Michigan
|
0-7818
|
38-2032782
|
(State or other jurisdiction of incorporation)
|
(Commission File Number) |
(IRS Employer Identification No.)
|
4200 East Beltline
Grand Rapids, Michigan
(Address of principal executive office)
|
49525
(Zip Code)
|
☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Title of each class
|
Trading symbol(s)
|
Name of each exchange on which registered
|
Common stock, no par value
|
IBCP
|
NASDAQ Global Select Market
|
Item 2.02. |
Results of Operations and Financial Condition
|
Item 9.01. |
Financial Statements and Exhibits
|
Exhibits.
|
|
Press release dated July 28, 2020.
|
|
Supplemental data to the Registrant’s press release dated July 28, 2020.
|
|
Earnings conference call presentation.
|
INDEPENDENT BANK CORPORATION
|
|||||
(Registrant)
|
|||||
Date
|
July 28, 2020
|
By
|
/s/ Robert N. Shuster
|
||
Robert N. Shuster, Principal Financial Officer
|
For Release:
|
Immediately
|
Contact:
|
William B. Kessel, President and CEO, 616.447.3933
|
Robert N. Shuster, Chief Financial Officer, 616.522.1765
|
• |
Customer Safety and Service Levels – From mid-March to mid-June we limited our branch lobbies to appointment only and kept drive-through windows open. In mid-June our bank branch lobbies fully reopened. With the ability to use drive
through service, ATMs or our electronic banking solutions there was minimal disruption to customers. In addition, our flexible operating network allowed us to efficiently redeploy our associates, as necessary, to high volume areas to fulfill
customer requests into our call center, requests for consumer and commercial loan payment relief and mortgage financing requests.
|
• |
Employee Safety – For employees that are in our bank branches servicing our customers, we have expanded sick and vacation time. All non-branch employees either have the option or are required to work remotely. We currently have
approximately 40% of our total staff working remotely every day. We have installed “customer friendly” shields throughout our delivery network and have implemented a variety of other protective processes to put both customers and staff at
ease. We continue to comply with the Governor of Michigan’s “Safe at Home” executive orders and “MI Safe Start Plan” as they apply to our business.
|
• |
Loan Forbearances – We have forbearance programs in place to proactively work with our customers who have experienced financial difficulty due to the COVID-19 pandemic. As of June 30, 2020 we had active forbearance agreements with 259
commercial customers with $210.5 million in loans, 668 retail (mortgage and installment loan) customers with $88.7 million in loans, and 773 customers with $114.8 million within our mortgage loans sold and serviced for others. These dollar
amounts represent 15.4%, 5.9% and 4.2% of the related total loan portfolio balances. As of July 23, 2020 the active forbearance agreements had changed as follows: 260 commercial customers with $211.8 million in loans, 524 retail customers
with $71.0 million in loans, and 639 customers with $98.2 million within our mortgage loans sold and serviced for others. The level of these loans are down after peaking in mid-June 2020, as many customers economic situations have improved,
allowing them to pay their loans current. The forbearance terms are flexible enough to meet the specific needs of each customer, while protecting the safety and soundness of the Company.
|
• |
U.S. Small Business Administration (“SBA”) Payroll Protection Program (“PPP”) – Our response, and focus on this vital program, shows our commitment to the communities we serve. We built an effective process to manage the high volume of
applications that we received and processed. Customer demand for this program was extraordinary. As of June 30, 2020, we had 2,012 PPP loans outstanding with a total balance of $259.4 million. The average balance of PPP loans in the second
quarter of 2020 was $191.1 million with an average yield of 3.05% (including the accretion of approximately $1.0 million of net fees). The PPP loan portfolio reduced the average yield on interest-earning assets by an estimated 0.04% in the
second quarter of 2020. At June 30, 2020, there was $7.7 million of remaining unaccreted net fees related to PPP loans. These net fees are expected to be accreted into interest income over the next 20 months and the pace of such accretion
will depend on payment activity (including loan forgiveness) within the PPP loan portfolio. The PPP has been extended to August 8, 2020. We have received approximately 35 forgiveness applications that will be submitted once the SBA
Forgiveness portal is activated.
|
• |
Federal Reserve Main Street Lending Program (“MSLP”) – We submitted an application and were approved as a MSLP lender. This program is designed to support small and medium-sized businesses that were in sound financial condition before the
COVID-19 pandemic. U.S. businesses may be eligible for MSLP loans if they meet either of the following conditions: (1) the business has 15,000 employees or fewer; or (2) the business had 2019 revenues of $5 billion or less. As of July, 14,
2020 we had received three loan applications under the MSLP.
|
• |
Changes in the fair value due to price of capitalized mortgage loan servicing rights (the “MSR Changes”) of a negative $2.9 million ($0.10 per diluted share, after taxes) and a negative $8.9 million ($0.31 per diluted share, after taxes)
for the three- and six-months ended June 30, 2020, respectively, as compared to a negative $2.7 million ($0.09 per diluted share, after taxes) and a negative $4.9 million ($0.16 per diluted share, after taxes) for the three- and six-months
ended June 30, 2019, respectively.
|
• |
Approximately $0.76 million ($0.03 per diluted share, after taxes) and $0.82 million ($0.03 per diluted share, after taxes) of expenses related to a pending data processing conversion and bank branch closures (as described further below
under “Operating Results”) for the three- and six-months ended June 30, 2020, respectively
|
• |
Increases in net income and diluted earnings per share of 37.7% and 45.7%, respectively, compared to 2019;
|
• |
Return on average assets and return on average equity of 1.54% and 17.39%, respectively;
|
• |
Net gains on mortgage loans of $17.6 million (up 310.1% over 2019) and total mortgage loan origination volume of $470.6 million;
|
• |
Total portfolio loan net growth of $148.5 million;
|
• |
Deposit net growth of $401.6 million;
|
• |
The issuance of $40.0 million of subordinated debt in May 2020;
|
• |
Continued strong asset quality metrics; and
|
• |
The payment of a 20 cent per share dividend on common stock on May 15, 2020.
