(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||||||||
(Address of principal executive offices) | (Zip Code) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading symbol | Name of each exchange on which registered | ||||||
Exhibit 99.1 | ||||||||
Exhibit 99.2 |
HERITAGE FINANCIAL CORPORATION | ||||||||
Date: | ||||||||
April 22, 2021 | /S/ JEFFREY J. DEUEL | |||||||
Jeffrey J. Deuel | ||||||||
President and Chief Executive Officer | ||||||||
(Duly Authorized Officer) |
As of Period End or for the Three Months Ended | |||||||||||||||||
March 31, 2021 | December 31, 2020 | March 31, 2020 | |||||||||||||||
(Dollars in thousands, except per share amounts) | |||||||||||||||||
Net income | $ | 25,344 | $ | 23,882 | $ | 12,191 | |||||||||||
Pre-tax, pre-provision income (1) | $ | 23,247 | $ | 25,178 | $ | 20,777 |
As of Period End or for the Three Months Ended | |||||||||||||||||
March 31, 2021 | December 31, 2020 | March 31, 2020 | |||||||||||||||
(Dollars in thousands, except per share amounts) | |||||||||||||||||
Diluted earnings per share | $ | 0.70 | $ | 0.66 | $ | 0.34 | |||||||||||
Return on average assets (2) | 1.51 | % | 1.42 | % | 0.88 | % | |||||||||||
Pre-tax, pre-provision return on average assets (1) (2) | 1.39 | % | 1.50 | % | 1.50 | % | |||||||||||
Return on average equity (2) | 12.43 | % | 11.74 | % | 6.08 | % | |||||||||||
Return on average tangible common equity (1) (2) | 18.37 | % | 17.62 | % | 9.46 | % | |||||||||||
Net interest margin (2) | 3.51 | % | 3.53 | % | 4.06 | % | |||||||||||
Cost of total deposits (2) | 0.12 | % | 0.14 | % | 0.37 | % | |||||||||||
Efficiency ratio | 61.57 | % | 60.50 | % | 64.20 | % | |||||||||||
Noninterest expense to average total assets (2) | 2.22 | % | 2.30 | % | 2.70 | % | |||||||||||
Total assets | $ | 7,028,392 | $ | 6,615,318 | $ | 5,587,300 | |||||||||||
Loans receivable, net | $ | 4,531,644 | $ | 4,398,462 | $ | 3,804,836 | |||||||||||
Total deposits | $ | 6,019,698 | $ | 5,597,990 | $ | 4,617,948 | |||||||||||
Loan to deposit ratio (3) | 76.3 | % | 79.8 | % | 83.4 | % | |||||||||||
Book value per share | $ | 22.99 | $ | 22.85 | $ | 22.25 | |||||||||||
Tangible book value per share (1) | $ | 15.95 | $ | 15.77 | $ | 15.10 |
As of March 31, 2021 | |||||||||||||||||
PPP1 | PPP2 | Total PPP | |||||||||||||||
(Dollars in thousands) | |||||||||||||||||
Number of funded loans | 4,642 | 2,235 | 6,877 | ||||||||||||||
Total amount funded | $ | 897,353 | $ | 353,491 | $ | 1,250,844 | |||||||||||
Average funded loan size | $ | 193 | $ | 158 | $ | 182 | |||||||||||
Net fees deferred at funding | $ | 28,805 | $ | 14,627 | $ | 43,432 |
As of or for the Three Months Ended | |||||||||||||||||
March 31, 2021 | |||||||||||||||||
PPP1 | PPP2 | Total PPP | |||||||||||||||
(In thousands) | |||||||||||||||||
Net deferred fees recognized during the period | $ | 6,592 | $ | 448 | $ | 7,040 | |||||||||||
Net deferred fees unrecognized as of period end | 8,814 | 14,165 | 22,979 | ||||||||||||||
Principal payments received during the period, including forgiveness payments from the SBA | 174,264 | — | 174,264 | ||||||||||||||
Principal balance remaining as of period end | 556,249 | 353,491 | 909,740 | ||||||||||||||
Amortized cost as of period end | 547,435 | 339,326 | 886,761 |
March 31, 2021 | December 31, 2020 | Change | |||||||||||||||||||||||||||||||||
Balance | % of Total | Balance | % of Total | Amount | % | ||||||||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||||||||
Commercial business: | |||||||||||||||||||||||||||||||||||
Commercial and industrial | $ | 693,539 | 15.1 | % | $ | 733,098 | 16.4 | % | $ | (39,559) | (5.4) | % | |||||||||||||||||||||||
SBA PPP | 886,761 | 19.3 | 715,121 | 16.0 | 171,640 | 24.0 | |||||||||||||||||||||||||||||
Owner-occupied CRE | 881,168 | 19.2 | 856,684 | 19.2 | 24,484 | 2.9 | |||||||||||||||||||||||||||||
Non-owner occupied CRE | 1,427,953 | 31.1 | 1,410,303 | 31.5 | 17,650 | 1.3 | |||||||||||||||||||||||||||||
Total commercial business | 3,889,421 | 84.7 | 3,715,206 | 83.1 | 174,215 | 4.7 | |||||||||||||||||||||||||||||
Residential real estate | 114,856 | 2.5 | 122,756 | 2.7 | (7,900) | (6.4) | |||||||||||||||||||||||||||||
Real estate construction and land development: | |||||||||||||||||||||||||||||||||||
Residential | 79,878 | 1.7 | 78,259 | 1.8 | 1,619 | 2.1 | |||||||||||||||||||||||||||||
Commercial and multifamily | 217,815 | 4.7 | 227,454 | 5.1 | (9,639) | (4.2) | |||||||||||||||||||||||||||||
Total real estate construction and land development | 297,693 | 6.4 | 305,713 | 6.9 | (8,020) | (2.6) | |||||||||||||||||||||||||||||
