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Item 5. Market for Registrant’s Common Equity

2022-03-18 compared with 2021-03-19 · 22 added, 110 removed, 26 unchanged (84% of the section changed)

6 unchanged sentences

Dividends and Dividend Policy

Taking into consideration our performance and capital levels, we began paying quarterly cash dividends of $0.06 per share in 2020, resulting in $0.24 per share in cash dividends for the year ended December 31, 2020.

Although we anticipate paying quarterly dividends going forward, we have no obligation to continue paying dividends, and we may change our dividend policy at any time without notice to our shareholders.

We anticipate paying quarterly dividends on our common stock, subject to approval by our board of directors.

Although we expect to pay quarterly dividends, we have no obligation to pay dividends, and we may change our dividend policy at any time without notice to our shareholders.

Any future determination relating to dividends will be made at the discretion of our board of directors and will depend on a number of factors, including our historical and projected financial condition, liquidity, and results of operations;

7 unchanged sentences

Source of Strength” and “ - Bank Regulation - Regulatory Restrictions on Dividends.”

Use of Proceeds from Registered Sales of Equity Securities

Unregistered Sales of Equity Securities and Use of Proceeds

On May 7, 2019, we sold 663,320 new shares of our common stock at a public offering price of $45.00 per share in our IPO, including 90,000 shares sold pursuant to the exercise of the underwriters’ option to purchase additional shares in the offering.

6 unchanged sentences

Issuer Purchases of Equity Securities

On August 27, 2020, our board of directors approved a stock repurchase program.

The repurchase program authorizes us to purchase up to $3.0 million of our outstanding shares of common stock through August 27, 2021.

In the third quarter of 2021, the $3.0 million stock repurchase program that was approved in August 2020 was completed after reaching the purchase limit.

Also in the third quarter of 2021, our Board of Directors approved the renewal of the stock repurchase program.

The renewed repurchase program authorized us to purchase up to $5.0 million of our outstanding shares of common stock between September 1, 2021 and August 31, 2022, from time to time in the open market at prevailing prices and based on market conditions, or in privately negotiated transactions.

In the fourth quarter of

2021, we entered into a privately negotiated stock repurchase agreement and repurchased 96,245 shares of common stock for $4.9 million, resulting in the purchase of the full amount authorized by that repurchase program.

For the year ended December 31, 2021, we repurchased 153,553 shares of our common stock at an aggregate cost of $7.9 million.

On February 4, 2022, our Board of Directors approved the renewal of the stock repurchase program.

The renewed repurchase program authorizes us to purchase up to $5.0 million of our outstanding shares of common stock between February 4, 2022 and December 31, 2022.

Repurchases may be made from time to time in the open market at prevailing prices and based on market conditions, or in privately negotiated transactions.

We did not repurchase any of our shares of common stock under a share repurchase plan during the three months ended December 31, 2020.

As of December 31, 2020, approximately $2.9 million remains available to repurchase shares under the stock repurchase program.

Selected Financial Data

The following tables set forth selected historical consolidated financial information for each of the periods indicated.

The historical financial information as of and for the years ended December 31, 2020 and 2019, except for the selected ratios, is derived from our audited consolidated financial statements included elsewhere in this document.

The historical financial information as of and for the years ended December 31, 2018, 2017, and 2016, except for the selected ratios, is derived from our audited consolidated financial statements that are not included in this document.

Our historical results may not be indicative of our future performance.

You should read the selected historical consolidated financial and operating data set forth below in conjunction with “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as our consolidated financial statements and the related notes included in "Item 8.

Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

The selected historical consolidated financial information presented below contains financial measures that are not presented in accordance with GAAP and have not been audited.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Financial Measures” for a reconciliation of non-GAAP financial measures.

As of and for the Years Ended December 31,

(in thousands) 2020 2019 2018 2017 2016

Selected Period End Balance Sheet Data:

Total assets $ 2,642,634 $ 1,988,225 $ 1,860,588 $ 1,724,264 $ 1,644,877

Cash and due from banks 29,537 25,937 34,070 29,819 27,588

Interest-bearing deposits in other banks 417,664 107,355 117,836 29,848 92,921

Securities available-for-sale 498,206 335,573 307,877 345,344 304,766

Securities held-to-maturity — — — 8,991 10,193

Loans held for sale 29,116 5,089 2,904 1,867 3,146

Loans held for investment 1,588,446 1,438,924 1,328,438 1,247,666 1,146,675

Allowance for loan losses 17,951 13,937 12,524 10,895 10,544

Noninterest-bearing deposits 943,615 584,915 547,880 504,286 475,164

Interest-bearing deposits 1,396,745 1,136,205 1,097,703 1,021,699 997,725

Total deposits 2,340,360 1,721,120 1,645,583 1,525,985 1,472,889

Junior subordinated debentures — — 11,341 11,341 11,341

Total stockholders’ equity 285,478 251,898 193,703 178,103 151,823

Selected Income Statement Data:

Interest and dividend income $ 77,378 $ 73,725 $ 66,886 $ 58,405 $ 54,256

Interest expense 8,378 10,086 7,649 6,560 6,430

Net interest income 69,000 63,639 59,237 51,845 47,826

Provision for loan losses 6,293 1,810 1,990 1,555 1,658

Noninterest income 23,167 15,970 14,531 12,714 12,902

Operating expenses 51,406 47,335 43,422 40,473 38,361

Income before income tax expense 34,468 30,464 28,356 22,531 20,709

Income tax expense 6,323 5,640 5,300 8,546 5,607

Net income $ 28,145 $ 24,824 $ 23,056 $ 13,985 $ 15,102

Common stock cash dividends $ 1,759 $ 1,326 $ 1,009 $ — $ —

As of and for the Years Ended December 31,

Our purchases of shares of common stock made during the quarter consisted of stock repurchases made under our publically announced stock repurchase programs and are summarized in the table below:

