1Non-GAAP measures – refer to Tables 1 and 9 for Non-GAAP reconciliations
EVANSVILLE, Ind., Feb. 01, 2016 (GLOBE NEWSWIRE) -- Today Old National Bancorp (the “Company” or “Old National”) (NASDAQ:ONB) reported 4th quarter 2015 net income of $32.0 million, or $.27 per share. These reported quarterly results compare to net income of $37.7 million in the 3rd quarter of 2015 and $29.3 million recorded in the 4th quarter of 2014.
Included in 4th quarter 2015 results were $11.1 million in pre-tax gains related primarily to the repurchase of 14 banking properties. Also included in the current quarter were $2.4 million in pre-tax charges related to continued efficiency initiatives as well as a $4.8 million pre-tax charge for a litigation settlement. Excluding the impact of these items, Old National would have reported net income of $29.4 million, or $.25 per share. Refer to Table 2 for Non-GAAP reconciliation.
For the twelve months ended December 31, 2015, net income was $116.7 million, or $1.00 per share. This net income represents an increase of 12.6% to full-year 2014 net income of $103.7 million, or $.95 per share.
Old National Bancorp President & CEO Bob Jones stated, “Our strong 4th quarter performance provides a fitting ending to 2015 – a year focused on execution. Our continued loan growth, lower expenses and excellent credit quality metrics, combined with our latest partnership and entry into the state of Wisconsin, should position us for continued success in 2016.”
Committed to our Strategic Imperatives and 2015 Initiatives
Old National’s continued steady performance and strong credit and capital positions can be attributed to the Company’s unwavering commitment to the three strategic imperatives that have guided Old National for 10 years:
1. Strengthen the risk profile; 2. Enhance management discipline; and 3. Achieve consistent quality earnings.
Guided by these three strategic imperatives, Old National’s primary initiatives for 2015 were: 1. Continue to grow organic revenue; 2. Improve operating leverage; and 3. Prudent use of capital, all while maintaining a strong credit culture.
Grow Organic Revenue
Balance Sheet and Net Interest Margin
Total period-end loans, including loans held for sale, increased $95.5 million to $6.962 billion from $6.867 billion at September 30, 2015. Excluding the change in covered loans, Old National had organic loan growth of $102.0 million, or 6.0% annualized, in the 4th quarter. The Louisville, Kentucky market, including the Company’s new Lexington office, and the Indianapolis and Vincennes, Indiana markets were the best producing regions, increasing $21.1 million, $20.2 million and $14.5 million, respectively, over September 30, 2015, loan balances.
At December 31, 2015, total core deposits, including demand and interest-bearing deposits, decreased $259.0 million to $8.302 billion, compared to the $8.561 billion at September 30, 2015.
Net interest income in the 4th quarter of 2015 totaled $85.9 million compared to $97.1 million in the 3rd quarter of 2015, and $90.0 million in the 4th quarter of 2014. Net interest income on a fully taxable equivalent basis was $91.1 million for the 4th quarter of 2015 and represented a net interest margin on total average earning assets of 3.50%. These results compare to net interest income on a fully taxable equivalent basis of $102.1 million and a margin of 3.94% in the 3rd quarter of 2015. In the 4th quarter of 2014, Old National reported net interest income on a fully taxable equivalent basis of $94.4 million and a margin of 3.83%. Refer to Table 6 for Non-GAAP taxable equivalent reconciliations.
As part of net interest income, Old National recorded $12.3 million, or a 48 basis point contribution to net interest margin, in accretion income in the 4th quarter of 2015 related to purchase accounting discounts from various acquisitions. Total accretion income in the 3rd quarter of 2015 and the 4th quarter of 2014 reported by Old National was $20.6 million, or an 80 basis point net interest margin contribution, and $16.6 million, or a 68 basis point net interest margin contribution, respectively. Excluding accretion income, the core net interest margin was 3.02%, 3.14% and 3.15%, for the 4th quarter of 2015, the 3rd quarter of 2015 and the 4th quarter of 2014, respectively.
Fees, Service Charges and Other Revenue
Total fees, service charges and other revenue represent an important component of Old National’s revenue stream and amounted to $58.9 million for the 4th quarter of 2015. This compares to $58.8 million in the 3rd quarter of 2015 and $45.6 million in the 4th quarter of 2014. Included in the 4th quarter of 2015 is a $10.8 million gain relating to the repurchase of 14 banking properties. Impacting the 3rd quarter of 2015 was a $15.4 million net gain relating to branch sales as well as a $6.6 million unfavorable change in the indemnification asset relating to the 2011 FDIC-assisted acquisition of Integra Bank. Impacting year-over-year comparisons is the Durbin Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. This Amendment became effective for Old National beginning July 1, 2015, resulting in a decline in interchange income of $2.7 million in both the 3rd and 4th quarters of 2015 as compared to the 4th quarter of 2014.
