About QCBT

Press Release

QCR Holdings, Inc. Announces Third Quarter Earnings And Successful Closing of Guaranty Acquisition

Company Release - 11/2/2017 4:01 PM ET

MOLINE, Ill., Nov. 02, 2017 (GLOBE NEWSWIRE) -- QCR Holdings, Inc. (NASDAQ:QCRH) today announced net income of $7.9 million and diluted earnings per share (“EPS”) of $0.58 for the quarter ended September 30, 2017.  This included $601 thousand of acquisition costs and post-acquisition transition and integration costs (after-tax) related to the previously announced acquisition of Guaranty Bank and Trust Company (“Guaranty Bank”), based in Cedar Rapids, Iowa, which closed on October 1, 2017.  Excluding these costs and other non-core items, the Company reported core net income (non-GAAP) of $8.5 million and diluted EPS of $0.63.  By comparison, for the quarter ended June 30, 2017, the Company reported net income of $8.8 million and diluted EPS of $0.65.  For the quarter ended September 30, 2016, the Company reported net income of $6.1 million and diluted EPS of $0.46.  This included $1.5 million of acquisition costs and post-acquisition transition and integration costs (after-tax) related to the acquisition of Community State Bank (“CSB”) based in Ankeny, Iowa, which closed on August 31, 2016.  Excluding these costs and other non-core items, the Company reported core net income (non-GAAP) of $7.5 million and diluted EPS of $0.57 for the quarter ending September 30, 2016.

For the nine months ended September 30, 2017, the Company reported net income of $25.8 million, and diluted EPS of $1.91.  Excluding acquisition costs, post-acquisition transition and integration costs, and other non-core items, the Company reported core net income (non-GAAP) of $26.4 million and diluted EPS of $1.96.  By comparison, for the nine months ended September 30, 2016, the Company reported net income of $19.2 million, and diluted EPS of $1.52.  Excluding acquisition costs, post-acquisition transition and integration costs, and other non-core items, the Company reported core net income (non-GAAP) of $20.6 million and diluted EPS of $1.64 for the nine months ended September 30, 2016.

“We are generally pleased with our core operating performance for the first nine months of the year,” commented Douglas M. Hultquist, President and Chief Executive Officer, “and we continue to strategize and pursue ways to improve our profitability through our ongoing key initiatives.  Our return on average assets has improved to 1.02% from 0.94%, when comparing the first nine months of 2017 to the same period of the prior year.  This is the result of strong organic loan growth, solid growth in core deposits, and margin improvements.   The acquisition of CSB in the third quarter of 2016 also contributed to our improved profitability.

“Our quarter-over-quarter results were down due to three key factors.  First, acquisition-related net accretion was down $1.1 million when comparing the third quarter of 2017 to the second quarter of 2017.  Secondly, swap fee income and gains from the sale of government guaranteed loans continue to be slow.  Lastly, we’ve seen an increase in noninterest expense of approximately 5% excluding acquisition costs and post-acquisition transition and integration costs.  Salaries and employee benefits increased from filling open positions, and legal expense also increased.”

Net Interest Income Improvement
Driven By Strong Loan Growth and Yield Increase

Net interest income totaled $28.6 million for the quarter ended September 30, 2017.  By comparison, net interest income totaled $28.0 million and $23.6 million for the quarters ended June 30, 2017 and September 30, 2016, respectively.  Acquisition-related net accretion totaled $474 thousand for the quarter ended September 30, 2017.  By comparison, acquisition-related net accretion totaled $1.5 million for the quarter ended June 30, 2017.  Excluding acquisition-related net accretion, net interest income of $28.1 million for the third quarter of 2017 increased 6%, compared to $26.5 million for the quarter ended June 30, 2017.

Net interest income totaled $84.3 million for the nine months ended September 30, 2017.  By comparison, net interest income totaled $65.2 million for the nine months ended September 30, 2016. 

“Net interest margin (excluding acquisition accounting net accretion) increased three basis points when comparing linked quarters at 3.65% for the third quarter of 2017 and 3.62% for the second quarter of 2017,” stated Todd A. Gipple, Executive Vice President, Chief Operating Officer and Chief Financial Officer.  “Due to our exceptional loan growth during the second and third quarters of this year, we’ve been able to shift our mix of earning assets, driving margin improvement.  Additionally, loan yield (excluding loan discount accretion) increased three basis points from 4.39% to 4.42% when comparing the second quarter of 2017 to the third quarter of 2017.”

