EQBK Equity Bancshares Inc

Equity Bancshares, Inc. (NYSE: EQBK), (“Equity”, “the Company”, “we,” “us,” “our”), the Wichita-based holding company of Equity Bank, reported net income of $11.5 million and $0.74 earnings per diluted share for the quarter ended June 30, 2023. During the quarter, the Company recognized a $1.3 million loss through a repositioning of $50.6 million of investments into higher-yielding earning assets. When excluding the loss, net income would have been $12.4 million or $0.80 per diluted share.

"Our Company's success in attracting and retaining core customers during the quarter is a testament to the emphasis our community leaders place on building strong relationships with customers, providing exceptional customer service, and partnering with the communities we serve," said Brad S. Elliott, Chairman and CEO, Equity Bancshares, Inc.

Mr. Elliott continued, "We are confident that our strong community presence, healthy financial condition, and strong liquidity and capital will continue to drive profitability and make us an attractive partner for mergers and acquisitions in our region."

Notable Items:

• Total transaction account deposits increased $29.4 million during the quarter or 3.5% linked quarter annualized while the loan-to-deposit ratio remained stable. Non-wholesale deposits increased $46 million during the quarter as brokered deposits declined $102 million.
• Net Interest income increased $319 thousand during the second quarter, driven by an increase of $67.7 million in average earnings assets.
• Cash and cash equivalents remained elevated, comprising 5.5% of Total Assets as management endeavored to maintain on-balance sheet liquidity.
• Repositioned $50.6 million of investment securities into alternative earning investments, realizing a current period loss of $1.3 million during the quarter, while enhancing current and prospective period net interest margin. The Company calculates the earn-back to be less than 12 months.
• Equity repurchased $8.2 million of common stock, totaling 349 thousand shares or 2.3% of outstanding shares as of the end of the second quarter.
• The ratio of non-performing assets to total assets improved 2 basis points linked quarter to 0.3%, and the ratio of Classified Assets to Bank Regulatory Capital decreased to 7.9% from 10.1%.

During the second quarter, Equity announced it has transferred to the New York Stock Exchange (NYSE). The Company's common stock began trading on the NYSE on May 23, 2023. In addition to the transfer to the NYSE, the Company also announced two additions to its executive management team. Rick Sems joined in May as the President of Equity Bank, and Ann Knutson joined in June as the Chief Human Resources Officer.

Financial Results for the Quarter Ended June 30, 2023

Net income allocable to common stockholders was $11.5 million, or $0.74 per diluted share, for the three months ended June 30, 2023, as compared to $12.3 million, or $0.77 per diluted share, for the three months ended March 31, 2023. The decrease during the quarter was primarily driven by a decrease in non-interest income of $1.7 million and an increase in interest expense of $4.8 million, partially offset by an increase in interest income of $5.1 million.

Net Interest Income

Net interest income was $39.4 million for the three months ended June 30, 2023, as compared to $39.1 million for the three months ended March 31, 2023, an increase of $319 thousand, or 0.82%. The yield on interest-earning assets increased 31 basis points to 5.25%. The cost of interest-bearing deposits increased by 41 basis points during the quarter, moving from 1.73% at March 31, 2023, to 2.14% at June 30, 2023.

The Company maintained an enhanced liquidity position in response to the first quarter market disruption by adding on-balance sheet cash, resulting in a seven basis point 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 June 30, 2023, non-interest bearing deposits declined $33.7 million from March 31, 2023 and $215.9 million from June 30, 2022. The majority of the decline over the last 12 months is primarily due to deposits migrating from non-interest bearing to interest-bearing deposit accounts and the continued spending of excess liquidity from pandemic related governmental support programs.

Provision for Credit Losses

During the three months ended June 30, 2023, there was a provision of $298 thousand compared to a net release of $366 thousand in the previous quarter. The provision for the quarter is the result of slight increases in projected losses over our economic forecast period and 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 June 30, 2023, we had net charge-offs of $858 thousand as compared to $377 thousand for the three months ended March 31, 2023.

Non-Interest Income

Total non-interest income was $7.0 million for the three months ended June 30, 2023, as compared to $8.6 million for the three months ended March 31, 2023, or a decrease of 19.2%, quarter-over-quarter. The $1.7 million decrease was primarily due to losses on sales of available-for-sale securities of $1.4 million and a decrease in value of bank owned life insurance of $826 thousand.