Improve Operating Leverage
Old National reported total noninterest expenses of $102.5 million in the 4th quarter of 2015 compared to $102.6 million in the 3rd quarter of 2015 and $100.1 million recorded in the 4th quarter of 2014. Included in the 4th quarter of 2015 are $2.4 million in pre-tax charges related to various efficiency initiatives (including branch consolidations and divestitures and severance) as well as a $4.8 million pre-tax charge for the estimated full cost of the anticipated settlement of the previously disclosed overdraft class action litigation. This compares to pre-tax charges of $2.0 million relating to branch sales and consolidations and integration charges in the 3rd quarter of 2015 and $3.1 million relating to integration activity in the 4th quarter of 2014. Also impacting year-over-year comparisons are the operational costs associated with the United Bancorp, Inc., LSB Financial Corp., and Founders Financial Corporation acquisitions, which closed in July and November of 2014, and January of 2015, respectively, adding 27 branches to the Old National franchise. As of December 31, 2015, Old National has 160 branches throughout its franchise.
Prudent Use of Capital
Old National’s capital position remained well above regulatory guideline minimums at December 31, 2015, with regulatory tier 1 and total risk-based capital ratios of 12.6% and 13.3%, respectively, compared to 12.5% and 13.2% at September 30, 2015, and 12.9% and 13.6% at December 30, 2014. Old National repurchased 306 thousand shares of stock in the open market during the 4th quarter of 2015.
The following table presents Old National’s risk-based and leverage ratios compared to industry requirements:
Fully Phased-In Regulatory Guidelines Minimum
Consolidated ONB at December 31, 2015
Tier 1 Risk-Based Capital Ratio
> 8.5%
12.6
%
Total Risk-Based Capital Ratio
> 10.5%
13.3
%
Common Equity Tier 1 Capital Ratio
> 7.0%
12.1
%
Tier 1 Leverage Capital Ratio
> 4.0%
8.5
%
Old National’s ratio of tangible common equity to tangible assets was 7.66% at December 31, 2015, compared to 7.56% at September 30, 2015, and 8.09% at December 31, 2014. Refer to Table 9 for Non-GAAP reconciliations.
Maintain a Strong Credit Culture
During the 4th quarter of 2015, Old National recorded provision expense of $.5 million and had net recoveries of $.5 million. These results compare to $.2 million in provision expense and net recoveries of $.9 million, and a provision expense of $.9 million and net charge-offs of $1.3 million, in the 3rd quarter of 2015 and the 4th quarter of 2014, respectively. Net recoveries for the 4th quarter of 2015 were .03% of average total loans on an annualized basis, compared to net recoveries of .05% of average total loans in the 3rd quarter of 2015 and net charge-offs of .08% of average total loans in the 4th quarter of 2014.
Delinquencies remained low as Old National reported 30+ day delinquent loans of .31% in the 4th quarter compared to .41% in the 3rd quarter of 2015. Old National’s 90+ day delinquent loans for the 4th quarter were .01% compared to .01% in the 3rd quarter of 2015.
For the full year of 2015, Old National reported net recoveries of $1.5 million, or .02% of average total loans, and recorded provision expense of $2.9 million. This compares to the full year of 2014 with net charge-offs of $2.4 million, or .04% of average total loans, and provision expense of $3.1 million.
Old National’s allowance for loan losses at December 31, 2015, was $52.2 million, or .75% of total loans, compared to an allowance of $51.2 million, or .75% of total loans at September 30, 2015, and $47.8 million, or .76% of total loans, at December 31, 2014. The coverage ratio (allowance to non-performing loans) stood at 36% at December 31, 2015, compared to 33% at September 30, 2015, and 31% at December 31, 2014. Impacting these ratios are the Company’s recent acquisitions in which the loan portfolios were booked at fair value in accordance with ASC 805. Therefore, no allowance for loan losses is recorded on the acquisition date.
The following table presents certain credit quality metrics related to Old National’s loan portfolio:
($ in millions)
4Q15
3Q15
4Q14
Non-Performing Loans (NPLs)
$
146.7
$
154.8
$
153.7
Problem Loans (Including NPLs)
213.3
252.4
250.9
Special Mention Loans
134.3
141.2
199.3
Net Charge-Off(Recoveries) Ratio
(0.03
)%
(0.05
)%
0.08
%
Provision for Loan Losses
$
0.5
$
0.2
$
0.9
Allowance for Loan Losses
52.2
51.2
47.8
Anchor Partnership and 2016 Initiatives
“Our initial integration efforts in Wisconsin have reinforced our belief that not only is Old National entering dynamic markets, but we are doing so with a high quality team,” stated CEO Bob Jones. “This expansion of our footprint will be supported through the continued focus on execution in our current markets, which will continue to be guided by the same strategic initiatives that led to our successful 2015: 1. Continue to grow organic revenue; 2. Improve the operating leverage of the Company; and 3. Prudent use of capital. We believe the partnerships we have closed to date position the franchise in growth markets where our community bank brand and style bode well for our future performance.”
