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First Business Bank Reports Record Second Quarter 2022 Net Income of $11.0 Million

-- Strong top line revenue and provision benefit drive tangible book value growth --

First Business Financial Services, Inc. (the “Company”, the “Bank”, or “First Business Bank”) (Nasdaq:FBIZ) reported quarterly net income available to common shareholders of $11.0 million, or $1.29 diluted earnings per share. This compares to net income of $8.7 million, or $1.02 per share, in the first quarter of 2022 and $8.2 million, or $0.95 per share, in the second quarter of 2021.

“Our record quarterly net income was driven by a notable increase in net interest income and exceptional commitment to asset quality resulting in a significant loan loss provision benefit,” President and Chief Executive Officer Corey Chambas said. “Despite above-average loan payoffs this year, we remain confident in our ability to produce 10% net loan growth. We believe this sustained loan growth and expanding net interest margin will continue to generate double-digit annual revenue growth.” Chambas added, “With an enhanced capital base, focus on diversified revenue streams, and relentless attention to credit quality, we believe we are well positioned to extend our track record of performance over the long term.”

Quarterly Highlights

  • Robust Profitability Metrics. Pre-tax, pre-provision adjusted (“PTPP”) earnings, excluding Paycheck Protection Program (“PPP”) interest and fee income, increased $998,000, or 10.4%, from the linked quarter and $3.7 million, or 53.8%, from the prior year quarter. The improvement in profitability was driven by an increase in top line revenue, which rose $1.8 million, or 6.3%, from the linked quarter and $5.4 million, or 21.9%, from the prior year quarter. With revenue growth outpacing operating expense growth, the Company increased PTPP return on average assets to 1.57% in the second quarter of 2022, compared to 1.46% in linked quarter and 1.15% in the prior year quarter.
  • Strong Asset Quality. The Bank continued its strong asset quality trend, highlighted by the team’s ability to proactively work through challenging loans to achieve positive outcomes for the Bank and its shareholders. Non-performing assets declined to $5.7 million, or 0.21% of total assets, improving from 0.40% of total assets on June 30, 2021. The Company recorded a provision benefit of $3.7 million, compared to a benefit of $855,000 in the first quarter of 2022 and $1.0 million in the second quarter of 2021. The provision benefit in the second quarter of 2022 was primarily due to a $4.1 million principal recovery on a legacy SBA relationship originated in May 2016 and fully charged-off in December 2020.
  • Record Net Interest Income Reflecting Loan Growth and Net Interest Margin Expansion. Net interest income grew to a record $23.7 million, increasing $2.2 million, or 10.4%, from the linked quarter and $2.0 million, or 9.3%, from the prior year quarter. This increase was primarily due to a 32 and 22 basis point expansion in net interest margin compared to the linked and prior year quarters, respectively. This net interest expansion resulted from rising rates on variable-rate loans and low deposit betas on in-market deposits following the Federal Open Market Committee’s (“FOMC”) decision to raise the target Fed Funds rate 150 basis points during the first half of 2022.
  • Increased Organic Loan Production. Loans, excluding net PPP loans, grew $48.9 million, or 8.8% annualized, from the first quarter of 2022 and $259.1 million, or 12.8%, from the second quarter of 2021, as the Company’s previous investments in both conventional and specialized lending continue to generate positive results.
  • Compounding Tangible Book Value Growth. The Company’s demonstrated earnings power and diligent credit management more than offset the interest-rate-driven market value decline in the investment portfolio, providing a 9.4% annualized increase in tangible book value compared to the linked quarter and 9.7% compared to the prior year quarter.

Quarterly Financial Results

(Unaudited)

 

As of and for the

Three Months Ended

 

As of and for the

Six Months Ended

(Dollars in thousands, except per share amounts)

 

June 30,

2022

 

March 31,

2022

 

June 30,

2021

 

June 30,

2022

 

June 30,

2021

Net interest income

 

$

23,660

 

 

$

21,426

 

 

$

21,652

 

 

$

45,087

 

 

$

42,515

 

Adjusted non-interest income (1)

 

 

6,872

 

 

 

7,386

 

 

 

6,292

 

 

 

14,258

 

 

 

13,487

 

Operating revenue (1)

 

 

30,532

 

 

 

28,812

 

 

 

27,944

 

 

 

59,345

 

 

 

56,002

 

Operating expense (1)

 

 

19,685

 

 

 

18,887

 

 

 

17,932

 

 

 

38,573

 

 

 

35,383

 

Pre-tax, pre-provision adjusted earnings (1)

 

 

10,847

 

 

 

9,925

 

 

 

10,012

 

 

 

20,772

 

 

 

20,619

 

Less:

 

 

 

 

 

 

 

 

 

 

Provision for loan and lease losses

 

 

(3,727

)

 

 

(855

)

 

 

(958

)

 

 

(4,582

)

 

 

(3,026

)

Net loss (gain) on foreclosed properties

 

 

8

 

 

 

12

 

 

 

(1

)

 

 

20

 

 

 

1

 

Amortization of other intangible assets

 

 

 

 

 

 

 

 

8

 

 

 

 

 

 

15

 

SBA recourse provision (benefit)

 

 

114

 

 

 

(76

)

 

 

245

 

 

 

38

 

 

 

115

 

Impairment (benefit) on tax credit investments

 

 

(351

)

 

 

 

 

 

 

 

 

(351

)

 

 

 

Add:

 

 

 

 

 

 

 

 

 

 

Net gain on sale of securities

 

 

 

 

 

 

 

 

29

 

 

 

 

 

 

29

 

Income before income tax expense

 

 

14,803

 

 

 

10,844

 

 

 

10,747

 

 

 

25,647

 

 

 

23,543

 

Income tax expense

 

 

3,599

 

 

 

2,172

 

 

 

2,512

 

 

 

5,771

 

 

 

5,577

 

Net income

 

$

11,204

 

 

$

8,672

 

 

$

8,235

 

 

$

19,876

 

 

$

17,966

 

Preferred stock dividends

 

 

246

 

 

 

 

 

 

 

 

 

246

 

 

 

 

Net income available to common shareholders

 

$

10,958

 

 

$

8,672

 

 

$

8,235

 

 

$

19,630

 

 

$

17,966

 

Earnings per share, diluted

 

$

1.29

 

 

$

1.02

 

 

$

0.95

 

 

$

2.31

 

 

$

2.08

 

Book value per share

 

$

28.08

 

 

$

27.46

 

 

$

25.70

 

 

$

28.08

 

 

$

25.70

 

Tangible book value per share (1)

 

$

26.63

 

 

$

26.02

 

 

$

24.28

 

 

$

26.63

 

 

$

24.28

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (2)

 

 

3.71

%

 

 

3.39

%

 

 

3.49

%

 

 

3.55

%

 

 

3.46

%

Adjusted net interest margin (1)(2)

 

 

3.45

%

 

 

3.24

%

 

 

3.20

%

 

 

3.35

%

 

 

3.20

%

Fee income ratio (non-interest income / total revenue)

 

 

22.51

%

 

 

25.64

%

 

 

22.60

%

 

 

24.03

%

 

 

24.12

%

Efficiency ratio (1)

 

 

64.47

%

 

 

65.55

%

 

 

64.17

%

 

 

65.00

%

 

 

63.18

%

Return on average assets (2)

 

 

1.61

%

 

 

1.30

%

 

 

1.26

%

 

 

1.46

%

 

 

1.38

%

Pre-tax, pre-provision adjusted return on average assets (1)(2)

 

 

1.60

%

 

 

1.49

%

 

 

1.53

%

 

 

1.54

%

 

 

1.59

%

Return on average common equity (2)

 

 

18.79

%

 

 

14.47

%

 

 

15.09

%

 

 

16.74

%

 

 

16.75

%

 

 

 

 

 

 

 

 

 

 

 

Period-end loans and leases receivable

 

$

2,290,100

 

 

$

2,251,249

 

 

$

2,143,561

 

 

$

2,290,100

 

 

$

2,143,561

 

Specialized lending as a percent of total loans and leases

 

 

20.68

%

 

 

19.22

%

 

 

17.59

%

 

 

20.68

%

 

 

17.59

%

Average loans and leases receivable

 

$

2,272,946

 

 

$

2,244,642

 

 

$

2,223,353

 

 

$

2,258,872

 

 

$

2,203,267

 

Period-end in-market deposits

 

$

1,857,010

 

 

$

2,011,373

 

 

$

2,016,215

 

 

$

1,857,010

 

 

$

2,016,215

 

Average in-market deposits

 

$

1,900,842

 

 

$

1,932,576

 

 

$

1,735,393

 

 

$

1,916,622

 

 

$

1,728,787

 

Allowance for loan and lease losses

 

$

24,104

 

 

$

23,669

 

 

$

25,675

 

 

$

24,104

 

 

$

25,675

 

Non-performing assets

 

$

5,709

 

 

$

5,734

 

 

$

11,601

 

 

$

5,709

 

 

$

11,601

 

Allowance for loan and lease losses as a percent of total gross loans and leases

 

 

1.05

%

 

 

1.05

%

 

 

1.20

%

 

 

1.05

%

 

 

1.20

%

Non-performing assets as a percent of total assets

 

 

0.21

%

 

 

0.21

%

 

 

0.40

%

 

 

0.21

%

 

 

0.40

%

(1)

 

This is a non-GAAP financial measure. Management believes these measures are meaningful because they reflect adjustments commonly made by management, investors, regulators, and analysts to evaluate financial performance, provide greater understanding of ongoing operations, and enhance comparability of results with prior periods. See the section titled Non-GAAP Reconciliations at the end of this release for a reconciliation of GAAP financial measures to non-GAAP financial measures.

