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WEST DES MOINES, Iowa, Jan. 26, 2023 (GLOBE NEWSWIRE) -- West Bancorporation, Inc. (Nasdaq: WTBA; the “Company”), parent company of West Bank, today reported 2022 net income of $46.4 million, or $2.76 per diluted common share, compared to 2021 net income of $49.6 million, or $2.95 per diluted common share. Net income for the fourth quarter 2022 was $8.9 million, or $0.53 per diluted common share, compared to fourth quarter 2021 net income of $11.9 million, or $0.71 per diluted common share. On January 25, 2023, the Company’s Board of Directors declared a regular quarterly dividend of $0.25 per common share. The dividend is payable on February 22, 2023, to stockholders of record on February 8, 2023.
David Nelson, President and Chief Executive Officer of the Company, commented, “Our company had another strong year, the second best year in our company’s history. Our credit quality continues to be pristine and we remain diligent in monitoring and managing our credit risk as we anticipate increasing economic challenges resulting from the Federal Reserve’s aggressive interest rate hikes in 2022. Loan growth in 2022 exceeded eleven percent and for the sixth consecutive quarter end, we had no loans greater than 30 days past due.”
David Nelson added, “Rising interest rates in 2022 have increased the average yield of our loan portfolio. However, changes in liquidity and competitive deposit pricing, as a result of volatility and uncertainty in the interest rate environment, have increased our cost of funds and resulted in a decline in our net interest income and net interest margin. We expect to continue to experience a lower than normal net interest margin while the Federal Reserve continues raising short-term rates. Our capital position is strong and we remain focused on delivering high quality services and products through our very successful relationship based business model.”
Fourth Quarter and Year Ended 2022 Financial Highlights
| Quarter Ended December 31, 2022 | Year Ended December 31, 2022 | ||||||||
| Net Income (in thousands) | $ | 8,946 | $ | 46,399 | |||||
| Return on Average Equity | 17.75 | % | 20.71 | % | |||||
| Return on Average Assets | 1.01 | % | 1.32 | % | |||||
| Efficiency ratio (a non-GAAP measure) | 50.42 | % | 43.70 | % | |||||
| Nonperforming assets to total assets | 0.01 | % | 0.01 | % | |||||
Fourth Quarter 2022 Compared to Third Quarter 2022 Overview
Fourth Quarter 2022 Compared to Fourth Quarter 2021 Overview
Year Ended 2022 Compared to Year Ended 2021 Overview
The Company plans to file its report on Form 10-K with the Securities and Exchange Commission on or before February 23, 2023. Please refer to that document for a more in-depth discussion of the Company’s financial results. The Form 10-K will be available on the Investor Relations section of West Bank’s website at www.westbankstrong.com.
The Company will discuss its results in a conference call scheduled for 2:00 p.m. Central Time on Thursday, January 26, 2023. The telephone number for the conference call is 844-200-6205. The access code for the conference call is 214929. A recording of the call will be available until February 9, 2023, by dialing 866-813-9403. The replay access code is 559343.
About West Bancorporation, Inc. (Nasdaq: WTBA)
West Bancorporation, Inc. is headquartered in West Des Moines, Iowa. Serving customers since 1893, West Bank, a wholly-owned subsidiary of West Bancorporation, Inc., is a community bank that focuses on lending, deposit services, and trust services for small- to medium-sized businesses and consumers. West Bank has six offices in the Des Moines, Iowa metropolitan area, one office in Coralville, Iowa, and four offices in Minnesota in the cities of Rochester, Owatonna, Mankato and St. Cloud.
