Exhibit 99.1
Talmer Bancorp, Inc. reports first quarter 2014 net income of $32.7 million, representing $0.45 of earnings per diluted average share
Completed acquisition of Michigan Commerce Bank (Talmer West Bank)
Successful completion of initial public offering resulting in net proceeds of $42.1 million
TROY/May 6, 2014 — Talmer Bancorp, Inc. (NASDAQ: TLMR) (“Talmer”) today reported first quarter 2014 net income of $32.7 million, compared to $12.6 million for the fourth quarter 2013 and $60.5 million for the first quarter 2013. Earnings per diluted share were $0.45 for the first quarter 2014, compared to $0.18 for the fourth quarter 2013 and $0.89 for the first quarter 2013.
Talmer Bancorp President and CEO David Provost commented, “We continue to execute on our strategic plans to build a leading Midwest community bank. Success in our priorities of building scale, delivering solid earning asset growth and effectively integrating acquired institutions is evident in our financial results. In early 2014, we completed the acquisition of Talmer West Bank, consolidated from four former banking subsidiaries of Capitol Bancorp. This acquisition expanded our presence into additional markets including Western Michigan and Northern Indiana. We are excited to welcome these employees and customers and look forward to further expansion of our presence in a number of these markets.”
“We have invested significantly over the last few years to build the necessary infrastructure for a larger and more complex institution. These enhancements have resulted in financial controls and risk management practices that have proven scalable and allowed us to strategically focus on our growth initiatives in a highly competitive banking environment. In the first quarter we completed the charter integration of First Place Bank into Talmer Bank and Trust, a significant final step in a long and costly process to deal with problem assets and build an effective control environment. Work and opportunity remain to continue to centralize back office functions and realize synergies in the near term, but I am proud of the efforts of our team in combining two very different institutions in such a short period of time.”
“Although the era of distressed bank acquisitions is winding down, we are pleased with how we have been able to combine formerly struggling institutions into a larger, community focused and profitable enterprise. We have utilized the financial flexibility provided by successful acquisitions to build a bank capable of delivering sustained growth. While attractive acquisition opportunities remain in our sights, we are also prepared to drive the next chapter of our story based on both a greater emphasis on organic growth and the continuing realization of operating synergies from previous acquisitions.”
Quarterly Results Summary
(Dollars in thousands, except per share data) | | 1st Qtr 2014 | | 4th Qtr 2013 | | 1st Qtr 2013 | |
Earnings Summary | | | | | | | |
Net interest income | | $ | 48,123 | | $ | 39,284 | | $ | 40,657 | |
Total provision for loan losses | | 3,926 | | 3,250 | | 2,260 | |
Noninterest income | | 53,012 | | 23,638 | | 103,619 | |
Noninterest expense | | 65,614 | | 53,090 | | 84,611 | |
Income before income taxes | | 31,595 | | 6,582 | | 57,405 | |
Income tax provision (benefit) | | (1,072 | ) | (5,971 | ) | (3,050 | ) |
Net income | | 32,667 | | 12,553 | | 60,455 | |
| | | | | | | |
Per Share Data | | | | | | | |
Diluted earnings per common share | | $ | 0.45 | | $ | 0.18 | | $ | 0.89 | |
Tangible book value per share (1) | | 9.74 | | 9.12 | | 8.66 | |
Average diluted shares (in thousands) | | 73,377 | | 70,555 | | 68,200 | |
| | | | | | | |
| | | | | | | |
Performance and Capital Ratios | | | | | | | |
Return on average assets (annualized) | | 2.36 | % | 1.08 | % | 5.05 | % |
Return on average equity (annualized) | | 19.07 | | 8.24 | | 41.11 | |
Net interest margin (fully taxable equivalent) (annualized) (2) | | 3.95 | | 3.72 | | 3.74 | |
Tangible average equity to tangible average assets (1) | | 12.09 | | 12.89 | | 12.00 | |
Tier 1 leverage ratio (3) | | 12.47 | | 11.88 | | 10.98 | |
Tier 1 risk-based capital (3) | | 16.66 | | 18.29 | | 19.15 | |
Total risk-based capital (3) | | 17.72 | | 19.21 | | 19.75 | |
(1) See section entitled “Reconciliation of Non-GAAP Financial Measures.”
(2) Presented on a tax equivalent basis using a 35% tax rate for all periods presented.
(3) First quarter 2014 is estimated.
First Quarter 2014 Compared to Fourth Quarter 2013
· Net income increased to $32.7 million, or $0.45 per diluted average share, in the first quarter 2014, compared to $12.6 million, or $0.18 per diluted average share, for the fourth quarter 2013. The $20.1 million increase in net income included the bargain purchase gain of $37.0 million resulting from our acquisition of Michigan Commerce Bank (Talmer West Bank). The bargain purchase gain was partially offset by transaction and integration related expenses during the first quarter detailed in the noninterest expense section following.
· Net total loans increased during the first quarter 2014 by $637.1 million, or 21.6%, to $3.6 billion, which at the end of the quarter included $552.3 million of loans from our acquisition of Talmer West Bank. Excluding loans from the Talmer West Bank acquisition, net total loans grew by $84.8 million, or 11.5% annualized, in the three months ended March 31, 2014. During the first quarter 2014, Talmer Bank and Trust experienced $114.6 million of net uncovered organic loan growth, partially offset by $29.8 million of net covered loan run-off (loans covered by loss share agreements with the FDIC). The Talmer West Bank acquisition added $572.2 million of loans at the time the transaction closed on January 1, 2014, of which a net $19.9 million ran-off by the end of the quarter.
· Total deposits increased $785.5 million, or 21.8%, to $4.4 billion as of March 31, 2014, primarily reflecting $857.8 million of deposits acquired in our acquisition of Talmer West Bank, partially offset by a decline in time deposits of $63.6 million.
· Net interest income of $48.1 million increased $8.8 million, or 22.5%, compared to the fourth quarter 2013. The increase in net interest income was primarily the result of the addition of $9.1 million of net interest income related to our acquisition of Talmer West Bank and its inclusion into our operations beginning January 1, 2014. Our net interest margin also increased 23 basis points to 3.95% in the first quarter 2014, compared to 3.72% in the fourth quarter 2013. The increase is primarily the result of the loan composition purchased in our acquisition of Talmer West Bank, which held a higher percentage of higher yielding commercial real estate loans, partially offset by a reduction in the benefit received from discount accretion on our purchased credit impaired loan portfolio.
· Noninterest income increased by $29.4 million, or 124.3%, to $53.0 million in the first quarter 2014 compared to fourth quarter 2013. The increase primarily relates to the $37.0 million bargain purchase gain recognized as a result of our acquisition of Talmer West Bank and its inclusion into our operations, partially offset by a decrease in mortgage banking and other loan fees and a net loss on sales of securities.
· Noninterest expenses increased $12.5 million, or 23.6%, to $65.6 million in the first quarter 2014 compared to fourth quarter 2013. Noninterest expenses in the first quarter 2014 included the addition of Talmer West Bank’s operating expenses and approximately $10.8 million of certain transaction and integration related expenses including severance expense, bank acquisition and due diligence fees, bonus payments related to our successful acquisition of Talmer West Bank, the merger of First Place Bank and Talmer Bank and Trust and the completion of our initial public offering, as well as expenses incurred related to termination of certain software contracts. Excluding transaction related expenses, Talmer West Bank added $10.5 million of operating expense in the first quarter 2014. Excluding Talmer West Bank operating expenses and transaction and integration related expenses of approximately $10.8 million, total operating expense declined by $8.8 million, or 16.5%, compared to fourth quarter 2013, primarily reflecting operating synergies achieved from the integration of First Place Bank into Talmer Bank and Trust.