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
6/30/2020
|
6/30/2019
|
6/30/2020
|
6/30/2019
|
|||||||||||||
Mortgage loan servicing, net:
|
(Dollars in thousands)
|
|||||||||||||||
Revenue, net
|
$
|
1,646
|
$
|
1,515
|
$
|
3,319
|
$
|
2,991
|
||||||||
Fair value change due to price
|
(2,921
|
)
|
(2,670
|
)
|
(8,852
|
)
|
(4,873
|
)
|
||||||||
Fair value change due to pay-downs
|
(1,747
|
)
|
(752
|
)
|
(2,789
|
)
|
(1,240
|
)
|
||||||||
Total
|
$
|
(3,022
|
)
|
$
|
(1,907
|
)
|
$
|
(8,322
|
)
|
$
|
(3,122
|
)
|
Loan Type
|
6/30/2020
|
12/31/2019
|
6/30/2019
|
|||||||||
(Dollars in thousands)
|
||||||||||||
Commercial
|
$
|
4,886
|
$
|
1,377
|
$
|
900
|
||||||
Consumer/installment
|
602
|
805
|
901
|
|||||||||
Mortgage
|
7,455
|
7,996
|
5,997
|
|||||||||
Subtotal
|
12,943
|
10,178
|
7,798
|
|||||||||
Less – government guaranteed loans
|
604
|
646
|
436
|
|||||||||
Total non-performing loans
|
$
|
12,339
|
$
|
9,532
|
$
|
7,362
|
||||||
Ratio of non-performing loans to total portfolio loans
|
0.43
|
%
|
0.35
|
%
|
0.27
|
%
|
||||||
Ratio of non-performing assets to total assets
|
0.34
|
%
|
0.32
|
%
|
0.27
|
%
|
||||||
Ratio of the allowance for loan losses to non-performing loans
|
279.60
|
%
|
274.32
|
%
|
351.85
|
%
|
(1) |
Excludes loans that are classified as “troubled debt restructured” that are still performing.
|
Regulatory Capital Ratios
|
6/30/2020
|
12/31/2019
|
Well
Capitalized
Minimum
|
|||||||||
Tier 1 capital to average total assets
|
8.76
|
%
|
9.49
|
%
|
5.00
|
%
|
||||||
Tier 1 common equity to risk-weighted assets
|
12.07
|
%
|
11.96
|
%
|
6.50
|
%
|
||||||
Tier 1 capital to risk-weighted assets
|
12.07
|
%
|
11.96
|
%
|
8.00
|
%
|
||||||
Total capital to risk-weighted assets
|
13.32
|
%
|
12.96
|
%
|
10.00
|
%
|
June 30,
2020
|
December 31,
2019
|
|||||||
(unaudited)
|
||||||||
(In thousands, except share
|
||||||||
amounts)
|
||||||||
Assets
|
||||||||
Cash and due from banks
|
$
|
47,369
|
$
|
53,295
|
||||
Interest bearing deposits
|
8,447
|
12,009
|
||||||
Cash and Cash Equivalents
|
55,816
|
65,304
|
||||||
Interest bearing deposits - time
|
-
|
350
|
||||||
Securities available for sale
|
856,280
|
518,400
|
||||||
Federal Home Loan Bank and Federal Reserve Bank stock, at cost
|
18,427
|
18,359
|
||||||
Loans held for sale, carried at fair value
|
83,706
|
69,800
|
||||||
Loans
|
||||||||
Commercial
|
1,362,956
|
1,166,695
|
||||||
Mortgage
|
1,041,684
|
1,098,911
|
||||||
Installment
|
462,023
|
459,417
|
||||||
Total Loans
|
2,866,663
|
2,725,023
|
||||||
Allowance for loan losses
|
(34,500
|
)
|
(26,148
|
)
|
||||
Net Loans
|
2,832,163
|
2,698,875
|
||||||
Other real estate and repossessed assets
|
1,569
|
1,865
|
||||||
Property and equipment, net
|
36,962
|
38,411
|
||||||
Bank-owned life insurance
|
55,300
|
55,710
|
||||||
Deferred tax assets, net
|
2,483
|
2,072
|
||||||
Capitalized mortgage loan servicing rights
|
13,773
|
19,171
|
||||||
Other intangibles
|
4,816
|
5,326
|
||||||
Goodwill
|
28,300
|
28,300
|
||||||
Accrued income and other assets
|
53,720
|
42,751
|
||||||
Total Assets
|
$
|
4,043,315
|
$
|
3,564,694
|
||||
Liabilities and Shareholders’ Equity
|
||||||||
Deposits
|
||||||||
Non-interest bearing
|
$
|
1,118,424
|
$
|
852,076
|
||||
Savings and interest-bearing checking
|
1,375,523
|
1,186,745
|
||||||
Reciprocal
|
535,398
|
431,027
|
||||||
Time
|
323,993
|
376,877
|
||||||
Brokered time
|
131,787
|
190,002
|
||||||
Total Deposits
|
3,485,125
|
3,036,727
|
||||||
Other borrowings
|
50,002
|
88,646
|
||||||
Subordinated debt
|
39,283
|
-
|
||||||
Subordinated debentures
|
39,490
|
39,456
|
||||||
Accrued expenses and other liabilities
|
74,292
|
49,696
|
||||||
Total Liabilities
|
3,688,192
|
3,214,525
|
||||||
Shareholders’ Equity
|
||||||||
Preferred stock, no par value, 200,000 shares authorized; none issued or outstanding
|
-
|
-
|
||||||
Common stock, no par value, 500,000,000 shares authorized; issued and outstanding: 21,880,183 shares at June 30, 2020 and 22,481,643 shares at December 31, 2019
