EVANSVILLE, Ind., April 23, 2018 (GLOBE NEWSWIRE) -- Old National Bancorp (NASDAQ:ONB) reports 1Q18 net income of $48.0 million, diluted EPS of $0.31. Adjusted1 net income of $51.2 million, or $0.34 per share.
CEO COMMENTARY:
“Our record start to 2018 was driven by continued strong commercial loan growth, disciplined expense management, controlled deposit costs and excellent credit quality,” said Old National Bancorp Chairman and CEO Bob Jones. “In keeping with our ongoing focus on improving the operating dynamics of the franchise, we also announced our decision to sell 10 branches and consolidate an additional 10 branches throughout our franchise.”
FIRST-QUARTER HIGHLIGHTS2:
Net Income
- Net income of $48.0 million, an increase of 33.3% from first quarter of 2017
- Earnings per share of $0.31, an increase of 14.8% from first quarter of 2017
Net Interest Income/NIM
- Net interest income was $128.5 million, up 8.4%
- Net interest margin on a fully taxable equivalent basis was 3.45% compared to 3.47%
Operating Performance
- Pre-provision net revenue1 (“PPNR”) was $56.1 million
- Adjusted PPNR1 was $61.1 million, up 5.9%
- Noninterest expense was $117.6 million
- Adjusted noninterest expense1 was $111.8 million, compared to $110.2 million
- Efficiency ratio1 was 65.94%
- Adjusted efficiency ratio1 was 62.59%, a 118 basis point improvement from first quarter of 2017
Loans and Credit Quality
- End-of-period total loans3 were $11,256.3 million compared to $11,136.1 million
- Represents 4.3% annualized growth
- End-of-period commercial and commercial real estate loans were $7,261.6 million compared to $7,071.8 million
- Represents 10.7% annualized growth
- Non-performing loans were 1.28% of total loans compared to 1.30%
- Provision for loan losses was $0.4 million compared to $1.0 million
- Net charge-offs were $0.4 million, or 0.01% annualized, compared to 0.03%
Capital Returns
- Return on average equity was 8.86%
- Return on average tangible common equity1 was 15.80%
- Adjusted return on average tangible common equity1 was 16.81%
Notable Items
- $2.3 million in merger and integration charges
- $2.8 million for branch consolidation charges
- $0.7 million in tax credit amortization
- Footprint rationalization continues with 10 branch consolidations and the pending sale of 10 branches
1 Non-GAAP financial measure that Management believes is useful in evaluating the financial results of the Company. Please refer to the Non-GAAP reconciliations contained in this release 2 Comparisons are on a linked-quarter basis, unless otherwise noted 3 Includes loans held for sale
RESULTS OF OPERATIONS
Old National Bancorp reported first-quarter 2018 net income of $48.0 million, or $0.31 per diluted share.
Included in the first quarter were pre-tax charges of $2.3 million for merger and integration and $2.8 million for branch consolidations. Excluding these items from the current quarter and netting out securities gains, Old National would have reported net income of $51.2 million, or $0.34 per share.
With a continued focus on expense management, 10 branches located throughout the footprint are scheduled to be consolidated; 9 in the second quarter and 1 in the third quarter of this year. In addition, Old National entered into a branch purchase and assumption agreement for the sale of 10 Old National branches in Wisconsin to Marine Credit Union of La Crosse, Wisconsin. The branch sale includes the assumption of approximately $274 million in deposits and no loans. Subject to regulatory approval and other terms and conditions, the sale is expected to close in the third quarter of 2018.
LOANS
Record first quarter performance was fueled by double-digit commercial loan growth.
- Period-end total loans increased to $11,256.3 million at March 31, 2018, up from $11,136.1 million at December 31, 2017.
- End-of-period total loan growth in the first quarter was $120.2 million, or 4.3% on an annualized basis.
- End-of-period growth in total commercial and commercial real estate loans was $189.8 million, or 10.7% on an annualized basis.
- On average, total loans in the first quarter were $11,179.3 million, up from $10,516.4 million in the fourth quarter of 2017.
- Average total loans increased $662.9 million, or 25% annualized, benefitting from a full quarter’s impact of loans acquired from the Minnesota partnership, which closed on November 1, 1017.
- Average total commercial and commercial real estate loan growth was $683.0 million, or 42.2% on an annualized basis, including impact of loans acquired from the Minnesota partnership.
DEPOSITS
A low-cost core deposit franchise continues to be one of Old National’s strengths.
- Period-end total deposits increased to $12,788.6 million at March 31, 2018, up from $12,605.8 million at December 31, 2017.
- End-of-period deposit growth in the first quarter was $182.8 million, or 5.8% on an annualized basis.
- On average, total deposits in the first quarter were $12,579.2 million, increasing from the $11,994.8 million in the fourth quarter of 2017.
- Average total deposits increased $584.4 million, or 19.5% annualized, benefitting from a full quarter’s impact of deposits assumed from the Minnesota partnership.
NET INTEREST INCOME AND MARGIN
Well-controlled deposit costs and higher accretion income offset lower fully taxable equivalent (FTE) interest income resulting from income tax rate change.
- Net interest income increased to $128.5 million in the first quarter of 2018 from $118.6 million in the fourth quarter of 2017.
- The net interest margin (on a fully taxable equivalent basis) declined just 2 basis points to 3.45% compared to 3.47% in the fourth quarter of 2017.
- Benefiting net interest income and net interest margin during the quarter was the increase in short term rates, strong loan production and accretion income given a full quarter of the Minnesota partnership. Partially offsetting these benefits was higher interest expense, lower interest collected on nonaccrual loans, and a decline in fully taxable equivalent interest income as a result of lower corporate income tax rates.
