EX-99.1 2 krny-ex991_6.htm EX-99.1 krny-ex991_6.htm

Exhibit 99.1

FOR IMMEDIATE RELEASE

January 30, 2020

 

For further information contact:

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

Keith Suchodolski, Executive Vice President and Chief Financial Officer

Kearny Financial Corp.

(973) 244-4500

 

KEARNY FINANCIAL CORP.

REPORTS SECOND QUARTER 2020 OPERATING RESULTS

 

Fairfield, New Jersey, January 30, 2020 – Kearny Financial Corp. (NASDAQ GS: KRNY) (the “Company”), the holding company of Kearny Bank (the “Bank”), today reported net income for the quarter ended December 31, 2019 of $10.7 million, or $0.13 per basic and diluted share.  The results represent a decrease of $718,000 compared to net income of $11.4 million, or $0.13 per basic and diluted share, for the quarter ended September 30, 2019.

 

The decrease in net income partially reflected the Company’s recognition of certain merger-related expenses totaling $219,000 related to its proposed acquisition of MSB Financial Corp. (NASDAQ: MSBF) (“MSBF”), the holding company for Millington Bank (“Millington”). The Company previously announced on December 18, 2019, that it had entered into a definitive agreement to acquire MSBF in a cash and stock transaction. Net income for the quarter ended December 31, 2019 was also impacted by a non-recurring increase of $153,000 in non-interest expense and a non-recurring decrease of $236,000 in non-interest income which were recognized in conjunction with the Company’s previously completed branch consolidations.  Adjusting for the impact of such charges, net of tax benefit, the Company’s adjusted net income for the quarter ended December 31, 2019 was $11.1 million or $0.13 per basic and diluted share.  This compares to adjusted net income of $11.8 million or $0.14 per basic and diluted share for the quarter ended September 30, 2019.

 

Craig L. Montanaro, President and Chief Executive Officer, commented, “I am very pleased to report another quarter of solid core earnings coupled with exceptionally strong core deposit growth.  During the quarter, we grew core deposits by $147.3 million while facilitating the outflow of $120.5 million in wholesale funding.  Our recently announced acquisition of MSB Financial Corp. will accelerate our funding realignment strategy as a majority of Millington’s deposits are comprised of core transaction accounts, while the Morris and Somerset county markets they serve offer tremendous opportunity for further growth in both deposits and loans.  On the technology front, we continue to seek out, and partner with, best of breed technology providers as a means of strengthening our digital banking presence.  Toward that end, we have committed to invest a total of $1.25 million in two separate FinTech firms whose product and service offerings will allow us to continue to provide our clients with the very best in digital banking solutions.  As we move ahead our digital strategy focuses on the evaluation and implementation of technology solutions that leverage artificial intelligence, machine learning, robotic process automation and open API architecture.”

Balance Sheet Highlights

 

•

Deposits decreased by $8.4 million to $4.19 billion at December 31, 2019 from $4.20 billion at September 30, 2019.  This net decrease in deposits was attributable to a decrease of $115.9 million in wholesale deposits that was largely offset by an increase of $107.5 million in retail deposits.  The reallocation of deposits for the quarter ended December 31, 2019 reflected the Company’s continuing effort to realign its funding mix in favor of core deposits.

 

•

Loans receivable decreased by $112.0 million to $4.49 billion, or 68.0% of total assets, at December 31, 2019 from $4.60 billion, or 69.3% of total assets, at September 30, 2019.  The decrease in loans receivable was attributable to an accelerated level of loan prepayment activity which outpaced loan origination volume.

 

•

Borrowings decreased by $6.1 million to $1.28 billion, or 19.3% of total assets, at December 31, 2019.  As noted above, the decrease in borrowings for the quarter ended December 31, 2019 reflected the Company’s continuing effort to realign its funding mix in favor of core deposits.

 

•

Investment securities increased by $168.7 million to $1.44 billion, or 21.8% of total assets, at December 31, 2019 from $1.27 billion, or 19.1% of total assets, at September 30, 2019.

1

 

Earnings Highlights

Net Interest Income, Spread and Margin

 

•

Net interest income decreased by $2.1 million to $34.6 million for the quarter ended December 31, 2019, from $36.7 million for the quarter ended September 30, 2019.  The decrease in net interest income was the result of a decrease of $2.7 in interest income partially offset by a decrease of $637,000 in interest expense.

 

•

Net interest spread decreased 11 basis points to 2.04% for the quarter ended December 31, 2019 from 2.15% for the quarter ended September 30, 2019.  The decrease in spread primarily reflected a 16 basis point decrease in the yield on interest-earning assets that was partially offset by a five basis point decrease in the cost of interest-bearing liabilities.

 

•

The factors that contributed to the quarterly change in net interest spread also contributed to a 13 basis point decrease in net interest margin to 2.29% for the quarter ended December 31, 2019 from 2.42% for the quarter ended September 30, 2019.

Non-Interest Income

 

•

Fees and service charges increased by $677,000 to $2.1 million for the quarter ended December 31, 2019 compared to $1.5 million for the quarter ended September 30, 2019.  This increase was largely attributable to loan pre-payment penalty income associated with the accelerated loan pre-payment activity noted above.

 

•

Aggregate loan sale gains once again attained record levels increasing by $63,000 to $668,000 for the quarter ended December 31, 2019 from $605,000 for the quarter ended September 30, 2019.  The increase in loan sale gains largely reflected an increase in the volume of residential mortgage loans sold during the period.

 

•

Miscellaneous non-interest income decreased by $116,000, to a net loss of $111,000 for the quarter ended December 31, 2019 from $5,000 for the quarter ended September 30, 2019.  This decrease was attributable to a non-recurring loss on asset disposals associated with the branch consolidations noted above.

Non-Interest Expense

 

•

Non-interest expense increased by $183,000 to $26.4 million for the quarter ended December 31, 2019 compared to $26.2 million for the quarter ended September 30, 2019.  The net increase was largely attributable to increases in advertising and marketing, net occupancy expense of premises, miscellaneous expense and non-recurring merger-related expenses.  Partially offsetting these increases were decreases in salaries and employee benefits and equipment and systems expense.

For the quarters ended December 31, 2019 and September 30, 2019, the Company recorded no expense associated with FDIC insurance premiums as a result of the FDIC’s Deposit Insurance Fund Reserve Ratio having reached a pre-established threshold defined by federal regulation.  Upon reaching this threshold qualifying banks with total consolidated assets of less than $10 billion are awarded assessment credits to be utilized towards their FDIC insurance premiums.

 

•

The Company’s non-interest expense ratio totaled 1.60% for the quarter ended December 31, 2019 compared to 1.58% for the prior quarter ended September 30, 2019.  Adjusting for the impact of the non-recurring expenses, noted earlier, the Company’s non-interest expense ratio would have been 1.57% for the quarter ended December 31, 2019.

 

•

The Company’s efficiency ratio was 67.5% for the quarter ended December 31, 2019 compared to 64.6% for the prior quarter ended September 30, 2019.  Adjusting for the impact of the non-recurring expenses, noted earlier, the Company’s efficiency ratio would have been 66.1% for the quarter ended December 31, 2019.

Income Taxes

 

•

Income tax expense totaled $3.5 million for the quarter ended December 31, 2019 compared to $3.8 million for the quarter ended September 30, 2019 resulting in effective tax rates of 25.0% and 25.1%, respectively.  The decrease in income tax expense largely reflected a lower level of pre-tax net income as compared to the prior period.

