[X] | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2017. | |
[ ] | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ______ to ______ | |
Commission file number 001-15373 |
Large accelerated filer [ ] | Accelerated filer [X] |
Non-accelerated filer [ ] (Do not check if a smaller reporting company) | Smaller reporting company [ ] |
Page | ||
PART I - FINANCIAL INFORMATION | ||
Item 1. Financial Statements | ||
Condensed Consolidated Balance Sheets (Unaudited) | ||
Condensed Consolidated Statements of Operations (Unaudited) | ||
Condensed Consolidated Statements of Comprehensive Income (Unaudited) | ||
Condensed Consolidated Statements of Shareholders' Equity (Unaudited) | ||
Condensed Consolidated Statements of Cash Flows (Unaudited) | ||
Notes to Condensed Consolidated Financial Statements (Unaudited) | ||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | ||
Item 3. Quantitative and Qualitative Disclosures About Market Risk | ||
Item 4. Controls and Procedures | ||
PART II - OTHER INFORMATION | ||
Item 1. Legal Proceedings | ||
Item 1A. Risk Factors | ||
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | ||
Item 5. Other Information | ||
Item 6. Exhibits | ||
Signatures | ||
(in thousands, except share and per share data) | September 30, 2017 | December 31, 2016 | |||||
Assets | |||||||
Cash and due from banks | $ | 76,777 | $ | 54,288 | |||
Federal funds sold | 1,155 | 446 | |||||
Interest-bearing deposits (including $2,949 and $675 pledged as collateral) | 105,176 | 144,068 | |||||
Total cash and cash equivalents | 183,108 | 198,802 | |||||
Interest-bearing deposits greater than 90 days | 2,645 | 980 | |||||
Securities available for sale | 603,121 | 460,797 | |||||
Securities held to maturity | 76,168 | 80,463 | |||||
Loans held for sale | 6,411 | 9,562 | |||||
Loans | 4,030,658 | 3,158,161 | |||||
Less: Allowance for loan losses | 43,191 | 43,409 | |||||
Total loans, net | 3,987,467 | 3,114,752 | |||||
Other real estate | 491 | 980 | |||||
Other investments, at cost | 29,436 | 14,840 | |||||
Fixed assets, net | 32,803 | 14,910 | |||||
Accrued interest receivable | 14,213 | 11,117 | |||||
State tax credits held for sale (including $1,274 and $3,585 carried at fair value) | 35,291 | 38,071 | |||||
Goodwill | 117,345 | 30,334 | |||||
Intangible assets, net | 11,745 | 2,151 | |||||
Other assets | 131,244 | 103,569 | |||||
Total assets | $ | 5,231,488 | $ | 4,081,328 | |||
Liabilities and Shareholders' Equity | |||||||
Demand deposits | $ | 1,047,910 | $ | 866,756 | |||
Interest-bearing transaction accounts | 814,338 | 731,539 | |||||
Money market accounts | 1,375,844 | 1,050,472 | |||||
Savings | 203,923 | 111,435 | |||||
Certificates of deposit: | |||||||
Brokered | 170,701 | 117,145 | |||||
Other | 446,495 | 356,014 | |||||
Total deposits | 4,059,211 | 3,233,361 | |||||
Subordinated debentures and notes (net of debt issuance cost of $1,169 and $1,267) | 118,093 | 105,540 | |||||
Federal Home Loan Bank advances | 248,868 | — | |||||
Other borrowings | 209,104 | 276,980 | |||||
Notes payable | 10,000 | — | |||||
Accrued interest payable | 2,007 | 1,105 | |||||
Other liabilities | 37,869 | 77,244 | |||||
Total liabilities | 4,685,152 | 3,694,230 | |||||
Shareholders' equity: | |||||||
Preferred stock, $0.01 par value; 5,000,000 shares authorized; 0 shares issued and outstanding | — | — | |||||
Common stock, $0.01 par value; 30,000,000 shares authorized; 23,754,814 and 20,306,353 shares issued | 237 | 203 | |||||
Treasury stock, at cost; 691,673 and 261,718 shares, respectively | (23,268 | ) | (6,632 | ) | |||
Additional paid in capital | 349,485 | 213,078 | |||||
Retained earnings | 220,371 | 182,190 | |||||
Accumulated other comprehensive loss | (489 | ) | (1,741 | ) | |||
Total shareholders' equity | 546,336 | 387,098 | |||||
Total liabilities and shareholders' equity | $ | 5,231,488 | $ | 4,081,328 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
(in thousands, except per share data) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Interest income: | |||||||||||||||
Interest and fees on loans | $ | 48,020 | $ | 34,442 | $ | 135,253 | $ | 101,233 | |||||||
Interest on debt securities: | |||||||||||||||
Taxable | 3,855 | 2,410 | 10,670 | 7,194 | |||||||||||
Nontaxable | 294 | 322 | 984 | 982 | |||||||||||
Interest on interest-bearing deposits | 173 | 67 | 537 | 186 | |||||||||||
Dividends on equity securities | 126 | 52 | 306 | 191 | |||||||||||
Total interest income | 52,468 | 37,293 | 147,750 | 109,786 | |||||||||||
Interest expense: | |||||||||||||||
Interest-bearing transaction accounts | 523 | 332 | 1,721 | 967 | |||||||||||
Money market accounts | 2,410 | 1,143 | 5,841 | 3,162 | |||||||||||
Savings accounts | 125 | 68 | 332 | 191 | |||||||||||
Certificates of deposit | 1,493 | 1,319 | 4,081 | 3,521 | |||||||||||
Subordinated debentures and notes | 1,316 | 369 | 3,768 | 1,078 | |||||||||||
Federal Home Loan Bank advances | 832 | 126 | 1,684 | 499 | |||||||||||
Notes payable and other borrowings | 144 | 106 | 423 | 327 | |||||||||||
Total interest expense | 6,843 | 3,463 | 17,850 | 9,745 | |||||||||||
Net interest income | 45,625 | 33,830 | 129,900 | 100,041 | |||||||||||
Provision for portfolio loan losses | 2,422 | 3,038 | 7,578 | 4,587 | |||||||||||
Provision reversal for purchased credit impaired loan losses | — | (1,194 | ) | (355 | ) | (1,603 | ) | ||||||||
Net interest income after provision for loan losses | 43,203 | 31,986 | 122,677 | 97,057 | |||||||||||
Noninterest income: | |||||||||||||||
Service charges on deposit accounts | 2,820 | 2,200 | 8,146 | 6,431 | |||||||||||
Wealth management revenue | 2,062 | 1,694 | 5,949 | 5,000 | |||||||||||
Card services revenue | 1,459 | 804 | 3,888 | 2,236 | |||||||||||
Gain (loss) on sale of other real estate | — | (226 | ) | 17 | 602 | ||||||||||
Gain on state tax credits, net | 77 | 228 | 332 | 899 | |||||||||||
Gain on sale of investment securities | 22 | 86 | 22 | 86 | |||||||||||
Miscellaneous income | 1,932 | 2,190 | 4,928 | 4,776 | |||||||||||
Total noninterest income | 8,372 | 6,976 | 23,282 | 20,030 | |||||||||||
Noninterest expense: | |||||||||||||||
Employee compensation and benefits | 15,090 | 12,091 | 46,096 | 37,398 | |||||||||||
Occupancy | 2,434 | 1,705 | 6,628 | 4,997 | |||||||||||
Data processing | 1,389 | 1,150 | 4,828 | 3,441 | |||||||||||
Professional fees | 922 | 757 | 2,838 | 2,160 | |||||||||||
FDIC and other insurance | 882 | 780 | 2,356 | 2,241 | |||||||||||
Loan legal and other real estate expense | 586 | 416 | 1,544 | 1,126 | |||||||||||
Merger related expenses | 315 | 302 | 6,462 | 302 | |||||||||||
Other | 5,786 | 3,613 | 16,039 | 11,264 | |||||||||||
Total noninterest expense | 27,404 | 20,814 | 86,791 | 62,929 | |||||||||||
Income before income tax expense | 24,171 | 18,148 | 59,168 | 54,158 | |||||||||||
Income tax expense | 7,856 | 6,316 | 18,507 | 18,949 | |||||||||||
Net income | $ | 16,315 | $ | 11,832 | $ | 40,661 | $ | 35,209 | |||||||
Earnings per common share | |||||||||||||||
Basic | $ | 0.70 | $ | 0.59 | $ | 1.77 | $ | 1.76 | |||||||
Diluted | 0.69 | 0.59 | 1.75 | 1.74 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
(in thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Net income | $ | 16,315 | $ | 11,832 | $ | 40,661 | $ | 35,209 | |||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Unrealized gains (losses) on investment securities arising during the period, net of income tax expense (benefit) for three months of $(493) and $(494), and for nine months of $775 and $2,795, respectively | (805 | ) | (796 | ) | 1,265 | 4,503 | |||||||||
Less: Reclassification adjustment for realized gains on sale of securities available for sale included in net income, net of income tax expense for three months of $8 and $33, and for nine months of $8 and $33, respectively | (13 | ) | (53 | ) | (13 | ) | (53 | ) | |||||||
Total other comprehensive income (loss) | (818 | ) | (849 | ) | 1,252 | 4,450 | |||||||||
Total comprehensive income | $ | 15,497 | $ | 10,983 | $ | 41,913 | $ | 39,659 |
(in thousands, except per share data) | Preferred Stock | Common Stock | Treasury Stock | Additional paid in capital | Retained earnings | Accumulated other comprehensive income (loss) | Total shareholders' equity | ||||||||||||||||||||
Balance December 31, 2016 | $ | — | $ | 203 | $ | (6,632 | ) | $ | 213,078 | $ | 182,190 | $ | (1,741 | ) | $ | 387,098 | |||||||||||
Net income | — | — | — | — | 40,661 | — | 40,661 | ||||||||||||||||||||
Reclassification adjustment for realized gain on sale of securities included in net income, net of tax | — | — | — | — | — | 1,252 | 1,252 | ||||||||||||||||||||
Total comprehensive income | — | — | — | — | 40,661 | 1,252 | 41,913 | ||||||||||||||||||||
Cash dividends paid on common shares, $0.33 per share | — | — | — | — | (7,709 | ) | — | (7,709 | ) | ||||||||||||||||||
Repurchase of common shares | — | — | (16,636 | ) | — | — | — | (16,636 | ) | ||||||||||||||||||
Issuance under equity compensation plans, 148,597 shares, net | — | 1 | — | (2,574 | ) | — | — | (2,573 | ) | ||||||||||||||||||
Share-based compensation | — | — | — | 2,514 | — | — | 2,514 | ||||||||||||||||||||
Shares issued in connection with acquisition of Jefferson County Bancshares, Inc. | — | 33 | — | 141,696 | — | — | 141,729 | ||||||||||||||||||||
Reclassification for the adoption of ASU 2016-09 | — | — | — | (5,229 | ) | 5,229 | — | — | |||||||||||||||||||
Balance September 30, 2017 | $ | — | $ | 237 | $ | (23,268 | ) | $ | 349,485 | $ | 220,371 | $ | (489 | ) | $ | 546,336 | |||||||||||
(in thousands, except per share data) | Preferred Stock | Common Stock | Treasury Stock | Additional paid in capital | Retained earnings | Accumulated other comprehensive income (loss) | Total shareholders' equity | ||||||||||||||||||||
Balance December 31, 2015 | $ | — | $ | 201 | $ | (1,743 | ) | $ | 210,589 | $ | 141,564 | $ | 218 | $ | 350,829 | ||||||||||||
Net income | — | — | — | — | 35,209 | — | 35,209 | ||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | 4,450 | 4,450 | ||||||||||||||||||||
Cash dividends paid on common shares, $0.30 per share | — | — | — | — | (6,005 | ) | — | (6,005 | ) | ||||||||||||||||||
Repurchase of common shares | — | — | (4,889 | ) | — | — | — | (4,889 | ) | ||||||||||||||||||
Issuance under equity compensation plans, 156,592 shares, net | — | 2 | — | (1,652 | ) | — | — | (1,650 | ) | ||||||||||||||||||
Share-based compensation | — | — | — | 2,410 | — | — | 2,410 | ||||||||||||||||||||
Excess tax benefit related to equity compensation plans | — | — | — | 744 | — | — | 744 | ||||||||||||||||||||
Balance September 30, 2016 | $ | — | $ | 203 | $ | (6,632 | ) | $ | 212,091 | $ | 170,768 | $ | 4,668 | $ | 381,098 |
Nine months ended September 30, | |||||||
(in thousands, except share data) | 2017 | 2016 | |||||
Cash flows from operating activities: | |||||||
Net income | $ | 40,661 | $ | 35,209 | |||
Adjustments to reconcile net income to net cash provided by operating activities | |||||||
Depreciation | 2,426 | 1,628 | |||||
Provision for loan losses | 7,223 | 2,984 | |||||
Deferred income taxes | 1,239 | 3,881 | |||||
Net amortization of debt securities | 2,064 | 2,350 | |||||
Amortization of intangible assets | 1,920 | 718 | |||||
Gain on sale of investment securities | (22 | ) | (86 | ) | |||
Mortgage loans originated for sale | (115,365 | ) | (117,975 | ) | |||