- Accretion income increased to $11.0 million, or 28 basis points of net interest margin, in the first quarter of 2018 from $7.5 million, or 21 basis points of net interest margin, in the fourth quarter of 2017. In the first quarter of 2018, accretion income was 6% of adjusted total revenue compared to 8% in the first quarter of 2017.
- The cost of total deposits rose just 3 basis points to 0.23% while the cost of total interest-bearing deposits rose just 4 basis points to 0.33%.
CREDIT QUALITY
Exceptional credit quality remains a hallmark of the Old National franchise.
- Asset quality remained strong with net charge-offs of just $0.4 million, or 0.01% of total average loans, and 30-89 day delinquencies of 0.33%.
- Provision expense for the first quarter was $0.4 million, matching net charge-offs of $0.4 million.
- Non-performing loans as a percentage of total loans continued to decline to 1.28% from 1.30%.
- 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 March 31, 2018, the remaining discount on these acquired loans was $125.6 million.
- The allowance for loan losses was $50.4 million, or 0.45% of total loans at March 31, 2018.
NONINTEREST INCOME
Noninterest income dipped slightly due to seasonality and other factors.
- Total noninterest income for the first quarter of 2018 was $42.4 million, or a decline of $2.4 million from the fourth quarter of 2017.
- Lower capital markets income ($0.4 million), a decline in other income ($0.5 million), a decline in wealth management revenue ($0.8 million) and the seasonal decline in deposit service charges ($0.2 million) were the main drivers of the quarterly decline.
- Securities gains were $0.8 million, down $0.8 million from the fourth quarter of 2017.
NONINTEREST EXPENSE
Disciplined expense management drives positive operating leverage1.
- Noninterest expense for the first quarter of 2018 was $117.6 million and included $2.3 million in merger and integration charges, $2.8 million in branch charges and $0.7 million in tax credit amortization.
- Excluding these items, adjusted noninterest expense for the first quarter was $111.8 million, slightly higher than the $110.2 million in adjusted noninterest expense in the fourth quarter of 2017. The first quarter included a full quarterly impact of the Minnesota partnership.
- Adjusted operating leverage1 improved 184 basis points in the first quarter compared to a year ago.
- First quarter includes typical seasonal factors, including higher snow removal costs ($0.7 million), higher postage costs ($0.4 million) and higher salary expense due to payroll tax reset and annual HSA contribution.
- The first quarter efficiency ratio was 65.94% while the adjusted efficiency ratio was 62.59%.
INCOME TAXES
Changes in the corporate tax rate as well as benefits of tax credits result in lower tax rates.
- On a fully taxable-equivalent basis, income tax expense in the first quarter was $7.7 million, resulting in a 13.9% FTE tax rate.
CAPITAL
Strong quarterly earnings drive capital ratios higher.
- At the end of the first quarter, total risk-based capital was 11.7% and regulatory tier 1 capital was 10.7%.
- Tangible common equity to tangible assets was 7.83% at the end of the first quarter compared to 7.65% in the fourth quarter of 2017.
NON-GAAP RECONCILIATIONS
| ($ in millions, except EPS, shares in 000s) | 1Q18 | Adjustments4 | Adjusted 1Q18 | ||||||
| Total Revenues (FTE) | $ | 173.7 | ($ | 0.8 | ) | $ | 172.9 | ||
| Less: Provision for Loan Losses | (0.4 | ) | - | (0.4 | ) | ||||
| Less: Noninterest Expenses | (117.6 | ) | 5.1 | (112.5 | ) | ||||
| Income before Income Taxes (FTE) | $ | 55.7 | $ | 4.3 | $ | 60.0 | |||
| Income Taxes | (7.7 | ) | (1.1 | ) | (8.8 | ) | |||
| Net Income | $ | 48.0 | $ | 3.2 | $ | 51.2 | |||
| Average Shares Outstanding | 152,370 | - | 152,370 | ||||||
| Earnings Per Share | $ | 0.31 | $ | 0.03 | $ | 0.34 | |||
4 Tax-effect calculations use the 2018 statutory FTE tax rates (federal + state)
| ($ in millions) | 1Q18 | 4Q17 | ||||
| Net Interest Income | $ | 128.5 | $ | 118.6 | ||
| FTE Adjustment | 2.8 | 6.1 | ||||
| Net Interest Income (FTE Basis) | $ | 131.3 | $ | 124.7 | ||
| Average Earning Assets | $ | 15,205.9 | $ | 14,389.5 | ||
| Net Interest Margin | 3.45 | % | 3.47 | % | ||
| ($ in millions) | 1Q18 | 4Q17 | ||||
| Net Interest Income | $ | 128.5 | $ | 118.6 | ||
| FTE Adjustment | 2.8 | 6.1 | ||||
| Net Interest Income (FTE Basis) | $ | 131.3 | $ | 124.7 | ||
| Total Noninterest Income | $ | 42.4 | $ | 44.8 | ||
| Noninterest Expense | 117.6 | 140.4 | ||||
| Pre-Provision Net Revenue | $ | 56.1 | $ | 29.1 | ||
