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CST: 20/11/2019 20:57:34   

Old National’s 3rd quarter net income increases 36% from a year ago to a record $69.8 million, or $0.41 per share

30 Days ago

EVANSVILLE, Ind., Oct. 21, 2019 (GLOBE NEWSWIRE) --

Old National Bancorp (NASDAQ: ONB) reports 3Q19 net income of $69.8 million, diluted EPS of $0.41.
Adjusted1 net income of $70.5 million, or $0.41 per diluted share.

CEO COMMENTARY:

“For the 2nd straight quarter, Old National combined record net income with record loan production, defense of our net interest margin, good fee income and excellent credit metrics, all of which allowed us to continue to generate positive operating leverage,” said CEO Jim Ryan. “While loan prepayments and lower line utilization impacted overall balance sheet growth, activity levels were robust. Our granular loan portfolio and low-risk profile again led to low credit costs, and Old National remains on a path to high-performance.”

THIRD QUARTER HIGHLIGHTS2:

Net Income

  • Net income of $69.8 million, an increase of 36% from third quarter of 2018
  • Earnings per share of $0.41, an increase of 21% from third quarter of 2018

Net Interest Income/NIM

  • Net interest income on a fully taxable equivalent basis was $156.3 million compared to $158.5 million
  • Net interest margin on a fully taxable equivalent basis was 3.57% compared to 3.66%

Operating Performance

  • Pre-provision net revenue1 (“PPNR”) was $87.6 million
  • Adjusted PPNR1 was $89.7 million, up 26.5% over third quarter of 2018
  • Noninterest expense was $122.6 million
  • Adjusted noninterest expense1 was $120.1 million
  • Efficiency ratio1 was 56.44%
  • Adjusted efficiency ratio1 was 55.26%, a 341 basis point improvement from third quarter of 2018

Loans and Credit Quality

  • End-of-period total loans3 were $12,075.9 million compared to $12,084.5 million
  • Third-quarter total commercial production was a record $680 million; September 30 pipeline was a record $2.0 billion
  • Provision for loan losses was $1.4 million
  • Net charge-offs were $0.8 million, or 0.03% annualized, compared to net charge-offs of $0.3 million
  • Non-performing loans were 1.31% of total loans compared to 1.34%

Return Profile & Capital

  • Return on average common equity was 9.91%
  • Return on average tangible common equity1 was 17.01%
  • Adjusted return on average tangible common equity1 was 17.16%
  • Repurchased 2.2 million shares of common stock during the quarter

Notable Items

  • $1.3 million in merger and integration charges
  • $1.2 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

RESULTS OF OPERATIONS

Old National Bancorp reported third-quarter 2019 net income of $69.8 million, or $0.41 per diluted share. 

Included in the third quarter were pre-tax charges of $1.3 million for merger and integration activity.  Excluding these charges from the current quarter and netting out debt securities gains, adjusted net income was $70.5 million, or $0.41 per diluted share.

LOANS
Record high commercial loan production; paydowns continued to impact outstandings.

  • Period-end total loans were $12,075.9 million at September 30, 2019, compared to $12,084.5 million at June 30, 2019.
  • Commercial and industrial loans decreased $124.3 million to $2,950.6 million; commercial real estate loans increased $118.4 million to $5,112.1 million; consumer loans decreased $37.5 million to $1,718.3 million.
  • Commercial loan production in the third quarter was $680 million; period-end pipeline totaled $2.0 billion.
  • On average, total loans in the third quarter were $12,073.8 million, down from $12,091.0 million in the second quarter of 2019.

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

  • Period-end total deposits were $14,448.4 million at September 30, 2019, an increase of $85.3 million from the second quarter of 2019.
  • On average, total deposits in the third quarter were $14,330.5 million, compared to $14,369.5 million in the second quarter of 2019. 

NET INTEREST INCOME AND MARGIN
Net interest income and margin lower with decline in interest collected on nonaccrual loans and mix shift partially offset by higher accretion and higher day count.

  • Net interest income decreased to $153.1 million in the third quarter of 2019 from $155.2 million in the second quarter of 2019.
  • The net interest margin on a fully taxable equivalent basis decreased 9 basis points to 3.57% compared to 3.66% in the second quarter of 2019.
  • Accretion income was $13.4 million, or 31 basis points of net interest margin, in the third quarter of 2019 compared to $11.8 million, or 27 basis points of net interest margin, in the second quarter of 2019.  In the third quarter of 2019, accretion income was 6.4% of adjusted total revenue.
  • Interest collected on nonaccrual loans was $2.0 million, or 5 basis points of net interest margin, in the third quarter of 2019 compared to $5.7 million, or 13 basis points of net interest margin, in the second quarter of 2019.
  • The cost of total deposits remained flat at 0.52% in the third quarter of 2019 while the cost of total interest-bearing deposits increased just 1 basis point to 0.71%.

