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CST: 20/11/2019 21:58:09   

Old National reports 4th quarter net income of $47.5 million, or $0.28 earnings per share

302 Days ago

EVANSVILLE, Ind., Jan. 22, 2019 (GLOBE NEWSWIRE) --

Old National Bancorp (NASDAQ: ONB) reports 4Q18 net income of $47.5 million, diluted EPS of $0.28.
Adjusted1 net income of $54.1 million, or $0.32 per diluted share.

2018 annual net income of $190.8 million, diluted EPS of $1.22.
Adjusted1 2018 annual net income of $201.8 million,  diluted EPS of $1.29.

CEO COMMENTARY:

“Old National’s strong 4th quarter – punctuated by the 2nd highest commercial loan production in our history - capped a year of outstanding performance that included $283.2 million in organic commercial loan growth, positive operating leverage and strong credit and capital ratios,” said Old National Chairman & CEO Bob Jones. “The 4th quarter also saw us continue to execute our growth strategy by closing on our KleinBank partnership, which effectively doubles our presence in the state of Minnesota.”

FOURTH-QUARTER HIGHLIGHTS2:

Net Income

  • Net income of $47.5 million
  • Earnings per share of $0.28

Net Interest Income/NIM

  • Net interest income on a fully taxable equivalent basis was $149.3 million, up 11.7%
  • Net interest margin on a fully taxable equivalent basis was 3.64% compared to 3.51%

Operating Performance

  • Pre-provision net revenue1 (“PPNR”) was $57.2 million
  • Adjusted PPNR1 was $67.0 million, up 16.0% over fourth quarter of 2017
  • Noninterest expense was $150.3 million
  • Adjusted noninterest expense1 was $126.9 million
  • Efficiency ratio1 was 70.33%
  • Adjusted efficiency ratio1 was 63.31%, a 27 basis point improvement from fourth quarter of 2017

Loans and Credit Quality

  • End-of-period total loans3 were $12,258.8 million compared to $11,314.0 million
  • End-of-period commercial and industrial loans were $3,233.0 million compared to $2,949.3 million
  • Fourth quarter total commercial production was $594.0 million; December 31 pipeline was $1.5 billion 
  • Provision for loan losses was $3.4 million compared to $0.8 million
  • Net charge-offs were $0.6 million, or 0.02% annualized, compared to net charge-offs of $1.7 million
  • Non-performing loans were 1.43% of total loans compared to 1.47%

Capital Returns

  • Return on average common equity was 7.59%
  • Return on average tangible common equity1 was 13.84%
  • Adjusted return on average tangible common equity1 was 15.62%

Notable Items

  • Closing of Klein partnership on November 1, 2018
  • Sale of 10 Wisconsin branches resulting in a $14.0 million net gain
  • $14.8 million in merger/integration charges and $7.5 million in ONB Foundation funding
  • $7.6 million in incentive compensation annual true-ups and benefit adjustments driven by higher hospitalization costs
  • $1.1 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 fourth-quarter 2018 net income of $47.5 million, or $0.28 per diluted share. 

Included in the fourth quarter were pre-tax charges of $14.8 million for merger and integration and $7.5 million in ONB Foundation funding.  The current quarter also included a $14.0 million net gain resulting from the sale of 10 Wisconsin branches.  Excluding these items from the current quarter and netting out securities gains, Old National would have reported net income of $54.1 million, or $0.32 per share. The fourth quarter also included $7.6 million in incentive compensation annual true-ups and benefit adjustments driven by higher hospitalization costs.

As was previously disclosed, Old National closed on its partnership with Minnesota-based Klein Financial, Inc. (Klein) as of November 1, 2018. 

LOANS
Pipeline and production remain strong with paydowns impacting outstandings; quarterly balances benefitted from the Klein partnership.

  • Period-end total loans increased to $12,258.8 million at December 31, 2018 from $11,314.0 million at September 30, 2018.
  • Total loans acquired though the partnership with Klein were $1,049.1 million as of the date of closing.
  • Fourth quarter commercial loan production was $594.0 million, second highest in company history, while period-end pipeline totaled $1.5 billion.
  • On average, total loans in the fourth quarter were $11,972.6 million, up from $11,291.7 million in the third quarter of 2018.
  • For the full-year 2018, total loans grew $1,122.8 million. Excluding the $1,049.1 million in loans acquired from Klein and the $64.9 million in student loans sold in the second quarter, organic loan growth for the full year was $138.6 million. 
  • For the full-year 2018, total commercial loans increased to $8,191.8 million.  Excluding the $836.8 million in commercial loans acquired from Klein, organic commercial loan growth was $283.2 million.

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

  • Period-end total deposits increased to $14,349.9 million at December 31, 2018, from $12,598.2 million at September 30, 2018.
  • Total deposits assumed from Klein were $1,713.1 million.  Total deposits sold during the fourth quarter (as part of the Wisconsin branch sale) totaled $230.6 million.  Excluding these transactions, organic deposit growth for the quarter was $269.3 million, or 8.5% annualized.
  • On average, total deposits in the fourth quarter were $13,620.6 million, compared to $12,597.8 million in the third quarter of 2018. 
  • For the full-year 2018, total deposits grew $1,744.2 million.  Excluding the deposits assumed and the deposits sold (as noted above), organic deposit growth was $261.7 million, or 2.1%, for the year.

NET INTEREST INCOME AND MARGIN
Controlled deposit costs and the Klein partnership benefited both net interest income and margin in the fourth quarter.

