ITASCA, IL -- (Marketwired) -- 01/26/16 -- First Midwest Bancorp, Inc. (the "Company" or "First Midwest") (NASDAQ: FMBI), the holding company of First Midwest Bank (the "Bank"), today reported results of operations and financial condition for the fourth quarter of 2015. Net income for the fourth quarter of 2015 was $16.3 million, or $0.21 per share. This compares to $23.3 million, or $0.30 per share, for the third quarter of 2015, and $14.6 million, or $0.19 per share, for the fourth quarter of 2014. Fourth quarter performance for the current and prior year was impacted by acquisition and integration related pre-tax expenses of $1.4 million and $9.3 million, respectively, or $0.01 and $0.07 per share after tax. In addition, a non-cash property valuation pre-tax adjustment of $8.6 million, or $0.07 per share after tax, was recorded in the fourth quarter of 2015 as a result of previously announced strategic branch initiatives. Excluding these expenses, earnings per share was $0.29 for the fourth quarter of 2015 compared to $0.27 for the fourth quarter of 2014, an increase of 7%.
For the full year of 2015, the Company reported net income of $82.1 million, or $1.05 per share, compared to $69.3 million, or $0.92 per share, for the year ended December 31, 2014. Earnings per share was $1.13 for the year ended December 31, 2015, excluding the valuation adjustment and acquisition and integration related expenses, and $1.03 for the year ended December 31, 2014, excluding acquisition and integration related expenses.
SELECT FOURTH QUARTER HIGHLIGHTS
- Increased earnings per share to $0.29, or 7%, compared to the fourth quarter of 2014, excluding the valuation adjustment and acquisition and integration related expenses.
- Expanded fee-based revenues to $34 million, an increase of 16% from the fourth quarter of 2014.
- Grew total loans to over $7 billion, up 7% from December 31, 2014 and 15% annualized from September 30, 2015.
- Reduced non-performing assets to $62 million, a decline of 33% from December 31, 2014 and 13% from September 30, 2015.
- Reduced loans past due 30-89 days to $16 million, down 19% from December 31, 2014 and 43% from September 30, 2015.
- Completed the acquisition of The Peoples' Bank of Arlington Heights on December 3, 2015, adding $92 million in deposits and $57 million in loans, and concluded the conversion of operating systems on December 7, 2015.
- Announced the acquisition of The National Bank & Trust Company of Sycamore on November 12, 2015, with $680 million in assets and $700 million in trust assets under management, receiving Bank Regulatory approvals by mid-January of 2016.
"It was an active quarter and year, reflecting strong progress on a number of business fronts and positioning us well as we enter 2016," said Michael L. Scudder, President and Chief Executive Officer of First Midwest Bancorp, Inc. "Business growth was solid in an intensely competitive environment, with performance impacted by both prior and current year acquisitions as well as ongoing strategic efforts to optimize our branch distribution network. Excluding charges attendant to these activities, performance for the quarter was up 7% as compared to last year. Late year and expected first quarter of 2016 acquisitions will grow our Company by some 10% in assets and further expand our wealth management capabilities and branch distribution network in the western markets of metro Chicago."
Mr. Scudder continued, "As we look ahead, 2016 is looking to be a year of transition for the industry and First Midwest. An evolving, upward rate environment will require balanced financial management. At the same time, the growth of our Company will be accompanied by greater regulatory oversight and expectations. We are well prepared to navigate this transition, leveraging the strength of our balance sheet, products, distribution, and an engaged team of colleagues to grow and enhance shareholder returns."
RECENT EVENTS
Strategic Branch Initiatives
On January 15, 2016, the Company announced planned strategic branch initiatives to enhance its customer experience, branch network, and operating efficiency. Based on the Company's ongoing analysis of its existing distribution network as well as customer preference and usage patterns, the Company will open a full service branch in the attractive Naperville, Illinois and downtown Chicago markets during the first quarter of 2016, consolidate four existing branches into nearby operating locations, and sell twelve closed branches and seven parcels of land previously purchased for expansion.
The orderly execution of these plans over the near term will result in an annual pre-tax reduction of ongoing operating costs of approximately $3.6 million, 60% of which the Company expects to realize in 2016. In furtherance of these initiatives, First Midwest recorded a pre-tax, non-cash valuation adjustment of $8.6 million, or $0.07 per share after tax, as of December 31, 2015 for those properties designated for sale.
Pending Acquisition
The National Bank & Trust Company of Sycamore
On November 12, 2015, the Company entered into a definitive agreement to acquire NI Bancshares Corporation, the holding company for The National Bank & Trust Company of Sycamore ("NB&T"). With the acquisition, the Company will acquire ten banking offices in northern Illinois, $415 million in loans, and $600 million in deposits. In addition, the Company will acquire over $700 million in trust assets under management which represents approximately a 10% increase in the Company's current trust assets under management. The merger consideration will be a combination of Company common stock and cash, with an overall transaction value of $70 million. The Company received approval for this acquisition from the Federal Reserve on January 5, 2016 and the Illinois Department of Financial and Professional Regulation on January 15, 2016. The acquisition is expected to close and the operating systems converted late in the first quarter of 2016, subject to approval by the stockholders of NB&T and customary closing conditions.
Completed Acquisition
The Peoples' Bank of Arlington Heights
On December 3, 2015, the Company completed the acquisition of Peoples Bancorp, Inc. and its wholly-owned banking subsidiary, The Peoples' Bank of Arlington Heights ("Peoples Bank"), which was previously announced on September 21, 2015. With the acquisition, the Company acquired two banking offices in Arlington Heights, Illinois, and approximately $92 million in deposits and $57 million in loans. The conversion of operating systems concluded on December 7, 2015.
OPERATING PERFORMANCE
Net Interest Income and Margin Analysis
(Dollar amounts in thousands)
Quarters Ended
--------------------------------------------------------
December 31, 2015 September 30, 2015
--------------------------- ---------------------------
Interest Yield/ Interest Yield/
Average Earned/ Rate Average Earned/ Rate
Balance Paid (%) Balance Paid (%)
----------- -------- ------ ----------- -------- ------
Assets:
Other interest-
earning assets $ 587,112 $ 530 0.36 $ 820,318 $ 645 0.31
Securities (1) 1,260,167 9,855 3.13 1,194,711 9,559 3.20
Federal Home Loan
Bank ("FHLB") and
Federal Reserve
Bank ("FRB") stock 38,926 371 3.81 38,748 369 3.81
Loans (1)(2) 7,013,586 76,405 4.32 6,887,611 76,328 4.40
---------- ------- ------ ---------- ------- ------
Total interest-
earning assets
(1) 8,899,791 87,161 3.89 8,941,388 86,901 3.86
------- ------ ------- ------
Cash and due from
banks 131,589 132,504
Allowance for loan
and covered loan
losses (74,823) (73,928)
Other assets 865,873 875,668
---------- ----------
Total assets $9,822,430 $9,875,632
========== ==========
Liabilities and
Stockholders'
Equity:
Interest-bearing
core deposits (3) $4,471,645 930 0.08 $4,465,956 931 0.08
Time deposits 1,152,895 1,341 0.46 1,173,127 1,398 0.47
Borrowed funds 167,120 1,250 2.97 168,807 928 2.18
Senior and
subordinated debt 201,168 3,134 6.18 201,083 3,133 6.18
---------- ------- ------ ---------- ------- ------
Total interest-
bearing
liabilities 5,992,828 6,655 0.44 6,008,973 6,390 0.42
------- ------ ------- ------
Demand deposits (3) 2,560,604 2,601,442
---------- ----------
Total funding
sources 8,553,432 8,610,415
Other liabilities 114,492 130,250
Stockholders'
equity - common 1,154,506 1,134,967
---------- ----------
Total
liabilities
and
stockholders'
equity $9,822,430 $9,875,632
========== ==========
Tax-equivalent net
interest
income/margin (1) 80,506 3.59 80,511 3.58
====== ======
Tax-equivalent
adjustment (2,494) (2,609)
------- -------
Net interest
income (GAAP) $78,012 $77,902
======= =======
Quarters Ended
---------------------------
December 31, 2014
---------------------------
Interest Yield/
Average Earned/ Rate
Balance Paid (%)
----------- -------- ------
Assets:
Other interest-
earning assets $ 625,183 $ 527 0.33
Securities (1) 1,113,546 9,992 3.59
Federal Home Loan
Bank ("FHLB") and
Federal Reserve
Bank ("FRB") stock 36,209 342 3.78
Loans (1)(2) 6,545,967 73,371 4.45
---------- ------- ------
Total interest-
earning assets
(1) 8,320,905 84,232 4.02
------- ------
Cash and due from
banks 126,317
Allowance for loan
and covered loan
losses (74,686)
Other assets 859,633
----------
Total assets $9,232,169
==========
Liabilities and
Stockholders'
Equity:
Interest-bearing
core deposits (3) $4,144,391 984 0.09
Time deposits 1,255,355 1,479 0.47
Borrowed funds 111,213 12 0.04
Senior and
subordinated debt 194,137 3,015 6.16
---------- ------- ------
Total interest-
bearing
liabilities 5,705,096 5,490 0.38
------- ------
Demand deposits (3) 2,339,298
----------
Total funding
sources 8,044,394
Other liabilities 115,093
Stockholders'
equity - common 1,072,682
----------
Total
liabilities
and
stockholders'
equity $9,232,169
==========
Tax-equivalent net
interest
income/margin (1) 78,742 3.76
======
Tax-equivalent
adjustment (2,923)
-------
Net interest
income (GAAP) $75,819
=======
(1) Interest income and yields on tax-exempt securities and loans are
presented on a tax-equivalent basis, assuming a federal income tax rate
of 35%. This non-GAAP financial measure assists management in comparing
revenue from both taxable and tax-exempt sources. The corresponding
income tax impact related to tax-exempt items is recorded in income tax
expense. These adjustments have no impact on net income.
