Equity Bancshares, Inc. Reports Fourth Quarter Results, Strong Organic Loan Growth, and Improved Asset Quality Metrics

WICHITA, Kan., Jan. 25, 2023 (GLOBE NEWSWIRE) -- Equity Bancshares, Inc. (NASDAQ: EQBK), (“Equity”, “the Company”, “we,” “us,” “our”), the Wichita-based holding company of Equity Bank, reported net income of $11.6 million and $0.72 earnings per diluted share for the quarter ended December 31, 2022. For the full year ending December 31, 2022, reported net income totaled $57.7 million or $3.51 per diluted share compared to $52.5 million or $3.43 per diluted share for the full year ending December 31, 2021.

"Our Company was able to deliver two records in 2022. First, record net income of $57.7 million and second, record revenue of $197.8 million. These achievements are a testament to the strength of our franchise despite economic uncertainty and changing consumer habits,” said Brad S. Elliott, Chairman and CEO, Equity Bancshares, Inc. “We’ve been able to offer competitive products and rely on our local market leadership to continue to add customer relationships based on value, convenience, and our brand. As we compete for business and consumer relationships, our teams continue working tirelessly to enhance our products and technology while delivering superior customer service.”

Mr. Elliott continued, “We also saw improvement in key credit ratios, including non-performing assets to total assets down to 0.37% from 1.28% year-over-year, thanks to the disciplined work of our bankers. We took the opportunity in 2022 to invest in our people and technology, allowing us to deliver best-in-class banking products and services into the future. Our Equity teams helped us earn regional honors like Best Places to Work by the Wichita Business Journal, and we were recognized as one of Newsweek’s Best Banks in the U.S. With our prudent loan underwriting standards, growing capital base, and diversified deposit portfolio, we are well positioned to continue to generate excellent financial results for our shareholders.”

Notable Items:

• The Company’s loan growth, excluding PPP and branch sales, was $56.8 million, or 6.9% linked quarter annualized including 9.25% annualized growth within the commercial and commercial real estate portfolios. Loan growth for the full year of 2022 was $220.0 million or 9.5% as compared to year-end 2021.
• Total FHLB borrowings declined $47.1 million during the quarter ending December 31, 2022 or 25.3% from $186 million at September 30, 2022. Deposits increased $15.2 million during the fourth quarter, or 0.4%.
• Book Value per Common Share increased $1.03 linked quarter to $25.74, while Tangible Book Value per Common Share increased $1.08 to $21.67.
• During the quarter, the Company realized linked period Net Interest Margin growth of 5 basis points, equating to record Net Interest Income of $42.0 million.
• Equity repurchased $5.5 million of common stock representing 1.0% of shares outstanding as of the end of the third quarter.
• During the quarter ending December 31, 2022, the ratio of non-performing assets to total assets improved 22bps linked quarter to 0.4%, and the ratio of Classified Assets to Bank Regulatory Capital improved to 10.0% from 11.0%.

Financial Results for the Quarter Ended December 31, 2022

Net income allocable to common stockholders was $11.6 million, or $0.72 per diluted share, for the three months ended December 31, 2022, as compared to $15.2 million, or $0.93 per diluted share, for the three months ended September 30, 2022. The decrease during the quarter was primarily driven by an increase in non-interest expense of $3.0 million as the Company continued to invest in its people, processes and the communities we serve.

Net Interest Income

Net interest income was $42.0 million for the three months ended December 31, 2022, as compared to $41.9 million for the three months ended September 30, 2022, an increase of $87 thousand, or 0.2%. The yield on interest-earning assets increased 49 basis points to 4.7%. The cost of interest-bearing deposits increased by 48 basis points during the quarter, moving from 0.6% at September 30, 2022, to 1.1% at December 31, 2022.

During the quarter, the Company realized the benefit of an emphasis on re-positioning interest earning assets into the loan portfolio with realized expansion of loans as a percentage of average assets. While total average assets were down, driven by the impact of the fair value mark on the investment portfolio, average loans in total and as a percentage of earning assets increased, comprising 72.2% of average earnings assets during the quarter. The Company continues to expect repositioning of investment portfolio assets into the loan portfolio.

Average interest-bearing liabilities moved up slightly during the quarter as the Company experienced a minor compositional shift from noninterest-bearing deposits into interest bearing categories while also paying down the level of debt on the balance sheet. Overall deposit levels increased $15.2 million, or 1.4% annualized linked quarter.

