Equity Bancshares, Inc. Reports Third Quarter Results; Including Net Interest Margin Growth Driven by Core Deposit Base

Equity Bancshares, Inc. (NYSE: EQBK), (“Equity”, “the Company”, “we,” “us,” “our”), the Wichita-based holding company of Equity Bank, reported net income of $12.3 million and $0.80 earnings per diluted share for the quarter ended September 30, 2023.

“Our Company's success is in large part due to our ability to adapt on behalf of our customers and teams no matter the banking environment. I’m pleased at our team’s ability to deliver unparalleled support and service to our customer base,” said Brad S. Elliott, Chairman and CEO of Equity. “Value creation is crucial for regional banks, and our ability to deliver sophisticated and customized solutions helps build our Company’s organic growth, sustainability, and competitive advantage.”

"During the third quarter our team continued to emphasize credit quality while meeting the needs of our customer base." Mr. Elliott said. "Our classified asset ratio is as low as it has ever been, while both capital and on balance sheet reserves remain high positioning Equity to be strategic as we assess both organic and acquisitive growth opportunities."

Notable Items:

• During the quarter, the Company realized linked period Net Interest Margin growth of 13 basis points, and Net Interest Income growth of $1.6 million.
• Pre-tax, pre-provision net income for the quarter was $15.5 million up $2.3 million linked quarter driven by growth in both net interest income and non-interest income.
• The Company continued to emphasize investor returns through share repurchase and quarterly dividends. The Company’s Board authorized a 20% increase in quarterly dividend to $0.12 per share, and authorized the repurchase of up to 1 million shares. During the quarter, the Company received non-objection from the Federal Reserve Bank of Kansas City related to the repurchase plan.
• Classified loans as a percentage of total risk-based capital at Equity Bank were 6.3%, down from 7.9% as of June 30, 2023, and 10.0% as of December 31, 2022.

During the third quarter, Equity announced two internal promotions to its executive management team. Chris Navratil was promoted to Chief Financial Officer and Krzysztof Slupkowski was promoted to Chief Credit Officer.

Financial Results for the Quarter Ended September 30, 2023

Net income allocable to common stockholders was $12.3 million, or $0.80 per diluted share, for the three months ended September 30, 2023, as compared to $11.5 million, or $0.74 per diluted share, for the three months ended June 30, 2023. The increase during the quarter was primarily driven by increases in interest income of $3.8 million and non-interest income of $1.8 million, partially offset by increases in interest expense of $2.2 million and non-interest expense of $1.1 million.

Net Interest Income

Net interest income was $41.0 million for the three months ended September 30, 2023, as compared to $39.4 million for the three months ended June 30, 2023, an increase of $1.6 million, or 4.01%. Net interest margin improved to 3.51% from 3.38% as the yield on interest-earning assets increased 32 basis points to 5.57% and the cost of interest-bearing deposits increased 26 basis points to 2.40%

The Company maintained an enhanced liquidity position in response to the first quarter market disruption by adding on-balance sheet cash, resulting in an adverse impact to net interest margin due to the increase in average earning assets and negligible impact to net interest income.

Average interest-bearing deposits declined slightly during the quarter and the Company continued to experience compositional shift from noninterest-bearing deposits into interest-bearing categories. At September 30, 2023, non-interest-bearing deposits declined $42.8 million from June 30, 2023 and $280.9 million from September 30, 2022. The majority of the decline over the last 12 months is due to deposits migrating to interest-bearing deposit accounts.

Provision for Credit Losses

During the three months ended September 30, 2023, there was a provision of $1.2 million compared to a provision of $298 thousand in the previous quarter. The provision for the quarter is the result of extended duration 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 prepayments rates and continued market disruption caused by elevated inflation, supply chain issues and the impact of monetary policy on consumers and businesses. For the three months ended September 30, 2023, we had net charge-offs of $1.6 million as compared to $857 thousand for the three months ended June 30, 2023.

Non-Interest Income

Total non-interest income was $8.7 million for the three months ended September 30, 2023, as compared to $7.0 million for the three months ended June 30, 2023, or an increase of 25.7%, quarter-over-quarter. The $1.8 million increase was primarily due to a decrease in losses on sales of available-for-sale securities of $1.3 million and an increase in other non-interest income of $439 thousand which was driven by increased insurance commission revenue.

Non-Interest Expense

Total non-interest expense for the quarter ended September 30, 2023, was $34.2 million as compared to $33.1 million for the quarter ended June 30, 2023, an increase of $1.1 million. The comparative increase was primarily due to salary and employee benefit expenses as the Company benefited from compensation reversals in the previous quarter which did not repeat.