About Old National
Old National Bancorp (NASDAQ:ONB), the holding company of Old National Bank, is the largest financial services holding company headquartered in Indiana and, with $12.0 billion in assets, ranks among the top 100 banking companies in the U.S. Since its founding in Evansville in 1834, Old National Bank has focused on community banking by building long-term, highly valued partnerships with clients. Today, Old National's footprint includes Indiana, Kentucky and Michigan. In addition to providing extensive services in retail and commercial banking, wealth management, investments and brokerage, Old National also owns Old National Insurance, one of the 100 largest brokers in the U.S. For more information and financial data, please visit Investor Relations at oldnational.com.
Conference Call
Old National will hold a conference call at 10:00 a.m. Central Time on Monday, February 1, 2016, to discuss 4th quarter and full-year 2015 financial results, strategic developments, and the Company’s financial outlook. The live audio web cast of the call, along with the corresponding presentation slides, will be available on the Company’s Investor Relations web page at oldnational.com and will be archived there for 12 months. A replay of the call will also be available from 7:00 a.m. Central Time on February 2 through February 16. To access the replay, dial 1-855-859-2056, Conference ID Code 24105575.
Use of Non-GAAP Financial Measures
This earnings release contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding Old National’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this release or the Quarterly Financial Trends supplement to this earnings release, which can be found on Investor Relations at oldnational.com.
Anticipated Settlement of Previously Disclosed Overdraft Litigation
(4.8
)
-
Branch Consolidation/Divestiture, Integration and Severance Charges
(2.4
)
(2.0
)
Operational Noninterest Expenses
$
95.3
$
100.6
Table 2: Non-GAAP Reconciliation-Adjusted Net Income
($ in millions, shares in 000s)
Reported 4Q15
Adjustments
Adjusted 4Q15
Total Revenues (FTE Basis)
$
151.7
$
(11.1
)
$
140.6
Less: Provision for Loan Losses
(0.5
)
-
(0.5
)
Less: Noninterest Expenses
(102.5
)
7.2
(95.3
)
Income before Income Taxes
$
48.7
$
(3.9
)
$
44.8
Income Taxes
(16.7
)
1.3
(15.4
)
Net Income
$
32.0
$
(2.6
)
$
29.4
Average Shares Outstanding
114,716
-
114,716
Earnings Per Share
$
0.27
$
(0.02
)
$
0.25
Forward-Looking Statement
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements about the expected timing, completion, financial benefits and other effects of the proposed merger between ONB and Anchor. Forward-looking statements can be identified by the use of the words “anticipate,” “believe,” “expect,” “intend,” “could” and “should,” and other words of similar meaning. These forward-looking statements express management’s current expectations or forecasts of future events and, by their nature, are subject to risks and uncertainties and there are a number of factors that could cause actual results to differ materially from those in such statements. Factors that might cause such a difference include, but are not limited to: expected cost savings, synergies and other financial benefits from the proposed merger might not be realized within the expected time frames and costs or difficulties relating to integration matters might be greater than expected; the requisite shareholder and regulatory approvals for the proposed merger might not be obtained; satisfaction of other closing conditions; delay in closing the proposed merger; the reaction to the transaction of the companies’ customers and employees; market, economic, operational, liquidity, credit and interest rate risks associated with ONB’s and Anchor’s businesses; competition; government legislation and policies (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act and its related regulations); ability of ONB and Anchor to execute their respective business plans (including integrating the ONB and Anchor businesses); changes in the economy which could materially impact credit quality trends and the ability to generate loans and gather deposits; failure or circumvention of our internal controls; failure or disruption of our information systems; significant changes in accounting, tax or regulatory practices or requirements; new legal obligations or liabilities or unfavorable resolutions of litigations; other matters discussed in this press release and other factors identified in ONB’s Annual Report on Form 10-K and other periodic filings with the SEC. These forward-looking statements are made only as of the date of this press release, and neither ONB nor Anchor undertakes an obligation to release revisions to these forward-looking statements to reflect events or conditions after the date of this press release.
Additional Information About the Old National Bancorp/Anchor BanCorp Wisconsin Inc. Transaction
Communications in this press release do not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. In connection with the proposed merger, ONB will file with the SEC a Registration Statement on Form S-4 that will include a Proxy Statement of Anchor and a Prospectus of ONB, as well as other relevant documents concerning the proposed transaction. Shareholders are urged to read the Registration Statement and the Proxy Statement/Prospectus regarding the merger when it becomes available and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information. A free copy of the Proxy Statement/Prospectus, as well as other filings containing information about ONB and Anchor, may be obtained at the SEC’s Internet site (http://www.sec.gov). You will also be able to obtain these documents, free of charge, from ONB at www.oldnational.com under the tab “Investor Relations” and then under the heading “Financial Information” or from Anchor by accessing Anchor’s website at www.anchorbank.com under the tab “About Us.”
