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West Bancorporation, Inc. Announces Second Quarter 2024 Financial Results and Declares Quarterly Dividend
Source: Nasdaq GlobeNewswire / 25 Jul 2024 08:30:01 America/New_York
WEST DES MOINES, Iowa, July 25, 2024 (GLOBE NEWSWIRE) -- West Bancorporation, Inc. (Nasdaq: WTBA; the “Company”), parent company of West Bank, today reported second quarter 2024 net income of $5.2 million, or $0.31 per diluted common share, compared to first quarter 2024 net income of $5.8 million, or $0.35 per diluted common share, and second quarter 2023 net income of $5.9 million, or $0.35 per diluted common share. On July 24, 2024, the Company’s Board of Directors declared a regular quarterly dividend of $0.25 per common share. The dividend is payable on August 21, 2024, to stockholders of record on August 7, 2024.
David Nelson, President and Chief Executive Officer of the Company, commented, “Our credit quality remains pristine as a result of our disciplined loan growth and credit risk management practices. The ratio of nonperforming assets to total assets remains negligible at 0.01%. In the first half of 2024, we have seen deposits grow, net interest income improve and net interest margin stabilize.”
David Nelson added, “Our efficiency ratio has increased as expected with the costs associated with our new buildings. Our buildings are designed as tools for building strong relationships and facilitating business development. We believe these strategic investments will continue to drive profitable growth similar to the successes we have had in our newer Minnesota offices.”
Second Quarter 2024 Financial Highlights Quarter Ended
June 30, 2024Six Months Ended
June 30, 2024Net income (in thousands) $5,192 $11,001 Return on average equity 9.50 % 10.07 % Return on average assets 0.53 % 0.57 % Efficiency ratio (a non-GAAP measure) 67.14 % 64.62 % Nonperforming assets to total assets 0.01 % 0.01 % Second Quarter 2024 Compared to First Quarter 2024 Overview
- Loans increased $18.6 million in the second quarter of 2024, or 2.5 percent annualized. The increase is primarily due to the funding of previously committed construction loans.
- No credit loss expense was recorded in either the first or second quarter of 2024.
- The allowance for credit losses to total loans was 0.95 percent at June 30, 2024 and March 31, 2024. Nonaccrual loans at June 30, 2024 consisted of three loans with a total balance of $521 thousand, compared to one loan with a balance of $289 thousand at March 31, 2024.
- Deposits increased $115.9 million, or 3.8 percent, in the second quarter of 2024. Brokered deposits totaled $370.3 million at June 30, 2024, compared to $396.4 million at March 31, 2024, a decrease of $26.1 million. Excluding brokered deposits, deposits increased $142.0 million during the second quarter of 2024. In the second quarter of 2024, a local municipal customer deposited approximately $120.0 million of bond proceeds that are expected to be withdrawn over the next 12-18 months. As of June 30, 2024, estimated uninsured deposits, which exclude deposits in the IntraFi® reciprocal network, brokered deposits and public funds protected by state programs, accounted for approximately 26.3 percent of total deposits.
- Borrowed funds decreased to $525.5 million at June 30, 2024, compared to $639.7 million at March 31, 2024. The decrease was primarily attributable to a decrease of $113.0 million in federal funds purchased and other short-term borrowings as a result of the increase in deposits.
- The efficiency ratio (a non-GAAP measure) was 67.14 percent for the second quarter of 2024, compared to 62.04 percent for the first quarter of 2024. The increase in the efficiency ratio was primarily due to the increase in noninterest expense, partially offset by the increase in net interest income. Salaries and benefits increased primarily due to annual officer compensation increases and compensation related accrual adjustments. Occupancy and equipment increased primarily due to the occupancy costs associated with the Company’s newly constructed headquarters.
