Exhibit 99.1
Berkshire Hills Reports 8% Increase in First Quarter Core EPS; Dividend Declared
PITTSFIELD, MASS, April 25, 2016 - Berkshire Hills Bancorp, Inc. (NYSE: BHLB) reported an 8% increase in first quarter core earnings per share to $0.54 in 2016 from $0.50 in 2015. The earnings improvement was driven by 26% revenue growth produced by the Company’s expanded operations. First quarter GAAP EPS increased year-over-year to $0.52 from $0.35. GAAP results in both periods included net non-core charges primarily related to acquisitions and restructuring activities.
FIRST QUARTER FINANCIAL HIGHLIGHTS (comparisons are to prior quarter unless otherwise stated):
· 3% increase in total revenue
· 6% annualized commercial loan growth
· 3.33% net interest margin
· 7% increase in fee income
· 2% decrease in non-interest expense
· 59.9% efficiency ratio
· 0.28% non-performing assets/assets
· 0.23% net loan charge-offs/average loans
CEO Michael Daly stated, “We maintained our growth momentum in the first quarter of 2016. Our commercial teams posted healthy loan growth and fee income increased in most major categories. The yield on earning assets improved and mortgage banking operations benefited from the increase in volume. We managed constructively through the volatility in the financial markets early in the year to achieve our goals for the first quarter.”
Mr. Daly continued, “Our teams have been active across many fronts. We announced that our community support exceeded $2 million in 2015, which supplements the 40,000 hours of community service from our employees. We strengthened our wealth and mortgage teams and we introduced a new channel for customer support “text AMEB1” via SMS texting, providing a convenient and efficient experience for the customer. I’m excited about the prospects for expanding our market success in 2016 and leveraging our franchise investment to further boost shareholder value.”
BHLB — Berkshire Hills Bancorp | | www.berkshirebank.com |
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DIVIDEND DECLARED
The Board of Directors voted to declare a cash dividend of $0.20 per share to shareholders of record at the close of business on May 12, 2016, payable on May 26, 2016. The dividend was increased to $0.20 in the prior quarter and equates to a 3% annualized yield based on the $26.71 average closing price of Berkshire’s common stock during the first quarter.
FINANCIAL CONDITION
Annualized commercial loan growth measured 6% in the first quarter of 2016, due primarily to 8% annualized growth in commercial real estate loans. This growth, together with consumer loan growth, offset a decrease in residential mortgage balances. A higher volume of fixed rate mortgages was sold following the dip in long term interest rates during the quarter. Annualized organic deposit growth measured 2%, following a surge in demand deposits at year-end. Deposits totaling $30 million were reclassified to other liabilities as a result of an agreement to sell two central New York branches. Total assets remained unchanged at $7.8 billion.
Tangible book value per share increased by $0.60 to $18.44 and book value per share increased by $0.54 to $29.18. Loans/deposits increased by 0.1% to 102.5% and the ratio of tangible equity/tangible assets increased by 0.3% to 7.7%. Problem assets and net loan charge-offs remained comparatively low and were slightly improved from the prior quarter. The loan loss provision exceeded net charge-offs, and the ratio of the loan loss allowance to total loans increased slightly reflecting the change in the loan portfolio mix.
RESULTS OF OPERATIONS
The first quarter core return on tangible equity increased year-over-year to 12.2% in 2016 from 12.1% in 2015. Net non-core charges in both periods were primarily related to acquisition activity. GAAP return on equity improved to 7.2% from 5.0% in the above respective periods. The efficiency ratio improved to 59.9% from 63.3% due to revenue driven positive operating leverage.
The net interest margin decreased to 3.33% from 3.35% in the linked quarter. Measured before the benefit of purchased loan accretion, the margin decreased slightly to 3.21% from 3.22%. This included the benefit of the December hike in the Fed Funds rate. It also reflected a 2 basis point cost related to higher expense on interest rate swaps which started to become effective this year. Purchased loan accretion decreased to $2.1 million from $2.4 million for the above periods.
The 7% increase in fee revenue over the linked quarter included increases in most categories, with seasonal benefits in wealth management and insurance revenues offsetting a seasonal decrease in deposit related fees. The 28% increase in mortgage banking revenue quarter over quarter was related to higher refinancing demand. Other
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non-interest income also benefited from a $1.8 million reduction in the amortization of tax credit investments, which partially offset the related increase in income tax expense. This amortization decreased to $1.1 million from $2.9 million in the linked quarter.
The 2% decrease in non-interest expense compared to the linked quarter included additional cost synergies and disciplined spending management during the recent period of financial market volatility. Total full time equivalent staff decreased to 1,208 from 1,221 during the quarter. The income tax rate increased as expected to 28% in the most recent quarter due to lower benefits from tax credit related investment projects, which was partially offset by the change in non-interest income noted above.
CONFERENCE CALL
Berkshire will conduct a conference call/webcast at 10:00 a.m. eastern time on Tuesday, April 26, 2016 to discuss the results for the quarter and provide guidance about expected future results. Participants should pre-register for the conference call using the following link: dpregister.com/10083503. Participants may also reach the registration link and access the webcast by logging in through the investor section of Berkshire’s website at ir.berkshirebank.com. Those parties who do not have internet access or are otherwise unable to pre-register for this event, may still participate at the above time by dialing 1-844-792-3726 and asking the Operator to join the Berkshire Hills Bancorp (BHLB) earnings call. A telephone replay of the call will be available through Tuesday, May 3, 2016 by dialing 877-344-7529 and entering access number 10083503. The webcast will be available on Berkshire’s website for an extended period of time.
