FB Financial Corporation (the “Company”) (NYSE: FBK), parent company of FirstBank, reported net income of $21.6 million, or $0.68 per diluted common share, for the fourth quarter of 2019, compared to net income of $17.0 million, or $0.54 per diluted common share, for the fourth quarter of 2018. On an adjusted basis, excluding merger expenses, net income per diluted common share was $0.70 for the fourth quarter of 2019 compared to $0.55 for the fourth quarter of 2018.

The Company reported net income of $83.8 million, or $2.65 per diluted common share, for the year ended December 31, 2019, compared to net income of $80.2 million, or $2.55 per diluted common share, for the year ended December 31, 2018. On an adjusted basis, excluding merger and mortgage restructuring expenses, net income per diluted common share was $2.83 for the year ended December 31, 2019, compared to $2.61 in 2018, representing an 8.43% increase.

President and Chief Executive Officer, Christopher T. Holmes stated, “Our fourth quarter results reflect the continued execution by our team and the strength of our markets. Our growth is a direct result of our continued focus on our customers across all of our markets. In addition to the solid 5.87% loan growth, the team produced strong adjusted returns on average assets of 1.42% and average tangible common equity of 15.2% for the quarter.”

Holmes further commented, “During the year, we completed the mortgage restructuring, completed the Atlantic Capital branch acquisition, and announced the merger with Farmers National Bank of Scottsville (KY). In addition to these milestone accomplishments, we had impressive organic growth, top tier profitability, good growth in tangible book value and energized associates. We are extremely excited about the future and have strong momentum as we head into 2020, including our announcement today of our proposed merger with Franklin Financial Network, Inc.”

Performance Summary

 

 

2019

 

2018

 

Annualized

 

 

(dollars in thousands, expect per share data)

 

Fourth Quarter

 

Third Quarter

 

Fourth Quarter

 

4Q19 / 3Q19
% Change

 

4Q19 / 4Q18
% Change

Balance Sheet Highlights

 

 

 

 

 

 

 

 

 

 

Investment securities

 

$

691,676

 

 

$

671,781

 

 

$

658,805

 

 

11.7

%

 

4.99

%

Loans - held for sale

 

262,518

 

 

305,493

 

 

278,815

 

 

(55.8

)%

 

(5.85

)%

Loans - held for investment (HFI)

 

4,409,642

 

 

4,345,344

 

 

3,667,511

 

 

5.87

%

 

20.2

%

Allowance for loan losses

 

31,139

 

 

31,464

 

 

28,932

 

 

(4.10

)%

 

7.63

%

Total assets

 

6,124,921

 

 

6,088,895

 

 

5,136,764

 

 

2.35

%

 

19.2

%

Customer deposits

 

4,914,587

 

 

4,896,327

 

 

4,068,610

 

 

1.48

%

 

20.8

%

Brokered and internet time deposits

 

20,351

 

 

25,436

 

 

103,107

 

 

(79.3

)%

 

(80.3

)%

Total deposits

 

4,934,938

 

 

4,921,763

 

 

4,171,717

 

 

1.06

%

 

18.3

%

Borrowings

 

304,675

 

 

307,129

 

 

227,776

 

 

(3.17

)%

 

33.8

%

Total shareholders' equity

 

762,329

 

 

744,835

 

 

671,857

 

 

9.32

%

 

13.5

%

Tangible book value per share*

 

$

18.55

 

 

$

18.03

 

 

$

17.02

 

 

 

 

 

Tangible common equity to tangible assets*

 

9.69

%

 

9.45

%

 

10.5

%

 

 

 

 

* Certain measures are considered non-GAAP financial measures. See “Use of non-GAAP Financial Measures” and the corresponding non-GAAP reconciliation tables in the Supplemental Financial Information, which accompanies this Earnings Release, as well as “Use of non-GAAP Financial Measures” and the Appendix in the Earnings Release Presentation issued January 21, 2020 for a reconciliation and discussion of this non-GAAP measure.

 

 

 

2019

 

2018

(dollars in thousands, except share data)

 

Fourth Quarter

 

Third Quarter

 

Fourth Quarter

Results of operations

 

 

 

 

 

 

Net interest income

 

$

57,692

 

 

$

58,305

 

 

$

51,367

 

NIM

 

4.12

%

 

4.28

%

 

4.50

%

Provision for loan losses

 

$

2,950

 

 

$

1,831

 

 

$

2,200

 

Net charge-off ratio

 

0.30

%

 

0.05

%

 

0.06

%

Noninterest income

 

$

35,234

 

 

$

38,145

 

 

$

27,249

 

Mortgage banking income

 

$

26,176

 

 

$

29,193

 

 

$

18,997

 

Total revenue

 

$

92,926

 

 

$

96,450

 

 

$

78,616

 

Noninterest expenses

 

$

62,686

 

 

$

62,935

 

 

$

53,736

 

Merger and mortgage restructuring expenses

 

$

686

 

 

$

407

 

 

$

401

 

