“Our Tax Services and Payments businesses and the increased interest income from our Commercial Finance business combined to produce solid second quarter revenue results,” said President and CEO
“We are pleased with our team’s ability to grow core revenues, improve efficiency, and manage credit. Excluding last year’s gain-on-sale from the divestiture of our community bank, we have seen promising fee income growth driven by both new and existing partner relationships in our payments and tax businesses. Our loan and lease portfolios also continued to perform well, reflecting the strength of our lending and collateral management programs,” said Executive Vice President and CFO
Business Development Highlights for the 2021 Fiscal Second Quarter
- Increased revenue included the benefits of H&R Block's suite of financial services products.
- Partnered with the
U.S. Department of the Treasury’sBureau of the Fiscal Service (“Fiscal Service”) to disburse Economic Income Payment (“EIP”) stimulus payments through the distribution of prepaid cards. During the quarter, the Company began distributing cards under the authorizations for the second round onJanuary 4, 2021 and for the third round onMarch 23, 2021 . - Selected as the issuing bank for Walgreens’ newly launched bank-account product with InComm Payments and MasterCard, adding to MetaBank’s diverse suite of Banking as a Service relationships.
- Expanded our solar lending business, increasing our solar lending originations for the first six months of the fiscal year 2021 by 65% to
$58.5 million . - Dedicated additional resources to our Environmental, Social, and Governance (“ESG”) activities to include the hiring of
Chief People and Inclusion Officer,Kia Tang .
Financial Highlights for the 2021 Fiscal Second Quarter
- Total revenue for the second quarter was
$187.3 million , a slight decrease compared to$188.3 million for the same quarter in fiscal 2020, which benefited from the one-time$19.3 million gain on sale from the divestiture of our former Community Bank division. - Operating efficiency ratio was 63.1% at
March 31, 2021 , compared to 62.9% atMarch 31, 2020 , which benefited from the aforementioned gain on sale of divestiture of theCommunity Bank division. See non-GAAP reconciliation table below. - Net interest income for the second quarter was
$73.9 million , compared to$67.7 million in the comparable quarter last year. - Net interest margin (“NIM”) decreased to 3.07% for the second quarter from 4.78% during the same period of last year, chiefly reflecting excess cash associated with the Company’s participation in the EIP program, as described further below.
- Total gross loans and leases at
March 31, 2021 increased$37.2 million , or 1%, to$3.65 billion , compared toMarch 31, 2020 and increased$208.5 million , or 6%, when compared toDecember 31, 2020 . - Average deposits from the payments division for the fiscal 2021 second quarter increased nearly 181% to
$9.29 billion when compared to the prior year quarter. A significant portion of the year-over-year increase reflected the Company’s participation in the EIP program, as described further below. - The Company repurchased 734,984 shares during the second quarter at an average price of
$40.78 .
Tax Season
For the 2021 tax season, MetaBank originated
During the second quarter of the fiscal 2021, total tax services product revenue was
While the 2021 tax services results have thus far been favorable compared to the prior year’s tax season, it has been below the Company’s expectations as a result of reduced overall demand for refund advances due to consumers having access to EIP stimulus funds, which have been partially offset by higher payments fee income. We do expect overall tax season refund transfer volumes and revenue to be similar to last year. We believe the impacts to the tax advance product are unique to this tax season and the Company anticipates more normalized results from its H&R Block and
EIP Program Update
The Bank is serving as the sole Financial Agent for distributing prepaid debit cards used in the EIP program. The Company’s Payments division, in collaboration with Fiserv and
On
Through
The Company anticipates that participating in the EIP card distribution program will continue to have a slightly positive impact on earnings and it does not expect any material impact on its risk-based capital ratios due to the participation in the card distribution program. Additionally, the Company does not expect these conditions will be sustained over the long-term.