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 third quarter of $0.8 million, or 0.03% of total average loans, and 30-89 day delinquencies of 0.21%.
  • Provision expense was $1.4 million in the third quarter compared to $1.0 million in the second quarter.
  • Non-performing loans decreased as a percentage of total loans to 1.31%.
  • 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 September 30, 2019, the remaining discount on these acquired loans was $87.1 million.
  • The allowance for loan losses was $56.9 million, or 0.47% of total loans at September 30, 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 increased due to increases in mortgage banking revenue and capital markets fees.

  • Total noninterest income for the third quarter of 2019 was $53.9 million, an increase of $2.7 million from the second quarter of 2019.
  • Mortgage banking revenue increased $1.7 million and capital markets income increased $1.4 million when compared to the second quarter of 2019.

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

  • Noninterest expense for the third quarter of 2019 was $122.6 million and included $1.3 million in merger & integration charges and $1.2 million in tax credit amortization.
  • Excluding these items, adjusted noninterest expense for the third quarter was $120.1 million, compared to the $124.3 million in adjusted noninterest expense in the second quarter of 2019. 
  • The third quarter efficiency ratio was 56.44%, while the adjusted efficiency ratio was 55.26%.

INCOME TAXES

  • On a fully taxable-equivalent basis, income tax expense in the third quarter was $16.4 million, resulting in a 19.1% FTE tax rate.
  • Income tax expense included $1.8 million in tax credit benefit.

CAPITAL
Strong quarterly earnings drove capital ratios higher.

  • At the end of the third quarter, total risk-based capital was 13.0% and regulatory tier 1 capital was 12.0%.
  • Tangible common equity to tangible assets was 8.95% at the end of the third quarter compared to 8.92% in the second quarter of 2019.
  • The Company repurchased 2.2 million shares of common stock during the third quarter with a weighted average price of $16.80 per share, excluding commissions.

NON-GAAP RECONCILIATIONS

($ in millions, except EPS, shares in 000s) 3Q19 Adjustments 4 Adjusted 3Q19
Total Revenues (FTE) $ 210.2   $ (0.4 ) $ 209.8  
Less: Provision for Loan Losses   (1.4 )   -     (1.4 )
Less: Noninterest Expenses   (122.6 )   1.3     (121.3 )
Income before Income Taxes (FTE) $ 86.2   $ 0.9   $ 87.1  
Income Taxes   16.4     0.2     16.6  
Net Income $ 69.8   $ 0.7   $ 70.5  
Average Shares Outstanding   171,551     -     171,551  
Earnings Per Share - Diluted $ 0.41   $ -   $ 0.41  
                   

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

($ in millions) 3Q19 2Q19
Net Interest Income $ 153.1   $ 155.2  
Add: FTE Adjustment   3.2     3.3  
Net Interest Income (FTE) $ 156.3   $ 158.5  
Average Earning Assets $ 17,510.5   $ 17,302.7  
Net Interest Margin (FTE)   3.57 %   3.66 %
             


($ in millions) 3Q19 2Q19
Net Interest Income $ 153.1   $ 155.2  
Add: FTE Adjustment   3.2     3.3  
Net Interest Income (FTE) $ 156.3   $ 158.5  
Add: Total Noninterest Income   53.9     51.2  
Less: Noninterest Expense   122.6     128.1  
Pre-Provision Net Revenue $ 87.6   $ 81.6  
Less: Debt Securities Gains/Losses   (0.4 )   (1.2 )
Add: Merger and Integration Charges   1.3     3.2  
Add: Amortization of Tax Credit Investments   1.2     0.6  
Adjusted Pre-Provision Net Revenue $ 89.7   $ 84.2  
             


($ in millions) 3Q19 2Q19 3Q18
Noninterest Expense $ 122.6   $ 128.1   $ 119.4  
Less: Merger and Integration Charges   (1.3 )   (3.2 )   (1.7 )
Less: Branch Action Charges & Severance   -     -     (0.1 )
Noninterest Expense less Charges $ 121.3   $ 124.9   $ 117.6  
Less: Amortization of Tax Credit Investments   (1.2 )   (0.6 )   (9.2 )
Adjusted Noninterest Expense $ 120.1   $ 124.3   $ 108.4  
Less: Intangible Amortization   (4.2 )   (4.3 )   (3.3 )
Adjusted Noninterest Expense Less Intangible Amortization $ 115.9   $ 120.0   $ 105.1  
Net Interest Income $ 153.1   $ 155.2   $ 130.8  
FTE Adjustment   3.2     3.3     2.8  
Net Interest Income (FTE) $ 156.3   $ 158.5   $ 133.6  
Total Noninterest Income   53.9     51.2     46.0  
Total Revenue (FTE) $ 210.2   $ 209.7   $ 179.6  
Less: Debt Securities Gains/Losses   (0.4 )   (1.2 )   (0.1 )
Less: Gain on Branch Actions   -     -     (0.2 )
Adjusted Total Revenue (FTE) $ 209.8   $ 208.5   $ 179.3  
Efficiency Ratio   56.44 %   59.35 %   64.71 %
Adjusted Efficiency Ratio   55.26 %   57.52 %   58.67 %
       
