(Mark One) | ||
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended June 30, 2016 | ||
Or | ||
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to |
Delaware | 47-1308512 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification Number) | |
225 South Main Avenue Sioux Falls, South Dakota | 57104 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer x (Do not check if a smaller company) | Smaller reporting company o |
• | “we,” “our,” “us” and our “company” refer to: |
◦ | Great Western Bancorporation, Inc., an Iowa corporation, and its consolidated subsidiaries, for all periods prior to the Formation Transactions; and |
◦ | Great Western Bancorp, Inc., a Delaware corporation, and its consolidated subsidiaries, for all periods after the completion of the Formation Transactions; |
• | “Great Western” refers to Great Western Bancorporation, Inc. but not its consolidated subsidiaries, for all periods prior to the Formation Transaction, and Great Western Bancorp, Inc. but not its consolidated subsidiaries, for all periods after the completion of the Formation Transaction; |
• | our “bank” refers to Great Western Bank, a South Dakota banking corporation; |
• | “NAB” refers to National Australia Bank Limited, an Australian public company that was our ultimate parent company prior to our initial public offering in October 2014 and, until July 31,2015, was our principal stockholder; |
• | our “states” refers to the nine states (South Dakota, Iowa, Nebraska, North Dakota, Minnesota, Colorado, Arizona, Kansas and Missouri) in which we currently conduct our business; |
• | our “footprint” refers to the geographic markets within our states in which we currently conduct our business; and |
• | the “Formation Transactions” means a series of transactions completed on October 17, 2014 and undertaken in preparation for our initial public offering comprised of: |
◦ | the cash contribution by National Americas Holdings LLC to Great Western Bancorp, Inc. in an amount equal to the total stockholder’s equity of Great Western Bancorporation, Inc.; |
◦ | the sale by National Americas Investment, Inc. of all outstanding capital stock of Great Western Bancorporation, Inc. to Great Western Bancorp, Inc. for an amount in cash equal to the total stockholder’s equity of Great Western Bancorporation, Inc.; and |
◦ | the merger of Great Western Bancorporation, Inc. with and into Great Western Bancorp, Inc., with Great Western Bancorp, Inc. continuing as the surviving corporation and succeeding to all the assets, liabilities and business of Great Western Bancorporation, Inc. |
• | current and future economic and market conditions in the United States generally or in our states in particular, including the rate of growth and employment levels; |
• | the effect of the current low interest rate environment or changes in market interest rates; |
• | the geographic concentration of our operations, and our concentration on originating business and agribusiness loans; |
• | the relative strength or weakness of the agricultural and commercial credit sectors and of the real estate markets in the markets in which our borrowers are located; |
• | declines in the market prices for agricultural products; |
• | our ability to effectively execute our strategic plan and manage our growth; |
• | our ability to successfully manage our credit risk and the sufficiency of our allowance for loan and lease loss; |
• | our ability to attract and retain skilled employees or changes in our management personnel; |
• | our ability to effectively compete with other financial services companies and the effects of competition in the financial services industry on our business; |
• | changes in the demand for our products and services; |
• | the effectiveness of our risk management and internal disclosure controls and procedures; |
• | fluctuations in the values of our assets and liabilities and off-balance sheet exposures; |
• | our ability to attract and retain customer deposits; |
• | our access to sources of liquidity and capital to address our liquidity needs; |
• | possible changes in trade, monetary and fiscal policies of, and other activities undertaken by, governments, agencies, central banks and similar organizations; |
• | our ability to identify and address cyber-security risks; |
• | any failure or interruption of our information and communications systems; |
• | our ability to keep pace with technological changes; |
• | our ability to successfully develop and commercialize new or enhanced products and services; |
• | possible impairment of our goodwill and other intangible assets, or any adjustment of the valuation of our deferred tax assets; |
• | the effects of problems encountered by other financial institutions; |
• | the effects of geopolitical instability, including war, terrorist attacks, and man-made and natural disasters; |
• | the effects of the failure of any component of our business infrastructure provided by a third party; |
• | the impact of, and changes in applicable laws, regulations and accounting standards and policies; |
• | market perceptions associated with our separation from NAB and other aspects of our business; |
• | our likelihood of success in, and the impact of, litigation or regulatory actions; |
• | our inability to receive dividends from our bank and to service debt, pay dividends to our common stockholders and satisfy obligations as they become due; |
• | the incremental costs of operating as a standalone public company; |
• | our ability to meet our obligations as a public company, including our obligations under Section 404 of the Sarbanes-Oxley Act of 2002 to maintain an effective system of internal control over financial reporting; |
• | our ability to retain service providers to perform oversight or control functions or services that have otherwise been performed in the past by NAB; |
• | various risks and uncertainties associated with our recently completed acquisition of HF Financial Corp. (“HF Financial”), including, without limitation, our ability to effectively and timely integrate HF Financial’s operations into our operations, our ability to achieve the estimated synergies from the proposed transaction, litigation related to the proposed transaction and the effects of the proposed transaction, on our future financial condition, operating results, strategy and plans; |
• | damage to our reputation from any of the factors described above; and |
• | other risks and uncertainties inherent to our business, including those discussed under the heading "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended September 30, 2015. |
ITEM 1. | FINANCIAL STATEMENTS (UNAUDITED) |
(Unaudited) | |||||||
June 30, | September 30, | ||||||
2016 | 2015 | ||||||
Assets | |||||||
Cash and due from banks | $ | 475,785 | $ | 237,770 | |||
Securities available for sale | 1,361,164 | 1,327,327 | |||||
Loans, net of unearned discounts and deferred fees, including $80,137 and $97,030 of loans covered by FDIC loss share agreements at June 30, 2016 and September 30, 2015, respectively, and $1,156,442 and $1,118,687 of loans and written loan commitments at fair value under the fair value option at June 30, 2016 and September 30, 2015, respectively, and $21,301 and $9,867 of loans held for sale at June 30, 2016 and September 30, 2015, respectively. | 8,606,974 | 7,325,198 | |||||
Allowance for loan and lease losses | (64,243 | ) | (57,200 | ) | |||
Net loans | 8,542,731 | 7,267,998 | |||||
Premises and equipment, including $7,974 and $0 of property held for sale at June 30, 2016 and September 30, 2015 | 118,151 | 97,550 | |||||
Accrued interest receivable | 43,547 | 44,077 | |||||
Other repossessed property, including $50 and $61 of property covered by FDIC loss share arrangements at June 30, 2016 and September 30, 2015, respectively | 11,701 | 15,892 | |||||
FDIC indemnification asset | 11,706 | 14,722 | |||||
Goodwill | 738,460 | 697,807 | |||||
Core deposits and other intangibles | 12,757 | 7,119 | |||||
Loan servicing rights | 6,231 | — | |||||
Cash value of life insurance | 28,945 | 6,800 | |||||
Net deferred tax assets | 40,199 | 32,470 | |||||
Other assets | 61,845 | 49,122 | |||||
Total assets | $ | 11,453,222 | $ | 9,798,654 | |||
Liabilities and stockholders’ equity | |||||||
Deposits | |||||||
Noninterest-bearing | $ | 1,802,169 | $ | 1,368,453 | |||
Interest-bearing | 6,678,040 | 6,018,612 | |||||
Total deposits | 8,480,209 | 7,387,065 | |||||
Securities sold under agreements to repurchase | 159,016 | 185,271 | |||||
FHLB advances and other borrowings | 913,377 | 581,000 | |||||
Subordinated debentures and subordinated notes payable | 111,827 | 90,727 | |||||
Fair value of derivatives | 91,319 | 53,613 | |||||
Accrued interest payable | 5,387 | 4,006 | |||||
Accrued expenses and other liabilities | 51,576 | 37,626 | |||||
Total liabilities | 9,812,711 | 8,339,308 | |||||
Stockholders’ equity | |||||||
Common stock, $0.01 par value, authorized 500,000,000 shares; 58,693,499 shares issued and outstanding at June 30, 2016 and 55,219,596 shares issued and outstanding at September 30, 2015 | 587 | 552 | |||||
Additional paid-in capital | 1,311,510 | 1,201,387 | |||||
Retained earnings | 319,383 | 255,089 | |||||
Accumulated other comprehensive income | 9,031 | 2,318 | |||||
Total stockholders' equity | 1,640,511 | 1,459,346 | |||||
Total liabilities and stockholders' equity | $ | 11,453,222 | $ | 9,798,654 |
Three Months Ended June 30, | Nine Months Ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Interest and dividend income | ||||||||||||||||
Loans | $ | 93,749 | $ | 85,240 | $ | 269,137 | $ | 251,978 | ||||||||
Taxable securities | 5,826 | 5,984 | 17,600 | 17,050 | ||||||||||||
Nontaxable securities | 61 | 10 | 85 | 36 | ||||||||||||
Dividends on securities | 396 | 489 | 832 | 997 | ||||||||||||
Federal funds sold and other | 157 | 155 | 326 | 599 | ||||||||||||
Total interest and dividend income | 100,189 | 91,878 | 287,980 | 270,660 | ||||||||||||
Interest expense | ||||||||||||||||
Deposits | 6,451 | 5,776 | 18,145 | 17,775 | ||||||||||||
Securities sold under agreements to repurchase | 124 | 134 | 395 | 430 | ||||||||||||
FHLB advances and other borrowings | 986 | 867 | 2,831 | 2,706 | ||||||||||||
Related party notes payable | — | 233 | — | 692 | ||||||||||||
Subordinated debentures and subordinated notes payable | 976 | 330 | 2,662 | 985 | ||||||||||||
Total interest expense | 8,537 | 7,340 | 24,033 | 22,588 | ||||||||||||
Net interest income | 91,652 | 84,538 | 263,947 | 248,072 | ||||||||||||
Provision for loan and lease losses | 5,372 | 4,410 | 11,892 | 17,408 | ||||||||||||
Net interest income after provision for loan and lease losses | 86,280 | 80,128 | 252,055 | 230,664 | ||||||||||||
Noninterest income | ||||||||||||||||
Service charges and other fees | 12,316 | 9,627 | 33,098 | 28,896 | ||||||||||||
Wealth management fees | 1,807 | 1,972 | 5,087 | 5,754 | ||||||||||||
Mortgage banking income, net | 1,669 | 1,903 | 4,143 | 5,027 | ||||||||||||
Net gain (loss) on sale of securities | 134 | — | (196 | ) | 51 | |||||||||||
Net increase (decrease) in fair value of loans at fair value | 14,198 | (24,394 | ) | 35,253 | 7,914 | |||||||||||
Net realized and unrealized gain (loss) on derivatives | (21,925 | ) | 18,946 | (53,379 | ) | (27,357 | ) | |||||||||
Other | 898 | 1,951 | 2,733 | 4,556 | ||||||||||||
Total noninterest income | 9,097 | 10,005 | 26,739 | 24,841 | ||||||||||||
Noninterest expense | ||||||||||||||||
Salaries and employee benefits | 28,352 | 26,612 | 78,417 | 75,373 | ||||||||||||
Data processing | 5,625 | 4,657 | 15,822 | 14,193 | ||||||||||||
Occupancy expenses | 4,002 | 3,161 | 11,436 | 11,169 | ||||||||||||
Professional fees | 3,327 | 3,289 | 9,087 | 10,464 | ||||||||||||
Communication expenses | 788 | 1,031 | 2,650 | 3,429 | ||||||||||||
Advertising | 1,047 | 1,196 | 3,015 | 2,870 | ||||||||||||
Equipment expense | 959 | 1,075 | 2,794 | 2,956 | ||||||||||||
Net loss recognized on repossessed property and other related expenses | 379 | 1,067 | 479 | 5,547 | ||||||||||||
Amortization of core deposits and other intangibles | 822 | 1,776 | 2,239 | 6,402 | ||||||||||||
Acquisition expenses | 12,179 | — | 12,950 | — | ||||||||||||
Other | 3,742 | 2,566 | 11,408 | 9,556 | ||||||||||||
Total noninterest expense | 61,222 | 46,430 | 150,297 | 141,959 | ||||||||||||
Income before income taxes | 34,155 | 43,703 | 128,497 | 113,546 | ||||||||||||
Provision for income taxes | 7,795 | 14,871 | 41,002 | 38,293 | ||||||||||||
Net income | $ | 26,360 | $ | 28,832 | $ | 87,495 | $ | 75,253 | ||||||||
Other comprehensive income (loss) - change in net unrealized gain (loss) on securities available for sale (net of deferred income tax (expense) benefit of $(2,649), and $2,254 for the three months ended June 30, 2016 and 2015, respectively and $(4,115) and $(2,712) for the nine months ended June 30, 2016 and 2015, respectively) | 4,322 | (3,845 | ) | 6,713 | 4,423 | |||||||||||
Comprehensive income | $ | 30,682 | $ | 24,987 | $ | 94,208 | $ | 79,676 | ||||||||
Basic earnings per common share | ||||||||||||||||
Weighted average shares outstanding | 57,012,698 | 57,898,335 | 55,845,322 | 57,897,484 | ||||||||||||
Basic earnings per share | $ | 0.46 | $ | 0.50 | $ | 1.57 | $ | 1.30 | ||||||||
Diluted earnings per common share | ||||||||||||||||
Weighted average shares outstanding | 57,176,705 | 57,959,202 | 55,993,011 | 57,929,188 | ||||||||||||
Diluted earnings per share | $ | 0.46 | $ | 0.50 | $ | 1.56 | $ | 1.30 | ||||||||
Dividends per share | ||||||||||||||||
Dividends paid | $ | 7,734 | $ | 6,946 | $ | 23,201 | $ | 13,893 | ||||||||
Dividends per share | $ | 0.14 | $ | 0.12 | $ | 0.42 | $ | 0.24 |
Comprehensive Income | Common Stock Par Value | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||||||||||||
Balance, September 30, 2014 | $ | 579 | $ | 1,260,124 | $ | 166,544 | $ | (6,157 | ) | $ | 1,421,090 | ||||||||||||
Net income | $ | 75,253 | — | — | 75,253 | — | 75,253 | ||||||||||||||||
Other comprehensive income, net of tax: | |||||||||||||||||||||||
Net change in net unrealized gain on securities available for sale | 4,423 | — | — | — | 4,423 | 4,423 | |||||||||||||||||
Total comprehensive income | $ | 79,676 | |||||||||||||||||||||
Stock-based compensation | — | 978 | — | — | 978 | ||||||||||||||||||
Cash dividends: | |||||||||||||||||||||||
Common stock, $0.24 per share | — | — | (13,893 | ) | — | (13,893 | ) | ||||||||||||||||
Balance, June 30, 2015 | $ | 579 | $ | 1,261,102 | $ | 227,904 | $ | (1,734 | ) | $ | 1,487,851 | ||||||||||||
Balance, September 30, 2015 | $ | 552 | $ | 1,201,387 | $ | 255,089 | $ | 2,318 | $ | 1,459,346 | |||||||||||||
Net income | $ | 87,495 | — | — | 87,495 | — | 87,495 | ||||||||||||||||
Other comprehensive income, net of tax: | |||||||||||||||||||||||
Net change in net unrealized gain on securities available for sale | 6,713 | — | — | — | 6,713 | 6,713 | |||||||||||||||||
Total comprehensive income | $ | 94,208 | |||||||||||||||||||||
Stock-based compensation | — | 2,680 | — | — | 2,680 | ||||||||||||||||||
Common stock issued in business acquisition | 35 | 107,443 | — | — | 107,478 | ||||||||||||||||||
Cash dividends: | |||||||||||||||||||||||
Common stock, $0.42 per share | — | — | (23,201 | ) | — | (23,201 | ) | ||||||||||||||||
Balance, June 30, 2016 | $ | 587 | $ | 1,311,510 | $ | 319,383 | $ | 9,031 | $ | 1,640,511 |
Nine months ended | |||||||
June 30, 2016 | June 30, 2015 | ||||||
Operating activities | |||||||
Net income | $ | 87,495 | $ | 75,253 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 11,827 | 17,474 | |||||
Amortization of FDIC indemnification asset | 2,886 | 6,347 | |||||
Net loss (gain) on sale of securities | 196 | (51 | ) | ||||
Net gain on sale of loans | (4,485 | ) | (5,027 | ) | |||
Net loss on FDIC indemnification asset | 836 | 1,686 | |||||
Net (gain) on sale of premises and equipment | (32 | ) | (1,681 | ) | |||
Loss from sale/writedowns of repossessed property | 479 | 5,547 | |||||
Provision for loan and lease losses | 11,892 | 17,408 | |||||
Provision for loan servicing rights loss | 176 | — | |||||
Stock-based compensation | 2,680 | 978 | |||||
Originations of residential real estate loans held for sale | (184,255 | ) | (212,144 | ) | |||
Proceeds from sales of residential real estate loans held for sale | 172,821 | 218,379 | |||||
Deferred income taxes | (7,458 | ) | 3,107 | ||||
Changes in: | |||||||
Accrued interest receivable | 4,647 | 3,081 | |||||
Other assets | 4,576 | (3,143 | ) | ||||
FDIC clawback liability | 801 | 708 | |||||
Accrued interest payable and other liabilities | 31,619 | 4,456 | |||||
Net cash provided by operating activities | 136,701 | 132,378 | |||||
Investing activities | |||||||
Purchase of securities available for sale | (195,042 | ) | (327,955 | ) | |||
Proceeds from sales of securities available for sale | 145,934 | 55,149 | |||||
Proceeds from maturities of securities available for sale | 186,483 | 205,609 | |||||
Net increase in loans | (408,571 | ) | (474,849 | ) | |||
(Payment) reimbursement of covered losses from FDIC indemnification claims | (706 | ) | 1,666 | ||||
Purchase of premises and equipment | (6,660 | ) | (2,108 | ) | |||
Proceeds from sale of premises and equipment | 641 | 2,765 | |||||
Proceeds from sale of repossessed property | 4,693 | 31,329 | |||||
Purchase of FHLB stock | (34,495 | ) | (40,027 | ) | |||
Proceeds from redemption of FHLB stock | 27,471 | 39,662 | |||||
Net cash paid in business acquisition | (15,669 | ) | — | ||||
Net cash used in investing activities | (295,921 | ) | (508,759 | ) | |||
Financing activities | |||||||
Net increase in deposits | 230,191 | 305,508 | |||||
Net (decrease) in securities sold under agreements to repurchase | (131,910 | ) | (128 | ) | |||
Net increase in FHLB advances and other borrowings | 322,155 | 15,426 | |||||
Dividends paid | (23,201 | ) | (13,893 | ) | |||
Net cash provided by financing activities | 397,235 | 306,913 | |||||
Net increase (decrease) in cash and due from banks | 238,015 | (69,468 | ) | ||||
Cash and due from banks, beginning of period | 237,770 | 256,639 | |||||
Cash and due from banks, end of period | $ | 475,785 | $ | 187,171 | |||
Supplemental disclosure of cash flow information | |||||||
Cash payments for interest | $ | 22,652 | $ | 23,650 | |||
Cash payments for income taxes | $ | 44,476 | $ | 42,088 | |||
Supplemental disclosure of noncash investing and financing activities | |||||||
Loans transferred to repossessed properties | $ | (1,817 | ) | $ | (7,447 | ) | |
Repossessed property transferred to premises and equipment | $ | (840 | ) | $ | — |
Intangible | Method | Years | |
Core deposit | Straight-line or effective yield | 5 - 10 | |
Brand intangible | Straight-line | 15 | |
Customer relationships | Straight-line | 8.5 | |
Other intangibles | Straight-line | 1.25 - 9.33 |
Number of Shares | Amount | |||||
(In thousands) | ||||||
Equity consideration: | ||||||
Common stock issued | 3,448,119 | $ | 107,478 | |||
Non-equity consideration: | ||||||
Cash | 34,487 | |||||
Total consideration paid | 141,965 | |||||
Fair value of net assets acquired including identifiable intangible assets | 101,312 | |||||
Goodwill | $ | 40,653 |
(In thousands) | Fair Value | |||
Identifiable assets acquired: | ||||
Cash and due from banks | $ | 18,818 | ||
Investment securities | 165,052 | |||
Net loans | 863,741 | |||
Premises and equipment | 19,220 | |||
Accrued interest receivable | 4,117 | |||
Other repossessed property | 4 | |||
Intangible assets | 7,877 | |||
Loan servicing rights | 6,573 | |||
Other assets | 36,639 | |||
Total identifiable assets acquired | $ | 1,122,041 | ||
Liabilities assumed: | ||||
Deposits | $ | 863,121 | ||
FHLB advances and other borrowings | 115,881 | |||
Subordinated debentures | 21,110 | |||
Other liabilities | 20,617 | |||
Total liabilities assumed | 1,020,729 | |||
Fair value of net identifiable assets acquired | 101,312 | |||
Net purchase price | 141,965 | |||
Goodwill | $ | 40,653 |
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(In thousands, except per share data) | |||||||||||||||
Net interest income | $ | 125,539 | $ | 93,999 | $ | 316,922 | $ | 275,746 | |||||||
Net income | 35,245 | 30,795 | 99,927 | 77,067 | |||||||||||
Basic earnings per share | 0.62 | 0.53 | 1.79 | 1.33 | |||||||||||
Fully diluted earnings per share | 0.62 | 0.53 | 1.78 | 1.33 |
Amount | |||||
(In thousands) | |||||
Contractually required principal and interest | $ | 83,710 | |||
Non-accretable difference | (28,516 | ) | |||
Cash flows expected to be collected | 55,194 | ||||
Accretable yield | (3,662 | ) | |||
Total purchased credit impaired loans acquired | $ | 51,532 |
Fair Value of Acquired Loans at Acquisition Date | Gross Contractual Amounts Receivable at Acquisition Date | Best Estimate at Acquisition Date of Contractual Cash Flows Not Expected to be Collected | |||||||||
(In thousands) | |||||||||||
Acquired receivables subject to ASC 310-30 | $ | 51,532 | $ | 83,710 | $ | 28,516 | |||||
Acquired receivables not subject to ASC 310-30 | 812,209 | 998,255 | 9,572 |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
As of June 30, 2016 | |||||||||||||||
U.S. Treasury securities | $ | 226,751 | $ | 5,246 | $ | — | $ | 231,997 | |||||||
U.S. Agency securities | 49,641 | 366 | — | 50,007 | |||||||||||
Mortgage-backed securities: | |||||||||||||||
Government National Mortgage Association | 705,180 | 5,786 | (1,388 | ) | 709,578 | ||||||||||
Federal National Mortgage Association | 178,320 | 1,814 | — | 180,134 | |||||||||||
Small Business Assistance Program | 146,746 | 2,550 | — | 149,296 | |||||||||||
States and political subdivision securities | 33,934 | 192 | (28 | ) | 34,098 | ||||||||||
Corporate debt securities | 4,997 | 2 | — | 4,999 | |||||||||||
Other | 1,013 | 42 | — | 1,055 | |||||||||||
Total | $ | 1,346,582 | $ | 15,998 | $ | (1,416 | ) | $ | 1,361,164 |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
As of September 30, 2015 | |||||||||||||||
U.S. Treasury securities | $ | 250,986 | $ | 3,811 | $ | — | $ | 254,797 | |||||||
U.S. Agency securities | 74,412 | 643 | — | 75,055 | |||||||||||
Mortgage-backed securities: | |||||||||||||||
Government National Mortgage Association | 842,460 | 3,663 | (4,503 | ) | 841,620 | ||||||||||
Federal National Mortgage Association | 46,449 | 96 | — | 46,545 | |||||||||||
Small Business Assistance Program | 101,415 | 233 | (213 | ) | 101,435 | ||||||||||
States and political subdivision securities | 1,849 | 1 | — | 1,850 | |||||||||||
Corporate debt securities | 4,996 | — | (13 | ) | 4,983 | ||||||||||
Other | 1,006 | 36 | — | 1,042 | |||||||||||
Total | $ | 1,323,573 | $ | 8,483 | $ | (4,729 | ) | $ | 1,327,327 |
June 30, 2016 | September 30, 2015 | ||||||||||||||
(In Thousands) | Amortized Cost | Estimated Fair Value | Amortized Cost | Estimated Fair Value | |||||||||||
Due in one year or less | $ | 53,129 | $ | 53,503 | $ | 76,261 | $ | 76,905 | |||||||
Due after one year through five years | 254,775 | 260,136 | 255,982 | 259,780 | |||||||||||
Due after five years through ten years | 7,297 | 7,340 | — | — | |||||||||||
Due after ten years | 122 | 122 | — | — | |||||||||||
315,323 | 321,101 | 332,243 | 336,685 | ||||||||||||
Mortgage-backed securities | 1,030,246 | 1,039,008 | 990,324 | 989,600 | |||||||||||
Securities without contractual maturities | 1,013 | 1,055 | 1,006 | 1,042 | |||||||||||
Total | $ | 1,346,582 | $ | 1,361,164 | $ | 1,323,573 | $ | 1,327,327 |
June 30, 2016 | |||||||||||||||||||||||
Less than 12 months | 12 months or more | Total | |||||||||||||||||||||
Estimated Fair Value | Unrealized Losses | Estimated Fair Value | Unrealized Losses | Estimated Fair Value | Unrealized Losses | ||||||||||||||||||
Mortgage-backed securities | $ | 101 | $ | (1 | ) | $ | 199,274 | $ | (1,387 | ) | $ | 199,375 | $ | (1,388 | ) | ||||||||
Corporate debt securities | — | — | — | — | — | — | |||||||||||||||||
States and political subdivision securities | 4,393 | (28 | ) | — | — | 4,393 | (28 | ) | |||||||||||||||
Total | $ | 4,494 | $ | (29 | ) | $ | 199,274 | $ | (1,387 | ) | $ | 203,768 | $ | (1,416 | ) |
September 30, 2015 | |||||||||||||||||||||||
Less than 12 months | 12 months or more | Total | |||||||||||||||||||||
Estimated Fair Value | Unrealized Losses | Estimated Fair Value | Unrealized Losses | Estimated Fair Value | Unrealized Losses | ||||||||||||||||||
Mortgage-backed securities | $ | 58,604 | $ | (236 | ) | $ | 412,058 | $ | (4,480 | ) | $ | 470,662 | $ | (4,716 | ) | ||||||||
Corporate debt securities | 4,984 | (13 | ) | — | — | 4,984 | (13 | ) | |||||||||||||||
States and political subdivision securities | — | — | — | — | — | — | |||||||||||||||||
Total | $ | 63,588 | $ | (249 | ) | $ | 412,058 | $ | (4,480 | ) | $ | 475,646 | $ | (4,729 | ) |
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Beginning balance accumulated other comprehensive income (loss) | $ | 4,709 | $ | 2,111 | $ | 2,318 | $ | (6,157 | ) | ||||||
Net unrealized holding gain arising during the period | 6,837 | (6,099 | ) | 11,024 | 7,186 | ||||||||||
Reclassification adjustment for net gain (loss) realized in net income | 134 | — | (196 | ) | (51 | ) | |||||||||
Net change in unrealized gain before income taxes | 6,971 | (6,099 | ) | 10,828 | 7,135 | ||||||||||
Income tax (expense) | (2,649 | ) | 2,254 | (4,115 | ) | (2,712 | ) | ||||||||
Net change in unrealized gain on securities after taxes | 4,322 | (3,845 | ) | 6,713 | 4,423 | ||||||||||
Ending balance accumulated other comprehensive income | $ | 9,031 | $ | (1,734 | ) | $ | 9,031 | $ | (1,734 | ) |
June 30, 2016 | September 30, 2015 | ||||||
Residential real estate | $ | 1,032,355 | $ | 921,827 | |||
Commercial real estate | 3,657,024 | 2,845,748 | |||||
Commercial non real estate | 1,746,257 | 1,610,828 | |||||
Agriculture | 2,101,601 | 1,861,465 | |||||
Consumer | 79,814 | 73,049 | |||||
Other | 45,444 | 38,371 | |||||
Ending balance | 8,662,495 | 7,351,288 | |||||
Less: | |||||||
Unamortized discount on acquired loans | (42,793 | ) | (19,264 | ) | |||
Unearned net deferred fees and costs and loans in process | (12,728 | ) | (6,826 | ) | |||
Total | $ | 8,606,974 | $ | 7,325,198 |
Nonaccrual loans | June 30, 2016 | September 30, 2015 | |||||
Residential real estate | $ | 5,834 | $ | 7,642 | |||
Commercial real estate | 10,331 | 9,556 | |||||
Commercial non real estate | 11,678 | 14,281 | |||||
Agriculture | 62,356 | 24,569 | |||||
Consumer | 88 | 107 | |||||
Total | $ | 90,287 | $ | 56,155 |
As of June 30, 2016 | Residential Real Estate | Commercial Real Estate | Commercial Non Real Estate | Agriculture | Consumer | Other | Total | ||||||||||||||||||||
Credit Risk Profile by Internally Assigned Grade | |||||||||||||||||||||||||||
Grade: | |||||||||||||||||||||||||||
Pass | $ | 921,503 | $ | 3,128,241 | $ | 1,148,620 | $ | 1,426,550 | $ | 78,478 | $ | 45,444 | $ | 6,748,836 | |||||||||||||
Watchlist | 5,212 | 108,694 | 69,731 | 212,049 | 207 | — | 395,893 | ||||||||||||||||||||
Substandard | 10,705 | 61,864 | 29,504 | 135,222 | 315 | — | 237,610 | ||||||||||||||||||||
Doubtful | 103 | 155 | 523 | — | — | — | 781 | ||||||||||||||||||||
Loss | — | — | — | — | — | — | — | ||||||||||||||||||||
Ending balance | 937,523 | 3,298,954 | 1,248,378 | 1,773,821 | 79,000 | 45,444 | 7,383,120 | ||||||||||||||||||||
Loans covered by FDIC loss sharing agreements | 80,137 | — | — | — | — | — | 80,137 | ||||||||||||||||||||
Total | $ | 1,017,660 | $ | 3,298,954 | $ | 1,248,378 | $ | 1,773,821 | $ | 79,000 | $ | 45,444 | $ | 7,463,257 |
As of September 30, 2015 | Residential Real Estate | Commercial Real Estate | Commercial Non Real Estate | Agriculture | Consumer | Other | Total | ||||||||||||||||||||
Credit Risk Profile by Internally Assigned Grade | |||||||||||||||||||||||||||
Grade: | |||||||||||||||||||||||||||
Pass | $ | 799,359 | $ | 2,384,980 | $ | 1,053,091 | $ | 1,272,312 | $ | 72,705 | $ | 38,371 | $ | 5,620,818 | |||||||||||||
Watchlist | 4,890 | 66,024 | 50,242 | 189,144 | 78 | — | 310,378 | ||||||||||||||||||||
Substandard | 11,877 | 56,905 | 60,801 | 53,837 | 223 | — | 183,643 | ||||||||||||||||||||
Doubtful | 323 | 200 | 682 | 256 | 7 | — | 1,468 | ||||||||||||||||||||
Loss | — | — | — | — | — | — | — | ||||||||||||||||||||
Ending balance | 816,449 | 2,508,109 | 1,164,816 | 1,515,549 | 73,013 | 38,371 | 6,116,307 | ||||||||||||||||||||
Loans covered by FDIC loss sharing agreements | 97,030 | — | — | — | — | — | 97,030 | ||||||||||||||||||||
Total | $ | 913,479 | $ | 2,508,109 | $ | 1,164,816 | $ | 1,515,549 | $ | 73,013 | $ | 38,371 | $ | 6,213,337 |
As of June 30, 2016 | 30-59 Days Past Due | 60-89 Days Past Due | 90 Days or Greater Past Due | Total Past Due | Current | Total Financing Receivables | |||||||||||||||||
Residential real estate | $ | 1,242 | $ | 877 | $ | 1,399 | $ | 3,518 | $ | 934,005 | $ | 937,523 | |||||||||||
Commercial real estate | 42 | 224 | 5,433 | 5,699 | 3,293,255 | 3,298,954 | |||||||||||||||||
Commercial non real estate | 182 | 436 | 8,589 | 9,207 | 1,239,171 | 1,248,378 | |||||||||||||||||
Agriculture | 4,343 | 7,972 | 4,735 | 17,050 | 1,756,771 | 1,773,821 | |||||||||||||||||
Consumer | 157 | 26 | 7 | 190 | 78,810 | 79,000 | |||||||||||||||||
Other | — | — | — | — | 45,444 | 45,444 | |||||||||||||||||
Ending balance | 5,966 | 9,535 | 20,163 | 35,664 | 7,347,456 | 7,383,120 | |||||||||||||||||
Loans covered by FDIC loss sharing agreements | 849 | 496 | 260 | 1,605 | 78,532 | 80,137 | |||||||||||||||||
Total | $ | 6,815 | $ | 10,031 | $ | 20,423 | $ | 37,269 | $ | 7,425,988 | $ | 7,463,257 |
As of September 30, 2015 | 30-59 Days Past Due | 60-89 Days Past Due | 90 Days or Greater Past Due | Total Past Due | Current | Total Financing Receivables | |||||||||||||||||
Residential real estate | $ | 486 | $ | 858 | $ | 2,776 | $ | 4,120 | $ | 812,329 | $ | 816,449 | |||||||||||
Commercial real estate | 1,708 | 1,204 | 4,247 | 7,159 | 2,500,950 | 2,508,109 | |||||||||||||||||
Commercial non real estate | 697 | 7,944 | 4,072 | 12,713 | 1,152,103 | 1,164,816 | |||||||||||||||||
Agriculture | 2,161 | 175 | 6,264 | 8,600 | 1,506,949 | 1,515,549 | |||||||||||||||||
Consumer | 232 | 8 | 37 | 277 | 72,736 | 73,013 | |||||||||||||||||
Other | — | — | — | — | 38,371 | 38,371 | |||||||||||||||||
Ending balance | 5,284 | 10,189 | 17,396 | 32,869 | 6,083,438 | 6,116,307 | |||||||||||||||||
Loans covered by FDIC loss sharing agreements | 2,455 | 594 | 873 | 3,922 | 93,108 | 97,030 | |||||||||||||||||
Total | $ | 7,739 | $ | 10,783 | $ | 18,269 | $ | 36,791 | $ | 6,176,546 | $ | 6,213,337 |
June 30, 2016 | September 30, 2015 | ||||||||||||||||||||||
Recorded Investment | Unpaid Principal Balance | Related Allowance | Recorded Investment | Unpaid Principal Balance | Related Allowance | ||||||||||||||||||
Impaired loans: | |||||||||||||||||||||||
With an allowance recorded: | |||||||||||||||||||||||
Residential real estate | $ | 10,983 | $ | 11,942 | $ | 3,173 | $ | 12,364 | $ | 12,602 | $ | 2,784 | |||||||||||
Commercial real estate | 69,602 | 70,665 | 7,602 | 67,751 | 69,722 | 4,644 | |||||||||||||||||
Commercial non real estate | 31,066 | 33,260 | 5,045 | 65,495 | 76,647 | 5,657 | |||||||||||||||||
Agriculture | 135,222 | 137,479 | 11,761 | 54,093 | 54,699 | 3,950 | |||||||||||||||||
Consumer | 327 | 510 | 69 | 230 | 359 | 50 | |||||||||||||||||
Total | $ | 247,200 | $ | 253,856 | $ | 27,650 | $ | 199,933 | $ | 214,029 | $ | 17,085 |
Three Months Ended June 30, 2016 | Three Months Ended June 30, 2015 | Nine Months Ended June 30, 2016 | Nine Months Ended June 30, 2015 | ||||||||||||||||||||||||||||
Average Recorded Investment | Interest Income Recognized while on Impaired Status | Average Recorded Investment | Interest Income Recognized while on Impaired Status | Average Recorded Investment | Interest Income Recognized while on Impaired Status | Average Recorded Investment | Interest Income Recognized while on Impaired Status | ||||||||||||||||||||||||
Residential real estate | $ | 11,743 | $ | 438 | $ | 12,413 | $ | 453 | $ | 11,899 | $ | 877 | $ | 12,336 | $ | 1,398 | |||||||||||||||
Commercial real estate | 78,962 | 3,193 | 75,665 | 3,106 | 76,159 | 6,666 | 72,287 | 9,498 | |||||||||||||||||||||||
Commercial non real estate | 37,322 | 1,162 | 49,705 | 2,308 | 44,365 | 2,284 | 45,409 | 5,753 | |||||||||||||||||||||||
Agriculture | 118,056 | 5,359 | 44,405 | 1,232 | 102,065 | 11,054 | 42,186 | 3,019 | |||||||||||||||||||||||
Consumer | 314 | 38 | 238 | 24 | 293 | 80 | 249 | 75 | |||||||||||||||||||||||
Total | $ | 246,397 | $ | 10,190 | $ | 182,426 | $ | 7,123 | $ | 234,781 | $ | 20,961 | $ | 172,467 | $ | 19,743 |
June 30, 2016 | September 30, 2015 | ||||||||||||||
Accruing | Nonaccrual | Accruing | Nonaccrual | ||||||||||||
Residential real estate | $ | 413 | $ | 1,090 | $ | 452 | $ | 1,547 | |||||||
Commercial real estate | 17,851 | 3,429 | 30,917 | 4,725 | |||||||||||
Commercial non real estate | 7,255 | 1,539 | 8,928 | 833 | |||||||||||
Agriculture | 19,610 | 32,723 | 20,041 | 6,857 | |||||||||||
Consumer | 32 | 9 | 33 | 4 | |||||||||||
Total | $ | 45,161 | $ | 38,790 | $ | 60,371 | $ | 13,966 |
Three Months Ended June 30, | |||||||||||||||||||||
2016 | 2015 | ||||||||||||||||||||
Recorded Investment | Recorded Investment | ||||||||||||||||||||
(in thousands) | Number | Pre- Modification | Post- Modification | Number | Pre- Modification | Post- Modification | |||||||||||||||
Residential real estate | |||||||||||||||||||||
Rate modification | — | $ | — | $ | — | — | $ | — | $ | — | |||||||||||
Term extension | 1 | 42 | 42 | 1 | 35 | 35 | |||||||||||||||
Payment modification | — | — | — | — | — | — | |||||||||||||||
Bankruptcy | — | — | — | — | — | — | |||||||||||||||
Other | — | — | — | — | — | — | |||||||||||||||
Total residential real estate | 1 | 42 | 42 | 1 | 35 | 35 | |||||||||||||||
Commercial real estate | |||||||||||||||||||||
Rate modification | — | — | — | — | — | — | |||||||||||||||
Term extension | — | — | — | 1 | 574 | 574 | |||||||||||||||
Payment modification | — | — | — | — | — | — | |||||||||||||||
Bankruptcy | — | — | — | — | — | — | |||||||||||||||
Other | — | — | — | — | — | — | |||||||||||||||
Total commercial real estate | — | — | — | 1 | 574 | 574 | |||||||||||||||
Commercial non real estate | |||||||||||||||||||||
Rate modification | — | — | — | — | — | — | |||||||||||||||
Term extension | 3 | 57 | 57 | — | — | — | |||||||||||||||
Payment modification | 1 | 878 | 878 | — | — | — | |||||||||||||||
Bankruptcy | — | — | — | — | — | — | |||||||||||||||
Other | — | — | — | — | — | — | |||||||||||||||
Total commercial non real estate | 4 | 935 | 935 | — | — | — | |||||||||||||||
Agriculture | |||||||||||||||||||||
Rate modification | — | — | — | — | — | — | |||||||||||||||
Term extension | — | — | — | — | — | — | |||||||||||||||
