First Mid Bancshares, Inc. Announces First Quarter 2022 Results

MATTOON, Ill., April 27, 2022 (GLOBE NEWSWIRE) -- First Mid Bancshares, Inc. (NASDAQ: FMBH) (the “Company”) today announced its financial results for the quarter ended March 31, 2022.

Highlights

• Net income of $16.6 million, or $0.86 diluted EPS
• Adjusted net income (non-GAAP) of $18.7 million, or $0.96 diluted EPS
• Completed the acquisition of Delta Bancshares Company (“Delta”) and its subsidiary Jefferson Bank and Trust (“Jefferson”) on February 14, 2022
• Strong quarter of wealth management and insurance revenues delivering on our unique diversification
• Board of Directors declared regular quarterly dividend of $0.22 per share
  

“We are off to a great start in 2022 with strong earnings across our diversified revenue streams,” said Joe Dively, Chairman and Chief Executive Officer. “The quarter was highlighted by the closing of the Delta acquisition, which brings additional depth and an expanded retail presence to our St. Louis Metro footprint. The reception from Jefferson’s customers has been positive and our experienced integration team is preparing for a mid-June bank system conversion.”

“Our wealth management group had a great quarter led by higher farm services revenue with increasing commodity prices and farmland sales. Assets under management for the group increased to $5.4 billion. Our insurance group also had a strong start to the year, and combined with wealth management, these two business units recognized year-over-year revenue growth of 21.3%. In what has historically been a seasonally slow quarter for us, loan growth was 1.1%, normalized for acquired and Paycheck Protection Program (“PPP”) loans. I am pleased with the first quarter momentum and expect that to carry forward throughout the year,” Dively concluded.

Net Interest Income

Net interest income for the first quarter of 2022 increased by $0.8 million, or 1.8% compared to the fourth quarter of 2021. Interest income increased by $0.8 million and interest expense was flat from the previous quarter. The increase in interest income was primarily driven by a combination of organic growth and acquisitions. Accretion income increased by $0.4 million in the quarter to $1.1 million and ended the quarter with a remaining discount of $9.3 million. Interest expense was flat with slightly higher interest on deposits offset by lower interest on FHLB borrowings.

In comparison to the first quarter of 2021, net interest income increased $6.8 million, or 18.4%. The increase was primarily the result of organic loan growth and the impact of acquisitions. Total interest expense was lower by $0.4 million compared to the same quarter last year, despite the Delta acquisition and the first quarter 2021 acquisition of Providence Bank (“Providence”).

Net Interest Margin

Net interest margin, on a tax equivalent basis, was 3.07% for the first quarter of 2022, which was 4 basis points lower compared to the prior quarter. Earning asset yields declined by 4 basis points, with a decline in loan yields partially offset by higher rates on securities. Average cost of funds was flat at 26 basis points.

In comparison to the first quarter of last year, the net interest margin decreased 9 basis points, with earning asset yields down 19 basis points and average cost of funds lower by 10 basis points. The first quarter of 2021 included 19 basis points of PPP fee income.

Loan Portfolio

Total loans ended the quarter at $4.45 billion, representing an increase of $459.0 million compared to the prior quarter. The increase was primarily driven by the addition of Jefferson, which added $426.4 million. PPP loans declined by $11.0 million and ended the period with $5.8 million outstanding, including $0.8 million from Jefferson. Excluding PPP loans and the addition of Jefferson, loans increased $43.6 million, or 1.1%. Growth was primarily within our CRE and C&I sectors, partially offset by the seasonal paydowns in Ag operating lines and elevated commercial payoffs. The pipeline for loan growth continues to look solid across our footprint.