ONB and Anchor and certain of their directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of Anchor in connection with the proposed merger. Information about the directors and executive officers of ONB is set forth in the proxy statement for ONB’s 2015 annual meeting of shareholders, as filed with the SEC on a Schedule 14A on March 13, 2015. Information about the directors and executive officers of Anchor is set forth in the proxy statement for Anchor’s 2015 annual meeting of shareholders, as filed with the SEC on a Schedule 14A on March 27, 2015. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the Proxy Statement/Prospectus regarding the proposed merger when it becomes available. Free copies of this document may be obtained as described in the preceding paragraph.
TABLE 3
Financial Highlights
($ and shares in thousands, except per share data)
Three Months Ended
Twelve Months Ended
December 31,
September 30,
December 31,
December 31,
December 31,
2015
2015
2014
2015
2014
Income Statement
Net interest income
$
85,922
$
97,104
$
90,043
$
366,116
$
366,370
Provision for loan losses
484
167
869
2,923
3,097
Noninterest income
60,614
59,744
50,495
230,632
165,129
Net income
31,985
37,669
29,250
116,716
103,667
Per Common Share Data (Diluted)
Net income available to common shareholders
$
0.27
$
0.33
$
0.25
$
1.00
$
0.95
Average diluted shares outstanding
114,716
115,153
116,592
116,255
108,365
Book value
13.05
12.89
12.54
13.05
12.54
Stock price
13.56
13.93
14.88
13.56
14.88
Dividend payout ratio
43
%
36
%
44
%
48
%
46
%
Tangible common book value (1)
7.62
7.45
7.67
7.62
7.67
Performance Ratios
Return on average assets
1.07
%
1.26
%
1.03
%
0.98
%
0.99
%
Return on average common equity
8.63
%
10.27
%
8.06
%
7.88
%
7.91
%
Net interest margin (FTE)
3.50
%
3.94
%
3.83
%
3.72
%
4.22
%
Efficiency ratio (2)
66.42
%
61.97
%
69.54
%
68.65
%
70.03
%
Net charge-offs (recoveries) to average loans
-0.03
%
-0.05
%
0.08
%
-0.02
%
0.04
%
Allowance for loan losses to ending loans
0.75
%
0.75
%
0.76
%
0.75
%
0.76
%
Non-performing loans to ending loans
2.11
%
2.26
%
2.43
%
2.11
%
2.43
%
Balance Sheet
Total loans
$
6,948,405
$
6,847,898
$
6,318,201
$
6,948,405
$
6,318,201
Total assets
11,991,527
11,913,786
11,646,051
11,991,527
11,646,051
Total deposits
8,400,860
8,621,325
8,490,664
8,400,860
8,490,664
Total borrowed funds
1,920,246
1,593,843
1,469,911
1,920,246
1,469,911
Total shareholders' equity
1,491,170
1,476,002
1,465,764
1,491,170
1,465,764
Capital Ratios (1)
Risk-based capital ratios (EOP):
Tier 1 common equity
12.1
%
12.1
%
N/A
12.1
%
N/A
Tier 1
12.6
%
12.5
%
12.9
%
12.6
%
12.9
%
Total
13.3
%
13.2
%
13.6
%
13.3
%
13.6
%
Leverage ratio (to average assets)
8.5
%
8.4
%
8.8
%
8.5
%
8.8
%
Total equity to assets (averages)
12.42
%
12.30
%
12.79
%
12.42
%
12.57
%
Tangible common equity to tangible assets
7.66
%
7.56
%
8.09
%
7.66
%
8.09
%
Nonfinancial Data
Full-time equivalent employees
2,652
2,675
2,938
2,652
2,938
Number of branches
160
164
195
160
195
(1) See non-GAAP measures on Table 9.
(2) Efficiency ratio is defined as noninterest expense before amortization of intangibles as a percent of FTE net interest income and noninterest revenues, excluding net gains from securities transactions. This presentation excludes intangible amortization and net securities gains, as is common in other company releases, and better aligns with true operating performance.
