EX-99.1 2 d430613dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO    LOGO

NASDAQ: ONB

oldnational.com

FOR IMMEDIATE RELEASE

July 25, 2017

Contacts:

Media:

Kathy A. Schoettlin – (812) 465-7269

Executive Vice President – Communications

Financial Community:

Lynell J. Walton – (812) 464-1366

Senior Vice President – Investor Relations

Old National’s 2nd quarter net income increases 8.0% over prior quarter; includes 10% annualized commercial loan growth

2ND QUARTER 2017 HIGHLIGHTS:

 

  •   Earnings of $38.9 million, or $0.28 per share

 

  •   Commercial and commercial real estate loan growth of 10.0% annualized from 1st quarter 2017

 

  •   Tangible book value1 increase of 3.6% from 1st quarter 2017

 

1 Non-GAAP measure – refer to Table 10 for Non-GAAP reconciliation

 

 

Evansville, Ind. (July 25, 2017) – Today Old National Bancorp (the “Company” or “Old National”) (NASDAQ: ONB) reported 2nd quarter 2017 net income of $38.9 million, or $0.28 per diluted share. Included in the current quarter were $0.5 million in pre-tax net branch consolidation charges and a $1.0 million pre-tax charge for a client experience improvement initiative. This current quarter net income represents an increase of 8.0% over the 1st quarter of 2017 net income of $36.0 million. During the 1st quarter, Old National incurred $1.4 million in pre-tax branch consolidation charges related to the 15 banking centers that were consolidated by the Company in January 2017.

“Our strong 2nd quarter results are reflective of our transformation into higher growth markets and executing on our stated initiatives,” said Old National Chairman and CEO Bob Jones. “With strong commercial loan growth and low credit costs, coupled with revenue growth and well-maintained expenses, this was a successful quarter of execution for Old National.”

Committed to our Strategic Imperatives

Old National’s continued steady performance and strong credit and capital positions can be attributed to the Company’s unwavering commitment to the three strategic imperatives that have guided Old National for 12 years:

1. Strengthen the risk profile; 2. Enhance management discipline; and 3. Achieve consistent quality earnings.

Balance Sheet and Net Interest Margin

Old National’s period-end loans, including loans held for sale, at June 30, 2017, totaled $9.259 billion, an increase of $110.4 million, or 4.8% annualized, from the $9.149 billion at March 31, 2017. Importantly, Old National’s portfolio of commercial and commercial real estate loans grew by 10.0%, annualized, from the 1st quarter to the 2nd quarter of 2017.

Total period-end core deposits, including demand and interest-bearing deposits, decreased $142.7 million to $10.561 billion at June 30, 2017, compared to $10.704 billion at March 31, 2017.

Net interest income for the 2nd quarter of 2017 totaled $104.3 million compared to $105.8 million in the 1st quarter of 2017, and $99.3 million in the 2nd quarter of 2016. On a fully taxable equivalent basis, net interest income was $110.0 million for the 2nd quarter of 2017 and represented a net interest margin on total average earning assets of 3.42%. These results compare to net interest income on a fully taxable equivalent basis of $111.5 million and a margin of 3.50% in the 1st quarter of 2017. In the 2nd quarter of 2016, Old National reported net interest income on a fully taxable equivalent basis of $104.6 million and a margin of 3.57%. Refer to Table 3 for Non-GAAP taxable equivalent reconciliations.

In the 2nd quarter of 2017, Old National recorded $9.7 million in accretion income as part of net interest income, which represents 30 basis points of the Company’s net interest margin. Accretion income is related to purchase accounting discounts from the Company’s various acquisitions. Total accretion income in the 1st quarter of 2017 and the 2nd quarter of 2016 reported by Old National was $12.6 million, or 40 basis points of the net interest margin, and $14.2 million, or 49 basis points of the net interest margin, respectively.

Noninterest Income

Total noninterest income for the 2nd quarter of 2017 amounted to $49.3 million and compares to $42.9 million reported in the 1st quarter of 2017 and $93.4 million in the 2nd quarter of 2016. The current quarter included $1.6 million of recoveries on loans originated by AnchorBank, fsb that had been fully charged-off prior to the acquisition; the 1st quarter of 2017 included $1.5 million of such recoveries. During the 2nd quarter of 2016, Old National recognized a $41.9 million pre-tax gain on the sale of its insurance subsidiary. The 2nd quarter of 2016 also included $7.1 million in insurance income, compared to essentially none in both the 1st quarter of 2017 and the 2nd quarter of 2017.

Noninterest Expenses

Noninterest expenses for Old National totaled $102.8 million for the 2nd quarter of 2017. The current quarter included $1.7 million in pre-tax charges: $0.7 million related to branch consolidations and $1.0 million related to a client-experience improvement initiative currently in process at the Company. Noninterest expenses for the 1st quarter of 2017 totaled $101.9 million and included $1.4 million in pre-tax charges related to branch consolidations. In the 2nd quarter of 2016, noninterest expenses totaled $121.5 million and included the following pre-tax charges: $7.2 million for merger and integration, $4.9 million for the Old National Bank Foundation and community support and $1.1 million for branch consolidations. Old National currently operates 188 branches throughout its franchise.

