Exhibit 99.1
FOR IMMEDIATE RELEASE
| | | | |
| CONTACT: | | Kevin T. Thompson | | Tim Dirrim |
| | | Executive Vice President | | Vice President |
| | | Chief Financial Officer | | Marketing Communications |
| | | Sky Financial Group, Inc. | | Sky Financial Group, Inc. |
| | | (419) 254-6068 | | (419) 327-6330 |
Sky Financial Group Reports Fourth Quarter and Year-End Results
January 19, 2006 - Bowling Green, Ohio - - Sky Financial Group, Inc. (NASDAQ: SKYF) today reported 2005 fourth quarter net income of $53.7 million, or $.49 per diluted share, compared to $49.3 million, or $.46 per diluted share, for the fourth quarter of 2004. Annualized return on assets and return on equity for the fourth quarter were 1.39% and 13.89%, respectively, compared with 1.33% and 13.55%, respectively, for the same period in 2004. The net income for the fourth quarter of 2005 and 2004 included income from discontinued operations of $0.4 million and $0.4 million, respectively.
For the full year 2005, Sky reported net income of $182.6 million, or $1.69 per diluted share versus $194.4 million, or $1.93 per diluted share for the prior year. The prior year-to-date included income from discontinued operations of $19.2 million, or $.19 per diluted share, due to a gain from Sky’s sale of its dental finance unit, Sky Financial Solutions (SFS). Income from continuing operations for 2005 was $182.2 million, or $1.69 per diluted share, versus $175.2 million, or $1.74 per diluted share, for the prior year.
During the fourth quarter of 2005, Sky Financial adopted Financial Accounting Standard No. 123(R)Share-Based Payment (FAS 123(R)). Sky adopted FAS 123(R) using the modified retrospective method and restated the first three quarters of 2005 using the pro forma expense originally disclosed; 2004 and previous years have not been restated. As such, the twelve months ended December 31, 2005, reflect a full year of expense for stock options, and the fourth quarter of 2005 reflects three months of expense. For the full year of 2005, Sky Financial recorded $4.1 million ($2.7 million after tax) as additional salaries and employee benefits expense. For the fourth quarter of 2005, Sky Financial recorded expense of $0.8 million ($0.6 million after tax).
“We were very pleased with our solid financial performance as we completed 2005,” stated Marty E. Adams, president, chairman and chief executive officer. “As expected, improvements in net interest margin and strong performance from Sky’s fee-based businesses contributed to increased earnings in the fourth quarter 2005 over the same period in the prior year. Future earnings will also benefit from our
1
fourth quarter improvement in asset quality. We expect to maintain our disciplined approach to both revenue growth and cost savings in 2006 in order to continue to generate value for our shareholders.”
Core operating earnings, which reflect net income adjusted to exclude discontinued operations and merger-related expenses that are not representative of ongoing operations, and adjusted to include pro forma stock option expense for periods that were not restated, were $53.7 million for the fourth quarter versus $47.5 million for the same period in 2004. Core operating earnings per diluted share for the fourth quarter were $.49 versus $.44 for the fourth quarter of 2004. For the 2005 fourth quarter, on a core operating earnings basis, annualized return on assets and return on equity were 1.39% and 13.90%, respectively, compared with 1.28% and 13.05%, respectively, for the same period in 2004.
Core operating earnings were $183.3 million, or $1.70 per diluted share, for the full year 2005 versus $174.6 million, or $1.74 per diluted share, for the prior year. For the full year 2005, on a core operating earnings basis, annualized return on assets and return on equity were 1.21% and 12.32%, respectively, compared with 1.31% and 14.20% respectively, for the full year 2004.
Cash operating earnings, which reflect core operating earnings, excluding amortization of intangibles, were $56.3 million, or $.52 per diluted share, in the fourth quarter compared to $49.8 million, or $.47 per diluted share, in the fourth quarter of 2004. On a cash operating basis, the annualized return on average tangible equity was 23.08% for the fourth quarter compared with 20.96% for the same period in 2004.
Cash operating earnings were $193.0 million, or $1.79 per diluted share, for the full year 2005 compared to $181.8 million, or $1.81 per diluted share, for the prior year. On a cash operating basis, the return on average tangible equity was 20.39% for 2005 compared with 20.97% for the prior year.
Fourth Quarter Results
Net interest income for the fourth quarter was $132.2 million, up 6.4% from $124.3 million in the fourth quarter of 2004. The net interest margin for the fourth quarter was 3.76%, up 1 basis point from the third quarter of 2005 and up 8 basis points from the fourth quarter of 2004. The net interest margin performance continued to reflect the benefits from rising short-term interest rates and prudent spread management and interest rate risk management practices, despite the effects of the flattened yield curve and increasingly competitive markets.
Average earning assets increased 3.6% over the fourth quarter of 2004 from a combination of organic growth and acquisitions. Average loans for the quarter increased 5.2% from the same quarter last year, with organic growth contributing 2.3% in addition to the acquisitions. Average deposits grew 4.8% from the fourth quarter of 2004, which included organic growth of 1.3% in addition to the acquisitions. Non-interest bearing deposits, Sky’s highest growth priority, were up 8.0% for the fourth quarter compared to the fourth quarter of 2004, which included organic growth of 4.5%.
2
Non-interest revenues, excluding securities transactions, were up 10.8%, including the benefit from acquisitions, compared to the same quarter in 2004. Non-interest revenues were $56.2 million for the fourth quarter, down 2.5% from $57.7 million in the fourth quarter of 2004, which includes a $6.8 million decrease in gains on securities transactions. Compared to the prior year quarter, mortgage banking revenues were down 0.8% mainly due to lower origination and sales revenue mostly offset by higher recapture of impairment charges and lower amortization expense. In addition, trust services income and service charges on deposits were up 10.3% and 8.8%, respectively. Brokerage and insurance commissions were up 8.7% due mostly to acquisitions at the beginning of the quarter. Other income increased 20.9% over the fourth quarter of 2004 mostly due to a gain on an insurance settlement for a portfolio of loans.
Non-interest expenses for the fourth quarter of 2005, which included $0.6 million of merger, integration and restructuring expenses related to the acquisition of Falls Bank and costs associated with a potential acquisition, were $101.1 million compared to $97.8 million in the fourth quarter of 2004, which included $0.4 million of merger, integration and restructuring expenses related to the acquisition of Prospect Bancshares. Excluding the merger, integration and restructuring expenses for both years, the 2005 fourth quarter non-interest expenses were up 3.1% or $3.0 million over the fourth quarter of 2004. Expenses have increased over 2004’s fourth quarter mainly due to the recording of expenses related to the adoption of FAS 123(R) discussed above and the acquisitions of Belmont Bancorp in the second quarter of 2005, Falls Bank in the fourth quarter of 2005 and three insurance agencies in the third and fourth quarters of 2005. Expenses were further impacted by the addition of four new financial centers over the last twelve months. The efficiency ratio, on a cash operating basis, excluding the merger, integration and restructuring expenses and amortization of intangible assets, was 51.02% for the fourth quarter of 2005, compared to 52.74% for the same quarter in 2004.
Credit Quality
Several positive events occurred in the fourth quarter of 2005, including cash received of $8.9 million from the sale of $9.2 million of non-accrual loans with payments guaranteed by surety bonds or insurance policies, the pay-off of an adversely-rated relationship of $16 million and the settlement of non-performing investments of $10.3 million resulting in a reduced risk profile at the end of the year. The provision for credit losses for the fourth quarter of 2005 was $6.8 million, decreasing from $11.6 million in the same quarter in 2004. This reduction in provision took into consideration the improved credit risk profile at the end of the year.
Net credit losses for the fourth quarter of 2005 were $16.2 million, or .59% annualized to average total loans, compared to $9.9 million, or .38%, for the fourth quarter of 2004. At December 31, 2005, non-performing loans to total loans was 1.07% versus 1.35% at the end of 2004. Total non-performing loans at December 31, 2005, were $119.5 million, a decrease of $24.2 million from $143.7 million at December 31, 2004. The allowance for credit losses to non-performing loans at December 31, 2005, was 121% versus 105% at the end of 2004. Non-performing loans continue to reflect the non-accrual status of loans
3
with payments guaranteed by surety bonds or insurance policies issued by two insurance companies, which remain in litigation. However, the total balance has decreased to $20.4 million from $34.4 million at December 31, 2004, as a result of cash received during the year.
Continued Expansion
On November 29, 2005, Sky completed its acquisition of Falls Bank. The two Falls branches were integrated into Sky’s Western Reserve Region at the beginning of December.
On October 4, 2005, Sky announced the acquisition of Becker-McDowell Agency, Inc. and Steiner Insurance Agency, Inc., both located in Wooster, Ohio. These businesses were integrated into Sky’s existing insurance business. In addition, on January 3, 2006, Sky announced the acquisition of the Peter B. Burke Insurance Agency in Pittsburgh, Pennsylvania. This business will also be merged into Sky’s existing insurance business.
Outlook For 2006
Commenting on 2006, Kevin Thompson, chief financial officer, stated, “We are pleased with our progress in a difficult 2005 and we are poised for a solid performance in 2006. We currently project 2006 diluted earnings per share on a net income, or GAAP basis, of $1.90 to $1.95 per diluted share.”
Conference Call
Today, January 19, 2006, at 10 a.m., Mr. Adams and members of Sky’s leadership team will host a conference call to provide an overview of 2005 fourth quarter performance and a business outlook. Participants are encouraged to call in beginning at 9:45 a.m. by dialing (800) 310-6649 (confirmation code: 3369488). R.S.V.P. is not required. The webcast can be accessed via the Investor Relations/Webcasts section (http://investor.skyfi.com/medialist.cfm) of the Sky website. A replay of the call will be available from 3 p.m., January 19, until midnight, January 24, by calling (888) 203-1112 (confirmation code: 3369488). The event will be archived on the Sky website indefinitely. For supplemental financial tables, please refer to the Investor Relations/Press Releases (http://investor.skyfi.com/releases.cfm) section on Sky’s web site.
