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Section 1: 8-K (FB FINANCIAL CORPORATION 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): July 22, 2019


                                                      
FB FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)

  
Tennessee
 
001-37875
 
62-1216058
(State or other jurisdiction
of incorporation)
 
(Commission File Number)
 
(IRS Employer
Identification Number)
         
211 Commerce Street, Suite 300
Nashville, Tennessee
 
 
 
 
37201
(Address of principal executive offices)
 
 
 
(Zip Code)
 
(615) 564-1212
(Registrant’s telephone number, including area code)

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 (see General Instruction A.2. below):
 
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))

Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $1.00 par value
FBK
New York Stock Exchange

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 July 22, 2019, FB Financial Corporation (the “Company”) issued a press release announcing its financial results for the second quarter ended June 30, 2019 (the “Earnings Release”).  In addition, the Company made available on its website (investors.firstbankonline.com) supplemental financial information for the second quarter ended June 30, 2019 (the “Supplemental Financial Information”) and an earnings release presentation (the “Earnings Presentation”) for use in connection with the Earnings Release.  Copies of the Earnings Release, the Supplemental Financial Information and the Earnings Presentation are furnished as Exhibit 99.1, Exhibit 99.2 and Exhibit 99.3, respectively, to this current report on Form 8-K (this “Report”).

The information contained in this Report, including Exhibit 99.1, Exhibit 99.2 and  Exhibit 99.3 furnished herewith, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that section, nor shall it be deemed incorporated by reference into any registration statement or other documents pursuant to the Securities Act of 1933, as amended, or into any filing or other document pursuant to the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 7.01. Regulation FD Disclosure.

The disclosure contained in Item 2.02 of this Report is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

Exhibit Number                                        Description of Exhibit


99.1

99.2

99.3



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.

 
FB FINANCIAL CORPORATION
 
       
 
 
 
 
 
By:
/s/ James R. Gordon
 
 
 
James R. Gordon
 
 
 
Chief Financial Officer

Date: July 22, 2019
(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit 99.1

FB Financial Corporation Reports Strong 2019 Second Quarter Results

Reported diluted EPS of $0.59 with ROAA of 1.30% and ROATCE of 14.4%

Adjusted diluted EPS of $0.70 with ROAA of 1.54% and ROATCE of 17.0%

NASHVILLE, Tenn.--(BUSINESS WIRE)--July 22, 2019--FB Financial Corporation (the “Company”) (NYSE: FBK), parent company of FirstBank, reported net income of $18.7 million, or $0.59 per diluted common share, for the second quarter of 2019, compared to net income of $22.1 million, or $0.70 per diluted common share, for the second quarter of 2018. On an adjusted basis, excluding merger and mortgage restructuring expenses, net income per diluted common share was $0.70 for the second quarter of 2019 compared to $0.66 for the first quarter of 2019 and $0.72, excluding secondary offering expenses, for the second quarter of 2018.

President and Chief Executive Officer, Christopher T. Holmes stated, “Our team continues building on our momentum by delivering outstanding service to our clients and seizing the opportunities available to us. To that end, we welcomed our new associates and customers from Atlantic Capital Bank in East Tennessee and North Georgia following a successful integration. We are pleased with every aspect of that addition to FirstBank.”

Holmes further commented, “In addition to the acquisition results, during the second quarter we remained focused on organic growth and profitability. Our organic loan growth was 13.5% during the quarter with a net interest margin of 4.39% while we kept deposit costs flat. Additionally, we delivered an adjusted ROAA 1.54% and adjusted ROATCE of 17.0%.”

On April 5, 2019, FirstBank completed the acquisition of 14 branches from Atlantic Capital Bank, N.A. The acquisition of the branches added $588.9 million in customer deposits and $375.0 million in net loans to the Company's balance sheet. The results of the acquired branches have been included after April 5, 2019. Additionally, on June 7, 2019, the Company completed the sale of its third party origination mortgage delivery channel and expects to complete the sale of its correspondent mortgage lending channel in August.

Performance Summary









 

 

 

2019

 

2018

 

Annualized

 

 

(dollars in thousands, expect per share data)

 

Second Quarter

 

First Quarter

 

Second Quarter

 

2Q19 / 1Q19
% Change

 

2Q19 / 2Q18
% Change

Balance Sheet Highlights

 

 

 

 

 

 

 

 

 

 

Investment securities

 

$

678,457

 

 

$

670,835

 

 

$

611,435

 

 

4.6

%

 

11.0

%

Loans - held for sale

 

294,699

 

 

248,054

 

 

374,916

 

 

75.4

%

 

(21.4

)%

Loans - held for investment (HFI)

 

4,289,516

 

 

3,786,791

 

 

3,415,575

 

 

53.2

%

 

25.6

%

Allowance for loan losses

 

30,138

 

 

29,814

 

 

26,347

 

 

4.4

%

 

14.4

%

Total assets

 

5,940,402

 

 

5,335,156

 

 

4,923,249

 

 

45.5

%

 

20.7

%

Customer deposits

 

4,812,962

 

 

4,242,349

 

 

3,844,009

 

 

53.9

%

 

25.2

%

Brokered and internet time deposits

 

29,864

 

 

60,842

 

 

65,854

 

 

(204.2

)%

 

(54.7

)%

Total deposits

 

4,842,826

 

 

4,303,191

 

 

3,909,863

 

 

50.3

%

 

23.9

%

Borrowings

 

257,299

 

 

229,178

 

 

342,893

 

 

49.2

%

 

(25.0

)%

Total shareholders' equity

 

718,759

 

 

694,577

 

 

630,959

 

 

14.0

%

 

13.9

%

Tangible book value per share*

 

$

17.18

 

 

$

17.73

 

 

$

15.66

 

 

 

 

 

Tangible common equity to tangible assets*

 

9.2

%

 

10.5

%

 

10.1

%

 

 

 

 

* Certain measures are considered non-GAAP financial measures. See “Use of non-GAAP Financial Measures” and the corresponding non-GAAP reconciliation tables in the Supplemental Financial Information, which accompanies this Earnings Release, as well as “Use of non-GAAP Financial Measures” and the Appendix in the Earnings Release Presentation issued July 22, 2019 for a reconciliation and discussion of this non-GAAP measure.






 

 

2019

 

2018

(dollars in thousands, except share data)

 

Second Quarter

 

First Quarter

 

Second Quarter

Results of operations

 

 

 

 

 

 

Net interest income

 

$

57,023

 

 

$

53,016

 

 

$

51,517

 

NIM

 

4.39

%

 

4.61

%

 

4.81

%

Provision for loan losses

 

$

881

 

 

$

1,391

 

 

$

1,063

 

Net charge-off (recovery) ratio

 

0.05

%

 

0.06

%

 

(0.11

)%

Noninterest income

 

$

32,979

 

 

$

29,039

 

 

$

35,763

 

Mortgage banking income

 

$

24,526

 

 

$

21,021

 

 

$

28,544

 

Total revenue

 

$

90,002

 

 

$

82,055

 

 

$

87,280

 

Noninterest expenses

 

$

64,119

 

 

$

55,101

 

 

$

56,358

 

Merger and mortgage restructuring expenses

 

$

4,612

 

 

$

1,675

 

 

$

 

Efficiency ratio

 

71.2

%

 

67.2

%

 

64.6

%

Core efficiency ratio*

 

65.9

%

 

64.9

%

 