  • Net interest income increased to $146.2 million in the fourth quarter of 2018 from $130.8 million in the third quarter of 2018, benefitting primarily from the Klein partnership.
  • The net interest margin on a fully taxable equivalent basis increased 13 basis points to 3.64% compared to 3.51% in the third quarter of 2018.
  • Accretion income was $11.3 million, or 27 basis points of net interest margin, in the fourth quarter of 2018 compared to $7.3 million, or 19 basis points of net interest margin, in the third quarter of 2018.  In the fourth quarter of 2018, accretion income was 5.8% of adjusted total revenue.
  • Loan yields, excluding accretion income, increased 11 basis points to 4.42%.
  • The cost of total deposits rose 4 basis points to 0.40% in the fourth quarter of 2018 while the cost of total interest-bearing deposits rose 7 basis points to 0.56%.

CREDIT QUALITY
Strong credit quality remains a hallmark of the Old National franchise, with larger quarterly provision driven mostly by two specific reserves.

  • Asset quality remained strong with net charge-offs in the fourth quarter of $0.6 million, or 0.02% of total average loans, and 30-89 day delinquencies of 0.39%.
  • Provision expense for the fourth quarter was $3.4 million, driven primarily by two specific reserves.
  • Non-performing loans as a percentage of total loans was 1.43%. 
  • In accordance with current accounting practices, the loans acquired from recent acquisitions were recorded at fair value with no allowance recorded at the acquisition date.  As of December 31, 2018, the remaining discount on these acquired loans was $121.3 million.
  • The allowance for loan losses was $55.5 million, or 0.45% of total loans at December 31, 2018.

NONINTEREST INCOME
Noninterest income included a gain on sale of Wisconsin branches and demonstrated normal seasonal patterns in several fee income businesses.

  • Total noninterest income for the fourth quarter of 2018 was $58.2 million, an increase of $12.2 million from the third quarter of 2018.
  • Included in noninterest income in the fourth quarter was a net gain of $14.0 million from the sale of 10 Wisconsin branches.
  • Klein contributed $2.8 million to noninterest income during the quarter (for the two months since the closing of the partnership), which was offset by lower capital markets income (down $1.9 million) and the normal seasonal decline in mortgage banking revenue.
  • Securities losses were $0.4 million, compared to securities gains of $0.1 million in the third quarter of 2018.

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

  • Noninterest expense for the fourth quarter of 2018 was $150.3 million and included $14.8 million in merger and integration charges, $7.5 million in ONB Foundation funding and $1.1 million in tax credit amortization.
  • Excluding these items, adjusted noninterest expense for the fourth quarter was $126.9 million, compared to the $108.4 million in adjusted noninterest expense in the third quarter of 2018. 
  • Klein noninterest expenses were $7.4 million during the fourth quarter (for the two months since the closing of the partnership).
  • The fourth quarter of 2018 also included $7.6 million in incentive compensation true-ups and benefit adjustments, which is included in adjusted noninterest expense defined above.
  • The fourth quarter efficiency ratio was 70.33%, while the adjusted efficiency ratio was 63.31%.
  • For the full year 2018, the efficiency ratio was 67.74%, while the adjusted efficiency ratio was 61.56%.
  • Adjusted operating leverage1 was +215 basis points in for the full-year 2018 as compared to 2017.

INCOME TAXES

  • On a fully taxable-equivalent basis, income tax expense in the fourth quarter was $6.3 million, resulting in a 11.7% FTE tax rate.

CAPITAL
Strong quarterly earnings drove capital ratios higher.

  • At the end of the fourth quarter, total risk-based capital was 12.3% and regulatory tier 1 capital was 11.4%.
  • Tangible common equity to tangible assets was 8.47% at the end of the fourth quarter compared to 8.08% in the third quarter of 2018.

NON-GAAP RECONCILIATIONS

 ($ in millions, except EPS, shares in 000s) 4Q18 Adjustments 4 Adjusted 4Q18
 Total Revenues (FTE) $ 207.5   $ (13.6 ) $ 193.9  
 Less: Provision for Loan Losses   (3.4 )   -     (3.4 )
 Less: Noninterest Expenses   (150.3 )   22.3     (128.0 )
 Income before Income Taxes (FTE) $ 53.8   $ 8.7   $ 62.5  
 Income Taxes   (6.3 )   (2.1 )   (8.4 )
 Net Income $ 47.5   $ 6.6   $ 54.1  
 Average Shares Outstanding   167,992     -     167,992  
 Earnings Per Share $ 0.28   $ 0.04   $ 0.32  

          4 Tax-effect calculations use the 2018 statutory FTE tax rates (federal + state)

 ($ in millions, except EPS, shares in 000s)   2018   Adjustments 4 Adjusted 2018
 Total Revenues (FTE) $ 744.3   $ (18.7 ) $ 725.6  
 Less: Provision for Loan Losses   (7.0 )   -     (7.0 )
 Less: Noninterest Expenses   (517.3 )   33.3     (484.0 )
 Income before Income Taxes (FTE) $ 220.0   $ 14.6   $ 234.6  
 Income Taxes   (29.2 )   (3.6 )   (32.8 )
 Net Income $ 190.8   $ 11.0   $ 201.8  
 Average Shares Outstanding   156,539     -     156,539  
 Earnings Per Share $ 1.22   $ 0.07   $ 1.29  

      4 Tax-effect calculations use the 2018 statutory FTE tax rates (federal + state)

 ($ in millions) 4Q18 3Q18
 Net Interest Income $ 146.2   $ 130.8  
 FTE Adjustment   3.1     2.8  
 Net Interest Income (FTE) $ 149.3   $ 133.6  
 Average Earning Assets $ 16,398.3   $ 15,213.4  
 Net Interest Margin (FTE)   3.64 %   3.51 %