Non-GAAP Financial Measures
In addition to results presented in accordance with GAAP, this press release contains certain non-GAAP financial measures. Sky believes that providing certain non-GAAP financial measures provides investors with information useful in understanding Sky’s financial performance, its performance trends and financial position. Specifically, Sky provides measures based on “core operating earnings,” which exclude merger-related expenses and discontinued operations that are not reflective of on-going operations or not expected to recur. In addition, Sky provides measures based on “cash operating earnings,” which further adjusts core operating earnings to exclude the effect of amortization of intangibles. These non-GAAP measures should not be considered a substitute for GAAP basis measures and results. A reconciliation of these non-GAAP measures to the most comparable GAAP equivalent is included in the financial tables.
4
Forward-looking Statement
The information in this press release contains forward-looking statements including certain projections, plans and forecasts of expected future performance that are not historical facts and are subject to a number of risks and uncertainties. These forward-looking statements include, but are not limited to, the Company’s 2006 earnings per share projections. Actual results and performance could differ materially from those contemplated or implied by these forward-looking statements. For a summary of important factors that could affect Sky’s forward-looking statements, please refer to Sky’s filings with the Securities and Exchange Commission (SEC) available at the SEC’s Internet site (www.sec.gov). Sky undertakes no obligation to update or revise these statements following the date of this release.
About Sky Financial Group, Inc.
Sky Financial Group is a $15.7 billion diversified financial holding company with its headquarters located in Bowling Green, Ohio. Sky’s asset size places it among the 40 largest publicly-held bank holding companies in the nation. Sky operates over 290 financial centers and over 300 ATMs serving communities in Ohio, Pennsylvania, Michigan, Indiana and West Virginia. Sky’s financial service affiliates include: Sky Bank, commercial and retail banking; Sky Trust, asset management services; and Sky Insurance, retail and commercial insurance agency services. Sky is located on the web at www.skyfi.com.
-end-
5
Summary Financials-Fourth Quarter 2005
SKY FINANCIAL GROUP, INC.
STATEMENTS OF INCOME (Unaudited)
| | | | | | | | | | | | | | | | | | |
(Dollars in thousands, except per share data)
| | Three Months Ended
December 31,
| | Percent Change
| | | Twelve Months Ended
December 31,
| | Percent Change
| |
| | 2005
| | 2004
| | | 2005
| | 2004
| |
Interest income | | $ | 223,243 | | $ | 186,124 | | 19.9 | % | | $ | 830,224 | | $ | 661,943 | | 25.4 | % |
Interest expense | | | 91,017 | | | 61,819 | | 47.2 | | | | 315,572 | | | 210,632 | | 49.8 | |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Net interest income | | | 132,226 | | | 124,305 | | 6.4 | | | | 514,652 | | | 451,311 | | 14.0 | |
Provision for credit losses | | | 6,807 | | | 11,615 | | (41.4 | ) | | | 52,249 | | | 37,660 | | 38.7 | |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Net interest income after provision for credit losses | | | 125,419 | | | 112,690 | | 11.3 | | | | 462,403 | | | 413,651 | | 11.8 | |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Non-interest income | | | | | | | | | | | | | | | | | | |
Trust services income | | | 5,511 | | | 4,996 | | 10.3 | | | | 21,918 | | | 18,281 | | 19.9 | |
Service charges and fees on deposit accounts | | | 14,578 | | | 13,395 | | 8.8 | | | | 55,570 | | | 47,964 | | 15.9 | |
Mortgage banking income | | | 5,632 | | | 5,675 | | (0.8 | ) | | | 24,991 | | | 24,844 | | 0.6 | |
Brokerage and insurance commissions | | | 14,519 | | | 13,358 | | 8.7 | | | | 59,172 | | | 55,820 | | 6.0 | |
Net securities gains (losses) | | | 1,553 | | | 8,310 | | (81.3 | ) | | | 3,662 | | | 14,569 | | (74.9 | ) |
Other income | | | 14,412 | | | 11,918 | | 20.9 | | | | 46,069 | | | 41,939 | | 9.8 | |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Total non-interest income | | | 56,205 | | | 57,652 | | (2.5 | ) | | | 211,382 | | | 203,417 | | 3.9 | |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Non-interest expenses | | | | | | | | | | | | | | | | | | |
Salaries and employee benefits | | | 53,251 | | | 53,190 | | 0.1 | | | | 214,555 | | | 193,611 | | 10.8 | |
Occupancy and equipment expense | | | 17,209 | | | 16,824 | | 2.3 | | | | 68,402 | | | 59,096 | | 15.7 | |
Merger, integration and restructuring expense | | | 618 | | | 365 | | 69.3 | | | | 1,771 | | | 4,542 | | (61.0 | ) |
Other operating expenses | | | 30,037 | | | 27,452 | | 9.4 | | | | 115,319 | | | 99,275 | | 16.2 | |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Total non-interest expense | | | 101,115 | | | 97,831 | | 3.4 | | | | 400,047 | | | 356,524 | | 12.2 | |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Income from continuing operations before income taxes | | | 80,509 | | | 72,511 | | 11.0 | | | | 273,738 | | | 260,544 | | 5.1 | |
Income taxes from continuing operations | | | 27,168 | | | 23,612 | | 15.1 | | | | 91,547 | | | 85,344 | | 7.3 | |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Income from continuing operations | | | 53,341 | | | 48,899 | | 9.1 | | | | 182,191 | | | 175,200 | | 4.0 | |
Income from discontinued operations, net of tax | | | 372 | | | 430 | | | | | | 372 | | | 19,155 | | (98.1 | ) |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
Net income | | $ | 53,713 | | $ | 49,329 | | 8.9 | | | $ | 182,563 | | $ | 194,355 | | (6.1 | ) |
| | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
SHARE DATA: | | | | | | | | | | | | | | | | | | |
Earnings per share from continuing operations | | | | | | | | | | | | | | | | | | |
Basic | | $ | 0.49 | | $ | 0.46 | | 6.5 | | | $ | 1.71 | | $ | 1.76 | | (2.8 | ) |
Diluted | | | 0.49 | | | 0.46 | | 6.5 | | | | 1.69 | | | 1.74 | | (2.9 | ) |
Earnings per share from discontinued operations | | | | | | | | | | | | | | | | | | |
Basic | | | 0.00 | | | 0.00 | | — | | | | 0.00 | | | 0.19 | | (100.0 | ) |
Diluted | | | 0.00 | | | 0.00 | | — | | | | 0.00 | | | 0.19 | | (100.0 | ) |
Earnings per share | | | | | | | | | | | | | | | | | | |
Basic | | | 0.50 | | | 0.47 | | 6.4 | | | | 1.71 | | | 1.95 | | (12.3 | ) |
Diluted | | | 0.49 | | | 0.46 | | 6.5 | | | | 1.69 | | | 1.93 | | (12.4 | ) |
Core operating earnings per share* | | | | | | | | | | | | | | | | | | |
Basic | | | 0.50 | | | 0.45 | | 11.0 | | | | 1.72 | | | 1.76 | | (2.3 | ) |
Diluted | | | 0.49 | | | 0.44 | | 11.4 | | | | 1.70 | | | 1.74 | | (2.3 | ) |
Cash operating earnings per share* | | | | | | | | | | | | | | | | | | |
Basic | | | 0.52 | | | 0.47 | | 10.6 | | | | 1.81 | | | 1.83 | | (1.1 | ) |
Diluted | | | 0.52 | | | 0.47 | | 10.6 | | | | 1.79 | | | 1.81 | | (1.1 | ) |
Cash dividend declared per common share | | | 0.23 | | | 0.22 | | — | | | | 0.89 | | | 0.85 | | — | |
Average shares outstanding | | | | | | | | | | | | | | | | | | |
Basic | | | 107,844,000 | | | 105,922,000 | | — | | | | 106,796,000 | | | 99,461,000 | | — | |
Diluted | | | 109,008,000 | | | 107,163,000 | | — | | | | 107,973,000 | | | 100,568,000 | | — | |
Note: During the fourth quarter of 2005, Sky Financial adopted Financial Accounting Standard No. 123(R)Share Based Payment(FAS 123(R)). Sky Financial adopted FAS 123(R) using the modified retrospective method and restated the first three interim quarters of 2005 using the pro forma expense originally disclosed in those quarters; 2004 and previous years have not been restated on a GAAP basis. As such, the twelve months ended December 31, 2005 results reflect a full year of expense for stock options and the three months ended December 31, 2005 reflects three months of expense related to stock options. For the full year of 2005, Sky Financial recorded $4.1 million ($2.7 million after tax) as additional salaries and employee benefits expense. For the fourth quarter of 2005, Sky Financial recorded $0.8 million ($0.6 million after tax) related to this adoption.