Consumer | 293,899 | 6.4 | 324,972 | 7.3 | (31,073) | (9.6) | |||||||||||||||||||||||||||||
Loans receivable | 4,595,869 | 100.0 | % | 4,468,647 | 100.0 | % | 127,222 | 2.8 | |||||||||||||||||||||||||||
Allowance for credit losses on loans | (64,225) | (70,185) | 5,960 | (8.5) | |||||||||||||||||||||||||||||||
Loans receivable, net | $ | 4,531,644 | $ | 4,398,462 | $ | 133,182 | 3.0 | % |
March 31, 2021 | December 31, 2020 | Change | |||||||||||||||||||||||||||||||||
Balance | % of Total | Balance | % of Total | Amount | % | ||||||||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||||||||
Noninterest demand deposits | $ | 2,205,562 | 36.6 | % | $ | 1,980,531 | 35.4 | % | $ | 225,031 | 11.4 | % | |||||||||||||||||||||||
Interest bearing demand deposits | 1,796,949 | 29.9 | 1,716,123 | 30.7 | 80,826 | 4.7 | |||||||||||||||||||||||||||||
Money market accounts | 1,046,202 | 17.4 | 962,983 | 17.2 | 83,219 | 8.6 | |||||||||||||||||||||||||||||
Savings accounts | 584,582 | 9.7 | 538,819 | 9.6 | 45,763 | 8.5 | |||||||||||||||||||||||||||||
Total non-maturity deposits | 5,633,295 | 93.6 | 5,198,456 | 92.9 | 434,839 | 8.4 | |||||||||||||||||||||||||||||
Certificates of deposit | 386,403 | 6.4 | 399,534 | 7.1 | (13,131) | (3.3) | |||||||||||||||||||||||||||||
Total deposits | $ | 6,019,698 | 100.0 | % | $ | 5,597,990 | 100.0 | % | $ | 421,708 | 7.5 | % |
March 31, 2021 | December 31, 2020 | March 31, 2020 | |||||||||||||||
Capital Ratios: | |||||||||||||||||
Stockholders' equity to total assets | 11.8 | % | 12.4 | % | 14.3 | % | |||||||||||
Tangible common equity to tangible assets (1) | 8.5 | % | 8.9 | % | 10.2 | % | |||||||||||
Tangible common equity to tangible assets, excluding SBA PPP loans (1) | 9.7 | % | 10.0 | % | 10.2 | % | |||||||||||
Common equity Tier 1 capital to risk-weighted assets (2) | 12.8 | % | 12.3 | % | 11.2 | % | |||||||||||
Tier 1 leverage capital to average quarterly assets (2) | 9.1 | % | 9.0 | % | 10.4 | % | |||||||||||
Tier 1 capital to risk-weighted assets (2) | 13.2 | % | 12.8 | % | 11.6 | % | |||||||||||
Total capital to risk-weighted assets (2) | 14.5 | % | 14.0 | % | 12.5 | % |
As of Period End or for the Three Months Ended | As of Period End or for the Three Months Ended | As of Period End or for the Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||
March 31, 2021 | December 31, 2020 | March 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||
ACL on Loans | ACL on Unfunded | Total | ACL on Loans | ACL on Unfunded | Total | ACL on Loans | ACL on Unfunded | Total | |||||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, beginning of period | $ | 70,185 | $ | 4,681 | $ | 74,866 | $ | 73,340 | $ | 5,022 | $ | 78,362 | $ | 36,171 | $ | 306 | $ | 36,477 | |||||||||||||||||||||||||||||||||||
Impact of CECL adoption | — | — | — | — | — | — | 1,822 | 3,702 | 5,524 | ||||||||||||||||||||||||||||||||||||||||||||
Adjusted balance, beginning of period | 70,185 | 4,681 | 74,866 | 73,340 | 5,022 | 78,362 | 37,993 | 4,008 | 42,001 | ||||||||||||||||||||||||||||||||||||||||||||
(Reversal of) provision for credit losses | (6,135) | (1,064) | (7,199) | (2,792) | (341) | (3,133) | 9,964 | (2,018) | 7,946 | ||||||||||||||||||||||||||||||||||||||||||||
Net recoveries (charge-offs) | 175 | — | 175 | (363) | — | (363) | (417) | — | (417) | ||||||||||||||||||||||||||||||||||||||||||||
Balance, end of period | $ | 64,225 | $ | 3,617 | $ | 67,842 | $ | 70,185 | $ | 4,681 | $ | 74,866 | $ | 47,540 | $ | 1,990 | $ | 49,530 |
Three Months Ended | |||||||||||||||||
March 31, 2021 | December 31, 2020 | March 31, 2020 | |||||||||||||||
(In thousands) | |||||||||||||||||
Balance, beginning of period | $ | 58,092 | $ | 52,604 | $ | 44,525 | |||||||||||
Additions of previously classified pass graded loans | 24 | 1,298 | 255 | ||||||||||||||
Additions of previously classified performing TDR loans and potential problem loans | 444 | 7,047 | 2,579 | ||||||||||||||
Net principal payments and transfers to accruing status | (5,690) | (2,268) | (12,300) | ||||||||||||||
Charge-offs | (2) | (589) | (626) | ||||||||||||||
Transfer to OREO | — | — | (270) | ||||||||||||||
Balance, end of period | $ | 52,868 | $ | 58,092 | $ | 34,163 |
Three Months Ended | |||||||||||||||||
March 31, 2021 | December 31, 2020 | March 31, 2020 | |||||||||||||||
(In thousands) | |||||||||||||||||
Balance, beginning of period | $ | 52,872 | $ | 18,437 | $ | 14,469 | |||||||||||
Addition of previously classified pass graded loans | 1,031 | 3,733 | 1,008 | ||||||||||||||
Addition of previously classified potential problem loans | 4,451 | 37,846 | 2,660 | ||||||||||||||