2

 

Performance Ratios

 

•

Return on average assets for the quarter ended December 31, 2019 decreased to 0.64% from 0.68% for the quarter ended September 30, 2019.  Adjusting for the impact of the non-recurring expenses noted earlier, the Company’s return on average assets would have been 0.67% for the quarter ended December 31, 2019.

 

•

Return on average equity decreased to 3.86% for the quarter ended December 31, 2019 from 4.08% for the quarter ended September 30, 2019.  Adjusting for the impact of the non-recurring expenses noted earlier, the Company’s return on average equity would have been 4.02% for the quarter ended December 31, 2019.

 

•

Return on average tangible equity decreased to 4.80% for the quarter ended December 31, 2019 from 5.06% for the quarter ended September 30, 2019.  Adjusting for the impact of the non-recurring expenses noted earlier, the Company’s return on average tangible equity would have been 5.00% for the quarter ended December 31, 2019.

Asset Quality Highlights

 

•

Asset quality remained strong throughout the quarter ended December 31, 2019.  The outstanding balance of non-performing loans totaled $22.0 million, or 0.49% of total loans, at December 31, 2019 as compared to $21.8 million, or 0.47% of total loans, at September 30, 2019.

 

•

The allowance for loan losses (“ALLL”) decreased to $30.9 million at December 31, 2019 from $32.4 million at September 30, 2019, resulting in an ALLL to total loans ratio of 0.68% and 0.70%, respectively. The balance of the allowance for loan losses reflects the impact of purchase accounting which generally precludes acquired loan balances from being considered in the balance of the allowance for loan losses at the time of their acquisition and thereafter.

 

•

Net charge offs totaled $30,000 for the quarter ended December 31, 2019, reflecting an annualized net charge off rate of 0.00% on the average balance of total loans for the period.  By comparison, net charge offs totaled $60,000 for the quarter ended September 30, 2019, reflecting an annualized net charge off rate of 0.01%.

 

•

The Company recorded a loan loss provision reversal of $1.5 million for the quarter ended December 31, 2019 compared to a loan loss provision reversal of $782,000 for the quarter ended September 30, 2019.  The increase in provision reversal was largely attributable to a comparatively larger decrease in the balance of the loan portfolio that was collectively evaluated for impairment during the quarter ended December 31, 2019 compared to the quarter ended September 30, 2019.

Capital Highlights

 

•

During the quarter ended December 31, 2019, the Company repurchased 1,574,500 shares of its common stock at a total cost of $21.7 million and an average cost of $13.76 per share.  Through December 31, 2019, the Company repurchased a total of 6,982,294 shares, or 75.7% of the shares authorized for repurchase under the current repurchase program, at a total cost of $93.6 million and at an average cost of $13.40 per share.

 

•

The Company increased its regular quarterly cash dividend by $0.01 to $0.07 per share during the quarter ended December 31, 2019.  The Company continually evaluates its dividend policies in relation to its overall capital management and shareholder value objectives.

 

•

Book value per share increased by $0.05 to $12.85 at December 31, 2019, from $12.80 at September 30, 2019.  Tangible book value per share increased by $0.01 to $10.32 at December 31, 2019, from $10.31 at September 30, 2019.

 

•

The Company’s and Bank’s regulatory capital ratios at December 31, 2019 were in excess of the levels required by federal banking regulators to be classified as “well-capitalized” under regulatory guidelines.  

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.

3

 

 

Linked-Quarter Comparative Financial Analysis

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary Balance Sheet

At

 

 

 

 

Variance

 

(Dollars and Shares in Thousands,

December 31,

 

September 30,

 

Variance

 

or Change

 

Except Per Share Data, Unaudited)

2019

 

2019

 

or Change

 

Pct.

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

41,796

 

$

129,305

 

$

(87,509

)

 

-67.7

%

Securities available for sale

 

1,402,206

 

 

1,231,691

 

 

170,515

 

 

13.8

%

Securities held to maturity

 

36,073

 

 

37,888

 

 

(1,815

)

 

-4.8

%

Loans held-for-sale

 

5,952

 

 

10,495

 

 

(4,543

)

 

-43.3

%

Loans receivable, including yield adjustments

 

4,492,697

 

 

4,604,738

 

 

(112,041

)

 

-2.4

%

Less allowance for loan losses

 

(30,937

)

 

(32,432

)

 

1,495

 

 

-4.6

%

Net loans receivable

 

4,461,760

 

 

4,572,306

 

 

(110,546

)

 

-2.4

%

Premises and equipment

 

56,542

 

 

56,599

 

 

(57

)

 

-0.1

%

Federal Home Loan Bank stock

 

62,838

 

 

63,739

 

 

(901

)

 

-1.4

%

Accrued interest receivable

 

18,261

 

 

19,393

 

 

(1,132

)

 

-5.8

%

Goodwill

 

210,895

 

 

210,895

 

 

-

 

 

0.0

%

Core deposit intangible

 

4,545

 

 

4,852

 

 

(307

)

 

-6.3

%

Bank owned life insurance

 

259,312

 

 

257,735

 

 

1,577

 

 

0.6

%

Deferred income taxes, net

 

20,438

 

 

21,742

 

 

(1,304

)

 

-6.0

%

Other real estate owned

 

178

 

 

-

 

 

178

 

 

0.0

%

Other assets

 

29,605

 

 

24,366

 

 

5,239

 

 

21.5

%

Total assets

$

6,610,401

 

$

6,641,006

 

$

(30,605

)

 

-0.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

$

4,188,822

 

$

4,197,250

 

$

(8,428

)

 

-0.2

%

Borrowings

 

1,275,049

 

 

1,281,118

 

 

(6,069

)

 

-0.5

%

Advance payments by borrowers for taxes

 

16,585

 

 

16,102

 

 

483

 

 

3.0

%

Other liabilities

 

35,375

 

 

35,747

 

 

(372

)

 

-1.0

%

Total liabilities

 

5,515,831

 

 

5,530,217

 

 

(14,386

)

 

-0.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

851

 

 

868

 

 

(17

)

 

-2.0

%

Paid-in capital

 

737,539

 

 

758,385

 

 

(20,846

)

 

-2.7

%

Retained earnings

 

377,896

 

 

373,004

 

 

4,892

 

 

1.3

%

Unearned ESOP shares

 

(29,671

)

 

(30,158

)

 

487

 

 

-1.6

%

Accumulated other comprehensive income, net

 

7,955

 

 

8,690

 

 

(735

)

 

-8.5

%

Total stockholders' equity

 

1,094,570

 

 

1,110,789

 

 

(16,219

)

 

-1.5

%

Total liabilities and stockholders' equity

$

6,610,401

 

$

6,641,006

 

$

(30,605

)

 

-0.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated capital ratios

 

 

 

 

 

 

 

 

 

 

 

 

Equity to assets

 

16.56

%

 

16.73

%

 

-0.17

%

 

 

 

Tangible equity to tangible assets

 

13.75

%

 

13.93

%

 

-0.18

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share data

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding shares

 

85,150

 

 

86,786

 

 

(1,636

)

 

-1.9

%

Book value per share

$

12.85

 

$

12.80

 

$

0.05

 

 

0.4

%

Tangible book value per share (1)

$

10.32

 

$

10.31

 

$

0.01

 

 

0.1

%

 

(1)

Tangible book value equals total stockholders' equity reduced by goodwill and core deposit intangible assets.

