EXHIBIT 99
| | | |
| | MB Financial, Inc. | |
| | 800 West Madison Street | |
| | Chicago, Illinois 60607 | |
| | (888) 422-6562 | |
| | NASDAQ: MBFI | |
| | | |
PRESS RELEASE
For Information at MB Financial, Inc. contact:
Jill York - Vice President and Chief Financial Officer
E-Mail: jyork@mbfinancial.com
FOR IMMEDIATE RELEASE
MB FINANCIAL, INC. REPORTS FIRST QUARTER 2012 NET INCOME OF $21.1 MILLION, STRONG PRE-TAX, PRE-PROVISION OPERATING EARNINGS AND IMPROVING CREDIT COSTS
CHICAGO, April 19, 2012 – MB Financial, Inc. (NASDAQ: MBFI), the holding company for MB Financial Bank, N.A (“the Bank” or “MB Financial Bank”), announced today first quarter results for 2012. The words “MB Financial,” “the Company,” “we,” “our” and “us” refer to MB Financial, Inc. and its consolidated subsidiaries, unless indicated otherwise. We had net income of $21.1 million and net income available to common stockholders of $17.8 million for the first quarter of 2012 compared to net income of $6.9 million and net income available to common stockholders of $4.3 million for the first quarter of 2011, and net income of $19.5 million and net income available to common stockholders of $16.8 million for the fourth quarter of 2011.
Key items for the quarter were as follows:
“Shareholder Friendly” TARP Repayment:
| · | On March 14, 2012, we repurchased all $196 million of preferred stock issued in 2008 to the U.S. Department of Treasury as part of the Troubled Asset Relief Program (“TARP”) Capital Purchase Program. No equity or long term debt was issued in conjunction with the repurchase. |
| The repurchase resulted in a one-time, non-cash after-tax charge of approximately $1.2 million or $0.02 per common share in the first quarter of 2012, related to unaccreted discount recorded at the date of issuance. |
| The repurchase was made with cash on hand as of the repurchase date. Prior to the repurchase date, we entered into and fully utilized a $35.0 million unsecured line of credit agreement with a correspondent bank to supplement holding company cash. |
Pre-Tax, Pre-Provision Operating Earnings Remain Strong:
| Pre-tax, pre-provision operating earnings on a fully tax equivalent basis were $44.5 million, or 2.91% of risk-weighted assets, for the first quarter of 2012 compared to $46.0 million, or 2.87% of risk-weighted assets, for the fourth quarter of 2011. |
| Pre-tax, pre-provision operating earnings on a fully tax equivalent basis to average assets was 1.84% for the first quarter of 2012 compared to 1.85% for the fourth quarter of 2011. |
| Net interest margin on a fully tax equivalent basis was 3.87% for the first quarter of 2012 compared to 3.91% in the fourth quarter of 2011. |
Credit Costs Continue to Improve:
| Our provision for credit losses was $3.1 million for the first quarter of 2012, while our net charge-offs were $5.8 million. Our provision for credit losses and net charge-offs for the fourth quarter of 2011 were $8.0 million and $13.9 million, respectively. |
| Our non-performing loans were $124.7 million or 2.15% of total loans as of March 31, 2012, a decrease of $4.7 million from $129.4 million or 2.17% of total loans at December 31, 2011. |
| Our allowance for loan losses to non-performing loans was 100.59% as of March 31, 2012 compared to 98.00% as of December 31, 2011. |
| Our non-performing assets were $187.8 million or 1.94% of total assets as of March 31, 2012, a decrease of $20.2 million from $208.0 million or 2.12% of total assets as of December 31, 2011. |
| Other real estate owned decreased to $63.1 million as of March 31, 2012 compared to $78.5 million as of December 31, 2011, while losses recognized on other real estate owned increased by $1.1 million to $6.6 million for the first quarter of 2012 compared to the fourth quarter of 2011. |
RESULTS OF OPERATIONS
First Quarter Results
Net Interest Income
Net interest income on a fully tax equivalent basis decreased $2.9 million from the fourth quarter of 2011 and decreased by $3.0 million from the first quarter of 2011 to the first quarter of 2012. The decrease from the fourth quarter of 2011 was due primarily to a decrease in average interest earning assets and a decrease in net interest margin. The decrease from the first quarter of 2011 to the first quarter of 2012 was due primarily to a decrease in average interest earning assets.
Our net interest margin, on a fully tax equivalent basis, was 3.87% for the first quarter of 2012 compared to 3.91% for the fourth quarter of 2011 and 3.88% for the first quarter of 2011. The net interest margin decreased from the fourth quarter of 2011 due to a decrease in loan yields, partially offset by an improved deposit mix and downward repricing of interest bearing deposits.
See the supplemental net interest margin tables for further detail.
Other Income (in thousands):
| | | Three Months Ended |
| | | | March 31, | | December 31, | | September 30, | | June 30, | | March 31, |
| | | | 2012 | | 2011 | | 2011 | | 2011 | | 2011 |
| Core other income: | | | | | | | | | | |
| | Loan service fees | $ | 1,339 | $ | 1,601 | $ | 2,159 | $ | 2,812 | $ | 1,126 |
| | Deposit service fees | | 9,408 | | 10,085 | | 9,932 | | 9,023 | | 10,030 |
| | Lease financing, net | | 6,958 | | 7,801 | | 6,494 | | 6,861 | | 5,783 |
| | Brokerage fees | | 1,255 | | 1,577 | | 1,273 | | 1,615 | | 1,419 |
| | Trust and asset management fees | | 4,404 | | 4,166 | | 4,272 | | 4,455 | | 4,431 |
| | Increase in cash surrender value of life insurance | | 917 | | 944 | | 1,014 | | 1,451 | | 968 |
| | Accretion of FDIC indemnification asset | | 475 | | 683 | | 985 | | 1,339 | | 1,831 |
| | Card fees | | 2,044 | | 1,096 | | 2,071 | | 2,062 | | 1,788 |
| | Other operating income | | 2,162 | | 1,632 | | 1,690 | | 1,979 | | 1,598 |
| Total core other income | | 28,962 | | 29,585 | | 29,890 | | 31,597 | | 28,974 |
| | | | | | | | | | | | |
Non-core other income: (1) | | | | | | | | | | |
| | Net gain (loss) on sale of investment securities | | (3) | | 411 | | - | | 232 | | (3) |
| | Net (loss) gain on sale of other assets | | (17) | | (87) | | - | | 13 | | 357 |
| | Net gain on sale of loans held for sale (A) | | - | | - | | - | | 1,790 | | - |
| | Net loss recognized on other real estate owned (B) | | (4,348) | | (3,620) | | (2,354) | | (3,629) | | (369) |
| | Net loss recognized on other real estate owned | | | | | | | | | | |
| | related to FDIC transactions (B) | | (2,241) | | (1,858) | | (764) | | (1,016) | | (3) |
| | Increase (decrease) in market value of assets held | | | | | | | | | | |
| | in trust for deferred compensation (A) | | 501 | | 20 | | (405) | | 158 | | 187 |
| Total non-core other income | | (6,108) | | (5,134) | | (3,523) | | (2,452) | | 169 |
| | | | | | | | | | | | |
| Total other income | $ | 22,854 | $ | 24,451 | $ | 26,367 | $ | 29,145 | $ | 29,143 |
| (1) | Letter denotes the corresponding line items where these non-core other income items reside in the consolidated statements of income as follows: A – Other operating income, B – Net loss recognized on other real estate owned. |
Core other income decreased by $623 thousand from the fourth quarter of 2011 to the first quarter of 2012. Deposit service fees decreased primarily due to decreases in NSF and overdraft fees. Net lease financing decreased due to a decrease in remarketing revenues, which were unusually robust during the fourth quarter of 2011. Accretion of indemnification asset decreased as a result of the corresponding decrease in the indemnification asset balance during the first quarter of 2012. Card fees increased due to restrictions of the Durbin Amendment to the Dodd-Frank Act on debit card interchange fees currently not applying to us as a result of total assets decreasing under $10 billion as of December 31, 2011. Non-core other income was primarily impacted by higher losses recognized on other real estate owned.
Core other income was consistent from the first quarter of 2011 to the first quarter of 2012. Deposit service fees decreased due to decreases in NSF and overdraft fees. Net lease financing increased primarily due to an increase in the sales of third party equipment maintenance contracts and related income. Accretion of indemnification asset decreased as a result of corresponding decrease in the indemnification asset balance during the first quarter of 2012. Non-core other income was primarily impacted by higher losses recognized on other real estate owned.
Other Expense (in thousands):
| | | Three Months Ended |
| | | | March 31, | | December 31, | | September 30, | | June 30, | | March 31, |
| | | | 2012 | | 2011 | | 2011 | | 2011 | | 2011 |
| Core other expense: | | | | | | | | | | |
| | Salaries and employee benefits | $ | 39,928 | $ | 39,826 | $ | 38,827 | $ | 37,657 | $ | 37,588 |
| | Occupancy and equipment expense | | 9,570 | | 8,498 | | 9,092 | | 8,483 | | 9,394 |
| | Computer services and telecommunication expense | | 3,653 | | 4,382 | | 3,488 | | 3,570 | | 3,445 |
| | Advertising and marketing expense | | 2,066 | | 1,831 | | 1,740 | | 1,748 | | 1,719 |
| | Professional and legal expense | | 1,413 | | 1,422 | | 1,647 | | 1,853 | | 1,225 |
| | Other intangible amortization expense | | 1,257 | | 1,410 | | 1,414 | | 1,416 | | 1,425 |
| | FDIC insurance premiums | | 2,643 | | 2,662 | | 2,272 | | 3,502 | | 3,428 |
| | Other real estate expense, net | | 1,243 | | 1,464 | | 1,181 | | 1,251 | | 398 |
| | Other operating expenses | | 5,057 | | 7,324 | | 7,352 | | 7,090 | | 7,055 |
| Total core other expense | | 66,830 | | 68,819 | | 67,013 | | 66,570 | | 65,677 |
| | | | | | | | | | | | |
Non-core other expense: (1) | | | | | | | | | | |
| | Branch impairment charges | | - | | 594 | | - | | - | | 1,000 |
| | Increase (decrease) in market value of assets held | | | | | | | | | | |
| | in trust for deferred compensation (A) | | 501 | | 20 | | (405) | | 158 | | 187 |
| Total non-core other expense | | 501 | | 614 | | (405) | | 158 | | 1,187 |
| | | | | | | | | | | | |
| Total other expense | $ | 67,331 | $ | 69,433 | $ | 66,608 | $ | 66,728 | $ | 66,864 |
| (1) | Letters denote the corresponding line items where these non-core other expense items reside in the consolidated statements of income as follows: A – Salaries and employee benefits. |
Core other expense decreased by $2.0 million in the first quarter of 2012 compared with the fourth quarter of 2011. Occupancy and equipment expense increased as a result of higher maintenance costs. Computer services and telecommunication expense decreased primarily due to product and system enhancement activities completed in the fourth quarter of 2011. The decrease in other operating expenses was primarily due to a $1.7 million decrease in the clawback liability related to our loss share agreements with the FDIC.
Core other expense increased by $1.2 million from the first quarter of 2011 to the first quarter of 2012. Salaries and employee benefits expense increased due to officer raises, higher health insurance claims and one extra day in the first quarter of 2012. FDIC insurance premiums decreased due to lower deposits, a change in the assessment computation during the second quarter of 2011, and the impact of improved credit quality on the computation. Other real estate expense increased as a result of increased holding costs related to other real estate owned. The decrease in other operating expenses was primarily due to a $1.7 million decrease in the clawback liability related to our loss share agreements with the FDIC. Non-core other expense was primarily impacted by $1.0 million of fixed asset impairment charges due to our decision to close a branch in the first quarter of 2011.
Income Taxes
The Company had income tax expense of $8.4 million for the three months ended March 31, 2012. Tax expense in the first quarter of 2011 included $2.1 million of income tax benefit due to an increase in deferred tax assets as a result of an increase in the Illinois corporate income tax rate enacted in the first quarter of 2011.
LOAN PORTFOLIO
The following table sets forth the composition of the loan portfolio, excluding loans held for sale, as of the dates indicated (dollars in thousands):
| | | | March 31, | | December 31, | | September 30, | | June 30, | | March 31, |
| | | | 2012 | | 2011 | | 2011 | | 2011 | | 2011 |
| | | | Amount | % of Total | | Amount | % of Total | | Amount | % of Total | | Amount | % of Total | | Amount | % of Total |
| Commercial related credits: | | | | | | | | | | | | | | | |
| | Commercial loans | $ | 1,040,340 | 18% | $ | 1,113,123 | 19% | $ | 1,042,583 | 18% | $ | 1,108,295 | 19% | $ | 1,154,451 | 18% |
| | Commercial loans collateralized by | | | | | | | | | | | | | | | |
| | assignment of lease payments (lease loans) | | 1,209,942 | 21% | | 1,208,575 | 20% | | 1,067,191 | 18% | | 1,031,677 | 17% | | 1,038,507 | 16% |
| | Commercial real estate | | 1,877,380 | 32% | | 1,853,788 | 31% | | 1,844,894 | 32% | | 1,863,223 | 32% | | 2,084,651 | 33% |
| | Construction real estate | | 128,040 | 2% | | 183,789 | 3% | | 210,206 | 4% | | 246,557 | 4% | | 356,579 | 6% |
| Total commercial related credits | | 4,255,702 | 73% | | 4,359,275 | 73% | | 4,164,874 | 72% | | 4,249,752 | 72% | | 4,634,188 | 73% |
| Other loans: | | | | | | | | | | | | | | | |
| | Residential real estate | | 309,644 | 5% | | 316,787 | 5% | | 316,305 | 5% | | 317,821 | 5% | | 335,423 | 5% |
| | Indirect vehicle | | 186,736 | 3% | | 187,481 | 3% | | 189,033 | 4% | | 182,536 | 3% | | 175,058 | 3% |
| | Home equity | | 327,450 | 6% | | 336,043 | 6% | | 348,934 | 6% | | 357,181 | 6% | | 371,108 | 6% |
| | Consumer loans | | 89,705 | 2% | | 88,865 | 2% | | 76,025 | 1% | | 75,069 | 1% | | 74,585 | 1% |
| Total other loans | | 913,535 | 16% | | 929,176 | 16% | | 930,297 | 16% | | 932,607 | 15% | | 956,174 | 15% |
| Gross loans excluding covered loans | | 5,169,237 | 89% | | 5,288,451 | 89% | | 5,095,171 | 88% | | 5,182,359 | 87% | | 5,590,362 | 88% |
| | Covered loans (1) | | 620,528 | 11% | | 662,544 | 11% | | 718,566 | 12% | | 755,670 | 13% | | 777,634 | 12% |
| Total loans | $ | 5,789,765 | 100% | $ | 5,950,995 | 100% | $ | 5,813,737 | 100% | $ | 5,938,029 | 100% | $ | 6,367,996 | 100% |
| (1) | Covered loans refer to loans we acquired in FDIC-assisted transactions that are subject to loss-sharing agreements with the FDIC. |
During the second quarter of 2011, we sold certain performing, sub-performing and non-performing loans. The loans sold had an aggregate carrying amount of $281.6 million prior to the transfer to loans held for sale, which was comprised of $160.8 million in commercial real estate loans, $73.7 million in construction real estate loans, $14.5 million in commercial loans and $32.6 million in residential real estate and home equity loans.
ASSET QUALITY
The following table presents a summary of non-performing assets, excluding loans held for sale, credit-impaired loans that were acquired as part of our FDIC-assisted transactions and OREO related to assets acquired in FDIC-assisted transactions, as of the dates indicated (dollar amounts in thousands):
| | | March 31, | | December 31, | | September 30, | | June 30, | | March 31, |
| | | 2012 | | 2011 | | 2011 | | 2011 | | 2011 |
| Non-performing loans: | | | | | | | | | | |
| Non-accrual loans (1) | $ | 124,011 | $ | 129,309 | $ | 140,979 | $ | 149,905 | $ | 318,923 |
| Loans 90 days or more past due, still accruing interest | | 679 | | 82 | | - | | 1,121 | | - |
| Total non-performing loans | | 124,690 | | 129,391 | | 140,979 | | 151,026 | | 318,923 |
| | | | | | | | | | | |
| OREO | | 63,077 | | 78,452 | | 87,469 | | 88,185 | | 80,107 |
| Repossessed vehicles | | 81 | | 156 | | 249 | | 55 | | 139 |
| Total non-performing assets | $ | 187,848 | $ | 207,999 | $ | 228,697 | $ | 239,266 | $ | 399,169 |
| | | | | | | | | | | |
| Total allowance for loan losses (2) | $ | 125,431 | $ | 126,798 | $ | 128,610 | $ | 130,057 | $ | 178,410 |
| | | | | | | | | | | |
| Accruing restructured loans (3) | $ | 24,145 | $ | 37,996 | $ | 34,321 | $ | 35,037 | $ | 31,819 |
| | | | | | | | | | | |
| Total non-performing loans to total loans | | 2.15% | | 2.17% | | 2.42% | | 2.54% | | 5.01% |
| Total non-performing assets to total assets | | 1.94% | | 2.12% | | 2.30% | | 2.40% | | 3.96% |
| Allowance for loan losses to non-performing loans | | 100.59% | | 98.00% | | 91.23% | | 86.12% | | 55.94% |
| (1) | Includes $34.7 million, $42.5 million, $36.0 million, $22.5 million and $60.9 million of restructured loans on non-accrual status at March 31, 2012, December 31, 2011, September 30, 2011, June 30, 2011 and March 31, 2011, respectively. |
| (2) | Includes $12.7 million for unfunded credit commitments at March 31, 2011. |
| (3) | Accruing restructured loans consists primarily of residential real estate and home equity loans that have been modified and are performing in accordance with those modified terms. |
The decreases in total non-performing loans and total non-performing assets from March 31, 2011 to June 30, 2011 were primarily due to the sale during the second quarter of 2011 of loans with an aggregate carrying amount of $281.6 million prior to the transfer to loans held for sale, $156.3 million of which were non-performing.
The following table represents a summary of OREO, excluding OREO related to assets acquired in FDIC-assisted transactions (in thousands):
| | | March 31, | | December 31, | | September 30, | | June 30, | | March 31, |
| | | 2012 | | 2011 | | 2011 | | 2011 | | 2011 |
| | | | | | | | | | | |
| Balance at the beginning of quarter | $ | 78,452 | $ | 87,469 | $ | 88,185 | $ | 80,107 | $ | 71,476 |
| Transfers in at fair value less estimated costs to sell | | 2,110 | | 4,209 | | 15,658 | | 15,761 | | 25,167 |
| Fair value adjustments | | (4,764) | | (3,733) | | (2,524) | | (3,417) | | (1,314) |
| Net gains (losses) on sales of OREO | | 416 | | 113 | | 170 | | (212) | | 945 |
| Cash received upon disposition | | (13,137) | | (9,606) | | (14,020) | | (4,054) | | (16,167) |
| Balance at the end of quarter | $ | 63,077 | $ | 78,452 | $ | 87,469 | $ | 88,185 | $ | 80,107 |
The following table presents data related to non-performing loans, by dollar amount and category at March 31, 2012, excluding loans held for sale and credit-impaired loans that were acquired as part of our FDIC-assisted transactions (dollar amounts in thousands):
| | Commercial and Lease Loans | | Construction Real Estate Loans | | Commercial Real Estate Loans | | Consumer Loans | | Total Loans |
| | Number of Relationships | | Amount | | Number of Relationships | | Amount | | Number of Relationships | | Amount | | Amount | | Amount |
| $10.0 million or more | - | $ | - | | - | $ | - | | - | $ | - | $ | - | $ | - |
| $5.0 million to $9.9 million | 3 | | 21,476 | | - | | - | | 1 | | 5,431 | | - | | 26,907 |
| $1.5 million to $4.9 million | 2 | | 3,577 | | - | | - | | 15 | | 40,603 | | 1,603 | | 45,783 |
| Under $1.5 million | 43 | | 9,418 | | 4 | | 1,553 | | 68 | | 24,905 | | 16,124 | | 52,000 |
| | 48 | $ | 34,471 | | 4 | $ | 1,553 | | 84 | $ | 70,939 | $ | 17,727 | $ | 124,690 |
| | | | | | | | | | | | | | | | |
| Percentage of individual loan category | | 1.53% | | | | 1.21% | | | | 3.78% | | 1.94% | | 2.15% |
The following table presents data related to non-performing loans, by dollar amount and category at December 31, 2011, excluding loans held for sale and credit-impaired loans that were acquired as part of our FDIC-assisted transactions (dollar amounts in thousands):
| | Commercial and Lease Loans | | Construction Real Estate Loans | | Commercial Real Estate Loans | | Consumer Loans | | Total Loans |
| | Number of Relationships | | Amount | | Number of Relationships | | Amount | | Number of Relationships | | Amount | | Amount | | Amount |
| $10.0 million or more | - | $ | - | | - | $ | - | | - | $ | - | $ | - | $ | - |
| $5.0 million to $9.9 million | 2 | | 14,322 | | - | | - | | 2 | | 15,435 | | - | | 29,757 |
| $1.5 million to $4.9 million | 5 | | 12,031 | | - | | - | | 13 | | 37,509 | | - | | 49,540 |
| Under $1.5 million | 42 | | 10,642 | | 3 | | 1,145 | | 61 | | 23,607 | | 14,700 | | 50,094 |
| | 49 | $ | 36,995 | | 3 | $ | 1,145 | | 76 | $ | 76,551 | $ | 14,700 | $ | 129,391 |
| | | | | | | | | | | | | | | | |
| Percentage of individual loan category | | 1.59% | | | | 0.62% | | | | 4.13% | | 1.58% | | 2.17% |
We define potential problem loans as performing loans rated substandard that do not meet the definition of a non-performing loan (See “Asset Quality” section above for non-performing loans). Potential problem loans carry a higher probability of default and require additional attention by management. The aggregate principal amount of potential problem loans was $159.4 million, or 2.75% of total loans, as of March 31, 2012, compared to $149.8 million, or 2.51% of total loans, as of December 31, 2011.
Below is a reconciliation of the activity in our allowance for credit and loan losses for the periods indicated (dollar amounts in thousands):
| | | | Three Months Ended |
| | | | March 31, | | December 31, | | September 30, | | June 30, | | March 31, |
| | | | 2012 | | 2011 | | 2011 | | 2011 | | 2011 |
| | | | | | | | | | | | |
| Allowance for credit losses, balance at the beginning of period | $ | 135,975 | $ | 141,861 | $ | 147,107 | $ | 178,410 | $ | 192,217 |
| Provision for credit losses | | 3,100 | | 8,000 | | 11,500 | | 61,250 | | 40,000 |
| Charge-offs: | | | | | | | | | | |
| | Commercial loans | | (539) | | (2,932) | | (3,497) | | (7,991) | | (3,151) |
| | Commercial loans collateralized by | | | | | | | | | | |
| | assignment of lease payments (lease loans) | | - | | (1,373) | | - | | (93) | | - |
| | Commercial real estate loans | | (3,003) | | (3,793) | | (7,815) | | (55,250) | | (29,775) |
| | Construction real estate | | (3,436) | | (6,989) | | (6,008) | | (18,826) | | (21,094) |
| | Residential real estate | | (294) | | (860) | | (141) | | (8,080) | | (3,562) |
| | Indirect vehicle | | (715) | | (954) | | (611) | | (553) | | (718) |
| | Home equity | | (1,072) | | (2,061) | | (1,605) | | (5,493) | | (1,907) |
| | Consumer loans | | (258) | | (285) | | (475) | | (344) | | (544) |
| | Total charge-offs | | (9,317) | | (19,247) | | (20,152) | | (96,630) | | (60,751) |
| Recoveries: | | | | | | | | | | |
| | Commercial loans | | 2,038 | | 634 | | 1,413 | | 758 | | 2,565 |
| | Commercial loans collateralized by | | | | | | | | | | |
| | assignment of lease payments (lease loans) | | 256 | | 1 | | 5 | | 153 | | 66 |
| | Commercial real estate loans | | 162 | | 747 | | 739 | | 312 | | 1,534 |
| | Construction real estate | | 565 | | 3,519 | | 681 | | 2,364 | | 2,026 |
| | Residential real estate | | 34 | | 9 | | 7 | | 26 | | 7 |
| | Indirect vehicle | | 311 | | 378 | | 327 | | 369 | | 325 |
| | Home equity | | 20 | | 6 | | 151 | | 19 | | 48 |
| | Consumer loans | | 111 | | 67 | | 83 | | 76 | | 373 |
| | Total recoveries | | 3,497 | | 5,361 | | 3,406 | | 4,077 | | 6,944 |
| | | | | | | | | | | | |
| Total net charge-offs | | (5,820) | | (13,886) | | (16,746) | | (92,553) | | (53,807) |
| | | | | | | | | | | | |
| Allowance for credit losses | | 133,255 | | 135,975 | | 141,861 | | 147,107 | | 178,410 |
| | | | | | | | | | | | |
Allowance for unfunded credit commitments (1) | | (7,824) | | (9,177) | | (13,251) | | (17,050) | | - |
| | | | | | | | | | | | |
Allowance for loan losses (2) | $ | 125,431 | $ | 126,798 | $ | 128,610 | $ | 130,057 | $ | 178,410 |
| | | | | | | | | | | | |
| Total loans, excluding loans held for sale | $ | 5,789,765 | $ | 5,950,995 | $ | 5,813,737 | $ | 5,938,029 | $ | 6,367,996 |
| Average loans, excluding loans held for sale | $ | 5,802,037 | $ | 5,818,425 | $ | 5,827,181 | $ | 6,293,073 | $ | 6,460,508 |
| | | | | | | | | | | | |
| Ratio of allowance for loan losses to total loans, excluding loans held for sale | | 2.17% | | 2.13% | | 2.21% | | 2.19% | | 2.80% |
| | | | | | | | | | | | |
| Ratio of allowance for credit losses to total loans, excluding loans held for sale, | | | | | | | | | | |
| and unfunded credit commitments | | 2.27% | | 2.26% | | 2.40% | | 2.43% | | 2.75% |
| | | | | | | | | | | | |
| Net loan charge-offs to average loans, excluding loans held for sale (annualized) | | 0.40% | | 0.95% | | 1.14% | | 5.90% | | 3.38% |
| (1) | The reserve for unfunded credit commitments (primarily letters of credit) was reclassified from the allowance for loan losses to other liabilities as of June 30, 2011. |
| (2) | Includes $12.7 million for unfunded credit commitments at March 31, 2011. |
The activity in the second quarter of 2011 reflects the previously disclosed sale of certain performing, sub-performing and non-performing loans, which resulted in approximately $87.6 million in charge-offs and an increase in the provision for credit losses of approximately $50 million.
Our allowance for loan losses is comprised of three elements: a general loss reserve, a specific reserve for impaired loans and a reserve for smaller-balance homogenous loans. The following table presents these three elements of our allowance for loan losses (in thousands):
| | | March 31, | | December 31, | | September 30, | | June 30, | | March 31, |
| | | 2012 | | 2011 | | 2011 | | 2011 | | 2011 |
| | | | | | | | | | | |
| General loss reserve | $ | 98,985 | $ | 102,196 | $ | 102,752 | $ | 104,002 | $ | 126,423 |
Specific reserve (1) | | 13,422 | | 10,804 | | 11,416 | | 12,111 | | 38,054 |
| Smaller-balance homogenous loans reserve | | 13,024 | | 13,798 | | 14,442 | | 13,944 | | 13,933 |
| Total allowance for loan losses | $ | 125,431 | $ | 126,798 | $ | 128,610 | $ | 130,057 | $ | 178,410 |
| (1) | The specific reserve as of March 31, 2011 includes reserves on unfunded credit commitments of approximately $12.7 million. Beginning as of June 30, 2011, reserves on unfunded credit commitments are recorded as liabilities. |
Although management believes that adequate specific and general loan loss allowances have been established, actual losses are dependent upon future events and, as such, further additions to the level of specific and general loan loss allowances may become necessary.
INVESTMENT SECURITIES
The following table sets forth the fair value, amortized cost, and total unrealized gain of our investment securities, by type (in thousands):
| | | March 31, | | December 31, | | September 30, | | June 30, | | March 31, |
| | | 2012 | | 2011 | | 2011 | | 2011 | | 2011 |
| | | | | | | | | | | |
| Securities available for sale: | | | | | | | | | | |
| Fair value | | | | | | | | | | |
| Government sponsored agencies and enterprises | $ | 42,070 | $ | 42,401 | $ | 56,007 | $ | 55,656 | $ | 56,971 |
| States and political subdivisions | | 581,720 | | 535,660 | | 394,279 | | 392,670 | | 365,481 |
| Mortgage-backed securities | | 1,193,248 | | 1,334,491 | | 1,421,789 | | 1,424,302 | | 1,279,968 |
| Corporate bonds | | 5,686 | | 5,899 | | 5,899 | | 6,019 | | 6,019 |
| Equity securities | | 10,887 | | 10,846 | | 10,764 | | 10,435 | | 10,215 |
| Total fair value | $ | 1,833,611 | $ | 1,929,297 | $ | 1,888,738 | $ | 1,889,082 | $ | 1,718,654 |
| | | | | | | | | | | |
| Amortized cost | | | | | | | | | | |
| Government sponsored agencies and enterprises | $ | 39,503 | $ | 39,640 | $ | 53,016 | $ | 54,423 | $ | 56,452 |
| States and political subdivisions | | 547,262 | | 500,979 | | 366,651 | | 371,598 | | 350,851 |
| Mortgage-backed securities | | 1,168,340 | | 1,308,020 | | 1,399,801 | | 1,401,975 | | 1,258,171 |
| Corporate bonds | | 5,686 | | 5,899 | | 5,899 | | 6,019 | | 6,019 |
| Equity securities | | 10,520 | | 10,457 | | 10,324 | | 10,246 | | 10,169 |
| Total amortized cost | $ | 1,771,311 | $ | 1,864,995 | $ | 1,835,691 | $ | 1,844,261 | $ | 1,681,662 |
| | | | | | | | | | | |
| Unrealized gain | | | | | | | | | | |
| Government sponsored agencies and enterprises | $ | 2,567 | $ | 2,761 | $ | 2,991 | $ | 1,233 | $ | 519 |
| States and political subdivisions | | 34,458 | | 34,681 | | 27,628 | | 21,072 | | 14,630 |
| Mortgage-backed securities | | 24,908 | | 26,471 | | 21,988 | | 22,327 | | 21,797 |
| Corporate bonds | | - | | - | | - | | - | | - |
| Equity securities | | 367 | | 389 | | 440 | | 189 | | 46 |
| Total unrealized gain | $ | 62,300 | $ | 64,302 | $ | 53,047 | $ | 44,821 | $ | 36,992 |
| | | | | | | | | | | |
| Securities held to maturity, at cost: | | | | | | | | | | |
| States and political subdivisions | $ | 239,526 | $ | 240,183 | $ | 240,839 | $ | - | $ | - |
| Mortgage-backed securities | | 259,241 | | 259,100 | | 258,199 | | 230,154 | | 102,206 |
| Total amortized cost | $ | 498,767 | $ | 499,283 | $ | 499,038 | $ | 230,154 | $ | 102,206 |
We do not have any meaningful direct or indirect holdings of subprime residential mortgage loans, home equity lines of credit, or any Fannie Mae or Freddie Mac preferred or common equity securities in our investment securities portfolio. Additionally, more than 99% of our mortgage-backed securities are agency guaranteed.
DEPOSIT MIX
The following table shows the composition of deposits as of the dates indicated (dollars in thousands):
| | | | March 31, | | December 31, | | September 30, | | June 30, | | March 31, |
| | | | 2012 | | 2011 | | 2011 | | 2011 | | 2011 |
| | | | | % of | | | % of | | | % of | | | % of | | | % of |
| | | | Amount | Total | | Amount | Total | | Amount | Total | | Amount | Total | | Amount | Total |
| Low cost deposits: | | | | | | | | | | | | | | | |
| | Noninterest bearing deposits | $ | 1,874,028 | 25% | $ | 1,885,694 | 25% | $ | 1,803,141 | 23% | $ | 1,776,873 | 23% | $ | 1,666,868 | 22% |
| | Money market and NOW accounts | | 2,702,636 | 35% | | 2,645,334 | 34% | | 2,722,162 | 35% | | 2,645,953 | 34% | | 2,712,314 | 34% |
| | Savings accounts | | 786,357 | 10% | | 753,610 | 10% | | 751,062 | 10% | | 729,222 | 9% | | 718,896 | 9% |
| Total low cost deposits | | 5,363,021 | 70% | | 5,284,638 | 69% | | 5,276,365 | 68% | | 5,152,048 | 66% | | 5,098,078 | 65% |
| | | | | | | | | | | | | | | | | |
| Certificates of deposit: | | | | | | | | | | | | | | | |
| | Certificates of deposit | | 1,820,266 | 24% | | 1,925,608 | 25% | | 2,001,210 | 26% | | 2,124,815 | 28% | | 2,326,591 | 29% |
| | Brokered deposit accounts | | 451,415 | 6% | | 437,361 | 6% | | 444,332 | 6% | | 441,720 | 6% | | 467,337 | 6% |
| Total certificates of deposit | | 2,271,681 | 30% | | 2,362,969 | 31% | | 2,445,542 | 32% | | 2,566,535 | 34% | | 2,793,928 | 35% |
| | | | | | | | | | | | | | | | | |
| Total deposits | $ | 7,634,702 | 100% | $ | 7,647,607 | 100% | $ | 7,721,907 | 100% | $ | 7,718,583 | 100% | $ | 7,892,006 | 100% |
FORWARD-LOOKING STATEMENTS
When used in this press release and in reports filed with or furnished to the Securities and Exchange Commission, in press releases or other public stockholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases “believe,” “will,” “should,” “will likely result,” “are expected to,” “will continue” “is anticipated,” “estimate,” “project,” “plans,” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date made. These statements may relate to our future financial performance, strategic plans or objectives, revenues or earnings projections, or other financial items. By their nature, these statements are subject to numerous uncertainties that could cause actual results to differ materially from those anticipated in the statements.
Important factors that could cause actual results to differ materially from the results anticipated or projected include, but are not limited to, the following: (1) expected revenues, cost savings, synergies and other benefits from our merger and acquisition activities might not be realized within the anticipated time frames or at all, and costs or difficulties relating to integration matters, including but not limited to customer and employee retention, might be greater than expected; (2) the possibility that the expected benefits of the FDIC-assisted transactions we previously completed will not be realized; (3) the credit risks of lending activities, including changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for loan losses, which could necessitate additional provisions for loan losses, resulting both from loans we originate and loans we acquire from other financial institutions; (4) results of examinations by the Office of Comptroller of Currency and other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our allowance for loan losses or write-down assets; (5) competitive pressures among depository institutions; (6) interest rate movements and their impact on customer behavior and net interest margin; (7) the impact of repricing and competitors’ pricing initiatives on loan and deposit products; (8) fluctuations in real estate values; (9) the ability to adapt successfully to technological changes to meet customers’ needs and developments in the market place; (10) our ability to realize the residual values of our direct finance, leveraged, and operating leases; (11) our ability to access cost-effective funding; (12) changes in financial markets; (13) changes in economic conditions in general and in the Chicago metropolitan area in particular; (14) the costs, effects and outcomes of litigation; (15) new legislation or regulatory changes, including but not limited to the Dodd-Frank Wall Street Reform and Consumer Protection Act and regulations adopted thereunder, other governmental initiatives affecting the financial services industry and changes in federal and/or state tax laws or interpretations thereof by taxing authorities; (16) changes in accounting principles, policies or guidelines; (17) our future acquisitions of other depository institutions or lines of business; and (18) future goodwill impairment due to changes in our business, changes in market conditions, or other factors.
We do not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date on which the forward-looking statement is made.
TABLES TO FOLLOW
| MB FINANCIAL, INC. & SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS (Unaudited) |
| As of the dates indicated |
| | | | March 31, | | December 31, | | September 30, | | June 30, | | March 31, |
| | | | 2012 | | 2011 | | 2011 | | 2011 | | 2011 |
| ASSETS | | | | | | | | | | |
| Cash and due from banks | $ | 128,411 | $ | 144,228 | $ | 133,755 | $ | 129,942 | $ | 123,794 |
| Interest earning deposits with banks | | 272,553 | | 100,337 | | 347,055 | | 513,378 | | 504,765 |
| Total cash and cash equivalents | | 400,964 | | 244,565 | | 480,810 | | 643,320 | | 628,559 |
| Investment securities: | | | | | | | | | | |
| | Securities available for sale, at fair value | | 1,833,611 | | 1,929,297 | | 1,888,738 | | 1,889,082 | | 1,718,654 |
| | Securities held to maturity, at amortized cost | | 498,767 | | 499,283 | | 499,038 | | 230,154 | | 102,206 |
| | Non-marketable securities - FHLB and FRB Stock | | 65,541 | | 80,832 | | 80,815 | | 80,815 | | 80,186 |
| Total investment securities | | 2,397,919 | | 2,509,412 | | 2,468,591 | | 2,200,051 | | 1,901,046 |
| Loans held for sale | | 3,364 | | 4,727 | | - | | - | | 11,533 |
| Loans: | | | | | | | | | | |
| | Total loans, excluding covered loans | | 5,169,237 | | 5,288,451 | | 5,095,171 | | 5,182,359 | | 5,590,362 |
| | Covered loans | | 620,528 | | 662,544 | | 718,566 | | 755,670 | | 777,634 |
| | Total loans | | 5,789,765 | | 5,950,995 | | 5,813,737 | | 5,938,029 | | 6,367,996 |
| | Less: Allowance for loan losses | | 125,431 | | 126,798 | | 128,610 | | 130,057 | | 178,410 |
| Net loans | | 5,664,334 | | 5,824,197 | | 5,685,127 | | 5,807,972 | | 6,189,586 |
| Lease investments, net | | 124,748 | | 135,490 | | 133,345 | | 139,391 | | 129,182 |
| Premises and equipment, net | | 212,589 | | 210,705 | | 211,062 | | 210,901 | | 209,257 |
| Cash surrender value of life insurance | | 126,226 | | 125,309 | | 124,364 | | 126,938 | | 126,014 |
| Goodwill, net | | 387,069 | | 387,069 | | 387,069 | | 387,069 | | 387,069 |
| Other intangibles, net | | 28,237 | | 29,494 | | 30,904 | | 32,318 | | 33,734 |
| Other real estate owned, net | | 63,077 | | 78,452 | | 87,469 | | 88,185 | | 80,107 |
| Other real estate owned related to FDIC transactions | | 53,703 | | 60,363 | | 69,311 | | 69,920 | | 61,461 |
| FDIC indemnification asset | | 72,161 | | 80,830 | | 94,542 | | 119,837 | | 148,314 |
| Other assets | | 137,209 | | 142,459 | | 149,767 | | 151,833 | | 165,481 |
| Total assets | $ | 9,671,600 | $ | 9,833,072 | $ | 9,922,361 | $ | 9,977,735 | $ | 10,071,343 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | | | |
| Liabilities | | | | | | | | | | |
| Deposits: | | | | | | | | | | |
| | Noninterest bearing | $ | 1,874,028 | $ | 1,885,694 | $ | 1,803,141 | $ | 1,776,873 | $ | 1,666,868 |
| | Interest bearing | | 5,760,674 | | 5,761,913 | | 5,918,766 | | 5,941,710 | | 6,225,138 |
| Total deposits | | 7,634,702 | | 7,647,607 | | 7,721,907 | | 7,718,583 | | 7,892,006 |
| Short-term borrowings | | 269,691 | | 219,954 | | 257,418 | | 235,733 | | 295,180 |
| Long-term borrowings | | 256,456 | | 266,264 | | 274,378 | | 275,559 | | 275,327 |
| Junior subordinated notes issued to capital trusts | | 158,530 | | 158,538 | | 158,546 | | 158,554 | | 158,563 |
| Accrued expenses and other liabilities | | 136,791 | | 147,682 | | 141,490 | | 243,962 | | 100,031 |
| Total liabilities | | 8,456,170 | | 8,440,045 | | 8,553,739 | | 8,632,391 | | 8,721,107 |
| Stockholders' Equity | | | | | | | | | | |
| Preferred stock | | - | | 194,719 | | 194,562 | | 194,407 | | 194,255 |
| Common stock | | 549 | | 548 | | 548 | | 546 | | 546 |
| Additional paid-in capital | | 732,613 | | 731,248 | | 730,056 | | 728,244 | | 726,604 |
| Retained earnings | | 445,233 | | 427,956 | | 411,659 | | 396,081 | | 406,594 |
| Accumulated other comprehensive income | | 37,935 | | 39,150 | | 32,322 | | 27,322 | | 22,566 |
| Treasury stock | | (3,326) | | (3,044) | | (3,010) | | (3,771) | | (2,845) |
| Controlling interest stockholders' equity | | 1,213,004 | | 1,390,577 | | 1,366,137 | | 1,342,829 | | 1,347,720 |
| Noncontrolling interest | | 2,426 | | 2,450 | | 2,485 | | 2,515 | | 2,516 |
| Total stockholders' equity | | 1,215,430 | | 1,393,027 | | 1,368,622 | | 1,345,344 | | 1,350,236 |
| Total liabilities and stockholders' equity | $ | 9,671,600 | $ | 9,833,072 | $ | 9,922,361 | $ | 9,977,735 | $ | 10,071,343 |
| MB FINANCIAL, INC. & SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF INCOME |
| (Amounts in thousands, except per share data) (Unaudited) |
| | | Three Months Ended |
| | | March 31, | December 31, | September 30, | June 30, | March 31, |
| | | 2012 | 2011 | 2011 | 2011 | 2011 |
| Interest income: | | | | | |
| | Loans | $ 71,648 | $ 75,466 | $ 78,046 | $ 84,114 | $ 87,167 |
| | Investment securities: | | | | | |
| | Taxable | 10,884 | 11,608 | 11,699 | 10,290 | 7,752 |
| | Nontaxable | 6,739 | 6,178 | 4,299 | 3,443 | 3,345 |
| | Other interest earning accounts | 169 | 181 | 244 | 258 | 470 |
| | Total interest income | 89,440 | 93,433 | 94,288 | 98,105 | 98,734 |
| Interest expense: | | | | | |
| | Deposits | 8,760 | 9,569 | 10,207 | 11,746 | 13,359 |
| | Short-term borrowings | 206 | 189 | 204 | 239 | 217 |
| | Long-term borrowings and junior subordinated notes | 3,381 | 3,430 | 3,461 | 3,713 | 2,953 |
| | Total interest expense | 12,347 | 13,188 | 13,872 | 15,698 | 16,529 |
| Net interest income | 77,093 | 80,245 | 80,416 | 82,407 | 82,205 |
| Provision for credit losses | 3,100 | 8,000 | 11,500 | 61,250 | 40,000 |
| Net interest income after provision for credit losses | 73,993 | 72,245 | 68,916 | 21,157 | 42,205 |
| Other income: | | | | | |
| | Loan service fees | 1,339 | 1,601 | 2,159 | 2,812 | 1,126 |
| | Deposit service fees | 9,408 | 10,085 | 9,932 | 9,023 | 10,030 |
| | Lease financing, net | 6,958 | 7,801 | 6,494 | 6,861 | 5,783 |
| | Brokerage fees | 1,255 | 1,577 | 1,273 | 1,615 | 1,419 |
| | Trust and asset management fees | 4,404 | 4,166 | 4,272 | 4,455 | 4,431 |
| | Net gain (loss) on sale of securities available for sale | (3) | 411 | - | 232 | (3) |
| | Increase in cash surrender value of life insurance | 917 | 944 | 1,014 | 1,451 | 968 |
| | Net (loss) gain on sale of assets | (17) | (87) | - | 13 | 357 |
| | Accretion of FDIC indemnification asset | 475 | 683 | 985 | 1,339 | 1,831 |
| | Card fees | 2,044 | 1,096 | 2,071 | 2,062 | 1,788 |
| | Net loss recognized on other real estate owned | (6,589) | (5,478) | (3,118) | (4,645) | (372) |
| | Other operating income | 2,663 | 1,652 | 1,285 | 3,927 | 1,785 |
| | Total other income | 22,854 | 24,451 | 26,367 | 29,145 | 29,143 |
| Other expenses: | | | | | |
| | Salaries and employee benefits | 40,429 | 39,846 | 38,422 | 37,815 | 37,775 |
| | Occupancy and equipment expense | 9,570 | 8,498 | 9,092 | 8,483 | 9,394 |
| | Computer services and telecommunication expense | 3,653 | 4,382 | 3,488 | 3,570 | 3,445 |
| | Advertising and marketing expense | 2,066 | 1,831 | 1,740 | 1,748 | 1,719 |
| | Professional and legal expense | 1,413 | 1,422 | 1,647 | 1,853 | 1,225 |
| | Other intangible amortization expense | 1,257 | 1,410 | 1,414 | 1,416 | 1,425 |
| | FDIC insurance premiums | 2,643 | 2,662 | 2,272 | 3,502 | 3,428 |
| | Branch impairment charges | - | 594 | - | - | 1,000 |
| | Other real estate expense, net | 1,243 | 1,464 | 1,181 | 1,251 | 398 |
| | Other operating expenses | 5,057 | 7,324 | 7,352 | 7,090 | 7,055 |
| | Total other expense | 67,331 | 69,433 | 66,608 | 66,728 | 66,864 |
| Income (loss) before income taxes | 29,516 | 27,263 | 28,675 | (16,426) | 4,484 |
| Income taxes | 8,430 | 7,810 | 8,978 | (9,060) | (2,460) |
| Net income (loss) | 21,086 | 19,453 | 19,697 | (7,366) | 6,944 |
| Dividends and discount accretion on preferred shares | 3,269 | 2,606 | 2,605 | 2,602 | 2,601 |
| | Net income (loss) available to common stockholders | $ 17,817 | $ 16,847 | $ 17,092 | $ (9,968) | $ 4,343 |
| | Three Months Ended |
| | | March 31, | | December 31, | | September 30, | | June 30, | | March 31, |
| | | 2012 | | 2011 | | 2011 | | 2011 | | 2011 |
| Common share data: | | | | | | | | | | |
| Basic earnings allocated to common stock per common share | $ | 0.39 | $ | 0.36 | $ | 0.36 | $ | (0.14) | $ | 0.13 |
| Impact of preferred stock dividends on basic | | | | | | | | | | |
| earnings (loss) per common share | | (0.06) | | (0.05) | | (0.04) | | (0.04) | | (0.05) |
| Basic earnings (loss) per common share | | 0.33 | | 0.31 | | 0.32 | | (0.18) | | 0.08 |
| | | | | | | | | | | |
| Diluted earnings allocated to common stock per common share | | 0.39 | | 0.36 | | 0.36 | | (0.14) | | 0.13 |
| Impact of preferred stock dividends on diluted | | | | | | | | | | |
| earnings (loss) per common share | | (0.06) | | (0.05) | | (0.05) | | (0.04) | | (0.05) |
| Diluted earnings (loss) per common share | | 0.33 | | 0.31 | | 0.31 | | (0.18) | | 0.08 |
| | | | | | | | | | | |
| Weighted average common shares outstanding for | | | | | | | | | | |
| basic earnings per common share | | 54,155,856 | | 54,140,646 | | 54,121,156 | | 54,002,979 | | 53,961,176 |
| | | | | | | | | | | |
| Weighted average common shares outstanding for | | | | | | | | | | |
| diluted earnings per common share | | 54,411,916 | | 54,360,178 | | 54,323,320 | | 54,002,979 | | 54,254,876 |
| Selected Financial Data: | | | | | | | | | | | | | | | |
| | | Three Months Ended | |
| | | March 31, | | | December 31, | | | September 30, | | | June 30, | | | March 31, | |
| | | 2012 | | | 2011 | | | 2011 | | | 2011 | | | 2011 | |
| Performance Ratios: | | | | | | | | | | | | | | | |
| Annualized return on average assets | | 0.87 | % | | 0.78 | % | | 0.80 | % | | (0.30) | % | | 0.28 | % |
| Annualized return on average common equity | | 5.94 | | | 5.66 | | | 5.86 | | | (3.43) | | | 1.53 | |
| Annualized cash return on average tangible | | | | | | | | | | | | | | | |
common equity(1) | | 9.36 | | | 9.09 | | | 9.52 | | | (4.80) | | | 2.88 | |
| Net interest rate spread | | 3.67 | | | 3.71 | | | 3.71 | | | 3.71 | | | 3.68 | |
Cost of funds(2) | | 0.60 | | | 0.63 | | | 0.66 | | | 0.74 | | | 0.77 | |
Efficiency ratio(3) | | 60.04 | | | 59.94 | | | 58.69 | | | 56.63 | | | 57.45 | |
| Annualized net non-interest expense to | | | | | | | | | | | | | | | |
average assets(4) | | 1.54 | | | 1.56 | | | 1.48 | | | 1.38 | | | 1.44 | |
| Pre-tax pre-provision operating earnings to | | | | | | | | | | | | | | | |
risk-weighted assets(5) | | 2.91 | | | 2.87 | | | 3.03 | | | 3.30 | | | 3.00 | |
| Pre-tax pre-provision operating earnings | | | | | | | | | | | | | | | |
to average assets(5) | | 1.84 | | | 1.85 | | | 1.91 | | | 2.05 | | | 1.93 | |
| Net interest margin | | 3.64 | | | 3.71 | | | 3.74 | | | 3.79 | | | 3.76 | |
| Tax equivalent effect | | 0.23 | | | 0.20 | | | 0.16 | | | 0.13 | | | 0.12 | |
Net interest margin - fully tax equivalent basis(6) | | 3.87 | | | 3.91 | | | 3.90 | | | 3.92 | | | 3.88 | |
| Asset Quality Ratios: | | | | | | | | | | | | | | | |
Non-performing loans(7) to total loans | | 2.15 | % | | 2.17 | % | | 2.42 | % | | 2.54 | % | | 5.01 | % |
Non-performing assets(7) to total assets | | 1.94 | | | 2.12 | | | 2.30 | | | 2.40 | | | 3.96 | |
Allowance for loan losses to non-performing loans(7) | | 100.59 | | | 98.00 | | | 91.23 | | | 86.12 | | | 55.94 | |
| Allowance for loan losses to total loans | | 2.17 | | | 2.13 | | | 2.21 | | | 2.19 | | | 2.80 | |
| Allowance for credit losses to total loans and | | | | | | | | | | | | | | | |
| unfunded credit commitments | | 2.27 | | | 2.26 | | | 2.40 | | | 2.43 | | | 2.75 | |
| Net loan charge-offs to average loans (annualized) | | 0.40 | | | 0.95 | | | 1.14 | | | 5.90 | | | 3.38 | |
| Capital Ratios: | | | | | | | | | | | | | | | |
Tangible equity to tangible assets(8) | | 8.74 | % | | 10.47 | % | | 10.10 | % | | 9.79 | % | | 9.74 | % |
Tangible common equity to risk weighted assets(9) | | 13.17 | | | 12.48 | | | 12.42 | | | 11.97 | | | 11.36 | |
Tangible common equity to tangible assets(10) | | 8.74 | | | 8.40 | | | 8.06 | | | 7.76 | | | 7.73 | |
Book value per common share(11) | $ | 22.23 | | $ | 21.92 | | $ | 21.48 | | $ | 21.14 | | $ | 21.24 | |
| Less: goodwill and other intangible assets, | | | | | | | | | | | | | | | |
| net of benefit, per common share | | 7.41 | | | 7.43 | | | 7.45 | | | 7.49 | | | 7.52 | |
Tangible book value per common share(12) | | 14.81 | | | 14.49 | | | 14.03 | | | 13.64 | | | 13.73 | |
| | | | | | | | | | | | | | | | |
| Total capital (to risk-weighted assets) | | 17.11 | % | | 19.41 | % | | 19.61 | % | | 19.18 | % | | 18.33 | % |
| Tier 1 capital (to risk-weighted assets) | | 15.04 | | | 17.36 | | | 17.54 | | | 17.11 | | | 16.31 | |
| Tier 1 capital (to average assets) | | 9.99 | | | 11.73 | | | 11.59 | | | 11.16 | | | 11.00 | |
| Tier 1 common capital (to risk-weighted assets) | | 12.54 | | | 11.87 | | | 11.90 | | | 11.50 | | | 11.01 | |
| (1) | Net cash flow available to common stockholders (net income available to common stockholders, plus other intangibles amortization expense, net of tax benefit) divided by average tangible common equity (average common equity less average goodwill and average other intangibles, net of tax benefit). |
| (2) | Equals total interest expense divided by the sum of average interest bearing liabilities and noninterest bearing deposits. |
| (3) | Equals total other expense excluding non-core items divided by the sum of net interest income on a fully tax equivalent basis, total other income less non-core items, and tax equivalent adjustment on the increase in cash surrender value of life insurance. |
| (4) | Equals total other expense excluding non-core items less total other income excluding non-core items, and including tax equivalent adjustment on the increase in cash surrender value of life insurance divided by average assets. |
| (5) | Equals net income before taxes, on a fully tax equivalent basis, excluding loan loss provision expense, non-core other income items, and non-core other expense items, including tax equivalent adjustment on the increase in cash surrender value of life insurance divided by risk-weighted assets or average assets. |
| (6) | Represents net interest income, on a fully tax equivalent basis assuming a 35% tax rate, as a percentage of average interest earning assets. |
| (7) | Non-performing loans excludes purchased credit-impaired loans and loans held for sale. Non-performing assets excludes purchased credit-impaired loans, loans held for sale, and other real estate owned related to FDIC transactions. |
| (8) | Equals total ending stockholders’ equity less goodwill and other intangibles, net of tax benefit, divided by total assets less goodwill and other intangibles, net of tax benefit. |
| (9) | Equals total ending common stockholders’ equity less goodwill and other intangibles, net of tax benefit, divided by total risk-weighted assets. |
| (10) | Equals total ending common stockholders’ equity less goodwill and other intangibles, net of tax benefit, divided by total assets less goodwill and other intangibles, net of tax benefit. |
| (11) | Equals total ending common stockholders’ equity divided by common shares outstanding. |
| (12) | Equals total ending common stockholders’ equity less goodwill and other intangibles, net of tax benefit, divided by common shares outstanding. |
NON-GAAP FINANCIAL INFORMATION
This press release contains certain financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (GAAP). These measures include pre-tax, pre-provision operating earnings; core other income, core other expense, non-core other income and non-core other expense; net interest income on a fully tax equivalent basis, net interest margin on a fully tax equivalent basis; efficiency ratio, ratio of annualized net non-interest expense to average assets, ratio of pre-tax, pre-provision operating earnings to risk-weighted assets and ratio of pre-tax, pre-provision operating earnings to average assets, with net gains and losses on securities available for sale, net losses on sale of other assets, net gains and losses on other real estate owned, net gain on sale of loans held for sale and increase (decrease) in market value of assets held in trust for deferred compensation excluded from the non-interest income components of these ratios, impairment charges and increase (decrease) in market value of assets held in trust for deferred compensation excluded from the non-interest expense components of these ratios, with tax equivalent adjustment for tax-exempt interest income and increase in cash surrender value of life insurance, as applicable; ratios of tangible equity to tangible assets, tangible common equity to risk-weighted assets, tangible common equity to tangible assets and Tier 1 common capital to risk-weighted assets; tangible book value per common share; and annualized cash return on average tangible common equity. Our management uses these non-GAAP measures, together with the related GAAP measures, in its analysis of our performance and in making business decisions. Management also uses these measures for peer comparisons.
Management believes that pre-tax, pre-provision operating earnings are a useful measure in assessing our core operating performance, particularly during times of economic stress. In recent periods, our results of operations have been negatively impacted by adverse economic conditions, as seen in our elevated levels of loan charge-offs and provision for credit losses. Management believes that measuring earnings before the impact of the provision for loan losses makes our financial data more comparable between reporting periods so that investors can better understand our operating performance trends. Management also believes that this is a standard figure used in the banking industry to measure performance.
Management believes that core and non-core other income and other expense are useful in assessing our core operating performance and in understanding the primary drivers of our other income and other expense when comparing periods.
The tax equivalent adjustment to net interest income, net interest margin, tax-exempt interest income and increase in cash surrender value of life insurance recognizes the income tax savings when comparing taxable and tax-exempt assets and assumes a 35% tax rate. Management believes that it is a standard practice in the banking industry to present net interest income and net interest margin on a fully tax equivalent basis, and accordingly believes that providing these measures may be useful for peer comparison purposes. For the same reasons, management believes the tax equivalent adjustments to tax-exempt interest income and increase in cash surrender value of life insurance are useful.
Management also believes that by excluding net gains and losses on securities available for sale, net gains and losses on sale of other assets, net losses on other real estate owned, net gain on sale of loans held for sale and increase (decrease) in market value of assets held in trust for deferred compensation from the non-interest income components, and excluding impairment changes and increase (decrease) in market value of assets held in trust for deferred compensation from the non-interest expense components, of the efficiency ratio, the ratio of annualized net non-interest expense to average assets, the ratio of pre-tax, pre-provision operating earnings to risk-weighted assets and the ratio of pre-tax, pre-provision operating earnings to average assets, these ratios better reflect our core operating performance, as the excluded items do not pertain to our core business operations and their exclusion makes these ratios more meaningful when comparing our operating results from period to period.
In addition, management believes that presenting the ratio of Tier 1 common equity to risk-weighted assets is useful for assessing our capital strength and for peer comparison purposes. The other measures exclude the acquisition-related goodwill and other intangible assets, net of tax benefit, in determining tangible assets, tangible equity, tangible common equity and average tangible common equity and exclude other intangible amortization expense, net of tax benefit, in determining net cash flow available to common stockholders. Management believes the presentation of these other financial measures excluding the impact of such items provides useful supplemental information that is helpful in understanding our financial results, as they provide a method to assess management’s success in utilizing our tangible capital as well as our capital strength. Management also believes that providing measures that exclude balances of acquisition-related goodwill and other intangible assets, which are subjective components of valuation, facilitates the comparison of our performance with the performance of our peers. In addition, management believes that these are standard financial measures used in the banking industry to evaluate performance.
The non-GAAP disclosures contained herein should not be viewed as substitutes for the results determined to be in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.
