EQBK Equity Bancshares Inc

Equity Bancshares, Inc. (NYSE: EQBK), (“Equity”, “the Company”, “we,” “us,” “our”), the Wichita-based holding company of Equity Bank, reported a net loss of $28.3 million or $(1.84) earnings per diluted share for the quarter ended December 31, 2023. Excluding the impact of our previously announced bond repositioning and merger related expenses, operating income would have been $11.9 million or $0.77 earnings per diluted share.

“Our Company entered the fourth quarter positioned to take advantage of market opportunities which we expect will drive our operating growth in the future,” said Brad S. Elliott, Chairman and CEO of Equity.  “With our team’s efforts around capital creation and management, we were able to announce our newest strategic combination with the Bank of Kirksville, Missouri, as well as a repositioning of our bond portfolio.  Each of these transactions reflect our entrepreneurial spirit and, we believe, position our Company for continued success.”

"In addition to the transformative transactions, our teams continued to emphasize core customer creation and service, while maintaining strong credit quality," Mr. Elliott said. "Our classified asset ratio continues to be historically low, while both capital and on balance sheet reserves remain high, positioning Equity to be strategic for organic and acquisitive growth opportunities."

Notable Items:

• The Company realized linked quarter gross loans held-for-investment expansion of $50.8 million, or 6.1% annualized.  Commercial lending categories were the primary contributors to realized growth.
• The Company realized linked quarter deposit growth of $63.3 million, including $13.3 million in non-brokered deposit balances.
• The Company sold $493.6 million in securities par value, realizing gross loss of $50.6 million.  Securities included in the transaction were yielding 1.20% at the date of sale.  Funds received were redeployed in bond purchases, loan production, cash, and the avoidance of high-cost borrowings.
• Stockholders' Equity increased $34.7 million linked quarter, while tangible book value increased $35.5 million. Tangible book value per share closed the year at $25.37 compared to $23.09 as of September 30, 2023 and $21.67 as of December 31, 2022.
• The Company announced its planned merger with Rockhold Bancorp, the parent company of Bank of Kirksville (“BoK”) which operates eight banking locations in northcentral Missouri. As of September 30, 2023 BoK reported total assets of $406 million, including $122 million in loans, and $344 million in deposits.
• Classified assets as a percentage of total risk based capital at Equity Bank closed the period at 7.1% while non-performing assets remained historically low.  The allowance for credit losses closed the quarter at 1.31% of total loans.

Financial Results for the Quarter Ended December 31, 2023

Net loss allocable to common stockholders was $28.3 million, or $(1.84) per diluted share, for the three months ended December 31, 2023, as compared to $12.3 million, or $0.80 per diluted share, for the three months ended September 30, 2023. The decrease during the quarter was primarily driven by a loss on sales of available-for-sale securities of $50.6 million. Excluding the tax-effected impact of loss on sale, operating net income would have been $11.9 million, or $0.77 per diluted share.

Net Interest Income

Net interest income was $39.5 million for the three months ended December 31, 2023, as compared to $41.0 million for the three months ended September 30, 2023, a decrease of $1.5 million, or 3.77%. Net interest margin decreased to 3.49% from 3.51% as the yield on interest-earning assets increased 12 basis points to 5.69% and the cost of interest-bearing deposits increased 18 basis points to 2.83%. Continued increases in loan coupon were offset by a decline in purchase accounting and non-accrual loan costs.

Average deposits declined during the quarter and the Company continued to experience compositional shift from noninterest-bearing deposits into interest-bearing categories. At December 31, 2023, non-interest-bearing deposits declined $38.1 million from September 30, 2023, and $199.8 million from December 31, 2022.  The majority of the decline over the last 12 months is due to deposits migrating to interest-bearing deposit accounts coupled with declining excess liquidity positions of our customer base.

Provision for Credit Losses

During the three months ended December 31, 2023, there was a provision of $711 thousand compared to a provision of $1.2 million in the previous quarter.  The provision for the quarter is the result of increased loss rates within the portfolio as well as realized charge-offs; however, overall we continue to experience positive credit trends. The Company continues to estimate the allowance for credit loss with assumptions that anticipate slower prepayment 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, 2023, we had net charge-offs of $1.4 million as compared to $1.6 million for the three months ended September 30, 2023.

Non-Interest Income

Total non-interest income was $(43.4) million for the three months ended December 31, 2023, as compared to $8.7 million for the three months ended September 30, 2023, or a decrease of 597.0%, quarter-over-quarter.  The $52.1 million decrease was primarily due to an increase in losses on the sale of available-for-sale securities of $50.7 million. During the fourth quarter the Company repositioned it's investment portfolio by selling lower yielding securities and reinvesting into higher yielding assets, resulting in the loss.

