EX-99.1 2 tm223804d1_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

 

BERKSHIRE HILLS REPORTS IMPROVED FOURTH QUARTER RESULTS;

 

SETS ANNUAL MEETING DATE

 

BOSTON, January 20, 2022 - Berkshire Hills Bancorp, Inc. (NYSE: BHLB) today reported that fourth quarter earnings per share (EPS) increased year-over-year by 40% to $0.42 in 2021, and by 50% to $0.42 on an adjusted non-GAAP basis. For the year 2021, Berkshire reported EPS of $2.39, or $1.69 on an adjusted basis, compared to a 2020 loss of ($10.60), or a $0.60 profit, on an adjusted basis.

 

Results for the quarter and full year 2021 demonstrate strong improvement over the prior year and a solid start to Berkshire’s Exciting Strategic Transformation (BEST) plan that is targeted to significantly improve stakeholder value while making Berkshire the leading socially responsible Community Bank in New England and beyond.

 

FOURTH QUARTER FINANCIAL HIGHLIGHTS (Comparisons are to the prior year unless otherwise stated; non-GAAP measures are reconciled on pages F-9 and F-10).

 

·4% increase in non-interest income excluding gains/losses
o18% increase excluding insurance operations sold in 2021
·1% increase in commercial loans quarter-over-quarter
o4% increase in commercial and industrial loans
·Total loans stable quarter-over-quarter; up 0.5% before non-strategic run-off
·45% decrease in non-performing assets, measuring 0.32% of total year-end assets
·$3 million benefit to the credit loss provision due to a release of the credit loss allowance
·71% reduction in wholesale funding to 3% of assets (period-end balance)
·Cost of deposits down year-over-year to 0.19% from 0.47%

 

CEO Nitin Mhatre stated, “We posted commercial portfolio loan growth during the quarter and our fee income demonstrated strong year-over-year momentum across most business lines. We announced and executed several initiatives in the most recent quarter which are targeted to strengthen our franchise and further improve our future operating results as part of our BEST plan. Berkshire continued to hire strong new talent in our SBA lending, wealth management and private banking divisions, and enhanced our business banking and MyBanker teams as well. Our Board of Directors was joined by former banking executive and digital, financial and risk expert Nina Charnley. Berkshire expanded its consumer lending solutions, providing more convenient and affordable access to consumers in its markets. The Bank also expanded its wealth management offerings with a suite of mission-aligned socially responsible investing portfolios and is already seeing some early success.”

 

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Mr. Mhatre concluded, “We’re pleased with the strong year-over-year improvement in net profit and are tracking ahead of our BEST plan financial targets. Berkshire Bank’s strong liquidity and capital positions it well for higher expected interest rates and planned business growth in 2022. I thank our Berkshire team for its commitment to exceptional service to our customers and markets, its dedication to community comeback, and for making our Company an award-winning workplace and outstanding corporate citizen. We’re pleased that our shareholders have benefited from our endeavors as our share price has reached a nearly two year high and appreciated at about twice the growth rate of peers in 2021. Also, we announced yesterday that our Board has authorized a share repurchase up to $140 million in total cost and we’re targeting further benefit to our shareholders from this plan in 2022.”

 

ANNUAL MEETING

 

The Board of Directors determined that the Annual Meeting of Shareholders will be held at 10:00 a.m. on Wednesday, May 18, 2022 and may be convened as a virtual meeting. The date of Friday, March 25, 2022 was established as the record date for the determination of shareholders entitled to notice of, and to vote at, the Annual Meeting. Further information about the annual meeting will be available in early April at the Company’s website at ir.berkshirebank.com.

 

RESULTS OF OPERATIONS

 

Earnings: Fourth quarter GAAP earnings per share increased to $0.42 in 2021 from $0.30 in 2020, and decreased from $1.31 in the third quarter of 2021. Berkshire’s non-GAAP measure of fourth quarter adjusted EPS was also $0.42 in 2021, which was a 50% increase year-over-year primarily due to a benefit to the loan loss provision reflecting improved credit performance in 2021. Adjusted EPS decreased 21% quarter-over-quarter reflecting changes in revenue mix as the Company is investing in new revenue generating sources targeted to benefit future periods. Fourth quarter return on equity increased year-over-year to 6.9% in 2021, and adjusted return on tangible common equity improved to 7.3%. These results included the benefit of the repurchase of 5% of outstanding shares during 2021.

 

Revenue: Fourth quarter revenue decreased year-over-year and quarter-over-quarter reflecting low interest rates and constrained customer demand during the ongoing pandemic. By accumulating lower yielding short term investments, the Company accepted lower 2021 revenues and is positioned to benefit from projected stronger loan demand and higher interest rates in 2022. Fourth quarter net interest income decreased 8% year-over-year and 3% quarter-over-quarter, reflecting both volume and margin changes, as well as the sale of the Company’s Mid-Atlantic branch operations. The fourth quarter 2021 net interest margin was 2.60%, compared to 2.56% in the linked quarter, and reflected the benefit of the reduction in higher cost wholesale funding and the roll-down in the cost of maturing retail time deposits.

 

Non-interest income excluding gains/losses increased by 4% year-over-year, and by 18% excluding insurance operations sold in 2021, including 1% growth of this measure quarter-over-quarter. Most ongoing categories of quarterly fee income increased year-over-year, despite the sale of the Mid-Atlantic branch operations. SBA lending revenue climbed again to $5.8 million, marking the third straight quarter of record revenues for this business line. Full year SBA lending non-interest revenue was a record $21 million. Wealth management revenue increased 10% year-over-year, totaling $2.6 million for the quarter. In recent months, the Company has recruited seasoned bankers to support ongoing growth in both of these business lines.

 

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Provision for Credit Losses on Loans: Berkshire recorded a $3 million benefit to the fourth quarter provision, compared to a charge of $10 million in the fourth quarter of 2020 and a benefit of $4 million in the linked quarter. This resulted from a $7 million release of the credit loss allowance net of $4 million in net loan charge-offs. The Company also utilizes the non-GAAP financial measure of Pre-tax Pre-Provision Net Revenue (“PPNR”) to evaluate the results of operations before the impact of the provision and tax expense. PPNR measured $21 million in the most recent quarter.