Asset Quality

The Company has always prided itself on a strong credit culture and the asset quality metrics for March 31, 2022 reflect those efforts. The allowance for credit losses at the end of the quarter was 1.31% of total loans. Also at quarter end, the ratio of non-performing loans to total loans was 0.50%, and the allowance for credit losses to non-performing loans was 260.3%. The ratio of nonperforming assets to total assets was 0.41% at quarter end. Nonperforming loans and nonperforming assets increased slightly in the period with the addition of Jefferson. The Company recognized a small amount of net recoveries during the first quarter compared to $1.8 million in net charge-offs during the prior quarter.

Provision expense was recorded in the amount of $3.0 million in the first quarter. The Company recorded $2.0 million for the non-PCD CECL requirement tied to the Jefferson acquisition. In addition to the non-PCD requirement related to the Jefferson acquisition, the Company added $0.9 million in PCD reserve through purchase accounting. In total, the allowance for credit losses increased $3.8 million to $58.5 million in the quarter.

Deposits

Total deposits ended the quarter at $5.49 billion, which represented an increase of $530.8 million from the prior quarter primarily from the addition of Jefferson, which added $558.6 million in deposits at the time the acquisition closed. Excluding Jefferson, total deposits decreased by $27.8 million driven primarily from maturing single-service time deposits. The Company’s average rate on cost of funds was 0.26%, flat compared to last quarter, and down from 0.36% in the first quarter of 2021.

Noninterest Income

Noninterest income for the first quarter of 2022 was $21.1 million compared to $18.1 million in the fourth quarter of 2021. The increase compared to the prior quarter was partially due to the addition of Jefferson. Insurance and wealth management revenues represented 62% of total noninterest income reflecting the diversification of our revenue sources. Wealth management had a strong quarter of farm management fee income on higher commodity prices and farmland sales. Both the wealth management and insurance business are well diversified within their revenue sources and deliver consistent cash flows. Mortgage banking revenues declined by $0.4 million due to the macro conditions with limited housing supply and higher mortgage interest rates. As a percent of noninterest income, mortgage banking was 2.1%.

In comparison to the first quarter of 2021, noninterest income increased $3.3 million, or 18.8%. The year-over-year increase was driven by strong growth in our wealth management and insurance businesses and the addition of Jefferson, partially offset by a $1.0 million decline in mortgage banking revenue.

Noninterest Expenses

Noninterest expense for the first quarter of 2022 totaled $40.4 million compared to $36.4 million in the fourth quarter. The increase was primarily driven by the addition of Jefferson, the producer incentive compensation tied to the strong business unit revenue growth, and overall inflationary pressures. The quarter included $0.6 million of acquisition related costs.

In comparison to the first quarter of 2021, noninterest expenses increased $2.8 million. The increase was primarily due to the addition of Jefferson and Providence, incentive compensation on business unit revenue growth, and overall inflationary pressures.

The Company’s efficiency ratio, as adjusted in the non-GAAP reconciliation table herein, for the first quarter 2022 was 58.6% compared to 55.8% in the prior quarter and 61.2% for the same period last year.

Capital Levels and Dividend

The Company’s capital levels remained strong and comfortably above the “well capitalized” levels. Capital levels ended the period as follows:

Total capital to risk-weighted assets	15.41%
Tier 1 capital to risk-weighted assets	12.42%
Common equity tier 1 capital to risk-weighted assets	12.03%
Leverage ratio	9.28%

The Company’s Board of Directors approved a regular quarterly dividend in the amount of $0.22 payable on June 1, 2022 for shareholders of record on May 18, 2022.

While regulatory capital levels were strong, the Company’s tangible book value per common share declined in the period by approximately 11.6%. A portion of this decline was anticipated pursuant to the Jefferson acquisition where we announced an expected 3.0% dilution to tangible book value per common share at closing. However, the rapid move in interest rates during the quarter was the primary driver for the decline as the unrealized loss position on the investment portfolio increased to $74.0 million.