Provision for Credit Losses

During the three months ended December 31, 2022, there was a net release of $151 thousand compared to a net release of $136 thousand in the previous quarter. The minimal release of provision for the quarter is the result of continued positive credit trends without realization of meaningful losses. The Company continues to estimate the allowance for credit loss with assumptions that anticipate slower prepayments rates and continued market disruption caused by elevated inflation, supply chain issues and the impact of monetary policy on consumers and businesses. For the three months ended December 31, 2022, we had net charge-offs of $501 thousand as compared to $1.6 million for the three months ended September 30, 2022.

Non-Interest Income

Total non-interest income was $8.3 million for the three months ended December 31, 2022, as compared to $9.0 million for the three months ended September 30, 2022, or a decrease of 7.1%, quarter-over-quarter. The $640 thousand decrease was primarily due to a decrease in loan repurchase obligation reversal of $280 thousand, mortgage banking revenue of $194 thousand, and derivative fair valuation changes of $175 thousand.

Non-Interest Expense

Total non-interest expense for the quarter ended December 31, 2022, was $35.2 million as compared to $32.2 million for the quarter ended September 30, 2022. The $3.0 million change was primarily due to increases in advertising and business development of $712 thousand driven by deposit campaigns, salaries and employee benefits of $671 thousand reflecting higher full-time equivalents reducing our job vacancy rate, write-off of tax credit investments of $537 thousand and an unfavorable change in losses on disposal of repossessed assets of $343 thousand reflecting a $333 thousand gain recognized in the third quarter of 2022.

Income Tax Expense

At December 31, 2022, the full year effective tax rate for 2022 was 17.9% as compared to an expectation of 16.2% as of September 30, 2022. The comparative increase in tax rate resulted in $1.2 million in additive income tax expense during the fourth quarter calculated as the full year’s pre-tax income multiplied by the change in effective tax rate expectation.

The increase in the effective tax rate was driven by the Company’s investment in solar tax credits for which timing of implementation and credit receipt is not certain. During the quarter, the timing on one of the investments moved back compared to expectations as of the end of September, resulting in less credits being received in 2022. The timing issue is expected to be resolved in the first quarter of 2023 with no material impact to the overall return on the investment.

Loans, Total Assets and Funding

Loans held for investments were $3.3 billion at December 31, 2022, increasing 6.9% on an annualized basis compared to previous quarter end. Excluding the impact of PPP loans and loans sold in branch transactions, balances have increased $220.0 million, or 9.5% year-over-year. Included in the annual growth, is $301.7 million within the commercial and industrial and commercial real estate portfolios, or 15.0%. Total assets were $5.0 billion as of December 31, 2022.

Total deposits were $4.2 billion at December 31, 2022, increasing 1.4% annualized compared to previous quarter end. Of this balance, non-interesting bearing accounts comprise approximately 25.9%. Borrowings from the FHLB declined $47.1 million to $138.9 million during the quarter.

Asset Quality

As of December 31, 2022, Equity’s allowance for credit losses to total loans remained materially consistent at 1.4% as compared to September 30, 2022. Nonperforming assets were $18.2 million as of December 31, 2022, or 0.4% of total assets, compared to $29.7 million at September 30, 2022, or 0.6% of total assets. Non-accrual loans were $17.6 million at December 31, 2022, as compared to $23.1 million at September 30, 2022. Total classified assets, including loans rated special mention or worse, other real estate owned, excluding previous branch locations, and other repossessed assets were $58.7 million, or 10.0% of regulatory capital, down from $63.1 million, or 11.0% of regulatory capital as of September 30, 2022.

During the quarter ended December 31, 2022, non-performing assets decreased $11.4 million due to decreases in other real estate owned of $5.7 million, non-accrual loans of $5.5 million and other repossessed assets of $174 thousand.

Capital

During the quarter, the Company realized expansion in both book and tangible capital, as well as book and tangible capital per share as dividends and costs incurred to repurchase shares were outpaced by earnings and partial recovery of the negative fair value mark on the investment portfolio.

The Company’s ratio of common equity tier 1 capital to risk-weighted assets was 12.3%, the total capital to risk-weighted assets was 16.1% and the total leverage ratio was 9.6% at December 31, 2022. At September 30, 2022, the Company’s common equity tier 1 capital to risk-weighted assets ratio was 12.2%, the total capital to risk-weighted assets ratio was 16.1% and the total leverage ratio was 9.5%.

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 10.8% at December 31, 2022. At September 30, 2022, Equity Bank’s ratio of common equity tier 1 capital to risk-weighted assets was 14.2%, the ratio of total capital to risk-weighted assets was 15.5% and the total leverage ratio was 10.5%.

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

Return on average assets before income tax provision and provision for loan losses 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 “core” performance and can be viewed as an alternative measure of how efficiently the Company services its asset base. Used as a ratio relative to average equity, it can function as an alternative measure of the Company’s earnings performance in relationship to its equity.

