Cadence Bancorporation (NYSE: CADE) (“Cadence”) today announced net income for the quarter ended September 30, 2020 of $49.3 million or $0.39 per share, compared to net income of $44.0 million or $0.34 per share for the quarter ended September 30, 2019, and a net loss of ($56.1) million or ($0.45) per share for the quarter ended June 30, 2020. Adjusted net income (loss)(1), excluding non-routine income and expenses(2), was $51.4 million or $0.40 per share for the quarter ended September 30, 2020, compared to $44.2 million or $0.34 per share for the quarter ended September 30, 2019 and compared to ($56.9) million or ($0.45) per share for the quarter ended June 30, 2020.
“We are pleased to report that our company’s core fundamental performance continues to be resilient. For the third quarter, adjusted pre-tax pre-provision net revenue (“PPNR”) was $94.6 million, 2.06% of average assets. Our net interest margin (“NIM”) and efficiency ratio have been consistently attractive and favorable to peers. Credit pressure still exists in today’s economy, but charge-offs are down linked quarter, nonperforming assets are lower and loan deferrals declined significantly to 1.5% currently. Our attractive capital ratios further improved linked quarter with Common Equity Tier 1 capital increasing to 12.0%. Based on these factors, we are taking a step forward by increasing our fourth quarter dividend to $0.075 cents per share. While there remains considerable uncertainty about how this credit environment will play out, I am proud of the way our experienced senior leadership and each of our employees continue to serve our customers and enhance our bank. As the economy improves, we will be well positioned for growth in some of the most attractive markets in America,” stated Paul B. Murphy, Jr., Chairman and Chief Executive Officer of Cadence Bancorporation.
Third Quarter 2020 Highlights:
Third quarter 2020 highlights (compared to the linked quarter where applicable) are as follows:
- Adjusted pre-tax pre-provision net revenue(1) for the third quarter of 2020 remained strong at $94.6 million, compared to $94.9 million for the second quarter of 2020. As a percent of average assets, adjusted PPNR was 2.06%, consistent with the prior quarter.
- The provision for credit losses for the third quarter of 2020 was $33.0 million compared to $158.8 million in the linked quarter reflecting current economic forecasts and continued COVID-19 driven stress. As of September 30, 2020, our allowance for credit losses (“ACL”) increased to 2.86% of total loans, up from 2.71% at June 30, 2020. Excluding Paycheck Protection Program (“PPP”) loans, our ACL ratio to loans was 3.11% at September 30, 2020, up from 2.93% at June 30, 2020. Our ratio of ACL to total nonperforming loans increased to 204% from 165%.
- Our tax equivalent net interest margin (“NIM”) remained stable at 3.49%, down only 2 basis points from prior quarter, and excluding the PPP program impact, NIM was 3.64%, up 3 basis points from the linked quarter. The core NIM improvement was supported by continued management of our funding costs as well as our hedging gains, with total deposit costs declining 14 basis points in the quarter to 0.32%.
- Adjusted efficiency ratio(1) remained strong at 49.5%, reflecting ongoing expense management efforts.
- Common Equity Tier 1 capital ratio increased to 12.0% and total risk weighted capital increased to 14.7%, providing a robust capital base well-positioned for the current environment.
- Annualized returns on average assets and tangible common equity for the third quarter of 2020 were 1.08% and 11.08%, respectively, compared to (1.22%) and (10.56%), respectively, for the second quarter of 2020.
- Adjusted annualized returns on average assets(1) and adjusted tangible common equity(1) for the third quarter of 2020 were 1.12% and 11.52%, respectively, compared to (1.24%) and (10.73%), respectively, for the second quarter of 2020.
- At quarter end, we had $1.1 billion of loans outstanding under the PPP.
Balance Sheet:
Total assets were $18.4 billion as of September 30, 2020, an increase of $548.2 million or 3.1% from September 30, 2019, and a decrease of $453.6 million or 2.4% from June 30, 2020. The linked quarter decline was driven by decreases in cash and loans, partially offset by an increase in investment securities.
Cash and Cash Equivalents at September 30, 2020 totaled $1.2 billion as compared to $1.1 billion at September 30, 2019 and compared to $1.9 billion at June 30, 2020. The $652.2 million decrease in the third quarter of 2020 resulted from an increase of $427.3 million in investment securities as well as net declines in deposits during the quarter.
Loans at September 30, 2020 totaled $13.5 billion as compared to $13.6 billion at September 30, 2019, a decrease of $171.5 million or 1.3%. Loans decreased $233.5 million or 1.7% from $13.7 billion at June 30, 2020. The decline was driven by reductions in the C&I segment representing net paydowns, soft loan origination and strategic declines in certain portfolios. Notable linked quarter decreases included Energy, down $59 million, and Restaurant, down $56 million. These declines were partially offset by an increase in CRE balances largely due to construction draws in the industrial and multifamily categories.
Investment Securities at September 30, 2020 totaled $3.1 billion as compared to $1.7 billion at September 30, 2019 and $2.7 billion at June 30, 2020. Securities as a percent of earning assets was 17.4%, 10.5%, and 14.6% at September 30, 2020, September 30, 2019 and June 30, 2020, respectively. The increase in securities from both the prior year and linked quarter is a result of increased balance sheet liquidity resulting from growth in deposits and lower loan originations. Securities acquired during the third quarter include primarily agency pass-through mortgage-backed securities along with some municipal securities.
Goodwill at September 30, 2020 totaled $43.1 million, down from $486.0 million at September 30, 2019 and unchanged from June 30, 2020. As previously reported, the Company recorded a $443.7 million ($412.9 million, after-tax), non-cash goodwill impairment charge in the first quarter of 2020. The remaining goodwill at September 30, 2020 relates to our registered investment advisory subsidiary and trust division.
Total Deposits at September 30, 2020 were $15.8 billion, an increase of $1.0 billion or 6.7% from the September 30, 2019 level and down $283.1 million or 1.8% from the June 30, 2020 level. Third quarter 2020 core deposits decreased as a result of PPP funds being deployed by customers, balance movement between non-interest bearing and interest bearing accounts, strategic lowering of certain higher cost deposit balances and net time deposit runoff. Non-interest bearing deposits were $5.0 billion or 31.9% of total deposits at September 30, 2020, up from $3.6 billion or 24.4% at September 30, 2019 and down from $5.2 billion or 32.5% of total deposits at June 30, 2020. Total cost of deposits declined to 0.32% for the third quarter 2020, meaningfully lower than both the third quarter 2019 cost of 1.32% and the second quarter 2020 cost of 0.46%.
Shareholders’ equity was $2.1 billion at September 30, 2020, a decrease of $404.5 million or 16.3% from September 30, 2019, and an increase of $26.0 million or 1.3% from June 30, 2020. The linked quarter increase included quarterly net income of $49.3 million, $6.3 million in cash dividends, and a decrease of $18.8 million in other comprehensive income driven by the $18.4 million amortization of our interest rate collar gain into interest income. The year over year decrease was impacted by the goodwill impairment in the first quarter of 2020.
Tangible common shareholders’ equity(1) was $1.9 billion at September 30, 2020, an increase of $61.0 million or 3.2% from September 30, 2019 and an increase of $31.3 million or 1.6% from June 30, 2020. The linked quarter increase resulted from the same factors noted above.
- Total shareholders’ equity to total assets and tangible equity to tangible assets were 11.3% and 10.6%, respectively, at September 30, 2020 compared to 13.9% and 10.9% at September 30, 2019, and 10.8% and 10.2% at June 30, 2020, respectively.
- Tangible book value per share(1) was $15.40 as of September 30, 2020, an increase of $0.74 or 5.0% from $14.66 as of September 30, 2019 and an increase of $0.25 or 1.7% from $15.15 as of June 30, 2020.
- Total outstanding shares at September 30, 2020 were 125.9 million.
Tangible common equity to tangible assets was 10.6% at September 30, 2020, and quarter end capital ratios remained robust and increased during the quarter as follows:
9/30/2020 | 6/30/2020 | 9/30/2019 | ||||
Common equity Tier 1 capital | 12.0% | 11.7% | 11.0% | |||
Tier 1 leverage capital | 9.9% | 9.5% | 10.3% | |||
Tier 1 risk-based capital | 12.0% | 11.7% | 11.0% | |||
Total risk-based capital | 14.7% | 14.3% | 13.1% |
Asset Quality:
Credit quality metrics during the third quarter of 2020 reflected some notable improvements including lower net-charge offs, declines in nonperforming loan balances and dramatically lower loan deferrals, but continued to reflect ongoing COVID-driven stress, especially in the Hospitality and Restaurant categories, indicated by the increases in the ACL and criticized loan balances during the quarter.
