UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported): April 27, 2017
Commission File Number 0-17071
FIRST MERCHANTS CORPORATION
(Exact name of registrant as specified in its charter)
INDIANA | 35-1544218 |
(State or other jurisdiction of incorporation) | (IRS Employer Identification No.) |
200 East Jackson Street
P.O. Box 792
Muncie, IN 47305-2814
(Address of principal executive offices, including zip code)
(765) 747-1500
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On Thursday, April 27, 2017, First Merchants Corporation will conduct a fourth quarter earnings conference call and web cast at 2:30 p.m. (ET). A copy of the slide presentation utilized on the conference call is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
(d) Exhibits.
Exhibit 99.1 | Slide presentation, utilized April 27, 2017, during conference call and web cast by First Merchants Corporation |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
First Merchants Corporation
(Registrant)
By: /s/ Mark K. Hardwick
Mark K. Hardwick
Executive Vice President,
Chief Financial Officer and Chief Operating Officer
Dated: April 27, 2017
EXHIBIT INDEX
Exhibit No. | Description |
99.1 | Slide presentation, utilized April 27, 2017, during conference call and web cast by First Merchants Corporation |
1st Quarter 2017
Earnings Highlights
April 27, 2017
Michael C. Rechin
President
Chief Executive Officer
Mark K. Hardwick
Executive Vice President
Chief Financial Officer
Chief Operating Officer
John J. Martin
Executive Vice President
Chief Credit Officer
This presentation contains forward-looking statements made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform
Act of 1995. Such forward-looking statements can often, but not always, be identified by the use of words like “believe”, “continue”, “pattern”,
“estimate”, “project”, “intend”, “anticipate”, “expect” and similar expressions or future or conditional verbs such as “will”, would”, “should”,
“could”, “might”, “can”, “may”, or similar expressions. These forward-looking statements include, but are not limited to, statements relating to
First Merchants’ goals, intentions and expectations; statements regarding the First Merchants’ business plan and growth strategies; statements
regarding the asset quality of First Merchants’ loan and investment portfolios; and estimates of First Merchants’ risks and future costs and
benefits. These forward-looking statements are subject to significant risks, assumptions and uncertainties that may cause results to differ
materially from those set forth in forward-looking statements, including, among other things: possible changes in economic and business
conditions; the existence or exacerbation of general geopolitical instability and uncertainty; the ability of First Merchants to integrate recent
acquisitions and attract new customers; possible changes in monetary and fiscal policies, and laws and regulations; the effects of easing
restrictions on participants in the financial services industry; the cost and other effects of legal and administrative cases; possible changes in the
credit worthiness of customers and the possible impairment of collectability of loans; fluctuations in market rates of interest; competitive
factors in the banking industry; changes in the banking legislation or regulatory requirements of federal and state agencies applicable to bank
holding companies and banks like First Merchants’ affiliate bank; continued availability of earnings and excess capital sufficient for the lawful
and prudent declaration of dividends; changes in market, economic, operational, liquidity, credit and interest rate risks associated with the First
Merchants’ business; and other risks and factors identified in each of First Merchants’ filings with the Securities and Exchange Commission. First
Merchants undertakes no obligation to update any forward-looking statement, whether written or oral, relating to the matters discussed in this
presentation or press release. In addition, the company’s past results of operations do not necessarily indicate its anticipated future results.
NON-GAAP FINANCIAL MEASURES
These slides contain non-GAAP financial measures. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of the
registrant’s historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that
have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with
GAAP in the statement of income, balance sheet or statement of cash flows (or equivalent statements) of the issuer; or includes amounts, or is
subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated
and presented. In this regard, GAAP refers to generally accepted accounting principles in the United States. Pursuant to the requirements of
Regulation G, First Merchants Corporation has provided reconciliations within the slides, as necessary, of the non-GAAP financial measure to the
most directly comparable GAAP financial measure.
