First Quarter 2023 Financial Highlights
Quarter Ended | ||||
Net Income (in thousands) | $ | 7,844 | ||
Return on Average Equity | 14.77 | % | ||
Return on Average Assets | 0.88 | % | ||
Efficiency ratio (a non-GAAP measure) | 55.34 | % | ||
Nonperforming assets to total assets | 0.01 | % |
First Quarter 2023 Compared to Fourth Quarter 2022 Overview
- Loans increased
$13.3 million in the first quarter of 2023, or 2.0 percent annualized. - No provision for credit losses was recorded in either the first quarter of 2023 or the fourth quarter of 2022.
- The allowance for credit losses to total loans was 1.01 percent at
March 31, 2023 , compared to 0.93 percent atDecember 31, 2022 . The increase in the allowance ratio was due to the adoption of ASU 2016-13, which resulted in a$2.5 million increase to the allowance for credit losses. This adoption also resulted in establishing an allowance for unfunded commitments of$2.3 million which is included in other liabilities, a$3.6 million decrease to retained earnings and$1.2 million increase in deferred tax assets. - There were no loans greater than 30 days past due at
March 31, 2023 , which was the seventh consecutive quarter in which no loans were greater than 30 days past due. Nonaccrual loans atMarch 31, 2023 , consisted of one loan with a balance of$316 thousand . - Deposits decreased
$82.0 million in the first quarter of 2023. Included in this decrease was a decrease in brokered deposits of$38.5 million . Brokered deposits totaled$234.2 million atMarch 31, 2023 , compared to$272.7 million atDecember 31, 2022 . - The efficiency ratio (a non-GAAP measure) was 55.34 percent for the first quarter of 2023, compared to 50.42 percent for the fourth quarter of 2022. The increase in the efficiency ratio is primarily the result of the decline in tax equivalent net interest income and an increase in compensation and employee benefits.
- Net interest margin, on a fully tax-equivalent basis (a non-GAAP measure), was 2.23 percent for the first quarter of 2023, compared to 2.49 percent for the fourth quarter of 2022. Net interest income for the first quarter of 2023 was
$18.7 million , compared to$20.7 million for the fourth quarter of 2022. The rising cost of deposits and borrowed funds and the change in mix of liabilities has increased interest expense faster than the increase in interest income from loan repricing and loan originations. - The tangible common equity ratio was 5.99 percent at
March 31, 2023 , an increase of 15 basis points compared to 5.84 percent atDecember 31, 2022 , due to an increase in the market value of the securities portfolio, which decreased the accumulated other comprehensive loss.
First Quarter 2023 Compared to First Quarter 2022 Overview
- Loans increased
$270.8 million atMarch 31, 2023 , or 10.9 percent, compared toMarch 31, 2022 . - Deposits decreased
$292.9 million atMarch 31, 2023 , compared toMarch 31, 2022 . Included in deposits were brokered deposits totaling$234.2 million atMarch 31, 2023 , compared to$116.5 million atMarch 31, 2022 . The decline in deposits was primarily attributable to customers using their own liquidity to fund business transactions, instead of incurring debt, and customers seeking higher yielding investment options for excess deposits accumulated over the past couple of years. During the second quarter of 2022, a large corporate customer completed a significant business transaction that was funded by the customer’s deposits held atWest Bank , accounting for a significant portion of the decrease in deposits. - Borrowed funds increased to
$580.2 million atMarch 31, 2023 , compared to$197.0 million atMarch 31, 2022 . The increase included$58.9 million in subordinated notes that were issued inJune 2022 ,$95.0 million in FHLB Advances associated with long-term interest rate swaps and$229.3 million in federal funds purchased and other short-term borrowings. - The efficiency ratio (a non-GAAP measure) was 55.34 percent for the first quarter of 2023, compared to 40.14 percent for the first quarter of 2022. Tax-equivalent net interest income decreased in the first quarter of 2023 compared to the first quarter of 2022 due to the increased cost of deposits and borrowed funds. Additionally, salaries and employee benefits increased due to wage increases that have been higher than recent historical averages in response to market conditions and competition in retaining and recruiting talent and increases in full-time equivalent employees with growth in our commercial banking team and information technology department. Occupancy and equipment expense increased primarily due to the increase in depreciation expense related to the new building in
St. Cloud, Minnesota which opened inMarch 2022 and scheduled increases in rent expense on existing leases. - Net interest margin, on a fully tax-equivalent basis (a non-GAAP measure), was 2.23 percent for the first quarter of 2023, compared to 2.85 percent for the first quarter of 2022. Net interest income for the first quarter of 2023 was
$18.7 million , compared to$23.8 million for the first quarter of 2022. In 2022 and 2023, the rising cost of deposits and borrowed funds and the change in mix of liabilities has increased interest expense faster than the increase in interest income from loan repricing and loan originations.
