SYRACUSE, N.Y.--(BUSINESS WIRE)--Community Bank System, Inc. (NYSE: CBU) reported fourth quarter 2019 net income of $42.9 million and fully diluted earnings per share of $0.82. This compares to $40.8 million in net income or $0.78 per share for the fourth quarter of 2018. Fourth quarter 2019 operating earnings per share (non-GAAP), which excludes acquisition expenses and unrealized loss on equity securities, were $0.83, or $0.05 above the fourth quarter of 2018. Full year diluted earnings per share totaled $3.23 in 2019, compared to $3.24 in 2018, and reflect a $0.11 negative impact due to the Durbin debit interchange price restrictions. Full year diluted operating earnings per share (non-GAAP), which excludes acquisition expenses, gain on sale of investments, unrealized gain on equity securities and loss on debt extinguishment, of $3.29 for 2019 were $0.06 per share higher than the $3.23 per share of operating earnings generated in 2018.
2019 Performance Highlights:
-
GAAP EPS
- $0.82 per share for the fourth quarter of 2019, compared to $0.78 per share for the fourth quarter of 2018
- $3.23 per share for full year 2019, down $0.01 per share from full year 2018
-
Operating EPS (non-GAAP)
- $0.83 per share for the fourth quarter of 2019, $0.05 per share above the fourth quarter of 2018
- $3.29 per share for full year 2019, $0.06 per share above 2018
-
Total Deposit Funding Costs
- 0.26% for the fourth quarter of 2019
- 0.23% for full year 2019
-
Return on Assets
- 1.48% for the fourth quarter of 2019
- 1.53% for full year 2019
-
Return on Tangible Equity
- 16.1% for fourth quarter 2019
- 16.6% for full year 2019
-
Non-banking Noninterest Revenues
- Up 5.2% over fourth quarter of 2018
- Up 4.6% for full year 2019
“Our 2019 very solid fourth quarter was characterized by revenue growth, improved earnings along with a continuation of positive operating metrics compared with the prior year quarter. Moreover, we are pleased with the company’s performance throughout 2019, during which we continued to utilize acquisitions to expand and strengthen our service area, organically grew loan and deposit portfolios, increased revenue to nearly $590 million and extended our uninterrupted streak of dividend increases to shareholders,” said Mark E. Tryniski, President and Chief Executive Officer. “Our acquisition of Kinderhook Bank Corp. (“Kinderhook”), during third quarter 2019 extended our market reach into the Capital District of Upstate New York, a region with attractive economic and demographic characteristics. The Company’s fourth quarter definitive agreement to acquire Steuben Trust Corporation will provide additional retail strength to our existing Western New York service area along with providing entry into two new Western New York counties. The transaction is also expected to be immediately accretive to earnings. Organic revenue increases in our employee benefits services and insurance services businesses were responsible for higher noninterest revenue in 2019. Total loans at year end increased by more than $600 million, driven by organic growth and by the Kinderhook acquisition. Despite realizing loan growth of nearly 10% in 2019, our asset quality metrics remained strong and consistent and reflective of our disciplined approach to lending. All in all, the accomplishments in 2019 were significant and were reflected in our Board’s decision to raise our cash dividend for the 27th consecutive year. Our unbroken streak of dividend increases puts Community Bank System in very select company, and signifies our commitment to robust shareholder returns. We begin 2020 well positioned to extend our performance through the year.”
Total revenues for the fourth quarter of 2019 were $149.9 million, an increase of $8.3 million, or 5.8%, over the fourth quarter of 2018. The Company recorded a $5.4 million, or 6.1%, increase in net interest income and a $2.9 million, or 5.4%, increase in noninterest revenues. The increase in net interest income was due largely to a $733.0 million increase in average earning assets between the periods due to both the Kinderhook acquisition and organic growth in earning assets, partially offset by a decrease in the net interest margin. The increase in noninterest revenues was due to a $1.0 million, or 5.8%, increase in deposit and other banking revenues and a $1.9 million, or 5.2%, increase on non-banking noninterest revenues. Revenues were up $1.5 million in the employee benefit services business, and wealth management and insurance services revenue was up $0.4 million between the fourth quarter of 2019 and fourth quarter of 2018.
On a linked quarter basis, total revenues increased $1.5 million, or 1.0%. Net interest income was up $1.5 million, or 1.6%, and noninterest revenues were consistent with the prior quarter. The increase in net interest income was driven by a $2.2 million increase due to volume, partially offset by a $0.7 million decrease due to changes in interest rates. Deposit and other banking revenues increased $0.2 million, or 1.1%, on a linked-quarter basis. Employee benefit services revenue was up $0.7 million on a linked quarter basis, while wealth management and insurance services revenue was down $0.8 million.
The Company recorded $92.7 million in net interest income during the fourth quarter of 2019. This compares to $87.4 million of net interest income generated in the fourth quarter of 2018. Interest income on loans was up $7.2 million, or 9.8%, while interest income on investments, including cash equivalents, was up $0.4 million, or 2.3%. Interest expense on deposits increased $2.6 million between the comparable periods, while interest expense on borrowings decreased $0.3 million. The increase in interest expense on deposits was driven by a $542.6 million increase in average interest bearing deposit balances primarily due to the Kinderhook acquisition and a 10 basis point increase in the cost of deposits. The decrease in interest expense on borrowings was driven by a $64.2 million decrease in average borrowings. The net interest margin decreased six basis points, from 3.77% in the fourth quarter of 2018 to 3.71% in the fourth quarter of 2019. Earning asset yields were 3.99% in both the fourth quarter of 2019 and the fourth quarter of 2018. However, the Company’s cost of funds increased eight basis points, from 0.23% in the fourth quarter of 2018 to 0.31% in the fourth quarter of 2019.