About First Mid: First Mid Bancshares, Inc. (“First Mid”) is the parent company of First Mid Bank & Trust, N.A., Jefferson Bank & Trust, First Mid Insurance Group, Inc., and First Mid Wealth Management Co. First Mid is a $6.6 billion community-focused organization that provides a full-suite of financial services including banking, wealth management, brokerage, Ag services, and insurance through a sizeable network of locations throughout Illinois, Missouri, and Texas, and a loan production office in the greater Indianapolis area. Together, our First Mid team takes great pride in providing solutions and services to the customers and communities and has done so over the last 157 years. More information about the Company is available on our website at www.firstmid.com.

Non-GAAP Measures: In addition to reports presented in accordance with generally accepted accounting principles (“GAAP”), this release contains certain non-GAAP financial measures. The Company believes that such non-GAAP financial measures provide investors with information useful in understanding the Company’s financial performance. Readers of this release, however, are urged to review these non-GAAP financial measures in conjunction with the GAAP results as reported. These non-GAAP financial measures are detailed as supplemental tables and include “Adjusted Net Income,” “Adjusted Diluted EPS,” “Efficiency Ratio,” “Net Interest Margin, tax equivalent,” and “Tangible Book Value per Common Share”. While the Company believes these non-GAAP financial measures provide investors with a broader understanding of the capital adequacy, funding profile and financial trends of the Company, this information should be considered as supplemental in nature and not as a substitute to the related financial information prepared in accordance with GAAP. These non-GAAP financial measures may also differ from the similar measures presented by other companies.

Forward Looking Statements
This document may contain certain forward-looking statements about First Mid, such as discussions of First Mid’s pricing and fee trends, credit quality and outlook, liquidity, new business results, expansion plans, anticipated expenses, and planned schedules. First Mid intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of First Mid, are identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” or similar expressions. Actual results could differ materially from the results indicated by these statements because the realization of those results is subject to many risks and uncertainties, including, among other things, the risk that integration of the operations of Delta with First Mid will be materially delayed or will be more costly or difficult than expected; changes in interest rates; general economic conditions and those in the market areas of First Mid; legislative and/or regulatory changes; monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board; the quality or composition of First Mid’s loan or investment portfolios and the valuation of those investment portfolios; demand for loan products; deposit flows; competition, demand for financial services in the market areas of First Mid; accounting principles, policies and guidelines; the severity, magnitude and duration of the COVID-19 pandemic, the direct and indirect impact of such pandemic, including responses to the pandemic by the U.S., state and local governments, customers' businesses, the disruption of global, national, state and local economies associated with the COVID-19 pandemic, which could affect First Mid’s liquidity and capital positions, impair the ability of First Mid’s borrowers to repay outstanding loans, impair collateral values, and further increase the allowance for credit losses, and the impact of the COVID-19 pandemic on First Mid’s financial results, including possible lost revenue and increased expenses (including cost of capital), as well as possible goodwill impairment charges. Additional information concerning First Mid, including additional factors and risks that could materially affect First Mid’s financial results, are included in First Mid’s filings with the SEC, including its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. Forward-looking statements speak only as of the date they are made. Except as required under the federal securities laws or the rules and regulations of the SEC, we do not undertake any obligation to update or review any forward-looking information, whether as a result of new information, future events or otherwise.

Investor Contact:
Aaron Holt
VP, Shareholder Relations
217-258-0463
aholt@firstmid.com