Annualized Loan and Lease Growth of 19.2% for Second Consecutive Quarter

During the third quarter of 2017, the Company’s total assets increased $93.3 million, or 3%, to a total of $3.55 billion, while total loans and leases grew $123.2 million, or 4.8% (19.2% when annualized).  Loan and lease growth was primarily funded by short-term borrowings and deposit growth.

 “Organic loan and lease growth totaled $271.3 million for the first nine months of the year, or an annual growth rate of 15.0%,” commented Mr. Hultquist.  “This was another very strong quarter of loan growth and while we’ve already attained our annual loan growth target for the year of 10-12% and are optimistic about the fourth quarter, we believe organic loan growth for the fourth quarter will be at a more normalized level.  We intend to continue our organic growth primarily through market share increases, as customers continue to appreciate the way we do business and are attracted to our relationship-based community banking model.”

“Swap fee income and gains on the sale of government guaranteed loans totaled $1.8 million for the first nine months of the year.  The third quarter of 2017 continued to be slow in this area but the pipeline remains active.  Given the nature of this fee income source, large fluctuations can occur from quarter-to-quarter,” said Mr. Gipple.  “We plan to continue executing these types of transactions, as they provide unique and beneficial solutions for our clients.”

Nonperforming Assets Increase in Third Quarter
Due to the Addition of One Large Relationship

Nonperforming assets (“NPAs”) increased $7.8 million in the current quarter.  The ratio of NPAs to total assets was 0.95% at September 30, 2017, which was up from 0.75% at June 30, 2017 and up from 0.69% a year ago. 

 “One large CRE relationship was the primary cause of the increase in NPAs in the third quarter.  We believe that this issue is isolated and not reflective of the overall portfolio,” stated Mr. Hultquist.  He continued, “We remain committed to improving asset quality.”

The Company’s provision for loan and lease losses totaled $2.1 million for the third quarter of 2017, which was up slightly from the prior quarter, and up $479 thousand compared to the third quarter of 2016.  As of September 30, 2017, the Company’s allowance to total loans and leases was 1.31%, which was flat compared to June 30, 2017 and up from 1.22% at September 30, 2016. 

In accordance with generally accepted accounting principles for acquisition accounting, the loans acquired through the acquisition of CSB were recorded at market value; therefore, there was no allowance associated with CSB’s loans at acquisition.  Management continues to evaluate the allowance needed on the acquired CSB loans factoring in the net remaining discount ($5.6 million at September 30, 2017).  When factoring this remaining discount into the Company’s allowance to total loans and leases calculation, the Company’s allowance as a percentage of total loans and leases increases from 1.31% to 1.52%.

Capital Levels Remain Strong

            As of September 30, 2017, the Company’s total risk-based capital ratio was 11.49%, the common equity tier 1 ratio was 9.33%, and the tangible common equity to tangible assets ratio increased to 8.31%.  By comparison, these respective ratios were 11.65%, 9.46% and 8.29% as of June 30, 2017.
             
            “As a result of solid earnings performance, capital ratios continue to be strong and we are growing tangible common equity at a steady pace,” stated Mr. Gipple.  He continued, “Tangible common equity has increased $35.1 million or 14% year-over-year when comparing September 30, 2017 to the same period of the prior year.”

Acquisition of Guaranty Bank, Headquartered in Cedar Rapids, Iowa

            Effective October 1st, the Company completed its previously announced acquisition of Guaranty Bank.  The acquisition and subsequent merger of Guaranty Bank into Cedar Rapids Bank & Trust Company (“CRBT”) in the fourth quarter of 2017 will enhance the footprint and deposit base of CRBT.  Guaranty Bank had approximately $257.2 million in assets and approximately $212.3 million in deposits as of September 30, 2017. 
             
            “We are delighted to welcome the Guaranty Bank employees, clients and shareholders to QCR Holdings,” commented Mr. Hultquist. “This transaction provides the opportunity for us to expand our footprint in Cedar Rapids, partner with a financial institution with a rich legacy and help create the dominant community bank franchise in the Cedar Rapids area. Both organizations focus on recruiting the best people, delivering exceptional, local client service and building the communities they serve.”

