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): October 26, 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, October 26, 2017, First Merchants Corporation will conduct a third 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 |
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: October 26, 2017
EXHIBIT INDEX
Exhibit No. | Description |
99.1 |
3rd Quarter 2017
Earnings Highlights
October 26, 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
3rd Quarter 2017 Financial Highlights
Earnings Per Share of $.50
$24.4 Million of Net Income, a 15.7% Increase over 3Q2016
Includes $7.9 Million in Acquisition Expenses, or $.11 Per Share
Total Assets of $9.0 Billion, Grew by 28.9% over 3Q2016
$16.62 Tangible Book Value Per Share, a 6.5% Annualized Increase
from December 31, 2016
4
3rd Quarter 2017 Performance Highlights
Winning Market Strategy Delivering Consistent Organic Growth:
Organic Loan Growth of $145 Million, a 9.2% Annualized Growth Rate
Organic Non-Brokered Deposit Growth of $75 Million, a 4.6%
Annualized Growth Rate
Grew Net-Interest Income to $74.4 Million, a 29% Increase over 3Q2016
Completed Acquisition of Independent Alliance Banks, Inc. on July 14, 2017
Completed Integration of The Arlington Bank on August 18, 2017
Mark K. Hardwick
Executive Vice President
Chief Operating Officer and
Chief Financial Officer
Total Assets
2015 2016 Q1-’17 Q2-’17 Q3-’17
1. Investments $1,277 $1,305 $1,327 $1,343 $1,469
2. Loans Held for Sale 10 3 1 4 5
3. Loans 4,694 5,140 5,275 5,613 6,483
4. Allowance (62) (66) (68) (70) (73)
5. Goodwill & Intangibles 260 259 258 310 479
6. BOLI 201 202 203 200 222
7. Other 381 369 330 405 464
8. Total Assets $6,761 $7,212 $7,326 $7,805 $9,049
Annualized Asset Growth 6.7% 34.0%*
6 *Annualized from 12.31.2016
Commercial &
Industrial
22.1%
Commercial
Real Estate Owner-
Occupied
10.4%
Commercial
Real Estate
Non-Owner
Occupied
25.4%
Construction Land
& Land
Development
7.7%
Agricultural
Land
3.8%
Agricultural
Production
1.8%
Public
Finance/Other
Commercial
5.1%
Residential
Mortgage
14.5%
Home
Equity
7.8%
Other
Consumer
1.4%
QTD Yield = 4.81%
YTD Yield = 4.70%
Total Loans = $6.5 Billion
Loan and Yield Detail
(as of 9/30/2017)
7
Mortgage-Backed
Securities
29%
Collateralized
Mortgage
Obligations
22%
U. S. Agencies
1%
Corporate
Obligations
2%
Tax-Exempt
Municipals
46%
Investment Portfolio
(as of 9/30/2017)
$1.5 Billion Portfolio
Modified duration of 4.9 years
Tax equivalent yield of 3.88%
Net unrealized gain of $23.4 Million
8
2015 2016 Q1-’17 Q2-’17 Q3-’17
1. Customer Non-Maturity Deposits $4,096 $4,428 $4,426 $4,724 $5,448
2. Customer Time Deposits 880 747 789 875 1,088
3. Brokered Deposits 314 381 420 418 375
4. Borrowings 446 572 587 581 656
5. Other Liabilities 51 60 53 49 66