Proceeds from mortgage loans sold | 118,798 | 117,639 | |||||
Gain on sale of other real estate | (17 | ) | (602 | ) | |||
Gain on state tax credits, net | (332 | ) | (899 | ) | |||
Excess tax benefit of share-based compensation | — | (744 | ) | ||||
Share-based compensation | 2,514 | 2,410 | |||||
Net accretion of loan discount | (3,796 | ) | (8,165 | ) | |||
Changes in: | |||||||
Accrued interest receivable | (302 | ) | (127 | ) | |||
Accrued interest payable | 249 | 19 | |||||
Other assets | 755 | (2,100 | ) | ||||
Other liabilities | (44,398 | ) | (8,057 | ) | |||
Net cash provided by operating activities | 13,617 | 28,083 | |||||
Cash flows from investing activities: | |||||||
Proceeds from JCB acquisition, net of cash purchase price | 4,456 | — | |||||
Net increase in loans | (201,715 | ) | (256,706 | ) | |||
Proceeds from the sale of securities, available for sale | 144,076 | 2,493 | |||||
Proceeds from the paydown or maturity of securities, available for sale | 126,073 | 46,017 | |||||
Proceeds from the paydown or maturity of securities, held to maturity | 4,145 | 2,592 | |||||
Proceeds from the redemption of other investments | 29,159 | 44,968 | |||||
Proceeds from the sale of state tax credits held for sale | 4,391 | 4,918 | |||||
Proceeds from the sale of other real estate | 2,513 | 8,072 | |||||
Payments for the purchase/origination of: | |||||||
Available for sale debt and equity securities | (263,453 | ) | (71,309 | ) | |||
Other investments | (45,224 | ) | (48,283 | ) | |||
State tax credits held for sale | (145 | ) | (2,349 | ) | |||
Fixed assets | (1,864 | ) | (1,284 | ) | |||
Net cash used in investing activities | (197,588 | ) | (270,871 | ) | |||
Cash flows from financing activities: | |||||||
Net increase in noninterest-bearing deposit accounts | 20,684 | 44,695 | |||||
Net increase in interest-bearing deposit accounts | 39,998 | 295,539 | |||||
Proceeds from Federal Home Loan Bank advances | 1,394,181 | 1,309,000 | |||||
Repayments of Federal Home Loan Bank advances | (1,145,681 | ) | (1,290,000 | ) | |||
Proceeds from notes payable | 10,000 | — | |||||
Net decrease in other borrowings | (123,987 | ) | (80,304 | ) | |||
Cash dividends paid on common stock | (7,709 | ) | (6,005 | ) | |||
Excess tax benefit of share-based compensation | — | 744 | |||||
Payments for the repurchase of common stock | (16,636 | ) | (4,889 | ) | |||
Issuance of common stock, net | (2,573 | ) | (1,650 | ) | |||
Net cash provided by financing activities | 168,277 | 267,130 | |||||
Net increase (decrease) in cash and cash equivalents | (15,694 | ) | 24,342 | ||||
Cash and cash equivalents, beginning of period | 198,802 | 94,157 | |||||
Cash and cash equivalents, end of period | $ | 183,108 | $ | 118,499 | |||
Supplemental disclosures of cash flow information: | |||||||
Cash paid during the period for: | |||||||
Interest | $ | 16,948 | $ | 9,726 | |||
Income taxes | 9,382 | 19,868 | |||||
Noncash transactions: | |||||||
Transfer to other real estate owned in settlement of loans | $ | 289 | $ | 2,683 | |||
Sales of other real estate financed | — | 140 | |||||
Common shares issued in connection with JCB acquisition | 141,729 | — |
(in thousands) | As Recorded by JCB | Adjustments | As Recorded by EFSC | ||||||||
Assets acquired: | |||||||||||
Cash and cash equivalents | $ | 33,739 | $ | — | $ | 33,739 | |||||
Interest-bearing deposits | 1,715 | — | 1,715 | ||||||||
Securities | 148,670 | — | 148,670 | ||||||||
Portfolio loans, net | 685,905 | (11,094 | ) | (a) | 674,811 | ||||||
Other real estate owned | 6,762 | (5,082 | ) | (b) | 1,680 | ||||||
Other investments | 2,695 | — | 2,695 | ||||||||
Fixed assets, net | 21,780 | (3,325 | ) | (c) | 18,455 | ||||||
Accrued interest receivable | 2,794 | — | 2,794 | ||||||||
Goodwill | 7,806 | (7,806 | ) | (d) | — | ||||||
Other intangible assets | 25 | 11,489 | (e) | 11,514 | |||||||
Deferred tax assets | 4,634 | 3,991 | (f) | 8,625 | |||||||
Other assets | 19,107 | (296 | ) | (g) | 18,811 | ||||||
Total assets acquired | $ | 935,632 | $ | (12,123 | ) | $ | 923,509 | ||||
Liabilities assumed: | |||||||||||
Deposits | $ | 764,539 | $ | 629 | (h) | $ | 765,168 | ||||
Other borrowings | 55,430 | 681 | (i) | 56,111 | |||||||
Trust preferred securities | 12,887 | (382 | ) | (j) | 12,505 | ||||||
Accrued interest payable | 653 | — | 653 | ||||||||
Other liabilities | 5,006 | 65 | (k) | 5,071 | |||||||
Total liabilities assumed | $ | 838,515 | $ | 993 | $ | 839,508 | |||||
Net assets acquired | $ | 97,117 | $ | (13,116 | ) | $ | 84,001 | ||||
Consideration paid: | |||||||||||
Cash | $ | 29,283 | |||||||||
Common stock | 141,729 | ||||||||||
Total consideration paid | $ | 171,012 | |||||||||
Goodwill | $ | 87,011 |
(a) | Fair value adjustments based on the Company’s evaluation of the acquired loan portfolio, write-off of net deferred loan costs, reclassification from other real estate owned, and elimination of the allowance for loan losses recorded by JCB. The fair value discount recorded to the loan portfolio is $24.7 million. |
(b) | Fair value adjustment based on the Company’s evaluation of the acquired other real estate portfolio, and reclassification to portfolio loans. |
(c) | Fair value adjustments based on the Company’s evaluation of the acquired premises and equipment. A decrease of $1.1 million was recorded during the third quarter of 2017 due to continued refinement of the purchase accounting calculations. |
(d) | Eliminate JCB’s recorded goodwill. |
(e) | Record the core deposit intangible asset on the acquired core deposit accounts. Amount to be amortized using a sum of years digits method over a 10 year useful life. |
(f) | Adjustment for deferred taxes at the acquisition date. The adjustment decreased by $0.2 million during the current quarter due to continued refinement of the purchase accounting calculations. |
(g) | Fair value adjustment based on evaluation of other assets. |
(h) | Fair value adjustment to time deposits based on current interest rates. |
(i) | Fair value adjustment to the FHLB advances based on current interest rates. |
(j) | Fair value adjustment based on the Company's evaluation of the trust preferred securities. |
(k) | A decrease of $0.1 million was recorded during the current quarter due to further refinement of the purchase accounting calculations. |
Pro Forma | |||||||
Nine months ended September 30, | |||||||
(in thousands, except per share data) | 2017 | 2016 | |||||
Total revenues (net interest income plus noninterest income) | $ | 155,907 | $ | 146,623 | |||
Net income | 40,151 | 42,298 | |||||
Diluted earnings per common share | 1.70 | 1.80 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
(in thousands, except per share data) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Net income as reported | $ | 16,315 | $ | 11,832 | $ | 40,661 | $ | 35,209 | |||||||
Weighted average common shares outstanding | 23,324 | 19,997 | 22,914 | 20,002 | |||||||||||
Additional dilutive common stock equivalents | 250 | 227 | 295 | 229 | |||||||||||
Weighted average diluted common shares outstanding | 23,574 | 20,224 | 23,209 | 20,231 | |||||||||||
Basic earnings per common share: | $ | 0.70 | $ | 0.59 | $ | 1.77 | $ | 1.76 | |||||||
Diluted earnings per common share: | $ | 0.69 | $ | 0.59 | $ | 1.75 | $ | 1.74 |
September 30, 2017 | |||||||||||||||
(in thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||
Available for sale securities: | |||||||||||||||
Obligations of U.S. Government-sponsored enterprises | $ | 99,866 | $ | 271 | $ | (14 | ) | $ | 100,123 | ||||||
Obligations of states and political subdivisions | 32,684 | 887 | (229 | ) | 33,342 | ||||||||||
Agency mortgage-backed securities | 470,941 | 1,760 | (3,045 | ) | 469,656 | ||||||||||
Total securities available for sale | $ | 603,491 | $ | 2,918 | $ | (3,288 | ) | $ | 603,121 | ||||||
Held to maturity securities: | |||||||||||||||
Obligations of states and political subdivisions | $ | 14,704 | $ | 159 | $ | (15 | ) | $ | 14,848 | ||||||
Agency mortgage-backed securities | 61,464 | 93 | (145 | ) | 61,412 | ||||||||||
Total securities held to maturity | $ | 76,168 | $ | 252 | $ | (160 | ) | $ | 76,260 |
December 31, 2016 | |||||||||||||||
(in thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||
Available for sale securities: | |||||||||||||||
Obligations of U.S. Government-sponsored enterprises | $ | 107,312 | $ | 348 | $ | — | $ | 107,660 | |||||||
Obligations of states and political subdivisions | 36,486 | 630 | (485 | ) | 36,631 | ||||||||||
Agency mortgage-backed securities | 319,345 | 1,101 | (3,940 | ) | 316,506 | ||||||||||
Total securities available for sale | $ | 463,143 | $ | 2,079 | $ | (4,425 | ) | $ | 460,797 | ||||||
Held to maturity securities: | |||||||||||||||
Obligations of states and political subdivisions | $ | 14,759 | $ | 11 | $ | (242 | ) | $ | 14,528 | ||||||
Agency mortgage-backed securities | 65,704 | 45 | (638 | ) | 65,111 | ||||||||||
Total securities held to maturity | $ | 80,463 | $ | 56 | $ | (880 | ) | $ | 79,639 |
Available for sale | Held to maturity | ||||||||||||||
(in thousands) | Amortized Cost | Estimated Fair Value | Amortized Cost | Estimated Fair Value | |||||||||||
Due in one year or less | $ | 2,940 | $ | 2,960 | $ | — | $ | — | |||||||
Due after one year through five years | 110,538 | 111,122 | 184 | 194 | |||||||||||
Due after five years through ten years | 15,710 | 16,241 | 12,996 | 13,126 | |||||||||||
Due after ten years | 3,362 | 3,142 | 1,524 | 1,528 | |||||||||||
Agency mortgage-backed securities | 470,941 | 469,656 | 61,464 | 61,412 | |||||||||||
$ | 603,491 | $ | 603,121 | $ | 76,168 | $ | 76,260 |
September 30, 2017 | |||||||||||||||||||||||
Less than 12 months | 12 months or more | Total | |||||||||||||||||||||
(in thousands) | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||
Obligations of U.S. Government-sponsored enterprises | $ | 10,127 | $ | 14 | $ | — | $ | — | $ | 10,127 | $ | 14 | |||||||||||
Obligations of states and political subdivisions | 4,907 | 244 | — | — | 4,907 | 244 | |||||||||||||||||
Agency mortgage-backed securities | 332,037 | 2,721 | 11,307 | 469 | 343,344 | 3,190 | |||||||||||||||||
$ | 347,071 | $ | 2,979 | $ | 11,307 | $ | 469 | $ | 358,378 | $ | 3,448 | ||||||||||||
December 31, 2016 | |||||||||||||||||||||||
Less than 12 months | 12 months or more | Total | |||||||||||||||||||||
(in thousands) | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||
Obligations of states and political subdivisions | $ | 21,361 | $ | 408 | $ | 3,553 | $ | 320 | $ | 24,914 | $ | 728 | |||||||||||
Agency mortgage-backed securities | 267,734 | 4,084 | 12,883 | 493 | 280,617 | 4,577 | |||||||||||||||||
$ | 289,095 | $ | 4,492 | $ | 16,436 | $ | 813 | $ | 305,531 | $ | 5,305 |
(in thousands) | September 30, 2017 | December 31, 2016 | |||||
Loans not accounted for as ASC 310-30 | $ | 3,948,676 | $ | 3,118,392 | |||
Loans accounted for as ASC 310-30 | 81,982 | 39,769 | |||||
Total loans | $ | 4,030,658 | $ | 3,158,161 |
(in thousands) | September 30, 2017 | December 31, 2016 | |||||
Commercial and industrial | $ | 1,861,285 | $ | 1,632,714 | |||
Real estate: | |||||||
Commercial - investor owned | 737,986 | 544,808 | |||||
Commercial - owner occupied | 553,512 | 350,148 | |||||
Construction and land development | 302,182 | 194,542 | |||||
Residential | 339,377 | 240,760 | |||||
Total real estate loans | 1,933,057 | 1,330,258 | |||||
