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

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 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

 

 

 

(Exact name of registrant as specified in its charter)

 

Delaware   001-13695   16-1213679
(State or other jurisdiction of incorporation)   (Commission File Number)   (I.R.S. Employer Identification No.)

 

5790 Widewaters Parkway, DeWitt, New York   13214-1883
(Address of principal executive offices)   (Zip Code)

 

(315) 445-2282

(Registrant's telephone number, including area code)

 

Not Applicable

(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 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the 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, Community Bank System, Inc. announced its results of operations for the quarter ended March 31, 2019. The public announcement was made by means of a news release, the text of which is set forth in Exhibit 99 hereto.

 

The information in this Form 8-K, including Exhibit 99 attached hereto, is being furnished under Item 2.02 and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 

Item 9.01 Financial Statements and Exhibits.

 

The following exhibit is filed as a part of this report:

 

Exhibit No.   Description
99   Press Release, dated April 22, 2019

 

Signatures

 

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.

 

Community Bank System, Inc.

 

Date: April 22, 2019   /s/ Mark E. Tryniski
    Mark E. Tryniski, President, Chief Executive Officer and Director
     
Date: April 22, 2019   /s/ Joseph E. Sutaris
    Joseph E. Sutaris, Executive Vice President and Chief Financial Officer

 

 

 

 

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Section 2: EX-99 (EXHIBIT 99)

 

Exhibit 99

 

 

News Release

For further information, please contact:

5790 Widewaters Parkway, DeWitt, N.Y. 13214

Joseph E. Sutaris, EVP & Chief Financial Officer

Office: (315) 445-7396

 

Community Bank System Reports

First Quarter 2019 Results

 

SYRACUSE, N.Y. — April 22, 2019 — Community Bank System, Inc. (NYSE: CBU) reported first quarter 2019 net income of $41.9 million, or $0.80 per fully diluted share. This compares to $40.1 million of net income, or $0.78 per share reported for the first quarter of 2018. The $0.02 increase in earnings per share was attributable to an increase in net interest income and decreases in the provision for loan losses and income taxes, offset in part by a decrease in bank noninterest revenues, higher operating expenses and an increase in fully-diluted shares outstanding. Comparatively, the Company recorded $0.78 in fully diluted earnings per share for the linked fourth quarter of 2018. Operating earnings per share, which excludes acquisition expenses and unrealized gain on equity securities, were $0.81 for the first quarter of 2019, a $0.03 improvement over the first quarter 2018 operating earnings per share.

 

First Quarter 2019 Performance Highlights:

 

vFirst quarter GAAP EPS of $0.80; up $0.02 over first quarter of 2018
vFirst quarter Operating EPS of $0.81; up $0.03 over the first quarter of 2018
vNet interest margin of 3.80% increased 9 basis points over first quarter of 2018
vDeposit funding costs of 0.20%
vReturn on assets of 1.59%
vReturn on tangible equity of 17.61%
vNoninterest revenues represent 39.1% of operating revenues
vAnnounced the acquisition of Kinderhook Bank Corp.

 

“Our improved first quarter 2019 operating results were driven by a combination of net interest income growth, increased financial services revenue and a continuation of excellent credit quality metrics, “said Mark E. Tryniski, President and Chief Executive Officer. “The strong performance of our core banking business worked to offset a $0.05 reduction in earnings per share related to the Durbin debit interchange price restrictions which became effective for the Company in the third quarter of 2018. Net interest income was up $2.2 million over the first quarter of 2018 and the net interest margin increased nine basis points to 3.80%, reflecting an increase in total loans and the favorable effect of certain loan pre-payment fees, which added four basis points to the net interest margin. Total deposits increased $297.3 million, or 3.6%, in the quarter primarily from significant increases to transaction and savings accounts. In January, we announced a definitive agreement to acquire Kinderhook Bank Corp., parent company of National Union Bank of Kinderhook. This transaction will extend our banking footprint into the attractive Capital District markets which are similar to the other Upstate New York markets in which we are a strong competitor. This investment also complements the financial commitment we made in 2018 when we added an experienced commercial banking team focused on the greater Albany area. We’re pleased with a first quarter performance that’s reflective of consistent and effective execution of our ongoing business strategy.”

