• West Bancorporation, Inc. Announces Net Income for the Third Quarter Of 2022, Declares Quarterly Dividend

    Source: Nasdaq GlobeNewswire / 27 Oct 2022 08:30:01   America/New_York

    WEST DES MOINES, Iowa, Oct. 27, 2022 (GLOBE NEWSWIRE) -- West Bancorporation, Inc. (Nasdaq: WTBA; the “Company”), parent company of West Bank, today reported third quarter 2022 net income of $11.6 million, or $0.69 per diluted common share, compared to third quarter 2021 net income of $12.7 million, or $0.76 per diluted common share. For the first nine months of 2022, net income was $37.5 million, or $2.23 per diluted common share, compared to $37.7 million, or $2.25 per diluted common share, for the first nine months of 2021. On October 26, 2022, the Company’s Board of Directors declared a regular quarterly dividend of $0.25 per common share. The dividend is payable on November 23, 2022, to stockholders of record on November 9, 2022.

    David Nelson, President and Chief Executive Officer of the Company, commented, “Our company had another strong quarter. Our credit quality remains pristine and we continue to see opportunities for high quality loan growth, although at a slower pace than we experienced the last few quarters. We remain diligent in monitoring and managing our credit quality as we anticipate increasing economic challenges as the Federal Reserve aggressively seeks to reduce inflation by raising interest rates. Our bankers are working hard every day to assist our customers and communities in navigating the current economic and interest rate uncertainties. For the fifth consecutive quarter end, we had no loans greater than 30 days past due.”

    David Nelson added, “While the yield on our loan portfolio is increasing, changes in liquidity and competitive deposit pricing, resulting from volatility and uncertainty in the interest rate environment, has put upward pressure on our cost of funds. Our capital position is strong and we remain focused on our highly successful core business model to continue building shareholder value.”

    Third Quarter 2022 Financial Highlights

     Return on Average Equity21.01%
     Return on Average Assets1.32%
     Efficiency ratio (a non-GAAP measure)43.16%
     Nonperforming assets to total assets0.01%
        

    Third Quarter 2022 Compared to Second Quarter 2022 Overview

    • No provision for loan losses was recorded in the third quarter of 2022, compared to a negative provision for loan losses of $1.75 million in the second quarter of 2022. The negative provision in the second quarter of 2022 was due primarily to the reversal of a specific reserve on an impaired loan. The impaired loan, which had a specific reserve of $2.5 million, was settled in the second quarter of 2022 resulting in a charge-off of $451 thousand.
    • The allowance for loan losses to total loans was 0.97 percent at September 30, 2022, compared to 0.99 percent at June 30, 2022. There were no loans greater than 30 days past due at September 30, 2022, for the fifth consecutive quarter. Nonaccrual loans at September 30, 2022 consisted of one loan with a balance of $329 thousand.
    • Loan swap fees of $835 thousand were recorded in the third quarter of 2022, compared to none in the second quarter of 2022.
    • Loans increased $41.0 million in the third quarter of 2022, or 6.3 percent annualized.
    • Deposits decreased $19.6 million in the third quarter of 2022. Included in deposits were brokered deposits totaling $258.1 million at September 30, 2022, compared to $196.5 million at June 30, 2022.
    • The efficiency ratio (a non-GAAP measure) was 43.16 percent for the third quarter of 2022, compared to 41.96 percent for the second quarter of 2022.
    • Net interest margin, on a fully tax-equivalent basis (a non-GAAP measure), was 2.78 percent for the third quarter of 2022, compared to 2.93 percent for the second quarter of 2022. Net interest income for the third quarter of 2022 was $23.0 million, compared to $24.2 million for the second quarter of 2022. The rising cost of deposits and borrowed funds and the change in mix of liabilities has increased interest expense faster than the increase in the interest income from loan repricing and loan growth.
    • The tangible common equity ratio was 5.65 percent at September 30, 2022, a decrease of 43 basis points compared to 6.22 percent at June 30, 2022 due to continued decline in the market value of the securities portfolio resulting from rising interest rates, which negatively impacts accumulated other comprehensive income.

