Old National reports 4th quarter earnings, announces dividend increase, stock repurchase plan, and ONB Way strategic update

Tuesday, 21. January 2020 12:30

EVANSVILLE, Ind., Jan. 21, 2020 (GLOBE NEWSWIRE) --

Old National Bancorp (NASDAQ: ONB) reports 4Q19 net income of $49.2 million, diluted EPS of $0.29.
Adjusted1 net income of $55.2 million, or $0.32 per diluted share. 
2019 annual net income of $238.2 million, diluted EPS of $1.38. 
Adjusted1 2019 annual net income of $249.9 million, diluted EPS of $1.45. 

CEO COMMENTARY:

“Our 4th quarter results capped a strong year of earnings for Old National,” said CEO Jim Ryan. “Full-year 2019
results included three quarters of record net income, stellar credit metrics, well controlled expenses and record
commercial loan production, all of which was accomplished while finalizing a new strategic plan – known as
 
The ONB Way – that will ensure our clients remain at the center of all we do.” 

FOURTH QUARTER HIGHLIGHTS2:

Net Income

  • Net income of $49.2 million
  • Earnings per share of $0.29

Net Interest Income/NIM

  • Net interest income on a fully taxable equivalent basis was $152.2 million compared to $156.3 million
  • Net interest margin on a fully taxable equivalent basis was 3.46% compared to 3.57%

Operating Performance

  • Pre-provision net revenue1 (“PPNR”) was $65.2 million
  • Adjusted PPNR1 was $73.9 million, up 10.3% over fourth quarter of 2018
  • Noninterest expense was $134.7 million
  • Adjusted noninterest expense1 was $125.6 million
  • Efficiency ratio1 was 65.57%
  • Adjusted efficiency ratio1 was 60.97%, a 234 basis point improvement from fourth quarter of 2018

Loans and Credit Quality

  • End-of-period total loans3 were $12,164.4 million compared to $12,075.9 million
  • Fourth-quarter total commercial production was a record $681 million; December 31 pipeline was a record $2.2 billion
  • Provision for loan losses was $1.3 million
  • Net charge-offs were $3.6 million, or 0.12% annualized, compared to net charge-offs of $0.8 million
  • Non-performing loans were 1.19% of total loans compared to 1.31%

Return Profile & Capital

  • Return on average common equity was 6.94%
  • Return on average tangible common equity1 was 12.03%
  • Adjusted return on average tangible common equity1 was 13.44%
  • Repurchased 428 thousand shares of common stock during the current quarter

Notable Items

  • $0.01 increase in quarterly cash dividend to $0.14 per share
  • 7 million share repurchase authorization effective until January 31, 2021
  • Current quarter contained $8.2 million in ONB Way charges, $0.2 million in merger and integration charges and $0.7 million in tax credit amortization

1 Non-GAAP financial measure that Management believes is useful in evaluating the financial results of the Company – please refer to the Non-GAAP reconciliations contained in this release 2 Comparisons are on a linked-quarter basis, unless otherwise noted 3 Includes loans held for sale

DIVIDEND AND SHARE REPURCHASE

Old National Bancorp’s Board of Directors declared an increase in its quarterly common stock cash dividend to $0.14 per share on the Company’s outstanding shares of common stock. This new dividend level represents a 7.7% increase over the previous cash dividend level of $0.13 per common share. The dividend is payable March 16, 2020, to shareholders of record on March 2, 2020. For purposes of broker trading, the ex-date of the cash dividend is February 28, 2020.

The Board of Directors has also approved the adoption of a stock repurchase plan that authorizes up to 7.0 million shares of Old National Bancorp stock to be repurchased, as conditions warrant, through January 31, 2021. These shares may be purchased in either the open market or in privately negotiated transactions, in accordance with SEC regulations.

THE ONB WAY: OLD NATIONAL’S NEW STRATEGIC PLAN

Old National is implementing a new strategic plan – and overall way of doing business – designed to keep our clients at the center of all we do. Known as The ONB Way, it includes:

  • Realigning the organization into clearly defined segments to align leaders and relationship managers with the client segment they can best serve (while not wavering on our commitment to community).
  • Deepening client relationships through integrated Commercial, Community Banking and Wealth teams.
  • Simplifying and improving the end-to-end banking/borrowing journey while adhering to strong risk management principles.
  • Creating a new Wealth Division that combines wealth management, investments and private banking for a simplified, highly consultative client experience firmly rooted in financial planning.
  • Investing in our operational and IT infrastructure to meet our clients “where they are” and ensure that we keep pace with technology and client digital expectations.

ADDITIONS TO THE LEADERSHIP TEAM

As part of The ONB Way, Old National is pleased to welcome four new executive leaders:

  • Chady AlAhmar, Wealth Division CEO. Most recently a Senior Executive of Wealth Management at U.S. Bank, Chady is passionate about achieving business growth through driving strategy optimization, team collaboration, sales practices, business development and analytics. Prior to joining U.S. Bank, he held strategy, finance and management consulting positions with GMAC (Ally Bank) and ACG in New York and ran his own management consulting firm for several years. He will be located in Minneapolis.
  • Paul Kilroy, Chief Information Officer. Paul brings a wide and impressive array of IT expertise and leadership experience to his role as ONB CIO, including Cloud, data and application rationalization strategies, and robotics and automation. Most recently, he served as SVP, Segment CIO of Enterprise Shared Services, Data and Architecture for Huntington National Bank, where he created a groundbreaking Robotics Center of Excellence. Prior to that, he spent 13 years in IT leadership roles at JP Morgan Chase. Paul will be located in Evansville.