Exclusive of the investment portfolio re-positioning, non-interest income was driven down by the fair valuation of portfolio derivatives as market rates trended down in the quarter, as well as a decline in the benefits from specific credits related to the Almena State Bank transaction of $526 thousand. 

Non-Interest Expense

Total non-interest expense for the quarter ended December 31, 2023, was $35.0 million as compared to $34.2 million for the quarter ended September 30, 2023, an increase of $754 thousand. Adjusting for merger expenses, the increase quarter over quarter was $462 thousand due to increased incentive and insurance accruals within the salary and employee benefits line item.

Income Tax Expense

At December 31, 2023, the effective tax rate for the quarter was 28.6% as compared to 13.5% at September 30, 2023. The year-to-date tax rate is (223.9)% compared to 14.1% at September 30, 2023. The increase in the rate linked to the quarter represents additional benefit associated with the sale of bonds generating pre-tax losses recognized in the fourth quarter ending December 31, 2023. The year-to-date tax rate represents the anticipated tax planning benefits and credits amplified by a reduction in pre-tax book income for the year due to the pre-tax losses generated in the fourth quarter related to the sale of bonds.  The anticipated tax rate for the full year, normalized for the sale of the bonds, would have been 12.8%.  

Loans, Total Assets and Funding

Loans held for investment were $3.33 billion at December 31, 2023, increasing $50.8 million compared to the previous quarter. Total assets were $5.03 billion as of December 31, 2023, increasing $89.3 million or 1.8% from September 30, 2023.

Total deposits were $4.1 billion at December 31, 2023, increasing $63.3 million from the previous quarter end and decreasing $96.4 million from the same period end in 2022.  During the fourth quarter, there were increases in brokered deposits of $50.0 million. Excluding the impact of brokered deposits, totals deposits increased $13.3 million as compared to September 30, 2023. Of the total deposit balance, non-interest-bearing accounts comprise approximately 21.7%. Advances from the FHLB and borrowings from the Federal Reserve's Bank Term Funding Program remained unchanged from September 30, 2023.

Asset Quality

As of December 31, 2023, Equity’s allowance for credit losses to total loans remained materially consistent at 1.3% as compared to September 30, 2023.  Nonperforming assets were $26.5 million as of December 31, 2023, or 0.5% of total assets, compared to $20.5 million at September 30, 2023, or 0.4% of total assets.  Non-accrual loans were $25.0 million at December 31, 2023, as compared to $19.4 million at September 30, 2023.  Total classified assets, including loans rated special mention or worse, other real estate owned, excluding previous branch locations, and other repossessed assets were $40.5 million, or 7.1% of regulatory capital, up from $37.6 million, or 6.3% of regulatory capital as of September 30, 2023.

Capital

Quarter over quarter, book capital increased $34.7 million to $452.9 million and tangible capital increased $35.5 million to $391.5 million.  The increase in book and tangible capital is primarily due to a decrease in the unrealized loss position in our investment portfolio of $65.0 million, partially offset by net loss for the quarter of $28.3 million, dividends declared of $1.9 million and a decrease in unrealized gains on cash-flow derivatives of $1.0 million.

The Company’s ratio of common equity tier 1 capital to risk-weighted assets was 11.7%, the total capital to risk-weighted assets was 15.5% and the total leverage ratio was 9.5% at December 31, 2023.  At September 30, 2023, the Company’s common equity tier 1 capital to risk-weighted assets ratio was 12.7%, the total capital to risk-weighted assets ratio was 16.4% and the total leverage ratio was 9.8%.

Equity Bank's ratio of common equity tier 1 capital to risk-weighted assets was 13.9%, total capital to risk-weighted assets was 15.1% and the total leverage ratio was 10.6% at December 31, 2023.  At September 30, 2023, Equity Bank’s ratio of common equity tier 1 capital to risk-weighted assets was 14.7%, the ratio of total capital to risk-weighted assets was 15.9% and the total leverage ratio was 10.8%.

