The
The Company’s third quarter 2023 operating results reflected the following changes from the second quarter of 2023: (1) a one-time
Absent the
“We continue efforts to improve franchise value notwithstanding a challenging economic climate and yield curve inversion. During the third quarter, we decreased special mention, substandard and non-performing loans. The decrease in nonperforming loans helped increase net interest income and increased the negative provision. The allowance for credit losses remained elevated at 1.59% of total loans. Operationally, we continue to control expenses to lessen the impact of net interest margin compression and its impact on our efficiency ratio,” stated
Book value per share was
- Quarterly earnings of
$2.5 million , or$0.24 per diluted share for the quarter endedSeptember 30, 2023 , decreased from the quarter endedJune 30, 2023 , earnings of$3.2 million or$0.31 per diluted share, and decreased from the quarter endedSeptember 30, 2022 , earnings of$4.0 million or$0.38 per diluted share. - Earnings for the nine months ended
September 30, 2023 , were$9.4 million , or$0.89 per diluted share, which is a decrease from$13.1 million , or$1.24 per diluted share, for the same period in the prior year. - Net interest income increased
$0.4 million to$12.1 million for the quarter endedSeptember 30, 2023 , from$11.7 million the previous quarter and decreased$2.3 million from the third quarter of 2022. The increase in net interest income from the second quarter of 2023 is due to$0.4 million recognized from a nonaccrual loan payoff, with positive asset repricing and higher non-interest-bearing checking balances offsetting higher liability costs. - The net interest margin without loan purchase accretion was 2.76% for the quarter ended
September 30, 2023 , compared to 2.69% for the previous quarter and 3.33% for the comparable quarter one year earlier. The impact of the nonaccrual loan payoff of$0.4 million was approximately 10 basis points. - In the third quarter, we recorded a negative provision for credit losses of
$0.3 million due to net recoveries from the payoff of a nonaccrual agricultural loan and the reversal of reserves as a result of the payoff of two larger loans. The favorable impact of improved forecasted general economic conditions from the second quarter offsets the provision for loan growth. The provision was$0.5 million for the preceding quarter and$0.4 million was recorded during the third quarter a year ago. - The effective tax rate increased to 50.5% for the third quarter from 25.5% in the second quarter. “The increase in the tax rate is due to a
Wisconsin budget signedJuly 5, 2023 , effectiveJanuary 1, 2023 , which makes originated loans inWisconsin for business purposes of up to$5.0 million non-taxable. The third quarter reflects three quarters of the benefit, retroactive toJanuary 1, 2023 , reducing income tax expense$0.6 million . This positive impact was more than offset by a one-time$1.8 million expense, related to a reduction in the carrying value of the deferred tax asset, due to the impact of theWisconsin law decreasing the incremental tax rate. The tax rate is assumed to approximate 21% in the fourth quarter.” saidJim Broucek , Executive Vice President, and Chief Financial Officer. - The efficiency ratio was 67% for the quarter ended
September 30, 2023 , compared to 66% for the quarter endedJune 30, 2023 . - Gross loans increased by
$22.6 million during the third quarter endedSeptember 30, 2023 , to$1.45 billion from$1.43 billion atJune 30, 2023 . Gross loans increased$35.7 million or 2.5% fromDecember 31, 2022 , and$71.5 million fromSeptember 30, 2022 , or 5.2%. - Nonperforming assets were
$15.5 million atSeptember 30, 2023 , compared to$17.4 million atJune 30, 2023 . The decrease is due to 1) the payoff of a nonaccrual agricultural loan; 2) payments on nonaccrual loans and 3) modest new nonaccrual additions and modest additions of ninety day plus delinquent loans still accruing. - Substandard loans decreased by
$3.0 million to$16.2 million atSeptember 30, 2023 , compared to$19.2 million atJune 30, 2023 . The decrease was due to 1) the payoff of a long-term agricultural nonaccrual loan, 2) other net reductions in non-performing loans and 3) the payoff of another accruing agricultural real estate loan. - Our office loan portfolio is
$40.9 million and consists of 74 loans. There are no criticized loans in this portfolio and there have been no charge-offs in the trailing twelve months. - Stockholders’ equity as a percent of total assets was 9.03% at
September 30, 2023 , compared to 9.05% atJune 30, 2023 . Tangible common equity (“TCE”) as a percent of tangible assets (non-GAAP)1 was 7.34% atSeptember 30, 2023 , compared to 7.35% atJune 30, 2023 . The positive impact of net income and amortization of intangibles was largely offset by an increase in the unrealized losses in the available for sale (AFS) investment portfolio. - At
September 30, 2023 , our deposit portfolio composition was 54% consumer, 29% commercial, 11% public and 6% brokered deposits compared to 54% consumer, 27% commercial, 12% public and 7% brokered deposits atJune 30, 2023 . - Uninsured and uncollateralized deposits were
$277.9 million , or 19% of total deposits, atSeptember 30, 2023 , and$268.1 million , or 18% of total deposits, atJune 30, 2023 . Uninsured deposits alone atSeptember 30, 2023 , were$412.9 million , or 28% of total deposits, and$413.0 million , or 28% of total deposits atJune 30, 2023 . - On-balance sheet liquidity, collateralized new borrowing capacity and uncommitted federal funds borrowing availability was 221% of uninsured and uncollateralized deposits at
September 30, 2023 , and 228% atJune 30, 2023 . - On-balance sheet liquidity, collateralized new borrowing capacity and uncommitted federal funds borrowing availability was
$604.9 million atSeptember 30, 2023 , and$611.1 million atJune 30, 2023 .