    Third Quarter 2022 Compared to Third Quarter 2021 Overview

    • Loans increased $254.6 million at September 30, 2022, or 10.8 percent, compared to September 30, 2021.
    • Deposits increased $85.9 million at September 30, 2022, compared to September 30, 2021. Included in deposits were brokered deposits totaling $258.1 million at September 30, 2022, compared to $103.0 million at September 30, 2021.
    • Borrowed funds increased to $460.3 million at September 30, 2022, compared to $202.5 million at September 30, 2021. The increase included $58.9 million in subordinated notes that were issued in June 2022, $33.8 million in long-term debt that was issued in December 2021 and $165.1 million in federal funds purchased.
    • The efficiency ratio (a non-GAAP measure) was 43.16 percent for the third quarter of 2022, compared to 39.41 percent for the third quarter of 2021. Salaries and benefits were higher in the third quarter of 2022, compared to the third quarter of 2021, due to a higher number of full-time equivalent employees and annual compensation adjustments.
    • Net interest margin, on a fully tax-equivalent basis (a non-GAAP measure), was 2.78 percent for the third quarter of 2022, compared to 3.06 percent for the third quarter of 2021. Net interest income for the third quarter of 2022 was $23.0 million, compared to $24.5 million for the third quarter of 2021. Net interest income in the third quarter of 2021 included $1.6 million of PPP loan interest income, compared to $101 thousand in the third quarter of 2022. In 2022, the rising cost of deposits and borrowed funds and the change in mix of liabilities has increased interest expense faster than the increase in the interest income from loan repricing and loan growth.

    The Company filed its report on Form 10-Q with the Securities and Exchange Commission today. Please refer to that document for a more in-depth discussion of the Company’s financial results. The Form 10-Q is available on the Investor Relations section of West Bank’s website at www.westbankstrong.com.

    The Company will discuss its results in a conference call scheduled for 2:00 p.m. Central Time on Thursday, October 27, 2022. The telephone number for the conference call is 844-200-6205. The access code for the conference call is 014998. A recording of the call will be available until November 10, 2022, by dialing 866-813-9403. The replay access code is 419470.

    About West Bancorporation, Inc. (Nasdaq: WTBA)

    West Bancorporation, Inc. is headquartered in West Des Moines, Iowa. Serving customers since 1893, West Bank, a wholly-owned subsidiary of West Bancorporation, Inc., is a community bank that focuses on lending, deposit services, and trust services for small- to medium-sized businesses and consumers. West Bank has six offices in the Des Moines, Iowa metropolitan area, one office in Coralville, Iowa, and four offices in Minnesota in the cities of Rochester, Owatonna, Mankato and St. Cloud.

    Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to the Company’s business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meanings of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may appear throughout this report. These forward-looking statements are generally identified by the words “believes,” “expects,” “intends,” “anticipates,” “projects,” “future,” “confident,” “may,” “should,” “will,” “strategy,” “plan,” “opportunity,” “will be,” “will likely result,” “will continue” or similar references, or references to estimates, predictions or future events. Such forward-looking statements are based upon certain underlying assumptions, risks and uncertainties. Because of the possibility that the underlying assumptions are incorrect or do not materialize as expected in the future, actual results could differ materially from these forward-looking statements.  Risks and uncertainties that may affect future results include: interest rate risk, including the effects of recent rate increases by the Federal Reserve; fluctuations in the values of the securities held in our investment portfolio, including as a result of rising interest rates; competitive pressures, including from non-bank competitors such as “fintech” companies; pricing pressures on loans and deposits; changes in credit and other risks posed by the Company’s loan portfolio, including declines in commercial or residential real estate values or changes in the allowance for loan losses dictated by new market conditions, accounting standards (including as a result of the future implementation of the current expected credit loss (CECL) accounting standard) or regulatory requirements; changes in local, national and international economic conditions, including rising rates of inflation; changes in legal and regulatory requirements, limitations and costs; changes in customers’ acceptance of the Company’s products and services; cyber-attacks; unexpected outcomes of existing or new litigation involving the Company; the monetary, trade and other regulatory policies of the U.S. government; acts of war or terrorism, including the Russian invasion of Ukraine, widespread disease or pandemics, such as the COVID-19 pandemic, or other adverse external events; developments and uncertainty related to the future use and availability of some reference rates, such as the London Interbank Offered Rate, as well as other alternative reference rates; changes to U.S. tax laws, regulations and guidance; talent and labor shortages; the new 1% excise tax on stock buybacks by publicly traded companies; and any other risks described in the “Risk Factors” sections of reports filed by the Company with the Securities and Exchange Commission. The Company undertakes no obligation to revise or update such forward-looking statements to reflect current or future events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

