Equity Bancshares, Inc. Reports Fourth Quarter Results

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 2020

WICHITA, 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.com        

Media Contact:

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

Unaudited Financial Tables

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

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

		Three months ended 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, 2020				September 30, 2020				June 30, 2020				March 31, 2020				December 31, 2019
Interest 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, 2020				September 30, 2020				June 30, 2020				March 31, 2020				December 31, 2019
ASSETS
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	%