Addition of previously classified nonaccrual loans | 994 | — | 177 | ||||||||||||||
Transfers of loans to nonaccrual status | — | (4,601) | — | ||||||||||||||
Net principal payments | (3,657) | (2,543) | (266) | ||||||||||||||
Balance, end of period | $ | 55,691 | $ | 52,872 | $ | 18,048 |
Three Months Ended | |||||||||||||||||
March 31, 2021 | December 31, 2020 | March 31, 2020 | |||||||||||||||
(In thousands) | |||||||||||||||||
Balance, beginning of period | $ | 182,342 | $ | 160,942 | $ | 87,788 | |||||||||||
Addition of previously classified pass graded loans | 6,831 | 80,470 | 31,180 | ||||||||||||||
Addition of previously classified nonaccrual loans | 1,138 | — | — | ||||||||||||||
Upgrades to pass graded loan status | (2,395) | (3,973) | (476) | ||||||||||||||
Net principal payments | (19,208) | (14,805) | (9,824) | ||||||||||||||
Transfers of loans to nonaccrual status | (444) | (2,446) | (2,579) | ||||||||||||||
Transfers of loans to performing TDR status | (4,451) | (37,846) | (2,660) | ||||||||||||||
Balance, end of period | $ | 163,813 | $ | 182,342 | $ | 103,429 |
Three Months Ended | |||||||||||||||||
March 31, 2021 | December 31, 2020 | March 31, 2020 | |||||||||||||||
Non-GAAP Measure:(1) | |||||||||||||||||
Loan yield (GAAP) | 4.47 | % | 4.39 | % | 4.97 | % | |||||||||||
Exclude impact from SBA PPP loans | 0.01 | 0.04 | — | ||||||||||||||
Exclude impact from incremental accretion on purchased loans(2) | (0.12) | (0.09) | (0.11) | ||||||||||||||
Loan yield, excluding SBA PPP loans and incremental accretion on purchased loans (non-GAAP) | 4.36 | % | 4.34 | % | 4.86 | % | |||||||||||
Three Months Ended | |||||||||||||||||||||||||||||||||||||||||
March 31, 2021 | December 31, 2020 | March 31, 2020 | Linked-quarter Change | Prior Year Quarter Change | |||||||||||||||||||||||||||||||||||||
(Dollar amounts in thousands) | $ | % | $ | % | |||||||||||||||||||||||||||||||||||||
Service charges and other fees | $ | 4,000 | $ | 4,213 | $ | 4,376 | $ | (213) | (5.1) | % | $ | (376) | (8.6) | % | |||||||||||||||||||||||||||
Gain on sale of investment securities, net | 29 | 55 | 1,014 | (26) | (47.3) | (985) | (97.1) | ||||||||||||||||||||||||||||||||||
Gain on sale of loans, net | 1,370 | 1,919 | 547 | (549) | (28.6) | 823 | 150.5 | ||||||||||||||||||||||||||||||||||
Interest rate swap fees | 152 | 230 | 296 | (78) | (33.9) | (144) | (48.6) | ||||||||||||||||||||||||||||||||||
Bank owned life insurance income | 656 | 1,880 | 885 | (1,224) | (65.1) | (229) | (25.9) | ||||||||||||||||||||||||||||||||||
Other income | 2,044 | 2,988 | 2,368 | (944) | (31.6) | (324) | (13.7) | ||||||||||||||||||||||||||||||||||
Total noninterest income | $ | 8,251 | $ | 11,285 | $ | 9,486 | $ | (3,034) | (26.9) | % | $ | (1,235) | (13.0) | % |
Three Months Ended | |||||||||||||||||||||||||||||||||||||||||
March 31, 2021 | December 31, 2020 | March 31, 2020 | Linked-quarter Change | Prior Year Quarter Change | |||||||||||||||||||||||||||||||||||||
(Dollar amounts in thousands) | $ | % | $ | % | |||||||||||||||||||||||||||||||||||||
Compensation and employee benefits | $ | 22,461 | $ | 22,257 | $ | 22,506 | $ | 204 | 0.9 | % | $ | (45) | (0.2) | % | |||||||||||||||||||||||||||
Occupancy and equipment | 4,454 | 4,364 | 4,564 | 90 | 2.1 | (110) | (2.4) | ||||||||||||||||||||||||||||||||||
Data processing | 3,812 | 3,714 | 3,527 | 98 | 2.6 | 285 | 8.1 | ||||||||||||||||||||||||||||||||||
Marketing | 669 | 783 | 866 | (114) | (14.6) | (197) | (22.7) | ||||||||||||||||||||||||||||||||||
Professional services | 1,331 | 1,289 | 1,377 | 42 | 3.3 | (46) | (3.3) | ||||||||||||||||||||||||||||||||||
State/municipal business and use tax | 972 | 1,128 | 757 | (156) | (13.8) | 215 | 28.4 | ||||||||||||||||||||||||||||||||||
Federal deposit insurance premium | 589 | 703 | — | (114) | (16.2) | 589 | 100.0 | ||||||||||||||||||||||||||||||||||
Other real estate owned, net | — | — | 25 | — | — | (25) | (100.0) | ||||||||||||||||||||||||||||||||||
Amortization of intangible assets | 797 | 859 | 903 | (62) | (7.2) | (106) | (11.7) | ||||||||||||||||||||||||||||||||||
Other expense | 2,157 | 3,465 | 2,735 | (1,308) | (37.7) | (578) | (21.1) | ||||||||||||||||||||||||||||||||||
Total noninterest expense | $ | 37,242 | $ | 38,562 | $ | 37,260 | $ | (1,320) | (3.4) | % | $ | (18) | — | % |
Three Months Ended | |||||||||||||||||||||||||||||||||||||||||
March 31, 2021 | December 31, 2020 | March 31, 2020 | Linked-quarter Change | Prior Year Quarter Change | |||||||||||||||||||||||||||||||||||||
