The Company’s third quarter 2022 operating results reflected the following changes from the second quarter of 2022: (1) net interest income increased
“We generated net loan growth of 2.2% compared to the linked quarter. Our pipeline plus advances on unfunded commitments suggests growth during the fourth quarter as our markets remain strong. Steady core net interest margin expansion was also integral to earnings performance in the quarter. While visibility into 2023 is limited, we do expect aggressive action by the
Book value per share was
- Quarterly earnings of
$4.0 million , or$0.38 per diluted share for the quarter endedSeptember 30, 2022 , decreased from the quarter endedJune 30, 2022 , earnings of$4.4 million or$0.41 per diluted share, and decreased from the quarter endedSeptember 30, 2021 , earnings of$5.0 million or$0.47 per diluted share. - Quarterly earnings, as adjusted (non-GAAP)1, were
$4.2 million , or$0.40 per diluted share for the quarter endedSeptember 30, 2022 , compared to$4.4 million or$0.41 per diluted share for the quarter endedJune 30, 2022 , and$5.0 million or$0.47 per diluted share for the third quarter endedSeptember 30, 2021 . - Earnings for the nine months ended
September 30, 2022 , were$13.1 million , or$1.24 per share, which is a decrease from$15.2 million , or$1.41 per share, for the same period in the prior year. The Company grew net interest income, despite lower SBA PPP net loan fee accretion in 2022 compared to 2021. The positive benefit of higher net interest income was more than offset year to date fiscal 2022 by higher provision for loan losses, lower gain on sale of loans, a modest increase in expense, partially due to 2022 new market tax depletion, 2022 branch closure expense and lower gains on foreclosed asset sales. - Net interest income increased
$0.2 million from the second quarter of 2022,$0.8 million from the third quarter of 2021 and$2.6 million for the nine months endedSeptember 30, 2022 , to$41.9 million . Net interest income was positively impacted by loan growth and the contractual increase in loan and investment yields, which more than offset the reduction in interest income realized on nonaccrual loan payoffs of$0.4 million (9 basis points in net interest margin) and higher liability interest expense. - The net interest margin without SBA PPP net loan fee accretion and loan purchase accretion has increased each quarter over the past six quarters. For the quarter ended
September 30, 2022 , the net interest margin without SBA PPP net loan fee accretion and loan purchase accretion was 3.33% compared to 2.82% for the year earlier quarter and 3.29% versus the linked quarter. The linked second quarter net interest margin included the positive benefit of approximately 0.09% due to interest income received on nonaccrual loan payoffs. - On
August 10, 2022 , the Company redeemed its$15.0 million subordinated debt with a coupon of 6.75%. For the third quarter, total interest expense on this debt was$0.29 million , including remaining issuance costs. - The provision for loan losses for the quarter ended
September 30, 2022 , was$0.38 million due to loan growth, compared to$0.40 million for the quarter endedJune 30, 2022 . No loan loss provision was realized during the quarters endedMarch 31, 2022 andSeptember 30, 2021 , due to lower CARES Act Section 4013 deferrals, low net charge-off or low net recoveries, decreases in criticized assets and improving economic conditions in our markets.
- Originated loans increased by
$49.6 million during the third quarter of 2022, with strong originations in commercial real estate, multi-family real estate and residential mortgages held in the loan portfolio. As a result of current market conditions, residential 10/1 ARM loan originations were added to the portfolio. The acquired loan portfolio declined$21.1 million . - The allowance for loan losses on originated loans decreased to 1.34% at
September 30, 2022 , from 1.37% atJune 30, 2022 . Loans resulting from Bank acquisitions were effectively marked to market value at the time of their acquisition and were excluded from this reserve calculation. - Nonperforming assets remained at
$12.6 million atSeptember 30, 2022 . - Substandard loans decreased modestly by
$0.5 million to$20.2 million atSeptember 30, 2022 , compared to$20.7 million atJune 30, 2022 . The decrease was largely due to the payoff of substandard loans that were purchased credit impaired loans classified as substandard when acquired. - The Company repurchased 53 thousand shares of the Company’s common stock in the third quarter. As of
September 30, 2022 , approximately 301 thousand shares remain available for repurchase under the current share repurchase authorization. - Stockholders’ equity as a percent of total assets was 9.17% at
September 30, 2022 , compared to 9.34% atJune 30, 2022 . Tangible common equity (“TCE”) as a percent of tangible assets (non-GAAP)1 was 7.40% atSeptember 30, 2022 , compared to 7.53% atJune 30, 2022 . Reductions in stockholders’ equity due to increased unrealized losses in the available for sale portfolio, modest stock buyback activity and modest asset growth, were partially offset by net income and amortization of intangibles. - In
June 2022 , the Company notified customers of theSt. James, MN branch, with approximately$18.7 million in deposits, that the branch would close inSeptember 2022 . In August of 2022, the Company notified customers of the south branch inRice Lake, WI , that the branch would close and be consolidated with the north branch inRice Lake, WI. In addition, inAugust 2022 the Company notified the customers of theRed Wing, MN branch that the branch would close. These August branch closure announcements will occur in the fourth quarter of 2022. The deposit accounts will be consolidated into various nearby branches.