(2) Includes loans acquired through Federal Deposit Insurance Corporation
("FDIC")-assisted transactions subject to loss sharing agreements
("covered loans") and a related FDIC indemnification asset.
(3) See the Deposit Composition table for further average balance detail by
category.
Total average interest-earning assets were relatively unchanged from the third quarter of 2015, with the increase of $126.0 million in average loans and $65.5 million in securities offset by a $233.2 million decline in lower yielding other interest-earning assets. Total average funding sources were consistent with the third quarter of 2015.
Compared to the fourth quarter of 2014, the $578.9 million increase in total average interest-earning assets and the $509.0 million rise in total average funding sources reflect loan growth over the course of the year, the full impact of the Great Lakes Financial Resources, Inc. ("Great Lakes") acquisition completed during the fourth quarter of 2014, and the Peoples Bank acquisition completed during the fourth quarter of 2015.
Tax-equivalent net interest margin for the current quarter was 3.59%, increasing one basis point from the third quarter of 2015 while decreasing 17 basis points from the fourth quarter of 2014. Compared to the third quarter of 2015, the rise in tax-equivalent net interest margin was due primarily to the reinvestment of other interest-earning assets into higher yielding loans and securities which was partially offset by lower acquired loan accretion and covered loan income and the continued shift in the loan mix to floating rate loans. Tax-equivalent net interest margin decreased compared to the fourth quarter of 2014, driven primarily by the continued shift in the loan mix and lower covered loan income.
Acquired loan accretion related to the Company's acquisitions completed in 2014 contributed $1.3 million for the fourth quarter of 2015, $1.8 million for the third quarter of 2015, and $1.4 million for the fourth quarter of 2014.
Fee-based Revenues and Total Noninterest Income Analysis
(Dollar amounts in thousands)
December 31, 2015
Quarters Ended Percent Change from
------------------------------ -------------------
December September December September December
31, 30, 31, 30, 31,
2015 2015 2014 2015 2014
--------- ---------- --------- --------- --------
Service charges on
deposit accounts $ 10,303 $ 10,519 $ 10,015 (2.1) 2.9
Wealth management fees 7,493 7,222 6,744 3.8 11.1
Card-based fees 6,761 6,868 6,390 (1.6) 5.8
Merchant servicing fees
(1) 2,929 3,207 2,703 (8.7) 8.4
Mortgage banking income 1,777 1,402 812 26.7 118.8
Other service charges,
commissions, and fees 4,664 3,900 2,700 19.6 72.7
--------- ---------- --------- --------- --------
Total fee-based
revenues 33,927 33,118 29,364 2.4 15.5
Other income 1,729 1,372 1,767 26.0 (2.2)
Net securities gains
(losses) 822 524 (63) 56.9 N/M
--------- ---------- --------- --------- --------
Total noninterest
income $ 36,478 $ 35,014 $ 31,068 4.2 17.4
========= ========== ========= ========= ========
N/M - Not meaningful.
(1) Merchant servicing fees are substantially offset by merchant card
expense included in noninterest expense for each period presented.
Total fee-based revenues of $33.9 million grew by 15.5% compared to the fourth quarter of 2014 and 2.4% compared to the third quarter of 2015. The increases compared to both prior periods presented reflect continued growth in wealth management fees, mortgage banking income, and capital market and lease initiatives within other service charges, commissions, and fees.
Continued sales of fiduciary and investment advisory services to new and existing customers drove the rise in wealth management fees compared to both prior periods presented.
Mortgage banking income resulted from sales of $51.4 million of 1-4 family mortgage loans in the secondary market during the fourth quarter of 2015, compared to $42.2 million in the third quarter of 2015 and $30.2 million in the fourth quarter of 2014.
Compared to both prior periods presented, the increase in other service charges, commissions, and fees was driven by fee income generated from sales of capital market products to commercial clients and gains on sales of lease contracts. Gains on sales of lease contracts generated by First Midwest Equipment Finance, formed from an acquisition in September of 2014, totaled $687,000, $456,000, and $327,000, for the fourth and third quarters of 2015 and fourth quarter of 2014, respectively. In addition, the Company has retained leases within the loan portfolio of $104.4 million as of December 31, 2015, up from $23.0 million as of December 31, 2014.
Total noninterest income of $36.5 million grew 17.4% and 4.2% from the fourth quarter of 2014 and the third quarter of 2015, respectively.
Noninterest Expense Analysis
(Dollar amounts in thousands)
December 31, 2015
Quarters Ended Percent Change from
-------------------------------- -------------------
December September December September December
31, 30, 31, 30, 31,
2015 2015 2014 2015 2014
--------- ---------- --------- --------- --------
Salaries and employee
benefits:
Salaries and wages $ 34,295 $ 33,554 $ 32,640 2.2 5.1
Retirement and
other employee
benefits 8,925 7,807 7,660 14.3 16.5
--------- ---------- --------- --------- --------
Total salaries
and employee
benefits 43,220 41,361 40,300 4.5 7.2
--------- ---------- --------- --------- --------
Net occupancy and
equipment expense 9,256 9,406 9,479 (1.6) (2.4)
Professional services 6,117 6,172 6,664 (0.9) (8.2)
Technology and
related costs 3,694 3,673 3,444 0.6 7.3
Merchant card expense
(1) 2,495 2,722 2,203 (8.3) 13.3
Advertising and
promotions 2,211 1,828 2,418 21.0 (8.6)
Cardholder expenses 1,329 1,354 1,036 (1.8) 28.3
Net other real estate
owned ("OREO")
expense 926 1,290 2,544 (28.2) (63.6)
Other expenses 7,525 6,559 7,446 14.7 1.1
Property valuation
adjustments 8,581 -- -- N/M N/M
Acquisition and
integration related
expenses 1,389 -- 9,294 N/M (85.1)
--------- ---------- --------- --------- --------
Total
noninterest
expense $ 86,743 $ 74,365 $ 84,828 16.6 2.3
========= ========== ========= ========= ========
Efficiency ratio (2) 65% 63% 66%
N/M - Not meaningful.
(1) Merchant card expenses are substantially offset by merchant servicing
fees included in noninterest income for each period presented.
(2) The efficiency ratio expresses noninterest expense, excluding OREO
expense, as a percentage of tax-equivalent net interest income plus
total fee-based revenues, other income, and tax-equivalent adjusted
bank-owned life insurance ("BOLI") income. In addition, property
valuation adjustments of $8.6 million and acquisition and integration
related expenses of $1.4 million are excluded from the efficiency ratio
for the fourth quarter of 2015. For the fourth quarter of 2014,
acquisition and integration related expenses of $9.3 million are
excluded from the efficiency ratio. See the accompanying Non-GAAP
Reconciliations for details on the calculation of the efficiency ratio.
Excluding the property valuation adjustment and acquisition and integration related expenses, total noninterest expense increased by 1.6% from the fourth quarter of 2014 and 3.2% from the third quarter of 2015.
The rise in total noninterest expense compared to the fourth quarter of 2014 was due partly to operating costs of the banking locations acquired in the Great Lakes acquisition during December of 2014. These costs primarily occurred within salaries and employee benefits, net occupancy and equipment expense, and other expenses. The reduction in professional services compared to the fourth quarter of 2014 resulted primarily from lower legal and loan remediation expenses and lower costs to service the Company's covered loan portfolio.
Salaries and employee benefits and other expenses increased compared to the third quarter of 2015 due primarily to talent recruitment and organizational growth needs.
The rise in retirement and other employee benefits compared to both prior periods presented was impacted by lump sum distributions related to the Company's defined benefit retirement plan, prompted in part by an expectation of rising rates. This expense is expected to return to normalized levels in subsequent quarters.
During the fourth quarter of 2015, property valuation adjustments of $8.6 million were recognized on twelve closed branches and seven parcels of land as part of the Company's strategic branch initiatives.
