SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) July 25, 2017
CENTERSTATE BANKS, INC.
(Exact name of registrant as specified in its charter)
Florida |
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000-32017 |
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59-3606741 |
(State or other jurisdiction |
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(Commission |
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(IRS employer |
1101 First Street South, Suite 202, Winter Haven, FL |
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33880 |
(Address of principal executive offices) |
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(Zip Code) |
Registrant’s telephone number, including area code: (863) 293-4710
Not Applicable
(Former name or former address, if changed since last report)
___________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ 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))
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
On July 25, 2017, CenterState Banks, Inc. issued a press release announcing certain financial results and additional information. A copy of the press release is furnished with this Form 8-K. CenterState will host a conference call on Wednesday, July 26, 2017 at 2:00pm (EST) to discuss its second quarter 2017 results. Investors may call in (toll free) by dialing (866) 393-0571 (passcode 52892724).
In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1 hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995:
Some of the statements in this report constitute forward-looking statements, within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. These statements related to future events, other future financial and operating performance, costs, revenues, economic conditions in our markets, loan performance, credit risks, collateral values and credit conditions, or business strategies, including expansion and acquisition activities and may be identified by terminology such as “may,” “will,” “should,” “expects,” “scheduled,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “potential,” or “continue” or the negative of such terms or other comparable terminology. Actual events or results may differ materially. In evaluating these statements, you should specifically consider the factors described throughout this report. We cannot assure you that future results, levels of activity, performance or goals will be achieved, and actual results may differ from those set forth in the forward looking statements. Forward looking statements, with respect to our beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions, involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause the actual results, performance or achievements of the Company or the Bank to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. You should not expect us to update any forward-looking statements. All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary notice, including, without limitation, those risks and uncertainties described in our annual report on Form 10-K for the year ended December
Item 9.01 |
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Financial Statements and Exhibits |
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(d) |
Exhibits: |
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2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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CENTERSTATE BANKS, INC. |
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By: |
/s/ Jennifer L. Idell |
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Jennifer L. Idell |
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Executive Vice President and |
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Chief Financial Officer |
Date: July 25, 2017
3
EXHIBIT INDEX
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Exhibit |
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Title |
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4
Exhibit 99.1
FOR IMMEDIATE RELEASE July 25, 2017 |
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CenterState Banks, Inc. Announces
Second Quarter 2017 Earnings Results
(all amounts are in thousands of dollars, except per share data, or unless otherwise noted)
WINTER HAVEN, FL. – July 25, 2017 - CenterState Banks, Inc. (Nasdaq: CSFL) reported net income of $15,233, or diluted earnings per share of $0.26, for the second quarter of 2017, as compared to net income of $16,600 for the first quarter of 2017. Other highlights for the second quarter of 2017 include the following:
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• |
The Company completed the acquisitions of both Platinum Bank Holding Company (“Platinum”) and Gateway Financial Holdings of Florida, Inc. (“Gateway”), successfully converted both banks into the Company’s core system and consolidated 7 of the 16 newly acquired branches increasing our average branch size to $70 million in deposits. Acquired loans from these transactions totalled $1,022,824 and assumed deposits totalled $1,228,632. |
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• |
Net loan growth in the second quarter equalled 12% annualized, excluding loans the Company acquired in the Platinum and Gateway transactions. The Company’s loan to deposit ratio increased to 85%, from 82% in the first quarter of 2017 and 77% in the second quarter of 2016. |
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• |
Tax equivalent net interest margin (“NIM”) (Non-GAAP) increased to 4.38% for the current quarter, compared to 4.28% for the previous quarter, mainly attributable to an 18 basis point increase in the Company’s NIM when excluding accretion from purchased credit impaired (“PCI”) loans. |
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• |
Non-interest income of $16,974 increased by $2,472, or 17%, compared to the previous quarter, mainly due to an increase in correspondent banking and capital markets division income. |
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• |
The effective tax rate for the current quarter decreased to 28.4% due to excess tax benefits on the exercise of stock options, resulting in a reduction of income tax expense of approximately $1,119 and lower pre-tax income due to merger related expenses. |
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• |
The Company’s current quarter’s net income was impacted by merger related expenses of $6,769, net of tax, or $0.11 per share diluted, compared to the net income in the first quarter of 2017 which was impacted by merger-related expenses of $607, net of tax. Merger-related expenses, which represent direct severance, system terminations, and legal and professional fees that are not duplicative of current operations, incurred during the current quarter impacted return on average assets by 0.47%, return on average tangible equity by 4.66% and the efficiency ratio by 11.9%. Net income, excluding the impact of these merger-related charges, totalled $22,002 (Non-GAAP), representing diluted earnings per share of $0.37 (Non-GAAP), and our return on average assets, net of these expenses, was 1.37% (Non-GAAP). |
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Three Months Ended |
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June 30, 2017 |
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March 31, 2017 |
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Excluding |
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Excluding |
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Merger |
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Merger |
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Related |
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Related |
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As Reported |
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Expenses (1) |
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As Reported |
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Expenses (1) |
Return on average assets |
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0.95% |
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1.37% |
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1.29% |
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1.34% |
Return on average tangible common equity (Non-GAAP) |
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10.99% |
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15.65% |
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14.06% |
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14.56% |
Earnings per share diluted |
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$0.26 |
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$0.37 |
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$0.32 |
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$0.33 |
Efficiency ratio (Non-GAAP) |
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68.9% |
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57.0% |
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59.3% |
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57.9% |
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(1) |
See reconciliation tables starting on page 8, Explanation of Certain Unaudited Non-GAAP Financial Measures. |
Subsequent Event
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• |
On July 20, 2017, the Company appointed David G. Salyers, head of Brand Activation Marketing for Chick-fil-A, Inc., to the Board of Directors of the Company. |
Condensed Consolidated Income Statement (unaudited)
Condensed consolidated income statements (unaudited) are shown below for the periods indicated.
