425

Filed by Old National Bancorp

Pursuant to Rule 425 under the Securities Act of 1933

Subject Company: Anchor Bancorp, Inc.

 

LOGO    LOGO

 

   NASDAQ: ONB
FOR IMMEDIATE RELEASE    oldnational.com
October 24, 2017   
   Contacts:
   Media:
   Kathy A. Schoettlin – (812) 465-7269
   Executive Vice President – Communications
   Financial Community:
   Lynell J. Walton – (812) 464-1366
   Senior Vice President – Investor Relations

Old National’s strong 3rd quarter driven by 12% annualized commercial loan growth

3RD QUARTER 2017 HIGHLIGHTS:

 

    Earnings of $39.4 million, or $0.29 per share

 

    Adjusted pre-tax, pre-provision income1 of $61.1 million

 

    Commercial and commercial real estate loan growth of 12.0% annualized from 2nd quarter 2017

 

    Cost of interest-bearing deposits (excluding brokered CD’s) increased just 2 basis points to 0.25%

 

    Tangible book value1 increase of 1.9% from 2nd quarter 2017

 

1 Non-GAAP measures – refer to Table 3 and Table 11 for Non-GAAP reconciliations

 

 

Evansville, Ind. (October 24, 2017) – Today Old National Bancorp (the “Company” or “Old National”) (NASDAQ: ONB) reported 3rd quarter 2017 net income of $39.4 million, or $0.29 per diluted share. Included in the current quarter were the following pre-tax charges: $2.1 million for branch consolidations, $1.9 million for a client experience improvement initiative, $0.4 million for merger and integrations, and $0.3 million in severance. This current quarter net income represents an increase of 1.3% over the 2nd quarter of 2017 net income of $38.9 million. During the 2nd quarter, Old National incurred $0.5 million in pre-tax net branch consolidation charges and $1.0 million in pre-tax charges for the client experience improvement initiative.

“This quarter is a good illustration of the transformation of the Old National franchise.” said Old National Chairman and CEO Bob Jones. “Our recent entry into many of the higher growth markets in the Midwest is reflected in the strong commercial loan growth we have seen now for 10 quarters. This consistent growth, coupled with the ability to fund our balance sheet through core deposits and take advantage of low funding costs provides for stable margins and positions us well for future growth.

“Our transformation continues with the anticipated November 1 closing of our newest partnership with St. Paul, Minnesota-based Anchor Bancorp,” Jones continued. “This entry into yet another vibrant Midwestern market provides Old National with another quality platform to execute our basic bank strategy.”    

Committed to our Strategic Imperatives

Old National’s continued steady performance and strong credit and capital positions can be attributed to the Company’s unwavering commitment to the three strategic imperatives that have guided Old National for 12 years:

1. Strengthen the risk profile; 2. Enhance management discipline; and 3. Achieve consistent quality earnings.


Balance Sheet and Net Interest Margin

Old National’s period-end loans, including loans held for sale, at September 30, 2017, totaled $9.428 billion, an increase of $168.8 million, or 7.3% annualized, from the $9.259 billion at June 30, 2017. Importantly, Old National’s portfolio of commercial and commercial real estate loans grew by 12.0%, annualized, from the 2nd quarter to the 3rd quarter of 2017.

Total period-end core deposits, including demand and interest-bearing deposits, decreased $69.3 million to $10.492 billion at September 30, 2017, compared to $10.561 billion at June 30, 2017. Noninterest-bearing deposit balances increased $23.5 million during that same period, from $3.011 billion to $3.035 billion.

Net interest income for the 3rd quarter of 2017 totaled $108.5 million compared to $104.3 million in the 2nd quarter of 2017, and $107.8 million in the 3rd quarter of 2016. On a fully taxable equivalent basis, net interest income was $114.1 million for the 3rd quarter of 2017 and represented a net interest margin on total average earning assets of 3.52%. These results compare to net interest income on a fully taxable equivalent basis of $110.0 million and a margin of 3.42% in the 2nd quarter of 2017. In the 3rd quarter of 2016, Old National reported net interest income on a fully taxable equivalent basis of $113.1 million and a margin of 3.60%. Refer to Table 4 for Non-GAAP taxable equivalent reconciliations.

In the 3rd quarter of 2017, Old National recorded $11.1 million in accretion income as part of net interest income, which represents 34 basis points of the Company’s net interest margin. Accretion income is related to purchase accounting discounts from the Company’s various acquisitions. Total accretion income in the 2nd quarter of 2017 and the 3rd quarter of 2016 reported by Old National was $9.7 million, or 30 basis points of the net interest margin, and $15.9 million, or 51 basis points of the net interest margin, respectively.

Noninterest Income

Total noninterest income for the 3rd quarter of 2017 amounted to $46.4 million and compares to $49.3 million reported in the 2nd quarter of 2017 and $47.2 million in the 3rd quarter of 2016. The current quarter included $0.6 million of recoveries on loans originated by AnchorBank, fsb that had been fully charged-off prior to the acquisition; the 2nd quarter of 2017 included $1.6 million of such recoveries.