(dollars in thousands, except per share data)

Per Common Share Data:

Earnings per share, basic

$ 3.84 $ 3.51 $ 3.43 $ 2.16 $ 2.37

Earnings per share, diluted

$ 3.83 $ 3.49 $ 3.41 $ 2.14 $ 2.35

Book value per share

$ 38.97 $ 34.48 $ 29.23 $ 26.50 $ 23.86

Tangible book value per share (2,3)

$ 38.76 $ 34.27 $ 28.99 $ 26.27 $ 23.62

Cash dividends per share

$ 0.24 $ 0.20 $ 0.15 $ — $ —

Shares outstanding 7,325,333 7,306,221 6,627,358 6,721,146 6,362,910

Weighted average shares outstanding, basic

7,322,158 7,072,689 6,716,943 6,483,958 6,378,568

Weighted average shares outstanding, diluted

7,345,045 7,115,514 6,756,102 6,526,828 6,416,708

Summary Performance Ratios:

Return on average assets

1.22 % 1.30 % 1.29 % 0.82 % 0.95 %

Return on average equity

10.39 % 10.86 % 12.46 % 8.45 % 10.09 %

Net interest margin

3.09 % 3.47 % 3.42 % 3.14 % 3.11 %

Net interest margin (FTE) (4)

3.14 % 3.52 % 3.44 % 3.20 % 3.21 %

Efficiency ratio (5)

55.77 % 59.46 % 58.86 % 62.69 % 63.17 %

Loans HFI to deposits ratio

67.87 % 83.60 % 80.73 % 81.76 % 77.85 %

Noninterest-bearing deposits to deposits ratio

40.32 % 33.98 % 33.29 % 33.05 % 32.26 %

Noninterest income to average assets

1.00 % 0.84 % 0.81 % 0.74 % 0.81 %

Operating expense to average assets

2.22 % 2.49 % 2.43 % 2.37 % 2.42 %

Summary Credit Quality Ratios:

Nonperforming assets to total assets

0.16 % 0.33 % 0.38 % 0.60 % 0.36 %

Nonperforming loans to loans HFI

0.21 % 0.37 % 0.49 % 0.83 % 0.49 %

Allowance for loan losses to loans HFI

1.13 % 0.97 % 0.94 % 0.87 % 0.92 %

Net charge-offs to average loans

0.14 % 0.03 % 0.03 % 0.10 % 0.06 %

Capital Ratios:

Total stockholders’ equity to total assets

10.80 % 12.67 % 10.41 % 10.33 % 9.23 %

Tangible common equity to tangible assets (2,6)

10.75 % 12.60 % 10.34 % 10.25 % 9.14 %

Total risk-based capital to risk-weighted assets

18.68 % 18.02 % 16.55 % 15.91 % 14.56 %

Tier I risk-based capital to risk-weighted assets

17.55 % 17.07 % 15.62 % 15.06 % 13.69 %

Common equity Tier I capital to risk-weighted assets

17.55 % 17.07 % 14.80 % 14.20 % 12.78 %

Tier I risk-based capital to average assets

10.92 % 12.82 % 11.40 % 11.21 % 10.04 %

(1) 2017 and 2016 amounts adjusted to give effect to the 2018 2-for-1 stock split.

(2) Non-GAAP financial measure.

For calculations and reconciliations to GAAP of non-GAAP financial measures, see "Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Financial Measures" in this Annual Report on Form 10-K.

(3) We calculate tangible book value per common share as total stockholders’ equity, less intangible assets, divided by the outstanding number of shares of our common stock at the end of the relevant period.

(4) Net interest margin FTE includes an FTE adjustment using a 21% federal income tax rate for 2020, 2019, and 2018, and a 35% tax rate for 2017 and 2016 on tax-exempt securities and tax-exempt loans.

(5) Efficiency ratio represents operating expenses divided by the sum of net interest income and noninterest income.

(6) We calculate tangible common equity as total stockholders’ equity, less intangible assets, net of accumulated amortization, and we calculate tangible assets as total assets, less intangible assets, net of accumulated amortization.

Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (1)(2)

October 1 - October 31, 2021 — $ — — $ 4,896

November 1 - November 30, 2021 96,245 $ 50.87 96,245 $ —

December 1 - December 31, 2021 — $ — — $ —

Total 96,245 $ 50.87 96,245 $ —

(1) On August 31, 2021, we announced the renewal of our stock repurchase program, which authorized us to purchase up to $5.0 million of our outstanding common stock between September 1, 2021 and August 31, 2022.

In the fourth quarter of 2021, the program was effectively terminated upon reaching our previously approved repurchase limit.

(2) On February 4, 2022, our Board of Directors approved the renewal of our stock repurchase program.

The renewed repurchase program authorizes us to purchase up to $5.0 million of our outstanding shares of common stock between February 4, 2022 and December 31, 2022.

Repurchases may be made from time to time in the open market at prevailing prices and based on market conditions, or in privately negotiated transactions.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity