Exhibit 99.1
FOR IMMEDIATE RELEASE
CONTACT
Kristine D. Brenner
Director of Investor Relations
(810) 257-2506
kristine.brenner@citizensbanking.com
Citizens Republic Bancorp Reports Solid Third Quarter Results
| • | Net income attributable to common shareholders was $15 million or $0.37 per share for the third quarter, which includes over $4 million in pre-tax merger-related expenses |
| • | Credit metric trends reflect continued stability and improved performance across the loan portfolio |
| • | Pre-tax, pre-provision profit remained strong at $33 million |
| • | Announced agreement to merge with FirstMerit Corporation in a stock-for-stock transaction |
FLINT, MICHIGAN, October 25, 2012—Citizens Republic Bancorp, Inc. (Nasdaq: CRBC) announced net income attributable to common shareholders of $14.9 million or $0.37 per diluted share for the three months ended September 30, 2012, compared to $297.1 million or $7.35 per diluted share for last quarter,and $27.2 million or $0.68 per diluted share for the third quarter of last year. For the first nine months of this year, Citizens recorded net income attributable to common shareholders of $330.9 million or $8.19 per share compared to a net loss of $28.7 million or $0.73 per share for the same period of 2011. Year to date 2012 results include a $275.5 million or $6.82 per share tax benefit related to the elimination of the valuation allowance against the deferred tax asset in the second quarter.
“Last month we announced that we entered into a definitive merger agreement with FirstMerit Corporation. We are excited about the transaction which creates a unique, contiguous, Midwest franchise of significant size and scale. Until the transaction closes, we continue to successfully execute our strategic initiatives, driving our consistent earnings and organically growing our strong capital position,” commented Cathleen Nash, president and chief executive officer.
Balance Sheet
Total assets increased modestly from last quarter. Increases in the investment securities portfolio and money market investments more than offset decreases in the loan portfolio. Citizens continues to focus on C&I and consumer lending. Over the past year, growth within the C&I and indirect consumer portfolios helped to mitigate balance reductions in the commercial real estate and residential mortgage portfolios.
Total deposit balances grew slightly, as growth in low cost core deposit balances was partially offset by strategic reductions in more expensive single service and brokered time deposits. These initiatives have resulted in core deposit growth of 6% and a 23% reduction in time deposits compared to September 30, 2011.
Capital
Citizens continues to grow capital organically through earnings and maintains a strong capital position.
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Capital Ratios
| Regulatory Minimum for “Well- Capitalized” | September 30, 2012 | June 30, 2012 | September 30, 2011 | |||||||||||||
Leverage ratio | 5.00 | % | 9.66 | % | 9.77 | % | 8.21 | % | ||||||||
Tier 1 capital ratio | 6.00 | 15.09 | 14.70 | 12.81 | ||||||||||||
Total capital ratio | 10.00 | 16.35 | 15.96 | 14.14 | ||||||||||||
Tier 1 common equity (non-GAAP) | 8.83 | 8.50 | 6.77 | |||||||||||||
Tangible equity to tangible assets (non-GAAP) | 11.00 | 10.82 | 7.36 | |||||||||||||
Tangible common equity to tangible assets (non-GAAP) | 7.91 | 7.73 | 4.31 | |||||||||||||
Net Interest Income and Margin
Net interest margin was 3.57% in the third quarter, a three basis point decrease from last quarter and a six basis point decrease from the third quarter of last year. The decreases were a result of the continued low interest rate environment and competitive pressures on our loan portfolio, partially offset by reduced funding costs. Year to date, net interest margin increased one basis point over last year to 3.58%.
Net interest income for the third quarter of 2012 was $75.8 million, consistent with last quarter and a decrease of $3.0 million from the third quarter of last year. The decrease from the third quarter of last year reflects lower net interest margin and a reduction in average earning assets. For the nine months ended September 30, 2012, net interest income decreased $7.5 million or 3% compared to the same period last year due to a reduction in average earning assets.
Credit Quality
Credit quality benefits from proactive credit management as well as returning economic stability.
| • | Total delinquencies decreased 3% from last quarter to $31.6 million and currently represent 0.58% of portfolio loans. |
| • | Nonperforming assets were $86.2 million at the end of September 2012, an 8% decrease from the end of June 2012 and a decrease of 37% from September 30 of last year due to proactively managing and resolving delinquent commercial and consumer loans and improving the risk profile of the loan portfolio. |
| • | Net charge-offs for the third quarter decreased to $19.2 million, compared to $22.2 million last quarter and $33.4 million in the third quarter of last year. The provision for loan losses was $5.2 million in the third quarter, substantially the same as the second quarter of 2012. |
| • | The allowance for loan losses was $122.1 million or 2.25% of portfolio loans at September 30, 2012, compared to $136.1 million or 2.47% at the end of the prior quarter, and $190.4 million or 3.36% at the end of the third quarter last year. |
Noninterest Income and Expense
Citizens’ focus on services and products helps support a stable base of fee income. Total noninterest income increased $1.4 million over last quarter and decreased $0.7 million compared to the third quarter last year.
| • | Service charges were consistent with the second quarter of 2012. Service charges on deposit accounts were down 8% compared to the third quarter of last year primarily as a result of regulatory changes. |
| • | Brokerage and investment fees were up 38% compared to last quarter and 54% compared to the third quarter of 2011 due to focused efforts to increase accounts and sales. |
| • | Minimal losses on loans held for sale were realized this quarter compared to gains in prior periods. |
| • | Other income increased compared to last quarter primarily due to higher unrealized gains on deferred compensation, which was offset in noninterest expense. |
Noninterest expense increased $5.7 million over last quarter and $6.6 million over the third quarter of last year, primarily due to merger-related expenses and ORE losses.
| • | Professional services increased compared to prior periods as a result of merger-related expenses of $4.4 million. |
| • | Overall, credit costs remained consistent. However, losses on ORE increased $1.1 million during the quarter primarily related to a writedown on a single commercial ORE property. |
| • | Salaries and employee benefit costs increased compared to last quarter due to higher deferred compensation expense. |
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| • | Data processing services increased over prior periods as a negotiated reduction in expense expired. |
Year to date, noninterest expense decreased $11.0 million from 2011 as lower credit costs were partially offset by higher salaries and employee benefits and merger-related expenses.
Income Taxes and Deferred Tax Asset
Citizens recorded income tax expense of $1.3 million for the third quarter of 2012, compared to a benefit of $12.6 million for the third quarter of 2011. For the first nine months of 2012, the income tax benefit totaled $275.5 million, compared with a benefit of $22.8 million for the same period of 2011. The tax benefit for the three months ended September 30, 2011 was largely due to Citizens recording a receivable as a result of a revocation of a tax election. The increase in tax benefit for the nine months ended September 30, 2012 was primarily the result of eliminating the valuation allowance against our deferred tax asset.
Conference Call
Citizens’ senior management will review the quarter’s results in a conference call at10:00 a.m. ET on Friday, October 26, 2012.A live audio webcast is available on Citizens’ investor relations page at www.citizensbanking.com or by calling (866) 952-1906 (conference ID: Citizens Republic). To listen to the conference call, please connect approximately 10 minutes prior to the scheduled conference time. A recording will be available approximately two hours after the completion of the conference call at www.citizensbanking.com, where it will be archived for 90 days.
