EX-99.1 2 tm2228594d1_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

 

 

Berkshire Hills Reports Third Quarter Results

 

BOSTON, October 20, 2022 - Berkshire Hills Bancorp, Inc. (NYSE: BHLB) today reported third quarter 2022 earnings per share (“EPS”) totaling $0.42. The non-GAAP measure of adjusted EPS totaled $0.62 for this period.

 

GAAP EPS decreased from $0.50 in the prior quarter due to $11 million in third quarter charges primarily consisting of branch restructuring costs following the completion of the previously announced branch consolidation program.

 

Excluding these charges, adjusted EPS increased by 21% from $0.51 in the prior quarter. Results benefited from a 13% increase in net interest income driven by a 37 basis point increase in the net interest margin due to loan growth and higher market interest rates.

 

Third quarter GAAP EPS decreased from $1.31 in 2021 due to $52 million in gains recorded on the sale of branch and insurance operations in 2021. Excluding these gains, adjusted EPS increased year-over-year by 18%. Berkshire’s 2022 results demonstrate positive operating leverage from its BEST strategic transformation initiatives.

 

THIRD QUARTER FINANCIAL HIGHLIGHTS (Changes are quarter-over-quarter unless otherwise stated. Non-GAAP measures are reconciled on pages F-9 and F-10).

 

●6.8% return on tangible common equity and 9.9% adjusted return on tangible common equity
●11% increase quarter-over-quarter in total net revenue; 10% increase in adjusted net revenue
●3.48% net interest margin, increased from 3.11% in 2Q22 and 2.56% in 3Q21
●62% efficiency ratio, improved from 67% in 2Q22 and 69% in 3Q21
●2% end-of-period loan growth quarter-over-quarter; 16% growth year-over-year
●0.74% delinquent and non-accrual loans/loans
●7% reduction in period-end shares outstanding year-over-year reflecting stock buybacks
●Prepayment of $75 million in subordinated debt in September 2022

 

CEO Nitin Mhatre stated “Berkshire posted strong revenue growth in the third quarter and achieved the highest adjusted per share earnings since 2019. We’re ahead of our BEST strategic transformation plan targets for performance improvement and accelerating our progress towards our vision of becoming a high-performing, leading socially responsible community bank.”

 

“Berkshire posted another quarter of loan growth and asset quality remains strong. Our balance sheet remains positioned to benefit from further increases in market interest rates. The Company’s expense discipline continues to support positive operating leverage and improved efficiency, allowing us to reinvest in targeted business lines. Our focused capital management has improved our capital returns to shareholders while also maintaining a strong capital base to support further franchise growth.”

 

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Mr. Mhatre concluded, “We continue to evolve our organization to meet shifting consumer, business, community, and employee expectations while enhancing our DigitouchSM model of customer engagement. We’ve increased our base pay rates, announced a number of promotions, and continue targeted recruiting of frontline bankers. Our teams are finding opportunities to add new relationships in the changing local banking landscape. We’re making steady progress in our multi-billion BEST Community Comeback program along with our ESG activities and are encouraged by the ongoing momentum within our organization and communities.”

 

RESULTS OF OPERATIONS

 

Earnings: Third quarter EPS of $0.42 decreased from $0.50 quarter-over-quarter, while adjusted EPS increased by 21% to $0.62 from $0.51. Third quarter EPS decreased from $1.31 in 2021 due to gains recorded on the sale of business operations in 2021. Third quarter adjusted EPS increased from $0.53 in 2021.

 

The improvement in adjusted earnings reflects positive operating leverage, with 11% revenue growth and 3% growth in adjusted operating expense compared to the prior quarter. The efficiency ratio improved to 62% in the most recent quarter, compared to 67% in the linked quarter and to 69% in the third quarter of 2021.

 

The third quarter 2022 return on tangible common equity measured 6.8% and the non-GAAP measure of adjusted return on tangible common equity measured 9.9%, The return on assets measured 0.66% and the non-GAAP measure of adjusted return on assets measured 0.99%.

 

The Company also utilizes the financial measure of Pre-tax Pre-Provision Net Revenue (“PPNR”) to evaluate the results of operations before the impact of the provision and tax expense. Compared to the prior quarter, PPNR decreased by $2 million to $27 million due to the restructuring expenses. The non-GAAP measure of adjusted PPNR increased by 28% to $39 million. Adjusted PPNR increased by 53% on a year-over-year basis.

 

Earnings per share benefited from share repurchases in most quarters during 2021 and 2022. At period-end, the Company had approximately $35 million remaining in its 2022 share repurchase authorization.

 

Revenue and expense comparisons to the third quarter of 2021 include the impact of the sale of branch and insurance operations at the end of that period. Revenue and expense related to those operations were components of operating income in that period and in prior periods.

 

Revenue: Total net revenue increased by 11% quarter-over-quarter and decreased by 25% year-over-year, due to the gains recorded on the sale of operations in the third quarter of 2021. The Company’s non-GAAP measure of adjusted revenue increased by 10% and 17% for the above periods.

 

Net interest income has been the primary driver of revenue growth in recent periods. Third quarter net interest income increased by $11 million, or 13%, compared to the linked quarter and by $21 million, or 29%, compared to the third quarter of 2021. After several quarters of relative stability, including a 2.56% margin in the third quarter of 2021, the margin expanded strongly to 3.11% in the second quarter of 2022, and then rose further to 3.48% in the third quarter of 2022.

 

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This improvement primarily reflected the impact of rapidly rising market interest rates which the Company was positioned to benefit from due to the positive asset sensitivity of its balance sheet. The margin also reflected the benefit of the reduction in higher cost wholesale funds as well as the reinvestment of excess cash into loan growth. The interest margin has also benefited from a lag in the responsiveness of deposit costs to the initial upward move in market interest rates.

 

The yield on average earning assets improved quarter-over-quarter to 3.91% from 3.34%. The cost of funds increased to 0.46% from 0.24%, while the cost of deposits increased to 0.33% from 0.17%. The Company’s interest rate sensitivity remained positive at period-end and was positioned to benefit from further interest rate increases anticipated by the market.

 

Deposit fees increased 5% quarter-over-quarter and 9% year-over-year, reflecting increased customer activity. Most lending related fees were down due to lower commercial activity in the most recent quarter.