| Less: Securities Gains | (0.8 | ) | (1.6 | ) | ||
| Add: Merger and Integration Charges | 2.3 | 11.9 | ||||
| Add: Branch Consolidations, Severance, Foundation Funding and Client Experience Initiative Charges | 2.8 | 6.6 | ||||
| Add: Amortization of Tax Credit Investments | 0.7 | 11.7 | ||||
| Adjusted Pre-Provision Net Revenue | $ | 61.1 | $ | 57.7 | ||
| ($ in millions) | 1Q18 | 4Q17 | 1Q17 | ||||||
| Noninterest Expense | $ | 117.6 | $ | 140.4 | $ | 101.9 | |||
| Less: Merger and Integration Charges | (2.3 | ) | (11.9 | ) | - | ||||
| Less: Branch Consolidations, Severance, Foundation Funding and Client Experience Initiative Charges | (2.8 | ) | (6.6 | ) | (1.4 | ) | |||
| Noninterest Expense less Charges | $ | 112.5 | $ | 121.9 | $ | 100.5 | |||
| Less: Amortization of Tax Credit Investments | (0.7 | ) | (11.7 | ) | - | ||||
| Adjusted Noninterest Expense | $ | 111.8 | $ | 110.2 | $ | 100.5 | |||
| Less: Intangible Amortization | (3.6 | ) | (3.4 | ) | (3.0 | ) | |||
| Adjusted Noninterest Expense Less Intangible Amortization | $ | 108.2 | $ | 106.8 | $ | 97.5 | |||
| Net Interest Income | $ | 128.5 | $ | 118.6 | $ | 105.8 | |||
| FTE Adjustment | 2.8 | 6.1 | 5.7 | ||||||
| Net Interest Income (FTE) | $ | 131.3 | $ | 124.7 | $ | 111.5 | |||
| Total Noninterest Income | $ | 42.4 | $ | 44.8 | $ | 42.9 | |||
| Total Revenue (FTE) | $ | 173.7 | $ | 169.5 | $ | 154.4 | |||
| Less: Securities Gains | (0.8 | ) | (1.6 | ) | (1.5 | ) | |||
| Adjusted Total Revenue (FTE) | $ | 172.9 | $ | 167.9 | $ | 152.9 | |||
| Efficiency Ratio | 65.94 | % | 81.60 | % | 64.66 | % | |||
| Adjusted Efficiency Ratio | 62.59 | % | 63.58 | % | 63.77 | % | |||
| Operating Leverage5 (basis points) | (295 | ) | |||||||
| Adjusted Operating Leverage6 (basis points) | 184 | ||||||||
5 Year-over-year basis point change in noninterest expenses plus change in total revenue
6 Year-over-year basis point change in adjusted noninterest expense plus change in adjusted total revenue
| ($ in millions) | 1Q18 | 4Q17 | ||||
| Net Income (Loss) | $ | 48.0 | $ | (18.5 | ) | |
| Add: Intangible Amortization (net of tax) | 2.8 | 2.2 | ||||
| Tangible Net Income (Loss) | $ | 50.8 | $ | (16.3 | ) | |
| Less: Securities Gains (net of tax7) | (0.6 | ) | (1.1 | ) | ||
| Add: Merger & Integration Charges (net of tax7) | 1.8 | 8.4 | ||||
| Add: Branch Consolidations, Severance, Foundation Funding, Client Experience Initiative Charges (net of tax7) | 2.1 | 4.6 | ||||
| Add: Estimated DTA Revaluation | - | 39.3 | ||||
| Adjusted Tangible Net Income (Loss) | $ | 54.1 | $ | 34.9 | ||
| Average Total Shareholders’ Equity | $ | 2,166.1 | $ | 2,104.6 | ||
| Less: Average Goodwill | (828.1 | ) | (776.9 | ) | ||
| Less: Average Intangibles | (51.1 | ) | (37.8 | ) | ||
| Average Tangible Shareholders’ Equity | $ | 1,286.8 | $ | 1,289.9 | ||
| Return on Average Tangible Common Equity | 15.80 | % | (5.05 | %) | ||
| Adjusted Return on Average Tangible Common Equity | 16.81 | % | 10.83 | % | ||
7 Tax-effect calculations use the 2018 statutory FTE tax rates (federal + state)
CONFERENCE CALL AND WEBCAST
Old National will host a conference call and live webcast at 7:00 a.m. Central Time on Monday, April 23, 2018, to review first-quarter 2018 financial results. 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 10:00 a.m. Central Time on April 23 through May 7. To access the replay, dial 1-855-859-2056, Conference ID Code 7676787.
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.
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. 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 merger with Anchor-Minnesota that might not be realized within the expected timeframes and costs or difficulties relating to integration matters might be greater than expected; 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.
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 $17.5 billion in assets, it ranks among the top 100 banking companies in the U.S. and has been recognized as a World’s Most Ethical Company by the Ethisphere Institute for six consecutive years. Since its founding in Evansville in 1834, Old National Bank has focused on community banking by building long-term, highly valued partnerships with clients. Today, Old National’s footprint includes Indiana, Kentucky, Michigan, Wisconsin and Minnesota. In addition to providing extensive services in retail and commercial banking, Old National offers comprehensive wealth management, investments and brokerage services. For more information and financial data, please visit Investor Relations at oldnational.com.
Media: Kathy A. Schoettlin (812) 465-7269
Investors: Lynell J. Walton (812) 464-1366
| Financial Highlights (unaudited) | |||||||||
| ($ and shares in thousands, except per share data) | |||||||||
| Three Months Ended | |||||||||
| March 31, | December 31, | March 31, | |||||||
| 2018 | 2017 | 2017 | |||||||
| Income Statement | |||||||||
| Net interest income | $ | 128,572 | $ | 118,556 | $ | 105,801 | |||
| Provision for loan losses | 380 | 1,037 | 347 | ||||||
| Noninterest income | 42,389 | 44,825 | 42,920 | ||||||
| Noninterest expense | 117,641 | 140,432 | 101,891 | ||||||
| Net income (loss) | 47,983 | (18,493 | ) | 35,992 | |||||
| Per Common Share Data (Diluted) | |||||||||
| Net income (loss) available to common shareholders | $ | 0.31 | $ | (0.13 | ) | $ | 0.27 | ||
| Average diluted shares outstanding | 152,370 | 146,875 | 135,431 | ||||||
| Book value | 14.32 | 14.17 | 13.63 | ||||||
| Stock price | 16.90 | 17.45 | 17.35 | ||||||
| Dividend payout ratio | 41 | % | N/M | 48 | % | ||||
| Tangible common book value (1) | 8.55 | 8.37 | 8.54 | ||||||
| Performance Ratios | |||||||||
| Return on average assets | 1.10 | % | -0.45 | % | 0.98 | % | |||
| Return on average common equity | 8.86 | % | -3.51 | % | 7.89 | % | |||
| Return on average tangible common equity (1) | 15.80 | % | -5.05 | % | 13.38 | % | |||
| Net interest margin (FTE) | 3.45 | % | 3.47 | % | 3.50 | % | |||
| Efficiency ratio (2) | 65.94 | % | 81.60 | % | 64.66 | % | |||
| Net charge-offs (recoveries) to average loans | 0.01 | % | 0.03 | % | 0.01 | % | |||
| Allowance for loan losses to ending loans | 0.45 | % | 0.45 | % | 0.55 | % | |||
| Non-performing loans to ending loans | 1.28 | % | 1.30 | % | 1.43 | % | |||
| Balance Sheet | |||||||||
| Total loans | $ | 11,238,682 | $ | 11,118,121 | $ | 9,131,773 | |||
| Total assets | 17,496,287 | 17,518,292 | 14,869,645 | ||||||
| Total deposits | 12,788,600 | 12,605,764 | 10,821,352 | ||||||
| Total borrowed funds | 2,371,292 | 2,578,204 | 2,066,617 | ||||||
| Total shareholders' equity | 2,179,118 | 2,154,397 | 1,846,359 | ||||||
| Capital Ratios (1) | |||||||||
| Risk-based capital ratios (EOP): | |||||||||
| Tier 1 common equity | 10.7 | % | 10.5 | % | 11.4 | % | |||
| Tier 1 | 10.7 | % | 10.4 | % | 11.7 | % | |||
| Total | 11.7 | % | 11.4 | % | 12.2 | % | |||
| Leverage ratio (to average assets) | 8.1 | % | 8.3 | % | 8.5 | % | |||
| Total equity to assets (averages) | 12.42 | % | 12.69 | % | 12.36 | % | |||
| Tangible common equity to tangible assets | 7.83 | % | 7.65 | % | 8.16 | % | |||
| Nonfinancial Data | |||||||||
| Full-time equivalent employees | 2,721 | 2,801 | 2,659 | ||||||
| Number of branches | 191 | 191 | 188 | ||||||
| (1) See "Non-GAAP Measures" table. | |||||||||
| (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 amortization of intangibles | |||||||||
| 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 N/M - Not meaningful | |||||||||
| Income Statement (unaudited) | ||||||||
| ($ and shares in thousands, except per share data) | ||||||||
| Three Months Ended | ||||||||
| March 31, | December 31, | March 31, | ||||||
| 2018 | 2017 | 2017 | ||||||
| Interest income | $ | 147,706 | $ | 135,134 | $ | 118,468 | ||
| Less: interest expense | 19,134 | 16,578 | 12,667 | |||||
| Net interest income | 128,572 | 118,556 | 105,801 | |||||
| Provision for loan losses | 380 | 1,037 | 347 | |||||
| Net interest income after provision for loan losses | 128,192 | 117,519 | 105,454 | |||||
| Wealth management fees | 9,026 | 9,801 | 8,999 | |||||
| Service charges on deposit accounts | 10,759 | 10,913 | 9,843 | |||||
| Debit card and ATM fees | 4,865 | 4,756 | 4,236 | |||||
| Mortgage banking revenue | 4,192 | 3,933 | 4,226 | |||||
| Investment product fees | 5,515 | 5,791 | 4,989 | |||||
| Capital markets income | 498 | 923 | 1,031 | |||||
| Company-owned life insurance | 2,605 | 2,366 | 2,149 | |||||
| Other income | 4,130 | 4,676 | 5,901 | |||||
| Gains (losses) on sales of securities | 788 | 1,588 | 1,500 | |||||
| Gains (losses) on derivatives | 11 | 78 | 46 | |||||
| Total noninterest income | 42,389 | 44,825 | 42,920 | |||||
| Salaries and employee benefits | 64,179 | 74,785 | 56,564 | |||||
| Occupancy | 13,280 | 12,168 | 12,134 | |||||
| Equipment | 3,565 | 3,498 | 3,227 | |||||
| Marketing | 3,697 | 3,803 | 3,050 | |||||
| Data processing | 8,884 | 8,776 | 7,608 | |||||
| Communication | 3,064 | 2,419 | 2,414 | |||||
| Professional fees | 2,730 | 5,523 | 2,651 | |||||
| Loan expenses | 1,744 | 1,730 | 1,631 | |||||
| Supplies | 722 | 686 | 579 | |||||
| FDIC assessment | 2,645 | 2,666 | 2,487 | |||||
| Other real estate owned expense | 349 | 741 | 1,115 | |||||
| Amortization of intangibles | 3,609 | 3,399 | 3,020 | |||||
| Amortization of tax credit investments | 716 | 11,733 | - | |||||
| Other expense | 8,457 | 8,505 | 5,411 | |||||
| Total noninterest expense | 117,641 | 140,432 | 101,891 | |||||
| Income before income taxes | 52,940 | 21,912 | 46,483 | |||||
| Income tax expense | 4,957 | 40,405 | 10,491 | |||||
| Net income (loss) | $ | 47,983 | $ | (18,493 | ) | $ | 35,992 | |
| Diluted Earnings Per Share | ||||||||
| Net income (loss) | $ | 0.31 | $ | (0.13 | ) | $ | 0.27 | |
| Average Common Shares Outstanding | ||||||||
| Basic | 151,721 | 146,073 | 134,912 | |||||
| Diluted | 152,370 | 146,875 | 135,431 | |||||
| Common shares outstanding at end of period | 152,172 | 152,040 | 135,435 | |||||
| Balance Sheet (unaudited) | |||||||||||||
| ($ in thousands) | |||||||||||||
| March 31, | December 31, | March 31, | |||||||||||
| 2018 | 2017 | 2017 | |||||||||||
| Assets | |||||||||||||
| Federal Reserve Bank account | $ | 73,657 | $ | 54,361 | $ | 24,460 | |||||||
| Money market investments | 12,562 | 13,318 | 7,601 | ||||||||||
| Investments: | |||||||||||||
| Treasury and government sponsored agencies | 655,353 | 669,838 | 595,172 | ||||||||||
| Mortgage-backed securities | 1,623,554 | 1,674,584 | 1,484,561 | ||||||||||
| States and political subdivisions | 1,159,614 | 1,207,353 | 1,144,412 | ||||||||||
| Other securities | 458,270 | 453,765 | 446,830 | ||||||||||
| Total investments | 3,896,791 | 4,005,540 | 3,670,975 | ||||||||||
| Loans held for sale | 17,635 | 17,930 | 17,373 | ||||||||||
| Loans: | |||||||||||||
| Commercial | 2,811,629 | 2,717,269 | 1,910,536 | ||||||||||
| Commercial and agriculture real estate | 4,449,980 | 4,354,552 | 3,222,865 | ||||||||||
| Consumer: | |||||||||||||
| Home equity | 487,237 | 507,509 | 464,911 | ||||||||||
| Other consumer loans | 1,331,304 | 1,371,738 | 1,421,199 | ||||||||||
| Subtotal of commercial and consumer loans | 9,080,150 | 8,951,068 | 7,019,511 | ||||||||||
| Residential real estate | 2,158,532 | 2,167,053 | 2,112,262 | ||||||||||
| Total loans | 11,238,682 | 11,118,121 | 9,131,773 | ||||||||||
| Total earning assets | 15,239,327 | 15,209,270 | 12,852,182 | ||||||||||
| Allowance for loan losses | (50,381 | ) | (50,381 | ) | (49,834 | ) | |||||||
| Non-earning Assets: | |||||||||||||
| Cash and due from banks | 192,022 | 222,753 | 184,974 | ||||||||||
| Premises and equipment | 453,603 | 458,074 | 420,866 | ||||||||||
| Goodwill and other intangible assets | 877,637 | 881,147 | 689,675 | ||||||||||
| Company-owned life insurance | 404,561 | 403,753 | 353,786 | ||||||||||
| Net deferred tax assets | 88,773 | 110,857 | 165,376 | ||||||||||
| Loan servicing rights | 24,380 | 24,661 | 25,446 | ||||||||||
| Other real estate owned | 6,735 | 8,810 | 12,547 | ||||||||||
| Other assets | 259,630 | 249,348 | 214,627 | ||||||||||
| Total non-earning assets | 2,307,341 | 2,359,403 | 2,067,297 | ||||||||||
| Total assets | $ | 17,496,287 | $ | 17,518,292 | $ | 14,869,645 | |||||||
| Liabilities and Equity | |||||||||||||
| Noninterest-bearing demand deposits | $ | 3,655,732 | $ | 3,680,807 | $ | 3,024,111 | |||||||
| NOW accounts | 3,135,778 | 3,115,822 | 2,635,317 | ||||||||||
| Savings accounts | 3,091,101 | 3,035,622 | 2,997,919 | ||||||||||
| Money market accounts | 1,130,258 | 1,139,077 | 697,287 | ||||||||||
| Other time deposits | 1,573,874 | 1,470,118 | 1,349,303 | ||||||||||
| Total core deposits | 12,586,743 | 12,441,446 | 10,703,937 | ||||||||||
| Brokered CD's | 201,857 | 164,318 | 117,415 | ||||||||||
| Total deposits | 12,788,600 | 12,605,764 | 10,821,352 | ||||||||||
| Federal funds purchased and interbank borrowings | 150,026 | 335,033 | 61,016 | ||||||||||
