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Section 1: 8-K (FORM 8-K)

Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): April 22, 2019

 

 

OLD NATIONAL BANCORP

(Exact name of Registrant as specified in its charter)

 

 

 

Indiana   001-15817   35-1539838

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

One Main Street

Evansville, Indiana

  47708
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s telephone number, including area code: (800) 731-2265

 

(Former name or former address if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the Registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (s230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (s240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 2.02

Results of Operations and Financial Condition.

On April 22, 2019, Old National Bancorp (the “Company”) issued a press release (“Press Release”) reporting its financial results for the first quarter of 2019. The Press Release is furnished as Exhibit 99.1 hereto and is incorporated herein by reference. In connection therewith, a slide presentation outlining first-quarter earnings, strategic developments, and the Company’s financial outlook will be available on the “Investor Relations” section of the Company’s website to complement the conference call to be held on April 22, 2019, at 7:00 a.m. CDT and will be accessible at http://www.oldnational.com before the conference call begins.

 

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit
No.

  

Description

99.1    Press Release issued by Old National Bancorp on April 22, 2019

 

2


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: April 22, 2019

 

OLD NATIONAL BANCORP
By:  

/s/ James C. Ryan, III

  James C. Ryan, III
  Senior Executive Vice President and
  Chief Financial Officer

 

3

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Section 2: EX-99.1 (EX-99.1)

EX-99.1

Exhibit 99.1

 

Old National Bancorp

One Main Street

   LOGO
Evansville, IN 47708    Media: Kathy A. Schoettlin (812) 465-7269
oldnational.com    Investors: Lynell J. Walton (812) 464-1366

Old National’s record 1st quarter net income increases 17% from a year ago to $56.3 million, or $0.32 per share

Evansville, Ind. (April 22, 2019)

 

 

Old National Bancorp (NASDAQ: ONB) reports 1Q19 net income of $56.3 million, diluted EPS of $0.32.

Adjusted1 net income of $57.3 million, or $0.33 per diluted share.

 

CEO COMMENTARY:

 

 

“This was another quarter of extremely positive earnings, well controlled expenses and strong credit metrics as we continue to execute on our growth strategy,” said incoming CEO Jim Ryan. Chairman and current CEO Bob Jones added:

“These strong results reflect the positive momentum that Old National enjoys as we transition to Jim Ryan as CEO. The transition is progressing extraordinarily well, and I’m incredibly confident in the future of the organization under Jim’s leadership.”

 

FIRST-QUARTER HIGHLIGHTS2:

 

  Net Income    

   Net income of $56.3 million, an increase of 17.3% from first quarter of 2018

   Earnings per share of $0.32, an increase of 3.2% from first quarter of 2018

 

Net Interest

Income/NIM

 

   Net interest income on a fully taxable equivalent basis was $150.2 million, up 0.07%

   Net interest margin on a fully taxable equivalent basis was 3.51% compared to 3.64%

 

Operating

  Performance  

 

   Pre-provision net revenue1 (“PPNR”) was $73.6 million

   Adjusted PPNR1 was $75.2 million, up 23.1% over first quarter of 2018

   Noninterest expense was $123.0 million

   Adjusted noninterest expense1 was $121.5 million

   Efficiency ratio1 was 60.26%

   Adjusted efficiency ratio1 was 59.51%, a 299 basis point improvement from first quarter of 2018

 

Loans and Credit

Quality

 

   End-of-period total loans 3 were $12,083.1 million compared to $12,258.8 million

   March 31 pipeline was a record high of $2.0 billion; first-quarter total commercial production was $424.1 million

   Provision for loan losses was $1.0 million compared to $3.4 million

   Net charge-offs were $0.9 million, or 0.03% annualized, compared to net charge-offs of $0.6 million

   Non-performing loans were 1.41% of total loans compared to 1.43%

 

Capital

Returns

 

   Return on average common equity was 8.29%

   Return on average tangible common equity1 was 14.88%

   Adjusted return on average tangible common equity1 was 15.13%

   Repurchased 1.5 million shares of common stock during the quarter

 

 

Notable

Items

 

 

   $1.2 million in merger and integration charges

   $0.3 million in tax credit amortization

1 Non-GAAP financial measure that Management believes is useful in evaluating the financial results of the Company – please refer to the Non-GAAP reconciliations contained in this release  2 Comparisons are on a linked-quarter basis, unless otherwise noted  3 Includes loans held for sale


RESULTS OF OPERATIONS

Old National Bancorp reported first-quarter 2019 net income of $56.3 million, or $0.32 per diluted share.

