Community Bank System, Inc. (NYSE: CBU) reported second quarter 2020 net income of $35.2 million, or $0.66 per fully-diluted share. This compares to $45.0 million of net income, or $0.86 per share for the second quarter of 2019. The $0.20 decrease in earnings per share was driven by an increase in acquisition-related expenses, a higher provision for credit losses, lower noninterest revenues and an increase in fully-diluted shares outstanding. These were offset, in part, by an increase in net interest income and a decrease in income taxes. Comparatively, the Company recorded $0.76 in fully-diluted earnings per share for the linked first quarter of 2020. Operating earnings per share (non-GAAP), which excludes, on an after-tax basis, acquisition expenses, net gain on sale of investments, and the provision for credit losses associated with the Steuben Trust Corporation (“Steuben”) acquisition, were $0.76 for the second quarter of 2020. This compares to operating earnings per share (non-GAAP) of $0.80 for the second quarter of 2019 and $0.77 for the linked first quarter of 2020.
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Second Quarter 2020 Highlights:
- Completed the acquisition of Steuben Trust Corporation
- GAAP EPS of $0.66; Operating EPS (non-GAAP) of $0.76, down $0.04 from the second quarter of 2019
- Adjusted Pre-Tax, Pre-Provision Net Revenue per share (non-GAAP) up $0.05 over the second quarter of 2019 and up $0.03 over the linked first quarter of 2020
- Return on assets of 1.12%; Return on assets – adjusted (non-GAAP) of 1.34%
- Deposit funding costs of 0.17%, down 8 basis points from 0.25% in the first quarter of 2020
- Annualized net charge-offs of 0.05%
- Noninterest revenues represent 36.6% of operating revenues
“In spite of the immense challenges posed by the COVID-19 pandemic and related market conditions, the Company’s second quarter was very productive,” said Mark Tryniski, President and CEO. “During the quarter, the Company successfully completed the acquisition of Steuben, funded approximately $500 million of Paycheck Protection Program (“PPP”) loans, processed over 5,000 borrower forbearance requests, reopened the majority of its branch offices to the public, implemented several phases of the Company’s return to work plan, enhanced its mobile banking platform and produced solid earnings. Although GAAP earnings per share were down $0.20, as compared to the same quarter in the prior year, operating earnings per share which excludes acquisition-related expenses and acquisition-related provision for credit losses due to the Steuben merger only decreased $0.04 over the same period in spite of the pandemic’s impact on market conditions, credit loss expectations and the Company’s operations. In addition, the Company booked $6.6 million in non-acquisition related provision for credit losses in the second quarter of 2020 due largely to COVID-related expected losses as compared to $1.4 million recorded during the second quarter of 2019. The Company’s adjusted pre-tax, pre-provision net revenue per share was up $0.05, or 4.9%, over the second quarter of 2019 and up $0.03, or 2.9%, on a linked quarter basis.”
Mr. Tryniski added, “As we continue to navigate the COVID-19 crisis, we believe our Company remains well-prepared to withstand its impacts. The Company continues to maintain very high levels of capital and liquidity, diversified revenue streams through its nonbanking businesses, a strong credit record and an experienced management team. Furthermore, I am very proud of the diligent efforts and steadfast commitment our employees have put forth this past quarter to maintain the Company’s operational continuity, provide high levels of customer service across all business lines and close and integrate Steuben, while producing solid operating results during very difficult times. I also would like to acknowledge the considerable effort put forth by the former Steuben employees to successfully integrate the two companies and welcome the former Steuben customers and shareholders to Community Bank. We remain concerned about the health and welfare of our employees, customers, shareholders and communities, and will continue to support all of our stakeholders throughout this crisis in a thoughtful, disciplined and compassionate manner.”
The Company recorded total revenues of $144.9 million in the second quarter of 2020, a decrease of $4.1 million, or 2.8%, from the prior year’s second quarter. Excluding net gains on securities of $4.9 million in the second quarter of 2019, total revenues increased $0.8 million, or 0.5%, between comparable quarters. A $3.7 million, or 4.1%, increase in net interest income was partially offset by a $2.8 million, or 16.5%, decrease in banking noninterest revenues. Net interest income increased $3.7 million, or 4.1%, to $92.0 million due to a $1.7 billion, or 17.8%, increase in average earning assets between the periods, offset, in part by a 43 basis point decrease in net interest margin. The increase in earning assets was driven by the third quarter 2019 acquisition of Kinderhook Bank Corp. (“Kinderhook”), larger than anticipated net inflows of funds from government stimulus programs, PPP loan originations and to a lesser extent, the Steuben acquisition in the second quarter of 2020. The 43 basis point decrease in net interest margin was driven by a 50 basis point decrease in tax-equivalent earning asset yields between the periods, partially offset by an eight basis point decrease in the cost of funds. The large drop in earning asset yields was due to a significant decrease in market interest rates between the periods and a significant change in the composition of earning assets, including a $488.7 million increase in average cash equivalents that currently earn a low yield. Total revenues were down $3.8 million, or 2.5%, on a linked quarter basis. The Company recorded a $4.3 million, or 24.7%, decrease in deposit service revenues and a $1.9 million, or 4.8%, decrease in financial services business revenues between linked quarters, offset, in part, by a $1.9 million, or 2.1%, increase in net interest income and a $0.5 million, or 50.1%, increase in mortgage banking revenues.
Interest income and fees on loans increased $4.7 million, or 6.3%, over the comparable prior year quarter due to an increase in average total loans outstanding, offset by a 33 basis point decrease in the average loan yield. The increase in average outstanding loan balances was due to the Kinderhook acquisition in the third quarter of 2019, the Steuben acquisition in the second quarter of 2020, as well as a significant increase in business lending due to $492.4 million of PPP loan originations during the quarter. Interest income on investments, including cash equivalents, decreased $1.8 million, or 8.9%, between the second quarter of 2019 and the second quarter of 2020. The decrease is reflective of lower market interest rates, a significant increase in the proportion of low-yield cash equivalents balances and a $0.8 million decrease in the Company’s Federal Reserve Bank semi-annual dividend payment, offset in part, by a $265.2 million, or 9.5%, increase in the average book value of investments. The tax-equivalent average yield on investments, including cash equivalents, decreased from 2.69% in the second quarter of 2019 to 2.00% in the second quarter of 2020. Interest expense was $0.8 million lower than the previous year’s second quarter, driven by a nine basis point decrease in the cost on interest-bearing liabilities partially offset by a $971.9 million, or 15.0% increase in average interest-bearing liabilities. The average cost of deposits was 0.17% in the second quarter of 2020, as compared to 0.22% in the second quarter of 2019, reflective of market driven rate decreases for deposits between the periods and significant increases in noninterest bearing deposits. By comparison, the average cost of deposits during the linked first quarter of 2020 was 0.25%.