Use of Non-GAAP Financial Measures
In addition to results presented in accordance with generally accepted accounting principles (“GAAP”), this release includes non-GAAP financial measures such as tangible equity to tangible assets ratio, tangible common equity to tangible assets ratio, Tier 1 common equity ratio, pre-tax pre-provision profit, net interest margin, the efficiency ratio, and adjusted earnings per share. Citizens believes these non-GAAP financial measures provide additional information that is useful to investors in understanding the underlying performance of Citizens, its business and performance trends, and such measures help facilitate performance comparisons with others in the banking industry. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied and are not audited. Readers should be aware of these limitations and should be cautious as to their use of such measures. To mitigate these limitations, Citizens has procedures in place to ensure that these measures are calculated using the appropriate GAAP or regulatory components in their entirety to ensure that Citizens’ performance is properly reflected to facilitate consistent period-to-period comparisons. Although Citizens believes the above non-GAAP financial measures disclosed in this release enhance investors’ understanding of its business and performance, these non-GAAP measures should not be considered in isolation, or as a substitute for GAAP basis financial measures. See our related Form 8-K for further discussion regarding these non-GAAP financial measures.
Corporate Profile
Citizens Republic Bancorp, Inc. is a diversified financial services company providing a wide range of commercial, consumer, mortgage banking, trust and financial planning services to a broad client base. Citizens serves communities in Michigan, Ohio, and Wisconsin with 219 offices and 249 ATMs. Citizens is the largest bank holding company headquartered in Michigan with roots dating back to 1871 and is the 57th largest bank holding company headquartered in the United States. More information about Citizens is available at www.citizensbanking.com.
Safe Harbor Statement
Discussions and statements in this release that are not statements of historical fact, including without limitation, statements that include terms such as “will,” “may,” “should,” “believe,” “expect,” “anticipate,” “estimate,” “project,” “intend,” and “plan,” and statements regarding Citizens’ future financial and operating results, plans, objectives, expectations and intentions, are forward-looking statements that involve risks and uncertainties, many of which are beyond Citizens’ control or are subject to change. No forward-looking statement is a guarantee of future performance and actual results could differ materially.
Factors that could cause or contribute to actual results differing materially from Citizens’ expectations include the risks and uncertainties detailed from time to time in Citizens’ annual and quarterly filings with the SEC, which are available at the SEC’s website www.sec.gov. Other factors not currently anticipated
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may also materially and adversely affect Citizens’ results of operations, cash flows, financial position and prospects. There can be no assurance that future results will meet expectations. While Citizens believes that the forward-looking statements in this release are reasonable, you should not place undue reliance on any forward-looking statement. In addition, these statements speak only as of the date made. Citizens does not undertake, and expressly disclaims, any obligation to update or alter any statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
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Consolidated Balance Sheets (Unaudited)
Citizens Republic Bancorp, Inc.
(in thousands) | September 30, 2012 | June 30, 2012 | September 30, 2011 | |||||||||
Assets | ||||||||||||
Cash and due from banks | $ | 162,705 | $ | 145,432 | $ | 147,418 | ||||||
Money market investments | 223,818 | 203,861 | 283,018 | |||||||||
Investment Securities: | ||||||||||||
Securities available for sale, at fair value | 1,541,567 | 1,480,290 | 1,307,977 | |||||||||
Securities held to maturity, at amortized cost (fair value of $1,378,310, $1,349,429 and $1,491,048, respectively) | 1,313,504 | 1,296,164 | 1,454,873 | |||||||||
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Total investment securities | 2,855,071 | 2,776,454 | 2,762,850 | |||||||||
FHLB and Federal Reserve stock | 122,123 | 122,123 | 123,696 | |||||||||
Portfolio loans: | ||||||||||||
Commercial and industrial | 1,688,996 | 1,711,411 | 1,531,492 | |||||||||
Commercial real estate | 1,335,601 | 1,417,409 | 1,643,901 | |||||||||
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Total commercial | 3,024,597 | 3,128,820 | 3,175,393 | |||||||||
Residential mortgage | 570,295 | 588,144 | 654,561 | |||||||||
Direct consumer | 865,777 | 881,070 | 954,831 | |||||||||
Indirect consumer | 970,235 | 923,714 | 887,542 | |||||||||
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Total portfolio loans | 5,430,904 | 5,521,748 | 5,672,327 | |||||||||
Less: Allowance for loan losses | (122,125 | ) | (136,120 | ) | (190,354 | ) | ||||||
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Net portfolio loans | 5,308,779 | 5,385,628 | 5,481,973 | |||||||||
Loans held for sale | 30,062 | 14,518 | 30,221 | |||||||||
Premises and equipment | 92,005 | 93,646 | 98,954 | |||||||||
Goodwill | 318,150 | 318,150 | 318,150 | |||||||||
Other intangible assets | 5,792 | 6,305 | 8,116 | |||||||||
Bank owned life insurance | 222,610 | 221,965 | 219,248 | |||||||||
Other assets | 383,675 | 382,411 | 126,544 | |||||||||
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Total assets | $ | 9,724,790 | $ | 9,670,493 | $ | 9,600,188 | ||||||
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Liabilities | ||||||||||||
Noninterest-bearing deposits | $ | 1,854,715 | $ | 1,796,531 | $ | 1,621,451 | ||||||
Interest-bearing demand deposits | 1,092,679 | 1,025,305 | 945,458 | |||||||||
Savings deposits | 2,574,642 | 2,607,718 | 2,652,267 | |||||||||
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Core deposits | 5,522,036 | 5,429,554 | 5,219,176 | |||||||||
Time deposits | 1,780,929 | 1,858,155 | 2,320,728 | |||||||||
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Total deposits | 7,302,965 | 7,287,709 | 7,539,904 | |||||||||
Federal funds purchased and securities sold under agreements to repurchase | 42,796 | 39,169 | 40,599 | |||||||||
Other short-term borrowings | — | — | 640 | |||||||||