2
Forward-Looking Statements
3
1st Quarter 2017 Highlights
Earnings Per Share of $ .56, a 30.2% Increase over 1Q2016
$23.2 Million of Net Income, a 31.1% Increase over 1Q2016
Total Assets of $7.3 Billion Grew Organically by 7.8% over 1Q2016
1.29% Return on Average Assets; 10.15% Return on Average Equity
52.61% Efficiency Ratio
Definitive Agreements Announced
The Arlington Bank on January 25, 2017
Independent Alliance Banks, Inc. on February 17, 2017
Mark K. Hardwick
Executive Vice President
Chief Financial Officer and
Chief Operating Officer
Total Assets
2015 2016 Q1-’16 Q1-’17
1. Investments $1,277 $1,305 $1,271 $1,327
2. Loans Held for Sale 10 3 4 1
3. Loans 4,694 5,140 4,710 5,275
4. Allowance (62) (66) (62) (68)
5. CD&I & Goodwill 260 259 262 258
6. BOLI 201 202 201 203
7. Other 381 369 413 330
8. Total Assets $6,761 $7,212 $6,799 $7,326
Annualized Asset Growth 6.7% 6.3%*
5 *Annualized from 12.31.2016
Commercial &
Industrial
23.9%
Commercial
Real Estate
Owner-Occupied
10.4%
Commercial
Real Estate
Non-Owner
Occupied
27.0%
Construction Land
& Land
Development
6.4%
Agricultural
Land
2.8%
Agricultural
Production
1.5%
Public
Finance/Other
Commercial
4.6%
Residential
Mortgage
14.0%
Home
Equity
8.0%
Other
Consumer
1.4%
YTD Yield = 4.63%
Total Loans = $5.3 Billion
Loan and Yield Detail
(as of 3/31/2017)
6
Mortgage-Backed
Securities
31%
Collateralized
Mortgage
Obligations
20%
U. S. Agencies
2%
Corporate
Obligations
1%
Corporate
Equities
1%
Tax-Exempt
Municipals
45%
Investment Portfolio
(as of 3/31/2017)
$1.3 Billion Portfolio
Modified duration of 4.9 years
Tax equivalent yield of 3.88%
Net unrealized gain of $24.2 Million
7
8
Total Liabilities and Capital
($ in Millions)
2015 2016 Q1-’16 Q1-’17
1. Customer Non-Maturity Deposits $4,096 $4,428 $4,140 $4,426
2. Customer Time Deposits 880 747 841 789
3. Brokered Deposits 314 381 330 420
4. Borrowings 446 572 420 587
5. Other Liabilities 51 60 79 53
6. Hybrid Capital 123 122 122 122
7. Common Equity 851 902 867 929
8. Total Liabilities and Capital $6,761 $7,212 $6,799 $7,326
Deposit Detail
(as of 3/31/2017) YTD Cost = .39%
Total = $5.6 Billion
9
Demand Deposits
51%
Savings Deposits
28%
Certificates &
Time Deposits of
>$100,000
6%
Certificates &
Time Deposits of
<$100,000
8%
Brokered
Deposits
7%
11.37% 11.22% 11.31%
11.49% 11.42% 11.39%
11.05% 11.10% 11.16%
9.21%
8.95%
9.17%
9.08%
9.26% 9.43% 9.48%
9.24%
9.50%
15.12% 14.92% 14.85% 14.94% 14.79% 14.67%
14.18% 14.21% 14.24%
6.00%
7.00%
8.00%
9.00%
10.00%
11.00%
12.00%
13.00%
14.00%
15.00%
16.00%
17.00%
18.00%
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17
Total Risk-Based Capital Ratio (Target = 13.50%)