LOAN PORTFOLIO AND ASSET QUALITY
Loan Portfolio Composition
(Dollar amounts in thousands)
December 31, 2015
As of Percent Change from
-------------------------------- -------------------
December September December September December
31, 30, 31, 30, 2015 31,
2015 2015 2014 (1) 2014
---------- ---------- ---------- --------- --------
Commercial and
industrial $2,524,726 $2,392,860 $2,253,556 22.0 12.0
Agricultural 387,440 393,732 358,249 (6.4) 8.1
Commercial real
estate:
Office 479,374 487,629 494,637 (6.8) (3.1)
Retail 434,241 432,107 452,225 2.0 (4.0)
Industrial 481,839 494,341 531,517 (10.1) (9.3)
Multi-family 528,324 539,308 564,421 (8.1) (6.4)
Construction 216,882 192,086 204,236 51.6 6.2
Other commercial
real estate 931,190 869,748 887,897 28.3 4.9
---------- ---------- ---------- --------- --------
Total commercial
real estate 3,071,850 3,015,219 3,134,933 7.5 (2.0)
---------- ---------- ---------- --------- --------
Total corporate
loans 5,984,016 5,801,811 5,746,738 12.6 4.1
---------- ---------- ---------- --------- --------
Home equity 653,468 647,223 543,185 3.9 20.3
1-4 family mortgages 355,854 294,261 291,463 83.7 22.1
Installment 137,602 131,185 76,032 19.6 81.0
---------- ---------- ---------- --------- --------
Total consumer
loans 1,146,924 1,072,669 910,680 27.7 25.9
---------- ---------- ---------- --------- --------
Total loans,
excluding covered
loans 7,130,940 6,874,480 6,657,418 14.9 7.1
Covered loans 30,775 51,219 79,435 N/M (61.3)
---------- ---------- ---------- --------- --------
Total loans $7,161,715 $6,925,699 $6,736,853 13.6 6.3
========== ========== ========== ========= ========
N/M - Not meaningful.
(1) Ratios are presented on an annualized basis.
Total loans, excluding covered loans, of $7.1 billion grew $256.5 million, or 14.9%, on an annualized basis from September 30, 2015 and $473.5 million, or 7.1%, from December 31, 2014. Compared to the third quarter of 2015, the increase in loans was driven primarily by strong sales production of the corporate lending teams, growth in 1-4 family mortgages, and the Peoples Bank acquisition completed in the fourth quarter of 2015, which contributed $53.9 million.
Compared to the fourth quarter of 2014, the increase in loans resulted primarily from strong sales production, growth in 1-4 family mortgages, and the expansion of the Company's web-based installment programs. The overall decline in commercial real estate loans compared to the fourth quarter of 2014 resulted from the decision of certain customers to opportunistically sell their commercial businesses and investment real estate properties or use excess liquidity to payoff long-term debt. These decreases more than offset organic commercial real estate growth.
Compared to both prior periods presented, growth in corporate loans was concentrated within our commercial and industrial loan category. The increase in commercial and industrial loans primarily reflects the continued expansion into select sector-based lending areas such as leasing, healthcare, asset-based lending, and structured finance.
Asset Quality
(Dollar amounts in thousands)
December 31, 2015
As of Percent Change from
-------------------------------- -------------------
December September December September December
31, 30, 31, 30, 31,
2015 2015 2014 2015 2014
--------- ---------- --------- --------- --------
Asset quality,
excluding covered
loans and covered
OREO
Non-accrual loans $ 28,875 $ 32,308 $ 59,971 (10.6) (51.9)
90 days or more past
due loans 2,883 4,559 1,173 (36.8) N/M
--------- ---------- --------- --------- --------
Total non-
performing loans 31,758 36,867 61,144 (13.9) (48.1)
Accruing troubled
debt restructurings
("TDRs") 2,743 2,771 3,704 (1.0) (25.9)
OREO 27,349 31,129 26,898 (12.1) 1.7
--------- ---------- --------- --------- --------
Total non-
performing assets $ 61,850 $ 70,767 $ 91,746 (12.6) (32.6)
========= ========== ========= ========= ========
30-89 days past due
loans $ 16,329 $ 28,629 $ 20,073
Non-accrual loans to
total loans 0.40% 0.47% 0.90%
Non-performing loans
to total loans 0.45% 0.54% 0.92%
Non-performing assets
to total loans plus
OREO 0.86% 1.02% 1.37%
Allowance for Credit
Losses
Allowance for loan
and covered loan
losses $ 73,630 $ 72,500 $ 72,694
Reserve for unfunded
commitments 1,225 1,225 1,816
--------- ---------- ---------
Total allowance for
credit losses $ 74,855 $ 73,725 $ 74,510
========= ========== =========
Allowance for credit
losses to total
loans (1) 1.05% 1.06% 1.11%
Allowance for credit
losses to non-
accrual loans,
excluding covered
loans 253.57% 215.45% 112.19%
N/M - Not meaningful.
(1) This ratio includes acquired loans that are recorded at fair value
through an acquisition adjustment, which incorporates credit risk, as of
the acquisition date with no allowance for credit losses being
established at that time. As the acquisition adjustment is accreted into
income over future periods, an allowance for credit losses is
established as necessary to reflect credit deterioration. The allowance
for credit losses to total loans, excluding acquired loans, was 1.11%,
1.14%, and 1.24% at December 31, 2015, September 30, 2015, and December
31, 2014, respectively.
Asset quality continued to improve across all metrics. Total non-performing assets, excluding covered loans and covered OREO, decreased by $8.9 million, or 12.6%, from September 30, 2015 and $29.9 million, or 32.6%, from December 31, 2014. Non-performing assets to total loans plus OREO improved to 0.86% at December 31, 2015 compared to 1.02% at September 30, 2015 and 1.37% at December 31, 2014.
Charge-Off Data
(Dollar amounts in thousands)
Quarters Ended Years Ended
-------------------------------- --------------------
December September December
31, 30, 31, December December
2015 2015 2014 31, 2015 31, 2014
--------- ---------- --------- --------- ---------
Net loan charge-offs
(1):
Commercial and
industrial $ 1,781 $ 1,601 $ 1,217 $ 13,312 $ 13,471
Agricultural -- -- -- -- 153
Office, retail,
and industrial 267 457 143 2,420 6,848
Multi-family (27) 67 476 530 856
Construction 105 (114) (6) (214) 886
Other commercial
real estate 110 92 (247) 650 3,107
Consumer 1,134 959 342 3,004 6,845
Covered -- 1 146 514 (187)
--------- ---------- --------- --------- ---------
Total net loan
charge-offs $ 3,370 $ 3,063 $ 2,071 $ 20,216 $ 31,979
========= ========== ========= ========= =========
Net loan charge-offs
to average loans 0.19% 0.18% 0.13% 0.29% 0.52%
(1) Amounts represent charge-offs, net of recoveries.
Total net loan charge-offs for the fourth quarter of 2015 were 19 basis points of average loans, or $3.4 million, consistent with the third quarter of 2015 and increasing slightly from 13 basis points for the fourth quarter of 2014.
DEPOSIT PORTFOLIO
Deposit Composition
(Dollar amounts in thousands)
December 31, 2015
Average for Quarters Ended Percent Change from
-------------------------------- -------------------
December September December
31, 30, 31, September December
2015 2015 2014 30, 2015 31, 2014
---------- ---------- ---------- --------- --------
Demand deposits $2,560,604 $2,601,442 $2,339,298 (1.6) 9.5
Savings deposits 1,483,962 1,471,003 1,306,388 0.9 13.6
NOW accounts 1,411,425 1,405,371 1,331,360 0.4 6.0
Money market accounts 1,576,258 1,589,582 1,506,643 (0.8) 4.6
---------- ---------- ---------- --------- --------
Core deposits 7,032,249 7,067,398 6,483,689 (0.5) 8.5
Time deposits and
other 1,152,895 1,173,127 1,255,355 (1.7) (8.2)
---------- ---------- ---------- --------- --------
Total deposits $8,185,144 $8,240,525 $7,739,044 (0.7) 5.8
========== ========== ========== ========= ========
Average core deposits of $7.0 billion for the fourth quarter of 2015 were consistent with the third quarter of 2015 and increased 8.5% compared to the fourth quarter of 2014. Compared to the third quarter of 2015, a normal seasonal decrease in average municipal deposits was offset by growth in commercial deposits and the one-month impact of $92.0 million in deposits assumed in the December of 2015 Peoples Bank acquisition. The rise in average core deposits compared to the fourth quarter of 2014 resulted from growth and the full quarter impact of deposits assumed in the December of 2014 Great Lakes acquisition, which further strengthened the Company's core deposit base.
CAPITAL MANAGEMENT
Capital Ratios
As of
---------------------------------------
December September December
31, 30, June 30, 31,
2015 2015 2015 2014
-------- --------- -------- --------
Company regulatory capital ratios
(1):
Total capital to risk-weighted
assets 11.15% 11.43% 11.37% 11.23%
Tier 1 capital to risk-weighted
assets 10.28% 10.55% 10.49% 10.18%
Tier 1 common capital to risk-
weighted assets 9.73% 10.00% 9.93% N/A
Tier 1 leverage to average assets 9.40% 9.29% 9.34% 9.03%
Company tangible common equity
ratios (2)(3):
Tangible common equity to
tangible assets 8.59% 8.50% 8.32% 8.41%
Tangible common equity, excluding
other comprehensive loss,to
tangible assets 8.89% 8.67% 8.54% 8.59%
Tangible common equity to risk-
weighted assets 9.29% 9.70% 9.55% 9.73%
N/A - Not applicable.
(1) Basel III Capital Rules became effective for the Company on January 1,
2015. These rules revise the risk-based capital requirements and
introduce a new capital measure, Tier 1 common capital to risk-weighted
assets. As a result, ratios subsequent to December 31, 2014 are computed
using the new rules and prior periods presented are reported using the
regulatory guidance applicable at that time.