FTE - Fully taxable equivalent basis EOP - End of period actual balances N/A - Not applicable
TABLE 4
Income Statement
($ and shares in thousands, except per share data)
Three Months Ended
Twelve Months Ended
December 31,
September 30,
December 31,
December 31,
December 31,
2015
2015
2014
2015
2014
Interest income
$
94,960
$
105,671
$
97,318
$
399,189
$
389,729
Less: interest expense
9,038
8,567
7,275
33,073
23,359
Net interest income
85,922
97,104
90,043
366,116
366,370
Wealth management fees
8,142
8,290
8,251
34,395
28,737
Service charges on deposit accounts
10,039
11,010
11,997
43,372
47,433
Debit card and ATM fees
3,646
3,887
6,818
21,340
25,835
Mortgage banking revenue
2,145
3,170
2,390
12,540
6,017
Insurance premiums and commissions
10,491
9,938
9,932
42,714
41,466
Investment product fees
4,375
4,427
4,467
17,924
17,136
Company-owned life insurance
2,064
2,195
1,982
8,604
6,924
Change in Indemnification Asset
57
(6,582
)
(6,246
)
(9,034
)
(43,162
)
Other income
17,958
22,477
5,963
52,851
24,650
Total fees, service charges and other revenue
58,917
58,812
45,554
224,706
155,036
Gains (losses) on sales of securities (1)
1,662
861
4,869
5,718
9,730
Gains (losses) on derivatives
35
71
72
208
363
Total noninterest income
60,614
59,744
50,495
230,632
165,129
Total revenues
146,536
156,848
140,538
596,748
531,499
Salaries and employee benefits
56,782
58,151
58,237
243,875
219,301
Occupancy
11,796
13,009
12,722
53,239
49,099
Equipment
2,856
2,977
2,933
13,183
12,453
Marketing
1,769
2,727
2,590
10,410
9,591
Data processing
6,020
6,622
6,918
27,309
25,382
Communication
2,106
2,301
2,907
9,586
10,476
Professional fees
2,808
2,435
3,733
11,756
16,390
Loan expenses
1,811
1,420
1,696
6,373
6,107
Supplies
565
445
688
2,275
2,958
FDIC assessment
1,913
1,733
1,704
7,503
6,261
Other real estate owned expense
482
584
330
2,703
3,101
Intangible amortization
2,816
2,872
2,761
11,746
9,120
Other expense
10,745
7,341
2,897
30,974
16,199
Total noninterest expense
102,469
102,617
100,116
430,932
386,438
Provision for loan losses
484
167
869
2,923
3,097
Income before income taxes
43,583
54,064
39,552
162,893
141,964
Total taxes
11,598
16,395
10,302
46,177
38,297
Net income
$
31,985
$
37,669
$
29,250
$
116,716
$
103,667
Diluted Earnings Per Share
Net income
$
0.27
$
0.33
$
0.25
$
1.00
$
0.95
Average Common Shares Outstanding
Basic
114,103
114,590
115,924
115,726
107,818
Diluted
114,716
115,153
116,592
116,255
108,365
Common shares outstanding (EOP)
114,297
114,523
116,847
114,297
116,847
(1) Includes $0.1 million other-than-temporary impairment (OTTI) in the twelve months ended December 31, 2014.
TABLE 5
Balance Sheet (EOP)
($ in thousands)
December 31,
September 30,
December 31,
2015
2015
2014
Assets
Federal Reserve Bank account
$
125,724
$
10,901
$
19,954
Money market investments
2,783
4,590
12,138
Investments:
Treasury and government sponsored agencies
768,564
797,713
868,324
Mortgage-backed securities
1,082,403
1,154,134
1,265,310
States and political subdivisions
1,100,501
1,079,678
967,740
Other securities
428,951
429,392
445,567
Total investments
3,380,419
3,460,917
3,546,941
Loans held for sale
13,810
18,783
213,490
Loans:
Commercial
1,804,615
1,740,394
1,629,600
Commercial and agriculture real estate
1,847,821
1,845,889
1,711,110
Consumer:
Home equity
359,954
362,055
360,320
Other consumer loans
1,183,814
1,145,232
950,307
Subtotal of commercial and consumer loans
5,196,204
5,093,570
4,651,337
Residential real estate
1,644,614
1,640,289
1,519,156
Covered loans
107,587
114,039
147,708
Total loans
6,948,405
6,847,898
6,318,201
Total earning assets
10,471,141
10,343,089
10,110,724
Allowance for loan losses
(52,233
)
(51,226
)
(47,849
)
Nonearning Assets:
Cash and due from banks
91,311
157,919
207,871
Premises and equipment
196,676
130,341
135,892
Goodwill and intangible assets
619,942
622,758
569,539
Company-owned life insurance
341,294
339,352
325,617
FDIC Indemnification Asset
9,030
8,905
20,603
Other real estate owned
12,498
13,705
16,362
Other assets
301,868
348,943
307,292