Non-Interest Expense

Total non-interest expense for the quarter ended June 30, 2023, was $33.1 million as compared to $33.2 million for the quarter ended March 31, 2023, a decrease of $99 thousand.

Income Tax Expense

At June 30, 2023, the effective tax rate for the quarter was 11.5% as compared 17.0% at March 31, 2023. The year-to-date tax rate is 14.5%. The reduction in rate from the first quarter to the second quarter of 2023 is associated with an increase in tax benefits related to the implementation of tax planning initiatives and associated reductions in state income tax expense 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 March 31, 2023. The impact of recognizing the year to date cumulative effect of these tax initiatives in the second quarter results in a lower tax rate quarter over quarter.

Loans, Total Assets and Funding

Loans held for investment were $3.32 billion at June 30, 2023, decreasing $7.9 million compared to previous quarter. During the quarter, the Company exited its last two remaining shared national credits and some larger loan payoffs were driven by asset sale dispositions by our borrowers. Excluding the impact of PPP loans, balances have increased $105.1 million, or 3.3% year-over-year. Included in the annual growth, is $126.2 million within the commercial and industrial and commercial real estate portfolios, or 5.7%. Total assets were $5.09 billion as of June 30, 2023 decreasing $61.8 million or 1.2% from March 31, 2023.

Total deposits were $4.23 billion at June 30, 2023, decreasing $56.0 million from the previous quarter end and decreasing $60.8 million from the same period end in 2022. During the second quarter, the Company reduced its brokered deposits by $102 million; improving the overall mix of the deposit portfolio during the second quarter. Of this balance, non-interest bearing accounts comprise approximately 23.1%. Advances from the FHLB declined $11.2 million to $100 million during the quarter, while borrowings from the Federal Reserve's Bank Term Funding Program remained unchanged from March 31, 2023.

Asset Quality

As of June 30, 2023, Equity’s allowance for credit losses to total loans remained materially consistent at 1.3% as compared to March 31, 2023. Nonperforming assets were $15.7 million as of June 30, 2023, or 0.3% of total assets, compared to $17.1 million at March 31, 2023, or 0.3% of total assets. Non-accrual loans were $15.0 million at June 30, 2023, as compared to $16.6 million at March 31, 2023. Total classified assets, including loans rated special mention or worse, other real estate owned, excluding previous branch locations, and other repossessed assets were $47.1 million, or 7.9% of regulatory capital, down from $59.9 million, or 10.1% of regulatory capital as of March 31, 2023.

Capital

During the quarter, the Company realized a decrease in both book and tangible capital but realized increases in book and tangible capital per share. The decrease in book and tangible capital is primarily due to dividends declared, costs incurred to repurchase shares and the fair value mark on the investment portfolio outpacing net income for the quarter.

The Company’s ratio of common equity tier 1 capital to risk-weighted assets was 12.2%, the total capital to risk-weighted assets was 16.0% and the total leverage ratio was 9.5% at June 30, 2023. At March 31, 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 9.6%.

The Company’s subsidiary, Equity Bank, had a ratio of common equity tier 1 capital to risk-weighted assets of 14.3%, a ratio of total capital to risk-weighted assets of 15.5% and a total leverage ratio of 10.6% at June 30, 2023. At March 31, 2023, Equity Bank’s ratio of common equity tier 1 capital to risk-weighted assets was 14.4%, the ratio of total capital to risk-weighted assets was 15.7% 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, Eric Newell, will hold a conference call and webcast to discuss first quarter results on Wednesday, July 19, 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 July 26, 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:

Chris NavratilSVP, FinanceEquity Bancshares, Inc.(316) 612-6014cnavratil@equitybank.com

Media Contact:

John J. HanleySVP, Senior Director of MarketingEquity 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 endedJune 30,								Six months endedJune 30,
		2023				2022				2023				2022
Interest and dividend income
Loans, including fees		$	52,748			$	36,849			$	101,129			$	73,155
Securities, taxable			5,813				5,584				11,760				10,975
Securities, nontaxable			568				678				1,237				1,333
Federal funds sold and other			2,127				513				3,253				813
Total interest and dividend income			61,256				43,624				117,379				86,276
Interest expense
Deposits			17,204				2,183				31,025				3,905
Federal funds purchased and retail repurchase agreements			192				46				387				79
Federal Home Loan Bank advances			953				176				1,971				185
Federal Reserve Bank borrowings			1,528				—				1,663				—
Subordinated debt			1,950				1,653				3,794				3,252
Total interest expense			21,827				4,058				38,840				7,421
Net interest income			39,429				39,566				78,539				78,855
Provision (reversal) for credit losses			298				824				(68	)			412
Net interest income after provision (reversal) for credit losses			39,131				38,742				78,607				78,443
Non-interest income
Service charges and fees			2,653				2,617				5,198				5,139
Debit card income			2,653				2,810				5,207				5,438
Mortgage banking			213				428				301				990
Increase in value of bank-owned life insurance			757				736				2,340				1,601
Net gain on acquisition and branch sales			—				540				—				540
Net gains (losses) from securities transactions			(1,322	)			(32	)			(1,290	)			8
Other			1,996				2,538				3,794				4,943
Total non-interest income			6,950				9,637				15,550				18,659
Non-interest expense
Salaries and employee benefits			15,237				15,383				31,929				30,451
Net occupancy and equipment			2,940				3,007				5,819				6,177
Data processing			4,493				3,642				8,409				7,411
Professional fees			1,645				1,111				3,029				2,282
Advertising and business development			1,249				972				2,408				1,948
Telecommunications			516				442				1,001				912
FDIC insurance			515				260				875				440
Courier and postage			463				489				921				912
Free nationwide ATM cost			524				541				1,049				1,042
Amortization of core deposit intangibles			918				1,111				1,836				2,161
Loan expense			136				207				253				392
Other real estate owned			71				14				190				13
Merger expenses			—				88				—				411
Other			4,423				4,169				8,640				6,343
Total non-interest expense			33,130				31,436				66,359				60,895
Income (loss) before income tax			12,951				16,943				27,798				36,207
Provision for income taxes			1,495				1,684				4,019				5,298
Net income (loss) and net income (loss) allocable to common stockholders		$	11,456			$	15,259			$	23,779			$	30,909
Basic earnings (loss) per share		$	0.74			$	0.95			$	1.52			$	1.88
Diluted earnings (loss) per share		$	0.74			$	0.94			$	1.51			$	1.86
Weighted average common shares			15,468,378				16,206,978				15,662,515				16,428,535
Weighted average diluted common shares			15,554,255				16,413,248				15,789,061				16,639,970

TABLE 2. QUARTERLY CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except per share data)
		As of and for the three months ended
		June 30,2023				March 31,2023				December 31,2022				September 30,2022				June 30,2022
Interest and dividend income
Loans, including fees		$	52,748			$	48,381			$	46,149			$	41,555			$	36,849
Securities, taxable			5,813				5,947				5,946				5,792				5,584
Securities, nontaxable			568				669				678				687				678
Federal funds sold and other			2,127				1,126				651				514				513
Total interest and dividend income			61,256				56,123				53,424				48,548				43,624
Interest expense
Deposits			17,204				13,821				8,013				4,403				2,183
Federal funds purchased and retail repurchase agreements			192				195				82				71				46
Federal Home Loan Bank advances			953				1,018				1,500				409				176
Federal Reserve Bank borrowings			1,528				135				—				—				—
Subordinated debt			1,950				1,844				1,798				1,721				1,653
Total interest expense			21,827				17,013				11,393				6,604				4,058
Net interest income			39,429				39,110				42,031				41,944				39,566
Provision (reversal) for credit losses			298				(366	)			(151	)			(136	)			824
Net interest income after provision (reversal) for credit losses			39,131				39,476				42,182				42,080				38,742
Non-interest income
Service charges and fees			2,653				2,545				2,705				2,788				2,617
Debit card income			2,653				2,554				2,557				2,682				2,810
Mortgage banking			213				88				116				310				428
Increase in value of bank-owned life insurance			757				1,583				758				754				736
Net gain on acquisition and branch sales			—				—				422				—				540
Net gains (losses) from securities transactions			(1,322	)			32				14				(17	)			(32	)
Other			1,996				1,798				1,757				2,452				2,538
Total non-interest income			6,950				8,600				8,329				8,969				9,637
Non-interest expense
Salaries and employee benefits			15,237				16,692				16,113				15,442				15,383
Net occupancy and equipment			2,940				2,879				2,919				3,127				3,007
Data processing			4,493				3,916				4,334				4,138				3,642
Professional fees			1,645				1,384				1,404				1,265				1,111
Advertising and business development			1,249				1,159				1,903				1,191				972
Telecommunications			516				485				517				487				442
FDIC insurance			515				360				360				340				260
Courier and postage			463				458				533				436				489
Free nationwide ATM cost			524				525				510				551				541
Amortization of core deposit intangibles			918				918				924				957				1,111
Loan expense			136				117				262				174				207
Other real estate owned			71				119				388				188				14
Merger expenses			—				—				68				115				88
Other			4,423				4,217				5,014				3,825				4,169
Total non-interest expense			33,130				33,229				35,249				32,236				31,436
Income (loss) before income tax			12,951				14,847				15,262				18,813				16,943
Provision for income taxes (benefit)			1,495				2,524				3,654				3,642				1,684
Net income (loss) and net income (loss) allocable to common stockholders		$	11,456			$	12,323			$	11,608			$	15,171			$	15,259
Basic earnings (loss) per share		$	0.74			$	0.78			$	0.73			$	0.94			$	0.95
Diluted earnings (loss) per share		$	0.74			$	0.77			$	0.72			$	0.93			$	0.94
Weighted average common shares			15,468,378				15,858,808				15,948,360				16,056,658				16,206,978
Weighted average diluted common shares			15,554,255				16,028,051				16,204,185				16,273,231				16,413,248