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 Federal Reserve; fluctuations in the values of the securities held in our investment portfolio, including as a result of rising interest rates, which has resulted in unrealized losses in our portfolio; competitive pressures, including from non-bank competitors such as “fintech” companies and digital asset service providers; pricing pressures on loans and deposits; our ability to successfully manage liquidity risk; changes in credit and other risks posed by the Company’s loan portfolio, including declines in commercial or residential real estate values or changes in the allowance for loan losses dictated by new market conditions, accounting standards (including as a result of the implementation of the current expected credit loss (CECL) accounting standard) or regulatory requirements; changes in local, national and international economic conditions, including rising rates of inflation; changes in legal and regulatory requirements, limitations and costs; changes in customers’ acceptance of the Company’s products and services; cyber-attacks; unexpected outcomes of existing or new litigation involving the Company; the monetary, trade and other regulatory policies of the U.S. government; acts of war or terrorism, including the Russian invasion of Ukraine, widespread disease or pandemics, such as the COVID-19 pandemic, or other adverse external events; risks related to climate change and the negative impact it may have on our customers and their businesses; developments and uncertainty related to the future use and availability of some reference rates, such as the expected discontinuation of the London Interbank Offered Rate and the development of other alternative reference rates; changes to U.S. tax laws, regulations and guidance; talent and labor shortages; the new 1% excise tax on stock buybacks by publicly traded companies; and any other risks described in the “Risk Factors” sections of reports filed by the Company with the Securities and Exchange Commission. The Company undertakes no obligation to revise or update such forward-looking statements to reflect current or future events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
| WEST BANCORPORATION, INC. AND SUBSIDIARY | ||||||||||||||||||||
| Financial Information (unaudited) | ||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| As of | ||||||||||||||||||||
| CONDENSED BALANCE SHEETS | December 31, 2022 | September 30, 2022 | June 30, 2022 | March 31, 2022 | December 31, 2021 | |||||||||||||||
| Assets | ||||||||||||||||||||
| Cash and due from banks | $ | 24,896 | $ | 58,342 | $ | 26,174 | $ | 21,896 | $ | 17,555 | ||||||||||
| Interest-bearing deposits | 1,643 | 1,049 | 766 | 122,359 | 175,270 | |||||||||||||||
| Securities available for sale, at fair value | 664,115 | 671,752 | 731,970 | 797,912 | 758,822 | |||||||||||||||
| Federal Home Loan Bank stock, at cost | 19,336 | 18,350 | 15,532 | 10,269 | 9,965 | |||||||||||||||
| Loans | 2,742,836 | 2,614,145 | 2,573,129 | 2,485,366 | 2,456,196 | |||||||||||||||
| Allowance for loan losses | (25,473 | ) | (25,418 | ) | (25,434 | ) | (27,623 | ) | (28,364 | ) | ||||||||||
