eqbk-10q_20170930.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number 001-37624

 

EQUITY BANCSHARES, INC.

(Exact name of registrant as specified in its charter)

 

 

Kansas

 

72-1532188

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

7701 East Kellogg Drive, Suite 300

Wichita, KS

 

 

67207

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: 316.612.6000

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

                                                         Large accelerated filer   ☐                                             Accelerated filer    ☒

                                                         Non-accelerated filer (Do not check is a smaller reporting company)         ☐

                                                                                                                            Smaller reporting company        ☐

                                                                                                                            Emerging growth company        ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☒ No

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

 

 

Shares outstanding as of

November 3, 2017

Class A Common Stock, par value $0.01 per share

12,234,019

 


 

TABLE OF CONTENTS

 

PART I

Financial Information

5

Item 1.

Financial Statements

5

 

Consolidated Balance Sheets

5

 

Consolidated Statements of Income

6

 

Consolidated Statements of Comprehensive Income

7

 

Consolidated Statements of Stockholders’ Equity

8

 

Consolidated Statements of Cash Flows

9

 

Condensed Notes to Interim Consolidated Financial Statements

11

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

37

 

Overview

37

 

Critical Accounting Policies

39

 

Results of Operations

41

 

Financial Condition

52

 

Liquidity and Capital Resources

65

 

Non-GAAP Financial Measures

68

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

71

Item 4.

Controls and Procedures

73

Part II

OTHER INFORMATION

74

Item 1.

Legal Proceedings

74

Item 1A.

Risk Factors

74

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

74

Item 3.

Defaults Upon Senior Securities

74

Item 4.

Mine Safety Disclosures

74

Item 5.

Other Information

74

Item 6.

Exhibits

75

 

Important Notice about Information in this Quarterly Report

Unless we state otherwise or the context otherwise requires, references in this Quarterly Report to “we,” “our,” “us,” “the Company” and “Equity” refer to Equity Bancshares, Inc. and its consolidated subsidiaries, including Equity Bank, which we sometimes refer to as “Equity Bank,” “the Bank” or “our Bank.”

The information contained in this Quarterly Report is accurate only as of the date of this Quarterly Report on Form 10-Q and as of the dates specified herein.

2


CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  These forward-looking statements reflect our current views with respect to, among other things, future events and our 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 our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution 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 we believe 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. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described under the heading “Item 1A - Risk Factors” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 16, 2017, and in Item 1A – Risk Factors of this Quarterly Report.

There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following:

 

an economic downturn, especially one affecting our core market areas;

 

the occurrence of various events that negatively impact the real estate market, since a significant portion of our loan portfolio is secured by real estate;

 

difficult or unfavorable conditions in the market for financial products and services generally;

 

interest rate fluctuations, which could have an adverse effect on our profitability;

 

external economic and/or market factors, such as changes in monetary and fiscal policies and laws, including the interest rate policies of the Board of Governors of the Federal Reserve System (the “Federal Reserve”), inflation or deflation, changes in the demand for loans, and fluctuations in consumer spending, borrowing and savings habits, which may have an adverse impact on our financial condition;

 

continued or increasing competition from other financial institutions, credit unions, and non-bank financial services companies, many of which are subject to different regulations than we are;

 

costs arising from the environmental risks associated with making loans secured by real estate;

 

losses resulting from a decline in the credit quality of the assets that we hold;

 

inadequacies in our allowance for loan losses, which could require us to take a charge to earnings and thereby adversely affect our financial condition;

 

inaccuracies or changes in the appraised value of real estate securing the loans that we originate, which could lead to losses if the real estate collateral is later foreclosed upon and sold at a price lower than the appraised value;

 

the costs of integrating the businesses we acquire, which may be greater than expected;

 

challenges arising from unsuccessful attempts to expand into new geographic markets, products, or services;

 

a lack of liquidity resulting from decreased loan repayment rates, lower deposit balances, or other factors;

 

restraints on the ability of Equity Bank to pay dividends to us, which could limit our liquidity;

 

the loss of our largest loan and depositor relationships;

 

limitations on our ability to lend and to mitigate the risks associated with our lending activities as a result of our size and capital position;

 

additional regulatory requirements and restrictions on our business, which could impose additional costs on us;