(2)

 

Calculation is annualized.

Quarterly Financial Results - Excluding PPP Loans, Interest Income, and Fees

(Unaudited)

 

As of and for the

Three Months Ended

 

As of and for the

Six Months Ended

(Dollars in thousands, except per share amounts)

 

June 30,

2022

 

March 31,

2022

 

June 30,

2021

 

June 30,

2022

 

June 30,

2021

Net interest income

 

$

23,435

 

 

$

21,125

 

 

$

18,545

 

 

$

44,561

 

 

$

36,592

 

Adjusted non-interest income (1)

 

 

6,872

 

 

 

7,386

 

 

 

6,292

 

 

 

14,258

 

 

 

13,487

 

Operating revenue (1)

 

 

30,307

 

 

 

28,511

 

 

 

24,837

 

 

 

58,819

 

 

 

50,079

 

Operating expense (1)

 

 

19,685

 

 

 

18,887

 

 

 

17,932

 

 

 

38,573

 

 

 

35,383

 

Pre-tax, pre-provision adjusted earnings (1)

 

$

10,622

 

 

$

9,624

 

 

$

6,905

 

 

$

20,246

 

 

$

14,696

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (2)

 

 

3.69

%

 

 

3.37

%

 

 

3.29

%

 

 

3.53

%

 

 

3.30

%

Fee income ratio (non-interest income / total revenue)

 

 

22.67

%

 

 

25.91

%

 

 

25.42

%

 

 

24.24

%

 

 

26.97

%

Efficiency ratio (1)

 

 

64.95

%

 

 

66.24

%

 

 

72.20

%

 

 

65.58

%

 

 

70.65

%

Pre-tax, pre-provision adjusted return on average assets (1)(2)

 

 

1.57

%

 

 

1.46

%

 

 

1.15

%

 

 

1.51

%

 

 

1.24

%

 

 

 

 

 

 

 

 

 

 

 

Period-end loans and leases receivable

 

$

2,281,928

 

 

$

2,233,043

 

 

$

2,022,839

 

 

$

2,281,928

 

 

$

2,022,839

 

Specialized lending as a percent of total loans and leases

 

 

20.76

%

 

 

19.38

%

 

 

18.67

%

 

 

20.76

%

 

 

18.67

%

Average loans and leases receivable

 

$

2,261,296

 

 

$

2,223,707

 

 

$

1,994,188

 

 

$

2,242,606

 

 

$

1,967,599

 

Allowance for loan and lease losses as a percent of total gross loans and leases

 

 

1.06

%

 

 

1.06

%

 

 

1.27

%

 

 

1.06

%

 

 

1.27

%

Non-performing assets as a percent of total assets

 

 

0.21

%

 

 

0.21

%

 

 

0.42

%

 

 

0.21

%

 

 

0.42

%

(1)

 

This is a non-GAAP financial measure. Management believes these measures are meaningful because they reflect adjustments commonly made by management, investors, regulators, and analysts to evaluate financial performance, provide greater understanding of ongoing operations, and enhance comparability of results with prior periods. See the section titled Non-GAAP Reconciliations at the end of this release for a reconciliation of GAAP financial measures to non-GAAP financial measures.

(2)

 

Calculation is annualized.

Second Quarter 2022 Compared to First Quarter 2022

Net interest income increased $2.2 million, or 10.4%, to $23.7 million.

  • Net interest income growth was driven by an increase in average loans and leases, net interest margin expansion, and an increase in fees in lieu of interest, which included the recovery of $709,000 in interest from a previously charged-off legacy SBA loan relationship. Average loans and leases receivable increased $37.6 million, or 6.8% annualized, to $2.261 billion. Fees in lieu of interest, which can vary from quarter to quarter based on client-driven activity, totaled $1.9 million, compared to $1.3 million, and included $196,000 and $249,000 in PPP fees, respectively. Excluding fees in lieu of interest and interest income from PPP loans, net interest income increased $1.7 million, or 8.4%.
  • Net interest margin was 3.71%, up 32 basis points compared to 3.39% in the linked quarter. Adjusted net interest margin was 3.45%, up 21 basis points compared to 3.24% in the linked quarter. The primary driver of improved net interest margin was a low deposit beta and higher earning asset yields in the current rising rate environment. The change in the yield of the respective interest-earning asset or the rate paid on interest-bearing liability compared to the change in short-term market rates is commonly referred to as a beta. Management defines short-term market rates as the daily average effective federal funds rate for purposes of estimating interest-earning asset and interest-bearing liability betas. Adjusted net interest margin is a non-GAAP measure representing net interest income excluding fees in lieu of interest and other recurring, but volatile, components of net interest margin divided by average interest-earning assets less average net PPP loans and other recurring, but volatile, components of average interest-earning assets.
  • The yield on average interest-earning assets increased 40 basis points to 4.24% from 3.84%. Excluding average net PPP loans, PPP loan interest income, and fees in lieu of interest, the yield earned on average interest-earning assets increased 30 basis points to 3.96% from 3.66%.
  • The rate paid for average interest-bearing, in-market deposits increased 10 basis points to 0.29% from 0.19%. The rate paid for average total bank funding increased 15 basis points to 0.46% from 0.31%. Total bank funding is defined as total deposits plus Federal Home Loan Bank (“FHLB”) advances. The daily average effective federal funds rate increased 65 basis points compared to the linked quarter, which equates to an in-market, interest-bearing deposit beta of 15% for the three months ended June 30, 2022.
  • The Bank continues to maintain an asset-sensitive balance sheet and ended the quarter appropriately positioned for net interest income to continue to benefit; however, the Bank anticipates deposit betas will rise at a greater rate with further increases in the federal funds rate during the second half of the year, slowing the pace of net interest margin expansion.

The Company reported a net benefit to provision for loan and lease losses of $3.7 million, compared to a $855,000 benefit in the first quarter of 2022.

  • The provision benefit in the second quarter of 2022 was primarily due to net recoveries of $4.2 million, partially offset by a $527,000 increase in the general reserve due to loan growth.

Non-interest income decreased $514,000, or 7.0%, to $6.9 million.

  • Other fee income decreased $1.2 million to $860,000, compared to $2.1 million in the first quarter. The decrease is primarily due to above-average returns on the Company’s investments in mezzanine funds in the first quarter, which returned to historical levels in the second quarter.
  • Private Wealth management fee income increased $11,000, or 0.4% to $2.9 million, despite lower market values during the second quarter. Private Wealth and trust assets under management and administration measured $2.554 billion at June 30, 2022, down $280.3 million, primarily due to a decrease in market valuations, which was partially offset by new business development.
  • Gains on sale of SBA loans increased $366,000 to $951,000.
  • Commercial loan swap fee income increased $246,000 to $471,000. Swap fee income can vary from period to period based on loan activity and the interest rate environment.

Non-interest expense increased $633,000, or 3.4%, to $19.5 million, while operating expense increased $798,000, or 4.2%, to $19.7 million.

  • Compensation expense was $14.0 million, reflecting an increase of $382,000, or 2.8%, from the linked quarter due to a $474,000 one-time increase to the annual cash incentive bonus program accrual, as well as expanded hiring to support the Bank’s growth plans. Management believes there will be upward pressure on compensation throughout the remainder of the year as the Bank continues to opportunistically invest in new talent and retain existing talent in the competitive market. Average FTEs for the second quarter of 2022 were 321, up eleven from 310 in the linked quarter as management continued to focus on talent acquisition to support the Bank’s growth initiatives.
  • Marketing expense increased $170,000, or 34.0%, to $670,000 primarily due to the increase in client entertainment and sponsorships as business development activities continue to increase towards pre-pandemic levels.
  • Professional fees increased $128,000, or 10.9%, to $1.3 million from the linked quarter primarily due to an increase in recruiting expense.
  • Data processing expense increased $112,000, or 14.4%, to $892,000 primarily due to the recurring annual expense related to tax processing on behalf of the Bank’s Private Wealth clients.

Income tax expense increased $1.4 million, or 65.7%, to $3.6 million. The effective tax rate was 23.7% for the six months ended June 30, 2022, compared to 23.6% for the same period in 2021. For 2022, the Company expects to report an effective tax rate of approximately 23% as management intends to continue actively pursuing tax credit opportunities.

Total period-end loans and leases receivable increased $38.9 million, or 6.9% annualized, to $2.290 billion. Excluding net PPP loans, total period-end loans and leases receivable increased $48.9 million, or 8.8% annualized, to $2.282 billion.

  • Commercial and industrial (“C&I”) loans increased $20.7 million, or 11.6% annualized, to $741.4 million, compared to $720.7 million. Excluding PPP loans, C&I loans increased $30.9 million, or 17.6% annualized, due to an increase in specialized lending.
  • Commercial real estate (“CRE”) loans increased by $18.8 million, or 5.1% annualized, to $1.488 billion, compared to $1.470 billion. Increases in construction financing, owner-occupied CRE, multi-family, and land development were offset by a decrease in non-owner occupied CRE loans.

Total period-end in-market deposits decreased $154.4 million, or 30.7% annualized, to $1.857 billion, compared to $2.011 billion. The average rate paid was 0.20%, up seven basis points from 0.13% in the first quarter. The decline in balances was due to movement of client deposits to investment alternatives, seasonality within the Bank’s municipality clients, tax payments, and normal course of business for continuing client relationships.