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Three Months Ended |
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Six Months Ended |
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June 30, 2017 |
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Mar. 31, 2017 |
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Dec. 31, 2016 |
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Sept. 30, 2016 |
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June 30, 2016 |
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June 30, 2017 |
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June 30, 2016 |
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Interest income |
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Loans |
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$ |
56,619 |
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$ |
44,249 |
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$ |
44,085 |
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$ |
41,445 |
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$ |
40,977 |
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$ |
100,868 |
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$ |
78,095 |
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Investment securities |
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7,289 |
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6,203 |
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5,531 |
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5,746 |
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5,710 |
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13,492 |
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11,552 |
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Federal Funds sold and other |
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836 |
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651 |
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539 |
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512 |
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622 |
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1,487 |
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1,160 |
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Total interest income |
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64,744 |
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51,103 |
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50,155 |
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47,703 |
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47,309 |
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115,847 |
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90,807 |
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Interest expense |
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Deposits |
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2,619 |
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1,897 |
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1,892 |
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1,821 |
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1,740 |
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4,516 |
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3,221 |
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Securities sold under agreement to repurchase |
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47 |
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30 |
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23 |
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25 |
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28 |
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77 |
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55 |
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Federal Funds purchased |
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728 |
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537 |
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393 |
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240 |
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250 |
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1,265 |
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521 |
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Corporate debentures |
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333 |
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318 |
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313 |
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298 |
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294 |
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|
651 |
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538 |
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Interest expense |
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3,727 |
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2,782 |
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2,621 |
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2,384 |
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2,312 |
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6,509 |
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4,335 |
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Net interest income |
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61,017 |
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48,321 |
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47,534 |
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45,319 |
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44,997 |
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109,338 |
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86,472 |
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Provision for loan losses |
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1,899 |
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995 |
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2,266 |
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1,275 |
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911 |
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2,894 |
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1,421 |
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Net interest income after loan loss provision |
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59,118 |
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47,326 |
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45,268 |
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44,044 |
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44,086 |
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106,444 |
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85,051 |
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Correspondent banking and capital markets division income |
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8,063 |
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6,449 |
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8,091 |
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7,528 |
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9,291 |
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14,512 |
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18,066 |
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Gain on sale of securities available for sale |
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— |
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— |
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— |
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13 |
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— |
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— |
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— |
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FDIC- IA (negative accretion) (1) |
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— |
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— |
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— |
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— |
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— |
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— |
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(1,166 |
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FDIC- revenue (1) |
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— |
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— |
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— |
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— |
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— |
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— |
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96 |
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Gain on early extinguishment of debt |
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— |
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— |
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— |
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— |
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— |
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— |
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308 |
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All other non interest income |
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8,911 |
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8,053 |
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9,065 |
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8,140 |
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7,680 |
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16,964 |
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14,228 |
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Total non interest income |
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16,974 |
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14,502 |
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17,156 |
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15,681 |
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16,971 |
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31,476 |
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31,532 |
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Correspondent banking and capital markets division-expense |
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5,544 |
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4,746 |
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5,987 |
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5,456 |
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6,159 |
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10,290 |
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11,941 |
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Credit related expenses |
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876 |
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|
655 |
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624 |
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187 |
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611 |
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1,531 |
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|
970 |
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Merger related expenses |
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9,458 |
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|
870 |
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272 |
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— |
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— |
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10,328 |
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11,172 |
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Termination of FDIC loss share agreements (1) |
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— |
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— |
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— |
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— |
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— |
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— |
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17,560 |
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All other non interest expense |
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38,931 |
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31,772 |
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31,301 |
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30,752 |
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30,279 |
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70,703 |
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58,259 |
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Total non interest expense |
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54,809 |
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38,043 |
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38,184 |
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36,395 |
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37,049 |
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92,852 |
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99,902 |
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Income before income tax |
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21,283 |
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23,785 |
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24,240 |
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23,330 |
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24,008 |
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45,068 |
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16,681 |
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Income tax provision |
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6,050 |
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7,185 |
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8,213 |
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7,946 |
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8,274 |
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13,235 |
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|
5,751 |
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Net income |
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$ |
15,233 |
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$ |
16,600 |
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$ |
16,027 |
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$ |
15,384 |
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$ |
15,734 |
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$ |
31,833 |
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$ |
10,930 |
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Net income allocated to common shares |
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$ |
15,200 |
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$ |
16,559 |
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$ |
15,970 |
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$ |
15,324 |
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$ |
15,672 |
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$ |
31,759 |
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$ |
10,887 |
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Earnings per share – Basic |
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$ |
0.26 |
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$ |
0.33 |
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$ |
0.33 |
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$ |
0.32 |
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$ |
0.33 |
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$ |
0.58 |
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$ |
0.23 |
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Earnings per share – Diluted |
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$ |
0.26 |
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$ |
0.32 |
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$ |
0.33 |
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$ |
0.32 |
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$ |
0.32 |
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$ |
0.57 |
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$ |
0.23 |
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Dividends per share |
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$ |
0.06 |
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$ |
0.06 |
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$ |
0.04 |
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$ |
0.04 |
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$ |
0.04 |
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$ |
0.12 |
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$ |
0.08 |
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Average common shares outstanding (basic) |
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58,307 |
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50,632 |
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|
47,870 |
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47,821 |
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|
47,782 |
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|
54,490 |
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|
46,968 |
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Average common shares outstanding (diluted) |
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59,370 |
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51,408 |
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48,800 |
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|
48,603 |
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48,454 |
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55,397 |
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47,620 |
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Common shares outstanding at period end |
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60,003 |
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51,126 |
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48,147 |
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48,017 |
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47,996 |
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60,003 |
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|
47,996 |
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Effective tax rate |
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28.43 |
% |
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30.21 |
% |
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33.88 |
% |
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|
34.06 |
% |
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|
34.46 |
% |
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29.37 |
% |
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34.48 |
% |
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(1) |
In February 2016, the Company terminated all existing loss share agreements with the FDIC. As a result, the Company wrote off the remaining indemnification asset and the claw back liability, received cash from the FDIC, and recognized a net loss on the transaction of approximately $17,560 during the first quarter of 2016. |
2
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
Presented below are condensed consolidated balance sheets for the periods indicated.
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Ending Balance |
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Condensed Consolidated Balance Sheets |
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June 30, 2017 |
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Mar. 31, 2017 |
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Dec. 31, 2016 |
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Sept. 30, 2016 |
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June 30, 2016 |
Assets |
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Cash and due from banks |
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$87,277 |
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$65,114 |
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$66,368 |
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$37,460 |
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$60,522 |
Fed funds sold and Fed Res Bank deposits |
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211,037 |
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214,369 |
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109,286 |
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161,406 |
|
223,533 |
Trading securities |
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1,934 |
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— |
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12,383 |
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2,166 |
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— |
Investment securities, available for sale |
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868,334 |
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819,352 |
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740,702 |
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761,648 |
|
744,575 |
Investment securities, held to maturity |
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238,798 |
|
243,812 |
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250,543 |
|
263,692 |
|
267,082 |
Loans held for sale |
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8,959 |
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2,637 |
|
2,285 |
|
2,333 |
|
4,329 |
Loans: |
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Originated loans |
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2,610,859 |
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2,397,021 |
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2,250,631 |
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2,069,272 |
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1,905,566 |
Acquired loans |
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1,856,310 |
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946,925 |
|
993,192 |
|
1,027,922 |
|
1,072,542 |
PCI loans |
|
179,364 |
|
176,058 |
|
185,924 |
|
197,288 |
|
216,859 |
Total gross loans |
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4,646,533 |
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3,520,004 |
|
3,429,747 |
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3,294,482 |
|
3,194,967 |
Allowance for loan losses |
|
(30,132) |
|
(27,819) |
|
(27,041) |
|
(25,499) |
|
(24,172) |
Loans, net of allowance |
|
4,616,401 |
|
3,492,185 |
|
3,402,706 |
|
3,268,983 |
|
3,170,795 |
Premises and equipment, net |
|
140,820 |
|
115,400 |
|
114,815 |
|
114,567 |
|
116,129 |
Goodwill |
|
257,683 |
|
106,028 |
|
106,028 |
|
105,492 |
|
105,492 |
Core deposit intangible |
|
26,217 |
|
14,785 |
|
15,510 |
|
16,267 |
|
17,023 |
Bank owned life insurance |
|
115,234 |
|
99,065 |
|
98,424 |
|
97,767 |
|
97,109 |
OREO |
|
6,422 |
|
7,201 |
|
7,090 |
|
9,005 |
|
12,311 |
Deferred income tax asset, net |
|
58,841 |
|
56,792 |
|
63,208 |
|
58,614 |
|
62,774 |
Other assets |
|
129,522 |
|
92,256 |
|
89,211 |
|
115,112 |
|
113,615 |
Total Assets |
|
$6,767,479 |
|
$5,328,996 |
|
$5,078,559 |
|
$5,014,512 |
|
$4,995,289 |
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
|
|
|
Deposits: |
|
|
|
|
|
|
|
|
|
|
Non-interest bearing |
|
$1,926,047 |
|
$1,585,963 |
|
$1,426,624 |
|
$1,406,030 |
|
$1,486,600 |
Interest bearing |
|
990,242 |
|
893,945 |
|
917,004 |
|
814,123 |
|
763,614 |
Total checking accounts |
|
2,916,289 |
|
2,479,908 |
|
2,343,628 |
|
2,220,153 |
|
2,250,214 |
Money market accounts |
|
1,178,109 |
|
910,056 |
|
900,532 |
|
903,697 |
|
927,997 |
Savings deposits |
|
519,964 |
|
384,202 |
|
362,947 |
|
352,547 |
|
347,631 |
Time deposits |
|
861,093 |
|
522,957 |
|
545,437 |
|
579,537 |
|
606,294 |
Total deposits |
|
$5,475,455 |
|
$4,297,123 |
|
$4,152,544 |
|
$4,055,934 |
|
$4,132,136 |
Federal funds purchased |
|
256,611 |
|
268,377 |
|
261,986 |
|
258,329 |
|
174,116 |
Other borrowings |
|
73,089 |
|
63,882 |
|
54,385 |
|
52,788 |
|
56,432 |
Other liabilities |
|
72,066 |
|
65,213 |
|
57,187 |
|
94,690 |
|
94,634 |
Common stockholders’ equity |
|
890,258 |
|
634,401 |
|
552,457 |
|
552,771 |
|
537,971 |
Total Liabilities and |
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity |
|
$6,767,479 |
|
$5,328,996 |
|
$5,078,559 |
|
$5,014,512 |
|
$4,995,289 |
LOANS
Total loans increased $103,705 during the quarter, for an annualized growth rate of approximately 12% excluding loans acquired in the Platinum and Gateway transactions. The acquisition date fair value of loans acquired from those two acquisitions totalled approximately $1,022,824. The loan to deposit ratio increased to 84.9% from 81.9% in the prior quarter, and from 77.3% in the same quarter in 2016.