6. Hybrid Capital 123 122 122 123 133
7. Common Equity 851 902 929 1,035 1,283
8. Total Liabilities and Capital $6,761 $7,212 $7,326 $7,805 $9,049
9
Total Liabilities and Capital
($ in Millions)
Deposit Detail
(as of 9/30/2017) QTD Cost = .52%
YTD Cost = .46%
Total = $6.9 Billion
10
Demand Deposits
52%
Savings Deposits
27%
Certificates &
Time Deposits of
>$100,000
7%
Certificates &
Time Deposits of
<$100,000
9%
Brokered
Deposits
5%
11.31%
11.49% 11.42% 11.39%
11.05% 11.10% 11.16% 11.11% 11.03%
9.17% 9.08% 9.26%
9.43% 9.48% 9.24%
9.50%
9.68%
9.39%
14.85%
14.94%
14.79% 14.67%
14.18% 14.21% 14.24%
14.01%
13.76%
6.00%
7.00%
8.00%
9.00%
10.00%
11.00%
12.00%
13.00%
14.00%
15.00%
16.00%
17.00%
18.00%
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
Total Risk-Based Capital Ratio (Target = 13.50%)
Common Equity Tier 1 Capital Ratio (Target = 10.00%)
Tangible Common Equity Ratio (TCE) (Target = 8.50%) 11
Capital Ratios
(Target)
(Target)
(Target)
12
Net Interest Margin
` NET INTEREST MARGIN
Q3 - '15 Q4 - '15 Q1 - '16 Q2 - '16 Q3 - '16 Q4 - '16 Q1 - '17 Q2 - '17 Q3 - '17
Net Interest Income - FTE
($millions) $ 53.3 $ 53.2 $ 57.6 $ 59.2 $ 61.1 $ 62.1 $ 64.9 $ 67.2 $ 78.9
Fair Value Accretion $ 2.0 $ 1.9 $ 2.5 $ 3.2 $ 3.8 $ 2.9 $ 4.3 $ 2.3 $ 3.2
Tax Equivalent Yield on Earning
Assets 4.30% 4.20% 4.28% 4.30% 4.37% 4.32% 4.42% 4.44% 4.56%
Cost of Supporting Liabilities 0.45% 0.45% 0.45% 0.44% 0.43% 0.42% 0.44% 0.49% 0.53%
Net Interest Margin 3.85% 3.75% 3.83% 3.86% 3.94% 3.90% 3.98% 3.95% 4.03%
Fair Value Accretion Effect 0.14% 0.13% 0.17% 0.21% 0.24% 0.18% 0.26% 0.14% 0.17%
3.85%
3.75%
3.83%
3.86%
3.94% 3.90%
3.98% 3.95%
4.03%
2.80%
3.00%
3.20%
3.40%
3.60%
3.80%
4.00%
4.20%
$44
$48
$52
$56
$60
$64
$68
$72
$76
$80
Q3 - '15 Q4 - '15 Q1 - '16 Q2 - '16 Q3 - '16 Q4 - '16 Q1 - '17 Q2 - '17 Q3 - '17
Net Interest Income - FTE ($millions) Net Interest Margin
13
Non-Interest Income
–
–
–
–
–
–
–
–
($ in Millions) 2015 2016 Q1-’17 Q2-’17 Q3-’17
1. Service Charges on Deposit Accounts $16.2 $17.8 $ 4.2 $ 4.4 $ 5.0
2. Wealth Management Fees 11.3 12.6 3.4 3.4 3.8
3. Insurance Commission Income 4.1
4. Card Payment Fees 13.4 15.0 3.7 4.2 4.1
5. Cash Surrender Value of Life Ins 2.9 4.3 0.9 3.0 1.6
6. Gains on Sales Mortgage Loans 6.5 7.1 1.3 1.6 2.3
7. Securities Gains/Losses 2.7 3.4 0.6 0.6 0.3
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 1.2 1.6
11. Total $69.8 $65.2 $14.9 $18.4 $18.7
– – –
– – –
– – –
-I t r st In
–
–
–
13
14
Non-Interest Expense
2015 2016 Q1-’17 Q2-’17 Q3-’17
1. Salary & Benefits $101.9 $102.6 $ 25.7 $ 27.1 $ 33.2
2. Premises & Equipment 25.5 29.5 7.0 6.9 7.9
3. Intangible Asset Amortization 2.8 3.9 0.9 1.0 1.7
4. Professional & Other Outside Services 9.9 6.5 1.7 3.3 5.8
5. OREO/Credit-Related Expense 3.9 2.9 0.5 0.7 0.3