 

Provision for Credit Losses on Loans: Berkshire recorded a $3 million provision for credit losses in the third quarter of 2022, compared to a zero provision in the second quarter of 2022 and a credit of $4 million in the third quarter of 2021. The Company continues to maintain strong credit quality, and the allowance for credit losses on loans decreased by $3 million to $96 million during the quarter.

 

Non-Interest Expense: Berkshire has maintained quarterly operating non-interest expenses generally stable within a targeted range of $68-70 million for more than a year, with a goal of reinvesting expense savings into frontline bankers and technology. Total expense increased to $82 million in the most recent quarter, primarily due to the $11 million charge for restructuring and other expense. The non-GAAP measure of adjusted non-interest expense totaled $70 million during this quarter. Total compensation expense increased by $2 million quarter-over-quarter including wage increases and increased performance based compensation. Full time equivalent staff totaled 1,300 positions at period-end, compared to 1,319 positions at the start of the year. The effective tax rate was 21% in the most recent quarter, which was an increase from 20% for the year 2021.

 

BALANCE SHEET (references are to period-end balances unless otherwise stated)

 

Summary: Total loans grew by 2% quarter over quarter and by 16% year-over-year, including increases near double digits or greater across all major categories. Total deposits decreased by 1% quarter-over-quarter and 4% year-over-year, due primarily due to reductions of brokered deposits and overnight payroll deposits. Period-end liquidity and capital remained strong, with the ratio of loans/deposits measuring 80% and tangible common equity/tangible assets measuring 8.1%. The Company remained positively sensitive to interest rate increases based on its asset/liability profile at period-end.

 

Loans: Quarter-over-quarter loan growth was concentrated in a 12% increase in residential mortgages. Year-over-year loan growth was concentrated in a 41% increase in residential mortgages and a 10% increase in commercial loans. Berkshire has expanded its mortgage origination team and its in-footprint relationship bank channel. The Company expanded its commercial teams over the last year, and business volumes and credit usage have benefited from improved market demand. Loan growth has also benefited from a decline in prepayments in the prevailing rising rate environment.

 

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Asset Quality: Asset quality metrics remained within historically favorable ranges through the third quarter. Period-end non-performing assets measured 0.35% of total assets, and total delinquent and non-accruing loans were 0.74% of total loans. Annualized net loan charge-offs measured 0.16% of average loans for the first nine months of the year. The ratio of the allowance for loan credit losses on loans to total loans decreased to 1.21% from 1.27% at midyear and from 1.55% at the start of the year.

 

Deposits and Borrowings: Total deposits decreased by 1% quarter-over-quarter and 4% year-over-year. Excluding changes in overnight payroll deposits and changes in brokered deposits, total deposits increased by 1% and decreased by 1% for these respective periods. During the third quarter, Berkshire prepaid its ten-year-old 6.875% $75 million subordinated note. The Company completed the issuance of an investment grade rated $100 million sustainable subordinated bond offering in June 2022.

 

Equity: The $71 million, or 7%, quarter-over-quarter decrease in shareholders’ equity included a $61 million net decrease due to after-tax unrealized bond losses caused by rising interest rates. Stock buybacks in the most recent quarter totaled approximately $20 million consisting of approximately 705,000 shares. At period-end, book value per share totaled $20.93 and tangible book value per share totaled $20.36.

 

ESG & CORPORATE RESPONSIBILITY UPDATE

 

Berkshire Bank is committed to purpose-driven, community-centered banking that enhances value for all stakeholders as it pursues its vision of being a high-performing, leading socially responsible community bank in New England and beyond. Learn more about the steps Berkshire is taking at berkshirebank.com/csr and in its most recent Corporate Responsibility Report.

 

Key developments in the quarter include:

 

●BEST Community Comeback: As a result of the collective efforts of its employees, Berkshire is making steady progress towards the achievement of its “BEST Community Comeback” goals. The multi-year plan focuses on four key areas: fueling small businesses, community financing and philanthropy, financial access and empowerment, and funding environmental sustainability. Additional information can be found at berkshirebank.com/comeback.

 

●Current ESG Performance: The Company remained within its BEST ESG goal with a top 23% composite performance in leading ESG indexes in the U.S. for its Environmental, Social and Governance (ESG) ratings. As of September 30, 2022 the Company has ratings of: MSCI ESG- BBB; ISS ESG Quality Score - Environment: 2, Social: 1, Governance: 2; and Bloomberg ESG Disclosure- 62.81. The Company also receives a rating by Sustainalytics. Berkshire continues to rank among the top 1% of all U.S. Banks for ESG in Bloomberg this year.

 

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●Recognition & Continued Community Impact: The Boston Business Journal named Berkshire one of Massachusetts’ Top Charitable Contributors for the tenth consecutive year. The honor further demonstrates Berkshire’s deep commitment to lifting-up its communities which includes recent announcements of $100,000 in scholarships to forty (40) students continuing in their pursuit of an undergraduate degree from an accredited non-profit college or technical school and more than $600,000 in third quarter philanthropic contributions through Berkshire’s Foundation to support projects enhancing the quality of life and economic vibrancy in communities where the bank operates.

 

INVESTOR CONFERENCE CALL AND INVESTOR PRESENTATION

 

Berkshire will conduct a conference call/webcast at 10:00 a.m. Eastern time on Thursday, October 20, 2022 to discuss results for the quarter and provide guidance about expected future results. Participants are encouraged to pre-register for the conference call using the following link:

 

https://www.netroadshow.com/events/login?show=4f8bbd69&confId=42577

 

Callers who pre-register will be given dial-in instructions and a unique PIN to gain immediate access to the call. Participants may pre-register at any time prior to the call and will immediately receive simple instructions via email. Additionally, participants may reach the registration link and access the webcast by logging in through the investor relations section of Berkshire's website at ir.berkshirebank.com. Those parties who do not have Internet access or are otherwise unable to pre-register for this event, may still participate at the above time by dialing 844-200-6205 and using participant access code: 197166. Participants are requested to dial-in a few minutes before the scheduled start of the call. A telephone replay of the call will be available for one week by dialing 866-813-9403 and using access code: 027908. The webcast will be available on Berkshire's website for an extended period of time.

 

ABOUT BERKSHIRE HILLS BANCORP

 

Berkshire Hills Bancorp is the parent of Berkshire Bank. The Bank's goal is to be a high-performing, leading socially responsible community bank in New England, Upstate New York, and beyond. Berkshire Bank provides business and consumer banking, mortgage, wealth management, and investment services. Headquartered in Boston, Berkshire has approximately $11.3 billion in assets and operates 100 financial centers in New England and New York, and is a member of the Bloomberg Gender-Equality Index. To learn more, call 800-773-5601 or follow us on Facebook, Twitter, Instagram, and LinkedIn.

