EX-99.1 2 d585587dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

July 30, 2018

For further information contact:

Craig L. Montanaro, President and Chief Executive Officer, or

Eric B. Heyer, Senior Executive Vice President and Chief Operating Officer

Kearny Financial Corp.

(973) 244-4500

KEARNY FINANCIAL CORP.

REPORTS FOURTH QUARTER AND YEAR END 2018 OPERATING RESULTS

Fairfield, New Jersey, July 30, 2018 – Kearny Financial Corp. (NASDAQ GS: KRNY) (the “Company”), the holding company of Kearny Bank (the “Bank”), today reported net income for the quarter ended June 30, 2018 of $7.7 million, or $0.08 per basic and diluted share. The results represent an increase of $2.3 million compared to net income of $5.4 million, or $0.07 per basic and diluted share, for the quarter ended March 31, 2018.

Net income for the quarters ended June 30, 2018 and March 31, 2018 reflected merger-related expenses recognized in conjunction with the Company’s acquisition of Clifton Bancorp, Inc. (“CSBK”), the holding company for Clifton Savings Bank (“Clifton”), which closed on April 2, 2018. Excluding the effects of merger-related expenses on an after-tax basis, the Company’s net income would have been $11.4 million or $0.12 per basic and diluted share for the quarter ended June 30, 2018 compared to $5.8 million or $0.08 per basic and diluted share for the quarter ended March 31, 2018.

For the fiscal year ended June 30, 2018, the Company reported net income of $19.6 million, or $0.24 per basic and diluted share. The results represent an increase of $993,000 compared to net income of $18.6 million, or $0.22 per basic and diluted share, for the fiscal year ended June 30, 2017.

As above, net income for the year ended June 30, 2018 included $6.7 million in merger-related expenses associated with the Company’s acquisition of CSBK. The Company estimates that such expenses adversely impacted net income by approximately $5.1 million for the year ended June 30, 2018.

Net income for the year ended June 30, 2018 also reflected the effects of federal income tax reform that was codified through the passage of the Tax Cuts and Jobs Act (the “Act”) during the quarter ended December 31, 2017. The Act permanently reduced the Company’s federal income tax rate from 35% to 21% while also including other provisions that altered the deductibility of certain recurring expenses recognized by the Company. The provisions of the Act positively impacted the Company’s earnings during the second half of fiscal 2018. However, the passage of the Act resulted in a $3.5 million net reduction in the carrying value of the Company’s deferred income tax assets and liabilities with an equal and offsetting charge to income tax expense during the quarter ended December 31, 2017.

The net charge of $3.5 million attributable to the changes in the carrying value of deferred income tax items was partially offset by a $769,000 reduction in current-year income tax expense attributable to the noted reduction in the Company’s income tax rate. For the “transition” year ended June 30, 2018, the Company’s statutory federal income tax rate was reduced to 28%, reflecting effective statutory rates of 35% and 21% for the first and second halves of the year, respectively. For the fiscal year ending June 30, 2019 and thereafter, the Company’s statutory federal income tax rate will be reduced to 21%.

Acquisition Highlights

The increase in the Company’s net income for the quarter ended June 30, 2018 exemplified the beneficial impact of the $1.6 billion, or 33.4%, of growth in total assets that resulted from the Company’s acquisition of CSBK. The growth arising from the acquisition reflected:

 

  •  

Loans acquired with aggregate fair values totaling $1.12 billion primarily comprising residential and commercial mortgage loans. Acquired loans included $5.4 million of nonperforming loans whose fair values at acquisition reflected negligible levels of impairment;

 

  •  

Deposits assumed with aggregate fair values totaling $949.8 million housed across a retail banking network consisting of 12 branches located in New Jersey’s Passaic, Bergen, Hudson and Essex counties;

 

  •  

Securities acquired with aggregate fair values of $326.9 million primarily comprising U.S. agency and other high-quality debt securities;

 

  •  

Borrowings assumed with fair values of $414.1 million comprised entirely of outstanding advances from the Federal Home Loan Bank of New York;

 

  •  

Merger consideration primarily comprising 25.4 million shares of the Company’s common stock issued to CSBK stockholders reflecting an exchange of 1.191 of Company shares for each outstanding share of CSBK common stock at the time of closing as well as cash distributed to CSBK stockholders and eligible option holders for the settlement of fractional shares and the value of outstanding options to purchase CSBK stock, respectively.

As required by applicable accounting standards, the Company recorded purchase accounting adjustments to the carrying value of all assets acquired and liabilities assumed from CSBK to reflect their fair values at the time of acquisition. With specific regard to the interest-earning assets acquired and interest-bearing liabilities assumed, such adjustments generally accrete or amortize into interest income and interest expense, respectively, on a level-yield/cost basis over their estimated remaining lives. As a result, the “post-acquisition” yield or cost recognized by the Company on the assets and liabilities acquired generally reflect the comparable market interest rates for such instruments at the time of their acquisition.

The CSBK acquisition was the primary factor contributing to the reported increase in net income for the quarter ended June 30, 2018 compared to the prior quarter ended March 31, 2018. As discussed in greater detail below, the increase in net income between comparative periods included the following highlights:

 

  •  

Net interest income increased by $13.5 million, or 50.0%, to $40.6 million from $27.1 million;

 

  •  

Net interest margin increased by 31 basis points to 2.72% from 2.41%;

 

  •  

Excluding the impact of non-recurring, merger-related expenses recognized during both comparative periods:

 

  •  

Non-interest expense increased by $4.0 million, or 17.9%, to $26.1 million from $22.1 million;

 

  •  

The non-interest expense ratio decreased by 23 basis points to 1.59% from 1.82%.

 

  •  

The efficiency ratio decreased by 13.0% to 59.4% from 72.4%;

 

  •  

Return on average on average assets ratio increased by 22 basis points to 0.69% from 0.47%.

Overview of Financial Performance

In addition to completing the CSBK acquisition, the Company continued to execute other strategies throughout fiscal 2018 intended to organically grow and diversify its balance sheet while increasing its core earnings and prudently managing capital to promote long-term growth in shareholder value. Together, the Company’s organic growth and acquisition strategies combined to result in several balance sheet growth and diversification achievements that are included among the following highlights for the quarter and year ended June 30, 2018:

 

  •  

The Company’s aggregate loan portfolio, excluding loans held for sale and the allowance for loan losses, increased by $1.15 billion to $4.50 billion, or 68.4% of total assets, at June 30, 2018 from $3.35 billion, or 67.9% of total assets, at March 31, 2018. For the year ended June 30, 2018, the Company’s aggregate loan portfolio increased by $1.26 billion, or 38.7%, from $3.25 billion, or 67.4% of total assets, at June 30, 2017.

 

  •  

The outstanding balance of the Company’s commercial mortgage loans increased by $476.6 million to $3.06 billion at June 30, 2018 from $2.58 billion at March 31, 2018. For the year ended June 30, 2018, commercial mortgage loans grew $563.9 million from $2.50 billion at June 30, 2017. The organic growth in commercial mortgage loans during the quarter and year ended June 30, 2018 continued to reflect the impact of an accelerated rate of loan prepayments compared to prior years that partially offset the increase in loans arising from loan origination volume. In addition to the growth arising from the CSBK acquisition, the Company continues to execute organic strategies designed to increase the origination volume of commercial mortgage loans to compensate for the challenges presented by the noted increase in prepayments. Toward that end, the Company’s pipeline of commercial mortgage loans in the underwriting process increased during the quarter ended June 30, 2018.

 

  •  

The outstanding balance of residential mortgage loans held in the portfolio, including home equity loans and lines of credit, increased by $744.9 million to $1.39 billion at June 30, 2018 from $643.3 million at March 31, 2018. For the year ended June 30, 2018, residential mortgage loans grew $738.1 million from $650.1 million at June 30, 2017. The increase in residential mortgage loans during the quarter and year ended June 30, 2018 primarily reflected the impact of the CSBK acquisition as the Company continued emphasizing its mortgage banking strategy through which most residential mortgage loans originated are sold into the secondary market.

 

  •  

Asset quality remained strong throughout the quarter and year ended June 30, 2018. The outstanding balance of nonperforming loans increased by $2.6 million to $16.9 million, or 0.37% of total loans, at June 30, 2018 from $14.2 million, or 0.42% of total loans, at March 31, 2018. For the year ended June 30, 2018, nonperforming loans decreased by $2.0 million from $18.9 million, or 0.58% of total loans, at June 30, 2017. As noted earlier, the increase in the outstanding balance of nonperforming loans at June 30, 2018 included a nominal balance of loans acquired from CSBK which was partially offset by a net decrease in the remaining balance of nonperforming loans during the reported periods.