Operating Leverage5 (basis points)   1,440      
Adjusted Operating Leverage6 (basis points)   624      
           

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) 3Q19 2Q19
Net Income $ 69.8   $ 63.0  
Add: Intangible Amortization (net of tax7)   3.1     3.2  
Tangible Net Income $ 72.9   $ 66.2  
Less: Securities Gains/Losses (net of tax7)    (0.3 )    (0.9 )
Add: Merger & Integration Charges (net of tax7)   1.0     2.4  
Adjusted Tangible Net Income $ 73.6   $ 67.7  
Average Total Shareholders’ Equity $ 2,817.5   $ 2,758.3  
Less: Average Goodwill   (1,036.3 )   (1,036.3 )
Less: Average Intangibles   (66.0 )   (70.3 )
Average Tangible Shareholders’ Equity $ 1,715.2   $ 1,651.7  
Return on Average Tangible Common Equity   17.01 %   16.04 %
Adjusted Return on Average Tangible Common Equity   17.16 %   16.41 %
             

7  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 Monday, October 21, 2019, to review third quarter 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 October 21 through November 4.  To access the replay, dial 1-855-859-2056, Conference ID Code 1869785.

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; 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   Nine Months Ended  
  September 30, June 30, September 30,   September 30, September 30,  
    2019     2019     2018       2019     2018    
Income Statement              
Net interest income $ 153,096   $ 155,230   $ 130,842     $ 455,374   $ 391,377    
Provision for loan losses   1,437     1,003     750       3,483     3,576    
Noninterest income   53,961     51,214     45,957       151,591     137,151    
Noninterest expense   122,585     128,118     119,376       373,744     366,993    
Net income   69,781     62,964     51,348       189,021     143,332    
               
               
Per Common Share Data              
Net income (diluted) $ 0.41   $ 0.36   $ 0.34     $ 1.09   $ 0.94    
Average diluted shares outstanding   171,551     173,675     152,784       173,527     152,616    
Book value   16.66     16.28     14.58       16.66     14.58    
Stock price   17.20     16.59     19.30       17.20     19.30    
Dividend payout ratio   32 %   35 %   38 %     35 %   41 %  
Tangible common book value (1)   10.18     9.86     8.86       10.18     8.86    
               
               
Performance Ratios              
Return on average assets   1.39 %   1.26 %   1.18 %     1.26 %   1.10 %  
Return on average common equity   9.91 %   9.13 %   9.28 %     9.12 %   8.74 %  
Return on average tangible common equity (1)   17.01 %   16.04 %   16.10 %     16.00 %   15.40 %  
Net interest margin (FTE)   3.57 %   3.66 %   3.51 %     3.58 %   3.51 %  
Efficiency ratio (2)   56.44 %   59.35 %   64.71 %     58.65 %   66.74 %  
Net charge-offs (recoveries) to average loans   0.03 %   0.01 %   0.06 %     0.02 %   0.01 %  
Allowance for loan losses to ending loans   0.47 %   0.47 %   0.47 %     0.47 %   0.47 %  
Non-performing loans to ending loans   1.31 %   1.34 %   1.47 %     1.31 %   1.47 %  
               
               
Balance Sheet              
Total loans $ 12,017,648   $ 12,046,578   $ 11,292,659     $ 12,017,648   $ 11,292,659    
Total assets   20,438,788     20,145,285     17,567,759       20,438,788     17,567,759    
Total deposits   14,448,352     14,363,101     12,598,200       14,448,352     12,598,200    
Total borrowed funds   2,831,863     2,726,481     2,576,039       2,831,863     2,576,039    
Total shareholders' equity   2,832,530     2,803,139     2,220,680       2,832,530     2,220,680    
               
               
Capital Ratios (1)              
Risk-based capital ratios (EOP):              
Tier 1 common equity   12.0 %   11.9 %   11.1 %     12.0 %   11.1 %  
Tier 1   12.0 %   11.9 %   11.1 %     12.0 %   11.1 %  
Total   13.0 %   12.8 %   12.1 %     13.0 %   12.1 %  
Leverage ratio (to average assets)   8.8 %   8.8 %   8.6 %     8.8 %   8.6 %  
               