Balance Sheet and Asset Quality
Total assets increased modestly by
Cash and cash equivalents decreased
Securities available for sale decreased
Securities held to maturity decreased
Gross loans increased by
The allowance for credit losses on loans decreased modestly by
Allowance for Credit Losses (“ACL”) - Loans Percentage
(in thousands, except ratios)
Loans, end of period | $ | 1,447,529 | $ | 1,424,988 | $ | 1,411,784 | $ | 1,375,876 | |||||||
Allowance for credit losses - Loans | $ | 22,973 | $ | 23,164 | |||||||||||
Allowance for loan losses “ALL” | $ | 17,939 | $ | 17,217 | |||||||||||
ACL - Loans as a percentage of loans, end of period | 1.59 | % | 1.63 | % | |||||||||||
ALL as a percentage of loans, end of period | 1.27 | % | 1.25 | % |
Allowance for Credit Losses - Unfunded Commitments:
(in thousands)
In addition to the ACL - Loans, the Company has established an ACL - Unfunded Commitments of
ACL - Unfunded commitments - beginning of period | $ | 1,544 | $ | — | $ | — | $ | — | |||
Cumulative effect of ASU 2016-13 adoption | — | — | 1,537 | — | |||||||
Additions (reductions) to ACL - Unfunded commitments via provision for credit losses charged to operations | 27 | — | 34 | — | |||||||
ACL - Unfunded commitments - end of period | $ | 1,571 | $ | — | $ | 1,571 | $ | — |
Nonperforming assets decreased
(in thousands) | ||||||||||||||
Special mention loan balances | $ | 20,043 | $ | 20,507 | $ | 6,636 | $ | 12,170 | $ | 20,178 | ||||
Substandard loan balances | 16,171 | 19,203 | 15,439 | 17,319 | 20,227 | |||||||||
Criticized loans, end of period | $ | 36,214 | $ | 39,710 | $ | 22,075 | $ | 29,489 | $ | 40,405 |
Special mention loans decreased
Substandard loans decreased by
Total deposits increased
Deposit Portfolio Composition
(in thousands)
2023 | 2023 | 2023 | 2022 | ||||||||
Consumer deposits | $ | 794,970 | $ | 790,404 | $ | 786,614 | $ | 805,598 | |||
Commercial deposits | 429,358 | 401,079 | 391,534 | 405,733 | |||||||
Public deposits | 163,734 | 175,869 | 194,683 | 173,548 | |||||||
Brokered deposits | 85,173 | 97,330 | 63,962 | 39,841 | |||||||
Total deposits | $ | 1,473,235 | $ | 1,464,682 | $ | 1,436,793 | $ | 1,424,720 |
Deposit Composition
(in thousands)
2023 | 2023 | 2022 | 2022 | ||||||||
Non-interest bearing demand deposits | $ | 275,790 | $ | 261,876 | $ | 284,722 | $ | 285,670 | |||
Interest bearing demand deposits | 336,962 | 358,226 | 371,210 | 394,924 | |||||||
Savings accounts | 183,702 | 206,380 | 220,019 | 236,107 | |||||||
Money market accounts | 312,689 | 288,934 | 323,435 | 328,544 | |||||||
Certificate accounts | 364,092 | 349,266 | 225,334 | 189,123 | |||||||
Total deposits | $ | 1,473,235 | $ | 1,464,682 | $ | 1,424,720 | $ | 1,434,368 |
The Company did not repurchase any shares of the Company’s common stock in the third quarter of 2023. As of
Review of Operations
Net interest income increased to
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 | $ | 12,121 | 2.79 | % | $ | 11,686 | 2.72 | % | $ | 12,795 | 3.02 | % | $ | 14,478 | 3.40 | % | $ | 14,457 | 3.43 | % | ||||||||||||||
Less non-accretable difference realized as interest from payoff of purchased credit impaired (“PCI”) loans | — | — | % | — | — | % | — | — | % | (109 | ) | (0.02 | )% | (34 | ) | (0.01 | )% | |||||||||||||||||
Less accelerated accretion from payoff of certain PCI loans with transferred non-accretable differences | — | — | % | — | — | % | — | — | % | (32 | ) | (0.01 | )% | (117 | ) | (0.06 | )% | |||||||||||||||||
Less accretion for PCD loans | (39 | ) | (0.01 | )% | (39 | ) | (0.01 | )% | (37 | ) | (0.01 | )% | — | — | % | — | — | % | ||||||||||||||||
Less scheduled accretion interest | (77 | ) | (0.02 | )% | (85 | ) | (0.02 | )% | (84 | ) | (0.02 | )% | (169 | ) | (0.04 | )% | (247 | ) | (0.03 | )% | ||||||||||||||