Common Equity Tier 1 Capital Ratio (Target = 10.00%)
Tangible Common Equity Ratio (TCE) (Target = 8.50%) 10
Capital Ratios
(Target)
(Target)
(Target)
3.78%
3.81% 3.85%
3.75%
3.83%
3.86%
3.94% 3.90%
3.98%
3.61%
3.65%
3.71%
3.62%
3.66% 3.65%
3.70% 3.72% 3.72%
2.80%
3.00%
3.20%
3.40%
3.60%
3.80%
4.00%
4.20%
$38
$42
$46
$50
$54
$58
$62
$66
Q1 - '15 Q2 - '15 Q3 - '15 Q4 - '15 Q1 - '16 Q2 - '16 Q3 - '16 Q4 - '16 Q1 - '17
Net Interest Income - FTE ($millions) Net Interest Margin Net Interest Margin - Adjusted for Fair Value Accretion
11
Net Interest Margin
($ in Millions) Q1 - '15 Q2 - '15 Q3 - '15 Q4 - '15 Q1 - '16 Q2 - '16 Q3 - '16 Q4 - '16 Q1 - '17
Net Interest Income - FTE $ 49.2 $ 51.7 $ 53.3 $ 53.2 $ 57.6 $ 59.2 $ 61.1 $ 62.1 $ 64.9
Fair Value Accretion $ 2.2 $ 2.2 $ 2.0 $ 1.9 $ 2.5 $ 3.2 $ 3.8 $ 2.9 $ 4.3
Tax Equivalent Yield on Earning
Assets 4.24% 4.26% 4.30% 4.20% 4.28% 4.30% 4.37% 4.32% 4.42%
Cost of Supporting Liabilities 0.46% 0.45% 0.45% 0.45% 0.45% 0.44% 0.43% 0.42% 0.44%
Net Interest Margin 3.78% 3.81% 3.85% 3.75% 3.83% 3.86% 3.94% 3.90% 3.98%
12
Non-Interest Income
–
–
–
–
–
–
–
–
–
2015 2016 Q1-’16 Q1-’17
1. Service Charges on Deposit Accounts $16.2 $17.8 $ 4.1 $ 4.2
2. Wealth Management Fees 11.3 12.6 3.1 3.4
3. Insurance Commission Income 4.1
4. Card Payment Fees 13.4 15.0 3.8 3.7
5. Cash Surrender Value of Life Ins 2.9 4.3 1.5 0.9
6. Gains on Sales Mortgage Loans 6.5 7.1 1.5 1.3
7. Securities Gains/Losses 2.7 3.4 1.0 0.6
8. Gain on Sale of Insurance Subsidiary 8.3
9. Gain on Cancellation of Trust Preferred Debt 1.3
10. Other 3.1 5.0 0.8 0.8
11. Total $69.8 $65.2 $15.8 $14.9
($ in Millions)
13
Non-Interest Expense
2015 2016 Q1-’16 Q1-’17
1. Salary & Benefits $101.9 $102.6 $ 27.3 $ 25.7
2. Premises & Equipment 25.5 29.5 7.3 7.0
3. Core Deposit Intangible 2.8 3.9 1.0 0.9
4. Professional & Other Outside Services 9.9 6.5 2.2 1.7
5. OREO/Credit-Related Expense 3.9 2.9 0.7 0.5
6. FDIC Expense 3.7 3.0 1.0 0.6
7. Outside Data Processing 7.1 9.2 2.1 2.6
8. Marketing 3.5 3.0 0.7 0.6
9. Other 16.5 16.7 4.1 3.5
10. Non-Interest Expense $174.8 $177.3 $ 46.4 $43.1
($ in Millions)
14
2015 2016 Q1-’16 Q1-’17
1. Net Interest Income $196.4 $226.5 $ 54.5 $ 61.0
2. Provision for Loan Losses (0.4) (5.7) (0.6) (2.4)
3. Net Interest Income after Provision 196.0 220.8 53.9 58.6
4. Non-Interest Income 69.8 65.2 15.8 14.9
5. Non-Interest Expense (174.8) (177.3) (46.4) (43.1)
6. Income before Income Taxes 91.0 108.7 23.3 30.4
7. Income Tax Expense (25.6) (27.6) (5.6) (7.2)
8. Net Income Avail. for Distribution $ 65.4 $ 81.1 $ 17.7 $ 23.2
9. EPS $ 1.72 $ 1.98 $ 0.43 $ 0.56
10. Efficiency Ratio 61.19% 56.51% 61.78% 52.61%
Earnings
($ in Millions)
2016 Q1 Q2 Q3 Q4 Total
