Michigan
(State or other jurisdiction of incorporation)
|
0-7818
(Commission File Number)
|
38-2032782
(IRS Employer Identification No.)
|
4200 East Beltline
Grand Rapids, Michigan
(Address of principal executive office)
|
49525
(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))
|
Item 2.02. |
Results of Operations and Financial Condition
|
Item 9.01. |
Financial Statements and Exhibits
|
99.1 |
Press release dated October 25, 2018.
|
99.2 |
Supplemental data to the Registrant's press release dated October 25, 2018.
|
99.3 |
Earnings conference call presentation.
|
INDEPENDENT BANK CORPORATION
|
|||||
(Registrant)
|
|||||
Date
|
October 25, 2018
|
By
|
s/Robert N. Shuster
|
||
Robert N. Shuster, Principal Financial Officer
|
For Release: |
Immediately
|
Contact: |
William B. Kessel, President and CEO, 616.447.3933
|
· |
The acquisition of TCSB Bancorp, Inc. (“TCSB”), and its subsidiary, Traverse City State Bank, on Apr. 1, 2018 (referred to as the “Merger” or “TCSB Acquisition”) and the
associated data processing systems conversions in June 2018. The total assets, loans and deposits acquired in the Merger were approximately $343.5 million, $295.8 million (including $1.3 million of loans held for sale) and $287.7
million, respectively.
|
· |
Merger related expenses of $0.1 million ($0.003 per diluted share, after taxes) and $3.4 million ($0.11 per diluted share, after taxes) for the three- and nine-months
ended Sept. 30, 2018, respectively.
|
· |
Positive changes in the fair value due to price of capitalized mortgage loan servicing rights of $0.6 million ($0.02 per diluted share, after taxes) and $2.6 million
($0.09 per diluted share, after taxes) for the three- and nine-months ended Sept. 30, 2018, respectively, as compared to negative changes of $0.6 million ($0.02 per diluted share, after taxes) and $1.1 million ($0.03 per diluted
share, after taxes) for the three- and nine-months ended Sept. 30, 2017, respectively.
|
· |
The passage of the "Tax Cuts and Jobs Act" which, among other things, reduced the federal corporate income
tax rate to 21% (from 35%) effective January 1, 2018.
|
· |
Year-over-year increases in net income and diluted earnings per share of 73.9% and 53.1%, respectively;
|
· |
A year-over-year increase in quarterly net interest income of $6.8 million, or 29.6%;
|
· |
Total portfolio loan net growth of $95.3 million, or 15.3% annualized;
|
· |
Continued strong asset quality metrics; and
|
· |
The payment of a 15 cent per share dividend on common stock on Aug. 15, 2018.
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
9/30/2018
|
9/30/2017
|
9/30/2018
|
9/30/2017
|
|||||||||||||
Mortgage loan servicing, net:
|
(Dollars in thousands)
|
|||||||||||||||
Revenue, net
|
$
|
1,410
|
$
|
1,091
|
$
|
3,974
|
$
|
3,253
|
||||||||
Fair value change due to price
|
610
|
(572
|
)
|
2,586
|
(1,075
|
)
|
||||||||||
Fair value change due to pay-downs
|
(808
|
)
|
(518
|
)
|
(1,892
|
)
|
(1,510
|
)
|
||||||||
Total
|
$
|
1,212
|
$
|
1
|
$
|
4,668
|
$
|
668
|
Loan Type
|
9/30/2018
|
12/31/2017
|
9/30/2017
|
|||||||||
(Dollars in thousands)
|
||||||||||||
Commercial
|
$
|
2,782
|
$
|
646
|
$
|
788
|
||||||
Consumer/installment
|
756
|
543
|
525
|
|||||||||
Mortgage
|
5,805
|
6,995
|
7,097
|
|||||||||
Total
|
$
|
9,343
|
$
|
8,184
|
$
|
8,410
|
||||||
Ratio of non-performing loans to total portfolio loans
|
0.36
|
%
|
0.41
|
%
|
0.43
|
%
|
||||||
Ratio of non-performing assets to total assets
|
0.33
|
%
|
0.35
|
%
|
0.38
|
%
|
||||||
Ratio of the allowance for loan losses to non-performing loans
|
261.17
|
%
|
275.99
|
%
|
255.39
|
%
|
(1) |
Excludes loans that are classified as “troubled debt restructured” that are still performing.