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

		June 30,2023				March 31,2023				December 31,2022				September 30,2022				June 30,2022
ASSETS
Cash and due from banks		$	262,604			$	249,982			$	104,013			$	155,039			$	103,126
Federal funds sold			15,495				384				415				374				458
Cash and cash equivalents			278,099				250,366				104,428				155,413				103,584
Available-for-sale securities			1,094,748				1,183,247				1,184,390				1,198,962				1,288,180
Held-to-maturity securities			2,216				1,944				1,948				—				—
Loans held for sale			2,456				648				349				1,518				1,714
Loans, net of allowance for credit losses(1)			3,278,126				3,285,515				3,265,701				3,208,524				3,175,208
Other real estate owned, net			4,362				4,171				4,409				10,412				12,969
Premises and equipment, net			106,186				104,789				101,492				100,566				101,212
Bank-owned life insurance			123,451				122,971				123,176				122,418				121,665
Federal Reserve Bank and Federal Home Loan Bank stock			21,129				33,359				21,695				24,428				21,479
Interest receivable			21,360				20,461				20,630				18,497				16,519
Goodwill			53,101				53,101				53,101				53,101				53,101
Core deposit intangibles, net			8,760				9,678				10,596				11,598				12,554
Other			100,889				86,466				89,736				94,978				93,971
Total assets		$	5,094,883			$	5,156,716			$	4,981,651			$	5,000,415			$	5,002,156
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Demand		$	978,968			$	1,012,671			$	1,097,899			$	1,217,094			$	1,194,863
Total non-interest-bearing deposits			978,968				1,012,671				1,097,899				1,217,094				1,194,863
Demand, savings and money market			2,397,524				2,334,463				2,329,584				2,335,847				2,445,545
Time			854,458				939,799				814,324				673,670				651,363
Total interest-bearing deposits			3,251,982				3,274,262				3,143,908				3,009,517				3,096,908
Total deposits			4,230,950				4,286,933				4,241,807				4,226,611				4,291,771
Federal funds purchased and retail repurchase agreements			44,770				45,098				46,478				47,443				52,750
Federal Home Loan Bank advances and Federal Reserve Bank borrowings			240,000				251,222				138,864				186,001				80,000
Subordinated debt			96,653				96,522				96,392				96,263				96,135
Contractual obligations			29,608				19,372				15,218				15,562				15,813
Interest payable and other liabilities			34,467				32,446				32,834				32,729				37,572
Total liabilities			4,676,448				4,731,593				4,571,593				4,604,609				4,574,041
Commitments and contingent liabilities
Stockholders’ equity
Common stock			207				206				205				204				204
Additional paid-in capital			487,225				486,658				484,989				482,668				480,897
Retained earnings			160,715				150,810				140,095				130,114				116,576
Accumulated other comprehensive income (loss), net of tax			(110,225	)			(101,238	)			(113,511	)			(120,918	)			(77,426	)
Treasury stock			(119,487	)			(111,313	)			(101,720	)			(96,262	)			(92,136	)
Total stockholders’ equity			418,435				425,123				410,058				395,806				428,115
Total liabilities and stockholders’ equity		$	5,094,883			$	5,156,716			$	4,981,651			$	5,000,415			$	5,002,156
(1) Allowance for credit losses		$	44,544			$	45,103			$	45,847			$	46,499			$	48,238