BACKGROUND
Berkshire Hills Bancorp is the parent of Berkshire Bank — America’s Most Exciting Bank®. Berkshire has $7.8 billion in assets and 93 full-service branch offices in Massachusetts, New York, Connecticut, and Vermont providing personal and business banking, insurance, and wealth management services. The Bank has two branches held for sale, which are located in Cairo and Greenville NY.
FORWARD LOOKING STATEMENTS
This document contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. There are several factors that could cause actual results to differ significantly from expectations described in the forward-looking statements. For a discussion of such factors, please see Berkshire’s most recent reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission and available on the SEC’s website at www.sec.gov. Berkshire does not undertake any obligation to update forward-looking statements.
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NON-GAAP FINANCIAL MEASURES
This document contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles (“GAAP”). These non-GAAP measures provide supplemental perspectives on operating results, performance trends, and financial condition. They are not a substitute for GAAP measures; they should be read and used in conjunction with the Company’s GAAP financial information. A reconciliation of non-GAAP financial measures to GAAP measures is included in the accompanying financial tables. In all cases, it should be understood that non-GAAP per share measures do not depict amounts that accrue directly to the benefit of shareholders. The Company utilizes the non-GAAP measure of core earnings in evaluating operating trends, including components for core revenue and expense. These measures exclude amounts which the Company views as unrelated to its normalized operations, including securities gains/losses, merger costs, restructuring costs, and systems conversion costs. Non-core adjustments are presented net of an adjustment for income tax expense. This adjustment is determined as the difference between the GAAP tax rate and the effective tax rate applicable to core income. The efficiency ratio is adjusted for non-core revenue and expense items and for tax preference items. The Company also calculates measures related to tangible equity, which adjust equity (and assets where applicable) to exclude intangible assets due to the importance of these measures to the investment community. Charges related to merger and acquisition activity consist primarily of severance/benefit related expenses, contract termination costs, systems conversion costs, and professional fees. Restructuring costs primarily consist of costs and losses associated with the disposition of assets and lease terminations. The Company’s disclosures of organic growth of loans and deposits in 2015 exclude balances acquired through the business combinations with Hampden Bancorp and Firestone Financial, and in 2016 are adjusted for two branches held for sale.
CONTACTS
Investor Relations Contact
Allison O’Rourke; Executive Vice President, Investor Relations Officer; 413-236-3149
Media Contact
Elizabeth Mach; Vice President, Marketing Officer; 413-445-8390
TABLE
INDEX | | CONSOLIDATED UNAUDITED FINANCIAL SCHEDULES |
F-1 | | Selected Financial Highlights |
F-2 | | Balance Sheets |
F-3 | | Loan and Deposit Analysis |
F-4 | | Statements of Income |
F-5 | | Statements of Income (Five Quarter Trend) |
F-6 | | Average Yields and Costs |
F-7 | | Average Balances |
F-8 | | Asset Quality Analysis |
F-9 | | Reconciliation of Non-GAAP Financial Measures |
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SELECTED FINANCIAL HIGHLIGHTS - UNAUDITED - (F-1)
| | At or for the Quarters Ended (1)(2) | |
| | March 31, | | Dec. 31, | | Sept. 30, | | June 30, | | March 31, | |
| | 2016 | | 2015 | | 2015 | | 2015 | | 2015 | |
| | | | | | | | | | | |
PER SHARE DATA | | | | | | | | | | | |
Core earnings, diluted | | $ | 0.54 | | $ | 0.54 | | $ | 0.54 | | $ | 0.51 | | $ | 0.50 | |
Net earnings, diluted | | 0.52 | | 0.52 | | 0.49 | | 0.35 | | 0.35 | |
Tangible book value | | 18.44 | | 17.84 | | 17.61 | | 17.16 | | 17.46 | |
Total book value | | 29.18 | | 28.64 | | 28.48 | | 28.02 | | 28.36 | |
Market price at period end | | 26.89 | | 29.11 | | 27.54 | | 28.48 | | 27.70 | |
Dividends | | 0.20 | | 0.19 | | 0.19 | | 0.19 | | 0.19 | |
| | | | | | | | | | | |
PERFORMANCE RATIOS (3) | | | | | | | | | | | |
Core return on assets | | 0.85 | % | 0.85 | % | 0.86 | % | 0.81 | % | 0.76 | % |
Return on assets | | 0.82 | | 0.82 | | 0.78 | | 0.56 | | 0.54 | |
Core return on equity | | 7.40 | | 7.58 | | 7.58 | | 7.32 | | 7.06 | |