The following table presents a reconciliation of tangible equity to equity (in thousands):
| | | March 31, | | December 31, | | September 30, | | June 30, | | March 31, |
| | | 2012 | | 2011 | | 2011 | | 2011 | | 2011 |
| Stockholders' equity - as reported | $ | 1,215,430 | $ | 1,393,027 | $ | 1,368,622 | $ | 1,345,344 | $ | 1,350,236 |
| | Less: goodwill | | 387,069 | | 387,069 | | 387,069 | | 387,069 | | 387,069 |
| | Less: other intangible, net of tax benefit | | 18,354 | | 19,171 | | 20,088 | | 21,007 | | 21,927 |
| Tangible equity | $ | 810,007 | $ | 986,787 | $ | 961,465 | $ | 937,268 | $ | 941,240 |
The following table presents a reconciliation of tangible assets to total assets (in thousands):
| | | March 31, | | December 31, | | September 30, | | June 30, | | March 31, |
| | | 2012 | | 2011 | | 2011 | | 2011 | | 2011 |
| Total assets - as reported | $ | 9,671,600 | $ | 9,833,072 | $ | 9,922,361 | $ | 9,977,735 | $ | 10,071,343 |
| | Less: goodwill | | 387,069 | | 387,069 | | 387,069 | | 387,069 | | 387,069 |
| | Less: other intangible, net of tax benefit | | 18,354 | | 19,171 | | 20,088 | | 21,007 | | 21,927 |
| Tangible assets | $ | 9,266,177 | $ | 9,426,832 | $ | 9,515,204 | $ | 9,569,659 | $ | 9,662,347 |
The following table presents a reconciliation of tangible common equity to stockholders’ common equity (in thousands):
| | | March 31, | | December 31, | | September 30, | | June 30, | | March 31, |
| | | 2012 | | 2011 | | 2011 | | 2011 | | 2011 |
| Common stockholders' equity - as reported | $ | 1,215,430 | $ | 1,198,308 | $ | 1,174,060 | $ | 1,150,937 | $ | 1,155,981 |
| | Less: goodwill | | 387,069 | | 387,069 | | 387,069 | | 387,069 | | 387,069 |
| | Less: other intangible, net of tax benefit | | 18,354 | | 19,171 | | 20,088 | | 21,007 | | 21,927 |
| Tangible common equity | $ | 810,007 | $ | 792,068 | $ | 766,903 | $ | 742,861 | $ | 746,985 |
The following table presents a reconciliation of average tangible common equity to average common stockholders’ equity (in thousands):
| | | | Three Months Ended |
| | | | March 31, | | December 31, | | September 30, | | June 30, | | March 31, |
| | | | 2012 | | 2011 | | 2011 | | 2011 | | 2011 |
| Average common stockholders' equity - as reported | $ | 1,206,364 | $ | 1,181,820 | $ | 1,158,119 | $ | 1,165,022 | $ | 1,152,119 |
| | Less: average goodwill | | 387,069 | | 387,069 | | 387,069 | | 387,069 | | 387,069 |
| | Less: average other intangible assets, net of tax benefit | | 18,721 | | 19,494 | | 20,414 | | 21,331 | | 22,254 |
| Average tangible common equity | $ | 800,574 | $ | 775,257 | $ | 750,636 | $ | 756,622 | $ | 742,796 |
The following table presents a reconciliation of net cash flow available to common stockholders to net income (loss) available to common stockholders (in thousands):
| | | | Three Months Ended |
| | | | March 31, | | December 31, | | September 30, | | June 30, | | March 31, |
| | | | 2012 | | 2011 | | 2011 | | 2011 | | 2011 |
| | | | | | | | | | | |
| Net income (loss) available to common stockholders - as reported | $ | 17,817 | $ | 16,847 | $ | 17,092 | $ | (9,968) | $ | 4,343 |
| | Add: other intangible amortization expense, net of tax benefit | | 817 | | 917 | | 919 | | 920 | | 926 |
| Net cash flow available to common stockholders | $ | 18,634 | $ | 17,764 | $ | 18,011 | $ | (9,048) | $ | 5,269 |
The following table presents a reconciliation of Tier 1 common capital to Tier 1 capital (in thousands):
| | | March 31, | | December 31, | | September 30, | | June 30, | | March 31, |
| | | 2012 | | 2011 | | 2011 | | 2011 | | 2011 |
| Tier 1 capital - as reported | $ | 925,089 | $ | 1,101,538 | $ | 1,083,020 | $ | 1,061,482 | $ | 1,072,537 |
| | Less: preferred stock | | - | | 194,719 | | 194,562 | | 194,407 | | 194,255 |
| | Less: qualifying trust preferred securities | | 153,500 | | 153,787 | | 153,795 | | 153,803 | | 153,812 |
| Tier 1 common capital | $ | 771,589 | $ | 753,032 | $ | 734,663 | $ | 713,272 | $ | 724,470 |
Efficiency Ratio Calculation (Dollars in Thousands)
| | | Three Months Ended |
| | | March 31, | | December 31, | | September 30, | | June 30, | | March 31, |
| | | 2012 | | 2011 | | 2011 | | 2011 | | 2011 |
| Non-interest expense | $ | 67,331 | $ | 69,433 | $ | 66,608 | $ | 66,728 | $ | 66,864 |
| Adjustment for impairment charges | | - | | 594 | | - | | - | | 1,000 |
| Adjustment for increase (decrease) in market value of | | | | | | | | | | |
| assets held in trust for deferred compensation | | 501 | | 20 | | (405) | | 158 | | 187 |
| Non-interest expense - as adjusted | $ | 66,830 | $ | 68,819 | $ | 67,013 | $ | 66,570 | $ | 65,677 |
| | | | | | | | | | | |
| Net interest income | $ | 77,093 | $ | 80,245 | $ | 80,416 | $ | 82,407 | $ | 82,205 |
| Tax equivalent adjustment | | 4,756 | | 4,468 | | 3,320 | | 2,775 | | 2,625 |
| Net interest income on a fully tax equivalent basis | | 81,849 | | 84,713 | | 83,736 | | 85,182 | | 84,830 |
| Tax equivalent adjustment on the increase in cash | | | | | | | | | | |
| surrender value of life insurance | | 494 | | 508 | | 546 | | 781 | | 521 |
| Plus other income | | 22,854 | | 24,451 | | 26,367 | | 29,145 | | 29,143 |
| Less net losses on other real estate owned | | (6,589) | | (5,478) | | (3,118) | | (4,645) | | (372) |
| Less net gains (losses) on securities available for sale | | (3) | | 411 | | - | | 232 | | (3) |
| Less net (losses) gains on sale of other assets | | (17) | | (87) | | - | | 13 | | 357 |
| Less net gain on sale of loans held for sale | | - | | - | | - | | 1,790 | | - |
| Less increase (decrease) in market value of | | | | | | | | | | |
| assets held in trust for deferred compensation | | 501 | | 20 | | (405) | | 158 | | 187 |
| | | | | | | | | | | |
| Net interest income plus non-interest income - as adjusted | $ | 111,305 | $ | 114,806 | $ | 114,172 | $ | 117,560 | $ | 114,325 |
| | | | | | | | | | | |
| Efficiency ratio | | 60.04% | | 59.94% | | 58.69% | | 56.63% | | 57.45% |
| | | | | | | | | | | |
| Efficiency ratio (without adjustments) | | 67.37% | | 66.32% | | 62.38% | | 59.82% | | 60.05% |
Annualized Net Non-interest Expense to Average Assets Calculation (Dollars in Thousands)
| | | | Three Months Ended |
| | | | March 31, | | December 31, | | September 30, | | June 30, | | March 31, |
| | | | 2012 | | 2011 | | 2011 | | 2011 | | 2011 |
| Non-interest expense | $ | 67,331 | $ | 69,433 | $ | 66,608 | $ | 66,728 | $ | 66,864 |
| Adjustment for impairment charges | | - | | 594 | | - | | - | | 1,000 |
| Adjustment for increase (decrease) in market value of assets | | | | | | | | | | |
| held in trust for deferred compensation | | 501 | | 20 | | (405) | | 158 | | 187 |
| | Non-interest expense - as adjusted | | 66,830 | | 68,819 | | 67,013 | | 66,570 | | 65,677 |
| | | | | | | | | | | | |
| Other income | | 22,854 | | 24,451 | | 26,367 | | 29,145 | | 29,143 |
| Less net losses on other real estate owned | | (6,589) | | (5,478) | | (3,118) | | (4,645) | | (372) |
| Less net gains (losses) on securities available for sale | | (3) | | 411 | | - | | 232 | | (3) |
| Less net (losses) gains on sale of other assets | | (17) | | (87) | | - | | 13 | | 357 |
| Less net gain on sale of loans held for sale | | - | | - | | - | | 1,790 | | - |
| Less increase (decrease) in market value of assets held in | | | | | | | | | | |
| trust for deferred compensation | | 501 | | 20 | | (405) | | 158 | | 187 |
| Other income - as adjusted | | 28,962 | | 29,585 | | 29,890 | | 31,597 | | 28,974 |
| Less tax equivalent adjustment on the increase in cash | | | | | | | | | | |
| surrender value of life insurance | | 494 | | 508 | | 546 | | 781 | | 521 |
| | | | | | | | | | | | |
| Net non-interest expense | $ | 37,374 | $ | 38,726 | $ | 36,577 | $ | 34,192 | $ | 36,182 |
| | | | | | | | | | | | |
| Average assets | $ | 9,736,702 | $ | 9,856,835 | $ | 9,807,561 | $ | 9,966,898 | $ | 10,198,626 |
| | | | | | | | | | | | |
| Annualized net non-interest expense to average assets | | 1.54% | | 1.56% | | 1.48% | | 1.38% | | 1.44% |
| | | | | | | | | | | | |
| Annualized net non-interest expense to average | | | | | | | | | | |
| assets (without adjustments) | | 1.84% | | 1.81% | | 1.63% | | 1.51% | | 1.50% |
Calculation of Pre-Tax, Pre-Provision Operating Earnings (Dollars in Thousands)
| | | | Three Months Ended |
| | | | March 31, | | December 31, | | September 30, | | June 30, | | March 31, |
| | | | 2012 | | 2011 | | 2011 | | 2011 | | 2011 |
| Income (loss) before income taxes | $ | 29,516 | $ | 27,263 | $ | 28,675 | $ | (16,426) | $ | 4,484 |
| Provision for credit losses | | 3,100 | | 8,000 | | 11,500 | | 61,250 | | 40,000 |
| | Pre-tax, pre-provision earnings | | 32,616 | | 35,263 | | 40,175 | | 44,824 | | 44,484 |
| | | | | | | | | | | | |
| Tax equivalent adjustment on tax-exempt interest income | | 4,756 | | 4,468 | | 3,320 | | 2,775 | | 2,625 |
| Tax equivalent adjustment on the increase in cash surrender | | | | | | | | | | |
| value of life insurance | | 494 | | 508 | | 546 | | 781 | | 521 |
| | Pre-tax, pre-provision earnings on a fully tax equivalent basis | | 37,866 | | 40,239 | | 44,041 | | 48,380 | | 47,630 |
| | | | | | | | | | | | |
| Non-core other income | | | | | | | | | | |
| | Net losses on other real estate owned | | (6,589) | | (5,478) | | (3,118) | | (4,645) | | (372) |
| | Net gains (losses) on securities available for sale | | (3) | | 411 | | - | | 232 | | (3) |
| | Net (losses) gain on sale of other assets | | (17) | | (87) | | - | | 13 | | 357 |
| | Net gain on sale of loans held for sale | | - | | - | | - | | 1,790 | | - |
| | Increase (decrease) in market value of assets held in trust | | | | | | | | | | |
| | for deferred compensation | | 501 | | 20 | | (405) | | 158 | | 187 |
| Total non-core other income | | (6,108) | | (5,134) | | (3,523) | | (2,452) | | 169 |
| | | | | | | | | | | | |
| Non-core other expense | | | | | | | | | | |
| | Impairment charges | | - | | 594 | | - | | - | | 1,000 |
| | Increase (decrease) in market value of assets held in | | | | | | | | | | |
| | trust for deferred compensation | | 501 | | 20 | | (405) | | 158 | | 187 |
| Total non-core other expense | | 501 | | 614 | | (405) | | 158 | | 1,187 |
| Pre-tax, pre-provision operating earnings | $ | 44,475 | $ | 45,987 | $ | 47,159 | $ | 50,990 | $ | 48,648 |
| | | | | | | | | | | | |
| Risk-weighted assets | $ | 6,150,910 | $ | 6,346,201 | $ | 6,174,508 | $ | 6,203,587 | $ | 6,577,477 |
| | | | | | | | | | | | |
| Average assets | $ | 9,736,702 | $ | 9,856,835 | $ | 9,807,561 | $ | 9,966,898 | $ | 10,198,626 |
| | | | | | | | | | | | |
| Annualized pre-tax, pre-provision operating earnings | | | | | | | | | | |
| to risk-weighted assets | | 2.91% | | 2.87% | | 3.03% | | 3.30% | | 3.00% |
| | | | | | | | | | | | |
| Annualized pre-tax, pre-provision operating earnings | | | | | | | | | | |
| to risk-weighted assets (without adjustments) | | 2.13% | | 2.20% | | 2.58% | | 2.90% | | 2.74% |
| | | | | | | | | | | | |
| Annualized pre-tax, pre-provision operating earnings | | | | | | | | | | |
| to average assets | | 1.84% | | 1.85% | | 1.91% | | 2.05% | | 1.93% |
| | | | | | | | | | | | |
| Annualized pre-tax, pre-provision operating earnings | | | | | | | | | | |
| to average assets (without adjustments) | | 1.35% | | 1.42% | | 1.63% | | 1.80% | | 1.77% |
A reconciliation of net interest margin on a fully tax equivalent basis to net interest margin is contained in the tables under “Net Interest Margin.” A reconciliation of tangible book value per common share to book value per common share is contained in the “Selected Financial Ratios” table. Reconciliations of core and non-core other income and other expense to other income and other expense are contained in the tables under “Results of Operations—Fourth Quarter Results.”