Included in the first quarter were pre-tax charges of $1.2 million for merger and integration activity. Excluding these charges from the current quarter and netting out debt securities losses, Old National would have reported net income of $57.3 million, or $0.33 per share.

LOANS

Record high pipeline though paydowns continued to impact outstandings.

 

  Ø  

Period-end total loans decreased to $12,083.1 million at March 31, 2019 from $12,258.8 million at December 31, 2018.

  Ø  

Commercial and industrial loans decreased to $3,042.8 million; commercial real estate loans increased to $5,023.6 million; consumer loans decreased to $1,758.7 million.

  Ø  

Period-end pipeline totaled a Company record of $2.0 billion; first-quarter commercial loan production was $424.1 million.

  Ø  

On average, total loans in the first quarter were $12,152.1 million, up from $11,972.6 million in the fourth quarter of 2018.

DEPOSITS

A low-cost core deposit franchise continues to be one of Old National’s strengths.

 

  Ø  

Period-end total deposits increased to $14,429.3 million at March 31, 2019, from $14,349.9 million at December 31, 2018.

  Ø  

On average, total deposits in the first quarter were $14,211.0 million, compared to $13,620.6 million in the fourth quarter of 2018.

NET INTEREST INCOME AND MARGIN

Net interest income up on a full quarter of Klein; lower accretion, fewer days and change in mix contributed to lower margin

 

  Ø  

Net interest income increased to $147.0 million in the first quarter of 2019 from $146.2 million in the fourth quarter of 2018.

  Ø  

The net interest margin on a fully taxable equivalent basis decreased 13 basis points to 3.51% compared to 3.64% in the fourth quarter of 2018, with 4 basis points of the decrease due to fewer days and 2 basis points of the decrease from mix change.

  Ø  

Accretion income was $8.9 million, or 21 basis points of net interest margin, in the first quarter of 2019 compared to $11.3 million, or 27 basis points of net interest margin, in the fourth quarter of 2018. In the first quarter of 2019, accretion income was 4.5% of adjusted total revenue.

  Ø  

Loan yields, excluding accretion income, increased 6 basis points to 4.48%.

  Ø  

The cost of total deposits rose 6 basis points to 0.46% in the first quarter of 2019 while the cost of total interest-bearing deposits rose 8 basis points to 0.64%.

CREDIT QUALITY

Strong credit quality remains a hallmark of the Old National franchise.

 

  Ø  

Asset quality remained strong with net charge-offs in the first quarter of $0.9 million, or 0.03% of total average loans, and 30-89 day delinquencies of 0.33%.

  Ø  

Provision expense for the first quarter was $1.0 million, compared to $3.4 million in the fourth quarter of 2018.

  Ø  

Non-performing loans decreased as a percentage of total loans to 1.41%.


  Ø  

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 March 31, 2019, the remaining discount on these acquired loans was $112.5 million.

  Ø  

The allowance for loan losses was $55.6 million, or 0.46% of total loans at March 31, 2019.

NONINTEREST INCOME

Noninterest income decreased due to fourth quarter’s branch gain - mortgage banking revenue and capital markets fees increased from prior quarter.

 

  Ø  

Total noninterest income for the first quarter of 2019 was $46.4 million, a decrease of $11.7 million from the fourth quarter of 2018.

  Ø  

Included in noninterest income in the fourth quarter of 2018 was a net gain of $14.0 million from the sale of 10 Wisconsin branches.

  Ø  

Capital markets income increased $1.7 million while mortgage banking revenue increased $1.1 million.

NONINTEREST EXPENSE

First quarter results demonstrated continued discipline with respect to expense management, helping to drive positive operating leverage1.

 

  Ø  

Noninterest expense for the first quarter of 2019 was $123.0 million and included $1.2 million in merger & integration charges and $0.3 million in tax credit amortization.

  Ø  

Excluding these items, adjusted noninterest expense for the first quarter was $121.5 million, compared to the $126.9 million in adjusted noninterest expense in the fourth quarter of 2018.

  Ø  

The first quarter efficiency ratio was 60.26%, while the adjusted efficiency ratio was 59.51%.

INCOME TAXES

 

  Ø  

On a fully taxable-equivalent basis, income tax expense in the first quarter was $16.3 million, resulting in a 22.5% FTE tax rate.

CAPITAL

Strong quarterly earnings drove capital ratios higher.