COVID-19 Business Update
As of
As of
The Company’s capital position remained in good standing as of
Net Interest Income
Net interest income for the fiscal 2021 second quarter was
During the second fiscal quarter of 2021, interest expense decreased
NIM decreased to 3.07% for the fiscal 2021 second quarter from 4.78% for the comparable quarter last year. The overall reported tax-equivalent yield (“TEY”) on average earning asset yields decreased by 249 basis points to 3.15% for the fiscal 2021 second quarter compared to the prior year quarter, driven primarily by excess low-yielding cash held at the
The Company’s cost of funds for all deposits and borrowings averaged 0.08% during the fiscal 2021 second quarter, compared to 0.83% during the prior year quarter. This reflected primarily an increase in the average balance of the Company’s noninterest-bearing deposits, mainly due to the EIP program noted above. The Company’s overall cost of deposits was 0.02% in the fiscal second quarter of 2021, compared to 0.66% in the same quarter last year.
Noninterest Income
Fiscal 2021 second quarter noninterest income decreased to
Noninterest Expense
Noninterest expense increased 5% to
Income Tax Expense
The Company recorded income tax expense of
The Company originated
Investments, Loans and Leases
Total investments | $ | 1,552,892 | $ | 1,309,452 | $ | 1,360,712 | $ | 1,268,416 | $ | 1,310,476 | |||||||||
Loans held for sale | |||||||||||||||||||
Consumer credit products | 6,233 | 234 | 962 | 391 | — | ||||||||||||||
SBA/ | 61,402 | 32,983 | 52,542 | 31,438 | 13,610 | ||||||||||||||
— | 100,442 | 130,073 | 48,076 | — | |||||||||||||||
Total loans held for sale | 67,635 | 133,659 | 183,577 | 79,905 | 13,610 | ||||||||||||||
National Lending | |||||||||||||||||||
Term lending | 891,414 | 881,306 | 805,323 | 738,454 | 725,581 | ||||||||||||||
Asset based lending | 248,735 | 242,298 | 182,419 | 181,130 | 250,211 | ||||||||||||||
Factoring | 277,612 | 275,650 | 281,173 | 206,361 | 285,495 | ||||||||||||||
Lease financing | 308,169 | 283,722 | 281,084 | 264,988 | 238,788 | ||||||||||||||
Insurance premium finance | 344,841 | 338,227 | 337,940 | 359,147 | 332,800 | ||||||||||||||
SBA/ | 331,917 | 300,707 | 318,387 | 308,611 | 92,000 | ||||||||||||||
Other commercial finance | 103,234 | 101,209 | 101,658 | 100,214 | 101,472 | ||||||||||||||
Commercial Finance | 2,505,922 | 2,423,119 | 2,307,984 | 2,158,905 | 2,026,347 | ||||||||||||||
Consumer credit products | 104,842 | 88,595 | 89,809 | 102,808 | 113,544 | ||||||||||||||
Other consumer finance | 130,822 | 162,423 | 134,342 | 138,777 | 144,895 | ||||||||||||||
Consumer Finance | 235,664 | 251,018 | 224,151 | 241,585 | 258,439 | ||||||||||||||
Tax Services | 225,921 | 92,548 | 3,066 | 19,168 | 95,936 | ||||||||||||||
Warehouse Finance | 332,456 | 318,937 | 293,375 | 277,614 | 333,829 | ||||||||||||||
Total National Lending loans and leases | 3,299,963 | 3,085,622 | 2,828,576 | 2,697,272 | 2,714,551 | ||||||||||||||
Community Banking | |||||||||||||||||||
Commercial real estate and operating | 335,587 | 339,141 | 457,371 | 608,303 | 654,429 | ||||||||||||||
Consumer one-to-four family real estate and other | 4,567 | 5,077 | 16,486 | 166,479 | 205,046 | ||||||||||||||
Agricultural real estate and operating | 7,911 | 9,724 | 11,707 | 24,655 | 36,759 | ||||||||||||||
Total Community Banking loans | 348,065 | 353,942 | 485,564 | 799,437 | 896,234 | ||||||||||||||
Total gross loans and leases | 3,648,028 | 3,439,564 | 3,314,140 | 3,496,709 | 3,610,785 | ||||||||||||||
Allowance for credit losses | (98,892 | ) | (72,389 | ) | (56,188 | ) | (65,747 | ) | (65,355 | ) | |||||||||
Net deferred loan and lease origination fees | 9,503 | 9,111 | 8,625 | 5,937 | 8,139 | ||||||||||||||
Total loans and leases, net of allowance | $ | 3,558,639 | $ | 3,376,286 | $ | 3,266,577 | $ | 3,436,899 | $ | 3,553,569 |
The Company’s investment security balances at
Total gross loans and leases increased
At
Consumer finance loans totaled
Tax services loans totaled
Community bank loans held for investment totaled
Asset Quality
The Company’s allowance for credit losses totaled
The year-over-year increase in the allowance was primarily driven by a
The following table presents the Company’s allowance for credit losses as a percentage of its total loans and leases.