Efficiency ratio

 

67.5

%

 

65.3

%

 

68.4

%

Core efficiency ratio*

 

66.5

%

 

64.5

%

 

67.5

%

Pre-tax income

 

$

27,290

 

 

$

31,684

 

 

$

22,680

 

Total mortgage banking pre-tax contribution (loss), adjusted*

 

$

3,010

 

 

$

5,375

 

 

$

(1,784

)

Net income

 

$

21,572

 

 

$

23,966

 

 

$

17,040

 

Diluted earnings per share

 

$

0.68

 

 

$

0.76

 

 

$

0.54

 

Effective tax rate

 

21.0

%

 

24.4

%

 

24.9

%

Net income, adjusted*

 

$

22,079

 

 

$

24,267

 

 

$

17,336

 

Diluted earnings per share, adjusted*

 

$

0.70

 

 

$

0.77

 

 

$

0.55

 

Weighted average number of shares outstanding- fully diluted

 

31,470,565

 

 

31,425,573

 

 

31,344,949

 

Actual shares outstanding - period end

 

31,034,315

 

 

30,927,664

 

 

30,724,532

 

Returns on average:

 

 

 

 

 

 

Assets ("ROAA")

 

1.39

%

 

1.59

%

 

1.35

%

Adjusted*

 

1.42

%

 

1.61

%

 

1.37

%

Equity ("ROAE")

 

11.2

%

 

13.0

%

 

10.3

%

Tangible common equity ("ROATCE")*

 

14.9

%

 

17.5

%

 

13.3

%

Adjusted*

 

15.2

%

 

17.7

%

 

13.5

%

* Certain measures are considered non-GAAP financial measures. See "Use of non-GAAP Financial Measures" and the corresponding non-GAAP reconciliation tables in the Supplemental Financial Information, which accompanies this Earnings Release, as well as "Use of non-GAAP Financial Measures" and the Appendix in the Earnings Release Presentation issued January 21, 2020, for a reconciliation and discussion of this non-GAAP measure. 

 

Balanced Growth

The Company grew loans (HFI) by $64.3 million to $4.41 billion during the fourth quarter of 2019, or 5.87% annualized, while average loans (HFI) increased 7.14% annualized from last quarter. Year over year loan growth was 20.2%, or 10.0% organically. Contractual loan yields decreased from 5.50% in the third quarter to 5.27% in the fourth quarter, reflecting the impact of the lower interest rate environment.

During the fourth quarter of 2019, the Company grew deposits to $4.93 billion, despite a $104.1 million decrease in mortgage escrow and wholesale/other deposits. The Company reduced its cost of deposits to 1.02% from 1.11% in the third quarter of 2019. Loans (HFI) to deposits increased to 89.4% this quarter from 88.3% last quarter.

The Company’s net interest income for the quarter was $57.7 million, representing a decrease from $58.3 million last quarter and an increase from $51.4 million for the fourth quarter of 2018. The Company’s net interest margin (“NIM”) was 4.12% for the fourth quarter of 2019, compared to 4.28% and 4.50% for the third quarter of 2019 and the fourth quarter of 2018, respectively. Accretion related to purchased loans and nonaccrual interest contributed 21 basis points to the NIM in the fourth quarter of 2019 compared to 16 and 17 basis points for the third quarter of 2019 and the fourth quarter of 2018, respectively. Overall, the NIM for the fourth quarter of 2019 was impacted by a 26 basis point decline in the yield on interest-earning assets offset by a 12 basis point decline in the rate on interest-bearing liabilities over last quarter.

James R. Gordon, Chief Financial Officer, commented, “Our margin declined as expected given the rate cuts in the third and fourth quarters. We believe the margin will stabilize over the first half of 2020 and are optimistic that we could see the margin begin to expand in the second half of 2020 as we opportunistically reprice deposits.”

Noninterest Income Benefits from Interest Rate Environment

During the quarter, the Company produced unseasonably strong results from the mortgage business driven by the lower interest rate environment. Noninterest income was $35.2 million for the fourth quarter of 2019, compared to $38.1 million for the third quarter of 2019 and $27.2 million for the fourth quarter of 2018. Mortgage banking income was $26.2 million for the fourth quarter of 2019, compared to $29.2 million for the third quarter of 2019 and $19.0 million for the fourth quarter of 2018. Interest rate lock commitment volume totaled $1.08 billion in the fourth quarter of 2019 compared to $1.64 billion in the third quarter of 2019 and $1.31 billion in the fourth quarter of 2018.

During the fourth quarter of 2019, the Company’s total mortgage pre-tax direct contribution was $3.0 million. This compares to the $5.4 million contribution, excluding mortgage restructuring expense of $0.1 million, in the third quarter of 2019 and a loss of $1.8 million in the fourth quarter of 2018.

Holmes commented, “Our mortgage operations are benefiting from the current interest rate environment and the strategic restructuring of the origination channels in the first half of 2019. We are comfortable with the operations at these levels and look forward to 2020.”