Capital

Old National’s capital position at June 30, 2017, remained well above regulatory guideline minimums with regulatory tier 1 and total risk-based capital ratios of 11.8% and 12.3%, respectively, compared to 11.7% and 12.2% at March 31, 2017, and 11.8% and 12.4% at June 30, 2016. Old National did not repurchase any stock in the open market during the 2nd quarter of 2017.

The following table presents Old National’s risk-based and leverage ratios compared to industry requirements:

 

Table 1

    Fully Phased-In
Regulatory
Guidelines Minimum		     Consolidated ONB at
June 30, 2017		  

Tier 1 Risk-Based Capital Ratio

      > 8.5 %      11.8 % 

Total Risk-Based Capital Ratio

      > 10.5 %      12.3 % 

Common Equity Tier 1 Capital Ratio

      > 7.0 %      11.5 % 

Tier 1 Leverage Capital Ratio

      > 4.0 %      8.7 % 

Old National’s ratio of tangible common equity to tangible assets was 8.41% at June 30, 2017, compared to 8.16% at March 31, 2017, and 8.10% at June 30, 2016. Refer to Table 10 for Non-GAAP reconciliations.

Credit

Old National recorded a provision expense of $1.4 million and had net charge-offs of $0.2 million in the 2nd quarter of 2017. These results compare to $0.3 million in provision expense and net charge-offs of $0.3 million, and provision expense of $1.3 million and net charge-offs of $0.2 million, in the 1st quarter of 2017 and the 2nd quarter of 2016, respectively. Net charge-offs for the 2nd quarter of 2017 were 0.01% of average total loans on an annualized basis, compared to net charge-offs of 0.01% of average total loans in both the 1st quarter of 2017 and the 2nd quarter of 2016, respectively.

Delinquencies remained low as Old National reported 30+ day delinquent loans of 0.32% in the 2nd quarter of 2017 compared to 0.32% in the 1st quarter of 2017. Old National’s 90+ day delinquent loans for the 2nd quarter of 2017 were near zero compared to 0.01% for the 2nd quarter of 2016.

At June 30, 2017, Old National’s allowance for loan losses was $51.0 million, or 0.55% of total loans, compared to an allowance of $49.8 million, or 0.55% of total loans at March 31, 2017, and $51.8 million, or 0.59% of total loans, at June 30, 2016. The coverage ratio (allowance to non-performing loans) stood at 37% at June 30, 2017, compared to 38% at March 31, 2017, and 30% at June 30, 2016.

In accordance with current accounting practices, the loans acquired from recent acquisitions were recorded at fair value with no allowance recorded at the acquisition date. As of June 30, 2017, the remaining discount on these acquired loans was $107.6 million.

The following table presents certain credit quality metrics related to Old National’s loan portfolio:

 

Table 2 ($ in millions)

    2Q17     1Q17     2Q16  

Non-Performing Loans (NPLs)

    $ 139.6     $ 130.3     $ 174.2  

Problem Loans (Including NPLs)

      238.0       219.9       250.2  

Special Mention Loans

      99.5       95.9       106.9  

Net Charge-Off (Recoveries) Ratio

      0.01 %      0.01 %      0.01 % 

Provision for Loan Losses

    $ 1.4     $ 0.3     $ 1.3  

Allowance for Loan Losses

      51.0       49.8       51.8  

Remaining Loan Discount on Acquired Loans

      107.6       117.1       159.4  

About Old National

Old National Bancorp (NASDAQ: ONB), the holding company of Old National Bank, is the largest financial services holding company headquartered in Indiana. With $15.0 billion in assets, it ranks among the top 100 banking companies in the U.S. and has been recognized as a World’s Most Ethical Company by the Ethisphere Institute for six consecutive years. Since its founding in Evansville in 1834, Old National Bank has focused on community banking by building long-term, highly valued partnerships with clients. Today, Old National’s footprint includes Indiana, Kentucky, Michigan and Wisconsin. In addition to providing extensive services in retail and commercial banking, Old National offers comprehensive wealth management, investments and brokerage services. For more information and financial data, please visit Investor Relations at oldnational.com.

Conference Call

Old National will hold a conference call at 10:00 a.m. Central Time on Tuesday, July 25, 2017, to discuss 2nd quarter 2017 financial results, strategic developments, and the Company’s financial outlook. The live audio web cast of the call, along with the corresponding presentation slides, will be available on the Company’s Investor Relations web page at oldnational.com and will be archived there for 12 months. A replay of the call will also be available from 1:00 p.m. Central Time on July 25 through August 8. To access the replay, dial 1-855-859-2056, Conference ID Code 49543317.

Use of Non-GAAP Financial Measures

This earnings release contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding Old National’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in the tables of this release.