(Dollar amounts in thousands) | $ | % | $ | % | |||||||||||||||||||||||||||||||||||||
Pre-tax income | $ | 30,446 | $ | 28,311 | $ | 12,831 | $ | 2,135 | 7.5 | % | $ | 17,615 | 137.3 | % | |||||||||||||||||||||||||||
Income tax expense | 5,102 | 4,429 | 640 | 673 | 15.2 | 4,462 | 697.2 | ||||||||||||||||||||||||||||||||||
Effective tax rate | 16.8 | % | 15.6 | % | 5.0 | % | n/a | 1.2 | n/a | 11.8 |
March 31, 2021 | December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | |||||||||||||||||||||||||
(Dollar amounts in thousands, except per share amounts) | |||||||||||||||||||||||||||||
Tangible common equity to tangible assets and tangible book value per share: | |||||||||||||||||||||||||||||
Total stockholders' equity (GAAP) | $ | 827,151 | $ | 820,439 | $ | 803,129 | $ | 793,652 | $ | 798,438 | |||||||||||||||||||
Exclude intangible assets | (253,230) | (254,027) | (254,886) | (255,746) | (256,649) | ||||||||||||||||||||||||
Tangible common equity (non-GAAP) | $ | 573,921 | $ | 566,412 | $ | 548,243 | $ | 537,906 | $ | 541,789 | |||||||||||||||||||
Total assets (GAAP) | $ | 7,028,392 | $ | 6,615,318 | $ | 6,685,889 | $ | 6,562,359 | $ | 5,587,300 | |||||||||||||||||||
Exclude intangible assets | (253,230) | (254,027) | (254,886) | (255,746) | (256,649) | ||||||||||||||||||||||||
Tangible assets (non-GAAP) | $ | 6,775,162 | $ | 6,361,291 | $ | 6,431,003 | $ | 6,306,613 | $ | 5,330,651 | |||||||||||||||||||
Total assets (GAAP) | $ | 7,028,392 | $ | 6,615,318 | $ | 6,685,889 | $ | 6,562,359 | $ | 5,587,300 | |||||||||||||||||||
Exclude intangible assets | (253,230) | (254,027) | (254,886) | (255,746) | (256,649) | ||||||||||||||||||||||||
Exclude SBA PPP loans | (886,761) | (715,121) | (867,782) | (856,490) | — | ||||||||||||||||||||||||
Tangible assets, excluding SBA PPP loans (non-GAAP) | $ | 5,888,401 | $ | 5,646,170 | $ | 5,563,221 | $ | 5,450,123 | $ | 5,330,651 | |||||||||||||||||||
March 31, 2021 | December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | |||||||||||||||||||||||||
(Dollar amounts in thousands, except per share amounts) | |||||||||||||||||||||||||||||
Stockholders' equity to total assets (GAAP) | 11.8 | % | 12.4 | % | 12.0 | % | 12.1 | % | 14.3 | % | |||||||||||||||||||
Tangible common equity to tangible assets (non-GAAP) | 8.5 | % | 8.9 | % | 8.5 | % | 8.5 | % | 10.2 | % | |||||||||||||||||||
Tangible common equity to tangible assets, excluding SBA PPP loans (non-GAAP) | 9.7 | % | 10.0 | % | 9.9 | % | 9.9 | % | 10.2 | % | |||||||||||||||||||
Shares outstanding | 35,981,317 | 35,912,243 | 35,910,300 | 35,908,908 | 35,888,494 | ||||||||||||||||||||||||
Book value per share (GAAP) | $ | 22.99 | $ | 22.85 | $ | 22.36 | $ | 22.10 | $ | 22.25 | |||||||||||||||||||
Tangible book value per share (non-GAAP) | $ | 15.95 | $ | 15.77 | $ | 15.27 | $ | 14.98 | $ | 15.10 |
March 31, 2021 | December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | |||||||||||||||||||||||||
(Dollar amounts in thousands) | |||||||||||||||||||||||||||||
ACL on loans to loans receivable, excluding SBA PPP loans: | |||||||||||||||||||||||||||||
Allowance for credit losses on loans | $ | 64,225 | $ | 70,185 | $ | 73,340 | $ | 71,501 | $ | 47,540 | |||||||||||||||||||
Loans receivable (GAAP) | $ | 4,595,869 | $ | 4,468,647 | $ | 4,666,730 | $ | 4,666,333 | $ | 3,852,376 | |||||||||||||||||||
Exclude SBA PPP loans | (886,761) | (715,121) | (867,782) | (856,490) | — | ||||||||||||||||||||||||
Loans receivable, excluding SBA PPP loans (non-GAAP) | $ | 3,709,108 | $ | 3,753,526 | $ | 3,798,948 | $ | 3,809,843 | $ | 3,852,376 | |||||||||||||||||||
ACL on loans to loans receivable (GAAP) | 1.40 | % | 1.57 | % | 1.57 | % | 1.53 | % | 1.23 | % | |||||||||||||||||||
ACL on loans to loans receivable, excluding SBA PPP loans (non-GAAP) | 1.73 | % | 1.87 | % | 1.93 | % | 1.88 | % | 1.23 | % |
Three Months Ended | |||||||||||||||||
March 31, 2021 | December 31, 2020 | March 31, 2020 | |||||||||||||||
(Dollar amounts in thousands) | |||||||||||||||||
Pre-tax, pre-provision income and pre-tax, pre-provision return on average equity, annualized: | |||||||||||||||||
Net income (GAAP) | $ | 25,344 | $ | 23,882 | $ | 12,191 | |||||||||||
Add income tax expense | 5,102 | 4,429 | 640 | ||||||||||||||
Add (reversal of) provision for credit losses | (7,199) | (3,133) | 7,946 | ||||||||||||||
Pre-tax, pre-provision income (non-GAAP) | $ | 23,247 | $ | 25,178 | $ | 20,777 | |||||||||||
Average total assets (GAAP) | $ | 6,799,625 | $ | 6,675,477 | $ | 5,560,212 | |||||||||||
Return on average assets, annualized (GAAP) | 1.51 | % | 1.42 | % | 0.88 | % | |||||||||||
