eqbk-10q_20180630.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 June 30, 2018

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 if 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

August 3, 2018

Class A Common Stock, par value $0.01 per share

15,787,545

Class B Non-Voting Common Stock, par value $0.01 per share

                 0


 

 

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

39

 

Overview

39

 

Critical Accounting Policies

41

 

Results of Operations

43

 

Financial Condition

55

 

Liquidity and Capital Resources

67

 

Non-GAAP Financial Measures

69

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

72

Item 4.

Controls and Procedures

74

Part II

Other Information

75

Item 1.

Legal Proceedings

75

Item 1A.

Risk Factors

75

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

75

Item 3.

Defaults Upon Senior Securities

75

Item 4.

Mine Safety Disclosures

75

Item 5.

Other Information

75

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, 2018, 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 man-made 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 verbal 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

June 30, 2018 and December 31, 2017

(Dollar amounts in thousands)

 

 

 

(Unaudited)

June 30,

 

 

December 31,

 

 

 

2018

 

 

2017

 

ASSETS

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

46,704

 

 

$

48,034

 

Federal funds sold

 

 

987

 

 

 

4,161

 

Cash and cash equivalents

 

 

47,691

 

 

 

52,195

 

Interest-bearing time deposits in other banks

 

 

6,991

 

 

 

3,496

 

Available-for-sale securities

 

 

180,238

 

 

 

162,272

 

Held-to-maturity securities, fair value of $653,012 and $532,744

 

 

665,995

 

 

 

535,462

 

Loans held for sale

 

 

43,875

 

 

 

16,344

 

Loans, net of allowance for loan losses of $10,083 and $8,498

 

 

2,401,388

 

 

 

2,094,781

 

Other real estate owned, net

 

 

7,623

 

 

 

7,907

 

Premises and equipment, net

 

 

73,312

 

 

 

63,449

 

Bank-owned life insurance

 

 

72,067

 

 

 

68,384

 

Federal Reserve Bank and Federal Home Loan Bank stock

 

 

35,681

 

 

 

24,373

 

Interest receivable

 

 

14,343

 

 

 

12,371

 

Goodwill

 

 

125,485

 

 

 

104,907

 

Core deposit intangibles, net

 

 

19,800

 

 

 

10,738

 

Other

 

 

17,696

 

 

 

13,830

 

Total assets

 

$

3,712,185

 

 

$

3,170,509

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

Demand

 

$

442,279

 

 

$

366,530

 

Total non-interest-bearing deposits

 

 

442,279

 

 

 

366,530

 

Savings, NOW, and money market

 

 

1,387,623

 

 

 

1,238,984

 

Time

 

 

805,146

 

 

 

776,499

 

Total interest-bearing deposits

 

 

2,192,769

 

 

 

2,015,483

 

Total deposits

 

 

2,635,048

 

 

 

2,382,013

 

Federal funds purchased and retail repurchase agreements

 

 

41,394

 

 

 

37,492

 

Federal Home Loan Bank advances

 

 

557,619

 

 

 

347,692

 

Bank stock loan

 

 

18,375

 

 

 

2,500

 

Subordinated debentures

 

 

14,113

 

 

 

13,968

 

Contractual obligations

 

 

1,734

 

 

 

1,967

 

Interest payable and other liabilities

 

 

10,620

 

 

 

10,733

 

Total liabilities

 

 

3,278,903

 

 

 

2,796,365

 

Commitments and contingent liabilities, see Notes 10 and 11

 

 

 

 

 

 

 

 

Stockholders’ equity, see Note 6

 

 

 

 

 

 

 

 

Common stock

 

 

173

 

 

 

161

 

Additional paid-in capital

 

 

377,800

 

 

 

331,339

 

Retained earnings

 

 

81,079

 

 

 

65,512

 

Accumulated other comprehensive loss

 

 

(5,994

)

 

 

(3,092

)

Employee stock loans

 

 

(121

)

 

 

(121

)

Treasury stock

 

 

(19,655

)

 

 

(19,655

)

Total stockholders’ equity

 

 

433,282

 

 

 

374,144

 

Total liabilities and stockholders’ equity

 

$

3,712,185

 

 

$

3,170,509

 

See accompanying condensed notes to interim consolidated financial statements.