 

Total revenues for the first quarter of 2019 were $142.6 million, an increase of $0.4 million, or 0.3%, over the prior year quarter. Net interest income increased $2.2 million, or 2.6%, to $86.9 million due to an improvement in the net interest margin, while noninterest revenues decreased $1.8 million, or 3.1%, between comparable quarters. A $3.0 million decrease in banking noninterest revenues, due primarily to the impact of Durbin-related debit interchange price restrictions, and a $0.3 million decrease in wealth management services revenues was offset, in part, by a $1.0 million, or 4.6% increase in employee benefit services revenues and a $0.5 million, or 6.8%, increase in the insurance services revenues. Noninterest revenues of $55.7 million comprised 39.1% of the Company’s total revenues during the first quarter of 2019, similar to 2018 full year results.

 

 

 

 

Interest income and fees on loans increased $4.3 million versus the comparable prior year quarter due to both an increase in average total loans outstanding and an increase in the yield on all categories of loans, reflective of higher market rates. The results for the quarter were favorably impacted by $1.0 million in one-time loan fees. Comparatively, the first quarter of 2018 was favorably impacted by $0.7 million in impaired loan accretion. A $0.4 million increase in interest income on cash equivalents between comparable annual quarters was partially offset by a $0.3 million decrease in interest income on the investment securities portfolio due primarily to a $65.4 million decrease in average outstanding balances on the Company’s non-taxable municipal investment securities portfolio. The average yield on cash equivalents increased from 1.54% in the first quarter of 2018 to 2.33% in the first quarter of 2019, reflective of increases in short-term market interest rates, and the average balance of cash equivalents increased $30.9 million. Interest expense was $2.0 million higher than the previous year’s first quarter, driven by an increase in the average cost of deposit liabilities. The average cost of deposits was 0.20% in the first quarter of 2019, as compared to 0.10% in the first quarter of 2018, reflective of market driven rate increases for deposits between the periods. By comparison, the average cost of deposits during the linked fourth quarter of 2018 was 0.16%.

 

The quarterly provision for loan losses of $2.4 million was $1.3 million lower than the first quarter of 2018 reflective of moderate improvements in the Company’s credit quality metrics. Non-performing loans decreased to 0.39% of total loans outstanding, as compared to 0.48% of total loans outstanding at the end of the first quarter of 2018 and 0.40% at the end of the linked fourth quarter. Similarly, delinquent loans to total loans outstanding decreased to 0.88% at the end of the first quarter of 2019. This compares to 1.01% at the end of the first quarter of 2018 and 1.00% at the end of the linked fourth quarter. Net-charge offs decreased $0.6 million from the first quarter of 2018, due largely to a decrease in net charge-offs in the business lending and consumer indirect loan portfolios.

 

Employee benefit services revenues for the first quarter of 2019 were $24.1 million. This represents a $1.0 million, or 4.6%, increase over first quarter 2018 revenues. The improvement in revenues was driven by growth in the Company’s collective investment fund administration and trust business, as well as growth in actuarial services revenues. The Company recorded $7.9 million in insurance services revenues during the first quarter of 2019, a $0.5 million, or 6.8%, increase over first quarter 2018 results, reflective of solid new business generation. Wealth management revenues for the first quarter of 2019 were $6.3 million. This compares to wealth management revenues of $6.7 million in the first quarter of 2018. Banking noninterest revenues decreased $3.0 million due to a net $3.1 million decrease in debit interchange fees and a $0.3 million decrease in other banking fees, including mortgage banking and deposit service fees, offset in part by a $0.4 million gain on life insurance.

 

Total operating expenses for the first quarter of 2019 were $88.7 million, representing a $2.3 million, or 2.7%, increase from the first quarter of 2018 due to an increase in salaries and employee benefits, data processing and communications, business development and marketing expenses, and acquisition expenses. These increases were offset by decreases in occupancy and equipment expense, amortization of intangible assets, legal and professional fees, office supplies and postage, FDIC insurance premiums and other expenses. Exclusive of $0.5 million of acquisition expenses, total operating expenses increased $1.8 million, or 2.1%, between the comparable quarterly periods.