  • Scott Fecteau, Chief Client Services Officer, Operations. Scott is an Operations, Financial and Risk Management executive with nearly 30 years of industry experience.  He most recently served as Managing Director/Global Delivery Lead BPO for Accenture Credit Services in Charlotte, North Carolina. Prior to that, he was Director of Residential Lending at Associated Bank, in Green Bay for 12 years. We are excited to welcome Scott back to Old National as he served in our Mortgage Division in 2003-04. He will be located in Evansville.

  • Malinda Anthony, Treasury Management (TM) President. Malinda joined ONB from Wells Fargo in Indianapolis, where she most recently served as North Division Sales Manager, overseeing TM sales supporting commercial banking in 10 states. In her role as ONB TM President, she is responsible for the entire Treasury Management business line, including sales, operations and support, product and process innovation, and Merchant Services. She will be located in Indianapolis.

BRANCH NETWORK OPTIMIZATION

Another component of The ONB Way is the optimization of our branch network. This optimization, which includes 31 banking centers scattered throughout the footprint that will be consolidated on April 24, 2020, reflects an ongoing shift among our clients toward digital banking solutions. Many of the facilities to be consolidated are in smaller markets, several of which were added in recent years through partnership activity. By state, these consolidations include 10 banking centers in both Wisconsin and Indiana, five in Michigan, four in Minnesota and two in Kentucky.

RESULTS OF OPERATIONS

Old National Bancorp reported fourth-quarter 2019 net income of $49.2 million, or $0.29 per diluted share. 

Included in the fourth quarter were pre-tax charges of $8.2 million for ONB Way and $0.2 million for merger and integration activity. Excluding these charges from the current quarter and netting out debt securities gains, adjusted net income was $55.2 million, or $0.32 per diluted share.

LOANS
Commercial activity remains strong with record high commercial loan production.

  • Period-end total loans were $12,164.4 million at December 31, 2019, compared to $12,075.9 million at September 30, 2019.
  • Commercial and industrial loans decreased $60.3 million to $2,890.3 million; commercial real estate loans increased $54.7 million to $5,166.8 million; consumer loans increased $7.8 million to $1,726.1 million and residential mortgage loans increased $86.3 million to $2,381.2 million.
  • Commercial loan production in the fourth quarter was $681 million; period-end pipeline totaled $2.2 billion.
  • On average, total loans in the fourth quarter were $12,069.2 million, down from $12,073.8 million in the third quarter of 2019.

DEPOSITS
A low-cost core deposit franchise continues to be one of Old National’s strengths.

  • Period-end total deposits were $14,553.4 million at December 31, 2019, an increase of $105.0 million from the third quarter of 2019.
  • On average, total deposits in the fourth quarter were $14,602.9 million, compared to $14,330.5 million in the third quarter of 2019. 

NET INTEREST INCOME AND MARGIN
Net interest income and margin lower with decline in accretion income and mix shift.

  • Net interest income decreased to $148.9 million in the fourth quarter of 2019 from $153.1 million in the third quarter of 2019.
  • The net interest margin on a fully taxable equivalent basis decreased 11 basis points to 3.46% compared to 3.57% in the third quarter of 2019.
  • Accretion income was $9.5 million, or 21 basis points of net interest margin, in the fourth quarter of 2019 compared to $13.4 million, or 31 basis points of net interest margin, in the third quarter of 2019.  In the fourth quarter of 2019, accretion income was 4.8% of adjusted total revenue.
  • Interest collected on nonaccrual loans was $2.4 million, or 5 basis points of net interest margin, in the fourth quarter of 2019 compared to $2.0 million, or 5 basis points of net interest margin, in the third quarter of 2019.
  • The cost of total deposits declined 9 basis points to 0.43% in the fourth quarter of 2019 while the cost of total interest-bearing deposits decreased 12 basis points to 0.59%.

CREDIT QUALITY AND CECL
Strong credit quality remains a hallmark of the Old National franchise.

  • Asset quality remained strong with net charge-offs in the fourth quarter of $3.6 million, or 0.12% of total average loans, and 30-89 day delinquencies of 0.25%.
  • Provision expense was $1.3 million in the fourth quarter compared to $1.4 million in the third quarter.
  • Non-performing loans decreased as a percentage of total loans to 1.19%.
  • In accordance with current accounting practices, the loans acquired from recent acquisitions were recorded at fair value with no allowance recorded at the acquisition date.  As of December 31, 2019, the remaining discount on these acquired loans was $77.8 million.
  • The allowance for loan losses was $54.6 million, or 0.45% of total loans at December 31, 2019.
  • Estimated day one increase to the allowance for loan losses and unfunded commitment liability of approximately $35 million to $45 million upon adoption of CECL. 

NONINTEREST INCOME
Noninterest income decreased due to normal seasonal patterns in mortgage banking and deposit service charges as well as a decline in capital markets income.

  • Total noninterest income for the fourth quarter of 2019 was $47.7 million, a decrease of $6.2 million from the third quarter of 2019.
  • Mortgage banking revenue decreased $3.2 million, capital markets income decreased $1.5 million and service charges on deposits declined $1.1 million when compared to the third quarter of 2019.

NONINTEREST EXPENSE
Fourth quarter results demonstrated continued discipline with respect to expense management, helping to drive positive operating leverage1.

  • Noninterest expense for the fourth quarter of 2019 was $134.7 million and included $8.2 million in ONB Way charges, $0.2 million in merger & integration charges and $0.7 million in tax credit amortization.
  • Excluding these items, adjusted noninterest expense for the fourth quarter was $125.6 million, compared to the $118.3 million in adjusted noninterest expense in the third quarter of 2019.
  • The fourth quarter of 2019 also included $4.0 million in additional incentive compensation which is included in adjusted noninterest expense defined above.
  • The fourth quarter efficiency ratio was 65.57%, while the adjusted efficiency ratio was 60.97%.
  • For the full-year 2019, the efficiency ratio was 60.35%, while the adjusted efficiency ratio was 57.87%.
  • Adjusted operating leverage1 was +636 basis points for the full-year 2019 as compared to 2018.