 

increased capital requirements imposed by banking regulators, which may require us to raise capital at a time when capital is not available on favorable terms or at all;

 

a failure in the internal controls we have implemented to address the risks inherent to the business of banking;

3


 

inaccuracies in our assumptions about future events, which could result in material differences between our financial projections and actual financial performance;

 

the departure of key members of our management personnel or our inability to hire qualified management personnel;

 

disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems;

 

unauthorized access to nonpublic personal information of our customers, which could expose us to litigation or reputational harm;

 

disruptions, security breaches, or other adverse events affecting the third-party vendors who perform several of our critical processing functions;

 

the occurrence of adverse weather or manmade events, which could negatively affect our core markets or disrupt our operations;

 

an increase in FDIC deposit insurance assessments, which could adversely affect our earnings;

 

an inability to keep pace with the rate of technological advances due to a lack of resources to invest in new technologies; and

 

other factors that are discussed in “Item 1A - Risk Factors.”

The foregoing factors should not be construed as exhaustive and should be read in conjunction with other cautionary statements that are included in this Quarterly Report. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. 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 we do 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, and it is not possible for us to predict those events or how they may affect us. In addition, we cannot assess the impact of each factor on our 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 Quarterly Report on Form 10-Q 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 we or persons acting on our behalf may issue.

 

 

4


PART I

 

 

Item 1: Financial Statements

EQUITY BANCSHARES, INC.

CONSOLIDATED BALANCE SHEETS

September 30, 2017 and December 31, 2016

(Dollar amounts in thousands)

 

 

 

(Unaudited)

September 30,

 

 

December 31,

 

 

 

2017

 

 

2016

 

ASSETS

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

27,444

 

 

$

34,137

 

Federal funds sold

 

 

21

 

 

 

958

 

Cash and cash equivalents

 

 

27,465

 

 

 

35,095

 

Interest-bearing time deposits in other banks

 

 

3,741

 

 

 

3,750

 

Available-for-sale securities

 

 

81,116

 

 

 

95,732

 

Held-to-maturity securities, fair value of $528,627 and $461,156

 

 

528,944

 

 

 

465,709

 

Loans held for sale

 

 

4,283

 

 

 

4,830

 

Loans, net of allowance for loan losses of $7,969 and $6,432

 

 

1,532,792

 

 

 

1,377,173

 

Other real estate owned, net

 

 

8,169

 

 

 

8,656

 

Premises and equipment, net

 

 

55,596

 

 

 

50,515

 

Bank owned life insurance

 

 

49,123

 

 

 

48,055

 

Federal Reserve Bank and Federal Home Loan Bank stock

 

 

17,107

 

 

 

16,652

 

Interest receivable

 

 

9,761

 

 

 

6,991

 

Goodwill

 

 

64,587

 

 

 

58,874

 

Core deposit intangible, net

 

 

5,476

 

 

 

4,715

 

Other

 

 

17,266

 

 

 

15,445

 

Total assets

 

$

2,405,426

 

 

$

2,192,192

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

Demand

 

$

263,746

 

 

$

207,668

 

Total non-interest-bearing deposits

 

 

263,746

 

 

 

207,668

 

Savings, NOW, and money market

 

 

959,498

 

 

 

869,625

 

Time

 

 

645,249

 

 

 

553,158

 

Total interest-bearing deposits

 

 

1,604,747

 

 

 

1,422,783

 

Total deposits

 

 

1,868,493

 

 

 

1,630,451

 

Federal funds purchased and retail repurchase agreements

 

 

31,181

 

 

 

20,637

 

Federal Home Loan Bank advances

 

 

190,021

 

 

 

259,588

 

Subordinated debentures

 

 

13,896

 

 

 

13,684

 

Contractual obligations

 

 

2,211

 

 

 

2,504

 

Interest payable and other liabilities

 

 

7,789

 

 

 

7,364

 

Total liabilities

 

 

2,113,591

 

 

 

1,934,228

 

Commitments and contingent liabilities, see Notes 10 and 11

 

 

 

 

 

 

 

 

Stockholders’ equity, see Note 6

 

 

 

 

 

 

 

 

Common stock

 

 

137

 

 

 

132

 

Additional paid-in capital

 

 

253,027

 

 

 

236,103

 

Retained earnings

 

 

60,703

 

 

 

44,328

 

Accumulated other comprehensive loss

 

 

(2,220

)

 

 

(2,702

)

Employee stock loans

 

 

(157

)

 

 

(242

)

Treasury stock

 

 

(19,655

)

 

 

(19,655

)

Total stockholders’ equity

 

 

291,835

 

 

 

257,964

 

Total liabilities and stockholders’ equity

 

$

2,405,426

 

 

$

2,192,192

 

See accompanying condensed notes to interim consolidated financial statements.