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Income Statement
Net Interest Income and Net Interest Margin
Net interest income for the first quarter of 2014 was $48.1 million, compared to $39.3 million in the prior quarter. The increase in net interest income in the first quarter was primarily the result of the addition of $9.1 million of net interest income related to our acquisition of Talmer West Bank and its inclusion into our operations beginning January 1, 2014.
Our net interest margin was 3.95% in the first quarter 2014, an increase of 23 basis points from 3.72% in the fourth quarter 2013. The increase in our net interest margin in the first quarter was due to a combination of several factors, the largest being the acquisition of Talmer West Bank, which had a significantly higher proportion of its loan portfolio in commercial real estate loans that, on average, have a higher yield than Talmer Bank and Trust’s loan portfolio which has a larger percentage of residential real estate loans.
Our net interest margin benefits from discount accretion on our purchased credit impaired loan portfolio, a component of the accretable yield. However, given the substantial growth of our organic loan portfolio, diminished size of our covered loan portfolio and the high negative yield on the FDIC indemnification asset, the net interest margin benefit from excess accretable yield is now relatively insignificant, especially when compared to prior quarters. The accretable yield represents the excess of the net present value of expected future cash flows over the acquisition date fair value on our purchased credit impaired loans and includes both the expected coupon of the loan and the discount accretion. The accretable yield is recognized as interest income over the expected remaining life of the purchased credit impaired loan. For the first quarter 2014 and the fourth quarter 2013, the yield on total loans was 5.80% and 5.91%, respectively, while the yield generated using only the expected coupon would have been 5.02% and 4.49%, respectively. The difference between the actual yield earned on total loans and the yield generated based on the expected coupon represents excess accretable yield. The expected coupon of the loan considers the actual coupon rate of the loan and does not include any interest income for loans in nonaccrual status. Our net interest margin is also adversely impacted by the negative yield on the FDIC indemnification asset. Because our quarterly cash flow re-estimations have continuously resulted in improvements in the overall expected cash flows on covered loans our expected payment from the FDIC under our loss share agreements have declined, resulting in a negative yield on the FDIC indemnification asset. This negative yield on the FDIC indemnification asset partially offsets the benefits provided by the excess accretable yield. This negative yield was 21.29% and 19.03% for first quarter 2014 and fourth quarter 2013, respectively. The combination of the excess accretable yield and negative yield on the FDIC indemnification asset benefitted net interest margin by five basis points and 36 basis points in the first quarter 2014 and fourth quarter 2013, respectively.
Noninterest Income
Noninterest income increased $29.4 million to $53.0 million in the first quarter 2014, compared to $23.6 million for the fourth quarter 2013. Noninterest income in the first quarter 2014 benefitted from the $37.0 million bargain purchase gain resulting from our acquisition of Talmer West Bank and the inclusion of $4.6 million of noninterest income related directly to Talmer West Bank. These benefits were partially offset primarily by a decrease in mortgage banking and other loan fees of $6.5 million and the net loss on sales of securities of $2.3 million during the quarter. The decrease in mortgage banking and other loan fees primarily reflects changes in the fair value of loan servicing rights, which was a detriment to earnings of $3.1 million during the first quarter 2014 versus a benefit of $3.1 million during the fourth quarter 2013 primarily due to movements in interest rates during those periods. The recognition of $2.3 million of net losses on sales of securities during the first quarter 2014 resulted from management’s decision to sell certain securities late in the quarter to take advantage of an opportunity to reinvest the proceeds in securities that improve the duration extension risk and forward looking yield profile of our securities profile.
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Noninterest Expenses
Noninterest expenses in the first quarter 2014 totaled $65.6 million, compared to $53.1 million in the fourth quarter 2013. The increase in total noninterest expenses was primarily due to the addition of Talmer West Bank’s $10.5 million of operating costs outside of transaction related expenses in the first quarter 2014 and approximately $10.8 million of transaction and integration related expenses including severance expense, bank acquisition and due diligence fees, bonus payments related to our successful acquisition of Talmer West Bank, the merger of First Place Bank and Talmer Bank and Trust and the completion of our initial public offering, as well as expenses incurred related to termination of certain software contracts. Outside of the Talmer West Bank and transaction and integration related expenses results for the first quarter 2014 reflect decreases of salary and employee benefits of $4.1 million, professional service fees of $1.5 million, occupancy and equipment expense of $1.1 million and insurance expense of $660 thousand. These reductions are cost benefits we realized as we continue to rationalize staffing and services in our growing organization. The following table illustrates certain transaction and integration related items impacting noninterest expense trends during the quarter.
| | Three months ended March 31, 2014 | |
(Dollars in thousands) | | Actual | | Transaction and integration
related expenses | | Excluding transaction and
integration related expenses | |
Noninterest expenses | | | | | | | |
Salary and employee benefits | | $ | 35,726 | | $ | 4,935 | | $ | 30,791 | |
Occupancy and equipment expense | | 9,148 | | 2,800 | | 6,348 | |
Data processing fees | | 1,740 | | — | | 1,740 | |
Professional service fees | | 4,290 | | 1,161 | | 3,129 | |
FDIC loss sharing expense | | 524 | | — | | 524 | |
Bank acquisition and due diligence fees | | 1,711 | | 1,711 | | — | |
Marketing expense | | 1,091 | | — | | 1,091 | |
Other employee expense | | 729 | | — | | 729 | |
Insurance expense | | 1,849 | | — | | 1,849 | |
Other expense | | 8,806 | | 240 | | 8,566 | |
Total noninterest expenses | | $ | 65,614 | | $ | 10,847 | | $ | 54,767 | |
We caution that earnings can be volatile given that such a large portion of our loan portfolio is comprised of purchased credit impaired loans and because of our on-going acquisition activities. Income can be significantly impacted by the accounting requirement to periodically re-estimate the cash flows of purchased credit impaired loans and expenses associated with technology conversion and organization integration related activities.
Credit Quality
We recorded our acquired loans at fair value at the date of acquisition with no separate allowance for loan losses. At March 31, 2014, the allowance for loan losses on uncovered loans was $22.8 million, or 0.72% of total uncovered loans, compared to $17.7 million, or 0.72% of total uncovered loans, at December 31, 2013. The increase in allowance for loan losses on uncovered loans for the quarter was primarily due to allowance resulting from our quarterly re-estimation of expected cash flows for our uncovered purchased credit impaired loans. At March 31, 2014, the allowance for loan losses on covered loans was $38.0 million, or 7.63% of total covered loans, compared to $40.4 million, or 7.62% of total covered loans at December 31, 2013. The decrease in allowance for loan losses on covered loans primarily reflects payments received on loans not previously anticipated, partially offset by the additional allowance resulting from our quarterly re-estimation of expected cash flows for our covered purchased credit impaired loans.
During the first quarter 2014, we completed re-estimations of cash flows expectation for purchased credit impaired loans in each of our acquisitions with the exception of Talmer West Bank since it was acquired during the quarter. For the re-estimations, loans with decreased cash flow expectations resulted additional loan loss provisions of $5.1 million. Provisions related to covered loans are partially offset by an increase in the FDIC indemnification asset. The re-estimations also resulted in a $16.4 million improvement in the gross cash flow expectation for loans which will be recognized prospectively as an increase in the accretable yield. The improvement in cash flows on covered loans will be partially offset by a continued reduction in the FDIC indemnification asset which will impact future earnings through negative accretion.