Payment modification | — | — | — | — | — | — | |||||||||||||||
Bankruptcy | — | — | — | — | — | — | |||||||||||||||
Other | — | — | — | — | — | — | |||||||||||||||
Total agriculture | — | — | — | — | — | — | |||||||||||||||
Consumer | |||||||||||||||||||||
Rate modification | — | — | — | — | — | — | |||||||||||||||
Term extension | — | — | — | — | — | — | |||||||||||||||
Payment modification | — | — | — | 1 | 18 | 18 | |||||||||||||||
Bankruptcy | — | — | — | — | — | — | |||||||||||||||
Other | — | — | — | — | — | — | |||||||||||||||
Total consumer | — | — | — | 1 | 18 | 18 | |||||||||||||||
Total accruing | 5 | $ | 977 | $ | 977 | 3 | $ | 627 | $ | 627 | |||||||||||
Change in recorded investment due to principal paydown at time of modification | — | $ | — | $ | — | — | $ | — | $ | — | |||||||||||
Change in recorded investment due to chargeoffs at time of modification | — | $ | — | $ | — | — | $ | — | $ | — |
Nine Months Ended June 30, | |||||||||||||||||||||
2016 | 2015 | ||||||||||||||||||||
Recorded Investment | Recorded Investment | ||||||||||||||||||||
(in thousands) | Number | Pre- Modification | Post- Modification | Number | Pre- Modification | Post- Modification | |||||||||||||||
Residential real estate | |||||||||||||||||||||
Rate modification | — | $ | — | $ | — | 1 | $ | 15 | $ | 15 | |||||||||||
Term extension | 1 | 42 | 42 | 1 | 35 | 35 | |||||||||||||||
Payment modification | — | — | — | — | — | — | |||||||||||||||
Bankruptcy | — | — | — | — | — | — | |||||||||||||||
Other | — | — | — | 1 | 21 | 21 | |||||||||||||||
Total residential real estate | 1 | 42 | 42 | 3 | 71 | 71 | |||||||||||||||
Commercial real estate | |||||||||||||||||||||
Rate modification | — | — | — | — | — | — | |||||||||||||||
Term extension | 2 | 1,898 | 1,898 | 2 | 664 | 574 | |||||||||||||||
Payment modification | — | — | — | 6 | 22,542 | 22,542 | |||||||||||||||
Bankruptcy | — | — | — | 1 | 498 | 498 | |||||||||||||||
Other | 3 | 6,714 | 6,714 | — | — | — | |||||||||||||||
Total commercial real estate | 5 | 8,612 | 8,612 | 9 | 23,704 | 23,614 | |||||||||||||||
Commercial non real estate | |||||||||||||||||||||
Rate modification | 1 | 49 | 49 | 1 | 32 | 32 | |||||||||||||||
Term extension | 4 | 115 | 115 | 3 | 2,879 | 2,879 | |||||||||||||||
Payment modification | 2 | 948 | 948 | 2 | 1,874 | 1,874 | |||||||||||||||
Bankruptcy | — | — | — | — | — | — | |||||||||||||||
Other | 3 | 3,849 | 3,849 | — | — | — | |||||||||||||||
Total commercial non real estate | 10 | 4,961 | 4,961 | 6 | 4,785 | 4,785 | |||||||||||||||
Agriculture | |||||||||||||||||||||
Rate modification | — | — | — | — | — | — | |||||||||||||||
Term extension | 13 | 26,914 | 26,914 | — | — | — | |||||||||||||||
Payment modification | 4 | 989 | 989 | — | — | — | |||||||||||||||
Bankruptcy | — | — | — | — | — | — | |||||||||||||||
Other | — | — | — | — | — | — | |||||||||||||||
Total agriculture | 17 | 27,903 | 27,903 | — | — | — | |||||||||||||||
Consumer | |||||||||||||||||||||
Rate modification | — | — | — | — | — | — | |||||||||||||||
Term extension | — | — | — | — | — | — | |||||||||||||||
Payment modification | — | — | — | 1 | 18 | 18 | |||||||||||||||
Bankruptcy | — | — | — | 1 | 6 | 6 | |||||||||||||||
Other | — | — | — | — | — | — | |||||||||||||||
Total consumer | — | — | — | 2 | 24 | 24 | |||||||||||||||
Total accruing | 33 | $ | 41,518 | $ | 41,518 | 20 | $ | 28,584 | $ | 28,494 | |||||||||||
Change in recorded investment due to principal paydown at time of modification | — | $ | — | $ | — | — | $ | — | $ | — | |||||||||||
Change in recorded investment due to chargeoffs at time of modification | — | $ | — | $ | — | 1 | $ | 90 | $ | — |
Three Months Ended June 30, | |||||||||||||||||||||
2016 | 2015 | ||||||||||||||||||||
Recorded Investment | Recorded Investment | ||||||||||||||||||||
(in thousands) | Number | Pre- Modification | Post- Modification | Number | Pre- Modification | Post- Modification | |||||||||||||||
Residential real estate | |||||||||||||||||||||
Rate modification | — | $ | — | $ | — | — | $ | — | $ | — | |||||||||||
Term extension | — | — | — | 1 | — | — | |||||||||||||||
Payment modification | 1 | 50 | 49 | 1 | 19 | 19 | |||||||||||||||
Bankruptcy | — | — | — | — | — | — | |||||||||||||||
Other | — | — | — | 1 | 25 | 10 | |||||||||||||||
Total residential real estate | 1 | 50 | 49 | 3 | 44 | 29 | |||||||||||||||
Commercial real estate | |||||||||||||||||||||
Rate modification | — | — | — | — | — | — | |||||||||||||||
Term extension | — | — | — | — | — | — | |||||||||||||||
Payment modification | — | — | — | — | — | — | |||||||||||||||
Bankruptcy | — | — | — | — | — | — | |||||||||||||||
Other | — | — | — | — | — | — | |||||||||||||||
Total commercial real estate | — | — | — | — | — | — | |||||||||||||||
Commercial Non Real Estate | |||||||||||||||||||||
Rate modification | — | — | — | — | — | — | |||||||||||||||
Term extension | — | — | — | 1 | 77 | — | |||||||||||||||
Payment modification | — | — | — | 1 | 4 | 4 | |||||||||||||||
Bankruptcy | — | — | — | — | — | — | |||||||||||||||
Other | — | — | — | — | — | — | |||||||||||||||
Total commercial non real estate | — | — | — | 2 | 81 | 4 | |||||||||||||||
Agriculture | |||||||||||||||||||||
Rate modification | — | — | — | — | — | — | |||||||||||||||
Term extension | 1 | 101 | 100 | — | — | — | |||||||||||||||
Payment modification | 4 | 932 | 887 | — | — | — | |||||||||||||||
Bankruptcy | — | — | — | — | — | — | |||||||||||||||
Other | 1 | 96 | 96 | — | — | — | |||||||||||||||
Total agriculture | 6 | 1,129 | 1,083 | — | — | — | |||||||||||||||
Consumer | |||||||||||||||||||||
Rate modification | — | — | — | — | — | — | |||||||||||||||
Term extension | — | — | — | 1 | 1 | 1 | |||||||||||||||
Payment modification | — | — | — | — | — | — | |||||||||||||||
Bankruptcy | — | — | — | — | — | — | |||||||||||||||
Other | — | — | — | — | — | — | |||||||||||||||
Total consumer | — | — | — | 1 | 1 | 1 | |||||||||||||||
Total non-accruing | 7 | $ | 1,179 | $ | 1,132 | 6 | $ | 126 | $ | 34 | |||||||||||
Change in recorded investment due to principal paydown at time of modification | — | $ | — | $ | — | — | $ | — | $ | — | |||||||||||
Change in recorded investment due to chargeoffs at time of modification | 7 | $ | 47 | $ | — | 2 | $ | 92 | $ | — |
Nine Months Ended June 30, | |||||||||||||||||||||
2016 | 2015 | ||||||||||||||||||||
Recorded Investment | Recorded Investment | ||||||||||||||||||||
(in thousands) | Number | Pre- Modification | Post- Modification | Number | Pre- Modification | Post- Modification | |||||||||||||||
Residential real estate | |||||||||||||||||||||
Rate modification | — | $ | — | $ | — | 2 | $ | 104 | $ | 104 | |||||||||||
Term extension | — | — | — | 2 | 77 | 77 | |||||||||||||||
Payment modification | 2 | 237 | 236 | 1 | 19 | 19 | |||||||||||||||
Bankruptcy | — | — | — | 1 | 43 | 43 | |||||||||||||||
Other | — | — | — | 1 | 25 | 10 | |||||||||||||||
Total residential real estate | 2 | 237 | 236 | 7 | 268 | 253 | |||||||||||||||
Commercial real estate | |||||||||||||||||||||
Rate modification | — | — | — | — | — | — | |||||||||||||||
Term extension | — | — | — | — | — | — | |||||||||||||||
Payment modification | — | — | — | — | — | — | |||||||||||||||
Bankruptcy | — | — | — | — | — | — | |||||||||||||||
Other | — | — | — | — | — | — | |||||||||||||||
Total commercial real estate | — | — | — | — | — | — | |||||||||||||||
Commercial Non Real Estate | |||||||||||||||||||||
Rate modification | — | — | — | — | — | — | |||||||||||||||
Term extension | — | — | — | 5 | 294 | 217 | |||||||||||||||
Payment modification | 2 | 760 | 760 | 1 | 4 | 4 | |||||||||||||||
Bankruptcy | — | — | — | — | — | — | |||||||||||||||
Other | — | — | — | — | — | — | |||||||||||||||
Total commercial non real estate | 2 | 760 | 760 | 6 | 298 | 221 | |||||||||||||||
Agriculture | |||||||||||||||||||||
Rate modification | — | — | — | — | — | — | |||||||||||||||
Term extension | 1 | 101 | 100 | — | — | — | |||||||||||||||
Payment modification | 4 | 932 | 887 | — | — | — | |||||||||||||||
Bankruptcy | — | — | — | — | — | — | |||||||||||||||
Other | 1 | 96 | 96 | — | — | — | |||||||||||||||
Total agriculture | 6 | 1,129 | 1,083 | — | — | — | |||||||||||||||
Consumer | |||||||||||||||||||||
Rate modification | — | — | — | — | — | — | |||||||||||||||
Term extension | — | — | — | 2 | 2 | 2 | |||||||||||||||
Payment modification | — | — | — | — | — | — | |||||||||||||||
Bankruptcy | 1 | 8 | 8 | — | — | — | |||||||||||||||
Other | — | — | — | — | — | — | |||||||||||||||
Total consumer | 1 | 8 | 8 | 2 | 2 | 2 | |||||||||||||||
Total non-accruing | 11 | $ | 2,134 | $ | 2,087 | 15 | $ | 568 | $ | 476 | |||||||||||
Change in recorded investment due to principal paydown at time of modification | — | $ | — | $ | — | — | $ | — | $ | — | |||||||||||
Change in recorded investment due to chargeoffs at time of modification | 7 | $ | 47 | $ | — | 2 | $ | 92 | $ | — |
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||||||||||
($ in thousands) | Number of Loans | Recorded Investment | Number of Loans | Recorded Investment | Number of Loans | Recorded Investment | Number of Loans | Recorded Investment | |||||||||||||||||||
Residential real estate | — | $ | — | 1 | $ | 10 | 1 | $ | — | 4 | $ | 353 | |||||||||||||||
Commercial real estate | — | — | — | — | — | — | — | — | |||||||||||||||||||
Commercial non real estate | 2 | 275 | 2 | 32 | 2 | 275 | 4 | 32 | |||||||||||||||||||
Agriculture | 1 | 760 | 3 | 782 | 3 | 760 | 3 | 782 | |||||||||||||||||||
Consumer | — | — | — | — | — | — | — | — | |||||||||||||||||||
Total | 3 | $ | 1,035 | 6 | $ | 824 | 6 | $ | 1,035 | 11 | $ | 1,167 |
Three Months Ended June 30, 2016 | Residential Real Estate | Commercial Real Estate | Commercial Non Real Estate | Agriculture | Consumer | Other | Total | ||||||||||||||||||||
Beginning balance April 1, 2016 | $ | 8,796 | $ | 20,904 | $ | 12,631 | $ | 18,323 | $ | 336 | $ | 927 | $ | 61,917 | |||||||||||||
Charge-offs | (257 | ) | (291 | ) | (1,936 | ) | (1,133 | ) | (37 | ) | (497 | ) | (4,151 | ) | |||||||||||||
Recoveries | 133 | 77 | 235 | 262 | 61 | 337 | 1,105 | ||||||||||||||||||||
Provision | (778 | ) | (713 | ) | 1,200 | 5,634 | 79 | 304 | 5,726 | ||||||||||||||||||
(Improvement) impairment of ASC 310-30 loans | (205 | ) | (149 | ) | — | — | — | — | (354 | ) | |||||||||||||||||
Ending balance June 30, 2016 | $ | 7,689 | $ | 19,828 | $ | 12,130 | $ | 23,086 | $ | 439 | $ | 1,071 | $ | 64,243 |
Three Months Ended June 30, 2015 | Residential Real Estate | Commercial Real Estate | Commercial Non Real Estate | Agriculture | Consumer | Other | Total | ||||||||||||||||||||
Beginning balance April 1, 2015 | $ | 7,495 | $ | 15,736 | $ | 15,957 | $ | 12,222 | $ | 189 | $ | 827 | $ | 52,426 | |||||||||||||
Charge-offs | (77 | ) | (280 | ) | (1,337 | ) | (411 | ) | (31 | ) | (356 | ) | (2,492 | ) | |||||||||||||
Recoveries | 84 | 205 | 949 | 10 | 32 | 306 | 1,586 | ||||||||||||||||||||
Provision | (325 | ) | 2,130 | 1,381 | 1,545 | 164 | 96 | 4,991 | |||||||||||||||||||
(Improvement) impairment of ASC 310-30 loans | (625 | ) | 45 | — | — | (1 | ) | — | (581 | ) | |||||||||||||||||
Ending balance June 30, 2015 | $ | 6,552 | $ | 17,836 | $ | 16,950 | $ | 13,366 | $ | 353 | $ | 873 | $ | 55,930 |
Nine Months Ended June 30, 2016 | Residential Real Estate | Commercial Real Estate | Commercial Non Real Estate | Agriculture | Consumer | Other | Total | ||||||||||||||||||||
Beginning balance October 1, 2015 | $ | 8,025 | $ | 18,014 | $ | 15,996 | $ | 13,952 | $ | 348 | $ | 865 | $ | 57,200 | |||||||||||||
Charge-offs | (959 | ) | (1,063 | ) | (2,193 | ) | (2,257 | ) | (183 | ) | (1,494 | ) | (8,149 | ) | |||||||||||||
Recoveries | 472 | 568 | 875 | 386 | 131 | 868 | 3,300 | ||||||||||||||||||||
Provision | 463 | 2,547 | (2,478 | ) | 11,005 | 143 | 832 | 12,512 | |||||||||||||||||||
(Impairment) improvement of ASC 310-30 loans | (312 | ) | (238 | ) | (70 | ) | — | — | — | (620 | ) | ||||||||||||||||
Ending balance June 30, 2016 | $ | 7,689 | $ | 19,828 | $ | 12,130 | $ | 23,086 | $ | 439 | $ | 1,071 | $ | 64,243 |
Nine Months Ended June 30, 2015 | Residential Real Estate | Commercial Real Estate | Commercial Non Real Estate | Agriculture | Consumer | Other | Total | ||||||||||||||||||||
Beginning balance October 1, 2014 | $ | 8,342 | $ | 16,884 | $ | 10,550 | $ | 10,655 | $ | 264 | $ | 823 | $ | 47,518 | |||||||||||||
Charge-offs | (197 | ) | (1,932 | ) | (9,861 | ) | (438 | ) | (88 | ) | (1,187 | ) | (13,703 | ) | |||||||||||||
Recoveries | 197 | 300 | 3,092 | 89 | 79 | 950 | 4,707 | ||||||||||||||||||||
Provision | (515 | ) | 2,476 | 13,169 | 3,060 | 123 | 287 | 18,600 | |||||||||||||||||||
(Impairment) improvement of ASC 310-30 loans | (1,275 | ) | 108 | — | — | (25 | ) | — | (1,192 | ) | |||||||||||||||||
Ending balance June 30, 2015 | $ | 6,552 | $ | 17,836 | $ | 16,950 | $ | 13,366 | $ | 353 | $ | 873 | $ | 55,930 |
As of June 30, 2016 | Residential Real Estate | Commercial Real Estate | Commercial Non Real Estate | Agriculture | Consumer | Other | Total | ||||||||||||||||||||
Allowance for loan and lease losses | |||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 3,172 | $ | 7,570 | $ | 5,038 | $ | 11,761 | $ | 69 | $ | — | $ | 27,610 | |||||||||||||
Collectively evaluated for impairment | 3,216 | 11,414 | 7,092 | 11,325 | 370 | 1,071 | 34,488 | ||||||||||||||||||||
ASC 310-30 loans | 1,301 | 844 | — | — | — | — | 2,145 | ||||||||||||||||||||
Total allowance | $ | 7,689 | $ | 19,828 | $ | 12,130 | $ | 23,086 | $ | 439 | $ | 1,071 | $ | 64,243 | |||||||||||||
Financing Receivables | |||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 10,413 | $ | 47,576 | $ | 29,681 | $ | 100,641 | $ | 281 | $ | — | $ | 188,592 | |||||||||||||
Collectively evaluated for impairment | 914,322 | 3,132,124 | 1,170,544 | 1,646,828 | 77,710 | 45,444 | 6,986,972 | ||||||||||||||||||||
ASC 310-30 loans | 70,993 | 45,670 | 4,591 | 16,115 | 1,009 | — | 138,378 | ||||||||||||||||||||
Loans Outstanding | $ | 995,728 | $ | 3,225,370 | $ | 1,204,816 | $ | 1,763,584 | $ | 79,000 | $ | 45,444 | $ | 7,313,942 |
As of September 30, 2015 | Residential Real Estate | Commercial Real Estate | Commercial Non Real Estate | Agriculture | Consumer | Other | Total | ||||||||||||||||||||
Allowance for loan and lease losses | |||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 2,783 | $ | 4,585 | $ | 5,624 | $ | 3,950 | $ | 50 | $ | — | $ | 16,992 | |||||||||||||
Collectively evaluated for impairment | 3,618 | 12,347 | 10,302 | 10,002 | 298 | 865 | 37,432 | ||||||||||||||||||||
ASC 310-30 loans | 1,624 | 1,082 | 70 | — | — | — | 2,776 | ||||||||||||||||||||
Total allowance | $ | 8,025 | $ | 18,014 | $ | 15,996 | $ | 13,952 | $ | 348 | $ | 865 | $ | 57,200 | |||||||||||||
Financing Receivables | |||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 13,106 | $ | 49,794 | $ | 62,158 | $ | 44,253 | $ | 193 | $ | — | $ | 169,504 | |||||||||||||
Collectively evaluated for impairment | 806,912 | 2,385,636 | 1,056,806 | 1,461,230 | 71,549 | 38,371 | 5,820,504 | ||||||||||||||||||||
ASC 310-30 loans | 82,189 | 20,710 | 2,759 | 1,538 | 1,271 | — | 108,467 | ||||||||||||||||||||
Loans Outstanding | $ | 902,207 | $ | 2,456,140 | $ | 1,121,723 | $ | 1,507,021 | $ | 73,013 | $ | 38,371 | $ | 6,098,475 |
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Balance at beginning of period | $ | 39,843 | $ | 43,431 | $ | 44,489 | $ | 50,889 | |||||||
Acquisition | 3,662 | — | 3,662 | — | |||||||||||
Accretion | (2,529 | ) | (3,240 | ) | (7,119 | ) | (11,249 | ) | |||||||
Reclassification from (to) nonaccretable difference | — | 7,736 | (56 | ) | 8,367 | ||||||||||
Disposals | — | (1,038 | ) | — | (1,118 | ) | |||||||||
Balance at end of period | $ | 40,976 | $ | 46,889 | $ | 40,976 | $ | 46,889 |
June 30, 2016 | September 30, 2015 | ||||||||||||||||||||||
Outstanding Balance 1 | Recorded Investment 2 | Carrying Value 3 | Outstanding Balance 1 | Recorded Investment 2 | Carrying Value 3 | ||||||||||||||||||
Residential real estate | $ | 83,624 | $ | 70,993 | $ | 69,692 | $ | 93,979 | $ | 82,189 | $ | 80,565 | |||||||||||
Commercial real estate | 131,309 | 45,670 | 44,826 | 97,302 | 20,710 | 19,628 | |||||||||||||||||
Commercial non real estate | 11,819 | 4,591 | 4,591 | 10,387 | 2,759 | 2,689 | |||||||||||||||||
Agriculture | 20,042 | 16,115 | 16,115 | 1,538 | 1,538 | 1,538 | |||||||||||||||||
Consumer | 1,178 | 1,009 | 1,009 | 1,368 | 1,271 | 1,271 | |||||||||||||||||
Total lending | $ | 247,972 | $ | 138,378 | $ | 136,233 | $ | 204,574 | $ | 108,467 | $ | 105,691 |
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Balance at beginning of period | $ | 12,875 | $ | 19,895 | $ | 14,722 | $ | 26,678 | |||||||
Amortization | (959 | ) | (1,754 | ) | (2,886 | ) | (6,347 | ) | |||||||
Changes in expected reimbursements from FDIC for changes in expected credit losses | (14 | ) | 15 | (141 | ) | (175 | ) | ||||||||
Changes in reimbursable expenses | (268 | ) | (1,148 | ) | (695 | ) | (1,511 | ) | |||||||
Payments (reimbursements) of covered losses from the FDIC | 72 | (29 | ) | 706 | (1,666 | ) | |||||||||
Balance at end of period | $ | 11,706 | $ | 16,979 | $ | 11,706 | $ | 16,979 |
June 30, 2016 | |||||||||||||
Notional Amount | Balance Sheet Location | Positive Fair Value | Negative Fair Value | ||||||||||
Derivatives not designated as hedging instruments: | |||||||||||||
Interest rate swaps | $ | 1,071,795 | Liabilities | $ | — | $ | (91,066 | ) | |||||
Mortgage loan commitments | 57,704 | Assets | 253 | — | |||||||||
Mortgage loan forward sale contracts | 75,195 | Liabilities | — | (253 | ) |
September 30, 2015 | |||||||||||||
Notional Amount | Balance Sheet Location | Positive Fair Value | Negative Fair Value | ||||||||||
Derivatives not designated as hedging instruments: | |||||||||||||
Interest rate swaps | $ | 1,087,505 | Liabilities | $ | 41 | $ | (53,559 | ) | |||||
Mortgage loan commitments | 30,196 | Assets | 95 | — | |||||||||
Mortgage loan forward sale contracts | 36,655 | Liabilities | — | (95 | ) |
Amount of Gain (Loss) Recognized in Income | |||||||||||||||||
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||||
Location of Gain (Loss) Recognized in Income | 2016 | 2015 | 2016 | 2015 | |||||||||||||
Derivatives not designated as hedging instruments: | |||||||||||||||||
Interest rate swaps | Noninterest income | $ | (21,925 | ) | $ | 18,946 | $ | (53,379 | ) | $ | (27,357 | ) | |||||
Mortgage loan commitments | Noninterest income | 201 | (26 | ) | 253 | 1 | |||||||||||
Mortgage loan forward sale contracts | Noninterest income | (201 | ) | 26 | (253 | ) | (1 | ) |
Gross Amount | Amount Offset | Net Amount Presented in Consolidated Balance Sheets | Held/Pledged Financial Instruments1 | Net Amount | |||||||||||||||
June 30, 2016 | |||||||||||||||||||
Derivative financial assets: | |||||||||||||||||||
Derivatives subject to master netting arrangement or similar arrangement | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
Derivative financial liabilities: | |||||||||||||||||||
Derivatives subject to master netting arrangement or similar arrangement | (91,066 | ) | — | (91,066 | ) | 91,066 | — | ||||||||||||
Total derivative financial liabilities | $ | (91,066 | ) | $ | — | $ | (91,066 | ) | $ | 91,066 | $ | — |
Gross Amount | Amount Offset | Net Amount Presented in Consolidated Balance Sheets | Held/Pledged Financial Instruments | Net Amount | |||||||||||||||
September 30, 2015 | |||||||||||||||||||
Derivative financial assets: | |||||||||||||||||||
Derivatives subject to master netting arrangement or similar arrangement | $ | 41 | $ | (41 | ) | $ | — | $ | — | $ | — | ||||||||
Derivative financial liabilities: | |||||||||||||||||||
Derivatives subject to master netting arrangement or similar arrangement | (53,559 | ) | 41 | (53,518 | ) | 53,518 | — | ||||||||||||
Total derivative financial liabilities | $ | (53,518 | ) | $ | — | $ | (53,518 | ) | $ | 53,518 | $ | — |
For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||||||||||
June 30, 2016 | June 30, 2015 | June 30, 2016 | June 30, 2015 | ||||||||||||||||||||||||||||
Noninterest Income | Total Changes in Fair Value | Noninterest Income | Total Changes in Fair Value | Noninterest Income | Total Changes in Fair Value | Noninterest Income | Total Changes in Fair Value | ||||||||||||||||||||||||
Long-term loans and written loan commitments | $ | 14,197 | $ | 14,197 | $ | (24,394 | ) | $ | (24,394 | ) | $ | 35,252 | $ | 35,252 | $ | 7,914 | $ | 7,914 |
June 30, 2016 | September 30, 2015 | ||||||
Balance, beginning of period | $ | 697,807 | $ | 697,807 | |||
Goodwill acquired during the period | 40,653 | — | |||||
Balance, end of period | $ | 738,460 | $ | 697,807 |
Core Deposit Intangible | Brand Intangible | Customer Relationships Intangible | Other Intangible | Total | |||||||||||||||
As of June 30, 2016 | |||||||||||||||||||
Gross carrying amount | $ | 100,018 | $ | 8,464 | $ | 16,089 | $ | 538 | $ | 125,109 | |||||||||
Accumulated amortization | (92,455 | ) | (4,559 | ) | (15,326 | ) | (12 | ) | (112,352 | ) | |||||||||
Net intangible assets | $ | 7,563 | $ | 3,905 | $ | 763 | $ | 526 | $ | 12,757 | |||||||||
As of September 30, 2015 | |||||||||||||||||||
Gross carrying amount | $ | 92,679 | $ | 8,464 | $ | 16,089 | $ | — | $ | 117,232 | |||||||||
Accumulated amortization | (92,073 | ) | (4,136 | ) | (13,904 | ) | — | (110,113 | ) | ||||||||||
Net intangible assets | $ | 606 | $ | 4,328 | $ | 2,185 | $ | — | $ | 7,119 |
Remaining in 2016 | $ | 1,024 | |
2017 | 2,342 | ||
2018 | 1,614 | ||
2019 | 1,489 | ||
2020 | 1,363 | ||
2021 and thereafter | 4,925 | ||
Total | $ | 12,757 |
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Loan servicing rights, beginning of period | $ | — | $ | — | $ | — | $ | — | |||||||
Acquired in HF Financial acquisition | 6,573 | — | 6,573 | — | |||||||||||
Additions | — | — | — | — | |||||||||||
Amortization (1) | (166 | ) | — | (166 | ) | — | |||||||||
Loan servicing rights, end of period | $ | 6,407 | $ | — | $ | 6,407 | $ | — | |||||||
Valuation allowance, beginning of period | $ | — | $ | — | $ | — | $ | — | |||||||
Additions / (reductions) (1) | (176 | ) | — | (176 | ) | — | |||||||||
Valuation allowance, end of period | $ | (176 | ) | $ | — | $ | (176 | ) | $ | — | |||||
Loan servicing rights, net | $ | 6,231 | $ | — | $ | 6,231 | $ | — | |||||||
Servicing fees received | $ | 306 | $ | — | $ | 306 | $ | — | |||||||
Balance of loans serviced at: | |||||||||||||||
Beginning of period | — | — | — | — | |||||||||||
End of period | 914,694 | — | 914,694 | — | |||||||||||
(1) Changes to carrying amounts are reported net of loan servicing income on the consolidated statements of comprehensive income for the periods presented. |
June 30, 2016 | |||||||||||||||||||
Remaining Contractual Maturity of the Agreements | |||||||||||||||||||
Overnight and Continuous | Up to 30 Days | 30-90 Days | Greater than 90 Days | Total | |||||||||||||||
Repurchase agreements | |||||||||||||||||||
U.S. Treasury and agency securities | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
Mortgage-backed securities | 156,072 | — | — | 2,944 | 159,016 | ||||||||||||||
Total repurchase agreements | $ | 156,072 | $ | — | $ | — | $ | 2,944 | $ | 159,016 |
September 30, 2015 | |||||||||||||||||||
Remaining Contractual Maturity of the Agreements | |||||||||||||||||||
Overnight and Continuous | Up to 30 Days | 30-90 Days | Greater than 90 Days | Total | |||||||||||||||
Repurchase agreements | |||||||||||||||||||
U.S. Treasury and agency securities | $ | 64,252 | $ | — | $ | — | $ | — | $ | 64,252 | |||||||||
Mortgage-backed securities | 118,147 | — | — | 2,872 | 121,019 | ||||||||||||||
Total repurchase agreements | $ | 182,399 | $ | — | $ | — | $ | 2,872 | $ | 185,271 |
June 30, 2016 | September 30, 2015 | ||||||
Notes payable to Federal Home Loan Bank (FHLB), interest rates from 0.43% to 3.66% and maturity dates from October 2016 to July 2023, collateralized by real estate loans and FHLB stock, with various call dates at the option of the FHLB | $ | 520,000 | $ | 581,000 | |||
Federal Home Loan Bank fed funds advance, interest rate of 0.42% to 0.52%, maturity dates from July 2016 to September 2016 | 393,155 | — | |||||
Other | 173 | — | |||||
Total | 913,328 | 581,000 | |||||
Fair value adjustment (1) | 49 | — | |||||
Total FHLB advances and other borrowings | $ | 913,377 | $ | 581,000 | |||
(1) Adjustment reflects the fair value adjustments related to the FHLB advances and notes payable assumed as part of the HF Financial acquisition. |
Remaining in 2016 | $ | 393,328 | |
2017 | 29,000 | ||
2018 | 31,000 | ||
2019 | — | ||
2020 | — | ||
2021 and thereafter | 460,000 | ||
Total | $ | 913,328 |
June 30, 2016 | September 30, 2015 | ||||||||||||||
Amount outstanding | Common Shares Held in Other Assets | Amount outstanding | Common Shares Held in Other Assets | ||||||||||||
Junior subordinated debentures payable to nonconsolidated trusts | |||||||||||||||
GW Statutory Trust IV, variable rate of 2.85%, plus 3 month LIBOR | $ | 23,093 | $ | 693 | $ | 23,093 | $ | 693 | |||||||
GW Statutory Trust VI, variable rate of 1.48%, plus 3 month LIBOR | 30,928 | 928 | 30,928 | 928 | |||||||||||
SSB Trust II, variable rate of 1.85%, plus 3 month LIBOR | 2,062 | 62 | 2,062 | 62 | |||||||||||
HFB Trust III, variable rate of 3.35%, plus 3 month LIBOR | 5,155 | 155 | — | — | |||||||||||
HFB Trust IV, variable rate of 3.10%, plus 3 month LIBOR | 7,217 | 217 | — | — | |||||||||||
HFB Trust V, variable rate of 1.83%, plus 3 month LIBOR | 10,310 | 310 | — | — | |||||||||||
HFB Trust VI, variable rate of 1.65%, plus 3 month LIBOR | 2,155 | 155 | — | — | |||||||||||
Total junior subordinated debentures payable | 80,920 | $ | 2,520 | 56,083 | $ | 1,683 | |||||||||
Less: fair value adjustment (1) | (3,792 | ) | — | ||||||||||||
Total junior subordinated debentures payable, net of fair value adjustment | 77,128 | 56,083 | |||||||||||||
Subordinated notes payable | |||||||||||||||
Fixed to floating rate, 4.875% per annum | 35,000 | 35,000 | |||||||||||||
Less: unamortized debt issuance costs | (301 | ) | (356 | ) | |||||||||||
Total subordinated notes payable | 34,699 | 34,644 | |||||||||||||
Total subordinated debentures and subordinated notes payable | $ | 111,827 | $ | 90,727 | |||||||||||
(1) Adjustment reflects the fair value adjustments related to the junior subordinated deferrable interest debentures assumed as part of the HF Financial acquisition. |
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net periodic benefit cost | |||||||||||||||
Service cost | $ | 8 | $ | — | $ | 8 | $ | — | |||||||
Interest cost | 109 | — | 109 | — | |||||||||||
Expected return on plan assets | (95 | ) | — | (95 | ) | — | |||||||||
Amortization of prior losses | — | — | — | — | |||||||||||
Net periodic benefit cost | $ | 22 | $ | — | $ | 22 | $ | — |
June 30, 2016 | September 30, 2015 | ||||||||||||
Restricted Shares | Common Shares | Weighted-Average Grant Date Fair Value | Common Shares | Weighted-Average Grant Date Fair Value | |||||||||
Restricted shares, beginning of fiscal year | 80,446 | $ | 18.18 | — | $ | — | |||||||
Granted | 113,543 | 30.95 | 81,419 | 18.18 | |||||||||
Vested and issued | (25,729 | ) | 18.11 | — | — | ||||||||
Forfeited | (3,137 | ) | 20.94 | (973 | ) | 18.00 | |||||||
Canceled | — | — | — | — | |||||||||
Restricted shares, end of period | 165,123 | $ | 26.92 | 80,446 | $ | 18.18 | |||||||
Vested, but not issuable at end of period | 24,480 | $ | 26.14 | 12,221 | $ | 18.00 | |||||||
Performance Shares | |||||||||||||
Performance shares, beginning of fiscal year | 211,026 | $ | 18.00 | — | $ | — | |||||||
Granted | 43,371 | 30.78 | 221,294 | 18.00 | |||||||||
Vested and issued | (55 | ) | 18.00 | — | — | ||||||||
Forfeited | (14,440 | ) | 18.36 | (10,268 | ) | 18.00 | |||||||
Canceled | — | — | — | — | |||||||||
Performance shares, end of period | 239,902 | $ | 20.29 | 211,026 | $ | 18.00 |
Level 2 | Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities |
Level 3 | Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities |
Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||
As of June 30, 2016 | |||||||||||||||
U.S. Treasury securities | $ | 231,997 | $ | 231,997 | $ | — | $ | — | |||||||
U.S. Agency securities | 50,007 | 50,007 | — | — | |||||||||||
Mortgage-backed securities | 1,039,008 | — | 1,039,008 | — | |||||||||||
States and political subdivision securities | 34,098 | — | 32,783 | 1,315 | |||||||||||
Corporate debt securities | 4,999 | — | 4,999 | — | |||||||||||
Other | 1,055 | — | 1,055 | — | |||||||||||
Securities available for sale | $ | 1,361,164 | $ | 282,004 | $ | 1,077,845 | $ | 1,315 | |||||||
Derivatives-assets | $ | 253 | $ | 253 | $ | — | |||||||||
Derivatives-liabilities | 91,319 | — | 91,319 | — | |||||||||||
Fair value loans and written loan commitments | 1,156,442 | — | 1,156,442 | — | |||||||||||
Cash value of life insurance | 28,945 | — | 28,945 | — | |||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||
As of September 30, 2015 | |||||||||||||||
U.S. Treasury securities | $ | 254,797 | $ | 254,797 | $ | — | $ | — | |||||||
U.S. Agency securities | 75,055 | 75,055 | — | — | |||||||||||
Mortgage-backed securities | 989,600 | — | 989,600 | — | |||||||||||
States and political subdivision securities | 1,850 | — | 15 | 1,835 | |||||||||||
Corporate debt securities | 4,983 | — | 4,983 | — | |||||||||||
Other | 1,042 | — | 1,042 | — | |||||||||||
Securities available for sale | $ | 1,327,327 | $ | 329,852 | $ | 995,640 | $ | 1,835 | |||||||
Derivatives-assets | $ | 95 | $ | — | $ | 95 | $ | — | |||||||
Derivatives-liabilities | 53,613 | — | 53,613 | — | |||||||||||
Fair value loans and written loan commitments | 1,118,687 | — | 1,118,687 | — | |||||||||||
Cash value of life insurance | 6,800 | — | 6,800 | — |
Other Securities Available for Sale | Three months ended June 30, | Nine months ended June 30, | |||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Balance, beginning of period | $ | 1,458 | $ | 1,958 | $ | 1,835 | $ | 2,029 | |||||||
Additions | 15 | — | 15 | — | |||||||||||
Principal paydown | (158 | ) | (124 | ) | (235 | ) | (195 | ) | |||||||
Realized loss on securities | — | — | (300 | ) | — | ||||||||||
Balance, end of period | $ | 1,315 | $ | 1,834 | $ | 1,315 | $ | 1,834 |
Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||
As of June 30, 2016 | |||||||||||||||
Other real estate owned | $ | 3,985 | $ | — | $ | — | $ | 3,985 | |||||||
Impaired loans | 160,151 | — | — | 160,151 | |||||||||||
Loans held for sale, at lower of cost or fair value | 21,301 | — | 21,301 | — | |||||||||||
Loan servicing rights | 6,231 | — | — | 6,231 | |||||||||||
As of September 30, 2015 | |||||||||||||||
Other real estate owned | $ | 8,826 | $ | — | $ | — | $ | 8,826 | |||||||
Impaired loans | 153,318 | — | — | 153,318 | |||||||||||
Loans held for sale, at lower of cost or fair value | 9,867 | — | 9,867 | — | |||||||||||
Loan servicing rights | — | — | — | — |
Financial Instrument | Fair Value of Assets / (Liabilities) at June 30, 2016 | Valuation Technique(s) | Unobservable Input | Range | Weighted Average | ||||||
Other real estate owned | $ | 3,985 | Appraisal value | Property specific adjustment | N/A | N/A | |||||
Impaired loans | 160,151 | Appraisal value | Property specific adjustment | N/A | N/A | ||||||
Loan servicing rights | 6,231 | Discounted cash flows | Constant prepayment rate Discount rate | 13.0 - 22.0% 9.5 - 15.0% | 16.4% 11.6% |
June 30, 2016 | September 30, 2015 | ||||||||||||||||
Level in Fair Value Hierarchy | Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||
Assets | |||||||||||||||||
Cash and due from banks | Level 1 | $ | 475,785 | $ | 475,785 | $ | 237,770 | $ | 237,770 | ||||||||
Loans, net excluding fair valued loans and loans held for sale | Level 3 | 7,364,988 | 7,337,738 | 6,139,444 | 6,120,262 | ||||||||||||
Accrued interest receivable | Level 2 | 43,547 | 43,547 | 44,077 | 44,077 | ||||||||||||
Federal Home Loan Bank stock | Level 2 | 48,799 | 48,799 | 35,745 | 35,745 | ||||||||||||
Liabilities | |||||||||||||||||
Deposits | Level 2 | $ | 8,480,209 | $ | 8,479,066 | $ | 7,387,065 | $ | 7,385,894 | ||||||||
FHLB advances and other borrowings | Level 2 | 913,377 | 917,617 | 581,000 | 584,261 | ||||||||||||
Securities sold under repurchase agreements | Level 2 | 159,016 | 159,016 | 185,271 | 185,271 | ||||||||||||
Accrued interest payable | Level 2 | 5,387 | 5,387 | 4,006 | 4,006 | ||||||||||||
Subordinated debentures and subordinated notes payable | Level 2 | 111,827 | 113,083 | 90,727 | 91,305 |
Three Months Ended June 30, | Nine Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income | $ | 26,360 | $ | 28,832 | $ | 87,495 | $ | 75,253 | |||||||
Weighted average common shares outstanding | 57,012,698 | 57,898,335 | 55,845,322 | 57,897,484 | |||||||||||
Dilutive effect of stock based compensation | 164,007 | 60,867 | 147,689 | 31,704 | |||||||||||
Weighted average common shares outstanding for diluted earnings per share calculation | 57,176,705 | 57,959,202 | 55,993,011 | 57,929,188 | |||||||||||
Basic earnings per share | $ | 0.46 | $ | 0.50 | $ | 1.57 | $ | 1.30 | |||||||
Diluted earnings per share | $ | 0.46 | $ | 0.50 | $ | 1.56 | $ | 1.30 |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
For the three months ended June 30, | |||||||
2016 | 2015 | ||||||
(dollars in thousands, except share and per share amounts) | |||||||
Operating Data: | |||||||
Interest and dividend income (FTE) | $ | 102,094 | $ | 93,582 | |||
Interest expense | 8,537 | 7,340 | |||||
Noninterest income | 9,097 | 10,005 | |||||
Noninterest expense | 61,222 | 46,430 | |||||
Provision for loan and lease losses | 5,372 | 4,410 | |||||
Net income | 26,360 | 28,832 | |||||
Adjusted net income (1) | 33,911 | 28,832 | |||||
Common shares outstanding | 58,693,499 | 57,886,114 | |||||
Weighted average diluted common shares outstanding | 57,176,705 | 57,959,202 | |||||
Earnings per common share - diluted | $ | 0.46 | $ | 0.50 | |||
Adjusted earnings per common share - diluted (1) | 0.59 | 0.50 | |||||
Performance Ratios: | |||||||
Net interest margin (FTE) | 3.95 | % | 3.95 | % | |||
Adjusted net interest margin (FTE)(1) | 3.74 | % | 3.70 | % | |||
Return on average total assets | 1.00 | % | 1.18 | % | |||
Return on average common equity | 6.8 | % | 7.8 | % | |||
Return on average tangible common equity(1) | 12.9 | % | 15.8 | % | |||
Efficiency ratio(1) | 58.8 | % | 46.4 | % | |||
(1) This is a non-GAAP financial measure we believe is helpful to interpreting our financial results. For more information on this non-GAAP financial measure, including a reconciliation to the most directly comparable GAAP financial measure, see "—Non-GAAP Financial Measures" section. |
For the nine months ended June 30, | |||||||
2016 | 2015 | ||||||
(dollars in thousands, except share and per share amounts) | |||||||