Net interest income increased $1.5 million, or 1.6%, on a linked quarter basis. The increase was attributable to a $0.6 million increase in interest income on loans, a $0.8 million increase in interest on investments and cash equivalents, including a $1.0 million Federal Reserve Bank semi-annual dividend payment, and a $0.1 million decrease in interest expense. Net interest margin decreased two basis points from 3.73% in the third quarter of 2019 to 3.71% in the fourth quarter. The yield on earning assets decreased four basis points between the linked quarters from 4.03% to 3.99%, while the total cost of funds decreased one basis point from 0.32% to 0.31%. During the fourth quarter, the Company purchased $724.1 million of investment securities, reduced cash equivalents by $738.5 million, increased average loans outstanding by $122.2 million and decreased the rates paid on certain higher-cost deposit accounts. These actions and results partially offset the unfavorable impact recent reductions in the overnight federal funds and prime lending rate had on interest income during the quarter.
The Company recorded a $2.9 million provision for loan losses in the fourth quarter 2019. This compares to a $2.5 million provision for loan losses recorded in the fourth quarter of 2018 and $1.8 million in the third quarter of 2019. The Company’s asset quality metrics remained stable in the fourth quarter, loans outstanding increased $37.4 million and the Company recorded net charge-offs of $2.4 million, $1.0 million less than the fourth quarter of 2018 and $0.7 million more than the linked third quarter.
Total operating expenses for the fourth quarter of 2019 were $95.3 million. Excluding $0.8 million of acquisition-related expenses, the Company recorded $94.5 million of operating expenses. This compares to $87.6 million of operating expenses and no acquisition expenses recorded in the fourth quarter of 2018. Excluding acquisition expenses, the $6.9 million, or 7.9%, increase in recurring operating expenses was driven by a $4.4 million, or 8.5%, increase in salaries and employee benefits including an increase in medical costs, a $1.3 million, or 13.5% increase in data processing and communication costs, and a $1.7 million, or 14.0%, increase in other expenses, partially offset by a $0.4 million, or 9.4%, decrease in amortization of intangible assets and a $0.1 million, or 0.7%, decrease in occupancy and equipment expense. The overall increase in operating expenses was largely driven by higher expenses associated with expanded operations subsequent to the Kinderhook transaction including higher business development and marketing expenses.
On a linked quarter basis, total operating expenses decreased $1.7 million, or 1.7%. During the third quarter of 2019, the Company acquired Kinderhook and incurred $6.1 million in acquisition-related expenses, as compared to $0.8 million of acquisition-related expenses in the fourth quarter of 2019. Excluding acquisition-related expenses, operating expenses increased $3.6 million, or 3.9%, from $90.9 million in the third quarter to $94.5 million in the fourth quarter. The increase in operating expenses excluding acquisition expenses was driven by a $0.4 million, or 0.7%, increase in salaries and employee benefits, a $0.3 million, or 2.4%, increase in data processing and communication costs, a $0.3 million, or 3.5%, increase in occupancy and equipment expense, and a $2.6 million, or 24.8%, increase in other expenses. The increase in other expenses was driven by increases in business development and marketing, legal and professional fees, and other seasonal operating expenses. The Company historically incurs higher operating expenses in the fourth quarter in comparison to the third quarter.
The effective tax rate for the fourth quarter of 2019 was 17.1%. This was down from a 20.7% effective tax rate in the fourth quarter of last year. The decrease in the effective tax rate was attributable to an increase in income tax benefits associated with equity based compensation activities and a reduction in certain activity-based state income tax expenses. The effective tax rate for the full year of 2019 was 19.2%. Excluding income tax benefits associated with equity based compensation, the Company’s effective tax rate for the full year of 2019 was 20.9%.
The Company also provides supplemental reporting of its results on an “operating,” “adjusted net” or “tangible” basis, from which it excludes the after-tax effect of amortization of core deposit and other intangible assets (and the related goodwill, core deposit intangible and other intangible asset balances, net of applicable deferred tax amounts), accretion on non-impaired purchased loans, expenses associated with acquisitions, the unrealized gain (loss) on equity securities and net realized gain on sale of investments. The amounts for such items are presented in the tables that accompany this release. Although these items are non-GAAP measures, the Company’s management believes this information helps investors understand the effect of acquisitions and other non-recurring activity in its reported results. Diluted adjusted net earnings per share were $0.86 in the fourth quarter of 2019, a 6.2% increase compared to $0.81 in the fourth quarter of 2018.
Financial Position
Average earning assets were up $233.3 million, or 2.4%, on a linked quarter basis, from $9.81 billion during the third quarter of 2019 to $10.04 billion during the fourth quarter of 2019. Average loan balances during the fourth quarter were $6.86 billion, up $122.2 million, or 1.8%, from the third quarter. Average deposit balances were also up $180.7 million, or 2.0%, from third quarter levels. During the quarter, average demand deposit, interest checking, money market and time deposits balances were up compared to the linked third quarter. These increases were slightly offset by a $4.6 million decrease in savings deposits. Average borrowings in the fourth quarter of 2019 of $325.1 million were up $34.2 million, or 11.7%, from the third quarter average of $291.0 million due primarily to a seasonal increase in customer repurchase agreements.
Ending loans at December 31, 2019 were $6.89 billion. This was up $37.4 million, or 0.5%, from the end of the third quarter and $609.4 million, or 9.7%, from one year earlier due to both organic growth and the Kinderhook transaction. During the fourth quarter, increases in the consumer mortgage and consumer indirect portfolios were partially offset by decreases in business lending, consumer direct and home equity loans. The consumer mortgage portfolio increased $25.7 million, or 1.1%, and the consumer indirect portfolio increased $21.1 million, or 1.9%, during the quarter. On a combined basis, business lending, consumer direct and home equity loans were down $9.4 million. Consumer financing activities in the Company’s markets were fairly robust during the fourth quarter driving new originations.