 

The effective tax rate for the first quarter of 2019 was 18.5%, down from 23.0% in the first quarter of 2018. The Company had significantly higher levels of deductions related to stock based compensation activity in the first quarter of 2019, as compared to the first quarter of 2018. Exclusive of stock-based compensation tax benefits, the Company’s effective tax rate was 21.8% in the first quarter of 2019.

 

The Company also provides supplemental reporting of its results on an “operating,” “adjusted” or “tangible” basis, from which it excludes the after-tax effect of amortization of core deposit and other intangible assets (and the related goodwill, core deposit intangible and other intangible asset balances, net of applicable deferred tax amounts), accretion on non-impaired purchased loans, expenses associated with acquisitions, the unrealized gain (loss) on equity securities and loss on debt extinguishment. The amounts for such items are presented in the tables that accompany this release. Although these items are non-GAAP measures, the Company’s management believes this information helps investors understand the effect of acquisition and other non-recurring activity in its reported results. Diluted adjusted net earnings per share were $0.85 in the first quarter of 2019, compared to $0.82 in the first quarter of 2018, a 3.7% increase.

 

 

 

 

Financial Position

 

Average earning assets were up $67.0 million, or 0.7%, on a linked quarter basis, from $9.31 billion during the fourth quarter of 2018 to $9.37 billion during the first quarter of 2019. Average loan balances during the first quarter of 2019 were $6.27 billion, down $2.4 million from the fourth quarter of 2018. Average deposit balances were up $48.8 million, or 0.6%, from fourth quarter 2018 levels, due largely to an increase in public fund deposits as seasonally anticipated. Ending deposits were also up $297.3 million, or 3.6%, with growth in all categories of deposits, interest-bearing and noninterest-bearing checking, savings, money market and time deposits. Average borrowings, including customer repurchase agreements, in the first quarter of 2019 of $373.7 million, were down $15.7 million, or 4.0%, from the fourth quarter 2018 average of $389.4 million.

 

Ending loans at March 31, 2019 were $6.27 billion. This was down $15.0 million, or 0.2%, from the end of the fourth quarter of 2018, but up $39.1 million, or 0.6%, when compared to March 31, 2018. During the first quarter of 2019 and consistent with seasonal expectations, outstanding balances in the consumer indirect, consumer direct and home equity portfolios decreased $30.5 million. This was partially offset, by a $13.5 million increase in the business lending portfolio and a $2.0 million increase in consumer mortgage balances.

 

Investment securities totaled $2.97 billion at March 31, 2019, down $15.5 million, or 0.5%, from the end of the fourth quarter of 2018 and down $66.5 million, or 2.2% from March 31, 2018. The net unrealized gain in this portfolio was $7.9 million at March 31, 2019, as compared to a $16.0 million unrealized loss at December 31, 2018, a $23.9 million increase due to changes in market interest rates. These compare to a net unrealized loss of $17.9 million at March 31, 2018. The effective duration of the portfolio was 3.0 years at the end of the first quarter of 2019.

 

Shareholders’ equity of $1.76 billion at March 31, 2019 was $43.3 million, or 2.5%, higher than the fourth quarter of 2018 and $125.7 million, or 7.7%, higher than March 31, 2018. The Company’s net tangible equity to net tangible assets ratio was 9.83% at March 31, 2019, up from 8.42% a year earlier and 9.68% at the end of the fourth quarter of 2018. The Company’s Tier 1 leverage ratio was 11.27% at the end of the first quarter of 2019, up from 10.19% a year earlier. These results are primarily a result of strong earnings generation and capital retention over the last four quarters.

 

As previously announced in December 2018, the Company’s Board of Directors approved a stock repurchase program authorizing the repurchase of up to 2.5 million shares of the Company’s common stock during a twelve-month period starting January 1, 2019. Such repurchases may be made at the discretion of the Company’s senior management based on market conditions and other relevant factors and will be acquired through open market or privately negotiated transactions as permitted under Rule 10b-18 of the Securities Exchange Act of 1934 and other applicable legal requirements. There were no shares repurchased pursuant to the program in 2019.

