GlobeNewswire Inc | Jul 19, 2021 05:18PM EDT

July 19, 2021

WICHITA, Kan., July 19, 2021 (GLOBE NEWSWIRE) -- Equity Bancshares, Inc. (NASDAQ: EQBK), (Equity, the Company, we, us, our), the Wichita-based holding company of Equity Bank, reported net income of $15.2 million and $1.03 per diluted share for the second quarter ended June 30, 2021.

Our Equity Bank team had an excellent quarter serving our customers, expanding our delivery channels and adding shareholder value. Exclusive of the Paycheck Protection Program, we organically grew gross loans by $81.8 million, an annualized rate of 14.75%, through the focused efforts of our sales and operational teams, said Brad S. Elliott, Chairman and CEO of Equity. A key component of our results is growth in our core deposit customer base, with new banking products contributing to a $1.1 million increase in service fee revenue, as well as the continued addition of trust and wealth management customer relationships.

Equity customers successfully had $99.7 million of Paycheck Protection Program (PPP) loans forgiven during the quarter, resulting in the recognition of fee income totaling $5.7 million in the three-month period ended June 30, 2021. At June 30, 2021, the total unrecognized fee income associated with PPP loans was $10.7 million. Through two rounds of PPP, Equity originated more than $610.0 million in PPP loans.

Further driving results this quarter was customer and relationship growth within Equity Trust and Wealth Management and Equitys consumer deposit base, expansion of non-interest income with Equitys debit card platform and increased transaction activity within our deposit customer base.

The Company has announced its expansion into St. Joseph, Missouri, with a definitive branch purchase and assumption agreement to acquire the assets and assume the deposits of three bank locations from Security Bank of Kansas City (Security), a subsidiary of Valley View Financial Co. (Valley) of Overland Park, Kansas. Equity anticipates closing the transaction in the fourth quarter of 2021.

We are pleased with the opportunity to offer Equity Bank products and services to customers in Northwest Missouri, and St. Joseph is a great fit within our network, said Mr. Elliott. We have been able to grow loans, fee income and our core deposit base effectively in Western Missouri with a focus on local community banking and we believe this approach will serve customers well in our new St. Joseph region.

Our recent merger announcement with American State Bancshares, Inc. is a great cultural fit for us as well as an expansion of our Kansas market, and our teams have worked diligently alongside one another. We remain on target for a closing and conversion of data systems in early October, said Mr. Elliott. I thank everyone on both the Equity and American State Bancshares, Inc. teams for their collaboration and hard work to make sure we continue to deliver excellent customer service while increasing shareholder value.

Notable Items:

-- Quarter over quarter, service fee revenue, including deposit services, mortgage banking, trust and wealth and insurance services increased to $6.4 million from $5.3 million, or 20.77%. -- The Company authorized a second stock repurchase program in the third quarter of 2020 totaling 800,000 shares. During the quarter ended June 30, 2021, the Company repurchased 73,070 shares at a weighted average cost of $28.94 per share, totaling $2.1 million. At the end of the quarter, capacity of 180,687 shares remained under the current repurchase program. -- Additional information attained on the assets purchased through the Almena State Bank (Almena) transaction indicated a more positive outcome than originally expected, resulting in a net reduction in reserves on the balance sheet and an increase in gain on acquisition of $663 thousand during the quarter. -- During the quarter ended June 30, 2021, there was a release of allowance for credit losses of $1.7 million as compared to a release of $5.8 million in the quarter ended March 31, 2021. The release in the second quarter was driven primarily by improvement in assets specifically assessed for impairment as asset quality improved quarter over quarter.

Equitys Balance Sheet Highlights:

-- Total loans held for investment of $2.82 billion at June 30, 2021, as compared to total loans held for investment of $2.80 billion at March 31, 2021. The periodic change included organic loan production of $81.8 million, or 14.75%. -- Total deposits of $3.69 billion at June 30, 2021, as compared to $3.63 billion at March 31, 2021. Checking, savings and money market accounts were $3.03 billion at June 30, 2021, relative to $3.05 billion at March 31, 2021. Included in the periodic change was a $20.2 million increase in non-interest-bearing deposits. As compared to December 31, 2020, the Bank has increased non-interest-bearing deposits by $200.9 million, or 25.38%. -- The allowance for credit losses as of June 30, 2021, was $51.8 million, or 1.84% of total loans and 2.04% of total loans excluding PPP assets.

Acquisition of Three Bank Locations in St. Joseph, Missouri

Equity will operate each of the three Security locations in St. Joseph as Equity Bank locations following completion of the acquisition, expected in December of 2021. Joshua J. Means, President of Western Missouri, will oversee the St. Joseph community bank locations. Equity will operate a total of 16 locations in Missouri, including the three Security locations, eight bank locations in legacy Western Missouri communities and five bank locations on the Missouri side of the Kansas City metropolitan area.

In Equitys Western Missouri region, notable for communities like Warrensburg, Sedalia and Higginsville, deposits as of June 30, 2018, were $478.4 million, compared to $614.8 million as of June 30, 2021. Total loans in Equitys Western Missouri region were $147.0 million as of June 30, 2018, compared to $218.3 million as of June 30, 2021, growing by 48.5% during the three-year period.

Each of our Missouri locations delivers outstanding service to our consumer, mortgage and business customers and we expect St. Joseph to serve as a key market for us in Northwest Missouri. Josh Means and his regional leadership team have helped our local banks grow in loans, fee income and deposits, one relationship at a time, said Mr. Elliott. We are pleased to welcome talented community bankers to our Equity team and to offer St. Joseph-area consumers enhanced commercial and business banking solutions.