 

FORWARD-LOOKING STATEMENTS

 

This document contains “forward-looking statements” within the meaning of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended. You can identify these statements from the use of the words “may,” “will,” “should,” “could,” “would,” “plan,” “potential,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” “remain,” “target” and similar expressions. There are many factors that could cause actual results to differ significantly from expectations described in the forward-looking statements. For a discussion of such factors, please see Berkshire’s most recent reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission and available on the SEC’s website at www.sec.gov. You should not place undue reliance on forward-looking statements, which reflect our expectations only as of the date of this document. Berkshire does not undertake any obligation to update forward-looking statements.

 

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NON-GAAP FINANCIAL MEASURES

 

This document contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles (“GAAP”). These non-GAAP measures provide supplemental perspectives on operating results, performance trends, and financial condition. They are not a substitute for GAAP measures; they should be read and used in conjunction with the Company’s GAAP financial information. A reconciliation of non-GAAP financial measures to GAAP measures is included on pages F-9 and F-10 in the accompanying financial tables. In all cases, it should be understood that non-GAAP per share measures do not depict amounts that accrue directly to the benefit of shareholders.

 

The Company utilizes the non-GAAP measure of adjusted earnings in evaluating operating trends, including components for adjusted revenue and expense. These measures exclude items which the Company does not view as related to its normalized operations. These items primarily include securities gains/losses, other gains/losses, merger costs, restructuring costs, goodwill impairment, and discontinued operations. In 2021, the Company recorded a third quarter net gain of $52 million on the sale of the Company’s insurance subsidiary and the Mid-Atlantic branch operations. Expense adjustments in the first quarter 2021 were primarily related to branch consolidations. Third quarter 2021 adjustments included Federal Home Loan Bank borrowings prepayment costs. They also included other restructuring charges for efficiency initiatives in operations areas including write-downs on real estate moved to held for sale and severance related to staff reductions. The fourth quarter 2021 revenue adjustment was primarily related to trailing revenue on a previously reported sale, and the expense adjustment was due primarily to branch restructuring costs. The revenue adjustments in 2022 were related to fair market value changes in equity and trading investments. The restructuring expense adjustment in third quarter of 2022 primarily related to the termination of leasehold interests and the write-down of related right of use assets and leasehold improvements in conjunction with branch consolidations and real estate reductions.

 

The Company utilizes Adjusted Pre-Provision Net Revenue (“Adjusted PPNR”) which measures adjusted income before credit loss provision and tax expense. PPNR is used by the investment community due to the volatility and variability across banks related to credit loss provision expense under the Current Expected Credit Loss accounting standard. The Company also calculates Adjusted PPNR/assets in order to utilize the PPNR measure in assessing its comparative operating profitability.

 

Non-GAAP adjustments are presented net of an adjustment for income tax expense. This adjustment is determined as the difference between the GAAP tax rate and the effective tax rate applicable to adjusted income. The efficiency ratio is adjusted for adjusted revenue and expense items and for tax preference items. The Company also calculates measures related to tangible equity, which adjust equity (and assets where applicable) to exclude intangible assets due to the importance of these measures to the investment community.

 

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CONTACTS

 

Investor Relations Contacts

 

Kevin Conn, SVP, Investor Relations & Corporate Development
Email: KAConn@berkshirebank.com
Tel: (617) 641-9206

 

David Gonci, Capital Markets Director
Email: dgonci@berkshirebank.com
Tel: (413) 281-1973

 

Media Contact:

 

Gary Levante, SVP, Corporate Responsibility & Communications
Email: glevante@berkshirebank.com
Tel: (413) 447-1737

 

TABLE

INDEX

  

 

CONSOLIDATED UNAUDITED FINANCIAL SCHEDULES

F-1   Selected Financial Highlights
F-2   Balance Sheets
F-3   Loan and Deposit Analysis
F-4   Statements of Income
F-5   Statements of Income (Five Quarter Trend)
F-6   Average Balances and Average Yields and Costs
F-7   Asset Quality Analysis
F-8   Asset Quality Analysis (continued)
F-9   Reconciliation of Non-GAAP Financial Measures and Supplementary Data (Five Quarter Trend)
F-10   Reconciliation of Non-GAAP Financial Measures and Supplementary Data (Year-to-Date)

 

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SELECTED FINANCIAL HIGHLIGHTS - UNAUDITED - (F-1)

 

   Sept. 30,   Dec. 31,   March 31,   June 30,   Sept. 30, 
   2021   2021   2022   2022   2022 
NOMINAL AND PER SHARE DATA                         
Net earnings per common share, diluted  $1.31   $0.42   $0.42   $0.50   $0.42 
Adjusted earnings per common share, diluted (2)   0.53    0.42    0.43    0.51    0.62 
Net income, (thousands)   63,749    20,248    20,196    23,115    18,717 
Adjusted net income, (thousands) (2)   25,695    20,172    20,789    23,562    27,928 
Total common shares outstanding, end of period (thousands)   48,657    48,667    47,792    45,788    45,040 
Average diluted shares, (thousands)   48,744    48,340    48,067    46,102    45,034 
Total book value per common share, (end of period)   24.21    24.30    22.89    22.15    20.93 
Tangible book value per common share, (end of period) (2)   23.58    23.69    22.30    21.56    20.36 
Dividends per common share   0.12    0.12    0.12    0.12    0.12 
Full-time equivalent staff   1,333    1,319    1,333    1,322    1,300 
                          
PERFORMANCE RATIOS (3)                         
Return on equity   22.18%   6.86%   6.79%   7.82%   6.30%
Adjusted return on equity (2)   8.94    6.83    6.99    7.97    9.40 
Return on tangible common equity (2)   23.14    7.37    7.29    8.33    6.76 
Adjusted return on tangible common equity (2)   9.53    7.34    7.49    8.48    9.92 
Return on assets   2.14    0.71    0.70    0.82    0.66 
Adjusted return on assets (2)   0.86    0.71    0.72    0.84    0.99 
Net interest margin, fully taxable equivalent (FTE) (4)(5)   2.56    2.60    2.61    3.11    3.48 
Efficiency ratio (2)   68.76    71.98    72.61    66.60    62.01 
                          