 ($ in millions) 4Q18 3Q18
 Net Interest Income $ 146.2   $ 130.8  
 FTE Adjustment   3.1     2.8  
 Net Interest Income (FTE) $ 149.3   $ 133.6  
 Total Noninterest Income $ 58.2   $ 46.0  
 Noninterest Expense   150.3     119.4  
 Pre-Provision Net Revenue $ 57.2   $ 60.2  
 Less: Securities Gains/Losses   0.4     (0.1 )
 Less: Gain on Branch Actions   (14.0 )   (0.2 )
 Add: Merger and Integration Charges   14.8     1.7  
 Add: Branch Action Charges and Severance   -     0.1  
 Add: ONB Foundation Funding   7.5     -  
 Add: Amortization of Tax Credit Investments   1.1     9.2  
 Adjusted Pre-Provision Net Revenue $ 67.0   $ 70.9  


 ($ in millions) 4Q18 3Q18 4Q17   2018     2017  
 Noninterest Expense $ 150.3   $ 119.4   $ 140.4   $ 517.3   $ 448.8  
 Less: Merger and Integration Charges   (14.8 )   (1.7 )   (11.9 )   (21.3 )   (12.3 )
 Less: Branch Action Charges, Severance, ONB
 Foundation Funding and Client Experience
 Initiative Charges
 
(7.5


)
 
(0.1
)    
(6.6
)   (12.0 )   (14.0 )
 Noninterest Expense less Charges $ 128.0   $ 117.6   $ 121.9   $ 484.0   $ 422.5  
 Less: Amortization of Tax Credit Investments   (1.1 )   (9.2 )   (11.7 )   (22.9 )   (11.7 )
 Adjusted Noninterest Expense $ 126.9   $ 108.4   $ 110.2   $ 461.1   $ 410.8  
 Less: Intangible Amortization   (4.1 )   (3.3 )   (3.4 )   (14.4 )   (11.8 )
 Adjusted Noninterest Expense Less Intangible
 Amortization
$ 122.8   $ 105.1   $ 106.8   $ 446.7  
$
399.0  
 Net Interest Income $ 146.2   $ 130.8   $ 118.6   $ 537.5   $ 437.2  
 FTE Adjustment   3.1     2.8     6.1     11.5     23.1  
 Net Interest Income (FTE) $ 149.3   $ 133.6   $ 124.7   $ 549.0   $ 460.3  
 Total Noninterest Income $ 58.2   $ 46.0   $ 44.8   $ 195.3   $ 183.3  
 Total Revenue (FTE) $ 207.5   $ 179.6   $ 169.5   $ 744.3   $ 643.6  
 Less: Securities Gains/Losses   0.4     (0.1 )   (1.6 )   (2.0 )   (9.1 )
 Less: Gain on Student Loan Sale   -     -     -     (2.2 )   -  
 Less: Gain on Branch Actions   (14.0 )   (0.2 )   -     (14.5 )   (0.2 )
 Adjusted Total Revenue (FTE) $ 193.9   $ 179.3   $ 167.9   $ 725.6   $ 634.3  
 Efficiency Ratio   70.33 %   64.71 %   81.60 %   67.74 %   68.87 %
 Adjusted Efficiency Ratio   63.31 %   58.67 %   63.58 %   61.56 %   62.90 %
           
 Operating Leverage5 (basis points)   1,536         40    
 Adjusted Operating Leverage6 (basis points)   30         215    

                                  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) 4Q18 3Q18
 Net Income (Loss) $ 47.5   $ 51.3  
 Add: Intangible Amortization (net of tax7)   3.3     2.6  
 Tangible Net Income (Loss) $ 50.8   $ 53.9  
 Less: Securities Gains/Losses (net of tax7)   0.3     (0.1 )
 Less: Gain on Branch Sale (net of tax7)   (10.6 )   -  
 Add: Merger & Integration Charges (net of tax7)   11.2     1.3  
 Add: Branch Action Charges (net of gains) and Severance
 (net of tax7)
  -     (0.1
)
 Add: ONB Foundation Funding (net of tax7)   5.7     -  
 Adjusted Tangible Net Income (Loss) $ 57.4   $ 55.0  
 Average Total Shareholders’ Equity $ 2,503.8   $ 2,212.7  
 Less: Average Goodwill   (969.4 )   (828.8 )
 Less: Average Intangibles   (66.9 )   (43.7 )
 Average Tangible Shareholders’ Equity $ 1,467.5   $ 1,340.2  
 Return on Average Tangible Common Equity   13.84 %   16.10 %
 Adjusted Return on Average Tangible Common Equity   15.62 %   16.42 %

         7 Tax-effect calculations use the 2018 statutory FTE tax rates (federal + state)

CONFERENCE CALL AND WEBCAST

Old National will host a conference call and live webcast at 7:00 a.m. Central Time on Tuesday, January 22, 2019, to review fourth-quarter and full-year 2018 financial results.  The live audio web cast of the call, along with the corresponding presentation slides, will be available on the Company’s Investor Relations web page at oldnational.com and will be archived there for 12 months.  A replay of the call will also be available from 10:00 a.m. Central Time on January 22 through February 5.  To access the replay, dial 1-855-859-2056, Conference ID Code 5499497.