|
338,989
|
352,344
|
||||||
Retained earnings
|
12,338
|
1,611
|
||||||
Accumulated other comprehensive income (loss)
|
3,796
|
(3,786
|
)
|
|||||
Total Shareholders’ Equity
|
355,123
|
350,169
|
||||||
Total Liabilities and Shareholders’ Equity
|
$
|
4,043,315
|
$
|
3,564,694
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||||
June 30,
2020
|
March 31,
2020
|
June 30,
2019
|
June 30,
|
|||||||||||||||||
2020
|
2019
|
|||||||||||||||||||
(unaudited)
|
||||||||||||||||||||
Interest Income
|
(In thousands, except per share amounts)
|
|||||||||||||||||||
Interest and fees on loans
|
$
|
29,863
|
$
|
31,764
|
$
|
33,836
|
$
|
61,627
|
$
|
66,517
|
||||||||||
Interest on securities available for sale
|
||||||||||||||||||||
Taxable
|
2,847
|
3,059
|
3,034
|
5,906
|
6,040
|
|||||||||||||||
Tax-exempt
|
793
|
390
|
324
|
1,183
|
698
|
|||||||||||||||
Other investments
|
251
|
366
|
379
|
617
|
954
|
|||||||||||||||
Total Interest Income
|
33,754
|
35,579
|
37,573
|
69,333
|
74,209
|
|||||||||||||||
Interest Expense
|
||||||||||||||||||||
Deposits
|
2,388
|
4,700
|
6,021
|
7,088
|
11,702
|
|||||||||||||||
Other borrowings and subordinated debt and debentures
|
904
|
688
|
796
|
1,592
|
1,508
|
|||||||||||||||
Total Interest Expense
|
3,292
|
5,388
|
6,817
|
8,680
|
13,210
|
|||||||||||||||
Net Interest Income
|
30,462
|
30,191
|
30,756
|
60,653
|
60,999
|
|||||||||||||||
Provision for loan losses
|
5,188
|
6,721
|
652
|
11,909
|
1,316
|
|||||||||||||||
Net Interest Income After Provision for Loan Losses
|
25,274
|
23,470
|
30,104
|
48,744
|
59,683
|
|||||||||||||||
Non-interest Income
|
||||||||||||||||||||
Service charges on deposit accounts
|
1,623
|
2,591
|
2,800
|
4,214
|
5,440
|
|||||||||||||||
Interchange income
|
2,526
|
2,457
|
2,604
|
4,983
|
4,959
|
|||||||||||||||
Net gains on assets
|
||||||||||||||||||||
Mortgage loans
|
17,642
|
8,840
|
4,302
|
26,482
|
7,913
|
|||||||||||||||
Securities available for sale
|
-
|
253
|
-
|
253
|
304
|
|||||||||||||||
Mortgage loan servicing, net
|
(3,022
|
)
|
(5,300
|
)
|
(1,907
|
)
|
(8,322
|
)
|
(3,122
|
)
|
||||||||||
Other
|
1,598
|
2,163
|
2,106
|
3,761
|
4,370
|
|||||||||||||||
Total Non-interest Income
|
20,367
|
11,004
|
9,905
|
31,371
|
19,864
|
|||||||||||||||
Non-interest Expense
|
||||||||||||||||||||
Compensation and employee benefits
|
16,279
|
16,509
|
15,931
|
32,788
|
32,282
|
|||||||||||||||
Occupancy, net
|
2,159
|
2,460
|
2,131
|
4,619
|
4,636
|
|||||||||||||||
Data processing
|
1,590
|
2,355
|
2,171
|
3,945
|
4,315
|
|||||||||||||||
Furniture, fixtures and equipment
|
1,090
|
1,036
|
1,006
|
2,126
|
2,035
|
|||||||||||||||
Communications
|
800
|
803
|
717
|
1,603
|
1,486
|
|||||||||||||||
Interchange expense
|
726
|
859
|
753
|
1,585
|
1,441
|
|||||||||||||||
Loan and collection
|
756
|
805
|
628
|
1,561
|
1,262
|
|||||||||||||||
Advertising
|
364
|
683
|
627
|
1,047
|
1,299
|
|||||||||||||||
Legal and professional
|
468
|
393
|
371
|
861
|
740
|
|||||||||||||||
FDIC deposit insurance
|
430
|
370
|
342
|
800
|
710
|
|||||||||||||||
Branch closure costs
|
417
|
-
|
-
|
417
|
-
|
|||||||||||||||
Conversion related expenses
|
346
|
56
|
-
|
402
|
-
|
|||||||||||||||
Credit card and bank service fees
|
94
|
99
|
97
|
193
|
200
|
|||||||||||||||
Net (gains) losses on other real estate and repossessed assets
|
(9
|
)
|
109
|
(198
|
)
|
100
|
(79
|
)
|
||||||||||||
Other
|
1,836
|
2,182
|
2,016
|
4,018
|
4,255
|
|||||||||||||||
Total Non-interest Expense
|
27,346
|
28,719
|
26,592
|
56,065
|
54,582
|
|||||||||||||||
Income Before Income Tax
|
18,295
|
5,755
|
13,417
|
24,050
|
24,965
|
|||||||||||||||
Income tax expense
|
3,523
|
945
|
2,687
|
4,468
|
4,854
|
|||||||||||||||
Net Income
|
$
|
14,772
|
$
|
4,810
|
$
|
10,730
|
$
|
19,582
|
$
|
20,111
|
||||||||||
Net Income Per Common Share
|
||||||||||||||||||||
Basic
|
$
|
0.67
|
$
|
0.22
|
$
|
0.47
|
$
|
0.89
|
$
|
0.86
|
||||||||||
Diluted