Operating Data: | |||||||
Interest and dividend income (FTE) | $ | 293,502 | $ | 275,458 | |||
Interest expense | 24,033 | 22,588 | |||||
Noninterest income | 26,739 | 24,841 | |||||
Noninterest expense | 150,297 | 141,959 | |||||
Provision for loan and lease losses | 11,892 | 17,408 | |||||
Net income | 87,495 | 75,253 | |||||
Adjusted net income (1) | 95,524 | 75,253 | |||||
Common shares outstanding | 58,693,499 | 57,886,114 | |||||
Weighted average diluted common shares outstanding | 55,993,011 | 57,929,188 | |||||
Earnings per common share - diluted | $ | 1.56 | $ | 1.30 | |||
Adjusted earnings per common share - diluted (1) | 1.71 | 1.30 | |||||
Performance Ratios: | |||||||
Net interest margin (FTE) | 3.97 | % | 3.92 | % | |||
Adjusted net interest margin (FTE)(1) | 3.74 | % | 3.67 | % | |||
Return on average total assets | 1.16 | % | 1.04 | % | |||
Return on average common equity | 7.8 | % | 6.9 | % | |||
Return on average tangible common equity(1) | 15.0 | % | 14.5 | % | |||
Efficiency ratio(1) | 50.0 | % | 48.8 | % | |||
(1) This is a non-GAAP financial measure we believe is helpful to interpreting our financial results. For more information on this non-GAAP financial measure, including a reconciliation to the most directly comparable GAAP financial measure, see "—Non-GAAP Financial Measures" section. |
For the three months ended June 30, | |||||||
2016 | 2015 | ||||||
(dollars in thousands) | |||||||
Net interest income: | |||||||
Total interest and dividend income (FTE) | $ | 102,094 | $ | 93,582 | |||
Less: Total interest expense | 8,537 | 7,340 | |||||
Net interest income (FTE) | 93,557 | 86,242 | |||||
Less: Provision for loan and lease losses | 5,372 | 4,410 | |||||
Net interest income after provision for loan and lease losses (FTE) | $ | 88,185 | $ | 81,832 | |||
Net interest margin (FTE) and adjusted net interest margin (FTE): | |||||||
Average interest-earning assets | $ | 9,528,576 | $ | 8,756,244 | |||
Average interest-bearing liabilities | $ | 8,928,981 | $ | 8,257,602 | |||
Net interest margin (FTE) | 3.95 | % | 3.95 | % | |||
Adjusted net interest margin (FTE)(1) | 3.74 | % | 3.70 | % | |||
(1) This is a non-GAAP financial measure we believe is helpful to interpreting our financial results. For more information on this non-GAAP financial measure, including a reconciliation to the most directly comparable GAAP financial measure, see "—Non-GAAP Financial Measures" section. |
For the nine months ended June 30, | |||||||
2016 | 2015 | ||||||
(dollars in thousands) | |||||||
Net interest income: | |||||||
Total interest and dividend income (FTE) | $ | 293,502 | $ | 275,458 | |||
Less: Total interest expense | 24,033 | 22,588 | |||||
Net interest income (FTE) | 269,469 | 252,870 | |||||
Less: Provision for loan and lease losses | 11,892 | 17,408 | |||||
Net interest income after provision for loan and lease losses (FTE) | $ | 257,577 | $ | 235,462 | |||
Net interest margin (FTE) and adjusted net interest margin (FTE): | |||||||
Average interest-earning assets | $ | 9,061,896 | $ | 8,624,469 | |||
Average interest-bearing liabilities | $ | 8,502,729 | $ | 8,173,845 | |||
Net interest margin (FTE) | 3.97 | % | 3.92 | % | |||
Adjusted net interest margin (FTE)(1) | 3.74 | % | 3.67 | % | |||
(1) This is a non-GAAP financial measure we believe is helpful to interpreting our financial results. For more information on this non-GAAP financial measure, including a reconciliation to the most directly comparable GAAP financial measure, see "—Non-GAAP Financial Measures" section. |
For the three months ended | |||||||||||||||||||||
June 30, 2016 | June 30, 2015 | ||||||||||||||||||||
Average Balance | Interest (FTE) | Yield / Cost1 | Average Balance | Interest (FTE) | Yield / Cost1 | ||||||||||||||||
Assets | |||||||||||||||||||||
Cash and due from banks | $ | 130,521 | $ | 157 | 0.48 | % | $ | 198,517 | $ | 155 | 0.31 | % | |||||||||
Investment securities | 1,373,451 | 6,283 | 1.84 | % | 1,439,690 | 6,483 | 1.81 | % | |||||||||||||
Non ASC 310-30 loans, net (2) | 7,903,860 | 93,733 | 4.77 | % | 6,995,340 | 84,798 | 4.86 | % | |||||||||||||
ASC 310-30 loans, net | 120,744 | 1,921 | 6.40 | % | 122,697 | 2,146 | 7.02 | % | |||||||||||||
Loans, net | 8,024,604 | 95,654 | 4.79 | % | 7,118,037 | 86,944 | 4.90 | % | |||||||||||||
Total interest-earning assets | 9,528,576 | 102,094 | 4.31 | % | 8,756,244 | 93,582 | 4.29 | % | |||||||||||||
Noninterest-earning assets | 1,085,961 | 1,065,347 | |||||||||||||||||||
Total assets | $ | 10,614,537 | $ | 102,094 | 3.87 | % | $ | 9,821,591 | $ | 93,582 | 3.82 | % | |||||||||
Liabilities and Stockholders' Equity | |||||||||||||||||||||
Noninterest-bearing deposits | $ | 1,497,567 | $ | 1,312,859 | |||||||||||||||||
NOW, MMDA and savings deposits | 5,236,443 | $ | 4,270 | 0.33 | % | 4,665,101 | $ | 3,272 | 0.28 | % | |||||||||||
CDs | 1,340,460 | 2,182 | 0.65 | % | 1,499,667 | 2,504 | 0.67 | % | |||||||||||||
Total deposits | 8,074,470 | 6,452 | 0.32 | % | 7,477,627 | 5,776 | 0.31 | % | |||||||||||||
Securities sold under agreements to repurchase | 152,615 | 124 | 0.33 | % | 158,758 | 134 | 0.34 | % | |||||||||||||
FHLB advances and other borrowings | 600,477 | 986 | 0.66 | % | 523,839 | 867 | 0.66 | % | |||||||||||||
Related party notes payable | — | — | — | % | 41,295 | 233 | 2.26 | % | |||||||||||||
Subordinated debentures and subordinated notes payable | 101,419 | 975 | 3.87 | % | 56,083 | 330 | 2.36 | % | |||||||||||||
Total borrowings | 854,511 | 2,085 | 0.98 | % | 779,975 | 1,564 | 0.80 | % | |||||||||||||
Total interest-bearing liabilities | 8,928,981 | $ | 8,537 | 0.38 | % | 8,257,602 | $ | 7,340 | 0.36 | % | |||||||||||
Noninterest-bearing liabilities | 118,184 | 87,433 | |||||||||||||||||||
Stockholders' equity | 1,567,372 | 1,476,556 | |||||||||||||||||||
Total liabilities and stockholders' equity | $ | 10,614,537 | $ | 9,821,591 | |||||||||||||||||
Net interest spread | 3.48 | % | 3.46 | % | |||||||||||||||||
Net interest income and net interest margin (FTE) | $ | 93,557 | 3.95 | % | $ | 86,242 | 3.95 | % | |||||||||||||
Less: Tax equivalent adjustment | $ | 1,905 | $ | 1,704 | |||||||||||||||||
Net interest income and net interest margin - ties to Consolidated Statements of Comprehensive Income | $ | 91,652 | 3.87 | % | $ | 84,538 | 3.87 | % | |||||||||||||
1 Annualized for all partial-year periods. | |||||||||||||||||||||
2 Interest income includes $1.8 million and $0.1 million for the third quarter of fiscal year 2016 and 2015, respectively, resulting from accretion of ASC 310-20 loan marks associated with acquired loans. |
For the nine months ended | |||||||||||||||||||||
June 30, 2016 | June 30, 2015 | ||||||||||||||||||||
Average Balance | Interest (FTE) | Yield / Cost1 | Average Balance | Interest (FTE) | Yield / Cost1 | ||||||||||||||||
Assets | |||||||||||||||||||||
Cash and due from banks | $ | 102,206 | $ | 326 | 0.43 | % | $ | 302,449 | $ | 599 | 0.26 | % | |||||||||
Investment securities | 1,362,576 | 18,517 | 1.82 | % | 1,370,129 | 18,083 | 1.76 | % | |||||||||||||
Non ASC 310-30 loans, net (2) | 7,489,534 | 269,452 | 4.81 | % | 6,816,785 | 249,581 | 4.90 | % | |||||||||||||
ASC 310-30 loans, net | 107,580 | 5,207 | 6.47 | % | 135,106 | 7,195 | 7.12 | % | |||||||||||||
Loans, net | 7,597,114 | 274,659 | 4.83 | % | 6,951,891 | 256,776 | 4.94 | % | |||||||||||||
Total interest-earning assets | 9,061,896 | 293,502 | 4.33 | % | 8,624,469 | 275,458 | 4.27 | % | |||||||||||||
Noninterest-earning assets | 1,055,005 | 1,089,322 | |||||||||||||||||||
Total assets | $ | 10,116,901 | $ | 293,502 | 3.88 | % | $ | 9,713,791 | $ | 275,458 | 3.79 | % | |||||||||
Liabilities and Stockholders' Equity | |||||||||||||||||||||
Noninterest-bearing deposits | $ | 1,420,749 | $ | 1,362,551 | |||||||||||||||||
NOW, MMDA and savings deposits | 4,973,268 | $ | 11,498 | 0.31 | % | 4,420,859 | $ | 9,190 | 0.28 | % | |||||||||||
CDs | 1,326,782 | 6,648 | 0.67 | % | 1,583,765 | 8,585 | 0.72 | % | |||||||||||||
Total deposits | 7,720,799 | 18,146 | 0.31 | % | 7,367,175 | 17,775 | 0.32 | % | |||||||||||||
Securities sold under agreements to repurchase | 163,622 | 395 | 0.32 | % | 169,660 | 430 | 0.34 | % | |||||||||||||
FHLB advances and other borrowings | 524,004 | 2,831 | 0.72 | % | 539,632 | 2,706 | 0.67 | % | |||||||||||||
Related party notes payable | — | — | — | % | 41,295 | 692 | 2.24 | % | |||||||||||||
Subordinated debentures and subordinated notes payable | 94,304 | 2,661 | 3.77 | % | 56,083 | 985 | 2.35 | % | |||||||||||||
Total borrowings | 781,930 | 5,887 | 1.01 | % | 806,670 | 4,813 | 0.80 | % | |||||||||||||
Total interest-bearing liabilities | 8,502,729 | $ | 24,033 | 0.38 | % | 8,173,845 | $ | 22,588 | 0.37 | % | |||||||||||
Noninterest-bearing liabilities | 107,432 | 83,772 | |||||||||||||||||||
Stockholders' equity | 1,506,740 | 1,456,174 | |||||||||||||||||||
Total liabilities and stockholders' equity | $ | 10,116,901 | $ | 9,713,791 | |||||||||||||||||
Net interest spread | 3.50 | % | 3.42 | % | |||||||||||||||||
Net interest income and net interest margin (FTE) | $ | 269,469 | 3.97 | % | $ | 252,870 | 3.92 | % | |||||||||||||
Less: Tax equivalent adjustment | $ | 5,522 | $ | 4,798 | |||||||||||||||||
Net interest income and net interest margin - ties to Consolidated Statements of Comprehensive Income | $ | 263,947 | 3.89 | % | $ | 248,072 | 3.85 | % | |||||||||||||
1 Annualized for all partial-year periods. | |||||||||||||||||||||
2 Interest income includes $2.0 million and $0.2 million for the nine months ended 2016 and 2015, respectively, resulting from accretion of ASC 310-20 loan marks associated with acquired loans. |
Three months ended June 30, | |||||||
2016 | 2015 | ||||||
(dollars in thousands) | |||||||
Interest and dividend income: | |||||||
Loans (FTE) | $ | 95,654 | $ | 86,944 | |||
Taxable securities | 5,826 | 5,984 | |||||
Nontaxable securities | 61 | 10 | |||||
Dividends on securities | 396 | 489 | |||||
Federal funds sold and other | 157 | 155 | |||||
Total interest and dividend income (FTE) | 102,094 | 93,582 | |||||
Tax equivalent adjustment | 1,905 | 1,704 | |||||
Total interest and dividend income (GAAP) | $ | 100,189 | $ | 91,878 |
Nine months ended June 30, | |||||||
2016 | 2015 | ||||||
(dollars in thousands) | |||||||
Interest and dividend income: | |||||||
Loans (FTE) | $ | 274,659 | $ | 256,776 | |||
Taxable securities | 17,600 | 17,050 | |||||
Nontaxable securities | 85 | 36 | |||||
Dividends on securities | 832 | 997 | |||||
Federal funds sold and other | 326 | 599 | |||||
Total interest and dividend income (FTE) | 293,502 | 275,458 | |||||
Tax equivalent adjustment | 5,522 | 4,798 | |||||
Total interest and dividend income (GAAP) | $ | 287,980 | $ | 270,660 |
Three months ended June 30, | |||||||
2016 | 2015 | ||||||
(dollars in thousands) | |||||||
Interest expense: | |||||||
Deposits | $ | 6,451 | $ | 5,776 | |||
Securities sold under agreements to repurchase | 124 | 134 | |||||
FHLB advances and other borrowings | 986 | 867 | |||||
Related party notes payable | — | 233 | |||||
Subordinated debentures and subordinated notes payable | 976 | 330 | |||||
Total interest expense | $ | 8,537 | $ | 7,340 |
Nine months ended June 30, | |||||||
2016 | 2015 | ||||||
(dollars in thousands) | |||||||
Interest expense: | |||||||
Deposits | $ | 18,145 | $ | 17,775 | |||
Securities sold under agreements to repurchase | 395 | 430 | |||||
FHLB advances and other borrowings | 2,831 | 2,706 | |||||
Related party notes payable | — | 692 | |||||
Subordinated debentures and subordinated notes payable | 2,662 | 985 | |||||
Total interest expense | $ | 24,033 | $ | 22,588 |
Current Quarter vs Comparable Quarter | |||||||||||
Volume | Rate | Total | |||||||||
(dollars in thousands) | |||||||||||
Increase (decrease) in interest income: | |||||||||||
Cash and due from banks | $ | (65 | ) | $ | 66 | $ | 1 | ||||
Investment securities | (301 | ) | 102 | (199 | ) | ||||||
Non ASC 310-30 loans | 10,809 | (1,873 | ) | 8,936 | |||||||
ASC 310-30 loans | (34 | ) | (192 | ) | (226 | ) | |||||
Total loans | 10,775 | (2,065 | ) | 8,710 | |||||||
Total increase (decrease) | 10,409 | (1,897 | ) | 8,512 | |||||||
Increase (decrease) in interest expense: | |||||||||||
NOW, MMDA & savings deposits | 429 | 568 | 997 | ||||||||
CDs | (260 | ) | (61 | ) | (321 | ) | |||||
Securities sold under agreements to repurchase | (5 | ) | (4 | ) | (9 | ) | |||||
FHLB advances and other borrowings | 126 | (8 | ) | 118 | |||||||
Related party notes payable | (233 | ) | — | (233 | ) | ||||||
Subordinated debentures and subordinated notes payable | 358 | 287 | 645 | ||||||||
Total increase (decrease) | 415 | 782 | 1,197 | ||||||||
Increase (decrease) in net interest income (FTE) | $ | 9,994 | $ | (2,679 | ) | $ | 7,315 |
Current 9 month period vs Comparable 9 month period | |||||||||||
Volume | Rate | Total | |||||||||
(dollars in thousands) | |||||||||||
Increase (decrease) in interest income: | |||||||||||
Cash and due from banks | $ | (522 | ) | $ | 248 | $ | (274 | ) | |||
Investment securities | (89 | ) | 521 | 432 | |||||||
Non ASC 310-30 loans | 25,017 | (5,144 | ) | 19,873 | |||||||
ASC 310-30 loans | (1,358 | ) | (629 | ) | (1,987 | ) | |||||
Total loans | 23,659 | (5,773 | ) | 17,886 | |||||||
Total increase (decrease) | 23,048 | (5,004 | ) | 18,044 | |||||||
Increase (decrease) in interest expense: | |||||||||||
NOW, MMDA & savings deposits | 1,237 | 1,071 | 2,308 | ||||||||
CDs | (1,303 | ) | (634 | ) | (1,937 | ) | |||||
Securities sold under agreements to repurchase | (14 | ) | (21 | ) | (35 | ) | |||||
FHLB advances and other borrowings | (77 | ) | 201 | 124 | |||||||
Related party notes payable | (346 | ) | (346 | ) | (692 | ) | |||||
Subordinated debentures and subordinated notes payable | 888 | 789 | 1,677 | ||||||||
Total increase (decrease) | 385 | 1,060 | 1,445 | ||||||||
Increase (decrease) in net interest income (FTE) | $ | 22,663 | $ | (6,064 | ) | $ | 16,599 |
Three months ended June 30, | Nine months ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(dollars in thousands) | |||||||||||||||
Provision for loan and lease losses, non ASC 310-30 loans * | $ | 5,726 | $ | 4,991 | $ | 12,512 | $ | 18,600 | |||||||
Provision for loan and lease losses, ASC 310-30 loans | (354 | ) | (581 | ) | (620 | ) | (1,192 | ) | |||||||
Provision for loan and lease losses, total | $ | 5,372 | $ | 4,410 | $ | 11,892 | $ | 17,408 | |||||||
* As presented above, the non ASC 310-30 loan portfolio includes originated loans, other than loans for which we have elected the fair value option, and loans we acquired that we did not determine were acquired with deteriorated credit quality. |
For the three months ended: | ||||||||||||||
Item | Included within F/S Line Item(s): | June 30, 2016 | March 31, 2016 | June 30, 2015 | ||||||||||
(Dollars in thousands) | ||||||||||||||
Provision for loan and lease losses | Provision for loan and lease losses | $ | 5,372 | $ | 2,631 | $ | 4,410 | |||||||
Net OREO charges | Net loss on repossessed property and other related expenses | 379 | 210 | 1,067 | ||||||||||
(Recovery) reversal of interest income on nonaccrual loans | Interest income on loans | 1,505 | (45 | ) | (100 | ) | ||||||||
Loan fair value adjustment related to credit | Net increase (decrease) in fair value of loans at fair value | 2,722 | (237 | ) | 31 | |||||||||
Total | $ | 9,978 | $ | 2,559 | $ | 5,408 |
For the nine months ended: | ||||||||||
Item | Included within F/S Line Item(s): | June 30, 2016 | June 30, 2015 | |||||||
(Dollars in thousands) | ||||||||||
Provision for loan and lease losses | Provision for loan and lease losses | $ | 11,892 | $ | 17,408 | |||||
Net OREO charges | Net loss on repossessed property and other related expenses | 479 | 5,547 | |||||||
Reversal of interest income on nonaccrual loans | Interest income on loans | 1,320 | 255 | |||||||
Loan fair value adjustment related to credit | Net increase (decrease) in fair value of loans at fair value | 2,296 | 3,438 | |||||||
Total | $ | 15,987 | $ | 26,648 |
Three months ended June 30, | |||||||
2016 | 2015 | ||||||
(dollars in thousands) | |||||||
Non-interest income: | |||||||
Service charges and other fees | $ | 12,316 | $ | 9,627 | |||
Wealth management fees | 1,807 | 1,972 | |||||
Mortgage banking income, net | 1,669 | 1,903 | |||||
Net gain on sale of securities | 134 | — | |||||
Other | 898 | 1,951 | |||||
Subtotal, product and service fees | 16,824 | 15,453 | |||||
Net increase (decrease) in fair value of loans at fair value | 14,198 | (24,394 | ) | ||||
Net realized and unrealized gain (loss) on derivatives | (21,925 | ) | 18,946 | ||||
Subtotal, loans at fair value and related derivatives | (7,727 | ) | (5,448 | ) | |||
Total noninterest income | $ | 9,097 | $ | 10,005 |
Nine months ended June 30, | |||||||
2016 | 2015 | ||||||
(dollars in thousands) | |||||||
Non-interest income: | |||||||
Service charges and other fees | $ | 33,098 | $ | 28,896 | |||
Wealth management fees | 5,087 | 5,754 | |||||
Mortgage banking income, net | 4,143 | 5,027 | |||||
Net gain (loss) on sale of securities | (196 | ) | 51 | ||||
Other | 2,733 | 4,556 | |||||
Subtotal, product and service fees | 44,865 | 44,284 | |||||
Net increase in fair value of loans at fair value | 35,253 | 7,914 | |||||
Net realized and unrealized (loss) on derivatives | (53,379 | ) | (27,357 | ) | |||
Subtotal, loans at fair value and related derivatives | (18,126 | ) | (19,443 | ) | |||
Total noninterest income | $ | 26,739 | $ | 24,841 |
Three months ended June 30, | |||||||
2016 | 2015 | ||||||
(dollars in thousands) | |||||||
Noninterest expense: | |||||||
Salaries and employee benefits | $ | 28,352 | $ | 26,612 | |||
Data processing | 5,625 | 4,657 | |||||
Occupancy expenses | 4,002 | 3,161 | |||||
Professional fees | 3,327 | 3,289 | |||||
Communication expenses | 788 | 1,031 | |||||
Advertising | 1,047 | 1,196 | |||||
Equipment expense | 959 | 1,075 | |||||
Net loss recognized on repossessed property and other related expenses | 379 | 1,067 | |||||
Amortization of core deposits and other intangibles | 822 | 1,776 | |||||
Acquisition expenses | 12,179 | — | |||||
Other | 3,742 | 2,566 | |||||
Total noninterest expense | $ | 61,222 | $ | 46,430 |
Nine months ended June 30, | |||||||
2016 | 2015 | ||||||
(dollars in thousands) | |||||||
Noninterest expense: | |||||||
Salaries and employee benefits | $ | 78,417 | $ | 75,373 | |||
Data processing | 15,822 | 14,193 | |||||
Occupancy expenses | 11,436 | 11,169 | |||||
Professional fees | 9,087 | 10,464 | |||||
Communication expenses | 2,650 | 3,429 | |||||
Advertising | 3,015 | 2,870 | |||||
Equipment expense | 2,794 | 2,956 | |||||
Net loss recognized on repossessed property and other related expenses | 479 | 5,547 | |||||
Amortization of core deposits and other intangibles | 2,239 | 6,402 | |||||
Acquisition expenses | 12,950 | — | |||||
Other | 11,408 | 9,556 | |||||
Total noninterest expense | $ | 150,297 | $ | 141,959 |
For the three months ended June 30, | |||||
2016 | 2015 | ||||
Return on average total assets | 1.00 | % | 1.18 | % | |
Return on average common equity | 6.8 | % | 7.8 | % | |
Average common equity to average assets ratio | 14.8 | % | 15.0 | % |
For the nine months ended June 30, | |||||
2016 | 2015 | ||||
Return on average total assets | 1.16 | % | 1.04 | % | |
Return on average common equity | 7.8 | % | 6.9 | % | |
Average common equity to average assets ratio | 14.9 | % | 15.0 | % |
As of | |||||||
June 30, 2016 | September 30, 2015 | ||||||
(dollars in thousands) | |||||||
Balance Sheet and Other Information: | |||||||
Total assets | $ | 11,453,222 | $ | 9,798,654 | |||
Loans(1) | 8,606,974 | 7,325,198 | |||||
Allowance for loan and lease losses | 64,243 | 57,200 | |||||
Deposits | 8,480,209 | 7,387,065 | |||||
Stockholders' equity | 1,640,511 | 1,459,346 | |||||
Tangible common equity(2) | 889,294 | 754,420 | |||||
Tier 1 capital ratio | 10.9 | % | 10.9 | % | |||
Total capital ratio | 12.0 | % | 12.1 | % | |||
Tier 1 leverage ratio | 10.0 | % | 9.1 | % | |||
Common equity tier 1 ratio | 10.0 | % | 10.1 | % | |||
Tangible common equity / tangible assets(2) | 8.3 | % | 8.3 | % | |||
Tangible book value per share(2) | $ | 15.15 | $ | 13.66 | |||
Nonaccrual loans / total loans | 1.26 | % | 0.93 | % | |||
Net charge-offs / average total loans(3) | 0.08 | % | 0.02 | % | |||
Allowance for loan and lease losses / total loans | 0.75 | % | 0.78 | % | |||
(1) Loans include unpaid principal balance net of unamortized discount on acquired loans and unearned net deferred fees and costs and loans in process. | |||||||
(2) This is a non-GAAP financial measure we believe is helpful to interpreting our financial results. For more information on this non-GAAP financial measure, including a reconciliation to the most directly comparable GAAP financial measure, see "—Non-GAAP Financial Measures" section. | |||||||
(3) Annualized for partial-year periods, except for September 30, 2015, which was for the twelve month period. |
June 30, 2016 | September 30, 2015 | ||||||
(dollars in thousands) | |||||||
Unpaid principal balance: | |||||||
Commercial non-real estate(1) | |||||||
Non ASC 310-30 loans | $ | 1,741,666 | $ | 1,608,069 | |||
ASC 310-30 loans | 4,591 | 2,759 | |||||
Total | 1,746,257 | 1,610,828 | |||||
Agriculture(1) | |||||||
Non ASC 310-30 loans | 2,085,486 | 1,859,927 | |||||
ASC 310-30 loans | 16,115 | 1,538 | |||||
Total | 2,101,601 | 1,861,465 | |||||
Commercial real estate (1) | |||||||
Non ASC 310-30 loans | 3,611,354 | 2,825,038 | |||||
ASC 310-30 loans | 45,670 | 20,710 | |||||
Total | 3,657,024 | 2,845,748 | |||||
Residential real estate | |||||||
Non ASC 310-30 loans | 961,362 | 839,639 | |||||
ASC 310-30 loans | 70,993 | 82,188 | |||||
Total | 1,032,355 | 921,827 | |||||
Consumer | |||||||
Non ASC 310-30 loans | 78,805 | 71,777 | |||||
ASC 310-30 loans | 1,009 | 1,272 | |||||
Total | 79,814 | 73,049 | |||||
Other lending | |||||||
Non ASC 310-30 loans | 45,444 | 38,371 | |||||
ASC 310-30 loans | — | — | |||||
Total | 45,444 | 38,371 | |||||
Non ASC 310-30 loans | 8,524,117 | 7,242,821 | |||||
ASC 310-30 loans | 138,378 | 108,467 | |||||
Total unpaid principal balance | 8,662,495 | 7,351,288 | |||||
Less: Unamortized discount on acquired loans | (42,793 | ) | (19,264 | ) | |||
Less: Unearned net deferred fees and costs and loans in process | (12,728 | ) | (6,826 | ) | |||
Total loans | 8,606,974 | 7,325,198 | |||||
Allowance for loan and lease losses | (64,243 | ) | (57,200 | ) | |||
Loans, net | $ | 8,542,731 | $ | 7,267,998 | |||
(1) Unpaid principal balance for commercial non-real estate, agriculture and commercial real estate loans includes fair value adjustments associated with long-term fixed-rate loans where we have entered into interest rate swaps to hedge our interest rate risk. |
Amount | |||
(dollars in thousands) | |||
Commercial non-real estate | $ | 60,909 | |
Agriculture | 189,839 | ||
Construction and development | 55,752 | ||
Owner-occupied CRE | 126,455 | ||
Non-owner-occupied CRE | 181,509 | ||
Multifamily residential real estate | 128,090 | ||
Commercial real estate | 491,806 | ||
Residential real estate | 133,426 | ||
Consumer | 15,688 | ||
Other 1 | 608 | ||
Total unpaid principal balance | 892,276 | ||
Less: Unamortized discount on acquired loans and unearned net deferred fees and costs and loans in process | (28,535 | ) | |
Total loans | $ | 863,741 | |
1 Other loans primarily include consumer and commercial credit cards, customer deposit account overdrafts, and lease receivables. |
June 30, 2016 | ||||||||||||||||||||||||||||||
Nebraska | Iowa / Kansas / Missouri | South Dakota | Arizona / Colorado | North Dakota / Minnesota | Other(2) | Total | % | |||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||||
Commercial non-real estate(1) | $ | 309,885 | $ | 828,906 | $ | 345,210 | $ | 192,039 | $ | 3,561 | $ | 66,656 | $ | 1,746,257 | 20.2 | % | ||||||||||||||
Agriculture(1) | 177,883 | 441,938 | 813,158 | 646,554 | 3,495 | 18,573 | 2,101,601 | 24.3 | % | |||||||||||||||||||||
Commercial real estate(1) | 709,039 | 906,768 | 1,035,120 | 748,610 | 187,378 | 70,109 | 3,657,024 | 42.2 | % | |||||||||||||||||||||
Residential real estate | 230,816 | 302,848 | 277,212 | 166,031 | 10,668 | 44,780 | 1,032,355 | 11.9 | % | |||||||||||||||||||||
Consumer | 18,517 | 20,944 | 34,923 | 3,289 | 786 | 1,355 | 79,814 | 0.9 | % | |||||||||||||||||||||
Other lending | — | — | — | — | — | 45,444 | 45,444 | 0.5 | % | |||||||||||||||||||||
Total | $ | 1,446,140 | $ | 2,501,404 | $ | 2,505,623 | $ | 1,756,523 | $ | 205,888 | $ | 246,917 | $ | 8,662,495 | 100 | % | ||||||||||||||
% by location | 16.6 | % | 28.9 | % | 28.9 | % | 20.3 | % | 2.4 | % | 2.9 | % | 100 | % | ||||||||||||||||
(1) Unpaid principal balance for commercial non-real estate, agriculture and commercial real estate loans includes fair value adjustments associated with long-term fixed-rate loans where we have entered into interest rate swaps to hedge our interest rate risk. | ||||||||||||||||||||||||||||||
(2) Balances in this column represent acquired workout loans and certain other loans managed by our staff, commercial and consumer credit card loans, fair value adjustments related to acquisitions and loans for which we have elected the fair value option, which could result in a negative carrying amount in the event of a net negative fair value adjustment. |
June 30, 2016 | |||
(dollars in thousands) | |||
Commercial non-real estate | $ | 1,746,257 | |
Agriculture real estate | 1,002,280 | ||
Agriculture operating loans | 1,099,321 | ||
Agriculture | 2,101,601 | ||
Construction and development | 487,220 | ||
Owner-occupied CRE | 1,207,665 | ||
Non-owner-occupied CRE | 1,554,127 | ||
Multifamily residential real estate | 408,012 | ||
Commercial real estate | 3,657,024 | ||
Home equity lines of credit | 367,924 | ||
Closed-end first lien | 514,112 | ||
Closed-end junior lien | 50,870 | ||
Residential construction | 99,449 | ||
Residential real estate | 1,032,355 | ||
Consumer | 79,814 | ||
Other | 45,444 | ||
Total unpaid principal balance | $ | 8,662,495 |
1 Year or Less | >1 Through 5 Years | >5 Years | Total | ||||||||||||
(dollars in thousands) | |||||||||||||||
Maturity distribution: | |||||||||||||||
Commercial non-real estate | $ | 725,509 | $ | 514,556 | $ | 506,192 | $ | 1,746,257 | |||||||
Agriculture | 1,026,697 | 693,259 | 381,645 | 2,101,601 | |||||||||||
Commercial real estate | 409,701 | 1,585,997 | 1,661,326 | 3,657,024 | |||||||||||
Residential real estate | 192,037 | 422,867 | 417,451 | 1,032,355 | |||||||||||
Consumer | 14,682 | 51,239 | 13,893 | 79,814 | |||||||||||
Other lending | 45,444 | — | — | 45,444 | |||||||||||
Total | $ | 2,414,070 | $ | 3,267,918 | $ | 2,980,507 | $ | 8,662,495 |
Fixed | Variable | Total | |||||||||
(dollars in thousands) | |||||||||||
Maturity distribution: | |||||||||||
Commercial non-real estate | $ | 699,402 | $ | 321,346 | $ | 1,020,748 | |||||
Agriculture | 842,298 | 232,606 | 1,074,904 | ||||||||
Commercial real estate | 1,604,907 | 1,642,416 | 3,247,323 | ||||||||
Residential real estate | 241,397 | 598,921 | 840,318 | ||||||||
Consumer | 57,564 | 7,568 | 65,132 | ||||||||
Total | $ | 3,445,568 | $ | 2,802,857 | $ | 6,248,425 |
Three Months Ended June 30, 2016 | |||
(dollars in thousands) | |||
Beginning balance | $ | 12,204 | |
Additions to OREO | 1,031 | ||
Valuation adjustments and other | (477) | ||
Sales | (1,057) | ||
Ending balance | $ | 11,701 |
Nine Months Ended June 30, 2016 | |||
(dollars in thousands) | |||
Beginning balance | $ | 15,892 | |
Additions to OREO | 1,817 | ||
Valuation adjustments and other | (1,608) | ||
Sales | (4,400) | ||
Ending balance | $ | 11,701 |
June 30, 2016 | September 30, 2015 | ||||||
(dollars in thousands) | |||||||
U.S. Treasury securities | $ | 226,751 | $ | 250,986 | |||
U.S. Agency securities | 49,641 | 74,412 | |||||
Mortgage-backed securities: | |||||||
Government National Mortgage Association | 705,180 | 842,460 | |||||
Federal National Mortgage Association | 178,320 | 46,449 | |||||
Small Business Assistance Program | 146,746 | 101,415 | |||||
States and political subdivision securities | 33,934 | 1,849 | |||||
Corporate debt securities | 4,997 | 4,996 | |||||
Other | 1,013 | 1,006 | |||||
$ | 1,346,582 | $ | 1,323,573 |
June 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||
Due in one year or less | Due after one year through five years | Due after five years through ten years | Due after ten years | Mortgage-backed securities | Securities without contractual maturities | Total | ||||||||||||||||||||||||||||||||||||||||||
Amount | Weighted average return | Amount | Weighted average return | Amount | Weighted average return | Amount | Weighted average return | Amount | Weighted average return | Amount | Weighted average return | Amount | Weighted average return | |||||||||||||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||
U.S. Treasury securities | $ | — | — | % | $ | 226,751 | 1.56 | % | $ | — | — | % | $ | — | — | % | $ | — | — | % | $ | — | — | % | $ | 226,751 | 1.56 | % | ||||||||||||||||||||
U.S. Agency securities | 49,641 | 1.81 | % | — | — | % | — | — | % | — | — | % | — | — | % | — | — | % | 49,641 | 1.81 | % | |||||||||||||||||||||||||||
Mortgage-backed securities | — | — | % | — | — | % | — | — | % | — | — | % | 1,030,246 | 1.84 | % | — | — | % | 1,030,246 | 1.84 | % | |||||||||||||||||||||||||||
States and political subdivision securities | 3,488 | 1.79 | % | 23,027 | 1.40 | % | 7,297 | 1.89 | % | 122 | 5.00 | % | — | — | % | — | — | % | 33,934 | 1.56 | % | |||||||||||||||||||||||||||
Corporate debt securities | — | — | % | 4,997 | 2.17 | % | — | — | % | — | — | % | — | — | % | — | — | % | 4,997 | 2.17 | % | |||||||||||||||||||||||||||
Other | — | — | % | — | — | % | — | — | % | — | — | % | — | — | % | 1,013 | — | % | 1,013 | — | % | |||||||||||||||||||||||||||
Total | $ | 53,129 | 1.81 | % | $ | 254,775 | 1.56 | % | $ | 7,297 | 1.89 | % | $ | 122 | 5.00 | % | $ | 1,030,246 | 1.84 | % | $ | 1,013 | — | % | $ | 1,346,582 | 1.78 | % |
June 30, 2016 | September 30, 2015 | ||||||
(dollars in thousands) | |||||||
Nonaccrual loans(1) | |||||||
Commercial non-real estate | |||||||
Loans covered by FDIC loss-sharing arrangements | $ | — | $ | — | |||
Loans not covered by FDIC loss-sharing arrangements | 11,751 | 14,287 | |||||
Total | 11,751 | 14,287 | |||||
Agriculture | |||||||
Loans covered by FDIC loss-sharing arrangements | — | — | |||||
Loans not covered by FDIC loss-sharing arrangements | 69,442 | 24,569 | |||||
Total | 69,442 | 24,569 | |||||
Commercial real estate | |||||||
Loans covered by FDIC loss-sharing arrangements | — | — | |||||
Loans not covered by FDIC loss-sharing arrangements | 17,207 | 16,870 | |||||
Total | 17,207 | 16,870 | |||||
Residential real estate | |||||||
Loans covered by FDIC loss-sharing arrangements | 4,200 | 5,317 | |||||
Loans not covered by FDIC loss-sharing arrangements | 5,499 | 7,124 | |||||
Total | 9,699 | 12,441 | |||||
Consumer | |||||||
Loans covered by FDIC loss-sharing arrangements | — | — | |||||
Loans not covered by FDIC loss-sharing arrangements | 108 | 122 | |||||
Total | 108 | 122 | |||||
Other lending | |||||||
Loans covered by FDIC loss-sharing arrangements | — | — | |||||
Loans not covered by FDIC loss-sharing arrangements | — | — | |||||
Total | — | — | |||||
Total nonaccrual loans covered by FDIC loss-sharing arrangements | 4,200 | 5,317 | |||||
Total nonaccrual loans not covered by FDIC loss-sharing arrangements | 104,007 | 62,972 | |||||
Total nonaccrual loans | 108,207 | 68,289 | |||||
OREO | 11,701 | 15,892 | |||||
Total nonperforming assets | 119,908 | 84,181 | |||||
Restructured performing loans | 45,161 | 60,371 | |||||
Total nonperforming and restructured assets | $ | 165,069 | $ | 144,552 | |||
Accruing loans 90 days or more past due | $ | 59 | $ | 58 | |||
Nonperforming restructured loans included in total nonaccrual loans | $ | 38,790 | $ | 13,966 | |||
Nonaccretable difference outstanding related to ASC 310-30 loans | $ | 61,283 | $ | 36,843 | |||
Percent of total assets | |||||||
Nonaccrual loans(1) | |||||||
Loans not covered by FDIC loss-sharing arrangements | 1.07 | % | 0.64 | % | |||
Total | 1.11 | % | 0.70 | % | |||
OREO | 0.12 | % | 0.16 | % | |||
Nonperforming assets(2) | 1.23 | % | 0.86 | % | |||
Nonperforming and restructured assets(2) | 1.69 | % | 1.48 | % | |||
(1) Includes nonperforming restructured loans | |||||||
(2) Includes nonaccrual loans, which includes nonperforming restructured loans. |
June 30, 2016 | September 30, 2015 | ||||||
(dollars in thousands) | |||||||
Commercial non-real estate | |||||||
Performing TDRs | $ | 7,255 | $ | 8,928 | |||
Nonperforming TDRs | 1,539 | 833 | |||||
Total | 8,794 | 9,761 | |||||
Agriculture | |||||||
Performing TDRs | 19,610 | 20,041 | |||||
Nonperforming TDRs | 32,723 | 6,857 | |||||
Total | 52,333 | 26,898 | |||||
Commercial real estate | |||||||
Performing TDRs | 17,851 | 30,917 | |||||
Nonperforming TDRs | 3,429 | 4,725 | |||||
Total | 21,280 | 35,642 | |||||
Residential real estate | |||||||
Performing TDRs | 413 | 452 | |||||
Nonperforming TDRs | 1,090 | 1,547 | |||||
Total | 1,503 | 1,999 | |||||
Consumer | |||||||
Performing TDRs | 32 | 33 | |||||
Nonperforming TDRs | 9 | 4 | |||||
Total | 41 | 37 | |||||
Total performing TDRs | 45,161 | 60,371 | |||||
Total nonperforming TDRs | 38,790 | 13,966 | |||||
Total TDRs | $ | 83,951 | $ | 74,337 |
At and for the nine months ended June 30, 2016 | At and for the fiscal year ended September 30, 2015 | ||||||
(dollars in thousands) | |||||||
Assets covered by FDIC loss-sharing arrangements | |||||||
Nonaccrual loans(1) | $ | 4,200 | $ | 5,317 | |||
TDRs | 314 | 425 | |||||
OREO | 50 | 61 | |||||
Allowance for loan and lease losses, loans covered by FDIC loss-sharing arrangements | |||||||
Balance at beginning of period | $ | 1,625 | $ | 5,108 | |||
Additional impairment recorded | — | 782 | |||||
Recoupment of previously-recorded impairment | (312 | ) | (1,701 | ) | |||
Charge-offs | (12 | ) | — | ||||
Recoveries | — | — | |||||
Expiration of loss-sharing arrangement | — | (2,564 | ) | ||||
Balance at end of period | $ | 1,301 | $ | 1,625 | |||
OREO covered by FDIC loss-sharing arrangement | |||||||
Balance at beginning of period | $ | 61 | $ | 10,628 | |||
Additions to OREO | 126 | 1,666 | |||||
Valuation adjustments and other | (15 | ) | (2,034 | ) | |||
Sales | (122 | ) | (7,031 | ) | |||
Expiration of FDIC loss-sharing arrangement | — | (3,168 | ) | ||||
Balance at end of period | $ | 50 | $ | 61 | |||
(1) Includes nonperforming restructured loans. |
At and for the nine months ended June 30, 2016 | At and for the fiscal year ended September 30, 2015 | ||||||
(dollars in thousands) | |||||||
Allowance for loan and lease losses: | |||||||
Balance at beginning of period | $ | 57,200 | $ | 47,518 | |||