ABOUT OLD NATIONAL
Old National Bancorp (NASDAQ: ONB) is the holding company of Old National Bank. Headquartered in Evansville with $19.7 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 seven consecutive years. For nearly 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: expected cost savings, synergies and other financial benefits from the merger with Klein that might not be realized within the expected timeframes and costs or difficulties relating to integration matters might be greater than expected; 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; 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.

               
Financial Highlights (unaudited)  
($ and shares in thousands, except per share data)  
               
  Three Months Ended    Twelve Months Ended 
  December 31, September 30, December 31,   December 31, December 31,  
    2018     2018     2017       2018     2017    
Income Statement              
Net interest income $   146,225   $   130,842   $   118,556     $   537,602   $   437,168    
Provision for loan losses   3,390     750     1,037       6,966     3,050    
Noninterest income   58,154     45,957     44,825       195,305     183,382    
Noninterest expense     150,268       119,376       140,432         517,261       448,836    
Net income (loss)   47,498     51,348     (18,493 )     190,830     95,725    
               
               
Per Common Share Data (Diluted)              
Net income (loss) available to common shareholders $   0.28   $   0.34   $   (0.13 )   $   1.22   $   0.69    
Average diluted shares outstanding   167,992     152,784     146,875       156,539     138,513    
Book value   15.36     14.58     14.17       15.36     14.17    
Stock price   15.40     19.30     17.45       15.40     17.45    
Dividend payout ratio   46 %   38 % N/M     42 %   75 %  
Tangible common book value (1)     9.00       8.86       8.37         9.00       8.37    
               
               
Performance Ratios              
Return on average assets   1.01 %   1.18 %   -0.45 %     1.07 %   0.63 %  
Return on average common equity   7.59 %   9.28 %   -3.51 %     8.42 %   4.98 %  
Return on average tangible common equity (1)   13.84 %   16.10 %   -5.05 %     14.97 %   8.59 %  
Net interest margin (FTE)   3.64 %   3.51 %   3.47 %     3.54 %   3.48 %  
Efficiency ratio (2)   70.33 %   64.71 %   81.60 %     67.74 %   68.87 %  
Net charge-offs (recoveries) to average loans   0.02 %   0.06 %   0.03 %     0.02 %   0.03 %  
Allowance for loan losses to ending loans   0.45 %   0.47 %   0.45 %     0.45 %   0.45 %  
Non-performing loans to ending loans   1.43 %   1.47 %   1.30 %     1.43 %   1.30 %  
               
               
Balance Sheet              
Total loans $   12,243,892   $   11,292,659   $   11,118,121     $   12,243,892   $   11,118,121    
Total assets   19,728,435     17,567,759     17,518,292       19,728,435     17,518,292    
Total deposits   14,349,949     12,598,200     12,605,764       14,349,949     12,605,764    
Total borrowed funds   2,493,793     2,576,039     2,578,204       2,493,793     2,578,204    
Total shareholders' equity   2,689,570     2,220,680     2,154,397       2,689,570     2,154,397    
               
               
Capital Ratios (1)              
Risk-based capital ratios (EOP):              
  Tier 1 common equity   11.4 %   11.1 %   10.5 %     11.4 %   10.5 %  
  Tier 1   11.4 %   11.1 %   10.4 %     11.4 %   10.4 %  
  Total   12.3 %   12.1 %   11.4 %     12.3 %   11.4 %  
Leverage ratio (to average assets)   9.2 %   8.6 %   8.3 %     9.2 %   8.3 %  
               
Total equity to assets (averages)   13.28 %   12.69 %   12.69 %     12.74 %   12.57 %  
Tangible common equity to tangible assets   8.47 %   8.08 %   7.65 %     8.47 %   7.65 %  
               
               
Nonfinancial Data              
Full-time equivalent employees    2,892     2,554     2,801       2,892     2,801    
Number of branches   191     182     191       191     191    
               
(1) See "Non-GAAP Measures" table.              
(2) Efficiency ratio is defined as noninterest expense before amortization of intangibles as a percent of FTE net interest income and   
  noninterest revenues, excluding net gains from securities transactions.  This presentation excludes amortization of intangibles  
  and net 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       N/M - Not meaningful    
               


               
  Income Statement (unaudited)
 ($ and shares in thousands, except per share data) 
               
  Three Months Ended    Twelve Months Ended   
  December 31, September 30, December 31,   December 31, December 31,  
    2018   2018   2017     2018 2017  
Interest income $   175,234   $   155,369 $   135,134     $   632,045 $   495,336  
Less:  interest expense   29,009     24,527   16,578         94,443   58,168  
  Net interest income   146,225     130,842   118,556         537,602   437,168  
Provision for loan losses   3,390     750   1,037         6,966   3,050  
  Net interest income after provision for loan losses   142,835     130,092   117,519         530,636   434,118  
               
Wealth management fees   9,069     9,022   9,801         36,863   37,316  
Service charges on deposit accounts   11,474     11,028   10,913         44,026   41,331  
Debit card and ATM fees   5,565     4,706   4,756         20,216   17,676  
Mortgage banking revenue   3,928     4,348   3,933         17,657   18,449  
Investment product fees   5,369     5,073   5,791         20,539   20,977  
Capital markets income   840     2,700   923         4,934   6,544  
Company-owned life insurance   2,591     2,958   2,366         10,584   8,654  
Other income   5,700     5,986   4,676         24,402   23,083  
Net gain on branch divestitures   13,989       -      -          13,989     -   
Gains (losses) on sales of securities   (357 )   135   1,588         2,060   9,135  
Gains (losses) on derivatives   (14 )   1   78         35   217  
  Total noninterest income   58,154     45,957   44,825         195,305   183,382  
               