6
Summary Financials-Fourth Quarter 2005
PERFORMANCE RATIOS:
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31,
| | | Twelve Months Ended
December 31,
| |
| | | 2005
| | | 2004
| | | 2005
| | | 2004
| |
Net Income | | $ | 53,713 | | | $ | 49,329 | | | $ | 182,563 | | | $ | 194,355 | |
Return on average equity | | | 13.89 | % | | | 13.55 | % | | | 12.27 | % | | | 15.80 | % |
Return on average assets | | | 1.39 | | | | 1.33 | | | | 1.21 | | | | 1.43 | |
| | | | |
CONTINUING OPERATIONS | | | | | | | | | | | | | | | | |
Income from continuing operations | | $ | 53,341 | | | $ | 48,899 | | | $ | 182,191 | | | $ | 175,200 | |
Return on average equity | | | 13.79 | % | | | 13.43 | % | | | 12.25 | % | | | 14.24 | % |
Return on average assets | | | 1.38 | | | | 1.32 | | | | 1.20 | | | | 1.31 | |
Efficiency ratio | | | 53.42 | | | | 53.53 | | | | 54.85 | | | | 54.17 | |
Net interest margin (FTE) | | | 3.76 | | | | 3.68 | | | | 3.73 | | | | 3.69 | |
| | | | |
CORE OPERATING * | | | | | | | | | | | | | | | | |
Core operating earnings | | $ | 53,743 | | | $ | 47,512 | | | $ | 183,342 | | | $ | 174,638 | |
Return on average equity | | | 13.90 | % | | | 13.05 | % | | | 12.32 | % | | | 14.20 | % |
Return on average assets | | | 1.39 | | | | 1.28 | | | | 1.21 | | | | 1.31 | |
Efficiency ratio | | | 53.09 | | | | 54.22 | | | | 54.60 | | | | 54.31 | |
| | | | |
CASH OPERATING* | | | | | | | | | | | | | | | | |
Cash operating earnings | | $ | 56,284 | | | $ | 49,837 | | | $ | 193,018 | | | $ | 181,775 | |
Return on average tangible equity | | | 23.08 | % | | | 20.96 | % | | | 20.39 | % | | | 20.97 | % |
Return on average tangible assets | | | 1.51 | | | | 1.39 | | | | 1.32 | | | | 1.40 | |
Efficiency ratio | | | 51.02 | | | | 52.74 | | | | 52.56 | | | | 52.64 | |
PERIOD END BALANCE SHEETS (Unaudited)
(Dollars in thousands)
| | | | | | | | | | | |
| | | December 31,
| | | Percent Change
| |
| | | 2005
| | | 2004
| | |
Cash and due from banks | | $ | 318,114 | | | $ | 232,407 | | | 36.9 | % |
Interest-earning deposits with banks | | | 15,037 | | | | 32,919 | | | (54.3 | ) |
Loans held for sale | | | 24,184 | | | | 9,433 | | | 156.4 | |
Securities available for sale | | | 3,097,472 | | | | 3,091,813 | | | 0.2 | |
Total loans | | | 11,149,222 | | | | 10,616,118 | | | 5.0 | |
Allowance for credit losses | | | (144,461 | ) | | | (151,389 | ) | | (4.6 | ) |
| | |
|
|
| |
|
|
| |
|
|
Net loans | | | 11,004,761 | | | | 10,464,729 | | | 5.2 | |
Premises and equipment | | | 166,797 | | | | 155,466 | | | 7.3 | |
Goodwill and other intangibles | | | 595,499 | | | | 546,932 | | | 8.9 | |
Other assets | | | 461,427 | | | | 410,724 | | | 12.3 | |
| | |
|
|
| |
|
|
| |
|
|
Total Assets | | $ | 15,683,291 | | | $ | 14,944,423 | | | 4.9 | |
| | |
|
|
| |
|
|
| |
|
|
Total interest-earning assets | | $ | 14,285,915 | | | $ | 13,750,283 | | | 3.9 | |
| | |
|
|
| |
|
|
| |
|
|
Non-interest-bearing deposits | | $ | 1,734,113 | | | $ | 1,592,510 | | | 8.9 | |
Interest-bearing deposits | | | 9,021,563 | | | | 8,759,081 | | | 3.0 | |
| | |
|
|
| |
|
|
| |
|
|
Total deposits | | | 10,755,676 | | | | 10,351,591 | | | 3.9 | |
Repos and federal funds purchased | | | 1,053,244 | | | | 1,041,361 | | | 1.1 | |
Debt and FHLB advances | | | 2,125,788 | | | | 1,924,840 | | | 10.4 | |
Other liabilities | | | 194,706 | | | | 155,676 | | | 25.1 | |
Shareholders’ equity | | | 1,553,877 | | | | 1,470,955 | | | 5.6 | |
| | |
|
|
| |
|
|
| |
|
|
Total Liabilities and Shareholders’ Equity | | $ | 15,683,291 | | | $ | 14,944,423 | | | 4.9 | |
| | |
|
|
| |
|
|
| |
|
|
7
Summary Financials-Fourth Quarter 2005
AVERAGE BALANCE SHEETS (Unaudited)
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31,
| | | Percent Change
| | | Twelve Months Ended
December 31,
| | | Percent Change
| |
| | | 2005
| | | 2004
| | | | 2005
| | | 2004
| | |
Cash and due from banks | | $ | 249,407 | | | $ | 244,726 | | | 1.9 | % | | $ | 247,833 | | | $ | 228,431 | | | 8.5 | % |
Interest-earning deposits with banks | | | 16,690 | | | | 36,498 | | | (54.3 | ) | | | 29,957 | | | | 37,187 | | | (19.4 | ) |
Federal funds sold | | | 930 | | | | 2,186 | | | (57.5 | ) | | | 1,284 | | | | 2,573 | | | (50.1 | ) |
Loans held for sale | | | 18,048 | | | | 27,601 | | | (34.6 | ) | | | 22,373 | | | | 30,323 | | | (26.2 | ) |
Securities available for sale | | | 3,049,214 | | | | 3,075,580 | | | (0.9 | ) | | | 3,055,905 | | | | 2,795,189 | | | 9.3 | |
Total loans | | | 10,946,325 | | | | 10,400,806 | | | 5.2 | | | | 10,766,796 | | | | 9,462,682 | | | 13.8 | |
Allowance for credit losses | | | (149,914 | ) | | | (149,288 | ) | | 0.4 | | | | (150,915 | ) | | | (136,526 | ) | | 10.5 | |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
| |
|
|
Net loans | | | 10,796,411 | | | | 10,251,518 | | | 5.3 | | | | 10,615,881 | | | | 9,326,156 | | | 13.8 | |
Premises and equipment | | | 165,570 | | | | 154,329 | | | 7.3 | | | | 162,551 | | | | 153,486 | | | 5.9 | |
Goodwill and other intangibles | | | 589,481 | | | | 527,525 | | | 11.7 | | | | 564,702 | | | | 384,681 | | | 46.8 | |
Assets of discontinued operations | | | — | | | | — | | | N/A | | | | — | | | | 215,013 | | | (100.0 | ) |
Other assets | | | 472,491 | | | | 431,688 | | | 9.5 | | | | 445,212 | | | | 398,877 | | | 11.6 | |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
| |
|
|
Total Assets | | $ | 15,358,242 | | | $ | 14,751,651 | | | 4.1 | | | $ | 15,145,698 | | | $ | 13,571,916 | | | 11.6 | |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
| |
|
|
Total interest-earning assets | | $ | 14,031,207 | | | $ | 13,542,671 | | | 3.6 | | | $ | 13,876,315 | | | $ | 12,327,954 | | | 12.6 | |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
| |
|
|
Non-interest-bearing deposits | | $ | 1,698,192 | | | $ | 1,573,004 | | | 8.0 | | | $ | 1,641,264 | | | $ | 1,402,627 | | | 17.0 | |
Interest-bearing deposits | | | 9,098,470 | | | | 8,724,960 | | | 4.3 | | | | 8,984,954 | | | | 8,102,221 | | | 10.9 | |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
| |
|
|
Total deposits | | | 10,796,662 | | | | 10,297,964 | | | 4.8 | | | | 10,626,218 | | | | 9,504,848 | | | 11.8 | |
Repos and federal funds purchased | | | 828,989 | | | | 944,788 | | | (12.3 | ) | | | 857,472 | | | | 897,438 | | | (4.5 | ) |
Debt and FHLB advances | | | 2,027,218 | | | | 1,927,205 | | | 5.2 | | | | 2,024,967 | | | | 1,601,932 | | | 26.4 | |
Liabilities of discontinued operations | | | — | | | | — | | | N/A | | | | — | | | | 201,842 | | | (100.0 | ) |
Other liabilities | | | 171,142 | | | | 133,619 | | | 28.1 | | | | 149,417 | | | | 135,923 | | | 9.9 | |
Shareholders’ equity | | | 1,534,231 | | | | 1,448,075 | | | 5.9 | | | | 1,487,624 | | | | 1,229,933 | | | 21.0 | |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
| |
|
|
Total Liabilities and Shareholders’ Equity | | $ | 15,358,242 | | | $ | 14,751,651 | | | 4.1 | | | $ | 15,145,698 | | | $ | 13,571,916 | | | 11.6 | |
| | |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
| |
|
|
ASSET QUALITY DATA:
| | | | | | | | |
| | | December 31,
| |
| | | 2005
| | | 2004
| |
Non-accrual loans | | $ | 119,030 | | | $ | 143,207 | |
Restructured loans | | | 479 | | | | 541 | |
| | |
|
|
| |
|
|
|
Total non-performing loans | | | 119,509 | | | | 143,748 | |
Investment securities | | | — | | | | 11,705 | |
Other real estate owned | | | 17,476 | | | | 10,055 | |
| | |
|
|
| |
|
|
|
Total non-performing assets | | $ | 136,985 | | | $ | 165,508 | |
| | |
|
|
| |
|
|
|
Loans 90 days or more past due & still accruing | | $ | 27,987 | | | $ | 16,243 | |
Allowance for credit losses | | | 144,461 | | | | 151,389 | |
| | |
ASSET QUALITY RATIOS: | | | | | | | | |
Non-accrual loans to total loans | | | 1.07 | % | | | 1.35 | % |
Non-performing loans to total loans | | | 1.07 | | | | 1.35 | |
Non-performing assets to total assets | | | 0.87 | | | | 1.11 | |
Loans 90 days or more past due and still accruing to total loans | | | 0.25 | | | | 0.15 | |
Allowance for credit losses to non-performing loans | | | 120.88 | | | | 105.32 | |
Allowance for credit losses to non-performing assets | | | 105.46 | | | | 91.47 | |
Allowance for credit losses to total loans | | | 1.30 | | | | 1.43 | |
| | |
| NET CHARGE-OFFS | | | | | | | | |
| |
| | | Three Months Ended
December 31,
| |
| | | 2005
| | | 2004
| |
Net charge-offs | | $ | 16,223 | | | $ | 9,864 | |
Net charge-offs to average loans | | | 0.59 | | | | 0.38 | |
| |
| | | Twelve Months Ended
December 31,
| |
| | | 2005
| | | 2004
| |
Net charge-offs | | $ | 61,785 | | | $ | 34,937 | |
Net charge-offs to average loans | | | 0.57 | | | | 0.37 | |
8
Summary Financials-Fourth Quarter 2005
SKY FINANCIAL GROUP, INC.
*NON-GAAP DISCLOSURE RECONCILIATIONS
(Dollars in thousands)
Core operating earnings reflect net income adjusted to exclude the after-tax effect of discontinued operations, merger, integration and restructuring expenses that are not reflective of on going operations or are not expected to recur and adjusted to include pro forma stock option expenses for periods that were not restated.