FINANCIAL DATA (in millions, end of period)                         
Total assets  $11,846   $11,555   $12,097   $11,579   $11,317 
Total earning assets   11,145    10,899    11,401    10,849    10,604 
Total loans   6,836    6,826    7,267    7,803    7,943 
Total deposits   10,365    10,069    10,699    10,115    9,988 
Loans/deposits (%)   66%   68%   68%   77%   80%
Total shareholders' equity  $1,178   $1,182   $1,094   $1,014   $943 
                          
ASSET QUALITY                         
Allowance for credit losses, (millions)  $113   $106   $99   $99   $96 
Net charge-offs, (millions)   (2)   (4)   (3)   (0)   (6)
Net charge-offs (QTD annualized)/average loans   0.12%   0.23%   0.15%   0.02%   0.30%
Provision (benefit)/expense, (millions)  $(4)  $(3)  $(4)  $-   $3 
Non-performing assets, (millions)   39    37    32    29    40 
Non-performing loans/total loans   0.54%   0.52%   0.41%   0.34%   0.48%
Allowance for credit losses/non-performing loans   304    300    335    368    254 
Allowance for credit losses/total loans   1.65    1.55    1.37    1.27    1.21 
                          
CAPITAL RATIOS                         
Common equity tier 1 capital to risk weighted assets(6)   15.3%   15.0%   13.9%   12.9%   12.7%
Tier 1 capital leverage ratio(6)   9.9    10.5    10.3    10.2    10.1 
Tangible common shareholders' equity/tangible assets(2)   9.7    10.0    8.8    8.5    8.1 

 

(1)Reconciliations of non-GAAP financial measures, including all references to adjusted and tangible amounts, appear on pages F-9 and F-10.
(2)Non-GAAP financial measure. adjusted measurements are non-GAAP financial measures that are adjusted to exclude net non-adjusted charges primarily related to acquisitions and restructuring activities. See pages F-9 and F-10 for reconciliations of non-GAAP financial measures.
(3)All performance ratios are annualized and are based on average balance sheet amounts, where applicable.
(4)Fully taxable equivalent considers the impact of tax advantaged investment securities and loans.
(5)The effect of purchase accounting accretion for loans, time deposits, and borrowings on the quarterly net interest margin was an increase in all quarters, which is shown sequentially as follows beginning with the earliest quarter and ending with the most recent quarter: 0.06%, 0.06%, 0.03%, 0.03%, 0.01%
(6)Presented as projected for September 30, 2022 and actual for the remaining periods.

 

 F-1 

 

 

 

CONSOLIDATED BALANCE SHEETS - UNAUDITED - (F-2)

 

   September 30,   December 31,   June 30,   September 30, 
(in thousands)  2021   2021   2022   2022 
Assets                    
Cash and due from banks  $153,185   $109,350   $156,470   $128,509 
Short-term investments   1,971,345    1,518,457    714,547    566,404 
Total cash and cash equivalents   2,124,530    1,627,807    871,017    694,913 
                     
Trading security   8,574    8,354    7,040    6,812 
Marketable equity securities, at fair value   15,601    15,453    14,154    12,790 
Securities available for sale, at fair value   1,643,965    1,877,585    1,697,019    1,470,949 
Securities held to maturity, at amortized cost   651,863    636,503    602,611    592,503 
Federal Home Loan Bank stock and other restricted securities   12,041    10,800    9,365    7,264 
Total securities   2,332,044    2,548,695    2,330,189    2,090,318 
Less: Allowance for credit losses on investment securities   (125)   (105)   (94)   (95)
Net securities   2,331,919    2,548,590    2,330,095    2,090,223 
                     
Loans held for sale   5,176    6,110    1,062    4,124 
                     
Total loans   6,836,235    6,825,847    7,803,451    7,943,481 
Less: Allowance for credit losses on loans   (112,916)   (106,094)   (99,021)   (96,013)
Net loans   6,723,319    6,719,753    7,704,430    7,847,468 
                     
Premises and equipment, net   99,233    94,383    89,657    86,809 
Goodwill and other intangible assets   30,907    29,619    27,046    25,761 
Other assets   527,049    524,074    550,275    563,946 
Assets held for sale   3,743    4,577    5,386    3,830 
Total assets  $11,845,876   $11,554,913   $11,578,968   $11,317,074 
                     
Liabilities and shareholders' equity                    
Demand deposits  $3,022,821   $3,008,461   $2,921,347   $2,896,659 
NOW and other deposits   1,982,089    976,401    2,247,544    1,045,970 
Money market deposits   2,438,832    3,293,526    2,327,004    3,388,932 
Savings deposits   1,095,959    1,111,625    1,143,352    1,111,304 
Time deposits   1,825,714    1,678,940    1,475,417    1,545,256 
Total deposits   10,365,415    10,068,953    10,114,664    9,988,121 
                     
Senior borrowings   13,369    13,331    58,542    4,494 
Subordinated borrowings   97,454    97,513    195,659    121,001 
Total borrowings   110,823    110,844    254,201    125,495 
                     
Other liabilities   191,563    192,681    196,053    260,896 
Total liabilities   10,667,801    10,372,478    10,564,918    10,374,512 
                     
Common shareholders' equity   1,178,075    1,182,435    1,014,050    942,562 
Total shareholders' equity   1,178,075    1,182,435    1,014,050    942,562 
Total liabilities and shareholders' equity  $11,845,876   $11,554,913   $11,578,968   $11,317,074 

 

 F-2 

 

 

CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED - (F-3)

 

LOAN ANALYSIS

 

               Growth % 
(in millions)  December 31, 2021
Balance		   June 30, 2022
Balance		   September 30, 2022
Balance		   Quarter ended
September 30, 2022		   Year to Date 
Total commercial real estate  $3,598   $3,920   $3,902    (0)%   8%
Commercial and industrial loans   1,330    1,471    1,435    (2)   8 
Total commercial loans   4,928    5,391    5,337    (1)   8 
                          
Total residential mortgages   1,392    1,819    2,033    12    46 
                          
Home equity   253    241    234    (3)   (7)
Auto and other   253    352    339    (4)   34 
Total consumer loans   506    593    573    (3)   13 
Total loans  $6,826   $7,803   $7,943    2%   16%

 

DEPOSIT ANALYSIS

 

               Growth % 
(in millions)  December 31, 2021
Balance		   June 30, 2022
Balance		   September 30, 2022
Balance		   Quarter ended
September 30, 2022		   Year to Date 
Non-interest bearing  $3,008   $2,921   $2,897    (1)%   (4)%
NOW and other   976    2,248    1,046    (53)   7 
Money market   3,294    2,327    3,389    46    3 
Savings   1,112    1,143    1,111    (3)   (0)
Time deposits   1,679    1,476    1,545    5    (8)
Total deposits (1)  $10,069   $10,115   $9,988    (1)%   (1)%

 

(1)Included in total deposits are brokered deposits of $163.6 million, $112.9 million, and $228.1 million at September 30, 2022, June 30, 2022, and December 31, 2021, respectively.

