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Enterprise Bancorp, Inc. Announces First Quarter Financial Results

EBTC | 10 days ago

LOWELL, Mass., April 23, 2024 (GLOBE NEWSWIRE) -- Enterprise Bancorp, Inc. (NASDAQ: EBTC), parent of Enterprise Bank, announced its financial results for the three months ended March 31, 2024. Net income amounted to $8.5 million, or $0.69 per diluted common share, for the three months ended March 31, 2024, compared to $7.9 million, or $0.64 per diluted share, for the three months ended December 31, 2023 and $10.8 million, or $0.88 per diluted share, for the three months ended March 31, 2023.

Selected financial results at or for the three months ended March 31, 2024, were as follows:

The returns on average assets and average equity were 0.75% and 10.47%, respectively.
Tax-equivalent net interest margin (non-GAAP) ("net interest margin") was 3.20%.
Total loans increased 2.4% compared to December 31, 2023.
Total deposits increased 3.2% compared to December 31, 2023.
Wealth assets under management and administration amounted to $1.37 billion and increased 4.0% compared to December 31, 2023.

Chief Executive Officer Jack Clancy commented, "The first quarter of 2024 had solid net income with strong loan and deposit growth. Higher deposit costs and the inverted yield curve continued to be a headwind resulting in a net interest margin of 3.20%. We remain well positioned with a strong balance sheet that is centered around a high-quality loan portfolio, a conservative credit and reserve culture and favorable liquidity, core deposit funding and capital." Executive Chairman & Founder George Duncan added, "Despite the higher interest rates, our markets remain economically healthy, and we continue to opportunistically add new loan, deposit and wealth management customers. I was particularly pleased with the 3% growth in total deposits."

Net Interest Income

Net interest income for the three months ended March 31, 2024, amounted to $35.2 million, a decrease of $4.8 million, or 12%, compared to the three months ended March 31, 2023. The decrease was due primarily to an increase in deposit interest expense of $11.3 million which was driven by an increase in the cost of funds and changes in deposit mix, partially offset by an increase in loan interest income of $9.3 million due to loan growth and higher market interest rates.

Net Interest Margin

Three months ended – March 31, 2024, compared to December 31, 2023

Net interest margin was 3.20% for the three months ended March 31, 2024, compared to 3.29% for the three months ended December 31, 2023.

Net interest margin compared to the prior quarter was impacted by the following factors:

Average other interest-earning assets decreased $86.1 million, or 50%, while the yield increased 6 basis points.
Average loan balances increased $140.2 million, or 4%, and the tax-equivalent yield increased 10 basis points.
Average total deposits decreased $45.5 million, or 1%, while the yield increased 18 basis points.
Average borrowed funds increased $56.1 million and the yield was 4.38%, an increase of 214 basis points from previously low levels.

Three months ended – March 31, 2024, compared to March 31, 2023

Net interest margin was 3.20% for the three months ended March 31, 2024, compared to 3.76% for the three months ended March 31, 2023.

Net interest margin compared to the prior year quarter was impacted by the following factors:

Average other interest-earning assets decreased $112.7 million, or 57%, while the yield increased 97 basis points.
Average investment securities decreased $173.7 million, or 19%, and the tax-equivalent yield decreased 8 basis points.
Average loan balances increased $407.3 million, or 13%, and the tax-equivalent yield increased 44 basis points.
Average total deposits increased $27.3 million, or 1%, and the yield increased 111 basis points.
Average borrowed funds increased $60.4 million and the yield was 4.38%, an increase of 281 basis points from previously low levels.

The decrease in net interest margin over the respective periods was due primarily to increases in funding costs, partially offset by increases in loan yields and other interest earning asset yields as well as loan growth. Yields on loans and other interest earning assets were positively impacted by the increases of 525 basis points in the federal funds rate from March 2022 through July 2023. During the current quarter, funding costs were impacted primarily by higher market interest rates, increased competition for deposits and changes in deposit mix as depositors sought higher yielding money market and certificate of deposit products.

Provision for Credit Losses

The provision for credit losses for the three months ended March 31, 2024, amounted to $622 thousand, compared to $2.7 million for the three months ended March 31, 2023. The provision expense for the first quarter of 2024 resulted primarily from growth in the Company's loan portfolio and a $1.6 million increase in reserves on individually evaluated loans, due primarily to the addition of one commercial construction loan which was credit downgraded, partially offset by the impact of an improved economic forecast in our allowance for credit loss ("ACL") model and a decrease in off-balance sheet commitments.