63.4

%

Banking segment core efficiency ratio*

 

58.5

%

 

54.7

%

 

54.4

%

Pre-tax income

 

$

25,002

 

 

$

25,563

 

 

$

29,859

 

Total mortgage banking pre-tax contribution, adjusted*

 

$

2,563

 

 

$

727

 

 

$

3,161

 

Net income

 

$

18,688

 

 

$

19,588

 

 

$

22,065

 

Diluted earnings per share

 

$

0.59

 

 

$

0.62

 

 

$

0.70

 

Effective tax rate

 

25.3

%

 

23.4

%

 

26.1

%

Net income, adjusted*

 

$

22,098

 

 

$

20,826

 

 

$

22,736

 

Diluted earnings per share, adjusted*

 

$

0.70

 

 

$

0.66

 

 

$

0.72

 

Weighted average number of shares outstanding- fully diluted

 

31,378,018

 

 

31,349,198

 

31,294,044

 

Actual shares outstanding - period end

 

30,865,636

 

 

30,852,665

 

30,683,353

 

Returns on average:

 

 

 

 

 

 

Assets ("ROAA")

 

1.30

%

 

1.54

%

 

1.86

%

Adjusted*

 

1.54

%

 

1.63

%

 

1.91

%

Equity ("ROAE")

 

10.6

%

 

11.6

%

 

14.4

%

Tangible common equity ("ROATCE")*

 

14.4

%

 

14.8

%

 

19.0

%

Adjusted*

 

17.0

%

 

15.7

%

 

19.6

%

* Certain measures are considered non-GAAP financial measures. See "Use of non-GAAP Financial Measures" and the corresponding non-GAAP reconciliation tables in the Supplemental Financial Information, which accompanies this Earnings Release, as well as "Use of non-GAAP Financial Measures" and the Appendix in the Earnings Release Presentation issued July 22, 2019 for a reconciliation and discussion of this non-GAAP measure.

Strong Growth Delivers Expected NIM

The Company grew loans (HFI) by $502.7 million during the second quarter of 2019, including $375.0 million from the branch acquisition, or 13.5% annualized on an organic basis. As expected, contractual loan yields decreased from 5.69% in the first quarter to 5.57% in the second quarter, primarily related to the acquired loans from the branch acquisition.

During the second quarter of 2019, the Company grew customer deposits by $570.6 million, including $588.9 million from the branch acquisition. Overall, deposits, excluding the acquired deposits, decreased slightly as the Company deployed approximately $171.0 million of excess liquidity from the branch acquisition to fund loan growth for the quarter. The Company maintained its cost of deposits level at 114 basis points from the first quarter of 2019. Loans (HFI) to deposits slightly increased from 88.0% last quarter to 88.6% this quarter.

The Company’s net interest margin (“NIM”) was 4.39% for the second quarter of 2019, compared to 4.61% and 4.81% for the first quarter of 2019 and the second quarter of 2018, respectively. Accretion related to purchased loans and nonaccrual interest contributed 17 basis points to the NIM in the second quarter of 2019 compared to 17 and 20 basis points for the first quarter of 2019 and the second quarter of 2018, respectively. The NIM, adjusted for accretion and nonaccrual interest of 4.22% was the mid-point of the range previously disclosed by management.

Noninterest Income Improves with Mortgage Results

Noninterest income was $33.0 million for the second quarter of 2019, compared to $29.0 million for the first quarter of 2019 and $35.8 million for the second quarter of 2018. Mortgage banking income was $24.5 million for the second quarter of 2019, compared to $21.0 million for the first quarter of 2019 and $28.5 million for the second quarter of 2018. Interest rate lock commitment volume totaled $1.82 billion in the second quarter of 2019 compared to $1.36 billion in the first quarter of 2019 and $1.98 billion in the second quarter of 2018, benefiting from the lower rate environment for most of the quarter.


During the second quarter of 2019, the Company’s total mortgage direct contribution was $2.6 million, excluding mortgage restructuring expenses of $0.8 million, compared to the $0.7 million contribution, excluding mortgage restructuring expense of $1.1 million in the first quarter of 2019. As expected, the lower interest rate environment increased production and margins in retail and Consumer Direct delivery channels, increasing mortgage banking income by $6.1 million in the second quarter of 2019 compared with the previous quarter. Partially offsetting this increase was a $2.6 million decline in mortgage servicing income, included in mortgage banking revenues, due to the sale of $29.2 million of MSRs in the first quarter of 2019 and a $1.5 million net change in the fair value of the MSRs related to prepayments.

Holmes commented, “With the exit of the TPO and correspondent origination channels, we are focusing our efforts and resources on the retail and Consumer Direct origination channels. These origination channels are well aligned with our strategic plan and provide more reliable financial results over time.”

Noninterest Expenses Remain Under Control

Noninterest expense was $64.1 million for the second quarter of 2019, compared to $55.1 million for the first quarter of 2019 and $56.4 million for the second quarter of 2018. Adjusted for merger and mortgage restructuring expenses, noninterest expense was $59.5 million for the second quarter of 2019 and $53.4 million for the first quarter of 2019. The increase from the first quarter was primarily driven by expected operating expenses from the branch acquisition and higher mortgage production.

Gordon stated, “Noninterest expenses remained under control in our banking business while increased mortgage sales volume led to an increase in mortgage noninterest expenses. Our core efficiency ratio was 65.9%, reflecting realized cost savings from the branch acquisition, ongoing expense management and continuing investments in our people, technology and operations.”

Asset Quality Remains Strong

During the second quarter of 2019, the Company recognized a provision for loan losses of $0.9 million, reflecting loan growth, renewals of previously acquired loans, stable credit metrics and net charge-offs of 0.05% of average loans. The Company's nonperforming assets at June 30, 2019, were 0.59% of total assets compared to 0.57% at March 31, 2019. Nonperforming loans were 0.43% of loans held for investment at June 30, 2019, compared to 0.41% at March 31, 2019.

Capital Positioned for Growth

“Our earnings continue to drive strong capital levels capable of sustaining our growth. With our tangible common equity at 9.2%, our capital levels easily accommodate our quarterly cash dividend of eight cents per share. The deployment of excess capital through the completed branch acquisition and continual profitability improved our adjusted return on average tangible equity to 17.0% this quarter from 15.7% last quarter,” commented Gordon.

Summary

“Overall, our Company continues to produce strong financial results by delivering solid organic growth and profitability while being opportunistic on the acquisition front. We remain committed to helping our customers and associates achieve their goals while providing shareholders outstanding returns,” Holmes concluded.

WEBCAST AND CONFERENCE CALL INFORMATION

The live broadcast of FB Financial Corporation’s earnings conference call will begin at 8:00 a.m. CT on Tuesday, July 23, 2019, and the conference call will be broadcast live over the Internet at https://www.webcaster4.com/Webcast/Page/1631/31026. An online replay will be available approximately an hour following the conclusion of the live broadcast.

ABOUT FB FINANCIAL CORPORATION

FB Financial Corporation (NYSE: FBK) is a bank holding company headquartered in Nashville, Tennessee. FB Financial operates through its wholly owned banking subsidiary, FirstBank, the third largest Tennessee-headquartered community bank, with 65 full-service bank branches across Tennessee, North Alabama and North Georgia, and mortgage offices across the Southeast. FirstBank serves five of the largest metropolitan markets in Tennessee and has approximately $5.9 billion in total assets.