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

The Company believes that disclosing these non-GAAP financial measures is both useful internally and is expected by our investors and analysts in order to understand the overall performance of the Company. Other companies may calculate and define their non-GAAP financial measures and supplemental data differently. A reconciliation of GAAP financial measures to non-GAAP measures and other performance ratios, as adjusted, are included in Table 6 in the following press release tables.

Conference Call and Webcast

Equity’s Chairman and Chief Executive Officer, Brad Elliott, and Chief Financial Officer, Eric Newell, will hold a conference call and webcast to discuss fourth quarter results on Thursday, January 26, 2023, at 10 a.m. eastern time or 9 a.m. central time.

A live webcast of the call will be available on the Company’s website at investor.equitybank.com. To access the call by phone, please go to this registration link, and you will be provided with dial in details. Investors, news media, and other participants are encouraged to dial into the conference call ten minutes ahead of the scheduled start time.

A replay of the call and webcast will be available two hours following the close of the call until February 3, 2023, accessible at investor.equitybank.com.

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

Special Note Concerning Forward-Looking Statements

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

For discussion of these and other risks that may cause actual results to differ from expectations, please refer to “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in Equity’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 9, 2022, 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, except as required by law. 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.
(913) 583-8004
jhanley@equitybank.com

Unaudited Financial Tables

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

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

	Three months ended December 31,								Year ended December 31,
	2022				2021				2022				2021
Interest and dividend income
Loans, including fees	$	46,149			$	34,942			$	160,859			$	137,334
Securities, taxable		5,946				4,754				22,713				15,996
Securities, nontaxable		678				747				2,698				2,843
Federal funds sold and other		651				349				1,978				1,195
Total interest and dividend income		53,424				40,792				188,248				157,368
Interest expense
Deposits		8,013				1,939				16,321				8,255
Federal funds purchased and retail repurchase agreements		82				32				232				104
Federal Home Loan Bank advances		1,500				14				2,094				169
Subordinated debt		1,798				1,592				6,771				6,261
Total interest expense		11,393				3,577				25,418				14,789
Net interest income		42,031				37,215				162,830				142,579
Provision (reversal) for credit losses		(151	)			(2,125	)			125				(8,480	)
Net interest income after provision (reversal) for credit losses		42,182				39,340				162,705				151,059
Non-interest income
Service charges and fees		2,705				2,471				10,632				8,596
Debit card income		2,557				2,633				10,677				10,236
Mortgage banking		116				722				1,416				3,306
Increase in value of bank-owned life insurance		758				1,060				3,113				3,506
Net gain on acquisition and branch sales		422				—				962				585
Net gains (losses) from securities transactions		14				8				5				406
Other		1,757				2,305				9,152				6,207
Total non-interest income		8,329				9,199				35,957				32,842
Non-interest expense
Salaries and employee benefits		16,113				15,119				62,006				54,198
Net occupancy and equipment		2,919				2,967				12,223				10,137
Data processing		4,334				3,867				15,883				13,261
Professional fees		1,404				1,565				4,951				4,713
Advertising and business development		1,903				1,129				5,042				3,370
Telecommunications		517				435				1,916				1,966
FDIC insurance		360				360				1,140				1,665
Courier and postage		533				389				1,881				1,429
Free nationwide ATM cost		510				515				2,103				2,019
Amortization of core deposit intangibles		924				1,080				4,042				4,174
Loan expense		262				308				828				934
Other real estate owned		388				617				589				(188	)
Loss on debt extinguishment		—				—				—				372
Merger expenses		68				4,562				594				9,189
Other		5,014				5,176				15,182				12,226
Total non-interest expense		35,249				38,089				128,380				119,465
Income (loss) before income tax		15,262				10,450				70,282				64,436
Provision for income taxes		3,654				(16	)			12,594				11,956
Net income (loss) and net income (loss) allocable to common stockholders	$	11,608			$	10,466			$	57,688			$	52,480
Basic earnings (loss) per share	$	0.73			$	0.62			$	3.56			$	3.49
Diluted earnings (loss) per share	$	0.72			$	0.61			$	3.51			$	3.43
Weighted average common shares		15,948,360				16,865,167				16,214,049				15,019,221
Weighted average diluted common shares		16,204,185				17,141,174				16,437,906				15,306,431