 

4

 

Summary Income Statement

For the three months ended

 

 

 

 

Variance

 

(Dollars and Shares in Thousands,

December 31,

 

September 30,

 

Variance

 

or Change

 

Except Per Share Data, Unaudited)

2019

 

2019

 

or Change

 

Pct.

 

Interest income

 

 

 

 

 

 

 

 

 

 

 

 

Loans

$

45,608

 

$

48,600

 

$

(2,992

)

 

-6.2

%

Taxable investment securities

 

9,698

 

 

9,328

 

 

370

 

 

4.0

%

Tax-exempt investment securities

 

666

 

 

693

 

 

(27

)

 

-3.9

%

Other interest-earning assets

 

1,210

 

 

1,278

 

 

(68

)

 

-5.3

%

Total Interest Income

 

57,182

 

 

59,899

 

 

(2,717

)

 

-4.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

15,590

 

 

16,055

 

 

(465

)

 

-2.9

%

Borrowings

 

6,985

 

 

7,157

 

 

(172

)

 

-2.4

%

Total interest expense

 

22,575

 

 

23,212

 

 

(637

)

 

-2.7

%

Net interest income

 

34,607

 

 

36,687

 

 

(2,080

)

 

-5.7

%

Reversal of loan losses

 

(1,465

)

 

(782

)

 

(683

)

 

87.3

%

Net interest income after reversal of

loan losses

 

36,072

 

 

37,469

 

 

(1,397

)

 

-3.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest income

 

 

 

 

 

 

 

 

 

 

 

 

Fees and service charges

 

2,145

 

 

1,468

 

 

677

 

 

46.1

%

Gain (loss) on sale and call of securities

 

11

 

 

(14

)

 

25

 

 

-178.6

%

Gain on sale of loans

 

668

 

 

605

 

 

63

 

 

10.4

%

Loss on sale and write down of other real estate owned

 

(28

)

 

-

 

 

(28

)

 

-100.0

%

Income from bank owned life insurance

 

1,576

 

 

1,580

 

 

(4

)

 

-0.3

%

Electronic banking fees and charges

 

293

 

 

318

 

 

(25

)

 

-7.9

%

Miscellaneous

 

(111

)

 

5

 

 

(116

)

 

-2320.0

%

Total non-interest income

 

4,554

 

 

3,962

 

 

592

 

 

14.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest expense

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

15,174

 

 

15,777

 

 

(603

)

 

-3.8

%

Net occupancy expense of premises

 

3,082

 

 

2,969

 

 

113

 

 

3.8

%

Equipment and systems

 

3,046

 

 

3,089

 

 

(43

)

 

-1.4

%

Advertising and marketing

 

890

 

 

535

 

 

355

 

 

66.4

%

Directors' compensation

 

769

 

 

770

 

 

(1

)

 

-0.1

%

Merger-related expenses

 

219

 

 

-

 

 

219

 

 

0.0

%

Miscellaneous

 

3,247

 

 

3,104

 

 

143

 

 

4.6

%

Total non-interest expense

 

26,427

 

 

26,244

 

 

183

 

 

0.7

%

Income before income taxes

 

14,199

 

 

15,187

 

 

(988

)

 

-6.5

%

Income taxes

 

3,547

 

 

3,817

 

 

(270

)

 

-7.1

%

Net income

$

10,652

 

$

11,370

 

$

(718

)

 

-6.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share (EPS)

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.13

 

$

0.13

 

$

-

 

 

 

 

Diluted

$

0.13

 

$

0.13

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

$

0.07

 

$

0.06

 

$

0.01

 

 

 

 

Cash dividends declared

$

5,760

 

$

5,045

 

$

715

 

 

 

 

Dividend payout ratio

 

54.1

%

 

44.4

%

 

9.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of  common

shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

82,831

 

 

84,756

 

 

(1,925

)

 

 

 

Diluted

 

82,876

 

 

84,793

 

 

(1,917

)

 

 

 

 

 

 

5

 

For the three months ended

 

 

 

 

Variance

 

Average Balance Sheet Data

December 31,

 

September 30,

 

Variance

 

or Change

 

(Dollars in Thousands, Unaudited)

2019

 

2019

 

or Change

 

Pct.

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

Loans receivable, including loans held for sale

 

4,547,126

 

$

4,656,192

 

$

(109,066

)

 

-2.3

%

Taxable investment securities

 

1,244,475

 

 

1,147,698

 

 

96,777

 

 

8.4

%

Tax-exempt investment securities

 

125,187

 

 

129,339

 

 

(4,152

)

 

-3.2

%

Other interest-earning assets

 

117,811

 

 

125,114

 

 

(7,303

)

 

-5.8

%

Total interest-earning assets

 

6,034,599

 

 

6,058,343

 

 

(23,744

)

 

-0.4

%

Non-interest-earning assets

 

590,746

 

 

585,826

 

 

4,920

 

 

0.8

%

Total assets

$

6,625,345

 

$

6,644,169

 

$

(18,824

)

 

-0.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing demand

$

982,163

 

$

883,843

 

$

98,320

 

 

11.1

%

Savings

 

813,626

 

 

799,181

 

 

14,445

 

 

1.8

%

Certificates of deposit

 

2,063,066

 

 

2,179,333

 

 

(116,267

)

 

-5.3

%

Total interest-bearing deposits

 

3,858,855

 

 

3,862,357

 

 

(3,502

)

 

-0.1

%

Borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank advances

 

1,255,597

 

 

1,277,145

 

 

(21,548

)

 

-1.7

%

Other borrowings

 

34,733

 

 

10,012

 

 

24,721

 

 

246.9

%

Total borrowings

 

1,290,330

 

 

1,287,157

 

 

3,173

 

 

0.2

%

Total interest-bearing liabilities

 

5,149,185

 

 

5,149,514

 

 

(329

)

 

0.0

%

Non-interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest-bearing deposits

 

320,161

 

 

320,641

 

 

(480

)

 

-0.1

%

Other non-interest-bearing liabilities

 

53,479

 

 

60,078

 

 

(6,599

)

 

-11.0

%

Total non-interest-bearing liabilities

 

373,640

 

 

380,719

 

 

(7,079

)

 

-1.9

%

Total liabilities

 

5,522,825

 

 

5,530,233

 

 

(7,408

)

 

-0.1

%

Stockholders' equity

 

1,102,520

 

 

1,113,936

 

 

(11,416

)

 

-1.0

%

Total liabilities and stockholders' equity

$

6,625,345

 

$

6,644,169

 

$

(18,824

)

 

-0.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Average interest-earning assets to average

interest-bearing liabilities

 

117.20

%

 

117.65

%

 

-0.45

%

 

-0.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

 

For the three months ended

 

 

 

 

 

December 31,

 

September 30,

 

Variance

 

Performance Ratio Highlights

2019

 

2019

 

or Change

 

Average yield on interest-earning assets:

 

 

 

 

 

 

 

 

 

Loans receivable, including loans held for sale

 

4.01

%

 

4.18

%

 

-0.17

%

Taxable investment securities

 

3.12

%

 

3.25

%

 

-0.13

%

Tax-exempt investment securities (1)

 

2.13

%

 

2.14

%

 

-0.01

%

Other interest-earning assets

 

4.11

%

 

4.09

%

 