The Company recorded $9.8 million in the provision for credit losses during the second quarter of 2020. This was comprised of $3.2 million of acquisition-related provision due to the Steuben transaction, and $6.6 million of provision related to expected credit losses largely due to the COVID-19 pandemic. The Company recorded loan net charge-offs of $0.9 million during the quarter. By comparison, the Company recorded $1.4 million in the provision for credit losses and $1.2 million in net charge-offs during the second quarter of 2019. The $5.2 million increase in the provision for credit losses, exclusive of the acquisition-related provision, between the periods is largely attributable to an increase in expected credit losses due to the ongoing impacts of the COVID-19 crisis. Although the ultimate effect the COVID-19 pandemic will have on the Company’s credit losses is still unknown and highly uncertain, the Company calculates the Allowance for Credit Losses pursuant to the Current Expected Credit Loss (“CECL”) accounting standard, adopted January 1, 2020, which incorporates certain current and forward-looking economic and non-economic qualitative factor adjustments to estimate losses for the life of the loan portfolio. This includes forward-looking economic forecasts, which distinctly and profoundly changed from stable at the end of 2019 to severely adverse during 2020 due primarily to the COVID-19 crisis. On a linked quarter basis, the provision for credit losses, exclusive of the acquisition-related provision, increased $1.0 million, due to weaker economic forecasts and the financial hardship experienced by certain segments of the Company’s loan customers.
The Company recorded $52.9 million in noninterest revenues in the second quarter of 2020, as compared to $55.8 million in the second quarter of 2019, excluding $4.9 million of investment securities gains. This represents a $2.9 million, or 5.2%, decrease in noninterest revenues between the periods; $2.8 million attributable to banking-related noninterest revenues. The significant decrease in banking noninterest revenues was due largely to a decrease in deposit service and other banking revenues, offset, in part, by an increase in mortgage banking revenue. Due to the pandemic and the mandated shutdown of nonessential businesses in the Company’s Northeast markets during the second quarter of 2020, deposit transaction activity dropped precipitously resulting in a decline in the Company’s deposit service revenues. Between the periods, the Company increased its commitment to sell secondary market eligible residential mortgage loans, which drove an increase in mortgage banking revenue from $0.2 million in the second quarter of 2019 to $1.4 million in the second quarter of 2020. Employee benefit services revenues for the second quarter of 2020 were $24.1 million. This represents a $0.3 million, or 1.2%, increase over second quarter 2019 revenues and is attributable to increases in plan administration, recordkeeping and actuarial service fees. The Company recorded $8.2 million in insurance services revenues during the second quarter of 2020, a $0.1 million, or 1.7%, decrease as compared to the second quarter of 2019. Wealth management revenues for the second quarter of 2020 were $6.4 million as compared to $6.6 million in the second quarter of 2019. Noninterest revenues decreased $5.7 million, or 9.7%, on a linked quarter basis. This was driven by a $4.3 million, or 24.7%, decrease in deposit service and other banking revenues, a $1.3 million, or 5.1%, decrease in employee benefits services revenues, and a $0.7 million, or 10.8%, decrease in wealth management revenues, partially offset by a $0.5 million, or 50.1%, increase in mortgage banking revenue and a $0.1 million, or 1.6%, increase in insurance services revenues.
The Company recorded $90.9 million in total operating expenses in the second quarter of 2020, as compared to $91.2 million of total operating expenses in the second quarter of 2019, a $0.3 million, or 0.3%, decrease between the comparable annual quarters. Excluding $3.4 million and $1.2 million of acquisition expenses recorded in the second quarters of 2020 and 2019, respectively, operating expenses decreased $2.5 million, or 2.7%, from $90.0 million in the second quarter of 2019 to $87.5 million in the second quarter of 2020. The decrease in operating expenses between the periods was largely attributable to decreased levels of business activities due to the COVID-19 pandemic. Business development and marketing expenses decreased $1.6 million, or 52.1%, between the periods. Other expenses decreased $2.1 million, or 33.6%, driven largely by decreases in employee business expenses. Salaries and employee benefits expenses increased $0.7 million, or 1.3%, but benefited from a $0.8 million, or 21.0%, decrease in employee medical expenses due to reduced provider utilization. Data processing and communications expenses increased $0.4 million, or 4.1%, while occupancy and equipment expense increased $0.1 million, or 1.4%, and legal and professional fees increased $0.4 million, or 14.1%, between the comparable quarterly periods. Intangible asset amortization expense decreased $0.4 million, or 9.7%, between the periods. Similarly, on a linked-quarter basis, total operating expenses, excluding acquisition expenses, decreased $5.8 million, or 6.2%, primarily due to a $3.6 million, or 6.1%, decrease in salaries and employee benefits, a $1.0 million, or 9.2%, decrease in occupancy and equipment expense and a $1.0 million, or 40.2% decrease in business development and marketing expenses.
The effective tax rate for the second quarter of 2020 was 20.3%, up from 20.2% in the second quarter of 2019 and 18.8% in the linked first quarter of 2020. The Company experienced less benefit from stock-based compensation activity in the second quarter of 2020, as compared to the same quarter last year and the first quarter of 2020.
The Company also provides supplemental reporting of its results on an “operating,” “adjusted” or “tangible” basis, from which it excludes the after-tax effect of amortization of core deposit and other intangible assets (and the related goodwill, core deposit intangible and other intangible asset balances, net of applicable deferred tax amounts), accretion on non-impaired purchased loans, expenses associated with acquisitions, acquisition-related provision for credit losses, the unrealized gain (loss) on equity securities and net gain on sale of investments. In addition, the Company provides supplemental reporting for “adjusted pre-tax, pre-provision net revenues,” which subtracts the provision for credit losses, acquisition expenses, net gain on sale of investments and unrealized gain (loss) on equity securities from income before income taxes. The amounts for such items are presented in the tables that accompany this release. Although these items are non-GAAP measures, the Company’s management believes this information helps investors understand the effect of acquisition and other non-recurring activity in its reported results. Diluted adjusted net earnings per share were $0.80 in the second quarter of 2020, compared to $0.84 in the second quarter of 2019, a $0.04 per share, or 4.8%, decrease. Adjusted pre-tax, pre-provision net revenue increased to $1.08 per share, up $0.05, or 4.9%, from the second quarter of 2019 and up $0.03, or 2.9%, on a linked quarter basis.
Financial Position
The Company’s total assets increased to $13.4 billion at June 30, 2020, which represents a $2.7 billion, or 25.1% increase over the last twelve months and a $1.6 billion, or 13.8%, increase over the prior quarter end. The substantial increase in the Company’s total assets over the last twelve months was due to the Kinderhook acquisition in the third quarter of 2019, the Steuben acquisition in the second quarter of 2020 and a significant increase in government stimulus-related deposit funding including PPP lending in the second quarter of 2020. Similarly, average earning assets increased substantially over the prior year, from $9.43 billion in the second quarter of 2019 to $11.11 billion in the second quarter of 2020, a $1.68 billion, or 17.8% increase. This included a $924.7 million, or 14.7%, increase in average total loans outstanding, a $265.2 million, or 9.5%, increase in average total investment securities and a $488.7 million, or 146.2%, increase in average outstanding cash equivalents. On a linked quarter basis, average earning assets increased $1.07 billion, or 10.6%, due largely to large net inflows of government stimulus funds, with average outstanding cash equivalents increasing $708.3 million, or 617.8%. Average loan balances increased $342.7 million, or 5.0%, due primarily to PPP originations and to a lesser extent the June 12, 2020 acquisition of Steuben. Average investment securities balances increased $17.0 million, or 0.6% versus first quarter 2020. Average deposit balances increased $1.61 billion, or 19.0%, between the second quarter of 2019 and the second quarter of 2020 and $1.1 billion, or 11.6%, on a linked quarter basis.