Total equity to assets (averages)   13.98 %   13.82 %   12.69 %     13.84 %   12.55 %  
Tangible common equity to tangible assets   8.95 %   8.92 %   8.08 %     8.95 %   8.08 %  
               
               
Nonfinancial Data              
Full-time equivalent employees   2,778     2,829     2,554       2,778     2,554    
Number of branches   192     192     182       192     182    
               
(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   Nine Months Ended  
  September 30, June 30, September 30,   September 30, September 30,  
    2019     2019   2018     2019   2018  
Interest income $ 185,853   $ 189,063   $ 155,369   $ 553,834   $ 456,811  
Less: interest expense   32,757     33,833     24,527     98,460     65,434  
Net interest income   153,096     155,230     130,842     455,374     391,377  
Provision for loan losses   1,437     1,003     750     3,483     3,576  
Net interest income after provision for loan losses   151,659     154,227     130,092     451,891     387,801  
               
Wealth management fees   9,160     9,909     9,022     27,604     27,794  
Service charges on deposit accounts   11,860     11,515     11,028     34,201     32,552  
Debit card and ATM fees   5,370     5,419     4,706     16,292     14,651  
Mortgage banking revenue   8,850     7,135     4,348     20,996     13,729  
Investment product fees   5,244     5,591     5,073     16,106     15,170  
Capital markets income   4,560     3,150     2,700     10,227     4,094  
Company-owned life insurance   2,703     2,711     2,958     8,602     7,993  
Other income   5,900     4,716     5,986     16,318     18,702  
Gains (losses) on sales of debt securities   424     1,165     135     1,486     2,417  
Gains (losses) on derivatives   (110 )   (97 )   1     (241 )   49  
Total noninterest income   53,961     51,214     45,957     151,591     137,151  
               
Salaries and employee benefits   71,729     71,566     63,158     214,478     193,929  
Occupancy   11,934     14,559     12,578     41,071     38,731  
Equipment   3,954     4,517     3,652     12,945     10,945  
Marketing   4,105     4,439     3,406     12,267     11,065  
Data processing   8,961     10,207     8,628     28,509     26,752  
Communication   2,349     2,849     2,473     8,252     8,309  
Professional fees   5,037     4,921     3,235     12,868     8,888  
Loan expenses   1,811     1,657     1,564     5,380     5,151  
FDIC assessment   960     1,454     2,722     4,501     8,528  
Amortization of intangibles   4,168     4,325     3,283     12,965     10,308  
Amortization of tax credit investments   1,211     568     9,233     2,039     21,807  
Other expense   6,366     7,056     5,444     18,469     22,580  
Total noninterest expense   122,585     128,118     119,376     373,744     366,993  
               
Income before income taxes   83,035     77,323     56,673     229,738     157,959  
Income tax expense   13,254     14,359     5,325     40,717     14,627  
Net income $ 69,781   $ 62,964   $ 51,348   $ 189,021   $ 143,332  
               
Diluted Earnings Per Share              
Net income $ 0.41   $ 0.36   $ 0.34   $ 1.09   $ 0.94  
               
Average Common Shares Outstanding              
Basic   170,746     172,985     151,930     172,807     151,844  
Diluted   171,551     173,675     152,784     173,527     152,616  
               
Common shares outstanding at end of period   170,031     172,231     152,352     170,031     152,352  
               
               


 
Balance Sheet (unaudited)
($ in thousands)
 
  September 30,   June 30,   September 30,  
    2019       2019       2018    
Assets            
Federal Reserve Bank account $ 80,018     $ 40,945     $ 65,878    
Money market investments   19,410       20,210       5,859    
Investments:            
Treasury and government-sponsored agencies   524,919       725,327       690,709    
Mortgage-backed securities   3,248,367       2,900,235       1,640,254    
States and political subdivisions   1,231,248       1,186,311       1,099,535    
Other securities   490,389       489,855       496,199    
Total investments   5,494,923       5,301,728       3,926,697    
Loans held for sale, at fair value   58,285       37,904       21,384    
Loans:            
Commercial   2,950,559       3,074,849       2,949,277    
Commercial and agriculture real estate   5,112,123       4,993,693       4,481,554    
Consumer:            
Home equity   555,905       553,991       498,325    
Other consumer loans   1,162,438       1,201,847       1,197,300    
Subtotal of commercial and consumer loans   9,781,025       9,824,380       9,126,456    
Residential real estate   2,236,623       2,222,198       2,166,203    
Total loans   12,017,648       12,046,578       11,292,659    
Total earning assets   17,670,284       17,447,365       15,312,477    
             