Income Tax Expense

At September 30, 2023, the effective tax rate for the quarter was 13.5% as compared to 11.5% at June 30, 2023. The year-to-date tax rate is 14.1%. The increase in rate linked quarter is associated with the cumulative increase in federal and state tax benefits related to the implementation of tax planning initiatives taken in the second quarter versus the normal quarterly recognition of these tax planning initiatives taken in the third quarter offset by a return to provision adjustment related to the federal income tax return when taken as a percentage of pre-tax income. These initiatives were anticipated and incorporated in our forecasted full year estimated effective tax rate at June 30, 2023.

Loans, Total Assets and Funding

Loans held for investment were $3.28 billion at September 30, 2023, decreasing $40.6 million compared to the previous quarter. Excluding the impact of PPP loans, balances have increased $32.9 million, or 1.0% year-over-year. Included in the annual growth, is $49.3 million within the commercial and industrial and commercial real estate portfolios, or 2.9%. Total assets were $4.95 billion as of September 30, 2023 decreasing $149.6 million or 2.9% from June 30, 2023.

Total deposits were $4.08 billion at September 30, 2023, decreasing $148.8 million from the previous quarter end and decreasing $144.4 million from the same period end in 2022. During the third quarter, the Company reduced its brokered deposits by $50.0 million; improving the overall mix of the deposit portfolio during the third quarter. In addition to the payoff of brokered funding, the Company also realized seasonal declines in our municipal deposit portfolio accounting for the remaining negative trend linked quarter. Of the total deposit balance, non-interest-bearing accounts comprise approximately 23.6%. Advances from the FHLB and borrowings from the Federal Reserve's Bank Term Funding Program remained unchanged from June 30, 2023.

Asset Quality

As of September 30, 2023, Equity’s allowance for credit losses to total loans remained materially consistent at 1.3% as compared to June 30, 2023. Nonperforming assets were $20.5 million as of September 30, 2023, or 0.4% of total assets, compared to $15.7 million at June 30, 2023, or 0.3% of total assets. Non-accrual loans were $19.4 million at September 30, 2023, as compared to $15.0 million at June 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 $37.6 million, or 6.3% of regulatory capital, down from $47.1 million, or 7.9% of regulatory capital as of June 30, 2023.

Capital

Quarter over quarter, book and tangible capital as well as book and tangible capital per share were essentially flat. Dividends paid and increase in the unrealized loss position in our investment portfolio of $13.3 million, partially offset by unrealized gains on cash-flow derivatives of $1.5 million, were materially offset by net income in the period.

The Company’s ratio of common equity tier 1 capital to risk-weighted assets was 12.7%, the total capital to risk-weighted assets was 16.4% and the total leverage ratio was 9.8% at September 30, 2023. At June 30, 2023, the Company’s common equity tier 1 capital to risk-weighted assets ratio was 12.2%, the total capital to risk-weighted assets ratio was 16.0% and the total leverage ratio was 9.5%.

The Company’s subsidiary, Equity Bank, had a ratio of common equity tier 1 capital to risk-weighted assets of 14.7%, a ratio of total capital to risk-weighted assets of 15.9% and a total leverage ratio of 10.8% at September 30, 2023. At June 30, 2023, Equity Bank’s ratio of common equity tier 1 capital to risk-weighted assets was 14.3%, the ratio of total capital to risk-weighted assets was 15.5% and the total leverage ratio was 10.7%.

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 third quarter results on Wednesday, October 18, 2023, at 10 a.m. eastern time or 9 a.m. central time.

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

A replay of the call and webcast will be available two hours following the close of the call until October 25, 2023, accessible at investor.equitybank.com.

About Equity Bancshares, Inc. Equity Bancshares, Inc. is the holding company for Equity Bank, offering a full range of financial solutions, including commercial loans, consumer banking, mortgage loans, trust and wealth management services and treasury management services, while delivering the high-quality, relationship-based customer service of a community bank. Equity’s common stock is traded on the 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 COVID-19 related impacts; competition from other financial institutions and bank holding companies; the effects of and changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board; changes in the demand for loans; fluctuations in value of collateral and loan reserves; inflation, interest rate, market and monetary fluctuations; changes in consumer spending, borrowing and savings habits; and acquisitions and integration of acquired businesses; and similar variables. The foregoing list of factors is not exhaustive.