Consumer and other | 155,514 | 156,182 | |||||
Loans, before unearned loan fees | 3,949,856 | 3,119,154 | |||||
Unearned loan fees, net | (1,180 | ) | (762 | ) | |||
Loans, including unearned loan fees | $ | 3,948,676 | $ | 3,118,392 |
(in thousands) | Commercial and industrial | CRE - investor owned | CRE - owner occupied | Construction and land development | Residential real estate | Consumer and other | Total | ||||||||||||||||||||
Allowance for loan losses: | |||||||||||||||||||||||||||
Balance at December 31, 2016 | $ | 26,996 | $ | 3,420 | $ | 2,890 | $ | 1,304 | $ | 2,023 | $ | 932 | $ | 37,565 | |||||||||||||
Provision (provision reversal) for loan losses | 1,835 | (105 | ) | (249 | ) | (11 | ) | (3 | ) | 66 | 1,533 | ||||||||||||||||
Losses charged off | (133 | ) | — | — | — | (9 | ) | (29 | ) | (171 | ) | ||||||||||||||||
Recoveries | 80 | 9 | 89 | 9 | 25 | 9 | 221 | ||||||||||||||||||||
Balance at March 31, 2017 | $ | 28,778 | $ | 3,324 | $ | 2,730 | $ | 1,302 | $ | 2,036 | $ | 978 | $ | 39,148 | |||||||||||||
Provision (provision reversal) for loan losses | 2,955 | (39 | ) | 354 | (51 | ) | 451 | (47 | ) | 3,623 | |||||||||||||||||
Losses charged off | (6,035 | ) | — | (45 | ) | (5 | ) | (265 | ) | (39 | ) | (6,389 | ) | ||||||||||||||
Recoveries | 57 | 102 | 1 | 49 | 62 | 20 | 291 | ||||||||||||||||||||
Balance at June 30, 2017 | $ | 25,755 | $ | 3,387 | $ | 3,040 | $ | 1,295 | $ | 2,284 | $ | 912 | $ | 36,673 | |||||||||||||
Provision (provision reversal) for loan losses | 1,126 | 376 | 245 | 305 | 299 | 71 | 2,422 | ||||||||||||||||||||
Losses charged off | (613 | ) | — | (45 | ) | — | (503 | ) | (75 | ) | (1,236 | ) | |||||||||||||||
Recoveries | 205 | 12 | 6 | 25 | 172 | 13 | 433 | ||||||||||||||||||||
Balance at September 30, 2017 | $ | 26,473 | $ | 3,775 | $ | 3,246 | $ | 1,625 | $ | 2,252 | $ | 921 | $ | 38,292 |
(in thousands) | Commercial and industrial | CRE - investor owned | CRE - owner occupied | Construction and land development | Residential real estate | Consumer and other | Total | ||||||||||||||||||||
Balance September 30, 2017 | |||||||||||||||||||||||||||
Allowance for loan losses - Ending balance: | |||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 2,063 | $ | 120 | $ | — | $ | 186 | $ | 48 | $ | — | $ | 2,417 | |||||||||||||
Collectively evaluated for impairment | 24,410 | 3,655 | 3,246 | 1,439 | 2,204 | 921 | 35,875 | ||||||||||||||||||||
Total | $ | 26,473 | $ | 3,775 | $ | 3,246 | $ | 1,625 | $ | 2,252 | $ | 921 | $ | 38,292 | |||||||||||||
Loans - Ending balance: | |||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 7,646 | $ | 544 | $ | 1,513 | $ | 323 | $ | 667 | $ | — | $ | 10,693 | |||||||||||||
Collectively evaluated for impairment | 1,853,639 | 737,442 | 551,999 | 301,859 | 338,710 | 154,334 | 3,937,983 | ||||||||||||||||||||
Total | $ | 1,861,285 | $ | 737,986 | $ | 553,512 | $ | 302,182 | $ | 339,377 | $ | 154,334 | $ | 3,948,676 | |||||||||||||
Balance December 31, 2016 | |||||||||||||||||||||||||||
Allowance for loan losses - Ending balance: | |||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 2,909 | $ | — | $ | — | $ | 155 | $ | — | $ | — | $ | 3,064 | |||||||||||||
Collectively evaluated for impairment | 24,087 | 3,420 | 2,890 | 1,149 | 2,023 | 932 | 34,501 | ||||||||||||||||||||
Total | $ | 26,996 | $ | 3,420 | $ | 2,890 | $ | 1,304 | $ | 2,023 | $ | 932 | $ | 37,565 | |||||||||||||
Loans - Ending balance: | |||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 12,523 | $ | 430 | $ | 1,854 | $ | 1,903 | $ | 62 | $ | — | $ | 16,772 | |||||||||||||
Collectively evaluated for impairment | 1,620,191 | 544,378 | 348,294 | 192,639 | 240,698 | 155,420 | 3,101,620 | ||||||||||||||||||||
Total | $ | 1,632,714 | $ | 544,808 | $ | 350,148 | $ | 194,542 | $ | 240,760 | $ | 155,420 | $ | 3,118,392 |
September 30, 2017 | |||||||||||||||||||||||
(in thousands) | Unpaid Contractual Principal Balance | Recorded Investment With No Allowance | Recorded Investment With Allowance | Total Recorded Investment | Related Allowance | Average Recorded Investment | |||||||||||||||||
Commercial and industrial | $ | 13,981 | $ | 6,407 | $ | 1,044 | $ | 7,451 | $ | 2,020 | $ | 11,735 | |||||||||||
Real estate: | |||||||||||||||||||||||
Commercial - investor owned | 562 | 259 | 285 | 544 | 120 | 542 | |||||||||||||||||
Commercial - owner occupied | — | — | — | — | — | — | |||||||||||||||||
Construction and land development | 444 | 322 | — | 322 | 186 | 337 | |||||||||||||||||
Residential | 673 | 668 | — | 668 | 48 | 676 | |||||||||||||||||
Consumer and other | — | — | — | — | — | — | |||||||||||||||||
Total | $ | 15,660 | $ | 7,656 | $ | 1,329 | $ | 8,985 | $ | 2,374 | $ | 13,290 |
December 31, 2016 | |||||||||||||||||||||||
(in thousands) | Unpaid Contractual Principal Balance | Recorded Investment With No Allowance | Recorded Investment With Allowance | Total Recorded Investment | Related Allowance | Average Recorded Investment | |||||||||||||||||
Commercial and industrial | $ | 12,341 | $ | 566 | $ | 11,791 | $ | 12,357 | $ | 2,909 | $ | 4,489 | |||||||||||
Real estate: | |||||||||||||||||||||||
Commercial - investor owned | 525 | 435 | — | 435 | — | 668 | |||||||||||||||||
Commercial - owner occupied | 225 | 231 | — | 231 | — | 227 | |||||||||||||||||
Construction and land development | 1,904 | 1,947 | 359 | 2,306 | 155 | 1,918 | |||||||||||||||||
Residential | 62 | 62 | — | 62 | — | 64 | |||||||||||||||||
Consumer and other | — | — | — | — | — | — | |||||||||||||||||
Total | $ | 15,057 | $ | 3,241 | $ | 12,150 | $ | 15,391 | $ | 3,064 | $ | 7,366 |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
(in thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Total interest income that would have been recognized under original terms | $ | 306 | $ | 226 | $ | 961 | $ | 703 | |||||||
Total cash received and recognized as interest income on non-accrual loans | 117 | 203 | 156 | 253 | |||||||||||
Total interest income recognized on accruing, impaired loans | 8 | 32 | 55 | 63 |
September 30, 2017 | |||||||||||
(in thousands) | Non-accrual | Restructured, not on non-accrual | Total | ||||||||
Commercial and industrial | $ | 6,730 | $ | 721 | $ | 7,451 | |||||
Real estate: | |||||||||||
Commercial - investor owned | 544 | — | 544 | ||||||||
Commercial - owner occupied | — | — | — | ||||||||
Construction and land development | 322 | — | 322 | ||||||||
Residential | 668 | — | 668 | ||||||||
Consumer and other | — | — | — | ||||||||
Total | $ | 8,264 | $ | 721 | $ | 8,985 |
December 31, 2016 | |||||||||||
(in thousands) | Non-accrual | Restructured, not on non-accrual | Total | ||||||||
Commercial and industrial | $ | 10,046 | $ | 2,311 | $ | 12,357 | |||||
Real estate: | |||||||||||
Commercial - investor owned | 435 | — | 435 | ||||||||
Commercial - owner occupied | 231 | — | 231 | ||||||||
Construction and land development | 2,286 | 20 | 2,306 | ||||||||
Residential | 62 | — | 62 | ||||||||
Consumer and other | — | — | — | ||||||||
Total | $ | 13,060 | $ | 2,331 | $ | 15,391 |
Nine months ended September 30, 2017 | Nine months ended September 30, 2016 | ||||||||||||||||||||
(in thousands, except for number of loans) | Number of loans | Pre-Modification Outstanding Recorded Balance | Post-Modification Outstanding Recorded Balance | Number of loans | Pre-Modification Outstanding Recorded Balance | Post-Modification Outstanding Recorded Balance | |||||||||||||||
Commercial and industrial | 1 | $ | 676 | $ | 676 | 2 | $ | 2,341 | $ | 2,341 | |||||||||||
Real estate: | |||||||||||||||||||||
Commercial - investor owned | — | — | — | 1 | 248 | 248 | |||||||||||||||
Commercial - owner occupied | — | — | — | — | — | — | |||||||||||||||
Construction and land development | — | — | — | 1 | 20 | 20 | |||||||||||||||
Residential | — | — | — | — | — | — | |||||||||||||||
Consumer and other | — | — | — | — | — | — | |||||||||||||||
Total | 1 | $ | 676 | $ | 676 | 4 | $ | 2,609 | $ | 2,609 |
Nine months ended September 30, 2017 | ||||||
(in thousands, except for number of loans) | Number of loans | Recorded Balance | ||||
Commercial and industrial | 2 | $ | 343 | |||
Real estate: | ||||||
Commercial - investor owned | — | — | ||||
Commercial - owner occupied | — | — | ||||
Construction and land development | — | — | ||||
Residential | 1 | 5 | ||||
Consumer and other | — | — | ||||
Total | 3 | $ | 348 |
September 30, 2017 | |||||||||||||||||||
(in thousands) | 30-89 Days Past Due | 90 or More Days Past Due | Total Past Due | Current | Total | ||||||||||||||
Commercial and industrial | $ | 9,147 | $ | 283 | $ | 9,430 | $ | 1,851,855 | $ | 1,861,285 | |||||||||
Real estate: | |||||||||||||||||||
Commercial - investor owned | 986 | — | 986 | 737,000 | 737,986 | ||||||||||||||
Commercial - owner occupied | 266 | — | 266 | 553,246 | 553,512 | ||||||||||||||
Construction and land development | — | 323 | 323 | 301,859 | 302,182 | ||||||||||||||
Residential | 485 | 668 | 1,153 | 338,224 | 339,377 | ||||||||||||||
Consumer and other | 1,542 | — | 1,542 | 152,792 | 154,334 | ||||||||||||||
Total | $ | 12,426 | $ | 1,274 | $ | 13,700 | $ | 3,934,976 | $ | 3,948,676 |
December 31, 2016 | |||||||||||||||||||
(in thousands) | 30-89 Days Past Due | 90 or More Days Past Due | Total Past Due | Current | Total | ||||||||||||||
Commercial and industrial | $ | 334 | $ | 171 | $ | 505 | $ | 1,632,209 | $ | 1,632,714 | |||||||||
Real estate: | |||||||||||||||||||
Commercial - investor owned | — | 175 | 175 | 544,633 | 544,808 | ||||||||||||||
Commercial - owner occupied | 212 | 225 | 437 | 349,711 | 350,148 | ||||||||||||||
Construction and land development | 355 | 1,528 | 1,883 | 192,659 | 194,542 | ||||||||||||||
Residential | 91 | — | 91 | 240,669 | 240,760 | ||||||||||||||
Consumer and other | 7 | — | 7 | 155,413 | 155,420 | ||||||||||||||
Total | $ | 999 | $ | 2,099 | $ | 3,098 | $ | 3,115,294 | $ | 3,118,392 |
• | Grades 1, 2, and 3 – Includes loans to borrowers with a continuous record of strong earnings, sound balance sheet condition and capitalization, ample liquidity with solid cash flow, and whose management team has experience and depth within their industry. |
• | Grade 4 – Includes loans to borrowers with positive trends in profitability, satisfactory capitalization and balance sheet condition, and sufficient liquidity and cash flow. |
• | Grade 5 – Includes loans to borrowers that may display fluctuating trends in sales, profitability, capitalization, liquidity, and cash flow. |
• | Grade 6 – Includes loans to borrowers where an adverse change or perceived weakness has occurred, but may be correctable in the near future. Alternatively, this rating category may also include circumstances where the borrower is starting to reverse a negative trend or condition, or has recently been upgraded from a 7, 8, or 9 rating. |
• | Grade 7 – Watch credits are borrowers that have experienced financial setback of a nature that is not determined to be severe or influence ‘ongoing concern’ expectations. Although possible, no loss is anticipated, due to strong collateral and/or guarantor support. |
• | Grade 8 – Substandard credits will include those borrowers characterized by significant losses and sustained downward trends in balance sheet condition, liquidity, and cash flow. Repayment reliance may have shifted to secondary sources. Collateral exposure may exist and additional reserves may be warranted. |