Matt Smith
Chief Financial Officer
217-258-1528
msmith@firstmid.com

 – Tables Follow –

FIRST MID BANCSHARES, INC.
Condensed Consolidated Balance Sheets
(In thousands, unaudited)
	As of
	March 31,				December 31,				March 31,
	2022				2021				2021
Assets
Cash and cash equivalents	$	223,980			$	168,602			$	410,017
Investment securities	1,472,277				1,431,299				1,099,532
Loans (including loans held for sale)	4,454,561				3,995,523				3,943,099
Less allowance for credit losses	(58,474		)		(54,655		)		(55,418		)
Net loans	4,396,087				3,940,868				3,887,681
Premises and equipment, net	89,319				81,484				86,654
Goodwill and intangibles, net	174,499				141,376				138,606
Bank owned life insurance	149,041				132,375				124,925
Other assets	126,803				90,578				89,855
Total assets	$	6,632,006			$	5,986,582			$	5,837,270
Liabilities and Stockholders' Equity
Deposits:
Non-interest bearing	$	1,373,881			$	1,246,673			$	1,185,181
Interest bearing	4,113,424				3,709,813				3,552,512
Total deposits	5,487,305				4,956,486				4,737,693
Repurchase agreement with customers	187,326				146,268				212,503
Other borrowings	126,396				86,446				116,861
Junior subordinated debentures	19,237				19,195				19,069
Subordinated debt	94,438				94,400				94,289
Other liabilities	50,919				49,893				54,971
Total liabilities	5,965,621				5,352,688				5,235,386
Total stockholders' equity	666,385				633,894				601,884
Total liabilities and stockholders' equity	$	6,632,006			$	5,986,582			$	5,837,270

FIRST MID BANCSHARES, INC.
Condensed Consolidated Statements of Income
(In thousands, except per share data, unaudited)
	Three Months Ended
	March 31,
	2022				2021
Interest income:
Interest and fees on loans	$	39,908			$	35,886
Interest on investment securities		7,170				4,842
Interest on federal funds sold & other deposits		67				88
Total interest income		47,145				40,816
Interest expense:
Interest on deposits		2,148				2,484
Interest on securities sold under agreements to repurchase		67				70
Interest on other borrowings		276				374
Interest on jr. subordinated debentures		146				140
Interest on subordinated debt		986				984
Total interest expense		3,623				4,052
Net interest income		43,522				36,764
Provision for loan losses		2,952				12,136
Net interest income after provision for loan		40,570				24,628
Non-interest income:
Wealth management revenues		5,975				4,926
Insurance commissions		7,104				5,857
Service charges		2,056				1,364
Securities gains, net		0				4
Mortgage banking revenues		444				1,409
ATM/debit card revenue		2,898				2,699
Other		2,611				1,490
Total non-interest income		21,088				17,749
Non-interest expense:
Salaries and employee benefits		24,302				23,487
Net occupancy and equipment expense		6,155				4,970
Net other real estate owned (income) expense		(33	)			78
FDIC insurance		426				452
Amortization of intangible assets		1,522				1,220
Stationary and supplies		311				316
Legal and professional expense		1,734				1,402
Marketing and donations		873				502
Other		5,098				5,173
Total non-interest expense		40,388				37,600
Income before income taxes		21,270				4,777
Income taxes		4,654				668
Net income	$	16,616			$	4,109
Per Share Information
Basic earnings per common share	$	0.86			$	0.24
Diluted earnings per common share		0.86				0.24
Weighted average shares outstanding		19,295,860				17,299,927
Diluted weighted average shares outstanding		19,358,457				17,352,947