 

  •  

The allowance for loan losses increased to $30.9 million at June 30, 2018 from $30.2 million at March 31, 2018, resulting in a “total loan coverage ratio”, representing the balance of the allowance for loan losses as a percentage of total loans, of 0.68% and 0.90%, respectively. For the year ended June 30, 2018, the allowance for loan losses increased by $1.6 million from $29.3 million, or 0.90% of total loans, at June 30, 2017. The decrease in the “total loan coverage ratio” for both the quarter and year ended June 30, 2018 largely reflects the impact of the CSBK acquisition and the related accounting standards which generally preclude acquired loan balances from being considered in the balance of the allowance for loan losses at the time of their acquisition. In lieu thereof, an accretable “credit mark” is established as a component of the purchase accounting fair value adjustments which directly reduces the carrying value of the acquired loan portfolio.

  •   The Company’s securities portfolio increased by $170.7 million to $1.31 billion, or 20.0% of total assets, at June 30, 2018 from $1.14 billion, or 23.2% of total assets, at March 31, 2018. For the year ended June 30, 2018, the securities portfolio increased by $207.7 million, or 18.8%, from $1.11 billion, or 23.0% of total assets at June 30, 2017. The increase in the securities portfolio for the quarter and year ended June 30, 2018 largely reflected the impact of securities acquired from CSBK. The Company sold a significant portion of the securities originally acquired from CSBK with a portion of the sale proceeds reinvested into shorter-duration, higher-yielding securities and the remainder reinvested into loans.

 

  •   The balance of cash and cash equivalents increased by $90.6 million to $128.9 million at June 30, 2018 from $38.3 million at March 31, 2018. For the year ended June 30, 2018, cash and cash equivalents increased by $50.6 million from $78.2 million at June 30, 2017. The increase for the quarter and year ended June 30, 2018 partly reflected day-to-day operating fluctuations in the Company’s balance of short-term liquidity coupled with the acquisition of cash and cash equivalents balances acquired from CSBK. Notwithstanding the increase in their overall balance, the Company generally endeavors to limit the balance of cash and cash equivalents held to the minimum levels needed to meet its short-term funding obligations and overall liquidity risk management objectives. As such, the excess balance of cash and cash equivalents held at June 30, 2018 is generally expected to be redeployed into higher-yielding assets during the quarter ending September 30, 2018.

 

  •   The Company’s total deposits increased by $1.01 billion to $4.07 billion at June 30, 2018, from $3.07 billion at March 31, 2018. For the year ended June 30, 2018, total deposits increased by $1.14 billion from $2.93 billion at June 30, 2017. The increase in deposits for the quarter and year ended June 30, 2018 largely reflected the impact of deposits acquired from CSBK while also reflecting the continuing effects of product, pricing and marketing strategies implemented during fiscal 2018.

 

  •   Total borrowings increased by $346.6 million to $1.20 billion at June 30, 2018, from $852.0 million at March 31, 2018. For the year ended June 30, 2018, total borrowings increased by $392.4 million from $806.2 million at June 30, 2017. The increase in borrowings for the quarter and year ended June 30, 2018 partly reflected the impact of borrowings acquired from CSBK. The increase attributable to the CSBK acquisition was partly offset by the repayment of maturing FHLB term and overnight advances coupled with changes in depositor sweep account balances representing normal day-to-day fluctuations in such balances.

 

  •   The Company’s stockholders’ equity increased by $277.5 million to $1.27 billion at June 30, 2018 from $991.2 million at March 31, 2018. The increase in stockholders’ equity for the quarter ended June 30, 2018 partly reflected $330.7 million of capital stock issued by the Company in conjunction with the acquisition of CSBK. The increase also reflected net income earned during the period coupled with a decrease in unearned ESOP shares and a net increase in accumulated other comprehensive income primarily reflecting changes in the fair value of the Company’s derivatives and available for sale securities portfolios. The noted increases in stockholders’ equity were partially offset by the Company’s repurchase of 4.5 million shares of its capital stock during the quarter ended June 30, 2018 at a total cost of $62.5 million and at an average cost of $13.85 per share, coupled with cash dividends paid to stockholders of $3.9 million during the period. For the year ended June 30, 2018, stockholders’ equity increased by $211.6 million from $1.06 billion at June 30, 2017. The net increase for the year was generally attributable to the cumulative effects of the same factors that contributed to the net change in stockholders’ equity for the quarter ended June 30, 2018.

 

  •   At June 30, 2018, the Company’s total consolidated equity to assets ratio was 19.28% while the Bank’s total consolidated equity to assets ratio was 18.19%. The Company’s and Bank’s regulatory capital ratios at June 30, 2018 were well in excess of the levels required by federal banking regulators to be classified as “well-capitalized” under regulatory guidelines.

As highlighted below, the acquisition of CSBK coupled with the organic balance sheet growth, reinvestment and reallocation achievements helped to offset the adverse effects of an increase in market interest rates and a flattening yield curve on the Company’s net interest margin:

 

  •  

The Company’s net interest income increased by $13.5 million to $40.6 million for the quarter ended June 30, 2018 from $27.1 million for the quarter ended March 31, 2018. For the year ended June 30, 2018, net interest income increased by $18.7 million to $121.3 million from $102.6 million for the year ended June 30, 2017.

 

  •  

The Company’s net interest margin increased 31 basis points to 2.72% for the quarter ended June 30, 2018 from 2.41% for the quarter ended March 31, 2018 while the net interest rate spread increased by 33 basis points to 2.48% from 2.15% for those same comparative periods, respectively. For the year ended June 30, 2018, the net interest margin increased by nine basis points to 2.50% from 2.41% for the year ended June 30, 2017 while the net interest rate spread increased by 11 basis points to 2.25% from 2.14% for those same comparative periods, respectively.

The level of the Company’s charge offs and provision for loan losses continued to reflect strong asset quality metrics:

 

  •  

The Company recognized net charge offs totaling approximately $101,000 for the quarter ended June 30, 2018, reflecting an annualized net charge off rate of 0.01% on the average balance of total loans for the period. By comparison, the Company’s net charge offs totaled approximately $241,000 for the quarter ended March 31, 2018, reflecting an annualized net charge off rate of 0.03%.

For the year ended June 30, 2018, the Company recognized net charge offs totaling $1.1 million reflecting an annualized charge off rate of 0.03% on the average balance of total loans for fiscal 2018. By comparison, the Company’s net charge offs totaled approximately $324,000 for the year ended June 30, 2017 reflecting an annualized charge off rate of 0.01% on the average balance of total loans for fiscal 2017.

 

  •  

The Company’s provision for loan losses increased by $294,000 to $717,000 for the quarter ended June 30, 2018 compared to $423,000 for the quarter ended March 31, 2018. The increase in the provision largely reflected the net effect of updates to historical and environmental loss factors that increased the level of provision expense between comparative periods. The increase in the provision expense was partially offset by a decrease in net charge offs between the two comparative periods, as discussed above, as well as the effects of comparatively lower growth during the quarter ended June 30, 2018 in the performing portion of the non-acquired loan portfolio that is collectively evaluated for impairment using historical and environmental loss factors.

 

  •  

For the year ended June 30, 2018, the provision for loan losses decreased by $2.7 million to $2.7 million from $5.4 million for the year ended June 30, 2017. The decrease in the provision was partly attributable to the effects of comparatively lower growth during fiscal 2018 in the performing portion of the non-acquired loan portfolio that is collectively evaluated for impairment using historical and environmental loss factors while also reflecting the effects of updates to such factors between comparative periods. This decrease was partially offset by an increase in net charge offs recognized between the two comparative periods, as discussed above.

The Company’s mortgage banking and SBA lending strategies continued to supplement and diversify its sources of non-interest income while the benefits of its commercial mortgage lending strategies were also reflected in non-interest income:

 

  •  

Aggregate loan sale gains totaled $127,000 for the quarter ended June 30, 2018 compared to $346,000 for the quarter ended March 31, 2018 while such gains totaled $1.0 million and $1.5 million for the years ended June 30, 2018 and June 30, 2017, respectively. The decrease in gains recognized was partly attributable to an overall increase in market interest rates that has reduced rate refinancing incentives for residential mortgage borrowers. A decrease in SBA sale gains between both sets of comparative periods generally reflected fluctuations in loan origination volume and timing that generally characterizes the Company’s SBA lending activities.

  •  

Fees and service charges totaled $1.2 million for the quarter ended June 30, 2018 compared to $1.5 million for the quarter ended March 31, 2018. For the year ended June 30, 2018, fees and service charges increased to $5.4 million from $3.3 million for the year ended June 30, 2017. The increased level of fees and service charges for the year ended June 30, 2018 was largely attributable to increased recognition of commercial loan prepayment fees while their inherent variability was the largest contributor to the decrease in fees and charges between the linked quarters ended June 30, 2018 and March 31, 2018.

The Company continues to evaluate and implement tactics and strategies designed to improve operating practices, policies and procedures while making more efficient and effective use of its supporting infrastructure, including human resources, facilities and information technology systems.