|
Regulatory Capital Ratios
|
9/30/2018
|
12/31/2017
|
Well
Capitalized
Minimum
|
|||||||||
Tier 1 capital to average total assets
|
9.73
|
%
|
9.78
|
%
|
5.00
|
%
|
||||||
Tier 1 common equity to risk-weighted assets
|
12.19
|
%
|
12.95
|
%
|
6.50
|
%
|
||||||
Tier 1 capital to risk-weighted assets
|
12.19
|
%
|
12.95
|
%
|
8.00
|
%
|
||||||
Total capital to risk-weighted assets
|
13.18
|
%
|
14.10
|
%
|
10.00
|
%
|
September 30,
|
December 31,
|
|||||||
2018
|
2017
|
|||||||
(unaudited)
|
||||||||
(In thousands, except share
|
||||||||
amounts)
|
||||||||
Assets
|
||||||||
Cash and due from banks
|
$
|
35,180
|
$
|
36,994
|
||||
Interest bearing deposits
|
17,990
|
17,744
|
||||||
Cash and Cash Equivalents
|
53,170
|
54,738
|
||||||
Interest bearing deposits - time
|
593
|
2,739
|
||||||
Equity securities at fair value
|
285
|
-
|
||||||
Trading securities
|
-
|
455
|
||||||
Securities available for sale
|
436,957
|
522,925
|
||||||
Federal Home Loan Bank and Federal Reserve Bank stock, at cost
|
18,355
|
15,543
|
||||||
Loans held for sale, carried at fair value
|
41,325
|
39,436
|
||||||
Loans
|
||||||||
Commercial
|
1,112,101
|
853,260
|
||||||
Mortgage
|
1,056,482
|
849,530
|
||||||
Installment
|
393,995
|
316,027
|
||||||
Total Loans
|
2,562,578
|
2,018,817
|
||||||
Allowance for loan losses
|
(24,401
|
)
|
(22,587
|
)
|
||||
Net Loans
|
2,538,177
|
1,996,230
|
||||||
Other real estate and repossessed assets
|
1,445
|
1,643
|
||||||
Property and equipment, net
|
39,012
|
39,149
|
||||||
Bank-owned life insurance
|
54,811
|
54,572
|
||||||
Deferred tax assets, net
|
8,449
|
15,089
|
||||||
Capitalized mortgage loan servicing rights
|
23,151
|
15,699
|
||||||
Goodwill
|
28,300
|
-
|
||||||
Other intangibles
|
6,709
|
1,586
|
||||||
Accrued income and other assets
|
46,385
|
29,551
|
||||||
Total Assets
|
$
|
3,297,124
|
$
|
2,789,355
|
||||
Liabilities and Shareholders' Equity
|
||||||||
Deposits
|
||||||||
Non-interest bearing
|
$
|
880,932
|
$
|
768,333
|
||||
Savings and interest-bearing checking
|
1,217,939
|
1,064,391
|
||||||
Reciprocal
|
92,635
|
50,979
|
||||||
Time
|
399,110
|
374,872
|
||||||
Brokered time
|
208,027
|
141,959
|
||||||
Total Deposits
|
2,798,643
|
2,400,534
|
||||||
Other borrowings
|
79,688
|
54,600
|
||||||
Subordinated debentures
|
39,371
|
35,569
|
||||||
Accrued expenses and other liabilities
|
34,218
|
33,719
|
||||||
Total Liabilities
|
2,951,920
|
2,524,422
|
||||||
Shareholders’ Equity
|
||||||||
Preferred stock, no par value, 200,000 shares authorized; none issued or outstanding
|
-
|
-
|
||||||
Common stock, no par value, 500,000,000 shares authorized; issued and outstanding: 24,150,341 shares at
September 30, 2018 and 21,333,869 shares at December 31, 2017
|
389,689
|
324,986
|
||||||
Accumulated deficit
|
(34,596
|
)
|
(54,054
|
)
|
||||
Accumulated other comprehensive loss
|
(9,889
|
)
|
(5,999
|
)
|
||||
Total Shareholders’ Equity
|
345,204
|
264,933
|
||||||
Total Liabilities and Shareholders’ Equity
|
$
|
3,297,124
|
$
|
2,789,355
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||||||
September 30,
|
June 30,
|
September 30,
|
September 30,
|
|||||||||||||||||
2018
|
2018
|
2017
|
2018
|
2017
|
||||||||||||||||
(unaudited)
|
||||||||||||||||||||
Interest Income
|
(In thousands, except per share amounts)
|
|||||||||||||||||||
Interest and fees on loans
|
$
|
31,000
|
$
|
29,674
|
$
|
21,831
|
$
|
84,027
|
$
|
61,638
|
||||||||||
Interest on securities
|
||||||||||||||||||||
Taxable
|
2,737
|
2,720
|
2,765
|
8,092
|
8,300
|
|||||||||||||||
Tax-exempt
|
412
|
444
|
512
|
1,335
|
1,478
|
|||||||||||||||
Other investments
|
303
|
265
|
263
|
898
|
867
|
|||||||||||||||
Total Interest Income
|
34,452
|
33,103
|
25,371
|
94,352
|
72,283
|