0.02

%

Total interest-earning assets

 

3.79

%

 

3.95

%

 

-0.16

%

 

 

 

 

 

 

 

 

 

 

Average cost of interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

Interest-bearing demand

 

1.29

%

 

1.30

%

 

-0.01

%

Savings

 

0.81

%

 

0.77

%

 

0.04

%

Certificates of deposit

 

2.09

%

 

2.14

%

 

-0.05

%

Total interest-bearing deposits

 

1.62

%

 

1.66

%

 

-0.04

%

Borrowings:

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank advances

 

2.19

%

 

2.24

%

 

-0.05

%

Other borrowings

 

1.36

%

 

0.66

%

 

0.70

%

Total borrowings

 

2.17

%

 

2.22

%

 

-0.05

%

Total interest-bearing liabilities

 

1.75

%

 

1.80

%

 

-0.05

%

 

 

 

 

 

 

 

 

 

 

Interest rate spread (2)

 

2.04

%

 

2.15

%

 

-0.11

%

Net interest margin (3)

 

2.29

%

 

2.42

%

 

-0.13

%

 

 

 

 

 

 

 

 

 

 

Non-interest income to average assets

(annualized)

 

0.27

%

 

0.24

%

 

0.03

%

Non-interest expense to average assets

(annualized)

 

1.60

%

 

1.58

%

 

0.02

%

 

 

 

 

 

 

 

 

 

 

Efficiency ratio (4)

 

67.48

%

 

64.56

%

 

2.92

%

 

 

 

 

 

 

 

 

 

 

Return on average assets (annualized)

 

0.64

%

 

0.68

%

 

-0.04

%

Return on average equity (annualized)

 

3.86

%

 

4.08

%

 

-0.22

%

Return on average tangible equity (annualized) (5)

 

4.80

%

 

5.06

%

 

-0.26

%

 

(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.

(5)

Average tangible equity equals total average stockholders’ equity reduced by average goodwill and average core deposit intangible assets.

 

 

 

 

 

 

 

 

 

 

 

7

 

Five-Quarter Financial Trend Analysis

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary Balance Sheet

At

 

(Dollars and Shares in Thousands,

December 31,

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

Except Per Share Data, Unaudited)

2019

 

2019

 

2019

 

2019

 

2018

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

41,796

 

$

129,305

 

$

38,935

 

$

54,160

 

$

51,483

 

Securities available for sale

 

1,402,206

 

 

1,231,691

 

 

714,263

 

 

726,920

 

 

666,602

 

Securities held to maturity

 

36,073

 

 

37,888

 

 

576,652

 

 

592,199

 

 

598,318

 

Loans held-for-sale

 

5,952

 

 

10,495

 

 

12,267

 

 

997

 

 

1,001

 

Loans receivable, including yield adjustments

 

4,492,697

 

 

4,604,738

 

 

4,678,928

 

 

4,659,804

 

 

4,753,392

 

Less allowance for loan losses

 

(30,937

)

 

(32,432

)

 

(33,274

)

 

(33,105

)

 

(33,526

)

Net loans receivable

 

4,461,760

 

 

4,572,306

 

 

4,645,654

 

 

4,626,699

 

 

4,719,866

 

Premises and equipment

 

56,542

 

 

56,599

 

 

56,854

 

 

58,274

 

 

58,414

 

Federal Home Loan Bank stock

 

62,838

 

 

63,739

 

 

64,190

 

 

64,288

 

 

64,514

 

Accrued interest receivable

 

18,261

 

 

19,393

 

 

19,360

 

 

20,326

 

 

19,435

 

Goodwill

 

210,895

 

 

210,895

 

 

210,895

 

 

210,895

 

 

210,895

 

Core deposit intangible

 

4,545

 

 

4,852

 

 

5,160

 

 

5,470

 

 

5,743

 

Bank owned life insurance

 

259,312

 

 

257,735

 

 

256,155

 

 

254,569

 

 

253,009

 

Deferred income taxes, net

 

20,438

 

 

21,742

 

 

25,367

 

 

24,182

 

 

24,692

 

Other real estate owned

 

178

 

 

-

 

 

-

 

 

209

 

 

508

 

Other assets

 

29,605

 

 

24,366

 

 

9,077

 

 

19,563

 

 

27,960

 

Total assets

$

6,610,401

 

$

6,641,006

 

$

6,634,829

 

$

6,658,751

 

$

6,702,440

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

4,188,822

 

$

4,197,250

 

$

4,147,610

 

$

4,137,573

 

$

4,173,434

 

Borrowings

 

1,275,049

 

 

1,281,118

 

 

1,321,982

 

 

1,326,216

 

 

1,310,547

 

Advance payments by borrowers for taxes

 

16,585

 

 

16,102

 

 

16,887

 

 

17,208

 

 

17,201

 

Other liabilities

 

35,375

 

 

35,747

 

 

21,191

 

 

19,643

 

 

17,997

 

Total liabilities

 

5,515,831

 

 

5,530,217

 

 

5,507,670

 

 

5,500,640

 

 

5,519,179

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

851

 

 

868

 

 

891

 

 

915

 

 

938

 

Paid-in capital

 

737,539

 

 

758,385

 

 

787,394

 

 

817,675

 

 

848,145

 

Retained earnings

 

377,896

 

 

373,004

 

 

366,679

 

 

363,072

 

 

356,993

 

Unearned ESOP shares

 

(29,671

)

 

(30,158

)

 

(30,644

)

 

(31,130

)

 

(31,617

)

Accumulated other comprehensive income, net

 

7,955

 

 

8,690

 

 

2,839

 

 

7,579

 

 

8,802

 

Total stockholders' equity

 

1,094,570

 

 

1,110,789

 

 

1,127,159

 

 

1,158,111

 

 

1,183,261

 

Total liabilities and stockholders' equity

$

6,610,401

 

$

6,641,006

 

$

6,634,829

 

$

6,658,751

 

$

6,702,440

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated capital ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity to assets

 

16.56

%

 

16.73

%

 

16.99

%

 

17.39

%

 

17.65

%

Tangible equity to tangible assets

 

13.75

%

 

13.93

%

 

14.19

%

 

14.62

%

 

14.90

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding shares

 

85,150

 

 

86,786

 

 

89,126

 

 

91,495

 

 

93,772

 

Book value per share

$

12.85

 

$

12.80

 

$

12.65

 

$

12.66

 

$

12.62

 

Tangible book value per share (1)

$

10.32

 

$

10.31

 

$

10.22

 

$

10.29

 

$

10.31

 

 

(1)

Tangible book value equals total stockholders' equity reduced by goodwill and core deposit intangible assets.