 

  •  

The Company’s ratio of non-interest expense to average assets totaled 1.90% for the quarter ended June 30, 2018 compared to 1.85% for the prior quarter ended March 31, 2018. For those same comparative periods, the Company’s operating efficiency ratio decreased to 71.1% from 73.7%, respectively. As noted earlier, excluding the impact of merger-related expenses, the Company’s non-interest expense to average assets ratios would have been 1.59% and 1.82% for the quarters ended June 30, 2018 and March 31, 2018, respectively, while the Company’s operating efficiency ratios would have been 59.4% and 72.4% for those same periods, respectively.

For the year ended June 30, 2018, the Company’s ratio of non-interest expense to average assets totaled 1.86% compared to 1.76% for the year ended June 30, 2017. For those same comparative periods, the Company’s operating efficiency ratio increased to 72.7% from 71.2%, respectively. For the year ended June 30, 2018, the Company’s ratio of non-interest expense to average assets and operating efficiency ratio included the impacts arising from merger-related expenses, as discussed above.

Collectively, the factors noted above contributed to the increases in net income for the quarter and year ended June 30, 2018 noted earlier. The increases in net income had a favorable impact on the Company’s earnings-based performance ratios as highlighted below:

 

  •  

The Company’s return on average assets for the quarter ended June 30, 2018 totaled 0.47% compared to 0.44% for the prior quarter ended March 31, 2018. Excluding the impacts on net income arising from the non-recurring effects of merger-related expenses, as discussed above, the Company’s return on average assets would have been 0.70% and 0.47% for the quarters ended June 30, 2018 and March 31, 2018, respectively.

For the year ended June 30, 2018, the return on average assets totaled 0.37% compared to 0.40% for the prior year ended June 30, 2017. The Company’s return on average assets for the year ended June 30, 2018 reflected the impacts arising from federal income tax reform and merger-related expenses, as discussed above.

The Company continued to execute key capital management strategies during the quarter ended June 30, 2018 to further support shareholder value:

 

  •  

The Company increased its regular quarterly cash dividend payable to stockholders by $0.01 from $0.03 per share declared and paid during the quarters ended September 30, 2017, December 31, 2017 and March 31, 2018, to $0.04 per share declared and paid during the quarter ended June 30, 2018. The Company continues to evaluate its dividend policies and practices in relation to its capital management and shareholder value objectives.

  •   In April 2018, the Company completed the repurchase of its shares of capital stock under its second share repurchase program announced in May 2017 through which it authorized the repurchase of 8,559,084 shares, or 10%, of the Company’s outstanding shares. The shares associated with this second program were repurchased at a total cost of $122.0 million and at an average cost of $14.25 per share.

 

  •   In May 2018, the Company announced a third share repurchase program through which it authorized the repurchase of 10,238,557 shares, or 10%, of the Company’s outstanding shares. Through June 30, 2018, the Company repurchased a total of 2,695,460 shares, or 26.3% of the shares authorized for repurchase under this third program, at a total cost of $38.4 million and at an average cost of $14.23 per share.

The exhibits that follow this narrative begin with the presentation of the Linked-Quarter Comparative Financial Analysis and Year-to-Year Comparative Financial Analysis. These tabular presentations support the discussion above by presenting the Company’s financial condition and operating results for the quarter and fiscal year ended June 30, 2018 compared to those for the prior linked-quarter ended March 31, 2018 and prior fiscal year ended June 30, 2017, respectively. This analysis is followed by a tabular Five-Quarter Financial Trend Analysis that presents similar financial information, together with other financial highlights and performance metrics, over a consecutive five quarter look-back period that is intended to reflect the Company’s financial performance and strategic achievements over this extended period of time. The exhibits conclude with the presentation of the Reconciliation of GAAP to Non-GAAP financial data included in this news release.

Statements contained in this news release that are not historical facts are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, factors discussed in documents filed by the Company with the Securities and Exchange Commission from time to time. The Company does not undertake and specifically disclaims any obligation to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company.

Linked-Quarter Comparative Financial Analysis

 

Summary Balance Sheet

(Dollars and Shares in Thousands,

Except Per Share Data, Unaudited)

    At     Variance
or Change		     Variance
or Change
Pct.		  
   June 30,     March 31,      
   2018     2018      

Assets

         

Cash and cash equivalents

    $ 128,864     $ 38,283     $ 90,581       236.6 % 

Securities available for sale

      725,085       684,771       40,314       5.9 % 

Securities held to maturity

      589,730       459,380       130,350       28.4 % 

Loans held-for-sale

      863       2,377       (1,514 )      -63.7 % 

Loans receivable, including yield adjustments

      4,501,348       3,351,369       1,149,979       34.3 % 

Less allowance for loan losses

      (30,865 )      (30,248 )      (617 )      2.0 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net loans receivable

      4,470,483       3,321,121       1,149,362       34.6 % 

Premises and equipment

      56,240       42,856       13,384       31.2 % 

Federal Home Loan Bank stock

      59,004       39,112       19,892       50.9 % 

Accrued interest receivable

      18,510       13,926       4,584       32.9 % 

Goodwill

      210,895       108,591       102,304       94.2 % 

Bank owned life insurance

      249,816       184,981       64,835       35.0 % 

Deferred income taxes, net

      23,754       3,898       19,856       509.4 % 

Other assets

      46,630       34,404       12,226       35.5 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total assets

    $ 6,579,874     $ 4,933,700     $ 1,646,174       33.4 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Liabilities

         

Deposits

    $ 4,073,604     $ 3,067,102     $ 1,006,502       32.8 % 

Borrowings

      1,198,646       852,009       346,637       40.7 % 

Advance payments by borrowers for taxes

      18,088       8,969       9,119       101.7 % 

Other liabilities

      20,788       14,419       6,369       44.2 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total liabilities

      5,311,126       3,942,499       1,368,627       34.7 % 

Stockholders’ Equity

         

Common stock

      996       788       208       26.4 % 

Paid-in capital

      922,711       653,045       269,666       41.3 % 

Retained earnings

      359,096       355,270       3,826       1.1 % 

Unearned ESOP shares

      (32,590 )      (33,076 )      486       -1.5 % 

Accumulated other comprehensive income, net

      18,535       15,174       3,361       22.1 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total stockholders’ equity

      1,268,748       991,201       277,547       28.0 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total liabilities and stockholders’ equity

    $ 6,579,874     $ 4,933,700     $ 1,646,174       33.4 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Consolidated capital ratios

         

Equity to assets

      19.28 %      20.09 %      -0.81 %   

Tangible equity to tangible assets

      16.53 %      18.29 %      -1.76 %   

Share data

         

Outstanding shares

      99,626       78,765       20,861       26.5 % 

Equity per share

    $ 12.74     $ 12.58     $ 0.16       1.3 % 

Tangible equity per share (1)

    $ 10.56     $ 11.20     $ (0.64 )      -5.7 % 

 

(1) Tangible equity equals total stockholders’ equity reduced by goodwill and core deposit intangible assets.

Summary Income Statement

(Dollars and Shares in Thousands,

Except Per Share Data, Unaudited)

    For the three months ended     Variance
or Change		     Variance
or Change
Pct.		  
   June 30,     March 31,      
   2018     2018      

Interest income

         

Loans

    $ 46,615     $ 30,728     $ 15,887       51.7 % 

Taxable investment securities

      8,670       6,450       2,220       34.4 % 

Tax-exempt investment securities

      702       652       50       7.7 % 

Other interest-earning assets

      1,275       715       560       78.3 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total Interest Income

      57,262       38,545       18,717       48.6 % 

Interest expense

         

Deposits

      9,755       7,026       2,729       38.8 % 

Borrowings

      6,916       4,462       2,454       55.0 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total interest expense

      16,671       11,488       5,183       45.1 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net interest income

      40,591       27,057       13,534       50.0 % 

Provision for loan losses

      717       423       294       69.5 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net interest income after provision for loan losses

      39,874       26,634       13,240       49.7 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Non-interest income

         

Fees and service charges

      1,205       1,537       (332 )      -21.6 % 

Gain (loss) on sale and call of securities

      9       (1 )      10       -1000.0 % 

Gain on sale of loans

      127       346       (219 )      -63.3 % 

Gain on sale of real estate owned

      60       7       53       757.1 % 

Income from bank owned life insurance

      1,604       1,227       377       30.7 % 

Electronic banking fees and charges

      278       243       35       14.4 % 

Miscellaneous

      75       189       (114 )      -60.3 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total non-interest income

      3,358       3,548       (190 )      -5.4 % 

Non-interest expense

         

Salaries and employee benefits

      15,353       12,888       2,465       19.1 % 

Net occupancy expense of premises

      2,716       2,359       357       15.1 % 

Equipment and systems

      2,776       2,323       453       19.5 % 

Advertising and marketing

      757       745       12       1.6 % 

Federal deposit insurance premium

      463       350       113       32.3 % 

Directors’ compensation

      754       689       65       9.4 % 

Merger-related expenses

      5,149       401       4,748       1184.0 % 

Miscellaneous

      3,289       2,788       501       18.0 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total non-interest expense

      31,257       22,543       8,714       38.7 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Income before income taxes

      11,975       7,639       4,336       56.8 % 

Income taxes

      4,257       2,262       1,995       88.2 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net income