TABLE 4. SELECTED FINANCIAL HIGHLIGHTS (Unaudited)
(Dollars in thousands, except per share data)
		As of and for the three months ended
		June 30,				March 31,				December 31,				September 30,				June 30,
		2023				2023				2022				2022				2022
Loans Held For Investment by Type
Commercial real estate		$	1,764,460			$	1,746,834			$	1,721,269			$	1,655,646			$	1,643,068
Commercial and industrial			583,664				605,576				594,862				607,722				578,899
Residential real estate			560,389				563,791				570,550				573,431				578,936
Agricultural real estate			202,317				202,274				199,189				200,415				197,938
Agricultural			104,510				106,169				120,003				115,048				124,753
Consumer			107,330				105,974				105,675				102,761				99,852
Total loans held-for-investment			3,322,670				3,330,618				3,311,548				3,255,023				3,223,446
Allowance for credit losses			(44,544	)			(45,103	)			(45,847	)			(46,499	)			(48,238	)
Net loans held for investment		$	3,278,126			$	3,285,515			$	3,265,701			$	3,208,524			$	3,175,208
Asset Quality Ratios
Allowance for credit losses on loans to total loans			1.34	%			1.35	%			1.38	%			1.43	%			1.50	%
Past due or nonaccrual loans to total loans			0.78	%			0.66	%			0.72	%			0.94	%			0.78	%
Nonperforming assets to total assets			0.31	%			0.33	%			0.37	%			0.59	%			0.74	%
Nonperforming assets to total loans plus other real estate owned			0.47	%			0.51	%			0.55	%			0.91	%			1.14	%
Classified assets to bank total regulatory capital			7.94	%			10.09	%			9.98	%			11.03	%			13.08	%
Selected Average Balance Sheet Data (QTD Average)
Investment securities		$	1,155,971			$	1,185,482			$	1,184,452			$	1,272,414			$	1,319,099
Total gross loans receivable			3,337,497				3,305,681				3,275,284				3,240,998				3,216,853
Interest-earning assets			4,678,744				4,611,019				4,538,177				4,602,568				4,675,967
Total assets			5,064,912				4,994,417				4,930,231				4,988,755				5,067,686
Interest-bearing deposits			3,226,965				3,235,557				3,032,902				3,081,245				3,112,300
Borrowings			385,504				247,932				299,191				221,514				238,062
Total interest-bearing liabilities			3,612,469				3,483,489				3,335,557				3,302,759				3,350,362
Total deposits			4,204,334				4,279,451				4,185,904				4,283,855				4,340,196
Total liabilities			4,640,051				4,573,918				4,531,959				4,552,564				4,630,204
Total stockholders' equity			424,862				420,500				398,270				436,191				437,483
Tangible common equity*			361,409				356,053				332,820				369,746				368,505
Performance ratios
Return on average assets (ROAA) annualized			0.91	%			1.00	%			0.93	%			1.21	%			1.21	%
Return on average assets before income tax and provision for loan losses*			1.05	%			1.18	%			1.22	%			1.49	%			1.41	%
Return on average equity (ROAE) annualized			10.82	%			11.89	%			11.57	%			13.80	%			13.99	%
Return on average equity before income tax and provision for loan losses*			12.51	%			13.97	%			15.05	%			16.99	%			16.29	%
Return on average tangible common equity (ROATCE) annualized*			13.55	%			14.89	%			14.74	%			17.12	%			17.60	%
Yield on loans annualized			6.34	%			5.94	%			5.59	%			5.09	%			4.59	%
Cost of interest-bearing deposits annualized			2.14	%			1.73	%			1.05	%			0.57	%			0.28	%
Cost of total deposits annualized			1.64	%			1.31	%			0.76	%			0.41	%			0.20	%
Net interest margin annualized			3.38	%			3.44	%			3.67	%			3.62	%			3.39	%
Efficiency ratio*			69.44	%			70.00	%			70.47	%			63.07	%			64.38	%
Non-interest income / average assets			0.55	%			0.74	%			0.67	%			0.71	%			0.76	%
Non-interest expense / average assets			2.62	%			2.74	%			2.84	%			2.56	%			2.49	%
Capital Ratios
Tier 1 Leverage Ratio			9.54	%			9.60	%			9.61	%			9.46	%			9.11	%
Common Equity Tier 1 Capital Ratio			12.23	%			12.21	%			12.26	%			12.15	%			12.08	%
Tier 1 Risk Based Capital Ratio			12.84	%			12.83	%			12.88	%			12.77	%			12.71	%
Total Risk Based Capital Ratio			15.96	%			15.98	%			16.08	%			15.99	%			15.97	%
Total stockholders' equity to total assets			8.21	%			8.24	%			8.23	%			7.92	%			8.56	%
Tangible common equity to tangible assets*			7.06	%			7.09	%			7.02	%			6.68	%			7.32	%
Dividend payout ratio			13.53	%			10.49	%			14.01	%			10.78	%			8.61	%
Book value per common share		$	27.18			$	27.03			$	25.74			$	24.71			$	26.58
Tangible book value per common share*		$	23.08			$	22.96			$	21.67			$	20.59			$	22.42
Tangible book value per diluted common share*		$	22.98			$	22.83			$	21.35			$	20.33			$	22.17