Balance Sheet and Asset Quality
Total assets increased modestly by
Securities available for sale decreased
Securities held to maturity decreased
Total loans receivable increased to
The allowance for loan losses increased to
Allowance for Loan Losses Percentages
(in thousands, except ratios)
Originated loans, net of deferred fees and costs | $ | 1,224,219 | $ | 1,174,701 | $ | 1,107,555 | $ | 1,006,159 | ||||||||
SBA PPP loans, net of deferred fees | — | — | 8,457 | 29,753 | ||||||||||||
Acquired loans, net of unamortized discount | 151,657 | 172,154 | 194,951 | 212,742 | ||||||||||||
Loans, end of period | $ | 1,375,876 | $ | 1,346,855 | $ | 1,310,963 | $ | 1,248,654 | ||||||||
SBA PPP loans, net of deferred fees | — | — | (8,457 | ) | (29,753 | ) | ||||||||||
Loans, net of SBA PPP loans and deferred fees | $ | 1,375,876 | $ | 1,346,855 | $ | 1,302,506 | $ | 1,218,901 | ||||||||
Allowance for loan losses allocated to originated loans | $ | 16,465 | $ | 16,053 | $ | 15,830 | $ | 15,505 | ||||||||
Allowance for loan losses allocated to other loans | 752 | 772 | 1,083 | 1,327 | ||||||||||||
Allowance for loan losses | $ | 17,217 | $ | 16,825 | $ | 16,913 | $ | 16,832 | ||||||||
ALL as a percentage of loans, end of period | 1.25 | % | 1.25 | % | 1.29 | % | 1.35 | % | ||||||||
ALL as a percentage of loans, net of SBA PPP loans and deferred fees | 1.25 | % | 1.25 | % | 1.30 | % | 1.38 | % | ||||||||
ALL allocated to originated loans as a percentage of originated loans, net of deferred fees and costs | 1.34 | % | 1.37 | % | 1.43 | % | 1.54 | % |
Nonperforming assets remained flat at
(in thousands) | |||||||||||||||
Special mention loan balances | $ | 20,178 | $ | 17,274 | $ | 1,849 | $ | 4,536 | $ | 2,548 | |||||
Substandard loan balances | 20,227 | 20,680 | 24,822 | 22,817 | 27,137 | ||||||||||
Criticized loans, end of period | $ | 40,405 | $ | 37,954 | $ | 26,671 | $ | 27,353 | $ | 29,685 |
Special mention loans increased
Substandard loans decreased modestly by
Deposits increased
The Company repurchased 53 thousand shares of the Company’s common stock in the third quarter. As of
Review of Operations
Net interest income was
The table below shows the impact of accretion related to purchased credit impaired loans and SBA PPP net loan fees on interest income and NIM.
Net interest income and net interest margin analysis:
(in thousands, except yields and rates)
Three months ended | |||||||||||||||||||||||||||||||||||
Net Interest Income | Net Interest Margin | Net Interest Income | Net Interest Margin | Net Interest Income | Net Interest Margin | Net Interest Income | Net Interest Margin | Net Interest Income | Net Interest Margin | ||||||||||||||||||||||||||
As reported | $ | 14,457 | 3.43 | % | $ | 14,267 | 3.46 | % | $ | 13,167 | 3.25 | % | $ | 14,384 | 3.50 | % | $ | 13,688 | 3.34 | % | |||||||||||||||
Less non-accretable difference realized as interest from payoff of purchased credit impaired (“PCI”) loans | $ | (34 | ) | (0.01)% | $ | (70 | ) | (0.02)% | $ | (26 | ) | (0.01)% | $ | (2 | ) | — | % | $ | (8 | ) | — | % | |||||||||||||
Less accelerated accretion from payoff of certain PCI loans with transferred non-accretable differences | $ | (117 | ) | (0.06)% | $ | (308 | ) | (0.08)% | $ | (11 | ) | — | % | $ | (200 | ) | (0.05)% | $ | (12 | ) | — | % | |||||||||||||
Less scheduled accretion interest | $ | (247 | ) | (0.03)% | $ | (255 | ) | (0.06)% | $ | (264 | ) | (0.07)% | $ | (264 | ) | (0.06)% | $ | (261 | ) | (0.06)% | |||||||||||||||
Without loan purchase accretion | $ | 14,059 | 3.33 | % | $ | 13,634 | 3.30 | % | $ | 12,866 | 3.17 | % | $ | 13,918 | 3.39 | % | $ | 13,407 | 3.28 | % | |||||||||||||||
Less SBA PPP net loan fee accretion | $ | — | — | % | $ | (39 | ) | (0.01)% | $ | (259 | ) | (0.06)% | $ | (1,251 | ) | (0.30)% | $ | (1,878 | ) | (0.46)% | |||||||||||||||
Without SBA PPP net loan fee accretion and loan purchase accretion | $ | 14,059 | 3.33 | % | $ | 13,595 | 3.29 | % | $ | 12,607 | 3.11 | % | $ | 12,667 | 3.09 | % | $ | 11,529 | 2.82 | % |
Loan loss provisions for the quarter ended
Non-interest income increased to
Total non-interest expense increased
Provision for income taxes decreased to
These financial results are preliminary until the Form 10-Q is filed in
About the Company
Cautionary Statement Regarding Forward-Looking Statements
Certain statements contained in this release are considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified using forward-looking words or phrases such as “anticipate,” “believe,” “could,” “expect,” “estimates,” “intend,” “may,” “on pace,” “preliminary,” “planned,” “potential,” “should,” “will,” “would” or the negative of those terms or other words of similar meaning. Such forward-looking statements in this release are inherently subject to many uncertainties arising in the operations and business environment of the Company and the Bank. These uncertainties include conditions in the financial markets and economic conditions generally; adverse impacts to the Company or Bank arising from the COVID-19 pandemic; acts of terrorism and political or military actions by
1 Non-GAAP Financial Measures
This press release contains non-GAAP financial measures, such as net income as adjusted, net income as adjusted per share, tangible book value, tangible book value per share, tangible common equity as a percent of tangible assets and return on average tangible common equity, which management believes may be helpful in understanding the Company’s results of operations or financial position and comparing results over different periods.
Net income as adjusted and net income as adjusted per share are non-GAAP measures that eliminate the impact of certain expenses such as branch closure costs and related severance pay, accelerated depreciation expense and lease termination fees, and the gain on sale of branch deposits and fixed assets. Tangible book value, tangible book value per share, tangible common equity as a percent of tangible assets and return on average tangible common equity are non-GAAP measures that eliminate the impact of goodwill, and intangible assets on our financial position. Management believes these measures are useful in assessing the strength of our financial position.
Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other banks and financial institutions.
