4th Quarter 2017 Highlights:
- Organic commercial and commercial real estate loan growth1 of 10.1% annualized from 3rd quarter of 2017
- Cost of total deposits remained low at 0.20%, up just 1 basis point from 3rd quarter of 2017
- Legacy noninterest expenses2 declined 6.8% from 4th quarter of 2016
- Anchor Bancorp, Inc. (Anchor-Minnesota) partnership closed November 1, 2017, less than 90 days following announcement
2017 Highlights:
- Organic loan growth1 of almost 5%; organic commercial and commercial real estate loan growth1 of 10.1%
- Cost of total deposits increased just 2 basis points to 0.19%
- Credit quality metrics remain strong, with net charge-offs of just 0.03% of average total loans
- Adjusted operating leverage improved over 350 basis points2 from 2016
1 Excludes acquired loans; includes loans held for sale 2 Non-GAAP measure – refer to Tables 3 and 4 for Non-GAAP reconciliations
EVANSVILLE, Ind., Jan. 23, 2018 (GLOBE NEWSWIRE) -- Today Old National Bancorp (the “Company” or “Old National”) (NASDAQ:ONB) reported a 4th quarter 2017 net loss of $18.5 million, or $0.13 per diluted share. Full-year 2017 net income was $95.7 million, or $0.69 per diluted share.
As was previously disclosed in a Current Report on Form 8-K filed by Old National with the Securities and Exchange Commission on December 22, 2017, the 4th quarter results included an estimated revaluation of the Company’s deferred tax asset due to the new “H.R.1” tax reform law. Old National recorded $39.3 million of additional tax expense to estimate the impact of a reduction to its deferred tax asset. Also included in the 4th quarter were the following pre-tax charges: $11.9 million for merger and integration, $3.0 million for branch consolidations, $1.6 million in severance, $1.3 million for Foundation funding and $0.7 million for a client experience improvement initiative. Excluding these items from the current quarter and netting out securities gains, Old National would have reported net income of $32.7 million, or $0.22 per share. Refer to Table 5 for Non-GAAP net income reconciliation.
“Old National capped off a very successful 2017 with another strong quarter,” said Old National Chairman and CEO Bob Jones. “Our 4th quarter saw a continuation of strong operating results highlighted by double digit commercial loan growth coupled with strong credit quality, controlled deposit costs and steady core expenses. We accomplished all of this while expanding into Minnesota with the successful closing of our Anchor-Minnesota partnership. We are optimistic as we look ahead to 2018 given the strength of our franchise and the foundation we have built for sustained, positive operating leverage.
“While the immediate impact of the Tax Cut and Jobs Act is the necessary writedown of a portion of our deferred taxes, the positive impact that reduced taxes will have on Old National and our clients will be significant in 2018 and beyond,” continued Jones. “We are already hearing from our clients about increased investments in technology and other capital expenditures. This is a similar story for us, as we expect to use some of the benefit to enhance our client experience through increased investments in technology. We continue to be a leader in investments in our communities, underscoring our commitment by making a contribution to our Foundation.”
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 13 years:
1. Strengthen the risk profile; 2. Enhance management discipline; and 3. Achieve consistent quality earnings.
Balance Sheet and Net Interest Margin
At December 31, 2017, total period-end loans, including loans held for sale, increased $1.708 billion to $11.136 billion from $9.428 billion at September 30, 2017. Total loans acquired through the partnership with Anchor-Minnesota were $1.595 billion as of the date of closing. Excluding these acquired loans, Old National reported organic loan growth during the 4th quarter of $112.4 million, or 4.8% on an annualized basis. Old National’s portfolio of commercial and commercial real estate loans grew by $1.653 billion from the 3rd quarter. Of this increase, $1.516 billon was acquired through the Anchor-Minnesota partnership, resulting in $136.5 million, or 10.1% annualized, of organic commercial loan growth.
For the full-year 2017, Old National’s total loan portfolio grew $2.035 billion. Organic loan growth was $439.5 million, or 4.8%. The Company’s portfolio of commercial and commercial real estate loans grew $2.024 billion for the full year, of which $507.8 million was organic growth, an increase of 10.1% compared to 2016.
Total period-end core deposits, including demand and interest-bearing deposits, increased $1.949 billion to $12.441 billion at December 31, 2017, compared to $10.492 billion at September 30, 2017. Total core deposits assumed through the Anchor-Minnesota partnership were $1.777 billion as of the date of closing, of which $579.4 million were noninterest-bearing demand deposits. Excluding these assumed deposits, Old National reported organic deposit growth of $172.0 million for the 4th quarter while noninterest-bearing deposit balances increased $66.8 million during that same period. Old National’s cost of total deposits remained well controlled at 0.20% in the 4th quarter of 2017 compared to 0.19% in the 3rd quarter of 2017 and 0.18% in the 4th quarter of 2016.
Net interest income for the 4th quarter of 2017 totaled $118.6 million compared to $108.5 million in the 3rd quarter of 2017, and $109.9 million in the 4th quarter of 2016. On a fully taxable equivalent basis, net interest income was $124.7 million for the 4th quarter of 2017 and represented a net interest margin on total average earning assets of 3.47%. These results compare to net interest income on a fully taxable equivalent basis of $114.1 million and a margin of 3.52% in the 3rd quarter of 2017. In the 4th quarter of 2016, Old National reported net interest income on a fully taxable equivalent basis of $115.4 million and a margin of 3.63%. Refer to Table 6 for Non-GAAP taxable equivalent reconciliations.
As part of net interest income, Old National recorded $7.5 million in accretion income, which represents 21 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 3rd quarter of 2017 and the 4th quarter of 2016 reported by Old National was $11.1 million, or 34 basis points of the net interest margin, and $16.8 million, or 53 basis points of the net interest margin, respectively.
Noninterest Income
For the 4th quarter of 2017, total noninterest income amounted to $44.8 million and compares to $46.4 million reported in the 3rd quarter of 2017 and $62.8 million in the 4th quarter of 2016. As compared to the 3rd quarter, the 4th quarter of 2017 saw seasonal declines in service charge income (excluding the $0.9 million contribution from Anchor-Minnesota) and mortgage revenue as well as lower capital markets income. The 4th quarter of 2016 included a $12.8 million pre-tax deferred gain related to the repurchase of various bank properties as well as $6.4 million of recoveries on loans from the Company’s 2016 Wisconsin acquisition. For the two months since the closing of the partnership, Anchor-Minnesota contributed $2.6 million in noninterest income to the 4th quarter of 2017.
Noninterest Expenses
Noninterest expenses for Old National totaled $140.4 million for the 4th quarter of 2017. The current quarter included $18.5 million of pre-tax charges: $11.9 million for merger and integration, $3.0 million for branch consolidations, $1.6 million in severance, $1.3 million for Foundation funding and $0.7 million for a client experience improvement initiative. Old National also incurred $11.7 million in amortization of tax credit investments in the 4th quarter. Excluding these charges from the current quarter, Old National’s adjusted noninterest expense was $110.2 million. The newly acquired Anchor-Minnesota operations contributed $9.5 million in noninterest expenses during the 4th quarter for the two months since the closing of the partnership. Refer to Table 3 for Non-GAAP noninterest expense reconciliation.