SUPPLEMENTAL FINANCIAL INFORMATION AND EARNINGS PRESENTATION

Investors are encouraged to review this Earnings Release in conjunction with the Supplemental Financial Information and Earnings Presentation posted on the Company’s website, which can be found at https://investors.firstbankonline.com. This Earnings Release, the Supplemental Financial Information and the Earnings Presentation are also included with a Current Report on Form 8-K that the Company furnished to the U.S. Securities and Exchange Commission (“SEC”) on July 22, 2019.

BUSINESS SEGMENT RESULTS

The Company has included its business segment financial tables as part of this Earnings Release. A detailed discussion of our business segments is included in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2018, and investors are encouraged to review that discussion in conjunction with this Earnings Release.

FORWARD-LOOKING STATEMENTS

This earnings release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that have been made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements in some cases through the use of words such as “believes,” “anticipates,” “expects,” “may,” “will,” “assumes,” “should,” “predicts,” “could,” “would,” “intends,” “targets,” “estimates,” “projects,” “plans,” “potential” and other similar words and expressions regarding the outlook for our future business and financial performance.

These forward-looking statements include, without limitation, statements relating to FB Financial’s assets, business, cash flows, condition (financial or otherwise), credit quality, financial performance, liquidity, short and long-term performance goals, prospects, results of operations, strategic initiatives, and the timing, benefits, as well as statements relating to the anticipated benefits and financial impact of FB Financial’s mortgage segment restructuring and the acquisition by FirstBank of the Atlantic Capital branches, including: acceptance by the customers of the acquired Atlantic Capital branches of FB Financial’s products and services, the opportunities to enhance market share in certain markets, market acceptance of FB Financial generally in new markets, expectations regarding future investment in the acquired Atlantic Capital branches’ markets and the integration of the acquired Atlantic Capital branches’ operations, disposition, and other growth opportunities. Forward-looking statements are based on the information known to, and current beliefs and expectations of, FB Financial’s management and are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by such forward-looking statements. A number of important factors could cause actual results to differ materially from those contemplated by the forward-looking statements in this release including, without limitation: FB Financial's ability to achieve the anticipated benefits and cost synergies of the mortgage segment restructuring; the possibility that any of the anticipated benefits of the Atlantic Capital acquisition will not be fully realized or will not be realized within the expected time period; the risk that integration of the acquired Atlantic Capital branches’ operations with those of FB Financial or will be more costly than expected; the effect of the announcement of the closing of the Atlantic Capital acquisition on employee and customer relationships and operating results (including, without limitation, difficulties in maintaining relationships with employees and customers); general competitive, economic, political and market conditions and fluctuations; and the other risk factors set forth in our December 31, 2018 Form 10-K, filed with the Securities and Exchange Commission on March 12, 2019, under the captions “Cautionary note regarding forward-looking statements” and “Risk factors”. Many of these factors are difficult to foresee and are beyond our ability to control or predict. We believe the forward-looking statements contained herein are reasonable; however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations and speak only as of the date that they are made. We do not assume any obligation to update any forward-looking statements as a result of new information, future developments or otherwise, except as otherwise may be required by law.


GAAP RECONCILIATION AND USE OF NON-GAAP FINANCIAL MEASURES

This Earnings Release contains certain financial measures that are not measures recognized under U.S. generally accepted accounting principles (“GAAP”) and therefore are considered non-GAAP financial measures. These non-GAAP financial measures include, without limitation, adjusted net income, adjusted diluted earnings per share, core revenue, core noninterest expense and core noninterest income, core efficiency ratio (tax equivalent basis), Banking segment core efficiency ratio (tax equivalent basis), Mortgage segment core efficiency ratio (tax equivalent basis), adjusted mortgage contribution, adjusted return on average assets and equity and core total revenue. Each of these non-GAAP metrics excludes certain income and expense items that the Company’s management considers to be non-core/adjusted in nature. The Company refers to these non-GAAP measures as adjusted measures. The corresponding Supplemental Financial Information and Earnings Release Presentation also presents tangible assets, tangible common equity, tangible book value per common share, tangible common equity to tangible assets, return on tangible common equity, return on average tangible common equity and adjusted return on average tangible common equity. Each of these non-GAAP metrics excludes the impact of goodwill and other intangibles.

The Company’s management uses these non-GAAP financial measures in their analysis of the Company’s performance, financial condition and the efficiency of its operations as management believes such measures facilitate period-to-period comparisons and provide meaningful indications of its operating performance as they eliminate both gains and charges that management views as non-recurring or not indicative of operating performance. Management believes that these non-GAAP financial measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods as well as demonstrate the effects of significant non-core gains and charges in the current and prior periods. The Company’s management also believes that investors find these non-GAAP financial measures useful as they assist investors in understanding the Company’s underlying operating performance and in the analysis of ongoing operating trends. In addition, because intangible assets such as goodwill and other intangibles, and the other items excluded each vary extensively from company to company, the Company believes that the presentation of this information allows investors to more easily compare the Company’s results to the results of other companies. However, the non-GAAP financial measures discussed herein should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which the Company calculates the non-GAAP financial measures discussed herein may differ from that of other companies reporting measures with similar names. Investors should understand how such other banking organizations calculate their financial measures similar or with names similar to the non-GAAP financial measures the Company has discussed herein when comparing such non-GAAP financial measures. See the “Use of non-GAAP Financial Measures” and the corresponding non-GAAP reconciliation tables in the Supplemental Financial Information as well as “Use of non-GAAP Financial Measures” and the Appendix in the Earnings Release Presentation issued July 22, 2019, for a discussion and reconciliation of these measures to the most directly comparable GAAP financial measures.


 

Financial Summary and Key Metrics

(Unaudited)

(In Thousands, Except Share Data and %)

 

 

2019

 

2018

 

 

Second Quarter

 

First Quarter

 

Second Quarter

Statement of Income Data

 

 

 

 

 

 

Total interest income

 

$

71,719

 

 

$

65,933

 

 

$

59,043

 

Total interest expense

 

14,696

 

 

12,917

 

 

7,526

 

Net interest income

 

57,023

 

 

53,016

 

 

51,517

 

Provision for loan losses

 

881

 

 

1,391

 

 

1,063

 

Total noninterest income

 

32,979

 

 

29,039

 

 

35,763

 

Total noninterest expense

 

64,119

 

 

55,101

 

 

56,358

 

Net income before income taxes

 

25,002

 

 

25,563

 

 

29,859

 

Income tax expense

 

6,314

 

 

5,975

 

 

7,794

 

Net income

 

$

18,688

 

 

$

19,588

 

 

$

22,065

 

Net interest income (tax—equivalent basis)

 

$

57,488

 

 

$

53,461

 

 

$

51,909

 

Net income, adjusted*

 

$

22,098

 

 

$

20,826

 

 

$

22,736

 

Per Common Share

 

 

 

 

 

 

Diluted net income

 

$

0.59

 

 

$

0.62

 

 

$

0.70

 

Diluted net income, adjusted*

 

0.70

 

 

0.66

 

 

0.72

 

Book value

 

23.29

 

 

22.51

 

 

20.56

 

Tangible book value*

 

17.18

 

 

17.73

 

 

15.66

 

Weighted average number of shares outstanding- fully diluted

 

31,378,018

 

 

31,349,198

 

 

31,294,044

 

Period-end number of shares

 

30,865,636

 

 

30,852,665

 

 

30,683,353

 