Contact:
(715)-836-9994
(CZWI-ER)
Consolidated Balance Sheets
(in thousands, except shares and per share data)
Assets | ||||||||||||||||
Cash and cash equivalents | $ | 29,411 | $ | 31,743 | $ | 47,691 | $ | 102,341 | ||||||||
Other interest bearing deposits | 368 | 1,505 | 1,511 | 1,512 | ||||||||||||
Securities available for sale “AFS” | 167,764 | 177,068 | 203,068 | 234,425 | ||||||||||||
Securities held to maturity “HTM” | 97,610 | 99,249 | 71,141 | 67,739 | ||||||||||||
Equity investments | 1,461 | 1,365 | 1,328 | 327 | ||||||||||||
Other investments | 15,907 | 14,899 | 15,305 | 14,965 | ||||||||||||
Loans receivable | 1,375,876 | 1,346,855 | 1,310,963 | 1,248,654 | ||||||||||||
Allowance for loan losses | (17,217 | ) | (16,825 | ) | (16,913 | ) | (16,832 | ) | ||||||||
Loans receivable, net | 1,358,659 | 1,330,030 | 1,294,050 | 1,231,822 | ||||||||||||
Loans held for sale | 666 | 1,172 | 6,670 | 1,675 | ||||||||||||
Mortgage servicing rights, net | 4,371 | 4,520 | 4,161 | 4,082 | ||||||||||||
Office properties and equipment, net | 21,427 | 21,589 | 21,169 | 21,730 | ||||||||||||
Accrued interest receivable | 4,716 | 4,243 | 3,916 | 4,882 | ||||||||||||
Intangible assets | 2,701 | 3,100 | 3,898 | 4,297 | ||||||||||||
31,498 | 31,498 | 31,498 | 31,498 | |||||||||||||
Foreclosed and repossessed assets, net | 1,584 | 1,437 | 1,408 | 4 | ||||||||||||
Bank owned life insurance (“BOLI”) | 24,784 | 24,622 | 24,312 | 24,149 | ||||||||||||
Other assets | 17,275 | 15,567 | 8,502 | 8,029 | ||||||||||||
TOTAL ASSETS | $ | 1,780,202 | $ | 1,763,607 | $ | 1,739,628 | $ | 1,753,477 | ||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||
Liabilities: | ||||||||||||||||
Deposits | $ | 1,434,368 | $ | 1,400,210 | $ | 1,387,535 | $ | 1,408,315 | ||||||||
102,530 | 102,030 | 111,527 | 111,512 | |||||||||||||
Other borrowings | 72,351 | 87,124 | 58,426 | 58,400 | ||||||||||||
Other liabilities | 7,634 | 9,500 | 11,274 | 9,324 | ||||||||||||
Total liabilities | 1,616,883 | 1,598,864 | 1,568,762 | 1,587,551 | ||||||||||||
Stockholders’ equity: | ||||||||||||||||
Common stock— | 105 | 105 | 105 | 105 | ||||||||||||
Additional paid-in capital | 119,638 | 119,987 | 119,925 | 119,929 | ||||||||||||
Retained earnings | 60,833 | 56,928 | 50,675 | 44,660 | ||||||||||||
Accumulated other comprehensive (loss) income | (17,257 | ) | (12,277 | ) | 161 | 1,232 | ||||||||||
Total stockholders’ equity | 163,319 | 164,743 | 170,866 | 165,926 | ||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 1,780,202 | $ | 1,763,607 | $ | 1,739,628 | $ | 1,753,477 |
Note: Certain items previously reported were reclassified for consistency with the current presentation.
Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended | Nine Months Ended | |||||||||||||||||||
Interest and dividend income: | ||||||||||||||||||||
Interest and fees on loans | $ | 15,937 | $ | 14,893 | $ | 14,537 | $ | 44,597 | $ | 43,014 | ||||||||||
Interest on investments | 2,022 | 1,810 | 1,638 | 5,441 | 4,260 | |||||||||||||||
Total interest and dividend income | 17,959 | 16,703 | 16,175 | 50,038 | 47,274 | |||||||||||||||
Interest expense: | ||||||||||||||||||||
Interest on deposits | 1,681 | 985 | 1,354 | 3,734 | 4,589 | |||||||||||||||
Interest on FHLB borrowed funds | 568 | 297 | 389 | 1,176 | 1,183 | |||||||||||||||
Interest on other borrowed funds | 1,253 | 1,154 | 744 | 3,237 | 2,217 | |||||||||||||||
Total interest expense | 3,502 | 2,436 | 2,487 | 8,147 | 7,989 | |||||||||||||||
Net interest income before provision for loan losses | 14,457 | 14,267 | 13,688 | 41,891 | 39,285 | |||||||||||||||
Provision for loan losses | 375 | 400 | — | 775 | — | |||||||||||||||
Net interest income after provision for loan losses | 14,082 | 13,867 | 13,688 | 41,116 | 39,285 | |||||||||||||||
Non-interest income: | ||||||||||||||||||||
Service charges on deposit accounts | 535 | 482 | 463 | 1,505 | 1,256 | |||||||||||||||
Interchange income | 597 | 614 | 600 | 1,760 | 1,776 | |||||||||||||||
Loan servicing income | 611 | 600 | 842 | 1,912 | 2,560 | |||||||||||||||
Gain on sale of loans | 194 | 414 | 1,014 | 1,330 | 4,131 | |||||||||||||||
Loan fees and service charges | 267 | 141 | 118 | 500 | 547 | |||||||||||||||
Net (losses) gains on investment securities | (55 | ) | (75 | ) | 73 | (167 | ) | 344 | ||||||||||||
Other | 323 | 196 | 338 | 717 | 801 | |||||||||||||||
Total non-interest income | 2,472 | 2,372 | 3,448 | 7,557 | 11,415 | |||||||||||||||
Non-interest expense: | ||||||||||||||||||||
Compensation and related benefits | 5,900 | 5,589 | 5,718 | 16,887 | 16,736 | |||||||||||||||
Occupancy | 1,429 | 1,343 | 1,313 | 4,137 | 3,943 | |||||||||||||||
Data processing | 1,382 | 1,415 | 1,582 | 4,098 | 4,374 | |||||||||||||||
Amortization of intangible assets | 399 | 399 | 399 | 1,197 | 1,197 | |||||||||||||||