(2) Ratio is not subject to formal Federal Reserve regulatory guidance.
(3) Tangible common equity ("TCE") represents common stockholders' equity
less goodwill and identifiable intangible assets. In management's view,
Tier 1 common capital and TCE measures are meaningful to the Company, as
well as analysts and investors, in assessing the Company's use of equity
and in facilitating comparisons with competitors. See the accompanying
Non-GAAP Reconciliations for details of the calculation of these ratios.
Compared to September 30, 2015, the declines in the Company's regulatory capital ratios tied to end-of-period risk-weighted assets reflect the impact of the increase in assets late in the fourth quarter of 2015, including those acquired from the Peoples Bank acquisition.
The Board of Directors approved a quarterly cash dividend of $0.09 per common share during the fourth quarter of 2015, which is consistent with the third quarter of 2015 and follows a dividend increase from $0.08 to $0.09 per common share during the first quarter of 2015.
Conference Call
A conference call to discuss the Company's results, outlook, and related matters will be held on Wednesday, January 27, 2016 at 10:00 A.M. (ET). Members of the public who would like to listen to the conference call should dial (877) 507-0639 (U.S. domestic) or (412) 317-6003 (International) and ask for the First Midwest Bancorp, Inc. Earnings Conference Call. The number should be dialed 10 to 15 minutes prior to the start of the conference call. There is no charge to access the call. The conference call will also be accessible as an audio webcast through the Investor Relations section of the Company's website, www.firstmidwest.com/investorrelations. For those unable to listen to the live broadcast, a replay will be available on the Company's website or by dialing (877) 344-7529 (U.S. domestic) or (412) 317-0088 (International) conference I.D. 10078820 beginning one hour after completion of the live call until 9:00 A.M. (ET) on February 4, 2016. Please direct any questions regarding obtaining access to the conference call to First Midwest Bancorp, Inc. Investor Relations, via e-mail, at investor.relations@firstmidwest.com.
Press Release and Additional Information Available on Website
This press release and the accompanying unaudited Selected Financial Information are available through the "Investor Relations" section of First Midwest's website at www.firstmidwest.com/investorrelations.
Forward-Looking Statements
This press release may contain certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, forward-looking statements can be identified by the use of words such as "may," "might," "will," "would," "should," "could," "expect," "plan," "intend," "anticipate," "believe," "estimate," "predict," "probable," "potential," "possible," "target," "continue," "look forward," or "assume" and words of similar import. Forward-looking statements are not historical facts but instead express only management's beliefs regarding future results or events, many of which, by their nature, are inherently uncertain and outside of management's control. It is possible that actual results and events may differ, possibly materially, from the anticipated results or events indicated in these forward-looking statements. Forward-looking statements are not guarantees of future performance, and we caution you not to place undue reliance on these statements. Forward-looking statements are made only as of the date of this press release, and we undertake no obligation to update any forward-looking statements contained in this press release to reflect new information or events or conditions after the date hereof.
Forward-looking statements may be deemed to include, among other things, statements relating to our future financial performance, the performance of our loan or securities portfolio, the expected amount of future credit reserves or charge-offs, corporate strategies or objectives, anticipated trends in our business, regulatory developments, acquisition transactions, including estimated synergies, cost savings and financial benefits of pending or consummated transactions, including First Midwest's proposed acquisition of NI Bancshares Corporation ("NI Bancshares"), and growth strategies, including possible future acquisitions. These statements are subject to certain risks, uncertainties and assumptions. For a discussion of these risks, uncertainties and assumptions, you should refer to the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2014, as well as our subsequent filings made with the Securities and Exchange Commission ("SEC"). However, these risks and uncertainties are not exhaustive. Other sections of such reports describe additional factors that could adversely impact our business and financial performance.
Additional Information for Stockholders
The information contained herein does not constitute an offer to sell or a solicitation of an offer to buy any securities or a solicitation of any vote or approval. In connection with the proposed merger of First Midwest and NI Bancshares, First Midwest has filed a registration statement on Form S-4 (File no. 333-208781) with the SEC. The registration statement includes a proxy statement of NI Bancshares, which also constitutes a prospectus of First Midwest, that will be sent to the stockholders of NI Bancshares. Stockholders are advised to read the registration statement and proxy statement/prospectus because it contains important information about First Midwest, NI Bancshares and the proposed transaction. This document and other documents relating to the transaction filed by First Midwest can be obtained free of charge from the SEC's website at www.sec.gov. These documents also can be obtained free of charge by accessing First Midwest's website at www.firstmidwest.com under the tab "Investor Relations" and then under "SEC Filings." Alternatively, these documents can be obtained free of charge from First Midwest upon written request to First Midwest Bancorp, Inc., Attn: Corporate Secretary, One Pierce Place, Suite 1500, Itasca, Illinois 60143 or by calling (630) 875-7463, or from NI Bancshares upon written request to NI Bancshares Corporation, Attn: Michael A. Cullen, President and Chief Executive Officer, 230 W. State Street, Sycamore, Illinois 60178 or by calling (815) 895-2125.
Participants in this Transaction
First Midwest, NI Bancshares, and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from NI Bancshares stockholders in connection with the proposed transaction between First Midwest and NI Bancshares under the rules of the SEC. Certain information regarding the interests of these participants and a description of their direct and indirect interests, by security holdings or otherwise, is included in the proxy statement/prospectus regarding the proposed transaction. Additional information about First Midwest and its directors and certain of its officers may be found in First Midwest's definitive proxy statement relating to its 2015 Annual Meeting of Stockholders filed with the SEC on April 14, 2015. This definitive proxy statement can be obtained free of charge from the SEC's website at www.sec.gov.
Non-GAAP Financial Information
The Company's accounting and reporting policies conform to U.S. generally accepted accounting principles ("GAAP") and general practice within the banking industry. As a supplement to GAAP, the Company provides non-GAAP performance results, which the Company believes are useful because they assist investors in assessing the Company's operating performance. Although intended to enhance investors' understanding of the Company's business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP. See the following reconciliations for details on the calculation of these measures to the extent presented herein.
About the Company
First Midwest is a relationship-focused financial institution and one of Illinois' largest independent publicly-traded bank holding companies. First Midwest's principal subsidiary, First Midwest Bank, and other affiliates provide a full range of business, middle market and retail banking as well as wealth management and private banking services through over 100 locations in metropolitan Chicago, northwest Indiana, central and western Illinois, and eastern Iowa. First Midwest was recognized as having the "Highest Customer Satisfaction with Retail Banking in the Midwest, Two Years in a Row"* according to the J.D. Power 2014 and 2015 Retail Banking Satisfaction Studies(SM). First Midwest's website is www.firstmidwest.com.
* First Midwest Bank received the highest numerical score among retail banks in the Midwest region in the proprietary J.D. Power 2014 and 2015 Retail Banking Satisfaction Studies(SM). The 2015 study is based on 82,030 total responses measuring 20 providers in the Midwest region (IA, IL, KS, MO, MN, WI) and measures opinions of consumers with their primary banking provider. Proprietary study results are based on experiences and perceptions of consumers surveyed April 2014 - February 2015. Your experiences may vary. Visit jdpower.com.