Continued Focus on Seven Key Initiatives

                The Company continues to focus on the following initiatives in an effort to improve profitability and drive increased shareholder value:

  • Continue strong organic loan and lease growth to maintain loans and leases to total assets ratio in the range of 73-78%
  • Continue to focus on growing core deposits to maintain reliance on wholesale funding at less than 15% of assets
  • Continue to focus on generating gains on sale of USDA and SBA loans, and fee income on swaps, as a significant and consistent component of core revenue
  • Grow wealth management net income by 10% annually
  • Carefully manage noninterest expense growth
  • Maintain asset quality metrics at better than peer levels
  • Participate as an acquirer in the consolidation taking place in our markets to further boost ROAA, improve efficiency ratio, and increase EPS            

Conference Call Details

The Company will host an earnings call/webcast on November 3, 2017 at 11 a.m. central time.  Dial-in information for the call is toll-free 1-888-317-6016 (international 1-412-317-6016).  Participants should request to join the QCR Holdings, Inc. call. The event will be archived and available for digital replay through November 17, 2017.  The replay access information is toll-free 1-877-344-7529 (international 1-412-317-0088); access code 10112157.  A webcast of the teleconference can be accessed at the Company’s News and Events page at http://www.qcrh.com or https://services.choruscall.com/links/qcrh171103.html .  The archived audio webcast will be available until November 3, 2018.  Participants should visit the Company’s website or call in to the conference line set forth above at least 10 minutes prior to the scheduled start of the call.              

About Us

QCR Holdings, Inc., headquartered in Moline, Illinois, is a relationship-driven, multi-bank holding company, which serves the Quad City, Cedar Rapids, Cedar Valley, Des Moines/Ankeny, and Rockford communities through its wholly owned subsidiary banks.  Quad City Bank & Trust Company, which is based in Bettendorf, Iowa, and commenced operations in 1994, Cedar Rapids Bank & Trust Company, which is based in Cedar Rapids, Iowa, and commenced operations in 2001, Community State Bank, which is based in Ankeny, Iowa and was acquired by the Company in 2016, and Rockford Bank & Trust Company, which is based in Rockford, Illinois, and commenced operations in 2005, provide full-service commercial and consumer banking and trust and wealth management services.  Quad City Bank & Trust Company also provides correspondent banking services.  In addition, Quad City Bank & Trust Company engages in commercial leasing through its wholly owned subsidiary, m2 Lease Funds, LLC, based in Milwaukee, Wisconsin.  Additionally, the Company serves the Waterloo/Cedar Falls, Iowa community through Community Bank & Trust, a division of Cedar Rapids Bank & Trust Company.  The Company enhanced its presence in Cedar Rapids, Iowa with the acquisition of Guaranty Bank & Trust Company in October 2017.

Special Note Concerning Forward-Looking Statements.  This document contains, and future oral and written statements of the Company and its management may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance and business of the Company.  Forward-looking statements, which may be based upon beliefs, expectations and assumptions of the Company’s management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “predict,” “suggest,” “appear,” “plan,” “intend,” “estimate,” ”annualize,” “may,” “will,” “would,” “could,” “should” or other similar expressions.  Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events.
               
A number of factors, many of which are beyond the ability of the Company to control or predict, could cause actual results to differ materially from those in its forward-looking statements.  These factors include, among others, the following: (i) the strength of the local, national and international economies; (ii) the economic impact of any future terrorist threats and attacks, and the response of the United States to any such threats and attacks; (iii) changes in state and federal laws, regulations and governmental policies concerning the Company’s general business; (iv) changes in interest rates and prepayment rates of the Company’s assets; (v) increased competition in the financial services sector and the inability to attract new customers; (vi) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (vii) unexpected results of acquisitions, including the acquisition of Guaranty Bank, which may include failure to realize the anticipated benefits of the acquisition and the possibility that the transaction costs may be greater than anticipated; (viii) the loss of key executives or employees; (ix) changes in consumer spending; (x)  unexpected outcomes of existing or new litigation involving the Company; and (xi) changes in accounting policies and practices.  These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.  Additional information concerning the Company and its business, including additional factors that could materially affect the Company’s financial results, is included in the Company’s filings with the Securities and Exchange Commission.

 

       
  As of
  September 30, June 30, March 31, December 31,   September 30,
  2017 2017 2017 2016 2016
       
  (dollars in thousands)
       
CONDENSED BALANCE SHEET      
       
Cash and due from banks $56,275 $77,161 $56,326 $70,570 $61,213
Federal funds sold and interest-bearing deposits  61,789  72,354  173,219  86,206  96,047
Securities  583,936  593,485  557,646  574,022  564,930
Net loans/leases  2,641,772  2,520,209  2,403,791  2,374,730  2,331,774
Core deposit intangible  6,689  6,919  7,150  7,381  7,614
Goodwill  13,111  13,111  13,111  13,111  13,632
Other assets  186,891  173,948  169,770  175,924  205,776
Total assets $   3,550,463  $   3,457,187  $   3,381,013  $   3,301,944  $   3,280,986
       
Total deposits $2,894,268 $2,870,234 $2,805,931 $2,669,261 $2,594,913
Total borrowings  296,145  230,263  231,534  290,952  312,104
Other liabilities  47,011  51,607  47,708  55,690  93,112
Total stockholders' equity  313,039  305,083  295,840  286,041  280,857
Total liabilities and stockholders' equity $   3,550,463  $   3,457,187  $   3,381,013  $   3,301,944  $   3,280,986
       
ANALYSIS OF LOAN PORTFOLIO      
Loan/lease mix:      
Commercial and industrial loans (1) $1,034,530 $942,539 $851,578 $827,637 $804,308
Commercial real estate loans  1,157,855  1,131,906  1,106,842  1,093,459  1,070,305
Direct financing leases (1)  147,063  153,337  159,368  165,419  166,924
Residential real estate loans  239,958  233,871  231,326  229,233  229,081
Installment and other consumer loans  89,606  84,047  78,771  81,666  81,918
Deferred loan/lease origination costs, net of fees  7,742  7,866  7,965  8,073  8,065
Total loans/leases $2,676,754 $2,553,566 $2,435,850 $2,405,487 $2,360,601
Less allowance for estimated losses on loans/leases  34,982  33,357  32,059  30,757  28,827
Net loans/leases $   2,641,772  $   2,520,209  $   2,403,791  $   2,374,730  $   2,331,774
       
ANALYSIS OF SECURITIES PORTFOLIO      
Securities mix:      
U.S. government sponsored agency securities $39,340 $41,944 $47,556 $46,084 $67,885
Municipal securities  379,694  381,254  356,776  374,463  360,330
Residential mortgage-backed and related securities  158,969  164,415  147,504  147,702  133,173
Other securities  5,933  5,872  5,810  5,773  3,542
Total securities $   583,936  $   593,485  $   557,646  $   574,022  $   564,930
       
ANALYSIS OF DEPOSITS      
Deposit mix:      
Noninterest-bearing demand deposits $715,537 $760,625 $777,150 $797,415 $764,615
Interest-bearing demand deposits  1,614,894  1,526,103  1,486,047  1,369,226  1,298,781
Time deposits  430,270  478,580  458,170  439,169  420,470
Brokered deposits  133,567  104,926  84,564  63,451  111,047
Total deposits $   2,894,268  $   2,870,234  $   2,805,931  $   2,669,261  $   2,594,913
       
ANALYSIS OF BORROWINGS      
Borrowings mix:      
Term FHLB advances $58,600 $57,000 $59,000 $63,000 $83,343
Overnight FHLB advances (2)  110,455  49,500  47,550  74,500  55,300
Wholesale structured repurchase agreements  45,000  45,000  45,000  45,000  45,000
Customer repurchase agreements  3,671  4,897  7,170  8,132  8,265
Federal funds purchased  12,340  13,320  12,300  31,840  51,750
Junior subordinated debentures  33,579  33,546  33,514  33,480  33,446
Other borrowings  32,500  27,000  27,000  35,000  35,000
Total borrowings $   296,145  $   230,263  $   231,534  $   290,952  $   312,104
       
(1) m2 Lease Funds, LLC also originates equipment financing agreements, which are classified as commercial and industrial loans. 
(2) At the most recent quarter-end, the weighted-average rate of these overnight borrowings was 1.32%.  
       