Mortgage servicing rights expense, net | 197 | 195 | 37 | 65 | 28 | |||||||||||||||
Advertising, marketing and public relations | 300 | 250 | 220 | 762 | 577 | |||||||||||||||
119 | 118 | 148 | 352 | 395 | ||||||||||||||||
Professional services | 382 | 368 | 328 | 1,152 | 1,192 | |||||||||||||||
Gains on repossessed assets, net | (8 | ) | (2 | ) | (3 | ) | (17 | ) | (149 | ) | ||||||||||
New market tax credit depletion | 163 | 162 | — | 488 | — | |||||||||||||||
Other | 1,014 | 625 | 578 | 2,286 | 1,714 | |||||||||||||||
Total non-interest expense | 11,277 | 10,462 | 10,320 | 31,407 | 30,007 | |||||||||||||||
Income before provision for income taxes | 5,277 | 5,777 | 6,816 | 17,266 | 20,693 | |||||||||||||||
Provision for income taxes | 1,284 | 1,411 | 1,819 | 4,201 | 5,484 | |||||||||||||||
Net income attributable to common stockholders | $ | 3,993 | $ | 4,366 | $ | 4,997 | $ | 13,065 | $ | 15,209 | ||||||||||
Per share information: | ||||||||||||||||||||
Basic earnings | $ | 0.38 | $ | 0.41 | $ | 0.47 | $ | 1.24 | $ | 1.41 | ||||||||||
Diluted earnings | $ | 0.38 | $ | 0.41 | $ | 0.47 | $ | 1.24 | $ | 1.41 | ||||||||||
Cash dividends paid | $ | — | $ | — | $ | — | $ | 0.26 | $ | 0.23 | ||||||||||
Book value per share at end of period | $ | 15.59 | $ | 15.64 | $ | 15.77 | $ | 15.59 | $ | 15.77 | ||||||||||
Tangible book value per share at end of period (non-GAAP) | $ | 12.32 | $ | 12.36 | $ | 12.37 | $ | 12.32 | $ | 12.37 |
Note: Certain items previously reported were reclassified for consistency with the current presentation.
Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP)
(in thousands, except per share data)
Three Months Ended | Nine Months Ended | ||||||||||||||
GAAP pretax income | $ | 5,277 | $ | 5,777 | $ | 6,816 | $ | 17,266 | $ | 20,693 | |||||
Branch closure costs (1) | 302 | 33 | — | 335 | — | ||||||||||
FHLB borrowings prepayment fee (2) | — | — | — | — | 102 | ||||||||||
Pretax income as adjusted (3) | 5,579 | 5,810 | 6,816 | 17,601 | 20,795 | ||||||||||
Provision for income tax on net income as adjusted (4) | 1,357 | 1,419 | 1,819 | 4,282 | 5,511 | ||||||||||
Net income as adjusted (non-GAAP) (3) | $ | 4,222 | $ | 4,391 | $ | 4,997 | $ | 13,319 | $ | 15,284 | |||||
GAAP diluted earnings per share, net of tax | $ | 0.38 | $ | 0.41 | $ | 0.47 | $ | 1.24 | $ | 1.41 | |||||
Branch closure costs, net of tax | 0.02 | — | — | 0.02 | — | ||||||||||
FHLB borrowings prepayment fee | — | — | — | — | 0.01 | ||||||||||
Diluted earnings per share, as adjusted, net of tax (non-GAAP) | $ | 0.40 | $ | 0.41 | $ | 0.47 | $ | 1.26 | $ | 1.42 | |||||
Average diluted shares outstanding | 10,519,079 | 10,541,905 | 10,622,595 | 10,533,414 | 10,797,502 |
(1) Branch closure costs include severance pay recorded in compensation and benefits and accelerated depreciation expense included in other non-interest expense in the consolidated statement of operations.
(2) FHLB borrowings prepayment fee resulted from the early termination of
(3) Net income as adjusted is a non-GAAP measure that management believes enhances the market’s ability to assess the underlying business performance and trends related to core business activities.
(4) Provision for income tax on net income as adjusted is calculated at our effective tax rate for each respective period presented.
Loan Composition (in thousands) | ||||||||||||||||
Originated Loans: | ||||||||||||||||
Commercial/Agricultural real estate: | ||||||||||||||||
Commercial real estate | $ | 610,348 | $ | 596,001 | $ | 578,395 | $ | 508,540 | ||||||||
Agricultural real estate | 62,302 | 57,323 | 52,372 | 49,082 | ||||||||||||
Multi-family real estate | 193,758 | 175,964 | 174,050 | 150,094 | ||||||||||||
Construction and land development | 116,147 | 114,017 | 78,613 | 84,399 | ||||||||||||
C&I/Agricultural operating: | ||||||||||||||||
Commercial and industrial | 124,350 | 124,113 | 107,937 | 90,581 | ||||||||||||
Agricultural operating | 20,847 | 20,287 | 26,202 | 25,390 | ||||||||||||
Residential mortgage: | ||||||||||||||||
Residential mortgage | 77,307 | 65,707 | 63,855 | 68,986 | ||||||||||||
Purchased HELOC loans | 3,357 | 3,419 | 3,871 | 3,921 | ||||||||||||
Consumer installment: | ||||||||||||||||
Originated indirect paper | 11,234 | 12,736 | 15,971 | 17,689 | ||||||||||||
Other consumer | 7,016 | 7,472 | 8,473 | 9,414 | ||||||||||||
Originated loans before SBA PPP loans | 1,226,666 | 1,177,039 | 1,109,739 | 1,008,096 | ||||||||||||
SBA PPP loans | — | — | 8,755 | 31,301 | ||||||||||||
Total originated loans | $ | 1,226,666 | $ | 1,177,039 | $ | 1,118,494 | $ | 1,039,397 | ||||||||
Acquired Loans: | ||||||||||||||||
Commercial/Agricultural real estate: | ||||||||||||||||
Commercial real estate | $ | 91,340 | $ | 106,916 | $ | 120,070 | $ | 129,784 | ||||||||