The loan origination pipeline totalled approximately $548 million at June 30, 2017, compared to $460 million at March 31, 2017.
DEPOSITS
Total deposits decreased by $50,300, or approximately 5% on an annualized basis, during the current quarter, excluding deposit balances assumed in the Platinum and Gateway transactions. The acquisition date fair value of the deposits assumed from the two acquisitions totalled approximately $1,228,632. The decrease in deposits during the current quarter primarily represents non-interest bearing commercial checking accounts returning to more normalized levels after the large increase that occurred in the first quarter. Total checking account balances represent 53% of total deposits. The overall cost of total deposits (i.e. includes non-interest bearing checking accounts) during the current quarter totalled 0.20%, compared to 0.18% in the previous quarter.
3
SELECTED CONSOLIDATED FINANCIAL DATA
The table below summarizes selected financial data for the periods presented.
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||||||||||||||
|
|
June 30, 2017 |
|
|
Mar. 31, 2017 |
|
|
Dec. 31, 2016 |
|
|
Sept. 30, 2016 |
|
|
June 30, 2016 |
|
|
June 30, 2017 |
|
|
June 30, 2016 |
|
|||||||
Selected financial data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets (annualized) |
|
|
0.95% |
|
|
|
1.29% |
|
|
|
1.25% |
|
|
|
1.22% |
|
|
|
1.27% |
|
|
|
1.10% |
|
|
|
0.47% |
|
Return on average equity (annualized) |
|
|
7.27% |
|
|
|
10.92% |
|
|
|
11.51% |
|
|
|
11.21% |
|
|
|
11.96% |
|
|
|
8.81% |
|
|
|
4.28% |
|
Return on average tangible equity (annualized) (Non-GAAP) (1) |
|
|
10.99% |
|
|
|
14.06% |
|
|
|
15.26% |
|
|
|
14.95% |
|
|
|
16.14% |
|
|
|
12.39% |
|
|
|
11.65% |
|
Efficiency ratio (tax equivalent) (Non-GAAP) (1) |
|
|
68.9% |
|
|
|
59.3% |
|
|
|
58.1% |
|
|
|
58.7% |
|
|
|
59.0% |
|
|
|
64.6% |
|
|
|
69.1% |
|
Dividend payout |
|
|
23.1% |
|
|
|
18.8% |
|
|
|
12.1% |
|
|
|
12.5% |
|
|
|
12.5% |
|
|
|
21.1% |
|
|
|
34.8% |
|
Loan / deposit ratio |
|
|
84.9% |
|
|
|
81.9% |
|
|
|
82.6% |
|
|
|
81.2% |
|
|
|
77.3% |
|
|
|
|
|
|
|
|
|
Stockholders’ equity (to total assets) |
|
|
13.2% |
|
|
|
11.9% |
|
|
|
10.9% |
|
|
|
11.0% |
|
|
|
10.8% |
|
|
|
|
|
|
|
|
|
Common equity per common share |
|
$ |
14.84 |
|
|
$ |
12.41 |
|
|
$ |
11.47 |
|
|
$ |
11.51 |
|
|
$ |
11.21 |
|
|
|
|
|
|
|
|
|
Tangible common equity per common share (Non-GAAP) (1) |
|
$ |
10.09 |
|
|
$ |
10.03 |
|
|
$ |
8.93 |
|
|
$ |
8.96 |
|
|
$ |
8.64 |
|
|
|
|
|
|
|
|
|
Common tangible equity (to total tangible assets) (Non-GAAP) (1) |
|
|
9.3% |
|
|
|
9.8% |
|
|
|
8.7% |
|
|
|
8.8% |
|
|
|
8.5% |
|
|
|
|
|
|
|
|
|
Tier 1 capital (to average assets) |
|
|
10.0% |
|
|
|
10.4% |
|
|
|
9.1% |
|
|
|
9.0% |
|
|
|
8.7% |
|
|
|
|
|
|
|
|
|
(1) |
See reconciliation tables starting on page 8, Explanation of Certain Unaudited Non-GAAP Financial Measures. |
NET INTEREST MARGIN (“NIM”)
The Company’s NIM increased 10 basis points from 4.28% in the previous quarter to 4.38% during the current quarter, due to higher loan and securities yields with a stable cost of deposits of 0.20%. PCI accretion impacted the Company’s NIM by 43 basis points during the current quarter compared to 51 basis points in the prior quarter. The tax equivalent yield on new loan production, which increased by 26 basis points from 4.05% in the prior quarter to 4.31% during the current quarter, resulted in an increase in the loan yields. In addition, the increase in short term interest rates had a positive impact on the Company’s floating rate loans, which represent 31% of the total loan portfolio.
The table below summarizes yields and costs by various interest earning asset and interest bearing liability account types for the current quarter, the previous calendar quarter and the same quarter last year.