* 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 six months ended												For six months ended
	June 30, 2023												June 30, 2022
	Average Outstanding Balance				Interest Income/ Expense				AverageYield/Rate(3)(4)				Average Outstanding Balance				Interest Income/ Expense				AverageYield/Rate(3)(4)
Interest-earning assets
Loans (1)
Commercial and industrial	$	584,081			$	20,519				7.08	%		$	581,880			$	15,244				5.28	%
Commercial real estate		1,324,010				40,987				6.24	%			1,200,212				27,972				4.70	%
Real estate construction		434,793				14,926				6.92	%			363,542				7,596				4.21	%
Residential real estate		568,710				11,848				4.20	%			615,035				10,872				3.56	%
Agricultural real estate		202,742				6,501				6.47	%			202,091				5,306				5.29	%
Agricultural		100,795				3,183				6.37	%			142,210				3,849				5.46	%
Consumer		106,546				3,165				5.99	%			101,409				2,316				4.60	%
Total loans		3,321,677				101,129				6.14	%			3,206,379				73,155				4.60	%
Securities
Taxable securities		1,076,108				11,760				2.20	%			1,248,178				10,975				1.77	%
Nontaxable securities		94,538				1,237				2.64	%			109,866				1,333				2.45	%
Total securities		1,170,646				12,997				2.24	%			1,358,044				12,308				1.83	%
Federal funds sold and other		152,747				3,253				4.29	%			131,148				813				1.25	%
Total interest-earning assets	$	4,645,070				117,379				5.10	%		$	4,695,571				86,276				3.71	%
Interest-bearing liabilities
Demand, savings and money market deposits	$	2,336,791				18,957				1.64	%		$	2,507,707				2,342				0.19	%
Time deposits		894,446				12,068				2.72	%			630,189				1,563				0.50	%
Total interest-bearing deposits		3,231,237				31,025				1.94	%			3,137,896				3,905				0.25	%
FHLB advances		95,497				1,971				4.16	%			45,299				185				0.82	%
Other borrowings		221,601				5,844				5.32	%			153,995				3,331				4.36	%
Total interest-bearing liabilities	$	3,548,335				38,840				2.21	%		$	3,337,190				7,421				0.45	%
Net interest income					$	78,539											$	78,855
Interest rate spread										2.89	%											3.26	%
Net interest margin (2)										3.41	%											3.39	%
(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
	June 30, 2023												June 30, 2022
	Average Outstanding Balance				Interest Income/ Expense				AverageYield/Rate(3)(4)				Average Outstanding Balance				Interest Income/ Expense				AverageYield/Rate(3)(4)
Interest-earning assets
Loans (1)
Commercial and industrial	$	590,634			$	10,885				7.39	%		$	588,126			$	7,483				5.10	%
Commercial real estate		1,303,520				20,875				6.42	%			1,210,185				14,521				4.81	%
Real estate construction		465,231				8,231				7.10	%			384,317				4,297				4.48	%
Residential real estate		567,297				6,048				4.28	%			597,680				5,206				3.49	%
Agricultural real estate		202,584				3,387				6.71	%			202,038				2,643				5.25	%
Agricultural		101,333				1,704				6.74	%			134,826				1,533				4.56	%
Consumer		106,898				1,618				6.07	%			99,680				1,166				4.69	%
Total loans		3,337,497				52,748				6.34	%			3,216,852				36,849				4.59	%
Securities
Taxable securities		1,068,653				5,813				2.18	%			1,210,828				5,584				1.85	%
Nontaxable securities		87,318				568				2.61	%			108,271				678				2.51	%
Total securities		1,155,971				6,381				2.21	%			1,319,099				6,262				1.90	%
Federal funds sold and other		185,276				2,127				4.61	%			140,016				513				1.47	%
Total interest-earning assets	$	4,678,744				61,256				5.25	%		$	4,675,967				43,624				3.74	%
Interest-bearing liabilities
Demand, savings and money market deposits	$	2,323,685				10,503				1.81	%		$	2,481,602				1,346				0.22	%
Time deposits		903,280				6,701				2.98	%			630,698				837				0.53	%
Total interest-bearing deposits		3,226,965				17,204				2.14	%			3,112,300				2,183				0.28	%
FHLB advances		101,845				952				3.75	%			80,266				176				0.88	%
Other borrowings		283,659				3,671				5.19	%			157,796				1,699				4.32	%
Total interest-bearing liabilities	$	3,612,469				21,827				2.42	%		$	3,350,362				4,058				0.49	%
Net interest income					$	39,429											$	39,566
Interest rate spread										2.83	%											3.25	%
Net interest margin (2)										3.38	%											3.39	%
(1) Average loan balances include nonaccrual loans.
(2) Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets for the period.
(3) Tax exempt income is not included in the above table on a tax-equivalent basis.