Pre-tax, pre-provision return on average assets (non-GAAP) | 1.39 | % | 1.50 | % | 1.50 | % | |||||||||||
Three Months Ended | |||||||||||||||||
March 31, 2021 | December 31, 2020 | March 31, 2020 | |||||||||||||||
(Dollar amounts in thousands) | |||||||||||||||||
Return on average tangible common equity, annualized: | |||||||||||||||||
Net income (GAAP) | $ | 25,344 | $ | 23,882 | $ | 12,191 | |||||||||||
Add amortization of intangible assets | 797 | 859 | 903 | ||||||||||||||
Exclude tax effect of adjustment | (167) | (180) | (190) | ||||||||||||||
Tangible net income (non-GAAP) | $ | 25,974 | $ | 24,561 | $ | 12,904 | |||||||||||
Average stockholders' equity (GAAP) | $ | 827,021 | $ | 808,999 | $ | 806,071 | |||||||||||
Exclude average intangible assets | (253,747) | (254,587) | (257,234) | ||||||||||||||
Average tangible common stockholders' equity (non-GAAP) | $ | 573,274 | $ | 554,412 | $ | 548,837 | |||||||||||
Return on average equity, annualized (GAAP) | 12.43 | % | 11.74 | % | 6.08 | % | |||||||||||
Return on average tangible common equity, annualized (non-GAAP) | 18.37 | % | 17.62 | % | 9.46 | % |
Three Months Ended | |||||||||||||||||
March 31, 2021 | December 31, 2020 | March 31, 2020 | |||||||||||||||
(Dollar amounts in thousands) | |||||||||||||||||
Loan yield, excluding SBA PPP loans and incremental accretion on purchased loans, annualized: | |||||||||||||||||
Interest and fees on loans (GAAP) | $ | 49,524 | $ | 50,089 | $ | 46,277 | |||||||||||
Exclude SBA PPP loans interest and fees | (9,136) | (8,739) | — | ||||||||||||||
Exclude incremental accretion on purchased loans | (1,075) | (795) | (1,012) | ||||||||||||||
Adjusted interest and fees on loans (non-GAAP) | $ | 39,313 | $ | 40,555 | $ | 45,265 | |||||||||||
Average loans receivable, net (GAAP) | $ | 4,490,499 | $ | 4,540,962 | $ | 3,748,573 | |||||||||||
Exclude average SBA PPP loans | (832,148) | (822,460) | — | ||||||||||||||
Adjusted average loans receivable, net (non-GAAP) | $ | 3,658,351 | $ | 3,718,502 | $ | 3,748,573 | |||||||||||
Loan yield, annualized (GAAP) | 4.47 | % | 4.39 | % | 4.97 | % | |||||||||||
Loan yield, excluding SBA PPP loans and incremental accretion on purchased loans, annualized (non-GAAP) | 4.36 | % | 4.34 | % | 4.86 | % |
March 31, 2021 | December 31, 2020 | ||||||||||
Assets | |||||||||||
Cash on hand and in banks | $ | 93,306 | $ | 91,918 | |||||||
Interest earning deposits | 841,010 | 651,404 | |||||||||
Cash and cash equivalents | 934,316 | 743,322 | |||||||||
Investment securities available for sale, at fair value, net (amortized cost of $876,357 and $770,195, respectively) | 893,558 | 802,163 | |||||||||
Loans held for sale | 6,801 | 4,932 | |||||||||
Loans receivable | 4,595,869 | 4,468,647 | |||||||||
Allowance for credit losses on loans | (64,225) | (70,185) | |||||||||
Loans receivable, net | 4,531,644 | 4,398,462 | |||||||||
Other real estate owned | — | — | |||||||||
Premises and equipment, net | 84,533 | 85,452 | |||||||||
Federal Home Loan Bank stock, at cost | 7,933 | 6,661 | |||||||||
Bank owned life insurance | 108,341 | 107,580 | |||||||||
Accrued interest receivable | 19,447 | 19,418 | |||||||||
Prepaid expenses and other assets | 188,589 | 193,301 | |||||||||
Other intangible assets, net | 12,291 | 13,088 | |||||||||
Goodwill | 240,939 | 240,939 | |||||||||
Total assets | $ | 7,028,392 | $ | 6,615,318 | |||||||
Liabilities and Stockholders' Equity | |||||||||||
Deposits | $ | 6,019,698 | $ | 5,597,990 | |||||||
Junior subordinated debentures | 20,960 | 20,887 | |||||||||
Securities sold under agreement to repurchase | 36,503 | 35,683 | |||||||||
Accrued expenses and other liabilities | 124,080 | 140,319 | |||||||||
Total liabilities | 6,201,241 | 5,794,879 | |||||||||
Common stock | 571,204 | 571,021 | |||||||||
Retained earnings | 242,486 | 224,400 | |||||||||
Accumulated other comprehensive income, net | 13,461 | 25,018 | |||||||||
Total stockholders' equity | 827,151 | 820,439 | |||||||||
Total liabilities and stockholders' equity | $ | 7,028,392 | $ | 6,615,318 | |||||||
Shares outstanding | 35,981,317 | 35,912,243 |
Three Months Ended | |||||||||||||||||
March 31, 2021 | December 31, 2020 | March 31, 2020 | |||||||||||||||
Interest income | |||||||||||||||||
Interest and fees on loans | $ | 49,524 | $ | 50,089 | $ | 46,277 | |||||||||||
Taxable interest on investment securities | 3,534 | 3,473 | 5,633 | ||||||||||||||
Nontaxable interest on investment securities | 958 | 973 | 756 | ||||||||||||||
Interest on interest earning deposits | 175 | 142 | 420 | ||||||||||||||