5


EQUITY BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF INCOME

For the Three and Six Months ended June 30, 2018 and 2017

(Dollar amounts in thousands, except per share data)

 

 

(Unaudited)

Three Months Ended

June 30,

 

 

(Unaudited)

Six Months Ended

June 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Interest and dividend income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

33,101

 

 

$

20,662

 

 

$

62,149

 

 

$

40,062

 

Securities, taxable

 

 

4,112

 

 

 

3,224

 

 

 

7,835

 

 

 

5,948

 

Securities, nontaxable

 

 

1,025

 

 

 

862

 

 

 

1,904

 

 

 

1,647

 

Federal funds sold and other

 

 

593

 

 

 

334

 

 

 

1,066

 

 

 

640

 

Total interest and dividend income

 

 

38,831

 

 

 

25,082

 

 

 

72,954

 

 

 

48,297

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

5,338

 

 

 

2,894

 

 

 

10,056

 

 

 

5,470

 

Federal funds purchased and retail repurchase agreements

 

 

24

 

 

 

13

 

 

 

47

 

 

 

25

 

Federal Home Loan Bank advances

 

 

2,094

 

 

 

734

 

 

 

3,393

 

 

 

1,236

 

Bank stock loan

 

 

156

 

 

 

 

 

 

183

 

 

 

 

Subordinated debentures

 

 

299

 

 

 

242

 

 

 

568

 

 

 

474

 

Total interest expense

 

 

7,911

 

 

 

3,883

 

 

 

14,247

 

 

 

7,205

 

Net interest income

 

 

30,920

 

 

 

21,199

 

 

 

58,707

 

 

 

41,092

 

Provision for loan losses

 

 

750

 

 

 

628

 

 

 

1,920

 

 

 

1,723

 

Net interest income after provision for loan losses

 

 

30,170

 

 

 

20,571

 

 

 

56,787

 

 

 

39,369

 

Non-interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges and fees

 

 

1,729

 

 

 

1,267

 

 

 

3,309

 

 

 

2,449

 

Debit card income

 

 

1,522

 

 

 

1,205

 

 

 

2,775

 

 

 

2,210

 

Mortgage banking

 

 

312

 

 

 

540

 

 

 

625

 

 

 

1,025

 

Increase in value of bank-owned life insurance

 

 

508

 

 

 

354

 

 

 

1,160

 

 

 

709

 

Net gain (loss) from securities transactions

 

 

(2

)

 

 

83

 

 

 

(10

)

 

 

96

 

Other

 

 

523

 

 

 

513

 

 

 

984

 

 

 

812

 

Total non-interest income

 

 

4,592

 

 

 

3,962

 

 

 

8,843

 

 

 

7,301

 

Non-interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

11,629

 

 

 

8,236

 

 

 

22,520

 

 

 

16,042

 

Net occupancy and equipment

 

 

2,011

 

 

 

1,519

 

 

 

3,813

 

 

 

3,018

 

Data processing

 

 

1,968

 

 

 

1,191

 

 

 

3,642

 

 

 

2,352

 

Professional fees

 

 

844

 

 

 

462

 

 

 

1,559

 

 

 

978

 

Advertising and business development

 

 

665

 

 

 

624

 

 

 

1,284

 

 

 

1,142

 

Telecommunications

 

 

432

 

 

 

330

 

 

 

801

 

 

 

691

 

FDIC insurance

 

 

510

 

 

 

219

 

 

 

754

 

 

 

325

 

Courier and postage

 

 

303

 

 

 

236

 

 

 

558

 

 

 

462

 

Free nationwide ATM cost

 

 

330

 

 

 

233

 

 

 

622

 

 

 

445

 

Amortization of core deposit intangibles

 

 

625

 

 

 

235

 

 

 

1,009

 

 

 

444

 

Loan expense

 

 

145

 

 

 

282

 

 

 

491

 

 

 

459

 

Other real estate owned

 

 

(671

)

 

 

70

 

 

 

(403

)

 

 

275

 

Merger expenses

 

 

5,236

 

 

 

136

 

 

 

5,767

 

 

 

1,062

 

Other

 

 

1,948

 

 

 

1,358

 

 

 

3,185

 

 

 

2,662

 

Total non-interest expense

 

 

25,975

 

 

 

15,131

 

 

 

45,602

 

 

 

30,357

 

Income before income taxes

 

 

8,787

 

 

 

9,402

 

 

 

20,028

 

 

 

16,313

 

Provision for income taxes

 

 

1,920

 

 

 

3,048

 

 

 

4,450

 

 

 

5,095

 

Net income and net income allocable to common stockholders

 

$

6,867

 

 

$

6,354

 

 

$

15,578

 

 

$

11,218

 

Basic earnings per share

 

$

0.45

 

 

$

0.52

 

 

$

1.04

 

 

$

0.93

 

Diluted earnings per share

 

$

0.44

 

 

$

0.51

 

 

$

1.02

 

 

$

0.91

 

See accompanying condensed notes to interim consolidated financial statements.

