NASHVILLE, Tenn.--(BUSINESS WIRE)--FB Financial Corporation (the “Company”) (NYSE: FBK), parent company of FirstBank, reported net income of $23.0 million, or $0.74 per diluted common share, compared to $0.37 per diluted common share for the fourth quarter of 2016. Core net income was $18.7 million, or $0.60 per diluted common share, excluding the tax benefit, merger-related charges and other items discussed below, reflecting growth of 39.4% in core earnings per diluted common share from the fourth quarter of 2016.
Additionally, for the year ended December 31, 2017, the Company reported net income of $52.4 million, or $1.86 per diluted common share. Core net income was $60.4 million, or $2.14 per diluted common share, excluding the tax benefit, merger-related charges and other items.
President and CEO Christopher T. Holmes stated, “We are extremely pleased with our operating results for the fourth quarter, capping another record year for FB Financial. As expected, the combination with the Clayton Banks in the third quarter was a real positive for our operating results and has significantly enhanced the franchise. The outstanding efforts and strong results send us into 2018 with a positive outlook across all of our markets.”
Fourth Quarter Key Highlights
- Return on average assets (ROAA) of 1.96% and core ROAA of 1.59%
- Return on average equity (ROAE) of 15.8% and core ROAE of 12.8%
- Return on average tangible common equity (ROATCE) of 21.4% and core ROATCE of 17.4%
- Loans held for investment (HFI) grew to a record $3.17 billion, up 71.3% over December 31, 2016
- Total deposits grew to $3.66 billion, up 37.2% over December 31, 2016
- Total revenues of $86.0 million, up 42.5% from the fourth quarter of 2016
- Net interest margin-tax-equivalent basis (NIM) rose to 4.63% in the fourth quarter of 2017, up 0.64% from 3.99% in the fourth quarter of 2016; NIM was 4.35%, excluding accretion on purchased loans and collection of nonaccrual interest in the fourth quarter of 2017
- Loan loss provision of $1.0 million with net charge-offs of 0.05% of average loans
- Efficiency ratio was 66.9% and core efficiency ratio was 63.6%, reflecting positive operating leverage
- Tangible book value (TBV) per share increased to $14.56, up 25.7% from $11.58 at December 31, 2016, driving our tangible equity to tangible asset ratio to 9.72% at December 31, 2017, up 107 basis points from December 31, 2016
Holmes further commented, “During the last twelve months, we have made significant progress on our goals and continue to improve both in operational and revenue-generating parts of the Company. We are particularly excited with our stellar performance, delivering strong growth in tangible book value per share for our shareholders.”
Performance Summary
Effective July 31, 2017, the Company completed its merger with Clayton Bank and Trust in Knoxville, Tennessee and American City Bank in Tullahoma, Tennessee (collectively, the “Clayton Banks” or the “Merger”). Accordingly, the Clayton Banks results are included for the entire fourth quarter.
| 2017 | 2016 | Annualized | ||||||||||||||
| (dollars in thousands) |
Fourth |
Third |
Fourth |
4Q17 / % Change |
4Q17 / % Change |
|||||||||||
|
Balance Sheet Overview |
||||||||||||||||
| Loans - held for sale | $ | 526,185 | $ | 466,369 | $ | 507,442 | 50.89% | 3.69% | ||||||||
| Loans - held for investment | 3,166,911 | 3,114,562 | 1,848,784 | 6.67% | 71.30% | |||||||||||
| Allowance for loan losses | 24,041 | 23,482 | 21,747 | 9.44% | 10.55% | |||||||||||
| Total assets | 4,727,713 | 4,581,943 | 3,276,881 | 12.62% | 44.27% | |||||||||||
| Customer deposits | 3,578,694 | 3,614,220 | 2,670,031 | (3.90%) | 34.03% | |||||||||||
| Total shareholders' equity | 596,729 | 572,528 | 330,498 | 16.77% | 80.55% | |||||||||||
| Reported Results | Non-GAAP Core Results(1) | |||||||||||||||
| For the Three Months Ended December 31, | ||||||||||||||||
| (dollars in thousands, except share data) | 2017 | 2016 | 2017 | 2016 |
|
|||||||||||
|
Results of operations |
||||||||||||||||
| Net interest income | $ |
48,983 |
$ |
29,032 |
$ |
48,983 |
$ |
29,032 |
||||||||
| NIM | 4.63 | % | 3.99 | % | 4.35 |
%(2) |
3.90 |
%(2) |
||||||||
| Provision for loan losses | $ | 956 | $ | (752 | ) | $ | 956 | $ | (752 | ) | ||||||
| Net charge-off ratio | 0.05 | % | 0.17 | % | ||||||||||||
| Noninterest income | $ | 37,017 | $ | 31,332 | $ | 37,592 | $ | 31,681 | ||||||||
| Total revenue | $ | 86,000 | $ | 60,364 | $ | 86,575 | $ | 60,713 | ||||||||
| Noninterest expenses | $ | 57,540 | $ | 47,319 | $ | 55,471 | $ | 45,242 | ||||||||
| Efficiency ratio | 66.91 | % | 78.39 | % | 63.55 | % | 73.72 | % | ||||||||
| Net income | $ | 23,018 | $ | 9,010 | $ | 18,677 | $ | 10,484 | ||||||||
| Diluted earnings per share | $ | 0.74 | $ | 0.37 | $ | 0.60 | $ | 0.43 | ||||||||
|
Weighted average number of shares - diluted |