Equity announced in May its merger with American State Bancshares, Inc. (ASBI), the holding company of American State Bank, a $779 million bank with headquarters in Wichita, Kansas, and 17 locations in its Kansas footprint. Equity expects to complete the merger with ASBI in October 2021. Pro forma Equity Bank, including ASBI and Security deposits and locations, will comprise more than 70 locations throughout our four-state footprint and hold more than $5 billion in assets.

Pursuant to the terms of the Branch Purchase and Assumption Agreement, between Equity Bank and Security, Equity will acquire certain loans and other branch-related assets and assume certain deposits and other liabilities associated with the Security branches.

Financial Results for the Quarter Ended June 30, 2021

Net income allocable to common stockholders was $15.2 million, or $1.03 per diluted share, for the three months ended June 30, 2021, as compared to $15.1 million, or $1.02 per diluted share, for the three months ended March 31, 2021, an increase of $91 thousand. This second quarter increase was attributable to a net interest income increase of $2.9 million and a non-interest income increase of $2.4 million, partially offset by a $4.1 million decrease in reversal of provision for credit losses, a $925 thousand increase in non-interest expense and a $144 thousand increase in provision for income taxes.

Net Interest Income

Net interest income was $34.6 million for the three months ended June 30, 2021, as compared to $31.8 million for the three months ended March 31, 2021, an increase of $2.9 million, or 9.0%. The increase in net interest income was primarily driven by a 15-basis point increase in the average yield earned on interest-earning assets, to 3.88% for the quarter ended June 30, 2021, from 3.73% for the quarter ended March 31, 2021. In addition, there was a 6-basis point decrease in average rate paid on interest-bearing liabilities, to 0.52% for the quarter ended June 30, 2021, from 0.58% for the quarter ended March 31, 2021. The cost of interest-bearing deposits declined by 5 basis points to 0.31% for the three months ended June 30, 2021 from 0.36% in the previous quarter primarily attributed to the reduction in the cost of time deposits, that slipped 19 basis points between the quarters.

Provision for Credit Losses

During the three months ended June 30, 2021, there was a net release of $1.7 million in the allowance for credit losses recognized through the provision for credit losses as compared to a net release of $5.8 million provision for credit losses for the three months ended March 31, 2021. For the three months ended June 30, 2021, we had net charge-offs of $567 thousand as compared to $65 thousand for the three months ended March 31, 2021. The release in the second quarter was driven primarily by improvement in assets individually evaluated for impairment as asset quality improved quarter over quarter.

Non-Interest Income

Total non-interest income was $9.1 million for the three months ended June 30, 2021, as compared to $6.7 million for the three months ended March 31, 2021, or $8.4 million excluding the $663 thousand net gain on the purchase and assumption of Almena State Bank. Other non-interest income was $2.1 million, an increase of $774 thousand, or 60.0%, from the quarter ended March 31, 2021. The increase in other non-interest income was primarily due to income of $917 thousand related to the reversal of potential repurchase obligation on acquired assets as Equity was able to improve our position on those assets during the quarter.

During the quarter, service fee revenue, including deposit services, mortgage banking, trust and wealth management, credit cards and insurance increased to $6.4 million from $5.3 million during the first quarter. The growth was driven by increasing balances, transaction activity and relationship development within our trust and wealth management business line.

Non-Interest Expense

Total non-interest expense for the quarter ended June 30, 2021, was $25.8 million as compared to $24.9 million for the quarter ended March 31, 2021. The $925 thousand change is primarily attributed to an increase of $811 thousand in data processing expense, as deposit accounts and activity have increased so too has the associated expense. The periodic increase also included $308 thousand in merger expense.

Asset Quality

As of June 30, 2021, Equitys allowance for credit losses to total loans was 1.84%, as compared to 1.99% at March 31, 2021. Exclusive of PPP assets, the reserve to total loans was 2.04% as of June 30, 2021 as compared to 2.33% at March 31, 2021. Nonperforming assets were $66.7 million as of June 30, 2021, or 1.56% of total assets, compared to $70.1 million at March 31, 2021, or 1.67% of total assets. Total classified assets, including loans rated special mention or worse, other real estate owned and other repossessed assets were $103.1 million, or 23.11% of regulatory capital, down from $112.6 million, or 26.45% of regulatory capital as of March 31, 2021.

Regulatory Capital

The Companys ratio of common equity tier 1 capital to risk-weighted assets was 12.4%, the total capital to risk-weighted assets was 16.7% and the total leverage ratio was 8.9% at June 30, 2021. At December 31, 2020, the Companys common equity tier 1 capital to risk-weighted assets ratio was 12.8%, the total capital to risk-weighted assets ratio was 17.4% and the total leverage ratio was 9.3%. The Companys subsidiary, Equity Bank, had a ratio of common equity tier 1 capital to risk-weighted assets of 14.4%, a ratio of total capital to risk-weighted assets of 15.6% and a total leverage ratio of 9.9% at June 30, 2021. At December 31, 2020, Equity Banks ratio of common equity tier 1 capital to risk-weighted assets was 14.5%, the ratio of total capital to risk-weighted assets was 15.7% and the total leverage ratio was 10.1%.

Non-GAAP Financial Measures

In addition to evaluating the Companys 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 Companys GAAP financial information.