Without loan purchase accretion | $ | 12,005 | 2.76 | % | $ | 11,562 | 2.69 | % | $ | 12,674 | 2.99 | % | $ | 14,168 | 3.33 | % | $ | 14,059 | 3.33 | % |
The third quarter provision for credit losses was a negative
Non-interest income decreased to
Total non-interest expense increased
Provision for income taxes increased to
These financial results are preliminary until 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)
(unaudited) | (unaudited) | (audited) | (unaudited) | ||||||||||||
Assets | |||||||||||||||
Cash and cash equivalents | $ | 32,532 | $ | 42,969 | $ | 35,363 | $ | 29,411 | |||||||
Other interest bearing deposits | — | — | 249 | 368 | |||||||||||
Securities available for sale “AFS” | 153,414 | 161,135 | 165,991 | 167,764 | |||||||||||
Securities held to maturity “HTM” | 92,336 | 93,800 | 96,379 | 97,610 | |||||||||||
Equity investments | 2,433 | 2,299 | 1,794 | 1,461 | |||||||||||
Other investments | 15,109 | 16,347 | 15,834 | 15,907 | |||||||||||
Loans receivable | 1,447,529 | 1,424,988 | 1,411,784 | 1,375,876 | |||||||||||
Allowance for credit losses | (22,973 | ) | (23,164 | ) | (17,939 | ) | (17,217 | ) | |||||||
Loans receivable, net | 1,424,556 | 1,401,824 | 1,393,845 | 1,358,659 | |||||||||||
Loans held for sale | 2,737 | 2,394 | — | 666 | |||||||||||
Mortgage servicing rights, net | 3,944 | 4,008 | 4,262 | 4,371 | |||||||||||
Office properties and equipment, net | 19,465 | 19,827 | 20,493 | 21,427 | |||||||||||
Accrued interest receivable | 5,936 | 5,702 | 5,285 | 4,716 | |||||||||||
Intangible assets | 1,873 | 2,052 | 2,449 | 2,701 | |||||||||||
31,498 | 31,498 | 31,498 | 31,498 | ||||||||||||
Foreclosed and repossessed assets, net | 1,046 | 1,199 | 1,271 | 1,584 | |||||||||||
Bank owned life insurance (“BOLI”) | 25,467 | 25,290 | 24,954 | 24,784 | |||||||||||
Other assets | 18,741 | 19,493 | 16,719 | 17,275 | |||||||||||
TOTAL ASSETS | $ | 1,831,087 | $ | 1,829,837 | $ | 1,816,386 | $ | 1,780,202 | |||||||
Liabilities and Stockholders’ Equity | |||||||||||||||
Liabilities: | |||||||||||||||
Deposits | $ | 1,473,235 | $ | 1,464,682 | $ | 1,424,720 | $ | 1,434,368 | |||||||
114,530 | 122,530 | 142,530 | 102,530 | ||||||||||||
Other borrowings | 67,407 | 67,357 | 72,409 | 72,351 | |||||||||||
Other liabilities | 10,513 | 9,710 | 9,639 | 7,634 | |||||||||||
Total liabilities | 1,665,685 | 1,664,279 | 1,649,298 | 1,616,883 | |||||||||||
Stockholders’ equity: | |||||||||||||||
Common stock— | 105 | 105 | 104 | 105 | |||||||||||
Additional paid-in capital | 119,612 | 119,404 | 119,240 | 119,638 | |||||||||||
Retained earnings | 67,424 | 64,926 | 65,400 | 60,833 | |||||||||||
Accumulated other comprehensive loss | (21,739 | ) | (18,877 | ) | (17,656 | ) | (17,257 | ) | |||||||
Total stockholders’ equity | 165,402 | 165,558 | 167,088 | 163,319 | |||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 1,831,087 | $ | 1,829,837 | $ | 1,816,386 | $ | 1,780,202 |
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 | $ | 19,083 | $ | 17,960 | $ | 15,937 | $ | 54,169 | $ | 44,597 | ||||||||
Interest on investments | 2,689 | 2,817 | 2,022 | 8,053 | 5,441 | |||||||||||||
Total interest and dividend income | 21,772 | 20,777 | 17,959 | 62,222 | 50,038 | |||||||||||||
Interest expense: | ||||||||||||||||||
Interest on deposits | 7,388 | 6,162 | 1,681 | 17,898 | 3,734 | |||||||||||||
Interest on FHLB borrowed funds | 1,210 | 1,892 | 568 | 4,595 | 1,176 | |||||||||||||
Interest on other borrowed funds | 1,053 | 1,037 | 1,253 | 3,127 | 3,237 | |||||||||||||
Total interest expense | 9,651 | 9,091 | 3,502 | 25,620 | 8,147 | |||||||||||||
Net interest income before provision for credit losses | 12,121 | 11,686 | 14,457 | 36,602 | 41,891 | |||||||||||||