31,166,080 | 24,500,943 | ||||||||||||||
| Returns on average: | ||||||||||||||||
| Assets | 1.96 | % | 1.12 | % | 1.59 | % | 1.30 | % | ||||||||
| Equity | 15.78 | % | 11.24 | % | 12.80 | % | 13.08 | % | ||||||||
| Tangible common equity(1) | 21.38 | % | 13.40 | % | 17.35 | % | 15.60 | % | ||||||||
| (1) Core measures are considered a non-GAAP financial measures. See “GAAP Reconciliation and Use of Non-GAAP Financial Measures” and the corresponding financial tables for a reconciliation and discussion of these non-GAAP measures. | ||||||||||||||||
| (2) Reported NIM, excluding accretion from purchased loans and collection of nonaccrual interest. | ||||||||||||||||
Holmes continued, “Our focused execution on growing customer loan and deposit relationships versus wholesale business continues to produce a healthy net interest margin. Through our recent merger, we continue to drive positive operating leverage in our Banking Segment. Additionally, our mortgage team had outstanding results for the year given the environment of increasing interest rates.”
During the fourth quarter of 2017 and 2016, as adjusted for in the above table, the Company recorded certain items impacting comparability between periods, as follows:
- $5.9 million income tax benefit in the fourth quarter of 2017 from the recently enacted federal corporate tax rate reduction, reducing our recorded deferred tax liabilities (based upon current information and estimates);
- $2.1 million pre-tax merger-related charges in the fourth quarter of 2017 associated with the merger;
- $0.2 million net pre-tax charge related to the decrease in the fair value of mortgage servicing rights (MSRs), net of hedging gains, during the fourth quarter of 2017, compared to impairment recoveries and the loss on sale of MSRs resulting in a net pre-tax charge of $1.0 million for the fourth quarter of 2016; and
- $0.4 million net pre-tax losses on other real estate owned, other assets, and investments compared to a $0.3 million net pre-tax charge in the fourth quarter of 2016.
Continued Execution of Strategy Drives Net Interest Income Growth and Peer-Leading NIM
“As we have set annual goals for ourselves in recent years, we have set organic loan growth rates at 10% to 12%. While this quarter was below that, mostly due to some large pay downs and pay-offs, the annual growth rate for 2017 of 13.9% is above our target. We continue to have healthy demand and our pipelines continue to reflect good, balanced growth,” Holmes said.
Holmes continued, “Deposits have been and will continue to be a key focus for the Company. We grew deposits by 37% for the year, but most of that growth came through the Clayton Banks merger. One of our goals for the merger was to replace wholesale deposits with customer deposits, which limited deposit growth this quarter and likely will have the same effect in some future quarters. However, we feel we are enhancing funding stability, controlling our long-term funding costs and ultimately enhancing shareholder value through this process.”
The Company’s NIM was 4.63% for the fourth quarter of 2017, compared to 4.61% and 3.99% for the third quarter of 2017 and the fourth quarter of 2016, respectively, reflecting additional accretion, collection of nonaccrual interest, and the benefit of the merger. Excluding accretion related to purchased loans and collections of nonaccrual interest, the Company’s NIM was 4.35% compared to 4.33% and 3.90% for the third quarter of 2017 and the fourth quarter of 2016, respectively. “Our adjusted NIM of 4.35% remains at the top-end of our 4.20% to 4.40% target range, meeting our desire to maintain a balance between growth and profitability,” Holmes commented.
Holmes continued, “Our banking teams continue to perform at a very high level, delivering excellent results this quarter and for the year. The impact of the merger continues to positively impact our results, and we are confident in our ability to deliver future profitability.”
Noninterest Income Continues Strength and Stability
Noninterest income was $37.0 million for the fourth quarter of 2017, compared to $37.8 million for the third quarter of 2017 and $31.3 million for the fourth quarter of 2016. Mortgage banking incoming was $30.3 million for the fourth quarter of 2017 and $31.3 million for the third quarter of 2017, compared to $26.2 million for the fourth quarter of 2016.
Holmes commented, “The fourth quarter of 2017 completed an outstanding year for our mortgage team, producing mortgage loan sales of $1.7 billion, compared to $1.5 billion in the fourth quarter of 2016, driving a 15.7% increase in mortgage banking income for the fourth quarter of 2017 compared to the fourth quarter of 2016. Similar to our outlook at the end of 2016, we expect a slightly higher pre-tax contribution from mortgage in 2018 with volumes continuing to increase.”