Cash operating earnings are core operating earnings adjusted to exclude the after-tax effect of amortizing core deposits and other intangibles. Management believes that both core operating earnings and cash operating earnings assist the investor in understanding the impact of merger, integration and restructuring expenses and amortization of intangibles on reported results.
Core operating earnings
The following reconciles GAAP income from continuing operations to core operating earnings for the three and twelve months ended December 31, 2005 and 2004:
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31,
| | | Twelve Months Ended
December 31,
| |
| | | 2005
| | | 2004
| | | 2005
| | | 2004
| |
Income from continuing operations | | $ | 53,341 | | | $ | 48,899 | | | $ | 182,191 | | | $ | 175,200 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Add: Merger, integration and restructuring expense | | | 618 | | | | 365 | | | | 1,771 | | | | 4,542 | |
Tax effect | | | (216 | ) | | | (128 | ) | | | (620 | ) | | | (1,590 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
After-tax non-operating items | | | 402 | | | | 237 | | | | 1,151 | | | | 2,952 | |
Deduct: Proforma stock option expense, net of tax | | | | | | | (1,624 | ) | | | | | | | (3,514 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Core operating earnings | | $ | 53,743 | | | $ | 47,512 | | | $ | 183,342 | | | $ | 174,638 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Merger, integration and restructuring expense in 2005 reflect charges associated with the acquisition of Belmont Bancorp in the second quarter, the cost associated with the pending acquisition of Falls Bank recorded in the third and fourth quarters and the cost associated with a potential acquisition recorded in the fourth quarter.
Merger, integration and restructuring expense in 2004 reflect charges associated with the sale of Sky Financial Solutions, Inc. in the first quarter, the acquisition of Second Bancorp in the third quarter and the acquisition of Prospect Bancshares in the fourth quarter.
Core operating earnings is used as the numerator to calculate core operating return on average assets, core operating return on average equity and core operating earnings per share. Additionally, merger, integration and restructuring expenses are deducted from non-interest expense in the numerator of the core operating efficiency ratio disclosed in the tables. The comparable information on a GAAP basis is also provided in the tables.
Cash operating earnings
The following table reconciles core operating earnings to cash operating earnings for the three and twelve months ended December 31, 2005 and 2004:
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31,
| | | Twelve Months Ended
December 31,
| |
| | | 2005
| | | 2004
| | | 2005
| | | 2004
| |
Core operating earnings | | $ | 53,743 | | | $ | 47,512 | | | $ | 183,342 | | | $ | 174,638 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Add: Amortization of core deposits and other intangible assets | | | 3,909 | | | | 3,577 | | | | 14,887 | | | | 10,979 | |
Tax effect | | | (1,368 | ) | | | (1,252 | ) | | | (5,211 | ) | | | (3,842 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
After-tax non-operating items | | | 2,541 | | | | 2,325 | | | | 9,676 | | | | 7,137 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Cash operating earnings | | $ | 56,284 | | | $ | 49,837 | | | $ | 193,018 | | | $ | 181,775 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Cash operating earnings is used as the numerator to calculate the cash operating return on average tangible equity and the cash operating return on average tangible assets. The denominator of each ratio is adjusted to deduct the average balance of intangible assets during the period. Additionally, amortization of core deposits and other intangible assets and merger, integration and restructuring expenses are deducted from non-interest expense in the numerator of the cash operating efficiency ratio disclosed in the tables. The comparable GAAP information is also included in the tables.
9
Summary Financials-Fourth Quarter 2005
The following table reconciles average GAAP equity to average tangible equity for the three and twelve months ended December 31, 2005 and 2004.
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31,
| | | Twelve Months Ended
December 31,
| |
| | | 2005
| | | 2004
| | | 2005
| | | 2004
| |
Average GAAP equity | | $ | 1,534,231 | | | $ | 1,448,075 | | | $ | 1,487,624 | | | $ | 1,229,933 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Goodwill | | | 524,288 | | | | 454,488 | | | | 496,315 | | | | 322,487 | |
Core deposits and other intangibles | | | 65,193 | | | | 73,037 | | | | 68,387 | | | | 62,194 | |
Deferred taxes | | | (22,818 | ) | | | (25,563 | ) | | | (23,935 | ) | | | (21,768 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
| | | | 566,663 | | | | 501,962 | | | | 540,767 | | | | 362,913 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Average tangible equity | | $ | 967,568 | | | $ | 946,113 | | | $ | 946,857 | | | $ | 867,020 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
|
| The following table reconciles average GAAP assets to average tangible assets for the three and twelve months ended December 31, 2005 and 2004: | |
| | |
| | | Three Months Ended
December 31,
| | | Twelve Months Ended
December 31,
| |
| | | 2005
| | | 2004
| | | 2005
| | | 2004
| |
Average GAAP assets (excluding discontinued operations) | | $ | 15,358,242 | | | $ | 14,751,651 | | | $ | 15,145,698 | | | $ | 13,356,903 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Goodwill | | | 524,288 | | | | 454,488 | | | | 496,315 | | | | 322,487 | |
Core deposits and other intangibles | | | 65,193 | | | | 73,037 | | | | 68,387 | | | | 62,194 | |
Deferred taxes | | | (22,818 | ) | | | (25,563 | ) | | | (23,935 | ) | | | (21,768 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
| | | | 566,663 | | | | 501,962 | | | | 540,767 | | | | 362,913 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Average tangible assets | | $ | 14,791,579 | | | $ | 14,249,689 | | | $ | 14,604,931 | | | $ | 12,993,990 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
|
The following table reconciles GAAP earnings per share to operating earnings per share, core operating earnings per share and cash operating earnings per share (certain information does not add due to rounding): Basic EPS | |
| | | Three Months Ended
December 31,
| | | Twelve Months Ended December 31,
| |
| | | 2005
| | | 2004
| | | 2005
| | | 2004
| |
Net income | | $ | 0.50 | | | $ | 0.47 | | | $ | 1.71 | | | $ | 1.95 | |
After-tax earnings from discontinued operations | | | (0.00 | ) | | | 0.00 | | | | (0.00 | ) | | | (0.19 | ) |
After-tax merger, integration and restructuring | | | 0.00 | | | | 0.00 | | | | 0.01 | | | | 0.03 | |
Deduct: Proforma stock option expense, net of tax | | | | | | | (0.02 | ) | | | | | | | (0.04 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Core operating earnings | | | 0.50 | | | | 0.45 | | | | 1.72 | | | | 1.76 | |
After-tax amortization of core deposits and other intangible assets | | | 0.02 | | | | 0.02 | | | | 0.09 | | | | 0.07 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Cash operating earnings | | $ | 0.52 | | | $ | 0.47 | | | $ | 1.81 | | | $ | 1.83 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
| | | | |
| Diluted EPS | | | | | | | | | | | | | | | | |
| | |
| | | Three Months Ended December 31,
| | | Twelve Months Ended
December 31,
| |
| | | 2005
| | | 2004
| | | 2005
| | | 2004
| |
Net income | | $ | 0.49 | | | $ | 0.46 | | | $ | 1.69 | | | $ | 1.93 | |
After-tax earnings from discontinued operations | | | (0.00 | ) | | | (0.00 | ) | | | (0.00 | ) | | | (0.19 | ) |
After-tax merger, integration and restructuring | | | 0.00 | | | | 0.00 | | | | 0.01 | | | | 0.03 | |
Deduct: Proforma stock option expense, net of tax | | | | | | | (0.02 | ) | | | | | | | (0.03 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Core operating earnings | | | 0.49 | | | | 0.44 | | | | 1.70 | | | | 1.74 | |
After-tax amortization of core deposits and other intangible assets | | | 0.02 | | | | 0.02 | | | | 0.09 | | | | 0.07 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Cash operating earnings | | $ | 0.52 | | | $ | 0.47 | | | $ | 1.79 | | | $ | 1.81 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
– end –
10
Fourth Quarter 2005
Supplemental Financial Information
January 19, 2006
Supplemental Financial Information - Fourth Quarter 2005
SKY FINANCIAL GROUP, INC.