1. Earnings Per Share $ .43 $ .49 $ .51 $ .55 $ 1.98
2. Dividends $ .11 $ .14 $ .14 $ .15 $ .54
3. Tangible Book Value $15.02 $15.53 $15.86 $15.85
2017 Q1 Q2 Q3 Q4 Total
1. Earnings Per Share $ .56 – – – $ .56
2. Dividends $ .15 – – – $ .15
3. Tangible Book Value $ 16.49 – – –
15
Per Share Results
$9.21 $9.64
$10.95
$12.17
$13.65
$14.68
$15.85
$16.49
Dividends and Tangible Book Value
0.00
0.02
0.04
0.06
0.08
0.10
0.12
0.14
0.16
.11
.01
.03
.05
.14
.15
1.53%
Forward
Dividend
Yield
26.8%
Dividend
Payout Ratio
=
Quarterly Dividends Tangible Book Value
.08
16
John J. Martin
Executive Vice President
and Chief Credit Officer
18
Loan Portfolio Trends
•Net $69 million
Construction and
CRE NOO growth
•Combined 4.1% Q1
growth
($ in Millions)
2015 2016 Q1-'16 Q1-'17 $ % $ % 186.1 186.1
1. Commercial & Industrial 1,057$ 1,195$ 1,061$ 1,259$ 64$ 5.4% 198$ 18.7%
2. Construction, Land and
Land Development 367 419 392 337 (82) (19.6%) (55) (14.0%)
3. CRE Non-Owner Occupied 1,090 1,272 1,106 1,423 151 11.9% 317 28.7%
4. CRE Owner Occupied 554 531 544 549 18 3.4% 5 0.9%
5. Agricultural Production 98 80 92 77 (3) (3.8%) (15) (16.3%)
6. Agricultural Land 158 149 155 146 (3) (2.0%) (9) (5.8%)
7. Residential Mortgage 786 739 770 738 (1) (0.1%) (32) (4.2%)
8. Home Equity 349 419 354 424 5 1.2% 70 19.8%
9. Public Finance/Other
Commercial 160 258 162 244 (14) (5.4%) 82 50.6%
10. Other Consumer 75 78 74 78 0 0.0% 4 5.4%
11. otal Loans 4,694$ 5,140$ 4,710$ 5,275$ 135$ 2.6% 565$ 12.0%
12. Constructi n Concentration
1
49.6% 52.3% 52.3% 41.1%
13. Investment RE Concentration
1
197.0% 211.2% 200.3% 214.9%
1As a % of Risk Based Capital
Change Change
Year End Year Over Year
19
Asset Quality Summary
($ in Millions)
2015 2016 Q1-'16 Q1-'17 $ % $ %
1. Non-Accrual Loans 31.4$ 30.0$ 36.7$ 27.9$ (2.1)$ (7.0%) (8.8)$ (24.0%)
2. Other Real Estate 17.3 9.0 15.6 8.3 (0.7) (7.8%) (7.3) (46.8%)
3. Renegotiated Loans 1.9 4.7 1.0 0.9 (3.8) (80.9%) (0.1) (10.0%)
4. 90+ Days Delinquent Loans 0.9 0.1 1.0 0.1 0.0 0.0% (0.9) (90.0%)
5. Total NPAs & 90+ Days Delinquent 51.5$ 43.8$ 54.3$ 37.2$ (6.6)$ (15.1%) (17.1)$ (31.5%)
6. Total NPAs & 90+ Days/Loans & ORE 1.1% 0.9% 1.2% 0.7%
7. Classified Assets 171.8$ 174.1$ 170.9$ 173.9$ (0.2)$ (0.1%) 3.0$ 1.8%
8. Criticized Assets (includes
Classified) 275.0$ 292.6$ 305.8$ 304.3$ 11.7$ 4.0% (1.5)$ (0.5%)
Change Change
Year End Year over Year
20
Non-Performing Asset Reconciliation
($ in Millions)
Q2-'16 Q3-'16 Q4-'16 Q1-'17
1. Beginning Balance NPAs & 90+ Days Delinquent 54.3$ 51.5$ 49.9$ 43.8$
Non-Accrual
2. Add: New Non-Accruals 3.6 6.0 4.3 2.5
3. Less: To Accrual/Payoff/Renegotiated (4.5) (3.2) (6.5) (2.6)
4. Less: To OREO (0.2) (0.4) (0.9) (0.5)