 

Asset Quality

 

The Company’s asset quality metrics continue to illustrate the long-term effectiveness of the Company’s disciplined risk management and underwriting standards. Total net charge-offs were $2.6 million for the first quarter of 2019. This compares to $3.2 million in the first quarter of 2018. The decrease in net charge-offs between the periods was due primarily to decreases in net charge-offs in business lending and the consumer indirect portfolios. Net charge-offs as an annualized percentage of average loans measured 0.17% in the first quarter of 2019, as compared to 0.21% in the first quarter of 2018. Nonperforming loans as a percentage of total loans at the end of the first quarter of 2019 were 0.39%. This compares to 0.40% at the end of the linked fourth quarter of 2018 and 0.48% at March 31, 2018, decreases of one basis point and nine basis points, respectively. The total loan delinquency ratio of 0.88% at the end of the first quarter of 2019 was 12 basis points lower than the end of the fourth quarter of 2018 and 13 basis points lower than the level one year earlier. The first quarter 2019 provision for loan losses of $2.4 million was $1.3 million lower than the first quarter of 2018 and $0.1 million lower than the fourth quarter of 2018. The allowance for loan losses to nonperforming loans was 202% at March 31, 2019, compared with 197% at the end of the fourth quarter of 2018 and 162% a year earlier. The Company’s allowance for loan losses was $49.1 million, or 0.78%, of total loans outstanding at March 31, 2019, as compared to $48.1 million, or 0.77% of total loans outstanding at the end of the first quarter of 2018.

 

 

  

Dividend Increase

 

During the first quarter of 2019, the Company declared a quarterly cash dividend of $0.38 per share on its common stock, up 11.8% from the $0.34 dividend declared in the first quarter of 2018, representing an annualized yield of 2.4% based upon the $62.38 closing price of the Company’s stock on April 18, 2019. The four cent increase declared in the third quarter of 2018 marked the 26th consecutive year of dividend increases for the Company. “The improvement of our earnings and cash flow results continue to provide further strength to capital accumulation and dividend capacity,” said Mr. Tryniski.

 

Kinderhook Bank Corp.

 

On January 22, 2019, the Company announced that it entered into a definitive agreement with Kinderhook Bank Corp., parent company of National Union Bank of Kinderhook, pursuant to which the Company will acquire Kinderhook Bank Corp. in an all cash transaction representing total consideration valued at approximately $93.4 million (the “Merger”). The Merger will extend the Company’s footprint into the Capital District of Upstate New York. Upon completion, Community Bank, N.A., the Company’s banking subsidiary, will add 11 branch locations across a five county area with approximately $630 million in assets, and deposits of $550 million. The Company has received the regulatory approvals necessary to complete the Merger, including approval from the Office of the Comptroller of the Currency and a waiver from filing an application with the Federal Reserve Bank of New York. At the present time, the Company expects the Merger to close early in the third quarter of 2019, subject to customary closing conditions, including approval by the shareholders of Kinderhook Bank Corp.

 

Conference Call Scheduled

 

Company management will conduct an investor call at 11:00 a.m. (ET) today, April 22, 2019, to discuss first quarter 2019 results. The conference call can be accessed at 866-337-5532 (786-460-7176 if outside United States and Canada) using the conference ID code 8798966. Investors may also listen live via the Internet at: https://www.webcaster4.com/Webcast/Page/995/29905.

 

This earnings release, including supporting financial tables, is available within the press releases section of the Company's investor relations website at: http://ir.communitybanksystem.com. An archived webcast of the earnings call will be available on this site for one full year.

 

About Us

 

Community Bank System, Inc. operates more than 230 customer facilities across Upstate New York, Northeastern Pennsylvania, Vermont, and Western Massachusetts through its banking subsidiary, Community Bank, N.A. With assets of over $10.9 billion, the DeWitt, N.Y. headquartered company is among the country’s 150 largest financial institutions. In addition to a full range of retail, business, and municipal banking services, the Company offers comprehensive financial planning, insurance and wealth management services through its’ Community Bank Wealth Management Group and OneGroup NY, Inc. operating units. The Company's Benefit Plans Administrative Services, Inc. subsidiary is a leading provider of employee benefits administration, trust services, collective investment fund administration and actuarial consulting services to customers on a national scale. Community Bank System, Inc. is listed on the New York Stock Exchange and the Company's stock trades under the symbol CBU. For more information about Community Bank visit www.communitybankna.com or http://ir.communitybanksystem.com.