 

Expense: Fourth quarter 2021 non-interest expense totaled $69 million, decreasing by 3% year-over-year and measuring flat quarter-over-quarter. Procurement initiatives have been deployed across the company, contributing to lower expenses for occupancy and professional services. Growth in compensation and technology costs include the impacts of frontline banker hires and digital initiatives. Full time equivalent staff totaled 1,319 positions at period-end, compared to 1,505 positions at the start of the year. The effective tax rate was 17% in the final quarter of 2021, and the tax rate was 20% for the full year 2021 including the impact of higher taxable income from third quarter sale gains. Tax credit investments provided $0.01 in EPS benefit in the most recent quarter, net of the related amortization recorded to non-interest income. This was unchanged from the prior quarter.

 

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

 

Summary: Assets totaled $11.6 billion at year-end 2021. Total assets decreased by 10% year-over-year due primarily to the sale of the Mid-Atlantic branch operations and expected repayments of SBA guaranteed commercial Paycheck Protection Program (“PPP”) loans. In the fourth quarter, liquidity was used to increase the investment securities portfolio and further reduce higher cost wholesale funds sources. Short-term investments remained elevated at 13% of total assets at year-end, positioning the bank to benefit from expected increases in interest rates. Capital metrics also remained elevated, with tangible equity measuring 10.0% of total year-end tangible assets. The Company’s strong capital and liquidity position it for future targeted loan growth and capital distributions which are integral elements of its BEST strategic plan.

 

Loans: Period-end loans were stable in the fourth quarter of 2021, as 1% growth in commercial balances offset 4% decreases in residential mortgage and consumer loan balances. Commercial and industrial loan balances grew 4%, including strong growth in asset-based lending. Quarterly results were net of runoff in targeted portfolios. For the year, loans decreased by 16%, including run-off in targeted portfolios consisting of a $603 million decrease in PPP loans, a $112 million decrease in indirect auto loans, and a $158 million decrease in commercial loans in COVID-sensitive industries. This accounted for approximately half of the full year decline in loan balances. Much of the remaining decline was due to runoff of residential mortgages which were not replaced in the low yield environment during the year. The Company has expanded its commercial and business banking teams and is developing new sourcing channels for residential mortgages and consumer loans in its markets to support planned loan growth in 2022.

 

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Asset Quality: Asset quality metrics remained favorable and improving in the most recent quarter. Non-accruing loans decreased year-over-year by 46% to $35 million, measuring 0.52% of total loans at year-end 2021. Annualized fourth quarter net loan charge-offs measured 0.23%, compared to 0.80% in 2020. Total delinquent and non-accruing loans decreased 15% year-over-year, measuring 1.15% of total year-end 2021 loans. The allowance for credit losses on loans decreased quarter-over-quarter by $7 million, measuring 1.55% of total loans, which was a decrease from 1.65% in the linked quarter.

 

Deposits and Borrowings: Period-end total deposits decreased by 1% year-over-year and 3% quarter-over-quarter. Excluding brokered deposits, total deposits increased by 2% year-over-year and decreased 2% quarter-over-quarter as businesses used liquidity near year-end. The Bank has been running off brokered deposits, which decreased by $383 million and $89 million year-over-year and quarter-over-quarter, respectively. Full year-deposit activity resulted in a shift in mix towards non-interest-bearing deposits, which increased 21% year-over-year and represented 30% of total year-end balances. The fourth quarter deposit mix shifted from NOW accounts to money market accounts due to year-end calendar timing related to payroll deposits. Higher cost wholesale funds, consisting of brokered deposits and borrowings, decreased by 71% year-over-year and 21% quarter-over-quarter. Wholesale funds totaled $339 million at year-end 2021 and all other time deposits totaled $1.45 billion. The Company targets to further lower funding costs as most of these higher cost balances mature in 2022.

 

Equity: Capital metrics improved in 2021, with tangible common shareholders’ equity/tangible assets increasing to 10.0% at year-end. During the second and third quarters of 2021, Berkshire repurchased approximately 5% of outstanding shares, which decreased to 48.7 million at year-end 2021 from 50.8 million at the prior year-end. For the year 2021, book value per share increased by 4% to $24.30, and the non-GAAP measure of tangible book value per share also increased by 4% to $23.69.

 

ESG & CORPORATE RESPONSIBILITY UPDATE

 

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

 

Key developments in the quarter include:

 

·Progress on the BEST Community Comeback: Berkshire previously announced its "BEST Community Comeback", an aggressive ESG and community commitment to fuel resilience and strengthen local economies. The multi-year plan focuses on four key areas: fueling small businesses, community financing and philanthropy, financial access and empowerment, and funding environmental sustainability. As a result of the collective efforts of its employees, Berkshire is showing early progress and momentum towards achievement of its goals. The Company helped more than 180,000 individuals through its financial wellness programming and increased its use of renewable electricity to 83%. Additional information can be found at berkshirebank.com/comeback.

 

·Enhancing ESG Oversight: Berkshire continued to enhance its oversight of Environmental, Social and Governance matters by adding an ESG Committee, chaired by its SVP, Corporate Responsibility & Communications and including members of its executive management team. The committee complements its existing comprehensive management committee structure and provides an additional layer of oversight to its enterprise-wide ESG and Corporate Responsibility program.

 

·Current ESG Performance: The Company continued to improve its Environmental, Social and Governance (ESG) ratings, generally outperforming peers and moving into the top-quartile for ESG performance, one of its five major BEST targets. As of December 31, 2021 the Company received ratings of: MSCI ESG- BBB; ISS ESG Quality Score - Environment: 3, Social: 1, Governance: 2; and Bloomberg ESG Disclosure- 47.81. The Company also received an improved rating from Sustainalytics.

 

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INVESTOR CONFERENCE CALL AND INVESTOR PRESENTATION

 

Berkshire will conduct a conference call/webcast at 10:00 a.m. eastern time on Thursday, January 20, 2022 to discuss results for the quarter and provide guidance about expected future results. The Company will also post an investor presentation at its website at ir.berkshirebank.com with additional financial information and other information about the quarter.