Allowance for loan losses   (56,910 )     (56,292 )     (52,713 )  
Non-earning Assets:            
Cash and due from banks   320,822       239,831       215,024    
Premises and equipment, net   492,065       493,481       450,253    
Operating lease right-of-use assets   102,976       106,222       -    
Goodwill and other intangible assets   1,101,045       1,104,478       870,938    
Company-owned life insurance   447,110       445,749       405,245    
Net deferred tax assets   26,523       36,002       94,667    
Loan servicing rights   24,623       24,332       24,336    
Other assets   310,250       304,117       247,532    
Total non-earning assets   2,825,414       2,754,212       2,307,995    
Total assets $ 20,438,788     $ 20,145,285     $ 17,567,759    
             
Liabilities and Equity            
Noninterest-bearing demand deposits $ 3,996,264     $ 3,771,888     $ 3,588,370    
Interest-bearing:            
Checking and NOW accounts   3,936,318       3,950,161       3,011,544    
Savings accounts   2,863,718       2,877,673       2,920,712    
Money market accounts   1,821,989       1,819,716       1,185,439    
Other time deposits   1,704,238       1,756,814       1,667,055    
Total core deposits   14,322,527       14,176,252       12,373,120    
Brokered CD's   125,825       186,849       225,080    
Total deposits   14,448,352       14,363,101       12,598,200    
             
Federal funds purchased and interbank borrowings   240,589       410,036       450,031    
Securities sold under agreements to repurchase   337,551       334,540       319,831    
Federal Home Loan Bank advances   2,001,960       1,730,065       1,554,515    
Other borrowings   251,763       251,840       251,662    
Total borrowed funds   2,831,863       2,726,481       2,576,039    
Operating lease liabilities   107,272       110,596       -    
Accrued expenses and other liabilities   218,771       141,968       172,840    
Total liabilities   17,606,258       17,342,146       15,347,079    
             
Common stock, surplus, and retained earnings   2,774,016       2,761,102       2,300,610    
Accumulated other comprehensive income (loss), net of tax   58,514       42,037       (79,930 )  
Total shareholders' equity   2,832,530       2,803,139       2,220,680    
Total liabilities and shareholders' equity $ 20,438,788     $ 20,145,285     $ 17,567,759    
           
           


         
Average Balance Sheet and Interest Rates (unaudited)  
($ in thousands)  
                         
                         
  Three Months Ended   Three Months Ended   Three Months Ended  
  September 30, 2019   June 30, 2019   September 30, 2018  
  Average Income (1)/ Yield/   Average Income (1)/ Yield/   Average Income (1)/ Yield/  
Earning Assets: Balance Expense Rate   Balance Expense Rate   Balance Expense Rate  
Money market and other interest-earning investments $ 63,142   $ 528 3.32 %   $ 58,321   $ 334 2.29 %   $ 35,928   $ 140 1.54 %  
Investments:                        
Treasury and government-sponsored agencies   682,940     4,341 2.54 %     695,775     4,301 2.47 %     685,919     3,748 2.19 %  
Mortgage-backed securities   3,019,322     18,589 2.46 %     2,767,791     18,799 2.72 %     1,595,630     9,381 2.35 %  
States and political subdivisions   1,172,017     10,896 3.72 %     1,193,176     11,235 3.77 %     1,103,347     10,110 3.67 %  
Other securities   499,308     4,049 3.24 %     496,631     4,063 3.27 %     500,837     4,116 3.29 %  
  Total investments   5,373,587     37,875 2.82 %     5,153,373     38,398 2.98 %     3,885,733     27,355 2.82 %  
Loans: (2)                        
Commercial   3,018,638     35,428 4.59 %     3,063,590     37,828 4.88 %     2,928,744     33,381 4.46 %  
Commercial and agriculture real estate   5,037,909     71,604 5.56 %     5,019,859     72,214 5.69 %     4,465,105     57,377 5.03 %  
Consumer:                        
Home equity   557,607     7,102 5.05 %     558,223     7,390 5.31 %     495,161     6,070 4.86 %  
Other consumer loans   1,175,900     12,226 4.13 %     1,201,752     12,408 4.14 %     1,215,583     11,263 3.68 %  
Subtotal commercial and consumer loans   9,790,054     126,360 5.12 %     9,843,424     129,840 5.29 %     9,104,593     108,091 4.71 %  
Residential real estate loans   2,283,704     24,261 4.25 %     2,247,570     23,780 4.23 %     2,187,130     22,536 4.12 %  
                         
  Total loans   12,073,758     150,621 4.91 %     12,090,994     153,620 5.05 %     11,291,723     130,627 4.56 %  
                         
  Total earning assets $ 17,510,487   $ 189,024 4.27 %   $ 17,302,688   $ 192,352 4.43 %   $ 15,213,384   $ 158,122 4.11 %  
                         
Less: Allowance for loan losses   (56,894 )         (56,632 )         (53,734 )      
                         