Salaries and employee benefits   87,346     63,158   74,785         281,275   246,738  
Occupancy   13,210     12,578   12,168         51,941   46,511  
Equipment   3,916     3,652   3,498         14,861   13,560  
Marketing   4,782     3,406   3,803         15,847   13,172  
Data processing    9,418     8,628   8,776         36,170   32,306  
Communication   2,537     2,473   2,419         10,846   9,284  
Professional fees   5,615     3,235   5,523         14,503   16,840  
Loan expenses   1,877     1,564   1,730         7,028   6,596  
Supplies   705     707   686         3,037   2,406  
FDIC assessment   2,110     2,722   2,666         10,638   9,480  
Other real estate owned expense   176     157   741         878   3,376  
Amortization of intangibles   4,134     3,283   3,399         14,442   11,841  
Amortization of tax credit investments   1,142       9,233     11,733         22,949     11,733  
Other expense     13,300       4,580     8,505         32,846     24,993  
  Total noninterest expense     150,268       119,376     140,432         517,261     448,836  
               
  Income before income taxes     50,721       56,673     21,912         208,680     168,664  
  Income tax expense   3,223     5,325   40,405         17,850     72,939  
  Net income (loss) $   47,498   $   51,348 $   (18,493 )   $   190,830 $   95,725  
               
Diluted Earnings Per Share                
Net income (loss) $   0.28   $   0.34 $   (0.13 )   $   1.22 $   0.69  
               
Average Common Shares Outstanding              
  Basic     167,044       151,930     146,073         155,675     137,821  
  Diluted     167,992       152,784     146,875         156,539     138,513  
               
Common shares outstanding at end of period     175,141       152,352     152,040         175,141     152,040  
               
               


   
Balance Sheet (unaudited)  
($ in thousands)  
               
  December 31,   September 30,   December 31,    
    2018       2018       2017      
Assets              
Federal Reserve Bank account $   26,182     $   65,878     $   54,361      
Money market investments     6,980         5,859         13,318      
Investments:              
Treasury and government-sponsored agencies     707,438         690,709         669,838      
Mortgage-backed securities     2,336,415         1,640,254         1,674,584      
States and political subdivisions     1,245,657         1,099,535         1,207,353      
Other securities     488,802         496,199         453,765      
To tal investments     4,778,312         3,926,697         4,005,540      
Loans held for sale, at fair value     14,911         21,384         17,930      
Loans:              
Commercial     3,232,970         2,949,277         2,717,269      
Commercial and agriculture real estate     4,958,851         4,481,554         4,354,552      
Consumer:               
Home equity     589,322         498,325         507,507      
Other consumer loans     1,214,345         1,197,300         1,371,740      
Subtotal of commercial and consumer loans     9,995,488         9,126,456         8,951,068      
Residential real estate     2,248,404         2,166,203         2,167,053      
To tal loans     12,243,892         11,292,659         11,118,121      
Total earning assets     17,070,277         15,312,477         15,209,270      
               
Allowance for loan losses     (55,461 )       (52,713 )       (50,381 )    
Non-earning Assets:              
Cash and due from banks     284,003         215,024         222,753      
Premises and equipment, net     485,912         450,253         458,074      
Goodwill and other intangible assets     1,113,274         870,938         881,147      
Company-owned life insurance     444,224         405,245         403,753      
Net deferred tax assets     87,048         94,667         110,857      
Loan servicing rights     24,497         24,336         24,661      
Other real estate owned and repossessed personal property     3,232         3,563         8,810      
Other assets      271,429         243,969         249,348      
Total non-earning assets     2,713,619         2,307,995         2,359,403      
To tal assets $   19,728,435     $   17,567,759     $   17,518,292      
               
Liabilities and Equity              
Noninterest-bearing demand deposits $   3,965,380     $   3,588,370     $   3,680,807      
Interest-bearing:              
Checking and NOW accounts     3,788,339         3,011,544         3,115,822      
Savings accounts     2,944,092         2,920,712         3,035,622      
Money market accounts     1,627,882         1,185,439         1,139,077      
Other time deposits     1,845,149         1,667,055         1,470,118      
Total core deposits     14,170,842         12,373,120         12,441,446      
Brokered CD's     179,107         225,080         164,318      
Total deposits     14,349,949         12,598,200         12,605,764      
               
Federal funds purchased and interbank borrowings     270,135         450,031         335,033      
Securities sold under agreements to repurchase     362,294         319,831         384,810      
Federal Home Loan Bank advances     1,613,481         1,554,515         1,609,579      
Other borrowings     247,883         251,662         248,782      
Total borrowed funds     2,493,793         2,576,039         2,578,204      
Accrued expenses and other liabilities     195,123         172,840         179,927      
Total liabilities     17,038,865         15,347,079         15,363,895      
               
Common stock, surplus, and retained earnings     2,734,520         2,300,610         2,204,669      
Accumulated other comprehensive income (loss), net of tax     (44,950 )       (79,930 )       (50,272 )    
Total shareholders' equity     2,689,570         2,220,680         2,154,397      
Total liabilities and shareholders' equity $   19,728,435     $   17,567,759     $   17,518,292      
                   


                           
                           
Average Balance Sheet and Interest Rates (unaudited)    
($ in thousands)    
                           