The efficiency ratio is used as a common measure by banks as a comparable metric to understand the Companys expense structure relative to its 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, provision for loan losses and goodwill impairment 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 the 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 Companys 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 8 in the following press release tables.

Conference Call and Webcast

Equity Chairman and Chief Executive Officer, Brad Elliott, and Executive Vice President and Chief Financial Officer, Eric Newell, will hold a conference call and webcast to discuss the 2021 second quarter results on Tuesday, July 20, 2021, at 10:00 a.m. eastern time, 9:00 a.m. central time.

Investors, news media and other participants should register for the call or audio webcast at investor.equitybank.com. On Tuesday, July 20, 2021, participants may also dial into the call toll-free at (844) 534-7311 from anywhere in the U.S. or (574) 990-1419 internationally, using conference ID no. 9999830.

Participants are encouraged to dial into the call or access the webcast approximately 10 minutes prior to the start time. Presentation slides to pair with the call or webcast will be posted one hour prior to the call at investor.equitybank.com.

A replay of the call and webcast will be available two hours following the close of the call until July 27, 2021, accessible at (855) 859-2056 with conference ID no. 9999830 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. Equitys common stock is traded on the NASDAQ Global Select Market under the symbol EQBK. Learn more at www.equitybank.com.

Important Additional Information

The information contained herein does not constitute an offer to sell or a solicitation of an offer to buy any securities or a solicitation of any vote or approval.

In connection with the proposed transaction, Equity filed with the Securities and Exchange Commission (SEC) a registration statement on Form S-4 to register the shares of Equity common stock to be issued to ASBI stockholders. The registration statement included a proxy statement/prospectus, which will be sent to the stockholders of ASBI seeking their approval of the proposed transaction.

WE URGE INVESTORS AND SECURITY HOLDERS TO READ THE REGISTRATION STATEMENT ON FORM S-4, THE PROXY STATEMENT/PROSPECTUS INCLUDED WITHIN THE REGISTRATION STATEMENT ON FORM S-4 AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT EQUITY, ASB AND THE PROPOSED TRANSACTION.

The documents filed by Equity with the SEC may be obtained free of charge at Equitys investor relations website at investor.equitybank.com or at the SECs website at www.sec.gov. Alternatively, these documents, when available, can be obtained free of charge from Equity upon written request to Equity Bancshares, Inc., Attn: Investor Relations, 7701 East Kellogg Drive, Suite 300, Wichita, Kansas 67207 or by calling (316) 612-6000.

Participants in the Transaction

Equity, ASBI and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from ASBIs stockholders in connection with the proposed transaction under the rules of the SEC. Information about the directors and executive officers of Equity is set forth in the proxy statement for Equitys 2021 annual meeting of stockholders filed with the SEC on Schedule 14A on March 18, 2021, and Equitys annual report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 9, 2021. Free copies of these documents may be obtained free of charge as described in the preceding paragraph. Additional information regarding the interests of these participants and other persons who may be deemed participants in the transaction may be obtained by reading the proxy statement/prospectus regarding the proposed transaction when it becomes available.

No Offer or Solicitation

This press release shall not constitute an offer to sell, a solicitation of an offer to sell, or the solicitation or an offer to buy any securities. There will be no sale of securities in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirement of Section 10 of the Securities Act of 1933, as amended.

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 Equitys management with respect to, among other things, future events and Equitys 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, 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 Equitys industry, managements beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond Equitys 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 Equitys 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 Equitys Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 9, 2021, and any updates to those risk factors set forth in Equitys 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 Equitys 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. New risks and uncertainties arise from time to time, such as COVID-19, 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 Equitys 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 Equitys 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.(816) 505-4063jhanley@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 ended Six months ended June 30, June 30, 2021 2020 2021 2020 Interest and dividend incomeLoans, including $ 33,810 $ 32,627 $ 64,811 $ 67,003 feesSecurities, 3,523 4,017 7,322 8,637 taxableSecurities, 717 880 1,441 1,846 nontaxableFederal funds sold 268 409 556 1,004 and otherTotal interest and 38,318 37,933 74,130 78,490 dividend incomeInterest expense Deposits 2,025 3,899 4,435 10,763 Federal fundspurchased and 26 24 48 55 retail repurchaseagreementsFederal Home Loan 80 552 145 1,727 Bank advancesFederal ReserveBank discount ? 6 ? 6 windowBank stock loan ? 306 ? 415 Subordinated debt 1,557 255 3,113 538 Total interest 3,688 5,042 7,741 13,504 expense Net interest 34,630 32,891 66,389 64,986 incomeProvision(reversal) for (1,657 ) 12,500 (7,413 ) 22,440 credit lossesNet interestincome afterprovision 36,287 20,391 73,802 42,546 (reversal) forcredit lossesNon-interest incomeService charges 2,169 1,365 3,765 3,391 and feesDebit card income 2,679 2,201 5,029 4,244 Mortgage banking 848 831 1,783 1,421 Increase in valueof bank-owned life 676 481 1,277 963 insuranceNet gain on 663 ? 585 ? acquisitionNet gains (losses)from securities ? 4 17 12 transactionsOther 2,065 850 3,356 1,007 Total non-interest 9,100 5,732 15,812 11,038 incomeNon-interest expenseSalaries and 12,769 12,695 25,491 26,199 employee benefitsNet occupancy and 2,327 2,119 4,695 4,354 equipmentData processing 3,474 2,763 6,137 5,426 Professional fees 999 943 2,072 2,310 Advertising andbusiness 799 403 1,481 1,099 developmentTelecommunications 512 390 1,092 877 FDIC insurance 425 414 840 931 Courier and 327 353 696 737 postageFree nationwide 513 327 985 747 ATM costAmortization ofcore deposit 1,030 974 2,064 1,776 intangiblesLoan expense 181 287 419 521 Other real estate (468 ) 269 (463 ) 577 ownedMerger expenses 460 ? 612 ? Other 2,458 2,000 4,566 4,141 Total non-interest 25,806 23,937 50,687 49,695 expenseIncome (loss) 19,581 2,186 38,927 3,889 before income taxProvision for 4,415 497 8,686 942 income taxesNet income (loss)and net income(loss) allocable $ 15,166 $ 1,689 $ 30,241 $ 2,947 to commonstockholdersBasic earnings $ 1.06 $ 0.11 $ 2.10 $ 0.19 (loss) per shareDiluted earnings $ 1.03 $ 0.11 $ 2.06 $ 0.19 (loss) per shareWeighted average 14,356,958 15,209,483 14,410,328 15,298,590 common sharesWeighted averagediluted common 14,674,838 15,304,009 14,704,240 15,449,517 shares