Non-Interest Income

Non-interest income for the three months ended March 31, 2024, amounted to $5.5 million, an increase of $738 thousand, or 16%, compared to the three months ended March 31, 2023. The increase in non-interest income was due primarily to increases in gains on equity securities of $481 thousand, wealth management fees of $263 thousand and income on bank-owned life insurance of $151 thousand.

Non-Interest Expense

Non-interest expense for the three months ended March 31, 2024, amounted to $28.9 million, an increase of $868 thousand, or 3%, compared to the three months ended March 31, 2023. The increase in non-interest expense was due primarily to increases in salaries and benefits expense of $655 thousand and deposit insurance premiums of $184 thousand.

Balance Sheet

Total assets amounted to $4.62 billion at March 31, 2024, compared to $4.47 billion at December 31, 2023, an increase of $158.0 million, or 4%.

Total interest-earning deposits with banks, which consist of overnight and short-term investments, amounted to $106.4 million at March 31, 2024, compared to $19.1 million at December 31, 2023. The increase of $87.2 million was due primarily to increases in deposits and borrowed funds, partially offset by loan growth.

Total investment securities at fair value amounted to $652.0 million at March 31, 2024, compared to $668.2 million at December 31, 2023. The decrease of $16.1 million, or 2%, was largely attributable to principal pay-downs, calls and maturities during the three months ended March 31, 2024. Unrealized losses on debt securities amounted to $105.6 million at March 31, 2024, compared to $102.9 million at December 31, 2023, an increase of $2.8 million, or 3%. At March 31, 2024, management determined that no ACL for available-for-sale securities was necessary.

Total loans amounted to $3.65 billion at March 31, 2024, compared to $3.57 billion at December 31, 2023. The increase of $86.7 million, or 2%, was due primarily to an increase in commercial real estate loans of $94.9 million.

Total deposits amounted to $4.11 billion at March 31, 2024, compared to $3.98 billion at December 31, 2023. The increase of $128.6 million, or 3%, was due primarily to increases in money market and certificate of deposit balances of $66.2 million and $61.1 million, respectively.

Total borrowed funds amounted to $63.2 million at March 31, 2024, compared to $25.8 million at December 31, 2023. The increase of $37.5 million, or 145%, was from an increase in advances used to support the Company's operations.

Total shareholders' equity amounted to $333.4 million at March 31, 2024, compared to $329.1 million at December 31, 2023. The increase of $4.3 million, or 1%, was due primarily to an increase in retained earnings of $5.6 million, partially offset by an increase in the accumulated other comprehensive loss of $2.1 million.

Credit Quality

Selected credit quality metrics at or for the three months ended March 31, 2024, compared to December 31, 2023, were as follows:

The ACL for loans amounted to $60.7 million, or 1.66% of total loans, compared to $59.0 million, or 1.65% of total loans.
The reserve for unfunded commitments(included in other liabilities) amounted to $5.9 million, compared to $7.1 million.
Non-performing loans amounted to $18.5 million, or 0.51% of total loans, compared to $11.4 million, or 0.32% of total loans. The increase in non-performing loans resulted primarily from one individually evaluated commercial construction loan which was credit downgraded and moved to non-accrual in the first quarter of 2024, as noted above.

Annualized net charge-offs to average total loans remained low and amounted to 0.01% for the three months ended March 31, 2024, compared to annualized net recoveries to average total loans of 0.01% for the three months ended March 31, 2023.

Wealth Management

Wealth assets are not carried as assets on the Company's consolidated balance sheets.

Wealth assets under management amounted to $1.11 billion at March 31, 2024, an increase of $27.3 million, or 3%, compared to December 31, 2023.

Wealth assets under administration amounted to $268.1 million at March 31, 2024, an increase of $25.7 million, or 11%, compared to December 31, 2023, resulting primarily from an increase in market values as well as net asset growth.

About Enterprise Bancorp, Inc.