”On the deposit front, the second quarter is typically seasonally weaker, due to tax payments and other business cycle reasons – just as the first quarter was seasonally strong,” said Corey Chambas. “What was unusual this quarter was several clients moved large amounts of deposits into investments and there were some large client distributions to investors, as well. Importantly, we have not lost any meaningful client relationships associated with these decreases in deposits. We believe a better measure of our deposit picture is that average deposits are up 10% from a year ago, and due to our Treasury Management sales success, service charge fee income is up 11% from a year ago.”

Period-end wholesale funding, including FHLB advances, brokered deposits, and deposits gathered through internet deposit listing services, increased $192.7 million to $566.4 million.

  • Wholesale deposits were $12.3 million in both periods. The average rate paid on wholesale deposits increased seven basis points to 2.98% and the weighted average original maturity was 4.8 years.
  • FHLB advances increased $192.7 million to $554.1 million. The average rate paid on FHLB advances increased 40 basis points to 1.48% and the weighted average original maturity decreased to 3.2 years from 6.0 years.

Non-performing assets were $5.7 million, or 0.21% of total assets, in both periods of comparison.

The allowance for loan and lease losses increased $435,000, or 1.8%, as an increase in the general reserve from loan growth was partially offset by a decrease in general reserve driven by a change in qualitative risk factors.

  • The allowance for loan and lease losses as a percent of total gross loans and leases was 1.05% in both periods of comparison (1.06% excluding net PPP loans).

Second Quarter 2022 Compared to Second Quarter 2021

Net interest income increased $2.0 million, or 9.3%, to $23.7 million.

  • The increase in net interest income primarily reflects an increase in average gross loans and leases, partially offset by lower fees in lieu of interest. Fees in lieu of interest decreased from $3.5 million to $1.9 million, primarily due to a $2.3 million reduction in PPP loan fee amortization. Excluding fees in lieu of interest and interest income from PPP loans, net interest income increased $4.2 million, or 24.0%. Excluding net PPP loans, average gross loans and leases increased $267.1 million, or 13.4%.
  • Net interest margin increased 22 basis points to 3.71% from 3.49%. Adjusted net interest margin increased 25 basis points to 3.45% from 3.20%.
  • The yield on average interest-earning assets measured 4.24% compared to 3.96%. Excluding fees in lieu of interest, PPP loan interest income, and net PPP loans, the yield on average interest-earning assets measured 3.96%, compared to 3.64%. This increase in yield was primarily due to the increase in short-term market rates and the reinvestment of cash flows from the securities and fixed rate loan portfolios in a rising rate environment.
  • The rate paid for average interest-bearing in-market deposits increased eight basis points to 0.29% from 0.21%. The rate paid for average total bank funding increased seven basis points to 0.46% from 0.39%.

The Company reported a net benefit to provision for loan and lease losses of $3.7 million, compared to provision benefit of $958,000 in the second quarter of 2021. The reasons for the provision benefit are consistent with the explanations discussed above in the linked quarter comparison.

Non-interest income of $6.9 million increased by $551,000, or 8.7%, from $6.3 million in the prior year period.

  • Private Wealth management fee income increased $108,000, or 3.9%, to $2.9 million, despite a decline in market values, due to the addition of new money from existing clients. Private Wealth and trust assets under management and administration measured $2.554 billion at June 30, 2022, down $10.6 million, or 0.4%.
  • Gains on sale of SBA loans decreased $252,000 to $951,000.
  • Loan fees of $697,000 increased by $128,000, or 22.5%, primarily due to an increase in conventional, SBA, and Floorplan Financing activity generating additional service fee income.
  • Commercial loan swap fee income was $471,000. There was no swap fee activity in the prior year quarter. Swap fee income varies from period to period based on loan activity and the interest rate environment in any given quarter.
  • Service charges on deposits increased $100,000, or 10.6%, to $1.0 million compared to $941,000, due to an increase in existing and new deposit client relationships.

Non-interest expense increased $1.3 million, or 7.0%, to $19.5 million. Operating expense increased $1.8 million, or 9.8%, to $19.7 million.

  • Compensation expense increased $765,000, or 5.8%, to $14.0 million. Average FTEs were 321 in the second quarter of 2022, compared to 312 in the second quarter of 2021. The reasons for the increase in compensation expense are consistent with the explanations discussed above in the linked quarter analysis.
  • Professional fees increased $385,000, or 42.2%, to $1.3 million, primarily due to an increase in recruiting expense, audit expenses, and a general increase in other professional consulting services for various projects.
  • Marketing expense increased $159,000, or 31.1%, to $670,000 mainly due to an increase in business development activities as the Company continues to return to pre-pandemic spending levels.

Total period-end loans and leases receivable increased $146.5 million, or 6.8%, to $2.290 billion. Excluding net PPP loans, total period-end loans and leases receivable increased $259.1 million, or 12.8%, to $2.282 billion.

  • C&I loans increased $45.9 million, or 6.6% to $741.4 million. Excluding PPP loans, C&I loans increased $161.5 million, or 28.2%, to $733.1 million due to an increase in conventional and specialized Commercial Lending. Management believes this growth rate will moderate to lower double-digits as the Company’s specialized lending products scale over time.
  • CRE loans increased $96.5 million, or 6.9%, primarily due to an increase in non-owner-occupied real estate and construction financing.

Total period-end in-market deposits decreased $159.2 million, or 7.9%, to $1.857 billion and the average rate paid increased five basis points to 0.20%. This decrease in deposits was principally due to a $274.7 million decrease in transaction accounts, partially offset by a $68.9 million and $46.6 million increase in certificates of deposit and money market accounts, respectively. The reasons for the decrease in deposits are consistent with the explanations discussed above in the linked quarter comparison.

Period-end wholesale funding increased $34.1 million to $566.4 million.

  • Wholesale deposits decreased $132.2 million to $12.3 million, compared to $144.5 million, as the existing portfolio runoff was replaced by FHLB advances. The average rate paid on brokered certificates of deposit increased 224 basis points to 2.98% and the weighted average original maturity increased to 4.8 years from 3.5 years.
  • FHLB advances increased $166.3 million to $554.1 million. The average rate paid on FHLB advances increased 21 basis points to 1.48% and the weighted average original maturity decreased to 3.2 years from 6.1 years.

Non-performing assets decreased to $5.7 million, or 0.21% of total assets, compared to $11.6 million, or 0.40% of total assets. Excluding net PPP loans, non-performing assets decreased to 0.21% of total assets compared to 0.42%.

The allowance for loan and lease losses decreased $1.6 million to $24.1 million, compared to $25.7 million.

  • The allowance for loan and lease losses as a percent of total gross loans and leases was 1.05% compared to 1.20%.
  • Excluding net PPP loans, the allowance for loan and leases losses as a percent of total gross loans and leases was 1.06% compared to 1.27%.

Paycheck Protection Program

As of June 30, 2022, the Company had $8.3 million in gross PPP loans outstanding and deferred processing fees outstanding of $113,000. The processing fees are deferred and recognized over the contractual life of the loan, or accelerated at forgiveness, as an adjustment of yield using the interest method. During the three months ended June 30, 2022, the Company recognized $196,000 of PPP processing fees in interest income. The SBA provides a guaranty to the lender of 100% of principal and interest, unless the lender violated an obligation under the agreement.

Share Repurchase Program Update

As previously announced, effective March 4, 2022, the Company’s Board of Directors authorized the repurchase by the Company of shares of its common stock with a maximum aggregate purchase price of $5.0 million, effective March 4, 2022 through March 4, 2023. For the six months ended June 30, 2022, the Company repurchased a total of 30,600 shares for approximately $1.0 million at an average cost of $33.28 per share.

About First Business Financial Services, Inc.

First Business Financial Services, Inc., (Nasdaq: FBIZ) is the parent company of First Business Bank. First Business Bank specializes in Business Banking, including Commercial Banking and Specialized Lending, Private Wealth, and Bank Consulting services, and through its refined focus, delivers unmatched expertise, accessibility, and responsiveness. Specialized Lending solutions are delivered through First Business Bank’s wholly owned subsidiary First Business Specialty Finance, LLC. For additional information, visit www.firstbusiness.bank.

This release may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, which reflect First Business Bank’s current views with respect to future events and financial performance. Forward-looking statements are not based on historical information, but rather are related to future operations, strategies, financial results, or other developments. Forward-looking statements are based on management’s expectations as well as certain assumptions and estimates made by, and information available to, management at the time the statements are made. Those statements are based on general assumptions and are subject to various risks, uncertainties, and other factors that may cause actual results to differ materially from the views, beliefs, and projections expressed in such statements. Such statements are subject to risks and uncertainties, including among other things:

  • Adverse changes in the economy or business conditions, either nationally or in our markets including, without limitation, inflation, supply chain issues, labor shortages, and the adverse effects of the COVID-19 pandemic on the global, national, and local economy.
  • Competitive pressures among depository and other financial institutions nationally and in the Company’s markets.
  • Increases in defaults by borrowers and other delinquencies.
  • Management’s ability to manage growth effectively, including the successful expansion of our client service, administrative infrastructure, and internal management systems.
  • Fluctuations in interest rates and market prices.
  • Changes in legislative or regulatory requirements applicable to the Company and its subsidiaries.
  • Changes in tax requirements, including tax rate changes, new tax laws, and revised tax law interpretations.
  • Fraud, including client and system failure or breaches of our network security, including the Company’s internet banking activities.
  • Failure to comply with the applicable SBA regulations in order to maintain the eligibility of the guaranteed portion of SBA loans.