Positive Operating Leverage Increases, Continuing to Improve Efficiency Ratio
Noninterest expense was $57.5 million for the fourth quarter of 2017, compared to $69.2 million for the third quarter of 2017 and $47.3 million for the fourth quarter of 2016. Excluding the merger-related charges and other items discussed above, core noninterest expense was $55.5 million for the fourth quarter of 2017, compared to $53.5 million for the third quarter of 2017 and $45.2 million for the fourth quarter of 2016. The primary drivers of this increase were mortgage and the impact of the merger.
“The merger accelerated improvements in the Company’s operating leverage as the realization of expected synergies continues into the first quarter. Our core efficiency ratio was 63.6% for the quarter, a decline of 10 percentage points from a year ago. Further illustrating the sustained operating leverage improvements that began with our core system conversion in mid-2016, our Banking Segment core efficiency ratio was 55.6% for the quarter, down 7 percentage points in the last year. Heading into 2018, we believe our consolidated and Banking Segment efficiency will continue to improve as we recognize the full benefit of the Clayton Banks synergies,” commented James R. Gordon, Chief Financial Officer.
Strong Asset Quality
During the fourth quarter of 2017, we recognized provision for loan losses of $1.0 million, reflecting new loan growth, stable fundamental credit metrics and net charge-offs of 0.05% of average loans. Our nonperforming assets increased to $71.9 million, or 1.52% of total assets, driven by an increase in other real estate owned of $2.3 million related to the transfer of five closed branches and facilities from the merger and a $29.5 million increase in GNMA rebooked loans over the previous quarter, which total $43.0 million at December 31, 2017. Nonperforming loans remained steady at 0.32% for loans held for investment at December 31, 2017, compared to 0.57% at December 31, 2016.
Capital Strength for Future Growth
“At year end, our tangible common equity ratio reached 9.72%, an increase of over 100 basis points from a year ago, driving our tangible book value per common share growth of $2.98 in 2017 to $14.56 at year end, demonstrating the strength and performance of our franchise. We have continued to build our capital base through positive operating leverage, consistent growth and strong margins, which have resulted in robust, sustained earnings power. This positions us well for both organic and acquired growth in coming periods,” commented Gordon.
Summary
“I want to thank each of our nearly 1,400 associates across the organization for serving our customers daily and delivering outstanding results for our shareholders. To our valued investors, we appreciate your support and confidence as we execute our strategy, and we look forward to continuing to earn your trust and partnership,” Holmes concluded.
WEBCAST AND CONFERENCE CALL INFORMATION
The live broadcast of FB Financial Corporation’s conference call will begin at 8:00 a.m. CST on Tuesday, January 23, 2018, and the earnings conference call will be broadcast live over the Internet at https://services.choruscall.com/links/fbk180123AWsp51Nq.html. An online replay will be available for ninety days approximately an hour following the conclusion of the live broadcast.
ABOUT FB FINANCIAL CORPORATION
FB Financial Corporation (NYSE: FBK) is a bank holding company headquartered in Nashville, Tennessee. FB Financial operates through its wholly owned banking subsidiary, FirstBank, the third largest Tennessee-headquartered community bank, with 58 full-service bank branches across Tennessee, North Alabama and North Georgia, and a national mortgage business with offices across the Southeast. FirstBank serves five of the largest metropolitan markets in Tennessee and has approximately $4.7 billion in total assets.
SUPPLEMENTARY FINANCIAL INFORMATION AND EARNINGS PRESENTATION
Investors are encouraged to review this Earnings Release in conjunction with the Supplementary Financial Data and Earnings Presentation posted on the Company’s website, which can be found at https://investors.firstbankonline.com. This Earnings Release and the Supplementary Financial Data and Earnings Presentation are also included with a Current Report on Form 8-K that the Company furnished to the U.S. Securities and Exchange Commission (SEC) on January 22, 2018.
BUSINESS SEGMENT RESULTS
The Company has included its business segment financial tables as part of this Earnings Release. A detailed discussion of the business segment results is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, and investors are encouraged to review that discussion in conjunction with this Earnings Release.
FORWARD-LOOKING STATEMENTS
This Earnings Release contains “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements. You can identify these forward-looking statements through the Company’s use of words such as “believes,” “anticipates,” “expects,” “may,” “will,” “assumes,” “should,” “predicts,” “could,” “would,” “intends,” “targets,” “estimates,” “projects,” “plans,” “potential,” “confident,” “future” and other similar words and expressions of the future or otherwise regarding the outlook for the Company’s future business and financial performance, including, without limitation, the impact of the 2017 Tax Cuts and Jobs Act on the Company and its operations and financial results, the performance of the banking and mortgage industry and the economy in general and the benefits, cost, synergies and financial impact of the Company’s acquisition of the Clayton Banks. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve known and unknown risks and uncertainties which may cause the actual results, performance or achievements of the Company to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements.