- Net charge-offs for the third quarter of 2020 were $19.9 million or 0.58% annualized of average loans compared to $31.3 million or 0.91% annualized and $32.6 million or 0.94% annualized for the quarters ended September 30, 2019 and June 30, 2020, respectively. The current quarter charge-offs included $14.7 million in Restaurant, $2.9 million in CRE-Office, $1.9 million in Energy, and $0.6 million in General C&I.
- Provision for credit losses for the third quarter of 2020 was $33.0 million as compared to $43.8 million for the third quarter of 2019 and $158.8 million for the second quarter of 2020. The current quarter’s provision was driven by both net credit migration as well as economic and environmental considerations. The third quarter 2020 loan provision was concentrated in the Commercial Real Estate segment provision of $33.3 million, driven by increased reserves on hospitality loans.
- The ACL was $385.4 million or 2.86% of total loans as of September 30, 2020, as compared to $127.8 million or 0.94% of total loans as of September 30, 2019, and $370.9 million or 2.71% of total loans as of June 30, 2020. Excluding PPP loans, the ACL was 3.11% of total loans at September 30, 2020, increased from 2.93% at June 30, 2020.
- The increase in the ACL as a percent of total loans in the third quarter 2020 was driven by increased coverage in our portfolios most impacted by COVID related stress. The ACL for our $311.0 million Hospitality portfolio increased to 13.6% of total loans at September 30, 2020 as compared 7.5% at June 30, 2020. The ACL for our $1.1 billion Restaurant portfolio increased to 5.66% of total loans at September 30, 2020 as compared to 5.52% at June 30, 2020.
- Total nonperforming loans (“NPL”) as a percent of total loans were 1.40% at September 30, 2020, compared to 0.79% at September 30, 2019 and 1.64% at June 30, 2020. NPL totaled $189.1 million, $108.1 million and $224.4 million as of September 30, 2020, September 30, 2019 and June 30, 2020, respectively. The linked quarter decline was due primarily to payoffs and net charge-offs.
- The ACL to NPL increased to 203.8% as of September 30, 2020, as compared to 118.2% as of September 30, 2019, and 165.3% as of June 30, 2020.
- Total criticized loans at September 30, 2020 were $1.1 billion or 8.05% of total loans as compared to $571.9 million or 4.19% at September 30, 2019 and $1.0 billion or 7.37% at June 30, 2020. The linked quarter increase was primarily in Hospitality, Energy and General C&I credits.
- COVID related loan payment deferrals totaled $376 million at September 30, 2020, down significantly from $1.4 billion at June 30, 2020. As of October 16, 2020, loan deferrals were down further to $181 million or 1.5% of total loans excluding PPP loans.
- Loans 30-89 days past due were 0.15% of total loans at September 30, 2020, compared to 0.15% at September 30, 2019 and 0.19% at June 30, 2020.
Total Revenue:
Total operating revenue(1) for the third quarter of 2020 was $186.6 million, down $8.2 million or 4.2% from the same period in 2019 and up $2.0 million or 1.1% from the linked quarter.
Net interest income Net interest income for the third quarter of 2020 was $154.0 million, a decrease of $6.1 million or 3.8% from the same period in 2019 and a slight decrease of $0.7 million or 0.4% from the second quarter of 2020. Compared to the linked quarter, loan interest income, excluding accretion, declined $6.8 million due to the trailing impact of the second quarter rate declines as well as lower average balances. Additionally, accretion declined $1.2 million. These declines were partially offset by $6.0 million in lower funding costs driven by lower rates, $2.0 million in additional hedge income and $1.4 million in increased investment income due to higher balances.
- We continued to aggressively lower our interest rates on deposits resulting in a 31% reduction in costs of total deposits to 0.32% for the quarter compared to 0.46% for the linked quarter. Noninterest-bearing deposits as a percent of total deposits decreased slightly to 31.9% from 32.5% in the linked quarter. Total interest-bearing liability costs declined by 19 basis points or 24% to 0.59% from 0.78% in the linked quarter. Average interest-bearing liabilities declined $451 million or 3.9% from the prior quarter to $11.1 billion.
- Yield on loans excluding accretion and hedge income was 3.75% in the third quarter of 2020, down 24 basis points from 3.99% in the second quarter of 2020. Excluding the impact of PPP loans, this yield was 3.87% and 4.07%, for the third and second quarters of 2020, respectively. Average loans declined $231.8 million or 1.7% from the prior quarter to $13.7 billion.
- Hedge income and collar gain recognition for the third quarter of 2020 was $19.7 million as compared to $17.7 million for the second quarter of 2020.
- Accretion on acquired loans totaled $6.4 million for the third quarter of 2020 as compared to $7.6 million for the second quarter of 2020.
- Yield on investment securities declined to 2.06% in the third quarter of 2020 compared to 2.29% in linked quarter, with the lower yield reflecting the impact of securities purchased in the third quarter. Average investment securities increased $472.9 million or 19.0% from the prior quarter to $3.0 billion. Fed funds sold and short-term investments likewise declined by $400.8 million or 29.9% from the prior quarter as excess funds were deployed into investment securities during the third quarter.
- Total earning asset yields declined to 3.86% in the third quarter of 2020 compared to 4.01% in the linked quarter, with average balances declining by $159.8 million or 0.9% to $17.6 billion.
- Our NIM for the third quarter of 2020 was 3.49% as compared to 3.94% for the third quarter of 2019 and 3.51% for the second quarter of 2020.
PPP loans averaged $1.0 billion in the third quarter at a yield of 2.27%, and along with cash in deposits associated with these loans, negatively impacted our third quarter NIM by 15 basis points as illustrated in the table below. Excluding the impact of the PPP program, the third quarter 2020 NIM improved 3 basis points to 3.64% from 3.61% in the linked quarter, as lower deposit costs, deployment of cash into securities, and increased hedge income more than offset the impact of lower rates on our loan portfolio. Specifically, the NIM change during the quarter included:
Quarterly Change | $ MM | NIM | ||||
2Q 2020 Net Interest Income | $155.1 | 3.51 | % | |||
2Q 2020 Net Interest Income before PPP loans and associated cash | $151.1 | 3.61 | % | |||
Loans (ex PPP & accretion) | (10.9 | ) | (0.18 | %) | ||
Deposits | 5.6 | 0.13 | % | |||
Hedge Income | 2.0 | 0.06 | % | |||
Accretion | (1.2 | ) | (0.02 | %) | ||
Securities | 1.3 | 0.04 | % | |||
Borrowings | 0.4 | 0.01 | % | |||
NIM before PPP loans & cash* | $148.4 | 3.64 | % | |||
PPP Loans & associated cash | 6.1 | (0.15 | %) | |||
3Q 2020 Net Interest Margin | $154.5 | 3.49 | % |
*Calculated by removing the quarterly average balance of PPP loans and income, as well as the quarterly average balance of cash associated with unused PPP funds. |
Noninterest income for the third quarter of 2020 was $32.6 million, a decrease of $2.1 million or 5.9% from the same period of 2019 and an increase of $2.6 million or 8.8% from the linked quarter. Adjusted noninterest income(1) for the third quarter of 2020 was $33.0 million, a decrease of $0.8 million or 2.4% from the third quarter of 2019, and an increase of $5.4 million or 19.5% from the linked quarter.
- The linked quarter included increases of $1.7 million and $1.5 million in SBA and mortgage banking income, respectively, due primarily to gains on loan sales from increased production volumes (excluding PPP loans). Service charges increased $1.0 million driven by higher account analysis revenue and loan fees were up $0.6 million. The quarter also reflected increases in trust and investment advisory revenue, partially enhanced by improved equity markets.
- Noninterest income as a percent of total revenue for the third quarter of 2020 was 17.5% as compared to 17.8% for the third quarter of 2019 and 16.2% for the linked quarter.
Noninterest expense for the third quarter of 2020 was $94.9 million, an increase of $0.6 million or 0.6% from the same period in 2019 and an increase of $6.2 million or 7.0% from the linked quarter. Adjusted noninterest expense(1), which excludes the impact of non-routine items(2), was $92.5 million, down $0.8 million or 0.8% from the third quarter of 2019 and up $5.1 million or 5.8% from the second quarter of 2020. The linked quarter increase in noninterest expenses resulted from:
- An increase of $4.6 million in personnel costs driven by lower loan cost deferrals as a result of the second quarter PPP loan volumes and an increase in incentive accruals due to improved corporate performance;
- An increase of $2.1 million in merger related expenses due to a revised estimate of a legacy State Bank post-retirement benefit; and
- A partially offsetting decrease of $1.4 million in FDIC insurance assessment due to additional second quarter accruals to reflect the impact of lower earnings on the assessment.