Non-earning Assets:                        
Cash and due from banks $ 264,145         $ 234,337         $ 205,446        
Other assets   2,429,466           2,473,255           2,068,469        
                         
  Total assets $ 20,147,204         $ 19,953,648         $ 17,433,565        
                         
Interest-Bearing Liabilities:                        
Checking and NOW accounts $ 3,895,654   $ 4,448 0.45 %   $ 3,895,881   $ 4,196 0.43 %   $ 3,026,289   $ 1,180 0.15 %  
Savings accounts   2,855,401     2,128 0.30 %     2,879,704     2,145 0.30 %     2,974,147     2,119 0.28 %  
Money market accounts   1,822,698     4,017 0.87 %     1,789,777     3,729 0.84 %     1,153,906     1,254 0.43 %  
Other time deposits   1,733,492     7,016 1.61 %     1,779,770     7,181 1.62 %     1,669,039     5,780 1.37 %  
  Total interest-bearing deposits   10,307,245     17,609 0.68 %     10,345,132     17,251 0.67 %     8,823,381     10,333 0.46 %  
Brokered CD's   181,425     1,098 2.40 %     212,198     1,268 2.40 %     178,283     856 1.90 %  
  Total interest-bearing deposits and CD's   10,488,670     18,707 0.71 %     10,557,330     18,519 0.70 %     9,001,664     11,189 0.49 %  
                         
Federal funds purchased and interbank borrowings   254,971     1,484 2.31 %     300,810     1,817 2.42 %     238,514     1,191 1.98 %  
Securities sold under agreements to repurchase   340,158     715 0.83 %     331,695     671 0.81 %     352,998     535 0.60 %  
Federal Home Loan Bank advances   1,889,407     9,123 1.92 %     1,695,681     10,039 2.37 %     1,624,661     8,880 2.17 %  
Other borrowings   251,817     2,728 4.33 %     251,577     2,787 4.43 %     250,255     2,732 4.37 %  
  Total borrowed funds   2,736,353     14,050 2.04 %     2,579,763     15,314 2.38 %     2,466,428     13,338 2.15 %  
                         
  Total interest-bearing liabilities $ 13,225,023   $ 32,757 0.98 %   $ 13,137,093   $ 33,833 1.03 %   $ 11,468,092   $ 24,527 0.85 %  
                         
Noninterest-Bearing Liabilities and Shareholders' Equity                      
Demand deposits $ 3,841,867         $ 3,812,175         $ 3,596,159        
Other liabilities   262,862           246,134           156,614        
Shareholders' equity   2,817,452           2,758,246           2,212,700        
                         
Total liabilities and shareholders' equity $ 20,147,204         $ 19,953,648         $ 17,433,565        
                         
Net interest rate spread     3.29 %       3.40 %       3.26 %  
                         
Net interest margin (FTE)     3.57 %       3.66 %       3.51 %  
                         
FTE adjustment   $ 3,171       $ 3,289       $ 2,753    
                         
(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)  
                 
                 
  Nine Months Ended   Nine Months Ended  
  September 30, 2019   September 30, 2018  
  Average Income (1)/ Yield/   Average Income (1)/ Yield/  
Earning Assets: Balance Expense Rate   Balance Expense Rate  
Money market and other interest-earning investments $ 60,071   $ 1,140 2.54 %   $ 51,284   $ 347 0.90 %  
Investments:                
Treasury and government-sponsored agencies   694,628     12,544 2.41 %     666,015     10,559 2.11 %  
Mortgage-backed securities   2,763,406     54,991 2.65 %     1,605,324     27,805 2.31 %  
States and political subdivisions   1,198,962     33,584 3.73 %     1,141,827     31,179 3.64 %  
Other securities   497,854     12,553 3.36 %     489,465     11,694 3.19 %  
  Total investments   5,154,850     113,672 2.94 %     3,902,631     81,237 2.78 %  
Loans: (2)                
Commercial   3,067,830     109,290 4.70 %     2,854,691     94,114 4.35 %  
Commercial and agriculture real estate   5,015,973     208,894 5.49 %     4,436,576     170,414 5.07 %  
Consumer:                
Home equity   567,953     22,089 5.20 %     496,365     17,834 4.80 %  
Other consumer loans   1,189,988     36,436 4.09 %     1,276,727     34,994 3.66 %  
Subtotal commercial and consumer loans   9,841,744     376,709 5.12 %     9,064,359     317,356 4.68 %  
Residential real estate loans   2,263,595     71,972 4.24 %     2,180,416     66,216 4.05 %  
                 
  Total loans   12,105,339     448,681 4.91 %     11,244,775     383,572 4.52 %  
                 
  Total earning assets $ 17,320,260   $ 563,493 4.32 %   $ 15,198,690   $ 465,156 4.06 %  
                 