 

  Ø  

At the end of the first quarter, total risk-based capital was 12.7% and regulatory tier 1 capital was 11.8%.

  Ø  

Tangible common equity to tangible assets was 8.66% at the end of the first quarter compared to 8.47% in the fourth quarter of 2018.

  Ø  

The Company repurchased 1.5 million shares of common stock during the first quarter with a weighted average price of $16.45 per share.

NON-GAAP RECONCILIATIONS

 

 

($ in millions, except EPS, shares in 000s)

     1Q19        Adjustments4        Adjusted 1Q19  
Total Revenues (FTE)      $196.6        $0.1        $196.7  
Less: Provision for Loan Losses      (1.0)        -        (1.0)  
Less: Noninterest Expenses      (123.0)        1.2        (121.8)  
Income before Income Taxes (FTE)      $72.6        $1.3        $73.9  
Income Taxes      16.3        0.3        16.6  
Net Income      $56.3        $1.0        $57.3  
                            
Average Shares Outstanding      175,368        -        175,368  
Earnings Per Share      $0.32        $0.01        $0.33  

4 Tax-effect calculations use the current statutory FTE tax rates (federal + state)


 

($ in millions)

    1Q19        4Q18  
Net Interest Income     $147.0        $146.2  
Add: FTE Adjustment     3.2        3.1  
Net Interest Income (FTE)     $150.2        $149.3  
                  
Average Earning Assets     $17,143.6        $16,398.3  
Net Interest Margin (FTE)     3.51%        3.64%  
    
($ in millions)     1Q19        4Q18  
Net Interest Income     $147.0        $146.2  
Add: FTE Adjustment     3.2        3.1  
Net Interest Income (FTE)     $150.2        $149.3  
Total Noninterest Income     46.4        $58.2  
Noninterest Expense     123.0        150.3  
Pre-Provision Net Revenue     $73.6        $57.2  
Less: Debt Securities Gains/Losses     0.1        0.4  
Less: Gain on Branch Actions     -        (14.0)  
Add: Merger and Integration Charges     1.2        14.8  
Add: ONB Foundation Funding     -        7.5  
Add: Amortization of Tax Credit Investments     0.3        1.1  
Adjusted Pre-Provision Net Revenue     $75.2        $67.0  

 

 

($ in millions)

     1Q19        4Q18        1Q18  
Noninterest Expense      $123.0        $150.3        $117.1  
Less: Merger and Integration Charges      (1.2)        (14.8)        (2.3)  
Less: Branch Action Charges, Severance, ONB Foundation Funding and Client Experience Initiative Charges      -        (7.5)        (2.8)  
Noninterest Expense less Charges      $121.8        $128.0        $112.0  
Less: Amortization of Tax Credit Investments      (0.3)        (1.1)        (0.7)  
Adjusted Noninterest Expense      $121.5        $126.9        $111.3  
Less: Intangible Amortization      (4.5)        (4.1)        (3.6)  
Adjusted Noninterest Expense Less Intangible Amortization      $117.0        $122.8        $107.7  
                            
Net Interest Income      $147.0        $146.2        $128.5  
FTE Adjustment      3.2        3.1        2.8  
Net Interest Income (FTE)      $150.2        $149.3        $131.3  
Total Noninterest Income      46.4        58.2        41.9  
Total Revenue (FTE)      196.6        $207.5        $173.2  
Less: Debt Securities Gains/Losses      0.1        0.4        (0.8)  
Less: Gain on Branch Actions      -        (14.0)        -  
Adjusted Total Revenue (FTE)      $196.7        $193.9        $172.4  
                            
Efficiency Ratio      60.26%        70.33%        65.84%  
Adjusted Efficiency Ratio      59.51%        63.31%        62.50%  
   
Operating Leverage5 (basis points)      848          
Adjusted Operating Leverage6 (basis points)      491                    

5 Year-over-year basis point change in noninterest expenses plus change in total revenue

6 Year-over-year basis point change in adjusted noninterest expense plus change in adjusted total revenue


 

($ in millions)

     1Q19        4Q18  
Net Income      $56.3        $47.5  
Add: Intangible Amortization (net of tax7)      3.4        3.3  
Tangible Net Income      $59.7        $50.8  
Less: Securities Gains/Losses (net of tax7)      0.1        0.3  
Less: Gain on Branch Sale (net of tax7)      -        (10.6)  
Add: Merger & Integration Charges (net of tax7)      0.9        11.2  
Add: ONB Foundation Funding (net of tax7)      -        5.7  
Adjusted Tangible Net Income      $60.7        $57.4  
                   