FIRST MID BANCSHARES, INC.
Condensed Consolidated Statements of Income
(In thousands, except per share data, unaudited)
	For the Quarter Ended
	March 31,				December 31,			September 30,			June 30,				March 31,
	2022				2021			2021			2021				2021
Interest income:
Interest and fees on loans	$	39,908			$	39,711		$	43,292		$	40,795			$	35,886
Interest on investment securities		7,170				6,500			5,835			5,739				4,842
Interest on federal funds sold & other deposits		67				88			136			101				88
Total interest income		47,145				46,299			49,263			46,635				40,816
Interest expense:
Interest on deposits		2,148				2,057			2,234			2,262				2,484
Interest on securities sold under agreements to repurchase		67				52			52			57				70
Interest on other borrowings		276				336			359			445				374
Interest on jr. subordinated debentures		146				125			137			139				140
Interest on subordinated debt		986				985			985			985				984
Total interest expense		3,623				3,555			3,767			3,888				4,052
Net interest income		43,522				42,744			45,496			42,747				36,764
Provision for loan losses		2,952				2,472			1,103			(560	)			12,136
Net interest income after provision for loan		40,570				40,272			44,393			43,307				24,628
Non-interest income:
Wealth management revenues		5,975				6,261			4,204			5,016				4,926
Insurance commissions		7,104				4,150			3,932			4,988				5,857
Service charges		2,056				2,067			1,838			1,539				1,364
Securities gains, net		0				36			11			73				4
Mortgage banking revenues		444				890			1,477			1,691				1,409
ATM/debit card revenue		2,898				3,074			3,060			3,141				2,699
Other		2,611				1,646			1,837			1,836				1,490
Total non-interest income		21,088				18,124			16,359			18,284				17,749
Non-interest expense:
Salaries and employee benefits		24,302				20,424			21,092			24,908				23,487
Net occupancy and equipment expense		6,155				5,712			5,382			5,482				4,970
Net other real estate owned (income) expense		(33	)			315			1,507			1,966				78
FDIC insurance		426				406			268			478				452
Amortization of intangible assets		1,522				1,462			1,414			1,295				1,220
Stationary and supplies		311				311			299			235				316
Legal and professional expense		1,734				1,811			1,878			1,639				1,402
Marketing and donations		873				1,915			679			507				502
Other		5,098				4,038			3,802			9,503				5,173
Total non-interest expense		40,388				36,394			36,321			46,013				37,600
Income before income taxes		21,270				22,002			24,431			15,578				4,777
Income taxes		4,654				5,168			6,105			3,357				668
Net income	$	16,616			$	16,834		$	18,326		$	12,221			$	4,109
Per Share Information
Basic earnings per common share	$	0.86			$	0.93		$	1.01		$	0.68			$	0.24
Diluted earnings per common share		0.86				0.93			1.01			0.68				0.24
Weighted average shares outstanding		19,295,860				18,086,949			18,083,126			18,067,190				17,299,927
Diluted weighted average shares outstanding		19,358,457				18,135,380			18,136,146			18,120,210				17,352,947