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, March 31, December 31, September June 30, 2021 2021 2020 30, 2020 2020Interest and dividend incomeLoans, including $ 33,810 $ 31,001 $ 35,383 $ 32,278 $ 32,627 feesSecurities, 3,523 3,799 3,408 3,476 4,017 taxableSecurities, 717 724 913 923 880 nontaxableFederal funds sold 268 288 285 405 409 and otherTotal interest and 38,318 35,812 39,989 37,082 37,933 dividend incomeInterest expense Deposits 2,025 2,410 2,755 3,064 3,899 Federal fundspurchased and 26 22 25 25 24 retail repurchaseagreementsFederal Home Loan 80 65 94 471 552 Bank advancesFederal ReserveBank discount ? ? ? ? 6 windowBank stock loan ? ? ? ? 306 Subordinated debt 1,557 1,556 1,556 1,415 255 Total interest 3,688 4,053 4,430 4,975 5,042 expense Net interest 34,630 31,759 35,559 32,107 32,891 incomeProvision(reversal) for (1,657 ) (5,756 ) 1,000 815 12,500 credit lossesNet interestincome afterprovision 36,287 37,515 34,559 31,292 20,391 (reversal) forcredit lossesNon-interest incomeService charges 2,169 1,596 1,759 1,706 1,365 and feesDebit card income 2,679 2,350 2,401 2,491 2,201 Mortgage banking 848 935 855 877 831 Increase in valueof bank-owned life 676 601 489 489 481 insuranceNet gain on 663 (78 ) 2,145 ? ? acquisitionNet gains (losses)from securities ? 17 (1 ) ? 4 transactionsOther 2,065 1,291 852 922 850 Total non-interest 9,100 6,712 8,500 6,485 5,732 incomeNon-interest expenseSalaries and 12,769 12,722 14,053 13,877 12,695 employee benefitsNet occupancy and 2,327 2,368 2,206 2,224 2,119 equipmentData processing 3,474 2,663 2,748 2,817 2,763 Professional fees 999 1,073 1,095 877 943 Advertising andbusiness 799 682 801 598 403 developmentTelecommunications 512 580 510 486 390 FDIC insurance 425 415 797 360 414 Courier and 327 369 338 366 353 postageFree nationwide 513 472 423 439 327 ATM costAmortization ofcore deposit 1,030 1,034 1,044 1,030 974 intangiblesLoan expense 181 238 161 107 287 Other real estate (468 ) 5 1,600 133 269 ownedMerger expenses 460 152 299 ? ? Goodwill ? ? ? 104,831 ? impairmentOther 2,458 2,108 2,385 2,690 2,000 Total non-interest 25,806 24,881 28,460 130,835 23,937 expenseIncome (loss) 19,581 19,346 14,599 (93,058 ) 2,186 before income taxProvision forincome taxes 4,415 4,271 2,111 (2,653 ) 497 (benefit)Net income (loss)and net income(loss) allocable $ 15,166 $ 15,075 $ 12,488 $ (90,405 ) $ 1,689 to commonstockholdersBasic earnings $ 1.06 $ 1.04 $ 0.85 $ (6.01 ) $ 0.11 (loss) per shareDiluted earnings $ 1.03 $ 1.02 $ 0.84 $ (6.01 ) $ 0.11 (loss) per shareWeighted average 14,356,958 14,464,291 14,760,810 15,040,407 15,209,483 common sharesWeighted averagediluted common 14,674,838 14,734,083 14,934,058 15,040,407 15,304,009 shares