Forward-looking statements are based on the information known to, and current beliefs and expectations of, the Company’s management and are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by such forward-looking statements. A number of factors could cause actual results to differ materially from those contemplated by the forward-looking statements in this Earnings Release including, without limitation, the risks and other factors set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on March 31, 2017 under the captions “Cautionary note regarding forward-looking statements” and “Risk factors.” Many of these factors are beyond the Company’s ability to control or predict. The Company believes the forward-looking statements contained herein are reasonable; however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations and speak only as of the date that they are made. The Company does not assume any obligation to update any forward-looking statements as a result of new information, future developments or otherwise, except as otherwise may be required by law.
GAAP RECONCILIATION AND USE OF NON-GAAP FINANCIAL MEASURES
This Earnings Release contains certain financial measures that are not measures recognized under U.S. generally accepted accounting principles (“GAAP”) and therefore are considered non-GAAP financial measures. These non‐GAAP financial measures include, without limitation, pro forma core net income, pro forma core income tax expense, pro forma core diluted earnings per share, core noninterest expense and core noninterest income, core efficiency ratio (tax equivalent basis), Banking segment core efficiency ratio (tax equivalent basis), Mortgage segment core efficiency ratio (tax equivalent basis), pro forma core return on average assets and equity and pro forma core total revenue. Each of these non-GAAP metrics excludes certain income and expense items that the Company’s management considers to be non‐core in nature. The Company refers to these non‐GAAP measures as core measures. This Earnings Release also presents tangible assets, tangible common equity, tangible book value per common share, tangible common equity to tangible assets, return on average tangible common equity, pro forma return on average tangible common equity and pro forma core return on average tangible common equity. Each of these non-GAAP metrics excludes the impact of goodwill and other intangibles.
The Company’s management uses these non-GAAP financial measures in their analysis of the Company’s performance, financial condition and the efficiency of its operations as management believes such measures facilitate period-to-period comparisons and provide meaningful indications of its operating performance as they eliminate both gains and charges that management views as non-recurring or not indicative of operating performance. Management believes that these non-GAAP financial measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods as well as demonstrating the effects of significant non-core gains and charges in the current and prior periods. The Company’s management also believes that investors find these non-GAAP financial measures useful as they assist investors in understanding the Company’s underlying operating performance and in the analysis of ongoing operating trends. In addition, because intangible assets such as goodwill and other intangibles, and the other items excluded each vary extensively from company to company, the Company believes that the presentation of this information allows investors to more easily compare the Company’s results to the results of other companies. However, the non-GAAP financial measures discussed herein should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which the Company calculates the non-GAAP financial measures discussed herein may differ from that of other companies reporting measures with similar names. You should understand how such other banking organizations calculate their financial measures similar or with names similar to the non-GAAP financial measures the Company has discussed herein when comparing such non-GAAP financial measures. The following tables provide a reconciliation of these measures to the most directly comparable GAAP financial measures.