| Securities sold under agreements to repurchase | 308,189 | 384,810 | 345,550 | ||||||||||
| Federal Home Loan Bank advances | 1,664,179 | 1,609,579 | 1,441,030 | ||||||||||
| Other borrowings | 248,898 | 248,782 | 219,021 | ||||||||||
| Total borrowed funds | 2,371,292 | 2,578,204 | 2,066,617 | ||||||||||
| Accrued expenses and other liabilities | 157,277 | 179,927 | 135,317 | ||||||||||
| Total liabilities | 15,317,169 | 15,363,895 | 13,023,286 | ||||||||||
| Common stock, surplus, and retained earnings | 2,240,644 | 2,204,669 | 1,894,924 | ||||||||||
| Accumulated other comprehensive income (loss) | (61,526 | ) | (50,272 | ) | (48,565 | ) | |||||||
| Total shareholders' equity | 2,179,118 | 2,154,397 | 1,846,359 | ||||||||||
| Total liabilities and shareholders' equity | $ | 17,496,287 | $ | 17,518,292 | $ | 14,869,645 | |||||||
| Average Balance Sheet and Interest Rates (unaudited) | |||||||||||||||||||||||||||||
| ($ in thousands) | |||||||||||||||||||||||||||||
| Three Months Ended | Three Months Ended | Three Months Ended | |||||||||||||||||||||||||||
| March 31, 2018 | December 31, 2017 | March 31, 2017 | |||||||||||||||||||||||||||
| Average | Income (1)/ | Yield/ | Average | Income (1)/ | Yield/ | Average | Income (1)/ | Yield/ | |||||||||||||||||||||
| Earning Assets: | Balance | Expense | Rate | Balance | Expense | Rate | Balance | Expense | Rate | ||||||||||||||||||||
| Money market and other interest-earning | |||||||||||||||||||||||||||||
| investments | $ | 66,536 | $ | 90 | 0.55 | % | $ | 54,611 | $ | 87 | 0.63 | % | $ | 27,482 | $ | 31 | 0.46 | % | |||||||||||
| Investments: | |||||||||||||||||||||||||||||
| Treasury and gov't sponsored agencies | 663,096 | 3,424 | 2.07 | % | 611,982 | 3,031 | 1.98 | % | 540,422 | 2,780 | 2.06 | % | |||||||||||||||||
| Mortgage-backed securities | 1,632,610 | 9,520 | 2.33 | % | 1,573,578 | 8,139 | 2.07 | % | 1,511,388 | 7,818 | 2.07 | % | |||||||||||||||||
| States and political subdivisions | 1,204,855 | 10,478 | 3.48 | % | 1,178,113 | 13,312 | 4.52 | % | 1,133,373 | 13,607 | 4.80 | % | |||||||||||||||||
| Other securities | 459,458 | 3,669 | 3.19 | % | 454,824 | 3,126 | 2.75 | % | 445,235 | 2,828 | 2.54 | % | |||||||||||||||||
| Total investments | 3,960,019 | 27,091 | 2.74 | % | 3,818,497 | 27,608 | 2.89 | % | 3,630,418 | 27,033 | 2.98 | % | |||||||||||||||||
| Loans: (2) | |||||||||||||||||||||||||||||
| Commercial | 2,759,688 | 28,205 | 4.09 | % | 2,480,987 | 26,577 | 4.19 | % | 1,887,929 | 19,088 | 4.04 | % | |||||||||||||||||
| Commercial and agriculture real estate | 4,394,002 | 55,787 | 5.08 | % | 3,989,684 | 47,683 | 4.68 | % | 3,171,005 | 40,324 | 5.09 | % | |||||||||||||||||
| Consumer: | |||||||||||||||||||||||||||||
| Home equity | 502,902 | 5,688 | 4.59 | % | 502,837 | 5,442 | 4.29 | % | 476,353 | 4,659 | 3.97 | % | |||||||||||||||||
| Other consumer loans | 1,346,331 | 12,140 | 3.66 | % | 1,371,986 | 12,248 | 3.54 | % | 1,408,100 | 11,767 | 3.39 | % | |||||||||||||||||
| Subtotal commercial and consumer loans | 9,002,923 | 101,820 | 4.59 | % | 8,345,494 | 91,950 | 4.37 | % | 6,943,387 | 75,838 | 4.43 | % | |||||||||||||||||
| Residential real estate loans | 2,176,413 | 21,472 | 3.95 | % | 2,170,900 | 21,628 | 3.99 | % | 2,141,571 | 21,254 | 3.97 | % | |||||||||||||||||
| Total loans | 11,179,336 | 123,292 | 4.42 | % | 10,516,394 | 113,578 | 4.26 | % | 9,084,958 | 97,092 | 4.29 | % | |||||||||||||||||
| Total earning assets | $ | 15,205,891 | $ | 150,473 | 3.97 | % | $ | 14,389,502 | $ | 141,273 | 3.88 | % | $ | 12,742,858 | $ | 124,156 | 3.91 | % | |||||||||||
| Less: Allowance for loan losses | (50,953 | ) | (50,601 | ) | (50,710 | ) | |||||||||||||||||||||||
| Non-earning Assets: | |||||||||||||||||||||||||||||
| Cash and due from banks | $ | 199,132 | $ | 201,520 | $ | 195,620 | |||||||||||||||||||||||
| Other assets | 2,089,790 | 2,046,544 | 1,877,849 | ||||||||||||||||||||||||||
| Total assets | $ | 17,443,860 | $ | 16,586,965 | $ | 14,765,617 | |||||||||||||||||||||||
| Interest-Bearing Liabilities: | |||||||||||||||||||||||||||||
| NOW accounts | $ | 3,067,437 | $ | 819 | 0.11 | % | $ | 2,905,440 | $ | 714 | 0.10 | % | $ | 2,585,814 | $ | 456 | 0.07 | % | |||||||||||