FIRST MID BANCSHARES, INC.
Consolidated Financial Highlights and Ratios
(Dollars in thousands, except per share data)
(Unaudited)
	As of and for the Quarter Ended
	March 31,				December 31,				September 30,				June 30,				March 31,
	2022				2021				2021				2021				2021
Loan Portfolio
Construction and land development	$	131,504			$	145,118			$	180,061			$	141,568			$	165,376
Farm real estate loans		280,993				279,272				278,788				277,362				269,652
1-4 Family residential properties		417,232				400,313				412,565				394,902				412,470
Multifamily residential properties		369,926				298,942				306,911				274,910				297,984
Commercial real estate		1,965,321				1,666,198				1,583,255				1,480,198				1,402,885
Loans secured by real estate		3,164,976				2,789,843				2,761,580				2,568,940				2,548,367
Agricultural operating loans		121,708				151,484				126,534				123,101				121,070
Commercial and industrial loans		935,454				832,008				835,860				864,554				1,017,400
Consumer loans		89,685				78,442				80,064				84,541				91,705
All other loans		142,738				143,746				143,731				155,168				164,557
Total loans		4,454,561				3,995,523				3,947,769				3,796,304				3,943,099
Deposit Portfolio
Non-interest bearing demand deposits	$	1,373,881			$	1,246,673			$	1,242,950			$	1,157,009			$	1,185,181
Interest bearing demand deposits		1,482,556				1,452,765				1,416,361				1,418,717				1,268,882
Savings deposits		685,228				626,523				612,404				598,232				668,098
Money Market		1,280,129				1,068,473				1,075,852				842,771				803,946
Time deposits		665,511				562,052				640,995				722,593				811,586
Total deposits		5,487,305				4,956,486				4,988,562				4,739,322				4,737,693
Asset Quality
Non-performing loans	$	22,465			$	22,036			$	27,723			$	30,410			$	31,984
Non-performing assets		27,269				27,055				33,359				37,648				45,323
Net charge-offs (recoveries)		(5	)			1,800				1,717				261				702
Allowance for credit losses to non-performing loans		260.29	%			248.03	%			194.72	%			179.54	%			173.27	%
Allowance for credit losses to total loans outstanding		1.31	%			1.37	%1			1.39	%1			1.50	%1			1.50	%1
Nonperforming loans to total loans		0.50	%			0.55	%			0.70	%			0.80	%			0.81	%
Nonperforming assets to total assets		0.41	%			0.45	%			0.55	%			0.65	%			0.78	%
Common Share Data
Common shares outstanding		20,437,183				18,080,303				18,083,126				18,078,474				18,042,256
Book value per common share	$	32.61			$	35.06			$	34.69			$	34.08			$	33.36
Tangible book value per common share(2)		24.07				27.24				26.80				26.33				25.68
Market price of stock		38.49				42.79				41.06				40.51				43.93
Key Performance Ratios and Metrics
End of period earning assets	$	6,038,542			$	5,504,517			$	5,542,199			$	5,269,882			$	5,374,848
Average earning assets		5,817,752				5,539,819				5,396,239				5,380,411				4,769,975
Average rate on average earning assets (tax equivalent)		3.33	%			3.37	%			3.67	%			3.52	%			3.52	%
Average rate on cost of funds		0.26	%			0.26	%			0.29	%			0.30	%			0.36	%
Net interest margin (tax equivalent)(2)		3.07	%			3.11	%			3.38	%			3.22	%			3.16	%
Return on average assets		1.05	%			1.12	%			1.25	%			0.84	%			0.32	%
Return on average common equity		9.95	%			10.74	%			11.67	%			8.00	%			2.78	%
Efficiency ratio (tax equivalent)(2)		58.59	%			55.75	%			52.73	%			59.91	%			61.20	%
Full-time equivalent employees		1,050				965				960				960				983
1Excludes Paycheck Protection Program loans.
2Non-GAAP financial measure. Refer to reconciliation to the comparable GAAP measure.

FIRST MID BANCSHARES, INC.
Net Interest Margin
(In thousands, unaudited)
	For the Quarter Ended March 31, 2022
	QTD Average							Average
	Balance				Interest			Rate
INTEREST EARNING ASSETS
Interest bearing deposits	$	135,176			$	55		0.16	%
Federal funds sold		3,714				1		0.13	%
Certificates of deposits investments		2,238				11		2.04	%
Investment Securities:
Taxable (total less municipals)		1,111,109				4,905		1.77	%
Tax-exempt (Municipals)		382,909				2,867		2.99	%
Loans (net of unearned income)		4,182,606				40,076		3.88	%
Total interest earning assets		5,817,752				47,915		3.33	%
NONEARNING ASSETS
Cash and due from banks		114,257
Premises and equipment		83,883
Other nonearning assets		367,966
Allowance for loan losses		(58,462	)
Total assets	$	6,325,396
INTEREST BEARING LIABILITIES
Demand deposits	$	2,610,573			$	1,321		0.21	%
Savings deposits		658,038				119		0.07	%
Time deposits		615,142				708		0.47	%
Total interest bearing deposits		3,883,753				2,148		0.22	%
Repurchase agreements		173,491				67		0.16	%
FHLB advances		115,852				276		0.97	%
Federal funds purchased		44				-		0.00	%
Subordinated debt		94,413				986		4.24	%
Jr. subordinated debentures		19,210				146		3.08	%
Total borrowings		403,010				1,475		1.48	%
Total interest bearing liabilities		4,286,763				3,623		0.34	%
NONINTEREST BEARING LIABILITIES
Demand deposits		1,329,554			Average cost of funds			0.26	%
Other liabilities		41,345
Stockholders' equity		667,734
Total liabilities & stockholders' equity	$	6,325,396
Net Interest Earnings / Spread					$	44,292		2.99	%
Impact of Non-Interest Bearing Funds								0.08	%
Tax effected yield on interest earning assets								3.07	%