6. FDIC Expense 3.7 3.0 0.6 0.6 0.7
7. Outside Data Processing 7.1 9.2 2.6 3.1 3.2
8. Marketing 3.5 3.0 0.6 0.8 1.0
9. Other 16.5 16.7 3.5 3.8 4.9
10. Non-Interest Expense $174.8 $177.3 $43.1 $47.3 $58.7
($ in Millions)
* * *
*Includes acquisition-related expenses of $0.4 in Q1-’17; $2.5 in Q2-’17; and $7.9 in Q3-’17
15
2015 2016 Q1-’17 Q2-’17 Q3-’17
1. Net Interest Income $196.4 $226.5 $ 61.0 $ 63.1 $ 74.4
2. Provision for Loan Losses (0.4) (5.7) (2.4) (2.9) (2.1)
3. Net Interest Income after Provision 196.0 220.8 58.6 60.2 72.3
4. Non-Interest Income 69.8 65.2 14.9 18.4 18.7
5. Non-Interest Expense (174.8) (177.3) (43.1) (47.3) (58.7)
6. Income before Income Taxes 91.0 108.7 30.4 31.3 32.3
7. Income Tax Expense (25.6) (27.6) (7.2) (7.2) (7.9)
8. Net Income Avail. for Distribution $ 65.4 $ 81.1 $ 23.2 $ 24.1 $ 24.4
9. EPS $ 1.72 $ 1.98 $ 0.56 $ 0.57 $ 0.50
10. Efficiency Ratio 61.19% 56.51% 52.61% 53.61% 58.30%
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 $ .57 $ .50 – $ 1.63
2. Dividends $ .15 .18 .18 – $ .51
3. Tangible Book Value $16.49 $16.97 $16.62 –
16
Per Share Results
$9.21 $9.64
$10.95
$12.17
$13.65
$14.68
$15.85
$16.62
Dividends and Tangible Book Value
0.00
0.02
0.04
0.06
0.08
0.10
0.12
0.14
0.16
0.18
.11
.01
.03
.05
.14
.15 1.68%
Forward
Dividend
Yield
31.3%
YTD Dividend
Payout Ratio
=
Quarterly Dividends Tangible Book Value
.08
17
.18
John J. Martin
Executive Vice President
and Chief Credit Officer
19
Loan Portfolio Trends
($ in Millions) FMB
2015 2016 Q1-'17 Q2-'17 Q3-'17
1
iAB Q3-'17 $
1
$ %
1. Commercial & Industrial 1,057$ 1,195$ 1,259$ 1,290$ 1,325$ 111$ 1,436$ 35$ 146$ 11.3%
2. Construction, Land and
Land Development 367 419 337 442 458 41 499 16 57 12.9%
3. CRE Non-Owner Occupied 1,090 1,272 1,423 1,444 1,507 141 1,648 63 204 14.1%
4. CRE Owner Occupied 554 531 549 577 555 120 675 (22) 98 17.0%
5. Agricultural Production 98 80 77 76 79 39 118 3 42 55.3%
6. Agricultural Land 158 149 146 147 145 103 248 (2) 101 68.7%
7. Residential Mortgage 786 739 738 848 834 105 939 (14) 91 10.7%
8. Home Equity 349 419 424 436 464 38 502 28 66 15.1%
9. Public Finance/Other
Commercial 160 258 244 274 310 22 332 36 58 21.2%
10. Other Consumer 75 78 78 79 81 5 86 2 7 8.9%
11. Total Loans 4,694$ 5,140$ 5,275$ 5,613$ 5,758$ 725$ 6,483$ 145$ 870$ 15.5%
12. Construction Concentration
2
50% 52% 41% 51% 50%
13. Investment RE Concentration
2
197% 211% 215% 216% 215%
1 Excludes acquired iAB loans
2As a % of Risk Based Capital
Change
Linked Quarter
20
Asset Quality Summary
($ in Millions) FMB
2015 2016 Q1-'17 Q2-'17 Q3-'17
1
iAB Q3-'17 $
1
$ % 186.1
1. Non-Accrual Loans 31.4$ 30.0$ 27.9$ 27.4$ 26.8$ 5.5$ 32.3$ (0.6)$ 4.9$ 17.9%
2. Other Real Estate 17.3 9.0 8.3 11.9 11.9 - 11.9 - - 0.0%