    $ 7,718     $ 5,377     $ 2,341       43.5 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net income per common share (EPS)

         

Basic

    $ 0.08     $ 0.07     $ 0.01    

Diluted

    $ 0.08     $ 0.07     $ 0.01    

Dividends declared

         

Cash dividends declared per common share

    $ 0.04     $ 0.03     $ 0.01    

Cash dividends declared

    $ 3,892     $ 2,262     $ 1,630    

Dividend payout ratio

      50.4 %      42.1 %      8.3 %   

Weighted average number of common shares outstanding

         

Basic

      98,046       75,492       22,554    

Diluted

      98,100       75,539       22,561    

Average Balance Sheet Data

(Dollars in Thousands, Unaudited)

    For the three months ended     Variance
or Change		     Variance
or Change
Pct.		  
   June 30,     March 31,      
   2018     2018      

Assets

         

Interest-earning assets:

         

Loans receivable, including loans held for sale

    $ 4,507,336     $ 3,293,664     $ 1,213,672       36.8 % 

Taxable investment securities

      1,192,066       1,003,600       188,466       18.8 % 

Tax-exempt investment securities

      134,683       127,605       7,078       5.5 % 

Other interest-earning assets

      142,591       67,770       74,821       110.4 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total interest-earning assets

      5,976,676       4,492,639       1,484,037       33.0 % 

Non-interest-earning assets

      586,976       369,299       217,677       58.9 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total assets

    $ 6,563,652     $ 4,861,938     $ 1,701,714       35.0 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Liabilities and Stockholders’ Equity

         

Interest-bearing liabilities:

         

Deposits:

         

Interest-bearing demand

    $ 1,004,445     $ 870,762     $ 133,683       15.4 % 

Savings and club

      724,430       513,948       210,482       41.0 % 

Certificates of deposit

      1,983,372       1,385,151       598,221       43.2 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total interest-bearing deposits

      3,712,247       2,769,861       942,386       34.0 % 

Borrowings:

         

Federal Home Loan Bank Advances

      1,179,147       777,721       401,426       51.6 % 

Other borrowings

      34,636       33,529       1,107       3.3 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total borrowings

      1,213,783       811,250       402,533       49.6 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total interest-bearing liabilities

      4,926,030       3,581,111       1,344,919       37.6 % 

Non-interest-bearing liabilities:

         

Non-interest-bearing deposits

      305,763       267,152       38,611       14.5 % 

Other non-interest-bearing liabilities

      39,340       24,953       14,387       57.7 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total non-interest-bearing liabilities

      345,103       292,105       52,998       18.1 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total liabilities

      5,271,133       3,873,216       1,397,917       36.1 % 

Stockholders’ equity

      1,292,519       988,722       303,797       30.7 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total liabilities and stockholders’ equity

    $ 6,563,652     $ 4,861,938     $ 1,701,714       35.0 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Average interest-earning assets to average interest-bearing liabilities

      121.33 %      125.45 %      -4.13 %      -3.3 % 

Performance Ratio Highlights

    For the three months ended     Variance
or Change		  
   June 30,     March 31,    
   2018     2018    

Average yield on interest-earning assets:

       

Loans receivable, including loans held for sale

      4.14 %      3.73 %      0.41 % 

Taxable investment securities

      2.91 %      2.57 %      0.34 % 

Tax-exempt investment securities (1)

      2.09 %      2.04 %      0.05 % 

Other interest-earning assets

      3.58 %      4.22 %      -0.64 % 
  

 

 

    

 

 

    

 

 

  

Total interest-earning assets

      3.83 %      3.43 %      0.40 % 

Average cost of interest-bearing liabilities:

       

Deposits:

       

Interest-bearing demand

      0.89 %      0.84 %      0.05 % 

Savings and club

      0.29 %      0.12 %      0.17 % 

Certificates of deposit

      1.41 %      1.46 %      -0.05 % 
  

 

 

    

 

 

    

 

 

  

Total interest-bearing deposits

      1.05 %      1.01 %      0.04 % 

Borrowings:

       

Federal Home Loan Bank Advances

      2.34 %      2.27 %      0.07 % 

Other borrowings

      0.34 %      0.56 %      -0.22 % 
  

 

 

    

 

 

    

 

 

  

Total borrowings

      2.28 %      2.20 %      0.08 % 
  

 

 

    

 

 

    

 

 

  

Total interest-bearing liabilities

      1.35 %      1.28 %      0.07 % 

Interest rate spread (2)

      2.48 %      2.15 %      0.33 % 

Net interest margin (3)

      2.72 %      2.41 %      0.31 % 

Non-interest income to average assets (annualized)

      0.20 %      0.29 %      -0.09 % 

Non-interest expense to average assets (annualized)

      1.90 %      1.85 %      0.05 % 

Efficiency ratio (4)

      71.12 %      73.66 %      -2.54 % 

Return on average assets (annualized)

      0.47 %      0.44 %      0.03 % 

Return on average equity (annualized)

      2.39 %      2.18 %      0.21 % 

 

(1) The yield on tax-exempt investment securities has not been adjusted to reflect their tax-effective yield.
(2) Interest income divided by average interest-earning assets less interest expense divided by average interest-bearing liabilities.
(3) Net interest income divided by average interest-earning assets.
(4) Non-interest expense divided by the sum of net interest income and non-interest income.

Year-to-Year Comparative Financial Analysis

 

Summary Balance Sheet

(Dollars in Thousands,

Except Per Share Data, Unaudited)

    At     Variance
or Change		     Variance
or Change
Pct.		  
   June 30,     June 30,      
   2018     2017      

Assets

         

Cash and cash equivalents

    $ 128,864     $ 78,237     $ 50,627       64.7 % 

Securities available for sale

      725,085       613,760       111,325       18.1 % 

Securities held to maturity

      589,730       493,321       96,409       19.5 % 

Loans held-for-sale

      863       4,692       (3,829 )      -81.6 % 

Loans receivable, including yield adjustments

      4,501,348       3,245,261       1,256,087       38.7 % 

Less allowance for loan losses

      (30,865 )      (29,286 )      (1,579 )      5.4 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net loans receivable

      4,470,483       3,215,975       1,254,508       39.0 % 

Premises and equipment

      56,240       39,585       16,655       42.1 % 

Federal Home Loan Bank stock

      59,004       39,958       19,046       47.7 % 

Accrued interest receivable

      18,510       12,493       6,017       48.2 % 

Goodwill

      210,895       108,591       102,304       94.2 % 

Bank owned life insurance

      249,816       181,223       68,593       37.9 % 

Deferred income taxes, net

      23,754       15,454       8,300       53.7 % 

Other assets

      46,630       14,838       31,792       214.3 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total assets

    $ 6,579,874     $ 4,818,127     $ 1,761,747       36.6 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Liabilities

         

Deposits

    $ 4,073,604     $ 2,929,745     $ 1,143,859       39.0 % 

Borrowings

      1,198,646       806,228       392,418       48.7 % 

Advance payments by borrowers for taxes

      18,088       8,711       9,377       107.6 % 

Other liabilities

      20,788       16,262       4,526       27.8 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total liabilities

      5,311,126       3,760,946       1,550,180       41.2 % 

Stockholders’ Equity

         

Common stock

    $ 996       844       152       18.0 % 

Paid-in capital

      922,711       728,790       193,921       26.6 % 

Retained earnings

      359,096       361,039       (1,943 )      -0.5 % 

Unearned ESOP shares

      (32,590 )      (34,536 )      1,946       -5.6 % 

Accumulated other comprehensive income, net

      18,535       1,044       17,491       1675.4 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total stockholders’ equity

      1,268,748       1,057,181       211,567       20.0 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total liabilities and stockholders’ equity

    $ 6,579,874     $ 4,818,127     $ 1,761,747       36.6 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Consolidated capital ratios

         

Equity to assets

      19.28 %      21.94 %      -2.66 %   

Tangible equity to tangible assets

      16.53 %      20.14 %      -3.61 %   

Share data

         

Outstanding shares (period end)

      99,626       84,351       15,275       18.1 % 

Equity per share

    $ 12.74     $ 12.53     $ 0.21       1.7 % 

Tangible equity per share (1)

    $ 10.56     $ 11.24     $ (0.68 )      -6.0 % 

 

(1) Tangible equity equals total stockholders’ equity reduced by goodwill and core deposit intangible assets.