Noninterest Expenses

Noninterest expense was $62.7 million for the fourth quarter of 2019, compared to $62.9 million for the third quarter of 2019 and $53.7 million for the fourth quarter of 2018. On an adjusted basis, noninterest expense was $62.0 million for the fourth quarter of 2019 and $62.5 million for the third quarter of 2019.

Gordon noted, “Noninterest expenses reflect our disciplined and thoughtful approach as we continue balancing profitability with investing in our teams and infrastructure.”

Asset Quality

During the fourth quarter of 2019, the Company recognized a provision for loan losses of $3.0 million, reflecting loan growth, renewals of previously acquired loans, and net charge-offs of 0.30% of average loans. The Company's nonperforming assets increased at December 31, 2019 to 0.77% of total assets compared to 0.62% at September 30, 2019. Nonperforming loans were 0.60% of loans held for investment at December 31, 2019, compared to 0.47% at September 30, 2019.

Holmes commented, “During the quarter we experienced charge-offs of $3.6 million, largely related to a single credit that accounted for $2.6 million of the total. The remaining balance of the credit of $1.6 million was placed on nonaccrual, contributing to an increase in the balance of nonaccrual loans. The credit referenced is an isolated occurrence related to specific events with a single borrower. The underlying credit trends of our loan portfolio remain strong and we continue to see overall strengths in our markets.”

Capital Well Positioned

“Our earnings continue to provide capital for growth and the capability to continue our dividend strategy. Our current level of tangible common equity at 9.7% of tangible assets and our simple capital structure of common equity and minimal trust preferred securities, positions us well and gives us multiple capital options to take advantage of future opportunities. We remain focused on delivering strong equity returns with a 15.4% adjusted return on average tangible common equity this year, driving a 8.99% increase in tangible book value per share from last year to $18.55 at year end,” commented Gordon.

Summary

Holmes further commented, “Our results reflect the hard work of our team in balancing growth and profitability during a quarter that saw interest rates decrease. We are proud of our team and our results and look forward to a prosperous 2020.”

WEBCAST AND CONFERENCE CALL INFORMATION

FB Financial Corporation will host a conference call to discuss the company’s financial results, and the announced merger with Franklin Financial Network, Inc. at 5:00 p.m. CT on Tuesday, January 21, 2020, and the conference call will be broadcast live over the Internet at https://www.webcaster4.com/Webcast/Page/1631/32670. An online replay will be available approximately an hour following the conclusion of the live broadcast.

ABOUT FB FINANCIAL CORPORATION

FB Financial Corporation (NYSE: FBK) is a bank holding company headquartered in Nashville, Tennessee. FB Financial Corporation operates through its wholly owned banking subsidiary, FirstBank, the third largest Tennessee-headquartered community bank, with 68 full-service bank branches across Tennessee, North Alabama and North Georgia, and mortgage offices across the Southeast. FirstBank serves five of the largest metropolitan markets in Tennessee and has approximately $6.1 billion in total assets.

SUPPLEMENTAL FINANCIAL INFORMATION AND EARNINGS PRESENTATION

Investors are encouraged to review this Earnings Release in conjunction with the Supplemental Financial Information and Earnings Presentation posted on the Company’s website, which can be found at https://investors.firstbankonline.com. This Earnings Release, the Supplemental Financial Information and the Earnings Presentation are also included with a Current Report on Form 8-K that the Company furnished to the U.S. Securities and Exchange Commission (“SEC”) on January 21, 2020.

BUSINESS SEGMENT RESULTS

The Company has included its business segment financial tables as part of this Earnings Release. A detailed discussion of our business segments is included in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2018, and investors are encouraged to review that discussion in conjunction with this Earnings Release.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this press release may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, without limitation, statements relating to the timing, benefits, costs, and synergies of the proposed merger with Franklin Financial Network, Inc. (“Franklin”) (the “Franklin merger”) and of the proposed merger with FNB Financial Corp. (“FNB”) (together with the Franklin merger, the “mergers”), and FB Financial’s future plans, results, strategies, and expectations. These statements can generally be identified by the use of the words and phrases “may,” “will,” “should,” “could,” “would,” “goal,” “plan,” “potential,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” “target,” “aim,” “predict,” “continue,” “seek,” “projection,” and other variations of such words and phrases and similar expressions. These forward-looking statements are not historical facts, and are based upon current expectations, estimates, and projections, many of which, by their nature, are inherently uncertain and beyond FB Financial’s control. The inclusion of these forward-looking statements should not be regarded as a representation by FB Financial or any other person that such expectations, estimates, and projections will be achieved. Accordingly, FB Financial cautions shareholders and investors 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. Actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. A number of factors could cause actual results to differ materially from those contemplated by the forward-looking statements including, without limitation, (1) the risk that the cost savings and any revenue synergies from the mergers or another acquisition may not be realized or may take longer than anticipated to be realized, (2) disruption from the mergers with customer, supplier, or employee relationships, (3) the occurrence of any event, change, or other circumstances that could give rise to the termination of the merger agreement with Franklin, (4) the failure to obtain necessary regulatory approvals for the Franklin merger, (5) the failure to obtain the approval of FB Financial and Franklin’s shareholders in connection with the Franklin merger, (6) the possibility that the costs, fees, expenses, and charges related to the mergers may be greater than anticipated, including as a result of unexpected or unknown factors, events, or liabilities, (7) the failure of the conditions to the Franklin merger to be satisfied, (8) the risks related to the integrations of the combined businesses following the mergers, including the risk that the integrations will be materially delayed or will be more costly or difficult than expected, (9) the diversion of management time on issues related to the mergers, (10) the ability of FB Financial to effectively manage the larger and more complex operations of the combined company following the mergers, (11) the risks associated with FB Financial’s pursuit of future acquisitions, (12) the risk of expansion into new geographic or product markets, (13) reputational risk and the reaction of the parties’ respective customers to the mergers, (14) FB Financial’s ability to successful execute its various business strategies, including its ability to execute on potential acquisition opportunities, (15) the risk of potential litigation or regulatory action related to the Franklin merger, and (16) general competitive, economic, political, and market conditions. Further information regarding FB Financial and factors which could affect the forward-looking statements contained herein can be found in FB Financial's Annual Report on Form 10-K for the fiscal year ended December 31, 2018, its Quarterly Reports on Form 10-Q for the three-month periods ended March 31, 2019, June 30, 2019 and September 30, 2019, and its other filings with the Securities and Exchange Commission (the “SEC”).

Many of these factors are beyond FB Financial’s ability to control or predict. If one or more events related to these or other risks or uncertainties materialize, or if the underlying assumptions prove to be incorrect, actual results may differ materially from the forward-looking statements. Accordingly, shareholders and investors should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date of this press release, and FB Financial undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law. New risks and uncertainties may emerge from time to time, and it is not possible for FB Financial to predict their occurrence or how they will affect the company.

FB Financial qualifies all forward-looking statements by these cautionary statements.

IMPORTANT INFORMATION FOR SHAREHOLDERS AND INVESTORS

In connection with the proposed merger with Franklin, FB Financial will file a registration statement on Form S-4 with the SEC. The registration statement will contain the joint proxy statement of Franklin and FB Financial to be sent to the FB Financial and Franklin shareholders seeking their approvals in connection with the merger and the issuance of FB Financial common stock in the merger. The registration statement will also contain the prospectus of FB Financial to register the shares of FB Financial common stock to be issued in connection with the merger. A definitive joint proxy statement/prospectus will also be provided to FB Financial and Franklin shareholders as required by applicable law. Investors and shareholders are encouraged to read the registration statement, including the joint proxy statement/prospectus that will be part of the registration statement, as well as any other relevant documents filed by FB Financial and Franklin with the SEC, including any amendments or supplements to the registration statement and other documents filed with the SEC, because they will contain important information about the Franklin merger, Franklin, and FB Financial. The registration statement and other documents filed with the SEC may be obtained for free on the SEC’s website (www.sec.gov). The definitive proxy statement/prospectus will also be made available for free by contacting FB Financial Corporation Investor Relations at (615) 564-1212 or investors@firstbankonline.com, or by contacting Franklin Investor Relations at (615) 236-8327 or investors@franklinsynergy.com. This press release does not constitute an offer to sell, the solicitation of an offer to sell or the solicitation of an offer to buy any securities, or the solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

PARTICIPANTS IN THE SOLICITATION

FB Financial, Franklin, and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from FB Financial and Franklin shareholders in connection with the proposed Franklin merger under the rules of the SEC. Information about the directors and executive officers of FB Financial may be found in the definitive proxy statement for FB Financial’s 2019 annual meeting of shareholders, filed with the SEC by FB Financial on April 16, 2019, and other documents subsequently filed by FB Financial with the SEC. Information about the directors and executive officers of Franklin may be found in the definitive proxy statement for Franklin’s 2019 annual meeting of shareholders, filed with the SEC by Franklin on April 12, 2019, and other documents subsequently filed by Franklin with the SEC. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus when it becomes available. Free copies of these documents may be obtained as described in the paragraph above.

GAAP RECONCILIATION AND USE OF NON-GAAP FINANCIAL MEASURES

This Earnings Release contains certain financial measures that are not measures recognized under U.S. generally accepted accounting principles (“GAAP”) and therefore are considered non-GAAP financial measures. These non-GAAP financial measures include, without limitation, adjusted net income, adjusted diluted earnings per share, core revenue, core noninterest expense and core noninterest income, core efficiency ratio (tax equivalent basis), Banking segment core efficiency ratio (tax equivalent basis), Mortgage segment core efficiency ratio (tax equivalent basis), adjusted mortgage contribution, adjusted return on average assets and equity and core total revenue. Each of these non-GAAP metrics excludes certain income and expense items that the Company’s management considers to be non-core/adjusted in nature. The Company refers to these non-GAAP measures as adjusted measures. The corresponding Supplemental Financial Information and Earnings Release Presentation also presents tangible assets, tangible common equity, tangible book value per common share, tangible common equity to tangible assets, return on tangible common equity, return on average tangible common equity and adjusted return on average tangible common equity. Each of these non-GAAP metrics excludes the impact of goodwill and other intangibles.

The Company’s management uses these non-GAAP financial measures in their analysis of the Company’s performance, financial condition and the efficiency of its operations as management believes such measures facilitate period-to-period comparisons and provide meaningful indications of its operating performance as they eliminate both gains and charges that management views as non-recurring or not indicative of operating performance. Management believes that these non-GAAP financial measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods as well as demonstrate the effects of significant non-core gains and charges in the current and prior periods. The Company’s management also believes that investors find these non-GAAP financial measures useful as they assist investors in understanding the Company’s underlying operating performance and in the analysis of ongoing operating trends. In addition, because intangible assets such as goodwill and other intangibles, and the other items excluded each vary extensively from company to company, the Company believes that the presentation of this information allows investors to more easily compare the Company’s results to the results of other companies. However, the non-GAAP financial measures discussed herein should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which the Company calculates the non-GAAP financial measures discussed herein may differ from that of other companies reporting measures with similar names. Investors should understand how such other banking organizations calculate their financial measures similar or with names similar to the non-GAAP financial measures the Company has discussed herein when comparing such non-GAAP financial measures. See the “Use of non-GAAP Financial Measures” and the corresponding non-GAAP reconciliation tables in the Supplemental Financial Information as well as “Use of non-GAAP Financial Measures” and the Appendix in the Earnings Release Presentation issued January 21, 2020, for a discussion and reconciliation of these measures to the most directly comparable GAAP financial measures.

 

Financial Summary and Key Metrics

(Unaudited)

(In Thousands, Except Share Data and %)

 

 

2019

 

2018

 

 

Fourth Quarter

 

Third Quarter

 

Fourth Quarter

Statement of Income Data

 

 

 

 

 

 

Total interest income

 

$

71,643

 

 

$

73,242

 

 

$

63,068

 

Total interest expense

 

13,951

 

 

14,937

 

 

11,701

 

Net interest income

 

57,692

 

 

58,305

 

 

51,367

 

Provision for loan losses

 

2,950

 

 

1,831

 

 

2,200

 

Total noninterest income

 

35,234

 

 

38,145

 

 

27,249

 

Total noninterest expense

 

62,686

 

 

62,935

 

 

53,736

 

Net income before income taxes

 

27,290

 

 

31,684

 

 

22,680

 

Income tax expense

 

5,718

 

 

7,718

 

 

5,640

 

Net income

 

$

21,572

 

 

$

23,966

 

 

$

17,040

 

Net interest income (tax—equivalent basis)

 

$

58,212

 

 

$

58,769

 

 

$

51,799

 

Net income, adjusted*

 

$

22,079

 

 

$

24,267

 

 

$

17,336

 

Per Common Share

 

 

 

 

 

 

Diluted net income

 

$

0.68

 

 

$

0.76

 

 

$

0.54

 

Diluted net income, adjusted*

 

0.70

 

 

0.77

 

 

0.55

 

Book value

 

24.56

 

 

24.08

 

 

21.87

 

Tangible book value*

 

18.55

 

 

18.03

 

 

17.02

 

Weighted average number of shares outstanding- fully diluted

 

31,470,565

 

 

31,425,573

 

 

31,344,949

 

Period-end number of shares

 

31,034,315

 

 

30,927,664

 

 

30,724,532

 

Selected Balance Sheet Data

 

 

 

 

 

 

Cash and cash equivalents

 

$

232,681

 

 

$

242,997

 

 

$

125,356

 

Loans held for investment (HFI)

 

4,409,642

 

 

4,345,344

 

 

3,667,511

 

Allowance for loan losses

 

(31,139

)

 

(31,464

)

 

(28,932

)

Loans held for sale

 

262,518

 

 

305,493

 

 

278,815

 

Investment securities, at fair value

 

691,676

 

 

671,781

 

 

658,805

 

Other real estate owned, net

 

18,939

 

 

16,076

 

 

12,643

 

Total assets

 

6,124,921

 

 

6,088,895

 

 

5,136,764

 

Customer deposits

 

4,914,587

 

 

4,896,327

 

 

4,068,610

 

Brokered and internet time deposits

 

20,351

 

 

25,436

 

 

103,107

 

Total deposits

 

4,934,938

 

 

4,921,763

 

 

4,171,717

 

Borrowings

 

304,675

 

 

307,129

 

 

227,776

 

Total shareholders' equity

 

762,329

 

 

744,835

 

 

671,857

 

Selected Ratios

 

 

 

 

 

 

Return on average:

 

 

 

 

 

 

Assets

 

1.39

%

 

1.59

%

 

1.35

%

Shareholders' equity

 