For discussion of these and other risks that may cause actual results to differ from expectations, please refer to “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in Equity’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 9, 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. Katzfey VP, Director of Corporate Development and Investor Relations Equity Bank [phone] [e-mail]        

Media Contact:

John J. Hanley SVP, Senior Director of Marketing Equity Bancshares, Inc. [phone] [e-mail]

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 September 30,								Nine months ended September 30,
		2023				2022				2023				2022
Interest and dividend income
Loans, including fees		$	55,152			$	41,555			$	156,281			$	114,710
Securities, taxable			5,696				5,792				17,456				16,767
Securities, nontaxable			369				687				1,606				2,020
Federal funds sold and other			3,822				514				7,075				1,327
Total interest and dividend income			65,039				48,548				182,418				134,824
Interest expense
Deposits			19,374				4,403				50,399				8,308
Federal funds purchased and retail repurchase agreements			246				71				633				150
Federal Home Loan Bank advances			968				409				2,939				594
Federal Reserve Bank borrowings			1,546				—				3,209				—
Subordinated debt			1,893				1,721				5,687				4,973
Total interest expense			24,027				6,604				62,867				14,025
Net interest income			41,012				41,944				119,551				120,799
Provision (reversal) for credit losses			1,230				(136	)			1,162				276
Net interest income after provision (reversal) for credit losses			39,782				42,080				118,389				120,523
Non-interest income
Service charges and fees			2,690				2,788				7,888				7,927
Debit card income			2,591				2,682				7,798				8,120
Mortgage banking			226				310				527				1,300
Increase in value of bank-owned life insurance			794				754				3,134				2,355
Net gain on acquisition and branch sales			—				—				—				540
Net gains (losses) from securities transactions			(1	)			(17	)			(1,291	)			(9	)
Other			2,435				2,452				6,229				7,395
Total non-interest income			8,735				8,969				24,285				27,628
Non-interest expense
Salaries and employee benefits			15,857				15,442				47,786				45,893
Net occupancy and equipment			3,262				3,127				9,081				9,304
Data processing			4,553				4,138				12,962				11,549
Professional fees			1,312				1,265				4,341				3,547
Advertising and business development			1,419				1,191				3,827				3,139
Telecommunications			502				487				1,503				1,399
FDIC insurance			660				340				1,535				780
Courier and postage			548				436				1,469				1,348
Free nationwide ATM cost			516				551				1,565				1,593
Amortization of core deposit intangibles			799				957				2,635				3,118
Loan expense			132				174				385				566
Other real estate owned			128				188				318				201
Merger expenses			—				115				—				526
Other			4,556				3,825				13,196				10,168
Total non-interest expense			34,244				32,236				100,603				93,131
Income (loss) before income tax			14,273				18,813				42,071				55,020
Provision for income taxes			1,932				3,642				5,951				8,940
Net income (loss) and net income (loss) allocable to common stockholders		$	12,341			$	15,171			$	36,120			$	46,080
Basic earnings (loss) per share		$	0.80			$	0.94			$	2.32			$	2.83
Diluted earnings (loss) per share		$	0.80			$	0.93			$	2.30			$	2.79
Weighted average common shares			15,404,992				16,056,658				15,575,731				16,303,586
Weighted average diluted common shares			15,507,172				16,273,231				15,692,305				16,516,787