For the 3rd quarter of 2017, Old National reported total noninterest expenses of $103.7 million, which included $4.7 million of pre-tax charges: $2.1 million related to branch consolidations, $1.9 million related to a client-experience improvement initiative, $0.4 million for merger and integration and $0.3 million in severance. In the 4th quarter of 2016, noninterest expenses totaled $126.3 million and included $18.3 million of pre-tax charges: $9.8 million for the termination of the Company’s pension plan, $5.1 million related to branch consolidations, $1.8 million in merger and integration charges and $1.6 million in severance. Old National consolidated 14 branches in the 4th quarter of 2017. With the addition of the newly acquired Minnesota branches, Old National currently operates 191 branches throughout its franchise.
Capital
At December 31, 2017, Old National’s capital position remained well above regulatory guideline minimums with regulatory tier 1 and total risk-based capital ratios of 10.4% and 11.4%, respectively, compared to 12.0% and 12.5% at September 30, 2017, and 11.7% and 12.2% at December 31, 2016. Old National did not repurchase any stock in the open market during the 4th quarter or full-year 2017.
The following table presents Old National’s risk-based and leverage capital ratios compared to industry requirements:
| Table 1 | Fully Phased-In Regulatory Guidelines Minimum | Consolidated ONB at December 31, 2017 | |
| Tier 1 Risk-Based Capital Ratio | > 8.5% | 10.4% | |
| Total Risk-Based Capital Ratio | > 10.5% | 11.4% | |
| Common Equity Tier 1 Capital Ratio | > 7.0% | 10.5% | |
| Tier 1 Leverage Capital Ratio | > 4.0% | 8.3% | |
Old National’s ratio of tangible common equity to tangible assets was 7.65% at December 31, 2017, compared to 8.50% at September 30, 2017, and 7.92% at December 31, 2016. Refer to Table 13 for Non-GAAP reconciliations.
Credit
Old National recorded a provision expense of $1.0 million and had net charge-offs of $0.8 million in the 4th quarter of 2017. These results compare to $0.3 million in provision expense and net charge-offs of $1.1 million, and a provision recapture of $1.8 million and net charge-offs of nearly zero, in the 3rd quarter of 2017 and the 4th quarter of 2016, respectively. Net charge-offs for the 4th quarter of 2017 were 0.03% of average total loans on an annualized basis, compared to net charge-offs of 0.05% of average total loans in the 3rd quarter of 2017 and 0.00% in the 4th quarter of 2016.
Delinquencies remained low as Old National reported 30-89 day delinquent loans of 0.37% in the 4th quarter of 2017 compared to 0.34% in the 3rd quarter of 2017. Old National’s 90+ day delinquent loans for the 4th quarter of 2017 were 0.01%, unchanged from the 3rd quarter of 2017.
For the full-year 2017, Old National recorded provision expense of $3.1 million and had net charge-offs of $2.5 million, or 0.03% of average total loans. This compares to the full-year 2016 provision expense of $1.0 million and net charge-offs of $3.4 million, or 0.04% of average total loans.
Old National’s allowance for loan losses at December 31, 2017, was $50.4 million, or 0.45% of total loans, compared to an allowance of $50.2 million, or 0.53% of total loans at September 30, 2017, and $49.8 million, or 0.55% of total loans, at December 31, 2016. The coverage ratio (allowance to non-performing loans) stood at 35% at December 31, 2017, compared to 37% at September 30, 2017, and 34% at December 31, 2016.
When reviewing Old National’s credit quality trends, it is important to remember that, 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 December 31, 2017, the remaining discount on these acquired loans was $136.5 million, of which $46.1 million is applicable to loans acquired in the Anchor-Minnesota partnership.
The following table presents certain credit quality metrics related to Old National’s loan portfolio:
| Table 2 ($ in millions) | 4Q17 Excluding Anchor-Minnesota | 4Q17 Anchor-Minnesota | 4Q17 Consolidated | 3Q17 | 4Q16 | |||||||||
| Non-Performing Loans (NPLs) | $128.0 | $16.5 | $144.5 | $137.1 | $145.8 | |||||||||
| Problem Loans (Including NPLs) | 199.2 | 27.4 | 226.6 | 209.5 | 220.4 | |||||||||
| Special Mention Loans | 141.6 | 46.5 | 188.1 | 130.2 | 95.5 | |||||||||
| Net Charge-Off (Recoveries) Ratio | 0.03% | - | 0.03% | 0.05% | 0.00% | |||||||||
| Provision for Loan Losses | $1.0 | $- | $1.0 | $0.3 | $(1.8) | |||||||||
| Allowance for Loan Losses | 50.4 | - | 50.4 | 50.2 | 49.8 | |||||||||
| Remaining Loan Discount on Acquired Loans | 90.4 | 46.1 | 136.5 | 96.5 | 129.7 | |||||||||
Income Taxes
On a fully taxable-equivalent basis, Old National reported $46.5 million in income tax expense in the 4th quarter of 2017. Included in this number is a $39.3 million estimate for the revaluation of the Company’s deferred tax asset. This revaluation resulted from the new “H.R.1” tax reform law which was signed on December 22, 2017. As an estimate, this amount could be adjusted during the measurement period, which will end in December 2018.
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 $17.5 billion in assets, it ranks among the top 100 banking companies in the U.S. and has been recognized as a World’s Most Ethical Company by the Ethisphere Institute for six consecutive years. Since its founding in Evansville in 1834, Old National Bank has focused on community banking by building long-term, highly valued partnerships with clients. Today, Old National’s footprint includes Indiana, Kentucky, Michigan, Wisconsin and Minnesota. In addition to providing extensive services in retail and commercial banking, Old National offers comprehensive wealth management, investments and brokerage services. For more information and financial data, please visit Investor Relations at oldnational.com.
Conference Call
Old National will hold a conference call at 10:00 a.m. Central Time on Tuesday, January 23, 2018, to discuss 4th quarter and full-year 2017 financial results, strategic developments, and the Company’s financial outlook. The live audio web cast of the call, along with the corresponding presentation slides, will be available on the Company’s Investor Relations web page at oldnational.com and will be archived there for 12 months. A replay of the call will also be available from 1:00 p.m. Central Time on January 23 through February 6. To access the replay, dial 1-855-859-2056, Conference ID Code 6268317.
Use of Non-GAAP Financial Measures
This earnings release contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding Old National’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in the tables of this release.