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

	As of and for the three months ended
	December 31, 2022				September 30, 2022				June 30, 2022				March 31, 2022				December 31, 2021
Interest and dividend income
Loans, including fees	$	46,149			$	41,555			$	36,849			$	36,306			$	34,942
Securities, taxable		5,946				5,792				5,584				5,391				4,754
Securities, nontaxable		678				687				678				655				747
Federal funds sold and other		651				514				513				300				349
Total interest and dividend income		53,424				48,548				43,624				42,652				40,792
Interest expense
Deposits		8,013				4,403				2,183				1,722				1,939
Federal funds purchased and retail repurchase agreements		82				71				46				33				32
Federal Home Loan Bank advances		1,500				409				176				9				14
Subordinated debt		1,798				1,721				1,653				1,599				1,592
Total interest expense		11,393				6,604				4,058				3,363				3,577
Net interest income		42,031				41,944				39,566				39,289				37,215
Provision (reversal) for credit losses		(151	)			(136	)			824				(412	)			(2,125	)
Net interest income after provision (reversal) for credit losses		42,182				42,080				38,742				39,701				39,340
Non-interest income
Service charges and fees		2,705				2,788				2,617				2,522				2,471
Debit card income		2,557				2,682				2,810				2,628				2,633
Mortgage banking		116				310				428				562				722
Increase in value of bank-owned life insurance		758				754				736				865				1,060
Net gain on acquisition and branch sales		422				—				540				—				—
Net gains (losses) from securities transactions		14				(17	)			(32	)			40				8
Other		1,757				2,452				2,538				2,405				2,305
Total non-interest income		8,329				8,969				9,637				9,022				9,199
Non-interest expense
Salaries and employee benefits		16,113				15,442				15,383				15,068				15,119
Net occupancy and equipment		2,919				3,127				3,007				3,170				2,967
Data processing		4,334				4,138				3,642				3,769				3,867
Professional fees		1,404				1,265				1,111				1,171				1,565
Advertising and business development		1,903				1,191				972				976				1,129
Telecommunications		517				487				442				470				435
FDIC insurance		360				340				260				180				360
Courier and postage		533				436				489				423				389
Free nationwide ATM cost		510				551				541				501				515
Amortization of core deposit intangibles		924				957				1,111				1,050				1,080
Loan expense		262				174				207				185				308
Other real estate owned		388				188				14				(1	)			617
Loss on debt extinguishment		—				—				—				—				—
Merger expenses		68				115				88				323				4,562
Other		5,014				3,825				4,169				2,174				5,176
Total non-interest expense		35,249				32,236				31,436				29,459				38,089
Income (loss) before income tax		15,262				18,813				16,943				19,264				10,450
Provision for income taxes (benefit)		3,654				3,642				1,684				3,614				(16	)
Net income (loss) and net income (loss) allocable to common stockholders	$	11,608			$	15,171			$	15,259			$	15,650			$	10,466
Basic earnings (loss) per share	$	0.73			$	0.94			$	0.95			$	0.94			$	0.62
Diluted earnings (loss) per share	$	0.72			$	0.93			$	0.94			$	0.93			$	0.61
Weighted average common shares		15,948,360				16,056,658				16,206,978				16,652,556				16,865,167
Weighted average diluted common shares		16,204,185				16,273,231				16,413,248				16,869,152				17,141,174