- Net interest margin, on a fully tax-equivalent basis (a non-GAAP measure), was 1.86 percent for the second quarter of 2024, compared to 1.88 percent for the first quarter of 2024. Net interest income for the second quarter of 2024 was $17.2 million, compared to $16.8 million for the first quarter of 2024.
- The tangible common equity ratio was 5.65 percent as of both June 30, 2024 and March 31, 2024.
Second Quarter 2024 Compared to Second Quarter 2023 Overview
- Loans increased $191.7 million at June 30, 2024, or 6.8 percent, compared to June 30, 2023. The increase is primarily due to the funding of previously committed construction loans.
- Deposits increased $344.6 million at June 30, 2024, compared to June 30, 2023. Included in deposits were brokered deposits totaling $370.3 million at June 30, 2024, compared to $230.7 million at June 30, 2023. Brokered deposits were used to reduce short-term borrowed funds and to fund loan growth. Excluding brokered deposits, deposits increased $205.0 million, or 7.9 percent, as of June 30, 2024, compared to June 30, 2023. In the second quarter of 2024, a local municipal customer deposited approximately $120.0 million of bond proceeds that are expected to be withdrawn over the next 12-18 months.
- Borrowed funds decreased to $525.5 million at June 30, 2024, compared to $593.9 million at June 30, 2023. The decrease was primarily attributable to a decrease of $98.7 million in federal funds purchased and other short-term borrowings, partially offset by an increase of $35.0 million in FHLB one-month rolling advances hedged with long-term interest rate swaps.
- The efficiency ratio (a non-GAAP measure) was 67.14 percent for the second quarter of 2024, compared to 62.83 percent for the second quarter of 2023. The increase in the efficiency ratio in the second quarter of 2024 compared to the second quarter of 2023 was primarily due to the decrease in net interest income and increase in noninterest expense. Occupancy and equipment increased primarily due to the occupancy costs associated with the Company’s newly constructed headquarters.
- Net interest margin, on a fully tax-equivalent basis (a non-GAAP measure), was 1.86 percent for the second quarter of 2024, compared to 2.02 percent for the second quarter of 2023. Net interest income for the second quarter of 2024 was $17.2 million, compared to $17.3 million for the second quarter of 2023.
The Company filed its report on Form 10-Q with the Securities and Exchange Commission today. Please refer to that document for a more in-depth discussion of the Company’s financial results. The Form 10-Q is available on the Investor Relations section of West Bank’s website at www.westbankstrong.com.
The Company will discuss its results in a conference call scheduled for 2:00 p.m. Central Time on Thursday, July 25, 2024. The telephone number for the conference call is 800-715-9871. The conference ID for the conference call is 8511345. A recording of the call will be available until August 8, 2024, by dialing 800-770-2030. The conference ID for the replay call is 8511345, followed by the # key.
About West Bancorporation, Inc. (Nasdaq: WTBA)
West Bancorporation, Inc. is headquartered in West Des Moines, Iowa. Serving customers since 1893, West Bank, a wholly-owned subsidiary of West Bancorporation, Inc., is a community bank that focuses on lending, deposit services, and trust services for small- to medium-sized businesses and consumers. West Bank has six offices in the Des Moines, Iowa metropolitan area, one office in Coralville, Iowa, and four offices in Minnesota in the cities of Rochester, Owatonna, Mankato and St. Cloud.
Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to the Company’s business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meanings of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may appear throughout this report. These forward-looking statements are generally identified by the words “believes,” “expects,” “intends,” “anticipates,” “projects,” “future,” “confident,” “may,” “should,” “will,” “strategy,” “plan,” “opportunity,” “will be,” “will likely result,” “will continue” or similar references, or references to estimates, predictions or future events. Such forward-looking statements are based upon certain underlying assumptions, risks and uncertainties. Because of the possibility that the underlying assumptions are incorrect or do not materialize as expected in the future, actual results could differ materially from these forward-looking statements. Risks and uncertainties that may affect future results include: interest rate risk, including the effects of sustained high interest rates by the Federal Reserve; fluctuations in the values of the securities held in our investment portfolio, including as a result of changes in interest rates; competitive pressures, including from non-bank competitors such as “fintech” companies and digital asset service providers; pricing pressures on loans and deposits; our ability to successfully manage liquidity risk; changes in credit and other risks posed by the Company’s loan portfolio, including declines in commercial or residential real estate values or changes in the allowance for credit losses dictated by new market conditions, accounting standards or regulatory requirements; the concentration of large deposits from certain clients who have balances above current FDIC insurance limits; changes in local, national and international economic conditions, including high rates of inflation and possible recession; the effects of recent developments and events in the financial services industry, including the large-scale deposit withdrawals over a short period of time that resulted in recent bank failures; changes in legal and regulatory requirements, limitations and costs including in response to the recent bank failures; changes in customers’ acceptance of the Company’s products and services; the occurrence of fraudulent activity, breaches or failures of our or our third-party partners’ information security controls or cyber-security related incidents, including as a result of sophisticated attacks using artificial intelligence and similar tools; unexpected outcomes of existing or new litigation involving the Company; the monetary, trade and other regulatory policies of the U.S. government; acts of war or terrorism, including the ongoing Israeli-Palestinian conflict and the Russian invasion of Ukraine, widespread disease or pandemics, or other adverse external events; risks related to climate change and the negative impact it may have on our customers and their businesses; changes to U.S. tax laws, regulations and guidance; potential changes in federal policy and at regulatory agencies as a result of the upcoming 2024 presidential election; talent and labor shortages; and any other risks described in the “Risk Factors” sections of reports filed by the Company with the Securities and Exchange Commission. The Company undertakes no obligation to revise or update such forward-looking statements to reflect current or future events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
For more information contact:
