goodwill impairment — 104,831 — — — Less: tax effect 2,111 2,652 497 445 3,131 Adjusted income $ 12,488 $ 9,121 $ 1,689 $ 1,258 $ 10,014 Weighted average common shares outstanding 14,760,810 15,040,407 15,209,483 15,387,697 15,442,841 Effect of weighted average dilutive shares assuming positive net income 173,248 82,804 94,526 207,327 241,832 Weighted average diluted shares 14,934,058 15,123,211 15,304,009 15,595,024 15,684,673 Diluted earnings per share adjusted for goodwill impairment $ 0.84 $ 0.60 $ 0.11 $ 0.08 $ 0.64 Total stockholders' equity $ 407,649 $ 402,172 $ 479,766 $ 477,351 $ 478,060 Less: goodwill 31,601 31,601 136,432 136,432 136,432 Less: core deposit intangibles, net 16,057 17,101 18,131 19,105 19,907 Less: mortgage servicing asset, net — 1 2 4 5 Less: naming rights, net 1,130 1,141 1,152 1,163 1,174 Tangible common equity $ 358,861 $ 352,328 $ 324,049 $ 320,647 $ 320,542 Common shares issued at period end 14,540,556 14,853,487 15,218,301 15,198,986 15,444,434 Diluted common shares outstanding at period end 14,756,378 14,945,282 15,333,977 15,297,319 15,719,810 Book value per common share $ 28.04 $ 27.08 $ 31.53 $ 31.41 $ 30.95 Tangible book value per common share $ 24.68 $ 23.72 $ 21.29 $ 21.10 $ 20.75 Tangible book value per diluted common share $ 24.32 $ 23.57 $ 21.13 $ 20.96 $ 20.39 Total assets $ 4,013,356 $ 3,865,571 $ 4,205,269 $ 3,943,832 $ 3,949,578 Less: goodwill 31,601 31,601 136,432 136,432 136,432 Less: core deposit intangibles, net 16,057 17,101 18,131 19,105 19,907 Less: mortgage servicing asset, net — 1 2 4 5 Less: naming rights, net 1,130 1,141 1,152 1,163 1,174 Tangible assets $ 3,964,568 $ 3,815,727 $ 4,049,552 $ 3,787,128 $ 3,792,060 Total stockholders' equity to total assets 10.16 % 10.40 % 11.41 % 12.10 % 12.10 % Tangible common equity to tangible assets 9.05 % 9.23 % 8.00 % 8.47 % 8.45 % Total average stockholders' equity $ 409,572 $ 483,088 $ 483,605 $ 482,567 $ 473,562 Less: average intangible assets 54,547 154,049 156,194 157,097 157,993 Average tangible common equity $ 355,025 $ 329,039 $ 327,411 $ 325,470 $ 315,569 Net income (loss) allocable to common stockholders $ 12,488 $ (90,405 ) $ 1,689 $ 1,258 $ 10,014 Add: goodwill impairment $ — $ 104,831 $ — $ — $ — Less: tax effect of goodwill impairment $ — $ 5,305 $ — $ — $ — Adjusted net income (loss) plus goodwill impairment $ 12,488 $ 9,121 $ 1,689 $ 1,258 $ 10,014 Amortization of intangible assets 1,055 1,043 986 814 833 Less: tax effect of intangible assets amortization 222 234 207 171 175 Adjusted net income (loss) allocable to common stockholders $ 13,321 $ 9,930 $ 2,468 $ 1,901 $ 10,672 Return on total average stockholders' equity (ROAE) annualized 12.13 % (74.45 )% 1.40 % 1.05 % 8.39 % Return on average tangible common equity (ROATCE) annualized 14.93 % (108.31 )% 3.03 % 2.35 % 13.42 % Adjusted return on average tangible common equity 14.93 % 12.01 % 3.03 % 2.35 % 13.42 % Non-interest expense $ 28,460 $ 130,835 $ 23,937 $ 25,758 $ 24,846 Less: merger expense 299 — — — — Less: goodwill impairment — 104,831 — — — Non-interest expense, excluding goodwill impairment $ 28,161 $ 26,004 $ 23,937 $ 25,758 $ 24,846 Net interest income $ 35,559 $ 32,107 $ 32,891 $ 32,095 $ 32,405 Non-interest income 8,500 6,485 5,732 5,306 6,641 Less: net gain on acquisition 2,145 — — — — Less: net gains (losses) from securities transactions (1 ) — 4 8 (3 ) Non-interest income, excluding gains (losses) from securities transactions $ 6,356 $ 6,485 $ 5,728 $ 5,298 $ 6,644 Net interest income plus non-interest income, excluding net gains (losses) from securities transactions $ 41,915 $ 38,592 $ 38,619 $ 37,393 $ 39,049 Non-interest expense to net interest income plus non-interest income 64.60 % 339.02 % 61.98 % 68.87 % 63.63 % Efficiency ratio 67.19 % 67.38 % 61.98 % 68.88 % 63.63 % Net income (loss) allocable to common stockholders $ 12,488 $ (90,405 ) $ 1,689 $ 1,258 $ 10,014 Add: income tax provision 2,111 (2,653 ) 497 445 3,131 Add: provision for loan losses 1,000 815 12,500 9,940 1,055 Add: goodwill impairment — 104,831 — — — Adjusted net income $ 15,599 $ 12,588 $ 14,686 $ 11,643 $ 14,200 Total average assets $ 3,910,628 $ 4,041,187 $ 4,159,336 $ 3,888,205 $ 3,932,909 Total average stockholders' equity $ 409,572 $ 483,088 $ 483,605 $ 482,567 $ 473,562 Return on average assets (ROAA) annualized 1.27 % (8.90 )% 0.16 % 0.13 % 1.01 % Adjusted return on average assets 1.59 % 1.24 % 1.42 % 1.20 % 1.43 % Adjusted return on average equity 15.15 % 10.37 % 12.21 % 9.70 % 11.90 %