Table 3 – Non-GAAP Reconciliations-Fully Taxable Equivalent Net Interest Margin

 

($ in millions)

    2Q17     1Q17     2Q16  

Net Interest Income

    $ 104.3     $ 105.8     $ 99.3  

Taxable Equivalent Adjustment

      5.7       5.7       5.3  

Net Interest Income – Taxable Equivalent

    $ 110.0     $ 111.5     $ 104.6  

Average Earning Assets

    $ 12,844.5     $ 12,742.9     $ 11,726.4  

Net Interest Margin

      3.42 %      3.50 %      3.57 % 

Forward-Looking Statement

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, descriptions of Old National Bancorp’s (“Old National’s”) financial condition, results of operations, asset and credit quality trends and profitability. Forward-looking statements can be identified by the use of the words “anticipate,” “believe,” “expect,” “intend,” “could” and “should,” and other words of similar meaning. These forward-looking statements express management’s current expectations or forecasts of future events and, by their nature, are subject to risks and uncertainties and there are a number of factors that could cause actual results to differ materially from those in such statements. Factors that might cause such a difference include, but are not limited to: expected cost savings, synergies and other financial benefits from the recently completed mergers might not be realized within the expected timeframes and costs or difficulties relating to integration matters might be greater than expected; market, economic, operational, liquidity, credit and interest rate risks associated with Old National’s business; competition; government legislation and policies (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act and its related regulations); ability of Old National to execute its business plan; changes in the economy which could materially impact credit quality trends and the ability to generate loans and gather deposits; failure or circumvention of our internal controls; failure or disruption of our information systems; significant changes in accounting, tax or regulatory practices or requirements; new legal obligations or liabilities or unfavorable resolutions of litigations; disruptive technologies in payment systems and other services traditionally provided by banks; computer hacking and other cybersecurity threats; other matters discussed in this press release and other factors identified in our Annual Report on Form 10-K and other periodic filings with the SEC. These forward-looking statements are made only as of the date of this press release, and Old National does not undertake an obligation to release revisions to these forward-looking statements to reflect events or conditions after the date of this press release.

TABLE 4    Financial Highlights (unaudited)   

($ and shares in thousands, except per share data)

 

     Three Months Ended     Six Months Ended  
     June 30,     March 31,     June 30,     June 30,     June 30,  
     2017     2017     2016     2017     2016  

Income Statement

           

Net interest income

    $ 104,333     $ 105,801     $ 99,340     $ 210,134     $ 184,983  

Provision for loan losses

      1,355       347       1,319       1,702       1,410  

Noninterest income

      49,271       42,920       93,385       92,191       142,836  

Noninterest expense

      102,811       101,891       121,472       204,702       219,827  

Net income

      38,854       35,992       39,122       74,846       66,099  

Per Common Share Data (Diluted)

           

Net income available to common shareholders

    $ 0.28     $ 0.27     $ 0.31     $ 0.55     $ 0.55  

Average diluted shares outstanding

      135,697       135,431       127,973       135,641       121,273  

Book value

      13.92       13.63       13.42       13.92       13.42  

Stock price

      17.25       17.35       12.53       17.25       12.53  

Dividend payout ratio

      46 %      48 %      42 %      47 %      47 % 

Tangible common book value (1)

      8.85       8.54       8.23       8.85       8.23  

Performance Ratios

           

Return on average assets

      1.05 %      0.98 %      1.16 %      1.01 %      1.04 % 

Return on average common equity

      8.33 %      7.89 %      9.22 %      8.11 %      8.26 % 

Net interest margin (FTE)

      3.42 %      3.50 %      3.57 %      3.46 %      3.54 % 

Efficiency ratio (2)

      64.05 %      64.66 %      60.22 %      64.35 %      63.76 % 

Net charge-offs (recoveries) to average loans

      0.01 %      0.01 %      0.01 %      0.01 %      0.05 % 

Allowance for loan losses to ending loans

      0.55 %      0.55 %      0.59 %      0.55 %      0.59 % 

Non-performing loans to ending loans

      1.51 %      1.43 %      1.97 %      1.51 %      1.97 % 

Balance Sheet

           

Total loans

    $ 9,232,040     $ 9,131,773     $ 8,830,158     $ 9,232,040     $ 8,830,158  

Total assets

      14,957,281       14,869,645       14,420,262       14,957,281       14,420,262  

Total deposits

      10,683,714       10,821,352       10,451,602       10,683,714       10,451,602  

Total borrowed funds

      2,259,918       2,066,617       1,935,555       2,259,918       1,935,555  

Total shareholders’ equity

      1,886,594       1,846,359       1,811,117       1,886,594       1,811,117  

Capital Ratios (1)

           

Risk-based capital ratios (EOP):

           

Tier 1 common equity

      11.5 %      11.4 %      11.6 %      11.5 %      11.6 % 

Tier 1

      11.8 %      11.7 %      11.8 %      11.8 %      11.8 % 

Total

      12.3 %      12.2 %      12.4 %      12.3 %      12.4 % 

Leverage ratio (to average assets)

      8.7 %      8.5 %      8.9 %      8.7 %      9.5 % 

Total equity to assets (averages)

      12.56 %      12.36 %      12.56 %      12.46 %      12.59 % 

Tangible common equity to tangible assets

      8.41 %      8.16 %      8.10 %      8.41 %      8.10 % 

Nonfinancial Data

           

Full-time equivalent employees

      2,652       2,659       2,919       2,652       2,919  

Number of branches

      188       188       206       188       206  

 

(1) See non-GAAP measures on Table 10.
(2) Efficiency ratio is defined as noninterest expense before amortization of intangibles as a percent of FTE net interest income and noninterest revenues, excluding net gains from securities transactions. This presentation excludes intangible amortization and net securities gains, as is common in other company releases, and better aligns with true operating performance.