 

Participants are encouraged to pre-register for the conference call using the following link:

 

https://www.incommglobalevents.com/registration/q4inc/9598/berkshire-hills-bancorp-q4-earnings-release-conference-call/

 

Callers who pre-register will be given dial-in instructions and a unique PIN to gain immediate access to the call. Participants may pre-register at any time prior to the call and will immediately receive simple instructions via email.

 

Additionally, participants may reach the registration link and access the webcast by logging in through the investor relations section of Berkshire’s website at ir.berkshirebank.com. Those parties who do not have Internet access or are otherwise unable to pre-register for this event, may still participate at the above time by dialing 844-200-6205 and using participant access code: 738511. Participants are requested to dial-in a few minutes before the scheduled start of the call.

 

A telephone replay of the call will be available for one week by dialing 866-813-9403 and using access code:  198914. The webcast will be available on Berkshire’s website for an extended period of time

 

ABOUT BERKSHIRE HILLS BANCORP

 

Berkshire Hills Bancorp is the parent of Berkshire Bank, which is transforming what it means to bank its neighbors socially, humanly, and digitally to empower the financial potential of people, families, and businesses in its communities as it pursues its vision of being the leading socially responsible omni-channel community bank in the markets it serves. Berkshire Bank provides business and consumer banking, mortgage, wealth management, and investment services. Headquartered in Boston, Berkshire has approximately $11.6 billion in assets and operates 106 branch offices in New England and New York, and is a member of the Bloomberg Gender-Equality Index. To learn more, call 800-773-5601 or follow us on Facebook, Twitter, Instagram, and LinkedIn.

 

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FORWARD-LOOKING STATEMENTS

 

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

 

NON-GAAP FINANCIAL MEASURES

 

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

 

The Company utilizes the non-GAAP measure of adjusted earnings in evaluating operating trends, including components for adjusted revenue and expense. These measures exclude items which the Company does not view as related to its normalized operations. These items primarily include securities gains/losses, other gains/losses, merger costs, restructuring costs, goodwill impairment, and discontinued operations. In 2020, the Company recorded a full impairment of its goodwill and exited its discontinued national mortgage banking operations. Other adjusted expense in 2020 was primarily related to costs of the separation with the former CEO, as well as consulting for the CEO succession process. A 2020 adjusted gain was recognized on the sale of a specialty commercial insurance business line. In 2021, the Company recorded a third quarter net gain of $52 million on the sale of the Company’s insurance subsidiary and the Mid-Atlantic branch operations. Expense adjustments in the first quarter 2021 were primarily related to branch consolidations. Third quarter 2021 adjustments included Federal Home Loan Bank borrowings prepayment costs. They also included other restructuring charges for efficiency initiatives in operations areas including writedowns on real estate moved to held for sale and severance related to staff reductions. The fourth quarter 2021 revenue adjustment was primarily related to trailing revenue on a previously reported sale, and the expense adjustment was due primarily to branch restructuring costs.

 

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

 

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

 

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CONTACTS

 

Investor Relations Contacts

 

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

 

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

 

Media Contact:

 

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

 

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TABLE

 

INDEX

 

 

 

CONSOLIDATED UNAUDITED FINANCIAL SCHEDULES

 

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

 

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SELECTED FINANCIAL HIGHLIGHTS - UNAUDITED - (F-1) 

          At or for the Quarters Ended (1)        
    Dec. 31,     March 31,     June 30,     Sept. 30,     Dec. 31,  
    2020     2021     2021     2021     2021  
NOMINAL AND PER SHARE DATA                              
Net earnings per common share, diluted   $ 0.30     $ 0.26     $ 0.43     $ 1.31     $ 0.42  
Adjusted earnings per common share, diluted (2)     0.28       0.32       0.44       0.53       0.42  
Net income, (thousands)     15,009       13,031       21,636       63,749       20,248  
Adjusted net income, (thousands) (2)     14,062       16,015       22,104       25,695       20,172  
Total common shares outstanding, period-end (thousands)                    50,833       50,988       50,453       48,657       48,667  
Average diluted shares, (thousands)     50,355       50,565       50,608       48,744       48,340  
Total book value per common share, (end of period)     23.37       23.05       23.30       24.21       24.30  
Tangible book value per common share, (end of period) (2)     22.68       22.39       22.66       23.58       23.69  
Dividends per common share     0.12       0.12       0.12       0.12       0.12  
Full-time equivalent staff, continuing operations     1,505       1,467       1,417       1,333       1,319  
                                         
PERFORMANCE RATIOS (3)                                        
Return on equity     5.22 %     4.50 %     7.37 %     22.18 %     6.86 %
Adjusted return on equity (2)     4.89       5.53       7.53       8.94       6.83  
Return on tangible common equity (2)     5.85       4.98       7.92       23.14       7.37  
Adjusted return on tangible common equity (2)     5.50       6.04       8.08       9.53       7.34  
Return on assets     0.48       0.42       0.70       2.14       0.71  
Adjusted return on assets (2)     0.45       0.51       0.71       0.86       0.71  
Net interest margin, fully taxable equivalent (FTE) (4)(5)     2.61       2.62       2.62       2.56       2.60  
Efficiency ratio (2)     71.03       71.32       67.82       68.76       71.98  
                                         
FINANCIAL DATA (in millions, end of period)                                        
Total assets   $ 12,838     $ 12,757     $ 12,273     $ 11,846     $ 11,555  
Total earning assets     12,090       12,071       11,571       11,145       10,899  
Total loans     8,082       7,659       7,233       6,836       6,826  
Total deposits     10,216       10,244       9,914       10,365       10,069  
Loans/deposits (%)     79 %     75 %     73 %     66 %     68 %
Total shareholders' equity   $ 1,188     $ 1,175     $ 1,175     $ 1,178     $ 1,182  
                                         
ASSET QUALITY                                        
Allowance for credit losses, (millions)   $ 127     $ 124     $ 119     $ 113     $ 106  
Net charge-offs, (millions)     (17 )     (10 )     (5 )     (2 )     (4 )
Net charge-offs (QTD annualized)/average loans     0.80 %     0.51 %     0.26 %     0.12 %     0.23 %
Provision expense/(income), (millions)   $ 10     $ 7     $ -     $ (4 )   $ (3 )
Non-performing assets, (millions)     67       58       49       39       37  
Non-performing loans/total loans     0.80 %     0.73 %     0.66 %     0.54 %     0.52 %
Allowance for credit losses/non-performing loans     196       222       250       304       300  
Allowance for credit losses/total loans     1.58       1.62       1.65       1.65       1.55  
                                         