|
Three Months Ended |
||||||||||||||||
|
June 30, 2017 |
|
Mar. 31, 2017 |
|
June 30, 2016 |
||||||||||||
|
Average |
|
Interest |
|
Average |
|
Average |
|
Interest |
|
Average |
|
Average |
|
Interest |
|
Average |
|
Balance |
|
Inc/Exp |
|
Rate |
|
Balance |
|
Inc/Exp |
|
Rate |
|
Balance |
|
Inc/Exp |
|
Rate |
Loans (1) |
$4,235,557 |
|
$48,922 |
|
4.63% |
|
$3,300,971 |
|
$36,474 |
|
4.48% |
|
$2,949,651 |
|
$33,255 |
|
4.53% |
PCI loans |
181,207 |
|
8,559 |
|
18.95% |
|
182,510 |
|
8,525 |
|
18.94% |
|
225,584 |
|
8,047 |
|
14.35% |
Taxable securities |
977,856 |
|
5,961 |
|
2.45% |
|
861,031 |
|
5,001 |
|
2.36% |
|
879,774 |
|
4,767 |
|
2.18% |
Tax -exempt securities (1) |
155,550 |
|
1,975 |
|
5.09% |
|
155,550 |
|
1,791 |
|
4.67% |
|
121,737 |
|
1,423 |
|
4.70% |
Fed funds sold and other |
180,261 |
|
836 |
|
1.86% |
|
204,125 |
|
651 |
|
1.29% |
|
272,635 |
|
622 |
|
0.92% |
Tot. interest earning assets (1) |
$5,730,431 |
|
$66,253 |
|
4.64% |
|
$4,704,187 |
|
$52,442 |
|
4.52% |
|
$4,449,381 |
|
$48,114 |
|
4.35% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest earnings assets |
726,950 |
|
|
|
|
|
511,328 |
|
|
|
|
|
532,867 |
|
|
|
|
Total Assets |
$6,457,381 |
|
|
|
|
|
$5,215,515 |
|
|
|
|
|
$4,982,248 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest bearing deposits |
$3,324,382 |
|
$2,619 |
|
0.32% |
|
$2,704,860 |
|
$1,897 |
|
0.28% |
|
$2,626,668 |
|
$1,740 |
|
0.27% |
Fed funds purchased |
253,851 |
|
692 |
|
1.09% |
|
259,831 |
|
537 |
|
0.84% |
|
188,663 |
|
244 |
|
0.52% |
Other borrowings |
56,414 |
|
83 |
|
0.59% |
|
34,612 |
|
30 |
|
0.35% |
|
33,315 |
|
34 |
|
0.41% |
Corporate debentures |
26,045 |
|
333 |
|
5.13% |
|
25,987 |
|
318 |
|
4.96% |
|
25,811 |
|
294 |
|
4.58% |
Total interest bearing liabilities |
$3,660,692 |
|
$3,727 |
|
0.41% |
|
$3,025,290 |
|
$2,782 |
|
0.37% |
|
$2,874,457 |
|
$2,312 |
|
0.32% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest bearing deposits |
1,891,968 |
|
|
|
|
|
1,508,058 |
|
|
|
|
|
1,506,762 |
|
|
|
|
All other liabilities |
64,668 |
|
|
|
|
|
65,899 |
|
|
|
|
|
71,935 |
|
|
|
|
Shareholders' equity |
840,053 |
|
|
|
|
|
616,268 |
|
|
|
|
|
529,094 |
|
|
|
|
Total liabilities and shareholders' equity |
$6,457,381 |
|
|
|
|
|
$5,215,515 |
|
|
|
|
|
$4,982,248 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Spread (1) |
|
|
|
|
4.23% |
|
|
|
|
|
4.15% |
|
|
|
|
|
4.03% |
Net Interest Margin (1) |
|
|
|
|
4.38% |
|
|
|
|
|
4.28% |
|
|
|
|
|
4.14% |
|
(1) |
Tax equivalent yield (Non-GAAP); see reconciliation tables starting on page 8, Explanation of Certain Unaudited Non-GAAP Financial Measures. |
4
CREDIT QUALITY AND ALLOWANCE FOR LOAN LOSSES
Non-performing assets (“NPAs”) totalled $26,469 at June 30, 2017, compared to $24,888 at March 31, 2017. The net increase in NPAs resulted from additions to nonaccrual loans of approximately $2.3 million. The majority of the loans transferred to nonaccrual during the current quarter are loans in the process of being renewed. NPAs as a percentage of total assets declined to 0.39% at June 30, 2017, compared to 0.47% at March 31, 2017.
The table below summarizes selected credit quality data for the periods indicated.
|
|
Ending Balance |
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Non-Performing Assets (1) |
|
June 30, 2017 |
|
|
Mar. 31, 2017 |
|
|
Dec. 31, 2016 |
|
|
Sept. 30, 2016 |
|
|
June 30, 2016 |
|
|
|
|
|
|
|
|
|
|||||
Non-accrual loans |
|
$ |
19,916 |
|
|
$ |
17,569 |
|
|
$ |
19,003 |
|
|
$ |
19,704 |
|
|
$ |
25,035 |
|
|
|
|
|
|
|
|
|
Past due loans 90 days or more |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and still accruing interest |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
Total non-performing loans (“NPLs”) |
|
|
19,916 |
|
|
|
17,569 |
|
|
|
19,003 |
|
|
|
19,704 |
|
|
|
25,035 |
|
|
|
|
|
|
|
|
|
Other real estate owned (“OREO”) |
|
|
6,422 |
|
|
|
7,201 |
|
|
|
7,090 |
|
|
|
9,005 |
|
|
|
12,311 |
|
|
|
|
|
|
|
|
|
Repossessed assets other than real estate |
|
131 |
|
|
118 |
|
|
114 |
|
|
170 |
|
|
104 |
|
|
|
|
|
|
|
|
|
|||||
Total non-performing assets |
|
$ |
26,469 |
|
|
$ |
24,888 |
|
|
$ |
26,207 |
|
|
$ |
28,879 |
|
|
$ |
37,450 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||||||||||||||
Asset Quality Ratios (1) |
|
June 30, 2017 |
|
|
Mar. 31, 2017 |
|
|
Dec. 31, 2016 |
|
|
Sept. 30, 2016 |
|
|
June 30, 2016 |
|
|
June 30, 2017 |
|
|
June 30, 2016 |
|
|||||||
Non-performing loans as percentage of total loans |
|
|
0.45 |
% |
|
|
0.53 |
% |
|
|
0.59 |
% |
|
|
0.64 |
% |
|
|
0.84 |
% |
|
|
|
|
|
|
|
|
Non-performing assets as percentage of total assets |
|
|
0.39 |
% |
|
|
0.47 |
% |
|
|
0.52 |
% |
|
|
0.58 |
% |
|
|
0.75 |
% |
|
|
|
|
|
|
|
|
Non-performing assets as percentage of loans and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OREO plus other repossessed assets |
|
|
0.59 |
% |
|
|
0.74 |
% |
|
|
0.81 |
% |
|
|
0.93 |
% |
|
|
1.25 |
% |
|
|
|
|
|
|
|
|
Loans past due 30 thru 89 days and accruing interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
as a percentage of total loans |
|
|
0.27 |
% |
|
|
0.47 |
% |
|
|
0.58 |
% |
|
|
0.36 |
% |
|
|
0.41 |
% |
|
|
|
|
|
|
|
|
Allowance for loan losses as percentage of NPLs |
|
|
149 |
% |
|
|
157 |
% |
|
|
140 |
% |
|
|
128 |
% |
|
|
96 |
% |
|
|
|
|
|
|
|
|
Net (recoveries) charge-offs |
|
$ |
(349 |
) |
|
$ |
217 |
|
|
$ |
724 |
|
|
$ |
(118 |
) |
|
$ |
(139 |
) |
|
$ |
(132 |
) |
|
$ |
(487 |
) |
Net (recoveries) charge-offs as a percentage of average |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
loans for the period on an annualized basis |
|
|
(0.03 |
%) |
|
|
0.03 |
% |
|
|
0.09 |
% |
|
|
(0.02 |
%) |
|
|
(0.02 |
% |
) |
|
(0.01 |
% |
) |
|
(0.04 |
%) |
(1) Excludes PCI loans.
The allowance for loan losses (“ALLL") totalled $30,132 at June 30, 2017, compared to $27,819 at March 31, 2017, an increase of $2,313 due to loan loss provision expense of $1,899 and net recoveries of $414. ALLL on originated loans increased $2,418 mainly due to the increase in loan balances. The ALLL on acquired loans declined 16 basis points due to the addition of loans acquired from Platinum and Gateway which equalled approximately $985,740, net of pay downs, at June 30, 2017. The loans acquired from these two transacations were recorded at estimated fair value on the dates of acquisition. As such, there is no allowance for loan losses associated with these loans as of June 30, 2017. The changes in the Company’s ALLL components between June 30, 2017 and March 31, 2017 are summarized in the table below (unaudited).