TABLE 2. QUARTERLY CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except per share data)
		As of and for the three months ended
		September 30, 2023				June 30, 2023				March 31, 2023				December 31, 2022				September 30, 2022
Interest and dividend income
Loans, including fees		$	55,152			$	52,748			$	48,381			$	46,149			$	41,555
Securities, taxable			5,696				5,813				5,947				5,946				5,792
Securities, nontaxable			369				568				669				678				687
Federal funds sold and other			3,822				2,127				1,126				651				514
Total interest and dividend income			65,039				61,256				56,123				53,424				48,548
Interest expense
Deposits			19,374				17,204				13,821				8,013				4,403
Federal funds purchased and retail repurchase agreements			246				192				195				82				71
Federal Home Loan Bank advances			968				953				1,018				1,500				409
Federal Reserve Bank borrowings			1,546				1,528				135				—				—
Subordinated debt			1,893				1,950				1,844				1,798				1,721
Total interest expense			24,027				21,827				17,013				11,393				6,604
Net interest income			41,012				39,429				39,110				42,031				41,944
Provision (reversal) for credit losses			1,230				298				(366	)			(151	)			(136	)
Net interest income after provision (reversal) for credit losses			39,782				39,131				39,476				42,182				42,080
Non-interest income
Service charges and fees			2,690				2,653				2,545				2,705				2,788
Debit card income			2,591				2,653				2,554				2,557				2,682
Mortgage banking			226				213				88				116				310
Increase in value of bank-owned life insurance			794				757				1,583				758				754
Net gain on acquisition and branch sales			—				—				—				422				—
Net gains (losses) from securities transactions			(1	)			(1,322	)			32				14				(17	)
Other			2,435				1,996				1,798				1,757				2,452
Total non-interest income			8,735				6,950				8,600				8,329				8,969
Non-interest expense
Salaries and employee benefits			15,857				15,237				16,692				16,113				15,442
Net occupancy and equipment			3,262				2,940				2,879				2,919				3,127
Data processing			4,553				4,493				3,916				4,334				4,138
Professional fees			1,312				1,645				1,384				1,404				1,265
Advertising and business development			1,419				1,249				1,159				1,903				1,191
Telecommunications			502				516				485				517				487
FDIC insurance			660				515				360				360				340
Courier and postage			548				463				458				533				436
Free nationwide ATM cost			516				524				525				510				551
Amortization of core deposit intangibles			799				918				918				924				957
Loan expense			132				136				117				262				174
Other real estate owned			128				71				119				388				188
Merger expenses			—				—				—				68				115
Other			4,556				4,423				4,217				5,014				3,825
Total non-interest expense			34,244				33,130				33,229				35,249				32,236
Income (loss) before income tax			14,273				12,951				14,847				15,262				18,813
Provision for income taxes (benefit)			1,932				1,495				2,524				3,654				3,642
Net income (loss) and net income (loss) allocable to common stockholders		$	12,341			$	11,456			$	12,323			$	11,608			$	15,171
Basic earnings (loss) per share		$	0.80			$	0.74			$	0.78			$	0.73			$	0.94
Diluted earnings (loss) per share		$	0.80			$	0.74			$	0.77			$	0.72			$	0.93
Weighted average common shares			15,404,992				15,468,378				15,858,808				15,948,360				16,056,658
Weighted average diluted common shares			15,507,172				15,554,255				16,028,051				16,204,185				16,273,231

TABLE 3. CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in thousands)
		September 30, 2023				June 30, 2023				March 31, 2023				December 31, 2022				September 30, 2022
ASSETS
Cash and due from banks		$	183,404			$	262,604			$	249,982			$	104,013			$	155,039
Federal funds sold			15,613				15,495				384				415				374
Cash and cash equivalents			199,017				278,099				250,366				104,428				155,413
Available-for-sale securities			1,057,009				1,094,748				1,183,247				1,184,390				1,198,962
Held-to-maturity securities			2,212				2,216				1,944				1,948				—
Loans held for sale			627				2,456				648				349				1,518
Loans, net of allowance for credit losses(1)			3,237,932				3,278,126				3,285,515				3,265,701				3,208,524
Other real estate owned, net			3,369				4,362				4,171				4,409				10,412
Premises and equipment, net			110,271				106,186				104,789				101,492				100,566
Bank-owned life insurance			124,245				123,451				122,971				123,176				122,418
Federal Reserve Bank and Federal Home Loan Bank stock			20,780				21,129				33,359				21,695				24,428
Interest receivable			23,621				21,360				20,461				20,630				18,497
Goodwill			53,101				53,101				53,101				53,101				53,101
Core deposit intangibles, net			7,961				8,760				9,678				10,596				11,598
Other			105,122				100,889				86,466				89,736				94,978
Total assets		$	4,945,267			$	5,094,883			$	5,156,716			$	4,981,651			$	5,000,415
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Demand		$	936,217			$	978,968			$	1,012,671			$	1,097,899			$	1,217,094
Total non-interest-bearing deposits			936,217				978,968				1,012,671				1,097,899				1,217,094
Demand, savings and money market			2,397,003				2,397,524				2,334,463				2,329,584				2,335,847
Time			748,950				854,458				939,799				814,324				673,670
Total interest-bearing deposits			3,145,953				3,251,982				3,274,262				3,143,908				3,009,517
Total deposits			4,082,170				4,230,950				4,286,933				4,241,807				4,226,611
Federal funds purchased and retail repurchase agreements			39,701				44,770				45,098				46,478				47,443
Federal Home Loan Bank advances and Federal Reserve Bank borrowings			240,000				240,000				251,222				138,864				186,001
Subordinated debt			96,787				96,653				96,522				96,392				96,263
Contractual obligations			29,019				29,608				19,372				15,218				15,562
Interest payable and other liabilities			39,460				34,467				32,446				32,834				32,729
Total liabilities			4,527,137				4,676,448				4,731,593				4,571,593				4,604,609
Commitments and contingent liabilities
Stockholders’ equity
Common stock			207				207				206				205				204
Additional paid-in capital			488,137				487,225				486,658				484,989				482,668
Retained earnings			171,188				160,715				150,810				140,095				130,114
Accumulated other comprehensive income (loss), net of tax			(122,047	)			(110,225	)			(101,238	)			(113,511	)			(120,918	)
Treasury stock			(119,355	)			(119,487	)			(111,313	)			(101,720	)			(96,262	)
Total stockholders’ equity			418,130				418,435				425,123				410,058				395,806
Total liabilities and stockholders’ equity		$	4,945,267			$	5,094,883			$	5,156,716			$	4,981,651			$	5,000,415
(1) Allowance for credit losses		$	44,186			$	44,544			$	45,103			$	45,847			$	46,499