Selected Balance Sheet Data

 

 

 

 

 

 

Cash and cash equivalents

 

$

164,336

 

 

$

195,414

 

 

$

104,417

 

Loans held for investment (HFI)

 

4,289,516

 

 

3,786,791

 

 

3,415,575

 

Allowance for loan losses

 

(30,138

)

 

(29,814

)

 

(26,347

)

Loans held for sale

 

294,699

 

 

248,054

 

 

374,916

 

Investment securities, at fair value

 

678,457

 

 

670,835

 

 

611,435

 

Other real estate owned, net

 

15,521

 

 

12,828

 

 

14,639

 

Total assets

 

5,940,402

 

 

5,335,156

 

 

4,923,249

 

Customer deposits

 

4,812,962

 

 

4,242,349

 

 

3,844,009

 

Brokered and internet time deposits

 

29,864

 

 

60,842

 

 

65,854

 

Total deposits

 

4,842,826

 

 

4,303,191

 

 

3,909,863

 

Borrowings

 

257,299

 

 

229,178

 

 

342,893

 

Total shareholders' equity

 

718,759

 

 

694,577

 

 

630,959

 

Selected Ratios

 

 

 

 

 

 

Return on average:

 

 

 

 

 

 

Assets

 

1.30

%

 

1.54

%

 

1.86

%

Shareholders' equity

 

10.6

%

 

11.6

%

 

14.4

%

Tangible common equity*

 

14.4

%

 

14.8

%

 

19.0

%

Average shareholders' equity to average assets

 

12.3

%

 

13.2

%

 

12.9

%

Net interest margin (NIM) (tax-equivalent basis)

 

4.39

%

 

4.61

%

 

4.81

%

Efficiency ratio (GAAP)

 

71.2

%

 

67.2

%

 

64.6

%

Core efficiency ratio (tax-equivalent basis)*

 

65.9

%

 

64.9

%

 

63.4

%

Loans HFI to deposit ratio

 

88.6

%

 

88.0

%

 

87.4

%

Total loans to deposit ratio

 

94.7

%

 

93.8

%

 

96.9

%

Yield on interest-earning assets

 

5.52

%

 

5.73

%

 

5.51

%

Cost of interest-bearing liabilities

 

1.54

%

 

1.52

%

 

0.96

%

Cost of total deposits

 

1.14

%

 

1.14

%

 

0.62

%

Credit Quality Ratios

 

 

 

 

 

 

Allowance for loan losses as a percentage of loans HFI

 

0.70

%

 

0.79

%

 

0.77

%

Net charge-off's (recoveries) as a percentage of average loans HFI

 

0.05

%

 

0.06

%

 

(0.11

)%

Nonperforming loans HFI as a percentage of total loans HFI

 

0.43

%

 

0.41

%

 

0.26

%

Nonperforming assets as a percentage of total assets

 

0.59

%

 

0.57

%

 

0.52

%

Preliminary capital ratios (Consolidated)

 

 

 

 

 

 

Shareholders' equity to assets

 

12.1

%

 

13.0

%

 

12.8

%

Tangible common equity to tangible assets*

 

9.2

%

 

10.5

%

 

10.1

%

Tier 1 capital (to average assets)

 

10.0

%

 

11.5

%

 

10.9

%

Tier 1 capital (to risk-weighted assets)

 

11.0

%

 

12.7

%

 

11.3

%

Total capital (to risk-weighted assets)

 

11.6

%

 

13.4

%

 

11.9

%

Common Equity Tier 1 (to risk-weighted assets) (CET1)

 

10.4

%

 

12.0

%

 

10.6

%

*These measures are considered non-GAAP financial measures. See "GAAP Reconciliation and Use of Non-GAAP Financial Measures" and the corresponding financial tables below for reconciliations of these Non-GAAP measures. Investors are encouraged to refer to the discussion of non-GAAP measures included in the corresponding earnings release.


 

Non-GAAP Reconciliation

For the Quarters Ended

(Unaudited)

(In Thousands, Except Share Data and %)

 

 

 

 

 

 

 

2019

 

2018

Net income, adjusted

 

Second Quarter

 

First Quarter

 

Second Quarter

Pre-tax net income

 

$

25,002

 

 

$

25,563

 

 

$

29,859

 

Plus merger, offering, and mortgage restructuring expenses

 

4,612

 

 

1,675

 

 

671

 

Pre-tax net income, adjusted

 

$

29,614

 

 

$

27,238

 

 

$

30,530

 

Income tax expense, adjusted

 

7,516

 

 

6,412

 

 

7,794

 

Net income, adjusted

 

$

22,098

 

 

$

20,826

 

 

$

22,736

 

Weighted average common shares outstanding- fully diluted

 

31,378,018

 

31,349,198

 

31,294,044

Diluted earnings per share, adjusted

 

 

 

 

 

 

Diluted earnings per common share

 

$

0.59

 

 

$

0.62

 

 

$

0.70

 

Plus merger, offering and mortgage restructuring expenses

 

0.15

 

 

0.05

 

 

0.02

 

Less tax effect

 

0.04

 

 

0.01

 

 

 

Diluted earnings per share, adjusted

 

$

0.70

 

 

$

0.66

 

 

$

0.72

 

 

 

 

 

 

 

 

Net income, adjusted

 

YTD 2019

 

2018

 

2017

Pre-tax net income

 

$

50,565

 

 

$

105,854

 

 

$

73,485

 

Plus merger, offering, and mortgage restructuring expenses

 

6,287

 

 

2,265

 

 

19,034

 

Pre tax net income, adjusted

 

56,852

 

 

108,119

 

 

92,519

 

Income tax expense, adjusted

 

13,927

 

 

26,034

 

 

34,749

 

Net income, adjusted

 

$

42,925

 

 

$

82,085

 

 

$

57,770

 

Weighted average common shares outstanding- fully diluted

 

31,348,966

 

 

31,314,981

 

 

28,207,602

 

 

 

 

 

 

 

 

Diluted earnings per share, adjusted

 

 

 

 

 

 

Diluted earnings per share

 

$

1.21

 

 

$

2.55

 

 

$

1.86

 

Plus merger, offering, and mortgage restructuring expenses

 

0.20

 

 

0.07

 

 

0.67

 

Less tax effect and benefit of enacted tax laws

 

0.05

 

 

0.01

 

 

0.48

 

Diluted earnings per share, adjusted

 

$

1.36

 

 

$

2.61

 

 

$

2.05

 

 

 

 

 

 

 

 

 

 

2019

 

2018

Core efficiency ratio (tax-equivalent basis)

 

Second Quarter

 

First Quarter

 

Second Quarter

Total noninterest expense

 

$

64,119

 

 

$

55,101

 

 

$

56,358

 

Less merger, offering, and mortgage restructuring expenses

 

4,612

 

 

1,675

 

 

671

 

Core noninterest expense

 

$

59,507

 

 

$

53,426

 

 

$

55,687

 

Net interest income (tax-equivalent basis)

 

$

57,488

 

 

$

53,461

 

 

$

51,909

 

Total noninterest income

 

32,979

 

 

29,039

 

 

35,763

 

Less gain (loss) on sales or write-downs of other real estate owned and other assets

 

94

 

 

152

 

 

(132

)

Less gain (loss) from securities, net

 

52

 

 

43

 

 

(42

)

Core noninterest income

 

32,833

 

 

28,844

 

 

35,937

 

Core revenue

 

$

90,321

 

 

$

82,305

 

 

$

87,846

 

Efficiency ratio (GAAP)(a)

 

71.2

%

 

67.2

%

 

64.6

%

Core efficiency ratio (tax-equivalent basis)

 

65.9

%

 

64.9

%

 

63.4

%

(a) Efficiency ratio (GAAP) is calculated by dividing reported noninterest expense by reported total revenue.