The Company filed its report on Form 10-Q with the
The Company will discuss its results in a conference call scheduled for
About
Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to the Company’s business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meanings of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may appear throughout this report. These forward-looking statements are generally identified by the words “believes,” “expects,” “intends,” “anticipates,” “projects,” “future,” “confident,” “may,” “should,” “will,” “strategy,” “plan,” “opportunity,” “will be,” “will likely result,” “will continue” or similar references, or references to estimates, predictions or future events. Such forward-looking statements are based upon certain underlying assumptions, risks and uncertainties. Because of the possibility that the underlying assumptions are incorrect or do not materialize as expected in the future, actual results could differ materially from these forward-looking statements. Risks and uncertainties that may affect future results include: interest rate risk, including the effects of recent rate increases by the
Financial Information (unaudited) | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
As of | ||||||||||||||||||||
CONDENSED BALANCE SHEETS | ||||||||||||||||||||
Assets | ||||||||||||||||||||
Cash and due from banks | $ | 21,579 | $ | 24,896 | $ | 58,342 | $ | 26,174 | $ | 21,896 | ||||||||||
Interest-bearing deposits | 901 | 1,643 | 1,049 | 766 | 122,359 | |||||||||||||||
Securities available for sale, at fair value | 665,358 | 664,115 | 671,752 | 731,970 | 797,912 | |||||||||||||||
22,226 | 19,336 | 18,350 | 15,532 | 10,269 | ||||||||||||||||
Loans | 2,756,185 | 2,742,836 | 2,614,145 | 2,573,129 | 2,485,366 | |||||||||||||||
Allowance for credit losses | (27,941 | ) | (25,473 | ) | (25,418 | ) | (25,434 | ) | (27,623 | ) | ||||||||||
Loans, net | 2,728,244 | 2,717,363 | 2,588,727 | 2,547,695 | 2,457,743 | |||||||||||||||
Premises and equipment, net | 59,565 | 53,124 | 44,592 | 41,807 | 40,898 | |||||||||||||||
Bank-owned life insurance | 44,830 | 44,573 | 44,318 | 44,072 | 43,836 | |||||||||||||||
Other assets | 82,240 | 88,168 | 90,387 | 66,775 | 52,156 | |||||||||||||||
Total assets | $ | 3,624,943 | $ | 3,613,218 | $ | 3,517,517 | $ | 3,474,791 | $ | 3,547,069 | ||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||||||
Deposits | $ | 2,798,393 | $ | 2,880,408 | $ | 2,822,847 | $ | 2,842,451 | $ | 3,091,252 | ||||||||||
Federal funds purchased and other short-term borrowings | 229,290 | 200,000 | 204,500 | 133,000 | — | |||||||||||||||
Other borrowings | 350,921 | 285,855 | 255,789 | 255,751 | 196,954 | |||||||||||||||
Other liabilities | 29,347 | 35,843 | 35,617 | 27,400 | 22,383 | |||||||||||||||
Stockholders’ equity | 216,992 | 211,112 | 198,764 | 216,189 | 236,480 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 3,624,943 | $ | 3,613,218 | $ | 3,517,517 | $ | 3,474,791 | $ | 3,547,069 | ||||||||||
For the Quarter Ended | ||||||||||||||||||||