Adjusted efficiency ratio(1) for the third quarter of 2020 was 49.4%, compared to the linked quarter ratio of 47.9% and the prior year’s third quarter ratio of 48.1%. The linked quarter increase was driven by a modest increase in expenses and the impact of lower average loans in the quarter.
_____________________ | ||
(1) | Considered a non-GAAP financial measure. See Table 10 “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measure. | |
(2) | See Table 10 for a detail of non-routine income and expenses. |
Taxes:
The effective tax rate for the third quarter of 2020 was 16.1% compared to 10.6% for the linked quarter and 22.5% for the third quarter of 2019.
Dividend:
As of October 21, 2020, the board of directors of Cadence Bancorporation declared a quarterly cash dividend in the amount of $0.075 per share of outstanding common stock, representing an annualized dividend of $0.30 per share. The dividend will be paid on November 16, 2020 to holders of record of Cadence’s Class A common stock on November 2, 2020.
Supplementary Financial Tables (Unaudited):
Supplementary financial tables (unaudited) are included in this release following the customary disclosure information.
Third Quarter 2020 Earnings Conference Call:
Cadence Bancorporation executive management will host a conference call to discuss third quarter 2020 results on Wednesday, October 21, 2020, at 7:30 a.m. CT / 8:30 a.m. ET. Slides to be presented by management on the conference call can be viewed by visiting www.cadencebancorporation.com and selecting “Events & Presentations” then “Presentations”.
Conference Call Access:
To access the conference call, please dial one of the following numbers approximately 10-15 minutes prior to the start time to allow time for registration and use the Elite Entry Number provided below.
Dial in (toll free): | 1-888-317-6003 | |
International dial in: | 1-412-317-6061 | |
Canada (toll free): | 1-866-284-3684 | |
Participant Elite Entry Number: | 2975522 |
For those unable to participate in the live presentation, a replay will be available through November 4, 2020. To access the replay, please use the following numbers:
US Toll Free: | 1-877-344-7529 | |
International Toll: | 1-412-317-0088 | |
Canada Toll Free: | 1-855-669-9658 | |
Replay Access Code: | 10148281 |
Webcast Access:
The call and corresponding presentation slides will be webcast live on the home page of the Company’s website: www.cadencebancorporation.com.
About Cadence Bancorporation:
Cadence Bancorporation (NYSE: CADE), headquartered in Houston, Texas, is a regional financial holding company with $18.4 billion in total assets as of September 30, 2020. Its wholly owned subsidiary, Cadence Bank, N.A., operates 99 branch locations in Alabama, Florida, Georgia, Mississippi, Tennessee and Texas, and provides corporations, middle-market companies, small businesses and consumers with a full range of innovative banking and financial solutions. Services and products include commercial and business banking, treasury management, specialized lending, asset-based lending, commercial real estate, SBA lending, foreign exchange, wealth management, investment and trust services, financial planning, retirement plan management, payroll and insurance services, consumer banking, consumer loans, mortgages, home equity lines and loans, and credit cards. Clients have access to leading-edge online and mobile solutions, interactive teller machines, and more than 55,000 ATMs. The Cadence team of 1,800 associates is committed to exceeding customer expectations and helping their clients succeed financially.
Cautionary Statement Regarding Forward-Looking Information
This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, future events and our results of operations, financial condition and financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would” and “outlook,” or the negative version of those words or other comparable words of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict.
Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. Such factors include, without limitation, the “Risk Factors” referenced in our Registration Statement on Form S-3 filed with the Securities and Exchange Commission (the “SEC”) on May 21, 2018, and our Registration Statement on Form S-4 filed with the SEC on July 20, 2018, other risks and uncertainties listed from time to time in our reports and documents filed with the SEC, including our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, and the following factors: business and economic conditions generally and in the financial services industry, nationally and within our current and future geographic market areas; economic, market, operational, liquidity, credit and interest rate risks associated with our business; deteriorating asset quality and higher loan charge-offs; the laws and regulations applicable to our business; our ability to achieve organic loan and deposit growth and the composition of such growth; increased competition in the financial services industry, nationally, regionally or locally; our ability to maintain our historical earnings trends; our ability to raise additional capital to implement our business plan; material weaknesses in our internal control over financial reporting; systems failures or interruptions involving our information technology and telecommunications systems or third-party servicers; the composition of our management team and our ability to attract and retain key personnel; the fiscal position of the U.S. federal government and the soundness of other financial institutions; the composition of our loan portfolio, including the identity of our borrowers and the concentration of loans in energy-related industries and in our specialized industries; the portion of our loan portfolio that is comprised of participations and shared national credits; the amount of nonperforming and classified assets we hold; the extent of the impact of the COVID-19 pandemic on us and our customers, counterparties, employees, and third-party service providers, and the impacts to our business, financial position, results of operations, and prospects; the impact on our financial condition, results of operations, financial disclosures, and future business strategies related to the implementation of FASB Accounting Standards Update 2016-13, Financial Instruments – Credit Losses, commonly referred to as CECL. Cadence can give no assurance that any goal or plan or expectation set forth in forward-looking statements can be achieved and readers are cautioned not to place undue reliance on such statements. The forward-looking statements are made as of the date of this communication, and Cadence does not intend, and assumes 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 or circumstances, except as required by applicable law.
About Non-GAAP Financial Measures
Certain of the financial measures and ratios we present, including “efficiency ratio,” “adjusted efficiency ratio,” “adjusted noninterest expenses,” “adjusted operating revenue,” “tangible common equity ratio,” “tangible book value per share” and “return on average tangible common equity”, “adjusted return on average tangible common equity”, “adjusted return on average assets”, “adjusted diluted earnings per share”, and “pre-tax, pre-provision net revenue” are supplemental measures that are not required by, or are not presented in accordance with, U.S. generally accepted accounting principles (GAAP). We refer to these financial measures and ratios as “non-GAAP financial measures.” We consider the use of select non-GAAP financial measures and ratios to be useful for financial and operational decision making and useful in evaluating period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenditures or assets that we believe are not indicative of our primary business operating results or by presenting certain metrics on a fully taxable equivalent basis.
We believe that management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, analyzing and comparing past, present and future periods.
These non-GAAP financial measures should not be considered a substitute for financial information presented in accordance with GAAP and you should not rely on non-GAAP financial measures alone as measures of our performance. The non-GAAP financial measures we present may differ from non-GAAP financial measures used by our peers or other companies. We compensate for these limitations by providing the equivalent GAAP measures whenever we present the non-GAAP financial measures and by including a reconciliation of the impact of the components adjusted for in the non-GAAP financial measure so that both measures and the individual components may be considered when analyzing our performance. A reconciliation of non-GAAP financial measures to the comparable GAAP financial measures is included at the end of the financial statement tables (Table 10).