| Loans, net | 2,717,363 | 2,588,727 | 2,547,695 | 2,457,743 | 2,427,832 | |||||||||||||||
| Premises and equipment, net | 53,124 | 44,592 | 41,807 | 40,898 | 34,568 | |||||||||||||||
| Bank-owned life insurance | 44,573 | 44,318 | 44,072 | 43,836 | 43,609 | |||||||||||||||
| Other assets | 88,168 | 90,387 | 66,775 | 52,156 | 32,580 | |||||||||||||||
| Total assets | $ | 3,613,218 | $ | 3,517,517 | $ | 3,474,791 | $ | 3,547,069 | $ | 3,500,201 | ||||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||||||||||
| Deposits | $ | 2,880,408 | $ | 2,822,847 | $ | 2,842,451 | $ | 3,091,252 | $ | 3,016,005 | ||||||||||
| Federal funds purchased and other short-term borrowings | 200,000 | 204,500 | 133,000 | — | 2,880 | |||||||||||||||
| Other borrowings | 285,855 | 255,789 | 255,751 | 196,954 | 196,986 | |||||||||||||||
| Other liabilities | 35,843 | 35,617 | 27,400 | 22,383 | 24,002 | |||||||||||||||
| Stockholders’ equity | 211,112 | 198,764 | 216,189 | 236,480 | 260,328 | |||||||||||||||
| Total liabilities and stockholders’ equity | $ | 3,613,218 | $ | 3,517,517 | $ | 3,474,791 | $ | 3,547,069 | $ | 3,500,201 | ||||||||||
| For the quarter ended | ||||||||||||||||||||
| AVERAGE BALANCES | December 31, 2022 | September 30, 2022 | June 30, 2022 | March 31, 2022 | December 31, 2021 | |||||||||||||||
| Assets | $ | 3,511,717 | $ | 3,475,894 | $ | 3,503,686 | $ | 3,544,564 | $ | 3,421,020 | ||||||||||
| Loans | 2,649,671 | 2,579,862 | 2,537,152 | 2,449,521 | 2,379,872 | |||||||||||||||
| Deposits | 2,901,928 | 2,864,648 | 3,002,535 | 3,067,019 | 2,964,585 | |||||||||||||||
| Stockholders’ equity | 199,947 | 219,065 | 222,731 | 255,130 | 255,224 | |||||||||||||||
| WEST BANCORPORATION, INC. AND SUBSIDIARY | ||||||||||||||||||||
| Financial Information (unaudited) | ||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| As of | ||||||||||||||||||||
| ANALYSIS OF LOAN PORTFOLIO | December 31, 2022 | September 30, 2022 | June 30, 2022 | March 31, 2022 | December 31, 2021 | |||||||||||||||
| Loan mix: | ||||||||||||||||||||
| Commercial | $ | 519,196 | $ | 526,336 | $ | 475,704 | $ | 466,874 | $ | 492,815 | ||||||||||
| Real estate: | ||||||||||||||||||||
| Construction, land and land development | 363,015 | 341,549 | 390,137 | 388,424 | 359,258 | |||||||||||||||
| 1-4 family residential first mortgages | 75,211 | 69,991 | 69,829 | 65,978 | 66,216 | |||||||||||||||
| Home equity | 10,322 | 10,271 | 8,564 | 9,213 | 8,422 | |||||||||||||||
| Commercial | 1,771,940 | 1,661,907 | 1,627,150 | 1,555,001 | 1,530,218 | |||||||||||||||
| Consumer and other | 7,291 | 7,884 | 5,912 | 4,068 | 3,797 | |||||||||||||||
| 2,746,975 | 2,617,938 | 2,577,296 | 2,489,558 | 2,460,726 | ||||||||||||||||
| Net unamortized fees and costs | (4,139 | ) | (3,793 | ) | (4,167 | ) | (4,192 | ) | (4,530 | ) | ||||||||||
| Total loans | $ | 2,742,836 | $ | 2,614,145 | $ | 2,573,129 | $ | 2,485,366 | $ | 2,456,196 | ||||||||||
| Less allowance for loan losses | (25,473 | ) | (25,418 | ) | (25,434 | ) | (27,623 | ) | (28,364 | ) | ||||||||||
| Net loans | $ | 2,717,363 | $ | 2,588,727 | $ | 2,547,695 | $ | 2,457,743 | $ | 2,427,832 | ||||||||||