TABLE 4. SELECTED FINANCIAL HIGHLIGHTS (Unaudited)
(Dollars in thousands, except per share data)
		As of and for the three months ended
		September 30,				June 30,				March 31,				December 31,				September 30,
		2023				2023				2023				2022				2022
Loans Held For Investment by Type
Commercial real estate		$	1,721,761			$	1,764,460			$	1,746,834			$	1,721,269			$	1,655,646
Commercial and industrial			585,129				583,664				605,576				594,862				607,722
Residential real estate			558,188				560,389				563,791				570,550				573,431
Agricultural real estate			205,865				202,317				202,274				199,189				200,415
Agricultural			103,352				104,510				106,169				120,003				115,048
Consumer			107,823				107,330				105,974				105,675				102,761
Total loans held-for-investment			3,282,118				3,322,670				3,330,618				3,311,548				3,255,023
Allowance for credit losses			(44,186	)			(44,544	)			(45,103	)			(45,847	)			(46,499	)
Net loans held for investment		$	3,237,932			$	3,278,126			$	3,285,515			$	3,265,701			$	3,208,524
Asset Quality Ratios
Allowance for credit losses on loans to total loans			1.35	%			1.34	%			1.35	%			1.38	%			1.43	%
Past due or nonaccrual loans to total loans			1.03	%			0.78	%			0.66	%			0.72	%			0.94	%
Nonperforming assets to total assets			0.41	%			0.31	%			0.33	%			0.37	%			0.59	%
Nonperforming assets to total loans plus other real estate owned			0.62	%			0.47	%			0.51	%			0.55	%			0.91	%
Classified assets to bank total regulatory capital			6.27	%			7.94	%			10.09	%			9.98	%			11.03	%
Selected Average Balance Sheet Data (QTD Average)
Investment securities		$	1,085,905			$	1,155,971			$	1,185,482			$	1,184,452			$	1,272,414
Total gross loans receivable			3,281,483				3,337,497				3,305,681				3,275,284				3,240,998
Interest-earning assets			4,635,384				4,678,744				4,611,019				4,538,177				4,602,568
Total assets			5,046,179				5,064,912				4,994,417				4,930,231				4,988,755
Interest-bearing deposits			3,206,300				3,226,965				3,235,557				3,032,902				3,081,245
Borrowings			385,125				385,504				247,932				299,191				221,514
Total interest-bearing liabilities			3,591,425				3,612,469				3,483,489				3,335,557				3,302,759
Total deposits			4,177,332				4,204,334				4,279,451				4,185,904				4,283,855
Total liabilities			4,619,919				4,640,050				4,573,917				4,531,961				4,552,564
Total stockholders' equity			426,260				424,862				420,500				398,270				436,191
Tangible common equity*			363,625				361,409				356,053				332,820				369,746
Performance ratios
Return on average assets (ROAA) annualized			0.97	%			0.91	%			1.00	%			0.93	%			1.21	%
Return on average assets before income tax and provision for loan losses*			1.22	%			1.05	%			1.18	%			1.22	%			1.49	%
Return on average equity (ROAE) annualized			11.49	%			10.82	%			11.89	%			11.57	%			13.80	%
Return on average equity before income tax and provision for loan losses*			14.43	%			12.51	%			13.97	%			15.05	%			16.99	%
Return on average tangible common equity (ROATCE) annualized*			14.18	%			13.55	%			14.89	%			14.74	%			17.12	%
Yield on loans annualized			6.67	%			6.34	%			5.94	%			5.59	%			5.09	%
Cost of interest-bearing deposits annualized			2.40	%			2.14	%			1.73	%			1.05	%			0.57	%
Cost of total deposits annualized			1.84	%			1.64	%			1.31	%			0.76	%			0.41	%
Net interest margin annualized			3.51	%			3.38	%			3.44	%			3.67	%			3.62	%
Efficiency ratio*			68.83	%			69.44	%			70.00	%			70.47	%			63.07	%
Non-interest income / average assets			0.69	%			0.55	%			0.74	%			0.67	%			0.71	%
Non-interest expense / average assets			2.69	%			2.62	%			2.74	%			2.84	%			2.56	%
Capital Ratios
Tier 1 Leverage Ratio			9.77	%			9.54	%			9.60	%			9.61	%			9.46	%
Common Equity Tier 1 Capital Ratio			12.65	%			12.23	%			12.21	%			12.26	%			12.15	%