AVERAGE BALANCES | ||||||||||||||||||||
Assets | $ | 3,617,458 | $ | 3,511,717 | $ | 3,475,894 | $ | 3,503,686 | $ | 3,544,564 | ||||||||||
Loans | 2,745,381 | 2,649,671 | 2,579,862 | 2,537,152 | 2,449,521 | |||||||||||||||
Deposits | 2,846,926 | 2,901,928 | 2,864,648 | 3,002,535 | 3,067,019 | |||||||||||||||
Stockholders’ equity | 215,391 | 199,947 | 219,065 | 222,731 | 255,130 |
Financial Information (unaudited) | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
As of | ||||||||||||||||||||
ANALYSIS OF LOAN PORTFOLIO | ||||||||||||||||||||
Loan mix: | ||||||||||||||||||||
Commercial | $ | 520,894 | $ | 519,196 | $ | 526,336 | $ | 475,704 | $ | 466,874 | ||||||||||
Real estate: | ||||||||||||||||||||
Construction, land and land development | 336,739 | 363,015 | 341,549 | 390,137 | 388,424 | |||||||||||||||
1-4 family residential first mortgages | 75,223 | 75,211 | 69,991 | 69,829 | 65,978 | |||||||||||||||
Home equity | 9,726 | 10,322 | 10,271 | 8,564 | 9,213 | |||||||||||||||
Commercial | 1,810,158 | 1,771,940 | 1,661,907 | 1,627,150 | 1,555,001 | |||||||||||||||
Consumer and other | 7,381 | 7,291 | 7,884 | 5,912 | 4,068 | |||||||||||||||
2,760,121 | 2,746,975 | 2,617,938 | 2,577,296 | 2,489,558 | ||||||||||||||||
Net unamortized fees and costs | (3,936 | ) | (4,139 | ) | (3,793 | ) | (4,167 | ) | (4,192 | ) | ||||||||||
Total loans | $ | 2,756,185 | $ | 2,742,836 | $ | 2,614,145 | $ | 2,573,129 | $ | 2,485,366 | ||||||||||
Less allowance for credit losses | (27,941 | ) | (25,473 | ) | (25,418 | ) | (25,434 | ) | (27,623 | ) | ||||||||||
Net loans | $ | 2,728,244 | $ | 2,717,363 | $ | 2,588,727 | $ | 2,547,695 | $ | 2,457,743 | ||||||||||
ANALYSIS OF DEPOSITS | ||||||||||||||||||||
Deposit mix: | ||||||||||||||||||||
Noninterest-bearing demand | $ | 605,666 | $ | 693,563 | $ | 712,722 | $ | 690,335 | $ | 710,697 | ||||||||||
Interest-bearing demand | 486,656 | 536,226 | 469,257 | 472,919 | 554,235 | |||||||||||||||
Savings and money market | 1,295,280 | 1,237,954 | 1,252,694 | 1,360,020 | 1,632,690 | |||||||||||||||
Time | 410,791 | 412,665 | 388,174 | 319,177 | 193,630 | |||||||||||||||
Total deposits | $ | 2,798,393 | $ | 2,880,408 | $ | 2,822,847 | $ | 2,842,451 | $ | 3,091,252 | ||||||||||
ANALYSIS OF BORROWINGS | ||||||||||||||||||||
Borrowings mix: | ||||||||||||||||||||
Federal funds purchased and other short-term borrowings | $ | 229,290 | $ | 200,000 | $ | 204,500 | $ | 133,000 | $ | — | ||||||||||
Subordinated notes, net | 79,435 | 79,369 | 79,303 | 79,265 | 20,468 | |||||||||||||||
220,000 | 155,000 | 125,000 | 125,000 | 125,000 | ||||||||||||||||
Long-term debt | 51,486 | 51,486 | 51,486 | 51,486 | 51,486 | |||||||||||||||
Total borrowings | $ | 580,211 | $ | 485,855 | $ | 460,289 | $ | 388,751 | $ | 196,954 | ||||||||||
STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
Preferred stock | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Common stock | 3,000 | 3,000 | 3,000 | 3,000 | 3,000 | |||||||||||||||
Additional paid-in capital | 31,797 | 32,021 | 31,152 | 30,283 | 29,421 | |||||||||||||||