All of our acquired loan portfolios are continuing to perform significantly better than initially anticipated. We believe improvements in performance are primarily due to improvements in the economy and the efforts made by our Special Assets team that manages our acquired loan portfolios. Similar to the first quarter 2014 re-estimations, the prior re-estimations of cash flows have indicated better overall expected performance than originally anticipated at acquisition.
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Balance Sheet and Capital Management
Total assets increased $869.8 million to $5.4 billion at March 31, 2014 compared to $4.5 billion at December 31, 2013. The acquisition date fair value of assets acquired in our acquisition of Talmer West Bank increased assets by $898.3 million after the $6.5 million of cash consideration paid. The primary drivers of the increase in assets in the quarter ended March 31, 2014 were a $637.1 million increase in net total loans and a $155.2 million increase in cash and cash equivalents.
Net total loans at March 31, 2014 were $3.6 billion, which at the end of the quarter included $552.3 million of loans acquired in the Talmer West Bank acquisition, compared to $2.9 billion at December 31, 2013. Excluding loans from our acquisition of Talmer West Bank, net total loans grew by $84.8 million, or 11.5% annualized, compared to December 31, 2013. During the quarter, Talmer Bank and Trust experienced $114.6 million of net uncovered organic loan growth, partially offset by $29.8 million of net covered loan run-off. The Talmer West Bank acquisition added $572.2 million of loans when the transaction closed on January 1, 2014, of which a net $19.9 million ran-off by the end of the quarter. We continue to be focused on sourcing quality loan growth to overcome the run-off of higher yielding acquired loans. A significant amount, $497.9 million, or 13.7%, of total loans, are covered by loss sharing agreement entered into with the FDIC. Acquired loans are reported on the balance sheet at the contractual balance net of remaining discount resulting from acquisition accounting and charge-offs taken since acquisition.
Total liabilities were $4.7 billion at March 31, 2014 compared to $3.9 billion at December 31, 2013. The acquisition date fair value of liabilities assumed in our acquisition of Talmer West Bank increased liabilities by $861.3 million. The increase in liabilities in the quarter ended March 31, 2014 was primarily due to an increase in total deposits of $785.5 million. While we increased our total deposits by 21.8% during the period, we continued to maintain a low total cost of deposits and total costs of funds of 20 basis points and 32 basis points, respectively, in the first quarter 2014.
Total shareholders’ equity increased $80.5 million, or 13.0%, to $697.5 million at March 31, 2014, compared to $617.0 million as of December 31, 2013. The increase in shareholders’ equity primarily reflects our initial public offering completed in February 2014 that raised $42.1 million of capital, after deducting underwriting discounts and commissions and offering expenses and our first quarter 2014 net income of $32.7 million.
Key Performance Goals
Our near-term focus continues to be on realizing significant operating synergies associated with the acquisitions of First Place Bank and Talmer West Bank.
· Consolidation of back office processes and personnel
· Wind-down of third-party expenses associated with regulatory compliance and systems enhancements
· Continuing footprint rationalization including branch consolidations and evaluation of potential divestitures
· In April 2014, we entered into an agreement to sell our 11 Wisconsin branch offices including the deposits in Wisconsin which will allow us to focus on the core banking franchise.
· Also in April 2014, we entered into an agreement to sell our single branch in Albuquerque, New Mexico along with its deposits and loans.
· Goal of building a sustainable 1%+ core return on assets by growing upon our foundation and infrastructure
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Conference Call and Webcast
Talmer Bancorp, Inc. will host a live conference webcast to review first quarter 2014 financial results at 8:30 a.m. ET on Wednesday, May 7, 2014. The webcast and supplemental financial information can be accessed via Talmer Bancorp Inc.’s “Investor Relations” page at www.talmerbank.com where a link will be provided. Interested parties may also access the conference call by calling (888) 317-6003 (event ID No. 5166535) or internationally at (412) 317-6061 (event ID No. 5166535). A replay of the Webcast can be accessed via Talmer Bancorp Inc.’s “Investor Relations” page at www.talmerbank.com.
About Talmer Bancorp, Inc.
Headquartered in Troy, Michigan, Talmer Bancorp, Inc. is the holding company for Talmer Bank and Trust and Talmer West Bank. These banks, operating through branches and lending offices in Michigan, Ohio, Indiana, Wisconsin, Nevada, Illinois and New Mexico, offer a full suite of commercial and retail banking, mortgage banking, wealth management and trust services to small and medium-sized businesses and individuals.
This press release contains both financial measures based on accounting principles generally accepted in the United States (GAAP) and non-GAAP based financial measures, which are used where management believes it to be helpful in understanding Talmer Bancorp Inc.’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as a reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.
Forward-looking Statements
Some of the statements in this press release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: “intend,” “plan,” “seek,” “believe,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Examples of forward-looking statements, include, among others, statements related to our future expectations, including all statements under the heading entitled “Key Performance Goals,” statements regarding expectations related to growth opportunities in our markets, our ability to deliver sustained growth through acquisition opportunities, organic growth and the realization of operating synergies from prior acquisitions and our strategic plan. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to risks, uncertainties and other factors, such as a downturn in the economy, unanticipated losses related to the integration of, and accounting for, our acquisition transactions, access to funding sources, greater than expected noninterest expenses, volatile credit and financial markets both domestic and foreign, potential deterioration in real estate values, regulatory changes and excessive loan losses, any or all of which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements, as well as additional risks and uncertainties contained in the “Risk Factors” and the forward-looking statement disclosure contained in our Annual Report on Form 10-K for the most recently ended fiscal year, any of which could cause actual results to differ materially from future results expressed or implied by those forward-looking statements. All forward-looking statements speak only as of the date on which it is made. We undertake no obligation to update or revise any forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events or otherwise.
Media Contact: | | Investor Relations Contact: |
| | |
Shellie Maitre | | Bradley Adams |
| | |
(248) 498-2858 | | (248) 498-2862 |
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Talmer Bancorp, Inc.
Consolidated Balance Sheets
(Unaudited)
| | March 31, | | December 31, | | March 31, | |
(Dollars in thousands, except per share data) | | 2014 | | 2013 | | 2013 | |
| | | | | | | |
Assets | | | | | | | |
Cash and due from banks | | $ | 107,170 | | $ | 97,167 | | $ | 91,040 | |
Interest-bearing deposits with other banks | | 318,368 | | 206,160 | | 431,289 | |
Federal funds sold and other short-term investments | | 105,000 | | 72,029 | | 131,421 | |
Total cash and cash equivalents | | 530,538 | | 375,356 | | 653,750 | |
Securities available-for-sale | | 632,047 | | 620,083 | | 579,320 | |
Federal Home Loan Bank stock | | 12,335 | | 16,303 | | 15,813 | |
Loans held for sale, at fair value | | 75,931 | | 85,252 | | 259,670 | |
Loans: | | | | | | | |
Residential real estate (includes $17.6 million, $16.3 million and $0 respectively, measured at fair value) (1) | | 1,268,200 | | 1,085,453 | | 956,769 | |
Commercial real estate | | 1,147,820 | | 755,839 | | 742,490 | |
Commercial and industrial | | 573,268 | | 446,644 | | 316,966 | |
Real estate construction (includes $278 thousand, $1.4 million and $0 respectively, measured at fair value) (1) | | 143,569 | | 176,226 | | 117,914 | |
Consumer | | 12,932 | | 9,754 | | 13,031 | |
Total loans, excluding covered loans | | 3,145,789 | | 2,473,916 | | 2,147,170 | |
Less: Allowance for loan losses - uncovered | | (22,771 | ) | (17,746 | ) | (10,598 | ) |
Net loans - excluding covered loans | | 3,123,018 | | 2,456,170 | | 2,136,572 | |
Covered loans | | 497,920 | | 530,068 | | 661,159 | |
Less: Allowance for loan losses - covered | | (38,000 | ) | (40,381 | ) | (49,914 | ) |
Net loans - covered | | 459,920 | | 489,687 | | 611,245 | |
Net total loans | | 3,582,938 | | 2,945,857 | | 2,747,817 | |
Premises and equipment | | 56,352 | | 51,001 | | 58,153 | |
FDIC indemnification asset | | 119,045 | | 131,861 | | 202,202 | |
Other real estate owned | | 57,451 | | 29,955 | | 42,944 | |
Loan servicing rights | | 77,892 | | 78,603 | | 53,761 | |
Core deposit intangible | | 16,102 | | 13,205 | | 15,199 | |
FDIC receivable | | 8,130 | | 7,783 | | 15,090 | |
Company-owned life insurance | | 39,814 | | 39,500 | | 38,506 | |
Income tax benefit | | 178,882 | | 126,200 | | 117,700 | |
Other assets | | 29,744 | | 26,402 | | 30,844 | |
Total assets | | $ | 5,417,201 | | $ | 4,547,361 | | $ | 4,830,769 | |
Liabilities | | | | | | | |
Deposits: | | | | | | | |
Noninterest-bearing demand deposits | | 950,671 | | 779,379 | | 743,238 | |
Interest-bearing demand deposits | | 714,043 | | 598,281 | | 547,233 | |
Money market and savings deposits | | 1,370,691 | | 1,215,864 | | 1,236,700 | |
Time deposits | | 1,270,927 | | 927,313 | | 1,225,664 | |
Other brokered funds | | 80,000 | | 80,000 | | 50,498 | |
Total deposits | | 4,386,332 | | 3,600,837 | | 3,803,333 | |
FDIC clawback liability | | 25,593 | | 24,887 | | 22,252 | |
FDIC warrants payable | | 4,423 | | 4,118 | | 4,452 | |
Short-term borrowings | | 89,562 | | 71,876 | | 69,035 | |
Long-term debt | | 177,483 | | 199,037 | | 259,972 | |
Other liabilities | | 36,340 | | 29,591 | | 82,732 | |
Total liabilities | | 4,719,733 | | 3,930,346 | | 4,241,776 | |
Shareholders’ equity | | | | | | | |
Preferred stock - $1.00 par value | | | | | | | |
Authorized - 20,000,000 shares at 3/31/2014, 12/31/2013 and 3/31/2013 | | | | | | | |
Issued and outstanding - 0 shares at 3/31/2014, 12/31/2013 and 3/31/2013 | | $ | — | | $ | — | | $ | — | |
Common stock: | | | | | | | |
Class A Voting Common Stock - $1.00 par value | | | | | | | |
Authorized - 198,000,000 shares at 3/31/2014, 12/31/2013 and 3/31/2013 | | | | | | | |
Issued and outstanding - 69,962,461 shares at 3/31/2014, 66,234,397 shares at 12/31/2013 and 66,229,397 at 3/31/2013 | | 69,962 | | 66,234 | | 66,229 | |
Class B Non-Voting Common Stock - $1.00 par value | | | | | | | |
Authorized - 2,000,000 shares at 3/31/2014, 12/31/2013 and 3/31/2013 | | | | | | | |
Issued and outstanding - 0 shares at 3/31/2014, 12/31/2013 and 3/31/2013 | | — | | — | | — | |
Additional paid-in-capital | | 404,905 | | 366,428 | | 365,106 | |
Retained earnings | | 225,016 | | 192,349 | | 154,247 | |
Accumulated other comprehensive income (loss), net of tax | | (2,415 | ) | (7,996 | ) | 3,411 | |
Total shareholders’ equity | | 697,468 | | 617,015 | | 588,993 | |
Total liabilities and shareholders’ equity | | $ | 5,417,201 | | $ | 4,547,361 | | $ | 4,830,769 | |
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Talmer Bancorp, Inc.
Consolidated Statements of Income
(Unaudited)
| | Three months ended March 31, | |
(Dollars in thousands, except per share data) | | 2014 | | 2013 | |
| | | | | |
Interest income | | | | | |
Interest and fees on loans | | $ | 53,420 | | $ | 48,738 | |
Interest on investments | | | | | |
Taxable | | 1,878 | | 1,364 | |
Tax-exempt | | 1,952 | | 994 | |
Total interest on securities | | 3,830 | | 2,358 | |
Interest on interest earning cash balances | | 216 | | 290 | |
Interest on federal funds and other short term investments | | 177 | | 200 | |
Dividends on FHLB stock | | 185 | | 407 | |
FDIC indemnification asset | | (6,718 | ) | (8,148 | ) |
Total interest income | | 51,110 | | 43,845 | |
Interest Expense | | | | | |
Interest-bearing demand deposits | | 224 | | 167 | |
Money market and savings deposits | | 494 | | 518 | |
Time deposits | | 1,491 | | 1,661 | |
Other brokered funds | | 29 | | 24 | |
Interest on short-term borrowings | | 175 | | 22 | |
Interest on long-term debt | | 574 | | 796 | |
Total interest expense | | 2,987 | | 3,188 | |
Net interest income | | 48,123 | | 40,657 | |
Provision for loan losses - uncovered | | 6,424 | | 1,176 | |
Provision (benefit) for loan losses - covered | | (2,498 | ) | 1,084 | |
Net interest income after provision for loan losses | | 44,197 | | 38,397 | |
| | | | | |
Noninterest income | | | | | |
Deposit fee income | | 3,274 | | 4,512 | |
Mortgage banking and other loan fees | | 1,264 | | 5,185 | |
Net gain on sales of loans | | 3,040 | | 16,815 | |
Bargain purchase gain | | 36,994 | | 71,702 | |
FDIC loss sharing income | | (113 | ) | 130 | |
Accelerated discount on acquired loans | | 6,466 | | 2,293 | |
Net gain (loss) on sales of securities | | (2,310 | ) | 31 | |
Other income | | 4,397 | | 2,951 | |
Total noninterest income | | 53,012 | | 103,619 | |
| | | | | |
Noninterest expenses | | | | | |
Salary and employee benefits | | 35,726 | | 52,896 | |
Occupancy and equipment expense | | 9,148 | | 7,022 | |
Data processing fees | | 1,740 | | 1,647 | |
Professional service fees | | 4,290 | | 3,887 | |
FDIC loss sharing expense | | 524 | | 696 | |
Bank acquisition and due diligence fees | | 1,711 | | 7,229 | |
Marketing expense | | 1,091 | | 1,537 | |
Other employee expense | | 729 | | 896 | |
Insurance expense | | 1,849 | | 2,932 | |
Other expense | | 8,806 | | 5,869 | |
Total noninterest expenses | | 65,614 | | 84,611 | |
Income before income taxes | | 31,595 | | 57,405 | |
Income tax provision (benefit) | | (1,072 | ) | (3,050 | ) |
Net income | | $ | 32,667 | | $ | 60,455 | |
| | | | | |
Earnings per share: | | | | | |
Basic | | $ | 0.48 | | $ | 0.91 | |
Diluted | | $ | 0.45 | | $ | 0.89 | |
Average shares outstanding - basic | | 68,121 | | 66,229 | |
Average shares outstanding - diluted | | 73,377 | | 68,200 | |
| | | | | |
Total comprehensive income | | 38,248 | | 59,948 | |
8
Talmer Bancorp, Inc.
Consolidated Statements of Income
(Unaudited)
| | 1st | | 4th | | 3rd | | 2nd | | 1st | |
| | Quarter | | Quarter | | Quarter | | Quarter | | Quarter | |
(Dollars in thousands, except per share data) | | 2014 | | 2013 | | 2013 | | 2013 | | 2013 | |
| | | | | | | | | | | |
Interest income | | | | | | | | | | | |
Interest and fees on loans | | $ | 53,420 | | $ | 45,354 | | $ | 49,475 | | $ | 51,290 | | $ | 48,738 | |
Interest on investments | | | | | | | | | | | |
Taxable | | 1,878 | | 1,880 | | 1,751 | | 1,102 | | 1,364 | |
Tax-exempt | | 1,952 | | 1,098 | | 1,132 | | 1,006 | | 994 | |
Total interest on securities | | 3,830 | | 2,978 | | 2,883 | | 2,108 | | 2,358 | |
Interest on interest earning cash balances | | 216 | | 188 | | 97 | | 201 | | 290 | |
Interest on federal funds and other short term investments | | 177 | | 204 | | 279 | | 247 | | 200 | |
Dividends on FHLB stock | | 185 | | 160 | | 167 | | 138 | | 407 | |
FDIC indemnification asset | | (6,718 | ) | (6,952 | ) | (6,032 | ) | (6,908 | ) | (8,148 | ) |
Total interest income | | 51,110 | | 41,932 | | 46,869 | | 47,076 | | 43,845 | |
Interest Expense | | | | | | | | | | | |
Interest-bearing demand deposits | | 224 | | 173 | | 174 | | 159 | | 167 | |
Money market and savings deposits | | 494 | | 430 | | 447 | | 494 | | 518 | |
Time deposits | | 1,491 | | 1,250 | | 1,408 | | 1,545 | | 1,661 | |
Other brokered funds | | 29 | | 32 | | 38 | | 48 | | 24 | |
Interest on short-term borrowings | | 175 | | 24 | | 26 | | 33 | | 22 | |
Interest on long-term debt | | 574 | | 739 | | 775 | | 742 | | 796 | |
Total interest expense | | 2,987 | | 2,648 | | 2,868 | | 3,021 | | 3,188 | |
Net interest income | | 48,123 | | 39,284 | | 44,001 | | 44,055 | | 40,657 | |
Provision for loan losses - uncovered | | 6,424 | | 6,569 | | 2,852 | | 4,923 | | 1,176 | |
Provision (benefit) for loan losses - covered | | (2,498 | ) | (3,319 | ) | (727 | ) | (7,460 | ) | 1,084 | |
Net interest income after provision for loan losses | | 44,197 | | 36,034 | | 41,876 | | 46,592 | | 38,397 | |
| | | | | | | | | | | |
Noninterest income | | | | | | | | | | | |
Deposit fee income | | 3,274 | | 3,179 | | 3,547 | | 4,648 | | 4,512 | |
Mortgage banking and other loan fees | | 1,264 | | 7,729 | | 7,222 | | 10,770 | | 5,185 | |
Net gain on sales of loans | | 3,040 | | 3,423 | | 5,028 | | 16,139 | | 16,815 | |
Bargain purchase gain | | 36,994 | | — | | — | | — | | 71,702 | |
FDIC loss sharing income | | (113 | ) | (3,167 | ) | (4,846 | ) | (2,343 | ) | 130 | |
Accelerated discount on acquired loans | | 6,466 | | 6,596 | | 4,345 | | 3,920 | | 2,293 | |
Net gain (loss) on sales of securities | | (2,310 | ) | 292 | | — | | 69 | | 31 | |
Other income | | 4,397 | | 5,586 | | 2,741 | | 2,858 | | 2,951 | |
Total noninterest income | | 53,012 | | 23,638 | | 18,037 | | 36,061 | | 103,619 | |
| | | | | | | | | | | |
Noninterest expenses | | | | | | | | | | | |
Salary and employee benefits | | 35,726 | | 29,837 | | 29,766 | | 34,110 | | 52,896 | |
Occupancy and equipment expense | | 9,148 | | 6,327 | | 6,582 | | 6,824 | | 7,022 | |
Data processing fees | | 1,740 | | 2,049 | | 3,539 | | 1,913 | | 1,647 | |
Professional service fees | | 4,290 | | 4,073 | | 4,472 | | 4,425 | | 3,887 | |
FDIC loss sharing expense | | 524 | | 483 | | 106 | | 722 | | 696 | |
Bank acquisition and due diligence fees | | 1,711 | | 819 | | 171 | | 474 | | 7,229 | |
Marketing expense | | 1,091 | | 659 | | 634 | | 654 | | 1,537 | |
Other employee expense | | 729 | | 793 | | 1,018 | | 975 | | 896 | |
Insurance expense | | 1,849 | | 1,851 | | 1,911 | | 3,280 | | 2,932 | |
Other expense | | 8,806 | | 6,199 | | 5,227 | | 6,527 | | 5,869 | |
Total noninterest expenses | | 65,614 | | 53,090 | | 53,426 | | 59,904 | | 84,611 | |
Income before income taxes | | 31,595 | | 6,582 | | 6,487 | | 22,749 | | 57,405 | |
Income tax provision (benefit) | | (1,072 | ) | (5,971 | ) | (4,057 | ) | 7,743 | | (3,050 | ) |
Net income | | $ | 32,667 | | $ | 12,553 | | $ | 10,544 | | $ | 15,006 | | $ | 60,455 | |
| | | | | | | | | | | |
Earnings per share: | | | | | | | | | | | |
Basic | | $ | 0.48 | | $ | 0.19 | | $ | 0.16 | | $ | 0.23 | | $ | 0.91 | |
Diluted | | $ | 0.45 | | $ | 0.18 | | 0.15 | | 0.21 | | $ | 0.89 | |
Average shares outstanding - basic | | 68,121 | | 66,231 | | 66,229 | | 66,229 | | 66,229 | |
Average shares outstanding - diluted | | 73,377 | | 70,555 | | 69,853 | | 69,853 | | 68,200 | |
| | | | | | | | | | | |
Total comprehensive income (loss) | | 38,248 | | 9,922 | | 10,737 | | 6,036 | | 59,949 | |
9
Talmer Bancorp, Inc.