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, Chris Navratil, will hold a conference call and webcast to discuss fourth quarter results on Thursday, January 25, 2024, 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 January 31, 2024, 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 NYSE National, Inc. 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,” “positioned,” “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 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, 2023, 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 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:

Brian J. KatzfeyVP, Director of Corporate Development and Investor RelationsEquity Bank(316) 858-3128bkatzfey@equitybank.com     

Media Contact:

John J. HanleyChief Marketing OfficerEquity Bancshares, Inc.(913) 583-8004jhanley@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,
		2023				2022				2023				2022
Interest and dividend income
Loans, including fees		$	54,932			$	46,149			$	211,213			$	160,859
Securities, taxable			6,417				5,946				23,873				22,713
Securities, nontaxable			354				678				1,960				2,698
Federal funds sold and other			2,591				651				9,666				1,978
Total interest and dividend income			64,294				53,424				246,712				188,248
Interest expense
Deposits			20,074				8,013				70,473				16,321
Federal funds purchased and retail repurchase agreements			298				82				931				232
Federal Home Loan Bank advances			1,005				1,500				3,944				2,094
Federal Reserve Bank borrowings			1,546				—				4,755				—
Subordinated debt			1,904				1,798				7,591				6,771
Total interest expense			24,827				11,393				87,694				25,418
Net interest income			39,467				42,031				159,018				162,830
Provision (reversal) for credit losses			711				(151	)			1,873				125
Net interest income after provision (reversal) for credit losses			38,756				42,182				157,145				162,705
Non-interest income
Service charges and fees			2,299				2,705				10,187				10,632
Debit card income			2,524				2,557				10,322				10,677
Mortgage banking			125				116				652				1,416
Increase in value of bank-owned life insurance			925				758				4,059				3,113
Net gain on acquisition and branch sales			—				422				—				962
Net gains (losses) from securities transactions			(50,618	)			14				(51,909	)			5
Other			1,331				1,757				7,560				9,152
Total non-interest income			(43,414	)			8,329				(19,129	)			35,957
Non-interest expense
Salaries and employee benefits			16,598				16,113				64,384				62,006
Net occupancy and equipment			3,244				2,919				12,325				12,223
Data processing			4,471				4,334				17,433				15,883
Professional fees			1,413				1,404				5,754				4,951
Advertising and business development			1,598				1,903				5,425				5,042
Telecommunications			460				517				1,963				1,916
FDIC insurance			660				360				2,195				1,140
Courier and postage			577				533				2,046				1,881
Free nationwide ATM cost			508				510				2,073				2,103
Amortization of core deposit intangibles			739				924				3,374				4,042
Loan expense			155				262				540				828
Other real estate owned			224				388				542				589
Merger expenses			292				68				297				594
Other			4,059				5,014				17,250				15,182
Total non-interest expense			34,998				35,249				135,601				128,380
Income (loss) before income tax			(39,656	)			15,262				2,415				70,282
Provision for income taxes			(11,357	)			3,654				(5,406	)			12,594
Net income (loss) and net income (loss) allocable to common stockholders		$	(28,299	)		$	11,608			$	7,821			$	57,688
Basic earnings (loss) per share		$	(1.84	)		$	0.73			$	0.50			$	3.56
Diluted earnings (loss) per share		$	(1.84	)		$	0.72			$	0.50			$	3.51
Weighted average common shares			15,417,200				15,948,360				15,535,772				16,214,049
Weighted average diluted common shares			15,417,200				16,204,185				15,648,842				16,437,906