Noninterest Expenses

Noninterest expenses for Old National totaled $103.7 million for the 3rd quarter of 2017. The current quarter included $4.7 million in pre-tax charges: $2.1 million related to branch consolidations, $1.9 million related to a client-experience improvement initiative, $0.4 million for merger and integrations and $0.3 million in severance. Old National did not incur any tax credit amortization in noninterest expenses in the 3rd quarter of 2017 as originally projected. Noninterest expenses for the 2nd quarter of 2017 totaled $102.8 million and included $1.7 million in pre-tax charges: $0.7 million related to branch consolidations and $1.0 million related to the client-experience improvement initiative. In the 3rd quarter of 2016, noninterest expenses totaled $108.1 million and included $5.5 million in pre-tax merger and integration charges. Old National consolidated 15 branches in the 1st quarter of 2017 and plans to consolidate another 14 branches in the 4th quarter of the current year. Old National currently operates 188 branches throughout its franchise.

Capital

Old National’s capital position at September 30, 2017, remained well above regulatory guideline minimums with regulatory tier 1 and total risk-based capital ratios of 12.0% and 12.5%, respectively, compared to 11.8% and 12.3% at June 30, 2017, and 11.9% and 12.5% at September 30, 2016. Old National did not repurchase any stock in the open market during the 3rd quarter of 2017.


The following table presents Old National’s risk-based and leverage ratios compared to industry requirements:

 

Table 1

   Fully Phased-In
Regulatory
Guidelines Minimum
    Consolidated ONB at
September 30, 2017
 

Tier 1 Risk-Based Capital Ratio

     > 8.5     12.0

Total Risk-Based Capital Ratio

     > 10.5     12.5

Common Equity Tier 1 Capital Ratio

     > 7.0     11.7

Tier 1 Leverage Capital Ratio

     > 4.0     8.8

Old National’s ratio of tangible common equity to tangible assets was 8.50% at September 30, 2017, compared to 8.41% at June 30, 2017, and 8.13% at September 30, 2016. Refer to Table 11 for Non-GAAP reconciliations.

As part of the Dodd-Frank Act Stress Test requirements, on October 24, 2017, Old National publicly disclosed the results of its 2017 stress test. These results can be found on the Company’s website at oldnational.com.

Credit

Old National recorded a provision expense of $0.3 million and had net charge-offs of $1.1 million in the 3rd quarter of 2017. These results compare to $1.4 million in provision expense and net charge-offs of $0.2 million, and provision expense of $1.3 million and net charge-offs of $1.6 million, in the 2nd quarter of 2017 and the 3rd quarter of 2016, respectively. Net charge-offs for the 3rd quarter of 2017 were 0.05% of average total loans on an annualized basis, compared to net charge-offs of 0.01% of average total loans in the 2nd quarter of 2017 and 0.07% in the 3rd quarter of 2016. On a year-to-date basis, Old National recorded provision expense of $2.0 million and had net charge-offs of $1.7 million.

Delinquencies remained low as Old National reported 30+ day delinquent loans of 0.34% in the 3rd quarter of 2017 compared to 0.32% in the 2nd quarter of 2017. Old National’s 90+ day delinquent loans for the 3rd quarter of 2017 were 0.01% compared to near zero for the 3rd quarter of 2016.

At September 30, 2017, Old National’s allowance for loan losses was $50.2 million, or 0.53% of total loans, compared to an allowance of $51.0 million, or 0.55% of total loans at June 30, 2017, and $51.5 million, or 0.58% of total loans, at September 30, 2016. The coverage ratio (allowance to non-performing loans) stood at 37% at September 30, 2017, compared to 37% at June 30, 2017, and 31% at September 30, 2016.

In accordance with current accounting practices, the loans acquired from recent acquisitions were recorded at fair value with no allowance recorded at the acquisition date. As of September 30, 2017, the remaining discount on these acquired loans was $96.5 million.

The following table presents certain credit quality metrics related to Old National’s loan portfolio:

 

Table 2 ($ in millions)

   3Q17     2Q17     3Q16  

Non-Performing Loans (NPLs)

   $ 137.1     $ 139.6     $ 165.3  

Problem Loans (Including NPLs)

     209.5       238.0       233.5  

Special Mention Loans

     130.2       99.5       125.8  

Net Charge-Off (Recoveries) Ratio

     0.05     0.01     0.07

Provision for Loan Losses

   $ 0.3     $ 1.4     $ 1.3  

Allowance for Loan Losses

     50.2       51.0       51.5  

Remaining Loan Discount on Acquired Loans

     96.5       107.6       144.3  


About Old National

Old National Bancorp (NASDAQ: ONB), the holding company of Old National Bank, is the largest financial services holding company headquartered in Indiana. With $15.1 billion in assets, it ranks among the top 100 banking companies in the U.S. and has been recognized as a Worlds Most Ethical Company by the Ethisphere Institute for six consecutive years. Since its founding in Evansville in 1834, Old National Bank has focused on community banking by building long-term, highly valued partnerships with clients. Today, Old National’s footprint includes Indiana, Kentucky, Michigan and Wisconsin. In addition to providing extensive services in retail and commercial banking, Old National offers comprehensive wealth management, investments and brokerage services. For more information and financial data, please visit Investor Relations at oldnational.com.

 

Conference Call

Old National will hold a conference call at 10:00 a.m. Central Time on Tuesday, October 24, 2017, to discuss 3rd quarter 2017 financial results, strategic developments, and the Company’s financial outlook. The live audio web cast of the call, along with the corresponding presentation slides, will be available on the Company’s Investor Relations web page at oldnational.com and will be archived there for 12 months. A replay of the call will also be available from 7:00 a.m. Central Time on October 25 through November 7. To access the replay, dial 1-855-859-2056, Conference ID Code 93364517.