Average Total Shareholders’ Equity      $2,714.2        $2,503.8  
Less: Average Goodwill      (1,036.3)        (969.4)  
Less: Average Intangibles      (74.8)        (66.9)  
Average Tangible Shareholders’ Equity      $1,603.1        $1,467.5  
                   
Return on Average Tangible Common Equity      14.88%        13.84%  
Adjusted Return on Average Tangible Common Equity      15.13%        15.62%  

7Tax-effect calculations use the current statutory FTE tax rates (federal + state)

CONFERENCE CALL AND WEBCAST

Old National will host a conference call and live webcast at 7:00 a.m. Central Time on Monday, April 22, 2019, to review first quarter 2019 financial results. 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 10:00 a.m. Central Time on April 22 through May 6. To access the replay, dial 1-855-859-2056, Conference ID Code 2358708.

ABOUT OLD NATIONAL

Old National Bancorp (NASDAQ: ONB) is the holding company of Old National Bank. Headquartered in Evansville with $20.1 billion in assets, it is a top 100 U.S. bank, the largest Indiana-based bank and has been recognized as a World’s Most Ethical Company by the Ethisphere Institute for eight consecutive years. For 185 years, Old National has been a community bank committed to building long-term, highly valued relationships with clients. With locations in Indiana, Kentucky, Michigan, Minnesota and Wisconsin, Old National provides retail and commercial banking services along with comprehensive wealth management, investment and capital markets services. For information and financial data, please visit Investor Relations at oldnational.com.

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.


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. 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 Klein that 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.


 

Financial Highlights (unaudited)

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

 

Three Months Ended

 
     March 31,     December 31,     March 31,  
     2019     2018     2018  

Income Statement

       

Net interest income

  $ 147,048     $ 146,225     $ 128,572  

Provision for loan losses

    1,043       3,390       380  

Noninterest income

    46,416       58,154       41,905  

Noninterest expense

    123,041       150,268       117,157  

Net income

 

   

 

56,276

 

 

 

   

 

47,498

 

 

 

   

 

47,983

 

 

 

       

Per Common Share Data (Diluted)

       

Net income available to common shareholders

  $ 0.32     $ 0.28     $ 0.31  

Average diluted shares outstanding

    175,368       167,992       152,370  

Book value

    15.82       15.36       14.32  

Stock price

    16.40       15.40       16.90  

Dividend payout ratio

    41%       46%       41%  

Tangible common book value (1)

 

   

 

9.44

 

 

 

   

 

9.00

 

 

 

   

 

8.55

 

 

 

       

Performance Ratios

       

Return on average assets

    1.14%       1.01%       1.10%  

Return on average common equity

    8.29%       7.59%       8.86%  

Return on average tangible common equity (1)

    14.88%       13.84%       15.80%  

Net interest margin (FTE)

    3.51%       3.64%       3.45%  

Efficiency ratio (2)

    60.26%       70.33%       65.84%  

Net charge-offs (recoveries) to average loans

    0.03%       0.02%       0.01%  

Allowance for loan losses to ending loans

    0.46%       0.45%       0.45%  

Non-performing loans to ending loans

 

   

 

1.41%

 

 

 

   

 

1.43%

 

 

 

   

 

1.28%

 

 

 

       

Balance Sheet

       

Total loans

  $         12,068,977     $         12,243,892     $         11,238,682  

Total assets

    20,084,420       19,728,435       17,496,287  

Total deposits

    14,429,270       14,349,949       12,788,600  

Total borrowed funds

    2,639,038       2,493,793       2,371,292  

Total shareholders’ equity

 

   

 

2,751,872

 

 

 

   

 

2,689,570

 

 

 

   

 

2,179,118

 

 

 

       

Capital Ratios (1)

       

Risk-based capital ratios (EOP):

       

Tier 1 common equity

    11.8%       11.4%       10.7%  

Tier 1

    11.8%       11.4%       10.7%  

Total

    12.7%       12.3%       11.7%  

 

Leverage ratio (to average assets)

    8.8%       9.2%       8.1%  
   

Total equity to assets (averages)

    13.70%       13.28%       12.42%  

Tangible common equity to tangible assets

 

   

 

8.66%

 

 

 

   

 

8.47%

 

 

 

   

 

7.83%

 

 

 

       

Nonfinancial Data

       

Full-time equivalent employees

    2,908       2,892       2,721  

Number of branches

    193       191       191  
 

(1) See “Non-GAAP Measures” table.