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

June 30, March 31, December September June 30, 2021 2021 31, 30, 2020 2020 2020ASSETS Cash and due from $ 138,869 $ 136,190 $ 280,150 $ 65,534 $ 178,045 banksFederal funds sold 452 498 548 305 245 Cash and cash 139,321 136,688 280,698 65,839 178,290 equivalentsInterest-bearingtime deposits in ? 249 249 499 2,248 other banksAvailable-for-sale 1,041,614 998,100 871,827 798,576 177,228 securitiesHeld-to-maturity ? ? ? ? 662,522 securities^(^1)Loans held for sale 6,183 8,609 12,394 9,053 4,802 Loans, net ofallowance for credit 2,763,227 2,740,215 2,557,987 2,691,626 2,772,256 losses^(^2)Other real estate 10,861 10,559 11,733 8,727 7,374 owned, netPremises and 90,876 90,322 89,412 86,087 87,055 equipment, netBank-owned life 103,321 102,645 77,044 76,555 76,066 insuranceFederal Reserve Bankand Federal Home 18,454 15,174 16,415 32,545 31,832 Loan Bank stockInterest receivable 15,064 16,655 15,831 18,110 19,598 Goodwill 31,601 31,601 31,601 31,601 136,432 Core deposit 13,993 15,023 16,057 17,101 18,131 intangibles, netOther 33,701 30,344 32,108 29,252 31,435 Total assets $ 4,268,216 $ 4,196,184 $ 4,013,356 $ 3,865,571 $ 4,205,269 LIABILITIES AND STOCKHOLDERS? EQUITYDeposits Demand $ 992,565 $ 972,364 $ 791,639 $ 693,967 $ 756,613 Totalnon-interest-bearing 992,565 972,364 791,639 693,967 756,613 depositsSavings, NOW and 2,035,496 2,074,261 2,029,097 1,816,307 1,800,132 money marketTime 659,494 587,905 626,854 623,344 690,522 Totalinterest-bearing 2,694,990 2,662,166 2,655,951 2,439,651 2,490,654 depositsTotal deposits 3,687,555 3,634,530 3,447,590 3,133,618 3,247,267 Federal fundspurchased and retail 47,184 40,339 36,029 46,295 51,557 repurchaseagreementsFederal Home Loan 9,208 9,926 10,144 167,862 344,900 Bank advancesSubordinated debt 87,908 87,788 87,684 87,537 55,575 Contractual 4,469 4,856 5,189 5,478 5,571 obligationsInterest payable and 18,897 20,930 19,071 22,609 20,633 other liabilitiesTotal liabilities 3,855,221 3,798,369 3,605,707 3,463,399 3,725,503 Commitments andcontingent liabilitiesStockholders? equity Common stock 176 175 174 174 174 Additional paid-in 389,394 387,939 386,820 386,017 384,955 capitalRetained earnings 68,625 53,459 50,787 38,299 128,704 Accumulated othercomprehensive 13,450 12,019 19,781 21,074 3,390 income, net of taxEmployee stock loans ? ? (43 ) (43 ) (43 )Treasury stock (58,650 ) (55,777 ) (49,870 ) (43,349 ) (37,414 )Total stockholders? 412,995 397,815 407,649 402,172 479,766 equityTotal liabilitiesand stockholders? $ 4,268,216 $ 4,196,184 $ 4,013,356 $ 3,865,571 $ 4,205,269 equity ^(1) Fair marketvalue of $ ? $ ? $ ? $ ? $ 689,206 held-to-maturitysecurities^(2) Allowance for 51,834 55,525 33,709 34,087 34,078 credit losses