During the fourth quarter of 2019, the Company purchased $724.1 million of investment securities and reduced its cash equivalents by $738.5 million. These activities extended the effective duration of the portfolio and were taken to manage the Company’s exposure to falling interest rates. At the end of the fourth quarter, investment securities totaled $3.09 billion, a $606.6 million, or 24.4%, increase from the end of the linked third quarter of 2019, and a $106.7 million, or 3.6%, increase from December 31, 2018. The net unrealized gain in the investment portfolio was $33.1 million at December 31, 2019, compared to a $45.3 million unrealized gain at September 30, 2019. The Company’s cash equivalents totaled $43.2 million at the end of the fourth quarter, compared to $781.7 million at the end of the third quarter. The effective duration of the portfolio was 4.3 years at the end of the fourth quarter, as compared to 2.5 years at the end of the third quarter.
Shareholders’ equity of $1.86 billion at December 31, 2019 was $141.5 million, or 8.3%, higher than the prior year period. The Company’s net tangible equity to net tangible assets ratio was 10.01% at December 31, 2019, up from 9.68% both one year prior and at the end of the third quarter of 2019. The Company’s Tier 1 leverage ratio was 10.80% at the end of the fourth quarter, down from 11.08% a year earlier. The increase in shareholders’ equity was driven by strong earnings generation over the last four quarters. The decrease in the Tier 1 leverage ratio was largely driven by a significant increase in assets due to the Kinderhook acquisition.
As previously announced in January 2019, the Company’s Board of Directors approved a stock repurchase program authorizing the repurchase of up to 2.5 million shares of the Company’s common stock during a twelve-month period starting January 1, 2019. Such repurchases may be made at the discretion of the Company’s senior management based on market conditions and other relevant factors and will be acquired through open market or privately negotiated transactions as permitted under Rule 10b-18 of the Securities Exchange Act of 1934 and other applicable legal requirements. There were no shares repurchased pursuant to the program in 2019. In December 2019, the Company reauthorized a new repurchase program for 2020 for up to 2.6 million shares of the Company’s common stock.
Asset Quality
The Company’s asset quality metrics continue to illustrate the long-term effectiveness of the Company’s disciplined credit risk management and underwriting standards. Total net charge-offs were $2.4 million for the fourth quarter. This compares to $3.3 million of net charge-offs in the fourth quarter of 2018, reflecting a $0.9 million decrease between comparable fourth quarters. Net charge-offs as an annualized percentage of average loans measured 0.14% in the fourth quarter of 2019 and 0.21% in the fourth quarter of 2018. Nonperforming loans as a percentage of total loans at the end of the fourth quarter were 0.35%, compared to 0.42% at September 30, 2019 and 0.40% at December 31, 2018. The total loan delinquency ratio, which includes nonperforming loans and loans 30 to 89 days delinquent, was 0.94% at the end of the fourth quarter, six basis points lower than the level one year earlier. The fourth quarter provision for loan losses of $2.9 million was $0.4 million higher than the fourth quarter of 2018, and $1.1 million higher than the third quarter of 2019 due primarily to loan growth in the fourth quarter. The allowance for loan losses to nonperforming loans ratio was 206% at December 31, 2019, compared with 172% and 197% at the ends of the third quarter of 2019 and fourth quarter of 2018, respectively. On a full year 2019 basis, the Company recorded a net charge-offs ratio of 0.12% compared to 0.15% for the full year of 2018. The Company’s allowance for loan losses was $49.9 million, or 0.72% of total loans outstanding at December 31, 2019, compared to $49.3 million and 0.78% of total loans outstanding at the end of the prior year. The decrease in this ratio between the periods was largely due to the acquisition of the Kinderhook loan portfolio during the third quarter of 2019.
Dividend Increase
During the fourth quarter of 2019, the Company declared a quarterly cash dividend of $0.41 per share on its common stock. The Board of Directors raised the cash dividend by $0.03 per share, or 7.9%, during the third quarter of 2019, marking the 27th consecutive year of dividend increases for the Company. Mr. Tryniski commented, “The payment of a meaningful and growing dividend is an important component of providing consistent and favorable long-term returns to our shareholders. The increase reflected the continued strength of our current operating performance and capital position.” The Company’s current dividend of $0.41 represents an annualized yield of 2.3% based upon the $70.13 closing price of the Company’s stock on January 21, 2020.
Steuben Trust Corporation
On October 21, 2019, the Company announced that it had entered into a definitive agreement to acquire Steuben Trust Corporation (“Steuben”), parent company of Steuben Trust Company, a New York State chartered community bank headquartered in Hornell, New York. The acquisition will extend the Company’s footprint into two new counties in Western New York State, and enhance the Company’s presence in four Western New York State counties in which it currently operates. Upon completion of the merger, Community Bank will add 15 branch locations with approximately $560 million of assets, and deposits of $460 million. The Company expects this acquisition to be approximately $0.08 to $0.09 per share accretive to its first full year of GAAP earnings and $0.09 to $0.10 per share accretive to cash earnings, excluding any one-time transaction costs. The acquisition is expected to close during the second quarter of 2020, pending both customary regulatory and Steuben shareholder approval. Based on the Company’s January 21, 2020 stock price of $70.13, Steuben’s shareholders are expected to receive total consideration of $117.1 million in Company stock and cash.
Conference Call Scheduled
Company management will conduct an investor call at 11:00 a.m. (ET) today, January 22, 2020, to discuss fourth quarter and full year 2019 results. The conference call can be accessed at 800-263-0877 (646-828-8143, if outside United States and Canada) using the conference ID code 5205291. Investors may also listen live via the Internet at: https://www.webcaster4.com/Webcast/Page/995/32696.