| ANALYSIS OF DEPOSITS | ||||||||||||||||||||
| Deposit mix: | ||||||||||||||||||||
| Noninterest-bearing demand | $ | 693,563 | $ | 712,722 | $ | 690,335 | $ | 710,697 | $ | 720,136 | ||||||||||
| Interest-bearing demand | 536,226 | 469,257 | 472,919 | 554,235 | 548,242 | |||||||||||||||
| Savings and money market | 1,237,954 | 1,252,694 | 1,360,020 | 1,632,690 | 1,550,636 | |||||||||||||||
| Time | 412,665 | 388,174 | 319,177 | 193,630 | 196,991 | |||||||||||||||
| Total deposits | $ | 2,880,408 | $ | 2,822,847 | $ | 2,842,451 | $ | 3,091,252 | $ | 3,016,005 | ||||||||||
| ANALYSIS OF BORROWINGS | ||||||||||||||||||||
| Borrowings mix: | ||||||||||||||||||||
| Federal funds purchased and other short-term borrowings | $ | 200,000 | $ | 204,500 | $ | 133,000 | $ | — | $ | 2,880 | ||||||||||
| Subordinated notes, net | 79,369 | 79,303 | 79,265 | 20,468 | 20,465 | |||||||||||||||
| Federal Home Loan Bank advances | 155,000 | 125,000 | 125,000 | 125,000 | 125,000 | |||||||||||||||
| Long-term debt | 51,486 | 51,486 | 51,486 | 51,486 | 51,521 | |||||||||||||||
| Total borrowings | $ | 485,855 | $ | 460,289 | $ | 388,751 | $ | 196,954 | $ | 199,866 | ||||||||||
| STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
| Preferred stock | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
| Common stock | 3,000 | 3,000 | 3,000 | 3,000 | 3,000 | |||||||||||||||
| Additional paid-in capital | 32,021 | 31,152 | 30,283 | 29,421 | 30,183 | |||||||||||||||
| Retained earnings | 267,562 | 262,776 | 255,334 | 246,827 | 237,782 | |||||||||||||||
| Accumulated other comprehensive loss | (91,471 | ) | (98,164 | ) | (72,428 | ) | (42,768 | ) | (10,637 | ) | ||||||||||
| Total Stockholders’ Equity | $ | 211,112 | $ | 198,764 | $ | 216,189 | $ | 236,480 | $ | 260,328 | ||||||||||
| WEST BANCORPORATION, INC. AND SUBSIDIARY | |||||||||||||||||
| Financial Information (unaudited) | |||||||||||||||||
| (in thousands) | |||||||||||||||||
| For the Quarter Ended | |||||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | December 31, 2022 | September 30, 2022 | June 30, 2022 | March 31, 2022 | December 31, 2021 | ||||||||||||
| Interest income: | |||||||||||||||||
| Loans, including fees | $ | 30,859 | $ | 28,102 | $ | 24,848 | $ | 23,286 | $ | 24,179 | |||||||
| Securities: | |||||||||||||||||
| Taxable | 3,398 | 3,147 | 3,090 | 2,889 | 2,590 | ||||||||||||
| Tax-exempt | 887 | 890 | 892 | 858 | 829 | ||||||||||||
| Interest-bearing deposits | 24 | 30 | 67 | 82 | 66 | ||||||||||||
| Total interest income | 35,168 | 32,169 | 28,897 | 27,115 | 27,664 | ||||||||||||
| Interest expense: | |||||||||||||||||
| Deposits | 11,043 | 6,289 | 3,146 | 2,151 | 2,055 | ||||||||||||
| Federal funds purchased and other short-term borrowings | 952 | 655 | 157 | — | 1 | ||||||||||||
| Subordinated notes | 1,119 | 1,106 | 394 | 248 | 254 | ||||||||||||
| Federal Home Loan Bank advances | 755 | 649 | 635 | 630 | 656 | ||||||||||||
| Long-term debt | 630 | 466 | 326 | 258 | 96 | ||||||||||||
| Total interest expense | 14,499 | 9,165 | 4,658 | 3,287 | 3,062 | ||||||||||||
| Net interest income | 20,669 | 23,004 | 24,239 | 23,828 | 24,602 | ||||||||||||
