ENGLEWOOD CLIFFS, N.J., Oct. 26, 2017 (GLOBE NEWSWIRE) -- ConnectOne Bancorp, Inc. (Nasdaq:CNOB) (the “Company” or “ConnectOne”), parent company of ConnectOne Bank (the “Bank”), today reported net income of $13.1 million for the third quarter of 2017 compared with $7.7 million for the second quarter of 2017 and $11.9 million earned during the third quarter of 2016. Diluted earnings per share were $0.41 for the current quarter versus $0.24 earned in the second quarter of 2017 and $0.39 earned in the third quarter of 2016.
Earnings per share, adjusted for charges related to the taxi medallion portfolio and securities gains, amounted to $0.46 for the third quarter of 2017, as compared with $0.42 for the second quarter of 2017 and $0.40 for the third quarter of 2016. Taxi medallion pretax charges/provisions amounted to $3.0 million, $9.7 million, and $4.8 million during the third quarter 2017, second quarter 2017 and third quarter 2016, respectively. A $4.1 million pretax securities gain was realized during the third quarter of 2016.
Frank Sorrentino, ConnectOne’s Chairman and CEO stated, “Third quarter operating results reflect increasing strong core performance, with return on tangible equity (excluding taxi medallion charges) surpassing 14%. Key business drivers showed continued momentum with deposit and loan growth achieving near-historic levels. Loans receivable increased by $128 million during the quarter, including non-CRE loans which increased in excess of 20% annualized. Loan growth since year-end 2016 amounted to $413.5 million or 15.8% on an annualized basis. In addition, we designated approximately $42 million of performing multifamily “non-relationship” loans as held-for-sale, which is anticipated to close in the fourth quarter of 2017 and would result in a modest gain and help to further diversify our loan portfolio. We also achieved strong progress in increasing core deposits. For the current quarter, our average core deposits (total deposits excluding time deposits) increased by $125 million, or 20.9% on an annualized basis. Return on assets for the third quarter, including $3.0 million of taxi charges, was 1.10% and return on tangible equity was 12.8%. When excluding the aforementioned taxi charges, the adjusted return on assets and return on tangible equity was 1.25% and 14.5%, respectively, while our 3.44% net interest margin for the quarter is stabilizing and our efficiency ratio improved to below 40%.”
Mr. Sorrentino added, “Operationally, we are expanding our deposit gathering initiatives with the opening of our first commercial banking office on Long Island, located on the Nassau/Suffolk border in Melville, NY. The new office is the Bank’s second location in New York State and enables ConnectOne to further provide best in class service to existing NY-based customers while also fostering new relationships on Long Island. ConnectOne has long worked with businesses in the New York metropolitan area to help them reach their goals and grow. Two years ago, we opened our first New York branch in Manhattan, and quickly realized the need for institutions with ConnectOne’s capabilities as a larger bank that can also provide the one-on-one service we specialize in. Our expansion to Long Island is a natural extension of our market focus.”
Mr. Sorrentino continued, “Looking ahead, we remain focused on driving shareholder return by executing against key strategic objectives including diversified loan growth, core deposit funding to match growth, and leveraging our infrastructure through economies of scale and technological advancements. In addition, strong earnings retention is funding balance sheet growth in excess of 10%. We are diligently building a stronger company and our third quarter and year-to-date results demonstrate our commitment to and success in achieving these goals.”
Operating Results
Fully taxable equivalent net interest income for the third quarter of 2017 was $37.9 million, an increase of $2.1 million, or 5.8%, from the second quarter of 2017, resulting from an increase in average interest-earning assets of 5.0% combined with a little-changed net interest margin, which contracted by 1 basis-point to 3.44% from 3.45%. Included in net interest income was accretion and amortization of purchase accounting adjustments of $0.3 million during both the third and second quarters of 2017. Excluding purchase accounting adjustments, the adjusted net interest margin was 3.41% in the third quarter of 2017, contracting by 1 basis-point from the second quarter 2017 adjusted net interest margin of 3.42%. The decrease in net interest margin was primarily attributable to increased deposit funding costs, offset by higher yields on loans.
Fully taxable equivalent net interest income for the third quarter of 2017 increased by $4.2 million, or 12.3%, from the third quarter of 2016, resulting from an increase in average interest-earning assets of 8.4% and the widening of the net interest margin by 12 basis-points to 3.44% from 3.32%. Included in net interest income was accretion and amortization of purchase accounting adjustments of $0.3 million and $1.0 million during the third quarter of 2017 and 2016, respectively. Excluding these purchase accounting adjustments, the adjusted net interest margin was 3.41% in the third quarter of 2017, widening by 19 basis-points from the third quarter of 2016 adjusted net interest margin of 3.22%. The increase in the adjusted net interest margin was primarily attributable to a higher volume of loans which reduced excess cash balances resulting in an improved asset-mix, partially offset by increased cost in deposit funding and lower yields on securities.
Noninterest income totaled $1.8 million in the third quarter of 2017, $1.4 million in the second quarter of 2017 and $5.6 million in the third quarter of 2016. There were no net securities gains during the third and second quarters of 2017. The third quarter of 2016 included net securities gains of $4.1 million. Excluding the securities gains, noninterest income increased approximately $0.3 million when compared to the sequential quarter and the prior year third quarter. The increase was due primarily to a bank owned life insurance death benefit recorded during the third quarter of 2017.
Noninterest expenses totaled $18.6 million for the third quarter of 2017, down $6.7 million from $25.3 million for the second quarter of 2017 and up $4.1 million from $14.6 million for the third quarter of 2016. The decrease from the sequential quarter was mainly attributable to the valuation allowance adjustment on taxi medallion loans held-for-sale, which declined to $3.0 million in the current quarter from $9.7 million in the second quarter of 2017. The increase in noninterest expenses from the prior year third quarter was mainly attributable to the aforementioned $3.0 million taxi medallion valuation allowance; there was no valuation allowance in the prior year’s period. In addition, increases in salaries and employee benefits ($1.1 million), FDIC insurance premiums ($0.1 million), data processing ($0.2 million), partially offset by decreases in other expense ($0.2 million) and occupancy and equipment expenses ($0.1 million) contributed to the overall increase in noninterest expense from the third quarter of 2016. The increases over the prior year third quarter were the result of increased levels of business and staff resulting from organic growth.