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, 2023				September 30, 2023				June 30, 2023				March 31, 2023				December 31, 2022
Interest and dividend income
Loans, including fees		$	54,932			$	55,152			$	52,748			$	48,381			$	46,149
Securities, taxable			6,417				5,696				5,813				5,947				5,946
Securities, nontaxable			354				369				568				669				678
Federal funds sold and other			2,591				3,822				2,127				1,126				651
Total interest and dividend income			64,294				65,039				61,256				56,123				53,424
Interest expense
Deposits			20,074				19,374				17,204				13,821				8,013
Federal funds purchased and retail repurchase agreements			298				246				192				195				82
Federal Home Loan Bank advances			1,005				968				953				1,018				1,500
Federal Reserve Bank borrowings			1,546				1,546				1,528				135				—
Subordinated debt			1,904				1,893				1,950				1,844				1,798
Total interest expense			24,827				24,027				21,827				17,013				11,393
Net interest income			39,467				41,012				39,429				39,110				42,031
Provision (reversal) for credit losses			711				1,230				298				(366	)			(151	)
Net interest income after provision (reversal) for credit losses			38,756				39,782				39,131				39,476				42,182
Non-interest income
Service charges and fees			2,299				2,690				2,653				2,545				2,705
Debit card income			2,524				2,591				2,653				2,554				2,557
Mortgage banking			125				226				213				88				116
Increase in value of bank-owned life insurance			925				794				757				1,583				758
Net gain on acquisition and branch sales			—				—				—				—				422
Net gains (losses) from securities transactions			(50,618	)			(1	)			(1,322	)			32				14
Other			1,331				2,435				1,996				1,798				1,757
Total non-interest income			(43,414	)			8,735				6,950				8,600				8,329
Non-interest expense
Salaries and employee benefits			16,598				15,857				15,237				16,692				16,113
Net occupancy and equipment			3,244				3,262				2,940				2,879				2,919
Data processing			4,471				4,553				4,493				3,916				4,334
Professional fees			1,413				1,312				1,645				1,384				1,404
Advertising and business development			1,598				1,419				1,249				1,159				1,903
Telecommunications			460				502				516				485				517
FDIC insurance			660				660				515				360				360
Courier and postage			577				548				463				458				533
Free nationwide ATM cost			508				516				524				525				510
Amortization of core deposit intangibles			739				799				918				918				924
Loan expense			155				132				136				117				262
Other real estate owned			224				128				71				119				388
Merger expenses			292				—				—				—				68
Other			4,059				4,556				4,423				4,217				5,014
Total non-interest expense			34,998				34,244				33,130				33,229				35,249
Income (loss) before income tax			(39,656	)			14,273				12,951				14,847				15,262
Provision for income taxes (benefit)			(11,357	)			1,932				1,495				2,524				3,654
Net income (loss) and net income (loss) allocable to common stockholders		$	(28,299	)		$	12,341			$	11,456			$	12,323			$	11,608
Basic earnings (loss) per share		$	(1.84	)		$	0.80			$	0.74			$	0.78			$	0.73
Diluted earnings (loss) per share		$	(1.84	)		$	0.80			$	0.74			$	0.77			$	0.72
Weighted average common shares			15,417,200				15,404,992				15,468,378				15,858,808				15,948,360
Weighted average diluted common shares			15,417,200				15,507,172				15,554,255				16,028,051				16,204,185

TABLE 3. CONSOLIDATED BALANCE SHEETS (Unaudited)

(Dollars in thousands)

		December 31, 2023				September 30, 2023				June 30, 2023				March 31, 2023				December 31, 2022
ASSETS
Cash and due from banks		$	363,289			$	183,404			$	262,604			$	249,982			$	104,013
Federal funds sold			15,810				15,613				15,495				384				415
Cash and cash equivalents			379,099				199,017				278,099				250,366				104,428
Available-for-sale securities			919,648				1,057,009				1,094,748				1,183,247				1,184,390
Held-to-maturity securities			2,209				2,212				2,216				1,944				1,948
Loans held for sale			476				627				2,456				648				349
Loans, net of allowance for credit losses(1)			3,289,381				3,237,932				3,278,126				3,285,515				3,265,701
Other real estate owned, net			1,833				3,369				4,362				4,171				4,409
Premises and equipment, net			112,632				110,271				106,186				104,789				101,492
Bank-owned life insurance			124,865				124,245				123,451				122,971				123,176
Federal Reserve Bank and Federal Home Loan Bank stock			20,608				20,780				21,129				33,359				21,695
Interest receivable			25,497				23,621				21,360				20,461				20,630
Goodwill			53,101				53,101				53,101				53,101				53,101
Core deposit intangibles, net			7,222				7,961				8,760				9,678				10,596
Other			98,021				105,122				100,889				86,466				89,736
Total assets		$	5,034,592			$	4,945,267			$	5,094,883			$	5,156,716			$	4,981,651
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Demand		$	898,129			$	936,217			$	978,968			$	1,012,671			$	1,097,899
Total non-interest-bearing deposits			898,129				936,217				978,968				1,012,671				1,097,899
Demand, savings and money market			2,483,807				2,397,003				2,397,524				2,334,463				2,329,584
Time			763,519				748,950				854,458				939,799				814,324
Total interest-bearing deposits			3,247,326				3,145,953				3,251,982				3,274,262				3,143,908
Total deposits			4,145,455				4,082,170				4,230,950				4,286,933				4,241,807
Federal funds purchased and retail repurchase agreements			43,582				39,701				44,770				45,098				46,478
Federal Home Loan Bank advances and Federal Reserve Bank borrowings			240,000				240,000				240,000				251,222				138,864
Subordinated debt			96,921				96,787				96,653				96,522				96,392
Contractual obligations			19,315				29,019				29,608				19,372				15,218
Interest payable and other liabilities			36,459				39,460				34,467				32,446				32,834
Total liabilities			4,581,732				4,527,137				4,676,448				4,731,593				4,571,593
Commitments and contingent liabilities
Stockholders’ equity
Common stock			207				207				207				206				205
Additional paid-in capital			489,187				488,137				487,225				486,658				484,989
Retained earnings			141,006				171,188				160,715				150,810				140,095
Accumulated other comprehensive income (loss), net of tax			(57,920	)			(122,047	)			(110,225	)			(101,238	)			(113,511	)
Treasury stock			(119,620	)			(119,355	)			(119,487	)			(111,313	)			(101,720	)
Total stockholders’ equity			452,860				418,130				418,435				425,123				410,058
Total liabilities and stockholders’ equity		$	5,034,592			$	4,945,267			$	5,094,883			$	5,156,716			$	4,981,651
(1) Allowance for credit losses		$	43,520			$	44,186			$	44,544			$	45,103			$	45,847