 

8

 

At

 

Supplemental Balance Sheet Highlights

December 31,

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

(Dollars in Thousands, Unaudited)

2019

 

2019

 

2019

 

2019

 

2018

 

Cash and cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from depository institutions

$

17,843

 

$

16,106

 

$

19,032

 

$

15,943

 

$

24,361

 

Interest-bearing deposits in other banks

 

23,953

 

 

113,199

 

 

19,903

 

 

38,217

 

 

27,122

 

Total cash and cash equivalents

$

41,796

 

$

129,305

 

$

38,935

 

$

54,160

 

$

51,483

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities available for sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. agency securities

$

606

 

$

694

 

$

3,678

 

$

3,737

 

$

3,942

 

Municipal and state obligations

 

88,057

 

 

91,050

 

 

26,951

 

 

26,731

 

 

26,205

 

Asset-backed securities

 

177,676

 

 

181,068

 

 

179,313

 

 

180,145

 

 

180,828

 

Collateralized loan obligations

 

198,324

 

 

198,549

 

 

208,611

 

 

207,906

 

 

184,439

 

Corporate bonds

 

192,074

 

 

191,241

 

 

122,024

 

 

121,597

 

 

144,692

 

Trust preferred securities

 

3,795

 

 

3,775

 

 

3,756

 

 

3,775

 

 

3,726

 

Debt securities

 

660,532

 

 

666,377

 

 

544,333

 

 

543,891

 

 

543,832

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collateralized mortgage obligations

 

57,839

 

 

63,594

 

 

21,390

 

 

21,660

 

 

23,019

 

Residential pass-through securities

 

360,900

 

 

202,858

 

 

44,303

 

 

70,513

 

 

91,918

 

Commercial pass-through securities

 

322,935

 

 

298,862

 

 

104,237

 

 

90,856

 

 

7,833

 

Mortgage-backed securities

 

741,674

 

 

565,314

 

 

169,930

 

 

183,029

 

 

122,770

 

Total securities available for sale

$

1,402,206

 

$

1,231,691

 

$

714,263

 

$

726,920

 

$

666,602

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities held to maturity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Municipal and state obligations

$

36,073

 

$

37,888

 

$

104,086

 

$

107,375

 

$

107,826

 

Corporate bonds

 

-

 

 

-

 

 

63,086

 

 

63,107

 

 

56,255

 

Debt securities

 

36,073

 

 

37,888

 

 

167,172

 

 

170,482

 

 

164,081

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collateralized mortgage obligations

 

-

 

 

-

 

 

46,381

 

 

49,368

 

 

51,540

 

Residential pass-through securities

 

-

 

 

-

 

 

166,283

 

 

174,338

 

 

182,335

 

Commercial pass-through securities

 

-

 

 

-

 

 

196,816

 

 

198,011

 

 

200,362

 

Mortgage-backed securities

 

-

 

 

-

 

 

409,480

 

 

421,717

 

 

434,237

 

Total securities held to maturity

$

36,073

 

$

37,888

 

$

576,652

 

$

592,199

 

$

598,318

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total securities

$

1,438,279

 

$

1,269,579

 

$

1,290,915

 

$

1,319,119

 

$

1,264,920

 

 

9

 

At

 

Supplemental Balance Sheet Highlights

December 31,

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

(Dollars in Thousands, Unaudited)

2019

 

2019

 

2019

 

2019

 

2018

 

Loan portfolio composition:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential first mortgage loans

$

1,331,301

 

$

1,319,750

 

$

1,344,044

 

$

1,325,105

 

$

1,334,284

 

Home equity loans and lines of credit

 

89,916

 

 

93,304

 

 

96,165

 

 

97,788

 

 

96,001

 

Residential mortgage loans

 

1,421,217

 

 

1,413,054

 

 

1,440,209

 

 

1,422,893

 

 

1,430,285

 

Multifamily mortgage loans

 

1,856,591

 

 

1,922,968

 

 

1,946,391

 

 

1,956,571

 

 

1,974,409

 

Nonresidential and mixed use mortgage loans

 

1,172,213

 

 

1,230,963

 

 

1,258,869

 

 

1,249,215

 

 

1,302,583

 

Commercial mortgage loans

 

3,028,804

 

 

3,153,931

 

 

3,205,260

 

 

3,205,786

 

 

3,276,992

 

Commercial business loans

 

67,887

 

 

66,889

 

 

65,763

 

 

66,476

 

 

70,059

 

Construction loans

 

16,221

 

 

14,637

 

 

13,907

 

 

14,377

 

 

28,405

 

Account loans

 

3,581

 

 

3,530

 

 

3,732

 

 

3,360

 

 

3,310

 

Other consumer loans

 

1,327

 

 

1,679

 

 

2,082

 

 

2,624

 

 

3,524

 

Consumer loans

 

4,908

 

 

5,209

 

 

5,814

 

 

5,984

 

 

6,834

 

Total loans, excluding yield adjustments

 

4,539,037

 

 

4,653,720

 

 

4,730,953

 

 

4,715,516

 

 

4,812,575

 

Unamortized yield adjustments

 

(46,340

)

 

(48,982

)

 

(52,025

)

 

(55,712

)

 

(59,183

)

Loans receivable, including yield adjustments

 

4,492,697

 

 

4,604,738

 

 

4,678,928

 

 

4,659,804

 

 

4,753,392

 

Less allowance for loan losses

 

(30,937

)

 

(32,432

)

 

(33,274

)

 

(33,105

)

 

(33,526

)

Net loans receivable

$

4,461,760

 

$

4,572,306

 

$

4,645,654

 

$

4,626,699

 

$

4,719,866

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan portfolio allocation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential first mortgage loans

 

29.3

%

 

28.4

%

 

28.4

%

 

28.1

%

 

27.7

%

Home equity loans and lines of credit

 

2.0

%

 

2.0

%

 

2.0

%

 

2.1

%

 

2.0

%

Residential mortgage loans

 

31.3

%

 

30.4

%

 

30.4

%

 

30.2

%

 

29.7

%

Multifamily mortgage loans

 

40.9

%

 

41.3

%

 

41.2

%

 

41.5

%

 

41.0

%

Nonresidential and mixed use mortgage loans

 

25.8

%

 

26.5

%

 

26.6

%

 

26.5

%

 

27.1

%

Commercial mortgage loans

 

66.7

%

 

67.8

%

 

67.8

%

 

68.0

%

 

68.1

%

Commercial business loans

 

1.5

%

 

1.4

%

 

1.4

%

 

1.3

%

 

1.4

%

Construction loans

 

0.4

%

 

0.3

%

 

0.3

%

 

0.3

%

 

0.6

%

Account loans

 

0.1

%

 

0.1

%

 

0.1

%

 

0.1

%

 

0.1

%

Other consumer loans

 

0.0

%

 

0.0

%

 

0.0

%

 

0.1

%

 

0.1

%

Consumer loans

 

0.1

%

 

0.1

%

 

0.1

%

 

0.2

%

 

0.2

%

Total loans, excluding yield adjustments

 

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset quality:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accruing loans - 90 days and over past due

$

19

 

$

15

 

$

22

 

$

24

 

$

32

 

Nonaccrual loans

 

21,935

 

 

21,766

 

 

20,248

 

 

21,297

 

 

20,743

 

Total nonperforming loans

 

21,954

 

 

21,781

 

 

20,270

 

 

21,321

 

 

20,775

 

Other real estate owned

 

178

 

 

-

 

 

-

 

 

209

 

 

508

 

Total nonperforming assets

$

22,132

 

$

21,781

 

$

20,270

 

$

21,530

 

$

21,283

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans (% total loans)

 

0.49

%

 

0.47

%

 

0.43

%

 

0.46

%

 

0.44

%

Nonperforming assets (% total assets)

 

0.33

%

 

0.33

%

 

0.31

%

 

0.32

%

 

0.32

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses (ALLL):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ALLL to total loans

 

0.68

%

 

0.70

%

 

0.70

%

 

0.70

%

 

0.70

%

ALLL to nonperforming loans

 

140.92

%

 

148.90

%

 

164.15

%

 

155.27

%

 