For further information about the factors that could affect the Company’s future results, please see the Company’s annual report on Form 10-K for the year ended December 31, 2021 and other filings with the Securities and Exchange Commission.

SELECTED FINANCIAL CONDITION DATA

 

(Unaudited)

 

As of

(in thousands)

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

September 30,

2021

 

June 30,

2021

Assets

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

95,484

 

 

$

95,603

 

 

$

57,110

 

 

$

110,624

 

 

$

389,977

 

Securities available-for-sale, at fair value

 

 

208,643

 

 

 

223,631

 

 

 

205,702

 

 

 

194,056

 

 

 

171,219

 

Securities held-to-maturity, at amortized cost

 

 

13,968

 

 

 

17,267

 

 

 

19,746

 

 

 

21,196

 

 

 

22,382

 

Loans held for sale

 

 

2,256

 

 

 

2,418

 

 

 

3,570

 

 

 

5,603

 

 

 

6,059

 

Loans and leases receivable

 

 

2,290,100

 

 

 

2,251,249

 

 

 

2,239,408

 

 

 

2,123,306

 

 

 

2,143,561

 

Allowance for loan and lease losses

 

 

(24,104

)

 

 

(23,669

)

 

 

(24,336

)

 

 

(24,676

)

 

 

(25,675

)

Loans and leases receivable, net

 

 

2,265,996

 

 

 

2,227,580

 

 

 

2,215,072

 

 

 

2,098,630

 

 

 

2,117,886

 

Premises and equipment, net

 

 

1,899

 

 

 

1,621

 

 

 

1,694

 

 

 

1,700

 

 

 

1,747

 

Foreclosed properties

 

 

124

 

 

 

117

 

 

 

164

 

 

 

172

 

 

 

179

 

Right-of-use assets

 

 

5,772

 

 

 

6,118

 

 

 

4,910

 

 

 

5,263

 

 

 

5,472

 

Bank-owned life insurance

 

 

54,324

 

 

 

53,974

 

 

 

53,600

 

 

 

53,244

 

 

 

52,887

 

Federal Home Loan Bank stock, at cost

 

 

22,959

 

 

 

12,863

 

 

 

13,336

 

 

 

12,351

 

 

 

13,451

 

Goodwill and other intangible assets

 

 

12,262

 

 

 

12,184

 

 

 

12,268

 

 

 

12,229

 

 

 

12,178

 

Derivatives

 

 

44,461

 

 

 

26,890

 

 

 

26,343

 

 

 

28,678

 

 

 

32,377

 

Accrued interest receivable and other assets

 

 

48,868

 

 

 

43,816

 

 

 

39,390

 

 

 

40,664

 

 

 

39,855

 

Total assets

 

$

2,777,016

 

 

$

2,724,082

 

 

$

2,652,905

 

 

$

2,584,410

 

 

$

2,865,669

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

 

 

In-market deposits

 

$

1,857,010

 

 

$

2,011,373

 

 

$

1,928,285

 

 

$

1,829,644

 

 

$

2,016,215

 

Wholesale deposits

 

 

12,321

 

 

 

12,321

 

 

 

29,638

 

 

 

74,638

 

 

 

144,492

 

Total deposits

 

 

1,869,331

 

 

 

2,023,694

 

 

 

1,957,923

 

 

 

1,904,282

 

 

 

2,160,707

 

Federal Home Loan Bank advances and other borrowings

 

 

596,642

 

 

 

414,487

 

 

 

403,451

 

 

 

394,090

 

 

 

420,113

 

Junior subordinated notes

 

 

 

 

 

 

 

 

10,076

 

 

 

10,072

 

 

 

10,069

 

Lease liabilities

 

 

7,207

 

 

 

7,580

 

 

 

5,406

 

 

 

5,780

 

 

 

6,005

 

Derivatives

 

 

40,357

 

 

 

24,961

 

 

 

28,283

 

 

 

31,890

 

 

 

36,109

 

Accrued interest payable and other liabilities

 

 

13,556

 

 

 

8,309

 

 

 

15,344

 

 

 

13,016

 

 

 

11,214

 

Total liabilities

 

 

2,527,093

 

 

 

2,479,031

 

 

 

2,420,483

 

 

 

2,359,130

 

 

 

2,644,217

 

Total stockholders’ equity

 

 

249,923

 

 

 

245,051

 

 

 

232,422

 

 

 

225,280

 

 

 

221,452

 

Total liabilities and stockholders’ equity

 

$

2,777,016

 

 

$

2,724,082

 

 

$

2,652,905

 

 

$

2,584,410

 

 

$

2,865,669

 

STATEMENTS OF INCOME

 

(Unaudited)

 

As of and for the Three Months Ended

 

As of and for the

Year Ended

(Dollars in thousands, except per share amounts)

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

September 30,

2021

 

June 30,

2021

 

June 30,

2022

 

June 30,

2021

Total interest income

 

$

27,031

 

 

$

24,235

 

 

$

23,576

 

 

$

24,014

 

 

$

24,599

 

 

$

51,266

 

 

$

48,406

 

Total interest expense

 

 

3,371

 

 

 

2,809

 

 

 

2,652

 

 

 

2,791

 

 

 

2,947

 

 

 

6,179

 

 

 

5,891

 

Net interest income

 

 

23,660

 

 

 

21,426

 

 

 

20,924

 

 

 

21,223

 

 

 

21,652

 

 

 

45,087

 

 

 

42,515

 

Provision for loan and lease losses

 

 

(3,727

)

 

 

(855

)

 

 

(508

)

 

 

(2,269

)

 

 

(958

)

 

 

(4,582

)

 

 

(3,026

)

Net interest income after provision for loan and lease losses

 

 

27,387

 

 

 

22,281

 

 

 

21,432

 

 

 

23,492

 

 

 

22,610

 

 

 

49,669

 

 

 

45,541

 

Private wealth management service fees

 

 

2,852

 

 

 

2,841

 

 

 

2,874

 

 

 

2,759

 

 

 

2,744

 

 

 

5,693

 

 

 

5,151

 

Gain on sale of SBA loans

 

 

951

 

 

 

585

 

 

 

1,042

 

 

 

721

 

 

 

1,203

 

 

 

1,537

 

 

 

2,281

 

Service charges on deposits

 

 

1,041

 

 

 

999

 

 

 

1,023

 

 

 

956

 

 

 

941

 

 

 

2,040

 

 

 

1,859

 

Loan fees

 

 

697

 

 

 

652

 

 

 

679

 

 

 

713

 

 

 

569

 

 

 

1,349

 

 

 

1,114

 

Net gain on sale of securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

29

 

 

 

 

 

 

29

 

Swap fees

 

 

471

 

 

 

225

 

 

 

684

 

 

 

 

 

 

 

 

 

697

 

 

 

684

 

Other non-interest income

 

 

860

 

 

 

2,084

 

 

 

1,267

 

 

 

1,866

 

 

 

835

 

 

 

2,942

 

 

 

2,398

 

Total non-interest income

 

 

6,872

 

 

 

7,386

 

 

 

7,569

 

 

 

7,015

 

 

 

6,321

 

 

 

14,258

 

 

 

13,516

 

Compensation

 

 

14,020

 

 

 

13,638

 

 

 

12,447

 

 

 

13,351

 

 

 

13,255

 

 

 

27,658

 

 

 

25,912

 

Occupancy

 

 

568

 

 

 

555

 

 

 

551

 

 

 

544

 

 

 

533

 

 

 

1,123

 

 

 

1,085

 

Professional fees

 

 

1,298

 

 

 

1,170

 

 

 

933

 

 

 

1,024

 

 

 

913

 

 

 

2,468

 

 

 

1,778

 

Data processing

 

 

892

 

 

 

780

 

 

 

773

 

 

 

746

 

 

 

798

 

 

 

1,673

 

 

 

1,569

 

Marketing

 

 

670

 

 

 

500

 

 

 

548

 

 

 

572

 

 

 

511

 

 

 

1,170

 

 

 

902

 

Equipment

 

 

235

 

 

 

244

 

 

 

223

 

 

 

260

 

 

 

261

 

 

 

479

 

 

 

506

 

Computer software

 

 

1,117

 

 

 

1,082

 

 

 

1,017

 

 

 

999

 

 

 

1,129

 

 

 

2,199

 

 

 

2,244

 

FDIC insurance

 

 

296

 

 

 

313

 

 

 

210

 

 

 

291

 

 

 

280

 

 

 

610

 

 

 

642

 

Other non-interest expense

 

 

360

 

 

 

541

 

 

 

829

 

 

 

703

 

 

 

504

 

 

 

900

 

 

 

876

 

Total non-interest expense

 

 

19,456

 

 

 

18,823

 

 

 

17,531

 

 

 

18,490

 

 

 

18,184

 

 

 

38,280

 

 

 

35,514

 

Income before income tax expense

 

 

14,803

 

 

 

10,844

 

 

 

11,470

 

 

 

12,017

 

 

 

10,747

 

 

 

25,647

 

 

 

23,543

 

Income tax expense

 

 

3,599

 

 

 

2,172

 

 

 

2,879

 

 

 

2,819

 

 

 

2,512

 

 

 

5,771

 

 

 

5,577

 

Net income

 

$

11,204

 

 

$

8,672

 

 

$

8,591

 

 

$

9,198

 

 

$

8,235

 

 

$

19,876

 