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 June 30, 30, 2021 2021 2020 2020 2020 LoansHeld-For-Investment by TypeCommercial real $ 1,261,214 $ 1,218,537 $ 1,188,696 $ 1,188,329 $ 1,191,336 estateCommercial and 732,126 820,736 734,495 857,244 883,355 industrialResidential real 503,110 438,503 381,958 402,242 442,486 estateAgricultural real 129,020 134,944 133,693 127,349 129,080 estateAgricultural 97,912 93,764 94,322 83,084 89,040 Consumer 91,679 89,256 58,532 67,465 71,037 Total loans 2,815,061 2,795,740 2,591,696 2,725,713 2,806,334 held-for-investmentAllowance for credit (51,834 ) (55,525 ) (33,709 ) (34,087 ) (34,078 )lossesNet loans $ 2,763,227 $ 2,740,215 $ 2,557,987 $ 2,691,626 $ 2,772,256 held-for-investment Asset Quality Ratios Allowance for creditlosses on loans to 1.84 % 1.99 % 1.30 % 1.25 % 1.21 %total loansPast due ornonaccrual loans to 2.09 % 2.30 % 1.99 % 2.12 % 1.88 %total loansNonperforming assets 1.56 % 1.67 % 1.36 % 1.55 % 1.37 %to total assetsNonperforming assetsto total loans plus 2.36 % 2.50 % 2.10 % 2.19 % 2.05 %other real estateownedClassified assets tobank total regulatory 23.11 % 26.45 % 25.50 % 18.35 % 20.81 %capital Selected AverageBalance Sheet Data (QTD Average)Investment securities $ 986,986 $ 947,453 $ 814,114 $ 802,525 $ 877,308 Total gross loans 2,853,145 2,736,918 2,692,223 2,758,680 2,806,865 receivableInterest-earning 3,964,633 3,891,140 3,647,730 3,679,168 3,786,629 assetsTotal assets 4,231,439 4,143,752 3,910,628 4,041,187 4,159,336 Interest-bearing 2,656,052 2,690,159 2,551,219 2,430,407 2,487,187 depositsBorrowings 171,658 139,360 172,730 377,158 384,727 Totalinterest-bearing 2,827,710 2,829,519 2,723,949 2,807,565 2,871,914 liabilitiesTotal deposits 3,624,950 3,577,625 2,960,791 3,145,810 3,257,631 Total liabilities 3,827,400 3,748,114 3,501,056 3,558,099 3,675,731 Total stockholders' 404,039 395,638 409,572 483,088 483,605 equityTangible common 356,705 347,262 355,025 329,039 327,411 equity* Performance ratios Return on averageassets (ROAA) 1.44 % 1.48 % 1.27 % (8.90 )% 0.16 %annualizedReturn on averageassets before incometax, provision for 1.70 % 1.33 % 1.59 % 1.24 % 1.42 %loan losses andgoodwillimpairment*Return on averageequity (ROAE) 15.06 % 15.45 % 12.13 % (74.45 )% 1.40 %annualizedReturn on averageequity before incometax, provision for 17.79 % 13.93 % 15.15 % 10.37 % 12.21 %loan losses andgoodwill impairment*Return on averagetangible common 17.98 % 18.57 % 14.93 % (108.31 )% 3.03 %equity (ROATCE)annualized*Return on averagetangible common 17.98 % 18.57 % 14.93 % 12.01 % 3.03 %equity adjusted forgoodwill impairment*Yield on loans 4.75 % 4.59 % 5.23 % 4.65 % 4.68 %annualizedCost ofinterest-bearing 0.31 % 0.36 % 0.43 % 0.50 % 0.63 %deposits annualizedCost of total 0.22 % 0.27 % 0.37 % 0.39 % 0.48 %deposits annualizedNet interest margin 3.50 % 3.31 % 3.88 % 3.47 % 3.49 %annualizedEfficiency ratio* 58.85 % 64.18 % 67.19 % 67.38 % 61.98 %Non-interest income / 0.86 % 0.66 % 0.86 % 0.64 % 0.55 %average assetsNon-interest expense 2.45 % 2.44 % 2.90 % 12.88 % 2.31 %/ average assets Capital Ratios Tier 1 Leverage Ratio 8.88 % 8.73 % 9.30 % 8.76 % 8.52 %Common Equity Tier 1 12.41 % 12.53 % 12.82 % 12.76 % 12.02 %Capital RatioTier 1 Risk Based 12.93 % 13.08 % 13.37 % 13.32 % 12.57 %Capital RatioTotal Risk Based 16.73 % 17.02 % 17.35 % 17.35 % 15.33 %Capital RatioTotal stockholders'equity to total 9.68 % 9.48 % 10.16 % 10.40 % 11.41 %assetsTangible commonequity to tangible 8.68 % 8.44 % 9.05 % 9.23 % 8.00 %assets*Book value per common $ 28.76 $ 27.66 $ 28.04 $ 27.08 $ 31.53 shareTangible book value $ 25.51 $ 24.34 $ 24.68 $ 23.72 $ 21.29 per common share*Tangible book valueper diluted common $ 24.98 $ 23.87 $ 24.32 $ 23.57 $ 21.13 share*

* The value noted is considered a Non-GAAP financial measure. For a reconciliation of Non-GAAP financial measures, see Table 8. Non-GAAP Financial Measures

TABLE 5. YEAR-TO-DATE NET INTEREST INCOME ANALYSIS (Unaudited)(Dollars in thousands)