|||||||||||||||
Interest Expense
|
||||||||||||||||||||
Deposits
|
3,976
|
3,209
|
1,833
|
9,472
|
4,754
|
|||||||||||||||
Other borrowings and subordinated debentures
|
779
|
914
|
626
|
2,267
|
1,659
|
|||||||||||||||
Total Interest Expense
|
4,755
|
4,123
|
2,459
|
11,739
|
6,413
|
|||||||||||||||
Net Interest Income
|
29,697
|
28,980
|
22,912
|
82,613
|
65,870
|
|||||||||||||||
Provision for loan losses
|
(53
|
)
|
650
|
582
|
912
|
806
|
||||||||||||||
Net Interest Income After Provision for Loan Losses
|
29,750
|
28,330
|
22,330
|
81,701
|
65,064
|
|||||||||||||||
Non-interest Income
|
||||||||||||||||||||
Service charges on deposit accounts
|
3,166
|
3,095
|
3,281
|
9,166
|
9,465
|
|||||||||||||||
Interchange income
|
2,486
|
2,504
|
1,942
|
7,236
|
5,869
|
|||||||||||||||
Net gains (losses) on assets
|
||||||||||||||||||||
Mortgage loans
|
2,745
|
3,255
|
2,971
|
8,571
|
8,886
|
|||||||||||||||
Securities
|
93
|
9
|
69
|
(71
|
)
|
62
|
||||||||||||||
Mortgage loan servicing, net
|
1,212
|
1,235
|
1
|
4,668
|
668
|
|||||||||||||||
Other
|
2,134
|
2,217
|
2,040
|
6,294
|
6,139
|
|||||||||||||||
Total Non-interest Income
|
11,836
|
12,315
|
10,304
|
35,864
|
31,089
|
|||||||||||||||
Non-interest Expense
|
||||||||||||||||||||
Compensation and employee benefits
|
16,169
|
15,869
|
13,577
|
46,506
|
41,104
|
|||||||||||||||
Occupancy, net
|
2,233
|
2,170
|
1,970
|
6,667
|
6,032
|
|||||||||||||||
Data processing
|
2,051
|
2,251
|
1,796
|
6,180
|
5,670
|
|||||||||||||||
Merger related expenses
|
98
|
3,082
|
10
|
3,354
|
10
|
|||||||||||||||
Furniture, fixtures and equipment
|
1,043
|
1,019
|
961
|
3,029
|
2,943
|
|||||||||||||||
Communications
|
727
|
704
|
685
|
2,111
|
2,046
|
|||||||||||||||
Interchange expense
|
715
|
661
|
294
|
1,974
|
869
|
|||||||||||||||
Loan and collection
|
531
|
692
|
481
|
1,900
|
1,564
|
|||||||||||||||
Advertising
|
594
|
543
|
526
|
1,578
|
1,551
|
|||||||||||||||
Legal and professional
|
477
|
456
|
540
|
1,311
|
1,366
|
|||||||||||||||
FDIC deposit insurance
|
270
|
250
|
208
|
750
|
608
|
|||||||||||||||
Credit card and bank service fees
|
108
|
106
|
105
|
310
|
432
|
|||||||||||||||
Net (gains) losses on other real estate and repossessed assets
|
(325
|
)
|
(4
|
)
|
30
|
(619
|
)
|
132
|
||||||||||||
Other
|
2,049
|
1,962
|
1,433
|
5,585
|
4,619
|
|||||||||||||||
Total Non-interest Expense
|
26,740
|
29,761
|
22,616
|
80,636
|
68,946
|
|||||||||||||||
Income Before Income Tax
|
14,846
|
10,884
|
10,018
|
36,929
|
27,207
|
|||||||||||||||
Income tax expense
|
2,921
|
2,067
|
3,159
|
7,026
|
8,443
|
|||||||||||||||
Net Income
|
$
|
11,925
|
$
|
8,817
|
$
|
6,859
|
$
|
29,903
|
$
|
18,764
|
||||||||||
Net Income Per Common Share
|
||||||||||||||||||||
Basic
|
$
|
0.49
|
$
|
0.37
|
$
|
0.32
|
$
|
1.29
|
$
|
0.88
|
||||||||||
Diluted
|
$
|
0.49
|
$
|
0.36
|
$
|
0.32
|
$
|
1.27
|
$
|
0.87
|
September 30,
|
June 30,
|
March 31,
|
December 31,
|
September 30,
|
||||||||||||||||
2018
|
2018
|
2018
|
2017
|
2017
|
||||||||||||||||
(unaudited)
|
||||||||||||||||||||
(Dollars in thousands except per share data)
|
||||||||||||||||||||
Three Months Ended
|
||||||||||||||||||||
Net interest income
|
$
|
29,697
|
$
|
28,980
|
$
|
23,936
|
$
|
23,316
|
$
|
22,912
|
||||||||||
Provision for loan losses
|
(53
|
)
|
650
|
315
|
393
|
582
|
||||||||||||||
Non-interest income
|
11,836
|
12,315
|
11,713
|
11,444
|
10,304
|
|||||||||||||||
Non-interest expense
|
26,740
|
29,761
|
24,135
|
23,136
|
22,616
|
|||||||||||||||
Income before income tax
|
14,846
|
10,884
|
11,199
|
11,231
|
10,018
|
|||||||||||||||
Income tax expense
|
2,921
|
2,067
|
2,038
|
9,520
|
3,159
|
|||||||||||||||
Net income
|
$
|
11,925
|
$
|
8,817
|
$
|
9,161
|
$
|
1,711
|
$
|
6,859
|
||||||||||
Basic earnings per share