Agricultural real estate | 19,405 | 20,484 | 26,123 | 27,552 | ||||||||||||
Multi-family real estate | 3,914 | 3,965 | 4,299 | 5,928 | ||||||||||||
Construction and land development | 1,703 | 1,171 | 907 | 1,139 | ||||||||||||
C&I/Agricultural operating: | ||||||||||||||||
Commercial and industrial | 10,465 | 14,889 | 14,230 | 16,554 | ||||||||||||
Agricultural operating | 5,186 | 4,182 | 5,386 | 4,541 | ||||||||||||
Residential mortgage: | ||||||||||||||||
Residential mortgage | 21,426 | 22,868 | 27,135 | 30,795 | ||||||||||||
Consumer installment: | ||||||||||||||||
Other consumer | 294 | 313 | 401 | 516 | ||||||||||||
Total acquired loans | $ | 153,733 | $ | 174,788 | $ | 198,551 | $ | 216,809 | ||||||||
Total Loans: | ||||||||||||||||
Commercial/Agricultural real estate: | ||||||||||||||||
Commercial real estate | $ | 701,688 | $ | 702,917 | $ | 698,465 | $ | 638,324 | ||||||||
Agricultural real estate | 81,707 | 77,807 | 78,495 | 76,634 | ||||||||||||
Multi-family real estate | 197,672 | 179,929 | 178,349 | 156,022 | ||||||||||||
Construction and land development | 117,850 | 115,188 | 79,520 | 85,538 | ||||||||||||
C&I/Agricultural operating: | ||||||||||||||||
Commercial and industrial | 134,815 | 139,002 | 122,167 | 107,135 | ||||||||||||
Agricultural operating | 26,033 | 24,469 | 31,588 | 29,931 | ||||||||||||
Residential mortgage: | ||||||||||||||||
Residential mortgage | 98,733 | 88,575 | 90,990 | 99,781 | ||||||||||||
Purchased HELOC loans | 3,357 | 3,419 | 3,871 | 3,921 | ||||||||||||
Consumer installment: | ||||||||||||||||
Originated indirect paper | 11,234 | 12,736 | 15,971 | 17,689 | ||||||||||||
Other consumer | 7,310 | 7,785 | 8,874 | 9,930 | ||||||||||||
Gross loans before SBA PPP loans | 1,380,399 | 1,351,827 | 1,308,290 | 1,224,905 | ||||||||||||
SBA PPP loans | — | — | 8,755 | 31,301 | ||||||||||||
Gross loans | $ | 1,380,399 | $ | 1,351,827 | $ | 1,317,045 | $ | 1,256,206 | ||||||||
Unearned net deferred fees and costs and loans in process | (2,447 | ) | (2,338 | ) | (2,482 | ) | (3,486 | ) | ||||||||
Unamortized discount on acquired loans | (2,076 | ) | (2,634 | ) | (3,600 | ) | (4,066 | ) | ||||||||
Total loans receivable | $ | 1,375,876 | $ | 1,346,855 | $ | 1,310,963 | $ | 1,248,654 |
Nonperforming Originated and Acquired Assets
(in thousands, except ratios)
Nonperforming assets: | ||||||||||||||||
Originated nonperforming assets: | ||||||||||||||||
Nonaccrual loans | $ | 8,294 | $ | 7,770 | $ | 6,448 | $ | 6,408 | ||||||||
Accruing loans past due 90 days or more | 169 | 700 | 63 | 295 | ||||||||||||
Total originated nonperforming loans (“NPL”) | 8,463 | 8,470 | 6,511 | 6,703 | ||||||||||||
Other real estate owned (“OREO”) | — | — | — | — | ||||||||||||
Other collateral owned | — | 10 | 2 | 2 | ||||||||||||
Total originated nonperforming assets (“NPAs”) | $ | 8,463 | $ | 8,480 | $ | 6,513 | $ | 6,705 | ||||||||
Acquired nonperforming assets: | ||||||||||||||||
Nonaccrual loans | $ | 2,478 | $ | 2,664 | $ | 5,217 | $ | 5,298 | ||||||||
Accruing loans past due 90 days or more | 79 | 14 | 97 | 130 | ||||||||||||
Total acquired nonperforming loans (“NPL”) | 2,557 | 2,678 | 5,314 | 5,428 | ||||||||||||
Other real estate owned (“OREO”) | 1,584 | 1,427 | 1,406 | 2 | ||||||||||||
Other collateral owned | — | — | — | — | ||||||||||||
Total acquired nonperforming assets (“NPAs”) | $ | 4,141 | $ | 4,105 | $ | 6,720 | $ | 5,430 | ||||||||
Total nonperforming assets (“NPAs”) | $ | 12,604 | $ | 12,585 | $ | 13,233 | $ | 12,135 | ||||||||
Loans, end of period | $ | 1,375,876 | $ | 1,346,855 | $ | 1,310,963 | $ | 1,248,654 | ||||||||
Total assets, end of period | $ | 1,780,202 | $ | 1,763,607 | $ | 1,739,628 | $ | 1,753,477 | ||||||||
Ratios: | ||||||||||||||||
Originated NPLs to total loans | 0.61 | % | 0.63 | % | 0.50 | % | 0.54 | % | ||||||||
Acquired NPLs to total loans | 0.19 | % | 0.20 | % | 0.41 | % | 0.43 | % | ||||||||
Originated NPAs to total assets | 0.48 | % | 0.48 | % | 0.37 | % | 0.38 | % | ||||||||
Acquired NPAs to total assets | 0.23 | % | 0.23 | % | 0.39 | % | 0.31 | % |
Nonperforming Assets
(in thousand, except ratios)
Nonperforming assets: | ||||||||||||||||
Nonaccrual loans | ||||||||||||||||
Commercial real estate | $ | 5,848 | $ | 5,275 | $ | 5,374 | $ | 5,427 | ||||||||
Agricultural real estate | 2,729 | 3,169 | 3,490 | 3,567 | ||||||||||||
Construction and land development | 43 | 43 | — | — | ||||||||||||
Commercial and industrial (“C&I”) | 188 | 211 | 298 | 311 | ||||||||||||
Agricultural operating | 668 | 555 | 993 | 1,063 | ||||||||||||
Residential mortgage | 1,246 | 1,122 | 1,433 | 1,263 | ||||||||||||
Consumer installment | 50 | 59 | 77 | 75 | ||||||||||||
Total nonaccrual loans | $ | 10,772 | $ | 10,434 | $ | 11,665 | $ | 11,706 | ||||||||