Tier 1 Risk Based Capital Ratio			13.28	%			12.84	%			12.83	%			12.88	%			12.77	%
Total Risk Based Capital Ratio			16.42	%			15.96	%			15.98	%			16.08	%			15.99	%
Total stockholders' equity to total assets			8.46	%			8.21	%			8.24	%			8.23	%			7.92	%
Tangible common equity to tangible assets*			7.29	%			7.06	%			7.09	%			7.02	%			6.68	%
Dividend payout ratio			15.13	%			13.53	%			10.49	%			14.01	%			10.78	%
Book value per common share		$	27.13			$	27.18			$	27.03			$	25.74			$	24.71
Tangible book value per common share*		$	23.09			$	23.08			$	22.96			$	21.67			$	20.59
Tangible book value per diluted common share*		$	22.96			$	22.98			$	22.83			$	21.35			$	20.33
* 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 nine months ended												For nine months ended
	September 30, 2023												September 30, 2022
	Average Outstanding Balance				Interest Income/ Expense				Average Yield/Rate(3)(4)				Average Outstanding Balance				Interest Income/ Expense				Average Yield/Rate(3)(4)
Interest-earning assets
Loans (1)
Commercial and industrial	$	580,359			$	31,503				7.26	%		$	579,610			$	22,994				5.30	%
Commercial real estate		1,300,202				61,811				6.36	%			1,236,282				45,995				4.97	%
Real estate construction		450,147				24,764				7.36	%			362,543				12,443				4.59	%
Residential real estate		567,169				17,933				4.23	%			604,218				16,336				3.61	%
Agricultural real estate		202,963				10,399				6.85	%			201,566				8,046				5.34	%
Agricultural		100,450				5,039				6.71	%			132,485				5,254				5.30	%
Consumer		106,841				4,832				6.05	%			101,341				3,642				4.80	%
Total loans		3,308,131				156,281				6.32	%			3,218,045				114,710				4.77	%
Securities
Taxable securities		1,059,858				17,456				2.20	%			1,220,045				16,767				1.84	%
Nontaxable securities		82,230				1,606				2.61	%			109,142				2,020				2.47	%
Total securities		1,142,088				19,062				2.23	%			1,329,187				18,787				1.89	%
Federal funds sold and other		191,585				7,075				4.94	%			116,997				1,327				1.52	%
Total interest-earning assets	$	4,641,804				182,418				5.25	%		$	4,664,229				134,824				3.86	%
Interest-bearing liabilities
Demand, savings and money market deposits	$	2,365,972				32,288				1.82	%		$	2,480,113				5,461				0.29	%
Time deposits		856,862				18,111				2.83	%			638,692				2,847				0.60	%
Total interest-bearing deposits		3,222,834				50,399				2.09	%			3,118,805				8,308				0.36	%
FHLB advances		97,014				2,939				4.05	%			54,100				594				1.47	%
Other borrowings		243,007				9,529				5.24	%			152,682				5,123				4.49	%
Total interest-bearing liabilities	$	3,562,855				62,867				2.36	%		$	3,325,587				14,025				0.56	%
Net interest income					$	119,551											$	120,799
Interest rate spread										2.89	%											3.30	%
Net interest margin (2)										3.44	%											3.46	%
(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
	September 30, 2023												September 30, 2022
	Average Outstanding Balance				Interest Income/ Expense				Average Yield/Rate(3)(4)				Average Outstanding Balance				Interest Income/ Expense				Average Yield/Rate(3)(4)
Interest-earning assets
Loans (1)
Commercial and industrial	$	573,039			$	10,984				7.60	%		$	575,149			$	7,750				5.35	%
Commercial real estate		1,253,362				20,824				6.59	%			1,307,244				18,023				5.47	%
Real estate construction		480,355				9,838				8.13	%			360,579				4,847				5.33	%
Residential real estate		564,138				6,085				4.28	%			582,938				5,464				3.72	%
Agricultural real estate		203,399				3,898				7.60	%			200,534				2,740				5.42	%
Agricultural		99,773				1,856				7.38	%			113,351				1,406				4.92	%
Consumer		107,417				1,667				6.16	%			101,203				1,325				5.20	%
Total loans		3,281,483				55,152				6.67	%			3,240,998				41,555				5.09	%
Securities
Taxable securities		1,027,889				5,696				2.20	%			1,164,697				5,792				1.97	%