    WEST BANCORPORATION, INC. AND SUBSIDIARY      
    Financial Information (unaudited)          
    (in thousands)          
      As of
    CONDENSED BALANCE SHEETS September 30,
    2022
     June 30,
    2022
     March 31,
    2022
     December 31,
    2021
     September 30,
    2021
    Assets          
    Cash and due from banks $58,342  $26,174  $21,896  $17,555  $30,922 
    Federal funds sold  1,049   766   122,359   175,270   1,547 
    Securities available for sale, at fair value  671,752   731,970   797,912   758,822   763,397 
    Federal Home Loan Bank stock, at cost  18,350   15,532   10,269   9,965   11,544 
    Loans  2,614,145   2,573,129   2,485,366   2,456,196   2,359,567 
    Allowance for loan losses  (25,418)  (25,434)  (27,623)  (28,364)  (28,098)
    Loans, net  2,588,727   2,547,695   2,457,743   2,427,832   2,331,469 
    Premises and equipment, net  44,592   41,807   40,898   34,568   33,287 
    Bank-owned life insurance  44,318   44,072   43,836   43,609   43,376 
    Other assets  90,387   66,775   52,156   32,580   34,158 
    Total assets $3,517,517  $3,474,791  $3,547,069  $3,500,201  $3,249,700 
               
    Liabilities and Stockholders’ Equity          
    Deposits $2,822,847  $2,842,451  $3,091,252  $3,016,005  $2,736,923 
    Federal funds purchased  204,500   133,000      2,880   39,380 
    Other borrowings  255,789   255,751   196,954   196,986   163,116 
    Other liabilities  35,617   27,400   22,383   24,002   57,905 
    Stockholders’ equity  198,764   216,189   236,480   260,328   252,376 
    Total liabilities and stockholders’ equity $3,517,517  $3,474,791  $3,547,069  $3,500,201  $3,249,700 
               
      For the quarter ended
    AVERAGE BALANCES September 30,
    2022
     June 30,
    2022
     March 31,
    2022
     December 31,
    2021
     September 30,
    2021
    Assets $3,475,894  $3,503,686  $3,544,564  $3,421,020  $3,325,522 
    Loans  2,579,862   2,537,152   2,449,521   2,379,872   2,337,355 
    Deposits  2,864,648   3,002,535   3,067,019   2,964,585   2,874,005 
    Stockholders’ equity  219,065   222,731   255,130   255,224   251,770 


    WEST BANCORPORATION, INC. AND SUBSIDIARY      
    Financial Information (unaudited)          
    (in thousands)          
      As of
    ANALYSIS OF LOAN PORTFOLIO September 30,
    2022
     June 30,
    2022
     March 31,
    2022
     December 31,
    2021
     September 30,
    2021
    Loan mix:          
    Commercial $526,336  $475,704  $466,874  $492,815  $491,344 
    Real estate:          
    Construction, land and land development  341,549   390,137   388,424   359,258   325,655 
    1-4 family residential first mortgages  69,991   69,829   65,978   66,216   63,881 
    Home equity  10,271   8,564   9,213   8,422   8,993 
    Commercial  1,661,907   1,627,150   1,555,001   1,530,218   1,471,170 
    Consumer and other  7,884   5,912   4,068   3,797   3,698 
       2,617,938   2,577,296   2,489,558   2,460,726   2,364,741 
    Net unamortized fees and costs  (3,793)  (4,167)  (4,192)  (4,530)  (5,174)
    Total loans $2,614,145  $2,573,129  $2,485,366  $2,456,196  $2,359,567 
    Less allowance for loan losses  (25,418)  (25,434)  (27,623)  (28,364)  (28,098)
    Net loans $2,588,727  $2,547,695  $2,457,743  $2,427,832  $2,331,469 
               
    ANALYSIS OF DEPOSITS          
    Deposit mix:          
    Noninterest-bearing demand $712,722  $690,335  $710,697  $720,136  $713,076 
    Interest-bearing demand  469,257   472,919   554,235   548,242   458,165 
    Savings and money market  1,252,694   1,360,020   1,632,690   1,550,636   1,379,321 
    Time  388,174   319,177   193,630   196,991   186,361 
    Total deposits $2,822,847  $2,842,451  $3,091,252  $3,016,005  $2,736,923 
               