|
|
June 30, 2017 |
|
|
March 31, 2017 |
|
|
Increase (Decrease) |
||||||||||||||||||||
|
|
Loan |
|
ALLL |
|
|
|
|
|
Loan |
|
ALLL |
|
|
|
|
|
Loan |
|
ALLL |
|
|
||||||
|
|
Balance |
|
Balance |
|
% |
|
|
Balance |
|
Balance |
|
% |
|
|
Balance |
|
Balance |
|
|
||||||||
Originated loans |
|
$ |
2,593,576 |
|
$ |
26,280 |
|
|
1.01 |
% |
|
$ |
2,380,220 |
|
$ |
24,129 |
|
|
1.01 |
% |
|
$ |
213,356 |
|
$ |
2,151 |
|
– bps |
Impaired originated loans |
|
|
17,283 |
|
|
850 |
|
|
4.92 |
% |
|
|
16,801 |
|
583 |
|
|
3.47 |
% |
|
|
482 |
|
|
267 |
|
145 bps |
|
Total originated loans |
|
|
2,610,859 |
|
|
27,130 |
|
|
1.04 |
% |
|
|
2,397,021 |
|
|
24,712 |
|
|
1.03 |
% |
|
|
213,838 |
|
|
2,418 |
|
1 bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired loans (2) |
|
|
1,854,501 |
|
|
2,639 |
|
|
0.14 |
% |
|
|
945,120 |
|
|
2,769 |
|
|
0.29 |
% |
|
|
909,381 |
|
|
(130 |
) |
(15) bps |
Impaired acquired loans (1) |
|
|
1,809 |
|
|
— |
|
|
— |
|
|
|
1,805 |
|
40 |
|
|
2.22 |
% |
|
|
4 |
|
|
(40 |
) |
(222) bps |
|
Total acquired loans |
|
|
1,856,310 |
|
|
2,639 |
|
|
0.14 |
% |
|
|
946,925 |
|
|
2,809 |
|
|
0.30 |
% |
|
|
909,385 |
|
|
(170 |
) |
(16) bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-PCI loans |
|
|
4,467,169 |
|
|
29,769 |
|
|
|
|
|
|
3,343,946 |
|
|
27,521 |
|
|
|
|
|
|
1,123,223 |
|
|
2,248 |
|
|
PCI loans |
|
|
179,364 |
|
|
363 |
|
|
|
|
|
|
176,058 |
|
298 |
|
|
|
|
|
|
3,306 |
|
|
65 |
|
|
|
Total loans |
|
$ |
4,646,533 |
|
$ |
30,132 |
|
|
|
|
|
$ |
3,520,004 |
|
$ |
27,819 |
|
|
|
|
|
$ |
1,126,529 |
|
$ |
2,313 |
|
|
|
(1) |
These are loans that were acquired as performing loans that subsequently became impaired. |
|
(2) |
Performing acquired loans recorded at estimated fair value on the related acquisition dates. The total net unamortized fair value adjustment at June 30, 2017 was approximately $23,260 or 1.2% of the aggregate outstanding related loan balances. |
5
Non interest income of $16,974 increased $2,472 in the second quarter, of which $1,614 was due to the increase in correspondent banking and capital markets division income. The table below summarizes the Company’s non-interest income for the periods indicated.
Condensed Consolidated Non Interest Income (unaudited)
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||||||||||||||
|
|
June 30, 2017 |
|
|
Mar. 31, 2017 |
|
|
Dec. 31, 2016 |
|
|
Sept. 30, 2016 |
|
|
June 30, 2016 |
|
|
June 30, 2017 |
|
|
June 30, 2016 |
|
|||||||
Correspondent banking and capital markets division (1) |
|
$ |
6,868 |
|
|
$ |
5,376 |
|
|
$ |
7,016 |
|
|
$ |
6,381 |
|
|
$ |
8,049 |
|
|
$ |
12,244 |
|
|
$ |
15,420 |
|
Other correspondent banking related revenue (2) |
|
|
1,195 |
|
|
|
1,073 |
|
|
|
1,075 |
|
|
|
1,147 |
|
|
|
1,242 |
|
|
|
2,268 |
|
|
|
2,646 |
|
Wealth management related revenue |
|
|
891 |
|
|
|
893 |
|
|
|
815 |
|
|
|
892 |
|
|
|
795 |
|
|
|
1,784 |
|
|
|
1,530 |
|
Service charges on deposit accounts |
|
|
3,822 |
|
|
|
3,575 |
|
|
|
3,729 |
|
|
|
3,770 |
|
|
|
3,329 |
|
|
|
7,397 |
|
|
|
6,065 |
|
Debit, prepaid, ATM and merchant card related fees |
|
|
2,324 |
|
|
|
2,265 |
|
|
|
2,009 |
|
|
|
2,017 |
|
|
|
2,182 |
|
|
|
4,589 |
|
|
|
4,228 |
|
BOLI income |
|
|
694 |
|
|
|
641 |
|
|
|
657 |
|
|
|
658 |
|
|
|
654 |
|
|
|
1,335 |
|
|
|
1,219 |
|
Gain on sale of bank properties held for sale |
|
|
— |
|
|
|
129 |
|
|
|
730 |
|
|
|
67 |
|
|
--- |
|
|
|
129 |
|
|
|
— |
|
|
Other service charges and fees |
|
|
1,180 |
|
|
|
550 |
|
|
|
1,125 |
|
|
|
736 |
|
|
|
720 |
|
|
|
1,730 |
|
|
|
1,186 |
|
Subtotal |
|
$ |
16,974 |
|
|
$ |
14,502 |
|
|
$ |
17,156 |
|
|
$ |
15,668 |
|
|
$ |
16,971 |
|
|
$ |
31,476 |
|
|
$ |
32,294 |
|
Gain on sale of securities available for sale |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
13 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Gain on early extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
308 |
|
FDIC indemnification asset – amortization |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,166 |
) |
FDIC indemnification income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
96 |
|
Total Non Interest Income |
|
$ |
16,974 |
|
|
$ |
14,502 |
|
|
$ |
17,156 |
|
|
$ |
15,681 |
|
|
$ |
16,971 |
|
|
$ |
31,476 |
|
|
$ |
31,532 |
|
|
(1) |
Includes gross commissions earned on bond sales, fees from hedging services, loan brokering fees and related consulting fees. The fee income in this category is based on sales volume in any particular period and is therefore volatile between comparable periods. |
|
(2) |
Includes fees from safe-keeping activities, bond accounting services, asset/liability consulting services, international wires, clearing and corporate checking account services and other correspondent banking related revenue and fees. The fees included in this category are less volatile than those described above in note 1. |
NON INTEREST EXPENSES
Non interest expense increased $16,766 in the second quarter to $54,809 which is mainly attributed to the Platinum and Gateway transactions. The Company incurred $9,458 of merger-related expenses in the current quarter. In addition, the Company incurred increased salary and benefits expense, occupancy and depreciation expense, data processing expense and amortization of intangibles related to the acquired banks. The table below summarizes the Company’s non-interest expense for the periods indicated.