Other liabilities | 168,351 | 154,718 | 154,232 | |||||||||
Long-term debt | 852,481 | 853,042 | 855,670 | |||||||||
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Total liabilities | 8,366,593 | 8,334,638 | 8,591,045 | |||||||||
Shareholders’ Equity | ||||||||||||
Preferred stock - no par value | 290,580 | 288,723 | 283,360 | |||||||||
Common stock - no par value | 1,436,925 | 1,435,920 | 1,433,765 | |||||||||
Retained deficit | (363,659 | ) | (378,520 | ) | (706,907 | ) | ||||||
Accumulated other comprehensive loss | (5,649 | ) | (10,268 | ) | (1,075 | ) | ||||||
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Total shareholders’ equity | 1,358,197 | 1,335,855 | 1,009,143 | |||||||||
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Total liabilities and shareholders’ equity | $ | 9,724,790 | $ | 9,670,493 | $ | 9,600,188 | ||||||
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Consolidated Statements of Operations (Unaudited)
Citizens Republic Bancorp, Inc.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(in thousands, except per share amounts) | 2012 | 2011 | 2012 | 2011 | ||||||||||||
Interest Income | ||||||||||||||||
Interest and fees on loans | $ | 73,376 | $ | 77,212 | $ | 222,205 | $ | 235,600 | ||||||||
Interest and dividends on investment securities: | ||||||||||||||||
Taxable | 16,034 | 20,508 | 49,356 | 60,664 | ||||||||||||
Tax-exempt | 2,157 | 2,613 | 6,610 | 8,412 | ||||||||||||
Dividends on FHLB and Federal Reserve stock | 1,196 | 974 | 3,487 | 3,143 | ||||||||||||
Money market investments | 152 | 168 | 481 | 670 | ||||||||||||
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Total interest income | 92,915 | 101,475 | 282,139 | 308,489 | ||||||||||||
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Interest Expense | ||||||||||||||||
Deposits | 8,779 | 13,528 | 29,243 | 44,945 | ||||||||||||
Short-term borrowings | 11 | 20 | 42 | 57 | ||||||||||||
Long-term debt | 8,320 | 9,086 | 25,251 | 28,426 | ||||||||||||
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Total interest expense | 17,110 | 22,634 | 54,536 | 73,428 | ||||||||||||
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Net Interest Income | 75,805 | 78,841 | 227,603 | 235,061 | ||||||||||||
Provision for loan losses | 5,195 | 17,481 | 18,891 | 123,801 | ||||||||||||
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Net interest income after provision for loan losses | 70,610 | 61,360 | 208,712 | 111,260 | ||||||||||||
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Noninterest Income | ||||||||||||||||
Service charges on deposit accounts | 9,554 | 10,362 | 27,894 | 29,544 | ||||||||||||
Trust fees | 3,635 | 3,622 | 10,818 | 11,356 | ||||||||||||
Mortgage and other loan income | 2,028 | 2,089 | 5,839 | 6,915 | ||||||||||||
Brokerage and investment fees | 1,831 | 1,188 | 4,486 | 3,829 | ||||||||||||
Card-based and other nondeposit fees | 4,431 | 4,475 | 13,140 | 12,862 | ||||||||||||
Net (losses) gains on loans held for sale | (184 | ) | 1,952 | 739 | 2,025 | |||||||||||
Investment securities gains (losses) | — | 3 | — | (1,373 | ) | |||||||||||
Other income | 2,415 | 736 | 7,380 | 5,737 | ||||||||||||
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Total noninterest income | 23,710 | 24,427 | 70,296 | 70,895 | ||||||||||||
Noninterest Expense | ||||||||||||||||
Salaries and employee benefits | 33,589 | 30,280 | 99,687 | 92,563 | ||||||||||||
Occupancy | 6,129 | 6,125 | 18,965 | 19,734 | ||||||||||||
Professional services | 6,806 | 2,394 | 11,294 | 7,020 | ||||||||||||
Equipment | 2,937 | 2,918 | 9,144 | 8,811 | ||||||||||||
Data processing services | 4,427 | 3,823 | 12,196 | 12,422 | ||||||||||||
Advertising and public relations | 1,847 | 2,179 | 4,890 | 4,550 | ||||||||||||
Postage and delivery | 1,157 | 1,142 | 3,375 | 3,378 | ||||||||||||
Other loan expenses | 3,121 | 3,941 | 9,574 | 12,510 | ||||||||||||
Losses on other real estate (ORE) | 941 | 1,210 | 382 | 11,687 | ||||||||||||
ORE expenses | 323 | 529 | 1,039 | 3,326 | ||||||||||||
Intangible asset amortization | 513 | 732 | 1,636 | 2,338 | ||||||||||||
Other expense | 10,265 | 10,138 | 33,312 | 38,172 | ||||||||||||
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Total noninterest expense | 72,055 | 65,411 | 205,494 | 216,511 | ||||||||||||
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Income (Loss) before Income Taxes | 22,265 | 20,376 | 73,514 | (34,356 | ) | |||||||||||
Income tax provision (benefit) | 1,274 | (12,568 | ) | (275,514 | ) | (22,779 | ) | |||||||||
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Net Income (Loss) | 20,991 | 32,944 | 349,028 | (11,577 | ) | |||||||||||
Dividend on redeemable preferred stock | (6,130 | ) | (5,761 | ) | (18,127 | ) | (17,088 | ) | ||||||||
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Net Income (Loss) Attributable to Common Shareholders | $ | 14,861 | $ | 27,183 | $ | 330,901 | $ | (28,665 | ) | |||||||
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Net Income (Loss) Per Common Share: | ||||||||||||||||
Basic | $ | 0.37 | $ | 0.68 | $ | 8.19 | $ | (0.73 | ) | |||||||
Diluted | 0.37 | 0.68 | 8.19 | (0.73 | ) | |||||||||||
Average Common Shares Outstanding: | ||||||||||||||||
Basic | 39,489 | 39,433 | 39,469 | 39,418 | ||||||||||||
Diluted | 39,489 | 39,433 | 39,469 | 39,418 | ||||||||||||
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Selected Quarterly Information (Unaudited)
(in thousands, except per share amounts) | Three Months Ended | |||||||||||||||||||
| September 30, 2012 | June 30, 2012 | March 31, 2012 | December 31, 2011 | September 30, 2011 | ||||||||||||||||
Summary of Operations | ||||||||||||||||||||
Net interest income | $ | 75,805 | $ | 75,680 | $ | 76,119 | $ | 78,049 | $ | 78,841 | ||||||||||
Provision for loan losses | 5,195 | 5,299 | 8,397 | 15,007 | 17,481 | |||||||||||||||
Noninterest income | 23,710 | 22,345 | 24,240 | 24,363 | 24,427 | |||||||||||||||
Noninterest expense | 72,055 | 66,339 | 67,101 | 66,640 | 65,411 | |||||||||||||||
Income before income taxes | 22,265 | 26,387 | 24,861 | 20,765 | 20,376 | |||||||||||||||
Income tax provision (benefit)(1) | 1,274 | (276,789 | ) | — | 2,521 | (12,568 | ) | |||||||||||||
Net income | 20,991 | 303,176 | 24,861 | 18,244 | 32,944 | |||||||||||||||
Net income attributable to common shareholders(2) | 14,861 | 297,134 | 18,906 | 12,347 | 27,183 | |||||||||||||||
Taxable equivalent adjustment | 1,503 | 1,532 | 1,571 | 1,670 | 1,827 | |||||||||||||||
Per Common Share Data(3) | ||||||||||||||||||||
Net income: | ||||||||||||||||||||
Basic | $ | 0.37 | $ | 7.35 | $ | 0.47 | $ | 0.31 | $ | 0.68 | ||||||||||