                           
  Three Months Ended   Three Months Ended   Three Months Ended    
  December 31, 2018   September 30, 2018   December 31, 2017    
  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 $   39,207   $   205 2.07 %   $   35,928   $   140 1.54 %   $   54,611   $   87 0.63 %    
Investments:                          
Treasury and government-sponsored agencies     694,409       3,874 2.23 %       685,919       3,748 2.19 %       611,982       3,031 1.98 %    
Mortgage-backed securities     2,011,275       13,688 2.72 %       1,595,630       9,381 2.35 %       1,573,578       8,139 2.07 %    
States and political subdivisions     1,187,404       11,147 3.76 %       1,103,347       10,110 3.67 %       1,178,113       13,312 4.52 %    
Other securities     493,426       4,017 3.26 %       500,837       4,116 3.29 %       454,824       3,126 2.75 %    
Total investments     4,386,514       32,726 2.98 %       3,885,733       27,355 2.82 %       3,818,497       27,608 2.89 %    
Loans: (2)                          
Commercial     3,133,153       37,358 4.67 %       2,928,744       33,381 4.46 %       2,480,987       26,577 4.19 %    
Commercial and agriculture real estate     4,834,589       65,461 5.30 %       4,465,105       57,377 5.03 %       3,989,684       47,683 4.68 %    
Consumer:                          
Home equity     562,801       7,159 5.05 %       495,161       6,070 4.86 %       502,837       5,442 4.29 %    
Other consumer loans     1,203,436       11,702 3.86 %       1,215,583       11,263 3.68 %       1,371,986       12,248 3.54 %    
Subtotal commercial and consumer loans     9,733,979       121,680 4.96 %       9,104,593       108,091 4.71 %       8,345,494       91,950 4.37 %    
Residential real estate loans     2,238,588       23,672 4.23 %       2,187,130       22,536 4.12 %       2,170,900       21,628 3.99 %    
                           
Total loans     11,972,567       145,352 4.78 %       11,291,723       130,627 4.56 %       10,516,394       113,578 4.26 %    
                           
Total earning assets $   16,398,288   $   178,283 4.30 %   $   15,213,384   $   158,122 4.11 %   $   14,389,502   $   141,273 3.88 %    
                           
Less: Allowance for loan losses     (53,045 )           (53,734 )           (50,601 )        
                           
Non-earning Assets:                          
Cash and due from banks $   232,360         $   205,446         $   201,520          
Other assets     2,275,907             2,068,469             2,046,544          
                           
Total assets $   18,853,510         $   17,433,565         $   16,586,965          
                           
Interest-Bearing Liabilities:                          
Checking and NOW accounts $   3,391,630   $   2,004 0.23 %   $   3,026,289   $   1,180 0.15 %   $   2,905,440   $   714 0.10 %    
Savings accounts     2,919,900       2,225 0.30 %       2,974,147       2,119 0.28 %       3,010,761       1,324 0.17 %    
Money market accounts     1,482,022       1,922 0.51 %       1,153,906       1,254 0.43 %       994,574       394 0.16 %    
Other time deposits     1,769,243       6,519 1.46 %       1,669,039       5,780 1.37 %       1,443,050       3,203 0.88 %    
Total interest-bearing deposits     9,562,795       12,670 0.53 %       8,823,381       10,333 0.46 %       8,353,825       5,635 0.27 %    
Brokered CD's      193,455       1,024 2.10 %       178,283       856 1.90 %       154,521       489 1.26 %    
Total interest-bearing deposits and CD's     9,756,250       13,694 0.56 %       9,001,664       11,189 0.49 %       8,508,346       6,124 0.29 %    
                           
Federal funds purchased and interbank borrowings     312,730       1,938 2.46 %       238,514       1,191 1.98 %       172,838       533 1.22 %    
Securities sold under agreements to repurchase     351,392       634 0.72 %       352,998       535 0.60 %       370,095       400 0.43 %    
Federal Home Loan Bank advances      1,649,304       9,441 2.27 %       1,624,661       8,880 2.17 %       1,543,690       6,871 1.77 %    
Other borrowings      250,926       3,302 5.26 %       250,255       2,732 4.37 %       241,695       2,650 4.39 %    
Total borrowed funds     2,564,352       15,315 2.37 %       2,466,428       13,338 2.15 %       2,328,318       10,454 1.78 %    
                           
Total interest-bearing liabilities $   12,320,602   $   29,009 0.93 %   $   11,468,092   $   24,527 0.85 %   $   10,836,664   $   16,578 0.61 %    
                           
Noninterest-Bearing Liabilities                          
Demand deposits $   3,864,302         $   3,596,159         $   3,486,412          
Other liabilities     164,771             156,614             159,243          
Shareholders' equity     2,503,835             2,212,700             2,104,646          
                           
Total liabilities and shareholders' equity $   18,853,510         $   17,433,565         $   16,586,965          
                           
Net interest rate spread     3.37 %       3.26 %       3.27 %    
                           
Net interest margin (FTE)     3.64 %       3.51 %       3.47 %    
                           
FTE adjustment   $   3,049       $   2,753       $   6,139      
                           
(1) Interest income is reflected on a fully taxable equivalent basis (FTE).                      
(2) Includes loans held for sale.                          
                           


                   
Average Balance Sheet and Interest Rates (unaudited)    
($ in thousands)    
                   