 

Use of Non-GAAP Financial Measures

This earnings release contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding Old National’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in the tables of this release.

Table 3 – Pre-Tax, Pre-Provision Income

 

($ in millions)

   3Q17  

Net Interest Income (FTE Basis)

   $ 114.1  

Noninterest Income

     46.4  

Total Revenue (FTE Basis)

   $ 160.5  

Noninterest Expense

     (103.7

Pre-Tax, Pre-Provision Income

   $ 56.8  

Securities Gains

   $ 3.0  

Branch Consolidations, Severance and Client Experience Initiative Charges

     4.3  

Merger and Integration Charges

     0.4  

Tax Credit Amortization

     —    

Intangible Amortization

     2.6  

Adjusted Total Revenue (FTE Basis)

   $ 157.5  

Adjusted Noninterest Expenses

   ($ 96.4

Adjusted Pre-Tax, Pre-Provision Income

   $ 61.1  

Table 4 – Non-GAAP Reconciliations-Fully Taxable Equivalent Net Interest Margin

 

($ in millions)

   3Q17     2Q17     3Q16  

Net Interest Income

   $ 108.5     $ 104.3     $ 107.8  

Taxable Equivalent Adjustment

     5.6       5.7       5.3  

Net Interest Income – Taxable Equivalent

   $ 114.1     $ 110.0     $ 113.1  

Average Earning Assets

   $ 12,959.7     $ 12,844.5     $ 12,575.5  

Net Interest Margin

     3.52     3.42     3.60


Additional Information for Shareholders of Anchor Bancorp, Inc.

Communications in this document do not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. In connection with the proposed merger, Old National Bancorp (“ONB”) has filed with the Securities and Exchange Commission (“SEC”) a Registration Statement on Form S-4 (Registration Statement No. 333-220434) that includes a Proxy Statement of Anchor Bancorp, Inc. (“Anchor”) and a Prospectus of ONB, as well as other relevant documents concerning the proposed transaction. Anchor shareholders are urged to read the Registration Statement and the Proxy Statement/Prospectus regarding the merger and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information. A free copy of the Proxy Statement/Prospectus, as well as other filings containing information about ONB and Anchor, may be obtained at the SEC’s Internet site (http://www.sec.gov). You will also be able to obtain these documents, free of charge, from ONB at www.oldnational.com under the tab “Investor Relations” and then under the heading “Financial Information” or from Anchor by accessing Anchor’s website at www.anchorlink.com under the tab “About Us.”

ONB and Anchor and certain of their directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of Anchor in connection with the proposed merger. Information about the directors and executive officers of ONB is set forth in the proxy statement for ONB’s 2017 annual meeting of shareholders, as filed with the SEC on a Schedule 14A on March 6, 2017. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the Proxy Statement/Prospectus regarding the proposed merger when it becomes available. Free copies of this document may be obtained as described in the preceding paragraph.

 

Forward-Looking Statement

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, descriptions of Old National Bancorp’s (“Old National’s”) financial condition, results of operations, asset and credit quality trends and profitability. Forward-looking statements can be identified by the use of the words “anticipate,” “believe,” “expect,” “intend,” “could” and “should,” and other words of similar meaning. These forward-looking statements express management’s current expectations or forecasts of future events and, by their nature, are subject to risks and uncertainties and there are a number of factors that could cause actual results to differ materially from those in such statements. Factors that might cause such a difference include, but are not limited to: expected cost savings, synergies and other financial benefits from the proposed merger with Anchor might not be realized within the expected timeframes and costs or difficulties relating to integration matters might be greater than expected; satisfaction of closing conditions for the Anchor merger; market, economic, operational, liquidity, credit and interest rate risks associated with Old National’s business; competition; government legislation and policies (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act and its related regulations); ability of Old National to execute its business plan; changes in the economy which could materially impact credit quality trends and the ability to generate loans and gather deposits; failure or circumvention of our internal controls; failure or disruption of our information systems; significant changes in accounting, tax or regulatory practices or requirements; new legal obligations or liabilities or unfavorable resolutions of litigations; disruptive technologies in payment systems and other services traditionally provided by banks; computer hacking and other cybersecurity threats; other matters discussed in this press release and other factors identified in our Annual Report on Form 10-K and other periodic filings with the SEC. These forward-looking statements are made only as of the date of this press release, and Old National does not undertake an obligation to release revisions to these forward-looking statements to reflect events or conditions after the date of this press release.