FIVE QUARTERS STATEMENTS OF INCOME (unaudited)
(Dollars in thousands)
| | | | | | | | | | | | | | | |
| | | 2005
| | 2004
|
| | | 4th qtr
| | 3rd qtr
| | 2nd qtr
| | 1st qtr
| | 4th qtr
|
Fully taxable equivalent interest income | | $ | 224,108 | | $ | 213,223 | | $ | 203,841 | | $ | 192,410 | | $ | 186,929 |
| | |
|
| |
|
| |
|
| |
|
| |
|
|
Interest income | | $ | 223,243 | | $ | 212,358 | | $ | 203,029 | | $ | 191,594 | | $ | 186,124 |
Interest expense | | | 91,017 | | | 81,939 | | | 75,029 | | | 67,587 | | | 61,819 |
| | |
|
| |
|
| |
|
| |
|
| |
|
|
Net interest income | | | 132,226 | | | 130,419 | | | 128,000 | | | 124,007 | | | 124,305 |
Provision for credit losses | | | 6,807 | | | 8,725 | | | 5,894 | | | 30,823 | | | 11,615 |
| | |
|
| |
|
| |
|
| |
|
| |
|
|
Net interest income after provision for credit losses | | | 125,419 | | | 121,694 | | | 122,106 | | | 93,184 | | | 112,690 |
| | |
|
| |
|
| |
|
| |
|
| |
|
|
Non-interest income | | | | | | | | | | | | | | | |
Trust services income | | | 5,511 | | | 5,598 | | | 5,395 | | | 5,414 | | | 4,996 |
Service charges and fees on deposit accounts | | | 14,578 | | | 14,786 | | | 14,033 | | | 12,173 | | | 13,395 |
Mortgage banking income | | | 5,632 | | | 7,681 | | | 5,923 | | | 5,755 | | | 5,675 |
Brokerage and insurance commissions | | | 14,519 | | | 13,896 | | | 14,127 | | | 16,630 | | | 13,358 |
Net securities gains (losses) | | | 1,553 | | | 147 | | | 1,084 | | | 878 | | | 8,310 |
Other income | | | 14,412 | | | 10,082 | | | 10,954 | | | 10,621 | | | 11,918 |
| | |
|
| |
|
| |
|
| |
|
| |
|
|
Total non-interest income | | | 56,205 | | | 52,190 | | | 51,516 | | | 51,471 | | | 57,652 |
| | |
|
| |
|
| |
|
| |
|
| |
|
|
Non-interest expenses | | | | | | | | | | | | | | | |
Salaries and employee benefits | | | 53,251 | | | 53,120 | | | 54,679 | | | 53,505 | | | 53,190 |
Occupancy and equipment expense | | | 17,209 | | | 16,754 | | | 16,835 | | | 17,604 | | | 16,824 |
Merger, integration and restructuring expense | | | 618 | | | 122 | | | 1,031 | | | — | | | 365 |
Other operating expenses | | | 30,037 | | | 27,444 | | | 29,508 | | | 28,330 | | | 27,452 |
| | |
|
| |
|
| |
|
| |
|
| |
|
|
Total non-interest expense | | | 101,115 | | | 97,440 | | | 102,053 | | | 99,439 | | | 97,831 |
| | |
|
| |
|
| |
|
| |
|
| |
|
|
Income from continuing operations before income taxes | | | 80,509 | | | 76,444 | | | 71,569 | | | 45,216 | | | 72,511 |
Income taxes from continuing operations | | | 27,168 | | | 26,099 | | | 23,783 | | | 14,497 | | | 23,612 |
| | |
|
| |
|
| |
|
| |
|
| |
|
|
Income from continuing operations | | | 53,341 | | | 50,345 | | | 47,786 | | | 30,719 | | | 48,899 |
| | |
|
| |
|
| |
|
| |
|
| |
|
|
Income from discontinued operations, net of tax | | | 372 | | | — | | | — | | | — | | | 430 |
Net income | | $ | 53,713 | | $ | 50,345 | | $ | 47,786 | | $ | 30,719 | | $ | 49,329 |
| | |
|
| |
|
| |
|
| |
|
| |
|
|
Core operating earnings | | $ | 53,743 | | $ | 50,424 | | $ | 48,456 | | $ | 30,719 | | $ | 47,512 |
| | |
|
| |
|
| |
|
| |
|
| |
|
|
Note: During the fourth quarter of 2005, Sky Financial adopted Financial Accounting Standards No. 123(R)Share Based Payment (FAS 123(R)). Sky Financial adopted FAS 123(R) using the modified retrospective method and restated the first three interim quarters of 2005 using the pro forma expense original disclosed in those quarters; 2004 and previous years have not been restated on a GAAP basis. As such, the first three quarters presented above have been restated from the amounts originally reported to included expense related to stock options. The additional salary and employee benefits expense was recorded as follows: (1) first quarter - $1.2 million ($0.8 million after tax); (2) second quarter - $1.1 million ($0.7 million after tax); (3) third quarter - $1.0 million ($0.7 million after tax); and (4) fourth quarter - $0.8 million ($0.6 million after tax).
1
Supplemental Financial Information - Fourth Quarter 2005
SKY FINANCIAL GROUP, INC.
FIVE QUARTER PERFORMANCE RATIOS AND SHARE DATA
(Unaudited)
PERFORMANCE RATIOS
| | | | | | | | | | | | | | | |
| | | 2005
| | | 2004
| |
| | | 4th qtr
| | | 3rd qtr
| | | 2nd qtr
| | | 1st qtr
| | | 4th qtr
| |
Return on average equity | | 13.89 | % | | 13.20 | % | | 13.32 | % | | 8.51 | % | | 13.55 | % |
Return on average assets | | 1.39 | | | 1.31 | | | 1.27 | | | 0.84 | | | 1.33 | |
| | | | | |
| CONTINUING OPERATIONS | | | | | | | | | | | | | | | |
| | | |
| | | 2005
| | |
| | | 2004
| |
| | | 4th qtr
| | | 3rd qtr
| | | 2nd qtr
| | | 1st qtr
| | | 4th qtr
| |
Return on average equity | | 13.79 | % | | 13.20 | % | | 13.32 | % | | 8.51 | % | | 13.43 | % |
Return on average assets | | 1.38 | | | 1.31 | | | 1.27 | | | 0.84 | | | 1.32 | |
Net interest rate spread (FTE) | | 3.32 | | | 3.35 | | | 3.37 | | | 3.36 | | | 3.37 | |
Net interest rate margin (FTE) | | 3.76 | | | 3.75 | | | 3.73 | | | 3.69 | | | 3.68 | |
Efficiency ratio | | 53.42 | | | 53.11 | | | 56.59 | | | 56.41 | | | 53.53 | |
| | | | | |
| CORE OPERATING * | | | | | | | | | | | | | | | |
| | | |
| | | 2005
| | |
| | | 2004
| |
| | | 4th qtr
| | | 3rd qtr
| | | 2nd qtr
| | | 1st qtr
| | | 4th qtr
| |
Return on average equity | | 13.90 | % | | 13.22 | % | | 13.51 | % | | 8.51 | % | | 13.05 | % |
Return on average assets | | 1.39 | | | 1.32 | | | 1.29 | | | 0.84 | | | 1.28 | |
Efficiency ratio | | 53.09 | | | 53.04 | | | 56.02 | | | 56.41 | | | 54.22 | |
| | | | | |
| CASH OPERATING* | | | | | | | | | | | | | | | |
| | | |
| | | 2005
| | |
| | | 2004
| |
| | | 4th qtr
| | | 3rd qtr
| | | 2nd qtr
| | | 1st qtr
| | | 4th qtr
| |
Return on average tangible equity | | 23.08 | % | | 21.87 | % | | 22.33 | % | | 14.13 | % | | 20.96 | % |
Return on average assets | | 1.51 | | | 1.43 | | | 1.40 | | | 0.93 | | | 1.39 | |
Efficiency ratio | | 51.02 | | | 50.96 | | | 54.02 | | | 54.39 | | | 52.74 | |
2
Supplemental Financial Information - Fourth Quarter 2005
SKY FINANCIAL GROUP, INC.
FIVE QUARTER SHARE DATA
(Unaudited)
| | | | | | | | | | | | | | | |
| | | 2005
| | 2004
|
| | | 4th qtr
| | 3rd qtr
| | 2nd qtr
| | 1st qtr
| | 4th qtr
|
Earnings per share from continuing operations | | | | | | | | | | | | | | | |
Basic | | $ | 0.49 | | $ | 0.47 | | $ | 0.45 | | $ | 0.29 | | $ | 0.46 |
Diluted | | | 0.49 | | | 0.46 | | | 0.45 | | | 0.29 | | | 0.46 |
Earnings per share from discontinued operations | | | | | | | | | | | | | | | |
Basic | | | 0.00 | | | — | | | — | | | — | | | 0.00 |
Diluted | | | 0.00 | | | — | | | — | | | — | | | 0.00 |
Earnings per share | | | | | | | | | | | | | | | |
Basic | | | 0.50 | | | 0.47 | | | 0.45 | | | 0.29 | | | 0.47 |
Diluted | | | 0.49 | | | 0.46 | | | 0.45 | | | 0.29 | | | 0.46 |
Core operating earnings per share* | | | | | | | | | | | | | | | |
Basic | | | 0.50 | | | 0.47 | | | 0.46 | | | 0.29 | | | 0.45 |
Diluted | | | 0.49 | | | 0.47 | | | 0.45 | | | 0.29 | | | 0.44 |
Cash operating earnings per share* | | | | | | | | | | | | | | | |
Basic | | | 0.52 | | | 0.49 | | | 0.48 | | | 0.31 | | | 0.47 |
Diluted | | | 0.52 | | | 0.49 | | | 0.48 | | | 0.31 | | | 0.47 |
Cash dividend declared per common share | | | 0.23 | | | 0.22 | | | 0.22 | | | 0.22 | | | 0.22 |
Book value per share | | | 14.35 | | | 14.12 | | | 13.97 | | | 13.31 | | | 13.77 |
Average shares outstanding | | | | | | | | | | | | | | | |
Basic | | | 107,844,000 | | | 107,236,000 | | | 105,752,000 | | | 106,330,000 | | | 105,922,000 |
Diluted | | | 109,008,000 | | | 108,431,000 | | | 106,888,000 | | | 107,591,000 | | | 107,163,000 |
Book value calculation shares outstanding | | | 108,307,601 | | | 107,469,752 | | | 107,183,099 | | | 105,752,028 | | | 106,838,511 |
3
Supplemental Financial Information - Fourth Quarter 2005
SKY FINANCIAL GROUP, INC.
FIVE QUARTER AVERAGE BALANCE SHEETS (Unaudited)
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | |
| | | 2005
| | | 2004
| |
| | | 4th qtr
| | | 3rd qtr
| | | 2nd qtr
| | | 1st qtr
| | | 4th qtr
| |
Cash and due from banks | | $ | 249,407 | | | $ | 266,045 | | | $ | 236,822 | | | $ | 238,742 | | | $ | 244,726 | |
Interest-earning deposits with banks | | | 16,690 | | | | 30,680 | | | | 34,747 | | | | 37,938 | | | | 36,498 | |
Federal funds sold | | | 930 | | | | 1,033 | | | | 3,164 | | | | — | | | | 2,186 | |
Loans held for sale | | | 18,048 | | | | 27,661 | | | | 21,832 | | | | 21,935 | | | | 27,601 | |
Securities available for sale | | | 3,049,214 | | | | 3,042,872 | | | | 3,077,456 | | | | 3,054,277 | | | | 3,075,580 | |
Total loans | | | 10,946,325 | | | | 10,791,361 | | | | 10,721,064 | | | | 10,604,408 | | | | 10,400,806 | |
Allowance for loan losses | | | (149,914 | ) | | | (152,901 | ) | | | (150,898 | ) | | | (149,925 | ) | | | (149,288 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Net loans | | | 10,796,411 | | | | 10,638,460 | | | | 10,570,166 | | | | 10,454,483 | | | | 10,251,518 | |
Premises and equipment | | | 165,570 | | | | 167,698 | | | | 159,843 | | | | 156,942 | | | | 154,329 | |
Goodwill and other intangibles | | | 589,481 | | | | 577,631 | | | | 549,951 | | | | 541,086 | | | | 527,525 | |
Other assets | | | 472,491 | | | | 445,424 | | | | 441,068 | | | | 421,298 | | | | 431,688 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total Assets | | $ | 15,358,242 | | | $ | 15,197,504 | | | $ | 15,095,049 | | | $ | 14,926,701 | | | $ | 14,751,651 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total interest-earning assets | | $ | 14,031,207 | | | $ | 13,893,607 | | | $ | 13,858,263 | | | $ | 13,718,558 | | | $ | 13,542,671 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Non-interest-bearing deposits | | $ | 1,698,192 | | | $ | 1,679,171 | | | $ | 1,622,138 | | | $ | 1,563,661 | | | $ | 1,573,004 | |
Interest-bearing deposits | | | 9,098,470 | | | | 9,083,148 | | | | 8,895,799 | | | | 8,858,682 | | | | 8,724,960 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total deposits | | | 10,796,662 | | | | 10,762,319 | | | | 10,517,937 | | | | 10,422,343 | | | | 10,297,964 | |
Repos and federal funds purchased | | | 828,989 | | | | 794,554 | | | | 892,024 | | | | 915,969 | | | | 944,788 | |
Debt and FHLB advances | | | 2,027,218 | | | | 1,980,981 | | | | 2,109,609 | | | | 1,982,049 | | | | 1,927,205 | |
Other liabilities | | | 171,142 | | | | 146,767 | | | | 137,036 | | | | 142,437 | | | | 133,619 | |
Shareholders’ equity | | | 1,534,231 | | | | 1,512,883 | | | | 1,438,443 | | | | 1,463,903 | | | | 1,448,075 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total Liabilities and Shareholders’ Equity | | $ | 15,358,242 | | | $ | 15,197,504 | | | $ | 15,095,049 | | | $ | 14,926,701 | | | $ | 14,751,651 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
4
Supplemental Financial Information - Fourth Quarter 2005
SKY FINANCIAL GROUP, INC.