• | Grade 9 – Doubtful credits include borrowers that may show deteriorating trends that are unlikely to be corrected. Collateral values may appear insufficient for full recovery, therefore requiring a partial charge-off, or debt renegotiation with the borrower. The borrower may have declared bankruptcy or bankruptcy is likely in the near term. All doubtful rated credits will be on non-accrual. |
September 30, 2017 | |||||||||||||||||||
(in thousands) | Pass (1-6) | Watch (7) | Substandard (8) | Doubtful (9) | Total | ||||||||||||||
Commercial and industrial | $ | 1,708,153 | $ | 90,885 | $ | 62,247 | $ | — | $ | 1,861,285 | |||||||||
Real estate: | |||||||||||||||||||
Commercial - investor owned | 720,912 | 12,592 | 4,482 | — | 737,986 | ||||||||||||||
Commercial - owner occupied | 513,939 | 33,249 | 6,324 | — | 553,512 | ||||||||||||||
Construction and land development | 298,613 | 2,558 | 1,011 | — | 302,182 | ||||||||||||||
Residential | 328,434 | 3,989 | 6,954 | — | 339,377 | ||||||||||||||
Consumer and other | 153,113 | 375 | 846 | — | 154,334 | ||||||||||||||
Total | $ | 3,723,164 | $ | 143,648 | $ | 81,864 | $ | — | $ | 3,948,676 |
December 31, 2016 | |||||||||||||||||||
(in thousands) | Pass (1-6) | Watch (7) | Substandard (8) | Doubtful (9) | Total | ||||||||||||||
Commercial and industrial | $ | 1,499,114 | $ | 57,416 | $ | 76,184 | $ | — | $ | 1,632,714 | |||||||||
Real estate: | |||||||||||||||||||
Commercial - investor owned | 530,494 | 10,449 | 3,865 | — | 544,808 | ||||||||||||||
Commercial - owner occupied | 306,658 | 39,249 | 4,241 | — | 350,148 | ||||||||||||||
Construction and land development | 185,505 | 6,575 | 2,462 | — | 194,542 | ||||||||||||||
Residential | 233,479 | 2,997 | 4,284 | — | 240,760 | ||||||||||||||
Consumer and other | 153,984 | — | 1,436 | — | 155,420 | ||||||||||||||
Total | $ | 2,909,234 | $ | 116,686 | $ | 92,472 | $ | — | $ | 3,118,392 |
September 30, 2017 | December 31, 2016 | ||||||||
(in thousands) | Weighted- Average Risk Rating1 | Recorded Investment PCI Loans | Weighted- Average Risk Rating1 | Recorded Investment PCI Loans | |||||
Commercial and industrial | 6.26 | $ | 3,676 | 5.87 | $ | 3,523 | |||
Real estate: | |||||||||
Commercial - investor owned | 7.29 | 45,865 | 6.95 | 8,162 | |||||
Commercial - owner occupied | 6.50 | 11,786 | 6.39 | 11,863 | |||||
Construction and land development | 5.93 | 7,927 | 5.80 | 4,365 | |||||
Residential | 6.05 | 12,661 | 5.64 | 11,792 | |||||
Total real estate loans | 78,239 | 36,182 | |||||||
Consumer and other | 2.99 | 67 | 1.64 | 64 | |||||
Purchased credit impaired loans | $ | 81,982 | $ | 39,769 | |||||
1Risk ratings are based on the borrower's contractual obligation, which is not reflective of the purchase discount. |
September 30, 2017 | |||||||||||||||||||
(in thousands) | 30-89 Days Past Due | 90 or More Days Past Due | Total Past Due | Current | Total | ||||||||||||||
Commercial and industrial | $ | — | $ | — | $ | — | $ | 3,676 | $ | 3,676 | |||||||||
Real estate: | |||||||||||||||||||
Commercial - investor owned | 429 | 396 | 825 | 45,040 | 45,865 | ||||||||||||||
Commercial - owner occupied | 46 | 909 | 955 | 10,831 | 11,786 | ||||||||||||||
Construction and land development | — | 478 | 478 | 7,449 | 7,927 | ||||||||||||||
Residential | 748 | 992 | 1,740 | 10,921 | 12,661 | ||||||||||||||
Consumer and other | — | — | — | 67 | 67 | ||||||||||||||
Total | $ | 1,223 | $ | 2,775 | $ | 3,998 | $ | 77,984 | $ | 81,982 |
December 31, 2016 | |||||||||||||||||||
(in thousands) | 30-89 Days Past Due | 90 or More Days Past Due | Total Past Due | Current | Total | ||||||||||||||
Commercial and industrial | $ | — | $ | — | $ | — | $ | 3,523 | $ | 3,523 | |||||||||
Real estate: | |||||||||||||||||||
Commercial - investor owned | — | — | — | 8,162 | 8,162 | ||||||||||||||
Commercial - owner occupied | — | — | — | 11,863 | 11,863 | ||||||||||||||
Construction and land development | — | — | — | 4,365 | 4,365 | ||||||||||||||
Residential | 169 | 51 | 220 | 11,572 | 11,792 | ||||||||||||||
Consumer and other | — | — | — | 64 | 64 | ||||||||||||||
Total | $ | 169 | $ | 51 | $ | 220 | $ | 39,549 | $ | 39,769 |
(in thousands) | Contractual Cashflows | Non-accretable Difference | Accretable Yield | Carrying Amount | |||||||||||
Balance December 31, 2016 | $ | 66,003 | $ | 18,902 | $ | 13,176 | $ | 33,925 | |||||||
Acquisitions | 68,763 | 14,296 | 5,312 | 49,155 | |||||||||||
Principal reductions and interest payments | (16,319 | ) | — | — | (16,319 | ) | |||||||||
Accretion of loan discount | — | — | (5,473 | ) | 5,473 | ||||||||||
Changes in contractual and expected cash flows due to remeasurement | 11,110 | (702 | ) | 3,776 | 8,036 | ||||||||||
Reductions due to disposals | (6,393 | ) | (1,612 | ) | (1,595 | ) | (3,186 | ) | |||||||
Balance September 30, 2017 | $ | 123,164 | $ | 30,884 | $ | 15,196 | $ | 77,084 | |||||||
Balance December 31, 2015 | $ | 116,689 | $ | 26,765 | $ | 25,341 | $ | 64,583 | |||||||
Principal reductions and interest payments | (20,417 | ) | — | — | (20,417 | ) | |||||||||
Accretion of loan discount | — | — | (4,984 | ) | 4,984 | ||||||||||
Changes in contractual and expected cash flows due to remeasurement | 9,194 | 975 | (1,043 | ) | 9,262 | ||||||||||
Reductions due to disposals | (27,888 | ) | (6,779 | ) | (3,713 | ) | (17,396 | ) | |||||||
Balance September 30, 2016 | $ | 77,578 | $ | 20,961 | $ | 15,601 | $ | 41,016 |
(in thousands) | September 30, 2017 | December 31, 2016 | |||||
Commitments to extend credit | $ | 1,263,809 | $ | 1,075,170 | |||
Letters of credit | 74,007 | 78,954 |
Asset Derivatives (Other Assets) | Liability Derivatives (Other Liabilities) | ||||||||||||||||||||||
Notional Amount | Fair Value | Fair Value | |||||||||||||||||||||
(in thousands) | September 30, 2017 | December 31, 2016 | September 30, 2017 | December 31, 2016 | September 30, 2017 | December 31, 2016 | |||||||||||||||||
Non-designated hedging instruments | |||||||||||||||||||||||
Interest rate swap contracts | $ | 270,542 | $ | 124,322 | $ | 1,902 | $ | 982 | $ | 1,902 | $ | 982 | |||||||||||
Foreign exchange forward contracts | 1,376 | 3,034 | 1,376 | 3,034 | 1,376 | 3,034 |
September 30, 2017 | |||||||||||||||
(in thousands) | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Fair Value | |||||||||||
Assets | |||||||||||||||
Securities available for sale | |||||||||||||||
Obligations of U.S. Government-sponsored enterprises | $ | — | $ | 100,123 | $ | — | $ | 100,123 | |||||||
Obligations of states and political subdivisions | — | 33,341 | — | 33,341 | |||||||||||
Residential mortgage-backed securities | — | 469,657 | — | 469,657 | |||||||||||
Total securities available for sale | $ | — | $ | 603,121 | $ | — | $ | 603,121 | |||||||
State tax credits held for sale | — | — | 1,274 | 1,274 | |||||||||||
Derivative financial instruments | — | 3,278 | — | 3,278 | |||||||||||
Total assets | $ | — | $ | 606,399 | $ | 1,274 | $ | 607,673 | |||||||
Liabilities | |||||||||||||||
Derivative financial instruments | $ | — | $ | 3,278 | $ | — | $ | 3,278 | |||||||
Total liabilities | $ | — | $ | 3,278 | $ | — | $ | 3,278 |
December 31, 2016 | |||||||||||||||
(in thousands) | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Fair Value | |||||||||||
Assets | |||||||||||||||
Securities available for sale | |||||||||||||||
Obligations of U.S. Government-sponsored enterprises | $ | — | $ | 107,660 | $ | — | $ | 107,660 | |||||||
Obligations of states and political subdivisions | — | 33,542 | 3,089 | 36,631 | |||||||||||
Residential mortgage-backed securities | — | 316,506 | — | 316,506 | |||||||||||
Total securities available for sale | $ | — | $ | 457,708 | $ | 3,089 | $ | 460,797 | |||||||
State tax credits held for sale | — | — | 3,585 | 3,585 | |||||||||||
Derivative financial instruments | — | 4,016 | — | 4,016 | |||||||||||
Total assets | $ | — | $ | 461,724 | $ | 6,674 | $ | 468,398 | |||||||
Liabilities | |||||||||||||||
Derivative financial instruments | $ | — | $ | 4,016 | $ | — | $ | 4,016 | |||||||
Total liabilities | $ | — | $ | 4,016 | $ | — | $ | 4,016 |
• | Securities available for sale. Securities classified as available for sale are reported at fair value utilizing Level 2 and Level 3 inputs. Fair values for Level 2 securities are based upon dealer quotes, market spreads, the U.S. Treasury yield curve, trade execution data, market consensus prepayment speeds, credit information and the bond's terms and conditions at the security level. At September 30, 2017, there were no Level 3 Auction Rate Securities. Auction Rate Securities at September 30, 2017 were valued using a Level 2 pricing source similar to our other securities available for sale. |
• | State tax credits held for sale. At September 30, 2017, of the $35.3 million of state tax credits held for sale on the condensed consolidated balance sheet, approximately $1.3 million were carried at fair value. The remaining $34.0 million of state tax credits were accounted for at cost. |
• | Derivatives. Derivatives are reported at fair value utilizing Level 2 inputs. The Company obtains counterparty quotations to value its interest rate swaps. In addition, the Company validates the counterparty quotations with third party valuation sources. Derivatives with negative fair values are included in Other liabilities in the consolidated balance sheets. Derivatives with positive fair value are included in Other assets in the consolidated balance sheets. |
• | Purchases, sales, issuances and settlements. There were no Level 3 purchases during the quarters ended September 30, 2017 or 2016. |
• | Transfers in and/or out of Level 3. There were no Level 3 transfers during the quarters ended September 30, 2017 and 2016. |
Securities available for sale, at fair value | |||||||||||||||
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
(in thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Beginning balance | $ | — | $ | 3,093 | $ | 3,089 | $ | 3,077 | |||||||
Total gains: | |||||||||||||||
Included in other comprehensive income | — | 1 | 4 | 17 | |||||||||||
Purchases, sales, issuances and settlements: | |||||||||||||||
Purchases | — | — | — | — | |||||||||||
Transfer in and/or out of Level 3 | — | — | (3,093 | ) | — | ||||||||||
Ending balance | $ | — | $ | 3,094 | $ | — | $ | 3,094 | |||||||
Change in unrealized gains relating to assets still held at the reporting date | $ | — | $ | 1 | $ | — | $ | 17 |
State tax credits held for sale | |||||||||||||||
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
(in thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Beginning balance | $ | 1,274 | $ | 4,774 | $ | 3,585 | $ | 5,941 | |||||||
Total gains: | |||||||||||||||
Included in earnings | — | 27 | 49 | 144 | |||||||||||
Purchases, sales, issuances and settlements: | |||||||||||||||
Sales | — | — | (2,360 | ) | (1,284 | ) | |||||||||
Ending balance | $ | 1,274 | $ | 4,801 | $ | 1,274 | $ | 4,801 | |||||||
Change in unrealized gains (losses) relating to assets still held at the reporting date | $ | — | $ | 27 | $ | (655 | ) | $ | (237 | ) |
(1) | (1) | (1) | (1) | ||||||||||||||||||||
(in thousands) | Total Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total losses for the three months ended September 30, 2017 | Total losses for the nine months ended September 30, 2017 | |||||||||||||||||