FTE - Fully taxable equivalent basis                 EOP - End of period actual balances

TABLE 5    Income Statement (unaudited)   

($ and shares in thousands, except per share data)

 

     Three Months Ended     Six Months Ended  
     June 30,      March 31,      June 30,     June 30,      June 30,  
     2017      2017      2016     2017      2016  

Interest income

    $ 118,209      $ 118,468      $ 110,243     $ 236,677      $ 205,572  

Less: interest expense

      13,876        12,667        10,903       26,543        20,589  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

  

Net interest income

      104,333        105,801        99,340       210,134        184,983  

Provision for loan losses

      1,355        347        1,319       1,702        1,410  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

  

Net interest income after provision for loan losses

      102,978        105,454        98,021       208,432        183,573  

Wealth management fees

      9,679        8,999        9,355       18,678        17,476  

Service charges on deposit accounts

      10,040        9,843        10,437       19,883        20,076  

Debit card and ATM fees

      4,436        4,236        4,471       8,672        8,256  

Mortgage banking revenue

      5,186        4,226        5,203       9,412        8,123  

Insurance premiums and commissions

      160        107        7,122       267        20,243  

Investment product fees

      5,004        4,989        4,724       9,993        8,629  

Capital markets income

      2,747        1,031        794       3,778        1,413  

Company-owned life insurance

      2,117        2,149        2,080       4,266        4,118  

Change in Indemnification Asset

      —          —          888       —          233  

Other income

      6,776        5,794        4,621       12,570        9,426  

Net gain on sale of ONB Insurance Group, Inc.

      —          —          41,864       —          41,864  

Gains (losses) on sales of securities

      3,075        1,500        1,856       4,575        2,962  

Gains (losses) on derivatives

      51        46        (30 )      97        17  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

  

Total noninterest income

      49,271        42,920        93,385       92,191        142,836  

Salaries and employee benefits

      57,606        56,564        62,715       114,170        119,687  

Occupancy

      10,539        12,134        13,568       22,673        26,412  

Equipment

      3,350        3,227        3,316       6,577        6,209  

Marketing

      3,673        3,050        5,111       6,723        7,597  

Data processing

      8,226        7,608        8,676       15,834        15,799  

Communication

      2,288        2,414        2,535       4,702        4,399  

Professional fees

      4,077        2,651        5,181       6,728        8,549  

Loan expenses

      1,693        1,631        2,123       3,324        3,456  

Supplies

      594        579        598       1,173        1,181  

FDIC assessment

      2,130        2,487        2,030       4,617        3,949  

Other real estate owned expense

      1,009        1,115        2,099       2,124        2,523  

Intangible amortization

      2,781        3,020        3,365       5,801        6,012  

Other expense

      4,845        5,411        10,155       10,256        14,054  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

  

Total noninterest expense

      102,811        101,891        121,472       204,702        219,827  

Income before income taxes

      49,438        46,483        69,934       95,921        106,582  

Income tax expense

      10,584        10,491        30,812       21,075        40,483  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

  

Net income

    $ 38,854      $ 35,992      $ 39,122     $ 74,846      $ 66,099  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

  

Diluted Earnings Per Share

              

Net income

    $ 0.28      $ 0.27      $ 0.31     $ 0.55      $ 0.55  

Average Common Shares Outstanding

              

Basic

      135,085        134,912        127,508       134,999        120,753  

Diluted

      135,697        135,431        127,973       135,641        121,273  

Common shares outstanding at end of period

      135,516        135,435        135,005       135,516        135,005  

TABLE 6    Balance Sheet (unaudited)   

($ in thousands)

 

     June 30,     March 31,     June 30,  
     2017     2017     2016  

Assets

       

Federal Reserve Bank account

    $ 22,117     $ 24,460     $ 56,433  

Money market investments

      9,815       7,601       5,514  

Investments:

       

Treasury and government sponsored agencies

      586,258       595,172       694,264  

Mortgage-backed securities

      1,470,687       1,484,561       1,349,805  

States and political subdivisions

      1,118,437       1,144,412       1,128,700  

Other securities

      449,045       446,830       437,669  
  

 

 

    

 

 

    

 

 

  

Total investments

      3,624,427       3,670,975       3,610,438  
  

 

 

    

 

 

    

 

 

  

Loans held for sale

      27,425       17,373       44,422  

Loans:

       

Commercial

      2,001,621       1,910,536       1,893,700  

Commercial and agriculture real estate

      3,259,998       3,222,865       2,943,525  

Consumer:

       

Home equity

      472,198       464,911       473,550  

Other consumer loans

      1,398,849       1,421,199       1,419,613  
  

 

 

    

 

 

    

 

 

  

Subtotal of commercial and consumer loans

      7,132,666       7,019,511       6,730,388  

Residential real estate

      2,099,374       2,112,262       2,099,770  
  

 

 

    

 

 

    

 

 

  

Total loans

      9,232,040       9,131,773       8,830,158  
  

 

 

    

 

 

    

 

 

  

Total earning assets

      12,915,824       12,852,182       12,546,965  
  

 

 

    

 

 

    

 

 

  