Jane Funk, Executive Vice President, Treasurer and Chief Financial Officer (515) 222-5766WEST BANCORPORATION, INC. AND SUBSIDIARY Financial Information (unaudited) (in thousands) As of CONDENSED BALANCE SHEETS June 30,
2024March 31,
2024December 31,
2023September 30,
2023June 30,
2023Assets Cash and due from banks $ 27,994 $ 27,071 $ 33,245 $ 18,819 $ 29,776 Interest-bearing deposits 121,825 120,946 32,112 1,802 1,968 Securities available for sale, at fair value 588,452 605,735 623,919 609,365 645,091 Federal Home Loan Bank stock, at cost 21,065 26,181 22,957 26,691 22,488 Loans 2,998,774 2,980,133 2,927,535 2,849,777 2,807,075 Allowance for credit losses (28,422 ) (28,373 ) (28,342 ) (28,147 ) (27,938 ) Loans, net 2,970,352 2,951,760 2,899,193 2,821,630 2,779,137 Premises and equipment, net 101,965 95,880 86,399 75,675 66,683 Bank-owned life insurance 44,416 44,138 43,864 43,589 43,328 Other assets 89,046 90,981 84,069 104,329 90,084 Total assets $ 3,965,115 $ 3,962,692 $ 3,825,758 $ 3,701,900 $ 3,678,555 Liabilities and Stockholders’ Equity Deposits $ 3,180,922 $ 3,065,030 $ 2,973,779 $ 2,755,529 $ 2,836,325 Federal funds purchased and other short-term borrowings 85,500 198,500 150,270 261,510 184,150 Other borrowings 439,998 441,183 442,367 443,552 409,736 Other liabilities 34,812 34,223 34,299 37,376 31,218 Stockholders’ equity 223,883 223,756 225,043 203,933 217,126 Total liabilities and stockholders’ equity $ 3,965,115 $ 3,962,692 $ 3,825,758 $ 3,701,900 $ 3,678,555 For the Quarter Ended AVERAGE BALANCES June 30,
2024March 31,
2024December 31,
2023September 30,
2023June 30,
2023Assets $ 3,964,109 $ 3,812,199 $ 3,706,497 $ 3,679,541 $ 3,645,651 Loans 2,994,492 2,949,672 2,857,594 2,813,213 2,783,463 Deposits 3,123,282 2,956,635 2,878,676 2,764,184 2,854,945 Stockholders’ equity 219,771 219,835 201,920 215,230 213,177 WEST BANCORPORATION, INC. AND SUBSIDIARY Financial Information (unaudited) (in thousands) As of LOANS June 30,
2024March 31,
2024December 31,
2023September 30,
2023June 30,
2023Commercial $ 526,589 $ 544,293 $ 531,594 $ 529,293 $ 535,085 Real estate: Construction, land and land development 496,864 465,247 413,477 399,253 351,461 1-4 family residential first mortgages 92,230 108,065 106,688 89,713 80,998 Home equity 15,264 14,020 14,618 12,429 12,625 Commercial 1,856,301 1,839,580 1,854,510 1,812,816 1,820,718 Consumer and other 15,234 12,844 10,930 10,123 10,289 3,002,482 2,984,049 2,931,817 2,853,627 2,811,176 Net unamortized fees and costs (3,708 ) (3,916 ) (4,282 ) (3,850 ) (4,101 ) Total loans $ 2,998,774 $ 2,980,133 $ 2,927,535 $ 2,849,777 $ 2,807,075 Less allowance for credit losses (28,422 ) (28,373 ) (28,342 ) (28,147 ) (27,938 ) Net loans $ 2,970,352 $ 2,951,760 $ 2,899,193 $ 2,821,630 $ 2,779,137 CREDIT QUALITY Pass $ 2,994,310 $ 2,983,618 $ 2,931,377 $ 2,853,100 $ 2,810,640 Watch 7,651 142 144 184 187 Substandard 521 289 296 343 349 Doubtful — — — — — Total loans $ 3,002,482 $ 2,984,049 $ 2,931,817 $ 2,853,627 $ 2,811,176 DEPOSITS Noninterest-bearing demand $ 530,441 $ 521,377 $ 548,726 $ 551,688 $ 568,029 Interest-bearing demand 443,658 449,946 481,207 417,802 459,030 Savings and money market - non-brokered 1,483,264 1,315,698 1,315,741 1,249,309 1,302,468 Money market - brokered 97,259 119,840 124,335 99,282 114,142 Total nonmaturity deposits 2,554,622 2,406,861 2,470,009 2,318,081 2,443,669 Time - non-brokered 353,269 381,646 322,694 299,683 276,097 Time - brokered 273,031 276,523 181,076 137,765 116,559 Total time