|
$
|
0.49
|
$
|
0.37
|
$
|
0.43
|
$
|
0.08
|
$
|
0.32
|
||||||||||
Diluted earnings per share
|
0.49
|
0.36
|
0.42
|
0.08
|
0.32
|
|||||||||||||||
Cash dividend per share
|
0.15
|
0.15
|
0.15
|
0.12
|
0.10
|
|||||||||||||||
Average shares outstanding
|
24,148,768
|
24,109,322
|
21,364,708
|
21,332,053
|
21,334,247
|
|||||||||||||||
Average diluted shares outstanding
|
24,514,814
|
24,509,963
|
21,674,375
|
21,661,133
|
21,651,963
|
|||||||||||||||
Performance Ratios
|
||||||||||||||||||||
Return on average assets
|
1.46
|
%
|
1.12
|
%
|
1.34
|
%
|
0.25
|
%
|
1.01
|
%
|
||||||||||
Return on average common equity
|
13.83
|
10.57
|
14.04
|
2.51
|
10.27
|
|||||||||||||||
Efficiency ratio (1)
|
63.63
|
71.14
|
66.72
|
66.14
|
67.38
|
|||||||||||||||
As a Percent of Average Interest-Earning Assets (1)
|
||||||||||||||||||||
Interest income
|
4.53
|
%
|
4.49
|
%
|
4.15
|
%
|
4.07
|
%
|
4.05
|
%
|
||||||||||
Interest expense
|
0.62
|
0.56
|
0.44
|
0.42
|
0.39
|
|||||||||||||||
Net interest income
|
3.91
|
3.93
|
3.71
|
3.65
|
3.66
|
|||||||||||||||
Average Balances
|
||||||||||||||||||||
Loans
|
$
|
2,550,302
|
$
|
2,449,056
|
$
|
2,062,847
|
$
|
2,006,207
|
$
|
1,911,635
|
||||||||||
Securities available for sale
|
442,949
|
470,427
|
500,599
|
532,202
|
565,546
|
|||||||||||||||
Total earning assets
|
3,038,221
|
2,963,982
|
2,611,890
|
2,574,779
|
2,522,060
|
|||||||||||||||
Total assets
|
3,247,603
|
3,168,196
|
2,776,986
|
2,742,761
|
2,697,362
|
|||||||||||||||
Deposits
|
2,789,969
|
2,701,362
|
2,417,906
|
2,340,593
|
2,315,806
|
|||||||||||||||
Interest bearing liabilities
|
1,986,905
|
1,946,287
|
1,724,153
|
1,680,917
|
1,664,734
|
|||||||||||||||
Shareholders' equity
|
341,998
|
334,626
|
264,584
|
270,099
|
265,074
|
|||||||||||||||
End of Period
|
||||||||||||||||||||
Capital
|
||||||||||||||||||||
Tangible common equity ratio
|
9.51
|
%
|
9.41
|
%
|
9.54
|
%
|
9.45
|
%
|
9.67
|
%
|
||||||||||
Average equity to average assets
|
10.53
|
10.56
|
9.53
|
9.85
|
9.83
|
|||||||||||||||
Tangible common equity per share of common stock
|
$
|
12.84
|
$
|
12.47
|
$
|
12.46
|
$
|
12.34
|
$
|
12.47
|
||||||||||
Total shares outstanding
|
24,150,341
|
24,143,044
|
21,374,816
|
21,333,869
|
21,332,317
|
|||||||||||||||
Selected Balances
|
||||||||||||||||||||
Loans
|
$
|
2,562,578
|
$
|
2,467,317
|
$
|
2,071,435
|
$
|
2,018,817
|
$
|
1,937,094
|
||||||||||
Securities available for sale
|
436,957
|
450,593
|
489,119
|
522,925
|
548,865
|
|||||||||||||||
Total earning assets
|
3,078,083
|
3,023,454
|
2,625,534
|
2,617,204
|
2,568,554
|
|||||||||||||||
Total assets
|
3,297,124
|
3,234,522
|
2,793,119
|
2,789,355
|
2,753,446
|
|||||||||||||||
Deposits
|
2,798,643
|
2,780,516
|
2,430,401
|
2,400,534
|
2,343,761
|
|||||||||||||||
Interest bearing liabilities
|
2,036,770
|
1,988,495
|
1,719,771
|
1,722,370
|
1,701,624
|
|||||||||||||||
Shareholders' equity
|
345,204
|
337,083
|
267,917
|
264,933
|
267,710
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
(Dollars in thousands)
|
||||||||||||||||
Net Interest Margin, Fully Taxable
|
||||||||||||||||
Equivalent ("FTE")
|
||||||||||||||||
Net interest income
|
$
|
29,697
|
$
|
22,912
|
$
|
82,613
|
$
|
65,870
|
||||||||
Add: taxable equivalent adjustment
|
123
|
288
|
384
|
837
|
||||||||||||
Net interest income - taxable equivalent
|
$
|
29,820
|
$
|
23,200
|
$
|
82,997
|
$
|
66,707
|
||||||||
Net interest margin (GAAP) (1)
|
3.88
|
%
|
3.60
|
%
|
3.84
|
%
|
3.61
|
%
|
||||||||
Net interest margin (FTE) (1)
|
3.91
|
%
|
3.66
|
%
|
3.86
|
%
|
3.65
|
%
|
September 30,
|
June 30,
|
March 31,
|
December 31,
|
September 30,
|
||||||||||||||||
2018
|
2018
|
2017
|
2017
|
2017
|
||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||