Table 3 – Non-GAAP Reconciliation-Noninterest Expenses
| ($ in millions) | 4Q17 | 4Q16 | ||||
| Noninterest Expense As Reported | $140.4 | $126.3 | ||||
| Less: Merger and Integration Charges | (11.9) | (1.8) | ||||
| Less: Amortization of Tax Credit Investments | (11.7) | - | ||||
| Less: Pension Termination Charges | - | (9.8) | ||||
| Less: Branch Consolidations, Severance, Foundation Funding and Client Experience Initiative Charges | (6.6) | (6.7) | ||||
| Adjusted Noninterest Expenses | $110.2 | $108.0 | ||||
| Less: Anchor-Minnesota Expenses | (9.5) | - | ||||
| Legacy ONB Noninterest Expenses | $100.7 | $108.0 | ||||
Table 4 – Non-GAAP Reconciliation-Operating Leverage
| ($ in millions) | 2017 | 2016 | ||||
| Noninterest Expense As Reported | $448.8 | $454.1 | ||||
| Less: Merger and Integration Charges | (12.3) | (15.9) | ||||
| Less: Amortization of Tax Credit Investments | (11.7) | - | ||||
| Less: Pension Termination Charges | - | (9.8) | ||||
| Less: Branch Consolidations, Severance, Foundation Funding and Client Experience Initiative Charges | (14.0) | (13.7) | ||||
| Adjusted Noninterest Expenses | $410.8 | $414.7 | ||||
| Net Interest Income As Reported | $437.2 | $402.7 | ||||
| FTE Adjustment | 23.1 | 21.3 | ||||
| Net Interest Income (FTE Basis) | $460.3 | $424.0 | ||||
| Total Noninterest Income As Reported | $183.4 | 252.8 | ||||
| Less: Securities Gains | (9.1) | (5.8) | ||||
| Adjusted Noninterest Income | $174.2 | $247.0 | ||||
| Total Revenue Less Securities Gains (FTE Basis) | $634.5 | $671.0 | ||||
| Less: Gain on Sale of Insurance | - | $(41.9) | ||||
| Less: Gain on Repurchased Bank Properties, Other Gains | (.2) | (12.0) | ||||
| Adjusted Total Revenue Less Securities Gains (FTE Basis) | $634.3 | $617.1 | ||||
| Operating Leverage1 (basis points) | (426) | |||||
| Adjusted Operating Leverage2 (basis points) | 373 | |||||
1 Year-over-year basis point change in noninterest expenses plus change in total revenue
2 Year-over-year basis point change in adjusted noninterest expenses plus change in adjusted total revenue
Table 5 – Non-GAAP Reconciliation-Adjusted Net Income
| ($ in millions, shares in 000s) | Reported 4Q17 | Adjustments1 | Adjusted 4Q17 | ||||||
| Total Revenues (FTE Basis) | $169.5 | $(1.6) | $167.9 | ||||||
| Less: Provision for Loan Losses | (1.0) | - | (1.0) | ||||||
| Less: Noninterest Expenses | (140.4) | 18.5 | (121.9) | ||||||
| Income before Income Taxes (FTE) | $28.1 | $16.9 | $45.0 | ||||||
| Income Taxes | (46.6) | 34.3 | (12.3) | ||||||
| Net Income (Loss) | $(18.5) | $51.2 | $32.7 | ||||||
| Average Shares Outstanding | 146,875 | - | 146,875 | ||||||
| Earnings (Loss) Per Share | $(0.13) | $0.35 | $0.22 | ||||||
1 Tax-effect calculations use estimated full-year 2017 FTE tax rate excluding the $39.3 million deferred tax asset revaluation
Table 6 – Non-GAAP Reconciliation-Fully Taxable Equivalent Net Interest Margin
| ($ in millions) | 4Q17 | 3Q17 | 4Q16 | ||||||
| Net Interest Income | $118.6 | $108.5 | $109.9 | ||||||
| Taxable Equivalent Adjustment | 6.1 | 5.6 | 5.5 | ||||||
| Net Interest Income – Taxable Equivalent | $124.7 | $114.1 | $115.4 | ||||||
| Average Earning Assets | $14,389.5 | $12,959.7 | $12,713.3 | ||||||
| Net Interest Margin | 3.47% | 3.52% | 3.63% | ||||||
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 merger with Anchor-Minnesota 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.
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
| Table 7 | |||||||||||||||||||
| Financial Highlights (unaudited) | |||||||||||||||||||
| ($ and shares in thousands, except per share data) | |||||||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||||||
| December 31, | September 30, | December 31, | December 31, | December 31, | |||||||||||||||
| 2017 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||
| Income Statement | |||||||||||||||||||
| Net interest income | $ | 118,556 | $ | 108,478 | $ | 109,917 | $ | 437,168 | $ | 402,703 | |||||||||
| Provision for loan losses | 1,037 | 311 | (1,756 | ) | 3,050 | 960 | |||||||||||||
| Noninterest income | 44,825 | 46,366 | 62,751 | 183,382 | 252,830 | ||||||||||||||
| Noninterest expense | 140,432 | 103,702 | 126,258 | 448,836 | 454,147 | ||||||||||||||
| Net income (loss) | (18,493 | ) | 39,372 | 33,456 | 95,725 | 134,264 | |||||||||||||
| Per Common Share Data (Diluted) | |||||||||||||||||||
| Net income (loss) available to common shareholders | $ | (0.13 | ) | $ | 0.29 | $ | 0.25 | $ | 0.69 | $ | 1.05 | ||||||||
| Average diluted shares outstanding | 146,875 | 135,796 | 135,383 | 138,513 | 128,301 | ||||||||||||||
| Book value | 14.17 | 14.07 | 13.42 | 14.17 | 13.42 | ||||||||||||||
| Stock price | 17.45 | 18.30 | 18.15 | 17.45 | 18.15 | ||||||||||||||
| Dividend payout ratio | N/M | 43 | % | 52 | % | 75 | % | 50 | % | ||||||||||
| Tangible common book value (1) | 8.37 | 9.02 | 8.30 | 8.37 | 8.30 | ||||||||||||||
| Performance Ratios | |||||||||||||||||||
| Return on average assets | -0.45 | % | 1.05 | % | 0.91 | % | 0.63 | % | 0.98 | % | |||||||||
| Return on average common equity | -3.51 | % | 8.31 | % | 7.33 | % | 4.98 | % | 7.84 | % | |||||||||
| Return on average tangible common equity (1) | -5.05 | % | 13.58 | % | 12.57 | % | 8.59 | % | 13.73 | % | |||||||||
| Net interest margin (FTE) | 3.47 | % | 3.52 | % | 3.63 | % | 3.48 | % | 3.58 | % | |||||||||
| Efficiency ratio (2) | 81.60 | % | 64.17 | % | 69.53 | % | 68.87 | % | 65.82 | % | |||||||||
| Net charge-offs (recoveries) to average loans | 0.03 | % | 0.05 | % | 0.00 | % | 0.03 | % | 0.04 | % | |||||||||