                   
  Twelve Months Ended   Twelve Months Ended    
  December 31, 2018   December 31, 2017    
  Average Income (1)/ Yield/   Average Income (1)/ Yield/    
Earning Assets: Balance Expense Rate   Balance Expense Rate    
Money market and other interest-earning                  
investments $   48,240   $   630 1.31 %   $   35,584   $   258 0.72 %    
Investments:                  
Treasury and government-sponsored agencies     673,171       14,433 2.14 %       578,640       11,453 1.98 %    
Mortgage-backed securities     1,707,646       41,493 2.43 %       1,506,677       30,782 2.04 %    
States and political subdivisions     1,153,315       42,326 3.67 %       1,134,532       53,359 4.70 %    
Other securities     490,464       15,633 3.19 %       450,127       11,863 2.64 %    
Total investments     4,024,596       113,885 2.83 %       3,669,976       107,457 2.93 %    
Loans: (2)                  
Commercial     2,924,878       131,471 4.49 %       2,083,779       85,747 4.11 %    
Commercial and agriculture real estate     4,536,897       235,876 5.20 %       3,426,757       171,483 5.00 %    
Consumer:                  
Home equity     513,111       25,029 4.88 %       483,310       20,003 4.14 %    
Other consumer loans     1,258,253       46,660 3.71 %       1,392,221       48,139 3.46 %    
Subtotal commercial and consumer loans     9,233,139       439,036 4.76 %       7,386,067       325,372 4.41 %    
Residential real estate loans     2,195,078       89,888 4.09 %       2,146,279       85,340 3.98 %    
                   
Total loans     11,428,217       528,924 4.63 %       9,532,346       410,712 4.31 %    
                   
Total earning assets $   15,501,053   $   643,439 4.15 %   $   13,237,906   $   518,427 3.92 %    
                   
Less: Allowance for loan losses     (52,316 )           (50,845 )        
                   
Non-earning Assets:                  
Cash and due from banks $   210,716         $   207,677          
Other assets     2,130,588             1,907,963          
                   
T otal assets $   17,790,041         $   15,302,701          
                   
Interest-Bearing Liabilities:                  
Checking and NOW accounts $   3,146,309   $   4,973 0.16 %   $   2,676,760   $   2,224 0.08 %    
Savings accounts     2,995,484       7,464 0.25 %       2,964,875       4,980 0.17 %    
Money market accounts     1,225,220       4,424 0.36 %       762,540       831 0.11 %    
Other time deposits     1,654,548       21,012 1.27 %       1,363,529       10,907 0.80 %    
Total interest-bearing deposits     9,021,561       37,873 0.42 %       7,767,704       18,942 0.24 %    
Brokered CD's      185,426       3,404 1.84 %       123,548       1,414 1.14 %    
Total interest-bearing deposits and CD's     9,206,987       41,277 0.45 %       7,891,252       20,356 0.26 %    
                   
Federal funds purchased and interbank borrowings     238,408       4,793 2.01 %       187,426       1,966 1.05 %    
Securities sold under agreements to repurchase     344,964       1,962 0.57 %       336,539       1,270 0.38 %    
Federal Home Loan Bank advances      1,665,689       34,925 2.10 %       1,481,314       24,818 1.68 %    
Other borrowings      249,832       11,486 4.60 %       224,793       9,758 4.34 %    
Total borrowed funds     2,498,893       53,166 2.13 %       2,230,072       37,812 1.70 %    
                   
T otal interest-bearing liabilities $   11,705,880   $   94,443 0.81 %   $   10,121,324   $   58,168 0.57 %    
                   
Noninterest-Bearing Liabilities                  
Demand deposits $   3,657,234         $   3,111,672          
Other liabilities     159,600             146,060          
Shareholders' equity     2,267,327             1,923,645          
                   
Total liabilities and shareholders' equity $   17,790,041         $   15,302,701          
                   
Net interest rate spread     3.34 %       3.35 %    
                   
Net interest margin (FTE)     3.54 %       3.48 %    
                   
FTE adjustment   $   11,394       $   23,091      
                   
(1) Interest income is reflected on a fully taxable equivalent basis (FTE).                
(2) Includes loans held for sale.                  
                   


               
Asset Quality (EOP) (unaudited)  
($ in thousands)  
               
  Three Months Ended   Twelve Months Ended  
  December 31, September 30, December 31,   December 31, December 31,  
    2018     2018     2017       2018     2017    
               
Beginning allowance for loan losses $   52,713   $   53,660   $   50,169     $   50,381   $   49,808    
               
Provision for loan losses     3,390       750       1,037         6,966       3,050    
               
Gross charge-offs     (2,969 )     (4,261 )     (3,278 )       (12,969 )     (12,717 )  
Gross recoveries     2,327       2,564       2,453         11,083       10,240    
Net (charge-offs) recoveries     (642 )     (1,697 )     (825 )       (1,886 )     (2,477 )  
               
Ending allowance for loan losses $   55,461   $   52,713   $   50,381     $   55,461   $   50,381    
               
Net charge-offs (recoveries) / average loans (1)   0.02 %   0.06 %   0.03 %     0.02 %   0.03 %  
               
Average loans outstanding (1) $   11,967,241   $   11,284,531   $   10,509,552     $   11,422,967   $   9,525,888    
               
EOP loans outstanding (1)     12,243,892   $   11,292,659   $   11,118,121     $   12,243,892   $   11,118,121    
               
Allowance for loan losses / EOP loans (1)   0.45 %   0.47 %   0.45 %     0.45 %   0.45 %  
               
Underperforming Assets:              
Loans 90 Days and over (still accruing) $   1,353   $   980   $   894     $   1,353   $   894    
               
Non-performing loans:              
Nonaccrual loans (2)     157,484       148,816       124,927         157,484       124,927    
Renegotiated loans     17,356       17,547       19,589         17,356       19,589    
Total non-performing loans     174,840       166,363       144,516         174,840       144,516    
               