Allowance for loan losses

      (50,986 )      (49,834 )      (51,804 ) 

Non-earning Assets:

       

Cash and due from banks

      230,809       184,974       205,973  

Premises and equipment

      413,933       420,866       231,656  

Goodwill and intangible assets

      686,894       689,675       699,760  

Company-owned life insurance

      354,875       353,786       350,193  

Net deferred tax assets

      146,780       165,376       179,448  

Loan servicing rights

      25,023       25,446       25,756  

Other real estate owned

      11,071       12,547       24,254  

Other assets

      223,058       214,627       208,061  
  

 

 

    

 

 

    

 

 

  

Total non-earning assets

      2,092,443       2,067,297       1,925,101  
  

 

 

    

 

 

    

 

 

  

Total assets

    $ 14,957,281     $ 14,869,645     $ 14,420,262  
  

 

 

    

 

 

    

 

 

  

Liabilities and Equity

       

Noninterest-bearing demand deposits

    $ 3,011,156     $ 3,024,111     $ 2,883,917  

NOW accounts

      2,639,813       2,635,317       2,456,963  

Savings accounts

      2,924,689       2,997,919       2,616,365  

Money market accounts

      672,391       697,287       1,015,336  

Other time deposits

      1,313,199       1,349,303       1,300,611  
  

 

 

    

 

 

    

 

 

  

Total core deposits

      10,561,248       10,703,937       10,273,192  

Brokered CD’s

      122,466       117,415       178,410  
  

 

 

    

 

 

    

 

 

  

Total deposits

      10,683,714       10,821,352       10,451,602  

Federal funds purchased and interbank borrowings

      227,029       61,016       263,536  

Securities sold under agreements to repurchase

      298,094       345,550       354,123  

Federal Home Loan Bank advances

      1,515,628       1,441,030       1,099,240  

Other borrowings

      219,167       219,021       218,656  
  

 

 

    

 

 

    

 

 

  

Total borrowed funds

      2,259,918       2,066,617       1,935,555  

Accrued expenses and other liabilities

      127,055       135,317       221,988  
  

 

 

    

 

 

    

 

 

  

Total liabilities

      13,070,687       13,023,286       12,609,145  

Common stock, surplus, and retained earnings

      1,917,714       1,894,924       1,834,734  

Other comprehensive income

      (31,120 )      (48,565 )      (23,617 ) 
  

 

 

    

 

 

    

 

 

  

Total shareholders’ equity

      1,886,594       1,846,359       1,811,117  
  

 

 

    

 

 

    

 

 

  

Total liabilities and shareholders’ equity

    $ 14,957,281     $ 14,869,645     $ 14,420,262  
  

 

 

    

 

 

    

 

 

  

TABLE 7    Average Balance Sheet and Interest Rates (unaudited)   
   ($ in thousands)   

 

    Three Months Ended     Three Months Ended     Three Months Ended  
    June 30, 2017     March 31, 2017     June 30, 2016  
    Average     Income (1)/     Yield/     Average     Income (1)/     Yield/     Average     Income (1)/     Yield/  
    Balance     Expense     Rate     Balance     Expense     Rate     Balance     Expense     Rate  
Earning Assets:                  

Fed Funds sold, resell agr, Fed Reserve Bank account, and money market

   $ 27,222     $ 55       0.80 %    $ 27,482     $ 31       0.46 %    $ 23,604     $ 21       0.36 % 

Investments:

                  

Treasury and gov’t sponsored agencies

     575,940       2,798       1.94 %      540,422       2,780       2.06 %      738,642       3,586       1.94 % 

Mortgage-backed securities

     1,485,582       7,590       2.04 %      1,511,388       7,818       2.07 %      1,209,231       5,562       1.84 % 

States and political subdivisions

     1,122,769       13,375       4.76 %      1,133,373       13,607       4.80 %      1,117,367       13,207       4.73 % 

Other securities

     446,521       2,866       2.57 %      445,235       2,828       2.54 %      434,089       2,119       1.95 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total investments

     3,630,812       26,629       2.93 %      3,630,418       27,033       2.98 %      3,499,329       24,474       2.80 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Loans: (2)

                  

Commercial

     1,938,751       19,352       3.95 %      1,887,929       19,088       4.04 %      1,825,627       17,709       3.84 % 

Commercial and agriculture real estate

     3,240,318       39,830       4.86 %      3,171,005       40,324       5.09 %      2,589,342       35,273       5.39 % 

Consumer:

                  

Home equity

     474,308       4,837       4.09 %      476,353       4,659       3.97 %      454,581       6,586       5.83 % 

Other consumer loans

     1,405,226       11,881       3.39 %      1,408,100       11,767       3.39 %      1,344,288       11,438       3.42 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Subtotal commercial and consumer loans

     7,058,603       75,900       4.31 %      6,943,387       75,838       4.43 %      6,213,838       71,006       4.60 % 

Residential real estate loans

     2,127,867       21,268       4.00 %      2,141,571       21,254       3.97 %      1,989,612       20,009       4.03 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total loans

     9,186,470       97,168       4.21 %      9,084,958       97,092       4.29 %      8,203,450       91,015       4.42 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total earning assets