Accruing loans past due 90 days or more | 248 | 714 | 160 | 425 | ||||||||||||
Total nonperforming loans (“NPLs”) | 11,020 | 11,148 | 11,825 | 12,131 | ||||||||||||
Foreclosed and repossessed assets, net | 1,584 | 1,437 | 1,408 | 4 | ||||||||||||
Total nonperforming assets (“NPAs”) | $ | 12,604 | $ | 12,585 | $ | 13,233 | $ | 12,135 | ||||||||
Troubled Debt Restructurings (“TDRs”) | $ | 9,336 | $ | 8,712 | $ | 12,523 | $ | 15,689 | ||||||||
Nonaccrual TDRs | $ | 2,426 | $ | 2,549 | $ | 4,539 | $ | 4,324 | ||||||||
Loans, end of period | $ | 1,375,876 | $ | 1,346,855 | $ | 1,310,963 | $ | 1,248,654 | ||||||||
Total assets, end of period | $ | 1,780,202 | $ | 1,763,607 | $ | 1,739,628 | $ | 1,753,477 | ||||||||
Ratios: | ||||||||||||||||
NPLs to total loans | 0.80 | % | 0.83 | % | 0.90 | % | 0.97 | % | ||||||||
NPAs to total assets | 0.71 | % | 0.71 | % | 0.76 | % | 0.69 | % | ||||||||
Deposit Composition
(in thousands)
Non-interest bearing demand deposits | $ | 285,670 | $ | 276,815 | $ | 276,631 | $ | 280,611 | ||||
Interest bearing demand deposits | 394,924 | 401,857 | 396,231 | 381,315 | ||||||||
Savings accounts | 236,107 | 239,322 | 222,674 | 229,623 | ||||||||
Money market accounts | 328,544 | 328,718 | 288,985 | 291,242 | ||||||||
Certificate accounts | 189,123 | 153,498 | 203,014 | 225,524 | ||||||||
Total deposits | $ | 1,434,368 | $ | 1,400,210 | $ | 1,387,535 | $ | 1,408,315 |
Average Balances, Interest Yields and Rates
(in thousands, except yields and rates)
Three months ended | Three months ended | Three months ended | |||||||||||||||||||||||||
Average Balance | Interest Income/ Expense | Average Yield/ Rate (1) | Average Balance | Interest Income/ Expense | Average Yield/ Rate (1) | Average Balance | Interest Income/ Expense | Average Yield/ Rate (1) | |||||||||||||||||||
Average interest earning assets: | |||||||||||||||||||||||||||
Cash and cash equivalents | $ | 11,043 | $ | 60 | 2.16 | % | $ | 25,195 | $ | 43 | 0.68 | % | $ | 111,192 | $ | 50 | 0.18 | % | |||||||||
Loans receivable | 1,370,897 | 15,937 | 4.61 | % | 1,328,661 | 14,893 | 4.50 | % | 1,192,636 | 14,537 | 4.84 | % | |||||||||||||||
Interest bearing deposits | 1,079 | 7 | 2.57 | % | 1,509 | 8 | 2.13 | % | 1,512 | 8 | 2.10 | % | |||||||||||||||
Investment securities (1) | 274,868 | 1,768 | 2.57 | % | 285,332 | 1,593 | 2.23 | % | 303,325 | 1,412 | 1.85 | % | |||||||||||||||
Other investments | 14,910 | 187 | 4.98 | % | 14,969 | 166 | 4.45 | % | 14,961 | 168 | 4.46 | % | |||||||||||||||
Total interest earning assets (1) | $ | 1,672,797 | $ | 17,959 | 4.26 | % | $ | 1,655,666 | $ | 16,703 | 4.05 | % | $ | 1,623,626 | $ | 16,175 | 3.95 | % | |||||||||
Average interest bearing liabilities: | |||||||||||||||||||||||||||
Savings accounts | $ | 227,985 | $ | 204 | 0.36 | % | $ | 230,784 | $ | 125 | 0.22 | % | $ | 216,304 | $ | 95 | 0.17 | % | |||||||||
Demand deposits | 413,033 | 575 | 0.55 | % | 410,468 | 300 | 0.29 | % | 392,080 | 280 | 0.28 | % | |||||||||||||||
Money market accounts | 331,469 | 519 | 0.62 | % | 323,907 | 287 | 0.36 | % | 276,582 | 193 | 0.28 | % | |||||||||||||||
CD’s | 136,624 | 335 | 0.97 | % | 134,338 | 223 | 0.67 | % | 207,494 | 682 | 1.30 | % | |||||||||||||||
IRA’s | 34,446 | 48 | 0.55 | % | 35,701 | 50 | 0.56 | % | 39,525 | 104 | 1.04 | % | |||||||||||||||
Total deposits | $ | 1,143,557 | $ | 1,681 | 0.58 | % | $ | 1,135,198 | $ | 985 | 0.35 | % | $ | 1,131,985 | $ | 1,354 | 0.47 | % | |||||||||
FHLB advances and other borrowings | 192,338 | 1,821 | 3.76 | % | 186,050 | 1,451 | 3.13 | % | 169,891 | 1,133 | 2.65 | % | |||||||||||||||
Total interest bearing liabilities | $ | 1,335,895 | $ | 3,502 | 1.04 | % | $ | 1,321,248 | $ | 2,436 | 0.74 | % | $ | 1,301,876 | $ | 2,487 | 0.76 | % | |||||||||
Net interest income | $ | 14,457 | $ | 14,267 | $ | 13,688 | |||||||||||||||||||||
Interest rate spread | 3.22 | % | 3.31 | % | 3.19 | % | |||||||||||||||||||||
Net interest margin (1) | 3.43 | % | 3.46 | % | 3.34 | % | |||||||||||||||||||||
Average interest earning assets to average interest bearing liabilities | 1.25 | 1.25 | 1.25 |
(1) Fully taxable equivalent (FTE). The average yield on tax exempt securities is computed on a tax equivalent basis using a tax rate of 21% for the quarters ended
Nine months ended | Nine months ended | |||||||||||||||||
Average Balance | Interest Income/ Expense | Average Yield/ Rate (1) | Average Balance | Interest Income/ Expense | Average Yield/ Rate (1) | |||||||||||||
Average interest earning assets: | ||||||||||||||||||
Cash and cash equivalents | $ | 23,727 | $ | 116 | 0.65 | % | $ | 118,064 | $ | 107 | 0.12 | % | ||||||
Loans receivable | 1,334,811 | 44,598 | 4.47 | % | 1,197,469 | 43,014 | 4.80 | % | ||||||||||
Interest bearing deposits | 1,365 | 22 | 2.15 | % | 2,227 | 37 | 2.22 | % | ||||||||||