| Allowance for loan losses to ending loans | 0.45 | % | 0.53 | % | 0.55 | % | 0.45 | % | 0.55 | % | |||||||||
| Non-performing loans to ending loans | 1.30 | % | 1.46 | % | 1.62 | % | 1.30 | % | 1.62 | % | |||||||||
| Balance Sheet | |||||||||||||||||||
| Total loans | $ | 11,118,121 | $ | 9,398,124 | $ | 9,010,512 | $ | 11,118,121 | $ | 9,010,512 | |||||||||
| Total assets | 17,518,292 | 15,065,800 | 14,860,237 | 17,518,292 | 14,860,237 | ||||||||||||||
| Total deposits | 12,605,764 | 10,606,784 | 10,743,253 | 12,605,764 | 10,743,253 | ||||||||||||||
| Total borrowed funds | 2,578,204 | 2,411,111 | 2,152,086 | 2,578,204 | 2,152,086 | ||||||||||||||
| Total shareholders' equity | 2,154,397 | 1,906,823 | 1,814,417 | 2,154,397 | 1,814,417 | ||||||||||||||
| Capital Ratios (1) | |||||||||||||||||||
| Risk-based capital ratios (EOP): | |||||||||||||||||||
| Tier 1 common equity | 10.5 | % | 11.7 | % | 11.5 | % | 10.5 | % | 11.5 | % | |||||||||
| Tier 1 | 10.4 | % | 12.0 | % | 11.7 | % | 10.4 | % | 11.7 | % | |||||||||
| Total | 11.4 | % | 12.5 | % | 12.2 | % | 11.4 | % | 12.2 | % | |||||||||
| Leverage ratio (to average assets) | 8.3 | % | 8.8 | % | 8.4 | % | 8.3 | % | 8.4 | % | |||||||||
| Total equity to assets (averages) | 12.69 | % | 12.65 | % | 12.44 | % | 12.57 | % | 12.55 | % | |||||||||
| Tangible common equity to tangible assets | 7.65 | % | 8.50 | % | 7.92 | % | 7.65 | % | 7.92 | % | |||||||||
| Nonfinancial Data | |||||||||||||||||||
| Full-time equivalent employees | 2,801 | 2,592 | 2,733 | 2,801 | 2,733 | ||||||||||||||
| Number of branches | 191 | 188 | 203 | 191 | 203 | ||||||||||||||
| (1) See non-GAAP measures on Table 13. | |||||||||||||||||||
| (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 amortization of intangibles 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 | N/M - Not meaningful | ||||||||||||||||||
| Table 8 | ||||||||||||||||
| Income Statement (unaudited) | ||||||||||||||||
| ($ and shares in thousands, except per share data) | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||||
| 2017 | 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Interest income | $ | 135,134 | $ | 123,525 | $ | 121,849 | $ | 495,336 | $ | 447,134 | ||||||
| Less: interest expense | 16,578 | 15,047 | 11,932 | 58,168 | 44,431 | |||||||||||
| Net interest income | 118,556 | 108,478 | 109,917 | 437,168 | 402,703 | |||||||||||
| Provision for loan losses | 1,037 | 311 | (1,756 | ) | 3,050 | 960 | ||||||||||
| Net interest income after provision for loan losses | 117,519 | 108,167 | 111,673 | 434,118 | 401,743 | |||||||||||
| Wealth management fees | 9,801 | 8,837 | 8,593 | 37,316 | 34,641 | |||||||||||
| Service charges on deposit accounts | 10,913 | 10,535 | 10,448 | 41,331 | 41,578 | |||||||||||
| Debit card and ATM fees | 4,756 | 4,248 | 4,183 | 17,676 | 16,769 | |||||||||||
| Mortgage banking revenue | 3,933 | 5,104 | 4,399 | 18,449 | 20,240 | |||||||||||
| Insurance premiums and commissions | 180 | 170 | 152 | 617 | 20,527 | |||||||||||
| Investment product fees | 5,791 | 5,193 | 5,155 | 20,977 | 18,822 | |||||||||||
| Capital markets income | 923 | 1,843 | 965 | 6,544 | 3,227 | |||||||||||
| Company-owned life insurance | 2,366 | 2,022 | 2,198 | 8,654 | 8,479 | |||||||||||
| Change in FDIC indemnification asset | - | - | - | - | 233 | |||||||||||
| Other income | 4,496 | 5,400 | 25,354 | 22,466 | 40,448 | |||||||||||
| Net gain on sale of ONB Insurance Group, Inc. | - | - | - | - | 41,864 | |||||||||||
| Gains (losses) on sales of securities | 1,588 | 2,972 | 1,239 | 9,135 | 5,848 | |||||||||||
| Gains (losses) on derivatives | 78 | 42 | 65 | 217 | 154 | |||||||||||
| Total noninterest income | 44,825 | 46,366 | 62,751 | 183,382 | 252,830 | |||||||||||
| Salaries and employee benefits | 74,785 | 57,783 | 72,344 | 246,738 | 252,892 | |||||||||||
| Occupancy | 12,168 | 11,670 | 11,591 | 46,511 | 50,947 | |||||||||||
| Equipment | 3,498 | 3,485 | 3,675 | 13,560 | 13,448 | |||||||||||
| Marketing | 3,803 | 2,646 | 3,495 | 13,172 | 14,620 | |||||||||||
| Data processing | 8,776 | 7,696 | 7,961 | 32,306 | 32,002 | |||||||||||
| Communication | 2,419 | 2,163 | 2,805 | 9,284 | 9,959 | |||||||||||
| Professional fees | 5,523 | 4,589 | 3,904 | 16,840 | 15,705 | |||||||||||
| Loan expenses | 1,730 | 1,542 | 1,963 | 6,596 | 7,632 | |||||||||||
| Supplies | 686 | 547 | 885 | 2,406 | 2,865 | |||||||||||
| FDIC assessment | 2,666 | 2,197 | 2,583 | 9,480 | 8,681 | |||||||||||
| Other real estate owned expense | 741 | 511 | 944 | 3,376 | 4,195 | |||||||||||
| Amortization of intangibles | 3,399 | 2,641 | 3,241 | 11,841 | 12,486 | |||||||||||
| Amortization of tax credit investments | 11,733 | - | - | 11,733 | - | |||||||||||
| Other expense | 8,505 | 6,232 | 10,867 | 24,993 | 28,715 | |||||||||||
| Total noninterest expense | 140,432 | 103,702 | 126,258 | 448,836 | 454,147 | |||||||||||
| Income before income taxes | 21,912 | 50,831 | 48,166 | 168,664 | 200,426 | |||||||||||
| Income tax expense | 40,405 | 11,459 | 14,710 | 72,939 | 66,162 | |||||||||||
| Net income (loss) | $ | (18,493 | ) | $ | 39,372 | $ | 33,456 | $ | 95,725 | $ | 134,264 | |||||
| Diluted Earnings Per Share | ||||||||||||||||
| Net income (loss) | $ | (0.13 | ) | $ | 0.29 | $ | 0.25 | $ | 0.69 | $ | 1.05 | |||||
| Average Common Shares Outstanding | ||||||||||||||||
| Basic | 146,073 | 135,120 | 134,670 | 137,821 | 127,705 | |||||||||||
| Diluted | 146,875 | 135,796 | 135,383 | 138,513 | 128,301 | |||||||||||