Impaired loans | $ | 2,743 | $ | — | $ | — | $ | 2,743 | $ | 613 | $ | 5,876 | |||||||||||
Other real estate | 26 | — | — | 26 | 38 | 38 | |||||||||||||||||
Total | $ | 2,769 | $ | — | $ | — | $ | 2,769 | $ | 651 | $ | 5,914 |
September 30, 2017 | December 31, 2016 | ||||||||||||||
(in thousands) | Carrying Amount | Estimated fair value | Carrying Amount | Estimated fair value | |||||||||||
Balance sheet assets | |||||||||||||||
Cash and due from banks | $ | 76,777 | $ | 76,777 | $ | 54,288 | $ | 54,288 | |||||||
Federal funds sold | 1,155 | 1,155 | 446 | 446 | |||||||||||
Interest-bearing deposits | 107,821 | 107,821 | 145,048 | 145,048 | |||||||||||
Securities available for sale | 603,121 | 603,121 | 460,797 | 460,797 | |||||||||||
Securities held to maturity | 76,168 | 76,260 | 80,463 | 79,639 | |||||||||||
Other investments, at cost | 29,436 | 29,436 | 14,840 | 14,840 | |||||||||||
Loans held for sale | 6,411 | 6,411 | 9,562 | 9,562 | |||||||||||
Derivative financial instruments | 3,278 | 3,278 | 4,016 | 4,016 | |||||||||||
Loans, net | 3,987,467 | 4,009,071 | 3,114,752 | 3,125,701 | |||||||||||
State tax credits, held for sale | 35,291 | 37,781 | 38,071 | 41,264 | |||||||||||
Accrued interest receivable | 14,213 | 14,213 | 11,117 | 11,117 | |||||||||||
Balance sheet liabilities | |||||||||||||||
Deposits | 4,059,211 | 4,057,561 | 3,233,361 | 3,232,414 | |||||||||||
Subordinated debentures and notes | 118,093 | 100,062 | 105,540 | 86,052 | |||||||||||
Federal Home Loan Bank advances | 248,868 | 249,168 | — | — | |||||||||||
Other borrowings | 219,104 | 219,012 | 276,980 | 276,905 | |||||||||||
Derivative financial instruments | 3,278 | 3,278 | 4,016 | 4,016 | |||||||||||
Accrued interest payable | 2,007 | 2,007 | 1,105 | 1,105 |
Estimated Fair Value Measurement at Reporting Date Using | Balance at September 30, 2017 | ||||||||||||||
(in thousands) | Level 1 | Level 2 | Level 3 | ||||||||||||
Financial Assets: | |||||||||||||||
Securities held to maturity | $ | — | $ | 76,260 | $ | — | $ | 76,260 | |||||||
Portfolio loans, net | — | — | 4,009,071 | 4,009,071 | |||||||||||
State tax credits, held for sale | — | — | 36,508 | 36,508 | |||||||||||
Financial Liabilities: | |||||||||||||||
Deposits | 3,442,015 | — | 615,546 | 4,057,561 | |||||||||||
Subordinated debentures and notes | — | 100,062 | — | 100,062 | |||||||||||
Federal Home Loan Bank advances | — | 249,168 | — | 249,168 | |||||||||||
Other borrowings | — | 219,012 | — | 219,012 | |||||||||||
Estimated Fair Value Measurement at Reporting Date Using | Balance at December 31, 2016 | ||||||||||||||
(in thousands) | Level 1 | Level 2 | Level 3 | ||||||||||||
Financial Assets: | |||||||||||||||
Securities held to maturity | $ | — | $ | 79,639 | $ | — | $ | 79,639 | |||||||
Portfolio loans, net | — | — | 3,125,701 | 3,125,701 | |||||||||||
State tax credits, held for sale | — | — | 37,679 | 37,679 | |||||||||||
Financial Liabilities: | |||||||||||||||
Deposits | 2,760,202 | — | 472,212 | 3,232,414 | |||||||||||
Subordinated debentures and notes | — | 86,052 | — | 86,052 | |||||||||||
Other borrowings | — | 276,905 | — | 276,905 |
(in thousands, except per share data) | For the Three Months ended/At | For the Nine Months ended | |||||||||||||||||
September 30, 2017 | June 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | |||||||||||||||
EARNINGS | |||||||||||||||||||
Total interest income | $ | 52,468 | $ | 51,542 | $ | 37,293 | $ | 147,750 | $ | 109,786 | |||||||||
Total interest expense | 6,843 | 5,909 | 3,463 | 17,850 | 9,745 | ||||||||||||||
Net interest income | 45,625 | 45,633 | 33,830 | 129,900 | 100,041 | ||||||||||||||
Provision for portfolio loans | 2,422 | 3,623 | 3,038 | 7,578 | 4,587 | ||||||||||||||
Provision reversal for PCI loans | — | (207 | ) | (1,194 | ) | (355 | ) | (1,603 | ) | ||||||||||
Net interest income after provision for loan losses | 43,203 | 42,217 | 31,986 | 122,677 | 97,057 | ||||||||||||||
Total noninterest income | 8,372 | 7,934 | 6,976 | 23,282 | 20,030 | ||||||||||||||
Total noninterest expense | 27,404 | 32,651 | 20,814 | 86,791 | 62,929 | ||||||||||||||
Income before income tax expense | 24,171 | 17,500 | 18,148 | 59,168 | 54,158 | ||||||||||||||
Income tax expense | 7,856 | 5,545 | 6,316 | 18,507 | 18,949 | ||||||||||||||
Net income | $ | 16,315 | $ | 11,955 | $ | 11,832 | $ | 40,661 | $ | 35,209 | |||||||||
Basic earnings per share | $ | 0.70 | $ | 0.51 | $ | 0.59 | $ | 1.77 | $ | 1.76 | |||||||||
Diluted earnings per share | 0.69 | 0.50 | 0.59 | 1.75 | 1.74 | ||||||||||||||
Return on average assets | 1.27 | % | 0.96 | % | 1.23 | % | 1.11 | % | 1.26 | % | |||||||||
Return on average common equity | 11.69 | % | 8.78 | % | 12.46 | % | 10.37 | % | 12.83 | % | |||||||||
Return on average tangible common equity | 15.23 | % | 11.49 | % | 13.64 | % | 13.25 | % | 14.10 | % | |||||||||
Net interest margin (fully tax equivalent) | 3.88 | % | 3.98 | % | 3.80 | % | 3.87 | % | 3.87 | % | |||||||||
Efficiency ratio | 50.75 | % | 60.95 | % | 51.01 | % | 56.66 | % | 52.41 | % | |||||||||
Tangible book value per common share | $ | 18.09 | $ | 17.89 | $ | 17.43 | |||||||||||||
ASSET QUALITY (1) | |||||||||||||||||||
Net charge-offs (recoveries) | $ | 803 | $ | 6,104 | $ | 1,038 | $ | 6,851 | $ | 530 | |||||||||
Nonperforming loans | 8,985 | 13,081 | 19,942 | ||||||||||||||||
Classified assets | 80,757 | 93,795 | 101,545 | ||||||||||||||||
Nonperforming loans to portfolio loans | 0.23 | % | 0.34 | % | 0.66 | % | |||||||||||||
Nonperforming assets to total assets (1) | 0.18 | % | 0.27 | % | 0.59 | % | |||||||||||||
Allowance for loan losses to portfolio loans | 0.97 | % | 0.96 | % | 1.23 | % | |||||||||||||
Net charge-offs to average loans (annualized) | 0.08 | % | 0.64 | % | 0.14 | % | 0.24 | % | 0.02 | % | |||||||||
(1) Excludes purchased credit impaired loans and related assets, except for their inclusion in total assets. |
For the Three Months ended | For the Nine Months ended | ||||||||||||||||||
(in thousands) | September 30, 2017 | June 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | ||||||||||||||
CORE PERFORMANCE MEASURES (1) | |||||||||||||||||||
Net interest income | $ | 44,069 | $ | 43,049 | $ | 31,534 | $ | 124,685 | $ | 91,340 | |||||||||
Provision for portfolio loans | 2,422 | 3,623 | 3,038 | 7,578 | 4,587 | ||||||||||||||
Noninterest income | 8,350 | 7,934 | 6,828 | 23,260 | 18,938 | ||||||||||||||
Noninterest expense | 27,070 | 27,798 | 20,242 | 79,814 | 61,123 | ||||||||||||||
Income before income tax expense | 22,927 | 19,562 | 15,082 | 60,553 | 44,568 | ||||||||||||||
Income tax expense | 7,391 | 6,329 | 5,142 | 18,636 | 15,276 | ||||||||||||||
Net income | $ | 15,536 | $ | 13,233 | $ | 9,940 | $ | 41,917 | $ | 29,292 | |||||||||
Earnings per share | $ | 0.66 | $ | 0.56 | $ | 0.49 | $ | 1.81 | $ | 1.45 | |||||||||
Return on average assets | 1.21 | % | 1.06 | % | 1.04 | % | 1.14 | % | 1.05 | % | |||||||||
Return on average common equity | 11.13 | % | 9.72 | % | 10.47 | % | 10.69 | % | 10.67 | % | |||||||||
Return on average tangible common equity | 14.50 | % | 12.72 | % | 11.46 | % | 13.66 | % | 11.73 | % | |||||||||
Net interest margin (fully tax equivalent) | 3.75 | % | 3.76 | % | 3.54 | % | 3.71 | % | 3.53 | % | |||||||||
Efficiency ratio | 51.64 | % | 54.52 | % | 52.77 | % | 53.95 | % | 55.43 | % | |||||||||
(1) A non-GAAP measure. A reconciliation has been included in this MD&A section under the caption "Use of Non-GAAP Financial Measures." |
• | The Company reported net income of $40.7 million, or $1.75 per diluted share, for the nine months ended September 30, 2017, compared to $35.2 million, or $1.74 per diluted share, for the same period in 2016. The $0.01 increase in earnings per share primarily resulted from increases in net interest income and noninterest income including growth from the JCB acquisition, offset by a decline in contribution from non-core acquired assets and the impact of merger related expenses in 2017. |
• | On a core basis1, net income was $41.9 million, or $1.81 per share, for the nine months ended September 30, 2017, compared to $29.3 million, or $1.45 per share, in the prior year period. The earnings per share increase of $0.36 was primarily due to higher levels of core net interest income from continued growth in earning asset balances combined with 18 basis points of core net interest margin expansion. This increase was partially offset by an increase in core noninterest expense primarily from employee compensation and benefits as a result of the JCB acquisition. |
• | Net interest income for the first nine months of 2017 increased $29.9 million or 30%, from the prior year period due to strong portfolio loan growth, net interest margin expansion and the acquisition of JCB. |
• | Net interest margin for the first nine months of 2017 remained stable at 3.87% when compared to the prior year period. Core net interest margin1, which excludes incremental accretion on non-core acquired loans, increased 18 basis points for the first nine months of 2017 from the prior year primarily due to core deposit-funded portfolio loan growth improving the earning asset mix, increased yield on portfolio loans, controlled increases in deposit costs, and the acquisition of JCB. |
• | Noninterest income for the first nine months of 2017 increased $3.3 million or 16%, compared to the prior year period due primarily to the acquisition of JCB ($3.6 million). This increase was partially offset by prior year non-core gain on sale of other real estate and other non-core income from acquired assets. |
• | Noninterest expenses were $86.8 million for the nine months ended September 30, 2017, compared to $62.9 million for the nine months ended September 30, 2016. Noninterest expenses for the nine months included $6.5 million of merger related expenses. Core noninterest expenses1 were $79.8 million for the nine months ended September 30, 2017, compared to $61.1 million for the prior year period due to the JCB acquisition and two full quarters of JCB's expense base. |
• | Loans – Portfolio loans increased to $4.0 billion at September 30, 2017, increasing $878 million when compared to December 31, 2016. Excluding the acquisition of JCB, portfolio loans organically grew by $200 million in the first nine months of 2017. On a year-over-year basis, portfolio loans increased $959 million of which $281 million was organic loan growth and $678 million was from the acquisition of JCB. See Item 1, Note 5 – Portfolio Loans for more information. |
• | Deposits – Total deposits at September 30, 2017 were $4.1 billion, an increase of $826 million, or 26% from December 31, 2016, and $934 million, or 30%, from September 30, 2016. $774 million of the increase in both periods is attributed to the acquisition of JCB. Core deposits, defined as total deposits excluding time deposits, were $3.4 billion at September 30, 2017, an increase of $114 million, or 3% , and $805 million, or 31%, from the linked quarter and prior year period, respectively. The trends in deposits reflect continued progress across our business lines, $636 million of core deposits from JCB, and some seasonality. |
• | Asset quality – Nonperforming loans were $9.0 million at September 30, 2017, compared to $14.9 million at December 31, 2016. Nonperforming loans represented 0.23% of portfolio loans at September 30, 2017 versus 0.48% at December 31, 2016. There were no portfolio loans that were over 90 days delinquent and still accruing at September 30, 2017 or December 31, 2016. |