 

 F-3 

 

 

CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED - (F-4)

 

 

   Three Months Ended   Nine Months Ended 
   September 30,   September 30, 
(in thousands, except per share data)  2022   2021   2022   2021 
Interest income  $103,671   $79,688   $265,873   $253,205 
Interest expense   11,587    8,320    23,368    31,351 
Net interest income, not FTE   92,084    71,368    242,505    221,854 
Non-interest income                    
Deposit related fees   8,377    7,657    23,733    22,291 
Loan fees and revenue   3,785    8,285    16,673    25,962 
Insurance commissions and fees   -    1,581    -    7,003 
Wealth management fees   2,353    2,653    7,753    7,944 
Mortgage banking fees   58    461    186    1,797 
Other   2,154    1,279    7,132    5,638 
Total non-interest income excluding (losses)   16,727    21,916    55,477    70,635 
Securities (losses), net   (476)   (166)   (2,194)   (681)
Gain on sale of business operations and assets, net   -    51,885    -    51,885 
Total non-interest income   16,251    73,635    53,283    121,839 
Total net revenue   108,335    145,003    295,788    343,693 
Total net revenue excluding (losses)   108,811    93,284    297,982    292,489 
                     
Provision expense/(benefit) for credit losses   3,000    (4,000)   (1,000)   2,500 
Non-interest expense                    
Compensation and benefits   39,422    37,068    114,773    112,773 
Occupancy and equipment   8,702    10,421    28,207    32,044 
Technology and communications   8,719    8,397    25,857    25,204 
Professional services   3,285    3,180    8,890    13,495 
Other expenses   10,076    8,969    29,449    28,053 
Merger, restructuring and other non-operating expenses   11,473    1,425    11,526    4,917 
Total non-interest expense   81,677    69,460    218,702    216,486 
Total non-interest expense excluding merger, restructuring and other   70,204    68,035    207,176    211,569 
                     
Income before income taxes  $23,658   $79,543   $78,086   $124,707 
Income tax expense   4,941    15,794    16,058    26,291 
Net income  $18,717   $63,749   $62,028   $98,416 
                     
Basic earnings per common share  $0.42   $1.32   $1.35   $1.98 
Diluted earnings per common share  $0.42   $1.31   $1.34   $1.97 
                     
Weighted average shares outstanding:                    
Basic   44,700    48,395    46,056    49,672 
Diluted   45,034    48,744    46,396    49,963 

 

 F-4 

 

 

CONSOLIDATED STATEMENTS OF INCOME (5 Quarter Trend) - UNAUDITED - (F-5)

 

 

   Sept. 30,   Dec. 31,   March 31,   June 30,   Sept. 30, 
(in thousands, except per share data)  2021   2021   2022   2022   2022 
Interest income  $79,688   $75,860   $74,823   $87,379   $103,671 
Interest expense   8,320    6,548    5,760    6,021    11,587 
Net interest income, not FTE   71,368    69,312    69,063    81,358    92,084 
Non-interest income                         
Deposit related fees   7,657    7,522    7,351    8,005    8,377 
Loan fees and revenue   8,285    9,098    8,265    4,623    3,785 
Insurance commissions and fees   1,581    -    -    -    - 
Wealth management fees   2,653    2,586    2,625    2,775    2,353 
Mortgage banking fees   461    259    19    109    58 
Other   1,279    993    3,166    1,812    2,154 
Total non-interest income excluding (losses)/gains   21,916    20,458    21,426    17,324    16,727 
Securities (losses), net   (166)   (106)   (745)   (973)   (476)
Gain on sale of business operations and assets, net   51,885    1,057    -    -    - 
Total non-interest income   73,635    21,409    20,681    16,351    16,251 
Total net revenue   145,003    90,721    89,744    97,709    108,335 
Total net revenue excluding (losses)/gains   93,284    89,770    90,489    98,682    108,811 
                          
Provision (benefit)/expense for credit losses   (4,000)   (3,000)   (4,000)   -    3,000 
Non-interest expense                         
Compensation and benefits   37,068    37,816    37,521    37,830    39,422 
Occupancy and equipment   10,421    9,738    10,067    9,438    8,702 
Technology and communications   8,397    8,599    8,527    8,611    8,719 
Professional services   3,180    2,365    2,692    2,913    3,285 
Other expenses   8,969    10,025    9,725    9,648    10,076 
Merger, restructuring and other non-operating expenses   1,425    864    18    35    11,473 
Total non-interest expense   69,460    69,407    68,550    68,475    81,677 
Total non-interest expense excluding merger, restructuring and other   68,035    68,543    68,532    68,440    70,204 
                          
                          
Income before income taxes  $79,543   $24,314   $25,194   $29,234   $23,658 
Income tax expense   15,794    4,066    4,998    6,119    4,941 
Net income  $63,749   $20,248   $20,196   $23,115   $18,717 
                          
Diluted earnings per common share  $1.31   $0.42   $0.42   $0.50   $0.42 
                          
Weighted average shares outstanding:                         
Basic   48,395    47,958    47,668    45,818    44,700 
Diluted   48,744    48,340    48,067    46,102    45,034 

 

 F-5 

 

 

AVERAGE BALANCES AND AVERAGE YIELDS AND COSTS - UNAUDITED - (F-6)

 

 