| Common shares outstanding at end of period | 152,040 | 135,523 | 135,159 | 152,040 | 135,159 | |||||||||||
| Table 9 | ||||||||||||||||
| Balance Sheet (unaudited) | ||||||||||||||||
| ($ in thousands) | ||||||||||||||||
| December 31, | September 30, | December 31, | ||||||||||||||
| 2017 | 2017 | 2016 | ||||||||||||||
| Assets | ||||||||||||||||
| Federal Reserve Bank account | $ | 54,361 | $ | 32,333 | $ | 36,496 | ||||||||||
| Money market investments | 13,318 | 17,382 | 9,642 | |||||||||||||
| Investments: | ||||||||||||||||
| Treasury and government sponsored agencies | 669,838 | 582,051 | 541,190 | |||||||||||||
| Mortgage-backed securities | 1,674,584 | 1,458,385 | 1,535,659 | |||||||||||||
| States and political subdivisions | 1,207,353 | 1,095,975 | 1,131,003 | |||||||||||||
| Other securities | 453,765 | 451,082 | 441,110 | |||||||||||||
| Total investments | 4,005,540 | 3,587,493 | 3,648,962 | |||||||||||||
| Loans held for sale | 17,930 | 30,221 | 90,682 | |||||||||||||
| Loans: | ||||||||||||||||
| Commercial | 2,717,269 | 2,049,054 | 1,917,099 | |||||||||||||
| Commercial and agriculture real estate | 4,354,552 | 3,370,211 | 3,130,853 | |||||||||||||
| Consumer: | ||||||||||||||||
| Home equity | 507,509 | 477,100 | 476,439 | |||||||||||||
| Other consumer loans | 1,371,738 | 1,382,639 | 1,398,591 | |||||||||||||
| Subtotal of commercial and consumer loans | 8,951,068 | 7,279,004 | 6,922,982 | |||||||||||||
| Residential real estate | 2,167,053 | 2,119,120 | 2,087,530 | |||||||||||||
| Total loans | 11,118,121 | 9,398,124 | 9,010,512 | |||||||||||||
| Total earning assets | 15,209,270 | 13,065,553 | 12,796,294 | |||||||||||||
| Allowance for loan losses | (50,381 | ) | (50,169 | ) | (49,808 | ) | ||||||||||
| Non-earning Assets: | ||||||||||||||||
| Cash and due from banks | 222,753 | 202,652 | 209,381 | |||||||||||||
| Premises and equipment | 458,074 | 412,488 | 429,622 | |||||||||||||
| Goodwill and other intangible assets | 881,147 | 684,253 | 692,695 | |||||||||||||
| Company-owned life insurance | 403,753 | 356,897 | 352,956 | |||||||||||||
| Net deferred tax assets | 110,857 | 137,951 | 181,863 | |||||||||||||
| Loan servicing rights | 24,661 | 24,900 | 25,561 | |||||||||||||
| Other real estate owned | 8,810 | 10,259 | 18,546 | |||||||||||||
| Other assets | 249,348 | 221,016 | 203,127 | |||||||||||||
| Total non-earning assets | 2,359,403 | 2,050,416 | 2,113,751 | |||||||||||||
| Total assets | $ | 17,518,292 | $ | 15,065,800 | $ | 14,860,237 | ||||||||||
| Liabilities and Equity | ||||||||||||||||
| Noninterest-bearing demand deposits | $ | 3,680,807 | $ | 3,034,696 | $ | 3,016,093 | ||||||||||
| NOW accounts | 3,115,822 | 2,539,233 | 2,596,595 | |||||||||||||
| Savings accounts | 3,035,622 | 2,932,488 | 2,954,709 | |||||||||||||
| Money market accounts | 1,139,077 | 648,378 | 707,748 | |||||||||||||
| Other time deposits | 1,470,118 | 1,337,156 | 1,353,614 | |||||||||||||
| Total core deposits | 12,441,446 | 10,491,951 | 10,628,759 | |||||||||||||
| Brokered CD's | 164,318 | 114,833 | 114,494 | |||||||||||||
| Total deposits | 12,605,764 | 10,606,784 | 10,743,253 | |||||||||||||
| Federal funds purchased and interbank borrowings | 335,033 | 317,021 | 213,003 | |||||||||||||
| Securities sold under agreements to repurchase | 384,810 | 285,409 | 367,052 | |||||||||||||
| Federal Home Loan Bank advances | 1,609,579 | 1,589,367 | 1,353,092 | |||||||||||||
| Other borrowings | 248,782 | 219,314 | 218,939 | |||||||||||||
| Total borrowed funds | 2,578,204 | 2,411,111 | 2,152,086 | |||||||||||||
| Accrued expenses and other liabilities | 179,927 | 141,082 | 150,481 | |||||||||||||
| Total liabilities | 15,363,895 | 13,158,977 | 13,045,820 | |||||||||||||
| Common stock, surplus, and retained earnings | 2,204,669 | 1,941,020 | 1,873,789 | |||||||||||||
| Accumulated other comprehensive income (loss) | (50,272 | ) | (34,197 | ) | (59,372 | ) | ||||||||||
| Total shareholders' equity | 2,154,397 | 1,906,823 | 1,814,417 | |||||||||||||
| Total liabilities and shareholders' equity | $ | 17,518,292 | $ | 15,065,800 | $ | 14,860,237 | ||||||||||
| Table 10 | |||||||||||||||||||||||||||
| Average Balance Sheet and Interest Rates (unaudited) | |||||||||||||||||||||||||||
| ($ in thousands) | |||||||||||||||||||||||||||
| Three Months Ended | Three Months Ended | Three Months Ended | |||||||||||||||||||||||||
| December 31, 2017 | September 30, 2017 | December 31, 2016 | |||||||||||||||||||||||||
| Average | Income (1)/ | Yield/ | Average | Income (1)/ | Yield/ | Average | Income (1)/ | Yield/ | |||||||||||||||||||
| Earning Assets: | Balance | Expense | Rate | Balance | Expense | Rate | Balance | Expense | Rate | ||||||||||||||||||
| Money market and other interest-earning | |||||||||||||||||||||||||||
| investments | $ | 54,611 | $ | 87 | 0.63 | % | $ | 32,755 | $ | 85 | 1.03 | % | $ | 40,791 | $ | 37 | 0.36 | % | |||||||||
| Investments: | |||||||||||||||||||||||||||
| Treasury and gov't sponsored agencies | 611,982 | 3,031 | 1.98 | % | 585,354 | 2,844 | 1.94 | % | 551,665 | 2,754 | 2.00 | % | |||||||||||||||
| Mortgage-backed securities | 1,573,578 | 8,139 | 2.07 | % | 1,456,034 | 7,235 | 1.99 | % | 1,504,887 | 7,182 | 1.91 | % | |||||||||||||||
| States and political subdivisions | 1,178,113 | 13,312 | 4.52 | % | 1,103,721 | 13,065 | 4.73 | % | 1,141,703 | 13,458 | 4.72 | % | |||||||||||||||
| Other securities | 454,824 | 3,126 | 2.75 | % | 453,782 | 3,043 | 2.68 | % | 445,877 | 2,868 | 2.57 | % | |||||||||||||||
| Total investments | 3,818,497 | 27,608 | 2.89 | % | 3,598,891 | 26,187 | 2.91 | % | 3,644,132 | 26,262 | 2.88 | % | |||||||||||||||