FIRST MID BANCSHARES, INC.
Reconciliation of Non-GAAP Financial Measures
(In thousands, unaudited)
	As of and for the Quarter Ended
	March 31,				December 31,				September 30,				June 30,				March 31,
	2022				2021				2021				2021				2021
Net interest income as reported	$	43,522			$	42,744			$	45,496			$	42,747			$	36,764
Net interest income, (tax equivalent)		44,292				43,492				46,165				43,359				37,359
Average earning assets		5,817,752				5,539,819				5,396,239				5,380,411				4,769,975
Net interest margin (tax equivalent)		3.07	%			3.11	%			3.38	%			3.22	%			3.16	%
Common stockholder's equity	$	666,385			$	633,894			$	627,225			$	616,066			$	601,884
Goodwill and intangibles, net		174,499				141,376				142,656				139,995				138,606
Common shares outstanding		20,437				18,080				18,083				18,078				18,042
Tangible Book Value per common share	$	24.07			$	27.24			$	26.80			$	26.33			$	25.68

FIRST MID BANCSHARES, INC.
Reconciliation of Non-GAAP Financial Measures
(In thousands, except per share data, unaudited)
	As of and for the Quarter Ended
	March 31,				December 31,				September 30,				June 30,				March 31,
	2022				2021				2021				2021				2021
Adjusted earnings Reconciliation
Net Income - GAAP	$	16,616			$	16,834			$	18,326			$	12,221			$	4,109
Adjustments (post-tax):(1)
Acquisition ACL on non-PCD assets in provision expense		1,580				-				-				-				9,072
Branch optimization costs		-				-				999				960				-
Integration and acquisition expenses		469				225				348				4,634				2,036
Total non-recurring adjustments (non-GAAP)	$	2,049			$	225			$	1,347			$	5,595			$	11,108
Adjusted earnings - non-GAAP	$	18,665			$	17,059			$	19,673			$	17,816			$	15,217
Adjusted diluted earnings per share (non-GAAP)	$	0.96			$	0.94			$	1.08			$	0.98			$	0.88
Efficiency Ratio Reconciliation
Noninterest expense - GAAP	$	40,388			$	36,394			$	36,321			$	46,013			$	37,600
Other real estate owned property income (expense)		33				(315	)			(242	)			(751	)			(78	)
Amortization of intangibles		(1,522	)			(1,462	)			(1,414	)			(1,295	)			(1,220	)
Branch optimization costs		-				-				(1,265	)			(1,215	)			-
integration and acquisition expenses		(594	)			(285	)			(440	)			(5,866	)			(2,578	)
Adjusted noninterest expense (non-GAAP)	$	38,305			$	34,332			$	32,960			$	36,886			$	33,724
Net interest income -GAAP	$	43,522			$	42,744			$	45,496			$	42,747			$	36,764
Effect of tax-exempt income(1)		770				748				669				612				595
Adjusted net interest income (non-GAAP)	$	44,292			$	43,492			$	46,165			$	43,359			$	37,359
Noninterest income - GAAP	$	21,088			$	18,124			$	16,359			$	18,284			$	17,749
Gain on sales of investment securities, net		0				(36	)			(11	)			(73	)			(4	)
Adjusted noninterest income (non-GAAP)	$	21,088			$	18,088			$	16,348			$	18,211			$	17,745
Adjusted total revenue (non-GAAP)	$	65,380			$	61,580			$	62,513			$	61,570			$	55,104
Efficiency ratio (non-GAAP)		58.59	%			55.75	%			52.73	%			59.91	%			61.20	%
(1) Nonrecurring items (post-tax) and tax-exempt income are calculated using an estimated effective tax rate of 21%.