Three months ended September 30, | |||||||||||||||||||||
2017 | 2016 | ||||||||||||||||||||
(in thousands) | Average Balance | Interest Income/Expense | Average Yield/ Rate | Average Balance | Interest Income/Expense | Average Yield/ Rate | |||||||||||||||
Assets | |||||||||||||||||||||
Interest-earning assets: | |||||||||||||||||||||
Taxable portfolio loans (1) | $ | 3,866,434 | $ | 45,526 | 4.67 | % | $ | 2,916,678 | $ | 30,980 | 4.23 | % | |||||||||
Tax-exempt portfolio loans (2) | 38,202 | 623 | 6.47 | 41,495 | 611 | 5.86 | |||||||||||||||
Non-core acquired loans - contractual | 35,120 | 553 | 6.25 | 53,198 | 789 | 5.90 | |||||||||||||||
Non-core acquired loans - incremental accretion | 1,556 | 17.57 | 2,296 | 17.17 | |||||||||||||||||
Total loans | 3,939,756 | 48,258 | 4.86 | 3,011,371 | 34,676 | 4.58 | |||||||||||||||
Taxable investments in debt and equity securities | 667,520 | 3,981 | 2.37 | 479,755 | 2,462 | 2.04 | |||||||||||||||
Non-taxable investments in debt and equity securities (2) | 43,537 | 475 | 4.33 | 47,761 | 521 | 4.34 | |||||||||||||||
Short-term investments | 61,859 | 173 | 1.11 | 50,193 | 67 | 0.53 | |||||||||||||||
Total securities and short-term investments | 772,916 | 4,629 | 2.38 | 577,709 | 3,050 | 2.10 | |||||||||||||||
Total interest-earning assets | 4,712,672 | 52,887 | 4.45 | 3,589,080 | 37,726 | 4.18 | |||||||||||||||
Noninterest-earning assets: | |||||||||||||||||||||
Cash and due from banks | 76,661 | 58,178 | |||||||||||||||||||
Other assets | 348,100 | 213,352 | |||||||||||||||||||
Allowance for loan losses | (41,939 | ) | (45,692 | ) | |||||||||||||||||
Total assets | $ | 5,095,494 | $ | 3,814,918 | |||||||||||||||||
Liabilities and Shareholders' Equity | |||||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||
Interest-bearing transaction accounts | $ | 805,073 | $ | 523 | 0.26 | % | $ | 600,707 | $ | 332 | 0.22 | % | |||||||||
Money market accounts | 1,314,274 | 2,410 | 0.73 | 1,075,747 | 1,143 | 0.42 | |||||||||||||||
Savings | 200,394 | 125 | 0.25 | 108,075 | 68 | 0.25 | |||||||||||||||
Certificates of deposit | 580,951 | 1,493 | 1.02 | 516,159 | 1,319 | 1.02 | |||||||||||||||
Total interest-bearing deposits | 2,900,692 | 4,551 | 0.62 | 2,300,688 | 2,862 | 0.49 | |||||||||||||||
Subordinated debentures | 118,086 | 1,316 | 4.42 | 56,807 | 369 | 2.59 | |||||||||||||||
Other borrowed funds | 455,995 | 976 | 0.85 | 286,896 | 232 | 0.32 | |||||||||||||||
Total interest-bearing liabilities | 3,474,773 | 6,843 | 0.78 | 2,644,391 | 3,463 | 0.52 | |||||||||||||||
Noninterest bearing liabilities: | |||||||||||||||||||||
Demand deposits | 1,031,346 | 768,468 | |||||||||||||||||||
Other liabilities | 35,662 | 24,198 | |||||||||||||||||||
Total liabilities | 4,541,781 | 3,437,057 | |||||||||||||||||||
Shareholders' equity | 553,713 | 377,861 | |||||||||||||||||||
Total liabilities & shareholders' equity | $ | 5,095,494 | $ | 3,814,918 | |||||||||||||||||
Net interest income | $ | 46,044 | $ | 34,263 | |||||||||||||||||
Net interest spread | 3.67 | % | 3.66 | % | |||||||||||||||||
Net interest margin | 3.88 | % | 3.80 | % | |||||||||||||||||
Core net interest margin (3) | 3.75 | % | 3.54 | % |
(1) | Average balances include non-accrual loans. The income on such loans is included in interest but is recognized only upon receipt. Loan fees, net of amortization of deferred loan origination fees and costs, included in interest income are approximately $0.9 million and $0.8 million for the three months ended September 30, 2017 and 2016 respectively. |
(2) | Non-taxable income is presented on a fully tax-equivalent basis using a 38.0% and 38.3% tax rate in 2017 and 2016, respectively. The tax-equivalent adjustments were $0.4 million for the three months ended September 30, 2017 and 2016, respectively. |
(3) | A non-GAAP measure. A reconciliation has been included in this MD&A section under the caption "Use of Non-GAAP Financial measures." |
Nine months ended September 30, | |||||||||||||||||||||
2017 | 2016 | ||||||||||||||||||||
(in thousands) | Average Balance | Interest Income/Expense | Average Yield/ Rate | Average Balance | Interest Income/Expense | Average Yield/ Rate | |||||||||||||||
Assets | |||||||||||||||||||||
Interest-earning assets: | |||||||||||||||||||||
Taxable portfolio loans (1) | $ | 3,713,188 | $ | 127,046 | 4.57 | % | $ | 2,830,365 | $ | 88,667 | 4.18 | % | |||||||||
Tax-exempt portfolio loans (2) | 41,703 | 1,998 | 6.41 | 41,526 | 1,899 | 6.11 | |||||||||||||||
Non-core acquired loans - contractual | 37,043 | 1,753 | 6.33 | 60,420 | 2,693 | 5.95 | |||||||||||||||
Non-core acquired loans - incremental accretion | 5,215 | 18.82 | 8,701 | 19.24 | |||||||||||||||||
Total loans | 3,791,934 | 136,012 | 4.80 | 2,932,311 | 101,960 | 4.64 | |||||||||||||||
Taxable investments in debt and equity securities | 624,126 | 10,976 | 2.35 | 474,981 | 7,385 | 2.08 | |||||||||||||||
Non-taxable investments in debt and equity securities (2) | 48,165 | 1,588 | 4.41 | 48,475 | 1,591 | 4.38 | |||||||||||||||
Short-term investments | 75,125 | 537 | 0.96 | 47,771 | 186 | 0.52 | |||||||||||||||
Total securities and short-term investments | 747,416 | 13,101 | 2.34 | 571,227 | 9,162 | 2.14 | |||||||||||||||
Total interest-earning assets | 4,539,350 | 149,113 | 4.39 | 3,503,538 | 111,122 | 4.24 | |||||||||||||||
Noninterest-earning assets: | |||||||||||||||||||||
Cash and due from banks | 76,086 | 56,618 | |||||||||||||||||||
Other assets | 325,808 | 214,860 | |||||||||||||||||||
Allowance for loan losses | (43,901 | ) | (44,567 | ) | |||||||||||||||||
Total assets | $ | 4,897,343 | $ | 3,730,449 | |||||||||||||||||
Liabilities and Shareholders' Equity | |||||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||
Interest-bearing transaction accounts | $ | 786,945 | $ | 1,721 | 0.29 | % | $ | 578,373 | $ | 967 | 0.22 | % | |||||||||
Money market accounts | 1,272,939 | 5,841 | 0.61 | 1,056,565 | 3,162 | 0.40 | |||||||||||||||
Savings | 185,218 | 332 | 0.24 | 102,589 | 191 | 0.25 | |||||||||||||||
Certificates of deposit | 576,906 | 4,081 | 0.95 | 460,667 | 3,521 | 1.02 | |||||||||||||||
Total interest-bearing deposits | 2,822,008 | 11,975 | 0.57 | 2,198,194 | 7,841 | 0.48 | |||||||||||||||
Subordinated debentures | 116,239 | 3,768 | 4.33 | 56,807 | 1,078 | 2.53 | |||||||||||||||
Other borrowed funds | 421,176 | 2,107 | 0.67 | 339,849 | 826 | 0.32 | |||||||||||||||
Total interest-bearing liabilities | 3,359,423 | 17,850 | 0.71 | 2,594,850 | 9,745 | 0.50 | |||||||||||||||
Noninterest bearing liabilities: | |||||||||||||||||||||
Demand deposits | 982,788 | 739,705 | |||||||||||||||||||
Other liabilities | 30,809 | 29,196 | |||||||||||||||||||
Total liabilities | 4,373,020 | 3,363,751 | |||||||||||||||||||
Shareholders' equity | 524,323 | 366,698 | |||||||||||||||||||
Total liabilities & shareholders' equity | $ | 4,897,343 | $ | 3,730,449 | |||||||||||||||||
Net interest income | $ | 131,263 | $ | 101,377 | |||||||||||||||||
Net interest spread | 3.68 | % | 3.74 | % | |||||||||||||||||
Net interest margin | 3.87 | % | 3.87 | % | |||||||||||||||||
Core net interest margin (3) | 3.71 | % | 3.53 | % |
(1) | Average balances include non-accrual loans. The income on such loans is included in interest but is recognized only upon receipt. Loan fees, net of amortization of deferred loan origination fees and costs, included in interest income are approximately $2.5 million and $1.6 million for the nine months ended September 30, 2017 and 2016 respectively. |
(2) | Non-taxable income is presented on a fully tax-equivalent basis using a 38.0% and 38.3% tax rate in 2017 and 2016, respectively. The tax-equivalent adjustments were $1.4 million and $1.3 million for the nine months ended September 30, 2017 and 2016, respectively. |
(3) | A non-GAAP measure. A reconciliation has been included in this MD&A section under the caption "Use of Non-GAAP Financial Measures." |
2017 compared to 2016 | |||||||||||||||||||||||
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
Increase (decrease) due to | Increase (decrease) due to | ||||||||||||||||||||||
(in thousands) | Volume(1) | Rate(2) | Net | Volume(1) | Rate(2) | Net | |||||||||||||||||
Interest earned on: | |||||||||||||||||||||||
Taxable portfolio loans | $ | 10,986 | $ | 3,560 | $ | 14,546 | $ | 29,551 | $ | 8,828 | $ | 38,379 | |||||||||||
Tax-exempt portfolio loans (3) | (50 | ) | 62 | 12 | 8 | 91 | 99 | ||||||||||||||||
Non-core acquired loans | (1,075 | ) | 99 | (976 | ) | (4,408 | ) | (18 | ) | (4,426 | ) | ||||||||||||
Taxable investments in debt and equity securities | 1,081 | 438 | 1,519 | 2,527 | 1,064 | 3,591 | |||||||||||||||||
Non-taxable investments in debt and equity securities (3) | (45 | ) | (1 | ) | (46 | ) | (11 | ) | 8 | (3 | ) | ||||||||||||
Short-term investments | 19 | 87 | 106 | 142 | 209 | 351 | |||||||||||||||||
Total interest-earning assets | $ | 10,916 | $ | 4,245 | $ | 15,161 | $ | 27,809 | $ | 10,182 | $ | 37,991 | |||||||||||
Interest paid on: | |||||||||||||||||||||||
Interest-bearing transaction accounts | $ | 127 | $ | 64 | $ | 191 | $ | 406 | $ | 348 | $ | 754 | |||||||||||
Money market accounts | 298 | 969 | 1,267 | 742 | 1,937 | 2,679 | |||||||||||||||||
Savings | 58 | (1 | ) | 57 | 148 | (7 | ) | 141 | |||||||||||||||
Certificates of deposit | 170 | 4 | 174 | 835 | (275 | ) | 560 | ||||||||||||||||
Subordinated debentures | 573 | 374 | 947 | 1,603 | 1,087 | 2,690 | |||||||||||||||||
Borrowed funds | 197 | 547 | 744 | 235 | 1,046 | 1,281 | |||||||||||||||||
Total interest-bearing liabilities | 1,423 | 1,957 | 3,380 | 3,969 | 4,136 | 8,105 | |||||||||||||||||
Net interest income | $ | 9,493 | $ | 2,288 | $ | 11,781 | $ | 23,840 | $ | 6,046 | $ | 29,886 |
For the Three Months ended | For the Nine Months ended | ||||||||||||||
(in thousands) | September 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | |||||||||||
Accelerated cash flows and other incremental accretion | $ | 1,556 | $ | 2,296 | $ | 5,215 | $ | 8,701 | |||||||
Provision reversal for non-core acquired loan losses | — | 1,194 | 355 | 1,603 | |||||||||||
Gain (loss) on sale of other real estate | — | (225 | ) | — | 480 | ||||||||||
Other income from other real estate | — | 287 | — | 526 | |||||||||||
Other expenses | (19 | ) | (270 | ) | (126 | ) | (922 | ) | |||||||
Non-core acquired assets income before income tax expense | $ | 1,537 | $ | 3,282 | $ | 5,444 | $ | 10,388 |
Three months ended September 30, | ||||||||||||||
(in thousands) | 2017 | 2016 | Increase (decrease) | |||||||||||
Service charges on deposit accounts | $ | 2,820 | $ | 2,200 | $ | 620 | 28 | % | ||||||
Wealth management revenue | 2,062 | 1,694 | 368 | 22 | % | |||||||||
Card services revenue | 1,459 | 804 | 655 | 81 | % | |||||||||
Gain on state tax credits, net | 77 | 228 | (151 | ) | (66 | )% | ||||||||
Miscellaneous income - core | 1,932 | 1,902 | 30 | 2 | % | |||||||||
Core noninterest income (1) | 8,350 | 6,828 | 1,522 | 22 | % | |||||||||
Loss on sale of other real estate from non-core acquired loans | — | (225 | ) | 225 | 100 | % | ||||||||
Gain on sale of investment securities | 22 | 86 | (64 | ) | (74 | )% | ||||||||
Other income from non-core acquired assets | — | 287 | (287 | ) | (100 | )% | ||||||||
Total noninterest income | $ | 8,372 | $ | 6,976 | $ | 1,396 | 20 | % | ||||||