INCOME TAXES

  • On a fully taxable-equivalent basis, income tax expense in the fourth quarter was $14.7 million, resulting in a 23.0% FTE tax rate.
  • Income tax expense included $0.7 million in tax credit benefit.

CAPITAL
Capital ratios remain strong.

  • At the end of the fourth quarter, total risk-based capital was 13.0% and regulatory tier 1 capital was 12.1%.
  • Tangible common equity to tangible assets was 9.09% at the end of the fourth quarter compared to 8.95% in the third quarter of 2019.
  • The Company repurchased 428 thousand shares of common stock during the fourth quarter of 2019 at a weighted average price of $16.78, excluding commissions.   

NON-GAAP RECONCILIATIONS

($ in millions, except EPS, shares in 000s)4Q19Adjustments4Adjusted 4Q19
Total Revenues (FTE)$199.9 ($0.4) $199.5 
Less: Provision for Loan Losses (1.3)  -  (1.3)
Less: Noninterest Expenses (134.7)  8.4  (126.3)
Income before Income Taxes (FTE)$63.9 $8.0 $71.9 
Income Taxes 14.7  2.0  16.7 
Net Income$49.2 $6.0 $55.2 
Average Shares Outstanding 170,186  -  170,186 
Earnings Per Share - Diluted$0.29 $0.03 $0.32 

4 Tax-effect calculations use the current statutory FTE tax rates (federal + state)

($ in millions, except EPS, shares in 000s) 2019 Adjustments4Adjusted 2019
Total Revenues (FTE)$816.5 ($1.9)$814.6 
Less: Provision for Loan Losses (4.7) -  (4.7)
Less: Noninterest Expenses (508.5) 17.4  (491.1)
Income before Income Taxes (FTE)$303.3 $15.5 $318.8 
Income Taxes (65.1) (3.8) (68.9)
Net Income$238.2 $11.7 $249.9 
Average Shares Outstanding 172,687  -  172,687 
Earnings Per Share$1.38 $0.07 $1.45 

4 Tax-effect calculations use the current statutory FTE tax rates (federal + state)

($ in millions)4Q193Q19
Net Interest Income$148.9 $153.1 
Add: FTE Adjustment3.3 3.2 
Net Interest Income (FTE)$152.2 $156.3 
Average Earning Assets$17,577.8 $17,510.5 
Net Interest Margin (FTE)3.46% 3.57% 


($ in millions)4Q193Q19
Net Interest Income$148.9 $153.1 
Add: FTE Adjustment 3.3  3.2 
Net Interest Income (FTE)$152.2 $156.3 
Add: Total Noninterest Income 47.7  53.9 
Less: Noninterest Expense (134.7)  (122.6)
Pre-Provision Net Revenue$65.2 $87.6 
Less: Debt Securities Gains/Losses (0.4)  (0.4)
Add: ONB Way Charges 8.2  1.8 
Add: Merger and Integration Charges 0.2  1.3 
Add: Amortization of Tax Credit Investments 0.7  1.2 
Adjusted Pre-Provision Net Revenue$73.9 $91.5 


($ in millions)4Q193Q194Q18 2019  2018 
Noninterest Expense$134.7 $122.6 $150.3 $508.5 $517.3 
Less: ONB Way Charges (8.2) (1.8) -  (11.4) - 
Less: Merger and Integration Charges (0.2) (1.3) (14.8) (6.0) (21.3)
Less: Branch Action Charges/Foundation Funding -  -  (7.5) -  (12.0)
Noninterest Expense less Charges$126.3 $119.5 $128.0 $491.1 $484.0 
Less: Amortization of Tax Credit Investments (0.7) (1.2) (1.1) (2.7) (22.9)
Adjusted Noninterest Expense$125.6 $118.3 $126.9 $488.4 $461.1 
Less: Intangible Amortization (3.9) (4.2) (4.1) (16.9) (14.4)
Adjusted Noninterest Expense Less Intangible Amortization

$ 121.7
 

$ 114.1
 

$ 122.8
 

$ 471.5
 

$ 446.7
 
Net Interest Income$148.9 $153.1 $146.2 $604.3 $537.5 
FTE Adjustment 3.3  3.2  3.1  12.9  11.5 
Net Interest Income (FTE)$152.2 $156.3 $149.3 $617.2 $549.0 
Total Noninterest Income 47.7  53.9  58.2  199.3  195.3 
Total Revenue (FTE)$199.9 $210.2 $207.5 $816.5 $744.3 
Less: Debt Securities Gains/Losses (0.4) (0.4) 0.4  (1.9) (2.0)
Less: Gain on Student Loan Sale -  -  -  -  (2.2)
Less: Gain on Branch Actions -  -  (14.0) -  (14.5)
Adjusted Total Revenue (FTE)$199.5 $209.8 $193.9 $814.6 $725.6 
Efficiency Ratio 65.57% 56.44% 70.33% 60.35% 67.74%
Adjusted Efficiency Ratio 60.97% 54.40% 63.31% 57.87% 61.56%
      
Operating Leverage5 (basis points) 668    1,140  
Adjusted Operating Leverage6 (basis points) 392    636  

5 Year-over-year basis point change in noninterest expenses plus change in total revenue
6 Year-over-year basis point change in adjusted noninterest expense plus change in adjusted total revenue