(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                    


 

Income Statement (unaudited)

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

 

Three Months Ended

 
     March 31,     December 31,     March 31,  
     2019     2018     2018  

Interest income

  $ 178,918     $ 175,234     $ 147,706  

Less: interest expense

    31,870       29,009       19,134  

  Net interest income

    147,048       146,225       128,572  

Provision for loan losses

    1,043       3,390       380  

  Net interest income after provision for loan losses

    146,005       142,835       128,192  
   

Wealth management fees

    8,535       9,069       9,026  

Service charges on deposit accounts

    10,826       11,474       10,759  

Debit card and ATM fees

    5,503       5,565       4,865  

Mortgage banking revenue

    5,011       3,928       4,192  

Investment product fees

    5,271       5,369       5,031  

Capital markets income

    2,517       840       498  

Company-owned life insurance

    3,188       2,591       2,605  

Other income

    5,702       5,700       4,130  

Net gain on branch divestitures

    -           13,989       -      

Gains (losses) on sales of debt securities

    (103     (357     788  

Gains (losses) on derivatives

    (34     (14     11  

  Total noninterest income

    46,416       58,154       41,905  
   

Salaries and employee benefits

    71,183       87,346       64,179  

Occupancy

    14,578       13,210       13,280  

Equipment

    4,474       3,916       3,565  

Marketing

    3,723       4,782       3,697  

Data processing

    9,341       9,418       8,400  

Communication

    3,054       2,537       3,064  

Professional fees

    2,910       5,615       2,730  

Loan expenses

    1,912       1,877       1,744  

Supplies

    755       705       722  

FDIC assessment

    2,087       2,110       2,645  

Other real estate owned expense

    36       176       349  

Amortization of intangibles

    4,472       4,134       3,609  

Amortization of tax credit investments

    260       1,142       716  

Other expense

    4,256       13,300       8,457  

  Total noninterest expense

    123,041       150,268       117,157  
   

  Income before income taxes

    69,380       50,721       52,940  

  Income tax expense

    13,104       3,223       4,957  

   Net income

  $               56,276     $               47,498     $               47,983  
                         
   

Diluted Earnings Per Share

       

Net income

  $ 0.32     $ 0.28     $ 0.31  
   

Average Common Shares Outstanding

       

Basic

    174,734       167,044       151,721  

Diluted

    175,368       167,992       152,370  
   

Common shares outstanding at end of period

    173,979       175,141       152,172  
                         


 

Balance Sheet (unaudited)

($ in thousands)
      March 31,           

 

December 31,

           March 31,       
      2019            2018            2018       

Assets

                

Federal Reserve Bank account

   $ 101,033        $ 26,182        $ 73,657      

Money market investments

     10,909          6,980          12,562      

Investments:

                

Treasury and government-sponsored agencies

     782,486          707,438          655,353      

Mortgage-backed securities

     2,684,330          2,336,415          1,623,554      

States and political subdivisions

     1,252,448          1,245,657          1,159,614      

Other securities

     498,977          488,802          458,270      

  Total investments

     5,218,241          4,778,312          3,896,791      

Loans held for sale, at fair value

     14,082          14,911          17,635      

Loans:

                

Commercial

     3,042,790          3,232,970          2,811,629      

Commercial and agriculture real estate

     5,023,620          4,958,851          4,449,980      

Consumer:

                

  Home equity

     553,264          589,322          487,237      

  Other consumer loans

     1,205,418          1,214,345          1,331,304      

Subtotal of commercial and consumer loans

     9,825,092          9,995,488          9,080,150      

Residential real estate

     2,243,885          2,248,404          2,158,532      

  Total loans

     12,068,977          12,243,892          11,238,682      

   Total earning assets

     17,413,242          17,070,277          15,239,327      
   

Allowance for loan losses

     (55,559        (55,461        (50,381    

Non-earning Assets:

                

Cash and due from banks

     211,174          284,003          192,022      

Premises and equipment, net

     490,216          485,912          453,603      

Operating lease right-of-use assets

     109,916          -              -          

Goodwill and other intangible assets

     1,108,802          1,113,274          877,637      

Company-owned life insurance

     444,551          444,224          404,561      

Net deferred tax assets

     59,430          87,048          88,773      

Loan servicing rights

     24,254          24,497          24,380      

Other real estate owned and repossessed personal property

     3,279          3,232          6,735      

Other assets

     275,115          271,429          259,630      

  Total non-earning assets

     2,726,737          2,713,619          2,307,341      

   Total assets

   $     20,084,420        $     19,728,435        $     17,496,287      
                                    
   