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,
		2023				2023				2023				2023				2022
Loans Held For Investment by Type
Commercial real estate		$	1,759,855			$	1,721,761			$	1,764,460			$	1,746,834			$	1,721,269
Commercial and industrial			598,327				585,129				583,664				605,576				594,862
Residential real estate			556,328				558,188				560,389				563,791				570,550
Agricultural real estate			196,114				205,865				202,317				202,274				199,189
Agricultural			118,587				103,352				104,510				106,169				120,003
Consumer			103,690				107,823				107,330				105,974				105,675
Total loans held-for-investment			3,332,901				3,282,118				3,322,670				3,330,618				3,311,548
Allowance for credit losses			(43,520	)			(44,186	)			(44,544	)			(45,103	)			(45,847	)
Net loans held for investment		$	3,289,381			$	3,237,932			$	3,278,126			$	3,285,515			$	3,265,701
Asset Quality Ratios
Allowance for credit losses on loans to total loans			1.31	%			1.35	%			1.34	%			1.35	%			1.38	%
Past due or nonaccrual loans to total loans			1.10	%			1.03	%			0.78	%			0.66	%			0.72	%
Nonperforming assets to total assets			0.53	%			0.42	%			0.31	%			0.33	%			0.37	%
Nonperforming assets to total loans plus other     real estate owned			0.79	%			0.63	%			0.47	%			0.51	%			0.55	%
Classified assets to bank total regulatory capital			7.09	%			6.27	%			7.94	%			10.09	%			9.98	%
Selected Average Balance Sheet Data (QTD Average)
Investment securities		$	985,591			$	1,085,905			$	1,155,971			$	1,185,482			$	1,184,452
Total gross loans receivable			3,293,755				3,281,483				3,337,497				3,305,681				3,275,284
Interest-earning assets			4,480,279				4,635,384				4,678,744				4,611,019				4,538,177
Total assets			4,892,712				5,046,179				5,064,912				4,994,417				4,930,231
Interest-bearing deposits			3,092,637				3,206,300				3,226,965				3,235,557				3,032,902
Borrowings			391,691				385,125				385,504				247,932				299,191
Total interest-bearing liabilities			3,484,328				3,591,425				3,612,469				3,483,489				3,335,557
Total deposits			4,019,362				4,177,332				4,204,334				4,279,451				4,185,904
Total liabilities			4,469,505				4,619,919				4,640,050				4,573,917				4,531,961
Total stockholders' equity			423,207				426,260				424,862				420,500				398,270
Tangible common equity*			361,451				363,625				361,409				356,053				332,820
Performance ratios
Return on average assets (ROAA) annualized			(2.29	)%			0.97	%			0.91	%			1.00	%			0.93	%
Return on average assets before income tax and    provision for loan losses*			(3.16	)%			1.22	%			1.05	%			1.18	%			1.22	%
Return on average equity (ROAE) annualized			(26.53	)%			11.49	%			10.82	%			11.89	%			11.57	%
Return on average equity before income tax and    provision for loan losses*			(36.51	)%			14.43	%			12.51	%			13.97	%			15.05	%
Return on average tangible common equity    (ROATCE) annualized*			(30.39	)%			14.18	%			13.55	%			14.89	%			14.74	%
Yield on loans annualized			6.62	%			6.67	%			6.34	%			5.94	%			5.59	%
Cost of interest-bearing deposits annualized			2.58	%			2.40	%			2.14	%			1.73	%			1.05	%
Cost of total deposits annualized			1.98	%			1.84	%			1.64	%			1.31	%			0.76	%
Net interest margin annualized			3.49	%			3.51	%			3.38	%			3.44	%			3.67	%
Efficiency ratio*			74.35	%			68.83	%			69.44	%			70.00	%			70.47	%
Non-interest income / average assets			(3.52	)%			0.69	%			0.55	%			0.74	%			0.67	%
Non-interest expense / average assets			2.84	%			2.69	%			2.62	%			2.74	%			2.84	%
Capital Ratios
Tier 1 Leverage Ratio			9.46	%			9.77	%			9.54	%			9.60	%			9.61	%
Common Equity Tier 1 Capital Ratio			11.74	%			12.65	%			12.23	%			12.21	%			12.26	%
Tier 1 Risk Based Capital Ratio			12.36	%			13.28	%			12.84	%			12.83	%			12.88	%
Total Risk Based Capital Ratio			15.48	%			16.42	%			15.96	%			15.98	%			16.08	%
Total stockholders' equity to total assets			8.99	%			8.46	%			8.21	%			8.24	%			8.23	%
Tangible common equity to tangible assets*			7.87	%			7.29	%			7.06	%			7.09	%			7.02	%
Dividend payout ratio			(6.65	)%			15.13	%			13.53	%			10.49	%			14.01	%
Book value per common share		$	29.35			$	27.13			$	27.18			$	27.03			$	25.74
Tangible book value per common share*		$	25.37			$	23.09			$	23.08			$	22.96			$	21.67
Tangible book value per diluted common share*		$	25.05			$	22.96			$	22.98			$	22.83			$	21.35