3. Renegotiated Loans 1.9 4.7 0.9 0.4 0.6 - 0.6 0.2 0.2 50.0%
4. 90+ Days Delinquent Loans 0.9 0.1 0.1 0.6 0.3 0.1 0.4 (0.3) (0.2) (33.3%)
5. Total NPAs & 90+ Days Delinquent 51.5$ 43.8$ 37.2$ 40.3$ 39.6$ 5.6$ 45.2$ (0.7)$ 4.9$ 12.2%
6. Total NPAs & 90+ Days/Loans & ORE 1.1% 0.9% 0.7% 0.7% 0.7% 0.8% 0.7%
7. Classified Assets 171.8$ 174.1$ 173.9$ 148.8$ 127.2$ 42.4$ 169.6$ (21.6)$ 20.8$ 14.0%
8. Specific Reserves 1.8$ 0.9$ 1.2$ 1.2$ 1.8$ 1.8$ 0.6$ 0.6$ 50.0%
1 Excludes acquired iAB loans
Change
Linked Quarter
21
Non-Performing Asset Reconciliation
($ in Millions) FMB
Q4-'16 Q1-'17 Q2-'17 Q3-'17
1
iAB Q3-'17186.1
1. Beginning Balance NPAs & 90+ Days Delinquent 49.9$ 43.8$ 37.2$ 40.3$ 40.3$
Non-Accrual
2. Add: New Non-Accruals 4.3 2.5 10.0 7.2 5.5$ 12.7
3. Less: To Accrual/Payoff/Renegotiated (6.5) (2.6) (2.3) (6.1) - (6.1)
4. Less: To OREO (0.9) (0.5) (6.8) (0.6) - (0.6)
5. Less: Charge-offs (1.0) (1.5) (1.4) (1.1) - (1.1)
6. Increase / (Decrease): Non-Accrual Loans (4.1) (2.1) (0.5) (0.6) 5.5 4.9
Other Real Estate Owned (ORE)
7. Add: New ORE Properties 0.9 0.5 6.8 0.6 - 0.6
8. Less: ORE Sold (1.5) (1.0) (2.8) (0.3) - (0.3)
9. Less: ORE Losses (write-downs) (0.6) (0.2) (0.4) (0.3) - (0.3)
10. Increase / (Decrease): ORE (1.2) (0.7) 3.6 0.0 0.0 0.0
11. Increase / (Decrease): 90+ Days Delinquent (1.5) 0.0 0.5 (0.3) 0.1 (0.2)
12. Increase / (Decrease): Renegotiated Loans 0.7 (3.8) (0.5) 0.2 0.0 0.2
13. Total NPAs & 90+ Days Delinquent Change (6.1) (6.6) 3.1 (0.7) 5.6 4.9
14. Ending Balance NPAs & 90+ Days Delinquent 43.8$ 37.2$ 40.3$ 39.6$ 5.6$ 45.2$
1 Excludes acquired iAB loans
22
ALLL and Fair Value Summary
($ in Millions) Q4-'16 Q1-'17 Q2-'17 Q3-'17
1. Beginning Allowance for Loan Losses (ALLL) 63.5$ 66.0$ 68.2$ 70.5$
2. Net Charge-offs (Recoveries) (0.1) 0.2 0.6 (0.8)
3. Provision Expense 2.4 2.4 2.9 2.1
4. Ending Allowance for Loan Losses (ALLL) 66.0 68.2 70.5 73.4
5. ALLL/Non-Accrual Loans 220.1% 244.4% 257.7% 227.4%
6. ALLL/Non-Purchased Loans 1.47% 1.46% 1.45% 1.44%
7. ALLL/Loans 1.28% 1.29% 1.25% 1.13%
8. Fair Value Adjustment (FVA) 34.9$ 30.6$ 29.7$ 50.4$
9. Total ALLL plus FVA 100.9 98.8 100.2 123.8
10. Purchased Loans plus FVA 700.4 639.3 792.6 1,445.8
11. FVA/Purchased Loans plus FVA 4.99% 4.79% 3.74% 3.49%
23
Portfolio Summary
Strong organic quarterly loan growth of $145 million, led by C&I, Commercial
Real Estate, Home Equity and Public Finance. With iAB, loans grew $870 million
Construction and CRE portfolios are 50% and 215% of risk-based capital,
respectively; well beneath regulatory guidelines
Provision expense of $2.1 million for growth in loan portfolio with net
recoveries of $.8 million
ALLL to Loans of 1.13% and to Non-Purchased Loans of 1.44%
Michael C. Rechin
President and Chief
Executive Officer
25
Looking Forward . . .