 

# # #

 

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The following factors, among others, could cause the actual results of CBU’s operations to differ materially from CBU’s expectations: the successful integration of operations of its acquisitions; competition; changes in economic conditions, interest rates and financial markets; changes in legislation or regulatory requirements; and the timing for receiving regulatory approvals and completing pending transactions. These statements are based on the current beliefs and expectations of CBU’s management and CBU does not assume any duty to update forward-looking statements.

 

 

 

  

Summary of Financial Data          
(Dollars in thousands, except per share data)          
           
  2019

2018

  1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
Earnings          
Loan income $73,703 $73,316 $72,256 $71,152 $69,441
Investment income 18,978 19,105 18,647 19,853 18,963
Total interest income 92,681 92,421 90,903 91,005 88,404
Interest expense 5,822 5,034 4,705 4,159 3,780
Net interest income 86,859 87,387 86,198 86,846 84,624
Provision for loan losses 2,422 2,495 2,215 2,448 3,679
Net interest income after provision for loan losses 84,437 84,892 83,983 84,398 80,945
Deposit service fees 15,864 16,116 16,127 18,964 19,177
Revenues from mortgage banking and other banking services 1,536 1,026 1,536 1,163 1,243
Wealth management and insurance services 14,211 13,675 14,438 13,911 14,065
Employee benefit services 24,054 23,466 23,265 22,542 23,006
Unrealized gain(loss) on equity securities 31  (65) 743 (21) 0
Loss on debt extinguishment 0 0 (318) 0 0
Total noninterest revenues 55,696 54,218 55,791 56,559 57,491
Salaries and employee benefits 53,379 52,040 51,062 52,402 51,859
Occupancy and equipment 10,288 10,210 9,770 9,437 10,531
Amortization of intangible assets 4,130 4,375 4,427 4,555 4,798
Acquisition expenses 534 0  (832) 71  (8)
Other 20,321 20,988 20,806 19,647 19,151
Total operating expenses 88,652 87,613 85,233 86,112 86,331
Income before income taxes 51,481 51,497 54,541 54,845 52,105
Income taxes 9,535 10,674 11,435 10,239 11,999
Net income $41,946 $40,823 $43,106 $44,606 $40,106
Basic earnings per share $0.81 $0.79 $0.84 $0.87 $0.78
Diluted earnings per share $0.80 $0.78 $0.83 $0.86 $0.78
Profitability          
Return on assets 1.59% 1.53% 1.61% 1.66% 1.52%
Return on equity 9.85% 9.63% 10.28% 10.91% 10.00%
Return on tangible equity(2) 17.61% 17.61% 19.06% 20.58% 19.11%
Noninterest revenues/operating revenues (FTE) (1) 39.1% 38.5% 39.4% 39.7% 40.7%
Efficiency ratio 59.1% 59.1% 58.0% 57.2% 57.8%
Components of Net Interest Margin (FTE)          
Loan yield 4.78% 4.65% 4.57% 4.58% 4.53%
Cash equivalents yield 2.33% 1.85% 1.60% 1.73% 1.54%
Investment yield 2.59% 2.62% 2.55% 2.65% 2.60%
Earning asset yield 4.05% 3.99% 3.91% 3.91% 3.87%
Interest-bearing deposit rate 0.27% 0.22% 0.18% 0.15% 0.14%
Borrowing rate 1.86% 1.68% 1.96% 1.80% 1.48%
Cost of all interest-bearing funds 0.36% 0.31% 0.29% 0.25% 0.23%
Cost of funds (includes DDA) 0.27% 0.23% 0.21% 0.19% 0.17%
Net interest margin (FTE) 3.80% 3.77% 3.71% 3.73% 3.71%
Fully tax-equivalent adjustment $1,008 $1,062 $1,071 $1,094 $1,118

 

 

 

 

Summary of Financial Data

(Dollars in thousands, except per share data)

 