| Financial Summary and Key Metrics | ||||||||||||
| (Unaudited) | ||||||||||||
| (In Thousands, Except Share Data and %) | ||||||||||||
| 2017 | 2016 | |||||||||||
| Fourth Quarter | Third Quarter | Fourth Quarter | ||||||||||
| Statement of Income Data | ||||||||||||
| Total interest income | $ | 55,031 | $ | 48,415 | $ | 31,567 | ||||||
| Total interest expense | 6,048 | 4,805 | 2,535 | |||||||||
| Net interest income | 48,983 | 43,610 | 29,032 | |||||||||
| Provision for loan losses | 956 | (784 | ) | (752 | ) | |||||||
| Total noninterest income | 37,017 | 37,820 | 31,332 | |||||||||
| Total noninterest expense | 57,540 | 69,224 | 47,319 | |||||||||
| Net income before income taxes | 27,504 | 12,990 | 13,797 | |||||||||
| Income tax expense | 4,486 | 4,602 | 4,787 | |||||||||
| Net income | $ | 23,018 | $ | 8,388 | $ | 9,010 | ||||||
| Net interest income (tax—equivalent basis) | $ | 49,692 | $ | 44,281 | $ | 29,686 | ||||||
| Core net income* | $ | 18,677 | $ | 18,516 | $ | 10,484 | ||||||
| Per Common Share | ||||||||||||
| Diluted net income | $ | 0.74 | $ | 0.27 | $ | 0.37 | ||||||
| Core net income - diluted* | 0.60 | 0.60 | 0.43 | |||||||||
| Book value | 19.54 | 18.76 | 13.71 | |||||||||
| Tangible book value* | 14.56 | 13.79 | 11.58 | |||||||||
| Weighted average number of shares-diluted | 31,166,080 | 30,604,537 | 24,500,943 | |||||||||
| Period-end number of shares | 30,535,517 | 30,526,592 | 24,107,660 | |||||||||
| Selected Balance Sheet Data | ||||||||||||
| Cash and due from banks | $ | 29,831 | $ | 67,070 | $ | 50,157 | ||||||
| Loans held for investment | 3,166,911 | 3,114,562 | 1,848,784 | |||||||||
| Allowance for loan losses | (24,041 | ) | (23,482 | ) | (21,747 | ) | ||||||
| Loans held for sale | 526,185 | 466,369 | 507,442 | |||||||||
| Available-for-sale securities, fair value | 543,992 | 543,282 | 582,183 | |||||||||
| Other real estate owned, net | 16,442 | 13,812 | 7,403 | |||||||||
| Total assets | 4,727,713 | 4,581,943 | 3,276,881 | |||||||||
| Customer deposits | 3,578,694 | 3,614,220 | 2,670,031 | |||||||||
| Brokered and internet time deposits | 85,701 | 104,318 | 1,531 | |||||||||
| Total deposits | 3,664,395 | 3,718,538 | 2,671,562 | |||||||||
| Borrowings | 333,302 | 196,299 | 194,892 | |||||||||
| Total shareholders' equity | 596,729 | 572,528 | 330,498 | |||||||||
| Selected Ratios | ||||||||||||
| Return on average: | ||||||||||||
| Assets | 1.96 | % | 0.80 | % | 1.12 | % | ||||||
| Shareholders' equity | 15.78 | % | 6.05 | % | 11.24 | % | ||||||
| Tangible common equity* | 21.38 | % | 7.70 | % | 13.40 | % | ||||||
| Average shareholders' equity to average assets | 12.41 | % | 13.22 | % | 9.95 | % | ||||||
| Net interest margin (NIM) (tax-equivalent basis) | 4.63 | % | 4.61 | % | 3.99 | % | ||||||
|
Net interest margin excluding accretion and nonaccrual interest collections (tax-equivalent basis) (a) |
4.35 | % | 4.33 | % | 3.90 | % | ||||||
| Efficiency ratio (GAAP) | 66.91 | % | 85.01 | % | 78.39 | % | ||||||
| Core efficiency ratio (tax-equivalent basis)* | 63.55 | % | 64.43 | % | 73.72 | % | ||||||
| Loans held for investment to deposit ratio | 86.42 | % | 83.76 | % | 69.20 | % | ||||||
| Total loans to deposit ratio | 100.78 | % | 96.30 | % | 88.20 | % | ||||||
| Yield on interest-earning assets | 5.20 | % | 5.10 | % | 4.33 | % | ||||||
| Cost of interest-bearing liabilities | 0.79 | % | 0.71 | % | 0.49 | % | ||||||
| Cost of total deposits | 0.50 | % | 0.46 | % | 0.29 | % | ||||||
| Credit Quality Ratios | ||||||||||||
| Allowance for loan losses as a percentage of loans held for investment | 0.76 | % | 0.75 | % | 1.18 | % | ||||||
|
Net (charge-off's) recoveries as a percentage of average loans held for investment |
(0.05 | )% | 0.15 | % | (0.17 | )% | ||||||
|
Nonperforming loans held for investment as a percentage of total loans held for investments |
0.32 | % | 0.29 | % | 0.57 | % | ||||||
| Nonperforming assets as a percentage of total assets (b) | 1.52 | % | 0.88 | % | 0.58 | % | ||||||
| Preliminary capital ratios (Consolidated) | ||||||||||||
| Shareholders' equity to assets | 12.62 | % | 12.50 | % | 10.09 | % | ||||||
| Tangible common equity to tangible assets* | 9.72 | % | 9.50 | % | 8.65 | % | ||||||
| Tier 1 capital (to average assets) | 10.46 | % | 11.35 | % | 10.05 | % | ||||||