($ in millions)4Q193Q19
Net Income$49.2 $69.8 
Add: Intangible Amortization (net of tax7) 3.0  3.1 
Tangible Net Income$52.2 $72.9 
Less: Securities Gains/Losses (net of tax7)  (0.3)  (0.3)
Add: ONB Way Charges (net of tax7) 6.2  1.4 
Add: Merger & Integration Charges (net of tax7) 0.1  1.0 
Adjusted Tangible Net Income$58.2 $75.0 
Average Total Shareholders’ Equity$2,832.9 $2,817.5 
Less: Average Goodwill (1,037.0) (1,036.3)
Less: Average Intangibles (61.9) (66.0)
Average Tangible Shareholders’ Equity$1,734.0 $1,715.2 
Return on Average Tangible Common Equity 12.03% 17.01%
Adjusted Return on Average Tangible Common Equity 13.44% 17.49%

Tax-effect calculations use the current statutory FTE tax rates (federal + state)

CONFERENCE CALL AND WEBCAST
Old National will host a conference call and live webcast at 7:00 a.m. Central Time on Tuesday, January 21, 2020, to review fourth-quarter and full-year 2019 financial results. The live audio web cast of the call, along with the corresponding presentation slides, will be available on the Company’s Investor Relations web page at oldnational.com and will be archived there for 12 months. A replay of the call will also be available from 10:00 a.m. Central Time on January 21 through February 4. To access the replay, dial 1-855-859-2056, Conference ID Code 5278346.

ABOUT OLD NATIONAL
Old National Bancorp (NASDAQ: ONB) is the holding company of Old National Bank. Headquartered in Evansville with $20.4 billion in assets, it is a top 100 U.S. bank, the largest Indiana-based bank and has been recognized as a World’s Most Ethical Company by the Ethisphere Institute for eight consecutive years. For 185 years, Old National has been a community bank committed to building long-term, highly valued relationships with clients. With locations in Indiana, Kentucky, Michigan, Minnesota and Wisconsin, Old National provides retail and commercial banking services along with comprehensive wealth management, investment and capital markets services. For information and financial data, please visit Investor Relations at oldnational.com.

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

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

Media: Kathy A. Schoettlin (812) 465-7269
Investors: Lynell J. Walton (812) 464-1366


  
  
Financial Highlights (unaudited)  
($ and shares in thousands, except per share data)  
         
 Three Months Ended Twelve Months Ended  
 December 31,September 30,December 31, December 31,December 31,  
  2019  2019  2018   2019  2018   
Income Statement        
Net interest income$148,899 $153,096 $146,225  $604,273 $537,602   
Provision for loan losses 1,264  1,437  3,390   4,747  6,966   
Noninterest income 47,726  53,961  58,154   199,317  195,305   
Noninterest expense 134,743  122,585  150,268   508,487  517,261   
Net income 49,185  69,781  47,498   238,206  190,830   
         
         
Per Common Share Data        
Net income (diluted)$0.29 $0.41 $0.28  $1.38 $1.22   
Average diluted shares outstanding 170,186  171,551  167,992   172,687  156,539   
Book value 16.82  16.66  15.36   16.82  15.36   
Stock price 18.29  17.20  15.40   18.29  15.40   
Dividend payout ratio 45% 32% 46%  37% 42%  
Tangible common book value (1) 10.35  10.18  9.00   10.35  9.00   
         
         
Performance Ratios        
Return on average assets 0.97% 1.39% 1.01%  1.19% 1.07%  
Return on average common equity 6.94% 9.91% 7.59%  8.57% 8.42%  
Return on average tangible common equity (1) 12.03% 17.01% 13.84%  14.97% 14.97%  
Net interest margin (FTE) 3.46% 3.57% 3.64%  3.55% 3.54%  
Efficiency ratio (2) 65.57% 56.44% 70.33%  60.35% 67.74%  
Net charge-offs (recoveries) to average loans 0.12% 0.03% 0.02%  0.05% 0.02%  
Allowance for loan losses to ending loans 0.45% 0.47% 0.45%  0.45% 0.45%  
Non-performing loans to ending loans 1.19% 1.31% 1.43%  1.19% 1.43%  
         
         
Balance Sheet        
Total loans$12,117,524 $12,017,648 $12,243,892  $12,117,524 $12,243,892   
Total assets 20,411,667  20,438,788  19,728,435   20,411,667  19,728,435   
Total deposits 14,553,397  14,448,352  14,349,949   14,553,397  14,349,949   
Total borrowed funds 2,744,728  2,831,863  2,493,793   2,744,728  2,493,793   
Total shareholders' equity 2,852,453  2,832,530  2,689,570   2,852,453  2,689,570   
         
         
Capital Ratios (1)        
Risk-based capital ratios (EOP):        
  Tier 1 common equity 12.1% 12.0% 11.4%  12.1% 11.4%  
  Tier 1 12.1% 12.0% 11.4%  12.1% 11.4%  
  Total 13.0% 13.0% 12.3%  13.0% 12.3%  
Leverage ratio (to average assets) 8.9% 8.8% 9.2%  8.9% 9.2%  
         
Total equity to assets (averages) 14.01% 13.98% 13.28%  13.88% 12.74%  
Tangible common equity to tangible assets 9.09% 8.95% 8.47%  9.09% 8.47%  
         
         
Nonfinancial Data        
Full-time equivalent employees 2,709  2,778  2,892   2,709  2,892   
Number of branches 192  192  191   192  191   
         