Table 1 – Selected Financial Data | ||||||||||||||||||||
As of and for the Three Months Ended | ||||||||||||||||||||
(In thousands, except share and per share data) | September 30, 2020 | June 30, 2020 | March 31, 2020 | December 31, 2019 | September 30, 2019 | |||||||||||||||
Statement of Operations Data | ||||||||||||||||||||
Interest income | $ | 170,497 | $ | 177,175 | $ | 192,754 | $ | 207,620 | $ | 213,149 | ||||||||||
Interest expense | 16,455 | 22,461 | 39,286 | 46,709 | 52,962 | |||||||||||||||
Net interest income | 154,042 | 154,714 | 153,468 | 160,911 | 160,187 | |||||||||||||||
Provision for credit losses | 32,973 | 158,811 | 83,429 | 27,126 | 43,764 | |||||||||||||||
Net interest income after provision | 121,069 | (4,097 | ) | 70,039 | 133,785 | 116,423 | ||||||||||||||
Noninterest income | 32,591 | 29,950 | 35,069 | 33,898 | 34,642 | |||||||||||||||
Noninterest expense (1) | 94,859 | 88,620 | 537,653 | 100,519 | 94,283 | |||||||||||||||
Income (loss) before income taxes | 58,801 | (62,767 | ) | (432,545 | ) | 67,164 | 56,782 | |||||||||||||
Income tax expense (benefit) | 9,486 | (6,653 | ) | (33,234 | ) | 15,738 | 12,796 | |||||||||||||
Net income (loss) | $ | 49,315 | $ | (56,114 | ) | $ | (399,311 | ) | $ | 51,426 | $ | 43,986 | ||||||||
Weighted average common shares outstanding | ||||||||||||||||||||
Basic | 125,956,714 | 125,924,652 | 126,630,446 | 127,953,742 | 128,457,491 | |||||||||||||||
Diluted | 126,094,868 | 125,924,652 | 126,630,446 | 128,003,089 | 128,515,274 | |||||||||||||||
Earnings (loss) per share | ||||||||||||||||||||
Basic | $ | 0.39 | $ | (0.45 | ) | $ | (3.15 | ) | $ | 0.40 | $ | 0.34 | ||||||||
Diluted | 0.39 | (0.45 | ) | (3.15 | ) | 0.40 | 0.34 | |||||||||||||
Period-End Balance Sheet Data | ||||||||||||||||||||
Cash and cash equivalents | $ | 1,247,172 | $ | 1,899,369 | $ | 609,351 | $ | 988,764 | $ | 1,061,102 | ||||||||||
Investment securities | 3,088,699 | 2,661,433 | 2,461,644 | 2,368,592 | 1,705,325 | |||||||||||||||
Total loans, net of unearned income | 13,465,556 | 13,699,097 | 13,392,191 | 12,983,655 | 13,637,042 | |||||||||||||||
Allowance for credit losses | 385,412 | 370,901 | 245,246 | 119,643 | 127,773 | |||||||||||||||
Total assets | 18,404,195 | 18,857,753 | 17,237,918 | 17,800,229 | 17,855,946 | |||||||||||||||
Total deposits | 15,786,221 | 16,069,282 | 14,489,505 | 14,742,794 | 14,789,712 | |||||||||||||||
Noninterest-bearing deposits | 5,033,338 | 5,220,109 | 3,959,721 | 3,833,704 | 3,602,861 | |||||||||||||||
Interest-bearing deposits | 10,752,883 | 10,849,173 | 10,529,784 | 10,909,090 | 11,186,851 | |||||||||||||||
Borrowings and subordinated debentures | 372,446 | 372,222 | 372,440 | 372,173 | 371,892 | |||||||||||||||
Total shareholders’ equity | 2,071,472 | 2,045,480 | 2,113,543 | 2,460,846 | 2,475,944 | |||||||||||||||
Average Balance Sheet Data | ||||||||||||||||||||
Investment securities | $ | 2,960,357 | $ | 2,487,467 | $ | 2,397,275 | $ | 2,003,339 | $ | 1,650,902 | ||||||||||
Total loans, net of unearned income | 13,652,395 | 13,884,220 | 13,161,371 | 13,423,435 | 13,719,286 | |||||||||||||||
Allowance for credit losses | 389,243 | 267,464 | 201,785 | 132,975 | 119,873 | |||||||||||||||
Total assets | 18,248,014 | 18,500,600 | 17,694,018 | 17,843,383 | 17,621,163 | |||||||||||||||
Total deposits | 15,628,314 | 15,774,787 | 14,574,614 | 14,749,327 | 14,539,420 | |||||||||||||||
Noninterest-bearing deposits | 4,892,079 | 4,587,673 | 3,658,612 | 3,648,874 | 3,456,807 | |||||||||||||||
Interest-bearing deposits | 10,736,235 | 11,187,115 | 10,916,002 | 11,100,454 | 11,082,613 | |||||||||||||||
Borrowings and subordinated debentures | 372,304 | 372,547 | 439,698 | 374,179 | 381,257 | |||||||||||||||
Total shareholders’ equity | 2,052,079 | 2,118,796 | 2,446,810 | 2,471,398 | 2,447,189 |
(1) | For the quarter ended March 31, 2020, includes the non-cash goodwill impairment charge of $443.7 million, $412.9 million after-tax. |
Table 1 (Continued) – Selected Financial Data | ||||||||||||||||||||
As of and for the Three Months Ended | ||||||||||||||||||||
(In thousands, except share and per share data) | September 30, 2020 | June 30, 2020 | March 31, 2020 | December 31, 2019 | September 30, 2019 | |||||||||||||||
Per Share Data: | ||||||||||||||||||||
Book value | $ | 16.45 | $ | 16.24 | $ | 16.79 | $ | 19.29 | $ | 19.32 | ||||||||||
Tangible book value (1) | 15.40 | 15.15 | 15.65 | 14.65 | 14.66 | |||||||||||||||
Cash dividends declared | 0.050 | 0.050 | 0.175 | 0.175 | 0.175 | |||||||||||||||
Dividend payout ratio | 12.82 | % | (11.11 | )% | (5.56 | )% | 43.75 | % | 51.47 | % | ||||||||||
Performance Ratios: | ||||||||||||||||||||
Return on average common equity (2) | 9.56 | % | (10.65 | )% | (65.64 | )% | 8.26 | % | 7.13 | % | ||||||||||
Return on average tangible common equity (1) (2) | 11.08 | (10.56 | ) | 3.86 | 11.82 | 10.43 | ||||||||||||||
Return on average assets (2) | 1.08 | (1.22 | ) | (9.08 | ) | 1.14 | 0.99 | |||||||||||||
Net interest margin (2) | 3.49 | 3.51 | 3.80 | 3.89 | 3.94 | |||||||||||||||
Efficiency ratio (1) | 50.83 | 47.99 | 285.17 | 51.60 | 48.39 | |||||||||||||||
Adjusted efficiency ratio (1) | 49.45 | 47.93 | 49.88 | 50.91 | 48.07 | |||||||||||||||
Asset Quality Ratios: | ||||||||||||||||||||
Total NPA to total loans, OREO, and other NPA | 1.55 | % | 1.74 | % | 1.31 | % | 0.97 | % | 0.84 | % | ||||||||||
Total nonperforming loans ("NPL") to total loans | 1.40 | 1.64 | 1.19 | 0.92 | 0.79 | |||||||||||||||
Total ACL to total loans | 2.86 | 2.71 | 1.83 | 0.92 | 0.94 | |||||||||||||||
ACL to total NPL | 203.82 | 165.30 | 153.61 | 100.07 | 118.17 | |||||||||||||||
Net charge-offs to average loans (2) | 0.58 | 0.94 | 0.99 | 1.04 | 0.91 | |||||||||||||||
Capital Ratios: | ||||||||||||||||||||
Total shareholders’ equity to assets | 11.3 | % | 10.8 | % | 12.3 | % | 13.8 | % | 13.9 | % | ||||||||||
Tangible common equity to tangible assets (1) | 10.6 | 10.2 | 11.5 | 10.9 | 10.9 | |||||||||||||||
Common equity Tier 1 capital (3) | 12.0 | 11.7 | 11.4 | 11.5 | 11.0 | |||||||||||||||
Tier 1 leverage capital (3) | 9.9 | 9.5 | 10.1 | 10.3 | 10.3 | |||||||||||||||
Tier 1 risk-based capital (3) | 12.0 | 11.7 | 11.4 | 11.5 | 11.0 | |||||||||||||||
Total risk-based capital (3) | 14.7 | 14.3 | 13.8 | 13.7 | 13.1 | |||||||||||||||
_____________________ |
(1) | Considered a non-GAAP financial measure. See Table 10 "Reconciliation of Non-GAAP Financial Measures" for a reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measure. | |
(2) | Annualized. | |
(3) | Current quarter regulatory capital ratios are estimates. |
Table 2 – Average Balances/Yield/Rates | ||||||||||||||||||||||||||
For the Three Months Ended September 30, | ||||||||||||||||||||||||||
2020 | 2019 | |||||||||||||||||||||||||
Average | Income/ | Yield/ | Average | Income/ | Yield/ | |||||||||||||||||||||
(In thousands) | Balance | Expense | Rate | Balance | Expense | Rate | ||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||||