Income tax expense was $5.6 million for the third quarter of 2017, compared to $2.1 million for the second quarter of 2017 and $5.4 million for the third quarter of 2016. Included in income tax expense for the first nine months of 2017 is a benefit of $180 thousand, which resulted from the effect of implementing ASU 2016-09, which relates to the recognition of excess tax benefits in the income statement (formerly through equity) that result from employee share-based payment awards. The effective tax rate for the current quarter was 30.0% versus 21.4% for the sequential quarter and 31.5% for the prior year third quarter. Excluding any changes to the taxi medallion valuation allowance, the effective tax rate for 2017 is expected to be maintained in the low 30% range.
Asset Quality
The provision for loan losses was $1.5 million in both the third and second quarters of 2017, down from $6.8 million in the third quarter of 2016. The decrease from the prior year quarter was largely attributable to a lower level of specific credit reserves.
As of September 30, 2017, loans held-for-sale included loans secured by NYC taxi medallions, predominantly corporate medallions totaling $47.4 million (net of a $15.3 million valuation allowance), compared to $65.6 million (with no valuation allowance) as of December 31, 2016. The decrease was primarily attributable to the aforementioned taxi medallion valuation allowance and a payoff of two corporate medallions for $1.1 million. The increase of the valuation allowance to $15.3 million compared to year-end 2016 was the result of reduced medallion lease revenues, lower transfer valuations as reported by the New York City Taxi and Limousine Commission, and uncertainty surrounding institutional investor interest in the NYC taxi business. The valuation allowance results in a per medallion value of approximately $348,000 as of September 30, 2017, down from approximately $374,000 as of June 30, 2017. Management continues to find market interest for taxi medallion loans to be extremely limited, especially for relatively smaller portfolios such as the Bank’s. Management is however experiencing continued success at restructuring loans in the portfolio and is encouraged by the cash flows being generated. Therefore, Management is currently considering returning the taxi medallion loans to loans held-for-investment. Although no decision has been made at the present time, if the loans are transferred back, they will be recorded at the held-for-sale valuation at the time of transfer.
Nonperforming assets, which includes nonaccrual loans and other real estate owned, were $61.2 million at September 30, 2017, $69.4 million at December 31, 2016 and $12.1 million at September 30, 2016. Included in nonperforming assets were taxi medallion loans, totaling $47.4 million at September 30, 2017, $63.0 million at December 31, 2016 and $3.6 million at September 30, 2016. Nonperforming assets as a percentage of total assets were 1.26% at September 30, 2017, 1.57% at December 31, 2016, and 0.28% at September 30, 2016. Excluding the taxi medallion loans, nonaccrual loans increased to $13.8 million at September 30, 2017, from $5.7 million at December 31, 2016 and $7.9 million at September 30, 2016. Nonaccrual loans as a percentage of loans receivable, excluding taxi medallion loans, were 0.35% at September 30, 2017, 0.16% at December 31, 2016 and 0.24% at September 30, 2016.
The net charge-off (recovery) ratio was (0.00)% for the third quarter of 2017, (0.01)% for the second quarter of 2017 and 0.22% for the third quarter of 2016. The allowance for loan losses represented 0.77%, 0.74%, and 1.09% of loans receivable as of September 30, 2017, December 31, 2016 and September 30, 2016, respectively. The allowance for loan losses as a percentage of nonaccrual loans, excluding taxi medallion loans, was 217.2% as of September 30, 2017, 449.0% as of December 31, 2016 and 319.3% as of September 30, 2016.
Selected Balance Sheet Items
At September 30, 2017, the Company’s total assets were $4.8 billion, an increase of $418 million from December 31, 2016. Loans receivable at September 30, 2017 were $3.9 billion, reflecting net loan growth (loan originations less pay-downs and pay-offs) of $413 million from December 31, 2016, primarily attributable to increases in multifamily ($280 million), other commercial real estate ($100 million), commercial and industrial ($88 million), and residential real estate ($32 million), offset by decreases in construction ($87 million).
The Company’s stockholders’ equity was $558 million at September 30, 2017, an increase of $26.7 million from December 31, 2016. The increase in stockholders’ equity was primarily attributable to an increase of $25.4 million in retained earnings and approximately $1.4 million of equity issuance related to stock-based compensation. As of September 30, 2017, the Company’s tangible common equity ratio and tangible book value per share were 8.71% and $12.78, respectively. As of December 31, 2016, the tangible common equity ratio and tangible book value per share were 8.93% and $11.96, respectively. Total goodwill and other intangible assets were approximately $148 million and $149 million as of September 30, 2017 and December 31, 2016, respectively.
Use of Non-GAAP Financial Measures
In addition to the results presented in accordance with Generally Accepted Accounting Principles ("GAAP"), ConnectOne routinely supplements its evaluation with an analysis of certain non-GAAP/adjusted financial measures including an adjusted net income available to common shareholders. ConnectOne believes these non-GAAP financial measures, in addition to the related GAAP measures, provide meaningful information to investors in understanding our operating performance and trends. These non-GAAP measures have inherent limitations and are not required to be uniformly applied and are not audited. They should not be considered in isolation or as a substitute for an analysis of results reported under GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies.
Reconciliations of non-GAAP/adjusted financial measures disclosed in this earnings release to the comparable GAAP measures are provided in the accompanying tables.
Third Quarter 2017 Conference Call
Management will host a conference call and audio webcast at 10:00 a.m. ET on October 26, 2017 to review the Company's financial performance and operating results. The conference call dial-in number is 785-424-1809, access code 6217589. Please dial in at least five minutes before the start of the call to register. An audio webcast of the conference call will be available to the public, on a listen-only basis, via the Company’s website at ir.ConnectOneBank.com.
A replay of the conference call will be available beginning at approximately 1:00 p.m. ET on Thursday, October 26, 2017 and ending on Thursday, November 2, 2017 by dialing 719-457-0820, access code 6217589. An online archive of the webcast will be available following the completion of the conference call at ir.ConnectOneBank.com.
About ConnectOne Bancorp, Inc.
ConnectOne is a New Jersey corporation and a registered bank holding company pursuant to the Bank Holding Company Act of 1956, as amended, and serves as the holding company for ConnectOne Bank ("the Bank"). The Bank is a community-based, full-service New Jersey-chartered commercial bank that was founded in 2005. The Bank operates from its headquarters located at 301 Sylvan Avenue in the Borough of Englewood Cliffs, Bergen County, New Jersey, and through its 20 other banking offices.
For more information visit https://www.ConnectOneBank.com/.