| Savings accounts | 3,052,646 | 1,343 | 0.18 | % | 3,010,761 | 1,324 | 0.17 | % | 2,969,866 | 1,157 | 0.16 | % | |||||||||||||||||
| Money market accounts | 1,159,010 | 546 | 0.19 | % | 994,574 | 394 | 0.16 | % | 706,990 | 149 | 0.09 | % | |||||||||||||||||
| Other time deposits | 1,561,945 | 3,900 | 1.01 | % | 1,443,050 | 3,203 | 0.88 | % | 1,332,912 | 2,368 | 0.72 | % | |||||||||||||||||
| Total interest-bearing deposits | 8,841,038 | 6,608 | 0.30 | % | 8,353,825 | 5,635 | 0.27 | % | 7,595,582 | 4,130 | 0.22 | % | |||||||||||||||||
| Brokered CD's | 175,039 | 647 | 1.50 | % | 154,521 | 489 | 1.26 | % | 107,519 | 253 | 0.95 | % | |||||||||||||||||
| Total interest-bearing deposits and CD's | 9,016,077 | 7,255 | 0.33 | % | 8,508,346 | 6,124 | 0.29 | % | 7,703,101 | 4,383 | 0.23 | % | |||||||||||||||||
| Federal funds purchased and interbank borrowings | 261,353 | 1,017 | 1.58 | % | 172,838 | 533 | 1.22 | % | 189,070 | 356 | 0.76 | % | |||||||||||||||||
| Securities sold under agreements to repurchase | 342,682 | 359 | 0.42 | % | 370,095 | 400 | 0.43 | % | 331,400 | 256 | 0.31 | % | |||||||||||||||||
| Federal Home Loan Bank advances | 1,675,700 | 7,780 | 1.88 | % | 1,543,690 | 6,871 | 1.77 | % | 1,429,977 | 5,312 | 1.51 | % | |||||||||||||||||
| Other borrowings | 248,828 | 2,723 | 4.38 | % | 241,695 | 2,650 | 4.39 | % | 218,965 | 2,360 | 4.31 | % | |||||||||||||||||
| Total borrowed funds | 2,528,563 | 11,879 | 1.91 | % | 2,328,318 | 10,454 | 1.78 | % | 2,169,412 | 8,284 | 1.55 | % | |||||||||||||||||
| Total interest-bearing liabilities | $ | 11,544,640 | $ | 19,134 | 0.67 | % | $ | 10,836,664 | $ | 16,578 | 0.61 | % | $ | 9,872,513 | $ | 12,667 | 0.52 | % | |||||||||||
| Noninterest-Bearing Liabilities | |||||||||||||||||||||||||||||
| Demand deposits | $ | 3,563,104 | $ | 3,486,412 | $ | 2,917,053 | |||||||||||||||||||||||
| Other liabilities | 170,061 | 159,243 | 150,392 | ||||||||||||||||||||||||||
| Shareholders' equity | 2,166,055 | 2,104,646 | 1,825,659 | ||||||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 17,443,860 | $ | 16,586,965 | $ | 14,765,617 | |||||||||||||||||||||||
| Net interest rate spread | 3.30 | % | 3.27 | % | 3.39 | % | |||||||||||||||||||||||
| Net interest margin (FTE) | 3.45 | % | 3.47 | % | 3.50 | % | |||||||||||||||||||||||
| FTE adjustment | $ | 2,767 | $ | 6,139 | $ | 5,688 | |||||||||||||||||||||||
| (1) Interest income is reflected on a fully taxable equivalent basis (FTE). | |||||||||||||||||||||||||||||
| (2) Includes loans held for sale. | |||||||||||||||||||||||||||||
| Asset Quality (EOP) (unaudited) | ||||||||||
| ($ in thousands) | ||||||||||
| Three Months Ended | ||||||||||
| March 31, | December 31, | March 31, | ||||||||
| 2018 | 2017 | 2017 | ||||||||
| Beginning allowance for loan losses | $ | 50,381 | $ | 50,169 | $ | 49,808 | ||||
| Provision for loan losses | 380 | 1,037 | 347 | |||||||
| Gross charge-offs | (2,685 | ) | (3,278 | ) | (3,239 | ) | ||||
| Gross recoveries | 2,305 | 2,453 | 2,918 | |||||||
| Net (charge-offs) recoveries | (380 | ) | (825 | ) | (321 | ) | ||||
| Ending allowance for loan losses | $ | 50,381 | $ | 50,381 | $ | 49,834 | ||||
| Net charge-offs (recoveries) / average loans (1) | 0.01 | % | 0.03 | % | 0.01 | % | ||||
| Average loans outstanding (1) | $ | 11,175,329 | $ | 10,509,552 | $ | 9,078,672 | ||||
| EOP loans outstanding (1) | 11,238,682 | $ | 11,118,121 | $ | 9,131,773 | |||||
| Allowance for loan losses / EOP loans (1) | 0.45 | % | 0.45 | % | 0.55 | % | ||||
| Underperforming Assets: | ||||||||||
| Loans 90 Days and over (still accruing) | $ | 328 | $ | 894 | $ | 381 | ||||
| Non-performing loans: | ||||||||||
| Nonaccrual loans (2) | 127,295 | 124,927 | 115,377 | |||||||
| Renegotiated loans | 16,802 | 19,589 | 14,969 | |||||||
| Total non-performing loans | 144,097 | 144,516 | 130,346 | |||||||
| Foreclosed properties | 6,735 | 8,810 | 12,547 | |||||||
| Total underperforming assets | $ | 151,160 | $ | 154,220 | $ | 143,274 | ||||
| Classified and Criticized Assets: | ||||||||||
| Nonaccrual loans (2) | 127,295 | 124,927 | 115,377 | |||||||
| Substandard accruing loans | 118,123 | 100,762 | 104,171 | |||||||
| Loans 90 days and over (still accruing) | 328 | 894 | 381 | |||||||