This earnings release, including supporting financial tables, is available within the press releases section of the Company's investor relations website at: http://ir.communitybanksystem.com. An archived webcast of the earnings call will be available on this site for one full year.
Community Bank System, Inc. operates more than 230 customer facilities across Upstate New York, Northeastern Pennsylvania, Vermont, and Western Massachusetts through its banking subsidiary, Community Bank, N.A. With assets of $11.4 billion, the DeWitt, N.Y. headquartered company is among the country’s 150 largest financial institutions. In addition to a full range of retail, business, and municipal banking services, the Company offers comprehensive financial planning, insurance and wealth management services through its Community Bank Wealth Management Group and OneGroup NY, Inc. operating units. The Company's Benefit Plans Administrative Services, Inc. subsidiary is a leading provider of employee benefits administration, trust services, collective investment fund administration and actuarial consulting services to customers on a national scale. Community Bank System, Inc. is listed on the New York Stock Exchange and the Company's stock trades under the symbol CBU. For more information about Community Bank visit www.cbna.com or http://ir.communitybanksystem.com.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The following factors, among others, could cause the actual results of CBU’s operations to differ materially from CBU’s expectations: the successful integration of operations of its acquisitions; competition; changes in economic conditions, interest rates and financial markets; changes in legislation or regulatory requirements; and the timing for receiving regulatory approvals and completing pending transactions. These statements are based on the current beliefs and expectations of CBU’s management and CBU does not assume any duty to update forward-looking statements.
| Summary of Financial Data (unaudited) |
|
|
|
|
(Dollars in thousands, except per share data) |
|
|
|
|
|
Quarter Ended |
Year-to-Date |
||
|
December 31,
|
December 31,
|
December 31,
|
December 31,
|
Earnings |
|
|
|
|
Loan income |
$80,509 |
$73,316 |
$308,210 |
$286,165 |
Investment income |
19,538 |
19,105 |
77,517 |
76,568 |
Total interest income |
100,047 |
92,421 |
385,727 |
362,733 |
Interest expense |
7,307 |
5,034 |
26,552 |
17,678 |
Net interest income |
92,740 |
87,387 |
359,175 |
345,055 |
Provision for loan losses |
2,857 |
2,495 |
8,430 |
10,837 |
Net interest income after provision for loan losses |
89,883 |
84,892 |
350,745 |
334,218 |
Deposit service fees and other banking services |
18,075 |
17,142 |
70,483 |
75,352 |
Wealth management and insurance services |
14,060 |
13,675 |
58,068 |
56,089 |
Employee benefit services |
24,997 |
23,466 |
97,167 |
92,279 |
Gain on sale of investments, net |
0 |
0 |
4,882 |
0 |
Unrealized (loss)gain on equity securities |
(9) |
(65) |
19 |
657 |
Loss on debt extinguishment |
0 |
0 |
0 |
(318) |
Total noninterest revenues |
57,123 |
54,218 |
230,619 |
224,059 |
Salaries and employee benefits |
56,468 |
52,040 |
219,916 |
207,363 |
Data processing and communications |
10,932 |
9,631 |
41,407 |
39,094 |
Occupancy and equipment |
10,142 |
10,210 |
39,850 |
39,948 |
Amortization of intangible assets |
3,962 |
4,375 |
15,956 |
18,155 |
Acquisition expenses |
819 |
0 |
8,608 |
(769) |
Other |
12,946 |
11,357 |
46,289 |
41,498 |
Total operating expenses |
95,269 |
87,613 |
372,026 |
345,289 |
Income before income taxes |
51,737 |
51,497 |
209,338 |
212,988 |
Income taxes |
8,853 |
10,674 |
40,275 |
44,347 |
Net income |
$42,884 |
$40,823 |
$169,063 |
$168,641 |
Basic earnings per share |
$0.82 |
$0.79 |
$3.26 |
$3.28 |
Diluted earnings per share |
$0.82 |
$0.78 |
$3.23 |
$3.24 |
| Summary of Financial Data (unaudited) |
|
|
|
|
|
||||
(Dollars in thousands, except per share data) |
|
|
|
|
|
||||
|
2019 |
2018 |
|||||||
|
4th Qtr |
3rd Qtr |
2nd Qtr |
1st Qtr |
4th Qtr |
||||
Earnings |
|
|
|
|
|
||||
Loan income |
$80,509 |
$79,931 |
$74,067 |