Loans, net of unearned income (1) | ||||||||||||||||||||||||||
Originated loans | $ | 11,168,913 | $ | 123,177 | 4.39 | % | $ | 10,191,066 | $ | 136,332 | 5.31 | % | ||||||||||||||
ANCI portfolio | 2,295,097 | 28,214 | 4.89 | 3,269,846 | 54,084 | 6.56 | ||||||||||||||||||||
PCD portfolio (3) | 188,385 | 3,460 | 7.31 | 258,375 | 7,554 | 11.60 | ||||||||||||||||||||
Total loans | 13,652,395 | 154,851 | 4.51 | 13,719,286 | 197,970 | 5.72 | ||||||||||||||||||||
Investment securities | ||||||||||||||||||||||||||
Taxable | 2,694,012 | 13,164 | 1.94 | 1,447,448 | 9,657 | 2.65 | ||||||||||||||||||||
Tax-exempt (2) | 266,345 | 2,150 | 3.21 | 203,454 | 1,892 | 3.69 | ||||||||||||||||||||
Total investment securities | 2,960,357 | 15,314 | 2.06 | 1,650,902 | 11,549 | 2.78 | ||||||||||||||||||||
Federal funds sold and short-term investments | 942,017 | 432 | 0.18 | 741,955 | 3,421 | 1.83 | ||||||||||||||||||||
Other investments | 77,262 | 350 | 1.80 | 77,605 | 606 | 3.10 | ||||||||||||||||||||
Total interest-earning assets | 17,632,031 | 170,947 | 3.86 | 16,189,748 | 213,546 | 5.23 | ||||||||||||||||||||
Noninterest-earning assets: | ||||||||||||||||||||||||||
Cash and due from banks | 170,241 | 123,758 | ||||||||||||||||||||||||
Premises and equipment | 127,432 | 128,286 | ||||||||||||||||||||||||
Accrued interest and other assets | 707,553 | 1,299,244 | ||||||||||||||||||||||||
Allowance for credit losses | (389,243 | ) | (119,873 | ) | ||||||||||||||||||||||
Total assets | $ | 18,248,014 | $ | 17,621,163 | ||||||||||||||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||||
Demand deposits | $ | 8,037,801 | $ | 4,681 | 0.23 | % | $ | 7,991,804 | $ | 31,064 | 1.54 | % | ||||||||||||||
Savings deposits | 319,004 | 140 | 0.17 | 250,003 | 274 | 0.43 | ||||||||||||||||||||
Time deposits | 2,379,430 | 7,741 | 1.29 | 2,840,806 | 17,083 | 2.39 | ||||||||||||||||||||
Total interest-bearing deposits | 10,736,235 | 12,562 | 0.47 | 11,082,613 | 48,421 | 1.73 | ||||||||||||||||||||
Other borrowings | 149,973 | 931 | 2.47 | 160,066 | 1,005 | 2.49 | ||||||||||||||||||||
Subordinated debentures | 222,331 | 2,961 | 5.30 | 221,191 | 3,536 | 6.34 | ||||||||||||||||||||
Total interest-bearing liabilities | 11,108,539 | 16,454 | 0.59 | 11,463,870 | 52,962 | 1.83 | ||||||||||||||||||||
Noninterest-bearing liabilities: | ||||||||||||||||||||||||||
Demand deposits | 4,892,079 | 3,456,807 | ||||||||||||||||||||||||
Accrued interest and other liabilities | 195,317 | 253,297 | ||||||||||||||||||||||||
Total liabilities | 16,195,935 | 15,173,974 | ||||||||||||||||||||||||
Shareholders' equity | 2,052,079 | 2,447,189 | ||||||||||||||||||||||||
Total liabilities and shareholders' equity | $ | 18,248,014 | $ | 17,621,163 | ||||||||||||||||||||||
Net interest income/net interest spread | 154,493 | 3.27 | % | 160,584 | 3.40 | % | ||||||||||||||||||||
Net yield on earning assets/net interest margin | 3.49 | % | 3.94 | % | ||||||||||||||||||||||
Taxable equivalent adjustment: | ||||||||||||||||||||||||||
Investment securities | (451 | ) | (397 | ) | ||||||||||||||||||||||
Net interest income | $ | 154,042 | $ | 160,187 | ||||||||||||||||||||||
_____________________ |
(1) | Nonaccrual loans are included in loans, net of unearned income. No adjustment has been made for these loans in the calculation of yields. | |
(2) | Interest income and yields are presented on a fully taxable equivalent basis using an income tax rate of 21%. | |
(3) | Prior to the adoption of CECL on January 1, 2020, these loans were referred to as ACI loans, but with the adoption of CECL they are referred to as PCD loans. |
Table 2 (Continued) – Average Balances/Yield/Rates | ||||||||||||||||||||||||||
For the Three Months Ended September 30, 2020 | For the Three Months Ended June 30, 2020 | |||||||||||||||||||||||||
Average | Income/ | Yield/ | Average | Income/ | Yield/ | |||||||||||||||||||||
(In thousands) | Balance | Expense | Rate | Balance | Expense | Rate | ||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||||
Loans, net of unearned income (1) | ||||||||||||||||||||||||||
Originated loans | $ | 11,168,913 | $ | 123,177 | 4.39 | % | $ | 11,173,408 | $ | 125,922 | 4.53 | % | ||||||||||||||
ANCI portfolio | 2,295,097 | 28,214 | 4.89 | 2,512,163 | 32,967 | 5.28 | ||||||||||||||||||||
PCD portfolio (3) | 188,385 | 3,460 | 7.31 | 198,649 | 3,965 | 8.03 | ||||||||||||||||||||
Total loans | 13,652,395 | 154,851 | 4.51 | 13,884,220 | 162,854 | 4.72 | ||||||||||||||||||||
Investment securities | ||||||||||||||||||||||||||
Taxable | 2,694,012 | 13,164 | 1.94 | 2,269,017 | 12,207 | 2.16 | ||||||||||||||||||||
Tax-exempt (2) | 266,345 | 2,150 | 3.21 | 218,450 | 1,948 | 3.59 | ||||||||||||||||||||
Total investment securities | 2,960,357 | 15,314 | 2.06 | 2,487,467 | 14,155 | 2.29 | ||||||||||||||||||||
Federal funds sold and short-term investments | 942,017 | 432 | 0.18 | 1,342,779 | 328 | 0.10 | ||||||||||||||||||||
Other investments | 77,262 | 350 | 1.80 | 77,337 | 247 | 1.28 | ||||||||||||||||||||
Total interest-earning assets | 17,632,031 | 170,947 | 3.86 | 17,791,803 | 177,584 | 4.01 | ||||||||||||||||||||
Noninterest-earning assets: | ||||||||||||||||||||||||||
Cash and due from banks | 170,241 | 176,716 | ||||||||||||||||||||||||
Premises and equipment | 127,432 | 127,413 | ||||||||||||||||||||||||
Accrued interest and other assets | 707,553 | 672,132 | ||||||||||||||||||||||||
Allowance for credit losses | (389,243 | ) | (267,464 | ) | ||||||||||||||||||||||
Total assets | $ | 18,248,014 | $ | 18,500,600 | ||||||||||||||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||||
Demand deposits | $ | 8,037,801 | $ | 4,681 | 0.23 | % | $ | 8,368,151 | $ | 7,511 | 0.36 | % | ||||||||||||||
Savings deposits | 319,004 | 140 | 0.17 | 291,874 | 179 | 0.25 | ||||||||||||||||||||
Time deposits | 2,379,430 | 7,741 | 1.29 | 2,527,090 | 10,451 | 1.66 | ||||||||||||||||||||
Total interest-bearing deposits | 10,736,235 | 12,562 | 0.47 | 11,187,115 | 18,141 | 0.65 | ||||||||||||||||||||
Other borrowings | 149,973 | 931 | 2.47 | 149,973 | 937 | 2.51 | ||||||||||||||||||||
Subordinated debentures | 222,331 | 2,961 | 5.30 | 222,574 | 3,383 | 6.11 | ||||||||||||||||||||
Total interest-bearing liabilities | 11,108,539 | 16,454 | 0.59 | 11,559,662 | 22,461 | 0.78 | ||||||||||||||||||||
Noninterest-bearing liabilities: | ||||||||||||||||||||||||||
Demand deposits | 4,892,079 | 4,587,673 | ||||||||||||||||||||||||
Accrued interest and other liabilities | 195,317 | 234,469 | ||||||||||||||||||||||||
Total liabilities | 16,195,935 | 16,381,804 | ||||||||||||||||||||||||
Stockholders' equity | 2,052,079 | 2,118,796 | ||||||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 18,248,014 | $ | 18,500,600 | ||||||||||||||||||||||
Net interest income/net interest spread | 154,493 | 3.27 | % | 155,123 | 3.23 | % | ||||||||||||||||||||
Net yield on earning assets/net interest margin | 3.49 | % | 3.51 | % | ||||||||||||||||||||||