(1) See "Non-GAAP Measures" table.        
(2) Efficiency ratio is defined as noninterest expense before amortization of intangibles as a percent of FTE net interest income and noninterest revenues, excluding net gains from debt securities transactions. This presentation excludes amortization of intangibles and net debt securities gains, as is common in other company releases, and better aligns with true operating performance.  
FTE - Fully taxable equivalent basis EOP - End of period actual balances     
         



 
Income Statement (unaudited)
($ and shares in thousands, except per share data)
        
 Three Months Ended Twelve Months Ended 
 December 31,September 30,December 31, December 31,December 31, 
  2019 2019  2018   2019  2018 
Interest income$176,553$185,853 $175,234  $730,387 $632,045 
Less: interest expense 27,654 32,757  29,009   126,114  94,443 
Net interest income 148,899 153,096  146,225   604,273  537,602 
Provision for loan losses 1,264 1,437  3,390   4,747  6,966 
Net interest income after provision for loan losses 147,635 151,659  142,835   599,526  530,636 
        
Wealth management fees 9,468 9,160  9,069   37,072  36,863 
Service charges on deposit accounts 10,714 11,860  11,474   44,915  44,026 
Debit card and ATM fees 5,360 5,370  5,565   21,652  20,216 
Mortgage banking revenue 5,626 8,850  3,928   26,622  17,657 
Investment product fees 5,679 5,244  5,369   21,785  20,539 
Capital markets income 3,043 4,560  840   13,270  4,934 
Company-owned life insurance 2,937 2,703  2,591   11,539  10,584 
Other income 4,329 5,900  5,700   20,648  24,402 
Net gain on branch divestitures - -  13,989   -  13,989 
Gains (losses) on sales of debt securities 437 424  (357)  1,923  2,060 
Gains (losses) on derivatives 133 (110) (14)  (109) 35 
Total noninterest income 47,726 53,961  58,154   199,317  195,305 
        
Salaries and employee benefits 74,974 71,729  87,346   289,452  281,275 
Occupancy 14,184 11,934  13,210   55,255  51,941 
Equipment 3,958 3,954  3,916   16,903  14,861 
Marketing 3,631 4,105  4,782   15,898  15,847 
Data processing 9,080 8,961  9,418   37,589  36,170 
Communication 2,450 2,349  2,537   10,702  10,846 
Professional fees 9,986 5,037  5,615   22,854  14,503 
Loan expenses 1,873 1,811  1,877   7,253  7,028 
FDIC assessment 1,529 960  2,110   6,030  10,638 
Amortization of intangibles 3,946 4,168  4,134   16,911  14,442 
Amortization of tax credit investments 710 1,211  1,142   2,749  22,949 
Other expense 8,422 6,366  14,181   26,891  36,761 
Total noninterest expense 134,743 122,585  150,268   508,487  517,261 
        
Income before income taxes 60,618 83,035  50,721   290,356  208,680 
Income tax expense 11,433 13,254  3,223   52,150  17,850 
Net income$49,185$69,781 $47,498  $238,206 $190,830 
        
Diluted Earnings Per Share        
Net income$0.29$0.41 $0.28  $1.38 $1.22 
        
Average Common Shares Outstanding       
Basic 169,235 170,746  167,044   171,907  155,675 
Diluted 170,186 171,551  167,992   172,687  156,539 
        
Common shares outstanding at end of period 169,616 170,031  175,141   169,616  175,141 
        



  
Balance Sheet (unaudited) 
($ in thousands) 
  
 December 31, September 30, December 31,  
  2019   2019   2018   
 Assets       
 Federal Reserve Bank account$29,141  $80,018  $26,182   
 Money market investments 12,430   19,410   6,980   
 Investments:       
 Treasury and government-sponsored agencies 610,666   524,919   707,438   
 Mortgage-backed securities 3,183,861   3,248,367   2,336,415   
 States and political subdivisions 1,275,643   1,231,248   1,245,657   
 Other securities 485,862   490,389   488,802   
 Total investments 5,556,032   5,494,923   4,778,312   
 Loans held for sale, at fair value 46,898   58,285   14,911   
 Loans:       
 Commercial 2,890,296   2,950,559   3,232,970   
 Commercial and agriculture real estate 5,166,792   5,112,123   4,958,851   
 Consumer:       
 Home equity 559,021   555,905   589,322   
 Other consumer loans 1,167,126   1,162,438   1,214,345   
 Subtotal of commercial and consumer loans 9,783,235   9,781,025   9,995,488   
 Residential real estate 2,334,289   2,236,623   2,248,404   
 Total loans 12,117,524   12,017,648   12,243,892   
   Total earning assets 17,762,025   17,670,284   17,070,277   
         
 Allowance for loan losses (54,619)  (56,910)  (55,461)  
 Non-earning Assets:       
 Cash and due from banks 234,766   320,822   284,003   
 Premises and equipment, net 490,925   492,065   485,912   
 Operating lease right-of-use assets 95,477   102,976   -   
 Goodwill and other intangible assets 1,097,099   1,101,045   1,113,274   
 Company-owned life insurance 448,967   447,110   444,224   
 Net deferred tax assets 29,705   26,523   87,048   
 Loan servicing rights 25,368   24,623   24,497   
 Other assets 281,954   310,250   274,661   
 Total non-earning assets 2,704,261   2,825,414   2,713,619   
   Total assets$20,411,667  $20,438,788  $19,728,435   
         
 Liabilities and Equity       
 Noninterest-bearing demand deposits$4,042,286  $3,996,264  $3,965,380   
 Interest-bearing:       
 Checking and NOW accounts 4,149,639   3,936,318   3,788,339   
 Savings accounts 2,845,423   2,863,718   2,944,092   
 Money market accounts 1,833,819   1,821,989   1,627,882   
 Other time deposits 1,589,988   1,704,238   1,845,149   
 Total core deposits 14,461,155   14,322,527   14,170,842   
 Brokered CD's 92,242   125,825   179,107   
 Total deposits 14,553,397   14,448,352   14,349,949   
         