5. Less: Charge-offs (2.0) (1.9) (1.0) (1.5)
6. Increase / (Decrease): Non-Accrual Loans (3.1) 0.5 (4.1) (2.1)
Other Real Estate Owned (ORE)
7. Add: New ORE Properties 0.2 0.4 0.9 0.5
8. Less: ORE Sold (2.1) (3.1) (1.5) (1.0)
9. Less: ORE Losses (write-downs) (0.5) (0.3) (0.6) (0.2)
10. Increase / (Decrease): ORE (2.4) (3.0) (1.2) (0.7)
11. Increase / (Decrease): 90+ Days Delinquent (0.6) 1.2 (1.5) 0.0
12. Increase / (Decrease): Renegotiated Loans 3.3 (0.3) 0.7 (3.8)
13. Total NPAs & 90+ Days Delinquent Change (2.8) (1.6) (6.1) (6.6)
14. Ending Balance NPAs & 90+ Days Delinquent 51.5$ 49.9$ 43.8$ 37.2$
21
ALLL and Fair Value Summary
($ in Millions) Q2-'16 Q3-'16 Q4-'16 Q1-'17
1. Beginning Allowance for Loan Losses (ALLL) 62.1$ 62.2$ 63.5$ 66.0$
2. Net Charge-offs (Recoveries) 0.7 0.6 (0.1) 0.2
3. Provision Expense 0.8 1.9 2.4 2.4
4. Ending Allowance for Loan Losses (ALLL) 62.2 63.5 66.0 68.2
5. Fair Value Adjustment (FVA) 42.3 37.9 34.9 30.6
6. Total ALLL plus FVA 104.5 101.4 100.9 98.8
7. Purchased Loans plus FVA 863.4 771.6 700.4 639.3
8. Specific Reserves 2.1 1.6 0.9 1.2
9. ALLL/Non-Accrual Loans 185.3% 186.1% 220.1% 244.4%
10. ALLL/Non-Purchased Loans 1.56% 1.50% 1.47% 1.46%
11. ALLL/Loans 1.29% 1.28% 1.28% 1.29%
12. ALLL & FVA/Total Loan Balances plus FVA1 2.15% 2.02% 1.95% 1.86%
1 Management uses this Non-GAAP measure to demonstrate coverage and credit risk
22
Asset Quality & Portfolio Summary
Strong quarterly loan growth of $135 million led by C&I and CRE.
Construction and CRE portfolios are 41% and 215% of risk-based capital,
respectively; well beneath regulatory guidelines.
Total NPAs & 90 days decreased $6.6 million this quarter dropping to .7% of
loans and ORE.
Provision expense of $2.4 million for growth in loan portfolio.
ALLL to Loans of 1.29% and to Non-Purchased Loans of 1.46%.
Michael C. Rechin
President and Chief
Executive Officer
24
FMC Strategy and Tactics Overview
Looking Forward . . .
Execute on Closing and Integrating The Arlington Bank and Independent Alliance Bank,
Inc. Transactions
Continue to Win in our Markets – Geographic Community-Based Banking Model
Continue Focus on Treasury Management Services for Deposit and Fee Generation
Exploit Back-Office Infrastructure for Efficiency and Operating Leverage
Build Out Specialty Finance Businesses and Lending Verticals
Persistently Focus on Banking Center Optimization in Alignment with Digital
Channels Migration
Prepare to Successfully Cross the $10 Billion Asset Level
“Responsive, Knowledgeable, High-Performing”
25
Contact Information
First Merchants Corporation common stock is
traded on the NASDAQ Global Select Market
under the symbol FRME.