TABLE 5

Financial Highlights (unaudited)

($ and shares in thousands, except per share data)

 

     Three Months Ended     Nine Months Ended  
     September 30,     June 30,     September 30,     September 30,     September 30,  
     2017     2017     2016     2017     2016  

Income Statement

          

Net interest income

   $ 108,478     $ 104,333     $ 107,803     $ 318,612     $ 292,786  

Provision for loan losses

     311       1,355       1,306       2,013       2,716  

Noninterest income

     46,366       49,271       47,243       138,557       190,079  

Noninterest expense

     103,702       102,811       108,062       308,404       327,889  

Net income

     39,372       38,854       34,709       114,218       100,808  

Per Common Share Data (Diluted)

          

Net income available to common shareholders

   $ 0.29     $ 0.28     $ 0.25     $ 0.84     $ 0.80  

Average diluted shares outstanding

     135,796       135,697       135,011       135,693       125,839  

Book value

     14.07       13.92       13.59       14.07       13.59  

Stock price

     18.30       17.25       14.06       18.30       14.06  

Dividend payout ratio

     43     46     52     46     49

Tangible common book value (1)

     9.02       8.85       8.43       9.02       8.43  

Performance Ratios

          

Return on average assets

     1.05     1.05     0.96     1.02     1.01

Return on average common equity

     8.31     8.33     7.62     8.18     8.03

Net interest margin (FTE)

     3.52     3.42     3.60     3.48     3.56

Efficiency ratio (2)

     64.17     64.05     66.05     64.29     64.50

Net charge-offs (recoveries) to average loans

     0.05     0.01     0.07     0.02     0.06

Allowance for loan losses to ending loans

     0.53     0.55     0.58     0.53     0.58

Non-performing loans to ending loans

     1.46     1.51     1.86     1.46     1.86

Balance Sheet

          

Total loans

   $ 9,398,124     $ 9,232,040     $ 8,904,985     $ 9,398,124     $ 8,904,985  

Total assets

     15,065,800       14,957,281       14,703,071       15,065,800       14,703,071  

Total deposits

     10,606,784       10,683,714       10,646,708       10,606,784       10,646,708  

Total borrowed funds

     2,411,111       2,259,918       2,023,099       2,411,111       2,023,099  

Total shareholders’ equity

     1,906,823       1,886,594       1,834,457       1,906,823       1,834,457  

Capital Ratios (1)

          

Risk-based capital ratios (EOP):

          

Tier 1 common equity

     11.7     11.5     11.8     11.7     11.8

Tier 1

     12.0     11.8     11.9     12.0     11.9

Total

     12.5     12.3     12.5     12.5     12.5

Leverage ratio (to average assets)

     8.8     8.7     8.4     8.8     9.2

Total equity to assets (averages)

     12.65     12.56     12.60     12.53     12.59

Tangible common equity to tangible assets

     8.50     8.41     8.13     8.50     8.13
Nonfinancial Data                               

Full-time equivalent employees

     2,592       2,652       2,910       2,592       2,910  

Number of branches

     188       188       201       188       201  

 

(1) See non-GAAP measures on Table 11.
(2) Efficiency ratio is defined as noninterest expense before amortization of intangibles as a percent of FTE net interest income and noninterest revenues, excluding net gains from securities transactions. This presentation excludes intangible amortization and net securities gains, as is common in other company releases, and better aligns with true operating performance.

FTE - Fully taxable equivalent basis                EOP - End of period actual balances


TABLE 6

Income Statement (unaudited)

($ and shares in thousands, except per share data)

 

     Three Months Ended      Nine Months Ended  
     September 30,
2017
     June 30,
2017
     September 30,
2016
     September 30,
2017
     September 30,
2016
 

Interest income

   $ 123,525      $ 118,209      $ 119,713      $ 360,202      $ 325,285  

Less: interest expense

     15,047        13,876        11,910        41,590        32,499  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net interest income

     108,478        104,333        107,803        318,612        292,786  

Provision for loan losses

     311        1,355        1,306        2,013        2,716  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net interest income after provision for loan losses

     108,167        102,978        106,497        316,599        290,070  

Wealth management fees

     8,837        9,679        8,572        27,515        26,048  

Service charges on deposit accounts

     10,535        10,040        11,054        30,418        31,130  

Debit card and ATM fees

     4,248        4,436        4,330        12,920        12,586  

Mortgage banking revenue

     5,104        5,186        7,718        14,516        15,841  

Insurance premiums and commissions

     170        160        132        437        20,375  

Investment product fees

     5,193        5,004        5,038        15,186        13,667  

Capital markets income

     1,843        2,747        849        5,621        2,262  

Company-owned life insurance

     2,022        2,117        2,163        6,288        6,281  

Change in Indemnification Asset

     —          —          —          —          233  

Other income

     5,400        6,776        5,668        17,970        15,094  

Net gain on sale of ONB Insurance Group, Inc.

     —          —          —          —          41,864  

Gains (losses) on sales of securities

     2,972        3,075        1,647        7,547        4,609  

Gains (losses) on derivatives

     42        51        72        139        89  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total noninterest income

     46,366        49,271        47,243        138,557        190,079  

Salaries and employee benefits

     57,783        57,606        60,861        171,953        180,548  

Occupancy

     11,670        10,539        12,944        34,343        39,356  

Equipment

     3,485        3,350        3,564        10,062        9,773  

Marketing

     2,646        3,673        3,528        9,369        11,125  

Data processing

     7,696        8,226        8,242        23,530        24,041  

Communication

     2,163        2,288        2,755        6,865        7,154  

Professional fees

     4,589        4,077        3,252        11,317        11,801  

Loan expenses

     1,542        1,693        2,213        4,866        5,669  

Supplies

     547        594        799        1,720        1,980  

FDIC assessment

     2,197        2,130        2,149        6,814        6,098  

Other real estate owned expense

     511        1,009        728        2,635        3,251  

Intangible amortization

     2,641        2,781        3,233        8,442        9,245  

Other expense

     6,232        4,845        3,794        16,488        17,848  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total noninterest expense