As of the Period Ended | ||||||||||||
(Unaudited) | ||||||||||||
Commercial finance | 1.77 | % | 1.88 | % | 1.85 | % | 1.30 | % | 1.36 | % | 1.28 | % |
Consumer finance | 4.70 | % | 4.39 | % | 4.31 | % | 1.64 | % | 1.75 | % | 1.74 | % |
Tax services | 12.90 | % | 1.53 | % | 0.06 | % | 0.06 | % | 59.67 | % | 22.22 | % |
Warehouse finance | 0.10 | % | 0.10 | % | 0.10 | % | 0.10 | % | 0.10 | % | 0.10 | % |
National Lending | 2.57 | % | 1.89 | % | 1.86 | % | 1.20 | % | 1.68 | % | 1.92 | % |
4.03 | % | 4.01 | % | 3.37 | % | 4.59 | % | 2.55 | % | 1.49 | % | |
Total loans and leases | 2.71 | % | 2.10 | % | 2.08 | % | 1.70 | % | 1.88 | % | 1.81 | % |
(1) Represents the Company’s allowance coverage ratio upon the adoption of the Accounting Standards Update 2016-13 using
The Company’s allowance for credit losses as a percentage of total loans and leases increased to 2.71% at
Activity in the allowance for credit losses for the periods presented was as follows.
(Unaudited) | Three Months Ended | Six Months Ended | ||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Beginning balance | $ | 72,389 | $ | 56,188 | $ | 30,176 | $ | 56,188 | $ | 29,149 | ||||||||||
Adoption of CECL accounting standard | — | 12,773 | — | 12,773 | — | |||||||||||||||
Provision - tax services loans | 27,680 | 454 | 19,596 | 28,134 | 20,507 | |||||||||||||||
Provision - all other loans and leases | 2,519 | 5,810 | 17,700 | 8,329 | 20,196 | |||||||||||||||
Charge-offs - tax services loans | — | — | — | — | — | |||||||||||||||
Charge-offs - all other loans and leases | (4,248 | ) | (5,675 | ) | (3,187 | ) | (9,923 | ) | (7,105 | ) | ||||||||||
Recoveries - tax services loans | 54 | 956 | 74 | 1,010 | 813 | |||||||||||||||
Recoveries - all other loans and leases | 498 | 1,883 | 996 | 2,381 | 1,795 | |||||||||||||||
Ending balance | $ | 98,892 | $ | 72,389 | $ | 65,355 | $ | 98,892 | $ | 65,355 |
Provision for credit losses was
The Company’s past due loans and leases were as follows for the periods presented.