$73,703 |
$73,316 |
||||
Investment income |
19,538 |
18,716 |
20,285 |
18,978 |
19,105 |
||||
Total interest income |
100,047 |
98,647 |
94,352 |
92,681 |
92,421 |
||||
Interest expense |
7,307 |
7,371 |
6,052 |
5,822 |
5,034 |
||||
Net interest income |
92,740 |
91,276 |
88,300 |
86,859 |
87,387 |
||||
Provision for loan losses |
2,857 |
1,751 |
1,400 |
2,422 |
2,495 |
||||
Net interest income after provision for loan losses |
89,883 |
89,525 |
86,900 |
84,437 |
84,892 |
||||
Deposit service fees and other banking services |
18,075 |
17,865 |
17,143 |
17,400 |
17,142 |
||||
Wealth management and insurance services |
14,060 |
14,890 |
14,907 |
14,211 |
13,675 |
||||
Employee benefit services |
24,997 |
24,329 |
23,787 |
24,054 |
23,466 |
||||
Gain on sale of investments, net |
0 |
0 |
4,882 |
0 |
0 |
||||
Unrealized (loss)gain on equity securities |
(9) |
10 |
(13) |
31 |
(65) |
||||
Total noninterest revenues |
57,123 |
57,094 |
60,706 |
55,696 |
54,218 |
||||
Salaries and employee benefits |
56,468 |
56,061 |
54,008 |
53,379 |
52,040 |
||||
Data processing and communications |
10,932 |
10,675 |
10,401 |
9,399 |
9,631 |
||||
Occupancy and equipment |
10,142 |
9,801 |
9,619 |
10,288 |
10,210 |
||||
Amortization of intangible assets |
3,962 |
3,960 |
3,904 |
4,130 |
4,375 |
||||
Acquisition expenses |
819 |
6,061 |
1,194 |
534 |
0 |
||||
Other |
12,946 |
10,371 |
12,050 |
10,922 |
11,357 |
||||
Total operating expenses |
95,269 |
96,929 |
91,176 |
88,652 |
87,613 |
||||
Income before income taxes |
51,737 |
49,690 |
56,430 |
51,481 |
51,497 |
||||
Income taxes |
8,853 |
10,472 |
11,415 |
9,535 |
10,674 |
||||
Net income |
$42,884 |
$39,218 |
$45,015 |
$41,946 |
$40,823 |
||||
Basic earnings per share |
$0.82 |
$0.76 |
$0.87 |
$0.81 |
$0.79 |
||||
Diluted earnings per share |
$0.82 |
$0.75 |
$0.86 |
$0.80 |
$0.78 |
||||
Profitability |
|
|
|
|
|
||||
Return on assets |
1.48% |
1.39% |
1.68% |
1.59% |
1.53% |
||||
Return on equity |
9.19% |
8.53% |
10.18% |
9.85% |
9.63% |
||||
Return on tangible equity(2) |
16.08% |
14.92% |
17.74% |
17.61% |
17.61% |
||||
Noninterest revenues/operating revenues (FTE) (1) |
38.3% |
38.6% |
38.8% |
39.1% |
38.5% |
||||
Efficiency ratio |
60.7% |
58.8% |
59.8% |
59.1% |
59.1% |
||||
Components of Net Interest Margin (FTE) |
|
|
|
|
|
||||
Loan yield |
4.67% |
4.72% |
4.73% |
4.78% |
4.65% |
||||
Cash equivalents yield |
1.68% |
2.19% |
2.37% |
2.33% |
1.85% |
||||
Investment yield |
2.70% |
2.61% |
2.73% |
2.59% |
2.62% |
||||
Earning asset yield |
3.99% |
4.03% |
4.06% |
4.05% |
3.99% |
||||
Interest-bearing deposit rate |
0.36% |
0.36% |
0.30% |
0.27% |
0.22% |
||||
Borrowing rate |
1.68% |
2.06% |
1.87% |
1.86% |
1.68% |
||||
Cost of all interest-bearing funds |
0.42% |
0.43% |
0.37% |
0.36% |
0.31% |
||||
Cost of funds (includes DDA) |
0.31% |
0.32% |
0.28% |
0.27% |
0.23% |
||||
Net interest margin (FTE) |
3.71% |
3.73% |
3.80% |
3.80% |
3.77% |
||||
Fully tax-equivalent adjustment |
$1,026 |
$985 |
$990 |
$1,008 |
$1,062 |
||||
Summary of Financial Data (unaudited) |
|
|
|
|
|
|||||||
(Dollars in thousands, except per share data) |
|
|
|
|
|
|||||||
|
2019 |
2018 |
||||||||||
|
4th Qtr |
3rd Qtr |
2nd Qtr |
1st Qtr |
4th Qtr |
|||||||
Average Balances |
|
|
|
|
|
|||||||
Loans |
$6,857,977 |
$6,735,776 |
$6,294,772 |
$6,273,798 |
$6,276,231 |
|||||||
Cash equivalents |
504,858 |
665,862 |
334,304 |
121,304 |
28,817 |
|||||||
Taxable investment securities |
2,242,471 |
1,990,979 |
2,400,516 |
2,574,902 |
2,577,366 |
|||||||
Nontaxable investment securities |
434,020 |
413,437 |
397,316 |
403,359 |
423,902 |
|||||||
Total interest-earning assets |
10,039,326 |
9,806,054 |
9,426,908 |
9,373,363 |
9,306,316 |
|||||||
Total assets |
11,472,415 |
11,229,919 |
10,771,975 |
10,687,708 |
10,575,272 |
|||||||
Interest-bearing deposits |
6,581,979 |
6,462,143 |
6,170,832 |
6,107,732 |
6,039,390 |
|||||||
Borrowings |
325,139 |
290,967 |
319,505 |
373,656 |
389,378 |
|||||||
Total interest-bearing liabilities |
6,907,118 |
6,753,110 |
6,490,337 |
6,481,388 |
6,428,768 |
|||||||
Noninterest-bearing deposits |
2,519,645 |