Core return on tangible equity | | 12.20 | | 12.68 | | 12.78 | | 12.30 | | 12.14 | |
Return on equity | | 7.19 | | 7.34 | | 6.90 | | 5.05 | | 5.00 | |
Net interest margin, fully taxable equivalent (FTE) (4) | | 3.33 | | 3.35 | | 3.37 | | 3.30 | | 3.18 | |
Net interest margin (FTE), excluding purchased loan accretion | | 3.21 | | 3.22 | | 3.22 | | 3.16 | | 3.15 | |
Fee income/Net interest and fee income | | 21.04 | | 19.62 | | 19.38 | | 22.92 | | 23.25 | |
Efficiency ratio | | 59.86 | | 60.56 | | 60.35 | | 61.51 | | 63.27 | |
| | | | | | | | | | | |
GROWTH (Year-to-date) | | | | | | | | | | | |
Total commercial loans, (annualized, excluding merger impacts) | | 6 | % | 9 | % | 11 | % | 11 | % | 14 | % |
Total loans, (annualized, excluding merger impacts) | | 0 | | 8 | | 9 | | 5 | | 4 | |
Total deposits, (annualized, excluding merger impacts) | | 0 | | 10 | | 11 | | 8 | | 6 | |
Total net revenues, (compared to prior year) | | 26 | | 18 | | 19 | | 20 | | 23 | |
Core earnings per share, (compared to prior year) | | 8 | | 16 | | 17 | | 17 | | 19 | |
Earnings per share, (compared to prior year) (5) | | 49 | | 27 | | 34 | | 69 | | N/M | |
| | | | | | | | | | | |
FINANCIAL DATA (In millions) | | | | | | | | | | | |
Total assets | | $ | 7,808 | | $ | 7,832 | | $ | 7,804 | | $ | 7,519 | | $ | 6,571 | |
Total earning assets | | 7,142 | | 7,140 | | 7,130 | | 6,740 | | 5,993 | |
Total investments | | 1,374 | | 1,371 | | 1,396 | | 1,379 | | 1,216 | |
Total loans | | 5,727 | | 5,725 | | 5,665 | | 5,285 | | 4,729 | |
Allowance for loan losses | | 40 | | 39 | | 38 | | 37 | | 36 | |
Total intangible assets | | 334 | | 335 | | 337 | | 321 | | 275 | |
Total deposits | | 5,584 | | 5,589 | | 5,507 | | 5,322 | | 4,720 | |
Total shareholders’ equity | | 906 | | 887 | | 882 | | 827 | | 716 | |
Core income | | 16.5 | | 16.5 | | 16.2 | | 14.6 | | 12.4 | |
Net income | | 16.0 | | 16.0 | | 14.7 | | 10.0 | | 8.8 | |
| | | | | | | | | | | |
ASSET QUALITY AND CONDITION RATIOS | | | | | | | | | | | |
Net charge-offs (current quarter annualized)/average loans | | 0.23 | % | 0.25 | % | 0.26 | % | 0.27 | % | 0.28 | % |
Allowance for loan losses/total loans | | 0.70 | | 0.69 | | 0.67 | | 0.70 | | 0.77 | |
Loans/deposits | | 103 | | 102 | | 103 | | 99 | | 100 | |
Shareholders’ equity to total assets | | 11.60 | | 11.33 | | 11.30 | | 11.00 | | 10.90 | |
Tangible shareholders’ equity to tangible assets (6) | | 7.66 | | 7.37 | | 7.30 | | 7.04 | | 7.00 | |
(1) Reconciliation of Non-GAAP financial measures, including all references to core and tangible amounts, appear on page F-9.
(2) The Company acquired Hampden Bancorp, Inc. (“Hampden”) on April 17, 2015 and Firestone Financial (“Firestone”) on August 7, 2015.
(3) All performance ratios are annualized and are based on average balance sheet amounts, where applicable.
(4) Fully taxable equivalent considers the impact of tax advantaged investments and loans.
(5) N/M means not meaningful.
(6) Tangible assets are total assets less total intangible assets.
F-1
CONSOLIDATED BALANCE SHEETS - UNAUDITED - (F-2)
| | March 31, | | December 31, | |
(In thousands) | | 2016 | | 2015 | |
Assets | | | | | |
Cash and due from banks | | $ | 44,370 | | $ | 72,918 | |
Short-term investments | | 24,447 | | 30,644 | |
Total cash and short-term investments | | 68,817 | | 103,562 | |
| | | | | |
Trading security | | 14,474 | | 14,189 | |
Securities available for sale, at fair value | | 1,171,534 | | 1,154,457 | |
Securities held to maturity, at amortized cost | | 128,196 | | 131,652 | |
Federal Home Loan Bank stock and other restricted securities | | 60,261 | | 71,018 | |
Total securities | | 1,374,465 | | 1,371,316 | |
| | | | | |
Loans held for sale, at fair value | | 15,919 | | 13,191 | |
| | | | | |
Commercial real estate | | 2,100,067 | | 2,059,767 | |
Commercial and industrial loans | | 1,054,140 | | 1,048,263 | |
Residential mortgages | | 1,753,622 | | 1,815,035 | |
Consumer loans | | 818,861 | | 802,171 | |
Total loans | | 5,726,690 | | 5,725,236 | |
Less: Allowance for loan losses | | (40,055 | ) | (39,308 | ) |
Net loans | | 5,686,635 | | 5,685,928 | |
| | | | | |
Premises and equipment, net | | 87,840 | | 88,072 | |
Other real estate owned | | 1,440 | | 1,725 | |
Goodwill | | 323,659 | | 323,943 | |
Other intangible assets | | 9,845 | | 10,664 | |
Cash surrender value of bank-owned life insurance | | 126,136 | | 125,233 | |
Deferred tax asset, net | | 36,514 | | 42,526 | |
Other assets | | 76,641 | | 65,755 | |
Total assets | | $ | 7,807,911 | | $ | 7,831,915 | |
| | | | | |
Liabilities and shareholders’ equity | | | | | |
Demand deposits | | $ | 1,037,103 | | $ | 1,081,860 | |