Forward-Looking Statements
This news release contains certain forward-looking statements which are based on certain assumptions and describe future plans, strategies and expectations of the Company. These forward-looking statements are generally identified by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project," or similar expressions. The Company's ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations of the Company and its subsidiaries include, but are not limited to, those factors set forth in Item 1A – Risk Factors of the Company’s Annual Report on Form 10-K, as filed with the Securities Exchange Commission, and changes in interest rates, general economic conditions, legislative/regulatory changes, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in the Company's market area and accounting principles and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
Investor Contact:
William S. Burns
Executive VP & CFO
201.816.4474; bburns@cnob.com
Media Contact:
Jake Ciorciari, MWWPR
646.376.7042; jciorciari@mww.com
CONNECTONE BANCORP, INC. AND SUBSIDIARIES | ||||||||||||
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION | ||||||||||||
(in thousands) | ||||||||||||
September 30, | December 31, | September 30, | ||||||||||
2017 | 2016 | 2016 | ||||||||||
ASSETS | (unaudited) | (unaudited) | ||||||||||
Cash and due from banks | $ | 41,114 | $ | 37,150 | $ | 49,028 | ||||||
Interest-bearing deposits with banks | 100,148 | 163,249 | 184,766 | |||||||||
Cash and cash equivalents | 141,262 | 200,399 | 233,794 | |||||||||
Securities available-for-sale | 400,516 | 353,290 | 338,459 | |||||||||
Loans held-for-sale (net of $15,287, $-0-, $-0- valuation allowance) | 89,386 | 78,005 | 15,112 | |||||||||
Loans receivable | 3,889,289 | 3,475,832 | 3,445,476 | |||||||||
Less: Allowance for loan losses | 29,870 | 25,744 | 37,615 | |||||||||
Net loans receivable | 3,859,419 | 3,450,088 | 3,407,861 | |||||||||
Investment in restricted stock, at cost | 29,672 | 24,310 | 24,535 | |||||||||
Bank premises and equipment, net | 21,917 | 22,075 | 22,112 | |||||||||
Accrued interest receivable | 14,841 | 12,965 | 12,497 | |||||||||
Bank owned life insurance | 110,762 | 98,359 | 97,644 | |||||||||
Other real estate owned | - | 626 | 626 | |||||||||
Goodwill | 145,909 | 145,909 | 145,909 | |||||||||
Core deposit intangibles | 2,533 | 3,088 | 3,281 | |||||||||
Other assets | 28,538 | 37,234 | 25,974 | |||||||||
Total assets | $ | 4,844,755 | $ | 4,426,348 | $ | 4,327,804 | ||||||
LIABILITIES | ||||||||||||
Deposits: | ||||||||||||
Noninterest-bearing | $ | 719,582 | $ | 694,977 | $ | 655,683 | ||||||
Interest-bearing | 2,904,187 | 2,649,294 | 2,613,266 | |||||||||
Total deposits | 3,623,769 | 3,344,271 | 3,268,949 | |||||||||
Borrowings | 585,124 | 476,280 | 481,337 | |||||||||
Subordinated debentures (net of $498, $621, $665 in debt issuance costs) | 54,657 | 54,534 | 54,490 | |||||||||
Other liabilities | 23,514 | 20,231 | 23,440 | |||||||||
Total liabilities | 4,287,064 | 3,895,316 | 3,828,216 | |||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||||
STOCKHOLDERS' EQUITY | ||||||||||||
Common stock | 412,546 | 412,726 | 374,287 | |||||||||
Additional paid-in capital | 12,840 | 11,407 | 10,409 | |||||||||
Retained earnings | 151,851 | 126,462 | 130,885 | |||||||||
Treasury stock | (16,717 | ) | (16,717 | ) | (16,717 | ) | ||||||
Accumulated other comprehensive (loss) income | (2,829 | ) | (2,846 | ) | 724 | |||||||
Total stockholders' equity | 557,691 | 531,032 | 499,588 | |||||||||
Total liabilities and stockholders' equity | $ | 4,844,755 | $ | 4,426,348 | $ | 4,327,804 | ||||||
CONNECTONE BANCORP, INC. AND SUBSIDIARIES | ||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||
(in thousands, except for per share data) | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
09/30/17 | 09/30/16 | 09/30/17 | 09/30/16 | |||||||||||
Interest income | ||||||||||||||
Interest and fees on loans | $ | 43,241 | $ | 37,803 | $ | 121,879 | $ | 109,381 | ||||||
Interest and dividends on investment securities: | ||||||||||||||
Taxable | 1,695 | 1,774 | 5,042 | 5,879 | ||||||||||
Tax-exempt | 870 | 988 | 2,655 | 2,867 | ||||||||||
Dividends | 362 | 352 | 982 | 1,074 | ||||||||||
Interest on federal funds sold and other short-term investments | 170 | 261 | 555 | 541 | ||||||||||
Total interest income | 46,338 | 41,178 | 131,113 | 119,742 | ||||||||||
Interest expense | ||||||||||||||
Deposits | 6,113 | 5,159 | 16,717 | 13,532 | ||||||||||
Borrowings | 3,206 | 2,995 | 9,135 | 9,472 | ||||||||||
Total interest expense | 9,319 | 8,154 | 25,852 | 23,004 | ||||||||||
Net interest income | 37,019 | 33,024 | 105,261 | 96,738 | ||||||||||
Provision for loan losses | 1,450 | 6,750 | 4,000 | 13,500 | ||||||||||
Net interest income after provision for loan losses | 35,569 | 26,274 | 101,261 | 83,238 | ||||||||||
Noninterest income | ||||||||||||||