| Provision for loan losses | — | — | (1,750 | ) | (750 | ) | — | ||||||||||
| Net interest income after provision for loan losses | 20,669 | 23,004 | 25,989 | 24,578 | 24,602 | ||||||||||||
| Noninterest income: | |||||||||||||||||
| Service charges on deposit accounts | 476 | 553 | 585 | 580 | 603 | ||||||||||||
| Debit card usage fees | 492 | 498 | 507 | 472 | 505 | ||||||||||||
| Trust services | 678 | 780 | 622 | 629 | 633 | ||||||||||||
| Increase in cash value of bank-owned life insurance | 255 | 246 | 236 | 227 | 233 | ||||||||||||
| Loan swap fees | — | 835 | — | — | 24 | ||||||||||||
| Other income | 364 | 364 | 328 | 481 | 350 | ||||||||||||
| Total noninterest income | 2,265 | 3,276 | 2,278 | 2,389 | 2,348 | ||||||||||||
| Noninterest expense: | |||||||||||||||||
| Salaries and employee benefits | 6,552 | 6,578 | 6,410 | 6,298 | 5,928 | ||||||||||||
| Occupancy | 1,270 | 1,315 | 1,242 | 1,086 | 1,532 | ||||||||||||
| Data processing | 673 | 644 | 656 | 624 | 630 | ||||||||||||
| FDIC insurance | 243 | 127 | 289 | 337 | 460 | ||||||||||||
| Professional fees | 205 | 250 | 202 | 217 | 183 | ||||||||||||
| Director fees | 215 | 209 | 222 | 168 | 184 | ||||||||||||
| Other expenses | 2,507 | 2,335 | 2,245 | 1,932 | 2,954 | ||||||||||||
| Total noninterest expense | 11,665 | 11,458 | 11,266 | 10,662 | 11,871 | ||||||||||||
| Income before income taxes | 11,269 | 14,822 | 17,001 | 16,305 | 15,079 | ||||||||||||
| Income taxes | 2,323 | 3,220 | 4,334 | 3,121 | 3,169 | ||||||||||||
| Net income | $ | 8,946 | $ | 11,602 | $ | 12,667 | $ | 13,184 | $ | 11,910 | |||||||
| Basic earnings per common share | $ | 0.54 | $ | 0.70 | $ | 0.76 | $ | 0.80 | $ | 0.72 | |||||||
| Diluted earnings per common share | $ | 0.53 | $ | 0.69 | $ | 0.75 | $ | 0.78 | $ | 0.71 | |||||||
| WEST BANCORPORATION, INC. AND SUBSIDIARY | ||||||||
| Financial Information (unaudited) | ||||||||
| (in thousands) | ||||||||
| For the Year Ended | ||||||||
| CONSOLIDATED STATEMENTS OF INCOME | December 31, 2022 | December 31, 2021 | ||||||
| Interest income: | ||||||||
| Loans, including fees | $ | 107,095 | $ | 95,585 | ||||
| Securities: | ||||||||
| Taxable | 12,524 | 8,542 | ||||||
| Tax-exempt | 3,527 | 2,861 | ||||||
| Interest-bearing deposits | 203 | 292 | ||||||
| Total interest income | 123,349 | 107,280 | ||||||
| Interest expense: | ||||||||
| Deposits | 22,629 | 7,948 | ||||||
| Federal funds purchased and other short-term borrowings | 1,764 | 5 | ||||||
| Subordinated notes | 2,867 | 1,008 | ||||||
| Federal Home Loan Bank advances | 2,669 | 2,944 | ||||||
| Long-term debt | 1,680 | 316 | ||||||
| Total interest expense | 31,609 | 12,221 | ||||||
| Net interest income | 91,740 | 95,059 | ||||||
| Provision for loan losses | (2,500 | ) | (1,500 | ) | ||||
| Net interest income after provision for loan losses | 94,240 | 96,559 | ||||||
| Noninterest income: | ||||||||
| Service charges on deposit accounts | 2,194 | 2,352 | ||||||
| Debit card usage fees | 1,969 | 1,948 | ||||||
| Trust services | 2,709 | 2,671 | ||||||
| Increase in cash value of bank-owned life insurance | 964 | 923 | ||||||
| Loan swap fees | 835 | 66 | ||||||
| Realized securities gains, net | — | 51 | ||||||