* The value noted is considered a Non-GAAP financial measure. For a reconciliation of Non-GGAP financial measures, see Table 8. 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, 2023												December 31, 2022
	Average Outstanding Balance				InterestIncome/Expense				Average Yield/Rate(3)(4)				Average Outstanding Balance				InterestIncome/Expense				Average Yield/Rate(3)(4)
Interest-earning assets
Loans (1)
Commercial and industrial	$	580,451			$	42,901				7.39	%		$	583,295			$	32,258				5.53	%
Commercial real estate		1,302,568				83,441				6.41	%			1,259,257				65,122				5.17	%
Real estate construction		447,516				33,764				7.54	%			363,902				18,269				5.02	%
Residential real estate		565,711				23,799				4.21	%			597,196				22,004				3.68	%
Agricultural real estate		201,326				13,820				6.86	%			201,295				11,399				5.66	%
Agricultural		100,394				6,966				6.94	%			125,342				6,697				5.34	%
Consumer		106,542				6,522				6.12	%			102,185				5,110				5.00	%
Total loans		3,304,508				211,213				6.39	%			3,232,472				160,859				4.98	%
Securities
Taxable securities		1,027,726				23,873				2.32	%			1,185,750				22,713				1.92	%
Nontaxable securities		74,917				1,960				2.62	%			106,955				2,698				2.52	%
Total securities		1,102,643				25,833				2.34	%			1,292,705				25,411				1.97	%
Federal funds sold and other		193,941				9,666				4.98	%			107,278				1,978				1.84	%
Total interest-earning assets	$	4,601,092				246,712				5.36	%		$	4,632,455				188,248				4.06	%
Interest-bearing liabilities
Demand, savings and money market deposits	$	2,362,365				46,206				1.96	%		$	2,433,364				10,797				0.44	%
Time deposits		827,652				24,267				2.93	%			663,790				5,524				0.83	%
Total interest-bearing deposits		3,190,017				70,473				2.21	%			3,097,154				16,321				0.53	%
FHLB advances		98,380				3,944				4.01	%			79,775				2,094				2.63	%
Other borrowings		254,666				13,277				5.21	%			151,172				7,003				4.63	%
Total interest-bearing liabilities	$	3,543,063				87,694				2.48	%		$	3,328,101				25,418				0.76	%
Net interest income					$	159,018											$	162,830
Interest rate spread										2.88	%											3.30	%
Net interest margin (2)										3.46	%											3.51	%
(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, 2023												December 31, 2022
	AverageOutstandingBalance				InterestIncome/Expense				Average Yield/Rate(3)(4)				AverageOutstandingBalance				InterestIncome/Expense				Average Yield/Rate(3)(4)
Interest-earning assets
Loans (1)
Commercial and industrial	$	580,726			$	11,397				7.79	%		$	594,221			$	9,264				6.19	%
Commercial real estate		1,309,588				21,630				6.55	%			1,327,438				19,127				5.72	%
Real estate construction		439,708				9,000				8.12	%			367,935				5,827				6.28	%
Residential real estate		561,382				5,866				4.15	%			576,357				5,667				3.90	%
Agricultural real estate		196,468				3,421				6.91	%			200,492				3,353				6.64	%
Agricultural		100,226				1,928				7.63	%			104,146				1,443				5.50	%
Consumer		105,657				1,690				6.35	%			104,695				1,468				5.57	%
Total loans		3,293,755				54,932				6.62	%			3,275,284				46,149				5.59	%
Securities
Taxable securities		932,376				6,417				2.73	%			1,083,986				5,946				2.18	%
Nontaxable securities		53,215				354				2.64	%			100,466				678				2.68	%
Total securities		985,591				6,771				2.73	%			1,184,452				6,624				2.22	%
Federal funds sold and other		200,933				2,591				5.12	%			78,441				651				3.29	%
Total interest-earning assets	$	4,480,279				64,294				5.69	%		$	4,538,177				53,424				4.67	%
Interest-bearing liabilities
Demand, savings and money market deposits	$	2,351,663				13,918				2.35	%		$	2,294,639				5,336				0.92	%
Time deposits		740,974				6,156				3.30	%			738,263				2,677				1.44	%
Total interest-bearing deposits		3,092,637				20,074				2.58	%			3,032,902				8,013				1.05	%
FHLB advances		102,432				1,005				3.89	%			155,964				1,500				3.82	%
Other borrowings		289,259				3,748				5.14	%			146,691				1,880				5.09	%
Total interest-bearing liabilities	$	3,484,328				24,827				2.83	%		$	3,335,557				11,393				1.36	%
Net interest income					$	39,467											$	42,031
Interest rate spread										2.86	%											3.31	%
Net interest margin (2)										3.49	%											3.67	%
(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 7. QUARTER-OVER-QUARTER NET INTEREST INCOME ANALYSIS (Unaudited)