   $ 12,844,504     $ 123,852       3.84 %    $ 12,742,858     $ 124,156       3.91 %    $ 11,726,383     $ 115,510       3.93 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Less: Allowance for loan losses

     (50,937 )          (50,710 )          (51,269 )     

Non-earning Assets:

                  

Cash and due from banks

   $ 200,209         $ 195,620         $ 187,974      

Other assets

     1,860,676           1,877,849           1,655,720      
 

 

 

        

 

 

        

 

 

      

Total assets

   $ 14,854,452         $ 14,765,617         $ 13,518,808      
 

 

 

        

 

 

        

 

 

      

Interest-Bearing Liabilities:

                  

NOW accounts

   $ 2,643,123     $ 511       0.08 %    $ 2,585,814     $ 456       0.07 %    $ 2,416,761     $ 405       0.07 % 

Savings accounts

     2,944,314       1,209       0.16 %      2,969,866       1,157       0.16 %      2,492,202       843       0.14 % 

Money market accounts

     684,911       146       0.09 %      706,990       149       0.09 %      861,791       282       0.13 % 

Other time deposits

     1,330,026       2,536       0.76 %      1,332,912       2,368       0.72 %      1,175,435       2,367       0.81 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total interest-bearing deposits

     7,602,374       4,402       0.23 %      7,595,582       4,130       0.22 %      6,946,189       3,897       0.23 % 

Brokered CD’s

     111,972       322       1.15 %      107,519       253       0.95 %      174,338       357       0.82 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total interest-bearing deposits and CD’s

     7,714,346       4,724       0.25 %      7,703,101       4,383       0.23 %      7,120,527       4,254       0.24 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Federal funds purchased and interbank borrowings

     166,690       422       1.02 %      189,070       356       0.76 %      183,115       217       0.48 % 

Securities sold under agreements to repurchase

     329,182       334       0.41 %      331,400       256       0.31 %      378,838       391       0.42 % 

Federal Home Loan Bank advances

     1,443,453       6,017       1.67 %      1,429,977       5,312       1.51 %      983,174       3,610       1.48 % 

Other borrowings

     219,085       2,379       4.34 %      218,965       2,360       4.31 %      235,022       2,431       4.14 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total borrowed funds

     2,158,410       9,152       1.70 %      2,169,412       8,284       1.55 %      1,780,149       6,649       1.50 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total interest-bearing liabilities

   $ 9,872,756     $ 13,876       0.56 %    $ 9,872,513     $ 12,667       0.52 %    $ 8,900,676     $ 10,903       0.49 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Noninterest-Bearing Liabilities

                  

Demand deposits

   $ 2,988,147         $ 2,917,053         $ 2,725,417      

Other liabilities

     128,231           150,392           195,091      

Shareholders’ equity

     1,865,318           1,825,659           1,697,624      
 

 

 

        

 

 

        

 

 

      

Total liabilities and shareholders’ equity

   $ 14,854,452         $ 14,765,617         $ 13,518,808      
 

 

 

        

 

 

        

 

 

      

Net interest rate spread

         3.28 %          3.39 %          3.44 % 

Net interest margin (FTE)

         3.42 %          3.50 %          3.57 % 

FTE adjustment

     $ 5,643         $ 5,688         $ 5,267    

 

(1) Interest income is reflected on a fully taxable equivalent basis (FTE).
(2) Includes loans held for sale.

TABLE 8    Average Balance Sheet and Interest Rates (unaudited)   
   ($ in thousands)   

 

     Six Months Ended     Six Months Ended  
     June 30, 2017     June 30, 2016  
     Average     Income (1)/      Yield/     Average     Income (1)/      Yield/  
     Balance     Expense      Rate     Balance     Expense      Rate  

Earning Assets:

               

Fed Funds sold, resell agr, Fed Reserve Bank account, and money market

    $ 27,352     $ 86        0.63 %    $ 34,051     $ 70        0.41 % 

Investments:

               

Treasury and gov’t sponsored agencies

      558,279       5,579        2.00 %      734,511       7,063        1.92 % 

Mortgage-backed securities

      1,498,414       15,408        2.06 %      1,129,876       10,639        1.88 % 

States and political subdivisions

      1,128,042       26,981        4.78 %      1,110,417       26,216        4.72 % 

Other securities

      445,881       5,694        2.55 %      431,206       4,956        2.30 % 
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

     

 

 

  

Total investments

      3,630,616       53,662        2.96 %      3,406,010       48,874        2.87 % 
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

     

 

 

  

Loans: (2)

               

Commercial

      1,913,480       38,440        4.00 %      1,803,669       34,871        3.82 % 

Commercial and agriculture real estate

      3,205,853       80,154        4.97 %      2,243,147       63,311        5.58 % 

Consumer:

               

Home equity

      475,325       9,496        4.03 %      434,189       10,865        5.03 % 

Other consumer loans

      1,406,655       23,648        3.39 %      1,277,640       21,118        3.32 % 
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

     

 

 

  

Subtotal commercial and consumer loans

      7,001,313       151,738        4.37 %      5,758,645       130,165        4.55 % 

Residential real estate loans

      2,134,681       42,522        3.98 %      1,830,000       36,930        4.05 % 
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

     

 

 

  