  2019 2018
  1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
Average Balances          
Loans $6,273,798 $6,276,231 $6,289,868 $6,250,739 $6,237,824
Cash equivalents 121,304 28,817 26,832 170,745 90,406
Taxable investment securities 2,574,902 2,577,366 2,574,116 2,575,962 2,583,446
Nontaxable investment securities 403,359 423,902 441,719 457,254 468,773
Total interest-earning assets 9,373,363 9,306,316 9,332,535 9,454,700 9,380,449
Total assets 10,687,708 10,575,272 10,619,872 10,752,203 10,715,529
Interest-bearing deposits 6,107,732 6,039,390 6,077,581 6,282,098 6,219,052
Borrowings 373,656 389,378 393,483 397,101 453,114
Total interest-bearing liabilities 6,481,388 6,428,768 6,471,064 6,679,199 6,672,166
Noninterest-bearing deposits 2,297,472 2,317,042 2,336,778 2,287,722 2,268,778
Shareholders' equity 1,726,313 1,682,525 1,664,234 1,640,076 1,625,951
Balance Sheet Data          
Cash and cash equivalents $508,364 $211,834 $256,838 $250,154 $543,899
Investment securities 2,966,147 2,981,658 2,948,057 2,983,352 3,032,642
Loans:          
Business lending 2,410,477 2,396,977 2,403,624 2,384,629 2,426,086
Consumer mortgage 2,237,430 2,235,408 2,220,022 2,210,051 2,211,882
Consumer indirect 1,070,840 1,083,207 1,098,943 1,063,679 1,008,198
Home equity 374,297 386,709 393,950 398,433 407,832
Consumer direct 173,042 178,820 184,349 181,217 173,032
Total loans 6,266,086 6,281,121 6,300,888 6,238,009 6,227,030
Allowance for loan losses 49,107 49,284 50,133 49,618 48,103
Intangible assets, net 804,419 807,349 811,700 816,127 820,584
Other assets 420,558 374,617 392,217 395,070 390,503
Total assets 10,916,467 10,607,295 10,659,567 10,633,094 10,966,555
Deposits:          
Noninterest-bearing 2,346,635 2,312,816 2,346,932 2,332,745 2,372,824
Non-maturity interest-bearing 5,517,141 5,270,015 5,366,488 5,439,101 5,642,109
Time 755,886 739,540 750,401 742,147 756,159
Total deposits 8,619,662 8,322,371 8,463,821 8,513,993 8,771,092
Borrowings 251,833 315,743 276,559 183,785 281,744
Subordinated debt held by unconsolidated subsidiary trusts 97,939 97,939 97,939 122,826 122,820
Accrued interest and other liabilities 189,905 157,459 152,903 155,531 159,433
Total liabilities 9,159,339 8,893,512 8,991,222 8,976,135 9,335,089
Shareholders' equity 1,757,128 1,713,783 1,668,345 1,656,959 1,631,466
Total liabilities and shareholders' equity 10,916,467 10,607,295 10,659,567 10,633,094 10,966,555
Capital          
Tier 1 leverage ratio 11.27% 11.08% 10.72% 10.53% 10.19%
Tangible equity/net tangible assets (2) 9.83% 9.68% 9.13% 9.00% 8.42%
Diluted weighted average common shares O/S 52,195 52,122 52,086 51,939 51,677
Period end common shares outstanding 51,471 51,258 51,137 51,086 50,884
Cash dividends declared per common share $0.38 $0.38 $0.38 $0.34 $0.34
Book value $34.14 $33.43 $32.63 $32.43 $32.06
Tangible book value(2) $19.40 $18.59 $17.67 $17.39 $16.88
Common stock price (end of period) $59.77 $58.30 $61.07 $59.07 $53.56

  

 

 

  

Summary of Financial Data          
(Dollars in thousands, except per share data)          
           