NOW deposits | | 473,556 | | 510,807 | |
Money market deposits | | 1,405,361 | | 1,408,107 | |
Savings deposits | | 611,556 | | 601,761 | |
Time deposits | | 2,056,814 | | 1,986,600 | |
Total deposits | | 5,584,390 | | 5,589,135 | |
| | | | | |
Senior borrowings | | 1,080,896 | | 1,174,335 | |
Subordinated borrowings | | 89,027 | | 89,812 | |
Total borrowings | | 1,169,923 | | 1,264,147 | |
| | | | | |
Other liabilities | | 147,761 | | 91,444 | |
Total liabilities | | 6,902,074 | | 6,944,726 | |
| | | | | |
Total common shareholders’ equity | | 905,837 | | 887,189 | |
Total liabilities and shareholders’ equity | | $ | 7,807,911 | | $ | 7,831,915 | |
| | | | | |
Net shares outstanding | | 31,039 | | 30,974 | |
F-2
CONSOLIDATED LOAN & DEPOSIT ANALYSIS - UNAUDITED - (F-3)
LOAN ANALYSIS
(in millions) | | March 31,
2016
Balance | | December 31,
2015
Balance | | Annualized Growth %
Quarter ended
March. 31, 2016 | |
Commercial real estate - construction | | $ | 256 | | $ | 254 | | 4 | % |
Commercial real estate - other | | 1,844 | | 1,806 | | 8 | |
Total commercial real estate | | 2,100 | | 2,060 | | 8 | |
Commercial and industrial loans | | 1,054 | | 1,048 | | 2 | |
Total commercial loans | | 3,154 | | 3,108 | | 6 | |
| | | | | | | |
Total residential mortgages | | 1,754 | | 1,815 | | (14 | ) |
| | | | | | | |
Home equity | | 358 | | 361 | | (3 | ) |
Auto and other | | 461 | | 441 | | 18 | |
Total consumer loans | | 819 | | 802 | | 8 | |
Total loans | | $ | 5,727 | | $ | 5,725 | | 0 | % |
DEPOSIT ANALYSIS
(in millions) | | March 31,
2016
Balance | | December 31,
2015
Balance | | Annualized Growth %
Quarter ended
March 31, 2016 (1) | | March 31,
2016
Deposits HFS | | Organic Annualized Growth %
Quarter ended
March 31, 2016 (1) | |
Demand | | $ | 1,037 | | $ | 1,082 | | (17 | )% | $ | 6 | | (14 | )% |
NOW | | 474 | | 511 | | (29 | ) | 3 | | (27 | ) |
Money market | | 1,405 | | 1,408 | | (1 | ) | 10 | | 2 | |
Savings | | 611 | | 601 | | 7 | | 2 | | 8 | |
Total non-maturity deposits | | 3,527 | | 3,602 | | (8 | ) | 21 | | (6 | ) |
| | | | | | | | | | | |
Total time deposits | | 2,057 | | 1,987 | | 14 | | 9 | | 16 | |
Total deposits | | $ | 5,584 | | $ | 5,589 | | 0 | % | $ | 30 | | 2 | % |
(1) March 31, 2016 deposits exclude $30 million of deposits associated with the two branches held for sale in New York. Annualized organic growth is 2% when including the $30 million of deposits held for sale.
F-3
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED - (F-4)
| | Three Months Ended | |
| | March 31, | |
(In thousands, except per share data) | | 2016 | | 2015 | |
Interest and dividend income | | | | | |
Loans | | $ | 58,442 | | $ | 44,445 | |
Securities and other | | 10,034 | | 8,306 | |
Total interest and dividend income | | 68,476 | | 52,751 | |
Interest expense | | | | | |
Deposits | | 7,159 | | 4,949 | |
Borrowings | | 3,620 | | 2,309 | |
Total interest expense | | 10,779 | | 7,258 | |
Net interest income | | 57,697 | | 45,493 | |
Non-interest income | | | | | |
Loan related income | | 3,046 | | 1,283 | |
Mortgage banking income | | 821 | | 1,253 | |
Deposit related fees | | 6,109 | | 5,677 | |
Insurance commissions and fees | | 2,893 | | 2,967 | |
Wealth management fees | | 2,502 | | 2,603 | |
Total fee income | | 15,371 | | 13,783 | |
Other | | 223 | | (1,255 | ) |
Securities gains, net | | 36 | | 34 | |
Total non-interest income | | 15,630 | | 12,562 | |
Total net revenue | | 73,327 | | 58,055 | |
Provision for loan losses | | 4,006 | | 3,851 | |
Non-interest expense | | | | | |
Compensation and benefits | | 25,714 | | 21,811 | |
Occupancy and equipment | | 6,690 | | 7,108 | |
Technology and communications | | 4,857 | | 3,593 | |
Marketing and promotion | | 673 | | 713 | |
Professional services | | 1,280 | | 1,272 | |
FDIC premiums and assessments | | 1,233 | | 1,129 | |
Other real estate owned and foreclosures | | 263 | | 251 | |
Amortization of intangible assets | | 819 | | 901 | |
Merger, restructuring and conversion expense (1) | | 780 | | 4,421 | |
Other | | 4,791 | | 3,949 | |
Total non-interest expense | | 47,100 | | 45,148 | |
| | | | | |
Income before income taxes | | 22,221 | | 9,056 | |
Income tax expense | | 6,220 | | 297 | |
Net income | | $ | 16,001 | | $ | 8,759 | |
| | | | | |
Earnings per share: | | | | | |
Basic | | $ | 0.52 | | $ | 0.35 | |
Diluted | | $ | 0.52 | | $ | 0.35 | |
| | | | | |
Weighted average shares outstanding: | | | | | |
Basic | | 30,511 | | 24,803 | |
Diluted | | 30,688 | | 24,955 | |
(1) Merger, restructuring and conversion expenses include Firestone acquisition, Hampden acquisition and branch restructuring related expenses.
