EX-99.1 2 wtba-20230727exhibit991.htm EX-99.1 Document

Exhibit 99.1

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Press Release
 
July 27, 2023
 
FOR IMMEDIATE RELEASE
For more information contact:
Jane Funk, Executive Vice President, Treasurer and Chief Financial Officer (515) 222-5766
 
WEST BANCORPORATION, INC. ANNOUNCES SECOND QUARTER 2023 FINANCIAL RESULTS AND DECLARES QUARTERLY DIVIDEND

West Des Moines, IA - West Bancorporation, Inc. (Nasdaq: WTBA; the “Company”), parent company of West Bank, today reported second quarter 2023 net income of $5.9 million, or $0.35 per diluted common share, compared to first quarter 2023 net income of $7.8 million, or $0.47 per diluted common share, and second quarter 2022 net income of $12.7 million, or $0.75 per diluted common share. On July 26, 2023, the Company’s Board of Directors declared a regular quarterly dividend of $0.25 per common share. The dividend is payable on August 23, 2023, to stockholders of record on August 9, 2023.

David Nelson, President and Chief Executive Officer of the Company, commented, “The unprecedented size and pace of the Federal Reserve’s interest rate increases in the last year and the resulting inverted yield curve have had a dramatic impact on our deposit base and cost of funds. Our deposit and funding mix has changed as depositors react to intense short-term rate competition and utilize accumulated cash for business operations. The resulting increase in our cost of funds has outpaced the repricing benefits in loans and investments, leading to a decline in our net interest income and net interest margin.”

David Nelson added, “Our credit quality continues to be pristine. We had one loan past due more than 30 days at the end of the second quarter. This is the first time in two years that we have had a loan more than 30 days past due at quarter-end. We have one loan on nonaccrual status and a total of $536 thousand in loans on our watch and classified loan list. We remain diligent in monitoring and managing our credit risk in light of future economic uncertainty and the volatile interest rate environment. Our capital position is strong and we remain focused on delivering high quality services and products through our successful relationship based business model.”

Second Quarter 2023 Financial Highlights
Quarter Ended June 30, 2023Six Months Ended June 30, 2023
Net income (in thousands)$5,862$13,706
Return on average equity11.03 %12.90 %
Return on average assets0.64 %0.76 %
Efficiency ratio (a non-GAAP measure)62.83 %58.91 %
Nonperforming assets to total assets0.01 %0.01 %

Second Quarter 2023 Compared to First Quarter 2023 Overview

•Loans increased $50.9 million in the second quarter of 2023, or 7.4 percent annualized.

•No provision for credit losses was recorded in either the second quarter of 2023 or the first quarter of 2023.

•The allowance for credit losses to total loans was 1.00 percent at June 30, 2023, compared to 1.01 percent at March 31, 2023.




•There was one loan with a balance of $229 thousand that was greater than 30 days past due at June 30, 2023. This loan is guaranteed by the SBA. For the seven consecutive quarter-ends prior to June 30, 2023, there were no loans greater than 30 days past due. Nonaccrual loans at June 30, 2023 consisted of one loan with a balance of $309 thousand.

•Commercial real estate loans totaling $52.6 million were upgraded and removed from the watch list during the second quarter of 2023. These loans related to one borrowing relationship that had been downgraded during the COVID-19 pandemic. The upgrade resulted from the borrowers’ ability to return to normal operations and financial performance for an extended period of time.

•Deposits increased $37.9 million in the second quarter of 2023. Brokered deposits totaled $230.7 million at June 30, 2023, compared to $234.2 million at March 31, 2023, a decrease of $3.5 million. Excluding brokered deposits, deposits increased $41.4 million, or 1.6 percent, during the second quarter of 2023. As of June 30, 2023, estimated uninsured deposits, which excludes deposits in the IntraFi® reciprocal network, brokered deposits and public funds protected by state programs, were approximately 27.5 percent of total deposits.
•The efficiency ratio (a non-GAAP measure) was 62.83 percent for the second quarter of 2023, compared to 55.34 percent for the first quarter of 2023. The increase in the efficiency ratio is primarily the result of the decline in tax equivalent net interest income and an increase in salaries and employee benefits.
•Net interest margin, on a fully tax-equivalent basis (a non-GAAP measure), was 2.02 percent for the second quarter of 2023, compared to 2.23 percent for the first quarter of 2023. Net interest income for the second quarter of 2023 was $17.3 million, compared to $18.7 million for the first quarter of 2023. The rising cost of deposits and borrowed funds and the change in mix of funding has increased interest expense faster than the increase in interest income from loan repricing and loan originations.
•The tangible common equity ratio was 5.90 percent at June 30, 2023, compared to 5.99 percent at March 31, 2023.