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

	December 31, 2022				September 30, 2022				June 30, 2022				March 31, 2022				December 31, 2021
ASSETS
Cash and due from banks	$	101,662			$	155,039			$	103,126			$	89,764			$	259,131
Federal funds sold		415				374				458				286				823
Cash and cash equivalents		102,077				155,413				103,584				90,050				259,954
Available-for-sale securities		1,184,390				1,198,962				1,288,180				1,352,894				1,327,442
Held-to-maturity securities		1,948				—				—				—				—
Loans held for sale		349				1,518				1,714				1,575				4,214
Loans, net of allowance for credit losses(1)		3,265,701				3,208,524				3,175,208				3,194,987				3,107,262
Other real estate owned, net		4,409				10,412				12,969				9,897				9,523
Premises and equipment, net		101,492				100,566				101,212				103,168				104,038
Bank-owned life insurance		123,176				122,418				121,665				120,928				120,787
Federal Reserve Bank and Federal Home Loan Bank stock		21,695				24,428				21,479				19,890				17,510
Interest receivable		20,630				18,497				16,519				16,923				18,048
Goodwill		53,101				53,101				53,101				54,465				54,465
Core deposit intangibles, net		10,596				11,598				12,554				13,830				14,879
Other		92,087				94,978				93,971				100,016				99,509
Total assets	$	4,981,651			$	5,000,415			$	5,002,156			$	5,078,623			$	5,137,631
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Demand	$	1,097,899			$	1,217,094			$	1,194,863			$	1,255,793			$	1,244,117
Total non-interest-bearing deposits		1,097,899				1,217,094				1,194,863				1,255,793				1,244,117
Demand, savings and money market		2,329,584				2,335,847				2,445,545				2,511,478				2,522,289
Time		814,324				673,670				651,363				612,399				653,598
Total interest-bearing deposits		3,143,908				3,009,517				3,096,908				3,123,877				3,175,887
Total deposits		4,241,807				4,226,611				4,291,771				4,379,670				4,420,004
Federal funds purchased and retail repurchase agreements		46,478				47,443				52,750				48,199				56,006
Federal Home Loan Bank advances		138,864				186,001				80,000				50,000				—
Subordinated debt		96,392				96,263				96,135				96,010				95,885
Contractual obligations		15,218				15,562				15,813				17,307				17,692
Interest payable and other liabilities		32,834				32,729				37,572				35,422				47,413
Total liabilities		4,571,593				4,604,609				4,574,041				4,626,608				4,637,000
Commitments and contingent liabilities
Stockholders’ equity
Common stock		205				204				204				204				203
Additional paid-in capital		484,989				482,668				480,897				480,106				478,862
Retained earnings		140,095				130,114				116,576				102,632				88,324
Accumulated other comprehensive income (loss), net of tax		(113,511	)			(120,918	)			(77,426	)			(50,012	)			1,776
Treasury stock		(101,720	)			(96,262	)			(92,136	)			(80,915	)			(68,534	)
Total stockholders’ equity		410,058				395,806				428,115				452,015				500,631
Total liabilities and stockholders’ equity	$	4,981,651			$	5,000,415			$	5,002,156			$	5,078,623			$	5,137,631
(1) Allowance for credit losses	$	45,847			$	46,499			$	48,238			$	47,590			$	48,365

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,
	2022				2022				2022				2022				2021
Loans Held For Investment by Type
Commercial real estate	$	1,721,269			$	1,655,646			$	1,643,068			$	1,552,134			$	1,486,148
Commercial and industrial		594,862				607,722				578,899				629,181				567,497
Residential real estate		570,550				573,431				578,936				613,928				638,087
Agricultural real estate		199,189				200,415				197,938				198,844				198,330
Agricultural		120,003				115,048				124,753				150,077				166,975
Consumer		105,675				102,761				99,852				98,413				98,590
Total loans held-for-investment		3,311,548				3,255,023				3,223,446				3,242,577				3,155,627
Allowance for credit losses		(45,847	)			(46,499	)			(48,238	)			(47,590	)			(48,365	)
Net loans held for investment	$	3,265,701			$	3,208,524			$	3,175,208			$	3,194,987			$	3,107,262
Asset Quality Ratios
Allowance for credit losses on loans to total loans		1.38	%			1.43	%			1.50	%			1.47	%			1.53	%
Past due or nonaccrual loans to total loans		0.72	%			0.94	%			0.78	%			0.82	%			1.18	%
Nonperforming assets to total assets		0.37	%			0.59	%			0.74	%			0.74	%			1.28	%
Nonperforming assets to total loans plus other real estate owned		0.55	%			0.91	%			1.14	%			1.15	%			2.07	%
Classified assets to bank total regulatory capital		9.98	%			11.03	%			13.08	%			17.12	%			25.34	%
Selected Average Balance Sheet Data (QTD Average)
Investment securities	$	1,184,452			$	1,272,414			$	1,319,099			$	1,397,421			$	1,330,267
Total gross loans receivable		3,275,284				3,240,998				3,216,853				3,195,787				3,181,279
Interest-earning assets		4,538,177				4,602,568				4,675,967				4,715,389				4,713,817
Total assets		4,930,231				4,988,755				5,067,686				5,108,120				5,068,278
Interest-bearing deposits		3,032,902				3,081,245				3,112,300				3,163,777				3,101,657
Borrowings		299,191				221,514				238,062				160,094				165,941
Total interest-bearing liabilities		3,335,557				3,302,759				3,350,362				3,323,871				3,267,598
Total deposits		4,185,904				4,283,855				4,340,196				4,393,879				4,342,732
Total liabilities		4,531,959				4,552,564				4,630,204				4,615,521				4,505,232
Total stockholders' equity		398,270				436,191				437,483				492,599				563,046
Tangible common equity*		332,820				369,746				368,505				422,418				501,860
Performance ratios
Return on average assets (ROAA) annualized		0.93	%			1.21	%			1.21	%			1.24	%			0.82	%
Return on average assets before income tax and provision for loan losses*		1.22	%			1.49	%			1.41	%			1.50	%			0.65	%
Return on average equity (ROAE) annualized		11.56	%			13.80	%			13.99	%			12.88	%			7.37	%
Return on average equity before income tax and provision for loan losses*		15.05	%			16.99	%			16.29	%			15.52	%			5.87	%
Return on average tangible common equity (ROATCE) annualized*		14.74	%			17.12	%			17.60	%			15.85	%			8.97	%
Yield on loans annualized		5.59	%			5.09	%			4.59	%			4.61	%			4.36	%
Cost of interest-bearing deposits annualized		1.05	%			0.57	%			0.28	%			0.22	%			0.25	%
Cost of total deposits annualized		0.76	%			0.41	%			0.20	%			0.16	%			0.18	%
Net interest margin annualized		3.67	%			3.62	%			3.39	%			3.38	%			3.13	%
Efficiency ratio*		70.47	%			63.07	%			64.38	%			60.36	%			72.25	%
Non-interest income / average assets		0.67	%			0.71	%			0.76	%			0.72	%			0.72	%
Non-interest expense / average assets		2.84	%			2.56	%			2.49	%			2.34	%			2.98	%
Capital Ratios
Tier 1 Leverage Ratio		9.61	%			9.46	%			9.11	%			9.07	%			9.09	%
Common Equity Tier 1 Capital Ratio		12.26	%			12.15	%			12.08	%			11.81	%			12.03	%
Tier 1 Risk Based Capital Ratio		12.88	%			12.77	%			12.71	%			12.43	%			12.67	%
Total Risk Based Capital Ratio		16.08	%			15.99	%			15.97	%			15.66	%			15.96	%
Total stockholders' equity to total assets		8.23	%			7.92	%			8.56	%			8.90	%			9.74	%
Tangible common equity to tangible assets*		7.02	%			6.68	%			7.32	%			7.63	%			8.48	%
Dividend payout ratio		14.01	%			10.78	%			8.61	%			8.58	%			13.05	%
Book value per common share	$	25.74			$	24.71			$	26.58			$	27.47			$	29.87
Tangible book value per common share*	$	21.67			$	20.59			$	22.42			$	23.24			$	25.65
Tangible book value per diluted common share*	$	21.35			$	20.33			$	22.17			$	22.95			$	25.22