Retained earnings | 267,620 | 267,562 | 262,776 | 255,334 | 246,827 | |||||||||||||||
Accumulated other comprehensive loss | (85,425 | ) | (91,471 | ) | (98,164 | ) | (72,428 | ) | (42,768 | ) | ||||||||||
Total Stockholders’ Equity | $ | 216,992 | $ | 211,112 | $ | 198,764 | $ | 216,189 | $ | 236,480 |
Financial Information (unaudited) | |||||||||||||||||
(in thousands) | |||||||||||||||||
For the Quarter Ended | |||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||
Interest income: | |||||||||||||||||
Loans, including fees | $ | 32,948 | $ | 30,859 | $ | 28,102 | $ | 24,848 | $ | 23,286 | |||||||
Securities: | |||||||||||||||||
Taxable | 3,316 | 3,398 | 3,147 | 3,090 | 2,889 | ||||||||||||
Tax-exempt | 885 | 887 | 890 | 892 | 858 | ||||||||||||
Interest-bearing deposits | 30 | 24 | 30 | 67 | 82 | ||||||||||||
Total interest income | 37,179 | 35,168 | 32,169 | 28,897 | 27,115 | ||||||||||||
Interest expense: | |||||||||||||||||
Deposits | 13,339 | 11,043 | 6,289 | 3,146 | 2,151 | ||||||||||||
Federal funds purchased and other short-term borrowings | 2,079 | 952 | 655 | 157 | — | ||||||||||||
Subordinated notes | 1,106 | 1,119 | 1,106 | 394 | 248 | ||||||||||||
1,262 | 755 | 649 | 635 | 630 | |||||||||||||
Long-term debt | 698 | 630 | 466 | 326 | 258 | ||||||||||||
Total interest expense | 18,484 | 14,499 | 9,165 | 4,658 | 3,287 | ||||||||||||
Net interest income | 18,695 | 20,669 | 23,004 | 24,239 | 23,828 | ||||||||||||
Credit loss expense (benefit) | — | — | — | (1,750 | ) | (750 | ) | ||||||||||
Net interest income after credit loss expense (benefit) | 18,695 | 20,669 | 23,004 | 25,989 | 24,578 | ||||||||||||
Noninterest income: | |||||||||||||||||
Service charges on deposit accounts | 462 | 476 | 553 | 585 | 580 | ||||||||||||
Debit card usage fees | 486 | 492 | 498 | 507 | 472 | ||||||||||||
Trust services | 706 | 678 | 780 | 622 | 629 | ||||||||||||
Increase in cash value of bank-owned life insurance | 257 | 255 | 246 | 236 | 227 | ||||||||||||
Gain from bank-owned life insurance | 691 | — | — | — | — | ||||||||||||
Loan swap fees | — | — | 835 | — | — | ||||||||||||
Other income | 355 | 364 | 364 | 328 | 481 | ||||||||||||
Total noninterest income | 2,957 | 2,265 | 3,276 | 2,278 | 2,389 | ||||||||||||
Noninterest expense: | |||||||||||||||||
Salaries and employee benefits | 6,867 | 6,552 | 6,578 | 6,410 | 6,298 | ||||||||||||
Occupancy and equipment | 1,327 | 1,270 | 1,315 | 1,242 | 1,086 | ||||||||||||
Data processing | 635 | 673 | 644 | 656 | 624 | ||||||||||||
Technology and software | 513 | 518 | 651 | 492 | 476 | ||||||||||||
416 | 243 | 127 | 289 | 337 | |||||||||||||
Professional fees | 250 | 205 | 250 | 202 | 217 | ||||||||||||
Director fees | 205 | 215 | 209 | 222 | 168 | ||||||||||||
Other expenses | 1,858 | 1,989 | 1,684 | 1,753 | 1,456 | ||||||||||||
Total noninterest expense | 12,071 | 11,665 | 11,458 | 11,266 | 10,662 | ||||||||||||
Income before income taxes | 9,581 | 11,269 | 14,822 | 17,001 | 16,305 | ||||||||||||
Income taxes | 1,737 | 2,323 | 3,220 | 4,334 | 3,121 | ||||||||||||