   Sept. 30, 2021   Dec. 31, 2021   March 31, 2022   June 30, 2022   Sept. 30, 2022 
(in millions)  Average
Balance		   Average
Yield/Rate		   Average
Balance		   Average
Yield/Rate		   Average
Balance		   Average
Yield/Rate		   Average
Balance		   Average
Yield/Rate		   Average
Balance		   Average
Yield/Rate		 
Assets                                        
Commercial real estate   3,577    3.40%   3,569    3.49%   3,651    3.35%   3,831    3.79%   3,926    4.53%
Commercial and industrial loans   1,370    4.78    1,278    4.37    1,373    4.14    1,447    4.46    1,449    5.21 
Residential mortgages   1,499    3.65    1,403    3.82    1,436    3.56    1,652    3.57    1,926    3.53 
Consumer loans   545    3.95    516    3.96    514    4.24    562    5.41    587    6.24 
Total loans (1)    6,991    3.77    6,766    3.76    6,974    3.61    7,492    3.99    7,888    4.54 
Securities (2)   2,312    2.09    2,367    2.04    2,649    1.95    2,621    1.97    2,400    2.13 
Short-term investments and loans held for sale   1,762    0.17    1,609    0.17    1,202    0.17    476    0.57    342    1.96 
Mid-Atlantic region loans held for sale   155    3.82    -    -    -    -    -    -    -    - 
Total earning assets   11,220    2.86    10,742    2.84    10,825    2.82    10,589    3.34    10,630    3.91 
Goodwill and other intangible assets   31         30         29         27         26      
Other assets   674         655         639         644         659      
Total assets   11,925         11,427         11,493         11,260         11,315      
                                                   
Liabilities and shareholders' equity                                                  
NOW and other   1,316    0.05%   1,331    0.05%   1,456    0.04%   1,454    0.12%   1,362    0.48%
Money market   2,716    0.16    2,731    0.16    2,871    0.16    2,811    0.19    2,737    0.46 
Savings   1,112    0.04    1,100    0.04    1,117    0.03    1,127    0.03    1,129    0.03 
Time   1,893    0.86    1,750    0.80    1,624    0.71    1,460    0.64    1,528    0.85 
Total interest-bearing deposits   7,037    0.31    6,912    0.28    7,068    0.24    6,852    0.24    6,756    0.48 
Borrowings (3)   263    3.89    121    5.68    122    5.21    160    4.61    251    5.46 
Mid-Atlantic region interest-bearing deposits   306    0.51    -    -    -    -    -    -    -    - 
Total interest-bearing liabilities   7,606    0.43    7,033    0.37    7,190    0.32    7,012    0.34    7,007    0.66 
Non-interest-bearing demand deposits   2,901         3,038         2,968         2,903         2,913      
Other liabilities (4)   269         175         146         163         206      
Total liabilities   10,776         10,246         10,304         10,078         10,126      
                                                   
Common shareholders' equity   1,149         1,181         1,189         1,182         1,189      
Total shareholders' equity   1,149         1,181         1,189         1,182         1,189      
Total liabilities and shareholders' equity   11,925         11,427         11,493         11,260         11,315      
                                                   
Net interest spread        2.43%        2.47%        2.50%        2.99%        3.25%
Net interest margin, FTE (5)        2.56         2.60         2.61         3.11         3.48 
Cost of funds        0.31         0.26         0.23         0.24         0.46 
Cost of deposits        0.22         0.19         0.17         0.17         0.33 
                                                   
Supplementary data                                                  
Net Interest Income, not FTE   71.368         69.312         69.063         81.358         92.084      
Fully taxable equivalent income adjustment   1.586         1.604         1.524         1.560         1.715      
Net Interest Income, FTE   72.954         70.916         70.587         82.918         93.799      
                                                   
Average PPP loans (6)   90         37         27         NM         NM      
Average loans excluding PPP loans (6)   6,901         6,729         6,947         7,492         7,888      
Total PPP loans, end of period (6)   46         30         16         NM         NM      
Total loans excluding PPP loans, end of period (6)   6,790         6,796         7,251         7,803         7,943      
PPP interest income   2.063         0.302         0.200         NM         NM      
                                                   
Total average non-maturity deposits   8,045         8,200         8,412         8,295         8,141      
Total average deposits   9,938         9,950         10,037         9,755         9,669      
                                                   
Purchase accounting accretion   1.695         1.548         0.717         0.773         0.280      
Total average tangible equity (7)   1,118         1,151         1,160         1,155         1,163      

 

(1)Total loans include non-accruing loans.
(2)Average balances for securities available-for-sale are based on amortized cost.
(3)Average balances for borrowings includes the financing lease obligation which is presented under other liabilities on the consolidated balance sheet.
(4)The average balance for September 30, 2021 includes the Mid-Atlantic region non-interesting bearing deposits.
(5)The effect of PPP loans on the quarterly net interest margin is shown sequentially as follows beginning with the earliest quarter and ending with the most recent quarter: (0.05%, 0.00%, 0.00%, 0.00%, 0.00%) This calculation excludes gross interest income on PPP loans and average PPP loan balances.
(6)As of June 30, 2022, the PPP loan balances and interest are not considered material and will no longer be considered in adjusted metrics.
(7)See page F-9 for details on the calculation of total average tangible equity.

 

 F-6 

 

 

ASSET QUALITY ANALYSIS - UNAUDITED - (F-7)

 

 

   Sept. 30,   Dec. 31,   March 31,   June 30,   Sept. 30, 
(in thousands)  2021   2021   2022   2022   2022 
NON-PERFORMING ASSETS                         
Non-accruing loans:                         
Commercial real estate  $14,845   $13,954   $8,984   $8,277   $2,976 
Commercial and industrial loans   7,140    6,747    5,618    4,891    21,008 
Residential mortgages   9,763    9,825    11,079    10,331    10,407 
Consumer loans   5,399    4,800    4,000    3,385    3,463 
Total non-accruing loans   37,147    35,326    29,681    26,884    37,854 
Other real estate owned   -    -    -    -    - 
Repossessed assets   1,664    1,736    2,004    2,004    2,175 
Total non-performing assets  $38,811   $37,062   $31,685   $28,888   $40,029 
                          
Total non-accruing loans/total loans   0.54%   0.52%   0.41%   0.34%   0.48%
Total non-accruing loans/total loans excluding PPP loans   0.55%   0.52%   0.42%   0.38%   0.54%
Total non-performing assets/total assets   0.33%   0.32%   0.26%   0.25%   0.35%
                          
PROVISION AND ALLOWANCE FOR CREDIT LOSSES ON LOANS                           
Balance at beginning of period  $119,044   $112,916   $106,094   $99,475   $99,021 
Charged-off loans   (4,334)   (7,976)   (6,048)   (1,593)   (7,424)
Recoveries on charged-off loans   2,206    4,154    3,429    1,139    1,416 
Net loans charged-off   (2,128)   (3,822)   (2,619)   (454)   (6,008)
Provision (benefit)/expense for loan credit losses   (4,000)   (3,000)   (4,000)   -    3,000 
Balance at end of period  $112,916   $106,094   $99,475   $99,021   $96,013 
                          