| Tier 1 capital (to risk-weighted assets) | 11.43 | % | 11.58 | % | 12.19 | % | ||||||
| Total capital (to risk-weighted assets) | 12.01 | % | 12.18 | % | 13.03 | % | ||||||
| Common Equity Tier 1 (to risk-weighted assets) (CET1) | 10.70 | % | 10.82 | % | 11.04 | % | ||||||
| *These measures are considered non-GAAP financial measures. See “GAAP Reconciliation and Use of Non-GAAP Financial Measures” and the corresponding financial tables below for reconciliations of these Non-GAAP measures. Investors are encouraged to refer to discussion of non-GAAP measures included in the corresponding earnings release. | ||||||||||||
|
(a) Excludes accretion from acquired/purchased loans and collection of interest income on nonaccrual loans. |
||||||||||||
| (b) Includes marketable equity securities received in satisfaction of previously charged-off loan, excess land and facilities held for sale, and GNMA loans subject to ability to repurchase. | ||||||||||||
| Non-GAAP Reconciliation | ||||||||||||
| For the Quarters Ended | ||||||||||||
| (Unaudited) | ||||||||||||
| (In Thousands, Except Share Data and %) | ||||||||||||
| 2017 | 2016 | |||||||||||
| Core net income | Fourth Quarter | Third Quarter | Fourth Quarter | |||||||||
| Pre-tax net income | $ | 27,504 | $ | 12,990 | $ | 13,797 | ||||||
| Non-core items: | ||||||||||||
| Noninterest income | ||||||||||||
| Less change in fair value on mortgage servicing rights, net | (190 | ) | (893 | ) | - | |||||||
| Less gain from securities, net | 1 | 254 | - | |||||||||
|
Less (loss) gain on sales or write-downs of other real estate owned and other assets |
(386 | ) | (314 | ) | (349 | ) | ||||||
| Noninterest expenses | ||||||||||||
| Plus variable compensation charge related to cash settled equity awards | - | - | 1,041 | |||||||||
| Plus merger and conversion | 2,069 | 15,711 | - | |||||||||
| Plus (recovery of) impairment of mortgage servicing rights | - | - | (3,411 | ) | ||||||||
| Plus loss on sale of mortgage servicing rights | - | - | 4,447 | |||||||||
| Pre tax core net income | $ | 30,148 | $ | 29,654 | $ | 16,223 | ||||||
| Core income tax expense | 11,471 | 11,138 | 5,739 | |||||||||
| Core net income | $ | 18,677 | $ | 18,516 | $ | 10,484 | ||||||
| Weighted average common shares outstanding fully diluted | 31,166,080 | 30,604,537 | 24,500,943 | |||||||||
| Core diluted earnings per share | ||||||||||||
| Diluted earning per share | $ | 0.74 | $ | 0.27 | $ | 0.37 | ||||||
| Non-core items: | ||||||||||||
| Noninterest income | ||||||||||||
| Less change in fair value on mortgage servicing rights | (0.01 | ) | (0.03 | ) | - | |||||||
|
Less gain from securities, net |
0.00 | 0.01 | 0.00 | |||||||||
|
Less (loss) gain on sales or write-downs of other real estate owned and other assets |
(0.01 | ) | (0.01 | ) | (0.01 | ) | ||||||
| Noninterest expenses | ||||||||||||
| Plus variable compensation charge related to cash settled equity awards | - | - | 0.04 | |||||||||
| Plus merger and conversion | 0.07 | 0.51 | - | |||||||||
| Plus (recovery of) impairment of mortgage servicing rights | - | - | (0.14 | ) | ||||||||
| Plus loss on sale of mortgage servicing rights | - | - | 0.18 | |||||||||
| Tax effect | (0.2 | ) | (0.2 | ) | (0.04 | ) | ||||||
| Core diluted earnings per share | $ | 0.60 | $ | 0.60 | $ | 0.43 | ||||||
| Pro forma core net income | 2017 | 2016 | ||||||||||
| Pre-tax net income | $ | 73,485 | $ | 62,324 | ||||||||
| Non-core items: | ||||||||||||
| Noninterest income | ||||||||||||
| Less change in fair value on mortgage servicing rights, net | (3,424 | ) | - | |||||||||
| Less gain from securities, net | 285 | 4,407 | ||||||||||
|
Less (loss) gain on sales or write-downs of other real estate owned and other assets |
110 | 1,179 | ||||||||||
| Noninterest expenses | ||||||||||||
| Plus one-time equity grants | - | 2,960 | ||||||||||
| Plus variable compensation charge related to cash settled equity awards | 635 | 1,254 | ||||||||||
| Plus merger and conversion | 19,034 | 3,268 | ||||||||||
| Plus (recovery of) impairment of mortgage servicing rights | - | 4,678 | ||||||||||
| Plus loss on sale of mortgage servicing rights | 249 | 4,447 | ||||||||||
| Pre tax core net income | $ | 96,432 | $ | 73,345 | ||||||||