Investment securities (1) | 282,771 | 4,777 | 3.38 | % | 263,655 | 3,606 | 1.83 | % | ||||||||||
Other investments | 15,044 | 525 | 4.67 | % | 15,006 | 510 | 4.54 | % | ||||||||||
Total interest earning assets (1) | $ | 1,657,718 | $ | 50,038 | 4.04 | % | $ | 1,596,421 | $ | 47,274 | 3.96 | % | ||||||
Average interest bearing liabilities: | ||||||||||||||||||
Savings accounts | $ | 227,787 | $ | 424 | 0.25 | % | $ | 211,320 | $ | 277 | 0.18 | % | ||||||
Demand deposits | 411,471 | 1,045 | 0.34 | % | 361,248 | 788 | 0.29 | % | ||||||||||
Money market accounts | 318,246 | 1,011 | 0.42 | % | 263,195 | 577 | 0.29 | % | ||||||||||
CD’s | 143,965 | 1,079 | 1.00 | % | 237,706 | 2,592 | 1.46 | % | ||||||||||
IRA’s | 35,729 | 175 | 0.65 | % | 40,119 | 355 | 1.18 | % | ||||||||||
Total deposits | $ | 1,137,198 | $ | 3,734 | 0.44 | % | $ | 1,113,588 | $ | 4,589 | 0.55 | % | ||||||
FHLB advances and other borrowings | 181,598 | 4,413 | 3.25 | % | 173,889 | 3,400 | 2.61 | % | ||||||||||
Total interest bearing liabilities | $ | 1,318,796 | $ | 8,147 | 0.83 | % | $ | 1,287,477 | $ | 7,989 | 0.83 | % | ||||||
Net interest income | $ | 41,891 | $ | 39,285 | ||||||||||||||
Interest rate spread | 3.21 | % | 3.13 | % | ||||||||||||||
Net interest margin (1) | 3.38 | % | 3.29 | % | ||||||||||||||
Average interest earning assets to average interest bearing liabilities | 1.26 | 1.24 |
(1) Fully taxable equivalent (FTE). The average yield on tax exempt securities is computed on a tax equivalent basis using a tax rate of 21% for the nine months ended
The following table reports key financial metric ratios based on a net income as adjusted basis:
Three Months Ended | Nine Months Ended | ||||||||||||||
Ratios based on net income: | |||||||||||||||
Return on average assets (annualized) | 0.89 | % | 0.99 | % | 1.13 | % | 0.99 | % | 1.19 | % | |||||
Return on average equity (annualized) | 9.57 | % | 10.63 | % | 12.00 | % | 10.51 | % | 12.51 | % | |||||
Return on average tangible common equity4 (annualized) | 12.99 | % | 14.41 | % | 16.24 | % | 14.22 | % | 17.06 | % | |||||
Efficiency ratio | 64 | % | 60 | % | 58 | % | 61 | % | 57 | % | |||||
Net interest margin with loan purchase accretion | 3.43 | % | 3.46 | % | 3.34 | % | 3.38 | % | 3.29 | % | |||||
Net interest margin without loan purchase accretion | 3.33 | % | 3.30 | % | 3.28 | % | 3.27 | % | 3.21 | % | |||||
Ratios based on net income as adjusted (non-GAAP) | |||||||||||||||
Return on average assets as adjusted2 (annualized) | 0.94 | % | 0.99 | % | 1.13 | % | 1.01 | % | 1.19 | % | |||||
Return on average equity as adjusted3 (annualized) | 10.12 | % | 10.63 | % | 12.00 | % | 10.71 | % | 12.57 | % |
Reconciliation of Return on Average Assets as Adjusted (non-GAAP)
(in thousands, except ratios)
Three Months Ended | Nine Months Ended | |||||||||||||||||||
GAAP earnings after income taxes | $ | 3,993 | $ | 4,366 | $ | 4,997 | $ | 13,065 | $ | 15,209 | ||||||||||
Net income as adjusted after income taxes (non-GAAP) (1) | $ | 4,221 | $ | 4,391 | $ | 4,997 | $ | 13,318 | $ | 15,284 | ||||||||||
Average assets | $ | 1,780,942 | $ | 1,764,517 | $ | 1,748,065 | $ | 1,764,321 | $ | 1,713,932 | ||||||||||
Return on average assets (annualized) | 0.89 | % | 0.99 | % | 1.13 | % | 0.99 | % | 1.19 | % | ||||||||||
Return on average assets as adjusted (non-GAAP) (annualized) | 0.94 | % | 1.00 | % | 1.13 | % | 1.01 | % | 1.19 | % |
(1) See Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP)
Reconciliation of Return on Average Equity as Adjusted (non-GAAP)
(in thousands, except ratios)
Three Months Ended | Nine Months Ended | |||||||||||||||||||
GAAP earnings after income taxes | $ | 3,993 | $ | 4,366 | $ | 4,997 | $ | 13,065 | $ | 15,209 | ||||||||||
Net income as adjusted after income taxes (non-GAAP) (1) | $ | 4,221 | $ | 4,391 | $ | 4,997 | $ | 13,318 | $ | 15,284 | ||||||||||
Average equity | $ | 165,528 | $ | 164,737 | $ | 165,203 | $ | 166,181 | $ | 162,510 | ||||||||||
Return on average equity (annualized) | 9.57 | % | 10.63 | % | 12.00 | % | 10.51 | % | 12.51 | % | ||||||||||
Return on average equity as adjusted (non-GAAP) (annualized) | 10.12 | % | 10.69 | % | 12.00 | % | 10.71 | % | 12.57 | % |
(1) See Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP)
Reconciliation of tangible book value per share (non-GAAP)
(in thousands, except per share data)
Tangible book value per share at end of period | ||||||||||||
Total stockholders’ equity | $ | 163,319 | $ | 164,743 | $ | 165,926 | ||||||
Less: | (31,498 | ) | (31,498 | ) | (31,498 | ) | ||||||
Less: Intangible assets | (2,701 | ) | (3,100 | ) | (4,297 | ) | ||||||
Tangible common equity (non-GAAP) | $ | 129,120 | $ | 130,145 | $ | 130,131 | ||||||
Ending common shares outstanding | 10,478,210 | 10,530,415 | 10,518,885 | |||||||||