deposits 626,300 658,169 503,770 437,448 392,656 Total deposits $ 3,180,922 $ 3,065,030 $ 2,973,779 $ 2,755,529 $ 2,836,325 BORROWINGS Federal funds purchased and other short-term borrowings $ 85,500 $ 198,500 $ 150,270 $ 261,510 $ 184,150 Subordinated notes, net 79,762 79,697 79,631 79,566 79,500 Federal Home Loan Bank advances 315,000 315,000 315,000 315,000 280,000 Long-term debt 45,236 46,486 47,736 48,986 50,236 Total borrowings $ 525,498 $ 639,683 $ 592,637 $ 705,062 $ 593,886 STOCKHOLDERS’ EQUITY Preferred stock $ — $ — $ — $ — $ — Common stock 3,000 3,000 3,000 3,000 3,000 Additional paid-in capital 34,322 33,685 34,197 33,487 32,642 Retained earnings 273,981 272,997 271,369 271,025 269,301 Accumulated other comprehensive loss (87,420 ) (85,926 ) (83,523 ) (103,579 ) (87,817 ) Total stockholders’ equity $ 223,883 $ 223,756 $ 225,043 $ 203,933 $ 217,126 WEST BANCORPORATION, INC. AND SUBSIDIARY Financial Information (unaudited) (in thousands) For the Quarter Ended CONSOLIDATED STATEMENTS OF
INCOMEJune 30,
2024March 31,
2024December 31,
2023September
30, 2023June 30,
2023Interest income: Loans, including fees $ 41,700 $ 40,196 $ 38,208 $ 36,756 $ 35,011 Securities: Taxable 3,394 3,416 3,521 3,427 3,432 Tax-exempt 808 810 869 880 883 Interest-bearing deposits 1,666 148 85 29 25 Total interest income 47,568 44,570 42,683 41,092 39,351 Interest expense: Deposits 23,943 21,559 20,024 17,156 16,277 Federal funds purchased and other short-term borrowings 1,950 2,183 2,024 3,165 2,264 Subordinated notes 1,105 1,108 1,114 1,113 1,109 Federal Home Loan Bank advances 2,718 2,325 2,482 2,329 1,621 Long-term debt 622 645 678 695 739 Total interest expense 30,338 27,820 26,322 24,458 22,010 Net interest income 17,230 16,750 16,361 16,634 17,341 Credit loss expense (benefit) — — 500 200 — Net interest income after credit loss expense (benefit) 17,230 16,750 15,861 16,434 17,341 Noninterest income: Service charges on deposit accounts 462 460 476 463 458 Debit card usage fees 490 458 488 495 511 Trust services 794 776 782 831 749 Increase in cash value of bank-owned life insurance 278 274 275 262 250 Loan swap fees — — — 431 — Realized securities losses, net — — (431 ) — — Other income 322 331 308 340 421 Total noninterest income 2,346 2,299 1,898 2,822 2,389 Noninterest expense: Salaries and employee benefits 7,169 6,489 6,468 6,696 7,029 Occupancy and equipment 1,852 1,447 1,499 1,359 1,322 Data processing 754 714 723 703 729 Technology and software 731 700 676 573 579 FDIC insurance 631 519 475 439 420 Professional fees 244 257 235 254 287 Director fees 236 199 240 196 251 Other expenses 1,577 1,543 1,845 1,685 1,857 Total noninterest expense 13,194 11,868 12,161 11,905 12,474 Income before income taxes 6,382 7,181 5,598 7,351 7,256 Income taxes 1,190 1,372 1,073 1,445 1,394 Net income $ 5,192 $ 5,809 $ 4,525 $ 5,906 $ 5,862 Basic earnings per common share $ 0.31 $ 0.35 $ 0.27 $ 0.35 $ 0.35 Diluted earnings per common share $ 0.31 $ 0.35 $ 0.27 $ 0.35 $ 0.35 WEST BANCORPORATION, INC. AND SUBSIDIARY Financial Information (unaudited) (in thousands) For the Six Months Ended CONSOLIDATED STATEMENTS OF INCOME June 30, 2024 June 30, 2023 Interest income: Loans, including fees $ 81,896 $ 67,959 Securities: Taxable 6,810 6,748 Tax-exempt 1,618 1,768 Interest-bearing deposits 1,814 55 Total interest income 92,138 76,530 Interest expense: Deposits 45,502 29,616 Federal funds purchased and other short-term borrowings 4,133 4,343 Subordinated notes 2,213 2,215 Federal Home