Liabilities and Equity

                

Noninterest-bearing demand deposits

   $ 3,903,314        $ 3,965,380        $ 3,655,732      

Interest-bearing:

                

Checking and NOW accounts

     3,742,241          3,788,339          3,135,778      

Savings accounts

     2,941,361          2,944,092          3,091,101      

Money market accounts

     1,780,756          1,627,882          1,130,258      

Other time deposits

     1,835,110          1,845,149          1,573,874      

 Total core deposits

     14,202,782          14,170,842          12,586,743      

Brokered CD’s

     226,488          179,107          201,857      

 Total deposits

     14,429,270          14,349,949          12,788,600      
   

Federal funds purchased and interbank borrowings

     325,030          270,135          150,026      

Securities sold under agreements to repurchase

     342,480          362,294          308,189      

Federal Home Loan Bank advances

     1,719,944          1,613,481          1,664,179      

Other borrowings

     251,584          247,883          248,898      

  Total borrowed funds

     2,639,038          2,493,793          2,371,292      

Operating lease liabilities

     114,040          -              -          

Accrued expenses and other liabilities

     150,200          195,123          157,277      

  Total liabilities

     17,332,548          17,038,865          15,317,169      
   

Common stock, surplus, and retained earnings

     2,749,252          2,734,520          2,240,644      

Accumulated other comprehensive income (loss), net of tax

     2,620          (44,950        (61,526    

Total shareholders’ equity

     2,751,872          2,689,570          2,179,118      

  Total liabilities and shareholders’ equity

   $ 20,084,420        $ 19,728,435        $ 17,496,287      
                                    
                                                


 

 

Average Balance Sheet and Interest Rates (unaudited)

($ in thousands)

 

   
        Three Months Ended           Three Months Ended           Three Months Ended  
        March 31, 2019           December 31, 2018           March 31, 2018  
            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

  $ 58,701     $ 278       1.92     $ 39,207     $ 205       2.07     $ 66,536     $ 90       0.55
 

  Investments:

                       
 

   Treasury and government-sponsored agencies

    705,417       3,902       2.21       694,409       3,874       2.23       663,096       3,424       2.07
 

   Mortgage-backed securities

    2,497,368       17,603       2.82       2,011,275       13,688       2.72       1,632,610       9,520       2.33
 

  States and political subdivisions

    1,232,355       11,453       3.72       1,187,404       11,147       3.76       1,204,855       10,478       3.48
 

  Other securities

    497,604       4,440       3.57       493,426       4,017       3.26       459,458       3,669       3.19
 

     Total investments

    4,932,744       37,398       3.03       4,386,514       32,726       2.98       3,960,019       27,091       2.74
 

  Loans: (2)

                       
 

   Commercial

    3,122,402       36,035       4.62       3,133,153       37,358       4.67       2,759,688       28,205       4.09
 

   Commercial and agriculture real estate

    4,989,622       65,076       5.22       4,834,589       65,461       5.30       4,394,002       55,787       5.08
 

   Consumer:

                       
 

     Home equity

    588,366       7,596       5.24       562,801       7,159       5.05       502,902       5,688       4.59
 

     Other consumer loans

    1,192,496       11,802       4.01       1,203,436       11,702       3.86       1,346,331       12,140       3.66
 

   Subtotal commercial and consumer loans

    9,892,886       120,509       4.94       9,733,979       121,680       4.96       9,002,923       101,820       4.59
 

   Residential real estate loans

   

 

2,259,243

 

 

 

   

 

23,931

 

 

 

   

 

4.24

 

 

     

 

2,238,588

 

 

 

   

 

23,672

 

 

 

   

 

4.23

 

 

     

 

2,176,413

 

 

 

   

 

21,472

 

 

 

   

 

3.95

 

 

   
 

     Total loans

    12,152,129       144,440       4.76       11,972,567       145,352       4.78       11,179,336       123,292       4.42
                                                                             
 

    Total earning assets

  $ 17,143,574     $ 182,116       4.26     $ 16,398,288     $ 178,283       4.30     $ 15,205,891     $ 150,473       3.97
                                                                             
 

Less: Allowance for loan losses

    (55,789           (53,045           (50,953      
 

 