|
$
|
0.67
|
$
|
0.21
|
$
|
0.46
|
$
|
0.88
|
$
|
0.85
|
June 30,
2020
|
March 31,
2020
|
December 31,
2019
|
September 30,
2019
|
June 30,
2019
|
||||||||||||||||
(unaudited)
|
||||||||||||||||||||
(Dollars in thousands except per share data)
|
||||||||||||||||||||
Three Months Ended
|
||||||||||||||||||||
Net interest income
|
$
|
30,462
|
$
|
30,191
|
$
|
30,710
|
$
|
30,872
|
$
|
30,756
|
||||||||||
Provision for loan losses
|
5,188
|
6,721
|
(221
|
)
|
(271
|
)
|
652
|
|||||||||||||
Non-interest income
|
20,367
|
11,004
|
15,597
|
12,275
|
9,905
|
|||||||||||||||
Non-interest expense
|
27,346
|
28,719
|
29,303
|
27,848
|
26,592
|
|||||||||||||||
Income before income tax
|
18,295
|
5,755
|
17,225
|
15,570
|
13,417
|
|||||||||||||||
Income tax expense
|
3,523
|
945
|
3,346
|
3,125
|
2,687
|
|||||||||||||||
Net income
|
$
|
14,772
|
$
|
4,810
|
$
|
13,879
|
$
|
12,445
|
$
|
10,730
|
||||||||||
Basic earnings per share
|
$
|
0.67
|
$
|
0.22
|
$
|
0.62
|
$
|
0.55
|
$
|
0.47
|
||||||||||
Diluted earnings per share
|
0.67
|
0.21
|
0.61
|
0.55
|
0.46
|
|||||||||||||||
Cash dividend per share
|
0.20
|
0.20
|
0.18
|
0.18
|
0.18
|
|||||||||||||||
|
||||||||||||||||||||
Average shares outstanding
|
21,890,761
|
22,271,412
|
22,481,551
|
22,486,041
|
23,035,526
|
|||||||||||||||
Average diluted shares outstanding
|
22,113,187
|
22,529,370
|
22,776,908
|
22,769,572
|
23,313,346
|
|||||||||||||||
Performance Ratios
|
||||||||||||||||||||
Return on average assets
|
1.54
|
%
|
0.54
|
%
|
1.56
|
%
|
1.42
|
%
|
1.27
|
%
|
||||||||||
Return on average equity
|
17.39
|
5.54
|
15.92
|
14.64
|
12.72
|
|||||||||||||||
Efficiency ratio (1)
|
53.07
|
69.32
|
62.56
|
63.76
|
64.57
|
|||||||||||||||
As a Percent of Average Interest-Earning Assets (1)
|
||||||||||||||||||||
Interest income
|
3.72
|
%
|
4.28
|
%
|
4.44
|
%
|
4.60
|
%
|
4.73
|
%
|
||||||||||
Interest expense
|
0.36
|
0.65
|
0.74
|
0.84
|
0.86
|
|||||||||||||||
Net interest income
|
3.36
|
3.63
|
3.70
|
3.76
|
3.87
|
|||||||||||||||
Average Balances
|
||||||||||||||||||||
Loans
|
$
|
2,913,857
|
$
|
2,766,770
|
$
|
2,776,037
|
$
|
2,786,544
|
$
|
2,699,648
|
||||||||||
Securities available for sale
|
660,126
|
527,395
|
488,016
|
423,255
|
441,523
|
|||||||||||||||
Total earning assets
|
3,659,614
|
3,350,948
|
3,320,828
|
3,285,081
|
3,191,264
|
|||||||||||||||
Total assets
|
3,868,408
|
3,565,829
|
3,529,744
|
3,483,296
|
3,388,398
|
|||||||||||||||
Deposits
|
3,303,302
|
3,066,298
|
3,040,099
|
3,023,334
|
2,929,885
|
|||||||||||||||
Interest bearing liabilities
|
2,402,361
|
2,309,995
|
2,251,928
|
2,219,133
|
2,155,660
|
|||||||||||||||
Shareholders’ equity
|
341,606
|
348,963
|
345,910
|
337,162
|
338,254
|
|||||||||||||||
End of Period
|
||||||||||||||||||||
Capital
|
||||||||||||||||||||
Tangible common equity ratio
|
8.03
|
%
|
8.40
|
8.96
|
%
|
8.71
|
%
|
8.72
|
%
|
|||||||||||
Average equity to average assets
|
8.83
|
9.79
|
9.80
|
9.68
|
9.98
|
|||||||||||||||
Tangible common equity per share of common stock
|
$
|
14.72
|
$
|
13.81
|
$
|
14.08
|
$
|
13.63
|
$
|
13.19
|
||||||||||
Total shares outstanding
|
21,880,183
|
21,892,001
|
22,481,643
|
22,480,748
|
22,498,776
|
|||||||||||||||
Selected Balances
|
||||||||||||||||||||
Loans
|
$
|
2,866,663
|
$
|
2,718,115
|
$
|
2,725,023
|
$
|
2,722,446
|
$
|
2,706,526
|
||||||||||
Securities available for sale
|
856,280
|
594,284
|
518,400
|
439,592
|
430,305
|
|||||||||||||||
Total earning assets
|
3,833,523
|
3,416,845
|
3,343,941
|
3,348,631
|
3,239,247
|
|||||||||||||||
Total assets
|
4,043,315
|
3,632,387
|
3,564,694
|
3,550,837
|
3,438,302
|
|||||||||||||||
Deposits
|
3,485,125
|
3,083,564
|
3,036,727
|
3,052,312
|
2,978,885
|
|||||||||||||||
Interest bearing liabilities
|
2,456,193
|
2,350,056
|
2,312,753
|
2,272,587
|
2,194,970
|
|||||||||||||||
Shareholders’ equity
|
355,123
|
335,618
|
350,169
|
340,245
|
330,846
|
(1) |
Presented on a fully tax equivalent basis assuming a marginal tax rate of 21%.