Diluted | 0.37 | 7.35 | 0.47 | 0.31 | 0.68 | |||||||||||||||
Common book value | 26.36 | 25.85 | 18.83 | 18.24 | 18.03 | |||||||||||||||
Tangible book value (non-GAAP) | 25.53 | 24.97 | 17.88 | 17.24 | 16.96 | |||||||||||||||
Tangible common book value (non-GAAP) | 18.36 | 17.84 | 10.75 | 10.16 | 9.92 | |||||||||||||||
Shares outstanding, end of period(4) | 40,508,823 | 40,504,637 | 40,247,241 | 40,260,213 | 40,255,758 | |||||||||||||||
At Period End | ||||||||||||||||||||
Assets | $ | 9,724,790 | $ | 9,670,493 | $ | 9,577,346 | $ | 9,462,849 | $ | 9,600,188 | ||||||||||
Earning assets | 8,600,731 | 8,588,343 | 8,774,119 | 8,680,995 | 8,824,183 | |||||||||||||||
Portfolio loans | 5,430,904 | 5,521,748 | 5,528,063 | 5,529,535 | 5,672,327 | |||||||||||||||
Allowance for loan losses | 122,125 | 136,120 | 153,007 | 172,726 | 190,354 | |||||||||||||||
Deposits | 7,302,965 | 7,287,709 | 7,490,362 | 7,394,941 | 7,539,904 | |||||||||||||||
Long-term debt | 852,481 | 853,042 | 853,599 | 854,185 | 855,670 | |||||||||||||||
Shareholders’ equity | 1,358,197 | 1,335,855 | 1,044,619 | 1,019,537 | 1,009,143 | |||||||||||||||
Average for the Quarter | ||||||||||||||||||||
Assets | $ | 9,723,587 | $ | 9,429,050 | $ | 9,521,386 | $ | 9,523,184 | $ | 9,596,275 | ||||||||||
Earning assets | 8,638,390 | 8,622,067 | 8,750,078 | 8,761,435 | 8,856,072 | |||||||||||||||
Portfolio loans | 5,501,400 | 5,517,726 | 5,508,528 | 5,632,432 | 5,663,058 | |||||||||||||||
Allowance for loan losses | 135,968 | 152,154 | 172,509 | 190,163 | 206,119 | |||||||||||||||
Deposits | 7,323,753 | 7,317,653 | 7,441,693 | 7,452,137 | 7,546,615 | |||||||||||||||
Long-term debt | 852,776 | 853,333 | 853,912 | 856,206 | 862,479 | |||||||||||||||
Shareholders’ equity | 1,345,817 | 1,061,519 | 1,028,494 | 1,017,082 | 991,602 | |||||||||||||||
Financial Ratios (annualized) | ||||||||||||||||||||
Return on average assets | 0.86 | % | 12.93 | % | 1.05 | % | 0.76 | % | 1.36 | % | ||||||||||
Return on average shareholders’ equity | 6.20 | 114.87 | 9.72 | 7.12 | 13.18 | |||||||||||||||
Average shareholders’ equity / average assets | 13.84 | 11.26 | 10.80 | 10.68 | 10.33 | |||||||||||||||
Net interest margin (FTE)(5) | 3.57 | 3.60 | 3.56 | 3.62 | 3.63 | |||||||||||||||
Efficiency ratio (non-GAAP)(6) | 65.20 | 65.99 | 65.20 | 61.39 | 59.89 | |||||||||||||||
Allowance for loan losses as a percent of portfolio loans | 2.25 | 2.47 | 2.77 | 3.12 | 3.36 | |||||||||||||||
Allowance for loan losses as a percent of nonperforming loans(7) | 191.29 | 161.53 | 202.56 | 197.56 | 190.09 | |||||||||||||||
Allowance for loan losses as a percent of nonperforming assets(7) | 141.69 | 144.85 | 168.87 | 168.97 | 139.01 | |||||||||||||||
Nonperforming loans as a percent of portfolio loans(7) | 1.18 | 1.53 | 1.37 | 1.58 | 1.77 | |||||||||||||||
Nonperforming assets as a percent of total loans plus ORAA(7)(8) | 1.58 | 1.69 | 1.63 | 1.84 | 2.39 | |||||||||||||||
Nonperforming assets as a percent of total assets(7) | 0.89 | 0.97 | 0.95 | 1.08 | 1.43 | |||||||||||||||
Ratio of net charge-offs during period to average portfolio loans | 1.39 | 1.62 | 2.05 | 2.30 | 2.34 | |||||||||||||||
Leverage ratio | 9.66 | 9.77 | 8.71 | 8.45 | 8.21 | |||||||||||||||
Tier 1 capital ratio | 15.09 | 14.70 | 13.70 | 13.51 | 12.81 | |||||||||||||||
Total capital ratio | 16.35 | 15.96 | 14.97 | 14.84 | 14.14 | |||||||||||||||
| (1) | Second quarter 2012 benefit is directly related to the restoration of the deferred tax asset. |
| (2) | Net income attributable to common shareholders includes a non-cash dividend to preferred shareholders of $6.0 million in the third, second, and first quarters of 2012 and $5.9 million, and $5.8 million in the fourth, and third quarters of 2011. |
| (3) | Earnings per share in the second quarter of 2012 includes a tax benefit of $6.85 per share related to restoring the deferred tax asset. |
| (4) | Includes participating shares which are restricted stock units and restricted shares. |
| (5) | Net interest margin is presented on an annual basis, includes taxable equivalent adjustments to interest income and is based on a tax rate of 35%. |
| (6) | Efficiency ratio (non-GAAP) is calculated as follows: (Noninterest expense-Losses on other real estate ("ORE")-ORE expenses-Intangible amortization-Merger related expenses)/(Net interest income+Taxable equivalent adjustment+Total noninterst income-Investment securities gains(losses)). |
| (7) | Nonperforming loans/assets exclude troubled debt restructurings (TDRs) that are on an accrual status and performing in accordance with their modified terms. |
| (8) | Other real estate assets acquired (ORAA) include loans held for sale. |
7
Loan Portfolios
(in thousands) | �� | September 30, 2012 | June 30, 2012 | March 31, 2012 | December 31, 2011 | September 30, 2011 | ||||||||||||||
Land hold | $ | 4,984 | $ | 5,119 | $ | 5,387 | $ | 6,542 | $ | 6,818 | ||||||||||
Land development | 7,521 | 7,006 | 7,226 | 13,104 | 22,232 | |||||||||||||||
Construction | 6,689 | 4,591 | 6,410 | 5,847 | 5,410 | |||||||||||||||
Income producing | 767,202 | 803,546 | 877,461 | 913,755 | 975,262 | |||||||||||||||
Owner-occupied | 549,205 | 597,147 | 590,575 | 605,113 | 634,179 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total commercial real estate | 1,335,601 | 1,417,409 | 1,487,059 | 1,544,361 | 1,643,901 | |||||||||||||||
Commercial and industrial | 1,688,996 | 1,711,411 | 1,657,140 | 1,543,529 | 1,531,492 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total commercial | 3,024,597 | 3,128,820 | 3,144,199 | 3,087,890 | 3,175,393 | |||||||||||||||
Residential mortgage | 570,295 | 588,144 | 611,166 | 637,245 | 654,561 | |||||||||||||||
Direct consumer | 865,777 | 881,070 | 903,238 | 933,314 | 954,831 | |||||||||||||||
Indirect consumer | 970,235 | 923,714 | 869,460 | 871,086 | 887,542 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total consumer | 2,406,307 | 2,392,928 | 2,383,864 | 2,441,645 | 2,496,934 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total portfolio loans | $ | 5,430,904 | $ | 5,521,748 | $ | 5,528,063 | $ | 5,529,535 | $ | 5,672,327 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Delinquency Rates By Loan Portfolio
| September 30, 2012 | June 30, 2012 | March 31, 2012 | December 31, 2011 | September 30, 2011 | ||||||||||||||||||||||||||||||||||||
30 to 89 days past due (in thousands) | $ | % of Portfolio | $ | % of Portfolio | $ | % of Portfolio | $ | % of Portfolio | $ | % of Portfolio | ||||||||||||||||||||||||||||||
Land hold | $ | — | — | % | $ | — | — | % | $ | — | — | % | $ | 21 | 0.32 | % | $ | — | — | % | ||||||||||||||||||||