2,458,831 |
2,326,630 |
2,297,472 |
2,317,042 |
|||||||
Shareholders' equity |
1,851,579 |
1,824,869 |
1,774,400 |
1,726,313 |
1,682,525 |
|||||||
Balance Sheet Data |
|
|
|
|
|
|||||||
Cash and cash equivalents |
$205,030 |
$1,014,042 |
$874,836 |
$508,364 |
$211,834 |
|||||||
Investment securities |
3,088,343 |
2,481,742 |
2,402,272 |
2,966,147 |
2,981,658 |
|||||||
Loans: |
|
|
|
|
|
|||||||
Business lending |
2,775,876 |
2,779,612 |
2,395,684 |
2,410,477 |
2,396,977 |
|||||||
Consumer mortgage |
2,430,902 |
2,405,191 |
2,255,782 |
2,237,430 |
2,235,408 |
|||||||
Consumer indirect |
1,113,062 |
1,091,980 |
1,082,834 |
1,070,840 |
1,083,207 |
|||||||
Home equity |
386,325 |
389,029 |
371,619 |
374,297 |
386,709 |
|||||||
Consumer direct |
184,378 |
187,379 |
178,151 |
173,042 |
178,820 |
|||||||
Total loans |
6,890,543 |
6,853,191 |
6,284,070 |
6,266,086 |
6,281,121 |
|||||||
Allowance for loan losses |
49,911 |
49,423 |
49,310 |
49,107 |
49,284 |
|||||||
Intangible assets, net |
836,923 |
840,685 |
800,515 |
804,419 |
807,349 |
|||||||
Other assets |
439,367 |
457,060 |
433,005 |
420,558 |
374,617 |
|||||||
Total assets |
11,410,295 |
11,597,297 |
10,745,388 |
10,916,467 |
10,607,295 |
|||||||
Deposits: |
|
|
|
|
|
|||||||
Noninterest-bearing |
2,465,902 |
2,549,395 |
2,363,408 |
2,346,635 |
2,312,816 |
|||||||
Non-maturity interest-bearing |
5,592,936 |
5,672,825 |
5,356,448 |
5,517,141 |
5,270,015 |
|||||||
Time |
936,129 |
946,065 |
768,349 |
755,886 |
739,540 |
|||||||
Total deposits |
8,994,967 |
9,168,285 |
8,488,205 |
8,619,662 |
8,322,371 |
|||||||
Borrowings |
253,758 |
237,661 |
144,290 |
251,833 |
315,743 |
|||||||
Subordinated notes payable |
13,795 |
13,814 |
0 |
0 |
0 |
|||||||
Subordinated debt held by unconsolidated subsidiary trusts |
77,320 |
77,320 |
97,939 |
97,939 |
97,939 |
|||||||
Accrued interest and other liabilities |
215,221 |
259,796 |
205,444 |
189,905 |
157,459 |
|||||||
Total liabilities |
9,555,061 |
9,756,876 |
8,935,878 |
9,159,339 |
8,893,512 |
|||||||
Shareholders' equity |
1,855,234 |
1,840,421 |
1,809,510 |
1,757,128 |
1,713,783 |
|||||||
Total liabilities and shareholders' equity |
11,410,295 |
11,597,297 |
10,745,388 |
10,916,467 |
10,607,295 |
|||||||
Capital |
|
|
|
|
|
|||||||
Tier 1 leverage ratio |
10.80% |
10.76% |
11.54% |
11.27% |
11.08% |
|||||||
Tangible equity/net tangible assets (2) |
10.01% |
9.68% |
10.56% |
9.83% |
9.68% |
|||||||
Diluted weighted average common shares O/S |
52,522 |
52,382 |
52,356 |
52,195 |
52,122 |
|||||||
Period end common shares outstanding |
51,794 |
51,660 |
51,571 |
51,471 |
51,258 |
|||||||
Cash dividends declared per common share |
$0.41 |
$0.41 |
$0.38 |
$0.38 |
$0.38 |
|||||||
Book value |
$35.82 |
$35.63 |
$35.09 |
$34.14 |
$33.43 |
|||||||
Tangible book value(2) |
$20.52 |
$20.24 |
$20.45 |
$19.40 |
$18.59 |
|||||||
Common stock price (end of period) |
$70.94 |
$61.69 |
$65.84 |
$59.77 |
$58.30 |
|||||||
Summary of Financial Data (unaudited) |
|
|
|
|
|
|||||||||
(Dollars in thousands, except per share data) |
|
|
|
|
|
|||||||||
|
2019 |
2018 |
||||||||||||
|
4th Qtr |
3rd Qtr |
2nd Qtr |
1st Qtr |
4th Qtr |
|||||||||
Asset Quality |
|
|
|
|
|
|||||||||
Nonaccrual loans |
$18,835 |
$23,610 |
$21,413 |
$21,252 |
$22,544 |
|||||||||
Accruing loans 90+ days delinquent |
5,426 |
5,064 |
3,047 |
3,019 |
2,455 |
|||||||||
Total nonperforming loans |
24,261 |
28,674 |
24,460 |
24,271 |
24,999 |
|||||||||
Other real estate owned (OREO) |
1,270 |
1,258 |
1,736 |
1,524 |
1,320 |
|||||||||
Total nonperforming assets |
25,531 |
29,932 |
26,196 |
25,795 |
26,319 |
|||||||||
Net charge-offs |
2,369 |
1,638 |
1,197 |
2,599 |
3,345 |
|||||||||
Allowance for loan losses/loans outstanding |
0.72% |
0.72% |
0.78% |
0.78% |
0.78% |
|||||||||
Nonperforming loans/loans outstanding |
0.35% |
0.42% |
0.39% |
0.39% |
0.40% |
|||||||||
Allowance for loan losses/nonperforming loans |
206% |
172% |
202% |
202% |
197% |
|||||||||
Net charge-offs/average loans |
0.14% |
0.10% |
0.08% |
0.17% |
0.21% |
|||||||||
Delinquent loans/ending loans |
0.94% |
0.85% |
0.87% |
0.88% |
1.00% |