Common shareholders' equity
|
$
|
345,204
|
$
|
337,083
|
$
|
267,917
|
$
|
264,933
|
$
|
267,710
|
||||||||||
Less:
|
||||||||||||||||||||
Goodwill
|
28,300
|
29,012
|
-
|
-
|
-
|
|||||||||||||||
Other intangibles
|
6,709
|
7,004
|
1,500
|
1,586
|
1,673
|
|||||||||||||||
Tangible common equity
|
$
|
310,195
|
$
|
301,067
|
$
|
266,417
|
$
|
263,347
|
$
|
266,037
|
||||||||||
Total assets
|
$
|
3,297,124
|
$
|
3,234,522
|
$
|
2,793,119
|
$
|
2,789,355
|
$
|
2,753,446
|
||||||||||
Less:
|
||||||||||||||||||||
Goodwill
|
28,300
|
29,012
|
-
|
-
|
-
|
|||||||||||||||
Other intangibles
|
6,709
|
7,004
|
1,500
|
1,586
|
1,673
|
|||||||||||||||
Tangible assets
|
$
|
3,262,115
|
$
|
3,198,506
|
$
|
2,791,619
|
$
|
2,787,769
|
$
|
2,751,773
|
||||||||||
Common equity ratio
|
10.47
|
%
|
10.42
|
%
|
9.59
|
%
|
9.50
|
%
|
9.72
|
%
|
||||||||||
Tangible common equity ratio
|
9.51
|
%
|
9.41
|
%
|
9.54
|
%
|
9.45
|
%
|
9.67
|
%
|
||||||||||
Tangible Common Equity per Share of Common Stock:
|
||||||||||||||||||||
Common shareholders' equity
|
$
|
345,204
|
$
|
337,083
|
$
|
267,917
|
$
|
264,933
|
$
|
267,710
|
||||||||||
Tangible common equity
|
$
|
310,195
|
$
|
301,067
|
$
|
266,417
|
$
|
263,347
|
$
|
266,037
|
||||||||||
Shares of common stock outstanding (in thousands)
|
24,150
|
24,143
|
21,375
|
21,334
|
21,332
|
|||||||||||||||
Common shareholders' equity per share of common stock
|
$
|
14.29
|
$
|
13.96
|
$
|
12.53
|
$
|
12.42
|
$
|
12.55
|
||||||||||
Tangible common equity per share of common stock
|
$
|
12.84
|
$
|
12.47
|
$
|
12.46
|
$
|
12.34
|
$
|
12.47
|
September 30,
|
June 30,
|
March 31,
|
December 31,
|
September 30,
|
||||||||||||||||
2018
|
2018
|
2018
|
2017
|
2017
|
||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||
Non-accrual loans
|
$
|
9,343
|
$
|
9,082
|
$
|
6,629
|
$
|
8,184
|
$
|
8,410
|
||||||||||
Loans 90 days or more past due and still accruing interest
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Total non-performing loans
|
9,343
|
9,082
|
6,629
|
8,184
|
8,410
|
|||||||||||||||
Other real estate and repossessed assets
|
1,445
|
1,689
|
1,647
|
1,643
|
2,150
|
|||||||||||||||
Total non-performing assets
|
$
|
10,788
|
$
|
10,771
|
$
|
8,276
|
$
|
9,827
|
$
|
10,560
|
||||||||||
As a percent of Portfolio Loans
|
||||||||||||||||||||
Non-performing loans
|
0.36
|
%
|
0.37
|
%
|
0.32
|
%
|
0.41
|
%
|
0.43
|
%
|
||||||||||
Allowance for loan losses
|
0.95
|
0.95
|
1.11
|
1.12
|
1.11
|
|||||||||||||||
Non-performing assets to total assets
|
0.33
|
0.33
|
0.30
|
0.35
|
0.38
|
|||||||||||||||
Allowance for loan losses as a percent of non-performing loans
|
261.17
|
258.80
|
348.03
|
275.99
|
255.39
|
September 30, 2018
|
||||||||||||
Commercial
|
Retail
|
Total
|
||||||||||
(In thousands)
|
||||||||||||
Performing TDR's
|
$
|
6,904
|
$
|
49,397
|
$
|
56,301
|
||||||
Non-performing TDR's(1)
|
212
|
2,799
|
(2)
|
3,011
|
||||||||
Total
|
$
|
7,116
|
$
|
52,196
|
$
|
59,312
|
December 31, 2017
|
||||||||||||
Commercial
|
Retail
|
Total
|
||||||||||
(In thousands)
|
||||||||||||
Performing TDR's
|
$
|
7,748
|
$
|
52,367
|
$
|
60,115
|
||||||
Non-performing TDR's(1)
|
323
|
4,506
|
(2)
|
4,829
|
||||||||
Total
|
$
|
8,071
|
$
|
56,873
|
$
|
64,944
|
Nine months ended
|
||||||||||||||||
September 30,
|
||||||||||||||||
2018
|
2017
|
|||||||||||||||
Unfunded
|
Unfunded
|
|||||||||||||||
Loans
|
Commitments
|
Loans
|
Commitments
|
|||||||||||||
(Dollars in thousands)
|
||||||||||||||||
Balance at beginning of period
|
$
|
22,587
|
$
|
1,125
|
$
|
20,234
|
$
|
650
|
||||||||
Additions (deductions)
|
||||||||||||||||
Provision for loan losses
|
912
|
-
|
806
|
-
|
||||||||||||
Recoveries credited to allowance
|
3,768
|
-
|
2,998
|
-
|
||||||||||||
Loans charged against the allowance