As of | Accruing and Nonaccruing Loans and Leases | Nonperforming Loans and Leases | |||||||||||||||||||||||||||||||||
(Dollars in Thousands) | 30-59 Days Past Due | 60-89 Days Past Due | > 89 Days Past Due | Total Past Due | Current | Total Loans and Leases Receivable | > 89 Days Past Due and Accruing | Non-accrual balance | Total | ||||||||||||||||||||||||||
Commercial finance | $ | 34,675 | $ | 8,730 | $ | 9,488 | $ | 52,893 | $ | 2,453,029 | $ | 2,505,922 | $ | 4,810 | $ | 18,305 | $ | 23,115 | |||||||||||||||||
Consumer finance | 2,033 | 4,162 | 2,294 | 8,489 | 227,175 | 235,664 | 517 | — | 517 | ||||||||||||||||||||||||||
Tax services | 507 | — | — | 507 | 225,414 | 225,921 | — | — | — | ||||||||||||||||||||||||||
Warehouse finance | — | — | — | — | 332,456 | 332,456 | — | — | — | ||||||||||||||||||||||||||
Total National Lending | 37,215 | 12,892 | 11,782 | 61,889 | 3,238,074 | 3,299,963 | 5,327 | 18,305 | 23,632 | ||||||||||||||||||||||||||
Total Community Banking | 12 | — | 1,818 | 1,830 | 346,235 | 348,065 | — | 19,824 | 19,824 | ||||||||||||||||||||||||||
Total loans and leases held for investment | $ | 37,227 | $ | 12,892 | $ | 13,600 | $ | 63,719 | $ | 3,584,309 | $ | 3,648,028 | $ | 5,327 | $ | 38,129 | $ | 43,456 |
As of | Accruing and Nonaccruing Loans and Leases | Nonperforming Loans and Leases | |||||||||||||||||||||||||||||||||
(Dollars in Thousands) | 30-59 Days Past Due | 60-89 Days Past Due | > 89 Days Past Due | Total Past Due | Current | Total Loans and Leases Receivable | > 89 Days Past Due and Accruing | Non-accrual balance | Total | ||||||||||||||||||||||||||
Commercial finance | $ | 23,448 | $ | 7,358 | $ | 14,900 | $ | 45,706 | $ | 2,377,413 | $ | 2,423,119 | $ | 2,092 | $ | 18,707 | $ | 20,799 | |||||||||||||||||
Consumer finance | 1,415 | 404 | 1,132 | 2,951 | 248,067 | 251,018 | 1,132 | — | 1,132 | ||||||||||||||||||||||||||
Tax services | — | — | — | — | 92,548 | 92,548 | — | — | — | ||||||||||||||||||||||||||
Warehouse finance | — | — | — | — | 318,937 | 318,937 | — | — | — | ||||||||||||||||||||||||||
Total National Lending | 24,863 | 7,762 | 16,032 | 48,657 | 3,036,965 | 3,085,622 | 3,224 | 18,707 | 21,931 | ||||||||||||||||||||||||||
Total Community Banking | 13 | — | 2,379 | 2,392 | 351,550 | 353,942 | — | 20,389 | 20,389 | ||||||||||||||||||||||||||
Total loans and leases held for investment | $ | 24,876 | $ | 7,762 | $ | 18,411 | $ | 51,049 | $ | 3,388,515 | $ | 3,439,564 | $ | 3,224 | $ | 39,096 | $ | 42,320 |
The Company’s nonperforming assets at
The Company’s nonperforming loans and leases at
Loan and lease balances that were within their active deferment period decreased to
Deposits, Borrowings and Other Liabilities
Total average deposits for the fiscal 2021 second quarter increased by
The average balance of total deposits and interest-bearing liabilities was
Total end-of-period deposits increased 118% to
The Company and MetaBank remained above the federal regulatory minimum capital requirements at
The tables below include certain non-GAAP financial measures that are used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies. Management reviews these measures along with other measures of capital as part of its financial analysis.
As of the dates indicated | 2021(1) | 2020 | 2020 | 2020 | 2020 | |||||||||
Company | ||||||||||||||
Tier 1 leverage capital ratio | 4.75 | % | 7.39 | % | 6.58 | % | 5.91 | % | 7.28 | % | ||||
Common equity Tier 1 capital ratio | 11.24 | % | 10.72 | % | 11.78 | % | 11.51 | % | 10.27 | % | ||||
Tier 1 capital ratio | 11.58 | % | 11.07 | % | 12.18 | % | 11.90 | % | 10.63 | % | ||||