Ending loans at June 30, 2020 were $7.53 billion. This was up $661.9 million, or 9.6%, from the end of the first quarter and up $1.24 billion, or 19.8%, when compared to June 30, 2019. During the second quarter 2020, the Company acquired $339.7 million of loans in the Steuben transaction and originated $492.4 million of PPP loans. Exclusive of these activities, the Company’s outstanding loan balances decreased $170.2 million, or 2.5% during the quarter, due largely to a significant slow-down in consumer and business activities due the COVID-19 pandemic.
The Company’s liquidity position remains extremely strong. The Company’s primary Bank subsidiary maintains a funding base largely comprised of core noninterest bearing demand deposit accounts and low cost interest-bearing savings, interest checking and money market deposit accounts with customers that operate, reside or work within its branch footprint. At June 30, 2020, the Company’s cash and cash equivalents balances, net of float and reserves, were $1.25 billion. The Company also maintains an available-for-sale investment securities portfolio, comprised primarily of highly-liquid U.S. Treasury securities, highly-rated municipal securities and U.S. agency-backed mortgage backed securities. At June 30, 2020, the Company’s available-for-sale investment securities portfolio totaled $3.29 billion, $1.62 billion of which was unpledged as collateral. Net unrealized gains on the portfolio were $163.1 million. The Bank’s unused borrowing capacity at the Federal Home Loan Bank of New York at June 30, 2020 was $1.80 billion and it maintained $259.8 million of availability at the Federal Reserve Bank’s discount window. Furthermore, the Company has not experienced significant draws on available working capital lines of credit and home equity lines of credit since the inception of the pandemic.
Although there is a high degree of uncertainty around the magnitude and duration of the economic impact of the COVID-19 pandemic, the Company’s management believes that its financial position, including high levels of capital, will allow it to successfully endure the negative economic impacts of the crisis. The Company’s capital planning and management activities, coupled with its historically strong earnings performance and prudent dividend practices, have allowed it to build and maintain strong capital reserves. Shareholders’ equity of $2.08 billion at June 30, 2020 was $104.7 million, or 5.3%, higher than the first quarter of 2020 and $271.8 million, or 15.0%, higher than June 30, 2019. The increase in shareholders’ equity over the last four quarters was primarily driven by solid earnings generation and capital retention, as well as the Steuben acquisition and an increase in accumulated other comprehensive income due primarily to an increase in net unrealized gains on the Company’s available-for-sale investment securities portfolio. At June 30, 2020, all of the Company’s regulatory capital ratios significantly exceeded well-capitalized standards. More specifically, the Company’s Tier 1 Leverage Ratio, a common measure to evaluate a financial institutions capital strength, was 10.79% at June 30, 2020, which represents over two times the regulatory well-capitalized standard of 5.0%. This compares to 11.54% at the end of the second quarter of 2019 and 11.10% at the end of the first quarter of 2020. The Company’s net tangible equity to net tangible assets ratio was 10.08% at June 30, 2020, down from 10.56% a year earlier and 10.78% at the end of the first quarter of 2020. The decrease in the net tangible equity to net tangible assets ratio and the Tier 1 leverage ratio was due to significant growth in total assets between the comparable periods.
As previously announced in December 2019, the Company’s Board of Directors approved a stock repurchase program authorizing the repurchase of up to 2.6 million shares of the Company’s common stock during a twelve-month period starting January 1, 2020. Such repurchases may be made at the discretion of the Company’s senior management based on market conditions and other relevant factors and will be acquired through open market or privately negotiated transactions as permitted under Rule 10b-18 of the Securities Exchange Act of 1934 and other applicable legal requirements. There were no shares repurchased pursuant to the program in the second quarter of 2020. Although the approved stock repurchase program has not been rescinded, management does not anticipate purchasing shares through this program during the third quarter of 2020.
Allowance for Credit Losses and Asset Quality
During the first quarter of 2020, the Company adopted ASU No. 2016-13, Financial Instruments – Credit Losses, also known as Current Expected Credit Losses (“CECL”). Upon the adoption of CECL on January 1, 2020, the Company’s allowance for credit losses increased $1.4 million, from $49.9 million at December 31, 2019 to $51.3 million. Following the adoption of CECL, the Company’s Allowance for Credit Losses has increased by $13.1 million, or 25.5%, $3.6 million of which was due to the Steuben acquisition, and $9.5 million primarily due to credit loss expectations associated with COVID-19’s adverse impact on economic and business operating conditions. The table below illustrates the Company’s changes in the Allowance for Credit Losses prior to CECL adoption through the end of the second quarter.
($ in millions) |
Allowance
|
CECL
|
First
|
Allowance
|
Steuben
|
Second
|
Allowance
| ||||||||
Balance | $49.9 | +$1.4 | +$4.4 | $55.7 | $3.6 | $5.1 | $64.4 | ||||||||
% Change from
| n/a | +2.7% | +8.8% | +7.3% | +10.3% | +29.1% |
At June 30, 2020, nonperforming (90+ days past due and non-accruing) loans decreased to 0.36% of total loans outstanding. This compares to 0.39% of total loans outstanding at the end of the second quarter of 2019 and 0.46% at the end of the linked first quarter of 2020. Total delinquent loans, which includes nonperforming loans and loans thirty or more days delinquent, to total loans outstanding, were 0.72% at the end of the second quarter of 2020. This compares to 0.87% at the end of the second quarter of 2019 and 1.11% at the end of the linked first quarter of 2020. The delinquency status for loans on payment deferment due to COVID-19 financial hardship were reported at June 30, 2020 based on their delinquency status at the end of the first quarter, unless subsequent to March 31, 2020, the borrower made all required past due payments to bring the loan to current status. The Company recorded net charge-offs of $0.9 million, or 0.05% annualized, in the second quarter of 2020. This compares to net charge-offs of $1.2 million, or 0.08% annualized, in the second quarter of 2019 and $1.6 million, or 0.09%, in the linked first quarter of 2020. The allowance for credit losses to total loans was 0.86% at June 30, 2020. This compares to 0.81% at March 31, 2020 and 0.78% at June 30, 2019.
The Company has participated in both rounds of the CARES Act PPP, a specialized low-interest loan program funded by the U.S. Treasury Department and administered by the U.S. Small Business Administration. As of June 30, 2020, the Company’s business lending portfolio included 3,473 PPP loans with a total balance of $507.2 million. This includes 204 loans with a total balance of $14.8 million acquired in connection with the Steuben acquisition.