Provision charged to expense | 12,512 | 19,718 | |||||
Impairment of ASC 310-30 loans | (620 | ) | (677 | ) | |||
Charge-offs: | |||||||
Commercial non-real estate | (2,193 | ) | (11,153 | ) | |||
Agriculture | (2,257 | ) | (606 | ) | |||
Commercial real estate | (1,063 | ) | (1,971 | ) | |||
Residential real estate | (959 | ) | (238 | ) | |||
Consumer | (183 | ) | (129 | ) | |||
Other lending | (1,494 | ) | (1,617 | ) | |||
Total charge-offs | (8,149 | ) | (15,714 | ) | |||
Recoveries: | |||||||
Commercial non-real estate | 875 | 3,407 | |||||
Agriculture | 386 | 131 | |||||
Commercial real estate | 568 | 1,339 | |||||
Residential real estate | 472 | 231 | |||||
Consumer | 131 | 104 | |||||
Other lending | 868 | 1,143 | |||||
Total recoveries | 3,300 | 6,355 | |||||
Net loan recoveries (charge-offs) | (4,849 | ) | (9,359 | ) | |||
Balance at end of period | $ | 64,243 | $ | 57,200 | |||
Average total loans for the period(1) | $ | 7,597,114 | $ | 7,019,151 | |||
Total loans at period end(1) | $ | 8,606,974 | $ | 7,325,198 | |||
Ratios | |||||||
Net charge-offs to average total loans(2) | 0.08 | % | 0.13 | % | |||
Allowance for loan and lease losses to: | |||||||
Total loans | 0.75 | % | 0.78 | % | |||
Nonaccruing loans(3) | 61.77 | % | 90.83 | % | |||
(1) Loans include unpaid principal balance net of unamortized discount on acquired loans and unearned net deferred fees and costs and loans in process. | |||||||
(2) Annualized for partial-year periods | |||||||
(3) Nonaccruing loans excludes loans covered by FDIC loss-sharing arrangements. |
June 30, 2016 | September 30, 2015 | ||||||
(dollars in thousands) | |||||||
Allocation of allowance for loan and lease losses: | |||||||
Commercial non-real estate | $ | 12,130 | $ | 15,996 | |||
Agriculture | 23,086 | 13,952 | |||||
Commercial real estate | 19,828 | 18,014 | |||||
Residential real estate | 7,689 | 8,025 | |||||
Consumer | 439 | 348 | |||||
Other lending | 1,071 | 865 | |||||
Total | $ | 64,243 | $ | 57,200 |
June 30, 2016 | September 30, 2015 | ||||
(dollars in thousands) | |||||
Allocation of allowance for loan and lease losses: | |||||
Commercial non-real estate | 18.9 | % | 28.0 | % | |
Agriculture | 35.9 | % | 24.4 | % | |
Commercial real estate | 30.9 | % | 31.5 | % | |
Residential real estate | 12.0 | % | 14.0 | % | |
Consumer | 0.6 | % | 0.6 | % | |
Other lending | 1.7 | % | 1.5 | % | |
Total | 100.0 | % | 100.0 | % |
June 30, 2016 | September 30, 2015 | ||||||||||||
Amount | Weighted Avg. Cost | Amount | Weighted Avg. Cost | ||||||||||
(dollars in thousands) | |||||||||||||
Non-interest-bearing demand | $ | 1,802,169 | — | % | $ | 1,368,453 | — | % | |||||
NOW accounts, money market and savings | 5,252,293 | 0.33 | % | 4,638,446 | 0.27 | % | |||||||
Time certificates, $250,000 or more | 258,071 | 0.98 | % | 217,016 | 0.89 | % | |||||||
Other time certificates | 1,167,676 | 0.67 | % | 1,163,150 | 0.68 | % | |||||||
Total | $ | 8,480,209 | 0.33 | % | $ | 7,387,065 | 0.30 | % |
June 30, 2016 | September 30, 2015 | ||||||
(dollars in thousands) | |||||||
Iowa / Kansas / Missouri | $ | 2,508,375 | $ | 2,305,489 | |||
Nebraska | 2,359,905 | 2,334,172 | |||||
South Dakota | 2,186,828 | 1,529,483 | |||||
Arizona / Colorado | 1,308,778 | 1,141,950 | |||||
North Dakota / Minnesota | 36,188 | — | |||||
Corporate and other | 80,135 | 75,971 | |||||
Total deposits | $ | 8,480,209 | $ | 7,387,065 |
Greater than or equal to $250,000 | Less than $250,000 | ||||||
(dollars in thousands) | |||||||
Remaining maturity: | |||||||
Three months or less | $ | 57,624 | $ | 231,255 | |||
Over three through six months | 38,807 | 186,859 | |||||
Over six through twelve months | 64,612 | 320,240 | |||||
Over twelve months | 97,028 | 429,322 | |||||
Total | $ | 258,071 | $ | 1,167,676 | |||
Percent of total deposits | 3.0 | % | 13.8 | % |
At and for the nine months ended June 30, 2016 | At and for the fiscal year ended September 30, 2015 | ||||||
(dollars in thousands) | |||||||
Short-term borrowings: | |||||||
Securities sold under agreements to repurchase | $ | 156,072 | $ | 182,399 | |||
Other short-term borrowings | 393,155 | — | |||||
Total short-term borrowings | $ | 549,227 | $ | 182,399 | |||
Maximum amount outstanding at any month-end during the period | $ | 549,227 | $ | 229,429 | |||
Average amount outstanding during the period | $ | 237,443 | $ | 182,202 | |||
Weighted average rate for the period | 0.35 | % | 0.38 | % | |||
Weighted average rate as of date indicated | 0.43 | % | 0.25 | % |
Less Than 1 Year | 1 to 2 Years | 2 to 5 Years | >5 Years | Not Determined | Total | ||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||
Contractual Obligations: | |||||||||||||||||||||||
Customer deposits | $ | 873,615 | $ | 274,390 | $ | 250,577 | $ | 1,383 | $ | 7,080,244 | $ | 8,480,209 | |||||||||||
Securities sold under agreement to repurchase | 159,016 | — | — | — | — | 159,016 | |||||||||||||||||
FHLB advances and other borrowings | 393,328 | 29,000 | 31,000 | 460,000 | — | 913,328 | |||||||||||||||||
Subordinated notes payable | — | — | — | 80,920 | — | 80,920 | |||||||||||||||||
Subordinated debentures | — | — | — | 35,000 | — | 35,000 | |||||||||||||||||
Operating leases, net of sublease income | 4,738 | 4,150 | 10,127 | 1,502 | — | 20,517 | |||||||||||||||||
Accrued interest payable | 5,387 | — | — | — | — | 5,387 | |||||||||||||||||
Interest on FHLB advances | 3,854 | 2,994 | 8,325 | 4,338 | — | 19,511 | |||||||||||||||||
Interest on subordinated notes payable | 2,302 | 2,302 | 6,907 | 31,019 | — | 42,530 | |||||||||||||||||
Interest on subordinated debentures | 1,706 | 1,706 | 5,119 | 7,038 | — | 15,569 | |||||||||||||||||
Other Commitments: | |||||||||||||||||||||||
Commitments to extend credit—non-credit card | $ | 1,212,760 | $ | 206,020 | $ | 334,866 | $ | 201,470 | $ | — | $ | 1,955,116 | |||||||||||
Commitments to extend credit—credit card | 188,077 | — | — | — | — | 188,077 | |||||||||||||||||
Letters of credit | 64,257 | — | — | — | — | 64,257 |
June 30, 2016 | September 30, 2015 | ||||||
(dollars in thousands) | |||||||
Commitments to extend credit | $ | 2,143,193 | $ | 2,156,243 | |||
Letters of credit | 64,257 | 52,571 | |||||
Total | $ | 2,207,450 | $ | 2,208,814 |
Actual | ||||||||||||
Capital Amount | Ratio | Minimum Capital Requirement Ratio | Well Capitalized Ratio | |||||||||
(dollars in thousands) | ||||||||||||
Great Western Bancorp, Inc. | ||||||||||||
Tier 1 capital | $ | 975,309 | 10.9 | % | 6.0 | % | 8.0 | % | ||||
Total capital | 1,074,552 | 12.0 | % | 8.0 | % | 10.0 | % | |||||
Tier 1 leverage | 975,309 | 10.0 | % | 4.0 | % | 5.0 | % | |||||
Common equity Tier 1 | 898,181 | 10.0 | % | 4.5 | % | 6.5 | % | |||||
Risk-weighted assets | 8,986,266 | |||||||||||
Great Western Bank | ||||||||||||
Tier 1 capital | $ | 995,276 | 11.1 | % | 6.0 | % | 8.0 | % | ||||
Total capital | 1,059,519 | 11.8 | % | 8.0 | % | 10.0 | % | |||||
Tier 1 leverage | 995,276 | 10.1 | % | 4.0 | % | 5.0 | % | |||||
Common equity Tier 1 | 995,276 | 11.1 | % | 4.5 | % | 6.5 | % | |||||
Risk-weighted assets | 8,991,609 |
At or for the nine months ended: | At or for the three months ended: | ||||||||||||||||||||||||||
June 30, 2016 | June 30, 2015 | June 30, 2016 | March 31, 2016 | December 31, 2015 | September 30, 2015 | June 30, 2015 | |||||||||||||||||||||
Adjusted net income and adjusted earnings per common share: | |||||||||||||||||||||||||||
Net income - GAAP | $ | 87,495 | $ | 75,253 | $ | 26,360 | $ | 30,674 | $ | 30,461 | $ | 33,812 | $ | 28,832 | |||||||||||||
Add: acquisition expenses | 12,950 | — | 12,179 | 771 | — | — | — | ||||||||||||||||||||
Add: tax effect at 38% | (4,921 | ) | — | (4,628 | ) | (293 | ) | — | — | — | |||||||||||||||||
Adjusted net income | $ | 95,524 | $ | 75,253 | $ | 33,911 | $ | 31,152 | $ | 30,461 | $ | 33,812 | $ | 28,832 | |||||||||||||
Weighted average diluted common shares outstanding | 55,993,011 | 57,929,188 | 57,176,705 | 55,408,876 | 55,393,452 | 56,215,947 | 57,959,202 | ||||||||||||||||||||
Earnings per common share - diluted | $ | 1.56 | $ | 1.30 | $ | 0.46 | $ | 0.55 | $ | 0.55 | $ | 0.60 | $ | 0.50 | |||||||||||||
Adjusted earnings per common share - diluted | $ | 1.71 | $ | 1.30 | $ | 0.59 | $ | 0.56 | $ | 0.55 | $ | 0.60 | $ | 0.50 | |||||||||||||
Cash net income and return on average tangible common equity: | |||||||||||||||||||||||||||
Net income - GAAP | $ | 87,495 | $ | 75,253 | $ | 26,360 | $ | 30,674 | $ | 30,461 | $ | 33,812 | $ | 28,832 | |||||||||||||
Add: Amortization of intangible assets | 2,239 | 6,402 | 822 | 708 | 709 | 708 | 1,776 | ||||||||||||||||||||
Add: Tax on amortization of intangible assets | (660 | ) | (660 | ) | (220 | ) | (220 | ) | (220 | ) | (220 | ) | (220 | ) | |||||||||||||
Cash net income | $ | 89,074 | $ | 80,995 | $ | 26,962 | $ | 31,162 | $ | 30,950 | $ | 34,300 | $ | 30,388 | |||||||||||||
Average common equity | $ | 1,506,740 | $ | 1,456,174 | $ | 1,567,372 | $ | 1,488,398 | $ | 1,464,450 | $ | 1,456,372 | $ | 1,476,556 | |||||||||||||
Less: Average goodwill and other intangible assets | 712,049 | 708,799 | 727,707 | 703,866 | 704,576 | 705,284 | 706,526 | ||||||||||||||||||||
Average tangible common equity | $ | 794,691 | $ | 747,375 | $ | 839,665 | $ | 784,532 | $ | 759,874 | $ | 751,088 | $ | 770,030 | |||||||||||||
Return on average common equity * | 7.8 | % | 6.9 | % | 6.8 | % | 8.3 | % | 8.3 | % | 9.2 | % | 7.8 | % | |||||||||||||
Return on average tangible common equity * | 15.0 | % | 14.5 | % | 12.9 | % | 16.0 | % | 16.2 | % | 18.1 | % | 15.8 | % | |||||||||||||
* Calculated as cash net income divided by average tangible common equity. Annualized for partial-year periods. | |||||||||||||||||||||||||||
At or for the nine months ended: | At or for the three months ended: | ||||||||||||||||||||||||||
June 30, 2016 | June 30, 2015 | June 30, 2016 | March 31, 2016 | December 31, 2015 | September 30, 2015 | June 30, 2015 | |||||||||||||||||||||
Adjusted net interest income and adjusted net interest margin (fully-tax equivalent basis): | |||||||||||||||||||||||||||
Net interest income - GAAP | $ | 263,947 | $ | 248,072 | $ | 91,652 | $ | 86,338 | $ | 85,957 | $ | 85,425 | $ | 84,538 | |||||||||||||
Add: Tax equivalent adjustment | 5,522 | 4,798 | 1,905 | 1,791 | 1,826 | 1,778 | 1,704 | ||||||||||||||||||||
Net interest income (FTE) | 269,469 | 252,870 | 93,557 | 88,129 | 87,783 | 87,203 | 86,242 | ||||||||||||||||||||
Add: Current realized derivative gain (loss) | (15,832 | ) | (16,005 | ) | (5,005 | ) | (5,175 | ) | (5,652 | ) | (5,637 | ) | (5,416 | ) | |||||||||||||
Adjusted net interest income (FTE) | $ | 253,637 | $ | 236,865 | $ | 88,552 | $ | 82,954 | $ | 82,131 | $ | 81,566 | $ | 80,826 | |||||||||||||
Average interest earning assets | $ | 9,061,896 | $ | 8,624,469 | $ | 9,528,576 | $ | 8,892,465 | $ | 8,764,649 | $ | 8,693,471 | $ | 8,756,244 | |||||||||||||
Net interest margin (FTE) * | 3.97 | % | 3.92 | % | 3.95 | % | 3.99 | % | 3.98 | % | 3.98 | % | 3.95 | % | |||||||||||||
Adjusted net interest margin (FTE) ** | 3.74 | % | 3.67 | % | 3.74 | % | 3.75 | % | 3.73 | % | 3.72 | % | 3.70 | % | |||||||||||||
* Calculated as net interest income (FTE) divided by average interest earning assets. Annualized for partial-year periods. | |||||||||||||||||||||||||||
** Calculated as adjusted net interest income (FTE) divided by average interest earning assets. Annualized for partial-year periods. | |||||||||||||||||||||||||||
Adjusted interest income and adjusted yield (fully-tax equivalent basis), on non ASC 310-30 loans: | |||||||||||||||||||||||||||
Net interest income - GAAP | $ | 263,930 | $ | 244,783 | $ | 91,829 | $ | 86,534 | $ | 85,567 | $ | 84,835 | $ | 83,094 | |||||||||||||
Add: Tax equivalent adjustment | 5,522 | 4,798 | 1,905 | 1,791 | 1,826 | 1,778 | 1,704 | ||||||||||||||||||||
Interest income (FTE) | 269,452 | 249,581 | 93,734 | 88,325 | 87,393 | 86,613 | 84,798 | ||||||||||||||||||||
Add: Current realized derivative gain (loss) | (15,832 | ) | (16,005 | ) | (5,005 | ) | (5,175 | ) | (5,652 | ) | (5,637 | ) | (5,416 | ) | |||||||||||||
Adjusted interest income (FTE) | $ | 253,620 | $ | 233,576 | $ | 88,729 | $ | 83,150 | $ | 81,741 | $ | 80,976 | $ | 79,382 | |||||||||||||
Average non ASC 310-30 loans | $ | 7,489,534 | $ | 6,816,785 | $ | 7,903,860 | $ | 7,371,600 | $ | 7,193,143 | $ | 7,108,598 | $ | 6,995,340 | |||||||||||||
Yield (FTE) * | 4.81 | % | 4.90 | % | 4.77 | % | 4.82 | % | 4.83 | % | 4.83 | % | 4.86 | % | |||||||||||||
Adjusted yield (FTE) ** | 4.52 | % | 4.58 | % | 4.52 | % | 4.54 | % | 4.52 | % | 4.52 | % | 4.55 | % | |||||||||||||
* Calculated as interest income (FTE) divided by average loans. Annualized for partial-year periods. | |||||||||||||||||||||||||||
** Calculated as adjusted interest income (FTE) divided by average loans. Annualized for partial-year periods. | |||||||||||||||||||||||||||
Efficiency ratio: | |||||||||||||||||||||||||||
Total revenue | $ | 290,686 | $ | 272,913 | $ | 100,749 | $ | 95,339 | $ | 94,601 | $ | 94,474 | $ | 94,543 | |||||||||||||
Add: Tax equivalent adjustment | 5,522 | 4,798 | 1,905 | 1,791 | 1,826 | 1,778 | 1,704 | ||||||||||||||||||||
Total revenue (FTE) | $ | 296,208 | $ | 277,711 | $ | 102,654 | $ | 97,130 | $ | 96,427 | $ | 96,252 | $ | 96,247 | |||||||||||||
Noninterest expense | $ | 150,297 | $ | 141,959 | $ | 61,222 | $ | 44,855 | $ | 44,220 | $ | 44,835 | $ | 46,430 | |||||||||||||
Less: Amortization of intangible assets | 2,239 | 6,402 | 822 | 708 | 709 | 708 | 1,776 | ||||||||||||||||||||
Tangible noninterest expense | $ | 148,058 | $ | 135,557 | $ | 60,400 | $ | 44,147 | $ | 43,511 | $ | 44,127 | $ | 44,654 | |||||||||||||
Efficiency ratio * | 50.0 | % | 48.8 | % | 58.8 | % | 45.5 | % | 45.1 | % | 45.8 | % | 46.4 | % | |||||||||||||
* Calculated as the ratio of tangible noninterest expense to total revenue (FTE). |
At or for the nine months ended: | At or for the three months ended: | ||||||||||||||||||||||||||
June 30, 2016 | June 30, 2015 | June 30, 2016 | March 31, 2016 | December 31, 2015 | September 30, 2015 | June 30, 2015 | |||||||||||||||||||||
Tangible common equity and tangible common equity to tangible assets: | |||||||||||||||||||||||||||
Total stockholders' equity | $ | 1,640,511 | $ | 1,487,851 | $ | 1,640,511 | $ | 1,509,202 | $ | 1,475,516 | $ | 1,459,346 | $ | 1,487,851 | |||||||||||||
Less: Goodwill and other intangible assets | 751,217 | 705,634 | 751,217 | 703,508 | 704,217 | 704,926 | 705,634 | ||||||||||||||||||||
Tangible common equity | $ | 889,294 | $ | 782,217 | $ | 889,294 | $ | 805,694 | $ | 771,299 | $ | 754,420 | $ | 782,217 | |||||||||||||
Total assets | $ | 11,453,222 | $ | 9,764,159 | $ | 11,453,222 | $ | 9,942,295 | $ | 9,957,215 | $ | 9,798,654 | $ | 9,764,159 | |||||||||||||
Less: Goodwill and other intangible assets | 751,217 | 705,634 | 751,217 | 703,508 | 704,217 | 704,926 | 705,634 | ||||||||||||||||||||
Tangible assets | $ | 10,702,005 | $ | 9,058,525 | $ | 10,702,005 | $ | 9,238,787 | $ | 9,252,998 | $ | 9,093,728 | $ | 9,058,525 | |||||||||||||
Tangible common equity to tangible assets | 8.3 | % | 8.6 | % | 8.3 | % | 8.7 | % | 8.3 | % | 8.3 | % | 8.6 | % | |||||||||||||
Tangible book value per share: | |||||||||||||||||||||||||||
Total stockholders' equity | $ | 1,640,511 | $ | 1,487,851 | $ | 1,640,511 | $ | 1,509,202 | $ | 1,475,516 | $ | 1,459,346 | $ | 1,487,851 | |||||||||||||
Less: Goodwill and other intangible assets | 751,217 | 705,634 | 751,217 | 703,508 | 704,217 | 704,926 | 705,634 | ||||||||||||||||||||
Tangible common equity | $ | 889,294 | $ | 782,217 | $ | 889,294 | $ | 805,694 | $ | 771,299 | $ | 754,420 | $ | 782,217 | |||||||||||||
Common shares outstanding | 58,693,499 | 57,886,114 | 58,693,499 | 55,245,177 | 55,244,569 | 55,219,596 | 57,886,114 | ||||||||||||||||||||
Tangible book value per share | $ | 15.15 | $ | 13.51 | $ | 15.15 | $ | 14.58 | $ | 13.96 | $ | 13.66 | $ | 13.51 |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Estimated Increase (Decrease) in Annualized Adjusted Net Interest Income for the Quarter Ended June 30, 2016 | |||||
Change in Market Interest Rates as of June 30, 2016 | Twelve Months Ending June 30, 2017 | Twelve Months Ending June 30, 2018 | |||
Immediate Shifts | |||||
+400 basis points | 12.01 | % | 9.44 | % | |
+300 basis points | 9.03 | % | 7.18 | % | |
+200 basis points | 6.02 | % | 4.84 | % | |
+100 basis points | 3.02 | % | 2.55 | % | |
-100 basis points | (1.17 | )% | (1.70 | )% | |
Gradual Shifts | |||||
+400 basis points | 2.78 | % | |||
+300 basis points | 2.15 | % | |||
+200 basis points | 1.53 | % | |||
+100 basis points | 0.88 | % | |||
-100 basis points | (0.22 | )% |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
ITEM 4. | MINE SAFETY DISCLOSURES |
ITEM 5. | OTHER INFORMATION |
ITEM 6. | EXHIBITS |
EX- 2.1 | Agreement and Plan of Merger, dated November 30, 2015, by and between Great Western Bancorp, Inc. and HF Financial Corp (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K/A filed by Great Western Bancorp, Inc. on December 1, 2015) |
EX - 11.1 | Statement regarding Computation of Per Share Earnings (included as Note 18 to the registrant's unaudited consolidated financial statements) |
EX - 31.1 | Rule 13a-14(a) Certification of Chief Executive Officer of Great Western Bancorp, Inc. in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 |
EX - 31.2 | Rule 13a-14(a) Certification of Chief Financial Officer of Great Western Bancorp, Inc. in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 |
EX - 32.1 | Section 1350 Certification of Chief Executive Officer of Great Western Bancorp, Inc. in accordance with Section 906 of the Sarbanes-Oxley Act of 2002 |
EX - 32.2 | Section 1350 Certification of Chief Financial Officer of Great Western Bancorp, Inc. in accordance with Section 906 of the Sarbanes-Oxley Act of 2002 |
101.INS | XBRL Instance Document |
101.SCH | XBRL Taxonomy Extension Schema Document |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
Great Western Bancorp, Inc. | |
Date: August 11, 2016 | By: ______/s/_Peter Chapman_________________ Name: Peter Chapman Title: Chief Financial Officer and Executive Vice President (Principal Financial Officer and Authorized Officer) |
Number | Description | ||
2.1 | Agreement and Plan of Merger, dated November 30, 2015, by and between Great Western Bancorp, Inc. and HF Financial Corp (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K/A filed by Great Western Bancorp, Inc. on December 1, 2015). | ||
11.1 | Statement regarding Computation of Per Share Earnings (included as Note 18 to the registrant's unaudited consolidated financial statements) | ||
31.1* | Rule 13a-14(a) Certification of Chief Executive Officer of Great Western Bancorp, Inc. in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 | ||
31.2* | Rule 13a-14(a) Certification of Chief Financial Officer of Great Western Bancorp, Inc. in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 | ||
32.1* | Section 1350 Certification of Chief Executive Officer of Great Western Bancorp, Inc. in accordance with Section 906 of the Sarbanes-Oxley Act of 2002 | ||
32.2* | Section 1350 Certification of Chief Financial Officer of Great Western Bancorp, Inc. in accordance with Section 906 of the Sarbanes-Oxley Act of 2002 | ||
101.INS** | XBRL Instance Document | ||
101.SCH** | XBRL Taxonomy Extension Schema Document | ||
101.CAL** | XBRL Taxonomy Extension Calculation Linkbase Document | ||
101.DEF** | XBRL Taxonomy Extension Definition Linkbase Document | ||
101.LAB** | XBRL Taxonomy Extension Label Linkbase Document | ||
101.PRE** | XBRL Taxonomy Extension Presentation Linkbase Document | ||
* Filed herewith | |||
** Furnished, not filed |
1. | I have reviewed this Quarterly Report on Form 10-Q of Great Western Bancorp, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(c) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: August 11, 2016 | By: | /s/ Ken Karels | |
Name: | Ken Karels | ||
Title: | President and Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Great Western Bancorp, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(c) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: August 11, 2016 | By: | /s/ Peter Chapman | |
Name: | Peter Chapman | ||
Title: | Executive Vice President and Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: August 11, 2016 | By: | /s/ Ken Karels | |
Name: | Ken Karels | ||
Title: | President and Chief Executive Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: August 11, 2016 | By: | /s/ Peter Chapman | |
Name: | Peter Chapman | ||
Title: | Executive Vice President and Chief Financial Officer |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Aug. 04, 2016 |
|
Document Information [Abstract] | ||
Entity Registrant Name | Great Western Bancorp, Inc. | |
Entity Central Index Key | 0001613665 | |
Current Fiscal Year End Date | --09-30 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 58,693,304 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Sep. 30, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Loans covered by FDIC loss share agreements | $ 80,137 | $ 97,030 |
Loans and written loan commitments at fair value under the fair value option | 1,156,442 | 1,118,687 |
Loans held for sale | 21,301 | 9,867 |
Property held for sale | 7,974 | 0 |
Property covered under FDIC loss share agreements | $ 50 | $ 61 |
Common stock, par value (in USD per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 58,693,499 | 55,219,596 |
Common stock, shares outstanding | 58,693,499 | 55,219,596 |
Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
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Income Statement [Abstract] | ||||
Income tax (expense) benefit | $ (2,649) | $ 2,254 | $ (4,115) | $ (2,712) |
Consolidated Statement of Stockholders' Equity (Unaudited) (Parenthetical) - $ / shares |
9 Months Ended | |
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Jun. 30, 2016 |
Jun. 30, 2015 |
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Statement of Stockholders' Equity [Abstract] | ||
Cash dividends paid on common stock (in USD per share) | $ 0.42 | $ 0.24 |
Nature of Operations and Summary of Significant Policies |
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Jun. 30, 2016 | |||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||
Nature of Operations and Summary of Significant Policies | Nature of Operations and Summary of Significant Policies Nature of Operations Great Western Bancorp, Inc. (the “Company”) is a bank holding company organized under the laws of Delaware. The primary business of the Company is ownership of its wholly owned subsidiary, Great Western Bank (the “Bank”). The Bank is a full-service regional bank focused on relationship-based business and agribusiness banking in Arizona, Colorado, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota. The Company and the Bank are subject to the regulation of certain federal and/or state agencies and undergo periodic examinations by those regulatory authorities. Substantially all of the Company’s income is generated from banking operations. Basis of Presentation The accompanying unaudited consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and reflect all adjustments that are, in the opinion of management, necessary for the fair presentation of the financial position and results of operations for the periods presented. All such adjustments are of a normal recurring nature. Certain previously reported amounts have been reclassified to conform to the current presentation. The unaudited interim consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended September 30, 2015, which includes a description of significant accounting policies. The results of operations for interim periods are not necessarily indicative of the results that may be expected for the year or any other period. The accompanying unaudited consolidated financial statements include the accounts and results of operations of the Company and its subsidiaries after elimination of all significant intercompany accounts and transactions. The preparation of unaudited consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from these estimates. Business Combinations The Company accounts for business combinations under the acquisition method of accounting in accordance with ASC 805, “Business Combinations” (“ASC 805”). The Company recognizes the fair value of the assets acquired and liabilities assumed, immediately expenses transaction costs and accounts for restructuring plans separately from the business combination. There is no separate recognition of the acquired allowance for loan and lease losses on the acquirer’s balance sheet as credit related factors are incorporated directly into the fair value of the loans recorded at the acquisition date. The excess of the cost of the acquisition over the fair value of the net tangible and intangible assets acquired is recorded as goodwill. Alternatively, a bargain purchase gain is recorded equal to the amount by which the fair value of assets purchased exceeds the fair value of liabilities assumed and consideration paid. Results of operations of the acquired business are included in the consolidated statements of comprehensive income from the effective date of acquisition. Securities The Company classifies securities upon purchase in one of three categories: trading, held to maturity, or available for sale. Debt and equity securities held for resale are classified as trading. Debt securities for which the Company has the ability and positive intent to hold until maturity are classified as held to maturity. All other securities are classified as available for sale as they may be sold prior to maturity in response to changes in the Company’s interest rate risk profile, funding needs, demand for collateralized deposits by public entities or other reasons. Held to maturity securities are stated at amortized cost, which represents actual cost adjusted for premium amortization and discount accretion. Available for sale securities are stated at fair value, with unrealized gains and losses, net of related taxes, included in stockholders’ equity as a component of accumulated other comprehensive income (loss). Trading securities are stated at fair value. Realized and unrealized gains and losses from sales and fair value adjustments of trading securities are included in other noninterest income in the consolidated statements of comprehensive income. Purchases and sales of securities are recognized on a trade date basis. The cost of securities sold is based on the specific identification method. Declines in the fair value of investment securities available for sale (with certain exceptions for debt securities noted below) that are deemed to be other-than-temporary are recognized in earnings as a realized loss, and a new cost basis for the securities is established. In evaluating other-than-temporary impairment, management considers the length of time and extent to which the fair value has been less than amortized cost, the financial condition and near-term prospects of the issuer, and the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value in the near term. Declines in the fair value of debt securities below amortized cost are deemed to be other-than-temporary in circumstances where: (1) the Company has the intent to sell a security; (2) it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis; or (3) the Company does not expect to recover the entire amortized cost basis of the security. If the Company intends to sell a security or if it is more likely than not that the Company will be required to sell the security before recovery, an other-than-temporary impairment loss is recognized in earnings equal to the difference between the security’s amortized cost basis and its fair value. If the Company does not intend to sell the security or it is not more likely than not that it will be required to sell the security before recovery, the other-than-temporary impairment write-down is separated into an amount representing credit loss, which is recognized in earnings, and an amount related to all other factors, which is recognized in accumulated other comprehensive income (loss). Interest and dividends, including amortization of premiums and accretion of discounts, are recognized as interest or dividend income when earned. Realized gains and losses on sales (using the specific identification method) and declines in value judged to be other- than-temporary are included in noninterest income in the consolidated statements of comprehensive income. Loans The Company’s accounting method for loans differs depending on whether the loans were originated or purchased and, for purchased loans, whether the loans were acquired at a discount related to evidence of credit deterioration since date of origination. Originated Loans Loans that management has the intent and ability to hold for the foreseeable future, or until maturity or pay-off, generally are reported at their outstanding principal balance, adjusted for charge-offs, the allowance for loan and lease losses, and any unamortized deferred fees or costs. Other fees, not associated with originating a loan are recognized as fee income when earned. Interest income on loans is accrued daily on the outstanding balances. Accrual of interest is discontinued when management believes, after considering collection efforts and other factors, the borrower’s financial condition is such that collection of interest is doubtful, which is generally at 90 days past due. Generally, when loans are placed on nonaccrual status, interest receivable is reversed against interest income in the current period. Interest payments received thereafter are applied as a reduction to the remaining principal balance as long as concern exists as to the ultimate collection of the principal. Loans are removed from nonaccrual status when they become current as to both principal and interest and concern no longer exists as to the collectability of principal and interest. The Company has elected to measure certain long-term loans and written loan commitments at fair value to assist in managing interest rate risk for longer-term loans. Fair value loans are fixed-rate loans having original maturities of 5 years or greater (typically between 5 and 15 years) to our business and agribusiness banking customers to assist them in facilitating their risk management strategies. The fair value option was elected upon the origination or acquisition of these loans and written loan commitments. Interest income is recognized in the same manner on loans reported at fair value as on non-fair value loans, except in regard to origination fees and costs which are recognized immediately upon closing. The changes in fair value of long-term loans and written loan commitments at fair value are reported in noninterest income. For loans held for sale, loan fees charged or received on origination, net of certain direct loan origination costs, are recognized in income when the related loan is sold. For loans held for investment, loan fees, net of certain direct loan origination costs, are deferred, and the net amount is amortized as an adjustment of the related loan’s yield. The Company is generally amortizing these amounts over the contractual lives of the loans. Commitment fees are recognized as income when received. The Company grants commercial, agricultural, consumer, residential real estate, and other loans to customers primarily in Arizona, Colorado, Iowa, Kansas, Missouri, Minnesota, Nebraska, North Dakota and South Dakota. The amount of collateral obtained, if deemed necessary, is based on management’s credit evaluation of the borrower. Collateral held varies but includes accounts receivable, inventory, property and equipment, residential real estate, and income-producing commercial and agricultural properties. Government guarantees are also obtained for some loans, which reduces the Company’s risk of loss. Loans originated and intended for sale in the secondary market are carried at the lower of cost or fair value. Loans held for sale include fixed rate single-family residential mortgage loans under contract to be sold in the secondary market. In most cases, loans are carried at cost and sold within 45 days. These loans are sold with the mortgage servicing rights released. Under limited circumstances, buyers may have recourse to return a purchased loan to the Company. Recourse conditions may include early payment default, breach of representation or warranties, or documentation deficiencies. Fair value of loans held for sale is determined based on prevailing market prices for loans with similar characteristics, sale contract prices, or, for certain portfolios, discounted cash flow analysis. Declines in fair value below cost (and subsequent recoveries) are recognized in net gain on sale of loans. Deferred fees and costs related to these loans are not amortized but are recognized as part of the cost basis of the loan at the time it is sold. Gains or losses on sales are recognized upon delivery and included in net gain on sale of loans. Purchased Loans Loans acquired (non-impaired and impaired) in a business acquisition are recorded at their fair value at the acquisition date. Credit discounts are included in the determination of fair value; therefore, an allowance for loan and lease losses is not recorded at the acquisition date. In determining the acquisition date fair value of purchased loans with evidence of credit deterioration (“ASC 310-30 loans”), and in subsequent accounting, the Company generally aggregates impaired purchased consumer and certain smaller balance impaired commercial loans into pools of loans with common risk characteristics, while accounting for larger-balance impaired commercial loans individually. Expected cash flows at the acquisition date in excess of the fair value of loans are recorded as interest income over the life of the loans using a level-yield method. Management estimates the cash flows expected to be collected at acquisition and at subsequent measurement dates using internal risk models, which incorporate the estimate of key assumptions, such as default rates, loss severity, and prepayment speeds. Subsequent to the acquisition date, decreases in cash flows over those expected at the acquisition date are recognized by recording an allowance for loan and lease losses. Subsequent increases in cash flow over those expected at the acquisition date are recognized as reductions to allowance for loan and lease losses to the extent impairment was previously recognized and thereafter as interest income prospectively. For purchased loans not deemed impaired at the acquisition date, the difference between the fair value and the unpaid principal balance of the loan at acquisition date is amortized or