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
(Dollars in thousands)
|
||||||||||||||||
Net Interest Margin, Fully Taxable Equivalent (“FTE”)
|
||||||||||||||||
Net interest income
|
$
|
30,462
|
$
|
30,756
|
$
|
60,653
|
$
|
60,999
|
||||||||
Add: taxable equivalent adjustment
|
223
|
102
|
344
|
219
|
||||||||||||
Net interest income - taxable equivalent
|
$
|
30,685
|
$
|
30,858
|
$
|
60,997
|
$
|
61,218
|
||||||||
Net interest margin (GAAP) (1)
|
3.34
|
%
|
3.86
|
%
|
3.47
|
%
|
3.86
|
%
|
||||||||
Net interest margin (FTE) (1)
|
3.36
|
%
|
3.87
|
%
|
3.49
|
%
|
3.88
|
%
|
||||||||
Adjusted Net Income before tax
|
||||||||||||||||
Income before income tax
|
$
|
18,295
|
$
|
13,417
|
$
|
24,050
|
$
|
24,965
|
||||||||
Provision for loan losses
|
5,188
|
652
|
11,909
|
1,316
|
||||||||||||
Pre-tax, pre-provision income
|
$
|
23,483
|
$
|
14,069
|
$
|
35,959
|
$
|
26,281
|
(1) |
Annualized.
|
June 30,
2020
|
March 31,
2020
|
December 31,
2019
|
September 30,
2019
|
June 30,
2019
|
||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||
Common shareholders’ equity
|
$
|
355,123
|
$
|
335,618
|
$
|
350,169
|
$
|
340,245
|
$
|
330,846
|
||||||||||
Less:
|
||||||||||||||||||||
Goodwill
|
28,300
|
28,300
|
28,300
|
28,300
|
28,300
|
|||||||||||||||
Other intangibles
|
4,816
|
5,071
|
5,326
|
5,598
|
5,870
|
|||||||||||||||
Tangible common equity
|
$
|
322,007
|
$
|
302,247
|
$
|
316,543
|
$
|
306,347
|
$
|
296,676
|
||||||||||
Total assets
|
$
|
4,043,315
|
$
|
3,632,387
|
$
|
3,564,694
|
$
|
3,550,837
|
$
|
3,438,302
|
||||||||||
Less:
|
||||||||||||||||||||
Goodwill
|
28,300
|
28,300
|
28,300
|
28,300
|
28,300
|
|||||||||||||||
Other intangibles
|
4,816
|
5,071
|
5,326
|
5,598
|
5,870
|
|||||||||||||||
Tangible assets
|
$
|
4,010,199
|
$
|
3,599,016
|
$
|
3,531,068
|
$
|
3,516,939
|
$
|
3,404,132
|
||||||||||
Common equity ratio
|
8.78
|
%
|
9.24
|
%
|
9.82
|
%
|
9.58
|
%
|
9.62
|
%
|
||||||||||
Tangible common equity ratio
|
8.03
|
%
|
8.40
|
%
|
8.96
|
%
|
8.71
|
%
|
8.72
|
%
|
||||||||||
Tangible Common Equity per Share of Common Stock:
|
||||||||||||||||||||
Common shareholders’ equity
|
$
|
355,123
|
$
|
335,618
|
$
|
350,169
|
$
|
340,245
|
$
|
330,846
|
||||||||||
Tangible common equity
|
$
|
322,007
|
$
|
302,247
|
$
|
316,543
|
$
|
306,347
|
$
|
296,676
|
||||||||||
Shares of common stock outstanding (in thousands)
|
21,880
|
21,892
|
22,482
|
22,481
|
22,499
|
|||||||||||||||
Common shareholders’ equity per share of common stock
|
$
|
16.23
|
$
|
15.33
|
$
|
15.58
|
$
|
15.13
|
$
|
14.70
|
||||||||||
Tangible common equity per share of common stock
|
$
|
14.72
|
$
|
13.81
|
$
|
14.08
|
$
|
13.63
|
$
|
13.19
|
June 30,
2020
|
March 31,
2020
|
December 31,
2019
|
September 30,
2019
|
June 30,
2019
|
||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||
Non-accrual loans
|
$
|
12,938
|
$
|
17,454
|
$
|
10,178
|
$
|
7,124
|
$
|
7,798
|
||||||||||
Loans 90 days or more past due and still accruing interest
|
5
|
-
|
-
|
-
|
-
|
|||||||||||||||
Subtotal
|
12,943
|
17,454
|
10,178
|
7,124
|
7,798
|
|||||||||||||||
Less: Government guaranteed loans
|
604
|
676
|
646
|
475
|
436
|
|||||||||||||||
Total non-performing loans
|
12,339
|
16,778
|
9,532
|
6,649
|
7,362
|
|||||||||||||||
Other real estate and repossessed assets
|
1,569
|
1,494
|
1,865
|
1,789
|
1,990
|
|||||||||||||||
Total non-performing assets
|
$
|
13,908
|
$
|
18,272
|
$
|
11,397
|
$
|
8,438
|
$
|
9,352
|
||||||||||
As a percent of Portfolio Loans
|
||||||||||||||||||||
Non-performing loans
|
0.43
|
%
|
0.62
|
%
|
0.35
|
%
|
0.24
|
%
|
0.27
|
%
|
||||||||||
Allowance for loan losses
|
1.20
|
1.20
|
0.96
|
0.96
|
0.96
|
|||||||||||||||
Non-performing assets to total assets
|
0.34
|
0.50
|
0.32
|
0.24
|
0.27
|
|||||||||||||||
Allowance for loan losses as a percent of non-performing loans
|
279.60
|
193.68
|
274.32
|
393.26
|
351.85
|
(1) |
Excludes loans classified as “trouble debt restructured” that are not past due.