CAPITAL RATIOS                                        
Common equity tier 1 capital to risk weighted assets(6)     13.8 %     14.2 %     14.3 %     15.3 %     15.0 %
Tier 1 capital leverage ratio(6)     9.4       9.5       9.5       9.9       10.5  
Tangible common shareholders' equity/tangible assets(2)     9.0       9.0       9.3       9.7       10.0  

 

 

  

(1) Reconciliations of non-GAAP financial measures, including all references to adjusted and tangible amounts, appear on pages F-9 and F-10.
(2) Non-GAAP financial measure. adjusted measurements are non-GAAP financial measures that are adjusted to exclude net non-adjusted charges primarily related to acquisitions and restructuring activities. See pages F-9 and F-10 for reconciliations of non-GAAP financial measures.
(3) All performance ratios are annualized and are based on average balance sheet amounts, where applicable.
(4) Fully taxable equivalent considers the impact of tax advantaged investment securities and loans.
(5) The effect of purchase accounting accretion for loans, time deposits, and borrowings on the quarterly net interest margin was an increase in all quarters, which is shown sequentially as follows beginning with the earliest quarter and ending with the most recent quarter: 0.07%, 0.05%, 0.08%, 0.06%, 0.05%.
(6) Presented as projected for December 31, 2021 and actual for the remaining periods.

  

F-1 

 

 

 

CONSOLIDATED BALANCE SHEETS - UNAUDITED - (F-2) 

   December 31,   September 30,   December 31, 
(in thousands)  2020   2021   2021 
Assets               
Cash and due from banks  $91,219   $153,185   $109,350 
Short-term investments   1,466,656    1,971,345    1,518,457 
Total cash and short-term investments   1,557,875    2,124,530    1,627,807 
                
Trading security   9,708    8,574    8,354 
Marketable equity securities, at fair value   18,513    15,601    15,453 
Securities available for sale, at fair value   1,695,232    1,643,965    1,877,585 
Securities held to maturity, at amortized cost   465,091    651,863    636,503 
Federal Home Loan Bank stock and other restricted securities   34,873    12,041    10,800 
Total securities   2,223,417    2,332,044    2,548,695 
Less: Allowance for credit losses on investment securities   (104)   (125)   (105)
Net securities   2,223,313    2,331,919    2,548,590 
                
Loans held for sale   17,748    5,176    6,110 
                
Total loans   8,081,519    6,836,235    6,825,847 
Less: Allowance for credit losses on loans   (127,302)   (112,916)   (106,094)
Net loans   7,954,217    6,723,319    6,719,753 
                
Premises and equipment, net   112,663    99,233    94,383 
Other real estate owned   149    -    - 
Goodwill and other intangible assets   34,819    30,907    29,619 
Other assets   619,925    527,049    524,074 
Assets held for sale (1)   317,304    3,743    4,577 
Total assets  $12,838,013   $11,845,876   $11,554,913 
                
Liabilities and shareholders' equity               
Demand deposits  $2,484,249   $3,022,821   $3,008,461 
NOW and other deposits   1,003,005    1,982,089    976,401 
Money market deposits   3,371,353    2,438,832    3,293,526 
Savings deposits   972,116    1,095,959    1,111,625 
Time deposits   2,385,085    1,825,714    1,678,940 
Total deposits   10,215,808    10,365,415    10,068,953 
                
Senior borrowings   474,357    13,369    13,331 
Subordinated borrowings   97,280    97,454    97,513 
Total borrowings   571,637    110,823    110,844 
                
Other liabilities   232,730    191,563    192,681 
Liabilities held for sale (1)   630,065    -    - 
Total liabilities   11,650,240    10,667,801    10,372,478 
                
Preferred shareholders' equity   -    -    - 
Common shareholders' equity   1,187,773    1,178,075    1,182,435 
Total shareholders' equity   1,187,773    1,178,075    1,182,435 
Total liabilities and shareholders' equity  $12,838,013   $11,845,876   $11,554,913 

 

(1) For December 31, 2020, balance includes loans and deposits from branch sales in the Mid-Atlantic region.

 

F-2 

 

 

 

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

 

LOAN ANALYSIS 

 

               Growth % 
(in millions) 

December 31, 2020

Balance

  

September 30, 2021

Balance

  

December 31, 2021

Balance

   Quarter ended
December 31, 2021		   Year to Date 
Total commercial real estate  $3,647   $3,565   $3,598    1%   (1)%
Commercial and industrial loans   1,326    1,254    1,300    4    (2)
Paycheck Protection Program (PPP) Loans   633    46    30    (35)   (95)
Total commercial loans   5,606    4,865    4,928    1    (12)
                          
Total residential mortgages   1,813    1,443    1,392    (4)   (23)
                          
Home equity   295    264    253    (4)   (14)
Auto and other   368    264    253    (4)   (31)
Total consumer loans   663    528    506    (4)   (24)
Total loans  $8,082   $6,836   $6,826    0%   (16)%

 

 DEPOSIT ANALYSIS

 

               Growth % 
(in millions) 

December 31, 2020

Balance

  

September 30, 2021

Balance

  

December 31, 2021

Balance

   Quarter ended
December 31, 2021		   Year to Date 
Non-interest bearing  $2,484   $3,023   $3,008    0%   21%
NOW and other   1,003    1,982    976    (51)   (3)
Money market   3,372    2,439    3,294    35    (2)
Savings   972    1,096    1,112    1    14 
Time deposits   2,385    1,825    1,679    (8)   (30)
Total deposits (1)  $10,216   $10,365   $10,069    (3)%   (1)%

 

(1) Included in total deposits are brokered deposits of $228.1 million, $317.1 million and $610.6 million at December 31, 2021, September 30, 2021, and December 31, 2020, respectively.