161.38

%

Net charge offs

$

30

 

$

60

 

$

495

 

$

242

 

$

176

 

Average net charge off rate (annualized)

 

0.00

%

 

0.01

%

 

0.04

%

 

0.02

%

 

0.01

%

 

10

 

At

 

Supplemental Balance Sheet Highlights

December 31,

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

(Dollars in Thousands, Unaudited)

2019

 

2019

 

2019

 

2019

 

2018

 

Funding by type:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest-bearing deposits

$

312,098

 

$

322,846

 

$

309,063

 

$

303,713

 

$

305,392

 

Interest-bearing demand

 

1,060,434

 

 

931,188

 

 

843,432

 

 

800,023

 

 

807,389

 

Savings

 

829,321

 

 

800,514

 

 

790,658

 

 

777,678

 

 

760,499

 

Certificates of deposit

 

1,986,969

 

 

2,142,702

 

 

2,204,457

 

 

2,256,159

 

 

2,300,154

 

Interest-bearing deposits

 

3,876,724

 

 

3,874,404

 

 

3,838,547

 

 

3,833,860

 

 

3,868,042

 

Total deposits

 

4,188,822

 

 

4,197,250

 

 

4,147,610

 

 

4,137,573

 

 

4,173,434

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank advances

 

1,253,958

 

 

1,273,618

 

 

1,283,211

 

 

1,289,285

 

 

1,293,845

 

Overnight borrowings

 

15,000

 

 

-

 

 

30,000

 

 

-

 

 

-

 

Depositor sweep accounts

 

6,091

 

 

7,500

 

 

8,771

 

 

36,931

 

 

16,702

 

Total borrowings

 

1,275,049

 

 

1,281,118

 

 

1,321,982

 

 

1,326,216

 

 

1,310,547

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total funding

$

5,463,871

 

$

5,478,368

 

$

5,469,592

 

$

5,463,789

 

$

5,483,981

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans as a % of deposits

 

106.7

%

 

109.2

%

 

112.3

%

 

111.8

%

 

113.1

%

Deposits as a % of total funding

 

76.7

%

 

76.6

%

 

75.8

%

 

75.7

%

 

76.1

%

Borrowings as a % of total funding

 

23.3

%

 

23.4

%

 

24.2

%

 

24.3

%

 

23.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Funding by source:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail funding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest-bearing deposits

$

312,098

 

$

322,846

 

$

309,063

 

$

303,713

 

$

305,392

 

Interest-bearing demand

 

1,060,434

 

 

931,188

 

 

843,432

 

 

800,023

 

 

807,389

 

Savings

 

829,321

 

 

800,514

 

 

790,658

 

 

777,678

 

 

760,499

 

Certificates of deposit

 

1,876,280

 

 

1,916,132

 

 

1,902,542

 

 

1,925,630

 

 

1,922,287

 

Total retail deposits

 

4,078,133

 

 

3,970,680

 

 

3,845,695

 

 

3,807,044

 

 

3,795,567

 

Depositor sweep accounts

 

6,091

 

 

7,500

 

 

8,771

 

 

36,931

 

 

16,702

 

Total retail funding

 

4,084,224

 

 

3,978,180

 

 

3,854,466

 

 

3,843,975

 

 

3,812,269

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wholesale funding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Certificates of deposit (listing service)

$

42,119

 

$

57,534

 

$

66,110

 

$

78,704

 

$

108,067

 

Certificates of deposit (brokered)

 

68,570

 

 

169,036

 

 

235,805

 

 

251,825

 

 

269,800

 

Total wholesale deposits

 

110,689

 

 

226,570

 

 

301,915

 

 

330,529

 

 

377,867

 

FHLB advances

 

1,253,958

 

 

1,273,618

 

 

1,283,211

 

 

1,289,285

 

 

1,293,845

 

Overnight borrowings

 

15,000

 

 

-

 

 

30,000

 

 

-

 

 

-

 

Total wholesale funding

 

1,379,647

 

 

1,500,188

 

 

1,615,126

 

 

1,619,814

 

 

1,671,712

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total funding

$

5,463,871

 

$

5,478,368

 

$

5,469,592

 

$

5,463,789

 

$

5,483,981

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail funding as a % of total funding

 

74.7

%

 

72.6

%

 

70.5

%

 

70.4

%

 

69.5

%

Wholesale funding as a % of total funding

 

25.3

%

 

27.4

%

 

29.5

%

 

29.6

%

 

30.5

%

 

11

 

Summary Income Statement

For the three months ended

 

(Dollars and Shares in Thousands,

December 31,

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

Except Per Share Data, Unaudited)

2019

 

2019

 

2019

 

2019

 

2018

 

Interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

$

45,608

 

$

48,600

 

$

47,818

 

$

48,116

 

$

49,015

 

Taxable investment securities

 

9,698

 

 

9,328

 

 

9,772

 

 

9,511

 

 

9,051

 

Tax-exempt investment securities

 

666

 

 

693

 

 

700

 

 

710

 

 

713

 

Other interest-earning assets

 

1,210

 

 

1,278

 

 

1,158

 

 

1,320

 

 

1,243

 

Total interest income

 

57,182

 

 

59,899

 

 

59,448

 

 

59,657

 

 

60,022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

15,590

 

 

16,055

 

 

15,131

 

 

14,114

 

 

12,727

 

Borrowings

 

6,985

 

 

7,157

 

 

7,171

 

 

6,905

 

 

7,946

 

Total interest expense

 

22,575

 

 

23,212

 

 

22,302

 

 

21,019

 

 

20,673

 

Net interest income

 

34,607

 

 

36,687

 

 

37,146

 

 

38,638

 

 

39,349

 

(Reversal of) provision for loan losses

 

(1,465

)

 

(782

)

 

664

 

 

(179

)

 

971

 

Net interest income after (reversal of)

provision for loan losses

 

36,072

 

 

37,469

 

 

36,482

 

 

38,817

 

 

38,378

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fees and service charges

 

2,145

 

 

1,468

 

 

1,340

 

 

1,674

 

 

1,258

 

Gain (loss) on sale and call of securities

 

11

 

 

(14

)

 

(141

)

 

(182

)

 

-

 

Gain on sale of loans

 

668

 

 

605

 

 

196

 

 

151

 

 

101

 

(Loss) gain on sale and write down of other real estate owned

 

(28

)

 

-

 

 

9

 

 

(6

)

 

36

 

Income from bank owned life insurance

 

1,576

 

 

1,580

 

 

1,586

 

 

1,560

 

 

1,599

 

Electronic banking fees and charges

 

293

 

 

318

 

 

270

 

 

253

 

 

277

 

Miscellaneous

 

(111

)

 

5

 

 

128

 

 

226

 

 

38

 

Total non-interest income

 

4,554

 

 

3,962

 

 

3,388

 

 

3,676

 

 

3,309

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

15,174

 

 

15,777

 

 

16,338

 

 

15,350

 

 

15,699

 

Net occupancy expense of premises

 

3,082

 

 

2,969

 

 

2,744

 

 

2,979

 

 

2,761

 

Equipment and systems

 

3,046

 

 

3,089

 

 

2,917

 

 

3,053

 

 

3,377

 

Advertising and marketing

 

890

 

 

535

 

 

948

 

 

739

 

 

787

 

Federal deposit insurance premium

 

-

 

 

-

 

 

438

 

 

455

 

 

421

 