|
June 30, 2020
|
|||||||||||||
Commercial
|
Retail (1)
|
Total
|
|||||||||||
(In thousands)
|
|||||||||||||
Performing TDR’s
|
$
|
13,973
|
$
|
38,554
|
$
|
52,527
|
|||||||
Non-performing TDR’s (2)
|
1,234
|
2,022
|
(3)
|
3,256
|
|||||||||
Total
|
$
|
15,207
|
$
|
40,576
|
$
|
55,783
|
December 31, 2019
|
|||||||||||||
Commercial
|
Retail (1)
|
Total
|
|||||||||||
(In thousands)
|
|||||||||||||
Performing TDR’s
|
$
|
7,974
|
$
|
39,601
|
$
|
47,575
|
|||||||
Non-performing TDR’s (2)
|
540
|
2,607
|
(3)
|
3,147
|
|||||||||
Total
|
$
|
8,514
|
$
|
42,208
|
$
|
50,722
|
(1)
|
Retail loans include mortgage and installment loan segments.
|
(2)
|
Included in non-performing assets table above.
|
(3)
|
Also includes loans on non-accrual at the time of modification until six payments are received on a timely basis.
|
Six months ended
June 30,
|
||||||||||||||||
2020
|
2019
|
|||||||||||||||
Unfunded
|
Unfunded
|
|||||||||||||||
Loans
|
Commitments
|
Loans
|
Commitments
|
|||||||||||||
(Dollars in thousands)
|
||||||||||||||||
Balance at beginning of period
|
$
|
26,148
|
$
|
1,542
|
$
|
24,888
|
$
|
1,296
|
||||||||
Additions (deductions)
|
||||||||||||||||
Provision for loan losses
|
11,909
|
-
|
1,316
|
-
|
||||||||||||
Recoveries credited to allowance
|
1,754
|
-
|
1,457
|
-
|
||||||||||||
Loans charged against the allowance
|
(5,311
|
)
|
-
|
(1,758
|
)
|
-
|
||||||||||
Additions included in non-interest expense
|
-
|
230
|
-
|
187
|
||||||||||||
Balance at end of period
|
$
|
34,500
|
$
|
1,772
|
$
|
25,903
|
$
|
1,483
|
||||||||
Net loans charged against the allowance to average Portfolio Loans
|
0.26
|
%
|
0.02
|
%
|
June 30,
2020
|
December 31,
2019
|
|||||||
(In thousands)
|
||||||||
Subordinated debt |
$ |
39,283 |
$ |
- |
||||
Subordinated debentures
|
|
39,490
|
|
39,456
|
||||
Amount not qualifying as regulatory capital
|
(507
|
)
|
(1,224
|
)
|
||||
Amount qualifying as regulatory capital
|
78,266
|
38,232
|
||||||
Shareholders’ equity
|
||||||||
Common stock
|
338,989
|
352,344
|
||||||
Retained earnings
|
12,338
|
1,611
|
||||||
Accumulated other comprehensive income (loss)
|
3,796
|
(3,786
|
)
|
|||||
Total shareholders’ equity
|
355,123
|
350,169
|
||||||
Total capitalization
|
$
|
433,389
|
$
|
388,401
|
Three months ended
|
Six months ended
|
|||||||||||||||||||
June 30,
2020
|
March 31,
2020
|
June 30,
2019
|
June 30,
|
|||||||||||||||||
2020
|
2019
|
|||||||||||||||||||
(In thousands)
|
||||||||||||||||||||
Service charges on deposit accounts
|
$
|
1,623
|
$
|
2,591
|
$
|
2,800
|
$
|
4,214
|
$
|
5,440
|
||||||||||
Interchange income
|
2,526
|
2,457
|
2,604
|
$
|
4,983
|
$
|
4,959
|
|||||||||||||
Net gains on assets
|
||||||||||||||||||||
Mortgage loans
|
17,642
|
8,840
|
4,302
|
26,482
|
7,913
|
|||||||||||||||
Securities
|
-
|
253
|
0
|
253
|
304
|
|||||||||||||||
Mortgage loan servicing, net
|
(3,022
|
)
|
(5,300
|
)
|
(1,907
|
)
|
(8,322
|
)
|
(3,122
|
)
|
||||||||||
Investment and insurance commissions
|
435
|
513
|
450
|
948
|
747
|
|||||||||||||||
Bank owned life insurance
|
265
|
270
|
270
|
535
|
512
|
|||||||||||||||
Other
|
898
|
1,380
|
1,386
|
2,278
|
3,111
|
|||||||||||||||
Total non-interest income
|
$
|
20,367
|
$
|
11,004
|
$
|
9,905
|
$
|
31,371
|
$
|
19,864
|
Three months ended
June 30,
|
Six months ended
June 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
(In thousands)
|
||||||||||||||||
Balance at beginning of period
|
$
|
14,829
|
$
|
19,909
|
$
|
19,171
|
$
|
21,400
|
||||||||
Servicing rights acquired
|
-
|
-
|
-
|
$
|
-
|
|||||||||||
Originated servicing rights capitalized
|
3,611
|
1,407
|
6,243
|
2,607
|
||||||||||||
Change in fair value
|
(4,667
|
)
|
(3,422
|
)
|
(11,641
|
)
|
(6,113
|
)
|
||||||||
Balance at end of period
|
$
|
13,773
|
$
|
17,894
|
$
|
13,773
|
$
|
17,894
|
Three months ended
|
Six months ended
|
|||||||||||||||||||
June 30,
2020
|
March 31,
2020
|
June 30,
2019
|
June 30,
|
|||||||||||||||||
2020
|
2019
|
|||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||
Mortgage loans originated
|
$
|
470,626
|
$
|
311,078
|
$
|
241,402
|
$
|
781,704
|
$
|
379,160
|
||||||||||
Mortgage loans sold
|
379,048
|
262,260
|
131,636
|
641,308
|
286,161
|
|||||||||||||||
Net gains on mortgage loans
|
17,642
|
8,840
|
4,302
|
26,482
|
7,913
|
|||||||||||||||
Net gains as a percent of mortgage loans sold (“Loan Sales Margin”)