Condensed Consolidated Non Interest Expense (unaudited)
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||||||||||||||
|
|
June 30, 2017 |
|
|
Mar. 31, 2017 |
|
|
Dec. 31, 2016 |
|
|
Sept. 30, 2016 |
|
|
June 30, 2016 |
|
|
June 30, 2017 |
|
|
June 30, 2016 |
|
|||||||
Salaries, wages and employee benefits |
|
|
28,317 |
|
|
|
22,882 |
|
|
|
24,049 |
|
|
|
22,418 |
|
|
|
22,959 |
|
|
|
51,199 |
|
|
|
44,414 |
|
Occupancy expense |
|
|
3,069 |
|
|
|
2,749 |
|
|
|
2,767 |
|
|
|
2,414 |
|
|
|
2,477 |
|
|
|
5,818 |
|
|
|
4,624 |
|
Depreciation of premises and equipment |
|
|
1,837 |
|
|
|
1,684 |
|
|
|
1,659 |
|
|
|
1,629 |
|
|
|
1,588 |
|
|
|
3,521 |
|
|
|
3,085 |
|
Supplies, stationary and printing |
|
|
434 |
|
|
|
354 |
|
|
|
320 |
|
|
|
341 |
|
|
|
380 |
|
|
|
788 |
|
|
|
679 |
|
Marketing expenses |
|
|
1,078 |
|
|
|
852 |
|
|
|
909 |
|
|
|
700 |
|
|
|
826 |
|
|
|
1,930 |
|
|
|
1,516 |
|
Data processing expenses |
|
|
2,419 |
|
|
|
1,826 |
|
|
|
1,814 |
|
|
|
1,761 |
|
|
|
1,765 |
|
|
|
4,245 |
|
|
|
3,292 |
|
Legal, auditing and other professional fees |
|
|
932 |
|
|
|
888 |
|
|
|
901 |
|
|
|
904 |
|
|
|
949 |
|
|
|
1,820 |
|
|
|
1,852 |
|
Bank regulatory related expenses |
|
|
891 |
|
|
|
727 |
|
|
|
779 |
|
|
|
863 |
|
|
|
968 |
|
|
|
1,618 |
|
|
|
1,778 |
|
Postage and delivery |
|
|
491 |
|
|
|
428 |
|
|
|
420 |
|
|
|
423 |
|
|
|
486 |
|
|
|
919 |
|
|
|
841 |
|
ATM and debit card related expenses |
|
|
863 |
|
|
|
706 |
|
|
|
713 |
|
|
|
725 |
|
|
|
816 |
|
|
|
1,569 |
|
|
|
1,412 |
|
Credit related expenses |
|
|
876 |
|
|
|
655 |
|
|
|
624 |
|
|
|
187 |
|
|
|
611 |
|
|
|
1,531 |
|
|
|
970 |
|
Amortization of intangibles |
|
|
1,042 |
|
|
|
762 |
|
|
|
791 |
|
|
|
791 |
|
|
|
814 |
|
|
|
1,804 |
|
|
|
1,492 |
|
Internet and telephone banking |
|
|
503 |
|
|
|
518 |
|
|
|
651 |
|
|
|
559 |
|
|
|
628 |
|
|
|
1,021 |
|
|
|
1,192 |
|
Impairment (recovery) on bank property held for sale |
|
|
430 |
|
|
|
77 |
|
|
|
116 |
|
|
|
616 |
|
|
|
(38 |
) |
|
|
507 |
|
|
|
418 |
|
Other expenses |
|
|
2,169 |
|
|
|
2,065 |
|
|
|
1,399 |
|
|
|
2,064 |
|
|
|
1,820 |
|
|
|
4,234 |
|
|
|
3,605 |
|
Subtotal |
|
|
45,351 |
|
|
|
37,173 |
|
|
|
37,912 |
|
|
|
36,395 |
|
|
|
37,049 |
|
|
|
82,524 |
|
|
|
71,170 |
|
Merger-related expenses |
|
|
9,458 |
|
|
|
870 |
|
|
|
272 |
|
|
|
— |
|
|
|
— |
|
|
|
10,328 |
|
|
|
11,172 |
|
Termination of FDIC loss share agreements |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
17,560 |
|
Total Non Interest Expense |
|
|
54,809 |
|
|
$ |
38,043 |
|
|
$ |
38,184 |
|
|
$ |
36,395 |
|
|
$ |
37,049 |
|
|
$ |
92,852 |
|
|
$ |
99,902 |
|
Note: Certain prior period amounts have been reclassified to conform to the current period presentation format.
6
CORRESPONDENT BANKING AND CAPITAL MARKETS SEGMENT
The condensed quarterly results of the Company’s correspondent banking and capital markets segment are presented below.
Condensed Segment Information - Correspondent banking and capital markets division (unaudited)
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||||||||||||||
|
|
June 30, 2017 |
|
|
Mar. 31, 2017 |
|
|
Dec. 31, 2016 |
|
|
Sept. 30, 2016 |
|
|
June 30, 2016 |
|
|
June 30, 2017 |
|
|
June 30, 2016 |
|
|||||||
Net interest income |
|
$ |
1,918 |
|
|
$ |
2,095 |
|
|
$ |
1,850 |
|
|
$ |
1,625 |
|
|
$ |
1,555 |
|
|
$ |
4,013 |
|
|
$ |
3,357 |
|
Provision for loan losses |
|
|
37 |
|
|
|
29 |
|
|
|
24 |
|
|
|
28 |
|
|
|
(24 |
) |
|
|
66 |
|
|
|
(76 |
) |
Total non-interest income (1) |
|
|
8,062 |
|
|
|
6,449 |
|
|
|
8,091 |
|
|
|
7,528 |
|
|
|
9,291 |
|
|
|
14,511 |
|
|
|
18,066 |
|
Total non-interest expense (2) |
|
|
(5,544 |
) |
|
|
(4,746 |
) |
|
|
(5,987 |
) |
|
|
(5,456 |
) |
|
|
(6,159 |
) |
|
|
(10,290 |
) |
|
|
(11,941 |
) |
Income tax provision |
|
|
(1,725 |
) |
|
|
(1,476 |
) |
|
|
(1,535 |
) |
|
|
(1,437 |
) |
|
|
(1,799 |
) |
|
|
(3,201 |
) |
|
|
(3,627 |
) |
Net income |
|
$ |
2,748 |
|
|
$ |
2,351 |
|
|
$ |
2,443 |
|
|
$ |
2,288 |
|
|
$ |
2,864 |
|
|
$ |
5,099 |
|
|
$ |
5,779 |
|
Contribution to diluted earnings per share |
|
$ |
0.05 |
|
|
$ |
0.05 |
|
|
$ |
0.05 |
|
|
$ |
0.05 |
|
|
$ |
0.06 |
|
|
$ |
0.09 |
|
|
$ |
0.12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation of indirect expense net of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
inter-company earnings credit, net of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
income tax benefit (3) |
|
$ |
(202 |
) |
|
$ |
(227 |
) |
|
$ |
(280 |
) |
|
$ |
(244 |
) |
|
$ |
(232 |
) |
|
$ |
(429 |
) |
|
$ |
(574 |
) |
Contribution to diluted earnings per share after |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
deduction of allocated indirect expenses |
|
$ |
0.04 |
|
|
$ |
0.04 |
|
|
$ |
0.04 |
|
|
$ |
0.04 |
|
|
$ |
0.05 |
|
|
$ |
0.08 |
|
|
$ |
0.11 |
|
|
(1) |
The primary component in this line item is gross commissions earned on bond sales, fees from hedging services, loan brokering fees and related consulting fees which were $6,868, $5,376, $7,016, $6,381 and $8,049 for the three months ended June 30, 2017, March 31, 2017, December 31, 2016, September 30, 2016 and June 30, 2016, respectively, and $12,244 and $15,420 for the six months ended June 30, 2017 and 2016, respectively. The fee income in this category is based on sales volume in any particular period and is therefore volatile between comparable periods. The remaining non interest income items in this category, which are less volatile, include fees from safe-keeping activities, bond accounting services, asset/liability consulting related activities, international wires, clearing and corporate checking account services, and other correspondent banking related revenue and fees. |
|
(2) |
A significant portion of these expenses are variable in nature and are a derivative of the income from bond sales, hedging services, brokering loans sales and related consulting services identified in note 1 above. The variable expenses related to these fees identified in (1) above were $2,853, $2,342, $3,133, $2,908 and $3,491 for the three months ended June 30, 2017, March 31, 2017, December 31, 2016, September 30, 2016 and June 30, 2016, respectively, and $5,195 and $6,843 for the six months ended June 30, 2017 and 2016, respectively. Expenses in this line item do not include any indirect support allocation costs. |
|
(3) |
A portion of the cost of the Company’s indirect departments such as human resources, accounting, deposit operations, item processing, information technology, compliance and others have been allocated to the correspondent banking and capital markets division based on management’s estimates. In addition, an inter-company earnings credit is allocated to the segment for services provided to the commercial bank segment, also based on management’s estimates and judgment. |
7
Explanation of Certain Unaudited Non-GAAP Financial Measures
This press release contains financial information determined by methods other than Generally Accepted Accounting Principles (“GAAP”), including adjusted net income, adjusted net income per share diluted, adjusted return on average assets, return on average tangible equity, adjusted return on average tangible equity, adjusted efficiency ratio, adjusted non-interest income, adjusted non-interest expense, adjusted net-interest income, tangible common equity, tangible common equity to tangible assets, common tangible equity per common share, tax equivalent yields on loans, securities and earning assets, and tax equivalent net interest spread and margin, which we refer to “Non-GAAP financial measures.” The tables below provide reconciliations between these Non-GAAP measures and net income, interest income, net interest income and tax equivalent basis interest income and net interest income, return on average assets, return on average equity, the efficiency ratio, total stockholders’ equity and tangible common equity, as applicable.