From a credit risk and lending perspective, the Company has taken actions to identify, assess and monitor its COVID-19 related credit exposures based on asset class and borrower type. No specific credit impairment has been identified within the Company’s investment securities portfolio, including the Company’s municipal securities portfolio since the onset of the pandemic. With respect to the Company’s lending activities, the Company implemented a customer forbearance program to assist both consumer and business borrowers that may be experiencing financial hardship due to COVID-19 related challenges. As of June 30, 2020, the Company had approximately 3,700 borrowers in forbearance due to COVID-19, representing approximately $700 million in outstanding loan balances, or 9.3% of total loans outstanding. Loans in forbearance status continued to accrue interest during the forbearance period unless otherwise classified as nonperforming. Consistent with industry regulatory guidance, borrowers that were otherwise current on loan payments that were granted COVID-19 related financial hardship payment deferrals will continue to be reported as current loans throughout the agreed upon deferral period. The payment deferrals granted under forbearance were deemed to be an insignificant borrower concession, and therefore, not classified as troubled-debt restructured loans during the second quarter. Borrowers that were delinquent in their payments to the Bank prior to requesting a COVID-19 related financial hardship payment deferral were reviewed on a case-by-case basis for troubled debt restructure classification and nonperforming loan status. The Company anticipates that the number and amount of COVID-19 financial hardship forbearance agreements will decrease substantially during the third quarter of 2020.
Dividend Increase
During the second quarter of 2020, the Company declared a quarterly cash dividend of $0.41 per share on its common stock, up 7.9% from the $0.38 dividend declared in the second quarter of 2019, representing an annualized yield of 2.8% based upon the $59.21 closing price of the Company’s stock on July 24, 2020. The three cent increase declared in the third quarter of 2019 marked the 27th consecutive year of dividend increases for the Company.
COVID-19 Pandemic Operations
As the COVID-19 events unfolded throughout the first half of 2020, the Company implemented various plans, strategies and protocols to protect its employees, maintain services for customers, assure the functional continuity of the Company’s operating systems, controls and processes, and mitigate financial risks posed by changing market conditions. In order to protect its employees and assure workforce continuity and operational redundancy, the Company imposed business travel restrictions, implemented quarantine and work from home protocols and physically separated, to the extent possible, the critical operations workforce that are unable to work remotely. To limit the risk of virus spread, the Company implemented drive-thru only and by appointment operating protocols for its extensive bank branch network. The Company also maintained active communications with its primary regulatory agencies and critical vendors to assure all mission-critical activities and functions are being performed in line with regulatory expectations and the Company’s service standards. Late in the second quarter, the Company implemented a return-to-work plan and currently has the majority of its employees working in a traditional office environment. In addition, it re-opened the substantial majority of its customer service facilities to the public.
The COVID-19 crisis is expected to continue to impact the Company’s financial results, as well as demand for its services and products during the remaining two quarters of 2020 and potentially beyond. The short and long-term implications of the COVID-19 crisis, and related government monetary and fiscal stimulus measures, on the Company’s future operations, revenues, earnings, allowance for credit losses, capital reserves, and liquidity are difficult to assess and remain unknown at this time.
Steuben Trust Corporation
On June 15, 2020, the Company announced that it acquired Steuben and its banking subsidiary, Steuben Trust Company, on June 12, 2020. The Company acquired Steuben for a combination of stock and cash representing total consideration valued at approximately $98.6 million. The acquisition extends the Company’s footprint into two new counties in Western New York State, and enhances the Company’s presence in four Western New York State counties in which it currently operates. In connection with the acquisition, the Company added eleven full-service offices to its branch service network and acquired total deposits of $516.3 million and total loans of $339.7 million.
Conference Call Scheduled
Company management will conduct an investor call at 11:00 a.m. (ET) today, July 27, 2020, to discuss second quarter 2020 results. The conference call can be accessed at 877-317-6789 (1-412-317-6789 if outside United States and Canada). Investors may also listen live via the Internet at: https://www.webcaster4.com/Webcast/Page/995/35311.
This earnings release, including supporting financial tables and presentation slides, is available within the press releases section of the Company's investor relations website at: http://ir.communitybanksystem.com. An archived webcast of the earnings call will be available on this site for one full year.
About Us
Community Bank System, Inc. operates more than 240 customer facilities across Upstate New York, Northeastern Pennsylvania, Vermont, and Western Massachusetts through its banking subsidiary, Community Bank, N.A. With assets of over $13 billion, the DeWitt, N.Y. headquartered company is among the country’s 125 largest banking institutions. In addition to a full range of retail, business, and municipal banking services, the Company offers comprehensive financial planning, insurance and wealth management services through its Community Bank Wealth Management Group and OneGroup NY, Inc. operating units. The Company's Benefit Plans Administrative Services, Inc. subsidiary is a leading provider of employee benefits administration, trust services, collective investment fund administration and actuarial consulting services to customers on a national scale. Community Bank System, Inc. is listed on the New York Stock Exchange and the Company's stock trades under the symbol CBU. For more information about Community Bank visit www.cbna.com or http://ir.communitybanksystem.com.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations of CBU’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. The following factors, among others, could cause the actual results of CBU’s operations to differ materially from its expectations: the macroeconomic and other challenges and uncertainties related to the COVID-19 pandemic, including the negative impacts and disruptions on public health, corporate and consumer customers, the communities CBU serves, and the domestic and global economy, including various actions taken in response by governments, central banks and others, which may have an adverse effect on CBU’s business; current and future economic and market conditions, including the effects of declines in housing prices, high unemployment rates, U.S. fiscal debt, budget and tax matters, geopolitical matters, and any slowdown in global economic growth; fiscal and monetary policies of the Federal Reserve Board; the effect of changes in the level of checking or savings account deposits on CBU’s funding costs and net interest margin; future provisions for credit losses on loans and debt securities; changes in nonperforming assets; the effect of a fall in stock market prices on CBU’s fee income businesses, including its employee benefit services, wealth management, and insurance businesses; the successful integration of operations of its acquisitions; competition; changes in legislation or regulatory requirements; and the timing for receiving regulatory approvals and completing pending transactions. For more information about factors that could cause actual results to differ materially from CBU’s expectations, refer to its reports filed with the Securities and Exchange Commission, including the discussion under “Risk Factors” in the Annual Report on Form 10-K for the year ended December 31, 2019 and Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, which have been filed with the Securities and Exchange Commission and available on its website at www.sec.gov. Further, any forward-looking statement speaks only as of the date on which it is made, and CBU undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.