Land development | — | — | — | — | 130 | 1.81 | — | — | 216 | 0.97 | ||||||||||||||||||||||||||||||
Construction | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Income producing | 1,104 | 0.14 | 1,519 | 0.19 | 1,447 | 0.16 | 2,508 | 0.27 | 3,325 | 0.34 | ||||||||||||||||||||||||||||||
Owner-occupied | 4,598 | 0.84 | 936 | 0.16 | 5,177 | 0.88 | 2,345 | 0.39 | 5,817 | 0.92 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Total commercial real estate | 5,702 | 0.43 | 2,455 | 0.17 | 6,754 | 0.45 | 4,874 | 0.32 | 9,358 | 0.57 | ||||||||||||||||||||||||||||||
Commercial and industrial | 880 | 0.05 | 1,565 | 0.09 | 2,887 | 0.17 | 2,454 | 0.16 | 2,594 | 0.17 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Total commercial | 6,582 | 0.22 | 4,020 | 0.13 | 9,641 | 0.31 | 7,328 | 0.24 | 11,952 | 0.38 | ||||||||||||||||||||||||||||||
Residential mortgage | 6,029 | 1.06 | 7,731 | 1.31 | 7,568 | 1.24 | 9,544 | 1.50 | 9,079 | 1.39 | ||||||||||||||||||||||||||||||
Direct consumer | 11,435 | 1.32 | 12,396 | 1.41 | 14,002 | 1.55 | 17,810 | 1.91 | 18,629 | 1.95 | ||||||||||||||||||||||||||||||
Indirect consumer | 7,514 | 0.77 | 8,504 | 0.92 | 8,780 | 1.01 | 13,067 | 1.50 | 9,898 | 1.12 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Total consumer | 24,978 | 1.04 | 28,631 | 1.20 | 30,350 | 1.27 | 40,421 | 1.66 | 37,606 | 1.51 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Total delinquent loans | $ | 31,560 | 0.58 | $ | 32,651 | 0.59 | $ | 39,991 | 0.72 | $ | 47,749 | 0.86 | $ | 49,558 | 0.87 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
8
Nonperforming Assets
| September 30, 2012 | June 30, 2012 | March 31, 2012 | December 31, 2011 | September 30, 2011 | ||||||||||||||||||||||||||||||||||||
(in thousands) | $ | % of Portfolio | $ | % of Portfolio | $ | % of Portfolio | $ | % of Portfolio | $ | % of Portfolio | ||||||||||||||||||||||||||||||
Land hold | $ | 326 | 6.54 | % | $ | 326 | 6.37 | % | $ | — | — | % | $ | — | — | % | $ | 167 | 2.45 | % | ||||||||||||||||||||
Land development | 3 | 0.04 | 3 | 0.05 | 207 | 2.87 | 213 | 1.62 | 12 | 0.05 | ||||||||||||||||||||||||||||||
Construction | — | — | — | — | 150 | 2.34 | 150 | 2.57 | 257 | 4.76 | ||||||||||||||||||||||||||||||
Income producing | 12,904 | 1.68 | 19,408 | 2.42 | 18,566 | 2.12 | 21,171 | 2.32 | 23,227 | 2.38 | ||||||||||||||||||||||||||||||
Owner-occupied | 13,146 | 2.39 | 18,187 | 3.05 | 20,716 | 3.51 | 23,798 | 3.93 | 27,540 | 4.34 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Total commercial real estate | 26,379 | 1.98 | 37,924 | 2.68 | 39,639 | 2.67 | 45,332 | 2.94 | 51,203 | 3.11 | ||||||||||||||||||||||||||||||
Commercial and industrial | 9,190 | 0.54 | 21,676 | 1.27 | 14,629 | 0.88 | 16,946 | 1.10 | 18,536 | 1.21 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Total nonaccruing commercial | 35,569 | 1.18 | 59,600 | 1.90 | 54,268 | 1.73 | 62,278 | 2.02 | 69,739 | 2.20 | ||||||||||||||||||||||||||||||
Residential mortgage | 15,271 | 2.68 | 13,474 | 2.29 | 11,137 | 1.82 | 11,312 | 1.78 | 13,074 | 2.00 | ||||||||||||||||||||||||||||||
Direct consumer | 10,552 | 1.22 | 9,263 | 1.05 | 8,895 | 0.98 | 12,115 | 1.30 | 14,704 | 1.54 | ||||||||||||||||||||||||||||||
Indirect consumer | 2,391 | 0.25 | 1,875 | 0.20 | 1,074 | 0.12 | 953 | 0.11 | 1,256 | 0.14 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Total nonaccruing consumer | 28,214 | 1.17 | 24,612 | 1.03 | 21,106 | 0.89 | 24,380 | 1.00 | 29,034 | 1.16 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Total nonaccruing loans | 63,783 | 1.17 | 84,212 | 1.53 | 75,374 | 1.37 | 86,658 | 1.57 | 98,773 | 1.74 | ||||||||||||||||||||||||||||||
Loans 90+ days still accruing | 60 | — | 59 | — | 164 | — | 770 | 0.01 | 1,368 | 0.02 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Total nonperforming portfolio loans | 63,843 | 1.18 | 84,271 | 1.53 | 75,538 | 1.37 | 87,428 | 1.58 | 100,141 | 1.77 | ||||||||||||||||||||||||||||||
Nonperforming held for sale | 16,650 | 887 | 3,264 | 2,372 | 20,134 | |||||||||||||||||||||||||||||||||||
Other repossessed assets acquired | 5,700 | 8,817 | 11,803 | 12,422 | 16,665 | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Total nonperforming assets | $ | 86,193 | $ | 93,975 | $ | 90,605 | $ | 102,222 | $ | 136,940 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Restructured loans still accruing | $ | 21,433 | $ | 18,187 | $ | 17,911 | $ | 32,347 | $ | 12,206 | ||||||||||||||||||||||||||||||
Commercial inflows | $ | 4,572 | $ | 23,828 | $ | 14,027 | $ | 13,269 | $ | 23,901 | ||||||||||||||||||||||||||||||
Commercial outflows | (28,603 | ) | (18,496 | ) | (22,037 | ) | (20,730 | ) | (17,611 | ) | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Net change | $ | (24,031 | ) | $ | 5,332 | $ | (8,010 | ) | $ | (7,461 | ) | $ | 6,290 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Net Charge-Offs
| Three Months Ended | ||||||||||||||||||||||||||||||||||||||||
| September 30, 2012 | June 30, 2012 | March 31, 2012 | December 31, 2011 | September 30, 2011 | ||||||||||||||||||||||||||||||||||||
(in thousands) | $ | % of Portfolio* | $ | % of Portfolio* | $ | % of Portfolio* | $ | % of Portfolio* | $ | % of Portfolio* | ||||||||||||||||||||||||||||||
Land hold | $ | — | — | % | $ | (58 | ) | (4.58 | )% | $ | — | — | % | $ | (33 | ) | (2.00 | )% | $ | — | — | % | ||||||||||||||||||
Land development | (8 | ) | (0.45 | ) | 100 | 5.76 | (83 | ) | (4.64 | ) | 3,079 | 93.21 | 43 | 0.76 | ||||||||||||||||||||||||||
Construction | (21 | ) | (1.24 | ) | 14 | 1.24 | (101 | ) | (6.33 | ) | (4 | ) | (0.24 | ) | (5 | ) | (0.34 | ) | ||||||||||||||||||||||
Income producing | 2,582 | 1.34 | 3,100 | 1.55 | 4,151 | 1.90 | 11,924 | 5.18 | 3,156 | 1.28 | ||||||||||||||||||||||||||||||
Owner-occupied | 1,891 | 1.37 | 2,384 | 1.61 | 2,537 | 1.73 | 5,791 | 3.80 | 2,129 | 1.33 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Total commercial real estate | 4,444 | 1.32 | 5,540 | 1.57 | 6,504 | 1.76 | 20,757 | 5.33 | 5,323 | 1.28 | ||||||||||||||||||||||||||||||
Commercial and industrial | 5,363 | 1.26 | 5,249 | 1.23 | 3,029 | 0.74 | 1,032 | 0.27 | 1,225 | 0.32 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Total commercial | 9,807 | 1.29 | 10,789 | 1.39 | 9,533 | 1.22 | 21,789 | 2.80 | 6,548 | 0.82 | ||||||||||||||||||||||||||||||
Residential mortgage | 2,515 | 1.75 | 3,506 | 2.40 | 5,076 | 3.34 | 1,170 | 0.73 | 18,364 | 11.13 | ||||||||||||||||||||||||||||||
Direct consumer | 4,790 | 2.20 | 5,666 | 2.59 | 10,935 | 4.87 | 6,930 | 2.95 | 5,710 | 2.37 | ||||||||||||||||||||||||||||||