FIVE QUARTER PERIOD END BALANCE SHEETS (Unaudited)
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | |
| | | 2005
| | | 2004
| |
| | | 4th qtr
| | | 3rd qtr
| | | 2nd qtr
| | | 1st qtr
| | | 4th qtr
| |
Cash and due from banks | | $ | 318,114 | | | $ | 289,089 | | | $ | 284,906 | | | $ | 217,333 | | | $ | 232,407 | |
Interest-earning deposits with banks | | | 15,037 | | | | 14,196 | | | | 19,245 | | | | 27,696 | | | | 32,919 | |
Loans held for sale | | | 24,184 | | | | 20,685 | | | | 14,979 | | | | 27,946 | | | | 9,433 | |
Securities available for sale | | | 3,097,472 | | | | 3,052,117 | | | | 3,056,836 | | | | 3,063,145 | | | | 3,091,813 | |
Total loans | | | 11,149,222 | | | | 10,914,530 | | | | 10,821,336 | | | | 10,662,957 | | | | 10,616,118 | |
Allowance for loan losses | | | (144,461 | ) | | | (153,351 | ) | | | (152,543 | ) | | | (150,122 | ) | | | (151,389 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Net loans | | | 11,004,761 | | | | 10,761,179 | | | | 10,668,793 | | | | 10,512,835 | | | | 10,464,729 | |
Premises and equipment | | | 166,797 | | | | 165,517 | | | | 167,132 | | | | 156,829 | | | | 155,466 | |
Goodwill and other intangibles | | | 595,499 | | | | 582,798 | | | | 577,008 | | | | 539,678 | | | | 546,932 | |
Other assets | | | 461,427 | | | | 451,384 | | | | 431,602 | | | | 432,350 | | | | 410,724 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total Assets | | $ | 15,683,291 | | | $ | 15,336,965 | | | $ | 15,220,501 | | | $ | 14,977,812 | | | $ | 14,944,423 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total interest-earning assets | | $ | 14,285,915 | | | $ | 14,001,528 | | | $ | 13,912,396 | | | $ | 13,781,744 | | | $ | 13,750,283 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Non-interest-bearing deposits | | $ | 1,734,113 | | | $ | 1,722,735 | | | $ | 1,689,340 | | | $ | 1,557,454 | | | $ | 1,592,510 | |
Interest-bearing deposits | | | 9,021,563 | | | | 9,132,059 | | | | 8,920,127 | | | | 8,883,838 | | | | 8,759,081 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total deposits | | | 10,755,676 | | | | 10,854,794 | | | | 10,609,467 | | | | 10,441,292 | | | | 10,351,591 | |
Repos and federal funds purchased | | | 1,053,244 | | | | 780,585 | | | | 845,146 | | | | 942,150 | | | | 1,041,361 | |
Debt and FHLB advances | | | 2,125,788 | | | | 1,963,594 | | | | 2,110,206 | | | | 2,043,946 | | | | 1,924,840 | |
Other liabilities | | | 194,706 | | | | 220,937 | | | | 158,483 | | | | 143,244 | | | | 155,676 | |
Shareholders’ equity | | | 1,553,877 | | | | 1,517,054 | | | | 1,497,199 | | | | 1,407,181 | | | | 1,470,955 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total Liabilities and Shareholders’ Equity | | $ | 15,683,291 | | | $ | 15,336,964 | | | $ | 15,220,501 | | | $ | 14,977,813 | | | $ | 14,944,423 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
5
Supplemental Financial Information - Fourth Quarter 2005
SKY FINANCIAL GROUP, INC.
FIVE QUARTER LOAN TABLE (Unaudited)
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | |
| | | 2005
| | | 2004
| |
| | | 4th qtr
| | | 3rd qtr
| | | 2nd qtr
| | | 1st qtr
| | | 4th qtr
| |
PERIOD END | | | | | | | | | | | | | | | | | | | | |
Residential Mortgage | | $ | 1,134,698 | | | $ | 1,096,703 | | | $ | 1,105,896 | | | $ | 1,082,756 | | | $ | 1,110,943 | |
Home Equity | | | 1,730,752 | | | | 1,737,937 | | | | 1,751,449 | | | | 1,701,716 | | | | 1,728,599 | |
Consumer | | | 711,197 | | | | 736,363 | | | | 768,837 | | | | 797,857 | | | | 807,686 | |
Commercial Real Estate | | | 4,552,226 | | | | 4,447,272 | | | | 4,479,275 | | | | 4,408,069 | | | | 4,406,151 | |
Commercial & Industrial | | | 3,020,349 | | | | 2,896,255 | | | | 2,715,879 | | | | 2,672,559 | | | | 2,562,739 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total Loans | | $ | 11,149,222 | | | $ | 10,914,530 | | | $ | 10,821,336 | | | $ | 10,662,957 | | | $ | 10,616,118 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Residential Mortgage | | | 10 | % | | | 10 | % | | | 10 | % | | | 10 | % | | | 10 | % |
Home Equity | | | 16 | % | | | 16 | % | | | 16 | % | | | 16 | % | | | 16 | % |
Consumer | | | 6 | % | | | 7 | % | | | 7 | % | | | 8 | % | | | 8 | % |
Commercial Real Estate | | | 41 | % | | | 41 | % | | | 42 | % | | | 41 | % | | | 42 | % |
Commercial & Industrial | | | 27 | % | | | 26 | % | | | 25 | % | | | 25 | % | | | 24 | % |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total Loans | | | 100 | % | | | 100 | % | | | 100 | % | | | 100 | % | | | 100 | % |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
| | |
| | | 2005
| | | 2004
| |
| | | 4th qtr
| | | 3rd qtr
| | | 2nd qtr
| | | 1st qtr
| | | 4th qtr
| |
AVERAGES | | | | | | | | | | | | | | | | | | | | |
Residential Mortgage | | $ | 1,106,292 | | | $ | 1,102,936 | | | $ | 1,088,328 | | | $ | 1,103,778 | | | $ | 1,067,456 | |
Home Equity | | | 1,732,682 | | | | 1,745,278 | | | | 1,721,724 | | | | 1,717,047 | | | | 1,694,828 | |
Consumer | | | 724,727 | | | | 755,634 | | | | 777,458 | | | | 798,477 | | | | 826,807 | |
Commercial Real Estate | | | 4,536,494 | | | | 4,419,506 | | | | 4,451,084 | | | | 4,405,092 | | | | 4,281,441 | |
Commercial & Industrial | | | 2,846,130 | | | | 2,768,007 | | | | 2,682,470 | | | | 2,580,014 | | | | 2,530,274 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total Loans | | $ | 10,946,325 | | | $ | 10,791,361 | | | $ | 10,721,064 | | | $ | 10,604,408 | | | $ | 10,400,806 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Residential Mortgage | | | 10 | % | | | 10 | % | | | 10 | % | | | 10 | % | | | 10 | % |
Home Equity | | | 16 | % | | | 16 | % | | | 16 | % | | | 16 | % | | | 16 | % |
Consumer | | | 7 | % | | | 7 | % | | | 7 | % | | | 8 | % | | | 8 | % |
Commercial Real Estate | | | 41 | % | | | 41 | % | | | 42 | % | | | 42 | % | | | 42 | % |
Commercial & Industrial | | | 26 | % | | | 26 | % | | | 25 | % | | | 24 | % | | | 24 | % |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total Loans | | | 100 | % | | | 100 | % | | | 100 | % | | | 100 | % | | | 100 | % |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
6
Supplemental Financial Information - Fourth Quarter 2005
SKY FINANCIAL GROUP, INC.