     103,702        102,811        108,062        308,404        327,889  

Income before income taxes

     50,831        49,438        45,678        146,752        152,260  

Income tax expense

     11,459        10,584        10,969        32,534        51,452  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net income

   $ 39,372      $ 38,854      $ 34,709      $ 114,218      $ 100,808  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Diluted Earnings Per Share

              

Net income

   $ 0.29      $ 0.28      $ 0.25      $ 0.84      $ 0.80  

Average Common Shares Outstanding

              

Basic

     135,120        135,085        134,492        135,040        125,366  

Diluted

     135,796        135,697        135,011        135,693        125,839  

Common shares outstanding at end of period

     135,523        135,516        134,985        135,523        134,985  


TABLE 7

Balance Sheet (unaudited)

($ in thousands)

 

     September 30,     June 30,     September 30,  
     2017     2017     2016  

Assets

      

Federal Reserve Bank account

   $ 32,333     $ 22,117     $ 31,634  

Money market investments

     17,382       9,815       4,513  

Investments:

      

Treasury and government sponsored agencies

     582,051       586,258       622,726  

Mortgage-backed securities

     1,458,385       1,470,687       1,495,683  

States and political subdivisions

     1,095,975       1,118,437       1,148,147  

Other securities

     451,082       449,045       449,614  
  

 

 

   

 

 

   

 

 

 

Total investments

     3,587,493       3,624,427       3,716,170  
  

 

 

   

 

 

   

 

 

 

Loans held for sale

     30,221       27,425       60,465  

Loans:

      

Commercial

     2,049,054       2,001,621       1,836,380  

Commercial and agriculture real estate

     3,370,211       3,259,998       3,092,575  

Consumer:

      

Home equity

     477,100       472,198       481,995  

Other consumer loans

     1,382,639       1,398,849       1,388,803  
  

 

 

   

 

 

   

 

 

 

Subtotal of commercial and consumer loans

     7,279,004       7,132,666       6,799,753  

Residential real estate

     2,119,120       2,099,374       2,105,232  
  

 

 

   

 

 

   

 

 

 

Total loans

     9,398,124       9,232,040       8,904,985  
  

 

 

   

 

 

   

 

 

 

Total earning assets

     13,065,553       12,915,824       12,717,767  
  

 

 

   

 

 

   

 

 

 

Allowance for loan losses

     (50,169     (50,986     (51,547

Non-earning Assets:

      

Cash and due from banks

     202,652       230,809       224,893  

Premises and equipment

     412,488       413,933       333,266  

Goodwill and intangible assets

     684,253       686,894       696,128  

Company-owned life insurance

     356,897       354,875       351,431  

Net deferred tax assets

     137,951       146,780       169,466  

Loan servicing rights

     24,900       25,023       25,920  

Other real estate owned

     10,259       11,071       23,719  

Other assets

     221,016       223,058       212,028  
  

 

 

   

 

 

   

 

 

 

Total non-earning assets

     2,050,416       2,092,443       2,036,851  
  

 

 

   

 

 

   

 

 

 

Total assets

   $ 15,065,800     $ 14,957,281     $ 14,703,071  
  

 

 

   

 

 

   

 

 

 

Liabilities and Equity

      

Noninterest-bearing demand deposits

   $ 3,034,696     $ 3,011,156     $ 2,944,331  

NOW accounts

     2,539,233       2,639,813       2,486,190  

Savings accounts

     2,932,488       2,924,689       2,963,637  

Money market accounts

     648,378       672,391       687,895  

Other time deposits

     1,337,156       1,313,199       1,400,068  
  

 

 

   

 

 

   

 

 

 

Total core deposits

     10,491,951       10,561,248       10,482,121  

Brokered CD’s

     114,833       122,466       164,587  
  

 

 

   

 

 

   

 

 

 

Total deposits

     10,606,784       10,683,714       10,646,708  

Federal funds purchased and interbank borrowings

     317,021       227,029       125,121  

Securities sold under agreements to repurchase

     285,409       298,094       347,804  

Federal Home Loan Bank advances

     1,589,367       1,515,628       1,331,379  

Other borrowings

     219,314       219,167       218,795  
  

 

 

   

 

 

   

 

 

 

Total borrowed funds

     2,411,111       2,259,918       2,023,099  

Accrued expenses and other liabilities

     141,082       127,055       198,807  
  

 

 

   

 

 

   

 

 

 

Total liabilities

     13,158,977       13,070,687       12,868,614  

Common stock, surplus, and retained earnings

     1,941,020       1,917,714       1,853,286  

Other comprehensive income

     (34,197     (31,120     (18,829
  

 

 

   

 

 

   

 

 

 

Total shareholders’ equity

     1,906,823       1,886,594       1,834,457  
  

 

 

   

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 15,065,800     $ 14,957,281     $ 14,703,071  
  

 

 

   

 

 

   

 

 

 


TABLE 8

Average Balance Sheet and Interest Rates (unaudited)

($ in thousands)

 

    Three Months Ended
September 30, 2017
    Three Months Ended
June 30, 2017
    Three Months Ended
September 30, 2016
 
    Average
Balance
    Income (1)/
Expense
    Yield/
Rate
    Average
Balance
    Income (1)/
Expense
    Yield/
Rate
    Average
Balance
    Income (1)/
Expense
    Yield/
Rate
 

Earning Assets:

                 

