EX-99.1 2 wtba-20231026exhibit991.htm EX-99.1 Document

Exhibit 99.1

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Press Release
 
October 26, 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 THIRD 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 third quarter 2023 net income of $5.9 million, or $0.35 per diluted common share, compared to second quarter 2023 net income of $5.9 million, or $0.35 per diluted common share, and third quarter 2022 net income of $11.6 million, or $0.69 per diluted common share. On October 25, 2023, the Company’s Board of Directors declared a regular quarterly dividend of $0.25 per common share. The dividend is payable on November 22, 2023, to stockholders of record on November 8, 2023.

David Nelson, President and Chief Executive Officer of the Company, commented, “West Bank and the banking industry are healthy and strong. While West Bank’s earnings have been negatively impacted by the unprecedented size and pace of the Federal Reserve’s interest rate increases over the last 18 months, we remain committed to delivering high quality services and products, building strong relationships and delivering long-term shareholder value.”

David Nelson added, “Our capital position is strong and our credit quality continues to be pristine. West Bank had no loans past due more than 30 days and only one nonaccrual loan at the end of the third quarter. Our credit risk management team remains focused on the economic uncertainties that are ahead and the volatile interest rate environment.”

Third Quarter 2023 Financial Highlights
Quarter Ended September 30, 2023Nine Months Ended September 30, 2023
Net income (in thousands)$5,906$19,612
Return on average equity10.89 %12.22 %
Return on average assets0.64 %0.72 %
Efficiency ratio (a non-GAAP measure)60.83 %59.52 %
Nonperforming assets to total assets0.01 %0.01 %

Third Quarter 2023 Compared to Second Quarter 2023 Overview

•Loans increased $42.7 million in the third quarter of 2023, or 6.1 percent annualized.

•A provision for credit losses of $200 thousand was recorded in the third quarter of 2023, compared to no provision in the second quarter of 2023. The provision in the third quarter of 2023 was directly associated with loan growth.

•The allowance for credit losses to total loans was 0.99 percent at September 30, 2023, compared to 1.00 percent at June 30, 2023. Nonaccrual loans at September 30, 2023 consisted of one loan with a balance of $303 thousand, in comparison to one loan with a balance of $309 thousand at June 30, 2023.

•Loan swap fees of $431 thousand were recorded in the third quarter of 2023, compared to none in the second quarter of 2023.





•Deposits decreased $80.8 million, or 2.8 percent, in the third quarter of 2023. Brokered deposits totaled $237.0 million at September 30, 2023, compared to $230.7 million at June 30, 2023, an increase of $6.3 million. Excluding brokered deposits, deposits decreased $87.1 million, or 3.3 percent, during the third quarter of 2023. 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. As of September 30, 2023, estimated uninsured deposits, which excludes deposits in the IntraFi® reciprocal network, brokered deposits and public funds protected by state programs, were approximately 28.0 percent of total deposits.

•Borrowed funds increased to $705.1 million at September 30, 2023, compared to $593.9 million at June 30, 2023. The increase included $77.4 million in federal funds purchased and other short-term borrowings and $35.0 million in Federal Home Loan Bank (FHLB) one-month rolling advances hedged with long-term interest rate swaps.
•The efficiency ratio (a non-GAAP measure) was 60.83 percent for the third quarter of 2023, compared to 62.83 percent for the second quarter of 2023. The decrease in the efficiency ratio was primarily due to the increase in noninterest income and decrease in noninterest expense, partially offset by the decrease in net interest income.
•Net interest margin, on a fully tax-equivalent basis (a non-GAAP measure), was 1.91 percent for the third quarter of 2023, compared to 2.02 percent for the second quarter of 2023. Net interest income for the third quarter of 2023 was $16.6 million, compared to $17.3 million for the second 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 5.51 percent at September 30, 2023, compared to 5.90 percent at June 30, 2023. The decline is attributable to the increase in accumulated other comprehensive loss, primarily driven by the negative effect that rising interest rates have had on the unrealized market value adjustment of our available for sale investment portfolio.