accreted to interest income using the effective interest method over the remaining period to contractual maturity. Credit Risk Management The Company’s strategy for credit risk management includes well-defined, centralized credit policies, uniform underwriting criteria and ongoing risk monitoring and review processes for all credit exposures. The strategy also emphasizes diversification on a geographic, industry, and customer level; regular credit examinations; and management reviews of loans exhibiting deterioration of credit quality. The credit risk management strategy also includes a credit risk assessment process that performs assessments of compliance with commercial and consumer credit policies, risk ratings, and other critical credit information. Loan decisions are documented with respect to the borrower’s business, purpose of the loan, evaluation of the repayment sources, and the associated risks, evaluation of collateral, covenants and monitoring requirements, and risk rating rationale. The Company categorizes its loan portfolio into six classes, which is the level at which it develops and documents a systematic methodology to determine the allowance for loan and lease losses. The Company’s six loan portfolio classes are residential real estate, commercial real estate, commercial non real estate, agriculture, consumer and other lending. The residential real estate lending class includes loans made to consumer customers including residential mortgages, residential construction loans and home equity loans and lines. These loans are typically fixed rate loans secured by residential real estate. Home equity lines are revolving accounts giving the borrower the ability to draw and repay balances repeatedly, up to a maximum commitment, and are secured by residential real estate. Home equity lines typically have variable rate terms which are benchmarked to a prime rate. Historical loss history is the primary factor in determining the allowance for loan and lease losses for the residential real estate lending class. Key risk characteristics relevant to residential real estate lending class loans primarily relate to the borrower’s capacity and willingness to repay and include unemployment rates and other economic factors, and customer payment history. These risk characteristics, among others, are reflected in the environmental factors considered in determining the allowance for loan and lease losses. The commercial real estate lending class includes loans made to small and middle market businesses, including multifamily properties. Loans in this class are secured by commercial real estate. Historical loss history and updated loan-to-value information on collateral-dependent loans are the primary factors in determining the allowance for loan and lease losses for the commercial real estate lending class. Key risk characteristics relevant to the commercial real estate lending class include the industry and geography of the borrower’s business, purpose of the loan, repayment sources, borrower’s debt capacity and financial performance, loan covenants, and nature of pledged collateral. We consider these risk characteristics in assigning risk ratings and estimating environmental factors considered in determining the allowance for loan and lease losses. The commercial non real estate lending class includes loans made to small and middle market businesses, and loans made to public sector customers. Loans in this class are generally secured by business assets and guaranteed by owners; cashflows are most often our primary source of repayment. Historical loss history and updated loan-to-value information on collateral-dependent loans are the primary factors in determining the allowance for loan and lease losses for the commercial non real estate lending class. Key risk characteristics relevant to the commercial non real estate lending class include the industry and geography of the borrower’s business, purpose of the loan, repayment sources, borrower’s debt capacity and financial performance, loan covenants, and nature of pledged collateral. We consider these risk characteristics in assigning risk ratings and estimating environmental factors considered in determining the allowance for loan and lease losses. The agriculture lending class includes loans made to small and mid-size agricultural businesses and individuals. Loans in this class are generally secured by operating assets and guaranteed by owners; cashflows are most often our primary source of repayment. Historical loss history and updated loan-to-value information on collateral-dependent loans are the primary factors in determining the allowance for loan and lease losses for the agriculture lending class. Key risk characteristics relevant to the agriculture lending class include the geography of the borrower’s operations, commodity prices and weather patterns, purpose of the loan, repayment sources, borrower’s debt capacity and financial performance, loan covenants, and nature of pledged collateral. We consider these risk characteristics in assigning risk ratings and estimating environmental factors considered in determining the allowance for loan and lease losses. The consumer lending class includes loans made to consumer customers including loans secured by automobiles and other installment loans, and the other lending class includes credit card loans and unsecured revolving credit lines. Historical loss history is the primary factor in determining the allowance for loan and lease losses for the consumer and other lending classes. Key risk characteristics relevant to loans in the consumer and other lending classes primarily relate to the borrower’s capacity and willingness to repay and include unemployment rates and other economic factors, and customer payment and overall credit history. These risk characteristics, among others, are reflected in the environmental factors considered in determining the allowance for loan and lease losses. The Company assigns all non-consumer loans a credit quality risk rating. These ratings are Pass, Watch, Substandard, Doubtful, and Loss. Loans with a Pass and Watch rating represent those loans not classified on the Company’s rating scale for problem credits, with loans with a Watch rating being monitored and updated at least quarterly by management. Substandard loans are those where a well-defined weakness has been identified that may put full collection of contractual debt at risk. Doubtful loans are those where a well-defined weakness has been identified and a loss of contractual debt is probable. Substandard and doubtful loans are monitored and updated monthly. All loan risk ratings are updated and monitored on a continuous basis. The Company generally does not risk rate consumer loans unless a default event such as bankruptcy or extended nonperformance takes place. Alternatively, standard credit scoring systems are used to assess credit risks of consumer loans. Troubled Debt Restructurings (“TDRs”) Loans modified under troubled debt restructurings involve granting a concession to a borrower who is experiencing financial difficulty. These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance, or other actions intended to maximize collection, which generally would not otherwise be considered. Our TDRs include performing and nonperforming TDRs, which consist of loans that continue to accrue interest at the loan's original interest rate as we expect to collect the remaining principal and interest on the loan, and nonaccrual TDRs, which include loans that are in a nonaccrual status and are no longer accruing interest, as we do not expect to collect the full amount of principal and interest owned from the borrower on these loans. At the time of modification (except for loans on nonaccrual status), a TDR is classified as nonperforming TDR until a six-month payment history of principal and interest payments, in accordance with the terms of the loan modification, is sustained, at which time we move the loan to a performing status (performing TDR). If we do not expect to collect all principal and interest on the loan, the modified loan is classified as a nonaccrual TDR. All TDRs are accounted for as impaired loans and are included in our analysis of the allowance for loan and lease losses. A TDR that has been re-underwritten and renewed for a borrower who is no longer experiencing financial difficulty and which yields a market rate of interest at the time of a renewal is no longer considered a TDR. Allowance for Loan and Lease Losses (“ALLL”) and Unfunded Commitments The Company maintains an allowance for loan and lease losses at a level management believes is appropriate to reserve for credit losses inherent in our loan portfolio. The allowance for loan and lease losses is determined based on an ongoing evaluation, driven primarily by monitoring changes in loan risk grades, delinquencies, and other credit risk indicators, which is inherently subjective. The Company considers the uncertainty related to certain industry sectors and the extent of credit exposure to specific borrowers within the portfolio. In addition, consideration is given to concentration risks associated with the various loan portfolios and current economic conditions that might impact the portfolio. The Company also considers changes, if any, in underwriting activities, the loan portfolio composition (including product mix and geographic, industry, or customer-specific concentrations), trends in loan performance, the level of allowance coverage relative to similar banking institutions and macroeconomic factors, such as changes in unemployment rates, gross domestic product, and consumer bankruptcy filings. All of these estimates are susceptible to significant change. Changes to the allowance for loan and lease losses are made by charges to the provision for loan and lease losses, which is reflected in the consolidated statements of comprehensive income. Past due status is monitored as an indicator of credit deterioration. Loans that are 90 days or more past due are put on nonaccrual status unless the loan is well secured and in the process of collection. Loans deemed to be uncollectible are charged off against the allowance for loan and lease losses. Recoveries of amounts previously charged-off are credited to the allowance for loan and lease losses. The allowance for loan and lease losses consist of reserves for probable losses that have been identified related to specific borrowing relationships that are individually evaluated for impairment (“specific reserve”), as well as probable losses inherent in our loan portfolio that are not specifically identified (“collective reserve”). The specific reserve relates to impaired loans. A loan is impaired when, based on current information and events, it is probable the Company will be unable to collect all amounts due (interest as well as principal) according to the contractual terms of the loan agreement. Specific reserves are determined on a loan-by-loan basis based on management’s best estimate of the Company’s exposure, given the current payment status of the loan, the present value of expected payments, and the value of any underlying collateral. Impaired loans also include loans modified in troubled debt restructurings. Generally, the impairment related to troubled debt restructurings is measured based on the fair value of the collateral, less cost to sell, or the present value of expected payments relative to the unpaid principal balance. If the impaired loan is identified as collateral dependent, then the fair value of the collateral method of measuring the amount of the impairment is utilized. This method requires obtaining an independent appraisal of the collateral and applying a discount factor to the appraised value, if necessary, and including costs to sell. Management’s estimate for collective reserves reflects losses incurred in the loan portfolio as of the consolidated balance sheet reporting date. Incurred loss estimates primarily are based on historical loss experience and portfolio mix. Incurred loss estimates may be adjusted for qualitative factors such as current economic conditions and current portfolio trends including credit quality, concentrations, aging of the portfolio, and/or significant policy and underwriting changes. The Company maintains an ALLL for acquired impaired loans accounted for under ASC 310-30, resulting from decreases in expected cash flows arising from the periodic revaluation of these loans. Any decrease in expected cash flows in the individual loan pool is generally recognized in the current provision for loan and lease losses. Any increase in expected cash flows is generally not recognized immediately, but is instead reflected as an adjustment to the related loan or pool's yield on a prospective basis once any previously recorded provision for loan and lease loss has been recognized. For acquired nonimpaired loans accounted for under ASC 310-20, the Company utilizes methods to estimate the required allowance for loan and lease losses similar to originated loans; the required reserve is compared to the net carrying value of each acquired nonimpaired loan (by segment) to determine if a provision is required. While management uses the best information available to establish the allowance for loan and lease losses, future adjustments may be necessary if economic conditions differ substantially from the assumptions used in performing the estimates. Unfunded residential mortgage loan commitments entered into in connection with mortgage loans to be held for sale are considered derivatives and are recorded at fair value and included in other liabilities on the consolidated balance sheets with changes in fair value recorded in other interest income. All other unfunded loan commitments are generally related to providing credit facilities to customers and are not considered derivatives. For purchased loans, the fair value of the unfunded credit commitments is considered in determination of the fair value of the loans recorded at the date of acquisition. Reserves for credit exposure on all other unfunded credit commitments are recorded in other liabilities on the consolidated balance sheets. FDIC Indemnification Asset and Clawback Liability In conjunction with a Federal Deposit Insurance Corporation (“FDIC”)-assisted transaction of TierOne Bank in 2010, the Company entered into two loss share agreements with the FDIC, one covering certain single family residential mortgage loans with the claim period ending June 2020 and one covering commercial loans and other assets, in which the claim period ended in June 2015. The agreements cover a portion of realized losses on loans, foreclosed real estate and certain other assets. The Company has recorded assets on the consolidated balance sheets (i.e. indemnification assets) representing estimated future amounts recoverable from the FDIC. Fair values of loans covered by the loss sharing agreements at the acquisition date were estimated based on projected cash flows available based on the expected probability of default, default timing and loss given default, the expected reimbursement rates (generally 80%) from the FDIC and other relevant terms of the loss sharing agreements. The initial fair value was established by discounting these expected cash flows with a market discount rate for instruments with like maturity and risk characteristics. The loss share assets are measured separately from the related loans and foreclosed real estate and recorded as an FDIC indemnification asset on the consolidated balance sheets because they are not contractually embedded in the loans and are not transferable with the loans should the Company choose to dispose of them. Subsequent to the acquisition date, reimbursements received from the FDIC for actual incurred losses reduce the carrying amount of the loss share assets. Reductions to expected losses on covered assets, to the extent such reductions to expected losses are the result of an improvement to the actual or expected cash flows from the covered assets, also reduce the carrying amount of the loss share assets. The rate of accretion of the indemnification asset discount included in interest income slows to mirror the accelerated accretion of the loan discount. Additional expected losses on covered assets, to the extent such expected losses result in the recognition of an allowance for loan and lease losses, increase the carrying amount of the loss share assets. A related increase in the value of the indemnification asset up to the amount covered by the FDIC is calculated based on the reimbursement rates from the FDIC and is included in other noninterest income. The corresponding loan accretion or amortization is recorded as a component of interest income on the consolidated statements of comprehensive income. Although these assets are contractual receivables from the FDIC, there are no contractual interest rates. As part of the loss sharing agreements, the Company also assumed a liability (“FDIC Clawback Liability”) to be paid within 45 days subsequent to the maturity or termination of the loss sharing agreements that is contingent upon actual losses incurred over the life of the agreements relative to expected losses considered in the consideration paid at acquisition date and the amount of losses reimbursed to the Company under the loss sharing agreements. The liability was recorded at fair value as of the acquisition date. The fair value was based on a discounted cash flow calculation that considered the formula defined in the loss sharing agreements and projected losses. The difference between the fair value at acquisition date and the projected losses is amortized through other noninterest expense. As projected losses and reimbursements are updated, as described above, the FDIC Clawback Liability is adjusted and a gain or loss is recorded in other noninterest expense. Loan Servicing Rights The Company records a servicing asset for contractually separated servicing from the underlying mortgage loans. Fair value is based on market prices for comparable mortgage servicing contracts, when available or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income. The asset is amortized into mortgage banking income, net on the consolidated statement of comprehensive income in proportion to and over the period of estimated net servicing income. Loan servicing rights are evaluated for impairment based upon the fair value of the rights as compared to the carrying amount. Impairment is determined by stratifying rights into groupings based on characteristics, such as interest rate, loan type and investor type. Impairment is recognized through a valuation allowance, to the extent that fair value is less than the carrying amount. If the Company later determines that all or a portion of the impairment no longer exists, a reduction of the allowance may be recorded as an increase to noninterest income. If the Company determines the impairment to be permanent, the valuation is written off against the loan servicing rights, which results in a new amortized balance. Changes in the valuation allowance are reported in mortgage banking income, net in the consolidated statement of comprehensive income. The fair value of loan servicing rights is subject to significant fluctuations as a result of changes in estimated and actual prepayment speeds and default rates and losses. Estimating future cash flows on the underlying mortgages is a difficult analysis and requires judgment based on the best information available. Based on the Company's analysis of loan servicing rights, a valuation allowance of $0.2 million was recorded at June 30, 2016. Servicing fee income, which is reported in noninterest income, is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding balance or a fixed amount per loan and are recorded as income as earned. The amortization of loan servicing rights is netted against mortgage banking income, net in the statement of consolidated comprehensive income. Goodwill Goodwill represents the cost in excess of the fair value of net assets acquired (including identifiable intangibles) in transactions accounted for as business acquisitions. Goodwill is evaluated annually for impairment or more frequently if events and circumstances exist that indicates that a goodwill impairment test should be performed. The Company performs its impairment evaluation as of June 30 of each fiscal year. If the implied fair value of goodwill is lower than its carrying amount, goodwill impairment is indicated and goodwill is written down to its implied fair value. Subsequent increases in goodwill are not recognized in the consolidated financial statements. No goodwill impairment was recognized during the three and nine months ended June 30, 2016 and 2015. Core Deposits and Other Intangibles Intangible assets consist of core deposits, brand intangible, customer relationships, and other intangibles. Core deposits represent the identifiable intangible value assigned to core deposit bases arising from purchase acquisitions. Brand intangible represents the value associated with the Bank charter. Customer relationships intangible represents the identifiable intangible value assigned to customer relationships arising from a purchase acquisition. Other intangibles represent contractual franchise arrangements under which the franchiser grants the franchisee the right to perform certain functions within a designated geographical area. The methods and lives used to amortize intangible assets are as follows:
Intangible assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. No intangible asset impairments were recognized during the periods ended June 30, 2016 and 2015. Derivatives The Company maintains an overall interest rate risk management strategy that permits the use of derivative instruments to modify exposure to interest rate risk. The Company enters into interest rate swap contracts to offset the interest rate risk associated with borrowers who lock in long-term fixed rates (greater than or equal to 5 years to maturity) through a fixed rate loan. These contracts do not qualify for hedge accounting. Generally, under these swaps, the Company agrees with various swap counterparties to exchange the difference between fixed-rate and floating-rate interest amounts based upon notional principal amounts. These interest rate derivative instruments are recognized as assets and liabilities on the consolidated balance sheets and measured at fair value, with changes in fair value reported in net realized and unrealized gain (loss) on derivatives. Since each fixed rate loan is paired with an offsetting derivative contract, the impact to net income is minimized. The Company enters into forward interest rate lock commitments on mortgage loans to be held for sale, which are commitments to originate loans whereby the interest rate on the loan is determined prior to funding. The Company also has corresponding forward sales contracts related to these interest rate lock commitments. Both the mortgage loan commitments and the related sales contracts are considered derivatives and are recorded at fair value with changes in fair value recorded in noninterest income. Stock Based Compensation Restricted and performance-based stock units/awards are classified as equity awards and accounted for under the Treasury method. Compensation expense for non-vested stock units/awards is based on the fair value of the award on the measurement date, which, for the Company, is the date of the grant and is recognized ratably over the vesting or performance period of the award. The fair value of non-vested stock units/awards is generally the market price of the Company's stock on the date of grant. Income Taxes The Company was required to file a consolidated income tax return with National Americas Investment, Inc. ("NAI") (a wholly owned indirect subsidiary of NAB) until NAI's dissolution on October 17, 2014. Income taxes are allocated pursuant to a tax-sharing arrangement, whereby the Company will pay federal and state income taxes as if it were filing on a stand-alone basis. Income tax expense includes two components: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over income. The Company determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax basis of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur. Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized. Tax benefits related to uncertain tax positions are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term "more likely than not" means a likelihood of more than 50 percent; the terms "examined" and "upon examination" also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management’s judgment. Transfers of Financial Assets Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company-put presumptively beyond reach of the Company and its creditors, even in bankruptcy or other receivership, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets. Securities sold under agreements to repurchase are accounted for as collateralized financing transactions and are recorded at amounts at which the securities were financed, plus accrued interest. Defined Benefit Plan The Company assumed plan sponsorship of the HF Financial Corp. Pension Plan during the quarter as part of the HF Financial acquisition. Defined benefit pension obligation and related costs are calculated using actuarial concepts and measurements. Three critical assumptions, the discount rate, the expected long-term rate of return on plan assets, and mortality rates are important elements of expense and/or benefit obligation measurements. Other assumptions involve employee demographic factors such as retirement patterns and turnover. The Company evaluates all assumptions annually. For accounting purposes, mortality assumptions at June 30, 2016 were based on the RP-2014 mortality tables and the MP 2015 projection scales. The discount rate enables the Company to state expected future benefit payments as a present value on the measurement date. The Company determined the discount rate at June 30, 2016 by utilizing the standard duration index from the Citi Pension Discount Curve and Liability Index. A lower discount rate increases the present value of benefit obligations and increases pension expense. To determine expected long-term rate of return on defined benefit pension plan assets, the Company considers the current asset allocation of the defined benefit pension plan, as well as historical and expected returns on each asset class. A lower expected rate of return on defined pension plan assets will increase pension expense. The Company recognizes the over- or under-funded status of a plan as an other asset or other liability in the consolidated balance sheet as measured by the difference between the fair value of the plan assets and the projected benefit obligation. When recorded, unrecognized prior service costs and actuarial gains and losses are recognized as a component of accumulated other comprehensive income (loss). Revenue Recognition The Company recognizes revenue as it is earned based on contractual terms, as transactions occur, or as services are provided and collectability is reasonably assured. Certain specific policies related to service charges and other fees include the following: Deposit Service Charges Service charges on deposit accounts are primarily fees related to customer overdraft events and not sufficient funds fees, net of any refunded fees, and are recognized as transactions occur and services are provided. Service charges on deposit accounts also relate to monthly fees based on minimum balances, and are earned as transactions occur and services are provided. Interchange Fees Interchange fees include interchange income from consumer debit card transactions processed through card association networks. Interchange income is a fee paid by a merchant bank to the card-issuing bank through the interchange network. Interchange fees are set by the card association networks and are based on cardholder purchase volumes. Wealth Management Fees Wealth management fees include commission income from financial planning, investment management and insurance operations. Comprehensive Income Comprehensive income consists of net income and other comprehensive income, net of applicable income taxes. Other comprehensive income (loss) consists entirely of unrealized appreciation (depreciation) on available-for-sale securities. Subsequent Events The Company has evaluated all events or transactions that occurred through the date the Company issued these financial statements. During this period, the Company did not have any material recognizable or non-recognizable subsequent events other than outlined below. On July 28, 2016, the board of directors of the Company declared a dividend of $0.14 per common share payable on August 24, 2016 to stockholders of record as of close of business on August 12, 2016. |
New Accounting Pronouncements |
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Jun. 30, 2016 | |
Accounting Changes and Error Corrections [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which addresses timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The ASU requires institutions to measure all expected credit losses related to financial assets measured at amortized costs with an expected loss model based on historical experience, current conditions and reasonable and supportable forecasts relevant to affect the collectibility of the financial assets, which is referred to as the current expected credit loss (CECL) model. The ASU requires enhanced disclosures, including qualitative and quantitative requirements, to help understand significant estimates and judgments used in estimating credit losses, as well as provide additional information about the amounts recorded in the financial statements. ASU 2016-13 will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted after December 15, 2018. The amendment requires the use of the modified retrospective approach for adoption. The Company is currently evaluating the potential impact of ASU 2016-13 on our financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Based Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which addresses several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Earlier application is permitted. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The Company is currently evaluating the potential impact of ASU 2016-09 on our financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires that lessees recognize the assets and liabilities arising from leases on the balance sheet. ASU 2015-16 will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the potential impact of ASU 2016-02 on our financial statements. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10) - Recognition and Measurement of Financial Assets and Financial Liabilities, which addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASU 2016-01 will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the potential impact of ASU 2016-01 on our financial statements. In September 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805) - Simplifying the Accounting for Measurement-Period Adjustments, which requires that adjustments to provisional amounts that are identified during the measurement period of a business combination be recognized in the reporting period in which the adjustment amounts are determined. Furthermore, the income statement effects of such adjustments, if any, must be calculated as if the accounting had been completed at the acquisition date. The portion of the amount recorded in current-period earnings that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. Under previous guidance, adjustments to provisional amounts identified during the measurement period are to be recognized retrospectively. ASU 2015-16 will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Earlier application is permitted for financial statements that have not been issued, therefore the Company has elected to early adopt this ASU as of and for its quarter ended June 30, 2016. The adoption of ASU 2015-16 in the third quarter of 2016 did not have a material impact on the Company's consolidated balance sheet or consolidated statement of comprehensive income. See also Note 3 to these consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which implements a common revenue standard that clarifies the principles for recognizing revenue. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. In August 2015, the FASB issued ASU No. 2015-14 which deferred the effective date of ASU No. 2014-09 to annual reporting periods beginning after December 15, 2017. In March 2016, the FASB issued ASU No. 2016-08, which intends to improve the operability and understandability of the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU No. 2016-10, which clarifies guidance pertaining to the identification of performance obligations and the licensing implementation. In May 2016, the FASB issued ASU Nos. 2016-11 and 2016-12, which further clarify guidance and provide practical expedients related to the adoption of ASU No. 2014-09. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is currently evaluating the potential impact of these standards on our financial statements. |
Acquisition Activity |
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition Activity | Acquisition Activity On May 16, 2016, the Company acquired by merger 100% of HF Financial Corp ("HF Financial"), the holding company of Home Federal Bank. Under terms of the agreement, HF Financial's stockholders had the right to receive for each share of HF Financial common stock, at their election (but subject to proration in the event cash or stock is oversubscribed), either (i) 0.6500 share of the Company's common stock, or (ii) $19.50 in cash. The total consideration was prorated as necessary to ensure that 24.29% of the total outstanding shares of HF Financial common stock were exchanged for cash and 75.71% of the total outstanding shares of HF Financial common stock were exchanged for shares of the Company's common stock. Total merger consideration of $142.0 million was paid by the Company in the acquisition, which resulted in goodwill of $40.7 million, as shown in the table below. With this acquisition, the Company expanded its presence into North Dakota and Minnesota through the addition of 23 bank offices and experienced in-market teams. The Company projects increased revenues from additional locations and customers and cost savings will be recognized in future periods through the elimination of redundant operations. The following summarizes consideration paid and an allocation of purchase price to net assets acquired.