Non-earning Assets:

                       
 

  Cash and due from banks

  $ 229,957           $ 232,360           $ 199,132        
 

  Other assets

   

 

2,490,524

 

 

 

         

 

2,275,907

 

 

 

         

 

2,089,790

 

 

 

     
 

    Total assets

  $ 19,808,266           $ 18,853,510           $ 17,443,860        
                                           
   
 

Interest-Bearing Liabilities:

                       
 

  Checking and NOW accounts

  $ 3,693,886     $ 3,142       0.34     $ 3,391,630     $ 2,004       0.23     $ 3,067,437     $ 819       0.11
 

  Savings accounts

    2,935,710       2,283       0.32       2,919,900       2,225       0.30       3,052,646       1,343       0.18
 

  Money market accounts

    1,702,655       2,826       0.67       1,482,022       1,922       0.51       1,159,010       546       0.19
 

  Other time deposits

    1,840,514       7,102       1.56       1,769,243       6,519       1.46       1,561,945       3,900       1.01
 

   Total interest-bearing deposits

    10,172,765       15,353       0.61       9,562,795       12,670       0.53       8,841,038       6,608       0.30
 

  Brokered CD’s

    191,443       1,091       2.31       193,455       1,024       2.10       175,039       647       1.50
 

   Total interest-bearing deposits and CD’s

    10,364,208       16,444       0.64       9,756,250       13,694       0.56       9,016,077       7,255       0.33
   
 

  Federal funds purchased and interbank borrowings

    316,998       1,918       2.45       312,730       1,938       2.46       261,353       1,017       1.58
 

  Securities sold under agreements to repurchase

    361,261       662       0.74       351,392       634       0.72       342,682       359       0.42
 

  Federal Home Loan Bank advances

    1,672,376       9,931       2.41       1,649,304       9,441       2.27       1,675,700       7,780       1.88
 

  Other borrowings

    249,794       2,915       4.67       250,926       3,302       5.26       248,828       2,723       4.38
 

   Total borrowed funds

    2,600,429       15,426       2.41       2,564,352       15,315       2.37       2,528,563       11,879       1.91
 

  

                                                                           
 

   Total interest-bearing liabilities

  $ 12,964,637     $ 31,870       1.00     $ 12,320,602     $ 29,009       0.93     $ 11,544,640     $ 19,134       0.67
                                                                             
   
 

Noninterest-Bearing Liabilities

                       
 

  Demand deposits

  $ 3,846,828           $ 3,864,302           $ 3,563,104        
 

  Other liabilities

    282,615             164,771             170,061        
 

  Shareholders’ equity

   

 

2,714,186

 

 

 

         

 

2,503,835

 

 

 

         

 

2,166,055

 

 

 

     
 

  Total liabilities and shareholders’ equity

  $ 19,808,266           $ 18,853,510           $ 17,443,860        
                                           
   
 

Net interest rate spread

        3.26           3.37           3.30
   
 

Net interest margin (FTE)

        3.51           3.64           3.45
   
 

FTE adjustment

    $ 3,198           $ 3,049           $ 2,767      
 
   

(1)  Interest income is reflected on a fully taxable equivalent basis (FTE).

(2)  Includes loans held for sale.

   

  


 

Asset Quality (EOP) (unaudited)

($ in thousands)

 
     
     Three Months Ended  
     March 31,     December 31,     March 31,  
     2019     2018     2018  
   

Beginning allowance for loan losses

  $ 55,461     $ 52,713     $ 50,381  
   

Provision for loan losses

    1,043       3,390       380  
   

Gross charge-offs

    (2,892     (2,969     (2,685

Gross recoveries

    1,947       2,327       2,305  

Net (charge-offs) recoveries

    (945     (642     (380
                         
   

Ending allowance for loan losses

  $ 55,559     $ 55,461     $ 50,381  
                         
   

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

    0.03%       0.02%       0.01%  
   

Average loans outstanding (1)

  $ 12,147,560     $ 11,967,241     $ 11,175,329  
   

EOP loans outstanding (1)

    12,068,977     $ 12,243,892     $ 11,238,682  
   

Allowance for loan losses / EOP loans (1)

    0.46%       0.45%       0.45%  
   

Underperforming Assets:

       

Loans 90 Days and over (still accruing)

  $ 560     $ 1,353     $ 328  
   

Non-performing loans:

       

Nonaccrual loans (2)