Loan Bank advances 5,043 2,883 Long-term debt 1,267 1,437 Total interest expense 58,158 40,494 Net interest income 33,980 36,036 Credit loss expense (benefit) — — Net interest income after credit loss expense (benefit) 33,980 36,036 Noninterest income: Service charges on deposit accounts 922 920 Debit card usage fees 948 997 Trust services 1,570 1,455 Increase in cash value of bank-owned life insurance 552 507 Gain from bank-owned life insurance — 691 Other income 653 776 Total noninterest income 4,645 5,346 Noninterest expense: Salaries and employee benefits 13,658 13,896 Occupancy and equipment 3,299 2,649 Data processing 1,468 1,364 Technology and software 1,431 1,092 FDIC insurance 1,150 836 Professional fees 501 537 Director fees 435 456 Other expenses 3,120 3,715 Total noninterest expense 25,062 24,545 Income before income taxes 13,563 16,837 Income taxes 2,562 3,131 Net income $ 11,001 $ 13,706 Basic earnings per common share $ 0.66 $ 0.82 Diluted earnings per common share $ 0.65 $ 0.82 WEST BANCORPORATION, INC. AND SUBSIDIARY Financial Information (unaudited) As of and for the Quarter Ended For the Six Months Ended COMMON SHARE DATA June 30,
2024March 31,
2024December 31, 2023 September 30, 2023 June 30,
2023June 30,
2024June 30,
2023Earnings per common share (basic) $ 0.31 $ 0.35 $ 0.27 $ 0.35 $ 0.35 $ 0.66 $ 0.82 Earnings per common share (diluted) 0.31 0.35 0.27 0.35 0.35 0.65 0.82 Dividends per common share 0.25 0.25 0.25 0.25 0.25 0.50 0.50 Book value per common share(1) 13.30 13.31 13.46 12.19 12.98 Closing stock price 17.90 17.83 21.20 16.31 18.41 Market price/book value(2) 134.59 % 133.96 % 157.50 % 133.80 % 141.83 % Price earnings ratio(3) 14.36 12.77 19.79 11.75 13.11 Annualized dividend yield(4) 5.59 % 5.61 % 4.72 % 6.13 % 5.43 % REGULATORY CAPITAL RATIOS Consolidated: Total risk-based capital ratio 11.85 % 11.78 % 11.88 % 11.96 % 12.15 % Tier 1 risk-based capital ratio 9.30 9.23 9.30 9.37 9.51 Tier 1 leverage capital ratio 8.08 8.36 8.50 8.58 8.60 Common equity tier 1 ratio 8.74 8.67 8.74 8.80 8.92 West Bank: Total risk-based capital ratio 12.66 % 12.63 % 12.76 % 12.89 % 13.13 % Tier 1 risk-based capital ratio 11.79 11.76 11.89 12.01 12.24 Tier 1 leverage capital ratio 10.25 10.65 10.86 11.00 11.08 Common equity tier 1 ratio 11.79 11.76 11.89 12.01 12.24 KEY PERFORMANCE RATIOS AND
OTHER METRICSReturn on average assets(5) 0.53 % 0.61 % 0.48 % 0.64 % 0.64 % 0.57 % 0.76 % Return on average equity(6) 9.50 10.63 8.89 10.89 11.03 10.07 12.90 Net interest margin(7)(13) 1.86 1.88 1.87 1.91 2.02 1.87 2.12 Yield on interest-earning assets(8)(13) 5.13 4.99 4.87 4.70 4.57 5.06 4.49 Cost of interest-bearing liabilities 3.83 3.70 3.60 3.38 3.10 3.77 2.94 Efficiency ratio(9)(13) 67.14 62.04 64.66 60.83 62.83 64.62 58.91 Nonperforming assets to total assets(10) 0.01 0.01 0.01 0.01 0.01 ACL ratio(11) 0.95 0.95 0.97 0.99 1.00 Loans/total assets 75.63 75.20 76.52 76.98 76.31 Loans/total deposits 94.27 97.23 98.44 103.42 98.97 Tangible common equity ratio(12) 5.65 5.65 5.88 5.51 5.90 (1) Includes accumulated other comprehensive loss.
(2) Closing stock price divided by book value per common share.
(3) Closing stock price divided by annualized earnings per common share (basic).
(4) Annualized dividend divided by period end closing stock price.
(5) Annualized net income divided by average assets.
(6) Annualized net income divided by average stockholders’ equity.
(7) Annualized tax-equivalent net interest income divided by average interest-earning assets.