5


EQUITY BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF INCOME

For the Three and Nine Months ended September 30, 2017 and 2016

(Dollar amounts in thousands, except per share data)

 

 

(Unaudited)

Three Months Ended

September 30,

 

 

(Unaudited)

Nine Months Ended

September 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Interest and dividend income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

20,420

 

 

$

11,493

 

 

$

60,482

 

 

$

34,885

 

Securities, taxable

 

 

2,982

 

 

 

1,855

 

 

 

8,930

 

 

 

6,051

 

Securities, nontaxable

 

 

863

 

 

 

383

 

 

 

2,510

 

 

 

1,043

 

Federal funds sold and other

 

 

323

 

 

 

519

 

 

 

963

 

 

 

1,513

 

Total interest and dividend income

 

 

24,588

 

 

 

14,250

 

 

 

72,885

 

 

 

43,492

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

3,270

 

 

 

1,707

 

 

 

8,740

 

 

 

4,984

 

Federal funds purchased and retail repurchase agreements

 

 

15

 

 

 

16

 

 

 

40

 

 

 

42

 

Federal Home Loan Bank advances

 

 

731

 

 

 

386

 

 

 

1,967

 

 

 

1,063

 

Subordinated debentures

 

 

251

 

 

 

159

 

 

 

725

 

 

 

469

 

Total interest expense

 

 

4,267

 

 

 

2,268

 

 

 

11,472

 

 

 

6,558

 

Net interest income

 

 

20,321

 

 

 

11,982

 

 

 

61,413

 

 

 

36,934

 

Provision for loan losses

 

 

727

 

 

 

104

 

 

 

2,450

 

 

 

1,359

 

Net interest income after provision for loan losses

 

 

19,594

 

 

 

11,878

 

 

 

58,963

 

 

 

35,575

 

Non-interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges and fees

 

 

1,303

 

 

 

851

 

 

 

3,679

 

 

 

2,437

 

Debit card income

 

 

1,175

 

 

 

722

 

 

 

3,385

 

 

 

2,127

 

Mortgage banking

 

 

521

 

 

 

442

 

 

 

1,546

 

 

 

1,019

 

Increase in value of bank owned life insurance

 

 

359

 

 

 

249

 

 

 

1,068

 

 

 

746

 

Net gain from securities transactions

 

 

175

 

 

 

 

 

 

271

 

 

 

479

 

Other

 

 

502

 

 

 

263

 

 

 

1,387

 

 

 

869

 

Total non-interest income

 

 

4,035

 

 

 

2,527

 

 

 

11,336

 

 

 

7,677

 

Non-interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

8,353

 

 

 

5,391

 

 

 

24,395

 

 

 

15,849

 

Net occupancy and equipment

 

 

1,603

 

 

 

1,159

 

 

 

4,621

 

 

 

3,321

 

Data processing

 

 

1,218

 

 

 

883

 

 

 

3,570

 

 

 

2,590

 

Professional fees

 

 

759

 

 

 

527

 

 

 

1,737

 

 

 

1,544

 

Advertising and business development

 

 

535

 

 

 

353

 

 

 

1,677

 

 

 

901

 

Telecommunications

 

 

275

 

 

 

285

 

 

 

966

 

 

 

803

 

FDIC insurance

 

 

290

 

 

 

240

 

 

 

615

 

 

 

753

 

Courier and postage

 

 

222

 

 

 

179

 

 

 

684

 

 

 

482

 

Free nationwide ATM cost

 

 

238

 

 

 

173

 

 

 

683

 

 

 

488

 

Amortization of core deposit intangible

 

 

243

 

 

 

87

 

 

 

687

 

 

 

260

 

Loan expense

 

 

199

 

 

 

153

 

 

 

658

 

 

 

413

 

Other real estate owned

 

 

219

 

 

 

156

 

 

 

494

 

 

 

164

 