Summary Income Statement

(Dollars and Shares in Thousands,

Except Per Share Data, Unaudited)

    For the year ended     Variance
or Change		     Variance
or Change
Pct.		  
   June 30,     June 30,      
   2018     2017      

Interest income

         

Loans

    $ 138,426     $ 111,181     $ 27,245       24.5 % 

Taxable investment securities

      27,053       23,543       3,510       14.9 % 

Tax-exempt investment securities

      2,616       2,300       316       13.7 % 

Other interest-earning assets

      3,336       2,069       1,267       61.2 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total Interest Income

      171,431       139,093       32,338       23.2 % 

Interest expense

         

Deposits

      29,649       22,100       7,549       34.2 % 

Borrowings

      20,489       14,419       6,070       42.1 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total interest expense

      50,138       36,519       13,619       37.3 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net interest income

      121,293       102,574       18,719       18.2 % 

Provision for loan losses

      2,706       5,381       (2,675 )      -49.7 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net interest income after provision for loan losses

      118,587       97,193       21,394       22.0 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Non-interest income

         

Fees and service charges

      5,412       3,289       2,123       64.5 % 

Gain (Loss) on sale and call of securities

      8       (1 )      9       -900.0 % 

Gain on sale of loans

      1,004       1,535       (531 )      -34.6 % 

Loss on sale of real estate owned

      (19 )      (106 )      87       -82.1 % 

Income from bank owned life insurance

      5,362       5,207       155       3.0 % 

Electronic banking fees and charges

      1,101       1,080       21       1.9 % 

Miscellaneous

      395       344       51       14.8 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total non-interest income

      13,263       11,348       1,915       16.9 % 

Non-interest expense

         

Salaries and employee benefits

      54,034       47,818       6,216       13.0 % 

Net occupancy expense of premises

      9,178       8,018       1,160       14.5 % 

Equipment and systems

      9,482       8,350       1,132       13.6 % 

Advertising and marketing

      2,960       2,626       334       12.7 % 

Federal deposit insurance premium

      1,516       1,334       182       13.6 % 

Directors’ compensation

      2,820       1,982       838       42.3 % 

Merger-related expenses

      6,743       —         —         0.0 % 

Miscellaneous

      11,117       10,990       127       1.2 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total non-interest expense

      97,850       81,118       16,732       20.6 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Income before income taxes

      34,000       27,423       6,577       24.0 % 

Income taxes

      14,404       8,820       5,584       63.3 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net income

    $ 19,596     $ 18,603     $ 993       5.3 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net income per common share (EPS)

         

Basic

    $ 0.24     $ 0.22     $ 0.02    

Diluted

    $ 0.24     $ 0.22     $ 0.02    

Dividends declared

         

Cash dividends declared per common share

    $ 0.25     $ 0.10     $ 0.15    

Cash dividends declared

    $ 20,158     $ 8,370     $ 11,788    

Dividend payout ratio

      102.9 %      45.0 %      57.88 %   

Weighted average number of common shares outstanding

         

Basic

      82,587       84,590       (2,003 )   

Diluted

      82,643       84,661       (2,018 )   

Average Balance Sheet Data

(Dollars in Thousands, Unaudited)

    For the year ended     Variance
or Change		     Variance
or Change
Pct.		  
   June 30,     June 30,      
   2018     2017      

Assets

         

Interest-earning assets:

         

Loans receivable, including loans held for sale

    $ 3,577,598     $ 2,955,686     $ 621,912       21.0 % 

Taxable investment securities

      1,048,163       1,066,508       (18,345 )      -1.7 % 

Tax-exempt investment securities

      127,779       114,545       13,234       11.6 % 

Other interest-earning assets

      93,209       114,121       (20,912 )      -18.3 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total interest-earning assets

      4,846,749       4,250,860       595,889       14.0 % 

Non-interest-earning assets

      420,219       355,554       64,665       18.2 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total assets

    $ 5,266,968     $ 4,606,414     $ 660,554       14.3 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Liabilities and Stockholders’ Equity

         

Interest-bearing liabilities:

         

Deposits:

         

Interest-bearing demand

    $ 896,695     $ 769,767     $ 126,928       16.5 % 

Savings and club

      569,777       519,506       50,271       9.7 % 

Certificates of deposit

      1,496,743       1,241,958       254,785       20.5 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total interest-bearing deposits

      2,963,215       2,531,231       431,984       17.1 % 

Borrowings:

         

Federal Home Loan Bank Advances

      876,253       647,360       228,893       35.4 % 

Other borrowings

      34,274       38,412       (4,138 )      -10.8 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total borrowings

      910,527       685,772       224,755       32.8 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total interest-bearing liabilities

      3,873,742       3,217,003       656,739       20.4 % 

Non-interest-bearing liabilities:

         

Non-interest-bearing deposits

      281,262       249,693       31,569       12.6 % 

Other non-interest-bearing liabilities

      30,298       33,416       (3,118 )      -9.3 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total non-interest-bearing liabilities

      311,560       283,109       28,451       10.0 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total liabilities

      4,185,302       3,500,112       685,190       19.6 % 

Stockholders’ equity

      1,081,666       1,106,302       (24,636 )      -2.2 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total liabilities and stockholders’ equity

    $ 5,266,968     $ 4,606,414     $ 660,554       14.3 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Average interest-earning assets to average
interest-bearing liabilities

      125.12 %      132.14 %      -7.02 %      -5.3 % 

Performance Ratio Highlights

    For the year ended     Variance
or Change		  
   June 30,     June 30,    
   2018     2017    

Average yield on interest-earning assets:

       

Loans receivable, including loans held for sale

      3.87 %      3.76 %      0.11 % 

Taxable investment securities

      2.58 %      2.21 %      0.37 % 

Tax-exempt investment securities (1)

      2.05 %      2.01 %      0.04 % 

Other interest-earning assets

      3.58 %      1.81 %      1.77 % 
  

 

 

    

 

 

    

 

 

  

Total interest-earning assets

      3.54 %      3.27 %      0.27 % 

Average cost of interest-bearing liabilities:

       

Deposits:

       

Interest-bearing demand

      0.82 %      0.66 %      0.16 % 

Savings and club

      0.17 %      0.13 %      0.04 % 

Certificates of deposit

      1.42 %      1.32 %      0.10 % 
  

 

 

    

 

 

    

 

 

  

Total interest-bearing deposits

      1.00 %      0.87 %      0.13 % 

Borrowings:

       

Federal Home Loan Bank Advances

      2.32 %      2.21 %      0.11 % 

Other borrowings

      0.40 %      0.33 %      0.07 % 
  

 

 

    

 

 

    

 

 

  

Total borrowings

      2.25 %      2.10 %      0.15 % 
  

 

 

    

 

 

    

 

 

  

Total interest-bearing liabilities

      1.29 %      1.13 %      0.16 % 

Interest rate spread (2)

      2.25 %      2.14 %      0.11 % 

Net interest margin (3)

      2.50 %      2.41 %      0.09 % 

Non-interest income to average assets

      0.25 %      0.25 %      0.01 % 

Non-interest expense to average assets

      1.86 %      1.76 %      0.10 % 

Efficiency ratio (4)

      72.72 %      71.20 %      1.52 % 

Return on average assets (annualized)

      0.37 %      0.40 %      -0.03 % 

Return on average equity (annualized)

      1.81 %      1.68 %      0.13 % 

 

(1) The yield on tax-exempt investment securities has not been adjusted to reflect their tax-effective yield.
(2) Interest income divided by average interest-earning assets less interest expense divided by average interest-bearing liabilities.
(3) Net interest income divided by average interest-earning assets.
(4) Non-interest expense divided by the sum of net interest income and non-interest income.

Five-Quarter Financial Trend Analysis

  

Summary Balance Sheet

(Dollars and Shares in Thousands,

Except Per Share Data, Unaudited)

    At  
   June 30,     March 31,     December 31,     September 30,     June 30,  
   2018     2018     2017     2017     2017  

Assets

           

Cash and cash equivalents

    $ 128,864     $ 38,283     $ 50,685     $ 38,823     $ 78,237  

Securities available for sale

      725,085       684,771       637,671       636,600       613,760  

Securities held to maturity

      589,730       459,380       471,452       482,926       493,321  

Loans held-for-sale

      863       2,377       3,490       3,808       4,692  

Loans receivable, including yield adjustments

      4,501,348       3,351,369       3,291,516       3,260,328       3,245,261  

Less allowance for loan losses

      (30,865 )      (30,248 )      (30,066 )      (29,445 )      (29,286 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net loans receivable

      4,470,483       3,321,121       3,261,450       3,230,883       3,215,975  

Premises and equipment

      56,240       42,856       41,829       40,132       39,585  

Federal Home Loan Bank stock

      59,004       39,112       39,113       39,115       39,958  

Accrued interest receivable

      18,510       13,926       13,524       13,268       12,493  

Goodwill

      210,895       108,591       108,591       108,591       108,591  

Bank owned life insurance

      249,816       184,981       183,754       182,489       181,223  

Deferred income taxes, net

      23,754       3,898       6,941       13,230       15,454  

Other assets

      46,630       34,404       25,347       18,285       14,838  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total assets

    $ 6,579,874     $ 4,933,700     $ 4,843,847     $ 4,808,150     $ 4,818,127  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Liabilities

           

Deposits

    $ 4,073,604     $ 3,067,102     $ 3,033,231     $ 2,952,887     $ 2,929,745  

Borrowings

      1,198,646       852,009       798,864       808,554       806,228  

Advance payments by borrowers for taxes

      18,088       8,969       8,511       9,787       8,711  

Other liabilities

      20,788       14,419       13,968       22,689       16,262  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total liabilities

