Slide 1: 2021 Fourth Quarter Earnings Presentation
2021 Fourth Quarter Earnings Presentation January 18, 2022
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 2021 and annual highlights
4Q 2021 and annual highlights Key highlights Financial results ◼ Excluding PPP loans, loans HFI grew 17.2% annualized in 4Q 2021, 4Q 2021 FY 2021 or $315 million. 2021 annual growth, excluding PPP loans, of 10.6%, or $730 million Diluted earnings per share $1.02 $3.97 Adjusted diluted earnings per s
Slide 5: Core earnings power
Core earnings power Adjusted return on average assets¹ 1.69% 1.68% 1.52% 1.55% 1.53% 2017 2018 2019 2020 2021 Drivers of profitability Loans/deposits Net interest margin Noninterest income ($mm) Core efficiency ratio1 Loans excluding HFS Loans HFS 4.66% $302 101% 4.46% 95% 95% 15% 4.34% 68.1% 7% 6%
Slide 6: Stable net interest margin
Stable net interest margin Historical yield and costs Average interest earning assets Yield on loans Cost of deposits NIM 5.0% $12,000 $11,000 Avg. interest earning 4.0% Yields and Costs (%) $10,000 assets ($mm) 3.0% $9,000 2.0% $8,000 $7,000 1.0% $6,000 -- $5,000 4Q20 1Q21 2Q21 3Q21 4Q21 NIM1 3.32%
Slide 7: Mortgage performance in 4Q 2021
Mortgage performance in 4Q 2021 Highlights Quarterly mortgage production ◼ Total mortgage pre-tax contribution1 of $0.7 million for the Consumer Direct 4Q20 3Q21 4Q21 fourth quarter Retail ◼ Rising rates are weighing on refinance volumes, which is expected to continue throughout 2022 ◼ The decline i
Slide 8: Managing expenses and investing to support growth
Managing expenses and investing to support growth Highlights Core efficiency ratio (tax-equivalent basis)¹ ◼ Consolidated 4Q 2021 core efficiency ratio¹ Banking segment of 67.0% Consolidated Mortgage segment 97.9% 97.8% ◼ Banking segment improvement reflects relatively flat expense base paired with
Slide 9: Well-capitalized for future opportunities
Well-capitalized for future opportunities Capital position Tangible book value per share3 4Q201 3Q211 4Q211,2 Shareholder’s equity/Assets 11.5% 11.9% 11.4% $24.67 $21.73 $18.55 TCE/TA3 9.4% 9.9% 9.5% $17.02 $14.56 $11.56 $11.58 Common equity 11.7% 12.4% 12.3% tier 1/Risk-weighted assets 3Q16 4Q16 4Q
Slide 10: Valuable core deposit base
Valuable core deposit base Total deposits ($mm) Cost of deposits Customer deposits Brokered and internet time deposits Noninterest bearing (%) Cost of total deposits (%) 35.0% $10,837 30.0% $10,257 $10,204 $10,072 25.9% 25.3% $27 24.0% 23.7% 24.4% $9,458 $38 $41 25.0% $28 $62 20.0% 15.0% $10,219 $10
Slide 11: Balanced loan portfolio
Balanced loan portfolio Portfolio mix C&I1 exposure by industry Other Balance Ex. PPP PPP 4% C&I CRE-OO Total % of Total Loans 1-4 family Real Estate Rental and Leasing $ 256.6 $ 160.5 $ 417.1 18.6% 0.1 1 17% C&I Finance and Insurance 246.9 11.3 258.2 11.5% 0.4 30% Retail Trade 117.4 127.2 244.6 10.
Slide 12: Asset quality remains solid
Asset quality remains solid Nonperforming ratios Classified loans / loans HFI 1 NPLs (HFI)/loans (HFI) NPAs/assets 2.22% 0.91% 0.94% 2.09% 0.83% 1.87% 1.80% 0.75% 0.77% 1.66% 0.66% 0.59% 0.62% 0.50% 0.50% 4Q20 1Q21 2Q21 3Q21 4Q21 4Q20 1Q21 2Q21 3Q21 4Q21 LLR/loans HFI (excluding PPP loans)2 Net char
Slide 13: Allowance for credit losses overview
Allowance for credit losses overview ◼ Current Expected Credit Loss (CECL) Allowance for Credit Losses (ACL) model utilizes Moody’s model with key economic data summarized below: FQE, FYE 12/31, 1Q 2022 2Q 2022 2021 2022 2023 2024 2025 GDP (bcw$) $ 19,728.5 $ 19,782.0 $ 19,403.0 $ 19,819.0 $ 20,278.
Slide 14: Appendix
FB} pee Bank Appendix
Slide 15: Adjusted net income and diluted earnings per share
GAAP reconciliation and use of non-GAAP financial measures Adjusted net income and diluted earnings per share 14
Slide 16: Adjusted pre-tax, pre-provision earnings
GAAP reconciliation and use of non-GAAP financial measures Adjusted pre-tax, pre-provision earnings 15
Slide 17: Adjusted earnings and diluted earnings per share
GAAP reconciliation and use of non-GAAP financial measures Adjusted earnings and diluted earnings per share* 16
Slide 18: Adjusted pre-tax, pre-provision earnings
GAAP reconciliation and use of non-GAAP financial measures Adjusted pre-tax, pre-provision earnings 17
Slide 19: Core efficiency ratio (tax-equivalent basis)
GAAP reconciliation and use of non-GAAP financial measures Core efficiency ratio (tax-equivalent basis) 18
Slide 20: Core efficiency ratio (tax-equivalent basis)
GAAP reconciliation and use of non-GAAP financial measures Core efficiency ratio (tax-equivalent basis) 19
Slide 21: Segment core efficiency ratios (tax-equivalent basis)
GAAP reconciliation and use of non-GAAP financial measures Segment core efficiency ratios (tax-equivalent basis) 20
Slide 22: Adjusted mortgage contribution
GAAP reconciliation and use of non-GAAP financial measures Adjusted mortgage contribution 21
Slide 23: Tangible assets and equity and tangible book value per share
GAAP reconciliation and use of non-GAAP financial measures Tangible assets and equity and tangible book value per share 22
Slide 24: Return on average tangible common equity reconciliation
GAAP reconciliation and use of non-GAAP financial measures Return on average tangible common equity and adjusted pre-tax pre-provision return on average tangible common equity 23
Slide 25: Return on average tangible common equity reconciliation
GAAP reconciliation and use of non-GAAP financial measures Return on average tangible common equity and adjusted pre-tax pre-provision return on average tangible common equity 24
Slide 26: Adjusted return on average assets and equity
GAAP reconciliation and use of non-GAAP financial measures Adjusted return on average assets and equity and adjusted pre-tax pre-provision return on average assets and equity 25
Slide 27: Adjusted return on average assets and equity
GAAP reconciliation and use of non-GAAP financial measures Adjusted return on average assets and equity and adjusted pre-tax pre-provision return on average assets and equity 26
Slide 28: Adjusted Allowance for Credit Losses to Loans Held for Investment
GAAP reconciliation and use of non-GAAP financial measures Adjusted Allowance for Credit Losses to Loans Held for Investment 27