Total interest income | 54,191 | 54,677 | 53,086 | ||||||||||||||
Interest expense | |||||||||||||||||
Deposits | 1,728 | 1,993 | 4,216 | ||||||||||||||
Junior subordinated debentures | 187 | 191 | 285 | ||||||||||||||
Other borrowings | 38 | 38 | 34 | ||||||||||||||
Total interest expense | 1,953 | 2,222 | 4,535 | ||||||||||||||
Net interest income | 52,238 | 52,455 | 48,551 | ||||||||||||||
(Reversal of) provision for credit losses | (7,199) | (3,133) | 7,946 | ||||||||||||||
Net interest income after (reversal of) provision for credit losses | 59,437 | 55,588 | 40,605 | ||||||||||||||
Noninterest income | |||||||||||||||||
Service charges and other fees | 4,000 | 4,213 | 4,376 | ||||||||||||||
Gain on sale of investment securities, net | 29 | 55 | 1,014 | ||||||||||||||
Gain on sale of loans, net | 1,370 | 1,919 | 547 | ||||||||||||||
Interest rate swap fees | 152 | 230 | 296 | ||||||||||||||
Bank owned life insurance income | 656 | 1,880 | 885 | ||||||||||||||
Other income | 2,044 | 2,988 | 2,368 | ||||||||||||||
Total noninterest income | 8,251 | 11,285 | 9,486 | ||||||||||||||
Noninterest expense | |||||||||||||||||
Compensation and employee benefits | 22,461 | 22,257 | 22,506 | ||||||||||||||
Occupancy and equipment | 4,454 | 4,364 | 4,564 | ||||||||||||||
Data processing | 3,812 | 3,714 | 3,527 | ||||||||||||||
Marketing | 669 | 783 | 866 | ||||||||||||||
Professional services | 1,331 | 1,289 | 1,377 | ||||||||||||||
State/municipal business and use taxes | 972 | 1,128 | 757 | ||||||||||||||
Federal deposit insurance premium | 589 | 703 | — | ||||||||||||||
Other real estate owned, net | — | — | 25 | ||||||||||||||
Amortization of intangible assets | 797 | 859 | 903 | ||||||||||||||
Other expense | 2,157 | 3,465 | 2,735 | ||||||||||||||
Total noninterest expense | 37,242 | 38,562 | 37,260 | ||||||||||||||
Income before income taxes | 30,446 | 28,311 | 12,831 | ||||||||||||||
Income tax expense | 5,102 | 4,429 | 640 | ||||||||||||||
Net income | $ | 25,344 | $ | 23,882 | $ | 12,191 | |||||||||||
Basic earnings per share | $ | 0.70 | $ | 0.66 | $ | 0.34 | |||||||||||
Diluted earnings per share | $ | 0.70 | $ | 0.66 | $ | 0.34 | |||||||||||
Dividends declared per share | $ | 0.20 | $ | 0.20 | $ | 0.20 | |||||||||||
Three Months Ended | |||||||||||||||||
March 31, 2021 | December 31, 2020 | March 31, 2020 | |||||||||||||||
Allowance for Credit Losses on Loans: | |||||||||||||||||
Balance, beginning of period | $ | 70,185 | $ | 73,340 | $ | 36,171 | |||||||||||
Impact of CECL adoption | — | — | 1,822 | ||||||||||||||
Adjusted balance, beginning of period | 70,185 | 73,340 | 37,993 | ||||||||||||||
(Reversal of) provision for credit losses on loans | (6,135) | (2,792) | 9,964 | ||||||||||||||
Charge-offs: | |||||||||||||||||
Commercial business | (1) | (198) | (1,222) | ||||||||||||||
Real estate construction and land development | (1) | (417) | — | ||||||||||||||
Consumer | (185) | (313) | (375) | ||||||||||||||
Total charge-offs | (187) | (928) | (1,597) | ||||||||||||||
Recoveries: | |||||||||||||||||
Commercial business | 207 | 310 | 1,069 | ||||||||||||||
Residential real estate | — | — | 3 | ||||||||||||||
Real estate construction and land development | 16 | 118 | 14 | ||||||||||||||
Consumer | 139 | 137 | 94 | ||||||||||||||
Total recoveries | 362 | 565 | 1,180 | ||||||||||||||
Net recoveries (charge-offs) | 175 | (363) | (417) | ||||||||||||||
Balance, end of period | $ | 64,225 | $ | 70,185 | $ | 47,540 | |||||||||||
Net recoveries (charge-offs) on loans to average loans, annualized | 0.02 | % | (0.03) | % | (0.04) | % |
March 31, 2021 | December 31, 2020 | ||||||||||
Nonperforming Assets: | |||||||||||
Nonaccrual loans: | |||||||||||
Commercial business | $ | 51,755 | $ | 56,786 | |||||||
Residential real estate | 66 | 184 | |||||||||
Real estate construction and land development | 1,021 | 1,022 | |||||||||
Consumer | 26 | 100 | |||||||||
Total nonaccrual loans | 52,868 | 58,092 | |||||||||
Other real estate owned | — | — | |||||||||
Nonperforming assets | $ | 52,868 | $ | 58,092 | |||||||
Restructured performing loans | $ | 55,691 | $ | 52,872 | |||||||
Accruing loans past due 90 days or more | — | — | |||||||||
Potential problem loans (1) | 163,813 | 182,342 | |||||||||
ACL on loans to: | |||||||||||
Loans receivable | 1.40 | % | 1.57 | % | |||||||
Loans receivable, excluding SBA PPP loans (2) | 1.73 | % | 1.87 | % | |||||||
Nonaccrual loans | 121.48 | % | 120.82 | % | |||||||
Nonperforming loans to loans receivable | 1.15 | % | 1.30 | % | |||||||
Nonperforming assets to total assets | 0.75 | % | 0.88 | % |
Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||
March 31, 2021 | December 31, 2020 | March 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Average Balance | Interest Earned/ Paid | Average Yield/ Rate (1) | Average Balance | Interest Earned/ Paid | Average Yield/ Rate (1) | Average Balance | Interest Earned/ Paid | Average Yield/ Rate (1) | |||||||||||||||||||||||||||||||||||||||||||||
Interest Earning Assets: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans receivable, net (2) (3) | $ | 4,490,499 | $ | 49,524 | 4.47 | % | $ | 4,540,962 | $ | 50,089 | 4.39 | % | $ | 3,748,573 | $ | 46,277 | 4.97 | % | |||||||||||||||||||||||||||||||||||
Taxable securities | 674,268 | 3,534 | 2.13 | 649,287 | 3,473 | 2.13 | 815,686 | 5,633 | 2.78 | ||||||||||||||||||||||||||||||||||||||||||||
Nontaxable securities (3) | 163,914 | 958 | 2.37 | 164,025 | 973 | 2.36 | 122,153 | 756 | 2.49 | ||||||||||||||||||||||||||||||||||||||||||||
Interest earning deposits | 713,885 | 175 | 0.10 | 559,491 | 142 | 0.10 | 125,357 | 420 | 1.35 | ||||||||||||||||||||||||||||||||||||||||||||
Total interest earning assets | 6,042,566 | 54,191 | 3.64 | % | 5,913,765 | 54,677 | 3.68 | % | 4,811,769 | 53,086 | 4.44 | % | |||||||||||||||||||||||||||||||||||||||||
Noninterest earning assets | 757,059 | 761,712 | 748,443 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total assets | $ | 6,799,625 | $ | 6,675,477 | 5,560,212 | ||||||||||||||||||||||||||||||||||||||||||||||||
Interest Bearing Liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Certificates of deposit | $ | 393,268 | $ | 559 | 0.58 | % | $ | 421,633 | $ | 720 | 0.68 | % | $ | 528,009 | $ | 2,012 | 1.53 | % | |||||||||||||||||||||||||||||||||||
Savings accounts | 560,094 | 95 | 0.07 | 532,301 | 106 | 0.08 | 434,459 | 188 | 0.17 | ||||||||||||||||||||||||||||||||||||||||||||
Interest bearing demand and money market accounts | 2,732,134 | 1,074 | 0.16 | 2,680,084 | 1,167 | 0.17 | 2,201,921 | 2,016 | 0.37 | ||||||||||||||||||||||||||||||||||||||||||||
Total interest bearing deposits | 3,685,496 | 1,728 | 0.19 | 3,634,018 | 1,993 | 0.22 | 3,164,389 | 4,216 | 0.54 | ||||||||||||||||||||||||||||||||||||||||||||
Junior subordinated debentures | 20,913 | 187 | 3.63 | 20,840 | 191 | 3.65 | 20,620 | 285 | 5.56 | ||||||||||||||||||||||||||||||||||||||||||||
Securities sold under agreement to repurchase | 40,074 | 38 | 0.38 | 35,278 | 38 | 0.43 | 19,246 | 33 | 0.69 | ||||||||||||||||||||||||||||||||||||||||||||
FHLB advances and other borrowings | — | — | — | — | — | — | 989 | 1 | 0.41 | ||||||||||||||||||||||||||||||||||||||||||||
Total interest bearing liabilities | 3,746,483 | 1,953 | 0.21 | % | 3,690,136 | 2,222 | 0.24 | % | 3,205,244 | 4,535 | 0.57 | % | |||||||||||||||||||||||||||||||||||||||||
Noninterest demand deposits | 2,091,359 | 2,034,425 | 1,420,247 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other noninterest bearing liabilities | 134,762 | 141,917 | 128,650 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders’ equity | 827,021 | 808,999 | 806,071 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 6,799,625 | $ | 6,675,477 | $ | 5,560,212 | |||||||||||||||||||||||||||||||||||||||||||||||
Net interest income | $ | 52,238 | $ | 52,455 | $ | 48,551 | |||||||||||||||||||||||||||||||||||||||||||||||
Net interest spread | 3.43 | % | 3.44 | % | 3.87 | % | |||||||||||||||||||||||||||||||||||||||||||||||
Net interest margin | 3.51 | % | 3.53 | % | 4.06 | % | |||||||||||||||||||||||||||||||||||||||||||||||
Average interest earning assets to average interest bearing liabilities | 161.29 | % | 160.26 | % | 150.12 | % |
Three Months Ended | |||||||||||||||||||||||||||||
March 31, 2021 | December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | |||||||||||||||||||||||||
Earnings: | |||||||||||||||||||||||||||||
Net interest income | $ | 52,238 | $ | 52,455 | $ | 49,678 | $ | 50,313 | $ | 48,551 | |||||||||||||||||||
(Reversal of) provision for credit losses | (7,199) | (3,133) | 2,730 | 28,563 | 7,946 | ||||||||||||||||||||||||
Noninterest income | 8,251 | 11,285 | 8,210 | 8,248 | 9,486 | ||||||||||||||||||||||||
Noninterest expense | 37,242 | 38,562 | 36,045 | 37,073 | 37,260 | ||||||||||||||||||||||||
Net income (loss) | 25,344 | 23,882 | 16,363 | (6,139) | 12,191 | ||||||||||||||||||||||||
Basic earnings (losses) per share | $ | 0.70 | $ | 0.66 | $ | 0.46 | $ | (0.17) | $ | 0.34 | |||||||||||||||||||
Diluted earnings (losses) per share | $ | 0.70 | $ | 0.66 | $ | 0.46 | $ | (0.17) | $ | 0.34 | |||||||||||||||||||