Enterprise Bancorp, Inc. is a Massachusetts corporation that conducts substantially all its operations through Enterprise Bank and Trust Company, commonly referred to as Enterprise Bank, and has reported 138 consecutive profitable quarters. Enterprise Bank is principally engaged in the business of attracting deposits from the general public and investing in commercial loans and investment securities. Through Enterprise Bank and its subsidiaries, the Company offers a range of commercial, residential and consumer loan products, deposit products and cash management services, electronic and digital banking options, as well as wealth management, and trust services. The Company's headquarters and Enterprise Bank's main office are located at 222 Merrimack Street in Lowell, Massachusetts. The Company's primary market area is the Northern Middlesex, Northern Essex, and Northern Worcester counties of Massachusetts and the Southern Hillsborough and Southern Rockingham counties in New Hampshire. Enterprise Bank has 27 full-service branches located in the Massachusetts communities of Acton, Andover, Billerica (2), Chelmsford (2), Dracut, Fitchburg, Lawrence, Leominster, Lexington, Lowell (2), Methuen, North Andover, Tewksbury (2), Tyngsborough and Westford and in the New Hampshire communities of Derry, Hudson, Londonderry, Nashua (2), Pelham, Salem and Windham.

Forward-Looking Statements

This earnings release contains statements about future events that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by references to a future period or periods or by the use of the words "believe," "expect," "anticipate," "intend," "estimate," "assume," "will," "should," "could," "plan," and other similar terms or expressions. Forward-looking statements should not be relied on because they involve known and unknown risks, uncertainties and other factors, some of which are beyond the control of the Company. These risks, uncertainties, and other factors may cause the actual results, performance, and achievements of the Company to be materially different from the anticipated future results, performance or achievements expressed in, or implied by, the forward-looking statements. Factors that could cause such differences include, but are not limited to, the impact on us and our customers of a decline in general economic conditions and any regulatory responses thereto; potential recession in the United States and our market areas; the impacts related to or resulting from bank failures and any continuation of uncertainty in the banking industry, including the associated impact to the Company and other financial institutions of any regulatory changes or other mitigation efforts taken by government agencies in response thereto; increased competition for deposits and related changes in deposit customer behavior; the impact of changes in market interest rates, whether due to continued elevated interest rates or potential reductions in interest rates and a resulting decline in net interest income; the persistence of the current inflationary pressures, or the resurgence of elevated levels of inflation, changes in market interest rates; the persistence of the current inflationary environment in our market areas and the United States; the uncertain impacts of ongoing quantitative tightening and current and future monetary policies of the Board of Governors of the Federal Reserve System; the effects of declines in housing prices in the United States and our market areas; increases in unemployment rates in the United States and our market areas; declines in commercial real estate values and prices; uncertainty regarding United States fiscal debt and budget matters; cyber incidents or other failures, disruptions or breaches of our operational or security systems or infrastructure, or those of our third-party vendors or other service providers, including as a result of cyber-attacks; severe weather, natural disasters, acts of war or terrorism, geopolitical instability or other external events; competition and market expansion opportunities; changes in non-interest expenditures or in the anticipated benefits of such expenditures; changes in tax laws; the risks related to the development, implementation, use and management of emerging technologies, including artificial intelligence and machine learnings; potential increased regulatory requirements and costs related to the transition and physical impacts of climate change; and current or future litigation, regulatory examinations or other legal and/or regulatory actions. Therefore, the Company can give no assurance that the results contemplated in the forward-looking statements will be realized and readers are cautioned not to place undue reliance on the forward-looking statements contained in this press release. For more information about these factors, please see our reports filed with or furnished to the U.S. Securities and Exchange Commission (the "SEC"), including our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q on file with the SEC, including the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." Any forward-looking statements contained in this earnings release are made as of the date hereof, and we undertake no duty, and specifically disclaim any duty, to update or revise any such statements, whether as a result of new information, future events or otherwise, except as required by applicable law.


ENTERPRISE BANCORP, INC.
Consolidated Balance Sheets
(unaudited)