Selected Financial Information
(Unaudited)
| | 2014 | | 2013 | |
(Dollars in thousands, except per share data) | | 1st Qtr | | 4th Qtr | | 3rd Qtr | | 2nd Qtr | | 1st Qtr | |
Earnings Summary | | | | | | | | | | | |
Interest income | | $ | 51,110 | | $ | 41,932 | | $ | 46,869 | | $ | 47,076 | | $ | 43,845 | |
Interest expense | | 2,987 | | 2,648 | | 2,868 | | 3,021 | | 3,188 | |
Net interest income | | 48,123 | | 39,284 | | 44,001 | | 44,055 | | 40,657 | |
Provision for loan losses - uncovered | | 6,424 | | 6,569 | | 2,852 | | 4,923 | | 1,176 | |
Provision (benefit) for loan losses - covered | | (2,498 | ) | (3,319 | ) | (727 | ) | (7,460 | ) | 1,084 | |
Bargain purchase gains | | 36,994 | | — | | — | | — | | 71,702 | |
Noninterest income | | 53,012 | | 23,638 | | 18,037 | | 36,061 | | 103,619 | |
Noninterest expense | | 65,614 | | 53,090 | | 53,426 | | 59,904 | | 84,611 | |
Income before income taxes | | 31,595 | | 6,582 | | 6,487 | | 22,749 | | 57,405 | |
Income tax provision (benefit) | | (1,072 | ) | (5,971 | ) | (4,057 | ) | 7,743 | | (3,050 | ) |
Net income | | 32,667 | | 12,553 | | 10,544 | | 15,006 | | 60,455 | |
| | | | | | | | | | | |
Per Share Data | | | | | | | | | | | |
Basic earnings per common share | | $ | 0.48 | | $ | 0.19 | | $ | 0.16 | | $ | 0.23 | | $ | 0.91 | |
Diluted earnings per common share | | 0.45 | | 0.18 | | 0.15 | | 0.21 | | 0.89 | |
Book value per common share | | 9.97 | | 9.32 | | 9.16 | | 9.00 | | 8.89 | |
Tangible book value per share (1) | | 9.74 | | 9.12 | | 8.95 | | 8.78 | | 8.66 | |
Shares outstanding (in thousands) | | 69,962 | | 66,234 | | 66,229 | | 66,229 | | 66,229 | |
Average diluted shares (in thousands) | | 73,377 | | 70,555 | | 69,853 | | 69,853 | | 68,200 | |
| | | | | | | | | | | |
Selected Period End Balances | | | | | | | | | | | |
Total assets | | $ | 5,417,201 | | $ | 4,547,361 | | $ | 4,741,945 | | $ | 4,849,135 | | $ | 4,830,769 | |
Securities available-for-sale | | 632,047 | | 620,083 | | 652,739 | | 662,876 | | 579,320 | |
Total Loans | | 3,643,709 | | 3,003,984 | | 2,880,727 | | 2,842,782 | | 2,808,329 | |
Uncovered loans | | 3,145,789 | | 2,473,916 | | 2,322,193 | | 2,239,655 | | 2,147,170 | |
Covered loans | | 497,920 | | 530,068 | | 558,534 | | 603,127 | | 661,159 | |
FDIC indemnification asset | | 119,045 | | 131,861 | | 148,325 | | 171,956 | | 202,202 | |
Total deposits | | 4,386,332 | | 3,600,837 | | 3,662,675 | | 3,741,765 | | 3,803,333 | |
Total liabilities | | 4,719,733 | | 3,930,346 | | 4,135,114 | | 4,253,286 | | 4,241,776 | |
Total shareholders’ equity | | 697,468 | | 617,015 | | 606,831 | | 595,849 | | 588,993 | |
Tangible shareholders’ equity (1) | | 681,366 | | 603,810 | | 592,963 | | 581,318 | | 573,794 | |
| | | | | | | | | | | |
Performance and Capital Ratios | | | | | | | | | | | |
Return on average assets (annualized) | | 2.36 | % | 1.08 | % | 0.90 | % | 1.26 | % | 5.05 | % |
Return on average equity (annualized) | | 19.07 | | 8.24 | | 7.09 | | 10.12 | | 41.11 | |
Net interest margin (fully taxable equivalent) (annualized) (2) | | 3.95 | | 3.72 | | 4.11 | | 4.03 | | 3.74 | |
Tangible average equity to tangible average assets (1) | | 12.09 | | 12.89 | | 12.37 | | 12.13 | | 12.00 | |
Tier 1 leverage ratio (3) | | 12.47 | | 11.88 | | 11.43 | | 11.43 | | 10.98 | |
Tier 1 risk-based capital (3) | | 16.66 | | 18.29 | | 17.83 | | 18.24 | | 19.15 | |
Total risk-based capital (3) | | 17.72 | | 19.21 | | 18.66 | | 18.91 | | 19.75 | |
| | | | | | | | | | | |
Asset Quality Ratios: | | | | | | | | | | | |
Net charge-offs to average loans, excluding covered loans (annualized) | | 0.17 | % | 0.01 | % | 0.19 | % | 0.25 | % | 0.26 | % |
Nonperforming assets as a percentage of total assets | | 1.82 | | 1.58 | | 1.57 | | 1.56 | | 1.20 | |
Nonperforming loans as a percent of total loans | | 1.13 | | 1.40 | | 1.43 | | 1.35 | | 0.54 | |
Nonperforming loans as a percent of total loans, excluding covered loans | | 0.81 | | 0.98 | | 1.02 | | 0.84 | | 0.14 | |
Allowance for loan losses as a percentage of period-end loans | | 1.67 | | 1.93 | | 2.02 | | 2.12 | | 2.15 | |
Allowance for loan losses-uncovered as a percentage of period-end uncovered loans | | 0.72 | | 0.72 | | 0.67 | | 0.62 | | 0.49 | |
Allowance for loan losses as a percentage of nonperforming loans, excluding loans accounted for under ASC 310-30 | | 50.61 | | 43.52 | | 41.55 | | 51.94 | | 100.61 | |
(1) See section entitled “Reconciliation of Non-GAAP Financial Measures.”
(2) Presented on a tax equivalent basis using a 35% tax rate for all periods presented.
(3) First quarter 2014 is estimated.
10
Talmer Bancorp, Inc.
Loan Data
(Unaudited)
| | March 31, | | December 31, | | September 30, | | June 30, | | March 31, | |
(Dollars in thousands) | | 2014 | | 2013 | | 2013 | | 2013 | | 2013 | |
| | | | | | | | | | | |
Uncovered loans | | | | | | | | | | | |
Residential real estate | | $ | 1,268,200 | | $ | 1,085,453 | | $ | 998,264 | | $ | 990,267 | | $ | 956,769 | |
Commercial real estate | | | | | | | | | | | |
Non-owner occupied | | 742,178 | | 581,651 | | 579,751 | | 598,169 | | 613,075 | |
Owner-occupied | | 377,678 | | 148,545 | | 135,743 | | 124,291 | | 112,367 | |
Farmland | | 27,964 | | 25,643 | | 23,931 | | 18,545 | | 17,048 | |
Total commercial real estate | | 1,147,820 | | 755,839 | | 739,425 | | 741,005 | | 742,490 | |
Commercial and industrial | | 573,268 | | 446,644 | | 384,265 | | 354,503 | | 316,966 | |
Real estate construction | | 143,569 | | 176,226 | | 190,312 | | 141,810 | | 117,914 | |
Consumer | | 12,932 | | 9,754 | | 9,927 | | 12,070 | | 13,031 | |
Total uncovered loans | | 3,145,789 | | 2,473,916 | | 2,322,193 | | 2,239,655 | | 2,147,170 | |
| | | | | | | | | | | |
Covered loans | | | | | | | | | | | |
Residential real estate | | 119,408 | | 123,334 | | 128,798 | | 134,625 | | 142,684 | |
Commercial real estate | | | | | | | | | | | |
Non-owner occupied | | 143,460 | | 154,951 | | 161,671 | | 144,536 | | 159,372 | |
Owner-occupied | | 108,630 | | 115,435 | | 119,470 | | 157,937 | | 170,553 | |
Farmland | | 27,059 | | 29,015 | | 29,253 | | 28,950 | | 32,261 | |
Total commercial real estate | | 279,149 | | 299,401 | | 310,394 | | 331,423 | | 362,186 | |
Commercial and industrial | | 71,155 | | 78,437 | | 88,749 | | 101,669 | | 119,381 | |
Real estate construction | | 16,895 | | 17,218 | | 18,312 | | 22,589 | | 23,082 | |
Consumer | | 11,313 | | 11,678 | | 12,281 | | 12,821 | | 13,826 | |
Total covered loans | | 497,920 | | 530,068 | | 558,534 | | 603,127 | | 661,159 | |
| | | | | | | | | | | |
Total loans | | $ | 3,643,709 | | $ | 3,003,984 | | $ | 2,880,727 | | $ | 2,842,782 | | $ | 2,808,329 | |
11
Talmer Bancorp, Inc.
Impaired Loans
(Unaudited)
| | 2014 | | 2013 | |
(Dollars in thousands) | | 1st Qtr | | 4th Qtr | | 3rd Qtr | | 2nd Qtr | | 1st Qtr | |
Uncovered | | | | | | | | | | | |
Nonperforming troubled debt restructurings | | | | | | | | | | | |
Residential real estate | | $ | 2,189 | | $ | 2,469 | | $ | 1,170 | | $ | 205 | | $ | 132 | |
Commercial real estate | | 2,664 | | 3,581 | | 1,946 | | 2,126 | | 271 | |
Commercial and industrial | | 526 | | 415 | | 434 | | 3 | | — | |
Consumer | | 2 | | 3 | | 3 | | 21 | | — | |
Total nonperforming troubled debt restructurings | | 5,381 | | 6,468 | | 3,553 | | 2,355 | | 403 | |
Nonaccrual loans other than nonperforming troubled debt restructurings | | | | | | | | | | | |
Residential real estate | | | 11,633 | | | 12,946 | | | 11,939 | | | 12,691 | | | 502 | |
Commercial real estate | | 6,174 | | 2,010 | | 4,841 | | 2,657 | | 1,012 | |
Commercial and industrial | | 1,723 | | 2,266 | | 854 | | 956 | | 917 | |
Real estate construction | | 582 | | 510 | | 2,357 | | 70 | | — | |
Consumer | | 100 | | 97 | | 103 | | 4 | | 70 | |
Total nonaccrual loans other than nonperforming troubled debt restructurings | | 20,212 | | 17,829 | | 20,094 | | 16,378 | | 2,501 | |
Total nonaccrual loans | | 25,593 | | 24,297 | | 23,647 | | 18,733 | | 2,904 | |
Other real estate | | 47,286 | | 18,384 | | 16,512 | | 15,906 | | 19,031 | |
Total nonperforming assets | | 72,879 | | 42,681 | | 40,159 | | 34,639 | | 21,935 | |
| | | | | | | | | | | |
Performing troubled debt restructurings | | | | | | | | | | | |
Residential real estate | | 828 | | 328 | | 4 | | 300 | | 46 | |
Commercial real estate | | 3,003 | | 1,637 | | 2,899 | | 45 | | 50 | |
Commercial and industrial | | 1,365 | | 1,367 | | 554 | | 1,193 | | 1,263 | |
Real estate construction | | 96 | | 90 | | — | | — | | — | |
Consumer | | 30 | | 30 | | 30 | | — | | 3 | |
Total performing troubled debt restructurings | | 5,322 | | 3,452 | | 3,487 | | 1,538 | | 1,362 | |
Total uncovered impaired assets | | $ | 78,201 | | $ | 46,133 | | $ | 43,646 | | $ | 36,177 | | $ | 23,297 | |
| | | | | | | | | | | |
Loans 90 days or more past due and still accruing, excluding loans accounted for under ASC 310-30 | | $ | 3 | | $ | 539 | | $ | — | | $ | 66 | | $ | 3 | |
| | | | | | | | | | | |
Covered | | | | | | | | | | | |
Nonperforming troubled debt restructurings | | | | | | | | | | | |
Residential real estate | | $ | 962 | | $ | 900 | | $ | 914 | | $ | 1,082 | | $ | 132 | |
Commercial real estate | | 6,235 | | 6,561 | | 5,340 | | 6,330 | | 5,106 | |
Commercial and industrial | | 2,780 | | 3,052 | | 3,019 | | 3,858 | | 2,713 | |
Real estate construction | | 1,023 | | 926 | | 884 | | 835 | | 206 | |
Consumer | | 25 | | 25 | | 26 | | 18 | | — | |
Total nonperforming troubled debt restructurings | | 11,025 | | 11,464 | | 10,183 | | 12,123 | | 8,157 | |
Nonaccrual loans other than nonperforming troubled debt restructurings | | | | | | | | | | | |
Residential real estate | | | 368 | | | 88 | | | 88 | | | 71 | | | — | |
Commercial real estate | | 1,563 | | 1,563 | | 1,575 | | 1,025 | | 1,343 | |
Commercial and industrial | | 2,124 | | 4,149 | | 5,154 | | 5,985 | | 2,249 | |
Real estate construction | | 442 | | 446 | | 457 | | 465 | | 474 | |
Consumer | | — | | 6 | | 6 | | 10 | | — | |
Total nonaccrual loans other than nonperforming troubled debt restructurings | | 4,497 | | 6,252 | | 7,280 | | 7,556 | | 4,066 | |
Total nonaccrual loans | | 15,522 | | 17,716 | | 17,463 | | 19,679 | | 12,223 | |
Other real estate | | 10,165 | | 11,571 | | 16,861 | | 21,374 | | 23,913 | |
Total nonperforming assets | | 25,687 | | 29,287 | | 34,324 | | 41,053 | | 36,136 | |
| | | | | | | | | | | |
Performing troubled debt restructurings | | | | | | | | | | | |
Residential real estate | | 2,582 | | 2,691 | | 2,544 | | 2,405 | | 2,457 | |
Commercial real estate | | 15,056 | | 14,391 | | 16,733 | | 16,450 | | 15,567 | |
Commercial and industrial | | 3,030 | | 3,802 | | 4,304 | | 4,921 | | 4,518 | |
Real estate construction | | 111 | | 163 | | 166 | | 168 | | 115 | |
Total performing troubled debt restructurings | | 20,779 | | 21,047 | | 23,747 | | 23,944 | | 22,657 | |
Total covered impaired assets | | $ | 46,466 | | $ | 50,334 | | $ | 58,071 | | $ | 64,997 | | $ | 58,793 | |
| | | | | | | | | | | |
Loans 90 days or more past due and still accruing, excluding loans accounted for under ASC 310-30 | | $ | 7 | | $ | — | | $ | — | | $ | 3,539 | | $ | 1,171 | |
12
Talmer Bancorp, Inc.