 

$

17,966

 

Preferred stock dividends

 

 

246

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

246

 

 

 

 

Net income available to common shareholders

 

$

10,958

 

 

$

8,672

 

 

$

8,591

 

 

$

9,198

 

 

$

8,235

 

 

$

19,630

 

 

$

17,966

 

Per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings

 

$

1.29

 

 

$

1.02

 

 

$

1.01

 

 

$

1.07

 

 

$

0.95

 

 

$

2.31

 

 

$

2.08

 

Diluted earnings

 

 

1.29

 

 

 

1.02

 

 

 

1.01

 

 

 

1.07

 

 

 

0.95

 

 

 

2.31

 

 

 

2.08

 

Dividends declared

 

 

0.1975

 

 

 

0.1975

 

 

 

0.18

 

 

 

0.18

 

 

 

0.18

 

 

 

0.395

 

 

 

0.36

 

Book value

 

 

28.08

 

 

 

27.46

 

 

 

27.48

 

 

 

26.56

 

 

 

25.70

 

 

 

28.08

 

 

 

25.70

 

Tangible book value

 

 

26.63

 

 

 

26.02

 

 

 

26.03

 

 

 

25.11

 

 

 

24.28

 

 

 

26.63

 

 

 

24.28

 

Weighted-average common shares outstanding(1)

 

 

8,225,838

 

 

 

8,232,142

 

 

 

8,228,311

 

 

 

8,340,042

 

 

 

8,385,069

 

 

 

8,245,317

 

 

 

8,381,868

 

Weighted-average diluted common shares outstanding(1)

 

 

8,225,838

 

 

 

8,232,142

 

 

 

8,228,311

 

 

 

8,340,042

 

 

 

8,385,069

 

 

 

8,245,317

 

 

 

8,381,868

 

(1)

 

Excluding participating securities.

NET INTEREST INCOME ANALYSIS

 

(Unaudited)

 

For the Three Months Ended

(Dollars in thousands)

 

June 30, 2022

 

March 31, 2022

 

June 30, 2021

 

 

Average

Balance

 

Interest

 

Average

Yield/Rate(4)

 

Average

Balance

 

Interest

 

Average

Yield/Rate(4)

 

Average

Balance

 

Interest

 

Average

Yield/Rate(4)

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate and other mortgage loans(1)

 

$

1,472,075

 

$

15,343

 

4.17

%

 

$

1,459,891

 

$

13,346

 

3.66

%

 

$

1,386,187

 

$

13,087

 

3.78

%

Commercial and industrial loans(1)

 

 

734,299

 

 

9,710

 

5.29

%

 

 

718,364

 

 

9,101

 

5.07

%

 

 

772,257

 

 

9,875

 

5.11

%

Direct financing leases(1)

 

 

15,527

 

 

176

 

4.53

%

 

 

16,540

 

 

189

 

4.57

%

 

 

19,883

 

 

222

 

4.47

%

Consumer and other loans(1)

 

 

51,045

 

 

458

 

3.59

%

 

 

49,847

 

 

436

 

3.50

%

 

 

45,026

 

 

407

 

3.62

%

Total loans and leases receivable(1)

 

 

2,272,946

 

 

25,687

 

4.52

%

 

 

2,244,642

 

 

23,072

 

4.11

%

 

 

2,223,353

 

 

23,591

 

4.24

%

Mortgage-related securities(2)

 

 

176,747

 

 

804

 

1.82

%

 

 

184,962

 

 

760

 

1.64

%

 

 

149,253

 

 

631

 

1.69

%

Other investment securities(3)

 

 

54,591

 

 

260

 

1.91

%

 

 

50,555

 

 

215

 

1.70

%

 

 

41,569

 

 

185

 

1.78

%

FHLB stock

 

 

17,355

 

 

226

 

5.21

%

 

 

14,002

 

 

172

 

4.91

%

 

 

14,172

 

 

176

 

4.97

%

Short-term investments

 

 

29,541

 

 

54

 

0.73

%

 

 

31,111

 

 

16

 

0.21

%

 

 

55,100

 

 

16

 

0.12

%

Total interest-earning assets

 

 

2,551,180

 

 

27,031

 

4.24

%

 

 

2,525,272

 

 

24,235

 

3.84

%

 

 

2,483,447

 

 

24,599

 

3.96

%

Non-interest-earning assets

 

 

165,527

 

 

 

 

 

 

140,969

 

 

 

 

 

 

137,893

 

 

 

 

Total assets

 

$

2,716,707

 

 

 

 

 

$

2,666,241

 

 

 

 

 

$

2,621,340

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transaction accounts

 

$

502,763

 

 

343

 

0.27

%

 

$

533,251

 

 

255

 

0.19

%

 

$

499,040

 

 

248

 

0.20

%

Money market

 

 

767,433

 

 

509

 

0.27

%

 

 

784,276

 

 

338

 

0.17

%

 

 

662,919

 

 

282

 

0.17

%

Certificates of deposit

 

 

73,560

 

 

114

 

0.62

%

 

 

52,519

 

 

55

 

0.42

%

 

 

45,993

 

 

112

 

0.97

%

Wholesale deposits

 

 

12,350

 

 

92

 

2.98

%

 

 

16,236

 

 

118

 

2.91

%

 

 

162,580

 

 

301

 

0.74

%

Total interest-bearing deposits

 

 

1,356,106

 

 

1,058

 

0.31

%

 

 

1,386,282

 

 

766

 

0.22

%

 

 

1,370,532

 

 

943

 

0.28

%

FHLB advances

 

 

449,599

 

 

1,666

 

1.48

%

 

 

385,080

 

 

1,036

 

1.08

%

 

 

405,855

 

 

1,284

 

1.27

%

Other borrowings

 

 

51,018

 

 

647

 

5.07

%

 

 

40,311

 

 

503

 

4.99

%

 

 

32,447

 

 

443

 

5.46

%

Junior subordinated notes(5)

 

 

 

 

 

%

 

 

9,850

 

 

504

 

20.47

%

 

 

10,066

 

 

277

 

11.01

%

Total interest-bearing liabilities

 

 

1,856,723

 

 

3,371

 

0.73

%

 

 

1,821,523

 

 

2,809

 

0.62

%

 

 

1,818,900

 

 

2,947

 

0.65

%

Non-interest-bearing demand deposit accounts

 

 

557,086

 

 

 

 

 

 

562,530

 

 

 

 

 

 

527,441

 

 

 

 

Other non-interest-bearing liabilities

 

 

57,615

 

 

 

 

 

 

42,537

 

 

 

 

 

 

56,691

 

 

 

 

Total liabilities

 

 

2,471,424

 

 

 

 

 

 

2,426,590

 

 

 

 

 

 

2,403,032

 

 

 

 

Stockholders’ equity

 

 

245,283

 

 

 

 

 

 

239,651

 

 

 

 

 

 

218,308

 

 

 

 

Total liabilities and stockholders’ equity

 

$

2,716,707

 

 

 

 

 

$

2,666,241

 

 

 

 

 

$

2,621,340

 

 

 

 

Net interest income

 

 

 

$

23,660

 

 

 

 

 

$

21,426

 

 

 

 

 

$

21,652

 

 

Interest rate spread

 

 

 

 

 

3.51

%

 

 

 

 

 

3.22

%

 

 

 

 

 

3.31

%

Net interest-earning assets

 

$

694,457

 

 

 

 

 

$

703,749

 

 

 

 

 

$

664,547

 

 

 

 

Net interest margin

 

 

 

 

 

3.71

%

 

 

 

 

 

3.39

%

 

 

 

 

 

3.49

%

(1)

 

The average balances of loans and leases include non-accrual loans and leases and loans held for sale. Interest income related to non-accrual loans and leases is recognized when collected. Interest income includes net loan fees collected in lieu of interest.

(2)

 

Includes amortized cost basis of assets available for sale and held to maturity.

(3)

 

Yields on tax-exempt municipal obligations are not presented on a tax-equivalent basis in this table.

(4)

 

Represents annualized yields/rates.

(5)

 

The calculation for the three months ended June 30, 2022 and March 31, 2022 includes $12,000 and $236,000, respectively, in accelerated amortization of debt issuance costs.