11.2

%

 

13.0

%

 

10.3

%

Tangible common equity*

 

14.9

%

 

17.5

%

 

13.3

%

Average shareholders' equity to average assets

 

12.4

%

 

12.2

%

 

13.2

%

Net interest margin (NIM) (tax-equivalent basis)

 

4.12

%

 

4.28

%

 

4.50

%

Efficiency ratio (GAAP)

 

67.5

%

 

65.3

%

 

68.4

%

Core efficiency ratio (tax-equivalent basis)*

 

66.5

%

 

64.5

%

 

67.5

%

Loans HFI to deposit ratio

 

89.4

%

 

88.3

%

 

87.9

%

Total loans to deposit ratio

 

94.7

%

 

94.5

%

 

94.6

%

Yield on interest-earning assets

 

5.11

%

 

5.37

%

 

5.52

%

Cost of interest-bearing liabilities

 

1.38

%

 

1.50

%

 

1.40

%

Cost of total deposits

 

1.02

%

 

1.11

%

 

1.03

%

Credit Quality Ratios

 

 

 

 

 

 

Allowance for loan losses as a percentage of loans HFI

 

0.71

%

 

0.72

%

 

0.79

%

Net charge-offs as a percentage of average loans HFI

 

0.30

%

 

0.05

%

 

0.06

%

Nonperforming loans HFI as a percentage of total loans HFI

 

0.60

%

 

0.47

%

 

0.46

%

Nonperforming assets as a percentage of total assets

 

0.77

%

 

0.62

%

 

0.61

%

Preliminary capital ratios (Consolidated)

 

 

 

 

 

 

Shareholders' equity to assets

 

12.4

%

 

12.2

%

 

13.1

%

Tangible common equity to tangible assets*

 

9.69

%

 

9.45

%

 

10.5

%

Tier 1 capital (to average assets)

 

10.1

%

 

10.1

%

 

11.4

%

Tier 1 capital (to risk-weighted assets)

 

11.6

%

 

11.3

%

 

12.4

%

Total capital (to risk-weighted assets)

 

12.2

%

 

12.0

%

 

13.0

%

Common Equity Tier 1 (to risk-weighted assets) (CET1)

 

11.1

%

 

10.8

%

 

11.7

%

*These measures are considered non-GAAP financial measures. See "GAAP Reconciliation and Use of Non-GAAP Financial Measures" and the corresponding financial tables below for reconciliations of these Non-GAAP measures. Investors are encouraged to refer to the discussion of non-GAAP measures included in the corresponding earnings release.

 

Non-GAAP Reconciliation

For the Periods Ended

(Unaudited)

(In Thousands, Except Share Data and %)

 

 

 

 

 

 

 

2019

 

2018

Net income, adjusted

 

Fourth Quarter

 

Third Quarter

 

Fourth Quarter

Pre-tax net income

 

$

27,290

 

 

$

31,684

 

 

$

22,680

 

Plus merger and mortgage restructuring expenses

 

686

 

 

407

 

 

401

 

Pre-tax net income, adjusted

 

$

27,976

 

 

$

32,091

 

 

$

23,081

 

Income tax expense, adjusted

 

5,897

 

 

7,824

 

 

5,745

 

Net income, adjusted

 

$

22,079

 

 

$

24,267

 

 

$

17,336

 

Weighted average common shares outstanding- fully diluted

 

 

31,470,565

 

 

 

31,425,573

 

 

 

31,344,949

 

Diluted earnings per share, adjusted

 

 

 

 

 

 

Diluted earnings per common share

 

$

0.68

 

 

$

0.76

 

 

$

0.54

 

Plus merger and mortgage restructuring expenses

 

0.02

 

 

0.01

 

 

0.01

 

Less tax effect

 

—

 

 

—

 

 

—

 

Diluted earnings per share, adjusted

 

$

0.70

 

 

$

0.77

 

 

$

0.55

 

 

 

 

 

 

 

 

Net income, adjusted

 

2019

 

2018

 

2017

Pre-tax net income

 

$

109,539

 

 

$

105,854

 

 

$

73,485

 

Plus merger, offering, and mortgage restructuring expenses

 

7,380

 

 

2,265

 

 

19,034

 

Pre tax net income, adjusted

 

116,919

 

 

108,119

 

 

92,519

 

Income tax expense, adjusted

 

27,648

 

 

26,034

 

 

34,749

 

Net income, adjusted

 

$

89,271

 

 

$

82,085

 

 

$

57,770

 

Weighted average common shares outstanding- fully diluted

 

31,402,897

 

 

31,314,981

 

 

28,207,602

 

 

 

 

 

 

 

 

Diluted earnings per share, adjusted

 

 

 

 

 

 

Diluted earning per share

 

$

2.65

 

 

$

2.55

 

 

$

1.86

 

Plus merger, offering, and mortgage restructuring expenses

 

0.24

 

 

0.07

 

 

0.67

 

Less tax effect and benefit of enacted tax laws

 