Total nonearning assets
1,572,619
1,621,923
1,583,176
Total assets
$
11,991,527
$
11,913,786
$
11,646,051
Liabilities and Equity
Noninterest-bearing demand deposits
$
2,488,855
$
2,388,854
$
2,427,748
NOW accounts
2,133,536
2,001,077
2,176,879
Savings accounts
2,201,352
2,201,066
2,222,557
Money market accounts
577,050
1,043,135
574,462
Other time deposits
901,352
926,981
1,052,508
Total core deposits
8,302,145
8,561,113
8,454,154
Brokered CD's
98,715
60,212
36,510
Total deposits
8,400,860
8,621,325
8,490,664
Short-term borrowings
628,499
474,894
551,309
Other borrowings
1,291,747
1,118,949
918,603
Total borrowed funds
1,920,246
1,593,843
1,469,911
Accrued expenses and other liabilities
179,251
222,616
219,712
Total liabilities
10,500,357
10,437,784
10,180,287
Common stock, surplus, and retained earnings
1,525,967
1,510,382
1,497,319
Other comprehensive income
(34,797
)
(34,380
)
(31,555
)
Total shareholders' equity
1,491,170
1,476,002
1,465,764
Total liabilities and shareholders' equity
$
11,991,527
$
11,913,786
$
11,646,051
EOP - End of period actual balances
TABLE 6
Average Balance Sheet and Interest Rates
($ in thousands)
Three Months Ended
Three Months Ended
Three Months Ended
December 31, 2015
September 30, 2015
December 31, 2014
Average
Income (1)/
Yield/
Average
Income (1)/
Yield/
Average
Income (1)/
Yield/
Earning Assets:
Balance
Expense
Rate
Balance
Expense
Rate
Balance
Expense
Rate
Fed Funds sold, resell agr, Fed Reserve
Bank account, and money market
$
94,660
$
29
0.12
%
$
33,215
$
4
0.05
%
$
21,398
$
20
0.38
%
Investments:
Treasury and gov't sponsored agencies
770,472
3,658
1.90
%
820,424
3,926
1.91
%
839,774
4,171
1.99
%
Mortgage-backed securities
1,134,521
5,356
1.89
%
1,123,701
5,179
1.84
%
1,255,051
5,297
1.69
%
States and political subdivisions
1,088,917
12,935
4.75
%
1,052,494
12,610
4.79
%
908,662
11,325
4.99
%
Other securities
431,541
2,635
2.44
%
440,588
2,773
2.52
%
433,442
2,766
2.54
%
Total investments
3,425,451
24,584
2.87
%
3,437,207
24,488
2.85
%
3,436,929
23,558
2.73
%
Loans:
Commercial (2)
1,773,804
16,861
3.72
%
1,765,028
20,106
4.46
%
1,661,863
18,919
4.45
%
Commercial and agriculture real estate (2)
1,860,536
27,496
5.78
%
1,873,068
34,303
7.23
%
1,737,031
29,566
6.66
%
Consumer:
Home equity (2)
424,013
4,218
3.95
%
433,517
4,230
3.87
%
423,370
3,501
3.28
%
Other consumer loans (2)
1,160,652
9,747
3.33
%
1,140,330
9,976
3.47
%
965,511
9,467
3.89
%
Subtotal commercial and consumer loans
5,219,005
58,322
4.43
%
5,195,768
68,615
5.24
%
4,787,775
61,453
5.09
%
Residential real estate loans (2)
1,675,707
17,188
4.10
%
1,698,501
17,529
4.13
%
1,612,419
16,611
4.10
%
Total loans (2)
6,894,712
75,510
4.32
%
6,894,269
86,144
4.92
%
6,400,194
78,064
4.81
%
Total earning assets
$
10,414,823
$
100,123
3.80
%
$
10,364,691
$
110,636
4.22
%
$
9,858,522
$
101,642
4.09
%
Interest-bearing Liabilities:
NOW accounts
$
2,063,815
$
289
0.06
%
$
2,099,658
$
148
0.03
%
$
2,190,919
$
184
0.03
%
Savings accounts
2,207,640
784
0.14
%
2,278,466
797
0.14
%
2,204,138
751
0.14
%
Money market accounts
828,501
263
0.13
%
607,060
104
0.07
%
557,842
72
0.05
%
Other time deposits
909,985
2,123
0.93
%
973,729
2,351
0.96
%
1,048,183
2,331
0.88
%
Total interest-bearing deposits
6,009,941
3,459
0.23
%
5,958,913
3,401
0.23
%
6,001,083
3,338
0.22
%
Brokered CD's
80,951
141
0.69
%
43,201
74
0.68
%
38,004
43
0.45
%
Total interest-bearing deposits and CD's
6,090,892
3,600
0.23
%
6,002,114
3,474
0.23
%
6,039,087
3,381
0.22
%
Short-term borrowings
479,760
144
0.12
%
527,368
140
0.11
%
437,388
84
0.08
%
Other borrowings
1,196,166
5,294
1.75
%
1,230,541
4,952
1.59
%
827,658
3,811
1.81
%
Total borrowed funds
1,675,926
5,438
1.29
%
1,757,909
5,092
1.15
%
1,265,047
3,895
1.19
%
Total interest-bearing liabilities
$
7,766,818
$
9,038
0.46
%
$
7,760,023
$
8,567
0.44
%
$
7,304,134
$
7,276
0.40
%
Net interest rate spread
3.34
%
3.78
%
3.69
%
Net interest margin (FTE)
3.50
%
3.94
%
3.83
%
FTE adjustment
$
5,163
$
4,965
$
4,324
(1) Interest income is reflected on a fully taxable equivalent basis (FTE).