Directors' compensation

 

769

 

 

770

 

 

770

 

 

770

 

 

746

 

Merger-related expenses

 

219

 

 

-

 

 

-

 

 

-

 

 

-

 

Miscellaneous

 

3,247

 

 

3,104

 

 

4,590

 

 

3,425

 

 

3,479

 

Total non-interest expense

 

26,427

 

 

26,244

 

 

28,745

 

 

26,771

 

 

27,270

 

Income before income taxes

 

14,199

 

 

15,187

 

 

11,125

 

 

15,722

 

 

14,417

 

Income taxes

 

3,547

 

 

3,817

 

 

2,314

 

 

4,305

 

 

3,649

 

Net income

$

10,652

 

$

11,370

 

$

8,811

 

$

11,417

 

$

10,768

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share (EPS)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.13

 

$

0.13

 

$

0.10

 

$

0.13

 

$

0.12

 

Diluted

$

0.13

 

$

0.13

 

$

0.10

 

$

0.13

 

$

0.12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

$

0.07

 

$

0.06

 

$

0.06

 

$

0.06

 

$

0.05

 

Cash dividends declared

$

5,760

 

$

5,045

 

$

5,204

 

$

5,338

 

$

4,082

 

Dividend payout ratio

 

54.1

%

 

44.4

%

 

59.1

%

 

46.8

%

 

37.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of  common

shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

82,831

 

 

84,756

 

 

87,090

 

 

89,488

 

 

92,434

 

Diluted

 

82,876

 

 

84,793

 

 

87,132

 

 

89,532

 

 

92,480

 

 

 

 

12

 

For the three months ended

 

Average Balance Sheet Data

December 31,

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

(Dollars in Thousands, Unaudited)

2019

 

2019

 

2019

 

2019

 

2018

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans receivable, including loans held for sale

$

4,547,126

 

$

4,656,192

 

$

4,648,362

 

$

4,709,052

 

$

4,758,587

 

Taxable investment securities

 

1,244,475

 

 

1,147,698

 

 

1,184,401

 

 

1,161,492

 

 

1,158,720

 

Tax-exempt investment securities

 

125,187

 

 

129,339

 

 

132,110

 

 

134,309

 

 

135,453

 

Other interest-earning assets

 

117,811

 

 

125,114

 

 

98,374

 

 

107,554

 

 

87,916

 

Total interest-earning assets

 

6,034,599

 

 

6,058,343

 

 

6,063,247

 

 

6,112,407

 

 

6,140,676

 

Non-interest-earning assets

 

590,746

 

 

585,826

 

 

572,218

 

 

574,921

 

 

587,921

 

Total assets

$

6,625,345

 

$

6,644,169

 

$

6,635,465

 

$

6,687,328

 

$

6,728,597

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing demand

$

982,163

 

$

883,843

 

$

815,624

 

$

790,567

 

$

792,989

 

Savings

 

813,626

 

 

799,181

 

 

780,558

 

 

773,308

 

 

743,676

 

Certificates of deposit

 

2,063,066

 

 

2,179,333

 

 

2,229,723

 

 

2,288,836

 

 

2,214,932

 

Total interest-bearing deposits

 

3,858,855

 

 

3,862,357

 

 

3,825,905

 

 

3,852,711

 

 

3,751,597

 

Borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank advances

 

1,255,597

 

 

1,277,145

 

 

1,284,427

 

 

1,292,168

 

 

1,293,470

 

Other borrowings

 

34,733

 

 

10,012

 

 

29,439

 

 

26,037

 

 

119,281

 

Total borrowings

 

1,290,330

 

 

1,287,157

 

 

1,313,866

 

 

1,318,205

 

 

1,412,751

 

Total interest-bearing liabilities

 

5,149,185

 

 

5,149,514

 

 

5,139,771

 

 

5,170,916

 

 

5,164,348

 

Non-interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest-bearing deposits

 

320,161

 

 

320,641

 

 

311,648

 

 

307,645

 

 

315,165

 

Other non-interest-bearing liabilities

 

53,479

 

 

60,078

 

 

39,294

 

 

35,930

 

 

37,374

 

Total non-interest-bearing liabilities

 

373,640

 

 

380,719

 

 

350,942

 

 

343,575

 

 

352,539

 

Total liabilities

 

5,522,825

 

 

5,530,233

 

 

5,490,713

 

 

5,514,491

 

 

5,516,887

 

Stockholders' equity

 

1,102,520

 

 

1,113,936

 

 

1,144,752

 

 

1,172,837

 

 

1,211,710

 

Total liabilities and stockholders' equity

$

6,625,345

 

$

6,644,169

 

$

6,635,465

 

$

6,687,328

 

$

6,728,597

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average interest-earning assets to average

interest-bearing liabilities

 

117.20

%

 

117.65

%

 

117.97

%

 

118.21

%

 

118.91

%

 

13

 

For the three months ended

 

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

Performance Ratio Highlights

2019

 

2019

 

2019

 

2019

 

2018

 

Average yield on interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans receivable, including loans held for sale

 

4.01

%

 

4.18

%

 

4.11

%

 

4.09

%

 

4.12

%

Taxable investment securities

 

3.12

%

 

3.25

%

 

3.30

%

 

3.28

%

 

3.12

%

Tax-exempt investment securities (1)

 

2.13

%

 

2.14

%

 

2.12

%

 

2.12

%

 

2.11

%

Other interest-earning assets

 

4.11

%

 

4.09

%

 

4.71

%

 

4.91

%

 

5.66

%

Total interest-earning assets

 

3.79

%

 

3.95

%

 

3.92

%

 

3.91

%

 

3.91

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average cost of interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing demand

 

1.29

%

 

1.30

%

 

1.19

%

 

1.06

%

 

0.97

%

Savings

 

0.81

%

 

0.77

%

 

0.68

%

 

0.60

%

 

0.49

%

Certificates of deposit

 

2.09

%

 

2.14

%

 

2.04

%

 

1.90

%

 

1.79

%

Total interest-bearing deposits

 

1.62

%

 

1.66

%

 

1.58

%

 

1.47

%

 

1.36

%

Borrowings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank advances

 

2.19

%

 

2.24

%

 

2.21

%

 

2.13

%

 

2.27

%

Other borrowings

 

1.36

%

 

0.66

%

 

0.99

%

 

0.35

%

 

1.99

%

Total borrowings

 

2.17

%

 

2.22

%

 

2.18

%

 

2.10

%

 

2.25

%

Total interest-bearing liabilities

 

1.75

%

 

1.80

%

 

1.74

%

 

1.63

%

 

1.60

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate spread (2)

 

2.04

%

 

2.15

%

 

2.18

%

 

2.28

%

 

2.31

%

Net interest margin (3)

 

2.29

%

 

2.42

%

 

2.45

%

 

2.53

%

 

2.56

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest income to average assets

(annualized)

 

0.27

%

 

0.24

%

 

0.20

%

 

0.22

%

 

0.20

%

Non-interest expense to average assets

(annualized)

 

1.60

%

 

1.58

%

 

1.73

%

 

1.60

%

 

1.62

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Efficiency ratio (4)

 

67.48

%

 

64.56

%

 

70.91

%

 

63.27

%

 

63.93

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (annualized)

 

0.64

%

 

0.68

%

 

0.53

%

 

0.68

%

 

0.64

%

Return on average equity (annualized)

 

3.86

%

 

4.08

%

 

3.08

%

 

3.89

%

 

3.55

%

Return on average tangible equity (annualized) (5)

 

4.80

%

 

5.06

%

 

3.80

%

 

4.78

%

 

4.33

%

 

(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.