|
4.65
|
%
|
3.37
|
%
|
3.27
|
%
|
4.13
|
%
|
2.77
|
%
|
||||||||||
Fair value adjustments included in the Loan Sales Margin
|
1.14
|
0.78
|
0.74
|
0.99
|
0.66
|
Three months ended
|
Six months ended
|
|||||||||||||||||||
June 30,
2020
|
March 31,
2020
|
June 30,
2019
|
June 30,
|
|||||||||||||||||
2020
|
2019
|
|||||||||||||||||||
(In thousands)
|
||||||||||||||||||||
Compensation
|
$
|
9,668
|
$
|
10,703
|
$
|
10,185
|
$
|
20,371
|
$
|
20,666
|
||||||||||
Performance-based compensation
|
3,809
|
2,121
|
2,296
|
5,930
|
4,516
|
|||||||||||||||
Payroll taxes and employee benefits
|
2,802
|
3,685
|
3,450
|
6,487
|
7,100
|
|||||||||||||||
Compensation and employee benefits
|
16,279
|
16,509
|
15,931
|
32,788
|
32,282
|
|||||||||||||||
Occupancy, net
|
2,159
|
2,460
|
2,131
|
4,619
|
4,636
|
|||||||||||||||
Data processing
|
1,590
|
2,355
|
2,171
|
3,945
|
4,315
|
|||||||||||||||
Furniture, fixtures and equipment
|
1,090
|
1,036
|
1,006
|
2,126
|
2,035
|
|||||||||||||||
Communications
|
800
|
803
|
717
|
1,603
|
1,486
|
|||||||||||||||
Interchange expense
|
726
|
859
|
753
|
1,585
|
1,441
|
|||||||||||||||
Loan and collection
|
756
|
805
|
628
|
1,561
|
1,262
|
|||||||||||||||
Advertising
|
364
|
683
|
627
|
1,047
|
1,299
|
|||||||||||||||
Legal and professional fees
|
468
|
393
|
371
|
861
|
740
|
|||||||||||||||
FDIC deposit insurance
|
430
|
370
|
342
|
800
|
710
|
|||||||||||||||
Amortization of intangible assets
|
255
|
255
|
273
|
510
|
545
|
|||||||||||||||
Branch closure costs
|
417
|
-
|
-
|
417
|
-
|
|||||||||||||||
Conversion related expenses
|
346
|
56
|
-
|
402
|
-
|
|||||||||||||||
Supplies
|
203
|
184
|
153
|
387
|
311
|
|||||||||||||||
Costs related to unfunded lending commitments
|
111
|
119
|
27
|
230
|
187
|
|||||||||||||||
Credit card and bank service fees
|
94
|
99
|
97
|
193
|
200
|
|||||||||||||||
Provision for loss reimbursement on sold loans
|
77
|
37
|
35
|
114
|
146
|
|||||||||||||||
Net (gains) losses on other real estate and repossessed assets
|
(9
|
)
|
109
|
(198
|
)
|
100
|
(79
|
)
|
||||||||||||
Other
|
1,190
|
1,587
|
1,528
|
2,777
|
3,066
|
|||||||||||||||
Total non-interest expense
|
$
|
27,346
|
$
|
28,719
|
$
|
26,592
|
$
|
56,065
|
$
|
54,582
|
Three Months Ended
June 30,
|
||||||||||||||||||||||||
2020
|
2019
|
|||||||||||||||||||||||
Average
Balance
|
Interest
|
Rate (2)
|
Average
Balance
|
Interest
|
Rate (2)
|
|||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Taxable loans
|
$
|
2,906,843
|
$
|
29,793
|
4.11
|
%
|
$
|
2,692,168
|
$
|
33,762
|
5.02
|
%
|
||||||||||||
Tax-exempt loans (1)
|
7,014
|
88
|
5.05
|
7,480
|
94
|
5.04
|
||||||||||||||||||
Taxable securities
|
535,345
|
2,847
|
2.13
|
392,075
|
3,034
|
3.10
|
||||||||||||||||||
Tax-exempt securities (1)
|
124,781
|
998
|
3.20
|
49,448
|
406
|
3.28
|
||||||||||||||||||
Interest bearing cash
|
67,204
|
18
|
0.11
|
31,734
|
115
|
1.45
|
||||||||||||||||||
Other investments
|
18,427
|
233
|
5.09
|
18,359
|
264
|
5.77
|
||||||||||||||||||
Interest Earning Assets
|
3,659,614
|
33,977
|
3.72
|
3,191,264
|
37,675
|
4.73
|
||||||||||||||||||
Cash and due from banks
|
45,714
|
33,252
|
||||||||||||||||||||||
Other assets, net
|
163,080
|
163,882
|
||||||||||||||||||||||
Total Assets
|
$
|
3,868,408
|
$
|
3,388,398
|
||||||||||||||||||||
Liabilities
|
||||||||||||||||||||||||
Savings and interest- bearing checking
|
$
|
1,754,503
|
505
|
0.12
|
$
|
1,413,073
|
2,647
|
0.75
|
||||||||||||||||
Time deposits
|
494,411
|
1,883
|
1.53
|
664,909
|
3,374
|
2.04
|
||||||||||||||||||
Other borrowings
|
153,447
|
904
|
2.37
|
77,678
|
796
|
4.11
|
||||||||||||||||||
Interest Bearing Liabilities
|
2,402,361
|
3,292
|
0.55
|
2,155,660
|
6,817
|
1.27
|
||||||||||||||||||
Non-interest bearing deposits
|
1,054,388
|
851,903
|
||||||||||||||||||||||
Other liabilities
|
70,053
|
42,581
|
||||||||||||||||||||||
Shareholders’ equity
|
341,606
|
338,254
|
||||||||||||||||||||||
Total liabilities and shareholders’ equity
|
$
|
3,868,408
|
$
|
3,388,398
|
||||||||||||||||||||
Net Interest Income
|
$
|
30,685
|
$
|
30,858
|
||||||||||||||||||||
Net Interest Income as a Percent of Average Interest Earning Assets
|
3.36
|
%
|
3.87
|
%
|
(1)
|
Interest on tax-exempt loans and securities is presented on a fully tax equivalent basis assuming a marginal tax rate of 21%.