Annuities and insurance commissions | - | 68 | 39 | 140 | ||||||||||
Income on bank owned life insurance | 985 | 615 | 2,402 | 1,843 | ||||||||||
Net gains on sale of loans held-for-sale | 50 | 56 | 120 | 147 | ||||||||||
Deposit, loan and other income | 721 | 706 | 2,023 | 1,984 | ||||||||||
Net gains on sale of investment securities | - | 4,131 | 1,596 | 4,234 | ||||||||||
Total noninterest income | 1,756 | 5,576 | 6,180 | 8,348 | ||||||||||
Noninterest expenses | ||||||||||||||
Salaries and employee benefits | 8,872 | 7,791 | 25,710 | 23,143 | ||||||||||
Occupancy and equipment | 1,969 | 2,049 | 6,215 | 6,450 | ||||||||||
FDIC insurance | 840 | 745 | 2,550 | 1,955 | ||||||||||
Professional and consulting | 740 | 667 | 2,192 | 2,078 | ||||||||||
Marketing and advertising | 225 | 293 | 770 | 817 | ||||||||||
Data processing | 1,176 | 1,002 | 3,474 | 3,036 | ||||||||||
Amortization of core deposit intangible | 169 | 193 | 555 | 627 | ||||||||||
Increase in valuation allowance, loans held-for-sale | 3,000 | - | 15,325 | - | ||||||||||
Other expenses | 1,650 | 1,811 | 5,402 | 5,150 | ||||||||||
Total noninterest expenses | 18,641 | 14,551 | 62,193 | 43,256 | ||||||||||
Income before income tax expense | 18,684 | 17,299 | 45,248 | 48,330 | ||||||||||
Income tax expense | 5,607 | 5,443 | 12,608 | 15,224 | ||||||||||
Net income | 13,077 | 11,856 | 32,640 | 33,106 | ||||||||||
Less: Preferred stock dividends | - | - | - | 22 | ||||||||||
Net income available to common stockholders | $ | 13,077 | $ | 11,856 | $ | 32,640 | $ | 33,084 | ||||||
Earnings per common share: | ||||||||||||||
Basic | $ | 0.41 | $ | 0.39 | $ | 1.02 | $ | 1.10 | ||||||
Diluted | 0.41 | 0.39 | 1.01 | 1.09 | ||||||||||
Dividends per common share | $ | 0.075 | $ | 0.075 | $ | 0.225 | $ | 0.225 |
ConnectOne's management believes that the supplemental financial information, including non-GAAP measures provided below, is useful to investors. The non-GAAP measures should not be viewed as a substitute for financial results determined in accordance with GAAP, and are not necessarily comparable to non-GAAP financial measures presented by other companies. | |||||||||||||||||||||
CONNECTONE BANCORP, INC. | |||||||||||||||||||||
SUPPLEMENTAL GAAP AND NON-GAAP FINANCIAL MEASURES | |||||||||||||||||||||
As of | |||||||||||||||||||||
Sept. 30, | June 30, | Mar. 31, | Dec. 31, | Sept. 30, | |||||||||||||||||
2017 | 2017 | 2017 | 2016 | 2016 | |||||||||||||||||
Selected Financial Data | (dollars in thousands) | ||||||||||||||||||||
Total assets | $ | 4,844,755 | $ | 4,681,280 | $ | 4,460,816 | $ | 4,426,348 | $ | 4,327,804 | |||||||||||
Loans receivable: | |||||||||||||||||||||
Commercial | 641,613 | 610,442 | 541,690 | 554,065 | 644,430 | ||||||||||||||||
Commercial real estate-other | 1,254,720 | 1,218,995 | 1,192,074 | 1,154,154 | 1,139,641 | ||||||||||||||||
Multifamily | 1,330,485 | 1,251,962 | 1,134,760 | 1,050,067 | 961,163 | ||||||||||||||||
Commercial construction | 399,453 | 431,049 | 460,611 | 486,228 | 471,109 | ||||||||||||||||
Residential | 264,244 | 251,108 | 242,883 | 232,547 | 229,401 | ||||||||||||||||
Consumer | 1,912 | 2,005 | 2,811 | 2,380 | 2,879 | ||||||||||||||||
Gross loans | 3,892,427 | 3,765,561 | 3,574,829 | 3,479,441 | 3,448,623 | ||||||||||||||||
Unearned net origination fees | (3,138 | ) | (3,989 | ) | (3,166 | ) | (3,609 | ) | (3,147 | ) | |||||||||||
Loans receivable | 3,889,289 | 3,761,572 | 3,571,663 | 3,475,832 | 3,445,476 | ||||||||||||||||
Loans held-for-sale (net of valuation allowance) | 89,386 | 51,124 | 62,255 | 78,005 | 15,112 | ||||||||||||||||
Total loans | $ | 3,978,675 | $ | 3,812,696 | $ | 3,633,918 | $ | 3,553,837 | $ | 3,460,588 | |||||||||||
Securities available-for-sale | $ | 400,516 | $ | 402,130 | $ | 352,476 | $ | 353,290 | $ | 338,459 | |||||||||||
Goodwill and other intangible assets | 148,442 | 148,611 | 148,804 | 148,997 | 149,190 | ||||||||||||||||
Deposits: | |||||||||||||||||||||
Noninterest-bearing demand | 719,582 | 695,522 | 671,183 | 694,977 | 655,683 | ||||||||||||||||
Other interest-bearing deposits | 1,825,828 | 1,752,523 | 1,714,081 | 1,681,158 | 1,605,927 | ||||||||||||||||
Time deposits | 1,078,359 | 982,328 | 970,213 | 968,136 | 1,007,339 | ||||||||||||||||
Total deposits | $ | 3,623,769 | $ | 3,430,373 | $ | 3,355,477 | $ | 3,344,271 | $ | 3,268,949 | |||||||||||
Borrowings | $ | 585,124 | $ | 626,173 | $ | 491,226 | $ | 476,280 | $ | 481,337 | |||||||||||
Subordinated debentures (net of issuance costs) | 54,657 | 54,616 | 54,575 | 54,534 | 54,490 | ||||||||||||||||
Total stockholders' equity | 557,691 | 546,173 | 540,277 | 531,032 | 499,588 | ||||||||||||||||
Quarterly Average Balances | |||||||||||||||||||||
Total assets | $ | 4,714,012 | $ | 4,495,573 | $ | 4,382,314 | $ | 4,349,961 | $ | 4,344,796 | |||||||||||
Loans receivable: | |||||||||||||||||||||
Commercial | 671,525 | 603,733 | 557,347 | 644,263 | 632,892 | ||||||||||||||||