(5)

Average tangible equity equals total average stockholders’ equity reduced by average goodwill and average core deposit intangible assets.

 

 

 

14

 

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

For the three months ended

 

(Dollars in Thousands,

December 31,

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

Except Per Share Data, Unaudited)

2019

 

2019

 

2019

 

2019

 

2018

 

Adjusted Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (GAAP)

$

10,652

 

$

11,370

 

$

8,811

 

$

11,417

 

$

10,768

 

Add: Merger-related expenses - net of tax

 

154

 

 

-

 

 

-

 

 

-

 

 

-

 

Add: Branch consolidation expenses - net of tax

 

274

 

 

475

 

 

1,216

 

 

-

 

 

-

 

Adjusted net income (non-GAAP)

$

11,080

 

$

11,845

 

$

10,027

 

$

11,417

 

$

10,768

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income per Common Share (EPS)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share Basic and

Diluted (GAAP)

$

0.13

 

$

0.13

 

$

0.10

 

$

0.13

 

$

0.12

 

Add: Merger-related expenses - net of tax

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Add: Branch consolidation expenses - net of tax

 

-

 

 

0.01

 

 

0.01

 

 

-

 

 

-

 

Adjusted net income per common share Basic

and Diluted (non-GAAP)

$

0.13

 

$

0.14

 

$

0.11

 

$

0.13

 

$

0.12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Non-Interest Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest expense (GAAP)

$

26,427

 

$

26,244

 

$

28,745

 

$

26,771

 

$

27,270

 

Less: Merger-related expenses

 

(219

)

 

-

 

 

-

 

 

-

 

 

-

 

Less: Branch consolidation expenses

 

(153

)

 

(567

)

 

(1,725

)

 

-

 

 

-

 

Adjusted non-interest expense (non-GAAP)

$

26,055

 

$

25,677

 

$

27,020

 

$

26,771

 

$

27,270

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Non-Interest Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest income (GAAP)

$

4,554

 

$

3,962

 

$

3,388

 

$

3,676

 

$

3,309

 

Add: Branch consolidation expenses

 

236

 

 

106

 

 

-

 

 

-

 

 

-

 

Adjusted non-interest income (non-GAAP)

$

4,790

 

$

4,068

 

$

3,388

 

$

3,676

 

$

3,309

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Non-Interest Expense Ratio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest expense to average assets (GAAP)

 

1.60

%

 

1.58

%

 

1.73

%

 

1.60

%

 

1.62

%

Less: Merger-related expenses

 

-0.01

%

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

Less: Branch consolidation expenses

 

-0.01

%

 

-0.03

%

 

-0.10

%

 

0.00

%

 

0.00

%

Adjusted non-interest expense ratio (non-GAAP)

 

1.57

%

 

1.55

%

 

1.63

%

 

1.60

%

 

1.62

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Efficiency Ratio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest expense / (Net interest income

+ non-interest income) (GAAP)

 

67.5

%

 

64.6

%

 

70.9

%

 

63.3

%

 

63.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Calculation of Adjusted Efficiency Ratio

(non-GAAP)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest expense (GAAP)

$

26,427

 

$

26,244

 

$

28,745

 

$

26,771

 

$

27,270

 

Less: Merger-related expenses

 

(219

)

 

-

 

 

-

 

 

-

 

 

-

 

Less: Branch consolidation expenses

 

(153

)

 

(567

)

 

(1,725

)

 

-

 

 

-

 

Non-interest expense (non-GAAP)

$

26,055

 

$

25,677

 

$

27,020

 

$

26,771

 

$

27,270

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income (GAAP)

 

34,607

 

 

36,687

 

 

37,146

 

 

38,638

 

 

39,349

 

Total non-interest income (GAAP)

 

4,554

 

 

3,962

 

 

3,388

 

 

3,676

 

 

3,309

 

Add: Branch consolidation expenses

 

236

 

 

106

 

 

-

 

 

-

 

 

-

 

Total revenue (non-GAAP)

$

39,397

 

$

40,755

 

$

40,534

 

$

42,314

 

$

42,658

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted efficiency ratio (non-GAAP)

 

66.1

%

 

63.0

%

 

66.6

%

 

63.3

%

 

63.9

%

 

 

15

 

For the three months ended

 

Reconciliation of GAAP to Non-GAAP

December 31,

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

(Dollars in Thousands, Unaudited)

2019

 

2019

 

2019

 

2019

 

2018

 

Adjusted Return on Average Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (GAAP)

 

0.64

%

 

0.68

%

 

0.53

%

 

0.68

%

 

0.64

%

Add: Merger-related expenses - net of tax

 

0.01

%

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

Add: Branch consolidation expenses - net of tax

 

0.02

%

 

0.03

%

 

0.07

%

 

0.00

%

 

0.00

%

Adjusted return on average assets (non-GAAP)

 

0.67

%

 

0.71

%

 

0.60

%

 

0.68

%

 

0.64

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Return on Average Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average equity (GAAP)

 

3.86

%

 

4.08

%

 

3.08

%

 

3.89

%

 

3.55

%

Add: Merger-related expenses - net of tax

 

0.06

%

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

Add: Branch consolidation expenses - net of tax

 

0.10

%

 

0.17

%

 

0.42

%

 

0.00

%

 

0.00

%

Adjusted return on average equity (non-GAAP)

 

4.02

%

 

4.25

%

 

3.50

%

 

3.89

%

 

3.55

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Calculation of Return on Average Tangible

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income annualized (GAAP)

$

42,608

 

$

45,480

 

$

35,244

 

$

45,668

 

$

43,072

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Average equity (GAAP)

$

1,102,520

 

$

1,113,936

 

$

1,144,752

 

$

1,172,837

 

$

1,211,710

 

Less: average goodwill

 

(210,895

)

 

(210,895

)

 

(210,895

)

 

(210,895

)

 

(210,895

)

Less: average other intangible assets

 

(4,711

)

 

(5,006

)

 

(5,313

)

 

(5,606

)

 

(5,915

)

Average tangible equity (non-GAAP)

$

886,914

 

$

898,035

 

$

928,544

 

$

956,336

 

$

994,900

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average tangible equity (non-GAAP)

 

4.80

%

 

5.06

%

 

3.80

%

 

4.78

%

 

4.33

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Calculation of Adjusted Return on Average

Tangible Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income annualized (non-GAAP)

$

44,320

 

$

47,380

 

$

40,108

 

$

45,668

 

$

43,072

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Average equity (GAAP)

$

1,102,520

 

$

1,113,936

 

$

1,144,752

 

$

1,172,837

 

$

1,211,710

 

Less: average goodwill

 

(210,895

)

 

(210,895

)

 

(210,895

)

 

(210,895

)

 

(210,895

)

Less: average other intangible assets

 

(4,711

)

 

(5,006

)

 

(5,313

)

 

(5,606

)

 

(5,915

)

Average tangible equity (non-GAAP)

$

886,914

 

$

898,035

 

$

928,544

 

$

956,336

 

$

994,900

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted return on average tangible equity

(non-GAAP)

 

5.00

%

 

5.28

%

 

4.32

%

 

4.78

%

 

4.33

%

 

 

16