|
(2,866
|
)
|
-
|
(2,560
|
)
|
-
|
||||||||||
Additions included in non-interest expense
|
-
|
(6
|
)
|
-
|
332
|
|||||||||||
Balance at end of period
|
$
|
24,401
|
$
|
1,119
|
$
|
21,478
|
$
|
982
|
||||||||
Net loans charged against the allowance to average Portfolio Loans
|
(0.04
|
)%
|
(0.03
|
)%
|
September 30,
|
December 31,
|
|||||||
2018
|
2017
|
|||||||
(In thousands)
|
||||||||
Subordinated debentures
|
$
|
39,371
|
$
|
35,569
|
||||
Amount not qualifying as regulatory capital
|
(1,224
|
)
|
(1,069
|
)
|
||||
Amount qualifying as regulatory capital
|
38,147
|
34,500
|
||||||
Shareholders’ equity
|
||||||||
Common stock
|
389,689
|
324,986
|
||||||
Accumulated deficit
|
(34,596
|
)
|
(54,054
|
)
|
||||
Accumulated other comprehensive loss
|
(9,889
|
)
|
(5,999
|
)
|
||||
Total shareholders’ equity
|
345,204
|
264,933
|
||||||
Total capitalization
|
$
|
383,351
|
$
|
299,433
|
Three months ended
|
Nine months ended
|
|||||||||||||||||||
September 30,
|
June 30,
|
September 30,
|
September 30,
|
|||||||||||||||||
2018
|
2018
|
2017
|
2018
|
2017
|
||||||||||||||||
(In thousands)
|
||||||||||||||||||||
Service charges on deposit accounts
|
$
|
3,166
|
$
|
3,095
|
$
|
3,281
|
$
|
9,166
|
$
|
9,465
|
||||||||||
Interchange income
|
2,486
|
2,504
|
1,942
|
7,236
|
5,869
|
|||||||||||||||
Net gains (losses) on assets
|
||||||||||||||||||||
Mortgage loans
|
2,745
|
3,255
|
2,971
|
8,571
|
8,886
|
|||||||||||||||
Securities
|
93
|
9
|
69
|
(71
|
)
|
62
|
||||||||||||||
Mortgage loan servicing, net
|
1,212
|
1,235
|
1
|
4,668
|
668
|
|||||||||||||||
Investment and insurance commissions
|
513
|
483
|
606
|
1,434
|
1,541
|
|||||||||||||||
Bank owned life insurance
|
237
|
220
|
283
|
713
|
776
|
|||||||||||||||
Other
|
1,384
|
1,514
|
1,151
|
4,147
|
3,822
|
|||||||||||||||
Total non-interest income
|
$
|
11,836
|
$
|
12,315
|
$
|
10,304
|
$
|
35,864
|
$
|
31,089
|
Three months ended
|
Nine months ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
(In thousands)
|
||||||||||||||||
Balance at beginning of period
|
$
|
21,848
|
$
|
14,515
|
$
|
15,699
|
$
|
13,671
|
||||||||
Change in accounting
|
-
|
-
|
-
|
542
|
||||||||||||
Balance at beginning of period, as adjusted
|
21,848
|
14,515
|
15,699
|
14,213
|
||||||||||||
Servicing rights acquired
|
-
|
-
|
3,047
|
-
|
||||||||||||
Originated servicing rights capitalized
|
1,501
|
1,250
|
3,711
|
3,047
|
||||||||||||
Change in fair value
|
(198
|
)
|
(1,090
|
)
|
694
|
(2,585
|
)
|
|||||||||
Balance at end of period
|
$
|
23,151
|
$
|
14,675
|
$
|
23,151
|
$
|
14,675
|
Three months ended
|
Nine months ended
|
|||||||||||||||||||
September 30,
|
June 30,
|
September 30,
|
September 30,
|
|||||||||||||||||
2018
|
2018
|
2017
|
2018
|
2017
|
||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||
Mortgage loans originated
|
$
|
231,849
|
$
|
226,264
|
$
|
264,177
|
$
|
617,080
|
$
|
657,345
|
||||||||||
Mortgage loans sold
|
148,730
|
115,299
|
120,981
|
370,372
|
305,386
|
|||||||||||||||
Net gains on mortgage loans
|
2,745
|
3,255
|
2,971
|
8,571
|
8,886
|
|||||||||||||||
Net gains as a percent of mortgage loans sold ("Loan Sales Margin")
|
1.85
|
%
|
2.82
|
%
|
2.46
|
%
|
2.31
|
%
|
2.91
|
%
|
||||||||||
Fair value adjustments included in the Loan Sales Margin
|
(0.26
|
)
|
0.57
|
(0.22
|
)
|
0.10
|
0.08
|
Three months ended
|
Nine months ended
|
|||||||||||||||||||
September 30,
|
June 30,
|
September 30,
|
September 30,
|
|||||||||||||||||
2018
|
2018
|
2017
|
2018
|
2017
|
||||||||||||||||
(In thousands)
|
||||||||||||||||||||
Compensation
|
$
|
9,582
|
$
|
9,574
|
$
|
8,494
|
$
|
28,086
|
$
|
26,872
|
||||||||||
Performance-based compensation
|
3,305
|
3,150
|
2,688
|
9,238
|
6,819
|
|||||||||||||||
Payroll taxes and employee benefits