(Dollars in thousands, except per share data)	March 31, 2024			December 31, 2023			March 31, 2023
Assets
Cash and cash equivalents:
Cash and due from banks	$	41,443		$	37,443		$	42,843
Interest-earning deposits with banks		106,391			19,149			172,850
Total cash and cash equivalents		147,834			56,592			215,693
Investments:
Debt securities at fair value (amortized cost of $749,561, $763,981 and $923,485, respectively)		643,924			661,113			825,520
Equity securities at fair value		8,102			7,058			5,375
Total investment securities at fair value		652,026			668,171			830,895
Federal Home Loan Bank stock		2,482			2,402			2,343
Loans held for sale		400			200			362
Loans:
Total loans		3,654,322			3,567,631			3,230,156
Allowance for credit losses		(60,741	)		(58,995	)		(55,002	)
Net loans		3,593,581			3,508,636			3,175,154
Premises and equipment, net		44,671			44,931			43,821
Lease right-of-use asset		24,645			24,820			24,751
Accrued interest receivable		20,501			19,233			18,540
Deferred income taxes, net		47,903			49,166			44,432
Bank-owned life insurance		65,878			65,455			64,463
Prepaid income taxes		5,771			1,589			3,636
Prepaid expenses and other assets		12,667			19,183			12,150
Goodwill		5,656			5,656			5,656
Total assets	$	4,624,015		$	4,466,034		$	4,441,896
Liabilities and Shareholders'Equity
Liabilities
Deposits	$	4,106,119		$	3,977,521		$	4,016,156
Borrowed funds		63,246			25,768			3,199
Subordinated debt		59,577			59,498			59,261
Lease liability		24,303			24,441			24,285
Accrued expenses and other liabilities		30,945			45,011			25,737
Accrued interest payable		6,386			4,678			1,940
Total liabilities		4,290,576			4,136,917			4,130,578
Commitments and Contingencies
Shareholders'Equity
Preferred stock, $0.01 par value per share; 1,000,000 shares authorized; no shares issued		—			—			—
Common stock, $0.01 par value per share; 40,000,000 shares authorized; 12,376,562, 12,272,674 and 12,222,717 shares issued and outstanding, respectively		124			123			122
Additional paid-in capital		108,246			107,377			104,621
Retained earnings		306,943			301,380			282,534
Accumulated other comprehensive loss		(81,874	)		(79,763	)		(75,959	)
Total shareholders' equity		333,439			329,117			311,318
Total liabilities and shareholders' equity	$	4,624,015		$	4,466,034		$	4,441,896

ENTERPRISE BANCORP, INC.
Consolidated Statements of Income
(unaudited)

	Three months ended
(Dollars in thousands, except per share data)	March 31, 2024		December 31, 2023		March 31, 2023
Interest and dividend income:
Other interest-earning assets	$	1,172	$	2,350	$	2,208
Investment securities		4,034		4,219		5,073
Loans and loans held for sale		48,817		46,680		39,556
Total interest and dividend income		54,023		53,249		46,837
Interest expense:
Deposits		17,272		15,821		5,987
Borrowed funds		694		43		12
Subordinated debt		867		867		867
Total interest expense		18,833		16,731		6,866
Net interest income		35,190		36,518		39,971
Provision for credit losses		622		2,493		2,736
Net interest income after provision for credit losses		34,568		34,025		37,235
Non-interest income:
Wealth management fees		1,850		1,797		1,587
Deposit and interchange fees		2,069		2,145		2,048
Income on bank-owned life insurance, net		458		314		307
Net gains on sales of loans		22		—		14
Gains (losses) on equity securities		465		674		(16	)
Other income		631		617		817
Total non-interest income		5,495		5,547		4,757
Non-interest expense:
Salaries and employee benefits		19,176		18,468		18,521
Occupancy and equipment expenses		2,459		2,283		2,501
Technology and telecommunications expenses		2,745		2,719		2,675
Advertising and public relations expenses		743		709		681
Audit, legal and other professional fees		734		788		640
Deposit insurance premiums		859		768		675
Supplies and postage expenses		237		245		255
Other operating expenses		1,955		2,244		2,092
Total non-interest expense		28,908		28,224		28,040
Income before income taxes		11,155		11,348		13,952
Provision for income taxes		2,648		3,441		3,184
Net income	$	8,507	$	7,907	$	10,768

Basic earnings per common share	$	0.69	$	0.64	$	0.89
Diluted earnings per common share	$	0.69	$	0.64	$	0.88

Basic weighted average common shares outstanding		12,292,417		12,261,918		12,155,320
Diluted weighted average common shares outstanding		12,304,203		12,276,769		12,193,756

ENTERPRISE BANCORP, INC.
Selected Consolidated Financial Data and Ratios
(unaudited)