NET INTEREST MARGIN
The following table presents, for the periods indicated, the total dollar amount of interest income from average interest earning assets and the resultant yields, as well as the interest expense on average interest bearing liabilities, and the resultant costs, expressed both in dollars and rates (dollars in thousands):
| | | | | Three Months Ended March 31, | | | Three Months Ended December 31, | |
| | | | | 2012 | | | 2011 | | | 2011 | |
| | | | | Average | | | Yield/ | | Average | | | Yield/ | | | Average | | | Yield/ | |
| | | | | Balance | | Interest | Rate | | | Balance | | Interest | Rate | | | Balance | | Interest | Rate | |
| Interest Earning Assets: | | | | | | | | | | | | | | | | | | |
Loans (1) (2) (3): | | | | | | | | | | | | | | | | | | |
| Commercial related credits | | | | | | | | | | | | | | | | | | |
| | Commercial | $ | 1,062,246 | $ | 12,774 | 4.76 | % | $ | 1,164,698 | | 14,331 | 4.99 | % | $ | 1,051,065 | $ | 12,989 | 4.90 | % |
| | Commercial loans collateralized by | | | | | | | | | | | | | | | | | | |
| | assignment of lease payments | | 1,176,901 | | 13,757 | 4.68 | | | 1,003,872 | | 14,090 | 5.61 | | | 1,102,220 | | 14,167 | 5.14 | |
| | Real estate commercial | | 1,863,892 | | 23,906 | 5.07 | | | 2,139,597 | | 28,235 | 5.28 | | | 1,839,689 | | 25,132 | 5.35 | |
| | Real estate construction | | 145,728 | | 1,540 | 4.18 | | | 407,148 | | 3,519 | 3.46 | | | 209,098 | | 2,443 | 4.57 | |
| Total commercial related credits | | 4,248,767 | | 51,977 | 4.84 | | | 4,715,315 | | 60,175 | 5.10 | | | 4,202,072 | | 54,731 | 5.10 | |
| Other loans | | | | | | | | | | | | | | | | | | |
| | Real estate residential | | 313,602 | | 3,650 | 4.66 | | | 332,856 | | 4,467 | 5.37 | | | 316,087 | | 3,719 | 4.71 | |
| | Home equity | | 332,909 | | 3,670 | 4.43 | | | 376,361 | | 4,003 | 4.31 | | | 342,011 | | 3,701 | 4.29 | |
| | Indirect | | 186,359 | | 2,935 | 6.33 | | | 174,362 | | 2,940 | 6.84 | | | 188,562 | | 3,080 | 6.48 | |
| | Consumer loans | | 69,747 | | 529 | 3.05 | | | 57,468 | | 600 | 4.23 | | | 62,703 | | 482 | 3.05 | |
| Total other loans | | 902,617 | | 10,784 | 4.81 | | | 941,047 | | 12,010 | 5.18 | | | 909,363 | | 10,982 | 4.79 | |
| | Total loans, excluding covered loans | | 5,151,384 | | 62,761 | 4.90 | | | 5,656,362 | | 72,185 | 5.18 | | | 5,111,435 | | 65,713 | 5.10 | |
| | Covered loans | | 652,146 | | 10,014 | 6.18 | | | 804,275 | | 15,805 | 7.97 | | | 707,039 | | 10,894 | 6.11 | |
| | Total loans | | 5,803,530 | | 72,775 | 5.04 | | | 6,460,637 | | 87,990 | 5.52 | | | 5,818,474 | | 76,607 | 5.22 | |
| Taxable investment securities | | 1,702,766 | | 10,884 | 2.56 | | | 1,313,061 | | 7,752 | 2.36 | | | 1,820,680 | | 11,608 | 2.55 | |
| Investment securities exempt from | | | | | | | | | | | | | | | | | | |
federal income taxes (3) | | 742,568 | | 10,368 | 5.58 | | | 348,831 | | 5,146 | 5.90 | | | 676,893 | | 9,505 | 5.49 | |
| Other interest earning deposits | | 258,351 | | 169 | 0.26 | | | 747,013 | | 471 | 0.26 | | | 272,762 | | 181 | 0.26 | |
| | Total interest earning assets | $ | 8,507,215 | $ | 94,196 | 4.45 | | $ | 8,869,542 | $ | 101,359 | 4.63 | | $ | 8,588,809 | $ | 97,901 | 4.52 | |
| Non-interest earning assets | | 1,229,487 | | | | | | 1,329,084 | | | | | | 1,268,026 | | | | |
| | Total assets | $ | 9,736,702 | | | | | $ | 10,198,626 | | | | | $ | 9,856,835 | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Interest Bearing Liabilities: | | | | | | | | | | | | | | | | | | |
| Core funding: | | | | | | | | | | | | | | | | | | |
| | Money market and NOW accounts | $ | 2,649,671 | $ | 1,207 | 0.18 | % | $ | 2,726,599 | $ | 2,486 | 0.37 | % | $ | 2,653,486 | $ | 1,498 | 0.22 | % |
| | Savings accounts | | 772,335 | | 248 | 0.13 | | | 710,455 | | 420 | 0.24 | | | 751,766 | | 327 | 0.17 | |
| | Certificates of deposit | | 1,892,328 | | 3,883 | 0.86 | | | 2,429,280 | | 6,520 | 1.09 | | | 1,971,473 | | 4,294 | 0.89 | |
| | Customer repurchase agreements | | 203,003 | | 134 | 0.27 | | | 262,578 | | 187 | 0.29 | | | 235,666 | | 151 | 0.25 | |
| Total core funding | | 5,517,337 | | 5,472 | 0.40 | | | 6,128,912 | | 9,613 | 0.64 | | | 5,612,391 | | 6,270 | 0.44 | |
| Wholesale funding: | | | | | | | | | | | | | | | | | | |
| | Brokered accounts (includes fee expense) | | 439,890 | | 3,422 | 3.13 | | | 467,417 | | 3,933 | 3.41 | | | 438,123 | | 3,450 | 3.12 | |
| | Other borrowings | | 429,231 | | 3,453 | 3.18 | | | 440,241 | | 2,983 | 2.71 | | | 431,165 | | 3,468 | 3.15 | |
| Total wholesale funding | | 869,121 | | 6,875 | 2.76 | | | 907,658 | | 6,916 | 3.09 | | | 869,288 | | 6,918 | 2.88 | |
| Total interest bearing liabilities | $ | 6,386,458 | $ | 12,347 | 0.78 | | $ | 7,036,570 | $ | 16,529 | 0.95 | | $ | 6,481,679 | $ | 13,188 | 0.81 | |
| Non-interest bearing deposits | | 1,851,211 | | | | | | 1,672,003 | | | | | | 1,878,049 | | | | |
| Other non-interest bearing liabilities | | 136,412 | | | | | | 143,775 | | | | | | 120,671 | | | | |
| Stockholders' equity | | 1,362,621 | | | | | | 1,346,278 | | | | | | 1,376,436 | | | | |
| | | Total liabilities and stockholders' equity | $ | 9,736,702 | | | | | $ | 10,198,626 | | | | | $ | 9,856,835 | | | | |
| | | Net interest income/interest rate spread (4) | | | $ | 81,849 | 3.67 | % | | | $ | 84,830 | 3.68 | % | | | $ | 84,713 | 3.71 | % |
| | | Taxable equivalent adjustment | | | | 4,756 | | | | | | 2,625 | | | | | | 4,468 | | |
| | | Net interest income, as reported | | | $ | 77,093 | | | | | $ | 82,205 | | | | | $ | 80,245 | | |
| | | Net interest margin (5) | | | | | 3.64 | % | | | | | 3.76 | % | | | | | 3.71 | % |
| | | Tax equivalent effect | | | | | 0.23 | % | | | | | 0.12 | % | | | | | 0.20 | % |
| | | Net interest margin on a fully tax | | | | | | | | | | | | | | | | | | |
| | | equivalent basis (5) | | | | | 3.87 | % | | | | | 3.88 | % | | | | | 3.91 | % |
| (1) | Non-accrual loans are included in average loans. |
| (2) | Interest income includes amortization of deferred loan origination fees of $877 thousand, $1.2 million, and $1.3 million for the three months ended March 31, 2012, December 31, 2011, and March 31, 2011, respectively. |
| (3) | Non-taxable loan and investment income is presented on a fully tax equivalent basis assuming a 35% tax rate. |
| (4) | Interest rate spread represents the difference between the average yield on interest earning assets and the average cost of interest bearing liabilities and is presented on a fully tax equivalent basis. |
| (5) | Net interest margin represents net interest income as a percentage of average interest earning assets. |