(1) A non-GAAP measure. A reconciliation has been included in this MD&A section under the caption "Use of Non-GAAP Financial Measures." |
Nine months ended September 30, | ||||||||||||||
(in thousands) | 2017 | 2016 | Increase (decrease) | |||||||||||
Service charges on deposit accounts | $ | 8,146 | $ | 6,431 | $ | 1,715 | 27 | % | ||||||
Wealth management revenue | 5,949 | 5,000 | 949 | 19 | % | |||||||||
Card services revenue | 3,888 | 2,236 | 1,652 | 74 | % | |||||||||
Gain on state tax credits, net | 332 | 899 | (567 | ) | (63 | )% | ||||||||
Gain on sale of other real estate - core | 17 | 122 | (105 | ) | (86 | )% | ||||||||
Miscellaneous income - core | 4,928 | 4,250 | 678 | 16 | % | |||||||||
Core noninterest income (1) | 23,260 | 18,938 | 4,322 | 23 | % | |||||||||
Gain on sale of other real estate from non-core acquired loans | — | 480 | (480 | ) | (100 | )% | ||||||||
Gain on sale of investment securities | 22 | 86 | (64 | ) | (74 | )% | ||||||||
Other income from non-core acquired assets | — | 526 | (526 | ) | (100 | )% | ||||||||
Total noninterest income | $ | 23,282 | $ | 20,030 | $ | 3,252 | 16 | % | ||||||
(1) A non-GAAP measure. A reconciliation has been included in this MD&A section under the caption "Use of Non-GAAP Financial Measures." |
Three months ended September 30, | ||||||||||||||
(in thousands) | 2017 | 2016 | Increase (decrease) | |||||||||||
Core expenses (1): | ||||||||||||||
Employee compensation and benefits - core | $ | 15,090 | $ | 11,910 | $ | 3,180 | 27 | % | ||||||
Occupancy - core | 2,434 | 1,679 | 755 | 45 | % | |||||||||
Data processing - core | 1,389 | 1,135 | 254 | 22 | % | |||||||||
FDIC and other insurance | 731 | 780 | (49 | ) | (6 | )% | ||||||||
Professional fees - core | 920 | 540 | 380 | 70 | % | |||||||||
Loan, legal and other real estate expense - core | 567 | 310 | 257 | 83 | % | |||||||||
Other - core | 5,939 | 3,888 | 2,051 | 53 | % | |||||||||
Core noninterest expense (1) | 27,070 | 20,242 | 6,828 | 34 | % | |||||||||
Merger related expenses | 315 | 302 | 13 | 4 | % | |||||||||
Other expenses related to non-core acquired loans | 19 | 270 | (251 | ) | (93 | )% | ||||||||
Total noninterest expense | $ | 27,404 | $ | 20,814 | $ | 6,590 | 32 | % | ||||||
(1) A non-GAAP measure. A reconciliation has been included in this MD&A section under the caption "Use of Non-GAAP Financial Measures." |
Nine months ended September 30, | ||||||||||||||
(in thousands) | 2017 | 2016 | Increase (decrease) | |||||||||||
Core expenses (1): | ||||||||||||||
Employee compensation and benefits - core | $ | 46,096 | $ | 36,560 | $ | 9,536 | 26 | % | ||||||
Occupancy - core | 6,628 | 4,920 | 1,708 | 35 | % | |||||||||
Data processing - core | 4,828 | 3,396 | 1,432 | 42 | % | |||||||||
FDIC and other insurance | 2,356 | 2,241 | 115 | 5 | % | |||||||||
Professional fees - core | 2,833 | 1,942 | 891 | 46 | % | |||||||||
Loan, legal and other real estate expense - core | 1,418 | 782 | 636 | 81 | % | |||||||||
Other - core | 15,655 | 11,282 | 4,373 | 39 | % | |||||||||
Core noninterest expense (1) | 79,814 | 61,123 | 18,691 | 31 | % | |||||||||
Executive severance | — | 332 | (332 | ) | (100 | )% | ||||||||
Merger related expenses | 6,462 | 302 | 6,160 | 2,040 | % | |||||||||
Other non-core expenses | 389 | 250 | 139 | 56 | % | |||||||||
Other expenses related to non-core acquired loans | 126 | 922 | (796 | ) | (86 | )% | ||||||||
Total noninterest expense | $ | 86,791 | $ | 62,929 | $ | 23,862 | 38 | % | ||||||
(1) A non-GAAP measure. A reconciliation has been included in this MD&A section under the caption "Use of Non-GAAP Financial Measures." |
(in thousands) | September 30, 2017 | December 31, 2016 | Increase (decrease) | |||||||||
Total cash and cash equivalents | $ | 183,108 | $ | 198,802 | (15,694 | ) | (7.9 | )% | ||||
Securities | 679,289 | 541,260 | 138,029 | 25.5 | % | |||||||
Loans | 4,030,658 | 3,158,161 | 872,497 | 27.6 | % | |||||||
Non-core acquired loans | 34,157 | 39,769 | (5,612 | ) | (14.1 | )% | ||||||
Total assets | 5,231,488 | 4,081,328 | 1,150,160 | 28.2 | % | |||||||
Deposits | 4,059,211 | 3,233,361 | 825,850 | 25.5 | % | |||||||
Total liabilities | 4,685,152 | 3,694,230 | 990,922 | 26.8 | % | |||||||
Total shareholders' equity | 546,336 | 387,098 | 159,238 | 41.1 | % |
(in thousands) | September 30, 2017 | December 31, 2016 | Increase (decrease) | |||||||||||
Commercial and industrial | $ | 1,861,935 | $ | 1,632,714 | $ | 229,221 | 14.0 | % | ||||||
Commercial real estate - investor owned | 776,425 | 544,808 | 231,617 | 42.5 | % | |||||||||
Commercial real estate - owner occupied | 555,686 | 350,148 | 205,538 | 58.7 | % | |||||||||
Construction and land development | 306,410 | 194,542 | 111,868 | 57.5 | % | |||||||||
Residential real estate | 341,695 | 240,760 | 100,935 | 41.9 | % | |||||||||
Consumer and other | 154,350 | 155,420 | (1,070 | ) | (0.7 | )% | ||||||||
Portfolio loans | 3,996,501 | 3,118,392 | 878,109 | 28.2 | % | |||||||||
Non-core acquired loans | 34,157 | 39,769 | (5,612 | ) | (14.1 | )% | ||||||||
Total loans | $ | 4,030,658 | $ | 3,158,161 | $ | 872,497 | 27.6 | % |
At the quarter ended | ||||||||||||||
(in thousands) | September 30, 2017 | December 31, 2016 | Increase (decrease) | |||||||||||
Enterprise value lending | $ | 455,983 | $ | 388,798 | $ | 67,185 | 17.3 | % | ||||||
C&I - general | 886,498 | 794,451 | 92,047 | 11.6 | % | |||||||||
Life insurance premium financing | 330,957 | 305,779 | 25,178 | 8.2 | % | |||||||||
Tax credits | 188,497 | 143,686 | 44,811 | 31.2 | % | |||||||||
CRE, Construction, and land development | 1,638,521 | 1,089,498 | 549,023 | 50.4 | % | |||||||||
Residential real estate | 341,695 | 240,760 | 100,935 | 41.9 | % | |||||||||
Consumer and other | 154,350 | 155,420 | (1,070 | ) | (0.7 | )% | ||||||||
Portfolio loans | $ | 3,996,501 | $ | 3,118,392 | $ | 878,109 | 28.2 | % |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
(in thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Allowance at beginning of period, for portfolio loans | $ | 36,673 | $ | 35,498 | $ | 37,565 | $ | 33,441 | |||||||
Loans charged off: | |||||||||||||||
Commercial and industrial | (613 | ) | (2,044 | ) | (6,781 | ) | (2,269 | ) | |||||||
Real estate: | |||||||||||||||
Commercial | (45 | ) | — | (90 | ) | — | |||||||||
Construction and land development | — | — | (5 | ) | — | ||||||||||
Residential | (503 | ) | (25 | ) | (777 | ) | (25 | ) | |||||||
Consumer and other | (75 | ) | (4 | ) | (143 | ) | (15 | ) | |||||||
Total loans charged off | (1,236 | ) | (2,073 | ) | (7,796 | ) | (2,309 | ) | |||||||
Recoveries of loans previously charged off: | |||||||||||||||
Commercial and industrial | 205 | 69 | 342 | 624 | |||||||||||
Real estate: | |||||||||||||||
Commercial | 18 | 25 | 219 | 123 | |||||||||||
Construction and land development | 25 | 913 | 83 | 927 | |||||||||||
Residential | 172 | 26 | 259 | 96 | |||||||||||
Consumer and other | 13 | 2 | 42 | 9 | |||||||||||
Total recoveries of loans | 433 | 1,035 | 945 | 1,779 | |||||||||||
Net loan charge-offs | (803 | ) | (1,038 | ) | (6,851 | ) | (530 | ) | |||||||
Provision for loan losses | 2,422 | 3,038 | 7,578 | 4,587 | |||||||||||
Allowance at end of period, for portfolio loans (1) | $ | 38,292 | $ | 37,498 | $ | 38,292 | $ | 37,498 | |||||||
Allowance at beginning of period, for purchased credit impaired loans | $ | 5,126 | $ | 8,551 | $ | 5,844 | $ | 10,175 | |||||||
Loans charged off | (175 | ) | (312 | ) | (223 | ) | (1,295 | ) | |||||||
Recoveries of loans | — | — | — | — | |||||||||||
Other | (52 | ) | (612 | ) | (367 | ) | (844 | ) | |||||||
Net loan charge-offs | (227 | ) | (924 | ) | (590 | ) | (2,139 | ) | |||||||
Provision reversal for purchased credit impaired loan losses | — | (1,194 | ) | (355 | ) | (1,603 | ) | ||||||||
Allowance at end of period, for purchased credit impaired loans | $ | 4,899 | $ | 6,433 | $ | 4,899 | $ | 6,433 | |||||||
Total allowance at end of period | $ | 43,191 | $ | 43,931 | $ | 43,191 | $ | 43,931 | |||||||
Portfolio loans, average | $ | 3,904,636 | $ | 2,947,949 | $ | 3,754,891 | $ | 2,864,916 | |||||||
Portfolio loans, ending (1) | 3,948,676 | 3,037,705 | 3,948,676 | 3,037,705 | |||||||||||
Net charge-offs to average portfolio loans (1) | 0.08 | % | 0.14 | % | 0.24 | % | 0.02 | % | |||||||
Allowance for portfolio loan losses to loans (1) | 0.97 | % | 1.23 | % | 0.97 | % | 1.23 | % | |||||||
(1) Excludes PCI loans. |
(in thousands) | September 30, 2017 | December 31, 2016 | September 30, 2016 | ||||||||
Non-accrual loans | $ | 8,264 | $ | 12,585 | $ | 17,622 | |||||
Restructured loans | 721 | 2,320 | 2,320 | ||||||||
Total nonperforming loans (1) | 8,985 | 14,905 | 19,942 | ||||||||
Other real estate from originated loans | 251 | 740 | 2,719 | ||||||||
Other real estate from acquired loans | 240 | 240 | 240 | ||||||||
Total nonperforming assets (1) (2) | $ | 9,476 | $ | 15,885 | $ | 22,901 | |||||
Total assets | $ | 5,231,488 | $ | 4,081,328 | $ | 3,909,644 | |||||
Portfolio loans (1) | 3,948,676 | 3,158,161 | 3,037,705 | ||||||||
Portfolio loans plus other real estate (1) | 3,949,167 | 3,159,141 | 3,040,664 | ||||||||
Nonperforming loans to portfolio loans (1) | 0.23 | % | 0.47 | % | 0.66 | % | |||||
Nonperforming assets to total loans plus other real estate (1) (2) | 0.24 | 0.50 | 0.75 | ||||||||
Nonperforming assets to total assets (1) (2) | 0.18 | 0.39 | 0.59 | ||||||||
Allowance for loans to nonperforming loans (1) | 426 | % | 252 | % | 188 | % | |||||
(1) Excludes PCI loans, except for their inclusion in total assets. | |||||||||||
(2) Other real estate from PCI loans included in Nonperforming assets beginning with the year ended December 31, 2015 due to termination of all existing FDIC loss share agreements. |
(in thousands) | September 30, 2017 | December 31, 2016 | September 30, 2016 | ||||||||
Commercial and industrial | $ | 7,451 | $ | 12,284 | $ | 13,160 | |||||
Commercial real estate | 544 | 655 | 252 | ||||||||
Construction and land development | 322 | 1,904 | 1,907 | ||||||||
Residential real estate | — | 62 | 124 | ||||||||
Consumer and other | 668 | — | 4,499 | ||||||||
Total | $ | 8,985 | $ | 14,905 | $ | 19,942 |
Nine months ended September 30, | |||||||
(in thousands) | 2017 | 2016 | |||||
Nonperforming loans beginning of period | $ | 14,905 | $ | 9,100 | |||
Additions to nonaccrual loans | 8,680 | 18,354 | |||||
Additions to restructured loans | 676 | 2,320 | |||||
Charge-offs | (7,678 | ) | (2,104 | ) | |||
Other principal reductions | (7,315 | ) | (6,058 | ) | |||
Moved to other real estate | (283 | ) | (283 | ) | |||
Moved to performing | — | (1,387 | ) | ||||
Loans past due 90 days or more and still accruing interest | — | — | |||||
Nonperforming loans end of period | $ | 8,985 | $ | 19,942 |
Nine months ended September 30, | |||||||
(in thousands) | 2017 | 2016 | |||||
Other real estate beginning of period | $ | 980 | $ | 8,366 | |||
Additions and expenses capitalized to prepare property for sale | 2,063 | 2,203 | |||||
Writedowns in value | (56 | ) | — | ||||
Sales | (2,496 | ) | (7,610 | ) | |||
Other real estate end of period | $ | 491 | $ | 2,959 |
(in thousands) | September 30, 2017 | December 31, 2016 | Increase (decrease) | ||||||||||
Demand deposits | $ | 1,047,910 | $ | 866,756 | 181,154 | 20.9 | % | ||||||
Interest-bearing transaction accounts | 814,338 | 731,539 | 82,799 | 11.3 | % | ||||||||