|||||||||
Loan loss provision/net charge-offs |
121% |
107% |
117% |
93% |
75% |
|||||||||
Nonperforming assets/total assets |
0.22% |
0.26% |
0.24% |
0.24% |
0.25% |
|||||||||
Asset Quality (excluding loans acquired since 1/1/09) |
|
|
|
|
|
|||||||||
Nonaccrual loans |
$15,415 |
$16,644 |
$15,529 |
$15,524 |
$16,182 |
|||||||||
Accruing loans 90+ days delinquent |
2,174 |
3,734 |
2,863 |
2,593 |
2,106 |
|||||||||
Total nonperforming loans |
17,589 |
20,378 |
18,392 |
18,117 |
18,288 |
|||||||||
Other real estate owned (OREO) |
1,148 |
1,258 |
1,145 |
898 |
669 |
|||||||||
Total nonperforming assets |
18,737 |
21,636 |
19,537 |
19,015 |
18,957 |
|||||||||
Net charge-offs |
2,435 |
1,602 |
1,234 |
1,516 |
3,053 |
|||||||||
Allowance for loan losses/loans outstanding |
0.87% |
0.89% |
0.93% |
0.94% |
0.93% |
|||||||||
Nonperforming loans/loans outstanding |
0.32% |
0.38% |
0.36% |
0.36% |
0.36% |
|||||||||
Allowance for loan losses/nonperforming loans |
270% |
231% |
260% |
262% |
256% |
|||||||||
Net charge-offs/average loans |
0.18% |
0.12% |
0.10% |
0.12% |
0.24% |
|||||||||
Delinquent loans/ending loans |
0.88% |
0.88% |
0.89% |
0.89% |
1.06% |
|||||||||
Loan loss provision/net charge-offs |
120% |
51% |
123% |
142% |
76% |
|||||||||
Nonperforming assets/total assets |
0.19% |
0.22% |
0.20% |
0.20% |
0.20% |
|||||||||
Summary of Financial Data (unaudited) |
|
|
|
|
|
|||||||
(Dollars in thousands, except per share data) |
|
|
|
|
|
|||||||
|
2019 |
2018 |
||||||||||
|
4th Qtr |
3rd Qtr |
2nd Qtr |
1st Qtr |
4th Qtr |
|||||||
Quarterly GAAP to Non-GAAP Reconciliations |
|
|
|
|
|
|||||||
Income statement data |
|
|
|
|
|
|||||||
Net income |
||||||||||||
Net income (GAAP) |
$42,884 |
$39,218 |
$45,015 |
$41,946 |
$40,823 |
|||||||
Acquisition expenses |
819 |
6,061 |
1,194 |
534 |
0 |
|||||||
Tax effect of acquisition expenses |
(140) |
(1,277) |
(242) |
(99) |
0 |
|||||||
Subtotal (non-GAAP) |
43,563 |
44,002 |
45,967 |
42,381 |
40,823 |
|||||||
Gain on sale of investments, net |
0 |
0 |
(4,882) |
0 |
0 |
|||||||
Tax effect of gain on sale of investments, net |
0 |
0 |
988 |
0 |
0 |
|||||||
Subtotal (non-GAAP) |
43,563 |
44,002 |
42,073 |
42,381 |
40,823 |
|||||||
Unrealized loss(gain) on equity securities |
9 |
(10) |
13 |
(31) |
65 |
|||||||
Tax effect of unrealized loss(gain) on equity securities |
(2) |
2 |
(3) |
6 |
(13) |
|||||||
Operating net income (non-GAAP) |
43,570 |
43,994 |
42,083 |
42,356 |
40,875 |
|||||||
Amortization of intangibles |
3,962 |
3,960 |
3,904 |
4,130 |
4,375 |
|||||||
Tax effect of amortization of intangibles |
(678) |
(835) |
(790) |
(765) |
(907) |
|||||||
Subtotal (non-GAAP) |
46,854 |
47,119 |
45,197 |
45,721 |
44,343 |
|||||||
Acquired non-impaired loan accretion |
(1,898) |
(1,637) |
(1,302) |
(1,330) |
(1,838) |
|||||||
Tax effect of acquired non-impaired loan accretion |
325 |
345 |
263 |
246 |
381 |
|||||||
Adjusted net income (non-GAAP) |
$45,281 |
$45,827 |
$44,158 |
$44,637 |
$42,886 |
|||||||
|
|
|
|
|
|
|||||||
Return on average assets |
|
|
|
|
|
|||||||
Adjusted net income (non-GAAP) |
$45,281 |
$45,827 |
$44,158 |
$44,637 |
$42,886 |
|||||||
Average total assets |
11,472,415 |
11,229,919 |
10,771,975 |
10,687,708 |
10,575,272 |
|||||||
Adjusted return on average assets |
1.57% |
1.62% |
1.64% |
1.69% |
1.61% |
|||||||
|
|
|
|
|
|
|||||||
Return on average equity |
|
|
|
|
|
|||||||
Adjusted net income (non-GAAP) |
$45,281 |
$45,827 |
$44,158 |
$44,637 |
$42,886 |
|||||||
Average total equity |
1,851,579 |
1,824,869 |
1,774,400 |
1,726,313 |
1,682,525 |
|||||||
Adjusted return on average equity |
9.70% |
9.96% |
9.98% |
10.49% |
10.11% |
|||||||
|
|
|
|
|
|
|||||||
Earnings per common share |
|
|
|
|
|
|||||||
Diluted earnings per share (GAAP) |
$0.82 |
$0.75 |
$0.86 |
$0.80 |
$0.78 |
|||||||
Acquisition expenses |
0.01 |
0.12 |
0.02 |
0.01 |
0.00 |
|||||||
Tax effect of acquisition expenses |
0.00 |
(0.03) |
0.00 |
0.00 |
0.00 |
|||||||
Subtotal (non-GAAP) |
0.83 |
0.84 |
0.88 |
0.81 |
0.78 |
|||||||
Gain on sale of investments, net |
0.00 |
0.00 |
(0.10) |
0.00 |
0.00 |
|||||||