| Other income | 1,537 | 1,718 | ||||||
| Total noninterest income | 10,208 | 9,729 | ||||||
| Noninterest expense: | ||||||||
| Salaries and employee benefits | 25,838 | 23,226 | ||||||
| Occupancy | 4,913 | 5,162 | ||||||
| Data processing | 2,597 | 2,465 | ||||||
| FDIC insurance | 996 | 1,818 | ||||||
| Professional fees | 874 | 946 | ||||||
| Director fees | 814 | 765 | ||||||
| Other expenses | 9,019 | 8,998 | ||||||
| Total noninterest expense | 45,051 | 43,380 | ||||||
| Income before income taxes | 59,397 | 62,908 | ||||||
| Income taxes | 12,998 | 13,301 | ||||||
| Net income | $ | 46,399 | $ | 49,607 | ||||
| Basic earnings per common share | $ | 2.79 | $ | 3.00 | ||||
| Diluted earnings per common share | $ | 2.76 | $ | 2.95 | ||||
| WEST BANCORPORATION, INC. AND SUBSIDIARY | ||||||||||||||||||||||||||||
| Financial Information (unaudited) | ||||||||||||||||||||||||||||
| As of and for the Quarter Ended | For the Year Ended | |||||||||||||||||||||||||||
| COMMON SHARE DATA | December 31, 2022 | September 30, 2022 | June 30, 2022 | March 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | |||||||||||||||||||||
| Earnings per common share (basic) | $ | 0.54 | $ | 0.70 | $ | 0.76 | $ | 0.80 | $ | 0.72 | $ | 2.79 | $ | 3.00 | ||||||||||||||
| Earnings per common share (diluted) | 0.53 | 0.69 | 0.75 | 0.78 | 0.71 | 2.76 | 2.95 | |||||||||||||||||||||
| Dividends per common share | 0.25 | 0.25 | 0.25 | 0.25 | 0.24 | 1.00 | 0.94 | |||||||||||||||||||||
| Book value per common share(1) | 12.69 | 11.94 | 12.99 | 14.22 | 15.73 | |||||||||||||||||||||||
| Closing stock price | 25.55 | 20.81 | 24.34 | 27.21 | 31.07 | |||||||||||||||||||||||
| Market price/book value(2) | 201.34 | % | 174.29 | % | 187.37 | % | 191.35 | % | 197.52 | % | ||||||||||||||||||
| Price earnings ratio(3) | 11.93 | 7.49 | 7.98 | 8.39 | 10.88 | |||||||||||||||||||||||
| Annualized dividend yield(4) | 3.91 | % | 4.81 | % | 4.11 | % | 3.68 | % | 3.89 | % | ||||||||||||||||||
| REGULATORY CAPITAL RATIOS | ||||||||||||||||||||||||||||
| Consolidated: | ||||||||||||||||||||||||||||
| Total risk-based capital ratio | 12.08 | % | 12.34 | % | 12.53 | % | 10.72 | % | 10.89 | % | ||||||||||||||||||
| Tier 1 risk-based capital ratio | 9.55 | 9.72 | 9.81 | 9.81 | 9.92 | |||||||||||||||||||||||
| Tier 1 leverage capital ratio | 8.81 | 8.85 | 8.59 | 8.39 | 8.49 | |||||||||||||||||||||||
| Common equity tier 1 ratio | 8.96 | 9.11 | 9.17 | 9.16 | 9.24 | |||||||||||||||||||||||
| West Bank: | ||||||||||||||||||||||||||||
| Total risk-based capital ratio | 13.08 | % | 13.38 | % | 13.62 | % | 11.88 | % | 12.10 | % | ||||||||||||||||||
| Tier 1 risk-based capital ratio | 12.33 | 12.60 | 12.81 | 10.98 | 11.13 | |||||||||||||||||||||||
| Tier 1 leverage capital ratio | 11.37 | 11.47 | 11.22 | 9.39 | 9.53 | |||||||||||||||||||||||
| Common equity tier 1 ratio | 12.33 | 12.60 | 12.81 | 10.98 | 11.13 | |||||||||||||||||||||||
| KEY PERFORMANCE RATIOS AND OTHER METRICS | ||||||||||||||||||||||||||||
| Return on average assets(5) | 1.01 | % | 1.32 | % | 1.45 | % | 1.51 | % | 1.38 | % | 1.32 | % | 1.52 | % | ||||||||||||||