	At or for the three months ended
(Dollars in thousands, except per share data)	March 31, 2024			December 31, 2023			September 30, 2023			June 30, 2023			March 31, 2023
Balance Sheet Data
Total cash and cash equivalents	$	147,834		$	56,592		$	225,421		$	258,825		$	215,693
Total investment securities at fair value		652,026			668,171			678,932			712,851			830,895
Total loans		3,654,322			3,567,631			3,404,014			3,345,667			3,230,156
Allowance for credit losses		(60,741	)		(58,995	)		(57,905	)		(56,899	)		(55,002	)
Total assets		4,624,015			4,466,034			4,482,374			4,502,344			4,441,896
Total deposits		4,106,119			3,977,521			4,060,403			4,075,598			4,016,156
Borrowed funds		63,246			25,768			4,290			3,334			3,199
Subordinated debt		59,577			59,498			59,419			59,340			59,261
Total shareholders' equity		333,439			329,117			299,699			307,490			311,318
Total liabilities and shareholders' equity		4,624,015			4,466,034			4,482,374			4,502,344			4,441,896

Wealth Management
Wealth assets under management	$	1,105,036		$	1,077,761		$	984,647		$	1,009,386		$	930,714
Wealth assets under administration	$	268,074		$	242,338		$	211,046		$	214,116		$	206,569

Shareholders' Equity Ratios
Book value per common share	$	26.94		$	26.82		$	24.45		$	25.11		$	25.47
Dividends paid per common share	$	0.24		$	0.23		$	0.23		$	0.23		$	0.23

Regulatory Capital Ratios
Total capital to risk weighted assets		13.20	%		13.12	%		13.45	%		13.37	%		13.55	%
Tier 1 capital to risk weighted assets(1)		10.43	%		10.34	%		10.61	%		10.52	%		10.64	%
Tier 1 capital to average assets		8.85	%		8.74	%		8.59	%		8.62	%		8.47	%

Credit Quality Data
Non-performing loans	$	18,527		$	11,414		$	11,656		$	7,647		$	7,532
Non-performing loans to total loans		0.51	%		0.32	%		0.34	%		0.23	%		0.23	%
Non-performing assets to total assets		0.40	%		0.26	%		0.26	%		0.17	%		0.17	%
ACL for loans to total loans		1.66	%		1.65	%		1.70	%		1.70	%		1.70	%
Net charge-offs (recoveries)	$	122		$	15		$	(12	)	$	146		$	(44	)

Income Statement Data
Net interest income	$	35,190		$	36,518		$	38,502		$	38,093		$	39,971
Provision for credit losses		622			2,493			1,752			2,268			2,736
Total non-interest income		5,495			5,547			4,486			2,819			4,757
Total non-interest expense		28,908			28,224			28,312			25,623			28,040
Income before income taxes		11,155			11,348			12,924			13,021			13,952
Provision for income taxes		2,648			3,441			3,225			3,337			3,184
Net income	$	8,507		$	7,907		$	9,699		$	9,684		$	10,768

Income Statement Ratios
Diluted earnings per common share	$	0.69		$	0.64		$	0.79		$	0.79		$	0.88
Return on average total assets		0.75	%		0.69	%		0.85	%		0.88	%		0.99	%
Return on average shareholders' equity		10.47	%		10.21	%		12.53	%		12.63	%		14.67	%
Net interest margin (tax-equivalent)(2)		3.20	%		3.29	%		3.46	%		3.55	%		3.76	%
(1) Ratio also represents common equity tier 1 capital to risk weighted assets as of the periods presented.
(2) Tax-equivalent net interest margin is net interest income adjusted for the tax-equivalent effect associated with tax-exempt loan and investment income, expressed as a percentage of average interest-earning assets.

ENTERPRISE BANCORP, INC.
Consolidated Loan and Deposit Data
(unaudited)

Major classifications of loans at the dates indicated were as follows:

(Dollars in thousands)	March 31, 2024			December 31, 2023			September 30, 2023			June 30, 2023			March 31, 2023
Commercial real estate	$	2,159,594		$	2,064,737		$	2,032,458		$	2,009,263		$	1,929,544
Commercial and industrial		417,604			430,749			425,334			420,095			423,864
Commercial construction		583,711			585,113			501,179			487,018			456,735
Total commercial loans		3,160,909			3,080,599			2,958,971			2,916,376			2,810,143

Residential mortgages		400,093			393,142			362,514			346,523			335,834
Home equity loans and lines		85,144			85,375			74,433			74,374			75,809
Consumer		8,176			8,515			8,096			8,394			8,370
Total retail loans		493,413			487,032			445,043			429,291			420,013
Total loans		3,654,322			3,567,631			3,404,014			3,345,667			3,230,156