Commercial real estate (including multifamily) | 2,502,846 | 2,337,499 | 2,222,795 | 2,130,955 | 2,081,741 | ||||||||||||||||
Commercial construction | 418,439 | 451,038 | 466,455 | 479,342 | 462,399 | ||||||||||||||||
Residential | 255,755 | 246,864 | 237,418 | 229,738 | 229,953 | ||||||||||||||||
Consumer | 2,555 | 2,929 | 2,460 | 2,777 | 2,771 | ||||||||||||||||
Gross loans | 3,851,120 | 3,642,063 | 3,486,475 | 3,487,075 | 3,409,756 | ||||||||||||||||
Unearned net origination fees | (3,724 | ) | (3,967 | ) | (3,304 | ) | (3,151 | ) | (2,956 | ) | |||||||||||
Loans receivable | 3,847,396 | 3,638,096 | 3,483,171 | 3,483,924 | 3,406,800 | ||||||||||||||||
Loans held-for-sale | 51,008 | 61,259 | 65,860 | 4,549 | 478 | ||||||||||||||||
Total loans | $ | 3,898,404 | $ | 3,699,355 | $ | 3,549,031 | $ | 3,488,473 | $ | 3,407,278 | |||||||||||
Securities available-for-sale | 398,635 | 391,965 | 367,940 | 351,809 | 269,895 | ||||||||||||||||
Securities held-to-maturity | - | - | - | - | 143,146 | ||||||||||||||||
Goodwill and other intangible assets | 148,553 | 148,737 | 148,930 | 149,123 | 149,317 | ||||||||||||||||
Deposits: | |||||||||||||||||||||
Noninterest-bearing demand | 688,707 | 667,461 | 655,597 | 666,913 | 640,323 | ||||||||||||||||
Other interest-bearing deposits | 1,816,162 | 1,712,875 | 1,706,991 | 1,631,368 | 1,637,500 | ||||||||||||||||
Time deposits | 1,005,997 | 976,012 | 963,976 | 985,944 | 1,007,530 | ||||||||||||||||
Total deposits | $ | 3,510,866 | $ | 3,356,348 | $ | 3,326,564 | $ | 3,284,225 | $ | 3,285,353 | |||||||||||
Borrowings | $ | 570,711 | $ | 514,161 | $ | 442,595 | $ | 476,925 | $ | 488,015 | |||||||||||
Subordinated debentures | 55,155 | 55,155 | 55,155 | 55,155 | 55,155 | ||||||||||||||||
Total stockholders' equity | 556,620 | 549,748 | 539,544 | 511,663 | 495,141 | ||||||||||||||||
Three Months Ended | |||||||||||||||||||||
Sept. 30, | June 30, | Mar. 31, | Dec. 31, | Sept. 30, | |||||||||||||||||
2017 | 2017 | 2017 | 2016 | 2016 | |||||||||||||||||
(dollars in thousands, except for per share data) | |||||||||||||||||||||
Net interest income | $ | 37,019 | $ | 35,101 | $ | 33,141 | $ | 33,407 | $ | 33,024 | |||||||||||
Provision for loan losses | 1,450 | 1,450 | 1,100 | 25,200 | 6,750 | ||||||||||||||||
Net interest income after provision for loan losses | 35,569 | 33,651 | 32,041 | 8,207 | 26,274 | ||||||||||||||||
Noninterest income | |||||||||||||||||||||
Annuity and insurance commissions | - | - | 39 | 51 | 68 | ||||||||||||||||
Income on bank owned life insurance | 985 | 714 | 703 | 715 | 615 | ||||||||||||||||
Net gains on sale of loans held-for-sale | 50 | 49 | 21 | 86 | 56 | ||||||||||||||||
Deposit, loan and other income | 721 | 659 | 643 | 721 | 706 | ||||||||||||||||
Net gains on sale of investment securities | - | - | 1,596 | - | 4,131 | ||||||||||||||||
Total noninterest income | 1,756 | 1,422 | 3,002 | 1,573 | 5,576 | ||||||||||||||||
Noninterest expenses | |||||||||||||||||||||
Salaries and employee benefits | 8,872 | 8,632 | 8,206 | 7,888 | 7,791 | ||||||||||||||||
Occupancy and equipment | 1,969 | 1,991 | 2,255 | 2,122 | 2,049 | ||||||||||||||||
FDIC insurance | 840 | 815 | 895 | 985 | 745 | ||||||||||||||||
Professional and consulting | 740 | 734 | 718 | 901 | 667 | ||||||||||||||||
Marketing and advertising | 225 | 289 | 256 | 222 | 293 | ||||||||||||||||
Data processing | 1,176 | 1,149 | 1,149 | 1,106 | 1,002 | ||||||||||||||||
Amortization of core deposit intangible | 169 | 193 | 193 | 193 | 193 | ||||||||||||||||
Increase in valuation allowance, loans held-for-sale | 3,000 | 9,725 | 2,600 | - | - | ||||||||||||||||
Other expenses | 1,650 | 1,775 | 1,977 | 1,835 | 1,811 | ||||||||||||||||
Total noninterest expenses | 18,641 | 25,303 | 18,249 | 15,252 | 14,551 | ||||||||||||||||
Income (loss) before income tax expense | 18,684 | 9,770 | 16,794 | (5,472 | ) | 17,299 | |||||||||||||||
Income tax expense (benefit) | 5,607 | 2,087 | 4,914 | (3,448 | ) | 5,443 | |||||||||||||||
Net income (loss) available to common stockholders | $ | 13,077 | $ | 7,683 | $ | 11,880 | $ | (2,024 | ) | $ | 11,856 | ||||||||||
Reconciliation of GAAP Earnings to Earnings Excluding Net Securities Gains and Expenses Related to the Taxi Medallion Loans Portfolio | |||||||||||||||||||||
Net income (loss) available to common stockholders | $ | 13,077 | $ | 7,683 | $ | 11,880 | $ | (2,024 | ) | $ | 11,856 | ||||||||||
Net gains on sales of securities (after taxes) | - | - | (1,093 | ) | - | (2,643 | ) | ||||||||||||||
Provision related to taxi medallion loans (after taxes) | - | - | - | 14,196 | 2,958 | ||||||||||||||||
Increase in valuation allowance, loans held-for-sale (after taxes) | 1,776 | 5,719 | 1,538 | - | - | ||||||||||||||||
Net income available to common stockholders-adjusted | $ | 14,853 | $ | 13,402 | $ | 12,325 | $ | 12,172 | $ | 12,171 | |||||||||||
Weighted average diluted shares outstanding | 32,182,016 | 32,255,770 | 32,192,643 | 30,729,359 | 30,401,684 | ||||||||||||||||