Provision for credit losses | (325 | ) | 450 | 375 | 175 | 775 | ||||||||||||
Net interest income after provision for credit losses | 12,446 | 11,236 | 14,082 | 36,427 | 41,116 | |||||||||||||
Non-interest income: | ||||||||||||||||||
Service charges on deposit accounts | 491 | 488 | 535 | 1,464 | 1,505 | |||||||||||||
Interchange income | 601 | 591 | 597 | 1,743 | 1,760 | |||||||||||||
Loan servicing income | 611 | 499 | 611 | 1,679 | 1,912 | |||||||||||||
Gain on sale of loans | 299 | 904 | 194 | 1,501 | 1,330 | |||||||||||||
Loan fees and service charges | 140 | 88 | 267 | 308 | 500 | |||||||||||||
Net gains (losses) on investment securities | 116 | 10 | (55 | ) | 182 | (167 | ) | |||||||||||
Other | 307 | 333 | 323 | 893 | 717 | |||||||||||||
Total non-interest income | 2,565 | 2,913 | 2,472 | 7,770 | 7,557 | |||||||||||||
Non-interest expense: | ||||||||||||||||||
Compensation and related benefits | 5,293 | 5,336 | 5,900 | 15,967 | 16,887 | |||||||||||||
Occupancy | 1,335 | 1,359 | 1,429 | 4,117 | 4,137 | |||||||||||||
Data processing | 1,536 | 1,444 | 1,382 | 4,440 | 4,098 | |||||||||||||
Amortization of intangible assets | 179 | 193 | 399 | 576 | 1,197 | |||||||||||||
Mortgage servicing rights expense, net | 150 | 148 | 197 | 456 | 65 | |||||||||||||
Advertising, marketing and public relations | 185 | 151 | 300 | 472 | 762 | |||||||||||||
204 | 203 | 119 | 608 | 352 | ||||||||||||||
Professional services | 342 | 306 | 382 | 1,153 | 1,152 | |||||||||||||
Losses (gains) on repossessed assets, net | 100 | (9 | ) | (8 | ) | 62 | (17 | ) | ||||||||||
New market tax credit depletion | — | — | 163 | — | 488 | |||||||||||||
Other | 645 | 715 | 1,014 | 2,085 | 2,286 | |||||||||||||
Total non-interest expense | 9,969 | 9,846 | 11,277 | 29,936 | 31,407 | |||||||||||||
Income before provision for income taxes | 5,042 | 4,303 | 5,277 | 14,261 | 17,266 | |||||||||||||
Provision for income taxes | 2,544 | 1,097 | 1,284 | 4,895 | 4,201 | |||||||||||||
Net income attributable to common stockholders | $ | 2,498 | $ | 3,206 | $ | 3,993 | $ | 9,366 | $ | 13,065 | ||||||||
Per share information: | ||||||||||||||||||
Basic earnings | $ | 0.24 | $ | 0.31 | $ | 0.38 | $ | 0.89 | $ | 1.24 | ||||||||
Diluted earnings | $ | 0.24 | $ | 0.31 | $ | 0.38 | $ | 0.89 | $ | 1.24 | ||||||||
Cash dividends paid | $ | — | $ | — | $ | — | $ | 0.29 | $ | 0.26 | ||||||||
Book value per share at end of period | $ | 15.80 | $ | 15.81 | $ | 15.59 | $ | 15.80 | $ | 15.59 | ||||||||
Tangible book value per share at end of period (non-GAAP) | $ | 12.61 | $ | 12.61 | $ | 12.32 | $ | 12.61 | $ | 12.32 |
Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP)
(in thousands, except per share data)
Three Months Ended | Nine Months Ended | |||||||||||||
2023 | 2023 | 2022 | 2023 | 2022 | ||||||||||
GAAP pretax income | $ | 5,042 | $ | 4,303 | $ | 5,277 | $ | 14,261 | $ | 17,266 | ||||
Branch closure costs (1) | — | — | 302 | — | 335 | |||||||||
Pretax income as adjusted (2) | $ | 5,042 | $ | 4,303 | $ | 5,579 | $ | 14,261 | $ | 17,601 | ||||
Provision for income tax on net income as adjusted (3) | 2,544 | 1,097 | 1,357 | 4,895 | 4,282 | |||||||||
Net income as adjusted (non-GAAP) (2) | $ | 2,498 | $ | 3,206 | $ | 4,222 | $ | 9,366 | $ | 13,319 | ||||
GAAP diluted earnings per share, net of tax | $ | 0.24 | $ | 0.31 | $ | 0.38 | $ | 0.89 | $ | 1.24 | ||||
Branch closure costs, net of tax | — | — | 0.02 | — | 0.02 | |||||||||
Diluted earnings per share, as adjusted, net of tax (non-GAAP) | $ | 0.24 | $ | 0.31 | $ | 0.40 | $ | 0.89 | $ | 1.26 | ||||
Average diluted shares outstanding | 10,470,098 | 10,477,733 | 10,519,079 | 10,474,685 | 10,533,414 |
(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) Pretax income as adjusted and 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.