Third Quarter 2023 Compared to Third Quarter 2022 Overview

•Loans increased $235.6 million at September 30, 2023, or 9.0 percent, compared to September 30, 2022.
•Deposits decreased $67.3 million at September 30, 2023, compared to September 30, 2022. Included in deposits were brokered deposits totaling $237.0 million at September 30, 2023, compared to $258.1 million at September 30, 2022. Excluding brokered deposits, deposits decreased $46.2 million, or 1.8 percent as of September 30, 2023 compared to September 30, 2022. The remaining 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 $705.1 million at September 30, 2023, compared to $460.3 million at September 30, 2022. The increase included $190.0 million in FHLB one-month rolling advances hedged with long-term interest rate swaps and $57.0 million in federal funds purchased and other short-term borrowings.
•The efficiency ratio (a non-GAAP measure) was 60.83 percent for the third quarter of 2023, compared to 43.16 percent for the third quarter of 2022. Tax-equivalent net interest income decreased in the third quarter of 2023 compared to the third quarter of 2022, primarily due to the increased cost of deposits and borrowed funds. Additionally, noninterest expense increased and noninterest income decreased.
•Net interest margin, on a fully tax-equivalent basis (a non-GAAP measure), was 1.91 percent for the third quarter of 2023, compared to 2.78 percent for the third quarter of 2022. Net interest income for the third quarter of 2023 was $16.6 million, compared to $23.0 million for the third quarter of 2022. In 2022 and year-to-date in 2023, the rising cost of deposits and borrowed funds and the change in mix of funding 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, October 26, 2023. The telephone number for the conference call is 888-300-4030. The access code for the conference call is 3218904. A recording of the call will be available until November 10, 2023, by dialing 800-770-2030.



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 and potential additional 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 Israeli-Palestinian conflict and 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 SHEETSSeptember 30, 2023June 30, 2023March 31, 2023December 31, 2022September 30, 2022
Assets
Cash and due from banks$18,819 $29,776 $21,579 $24,896 $58,342 
Interest-bearing deposits1,802 1,968 901 1,643 1,049 
Securities available for sale, at fair value609,365 645,091 665,358 664,115 671,752 
Federal Home Loan Bank stock, at cost26,691 22,488 22,226 19,336 18,350 
Loans2,849,777 2,807,075 2,756,185 2,742,836 2,614,145 
Allowance for credit losses(28,147)(27,938)(27,941)(25,473)(25,418)
Loans, net2,821,630 2,779,137 2,728,244 2,717,363 2,588,727 
Premises and equipment, net75,675 66,683 59,565 53,124 44,592 
Bank-owned life insurance43,589 43,328 44,830 44,573 44,318 
Other assets104,329 90,084 82,240 88,168 90,387 
Total assets$3,701,900 $3,678,555 $3,624,943 $3,613,218 $3,517,517 
Liabilities and Stockholders’ Equity
Deposits$2,755,529 $2,836,325 $2,798,393 $2,880,408 $2,822,847 
Federal funds purchased and other short-term borrowings261,510 184,150 229,290 200,000 204,500 
Other borrowings443,552 409,736 350,921 285,855 255,789 
Other liabilities37,376 31,218 29,347 35,843 35,617 
Stockholders’ equity203,933 217,126 216,992 211,112 198,764 
Total liabilities and stockholders’ equity$3,701,900 $3,678,555 $3,624,943 $3,613,218 $3,517,517 
For the Quarter Ended
AVERAGE BALANCESSeptember 30, 2023June 30, 2023March 31, 2023December 31, 2022September 30, 2022
Assets$3,679,541 $3,645,651 $3,617,458 $3,511,717 $3,475,894 
Loans2,813,213 2,783,463 2,745,381 2,649,671 2,579,862 
Deposits2,764,184 2,854,945 2,846,926 2,901,928 2,864,648 
Stockholders’ equity215,230 213,177 215,391 199,947 219,065 



WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (unaudited)
(in thousands)
As of
LOANSSeptember 30, 2023June 30, 2023March 31, 2023December 31, 2022September 30, 2022
Commercial$529,293 $535,085 $520,894 $519,196 $526,336 
Real estate:
Construction, land and land development399,253 351,461 336,739 363,014 341,549 
1-4 family residential first mortgages89,713 80,998 75,223 75,211 69,991 
Home equity12,429 12,625 9,726 10,322 10,271 
Commercial1,812,816 1,820,718 1,810,158 1,771,940 1,661,907 
Consumer and other10,123 10,289 7,381 7,292 7,884 
2,853,627 2,811,176 2,760,121 2,746,975 2,617,938 
Net unamortized fees and costs(3,850)(4,101)(3,936)(4,139)(3,793)
Total loans$2,849,777 $2,807,075 $2,756,185 $2,742,836 $2,614,145 
Less allowance for credit losses(28,147)(27,938)(27,941)(25,473)(25,418)
Net loans$2,821,630 $2,779,137 $2,728,244 $2,717,363 $2,588,727 
CREDIT QUALITY
Pass$2,853,100 $2,810,640 $2,706,951 $2,692,334 $2,559,722 
Watch184 187 52,766 54,231 57,789 
Substandard343 349 404 410 427 
Doubtful— — — — — 
     Total loans$2,853,627 $2,811,176 $2,760,121 $2,746,975 $2,617,938 
DEPOSITS
Noninterest-bearing demand$551,688 $568,029 $605,666 $693,563 $712,722 
Interest-bearing demand417,802 459,030 486,656 536,226 469,257 
Savings and money market - non-brokered1,249,309 1,302,468 1,202,756 1,125,202 1,170,214 
Money market - brokered99,282 114,142 92,524 112,752 82,480 
    Total nonmaturity deposits2,318,081 2,443,669 2,387,602 2,467,743 2,434,673 
Time - non-brokered299,683 276,097 269,102 252,725 212,574 
Time - brokered137,765 116,559 141,689 159,940 175,600 
    Total time deposits437,448 392,656 410,791 412,665 388,174 
    Total deposits$2,755,529 $2,836,325 $2,798,393 $2,880,408 $2,822,847 
BORROWINGS
Federal funds purchased and other short-term borrowings$261,510 $184,150 $229,290 $200,000 $204,500 
Subordinated notes, net79,566 79,500 79,435 79,369 79,303 
Federal Home Loan Bank advances315,000 280,000 220,000 155,000 125,000 
Long-term debt48,986 50,236 51,486 51,486 51,486 
    Total borrowings$705,062 $593,886 $580,211 $485,855 $460,289 
STOCKHOLDERS’ EQUITY
Preferred stock$— $— $— $— $— 
Common stock3,000 3,000 3,000 3,000 3,000 
Additional paid-in capital33,487 32,642 31,797 32,021 31,152 
Retained earnings271,025 269,301 267,620 267,562 262,776 
Accumulated other comprehensive loss(103,579)(87,817)(85,425)(91,471)(98,164)
    Total Stockholders’ Equity$203,933 $217,126 $216,992 $211,112 $198,764 




WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (unaudited)
(in thousands)
For the Quarter Ended
CONSOLIDATED STATEMENTS OF INCOMESeptember 30, 2023June 30, 2023March 31, 2023December 31, 2022September 30, 2022
Interest income:
Loans, including fees$36,756 $35,011 $32,948 $30,859 $28,102 
Securities:
Taxable3,427 3,432 3,316 3,398 3,147 
Tax-exempt880 883 885 887 890 
Interest-bearing deposits29 25 30 24 30 
Total interest income41,092 39,351 37,179 35,168 32,169 
Interest expense:
Deposits17,156 16,277 13,339 11,043 6,289 
 Federal funds purchased and other short-term borrowings3,165 2,264 2,079 952 655 
Subordinated notes1,113 1,109 1,106 1,119 1,106 
Federal Home Loan Bank advances2,329 1,621 1,262 755 649 
Long-term debt695 739 698 630 466 
Total interest expense24,458 22,010 18,484 14,499 9,165 
Net interest income16,634 17,341 18,695 20,669 23,004 
Credit loss expense (benefit)200 — — — — 
Net interest income after credit loss expense (benefit)16,434 17,341 18,695 20,669 23,004 
Noninterest income:
Service charges on deposit accounts463 458 462 476 553 
Debit card usage fees495 511 486 492 498 
Trust services831 749 706 678 780 
 Increase in cash value of bank-owned life insurance262 250 257 255 246 
Gain from bank-owned life insurance— — 691 — — 
Loan swap fees431 — — — 835 
Other income340 421 355 364 364 
Total noninterest income2,822 2,389 2,957 2,265 3,276 
Noninterest expense:
Salaries and employee benefits6,696 7,029 6,867 6,552 6,578 
Occupancy and equipment1,359 1,322 1,327 1,270 1,315 
Data processing703 729 635 673 644 
Technology and software573 579 513 518 651 
FDIC insurance439 420 416 243 127 
Professional fees254 287 250 205 250 
Director fees196 251 205 215 209 
Other expenses1,685 1,857 1,858 1,989 1,684 
Total noninterest expense11,905 12,474 12,071 11,665 11,458 
Income before income taxes7,351 7,256 9,581 11,269 14,822 
Income taxes1,445 1,394 1,737 2,323 3,220 
Net income$5,906 $5,862 $7,844 $8,946 $11,602 
Basic earnings per common share$0.35 $0.35 $0.47 $0.54 $0.70 
Diluted earnings per common share$0.35 $0.35 $0.47 $0.53 $0.69 




WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (unaudited)
(in thousands)
For the Nine Months Ended
CONSOLIDATED STATEMENTS OF INCOMESeptember 30, 2023September 30, 2022
Interest income:
Loans, including fees$104,715 $76,236 
Securities:
Taxable10,175 9,126 
Tax-exempt2,648 2,640 
Interest-bearing deposits84 179
Total interest income117,622 88,181 
Interest expense:
Deposits46,772 11,586 
Federal funds purchased and other short-term borrowings7,508 812 
Subordinated notes3,328 1,748 
Federal Home Loan Bank advances5,212 1,914 
Long-term debt2,132 1,050 
Total interest expense64,952 17,110 
Net interest income52,670 71,071 
Credit loss expense (benefit)200 (2,500)
Net interest income after credit loss expense (benefit)52,470 73,571 
Noninterest income:
Service charges on deposit accounts1,383 1,718 
Debit card usage fees1,492 1,477 
Trust services2,286 2,031 
Increase in cash value of bank-owned life insurance769 709 
Loan swap fees431 835 
Gain from bank-owned life insurance691 — 
Other income1,116 1,173 
Total noninterest income8,168 7,943 
Noninterest expense:
Salaries and employee benefits20,592 19,286 
Occupancy and equipment4,008 3,643 
Data processing2,067 1,924 
Technology and software1,665 1,619 
FDIC insurance1,275 753 
Professional fees791 669 
Director fees652 599 
Other expenses5,400 4,893 
Total noninterest expense36,450 33,386 
Income before income taxes24,188 48,128 
Income taxes4,576 10,675 
Net income$19,612 $37,453 
Basic earnings per common share$1.17 $2.25 
Diluted earnings per common share$1.17 $2.23 







WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (unaudited)
As of and for the Quarter EndedFor the Nine Months Ended
COMMON SHARE DATASeptember 30, 2023June 30, 2023March 31, 2023December 31, 2022September 30, 2022September 30, 2023September 30, 2022
Earnings per common share (basic)$0.35 $0.35 $0.47 $0.54 $0.70 $1.17 $2.25 
Earnings per common share (diluted)0.35 0.35 0.47 0.53 0.69 1.17 2.23 
Dividends per common share0.25 0.25 0.25 0.25 0.25 0.75 0.75 
Book value per common share(1)
12.19 12.98 12.98 12.69 11.94 
Closing stock price16.31 18.41 18.27 25.55 20.81 
Market price/book value(2)
133.80 %141.83 %140.76 %201.34 %174.29 %
Price earnings ratio(3)
11.75 13.11 9.56 11.93 7.49 
Annualized dividend yield(4)
6.13 %5.43 %5.47 %3.91 %4.81 %
REGULATORY CAPITAL RATIOS
Consolidated:
Total risk-based capital ratio11.96 %12.15 %12.17 %12.08 %12.34 %
Tier 1 risk-based capital ratio9.37 9.51 9.51 9.55 9.72 
Tier 1 leverage capital ratio8.58 8.60 8.60 8.81 8.85 
Common equity tier 1 ratio8.80 8.92 8.92 8.96 9.11 
West Bank:
Total risk-based capital ratio12.89 %13.13 %13.16 %13.08 %13.38 %
Tier 1 risk-based capital ratio12.01 12.24 12.26 12.33 12.60 
Tier 1 leverage capital ratio11.00 11.08 11.10 11.37 11.47 
Common equity tier 1 ratio12.01 12.24 12.26 12.33 12.60 
KEY PERFORMANCE RATIOS AND OTHER METRICS
Return on average assets(5)
0.64 %0.64 %0.88 %1.01 %1.32 %0.72 %1.43 %
Return on average equity(6)
10.89 11.03 14.77 17.75 21.01 12.22 21.57 
Net interest margin(7)(13)
1.91 2.02 2.23 2.49 2.78 2.05 2.85 
Yield on interest-earning assets(8)(13)
4.70 4.57 4.41 4.21 3.87 4.56 3.53 
Cost of interest-bearing liabilities3.38 3.10 2.76 2.24 1.45 3.09 0.90 
Efficiency ratio(9)(13)
60.83 62.83 55.34 50.42 43.16 59.52 41.75 
Nonperforming assets to total assets(10)
0.01 0.01 0.01 0.01 0.01 
ACL ratio(11)
0.99 1.00 1.01 0.93 0.97 
Loans/total assets76.98 76.31 76.03 75.91 74.32 
Loans/total deposits103.42 98.97 98.49 95.22 92.61 
Tangible common equity ratio(12)
5.51 5.90 5.99 5.84 5.65 

(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 Nine Months Ended
September 30, 2023June 30, 2023March 31, 2023December 31, 2022September 30, 2022September 30, 2023September 30, 2022
Reconciliation of net interest income and net interest margin on a FTE basis to GAAP:
Net interest income (GAAP)$16,634 $17,341 $18,695 $20,669 $23,004 $52,670 $71,071 
Tax-equivalent adjustment (1)
113 122 161 197 270 396 925 
Net interest income on a FTE basis (non-GAAP)16,747 17,463 18,856 20,866 23,274 53,066 71,996 
Average interest-earning assets3,478,053 3,461,313 3,435,988 3,328,941 3,322,522 3,458,606 3,371,915 
Net interest margin on a FTE basis (non-GAAP)1.91 %2.02 %2.23 %2.49 %2.78 %2.05 %2.85 %
Reconciliation of efficiency ratio on an adjusted and FTE basis to GAAP:
Net interest income on a FTE basis (non-GAAP)$16,747 $17,463 $18,856 $20,866 $23,274 $53,066 $71,996 
Noninterest income2,822 2,389 2,957 2,265 3,276 8,168 7,943 
Adjustment for losses on disposal of premises and equipment, net3 2 — 2 — 5 27 
Adjusted income19,572 19,854 21,813 23,133 26,550 61,239 79,966 
Noninterest expense11,905 12,474 12,071 11,665 11,458 36,450 33,386 
Efficiency ratio on an adjusted and FTE basis (non-GAAP) (2)
60.83 %62.83 %55.34 %50.42 %43.16 %59.52 %41.75 %
(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.