Goodwill of $40.7 million arising from the acquisition arose as a result of consideration in excess of net assets acquired. The amount of goodwill that is expected to be deductible for income tax purposes is $0.0 million. The fair value of intangible assets created in the acquisition was $7.9 million related to core deposits and other intangible assets. The following table summarizes the assets acquired and liabilities assumed which were recorded on the consolidated balance sheet as of the date of merger of HF Financial:
The Company accounted for the aforementioned business combination under the acquisition method in accordance with ASC Topic 805, Business Combinations. Accordingly, the purchase price is allocated to the fair value of the assets acquired and liabilities assumed as of the date of acquisition. The foregoing purchase price allocations on the acquisition are preliminary and will be finalized upon the receipt of final valuations on certain assets and liabilities. Upon receipt of final fair value estimates, which must be within one year of the acquisition date, the Company will make any final adjustments to the purchase price allocation and retrospectively adjust any goodwill recorded. Material adjustments to acquisition date estimated fair values would be recorded in the reporting period in which the adjustment amounts are determined. Information regarding the Company’s loan discount and related deferred tax asset, core deposit intangible asset and related deferred tax liability, as well as income taxes payable and the related deferred tax balances recorded in the acquisition may be adjusted as the Company refines its estimates. Determining the fair value of assets and liabilities, particularly illiquid assets and liabilities, is a complicated process involving significant judgment regarding estimates and assumptions used to calculate estimated fair value. Fair value adjustments based on updated estimates could materially affect the goodwill recorded on the acquisition. The Company may incur losses on the acquired loans that are materially different from losses the Company originally projected. The results of the merged HF Financial operations are presented within the Company’s consolidated financial statements from the acquisition date. The disclosure of HF Financial's post-acquisition revenue and net income is not practical due to the combining of HF Financial’s operations with and into the Company as of the acquisition date. Acquisition-related transaction expenses associated with the HF Financial acquisition totaled $12.2 million and $12.9 million during the three and nine months ended June 30, 2016, respectively, and $0.0 million for the three and nine months ended June 30, 2015. Supplemental unaudited pro forma information The following unaudited pro forma combined results of operations of the Company and HF Financial presents results as if the acquisition had been completed as of the beginning of each period indicated. The unaudited pro forma combined results of operations are presented solely for information purposes and are not intended to represent or be indicative of the consolidated results of operations that the Company would have reported had this transaction been completed as of the dates and for the periods presented, nor are they necessarily indicative of future results. In particular, no adjustments have been made to eliminate the amount of HF Financial's provision for loan and lease losses incurred prior to the acquisition date that would not have been necessary had the acquired loans been recorded at fair value as of the beginning of each period indicated. In accordance with Article 11 of SEC Regulation S-X, transaction costs directly attributable to the acquisition have been excluded.
In the acquisition, the Company acquired $863.7 million of loans at fair value, net of $28.5 million, or 3.30%, estimated discount to the outstanding principal balance. Of the total loans acquired, management identified $65.4 million that were considered to be credit impaired and are accounted for under ASC Topic 310-30. The table below summarizes the total contractually required principal and interest cash payments, management's estimate of expected total cash payments and fair value of the loans as of acquisition date for purchased credit impaired loans. Contractually required principal and interest payments have been adjusted for estimated prepayments.
The following table presents the acquired loan data for the HF Financial acquisition.
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Securities Available for Sale |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities Available for Sale | Securities Available for Sale The amortized cost and approximate fair value of investments in securities, all of which are classified as available for sale according to management’s intent, are summarized as follows (in thousands):
The amortized cost and approximate fair value of debt securities available for sale as of June 30, 2016 and September 30, 2015, by contractual maturity, are shown below. Maturities of mortgage-backed securities may differ from contractual maturities because the mortgages underlying the securities may be called or repaid without any penalties.
Proceeds from sales of securities available for sale were $120.9 million and $0.0 million for the three months ended June 30, 2016 and 2015, respectively, and $145.9 million and $55.1 million for the nine months ended June 30, 2016 and 2015, respectively. Gross gains (pre-tax) of $0.1 million and $0.0 million and gross losses (pre-tax) of $0.0 million and $0.0 million were realized on the sales for the three months ended June 30, 2016 and 2015, respectively. Gross gains (pre-tax) of $0.2 million and $0.6 million and gross losses (pre-tax) of $0.0 million and $0.5 million were realized on the sales for the nine months ended June 30, 2016 and 2015, respectively, using the specific identification method. The Company recognized an other-than-temporary impairment in net loss on sale of securities in the consolidated statements of comprehensive income of $0.0 million and $0.4 million on two security holdings attributable to credit for the three and nine months ended June 30, 2016. There was no other-than-temporary impairment recognized for the three and nine months ended June 30, 2015. Securities with an estimated fair value of approximately $1.08 billion and $894.3 million at June 30, 2016 and September 30, 2015, respectively, were pledged as collateral on public deposits, securities sold under agreements to repurchase, and for other purposes as required or permitted by law. The counterparties do not have the right to sell or pledge the securities the Company has pledged as collateral. As detailed in the following tables, certain investments in debt securities, which are approximately 15% and 36% of the Company’s investment portfolio at June 30, 2016 and September 30, 2015, respectively, are reported in the consolidated financial statements at an amount less than their amortized cost. Based on evaluation of available evidence, including recent changes in market interest rates, credit rating information, implicit or explicit government guarantees, and information obtained from regulatory filings, management believes the declines in fair value of these securities are temporary. As the Company does not intend to sell the securities and it is not more likely than not that the Company will be required to sell the securities before the recovery of their amortized cost basis, which may be maturity, the Company does not consider the securities to be other-than-temporarily impaired at June 30, 2016 or September 30, 2015. The following table presents the Company’s gross unrealized losses and approximate fair value in investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position (in thousands):
As of June 30, 2016 and September 30, 2015, the Company had 30 and 31 securities, respectively, in an unrealized loss position. The majority of the Company’s investments in nonmarketable equity securities are stock of the Federal Home Loan Bank ("FHLB"). The carrying value of Federal Home Loan Bank stock was $48.8 million and $35.7 million as of June 30, 2016 and September 30, 2015, respectively, and is reported in other assets on the consolidated balance sheets. No indicators of impairment related to FHLB stock were identified during the three and nine months ended June 30, 2016 and 2015, respectively. The components of accumulated other comprehensive income (loss) from net unrealized gains (losses) on securities available for sale for the three and nine months ended June 30, 2016 and 2015, respectively are as follows (in thousands):
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Loans |
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans | Loans The composition of loans as of June 30, 2016 and September 30, 2015, is as follows (in thousands):
The loan breakouts above include loans covered by FDIC loss sharing agreements totaling $80.1 million and $97.0 million as of June 30, 2016 and September 30, 2015, respectively, residential real estate loans held for sale totaling $21.3 million and $9.9 million at June 30, 2016 and September 30, 2015, respectively, and $1.16 billion and $1.12 billion of loans and written loan commitments accounted for at fair value at June 30, 2016 and September 30, 2015, respectively. Unamortized net deferred fees and costs totaled $7.7 million and $7.5 million as of June 30, 2016 and September 30, 2015, respectively. Loans in process represent loans that have been funded as of the balance sheet dates but not classified into a loan category and loan payments received as of the balance sheet dates that have not been applied to individual loan accounts. Loans in process totaled $5.0 million and $(0.7) million at June 30, 2016 and September 30, 2015, respectively. Loans guaranteed by agencies of the U.S. government totaled $128.0 million and $105.0 million at June 30, 2016 and September 30, 2015, respectively. Principal balances of residential real estate loans sold totaled $64.2 million and $79.5 million for the three months ended June 30, 2016 and 2015, respectively, and $172.8 million and $213.4 million for the nine months ended June 30, 2016 and 2015, respectively. Nonaccrual The following table presents the Company’s nonaccrual loans at June 30, 2016 and September 30, 2015 (in thousands), excluding ASC 310-30 loans. Loans greater than 90 days past due and still accruing interest as of June 30, 2016 and September 30, 2015, were not significant.
Credit Quality Information The composition of the loan portfolio by internally assigned grade is as follows as of June 30, 2016 and September 30, 2015. This table (in thousands) is presented net of unamortized discount on acquired loans and excludes loans measured at fair value with changes in fair value reported in earnings of $1.16 billion at June 30, 2016 and $1.12 billion at September 30, 2015:
Past Due Loans The following table (in thousands) presents the Company’s past due loans at June 30, 2016 and September 30, 2015. This table is presented net of unamortized discount on acquired loans and excludes loans measured at fair value with changes in fair value reported in earnings of $1.16 billion at June 30, 2016 and $1.12 billion at September 30, 2015.
Impaired Loans The following table presents the Company’s impaired loans (in thousands). This table excludes loans covered by FDIC loss sharing agreements:
There are no impaired loans without a valuation allowance, other than those loans for which the Company has claim to collateral with value(s) in excess of the outstanding loan amount, after allowing for the cost of liquidating the collateral as of June 30, 2016 and September 30, 2015. The average recorded investment on impaired loans and interest income recognized on impaired loans for the three and nine months ended June 30, 2016 and 2015, respectively, are as follows (in thousands):
Valuation adjustments made to repossessed properties for the three months ended June 30, 2016 and 2015, totaled $0.5 million and $1.2 million, respectively and $1.0 million and $5.6 million for the nine months ended June 30, 2016 and 2015, respectively. The adjustments are included in noninterest expense. Troubled Debt Restructurings Included in certain loan categories in the impaired loans are troubled debt restructurings (“TDRs”) that were classified as impaired. These TDRs do not include purchased credit impaired loans. When the Company grants concessions to borrowers such as reduced interest rates or extensions of loan periods that would not be considered other than because of borrowers’ financial difficulties, the modification is considered a TDR. Specific reserves included in the allowance for loan and lease losses for TDRs were $10.0 million and $3.6 million at June 30, 2016 and September 30, 2015, respectively. Commitments to lend additional funds to borrowers whose loans were modified in a TDR were $0.2 million and $2.3 million as of June 30, 2016 and September 30, 2015, respectively. The following table presents the recorded value of the Company’s TDR balances as of June 30, 2016 and September 30, 2015 (in thousands):
The following table presents a summary of all accruing loans restructured in TDRs during the three months ended June 30, 2016 and 2015, respectively:
The following table presents a summary of all accruing loans restructured in TDRs during the nine months ended June 30, 2016 and 2015, respectively:
The following table presents a summary of all non-accruing loans restructured in TDRs during the three months ended June 30, 2016 and 2015:
The following table presents a summary of all non-accruing loans restructured in TDRs during the nine months ended June 30, 2016 and 2015:
The tables below represent defaults on loans that were first modified during the respective past 12 months, that became 90 days or more delinquent or were charged-off during the three and nine months ended June 30, 2016 and 2015, respectively.
The majority of loans that were modified and subsequently became 90 days or more delinquent have remained on nonaccrual status since the time of modification. For the three months ended June 30, 2016, there were $17.9 million of loans removed from TDR status as they were restructured at market terms and are performing. There were no significant loans removed from TDR status for the three months ended June 30, 2015. |
Allowance for Loan and Lease Losses |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for Loan and Lease Losses | Allowance for Loan and Lease Losses The following tables presents the Company’s allowance for loan and lease losses roll forward for the three and nine months ended June 30, 2016 and 2015 (in thousands):
The following tables provide details regarding the allowance for loan and lease losses and balance by type of allowance. These tables (in thousands) are presented net of unamortized discount on acquired loans and excludes loans of $1.16 billion measured at fair value (and the associated credit mark embedded within the carrying value of these loans) with changes in fair value reported in earnings, loans held for sale of $21.3 million, and guaranteed loans of $128.0 million for June 30, 2016 and loans measured at fair value with changes in fair value reported in earnings of $1.12 billion, loans held for sale of $9.9 million, and guaranteed loans of $105.0 million for September 30, 2015.
The Company maintains an ALLL for acquired loans accounted for under ASC 310-30 as a result of impairment to loan pools arising from the periodic re-valuation of these loans. Any impairment in the individual pool is generally recognized in the current period as provision for loan and lease losses. Any improvement in the estimated cash flows, is generally not recognized immediately, but is instead reflected as an adjustment to the related loan pools yield on a prospective basis once any previously recorded impairment has been recaptured. The ALLL for ASC 310-30 loans totaled $2.1 million at June 30, 2016, compared to $2.8 million at September 30, 2015. During the three and nine month period ended June 30, 2016, loan pools accounted for under ASC 310-30 had a net reversal of provision of $0.4 million and $0.6 million, respectively, as a result of increases in expected cash flows. Net provision reversals for the three and nine month period ended June 30, 2015 totaled $0.6 million and $1.2 million, and were driven a result of increases in expected cash flows in the residential real estate pool. For acquired loans not accounted for under ASC 310-20 (purchased non-credit impaired), the Company utilizes specific and collective reserve calculation methods similar to originated loans. The required ALLL for these loans is included in the individually evaluated for impairment bucket of the ALLL if the loan is rated substandard or worse, and in the collectively evaluated for impairment bucket for pass rated loans. The reserve for unfunded loan commitments was $0.5 million at June 30, 2016 and $0.4 million at September 30, 2015 and is recorded in other liabilities on the consolidated balance sheets. |
Accounting for Certain Loans Acquired with Deteriorated Credit Quality |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting for Certain Loans Acquired with Deteriorated Credit Quality | Accounting for Certain Loans Acquired with Deteriorated Credit Quality In June 2010 and May 2016, the Company acquired certain loans that had deteriorated credit quality (ASC 310-30 loans). Loan accounting specific to these purchased credit impaired loans addresses differences between contractual cash flows expected to be collected from the initial investment in loans if those differences are attributable, at least in part, to credit quality. Several factors were considered when evaluating whether a loan was considered a purchased credit impaired loan, including the delinquency status of the loan, updated borrower credit status, geographic information, and updated loan-to-values (“LTV”). U.S. GAAP allows purchasers to aggregate purchased credit impaired loans acquired in the same fiscal quarter in one or more pools, provided that the loans have common risk characteristics. A pool is then accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows. Loan pools are periodically reassessed to determine expected cash flows. In determining the expected cash flows, the timing of cash flows and prepayment assumptions for smaller, homogeneous loans are based on statistical models that take into account factors such as the loan interest rate, credit profile of the borrowers, the years in which the loans were originated, and whether the loans are fixed or variable rate loans. Prepayments may be assumed on large individual loans that consider similar prepayment factors listed above for smaller homogeneous loans. The re-assessment of purchased credit impaired loans resulted in the following changes in the accretable yield during the three and nine months ended June 30, 2016 and 2015 (in thousands):
The reclassification from nonaccretable difference noted in the table above represents instances where specific pools of loans are expected to perform better over the remaining lives of the loans than expected at the prior re-assessment date. The reclassification to nonaccretable difference noted in the table above represents instances where specific pools of loans are estimated to have a shortfall in the expected future cash flows compared to the contractual cash flows at the prior re-assessment date. The following table provides purchased credit impaired loans at June 30, 2016 and September 30, 2015 (in thousands):
1 Represents the legal balance of loans acquired with deteriorated credit quality. 2 Represents the book balance of loans acquired with deteriorated credit quality. 3 Represents the book balance of loans acquired with deteriorated credit quality net of the related allowance for loan and lease losses. Due to improved cash flows of the purchased credit impaired loans, the reductions to allowance recognized on previous impairments were $0.4 million and $0.9 million for the three months ended June 30, 2016 and 2015, respectively and $0.6 million and $1.9 million for the nine months ended June 30, 2016 and 2015, respectively. |
FDIC Indemnification Asset |
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Banking and Thrift [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FDIC Indemnification Asset | FDIC Indemnification Asset Under the terms of the purchase and assumption agreement with the FDIC with regard to the TierOne Bank acquisition, the Company is reimbursed for a portion of the losses incurred on covered assets. As covered assets are resolved, whether it be through repayment, short sale of the underlying collateral, the foreclosure on or sale of collateral, or the sale or charge-off of loans or OREO, any differences between the carrying value of the covered assets versus the payments received during the resolution process, that are reimbursable by the FDIC, are recognized as reductions in the FDIC indemnification asset. Any gains or losses realized from the resolution of covered assets reduce or increase, respectively, the amount recoverable from the FDIC. The following table represents a summary of the activity related to the FDIC indemnification asset for the three and nine months ended June 30, 2016 and 2015 (in thousands):
The loss claims filed are subject to review, approval, and annual audits by the FDIC or its assigned agents for compliance with the terms in the loss sharing agreements. The non-commerical loss share agreement ends June 4, 2020. |
Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | Derivative Financial Instruments In the normal course of business, the Company uses interest rate swaps to manage its interest rate risk and market risk in accommodating the needs of its customers. Also, the Company enters into interest rate lock commitments on mortgage loans to be held for sale, with corresponding forward sales contracts related to these interest rate lock commitments. Derivative instruments are recognized as either assets or liabilities in the accompanying consolidated financial statements and are measured at fair value. The following table summarizes the notional amounts and estimated fair values of the Company’s derivative instruments at June 30, 2016 and September 30, 2015 (in thousands):
As with any financial instrument, derivative financial instruments have inherent risk including adverse changes in interest rates. The Company’s exposure to derivative credit risk is defined as the possibility of sustaining a loss due to the failure of the counterparty to perform in accordance with the terms of the contract. Credit risks associated with interest rate swaps are similar to those relating to traditional on-balance sheet financial instruments. The Company manages interest rate swap credit risk with the same standards and procedures applied to its commercial lending activities. Amounts due from swap counterparties to reclaim cash collateral under the interest rate swap master netting arrangements have not been offset against the derivative balances. Credit-risk-related contingent features The Company has agreements with its derivative counterparties that contain a provision where if the Company fails to maintain its status as a well/adequately capitalized institution, then the counterparty has the right to terminate the derivative positions and the Company would be required to settle its obligations under the agreements. As of June 30, 2016, the termination value of derivatives in a net liability position related to these agreements was $93.4 million which includes accrued interest but excludes any adjustment for nonperformance risk. The Company has minimum collateral posting thresholds with its derivative counterparties and as of June 30, 2016, the Company had posted $101.6 million in eligible collateral. The effect of derivatives on the consolidated statements of comprehensive income for the three and nine months ended June 30, 2016 and 2015 (in thousands) was as follows:
Netting of Derivatives The Company has various financial assets and financial liabilities that are subject to enforceable master netting agreements or similar agreements. The Company has entered into an ISDA master netting arrangement with various swap counterparties. Under the terms of the master netting arrangements, all transactions between the Company and the counterparty constitute a single business relationship such that in the event of default, the non-defaulting party is entitled to set off claims and apply property held by that party in respect of any transaction against obligations owed. Any payments, deliveries, or other transfers may be applied against each other and netted. The following tables (in thousands) present the Company's total gross derivative assets and liabilities at June 30, 2016 and September 30, 2015, which are adjusted on an aggregate basis, where applicable, to take into consideration the effects of legally enforceable master netting agreements for the net reported amount in the consolidated balance sheets. These amounts are offset on the consolidated balance sheets.
1 The actual amount of collateral exceeds the fair value exposure, at the individual counterparty level, as of the date presented.
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The Fair Value Option For Certain Loans |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The Fair Value Option For Certain Loans | The Fair Value Option For Certain Loans The Company has elected to measure certain long-term loans and written loan commitments at fair value to assist in managing the interest rate risk for longer-term loans. This fair value option was elected upon the origination of these loans. Interest income is recognized in the same manner as interest on non-fair value loans. See Note 19 for additional disclosures regarding the fair value of the fair value option loans and written loan commitments. Long-term loans and written loan commitments for which the fair value option has been elected had a net favorable difference between the aggregate fair value and the aggregate unpaid loan principal balance and written loan commitment amount of approximately $83.0 million and $47.8 million at June 30, 2016 and September 30, 2015, respectively. The total unpaid principal balance of these long-term loans was approximately $1.07 billion and $1.07 billion at June 30, 2016 and September 30, 2015, respectively. The fair value of these loans and written loan commitments is included in total loans in the consolidated balance sheets and are grouped with commercial non real estate, commercial real estate, and agricultural loans in Note 5. The fair value of these written loan commitments was not material at June 30, 2016 and September 30, 2015, respectively. As of June 30, 2016 and September 30, 2015, there were loans with a fair value of $9.0 million and $1.5 million, respectively, which were greater than 90 days past due or in nonaccrual status with an unpaid principal balance of $11.0 million and $1.7 million, respectively. Changes in fair value for items for which the fair value option has been elected and the line items in which these changes are reported within the consolidated statements of comprehensive income are as follows for the three and nine months ended June 30, 2016 and 2015 (in thousands):
For long-term loans and written loan commitments, $2.7 million and $0.0 million for the three months ended June 30, 2016 and 2015, respectively, and $2.3 million and $0.5 million for the nine months ended June 30, 2016 and 2015, respectively, of the total change in fair value is attributable to changes in specific credit risk. The gains or losses attributable to changes in instrument-specific credit risk were determined based on an assessment of existing market conditions and credit quality of the underlying loan for the specific portfolio of loans. |
Goodwill |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill | Goodwill A summary of changes to the carrying amount of goodwill is as follows (in thousands):
The goodwill acquired in 2016 was a result of the HF Financial acquisition. See Note 3 for further information. |
Core Deposits and Other Intangibles |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Core Deposits and Other Intangibles | Core Deposits and Other Intangibles A summary of intangible assets subject to amortization is as follows (in thousands):
Amortization expense of intangible assets was $0.7 million and $1.8 million for the three months ended June 30, 2016 and 2015, respectively, and $2.1 million and $6.4 million for the nine months ended June 30, 2016 and 2015, respectively. The estimated amortization expense of intangible assets assumes no activities, such as acquisitions, which would result in additional amortizable intangible assets. Estimated amortization expense of intangible assets in subsequent fiscal years is as follows (in thousands):
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Loan Servicing Rights |
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Transfers and Servicing [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loan Servicing Rights | Loan Servicing Rights Mortgage loans serviced for others are not included in the accompanying consolidated statements of financial condition. The following table is the activity for loan servicing rights and the related valuation allowance (in thousands):
Amortization of servicing rights is adjusted each quarter based upon analysis of portfolio attributes and factors, including an evaluation of historical prepayment activity and prospective industry consensus data. An independent third party is utilized to calculate the amortization and valuation based upon specific loan characteristics, prepayment speeds generated from a validation model utilizing both empirical and market derived data and discount rates. At June 30, 2016, the constant prepayment rates (CPR) used to calculate the amortization averaged 16.4%. For valuation purposes, an average discount rate of 11.6% was utilized at June 30, 2016. Based on the Company's analysis of mortgage servicing rights, a $0.2 million valuation reserve was recorded at June 30, 2016 and $0.0 million at June 30, 2015. |
Securities Sold Under Agreements to Repurchase |
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Federal Funds Purchased and Securities Sold under Agreements to Repurchase [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities Sold Under Agreements to Repurchase | Securities Sold Under Agreements to Repurchase Securities sold under agreements to repurchase generally mature overnight following the transaction date. Securities underlying the agreements had an amortized cost of approximately $161.8 million and $180.6 million and fair value of approximately $163.0 million and $181.6 million at June 30, 2016 and September 30, 2015, respectively. In most cases, the Company over-collateralizes the repurchase agreements at 102% of total funds borrowed to protect the purchaser from changes in market value. Additionally, the Company utilizes held-in-custody procedures to ensure the securities sold under repurchase agreements are unencumbered. The following tables present the gross obligation by the class of collateral pledged and the remaining contractual maturity of the agreements at June 30, 2016 and September 30, 2015 (in thousands).