F-4
CONSOLIDATED STATEMENTS OF INCOME (5 Quarter Trend) - UNAUDITED - (F-5)
| | March 31, | | Dec. 31, | | Sept. 30, | | June 30, | | March 31, | |
(In thousands, except per share data) | | 2016 | | 2015 | | 2015 | | 2015 | | 2015 | |
Interest and dividend income | | | | | | | | | | | |
Loans | | $ | 58,442 | | $ | 59,055 | | $ | 56,343 | | $ | 51,504 | | $ | 44,445 | |
Securities and other | | 10,034 | | 9,369 | | 9,109 | | 8,899 | | 8,306 | |
Total interest and dividend income | | 68,476 | | 68,424 | | 65,452 | | 60,403 | | 52,751 | |
Interest expense | | | | | | | | | | | |
Deposits | | 7,159 | | 6,661 | | 6,046 | | 5,292 | | 4,949 | |
Borrowings | | 3,620 | | 3,015 | | 2,435 | | 2,474 | | 2,309 | |
Total interest expense | | 10,779 | | 9,676 | | 8,481 | | 7,766 | | 7,258 | |
Net interest income | | 57,697 | | 58,748 | | 56,971 | | 52,637 | | 45,493 | |
Non-interest income | | | | | | | | | | | |
Loan related income | | 3,046 | | 2,707 | | 1,537 | | 2,783 | | 1,283 | |
Mortgage banking income | | 821 | | 641 | | 693 | | 1,546 | | 1,253 | |
Deposit related fees | | 6,109 | | 6,416 | | 6,549 | | 6,442 | | 5,677 | |
Insurance commissions and fees | | 2,893 | | 2,254 | | 2,544 | | 2,486 | | 2,967 | |
Wealth management fees | | 2,502 | | 2,326 | | 2,376 | | 2,397 | | 2,603 | |
Total fee income | | 15,371 | | 14,344 | | 13,699 | | 15,654 | | 13,783 | |
Other | | 223 | | (1,739 | ) | (1,050 | ) | (1,258 | ) | (1,255 | ) |
Securities gains, net | | 36 | | (357 | ) | 49 | | 2,384 | | 34 | |
Total non-interest income | | 15,630 | | 12,248 | | 12,698 | | 16,780 | | 12,562 | |
Total net revenue | | 73,327 | | 70,996 | | 69,669 | | 69,417 | | 58,055 | |
Provision for loan losses | | 4,006 | | 4,431 | | 4,240 | | 4,204 | | 3,851 | |
Non-interest expense | | | | | | | | | | | |
Compensation and benefits | | 25,714 | | 25,819 | | 25,237 | | 24,503 | | 21,811 | |
Occupancy and equipment | | 6,690 | | 7,308 | | 6,827 | | 7,243 | | 7,108 | |
Technology and communications | | 4,857 | | 4,553 | | 4,645 | | 4,090 | | 3,593 | |
Marketing and promotion | | 673 | | 1,012 | | 781 | | 800 | | 713 | |
Professional services | | 1,280 | | 1,472 | | 1,053 | | 1,375 | | 1,272 | |
FDIC premiums and assessments | | 1,233 | | 1,220 | | 1,157 | | 1,143 | | 1,129 | |
Other real estate owned and foreclosures | | 263 | | 33 | | 298 | | 251 | | 251 | |
Amortization of intangible assets | | 819 | | 841 | | 887 | | 934 | | 901 | |
Merger, restructuring and conversion expense (1) | | 780 | | 1,118 | | 3,361 | | 8,711 | | 4,421 | |
Other | | 4,791 | | 4,903 | | 5,132 | | 4,975 | | 3,949 | |
Total non-interest expense | | 47,100 | | 48,279 | | 49,378 | | 54,025 | | 45,148 | |
| | | | | | | | | | | |
Income before income taxes | | 22,221 | | 18,286 | | 16,051 | | 11,188 | | 9,056 | |
Income tax expense | | 6,220 | | 2,273 | | 1,350 | | 1,144 | | 297 | |
Net income | | $ | 16,001 | | $ | 16,013 | | $ | 14,701 | | $ | 10,044 | | $ | 8,759 | |
| | | | | | | | | | | |
Earnings per share: | | | | | | | | | | | |
Basic | | $ | 0.52 | | $ | 0.53 | | $ | 0.49 | | $ | 0.35 | | $ | 0.35 | |
Diluted | | $ | 0.52 | | $ | 0.52 | | $ | 0.49 | | $ | 0.35 | | $ | 0.35 | |
| | | | | | | | | | | |
Weighted average shares outstanding: | | | | | | | | | | | |
Basic | | 30,511 | | 30,500 | | 29,893 | | 28,301 | | 24,803 | |
Diluted | | 30,688 | | 30,694 | | 30,069 | | 28,461 | | 24,955 | |
(1) See note on Page F-4
F-5
AVERAGE YIELDS AND COSTS (Fully Taxable Equivalent - Annualized) - UNAUDITED - (F-6)
| | Quarters Ended | |
| | March 31, | | Dec. 31, | | Sept. 30, | | June 30, | | March 31, | |
| | 2016 | | 2015 | | 2015 | | 2015 | | 2015 | |
Earning assets | | | | | | | | | | | |
Loans: | | | | | | | | | | | |
Commercial real estate | | 4.18 | % | 4.17 | % | 4.47 | % | 4.46 | % | 4.12 | % |
Commercial and industrial loans | | 5.04 | | 5.51 | | 4.79 | | 3.64 | | 3.70 | |
Residential mortgages | | 3.86 | | 3.72 | | 3.74 | | 4.08 | | 3.94 | |
Consumer loans | | 3.44 | | 3.30 | | 3.29 | | 3.24 | | 3.23 | |
Total loans | | 4.13 | | 4.15 | | 4.14 | | 4.02 | | 3.86 | |
Securities | | 3.26 | | 2.96 | | 2.92 | | 2.99 | | 3.10 | |
Short-term investments and loans held for sale | | 0.91 | | 0.89 | | 1.34 | | 1.13 | | 1.40 | |
Total earning assets | | 3.93 | | 3.89 | | 3.87 | | 3.77 | | 3.67 | |
| | | | | | | | | | | |
Funding liabilities | | | | | | | | | | | |
Deposits: | | | | | | | | | | | |
NOW | | 0.13 | | 0.14 | | 0.14 | | 0.15 | | 0.14 | |
Money market | | 0.49 | | 0.45 | | 0.42 | | 0.37 | | 0.40 | |
Savings | | 0.13 | | 0.14 | | 0.15 | | 0.17 | | 0.15 | |
Time | | 0.99 | | 0.93 | | 0.90 | | 0.91 | | 0.92 | |
Total interest-bearing deposits | | 0.63 | | 0.59 | | 0.55 | | 0.52 | | 0.53 | |
Borrowings | | 1.19 | | 0.96 | | 0.81 | | 0.77 | | 0.85 | |
Total interest-bearing liabilities | | 0.75 | | 0.67 | | 0.61 | | 0.58 | | 0.61 | |
| | | | | | | | | | | |
Net interest spread | | 3.18 | | 3.22 | | 3.26 | | 3.19 | | 3.06 | |
Net interest margin | | 3.33 | | 3.35 | | 3.37 | | 3.30 | | 3.18 | |
| | | | | | | | | | | |
Cost of funds (1) | | 0.64 | | 0.56 | | 0.51 | | 0.49 | | 0.51 | |
Cost of deposits (2) | | 0.51 | | 0.48 | | 0.45 | | 0.42 | | 0.43 | |
(1) Cost of funds includes all deposits and borrowings.