| Pro forma core income tax expense | 36,036 | 27,225 | ||||||||||
| Pro forma core net income | $ | 60,396 | $ | 46,120 | ||||||||
| Weighted average common shares outstanding fully diluted | 28,207,602 | 19,312,174 | ||||||||||
| Pro forma core diluted earnings per share | ||||||||||||
| Diluted earning per share | $ | 1.86 | $ | 2.04 | ||||||||
| Non-core items: | ||||||||||||
| Noninterest income | ||||||||||||
| Less change in fair value on mortgage servicing rights | (0.13 | ) | - | |||||||||
| Less gain from securities, net | 0.01 | 0.23 | ||||||||||
|
Less (loss) gain on sales or write-downs of other real estate owned and other assets |
0.01 | 0.06 | ||||||||||
| Noninterest expenses | ||||||||||||
| Plus one-time equity grants | - | 0.15 | ||||||||||
| Plus variable compensation charge related to cash settled equity awards | 0.03 | 0.06 | ||||||||||
| Plus merger and conversion | 0.63 | 0.17 | ||||||||||
| Plus (recovery of) impairment of mortgage servicing rights | - | 0.24 | ||||||||||
| Plus loss on sale of mortgage servicing rights | 0.01 | 0.23 | ||||||||||
| Tax effect | (0.5 | ) | (0.2 | ) | ||||||||
| Pro forma core diluted earnings per share | $ | 2.14 | $ | 2.39 | ||||||||
| Non-GAAP Reconciliation | ||||||||||||
| For the Quarters Ended | ||||||||||||
| (Unaudited) | ||||||||||||
| (In Thousands, Except Share Data and %) | ||||||||||||
| 2017 | 2016 | |||||||||||
| Core efficiency ratio (tax-equivalent basis) | Fourth Quarter | Third Quarter | Fourth Quarter | |||||||||
| Total noninterest expense | $ | 57,540 | $ | 69,224 | $ | 47,319 | ||||||
| Less variable compensation charge related to cash settled equity awards | - | - | 1,041 | |||||||||
| Less merger and conversion expenses | 2,069 | 15,711 | - | |||||||||
| Less (recovery of) impairment of mortgage servicing rights | - | - | (3,411 | ) | ||||||||
| Less loss on sale of mortgage servicing rights | - | - | 4,447 | |||||||||
| Core noninterest expense | $ | 55,471 | $ | 53,513 | $ | 45,242 | ||||||
| Net interest income (tax-equivalent basis) | 49,692 | 44,281 | 29,686 | |||||||||
| Total noninterest income | 37,017 | 37,820 | 31,332 | |||||||||
| Less change in fair value on mortgage servicing rights | (190 | ) | (893 | ) | - | |||||||
|
Less (loss) gain on sales or write-downs of other real estate owned and other assets |
(386 | ) | (314 | ) | (349 | ) | ||||||
| Less gain from securities, net | 1 | 254 | - | |||||||||
| Core noninterest income | 37,592 | 38,773 | 31,681 | |||||||||
| Core revenue | $ | 87,284 | $ | 83,054 | $ | 61,367 | ||||||
| Efficiency ratio (GAAP)(1) | 66.91 | % | 85.01 | % | 78.39 | % | ||||||
| Core efficiency ratio (tax-equivalent basis) | 63.55 | % | 64.43 | % | 73.72 | % | ||||||
| (1) Efficiency ratio (GAAP) is calculated by dividing reported noninterest expense by reported total revenue | ||||||||||||
| 2017 | 2016 | |||||||||||
| Banking segment core efficiency ratio (tax equivalent) | Fourth Quarter | Third Quarter | Fourth Quarter | |||||||||
| Core consolidated noninterest expense | $ | 55,471 | $ | 53,513 | $ | 45,242 | ||||||
| Less Mortgage segment noninterest expense | 20,117 | 19,757 | 22,256 | |||||||||
| Add (recovery of) impairment of mortgage servicing rights | - | - | (3,411 | ) | ||||||||
| Add loss on sale of mortgage servicing rights | - | - | 4,447 | |||||||||
| Adjusted Banking segment noninterest expense | 35,354 | 33,756 | 24,022 | |||||||||
| Adjusted core revenue | 87,284 | 83,054 | 61,367 | |||||||||
| Less Mortgage segment noninterest income | 23,825 | 23,836 | 22,975 | |||||||||
| Less change in fair value on mortgage servicing rights | (190 | ) | (893 | ) | - | |||||||
| Adjusted Banking segment total revenue | $ | 63,649 | $ | 60,111 | $ | 38,392 | ||||||
|
Banking segment core efficiency ratio (tax-equivalent basis) |
55.55 | % | 56.16 | % | 62.57 | % | ||||||
| Mortgage segment core efficiency ratio (tax equivalent) | ||||||||||||
| Consolidated Noninterest expense | $ | 57,540 | $ | 69,224 | $ | 47,319 | ||||||
| Less impairment of mortgage servicing rights | - | - | (3,411 | ) | ||||||||
| Less loss on sale of mortgage servicing rights | - | - | 4,447 | |||||||||
| Less Banking segment noninterest expense | 37,423 | 49,467 | 25,030 | |||||||||
| Adjusted Mortgage segment noninterest expense | $ | 20,117 | $ | 19,757 | $ | 21,253 | ||||||