ACL for loans		(60,741	)		(58,995	)		(57,905	)		(56,899	)		(55,002	)
Net loans	$	3,593,581		$	3,508,636		$	3,346,109		$	3,288,768		$	3,175,154

Deposits are summarized as follows as of the periods indicated:

(Dollars in thousands)	March 31, 2024		December 31, 2023		September 30, 2023		June 30, 2023		March 31, 2023
Non-interest checking	$	1,050,608	$	1,070,104	$	1,130,732	$	1,273,968	$	1,247,253
Interest-bearing checking		730,819		697,632		727,817		701,701		641,194
Savings		273,369		285,770		290,363		310,321		297,790
Money market		1,469,181		1,402,939		1,434,036		1,373,816		1,454,858
CDs $250,000 or less		337,367		295,789		262,975		244,114		222,116
CDs greater than $250,000		244,775		225,287		214,480		171,678		152,945
Deposits	$	4,106,119	$	3,977,521	$	4,060,403	$	4,075,598	$	4,016,156

ENTERPRISE BANCORP, INC.
Consolidated Average Balance Sheets and Yields (tax-equivalent basis)
(unaudited)

The following table presents the Company's average balance sheets, net interest income and average rates for the periods indicated:

	Three months ended March 31, 2024						Three Months Ended December 31, 2023						Three months ended March 31, 2023
(Dollars in thousands)	Average Balance		Interest(1)		Average Yield(1)		Average Balance		Interest(1)		Average Yield(1)		Average Balance		Interest(1)		Average Yield(1)
Assets:
Other interest-earning assets(2)	$	86,078	$	1,172	5.48	%	$	172,167	$	2,350	5.42	%	$	198,741	$	2,208	4.51	%
Investment securities(3) (tax-equivalent)		763,692		4,157	2.18	%		799,093		4,345	2.17	%		937,382		5,300	2.26	%
Loans and loans held for sale(4) (tax-equivalent)		3,608,157		48,960	5.46	%		3,467,945		46,824	5.36	%		3,200,842		39,679	5.02	%
Total interest-earnings assets (tax-equivalent)		4,457,927		54,289	4.89	%		4,439,205		53,519	4.79	%		4,336,965		47,187	4.40	%
Other assets		91,794						78,102						86,580
Total assets	$	4,549,721					$	4,517,307					$	4,423,545

Liabilities and stockholders' equity:
Non-interest checking	$	1,069,145		—			$	1,155,307		—			$	1,317,534		—
Interest checking, savings and money market		2,418,947		11,356	1.89	%		2,427,089		10,786	1.76	%		2,354,967		4,105	0.71	%
CDs		549,097		5,916	4.33	%		500,286		5,035	3.99	%		337,361		1,882	2.26	%
Total deposits		4,037,189		17,272	1.72	%		4,082,682		15,821	1.54	%		4,009,862		5,987	0.61	%
Borrowed funds		63,627		694	4.38	%		7,572		43	2.24	%		3,206		12	1.57	%
Subordinated debt(5)		59,530		867	5.82	%		59,451		867	5.83	%		59,213		867	5.85	%
Total funding liabilities		4,160,346		18,833	1.82	%		4,149,705		16,731	1.60	%		4,072,281		6,866	0.68	%
Other liabilities		62,500						60,376						53,665
Total liabilities		4,222,846						4,210,081						4,125,946
Stockholders' equity		326,875						307,226						297,599
Total liabilities and stockholders' equity	$	4,549,721					$	4,517,307					$	4,423,545

Net interest-rate spread (tax-equivalent)					3.07	%					3.19	%					3.72	%
Net interest income (tax-equivalent)				35,456						36,788						40,321
Net interest margin (tax-equivalent)					3.20	%					3.29	%					3.76	%
Less tax-equivalent adjustment				266						270						350
Net interest income			$	35,190					$	36,518					$	39,971
Net interest margin					3.17	%					3.27	%					3.73	%
(1) Average yields and interest income are presented on a tax-equivalent basis, calculated using a U.S. federal income tax rate of 21% for each period presented, based on tax-equivalent adjustments associated with tax-exempt loans and investments interest income.
(2) Average other interest-earning assets include interest-earning deposits with banks, federal funds sold and FHLB stock.
(3) Average investment securities are presented at average amortized cost.
(4) Average loans and loans held for sale are presented at average amortized cost and include non-accrual loans.
(5) Subordinated debt is net of average deferred debt issuance costs.