Total capital ratio | 14.59 | % | 14.14 | % | 15.30 | % | 14.99 | % | 13.61 | % | ||||
MetaBank | ||||||||||||||
Tier 1 leverage capital ratio | 5.47 | % | 8.60 | % | 7.56 | % | 6.89 | % | 8.52 | % | ||||
Common equity Tier 1 capital ratio | 13.32 | % | 12.87 | % | 13.96 | % | 13.82 | % | 12.39 | % | ||||
Tier 1 capital ratio | 13.33 | % | 12.89 | % | 14.00 | % | 13.86 | % | 12.44 | % | ||||
Total capital ratio | 14.60 | % | 14.14 | % | 15.26 | % | 15.12 | % | 13.69 | % |
(1)
The following table provides the non-GAAP financial measures used to compute certain of the ratios included in the table above, as well as a reconciliation of such non-GAAP financial measures to the most directly comparable financial measure in accordance with GAAP:
Standardized Approach(1) | 2021 | 2020 | 2020 | 2020 | 2020 | ||||||||||||||
(Dollars in Thousands) | |||||||||||||||||||
Total stockholders’ equity | $ | 835,258 | $ | 813,210 | $ | 847,308 | $ | 829,909 | $ | 805,074 | |||||||||
Adjustments: | |||||||||||||||||||
LESS: | 301,602 | 301,999 | 302,396 | 302,814 | 303,625 | ||||||||||||||
LESS: Certain other intangible assets | 36,779 | 39,403 | 40,964 | 42,865 | 44,909 | ||||||||||||||
LESS: Net deferred tax assets from operating loss and tax credit carry-forwards | 19,306 | 24,105 | 18,361 | 10,360 | 11,589 | ||||||||||||||
LESS: Net unrealized gains (losses) on available-for-sale securities | 12,458 | 19,894 | 17,762 | 8,382 | 2,337 | ||||||||||||||
LESS: Non-controlling interest | 1,092 | 1,536 | 3,603 | 3,787 | 3,762 | ||||||||||||||
ADD: Adoption of Accounting Standards Update 2016-13 | 10,439 | 10,439 | — | — | — | ||||||||||||||
Common Equity Tier 1(1) | 474,460 | 436,712 | 464,222 | 461,701 | 438,852 | ||||||||||||||
Long-term borrowings and other instruments qualifying as Tier 1 | 13,661 | 13,661 | 13,661 | 13,661 | 13,661 | ||||||||||||||
Tier 1 minority interest not included in common equity tier 1 capital | 690 | 749 | 1,894 | 1,894 | 2,036 | ||||||||||||||
Total Tier 1 Capital | 488,811 | 451,122 | 479,777 | 477,256 | 454,549 | ||||||||||||||
Allowance for credit losses | 53,232 | 51,070 | 49,343 | 50,338 | 53,580 | ||||||||||||||
Subordinated debentures (net of issuance costs) | 73,892 | 73,850 | 73,807 | 73,765 | 73,724 | ||||||||||||||
Total qualifying capital | $ | 615,935 | $ | 576,042 | $ | 602,927 | $ | 601,359 | $ | 581,853 |
(1) Capital ratios were determined using the Basel III capital rules that became effective on
The following table provides a reconciliation of tangible common equity and tangible common equity excluding accumulated other comprehensive income (“AOCI”), each of which is used in calculating tangible book value data, to Total Stockholders’ Equity. Each of tangible common equity and tangible common equity excluding AOCI is a non-GAAP financial measure that is commonly used within the banking industry.
2021 | 2020 | 2020 | 2020 | 2020 | |||||||||||||||
(Dollars in Thousands) | |||||||||||||||||||
Total Stockholders’ Equity | $ | 835,258 | $ | 813,210 | $ | 847,308 | $ | 829,909 | $ | 805,074 | |||||||||
Less: | 309,505 | 309,505 | 309,505 | 309,505 | 309,505 | ||||||||||||||
Less: Intangible assets | 36,903 | 39,660 | 41,692 | 43,974 | 46,766 | ||||||||||||||
Tangible common equity | 488,850 | 464,045 | 496,111 | 476,430 | 448,803 | ||||||||||||||
Less: Accumulated other comprehensive income (loss) (“AOCI”) | 12,809 | 20,119 | 17,542 | 7,995 | 1,654 | ||||||||||||||
Tangible common equity excluding AOCI | $ | 476,041 | $ | 443,926 | $ | 478,569 | $ | 468,435 | $ | 447,149 |
Conference Call
The Company will host a conference call and earnings webcast at
Upcoming Investor Events