Money market and other interest-earning investments

  $ 32,755     $ 85       1.03   $ 27,222     $ 55       0.80   $ 21,923     $ 23       0.42

Investments:

                 

Treasury and gov’t sponsored agencies

    585,354       2,844       1.94     575,940       2,798       1.94     671,295       3,390       2.02

Mortgage-backed securities

    1,456,034       7,235       1.99     1,485,582       7,590       2.04     1,414,753       6,353       1.80

States and political subdivisions

    1,103,721       13,065       4.73     1,122,769       13,375       4.76     1,139,983       13,329       4.68

Other securities

    453,782       3,043       2.68     446,521       2,866       2.57     446,870       2,566       2.30
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total investments

    3,598,891       26,187       2.91     3,630,812       26,629       2.93     3,672,901       25,638       2.79
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loans: (2)

                 

Commercial

    2,021,614       20,731       4.01     1,938,751       19,352       3.95     1,861,906       18,268       3.84

Commercial and agriculture real estate

    3,298,435       43,646       5.18     3,240,318       39,830       4.86     2,975,029       41,906       5.51

Consumer:

                 

Home equity

    479,492       5,065       4.19     474,308       4,837       4.09     483,678       4,895       4.03

Other consumer loans

    1,384,057       12,242       3.51     1,405,226       11,881       3.39     1,404,947       11,960       3.39
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal commercial and consumer loans

    7,183,598       81,684       4.51     7,058,603       75,900       4.31     6,725,560       77,029       4.56

Residential real estate loans

    2,144,478       21,190       3.95     2,127,867       21,268       4.00     2,155,070       22,343       4.14
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total loans

    9,328,076       102,874       4.35     9,186,470       97,168       4.21     8,880,630       99,372       4.41
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total earning assets

  $ 12,959,722     $ 129,146       3.95   $ 12,844,504     $ 123,852       3.84   $ 12,575,454     $ 125,033       3.94
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Less: Allowance for loan losses

    (51,130         (50,937         (52,809    

Non-earning Assets:

                 

Cash and due from banks

  $ 233,017         $ 200,209         $ 204,991      

Other assets

    1,845,612           1,860,676           1,721,772      
 

 

 

       

 

 

       

 

 

     

Total assets

  $ 14,987,221         $ 14,854,452         $ 14,449,408      
 

 

 

       

 

 

       

 

 

     

Interest-Bearing Liabilities:

                 

NOW accounts

  $ 2,570,321     $ 544       0.08   $ 2,643,123     $ 511       0.08   $ 2,461,799     $ 456       0.07

Savings accounts

    2,934,445       1,289       0.17     2,944,314       1,209       0.16     2,708,307       962       0.14

Money market accounts

    661,635       142       0.09     684,911       146       0.09     936,232       326       0.14

Other time deposits

    1,347,095       2,800       0.82     1,330,026       2,536       0.76     1,352,876       2,704       0.79
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total interest-bearing deposits

    7,513,496       4,775       0.25     7,602,374       4,402       0.23     7,459,214       4,448       0.24

Brokered CD’s

    119,707       350       1.16     111,972       322       1.15     174,375       371       0.85
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total interest-bearing deposits and CD’s

    7,633,203       5,125       0.27     7,714,346       4,724       0.25     7,633,589       4,819       0.25
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Federal funds purchased and interbank borrowings

    220,918       655       1.18     166,690       422       1.02     178,770       226       0.50

Securities sold under agreements to repurchase

    315,285       280       0.35     329,182       334       0.41     355,734       375       0.42

Federal Home Loan Bank advances

    1,506,606       6,618       1.74     1,443,453       6,017       1.67     1,129,756       4,137       1.46

Other borrowings

    219,241       2,369       4.32     219,085       2,379       4.34     218,720       2,353       4.30
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total borrowed funds

    2,262,050       9,922       1.74     2,158,410       9,152       1.70     1,882,980       7,091       1.50
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total interest-bearing liabilities

  $ 9,895,253     $ 15,047       0.61   $ 9,872,756     $ 13,876       0.56   $ 9,516,569     $ 11,910       0.50
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Noninterest-Bearing Liabilities

                 

Demand deposits

  $ 3,049,503         $ 2,988,147         $ 2,895,945      

Other liabilities

    146,271           128,231           215,620      

Shareholders’ equity

    1,896,194           1,865,318           1,821,274      
 

 

 

       

 

 

       

 

 

     

Total liabilities and shareholders’ equity

  $ 14,987,221         $ 14,854,452         $ 14,449,408      
 

 

 

       

 

 

       

 

 

     

Net interest rate spread

        3.34         3.28         3.44

Net interest margin (FTE)

        3.52         3.42         3.60

FTE adjustment

    $ 5,621         $ 5,643         $ 5,320    

 

(1) Interest income is reflected on a fully taxable equivalent basis (FTE).
(2) Includes loans held for sale.