Tax effect of gain on sale of investments, net |
0.00 |
0.00 |
0.02 |
0.00 |
0.00 |
|||||||
Subtotal (non-GAAP) |
0.83 |
0.84 |
0.80 |
0.81 |
0.78 |
|||||||
Unrealized loss(gain) on equity securities |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
|||||||
Tax effect of unrealized loss(gain) on equity securities |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
|||||||
Operating diluted earnings per share (non-GAAP) |
0.83 |
0.84 |
0.80 |
0.81 |
0.78 |
|||||||
Amortization of intangibles |
0.07 |
0.08 |
0.07 |
0.08 |
0.08 |
|||||||
Tax effect of amortization of intangibles |
(0.01) |
(0.02) |
(0.02) |
(0.01) |
(0.02) |
|||||||
Subtotal (non-GAAP) |
0.89 |
0.90 |
0.85 |
0.88 |
0.84 |
|||||||
Acquired non-impaired loan accretion |
(0.04) |
(0.03) |
(0.02) |
(0.03) |
(0.04) |
|||||||
Tax effect of acquired non-impaired loan accretion |
0.01 |
0.01 |
0.01 |
0.00 |
0.01 |
|||||||
Diluted adjusted net earnings per share (non-GAAP) |
$0.86 |
$0.88 |
$0.84 |
$0.85 |
$0.81 |
|||||||
|
|
|
|
|
|
|||||||
Summary of Financial Data (unaudited) |
|
|
|
|
|
|
|||||||
(Dollars in thousands, except per share data) |
|
|
|
|
|
|
|||||||
|
2019 |
2018 |
|||||||||||
|
4th Qtr |
3rd Qtr |
2nd Qtr |
1st Qtr |
4th Qtr |
||||||||
Quarterly GAAP to Non-GAAP Reconciliations |
|
|
|
|
|
||||||||
Income statement data (continued) |
|
|
|
|
|
||||||||
Noninterest operating expenses |
|
|
|
|
|
||||||||
Noninterest expenses (GAAP) |
$95,269 |
$96,929 |
$91,176 |
$88,652 |
$87,613 |
||||||||
Amortization of intangibles |
(3,962) |
(3,960) |
(3,904) |
(4,130) |
(4,375) |
||||||||
Acquisition expenses |
(819) |
(6,061) |
(1,194) |
(534) |
0 |
||||||||
Total adjusted noninterest expenses (non-GAAP) |
$90,488 |
$86,908 |
$86,078 |
$83,988 |
$83,238 |
||||||||
|
|
|
|
|
|
||||||||
Efficiency ratio |
|
|
|
|
|
||||||||
Adjusted noninterest expenses (non-GAAP) - numerator |
$90,488 |
$86,908 |
$86,078 |
$83,988 |
$83,238 |
||||||||
Tax-equivalent net interest income |
93,766 |
92,261 |
89,290 |
87,867 |
88,449 |
||||||||
Noninterest revenues |
57,123 |
57,094 |
60,706 |
55,696 |
54,218 |
||||||||
Acquired non-impaired loan accretion |
(1,898) |
(1,637) |
(1,302) |
(1,330) |
(1,838) |
||||||||
Gain on sale of investments, net |
0 |
0 |
(4,882) |
0 |
0 |
||||||||
Unrealized loss(gain) on equity securities |
9 |
(10) |
13 |
(31) |
65 |
||||||||
Operating revenues (non-GAAP) - denominator |
149,000 |
147,708 |
143,825 |
142,202 |
140,894 |
||||||||
Efficiency ratio (non-GAAP) |
60.7% |
58.8% |
59.8% |
59.1% |
59.1% |
||||||||
|
|
|
|
|
|
||||||||
Balance sheet data |
|
|
|
|
|
||||||||
Total assets |
|
|
|
|
|
||||||||
Total assets (GAAP) |
$11,410,295 |
$11,597,297 |
$10,745,388 |
$10,916,467 |
$10,607,295 |
||||||||
Intangible assets |
(836,923) |
(840,685) |
(800,515) |
(804,419) |
(807,349) |
||||||||
Deferred taxes on intangible assets |
44,742 |
46,048 |
45,576 |
45,994 |
46,370 |
||||||||
Total tangible assets (non-GAAP) |
10,618,114 |
10,802,660 |
9,990,449 |
10,158,042 |
9,846,316 |
||||||||
|
|
|
|
|
|
||||||||
Total common equity |
|
|
|
|
|
||||||||
Shareholders' Equity (GAAP) |
1,855,234 |
1,840,421 |
1,809,510 |
1,757,128 |
1,713,783 |
||||||||
Intangible assets |
(836,923) |
(840,685) |
(800,515) |
(804,419) |
(807,349) |
||||||||
Deferred taxes on intangible assets |
44,742 |
46,048 |
45,576 |
45,994 |
46,370 |
||||||||
Total tangible common equity (non-GAAP) |
1,063,053 |
1,045,784 |
1,054,571 |
998,703 |
952,804 |
||||||||
|
|
|
|
|
|
||||||||
Net tangible equity-to-assets ratio at quarter end |
|
|
|
|
|
||||||||
Total tangible common equity (non-GAAP) - numerator |
$1,063,053 |
$1,045,784 |
$1,054,571 |
$998,703 |
$952,804 |
||||||||
Total tangible assets (non-GAAP) - denominator |
10,618,114 |
10,802,660 |
9,990,449 |
10,158,042 |
9,846,316 |
||||||||
Net tangible equity-to-assets ratio at quarter end (non-GAAP) |
10.01% |
9.68% |
10.56% |
9.83% |
9.68% |
||||||||
|
|
|
|
|
|
||||||||
(1) Excludes gain on sales of investments and unrealized gain and loss on equity securities. |
|||||||||
(2) Includes deferred tax liabilities related to certain intangible assets. |