Complete Independent Alliance Bank integration and gain synergies and market expansion opportunities
that Arlington Bank and Independent Alliance Bank acquisitions offer; continue to evaluate M&A
opportunities for strategic fit
Win in all our markets, in all lines of business; Commercial and Consumer Lending, Deposit Gathering,
Payments, Mortgage, and Private Wealth Management; be the service-driven alternative to super-
regional bank competitors
Expand specialty finance businesses in asset-based lending, sponsor finance, and public finance
Leverage asset-sensitive balance sheet as interest rates rise
Complete checking account migration to new product set and streamline front and back-office processes;
continue implementation of workflow technologies and automation agents for back-office efficiency and
operating leverage
Persistently focus on banking center optimization in alignment with digital channels migration
Prepare to successfully cross $10 Billion asset level
“Responsive, Knowledgeable, High-Performing”
26
Contact Information
First Merchants Corporation common stock is
traded on the NASDAQ Global Select Market
under the symbol FRME.
Additional information can be found at
www.FIRSTMERCHANTS.COM
Investor inquiries:
David L. Ortega
Investor Relations
Telephone: 765.378.8937
dortega@firstmerchants.com
Appendix
28
Appendix – Non-GAAP Reconciliation
CAPITAL RATIOS (dollars in thousands):
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
Total Risk-Based Capital Ratio
Total Stockholders' Equity (GAAP) 766,984 850,509 867,263 887,550 900,865 901,657 929,470 1,035,116 1,283,120
Adjust for Accumulated Other Comprehensive (Income) Loss* 3,614 1,362 (2,066) (7,035) (3,924) 13,581 3,722 (1,384) 6,358
Less: Preferred Stock (125) (125) (125) (125) (125) (125) (125) (125) (125)
Add: Qualifying Capital Securities 51,827 55,776 55,236 55,296 55,355 55,415 55,474 55,534 65,864
Less: Tier 1 Capital Deductions (3,418) (2,516) (1,999) (1,828) (1,440) (376) (80) (166) -
Less: Disallowed Goodwill and Intangible Assets (208,749) (247,006) (250,367) (249,932) (249,541) (249,104) (250,493) (300,307) (462,080)
Less: Disallowed Deferred Tax Assets (1,144) (1,677) (2,998) (2,743) (2,161) (564) (320) (665) -
Total Tier 1 Capital (Regulatory) 608,989$ 656,323$ 664,944$ 681,183$ 699,029$ 720,484$ 737,648$ 788,003$ 893,137$
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 62,012 62,453 62,086 62,186 63,456 66,037 68,225 70,471 73,354
Total Risk-Based Capital (Regulatory) 736,001$ 783,776$ 792,030$ 808,369$ 827,485$ 851,521$ 870,873$ 923,474$ 1,031,491$
Net Risk-Weighted Assets (Regulatory) 4,956,737$ 5,247,617$ 5,355,827$ 5,511,557$ 5,836,806$ 5,993,381$ 6,114,112$ 6,592,710$ 7,497,321$
Total Risk-Based Capital Ratio (Regulatory) 14.85% 14.94% 14.79% 14.67% 14.18% 14.21% 14.24% 14.01% 13.76%
Common Equity Tier 1 Capital Ratio
Total Tier 1 Capital (Regulatory) 608,989$ 656,323$ 664,944$ 681,183$ 699,029$ 720,484$ 737,648$ 788,003$ 893,137$
Less: Qualified Capital Securities (51,827) (55,776) (55,236) (55,296) (55,355) (55,415) (55,474) (55,534) (65,864)
Add: Additional Tier 1 Capital Deductions 3,418 2,516 1,999 1,828 1,440 376 80 166 -
Common Equity Tier 1 Capital (Regulatory) 560,580$ 603,063$ 611,707$ 627,715$ 645,114$ 665,445$ 682,254$ 732,635$ 827,273$
Net Risk-Weighted Assets (Regulatory) 4,956,737$ 5,247,617$ 5,355,827$ 5,511,557$ 5,836,806$ 5,993,381$ 6,114,112$ 6,592,710$ 7,497,321$
Common Equity Tier 1 Capital Ratio (Regulatory) 11.31% 11.49% 11.42% 11.39% 11.05% 11.10% 11.16% 11.11% 11.03%
* 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.