FIVE QUARTER FUNDING TABLE (Unaudited)
(Dollars in thousands)
| | | | | | | | | | | | | | | |
| | | 2005
| | 2004
|
| | | 4th qtr
| | 3rd qtr
| | 2nd qtr
| | 1st qtr
| | 4th qtr
|
PERIOD END | | | | | | | | | | | | | | | |
Non-interest-bearing demand deposits | | $ | 1,734,113 | | $ | 1,722,735 | | $ | 1,689,340 | | $ | 1,557,454 | | $ | 1,592,510 |
Interest-bearing demand deposits | | | 333,491 | | | 410,783 | | | 367,174 | | | 359,620 | | | 325,751 |
Savings deposits | | | 3,416,583 | | | 3,585,227 | | | 3,670,735 | | | 3,825,900 | | | 3,874,943 |
Time deposits | | | 5,271,489 | | | 5,136,049 | | | 4,882,218 | | | 4,698,318 | | | 4,558,387 |
| | |
|
| |
|
| |
|
| |
|
| |
|
|
Total deposits | | | 10,755,676 | | | 10,854,794 | | | 10,609,467 | | | 10,441,292 | | | 10,351,591 |
| | |
|
| |
|
| |
|
| |
|
| |
|
|
Short-term borrowings | | | 1,053,244 | | | 780,585 | | | 846,268 | | | 942,150 | | | 1,041,361 |
Trust preferred securities | | | 184,798 | | | 187,790 | | | 190,491 | | | 188,326 | | | 189,558 |
Debt and FHLB advances | | | 1,940,990 | | | 1,775,804 | | | 1,918,593 | | | 1,855,620 | | | 1,735,282 |
| | |
|
| |
|
| |
|
| |
|
| |
|
|
Total funding sources | | $ | 13,934,708 | | $ | 13,598,973 | | $ | 13,564,819 | | $ | 13,427,388 | | $ | 13,317,792 |
| | |
|
| |
|
| |
|
| |
|
| |
|
|
| | |
| | | 2005
| | 2004
|
| | | 4th qtr
| | 3rd qtr
| | 2nd qtr
| | 1st qtr
| | 4th qtr
|
AVERAGE | | | | | | | | | | | | | | | |
Non-interest-bearing demand deposits | | $ | 1,698,192 | | $ | 1,679,171 | | $ | 1,622,138 | | $ | 1,563,661 | | $ | 1,573,004 |
Interest-bearing demand deposits | | | 368,885 | | | 400,426 | | | 357,348 | | �� | 347,180 | | | 362,352 |
Savings deposits | | | 3,524,370 | | | 3,651,598 | | | 3,751,675 | | | 3,879,783 | | | 3,939,766 |
Time deposits | | | 5,205,215 | | | 5,031,124 | | | 4,786,776 | | | 4,631,719 | | | 4,422,842 |
| | |
|
| |
|
| |
|
| |
|
| |
|
|
Total deposits | | | 10,796,662 | | | 10,762,319 | | | 10,517,937 | | | 10,422,343 | | | 10,297,964 |
| | |
|
| |
|
| |
|
| |
|
| |
|
|
Short-term borrowings | | | 828,989 | | | 794,554 | | | 894,356 | | | 915,969 | | | 944,788 |
Trust preferred securities | | | 185,934 | | | 189,509 | | | 189,801 | | | 189,726 | | | 186,669 |
Debt and FHLB advances | | | 1,841,284 | | | 1,791,472 | | | 1,917,476 | | | 1,792,323 | | | 1,740,536 |
| | |
|
| |
|
| |
|
| |
|
| |
|
|
Total funding sources | | $ | 13,652,869 | | $ | 13,537,854 | | $ | 13,519,570 | | $ | 13,320,361 | | $ | 13,169,957 |
| | |
|
| |
|
| |
|
| |
|
| |
|
|
7
Supplemental Financial Information - Fourth Quarter 2005
ASSET QUALITY DATA:
| | | | | | | | | | | | | | | |
| | | 2005
| | 2004
|
| | | 4th qtr
| | 3rd qtr
| | 2nd qtr
| | 1st qtr
| | 4th qtr
|
Non-accrual loans | | $ | 119,030 | | $ | 126,131 | | $ | 126,537 | | $ | 125,464 | | $ | 143,207 |
Restructured loans | | | 479 | | | 495 | | | 516 | | | 526 | | | 541 |
| | |
|
| |
|
| |
|
| |
|
| |
|
|
Total non-performing loans | | | 119,509 | | | 126,626 | | | 127,053 | | | 125,990 | | | 143,748 |
Investment securities | | | — | | | 10,299 | | | 10,395 | | | 11,705 | | | 11,705 |
Other real estate owned | | | 17,476 | | | 14,700 | | | 11,511 | | | 11,854 | | | 10,055 |
| | |
|
| |
|
| |
|
| |
|
| |
|
|
Total non-performing assets | | $ | 136,985 | | $ | 151,625 | | $ | 148,959 | | $ | 149,549 | | $ | 165,508 |
| | |
|
| |
|
| |
|
| |
|
| |
|
|
Loans 90 days or more past due & still accruing | | $ | 27,987 | | $ | 24,424 | | $ | 25,848 | | $ | 26,885 | | $ | 16,243 |
Net charge-offs | | | 16,223 | | | 7,997 | | | 5,817 | | | 31,748 | | | 9,864 |
Allowance for loan losses | | | 144,461 | | | 153,351 | | | 152,543 | | | 150,122 | | | 151,389 |
ASSET QUALITY RATIOS:
| | | | | | | | | | | | | | | |
| | | 2005
| | | 2004
| |
| | | 4th qtr
| | | 3rd qtr
| | | 2nd qtr
| | | 1st qtr
| | | 4th qtr
| |
Non-accrual loans to total loans | | 1.07 | % | | 1.16 | % | | 1.17 | % | | 1.18 | % | | 1.35 | % |
Non-performing loans to total loans | | 1.07 | | | 1.16 | | | 1.17 | | | 1.18 | | | 1.35 | |
Non-performing assets to total assets | | 0.87 | | | 0.99 | | | 0.98 | | | 1.00 | | | 1.11 | |
Loans 90 days or more past due and still accruing to total loans | | 0.25 | | | 0.22 | | | 0.24 | | | 0.25 | | | 0.15 | |
Net charge-offs to average loans | | 0.59 | | | 0.29 | | | 0.22 | | | 1.21 | | | 0.38 | |
Allowance for loan losses to non-performing loans | | 120.88 | | | 121.11 | | | 120.06 | | | 119.15 | | | 105.32 | |
Allowance for loan losses to non-performing assets | | 105.46 | | | 101.14 | | | 102.41 | | | 100.38 | | | 91.47 | |
Allowance for loan losses to total loans | | 1.30 | | | 1.41 | | | 1.41 | | | 1.41 | | | 1.43 | |
8
Supplemental Financial Information - Fourth Quarter 2005
SKY FINANCIAL GROUP, INC.
*NON-GAAP DISCLOSURE RECONCILIATIONS
(Dollars in thousands)
Core operating earnings reflect net income adjusted to exclude the after-tax effect of discontinued operations, merger, integration and restructuring expenses that are not reflective of on going operations or are not expected to recur and adjusted to include pro forma stock option expenses for periods that were not restated.
Cash operating earnings are core operating earnings adjusted to exclude the after-tax effect of amortizing core deposits and other intangibles. Management believes that both core operating earnings and cash operating earnings assist the investor in understanding the impact of merger, integration and restructuring expenses and amortization of intangibles on reported results.
Core operating earnings
The following reconciles GAAP income from continuing operations to core operating earnings for the twelve months ended December 31, 2005 and 2004 for each of the five quarters presented in the tables:
| | | | | | | | |
| | | Twelve Months Ended
December 31,
| |
| | | 2005
| | | 2004
| |
Income from continuing operations | | $ | 182,191 | | | $ | 175,200 | |
Merger, integration and restructuring expense | | | 1,771 | | | | 4,542 | |
Tax effect | | | (620 | ) | | | (1,590 | ) |
| | |
|
|
| |
|
|
|
After-tax non-operating items | | | 1,151 | | | | 2,952 | |
Less: Proforma stock option compensation expense, net of tax benefit | | | — | | | | (3,514 | ) |
| | |
|
|
| |
|
|
|
Core operating earnings | | $ | 183,342 | | | $ | 174,638 | |
| | |
|
|
| |
|
|
|
| | | | | | | | | | | | | | | | | | | |
| | | 2005
| | 2004
| |
| | | 4th qtr
| | | 3rd qtr
| | | 2nd qtr
| | | 1st qtr
| | 4th qtr
| |
Income from continuing operations | | $ | 53,341 | | | $ | 50,345 | | | $ | 47,786 | | | $ | 30,719 | | $ | 48,899 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
| |
|
|
|
Merger, integration and restructuring expense | | | 618 | | | | 122 | | | | 1,031 | | | | — | | | 365 | |
Tax effect | | | (216 | ) | | | (43 | ) | | | (361 | ) | | | — | | | (128 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
| |
|
|
|
After-tax non-operating items | | | 402 | | | | 79 | | | | 670 | | | | — | | | 237 | |
Less: Proforma stock option compensation expense, net of tax benefit | | | — | | | | — | | | | — | | | | — | | | (1,624 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
| |
|
|
|
Core operating earnings | | $ | 53,743 | | | $ | 50,424 | | | $ | 48,456 | | | $ | 30,719 | | $ | 47,512 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
| |
|
|
|
Merger, integration and restructuring expense in 2005 reflect charges associated with the acquisition of Belmont Bancorp in the second quarter, the cost associated with the acquisition of Falls Bank recorded in the third and fourth quarters and the cost associated with a potential acquisition recorded in the fourth quarter. Merger, integration and restructuring expense in 2004 reflect charges associated with the sale of Sky Financial Solutions, Inc. in the first quarter, the acquisition of Second Bancorp in the third quarter and the acquisition of Prospect Bancshares in the fourth quarter.
Core operating earnings is used as the numerator to calculate core operating return on average assets, core operating return on average equity and core operating earnings per share. Additionally, merger, integration and restructuring expenses are deducted from non-interest expense in the numerator of the core operating efficiency ratio disclosed in the tables. The comparable information on a GAAP basis is also provided in the tables.