  

F-3 

 

 

 

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

   Three Months Ended   Years Ended 
   December 31,   December 31, 
(in thousands, except per share data)  2021   2020   2021   2020 
Interest income  $75,860   $92,131   $329,065   $409,782 
Interest expense   6,548    16,422    37,899    93,000 
Net interest income from continuing operations, not FTE   69,312    75,709    291,166    316,782 
Non-interest income from continuing operations                    
Deposit related fees   7,522    7,523    29,813    27,905 
Loan fees and revenue   9,098    4,833    35,060    16,840 
Insurance commissions and fees   -    2,319    7,003    10,770 
Wealth management fees   2,586    2,359    10,530    9,285 
Mortgage banking originations   259    543    2,056    5,190 
Other   993    2,105    6,631    2,597 
Total non-interest income excluding gains/(losses)   20,458    19,682    91,093    72,587 
Securities (losses)/gains, net   (106)   2,405    (787)   (7,520)
Gain on sale of business operations and assets, net   1,057    1,240    52,942    1,240 
Total non-interest income   21,409    23,327    143,248    66,307 
Total net revenue from continuing operations   90,721    99,036    434,414    383,089 
Total net revenue from continuing operations excluding (losses)/gains   89,770    95,391    382,259    389,369 
                     
Provision (benefit) for credit losses   (3,000)   10,000    (500)   75,878 
Non-interest expense from continuing operations                    
Compensation and benefits   37,816    36,719    150,589    147,840 
Occupancy and equipment   9,738    10,948    41,782    43,359 
Technology and communications   8,599    7,988    33,803    32,364 
Professional services   2,365    4,055    15,860    11,907 
Other expenses   10,025    11,563    38,078    45,168 
Merger, restructuring and other non-operating expenses   864    523    5,781    559,601 
Total non-interest expense   69,407    71,796    285,893    840,239 
Total non-interest expense excluding merger, restructuring and other   68,543    71,273    280,112    280,638 
                     
Income/(loss) from continuing operations before income taxes  $24,314   $17,240   $149,021   $(533,028)
Income tax expense/(benefit)   4,066    (1,659)   30,357    (19,853)
Net income/(loss) from continuing operations  $20,248   $18,899   $118,664   $(513,175)
                     
(Loss) from discontinued operations before income taxes  $-   $(5,114)  $-   $(26,855)
Income tax (benefit)   -    (1,224)   -    (7,013)
Net (loss) from discontinued operations  $-   $(3,890)  $-   $(19,842)
                     
Net income/(loss)  $20,248   $15,009   $118,664   $(533,017)
Preferred stock dividend   -    -    -    313 
Income/(loss) available to common shareholders  $20,248   $15,009   $118,664   $(533,330)
                     
Basic earnings/(loss) per common share:                    
Continuing Operations  $0.42   $0.38   $2.41   $(10.21)
Discontinued Operations   -    (0.08)   -    (0.39)
Total  $0.42   $0.30   $2.41   $(10.60)
                     
Diluted earnings/(loss) per common share:                    
Continuing Operations  $0.42   $0.38   $2.39   $(10.21)
Discontinued Operations   -    (0.08)   -    (0.39)
Total  $0.42   $0.30   $2.39   $(10.60)
                     
Weighted average shares outstanding:                    
Basic   47,958    50,308    49,240    50,270 
Diluted   48,340    50,355    49,554    50,270 

 

 

 

F-4 

 

 

  

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

   Dec. 31,   March 31,   June 30,   Sept. 30,   Dec. 31, 
(in thousands, except per share data)  2020   2021   2021   2021   2021 
Interest income  $92,131   $88,153   $85,364   $79,688   $75,860 
Interest expense   16,422    13,060    9,971    8,320    6,548 
Net interest income from continuing operations, not FTE   75,709    75,093    75,393    71,368    69,312 
Non-interest income from continuing operations                         
Deposit related fees   7,523    7,126    7,508    7,657    7,522 
Loan fees and revenue   4,833    10,246    7,431    8,285    9,098 
Insurance commissions and fees   2,319    3,130    2,292    1,581    - 
Wealth management fees   2,359    2,772    2,519    2,653    2,586 
Mortgage banking originations   543    802    534    461    259 
Other   2,105    2,148    2,211    1,279    993 
Total non-interest income excluding (losses)/gains   19,682    26,224    22,495    21,916    20,458 
Securities (losses)/gains, net   2,405    (31)   (484)   (166)   (106)
Gain on sale of business operations and assets, net   1,240    -    -    51,885    1,057 
Total non-interest income   23,327    26,193    22,011    73,635    21,409 
Total net revenue from continuing operations   99,036    101,286    97,404    145,003    90,721 
Total net revenue from continuing operations excluding (losses)/gains   95,391    101,317    97,888    93,284    89,770 
                          
Provision (benefit) for credit losses   10,000    6,500    -    (4,000)   (3,000)
Non-interest expense from continuing operations                         
Compensation and benefits   36,719    38,735    36,970    37,068    37,816 
Occupancy and equipment   10,948    11,024    10,599    10,421    9,738 
Technology and communications   7,988    8,593    8,214    8,397    8,599 
Professional services   4,055    6,614    3,701    3,180    2,365 
Other expenses   11,563    9,702    9,382    8,969    10,025 
Merger, restructuring and other non-operating expenses   523    3,486    6    1,425    864 
Total non-interest expense   71,796    78,154    68,872    69,460    69,407 
Total non-interest expense excluding merger, restructuring and other   71,273    74,668    68,866    68,035    68,543 
                          
Income from continuing operations before income taxes  $17,240   $16,632   $28,532   $79,543   $24,314 
Income tax expense/(benefit)   (1,659)   3,601    6,896    15,794    4,066 
Net income from continuing operations  $18,899   $13,031   $21,636   $63,749   $20,248 
                          
(Loss) from discontinued operations before income taxes  $(5,114)  $-   $-   $-   $- 
Income tax (benefit)   (1,224)   -    -    -    - 
Net (loss) from discontinued operations  $(3,890)  $-   $-   $-   $- 
                          
Net income  $15,009   $13,031   $21,636   $63,749   $20,248 
Preferred stock dividend   -    -    -    -    - 
Income available to common shareholders  $15,009   $13,031   $21,636   $63,749   $20,248 
                          