  2019 2018
  1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
Asset Quality          
Nonaccrual loans $21,252 $22,544 $21,982 $22,807 $23,239
Accruing loans 90+ days delinquent 3,019 2,455 2,951 6,532 6,425
Total nonperforming loans 24,271 24,999 24,933 29,339 29,664
Other real estate owned (OREO) 1,524 1,320 1,142 1,310 1,865
Total nonperforming assets 25,795 26,319 26,075 30,649 31,529
Net charge-offs 2,599 3,345 1,700 933 3,159
Allowance for loan losses/loans outstanding 0.78% 0.78% 0.80% 0.80% 0.77%
Nonperforming loans/loans outstanding 0.39% 0.40% 0.40% 0.47% 0.48%
Allowance for loan losses/nonperforming loans 202% 197% 201% 169% 162%
Net charge-offs/average loans 0.17% 0.21% 0.11% 0.06% 0.21%
Delinquent loans/ending loans 0.88% 1.00% 0.93% 0.89% 1.01%
Loan loss provision/net charge-offs 93% 75% 130% 262% 116%
Nonperforming assets/total assets 0.24% 0.25% 0.24% 0.29% 0.29%
Asset Quality (excluding loans acquired since 1/1/09)          
Nonaccrual loans $15,524 $16,182 $14,684 $14,644 $15,161
Accruing loans 90+ days delinquent 2,594 2,106 2,688 6,243 5,894
Total nonperforming loans 18,118 18,288 17,372 20,887 21,055
Other real estate owned (OREO) 898 669 859 1,025 1,336
Total nonperforming assets 19,016 18,957 18,231 21,912 22,391
Net charge-offs 1,516 3,053 1,533 552 1,800
Allowance for loan losses/loans outstanding 0.94% 0.93% 0.96% 0.98% 0.97%
Nonperforming loans/loans outstanding 0.36% 0.36% 0.35% 0.43% 0.45%
Allowance for loan losses/nonperforming loans 262% 256% 274% 225% 216%
Net charge-offs/average loans 0.12% 0.24% 0.12% 0.05% 0.16%
Delinquent loans/ending loans 0.89% 1.06% 0.97% 0.91% 1.01%
Loan loss provision/net charge-offs 142% 76% 138% 364% 122%
Nonperforming assets/total assets 0.20% 0.20% 0.20% 0.24% 0.24%

 

 

 

  

Summary of Financial Data

(Dollars in thousands, except per share data)

 

  2019 2018
  1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
Quarterly GAAP to Non-GAAP Reconciliations          
Income statement data          
Net income          
Net income (GAAP) $41,946 $40,823 $43,106  $44,606  $40,106
Acquisition expenses 534 0  (832) 71 (8)
Tax effect of acquisition expenses (99) 0 174 (13) 2
Subtotal (non-GAAP) 42,381 40,823 42,448 44,664 40,100
Unrealized (gain)loss on equity securities (31) 65  (743) 21 0
Tax effect of unrealized (gain)loss on equity securities 6  (13) 156  (4) 0
Subtotal (non-GAAP) 42,356 40,875 41,861 44,681 40,100
Loss on debt extinguishment 0 0 318 0 0
Tax effect of loss on debt extinguishment 0 0  (67) 0 0
Operating net income (non-GAAP) 42,356 40,875 42,112 44,681 40,100
Amortization of intangibles 4,130 4,375 4,427 4,555 4,798
Tax effect of amortization of intangibles  (765)  (907)  (928)  (850)  (1,105)
Subtotal (non-GAAP) 45,721 44,343 45,611 48,386 43,793
Acquired non-impaired loan accretion  (1,330)  (1,838)  (1,980)  (2,040)  (2,063)
Tax effect of acquired non-impaired loan accretion 246 381 415 381 475
Adjusted net income (non-GAAP) $44,637 $42,886 $44,046 $46,727 $42,205
           
Return on average assets          
Adjusted net income (non-GAAP) $44,637 $42,886 $44,046  $46,727  $42,205
Average total assets 10,687,708 10,575,272 10,619,872 10,752,203 10,715,529
Adjusted return on average assets 1.69% 1.61% 1.65% 1.74% 1.60%
           
Return on average equity          
Adjusted net income (non-GAAP) $44,637 $42,886 $44,046  $46,727  $42,205
Average total equity 1,726,313 1,682,525 1,664,234 1,640,076 1,625,951
Adjusted return on average equity 10.49% 10.11% 10.50% 11.43% 10.53%
           