Management uses these Non-GAAP financial measures in its analysis of the Company’s performance and believes these presentations provide useful supplemental information, and enhance investors’ understanding of the Company’s core business and performance without the impact of merger-related expenses. Accordingly, management believes it is appropriate to exclude merger-related expenses because those costs are specific to each acquisition, vary based upon the size, complexity and other specifics of each acquisition, and are not indicative of the costs to operate the Company’s core business.
Non-GAAP measures are also useful in understanding performance trends and facilitate comparisons with the performance of other financial institutions. The limitations associated with operating measures are the risk that persons might disagree as to the appropriateness of items comprising these measures and that different companies might calculate these measures differently. The Company provides reconciliations between GAAP and these Non-GAAP measures. These disclosures should not be considered an alternative to GAAP.
Reconciliation of GAAP to non-GAAP Measures (unaudited):
|
Three months ended |
|
Six months ended |
||||||||||
|
June 30, 2017 |
|
Mar. 31, 2017 |
|
Dec. 31, 2016 |
|
Sept. 30, 2016 |
|
June 30, 2016 |
|
June 30, 2017 |
|
June 30, 2016 |
Adjusted net income (Non-GAAP) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (GAAP) |
$15,233 |
|
$16,600 |
|
$16,027 |
|
$15,384 |
|
$15,734 |
|
$31,833 |
|
$10,930 |
Gain on sale of securities available for sale, net of tax |
— |
|
— |
|
— |
|
(9) |
|
— |
|
— |
|
— |
Gain on early extinguishment of debt, net of tax |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(202) |
Termination of FDIC loss share agreements, net of tax |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
11,514 |
Merger-related expenses, net of tax |
6,769 |
|
607 |
|
180 |
|
— |
|
— |
|
7,295 |
|
7,325 |
Adjusted net income (Non-GAAP) |
$22,002 |
|
$17,207 |
|
$16,207 |
|
$15,375 |
|
$15,734 |
|
$39,128 |
|
$29,567 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income per share - Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share - Diluted (GAAP) |
$0.26 |
|
$0.32 |
|
$0.33 |
|
$0.32 |
|
$0.32 |
|
$0.57 |
|
$0.23 |
Effect to adjust for securities available for sale |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
Effect to adjust for early extinguishment of debt |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
Effect to adjust for termination of FDIC loss share agreements |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
0.24 |
Effect to adjust for merger-related expenses |
0.11 |
|
0.01 |
|
— |
|
— |
|
— |
|
0.14 |
|
0.15 |
Adjusted net income per share - Diluted (Non-GAAP) |
$0.37 |
|
$0.33 |
|
$0.33 |
|
$0.32 |
|
$0.32 |
|
$0.71 |
|
$0.62 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted return on average assets (Non-GAAP) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets (GAAP) |
0.95% |
|
1.29% |
|
1.25% |
|
1.22% |
|
1.27% |
|
1.10% |
|
0.47% |
Effect to adjust for securities available for sale |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
Effect to adjust for early extinguishment of debt |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(0.01%) |
Effect to adjust for termination of FDIC loss share agreements |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
0.50% |
Effect to adjust for merger-related expenses |
0.42% |
|
0.05% |
|
0.01% |
|
— |
|
— |
|
0.26% |
|
0.31% |
Adjusted return on average assets (Non-GAAP) |
1.37% |
|
1.34% |
|
1.26% |
|
1.22% |
|
1.27% |
|
1.36% |
|
1.27% |
8
Explanation of Certain Unaudited Non-GAAP Financial Measures (continued)
|
Three months ended |
|
Six months ended |
||||||||||
|
June 30, 2017 |
|
Mar. 31, 2017 |
|
Dec. 31, 2016 |
|
Sept. 30, 2016 |
|
June 30, 2016 |
|
June 30, 2017 |
|
June 30, 2016 |
Return on average tangible equity (non-GAAP) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (GAAP) |
$15,233 |
|
$16,600 |
|
$16,027 |
|
$15,384 |
|
$15,734 |
|
$31,833 |
|
$10,930 |
Gain on early extinguishment of debt, net of tax |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(202) |
Termination of FDIC loss share agreements, net of tax |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
11,514 |
Amortization of intangibles, net of tax |
746 |
|
532 |
|
523 |
|
522 |
|
533 |
|
1,274 |
|
978 |
Adjusted net income for average tangible equity (Non-GAAP) |
$15,979 |
|
$17,132 |
|
$16,550 |
|
$15,906 |
|
$16,267 |
|
$33,107 |
|
$23,220 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average stockholders' equity (GAAP) |
$840,053 |
|
$616,268 |
|
$553,997 |
|
$546,023 |
|
$529,094 |
|
$728,779 |
|
$513,258 |
Average goodwill |
(232,026) |
|
(106,028) |
|
(105,760) |
|
(105,492) |
|
(105,492) |
|
(169,375) |
|
(96,013) |
Average core deposit intangible |
(24,118) |
|
(15,148) |
|
(15,889) |
|
(16,645) |
|
(17,413) |
|
(19,698) |
|
(15,779) |
Average other intangibles |
(962) |
|
(769) |
|
(759) |
|
(751) |
|
(785) |
|
(867) |
|
(805) |
Average tangible equity (Non-GAAP) |
$582,947 |
|
$494,323 |
|
$431,589 |
|
$423,135 |
|
$405,404 |
|
$538,839 |
|
$400,661 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average tangible equity (annualized) (Non-GAAP) |
10.99% |
|
14.06% |
|
15.26% |
|
14.95% |
|
16.14% |
|
12.39% |
|
11.65% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted return on average tangible equity (non-GAAP) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average tangible equity (Non-GAAP) |
10.99% |
|
14.06% |
|
15.26% |
|
14.95% |
|
16.14% |
|
12.39% |
|
11.65% |
Effect to adjust for merger-related expenses |
4.66% |
|
0.50% |
|
0.17% |
|
— |
|
— |
|
2.73% |
|
3.68% |
Adjusted return on average tangible equity (Non-GAAP) |
15.65% |
|
14.56% |
|
15.43% |
|
14.95% |
|
16.14% |
|
15.12% |
|
15.33% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Efficiency ratio (tax equivalent) (Non-GAAP) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non interest income (GAAP) |
$16,974 |
|
$14,502 |
|
$17,156 |
|
$15,681 |
|
$16,971 |
|
$31,476 |
|
$31,532 |
Gain on early extinguishment of debt |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(308) |
Adjusted non interest income (Non-GAAP) |
$16,974 |
|
$14,502 |
|
$17,156 |
|
$15,681 |
|
$16,971 |
|
$31,476 |
|
$31,224 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income before provision (GAAP) |
$61,017 |
|
$48,321 |
|
$47,534 |
|
$45,319 |
|
$44,997 |
|
$109,338 |
|
$86,472 |
Total tax equivalent adjustment |
1,509 |
|
1,339 |
|
1,036 |
|
949 |
|
805 |
|
2,848 |
|
1,480 |
Adjusted net interest income (Non-GAAP) |
$62,526 |
|
$49,660 |
|
$48,570 |
|
$46,268 |
|
$45,802 |
|
$112,186 |
|
$87,952 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non interest expense (GAAP) |
$54,809 |
|
$38,043 |
|
$38,184 |
|
$36,395 |
|
$37,049 |
|
$92,852 |