(2) The average cost of deposits include the deposits held for sale.
F-6
AVERAGE BALANCES - UNAUDITED - (F-7)
| | Quarters Ended | |
| | March 31, | | Dec. 31, | | Sept. 30, | | June 30, | | March 31, | |
(In thousands) | | 2016 | | 2015 | | 2015 | | 2015 | | 2015 | |
Assets | | | | | | | | | | | |
Loans | | | | | | | | | | | |
Commercial real estate | | $ | 2,079,001 | | $ | 2,034,917 | | $ | 1,948,753 | | $ | 1,889,306 | | $ | 1,646,638 | |
Commercial and industrial loans | | 1,027,257 | | 1,033,081 | | 998,782 | | 886,297 | | 806,710 | |
Residential mortgages | | 1,798,034 | | 1,790,334 | | 1,664,505 | | 1,562,503 | | 1,469,910 | |
Consumer loans | | 807,888 | | 807,768 | | 813,986 | | 821,933 | | 765,938 | |
Total loans (1) (2) | | 5,712,180 | | 5,666,100 | | 5,426,026 | | 5,160,039 | | 4,689,196 | |
Securities (3) | | 1,342,590 | | 1,368,505 | | 1,353,818 | | 1,301,918 | | 1,176,559 | |
Short-term investments and loans held for sale | | 56,042 | | 51,241 | | 51,832 | | 72,003 | | 55,652 | |
Total earning assets | | 7,110,812 | | 7,085,846 | | 6,831,676 | | 6,533,960 | | 5,921,407 | |
Goodwill and other intangible assets | | 333,948 | | 335,440 | | 330,084 | | 303,780 | | 275,732 | |
Other assets | | 346,327 | | 342,902 | | 379,319 | | 357,026 | | 300,264 | |
Total assets | | $ | 7,791,087 | | $ | 7,764,188 | | $ | 7,541,079 | | $ | 7,194,766 | | $ | 6,497,403 | |
| | | | | | | | | | | |
Liabilities and shareholders’ equity | | | | | | | | | | | |
Deposits (4) | | | | | | | | | | | |
NOW | | $ | 484,334 | | $ | 491,445 | | $ | 475,433 | | $ | 460,378 | | $ | 423,474 | |
Money market | | 1,417,068 | | 1,455,267 | | 1,474,389 | | 1,437,428 | | 1,408,777 | |
Savings | | 602,414 | | 604,215 | | 615,410 | | 606,231 | | 502,412 | |
Time | | 2,063,712 | | 1,958,394 | | 1,795,156 | | 1,558,350 | | 1,419,706 | |
Total interest-bearing deposits | | 4,567,528 | | 4,509,321 | | 4,360,388 | | 4,062,387 | | 3,754,369 | |
Borrowings | | 1,222,288 | | 1,256,287 | | 1,198,455 | | 1,287,319 | | 1,106,541 | |
Total interest-bearing liabilities | | 5,789,816 | | 5,765,608 | | 5,558,843 | | 5,349,706 | | 4,860,910 | |
Non-interest-bearing demand deposits | | 1,026,447 | | 1,033,844 | | 1,010,613 | | 974,160 | | 869,780 | |
Other liabilities | | 84,042 | | 91,877 | | 119,322 | | 75,487 | | 65,453 | |
Total liabilities | | 6,900,305 | | 6,891,329 | | 6,688,778 | | 6,399,353 | | 5,796,143 | |
| | | | | | | | | | | |
Total shareholders’ equity | | 890,782 | | 872,859 | | 852,301 | | 795,413 | | 701,260 | |
| | | | | | | | | | | |
Total liabilities and shareholders’ equity | | $ | 7,791,087 | | $ | 7,764,188 | | $ | 7,541,079 | | $ | 7,194,766 | | $ | 6,497,403 | |
| | | | | | | | | | | |
Supplementary data | | | | | | | | | | | |
Total non-maturity deposits (4) | | $ | 3,530,263 | | $ | 3,584,771 | | $ | 3,575,845 | | $ | 3,478,197 | | $ | 3,204,443 | |
Total deposits (4) | | 5,593,975 | | 5,543,165 | | 5,371,001 | | 5,036,547 | | 4,624,149 | |
Fully taxable equivalent income adjustment | | 1,134 | | 1,108 | | 1,131 | | 1,068 | | 889 | |
Total average tangible equity (5) | | 556,834 | | 537,419 | | 522,217 | | 491,633 | | 425,528 | |
(1) Total loans include non-accruing loans.