Diluted earnings/(loss) per common share:                         
Continuing Operations  $0.38   $0.26   $0.43   $1.31   $0.42 
Discontinued Operations   (0.08)   -    -    -    - 
Total  $0.30   $0.26   $0.43   $1.31   $0.42 
                          
Weighted average shares outstanding:                         
Basic   50,308    50,330    50,321    48,395    47,958 
Diluted   50,355    50,565    50,608    48,744    48,340 

 

 

 

F-5 

 

 

 

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

   Quarters Ended 
     
   Dec. 31, 2020   March 31, 2021   June 30, 2021   Sept. 30, 2021   Dec. 31, 2021 
(in millions)   Average Balance    Average Yield/Rate    Average Balance    Average Yield/Rate    Average Balance    Average Yield/Rate    Average Balance    Average Yield/Rate    Average Balance    Average Yield/Rate 
Assets                                                  
Commercial real estate   3,843    3.34%   3,630    3.27%   3,625    3.46%   3,577    3.40%   3,569    3.49%
Commercial and industrial loans   2,056    4.05    1,865    4.62    1,605    4.74    1,370    4.78    1,278    4.37 
Residential mortgages   1,971    3.78    1,740    3.71    1,604    3.79    1,499    3.65    1,403    3.82 
Consumer loans   726    3.41    634    3.79    582    3.80    545    3.95    516    3.96 
Total loans (1)    8,596    3.62    7,869    3.73    7,416    3.84    6,991    3.77    6,766    3.76 
Securities (2)   1,968    2.69    2,195    2.36    2,259    2.17    2,312    2.09    2,367    2.04 
Short-term investments and loans held for sale   977    0.14    1,351    0.13    1,750    0.10    1,762    0.17    1,609    0.17 
Mid-Atlantic region loans held for sale   101    4.27    295    4.09    269    3.96    155    3.82    -    - 
Total earning assets (3)   11,642    3.17    11,710    3.07    11,694    2.96    11,220    2.86    10,742    2.84 
Goodwill and other intangible assets   40         34         33         31         30      
Other assets   752         724         690         674         655      
Assets from discontinued operations   12         -         -         -         -      
Total assets   12,446         12,468         12,417         11,925         11,427      
                                                   
Liabilities and shareholders' equity                                                  
NOW and other   1,279    0.17%   1,325    0.15%   1,389    0.07%   1,316    0.05%   1,331    0.05%
Money market   2,756    0.32    2,802    0.27    2,751    0.18    2,716    0.16    2,731    0.16 
Savings   967    0.08    1,003    0.08    1,054    0.05    1,112    0.04    1,100    0.04 
Time   2,629    1.35    2,266    1.12    2,013    0.94    1,893    0.86    1,750    0.80 
Total interest-bearing deposits   7,631    0.62    7,396    0.48    7,207    0.35    7,037    0.31    6,912    0.28 
Borrowings   658    2.50    500    2.78    381    3.12    253    3.89    111    5.68 
Mid-Atlantic region interest-bearing deposits   180    0.80    518    0.60    517    0.51    306    0.51    -    - 
Total interest-bearing liabilities   8,469    0.77    8,414    0.63    8,105    0.49    7,596    0.43    7,023    0.37 
Non-interest-bearing demand deposits   2,542         2,537         2,787         2,901         3,038      
Other liabilities (4)   279         358         351         279         185      
Liabilities from discontinued operations   6         -         -         -         -      
Total liabilities   11,296         11,309         11,243         10,776         10,246      
                                                   
Preferred shareholders' equity   7         -         -         -         -      
Common shareholders' equity   1,143         1,159         1,174         1,149         1,181      
Total shareholders' equity   1,150         1,159         1,174         1,149         1,181      
Total liabilities and shareholders' equity   12,446         12,468         12,417         11,925         11,427      
                                                   
Net interest spread        2.40%        2.44%        2.47%        2.43%        2.47%
Net interest margin, FTE (5)        2.61         2.62         2.62         2.56         2.60 
Cost of funds        0.60         0.48         0.36         0.31         0.26 
Cost of deposits        0.47         0.36         0.25         0.22         0.19 
                                                   
Supplementary data                                                  
Net Interest Income, not FTE   76         75         75         71         69      
Fully taxable equivalent income adjustment   1         1         2         2         2      
Net Interest Income, FTE   77         77         77         73         71      
                                                   
Average PPP loans   685         546         321         90         37      
Average loans excluding PPP loans   7,911         7,323         7,095         6,901         6,729      
Total PPP loans, end of period   633         444         173         46         30      
Total loans excluding PPP loans, end of period   7,448         7,215         7,059         6,790         6,796      
PPP interest income   6         7         5         2         0      
                                                   
Total average non-maturity deposits   7,544         7,666         7,981         8,045         8,200      
Total average deposits   10,173         9,932         9,994         9,938         9,950      
                                                   
Purchased loan accretion   2         1         2         2         2      
Total average tangible equity (6)   1,110         1,125         1,141         1,118         1,151      

 

 

 

(1) Total loans include non-accruing loans.
(2) Average balances for securities available-for-sale are based on amortized cost.
(3) Excludes discontinued operations for presentation purposes. Performance ratios are calculated including the impact of discontinued operations.
(4) Includes the Mid-Atlantic region non-interesting bearing deposits. As of December 31, 2021 there were no Mid-Atlantic region average non-interest bearing deposits. As of December 31, 2020, the Mid-Atlantic region average non-interest bearing deposits were $37 million, respectively.
(5) The effect of PPP loans on the quarterly net interest margin is shown sequentially as follows beginning with the earliest quarter and ending with the most recent quarter: ( 0.05%, 0.11%, 0.11%, 0.05%, 0.00%.) This calculation excludes gross interest income on PPP loans and average PPP loan balances.
(6) See page F-9 for details on the calculation of total average tangible equity.