 

Non-GAAP Reconciliation

For the Quarters Ended

(Unaudited)

(In Thousands, Except Share Data and %)

 

 

 

 

 

 

 

2019

 

2018

Banking segment core efficiency ratio
(tax equivalent)

 

Second Quarter

 

First Quarter

 

Second Quarter

Core consolidated noninterest expense

 

$

59,507

 

 

$

53,426

 

 

$

55,687

 

Less Mortgage segment core noninterest expense

 

17,835

 

 

17,486

 

 

19,582

 

Core Banking segment noninterest expense

 

41,672

 

 

35,940

 

 

36,105

 

Core revenue

 

90,321

 

 

82,305

 

 

87,846

 

Less Mortgage segment total revenue

 

19,119

 

 

16,658

 

 

21,498

 

Core Banking segment total revenue

 

$

71,202

 

 

$

65,647

 

 

$

66,348

 

Banking segment core efficiency ratio

 

58.5

%

 

54.7

%

 

54.4

%

(tax-equivalent basis)










 

 

 

 

 

 

 

Mortgage segment core efficiency ratio

 

 

 

 

 

 

(tax equivalent)







Mortgage segment noninterest expense

 

$

18,664

 

 

$

18,540

 

 

$

19,582

 

Less mortgage restructuring expense

 

829

 

 

1,054

 

 

 

Core Mortgage segment noninterest expense

 

$

17,835

 

 

$

17,486

 

 

$

19,582

 

Mortgage segment total revenue

 

$

19,119

 

 

$

16,658

 

 

$

21,498

 

Mortgage segment core efficiency ratio













(tax-equivalent basis)

 

93.3

%

 

N/A

 

91.1

%

 

 

 

 

 

 

 

 

 

 

2019

 

2018

Mortgage contribution, adjusted

 

Second Quarter

 

First Quarter

 

Second Quarter

Mortgage segment pre-tax net contribution

 

$

455

 

 

$

(1,882

)

 

$

1,916

 

Retail footprint:

 

 

 

 

 

 

Mortgage banking income

 

5,451

 

 

4,386

 

 

6,894

 

Mortgage banking expenses

 

4,172

 

 

2,831

 

 

5,649

 

Retail footprint pre-tax net contribution

 

1,279

 

 

1,555

 

 

1,245

 

Total mortgage banking pre-tax net (loss) contribution

 

$

1,734

 

 

$

(327

)

 

$

3,161

 

Plus mortgage restructuring expense

 

829

 

 

1,054

 

 

 

Total mortgage banking pre-tax net contribution (loss), adjusted

 

$

2,563

 

 

$

727

 

 

$

3,161

 

Pre-tax net income

 

$

25,002

 

 

$

25,563

 

 

$

29,859

 

% total mortgage banking pre-tax net contribution

 

6.9

%

 

N/A

 

10.6

%

Pre-tax net income, adjusted

 

$

29,614

 

 

$

27,238

 

 

$

30,530

 

% total mortgage banking pre-tax net contribution, adjusted

 

8.7

%

 

2.7

%

 

10.4

%

 

 

 

 

 

 

 

 

 

2019

 

2018

Tangible assets and equity

 

Second Quarter

 

First Quarter

 

Second Quarter

Tangible Assets

 

 

 

 

 

 

Total assets

 

$

5,940,402

 

 

$

5,335,156

 

 

$

4,923,249

 

Less goodwill

 

168,486

 

 

137,190

 

 

137,190

 

Less intangibles, net

 

19,945

 

 

10,439

 

 

13,203

 

Tangible assets

 

$

5,751,971

 

 

$

5,187,527

 

 

$

4,772,856

 

Tangible Common Equity

 

 

 

 

 

 

Total shareholders' equity

 

$

718,759

 

 

$

694,577

 

 

$

630,959

 

Less goodwill

 

168,486

 

 

137,190

 

 

137,190

 

Less intangibles, net

 

19,945

 

 

10,439

 

 

13,203

 

Tangible common equity

 

$

530,328

 

 

$

546,948

 

 

$

480,566

 

Common shares outstanding

 

30,865,636

 

 

30,852,665

 

 

30,683,353

 

Book value per common share

 

$

23.29

 

 

$

22.51

 

 

$

20.56

 

Tangible book value per common share

 

$

17.18

 

 

$

17.73

 

 

$

15.66

 

Total shareholders' equity to total assets

 

12.1

%

 

13.0

%

 

12.8

%

Tangible common equity to tangible assets

 

9.2

%

 

10.5

%

 

10.1

%

Net income

 

$

18,688

 

 

$

19,588

 

 

$

22,065

 

Return on tangible common equity

 

14.1

%

 

14.5

%

 

18.4

%



Non-GAAP Reconciliation

For the Quarters Ended

(Unaudited)

(In Thousands, Except Share Data and %)

 

 

 

 

 

 

 

2019

 

2018

Return on average tangible common equity

 

Second Quarter

 

First Quarter

 

Second Quarter

Total average shareholders' equity

 

$

708,557

 

 

$

684,545

 

 

$

615,950

 

Less average goodwill

 

167,781

 

 

137,190

 

 

137,190

 

Less average intangibles, net

 

20,214

 

 

10,856

 

 

13,615

 

Average tangible common equity

 

$

520,562

 

 

$

536,499

 

 

$

465,145

 

Net income

 

$

18,688

 

 

$

19,588

 

 

$

22,065

 

Return on average tangible common equity

 

14.4

%

 

14.8

%

 

19.0

%

 

 

 

 

 

 

 

2019

 

2018

Return on average tangible common equity, adjusted

 

Second Quarter

 

First Quarter

 

Second Quarter

Average tangible common equity

 

$

520,562

 

 

$

536,499

 

 

$

465,145

 

Net income, adjusted

 

22,098

 

 

20,826

 

 

22,736

 

Return on average tangible common equity, adjusted

 

17.0

%

 

15.7

%

 

19.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average tangible common equity

 

YTD 2019

 

2018

 

2017

Total average shareholders' equity

 

$

696,621

 

 

$

629,922

 

 

$

466,219

 

Less average goodwill

 

152,570

 

 

137,190

 

 

84,997

 

Less average intangibles, net

 

15,562

 

 

12,815

 

 

8,047

 

Average tangible common equity

 

$

528,489

 

 

$

479,917

 

 

$

373,175

 

Net income

 

38,276

 

 

80,236

 

 

52,398

 

Return on average tangible common equity

 

14.6

%

 

16.7

%

 

14.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average tangible common equity, adjusted

 

YTD 2019

 

2018

 

2017

Average tangible common equity

 

$

528,489

 

 

$

479,917

 

 

$

373,175

 

Net income, adjusted

 

42,925

 

 

82,085

 

 

57,770

 

Return on average tangible common equity, adjusted

 

16.4

%

 

17.1

%

 

15.5

%

 

 

 

 

 

 

 

 

 

2019

 

2018

Return on average assets and equity, adjusted

 

Second Quarter

 

First Quarter

 

Second Quarter

Net income

 