Total loans

      9,135,994       194,260        4.25 %      7,588,645       167,095        4.39 % 
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

     

 

 

  

Total earning assets

    $ 12,793,962     $ 248,008        3.87 %    $ 11,028,706     $ 216,039        3.91 % 
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

     

 

 

  

Less: Allowance for loan losses

      (50,824 )           (51,673 )      

Non-earning Assets:

               

Cash and due from banks

    $ 197,927          $ 177,162       

Other assets

      1,869,215            1,557,129       
  

 

 

         

 

 

       

Total assets

    $ 14,810,280          $ 12,711,324       
  

 

 

         

 

 

       

Interest-bearing Liabilities:

               

NOW accounts

    $ 2,614,627     $ 967        0.07 %    $ 2,265,779     $ 643        0.06 % 

Savings accounts

      2,957,020       2,367        0.16 %      2,358,177       1,623        0.14 % 

Money market accounts

      695,890       295        0.09 %      707,133       372        0.11 % 

Other time deposits

      1,331,460       4,903        0.74 %      1,044,391       4,481        0.86 % 
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

     

 

 

  

Total interest-bearing deposits

      7,598,997       8,532        0.23 %      6,375,480       7,119        0.22 % 

Brokered CD’s

      109,758       575        1.06 %      150,812       628        0.84 % 
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

     

 

 

  

Total interest-bearing deposits and CD’s

      7,708,755       9,107        0.24 %      6,526,292       7,747        0.24 % 
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

     

 

 

  

Federal funds purchased and interbank borrowings

      177,818       778        0.88 %      146,747       340        0.47 % 

Securities sold under agreements to repurchase

      330,285       590        0.36 %      382,441       764        0.40 % 

Federal Home Loan Bank advances

      1,436,752       11,329        1.59 %      1,044,933       7,027        1.35 % 

Other borrowings

      219,025       4,739        4.33 %      226,671       4,711        4.16 % 
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

     

 

 

  

Total borrowed funds

      2,163,880       17,436        1.62 %      1,800,792       12,842        1.43 % 
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

     

 

 

  

Total interest-bearing liabilities

    $ 9,872,635     $ 26,543        0.54 %    $ 8,327,084     $ 20,589        0.50 % 
  

 

 

    

 

 

     

 

 

    

 

 

    

 

 

     

 

 

  

Noninterest-Bearing Liabilities

               

Demand deposits

      2,952,797            2,599,253       

Other liabilities

      139,250            184,694       

Shareholders’ equity

      1,845,598            1,600,293       
  

 

 

         

 

 

       

Total liabilities and shareholders’ equity

    $ 14,810,280          $ 12,711,324       
  

 

 

         

 

 

       

Net interest rate spread

           3.33 %           3.41 % 

Net interest margin (FTE)

           3.46 %           3.54 % 

FTE adjustment

      $ 11,331          $ 10,467     

 

(1) Interest income is reflected on a fully taxable equivalent basis (FTE).
(2) Includes loans held for sale.

TABLE 9    Asset Quality (EOP) (unaudited)   
   ($ in thousands)   

 

     Three Months Ended     Six Months Ended  
     June 30,     March 31,     June 30,     June 30,     June 30,  
     2017     2017     2016     2017     2016  

Beginning allowance for loan losses

    $ 49,834     $ 49,808     $ 50,700     $ 49,808     $ 52,233  

Provision for loan losses

      1,355       347       1,319       1,702       1,410  

Gross charge-offs

      (3,380 )      (3,239 )      (2,677 )      (6,619 )      (6,619 ) 

Gross recoveries

      3,177       2,918       2,462       6,095       4,780  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net (charge-offs) recoveries

      (203 )      (321 )      (215 )      (524 )      (1,839 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Ending allowance for loan losses

    $ 50,986     $ 49,834     $ 51,804     $ 50,986     $ 51,804  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net charge-offs (recoveries) / average loans (1)

      0.01 %      0.01 %      0.01 %      0.01 %      0.05 % 

Average loans outstanding (1)

    $ 9,180,987     $ 9,078,672     $ 8,191,544     $ 9,130,112     $ 7,581,061  

EOP loans outstanding (1)

    $ 9,232,040     $ 9,131,773     $ 8,830,158     $ 9,232,040     $ 8,830,158  

Allowance for loan losses / EOP loans (1)

      0.55 %      0.55 %      0.59 %      0.55 %      0.59 % 

Underperforming Assets:

           

Loans 90 Days and over (still accruing)

    $ 201     $ 381     $ 670     $ 201     $ 670  

Non-performing loans:

           

Nonaccrual loans (2)

      125,519       115,377       160,340       125,519       160,340  

Renegotiated loans

      14,123       14,969       13,904       14,123       13,904  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total non-performing loans

      139,642       130,346       174,244       139,642       174,244  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Foreclosed properties

      11,071       12,547       24,254       11,071       24,254  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total underperforming assets

    $ 150,914     $ 143,274     $ 199,168     $ 150,914     $ 199,168  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Classified loans - “problem loans”

    $ 237,997     $ 219,929     $ 250,214     $ 237,997     $ 250,214  

Other classified assets

      7,449       7,306       6,392       7,449       6,392  

Criticized loans - “special mention loans”