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FHLB Advances and Other Borrowings |
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Federal Home Loan Banks [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FHLB Advances and Other Borrowings | FHLB Advances and Other Borrowings FHLB advances and other borrowings consist of the following at June 30, 2016 and September 30, 2015 (in thousands):
The Company has a $10.0 million revolving line of credit with Wells Fargo, which expires on July 28, 2017. The line of credit has an interest rate of 1 Month LIBOR plus 200 basis points, with interest payable monthly. There is also an unused line fee of .20% on the unused portion which is payable quarterly. The interest rate was 2.47% at June 30, 2016. There were $0.0 million outstanding advances on this line of credit at June 30, 2016 and September 30, 2015. As of June 30, 2016, based on its Federal Home Loan Bank stock holdings, the combined aggregate additional borrowing capacity of the Company with the Federal Home Loan Bank was $684.7 million. Principal balances of loans pledged to the Federal Home Loan Bank to collateralize notes payable totaled $3.11 billion and $2.29 billion at June 30, 2016 and September 30, 2015, respectively. As of June 30, 2016, FHLB advances and other borrowings are due or callable (whichever is earlier) in subsequent fiscal years as follows (in thousands):
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Subordinated Debentures and Subordinated Notes Payable |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Subordinated Debentures and Subordinated Notes Payable | Subordinated Debentures and Subordinated Notes Payable Junior Subordinated Deferrable Interest Debentures The Company has caused seven trusts to be created (or assumed as part of the HF Financial and Sunstate Bank acquisitions) that have issued and outstanding 78,400 shares, $1,000 par value, of Company Obligated Mandatorily Redeemable Preferred Securities (the "Preferred Securities"). These seven trusts were established and exist for the sole purpose of issuing the Preferred Securities and investing the proceeds in junior subordinated deferrable interest debentures (the "Debentures") issued by the Company. The Debentures constitute the sole assets of the seven trusts. The Preferred Securities provide for cumulative cash distributions calculated at a rate based on three-month LIBOR plus a range from 1.48% to 3.35% adjusted quarterly. The Company may, at one or more times, defer interest payments on the Debentures for up to 20 consecutive quarters following suspension of dividends on all capital stock, but not beyond the respective maturity date. At the end of any deferral period, all accumulated and unpaid interest must be paid. The Debentures have redemption dates ranging from January 7, 2033 to October 1, 2037; however, the Company has the option to shorten the respective maturity date for all seven Preferred Securities as the call option date has passed. Holders of the Preferred Securities have no voting rights. The Preferred Securities are unsecured and rank junior in priority of the payment to all of the Company's indebtedness and senior to the Company's common and preferred stock. The trusts’ ability to pay amounts due on the Preferred Securities is solely dependent upon the Company making payment on the related Debentures. The Company’s obligation under the Debentures and relevant trust agreements constitute a full, irrevocable, and unconditional guarantee on a subordinated basis by it of the obligations of the trusts under the Preferred Securities. For regulatory purposes the Debentures qualify as elements of capital. $77.1 million and $56.1 million of Debentures were eligible for treatment as Tier 1 capital, respectively, as of June 30, 2016 and 2015. Relating to the trusts, the Company held as assets $2.5 million and $1.7 million in common shares at June 30, 2016 and 2015, respectively, which are included in other assets on the consolidated balance sheets. Subordinated Notes Payable In 2015, the Company issued $35.0 million of 4.875% fixed-to-floating rate subordinated notes that mature on August 15, 2025 through a private placement. The notes, which qualify as Tier 2 capital under capital rules in effect at June 30, 2016, have an interest rate of 4.875% per annum, payable semi-annually on each February 15 and August 15, which commenced on February 15, 2016 until August 15, 2020. From August 15, 2020, to but excluding the maturity date or date of earlier redemption, the notes will bear interest at a rate per annum equal to to three-month LIBOR for the related interest period plus 3.15%, payable quarterly on each November 15, February 15, April 15 and August 15. The notes are subordinated in right of payment to all of the Company's senior indebtedness and effectively subordinated to all existing and future debt and all other liabilities of the Company's subsidiary bank. The Company may elect to redeem the notes (subject to regulatory approval), in whole or in part, on any early redemption date which is any interest payment date on or after August 15, 2020 at a redemption price equal to 100% of the principal amount plus any accrued and unpaid interest. Other than on an early redemption date, the notes cannot be accelerated except in the event of bankruptcy or the occurrence of certain other events of bankruptcy, insolvency or reorganization. Proceeds from the private placement of subordinated notes repaid outstanding subordinated debt. Subordinated debentures and subordinated notes payable are summarized as follows (in thousands):
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Profit-Sharing Plan and Defined Benefit Plans |
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Profit-Sharing Plan and Defined Benefit Plans | Profit-Sharing and Defined Benefit Plans Profit Sharing Plan The Company participates in a multiple employer 401(k) profit sharing plan (the Plan). All employees are eligible to participate, beginning with the first day of the month coincident with or immediately following the completion of one year of service and having reached the age of 21. In addition to employee contributions, the Company may contribute discretionary amounts for eligible participants. Contribution rates for participating employees must be equal. The Company contributed $1.2 million and $1.1 million to the Plan for the three months ended June 30, 2016 and 2015, respectively and $3.2 million and $2.9 million for the nine months ended June 30, 2016 and 2015, respectively. Defined Benefit Plan The Company acquired a noncontributory (cash balance) defined benefit pension plan from HF Financial which covers employees of HF Financial and its wholly-owned subsidiaries. Effective July 1, 2015, the Company froze the plan which eliminates future contributions for qualified individuals. The plan has not been terminated, so the plan continues to exist with related benefit obligations and plan assets for those vested within the plan. Information relative to the components of net periodic benefit cost measured at/or for the three and nine months ended June 30, 2016 and 2015 for the defined benefit plan is presented below (in thousands):
The Company does not anticipate funding any contributions for fiscal 2016. |
Stock-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation On September 26, 2014, the Board of Directors adopted, and on October 10, 2014, NAB, at that time our controlling shareholder, approved the Great Western Bancorp, Inc. 2014 Omnibus Incentive Compensation Plan (the “2014 Plan”), the Great Western Bancorp, Inc. 2014 Non-Employee Director Plan (the “2014 Director Plan”), and the Great Western Bancorp, Inc. Executive Incentive Compensation Plan (the “Bonus Plan”), collectively ("the Plans"), which provide for the issuance of restricted share units and performance based share units to certain officers, employees and directors of the Company. The Plans were primarily established to enhance the Company’s ability to attract, retain and motivate employees. The Company’s Board of Directors, the Compensation Committee of the Board of Directors ("Compensation Committee"), or executive management upon delegation of the Compensation Committee has exclusive authority to select the employees and others, including directors, to receive the awards and to establish the terms and conditions of each award made pursuant to the Company’s stock-based compensation plans. Stock units issued under the Company’s restricted and performance based stock plans may not be sold or otherwise transferred until the vesting period (typically 3 years) has been met and/or performance objectives have been obtained. During the vesting periods, participants do not have voting rights and dividends are accumulated until the time upon which the award vests. Upon specified events, as defined in the Plans, stock unit awards that have not vested and/or performance hurdles that have not been met will be forfeited. Based on the substantive terms of each award, restricted and performance-based awards are classified as equity awards and accounted for under the Treasury method. The fair value of equity-classified awards is based on the market price of the stock on the measurement date and is amortized as compensation expense on a straight-line basis over the vesting or performance period. Stock based compensation is recognized based on the number of awards that are ultimately expected to vest. Forfeitures are estimated based on historical turnover experience of qualified employees. For performance-based stock awards, an estimate is made of the number of shares expected to vest as a result of actual performance against the performance targets to determine the amount of compensation expense to be recognized. The estimate is reevaluated quarterly and total compensation expense is adjusted for any change in the current period. Stock-based compensation expense is included in salaries and employee benefits expense in the consolidated statements of comprehensive income. For the three months ended June 30, 2016 and 2015, stock compensation expense was $0.9 million and $0.3 million, respectively. For the nine months ended June 30, 2016 and 2015, stock compensation expense was $2.7 million and $1.0 million, respectively. Related income tax benefits recognized were $0.3 million and $0.1 million for the three months ended June 30, 2016 and 2015, respectively and $1.0 million and $0.4 million for the nine months ended June 30, 2016 and 2015, respectively. The following is a summary of the Plans’ restricted share and performance-based stock award activity as of June 30, 2016 and September 30, 2015:
The number of performance shares granted is reflected in the above table at the 100% target performance level. The actual performance-based award payouts will vary based on the achievement of the pre-established targets and can range from 0% to 150% of the target amount. The outstanding number of performance shares reflected in the table represents the number of shares expected to be awarded based on estimated achievement of the goals as of June 30, 2016. The maximum number of performance-based shares that could be issued if performance is attained at 150% of target based on the grants made to date was approximately 359,853 shares at June 30, 2016. As of June 30, 2016, there was $4.9 million of unrecognized compensation cost related to nonvested restricted stock awards expected to be recognized over a period of 2.4 years. The fair value of the vested, but not issued stock awards at June 30, 2016, was $0.8 million. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The Company measures, monitors and discloses certain of its assets and liabilities on a fair value basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value guidance also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The guidance describes three levels of inputs that may be used to measure fair value are as follows: Level 1 Quoted prices in active markets for identical assets or liabilities
Level 1 inputs are considered to be the most transparent and reliable and Level 3 inputs are considered to be the least transparent and reliable. The Company assumes the use of the principal market to conduct a transaction of each particular asset or liability being measured and then considers the assumptions that market participants would use when pricing the asset or liability. Whenever possible, the Company first looks for quoted prices for identical assets or liabilities in active markets (Level 1 inputs) to value each asset or liability. However, when inputs from identical assets or liabilities on active markets are not available, the Company utilizes market observable data for similar assets and liabilities. The Company maximizes the use of observable inputs and limits the use of unobservable inputs to occasions when observable inputs are not available. The need to use unobservable inputs generally results from the lack of market liquidity of the actual financial instrument or of the underlying collateral. Although in some instances, third party price indications may be available, limited trading activity can challenge the observability of these quotations. Assets and Liabilities Measured at Fair Value on a Recurring Basis Following is a description of the valuation methodologies and inputs used for assets and liabilities measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such assets and liabilities pursuant to the valuation hierarchy. Securities Available for Sale Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities include U.S. Treasury securities and U.S. Agency securities. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows and classified as Level 2 securities. Level 2 securities include agency mortgage-backed, states and political subdivisions, corporate debt, and other securities. Where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy. Interest Rate Swaps and Loans Interest rate swaps are valued by the Company's Swap Dealers using LIBOR rates. The fair value of loans accounted for under the fair value option represents the net carrying value of the loan, plus the equal and opposite amount of the value of the swap needed to hedge the interest rate risk and an adjustment for credit risk based on our assessment of existing market conditions for the specific portfolio of loans. This is used due to the strict prepayment penalties put in the loan terms to cover the cost of exiting the hedge of the loans in the case of early prepayment or termination. The adjustment for credit risk on loans accounted for under the fair value option is not significant to the overall fair value of the loans. The fair values estimated by the Company's Swap Dealers use interest rates that are observable or that can be corroborated by observable market data and, therefore, are classified within Level 2 of the valuation hierarchy. The Company is required to post cash collateral to swap counterparties for interest rate derivative contracts that are in a liability position, thus a credit risk adjustment on interest rate swaps is not warranted. Cash Value of Life Insurance Fair value is equal to the cash surrender value of the life insurance policies. The following table presents the fair value measurements of assets and liabilities recognized in the accompanying consolidated balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at June 30, 2016 and September 30, 2015 (in thousands):
The following table presents the changes in Level 3 financial instruments for the three and nine months ended June 30, 2016 and 2015 (in thousands):
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis Following is a description of the valuation methodologies used for assets and liabilities measured at fair value on a nonrecurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such assets and liabilities pursuant to the valuation hierarchy. Impaired Loans (Collateral Dependent) Loans for which it is probable that the Company will not collect all principal and interest due according to contractual terms are measured for impairment. Allowable methods for estimating fair value include using the fair value of the collateral for collateral dependent loans or, where a loan is determined not to be collateral dependent, using the discounted cash flow method. If the impaired loan is identified as collateral dependent, then the fair value method of measuring the amount of the impairment is utilized. This method requires obtaining a current independent appraisal of the collateral and applying a discount factor, if necessary, to the appraised value and including costs to sell. Because many of these inputs are not observable, the measurements are classified as Level 3. Other Real Estate Owned (OREO) Other real estate owned consists of loan collateral that has been repossessed through foreclosure. This collateral is comprised of commercial and residential real estate. OREO is recorded initially at fair value of the collateral less estimated selling costs. Subsequent to foreclosure, valuations are updated periodically, and the assets may be marked down further to fair value less selling costs, reflecting a valuation allowance. Fair value measurements may be based upon appraisals, third-party price opinions, or internally developed pricing methods. These measurements are classified as Level 3. Mortgage Loans Held for Sale Fair value of mortgage loans held for sale is based on either quoted prices for the same or similar loans, or values obtained from third parties, or are estimated for portfolios of loans with similar financial characteristics and are therefore considered a Level 2 valuation. Loan Servicing Rights Fair value is determined at a tranche level, based on market prices for comparable mortgage servicing contracts (Level 3), when available, or alternatively based on a valuation model that calculates the present value of estimated future net servicing income. The valuation model utilizes interest rate, prepayment speed, and default rate assumptions that market participants would use in estimating future net servicing income and that can be validated against market data (Level 3). The following tables present the fair value measurement of assets and liabilities measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at June 30, 2016 and September 30, 2015 (in thousands):
The valuation techniques and significant unobservable inputs used to measure Level 3 fair value measurements at June 30, 2016 were as follows (in thousands):
Disclosures about Fair Value of Financial Instruments For financial instruments that have quoted market prices, those quotes are used to determine fair value. Financial instruments that have no defined maturity, have a remaining maturity of 180 days or less, or reprice frequently to a market rate are assumed to have a fair value that approximates carrying value, after taking into consideration any applicable credit risk. If no market quotes are available, financial instruments are valued by discounting the expected cash flows using an estimated current market interest rate for the financial instrument. The short maturity of the Company’s assets and liabilities results in having a significant number of financial instruments whose fair value equals or closely approximates carrying value. Such financial instruments are reported in the following consolidated balance sheet categories: cash and due from banks, securities sold under agreements to repurchase, and accrued interest. Fair value estimates are based on existing on and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Significant assets and liabilities that are not considered financial instruments include premises and equipment, deferred income taxes, goodwill, and core deposit and other intangibles. In addition, the tax ramifications related to the realization of unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates. Off-balance sheet instruments (commitments to extend credit and standby letters of credit) are generally short-term and at variable rates. Therefore, both the carrying amount and the estimated fair value associated with these instruments are immaterial. Fair values for balance sheet instruments as of June 30, 2016 and September 30, 2015, are as follows (in thousands):
The following methods and assumptions were used in estimating the fair value of financial instruments that were not previously disclosed: Cash and cash due from banks: Due to the short term nature of cash and cash equivalents, the estimated fair value is equal to the carrying value and they are categorized as a Level 1 fair value measurement. Loans, net excluding fair valued loans and loans held for sale: The fair value of the loan portfolio is estimated using observable inputs including estimated cash flows, and discount rates based on interest rates currently being offered for loans with similar terms, to borrowers of similar credit quality. Loans held for investment are categorized as a Level 3 fair value measurement. Accrued interest receivable: Due to the nature of accrued interest receivable, the estimated fair value is equal to the carrying value and they are categorized as a Level 2 fair value measurement. Federal Home Loan Bank stock: The carrying amount of FHLB stock approximates its fair value as it can only be redeemed with the FHLB at par value. Federal Home Loan Bank stock has been categorized as a Level 2 fair value measurement. Deposits: The estimated fair value of deposits with no stated maturity, such as non-interest bearing demand deposits, savings, NOW, and money market accounts, is equal to the amount payable on demand. The fair value of interest-bearing time deposits is based on the discounted value of contractual cash flows of such deposits, taking into account the option for early withdrawal. The discount rate is estimated using the rates offered by the Company, at the respective measurement dates, for deposits of similar maturities. Deposits have been categorized as a Level 2 fair value measurement. FHLB advances and other borrowings: The fair value of FHLB advances and other borrowings is estimated using discounted cash flow analysis, based on current incremental borrowing rates for similar types of borrowing arrangements. In the absence of a reasonably precise methodology to determine the fair value of the credit agreement, carrying value has been used to represent fair value. FHLB advances and other borrowings have been categorized as a Level 2 fair value measurement. Securities sold under repurchase agreements: The Company’s repurchase agreements are overnight transactions that mature the day after the transaction, and as a result of this short-term nature, the estimated fair value equals the carrying value. Securities sold under repurchase agreements have been categorized as a Level 2 fair value measurement. Accrued interest payable: Due to the nature of accrued interest payable, the estimated fair value is equal to the carrying value and they are categorized as a Level 2 fair value measurement. Subordinated Debentures and Subordinated Notes Payable: The fair value of subordinated debentures and subordinated notes payable is estimated using discounted cash flow analysis, based on current incremental debt rates. Subordinated debentures and subordinated notes payable have been categorized as a Level 2 fair value measurement. |
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Earnings per Share | Earnings per Share Basic earnings per common share is calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period, excluding outstanding non-vested restricted stock awards. Diluted earnings per common share is calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding determined for the basic earnings per share calculation plus the dilutive effect of stock compensation using the treasury stock method. The following information was used in the computation of basic earnings per share (EPS) for the three and nine months ended June 30, 2016 and 2015 (in thousands, except share data):
The Company had 36,696 and 30,909 shares of unvested performance stock as of June 30, 2016 and 2015, respectively, that were not included in the computation of diluted earnings per common share because performance conditions for vesting had not been met. The Company had 88,775 and 60,543 shares of anti-dilutive stock awards outstanding as of June 30, 2016 and 2015, respectively. |
Nature of Operations and Summary of Significant Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||
Basis of Presentation | The accompanying unaudited consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and reflect all adjustments that are, in the opinion of management, necessary for the fair presentation of the financial position and results of operations for the periods presented. All such adjustments are of a normal recurring nature. Certain previously reported amounts have been reclassified to conform to the current presentation. |
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Principles of Consolidation | The accompanying unaudited consolidated financial statements include the accounts and results of operations of the Company and its subsidiaries after elimination of all significant intercompany accounts and transactions. The preparation of unaudited consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from these estimates. |
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Business Combinations | The Company accounts for business combinations under the acquisition method of accounting in accordance with ASC 805, “Business Combinations” (“ASC 805”). The Company recognizes the fair value of the assets acquired and liabilities assumed, immediately expenses transaction costs and accounts for restructuring plans separately from the business combination. There is no separate recognition of the acquired allowance for loan and lease losses on the acquirer’s balance sheet as credit related factors are incorporated directly into the fair value of the loans recorded at the acquisition date. The excess of the cost of the acquisition over the fair value of the net tangible and intangible assets acquired is recorded as goodwill. Alternatively, a bargain purchase gain is recorded equal to the amount by which the fair value of assets purchased exceeds the fair value of liabilities assumed and consideration paid. Results of operations of the acquired business are included in the consolidated statements of comprehensive income from the effective date of acquisition. |
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Securities | The Company classifies securities upon purchase in one of three categories: trading, held to maturity, or available for sale. Debt and equity securities held for resale are classified as trading. Debt securities for which the Company has the ability and positive intent to hold until maturity are classified as held to maturity. All other securities are classified as available for sale as they may be sold prior to maturity in response to changes in the Company’s interest rate risk profile, funding needs, demand for collateralized deposits by public entities or other reasons. Held to maturity securities are stated at amortized cost, which represents actual cost adjusted for premium amortization and discount accretion. Available for sale securities are stated at fair value, with unrealized gains and losses, net of related taxes, included in stockholders’ equity as a component of accumulated other comprehensive income (loss). Trading securities are stated at fair value. Realized and unrealized gains and losses from sales and fair value adjustments of trading securities are included in other noninterest income in the consolidated statements of comprehensive income. Purchases and sales of securities are recognized on a trade date basis. The cost of securities sold is based on the specific identification method. Declines in the fair value of investment securities available for sale (with certain exceptions for debt securities noted below) that are deemed to be other-than-temporary are recognized in earnings as a realized loss, and a new cost basis for the securities is established. In evaluating other-than-temporary impairment, management considers the length of time and extent to which the fair value has been less than amortized cost, the financial condition and near-term prospects of the issuer, and the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value in the near term. Declines in the fair value of debt securities below amortized cost are deemed to be other-than-temporary in circumstances where: (1) the Company has the intent to sell a security; (2) it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis; or (3) the Company does not expect to recover the entire amortized cost basis of the security. If the Company intends to sell a security or if it is more likely than not that the Company will be required to sell the security before recovery, an other-than-temporary impairment loss is recognized in earnings equal to the difference between the security’s amortized cost basis and its fair value. If the Company does not intend to sell the security or it is not more likely than not that it will be required to sell the security before recovery, the other-than-temporary impairment write-down is separated into an amount representing credit loss, which is recognized in earnings, and an amount related to all other factors, which is recognized in accumulated other comprehensive income (loss). Interest and dividends, including amortization of premiums and accretion of discounts, are recognized as interest or dividend income when earned. Realized gains and losses on sales (using the specific identification method) and declines in value judged to be other- than-temporary are included in noninterest income in the consolidated statements of comprehensive income. |
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Loans | The Company’s accounting method for loans differs depending on whether the loans were originated or purchased and, for purchased loans, whether the loans were acquired at a discount related to evidence of credit deterioration since date of origination. Originated Loans Loans that management has the intent and ability to hold for the foreseeable future, or until maturity or pay-off, generally are reported at their outstanding principal balance, adjusted for charge-offs, the allowance for loan and lease losses, and any unamortized deferred fees or costs. Other fees, not associated with originating a loan are recognized as fee income when earned. Interest income on loans is accrued daily on the outstanding balances. Accrual of interest is discontinued when management believes, after considering collection efforts and other factors, the borrower’s financial condition is such that collection of interest is doubtful, which is generally at 90 days past due. Generally, when loans are placed on nonaccrual status, interest receivable is reversed against interest income in the current period. Interest payments received thereafter are applied as a reduction to the remaining principal balance as long as concern exists as to the ultimate collection of the principal. Loans are removed from nonaccrual status when they become current as to both principal and interest and concern no longer exists as to the collectability of principal and interest. The Company has elected to measure certain long-term loans and written loan commitments at fair value to assist in managing interest rate risk for longer-term loans. Fair value loans are fixed-rate loans having original maturities of 5 years or greater (typically between 5 and 15 years) to our business and agribusiness banking customers to assist them in facilitating their risk management strategies. The fair value option was elected upon the origination or acquisition of these loans and written loan commitments. Interest income is recognized in the same manner on loans reported at fair value as on non-fair value loans, except in regard to origination fees and costs which are recognized immediately upon closing. The changes in fair value of long-term loans and written loan commitments at fair value are reported in noninterest income. For loans held for sale, loan fees charged or received on origination, net of certain direct loan origination costs, are recognized in income when the related loan is sold. For loans held for investment, loan fees, net of certain direct loan origination costs, are deferred, and the net amount is amortized as an adjustment of the related loan’s yield. The Company is generally amortizing these amounts over the contractual lives of the loans. Commitment fees are recognized as income when received. The Company grants commercial, agricultural, consumer, residential real estate, and other loans to customers primarily in Arizona, Colorado, Iowa, Kansas, Missouri, Minnesota, Nebraska, North Dakota and South Dakota. The amount of collateral obtained, if deemed necessary, is based on management’s credit evaluation of the borrower. Collateral held varies but includes accounts receivable, inventory, property and equipment, residential real estate, and income-producing commercial and agricultural properties. Government guarantees are also obtained for some loans, which reduces the Company’s risk of loss. Loans originated and intended for sale in the secondary market are carried at the lower of cost or fair value. Loans held for sale include fixed rate single-family residential mortgage loans under contract to be sold in the secondary market. In most cases, loans are carried at cost and sold within 45 days. These loans are sold with the mortgage servicing rights released. Under limited circumstances, buyers may have recourse to return a purchased loan to the Company. Recourse conditions may include early payment default, breach of representation or warranties, or documentation deficiencies. Fair value of loans held for sale is determined based on prevailing market prices for loans with similar characteristics, sale contract prices, or, for certain portfolios, discounted cash flow analysis. Declines in fair value below cost (and subsequent recoveries) are recognized in net gain on sale of loans. Deferred fees and costs related to these loans are not amortized but are recognized as part of the cost basis of the loan at the time it is sold. Gains or losses on sales are recognized upon delivery and included in net gain on sale of loans. Purchased Loans Loans acquired (non-impaired and impaired) in a business acquisition are recorded at their fair value at the acquisition date. Credit discounts are included in the determination of fair value; therefore, an allowance for loan and lease losses is not recorded at the acquisition date. In determining the acquisition date fair value of purchased loans with evidence of credit deterioration (“ASC 310-30 loans”), and in subsequent accounting, the Company generally aggregates impaired purchased consumer and certain smaller balance impaired commercial loans into pools of loans with common risk characteristics, while accounting for larger-balance impaired commercial loans individually. Expected cash flows at the acquisition date in excess of the fair value of loans are recorded as interest income over the life of the loans using a level-yield method. Management estimates the cash flows expected to be collected at acquisition and at subsequent measurement dates using internal risk models, which incorporate the estimate of key assumptions, such as default rates, loss severity, and prepayment speeds. Subsequent to the acquisition date, decreases in cash flows over those expected at the acquisition date are recognized by recording an allowance for loan and lease losses. Subsequent increases in cash flow over those expected at the acquisition date are recognized as reductions to allowance for loan and lease losses to the extent impairment was previously recognized and thereafter as interest income prospectively. For purchased loans not deemed impaired at the acquisition date, the difference between the fair value and the unpaid principal balance of the loan at acquisition date is amortized or accreted to interest income using the effective interest method over the remaining period to contractual maturity. Credit Risk Management The Company’s strategy for credit risk management includes well-defined, centralized credit policies, uniform underwriting criteria and ongoing risk monitoring and review processes for all credit exposures. The strategy also emphasizes diversification on a geographic, industry, and customer level; regular credit examinations; and management reviews of loans exhibiting deterioration of credit quality. The credit risk management strategy also includes a credit risk assessment process that performs assessments of compliance with commercial and consumer credit policies, risk ratings, and other critical credit information. Loan decisions are documented with respect to the borrower’s business, purpose of the loan, evaluation of the repayment sources, and the associated risks, evaluation of collateral, covenants and monitoring requirements, and risk rating rationale. The Company categorizes its loan portfolio into six classes, which is the level at which it develops and documents a systematic methodology to determine the allowance for loan and lease losses. The Company’s six loan portfolio classes are residential real estate, commercial real estate, commercial non real estate, agriculture, consumer and other lending. The residential real estate lending class includes loans made to consumer customers including residential mortgages, residential construction loans and home equity loans and lines. These loans are typically fixed rate loans secured by residential real estate. Home equity lines are revolving accounts giving the borrower the ability to draw and repay balances repeatedly, up to a maximum commitment, and are secured by residential real estate. Home equity lines typically have variable rate terms which are benchmarked to a prime rate. Historical loss history is the primary factor in determining the allowance for loan and lease losses for the residential real estate lending class. Key risk characteristics relevant to residential real estate lending class loans primarily relate to the borrower’s capacity and willingness to repay and include unemployment rates and other economic factors, and customer payment history. These risk characteristics, among others, are reflected in the environmental factors considered in determining the allowance for loan and lease losses. The commercial real estate lending class includes loans made to small and middle market businesses, including multifamily properties. Loans in this class are secured by commercial real estate. Historical loss history and updated loan-to-value information on collateral-dependent loans are the primary factors in determining the allowance for loan and lease losses for the commercial real estate lending class. Key risk characteristics relevant to the commercial real estate lending class include the industry and geography of the borrower’s business, purpose of the loan, repayment sources, borrower’s debt capacity and financial performance, loan covenants, and nature of pledged collateral. We consider these risk characteristics in assigning risk ratings and estimating environmental factors considered in determining the allowance for loan and lease losses. The commercial non real estate lending class includes loans made to small and middle market businesses, and loans made to public sector customers. Loans in this class are generally secured by business assets and guaranteed by owners; cashflows are most often our primary source of repayment. Historical loss history and updated loan-to-value information on collateral-dependent loans are the primary factors in determining the allowance for loan and lease losses for the commercial non real estate lending class. Key risk characteristics relevant to the commercial non real estate lending class include the industry and geography of the borrower’s business, purpose of the loan, repayment sources, borrower’s debt capacity and financial performance, loan covenants, and nature of pledged collateral. We consider these risk characteristics in assigning risk ratings and estimating environmental factors considered in determining the allowance for loan and lease losses. The agriculture lending class includes loans made to small and mid-size agricultural businesses and individuals. Loans in this class are generally secured by operating assets and guaranteed by owners; cashflows are most often our primary source of repayment. Historical loss history and updated loan-to-value information on collateral-dependent loans are the primary factors in determining the allowance for loan and lease losses for the agriculture lending class. Key risk characteristics relevant to the agriculture lending class include the geography of the borrower’s operations, commodity prices and weather patterns, purpose of the loan, repayment sources, borrower’s debt capacity and financial performance, loan covenants, and nature of pledged collateral. We consider these risk characteristics in assigning risk ratings and estimating environmental factors considered in determining the allowance for loan and lease losses. The consumer lending class includes loans made to consumer customers including loans secured by automobiles and other installment loans, and the other lending class includes credit card loans and unsecured revolving credit lines. Historical loss history is the primary factor in determining the allowance for loan and lease losses for the consumer and other lending classes. Key risk characteristics relevant to loans in the consumer and other lending classes primarily relate to the borrower’s capacity and willingness to repay and include unemployment rates and other economic factors, and customer payment and overall credit history. These risk characteristics, among others, are reflected in the environmental factors considered in determining the allowance for loan and lease losses. The Company assigns all non-consumer loans a credit quality risk rating. These ratings are Pass, Watch, Substandard, Doubtful, and Loss. Loans with a Pass and Watch rating represent those loans not classified on the Company’s rating scale for problem credits, with loans with a Watch rating being monitored and updated at least quarterly by management. Substandard loans are those where a well-defined weakness has been identified that may put full collection of contractual debt at risk. Doubtful loans are those where a well-defined weakness has been identified and a loss of contractual debt is probable. Substandard and doubtful loans are monitored and updated monthly. All loan risk ratings are updated and monitored on a continuous basis. The Company generally does not risk rate consumer loans unless a default event such as bankruptcy or extended nonperformance takes place. Alternatively, standard credit scoring systems are used to assess credit risks of consumer loans. Troubled Debt Restructurings (“TDRs”) Loans modified under troubled debt restructurings involve granting a concession to a borrower who is experiencing financial difficulty. These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance, or other actions intended to maximize collection, which generally would not otherwise be considered. Our TDRs include performing and nonperforming TDRs, which consist of loans that continue to accrue interest at the loan's original interest rate as we expect to collect the remaining principal and interest on the loan, and nonaccrual TDRs, which include loans that are in a nonaccrual status and are no longer accruing interest, as we do not expect to collect the full amount of principal and interest owned from the borrower on these loans. At the time of modification (except for loans on nonaccrual status), a TDR is classified as nonperforming TDR until a six-month payment history of principal and interest payments, in accordance with the terms of the loan modification, is sustained, at which time we move the loan to a performing status (performing TDR). If we do not expect to collect all principal and interest on the loan, the modified loan is classified as a nonaccrual TDR. All TDRs are accounted for as impaired loans and are included in our analysis of the allowance for loan and lease losses. A TDR that has been re-underwritten and renewed for a borrower who is no longer experiencing financial difficulty and which yields a market rate of interest at the time of a renewal is no longer considered a TDR. Allowance for Loan and Lease Losses (“ALLL”) and Unfunded Commitments The Company maintains an allowance for loan and lease losses at a level management believes is appropriate to reserve for credit losses inherent in our loan portfolio. The allowance for loan and lease losses is determined based on an ongoing evaluation, driven primarily by monitoring changes in loan risk grades, delinquencies, and other credit risk indicators, which is inherently subjective. The Company considers the uncertainty related to certain industry sectors and the extent of credit exposure to specific borrowers within the portfolio. In addition, consideration is given to concentration risks associated with the various loan portfolios and current economic conditions that might impact the portfolio. The Company also considers changes, if any, in underwriting activities, the loan portfolio composition (including product mix and geographic, industry, or customer-specific concentrations), trends in loan performance, the level of allowance coverage relative to similar banking institutions and macroeconomic factors, such as changes in unemployment rates, gross domestic product, and consumer bankruptcy filings. All of these estimates are susceptible to significant change. Changes to the allowance for loan and lease losses are made by charges to the provision for loan and lease losses, which is reflected in the consolidated statements of comprehensive income. Past due status is monitored as an indicator of credit deterioration. Loans that are 90 days or more past due are put on nonaccrual status unless the loan is well secured and in the process of collection. Loans deemed to be uncollectible are charged off against the allowance for loan and lease losses. Recoveries of amounts previously charged-off are credited to the allowance for loan and lease losses. The allowance for loan and lease losses consist of reserves for probable losses that have been identified related to specific borrowing relationships that are individually evaluated for impairment (“specific reserve”), as well as probable losses inherent in our loan portfolio that are not specifically identified (“collective reserve”). The specific reserve relates to impaired loans. A loan is impaired when, based on current information and events, it is probable the Company will be unable to collect all amounts due (interest as well as principal) according to the contractual terms of the loan agreement. Specific reserves are determined on a loan-by-loan basis based on management’s best estimate of the Company’s exposure, given the current payment status of the loan, the present value of expected payments, and the value of any underlying collateral. Impaired loans also include loans modified in troubled debt restructurings. Generally, the impairment related to troubled debt restructurings is measured based on the fair value of the collateral, less cost to sell, or the present value of expected payments relative to the unpaid principal balance. If the impaired loan is identified as collateral dependent, then the fair value of the collateral method of measuring the amount of the impairment is utilized. This method requires obtaining an independent appraisal of the collateral and applying a discount factor to the appraised value, if necessary, and including costs to sell. Management’s estimate for collective reserves reflects losses incurred in the loan portfolio as of the consolidated balance sheet reporting date. Incurred loss estimates primarily are based on historical loss experience and portfolio mix. Incurred loss estimates may be adjusted for qualitative factors such as current economic conditions and current portfolio trends including credit quality, concentrations, aging of the portfolio, and/or significant policy and underwriting changes. The Company maintains an ALLL for acquired impaired loans accounted for under ASC 310-30, resulting from decreases in expected cash flows arising from the periodic revaluation of these loans. Any decrease in expected cash flows in the individual loan pool is generally recognized in the current provision for loan and lease losses. Any increase in expected cash flows is generally not recognized immediately, but is instead reflected as an adjustment to the related loan or pool's yield on a prospective basis once any previously recorded provision for loan and lease loss has been recognized. For acquired nonimpaired loans accounted for under ASC 310-20, the Company utilizes methods to estimate the required allowance for loan and lease losses similar to originated loans; the required reserve is compared to the net carrying value of each acquired nonimpaired loan (by segment) to determine if a provision is required. While management uses the best information available to establish the allowance for loan and lease losses, future adjustments may be necessary if economic conditions differ substantially from the assumptions used in performing the estimates. Unfunded residential mortgage loan commitments entered into in connection with mortgage loans to be held for sale are considered derivatives and are recorded at fair value and included in other liabilities on the consolidated balance sheets with changes in fair value recorded in other interest income. All other unfunded loan commitments are generally related to providing credit facilities to customers and are not considered derivatives. For purchased loans, the fair value of the unfunded credit commitments is considered in determination of the fair value of the loans recorded at the date of acquisition. Reserves for credit exposure on all other unfunded credit commitments are recorded in other liabilities on the consolidated balance sheets. |
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FDIC Indemnification Asset and Clawback Liability | In conjunction with a Federal Deposit Insurance Corporation (“FDIC”)-assisted transaction of TierOne Bank in 2010, the Company entered into two loss share agreements with the FDIC, one covering certain single family residential mortgage loans with the claim period ending June 2020 and one covering commercial loans and other assets, in which the claim period ended in June 2015. The agreements cover a portion of realized losses on loans, foreclosed real estate and certain other assets. The Company has recorded assets on the consolidated balance sheets (i.e. indemnification assets) representing estimated future amounts recoverable from the FDIC. Fair values of loans covered by the loss sharing agreements at the acquisition date were estimated based on projected cash flows available based on the expected probability of default, default timing and loss given default, the expected reimbursement rates (generally 80%) from the FDIC and other relevant terms of the loss sharing agreements. The initial fair value was established by discounting these expected cash flows with a market discount rate for instruments with like maturity and risk characteristics. The loss share assets are measured separately from the related loans and foreclosed real estate and recorded as an FDIC indemnification asset on the consolidated balance sheets because they are not contractually embedded in the loans and are not transferable with the loans should the Company choose to dispose of them. Subsequent to the acquisition date, reimbursements received from the FDIC for actual incurred losses reduce the carrying amount of the loss share assets. Reductions to expected losses on covered assets, to the extent such reductions to expected losses are the result of an improvement to the actual or expected cash flows from the covered assets, also reduce the carrying amount of the loss share assets. The rate of accretion of the indemnification asset discount included in interest income slows to mirror the accelerated accretion of the loan discount. Additional expected losses on covered assets, to the extent such expected losses result in the recognition of an allowance for loan and lease losses, increase the carrying amount of the loss share assets. A related increase in the value of the indemnification asset up to the amount covered by the FDIC is calculated based on the reimbursement rates from the FDIC and is included in other noninterest income. The corresponding loan accretion or amortization is recorded as a component of interest income on the consolidated statements of comprehensive income. Although these assets are contractual receivables from the FDIC, there are no contractual interest rates. As part of the loss sharing agreements, the Company also assumed a liability (“FDIC Clawback Liability”) to be paid within 45 days subsequent to the maturity or termination of the loss sharing agreements that is contingent upon actual losses incurred over the life of the agreements relative to expected losses considered in the consideration paid at acquisition date and the amount of losses reimbursed to the Company under the loss sharing agreements. The liability was recorded at fair value as of the acquisition date. The fair value was based on a discounted cash flow calculation that considered the formula defined in the loss sharing agreements and projected losses. The difference between the fair value at acquisition date and the projected losses is amortized through other noninterest expense. As projected losses and reimbursements are updated, as described above, the FDIC Clawback Liability is adjusted and a gain or loss is recorded in other noninterest expense. |
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Loan Servicing Rights | The Company records a servicing asset for contractually separated servicing from the underlying mortgage loans. Fair value is based on market prices for comparable mortgage servicing contracts, when available or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income. The asset is amortized into mortgage banking income, net on the consolidated statement of comprehensive income in proportion to and over the period of estimated net servicing income. Loan servicing rights are evaluated for impairment based upon the fair value of the rights as compared to the carrying amount. Impairment is determined by stratifying rights into groupings based on characteristics, such as interest rate, loan type and investor type. Impairment is recognized through a valuation allowance, to the extent that fair value is less than the carrying amount. If the Company later determines that all or a portion of the impairment no longer exists, a reduction of the allowance may be recorded as an increase to noninterest income. If the Company determines the impairment to be permanent, the valuation is written off against the loan servicing rights, which results in a new amortized balance. Changes in the valuation allowance are reported in mortgage banking income, net in the consolidated statement of comprehensive income. The fair value of loan servicing rights is subject to significant fluctuations as a result of changes in estimated and actual prepayment speeds and default rates and losses. Estimating future cash flows on the underlying mortgages is a difficult analysis and requires judgment based on the best information available. Based on the Company's analysis of loan servicing rights, a valuation allowance of $0.2 million was recorded at June 30, 2016. Servicing fee income, which is reported in noninterest income, is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding balance or a fixed amount per loan and are recorded as income as earned. The amortization of loan servicing rights is netted against mortgage banking income, net in the statement of consolidated comprehensive income. |
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Goodwill | Goodwill represents the cost in excess of the fair value of net assets acquired (including identifiable intangibles) in transactions accounted for as business acquisitions. Goodwill is evaluated annually for impairment or more frequently if events and circumstances exist that indicates that a goodwill impairment test should be performed. The Company performs its impairment evaluation as of June 30 of each fiscal year. If the implied fair value of goodwill is lower than its carrying amount, goodwill impairment is indicated and goodwill is written down to its implied fair value. Subsequent increases in goodwill are not recognized in the consolidated financial statements. |
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Core Deposits and Other Intangibles | Intangible assets consist of core deposits, brand intangible, customer relationships, and other intangibles. Core deposits represent the identifiable intangible value assigned to core deposit bases arising from purchase acquisitions. Brand intangible represents the value associated with the Bank charter. Customer relationships intangible represents the identifiable intangible value assigned to customer relationships arising from a purchase acquisition. Other intangibles represent contractual franchise arrangements under which the franchiser grants the franchisee the right to perform certain functions within a designated geographical area. The methods and lives used to amortize intangible assets are as follows:
Intangible assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. |
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Derivatives | The Company maintains an overall interest rate risk management strategy that permits the use of derivative instruments to modify exposure to interest rate risk. The Company enters into interest rate swap contracts to offset the interest rate risk associated with borrowers who lock in long-term fixed rates (greater than or equal to 5 years to maturity) through a fixed rate loan. These contracts do not qualify for hedge accounting. Generally, under these swaps, the Company agrees with various swap counterparties to exchange the difference between fixed-rate and floating-rate interest amounts based upon notional principal amounts. These interest rate derivative instruments are recognized as assets and liabilities on the consolidated balance sheets and measured at fair value, with changes in fair value reported in net realized and unrealized gain (loss) on derivatives. Since each fixed rate loan is paired with an offsetting derivative contract, the impact to net income is minimized. The Company enters into forward interest rate lock commitments on mortgage loans to be held for sale, which are commitments to originate loans whereby the interest rate on the loan is determined prior to funding. The Company also has corresponding forward sales contracts related to these interest rate lock commitments. Both the mortgage loan commitments and the related sales contracts are considered derivatives and are recorded at fair value with changes in fair value recorded in noninterest income. |
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Stock Based Compensation | Restricted and performance-based stock units/awards are classified as equity awards and accounted for under the Treasury method. Compensation expense for non-vested stock units/awards is based on the fair value of the award on the measurement date, which, for the Company, is the date of the grant and is recognized ratably over the vesting or performance period of the award. The fair value of non-vested stock units/awards is generally the market price of the Company's stock on the date of grant. |
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Income Taxes | The Company was required to file a consolidated income tax return with National Americas Investment, Inc. ("NAI") (a wholly owned indirect subsidiary of NAB) until NAI's dissolution on October 17, 2014. Income taxes are allocated pursuant to a tax-sharing arrangement, whereby the Company will pay federal and state income taxes as if it were filing on a stand-alone basis. Income tax expense includes two components: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over income. The Company determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax basis of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur. Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized. Tax benefits related to uncertain tax positions are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term "more likely than not" means a likelihood of more than 50 percent; the terms "examined" and "upon examination" also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management’s judgment. |
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Transfers of Financial Assets | Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company-put presumptively beyond reach of the Company and its creditors, even in bankruptcy or other receivership, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return specific assets. Securities sold under agreements to repurchase are accounted for as collateralized financing transactions and are recorded at amounts at which the securities were financed, plus accrued interest. |
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Defined Benefit Plan | The Company assumed plan sponsorship of the HF Financial Corp. Pension Plan during the quarter as part of the HF Financial acquisition. Defined benefit pension obligation and related costs are calculated using actuarial concepts and measurements. Three critical assumptions, the discount rate, the expected long-term rate of return on plan assets, and mortality rates are important elements of expense and/or benefit obligation measurements. Other assumptions involve employee demographic factors such as retirement patterns and turnover. The Company evaluates all assumptions annually. For accounting purposes, mortality assumptions at June 30, 2016 were based on the RP-2014 mortality tables and the MP 2015 projection scales. The discount rate enables the Company to state expected future benefit payments as a present value on the measurement date. The Company determined the discount rate at June 30, 2016 by utilizing the standard duration index from the Citi Pension Discount Curve and Liability Index. A lower discount rate increases the present value of benefit obligations and increases pension expense. To determine expected long-term rate of return on defined benefit pension plan assets, the Company considers the current asset allocation of the defined benefit pension plan, as well as historical and expected returns on each asset class. A lower expected rate of return on defined pension plan assets will increase pension expense. The Company recognizes the over- or under-funded status of a plan as an other asset or other liability in the consolidated balance sheet as measured by the difference between the fair value of the plan assets and the projected benefit obligation. When recorded, unrecognized prior service costs and actuarial gains and losses are recognized as a component of accumulated other comprehensive income (loss). |
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Revenue Recognition | The Company recognizes revenue as it is earned based on contractual terms, as transactions occur, or as services are provided and collectability is reasonably assured. Certain specific policies related to service charges and other fees include the following: Deposit Service Charges Service charges on deposit accounts are primarily fees related to customer overdraft events and not sufficient funds fees, net of any refunded fees, and are recognized as transactions occur and services are provided. Service charges on deposit accounts also relate to monthly fees based on minimum balances, and are earned as transactions occur and services are provided. Interchange Fees Interchange fees include interchange income from consumer debit card transactions processed through card association networks. Interchange income is a fee paid by a merchant bank to the card-issuing bank through the interchange network. Interchange fees are set by the card association networks and are based on cardholder purchase volumes. Wealth Management Fees Wealth management fees include commission income from financial planning, investment management and insurance operations. |
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Comprehensive Income | Comprehensive income consists of net income and other comprehensive income, net of applicable income taxes. Other comprehensive income (loss) consists entirely of unrealized appreciation (depreciation) on available-for-sale securities. |
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Subsequent Events | The Company has evaluated all events or transactions that occurred through the date the Company issued these financial statements. During this period, the Company did not have any material recognizable or non-recognizable subsequent events other than outlined below. |
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New Accounting Pronouncements | In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which addresses timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The ASU requires institutions to measure all expected credit losses related to financial assets measured at amortized costs with an expected loss model based on historical experience, current conditions and reasonable and supportable forecasts relevant to affect the collectibility of the financial assets, which is referred to as the current expected credit loss (CECL) model. The ASU requires enhanced disclosures, including qualitative and quantitative requirements, to help understand significant estimates and judgments used in estimating credit losses, as well as provide additional information about the amounts recorded in the financial statements. ASU 2016-13 will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted after December 15, 2018. The amendment requires the use of the modified retrospective approach for adoption. The Company is currently evaluating the potential impact of ASU 2016-13 on our financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Based Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which addresses several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Earlier application is permitted. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The Company is currently evaluating the potential impact of ASU 2016-09 on our financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires that lessees recognize the assets and liabilities arising from leases on the balance sheet. ASU 2015-16 will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the potential impact of ASU 2016-02 on our financial statements. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10) - Recognition and Measurement of Financial Assets and Financial Liabilities, which addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASU 2016-01 will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the potential impact of ASU 2016-01 on our financial statements. In September 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805) - Simplifying the Accounting for Measurement-Period Adjustments, which requires that adjustments to provisional amounts that are identified during the measurement period of a business combination be recognized in the reporting period in which the adjustment amounts are determined. Furthermore, the income statement effects of such adjustments, if any, must be calculated as if the accounting had been completed at the acquisition date. The portion of the amount recorded in current-period earnings that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. Under previous guidance, adjustments to provisional amounts identified during the measurement period are to be recognized retrospectively. ASU 2015-16 will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Earlier application is permitted for financial statements that have not been issued, therefore the Company has elected to early adopt this ASU as of and for its quarter ended June 30, 2016. The adoption of ASU 2015-16 in the third quarter of 2016 did not have a material impact on the Company's consolidated balance sheet or consolidated statement of comprehensive income. See also Note 3 to these consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which implements a common revenue standard that clarifies the principles for recognizing revenue. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. In August 2015, the FASB issued ASU No. 2015-14 which deferred the effective date of ASU No. 2014-09 to annual reporting periods beginning after December 15, 2017. In March 2016, the FASB issued ASU No. 2016-08, which intends to improve the operability and understandability of the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU No. 2016-10, which clarifies guidance pertaining to the identification of performance obligations and the licensing implementation. In May 2016, the FASB issued ASU Nos. 2016-11 and 2016-12, which further clarify guidance and provide practical expedients related to the adoption of ASU No. 2014-09. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is currently evaluating the potential impact of these standards on our financial statements. |
Nature of Operations and Summary of Significant Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-lived Intangible Assets | The methods and lives used to amortize intangible assets are as follows:
A summary of intangible assets subject to amortization is as follows (in thousands):
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Acquisition Activity (Tables) |
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Schedule of acquisition activity | The following table presents the acquired loan data for the HF Financial acquisition.