Net income | $ | 7,844 | $ | 8,946 | $ | 11,602 | $ | 12,667 | $ | 13,184 | |||||||
Basic earnings per common share | $ | 0.47 | $ | 0.54 | $ | 0.70 | $ | 0.76 | $ | 0.80 | |||||||
Diluted earnings per common share | $ | 0.47 | $ | 0.53 | $ | 0.69 | $ | 0.75 | $ | 0.78 |
Financial Information (unaudited) | ||||||||||||||||||||
As of and for the Quarter Ended | ||||||||||||||||||||
COMMON SHARE DATA | ||||||||||||||||||||
Earnings per common share (basic) | $ | 0.47 | $ | 0.54 | $ | 0.70 | $ | 0.76 | $ | 0.80 | ||||||||||
Earnings per common share (diluted) | 0.47 | 0.53 | 0.69 | 0.75 | 0.78 | |||||||||||||||
Dividends per common share | 0.25 | 0.25 | 0.25 | 0.25 | 0.25 | |||||||||||||||
Book value per common share(1) | 12.98 | 12.69 | 11.94 | 12.99 | 14.22 | |||||||||||||||
Closing stock price | 18.27 | 25.55 | 20.81 | 24.34 | 27.21 | |||||||||||||||
Market price/book value(2) | 140.76 | % | 201.34 | % | 174.29 | % | 187.37 | % | 191.35 | % | ||||||||||
Price earnings ratio(3) | 9.56 | 11.93 | 7.49 | 7.98 | 8.39 | |||||||||||||||
Annualized dividend yield(4) | 5.47 | % | 3.91 | % | 4.81 | % | 4.11 | % | 3.68 | % | ||||||||||
REGULATORY CAPITAL RATIOS | ||||||||||||||||||||
Consolidated: | ||||||||||||||||||||
Total risk-based capital ratio | 12.17 | % | 12.08 | % | 12.34 | % | 12.53 | % | 10.72 | % | ||||||||||
Tier 1 risk-based capital ratio | 9.51 | 9.55 | 9.72 | 9.81 | 9.81 | |||||||||||||||
Tier 1 leverage capital ratio | 8.60 | 8.81 | 8.85 | 8.59 | 8.39 | |||||||||||||||
Common equity tier 1 ratio | 8.92 | 8.96 | 9.11 | 9.17 | 9.16 | |||||||||||||||
Total risk-based capital ratio | 13.16 | % | 13.08 | % | 13.38 | % | 13.62 | % | 11.88 | % | ||||||||||
Tier 1 risk-based capital ratio | 12.26 | 12.33 | 12.60 | 12.81 | 10.98 | |||||||||||||||
Tier 1 leverage capital ratio | 11.10 | 11.37 | 11.47 | 11.22 | 9.39 | |||||||||||||||
Common equity tier 1 ratio | 12.26 | 12.33 | 12.60 | 12.81 | 10.98 | |||||||||||||||
KEY PERFORMANCE RATIOS AND OTHER METRICS | ||||||||||||||||||||
Return on average assets(5) | 0.88 | % | 1.01 | % | 1.32 | % | 1.45 | % | 1.51 | % | ||||||||||
Return on average equity(6) | 14.77 | 17.75 | 21.01 | 22.81 | 20.96 | |||||||||||||||
Net interest margin(7)(13) | 2.23 | 2.49 | 2.78 | 2.93 | 2.85 | |||||||||||||||
Yield on interest-earning assets(8)(13) | 4.41 | 4.21 | 3.87 | 3.49 | 3.24 | |||||||||||||||
Cost of interest-bearing liabilities | 2.76 | 2.24 | 1.45 | 0.73 | 0.52 | |||||||||||||||
Efficiency ratio(9)(13) | 55.34 | 50.42 | 43.16 | 41.96 | 40.14 | |||||||||||||||
Non-performing assets to total assets(10) | 0.01 | 0.01 | 0.01 | 0.01 | 0.25 | |||||||||||||||
ACL ratio(11) | 1.01 | 0.93 | 0.97 | 0.99 | 1.11 | |||||||||||||||
Loans/total assets | 76.03 | 75.91 | 74.32 | 74.05 | 70.07 | |||||||||||||||
Loans/total deposits | 98.49 | 95.22 | 92.61 | 90.53 | 80.40 | |||||||||||||||
Tangible common equity ratio(12) | 5.99 | 5.84 | 5.65 | 6.22 | 6.67 |
(1) Includes accumulated other comprehensive income (loss).
(2) Closing stock price divided by book value per common share.