Summary of Financial Data (unaudited) | ||||
(Dollars in thousands, except per share data) | ||||
Quarter Ended | Year-to-Date | |||
June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | |
Earnings | ||||
Loan income | $78,720 | $74,067 | $157,285 | $147,770 |
Investment income | 18,472 | 20,285 | 36,902 | 39,263 |
Total interest income | 97,192 | 94,352 | 194,187 | 187,033 |
Interest expense | 5,241 | 6,052 | 12,182 | 11,874 |
Net interest income | 91,951 | 88,300 | 182,005 | 175,159 |
Acquisition-related provision for credit losses | 3,201 | 0 | 3,201 | 0 |
Provision for credit losses | 6,573 | 1,400 | 12,167 | 3,822 |
Net interest income after provision for credit losses | 82,177 | 86,900 | 166,637 | 171,337 |
Deposit service and other banking fees | 12,934 | 16,930 | 30,112 | 34,129 |
Mortgage banking | 1,375 | 213 | 2,291 | 414 |
Wealth management and insurance services | 14,549 | 14,907 | 29,741 | 29,118 |
Employee benefit services | 24,068 | 23,787 | 49,434 | 47,841 |
Gain on sale of investments, net | 0 | 4,882 | 0 | 4,882 |
Unrealized gain (loss) on equity securities | 12 | (13) | (18) | 18 |
Total noninterest revenues | 52,938 | 60,706 | 111,560 | 116,402 |
Salaries and employee benefits | 54,721 | 54,008 | 112,972 | 107,387 |
Data processing and communications | 10,833 | 10,401 | 21,246 | 19,800 |
Occupancy and equipment | 9,754 | 9,619 | 20,493 | 19,907 |
Amortization of intangible assets | 3,524 | 3,904 | 7,191 | 8,034 |
Acquisition expenses | 3,372 | 1,194 | 3,741 | 1,728 |
Other | 8,699 | 12,050 | 18,923 | 22,972 |
Total operating expenses | 90,903 | 91,176 | 184,566 | 179,828 |
Income before income taxes | 44,212 | 56,430 | 93,631 | 107,911 |
Income taxes | 8,964 | 11,415 | 18,249 | 20,950 |
Net income | $35,248 | $45,015 | $75,382 | $86,961 |
Basic earnings per share | $0.67 | $0.87 | $1.44 | $1.68 |
Diluted earnings per share | $0.66 | $0.86 | $1.43 | $1.66 |
Summary of Financial Data (unaudited) | |||||||||
(Dollars in thousands, except per share data) | |||||||||
2020 | 2019 | ||||||||
2nd Qtr | 1st Qtr | 4th Qtr | 3rd Qtr | 2nd Qtr | |||||
Earnings | |||||||||
Loan income | $78,720 | $78,565 | $80,509 | $79,931 | $74,067 | ||||
Investment income | 18,472 | 18,430 | 19,538 | 18,716 | 20,285 | ||||
Total interest income | 97,192 | 96,995 | 100,047 | 98,647 | 94,352 | ||||
Interest expense | 5,241 | 6,941 | 7,307 | 7,371 | 6,052 | ||||
Net interest income | 91,951 | 90,054 | 92,740 | 91,276 | 88,300 | ||||
Acquisition-related provision for credit losses | 3,201 | 0 | 0 | 0 | 0 | ||||
Provision for credit losses | 6,573 | 5,594 | 2,857 | 1,751 | 1,400 | ||||
Net interest income after provision for credit losses | 82,177 | 84,460 | 89,883 | 89,525 | 86,900 | ||||
Deposit service and other banking fees | 12,934 | 17,178 | 17,828 | 18,003 | 16,930 | ||||
Mortgage banking | 1,375 | 916 | 247 | (138) | 213 | ||||
Wealth management and insurance services | 14,549 | 15,192 | 14,060 | 14,890 | 14,907 | ||||
Employee benefit services | 24,068 | 25,366 | 24,997 | 24,329 | 23,787 | ||||
Gain on sale of investments, net | 0 | 0 | 0 | 0 | 4,882 | ||||
Unrealized gain (loss) on equity securities | 12 | (30) | (9) | 10 | (13) | ||||
Total noninterest revenues | 52,938 | 58,622 | 57,123 | 57,094 | 60,706 | ||||
Salaries and employee benefits | 54,721 | 58,251 | 56,468 | 56,061 | 54,008 | ||||
Data processing and communications | 10,833 | 10,413 | 10,932 | 10,675 | 10,401 | ||||
Occupancy and equipment | 9,754 | 10,739 | 10,142 | 9,801 | 9,619 | ||||
Amortization of intangible assets | 3,524 | 3,667 | 3,962 | 3,960 | 3,904 | ||||
Acquisition expenses | 3,372 | 369 | 819 | 6,061 | 1,194 | ||||
Other | 8,699 | 10,224 | 12,946 | 10,371 | 12,050 | ||||
Total operating expenses | 90,903 | 93,663 | 95,269 | 96,929 | 91,176 | ||||
Income before income taxes | 44,212 | 49,419 | 51,737 | 49,690 | 56,430 | ||||
Income taxes | 8,964 | 9,285 | 8,853 | 10,472 | 11,415 | ||||
Net income | $35,248 | $40,134 | $42,884 | $39,218 | $45,015 | ||||
Basic earnings per share | $0.67 | $0.77 | $0.82 | $0.76 | $0.87 | ||||
Diluted earnings per share | $0.66 | $0.76 | $0.82 | $0.75 | $0.86 | ||||
Profitability | |||||||||
Return on assets | 1.12% | 1.41% | 1.48% | 1.39% | 1.68% | ||||
Return on equity | 7.05% | 8.49% | 9.19% | 8.53% | 10.18% | ||||
Return on tangible equity(2) | 11.60% | 14.52% | 16.08% | 14.92% | 17.74% | ||||
Noninterest revenues/operating revenues (FTE)(1) | 36.6% | 39.6% | 38.3% | 38.6% | 38.8% | ||||
Efficiency ratio | 58.1% | 60.4% | 60.7% | 58.8% | 59.8% | ||||
Components of Net Interest Margin (FTE) | |||||||||
Loan yield | 4.40% | 4.61% | 4.67% | 4.72% | 4.73% | ||||
Cash equivalents yield | 0.10% | 0.90% | 1.68% | 2.19% | 2.37% | ||||
Investment yield | 2.50% | 2.51% | 2.70% | 2.61% | 2.73% | ||||
Earning asset yield | 3.56% | 3.93% | 3.99% | 4.03% | 4.06% | ||||
Interest-bearing deposit rate | 0.23% | 0.34% | 0.36% | 0.36% | 0.30% | ||||
Borrowing rate | 1.36% | 1.70% | 1.68% | 2.06% | 1.87% | ||||
Cost of all interest-bearing funds | 0.28% | 0.40% | 0.42% | 0.43% | 0.37% | ||||
Cost of funds (includes DDA) | 0.20% | 0.30% | 0.31% | 0.32% | 0.28% | ||||
Net interest margin (FTE) | 3.37% | 3.65% | 3.71% | 3.73% | 3.80% | ||||
Fully tax-equivalent adjustment | $1,015 | $1,032 | $1,026 | $985 | $990 | ||||
Summary of Financial Data (unaudited) | |||||||||||||||||||||||||
(Dollars in thousands, except per share data) | |||||||||||||||||||||||||
2020 | 2019 | ||||||||||||||||||||||||