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

	For the year ended										For the year ended
	December 31, 2022										December 31, 2021
	Average Outstanding Balance			Interest Income/ Expense			Average Yield/Rate(3)(4)				Average Outstanding Balance			Interest Income/ Expense			Average Yield/Rate(3)(4)
Interest-earning assets
Loans (1)
Commercial and industrial	$	583,295		$	32,258			5.53	%		$	714,561		$	41,580		5.82	%
Commercial real estate		1,259,257			65,122			5.17	%			1,040,443			48,676		4.68	%
Real estate construction		363,902			18,269			5.02	%			277,307			10,256		3.70	%
Residential real estate		597,196			22,004			3.68	%			498,164			19,341		3.88	%
Agricultural real estate		201,295			11,399			5.66	%			153,607			8,122		5.29	%
Agricultural		125,342			6,697			5.34	%			108,276			5,361		4.95	%
Consumer		102,185			5,110			5.00	%			88,383			3,998		4.52	%
Total loans		3,232,472			160,859			4.98	%			2,880,741			137,334		4.77	%
Securities
Taxable securities		1,185,750			22,713			1.92	%			976,942			15,996		1.64	%
Nontaxable securities		106,955			2,698			2.52	%			105,522			2,843		2.69	%
Total securities		1,292,705			25,411			1.97	%			1,082,464			18,839		1.74	%
Federal funds sold and other		107,278			1,978			1.84	%			182,443			1,195		0.65	%
Total interest-earning assets	$	4,632,455			188,248			4.06	%		$	4,145,648			157,368		3.80	%
Interest-bearing liabilities
Demand, savings and money market deposits	$	2,433,364			10,797			0.44	%		$	2,162,807			3,705		0.17	%
Time deposits		663,790			5,524			0.83	%			625,562			4,550		0.73	%
Total interest-bearing deposits		3,097,154			16,321			0.53	%			2,788,369			8,255		0.30	%
FHLB advances		79,775			2,094			2.63	%			16,797			169		1.01	%
Other borrowings		151,172			7,003			4.63	%			135,607			6,365		4.69	%
Total interest-bearing liabilities	$	3,328,101			25,418			0.76	%		$	2,940,773			14,789		0.50	%
Net interest income				$	162,830									$	142,579
Interest rate spread								3.30	%								3.30	%
Net interest margin (2)								3.52	%								3.44	%
(1) Average loan balances include nonaccrual loans.
(2) Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets for the period.
(3) Tax exempt income is not included in the above table on a tax-equivalent basis.
(4) Actual unrounded values are used to calculate the reported yield or rate disclosed. Accordingly, recalculations using the amounts in thousands as disclosed in this report may not produce the same amounts.