9
Supplemental Financial Information - Fourth Quarter 2005
Cash operating earnings
The following reconciles core operating earnings to cash operating earnings for the twelve months ended December 31, 2005 and 2004 as well as for each of the five quarters presented in these tables:
| | | | | | | | |
| | | Twelve Months Ended
December 31,
| |
| | | 2005
| | | 2004
| |
Core operating earnings | | $ | 183,342 | | | $ | 174,638 | |
| | |
|
|
| |
|
|
|
Amortization of core deposits and other intangible assets | | | 14,887 | | | | 10,979 | |
Tax effect | | | (5,211 | ) | | | (3,842 | ) |
| | |
|
|
| |
|
|
|
After-tax non-operating items | | | 9,676 | | | | 7,137 | |
| | |
|
|
| |
|
|
|
Cash operating earnings | | $ | 193,018 | | | $ | 181,775 | |
| | |
|
|
| |
|
|
|
| | | | | | | | | | | | | | | | | | | | |
| | | 2005
| | | 2004
| |
| | | 4th qtr
| | | 3rd qtr
| | | 2nd qtr
| | | 1st qtr
| | | 4th qtr
| |
Core operating earnings | | $ | 53,743 | | | $ | 50,424 | | | $ | 48,456 | | | $ | 30,719 | | | $ | 47,512 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Amortization of core deposits and other intangible assets | | | 3,909 | | | | 3,814 | | | | 3,610 | | | | 3,554 | | | | 3,577 | |
Tax effect | | | (1,368 | ) | | | (1,335 | ) | | | (1,264 | ) | | | (1,244 | ) | | | (1,252 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
After-tax non-operating items | | | 2,541 | | | | 2,479 | | | | 2,346 | | | | 2,310 | | | | 2,325 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Cash operating earnings | | $ | 56,284 | | | $ | 52,903 | | | $ | 50,802 | | | $ | 33,029 | | | $ | 49,837 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Cash operating earnings is used as the numerator to calculate the cash operating return on average tangible equity and the cash operating return on average tangible assets. The denominator of each ratio is adjusted to deduct the average balance of intangible assets during the period. Additionally, amortization of core deposits and other intangible assets and merger, integration and restructuring expenses are deducted from non-interest expense in the numerator of the cash operating efficiency ratio disclosed in the tables. The comparable GAAP information is also included in the tables.
10
Supplemental Financial Information - Fourth Quarter 2005
The following table reconciles average GAAP equity to average tangible equity for the three and twelve months ended December 31, 2005 and 2004, as well as each of the period ends presented in the tables.
| | | | | | | | |
| | | December 31,
| |
| | | 2005
| | | 2004
| |
Average GAAP equity | | $ | 1,487,624 | | | $ | 1,229,933 | |
| | |
|
|
| |
|
|
|
Goodwill | | | 496,315 | | | | 322,487 | |
Core deposits and other intangibles | | | 68,387 | | | | 62,194 | |
Deferred taxes | | | (23,935 | ) | | | (21,768 | ) |
| | |
|
|
| |
|
|
|
| | | | 540,767 | | | | 362,913 | |
| | |
|
|
| |
|
|
|
Average tangible equity | | $ | 946,857 | | | $ | 867,020 | |
| | |
|
|
| |
|
|
|
| | | | | | | | | | | | | | | | | | | | |
| | | 2005
| | | 2004
| |
| | | 4th qtr
| | | 3rd qtr
| | | 2nd qtr
| | | 1st qtr
| | | 4th qtr
| |
Average GAAP equity | | $ | 1,534,231 | | | $ | 1,512,883 | | | $ | 1,438,443 | | | $ | 1,463,903 | | | $ | 1,448,075 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Goodwill | | | 524,288 | | | | 507,944 | | | | 481,190 | | | | 471,141 | | | | 454,488 | |
Core deposits and other intangibles | | | 65,193 | | | | 69,687 | | | | 68,761 | | | | 69,945 | | | | 73,037 | |
Deferred taxes | | | (22,818 | ) | | | (24,390 | ) | | | (24,066 | ) | | | (24,481 | ) | | | (25,563 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
| | | | 566,663 | | | | 553,241 | | | | 525,885 | | | | 516,605 | | | | 501,962 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Average tangible equity | | $ | 967,568 | | | $ | 959,642 | | | $ | 912,558 | | | $ | 947,298 | | | $ | 946,113 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
The following table reconciles average GAAP assets to average tangible assets for the twelve months ended December 31, 2005 and 2004, as well as each of the period ends presented in the tables.
| | | | | | | | |
| | | December 31,
| |
| | | 2005
| | | 2004
| |
Average GAAP assets (excluding discontinued operations) | | $ | 15,145,698 | | | $ | 13,356,903 | |
| | |
|
|
| |
|
|
|
Goodwill | | | 496,315 | | | | 322,487 | |
Core deposits and other intangibles | | | 68,387 | | | | 62,194 | |
Deferred taxes | | | (23,935 | ) | | | (21,768 | ) |
| | |
|
|
| |
|
|
|
| | | | 540,767 | | | | 362,913 | |
| | |
|
|
| |
|
|
|
Average tangible assets | | $ | 14,604,931 | | | $ | 12,993,990 | |
| | |
|
|
| |
|
|
|
| | | | | | | | | | | | | | | | | | | | |
| | | 2005
| | | 2004
| |
| | | 4th qtr
| | | 3rd qtr
| | | 2nd qtr
| | | 1st qtr
| | | 4th qtr
| |
Average GAAP assets | | $ | 15,358,242 | | | $ | 15,197,504 | | | $ | 15,095,049 | | | $ | 14,926,701 | | | $ | 14,751,651 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Goodwill | | | 524,288 | | | | 507,944 | | | | 481,190 | | | | 471,141 | | | | 454,488 | |
Core deposits and other intangibles | | | 65,193 | | | | 69,687 | | | | 68,761 | | | | 69,945 | | | | 73,037 | |
Deferred taxes | | | (22,818 | ) | | | (24,390 | ) | | | (24,066 | ) | | | (24,481 | ) | | | (25,563 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
| | | | 566,663 | | | | 553,241 | | | | 525,885 | | | | 516,605 | | | | 501,962 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Average tangible assets | | $ | 14,791,579 | | | $ | 14,644,263 | | | $ | 14,569,164 | | | $ | 14,410,096 | | | $ | 14,249,689 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
11
Supplemental Financial Information - Fourth Quarter 2005
The following table reconciles GAAP earnings per share to core operating earnings per share and cash operating earnings per share (certain information does not add due to rounding):
Basic EPS
| | | | | | | | |
| | | Twelve Months Ended
December 31,
| |
| | | 2005
| | | 2004
| |
Net income | | $ | 1.71 | | | $ | 1.95 | |
After-tax earnings from discontinued operations | | | (0.00 | ) | | | (0.19 | ) |
After-tax merger, integration and restructuring | | | 0.01 | | | | 0.03 | |
Deduct: Proforma stock option expense, net of tax | | | | | | | (0.04 | ) |
| | |
|
|
| |
|
|
|
Core operating earnings | | | 1.72 | | | | 1.76 | |
After-tax amortization of core deposits and other intangible assets | | | 0.09 | | | | 0.07 | |
| | |
|
|
| |
|
|
|
Cash operating earnings | | $ | 1.81 | | | $ | 1.83 | |
| | |
|
|
| |
|
|
|
| | | | | | | | | | | | | | | | | |
| | | 2005
| | 2004
| |
| | | 4th qtr
| | | 3rd qtr
| | 2nd qtr
| | 1st qtr
| | 4th qtr
| |
Net income | | $ | 0.50 | | | $ | 0.47 | | $ | 0.45 | | $ | 0.29 | | $ | 0.47 | |
After-tax earnings from discontinued operations | | | (0.00 | ) | | | — | | | — | | | — | | | 0.00 | |
After-tax merger, integration and restructuring | | | 0.00 | | | | 0.00 | | | 0.01 | | | 0.00 | | | 0.00 | |
Deduct: Proforma stock option expense, net of tax | | | | | | | | | | | | | | | | (0.02 | ) |
| | |
|
|
| |
|
| |
|
| |
|
| |
|
|
|
Core operating earnings | | | 0.50 | | | | 0.47 | | | 0.46 | | | 0.29 | | | 0.45 | |
After-tax amortization of core deposits and other intangible assets | | | 0.02 | | | | 0.02 | | | 0.02 | | | 0.02 | | | 0.02 | |
| | |
|
|
| |
|
| |
|
| |
|
| |
|
|
|
Cash operating earnings | | $ | 0.52 | | | $ | 0.49 | | $ | 0.48 | | $ | 0.31 | | $ | 0.47 | |
| | |
|
|
| |
|
| |
|
| |
|
| |
|
|
|
Diluted EPS
| | | | | | | | |
| | | Twelve Months Ended
December 31,
| |
| | | 2005
| | | 2004
| |
Net income | | $ | 1.69 | | | $ | 1.93 | |
After-tax earnings from discontinued operations | | | (0.00 | ) | | | (0.19 | ) |
After-tax merger, integration and restructuring | | | 0.01 | | | | 0.03 | |
Deduct: Proforma stock option expense, net of tax | | | | | | | (0.03 | ) |
| | |
|
|
| |
|
|
|
Core operating earnings | | | 1.70 | | | | 1.74 | |
After-tax amortization of core deposits and other intangible assets | | | 0.09 | | | | 0.07 | |
| | |
|
|
| |
|
|
|
Cash operating earnings | | $ | 1.79 | | | $ | 1.81 | |
| | |
|
|
| |
|
|
|
| | | | | | | | | | | | | | | | | |
| | | 2005
| | 2004
| |
| | | 4th qtr
| | | 3rd qtr
| | 2nd qtr
| | 1st qtr
| | 4th qtr
| |
Net income | | $ | 0.49 | | | $ | 0.46 | | $ | 0.45 | | $ | 0.29 | | $ | 0.46 | |
After-tax earnings from discontinued operations | | | (0.00 | ) | | | — | | | — | | | — | | | (0.00 | ) |
After-tax merger, integration and restructuring | | | 0.00 | | | | 0.00 | | | 0.01 | | | 0.00 | | | 0.00 | |
Deduct: Proforma stock option expense, net of tax | | | | | | | | | | | | | | | | (0.02 | ) |
| | |
|
|
| |
|
| |
|
| |
|
| |
|
|
|
Core operating earnings | | | 0.49 | | | | 0.47 | | | 0.46 | | | 0.29 | | | 0.44 | |
After-tax amortization of core deposits and other intangible assets | | | 0.02 | | | | 0.02 | | | 0.02 | | | 0.02 | | | 0.02 | |
| | |
|
|
| |
|
| |
|
| |
|
| |
|
|
|
Cash operating earnings | | $ | 0.52 | | | $ | 0.49 | | $ | 0.48 | | $ | 0.31 | | $ | 0.47 | |
| | |
|
|
| |
|
| |
|
| |
|
| |
|
|
|
12