$

18,688

 

 

$

19,588

 

 

$

22,065

 

Average assets

 

5,771,371

 

 

5,174,918

 

 

4,763,991

 

Average equity

 

708,557

 

 

684,545

 

 

615,950

 

Return on average assets

 

1.30

%

 

1.54

%

 

1.86

%

Return on average equity

 

10.6

%

 

11.6

%

 

14.4

%

Net income, adjusted

 

$

22,098

 

 

$

20,826

 

 

$

22,736

 

Return on average assets, adjusted

 

1.54

%

 

1.63

%

 

1.91

%

Return on average equity, adjusted

 

12.5

%

 

12.3

%

 

14.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets and equity, adjusted

 

YTD 2019

 

2018

 

2017

Net income

 

$

38,276

 

 

$

80,236

 

 

$

52,398

 

Average assets

 

5,474,495

 

 

4,844,865

 

 

3,811,158

 

Average equity

 

696,621

 

 

629,922

 

 

466,219

 

Return on average assets

 

1.41

%

 

1.66

%

 

1.37

%

Return on average equity

 

11.1

%

 

12.7

%

 

11.2

%

Net income, adjusted

 

$

42,925

 

 

$

82,085

 

 

$

57,770

 

Return on average assets, adjusted

 

1.58

%

 

1.69

%

 

1.52

%

Return on average equity, adjusted

 

12.4

%

 

13.0

%

 

12.4

%

 

Contacts

MEDIA CONTACT:
Jeanie M. Rittenberry
615-313-8328
[email protected]
www.firstbankonline.com

FINANCIAL CONTACT:
James R. Gordon
615-564-1212
[email protected]
[email protected]

(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit 99.2












Second Quarter 2019
Financial Supplement


TABLE OF CONTENTS
 
 
Page
   
Financial Summary and Key Metrics
4
   
Consolidated Statements of Income
 5
   
Consolidated Balance Sheets
 7
   
Branch Acquisition Opening Balance Sheet (Preliminary)
8
   
Average Balance, Average Yield Earned and Average Rate Paid
 9
   
Loans and Deposits by Market
 12
   
Segment Data
 13
   
Loan Portfolio and Asset Quality
 14
   
Preliminary Capital Ratios
 16
   
Investment Portfolio
 17
   
Non-GAAP Reconciliation
 18



Use of non-GAAP Financial Measures

This Supplemental Financial Information contains certain financial measures that are not measures recognized under U.S. generally accepted accounting principles (“GAAP”) and therefore are considered non-GAAP financial measures. These non-GAAP financial measures include, without limitation, adjusted net income, adjusted diluted earnings per share, core noninterest expense and core noninterest income, core efficiency ratio (tax equivalent basis), Banking segment core efficiency ratio (tax equivalent basis), Mortgage segment core efficiency ratio (tax equivalent basis), adjusted mortgage contribution, adjusted return on average assets and equity, pro forma return on average assets and equity, adjusted pro forma return on average assets and equity and core total revenue.  Each of these non-GAAP metrics excludes certain income and expense items that the Company’s management considers to be non-core/adjusted in nature. The Company refers to these non-GAAP measures as adjusted measures. The corresponding Earnings Release and Earnings Release Presentation also presents tangible assets, tangible common equity, tangible book value per common share, tangible common equity to tangible assets, return on tangible common equity, return on average tangible common equity, pro forma return on average tangible common equity, adjusted return on average tangible common equity and pro forma adjusted return on average tangible common equity.  Each of these non-GAAP metrics excludes the impact of goodwill and other intangibles.
 
The Company’s management uses these non-GAAP financial measures in their analysis of the Company’s performance, financial condition and the efficiency of its operations as management believes such measures facilitate period-to-period comparisons and provide meaningful indications of its operating performance as they eliminate both gains and charges that management views as non-recurring or not indicative of operating performance. Management believes that these non-GAAP financial measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods as well as demonstrating the effects of significant non-core gains and charges in the current and prior periods. The Company’s management also believes that investors find these non-GAAP financial measures useful as they assist investors in understanding the Company’s underlying operating performance and in the analysis of ongoing operating trends.  In addition, because intangible assets such as goodwill and other intangibles, and the other items excluded each vary extensively from company to company, the Company believes that the presentation of this information allows investors to more easily compare the Company’s results to the results of other companies.  However, the non-GAAP financial measures discussed herein should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which the Company calculates the non-GAAP financial measures discussed herein may differ from that of other companies reporting measures with similar names. You should understand how such other banking organizations calculate their financial measures similar or with names similar to the non-GAAP financial measures the Company has discussed herein when comparing such non-GAAP financial measures.  The Company includes tables under the Non-GAAP reconciliation section of this document to provide a reconciliation of these measures to the most directly comparable GAAP financial measures.



Financial Summary and Key Metrics
(Unaudited)
(In Thousands, Except Share Data and %)

 

 

2019

   

2018

 
   
Second
Quarter
   
 First
Quarter
   
 Fourth
Quarter
   
Third
Quarter
   
Second
Quarter
 

Statement of Income Data

                             

Total interest income

 

$

71,719

   

$

65,933

   

$

63,068

   

$

62,612

   

$

59,043

 

Total interest expense

   

14,696

     

12,917

     

11,701

     

9,857

     

7,526

 

Net interest income

   

57,023

     

53,016

     

51,367

     

52,755

     

51,517

 

Provision for loan losses

   

881

     

1,391

     

2,200

     

1,818

     

1,063

 

Total noninterest income

   

32,979

     

29,039

     

27,249

     

34,355

     

35,763

 

Total noninterest expense

   

64,119

     

55,101

     

53,736

     

57,213

     

56,358

 

Net income before income taxes

   

25,002

     

25,563

     

22,680

     

28,079

     

29,859

 

Income tax expense

   

6,314

     

5,975

     

5,640

     

6,702

     

7,794

 

Net income

 

$

18,688

   

$

19,588

   

$

17,040

   

$

21,377

   

$

22,065

 

Net interest income (tax—equivalent basis)

 

$

57,488

   

$

53,461

   

$

51,799

   

$

53,161

   

$

51,909

 

Net income, adjusted*

 

$

22,098

   

$

20,826

   

$

17,336

   

$

21,377

   

$

22,736

 

Per Common Share

                                       

Diluted net income

 

$

0.59

   

$

0.62

   

$

0.54

   

$

0.68

   

$

0.70

 

Diluted net income, adjusted*

   

0.70

     

0.66

     

0.55

     

0.68

     

0.72

 

Book value

   

23.29

     

22.51

     

21.87

     

21.12

     

20.56

 

Tangible book value*

   

17.18

     

17.73

     

17.02

     

16.25

     

15.66

 

Weighted average number of shares outstanding- fully diluted

   

31,378,018

     

31,349,198

     

31,344,949

     

31,339,628

     

31,294,044

 

Period-end number of shares

   

30,865,636

     

30,852,665

     

30,724,532

     

30,715,792

     

30,683,353

 

Selected Balance Sheet Data

                                       

Cash and cash equivalents

 

$

164,336

   

$

195,414

   

$

125,356

   

$

181,630

   

$

104,417

 

Loans held for investment (HFI)

   

4,289,516

     

3,786,791

     

3,667,511

     

3,538,531

     

3,415,575

 

Allowance for loan losses

   

(30,138

)

   

(29,814

)

   

(28,932

)

   

(27,608

)

   

(26,347

)