 

      
   For the Nine Months Ended
   September 30,   September 30,
    2017   2016
      
  (dollars in thousands, except per share data)
      
INCOME STATEMENT    
Interest income $  97,639  $  74,232
Interest expense    13,367     8,995
Net interest income     84,272     65,237
Provision for loan/lease losses    6,215     4,879
Net interest income after provision for loan/lease losses $   78,057   $   60,358
      
Trust department fees $  5,154  $  4,607
Investment advisory and management fees    2,799     2,117
Deposit service fees    4,297     3,029
Gain on sales of residential real estate loans    307     289
Gain on sales of government guaranteed portions of loans    1,130     2,701
Swap fee income    635     1,358
Securities gains (losses), net    (25)    4,628
Earnings on bank-owned life insurance    1,357     1,324
Debit card fees    2,201     1,127
Correspondent banking fees    684     801
Other      2,229     2,027
Total noninterest income $   20,768   $   24,008
      
Salaries and employee benefits $  39,662  $  32,921
Occupancy and equipment expense    7,717     5,798
Professional and data processing fees    7,375     4,921
Acquisition costs    408     1,364
Post-acquisition transition and integration costs    523     1,037
FDIC insurance, other insurance and regulatory fees    1,957     1,867
Loan/lease expense    811     420
Net cost of (income from) operation of other real estate    (118)    513
Advertising and marketing    1,847     1,367
Bank service charges    1,331     1,247
Losses on debt extinguishment, net    -      4,220
Correspondent banking expense    604     565
Other     3,956     2,939
Total noninterest expense $   66,073   $   59,179
      
Net income before taxes $   32,752   $   25,187
Income tax expense    6,947     6,030
Net income  $   25,805   $   19,157
      
Basic EPS $  1.96  $  1.55
Diluted EPS $  1.91  $  1.52
      
Weighted average common shares outstanding    13,151,672     12,398,491
Weighted average common and common equivalent shares outstanding    13,509,566     12,580,042
      

 

        
   For the Quarter Ended
   September 30, June 30,March 31,December 31,September 30,
    2017 2017 2017 2016  2016
        
   (dollars in thousands, except per share data)
        
INCOME STATEMENT      
Interest income $  33,841  $  32,453 $  31,345 $  32,236  $  26,817
Interest expense    5,285    4,406   3,676   2,956    3,186
Net interest income     28,556    28,047   27,669   29,280    23,631
Provision for loan/lease losses    2,087    2,023   2,105   2,599    1,608
Net interest income after provision for loan/lease losses $   26,469  $   26,024 $   25,564 $   26,681  $   22,023
        
        
Trust department fees $  1,722 $  1,692$  1,740$  1,558 $  1,519
Investment advisory and management fees    969    868   962   876    766
Deposit service fees    1,522    1,459   1,316   1,411    1,151
Gain on sales of residential real estate loans    98    113   96   142    144
Gain on sales of government guaranteed portions of loans    92    87   951   458    219
Swap fee income    194    327   114   350    334
Securities gains (losses), net    (63)   38   -    (36)   4,252
Earnings on bank-owned life insurance    428    459   470   447    450
Debit card fees    755    743   703   688    475
Correspondent banking fees    239    200   245   249    254
Other      746    796   687   886    859
Total noninterest income $   6,702  $   6,782 $   7,284 $   7,029  $   10,423
        
        
Salaries and employee benefits $  13,424 $  12,931$  13,307$  13,396 $  11,202
Occupancy and equipment expense    2,516    2,699   2,502   2,630    2,086
Professional and data processing fees    2,951    2,341   2,083   2,192    1,931
Acquisition costs    408    -    -    -     1,037
Post-acquisition transition and integration costs    523    -    -    40    1,009
FDIC insurance, other insurance and regulatory fees    690    646   621   683    583
Loan/lease expense    257    260   294   242    103
Net cost of (income from) operation of other real estate    (160)   28   14   78    133
Advertising and marketing    670    568   609   760    548
Bank service charges    460    447   424   446    415
Losses on debt extinguishment, net    -     -    -    357    4,137
Correspondent banking expense    204    202   198   186    206
Other     1,452    1,283   1,221   1,298    1,090
Total noninterest expense $   23,395  $   21,405 $   21,273 $   22,308  $   24,480
        
Net income before taxes $   9,776  $   11,401 $   11,575 $   11,402  $   7,966
Income tax expense    1,922    2,635   2,390   2,873    1,858
Net income  $   7,854  $   8,766 $   9,185 $   8,529  $   6,108
        
Basic EPS $  0.60 $  0.67$  0.70$  0.65 $  0.47
Diluted EPS $  0.58 $  0.65$  0.68$  0.64 $  0.46
        