| Return on average equity(6) | 17.75 | 21.01 | 22.81 | 20.96 | 18.51 | 20.71 | 20.33 | |||||||||||||||||||||
| Net interest margin(7)(13) | 2.49 | 2.78 | 2.93 | 2.85 | 3.00 | 2.76 | 3.05 | |||||||||||||||||||||
| Yield on interest-earning assets(8) | 4.21 | 3.87 | 3.49 | 3.24 | 3.36 | 3.70 | 3.44 | |||||||||||||||||||||
| Cost of interest-bearing liabilities | 2.24 | 1.45 | 0.73 | 0.52 | 0.50 | 1.24 | 0.53 | |||||||||||||||||||||
| Efficiency ratio(9)(13) | 50.42 | 43.16 | 41.96 | 40.14 | 43.32 | 43.70 | 40.91 | |||||||||||||||||||||
| Non-performing assets to total assets(10) | 0.01 | 0.01 | 0.01 | 0.25 | 0.26 | |||||||||||||||||||||||
| ALLL ratio(11) | 0.93 | 0.97 | 0.99 | 1.11 | 1.15 | |||||||||||||||||||||||
| Loans/total assets | 75.91 | 74.32 | 74.05 | 70.07 | 70.17 | |||||||||||||||||||||||
| Loans/total deposits | 95.22 | 92.61 | 90.53 | 80.40 | 81.44 | |||||||||||||||||||||||
| Tangible common equity ratio(12) | 5.84 | 5.65 | 6.22 | 6.67 | 7.44 | |||||||||||||||||||||||
(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 loan 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 | For the Year Ended | ||||||||||||||||||||||||||
| December 31, 2022 | September 30, 2022 | June 30, 2022 | March 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||
| Reconciliation of net interest income and net interest margin on a FTE basis to GAAP: | ||||||||||||||||||||||||||||
| Net interest income (GAAP) | $ | 20,669 | $ | 23,004 | $ | 24,239 | $ | 23,828 | $ | 24,602 | $ | 91,740 | $ | 95,059 | ||||||||||||||
| Tax-equivalent adjustment (1) | 197 | 270 | 326 | 329 | 397 | 1,122 | 1,202 | |||||||||||||||||||||
| Net interest income on a FTE basis (non-GAAP) | 20,866 | 23,274 | 24,565 | 24,157 | 24,999 | 92,862 | 96,261 | |||||||||||||||||||||
| Average interest-earning assets | 3,328,941 | 3,322,522 | 3,362,313 | 3,432,114 | 3,309,625 | 3,361,091 | 3,152,138 | |||||||||||||||||||||
| Net interest margin on a FTE basis (non-GAAP) | 2.49 | % | 2.78 | % | 2.93 | % | 2.85 | % | 3.00 | % | 2.76 | % | 3.05 | % | ||||||||||||||
| Reconciliation of efficiency ratio on an adjusted and FTE basis to GAAP: | ||||||||||||||||||||||||||||
| Net interest income on a FTE basis (non-GAAP) | $ | 20,866 | $ | 23,274 | $ | 24,565 | $ | 24,157 | $ | 24,999 | $ | 92,862 | $ | 96,261 | ||||||||||||||
| Noninterest income | 2,265 | 3,276 | 2,278 | 2,389 | 2,348 | 10,208 | 9,729 | |||||||||||||||||||||
| Adjustment for realized securities gains, net | — | — | — | — | — | — | (51 | ) | ||||||||||||||||||||
| Adjustment for losses on disposal of premises and equipment, net | 2 | — | 9 | 18 | 55 | 29 | 84 | |||||||||||||||||||||
| Adjusted income | 23,133 | 26,550 | 26,852 | 26,564 | 27,402 | 103,099 | 106,023 | |||||||||||||||||||||
| Noninterest expense | 11,665 | 11,458 | 11,266 | 10,662 | 11,871 | 45,051 | 43,380 | |||||||||||||||||||||
| Efficiency ratio on an adjusted and FTE basis (non-GAAP) (2) | 50.42 | % | 43.16 | % | 41.96 | % | 40.14 | % | 43.32 | % | 43.70 | % | 40.91 | % | ||||||||||||||
(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.
For more information contact:
Jane Funk, Executive Vice President, Treasurer and Chief Financial Officer (515) 222-5766