Indirect consumer | 2,078 | 0.85 | 2,225 | 0.97 | 2,572 | 1.19 | 2,746 | 1.25 | 2,797 | 1.25 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Total consumer | 9,383 | 1.55 | 11,397 | 1.92 | 18,583 | 3.14 | 10,846 | 1.76 | 26,871 | 4.27 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
Total net charge-offs | $ | 19,190 | 1.39 | $ | 22,186 | 1.62 | $ | 28,116 | 2.05 | $ | 32,635 | 2.30 | $ | 33,419 | 2.34 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
| * | Represents an annualized rate. |
9
Summary of Loan Loss Experience
(in thousands) | Three Months Ended | |||||||||||||||||||
| September 30, 2012 | June 30, 2012 | March 31, 2012 | December 31, 2011 | September 30, 2011 | ||||||||||||||||
Allowance for loan losses—beginning of period | $ | 136,120 | $ | 153,007 | $ | 172,726 | $ | 190,354 | $ | 206,292 | ||||||||||
Provision for loan losses | 5,195 | 5,299 | 8,397 | 15,007 | 17,481 | |||||||||||||||
Charge-offs: | ||||||||||||||||||||
Commercial and industrial | 4,552 | 3,667 | 2,388 | 1,489 | 994 | |||||||||||||||
Small business | 1,039 | 2,271 | 1,265 | 399 | 1,132 | |||||||||||||||
Commercial real estate | 5,452 | 8,093 | 8,997 | 21,581 | 5,860 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total commercial | 11,043 | 14,031 | 12,650 | 23,470 | 7,986 | |||||||||||||||
Residential mortgage | 3,261 | 3,972 | 5,210 | 1,366 | 18,369 | |||||||||||||||
Direct consumer | 6,067 | 7,168 | 11,527 | 7,544 | 6,398 | |||||||||||||||
Indirect consumer | 3,172 | 3,157 | 3,251 | 3,229 | 3,430 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total charge-offs | 23,543 | 28,328 | 32,638 | 35,609 | 36,183 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Recoveries: | ||||||||||||||||||||
Commercial and industrial | 108 | 577 | 376 | 609 | 721 | |||||||||||||||
Small business | 120 | 112 | 248 | 248 | 180 | |||||||||||||||
Commercial real estate | 1,008 | 2,553 | 2,493 | 824 | 537 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total commercial | 1,236 | 3,242 | 3,117 | 1,681 | 1,438 | |||||||||||||||
Residential mortgage | 746 | 466 | 134 | 197 | 5 | |||||||||||||||
Direct consumer | 1,277 | 1,502 | 592 | 613 | 688 | |||||||||||||||
Indirect consumer | 1,094 | 932 | 679 | 483 | 633 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total recoveries | 4,353 | 6,142 | 4,522 | 2,974 | 2,764 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net charge-offs | 19,190 | 22,186 | 28,116 | 32,635 | 33,419 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Allowance for loan losses—end of period | $ | 122,125 | $ | 136,120 | $ | 153,007 | $ | 172,726 | $ | 190,354 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
10
Non-GAAP Reconciliation
| September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
(in thousands) | 2012 | 2012 | 2012 | 2011 | 2011 | |||||||||||||||
Efficiency Ratio (non-GAAP) | ||||||||||||||||||||
Net interest income (A) | $ | 75,805 | $ | 75,680 | $ | 76,119 | $ | 78,049 | $ | 78,841 | ||||||||||
Taxable equivalent adjustment (B) | 1,503 | 1,532 | 1,571 | 1,670 | 1,827 | |||||||||||||||
Investment securities gains (losses) (C) | — | — | — | 38 | 3 | |||||||||||||||
Noninterest income (D) | 23,710 | 22,345 | 24,240 | 24,363 | 24,427 | |||||||||||||||
Noninterest expense (E) | 72,055 | 66,339 | 67,101 | 66,640 | 65,411 | |||||||||||||||
(Gains) losses on ORE and ORE expenses (F) | 1,264 | 93 | 65 | 2,076 | 1,739 | |||||||||||||||
Intangible amortization (G) | 513 | 545 | 578 | 688 | 732 | |||||||||||||||
Merger-related expenses (H) | 4,411 | — | — | — | — | |||||||||||||||
Efficiency ratio: (E-F-G-H)/(A+B-C+D) (non-GAAP) | 65.20 | % | 65.99 | % | 65.20 | % | 61.39 | % | 59.89 | % | ||||||||||
Tangible Common Equity to Tangible Assets (non-GAAP) | ||||||||||||||||||||
Total assets | $ | 9,724,790 | $ | 9,670,493 | $ | 9,577,346 | $ | 9,462,849 | $ | 9,600,188 | ||||||||||
Goodwill | (318,150 | ) | (318,150 | ) | (318,150 | ) | (318,150 | ) | (318,150 | ) | ||||||||||
Other intangible assets | (5,792 | ) | (6,305 | ) | (6,850 | ) | (7,428 | ) | (8,116 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Tangible assets (non-GAAP) | $ | 9,400,848 | $ | 9,346,038 | $ | 9,252,346 | $ | 9,137,271 | $ | 9,273,922 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total shareholders’ equity | $ | 1,358,197 | $ | 1,335,855 | $ | 1,044,619 | $ | 1,019,537 | $ | 1,009,143 | ||||||||||
Goodwill | (318,150 | ) | (318,150 | ) | (318,150 | ) | (318,150 | ) | (318,150 | ) | ||||||||||
Other intangible assets | (5,792 | ) | (6,305 | ) | (6,850 | ) | (7,428 | ) | (8,116 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Tangible equity (non-GAAP) | $ | 1,034,255 | $ | 1,011,400 | $ | 719,619 | $ | 693,959 | $ | 682,877 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Tangible equity | $ | 1,034,255 | $ | 1,011,400 | $ | 719,619 | $ | 693,959 | $ | 682,877 | ||||||||||
Preferred stock | (290,580 | ) | (288,723 | ) | (286,901 | ) | (285,114 | ) | (283,360 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Tangible common equity (non-GAAP) | $ | 743,675 | $ | 722,677 | $ | 432,718 | $ | 408,845 | $ | 399,517 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Tier 1 Common Equity (non-GAAP) | ||||||||||||||||||||
Total shareholders' equity | $ | 1,358,197 | $ | 1,335,855 | $ | 1,044,619 | $ | 1,019,537 | $ | 1,009,143 | ||||||||||
Qualifying capital securities | 73,667 | 73,667 | 73,667 | 73,667 | 73,667 | |||||||||||||||
Goodwill | (318,150 | ) | (318,150 | ) | (318,150 | ) | (318,150 | ) | (318,150 | ) | ||||||||||
Accumulated other comprehensive loss | 5,649 | 10,268 | 1,955 | 5,820 | 1,075 | |||||||||||||||
Disallowed deferred tax asset | (235,461 | ) | (235,529 | ) | — | — | — | |||||||||||||
Other intangible assets | (5,792 | ) | (6,305 | ) | (6,850 | ) | (7,428 | ) | (8,116 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Tier 1 capital (regulatory) | $ | 878,110 | $ | 859,806 | $ | 795,241 | $ | 773,446 | $ | 757,619 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Tier 1 capital (regulatory) | $ | 878,110 | $ | 859,806 | $ | 795,241 | $ | 773,446 | $ | 757,619 | ||||||||||
Qualifying capital securities | (73,667 | ) | (73,667 | ) | (73,667 | ) | (73,667 | ) | (73,667 | ) | ||||||||||
Preferred stock | (290,580 | ) | (288,723 | ) | (286,901 | ) | (285,114 | ) | (283,360 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Tier 1 common equity (non-GAAP) | $ | 513,863 | $ | 497,416 | $ | 434,673 | $ | 414,665 | $ | 400,592 | ||||||||||
|
|
|
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Net risk-weighted assets (regulatory) | $ | 5,821,748 | $ | 5,851,871 | $ | 5,803,811 | $ | 5,723,333 | $ | 5,912,527 | ||||||||||