      5,311,126       3,942,499       3,854,574       3,793,917       3,760,946  

Stockholders’ Equity

           

Common stock

      996       788       795       815       844  

Paid-in capital

      922,711       653,045       662,093       690,204       728,790  

Retained earnings

      359,096       355,270       353,536       354,123       361,039  

Unearned ESOP shares

      (32,590 )      (33,076 )      (33,563 )      (34,049 )      (34,536 ) 

Accumulated other comprehensive income, net

      18,535       15,174       6,412       3,140       1,044  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total stockholders’ equity

      1,268,748       991,201       989,273       1,014,233       1,057,181  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total liabilities and stockholders’ equity

    $ 6,579,874     $ 4,933,700     $ 4,843,847     $ 4,808,150     $ 4,818,127  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Consolidated capital ratios

           

Equity to assets

      19.28 %      20.09 %      20.42 %      21.09 %      21.94 % 

Tangible equity to tangible assets

      16.53 %      18.29 %      18.59 %      19.27 %      20.14 % 

Share data

           

Outstanding shares

      99,626       78,765       79,527       81,548       84,351  

Equity per share

    $ 12.74     $ 12.58     $ 12.44     $ 12.44     $ 12.53  

Tangible equity per share (1)

    $ 10.56     $ 11.20     $ 11.07     $ 11.10     $ 11.24  

 

(1) Tangible equity equals total stockholders’ equity reduced by goodwill and core deposit intangible assets.

Supplemental Balance Sheet Highlights

(Dollars in Thousands, Unaudited)

    At  
   June 30,      March 31,      December 31,      September 30,      June 30,  
   2018      2018      2017      2017      2017  

Cash and cash equivalents

               

Cash and due from depository institutions

    $ 26,199      $ 18,229      $ 17,899      $ 17,972      $ 18,889  

Interest-bearing deposits in other banks

      102,665        20,054        32,786        20,851        59,348  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total cash and cash equivalents

    $ 128,864      $ 38,283      $ 50,685      $ 38,823      $ 78,237  

Securities available for sale

               

Debt securities:

               

U.S. agency securities

    $ 4,411      $ 4,667      $ 4,810      $ 5,063      $ 5,316  

Municipal and state obligations

      26,088        26,733        27,428        27,725        27,740  

Asset-backed securities

      182,620        182,066        169,484        163,615        162,429  

Collateralized loan obligations

      226,066        178,342        133,341        128,383        98,154  

Corporate bonds

      147,594        142,202        142,397        142,489        142,318  

Trust preferred securities

      3,783        8,485        8,494        8,544        8,540  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Debt securities available for sale

      590,562        542,495        485,954        475,819        444,497  

Mortgage-backed securities:

               

Collateralized mortgage obligations

      24,292        25,601        27,187        28,790        30,536  

Residential pass-through securities

      102,359        108,736        116,496        123,868        130,550  

Commercial pass-through securities

      7,872        7,939        8,034        8,123        8,177  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Mortgage-backed securities

      134,523        142,276        151,717        160,781        169,263  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total securities available for sale

    $ 725,085      $ 684,771      $ 637,671      $ 636,600      $ 613,760  

Securities held to maturity

               

Debt securities:

               

U.S. agency securities

    $ —        $ —        $ —        $ 35,000      $ 35,000  

Municipal and state obligations

      109,483        98,011        100,671        95,954        94,713  

Subordinated debt

      46,294        30,000        25,000        15,000        15,000  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Debt securities held to maturity

      155,777        128,011        125,671        145,954        144,713  

Mortgage-backed securities:

               

Collateralized mortgage obligations

      56,886        34,309        35,861        16,600        17,854  

Residential pass-through securities

      200,622        151,605        160,487        169,257        178,813  

Commercial pass-through securities

      176,445        145,455        149,433        151,115        151,941  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Mortgage-backed securities

      433,953        331,369        345,781        336,972        348,608  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total securities held to maturity

    $ 589,730      $ 459,380      $ 471,452      $ 482,926      $ 493,321  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total securities

    $ 1,314,815      $ 1,144,151      $ 1,109,123      $ 1,119,526      $ 1,107,081  

Supplemental Balance Sheet Highlights

(Dollars in Thousands, Unaudited)

    At  
   June 30,     March 31,     December 31,     September 30,     June 30,  
   2018     2018     2017     2017     2017  

Loan portfolio composition:

           

Residential first mortgage loans

    $ 1,297,453     $ 563,807     $ 574,322     $ 559,593     $ 567,323  

Home equity loans and lines of credit

      90,761       79,522       80,961       80,746       82,822  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Residential mortgage loans

      1,388,214       643,329       655,283       640,339       650,145  

Multifamily mortgage loans

      1,758,584       1,471,573       1,438,386       1,427,840       1,412,575  

Nonresidential and mixed use mortgage loans

      1,302,961       1,113,385       1,069,254       1,085,983       1,085,064  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Commercial mortgage loans

      3,061,545       2,584,958       2,507,640       2,513,823       2,497,639  

Commercial business loans

      85,825       88,216       92,442       81,676       74,471  

Construction loans

      23,271       22,963       22,205       8,320       3,815  

Account loans

      3,283       3,038       2,996       2,800       2,863  

Other consumer loans

      5,777       7,186       8,951       10,988       13,520  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Consumer loans

      9,060       10,224       11,947       13,788       16,383  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total loans, excluding yield adjustments

      4,567,915       3,349,690       3,289,517       3,257,946       3,242,453  

Unamortized yield adjustments

      (66,567 )      1,679       1,999       2,382       2,808  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Loans receivable, including yield adjustments

      4,501,348       3,351,369       3,291,516       3,260,328       3,245,261  

Less allowance for loan losses

      (30,865 )      (30,248 )      (30,066 )      (29,445 )      (29,286 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net loans receivable

    $ 4,470,483     $ 3,321,121     $ 3,261,450     $ 3,230,883     $ 3,215,975  

Loan portfolio allocation:

           

Residential first mortgage loans

      28.4 %      16.8 %      17.5 %      17.2 %      17.5 % 

Home equity loans and lines of credit

      2.0 %      2.4 %      2.5 %      2.5 %      2.6 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Residential mortgage loans

      30.4 %      19.2 %      20.0 %      19.7 %      20.1 % 

Multifamily mortgage loans

      38.5 %      43.9 %      43.7 %      43.8 %      43.6 % 

Nonresidential and mixed use mortgage loans

      28.5 %      33.2 %      32.5 %      33.3 %      33.4 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Commercial mortgage loans

      67.0 %      77.1 %      76.2 %      77.1 %      77.0 % 

Commercial business loans

      1.9 %      2.6 %      2.8 %      2.5 %      2.3 % 

Construction loans

      0.5 %      0.7 %      0.7 %      0.3 %      0.1 % 

Account loans

      0.1 %      0.1 %      0.1 %      0.1 %      0.1 % 

Other consumer loans

      0.1 %      0.3 %      0.2 %      0.3 %      0.4 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Consumer loans

      0.2 %      0.4 %      0.3 %      0.4 %      0.5 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total loans, excluding yield adjustments

      100.0 %      100.0 %      100.0 %      100.0 %      100.0 % 

Asset quality:

           

Nonperforming assets:

           

Accruing loans > 90 days past due

    $ 60     $ 45     $ 31     $ 105     $ 74  

Nonaccrual loans

      16,799       14,190       16,315       18,006       18,798  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total nonperforming loans

      16,859       14,235       16,346       18,111       18,872  

Other real estate owned

      725       1,094       1,693       2,424       1,632  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total nonperforming assets

    $ 17,584     $ 15,329     $ 18,039     $ 20,535     $ 20,504  

Nonperforming loans (% total loans)

      0.37 %      0.42 %      0.50 %      0.56 %      0.58 % 

Nonperforming assets (% total assets)

      0.27 %      0.31 %      0.37 %      0.43 %      0.43 % 

Allowance for loan losses (ALLL):

           

ALLL to total loans

      0.68 %      0.90 %      0.91 %      0.90 %      0.90 % 

ALLL to nonperforming loans

      183.08 %      212.49 %      183.93 %      162.58 %      155.18 % 

Net charge offs (recoveries)

    $ 101     $ 241     $ 315     $ 471     $ (483 ) 

Average net charge off (recovery) rate (annualized)

      0.01 %      0.03 %      0.04 %      0.06 %      -0.06 % 

Supplemental Balance Sheet Highlights

(Dollars in Thousands, Unaudited)

    At  
   June 30,     March 31,     December 31,     September 30,     June 30,  
   2018     2018     2017     2017     2017  

Funding by type:

           

Deposits

           

Non-interest-bearing deposits

    $ 311,938     $ 270,217     $ 275,065     $ 279,263     $ 267,412  

Interest-bearing demand

      1,000,989       871,425       879,385       855,822       847,400  

Savings and club

      744,039       515,805       517,400       519,037       523,981  

Certificates of deposit

      2,016,638       1,409,655       1,361,381       1,298,765       1,290,952  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Interest-bearing deposits