Weighted average common shares outstanding    13,151,350    13,170,283   13,133,382   13,087,592    13,066,777
Weighted average common and common equivalent shares outstanding   13,507,955    13,532,324   13,488,417   13,323,883    13,269,703
        

 

           
  For the Quarter Ended
 For the Nine Months Ended
  September 30,  
 June 30,
 March 31,
 December 31,
 September 30,
 September 30, September 30,
   2017   2017   2017   2016   2016   2017   2016 
         
 (dollars in thousands, except per share data)   
 
COMMON SHARE DATA        
Common shares outstanding       13,201,959     13,175,234     13,161,219     13,106,845     13,075,307    
Book value per common share (1) $23.71  $23.16  $22.48  $21.82  $21.48    
Tangible book value per common share (2) $22.21  $21.64  $20.94  $20.11  $19.74    
Closing stock price $45.50  $47.40  $42.35  $43.30  $31.74    
Market capitalization $600,689  $624,506  $557,378  $567,526  $415,010    
Market price / book value  191.89%  204.70%  188.41%  198.41%  147.77%   
Market price / tangible book value  204.85%  219.08%  202.26%  215.36%  160.79%   
Earnings per common share (basic) LTM (3) $  2.62  $  2.49  $  2.36  $  2.20  $  2.13    
Price earnings ratio LTM (3) 17.37 x  19.11 x  17.94 x 19.68 x  14.90 x    
TCE / TA (4)  8.31%  8.29%  8.20%  8.04%  7.92%   
         
         
CONDENSED STATEMENT OF CHANGES IN
STOCKHOLDERS' EQUITY
        
Beginning balance $  305,083  $  295,840  $  286,041  $  280,857  $  275,117    
Net income    7,854     8,766     9,185     8,529     6,108    
Other comprehensive income (loss), net of tax    275     702     411     (3,681)    (361)   
Common stock cash dividends declared    (658)    (657)    (657)    (523)    (521)   
Other (5)    485     432     860     859     514    
Ending balance $   313,039   $   305,083   $   295,840   $   286,041   $   280,857     
            
         
REGULATORY CAPITAL RATIOS:        
Total risk-based capital ratio  11.49%  11.65%  11.90%  11.56%  11.33%   
Tier 1 risk-based capital ratio  10.35%  10.51%  10.75%  10.46%  10.29%   
Tier 1 leverage capital ratio  9.23%  9.34%  9.37%  9.10%  10.09%   
Common equity tier 1 ratio  9.33%  9.46%  9.64%  9.41%  9.22%   
         
         
KEY PERFORMANCE RATIOS AND OTHER METRICS        
Return on average assets (annualized)  0.90%  1.04%  1.12%  1.04%  0.85%  1.02%  0.94%
Return on average total equity (annualized)  10.15%  11.65%  12.63%  12.04%  8.78%  11.45%  10.02%
Net interest margin  3.43%  3.54%  3.65%  3.80%  3.48%  3.54%  3.42%
Net interest margin (TEY) (Non-GAAP)(6)  3.71%  3.81%  3.90%  4.02%  3.71%  3.81%  3.65%
Efficiency ratio (Non-GAAP) (7)  66.35%  61.46%  60.86%  61.44%  71.89%  62.90%  66.31%
Gross loans and leases / total assets  75.39%  73.86%  72.04%  72.85%  71.95%  75.39%  71.95%
Effective tax rate  19.66%  23.11%  20.65%  25.20%  23.32%  21.21%  23.94%
Tax benefit related to stock options exercised and
restricted stock awards vested (8)
  191   90   533   N/A   N/A   814   N/A 
Full-time equivalent employees (9)  580   585   561   572   572   580   572 
         
         
AVERAGE BALANCES         
Assets $  3,503,148  $  3,378,195  $  3,274,713  $  3,277,814  $  2,865,947  $  3,385,352  $  2,702,992 
Loans/leases    2,629,626     2,488,828     2,398,387     2,358,960     2,077,376     2,505,614     1,937,086 
Deposits    2,882,106     2,835,711     2,692,009     2,717,923     2,243,397     2,803,275     2,085,524 
Total stockholders' equity    309,596     300,868     290,906     283,292     278,369     300,457     255,002 
         