Loss on debt extinguishment

 

 

 

 

 

 

 

 

 

 

 

58

 

Merger expenses

 

 

1,023

 

 

 

237

 

 

 

2,085

 

 

 

237

 

Other

 

 

1,211

 

 

 

911

 

 

 

3,873

 

 

 

2,501

 

Total non-interest expense

 

 

16,388

 

 

 

10,734

 

 

 

46,745

 

 

 

30,364

 

Income before income taxes

 

 

7,241

 

 

 

3,671

 

 

 

23,554

 

 

 

12,888

 

Provision for income taxes

 

 

2,084

 

 

 

1,000

 

 

 

7,179

 

 

 

3,931

 

Net income

 

 

5,157

 

 

 

2,671

 

 

 

16,375

 

 

 

8,957

 

Dividends and discount accretion on preferred stock

 

 

 

 

 

 

 

 

 

 

 

(1

)

Net income allocable to common stockholders

 

$

5,157

 

 

$

2,671

 

 

$

16,375

 

 

$

8,956

 

Basic earnings per share

 

$

0.42

 

 

$

0.32

 

 

$

1.36

 

 

$

1.09

 

Diluted earnings per share

 

$

0.41

 

 

$

0.32

 

 

$

1.33

 

 

$

1.07

 

See accompanying condensed notes to interim consolidated financial statements.

6


EQUITY BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Three and Nine Months ended September 30, 2017 and 2016

(Dollar amounts in thousands)

 

 

 

(Unaudited)

Three Months Ended

September 30,

 

 

(Unaudited)

Nine Months Ended

September 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Net income

 

$

5,157

 

 

$

2,671

 

 

$

16,375

 

 

$

8,957

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized holding gains (losses) arising during the period on

   available-for-sale securities

 

 

119

 

 

 

355

 

 

 

652

 

 

 

1,988

 

Amortization of unrealized losses on held-to-maturity securities

 

 

135

 

 

 

165

 

 

 

399

 

 

 

457

 

Reclassification adjustment for net gains included in net income

 

 

(175

)

 

 

 

 

 

(271

)

 

 

(893

)

Total other comprehensive income (loss)

 

 

79

 

 

 

520

 

 

 

780

 

 

 

1,552

 

Tax effect

 

 

(30

)

 

 

(197

)

 

 

(298

)

 

 

(590

)

Other comprehensive income (loss), net of tax

 

 

49

 

 

 

323

 

 

 

482

 

 

 

962

 

Comprehensive income

 

$

5,206

 

 

$

2,994

 

 

$

16,857

 

 

$

9,919

 

See accompanying condensed notes to interim consolidated financial statements.

 

 

7


EQUITY BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Nine Months ended September 30, 2017 and 2016

(Unaudited)

(Dollar amounts in thousands, except per share data)

 

 

 

Preferred

Stock

 

 

Common Stock

 

 

Additional

 

 

 

 

 

 

Accumulated

Other

 

 

Employee

 

 

 

 

 

 

Total

 

 

 

Series C

 

 

Shares

Outstanding

 

 

Amount

 

 

Paid-In

Capital

 

 

Retained

Earnings

 

 

Comprehensive

Income (loss)

 

 

Stock

Loans

 

 

Treasury

Stock

 

 

Stockholders’

Equity

 

Balance at January 1, 2016

 

$

16,372

 

 

 

8,211,727

 

 

$

97

 

 

$

138,077

 

 

$

34,955

 

 

$

(2,371

)

 

$

(242

)

 

$

(19,655

)

 

$

167,233

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,957

 

 

 

 

 

 

 

 

 

 

 

 

8,957

 

Other comprehensive income,

   net of tax effects

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

962

 

 

 

 

 

 

 

 

 

962

 

Retirement of preferred stock

 

 

(16,372

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,372

)

Stock based compensation

 

 

 

 

 

 

 

 

 

 

 

348

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

348

 

Common stock issued upon exercise of stock options

 

 

 

 

 

7,688

 

 

 

 

 

 

121

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

121

 

Cash dividends declared and

   accrued on preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

(1

)

Balance at September 30, 2016

 

$

 

 

 

8,219,415

 

 

$

97

 

 

$

138,546

 

 

$

43,911

 

 

$

(1,409

)

 

$

(242

)

 

