Slide 1: 2023 Fourth Quarter Earnings Presentation
2023 Fourth Quarter Earnings Presentation January 16, 2024
Slide 2: Forward-looking statements
Forward–looking statements Certain statements contained in this Presentation that are not historical in nature may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, statem
Slide 3: Use of non-GAAP financial measures
Use of non-GAAP financial measures This Presentation contains certain financial measures that are not measures recognized under U.S. generally accepted accounting principles (“GAAP”) and therefore are considered non-GAAP financial measures. These non-GAAP financial measures may include, without limi
Slide 4: 4Q 2023 and Annual Highlights
4Q 2023 and Annual Highlights Key highlights Financial results Net interest income (tax-equivalent basis) and NIM increased in 4Q 2023 over 3Q 2023 to $101.9 million from $101.8 million and 3.46% from 4Q 2023 FY 2023 3.42%, respectively Diluted earnings per common share $0.63 $2.57 Contractual y
Slide 5: Driving shareholder value
Driving shareholder value Earnings per Share Tangible Book Value per Share1 Earnings per Share Adjusted Earnings per Share 1 BVPS TBVPS $3.97 $3.70 $3.76 $31.05 $30.13 $28.36 $27.35 $25.69 $3.01 $24.67 $2.83 $2.92 $24.56 $22.90 $2.65 $2.64 $2.57 $21.73 $18.55 $1.67 2019 2020 2021 2022 2023 2019 2020
Slide 6: Significant projected reduction in run-rate expenses
Significant projected reduction in run-rate expenses Highlights Core efficiency ratio (tax-equivalent basis)¹ Banking segment Consolidated 4Q 2023 efficiency ratio of 68.9%; core 145.4% Consolidated efficiency ratio¹ of 61.7% Mortgage segment Reduced annual core expense projection by $20 125.5%
Slide 7: Stabilizing net interest margin
Stabilizing net interest margin Historical yield and costs Average interest earning assets Yield on loans Cost of deposits NIM 7.0% $13,000 6.0% Avg. interest earning $11,000 Yields and Costs (%) 5.0% assets ($mm) 4.0% $9,000 3.0% 2.0% $7,000 1.0% -- $5,000 4Q22 1Q23 2Q23 3Q23 4Q23 NIM1 3.78% 3.51%
Slide 8: Well-capitalized for future opportunities
Well-capitalized for future opportunities Capital Position Tangible Book Value per Share1 4Q22 3Q23 4Q232 Shareholder’s Equity/Assets 10.3% 11.0% 11.5% $24.67 $25.69 $22.90 TCE/TA1 8.5% 9.2% 9.7% $21.73 $18.55 $17.02 Common Equity 11.0% 11.8% 12.2% $14.56 Tier 1 $11.56 $11.58 Tier 1 Risk-Based 11.3%
Slide 9: Balanced loan portfolio
Balanced loan portfolio Portfolio mix C&I1 exposure by industry ($ millions) Other 4% 1-4 family 1 17% C&I 31% 1-4 family HELOC 6% Multifamily 6% C&D 15% CRE 2 21% CRE2 exposure by type C&D exposure by type Other Multifamily Healthcare Facility 9% Office 12% 4% 18% Self Storage 6% Consumer 13% Land-
Slide 10: Office exposure (non-owner occupied CRE & C&D)
Office exposure (non-owner occupied CRE & C&D) Office loans represent only 3.8% of our total HFI loan portfolio as of the end of 4Q23 Credit detail by class Projects generally characterized by 25-30% cash equity requirement, loan Average Oustanding Wtd. Avg. Wtd. Avg. to value maximums of 70%-75
Slide 11: Allowance for credit losses overview
Allowance for credit losses overview Current Expected Credit Loss (CECL) Allowance for Credit Losses (ACL) model utilizes Moody’s model1 with key economic data summarized below: ACL on loans HFI / Loans HFI by category 4Q22 3Q23 4Q23 4.11% 3.95% 3.67% 2.40% 2.47% 2.53% 1.66% 1.65% 1.69% 1.77% 1.78
Slide 12: Asset quality remains solid
Asset quality remains solid Nonperforming assets / assets Nonperforming loans HFI / loans HFI Commercial loans HFS Optional GNMA repurchase 1 Other NPAs 0.71% 0.69% 0.65% 0.68% 0.59% 0.61% 0.59% 0.07% 0.07% 0.49% 0.49% 0.07% 0.17% 0.47% 0.07% 0.18% 0.20% 0.16% 0.16% 0.46% 0.52% 0.41% 0.38% 0.36% 4Q2
Slide 13: Valuable deposit base