TABLE 7. QUARTER-OVER-QUARTER NET INTEREST INCOME ANALYSIS (Unaudited)(Dollars in thousands)

	For the three months ended												For the three months ended
	June 30, 2023												March 31, 2023
	Average Outstanding Balance				Interest Income/ Expense				AverageYield/Rate(3)(4)				Average Outstanding Balance				Interest Income/ Expense				AverageYield/Rate(3)(4)
Interest-earning assets
Loans (1)
Commercial and industrial	$	590,634			$	10,885				7.39	%		$	577,452			$	9,634				6.77	%
Commercial real estate		1,303,520				20,875				6.42	%			1,344,727				20,112				6.07	%
Real estate construction		465,231				8,231				7.10	%			404,016				6,695				6.72	%
Residential real estate		567,297				6,048				4.28	%			570,139				5,802				4.13	%
Agricultural real estate		202,584				3,387				6.71	%			202,901				3,114				6.22	%
Agricultural		101,333				1,704				6.74	%			100,251				1,478				5.98	%
Consumer		106,898				1,618				6.07	%			106,195				1,546				5.91	%
Total loans		3,337,497				52,748				6.34	%			3,305,681				48,381				5.94	%
Securities
Taxable securities		1,068,653				5,813				2.18	%			1,083,645				5,947				2.23	%
Nontaxable securities		87,318				568				2.61	%			101,837				669				2.67	%
Total securities		1,155,971				6,381				2.21	%			1,185,482				6,616				2.26	%
Federal funds sold and other		185,276				2,127				4.61	%			119,856				1,126				3.81	%
Total interest-earning assets	$	4,678,744				61,256				5.25	%		$	4,611,019				56,123				4.94	%
Interest-bearing liabilities
Demand savings and money market deposits	$	2,323,685				10,503				1.81	%		$	2,350,042				8,453				1.46	%
Time deposits		903,280				6,701				2.98	%			885,515				5,368				2.46	%
Total interest-bearing deposits		3,226,965				17,204				2.14	%			3,235,557				13,821				1.73	%
FHLB advances		101,845				952				3.75	%			89,078				1,018				4.64	%
Other borrowings		283,659				3,671				5.19	%			158,854				2,174				5.55	%
Total interest-bearing liabilities	$	3,612,469				21,827				2.42	%		$	3,483,489				17,013				1.98	%
Net interest income					$	39,429											$	39,110
Interest rate spread										2.83	%											2.96	%
Net interest margin (2)										3.38	%											3.44	%
(1) Average loan balances include nonaccrual loans.
(2) Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets for the period.
(3) Tax exempt income is not included in the above table on a tax-equivalent basis.