Accompanying Unaudited Selected Financial Information
Consolidated Statements of Financial Condition (Unaudited)
(Dollar amounts in thousands)
As of
----------------------------------------------------------
December September December
31, 30, June 30, March 31, 31,
2015 2015 2015 2015 2014
---------- ---------- ---------- ---------- ----------
Period-End
Balance Sheet
Assets
Cash and due
from banks $ 114,587 $ 125,279 $ 135,546 $ 126,450 $ 117,315
Interest-bearing
deposits in
other banks 266,615 822,264 811,287 492,607 488,947
Trading
securities, at
fair value 16,894 17,038 18,172 18,374 17,460
Securities
available-for-
sale, at fair
value 1,306,636 1,151,418 1,142,407 1,151,603 1,187,009
Securities held-
to-maturity, at
amortized cost 23,152 23,723 24,292 25,861 26,555
FHLB and FRB
stock 39,306 38,748 38,748 38,748 37,558
Loans, excluding
covered loans:
Commercial and
industrial 2,524,726 2,392,860 2,366,056 2,318,058 2,253,556
Agricultural 387,440 393,732 377,410 368,836 358,249
Commercial
real estate:
Office,
retail, and
industrial 1,395,454 1,414,077 1,432,502 1,443,562 1,478,379
Multi-family 528,324 539,308 557,947 560,800 564,421
Construction 216,882 192,086 190,970 191,104 204,236
Other
commercial
real estate 931,190 869,748 871,119 881,026 887,897
Home equity 653,468 647,223 599,320 599,543 543,185
1-4 family
mortgages 355,854 294,261 283,562 285,758 291,463
Installment 137,602 131,185 113,382 92,834 76,032
---------- ---------- ---------- ---------- ----------
Total loans,
excluding
covered
loans 7,130,940 6,874,480 6,792,268 6,741,521 6,657,418
Covered loans 30,775 51,219 57,917 62,830 79,435
Allowance for
loan and
covered loan
losses (73,630) (72,500) (71,463) (70,990) (72,694)
---------- ---------- ---------- ---------- ----------
Net loans 7,088,085 6,853,199 6,778,722 6,733,361 6,664,159
OREO, excluding
covered OREO 27,349 31,129 24,471 26,042 26,898
Covered OREO 433 906 3,759 7,309 8,068
FDIC
indemnification
asset 3,903 6,106 7,335 8,540 8,452
Premises,
furniture, and
equipment, net 122,278 127,443 128,621 128,698 131,109
Investment in
BOLI 209,601 208,666 207,814 207,190 206,498
Goodwill and
other
intangible
assets 339,277 331,250 332,223 333,202 334,199
Accrued interest
receivable and
other assets 174,560 197,877 209,630 200,611 190,912
---------- ---------- ---------- ---------- ----------
Total assets $9,732,676 $9,935,046 $9,863,027 $9,498,596 $9,445,139
========== ========== ========== ========== ==========
Liabilities and
Stockholders'
Equity
Noninterest-
bearing
deposits $2,414,454 $2,671,793 $2,508,316 $2,339,492 $2,301,757
Interest-bearing
deposits 5,683,284 5,624,657 5,704,355 5,575,187 5,586,001
---------- ---------- ---------- ---------- ----------
Total deposits 8,097,738 8,296,450 8,212,671 7,914,679 7,887,758
Borrowed funds 165,096 169,943 189,036 131,200 137,994
Senior and
subordinated
debt 201,208 201,123 201,039 200,954 200,869
Accrued interest
payable and
other
liabilities 122,366 119,861 135,324 135,813 117,743
Stockholders'
equity 1,146,268 1,147,669 1,124,957 1,115,950 1,100,775
---------- ---------- ---------- ---------- ----------
Total
liabilities
and
stockholders'
equity $9,732,676 $9,935,046 $9,863,027 $9,498,596 $9,445,139
========== ========== ========== ========== ==========
Stockholders'
equity,
excluding
accumulated
other
comprehensive
income ("AOCI") $1,174,657 $1,163,487 $1,146,189 $1,128,755 $1,116,630
Stockholders'
equity, common 1,146,268 1,147,669 1,124,957 1,115,950 1,100,775
Condensed Consolidated Statements of Income (Unaudited)
(Dollar amounts in thousands)
Quarters Ended
----------------------------------------------------
December September December
31, 30, June 30, March 31, 31,
2015 2015 2015 2015 2014
---------- ---------- --------- --------- ----------
Income Statement
Interest income $ 84,667 $ 84,292 $ 84,556 $ 82,469 $ 81,309
Interest expense 6,655 6,390 5,654 5,687 5,490
---------- ---------- --------- --------- ----------
Net interest income 78,012 77,902 78,902 76,782 75,819
Provision for loan and
covered loan losses 4,500 4,100 6,000 6,552 1,659
---------- ---------- --------- --------- ----------
Net interest
income after
provision for
loan and
covered loan
losses 73,512 73,802 72,902 70,230 74,160
---------- ---------- --------- --------- ----------
Noninterest Income
Service charges on
deposit accounts 10,303 10,519 9,886 9,271 10,015
Wealth management
fees 7,493 7,222 7,433 7,014 6,744
Card-based fees 6,761 6,868 6,953 6,402 6,390
Merchant servicing
fees 2,929 3,207 2,938 2,665 2,703
Mortgage banking
income 1,777 1,402 1,439 1,123 812
Other service
charges,
commissions, and
fees 4,664 3,900 2,924 2,166 2,700
---------- ---------- --------- --------- ----------
Total fee-based
revenues 33,927 33,118 31,573 28,641 29,364
Other income 1,437 1,372 1,900 1,948 1,767
Net securities
gains (losses) 822 524 515 512 (63)
Gains on sales of
properties 292 - - - -
Loss on early
extinguishment of
debt - - - - -
---------- ---------- --------- --------- ----------
Total
noninterest
income 36,478 35,014 33,988 31,101 31,068
Noninterest Expense
Salaries and
employee benefits:
Salaries and wages 34,295 33,554 33,096 32,794 32,640
Retirement and
other employee
benefits 8,925 7,807 7,198 7,922 7,660
---------- ---------- --------- --------- ----------
Total salaries
and employee
benefits 43,220 41,361 40,294 40,716 40,300
---------- ---------- --------- --------- ----------
Net occupancy and
equipment expense 9,256 9,406 9,622 10,436 9,479
Professional
services 6,117 6,172 5,322 5,109 6,664
Technology and
related costs 3,694 3,673 3,527 3,687 3,444
Merchant card
expense 2,495 2,722 2,472 2,197 2,203
Advertising and
promotions 2,211 1,828 2,344 1,223 2,418
Cardholder
expenses 1,329 1,354 1,292 1,268 1,036
Net OREO expense 926 1,290 1,861 1,204 2,544
Other expenses 7,525 6,559 6,717 6,817 7,446
Property valuation
adjustments 8,581 - - - -
Acquisition and
integration
related expense 1,389 - - - 9,294
---------- ---------- --------- --------- ----------
Total
noninterest
expense 86,743 74,365 73,451 72,657 84,828
---------- ---------- --------- --------- ----------
Income before
income tax
expense 23,247 34,451 33,439 28,674 20,400
Income tax expense 6,923 11,167 10,865 8,792 5,807
---------- ---------- --------- --------- ----------
Net income $ 16,324 $ 23,284 $ 22,574 $ 19,882 $ 14,593
========== ========== ========= ========= ==========
Net income applicable
to common shares $ 16,145 $ 23,058 $ 22,325 $ 19,654 $ 14,454
Net income applicable
to common shares,
excluding certain
significant
transactions (1) $ 22,127 $ 23,058 $ 22,325 $ 19,654 $ 20,030
Years Ended
---------------------
December December
31, 31,
2015 2014
---------- ----------
Income Statement
Interest income $ 335,984 $ 299,864
Interest expense 24,386 23,012
---------- ----------
Net interest income 311,598 276,852
Provision for loan and
covered loan losses 21,152 19,168
---------- ----------
Net interest
income after
provision for
loan and
covered loan
losses 290,446 257,684
---------- ----------
Noninterest Income
Service charges on
deposit accounts 39,979 36,910
Wealth management
fees 29,162 26,474
Card-based fees 26,984 24,340
Merchant servicing
fees 11,739 11,260
Mortgage banking
income 5,741 4,011
Other service
charges,
commissions, and
fees 13,654 8,086
---------- ----------
Total fee-based
revenues 127,259 111,081
Other income 6,657 5,545
Net securities
gains (losses) 2,373 8,097
Gains on sales of
properties 292 3,954
Loss on early
extinguishment of
debt - (2,059)
---------- ----------
Total
noninterest
income 136,581 126,618
Noninterest Expense
Salaries and
employee benefits:
Salaries and wages 133,739 116,578
Retirement and
other employee
benefits 31,852 27,245
---------- ----------
Total salaries
and employee
benefits 165,591 143,823
---------- ----------
Net occupancy and
equipment expense 38,720 35,181
Professional
services 22,720 23,436
Technology and
related costs 14,581 12,875
Merchant card
expense 9,886 9,195
Advertising and
promotions 7,606 8,159
Cardholder
expenses 5,243 4,251
Net OREO expense 5,281 7,075
Other expenses 27,618 33,034
Property valuation
adjustments 8,581 -
Acquisition and
integration
related expense 1,389 13,872
---------- ----------
Total
noninterest
expense 307,216 283,826
---------- ----------
Income before
income tax
expense 119,811 100,476
Income tax expense 37,747 31,170
---------- ----------
Net income $ 82,064 $ 69,306
========== ==========
Net income applicable
to common shares $ 81,182 $ 68,470
Net income applicable
to common shares,
excluding certain
significant
transactions (1) $ 87,164 $ 54,598
Footnotes to Condensed Consolidated Statements of Income
(1) Certain significant transactions include property valuation
adjustments related to strategic branch initiatives and acquisition
and integration related expenses associated with completed and pending
acquisitions.