  

F-6 

 

 

 

ASSET QUALITY ANALYSIS - UNAUDITED - (F-7) 

   At or for the Quarters Ended 
   Dec. 31,   March 31,   June 30,   Sept. 30,   Dec. 31, 
(in thousands)  2020   2021   2021   2021   2021 
NON-PERFORMING ASSETS                         
Non-accruing loans:                         
Commercial real estate  $35,581   $28,325   $22,799   $14,845   $13,954 
Commercial and industrial loans   12,921    9,371    9,427    7,140    6,747 
Residential mortgages   8,347    10,674    9,238    9,763    9,825 
Consumer loans   8,099    7,447    6,141    5,399    4,800 
Total non-accruing loans   64,948    55,817    47,605    37,147    35,326 
Other real estate owned   149    149    85    -    - 
Repossessed assets   1,932    1,701    1,666    1,664    1,736 
Total non-performing assets  $67,029   $57,667   $49,356   $38,811   $37,062 
                          
Total non-accruing loans/total loans   0.80%   0.73%   0.66%   0.54%   0.52%
Total non-accruing loans/total loans excluding PPP loans   0.87%   0.77%   0.67%   0.55%   0.52%
Total non-performing assets/total assets   0.52%   0.45%   0.40%   0.33%   0.32%
                          
PROVISION AND ALLOWANCE FOR CREDIT LOSSES ON LOANS                         
Balance at beginning of period  $134,414   $127,302   $123,800   $119,044   $112,916 
Charged-off loans   (18,314)   (11,460)   (7,248)   (4,334)   (7,976)
Recoveries on charged-off loans   1,209    1,465    2,492    2,206    4,154 
Net loans charged-off   (17,105)   (9,995)   (4,756)   (2,128)   (3,822)
Provision (benefit) for loan credit losses   9,993    6,493    -    (4,000)   (3,000)
Balance at end of period  $127,302   $123,800   $119,044   $112,916   $106,094 
                          
Allowance for credit losses/total loans   1.58%   1.62%   1.65%   1.65%   1.55%
Allowance for credit losses/total loans excluding PPP loans   1.71%   1.72%   1.69%   1.66%   1.56%
Allowance for credit losses/non-accruing loans   196%   222%   250%   304%   300%
                          
NET LOAN CHARGE-OFFS                         
Commercial real estate  $(11,862)  $(6,959)  $(2,325)  $(1,391)  $(2,208)
Commercial and industrial loans   (5,089)   (2,662)   (2,331)   110    (1,649)
Residential mortgages   250    80    176    (677)   (2)
Home equity   141    (42)   (136)   106    106 
Auto and other consumer   (545)   (412)   (140)   (276)   (69)
Total, net  $(17,105)  $(9,995)  $(4,756)  $(2,128)  $(3,822)
                          
Net charge-offs (QTD annualized)/average loans   0.80%   0.51%   0.26%   0.12%   0.23%
Net charge-offs (YTD annualized)/average loans   0.41%   0.51%   0.39%   0.30%   0.29%

  

 

 

F-7 

 

 

 

ASSET QUALITY ANALYSIS - UNAUDITED (F-8)  

   At or for the Quarters Ended
   December 31, 2020   March 31, 2021   June 30, 2021   September 30, 2021   December 31, 2021 
(in thousands)  Balance   Percent of Total Loans   Balance   Percent of Total Loans   Balance   Percent of Total Loans   Balance   Percent of Total Loans   Balance   Percent of Total Loans 
30-89 Days delinquent  $16,310    0.20%  $28,565    0.37%  $15,483    0.22%  $18,365    0.27%  $39,863    0.58%
90+ Days delinquent and still accruing   11,450    0.14%   6,124    0.08%   3,129    0.04%   3,803    0.06%   3,270    0.05%
Total accruing delinquent loans   27,760    0.34%   34,689    0.45%   18,612    0.26%   22,168    0.33%   43,133    0.63%
Non-accruing loans   64,948    0.80%   55,817    0.73%   47,605    0.66%   37,147    0.54%   35,326    0.52%
Total delinquent and non-accruing loans  $92,708    1.14%  $90,506    1.18%  $66,217    0.92%  $59,315    0.87%  $78,459    1.15%

 

F-8 

 

 

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

   At or for the Quarters Ended 
       Dec. 31,   March 31,   June 30,   Sept. 30,   Dec. 31, 
(in thousands)      2020   2021   2021   2021   2021 
Total revenue from continuing operations   (A)   $99,036   $101,286   $97,404   $145,003   $90,721 
Adj: Net securities losses/(gains) (1)        (2,405)   31    484    166    106 
Adj: Net (gains) on sale of business operations and assets        (1,240)   -    -    (51,885)   (1,057)
Total adjusted revenue (2)   (B)   $95,391   $101,317   $97,888   $93,284   $89,770 
                               
Total non-interest expense from continuing operations   (C)   $71,796   $78,154   $68,872   $69,460   $69,407 
Less: Merger, restructuring and other expense        (523)   (3,486)   (6)   (1,425)   (864)
Adjusted non-interest expense (2)                                       (D)   $71,273   $74,668   $68,866   $68,035   $68,543 
                               
Pre-tax, pre-provision net revenue (PPNR) from continuing operations   (A-C)   $27,240   $23,132   $28,532   $75,543   $21,314 
Adjusted pre-tax, pre-provision net revenue (PPNR)   (B-D)    24,118    26,649    29,022    25,249    21,227 
                               
Net income       $15,009   $13,031   $21,636   $63,749   $20,248 
Adj: Net securities losses/(gains) (1)        (2,405)   31    484    166    106 
Adj: Net (gains) on sale of business operations and assets        (1,240)   -    -    (51,885)   (1,057)
Adj: Restructuring expense and other expense        523    3,486    6    1,425    864 
Adj: Loss from discontinued operations before income taxes        5,114    -    -    -    - 
Adj: Income taxes benefit/(expense)        (2,939)   (533)   (22)   12,240    11 
Total adjusted income (2)   (E)   $14,062   $16,015   $22,104   $25,695   $20,172 
                               
(in millions, except per share data)                              
Total average assets   (F)   $12,446   $12,468   $12,417   $11,925   $11,427 
Total average shareholders' equity   (G)    1,150    1,159    1,174    1,149    1,181 
Total average tangible shareholders' equity (2)(3)                           (H)    1,110    1,125    1,141    1,118    1,151 
Total average tangible common shareholders' equity (2)(3)                           (I)    1,103    1,125    1,141    1,118    1,151 
Total tangible shareholders' equity, period-end (2)(3)   (J)    1,153    1,142    1,143    1,147    1,153 
Total tangible common shareholders' equity, period-end (2)(3)   (K)    1,153    1,142    1,143    1,147    1,153 
Total tangible assets, period-end (2)(3)   (L)    12,803    12,724    12,241    11,815    11,525 
                               