(Dollars in thousands)

	For the three months ended												For the three months ended
	December 31, 2023												September 30, 2023
	AverageOutstandingBalance				InterestIncome/Expense				Average Yield/Rate(3)(4)				AverageOutstandingBalance				InterestIncome/Expense				Average Yield/Rate(3)(4)
Interest-earning assets
Loans (1)
Commercial and industrial	$	580,726			$	11,397				7.79	%		$	573,039			$	10,984				7.60	%
Commercial real estate		1,309,588				21,630				6.55	%			1,253,362				20,824				6.59	%
Real estate construction		439,708				9,000				8.12	%			480,355				9,838				8.13	%
Residential real estate		561,382				5,866				4.15	%			564,138				6,085				4.28	%
Agricultural real estate		196,468				3,421				6.91	%			203,399				3,898				7.60	%
Agricultural		100,226				1,928				7.63	%			99,773				1,856				7.38	%
Consumer		105,657				1,690				6.35	%			107,417				1,667				6.16	%
Total loans		3,293,755				54,932				6.62	%			3,281,483				55,152				6.67	%
Securities
Taxable securities		932,376				6,417				2.73	%			1,027,889				5,696				2.20	%
Nontaxable securities		53,215				354				2.64	%			58,016				369				2.52	%
Total securities		985,591				6,771				2.73	%			1,085,905				6,065				2.22	%
Federal funds sold and other		200,933				2,591				5.12	%			267,996				3,822				5.66	%
Total interest-earning assets	$	4,480,279				64,294				5.69	%		$	4,635,384				65,039				5.57	%
Interest-bearing liabilities
Demand savings and money market deposits	$	2,351,663				13,918				2.35	%		$	2,423,380				13,331				2.18	%
Time deposits		740,974				6,156				3.30	%			782,920				6,043				3.06	%
Total interest-bearing deposits		3,092,637				20,074				2.58	%			3,206,300				19,374				2.40	%
FHLB advances		102,432				1,005				3.89	%			100,000				968				3.84	%
Other borrowings		289,259				3,748				5.14	%			285,125				3,685				5.13	%
Total interest-bearing liabilities	$	3,484,328				24,827				2.83	%		$	3,591,425				24,027				2.65	%
Net interest income					$	39,467											$	41,012
Interest rate spread										2.86	%											2.92	%
Net interest margin (2)										3.49	%											3.51	%
(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 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,
		2023				2023				2023				2023				2022
Total stockholders' equity		$	452,860			$	418,130			$	418,435			$	425,123			$	410,058
Less: goodwill			53,101				53,101				53,101				53,101				53,101
Less: core deposit intangibles, net			7,222				7,961				8,760				9,678				10,596
Less: mortgage servicing rights, net			75				100				126				151				176
Less: naming rights, net			1,000				1,011				1,022				1,033				1,044
Tangible common equity		$	391,462			$	355,957			$	355,426			$	361,160			$	345,141
Common shares outstanding at period end			15,428,251				15,413,064				15,396,739				15,730,257				15,930,112
Diluted common shares outstanding at period end			15,629,185				15,500,749				15,468,319				15,822,536				16,163,253
Book value per common share		$	29.35			$	27.13			$	27.18			$	27.03			$	25.74
Tangible book value per common share		$	25.37			$	23.09			$	23.08			$	22.96			$	21.67
Tangible book value per diluted common share		$	25.05			$	22.96			$	22.98			$	22.83			$	21.35