Equity to assets | 13.97 | % | 13.81 | % | 10.91 | % | 10.77 | % | 10.51 | % | ||||||||||
Tier 1 common equity (non-GAAP) | 8.83 | 8.50 | 7.49 | 7.24 | 6.77 | |||||||||||||||
Tangible equity to tangible assets (non-GAAP) | 11.00 | 10.82 | 7.78 | 7.59 | 7.36 | |||||||||||||||
Tangible common equity to tangible assets (non-GAAP) | 7.91 | 7.73 | 4.68 | 4.47 | 4.31 | |||||||||||||||
11
Non-GAAP Reconciliation
Adjusted earnings per share
| Nine Months Ended September 30, | ||||||||
(in thousands, except per share amounts) | 2012 | 2011 | ||||||
Earnings per Share | ||||||||
Diluted net income (loss) per share | $ | 8.19 | $ | (0.73 | ) | |||
Restoration of the deferred tax asset | 6.82 | — | ||||||
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Diluted net income (loss) per share (non-GAAP) | $ | 1.37 | $ | (0.73 | ) | |||
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| An itemized reconciliation between net income on a GAAP basis and net income excluding the benefit of restoring the deferred tax asset (non-GAAP) follows: | ||||||||
Numerator: | ||||||||
Net income (loss) | $ | 349,028 | $ | (11,577 | ) | |||
Restoration of the deferred tax asset | (275,484 | ) | — | |||||
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|
| |||||
Net income (loss) (non-GAAP) | 73,544 | (11,577 | ) | |||||
Dividend on redeemable preferred stock | (18,127 | ) | (17,088 | ) | ||||
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| |||||
Net income (loss) attributable to common shareholders (non-GAAP) | 55,417 | (28,665 | ) | |||||
Net income allocated to participating securities | 1,268 | — | ||||||
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Net income (loss) after allocation to participating securities (non-GAAP) | $ | 54,149 | $ | (28,665 | ) | |||
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Denominator: | ||||||||
Weighted average shares outstanding for basic and dilutive earnings per common share | 39,469 | 39,418 | ||||||
Basic net income (loss) per common share (non-GAAP) | $ | 1.37 | $ | (0.73 | ) | |||
Diluted net income (loss) per common share (non-GAAP) | 1.37 | (0.73 | ) | |||||
Pre-tax pre-provision profit (non-GAAP)
| Three Months Ended | ||||||||||||||||||||
(in thousands) | September 30, 2012 | June 30, 2012 | March 31, 2012 | December 31, 2011 | September 30, 2011 | |||||||||||||||
Net income | $ | 20,991 | $ | 303,176 | $ | 24,861 | $ | 18,244 | $ | 32,944 | ||||||||||
Income tax provision (benefit) | 1,274 | (276,789 | ) | — | 2,521 | (12,568 | ) | |||||||||||||
Provision for loan losses | 5,195 | 5,299 | 8,397 | 15,007 | 17,481 | |||||||||||||||
Net losses (gains) on loans held for sale | 184 | (6 | ) | (916 | ) | 217 | (1,952 | ) | ||||||||||||
Investment securities (gains) losses | — | — | — | (38 | ) | (3 | ) | |||||||||||||
Losses (gains) on other real estate (ORE) | 941 | (173 | ) | (385 | ) | 1,081 | 1,210 | |||||||||||||
Merger-related expenses(1) | 4,411 | — | — | — | — | |||||||||||||||
Fair-value adjustment on bank owned life insurance(2) | (31 | ) | 118 | (205 | ) | (100 | ) | 385 | ||||||||||||
Fair-value adjustment on swaps(2) | 83 | 74 | (61 | ) | (46 | ) | 268 | |||||||||||||
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Pre-tax pre-provision profit (non-GAAP) | $ | 33,048 | $ | 31,699 | $ | 31,691 | $ | 36,886 | $ | 37,765 | ||||||||||
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| (1) | Merger-related expenses are contained in line item “Professional services” on Consolidated Statements of Operations. |
| (2) | Fair-value adjustment amounts contained in line item “Other income” on Consolidated Statements of Operations. |
12
Noninterest Income and Noninterest Expense
(in thousands) | Three Months Ended | |||||||||||||||||||
| September 30, 2012 | June 30, 2012 | March 31, 2012 | December 31, 2011 | September 30, 2011 | ||||||||||||||||
Service charges on deposit accounts | $ | 9,554 | $ | 9,355 | $ | 8,985 | $ | 9,724 | $ | 10,362 | ||||||||||
Trust fees | 3,635 | 3,582 | 3,602 | 3,747 | 3,622 | |||||||||||||||
Mortgage and other loan income | 2,028 | 1,952 | 1,858 | 2,705 | 2,089 | |||||||||||||||
Brokerage and investment fees | 1,831 | 1,331 | 1,324 | 1,243 | 1,188 | |||||||||||||||
Card-based and other nondeposit fees | 4,431 | 4,444 | 4,265 | 4,305 | 4,475 | |||||||||||||||
Gains (losses) on loans held for sale | (184 | ) | 6 | 916 | (217 | ) | 1,952 | |||||||||||||
Investment securities gains | — | — | — | 38 | 3 | |||||||||||||||
Other income | 2,415 | 1,675 | 3,290 | 2,818 | 736 | |||||||||||||||
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Total noninterest income | $ | 23,710 | $ | 22,345 | $ | 24,240 | $ | 24,363 | $ | 24,427 | ||||||||||
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Salaries and employee benefits | $ | 33,589 | $ | 32,801 | $ | 33,298 | $ | 30,952 | $ | 30,280 | ||||||||||
Occupancy | 6,129 | 6,140 | 6,696 | 6,326 | 6,125 | |||||||||||||||
Professional services(1) | 6,806 | 2,465 | 2,023 | 2,311 | 2,394 | |||||||||||||||
Equipment | 2,937 | 2,904 | 3,303 | 3,326 | 2,918 | |||||||||||||||
Data processing services | 4,427 | 3,721 | 4,048 | 3,709 | 3,823 | |||||||||||||||
Advertising and public relations | 1,847 | 1,708 | 1,335 | 1,298 | 2,179 | |||||||||||||||
Postage and delivery | 1,157 | 1,119 | 1,099 | 1,165 | 1,142 | |||||||||||||||
Other loan expenses | 3,121 | 3,266 | 3,186 | 3,497 | 3,941 | |||||||||||||||
Losses (gains) on other real estate (ORE) | 941 | (173 | ) | (385 | ) | 1,081 | 1,210 | |||||||||||||
ORE expenses | 323 | 266 | 450 | 995 | 529 | |||||||||||||||
Intangible asset amortization | 513 | 545 | 578 | 688 | 732 | |||||||||||||||
Other expense | 10,265 | 11,577 | 11,470 | 11,292 | 10,138 | |||||||||||||||
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Total noninterest expense | $ | 72,055 | $ | 66,339 | $ | 67,101 | $ | 66,640 | $ | 65,411 | ||||||||||
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| (1) | Includes merger-related expenses of $4.4 million in the three months ended September 30, 2012. |
13
Average Balances, Yields and Rates
| Three Months Ended | ||||||||||||||||||||||||
| September 30, 2012 | June 30, 2012 | September 30, 2011 | ||||||||||||||||||||||
(in thousands) | Average Balance | Average Rate | Average Balance | Average Rate | Average Balance | Average Rate | ||||||||||||||||||
Earning Assets | ||||||||||||||||||||||||
Money market investments | $ | 238,492 | 0.25 | % | $ | 184,670 | 0.25 | % | $ | 270,422 | 0.25 | % | ||||||||||||
Investment securities: | ||||||||||||||||||||||||
Taxable | 2,557,793 | 2.51 | 2,577,646 | �� | 2.48 | 2,536,944 | 3.23 | |||||||||||||||||