Additional information can be found at
www.FIRSTMERCHANTS.COM
Investor inquiries:
David L. Ortega
Investor Relations
Telephone: 765.378.8937
dortega@firstmerchants.com
Appendix
27
Appendix – Non-GAAP Reconciliation
CAPITAL RATIOS (dollars in thousands):
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17
Total Risk-Based Capital Ratio
Total Stockholders' Equity (GAAP) 739,658 749,955 766,984 850,509 867,263 887,550 900,865 901,657 929,470
Adjust for Accumulated Other Comprehensive (Income) Loss a 1,915 6,490 3,614 1,362 (2,066) (7,035) (3,924) 13,581 3,722
Less: Preferred Stock (125) (125) (125) (125) (125) (125) (125) (125) (125)
Add: Qualifying Capital Securities 56,827 56,827 51,827 55,776 55,236 55,296 55,355 55,415 55,474
Less: Tier 1 Capital Deductions (4,381) (2,371) (3,418) (2,516) (1,999) (1,828) (1,440) (376) (80)
Less: Disallowed Goodwill and Intangible Assets (205,818) (208,980) (208,749) (247,006) (250,367) (249,932) (249,541) (249,104) (250,493)
Less: Disallowed Servicing Assets
Less: Disallowed Deferred Tax Assets (1,786) (1,581) (1,144) (1,677) (2,998) (2,743) (2,161) (564) (320)
Total Tier 1 Capital (Regulatory) 586,290$ 600,215$ 608,989$ 656,323$ 664,944$ 681,183$ 699,029$ 720,484$ 737,648$
Qualifying Subordinated Debentures 65,000 65,000 65,000 65,000 65,000 65,000 65,000 65,000 65,000
Allowance for Loan Losses includible in Tier 2 Capital 58,688 60,865 62,012 62,453 62,086 62,186 63,456 66,037 68,225
Total Risk-Based Capital (Regulatory) 709,978$ 726,080$ 736,001$ 783,776$ 792,030$ 808,369$ 827,485$ 851,521$ 870,873$
Net Risk-Weighted Assets (Regulatory) 4,695,073$ 4,865,157$ 4,956,737$ 5,247,617$ 5,355,827$ 5,511,557$ 5,836,806$ 5,993,381$ 6,114,112$
Total Risk-Based Capital Ratio (Regulatory) 15.12% 14.92% 14.85% 14.94% 14.79% 14.67% 14.18% 14.21% 14.24%
Common Equity Tier 1 Capital Ratio
Total Tier 1 Capital (Regulatory) 586,290$ 600,215$ 608,989$ 656,323$ 664,944$ 681,183$ 699,029$ 720,484$ 737,648$
Less: Qualified Capital Securities (56,827) (56,827) (51,827) (55,776) (55,236) (55,296) (55,355) (55,415) (55,474)
Add: Additional Tier 1 Capital Deductions 4,381 2,371 3,418 2,516 1,999 1,828 1,440 376 80
Less: Preferred Stock
Common Equity Tier 1 Capital (Regulatory) 533,844$ 545,759$ 560,580$ 603,063$ 611,707$ 627,715$ 645,114$ 665,445$ 682,254$
Net Risk-Weighted Assets (Regulatory) 4,695,073$ 4,865,157$ 4,956,737$ 5,247,617$ 5,355,827$ 5,511,557$ 5,836,806$ 5,993,381$ 6,114,112$
Common Equity Tier 1 Capital Ratio (Regulatory) 11.37% 11.22% 11.31% 11.49% 11.42% 11.39% 11.05% 11.10% 11.16%
guidance for defined benefit and other postretirement plans.