(2) The average balances of loans include the loans associated with the two branches in New York that are for sale and presented under loans held for sale on the consolidated balance sheet.
(3) Average balances for securities available-for-sale are based on amortized cost.
(4) The average balances of deposits include the deposits held for sale presented under other liabilities on the consolidated balance sheet.
(5) Total average tangible equity results from the subtraction of average goodwill and other intangible assets from total average shareholders’ equity.
F-7
ASSET QUALITY ANALYSIS - UNAUDITED - (F-8)
| | At or for the Quarters Ended | |
| | March 31, | | Dec. 31, | | Sept. 30, | | June 30, | | March 31, | |
(in thousands) | | 2016 | | 2015 | | 2015 | | 2015 | | 2015 | |
NON-PERFORMING ASSETS | | | | | | | | | | | |
Non-accruing loans: | | | | | | | | | | | |
Commercial real estate | | $ | 5,001 | | $ | 4,882 | | $ | 5,693 | | $ | 9,733 | | $ | 13,516 | |
Commercial and industrial loans | | 7,480 | | 8,259 | | 8,092 | | 3,031 | | 1,308 | |
Residential mortgages | | 4,732 | | 3,966 | | 4,565 | | 4,234 | | 4,153 | |
Consumer loans | | 3,588 | | 3,768 | | 3,386 | | 2,991 | | 3,032 | |
Total non-accruing loans | | 20,801 | | 20,875 | | 21,736 | | 19,989 | | 22,009 | |
Other real estate owned | | 1,440 | | 1,725 | | 2,487 | | 674 | | 1,444 | |
Total non-performing assets | | $ | 22,241 | | $ | 22,600 | | $ | 24,223 | | $ | 20,663 | | $ | 23,453 | |
| | | | | | | | | | | |
Total non-accruing loans/total loans | | 0.36 | % | 0.36 | % | 0.38 | % | 0.38 | % | 0.47 | % |
Total non-performing assets/total assets | | 0.28 | % | 0.29 | % | 0.31 | % | 0.27 | % | 0.36 | % |
| | | | | | | | | | | |
PROVISION AND ALLOWANCE FOR LOAN LOSSES | | | | | | | | | | | |
Balance at beginning of period | | $ | 39,308 | | $ | 38,180 | | $ | 37,197 | | $ | 36,286 | | $ | 35,662 | |
Charged-off loans | | (3,704 | ) | (3,538 | ) | (3,542 | ) | (4,176 | ) | (3,432 | ) |
Recoveries on charged-off loans | | 445 | | 235 | | 285 | | 883 | | 205 | |
Net loans charged-off | | (3,259 | ) | (3,303 | ) | (3,257 | ) | (3,293 | ) | (3,227 | ) |
Provision for loan losses | | 4,006 | | 4,431 | | 4,240 | | 4,204 | | 3,851 | |
Balance at end of period | | $ | 40,055 | | $ | 39,308 | | $ | 38,180 | | $ | 37,197 | | $ | 36,286 | |
| | | | | | | | | | | |
Allowance for loan losses/total loans | | 0.70 | % | 0.69 | % | 0.67 | % | 0.70 | % | 0.77 | % |
Allowance for loan losses/non-accruing loans | | 193 | % | 188 | % | 176 | % | 186 | % | 165 | % |
| | | | | | | | | | | |
NET LOAN CHARGE-OFFS | | | | | | | | | | | |
Commercial real estate | | $ | (1,043 | ) | $ | (1,152 | ) | $ | (1,343 | ) | $ | (2,461 | ) | $ | (2,007 | ) |
Commercial and industrial loans | | (847 | ) | (1,056 | ) | (1,098 | ) | (124 | ) | (375 | ) |
Residential mortgages | | (774 | ) | (633 | ) | (354 | ) | (367 | ) | (299 | ) |
Home equity | | (221 | ) | (118 | ) | (135 | ) | (174 | ) | (202 | ) |
Auto and other consumer | | (374 | ) | (344 | ) | (327 | ) | (167 | ) | (344 | ) |
Total, net | | $ | (3,259 | ) | $ | (3,303 | ) | $ | (3,257 | ) | $ | (3,293 | ) | $ | (3,227 | ) |
| | | | | | | | | | | |
Net charge-offs (QTD annualized)/average loans | | 0.23 | % | 0.25 | % | 0.26 | % | 0.26 | % | 0.28 | % |
Net charge-offs (YTD annualized)/average loans | | 0.23 | % | 0.25 | % | 0.26 | % | 0.26 | % | 0.28 | % |
| | | | | | | | | | | |
DELINQUENT AND NON-ACCRUING LOANS/TOTAL LOANS | | | | | | | | | | | |
30-89 Days delinquent | | 0.26 | % | 0.34 | % | 0.37 | % | 0.29 | % | 0.28 | % |
90+ Days delinquent and still accruing | | 0.07 | % | 0.09 | % | 0.10 | % | 0.12 | % | 0.15 | % |
Total accruing delinquent loans | | 0.33 | % | 0.43 | % | 0.47 | % | 0.41 | % | 0.43 | % |
Non-accruing loans | | 0.36 | % | 0.36 | % | 0.38 | % | 0.38 | % | 0.47 | % |
Total delinquent and non-accruing loans | | 0.69 | % | 0.79 | % | 0.85 | % | 0.79 | % | 0.90 | % |
F-8
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES - UNAUDITED - (F-9)
| | | | At or for the Quarters Ended | |
| | | | March 31, | | Dec. 31, | | Sept. 30, | | June 30, | | March 31, | |
(in thousands) | | | | 2016 | | 2015 | | 2015 | | 2015 | | 2015 | |
Net income | | | | $ | 16,001 | | $ | 16,013 | | $ | 14,701 | | $ | 10,044 | | $ | 8,759 | |