6


EQUITY BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Three and Six Months ended June 30, 2018 and 2017

(Dollar amounts in thousands)

 

 

 

(Unaudited)

Three Months Ended

June 30,

 

 

(Unaudited)

Six Months Ended

June 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Net income

 

$

6,867

 

 

$

6,354

 

 

$

15,578

 

 

$

11,218

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized holding gains (losses) arising during the period on

   available-for-sale securities

 

 

(1,199

)

 

 

321

 

 

 

(4,136

)

 

 

533

 

Amortization of unrealized losses on held-to-maturity securities

 

 

115

 

 

 

127

 

 

 

234

 

 

 

264

 

Reclassification adjustment for net gains included in net income

 

 

 

 

 

(83

)

 

 

 

 

 

(96

)

Total other comprehensive income (loss)

 

 

(1,084

)

 

 

365

 

 

 

(3,902

)

 

 

701

 

Tax effect

 

 

275

 

 

 

(139

)

 

 

989

 

 

 

(268

)

Other comprehensive income (loss), net of tax

 

 

(809

)

 

 

226

 

 

 

(2,913

)

 

 

433

 

Comprehensive income

 

$

6,058

 

 

$

6,580

 

 

$

12,665

 

 

$

11,651

 

See accompanying condensed notes to interim consolidated financial statements.

 

 

7


EQUITY BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Six Months ended June 30, 2018 and 2017

(Unaudited)

(Dollar amounts in thousands, except per share data)

 

 

 

Common Stock

 

 

Additional

 

 

 

 

 

 

Accumulated

Other

 

 

Employee

 

 

 

 

 

 

Total

 

 

 

Shares

Outstanding

 

 

Amount

 

 

Paid-In

Capital

 

 

Retained

Earnings

 

 

Comprehensive

Income (loss)

 

 

Stock

Loans

 

 

Treasury

Stock

 

 

Stockholders’

Equity

 

Balance at January 1, 2017

 

 

11,680,308

 

 

$

132

 

 

$

236,103

 

 

$

44,328

 

 

$

(2,702

)

 

$

(242

)

 

$

(19,655

)

 

$

257,964

 

Net income

 

 

 

 

 

 

 

 

 

 

 

11,218

 

 

 

 

 

 

 

 

 

 

 

 

11,218

 

Other comprehensive income,

   net of tax effects

 

 

 

 

 

 

 

 

 

 

 

 

 

 

433

 

 

 

 

 

 

 

 

 

433

 

Stock based compensation

 

 

3,712

 

 

 

 

 

 

732

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

732

 

Common stock issued upon exercise of stock options

 

 

42,834

 

 

 

 

 

 

726

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

726

 

Repayments on employee stock loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

72

 

 

 

 

 

 

72

 

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

 

 

479,465

 

 

 

5

 

 

 

14,908

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14,913

 

Balance at June 30, 2017

 

 

12,206,319

 

 

$

137

 

 

$

252,469

 

 

$

55,546

 

 

$

(2,269

)

 

$

(170

)

 

$

(19,655

)

 

$

286,058

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2018

 

 

14,605,607

 

 

$

161

 

 

$

331,339

 

 

$

65,512

 

 

$

(3,092

)

 

$

(121

)

 

$

(19,655

)

 

$

374,144

 

Net income

 

 

 

 

 

 

 

 

 

 

 

15,578

 

 

 

 

 

 

 

 

 

 

 

 

15,578

 

Other comprehensive income,

   net of tax effects

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,913

)

 

 

 

 

 

 

 

 

(2,913

)

Stock based compensation

 

 

9,008

 

 

 

 

 

 

1,339

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,339

 

Common stock issued upon

   exercise of stock options

 

 

1,250

 

 