TABLE 9

Average Balance Sheet and Interest Rates (unaudited)

($ in thousands)

 

     Nine Months Ended     Nine Months Ended  
     September 30, 2017     September 30, 2016  
     Average     Income (1)/      Yield/     Average     Income (1)/      Yield/  
     Balance     Expense      Rate     Balance     Expense      Rate  

Earning Assets:

              

Money market and other interest-earning investments

   $ 29,172     $ 171        0.78   $ 29,979     $ 93        0.42

Investments:

              

Treasury and gov’t sponsored agencies

     567,403       8,422        1.98     713,285       10,454        1.95

Mortgage-backed securities

     1,484,132       22,643        2.03     1,225,528       16,992        1.85

States and political subdivisions

     1,119,846       40,047        4.77     1,120,344       39,545        4.71

Other securities

     448,544       8,738        2.60     436,466       7,522        2.30
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Total investments

     3,619,925       79,850        2.94     3,495,623       74,513        2.85
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Loans: (2)

              

Commercial

     1,949,921       59,171        4.00     1,823,223       53,138        3.83

Commercial and agriculture real estate

     3,237,053       123,800        5.04     2,488,888       105,217        5.55

Consumer:

              

Home equity

     476,729       14,560        4.08     450,805       15,759        4.67

Other consumer loans

     1,399,040       35,890        3.43     1,320,386       33,078        3.35
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Subtotal commercial and consumer loans

     7,062,743       233,421        4.42     6,083,302       207,192        4.55

Residential real estate loans

     2,137,982       63,712        3.97     1,939,148       59,274        4.08
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Total loans

     9,200,725       297,133        4.28     8,022,450       266,466        4.40
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Total earning assets

   $ 12,849,822     $ 377,154        3.90   $ 11,548,052     $ 341,072        3.92
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Less: Allowance for loan losses

     (50,927          (52,054     

Non-earning Assets:

              

Cash and due from banks

   $ 209,752          $ 186,506       

Other assets

     1,861,261            1,612,410       
  

 

 

        

 

 

      

Total assets

   $ 14,869,908          $ 13,294,914       
  

 

 

        

 

 

      

Interest-Bearing Liabilities:

              

NOW accounts

   $ 2,599,696     $ 1,511        0.08   $ 2,331,596     $ 1,099        0.06

Savings accounts

     2,949,412       3,655        0.17     2,475,739       2,585        0.14

Money market accounts

     684,346       437        0.09     784,057       698        0.12

Other time deposits

     1,336,729       7,704        0.77     1,147,969       7,184        0.84
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Total interest-bearing deposits

     7,570,183       13,307        0.24     6,739,361       11,566        0.23

Brokered CD’s

     113,111       925        1.09     158,724       1,000        0.84
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Total interest-bearing deposits and CD’s

     7,683,294       14,232        0.25     6,898,085       12,566        0.24
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Federal funds purchased and interbank borrowings

     192,343       1,433        1.00     157,499       566        0.48

Securities sold under agreements to repurchase

     325,230       870        0.36     373,474       1,139        0.41

Federal Home Loan Bank advances

     1,460,293       17,947        1.64     1,073,414       11,164        1.39

Other borrowings

     219,097       7,108        4.33     224,000       7,064        4.20
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Total borrowed funds

     2,196,963       27,358        1.66     1,828,387       19,933        1.46
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Total interest-bearing liabilities

   $ 9,880,257     $ 41,590        0.56   $ 8,726,472     $ 32,499        0.50
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Noninterest-Bearing Liabilities

              

Demand deposits

   $ 2,985,386          $ 2,698,873       

Other liabilities

     141,616            195,078       

Shareholders’ equity

     1,862,649            1,674,491       
  

 

 

        

 

 

      

Total liabilities and shareholders’ equity

   $ 14,869,908          $ 13,294,914       
  

 

 

        

 

 

      

Net interest rate spread

          3.34          3.42

Net interest margin (FTE)

          3.48          3.56

FTE adjustment

     $ 16,952          $ 15,787     

 

(1) Interest income is reflected on a fully taxable equivalent basis (FTE).
(2) Includes loans held for sale.


TABLE 10

Asset Quality (EOP) (unaudited)

($ in thousands)

 

     Three Months Ended     Nine Months Ended  
     September 30,     June 30,     September 30,     September 30,     September 30,  
     2017     2017     2016     2017     2016  

Beginning allowance for loan losses

   $ 50,986     $ 49,834     $ 51,804     $ 49,808     $ 52,233  

Provision for loan losses

     311       1,355       1,306       2,013       2,716  

Gross charge-offs

     (2,821     (3,380     (4,519     (9,440     (11,138

Gross recoveries

     1,693       3,177       2,956       7,788       7,736  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (charge-offs) recoveries

     (1,128     (203     (1,563     (1,652     (3,402
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending allowance for loan losses

   $ 50,169     $ 50,986     $ 51,547     $ 50,169     $ 51,547  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net charge-offs (recoveries) / average loans  (1)

     0.05     0.01     0.07     0.02     0.06

Average loans outstanding (1)

   $ 9,320,868     $ 9,180,987     $ 8,865,400     $ 9,194,396     $ 8,012,299  

EOP loans outstanding (1)

   $ 9,398,124     $ 9,232,040     $ 8,904,985     $ 9,398,124     $ 8,904,985  

Allowance for loan losses / EOP loans (1)

     0.53     0.55     0.58     0.53     0.58

Underperforming Assets:

          

Loans 90 Days and over (still accruing)

   $ 879     $ 201     $ 443     $ 879     $ 443  

Non-performing loans:

          

Nonaccrual loans (2)

     119,256       125,519       151,484       119,256       151,484  

Renegotiated loans

     17,886       14,123       13,860       17,886       13,860  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total non-performing loans

     137,142       139,642       165,344       137,142       165,344  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Foreclosed properties