Earnings per common share          
Diluted earnings per share (GAAP) $0.80 $0.78 $0.83 $0.86  $0.78
Acquisition expenses 0.01 0.00 (0.02)  0.00  0.00
Tax effect of acquisition expenses 0.00 0.00 0.00  0.00  0.00
Subtotal (non-GAAP) 0.81 0.78 0.81 0.86 0.78
Unrealized (gain)loss on equity securities 0.00 0.00 (0.01) 0.00 0.00
Tax effect of unrealized (gain)loss on equity securities 0.00 0.00 0.00 0.00 0.00
Subtotal (non-GAAP) 0.81 0.78 0.80 0.86 0.78
Loss on debt extinguishment 0.00 0.00 0.01 0.00 0.00
Tax effect of loss on debt extinguishment 0.00 0.00 0.00 0.00 0.00
Operating diluted earnings per share (non-GAAP) 0.81 0.78 0.81 0.86 0.78
Amortization of intangibles 0.08 0.08 0.08 0.09 0.09
Tax effect of amortization of intangibles (0.01) (0.02) (0.02) (0.02) (0.02)
Subtotal (non-GAAP) 0.88 0.84 0.87 0.93 0.85
Acquired non-impaired loan accretion (0.03) (0.04) (0.04) (0.04) (0.04)
Tax effect of acquired non-impaired loan accretion 0.00 0.01 0.01 0.01 0.01
Diluted adjusted net earnings per share (non-GAAP) $0.85 $0.81 $0.84 $0.90 $0.82
           

 

 

 

  

Summary of Financial Data

(Dollars in thousands, except per share data)

 

  2019 2018
  1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
Quarterly GAAP to Non-GAAP Reconciliations          
Income statement data (continued)          
Noninterest operating expenses          
Noninterest expenses (GAAP) $88,652 $87,613 $85,233 $86,112  $86,331
Amortization of intangibles  (4,130)  (4,375)  (4,427) (4,555)  (4,798)
Acquisition expenses (534) 0 832 (71)  8
Total adjusted noninterest expenses (non-GAAP) $83,988 $83,238 $81,638 $81,486 $81,541
           
Efficiency ratio          
Adjusted noninterest expenses (non-GAAP) - numerator $83,988 $83,238 $81,638 $81,486  $81,541
Tax-equivalent net interest income 87,867 88,449 87,269 87,940 85,742
Noninterest revenues 55,696 54,218 55,791 56,559  57,491
Acquired non-impaired loan accretion  (1,330)  (1,838)  (1,980) (2,040) (2,063)
Unrealized (gain)loss on equity securities (31) 65  (743) 21 0
Loss on debt extinguishment 0 0 318 0 0
Operating revenues (non-GAAP) - denominator 142,202 140,894 140,655 142,480  141,170
Efficiency ratio (non-GAAP) 59.1% 59.1% 58.0% 57.2% 57.8%
           
Balance sheet data          
Total assets          
Total assets (GAAP) $10,916,467 $10,607,295 $10,659,567 $10,633,094 $10,966,555
Intangible assets  (804,419)  (807,349)  (811,700)  (816,127)  (820,584)
Deferred taxes on intangible assets 45,994 46,370 46,882  47,334  47,904
Total tangible assets (non-GAAP) 10,158,042 9,846,316 9,894,749 9,864,301 10,193,875
           
Total common equity          
Shareholders' Equity (GAAP) 1,757,128 1,713,783 1,668,345 1,656,959  1,631,466
Intangible assets  (804,419)  (807,349)  (811,700)  (816,127)  (820,584)
Deferred taxes on intangible assets 45,994 46,370 46,882  47,334 47,904
Total tangible common equity (non-GAAP) 998,703 952,804 903,527 888,166 858,786
           
Net tangible equity-to-assets ratio at quarter end          
Total tangible common equity (non-GAAP) - numerator $998,703 $952,804 $903,527  $888,166  $858,786
Total tangible assets (non-GAAP) - denominator 10,158,042 9,846,316 9,894,749  9,864,301  10,193,875
Net tangible equity-to-assets ratio at quarter end (non-GAAP) 9.83% 9.68% 9.13% 9.00% 8.42%
           

 

(1) Excludes unrealized gains and losses on equity securities and loss on debt extinguishment.

 

(2) Includes deferred tax liabilities related to certain intangible assets.

 

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