 

 

 

 

18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18

 

Adoption of ASU 2016-01 reclassifying AFS equity securities with readily determined fair value

 

 

 

 

 

 

 

 

 

 

 

(11

)

 

 

11

 

 

 

 

 

 

 

 

 

 

Issuance of common stock in connection with the acquisition of Kansas Bank Corporation, net of issuance expenses of $207

 

 

820,849

 

 

 

8

 

 

 

31,888

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31,896

 

Issuance of common stock in connection with the acquisition of Adams Dairy Bancshares, Inc., net of issuance expenses of $236

 

 

344,063

 

 

 

4

 

 

 

13,216

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13,220

 

Balance at June 30, 2018

 

 

15,780,777

 

 

$

173

 

 

$

377,800

 

 

$

81,079

 

 

$

(5,994

)

 

$

(121

)

 

$

(19,655

)

 

$

433,282

 

 

See accompanying condensed notes to interim consolidated financial statements.

 

 

8


EQUITY BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months ended June 30, 2018 and 2017

(Dollar amounts in thousands, except per share data)

 

 

 

(Unaudited)

June 30,

 

 

 

2018

 

 

2017

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net income

 

$

15,578

 

 

$

11,218

 

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

 

 

 

 

 

 

 

 

Stock based compensation

 

 

1,339

 

 

 

732

 

Depreciation

 

 

1,451

 

 

 

1,197

 

Provision for loan losses

 

 

1,920

 

 

 

1,723

 

Net (accretion) amortization of purchase accounting adjustments

 

 

(2,559

)

 

 

(2,749

)

Amortization of premiums and discounts on securities

 

 

1,551

 

 

 

1,225

 

Amortization of intangibles

 

 

1,033

 

 

 

447

 

Deferred income taxes

 

 

(101

)

 

 

(53

)

FHLB stock dividends

 

 

(575

)

 

 

(380

)

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

 

 

(725

)

 

 

(14

)

Net loss (gain) on securities transactions

 

 

(2

)

 

 

(96

)

Change in unrealized loss (gain) on equity securities

 

 

12

 

 

 

 

Loss (gain) on disposal of premise and equipment

 

 

(192

)

 

 

(10

)

Loss (gain) on sale of foreclosed assets

 

 

1

 

 

 

 

Loss (gain) on sales of loans

 

 

(504

)

 

 

(856

)

Originations of loans held for sale

 

 

(134,283

)

 

 

(35,180

)

Proceeds from the sale of loans held for sale

 

 

107,257

 

 

 

37,402

 

Increase in the value of bank-owned life insurance

 

 

(1,160

)

 

 

(710

)

Change in fair value of derivatives recognized in earnings

 

 

(7

)

 

 

(1

)

Net change in:

 

 

 

 

 

 

 

 

Interest receivable

 

 

167

 

 

 

257

 

Other assets

 

 

(332

)

 

 

(716

)

Interest payable and other liabilities

 

 

(552

)

 

 

604

 

Net cash provided by (used in) operating activities

 

 

(10,683

)

 

 

14,040

 

Cash flows to investing activities

 

 

 

 

 

 

 

 

Purchases of available-for-sale securities

 

 

(36,007

)

 

 

(13,660

)

Purchases of held-to-maturity securities

 

 

(71,325

)

 

 

(89,853

)

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

 

 

46,516

 

 

 

17,452

 

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

 

 

32,240

 

 

 

26,877

 

Net change in interest-bearing time deposits in other banks

 

 

743

 

 

 

248

 

Net change in loans

 

 

(65,142

)

 

 

(17,212

)

Purchase of premises and equipment

 

 

(2,002

)

 

 

(2,955

)

Proceeds from sale of premise and equipment

 

 

1,200

 

 

 

13

 

Proceeds from sale of foreclosed assets

 

 

99

 

 

 

 

Net redemption (purchase) of FHLB and FRB stock

 

 

(10,066

)

 

 

(2,565

)

Proceeds from sale of other real estate owned

 

 

2,305

 

 

 

932

 

Proceeds from bank-owned life insurance death benefits

 

 

346

 

 

 

 

Purchase of Prairie, net of cash acquired

 

 

 

 

 

(6,744

)

Cash paid for acquisition of Eastman

 

 

(55

)

 

 

 

Purchase of KBC, net of cash acquired

 

 

12,774