$

(19,655

)

 

$

161,248

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2017

 

$

 

 

 

11,680,308

 

 

$

132

 

 

$

236,103

 

 

$

44,328

 

 

$

(2,702

)

 

$

(242

)

 

$

(19,655

)

 

$

257,964

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16,375

 

 

 

 

 

 

 

 

 

 

 

 

16,375

 

Other comprehensive income,

   net of tax effects

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

482

 

 

 

 

 

 

 

 

 

482

 

Stock based compensation

 

 

 

 

 

3,712

 

 

 

 

 

 

882

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

882

 

Common stock issued upon

   exercise of stock options

 

 

 

 

 

66,834

 

 

 

 

 

 

1,134

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,134

 

Repayments on employee stock loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

85

 

 

 

 

 

 

85

 

Issuance of common stock in connection with the acquisition of Prairie State Bancshares, net of issuance expenses of $329

 

 

 

 

 

479,465

 

 

 

5

 

 

 

14,908

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14,913

 

Balance at September 30, 2017

 

$

 

 

 

12,230,319

 

 

$

137

 

 

$

253,027

 

 

$

60,703

 

 

$

(2,220

)

 

$

(157

)

 

$

(19,655

)

 

$

291,835

 

 

See accompanying condensed notes to interim consolidated financial statements.

 

 

8


EQUITY BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months ended September 30, 2017 and 2016

(Dollar amounts in thousands, except per share data)

 

 

 

(Unaudited)

September 30,

 

 

 

2017

 

 

2016

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net income

 

$

16,375

 

 

$

8,957

 

Adjustments to reconcile net income to net cash from operating activities:

 

 

 

 

 

 

 

 

Stock based compensation

 

 

882

 

 

 

348

 

Depreciation

 

 

1,820

 

 

 

1,258

 

Provision for loan losses

 

 

2,450

 

 

 

1,359

 

Net (accretion) amortization of purchase valuation adjustments

 

 

(3,676

)

 

 

445

 

Amortization of premiums and discounts on securities

 

 

2,053

 

 

 

2,011

 

Amortization of intangibles

 

 

692

 

 

 

264

 

Deferred income taxes

 

 

(77

)

 

 

(56

)

FHLB stock dividends

 

 

(550

)

 

 

(511

)

Loss (gain) on sales and valuation adjustments on other real estate owned

 

 

(33

)

 

 

(129

)

Net loss (gain) on securities transactions

 

 

(271

)

 

 

(479

)

Loss (gain) on disposal of premise and equipment

 

 

1

 

 

 

(40

)

Loss (gain) on sales of loans

 

 

(1,298

)

 

 

(883

)

Originations of loans held for sale

 

 

(53,986

)

 

 

(36,037

)

Proceeds from the sale of loans held for sale

 

 

55,830

 

 

 

37,354

 

Increase in the value of bank owned life insurance

 

 

(1,068

)

 

 

(746

)

Change in fair value of derivatives recognized in earnings

 

 

4

 

 

 

8

 

Net change in:

 

 

 

 

 

 

 

 

Interest receivable

 

 

(442

)

 

 

(172

)

Other assets

 

 

(2,043

)

 

 

265

 

Interest payable and other liabilities

 

 

2

 

 

 

104

 

Net cash provided by (used in) operating activities

 

 

16,665

 

 

 

13,320

 

Cash flows to investing activities

 

 

 

 

 

 

 

 

Purchases of available-for-sale securities

 

 

(23,908

)

 

 

(56,056

)

Purchases of held-to-maturity securities

 

 

(102,975

)

 

 

(69,959

)

Proceeds from sales, calls, pay-downs, and maturities of available-for-sale securities

 

 

38,981

 

 

 

86,066

 

Proceeds from calls, pay-downs and maturities of held-to-maturity securities

 

 

42,680

 

 

 

34,472

 

Net change in interest-bearing time deposits in other banks

 

 

9

 

 

 

250

 

Net change in loans

 

 

(28,038

)

 

 

1,457

 

Purchase of premises and equipment

 

 

(4,480

)

 

 

(2,086

)

Proceeds from sale of premise and equipment

 

 

2

 

 

 

208

 

Net redemption (purchase) of FHLB and FRB stock

 

 

293

 

 

 

(63

)

Proceeds from sale of other real estate owned