Total assets		$	5,034,592			$	4,945,267			$	5,094,883			$	5,156,716			$	4,981,651
Less: goodwill			53,101				53,101				53,101				53,101				53,101
Less: core deposit intangibles, net			7,222				7,961				8,760				9,678				10,596
Less: mortgage servicing rights, net			75				100				126				151				176
Less: naming rights, net			1,000				1,011				1,022				1,033				1,044
Tangible assets		$	4,973,194			$	4,883,094			$	5,031,874			$	5,092,753			$	4,916,734
Total stockholders' equity to total assets			8.99	%			8.46	%			8.21	%			8.24	%			8.23	%
Tangible common equity to tangible assets			7.87	%			7.29	%			7.06	%			7.09	%			7.02	%
Total average stockholders' equity		$	423,207			$	426,260			$	424,862			$	420,500			$	398,270
Less: average intangible assets			61,756				62,635				63,453				64,447				65,450
Average tangible common equity		$	361,451			$	363,625			$	361,409			$	356,053			$	332,820
Net income (loss) allocable to common stockholders		$	(28,299	)		$	12,341			$	11,456			$	12,323			$	11,608
Add: amortization of intangible assets			775				835				954				954				961
Less: tax effect of intangible assets amortization			163				175				200				200				202
Adjusted net income (loss) allocable to common     stockholders		$	(27,687	)		$	13,001			$	12,210			$	13,077			$	12,367
Return on total average stockholders' equity     (ROAE) annualized			(26.53	)%			11.49	%			10.82	%			11.89	%			11.57	%
Return on average tangible common equity     (ROATCE) annualized			(30.39	)%			14.18	%			13.55	%			14.89	%			14.74	%
Non-interest expense		$	34,998			$	34,244			$	33,130			$	33,229			$	35,249
Less: merger expense			297				—				—				—				68
Adjusted non-interest expense		$	34,701			$	34,244			$	33,130			$	33,229			$	35,181
Net interest income		$	39,467			$	41,012			$	39,429			$	39,110			$	42,031
Non-interest income			(43,414	)			8,735				6,950				8,600				8,329
Less: net gain on acquisition and branch sales			—				—				—				—				422
Less: net gains (losses) from securities transactions			(50,618	)			(1	)			(1,322	)			32				14
Adjusted non-interest income		$	7,204			$	8,736			$	8,272			$	8,568			$	7,893
Net interest income plus adjusted non-interest income		$	46,671			$	49,748			$	47,701			$	47,678			$	49,924
Non-interest expense to     net interest income plus non-interest income			(886.70	)%			68.84	%			71.43	%			69.65	%			69.99	%
Efficiency ratio			74.35	%			68.83	%			69.45	%			69.69	%			70.47	%
Net income (loss) allocable to common stockholders		$	(28,299	)		$	12,341			$	11,456			$	12,323			$	11,608
Add: income tax provision			(11,357	)			1,932				1,495				2,524				3,654
Add: provision (reversal) of credit losses			711				1,230				298				(366	)			(151	)
Pre-tax, pre-provision income		$	(38,945	)		$	15,503			$	13,249			$	14,481			$	15,111
Total average assets		$	4,892,712			$	5,046,179			$	5,064,912			$	4,994,417			$	4,930,231
Total average stockholders' equity		$	423,207			$	426,620			$	424,862			$	420,500			$	398,270
Return on average assets (ROAA) annualized			(2.29	)%			0.97	%			0.91	%			1.00	%			0.93	%
Adjusted return on average assets			(3.16	)%			1.22	%			1.05	%			1.18	%			1.22	%
Adjusted return on average equity			(36.51	)%			14.43	%			12.51	%			13.97	%			15.05	%