(3) Closing stock price divided by annualized earnings per common share (basic).
(4) Annualized dividend divided by period end closing stock price.
(5) Annualized net income divided by average assets.
(6) Annualized net income divided by average stockholders’ equity.
(7) Annualized tax-equivalent net interest income divided by average interest-earning assets.
(8) Annualized tax-equivalent interest income on interest-earning assets divided by average interest-earning assets.
(9) Noninterest expense (excluding other real estate owned expense and write-down of premises) divided by noninterest income (excluding net securities gains/losses and gains/losses on disposition of premises and equipment) plus tax-equivalent net interest income.
(10) Total nonperforming assets divided by total assets.
(11) Allowance for credit losses divided by total loans.
(12) Common equity less intangible assets (none held) divided by tangible assets.
(13) A non-GAAP measure.
NON-GAAP FINANCIAL MEASURES
This report contains references to financial measures that are not defined in GAAP. Such non-GAAP financial measures include the Company’s presentation of net interest income and net interest margin on a fully taxable equivalent (FTE) basis and the presentation of the efficiency ratio on an adjusted and FTE basis, excluding certain income and expenses. Management believes these non-GAAP financial measures provide useful information to both management and investors to analyze and evaluate the Company’s financial performance. These measures are considered standard measures of comparison within the banking industry. Additionally, management believes providing measures on a FTE basis enhances the comparability of income arising from taxable and nontaxable sources. Limitations associated with non-GAAP financial measures include the risks that persons might disagree as to the appropriateness of items included in these measures and that different companies might calculate these measures differently. These non-GAAP disclosures should not be considered an alternative to the Company’s GAAP results. The following table reconciles the non-GAAP financial measures of net interest income and net interest margin on a fully taxable equivalent basis and efficiency ratio on an adjusted and FTE basis.
(in thousands) | As of and for the Quarter Ended | |||||||||||||||||||
Reconciliation of net interest income and net interest margin on a FTE basis to GAAP: | ||||||||||||||||||||
Net interest income (GAAP) | $ | 18,695 | $ | 20,669 | $ | 23,004 | $ | 24,239 | $ | 23,828 | ||||||||||
Tax-equivalent adjustment (1) | 161 | 197 | 270 | 326 | 329 | |||||||||||||||
Net interest income on a FTE basis (non-GAAP) | 18,856 | 20,866 | 23,274 | 24,565 | 24,157 | |||||||||||||||
Average interest-earning assets | 3,435,988 | 3,328,941 | 3,322,522 | 3,362,313 | 3,432,114 | |||||||||||||||
Net interest margin on a FTE basis (non-GAAP) | 2.23 | % | 2.49 | % | 2.78 | % | 2.93 | % | 2.85 | % | ||||||||||
Reconciliation of efficiency ratio on an adjusted and FTE basis to GAAP: | ||||||||||||||||||||
Net interest income on a FTE basis (non-GAAP) | $ | 18,856 | $ | 20,866 | $ | 23,274 | $ | 24,565 | $ | 24,157 | ||||||||||
Noninterest income | 2,957 | 2,265 | 3,276 | 2,278 | 2,389 | |||||||||||||||
Adjustment for losses on disposal of premises and equipment, net | — | 2 | — | 9 | 18 | |||||||||||||||
Adjusted income | 21,813 | 23,133 | 26,550 | 26,852 | 26,564 | |||||||||||||||
Noninterest expense | 12,071 | 11,665 | 11,458 | 11,266 | 10,662 | |||||||||||||||
Efficiency ratio on an adjusted and FTE basis (non-GAAP) (2) | 55.34 | % | 50.42 | % | 43.16 | % | 41.96 | % | 40.14 | % |
(1) Computed on a tax-equivalent basis using a federal income tax rate of 21 percent, adjusted to reflect the effect of the nondeductible interest expense associated with owning tax-exempt securities and loans. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the financial results, as it enhances the comparability of income arising from taxable and nontaxable sources.
(2) The efficiency ratio expresses noninterest expense as a percent of fully taxable equivalent net interest income and noninterest income, excluding specific noninterest income and expenses. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the Company's financial performance. It is a standard measure of comparison within the banking industry. A lower ratio is more desirable.
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Source:
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