Tax-exempt | 205,572 | 6.46 | 209,421 | 6.46 | 242,494 | 6.63 | ||||||||||||||||||
FHLB and Federal Reserve stock | 122,123 | 3.90 | 119,413 | 3.87 | 123,906 | 3.13 | ||||||||||||||||||
Portfolio loans: | ||||||||||||||||||||||||
Commercial and industrial | 1,713,382 | 5.42 | 1,665,640 | 5.45 | 1,440,968 | 5.24 | ||||||||||||||||||
Commercial real estate | 1,382,873 | 4.81 | 1,465,135 | 5.04 | 1,678,996 | 5.07 | ||||||||||||||||||
Residential mortgage | 580,002 | 4.36 | 601,439 | 4.36 | 693,494 | 4.45 | ||||||||||||||||||
Direct consumer | 873,057 | 5.81 | 890,957 | 5.88 | 967,443 | 6.00 | ||||||||||||||||||
Indirect consumer | 952,086 | 6.05 | 894,555 | 6.15 | 882,157 | 6.56 | ||||||||||||||||||
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Total portfolio loans | 5,501,400 | 5.33 | 5,517,726 | 5.40 | 5,663,058 | 5.43 | ||||||||||||||||||
Loans held for sale | 13,010 | 3.40 | 13,191 | 3.40 | 19,248 | 4.44 | ||||||||||||||||||
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Total earning assets | 8,638,390 | 4.36 | 8,622,067 | 4.42 | 8,856,072 | 4.64 | ||||||||||||||||||
Nonearning Assets | ||||||||||||||||||||||||
Cash and due from banks | 145,961 | 141,122 | 147,044 | |||||||||||||||||||||
Premises and equipment | 92,775 | 94,836 | 99,835 | |||||||||||||||||||||
Investment security fair value adjustment | 54,807 | 53,672 | 46,558 | |||||||||||||||||||||
Other nonearning assets | 927,622 | 669,507 | 652,885 | |||||||||||||||||||||
Allowance for loan losses | (135,968 | ) | (152,154 | ) | (206,119 | ) | ||||||||||||||||||
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Total assets | $ | 9,723,587 | $ | 9,429,050 | $ | 9,596,275 | ||||||||||||||||||
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Interest-Bearing Liabilities | ||||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||
Interest-bearing demand deposits | $ | 1,073,294 | 0.13 | $ | 988,884 | 0.14 | $ | 976,637 | 0.21 | |||||||||||||||
Savings deposits | 2,602,216 | 0.20 | 2,677,524 | 0.23 | 2,648,640 | 0.33 | ||||||||||||||||||
Time deposits | 1,825,144 | 1.55 | 1,916,294 | 1.57 | 2,380,333 | 1.80 | ||||||||||||||||||
Short-term borrowings | 45,974 | 0.10 | 37,148 | 0.13 | 43,445 | 0.18 | ||||||||||||||||||
Long-term debt | 852,776 | 3.89 | 853,333 | 3.94 | 862,479 | 4.19 | ||||||||||||||||||
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Total interest-bearing liabilities | 6,399,404 | 1.06 | 6,473,183 | 1.10 | 6,911,534 | 1.30 | ||||||||||||||||||
Noninterest-Bearing Liabilities and Shareholders’ Equity | ||||||||||||||||||||||||
Noninterest-bearing demand | 1,823,099 | 1,734,951 | 1,541,005 | |||||||||||||||||||||
Other liabilities | 155,267 | 159,397 | 152,134 | |||||||||||||||||||||
Shareholders’ equity | 1,345,817 | 1,061,519 | 991,602 | |||||||||||||||||||||
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Total liabilities and shareholders’ equity | $ | 9,723,587 | $ | 9,429,050 | $ | 9,596,275 | ||||||||||||||||||
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| |||||||||||||||||||
Interest Spread | 3.29 | % | 3.32 | % | 3.34 | % | ||||||||||||||||||
Contribution of noninterest bearing sources of funds | 0.28 | 0.28 | 0.29 | |||||||||||||||||||||
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Net Interest Margin | 3.57 | % | 3.60 | % | 3.63 | % | ||||||||||||||||||
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14
Average Balances, Yields and Rates
| Nine Months Ended | ||||||||||||||||
| September 30, | ||||||||||||||||
| 2012 | 2011 | |||||||||||||||
| Average | Average | Average | Average | |||||||||||||
(in thousands) | Balance | Rate | Balance | Rate | ||||||||||||
Earning Assets | ||||||||||||||||
Money market investments | $ | 257,535 | 0.25 | % | $ | 362,983 | 0.25 | % | ||||||||
Investment securities: | ||||||||||||||||
Taxable | 2,561,262 | 2.57 | 2,432,220 | 3.33 | ||||||||||||
Tax-exempt | 210,096 | 6.45 | 258,524 | 6.67 | ||||||||||||
FHLB and Federal Reserve stock | 119,834 | 3.88 | 134,998 | 3.11 | ||||||||||||
Portfolio loans: | ||||||||||||||||
Commercial and industrial | 1,651,213 | 5.49 | 1,404,081 | 5.07 | ||||||||||||
Commercial real estate | 1,456,217 | 4.97 | 1,828,800 | 5.14 | ||||||||||||
Residential mortgage | 602,970 | 4.35 | 718,039 | 4.68 | ||||||||||||
Direct consumer | 894,603 | 5.86 | 994,185 | 6.06 | ||||||||||||
Indirect consumer | 904,188 | 6.20 | 847,878 | 6.68 | ||||||||||||
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| |||||||||||||
Total portfolio loans | 5,509,191 | 5.40 | 5,792,983 | 5.44 | ||||||||||||
Loans held for sale | 12,145 | 3.72 | 26,739 | 3.65 | ||||||||||||
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| |||||||||||||
Total earning assets | 8,670,063 | 4.42 | 9,008,447 | 4.66 | ||||||||||||
Nonearning Assets | ||||||||||||||||
Cash and due from banks | 143,373 | 143,254 | ||||||||||||||
Premises and equipment | 94,858 | 101,846 | ||||||||||||||
Investment security fair value adjustment | 52,778 | 44,256 | ||||||||||||||
Other nonearning assets | 751,020 | 662,565 | ||||||||||||||
Allowance for loan losses | (153,480 | ) | (241,431 | ) | ||||||||||||
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| |||||||||||||
Total assets | $ | 9,558,612 | $ | 9,718,937 | ||||||||||||
|
|
|
| |||||||||||||
Interest-Bearing Liabilities | ||||||||||||||||
Deposits: | ||||||||||||||||
Interest-bearing demand deposits | $ | 1,012,171 | 0.15 | $ | 958,634 | 0.22 | ||||||||||
Savings deposits | 2,662,533 | 0.24 | 2,633,255 | 0.37 | ||||||||||||
Time deposits | 1,956,304 | 1.60 | 2,564,001 | 1.88 | ||||||||||||
Short-term borrowings | 40,621 | 0.14 | 41,999 | 0.18 | ||||||||||||
Long-term debt | 853,339 | 3.95 | 912,755 | 4.16 | ||||||||||||
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|
| |||||||||||||
Total interest-bearing liabilities | 6,524,968 | 1.12 | 7,110,644 | 1.38 | ||||||||||||
Noninterest-Bearing Liabilities and Shareholders’ Equity | ||||||||||||||||
Noninterest-bearing demand | 1,729,889 | 1,470,866 | ||||||||||||||
Other liabilities | 157,746 | 151,525 | ||||||||||||||
Shareholders’ equity | 1,146,009 | 985,902 | ||||||||||||||
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| |||||||||||||
Total liabilities and shareholders’ equity | $ | 9,558,612 | $ | 9,718,937 | ||||||||||||
|
|
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| |||||||||||||
Interest Spread | 3.30 | % | 3.28 | % | ||||||||||||
Contribution of noninterest bearing sources of funds | 0.28 | 0.29 | ||||||||||||||
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| |||||||||||||
Net Interest Margin | 3.58 | % | 3.57 | % | ||||||||||||
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15