Book value per share | $ | 15.59 | $ | 15.64 | $ | 15.77 | ||||||
Tangible book value per share (non-GAAP) | $ | 12.32 | $ | 12.36 | $ | 12.37 |
Reconciliation of tangible common equity as a percent of tangible assets (non-GAAP)
(in thousands, except ratios)
Tangible common equity as a percent of tangible assets at end of period | ||||||||||||
Total stockholders’ equity | $ | 163,319 | $ | 164,743 | $ | 165,926 | ||||||
Less: | (31,498 | ) | (31,498 | ) | (31,498 | ) | ||||||
Less: Intangible assets | (2,701 | ) | (3,100 | ) | (4,297 | ) | ||||||
Tangible common equity (non-GAAP) | $ | 129,120 | $ | 130,145 | $ | 130,131 | ||||||
Total Assets | $ | 1,780,202 | $ | 1,763,607 | $ | 1,753,477 | ||||||
Less: | (31,498 | ) | (31,498 | ) | (31,498 | ) | ||||||
Less: Intangible assets | (2,701 | ) | (3,100 | ) | (4,297 | ) | ||||||
Tangible Assets (non-GAAP) | $ | 1,746,003 | $ | 1,729,009 | $ | 1,717,682 | ||||||
Total stockholders’ equity to total assets ratio | 9.17 | % | 9.34 | % | 9.46 | % | ||||||
Tangible common equity as a percent of tangible assets (non-GAAP) | 7.40 | % | 7.53 | % | 7.58 | % |
Reconciliation of Return on Average Tangible Common Equity (non-GAAP)
(in thousands, except ratios)
Three Months Ended | Nine Months Ended | |||||||||||||||||||
Total stockholders’ equity | $ | 163,319 | $ | 164,743 | $ | 165,926 | $ | 163,319 | $ | 165,926 | ||||||||||
Less: | (31,498 | ) | (31,498 | ) | (31,498 | ) | (31,498 | ) | (31,498 | ) | ||||||||||
Less: Intangible assets | (2,701 | ) | (3,100 | ) | (4,297 | ) | (2,701 | ) | (4,297 | ) | ||||||||||
Tangible common equity (non-GAAP) | $ | 129,120 | $ | 130,145 | $ | 130,131 | $ | 129,120 | $ | 130,131 | ||||||||||
Average tangible common equity (non-GAAP) | $ | 131,130 | $ | 129,939 | $ | 129,208 | $ | 131,383 | $ | 126,116 | ||||||||||
GAAP earnings after income taxes | $ | 3,993 | $ | 4,366 | $ | 4,997 | $ | 13,065 | $ | 15,209 | ||||||||||
Amortization of intangible assets, net of tax | 302 | 302 | 292 | 906 | 879 | |||||||||||||||
Tangible net income | $ | 4,295 | $ | 4,668 | $ | 5,289 | $ | 13,971 | $ | 16,088 | ||||||||||
Return on average tangible common equity (annualized) | 12.99 | % | 14.41 | % | 16.24 | % | 14.22 | % | 17.06 | % |
Reconciliation of Efficiency Ratio
(in thousands, except ratios)
Three Months Ended | Nine Months Ended | ||||||||||||||||||
Non-interest expense (GAAP) | $ | 11,277 | $ | 10,462 | $ | 10,320 | $ | 31,407 | $ | 30,007 | |||||||||
Less amortization of intangibles | (399 | ) | (399 | ) | (399 | ) | (1,197 | ) | (1,197 | ) | |||||||||
Efficiency ratio numerator (GAAP) | $ | 10,878 | $ | 10,063 | $ | 9,921 | $ | 30,210 | $ | 28,810 | |||||||||
Non-interest income | $ | 2,472 | $ | 2,372 | $ | 3,448 | $ | 7,557 | $ | 11,415 | |||||||||
Loss (Gain) on investment securities | 55 | 75 | (73 | ) | 167 | (344 | ) | ||||||||||||
Net interest margin | 14,457 | 14,267 | 13,688 | 41,891 | 39,285 | ||||||||||||||
Efficiency ratio denominator (GAAP) | $ | 16,984 | $ | 16,714 | $ | 17,063 | $ | 49,615 | $ | 50,356 | |||||||||
Efficiency ratio (GAAP) | 64 | % | 60 | % | 58 | % | 61 | % | 57 | % |
1Net income as adjusted and net income as adjusted per share are non-GAAP financial measures that management believes enhances investors’ ability to better understand the underlying business performance and trends related to core business activities. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table “Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP)”.
2Return on average assets as adjusted is a non-GAAP measure that management believes enhances investors’ ability to better understand the underlying business performance and trends relative to average assets. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table “Reconciliation of Return on Average Assets as Adjusted (non-GAAP)”.
3Return on average equity as adjusted is a non-GAAP measure that management believes enhances investors’ ability to better understand the underlying business performance and trends relative to average equity. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table “Reconciliation of Return on Average Equity as Adjusted (non-GAAP)”.
4Tangible book value, tangible book value per share, tangible common equity as a percent of tangible assets and return on tangible common equity are non-GAAP measures that management believes enhances investors’ ability to better understand the Company’s financial position. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table “Reconciliation of tangible book value per share (non-GAAP)”, “Reconciliation of tangible common equity as a percent of tangible assets (non-GAAP)”, and “Reconciliation of return on average tangible common equity)”.
Source:
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