(3) 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)
Total Loans: | |||||||||||||||
Commercial/Agricultural real estate: | |||||||||||||||
Commercial real estate | $ | 750,282 | $ | 732,435 | $ | 725,971 | $ | 701,688 | |||||||
Agricultural real estate | 84,558 | 87,198 | 87,908 | 81,707 | |||||||||||
Multi-family real estate | 219,193 | 208,211 | 208,908 | 197,672 | |||||||||||
Construction and land development | 109,799 | 105,625 | 102,492 | 117,850 | |||||||||||
C&I/Agricultural operating: | |||||||||||||||
Commercial and industrial | 121,033 | 133,763 | 136,013 | 134,815 | |||||||||||
Agricultural operating | 24,552 | 24,358 | 28,806 | 26,033 | |||||||||||
Residential mortgage: | |||||||||||||||
Residential mortgage | 125,939 | 119,724 | 105,389 | 98,733 | |||||||||||
Purchased HELOC loans | 2,881 | 3,216 | 3,262 | 3,357 | |||||||||||
Consumer installment: | |||||||||||||||
Originated indirect paper | 7,175 | 8,189 | 10,236 | 11,234 | |||||||||||
Other consumer | 6,440 | 6,487 | 7,150 | 7,310 | |||||||||||
Gross loans | $ | 1,451,852 | $ | 1,429,206 | $ | 1,416,135 | $ | 1,380,399 | |||||||
Unearned net deferred fees and costs and loans in process | (3,048 | ) | (2,827 | ) | (2,585 | ) | (2,447 | ) | |||||||
Unamortized discount on acquired loans | (1,275 | ) | (1,391 | ) | (1,766 | ) | (2,076 | ) | |||||||
Total loans receivable | $ | 1,447,529 | $ | 1,424,988 | $ | 1,411,784 | $ | 1,375,876 |
Nonperforming Assets
(in thousands, except ratios)
Nonperforming assets: | |||||||||||||||
Nonaccrual loans | |||||||||||||||
Commercial real estate | $ | 10,570 | $ | 11,359 | $ | 5,736 | $ | 5,848 | |||||||
Agricultural real estate | 469 | 1,712 | 2,742 | 2,729 | |||||||||||
Construction and land development | 94 | 94 | — | 43 | |||||||||||
Commercial and industrial (“C&I”) | — | 4 | 552 | 188 | |||||||||||
Agricultural operating | 1,373 | 1,436 | 890 | 668 | |||||||||||
Residential mortgage | 923 | 1,029 | 1,253 | 1,246 | |||||||||||
Consumer installment | 27 | 29 | 31 | 50 | |||||||||||
Total nonaccrual loans | $ | 13,456 | $ | 15,663 | $ | 11,204 | $ | 10,772 | |||||||
Accruing loans past due 90 days or more | 971 | 492 | 246 | 248 | |||||||||||
Total nonperforming loans (“NPLs”) | 14,427 | 16,155 | 11,450 | 11,020 | |||||||||||
Foreclosed and repossessed assets, net | 1,046 | 1,199 | 1,271 | 1,584 | |||||||||||
Total nonperforming assets (“NPAs”) | $ | 15,473 | $ | 17,354 | $ | 12,721 | $ | 12,604 | |||||||
Loans, end of period | $ | 1,447,529 | $ | 1,424,988 | $ | 1,411,784 | $ | 1,375,876 | |||||||
Total assets, end of period | $ | 1,831,087 | $ | 1,829,837 | $ | 1,816,386 | $ | 1,780,202 | |||||||
Ratios: | |||||||||||||||
NPLs to total loans | 1.00 | % | 1.13 | % | 0.81 | % | 0.80 | % | |||||||
NPAs to total assets | 0.85 | % | 0.95 | % | 0.70 | % | 0.71 | % |
(1) Loan balances are at amortized cost.