a Includes net unrealized gains or losses on securities available for sale, net gains or losses on cash flow hedges, and amounts resulting from the application of the applicable accounting
28
Appendix – Non-GAAP Reconciliation
TANGIBLE COMMON EQUITY RATIO (dollars in thousands):
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17
Total Stockholders' Equity (GAAP) 739,658$ 749,955$ 766,984$ 850,509$ 867,263$ 887,550$ 900,865$ 901,657$ 929,470$
Less: Pr ferred Stock (125) (125) (125) (125) (125) (125) (125) (125) (125)
Less: Intangible Assets (218,033) (220,196) (219,503) (259,764) (261,799) (260,822) (259,844) (258,866) (257,963)
Tangible Common Equity (non-GAAP) 521,500$ 529,634$ 547,356$ 590,620$ 605,339$ 626,603$ 640,896$ 642,666$ 671,382$
Total Assets (GAAP) 5,877,521$ 6,140,308$ 6,189,797$ 6,761,003$ 6,798,539$ 6,906,418$ 7,022,352$ 7,211,611$ 7,326,193$
Less: Intangibles Assets (218,033) (220,196) (219,503) (259,764) (261,799) (260,822) (259,844) (258,866) (257,963)
Tangible Assets (non-GAAP) 5,659,488$ 5,920,112$ 5,970,294$ 6,501,239$ 6,536,740$ 6,645,596$ 6,762,508$ 6,952,745$ 7,068,230$
Tangible Common Equity Ratio (non-GAAP) 9.21% 8.95% 9.17% 9.08% 9.26% 9.43% 9.48% 9.24% 9.50%
TANGIBLE COMMON EQUITY PER SHARE (dollars in thousands):
4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17
Total Stockholders' Equity (GAAP) 454,408$ 514,467$ 552,236$ 634,923$ 726,827$ 850,509$ 867,263$ 887,550$ 900,865$ 901,657$ 929,470$
Less: Preferred Stock (67,880) (90,783) (90,908) (125) (125) (125) (125) (125) (125) (125) (125)
Less: Intangible Assets (154,019) (150,471) (149,529) (202,767) (218,755) (259,764) (261,799) (260,822) (259,844) (258,866) (257,963)
Tax Benefit 2,907 2,224 2,249 4,973 6,085 6,278 6,753 6,453 6,204 5,930 5,659
Tangible Common Equity, Net of Tax (non-GAAP) 235,416$ 275,437$ 314,048$ 437,004$ 514,032$ 596,898$ 612,092$ 633,056$ 647,100$ 648,596$ 677,041$
Shares Outstanding 25,574,251 28,559,707 28,692,616 35,921,761 37,669,948 40,664,258 40,749,340 40,772,896 40,799,025 40,912,697 41,047,543
Tangible Common Equity per Share (non-GAAP) 9.21$ 9.64$ 10.95$ 12.17$ 13.65$ 14.68$ 15.02$ 15.53$ 15.86$ 15.85$ 16.49$
29
Appendix – Non-GAAP Reconciliation
FORWARD DIVIDEND YIELD
1Q17
Most recent quarter's dividend per share $ 0.15
Most recent quarter's dividend per share - Annualized $ 0.60
Stock Price at 3/31/17 $ 39.32
Forward Dividend Yield 1.53%
DIVIDEND PAYOUT RATIO
2017
Dividends per share $ 0.15
Earnings Per Share $ 0.56
Dividend Payout Ratio 26.8%
EFFICIENCY RATIO (dollars in thousands):
2015 1Q16 2016 1Q17
Non Interest Expense (GAAP) 174,806$ 46,475$ 177,359$ 43,099$
Less: Core Deposit Intangible Amortization (2,835) (978) (3,910) (903)
Less: OREO and Foreclosure Expenses (3,956) (751) (2,877) (531)
Adjusted Non Interest Expense (non-GAAP) 168,015 44,746 170,572 41,665
Net Interest Income (GAAP) 196,404 54,455 226,473 60,999