2nd Qtr | 1st Qtr | 4th Qtr | 3rd Qtr | 2nd Qtr | |||||||||||||||||||||
Average Balances | |||||||||||||||||||||||||
Loans | $7,219,462 | $6,876,771 | $6,857,977 | $6,735,776 | $6,294,772 | ||||||||||||||||||||
Cash equivalents | 822,992 | 114,660 | 504,858 | 665,862 | 334,304 | ||||||||||||||||||||
Taxable investment securities | 2,608,495 | 2,586,646 | 2,242,471 | 1,990,979 | 2,400,516 | ||||||||||||||||||||
Nontaxable investment securities | 454,511 | 459,340 | 434,020 | 413,437 | 397,316 | ||||||||||||||||||||
Total interest-earning assets | 11,105,460 | 10,037,417 | 10,039,326 | 9,806,054 | 9,426,908 | ||||||||||||||||||||
Total assets | 12,652,200 | 11,487,384 | 11,472,415 | 11,229,919 | 10,771,975 | ||||||||||||||||||||
Interest-bearing deposits | 7,146,301 | 6,598,131 | 6,581,979 | 6,462,143 | 6,170,832 | ||||||||||||||||||||
Borrowings | 315,934 | 329,355 | 325,139 | 290,967 | 319,505 | ||||||||||||||||||||
Total interest-bearing liabilities | 7,462,235 | 6,927,486 | 6,907,118 | 6,753,110 | 6,490,337 | ||||||||||||||||||||
Noninterest-bearing deposits | 2,964,717 | 2,458,529 | 2,519,645 | 2,458,831 | 2,326,630 | ||||||||||||||||||||
Shareholders' equity | 2,009,996 | 1,902,169 | 1,851,579 | 1,824,869 | 1,774,400 | ||||||||||||||||||||
Balance Sheet Data | |||||||||||||||||||||||||
Cash and cash equivalents | $1,319,880 | $529,336 | $205,030 | $1,014,042 | $874,836 | ||||||||||||||||||||
Investment securities | 3,337,459 | 3,185,381 | 3,088,343 | 2,481,742 | 2,402,272 | ||||||||||||||||||||
Loans: | |||||||||||||||||||||||||
Business lending | 3,455,343 | 2,789,130 | 2,775,876 | 2,779,612 | 2,395,684 | ||||||||||||||||||||
Consumer mortgage | 2,428,060 | 2,424,656 | 2,430,902 | 2,405,191 | 2,255,782 | ||||||||||||||||||||
Consumer indirect | 1,056,865 | 1,087,879 | 1,113,062 | 1,091,980 | 1,082,834 | ||||||||||||||||||||
Home equity | 418,543 | 386,583 | 386,325 | 389,029 | 371,619 | ||||||||||||||||||||
Consumer direct | 169,228 | 177,844 | 184,378 | 187,379 | 178,151 | ||||||||||||||||||||
Total loans | 7,528,039 | 6,866,092 | 6,890,543 | 6,853,191 | 6,284,070 | ||||||||||||||||||||
Allowance for credit losses | 64,437 | 55,652 | 49,911 | 49,423 | 49,310 | ||||||||||||||||||||
Intangible assets, net | 852,761 | 832,919 | 836,923 | 840,685 | 800,515 | ||||||||||||||||||||
Other assets | 470,515 | 450,907 | 439,367 | 457,060 | 433,005 | ||||||||||||||||||||
Total assets | 13,444,217 | 11,808,983 | 11,410,295 | 11,597,297 | 10,745,388 | ||||||||||||||||||||
Deposits: | |||||||||||||||||||||||||
Noninterest-bearing | 3,273,921 | 2,491,720 | 2,465,902 | 2,549,395 | 2,363,408 | ||||||||||||||||||||
Non-maturity interest-bearing | 6,600,140 | 5,899,297 | 5,592,936 | 5,672,825 | 5,356,448 | ||||||||||||||||||||
Time | 972,612 | 912,965 | 936,129 | 946,065 | 768,349 | ||||||||||||||||||||
Total deposits | 10,846,673 | 9,303,982 | 8,994,967 | 9,168,285 | 8,488,205 | ||||||||||||||||||||
Borrowings | 176,195 | 208,718 | 253,758 | 237,661 | 144,290 | ||||||||||||||||||||
Subordinated notes payable | 13,755 | 13,775 | 13,795 | 13,814 | 0 | ||||||||||||||||||||
Subordinated debt held by unconsolidated subsidiary trusts | 79,382 | 77,320 | 77,320 | 77,320 | 97,939 | ||||||||||||||||||||
Accrued interest and other liabilities | 246,897 | 228,557 | 215,221 | 259,796 | 205,444 | ||||||||||||||||||||
Total liabilities | 11,362,902 | 9,832,352 | 9,555,061 | 9,756,876 | 8,935,878 | ||||||||||||||||||||
Shareholders' equity | 2,081,315 | 1,976,631 | 1,855,234 | 1,840,421 | 1,809,510 | ||||||||||||||||||||
Total liabilities and shareholders' equity | 13,444,217 | 11,808,983 | 11,410,295 | 11,597,297 | 10,745,388 | ||||||||||||||||||||
Capital | |||||||||||||||||||||||||
Tier 1 leverage ratio | 10.79% | 11.10% | 10.80% | 10.76% | 11.54% | ||||||||||||||||||||
Tangible equity/net tangible assets(2) | 10.08% | 10.78% | 10.01% | 9.68% | 10.56% | ||||||||||||||||||||
Diluted weighted average common shares O/S | 53,017 | 52,646 | 52,522 | 52,382 | 52,356 | ||||||||||||||||||||
Period end common shares outstanding | 53,514 | 52,031 | 51,794 | 51,660 | 51,571 | ||||||||||||||||||||
Cash dividends declared per common share | $0.41 | $0.41 | $0.41 | $0.41 | $0.38 | ||||||||||||||||||||
Book value | $38.89 | $37.99 | $35.82 | $35.63 | $35.09 | ||||||||||||||||||||
Tangible book value(2) | $23.80 | $22.84 | $20.52 | $20.24 | $20.45 | ||||||||||||||||||||
Common stock price (end of period) | $57.02 | $58.80 | $70.94 | $61.69 | $65.84 | ||||||||||||||||||||
Summary of Financial Data (unaudited) | |||||||||||||||||||||||||
(Dollars in thousands, except per share data) | |||||||||||||||||||||||||
2020 | 2019 | ||||||||||||||||||||||||
2nd Qtr | 1st Qtr | 4th Qtr | 3rd Qtr | 2nd Qtr | |||||||||||||||||||||
Asset Quality | |||||||||||||||||||||||||
Nonaccrual loans | $20,697 | $19,046 | $18,835 | $23,610 | $21,413 | ||||||||||||||||||||
Accruing loans 90+ days delinquent | 6,063 | 12,736 | 5,426 | 5,064 | 3,047 | ||||||||||||||||||||
Total nonperforming loans | 26,760 | 31,782 | 24,261 | 28,674 | 24,460 | ||||||||||||||||||||
Other real estate owned (OREO) | 3,186 | 1,469 | 1,270 | 1,258 | 1,736 | ||||||||||||||||||||
Total nonperforming assets | 29,946 | 33,251 | 25,531 | 29,932 | 26,196 | ||||||||||||||||||||
Net charge-offs | 910 | 1,550 | 2,369 | 1,638 | 1,197 | ||||||||||||||||||||
Allowance for credit losses/loans outstanding | 0.86% | 0.81% | 0.72% | 0.72% | 0.78% | ||||||||||||||||||||
Nonperforming loans/loans outstanding | 0.36% | 0.46% | 0.35% | 0.42% | 0.39% | ||||||||||||||||||||