Diluted EPS (GAAP) | $ | 0.41 | $ | 0.24 | $ | 0.37 | $ | (0.07 | ) | $ | 0.39 | ||||||||||
Diluted EPS-adjusted (non-GAAP) (1) | 0.46 | 0.42 | 0.38 | 0.40 | 0.40 | ||||||||||||||||
Return on Assets Measures | |||||||||||||||||||||
Net income available to common stockholders-adjusted | $ | 14,853 | $ | 13,402 | $ | 12,325 | $ | 12,172 | $ | 12,171 | |||||||||||
Average assets | $ | 4,714,012 | $ | 4,495,573 | $ | 4,382,314 | $ | 4,349,961 | $ | 4,344,796 | |||||||||||
Less: average intangible assets | (148,553 | ) | (148,737 | ) | (148,930 | ) | (149,123 | ) | (149,317 | ) | |||||||||||
Average tangible assets | $ | 4,565,459 | $ | 4,346,836 | $ | 4,233,384 | $ | 4,200,838 | $ | 4,195,479 | |||||||||||
Return on avg. assets (GAAP) | 1.10 | % | 0.69 | % | 1.10 | % | (0.19 | ) | % | 1.09 | % | ||||||||||
Return on avg. assets-adjusted (non-GAAP) (2) | 1.25 | 1.20 | 1.14 | 1.11 | 1.11 | ||||||||||||||||
Return on avg. tangible assets (non-GAAP) (3) | 1.15 | 0.72 | 1.15 | (0.18 | ) | 1.14 | |||||||||||||||
Return on avg. tangible assets-adjusted (non-GAAP) (4) | 1.30 | 1.25 | 1.19 | 1.16 | 1.16 | ||||||||||||||||
__________________ | |||||||||||||||||||||
(1) Adjusted net income available to common stockholders divided by weighted average diluted shares outstanding. | |||||||||||||||||||||
(2) Adjusted net income available to common stockholders divided by average assets. | |||||||||||||||||||||
(3) Net income available to common stockholders excluding amortization of intangible assets divided by average tangible assets. | |||||||||||||||||||||
(4) Adjusted net income available to common stockholders excluding amortization of intangible assets divided by average tangible assets. | |||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||
Sept. 30, | June 30, | Mar. 31, | Dec. 31, | Sept. 30, | |||||||||||||||||
2017 | 2017 | 2017 | 2016 | 2016 | |||||||||||||||||
Return on Equity Measures | (dollars in thousands) | ||||||||||||||||||||
Net income available to common stockholders-adjusted | $ | 14,853 | $ | 13,402 | $ | 12,325 | $ | 12,172 | $ | 12,171 | |||||||||||
Average common equity | $ | 556,620 | $ | 549,748 | $ | 539,544 | $ | 511,663 | $ | 495,141 | |||||||||||
Less: average intangible assets | (148,553 | ) | (148,737 | ) | (148,930 | ) | (149,123 | ) | (149,317 | ) | |||||||||||
Average tangible common equity | $ | 408,067 | $ | 401,011 | $ | 390,614 | $ | 362,540 | $ | 345,824 | |||||||||||
Return on avg. common equity (GAAP) | 9.32 | % | 5.61 | % | 8.93 | % | (1.57 | ) | % | 9.53 | % | ||||||||||
Return on avg. common equity-adjusted (non-GAAP) (5) | 10.59 | 9.78 | 9.26 | 9.46 | 9.78 | ||||||||||||||||
Return on avg. tangible common equity (non-GAAP) (6) | 12.81 | 7.80 | 12.45 | (2.10 | ) | 13.77 | |||||||||||||||
Return on avg. tangible common equity-adjusted (non-GAAP) (7) | 14.54 | 13.52 | 12.91 | 13.48 | 14.13 | ||||||||||||||||
Efficiency Measures | |||||||||||||||||||||
Total noninterest expenses | $ | 18,641 | $ | 25,303 | $ | 18,249 | $ | 15,252 | $ | 14,551 | |||||||||||
Increase in valuation allowance, loans held-for-sale | (3,000 | ) | (9,725 | ) | (2,600 | ) | - | - | |||||||||||||
Foreclosed property expense | (46 | ) | (71 | ) | (100 | ) | (81 | ) | (37 | ) | |||||||||||
Operating noninterest expense | $ | 15,595 | $ | 15,507 | $ | 15,549 | $ | 15,171 | $ | 14,514 | |||||||||||
Net interest income (tax equivalent basis) | $ | 37,929 | $ | 35,839 | $ | 33,956 | $ | 34,120 | $ | 33,762 | |||||||||||
Noninterest income | 1,756 | 1,422 | 3,002 | 1,573 | 5,576 | ||||||||||||||||
Net gains on sales of investment securities | - | - | (1,596 | ) | - | (4,131 | ) | ||||||||||||||
Operating revenue | $ | 39,685 | $ | 37,261 | $ | 35,362 | $ | 35,693 | $ | 35,207 | |||||||||||
Operating efficiency ratio (non-GAAP) (8) | 39.3 | % | 41.6 | % | 44.0 | % | 42.5 | % | 41.2 | % | |||||||||||
Net Interest Margin | |||||||||||||||||||||
Average interest-earning assets | $ | 4,378,537 | $ | 4,168,344 | $ | 4,053,324 | $ | 4,038,030 | $ | 4,041,020 | |||||||||||
Net interest income (tax equivalent basis) | $ | 37,929 | $ | 35,839 | $ | 33,956 | $ | 34,120 | $ | 33,762 | |||||||||||
Impact of purchase accounting fair value marks | (317 | ) | (316 | ) | (649 | ) | (960 | ) | (1,045 | ) | |||||||||||
Adjusted net interest income | $ | 37,612 | $ | 35,523 | $ | 33,307 | $ | 33,160 | $ | 32,717 | |||||||||||
Net interest margin (GAAP) | 3.44 | % | 3.45 | % | 3.40 | % | 3.36 | % | 3.32 | % | |||||||||||
Adjusted net interest margin (non-GAAP) (9) | 3.41 | 3.42 | 3.33 | 3.27 | 3.22 | ||||||||||||||||
_____________ | |||||||||||||||||||||
(5) Adjusted net income available to common stockholders divided by average common equity. | |||||||||||||||||||||
(6) Net income available to common stockholders excluding amortization of intangibles assets divided by average tangible common equity. | |||||||||||||||||||||