TABLE 8. NON-GAAP FINANCIAL MEASURES (Unaudited)
(Dollars in thousands, except per share data)
		As of and for the three months ended
		June 30,				March 31,				December 31,				September 30,				June 30,
		2023				2023				2022				2022				2022
Total stockholders' equity		$	418,435			$	425,123			$	410,058			$	395,806			$	428,115
Less: goodwill			53,101				53,101				53,101				53,101				53,101
Less: core deposit intangibles, net			8,760				9,678				10,596				11,598				12,554
Less: mortgage servicing rights, net			126				151				176				201				226
Less: naming rights, net			1,022				1,033				1,044				1,054				1,065
Tangible common equity		$	355,426			$	361,160			$	345,141			$	329,852			$	361,169
Common shares outstanding at period end			15,396,739				15,730,257				15,930,112				16,017,834				16,106,818
Diluted common shares outstanding at period end			15,468,319				15,822,536				16,163,253				16,225,591				16,289,635
Book value per common share		$	27.18			$	27.03			$	25.74			$	24.71			$	26.58
Tangible book value per common share		$	23.08			$	22.96			$	21.67			$	20.59			$	22.42
Tangible book value per diluted common share		$	22.98			$	22.83			$	21.35			$	20.33			$	22.17
Total assets		$	5,094,883			$	5,156,716			$	4,981,651			$	5,000,415			$	5,002,156
Less: goodwill			53,101				53,101				53,101				53,101				53,101
Less: core deposit intangibles, net			8,760				9,678				10,596				11,598				12,554
Less: mortgage servicing rights, net			126				151				176				201				226
Less: naming rights, net			1,022				1,033				1,044				1,054				1,065
Tangible assets		$	5,031,874			$	5,092,753			$	4,916,734			$	4,934,461			$	4,935,210
Total stockholders' equity to total assets			8.21	%			8.24	%			8.23	%			7.92	%			8.56	%
Tangible common equity to tangible assets			7.06	%			7.09	%			7.02	%			6.68	%			7.32	%
Total average stockholders' equity		$	424,862			$	420,500			$	398,270			$	436,191			$	437,483
Less: average intangible assets			63,453				64,447				65,450				66,445				68,978
Average tangible common equity		$	361,409			$	356,053			$	332,820			$	369,746			$	368,505
Net income (loss) allocable to common stockholders		$	11,456			$	12,323			$	11,608			$	15,171			$	15,259
Add: amortization of intangible assets			954				954				961				992				1,148
Less: tax effect of intangible assets amortization			200				200				202				208				241
Adjusted net income (loss) allocable to common stockholders		$	12,210			$	13,077			$	12,367			$	15,955			$	16,166
Return on total average stockholders' equity (ROAE) annualized			10.82	%			11.89	%			11.56	%			13.80	%			13.99	%
Return on average tangible common equity (ROATCE) annualized			13.55	%			14.89	%			14.74	%			17.12	%			17.60	%
Non-interest expense		$	33,130			$	33,229			$	35,248			$	32,236			$	31,436
Less: loss on debt extinguishment			—				—				—				—				—
Less: merger expense			—				—				68				115				88
Adjusted non-interest expense		$	33,130			$	33,229			$	35,180			$	32,121			$	31,348
Net interest income		$	39,429			$	39,110			$	42,031			$	41,944			$	39,566
Non-interest income			6,950				8,600				8,330				8,969				9,637
Less: net gain on acquisition and branch sales			—				—				422				—				540
Less: net gains (losses) from securities transactions			(1,322	)			32				14				(17	)			(32	)
Adjusted non-interest income		$	8,272			$	8,568			$	7,894			$	8,986			$	9,129
Net interest income plus adjusted non-interest income		$	47,701			$	47,678			$	49,925			$	50,930			$	48,695
Non-interest expense to net interest income plus non-interest income			71.43	%			69.65	%			69.99	%			63.32	%			63.89	%
Efficiency ratio			69.45	%			69.69	%			70.47	%			63.07	%			64.38	%
Net income (loss) allocable to common stockholders		$	11,456			$	12,323			$	11,608			$	15,171			$	15,259
Add: income tax provision			1,495				2,524				3,654				3,642				1,684
Add: provision (reversal) of credit losses			298				(366	)			(151	)			(136	)			824
Pre-tax, pre-provision income		$	13,249			$	14,481			$	15,111			$	18,677			$	17,767
Total average assets		$	5,064,912			$	4,994,417			$	4,930,231			$	4,988,755			$	5,067,687
Total average stockholders' equity		$	424,862			$	420,500			$	398,270			$	436,191			$	437,483
Return on average assets (ROAA) annualized			0.91	%			1.00	%			0.93	%			1.21	%			1.21	%
Adjusted return on average assets			1.05	%			1.18	%			1.22	%			1.49	%			1.41	%
Adjusted return on average equity			12.51	%			13.97	%			15.05	%			16.99	%			16.29	%