| Loans: (2) | |||||||||||||||||||||||||||
| Commercial | 2,480,987 | 26,577 | 4.19 | % | 2,021,614 | 20,731 | 4.01 | % | 1,871,338 | 17,453 | 3.65 | % | |||||||||||||||
| Commercial and agriculture real estate | 3,989,684 | 47,683 | 4.68 | % | 3,298,435 | 43,646 | 5.18 | % | 3,125,500 | 45,375 | 5.68 | % | |||||||||||||||
| Consumer: | |||||||||||||||||||||||||||
| Home equity | 502,837 | 5,442 | 4.29 | % | 479,492 | 5,065 | 4.19 | % | 485,984 | 4,597 | 3.76 | % | |||||||||||||||
| Other consumer loans | 1,371,986 | 12,248 | 3.54 | % | 1,384,057 | 12,242 | 3.51 | % | 1,384,017 | 11,942 | 3.43 | % | |||||||||||||||
| Subtotal commercial and consumer loans | 8,345,494 | 91,950 | 4.37 | % | 7,183,598 | 81,684 | 4.51 | % | 6,866,839 | 79,367 | 4.60 | % | |||||||||||||||
| Residential real estate loans | 2,170,900 | 21,628 | 3.99 | % | 2,144,478 | 21,190 | 3.95 | % | 2,161,583 | 21,689 | 4.00 | % | |||||||||||||||
| Total loans | 10,516,394 | 113,578 | 4.26 | % | 9,328,076 | 102,874 | 4.35 | % | 9,028,422 | 101,056 | 4.42 | % | |||||||||||||||
| Total earning assets | $ | 14,389,502 | $ | 141,273 | 3.88 | % | $ | 12,959,722 | $ | 129,146 | 3.95 | % | $ | 12,713,345 | $ | 127,355 | 3.97 | % | |||||||||
| Less: Allowance for loan losses | (50,601 | ) | (51,130 | ) | (52,691 | ) | |||||||||||||||||||||
| Non-earning Assets: | |||||||||||||||||||||||||||
| Cash and due from banks | $ | 201,520 | $ | 233,017 | $ | 209,957 | |||||||||||||||||||||
| Other assets | 2,046,544 | 1,845,612 | 1,806,507 | ||||||||||||||||||||||||
| Total assets | $ | 16,586,965 | $ | 14,987,221 | $ | 14,677,118 | |||||||||||||||||||||
| Interest-Bearing Liabilities: | |||||||||||||||||||||||||||
| NOW accounts | $ | 2,905,440 | $ | 714 | 0.10 | % | $ | 2,570,321 | $ | 544 | 0.08 | % | $ | 2,560,533 | $ | 430 | 0.07 | % | |||||||||
| Savings accounts | 3,010,761 | 1,324 | 0.17 | % | 2,934,445 | 1,289 | 0.17 | % | 2,952,666 | 1,138 | 0.15 | % | |||||||||||||||
| Money market accounts | 994,574 | 394 | 0.16 | % | 661,635 | 142 | 0.09 | % | 703,904 | 142 | 0.08 | % | |||||||||||||||
| Other time deposits | 1,443,050 | 3,203 | 0.88 | % | 1,347,095 | 2,800 | 0.82 | % | 1,392,410 | 2,714 | 0.78 | % | |||||||||||||||
| Total interest-bearing deposits | 8,353,825 | 5,635 | 0.27 | % | 7,513,496 | 4,775 | 0.25 | % | 7,609,513 | 4,424 | 0.23 | % | |||||||||||||||
| Brokered CD's | 154,521 | 489 | 1.26 | % | 119,707 | 350 | 1.16 | % | 132,901 | 293 | 0.88 | % | |||||||||||||||
| Total interest-bearing deposits and CD's | 8,508,346 | 6,124 | 0.29 | % | 7,633,203 | 5,125 | 0.27 | % | 7,742,414 | 4,717 | 0.24 | % | |||||||||||||||
| Federal funds purchased and interbank borrowings | 172,838 | 533 | 1.22 | % | 220,918 | 655 | 1.18 | % | 79,913 | 107 | 0.53 | % | |||||||||||||||
| Securities sold under agreements to repurchase | 370,095 | 400 | 0.43 | % | 315,285 | 280 | 0.35 | % | 354,709 | 370 | 0.41 | % | |||||||||||||||
| Federal Home Loan Bank advances | 1,543,690 | 6,871 | 1.77 | % | 1,506,606 | 6,618 | 1.74 | % | 1,264,368 | 4,383 | 1.38 | % | |||||||||||||||
| Other borrowings | 241,695 | 2,650 | 4.39 | % | 219,241 | 2,369 | 4.32 | % | 218,860 | 2,355 | 4.30 | % | |||||||||||||||
| Total borrowed funds | 2,328,318 | 10,454 | 1.78 | % | 2,262,050 | 9,922 | 1.74 | % | 1,917,850 | 7,215 | 1.50 | % | |||||||||||||||
| Total interest-bearing liabilities | $ | 10,836,664 | $ | 16,578 | 0.61 | % | $ | 9,895,253 | $ | 15,047 | 0.61 | % | $ | 9,660,264 | $ | 11,932 | 0.49 | % | |||||||||
| Noninterest-Bearing Liabilities | |||||||||||||||||||||||||||
| Demand deposits | $ | 3,486,412 | $ | 3,049,503 | $ | 3,006,263 | |||||||||||||||||||||
| Other liabilities | 159,243 | 146,271 | 184,598 | ||||||||||||||||||||||||
| Shareholders' equity | 2,104,646 | 1,896,194 | 1,825,993 | ||||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 16,586,965 | $ | 14,987,221 | $ | 14,677,118 | |||||||||||||||||||||
| Net interest rate spread | 3.27 | % | 3.34 | % | 3.48 | % | |||||||||||||||||||||
| Net interest margin (FTE) | 3.47 | % | 3.52 | % | 3.63 | % | |||||||||||||||||||||
| FTE adjustment | $ | 6,139 | $ | 5,621 | $ | 5,506 | |||||||||||||||||||||
| (1) Interest income is reflected on a fully taxable equivalent basis (FTE). | |||||||||||||||||||||||||||
| (2) Includes loans held for sale. | |||||||||||||||||||||||||||
| Table 11 | ||||||||||||||||||||
| Average Balance Sheet and Interest Rates (unaudited) | ||||||||||||||||||||
| ($ in thousands) | ||||||||||||||||||||
| Twelve Months Ended | Twelve Months Ended | |||||||||||||||||||
| December 31, 2017 | December 31, 2016 | |||||||||||||||||||
| Average | Income (1)/ | Yield/ | Average | Income (1)/ | Yield/ | |||||||||||||||
| Earning Assets: | Balance | Expense | Rate | Balance | Expense | Rate | ||||||||||||||
| Money market and other interest-earning | ||||||||||||||||||||
| investments | $ | 35,584 | $ | 258 | 0.72 | % | $ | 32,697 | $ | 130 | 0.40 | % | ||||||||
| Investments: | ||||||||||||||||||||
| Treasury and gov't sponsored agencies | 578,640 | 11,453 | 1.98 | % | 672,659 | 13,207 | 1.96 | % | ||||||||||||
| Mortgage-backed securities | 1,506,677 | 30,782 | 2.04 | % | 1,295,749 | 24,174 | 1.87 | % | ||||||||||||
| States and political subdivisions | 1,134,532 | 53,359 | 4.70 | % | 1,125,713 | 53,003 | 4.71 | % | ||||||||||||
| Other securities | 450,127 | 11,863 | 2.64 | % | 438,832 | 10,391 | 2.37 | % | ||||||||||||
| Total investments | 3,669,976 | 107,457 | 2.93 | % | 3,532,953 | 100,775 | 2.85 | % | ||||||||||||