Loans held for sale

   

294,699

     

248,054

     

278,815

     

323,486

     

374,916

 

Investment securities, at fair value

   

678,457

     

670,835

     

658,805

     

609,568

     

611,435

 

Other real estate owned, net

   

15,521

     

12,828

     

12,643

     

13,587

     

14,639

 

Total assets

   

5,940,402

     

5,335,156

     

5,136,764

     

5,058,167

     

4,923,249

 

Customer deposits

   

4,812,962

     

4,242,349

     

4,068,610

     

4,017,391

     

3,844,009

 

Brokered and internet time deposits

   

29,864

     

60,842

     

103,107

     

112,082

     

65,854

 

Total deposits

   

4,842,826

     

4,303,191

     

4,171,717

     

4,129,473

     

3,909,863

 

Borrowings

   

257,299

     

229,178

     

227,776

     

210,968

     

342,893

 

Total shareholders' equity

   

718,759

     

694,577

     

671,857

     

648,731

     

630,959

 

Selected Ratios

                                       

Return on average:

                                       

Assets

   

1.30

%

   

1.54

%

   

1.35

%

   

1.72

%

   

1.86

%

Shareholders' equity

   

10.6

%

   

11.6

%

   

10.3

%

   

13.3

%

   

14.4

%

Tangible common equity*

   

14.4

%

   

14.8

%

   

13.3

%

   

17.4

%

   

19.0

%

Average shareholders' equity to average assets

   

12.3

%

   

13.2

%

   

13.2

%

   

12.9

%

   

12.9

%

Net interest margin (NIM) (tax-equivalent basis)

   

4.39

%

   

4.61

%

   

4.50

%

   

4.71

%

   

4.81

%

Efficiency ratio (GAAP)

   

71.2

%

   

67.2

%

   

68.4

%

   

65.7

%

   

64.6

%

Core efficiency ratio (tax-equivalent basis)*

   

65.9

%

   

64.9

%

   

67.5

%

   

65.7

%

   

63.4

%

Loans HFI to deposit ratio

   

88.6

%

   

88.0

%

   

87.9

%

   

85.7

%

   

87.4

%

Total loans to deposit ratio

   

94.7

%

   

93.8

%

   

94.6

%

   

93.5

%

   

96.9

%

Yield on interest-earning assets

   

5.52

%

   

5.73

%

   

5.52

%

   

5.58

%

   

5.51

%

Cost of interest-bearing liabilities

   

1.54

%

   

1.52

%

   

1.40

%

   

1.20

%

   

0.96

%

Cost of total deposits

   

1.14

%

   

1.14

%

   

1.03

%

   

0.80

%

   

0.62

%

Credit Quality Ratios

                                       

Allowance for loan losses as a percentage of loans HFI

   

0.70

%

   

0.79

%

   

0.79

%

   

0.78

%

   

0.77

%

Net charge-off's (recoveries) as a percentage of average loans HFI

   

0.05

%

   

0.06

%

   

0.06

%

   

0.06

%

   

(0.11

)%

Nonperforming loans HFI as a percentage of total loans HFI

   

0.43

%

   

0.41

%

   

0.46

%

   

0.30

%

   

0.26

%

Nonperforming assets as a percentage of total assets

   

0.59

%

   

0.57

%

   

0.61

%

   

0.51

%

   

0.52

%

Preliminary capital ratios (Consolidated)

                                       

Shareholders' equity to assets

   

12.1

%

   

13.0

%

   

13.1

%

   

12.8

%

   

12.8

%

Tangible common equity to tangible assets*

   

9.2

%

   

10.5

%

   

10.5

%

   

10.2

%

   

10.1

%

Tier 1 capital (to average assets)

   

10.0

%

   

11.5

%

   

11.4

%

   

11.3

%

   

10.9

%

Tier 1 capital (to risk-weighted assets)

   

11.0

%

   

12.7

%

   

12.4

%

   

12.2

%

   

11.3

%

Total capital (to risk-weighted assets)

   

11.6

%

   

13.4

%

   

13.0

%

   

12.8

%

   

11.9

%

Common Equity Tier 1 (to risk-weighted assets) (CET1)

   

10.4

%

   

12.0

%

   

11.7

%

   

11.5

%

   

10.6

%

*These measures are considered non-GAAP financial measures. See "GAAP Reconciliation and Use of Non-GAAP Financial Measures" and the corresponding financial tables below for reconciliations of these Non-GAAP measures. Investors are encouraged to refer to the discussion of non-GAAP measures included in the corresponding earnings release.

4


Consolidated Statements of Income
(Unaudited)
(In Thousands, Except Share Data and %)

                                  Q2 2019
  Q2 2019
                                   vs.   vs.
    2019     2018     Q1 2019
  Q2 2018
   
 Second
Quarter
   
First
Quarter
   
Fourth
Quarter
   
 Third
Quarter
   
Second
Quarter
   
 Percent
variance
 
Percent
variance

Interest income:

                                         

Interest and fees on loans

 

$

66,276

   

$

60,448

   

$

57,875

   

$

57,904

   

$

54,529

   

9.6

%

 

21.5

%

Interest on securities

                                                   

Taxable

   

3,548

     

3,569

     

3,260

     

3,151

     

3,134

   

(0.6

)%

 

13.2

%

Tax-exempt

   

1,160

     

1,144

     

1,110

     

1,031

     

981

   

1.4

%

 

18.2

%

Other

   

735

     

772

     

823

     

526

     

399

   

(4.8

)%

 

84.2

%

Total interest income

   

71,719

     

65,933

     

63,068

     

62,612

     

59,043

   

8.8

%

 

21.5

%

Interest expense:

                                                   

Deposits

   

13,488

     

11,855

     

10,703

     

7,864

     

5,898

   

13.8

%

 

128.7

%

Borrowings

   

1,208

     

1,062

     

998

     

1,993

     

1,628

   

13.7

%

 

(25.8

)%

Total interest expense

   

14,696

     

12,917

     

11,701

     

9,857

     

7,526

   

13.8

%

 

95.3

%

Net interest income

   

57,023

     

53,016

     

51,367

     

52,755

     

51,517

   

7.6

%

 

10.7

%

Provision for loan losses

   

881

     

1,391

     

2,200

     

1,818

     

1,063

   

(36.7

)%

 

(17.1

)%

Net interest income after provision for loan losses

   

56,142

     

51,625

     

49,167

     

50,937

     

50,454

   

8.7

%

 

11.3

%

Noninterest income:

                                                   

Mortgage banking income

   

24,526

     

21,021

     

18,997

     

26,649

     

28,544

   

16.7

%

 

(14.1

)%

Service charges on deposit accounts

   

2,327

     

2,079

     

2,286

     

2,208

     

2,049

   

11.9

%

 

13.6

%

ATM and interchange fees

   

3,002

     

2,656

     

2,660

     

2,411

     

2,581

   

13.0

%

 

16.3

%

Investment services and trust income

   

1,287

     

1,295

     

1,384

     

1,411

     

1,180

   

(0.6

)%

 

9.1

%

Gain (loss) from securities, net

   

52

     

43

     

     

(27

)

   

(42

)

 

20.9

%

 

(223.8

)%

Gain (loss) on sales or write-downs of other real estate owned

   

277

     

(39

)

   

(56

)

   

120

     

23

   

(810.3

)%

 

1,104.3

%

(Loss) gain from other assets

   

(183

)

   