(7) Adjusted net income available to common stockholders divided by average tangible common equity. | |||||||||||||||||||||
(8) Operating noninterest expense divided by operating revenue. | |||||||||||||||||||||
(9) Adjusted net interest income divided by average interest-earning assets. | |||||||||||||||||||||
As of | |||||||||||||||||||||
Sept. 30, | June 30, | Mar. 31, | Dec. 31, | Sept. 30, | |||||||||||||||||
2017 | 2017 | 2017 | 2016 | 2016 | |||||||||||||||||
Capital Ratios and Book Value per Share | (dollars in thousands, except for per share data) | ||||||||||||||||||||
Common equity | $ | 557,691 | $ | 546,173 | $ | 540,277 | $ | 531,032 | $ | 499,588 | |||||||||||
Less: intangible assets | (148,442 | ) | (148,611 | ) | (148,804 | ) | (148,997 | ) | (149,190 | ) | |||||||||||
Tangible common equity | $ | 409,249 | $ | 397,562 | $ | 391,473 | $ | 382,035 | $ | 350,398 | |||||||||||
Total assets | $ | 4,844,755 | $ | 4,681,280 | $ | 4,460,816 | $ | 4,426,348 | $ | 4,327,804 | |||||||||||
Less: intangible assets | (148,442 | ) | (148,611 | ) | (148,804 | ) | (148,997 | ) | (149,190 | ) | |||||||||||
Tangible assets | $ | 4,696,313 | $ | 4,532,669 | $ | 4,312,012 | $ | 4,277,351 | $ | 4,178,614 | |||||||||||
Common shares outstanding | 32,015,317 | 32,015,317 | 32,004,471 | 31,944,403 | 30,197,318 | ||||||||||||||||
Common equity ratio (GAAP) | 11.51 | % | 11.67 | % | 12.11 | % | 12.00 | % | 11.54 | % | |||||||||||
Tangible common equity ratio (non-GAAP) (10) | 8.71 | 8.77 | 9.08 | 8.93 | 8.39 | ||||||||||||||||
Regulatory capital ratios (Bancorp): | |||||||||||||||||||||
Leverage ratio | 9.13 | % | 9.33 | % | 9.44 | % | 9.29 | % | 8.49 | % | |||||||||||
Common equity tier 1 risk-based ratio | 9.40 | 9.48 | 9.79 | 9.74 | 9.25 | ||||||||||||||||
Risk-based tier 1 capital ratio | 9.52 | 9.60 | 9.92 | 9.87 | 9.38 | ||||||||||||||||
Risk-based total capital ratio | 11.34 | 11.46 | 11.83 | 11.78 | 11.69 | ||||||||||||||||
Regulatory capital ratios (Bank): | |||||||||||||||||||||
Leverage ratio | 10.11 | % | 10.34 | % | 10.50 | % | 10.34 | % | 9.57 | % | |||||||||||
Common equity tier 1 risk-based ratio | 10.54 | 10.64 | 11.03 | 10.98 | 10.58 | ||||||||||||||||
Risk-based tier 1 capital ratio | 10.54 | 10.64 | 11.03 | 10.98 | 10.58 | ||||||||||||||||
Risk-based total capital ratio | 11.22 | 11.32 | 11.70 | 11.63 | 11.57 | ||||||||||||||||
Book value per share (GAAP) | $ | 17.42 | $ | 17.06 | $ | 16.88 | $ | 16.62 | $ | 16.54 | |||||||||||
Tangible book value per share (non-GAAP) (11) | 12.78 | 12.42 | 12.23 | 11.96 | 11.60 | ||||||||||||||||
Net Loan Charge-offs Detail | |||||||||||||||||||||
Net loan charge-offs (recoveries): | |||||||||||||||||||||
Charge-offs | $ | - | $ | 10 | $ | 72 | $ | 37,074 | $ | 1,910 | |||||||||||
Recoveries | (20 | ) | (60 | ) | (129 | ) | (2 | ) | (12 | ) | |||||||||||
Net loan charge-offs | $ | (20 | ) | $ | (50 | ) | $ | (57 | ) | $ | 37,072 | $ | 1,898 | ||||||||
Net loan charge-offs as a % of average total loans (annualized) | (0.00 | ) | % | (0.01 | ) | % | (0.01 | ) | % | 4.23 | % | 0.22 | % | ||||||||
Asset Quality | |||||||||||||||||||||
Nonaccrual taxi medallion loans | $ | 47,430 | $ | 48,884 | $ | 59,054 | $ | 63,044 | $ | 3,637 | |||||||||||
Nonaccrual loans (excluding taxi medallion loans) | 13,755 | 14,055 | 12,790 | 5,734 | 7,856 | ||||||||||||||||
Other real estate owned | - | 580 | 580 | 626 | 626 | ||||||||||||||||
Total nonperforming assets | $ | 61,185 | $ | 63,519 | $ | 72,424 | $ | 69,404 | $ | 12,119 | |||||||||||
Performing troubled debt restructurings | $ | 12,749 | $ | 10,221 | $ | 10,005 | $ | 13,338 | $ | 105,338 | |||||||||||
Allowance for loan losses ("ALLL") | $ | 29,870 | $ | 28,401 | $ | 26,901 | $ | 25,744 | $ | 37,615 | |||||||||||
ALLL, net of taxi specific reserves | 29,870 | 28,401 | 26,901 | 25,744 | 25,081 | ||||||||||||||||
Nonaccrual loans as a % of loans receivable (excluding taxi medallion loans) | 0.35 | % | 0.37 | % | 0.36 | % | 0.16 | % | 0.24 | % | |||||||||||
Nonperforming assets as a % of total assets | 1.26 | 1.36 | 1.62 | 1.57 | 0.28 | ||||||||||||||||
ALLL as a % of loans receivable | 0.77 | 0.76 | 0.75 | 0.74 | 1.09 | ||||||||||||||||
ALLL as a % of nonaccrual loans | 48.8 | 45.1 | 37.4 | 37.4 | 327.3 | ||||||||||||||||
ALLL (excluding taxi medallion loans specific reserves) as a % of nonaccrual loans (excluding taxi medallion loans) | 217.2 | 202.1 | 210.3 | 449.0 | 319.3 | ||||||||||||||||
ALLL (excluding taxi medallion specific reserves) as a % of loans receivable (excluding taxi medallion loans) | 0.77 | 0.76 | 0.75 | 0.74 | 0.73 | ||||||||||||||||
Loans receivable | $ | 3,889,289 | $ | 3,761,572 | $ | 3,571,663 | $ | 3,475,832 | $ | 3,445,476 | |||||||||||
Less: taxi medallion loans | - | - | - | - | (102,735 | ) | |||||||||||||||
Loans receivable (excluding taxi medallion loans) | $ | 3,889,289 | $ | 3,761,572 | $ | 3,571,663 | $ | 3,475,832 | $ | 3,342,741 | |||||||||||