Piper Sandler Fintech and Payments Conference ,June 10, 2021 | Virtual
Forward-Looking Statements
The Company and MetaBank may from time to time make written or oral “forward-looking statements,” including statements contained in this press release, the Company’s filings with the
You can identify forward-looking statements by words such as “may,” “hope,” “will,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,” “continue,” “could,” “future,” or the negative of those terms, or other words of similar meaning or similar expressions. You should carefully read statements that contain these words because they discuss our future expectations or state other “forward-looking” information. These forward-looking statements are based on information currently available to us and assumptions about future events, and include statements with respect to the Company’s beliefs, expectations, estimates, and intentions, which are subject to significant risks and uncertainties, and are subject to change based on various factors, some of which are beyond the Company’s control. Such risks, uncertainties and other factors may cause our actual growth, results of operations, financial condition, cash flows, performance and business prospects and opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. Such statements address, among others, the following subjects: future operating results; expectations in connection with the impact of the ongoing COVID-19 pandemic and related government actions on our business, our industry and the capital markets; customer retention; loan and other product demand; expectations concerning acquisitions and divestitures; new products and services, including those offered by Meta Payment Systems, Refund Advantage, EPS Financial and Specialty Consumer Services divisions; credit quality; the level of net charge-offs and the adequacy of the allowance for credit losses; technology; and the Company’s employees. The following factors, among others, could cause the Company’s financial performance and results of operations to differ materially from the expectations, estimates, and intentions expressed in such forward-looking statements: maintaining our executive management team; expected growth opportunities may not be realized or may take longer to realize than expected; the potential adverse effects of the ongoing COVID-19 pandemic and any governmental or societal responses thereto including the deployment and efficacy of the COVID-19 vaccines, or other unusual and infrequently occurring events; actual changes in interest rates and the Fed Funds rate; additional changes in tax laws; the strength of the United States’ economy, in general, and the strength of the local economies in which the Company operates; changes in trade, monetary, and fiscal policies and laws, including interest rate policies of the
The foregoing list of factors is not exclusive. We caution you not to place undue reliance on these forward-looking statements. The forward-looking statements included in this press release speak only as of the date hereof. Additional discussions of factors affecting the Company’s business and prospects are reflected under the caption “Risk Factors” and in other sections of the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended
Condensed Consolidated Statements of Financial Condition (Unaudited)
(Dollars in Thousands, Except Share Data)
ASSETS | 2021 | 2020 | 2020 | 2020 | 2020 | ||||||||||||||
Cash and cash equivalents | $ | 3,724,242 | $ | 1,586,451 | $ | 427,367 | $ | 3,108,141 | $ | 108,733 | |||||||||
Investment securities available for sale, at fair value | 921,947 | 797,363 | 814,495 | 825,579 | 840,525 | ||||||||||||||