 Federal funds purchased and interbank borrowings 350,414   240,589   270,135   
 Securities sold under agreements to repurchase 327,782   337,551   362,294   
 Federal Home Loan Bank advances 1,822,847   2,001,960   1,613,481   
 Other borrowings 243,685   251,763   247,883   
 Total borrowed funds 2,744,728   2,831,863   2,493,793   
 Operating lease liabilities 99,500   107,272   -   
 Accrued expenses and other liabilities 161,589   218,771   195,123   
 Total liabilities 17,559,214   17,606,258   17,038,865   
         
 Common stock, surplus, and retained earnings 2,796,246   2,774,016   2,734,520   
 Accumulated other comprehensive income (loss), net of tax 56,207   58,514   (44,950)  
 Total shareholders' equity 2,852,453   2,832,530   2,689,570   
   Total liabilities and shareholders' equity$20,411,667  $20,438,788  $19,728,435   
        



     
Average Balance Sheet and Interest Rates (unaudited) 
($ in thousands) 
              
              
  Three Months Ended Three Months Ended Three Months Ended 
  December 31, 2019 September 30, 2019 December 31, 2018 
  AverageIncome (1)/Yield/ AverageIncome (1)/Yield/ AverageIncome (1)/Yield/ 
Earning Assets: BalanceExpenseRate BalanceExpenseRate BalanceExpenseRate 
Money market and other interest-earning investments $87,835 $5302.39% $63,142 $5283.32% $39,207 $2052.07% 
Investments:             
Treasury and government-sponsored agencies 546,266  3,5472.60%  682,940  4,3412.54%  694,409  3,8742.23% 
Mortgage-backed securities 3,172,818  18,8442.38%  3,019,322  18,5892.46%  2,011,275  13,6882.72% 
States and political subdivisions 1,211,850  11,1333.67%  1,172,017  10,8963.72%  1,187,404  11,1473.76% 
Other securities  489,889  3,5852.93%  499,308  4,0493.24%  493,426  4,0173.26% 
Total investments  5,420,823  37,1092.74%  5,373,587  37,8752.82%  4,386,514  32,7262.98% 
Loans: (2)             
Commercial  2,891,641  31,9254.32%  3,018,638  35,4284.59%  3,133,153  37,3584.67% 
Commercial and agriculture real estate 5,129,638  66,9595.11%  5,037,909  71,6045.56%  4,834,589  65,4615.30% 
Consumer:             
Home equity  561,125  6,4264.54%  557,607  7,1025.05%  562,801  7,1595.05% 
Other consumer loans 1,153,924  12,2454.21%  1,175,900  12,2264.13%  1,203,436  11,7023.86% 
Subtotal commercial and consumer loans 9,736,328  117,5554.79%  9,790,054  126,3605.12%  9,733,979  121,6804.96% 
Residential real estate loans 2,332,835  24,6414.23%  2,283,704  24,2614.25%  2,238,588  23,6724.23% 
              
Total loans  12,069,163  142,1964.64%  12,073,758  150,6214.91%  11,972,567  145,3524.78% 
              
Total earning assets$17,577,821 $179,8354.05% $17,510,487 $189,0244.27% $16,398,288 $178,2834.30% 
              
Less: Allowance for loan losses (57,162)    (56,894)    (53,045)   
              
Non-earning Assets:             
Cash and due from banks$278,324    $264,145    $232,360    
Other assets  2,419,792     2,429,466     2,275,907    
              
Total assets $20,218,775    $20,147,204    $18,853,510    
              
Interest-Bearing Liabilities:            
Checking and NOW accounts$4,121,021 $3,8120.37% $3,895,654 $4,4480.45% $3,391,630 $2,0040.23% 
Savings accounts  2,842,996  1,5860.22%  2,855,401  2,1280.30%  2,919,900  2,2250.30% 
Money market accounts 1,839,258  3,5580.77%  1,822,698  4,0170.87%  1,482,022  1,9220.51% 
Other time deposits  1,642,773  6,1011.47%  1,733,492  7,0161.61%  1,769,243  6,5191.46% 
Total interest-bearing deposits 10,446,048  15,0570.57%  10,307,245  17,6090.68%  9,562,795  12,6700.53% 
Brokered CD's  109,504  6372.31%  181,425  1,0982.40%  193,455  1,0242.10% 
Total interest-bearing deposits and CD's 10,555,552  15,6940.59%  10,488,670  18,7070.71%  9,756,250  13,6940.56% 
              
Federal funds purchased and interbank borrowings  95,973  4371.80%  254,971  1,4842.31%  312,730  1,9382.46% 
Securities sold under agreements to repurchase 337,786  4690.55%  340,158  7150.83%  351,392  6340.72% 
Federal Home Loan Bank advances 1,843,357  8,3591.80%  1,889,407  9,1231.92%  1,649,304  9,4412.27% 
Other borrowings  251,565  2,6954.29%  251,817  2,7284.33%  250,926  3,3025.26% 
Total borrowed funds 2,528,681  11,9601.88%  2,736,353  14,0502.04%  2,564,352  15,3152.37% 
              
Total interest-bearing liabilities$13,084,233 $27,6540.84% $13,225,023 $32,7570.98% $12,320,602 $29,0090.93% 
              
Noninterest-Bearing Liabilities and Shareholders' Equity           
Demand deposits $4,047,308    $3,841,867    $3,864,302    
Other liabilities  254,296     262,862     164,771    
Shareholders' equity  2,832,938     2,817,452     2,503,835    
              
Total liabilities and shareholders' equity$20,218,775    $20,147,204    $18,853,510    
              
Net interest rate spread  3.21%   3.29%   3.37% 
              
Net interest margin (FTE)  3.46%   3.57%   3.64% 
              
FTE adjustment  $3,282   $3,171   $3,049  
              
(1) Interest income is reflected on a fully taxable equivalent basis (FTE).   
(2) Includes loans held for sale.   