NET INTEREST INCOME ANALYSIS

 

(Unaudited)

 

For the Six Months Ended

(Dollars in thousands)

 

June 30, 2022

 

June 30, 2021

 

 

Average

Balance

 

Interest

 

Average

Yield/Rate(4)

 

Average

Balance

 

Interest

 

Average

Yield/Rate(4)

Interest-earning assets

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate and other mortgage loans(1)

 

$

1,466,017

 

$

28,689

 

3.91

%

 

$

1,371,744

 

$

25,615

 

3.73

%

Commercial and industrial loans(1)

 

 

726,376

 

 

18,811

 

5.18

%

 

 

765,117

 

 

19,500

 

5.10

%

Direct financing leases(1)

 

 

16,030

 

 

365

 

4.55

%

 

 

21,071

 

 

466

 

4.42

%

Consumer and other loans(1)

 

 

50,449

 

 

894

 

3.54

%

 

 

45,335

 

 

805

 

3.55

%

Total loans and leases receivable(1)

 

 

2,258,872

 

 

48,759

 

4.32

%

 

 

2,203,267

 

 

46,386

 

4.21

%

Mortgage-related securities(2)

 

 

180,832

 

 

1,564

 

1.73

%

 

 

156,249

 

 

1,297

 

1.66

%

Other investment securities(3)

 

 

52,584

 

 

475

 

1.81

%

 

 

41,871

 

 

372

 

1.78

%

FHLB stock

 

 

15,688

 

 

398

 

5.07

%

 

 

13,323

 

 

329

 

4.94

%

Short-term investments

 

 

30,321

 

 

70

 

0.46

%

 

 

39,922

 

 

22

 

0.11

%

Total interest-earning assets

 

 

2,538,297

 

 

51,266

 

4.04

%

 

 

2,454,632

 

 

48,406

 

3.94

%

Non-interest-earning assets

 

 

153,316

 

 

 

 

 

 

144,741

 

 

 

 

Total assets

 

$

2,691,613

 

 

 

 

 

$

2,599,373

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Transaction accounts

 

$

517,923

 

 

597

 

0.23

%

 

$

510,024

 

 

498

 

0.20

%

Money market

 

 

775,808

 

 

848

 

0.22

%

 

 

660,319

 

 

557

 

0.17

%

Certificates of deposit

 

 

63,098

 

 

169

 

0.54

%

 

 

51,677

 

 

288

 

1.11

%

Wholesale deposits

 

 

14,282

 

 

210

 

2.94

%

 

 

164,654

 

 

619

 

0.75

%

Total interest-bearing deposits

 

 

1,371,111

 

 

1,824

 

0.27

%

 

 

1,386,674

 

 

1,962

 

0.28

%

FHLB advances

 

 

417,518

 

 

2,702

 

1.29

%

 

 

386,371

 

 

2,533

 

1.31

%

Other borrowings

 

 

45,694

 

 

1,149

 

5.03

%

 

 

29,886

 

 

844

 

5.65

%

Junior subordinated notes(5)

 

 

4,898

 

 

504

 

20.58

%

 

 

10,064

 

 

552

 

10.97

%

Total interest-bearing liabilities

 

 

1,839,221

 

 

6,179

 

0.67

%

 

 

1,812,995

 

 

5,891

 

0.65

%

Non-interest-bearing demand deposit accounts

 

 

559,793

 

 

 

 

 

 

506,767

 

 

 

 

Other non-interest-bearing liabilities

 

 

50,117

 

 

 

 

 

 

65,146

 

 

 

 

Total liabilities

 

 

2,449,131

 

 

 

 

 

 

2,384,908

 

 

 

 

Stockholders’ equity

 

 

242,482

 

 

 

 

 

 

214,465

 

 

 

 

Total liabilities and stockholders’ equity

 

$

2,691,613

 

 

 

 

 

$

2,599,373

 

 

 

 

Net interest income

 

 

 

$

45,087

 

 

 

 

 

$

42,515

 

 

Interest rate spread

 

 

 

 

 

3.37

%

 

 

 

 

 

3.29

%

Net interest-earning assets

 

$

699,076

 

 

 

 

 

$

641,637

 

 

 

 

Net interest margin

 

 

 

 

 

3.55

%

 

 

 

 

 

3.46

%

(1)

 

The average balances of loans and leases include non-accrual loans and leases and loans held for sale. Interest income related to non-accrual loans and leases is recognized when collected. Interest income includes net loan fees collected in lieu of interest.

(2)

 

Includes amortized cost basis of assets available for sale and held to maturity.

(3)

 

Yields on tax-exempt municipal obligations are not presented on a tax-equivalent basis in this table.

(4)

 

Represents annualized yields/rates.

(5)

 

The calculation for the six months ended June 30, 2022, 2022 includes $248,000 in accelerated amortization of debt issuance costs.

PROVISION FOR LOAN AND LEASE LOSS COMPOSITION

 

(Unaudited)

 

For the Three Months Ended

 

For the Six Months Ended

(Dollars in thousands)

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

September 30,

2021

 

June 30,

2021

 

June 30,

2022

 

June 30,

2021

Change in general reserve due to subjective factor changes

 

$

(185

)

 

$

(416

)

 

$

(805

)

 

$

(51

)

 

$

(652

)

 

$

(601

)

 

$

430

 

Change in general reserve due to historical loss factor changes

 

 

64

 

 

 

(206

)

 

 

(862

)

 

 

(923

)

 

 

(1,687

)

 

 

(142

)

 

 

(2,671

)

Charge-offs

 

 

85

 

 

 

22

 

 

 

106

 

 

 

364

 

 

 

2,894

 

 

 

107

 

 

 

3,038

 

Recoveries

 

 

(4,247

)

 

 

(210

)

 

 

(274

)

 

 

(1,634

)

 

 

(545

)

 

 

(4,457

)

 

 

(3,218

)

Change in specific reserves on impaired loans, net

 

 

29

 

 

 

(280

)

 

 

(64

)

 

 

(451

)

 

 

(1,466

)

 

 

(251

)

 

 

(1,660

)

Change due to loan growth, net

 

 

527

 

 

 

235

 

 

 

1,391

 

 

 

426

 

 

 

498

 

 

 

762

 

 

 

1,055

 

Total provision for loan and lease losses

 

$

(3,727

)

 

$

(855

)

 

$

(508

)

 

$

(2,269

)

 

$

(958

)

 

$

(4,582

)

 

$

(3,026

)

PERFORMANCE RATIOS

 

 

 

For the Three Months Ended

 

For the Six Months Ended

(Unaudited)

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

September 30,

2021

 

June 30,

2021

 

June 30,

2022

 

June 30,

2021

Return on average assets (annualized)

 

1.61

%

 

1.30

%

 

1.32

%

 

1.41

%

 

1.26

%

 

1.46

%

 

1.38

%

Return on average common equity (annualized)

 

18.79

%

 

14.47

%

 

15.04

%

 

16.39

%

 

15.09

%

 

16.74

%

 

16.75

%

Efficiency ratio

 

64.47

%

 

65.55

%

 

61.92

%

 

65.68

%

 

64.17

%

 

65.00

%

 

63.18

%

Interest rate spread

 

3.51

%

 

3.22

%

 

3.21

%

 

3.27

%

 

3.31

%

 

3.37

%

 

3.29

%

Net interest margin

 

3.71

%

 

3.39

%

 

3.39

%

 

3.45

%

 

3.49

%

 

3.55

%

 

3.46

%

Average interest-earning assets to average interest-bearing liabilities

 

137.40

%

 

138.64

%

 

141.19

%

 

139.19

%

 

136.54

%

 

138.01

%

 

135.39

%

ASSET QUALITY RATIOS

 

(Unaudited)

 

As of

(Dollars in thousands)

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

September 30,

2021

 

June 30,

2021

Non-accrual loans and leases

 

$

5,585

 

 

$

5,617

 

 

$

6,358

 

 

$

7,433

 

 

$

11,422

 

Foreclosed properties

 

 

124

 

 

 

117

 

 

 

164

 

 

 

172

 

 

 

179

 

Total non-performing assets

 

 

5,709

 

 

 

5,734

 

 

 

6,522

 

 

 

7,605

 

 

 

11,601

 

Performing troubled debt restructurings

 

 

188

 

 

 

203

 

 

 

217

 

 

 

53

 

 

 

56

 

Total impaired assets

 

$

5,897

 

 

$

5,937

 

 

$

6,739

 

 

$

7,658

 

 

$

11,657

 

 

 

 

 

 

 

 

 

 

 

 

Non-accrual loans and leases as a percent of total gross loans and leases

 

 

0.24

%

 

 

0.25

%

 

 

0.28

%

 

 

0.35

%

 

 

0.53

%

Non-performing assets as a percent of total gross loans and leases plus foreclosed properties

 

 

0.25

%

 

 

0.25

%

 

 

0.29

%

 

 

0.36

%

 

 

0.54

%

Non-performing assets as a percent of total assets

 

 

0.21

%

 

 

0.21

%

 

 

0.25

%

 

 

0.29

%

 

 

0.40

%

Allowance for loan and lease losses as a percent of total gross loans and leases

 

 

1.05

%

 

 

1.05

%

 

 

1.09

%

 

 

1.16

%

 

 

1.20

%

Allowance for loan and lease losses as a percent of non-accrual loans and leases

 

 

431.58

%

 

 

421.38

%

 

 

382.76

%

 

 

331.98

%

 

 

224.79

%

ASSET QUALITY RATIOS - EXCLUDING NET PPP LOANS

 

(Unaudited)

 

As of

(Dollars in thousands)

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

September 30,

2021

 

June 30,

2021

Non-accrual loans and leases as a percent of total gross loans and leases

 

 

0.24

%

 

 

0.25

%

 

 

0.29

%

 

 

0.36

%

 

 

0.56

%

Non-performing assets as a percent of total gross loans and leases plus foreclosed properties

 

 

0.25

%

 

 

0.26

%

 

 

0.29

%

 

 

0.37

%

 

 

0.57

%

Non-performing assets as a percent of total assets

 

 

0.21

%

 

 

0.21

%

 

 

0.25

%

 

 

0.30

%

 

 

0.42

%

Allowance for loan and lease losses as a percent of total gross loans and leases

 

 

1.06

%

 

 

1.06

%

 

 

1.10

%

 

 

1.20

%

 

 

1.27

%

PPP loans outstanding, net

 

$

8,172

 

 

$

18,206

 

 

$

27,297

 

 

$

64,454

 

 

$

120,723

 

NET CHARGE-OFFS (RECOVERIES)

 

(Unaudited)

 

For the Three Months Ended

 

For the Six Months Ended

(Dollars in thousands)

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

September 30,

2021

 

June 30,

2021

 

June 30,

2022

 