Less: Allowance for loan losses   (56,442 )         (52,070 )      
                 
Non-earning Assets:                
Cash and due from banks $ 242,938         $ 203,421        
Other assets   2,464,192           2,081,615        
                 
  Total assets $ 19,970,948         $ 17,431,656        
                 
Interest-Bearing Liabilities:                
Checking and NOW accounts $ 3,829,213   $ 11,786 0.41 %   $ 3,063,636   $ 2,969 0.13 %  
Savings accounts   2,889,977     6,556 0.30 %     3,020,955     5,239 0.23 %  
Money market accounts   1,772,150     10,572 0.80 %     1,138,679     2,502 0.29 %  
Other time deposits   1,784,200     21,299 1.60 %     1,615,896     14,493 1.20 %  
  Total interest-bearing deposits   10,275,540     50,213 0.65 %     8,839,166     25,203 0.38 %  
Brokered CD's   194,985     3,457 2.37 %     182,720     2,380 1.74 %  
  Total interest-bearing deposits and CD's   10,470,525     53,670 0.69 %     9,021,886     27,583 0.41 %  
                 
Federal funds purchased and interbank borrowings   290,699     5,219 2.40 %     213,362     2,855 1.79 %  
Securities sold under agreements to repurchase   344,294     2,048 0.80 %     342,797     1,328 0.52 %  
Federal Home Loan Bank advances   1,753,283     29,093 2.22 %     1,671,211     25,484 2.04 %  
Other borrowings   251,070     8,430 4.48 %     249,464     8,184 4.37 %  
  Total borrowed funds   2,639,346     44,790 2.27 %     2,476,834     37,851 2.04 %  
                 
  Total interest-bearing liabilities $ 13,109,871   $ 98,460 1.00 %   $ 11,498,720   $ 65,434 0.76 %  
                 
Noninterest-Bearing Liabilities and Shareholders' Equity                
Demand deposits $ 3,833,605         $ 3,587,453        
Other liabilities   263,799           157,859        
Shareholders' equity   2,763,673           2,187,624        
                 
Total liabilities and shareholders' equity $ 19,970,948         $ 17,431,656        
                 
Net interest rate spread     3.32 %       3.30 %  
                 
Net interest margin (FTE)     3.58 %       3.51 %  
                 
FTE adjustment   $ 9,659       $ 8,345    
                 
(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   Nine Months Ended  
  September 30, June 30, September 30,   September 30, September 30,  
  2019 2019 2018   2019 2018  
               
Beginning allowance for loan losses $ 56,292   $ 55,559   $ 53,660     $ 55,461   $ 50,381    
               
Provision for loan losses   1,437     1,003     750       3,483     3,576    
               
Gross charge-offs   (2,716 )   (2,876 )   (4,261 )     (8,485 )   (10,000 )  
Gross recoveries   1,897     2,606     2,564       6,451     8,756    
Net (charge-offs) recoveries   (819 )   (270 )   (1,697 )     (2,034 )   (1,244 )  
               
Ending allowance for loan losses $ 56,910   $ 56,292   $ 52,713     $ 56,910   $ 52,713    
               
Net charge-offs (recoveries) / average loans (1)   0.03 %   0.01 %   0.06 %     0.02 %   0.01 %  
               
Average loans outstanding (1) $ 12,061,705   $ 12,083,609   $ 11,284,531     $ 12,097,310   $ 11,239,549    
               
EOP loans outstanding (1)   12,017,648   $ 12,046,578   $ 11,292,659     $ 12,017,648   $ 11,292,659    
               
Allowance for loan losses / EOP loans (1)   0.47 %   0.47 %   0.47 %     0.47 %   0.47 %  
               
Underperforming Assets:              
Loans 90 Days and over (still accruing) $ 703   $ 423   $ 980     $ 703   $ 980    
               
Non-performing loans:              
Nonaccrual loans (2)   138,498     142,421     148,816       138,498     148,816    
Renegotiated loans   18,884     19,031     17,547       18,884     17,547    
Total non-performing loans   157,382     161,452     166,363       157,382     166,363    
               
Foreclosed properties   2,941     2,819     3,563       2,941     3,563    
               
Total underperforming assets $ 161,026   $ 164,694   $ 170,906     $ 161,026   $ 170,906    
               
Classified and Criticized Assets:              
Nonaccrual loans (2)   138,498     142,421     148,816       138,498     148,816    
Substandard accruing loans   145,987     174,728     107,257       145,987     107,257    
Loans 90 days and over (still accruing)   703     423     980       703     980    
Total classified loans - "problem loans" $ 285,188   $ 317,572   $ 257,053     $ 285,188   $ 257,053    
               