Allowance for credit losses/total loans   1.65%   1.55%   1.37%   1.27%   1.21%
Allowance for credit losses/total loans excluding PPP loans   1.66%   1.56%   1.37%   1.27%   1.21%
Allowance for credit losses/non-accruing loans   304%   300%   335%   368%   254%
                          
NET LOAN CHARGE-OFFS                         
Commercial real estate  $(1,391)  $(2,208)  $(3,280)  $(76)  $(854)
Commercial and industrial loans   110    (1,649)   653    (237)   (4,931)
Residential mortgages   (677)   (2)   (50)   (30)   122 
Home equity   106    106    135    33    1 
Auto and other consumer   (276)   (69)   (77)   (144)   (346)
Total, net  $(2,128)  $(3,822)  $(2,619)  $(454)  $(6,008)
                          
Net charge-offs (QTD annualized)/average loans   0.12%   0.23%   0.15%   0.02%   0.30%
Net charge-offs (YTD annualized)/average loans   0.30%   0.29%   0.15%   0.08%   0.16%

 

 F-7 

 

 

ASSET QUALITY ANALYSIS - UNAUDITED (F-8)

 

   September 30, 2021   December 31, 2021   March 31, 2022   June 30, 2022   September 30, 2022 
(in thousands)  Balance   Percent of
Total Loans		   Balance   Percent of
Total Loans		   Balance   Percent of
Total Loans		   Balance   Percent of
Total Loans		   Balance   Percent of
Total Loans		 
30-89 Days delinquent  $18,365    0.27%  $39,863    0.58%  $13,517    0.19%  $36,184    0.46%  $14,662    0.18%
90+ Days delinquent and still accruing   3,803    0.06%   3,270    0.05%   6,613    0.09%   6,760    0.09%   6,285    0.08%
Total accruing delinquent loans   22,168    0.33%   43,133    0.63%   20,130    0.28%   42,944    0.55%   20,947    0.26%
Non-accruing loans   37,147    0.54%   35,326    0.52%   29,681    0.41%   26,884    0.34%   37,854    0.48%
Total delinquent and non-accruing loans  $59,315    0.87%  $78,459    1.15%  $49,811    0.69%  $69,828    0.89%  $58,801    0.74%

 

F-8

 

 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA- UNAUDITED - (F-9)

 

      Sept. 30,   Dec. 31,   March 31,   June 30,   Sept. 30, 
(in thousands)     2021   2021   2022   2022   2022 
Total revenue  (A)  $145,003   $90,721   $89,744   $97,709   $108,335 
Adj: Net securities losses (1)      166    106    745    973    476 
Adj: Net (gains) on sale of business operations and assets      (51,885)   (1,057)   -    -    - 
Total adjusted revenue (2)  (B)  $93,284   $89,770   $90,489   $98,682   $108,811 
                             
Total non-interest expense  (C)  $69,460   $69,407   $68,550   $68,475   $81,677 
Less: Merger, restructuring and other expense      (1,425)   (864)   (18)   (35)   (11,473)
Adjusted non-interest expense (2)    (D)  $68,035   $68,543   $68,532   $68,440   $70,204 
                             
Pre-tax, pre-provision net revenue (PPNR)  (A-C)  $75,543   $21,314   $21,194   $29,234   $26,658 
Adjusted pre-tax, pre-provision net revenue (PPNR)  (B-D)   25,249    21,227    21,957    30,242    38,607 
                             
Net income     $63,749   $20,248   $20,196   $23,115   $18,717 
Adj: Net securities losses (1)      166    106    745    973    476 
Adj: Net (gains) on sale of business operations and assets      (51,885)   (1,057)   -    -    - 
Adj: Restructuring expense and other expense      1,425    864    18    35    11,473 
Adj: Income taxes (expense)/benefit      12,240    11    (170)   (561)   (2,738)
Total adjusted income (2)  (E)  $25,695   $20,172   $20,789   $23,562   $27,928 
                             
(in millions, except per share data)                            
Total average assets  (F)  $11,925   $11,427   $11,493   $11,260   $11,315 
Total average shareholders' equity  (G)   1,149    1,181    1,189    1,182    1,189 
Total average tangible shareholders' equity (2)(3)  (H)   1,118    1,151    1,160    1,155    1,164 
Total average tangible common shareholders' equity (2)(3)  (I)   1,118    1,151    1,160    1,155    1,164 
Total tangible shareholders' equity, period-end (2)(3)  (J)   1,147    1,153    1,066    987    917 
Total tangible common shareholders' equity, period-end (2)(3)  (K)   1,147    1,153    1,066    987    917 
Total tangible assets, period-end (2)(3)  (L)   11,815    11,525    12,069    11,552    11,291 
                             
Total common shares outstanding, period-end (thousands)   (M)   48,657    48,667    47,792    45,788    45,040 
Average diluted shares outstanding (thousands)  (N)   48,744    48,340    48,067    46,102    45,034 
                             
GAAP earnings per common share, diluted (2)     $1.31   $0.42   $0.42   $0.50   $0.42 
Adjusted earnings per common share, diluted (2)  (E/N)   0.53    0.42    0.43    0.51    0.62 
Tangible book value per common share, period-end (2)  (K/M)   23.58    23.69    22.30    21.56    20.36 
Total tangible shareholders' equity/total tangible assets (2)  (J/L)   9.71    10.00    8.83    8.54    8.12 
                             
Performance ratios (4)                            
GAAP return on equity      22.18%   6.86%   6.79    7.82%   6.30%
Adjusted return on equity (2)  (E/G)   8.94    6.83    6.99    7.97    9.40 
Return on tangible common equity (2)(5)      23.14    7.37    7.29    8.33    6.76 
Adjusted return on tangible common equity (2)(5)  (E+Q)/(I)   9.53    7.34    7.49    8.48    9.92 
GAAP return on assets      2.14    0.71    0.70    0.82    0.66 
Adjusted return on assets (2)      0.86    0.71    0.72    0.84    0.99 
PPNR from continuing operations/assets (2)      2.53    0.75    0.74    1.04    0.94 
Adjusted PPNR/assets (2)      0.85    0.74    0.76    1.07    1.36 
Efficiency ratio (2)(6)     (D-Q)/(B+O+R)   68.76    71.98    72.61    66.60    62.01 
Net interest margin, FTE      2.56    2.60    2.61    3.11    3.48 
                             