    ANALYSIS OF BORROWINGS          
    Borrowings mix:          
    Federal funds purchased $204,500  $133,000  $  $2,880  $39,380 
    Subordinated notes, net  79,303   79,265   20,468   20,465   20,462 
    Federal Home Loan Bank advances  125,000   125,000   125,000   125,000   125,000 
    Long-term debt  51,486   51,486   51,486   51,521   17,654 
    Total borrowings $460,289  $388,751  $196,954  $199,866  $202,496 
               
    STOCKHOLDERS’ EQUITY          
    Preferred stock $  $  $  $  $ 
    Common stock  3,000   3,000   3,000   3,000   3,000 
    Additional paid-in capital  31,152   30,283   29,421   30,183   29,536 
    Retained earnings  262,776   255,334   246,827   237,782   229,845 
    Accumulated other comprehensive loss  (98,164)  (72,428)  (42,768)  (10,637)  (10,005)
    Total Stockholders’ Equity $198,764  $216,189  $236,480  $260,328  $252,376 


    WEST BANCORPORATION, INC. AND SUBSIDIARY        
    Financial Information (unaudited)          
    (in thousands)          
      For the Quarter Ended
    CONSOLIDATED STATEMENTS OF INCOME September 30,
    2022
     June 30,
    2022
     March 31,
    2022
     December 31,
    2021
     September 30,
    2021
    Interest income:          
    Loans, including fees $28,102 $24,848  $23,286  $24,179 $24,229
    Securities:          
    Taxable  3,147  3,090   2,889   2,590  2,412
    Tax-exempt  890  892   858   829  762
    Federal funds sold  30  67   82   66  82
    Total interest income  32,169  28,897   27,115   27,664  27,485
    Interest expense:          
    Deposits  6,289  3,146   2,151   2,055  2,021
    Federal funds purchased  655  157      1  2
    Subordinated notes  1,106  394   248   254  254
    Federal Home Loan Bank advances  649  635   630   656  656
    Long-term debt  466  326   258   96  66
    Total interest expense  9,165  4,658   3,287   3,062  2,999
    Net interest income  23,004  24,239   23,828   24,602  24,486
    Provision for loan losses    (1,750)  (750)    
    Net interest income after provision for loan losses  23,004  25,989   24,578   24,602  24,486
    Noninterest income:          
    Service charges on deposit accounts  553  585   580   603  589
    Debit card usage fees  498  507   472   505  490
    Trust services  780  622   629   633  695
    Increase in cash value of bank-owned life insurance  246  236   227   233  230
    Loan swap fees  835        24  
    Realized securities gains, net            11
    Other income  364  328   481   350  386
    Total noninterest income  3,276  2,278   2,389   2,348  2,401
    Noninterest expense:          
    Salaries and employee benefits  6,578  6,410   6,298   5,928  6,018
    Occupancy  1,315  1,242   1,086   1,532  1,203
    Data processing  644  656   624   630  616
    FDIC insurance  127  289   337   460  528
    Professional fees  250  202   217   183  212
    Director fees  209  222   168   184  176
    Other expenses  2,335  2,245   1,932   2,954  1,959
    Total noninterest expense  11,458  11,266   10,662   11,871  10,712
    Income before income taxes  14,822  17,001   16,305   15,079  16,175
    Income taxes  3,220  4,334   3,121   3,169  3,469
    Net income $11,602 $12,667  $13,184  $11,910 $12,706
               
    Basic earnings per common share $0.70 $0.76  $0.80  $0.72 $0.77
    Diluted earnings per common share $0.69 $0.75  $0.78  $0.71 $0.76