29
Appendix – Non-GAAP Reconciliation
TANGIBLE COMMON EQUITY RATIO (dollars in thousands):
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
Total Stockholders' Equity (GAAP) 766,984$ 850,509$ 867,263$ 887,550$ 900,865$ 901,657$ 929,470$ 1,035,116$ 1,283,120$
Less: Preferred Stock (125) (125) (125) (125) (125) (125) (125) (125) (125)
Less: Intangible Assets (219,503) (259,764) (261,799) (260,822) (259,844) (258,866) (257,963) (309,686) (478,558)
Tangible Common Equity (non-GAAP) 547,356$ 590,620$ 605,339$ 626,603$ 640,896$ 642,666$ 671,382$ 725,305$ 804,437$
Total Assets (GAAP) 6,189,797$ 6,761,003$ 6,798,539$ 6,906,418$ 7,022,352$ 7,211,611$ 7,326,193$ 7,805,029$ 9,049,403$
Less: Intangible Assets (219,503) (259,764) (261,799) (260,822) (259,844) (258,866) (257,963) (309,686) (478,558)
Tangible Assets (non-GAAP) 5,970,294$ 6,501,239$ 6,536,740$ 6,645,596$ 6,762,508$ 6,952,745$ 7,068,230$ 7,495,343$ 8,570,845$
Tangible Common Equity Ratio (non-GAAP) 9.17% 9.08% 9.26% 9.43% 9.48% 9.24% 9.50% 9.68% 9.39%
ANGIBLE COMMON EQUITY PER SHARE (dollars in thousands):
4Q10 4Q11 4Q12 4Q1 4Q14 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17
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$ 1,035,116$ 1,283,120$
Less: Preferred Stock (67,880) (90,783) (90,908) (125) (125) (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) (309,686) (478,558)
Tax Benefit 2,907 2,224 2,249 4,973 6,085 6,278 6,753 6,453 6,204 5,930 5,659 6,941 12,510
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$ 732,246$ 816,947$
0
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 43,153,509 49,140,594
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$ 16.97$ 16.62$
30
Appendix – Non-GAAP Reconciliation
FORWARD DIVIDEND YIELD
3Q17
Most recent quarter's dividend per share 0.18$
Most recent quarter's dividend per share - Annualized 0.72$
Stock Price at 9/30/17 42.93$
Forward Dividend Yield 1.68%
DIVIDEND PAYOUT RATIO
2017 YTD
Dividends per share 0.51$
Earnings Per Share 1.63$
Dividend Payout Ratio - YTD 31.3%
EFFICIENCY RATIO (dollars in thousands):
2015 2016 1Q17 2Q17 3Q17
Non Interest Expense (GAAP) 174,806$ 177,359$ 43,099$ 47,316$ 58,708$
Less: Intangible Asset Amortization (2,835) (3,910) (903) (991) (1,698)
Less: OREO and Foreclosure Expenses (3,956) (2,877) (531) (731) (330)
Adjusted Non Interest Expense (non-GAAP) 168,015 170,572 41,665 45,594 56,680
Net Interest Income (GAAP) 196,404 226,473 60,999 63,100 74,420
Plus: Fully Taxable Equivalent Adjustment 10,975 13,541 3,950 4,083 4,472
Net Interest Income on a Fully Taxable Equivalent Basis (non-GAAP) 207,379 240,014 64,949 67,183 78,892