Nontaxable securities		58,016				369				2.52	%			107,717				687				2.53	%
Total securities		1,085,905				6,065				2.22	%			1,272,414				6,479				2.02	%
Federal funds sold and other		267,996				3,822				5.66	%			89,156				514				2.29	%
Total interest-earning assets	$	4,635,384				65,039				5.57	%		$	4,602,568				48,548				4.18	%
Interest-bearing liabilities
Demand, savings and money market deposits	$	2,423,380				13,331				2.18	%		$	2,425,824				3,118				0.51	%
Time deposits		782,920				6,043				3.06	%			655,421				1,285				0.78	%
Total interest-bearing deposits		3,206,300				19,374				2.40	%			3,081,245				4,403				0.57	%
FHLB advances		100,000				968				3.84	%			71,415				409				2.27	%
Other borrowings		285,125				3,685				5.13	%			150,099				1,792				4.74	%
Total interest-bearing liabilities	$	3,591,425				24,027				2.65	%		$	3,302,759				6,604				0.79	%
Net interest income					$	41,012											$	41,944
Interest rate spread										2.92	%											3.39	%
Net interest margin (2)										3.51	%											3.62	%
(1) Average loan balances include nonaccrual loans.
(2) Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets for the period.
(3) Tax exempt income is not included in the above table on a tax-equivalent basis.
(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
	September 30, 2023												June 30, 2023
	Average Outstanding Balance				Interest Income/ Expense				Average Yield/Rate(3)(4)				Average Outstanding Balance				Interest Income/ Expense				Average Yield/Rate(3)(4)
Interest-earning assets
Loans (1)
Commercial and industrial	$	573,039			$	10,984				7.60	%		$	590,634			$	10,885				7.39	%
Commercial real estate		1,253,362				20,824				6.59	%			1,303,520				20,875				6.42	%
Real estate construction		480,355				9,838				8.13	%			465,231				8,231				7.10	%
Residential real estate		564,138				6,085				4.28	%			567,297				6,048				4.28	%
Agricultural real estate		203,399				3,898				7.60	%			202,584				3,387				6.71	%
Agricultural		99,773				1,856				7.38	%			101,333				1,704				6.74	%
Consumer		107,417				1,667				6.16	%			106,898				1,618				6.07	%
Total loans		3,281,483				55,152				6.67	%			3,337,497				52,748				6.34	%
Securities
Taxable securities		1,027,889				5,696				2.20	%			1,068,653				5,813				2.18	%
Nontaxable securities		58,016				369				2.52	%			87,318				568				2.61	%
Total securities		1,085,905				6,065				2.22	%			1,155,971				6,381				2.21	%
Federal funds sold and other		267,996				3,822				5.66	%			185,276				2,127				4.61	%
Total interest-earning assets	$	4,635,384				65,039				5.57	%		$	4,678,744				61,256				5.25	%
Interest-bearing liabilities
Demand savings and money market deposits	$	2,423,380				13,331				2.18	%		$	2,323,685				10,503				1.81	%
Time deposits		782,920				6,043				3.06	%			903,280				6,701				2.98	%
Total interest-bearing deposits		3,206,300				19,374				2.40	%			3,226,965				17,204				2.14	%
FHLB advances		100,000				968				3.84	%			101,845				953				3.75	%
Other borrowings		285,125				3,685				5.13	%			283,659				3,670				5.19	%
Total interest-bearing liabilities	$	3,591,425				24,027				2.65	%		$	3,612,469				21,827				2.42	%
Net interest income					$	41,012											$	39,429
Interest rate spread										2.92	%											2.83	%
Net interest margin (2)										3.51	%											3.38	%
(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
		September 30,				June 30,				March 31,				December 31,				September 30,
		2023				2023				2023				2022				2022
Total stockholders' equity		$	418,130			$	418,435			$	425,123			$	410,058			$	395,806
Less: goodwill			53,101				53,101				53,101				53,101				53,101
Less: core deposit intangibles, net			7,961				8,760				9,678				10,596				11,598
Less: mortgage servicing rights, net			100				126				151				176				201