Money market accounts | 1,375,844 | 1,050,472 | 325,372 | 31.0 | % | ||||||||
Savings | 203,923 | 111,435 | 92,488 | 83.0 | % | ||||||||
Certificates of deposit: | |||||||||||||
Brokered | 170,701 | 117,145 | 53,556 | 45.7 | % | ||||||||
Other | 446,495 | 356,014 | 90,481 | 25.4 | % | ||||||||
Total deposits | $ | 4,059,211 | $ | 3,233,361 | 825,850 | 25.5 | % | ||||||
Non-time deposits / total deposits | 85 | % | 85 | % | |||||||||
Demand deposits / total deposits | 26 | % | 27 | % |
• | Issuance of 3.3 million shares common stock for the JCB acquisition of $141.7 million, |
• | Repurchase of 429,955 shares at an average price of $38.69, or $16.6 million pursuant to its publicly announced program, |
• | Net income of $40.7 million, and |
• | Dividends paid on common shares of $7.7 million. |
(in thousands) | September 30, 2017 | December 31, 2016 | Well Capitalized Minimum % | |||||||
Total capital to risk-weighted assets | 12.33 | % | 13.48 | % | 10.00 | % | ||||
Tier 1 capital to risk-weighted assets | 10.36 | % | 10.99 | % | 8.00 | % | ||||
Common equity tier 1 capital to risk-weighted assets | 8.93 | % | 9.52 | % | 6.50 | % | ||||
Leverage ratio (Tier 1 capital to average assets) | 9.88 | % | 10.42 | % | 5.00 | % | ||||
Tangible common equity to tangible assets1 | 8.18 | % | 8.76 | % | N/A | |||||
Tier 1 capital | $ | 491,315 | $ | 412,865 | ||||||
Total risk-based capital | 584,931 | 506,349 | ||||||||
1 Not a required regulatory capital ratio |
For the Three Months ended | For the Nine Months ended | ||||||||||||||||||
(in thousands) | September 30, 2017 | June 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | ||||||||||||||
Net interest income | $ | 45,625 | $ | 45,633 | $ | 33,830 | $ | 129,900 | $ | 100,041 | |||||||||
Less: Incremental accretion income | 1,556 | 2,584 | 2,296 | 5,215 | 8,701 | ||||||||||||||
Core net interest income | 44,069 | 43,049 | 31,534 | 124,685 | 91,340 | ||||||||||||||
Total noninterest income | 8,372 | 7,934 | 6,976 | 23,282 | 20,030 | ||||||||||||||
Less: Gain (loss) on sale of other real estate from non-core acquired loans | — | — | (225 | ) | — | 480 | |||||||||||||
Less: Gain on sale of investment securities | 22 | — | 86 | 22 | 86 | ||||||||||||||
Less: Other income from non-core acquired assets | — | — | 287 | — | 526 | ||||||||||||||
Core noninterest income | 8,350 | 7,934 | 6,828 | 23,260 | 18,938 | ||||||||||||||
Total core revenue | 52,419 | 50,983 | 38,362 | 147,945 | 110,278 | ||||||||||||||
Provision for portfolio loans | 2,422 | 3,623 | 3,038 | 7,578 | 4,587 | ||||||||||||||
Total noninterest expense | 27,404 | 32,651 | 20,814 | 86,791 | 62,929 | ||||||||||||||
Less: Other expenses related to non-core acquired loans | 19 | (16 | ) | 270 | 126 | 922 | |||||||||||||
Less: Merger related expenses | 315 | 4,480 | 302 | 6,462 | 302 | ||||||||||||||
Less: Facilities disposal charge | — | 389 | — | 389 | — | ||||||||||||||
Less: Executive severance | — | — | — | — | 332 | ||||||||||||||
Less: Other non-core expenses | — | — | — | — | 250 | ||||||||||||||
Core noninterest expense | 27,070 | 27,798 | 20,242 | 79,814 | 61,123 | ||||||||||||||
Core income before income tax expense | 22,927 | 19,562 | 15,082 | 60,553 | 44,568 | ||||||||||||||
Total income tax expense | 7,856 | 5,545 | 6,316 | 18,507 | 18,949 | ||||||||||||||
Less: Non-core income tax expense1 | 465 | (784 | ) | 1,174 | (129 | ) | 3,673 | ||||||||||||
Core income tax expense | 7,391 | 6,329 | 5,142 | 18,636 | 15,276 | ||||||||||||||
Core net income | $ | 15,536 | $ | 13,233 | $ | 9,940 | $ | 41,917 | $ | 29,292 | |||||||||
Core diluted earnings per share | $ | 0.66 | $ | 0.56 | $ | 0.49 | $ | 1.81 | $ | 1.45 | |||||||||
Core return on average assets | 1.21 | % | 1.06 | % | 1.04 | % | 1.14 | % | 1.05 | % | |||||||||
Core return on average common equity | 11.13 | % | 9.72 | % | 10.47 | % | 10.69 | % | 10.67 | % | |||||||||
Core return on average tangible common equity | 14.50 | % | 12.72 | % | 11.46 | % | 13.66 | % | 11.73 | % | |||||||||
Core efficiency ratio | 51.64 | % | 54.52 | % | 52.77 | % | 53.95 | % | 55.43 | % | |||||||||
1Non-core income tax expense calculated at 38% of non-core pretax income plus an estimate of taxes payable related to non-deductible JCB acquisition costs. |
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
(in thousands) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Net interest income | $ | 46,047 | $ | 34,263 | $ | 131,290 | $ | 101,377 | |||||||
Less: Incremental accretion income | 1,556 | 2,296 | 5,215 | 8,701 | |||||||||||
Core net interest income | $ | 44,491 | $ | 31,967 | $ | 126,075 | $ | 92,676 | |||||||
Average earning assets | $ | 4,712,672 | $ | 3,589,080 | $ | 4,539,350 | $ | 3,503,538 | |||||||
Reported net interest margin | 3.88 | % | 3.80 | % | 3.87 | % | 3.87 | % | |||||||
Core net interest margin | 3.75 | % | 3.54 | % | 3.71 | % | 3.53 | % |
(in thousands) | September 30, 2017 | December 31, 2016 | |||||
Total shareholders' equity | $ | 546,336 | $ | 387,098 | |||
Less: Goodwill | 117,345 | 30,334 | |||||
Less: Intangible assets | 11,745 | 2,151 | |||||
Tangible common equity | $ | 417,246 | $ | 354,613 | |||
Total assets | $ | 5,231,488 | $ | 4,081,328 | |||
Less: Goodwill | 117,345 | 30,334 | |||||
Less: Intangible assets | 11,745 | 2,151 | |||||
Tangible assets | $ | 5,102,398 | $ | 4,048,843 | |||
Tangible common equity to tangible assets | 8.18 | % | 8.76 | % |
(in thousands) | September 30, 2017 | December 31, 2016 | |||||
Total shareholders' equity | $ | 546,336 | $ | 387,098 | |||
Less: Goodwill | 117,345 | 30,334 | |||||
Less: Intangible assets, net of deferred tax liabilities | 5,825 | 800 | |||||
Less: Unrealized gains (losses) | (489 | ) | (1,741 | ) | |||
Plus: Other | 12 | 24 | |||||
Common equity Tier 1 capital | 423,667 | 357,729 | |||||
Plus: Qualifying trust preferred securities | 67,600 | 55,100 | |||||
Plus: Other | 48 | 36 | |||||
Tier 1 capital | 491,315 | 412,865 | |||||
Plus: Tier 2 capital | 93,616 | 93,484 | |||||
Total risk-based capital | 584,931 | 506,349 | |||||
Total risk-weighted assets determined in accordance with prescribed regulatory requirements | $ | 4,743,393 | $ | 3,757,161 | |||
Common equity tier 1 to risk-weighted assets | 8.93 | % | 9.52 | % | |||
Tier 1 capital to risk-weighted assets | 10.36 | % | 10.99 | % | |||
Total risk-based capital to risk-weighted assets | 12.33 | % | 13.48 | % |
Rate Shock | Annual % change in net interest income |
+ 300 bp | 4.7% |
+ 200 bp | 3.2% |
+ 100 bp | 1.6% |
- 100 bp | -6.1% |
Period | Total number of shares purchased (a) | Weighted-average price paid per share | Total number of shares purchased as part of publicly announced plans or programs | Maximum number of shares that may yet be purchased under the plans or programs | ||||||||
July 1, 2017 through July 31, 2017 | 67,201 | 39.84 | 67,201 | 1,747,081 | ||||||||
August 1, 2017 through August 31, 2017 | 123,179 | 38.70 | 123,179 | 1,623,902 | ||||||||
September 1, 2017 through September 30, 2017 | 239,575 | 38.37 | 239,575 | 1,384,327 | ||||||||
Total | 429,955 | $ | 38.69 | 429,955 | 1,384,327 | |||||||
(a) In May 2015, the Company’s board of directors authorized the repurchase of up to two million shares of the Company’s common stock. The repurchases may be made in open market or privately negotiated transactions and the repurchase program will remain in effect until fully utilized or until modified, superseded or terminated. The timing and exact amount of common stock repurchases will depend on a number of factors including, among others, market and general economic conditions, economic capital and regulatory capital considerations, alternative uses of capital, the potential impact on our credit ratings, and contractual and regulatory limitations. |
Exhibit No. | Description |
*12.1 |
*31.1 |
*31.2 |
**32.1 |
**32.2 |
**99.1 |
101 | Pursuant to Rule 405 of Regulation S-T, the following financial information from the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2017, is formatted in XBRL interactive data files: (i) Consolidated Balance Sheet at September 30, 2017 and December 31, 2016; (ii) Consolidated Statement of Income for the three and nine months ended September 30, 2017 and 2016; (iii) Consolidated Statement of Comprehensive Income for the three and nine months ended September 30, 2017 and 2016; (iv) Consolidated Statement of Changes in Equity for the nine months ended September 30, 2017 and 2016; (v) Consolidated Statement of Cash Flows for the nine months ended September 30, 2017 and 2016; and (vi) Notes to Financial Statements. |
ENTERPRISE FINANCIAL SERVICES CORP | |||
By: | /s/ James B. Lally | ||
James B. Lally | |||
Chief Executive Officer | |||
By: | /s/ Keene S. Turner | ||
Keene S. Turner | |||
Chief Financial Officer |
Nine Months Ended September 30, | Years ended December 31, | ||||||||||||||||||
($ in thousands) | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||
Earnings (1): | |||||||||||||||||||
Income before income tax expense | $ | 59,168 | $ | 74,839 | $ | 58,401 | $ | 41,044 | $ | 50,080 | $ | 42,830 | |||||||
Add: Fixed charges from below | 17,850 | 13,729 | 12,369 | 14,386 | 18,137 | 28,002 | |||||||||||||
Earnings including interest expense on deposits (a) | $ | 77,018 | $ | 88,568 | $ | 70,770 | $ | 55,430 | $ | 68,217 | $ | 70,832 | |||||||
Less: interest expense on deposits | (11,975 | ) | (10,841 | ) | (10,412 | ) | (10,487 | ) | (11,142 | ) | (15,406 | ) | |||||||
Earnings excluding interest expense on deposits (b) | $ | 65,043 | $ | 77,727 | $ | 60,358 | $ | 44,943 | $ | 57,075 | $ | 55,426 | |||||||
Fixed charges (1): | |||||||||||||||||||
Interest on deposits | $ | 11,975 | $ | 10,841 | $ | 10,412 | $ | 10,487 | $ | 11,142 | $ | 15,406 | |||||||
Interest on borrowings | 5,875 | 2,888 | 1,957 | 3,899 | 6,995 | 7,761 | |||||||||||||
TARP preferred stock dividends (pre-tax) | — | — | — | — | — | 4,835 | |||||||||||||
Fixed charges including interest on deposits (c) | $ | 17,850 | $ | 13,729 | $ | 12,369 | $ | 14,386 | $ | 18,137 | $ | 28,002 | |||||||
Less: interest expense on deposits | (11,975 | ) | (10,841 | ) | (10,412 | ) | (10,487 | ) | (11,142 | ) | (15,406 | ) | |||||||
Fixed charges excluding interest expense on deposits (d) | $ | 5,875 | $ | 2,888 | $ | 1,957 | $ | 3,899 | $ | 6,995 | $ | 12,596 | |||||||
Ratio of earnings to combined fixed charges | |||||||||||||||||||
Excluding interest on deposits (b/d) | 11.07x | 26.91x | 30.85x | 11.53x | 8.16x | 4.40x | |||||||||||||
Including interest on deposits (a/c) | 4.31x | 6.45x | 5.72x | 3.85x | 3.76x | 2.53x | |||||||||||||
Ratio of earnings to combined fixed charges and preferred dividends: | |||||||||||||||||||
Excluding interest on deposits (b/d) (2) | 11.07x | 26.91x | 30.85x | 11.53x | 8.16x | 6.52x | |||||||||||||
Including interest on deposits (a/c) | 4.31x | 6.45x | 5.72x | 3.85x | 3.76x | 2.85x |
1. | I have reviewed this quarterly report on Form 10-Q of Enterprise Financial Services Corp; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
By: | /s/ James B. Lally | Date: | October 27, 2017 |
James B. Lally | |||
Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Enterprise Financial Services Corp; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
By: | /s/ Keene S. Turner | Date: | October 27, 2017 |
Keene S. Turner | |||
Chief Financial Officer |