     10,259       11,071       23,719       10,259       23,719  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total underperforming assets

   $ 148,280     $ 150,914     $ 189,506     $ 148,280     $ 189,506  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Classified loans - “problem loans”

   $ 209,524     $ 237,997     $ 233,469     $ 209,524     $ 233,469  

Other classified assets

     7,526       7,449       6,634       7,526       6,634  

Criticized loans - “special mention loans”

     130,197       99,502       125,840       130,197       125,840  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total classified and criticized assets

   $ 347,247     $ 344,948     $ 365,943     $ 347,247     $ 365,943  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-performing loans / EOP loans (1)

     1.46     1.51     1.86     1.46     1.86

Allowance to non-performing loans (3)

     37     37     31     37     31

Under-performing assets / EOP loans (1)

     1.58     1.63     2.13     1.58     2.13

EOP total assets

   $ 15,065,800     $ 14,957,281     $ 14,703,071     $ 15,065,800     $ 14,703,071  

Under-performing assets / EOP assets

     0.98     1.01     1.29     0.98     1.29

EOP - End of period actual balances

 

(1) Excludes loans held for sale.
(2) Includes renegotiated loans totaling $43.7 million at September 30, 2017, $46.2 million at June 30, 2017 and $29.9 million at September 30, 2016.
(3) Includes acquired loans that were recorded at fair value in accordance with ASC 805 at the date of acquisition. As such, the credit risk was incorporated in the fair value recorded and no allowance for loan losses was recorded on the acquisition date.


TABLE 11

Non-GAAP Measures (unaudited)

($ in thousands)

 

    Three Months Ended     Nine Months Ended  
    September 30,     June 30,     September 30,     September 30,     September 30,  
    2017     2017     2016     2017     2016  

Actual End of Period Balances

         

GAAP shareholders’ equity

  $ 1,906,823     $ 1,886,594     $ 1,834,457     $ 1,906,823     $ 1,834,457  

Deduct:

         

Goodwill

    655,018       655,018       655,210       655,018       655,210  

Intangibles

    29,235       31,876       40,918       29,235       40,918  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    684,253       686,894       696,128       684,253       696,128  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Tangible shareholders’ equity

  $ 1,222,570     $ 1,199,700     $ 1,138,329     $ 1,222,570     $ 1,138,329  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average Balances

         

GAAP shareholders’ equity

  $ 1,896,194     $ 1,865,318     $ 1,821,274     $ 1,862,649     $ 1,674,491  

Deduct:

         

Goodwill

    655,018       655,018       655,519       655,018       628,859  

Intangibles

    30,502       33,189       42,522       33,242       40,679  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    685,520       688,207       698,041       688,260       669,538  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average tangible shareholders’ equity

  $ 1,210,674     $ 1,177,111     $  1,123,233     $ 1,174,389     $ 1,004,953  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Actual End of Period Balances

         

GAAP assets

  $ 15,065,800     $ 14,957,281     $ 14,703,071     $ 15,065,800     $ 14,703,071  

Add:

         

Trust overdrafts

    45       31       47       45       47  

Deduct:

         

Goodwill

    655,018       655,018       655,210       655,018       655,210  

Intangibles

    29,235       31,876       40,918       29,235       40,918  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    684,253       686,894       696,128       684,253       696,128  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Tangible assets

  $ 14,381,592     $ 14,270,418     $  14,006,990     $ 14,381,592     $ 14,006,990  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Risk-weighted assets

  $ 10,495,407     $ 10,367,804     $ 9,703,233     $ 10,495,407     $ 9,703,233  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP net income

  $ 39,372     $ 38,854     $ 34,709     $ 114,218     $ 100,808  

Add:

         

Intangible amortization (net of tax)

    1,717       1,807       2,101       5,487       6,009  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Tangible net income

  $ 41,089     $ 40,661     $ 36,810     $ 119,705     $ 106,817  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Tangible Ratios

         

Return on tangible common equity

    13.44     13.56     12.93     13.06     12.51

Return on average tangible common equity

    13.58     13.82     13.11     13.59     14.17

Return on tangible assets

    1.14     1.14     1.05     1.11     1.02

Tangible common equity to tangible assets

    8.50     8.41     8.13     8.50     8.13

Tangible common equity to risk-weighted  assets

    11.65     11.57     11.73     11.65     11.73

Tangible common book value (1)

    9.02       8.85       8.43       9.02       8.43  
Tangible common equity presentation includes other comprehensive income as is common in other company releases.  

(1)    Tangible common shareholders’ equity divided by common shares issued and outstanding at period-end.

     

Tier 1 capital

  $ 1,254,790     $ 1,222,250     $ 1,156,274     $ 1,254,790     $ 1,156,274  

Deduct:

         

Trust Preferred Securities

    45,000       45,000       45,000       45,000       45,000  

Additional Tier 1 capital deductions

    (13,498     (14,977     (30,466     (13,498     (30,466
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    31,502       30,023       14,534       31,502       14,534  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Tier 1 common equity

  $ 1,223,288     $ 1,192,227     $ 1,141,740     $ 1,223,288     $ 1,141,740  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Risk-weighted assets

    10,495,407       10,367,804       9,703,233       10,495,407       9,703,233  

Tier 1 common equity to risk-weighted assets

    11.66     11.50     11.77     11.66     11.77