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 | $ | 21,298 | $ | 302 | 5.63 | % | $ | 24,779 | $ | 327 | 5.29 | % | $ | 11,043 | $ | 60 | 2.16 | % | ||||||||
Loans receivable | 1,435,284 | 19,083 | 5.27 | % | 1,414,925 | 17,960 | 5.09 | % | 1,370,897 | 15,937 | 4.61 | % | ||||||||||||||
Interest bearing deposits | — | — | — | % | 5 | — | — | % | 1,079 | 7 | 2.57 | % | ||||||||||||||
Investment securities (1) | 252,226 | 2,119 | 3.33 | % | 264,579 | 2,210 | 3.34 | % | 274,868 | 1,768 | 2.57 | % | ||||||||||||||
Other investments | 15,511 | 268 | 6.85 | % | 17,491 | 280 | 6.42 | % | 14,910 | 187 | 4.98 | % | ||||||||||||||
Total interest earning assets (1) | $ | 1,724,319 | $ | 21,772 | 5.01 | % | $ | 1,721,779 | $ | 20,777 | 4.84 | % | $ | 1,672,797 | $ | 17,959 | 4.26 | % | ||||||||
Average interest bearing liabilities: | ||||||||||||||||||||||||||
Savings accounts | $ | 199,279 | $ | 328 | 0.65 | % | $ | 209,277 | $ | 393 | 0.75 | % | $ | 238,095 | $ | 211 | 0.35 | % | ||||||||
Demand deposits | 354,073 | 1,863 | 2.09 | % | 366,037 | 1,752 | 1.92 | % | 413,033 | 575 | 0.55 | % | ||||||||||||||
Money market accounts | 298,098 | 1,889 | 2.51 | % | 299,201 | 1,774 | 2.38 | % | 331,469 | 519 | 0.62 | % | ||||||||||||||
CD’s | 358,238 | 3,308 | 3.66 | % | 293,262 | 2,243 | 3.07 | % | 160,960 | 376 | 0.93 | % | ||||||||||||||
Total deposits | $ | 1,209,688 | $ | 7,388 | 2.42 | % | $ | 1,167,777 | $ | 6,162 | 2.12 | % | $ | 1,143,557 | $ | 1,681 | 0.58 | % | ||||||||
FHLB advances and other borrowings | 182,967 | 2,263 | 4.91 | % | 238,776 | 2,929 | 4.92 | % | 192,338 | 1,821 | 3.76 | % | ||||||||||||||
Total interest bearing liabilities | $ | 1,392,655 | $ | 9,651 | 2.75 | % | $ | 1,406,553 | $ | 9,091 | 2.59 | % | $ | 1,335,895 | $ | 3,502 | 1.04 | % | ||||||||
Net interest income | $ | 12,121 | $ | 11,686 | $ | 14,457 | ||||||||||||||||||||
Interest rate spread | 2.26 | % | 2.25 | % | 3.22 | % | ||||||||||||||||||||
Net interest margin (1) | 2.79 | % | 2.72 | % | 3.43 | % | ||||||||||||||||||||
Average interest earning assets to average interest bearing liabilities | 1.24 | 1.22 | 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 | $ | 19,066 | $ | 768 | 5.39 | % | $ | 23,727 | $ | 116 | 0.65 | % | |||||
Loans receivable | 1,420,423 | 54,169 | 5.10 | % | 1,334,811 | 44,597 | 4.47 | % | |||||||||
Interest bearing deposits | 84 | 1 | 1.59 | % | 1,365 | 22 | 2.15 | % | |||||||||
Investment securities (1) | 261,507 | 6,505 | 3.33 | % | 282,771 | 4,777 | 3.38 | % | |||||||||
Other investments | 16,447 | 779 | 6.33 | % | 15,044 | 526 | 4.67 | % | |||||||||
Total interest earning assets (1) | $ | 1,717,527 | $ | 62,222 | 4.84 | % | $ | 1,657,718 | $ | 50,038 | 4.04 | % | |||||
Average interest bearing liabilities: | |||||||||||||||||
Savings accounts | $ | 208,446 | $ | 1,103 | 0.71 | % | $ | 237,677 | $ | 442 | 0.25 | % | |||||
Demand deposits | 370,235 | 5,047 | 1.82 | % | 411,471 | 1,045 | 0.34 | % | |||||||||
Money market accounts | 298,957 | 4,759 | 2.13 | % | 318,246 | 1,011 | 0.42 | % | |||||||||
CD’s | 300,279 | 6,989 | 3.11 | % | 169,804 | 1,236 | 0.97 | % | |||||||||
Total deposits | $ | 1,177,917 | $ | 17,898 | 2.03 | % | $ | 1,137,198 | $ | 3,734 | 0.44 | % | |||||
FHLB advances and other borrowings | 214,034 | 7,722 | 4.82 | % | 181,598 | 4,413 | 3.25 | % | |||||||||
Total interest bearing liabilities | $ | 1,391,951 | $ | 25,620 | 2.46 | % | $ | 1,318,796 | $ | 8,147 | 0.83 | % | |||||
Net interest income | $ | 36,602 | $ | 41,891 | |||||||||||||