0.06

 

 

0.01

 

 

0.48

 

Diluted earnings per share, adjusted

 

$

2.83

 

 

$

2.61

 

 

$

2.05

 

 

 

 

 

 

 

 

 

 

2019

 

2018

Core efficiency ratio (tax-equivalent basis)

 

Fourth Quarter

 

Third Quarter

 

Fourth Quarter

Total noninterest expense

 

$

62,686

 

 

$

62,935

 

 

$

53,736

 

Less merger and mortgage restructuring expenses

 

686

 

 

407

 

 

401

 

Core noninterest expense

 

$

62,000

 

 

$

62,528

 

 

$

53,335

 

Net interest income (tax-equivalent basis)

 

$

58,212

 

 

$

58,769

 

 

$

51,799

 

Total noninterest income

 

35,234

 

 

38,145

 

 

27,249

 

Less gain (loss) on sales or write-downs of other real estate owned and other assets

 

277

 

 

(82

)

 

 

33

 

Less loss from securities, net

 

(18

)

 

(20

)

 

—

 

Core noninterest income

 

34,975

 

 

38,247

 

 

27,216

 

Core revenue

 

$

93,187

 

 

$

97,016

 

 

$

79,015

 

Efficiency ratio (GAAP)(a)

 

67.5

%

 

65.3

%

 

68.4

%

Core efficiency ratio (tax-equivalent basis)

 

66.5

%

 

64.5

%

 

67.5

%

(a) Efficiency ratio (GAAP) is calculated by dividing reported noninterest expense by reported total revenue. 

 

Non-GAAP Reconciliation

For the Periods Ended

(Unaudited)

(In Thousands, Except Share Data and %)

 

 

 

 

 

 

 

2019

 

2018

Banking segment core efficiency ratio (tax equivalent)

 

Fourth Quarter

 

Third Quarter

 

Fourth Quarter

Core consolidated noninterest expense

 

$

62,000

 

 

$

62,528

 

 

$

53,335

 

Less Mortgage segment core noninterest expense

 

14,956

 

 

15,686

 

 

16,262

 

Core Banking segment noninterest expense

 

$

47,044

 

 

$

46,842

 

 

$

37,073

 

Core revenue

 

$

93,187

 

 

$

97,016

 

 

$

79,015

 

Less Mortgage segment total revenue

 

16,193

 

 

18,455

 

 

13,979

 

Core Banking segment total revenue

 

$

76,994

 

 

$

78,561

 

 

$

65,036

 

Banking segment core efficiency ratio (tax-equivalent basis)

 

61.1

%

 

59.6

%

 

57.0

%

 

 

 

 

 

 

 

Mortgage segment core efficiency ratio (tax equivalent)

 

 

 

 

 

 

Mortgage segment noninterest expense

 

$

14,956

 

 

$

15,798

 

 

$

16,262

 

Less mortgage restructuring expense

 

—

 

 

112

 

 

—

 

Core Mortgage segment noninterest expense

 

$

14,956

 

 

15,686

 

 

16,262

 

Mortgage segment total revenue

 

$

16,193

 

 

18,455

 

 

13,979

 

Mortgage segment core efficiency ratio (tax-equivalent basis)

 

92.4

%

 

85.0

%

 

 

N/A

 

 

 

 

 

 

 

 

 

 

 

2019

 

2018

Mortgage contribution, adjusted

 

Fourth Quarter

 

Third Quarter

 

Fourth Quarter

Mortgage segment pre-tax net contribution

 

$

1,237

 

 

$

2,657

 

 

$

(2,283

)

Retail footprint:

 

 

 

 

 

 

Mortgage banking income

 

9,899

 

 

10,693

 

 

5,041

 

Mortgage banking expenses

 

8,126

 

 

8,087

 

 

4,542

 

Retail footprint pre-tax net contribution

 

1,773

 

 

2,606

 

 

499

 

Total mortgage banking pre-tax net contribution

 

$

3,010

 

 

$

5,263

 

 

$

(1,784

)

Plus mortgage restructuring expense

 

—

 

 

112

 

 

—

 

Total mortgage banking pre-tax net contribution, adjusted

 

$

3,010

 

 

$

5,375

 

 

$

(1,784

)

Pre-tax net income

 

$

27,290

 

 

$

31,684

 

 

$

22,680

 

% total mortgage banking pre-tax net contribution

 

11.0

%

 

16.6

%

 

 

NM

 

Pre-tax net income, adjusted

 

$

27,976

 

 

$

32,091

 

 

$

23,081

 

% total mortgage banking pre-tax net contribution, adjusted

 

10.8

%

 

16.7

%

 

 

NM

 

 

 

 

 

 

 

 

 

2019

 

2018

Tangible assets and equity

 

Fourth Quarter

 

Third Quarter

 

Fourth Quarter

Tangible Assets

 

 

 

 

 

 

Total assets

 

$

6,124,921

 

 

$

6,088,895

 

 

$

5,136,764

 