Taxable equivalent adjustment: | ||||||||||||||||||||||||||
Investment securities | (451 | ) | (409 | ) | ||||||||||||||||||||||
Net interest income | $ | 154,042 | $ | 154,714 | ||||||||||||||||||||||
_____________________ |
(1) | Nonaccrual loans are included in loans, net of unearned income. No adjustment has been made for these loans in the calculation of yields. | |
(2) | Interest income and yields are presented on a fully taxable equivalent basis using an income tax rate of 21%. | |
(3) | Prior to the adoption of CECL on January 1, 2020, these loans were referred to as ACI loans, but with the adoption of CECL they are referred to as PCD loans. |
Table 3 – Loan Interest Income Detail | |||||||||||||||||||||||||
Year-To-Date | For the Three Months Ended | ||||||||||||||||||||||||
(In thousands) | September 30, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | December 31, 2019 | September 30, 2019 | |||||||||||||||||||
Interest Income Detail | |||||||||||||||||||||||||
Originated loans | $ | 378,501 | $ | 123,177 | $ | 125,922 | $ | 129,402 | $ | 134,450 | $ | 136,333 | |||||||||||||
ANCI loans: interest income | 82,055 | 22,850 | 26,264 | 32,940 | 37,637 | 43,133 | |||||||||||||||||||
ANCI loans: accretion | 19,777 | 5,364 | 6,703 | 7,710 | 8,610 | 10,951 | |||||||||||||||||||
PCD loans: interest income (1) | 8,571 | 2,421 | 3,111 | 3,039 | 3,839 | 3,406 | |||||||||||||||||||
PCD loans: accretion (1) | 3,936 | 1,039 | 854 | 2,043 | 6,018 | 4,147 | |||||||||||||||||||
Total loan interest income | $ | 492,840 | $ | 154,851 | $ | 162,854 | $ | 175,134 | $ | 190,554 | $ | 197,970 | |||||||||||||
Yields | |||||||||||||||||||||||||
Originated loans | 4.66 | % | 4.39 | % | 4.53 | % | 5.10 | % | 5.25 | % | 5.31 | % | |||||||||||||
ANCI loans without discount accretion | 4.36 | 3.96 | 4.20 | 4.85 | 4.95 | 5.23 | |||||||||||||||||||
ANCI loans discount accretion | 1.05 | 0.93 | 1.08 | 1.14 | 1.13 | 1.33 | |||||||||||||||||||
PCD loans without discount accretion | 5.69 | 5.11 | 6.30 | 5.65 | 6.20 | 5.23 | |||||||||||||||||||
PCD loans discount accretion | 2.62 | 2.20 | 1.73 | 3.80 | 9.73 | 6.37 | |||||||||||||||||||
Total loan yield | 4.85 | % | 4.51 | % | 4.72 | % | 5.35 | % | 5.63 | % | 5.72 | % |
(1) | Prior year quarter PCD amounts have been revised to be comparable to the current year presentation. Interest income for PCD loans represents contractual interest. |
Table 4 – Allowance for Credit Losses (“ACL”) (1) | ||||||||||||||||||||
For the Three Months Ended | ||||||||||||||||||||
(In thousands) | September 30, 2020 | June 30, 2020 | March 31, 2020 | December 31, 2019 | September 30, 2019 | |||||||||||||||
Balance at beginning of period | $ | 370,901 | $ | 245,246 | $ | 119,643 | $ | 127,773 | $ | 115,345 | ||||||||||
Cumulative effect of the adoption of CECL (2) | — | — | 75,850 | — | — | |||||||||||||||
Charge-offs | (21,830 | ) | (33,452 | ) | (33,098 | ) | (35,432 | ) | (31,650 | ) | ||||||||||
Recoveries | 1,936 | 901 | 613 | 176 | 314 | |||||||||||||||
Net charge-offs | (19,894 | ) | (32,551 | ) | (32,485 | ) | (35,256 | ) | (31,336 | ) | ||||||||||
Provision for loan losses | 34,405 | 158,206 | 82,238 | 27,126 | 43,764 | |||||||||||||||
Balance at end of period | $ | 385,412 | $ | 370,901 | $ | 245,246 | $ | 119,643 | $ | 127,773 |
(1) | This table represents the activity in the ACL for funded loans. | |
(2) | The Company adopted ASU 2016-13, Financial Instruments – Credit Losses (“CECL”), on January 1, 2020 and recorded this cumulative effect adjustment as a result of accounting change. |
Table 5 – ACL Activity by Segment | ||||||||||||||||||||||||
For the Three Months Ended September 30, 2020 | ||||||||||||||||||||||||
(In thousands) | Commercial and Industrial | Commercial Real Estate | Consumer | Total Allowance for Credit Losses | Reserve for Unfunded Commitments (1) | Total | ||||||||||||||||||
As of June 30, 2020 | $ | 217,796 | $ | 112,480 | $ | 40,625 | $ | 370,901 | $ | 3,827 | $ | 374,728 | ||||||||||||
Provision for credit losses | 1,562 | 33,262 | (419 | ) | 34,405 | (1,432 | ) | 32,973 | ||||||||||||||||
Charge-offs | (18,604 | ) | (2,978 | ) | (248 | ) | (21,830 | ) | — | (21,830 | ) | |||||||||||||
Recoveries | 1,443 | 244 | 249 | 1,936 | — | 1,936 | ||||||||||||||||||
As of September 30, 2020 | $ | 202,197 | $ | 143,008 | $ | 40,207 | $ | 385,412 | $ | 2,395 | $ | 387,807 | ||||||||||||
For the Nine Months Ended September 30, 2020 | ||||||||||||||||||||||||
(In thousands) | Commercial and Industrial | Commercial Real Estate | Consumer | Total Allowance for Credit Losses | Reserve for Unfunded Commitments (1) | Total | ||||||||||||||||||
As of December 31, 2019 | $ | 89,796 | $ | 15,319 | $ | 14,528 | $ | 119,643 | $ | 1,699 | $ | 121,342 | ||||||||||||
Cumulative effect of the adoption of CECL | 32,951 | 20,599 | 22,300 | 75,850 | 332 | 76,182 | ||||||||||||||||||
As of January 1, 2020 | 122,747 | 35,918 | 36,828 | 195,493 | 2,031 | 197,524 | ||||||||||||||||||
Provision for credit losses | 160,570 | 110,420 | 3,859 | 274,849 | 364 | 275,213 | ||||||||||||||||||
Charge-offs | (83,406 | ) | (3,784 | ) | (1,190 | ) | (88,380 | ) | — | (88,380 | ) | |||||||||||||
Recoveries | 2,286 | 454 | 710 | 3,450 | — | 3,450 | ||||||||||||||||||
As of September 30, 2020 | $ | 202,197 | $ | 143,008 | $ | 40,207 | $ | 385,412 | $ | 2,395 | $ | 387,807 |
(1) | The reserve for unfunded commitments is recorded in other liabilities in the consolidated balance sheets. |
Table 6 – Criticized Loans by Segment | ||||||||||||||||
As of September 30, 2020 | ||||||||||||||||
(Amortized cost in thousands) | Special Mention | Substandard | Doubtful | Total Criticized | ||||||||||||
Commercial and industrial | ||||||||||||||||
General C&I | $ | 71,384 | $ | 156,323 | $ | 9,270 | $ | 236,977 | ||||||||
Energy | 146,772 | 165,277 | 7,816 | 319,865 | ||||||||||||
Restaurant | 97,315 | 169,899 | 7,624 | 274,838 | ||||||||||||
Healthcare | 722 | 58,802 | — | 59,524 | ||||||||||||
Total commercial and industrial | 316,193 | 550,301 | 24,710 | 891,204 | ||||||||||||
Commercial real estate | ||||||||||||||||
Industrial, retail, and other | 93,897 | 58,321 | — | 152,218 | ||||||||||||
Multifamily | 91 | 200 | — | 291 | ||||||||||||
Office | 346 | 13,250 | 3,029 | 16,625 | ||||||||||||
Total commercial real estate | 94,334 | 71,771 | 3,029 | 169,134 | ||||||||||||
Consumer | ||||||||||||||||
Residential | — | 22,770 | — | 22,770 | ||||||||||||
Other | — | 358 | — | 358 | ||||||||||||
Total consumer | — | 23,128 | — | 23,128 | ||||||||||||
Total | $ | 410,527 | $ | 645,200 | $ | 27,739 | $ | 1,083,466 | ||||||||
As of June 30, 2020 | ||||||||||||||||
(Amortized cost in thousands) | Special Mention | Substandard | Doubtful | Total Criticized | ||||||||||||
Commercial and industrial | ||||||||||||||||
General C&I | $ | 45,512 | $ | 146,333 | $ | 10,237 | $ | 202,082 | ||||||||
Energy sector | 155,735 | 114,080 | 10,747 | 280,562 | ||||||||||||
Restaurant industry | 171,722 | 158,596 | 7,596 | 337,914 | ||||||||||||