The following summarizes consideration paid and an allocation of purchase price to net assets acquired.
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Schedule of assets acquired and liabilities assumed | The following table summarizes the assets acquired and liabilities assumed which were recorded on the consolidated balance sheet as of the date of merger of HF Financial:
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Schedule of pro forma information | The following unaudited pro forma combined results of operations of the Company and HF Financial presents results as if the acquisition had been completed as of the beginning of each period indicated. The unaudited pro forma combined results of operations are presented solely for information purposes and are not intended to represent or be indicative of the consolidated results of operations that the Company would have reported had this transaction been completed as of the dates and for the periods presented, nor are they necessarily indicative of future results. In particular, no adjustments have been made to eliminate the amount of HF Financial's provision for loan and lease losses incurred prior to the acquisition date that would not have been necessary had the acquired loans been recorded at fair value as of the beginning of each period indicated. In accordance with Article 11 of SEC Regulation S-X, transaction costs directly attributable to the acquisition have been excluded.
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Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Table Text Block] | The table below summarizes the total contractually required principal and interest cash payments, management's estimate of expected total cash payments and fair value of the loans as of acquisition date for purchased credit impaired loans. Contractually required principal and interest payments have been adjusted for estimated prepayments.
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Securities Available for Sale (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortized Cost and Fair Value | The amortized cost and approximate fair value of investments in securities, all of which are classified as available for sale according to management’s intent, are summarized as follows (in thousands):
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Marketable Securities | The amortized cost and approximate fair value of debt securities available for sale as of June 30, 2016 and September 30, 2015, by contractual maturity, are shown below. Maturities of mortgage-backed securities may differ from contractual maturities because the mortgages underlying the securities may be called or repaid without any penalties.
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Schedule of Unrealized Loss on Investments | The following table presents the Company’s gross unrealized losses and approximate fair value in investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position (in thousands):
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Unrealized Gain (Loss) on Investments | The components of accumulated other comprehensive income (loss) from net unrealized gains (losses) on securities available for sale for the three and nine months ended June 30, 2016 and 2015, respectively are as follows (in thousands):
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Loans (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Loans Receivable | The composition of loans as of June 30, 2016 and September 30, 2015, is as follows (in thousands):
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Schedule of Company's Nonaccrual Loans | The following table presents the Company’s nonaccrual loans at June 30, 2016 and September 30, 2015 (in thousands), excluding ASC 310-30 loans. Loans greater than 90 days past due and still accruing interest as of June 30, 2016 and September 30, 2015, were not significant.
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Composition of Loan Portfolio by Internal Risk Rating | This table (in thousands) is presented net of unamortized discount on acquired loans and excludes loans measured at fair value with changes in fair value reported in earnings of $1.16 billion at June 30, 2016 and $1.12 billion at September 30, 2015:
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Past Due Financing Receivables | The following table (in thousands) presents the Company’s past due loans at June 30, 2016 and September 30, 2015. This table is presented net of unamortized discount on acquired loans and excludes loans measured at fair value with changes in fair value reported in earnings of $1.16 billion at June 30, 2016 and $1.12 billion at September 30, 2015.
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Impaired Financing Receivables | The following table presents the Company’s impaired loans (in thousands). This table excludes loans covered by FDIC loss sharing agreements:
The average recorded investment on impaired loans and interest income recognized on impaired loans for the three and nine months ended June 30, 2016 and 2015, respectively, are as follows (in thousands):
The following table provides purchased credit impaired loans at June 30, 2016 and September 30, 2015 (in thousands):
1 Represents the legal balance of loans acquired with deteriorated credit quality. 2 Represents the book balance of loans acquired with deteriorated credit quality. 3 Represents the book balance of loans acquired with deteriorated credit quality net of the related allowance for loan and lease losses. |
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Troubled Debt Restructurings on Financing Receivables | The following table presents the recorded value of the Company’s TDR balances as of June 30, 2016 and September 30, 2015 (in thousands):
The following table presents a summary of all accruing loans restructured in TDRs during the three months ended June 30, 2016 and 2015, respectively:
The following table presents a summary of all accruing loans restructured in TDRs during the nine months ended June 30, 2016 and 2015, respectively:
The following table presents a summary of all non-accruing loans restructured in TDRs during the three months ended June 30, 2016 and 2015:
The following table presents a summary of all non-accruing loans restructured in TDRs during the nine months ended June 30, 2016 and 2015:
The tables below represent defaults on loans that were first modified during the respective past 12 months, that became 90 days or more delinquent or were charged-off during the three and nine months ended June 30, 2016 and 2015, respectively.
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Allowance for Loan and Lease Losses (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for credit losses on financing receivables | The following tables presents the Company’s allowance for loan and lease losses roll forward for the three and nine months ended June 30, 2016 and 2015 (in thousands):
The following tables provide details regarding the allowance for loan and lease losses and balance by type of allowance. These tables (in thousands) are presented net of unamortized discount on acquired loans and excludes loans of $1.16 billion measured at fair value (and the associated credit mark embedded within the carrying value of these loans) with changes in fair value reported in earnings, loans held for sale of $21.3 million, and guaranteed loans of $128.0 million for June 30, 2016 and loans measured at fair value with changes in fair value reported in earnings of $1.12 billion, loans held for sale of $9.9 million, and guaranteed loans of $105.0 million for September 30, 2015.
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Accounting for Certain Loans Acquired with Deteriorated Credit Quality (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Troubled Debt Restructurings on Financing Receivables | The re-assessment of purchased credit impaired loans resulted in the following changes in the accretable yield during the three and nine months ended June 30, 2016 and 2015 (in thousands):
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Impaired Financing Receivables | The following table presents the Company’s impaired loans (in thousands). This table excludes loans covered by FDIC loss sharing agreements:
The average recorded investment on impaired loans and interest income recognized on impaired loans for the three and nine months ended June 30, 2016 and 2015, respectively, are as follows (in thousands):
The following table provides purchased credit impaired loans at June 30, 2016 and September 30, 2015 (in thousands):
1 Represents the legal balance of loans acquired with deteriorated credit quality. 2 Represents the book balance of loans acquired with deteriorated credit quality. 3 Represents the book balance of loans acquired with deteriorated credit quality net of the related allowance for loan and lease losses. |
FDIC Indemnification Asset (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Banking and Thrift [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FDIC indemnification asset roll forward | The following table represents a summary of the activity related to the FDIC indemnification asset for the three and nine months ended June 30, 2016 and 2015 (in thousands):
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Derivative Financial Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Positions, Notional Amounts | The following table summarizes the notional amounts and estimated fair values of the Company’s derivative instruments at June 30, 2016 and September 30, 2015 (in thousands):
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Schedule of Derivative Instruments, Effect on Other Comprehensive Income | The effect of derivatives on the consolidated statements of comprehensive income for the three and nine months ended June 30, 2016 and 2015 (in thousands) was as follows:
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Summary of Offsetting Assets | The following tables (in thousands) present the Company's total gross derivative assets and liabilities at June 30, 2016 and September 30, 2015, which are adjusted on an aggregate basis, where applicable, to take into consideration the effects of legally enforceable master netting agreements for the net reported amount in the consolidated balance sheets. These amounts are offset on the consolidated balance sheets.
1 The actual amount of collateral exceeds the fair value exposure, at the individual counterparty level, as of the date presented.
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Summary of Offsetting Liabilities | The following tables (in thousands) present the Company's total gross derivative assets and liabilities at June 30, 2016 and September 30, 2015, which are adjusted on an aggregate basis, where applicable, to take into consideration the effects of legally enforceable master netting agreements for the net reported amount in the consolidated balance sheets. These amounts are offset on the consolidated balance sheets.
1 The actual amount of collateral exceeds the fair value exposure, at the individual counterparty level, as of the date presented.
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The Fair Value Option For Certain Loans (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Fair Value Option | Changes in fair value for items for which the fair value option has been elected and the line items in which these changes are reported within the consolidated statements of comprehensive income are as follows for the three and nine months ended June 30, 2016 and 2015 (in thousands):
|
Goodwill (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Summary of changes to the carrying amount of goodwill | A summary of changes to the carrying amount of goodwill is as follows (in thousands):
|
Core Deposits and Other Intangibles (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-lived Intangible Assets | The methods and lives used to amortize intangible assets are as follows:
A summary of intangible assets subject to amortization is as follows (in thousands):
|
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Schedule of Finite-lived Intangible Assets, Future Amortization Expense | Estimated amortization expense of intangible assets in subsequent fiscal years is as follows (in thousands):
|
Loan Servicing Rights (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers and Servicing [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of loan servicing rights and valuation allowance activity | The following table is the activity for loan servicing rights and the related valuation allowance (in thousands):
|
Securities Sold Under Agreements to Repurchase (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Federal Funds Purchased and Securities Sold under Agreements to Repurchase [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Repurchase Agreements | The following tables present the gross obligation by the class of collateral pledged and the remaining contractual maturity of the agreements at June 30, 2016 and September 30, 2015 (in thousands).
|
FHLB Advances and Other Borrowings (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Federal Home Loan Banks [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of FHLB Advances and Other Borrowings | FHLB advances and other borrowings consist of the following at June 30, 2016 and September 30, 2015 (in thousands):
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Schedule of FHLB Advances and Other Borrowings by Maturity Date | As of June 30, 2016, FHLB advances and other borrowings are due or callable (whichever is earlier) in subsequent fiscal years as follows (in thousands):
|
Subordinated Debentures and Subordinated Notes Payable (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of subordinated debentures and subordinated notes payable | Subordinated debentures and subordinated notes payable are summarized as follows (in thousands):
|
Profit-Sharing Plan and Defined Benefit Plans (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Net Periodic Benefit Cost | Information relative to the components of net periodic benefit cost measured at/or for the three and nine months ended June 30, 2016 and 2015 for the defined benefit plan is presented below (in thousands):
|
Stock-Based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-Based Compensation, Restricted Stock Units Award Activity | The following is a summary of the Plans’ restricted share and performance-based stock award activity as of June 30, 2016 and September 30, 2015:
|
Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value Measurements, Assets and Liabilities | The following table presents the fair value measurements of assets and liabilities recognized in the accompanying consolidated balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at June 30, 2016 and September 30, 2015 (in thousands):
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Schedule of Available-for-Sale Securities Reconciliation | The following table presents the changes in Level 3 financial instruments for the three and nine months ended June 30, 2016 and 2015 (in thousands):
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Mortgage Loans Held-for-Sale, Fair Value Measurement | The following tables present the fair value measurement of assets and liabilities measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at June 30, 2016 and September 30, 2015 (in thousands):
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Mortgage Loans Held-for-Sale, Recurring and Nonrecurring Fair Value Measurements | The valuation techniques and significant unobservable inputs used to measure Level 3 fair value measurements at June 30, 2016 were as follows (in thousands):
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Fair Value, by Balance Sheet Grouping | Fair values for balance sheet instruments as of June 30, 2016 and September 30, 2015, are as follows (in thousands):
|
Earnings per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Basic and Diluted Earnings per Share | The following information was used in the computation of basic earnings per share (EPS) for the three and nine months ended June 30, 2016 and 2015 (in thousands, except share data):
|
Acquisition Activity - Schedule of Consideration (Details) - USD ($) shares in Thousands, $ in Thousands |
May 16, 2016 |
Jun. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
---|---|---|---|---|
Non-equity consideration: | ||||
Goodwill | $ 738,460 | $ 697,807 | $ 697,807 | |
HF Financial Corporation | ||||
Equity consideration: | ||||
Common stock issued (in shares) | 3,448,119 | |||
Common stock issued | $ 107,478 | |||
Non-equity consideration: | ||||
Cash | 34,487 | |||
Total consideration paid | 141,965 | |||
Fair value of net assets acquired including identifiable intangible assets | 101,312 | |||
Goodwill | $ 40,653 |
Acquisition Activity - Schedule of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands |
May 16, 2016 |
Jun. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2014 |
---|---|---|---|---|
Liabilities assumed: | ||||
Goodwill | $ 738,460 | $ 697,807 | $ 697,807 | |
HF Financial Corporation | ||||
Identifiable assets acquired: | ||||
Cash and due from banks | $ 18,818 | |||
Investment securities | 165,052 | |||
Net loans | 863,741 | |||
Premises and equipment | 19,220 | |||
Accrued interest receivable | 4,117 | |||
Other repossessed property | 4 | |||
Intangible assets | 7,877 | |||
Loan servicing rights | 6,573 | |||
Other assets | 36,639 | |||
Total identifiable assets acquired | 1,122,041 | |||
Liabilities assumed: | ||||
Deposits | 863,121 | |||
FHLB advances and other borrowings | 115,881 | |||
Subordinated debentures | 21,110 | |||
Other liabilities | 20,617 | |||
Total liabilities assumed | 1,020,729 | |||
Fair value of net identifiable assets acquired | 101,312 | |||
Net purchase price | 141,965 | |||
Goodwill | $ 40,653 |
Acquisition Activity - Schedule of Pro Forma Information (Details) - HF Financial Corporation - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Business Acquisition [Line Items] | ||||
Net interest income | $ 125,539 | $ 93,999 | $ 316,922 | $ 275,746 |
Net income | $ 35,245 | $ 30,795 | $ 99,927 | $ 77,067 |
Basic earnings per share (in USD per share) | $ 0.62 | $ 0.53 | $ 1.79 | $ 1.33 |
Fully diluted earnings per share (in USD per share) | $ 0.62 | $ 0.53 | $ 1.78 | $ 1.33 |
Acquisition Activity - Schedule of Total Contractually Required Principal and Interest (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
May 16, 2016 |
Mar. 31, 2016 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Sep. 30, 2014 |
---|---|---|---|---|---|---|---|
Business Acquisition [Line Items] | |||||||
Accretable yield | $ (40,976) | $ (39,843) | $ (44,489) | $ (46,889) | $ (43,431) | $ (50,889) | |
HF Financial Corporation | Receivables acquired with deteriorated credit quality | |||||||
Business Acquisition [Line Items] | |||||||
Contractually required principal and interest | $ 83,710 | ||||||
Non-accretable difference | (28,516) | ||||||
Cash flows expected to be collected | 55,194 | ||||||
Accretable yield | (3,662) | ||||||
Total purchased credit impaired loans acquired | $ 51,532 |
Acquisition Activity - Schedule of Acquired Loans (Details) - HF Financial Corporation $ in Thousands |
May 16, 2016
USD ($)
|
---|---|
Business Acquisition [Line Items] | |
Fair Value of Acquired Loans at Acquisition Date | $ 812,209 |
Gross Contractual Amounts Receivable at Acquisition Date | 998,255 |
Best Estimate at Acquisition Date of Contractual Cash Flows Not Expected to be Collected | 9,572 |
Receivables acquired with deteriorated credit quality | |
Business Acquisition [Line Items] | |
Fair Value of Acquired Loans at Acquisition Date | 51,532 |
Gross Contractual Amounts Receivable at Acquisition Date | 83,710 |
Best Estimate at Acquisition Date of Contractual Cash Flows Not Expected to be Collected | $ 28,516 |
Securities Available for Sale - (Narrative) (Details) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2016
USD ($)
security
|
Jun. 30, 2015
USD ($)
|
Jun. 30, 2016
USD ($)
security
|
Jun. 30, 2015
USD ($)
|
Sep. 30, 2015
USD ($)
security
|
|
Investments, Debt and Equity Securities [Abstract] | |||||
Proceeds from sales of securities available for sale | $ 120,900,000 | $ 0 | $ 145,934,000 | $ 55,149,000 | |
Available-for-sale securities, gross realized gains | 100,000 | 0 | 200,000 | 600,000 | |
Available-for-sale securities, gross realized losses | 0 | 0 | 0 | 500,000 | |
Other than temporary impairment losses recognized in earnings | $ 0 | $ 0 | $ 400,000 | $ 0 | |
Number of securities written off | security | 2 | 2 | |||
Securities pledged as collateral | $ 1,080,000,000 | $ 1,080,000,000 | $ 894,300,000 | ||
Percentage of investment portfolio in continuous loss position | 15.00% | 15.00% | 36.00% | ||
Number of securities in an unrealized loss position (securities) | security | 30 | 30 | 31 | ||
Federal home loan bank stock | $ 48,800,000 | $ 48,800,000 | $ 35,700,000 |
Securities Available for Sale - Schedule of Available For Sale Securities (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Sep. 30, 2015 |
---|---|---|
Amortized Cost | ||
Due in one year or less | $ 53,129 | $ 76,261 |
Due after one year through five years | 254,775 | 255,982 |
Due after five years through ten years | 7,297 | 0 |
Due after ten years | 122 | 0 |
Amortized Cost | 315,323 | 332,243 |
Estimated Fair Value | ||
Due in one year or less | 53,503 | 76,905 |
Due after one year through five years | 260,136 | 259,780 |
Due after five years through ten years | 7,340 | 0 |
Due after ten years | 122 | 0 |
Fair Value | 321,101 | 336,685 |
Amortized Cost | 1,346,582 | 1,323,573 |
Estimated Fair Value | 1,361,164 | 1,327,327 |
Securities without contractual maturities, Amortized Cost | 1,013 | 1,006 |
Securities without contractual maturities, Fair Value | 1,055 | 1,042 |
Mortgage-backed securities | ||
Estimated Fair Value | ||
Amortized Cost | 1,030,246 | 990,324 |
Estimated Fair Value | $ 1,039,008 | $ 989,600 |
Accounting for Certain Loans Acquired with Deteriorated Credit Quality - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Receivables [Abstract] | ||||
Allowance recognized on previous impairments | $ 0.4 | $ 0.9 | $ 0.6 | $ 1.9 |
Accounting for Certain Loans Acquired with Deteriorated Credit Quality - Schedule of Troubled Debt Restructurings (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Certain Loans Acquired in Transfer Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward] | ||||
Balance at beginning of period | $ 39,843 | $ 43,431 | $ 44,489 | $ 50,889 |
Acquisition | 3,662 | 0 | 3,662 | 0 |
Accretion | (2,529) | (3,240) | (7,119) | (11,249) |
Reclassification from (to) nonaccretable difference | 0 | 7,736 | (56) | 8,367 |
Disposals | 0 | (1,038) | 0 | (1,118) |
Balance at end of period | $ 40,976 | $ 46,889 | $ 40,976 | $ 46,889 |
FDIC Indemnification Asset - Schedule of Other Current Assets (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
FDIC Indemnification Asset [Roll Forward] | ||||
Balance at beginning of period | $ 12,875 | $ 19,895 | $ 14,722 | $ 26,678 |
Amortization | (959) | (1,754) | (2,886) | (6,347) |
Changes in expected reimbursements from FDIC for changes in expected credit losses | (14) | 15 | (141) | (175) |
Changes in reimbursable expenses | (268) | (1,148) | (695) | (1,511) |
Payments (reimbursements) of covered losses from the FDIC | 72 | (29) | 706 | (1,666) |
Balance at end of period | $ 11,706 | $ 16,979 | $ 11,706 | $ 16,979 |
Derivative Financial Instruments - Notional Amounts and Estimated Fair Value (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Sep. 30, 2015 |
---|---|---|
Derivative [Line Items] | ||
Positive Fair Value | $ 0 | $ 41 |
Negative Fair Value | (91,066) | (53,559) |
Termination value of net liability position | 93,400 | |
Collateral posted, amount | 101,600 | |
Not Designated as Hedging Instruments | Liabilities | Interest rate swaps | ||
Derivative [Line Items] | ||
Notional Amount | 1,071,795 | 1,087,505 |
Positive Fair Value | 0 | 41 |
Negative Fair Value | (91,066) | (53,559) |
Not Designated as Hedging Instruments | Liabilities | Mortgage loan forward sale contracts | ||
Derivative [Line Items] | ||
Notional Amount | 75,195 | 36,655 |
Positive Fair Value | 0 | 0 |
Negative Fair Value | (253) | (95) |
Not Designated as Hedging Instruments | Assets | Mortgage loan commitments | ||
Derivative [Line Items] | ||
Notional Amount | 57,704 | 30,196 |
Positive Fair Value | 253 | 95 |
Negative Fair Value | $ 0 | $ 0 |
Derivative Financial Instruments - Effect on the Consolidated Statement of Comprehensive Income (Details) - Noninterest income - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Interest rate swaps | ||||
Derivative [Line Items] | ||||
Amount of Gain (Loss) Recognized in Income | $ (21,925) | $ 18,946 | $ (53,379) | $ (27,357) |
Mortgage loan commitments | ||||
Derivative [Line Items] | ||||
Amount of Gain (Loss) Recognized in Income | 201 | (26) | 253 | 1 |
Mortgage loan forward sale contracts | ||||
Derivative [Line Items] | ||||
Amount of Gain (Loss) Recognized in Income | $ (201) | $ 26 | $ (253) | $ (1) |
The Fair Value Option For Certain Loans - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Sep. 30, 2015 |
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Eligible item for the fair value option | $ 83.0 | $ 47.8 | |||
Loans greater than 90 days past due or in nonaccrual status | $ 9.0 | 9.0 | 1.5 | ||
Unpaid principal balance greater than 90 days past due or in nonaccrual status | 11.0 | 11.0 | 1.7 | ||
Long-term loans and written loan commitments | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Eligible item for the fair value option | 2.7 | $ 0.0 | 2.3 | $ 0.5 | |
Fair value, option, aggregate differences, long-term debt instruments | $ 1,070.0 | $ 1,070.0 | $ 1,070.0 |
The Fair Value Option For Certain Loans - Schedule of Fair Value Option (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Change in fair value of loans | $ 14,198 | $ (24,394) | $ 35,253 | $ 7,914 |
Long-term loans and written loan commitments | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Change in fair value of loans | 14,197 | (24,394) | 35,252 | 7,914 |
Noninterest Income | Long-term loans and written loan commitments | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Change in fair value of loans | $ 14,197 | $ (24,394) | $ 35,252 | $ 7,914 |
Goodwill - Summary of Changes to Goodwill (Details) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2016 |
Sep. 30, 2015 |
|
Goodwill [Roll Forward] | ||
Balance, beginning of period | $ 697,807 | $ 697,807 |
Goodwill acquired during the period | 40,653 | 0 |
Balance, end of period | $ 738,460 | $ 697,807 |
Core Deposits and Other Intangibles - Intangible Assets Amortization Expense (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Sep. 30, 2015 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | $ 125,109 | $ 117,232 |
Accumulated amortization | (112,352) | (110,113) |
Total | 12,757 | 7,119 |
Core Deposit Intangible | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 100,018 | 92,679 |
Accumulated amortization | (92,455) | (92,073) |
Total | 7,563 | 606 |
Brand Intangible | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 8,464 | 8,464 |
Accumulated amortization | (4,559) | (4,136) |
Total | 3,905 | 4,328 |
Customer Relationships Intangible | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 16,089 | 16,089 |
Accumulated amortization | (15,326) | (13,904) |
Total | 763 | 2,185 |
Other intangibles | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 538 | 0 |
Accumulated amortization | (12) | 0 |
Total | $ 526 | $ 0 |
Core Deposits and Other Intangibles (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization of core deposits and other intangibles | $ 0.7 | $ 1.8 | $ 2.1 | $ 6.4 |
Core Deposits and Other Intangibles - Schedule of Future Amortization Expense (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Sep. 30, 2015 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Remaining in 2016 | $ 1,024 | |
2017 | 2,342 | |
2018 | 1,614 | |
2019 | 1,489 | |
2020 | 1,363 | |
2021 and thereafter | 4,925 | |
Total | $ 12,757 | $ 7,119 |
Loan Servicing Rights - Schedule of Loan Servicing Rights Activity and Valuation Allowance (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Sep. 30, 2015 |
|
Balance of loans serviced at: | |||||
Loan servicing rights, beginning of period | $ 0 | $ 0 | $ 0 | $ 0 | |
Acquired in HF Financial acquisition | 6,573 | 0 | 6,573 | 0 | |
Additions | 0 | 0 | 0 | 0 | |
Amortization | (166) | 0 | (166) | 0 | |
Loan servicing rights, end of period | 6,407 | 0 | 6,407 | 0 | |
Valuation Allowance for Impairment of Recognized Servicing Assets [Roll Forward] | |||||
Valuation allowance, beginning of period | 0 | 0 | 0 | 0 | |
Additions / (reductions) | (176) | 0 | (176) | 0 | |
Valuation allowance, end of period | (176) | 0 | (176) | 0 | |
Loan servicing rights, net | 6,231 | 0 | 6,231 | 0 | $ 0 |
Servicing fees received | 306 | 0 | 306 | 0 | |
Balance of loans serviced at: | |||||
Beginning of period | 0 | 0 | 0 | 0 | |
End of period | $ 914,694 | $ 0 | $ 914,694 | $ 0 | |
Constant prepayment rates | 16.40% | ||||
Discount rate | 11.60% |
Securities Sold Under Agreements to Repurchase - (Narrative) (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Sep. 30, 2015 |
|
Federal Funds Purchased and Securities Sold under Agreements to Repurchase [Abstract] | ||
Securities sold under agreements to repurchase | $ 161.8 | $ 180.6 |
Securities sold under agreements to repurchase, fair value of collateral | $ 163.0 | $ 181.6 |
Securities sold under agreements to repurchase, collateral, percentage of borrowed funds | 102.00% |
FHLB Advances and Other Borrowings - (Narrative) (Details) - USD ($) |
9 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Sep. 30, 2015 |
|
Debt Instrument [Line Items] | ||
Current borrowing capacity | $ 684,700,000 | |
Loans pledged to the Federal Home Loan Bank | 3,110,000,000 | $ 2,290,000,000 |
Wells Fargo | Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Borrowing capacity | $ 10,000,000 | |
Unused capacity fee, percentage | 0.20% | |
Interest rate at end of period | 2.47% | |
Outstanding advances | $ 0 | $ 0 |
London Interbank Offered Rate (LIBOR) | Wells Fargo | Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 2.00% |
FHLB Advances and Other Borrowings - Schedule of Due or Callable Notes (Details) - USD ($) $ in Thousands |
Jun. 30, 2016 |
Sep. 30, 2015 |
---|---|---|
Debt Instrument [Line Items] | ||
Total | $ 111,827 | $ 90,727 |
FHLB Advances and Related Party Notes Payable | ||
Debt Instrument [Line Items] | ||
Remaining in 2016 | 393,328 | |
2017 | 29,000 | |
2018 | 31,000 | |
2019 | 0 | |
2020 | 0 | |
2021 and thereafter | 460,000 | |
Total | $ 913,328 |
Profit-Sharing Plan and Defined Benefit Plans - Profit Sharing Plan (Details) - Multiple employer 401(k) profit sharing plan - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Defined Contribution Plan Disclosure [Line Items] | ||||
Defined contribution plan, requisite service period | 1 year | |||
Defined contribution plan, minimum age requirement | 21 years | |||
Contributions by the Company | $ 1.2 | $ 1.1 | $ 3.2 | $ 2.9 |
Profit-Sharing Plan and Defined Benefit Plans - Components of Net Periodic Benefit Cost (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Net periodic benefit cost | ||||
Service cost | $ 8 | $ 0 | $ 8 | $ 0 |
Interest cost | 109 | 0 | 109 | 0 |
Expected return on plan assets | (95) | 0 | (95) | 0 |
Amortization of prior losses | 0 | 0 | 0 | 0 |
Net periodic benefit cost | $ 22 | $ 0 | $ 22 | $ 0 |
Fair Value Measurements - (Narrative) (Details) |
9 Months Ended |
---|---|
Jun. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Derivative, remaining maturity (or less) | 180 days |
Fair Value Measurements - Schedule of Other Available-for-Sale (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Beginning Balance | $ 1,458 | $ 1,958 | $ 1,835 | $ 2,029 |
Additions | 15 | 0 | 15 | 0 |
Principal paydown | (158) | (124) | (235) | (195) |
Realized loss on securities | 0 | 0 | (300) | 0 |
Ending Balance | $ 1,315 | $ 1,834 | $ 1,315 | $ 1,834 |
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