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share data)
As of or for the
---------------------------------------------------------
Quarters Ended
--------------------------------------------------------
December September December
31, 30, June 30, March 31, 31,
2015 2015 2015 2015 2014
---------- ---------- --------- --------- ----------
Earnings Per Share
Basic earnings per
common share
("EPS") (1) $ 0.21 $ 0.30 $ 0.29 $ 0.26 $ 0.19
Diluted EPS (1) $ 0.21 $ 0.30 $ 0.29 $ 0.26 $ 0.19
Diluted EPS,
excluding certain
significant
transactions
(1)(7) $ 0.29 $ 0.30 $ 0.29 $ 0.26 $ 0.27
Common Stock and Related Per Common Share Data
Book value $ 14.70 $ 14.72 $ 14.43 $ 14.31 $ 14.17
Tangible book
value 10.35 10.47 10.17 10.04 9.87
Dividends declared
per share 0.09 0.09 0.09 0.09 0.08
Closing price at
period end 18.43 17.54 18.97 17.37 17.11
Closing price to
book value 1.3 1.2 1.3 1.2 1.2
Period end shares
outstanding 77,952 77,942 77,961 77,957 77,695
Period end
treasury shares 10,276 10,286 10,267 10,271 10,533
Common dividends $ 7,017 $ 7,014 $ 7,022 $ 7,011 $ 6,206
Key Ratios/Data
Return on average
common equity
(1)(2) 5.55% 8.06% 7.97% 7.15% 5.35%
Return on average
tangible common
equity (1)(2) 8.06% 11.68% 11.62% 10.52% 7.89%
Return on average
tangible common
equity, excluding
certain
significant
transactions
(1)(2)(7) 10.94% 11.68% 11.62% 10.52% 10.83%
Return on average
assets (2) 0.66% 0.94% 0.94% 0.85% 0.63%
Efficiency ratio
(1) 65.11% 63.20% 61.70% 64.46% 66.09%
Net interest
margin (3) 3.59% 3.58% 3.76% 3.79% 3.76%
Loans-to-deposits 88.44% 83.48% 83.41% 85.97% 85.41%
Yield on average
interest-earning
assets (3) 3.89% 3.86% 4.02% 4.06% 4.02%
Cost of funds 0.44% 0.42% 0.38% 0.39% 0.38%
Net noninterest
expense to
average assets 2.08% 1.60% 1.66% 1.80% 2.31%
Effective income
tax rate 29.78% 32.41% 32.50% 30.66% 28.47%
Capital Ratios
Total capital to
risk-weighted
assets (1) 11.15% 11.43% 11.37% 11.23% 11.23%
Tier 1 capital to
risk-weighted
assets (1) 10.28% 10.55% 10.49% 10.35% 10.19%
Tier 1 common
capital to risk-
weighted assets
(CET1) (1)(4) 9.73% 10.00% 9.93% 9.79% N/A
Tier 1 leverage to
average assets
(1) 9.40% 9.29% 9.34% 9.32% 9.03%
Tangible common
equity to
tangible assets
(1) 8.59% 8.50% 8.32% 8.54% 8.41%
Tangible common
equity, excluding
AOCI, to tangible
assets (1) 8.89% 8.67% 8.54% 8.68% 8.59%
Tangible common
equity to risk-
weighted assets
(1) 9.29% 9.70% 9.55% 9.51% 9.73%
Note: Selected Financial Information footnotes are located at the end of
this section.
As of or for the
-----------------------
Years Ended
----------------------
December December
31, 31,
2015 2014
---------- ----------
Earnings Per Share
Basic earnings per
common share
("EPS") (1) $ 1.05 $ 0.92
Diluted EPS (1) $ 1.05 $ 0.92
Diluted EPS,
excluding certain
significant
transactions
(1)(7) $ 1.13 $ 1.03
Common Stock and Related Per Common Share
Data
Book value $ 14.70 $ 14.17
Tangible book
value 10.35 9.87
Dividends declared
per share 0.36 0.31
Closing price at
period end 18.43 17.11
Closing price to
book value 1.3 1.2
Period end shares
outstanding 77,952 77,695
Period end
treasury shares 10,276 10,533
Common dividends $ 28,064 $ 23,530
Key Ratios/Data
Return on average
common equity
(1)(2) 7.17% 6.56%
Return on average
tangible common
equity (1)(2) 10.44% 9.32%
Return on average
tangible common
equity, excluding
certain
significant
transactions
(1)(2)(7) 11.19% 10.42%
Return on average
assets (2) 0.85% 0.80%
Efficiency ratio
(1) 63.61% 64.57%
Net interest
margin (3) 3.68% 3.69%
Loans-to-deposits 88.44% 85.41%
Yield on average
interest-earning
assets (3) 3.95% 3.98%
Cost of funds 0.41% 0.43%
Net noninterest
expense to
average assets 1.79% 1.93%
Effective income
tax rate 31.51% 31.02%
Capital Ratios
Total capital to
risk-weighted
assets (1) 11.15% 11.23%
Tier 1 capital to
risk-weighted
assets (1) 10.28% 10.19%
Tier 1 common
capital to risk-
weighted assets
(CET1) (1)(4) 9.73% N/A
Tier 1 leverage to
average assets
(1) 9.40% 9.03%
Tangible common
equity to
tangible assets
(1) 8.59% 8.41%
Tangible common
equity, excluding
AOCI, to tangible
assets (1) 8.89% 8.59%
Tangible common
equity to risk-
weighted assets
(1) 9.29% 9.73%
Note: Selected Financial Information
footnotes are located at the end of this
section.
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share data)
As of or for the
----------------------------------------------------------
Quarters Ended
--------------------------------------------------------
December September December
31, 30, June 30, March 31, 31,
2015 2015 2015 2015 2014
---------- ---------- --------- --------- ----------
Asset Quality
Performance Data
Non-performing
assets(5)
Commercial and
industrial $ 5,587 $ 6,438 $ 11,100 $ 12,913 $ 22,693
Agricultural 355 112 317 358 360
Commercial real
estate:
Office, retail,
and industrial 6,875 6,961 12,599 11,363 12,939
Multi-family 796 1,046 1,287 700 754
Construction 905 3,332 4,940 7,488 6,981
Other commercial
real estate 5,611 5,898 5,513 5,915 6,970
Consumer 8,746 8,521 9,253 9,340 9,274
---------- ---------- --------- --------- ----------
Total non-
accrual loans 28,875 32,308 45,009 48,077 59,971
90 days or more
past due loans 2,883 4,559 2,744 3,564 1,173
---------- ---------- --------- --------- ----------
Total non-
performing
loans 31,758 36,867 47,753 51,641 61,144
Accruing troubled
debt
restructurings 2,743 2,771 3,067 3,581 3,704
Other real estate
owned 27,349 31,129 24,471 26,042 26,898
---------- ---------- --------- --------- ----------
Total non-
performing
assets $ 61,850 $ 70,767 $ 75,291 $ 81,264 $ 91,746
========== ========== ========= ========= ==========
30-89 days past
due loans (5) $ 16,329 $ 28,629 $ 28,625 $ 18,631 $ 20,073
Allowance for
credit losses
Allowance for
loan losses $ 71,992 $ 68,384 $ 66,602 $ 65,311 $ 65,468
Allowance for
covered loan
losses 1,638 4,116 4,861 5,679 7,226
Reserve for
unfunded
commitments 1,225 1,225 1,816 1,816 1,816
---------- ---------- --------- --------- ----------
Total allowance
for credit
losses $ 74,855 $ 73,725 $ 73,279 $ 72,806 $ 74,510
========== ========== ========= ========= ==========
Provision for
loan and covered
loan losses $ 4,500 $ 4,100 $ 6,000 $ 6,552 $ 1,659
Net charge-offs
by category
Commercial and
industrial $ 1,781 $ 1,601 $ 3,273 $ 6,657 $ 1,217
Agricultural - - - - -
Commercial real
estate:
Office, retail,
and industrial 267 457 1,862 (166) 143
Multi-family (27) 67 466 24 476
Construction 105 (114) (188) (17) (6)
Other commercial
real estate 110 92 (603) 1,051 (247)
Consumer 1,134 959 432 479 342
---------- ---------- --------- --------- ----------
Net charge-offs,
excluding
covered loans 3,370 3,062 5,242 8,028 1,925
Charge-offs on
covered loans - 1 285 228 146
---------- ---------- --------- --------- ----------
Total net
charge-offs $ 3,370 $ 3,063 $ 5,527 $ 8,256 $ 2,071
========== ========== ========= ========= ==========
Total recoveries
included above $ 1,031 $ 1,294 $ 2,579 $ 1,797 $ 2,669
As of or for the
-----------------------
Years Ended
----------------------
December December
31, 31,
2015 2014
---------- ----------
Asset Quality
Performance Data
Non-performing
assets(5)
Commercial and
industrial $ 5,587 $ 22,693
Agricultural 355 360
Commercial real
estate:
Office, retail,
and industrial 6,875 12,939
Multi-family 796 754
Construction 905 6,981
Other commercial
real estate 5,611 6,970
Consumer 8,746 9,274
---------- ----------
Total non-
accrual loans 28,875 59,971
90 days or more
past due loans 2,883 1,173
---------- ----------
Total non-
performing
loans 31,758 61,144
Accruing troubled
debt
restructurings 2,743 3,704
Other real estate
owned 27,349 26,898
---------- ----------
Total non-
performing
assets $ 61,850 $ 91,746
========== ==========
30-89 days past
due loans (5) $ 16,329 $ 20,073
Allowance for
credit losses
Allowance for
loan losses $ 71,992 $ 65,468
Allowance for
covered loan
losses 1,638 7,226
Reserve for
unfunded
commitments 1,225 1,816
---------- ----------
Total allowance
for credit
losses $ 74,855 $ 74,510
========== ==========
Provision for
loan and covered
loan losses $ 21,152 $ 19,168
Net charge-offs
by category
Commercial and
industrial $ 13,312 $ 13,471
Agricultural - 153
Commercial real
estate:
Office, retail,
and industrial 2,420 6,848
Multi-family 530 856
Construction (214) 886
Other commercial
real estate 650 3,107
Consumer 3,004 6,845
---------- ----------
Net charge-offs,
excluding
covered loans 19,702 32,166
Charge-offs on
covered loans 514 (187)
---------- ----------
Total net
charge-offs $ 20,216 $ 31,979
========== ==========
Total recoveries
included above $ 6,701 $ 8,205
Note: Selected Financial Information footnotes are located at the end of
this section.