For the six months ended For the six months ended June 30, 2021 June 30, 2020 Average Interest Average Average Interest Average Outstanding Income/ Yield/ Outstanding Income/ Yield/ Balance Expense Rate^(^ Balance Expense Rate^(^ 3)(4) 3)(4)Interest-earning assetsLoans ^(1) Commercial and $ 814,895 $ 20,962 5.19 % $ 712,115 $ 16,258 4.59 %industrialCommercial real 981,482 22,873 4.70 % 923,625 25,134 5.47 %estateReal estate 254,807 4,531 3.59 % 260,530 6,413 4.95 %constructionResidential real 430,123 9,093 4.26 % 481,716 10,156 4.24 %estateAgricultural 136,366 3,384 5.00 % 134,098 4,046 6.07 %real estateAgricultural 94,596 2,062 4.40 % 87,892 2,576 5.89 %Consumer 83,083 1,906 4.63 % 66,128 2,420 7.36 %Total loans 2,795,352 64,811 4.68 % 2,666,104 67,003 5.05 %Securities Taxable 863,801 7,322 1.71 % 763,992 8,637 2.27 %securitiesNontaxable 103,529 1,441 2.81 % 128,616 1,846 2.89 %securitiesTotal securities 967,330 8,763 1.83 % 892,608 10,483 2.36 %Federal funds 165,408 556 0.68 % 94,234 1,004 2.14 %sold and otherTotalinterest-earning $ 3,928,090 74,130 3.81 % $ 3,652,946 78,490 4.32 %assetsInterest-bearing liabilitiesSavings, NOW andmoney market $ 2,073,658 1,865 0.18 % $ 1,739,527 4,048 0.47 %depositsTime deposits 599,353 2,570 0.86 % 769,820 6,715 1.75 %Totalinterest-bearing 2,673,011 4,435 0.33 % 2,509,347 10,763 0.86 %depositsFHLB advances 23,911 145 1.22 % 283,231 1,727 1.23 %Other borrowings 131,687 3,161 4.84 % 86,784 1,014 2.35 %Totalinterest-bearing $ 2,828,609 7,741 0.55 % $ 2,879,362 13,504 0.94 %liabilities Net interest $ 66,389 $ 64,986 incomeInterest rate 3.26 % 3.38 %spread Net interest 3.41 % 3.58 %margin ^(2) ^(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 ratedisclosed. 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, 2021 June 30, 2020 Average Interest Average Average Interest Average Outstanding Income/ Yield/ Outstanding Income/ Yield/ Balance Expense Rate^(^ Balance Expense Rate^(^ 3)(4) 3)(4)Interest-earning assetsLoans ^(1) Commercial and $ 826,647 $ 11,729 5.69 % $ 868,302 $ 8,378 3.88 %industrialCommercial real 991,033 11,433 4.63 % 934,186 12,192 5.25 %estateReal estate 253,947 2,352 3.71 % 253,672 2,837 4.50 %constructionResidential real 465,525 4,642 4.00 % 467,246 4,854 4.18 %estateAgricultural 131,906 1,687 5.13 % 130,533 1,955 6.02 %real estateAgricultural 94,407 1,024 4.35 % 87,830 1,266 5.80 %Consumer 89,680 943 4.22 % 65,096 1,145 7.07 %Total loans 2,853,145 33,810 4.75 % 2,806,865 32,627 4.68 %Securities Taxable 887,983 3,523 1.59 % 753,332 4,017 2.14 %securitiesNontaxable 99,003 717 2.90 % 123,976 880 2.86 %securitiesTotal securities 986,986 4,240 1.72 % 877,308 4,897 2.25 %Federal funds 124,502 268 0.86 % 102,456 409 1.61 %sold and otherTotalinterest-earning $ 3,964,633 38,318 3.88 % $ 3,786,629 37,933 4.03 %assetsInterest-bearing liabilitiesSavings, NOW andmoney market $ 2,068,319 895 0.17 % $ 1,754,280 923 0.21 %depositsTime deposits 587,733 1,130 0.77 % 732,907 2,976 1.63 %Totalinterest-bearing 2,656,052 2,025 0.31 % 2,487,187 3,899 0.63 %depositsFHLB advances 37,656 80 0.86 % 270,785 552 0.82 %Other borrowings 134,002 1,583 4.74 % 113,942 591 2.09 %Totalinterest-bearing $ 2,827,710 3,688 0.52 % $ 2,871,914 5,042 0.71 %liabilities Net interest $ 34,630 $ 32,891 incomeInterest rate 3.36 % 3.32 %spread Net interest 3.50 % 3.49 %margin ^(2) ^(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, 2021 March 31, 2021 Average Interest Average Average Interest Average Outstanding Income/ Yield/ Outstanding Income/ Yield/ Balance Expense Rate^(^ Balance Expense Rate^(^ 3)(4) 3)(4)Interest-earning assetsLoans ^(1) Commercial and $ 826,647 $ 11,729 5.69 % $ 803,012 $ 9,234 4.66 %industrialCommercial real 991,033 11,433 4.63 % 971,825 11,441 4.77 %estateReal estate 253,947 2,352 3.71 % 255,677 2,178 3.45 %constructionResidential real 465,525 4,642 4.00 % 394,329 4,452 4.58 %estateAgricultural 131,906 1,687 5.13 % 140,875 1,696 4.88 %real estateAgricultural 94,407 1,024 4.35 % 94,787 1,037 4.44 %Consumer 89,680 943 4.22 % 76,413 963 5.11 %Total loans 2,853,145 33,810 4.75 % 2,736,918 31,001 4.59 %Securities Taxable 887,983 3,523 1.59 % 839,349 3,799 1.84 %securitiesNontaxable 99,003 717 2.90 % 108,104 724 2.72 %securitiesTotal securities 986,986 4,240 1.72 % 947,453 4,523 1.94 %Federal funds 124,502 268 0.86 % 206,769 288 0.56 %sold and otherTotalinterest-earning $ 3,964,633 38,318 3.88 % $ 3,891,140 35,812 3.73 %assetsInterest-bearing liabilitiesSavings, NOW andmoney market $ 2,068,319 895 0.17 % $ 2,079,057 971 0.19 %depositsTime deposits 587,733 1,130 0.77 % 611,102 1,439 0.96 %Totalinterest-bearing 2,656,052 2,025 0.31 % 2,690,159 2,410 0.36 %depositsFHLB advances 37,656 80 0.86 % 10,013 65 2.63 %Other borrowings 134,002 1,583 4.74 % 129,347 1,578 4.96 %Totalinterest-bearing $ 2,827,710 3,688 0.52 % $ 2,829,519 4,053 0.58 %liabilities Net interest $ 34,630 $ 31,759 incomeInterest rate 3.36 % 3.15 %spread Net interest 3.50 % 3.31 %margin ^(2) ^(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 June 30, 30, 2021 2021 2020 2020 2020 Income before $ 19,581 $ 19,346 $ 14,599 $ (93,058 ) $ 2,186 income taxesAdd: goodwill ? ? ? 