Interest rate spread | 2.38 | % | 3.21 | % | |||||||||||||
Net interest margin (1) | 2.85 | % | 3.38 | % | |||||||||||||
Average interest earning assets to average interest bearing liabilities | 1.23 | 1.26 |
(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
Key Financial Metric Ratios:
Three Months Ended | Nine Months Ended | |||||||||||||
2023 | 2023 | 2022 | 2023 | 2022 | ||||||||||
Ratios based on net income: | ||||||||||||||
Return on average assets (annualized) | 0.54 | % | 0.70 | % | 0.89 | % | 0.68 | % | 0.99 | % | ||||
Return on average equity (annualized) | 5.97 | % | 7.81 | % | 9.57 | % | 7.59 | % | 10.51 | % | ||||
Return on average tangible common equity4 (annualized) | 7.74 | % | 10.26 | % | 12.99 | % | 9.91 | % | 14.22 | % | ||||
Efficiency ratio | 67 | % | 66 | % | 64 | % | 66 | % | 61 | % | ||||
Net interest margin with loan purchase accretion | 2.79 | % | 2.72 | % | 3.43 | % | 2.85 | % | 3.38 | % | ||||
Net interest margin without loan purchase accretion | 2.76 | % | 2.69 | % | 3.33 | % | 2.82 | % | 3.27 | % | ||||
Ratios based on net income as adjusted (non-GAAP) | ||||||||||||||
Return on average assets as adjusted2 (annualized) | 0.54 | % | 0.70 | % | 0.94 | % | 0.68 | % | 1.01 | % | ||||
Return on average equity as adjusted3 (annualized) | 5.97 | % | 7.81 | % | 10.12 | % | 7.59 | % | 10.71 | % |
Reconciliation of Return on Average Assets
(in thousands, except ratios)
Three Months Ended | Nine Months Ended | ||||||||||||||||||
2023 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||
GAAP earnings after income taxes | $ | 2,498 | $ | 3,206 | $ | 3,993 | $ | 9,366 | $ | 13,065 | |||||||||
Net income as adjusted after income taxes (non-GAAP) (1) | $ | 2,498 | $ | 3,206 | $ | 4,221 | $ | 9,366 | $ | 13,318 | |||||||||
Average assets | $ | 1,836,775 | $ | 1,844,196 | $ | 1,780,942 | $ | 1,832,832 | $ | 1,764,321 | |||||||||
Return on average assets (annualized) | 0.54 | % | 0.70 | % | 0.89 | % | 0.68 | % | 0.99 | % | |||||||||
Return on average assets as adjusted (non-GAAP) (annualized) | 0.54 | % | 0.70 | % | 0.94 | % | 0.68 | % | 1.01 | % |
(1) See Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP)
Reconciliation of Return on Average Equity
(in thousands, except ratios)
Three Months Ended | Nine Months Ended | ||||||||||||||||||
2023 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||
GAAP earnings after income taxes | $ | 2,498 | $ | 3,206 | $ | 3,993 | $ | 9,366 | $ | 13,065 | |||||||||
Net income as adjusted after income taxes (non-GAAP) (1) | $ | 2,498 | $ | 3,206 | $ | 4,221 | $ | 9,366 | $ | 13,318 | |||||||||
Average equity | $ | 166,131 | $ | 164,661 | $ | 165,528 | $ | 165,075 | $ | 166,181 | |||||||||
Return on average equity (annualized) | 5.97 | % | 7.81 | % | 9.57 | % | 7.59 | % | 10.51 | % | |||||||||
Return on average equity as adjusted (non-GAAP) (annualized) | 5.97 | % | 7.81 | % | 10.12 | % | 7.59 | % | 10.71 | % |
(1) See Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP)
Reconciliation of Efficiency Ratio
(in thousands, except ratios)
Three Months Ended | Nine Months Ended | ||||||||||||||||||
2023 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||
Non-interest expense (GAAP) | $ | 9,969 | $ | 9,846 | $ | 11,277 | $ | 29,936 | $ | 31,407 | |||||||||
Less amortization of intangibles | (179 | ) | (193 | ) | (399 | ) | (576 | ) | (1,197 | ) | |||||||||
Efficiency ratio numerator (GAAP) | $ | 9,790 | $ | 9,653 | $ | 10,878 | $ | 29,360 | $ | 30,210 | |||||||||