|
3,282
|
3,145
|
2,395
|
9,182
|
7,413
|
|||||||||||||||
Compensation and employee benefits
|
16,169
|
15,869
|
13,577
|
46,506
|
41,104
|
|||||||||||||||
Occupancy, net
|
2,233
|
2,170
|
1,970
|
6,667
|
6,032
|
|||||||||||||||
Data processing
|
2,051
|
2,251
|
1,796
|
6,180
|
5,670
|
|||||||||||||||
Merger related expenses
|
98
|
3,082
|
10
|
3,354
|
10
|
|||||||||||||||
Furniture, fixtures and equipment
|
1,043
|
1,019
|
961
|
3,029
|
2,943
|
|||||||||||||||
Communications
|
727
|
704
|
685
|
2,111
|
2,046
|
|||||||||||||||
Interchange expense
|
715
|
661
|
294
|
1,974
|
869
|
|||||||||||||||
Loan and collection
|
531
|
692
|
481
|
1,900
|
1,564
|
|||||||||||||||
Advertising
|
594
|
543
|
526
|
1,578
|
1,551
|
|||||||||||||||
Legal and professional fees
|
477
|
456
|
540
|
1,311
|
1,366
|
|||||||||||||||
FDIC deposit insurance
|
270
|
250
|
208
|
750
|
608
|
|||||||||||||||
Amortization of intangible assets
|
295
|
295
|
87
|
676
|
260
|
|||||||||||||||
Supplies
|
173
|
178
|
176
|
516
|
507
|
|||||||||||||||
Credit card and bank service fees
|
108
|
106
|
105
|
310
|
432
|
|||||||||||||||
Provision for loss reimbursement on sold loans
|
47
|
20
|
15
|
78
|
66
|
|||||||||||||||
Costs (recoveries) related to unfunded lending commitments
|
71
|
37
|
92
|
(6
|
)
|
332
|
||||||||||||||
Net (gains) losses on other real estate and repossessed assets
|
(325
|
)
|
(4
|
)
|
30
|
(619
|
)
|
132
|
||||||||||||
Other
|
1,463
|
1,432
|
1,063
|
4,321
|
3,454
|
|||||||||||||||
Total non-interest expense
|
$
|
26,740
|
$
|
29,761
|
$
|
22,616
|
$
|
80,636
|
$
|
68,946
|
Three Months Ended
|
||||||||||||||||||||||||
September 30,
|
||||||||||||||||||||||||
2018
|
2017
|
|||||||||||||||||||||||
Average
|
Average
|
|||||||||||||||||||||||
Balance
|
Interest
|
Rate (2)
|
Balance
|
Interest
|
Rate (2)
|
|||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Taxable loans
|
$
|
2,543,712
|
$
|
30,936
|
4.84
|
%
|
$
|
1,908,497
|
$
|
21,801
|
4.55
|
%
|
||||||||||||
Tax-exempt loans (1)
|
6,590
|
81
|
4.88
|
3,138
|
47
|
5.94
|
||||||||||||||||||
Taxable securities
|
379,985
|
2,737
|
2.88
|
474,901
|
2,765
|
2.33
|
||||||||||||||||||
Tax-exempt securities (1)
|
62,964
|
518
|
3.29
|
90,645
|
783
|
3.46
|
||||||||||||||||||
Interest bearing cash
|
27,477
|
66
|
0.95
|
29,336
|
63
|
0.85
|
||||||||||||||||||
Other investments
|
17,493
|
237
|
5.38
|
15,543
|
200
|
5.11
|
||||||||||||||||||
Interest Earning Assets
|
3,038,221
|
34,575
|
4.53
|
2,522,060
|
25,659
|
4.05
|
||||||||||||||||||
Cash and due from banks
|
35,874
|
33,019
|
||||||||||||||||||||||
Other assets, net
|
173,508
|
142,283
|
||||||||||||||||||||||
Total Assets
|
$
|
3,247,603
|
$
|
2,697,362
|
||||||||||||||||||||
Liabilities
|
||||||||||||||||||||||||
Savings and interest-bearing checking
|
$
|
1,241,868
|
1,223
|
0.39
|
$
|
1,048,289
|
408
|
0.15
|
||||||||||||||||
Time deposits
|
664,098
|
2,753
|
1.64
|
531,226
|
1,425
|
1.06
|
||||||||||||||||||
Other borrowings
|
80,939
|
779
|
3.82
|
85,219
|
626
|
2.91
|
||||||||||||||||||
Interest Bearing Liabilities
|
1,986,905
|
4,755
|
0.95
|
1,664,734
|
2,459
|
0.59
|
||||||||||||||||||
Non-interest bearing deposits
|
884,003
|
736,291
|
||||||||||||||||||||||
Other liabilities
|
34,697
|
31,263
|
||||||||||||||||||||||
Shareholders’ equity
|
341,998
|
265,074
|
||||||||||||||||||||||
Total liabilities and shareholders’ equity
|
$
|
3,247,603
|
$
|
2,697,362
|
||||||||||||||||||||
Net Interest Income
|
$
|
29,820
|
$
|
23,200
|
||||||||||||||||||||
Net Interest Income as a Percent of Average Interest Earning Assets
|
3.91
|
%
|
3.66
|
%
|
(1) |
Interest on tax-exempt loans and securities is presented on a fully tax equivalent basis assuming a marginal tax rate of 21% in
2018 and 35% in 2017.