104,831 ? impairmentLess: tax effect 4,415 4,271 2,111 2,652 497 Adjusted income $ 15,166 $ 15,075 $ 12,488 $ 9,121 $ 1,689 Weighted averagecommon shares 14,356,958 14,464,291 14,760,810 15,040,407 15,209,483 outstandingEffect of weightedaverage dilutive 317,880 269,792 173,248 82,804 94,526 shares assumingpositive net incomeWeighted average 14,674,838 14,734,083 14,934,058 15,123,211 15,304,009 diluted sharesDiluted earningsper share adjusted $ 1.03 $ 1.02 $ 0.84 $ 0.60 $ 0.11 for goodwillimpairment Total stockholders' $ 412,995 $ 397,815 $ 407,649 $ 402,172 $ 479,766 equityLess: goodwill 31,601 31,601 31,601 31,601 136,432 Less: core deposit 13,993 15,023 16,057 17,101 18,131 intangibles, netLess: mortgageservicing asset, ? ? ? 1 2 netLess: naming 1,109 1,119 1,130 1,141 1,152 rights, netTangible common $ 366,292 $ 350,072 $ 358,861 $ 352,328 $ 324,049 equityCommon sharesissued at period 14,360,172 14,383,913 14,540,556 14,853,487 15,218,301 endDiluted commonshares outstanding 14,664,603 14,668,287 14,756,378 14,945,282 15,334,144 at period endBook value per $ 28.76 $ 27.66 $ 28.04 $ 27.08 $ 31.53 common shareTangible book value $ 25.51 $ 24.34 $ 24.68 $ 23.72 $ 21.29 per common shareTangible book valueper diluted common $ 24.98 $ 23.87 $ 24.32 $ 23.57 $ 21.13 share Total assets $ 4,268,216 $ 4,196,184 $ 4,013,356 $ 3,865,571 $ 4,205,269 Less: goodwill 31,601 31,601 31,601 31,601 136,432 Less: core deposit 13,993 15,023 16,057 17,101 18,131 intangibles, netLess: mortgageservicing asset, ? ? ? 1 2 netLess: naming 1,109 1,119 1,130 1,141 1,152 rights, netTangible assets $ 4,221,513 $ 4,148,441 $ 3,964,568 $ 3,815,727 $ 4,049,552 Total stockholders'equity to total 9.68 % 9.48 % 10.16 % 10.40 % 11.41 %assetsTangible commonequity to tangible 8.68 % 8.44 % 9.05 % 9.23 % 8.00 %assets Total averagestockholders' $ 404,039 $ 395,638 $ 409,572 $ 483,088 $ 483,605 equityLess: average 47,334 48,376 54,547 154,049 156,194 intangible assetsAverage tangible $ 356,705 $ 347,262 $ 355,025 $ 329,039 $ 327,411 common equityNet income (loss)allocable to common $ 15,166 $ 15,075 $ 12,488 $ (90,405 ) $ 1,689 stockholdersAdd: goodwill ? ? ? 104,831 ? impairmentLess: tax effect of ? ? ? 5,305 ? goodwill impairmentAdjusted net income(loss) plus 15,166 15,075 12,488 9,121 1,689 goodwillimpairmentAmortization of 1,041 1,045 1,055 1,043 986 intangible assetsLess: tax effect ofintangible assets 219 219 222 234 207 amortizationAdjusted net income(loss) allocable to $ 15,988 $ 15,901 $ 13,321 $ 9,930 $ 2,468 commonstockholdersReturn on totalaverage )stockholders' 15.06 % 15.45 % 12.13 % (74.45 % 1.40 %equity(ROAE)annualizedReturn on averagetangible common 17.98 % 18.57 % 14.93 % (108.31 ) 3.03 %equity(ROATCE) %annualizedAdjusted return onaverage tangible 17.98 % 18.57 % 14.93 % 12.01 % 3.03 %commonequity Non-interest $ 25,806 $ 24,881 $ 28,460 $ 130,835 $ 23,937 expenseLess: merger 460 152 299 ? ? expenseLess: goodwill ? ? ? 104,831 ? impairmentNon-interestexpense, excluding $ 25,346 $ 24,729 $ 28,161 $ 26,004 $ 23,937 merger expense andgoodwill impairmentNet interest income $ 34,630 $ 31,759 $ 35,559 $ 32,107 $ 32,891 Non-interest income 9,100 6,712 8,500 6,485 5,732 Less: net gain on 663 (78 ) 2,145 ? ? acquisitionLess: net gains(losses) from ? 17 (1 ) ? 4 securitiestransactionsNon-interestincome, excludinggains (losses) from $ 8,437 $ 6,773 $ 6,356 $ 6,485 $ 5,728 securitiestransactionsNet interest incomeplus non-interestincome,excludingnet gain on $ 43,067 $ 38,532 $ 41,915 $ 38,592 $ 38,619 acquisition and netgains(losses) fromsecuritiestransactionsNon-interestexpense lessgoodwill impairment 59.01 % 64.67 % 64.60 % 67.38 % 61.98 %tonet interestincome plusnon-interest incomeEfficiency ratio 58.85 % 64.18 % 67.19 % 67.38 % 61.98 %Net income (loss)allocable to common $ 15,166 $ 15,075 $ 12,488 $ (90,405 ) $ 1,689 stockholdersAdd: income tax 4,415 4,271 2,111 (2,653 ) 497 provisionAdd: provision(reversal) of (1,657 ) (5,756 ) 1,000 815 12,500 credit lossesAdd: goodwill ? ? ? 104,831 ? impairmentAdjusted net income $ 17,924 $ 13,590 $ 15,599 $ 12,588 $ 14,686 Total average $ 4,231,439 $ 4,143,752 $ 3,910,628 $ 4,041,187 $ 4,159,336 assetsTotal averagestockholders' $ 404,039 $ 395,638 $ 409,572 $ 483,088 $ 483,605 equityReturn on average )assets (ROAA) 1.44 % 1.48 % 1.27 % (8.90 % 0.16 %annualizedAdjusted return on 1.70 % 1.33 % 1.59 % 1.24 % 1.42 %average assetsAdjusted return on 17.79 % 13.93 % 15.15 % 10.37 % 12.21 %average equity