June 30,

2021

Charge-offs

 

$

85

 

 

$

22

 

 

$

106

 

 

$

364

 

 

$

2,894

 

 

$

107

 

 

$

3,038

 

Recoveries

 

 

(4,247

)

 

 

(210

)

 

 

(274

)

 

 

(1,634

)

 

 

(545

)

 

 

(4,457

)

 

 

(3,218

)

Net (recoveries) charge-offs

 

$

(4,162

)

 

$

(188

)

 

$

(168

)

 

$

(1,270

)

 

$

2,349

 

 

$

(4,350

)

 

$

(180

)

Net (recoveries) charge-offs as a percent of average gross loans and leases (annualized)

 

 

(0.73

)%

 

 

(0.03

)%

 

 

(0.03

)%

 

 

(0.24

)%

 

 

0.42

%

 

 

(0.39

)%

 

 

(0.02

)%

Annualized (recoveries) charge-offs as a percent of average gross loans and leases, excluding average net PPP loans

 

 

(0.74

)%

 

 

(0.03

)%

 

 

(0.03

)%

 

 

(0.25

)%

 

 

0.47

%

 

 

(0.39

)%

 

 

(0.02

)%

Average PPP loans outstanding, net

 

$

11,650

 

 

$

20,935

 

 

$

52,923

 

 

$

87,517

 

 

$

229,165

 

 

$

16,266

 

 

$

235,668

 

CAPITAL RATIOS

 

 

 

As of and for the Three Months Ended

(Unaudited)

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

September 30,

2021

 

June 30,

2021

Total capital to risk-weighted assets

 

11.56

%

 

11.87

%

 

10.82

%

 

11.14

%

 

11.22

%

Tier I capital to risk-weighted assets

 

9.34

%

 

9.27

%

 

8.94

%

 

9.14

%

 

9.14

%

Common equity tier I capital to risk-weighted assets

 

8.90

%

 

8.81

%

 

8.55

%

 

8.73

%

 

8.72

%

Tier I capital to adjusted assets

 

9.19

%

 

9.09

%

 

8.94

%

 

8.69

%

 

8.48

%

Tangible common equity to tangible assets

 

8.16

%

 

8.14

%

 

8.34

%

 

8.28

%

 

7.33

%

Tangible common equity to tangible assets, excluding net PPP loans

 

8.19

%

 

8.20

%

 

8.42

%

 

8.50

%

 

7.66

%

LOAN AND LEASE RECEIVABLE COMPOSITION

 

(Unaudited)

 

As of

(in thousands)

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

September 30,

2021

 

June 30,

2021

Commercial real estate:

 

 

 

 

 

 

 

 

 

 

Commercial real estate - owner occupied

 

$

258,375

 

$

254,237

 

$

235,589

 

$

241,977

 

$

253,600

Commercial real estate - non-owner occupied

 

 

651,920

 

 

656,185

 

 

661,423

 

 

639,423

 

 

614,289

Land development

 

 

42,545

 

 

40,092

 

 

42,792

 

 

39,119

 

 

45,056

Construction

 

 

203,913

 

 

200,472

 

 

179,841

 

 

139,933

 

 

139,943

Multi-family

 

 

314,392

 

 

302,494

 

 

320,072

 

 

313,787

 

 

319,351

1-4 family

 

 

17,335

 

 

16,198

 

 

14,911

 

 

13,487

 

 

19,769

Total commercial real estate

 

 

1,488,480

 

 

1,469,678

 

 

1,454,628

 

 

1,387,726

 

 

1,392,008

Commercial and industrial

 

 

741,363

 

 

720,695

 

 

730,819

 

 

681,065

 

 

695,442

Direct financing leases, net

 

 

13,718

 

 

14,551

 

 

15,743

 

 

16,810

 

 

18,142

Consumer and other:

 

 

 

 

 

 

 

 

 

 

Home equity and second mortgages

 

 

5,132

 

 

4,523

 

 

4,223

 

 

4,576

 

 

5,740

Other

 

 

42,387

 

 

43,066

 

 

35,518

 

 

35,645

 

 

36,567

Total consumer and other

 

 

47,519

 

 

47,589

 

 

39,741

 

 

40,221

 

 

42,307

Total gross loans and leases receivable

 

 

2,291,080

 

 

2,252,513

 

 

2,240,931

 

 

2,125,822

 

 

2,147,899

Less:

 

 

 

 

 

 

 

 

 

 

Allowance for loan and lease losses

 

 

24,104

 

 

23,669

 

 

24,336

 

 

24,676

 

 

25,675

Deferred loan fees

 

 

980

 

 

1,264

 

 

1,523

 

 

2,516

 

 

4,338

Loans and leases receivable, net

 

$

2,265,996

 

$

2,227,580

 

$

2,215,072

 

$

2,098,630

 

$

2,117,886

DEPOSIT COMPOSITION

 

(Unaudited)

 

As of

(in thousands)

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

September 30,

2021

 

June 30,

2021

Non-interest-bearing transaction accounts

 

$

544,507

 

$

600,987

 

$

589,559

 

$

526,047

 

$

774,253

Interest-bearing transaction accounts

 

 

466,785

 

 

539,492

 

 

530,225

 

 

517,248

 

 

511,698

Money market accounts

 

 

731,718

 

 

806,917

 

 

754,410

 

 

728,751

 

 

685,127

Certificates of deposit

 

 

114,000

 

 

63,977

 

 

54,091

 

 

57,598

 

 

45,137

Wholesale deposits

 

 

12,321

 

 

12,321

 

 

29,638

 

 

74,638

 

 

144,492

Total deposits

 

$

1,869,331

 

$

2,023,694

 

$

1,957,923

 

$

1,904,282

 

$

2,160,707

TRUST ASSETS COMPOSITION

 

(Unaudited)

 

As of

(in thousands)

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

September 30,

2021

 

June 30,

2021

Trust assets under management

 

$

2,386,637

 

$

2,636,896

 

$

2,711,760

 

$

2,545,089

 

$

2,362,257

Trust assets under administration

 

 

167,095

 

 

197,160

 

 

208,954

 

 

202,657

 

 

202,116

Total trust assets

 

$

2,553,732

 

$

2,834,056

 

$

2,920,714

 

$

2,747,746

 

$

2,564,373

NON-GAAP RECONCILIATIONS

Certain financial information provided in this release is determined by methods other than in accordance with generally accepted accounting principles (United States) (“GAAP”). Although the Company’s management believes that these non-GAAP financial measures provide a greater understanding of its business, these measures are not necessarily comparable to similar measures that may be presented by other companies.

TANGIBLE BOOK VALUE

“Tangible book value per share” is a non-GAAP measure representing tangible common equity divided by total common shares outstanding. “Tangible common equity” itself is a non-GAAP measure representing common stockholders’ equity reduced by intangible assets, if any. The Company’s management believes that this measure is important to many investors in the marketplace who are interested in period-to-period changes in book value per common share exclusive of changes in intangible assets. The information provided below reconciles tangible book value per share and tangible common equity to their most comparable GAAP measures.

(Unaudited)

 

As of

(Dollars in thousands, except per share amounts)

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

September 30,

2021

 

June 30,

2021

Common stockholders’ equity

 

$

237,931

 

 

$

233,059

 

 

$

232,422

 

 

$

225,280

 

 

$

221,452

 

Goodwill and other intangible assets

 

 

(12,262

)

 

 

(12,184

)

 

 

(12,268

)

 

 

(12,229

)

 

 

(12,178

)

Tangible common equity

 

$

225,669

 

 

$

220,875

 

 

$

220,154

 

 

$

213,051

 

 

$

209,274

 

Common shares outstanding

 

 

8,474,699

 

 

 

8,488,585

 

 

 

8,457,564

 

 

 

8,483,099

 

 

 

8,617,761

 

Book value per share

 

$

28.08

 

 

$

27.46

 

 

$

27.48

 

 

$

26.56

 

 

$

25.70

 

Tangible book value per share

 

 

26.63

 

 

 

26.02

 

 

 

26.03

 

 

 

25.11

 

 

 

24.28

 

TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS

“Tangible common equity to tangible assets” is defined as the ratio of common stockholders’ equity reduced by intangible assets, if any, divided by total assets reduced by intangible assets, if any. The Company’s management believes that this measure is important to many investors in the marketplace who are interested in the relative changes from period to period in common equity and total assets, each exclusive of changes in intangible assets. The information below reconciles tangible common equity and tangible assets to their most comparable GAAP measures.