Healthcare | 18,250 | 47,398 | — | 65,648 | ||||||||||||
Total commercial and industrial | 391,219 | 466,407 | 28,580 | 886,206 | ||||||||||||
Commercial real estate | ||||||||||||||||
Industrial, retail, and other | 60,819 | 40,351 | 534 | 101,704 | ||||||||||||
Multifamily | 91 | 714 | — | 805 | ||||||||||||
Office | 346 | 1,005 | — | 1,351 | ||||||||||||
Total commercial real estate | 61,256 | 42,070 | 534 | 103,860 | ||||||||||||
Consumer | ||||||||||||||||
Residential real estate | — | 19,172 | — | 19,172 | ||||||||||||
Other | — | 39 | — | 39 | ||||||||||||
Total consumer | — | 19,211 | — | 19,211 | ||||||||||||
Total | $ | 452,475 | $ | 527,688 | $ | 29,114 | $ | 1,009,277 |
Table 7 – Nonperforming Assets | ||||||||||||||||||||
As of | ||||||||||||||||||||
(In thousands) | September 30, 2020 | June 30, 2020 | March 31, 2020 | December 31, 2019 | September 30, 2019 | |||||||||||||||
Nonperforming loans (1) | ||||||||||||||||||||
Commercial and industrial | $ | 145,570 | $ | 182,839 | $ | 136,712 | $ | 106,803 | $ | 92,643 | ||||||||||
Commercial real estate | 27,163 | 25,261 | 8,133 | 1,127 | 6,855 | |||||||||||||||
Consumer | 16,364 | 16,284 | 14,808 | 7,289 | 5,294 | |||||||||||||||
Small business (2) | — | — | — | 4,337 | 3,334 | |||||||||||||||
Total nonperforming loans ("NPL") | 189,097 | 224,384 | 159,653 | 119,556 | 108,126 | |||||||||||||||
Foreclosed OREO and other NPA | 20,344 | 13,949 | 15,679 | 5,958 | 6,731 | |||||||||||||||
Total nonperforming assets | $ | 209,441 | $ | 238,333 | $ | 175,332 | $ | 125,514 | $ | 114,857 | ||||||||||
NPL as a percentage of total loans | 1.40 | % | 1.64 | % | 1.19 | % | 0.92 | % | 0.79 | % | ||||||||||
NPA as a percentage of loans plus OREO/other | 1.55 | % | 1.74 | % | 1.31 | % | 0.97 | % | 0.84 | % | ||||||||||
NPA as a percentage of total assets | 1.14 | % | 1.26 | % | 0.99 | % | 0.71 | % | 0.64 | % | ||||||||||
Total accruing loans 90 days or more past due | $ | 7,260 | $ | 3,123 | $ | 1,999 | $ | 23,364 | $ | 24,487 |
(1) | Amounts are not comparable due to our adoption of CECL on January 1, 2020. Prior to this date, pools of individual ACI loans were excluded because they continued to earn interest income from the accretable yield at the pool level. With the adoption of CECL, the pools were discontinued, and performance is based on contractual terms for individual loans. Additionally, prior to January 1, 2020, we used recorded investment in this table. With the adoption of CECL, we now use amortized cost. | |
(2) | Upon the adoption of CECL, small business loans are included in commercial and industrial and commercial real estate loans. |
Table 8 – Noninterest Income | ||||||||||||||||||||
For the Three Months Ended | ||||||||||||||||||||
(In thousands) | September 30, 2020 | June 30, 2020 | March 31, 2020 | December 30, 2019 | September 30, 2019 | |||||||||||||||
Noninterest Income | ||||||||||||||||||||
Investment advisory revenue | $ | 6,797 | $ | 6,505 | $ | 5,605 | $ | 6,920 | $ | 6,532 | ||||||||||
Trust services revenue | 4,556 | 4,092 | 4,815 | 4,713 | 4,440 | |||||||||||||||
Service charges on deposit accounts | 5,847 | 4,852 | 6,416 | 5,181 | 5,462 | |||||||||||||||
Credit-related fees | 4,202 | 4,401 | 5,983 | 5,094 | 5,960 | |||||||||||||||
Bankcard fees | 1,745 | 1,716 | 1,958 | 1,933 | 2,061 | |||||||||||||||
Payroll processing revenue | 1,255 | 1,143 | 1,367 | 1,373 | 1,196 | |||||||||||||||
SBA income | 3,037 | 1,335 | 1,908 | 2,153 | 2,216 | |||||||||||||||
Other service fees | 1,450 | 1,528 | 1,912 | 1,701 | 1,700 | |||||||||||||||
Securities gains, net | 79 | 2,286 | 2,994 | 317 | 775 | |||||||||||||||
Other | 3,623 | 2,092 | 2,111 | 4,513 | 4,300 | |||||||||||||||
Total noninterest income | $ | 32,591 | $ | 29,950 | $ | 35,069 | $ | 33,898 | $ | 34,642 |
Table 9 – Noninterest Expenses | ||||||||||||||||||||
For the Three Months Ended | ||||||||||||||||||||
(In thousands) | September 30, 2020 | June 30, 2020 | September 30, 2019 | December 30, 2019 | September 30, 2019 | |||||||||||||||
Noninterest Expenses | ||||||||||||||||||||
Salaries and employee benefits | $ | 51,734 | $ | 47,158 | $ | 48,807 | $ | 54,840 | $ | 51,904 | ||||||||||
Premises and equipment | 10,716 | 10,634 | 10,808 | 11,618 | 10,913 | |||||||||||||||
Merger related expenses | 2,105 | — | 1,282 | 925 | 1,010 | |||||||||||||||
Intangible asset amortization | 5,299 | 5,472 | 5,592 | 5,876 | 6,025 | |||||||||||||||
Data processing | 3,024 | 3,084 | 3,352 | 3,343 | 3,641 | |||||||||||||||
Software amortization | 4,432 | 4,036 | 3,547 | 3,427 | 3,406 | |||||||||||||||
Consulting and professional fees | 3,320 | 3,009 | 2,707 | 3,552 | 2,621 | |||||||||||||||
Loan related expenses | 953 | 735 | 760 | 654 | (921 | ) | ||||||||||||||
FDIC insurance | 2,528 | 3,939 | 2,436 | 1,245 | 527 | |||||||||||||||
Communications | 1,119 | 1,002 | 1,156 | 1,236 | 1,425 | |||||||||||||||
Advertising and public relations | 716 | 920 | 1,464 | 1,764 | 1,368 | |||||||||||||||
Legal expenses | 681 | 579 | 411 | 306 | 500 | |||||||||||||||
Other | 8,232 | 8,052 | 11,636 | 11,732 | 11,864 | |||||||||||||||
Noninterest expenses excluding goodwill impairment charge | 94,859 | 88,620 | 93,958 | 100,519 | 94,283 | |||||||||||||||
Goodwill impairment charge | — | — | 443,695 | — | — | |||||||||||||||
Total noninterest expenses | $ | 94,859 | $ | 88,620 | $ | 537,653 | $ | 100,519 | $ | 94,283 |
Table 10 – Reconciliation of Non-GAAP Financial Measures | ||||||||||||||||||||
As of and for the Three Months Ended | ||||||||||||||||||||
(In thousands, except share and per share data) | September 30, 2020 | June 30, 2020 | March 31, 2020 | December 31, 2019 | September 30, 2019 | |||||||||||||||
Efficiency ratio | ||||||||||||||||||||
Noninterest expenses (numerator) | $ | 94,859 | $ | 88,620 | $ | 537,653 | $ | 100,519 | $ | 94,283 | ||||||||||
Net interest income | $ | 154,042 | $ | 154,714 | $ | 153,468 | $ | 160,911 | $ | 160,187 | ||||||||||
Noninterest income | 32,591 | 29,950 | 35,069 | 33,898 | 34,642 | |||||||||||||||
Operating revenue (denominator) | $ | 186,633 | $ | 184,664 | $ | 188,537 | $ | 194,809 | $ | 194,829 | ||||||||||
Efficiency ratio | 50.83 | % | 47.99 | % | 285.17 | % | 51.60 | % | 48.39 | % | ||||||||||
Adjusted efficiency ratio | ||||||||||||||||||||
Noninterest expenses | $ | 94,859 | $ | 88,620 | $ | 537,653 | $ | 100,519 | $ | 94,283 | ||||||||||
Less: non-cash goodwill impairment charge | — | — | 443,695 | — | — | |||||||||||||||
Less: merger related expenses | 2,105 | — | 1,282 | 925 | 1,010 | |||||||||||||||
Less: pension plan termination expense | — | — | — | 1,225 | — | |||||||||||||||
Less: expenses related to COVID-19 pandemic | 235 | 1,205 | 122 | — | — | |||||||||||||||
Adjusted noninterest expenses (numerator) | $ | 92,519 | $ | 87,415 | $ | 92,554 | $ | 98,369 | $ | 93,273 | ||||||||||
Net interest income | $ | 154,042 | $ | 154,714 | $ | 153,468 | $ | 160,911 | $ | 160,187 | ||||||||||