Less: naming rights, net			1,011				1,022				1,033				1,044				1,054
Tangible common equity		$	355,957			$	355,426			$	361,160			$	345,141			$	329,852
Common shares outstanding at period end			15,413,064				15,396,739				15,730,257				15,930,112				16,017,834
Diluted common shares outstanding at period end			15,500,749				15,468,319				15,822,536				16,163,253				16,225,591
Book value per common share		$	27.13			$	27.18			$	27.03			$	25.74			$	24.71
Tangible book value per common share		$	23.09			$	23.08			$	22.96			$	21.67			$	20.59
Tangible book value per diluted common share		$	22.96			$	22.98			$	22.83			$	21.35			$	20.33
Total assets		$	4,945,267			$	5,094,883			$	5,156,716			$	4,981,651			$	5,000,415
Less: goodwill			53,101				53,101				53,101				53,101				53,101
Less: core deposit intangibles, net			7,961				8,760				9,678				10,596				11,598
Less: mortgage servicing rights, net			100				126				151				176				201
Less: naming rights, net			1,011				1,022				1,033				1,044				1,054
Tangible assets		$	4,883,094			$	5,031,874			$	5,092,753			$	4,916,734			$	4,934,461
Total stockholders' equity to total assets			8.46	%			8.21	%			8.24	%			8.23	%			7.92	%
Tangible common equity to tangible assets			7.29	%			7.06	%			7.09	%			7.02	%			6.68	%
Total average stockholders' equity		$	426,260			$	424,862			$	420,500			$	398,270			$	436,191
Less: average intangible assets			62,635				63,453				64,447				65,450				66,445
Average tangible common equity		$	363,625			$	361,409			$	356,053			$	332,820			$	369,746
Net income (loss) allocable to common stockholders		$	12,341			$	11,456			$	12,323			$	11,608			$	15,171
Add: amortization of intangible assets			835				954				954				961				992
Less: tax effect of intangible assets amortization			175				200				200				202				208
Adjusted net income (loss) allocable to common stockholders		$	13,001			$	12,210			$	13,077			$	12,367			$	15,955
Return on total average stockholders' equity (ROAE) annualized			11.49	%			10.82	%			11.89	%			11.56	%			13.80	%
Return on average tangible common equity (ROATCE) annualized			14.18	%			13.55	%			14.89	%			14.74	%			17.12	%
Non-interest expense		$	34,244			$	33,130			$	33,229			$	35,248			$	32,236
Less: merger expense			—				—				—				68				115
Adjusted non-interest expense		$	34,244			$	33,130			$	33,229			$	35,180			$	32,121
Net interest income		$	41,012			$	39,429			$	39,110			$	42,031			$	41,944
Non-interest income			8,735				6,950				8,600				8,330				8,969
Less: net gain on acquisition and branch sales			—				—				—				422				—
Less: net gains (losses) from securities transactions			(1	)			(1,322	)			32				14				(17	)
Adjusted non-interest income		$	8,736			$	8,272			$	8,568			$	7,894			$	8,986
Net interest income plus adjusted non-interest income		$	49,748			$	47,701			$	47,678			$	49,925			$	50,930
Non-interest expense to net interest income plus non-interest income			68.84	%			71.43	%			69.65	%			69.99	%			63.32	%
Efficiency ratio			68.83	%			69.45	%			69.69	%			70.47	%			63.07	%
Net income (loss) allocable to common stockholders		$	12,341			$	11,456			$	12,323			$	11,608			$	15,171
Add: income tax provision			1,932				1,495				2,524				3,654				3,642
Add: provision (reversal) of credit losses			1,230				298				(366	)			(151	)			(136	)
Pre-tax, pre-provision income		$	15,503			$	13,249			$	14,481			$	15,111			$	18,677
Total average assets		$	5,046,179			$	5,064,912			$	4,994,417			$	4,930,231			$	4,988,755
Total average stockholders' equity		$	426,620			$	424,862			$	420,500			$	398,270			$	436,191
Return on average assets (ROAA) annualized			0.97	%			0.91	%			1.00	%			0.93	%			1.21	%
Adjusted return on average assets			1.22	%			1.05	%			1.18	%			1.22	%			1.49	%
Adjusted return on average equity			14.43	%			12.51	%			13.97	%			15.05	%			16.99	%