| Loans: (2) | ||||||||||||||||||||
| Commercial | 2,083,779 | 85,747 | 4.11 | % | 1,835,317 | 70,591 | 3.85 | % | ||||||||||||
| Commercial and agriculture real estate | 3,426,757 | 171,483 | 5.00 | % | 2,648,911 | 150,592 | 5.69 | % | ||||||||||||
| Consumer: | ||||||||||||||||||||
| Home equity | 483,310 | 20,003 | 4.14 | % | 459,648 | 20,356 | 4.43 | % | ||||||||||||
| Other consumer loans | 1,392,221 | 48,139 | 3.46 | % | 1,336,381 | 45,020 | 3.37 | % | ||||||||||||
| Subtotal commercial and consumer loans | 7,386,067 | 325,372 | 4.41 | % | 6,280,257 | 286,559 | 4.56 | % | ||||||||||||
| Residential real estate loans | 2,146,279 | 85,340 | 3.98 | % | 1,995,060 | 80,963 | 4.06 | % | ||||||||||||
| Total loans | 9,532,346 | 410,712 | 4.31 | % | 8,275,317 | 367,522 | 4.44 | % | ||||||||||||
| Total earning assets | $ | 13,237,906 | $ | 518,427 | 3.92 | % | $ | 11,840,967 | $ | 468,427 | 3.96 | % | ||||||||
| Less: Allowance for loan losses | (50,845 | ) | (52,215 | ) | ||||||||||||||||
| Non-earning Assets: | ||||||||||||||||||||
| Cash and due from banks | $ | 207,677 | $ | 192,401 | ||||||||||||||||
| Other assets | 1,907,963 | 1,661,200 | ||||||||||||||||||
| Total assets | $ | 15,302,701 | $ | 13,642,353 | ||||||||||||||||
| Interest-Bearing Liabilities: | ||||||||||||||||||||
| NOW accounts | $ | 2,676,760 | $ | 2,224 | 0.08 | % | $ | 2,389,143 | $ | 1,529 | 0.06 | % | ||||||||
| Savings accounts | 2,964,875 | 4,980 | 0.17 | % | 2,595,622 | 3,723 | 0.14 | % | ||||||||||||
| Money market accounts | 762,540 | 831 | 0.11 | % | 763,909 | 840 | 0.11 | % | ||||||||||||
| Other time deposits | 1,363,529 | 10,907 | 0.80 | % | 1,209,414 | 9,898 | 0.82 | % | ||||||||||||
| Total interest-bearing deposits | 7,767,704 | 18,942 | 0.24 | % | 6,958,088 | 15,990 | 0.23 | % | ||||||||||||
| Brokered CD's | 123,548 | 1,414 | 1.14 | % | 152,233 | 1,293 | 0.85 | % | ||||||||||||
| Total interest-bearing deposits and CD's | 7,891,252 | 20,356 | 0.26 | % | 7,110,321 | 17,283 | 0.24 | % | ||||||||||||
| Federal funds purchased and interbank borrowings | 187,426 | 1,966 | 1.05 | % | 137,997 | 673 | 0.49 | % | ||||||||||||
| Securities sold under agreements to repurchase | 336,539 | 1,270 | 0.38 | % | 368,757 | 1,509 | 0.41 | % | ||||||||||||
| Federal Home Loan Bank advances | 1,481,314 | 24,818 | 1.68 | % | 1,121,413 | 15,547 | 1.39 | % | ||||||||||||
| Other borrowings | 224,793 | 9,758 | 4.34 | % | 222,708 | 9,419 | 4.23 | % | ||||||||||||
| Total borrowed funds | 2,230,072 | 37,812 | 1.70 | % | 1,850,875 | 27,148 | 1.47 | % | ||||||||||||
| Total interest-bearing liabilities | $ | 10,121,324 | $ | 58,168 | 0.57 | % | $ | 8,961,196 | $ | 44,431 | 0.50 | % | ||||||||
| Noninterest-Bearing Liabilities | ||||||||||||||||||||
| Demand deposits | $ | 3,111,672 | $ | 2,776,140 | ||||||||||||||||
| Other liabilities | 146,060 | 192,443 | ||||||||||||||||||
| Shareholders' equity | 1,923,645 | 1,712,574 | ||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 15,302,701 | $ | 13,642,353 | ||||||||||||||||
| Net interest rate spread | 3.35 | % | 3.46 | % | ||||||||||||||||
| Net interest margin (FTE) | 3.48 | % | 3.58 | % | ||||||||||||||||
| FTE adjustment | $ | 23,091 | $ | 21,293 | ||||||||||||||||
| (1) Interest income is reflected on a fully taxable equivalent basis (FTE). | ||||||||||||||||||||
| (2) Includes loans held for sale. | ||||||||||||||||||||
| Table 12 | ||||||||||||||||||
| Asset Quality (EOP) (unaudited) | ||||||||||||||||||
| ($ in thousands) | ||||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||||
| December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||||||
| 2017 | 2017 | 2016 | 2017 | 2016 | ||||||||||||||
| Beginning allowance for loan losses | $ | 50,169 | $ | 50,986 | $ | 51,547 | $ | 49,808 | $ | 52,233 | ||||||||
| Provision for loan losses | 1,037 | 311 | (1,756 | ) | 3,050 | 960 | ||||||||||||
| Gross charge-offs | (3,278 | ) | (2,821 | ) | (3,472 | ) | (12,717 | ) | (14,610 | ) | ||||||||
| Gross recoveries | 2,453 | 1,693 | 3,489 | 10,240 | 11,225 | |||||||||||||
| Net (charge-offs) recoveries | (825 | ) | (1,128 | ) | 17 | (2,477 | ) | (3,385 | ) | |||||||||
| Ending allowance for loan losses | $ | 50,381 | $ | 50,169 | $ | 49,808 | $ | 50,381 | $ | 49,808 | ||||||||
| Net charge-offs (recoveries) / average loans (1) | 0.03 | % | 0.05 | % | 0.00 | % | 0.03 | % | 0.04 | % | ||||||||
| Average loans outstanding (1) | $ | 10,509,552 | $ | 9,320,868 | $ | 9,018,280 | $ | 9,525,888 | $ | 8,265,169 | ||||||||
| EOP loans outstanding (1) | $ | 11,118,121 | $ | 9,398,124 | $ | 9,010,512 | $ | 11,118,121 | $ | 9,010,512 | ||||||||
| Allowance for loan losses / EOP loans (1) | 0.45 | % | 0.53 | % | 0.55 | % | 0.45 | % | 0.55 | % | ||||||||
| Underperforming Assets: | ||||||||||||||||||
| Loans 90 Days and over (still accruing) | $ | 894 | $ | 879 | $ | 328 | $ | 894 | $ | 328 | ||||||||
| Non-performing loans: | ||||||||||||||||||
| Nonaccrual loans (2) | 124,927 | 119,256 | 131,407 | 124,927 | 131,407 | |||||||||||||
| Renegotiated loans | 19,589 | 17,886 | 14,376 | 19,589 | 14,376 | |||||||||||||
| Total non-performing loans | 144,516 | 137,142 | 145,783 | 144,516 | 145,783 | |||||||||||||
| Foreclosed properties | 8,810 | 10,259 | 18,546 | 8,810 | 18,546 | |||||||||||||
| Total underperforming assets | $ | 154,220 | $ | 148,280 | $ | 164,657 | $ | 154,220 | $ | 164,657 | ||||||||
| Classified loans - "problem loans" | $ | 226,583 | $ | 209,524 | $ | 220,429 | $ | 226,583 | $ | 220,429 | ||||||||
| Other classified assets | 4,556 | 7,526 | 7,063 | 4,556 | 7,063 | |||||||||||||