|
$99,902 |
Termination of FDIC loss share agreements |
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(17,560) |
Adjusted non interest expense (Non-GAAP) |
$54,809 |
|
$38,043 |
|
$38,184 |
|
$36,395 |
|
$37,049 |
|
$92,852 |
|
$82,342 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Efficiency ratio (tax equivalent) (Non-GAAP) |
68.9% |
|
59.3% |
|
58.1% |
|
58.7% |
|
59.0% |
|
64.6% |
|
69.1% |
Effect to adjust for merger-related expenses |
(11.9%) |
|
(1.4%) |
|
(0.4%) |
|
— |
|
— |
|
(7.2%) |
|
(9.4%) |
Adjusted efficiency ratio (Non-GAAP) |
57.0% |
|
57.9% |
|
57.7% |
|
58.7% |
|
59.0% |
|
57.4% |
|
59.7% |
9
Explanation of Certain Unaudited Non-GAAP Financial Measures (continued)
|
Endng Balance |
||||||||
|
June 30, 2017 |
|
Mar. 31, 2017 |
|
Dec. 31, 2016 |
|
Sept. 30, 2016 |
|
June 30, 2016 |
Tangible common equity (Non-GAAP) |
|
|
|
|
|
|
|
|
|
Total stockholders' equity (GAAP) |
$890,258 |
|
$634,401 |
|
$552,457 |
|
$552,771 |
|
$537,971 |
Goodwill |
(257,683) |
|
(106,028) |
|
(106,028) |
|
(105,492) |
|
(105,492) |
Core deposit intangible |
(26,217) |
|
(14,785) |
|
(15,510) |
|
(16,267) |
|
(17,023) |
Other intangibles |
(1,011) |
|
(754) |
|
(784) |
|
(733) |
|
(768) |
Tangible common equity (Non-GAAP) |
$605,347 |
|
$512,834 |
|
$430,135 |
|
$430,279 |
|
$414,688 |
|
|
|
|
|
|
|
|
|
|
Total assets (GAAP) |
$6,767,479 |
|
$5,328,996 |
|
$5,078,559 |
|
$5,014,512 |
|
$4,995,289 |
Goodwill |
(257,683) |
|
(106,028) |
|
(106,028) |
|
(105,492) |
|
(105,492) |
Core deposit intangible |
(26,217) |
|
(14,785) |
|
(15,510) |
|
(16,267) |
|
(17,023) |
Other intangibles |
(1,011) |
|
(754) |
|
(784) |
|
(733) |
|
(768) |
Total tangible assets (Non-GAAP) |
$6,482,568 |
|
$5,207,429 |
|
$4,956,237 |
|
$4,892,020 |
|
$4,872,006 |
|
|
|
|
|
|
|
|
|
|
Tangible common equity to tangible assets (Non-GAAP) |
9.3% |
|
9.8% |
|
8.7% |
|
8.8% |
|
8.5% |
Common tangible equity per common share (Non-GAAP) |
$10.09 |
|
$10.03 |
|
$8.93 |
|
$8.96 |
|
$8.64 |
Common shares outstanding at period end |
60,003 |
|
51,126 |
|
48,147 |
|
48,017 |
|
47,996 |
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
|
||||
|
June 30, 2017 |
|
Mar. 31, 2017 |
|
June 30, 2016 |
|
|
|
|
Tax equivalent yields (Non-GAAP) |
|
|
|
|
|
|
|
|
|
Loans, excluding PCI loans |
$48,060 |
|
$35,724 |
|
$32,930 |
|
|
|
|
PCI loans |
8,559 |
|
8,525 |
|
8,047 |
|
|
|
|
Taxable securities |
5,961 |
|
5,001 |
|
4,767 |
|
|
|
|
Tax -exempt securities |
1,328 |
|
1,202 |
|
943 |
|
|
|
|
Fed funds sold and other |
836 |
|
651 |
|
622 |
|
|
|
|
Interest income (GAAP) |
$64,744 |
|
$51,103 |
|
$47,309 |
|
|
|
|
Tax equivalent adjustment for Non-PCI loans |
862 |
|
750 |
|
325 |
|
|
|
|
Tax equivalent adjustment for tax-exempt securities |
647 |
|
589 |
|
480 |
|
|
|
|
Tax equivalent adjustments |
1,509 |
|
1,339 |
|
805 |
|
|
|
|
Interest income (tax equivalent) (Non-GAAP) |
$66,253 |
|
$52,442 |
|
$48,114 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income (GAAP) |
$61,017 |
|
$48,321 |
|
$44,997 |
|
|
|
|
Tax equivalent adjustments |
1,509 |
|
1,339 |
|
805 |
|
|
|
|
Net interest income (tax equivalent) (Non-GAAP) |
$62,526 |
|
$49,660 |
|
$45,802 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yield on Non-PCI loans |
4.55% |
|
4.39% |
|
4.49% |
|
|
|
|
Effect from tax equivalent adjustment |
0.08% |
|
0.09% |
|
0.04% |
|
|
|
|
Yield on Non-PCI loans - tax equivalent (Non-GAAP) |
4.63% |
|
4.48% |
|
4.53% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yield on securities |
2.58% |
|
2.47% |
|
2.29% |
|
|
|
|
Effect from tax equivalent adjustment |
0.23% |
|
0.23% |
|
0.19% |
|
|
|
|
Yield on securities - tax equivalent (Non-GAAP) |
2.81% |
|
2.71% |
|
2.49% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yield on interest earning assets (GAAP) |
4.53% |
|
4.41% |
|
4.28% |
|
|
|
|
Effect from tax equivalent adjustments |
0.11% |
|
0.12% |
|
0.07% |
|
|
|
|
Yield on interest earning assets - tax equivalent (Non-GAAP) |
4.64% |
|
4.52% |
|
4.35% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest spread (GAAP) |
4.12% |
|
4.04% |
|
3.96% |
|
|
|
|
Effect for tax equivalent adjustments |
0.11% |
|
0.12% |
|
0.07% |
|
|
|
|
Net interest spread (Non-GAAP) |
4.23% |
|
4.15% |
|
4.03% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin (GAAP) |
4.27% |
|
4.17% |
|
4.07% |
|
|
|
|
Effect from tax equivalent adjustments |
0.11% |
|
0.12% |
|
0.07% |
|
|
|
|
Net interest margin - tax equivalent (Non-GAAP) |
4.38% |
|
4.28% |
|
4.14% |
|
|
|
|
10
The Company, headquartered in Winter Haven, Florida between Orlando and Tampa, is a financial holding company with one nationally chartered bank, CenterState Bank, N.A. Presently, the Company operates through its network of 78 branch banking offices located in 28 counties throughout Florida, providing traditional deposit and lending products and services to its commercial and retail customers. The Company also provides correspondent banking and capital market services to over 600 community banks nationwide.
For additional information contact John C. Corbett (CEO), Stephen D. Young (COO) or Jennifer L. Idell (CFO) at 863-293-4710.
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995:
This report contains forward-looking statements, within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. These statements related to future events, other future financial and operating performance, costs, revenues, economic conditions in our markets, loan performance, credit risks, collateral values and credit conditions, or business strategies, including expansion and acquisition activities and may be identified by terminology such as “may,” “will,” “should,” “expects,” “scheduled,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “potential,” or “continue” or the negative of such terms or other comparable terminology. Actual events or results may differ materially. In evaluating these statements, you should specifically consider the factors described throughout this report. We cannot assure you that future results, levels of activity, performance or goals will be achieved, and actual results may differ from those set forth in the forward looking statements.
Forward-looking statements, with respect to our beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions, involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause the actual results, performance or achievements of the Company or the Bank to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. You should not expect us to update any forward-looking statements. All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary notice, including, without limitation, those risks and uncertainties described in our annual report on Form 10-K for the year ended December 31, 2016, and otherwise in our SEC reports and filings.
11
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