(Unaudited)

 

As of

(Dollars in thousands)

 

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

September 30,

2021

 

June 30,

2021

Common stockholders’ equity

 

$

237,931

 

 

$

233,052

 

 

$

232,422

 

 

$

225,280

 

 

$

221,452

 

Goodwill and other intangible assets

 

 

(12,262

)

 

 

(12,184

)

 

 

(12,268

)

 

 

(12,229

)

 

 

(12,178

)

Tangible common equity

 

$

225,669

 

 

$

220,875

 

 

$

220,154

 

 

$

213,051

 

 

$

209,274

 

Total assets

 

$

2,777,016

 

 

$

2,724,082

 

 

$

2,652,905

 

 

$

2,584,410

 

 

$

2,865,669

 

Goodwill and other intangible assets

 

 

(12,262

)

 

 

(12,184

)

 

 

(12,268

)

 

 

(12,229

)

 

 

(12,178

)

Tangible assets

 

$

2,764,754

 

 

$

2,711,898

 

 

$

2,640,637

 

 

$

2,572,181

 

 

$

2,853,491

 

Tangible common equity to tangible assets

 

 

8.16

%

 

 

8.14

%

 

 

8.34

%

 

 

8.28

%

 

 

7.33

%

Period-end net PPP loans

 

 

8,172

 

 

 

18,206

 

 

 

27,297

 

 

 

64,454

 

 

 

120,722

 

Tangible assets, excluding net PPP loans

 

$

2,756,582

 

 

$

2,693,692

 

 

$

2,613,340

 

 

$

2,507,727

 

 

$

2,732,769

 

Tangible common equity to tangible assets, excluding net PPP loans

 

 

8.19

%

 

 

8.20

%

 

 

8.42

%

 

 

8.50

%

 

 

7.66

%

EFFICIENCY RATIO & PRE-TAX, PRE-PROVISION ADJUSTED EARNINGS

“Efficiency ratio” is a non-GAAP measure representing non-interest expense excluding the effects of the SBA recourse provision, impairment of tax credit investments, losses or gains on foreclosed properties, amortization of other intangible assets and other discrete items, if any, divided by operating revenue, which is equal to net interest income plus non-interest income less realized gains or losses on securities, if any. “Pre-tax, pre-provision adjusted earnings” is defined as operating revenue less operating expense. In the judgment of the Company’s management, the adjustments made to non-interest expense and non-interest income allow investors and analysts to better assess the Company’s operating expenses in relation to its core operating revenue by removing the volatility that is associated with certain one-time items and other discrete items. The information provided below reconciles the efficiency ratio and pre-tax, pre-provision adjusted earnings to its most comparable GAAP measure.

(Unaudited)

For the Three Months Ended

 

For the Six Months Ended

(Dollars in thousands)

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

September 30,

2021

 

June 30,

2021

 

June 30,

2022

 

June 30,

2021

Total non-interest expense

$

19,456

 

 

$

18,823

 

 

$

17,531

 

 

$

18,490

 

 

$

18,184

 

 

$

38,280

 

 

$

35,514

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss (gain) on foreclosed properties

 

8

 

 

 

12

 

 

 

7

 

 

 

6

 

 

 

(1

)

 

 

20

 

 

 

1

 

Amortization of other intangible assets

 

 

 

 

 

 

 

2

 

 

 

7

 

 

 

8

 

 

 

 

 

 

15

 

SBA recourse provision (benefit)

 

114

 

 

 

(76

)

 

 

(122

)

 

 

(69

)

 

 

245

 

 

 

38

 

 

 

115

 

Tax credit investment impairment recovery

 

(351

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(351

)

 

 

 

Total operating expense (a)

$

19,685

 

 

$

18,887

 

 

$

17,644

 

 

$

18,546

 

 

$

17,932

 

 

$

38,573

 

 

$

35,383

 

Net interest income

$

23,660

 

 

$

21,426

 

 

$

20,924

 

 

$

21,223

 

 

$

21,652

 

 

$

45,087

 

 

$

42,515

 

Total non-interest income

 

6,872

 

 

 

7,386

 

 

 

7,569

 

 

 

7,015

 

 

 

6,321

 

 

 

14,258

 

 

 

13,516

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gain on sale of securities

 

 

 

 

 

 

 

 

 

 

 

 

 

29

 

 

 

 

 

 

29

 

Adjusted non-interest income

 

6,872

 

 

 

7,386

 

 

 

7,569

 

 

 

7,015

 

 

 

6,292

 

 

 

14,258

 

 

 

13,487

 

Total operating revenue (b)

$

30,532

 

 

$

28,812

 

 

$

28,493

 

 

$

28,238

 

 

$

27,944

 

 

$

59,345

 

 

$

56,002

 

Efficiency ratio

 

64.47

%

 

 

65.55

%

 

 

61.92

%

 

 

65.68

%

 

 

64.17

%

 

 

65.00

%

 

 

63.18

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax, pre-provision adjusted earnings (b - a)

$

10,847

 

 

$

9,925

 

 

$

10,849

 

 

$

9,692

 

 

$

10,012

 

 

$

20,772

 

 

$

20,619

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

PPP fee income

 

196

 

 

 

249

 

 

 

892

 

 

 

1,666

 

 

 

2,541

 

 

 

445

 

 

 

4,754

 

PPP loan interest income

 

29

 

 

 

52

 

 

 

134

 

 

 

221

 

 

 

566

 

 

 

81

 

 

 

1,169

 

Pre-tax, pre-provision adjusted earnings, excluding PPP

$

10,622

 

 

$

9,624

 

 

$

9,823

 

 

$

7,805

 

 

$

6,905

 

 

$

20,246

 

 

$

14,696

 

Average total assets

$

2,716,707

 

 

$

2,666,241

 

 

$

2,612,905

 

 

$

2,608,198

 

 

$

2,621,340

 

 

$

2,691,613

 

 

$

2,599,373

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

Average net PPP loans

 

11,650

 

 

 

20,935

 

 

 

52,923

 

 

 

87,517

 

 

 

229,165

 

 

 

16,266

 

 

 

235,668

 

Adjusted average total assets

$

2,705,057

 

 

$

2,645,306

 

 

$

2,559,982

 

 

$

2,520,681

 

 

$

2,392,175

 

 

$

2,675,347

 

 

$

2,363,705

 

Pre-tax, pre-provision adjusted return on average assets

 

1.60

%

 

 

1.49

%

 

 

1.66

%

 

 

1.49

%

 

 

1.53

%

 

 

1.54

%

 

 

1.59

%

Pre-tax, pre-provision adjusted return on average assets, excluding PPP

 

1.57

%

 

 

1.46

%

 

 

1.53

%

 

 

1.24

%

 

 

1.15

%

 

 

1.51

%

 

 

1.24

%

ADJUSTED NET INTEREST MARGIN

“Adjusted Net Interest Margin” is a non-GAAP measure representing net interest income excluding the fees in lieu of interest and other recurring, but volatile, components of net interest margin divided by average interest-earning assets less average net PPP loans, if any, and other recurring, but volatile, components of average interest-earning assets. Fees in lieu of interest are defined as prepayment fees, asset-based loan fees, non-accrual interest, and loan fee amortization. In the judgment of the Company’s management, the adjustments made to net interest income allow investors and analysts to better assess the Company’s net interest income in relation to its core client-facing loan and deposit rate changes by removing the volatility that is associated with these recurring but volatile components. The information provided below reconciles the net interest margin to its most comparable GAAP measure.

(Unaudited)

For the Three Months Ended

 

For the Six Months Ended

(Dollars in thousands)

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

September 30,

2021

 

June 30,

2021

 

June 30,

2022

 

June 30,

2021

Interest income

$

27,031

 

 

$

24,235

 

 

$

23,576

 

 

$

24,014

 

 

$

24,599

 

 

$

51,266

 

 

$

48,406

 

Interest expense

 

3,371

 

 

 

2,809

 

 

 

2,652

 

 

 

2,791

 

 

 

2,947

 

 

 

6,179

 

 

 

5,891

 

Net interest income (a)

 

23,660

 

 

 

21,426

 

 

 

20,924

 

 

 

21,223

 

 

 

21,652

 

 

 

45,087

 

 

 

42,515

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

Fees in lieu of interest

 

1,865

 

 

 

1,293

 

 

 

1,700

 

 

 

2,839

 

 

 

3,536

 

 

 

3,158

 

 

 

6,621

 

PPP loan interest income

 

29

 

 

 

52

 

 

 

134

 

 

 

221

 

 

 

566

 

 

 

81

 

 

 

1,169

 

FRB interest income and FHLB dividend income

 

279

 

 

 

188

 

 

 

179

 

 

 

212

 

 

 

192

 

 

 

467

 

 

 

350

 

Adjusted net interest income (b)

$

21,487

 

 

$

19,893

 

 

$

18,911

 

 

$

17,951

 

 

$

17,358

 

 

$

41,381

 

 

$

34,375

 

Average interest-earning assets (c)

$

2,551,180

 

 

$

2,525,272

 

 

$

2,472,013

 

 

$

2,460,567

 

 

$

2,483,447

 

 

$

2,538,297

 

 

$

2,454,632

 

Less:

 

 

 

 

 

 

 

 

 

 

 

 

 

Average net PPP loans

 

11,650

 

 

 

20,935

 

 

 

52,923

 

 

 

87,517

 

 

 

229,165

 

 

 

16,266

 

 

 

235,668

 

Average FRB cash and FHLB stock

 

46,334

 

 

 

44,577

 

 

 

71,939

 

 

 

129,469

 

 

 

68,503

 

 

 

45,461

 

 

 

52,661

 

Average non-accrual loans and leases

 

5,429

 

 

 

6,195

 

 

 

6,796

 

 

 

11,298

 

 

 

16,744

 

 

 

5,810

 

 

 

19,392

 

Adjusted average interest-earning assets (d)

$

2,487,767

 

 

$

2,453,565

 

 

$

2,340,355

 

 

$

2,232,283

 

 

$

2,169,035

 

 

$

2,470,760

 

 

$

2,146,911

 

Net interest margin (a / c)

 

3.71

%

 

 

3.39

%

 

 

3.39

%

 

 

3.45

%

 

 

3.49

%

 

 

3.55

%

 

 

3.46

%

Adjusted net interest margin (b / d)

 

3.45

%

 

 

3.24

%

 

 

3.23

%

 

 

3.22

%

 

 

3.20

%

 

 

3.35

%

 

 

3.20

%

 

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