    WEST BANCORPORATION, INC. AND SUBSIDIARY  
    Financial Information (unaudited)    
    (in thousands)    
      For the Nine Months Ended
    CONSOLIDATED STATEMENTS OF INCOME September 30, 2022 September 30, 2021
    Interest income:    
    Loans, including fees $76,236  $71,406 
    Securities:    
    Taxable  9,126   5,952 
    Tax-exempt  2,640   2,032 
    Federal funds sold  179   226 
    Total interest income  88,181   79,616 
    Interest expense:    
    Deposits  11,586   5,893 
    Federal funds purchased  812   4 
    Subordinated notes  1,748   754 
    Federal Home Loan Bank advances  1,914   2,288 
    Long-term debt  1,050   220 
    Total interest expense  17,110   9,159 
    Net interest income  71,071   70,457 
    Provision for loan losses  (2,500)  (1,500)
    Net interest income after provision for loan losses  73,571   71,957 
    Noninterest income:    
    Service charges on deposit accounts  1,718   1,749 
    Debit card usage fees  1,477   1,443 
    Trust services  2,031   2,038 
    Increase in cash value of bank-owned life insurance  709   690 
    Loan swap fees  835   42 
    Realized securities gains, net     51 
    Other income  1,173   1,368 
    Total noninterest income  7,943   7,381 
    Noninterest expense:    
    Salaries and employee benefits  19,286   17,298 
    Occupancy  3,643   3,630 
    Data processing  1,924   1,835 
    FDIC insurance  753   1,358 
    Professional fees  669   763 
    Director fees  599   581 
    Other expenses  6,512   6,044 
    Total noninterest expense  33,386   31,509 
    Income before income taxes  48,128   47,829 
    Income taxes  10,675   10,132 
    Net income $37,453  $37,697 
         
    Basic earnings per common share $2.25  $2.28 
    Diluted earnings per common share $2.23  $2.25 


    WEST BANCORPORATION, INC. AND SUBSIDIARY      
    Financial Information (unaudited)              
                   
      As of and for the Quarter Ended For the Nine Months Ended
    COMMON SHARE DATA September 30,
    2022
     June 30,
    2022
     March 31,
    2022
     December 31,
    2021
     September 30,
    2021
     September 30,
    2022
     September 30,
    2021
    Earnings per common share (basic) $0.70  $0.76  $0.80  $0.72  $0.77  $2.25  $2.28 
    Earnings per common share (diluted)  0.69   0.75   0.78   0.71   0.76   2.23   2.25 
    Dividends per common share  0.25   0.25   0.25   0.24   0.24   0.75   0.70 
    Book value per common share(1)  11.94   12.99   14.22   15.73   15.24     
    Closing stock price  20.81   24.34   27.21   31.07   30.03     
    Market price/book value(2)  174.29%  187.37%  191.35%  197.52%  197.05%    
    Price earnings ratio(3)  7.49%  7.98%  8.39%  10.88%  9.83%    
    Annualized dividend yield(4)  4.81%  4.11%  3.68%  3.89%  3.20%    
                   
    REGULATORY CAPITAL RATIOS              
    Consolidated:              
    Total risk-based capital ratio  12.34%  12.53%  10.72%  10.89%  11.12%    
    Tier 1 risk-based capital ratio  9.72   9.81   9.81   9.92   10.11     
    Tier 1 leverage capital ratio  8.85   8.59   8.39   8.49   8.51     
    Common equity tier 1 ratio  9.11   9.17   9.16   9.24   9.40     
    West Bank:              
    Total risk-based capital ratio  13.38%  13.62%  11.88%  12.10%  11.18%    
    Tier 1 risk-based capital ratio  12.60   12.81   10.98   11.13   10.17     
    Tier 1 leverage capital ratio  11.47   11.22   9.39   9.53   8.56     
    Common equity tier 1 ratio  12.60   12.81   10.98   11.13   10.17     
                   
    KEY PERFORMANCE RATIOS AND OTHER METRICS              
    Return on average assets(5)  1.32%  1.45%  1.51%  1.38%  1.52%  1.43%  1.56%
    Return on average equity(6)  21.01   22.81   20.96   18.51   20.02   21.57   20.98 
    Net interest margin(7)(13)  2.78   2.93   2.85   3.00   3.06   2.85   3.07 
    Yield on interest-earning assets(8)  3.87   3.49   3.24   3.36   3.43   3.53   3.47 
    Cost of interest-bearing liabilities  1.45   0.73   0.52   0.50   0.51   0.90   0.55 
    Efficiency ratio(9)(13)  43.16   41.96   40.14   43.32   39.41   41.75   40.08 
    Non-performing assets to total assets(10)  0.01   0.01   0.25   0.26   0.28     
    ALLL ratio(11)  0.97   0.99   1.11   1.15   1.19     
    Loans/total assets  74.32   74.05   70.07   70.17   72.61     
    Loans/total deposits  92.61   90.53   80.40   81.44   86.21     
    Tangible common equity ratio(12)  5.65   6.22   6.67   7.44   7.77     