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share data)
As of or for the
-------------------------------------------------
Quarters Ended
-----------------------------------------------
December September June March December
31, 30, 30, 31, 31,
2015 2015 2015 2015 2014
-------- --------- ------- ------- --------
Asset Quality ratios(5)
Non-accrual loans to total
loans 0.40% 0.47% 0.66% 0.71% 0.90%
Non-performing loans to
total loans 0.45% 0.54% 0.70% 0.77% 0.92%
Non-performing assets to
total loans plus OREO 0.86% 1.02% 1.10% 1.20% 1.37%
Non-performing assets to
tangible common equity
plus allowance for credit
losses 7.03% 7.99% 8.74% 9.56% 11.00%
Non-accrual loans to total
assets 0.30% 0.33% 0.46% 0.51% 0.64%
Allowance for credit
losses and net charge-off
ratios
Allowance for credit
losses to total loans (6) 1.05% 1.06% 1.07% 1.07% 1.11%
Allowance for credit
losses to loans,
excluding acquired loans 1.11% 1.14% 1.16% 1.19% 1.24%
Allowance for credit
losses to non-accrual
loans (5) 253.57% 215.45% 152.01% 139.62% 112.19%
Allowance for credit
losses to non-performing
loans (5) 230.55% 188.81% 143.27% 129.99% 110.04%
Net charge-offs to average
loans (2) 0.19% 0.18% 0.33% 0.50% 0.13%
As of or for the
----------------------------
Years Ended
----------------------------
December 31, December 31,
2015 2014
------------- -------------
Asset Quality ratios(5)
Non-accrual loans to total
loans 0.40% 0.90%
Non-performing loans to
total loans 0.45% 0.92%
Non-performing assets to
total loans plus OREO 0.86% 1.37%
Non-performing assets to
tangible common equity
plus allowance for credit
losses 7.03% 11.00%
Non-accrual loans to total
assets 0.30% 0.64%
Allowance for credit
losses and net charge-off
ratios
Allowance for credit
losses to total loans (6) 1.05% 1.11%
Allowance for credit
losses to loans,
excluding acquired loans 1.11% 1.24%
Allowance for credit
losses to non-accrual
loans (5) 253.57% 112.19%
Allowance for credit
losses to non-performing
loans (5) 230.55% 110.04%
Net charge-offs to average
loans (2) 0.29% 0.52%
Footnotes to Selected Financial Information
(1) See the Non-GAAP Reconciliations section for the detailed calculation.
(2) Annualized based on the actual number of days for each period
presented.
(3) Tax equivalent basis reflects federal and state tax benefits.
(4) Basel III Capital Rules became effective for the Company on January 1,
2015. These rules revise the risk-based capital requirements and
introduce a new capital measure, Tier 1 common capital to risk weighted
assets. As a result, ratios subsequent to December 31, 2014 are
computed using the new rules and prior periods presented are reported
using the regulatory guidance applicable at that time.
(5) Excludes covered loans and covered OREO.
(6) This ratio includes acquired loans that are recorded at fair value
through an acquisition adjustment, which incorporates credit risk, as
of the acquisition date with no allowance for credit losses being
established at that time. As the acquisition adjustment is accreted
into income over future periods, an allowance for credit losses is
established as necessary to reflect credit deterioration.
(7) Certain significant transactions include property valuation adjustments
related to strategic branch initiatives and acquisition and integration
related expenses associated with completed and pending acquisitions.
Non-GAAP Reconciliations (Unaudited)
(Amounts in thousands, except per share data)
Quarters Ended
----------------------------------------------------
December September March December
31, 30, June 30, 31, 31,
2015 2015 2015 2015 2014
--------- ---------- -------- -------- ---------
Earnings Per Share
Net income $ 16,324 $ 23,284 $ 22,574 $ 19,882 $ 14,593
Net income applicable
to non- vested
restricted shares (179) (226) (249) (228) (139)
--------- ---------- -------- -------- ---------
Net income
applicable to
common shares 16,145 23,058 22,325 19,654 14,454
Tax-equivalent
property valuation
adjustments 5,149 - - - -
Tax-equivalent
acquisition and
integration related
expenses 833 - - - 5,576
--------- ---------- -------- -------- ---------
Net income
applicable to
common shares,
excluding certain
significant
transactions (1) $ 22,127 $ 23,058 $ 22,325 $ 19,654 $ 20,030
========= ========== ======== ======== =========
Weighted-average
common shares
outstanding:
Weighted-average
common shares
outstanding (basic) 77,121 77,106 77,089 76,918 75,119
Dilutive effect of
common stock
equivalents 13 13 12 12 12
--------- ---------- -------- -------- ---------
Weighted-average
diluted common
shares outstanding 77,134 77,119 77,101 76,930 75,131
========= ========== ======== ======== =========
Basic EPS $ 0.21 $ 0.30 $ 0.29 $ 0.26 $ 0.19
Diluted EPS $ 0.21 $ 0.30 $ 0.29 $ 0.26 $ 0.19
Diluted EPS,
excluding certain
significant
transactions (1) $ 0.29 $ 0.30 $ 0.29 $ 0.26 $ 0.27
Anti-dilutive shares
not included in the
computation of
diluted EPS 735 751 768 948 1,146
Efficiency Ratio
Calculation
Noninterest expense $ 86,743 $ 74,365 $ 73,451 $ 72,657 $ 84,828
Less:
Net OREO expense (926) (1,290) (1,861) (1,204) (2,544)
Property valuation
adjustments (8,581) - - - -
Acquisition and
integration related
expenses (1,389) - - - (9,294)
--------- ---------- -------- -------- ---------
Total $ 75,847 $ 73,075 $ 71,590 $ 71,453 $ 72,990
========= ========== ======== ======== =========
Tax-equivalent net
interest income (2) $ 80,506 $ 80,511 $ 81,595 $ 79,665 $ 78,742
Fee-based revenues 33,927 33,118 31,573 28,641 29,364
Add:
Other income,
excluding BOLI
income 515 446 446 1,065 924
Tax-adjusted BOLI
(BOLI/.6) 1,537 1,543 2,423 1,472 1,405
--------- ---------- -------- -------- ---------
Total $ 116,485 $ 115,618 $116,037 $110,843 $ 110,435
========= ========== ======== ======== =========
Efficiency ratio 65.11% 63.20% 61.70% 64.46% 66.09%
Tax Equivalent Net
Interest Income
Net interest income $ 78,012 $ 77,902 $ 78,902 $ 76,782 $ 75,819
Tax-equivalent
adjustment 2,494 2,609 2,693 2,883 2,923
--------- ---------- -------- -------- ---------
Tax-equivalent net
interest income (2) $ 80,506 $ 80,511 $ 81,595 $ 79,665 $ 78,742
========= ========== ======== ======== =========
Years Ended
----------------------
December December
31, 31,
2015 2014
---------- ----------
Earnings Per Share
Net income $ 82,064 $ 69,306
Net income applicable
to non- vested
restricted shares (882) (836)
---------- ----------
Net income
applicable to
common shares 81,182 68,470
Tax-equivalent
property valuation
adjustments 5,149 -
Tax-equivalent
acquisition and
integration related
expenses 833 8,323
---------- ----------
Net income
applicable to
common shares,
excluding certain
significant
transactions (1) $ 87,164 $ 76,793
========== ==========
Weighted-average
common shares
outstanding:
Weighted-average
common shares
outstanding (basic) 77,059 74,484
Dilutive effect of
common stock
equivalents 13 12
---------- ----------
Weighted-average
diluted common
shares outstanding 77,072 74,496
========== ==========
Basic EPS $ 1.05 $ 0.92
Diluted EPS $ 1.05 $ 0.92
Diluted EPS,
excluding certain
significant
transactions (1) $ 1.13 $ 1.03
Anti-dilutive shares
not included in the
computation of
diluted EPS 800 1,198
Efficiency Ratio
Calculation
Noninterest expense $ 307,216 $ 283,826
Less:
Net OREO expense (5,281) (7,075)
Property valuation
adjustments (8,581) -
Acquisition and
integration related
expenses (1,389) (13,872)
---------- ----------
Total $ 291,965 $ 262,879
========== ==========
Tax-equivalent net
interest income (2) $ 322,277 $ 288,589
Fee-based revenues 127,259 111,081
Add:
Other income,
excluding BOLI
income 2,472 2,672
Tax-adjusted BOLI
(BOLI/.6) 6,975 4,788
---------- ----------
Total $ 458,983 $ 407,130
========== ==========
Efficiency ratio 63.61% 64.57%
Tax Equivalent Net
Interest Income
Net interest income $ 311,598 $ 276,852
Tax-equivalent
adjustment 10,679 11,737
---------- ----------
Tax-equivalent net
interest income (2) $ 322,277 $ 288,589
========== ==========
Note: Non-GAAP Reconciliations footnotes are located at the end of this
section.