Noninterest income | 32,591 | 29,950 | 35,069 | 33,898 | 34,642 | |||||||||||||||
Plus: impairment charge on branch building | 538 | — | — | — | — | |||||||||||||||
Less: gain on sale of acquired loans | — | — | — | 1,263 | — | |||||||||||||||
Less: securities gains, net | 79 | 2,286 | 2,994 | 317 | 775 | |||||||||||||||
Adjusted noninterest income | 33,050 | 27,664 | 32,075 | 32,318 | 33,867 | |||||||||||||||
Adjusted operating revenue (denominator) | $ | 187,092 | $ | 182,378 | $ | 185,543 | $ | 193,229 | $ | 194,054 | ||||||||||
Adjusted efficiency ratio | 49.45 | % | 47.93 | % | 49.88 | % | 50.91 | % | 48.07 | % | ||||||||||
Tangible common equity ratio | ||||||||||||||||||||
Shareholders’ equity | $ | 2,071,472 | $ | 2,045,480 | $ | 2,113,543 | $ | 2,460,846 | $ | 2,475,944 | ||||||||||
Less: goodwill and other intangible assets, net | (132,005 | ) | (137,318 | ) | (142,782 | ) | (590,949 | ) | (597,488 | ) | ||||||||||
Tangible common shareholders’ equity | 1,939,467 | 1,908,162 | 1,970,761 | 1,869,897 | 1,878,456 | |||||||||||||||
Total assets | 18,404,195 | 18,857,753 | 17,237,918 | 17,800,229 | 17,855,946 | |||||||||||||||
Less: goodwill and other intangible assets, net | (132,005 | ) | (137,318 | ) | (142,782 | ) | (590,949 | ) | (597,488 | ) | ||||||||||
Tangible assets | $ | 18,272,190 | $ | 18,720,435 | $ | 17,095,136 | $ | 17,209,280 | $ | 17,258,458 | ||||||||||
Tangible common equity ratio | 10.61 | % | 10.19 | % | 11.53 | % | 10.87 | % | 10.88 | % | ||||||||||
Tangible book value per share | ||||||||||||||||||||
Shareholders’ equity | $ | 2,071,472 | $ | 2,045,480 | $ | 2,113,543 | $ | 2,460,846 | $ | 2,475,944 | ||||||||||
Less: goodwill and other intangible assets, net | (132,005 | ) | (137,318 | ) | (142,782 | ) | (590,949 | ) | (597,488 | ) | ||||||||||
Tangible common shareholders’ equity | $ | 1,939,467 | $ | 1,908,162 | $ | 1,970,761 | $ | 1,869,897 | $ | 1,878,456 | ||||||||||
Common shares outstanding | 125,946,793 | 125,930,741 | 125,897,827 | 127,597,569 | 128,173,765 | |||||||||||||||
Tangible book value per share | $ | 15.40 | $ | 15.15 | $ | 15.65 | $ | 14.65 | $ | 14.66 |
Table 10 (Continued) – Reconciliation of Non-GAAP Measures | ||||||||||||||||||||
As of and for the Three Months Ended | ||||||||||||||||||||
(In thousands, except share and per share data) | September 30, 2020 | June 30, 2020 | March 31, 2020 | December 31, 2019 | September 30, 2019 | |||||||||||||||
Return on average tangible common equity | ||||||||||||||||||||
Average common equity | $ | 2,052,079 | $ | 2,118,796 | $ | 2,446,810 | $ | 2,471,398 | $ | 2,447,189 | ||||||||||
Less: average intangible assets | (135,491 | ) | (140,847 | ) | (584,513 | ) | (595,439 | ) | (598,602 | ) | ||||||||||
Average tangible common shareholders’ equity | $ | 1,916,588 | $ | 1,977,949 | $ | 1,862,297 | $ | 1,875,959 | $ | 1,848,587 | ||||||||||
Net income (loss) | $ | 49,315 | $ | (56,114 | ) | $ | (399,311 | ) | $ | 51,426 | $ | 43,986 | ||||||||
Plus: non-cash goodwill impairment charge, net of tax | — | — | 412,918 | — | — | |||||||||||||||
Plus: intangible asset amortization, net of tax | 4,042 | 4,174 | 4,261 | 4,477 | 4,620 | |||||||||||||||
Tangible net income (loss) | $ | 53,357 | $ | (51,940 | ) | $ | 17,868 | $ | 55,903 | $ | 48,606 | |||||||||
Return on average tangible common equity(1) | 11.08 | % | (10.56 | )% | 3.86 | % | 11.82 | % | 10.43 | % | ||||||||||
Adjusted return on average tangible common equity | ||||||||||||||||||||
Average tangible common shareholders’ equity | $ | 1,916,588 | $ | 1,977,949 | $ | 1,862,297 | $ | 1,875,959 | $ | 1,848,587 | ||||||||||
Tangible net income (loss) | $ | 53,357 | $ | (51,940 | ) | $ | 17,868 | $ | 55,903 | $ | 48,606 | |||||||||
Non-routine items: | ||||||||||||||||||||
Plus: merger related expenses | 2,105 | — | 1,282 | 925 | 1,010 | |||||||||||||||
Plus: pension plan termination expense | — | — | — | 1,225 | — | |||||||||||||||
Plus: expenses related to COVID-19 pandemic | 235 | 1,205 | 122 | — | — | |||||||||||||||
Plus: impairment loss on branch building | 538 | — | — | — | — | |||||||||||||||
Less: gain on sale of acquired loans | — | — | — | 1,263 | — | |||||||||||||||
Less: securities gains (losses), net | 79 | 2,286 | 2,994 | 317 | 775 | |||||||||||||||
Less: income tax effect of tax deductible non-routine items | 664 | (256 | ) | (464 | ) | 48 | 55 | |||||||||||||
Total non-routine items, after tax | 2,135 | (825 | ) | (1,126 | ) | 522 | 180 | |||||||||||||
Adjusted tangible net income (loss) | $ | 55,492 | $ | (52,765 | ) | $ | 16,742 | $ | 56,425 | $ | 48,786 | |||||||||
Adjusted return on average tangible common equity(1) | 11.52 | % | (10.73 | )% | 3.62 | % | 11.93 | % | 10.47 | % | ||||||||||
Adjusted return on average assets | ||||||||||||||||||||
Average assets | $ | 18,248,014 | $ | 18,500,600 | $ | 17,694,018 | $ | 17,843,383 | $ | 17,621,163 | ||||||||||
Net income (loss) | $ | 49,315 | $ | (56,114 | ) | $ | (399,311 | ) | $ | 51,426 | $ | 43,986 | ||||||||
Return on average assets | 1.08 | % | (1.22 | )% | (9.08 | )% | 1.14 | % | 0.99 | % | ||||||||||
Net income (loss) | $ | 49,315 | $ | (56,114 | ) | $ | (399,311 | ) | $ | 51,426 | $ | 43,986 | ||||||||
Plus: non-cash goodwill impairment charge, net of tax | — | — | 412,918 | — | — | |||||||||||||||
Total non-routine items, after tax | 2,135 | (825 | ) | (1,126 | ) | 522 | 180 | |||||||||||||
Adjusted net income (loss) | $ | 51,450 | $ | (56,939 | ) | $ | 12,481 | $ | 51,948 | $ | 44,166 | |||||||||
Adjusted return on average assets(1) | 1.12 | % | (1.24 | )% | 0.28 | % | 1.16 | % | 0.99 | % | ||||||||||
Adjusted diluted earnings per share | ||||||||||||||||||||
Diluted weighted average common shares outstanding | 126,094,868 | 125,924,652 | 126,630,446 | 128,003,089 | 128,515,274 | |||||||||||||||
Net income allocated to common stock | $ | 48,884 | $ | (56,114 | ) | $ | (399,311 | ) | $ | 51,248 | $ | 43,849 | ||||||||
Plus: non-cash goodwill impairment, net of tax | — | — | 412,918 | — | — | |||||||||||||||
Total non-routine items, after tax | 2,135 | (825 | ) | (1,126 | ) | 522 | 180 | |||||||||||||
Adjusted net income allocated to common stock | $ | 51,019 | $ | (56,939 | ) | $ | 12,481 | $ | 51,770 | $ | 44,029 | |||||||||
Adjusted diluted earnings (loss) per share | $ | 0.40 | $ | (0.45 | ) | $ | 0.10 | $ | 0.40 | $ | 0.34 | |||||||||
Adjusted pre-tax, pre-provision net revenue | ||||||||||||||||||||
Income (loss) before taxes | $ | 58,801 | $ | (62,767 | ) | $ | (432,545 | ) | $ | 67,164 | $ | 56,782 | ||||||||
Plus: Provision for credit losses | 32,973 | 158,811 | 83,429 | 27,126 | 43,764 | |||||||||||||||
Plus: non-cash goodwill impairment | — | — | 443,695 | — | — | |||||||||||||||
Plus: Total non-routine items before taxes | 2,799 | (1,081 | ) | (1,590 | ) | 570 | 235 | |||||||||||||
Adjusted pre-tax, pre-provision net revenue | $ | 94,573 | $ | 94,963 | $ | 92,989 | $ | 94,860 | $ | 100,781 |
(1) | Annualized. |
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