|
(2)
|
Annualized
|
Six Months Ended
June 30,
|
||||||||||||||||||||||||
2020
|
2019
|
|||||||||||||||||||||||
Average
Balance
|
Interest
|
Rate(2)
|
Average
Balance
|
Interest
|
Rate(2)
|
|||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Taxable loans
|
$
|
2,832,876
|
$
|
61,481
|
4.36
|
%
|
$
|
2,652,893
|
$
|
66,362
|
5.03
|
%
|
||||||||||||
Tax-exempt loans (1)
|
7,438
|
185
|
5.00
|
8,081
|
197
|
4.92
|
||||||||||||||||||
Taxable securities
|
501,720
|
5,906
|
2.35
|
390,966
|
6,040
|
3.09
|
||||||||||||||||||
Tax-exempt securities (1)
|
92,040
|
1,488
|
3.23
|
53,148
|
875
|
3.29
|
||||||||||||||||||
Interest bearing cash
|
52,814
|
146
|
0.56
|
48,381
|
426
|
1.78
|
||||||||||||||||||
Other investments
|
18,393
|
471
|
5.15
|
18,359
|
528
|
5.80
|
||||||||||||||||||
Interest Earning Assets
|
3,505,281
|
69,677
|
3.99
|
3,171,828
|
74,428
|
4.72
|
||||||||||||||||||
Cash and due from banks
|
47,663
|
33,744
|
||||||||||||||||||||||
Other assets, net
|
164,167
|
167,270
|
||||||||||||||||||||||
Total Assets
|
$
|
3,717,111
|
$
|
3,372,842
|
||||||||||||||||||||
Liabilities
|
||||||||||||||||||||||||
Savings and interest- bearing checking
|
$
|
1,685,046
|
2,435
|
0.29
|
$
|
1,387,208
|
4,969
|
0.72
|
||||||||||||||||
Time deposits
|
544,642
|
4,653
|
1.72
|
676,606
|
6,733
|
2.01
|
||||||||||||||||||
Other borrowings
|
126,491
|
1,592
|
2.53
|
71,901
|
1,508
|
4.23
|
||||||||||||||||||
Interest Bearing Liabilities
|
2,356,179
|
8,680
|
0.74
|
2,135,715
|
13,210
|
1.25
|
||||||||||||||||||
Non-interest bearing deposits
|
955,114
|
855,732
|
||||||||||||||||||||||
Other liabilities
|
60,540
|
41,481
|
||||||||||||||||||||||
Shareholders’ equity
|
345,278
|
339,914
|
||||||||||||||||||||||
Total liabilities and shareholders’ equity
|
$
|
3,717,111
|
$
|
3,372,842
|
||||||||||||||||||||
Net Interest Income
|
$
|
60,997
|
$
|
61,218
|
||||||||||||||||||||
Net Interest Income as a Percent of Average Interest Earning Assets
|
3.49
|
%
|
3.88
|
%
|
(1)
|
Interest on tax-exempt loans and securities is presented on a fully tax equivalent basis assuming a marginal tax rate of 21%.
|
(2)
|
Annualized
|
Total Commercial Loans
|
||||||||||||||||||||
Watch Credits
|
Percent of Loan
|
|||||||||||||||||||
Loan Category
|
All Loans
|
Performing
|
Non-accrual
|
Total
|
Category in
Watch Credit
|
|||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||
Land
|
$
|
11,168
|
$
|
183
|
$
|
673
|
$
|
856
|
7.7
|
%
|
||||||||||
Land Development
|
12,448
|
38
|
-
|
38
|
0.3
|
|||||||||||||||
Construction
|
109,725
|
36
|
-
|
36
|
0.0
|
|||||||||||||||
Income Producing
|
401,619
|
15,157
|
-
|
15,157
|
3.8
|
|||||||||||||||
Owner Occupied
|
297,295
|
22,941
|
3,702
|
26,643
|
9.0
|
|||||||||||||||
Total Commercial Real Estate Loans
|
$
|
832,255
|
$
|
38,355
|
4,375
|
$
|
42,730
|
5.1
|
||||||||||||
Other Commercial Loans
|
$
|
530,701
|
$
|
20,646
|
511
|
$
|
21,157
|
4.0
|
||||||||||||
Total non-performing commercial loans
|
$
|
4,886
|
Total Commercial Loans
|
||||||||||||||||||||
Watch Credits
|
Percent of Loan
|
|||||||||||||||||||
Loan Category
|
All Loans
|
Performing
|
Non-accrual
|
Total
|
Category in
Watch Credit
|
|||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||
Land
|
$
|
11,235
|
$
|
275
|
$
|
735
|
$
|
1,010
|
9.0
|
%
|
||||||||||
Land Development
|
12,899
|
-
|
-
|
-
|
0.0
|
|||||||||||||||
Construction
|
97,463
|
-
|
-
|
-
|
0.0
|
|||||||||||||||
Income Producing
|
409,897
|
15,347
|
-
|
15,347
|
3.7
|
|||||||||||||||
Owner Occupied
|
323,694
|
35,485
|
295
|
35,780
|
11.1
|
|||||||||||||||
Total Commercial Real Estate Loans
|
$
|
855,188
|
$
|
51,107
|
1,030
|
$
|
52,137
|
6.1
|
||||||||||||
Other Commercial Loans
|
$
|
311,507
|
$
|
20,580
|
347
|
$
|
20,927
|
6.7
|
||||||||||||
Total non-performing commercial loans
|
$
|
1,377
|
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