(2) Includes loans held for sale.
TABLE 7
Average Balance Sheet and Interest Rates
($ in Thousands)
Twelve Months Ended
Twelve Months Ended
December 31, 2015
December 31, 2014
Average
Income (1)/
Yield/
Average
Income (1)/
Yield/
Earning Assets:
Balance
Expense
Rate
Balance
Expense
Rate
Fed Funds sold, resell agr, Fed Reserve
Bank account, and money market
$
43,383
$
47
0.11
%
$
20,148
$
42
0.21
%
Investments:
Treasury and gov't sponsored agencies
829,728
16,080
1.94
%
760,566
15,612
2.05
%
Mortgage-backed securities
1,137,565
20,645
1.81
%
1,281,412
23,130
1.81
%
States and political subdivisions
1,023,983
49,162
4.80
%
889,343
45,112
5.07
%
Other securities
444,520
10,903
2.45
%
418,714
11,322
2.70
%
Total investments
3,435,796
96,790
2.82
%
3,350,035
95,176
2.84
%
Loans:
Commercial (2)
1,754,141
75,900
4.33
%
1,527,436
70,471
4.61
%
Commercial and agriculture real estate (2)
1,862,055
118,237
6.35
%
1,474,136
130,780
8.87
%
Consumer:
Home equity (2)
439,657
17,480
3.98
%
374,320
15,281
4.08
%
Other consumer loans (2)
1,115,430
39,370
3.53
%
839,571
34,074
4.06
%
Subtotal commercial and consumer loans
5,170,591
250,987
4.85
%
4,215,463
250,606
5.94
%
Residential real estate loans (2)
1,712,636
70,908
4.14
%
1,497,122
60,904
4.07
%
Total loans (2)
6,883,919
321,895
4.68
%
5,712,585
311,510
5.45
%
Total earning assets
$
10,363,098
$
418,732
4.04
%
$
9,082,768
$
406,728
4.48
%
Interest-bearing Liabilities:
NOW accounts
$
2,160,019
$
758
0.04
%
$
1,989,794
$
595
0.03
%
Savings accounts
2,299,357
3,199
0.14
%
2,104,076
2,875
0.14
%
Money market accounts
677,414
577
0.09
%
490,247
250
0.05
%
Other time deposits
1,001,436
9,270
0.93
%
996,405
9,453
0.91
%
Total interest-bearing deposits
6,138,226
13,804
0.23
%
5,580,522
13,173
0.24
%
Brokered CD's
62,346
364
0.58
%
27,973
153
0.55
%
Total interest-bearing deposits and CD's
6,200,572
14,168
0.23
%
5,608,494
13,326
0.24
%
Short-term borrowings
482,241
493
0.10
%
404,919
310
0.08
%
Other borrowings
1,061,681
18,412
1.73
%
753,358
9,723
1.29
%
Total borrowed funds
1,543,922
18,905
1.22
%
1,158,277
10,033
0.86
%
Total interest-bearing liabilities
$
7,744,494
$
33,073
0.43
%
$
6,766,771
$
23,359
0.35
%
Net interest rate spread
3.61
%
4.12
%
Net interest margin (FTE)
3.72
%
4.22
%
FTE adjustment
$
19,543
$
16,999
(1) Interest income is reflected on a fully taxable equivalent basis (FTE).
(2) Includes loans held for sale.
TABLE 8
Asset Quality (EOP)
($ in thousands)
Three Months Ended
Twelve Months Ended
December 31,
September 30,
December 31,
December 31,
December 31,
2015
2015
2014
2015
2014
Beginning allowance for loan losses
$
51,226
$
50,191
$
48,279
$
47,849
$
47,145
Provision for loan losses
484
167
869
2,923
3,097
Gross charge-offs
(3,499
)
(2,468
)
(3,524
)
(10,818
)
(11,216
)
Gross recoveries
4,022
3,336
2,225
12,279
8,823
Net (charge-offs) recoveries
523
869
(1,298
)
1,461
(2,393
)
Ending allowance for loan losses
$
52,233
$
51,226
$
47,849
$
52,233
$
47,849
Net charge-offs (recoveries) / average loans (1)
-0.03
%
-0.05
%
0.08
%
-0.02
%
0.04
%
Average loans outstanding (1)
$
6,891,197
$
6,791,601
$
6,387,085
$
6,756,135
$
5,703,294
EOP loans outstanding (1)
$
6,948,405
$
6,847,898
$
6,318,201
$
6,948,405
$
6,318,201
Allowance for loan loss / EOP loans (1)
0.75
%
0.75
%
0.76
%
0.75
%
0.76
%
Underperforming Assets:
Loans 90 Days and over (still accruing)
$
916
$
575
$
457
$
916
$
457
Non-performing loans:
Nonaccrual loans (2)
132,373
140,666
140,860
132,373
140,860
Renegotiated loans
14,285
14,121
12,858
14,285
12,858
Total non-performing loans
146,658
154,787
153,718
146,658
153,718
Foreclosed properties
12,498
13,705
16,362
12,498
16,362
Total underperforming assets
$
160,072
$
169,067
$
170,537
$
160,072
$
170,537
Classified loans - "problem loans"
$
213,294
$
252,397
$
250,899
$
213,294
$
250,899
Other classified assets
6,857
22,111
26,479
6,857
26,479
Criticized loans - "special mention loans"
134,347
141,187
199,334
134,347
199,334
Total classified and criticized assets
$
354,498
$
415,695
$
476,712
$
354,498
$
476,712
Non-performing loans / EOP loans (1)
2.11
%
2.26
%
2.43
%
2.11
%
2.43
%
Allowance to non-performing loans (3)
36
%
33
%
31
%
36
%
31
%
Under-performing assets / EOP loans (1)
2.30
%
2.47
%
2.70
%
2.30
%
2.70
%
EOP total assets
$
11,991,527
$
11,913,786
$
11,646,051
$
11,991,527
$
11,646,051
Under-performing assets / EOP assets
1.33
%
1.42
%
1.46
%
1.33
%
1.46
%
EOP - End of period actual balances
(1) Excludes loans held for sale.