| Criticized loans - "special mention loans" | 188,085 | 130,197 | 95,462 | 188,085 | 95,462 | |||||||||||||
| Total classified and criticized assets | $ | 419,224 | $ | 347,247 | $ | 322,954 | $ | 419,224 | $ | 322,954 | ||||||||
| Non-performing loans / EOP loans (1) | 1.30 | % | 1.46 | % | 1.62 | % | 1.30 | % | 1.62 | % | ||||||||
| Allowance to non-performing loans (3) | 35 | % | 37 | % | 34 | % | 35 | % | 34 | % | ||||||||
| Under-performing assets / EOP loans (1) | 1.39 | % | 1.58 | % | 1.83 | % | 1.39 | % | 1.83 | % | ||||||||
| EOP total assets | $ | 17,518,292 | $ | 15,065,800 | $ | 14,860,237 | $ | 17,518,292 | $ | 14,860,237 | ||||||||
| Under-performing assets / EOP assets | 0.88 | % | 0.98 | % | 1.11 | % | 0.88 | % | 1.11 | % | ||||||||
| EOP - End of period actual balances | ||||||||||||||||||
| (1) Excludes loans held for sale. | ||||||||||||||||||
| (2) Includes renegotiated loans totaling $34.0 million at December 31, 2017, $43.7 million at September 30, 2017 and $26.3 million at December 31, 2016. | ||||||||||||||||||
| (3) Includes acquired loans that were recorded at fair value in accordance with ASC 805 at the date of acquisition. As such, the credit risk was incorporated in the fair value recorded and no allowance for loan losses was recorded on the acquisition date. | ||||||||||||||||||
| Table 13 | ||||||||||||||||||||
| Non-GAAP Measures (unaudited) | ||||||||||||||||||||
| ($ in thousands) | ||||||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||
| December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||||||||
| 2017 | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||
| Actual End of Period Balances | ||||||||||||||||||||
| GAAP shareholders' equity | $ | 2,154,397 | $ | 1,906,823 | $ | 1,814,417 | $ | 2,154,397 | $ | 1,814,417 | ||||||||||
| Deduct: | ||||||||||||||||||||
| Goodwill | 828,051 | 655,018 | 655,018 | 828,051 | 655,018 | |||||||||||||||
| Intangibles | 53,096 | 29,235 | 37,677 | 53,096 | 37,677 | |||||||||||||||
| 881,147 | 684,253 | 692,695 | 881,147 | 692,695 | ||||||||||||||||
| Tangible shareholders' equity | $ | 1,273,250 | $ | 1,222,570 | $ | 1,121,722 | $ | 1,273,250 | $ | 1,121,722 | ||||||||||
| Average Balances | ||||||||||||||||||||
| GAAP shareholders' equity | $ | 2,104,646 | $ | 1,896,194 | $ | 1,825,993 | $ | 1,923,645 | $ | 1,712,574 | ||||||||||
| Deduct: | ||||||||||||||||||||
| Goodwill | 776,862 | 655,018 | 655,041 | 685,729 | 635,440 | |||||||||||||||
| Intangibles | 37,802 | 30,502 | 39,239 | 34,392 | 40,317 | |||||||||||||||
| 814,664 | 685,520 | 694,280 | 720,121 | 675,757 | ||||||||||||||||
| Average tangible shareholders' equity | $ | 1,289,982 | $ | 1,210,674 | $ | 1,131,713 | $ | 1,203,524 | $ | 1,036,817 | ||||||||||
| Actual End of Period Balances | ||||||||||||||||||||
| GAAP assets | $ | 17,518,292 | $ | 15,065,800 | $ | 14,860,237 | $ | 17,518,292 | $ | 14,860,237 | ||||||||||
| Add: | ||||||||||||||||||||
| Trust overdrafts | 59 | 45 | 122 | 59 | 122 | |||||||||||||||
| Deduct: | ||||||||||||||||||||
| Goodwill | 828,051 | 655,018 | 655,018 | 828,051 | 655,018 | |||||||||||||||
| Intangibles | 53,096 | 29,235 | 37,677 | 53,096 | 37,677 | |||||||||||||||
| 881,147 | 684,253 | 692,695 | 881,147 | 692,695 | ||||||||||||||||
| Tangible assets | $ | 16,637,204 | $ | 14,381,592 | $ | 14,167,664 | $ | 16,637,204 | $ | 14,167,664 | ||||||||||
| Risk-weighted assets | $ | 12,491,430 | $ | 10,495,407 | $ | 10,099,613 | $ | 12,491,430 | $ | 10,099,613 | ||||||||||
| GAAP net income (loss) | $ | (18,493 | ) | $ | 39,372 | $ | 33,456 | $ | 95,725 | $ | 134,264 | |||||||||
| Add: | ||||||||||||||||||||
| Amortization of intangibles (net of tax) | 2,210 | 1,717 | 2,107 | 7,697 | 8,116 | |||||||||||||||
| Tangible net income (loss) | $ | (16,283 | ) | $ | 41,089 | $ | 35,563 | $ | 103,422 | $ | 142,380 | |||||||||
| Tangible Ratios | ||||||||||||||||||||
| Return on tangible common equity | -5.12 | % | 13.44 | % | 12.68 | % | 8.12 | % | 12.69 | % | ||||||||||
| Return on average tangible common equity | -5.05 | % | 13.58 | % | 12.57 | % | 8.59 | % | 13.73 | % | ||||||||||
| Return on tangible assets | -0.39 | % | 1.14 | % | 1.00 | % | 0.62 | % | 1.00 | % | ||||||||||
| Tangible common equity to tangible assets | 7.65 | % | 8.50 | % | 7.92 | % | 7.65 | % | 7.92 | % | ||||||||||
| Tangible common equity to risk-weighted assets | 10.19 | % | 11.65 | % | 11.11 | % | 10.19 | % | 11.11 | % | ||||||||||
| Tangible common book value (1) | 8.37 | 9.02 | 8.30 | 8.37 | 8.30 | |||||||||||||||
| 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 | $ | 1,298,327 | $ | 1,254,790 | $ | 1,176,849 | $ | 1,298,327 | $ | 1,176,849 | ||||||||||
| Deduct: | ||||||||||||||||||||
| Trust Preferred Securities (2) | - | 45,000 | 45,000 | - | 45,000 | |||||||||||||||
| Additional Tier 1 capital deductions | (10,000 | ) | (13,498 | ) | (30,968 | ) | (10,000 | ) | (30,968 | ) | ||||||||||
| (10,000 | ) | 31,502 | 14,032 | (10,000 | ) | 14,032 | ||||||||||||||
| Tier 1 common equity | $ | 1,308,327 | $ | 1,223,288 | $ | 1,162,817 | $ | 1,308,327 | $ | 1,162,817 | ||||||||||
| Risk-weighted assets | 12,491,430 | 10,495,407 | 10,099,613 | 12,491,430 | 10,099,613 | |||||||||||||||
| Tier 1 common equity to risk-weighted assets | 10.47 | % | 11.66 | % | 11.51 | % | 10.47 | % | 11.51 | % | ||||||||||
| (2) Trust Preferred Securities are now included in Tier 2 capital as a result of exceeding the $15 billion asset threshold from the Anchor-Minnesota acquisition. | ||||||||||||||||||||