Allowance for credit losses/nonperforming loans | 241% | 175% | 206% | 172% | 202% | ||||||||||||||||||||
Net charge-offs/average loans | 0.05% | 0.09% | 0.14% | 0.10% | 0.08% | ||||||||||||||||||||
Delinquent loans/ending loans | 0.72% | 1.11% | 0.94% | 0.85% | 0.87% | ||||||||||||||||||||
Provision for credit losses/net charge-offs | 1,074% | 361% | 121% | 107% | 117% | ||||||||||||||||||||
Nonperforming assets/total assets | 0.22% | 0.28% | 0.22% | 0.26% | 0.24% | ||||||||||||||||||||
Quarterly GAAP to Non-GAAP Reconciliations | |||||||||||||||||||||||||
Income statement data | |||||||||||||||||||||||||
Pre-tax, pre-provision net revenue | |||||||||||||||||||||||||
Net income (GAAP) | $35,248 | $40,134 | $42,884 | $39,218 | $45,015 | ||||||||||||||||||||
Income taxes | 8,964 | 9,285 | 8,853 | 10,472 | 11,415 | ||||||||||||||||||||
Income before income taxes | 44,212 | 49,419 | 51,737 | 49,690 | 56,430 | ||||||||||||||||||||
Provision for credit losses | 9,774 | 5,594 | 2,857 | 1,751 | 1,400 | ||||||||||||||||||||
Pre-tax, pre-provision net revenue (non-GAAP) | 53,986 | 55,013 | 54,594 | 51,441 | 57,830 | ||||||||||||||||||||
Acquisition expenses | 3,372 | 369 | 819 | 6,061 | 1,194 | ||||||||||||||||||||
Gain on sale of investments, net | 0 | 0 | 0 | 0 | (4,882) | ||||||||||||||||||||
Unrealized (gain) loss on equity securities | (12) | 30 | 9 | (10) | 13 | ||||||||||||||||||||
Adjusted pre-tax, pre-provision net revenue (non-GAAP) | $57,346 | $55,412 | $55,422 | $57,492 | $54,155 | ||||||||||||||||||||
Pre-tax, pre-provision net revenue per share | |||||||||||||||||||||||||
Diluted earnings per share (GAAP) | $0.66 | $0.76 | $0.82 | $0.75 | $0.86 | ||||||||||||||||||||
Income taxes | 0.17 | 0.18 | 0.17 | 0.20 | 0.22 | ||||||||||||||||||||
Income before income taxes | 0.83 | 0.94 | 0.99 | 0.95 | 1.08 | ||||||||||||||||||||
Provision for credit losses | 0.19 | 0.10 | 0.06 | 0.03 | 0.03 | ||||||||||||||||||||
Pre-tax, pre-provision net revenue per share (non-GAAP) | 1.02 | 1.04 | 1.05 | 0.98 | 1.11 | ||||||||||||||||||||
Acquisition expenses | 0.06 | 0.01 | 0.01 | 0.12 | 0.02 | ||||||||||||||||||||
Gain on sale of investments, net | 0.00 | 0.00 | 0.00 | 0.00 | (0.10) | ||||||||||||||||||||
Unrealized (gain) loss on equity securities | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||||||
Adjusted pre-tax, pre-provision net revenue per share (non-GAAP) | $1.08 | $1.05 | $1.06 | $1.10 | $1.03 | ||||||||||||||||||||
Summary of Financial Data (unaudited) | |||||||||||||||||||||||||
(Dollars in thousands, except per share data) | |||||||||||||||||||||||||
2020 | 2019 | ||||||||||||||||||||||||
2nd Qtr | 1st Qtr | 4th Qtr | 3rd Qtr | 2nd Qtr | |||||||||||||||||||||
Quarterly GAAP to Non-GAAP Reconciliations | |||||||||||||||||||||||||
Income statement data (continued) | |||||||||||||||||||||||||
Net income | |||||||||||||||||||||||||
Net income (GAAP) | $35,248 | $40,134 | $42,884 | $39,218 | $45,015 | ||||||||||||||||||||
Acquisition expenses | 3,372 | 369 | 819 | 6,061 | 1,194 | ||||||||||||||||||||
Tax effect of acquisition expenses | (684) | (69) | (140) | (1,277) | (242) | ||||||||||||||||||||
Subtotal (non-GAAP) | 37,936 | 40,434 | 43,563 | 44,002 | 45,967 | ||||||||||||||||||||
Acquisition-related provision for credit losses | 3,201 | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Tax effect of acquisition-related provision for credit losses | (649) | 0 | 0 | 0 | 0 | ||||||||||||||||||||
Subtotal (non-GAAP) | 40,488 | 40,434 | 43,563 | 44,002 | 45,967 | ||||||||||||||||||||
Gain on sale of investments, net | 0 | 0 | 0 | 0 | (4,882) | ||||||||||||||||||||
Tax effect of gain on sale of investments, net | 0 | 0 | 0 | 0 | 988 | ||||||||||||||||||||
Subtotal (non-GAAP) | 40,488 | 40,434 | 43,563 | 44,002 | 42,073 | ||||||||||||||||||||
Unrealized (gain) loss on equity securities | (12) | 30 | 9 | (10) | 13 | ||||||||||||||||||||
Tax effect of unrealized (gain) loss on equity securities | 2 | (6) | (2) | 2 | (3) | ||||||||||||||||||||
Operating net income (non-GAAP) | 40,478 | 40,458 | 43,570 | 43,994 | 42,083 | ||||||||||||||||||||
Amortization of intangibles | 3,524 | 3,667 | 3,962 | 3,960 | 3,904 | ||||||||||||||||||||
Tax effect of amortization of intangibles | (714) | (689) | (678) | (835) | (790) | ||||||||||||||||||||
Subtotal (non-GAAP) | 43,288 | 43,436 | 46,854 | 47,119 | 45,197 | ||||||||||||||||||||
Acquired non-impaired loan accretion | (1,365) | (1,465) | (1,898) | (1,637) | (1,302) | ||||||||||||||||||||
Tax effect of acquired non-impaired loan accretion | 277 | 275 | 325 | 345 | 263 | ||||||||||||||||||||
Adjusted net income (non-GAAP) | $42,200 | $42,246 | $45,281 | $45,827 | $44,158 | ||||||||||||||||||||
Return on average assets | |||||||||||||||||||||||||
Adjusted net income (non-GAAP) | $42,200 | $42,246 | $45,281 | $45,827 | $44,158 | ||||||||||||||||||||
Average total assets | 12,652,200 | 11,487,384 | 11,472,415 | 11,229,919 | 10,771,975 | ||||||||||||||||||||
Adjusted return on average assets (non-GAAP) | 1.34% | 1.48% | 1.57% | 1.62% | 1.64% | ||||||||||||||||||||
Return on average equity | |||||||||||||||||||||||||
Adjusted net income (non-GAAP) | $42,200 | $42,246 | $45,281 | $45,827 | $44,158 | ||||||||||||||||||||
Average total equity | 2,009,996 | 1,902,169 | 1,851,579 | 1,824,869 | 1,774,400 | ||||||||||||||||||||
Adjusted return on average equity (non-GAAP) | 8.44% | 8.93% | 9.70% | 9.96% | 9.98% | ||||||||||||||||||||