Non-interest income | $ | 2,565 | $ | 2,913 | $ | 2,472 | $ | 7,770 | $ | 7,557 | |||||||||
(Gain) loss on investment securities | (116 | ) | (10 | ) | 55 | (182 | ) | 167 | |||||||||||
Net interest margin | 12,121 | 11,686 | 14,457 | 36,602 | 41,891 | ||||||||||||||
Efficiency ratio denominator (GAAP) | $ | 14,570 | $ | 14,589 | $ | 16,984 | $ | 44,190 | $ | 49,615 | |||||||||
Efficiency ratio (GAAP) | 67 | % | 66 | % | 64 | % | 66 | % | 61 | % |
Reconciliation of tangible book value per share (non-GAAP)
(in thousands, except per share data)
Tangible book value per share at end of period | 2023 | 2023 | 2022 | 2022 | |||||||||||
Total stockholders’ equity | $ | 165,402 | $ | 165,558 | $ | 167,088 | $ | 163,319 | |||||||
Less: | (31,498 | ) | (31,498 | ) | (31,498 | ) | (31,498 | ) | |||||||
Less: Intangible assets | (1,873 | ) | (2,052 | ) | (2,449 | ) | (2,701 | ) | |||||||
Tangible common equity (non-GAAP) | $ | 132,031 | $ | 132,008 | $ | 133,141 | $ | 129,120 | |||||||
Ending common shares outstanding | 10,468,091 | 10,470,175 | 10,425,119 | 10,478,210 | |||||||||||
Book value per share | $ | 15.80 | $ | 15.81 | $ | 16.03 | $ | 15.59 | |||||||
Tangible book value per share (non-GAAP) | $ | 12.61 | $ | 12.61 | $ | 12.77 | $ | 12.32 |
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 | 2023 | 2023 | 2022 | 2022 | |||||||||||
Total stockholders’ equity | $ | 165,402 | $ | 165,558 | $ | 167,088 | $ | 163,319 | |||||||
Less: | (31,498 | ) | (31,498 | ) | (31,498 | ) | (31,498 | ) | |||||||
Less: Intangible assets | (1,873 | ) | (2,052 | ) | (2,449 | ) | (2,701 | ) | |||||||
Tangible common equity (non-GAAP) | $ | 132,031 | $ | 132,008 | $ | 133,141 | $ | 129,120 | |||||||
Total Assets | $ | 1,831,087 | $ | 1,829,837 | $ | 1,816,386 | $ | 1,780,202 | |||||||
Less: | (31,498 | ) | (31,498 | ) | (31,498 | ) | (31,498 | ) | |||||||
Less: Intangible assets | (1,873 | ) | (2,052 | ) | (2,449 | ) | (2,701 | ) | |||||||
Tangible Assets (non-GAAP) | $ | 1,797,716 | $ | 1,796,287 | $ | 1,782,439 | $ | 1,746,003 | |||||||
Total stockholders’ equity to total assets ratio | 9.03 | % | 9.05 | % | 9.20 | % | 9.17 | % | |||||||
Tangible common equity as a percent of tangible assets (non-GAAP) | 7.34 | % | 7.35 | % | 7.47 | % | 7.40 | % |
Reconciliation of Return on Average Tangible Common Equity (non-GAAP)
(in thousands, except ratios)
Three Months Ended | Nine Months Ended | ||||||||||||||||||
2023 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||
Total stockholders’ equity | $ | 165,402 | $ | 165,558 | $ | 163,319 | $ | 165,402 | $ | 163,319 | |||||||||
Less: | (31,498 | ) | (31,498 | ) | (31,498 | ) | (31,498 | ) | (31,498 | ) | |||||||||
Less: Intangible assets | (1,873 | ) | (2,052 | ) | (2,701 | ) | (1,873 | ) | (2,701 | ) | |||||||||
Tangible common equity (non-GAAP) | $ | 132,031 | 132,008 | $ | 129,120 | $ | 132,031 | $ | 129,120 | ||||||||||
Average tangible common equity (non-GAAP) | $ | 132,671 | $ | 131,016 | $ | 131,130 | $ | 131,425 | $ | 131,383 | |||||||||
GAAP earnings after income taxes | 2,498 | 3,206 | 3,993 | 9,366 | 13,065 | ||||||||||||||
Amortization of intangible assets, net of tax | 89 | 144 | 302 | 378 | 906 | ||||||||||||||
Tangible net income | $ | 2,587 | $ | 3,350 | $ | 4,295 | $ | 9,744 | $ | 13,971 | |||||||||
Return on average tangible common equity (annualized) | 7.74 | % | 10.26 | % | 12.99 | % | 9.91 | % | 14.22 | % |
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:
2023 GlobeNewswire, Inc., source