Other classified assets   2,556     2,550     3,070       2,556     3,070    
Criticized loans - "special mention loans"   233,519     220,455     181,165       233,519     181,165    
               
Total classified and criticized assets $ 521,263   $ 540,577   $ 441,288     $ 521,263   $ 441,288    
               
Non-performing loans / EOP loans (1)   1.31 %   1.34 %   1.47 %     1.31 %   1.47 %  
               
Allowance to non-performing loans (3)   36 %   35 %   32 %     36 %   32 %  
               
Under-performing assets / EOP loans (1)   1.34 %   1.37 %   1.51 %     1.34 %   1.51 %  
               
EOP total assets $ 20,438,788   $ 20,145,285   $ 17,567,759     $ 20,438,788   $ 17,567,759    
               
Under-performing assets / EOP assets   0.79 %   0.82 %   0.97 %     0.79 %   0.97 %  
               
EOP - End of period actual balances              
(1) Excludes loans held for sale.              
(2) Includes renegotiated loans totaling $21.8 million at September 30, 2019, $24.7 million at June 30, 2019, and $29.9 million at September 30, 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   Nine Months Ended  
  September 30, June 30, September 30,   September 30, September 30,  
  2019 2019 2018   2019 2018  
               
Actual End of Period Balances              
GAAP shareholders' equity $ 2,832,530   $ 2,803,139   $ 2,220,680     $ 2,832,530   $ 2,220,680    
               
Deduct:              
Goodwill   1,036,994     1,036,258     828,804       1,036,994     828,804    
Intangibles   64,051     68,220     42,134       64,051     42,134    
    1,101,045     1,104,478     870,938       1,101,045     870,938    
               
Tangible shareholders' equity $ 1,731,485   $ 1,698,661   $ 1,349,742     $ 1,731,485   $ 1,349,742    
               
Average Balances              
GAAP shareholders' equity $ 2,817,452   $ 2,758,246   $ 2,212,700     $ 2,763,673   $ 2,187,624    
               
Deduct:              
Goodwill   1,036,306     1,036,258     828,804       1,036,274     828,585    
Intangibles   66,047     70,282     43,685       70,361     47,249    
    1,102,353     1,106,540     872,489       1,106,635     875,834    
               
Average tangible shareholders' equity $ 1,715,099   $ 1,651,706   $ 1,340,211     $ 1,657,038   $ 1,311,790    
               
Actual End of Period Balances              
GAAP assets $ 20,438,788   $ 20,145,285   $ 17,567,759     $ 20,438,788   $ 17,567,759    
               
Add:              
Trust overdrafts   24     29     118       24     118    
               
Deduct:              
Goodwill   1,036,994     1,036,258     828,804       1,036,994     828,804    
Intangibles   64,051     68,220     42,134       64,051     42,134    
    1,101,045     1,104,478     870,938       1,101,045     870,938    
               
Tangible assets $ 19,337,767   $ 19,040,836   $ 16,696,939     $ 19,337,767   $ 16,696,939    
               
Risk-weighted assets $ 13,975,295   $ 13,996,770   $ 12,715,665     $ 13,975,295   $ 12,715,665    
               
GAAP net income $ 69,781   $ 62,964   $ 51,348     $ 189,021   $ 143,332    
               
Add:              
Amortization of intangibles (net of tax)   3,145     3,262     2,593       9,780     8,143    
               
Tangible net income $ 72,926   $ 66,226   $ 53,941     $ 198,801   $ 151,475    
               
Tangible Ratios              
Return on tangible common equity   16.85 %   15.59 %   15.99 %     15.31 %   14.96 %  
Return on average tangible common equity   17.01 %   16.04 %   16.10 %     16.00 %   15.40 %  
Return on tangible assets   1.51 %   1.39 %   1.29 %     1.37 %   1.21 %  
Tangible common equity to tangible assets   8.95 %   8.92 %   8.08 %     8.95 %   8.08 %  
Tangible common equity to risk-weighted assets   12.39 %   12.14 %   10.61 %     12.39 %   10.61 %  
Tangible common book value (1)   10.18     9.86     8.86       10.18     8.86    
               
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 capital $ 1,681,457   $ 1,664,277   $ 1,409,775     $ 1,681,457   $ 1,409,775    
               
Deduct:              
Tier 1 capital adjustments   -     -     -       -     -    
    -     -     -       -     -    
               
Tier 1 common equity $ 1,681,457   $ 1,664,277   $ 1,409,775     $ 1,681,457   $ 1,409,775    
               
Risk-weighted assets   13,975,295     13,996,770     12,715,665       13,975,295     12,715,665    
               
Tier 1 common equity to risk-weighted assets   12.03 %   11.89 %   11.09 %     12.03 %   11.09 %  
               
               

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