Summary of Financial Data (unaudited) | |||||||||||||||||||||||||
(Dollars in thousands, except per share data) | |||||||||||||||||||||||||
2020 | 2019 | ||||||||||||||||||||||||
2nd Qtr | 1st Qtr | 4th Qtr | 3rd Qtr | 2nd Qtr | |||||||||||||||||||||
Quarterly GAAP to Non-GAAP Reconciliations | |||||||||||||||||||||||||
Income statement data (continued) | |||||||||||||||||||||||||
Earnings per common share | |||||||||||||||||||||||||
Diluted earnings per share (GAAP) | $0.66 | $0.76 | $0.82 | $0.75 | $0.86 | ||||||||||||||||||||
Acquisition expenses | 0.06 | 0.01 | 0.01 | 0.12 | 0.02 | ||||||||||||||||||||
Tax effect of acquisition expenses | (0.01) | 0.00 | 0.00 | (0.03) | 0.00 | ||||||||||||||||||||
Subtotal (non-GAAP) | 0.71 | 0.77 | 0.83 | 0.84 | 0.88 | ||||||||||||||||||||
Acquisition-related provision for credit losses | 0.06 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||||||
Tax effect of acquisition-related provision for credit losses | (0.01) | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||||||
Subtotal (non-GAAP) | 0.76 | 0.77 | 0.83 | 0.84 | 0.88 | ||||||||||||||||||||
Gain on sale of investments, net | 0.00 | 0.00 | 0.00 | 0.00 | (0.10) | ||||||||||||||||||||
Tax effect of gain on sale of investments, net | 0.00 | 0.00 | 0.00 | 0.00 | 0.02 | ||||||||||||||||||||
Subtotal (non-GAAP) | 0.76 | 0.77 | 0.83 | 0.84 | 0.80 | ||||||||||||||||||||
Unrealized loss (gain) on equity securities | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||||||
Tax effect of unrealized loss (gain) on equity securities | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||||||
Operating diluted earnings per share (non-GAAP) | 0.76 | 0.77 | 0.83 | 0.84 | 0.80 | ||||||||||||||||||||
Amortization of intangibles | 0.07 | 0.07 | 0.07 | 0.08 | 0.07 | ||||||||||||||||||||
Tax effect of amortization of intangibles | (0.01) | (0.01) | (0.01) | (0.02) | (0.02) | ||||||||||||||||||||
Subtotal (non-GAAP) | 0.82 | 0.83 | 0.89 | 0.90 | 0.85 | ||||||||||||||||||||
Acquired non-impaired loan accretion | (0.03) | (0.03) | (0.04) | (0.03) | (0.02) | ||||||||||||||||||||
Tax effect of acquired non-impaired loan accretion | 0.01 | 0.00 | 0.01 | 0.01 | 0.01 | ||||||||||||||||||||
Diluted adjusted net earnings per share (non-GAAP) | $0.80 | $0.80 | $0.86 | $0.88 | $0.84 | ||||||||||||||||||||
Noninterest operating expenses | |||||||||||||||||||||||||
Noninterest expenses (GAAP) | $90,903 | $93,663 | $95,269 | $96,929 | $91,176 | ||||||||||||||||||||
Amortization of intangibles | (3,524) | (3,667) | (3,962) | (3,960) | (3,904) | ||||||||||||||||||||
Acquisition expenses | (3,372) | (369) | (819) | (6,061) | (1,194) | ||||||||||||||||||||
Total adjusted noninterest expenses (non-GAAP) | $84,007 | $89,627 | $90,488 | $86,908 | $86,078 | ||||||||||||||||||||
Efficiency ratio | |||||||||||||||||||||||||
Adjusted noninterest expenses (non-GAAP) - numerator | $84,007 | $89,627 | $90,488 | $86,908 | $86,078 | ||||||||||||||||||||
Tax-equivalent net interest income | 92,966 | 91,086 | 93,766 | 92,261 | 89,290 | ||||||||||||||||||||
Noninterest revenues | 52,938 | 58,622 | 57,123 | 57,094 | 60,706 | ||||||||||||||||||||
Acquired non-impaired loan accretion | (1,365) | (1,465) | (1,898) | (1,637) | (1,302) | ||||||||||||||||||||
Gain on sale of investments, net | 0 | 0 | 0 | 0 | (4,882) | ||||||||||||||||||||
Unrealized (gain) loss on equity securities | (12) | 30 | 9 | (10) | 13 | ||||||||||||||||||||
Operating revenues (non-GAAP) - denominator | 144,527 | 148,273 | 149,000 | 147,708 | 143,825 | ||||||||||||||||||||
Efficiency ratio (non-GAAP) | 58.1% | 60.4% | 60.7% | 58.8% | 59.8% | ||||||||||||||||||||
Summary of Financial Data (unaudited) | |||||||||||||
(Dollars in thousands, except per share data) | |||||||||||||
2020 | 2019 | ||||||||||||
2nd Qtr | 1st Qtr | 4th Qtr | 3rd Qtr | 2nd Qtr | |||||||||
Quarterly GAAP to Non-GAAP Reconciliations | |||||||||||||
Balance sheet data | |||||||||||||
Total assets | |||||||||||||
Total assets (GAAP) | $13,444,217 | $11,808,983 | $11,410,295 | $11,597,297 | $10,745,388 | ||||||||
Intangible assets | (852,761) | (832,919) | (836,923) | (840,685) | (800,515) | ||||||||
Deferred taxes on intangible assets | 45,094 | 44,494 | 44,742 | 46,048 | 45,576 | ||||||||
Total tangible assets (non-GAAP) | 12,636,550 | 11,020,558 | 10,618,114 | 10,802,660 | 9,990,449 | ||||||||
Total common equity | |||||||||||||
Shareholders' Equity (GAAP) | 2,081,315 | 1,976,631 | 1,855,234 | 1,840,421 | 1,809,510 | ||||||||
Intangible assets | (852,761) | (832,919) | (836,923) | (840,685) | (800,515) | ||||||||
Deferred taxes on intangible assets | 45,094 | 44,494 | 44,742 | 46,048 | 45,576 | ||||||||
Total tangible common equity (non-GAAP) | 1,273,648 | 1,188,206 | 1,063,053 | 1,045,784 | 1,054,571 | ||||||||
Net tangible equity-to-assets ratio at quarter end | |||||||||||||
Total tangible common equity (non-GAAP) - numerator | $1,273,648 | $1,188,206 | $1,063,053 | $1,045,784 | $1,054,571 | ||||||||
Total tangible assets (non-GAAP) - denominator | 12,636,550 | 11,020,558 | 10,618,114 | 10,802,660 | 9,990,449 | ||||||||
Net tangible equity-to-assets ratio at quarter end (non-GAAP) | 10.08% | 10.78% | 10.01% | 9.68% | 10.56% | ||||||||
(1) Excludes gain on sales of investments and unrealized gain and loss on equity securities. | |||||||||||||
(2) Includes deferred tax liabilities related to certain intangible assets. | |||||||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20200727005138/en/
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