Loans held-for-sale, taxi medallion loans | $ | 47,430 | $ | 50,891 | $ | 61,319 | $ | 65,596 | $ | - | |||||||||||
__________________ | |||||||||||||||||||||
(10) Tangible common equity divided by tangible assets. | |||||||||||||||||||||
(11) Tangible common equity divided by common shares outstanding at period-end. |
CONNECTONE BANCORP, INC. | ||||||||||||||||||||||||||||||||||||
NET INTEREST MARGIN ANALYSIS | ||||||||||||||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||||||||||
For the Three Months Ended | ||||||||||||||||||||||||||||||||||||
September 30, 2017 | June 30, 2017 | September 30, 2016 | ||||||||||||||||||||||||||||||||||
Average | Average | Average | ||||||||||||||||||||||||||||||||||
Interest-earning assets: | Balance | Interest | Rate (8) | Balance | Interest | Rate (8) | Balance | Interest | Rate (8) | |||||||||||||||||||||||||||
Investment securities (1) (2) | $ | 397,077 | $ | 3,033 | 3.03 | % | $ | 390,462 | $ | 3,079 | 3.16 | % | $ | 406,802 | $ | 3,293 | 3.22 | % | ||||||||||||||||||
Total loans (2) (3) (4) | 3,898,404 | 43,683 | 4.45 | 3,699,355 | 40,921 | 4.44 | 3,407,278 | 38,010 | 4.44 | |||||||||||||||||||||||||||
Federal funds sold and interest- | ||||||||||||||||||||||||||||||||||||
bearing deposits with banks | 53,820 | 170 | 1.25 | 52,099 | 139 | 1.07 | 202,106 | 261 | 0.51 | |||||||||||||||||||||||||||
Restricted investment in bank stock | 29,236 | 362 | 4.91 | 26,428 | 290 | 4.40 | 24,834 | 352 | 5.64 | |||||||||||||||||||||||||||
Total interest-earning assets | 4,378,537 | 47,248 | 4.28 | 4,168,344 | 44,429 | 4.28 | 4,041,020 | 41,916 | 4.13 | |||||||||||||||||||||||||||
Allowance for loan losses | (28,999 | ) | (27,355 | ) | (34,052 | ) | ||||||||||||||||||||||||||||||
Noninterest-earning assets | 364,474 | 354,584 | 337,828 | |||||||||||||||||||||||||||||||||
Total assets | $ | 4,714,012 | $ | 4,495,573 | $ | 4,344,796 | ||||||||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||
Time deposits | 1,005,997 | 3,593 | 1.42 | 976,012 | 3,311 | 1.36 | 1,007,530 | 3,323 | 1.31 | |||||||||||||||||||||||||||
Other interest-bearing deposits | 1,816,162 | 2,520 | 0.55 | 1,712,875 | 2,184 | 0.51 | 1,637,500 | 1,836 | 0.45 | |||||||||||||||||||||||||||
Total interest-bearing deposits | 2,822,159 | 6,113 | 0.86 | 2,688,887 | 5,495 | 0.82 | 2,645,030 | 5,159 | 0.78 | |||||||||||||||||||||||||||
Borrowings | 570,711 | 2,353 | 1.64 | 514,161 | 2,244 | 1.75 | 488,015 | 2,139 | 1.74 | |||||||||||||||||||||||||||
Subordinated debentures (5) | 55,155 | 813 | 5.85 | 55,155 | 810 | 5.89 | 55,155 | 814 | 5.87 | |||||||||||||||||||||||||||
Capital lease obligation | 2,688 | 40 | 5.90 | 2,720 | 41 | 6.05 | 2,814 | 42 | 5.94 | |||||||||||||||||||||||||||
Total interest-bearing liabilities | 3,450,713 | 9,319 | 1.07 | 3,260,923 | 8,590 | 1.06 | 3,191,014 | 8,154 | 1.02 | |||||||||||||||||||||||||||
Noninterest-bearing demand deposits | 688,707 | 667,461 | 640,323 | |||||||||||||||||||||||||||||||||
Other liabilities | 17,972 | 17,441 | 18,318 | |||||||||||||||||||||||||||||||||
Total noninterest-bearing liabilities | 706,679 | 684,902 | 658,641 | |||||||||||||||||||||||||||||||||
Stockholders' equity | 556,620 | 549,748 | 495,141 | |||||||||||||||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 4,714,012 | $ | 4,495,573 | $ | 4,344,796 | ||||||||||||||||||||||||||||||
Net interest income (tax equivalent basis) | 37,929 | 35,839 | 33,762 | |||||||||||||||||||||||||||||||||
Net interest spread (6) | 3.21 | % | 3.22 | % | 3.11 | % | ||||||||||||||||||||||||||||||
Net interest margin (7) | 3.44 | % | 3.45 | % | 3.32 | % | ||||||||||||||||||||||||||||||
Tax equivalent adjustment | (910 | ) | (738 | ) | (738 | ) | ||||||||||||||||||||||||||||||
Net interest income | $ | 37,019 | $ | 35,101 | $ | 33,024 | ||||||||||||||||||||||||||||||
________________________ | ||||||||||||||||||||||||||||||||||||
(1) Average balances are calculated on amortized cost. | ||||||||||||||||||||||||||||||||||||
(2) Interest income is presented on a tax equivalent basis using 35% federal tax rate. | ||||||||||||||||||||||||||||||||||||
(3) Includes loan fee income. | ||||||||||||||||||||||||||||||||||||
(4) Loans include nonaccrual loans. | ||||||||||||||||||||||||||||||||||||
(5) Does not reflect netting of debt issuance costs of $525, $565 and $697 for the three months ended September 30, 2017, | ||||||||||||||||||||||||||||||||||||
June 30, 2017 and September 30, 2016, respectively. | ||||||||||||||||||||||||||||||||||||
(6) Represents difference between the average yield on interest-earning assets and the average cost of interest-bearing | ||||||||||||||||||||||||||||||||||||
liabilities and is presented on a tax equivalent basis. | ||||||||||||||||||||||||||||||||||||
(7) Represents net interest income on a tax equivalent basis divided by average total interest-earning assets. | ||||||||||||||||||||||||||||||||||||
(8) Rates are annualized. |