      3,761,666       2,796,885       2,758,166       2,673,624       2,662,333  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total deposits

      4,073,604       3,067,102       3,033,231       2,952,887       2,929,745  

Borrowings:

           

Federal Home Loan Bank advances

      1,170,144       775,625       775,649       775,673       775,696  

Overnight borrowings

      —         42,000       —         —         —    

Depositor sweep accounts

      28,502       34,384       23,215       32,881       30,532  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total borrowings

      1,198,646       852,009       798,864       808,554       806,228  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total funding

    $ 5,272,250     $ 3,919,111     $ 3,832,095     $ 3,761,441     $ 3,735,973  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Loans as a % of deposits

      109.8 %      108.4 %      107.6 %      109.5 %      109.9 % 

Deposits as a % of total funding

      77.3 %      78.3 %      79.2 %      78.5 %      78.4 % 

Borrowings as a % of total funding

      22.7 %      21.7 %      20.8 %      21.5 %      21.6 % 

Funding by source:

           

Retail funding

           

Non-interest-bearing deposits

    $ 311,938     $ 270,217     $ 275,065     $ 279,263     $ 267,412  

Interest-bearing demand

      790,164       656,114       657,349       633,478       624,798  

Savings and club

      744,039       515,805       517,400       519,037       523,981  

Certificates of deposit

      1,828,039       1,247,900       1,210,428       1,175,329       1,167,894  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total retail deposits

      3,674,180       2,690,036       2,660,242       2,607,107       2,584,085  

Depositor sweep accounts

      28,502       34,384       23,215       32,881       30,532  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total retail funding

      3,702,682       2,724,420       2,683,457       2,639,988       2,614,617  

Wholesale funding:

           

Interest-bearing demand

    $ 210,825     $ 215,311     $ 222,036     $ 222,344     $ 222,602  

Certificates of deposit (listing service)

      104,256       104,934       93,853       101,791       101,430  

Certificates of deposit (brokered)

      84,343       56,821       57,100       21,645       21,628  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total wholesale deposits

      399,424       377,066       372,989       345,780       345,660  

FHLB Advances

      1,170,144       775,625       775,649       775,673       775,696  

Overnight borrowings

      —         42,000       —         —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total wholesale funding

      1,569,568       1,194,691       1,148,638       1,121,453       1,121,356  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total funding

    $ 5,272,250     $ 3,919,111     $ 3,832,095     $ 3,761,441     $ 3,735,973  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Retail funding as a % of total funding

      70.2 %      69.5 %      70.0 %      70.2 %      70.0 % 

Wholesale funding as a % of total funding

      29.8 %      30.5 %      30.0 %      29.8 %      30.0 % 

Summary Income Statement

(Dollars and Shares in Thousands,

Except Per Share Data, Unaudited)

    For the three months ended  
   June 30,     March 31,     December 31,     September 30,     June 30,  
   2018     2018     2017     2017     2017  

Interest income

           

Loans

    $ 46,615     $ 30,728     $ 30,610     $ 30,473     $ 29,842  

Taxable investment securities

      8,670       6,450       6,077       5,856       5,931  

Tax-exempt investment securities

      702       652       641       621       605  

Other interest-earning assets

      1,275       715       704       642       586  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total interest income

      57,262       38,545       38,032       37,592       36,964  

Interest expense

           

Deposits

      9,755       7,026       6,649       6,219       5,909  

Borrowings

      6,916       4,462       4,548       4,563       4,325  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total interest expense

      16,671       11,488       11,197       10,782       10,234  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net interest income

      40,591       27,057       26,835       26,810       26,730  

Provision for loan losses

      717       423       936       630       1,188  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net interest income after provision for
loan losses

      39,874       26,634       25,899       26,180       25,542  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Non-interest income

           

Fees and service charges

      1,205       1,537       1,409       1,261       839  

Gain (loss) on sale and call of securities

      9       (1 )      —         —         —    

Gain on sale of loans

      127       346       200       331       531  

Gain (loss) on sale of real estate owned

      60       7       23       (109 )      3  

Income from bank owned life insurance

      1,604       1,227       1,264       1,267       1,288  

Electronic banking fees and charges

      278       243       302       278       287  

Miscellaneous

      75       189       65       66       72  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total non-interest income

      3,358       3,548       3,263       3,094       3,020  

Non-interest expense

           

Salaries and employee benefits

      15,353       12,888       12,926       12,867       12,887  

Net occupancy expense of premises

      2,716       2,359       2,122       1,981       2,013  

Equipment and systems

      2,776       2,323       2,193       2,190       2,204  

Advertising and marketing

      757       745       748       710       937  

Federal deposit insurance premium

      463       350       343       360       352  

Directors’ compensation

      754       689       688       689       689  

Merger-related expenses

      5,149       401       1,193       —         —    

Miscellaneous

      3,289       2,788       2,551       2,489       2,969  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total non-interest expense

      31,257       22,543       22,764       21,286       22,051  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Income before income taxes

      11,975       7,639       6,398       7,988       6,511  

Income taxes

      4,257       2,262       5,129       2,756       2,107  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net income

    $ 7,718     $ 5,377     $ 1,269     $ 5,232     $ 4,404  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net income per common share (EPS)

           

Basic

    $ 0.08     $ 0.07     $ 0.02     $ 0.07     $ 0.05  

Diluted

    $ 0.08     $ 0.07     $ 0.02     $ 0.07     $ 0.05  

Dividends declared (1)

           

Cash dividends declared per common share

    $ 0.04     $ 0.03     $ 0.03     $ 0.15     $ 0.03  

Cash dividends declared

    $ 3,892     $ 2,262     $ 1,856     $ 12,148     $ 2,448  

Dividend payout ratio

      50.4 %      42.1 %      146.3 %      232.2 %      55.6 % 

Weighted average number of common
shares outstanding

           

Basic

      98,046       75,492       77,174       79,649       82,372  

Diluted

      98,100       75,539       77,239       79,708       82,429  

 

(1)  Dividends declared during the quarter ended September 30, 2017 include a $0.12 special dividend representing a supplemental distribution of net income to stockholders from the prior fiscal year ended June 30, 2017.

Average Balance Sheet Data

(Dollars in Thousands, Unaudited)

    For the three months ended  
   June 30,     March 31,     December 31,     September 30,     June 30,  
   2018     2018     2017     2017     2017  

Assets

           

Interest-earning assets:

           

Loans receivable, including loans held for sale

    $ 4,507,336     $ 3,293,664     $ 3,255,862     $ 3,257,465     $ 3,200,968  

Taxable investment securities

      1,192,066       1,003,600       996,397       1,001,183       1,009,120  

Tax-exempt investment securities

      134,683       127,605       126,214       122,685       119,957  

Other interest-earning assets

      142,591       67,770       82,539       79,920       118,349  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total interest-earning assets

      5,976,676       4,492,639       4,461,012       4,461,253       4,448,394  

Non-interest-earning assets

      586,976       369,299       364,015       361,259       358,791  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total assets

    $ 6,563,652     $ 4,861,938     $ 4,825,027     $ 4,822,512     $ 4,807,185  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Liabilities and Stockholders’ Equity

           

Interest-bearing liabilities:

           

Deposits:

           

Interest-bearing demand

    $ 1,004,445     $ 870,762     $ 854,142     $ 858,039     $ 812,932  

Savings and club

      724,430       513,948       518,513       522,686       523,771  

Certificates of deposit

      1,983,372       1,385,151       1,336,466       1,284,847       1,288,537  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total interest-bearing deposits

      3,712,247       2,769,861       2,709,121       2,665,572       2,625,240  

Borrowings:

           

Federal Home Loan Bank Advances

      1,179,147       777,721       777,460       778,104       775,703  

Other borrowings

      34,636       33,529       30,606       32,041       40,064  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total borrowings

      1,213,783       811,250       808,066       810,145       815,767  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total interest-bearing liabilities

      4,926,030       3,581,111       3,517,187       3,475,717       3,441,007  

Non-interest-bearing liabilities:

           

Non-interest-bearing deposits

      305,763       267,152       277,236       274,858       262,499  

Other non-interest-bearing liabilities

      39,340       24,953       25,777       31,070       26,322  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total non-interest-bearing liabilities

      345,103       292,105       303,013       305,928       288,821  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total liabilities

      5,271,133       3,873,216       3,820,200       3,781,645       3,729,828  

Stockholders’ equity

      1,292,519       988,722       1,004,827       1,040,867       1,077,357  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total liabilities and stockholders’ equity

    $ 6,563,652     $ 4,861,938     $ 4,825,027     $ 4,822,512     $ 4,807,185  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Average interest-earning assets to average
interest-bearing liabilities

      121.33 %      125.45 %      126.83 %      128.35 %      129.28 % 

Performance Ratio Highlights

    For the three months ended  
   June 30,     March 31,     December 31,     September 30,     June 30,  
   2018     2018     2017     2017     2017  