     
Average Balance Sheet and Interest Rates (unaudited) 
($ in thousands) 
          
          
  Twelve Months Ended Twelve Months Ended 
  December 31, 2019 December 31, 2018 
  AverageIncome (1)/Yield/ AverageIncome (1)/Yield/ 
Earning Assets: BalanceExpenseRate BalanceExpenseRate 
Money market and other interest-earning investments $67,069 $1,6702.49% $48,240 $6301.31% 
Investments:         
Treasury and government-sponsored agencies 657,233  16,0912.45%  673,171  14,4332.14% 
Mortgage-backed securities 2,866,600  73,8352.58%  1,707,646  41,4932.43% 
States and political subdivisions 1,202,210  44,7163.72%  1,153,315  42,3263.67% 
Other securities  495,847  16,1383.25%  490,464  15,6333.19% 
Total investments  5,221,890  150,7802.89%  4,024,596  113,8852.83% 
Loans: (2)         
Commercial  3,023,421  141,2154.67%  2,924,878  131,4714.49% 
Commercial and agriculture real estate 5,044,623  275,8535.47%  4,536,897  235,8765.20% 
Consumer:         
Home equity  566,232  28,5155.04%  513,111  25,0294.88% 
Other consumer loans 1,180,898  48,6814.12%  1,258,253  46,6603.71% 
Subtotal commercial and consumer loans 9,815,174  494,2645.04%  9,233,139  439,0364.76% 
Residential real estate loans 2,281,047  96,6134.24%  2,195,078  89,8884.09% 
          
Total loans  12,096,221  590,8774.88%  11,428,217  528,9244.63% 
          
Total earning assets$17,385,180 $743,3274.28% $15,501,053 $643,4394.15% 
          
Less: Allowance for loan losses (56,624)    (52,316)   
          
Non-earning Assets:         
Cash and due from banks$251,857    $210,716    
Other assets  2,453,001     2,130,588    
          
Total assets $20,033,414    $17,790,041    
          
Interest-Bearing Liabilities:        
Checking and NOW accounts$3,902,765 $15,5980.40% $3,146,309 $4,9730.16% 
Savings accounts  2,878,135  8,1420.28%  2,995,484  7,4640.25% 
Money market accounts 1,789,065  14,1300.79%  1,225,220  4,4240.36% 
Other time deposits  1,748,552  27,4001.57%  1,654,548  21,0121.27% 
Total interest-bearing deposits 10,318,517  65,2700.63%  9,021,561  37,8730.42% 
Brokered CD's  173,439  4,0942.36%  185,426  3,4041.84% 
Total interest-bearing deposits and CD's 10,491,956  69,3640.66%  9,206,987  41,2770.45% 
          
Federal funds purchased and interbank borrowings 241,618  5,6562.34%  238,408  4,7932.01% 
Securities sold under agreements to repurchase 342,654  2,5170.73%  344,964  1,9620.57% 
Federal Home Loan Bank advances 1,775,987  37,4522.11%  1,665,689  34,9252.10% 
Other borrowings  251,194  11,1254.43%  249,832  11,4864.60% 
Total borrowed funds 2,611,453  56,7502.17%  2,498,893  53,1662.13% 
          
Total interest-bearing liabilities$13,103,409 $126,1140.96% $11,705,880 $94,4430.81% 
          
Noninterest-Bearing Liabilities and Shareholders' Equity        
Demand deposits $3,887,470    $3,657,234    
Other liabilities  261,403     159,600    
Shareholders' equity  2,781,132     2,267,327    
          
Total liabilities and shareholders' equity$20,033,414    $17,790,041    
          
Net interest rate spread  3.32%   3.34% 
          
Net interest margin (FTE)  3.55%   3.54% 
          
FTE adjustment  $12,940   $11,394  
          
(1) Interest income is reflected on a fully taxable equivalent basis (FTE).   
(2) Includes loans held for sale.   
          



 
Asset Quality (EOP) (unaudited) 
($ in thousands) 
 
 Three Months Ended Twelve Months Ended 
 December 31,September 30,December 31, December 31,December 31, 
  2019  2019  2018   2019  2018  
        
Beginning allowance for loan losses$56,910 $56,292 $52,713  $55,461 $50,381  
        
Provision for loan losses 1,264  1,437  3,390   4,747  6,966  
        
Gross charge-offs (6,304) (2,716) (2,969)  (14,789) (12,969) 
Gross recoveries 2,749  1,897  2,327   9,200  11,083  
Net (charge-offs) recoveries (3,555) (819) (642)  (5,589) (1,886) 
        
Ending allowance for loan losses$54,619 $56,910 $55,461  $54,619 $55,461  
        
Net charge-offs (recoveries) / average loans (1) 0.12% 0.03% 0.02%  0.05% 0.02% 
        
Average loans outstanding (1)$12,058,109 $12,061,705 $11,967,241  $12,087,429 $11,422,967  
        
EOP loans outstanding (1) 12,117,524 $12,017,648 $12,243,892  $12,117,524 $12,243,892  
        