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

	For the three months ended									For the three months ended
	December 31, 2022									December 31, 2021
	Average Outstanding Balance			Interest Income/ Expense			Average Yield/Rate(3)(4)			Average Outstanding Balance			Interest Income/ Expense			Average Yield/Rate(3)(4)
Interest-earning assets
Loans (1)
Commercial and industrial	$	594,221		$	9,264		6.19	%		$	601,103		$	6,971		4.60	%
Commercial real estate		1,327,438			19,127		5.72	%			1,187,747			13,732		4.59	%
Real estate construction		367,935			5,827		6.28	%			315,774			3,062		3.85	%
Residential real estate		576,357			5,667		3.90	%			618,057			5,174		3.32	%
Agricultural real estate		200,492			3,353		6.64	%			206,462			2,919		5.61	%
Agricultural		104,146			1,443		5.50	%			151,589			1,929		5.05	%
Consumer		104,695			1,468		5.57	%			100,547			1,155		4.56	%
Total loans		3,275,284			46,149		5.59	%			3,181,279			34,942		4.36	%
Securities
Taxable securities		1,083,986			5,946		2.18	%			1,209,826			4,754		1.56	%
Nontaxable securities		100,466			678		2.68	%			120,441			747		2.46	%
Total securities		1,184,452			6,624		2.22	%			1,330,267			5,501		1.64	%
Federal funds sold and other		78,441			651		3.29	%			202,271			348		0.68	%
Total interest-earning assets	$	4,538,177			53,424		4.67	%		$	4,713,817			40,791		3.43	%
Interest-bearing liabilities
Demand, savings and money market deposits	$	2,294,639			5,336		0.92	%		$	2,418,492			978		0.16	%
Time deposits		738,263			2,677		1.44	%			683,165			962		0.56	%
Total interest-bearing deposits		3,032,902			8,013		1.05	%			3,101,657			1,940		0.25	%
FHLB advances		155,964			1,500		3.82	%			18,197			15		0.32	%
Other borrowings		146,691			1,880		5.09	%			147,744			1,624		4.36	%
Total interest-bearing liabilities	$	3,335,557			11,393		1.36	%		$	3,267,598			3,579		0.43	%
Net interest income				$	42,031								$	37,212
Interest rate spread							3.31	%								3.00	%
Net interest margin (2)							3.67	%								3.13	%
(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, 2022									September 30, 2022
	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	$	594,221		$	9,264		6.19	%		$	575,149		$	7,750		5.35	%
Commercial real estate		1,327,438			19,127		5.72	%			1,307,244			18,023		5.47	%
Real estate construction		367,935			5,827		6.28	%			360,579			4,847		5.33	%
Residential real estate		576,357			5,667		3.90	%			582,938			5,464		3.72	%
Agricultural real estate		200,492			3,353		6.64	%			200,534			2,740		5.42	%
Agricultural		104,146			1,443		5.50	%			113,351			1,406		4.92	%
Consumer		104,695			1,468		5.57	%			101,203			1,325		5.20	%
Total loans		3,275,284			46,149		5.59	%			3,240,998			41,555		5.09	%
Securities
Taxable securities		1,083,986			5,946		2.18	%			1,164,697			5,793		1.97	%
Nontaxable securities		100,466			678		2.68	%			107,717			687		2.53	%
Total securities		1,184,452			6,624		2.22	%			1,272,414			6,480		2.02	%
Federal funds sold and other		78,441			651		3.29	%			89,156			513		2.29	%
Total interest-earning assets	$	4,538,177			53,424		4.67	%		$	4,602,568			48,548		4.18	%
Interest-bearing liabilities
Demand savings and money market deposits	$	2,294,639			5,336		0.92	%		$	2,425,824			3,118		0.51	%
Time deposits		738,263			2,677		1.44	%			655,421			1,285		0.78	%
Total interest-bearing deposits		3,032,902			8,013		1.05	%			3,081,245			4,403		0.57	%
FHLB advances		155,964			1,500		3.82	%			71,415			409		2.27	%
Other borrowings		146,691			1,880		5.09	%			150,099			1,792		4.74	%
Total interest-bearing liabilities	$	3,335,557			11,393		1.36	%		$	3,302,759			6,604		0.79	%
Net interest income				$	42,031								$	41,944
Interest rate spread							3.31	%								3.39	%
Net interest margin (2)							3.67	%								3.62	%
(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,
	2022				2022				2022				2022				2021
Total stockholders' equity	$	410,058			$	395,806			$	428,115			$	452,015			$	500,631
Less: goodwill		53,101				53,101				53,101				54,465				54,465