Less goodwill

 

169,051

 

 

168,486

 

 

137,190

 

Less intangibles, net

 

17,589

 

 

18,748

 

 

11,628

 

Tangible assets

 

$

5,938,281

 

 

$

5,901,661

 

 

$

4,987,946

 

Tangible Common Equity

 

 

 

 

 

 

Total shareholders' equity

 

$

762,329

 

 

$

744,835

 

 

$

671,857

 

Less goodwill

 

169,051

 

 

168,486

 

 

137,190

 

Less intangibles, net

 

17,589

 

 

18,748

 

 

11,628

 

Tangible common equity

 

$

575,689

 

 

$

557,601

 

 

$

523,039

 

Common shares outstanding

 

31,034,315

 

 

30,927,664

 

 

30,724,532

 

Book value per common share

 

$

24.56

 

 

$

24.08

 

 

$

21.87

 

Tangible book value per common share

 

$

18.55

 

 

$

18.03

 

 

$

17.02

 

Total shareholders' equity to total assets

 

12.4

%

 

12.2

%

 

13.1

%

Tangible common equity to tangible assets

 

9.69

%

 

9.45

%

 

10.5

%

 

Non-GAAP Reconciliation

For the Periods Ended

(Unaudited)

(In Thousands, Except Share Data and %)

 

 

 

 

 

 

 

2019

 

2018

Return on average tangible common equity

 

Fourth Quarter

 

Third Quarter

 

Fourth Quarter

Total average shareholders' equity

 

$

761,949

 

 

$

731,701

 

 

$

659,050

 

Less average goodwill

 

168,492

 

 

168,486

 

 

137,190

 

Less average intangibles, net

 

18,242

 

 

19,523

 

 

12,016

 

Average tangible common equity

 

$

575,215

 

 

$

543,692

 

 

$

509,845

 

Net income

 

$

21,572

 

 

$

23,966

 

 

$

17,040

 

Return on average tangible common equity

 

14.9

%

 

17.5

%

 

13.3

%

 

 

 

 

 

 

 

2019

 

2018

Return on average tangible common equity, adjusted

 

Fourth Quarter

 

Third Quarter

 

Fourth Quarter

Average tangible common equity

 

$

575,215

 

 

$

543,692

 

 

$

509,845

 

Net income, adjusted

 

22,079

 

 

24,267

 

 

17,336

 

Return on average tangible common equity, adjusted

 

15.2

%

 

17.7

%

 

13.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average tangible common equity

 

2019

 

2018

 

2017

Total average shareholders' equity

 

$

723,494

 

 

$

629,922

 

 

$

466,219

 

Less average goodwill

 

160,587

 

 

137,190

 

 

84,997

 

Less average intangibles, net

 

17,236

 

 

12,815

 

 

8,047

 

Average tangible common equity

 

$

545,671

 

 

$

479,917

 

 

$

373,175

 

Net income

 

83,814

 

 

80,236

 

 

52,398

 

Return on average tangible common equity

 

15.4

%

 

16.7

%

 

14.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average tangible common equity, adjusted

 

2019

 

2018

 

2017

Average tangible common equity

 

$

545,671

 

 

$

479,917

 

 

$

373,175

 

Net income, adjusted

 

89,271

 

 

82,085

 

 

57,770

 

Return on average tangible common equity, adjusted

 

16.4

%

 

17.1

%

 

15.5

%

 

 

 

 

 

 

 

 

 

2019

 

2018

Return on average assets and equity, adjusted

 

Fourth Quarter

 

Third Quarter

 

Fourth Quarter

Net income

 

$

21,572

 

 

$

23,966

 

 

$

17,040

 

Average assets

 

6,157,931

 

 

5,988,572

 

 

5,005,158

 

Average equity

 

761,949

 

 

731,701

 

 

659,050

 

Return on average assets

 

1.39

%

 

1.59

%

 

1.35

%

Return on average equity

 

11.2

%

 

13.0

%

 

10.3

%

Net income, adjusted

 

$

22,079

 

 

$

24,267

 

 

$

17,336

 

Return on average assets, adjusted

 

1.42

%

 

1.61

%

 

1.37

%

Return on average equity, adjusted

 

11.5

%

 

13.2

%

 

10.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets and equity, adjusted

 

2019

 

2018

 

2017

Net income

 

$

83,814

 

 

$

80,236

 

 

$

52,398

 

Average assets

 

5,777,672

 

 

4,844,865

 

 

3,811,158

 

Average equity

 

723,494

 

 

629,922

 

 

466,219

 

Return on average assets

 

1.45

%

 

1.66

%

 

1.37

%

Return on average equity

 

11.6

%

 

12.7

%

 

11.2

%

Net income, adjusted

 

$

89,271

 

 

$

82,085

 

 

$

57,770

 

Return on average assets, adjusted

 

1.55

%

 

1.69

%

 

1.52

%

Return on average equity, adjusted

 

12.3

%

 

13.0

%

 

12.4

%