Foreclosed properties     3,232       3,563       8,810         3,232       8,810    
               
Total underperforming assets $   179,425   $   170,906   $   154,220     $   179,425   $   154,220    
               
Classified and Criticized Assets:              
Nonaccrual loans (2)     157,484       148,816       124,927         157,484       124,927    
Substandard accruing loans     175,948       107,257       100,762         175,948       100,762    
Loans 90 days and over (still accruing)     1,353       980       894         1,353       894    
Total classified loans - "problem loans" $   334,785   $   257,053   $   226,583     $   334,785   $   226,583    
               
Other classified assets     2,820       3,070       4,556         2,820       4,556    
Criticized loans - "special mention loans"     238,752       181,165       188,085         238,752       188,085    
               
Total classified and criticized assets $   576,357   $   441,288   $   419,224     $   576,357   $   419,224    
               
Non-performing loans / EOP loans (1)   1.43 %   1.47 %   1.30 %     1.43 %   1.30 %  
               
Allowance to non-performing loans (3)   32 %   32 %   35 %     32 %   35 %  
               
Under-performing assets / EOP loans (1)   1.47 %   1.51 %   1.39 %     1.47 %   1.39 %  
               
EOP total assets $   19,728,435   $   17,567,759   $   17,518,292     $   19,728,435   $   17,518,292    
               
Under-performing assets / EOP assets   0.91 %   0.97 %   0.88 %     0.91 %   0.88 %  
               
 EOP - End of period actual balances               
 (1) Excludes loans held for sale.               
 (2) Includes renegotiated loans totaling $26.3 million at December 31, 2018, $29.9 million at September 30, 2018, and $34.0 million   
  at December 31, 2017.               
 (3) Includes acquired loans that were recorded at fair value in accordance with ASC 805 at the date of acquisition.  As such, the   
  credit risk was incorporated in the fair value recorded and no allowance for loan losses was recorded on the acquisition date.   
               
               


               
Non-GAAP Measures (unaudited)  
($ in thousands)  
               
  Three Months Ended    Twelve Months Ended   
  December 31, September 30, December 31,   December 31, December 31,  
    2018     2018     2017       2018     2017    
               
Actual End of Period Balances              
GAAP shareholders' equity  $   2,689,570   $   2,220,680   $   2,154,397     $   2,689,570   $   2,154,397    
               
Deduct:              
Goodwill      1,036,258       828,804       828,051         1,036,258       828,051    
Intangibles      77,016       42,134       53,096         77,016       53,096    
      1,113,274       870,938       881,147         1,113,274       881,147    
               
Tangible shareholders' equity   $   1,576,296   $   1,349,742   $   1,273,250     $   1,576,296   $   1,273,250    
               
Average Balances              
GAAP shareholders' equity  $   2,503,835   $   2,212,700   $   2,104,646     $   2,267,327   $   1,923,645    
               
Deduct:              
Goodwill      969,403       828,804       776,862         864,079       685,729    
Intangibles      66,927       43,685       37,802         52,209       34,392    
      1,036,330       872,489       814,664         916,288       720,121    
               
Average tangible shareholders' equity   $   1,467,505   $   1,340,211   $   1,289,982     $   1,351,039   $   1,203,524    
               
Actual End of Period Balances              
GAAP assets  $   19,728,435   $   17,567,759   $   17,518,292     $   19,728,435   $   17,518,292    
               
Add:              
Trust overdrafts     11       118       59         11       59    
               
Deduct:              
Goodwill      1,036,258       828,804       828,051         1,036,258       828,051    
Intangibles      77,016       42,134       53,096         77,016       53,096    
      1,113,274       870,938       881,147         1,113,274       881,147    
               
Tangible assets   $   18,615,172   $   16,696,939   $   16,637,204     $   18,615,172   $   16,637,204    
               
Risk-weighted assets $   14,248,562   $   12,715,665   $   12,491,430     $   14,248,562   $   12,491,430    
               
GAAP net income (loss) $   47,498   $   51,348   $   (18,493 )   $   190,830   $   95,725    
               
Add:              
Amortization of intangibles (net of tax)     3,266       2,593       2,210         11,410       7,697    
               
Tangible net income (loss) $   50,764   $   53,941   $   (16,283 )   $   202,240   $   103,422    
               
Tangible Ratios              
Return on tangible common equity   12.88 %   15.99 %   -5.12 %     12.83 %   8.12 %  
Return on average tangible common equity   13.84 %   16.10 %   -5.05 %     14.97 %   8.59 %  
Return on tangible assets    1.09 %   1.29 %   -0.39 %     1.09 %   0.62 %  
Tangible common equity to tangible assets    8.47 %   8.08 %   7.65 %     8.47 %   7.65 %  
Tangible common equity to risk-weighted assets    11.06 %   10.61 %   10.19 %     11.06 %   10.19 %  
Tangible common book value (1)     9.00       8.86       8.37         9.00       8.37    
               
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 $   1,617,936   $   1,409,775   $   1,298,327     $   1,617,936   $   1,298,327    
               
Deduct:              
Tier 1 capital adjustments     -        -        (10,000 )       -        (10,000 )  
      -        -        (10,000 )       -        (10,000 )  
               
Tier 1 common equity   $   1,617,936   $   1,409,775   $   1,308,327     $   1,617,936   $   1,308,327    
               
Risk-weighted assets     14,248,562       12,715,665       12,491,430         14,248,562       12,491,430    
               
Tier 1 common equity to risk-weighted assets     11.36 %   11.09 %   10.47 %     11.36 %   10.47 %  
               
               

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

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