(2) Includes renegotiated loans totaling $30.0 million at December 31, 2015, $38.6 million at September 30, 2015, and $22.1 million at December 31, 2014.
(3) Includes acquired loans that were recorded at fair value in accordance with ASC 805 at the date of acquisition. As such, the credit risk was incorporated in the fair value recorded and no allowance for loan losses was recorded on the acquisition date.
TABLE 9
Non-GAAP Measures
($ in thousands)
Three Months Ended
Twelve Months Ended
December 31,
September 30,
December 31,
December 31,
December 31,
2015
2015
2014
2015
2014
Actual EOP Balances
GAAP shareholders' equity
$
1,491,170
$
1,476,002
$
1,465,764
$
1,491,170
$
1,465,764
Deduct:
Goodwill
584,634
584,634
530,845
584,634
530,845
Intangibles
35,308
38,124
38,694
35,308
38,694
619,942
622,758
569,539
619,942
569,539
Tangible shareholders' equity
$
871,228
$
853,244
$
896,225
$
871,228
$
896,225
Actual EOP Balances
GAAP assets
$
11,991,527
$
11,913,786
$
11,646,051
$
11,991,527
$
11,646,051
Add:
Trust overdrafts
29
127
227
29
227
Deduct:
Goodwill
584,634
584,634
530,845
584,634
530,845
Intangibles
35,308
38,124
38,694
35,308
38,694
619,942
622,758
569,539
619,942
569,539
Tangible Assets
$
11,371,614
$
11,291,155
$
11,076,739
$
11,371,614
$
11,076,739
Risk weighted assets
7,718,065
7,597,349
7,334,027
7,718,065
7,334,027
Actual EOP Balances
GAAP net income
$
31,985
$
37,669
$
29,250
$
116,716
$
103,667
Add:
Intangible amortization (net of tax)
2,545
2,596
2,461
10,593
7,797
Tangible net income
$
34,530
$
40,265
$
31,711
$
127,309
$
111,464
Tangible Ratios
Return on tangible common equity
15.85
%
18.88
%
14.15
%
14.61
%
12.44
%
Return on tangible assets
1.21
%
1.43
%
1.15
%
1.12
%
1.01
%
Tangible common equity to tangible assets
7.66
%
7.56
%
8.09
%
7.66
%
8.09
%
Tangible common equity to risk weighted assets
11.29
%
11.23
%
12.22
%
11.29
%
12.22
%
Tangible common book value (1)
7.62
7.45
7.67
7.62
7.67
Tangible common equity presentation includes other comprehensive income as is common in other company releases.
(1) Tangible common shareholders' equity divided by common shares issued and outstanding at period-end.
Tier 1 capital
$
968,772
$
950,915
$
944,649
$
968,772
$
944,649
Deduct:
Trust Preferred Securities
45,000
45,000
45,000
45,000
45,000
Additional Tier 1 capital deductions
(10,725
)
(11,392
)
-
(10,725
)
-
34,275
33,608
45,000
34,275
45,000
Tier 1 common equity
$
934,497
$
917,307
$
899,649
$
934,497
$
899,649
Risk weighted assets
7,718,065
7,597,349
7,334,027
7,718,065
7,334,027
Tier 1 common equity to risk weighted assets
12.11
%
12.07
%
12.27
%
12.11
%
12.27
%
Contacts:
Media:
Kathy A. Schoettlin – (812) 465-7269
Executive Vice President – Communications
Financial Community:
Lynell J. Walton – (812) 464-1366
Senior Vice President – Investor Relations