Average Balances: | |||||||||||||||||||||||||||||
Loans receivable, net (1) | $ | 4,490,499 | $ | 4,540,962 | $ | 4,605,389 | $ | 4,442,108 | $ | 3,748,573 | |||||||||||||||||||
Investment securities | 838,182 | 813,312 | 860,198 | 924,987 | 937,839 | ||||||||||||||||||||||||
Total interest earning assets | 6,042,566 | 5,913,765 | 5,855,240 | 5,552,494 | 4,811,769 | ||||||||||||||||||||||||
Total assets | 6,799,625 | 6,675,477 | 6,620,980 | 6,310,024 | 5,560,212 | ||||||||||||||||||||||||
Total interest bearing deposits | 3,685,496 | 3,634,018 | 3,620,503 | 3,430,542 | 3,164,389 | ||||||||||||||||||||||||
Total noninterest demand deposits | 2,091,359 | 2,034,425 | 1,998,772 | 1,883,227 | 1,420,247 | ||||||||||||||||||||||||
Stockholders' equity | 827,021 | 808,999 | 799,738 | 807,539 | 806,071 | ||||||||||||||||||||||||
Financial Ratios: | |||||||||||||||||||||||||||||
Return on average assets (2) | 1.51 | % | 1.42 | % | 1.00 | % | (0.39) | % | 0.88 | % | |||||||||||||||||||
Return on average common equity (2) | 12.43 | 11.74 | 8.28 | (3.06) | 6.08 | ||||||||||||||||||||||||
Return on average tangible common equity (2) (3) | 18.37 | 17.62 | 12.66 | (3.96) | 9.46 | ||||||||||||||||||||||||
Efficiency ratio | 61.57 | 60.50 | 62.27 | 63.31 | 64.20 | ||||||||||||||||||||||||
Noninterest expense to average total assets (2) | 2.22 | 2.30 | 2.17 | 2.36 | 2.70 | ||||||||||||||||||||||||
Net interest margin (2) | 3.51 | 3.53 | 3.38 | 3.64 | 4.06 | ||||||||||||||||||||||||
Net interest spread (2) | 3.43 | 3.44 | 3.26 | 3.48 | 3.87 |
As of Period End or for the Three Months Ended | |||||||||||||||||||||||||||||
March 31, 2021 | December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | |||||||||||||||||||||||||
Select Balance Sheet: | |||||||||||||||||||||||||||||
Total assets | $ | 7,028,392 | $ | 6,615,318 | $ | 6,685,889 | $ | 6,562,359 | $ | 5,587,300 | |||||||||||||||||||
Loans receivable, net | 4,531,644 | 4,398,462 | 4,593,390 | 4,594,832 | 3,804,836 | ||||||||||||||||||||||||
Investment securities | 893,558 | 802,163 | 834,492 | 879,927 | 961,092 | ||||||||||||||||||||||||
Deposits | 6,019,698 | 5,597,990 | 5,689,048 | 5,567,733 | 4,617,948 | ||||||||||||||||||||||||
Noninterest demand deposits | 2,205,562 | 1,980,531 | 1,989,247 | 1,999,754 | 1,415,177 | ||||||||||||||||||||||||
Stockholders' equity | 827,151 | 820,439 | 803,129 | 793,652 | 798,438 | ||||||||||||||||||||||||
Financial Measures: | |||||||||||||||||||||||||||||
Book value per share | $ | 22.99 | $ | 22.85 | $ | 22.36 | $ | 22.10 | $ | 22.25 | |||||||||||||||||||
Tangible book value per share (1) | 15.95 | 15.77 | 15.27 | 14.98 | 15.10 | ||||||||||||||||||||||||
Stockholders' equity to total assets | 11.8 | % | 12.4 | % | 12.0 | % | 12.1 | % | 14.3 | % | |||||||||||||||||||
Tangible common equity to tangible assets (1) | 8.5 | 8.9 | 8.5 | 8.5 | 10.2 | ||||||||||||||||||||||||
Tangible common equity to tangible assets, excluding SBA PPP loans(1) | 9.7 | 10.0 | 9.9 | 9.9 | 10.2 | ||||||||||||||||||||||||
Loans to deposits ratio | 76.3 | 79.8 | 82.0 | 83.8 | 83.4 | ||||||||||||||||||||||||
Credit Quality Metrics: | |||||||||||||||||||||||||||||
ACL on loans to: | |||||||||||||||||||||||||||||
Loans receivable | 1.40 | % | 1.57 | % | 1.57 | % | 1.53 | % | 1.23 | % | |||||||||||||||||||
Loans receivable, excluding SBA PPP loans (1) | 1.73 | 1.87 | 1.93 | 1.88 | 1.23 | ||||||||||||||||||||||||
Nonperforming loans | 121.48 | 120.82 | 139.42 | 212.62 | 139.16 | ||||||||||||||||||||||||
Nonperforming loans to loans receivable | 1.15 | 1.30 | 1.13 | 0.72 | 0.89 | ||||||||||||||||||||||||
Nonperforming assets to total assets | 0.75 | 0.88 | 0.79 | 0.51 | 0.63 | ||||||||||||||||||||||||
Net recoveries (charge-offs) on loans to average loans receivable | 0.02 | (0.03) | (0.04) | (0.18) | (0.04) | ||||||||||||||||||||||||
Criticized Loans by Credit Quality Rating: | |||||||||||||||||||||||||||||
Special Mention | $ | 108,975 | $ | 132,036 | $ | 104,781 | $ | 60,498 | $ | 61,968 | |||||||||||||||||||
Substandard | 160,461 | 158,515 | 123,570 | 90,552 | 89,510 | ||||||||||||||||||||||||
Other Metrics: | |||||||||||||||||||||||||||||
Number of banking offices | 53 | 61 | 62 | 62 | 62 | ||||||||||||||||||||||||
Average number of full-time equivalent employees | 840 | 848 | 857 | 877 | 877 | ||||||||||||||||||||||||
Deposits per branch | $ | 113,579 | $ | 91,770 | $ | 91,759 | $ | 89,802 | $ | 74,483 | |||||||||||||||||||
Average assets per full-time equivalent employee | 8,098 | 7,873 | 7,727 | 7,195 | 6,342 |
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