(8) Annualized tax-equivalent interest income on interest-earning assets divided by average interest-earning assets.
(9) Noninterest expense (excluding other real estate owned expense and write-down of premises) divided by noninterest income (excluding net securities gains/losses and gains/losses on disposition of premises and equipment) plus tax-equivalent net interest income.
(10) Total nonperforming assets divided by total assets.
(11) Allowance for credit losses on loans divided by total loans.
(12) Common equity less intangible assets (none held) divided by tangible assets.
(13) A non-GAAP measure.NON-GAAP FINANCIAL MEASURES
This report contains references to financial measures that are not defined in GAAP. Such non-GAAP financial measures include the Company’s presentation of net interest income and net interest margin on a fully taxable equivalent (FTE) basis and the presentation of the efficiency ratio on an adjusted and FTE basis, excluding certain income and expenses. Management believes these non-GAAP financial measures provide useful information to both management and investors to analyze and evaluate the Company’s financial performance. These measures are considered standard measures of comparison within the banking industry. Additionally, management believes providing measures on a FTE basis enhances the comparability of income arising from taxable and nontaxable sources. Limitations associated with non-GAAP financial measures include the risks that persons might disagree as to the appropriateness of items included in these measures and that different companies might calculate these measures differently. These non-GAAP disclosures should not be considered an alternative to the Company’s GAAP results. The following table reconciles the non-GAAP financial measures of net interest income and net interest margin on a fully taxable equivalent basis and efficiency ratio on an adjusted and FTE basis.
(in thousands) For the Quarter Ended For the Six Months Ended June 30,
2024March 31,
2024December 31, 2023 September 30, 2023 June 30,
2023June 30,
2024June 30,
2023Reconciliation of net interest income and net interest margin on a FTE basis to GAAP: Net interest income (GAAP) $ 17,230 $ 16,750 $ 16,361 $ 16,634 $ 17,341 $ 33,980 $ 36,036 Tax-equivalent adjustment (1) 55 82 95 113 122 137 283 Net interest income on a FTE basis (non-GAAP) 17,285 16,832 16,456 16,747 17,463 34,117 36,319 Average interest-earning assets 3,731,674 3,595,954 3,487,799 3,478,053 3,461,313 3,663,814 3,448,722 Net interest margin on a FTE basis (non-GAAP) 1.86 % 1.88 % 1.87 % 1.91 % 2.02 % 1.87 % 2.12 % Reconciliation of efficiency ratio on an adjusted and FTE basis to GAAP: Net interest income on a FTE basis (non-GAAP) $ 17,285 $ 16,832 $ 16,456 $ 16,747 $ 17,463 $ 34,117 $ 36,319 Noninterest income 2,346 2,299 1,898 2,822 2,389 4,645 5,346 Adjustment for realized securities losses, net — — 431 — — — — Adjustment for losses on disposal of premises and equipment, net 21 — 24 3 2 21 2 Adjusted income 19,652 19,131 18,809 19,572 19,854 38,783 41,667 Noninterest expense 13,194 11,868 12,161 11,905 12,474 25,062 24,545 Efficiency ratio on an adjusted and FTE basis (non-GAAP) (2) 67.14 % 62.04 % 64.66 % 60.83 % 62.83 % 64.62 % 58.91 % (1) Computed on a tax-equivalent basis using a federal income tax rate of 21 percent, adjusted to reflect the effect of the nondeductible interest expense associated with owning tax-exempt securities and loans. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the financial results, as it enhances the comparability of income arising from taxable and nontaxable sources.
(2) The efficiency ratio expresses noninterest expense as a percent of fully taxable equivalent net interest income and noninterest income, excluding specific noninterest income and expenses. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the Company's financial performance. It is a standard measure of comparison within the banking industry. A lower ratio is more desirable.
- Loans increased $18.6 million in the second quarter of 2024, or 2.5 percent annualized. The increase is primarily due to the funding of previously committed construction loans.