| Total noninterest income | 37,017 | 37,820 | 31,332 | |||||||||
| Less Banking segment noninterest income | 13,192 | 13,984 | 8,357 | |||||||||
| Less change in fair value on mortgage servicing rights | (190 | ) | (893 | ) | - | |||||||
| Adjusted Mortgage segment total revenue | $ | 24,015 | $ | 24,729 | $ | 22,975 | ||||||
| Mortgage segment core efficiency ratio (tax-equivalent basis) | 83.77 | % | 79.89 | % | 92.50 | % | ||||||
| 2017 | 2016 | |||||||||||
| Tangible assets and equity | Fourth Quarter | Third Quarter | Fourth Quarter | |||||||||
| Tangible Assets | ||||||||||||
| Total assets | $ | 4,727,713 | $ | 4,581,943 | $ | 3,276,881 | ||||||
| Less goodwill | 137,190 | 138,910 | 46,867 | |||||||||
| Less intangibles, net | 14,902 | 12,550 | 4,563 | |||||||||
| Tangible assets | $ | 4,575,621 | $ | 4,430,483 | $ | 3,255,451 | ||||||
| Tangible Common Equity | ||||||||||||
| Total shareholders' equity | $ | 596,729 | $ | 572,528 | $ | 330,498 | ||||||
| Less goodwill | 137,190 | 138,910 | 46,867 | |||||||||
| Less intangibles, net | 14,902 | 12,550 | 4,563 | |||||||||
| Tangible common equity | $ | 444,637 | $ | 421,068 | $ | 279,068 | ||||||
| Common shares outstanding | 30,535,517 | 30,526,592 | 24,107,660 | |||||||||
| Book value per common share | $ | 19.54 | $ | 18.76 | $ | 13.71 | ||||||
| Tangible book value per common share | $ | 14.56 | $ | 13.79 | $ | 11.58 | ||||||
| Total shareholders' equity to total assets | 12.62 | % | 12.50 | % | 10.09 | % | ||||||
| Tangible common equity to tangible assets | 9.72 | % | 9.50 | % | 8.65 | % | ||||||
| Net income | $ | 23,018 | $ | 8,388 | $ | 9,010 | ||||||
| Return on tangible common equity | 20.54 | % | 7.90 | % | 12.84 | % | ||||||
| 2017 | 2016 | |||||||||||
| Return on average tangible common equity | Fourth Quarter | Third Quarter | Fourth Quarter | |||||||||
| Total average shareholders' equity | $ | 578,856 | $ | 550,409 | $ | 318,986 | ||||||
| Less average goodwill | 138,050 | 108,220 | 46,839 | |||||||||
| Less intangibles, net | 13,726 | 9,983 | 4,694 | |||||||||
| Average tangible common equity | $ | 427,080 | $ | 432,206 | $ | 267,453 | ||||||
| Net income | $ | 23,018 | $ | 8,388 | $ | 9,010 | ||||||
| Return on average tangible common equity | 21.38 | % | 7.70 | % | 13.40 | % | ||||||
| Non-GAAP Reconciliation | ||||||||||||
| For the Quarters Ended | ||||||||||||
| (Unaudited) | ||||||||||||
| (In Thousands, Except Share Data and %) | ||||||||||||
| 2017 | 2016 | |||||||||||
| Core return on average tangible equity | Fourth Quarter | Third Quarter | Fourth Quarter | |||||||||
| Pre-tax net income | $ | 27,504 | $ | 12,990 | $ | 13,797 | ||||||
| Adjustments: | ||||||||||||
| Add non-core items | 2,644 | 16,664 | 2,426 | |||||||||
| Less core income tax expense | 11,471 | 11,138 | 5,739 | |||||||||
| Core net income | $ | 18,677 | $ | 18,516 | $ | 10,484 | ||||||
| Core return on average tangible common equity | 17.35 | % | 17.00 | % | 15.60 | % | ||||||
| 2017 | 2016 | |||||||||||
| Core return on average assets and equity | Fourth Quarter | Third Quarter | Fourth Quarter | |||||||||
| Net income | $ | 23,018 | $ | 8,388 | $ | 9,010 | ||||||
| Average assets | 4,664,669 | 4,162,478 | 3,206,398 | |||||||||
| Average equity | 578,856 | 550,409 | 318,986 | |||||||||
| Return on average assets | 1.96 | % | 0.80 | % | 1.12 | % | ||||||
| Return on average equity | 15.78 | % | 6.05 | % | 11.24 | % | ||||||
| Core net income | 18,677 | 18,516 | 10,484 | |||||||||
| Core return on average assets | 1.59 | % | 1.76 | % | 1.30 | % | ||||||
| Core return on average equity | 12.80 | % | 13.35 | % | 13.08 | % | ||||||
| 2017 | 2016 | |||||||||||
| Core total revenue | Fourth Quarter | Third Quarter | Fourth Quarter | |||||||||
| Net interest income | $ | 48,983 | $ | 43,610 | $ | 29,032 | ||||||
| Noninterest income | 37,017 | 37,820 | 31,332 | |||||||||
| Less adjustments: | ||||||||||||
| Change in fair value of mortgage servicing rights | (190 | ) | (893 | ) | - | |||||||
| Gain from securities, net | 1 | 254 | - | |||||||||
|
(Loss) gain on sales or write-downs of other real estate owned and other assets |
(386 | ) | (314 | ) | (349 | ) | ||||||
| Core total revenue | $ | 86,575 | $ | 82,383 | $ | 60,713 | ||||||