Non-GAAP Reconciliations (Unaudited)
(Amounts in thousands, except per share data)
As of or for the
------------------------------------------------------------
Quarters Ended
----------------------------------------------------------
December September December
31, 30, June 30, March 31, 31,
2015 2015 2015 2015 2014
---------- ---------- ---------- ---------- ----------
Risk-Based
Capital Data
(3)
Common stock $ 882 $ 882 $ 882 $ 882 $ 882
Additional
paid-in
capital 446,672 445,037 443,558 441,689 449,798
Retained
earnings 953,516 944,209 927,939 912,387 899,516
Treasury stock,
at cost (226,413) (226,641) (226,190) (226,203) (233,566)
Goodwill and
other
intangible
assets (327,115) (318,854) (319,243) (319,635) (334,199)
Disallowed
deferred tax
assets (CET1)
(3) (1,888) (2,889) (3,046) (3,354) (30,638)
---------- ---------- ---------- ---------- ----------
Common equity
Tier 1
capital 845,654 841,744 823,900 805,766 751,793
Trust preferred
securities 50,690 50,690 50,690 50,690 50,690
Disallowed
deferred tax
assets (other)
(3) (2,868) (4,334) (4,568) (5,030) N/A
---------- ---------- ---------- ---------- ----------
Tier 1 capital 893,476 888,100 870,022 851,426 802,483
Tier 2 capital 74,855 73,725 73,279 72,806 82,209
---------- ---------- ---------- ---------- ----------
Total capital $ 968,331 $ 961,825 $ 943,301 $ 924,232 $ 884,692
========== ========== ========== ========== ==========
Risk-weighted
assets $8,687,864 $8,414,729 $8,296,679 $8,229,627 $7,876,754
Adjusted
average assets $9,501,087 $9,559,796 $9,318,347 $9,134,320 $8,884,045
Total capital
to risk-
weighted
assets 11.15% 11.43% 11.37% 11.23% 11.23%
Tier 1 capital
to risk-
weighted
assets 10.28% 10.55% 10.49% 10.35% 10.19%
Tier 1 common
capital to
risk- weighted
assets (CET1)
(3) 9.73% 10.00% 9.93% 9.79% N/A
Tier 1 leverage
to average
assets 9.40% 9.29% 9.34% 9.32% 9.03%
Tangible Common
Equity
Stockholders'
equity $1,146,268 $1,147,669 $1,124,957 $1,115,950 $1,100,775
Less: goodwill
and other
intangible
assets (339,277) (331,250) (332,223) (333,202) (334,199)
---------- ---------- ---------- ---------- ----------
Tangible
common equity 806,991 816,419 792,734 782,748 766,576
Less: AOCI 28,389 15,818 21,232 12,805 15,855
---------- ---------- ---------- ---------- ----------
Tangible
common
equity,
excluding
AOCI $ 835,380 $ 832,237 $ 813,966 $ 795,553 $ 782,431
========== ========== ========== ========== ==========
Total assets $9,732,676 $9,935,046 $9,863,027 $9,498,596 $9,445,139
Less: goodwill
and other
intangible
assets (339,277) (331,250) (332,223) (333,202) (334,199)
---------- ---------- ---------- ---------- ----------
Tangible
assets $9,393,399 $9,603,796 $9,530,804 $9,165,394 $9,110,940
========== ========== ========== ========== ==========
Tangible common
equity to
tangible
assets 8.59% 8.50% 8.32% 8.54% 8.41%
Tangible common
equity,
excluding
AOCI, to
tangible
assets 8.89% 8.67% 8.54% 8.68% 8.59%
Tangible common
equity to
risk- weighted
assets 9.29% 9.70% 9.55% 9.51% 9.73%
As of or for the
-----------------------
Years Ended
----------------------
December December
31, 31,
2015 2014
---------- ----------
Risk-Based
Capital Data
(3)
Common stock $ 882 $ 882
Additional
paid-in
capital 446,672 449,798
Retained
earnings 953,516 899,516
Treasury stock,
at cost (226,413) (233,566)
Goodwill and
other
intangible
assets (327,115) (334,199)
Disallowed
deferred tax
assets (CET1)
(3) (1,888) (30,638)
---------- ----------
Common equity
Tier 1
capital 845,654 751,793
Trust preferred
securities 50,690 50,690
Disallowed
deferred tax
assets (other)
(3) (2,868) N/A
---------- ----------
Tier 1 capital 893,476 802,483
Tier 2 capital 74,855 82,209
---------- ----------
Total capital $ 968,331 $ 884,692
========== ==========
Risk-weighted
assets $8,687,864 $7,876,754
Adjusted
average assets $9,501,087 $8,884,045
Total capital
to risk-
weighted
assets 11.15% 11.23%
Tier 1 capital
to risk-
weighted
assets 10.28% 10.19%
Tier 1 common
capital to
risk- weighted
assets (CET1)
(3) 9.73% N/A
Tier 1 leverage
to average
assets 9.40% 9.03%
Tangible Common
Equity
Stockholders'
equity $1,146,268 $1,100,775
Less: goodwill
and other
intangible
assets (339,277) (334,199)
---------- ----------
Tangible
common equity 806,991 766,576
Less: AOCI 28,389 15,855
---------- ----------
Tangible
common
equity,
excluding
AOCI $ 835,380 $ 782,431
========== ==========
Total assets $9,732,676 $9,445,139
Less: goodwill
and other
intangible
assets (339,277) (334,199)
---------- ----------
Tangible
assets $9,393,399 $9,110,940
========== ==========
Tangible common
equity to
tangible
assets 8.59% 8.41%
Tangible common
equity,
excluding
AOCI, to
tangible
assets 8.89% 8.59%
Tangible common
equity to
risk- weighted
assets 9.29% 9.73%
Note: Non-GAAP Reconciliations footnotes are located at the end of this
section.
Non-GAAP Reconciliations (Unaudited)
(Amounts in thousands, except per share data)
As of or for the
------------------------------------------------------------
Quarters Ended
----------------------------------------------------------
December September December
31, 30, June 30, March 31, 31,
2015 2015 2015 2015 2014
---------- ---------- ---------- ---------- ----------
Return on
Average Common
and Tangible
Common Equity
Net income
applicable to
common shares $ 16,145 $ 23,058 $ 22,325 $ 19,654 $ 14,454
Intangibles
amortization 971 973 978 998 842
Tax-equivalent
adjustment of
intangibles
amortization (388) (389) (391) (399) (337)
---------- ---------- ---------- ---------- ----------
Net income
applicable to
common
shares,
excluding
intangibles
amortization 16,728 23,642 22,912 20,253 14,959
Tax-equivalent
property
valuation
adjustments
(2) 5,149 - - - -
Tax-equivalent
acquisition
and
integration
related
expenses (2) 833 - - - 5,576
---------- ---------- ---------- ---------- ----------
Net income
applicable to
common
shares,
excluding
certain
significant
transactions
(1) $ 22,710 $ 23,642 $ 22,912 $ 20,253 $ 20,535
========== ========== ========== ========== ==========
Average
stockholders'
equity $1,154,506 $1,134,967 $1,123,530 $1,114,762 $1,072,682
Less: average
intangible
assets (331,013) (331,720) (332,694) (333,684) (320,533)
---------- ---------- ---------- ---------- ----------
Average
tangible
common equity $ 823,493 $ 803,247 $ 790,836 $ 781,078 $ 752,149
========== ========== ========== ========== ==========
Return on
average common
equity (4) 5.55% 8.06% 7.97% 7.15% 5.35%
Return on
average
tangible
common equity
(4) 8.06% 11.68% 11.62% 10.52% 7.89%
Return on
average
tangible
common equity,
excluding
certain
significant
transactions
(1)(4) 10.94% 11.68% 11.62% 10.52% 10.83%
As of or for the
-----------------------
Years Ended
----------------------
December December
31, 31,
2015 2014
---------- ----------
Return on
Average Common
and Tangible
Common Equity
Net income
applicable to
common shares $ 81,182 $ 68,470
Intangibles
amortization 3,920 2,889
Tax-equivalent
adjustment of
intangibles
amortization (1,568) (1,156)
---------- ----------
Net income
applicable to
common
shares,
excluding
intangibles
amortization 83,534 70,203
Tax-equivalent
property
valuation
adjustments
(2) 5,149 -
Tax-equivalent
acquisition
and
integration
related
expenses (2) 833 8,323
---------- ----------
Net income
applicable to
common
shares,
excluding
certain
significant
transactions
(1) $ 89,516 $ 78,526
========== ==========
Average
stockholders'
equity $1,132,058 $1,043,566
Less: average
intangible
assets (332,269) (290,303)
---------- ----------
Average
tangible
common equity $ 799,789 $ 753,263
========== ==========
Return on
average common
equity (4) 7.17% 6.56%
Return on
average
tangible
common equity
(4) 10.44% 9.32%
Return on
average
tangible
common equity,
excluding
certain
significant
transactions
(1)(4) 11.19% 10.42%
Footnotes to Non-GAAP Reconciliations
(1) Certain significant transactions include property valuation adjustments
related to strategic branch initiatives and acquisition and integration
related expenses associated with completed and pending acquisitions.
(2) Tax equivalent basis reflects federal and state tax benefits.
(3) Basel III Capital Rules became effective for the Company on January 1,
2015. These rules revise the risk-based capital requirements and
introduce a new capital measure, Tier 1 common capital to risk-weighted
assets. As a result, ratios subsequent to December 31, 2014 are
computed using the new rules and prior periods presented are reported
using the regulatory guidance applicable at that time.
(4) Annualized based on the actual number of days for each period
presented.