Plus: Fully Tax ble Equivalent Adjustment 10,975 3,136 13,541 3,950
Net Interest Income on a Fully Taxable Equivalent Basis (non-GAAP) 207,379 57,591 240,014 64,949
Non Interest Income (GAAP) 69,868 15,837 65,203 14,846
Less: Investment Securities Gains (Losses) (2,670) (997) (3,389) (598)
Adjusted Non Interest Income (non-GAAP) 67,198 14,840 61,814 14,248
Adjusted Revenue (non-GAAP) 274,577 72,431 301,828 79,197
Efficiency Ratio (non-GAAP) 61.19% 61.78% 56.51% 52.61%
30
Appendix – Non-GAAP Reconciliation
CONSTRUCTION AND INVESTMENT REAL ESTATE CONCENTRATIONS (dollars in thousands):
2015 2016 1Q16 1Q17
Total Risk-Based Capital (Subsidiary Bank Only)
Total Stockholders' Equity (GAAP) 927,774$ 973,641$ 945,283$ 993,130$
Adjust for Accumulated Other Comprehensive (Income) Loss 1 (579) 9,701 (4,566) 8,226
Less: Preferred Stock (125) (125) (125) (125)
Less: Tier 1 Capital Deductions (1,903) - (1,805) -
Less: Disallowed Goodwill and Intangible Assets (246,558) (248,656) (249,919) (250,047)
Less: Disallowed Deferred Tax Assets (1,269) - (2,708) -
Total Tier 1 Capital (Regulatory) 677,340 734,561 686,160 751,184
Allowance for Loan Losses includible in Tier 2 Capital 62,453 66,037 62,086 68,225
Total Risk-Based Capital (Regulatory) 739,793$ 800,598$ 748,246$ 819,409$
Construction, Land and Land Development Loans 366,704$ 418,703$ 391,621$ 336,931$
Concentration as a % of the Bank's Risk-Based Capital 49.6% 52.3% 52.3% 41.1%
Construction, Land and Land Development Loans 366,704$ 418,703$ 391,621$ 336,931$
Investment Real Estate Loans 1,090,573 1,272,415 1,107,288 1,423,792
Total Construction and Investment RE Loans 1,457,277$ 1,691,118$ 1,498,909$ 1,760,723$
Concentration as a % of the Bank's Risk-Based Capital 197.0% 211.2% 200.3% 214.9%
1 Includes net unrealized gains or losses on securities available for sale, net gains or losses on cash flow hedges, and amounts resulting
from the application of the applicable accounting guidance for defined benefit and other postretirement plans.
ALLOWANCE AS A PERCENTAGE OF NON-PURCHASED LOANS (dollars in thousands):
2Q16 3Q16 4Q16 1Q17
L ans Held for Sale (GAAP) 18,854$ 1,482$ 2,929$ 1,262$
Loans (GAAP) 4, 91,429 4,973,844 5,139,645 5,274,909
T tal Loans 4,810,283 4, 75,326 5,142,574 5,276,171
Less: Purchased Loans (821,158) (733,715) (665,417) (608,724)
Non-Purchased Loans (non-GAAP) 3,989,125$ 4,241,611$ 4,477,157$ 4,667,447$
Allowance for Loan Losses (GAAP) 62,186$ 63,456$ 66,037$ 68,225$
Fair Value Adjustme t (FVA) (GAAP) 42,291 37,898 34,936 30,623
Allowance plus FVA (non-GAAP) 104,477$ 101,354$ 100,973$ 98,848$
Total Loans 4,810,283$ 4,975,326$ 5,142,574$ 5,276,171$
Fair Value Adjustment (FVA) (GAAP) 42,291 37,898 34,936 30,623
Total Loans plus FVA (non-GAAP) 4,852,574$ 5,013,224$ 5,177,510$ 5,306,794$
Allowance as a Percentage of Non-Purchased Loans (non-GAAP) 1.56% 1.50% 1.47% 1.46%
Allowance plus FVA as a Percentage of Total Loans plus FVA (non-GAAP) 2.15% 2.02% 1.95% 1.86%