Mortgage-backed securities available for sale, at fair value | 558,833 | 430,761 | 453,607 | 338,250 | 355,094 | ||||||||||||||
Investment securities held to maturity, at cost | 67,709 | 76,176 | 87,183 | 98,205 | 108,105 | ||||||||||||||
Mortgage-backed securities held to maturity, at cost | 4,403 | 5,152 | 5,427 | 6,382 | 6,752 | ||||||||||||||
Loans held for sale | 67,635 | 133,659 | 183,577 | 79,905 | 13,610 | ||||||||||||||
Loans and leases | 3,657,531 | 3,448,675 | 3,322,765 | 3,502,646 | 3,618,924 | ||||||||||||||
Allowance for credit losses | (98,892 | ) | (72,389 | ) | (56,188 | ) | (65,747 | ) | (65,355 | ) | |||||||||
28,433 | 27,138 | 27,138 | 31,836 | 29,944 | |||||||||||||||
Accrued interest receivable | 17,429 | 17,133 | 16,628 | 17,545 | 16,958 | ||||||||||||||
Premises, furniture, and equipment, net | 41,510 | 39,932 | 41,608 | 40,361 | 38,871 | ||||||||||||||
Rental equipment, net | 211,397 | 206,732 | 205,964 | 216,336 | 200,837 | ||||||||||||||
Bank-owned life insurance | 93,542 | 92,937 | 92,315 | 91,697 | 91,081 | ||||||||||||||
Foreclosed real estate and repossessed assets | 1,483 | 7,186 | 9,957 | 6,784 | 7,249 | ||||||||||||||
309,505 | 309,505 | 309,505 | 309,505 | 309,505 | |||||||||||||||
Intangible assets | 36,903 | 39,660 | 41,692 | 43,974 | 46,766 | ||||||||||||||
Prepaid assets | 10,201 | 11,270 | 8,328 | 6,806 | 9,727 | ||||||||||||||
Deferred taxes | 25,435 | 24,411 | 17,723 | 15,944 | 20,887 | ||||||||||||||
Other assets | 110,877 | 82,763 | 82,983 | 104,877 | 85,652 | ||||||||||||||
Total assets | $ | 9,790,123 | $ | 7,264,515 | $ | 6,092,074 | $ | 8,779,026 | $ | 5,843,865 | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||||||||
LIABILITIES | |||||||||||||||||||
Deposits: | |||||||||||||||||||
Noninterest-bearing checking | 7,928,235 | 5,581,597 | 4,356,630 | 6,537,809 | 2,900,484 | ||||||||||||||
Interest-bearing checking | 416,164 | 274,504 | 157,571 | 187,003 | 152,504 | ||||||||||||||
Savings deposits | 126,834 | 54,080 | 47,866 | 55,896 | 37,615 | ||||||||||||||
Money market deposits | 55,045 | 56,440 | 48,494 | 40,811 | 37,266 | ||||||||||||||
Time certificates of deposit | 12,614 | 13,522 | 20,223 | 25,000 | 25,492 | ||||||||||||||
Wholesale deposits | 103,521 | 227,648 | 348,416 | 743,806 | 809,043 | ||||||||||||||
Total deposits | 8,642,413 | 6,207,791 | 4,979,200 | 7,590,325 | 3,962,404 | ||||||||||||||
Short-term borrowings | — | — | — | — | 717,000 | ||||||||||||||
Long-term borrowings | 95,336 | 96,760 | 98,224 | 209,781 | 211,353 | ||||||||||||||
Accrued interest payable | 679 | 2,068 | 1,923 | 4,332 | 3,607 | ||||||||||||||
Accrued expenses and other liabilities | 216,437 | 144,686 | 165,419 | 144,679 | 144,427 | ||||||||||||||
Total liabilities | 8,954,865 | 6,451,305 | 5,244,766 | 7,949,117 | 5,038,791 | ||||||||||||||
STOCKHOLDERS’ EQUITY | |||||||||||||||||||
Preferred stock | — | — | — | — | — | ||||||||||||||
Common stock, | 319 | 326 | 344 | 346 | 346 | ||||||||||||||
Common stock, Nonvoting, | — | — | — | — | — | ||||||||||||||
Additional paid-in capital | 601,222 | 598,669 | 594,569 | 592,693 | 590,682 | ||||||||||||||
Retained earnings | 225,471 | 198,000 | 234,927 | 228,500 | 212,027 | ||||||||||||||
Accumulated other comprehensive income | 12,809 | 20,119 | 17,542 | 7,995 | 1,654 | ||||||||||||||
(5,655 | ) | (5,440 | ) | (3,677 | ) | (3,412 | ) | (3,397 | ) | ||||||||||
Total equity attributable to parent | 834,166 | 811,674 | 843,705 | 826,122 | 801,312 | ||||||||||||||
Noncontrolling interest | 1,092 | 1,536 | 3,603 | 3,787 | 3,762 | ||||||||||||||