(1) Includes accumulated other comprehensive income (loss).        
(2) Includes accumulated other comprehensive income (loss) and excludes intangible assets.      
(3) LTM : Last twelve months.        
(4) TCE / TA : tangible common equity / total tangible assets.  See GAAP to non-GAAP reconciliations.     
(5) Mainly common stock issued for options exercised and the employee stock purchase plan, as well as stock-based compensation.  
(6) TEY : Tax equivalent yield.  See GAAP to Non-GAAP reconciliations. 
(7) See GAAP to Non-GAAP reconciliations. 
(8) ASC 2016-09 became effective on January 1, 2017 and affects the accounting for stock compensation.  This amount reflects the tax benefit recognized as a result of this new standard.
(9) Full-time equivalent employees ("FTEs") increased in the second quarter of 2017 due to the addition of summer interns (13.6 FTEs).  
  

 

            
ANALYSIS OF NET INTEREST INCOME AND MARGIN
         
            
 For the Quarter Ended
 September 30, 2017 June 30, 2017 September 30, 2016
 Average
Balance
Interest
Earned
or Paid
Average
Yield
or Cost
 Average
Balance
Interest
Earned
or Paid
Average
Yield
or Cost
   Average
Balance
Interest
Earned
or Paid
Average
Yield
or Cost
            
 (dollars in thousands)
            
Fed funds sold$19,966$52 1.03% $18,742$38     0.81% $17,685  $13   0.29%
Interest-bearing deposits at financial institutions 42,178 141 1.33%  86,236 220 1.02%  67,807 1030.60%
Securities (1) 593,451 5,808   3.88%  573,747 5,384 3.76%  525,417 4,8263.65%
Restricted investment securities 17,793 173 3.86%  13,226 132 4.00%  14,877 1323.53%
Loans (1) 2,629,626 29,978 4.52%  2,488,828 28,881 4.65%  2,077,376 23,3304.47%
Total earning assets (1)$3,303,014$36,152 4.34% $3,180,779$34,655 4.37% $2,703,162$28,4044.18%
            
Interest-bearing deposits$1,613,162$2,230 0.55% $1,566,106$1,835 0.47% $1,116,325$7170.26%
Time deposits 530,120 1,326 0.99%  527,719 1,156 0.88%  422,603 7550.71%
Short-term borrowings 16,138 33 0.81%  17,936 19 0.42%  30,208 120.16%
Federal Home Loan Bank advances (4) 146,556 608 1.65%  76,739 354 1.85%  118,564 4211.41%
Other borrowings 72,617 726 3.97%  72,000 696 3.88%  116,856 9753.32%
Junior subordinated debentures 33,563 362 4.28%  33,530 347 4.15%  33,430 3063.64%
Total interest-bearing liabilities$2,412,156$5,285 0.87% $2,294,030$4,407 0.77% $1,837,986$3,1860.69%
            
Net interest income / spread (1) $30,867 3.47%  $30,248 3.60%  $25,2183.49%
Net interest margin (2)   3.43%    3.54%   3.48%
Net interest margin (TEY) (Non-GAAP) (1) (2) (3)   3.71%    3.81%   3.71%
            
            
 For the Nine Months Ended    
 September 30, 2017 September 30, 2016  
 Average
Balance
Interest
Earned
or Paid
Average
Yield
or Cost
 Average
Balance
Interest
Earned
or Paid
Average
Yield
or Cost
    
            
 (dollars in thousands)   
            
Fed funds sold $16,600  $105 0.85%  $16,364  $36 0.29%    
Interest-bearing deposits at financial institutions 73,655 560 1.02%  53,063 226 0.57%    
Securities (1) 575,884 16,350 3.80%  527,162 14,084 3.57%    
Restricted investment securities 14,963 435 3.89%  14,396 396 3.67%    
Loans (1) 2,505,614 86,821 4.63%  1,937,085 63,784 4.40%    
Total earning assets (1)$3,186,716$104,271 4.37% $2,548,070$78,526 4.12%    
            
Interest-bearing deposits$1,528,971$5,205 0.46% $994,476$1,931 0.26%    
Time deposits 522,986 3,575 0.91%  415,808 2,175 0.70%    
Short-term borrowings 19,754 76 0.51%  55,623 74 0.18%    
Federal Home Loan Bank advances 112,550 1,365 1.62%  125,319 1,278 1.36%    
Other borrowings 73,126 2,104 3.85%  106,201 2,624 3.30%    
Junior subordinated debentures 33,530 1,042 4.15%