Less: core deposit intangibles, net		10,596				11,598				12,554				13,830				14,879
Less: mortgage servicing rights, net		176				201				226				251				276
Less: naming rights, net		1,044				1,054				1,065				1,076				1,087
Tangible common equity	$	345,141			$	329,852			$	361,169			$	382,393			$	429,924
Common shares outstanding at period end		15,930,112				16,017,834				16,106,818				16,454,966				16,760,115
Diluted common shares outstanding at period end		16,163,253				16,225,591				16,289,635				16,662,779				17,050,115
Book value per common share	$	25.74			$	24.71			$	26.58			$	27.47			$	29.87
Tangible book value per common share	$	21.67			$	20.59			$	22.42			$	23.24			$	25.65
Tangible book value per diluted common share	$	21.35			$	20.33			$	22.17			$	22.95			$	25.22
Total assets	$	4,981,651			$	5,000,415			$	5,002,156			$	5,078,623			$	5,137,631
Less: goodwill		53,101				53,101				53,101				54,465				54,465
Less: core deposit intangibles, net		10,596				11,598				12,554				13,830				14,879
Less: mortgage servicing rights, net		176				201				226				251				276
Less: naming rights, net		1,044				1,054				1,065				1,076				1,087
Tangible assets	$	4,916,734			$	4,934,461			$	4,935,210			$	5,009,001			$	5,066,924
Total stockholders' equity to total assets		8.23	%			7.92	%			8.56	%			8.90	%			9.74	%
Tangible common equity to tangible assets		7.02	%			6.68	%			7.32	%			7.63	%			8.48	%
Total average stockholders' equity	$	398,270			$	436,191			$	437,483			$	492,599			$	563,046
Less: average intangible assets		65,450				66,445				68,978				70,181				61,186
Average tangible common equity	$	332,820			$	369,746			$	368,505			$	422,418			$	501,860
Net income (loss) allocable to common stockholders	$	11,608			$	15,171			$	15,259			$	15,650			$	10,466
Add: amortization of intangible assets		961				992				1,148				1,085				1,116
Less: tax effect of intangible assets amortization		202				208				241				228				234
Adjusted net income (loss) allocable to common stockholders	$	12,367			$	15,955			$	16,166			$	16,507			$	11,348
Return on total average stockholders' equity (ROAE) annualized		11.56	%			13.80	%			13.99	%			12.88	%			7.37	%
Return on average tangible common equity (ROATCE) annualized		14.74	%			17.12	%			17.60	%			15.85	%			8.97	%
Non-interest expense	$	35,248			$	32,236			$	31,436			$	29,459			$	38,089
Less: loss on debt extinguishment		—				—				—				—				—
Less: merger expense		68				115				88				323				4,562
Adjusted non-interest expense	$	35,180			$	32,121			$	31,348			$	29,136			$	33,527
Net interest income	$	42,031			$	41,944			$	39,566			$	39,289			$	37,215
Non-interest income		8,330				8,969				9,637				9,022				9,199
Less: net gain on acquisition and branch sales		422				—				540				—				—
Less: net gains (losses) from securities transactions		14				(17	)			(32	)			40				8
Adjusted non-interest income	$	7,894			$	8,986			$	9,129			$	8,982			$	9,191
Net interest income plus adjusted non-interest income	$	49,925			$	50,930			$	48,695			$	48,271			$	46,406
Non-interest expense to net interest income plus non-interest income		69.99	%			63.32	%			63.89	%			60.98	%			82.06	%
Efficiency ratio		70.47	%			63.07	%			64.38	%			60.36	%			72.25	%
Net income (loss) allocable to common stockholders	$	11,608			$	15,171			$	15,259			$	15,650			$	10,466
Add: income tax provision		3,654				3,642				1,684				3,614				(16	)
Add: provision (reversal) of credit losses		(151	)			(136	)			824				(412	)			(2,125	)
Pre-tax, pre-provision income	$	15,111			$	18,677			$	17,767			$	18,852			$	8,325
Total average assets	$	4,930,231			$	4,988,755			$	5,067,687			$	5,108,120			$	5,068,301
Total average stockholders' equity	$	398,270			$	436,191			$	437,483			$	492,599			$	563,023
Return on average assets (ROAA) annualized		0.93	%			1.21	%			1.21	%			1.24	%			0.82	%
Adjusted return on average assets		1.22	%			1.49	%			1.41	%			1.50	%			0.65	%
Adjusted return on average equity		15.05	%			16.99	%			16.29	%			15.52	%			5.87	%