Total common shares outstanding, period-end (thousands)                  (M)    50,833    50,988    50,453    48,657    48,667 
Average diluted shares outstanding (thousands)   (N)    50,355    50,565    50,608    48,744    48,340 
                               
GAAP earnings per common share, diluted (2)       $0.30   $0.26   $0.43   $1.31   $0.42 
Adjusted earnings per common share, diluted (2)   (E/N)    0.28    0.32    0.44    0.53    0.42 
Tangible book value per common share, period-end (2)   (K/M)    22.68    22.39    22.66    23.58    23.69 
Total tangible shareholders' equity/total tangible assets (2)   (J/L)    9.01    8.98    9.34    9.71    10.00 
                               
Performance ratios (4)                              
GAAP return on equity        5.22%   4.50%   7.37%   22.18%   6.86 
Adjusted return on equity (2)   (E/G)    4.89    5.53    7.53    8.94    6.83 
Return on tangible common equity (2)(5)        5.85    4.98    7.92    23.14    7.37 
Adjusted return on tangible common equity (2)(5)   (E+Q)/(I)    5.50    6.04    8.08    9.53    7.34 
GAAP return on assets        0.48    0.42    0.70    2.14    0.71 
Adjusted return on assets (2)        0.45    0.51    0.71    0.86    0.71 
PPNR from continuing operations/assets (2)        0.88    0.74    0.92    2.53    0.75 
Adjusted PPNR/assets (2)        0.78    0.85    0.93    0.85    0.74 
Efficiency ratio (2)(6)                                                                                   (D-Q)/(B+O+R)    71.03    71.32    67.82    68.76    71.98 
Net interest margin, FTE        2.61    2.62    2.62    2.56    2.60 
                               
                               
Supplementary data (in thousands)                              
Tax benefit on tax-credit investments (7)   (O)   $1,334   $41   $79   $2,195   $2,057 
Non-interest income charge on tax-credit investments (8)   (P)    (971)   (33)   (175)   (1,789)   (1,448)
Net income on tax-credit investments   (O+P)    363    9    (96)   406    609 
                               
Intangible amortization   (Q)   $1,513   $1,319   $1,297   $1,296   $1,288 
Fully taxable equivalent income adjustment   (R)    1,485    1,494    1,660    1,586    1,604 

 

 

 

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

 

F-9 

 

 

 

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

       Years Ended 
       Dec. 31,   Dec. 31, 
(in thousands)      2020   2021 
Total revenue from continuing operations   (A)   $383,089   $434,414 
Adj: Net securities losses (1)        7,520    787 
Adj: Net (gains) on sale of business operations and assets        (1,240)   (52,942)
Total adjusted revenue (2)   (B)   $389,369   $382,259 
                
Total non-interest expense from continuing operations   (C)   $840,239   $285,893 
Less: Merger, restructuring and other expense        (5,839)   (5,781)
Less: Goodwill impairment        (553,762)   - 
Adjusted non-interest expense (2)                                       (D)   $280,638   $280,112 
                
Pre-tax, pre-provision net revenue (PPNR) from continuing operations   (A-C)   $(457,150)  $148,521 
Adjusted pre-tax, pre-provision net revenue (PPNR)   (B-D)    108,731    102,147 
                
Net income/(loss)       $(533,017)  $118,664 
Adj: Net securities losses (1)        7,520    787 
Adj: Goodwill impairment        553,762    - 
Adj: Net (gains) on sale of business operations and assets        (1,240)   (52,942)
Adj: Restructuring expense and other expense        5,839    5,781 
Adj: Loss from discontinued operations before income taxes        26,855    - 
Adj: Income taxes benefit/(expense)        (29,342)   11,696 
Total adjusted income/(loss) (2)   (E)   $30,377   $83,986 
                
(in millions, except per share data)               
Total average assets   (F)   $12,861   $12,056 
Total average shareholders' equity   (G)    1,421    1,166 
Total average tangible shareholders' equity (2)(3)                           (H)    1,105    1,134 
Total average tangible common shareholders' equity (2)(3)                           (I)    1,088    1,134 
Total tangible shareholders' equity, period-end (2)(3)   (J)    1,153    1,153 
Total tangible common shareholders' equity, period-end (2)(3)   (K)    1,153    1,153 
Total tangible assets, period-end (2)(3)   (L)    12,803    11,525 
                
Total common shares outstanding, period-end (thousands)                  (M)    50,833    48,667 
Average diluted shares outstanding (thousands)   (N)    50,308    49,554 
                
GAAP earnings/(loss) per common share, diluted (2)       $(10.60)  $2.39 
Adjusted earnings per common share, diluted (2)   (E/N)    0.60    1.69 
Tangible book value per common share, period-end (2)   (K/M)    22.68    23.69 
Total tangible shareholders' equity/total tangible assets (2)   (J/L)    9.01    10.00 
                
Performance ratios (4)               
GAAP return on equity        (37.46)%   10.18%
Adjusted return on equity (2)   (E/G)    2.14    7.20 
Return on tangible common equity (2)(5)        (48.60)   10.80 
Adjusted return on tangible common equity (2)(5)   (E+Q)/(I)    3.18    7.74 
GAAP return on assets        (4.15)   0.98 
Adjusted return on assets (2)        0.24    0.70 
PPNR from continuing operations/assets (2)        (3.55)   1.23 
Adjusted PPNR/assets (2)        0.85    0.85 
Efficiency ratio (2)(6)                                                                                   (D-Q)/(B+O+R)    68.53    69.96 
Net interest margin, FTE        2.72    2.60 
                
                
Supplementary data (in thousands)               
Tax benefit on tax-credit investments (7)   (O)   $4,699   $4,372 
Non-interest income charge on tax-credit investments (8)   (P)    (3,645)   (3,445)
Net income on tax-credit investments   (O+P)    1,054    928 
                
Intangible amortization   (Q)   $6,181   $5,200 
Fully taxable equivalent income adjustment   (R)    6,402    6,344 

 

 

 

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

 

F-10