Average yield on interest-earning assets:

           

Loans receivable, including loans held for sale

      4.14 %      3.73 %      3.76 %      3.74 %      3.73 % 

Taxable investment securities

      2.91 %      2.57 %      2.44 %      2.34 %      2.35 % 

Tax-exempt investment securities (1)

      2.09 %      2.04 %      2.03 %      2.03 %      2.02 % 

Other interest-earning assets

      3.58 %      4.22 %      3.42 %      3.21 %      1.98 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total interest-earning assets

      3.83 %      3.43 %      3.41 %      3.37 %      3.32 % 

Average cost of interest-bearing liabilities:

           

Deposits:

           

Interest-bearing demand

      0.89 %      0.84 %      0.80 %      0.76 %      0.71 % 

Savings and club

      0.29 %      0.12 %      0.12 %      0.12 %      0.12 % 

Certificates of deposit

      1.41 %      1.46 %      1.43 %      1.38 %      1.34 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total interest-bearing deposits

      1.05 %      1.01 %      0.98 %      0.93 %      0.90 % 

Borrowings:

           

Federal Home Loan Bank Advances

      2.34 %      2.27 %      2.33 %      2.33 %      2.21 % 

Other borrowings

      0.34 %      0.56 %      0.27 %      0.27 %      0.27 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total borrowings

      2.28 %      2.20 %      2.25 %      2.25 %      2.12 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total interest-bearing liabilities

      1.35 %      1.28 %      1.27 %      1.24 %      1.19 % 

Interest rate spread (2)

      2.48 %      2.15 %      2.14 %      2.13 %      2.13 % 

Net interest margin (3)

      2.72 %      2.41 %      2.41 %      2.40 %      2.40 % 

Non-interest income to average assets
(annualized)

      0.20 %      0.29 %      0.27 %      0.26 %      0.25 % 

Non-interest expense to average assets
(annualized)

      1.90 %      1.85 %      1.89 %      1.77 %      1.83 % 

Efficiency ratio (4)

      71.12 %      73.66 %      75.63 %      71.18 %      74.12 % 

Return on average assets (annualized)

      0.47 %      0.44 %      0.11 %      0.43 %      0.37 % 

Return on average equity (annualized)

      2.39 %      2.18 %      0.51 %      2.01 %      1.64 % 

 

(1) The yield on tax-exempt investment securities has not been adjusted to reflect their tax-effective yield.
(2) Interest income divided by average interest-earning assets less interest expense divided by average interest-bearing liabilities.
(3) Net interest income divided by average interest-earning assets.
(4) Non-interest expense divided by the sum of net interest income and non-interest income.

This document contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles (“GAAP”). These non-GAAP measures provide additional information which allow readers to evaluate the ongoing performance of the Company. They are not a substitute for GAAP measures; they should be read and used in conjunction with the Company’s GAAP financial information. A reconciliation of non-GAAP financial measures to GAAP measures is included below. In all cases, it should be understood that non-GAAP per share measures do not depict amounts that accrue directly to the benefit of shareholders.

 

Reconciliation of GAAP to Non-GAAP

(Dollars in Thousands,

Except Per Share Data, Unaudited)

    For the three months ended  
   June 30,     March 31,     December 31,     September 30,      June 30,  
   2018     2018     2017     2017      2017  

Adjusted Net Income

            

Net income (GAAP)

    $ 7,718     $ 5,377     $ 1,269     $ 5,232      $ 4,404  

Effect to adjust for:

            

Merger-related expenses

      5,149       401       1,193       —          —    

Income tax benefit from merger-related expenses

      (1,451 )      (22 )      (165 )      —          —    

Income tax expense for write-down of net deferred tax asset

      —         —         4,867       —          —    

Income tax benefit for write-down of net deferred tax liability

      —         —         (1,381 )      —          —    

Income tax benefit for reduction in current year income tax rate (from 35% to 28%)

      —         —         (769 )      —          —    
  

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Adjusted net income (non-GAAP)

    $ 11,416     $ 5,756     $ 5,014     $ 5,232      $ 4,404  
  

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Adjusted Net Income per Common Share (EPS)

            

Net income per common share Basic (GAAP)

    $ 0.08     $ 0.07     $ 0.02     $ 0.07      $ 0.05  

Effect to adjust for:

            

Merger-related expenses

      0.05       0.01       0.02       —          —    

Income tax benefit from merger-related expenses

      (0.01 )      —         (0.01 )      —          —    

Income tax expense for write-down of net deferred tax asset

      —         —         0.06       —          —    

Income tax benefit for write-down of net deferred tax liability

      —         —         (0.02 )      —          —    

Income tax benefit for reduction in current year income tax rate (from 35% to 28%)

      —         —         (0.01 )      —          —    
  

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Adjusted net income per common share Basic (non-GAAP)

    $ 0.12     $ 0.08     $ 0.06     $ 0.07      $ 0.05  
  

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Adjusted Net Income per Common Share (EPS)

            

Net income per common share Diluted (GAAP)

    $ 0.08     $ 0.07     $ 0.02     $ 0.07      $ 0.05  

Effect to adjust for:

            

Merger-related expenses

      0.05       0.01       0.02       —          —    

Income tax benefit from merger-related expenses

      (0.01 )      —         (0.01 )      —          —    

Income tax expense for write-down of net deferred tax asset

      —         —         0.06       —          —    

Income tax benefit for write-down of net deferred tax liability

      —         —         (0.02 )      —          —    

Income tax benefit for reduction in current year income tax rate (from 35% to 28%)

      —         —         (0.01 )      —          —    
  

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Adjusted net income per common share Diluted (non-GAAP)

    $ 0.12     $ 0.08     $ 0.06     $ 0.07      $ 0.05  
  

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Reconciliation of GAAP to Non-GAAP

(Unaudited)                                             

    For the three months ended  
   June 30,     March 31,     December 31,     September 30,     June 30,  
   2018     2018     2017     2017     2017  

Adjusted Non-Interest Expense

           

Non-interest expense (GAAP)

      31,257       22,543       22,764       21,286       22,051  

Effect to adjust for:

           

Merger-related expenses

      (5,149 )      (401 )      (1,193 )      —         —    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted non-interest expense (non-GAAP)

      26,108       22,142       21,571       21,286       22,051  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted Non-Interest Expense Ratio

           

Non-interest expense to average assets (GAAP)

      1.90 %      1.85 %      1.89 %      1.77 %      1.83 % 

Effect to adjust for:

           

Merger-related expenses

      -0.31 %      -0.03 %      -0.10 %      0.00 %      0.00 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted non-interest expense ratio (non-GAAP)

      1.59 %      1.82 %      1.79 %      1.77 %      1.83 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted Efficiency Ratio

           

Non-interest expense / (Net interest income + non-interest income) (GAAP)

      71.1 %      73.7 %      75.6 %      71.2 %      74.1 % 

Effect to adjust for:

           

Merger-related expenses

      -11.7 %      -1.3 %      -3.9 %      0.0 %      0.0 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted efficiency ratio (non-GAAP)

      59.4 %      72.4 %      71.7 %      71.2 %      74.1 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted Return on Average Assets

           

Return on average assets (GAAP)

      0.47 %      0.44 %      0.11 %      0.43 %      0.37 % 

Effect to adjust for:

           

Merger-related expenses

      0.31 %      0.03 %      0.09 %      0.00 %      0.00 % 

Income tax benefit from merger-related expenses

      -0.09 %      0.00 %      -0.01 %      0.00 %      0.00 % 

Income tax expense for write-down of net deferred tax asset

      0.00 %      0.00 %      0.40 %      0.00 %      0.00 % 

Income tax benefit for write-down of net deferred tax liability

      0.00 %      0.00 %      -0.11 %      0.00 %      0.00 % 

Income tax benefit for reduction in current year income tax rate (from 35% to 28%)

      0.00 %      0.00 %      -0.06 %      0.00 %      0.00 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted return on average assets (non-GAAP)

      0.69 %      0.47 %      0.42 %      0.43 %      0.37 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted Return on Average Equity

           

Return on average equity (GAAP)

      2.39 %      2.18 %      0.51 %      2.01 %      1.64 % 

Effect to adjust for:

           

Merger-related expenses

      1.59 %      0.16 %      0.48 %      0.00 %      0.00 % 

Income tax benefit from merger-related expenses

      -0.45 %      -0.01 %      -0.07 %      0.00 %      0.00 % 

Income tax expense for write-down of net deferred tax asset

      0.00 %      0.00 %      1.94 %      0.00 %      0.00 % 

Income tax benefit for write-down of net deferred tax liability

      0.00 %      0.00 %      -0.55 %      0.00 %      0.00 % 

Income tax benefit for reduction in current year income tax rate (from 35% to 28%)

      0.00 %      0.00 %      -0.31 %      0.00 %      0.00 % 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted return on average equity (non-GAAP)

      3.53 %      2.33 %      2.00 %      2.01 %      1.64 %