| Total classified loans - "problem loans" | $ | 245,746 | $ | 226,583 | $ | 219,929 | ||||
| Other classified assets | 2,987 | 4,556 | 7,306 | |||||||
| Criticized loans - "special mention loans" | 174,873 | 188,085 | 95,881 | |||||||
| Total classified and criticized assets | $ | 423,606 | $ | 419,224 | $ | 323,116 | ||||
| Non-performing loans / EOP loans (1) | 1.28 | % | 1.30 | % | 1.43 | % | ||||
| Allowance to non-performing loans (3) | 35 | % | 35 | % | 38 | % | ||||
| Under-performing assets / EOP loans (1) | 1.35 | % | 1.39 | % | 1.57 | % | ||||
| EOP total assets | $ | 17,496,287 | $ | 17,518,292 | $ | 14,869,645 | ||||
| Under-performing assets / EOP assets | 0.86 | % | 0.88 | % | 0.96 | % | ||||
| EOP - End of period actual balances | ||||||||||
| (1) Excludes loans held for sale. | ||||||||||
| (2) Includes renegotiated loans totaling $36.9 million at March 31, 2018, $34.0 million at December 31, 2017, and $34.2 million | ||||||||||
| at March 31, 2017. | ||||||||||
| (3) Includes acquired loans that were recorded at fair value in accordance with ASC 805 at the date of acquisition. As such, the | ||||||||||
| credit risk was incorporated in the fair value recorded and no allowance for loan losses was recorded on the acquisition date. | ||||||||||
| Non-GAAP Measures (unaudited) | |||||||||||
| ($ in thousands) | |||||||||||
| Three Months Ended | |||||||||||
| March 31, | December 31, | March 31, | |||||||||
| 2018 | 2017 | 2017 | |||||||||
| Actual End of Period Balances | |||||||||||
| GAAP shareholders' equity | $ | 2,179,118 | $ | 2,154,397 | $ | 1,846,359 | |||||
| Deduct: | |||||||||||
| Goodwill | 828,804 | 828,051 | 655,018 | ||||||||
| Intangibles | 48,833 | 53,096 | 34,657 | ||||||||
| 877,637 | 881,147 | 689,675 | |||||||||
| Tangible shareholders' equity | $ | 1,301,481 | $ | 1,273,250 | $ | 1,156,684 | |||||
| Average Balances | |||||||||||
| GAAP shareholders' equity | $ | 2,166,055 | $ | 2,104,646 | $ | 1,825,659 | |||||
| Deduct: | |||||||||||
| Goodwill | 828,141 | 776,862 | 655,018 | ||||||||
| Intangibles | 51,092 | 37,802 | 36,097 | ||||||||
| 879,233 | 814,664 | 691,115 | |||||||||
| Average tangible shareholders' equity | $ | 1,286,822 | $ | 1,289,982 | $ | 1,134,544 | |||||
| Actual End of Period Balances | |||||||||||
| GAAP assets | $ | 17,496,287 | $ | 17,518,292 | $ | 14,869,645 | |||||
| Add: | |||||||||||
| Trust overdrafts | 50 | 59 | 86 | ||||||||
| Deduct: | |||||||||||
| Goodwill | 828,804 | 828,051 | 655,018 | ||||||||
| Intangibles | 48,833 | 53,096 | 34,657 | ||||||||
| 877,637 | 881,147 | 689,675 | |||||||||
| Tangible assets | $ | 16,618,700 | $ | 16,637,204 | $ | 14,180,056 | |||||
| Risk-weighted assets | $ | 12,523,432 | $ | 12,491,430 | $ | 10,171,517 | |||||
| GAAP net income (loss) | $ | 47,983 | $ | (18,493 | ) | $ | 35,992 | ||||
| Add: | |||||||||||
| Amortization of intangibles (net of tax) | 2,851 | 2,210 | 1,963 | ||||||||
| Tangible net income (loss) | $ | 50,834 | $ | (16,284 | ) | $ | 37,955 | ||||
| Tangible Ratios | |||||||||||
| Return on tangible common equity | 15.62 | % | -5.12 | % | 13.13 | % | |||||
| Return on average tangible common equity | 15.80 | % | -5.05 | % | 13.38 | % | |||||
| Return on tangible assets | 1.22 | % | -0.39 | % | 1.07 | % | |||||
| Tangible common equity to tangible assets | 7.83 | % | 7.65 | % | 8.16 | % | |||||
| Tangible common equity to risk-weighted assets | 10.39 | % | 10.19 | % | 11.37 | % | |||||
| Tangible common book value (1) | 8.55 | 8.37 | 8.54 | ||||||||
| 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 | $ | 1,341,261 | $ | 1,298,327 | $ | 1,191,735 | |||||
| Deduct: | |||||||||||
| Trust Preferred Securities (2) | - | - | 45,000 | ||||||||
| Additional Tier 1 capital deductions | - | (10,000 | ) | (16,100 | ) | ||||||
| - | (10,000 | ) | 28,900 | ||||||||
| Tier 1 common equity | $ | 1,341,261 | $ | 1,308,327 | $ | 1,162,835 | |||||
| Risk-weighted assets | 12,523,432 | 12,491,430 | 10,171,517 | ||||||||
| Tier 1 common equity to risk-weighted assets | 10.71 | % | 10.47 | % | 11.43 | % | |||||
| (2) Trust Preferred Securities are now included in Tier 2 capital as a result of exceeding the $15 billion asset threshold from the | |||||||||||
| Anchor-Minnesota acquisition. | |||||||||||