Net Interest Income and Net Interest Margin
(Unaudited)
| | Three months ended | |
| | March 31, 2014 | | December 31, 2013 | | March 31, 2013 | |
(Dollars in thousands) | | Average
Balance | | Interest (1) | | Average
Rate (2) | | Average
Balance | | Interest (1) | | Average
Rate (2) | | Average
Balance | | Interest (1) | | Average
Rate (2) | |
Earning assets: | | | | | | | | | | | | | | | | | | | |
Interest-earning balances | | $ | 401,307 | | $ | 216 | | 0.22 | % | $ | 278,114 | | $ | 188 | | 0.27 | % | $ | 469,326 | | $ | 290 | | 0.25 | % |
Federal funds sold & other short-term investments | | 70,688 | | 177 | | 1.02 | | 103,011 | | 204 | | 0.79 | | 98,286 | | 200 | | 0.82 | |
Investment securities (3): | | | | | | | | | | | | | | | | | | | |
Taxable | | 477,801 | | 1,878 | | 1.59 | | 451,467 | | 1,880 | | 1.65 | | 411,861 | | 1,364 | | 1.34 | |
Tax-exempt | | 183,986 | | 1,952 | | 5.81 | | 187,911 | | 1,098 | | 3.13 | | 162,292 | | 994 | | 3.35 | |
FHLB stock | | 22,426 | | 185 | | 3.34 | | 16,303 | | 160 | | 3.90 | | 15,813 | | 407 | | 10.43 | |
Gross uncovered loans (4) | | 3,219,185 | | 39,610 | | 4.99 | | 2,512,137 | | 29,615 | | 4.68 | | 2,357,561 | | 28,212 | | 4.85 | |
Gross covered loans (4) | | 513,608 | | 13,810 | | 10.90 | | 534,666 | | 15,739 | | 11.68 | | 704,294 | | 20,526 | | 11.82 | |
FDIC indemnification asset | | 127,983 | | (6,718 | ) | (21.29 | ) | 144,949 | | (6,952 | ) | (19.03 | ) | 219,322 | | (8,148 | ) | (15.07 | ) |
Total earning assets | | 5,016,984 | | 51,110 | | 4.19 | % | 4,228,558 | | 41,932 | | 3.97 | % | 4,438,755 | | 43,845 | | 4.04 | % |
Non-earning assets: | | | | | | | | | | | | | | | | | | | |
Cash and due from banks | | 119,222 | | | | | | 108,896 | | | | | | 101,022 | | | | | |
Allowance for loan losses | | (61,913 | ) | | | | | (57,114 | ) | | | | | (58,835 | ) | | | | |
Premises and equipment | | 55,350 | | | | | | 52,870 | | | | | | 60,645 | | | | | |
Core deposit intangible | | 16,794 | | | | | | 13,527 | | | | | | 15,538 | | | | | |
Other real estate owned | | 59,541 | | | | | | 29,650 | | | | | | 43,552 | | | | | |
Loan servicing rights | | 80,065 | | | | | | 73,680 | | | | | | 49,893 | | | | | |
FDIC receivable | | 7,067 | | | | | | 10,392 | | | | | | 14,874 | | | | | |
Company-owned life insurance | | 40,963 | | | | | | 39,337 | | | | | | 38,344 | | | | | |
Other non-earning assets | | 211,140 | | | | | | 135,511 | | | | | | 85,276 | | | | | |
Total assets | | $ | 5,544,761 | | | | | | $ | 4,635,307 | | | | | | $ | 4,789,064 | | | | | |
| | | | | | | | | | | | | | | | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | | |
Deposits: | | | | | | | | | | | | | | | | | | | |
Interest-bearing DDA | | $ | 709,274 | | 224 | | 0.13 | | $ | 595,362 | | 173 | | 0.12 | | $ | 552,251 | | 167 | | 0.12 | |
Money market and savings deposits | | 1,396,282 | | 494 | | 0.14 | | 1,225,280 | | 430 | | 0.14 | | 1,212,348 | | 518 | | 0.17 | |
Time deposits | | 1,327,397 | | 1,491 | | 0.46 | | 943,778 | | 1,250 | | 0.53 | | 1,251,093 | | 1,661 | | 0.54 | |
Other brokered funds | | 80,000 | | 29 | | 0.15 | | 80,000 | | 32 | | 0.16 | | 39,907 | | 24 | | 0.24 | |
Short-term borrowings | | 102,633 | | 175 | | 0.69 | | 40,219 | | 24 | | 0.24 | | 41,208 | | 22 | | 0.22 | |
Long-term debt | | 211,735 | | 574 | | 1.10 | | 252,173 | | 739 | | 1.16 | | 264,252 | | 796 | | 1.22 | |
Total interest-bearing liabilities | | 3,827,321 | | 2,987 | | 0.32 | % | 3,136,812 | | 2,648 | | 0.33 | % | 3,361,059 | | 3,188 | | 0.38 | % |
Noninterest-bearing liabilities and stockholders’ equity: | | | | | | | | | | | | | | | | | | | |
Noninterest-bearing DDA | | 968,029 | | | | | | 819,992 | | | | | | 732,395 | | | | | |
FDIC clawback liability | | 25,075 | | | | | | 24,485 | | | | | | 22,339 | | | | | |
Other liabilities | | 39,111 | | | | | | 44,673 | | | | | | 85,046 | | | | | |
Stockholders’ equity | | 685,224 | | | | | | 609,345 | | | | | | 588,225 | | | | | |
Total liabilities and stockholders’ equity | | $ | 5,544,761 | | | | | | $ | 4,635,307 | | | | | | $ | 4,789,064 | | | | | |
| | | | | | | | | | | | | | | | | | | |
Net interest income | | | | $ | 48,123 | | | | | | $ | 39,284 | | | | | | $ | 40,657 | | | |
| | | | | | | | | | | | | | | | | | | |
Interest spread | | | | | | 3.87 | % | | | | | 3.64 | % | | | | | 3.66 | % |
Net interest margin as a percentage of interest-earning assets | | | | | | 3.89 | | | | | | 3.68 | | | | | | 3.71 | |
Tax equivalent effect | | | | | | 0.06 | | | | | | 0.04 | | | | | | 0.03 | |
Net interest margin as a percentage of interest-earning assets (FTE) | | | | | | 3.95 | % | | | | | 3.72 | % | | | | | 3.74 | % |
(1) Interest income is shown on actual basis and does not include taxable equivalent adjustments.
(2) Average rates are presented on an annual basis and includes a taxable equivalent adjustment to interest income on tax exempt securities of $683 thousand, $384 thousand and $348 thousand for the three months ended March 31, 2014, December 31, 2013, and March 31, 2013, respectively, using the statutory tax rate of 35%.
(3) For presentation in this table, average balances and the corresponding average rates for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts.
(4) Includes nonaccrual loans.
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Talmer Bancorp, Inc.
Reconciliation of Non-GAAP Financial Measures (1)
(Unaudited)
| | 2014 | | 2013 | |
(Dollars in thousands, except per shara date) | | 1st Quarter | | 4th Quarter | | 3rd Quarter | | 2nd Quarter | | 1st Quarter | |
| | | | | | | | | | | |
Total Shareholders’ equity | | $ | 697,468 | | $ | 617,015 | | $ | 606,831 | | $ | 595,849 | | $ | 588,993 | |
Less: | | | | | | | | | | | |
Core deposit intangibles | | 16,102 | | 13,205 | | 13,868 | | 14,531 | | 15,199 | |
Tangible shareholders’ equity | | $ | 681,366 | | $ | 603,810 | | $ | 592,963 | | $ | 581,318 | | $ | 573,794 | |
| | | | | | | | | | | |
Shares outstanding | | 69,962 | | 66,234 | | 66,229 | | 66,229 | | 66,229 | |
Tangible book value per share | | $ | 9.74 | | $ | 9.12 | | $ | 8.95 | | $ | 8.78 | | $ | 8.66 | |
| | | | | | | | | | | |
Average Assets | | $ | 5,544,761 | | $ | 4,635,307 | | $ | 4,706,431 | | $ | 4,781,267 | | $ | 4,789,064 | |
Average Equity | | 685,224 | | 609,345 | | 594,508 | | 593,028 | | 588,225 | |
Average Core Deposit intangibles | | 16,794 | | 13,527 | | 14,193 | | 14,863 | | 15,538 | |
Tangible average equity to tangible average assets | | 12.09 | % | 12.89 | % | 12.37 | % | 12.13 | % | 12.00 | % |
(1) Management believes these non-GAAP financial measures provide useful information to both management and investors that is supplementary to our financial condition and results of operations in accordance with GAAP; however, we do acknowledge that our non-GAAP financial measures have a number of limitations. As such, you should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other companies use.
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