      99,502       95,881       106,886       99,502       106,886  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total classified and criticized assets

    $ 344,948     $ 323,116     $ 363,492     $ 344,948     $ 363,492  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Non-performing loans / EOP loans (1)

      1.51 %      1.43 %      1.97 %      1.51 %      1.97 % 

Allowance to non-performing loans (3)

      37 %      38 %      30 %      37 %      30 % 

Under-performing assets / EOP loans (1)

      1.63 %      1.57 %      2.26 %      1.63 %      2.26 % 

EOP total assets

    $ 14,957,281     $ 14,869,645     $ 14,420,262     $ 14,957,281     $ 14,420,262  

Under-performing assets / EOP assets

      1.01 %      0.96 %      1.38 %      1.01 %      1.38 % 

EOP - End of period actual balances

(1) Excludes loans held for sale.
(2) Includes renegotiated loans totaling $46.2 million at June 30, 2017, $34.2 million at March 31, 2017 and $38.1 million at June 30, 2016.
(3) Includes acquired loans that were recorded at fair value in accordance with ASC 805 at the date of acquisition. As such, the credit risk was incorporated in the fair value recorded and no allowance for loan losses was recorded on the acquisition date.

TABLE 10    Non-GAAP Measures (unaudited)   
   ($ in thousands)   

 

     Three Months Ended     Six Months Ended  
     June 30,     March 31,     June 30,     June 30,     June 30,  
     2017     2017     2016     2017     2016  

Actual End of Period Balances

           

GAAP shareholders’ equity

    $ 1,886,594     $ 1,846,359     $ 1,811,117     $ 1,886,594     $ 1,811,117  

Deduct:

           

Goodwill

      655,018       655,018       655,523       655,018       655,523  

Intangibles

      31,876       34,657       44,237       31,876       44,237  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     686,894       689,675       699,760       686,894       699,760  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Tangible shareholders’ equity

    $ 1,199,700     $ 1,156,684     $ 1,111,357     $ 1,199,700     $ 1,111,357  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Average Balances

           

GAAP shareholders’ equity

    $ 1,865,318     $ 1,825,659     $ 1,697,624     $ 1,845,598     $ 1,600,293  

Deduct:

           

Goodwill

      655,018       655,018       646,131       655,018       615,383  

Intangibles

      33,189       36,097       45,710       34,635       39,747  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     688,207       691,115       691,841       689,653       655,130  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Average tangible shareholders’ equity

    $ 1,177,111     $ 1,134,544     $ 1,005,783     $ 1,155,945     $ 945,163  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Actual End of Period Balances

           

GAAP assets

    $ 14,957,281     $ 14,869,645     $ 14,420,262     $ 14,957,281     $ 14,420,262  

Add:

           

Trust overdrafts

      31       86       337       31       337  

Deduct:

           

Goodwill

      655,018       655,018       655,523       655,018       655,523  

Intangibles

      31,876       34,657       44,237       31,876       44,237  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     686,894       689,675       699,760       686,894       699,760  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Tangible assets

    $ 14,270,418     $ 14,180,056     $ 13,720,839     $ 14,270,418     $ 13,720,839  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Risk-weighted assets

    $ 10,367,804     $ 10,171,517     $ 9,624,966     $ 10,367,804     $ 9,624,966  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

GAAP net income

    $ 38,854     $ 35,992     $ 39,122     $ 74,846     $ 66,099  

Add:

           

Intangible amortization (net of tax)

      1,807       1,963       2,188       3,770       3,908  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Tangible net income

    $ 40,661     $ 37,955     $ 41,310     $ 78,616     $ 70,007  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Tangible Ratios

           

Return on tangible common equity

      13.56 %      13.13 %      14.87 %      13.11 %      12.60 % 

Return on average tangible common equity

      13.82 %      13.38 %      16.43 %      13.60 %      14.81 % 

Return on tangible assets

      1.14 %      1.07 %      1.20 %      1.10 %      1.02 % 

Tangible common equity to tangible assets

      8.41 %      8.16 %      8.10 %      8.41 %      8.10 % 

Tangible common equity to risk-weighted assets

      11.57 %      11.37 %      11.55 %      11.57 %      11.55 % 

Tangible common book value (1)

      8.85       8.54       8.23       8.85       8.23  

Tangible common equity presentation includes other comprehensive income as is common in other company releases.

(1) Tangible common shareholders’ equity divided by common shares issued and outstanding at period-end.

Tier 1 capital

    $ 1,222,250     $ 1,191,735     $ 1,134,978     $ 1,222,250     $ 1,134,978  

Deduct:

           

Trust Preferred Securities

      45,000       45,000       45,000       45,000       45,000  

Additional Tier 1 capital deductions

      (14,977 )      (16,100 )      (30,760 )      (14,977 )      (30,760 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     30,023       28,900       14,240       30,023       14,240  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Tier 1 common equity

    $ 1,192,227     $ 1,162,835     $ 1,120,738     $ 1,192,227     $ 1,120,738  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Risk-weighted assets

      10,367,804       10,171,517       9,624,966       10,367,804       9,624,966  

Tier 1 common equity to risk-weighted assets

      11.50 %      11.43 %      11.64 %      11.50 %      11.64 %