    152,881       157,484       127,295  

Renegotiated loans

    17,123       17,356       16,802  

Total non-performing loans

    170,004       174,840       144,097  
   

Foreclosed properties

   

 

3,279

 

 

 

   

 

3,232

 

 

 

   

 

6,735

 

 

 

   

Total underperforming assets

  $ 173,843     $ 179,425     $ 151,160  
                         
   

Classified and Criticized Assets:

       

Nonaccrual loans (2)

    152,881       157,484       127,295  

Substandard accruing loans

    210,680       175,948       118,123  

Loans 90 days and over (still accruing)

    560       1,353       328  

Total classified loans - “problem loans”

  $ 364,121     $ 334,785     $ 245,746  
   

Other classified assets

    2,715       2,820       2,987  

Criticized loans - “special mention loans”

    268,836       238,752       174,873  
   

Total classified and criticized assets

  $ 635,672     $ 576,357     $ 423,606  
                         
   

Non-performing loans / EOP loans (1)

    1.41%       1.43%       1.28%  
   

Allowance to non-performing loans (3)

    33%       32%       35%  
   

Under-performing assets / EOP loans (1)

    1.44%       1.47%       1.35%  
   

EOP total assets

  $         20,084,420     $         19,728,435     $         17,496,287  
   

Under-performing assets / EOP assets

    0.87%       0.91%       0.86%  

 

EOP - End of period actual balances

(1) Excludes loans held for sale.

(2) Includes renegotiated loans totaling $27.0 million at March 31, 2019, $26.3 million at December 31, 2018, and $36.9 million at March 31, 2018.

(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.

 

  

  

  


 

Non-GAAP Measures (unaudited)

($ in thousands)

 

   
           
     Three Months Ended       
     March 31,     December 31,     March 31,       
     2019     2018     2018       

Actual End of Period Balances

         

GAAP shareholders’ equity

  $         2,751,872     $         2,689,570     $         2,179,118      
   

Deduct:

         

Goodwill

    1,036,258       1,036,258       828,804      

Intangibles

    72,544       77,016       48,833      
      1,108,802       1,113,274       877,637      

Tangible shareholders’ equity

  $ 1,643,070     $ 1,576,296     $ 1,301,481      
                             
   

Average Balances

         

GAAP shareholders’ equity

  $ 2,714,186     $ 2,503,835     $ 2,166,055      
   

Deduct:

         

Goodwill

    1,036,258       969,403       828,141      

Intangibles

    74,849       66,927       51,092      
      1,111,107       1,036,330       879,233      

Average tangible shareholders’ equity

  $ 1,603,079     $ 1,467,505     $ 1,286,822      
                             
   

Actual End of Period Balances

         

GAAP assets

  $ 20,084,420     $ 19,728,435     $ 17,496,287      
   

Add:

         

Trust overdrafts

    28       11       50      
   

Deduct:

         

Goodwill

    1,036,258       1,036,258       828,804      

Intangibles

    72,544       77,016       48,833      
      1,108,802       1,113,274       877,637      

Tangible assets

  $ 18,975,646     $ 18,615,172     $ 16,618,700      
                             
   

Risk-weighted assets

  $ 13,966,569     $ 14,248,562     $ 12,523,432      
                             
   

GAAP net income

  $ 56,276     $ 47,498     $ 47,983      
   

Add:

         

Amortization of intangibles (net of tax)

    3,373       3,266       2,851      

 

Tangible net income

  $ 59,649     $ 50,764     $ 50,834      
                             
   

Tangible Ratios

         

Return on tangible common equity

    14.52%       12.88%       15.62%      

Return on average tangible common equity

    14.88%       13.84%       15.80%      

Return on tangible assets

    1.26%       1.09%       1.22%      

Tangible common equity to tangible assets

    8.66%       8.47%       7.83%      

Tangible common equity to risk-weighted assets

    11.76%       11.06%       10.39%      

Tangible common book value (1)

    9.44       9.00       8.55      
   

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

  $ 1,643,496     $ 1,617,936     $ 1,341,261      
   

Deduct:

         

Tier 1 capital adjustments

    -           -           -          
     

 

-    

 

 

 

   

 

-    

 

 

 

   

 

-    

 

 

 

   

Tier 1 common equity

  $ 1,643,496     $ 1,617,936     $ 1,341,261      
                             
   

Risk-weighted assets

    13,966,569       14,248,562       12,523,432      
   

Tier 1 common equity to risk-weighted assets

    11.77%       11.36%       10.71%      
                             
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