Non Interest Income (GAAP) 69,868 65,203 14,846 18,434 18,668
Less: Investment Securities Gains (Losses) (2,670) (3,389) (598) (567) (332)
Adjusted Non Interest Income (non-GAAP) 67,198 61,814 14,248 17,867 18,336
Adjusted Revenu (non-GA P) 274,577 301,828 79,197 85,050 97,228
Efficiency Ratio (non-GAAP) 61.19% 56.51% 52.61% 53.61% 58.30%
31
Appendix – Non-GAAP Reconciliation
CONSTRUCTION AND INVESTMENT REAL ESTATE CONCENTRATIONS (dollars in thousands):
2015 2016 1Q17 2Q17 3Q17
Total Risk-Based Capital (Subsidiary Bank Only)
Total Stockholders' Equity (GAAP) 927,774$ 973,641$ 993,130$ 1,099,762$ 1,384,867$
Adjust for Accumulated Other Comprehensive (Income) Loss 1 (579) 9,701 8,226 3,830 3,170
Less: Preferred Stock (125) (125) (125) (125) (125)
Less: Tier 1 Capital Deductions (1,903) - - - -
Less: Disallowed Goodwill and Intangible Assets (246,558) (248,656) (250,047) (299,859) (461,632)
Less: Disallowed Deferred Tax Assets (1,269) - - - -
Total Tier 1 Capital (Regulatory) 677,340 734,561 751,184 803,608 926,280
Allowance for Loan Losses includible in Tier 2 Capital 62,453 66,037 68,225 70,471 73,354
Total Risk-Based Capital (Regulatory) 739,793$ 800,598$ 819,409$ 874,079$ 999,634$
Construction, Land and Land Development Loans 366,704$ 418,703$ 336,931$ 442,389$ 498,862$
Concentration as a % of the Bank's Risk-Based Capital 50% 52% 41% 51% 50%
Construction, Land and Land Development Loans 366,704$ 418,703$ 336,931$ 442,389$ 498,862$
Investment Real Estate Loans 1,090,573 1,272,415 1,423,792 1,443,576 1,647,797
Total Construction and Investment RE Loans 1,457,277$ 1,691,118$ 1,760,723$ 1,885,965$ 2,146,659$
Concentration as a % of the Bank's Risk-Based Capital 197% 211% 215% 216% 215%
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):
4Q16 1Q17 2Q17 3Q17
Loa Held for Sale (GAAP) 2,929$ 1,262$ 4,036$ 4,514$
Loans (GAAP) 5,139,645 5,274,909 5,6 3,144 6,483,448
Total Loans 5,142,574 5,276,171 5,617,180 6,487,962
Less: Purchased Loans (665,417) (608,724) (762,893) (1,395,368)
Non-Purchased Loans (non-GAAP) 4,477,157$ 4,66 ,447$ 4,854,287$ 5,092,594$
Allowance for Loan Losses (GAAP) 66,037$ 68,225$ 70,471$ 73,354$
Fair Value Adjustment (FVA) (GAAP) 34,936 30,623 29,664 50,434
Allowance plus FVA (non-GAAP) 100,973$ 98,848$ 100,135$ 123,788$
Purchased Loans 665,417$ 608,724$ 762,893$ 1,395,368$
Fair Value Adjustment (FVA) (GAAP) 34,936 30,623 29,664 50,434
Purchased Loans plus FVA (non-GAAP) 700,353$ 639,347$ 792,557$ 1,445,802$
Allowance as a Percentage of Non-Purchased Loans (non-GAAP) 1.47% 1.46% 1.45% 1.44%
FVA as a Percentage of Purchased Loans plus FVA (non-GAAP) 4.99% 4.79% 3.74% 3.49%