    (1) Includes accumulated other comprehensive income (loss).
    (2) Closing stock price divided by book value per common share.
    (3) Closing stock price divided by annualized earnings per common share (basic).
    (4) Annualized dividend divided by period end closing stock price.
    (5) Annualized net income divided by average assets.
    (6) Annualized net income divided by average stockholders’ equity.
    (7) Annualized tax-equivalent net interest income divided by average interest-earning assets.
    (8) Annualized tax-equivalent interest income on interest-earning assets divided by average interest-earning assets.
    (9) Noninterest expense (excluding other real estate owned expense and write-down of premises) divided by noninterest income (excluding net securities gains/losses and gains/losses on disposition of premises and equipment) plus tax-equivalent net interest income.
    (10) Total nonperforming assets divided by total assets.
    (11) Allowance for loan losses divided by total loans.        
    (12) Common equity less intangible assets (none held) divided by tangible assets.
    (13) A non-GAAP measure.

    NON-GAAP FINANCIAL MEASURES

    This report contains references to financial measures that are not defined in GAAP. Such non-GAAP financial measures include the Company’s presentation of net interest income and net interest margin on a fully taxable equivalent (FTE) basis and the presentation of the efficiency ratio on an adjusted and FTE basis, excluding certain income and expenses. Management believes these non-GAAP financial measures provide useful information to both management and investors to analyze and evaluate the Company’s financial performance. These measures are considered standard measures of comparison within the banking industry. Additionally, management believes providing measures on a FTE basis enhances the comparability of income arising from taxable and nontaxable sources. Limitations associated with non-GAAP financial measures include the risks that persons might disagree as to the appropriateness of items included in these measures and that different companies might calculate these measures differently. These non-GAAP disclosures should not be considered an alternative to the Company’s GAAP results. The following table reconciles the non-GAAP financial measures of net interest income and net interest margin on a fully taxable equivalent basis and efficiency ratio on an adjusted and FTE basis.

    (in thousands) As of and for the Quarter Ended For the Nine Months Ended
      September 30,
    2022
     June 30,
    2022
     March 31,
    2022
     December 31,
    2021
     September 30,
    2021
     September 30,
    2022
     September 30,
    2021
    Reconciliation of net interest income and net interest margin on a FTE basis to GAAP:              
    Net interest income (GAAP) $23,004  $24,239  $23,828  $24,602  $24,486  $71,071  $70,457 
    Tax-equivalent adjustment(1)  270   326   329   397   306   925   805 
    Net interest income on a FTE basis (non-GAAP)  23,274   24,565   24,157   24,999   24,792   71,996   71,262 
    Average interest-earning assets  3,322,522   3,362,313   3,432,114   3,309,625   3,212,283   3,371,915   3,099,066 
    Net interest margin on a FTE basis (non-GAAP)  2.78%  2.93%  2.85%  3.00%  3.06%  2.85%  3.07%
                   
    Reconciliation of efficiency ratio on an adjusted and FTE basis to GAAP:              
    Net interest income on a FTE basis (non-GAAP) $23,274  $24,565  $24,157  $24,999  $24,792  $71,996  $71,262 
    Noninterest income  3,276   2,278   2,389   2,348   2,401   7,943   7,381 
    Adjustment for realized securities gains, net              (11)     (51)
    Adjustment for losses on disposal of premises and equipment, net     9   18   55      27   29 
    Adjusted income  26,550   26,852   26,564   27,402   27,182   79,966   78,621 
    Noninterest expense  11,458   11,266   10,662   11,871   10,712   33,386   31,509 
    Efficiency ratio on an adjusted and FTE basis (non-GAAP)(2)  43.16%  41.96%  40.14%  43.32%  39.41%  41.75%  40.08%
                 

    (1) Computed on a tax-equivalent basis using a federal income tax rate of 21 percent, adjusted to reflect the effect of the nondeductible interest expense associated with owning tax-exempt securities and loans. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the financial results, as it enhances the comparability of income arising from taxable and nontaxable sources.
    (2) The efficiency ratio expresses noninterest expense as a percent of fully taxable equivalent net interest income and noninterest income, excluding specific noninterest income and expenses. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the Company's financial performance. It is a standard measure of comparison within the banking industry. A lower ratio is more desirable. 

    For more information contact:
    Jane Funk, Executive Vice President, Treasurer and Chief Financial Officer (515) 222-5766


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