Supplementary data (in thousands)                            
Tax benefit on tax-credit investments (7)  (O)  $2,195   $2,057   $596   $595   $620 
Non-interest income charge on tax-credit investments (8)  (P)   (1,789)   (1,448)   (357)   (351)   (445)
Net income on tax-credit investments  (O+P)   406    609    239    244    175 
                             
Intangible amortization  (Q)  $1,296   $1,288   $1,286   $1,286   $1,285 
Fully taxable equivalent income adjustment  (R)   1,586    1,604    1,524    1,560    1,715 

 

(1)Net securities losses/(gains) include the change in fair value of the Company's equity securities in compliance with the Company's adoption of ASU 2016-01.
(2)Non-GAAP financial measure.
(3)Total tangible shareholders' equity is computed by taking total shareholders' equity less the intangible assets at period-end. Total tangible assets is computed by taking intangible assets at period-end.
(4)Ratios are annualized and based on average balance sheet amounts, where applicable. Quarterly data may not sum to year-to-date data due to rounding.
(5)Adjusted return on tangible equity is computed by dividing the total adjusted income adjusted for the tax-effected amortization of intangible assets, assuming a 27% marginal rate, by tangible equity.
(6)Efficiency ratio is computed by dividing total adjusted tangible non-interest expense by the sum of total net interest income on a fully taxable equivalent basis and total adjusted  non-interest income adjusted to include tax credit benefit of tax shelter investments.  The Company uses this non-GAAP measure to provide important information regarding its operational efficiency.
(7)The tax benefit is the direct reduction to the income tax provision due to tax credits and deductions generated from investments in historic  rehabilitation and low-income housing.
(8)The non-interest income charge is the reduction to the tax-advantaged investments, which are incurred as the tax credits are generated.

 

F-9

 

 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARY DATA- UNAUDITED - (F-10)

 

      At or for the Nine Months Ended 
      Sept. 30,   Sept. 30, 
(in thousands)     2021   2022 
Total revenue  (A)  $343,693   $295,788 
Adj: Net securities losses (1)      681    2,194 
Adj: Net (gains) on sale of business operations and assets      (51,885)   - 
Total adjusted revenue (2)  (B)  $292,489   $297,982 
              
Total non-interest expense  (C)  $216,486   $218,702 
Less: Merger, restructuring and other expense      (4,917)   (11,526)
Adjusted non-interest expense (2)    (D)  $211,569   $207,176 
              
Pre-tax, pre-provision net revenue (PPNR)  (A-C)  $127,207   $77,086 
Adjusted pre-tax, pre-provision net revenue (PPNR)  (B-D)   80,920    90,806 
              
Net income     $98,416   $62,028 
Adj: Net securities losses (1)      681    2,194 
Adj: Net (gains) on sale of business operations and assets      (51,885)   - 
Adj: Restructuring expense and other expense      4,917    11,526 
Adj: Income taxes benefit/(expense)      11,685    (3,469)
Total adjusted income/(loss) (2)  (E)  $63,814   $72,279 
              
(in millions, except per share data)             
Total average assets  (F)  $12,268   $11,355 
Total average shareholders' equity  (G)   1,161    1,187 
Total average tangible shareholders' equity (2)(3)  (H)   1,128    1,159 
Total average tangible common shareholders' equity (2)(3)  (I)   1,128    1,159 
Total tangible shareholders' equity, period-end (2)(3)  (J)   1,147    917 
Total tangible common shareholders' equity, period-end (2)(3)  (K)   1,147    917 
Total tangible assets, period-end (2)(3)  (L)   11,815    11,291 
              
Total common shares outstanding, period-end (thousands)                 (M)   48,657    45,040 
Average diluted shares outstanding (thousands)  (N)   49,963    46,396 
              
GAAP earnings/(loss) per common share, diluted (2)     $1.97   $1.34 
Adjusted earnings per common share, diluted (2)  (E/N)   1.28    1.56 
Tangible book value per common share, period-end (2)  (K/M)   23.58    20.36 
Total tangible shareholders' equity/total tangible assets (2)  (J/L)   9.71    8.12 
              
Performance ratios (4)             
GAAP return on equity      11.30%   6.97%
Adjusted return on equity (2)  (E/G)   7.33    8.12 
Return on tangible common equity (2)(5)      11.97    7.46 
Adjusted return on tangible common equity (2)(5)  (E+Q)/(I)   7.88    8.64 
GAAP return on assets      1.07    0.73 
Adjusted return on assets (2)      0.69    0.85 
PPNR from continuing operations/assets (2)      1.38    0.91 
Adjusted PPNR/assets (2)      0.88    1.07 
Efficiency ratio (2)(6)     (D-Q)/(B+O+R)   69.32    66.75 
Net interest margin, FTE      2.60    3.05 
              
Supplementary data (in thousands)             
Tax benefit on tax-credit investments (7)  (O)  $2,315   $1,811 
Non-interest income charge on tax-credit investments (8)  (P)   (1,996)   (1,153)
Net income on tax-credit investments  (O+P)   319    658 
              
Intangible amortization  (Q)  $3,912   $3,857 
Fully taxable equivalent income adjustment  (R)   4,739    4,799 

 

(1) Net securities losses include the change in fair value of the Company's equity securities in compliance with the Company's adoption of ASU 2016-01.
(2) Non-GAAP financial measure.
(3) Total tangible shareholders' equity is computed by taking total shareholders' equity less the intangible assets at period-end. Total tangible assets is computed by taking intangible assets at period-end.  
(4) Ratios are annualized and based on average balance sheet amounts, where applicable. Quarterly data may not sum to year-to-date data due to rounding.
(5) Adjusted return on tangible equity is computed by dividing the total adjusted income adjusted for the tax-effected amortization of intangible assets, assuming a 27% marginal rate, by tangible equity.
(6) Efficiency ratio is computed by dividing total adjusted tangible non-interest expense by the sum of total net interest income on a fully taxable equivalent basis and total adjusted non-interest income adjusted to include tax credit benefit of tax shelter investments. The Company uses this non-GAAP measure to provide important information regarding its operational efficiency.
(7) The tax benefit is the direct reduction to the income tax provision due to tax credits and deductions generated from investments in historic  rehabilitation and low-income housing.
(8) The non-interest income charge is the reduction to the tax-advantaged investments, which are incurred as the tax credits are generated.

 

F-10