Adj: Net securities (gains) losses | | | | (36 | ) | 357 | | (49 | ) | (2,384 | ) | (34 | ) |
Adj: Merger and acquisition expense | | | | 527 | | 1,230 | | 2,987 | | 5,665 | | 3,275 | |
Adj: Restructuring expense | | | | 253 | | (112 | ) | 374 | | 3,046 | | 1,146 | |
Adj: Income taxes | | | | (256 | ) | (959 | ) | (1,862 | ) | (1,815 | ) | (772 | ) |
Total core income | | (A) | | $ | 16,489 | | $ | 16,529 | | $ | 16,151 | | $ | 14,556 | | $ | 12,374 | |
| | | | | | | | | | | | | |
Total revenue | | | | $ | 73,327 | | $ | 70,996 | | $ | 69,669 | | $ | 69,417 | | $ | 58,055 | |
Adj: Net securities (gains) losses | | | | (36 | ) | 357 | | (49 | ) | (2,384 | ) | (34 | ) |
Total core revenue | | (B) | | $ | 73,291 | | $ | 71,353 | | $ | 69,620 | | $ | 67,033 | | $ | 58,021 | |
| | | | | | | | | | | | | |
Total non-interest expense | | | | $ | 47,100 | | $ | 48,279 | | $ | 49,378 | | $ | 54,025 | | $ | 45,148 | |
Less: Total non-core expense (see above) | | | | (780 | ) | (1,118 | ) | (3,361 | ) | (8,711 | ) | (4,421 | ) |
Core non-interest expense | | (C) | | $ | 46,320 | | $ | 47,161 | | $ | 46,017 | | $ | 45,314 | | $ | 40,727 | |
| | | | | | | | | | | | | |
(in millions, except per share data) | | | | | | | | | | | | | |
Total average assets | | (D) | | $ | 7,791 | | $ | 7,764 | | $ | 7,541 | | $ | 7,195 | | $ | 6,497 | |
Total average shareholders’ equity | | (E) | | 891 | | 873 | | 852 | | 795 | | 701 | |
Total average tangible shareholders’ equity | | (F) | | 557 | | 537 | | 522 | | 492 | | 426 | |
Total tangible shareholders’ equity, period-end (1) | | (G) | | 572 | | 553 | | 545 | | 507 | | 441 | |
Total tangible assets, period-end | | (H) | | 7,474 | | 7,497 | | 7,468 | | 7,198 | | 6,296 | |
| | | | | | | | | | | | | |
Total common shares outstanding, period-end (thousands) | | (I) | | 31,039 | | 30,974 | | 30,949 | | 29,521 | | 25,253 | |
Average diluted shares outstanding (thousands) | | (J) | | 30,688 | | 30,694 | | 30,069 | | 28,461 | | 24,955 | |
| | | | | | | | | | | | | |
Core earnings per share, diluted | | (A/J) | | $ | 0.54 | | $ | 0.54 | | $ | 0.54 | | $ | 0.51 | | $ | 0.50 | |
Tangible book value per share, period-end | | (G/I) | | 18.44 | | 17.84 | | 17.61 | | 17.16 | | 17.46 | |
| | | | | | | | | | | | | |
Performance ratios (2) | | | | | | | | | | | | | |
Core return on assets | | (A/D) | | 0.85 | % | 0.85 | % | 0.86 | % | 0.81 | % | 0.76 | % |
Core return on equity | | (A/E) | | 7.40 | | 7.58 | | 7.58 | | 7.32 | | 7.06 | |
Core return on tangible equity (3) | | (A/F) | | 12.20 | | 12.68 | | 12.78 | | 12.30 | | 12.14 | |
Efficiency ratio | | (C-M)/(B+K+N) | | 59.86 | | 60.56 | | 60.35 | | 61.51 | | 63.27 | |
Total tangible shareholders’ equity/Total tangible assets | | (G)/(H) | | 7.66 | | 7.38 | | 7.30 | | 7.04 | | 7.00 | |
| | | | | | | | | | | | | |
Supplementary data (in thousands) | | | | | | | | | | | | | |
Tax benefit on tax-credit investments (4) | | (K) | | $ | 1,588 | | $ | 4,029 | | $ | 4,029 | | $ | 4,034 | | $ | 4,034 | |
Non-interest income charge on tax-credit investments (5) | | (L) | | (1,101 | ) | (2,851 | ) | (2,851 | ) | (2,851 | ) | (2,851 | ) |
Net income on tax-credit investments | | (K+L) | | 487 | | 1,178 | | 1,178 | | 1,183 | | 1,183 | |
Intangible amortization | | (M) | | 819 | | 841 | | 887 | | 934 | | 901 | |
Fully taxable equivalent income adjustment | | (N) | | 1,134 | | 1,108 | | 1,131 | | 1,068 | | 889 | |
(1) Total tangible shareholders’ equity is computed by taking total shareholders’ equity less the intangible assets at period-end.
(2) Ratios are annualized and based on average balance sheet amounts, where applicable. Quarterly data may not sum to year-to-date data due to rounding.
(3) Core return on tangible equity is computed by dividing the total core income adjusted for the tax-affected amortization of intangible assets, assuming a 40% marginal rate, by tangible equity.
(4) The tax benefit is the direct reduction to the income tax provision due to tax credits and deductions generated from investments in historic rehabilitation, low-income housing, new market projects, and renewable energy projects.
(5) The non-interest income charge is the reduction to the tax-advantaged investments, which are incurred as the tax credits are generated.
F-9