Second Quarter 2023 Compared to Second Quarter 2022 Overview

•Loans increased $233.9 million at June 30, 2023, or 9.1 percent, compared to June 30, 2022.
•Deposits decreased $6.1 million at June 30, 2023, compared to June 30, 2022. Included in deposits were brokered deposits totaling $230.7 million at June 30, 2023, compared to $196.5 million at June 30, 2022. The decline in deposits was primarily attributable to customers using their own liquidity to fund business transactions, instead of incurring debt, and customers seeking higher yielding investment options.
•Borrowed funds increased to $593.9 million at June 30, 2023, compared to $388.8 million at June 30, 2022. The increase included $135.0 million in FHLB advances associated with long-term interest rate swaps and $51.1 million in federal funds purchased and other short-term borrowings.
•The efficiency ratio (a non-GAAP measure) was 62.83 percent for the second quarter of 2023, compared to 41.96 percent for the second quarter of 2022. Tax-equivalent net interest income decreased in the second quarter of 2023 compared to the second quarter of 2022, primarily due to the increased cost of deposits and borrowed funds. Additionally, salaries and employee benefits increased due to wage increases in response to market conditions and competition in retaining and recruiting talent and increases in full-time equivalent employees with growth in our commercial banking team and information technology department.
•Net interest margin, on a fully tax-equivalent basis (a non-GAAP measure), was 2.02 percent for the second quarter of 2023, compared to 2.93 percent for the second quarter of 2022. Net interest income for the second quarter of 2023 was $17.3 million, compared to $24.2 million for the second quarter of 2022. In 2022 and 2023, the rising cost of deposits and borrowed funds and the change in mix of funding has increased interest expense faster than the increase in interest income from loan repricing and loan originations.

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, July 27, 2023. The telephone number for the conference call is 833-470-1428. The access code for the conference call is 716035. A recording of the call will be available until August 10, 2023, by dialing 866-813-9403. The replay access code is 518749.




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 changes in interest rates; competitive pressures, including from non-bank competitors such as “fintech” companies and digital asset service providers; pricing pressures on loans and deposits; our ability to successfully manage liquidity risk; 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 credit losses dictated by new market conditions, accounting standards (including as a result of the implementation of the current expected credit loss (CECL) accounting standard) or regulatory requirements; the concentration of large deposits from certain clients who have balances above current FDIC insurance limits; changes in local, national and international economic conditions, including rising rates of inflation and possible recession; the effects of recent developments and events in the financial services industry, including the large-scale deposit withdrawals over a short period of time at Silicon Valley Bank, Signature Bank and First Republic Bank that resulted in the failure of those institutions; changes in legal and regulatory requirements, limitations and costs including in response to the recent failures of Silicon Valley Bank, Signature Bank and First Republic Bank; changes in customers’ acceptance of the Company’s products and services; the occurrence of fraudulent activity, breaches or failures of our information security controls or cyber-security related incidents, including as a result of sophisticated attacks using artificial intelligence and similar tools; 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; risks related to climate change and the negative impact it may have on our customers and their businesses; changes to U.S. tax laws, regulations and guidance; talent and labor shortages; the new 1 percent 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 SHEETSJune 30, 2023March 31, 2023December 31, 2022September 30, 2022June 30, 2022
Assets
Cash and due from banks$29,776 $21,579 $24,896 $58,342 $26,174 
Interest-bearing deposits1,968 901 1,643 1,049 766 
Securities available for sale, at fair value645,091 665,358 664,115 671,752 731,970 
Federal Home Loan Bank stock, at cost22,488 22,226 19,336 18,350 15,532 
Loans2,807,075 2,756,185 2,742,836 2,614,145 2,573,129 
Allowance for credit losses(27,938)(27,941)(25,473)(25,418)(25,434)
Loans, net2,779,137 2,728,244 2,717,363 2,588,727 2,547,695 
Premises and equipment, net66,683 59,565 53,124 44,592 41,807 
Bank-owned life insurance43,328 44,830 44,573 44,318 44,072 
Other assets90,084 82,240 88,168 90,387 66,775 
Total assets$3,678,555 $3,624,943 $3,613,218 $3,517,517 $3,474,791 
Liabilities and Stockholders’ Equity
Deposits$2,836,325 $2,798,393 $2,880,408 $2,822,847 $2,842,451 
Federal funds purchased and other short-term borrowings184,150 229,290 200,000 204,500 133,000 
Other borrowings409,736 350,921 285,855 255,789 255,751 
Other liabilities31,218 29,347 35,843 35,617 27,400 
Stockholders’ equity217,126 216,992 211,112 198,764 216,189 
Total liabilities and stockholders’ equity$3,678,555 $3,624,943 $3,613,218 $3,517,517 $3,474,791 
For the Quarter Ended
AVERAGE BALANCESJune 30, 2023March 31, 2023December 31, 2022September 30, 2022June 30, 2022
Assets$3,645,651 $3,617,458 $3,511,717 $3,475,894 $3,503,686 
Loans2,783,463 2,745,381 2,649,671 2,579,862 2,537,152 
Deposits2,854,945 2,846,926 2,901,928 2,864,648 3,002,535 
Stockholders’ equity213,177 215,391 199,947 219,065 222,731 



WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (unaudited)
(in thousands)
As of
ANALYSIS OF LOAN PORTFOLIOJune 30, 2023March 31, 2023December 31, 2022September 30, 2022June 30, 2022
Loan mix:
  Commercial$535,085 $520,894 $519,196 $526,336 $475,704 
  Real estate:
  Construction, land and land development 351,461 336,739 363,015 341,549 390,137 
  1-4 family residential first mortgages80,998 75,223 75,211 69,991 69,829 
  Home equity12,625 9,726 10,322 10,271 8,564 
  Commercial1,820,718 1,810,158 1,771,940 1,661,907 1,627,150 
  Consumer and other10,289 7,381 7,291 7,884 5,912 
2,811,176 2,760,121 2,746,975 2,617,938 2,577,296 
  Net unamortized fees and costs(4,101)(3,936)(4,139)(3,793)(4,167)
Total loans$2,807,075 $2,756,185 $2,742,836 $2,614,145 $2,573,129 
Less allowance for credit losses(27,938)(27,941)(25,473)(25,418)(25,434)
Net loans$2,779,137 $2,728,244 $2,717,363 $2,588,727 $2,547,695 
CLASSIFIED LOANS
Watch$187 $52,766 $54,231 $57,789 $46,114 
Substandard349 404 410 427 434 
Doubtful— — — — — 
Total$536 $53,170 $54,641 $58,216 $46,548 
ANALYSIS OF DEPOSITS
Deposit mix:
Noninterest-bearing demand$568,029 $605,666 $693,563 $712,722 $690,335 
Interest-bearing demand459,030 486,656 536,226 469,257 472,919 
Savings and money market - non-brokered1,302,468 1,202,756 1,125,202 1,170,214 1,253,366 
Money market - brokered114,142 92,524 112,752 82,480 106,654 
Total nonmaturity deposits2,443,669 2,387,602 2,467,743 2,434,673 2,523,274 
Time - non-brokered276,097 269,102 252,725 212,574 229,354 
Time - brokered116,559 141,689 159,940 175,600 89,823 
Total time deposits392,656 410,791 412,665 388,174 319,177 
Total deposits$2,836,325 $2,798,393 $2,880,408 $2,822,847 $2,842,451 
ANALYSIS OF BORROWINGS
Borrowings mix:
 Federal funds purchased and other short-term borrowings$184,150 $229,290 $200,000 $204,500 $133,000 
Subordinated notes, net79,500 79,435 79,369 79,303 79,265 
Federal Home Loan Bank advances280,000 220,000 155,000 125,000 125,000 
Long-term debt50,236 51,486 51,486 51,486 51,486 
Total borrowings$593,886 $580,211 $485,855 $460,289 $388,751 
STOCKHOLDERS’ EQUITY
Preferred stock$— $— $— $— $— 
Common stock3,000 3,000 3,000 3,000 3,000 
Additional paid-in capital32,642 31,797 32,021 31,152 30,283 
Retained earnings269,301 267,620 267,562 262,776 255,334 
Accumulated other comprehensive loss(87,817)(85,425)(91,471)(98,164)(72,428)
Total Stockholders’ Equity$217,126 $216,992 $211,112 $198,764 $216,189 




WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (unaudited)
(in thousands)
For the Quarter Ended
CONSOLIDATED STATEMENTS OF INCOMEJune 30, 2023March 31, 2023December 31, 2022September 30, 2022June 30, 2022
Interest income:
Loans, including fees$35,011 $32,948 $30,859 $28,102 $24,848 
Securities:
Taxable3,432 3,316 3,398 3,147 3,090 
Tax-exempt883 885 887 890 892 
Interest-bearing deposits25 30 24 30 67 
Total interest income39,351 37,179 35,168 32,169 28,897 
Interest expense:
Deposits16,277 13,339 11,043 6,289 3,146 
 Federal funds purchased and other short-term borrowings2,264 2,079 952 655 157 
Subordinated notes1,109 1,106 1,119 1,106 394 
Federal Home Loan Bank advances1,621 1,262 755 649 635 
Long-term debt739 698 630 466 326 
Total interest expense22,010 18,484 14,499 9,165 4,658 
Net interest income17,341 18,695 20,669 23,004 24,239 
Credit loss expense (benefit)— — — — (1,750)
Net interest income after credit loss expense (benefit)17,341 18,695 20,669 23,004 25,989 
Noninterest income:
Service charges on deposit accounts458 462 476 553 585 
Debit card usage fees511 486 492 498 507 
Trust services749 706 678 780 622 
 Increase in cash value of bank-owned life insurance250 257 255 246 236 
Gain from bank-owned life insurance— 691 — — — 
Loan swap fees— — — 835 — 
Other income421 355 364 364 328 
Total noninterest income2,389 2,957 2,265 3,276 2,278 
Noninterest expense:
Salaries and employee benefits7,029 6,867 6,552 6,578 6,410 
Occupancy and equipment1,322 1,327 1,270 1,315 1,242 
Data processing729 635 673 644 656 
Technology and software579 513 518 651 492 
FDIC insurance420 416 243 127 289 
Professional fees287 250 205 250 202 
Director fees251 205 215 209 222 
Other expenses1,857 1,858 1,989 1,684 1,753 
Total noninterest expense12,474 12,071 11,665 11,458 11,266 
Income before income taxes7,256 9,581 11,269 14,822 17,001 
Income taxes1,394 1,737 2,323 3,220 4,334 
Net income$5,862 $7,844 $8,946 $11,602 $12,667 
Basic earnings per common share$0.35 $0.47 $0.54 $0.70 $0.76 
Diluted earnings per common share$0.35 $0.47 $0.53 $0.69 $0.75 




WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (unaudited)
(in thousands)
For the Six Months Ended
CONSOLIDATED STATEMENTS OF INCOMEJune 30, 2023June 30, 2022
Interest income:
Loans, including fees$67,959 $48,134 
Securities:
Taxable6,748 5,979 
Tax-exempt1,768 1,750 
Interest-bearing deposits55 149
Total interest income76,530 56,012 
Interest expense:
Deposits29,616 5,297 
Federal funds purchased and other short-term borrowings4,343 157 
Subordinated notes2,215 642 
Federal Home Loan Bank advances2,883 1,265 
Long-term debt1,437 584 
Total interest expense40,494 7,945 
Net interest income36,036 48,067 
Credit loss expense (benefit)— (2,500)
Net interest income after credit loss expense (benefit)36,036 50,567 
Noninterest income:
Service charges on deposit accounts920 1,165 
Debit card usage fees997 979 
Trust services1,455 1,251 
Increase in cash value of bank-owned life insurance507 463 
Gain from bank-owned life insurance691 — 
Other income776 809 
Total noninterest income5,346 4,667 
Noninterest expense:
Salaries and employee benefits13,896 12,708 
Occupancy and equipment2,649 2,328 
Data processing1,364 1,280 
Technology and software1,092 968 
FDIC insurance836 626 
Professional fees537 419 
Director fees456 390 
Other expenses3,715 3,209 
Total noninterest expense24,545 21,928 
Income before income taxes16,837 33,306 
Income taxes3,131 7,455 
Net income$13,706 $25,851 
Basic earnings per common share$0.82 $1.56 
Diluted earnings per common share$0.82 $1.54 







WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (unaudited)
As of and for the Quarter EndedFor the Six Months Ended
COMMON SHARE DATAJune 30, 2023March 31, 2023December 31, 2022September 30, 2022June 30, 2022June 30, 2023June 30, 2022
Earnings per common share (basic)$0.35 $0.47 $0.54 $0.70 $0.76 $0.82 $1.56 
Earnings per common share (diluted)0.35 0.47 0.53 0.69 0.75 0.82 1.54 
Dividends per common share0.25 0.25 0.25 0.25 0.25 0.50 0.50 
Book value per common share(1)
12.98 12.98 12.69 11.94 12.99 
Closing stock price18.41 18.27 25.55 20.81 24.34 
Market price/book value(2)
141.83 %140.76 %201.34 %174.29 %187.37 %
Price earnings ratio(3)
13.11 9.56 11.93 7.49 7.98 
Annualized dividend yield(4)
5.43 %5.47 %3.91 %4.81 %4.11 %
REGULATORY CAPITAL RATIOS
Consolidated:
Total risk-based capital ratio12.15 %12.17 %12.08 %12.34 %12.53 %
Tier 1 risk-based capital ratio9.51 9.51 9.55 9.72 9.81 
Tier 1 leverage capital ratio8.60 8.60 8.81 8.85 8.59 
Common equity tier 1 ratio8.92 8.92 8.96 9.11 9.17 
West Bank:
Total risk-based capital ratio13.13 %13.16 %13.08 %13.38 %13.62 %
Tier 1 risk-based capital ratio12.24 12.26 12.33 12.60 12.81 
Tier 1 leverage capital ratio11.08 11.10 11.37 11.47 11.22 
Common equity tier 1 ratio12.24 12.26 12.33 12.60 12.81 
KEY PERFORMANCE RATIOS AND OTHER METRICS
Return on average assets(5)
0.64 %0.88 %1.01 %1.32 %1.45 %0.76 %1.48 %
Return on average equity(6)
11.03 14.77 17.75 21.01 22.81 12.90 21.83 
Net interest margin(7)(13)
2.02 2.23 2.49 2.78 2.93 2.12 2.89 
Yield on interest-earning assets(8)(13)
4.57 4.41 4.21 3.87 3.49 4.49 3.36 
Cost of interest-bearing liabilities3.10 2.76 2.24 1.45 0.73 2.94 0.63 
Efficiency ratio(9)(13)
62.83 55.34 50.42 43.16 41.96 58.91 41.05 
Nonperforming assets to total assets(10)
0.01 0.01 0.01 0.01 0.01 
ACL ratio(11)
1.00 1.01 0.93 0.97 0.99 
Loans/total assets76.31 76.03 75.91 74.32 74.05 
Loans/total deposits98.97 98.49 95.22 92.61 90.53 
Tangible common equity ratio(12)
5.90 5.99 5.84 5.65 6.22 

(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 credit 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 EndedFor the Six Months Ended
June 30, 2023March 31, 2023December 31, 2022September 30, 2022June 30, 2022June 30, 2023June 30, 2022
Reconciliation of net interest income and net interest margin on a FTE basis to GAAP:
Net interest income (GAAP)$17,341 $18,695 $20,669 $23,004 $24,239 $36,036 $48,067 
Tax-equivalent adjustment (1)
122 161 197 270 326 283 655 
Net interest income on a FTE basis (non-GAAP)17,463 18,856 20,866 23,274 24,565 36,319 48,722 
Average interest-earning assets3,461,313 3,435,988 3,328,941 3,322,522 3,362,313 3,448,722 3,397,021 
Net interest margin on a FTE basis (non-GAAP)2.02 %2.23 %2.49 %2.78 %2.93 %2.12 %2.89 %
Reconciliation of efficiency ratio on an adjusted and FTE basis to GAAP:
Net interest income on a FTE basis (non-GAAP)$17,463 $18,856 $20,866 $23,274 $24,565 $36,319 $48,722 
Noninterest income2,389 2,957 2,265 3,276 2,278 5,346 4,667 
Adjustment for losses on disposal of premises and equipment, net2 — 2 — 9 2 27 
Adjusted income19,854 21,813 23,133 26,550 26,852 41,667 53,416 
Noninterest expense12,474 12,071 11,665 11,458 11,266 24,545 21,928 
Efficiency ratio on an adjusted and FTE basis (non-GAAP) (2)
62.83 %55.34 %50.42 %43.16 %41.96 %58.91 %41.05 %
(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.