|
(2) |
Annualized
|
Nine Months Ended
|
||||||||||||||||||||||||
September 30,
|
||||||||||||||||||||||||
2018
|
2017
|
|||||||||||||||||||||||
Average
|
Average
|
|||||||||||||||||||||||
Balance
|
Interest
|
Rate (2)
|
Balance
|
Interest
|
Rate (2)
|
|||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Taxable loans
|
$
|
2,350,883
|
$
|
83,881
|
4.77
|
%
|
$
|
1,792,381
|
$
|
61,544
|
4.59
|
%
|
||||||||||||
Tax-exempt loans (1)
|
5,221
|
185
|
4.74
|
3,410
|
145
|
5.69
|
||||||||||||||||||
Taxable securities
|
400,957
|
8,092
|
2.69
|
499,886
|
8,300
|
2.21
|
||||||||||||||||||
Tax-exempt securities (1)
|
70,155
|
1,680
|
3.19
|
85,853
|
2,264
|
3.52
|
||||||||||||||||||
Interest bearing cash
|
29,502
|
214
|
0.97
|
42,610
|
229
|
0.72
|
||||||||||||||||||
Other investments
|
16,457
|
684
|
5.56
|
15,543
|
638
|
5.49
|
||||||||||||||||||
Interest Earning Assets
|
2,873,175
|
94,736
|
4.40
|
2,439,683
|
73,120
|
4.00
|
||||||||||||||||||
Cash and due from banks
|
33,204
|
32,492
|
||||||||||||||||||||||
Other assets, net
|
159,844
|
146,753
|
||||||||||||||||||||||
Total Assets
|
$
|
3,066,223
|
$
|
2,618,928
|
||||||||||||||||||||
Liabilities
|
||||||||||||||||||||||||
Savings and interest-bearing checking
|
$
|
1,193,388
|
2,785
|
0.31
|
$
|
1,051,395
|
1,007
|
0.13
|
||||||||||||||||
Time deposits
|
611,103
|
6,687
|
1.46
|
494,219
|
3,747
|
1.01
|
||||||||||||||||||
Other borrowings
|
82,253
|
2,267
|
3.68
|
66,392
|
1,659
|
3.34
|
||||||||||||||||||
Interest Bearing Liabilities
|
1,886,744
|
11,739
|
0.83
|
1,612,006
|
6,413
|
0.53
|
||||||||||||||||||
Non-interest bearing deposits
|
833,283
|
717,589
|
||||||||||||||||||||||
Other liabilities
|
32,177
|
30,372
|
||||||||||||||||||||||
Shareholders’ equity
|
314,019
|
258,961
|
||||||||||||||||||||||
Total liabilities and shareholders’ equity
|
$
|
3,066,223
|
$
|
2,618,928
|
||||||||||||||||||||
Net Interest Income
|
$
|
82,997
|
$
|
66,707
|
||||||||||||||||||||
Net Interest Income as a Percent of Average Interest Earning Assets
|
3.86
|
%
|
3.65
|
%
|
(1) |
Interest on tax-exempt loans and securities is presented on a fully tax equivalent basis assuming a marginal tax rate of 21% in
2018 and 35% in 2017.
|
(2) |
Annualized
|
Total Commercial Loans
|
||||||||||||||||||||
Watch Credits
|
Percent of Loan
|
|||||||||||||||||||
Loan Category
|
All Loans
|
Performing
|
Non-performing
|
Total
|
Category in
Watch Credit
|
|||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||
Land
|
$
|
12,439
|
$
|
67
|
$
|
-
|
$
|
67
|
0.5
|
%
|
||||||||||
Land Development
|
13,249
|
-
|
-
|
-
|
0.0
|
|||||||||||||||
Construction
|
38,549
|
6,690
|
2,403
|
9,093
|
23.6
|
|||||||||||||||
Income Producing
|
377,906
|
3,257
|
-
|
3,257
|
0.9
|
|||||||||||||||
Owner Occupied
|
349,271
|
19,315
|
72
|
19,387
|
5.6
|
|||||||||||||||
Total Commercial Real Estate Loans
|
$
|
791,414
|
$
|
29,329
|
2,475
|
$
|
31,804
|
4.0
|
||||||||||||
Other Commercial Loans
|
$
|
320,687
|
$
|
18,142
|
307
|
$
|
18,449
|
5.8
|
||||||||||||
Total non-performing commercial loans
|
$
|
2,782
|
Total Commercial Loans
|
||||||||||||||||||||
Watch Credits
|
Percent of Loan
|
|||||||||||||||||||
Loan Category
|
All Loans
|
Performing
|
Non-performing
|
Total
|
Category in
Watch Credit
|
|||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||
Land
|
$
|
8,559
|
$
|
60
|
$
|
9
|
$
|
69
|
0.8
|
%
|
||||||||||
Land Development
|
9,685
|
-
|
-
|
-
|
0.0
|
|||||||||||||||
Construction
|
51,733
|
-
|
-
|
-
|
0.0
|
|||||||||||||||
Income Producing
|
289,799
|
1,590
|
30
|
1,620
|
0.6
|
|||||||||||||||
Owner Occupied
|
258,888
|
11,491
|
170
|
11,661
|
4.5
|
|||||||||||||||
Total Commercial Real Estate Loans
|
$
|
618,664
|
$
|
13,141
|
209
|
$
|
13,350
|
2.2
|
||||||||||||
Other Commercial Loans
|
$
|
234,596
|
$
|
19,109
|
437
|
$
|
19,546
|
8.3
|
||||||||||||
Total non-performing commercial loans
|
$
|
646
|
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