Valuable deposit base Deposits by customer segment ($mm) Cost of deposits Consumer Commercial Public Noninterest-bearing (%) Cost of total deposits (%) $10,856 $11,183 $10,872 35.0% 2.58% $10,639 $10,548 2.38% 2.65% 30.0% $2,073 $2,387 $1,924 $1,619 $1,597 1.94% 24.7% 25.0% 22.3% 22.1% 22.2% 21.0% $
Slide 14: Strong liquidity position
Strong liquidity position Well positioned for economic challenges created by the current volatile environment On-balance sheet liquidity ($mm) Securities portfolio makes up 11.7% of total assets and does not include On-balance sheet liquidity any HTM securities On-balance sheet liquidity / tangi
Slide 15: Mortgage performance in 4Q 2023
Mortgage performance in 4Q 2023 Highlights Interest rate lock commitment volume ($mm) Mortgage segment pre-tax net loss of $2.2 million in 4Q Purchase Refinance 2023 Interest rate lock commitment volume decreased 34.1% in 4Q 2023 compared to 3Q 2023 Decay and interest rate volatility led to MS
Slide 16: Appendix
FB) pe Bank Appendix
Slide 17: Adjusted net income and diluted earnings per share
GAAP reconciliations and use of non-GAAP financial measures Adjusted net income and diluted earnings per share 16
Slide 18: Adjusted pre-tax pre-provision earnings
GAAP reconciliations and use of non-GAAP financial measures Adjusted pre-tax pre-provision earnings 17
Slide 19: Adjusted tangible net income
GAAP reconciliations and use of non-GAAP financial measures Adjusted tangible net income 18
Slide 20: Adjusted earnings and diluted earnings per share
GAAP reconciliations and use of non-GAAP financial measures Adjusted earnings and diluted earnings per share 19
Slide 21: Adjusted pre-tax pre-provision earnings
GAAP reconciliations and use of non-GAAP financial measures Adjusted pre-tax pre-provision earnings 20
Slide 22: Adjusted tangible net income
GAAP reconciliations and use of non-GAAP financial measures Adjusted tangible net income 21
Slide 23: Adjusted Common Equity Tier 1 and Total Risk-Based capital ratios
GAAP Reconciliations and use of non-GAAP Financial Measures Adjusted Common Equity Tier 1 and Total Risk-Based capital ratios 22
Slide 24: Core efficiency ratio (tax-equivalent basis)
GAAP reconciliations and use of non-GAAP financial measures Core efficiency ratio (tax-equivalent basis) 23
Slide 25: Banking segment core efficiency ratios (tax-equivalent basis)
GAAP reconciliations and use of non-GAAP financial measures Banking segment core efficiency ratios (tax-equivalent basis) 24
Slide 26: Mortgage segment core efficiency and core revenue ratios
GAAP reconciliations and use of non-GAAP financial measures Mortgage segment core efficiency (tax-equivalent basis) and core revenue ratios 25
Slide 27: Tangible assets, common equity and related measures
GAAP reconciliations and use of non-GAAP financial measures Tangible assets, common equity and related measures 26
Slide 28: Tangible assets, common equity and related measures
GAAP reconciliations and use of non-GAAP financial measures Tangible assets, common equity and related measures 27
Slide 29: Adjusted return on average tangible common equity and related measures
GAAP reconciliations and use of non-GAAP financial measures Adjusted return on average tangible common equity and related measures 28
Slide 30: Adjusted return on average asset, common equity and related measures
GAAP reconciliations and use of non-GAAP financial measures Adjusted return on average asset, common equity and related measures 29
Slide 31: Adjusted return on average tangible common equity and related measures
GAAP reconciliations and use of non-GAAP financial measures Adjusted return on average tangible common equity and related measures 30
Slide 32: Adjusted return on average asset, common equity and related measures
GAAP reconciliations and use of non-GAAP financial measures Adjusted return on average asset, common equity and related measures 31