191

     

89

     

326

     

(155

)

 

(195.8

)%

 

18.1

%

Other income

   

1,691

     

1,793

     

1,889

     

1,257

     

1,583

   

(5.7

)%

 

6.8

%

Total noninterest income

   

32,979

     

29,039

     

27,249

     

34,355

     

35,763

   

13.6

%

 

(7.8

)%

Total revenue

   

90,002

     

82,055

     

78,616

     

87,110

     

87,280

   

9.7

%

 

3.1

%

Noninterest expenses:

                                                   

Salaries, commissions and employee benefits

   

37,918

     

33,697

     

33,286

     

35,213

     

34,366

   

12.5

%

 

10.3

%

Occupancy and equipment expense

   

4,319

     

3,730

     

3,493

     

3,514

     

3,545

   

15.8

%

 

21.8

%

Legal and professional fees

   

1,694

     

1,725

     

1,978

     

1,917

     

1,965

   

(1.8

)%

 

(13.8

)%

Data processing

   

2,643

     

2,384

     

2,365

     

2,562

     

2,138

   

10.9

%

 

23.6

%

Merger expense

   

3,783

     

621

     

401

     

     

   

509.2

%

 

100.0

%

Amortization of core deposits and other intangibles



1,255




729




753




777




802



72.2

%


56.5

%

Regulatory fees and deposit insurance assessments



634

     

592

     

684

     

738

     

730

   

7.1

%

 

(13.2

)%

Software license and maintenance fees

   

622

     

472

     

489

     

622

     

603

   

31.8

%

 

3.2

%

Advertising

   

2,434

     

2,737

     

2,639

     

3,810

     

3,408

   

(11.1

)%

 

(28.6

)%

Mortgage restructuring expense

   

829

     

1,054

     

     

     

   

(21.3

)%

 

100.0

%

Other expense

   

7,988

     

7,360

     

7,648

     

8,060

     

8,801

   

8.5

%

 

(9.2

)%

Total noninterest expense

   

64,119

     

55,101

     

53,736

     

57,213

     

56,358

   

16.4

%

 

13.8

%

Income before income taxes

   

25,002

     

25,563

     

22,680

     

28,079

     

29,859

   

(2.2

)%

 

(16.3

)%

Income tax expense

   

6,314

     

5,975

     

5,640

     

6,702

     

7,794

   

5.7

%

 

(19.0

)%

Net income

 

$

18,688

   

$

19,588

   

$

17,040

   

$

21,377

   

$

22,065

   

(4.6

)%

 

(15.3

)%

Earnings available to common shareholders

 

$

18,588

   

$

19,483

   

$

16,949

   

$

21,263

   

$

21,948

             

Weighted average common shares outstanding:

                                                   

Basic

   

30,859,596

     

30,786,684

     

30,717,008

     

30,692,668

     

30,678,732

             

Fully diluted

   

31,378,018

     

31,349,198

     

31,344,949

     

31,339,628

     

31,294,044

             

Earnings per common share:

                                                   

Basic

 

$

0.60

     

0.63

   

$

0.55

   

$

0.69

   

$

0.72

             

Fully diluted

   

0.59

     

0.62

     

0.54

     

0.68

     

0.70

             

5


Consolidated Statements of Income
(Unaudited)
(In Thousands, Except Share Data and %)

               
YTD 2019
 
   
For the six months ended
   
vs.
 
   
June 30,
   
YTD 2018
 
   

2019
   

2018
   
Percent
variance
 
Interest income:
                 
Interest and fees on loans
  $ 126,724     $ 105,222      
20.4
%
Interest on securities
                       
Taxable
   
7,117
     
5,986
     
18.9
%
Tax-exempt
   
2,304
     
1,906
     
20.9
%
Other
   
1,507
     
777
     
94
%
Total interest income
   
137,652
     
113,891
     
20.9
%
Interest expense:
                       
Deposits
   
25,343
     
10,969
     
131
%
Borrowings
   
2,270
     
2,976
     
(23.7
)%
Total interest expense
   
27,613
     
13,945
     
98
%
Net interest income
   
110,039
     
99,946
     
10.1
%
Provision for loan losses
   
2,272
     
1,380
     
64.6
%
Net interest income after provision for loan losses
   
107,767
     
98,566
     
9.3
%
Noninterest income:
                       
Mortgage banking income
   
45,547
     
55,015
     
(17.2
)%
Service charges on deposit accounts
   
4,406
     
4,008
     
9.9
%
ATM and interchange fees
   
5,658
     
4,942
     
14.5
%
Investment services and trust income
   
2,582
     
2,386
     
8.2
%
Gain (loss) from securities, net
   
95
     
(89
)
   
206.7
%
Gain (loss) on sales or write-downs of other real estate owned
   
238
     
(163
)
   
246
%
Gain (loss) on other assets
   
8
     
(87
)
   
109.2
%
Other income
   
3,484
     
3,026
     
15.1
%
Total noninterest income
   
62,018
     
69,038
     
(10.2
)%
Total revenue
   
172,057
     
168,984
     
1.8
%
Noninterest expenses:
                       
Salaries, commissions and employee benefits
   
71,615
     
68,393
     
4.7
%
Occupancy and equipment expense
   
8,049
     
6,969
     
15.5
%
Legal and professional fees
   
3,419
     
4,008
     
(14.7
)%
Data processing
   
5,027
     
4,173
     
20.5
%
Merger expense
   
4,404
     
1,193
     
269.2
%
Amortization of core deposit and other intangibles
   
1,984
     
1,655
     
19.9
%
Regulatory fees and deposit insurance assessments
   
1,226
     
1,292
     
(5.1
)%
Software license and maintenance fees
   
1,094
     
1,260
     
(13.2
)%
Advertising
   
5,171
     
6,690
     
(22.7
)%
Mortgage restructuring expense
   
1,883
     
     
100
%
Other expense
   
15,348
     
16,876
     
(9.1
)%
Total noninterest expense
   
119,220
     
112,509
     
6
%
Net income before income taxes
   
50,565
     
55,095
     
(8.2
)%
Income tax expense
   
12,289
     
13,276
     
(7.4
)%
Net income
  $ 38,276     $ 41,819      
(8.5
)%
Earnings available to common shareholders
  $ 38,071     $ 41,596          
Weighted average common shares outstanding:
                       
Basic
   
30,823,341
     
30,646,189
         
Fully diluted
   
31,348,966
     
31,275,846
         
Earnings per common share:
                       
Basic
  $ 1.24     $
1.36
         
Fully diluted
   
1.21
     
1.33
         

6


Consolidated Balance Sheets
(Unaudited)
(In Thousands, Except %)

                                 
Annualized
       
                                 
Q2 2019
   
Q2 2019
 
                                 
vs.
   
vs.
 
   
2019
   
2018
   
Q1 2019
   
Q2 2018
 
   
Second
Quarter
   
First
Quarter
   
Fourth
Quarter
   
Third
Quarter
   
Second
Quarter
   
Percent
variance
   
Percent
variance
 
ASSETS
                                             
Cash and due from banks
  $ 64,458     $ 60,253     $ 38,381     $ 81,366     $ 67,863      
28
%
   
(5.0
)%
Federal funds sold
   
9,781
     
6,600
     
31,364
     
801
     
19,859
     
193.3
%
   
(50.7
)%
Interest bearing deposits in financial institutions
   
90,097
     
128,561
     
55,611
     
99,463