Allowance for loan losses / EOP loans (1) 0.45% 0.47% 0.45%  0.45% 0.45% 
        
Underperforming Assets:       
Loans 90 Days and over (still accruing)$570 $703 $1,353  $570 $1,353  
        
Non-performing loans:       
Nonaccrual loans (2) 126,412  138,498  157,484   126,412  157,484  
Renegotiated loans 18,338  18,884  17,356   18,338  17,356  
Total non-performing loans 144,750  157,382  174,840   144,750  174,840  
        
Foreclosed properties 2,169  2,941  3,232   2,169  3,232  
        
Total underperforming assets$147,489 $161,026 $179,425  $147,489 $179,425  
        
Classified and Criticized Assets:       
Nonaccrual loans (2) 126,412  138,498  157,484   126,412  157,484  
Substandard accruing loans 169,689  145,987  175,948   169,689  175,948  
Loans 90 days and over (still accruing) 570  703  1,353   570  1,353  
Total classified loans - "problem loans"$296,671 $285,188 $334,785  $296,671 $334,785  
        
Other classified assets 2,933  2,556  2,820   2,933  2,820  
Criticized loans - "special mention loans" 234,841  233,519  238,752   234,841  238,752  
        
Total classified and criticized assets$534,445 $521,263 $576,357  $534,445 $576,357  
        
Non-performing loans / EOP loans (1) 1.19% 1.31% 1.43%  1.19% 1.43% 
        
Allowance to non-performing loans (3) 38% 36% 32%  38% 32% 
        
Under-performing assets / EOP loans (1) 1.22% 1.34% 1.47%  1.22% 1.47% 
        
EOP total assets$20,411,667 $20,438,788 $19,728,435  $20,411,667 $19,728,435  
        
Under-performing assets / EOP assets 0.72% 0.79% 0.91%  0.72% 0.91% 
        
EOP - End of period actual balances       
(1) Excludes loans held for sale.       
(2) Includes renegotiated loans totaling $13.8 million at December 31, 2019, $21.8 million at September 30, 2019, and $26.3 million at December 31, 2018. 
(3) Includes acquired loans that were recorded at fair value in accordance with ASC 805 at the date of acquisition. As such, the credit risk was incorporated in the fair value recorded and no allowance for loan losses was recorded on the acquisition date. 
        



 
Non-GAAP Measures (unaudited) 
($ in thousands) 
         
  Three Months Ended Twelve Months Ended 
  December 31,September 30,December 31, December 31,December 31, 
   2019  2019  2018   2019  2018  
         
 Actual End of Period Balances       
 GAAP shareholders' equity$2,852,453 $2,832,530 $2,689,570  $2,852,453 $2,689,570  
         
 Deduct:       
 Goodwill 1,036,994  1,036,994  1,036,258   1,036,994  1,036,258  
 Intangibles 60,105  64,051  77,016   60,105  77,016  
   1,097,099  1,101,045  1,113,274   1,097,099  1,113,274  
         
 Tangible shareholders' equity $1,755,354 $1,731,485 $1,576,296  $1,755,354 $1,576,296  
         
 Average Balances       
 GAAP shareholders' equity$2,832,938 $2,817,452 $2,503,835  $2,781,132 $2,267,327  
         
 Deduct:       
 Goodwill 1,036,994  1,036,306  969,403   1,036,456  864,079  
 Intangibles 61,963  66,047  66,927   68,244  52,209  
   1,098,957  1,102,353  1,036,330   1,104,700  916,288  
         
 Average tangible shareholders' equity $1,733,981 $1,715,099 $1,467,505  $1,676,432 $1,351,039  
         
 Actual End of Period Balances       
 GAAP assets$20,411,667 $20,438,788 $19,728,435  $20,411,667 $19,728,435  
         
 Add:       
 Trust overdrafts 31  24  11   31  11  
         
 Deduct:       
 Goodwill 1,036,994  1,036,994  1,036,258   1,036,994  1,036,258  
 Intangibles 60,105  64,051  77,016   60,105  77,016  
   1,097,099  1,101,045  1,113,274   1,097,099  1,113,274  
         
 Tangible assets $19,314,599 $19,337,767 $18,615,172  $19,314,599 $18,615,172  
         
 Risk-weighted assets$14,073,929 $13,975,295 $14,248,562  $14,073,929 $14,248,562  
         
 GAAP net income$49,185 $69,781 $47,498  $238,206 $190,830  
         
 Add:       
 Amortization of intangibles (net of tax) 2,976  3,145  3,266   12,756  11,410  
         
 Tangible net income$52,161 $72,926 $50,764  $250,962 $202,240  
         
 Tangible Ratios        
 Return on tangible common equity 11.89% 16.85% 12.88%  14.30% 12.83% 
 Return on average tangible common equity 12.03% 17.01% 13.84%  14.97% 14.97% 
 Return on tangible assets 1.08% 1.51% 1.09%  1.30% 1.09% 
 Tangible common equity to tangible assets 9.09% 8.95% 8.47%  9.09% 8.47% 
 Tangible common equity to risk-weighted assets 12.47% 12.39% 11.06%  12.47% 11.06% 
 Tangible common book value (1) 10.35  10.18  9.00   10.35  9.00  
         
 Tangible common equity presentation includes other comprehensive income as is common in other company releases. 
 (1) Tangible common shareholders' equity divided by common shares issued and outstanding at period-end.  
         
 Tier 1 common equity$1,706,727 $1,681,457 $1,617,936  $1,706,727 $1,617,936  
         
 Risk-weighted assets 14,073,929  13,975,295  14,248,562   14,073,929  14,248,562  
         
 Tier 1 common equity to risk-weighted assets  12.13% 12.03% 11.36%  12.13% 11.36% 
         
         

 

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