Total stockholders’ equity | 835,258 | 813,210 | 847,308 | 829,909 | 805,074 | ||||||||||||||
Total liabilities and stockholders’ equity | $ | 9,790,123 | $ | 7,264,515 | $ | 6,092,074 | $ | 8,779,026 | $ | 5,843,865 |
Consolidated Statements of Operations (Unaudited)
(Dollars in Thousands, Except Share and Per Share Data)
Three Months Ended | Year Ended | ||||||||||||||||||
2021 | 2020 | 2020 | 2021 | 2020 | |||||||||||||||
Interest and dividend income: | |||||||||||||||||||
Loans and leases, including fees | $ | 68,472 | $ | 61,655 | $ | 70,493 | $ | 130,128 | $ | 139,195 | |||||||||
Mortgage-backed securities | 2,608 | 2,123 | 2,493 | 4,730 | 4,882 | ||||||||||||||
Other investments | 4,589 | 4,368 | 6,417 | 8,956 | 12,952 | ||||||||||||||
75,669 | 68,146 | 79,403 | 143,814 | 157,029 | |||||||||||||||
Interest expense: | |||||||||||||||||||
Deposits | 445 | 797 | 8,242 | 1,241 | 17,583 | ||||||||||||||
FHLB advances and other borrowings | 1,374 | 1,350 | 3,424 | 2,724 | 7,058 | ||||||||||||||
1,819 | 2,147 | 11,666 | 3,965 | 24,641 | |||||||||||||||
Net interest income | 73,850 | 65,999 | 67,737 | 139,849 | 132,388 | ||||||||||||||
Provision for credit losses | 30,290 | 6,089 | 37,296 | 36,379 | 40,703 | ||||||||||||||
Net interest income after provision for loan and lease losses | 43,560 | 59,910 | 30,441 | 103,470 | 91,685 | ||||||||||||||
Noninterest income: | |||||||||||||||||||
Refund transfer product fees | 22,680 | 647 | 28,939 | 23,327 | 29,131 | ||||||||||||||
Tax advance product fees | 44,562 | 1,960 | 29,536 | 46,522 | 31,812 | ||||||||||||||
Payments card and deposit fees | 29,875 | 22,564 | 23,156 | 52,439 | 44,655 | ||||||||||||||
Other bank and deposit fees | 133 | 237 | 381 | 370 | 868 | ||||||||||||||
Rental income | 9,846 | 9,885 | 11,100 | 19,731 | 23,451 | ||||||||||||||
Gain on sale of securities available-for-sale, net | 6 | — | — | 6 | — | ||||||||||||||
Gain on divestitures | — | — | 19,275 | — | 19,275 | ||||||||||||||
Gain (loss) on sale of other | 2,133 | 2,847 | 2,325 | 4,981 | (244 | ) | |||||||||||||
Other income | 4,218 | 7,315 | 5,801 | 11,532 | 9,047 | ||||||||||||||
Total noninterest income | 113,453 | 45,455 | 120,513 | 158,908 | 157,995 | ||||||||||||||
Noninterest expense: | |||||||||||||||||||
Compensation and benefits | 43,932 | 32,331 | 34,260 | 76,263 | 68,529 | ||||||||||||||
Refund transfer product expense | 6,146 | 61 | 7,449 | 6,207 | 7,621 | ||||||||||||||
Tax advance product expense | 2,189 | 370 | 1,698 | 2,559 | 2,830 | ||||||||||||||
Card processing | 7,212 | 6,117 | 6,696 | 13,329 | 12,303 | ||||||||||||||
Occupancy and equipment expense | 6,748 | 6,888 | 7,013 | 13,636 | 13,668 | ||||||||||||||
Operating lease equipment depreciation | 7,419 | 7,581 | 8,421 | 15,000 | 16,701 | ||||||||||||||
Legal and consulting | 6,045 | 5,247 | 5,909 | 11,292 | 10,583 | ||||||||||||||
Intangible amortization | 2,757 | 2,013 | 3,402 | 4,770 | 6,077 | ||||||||||||||
Impairment expense | 554 | 1,159 | 507 | 1,713 | 750 | ||||||||||||||
Other expense | 12,969 | 10,808 | 16,374 | 23,777 | 28,464 | ||||||||||||||
Total noninterest expense | 95,971 | 72,575 | 91,729 | 168,546 | 167,526 | ||||||||||||||
Income before income tax expense | 61,042 | 32,790 | 59,225 | 93,832 | 82,154 | ||||||||||||||
Income tax expense | 1,133 | 3,533 | 5,617 | 4,665 | 6,297 | ||||||||||||||
Net income before noncontrolling interest | 59,909 | 29,257 | 53,608 | 89,167 | 75,857 | ||||||||||||||
Net income attributable to noncontrolling interest | 843 | 1,220 | 1,304 | 2,064 | 2,485 | ||||||||||||||
Net income attributable to parent | $ | 59,066 | $ | 28,037 | $ | 52,304 | $ | 87,103 | $ | 73,372 | |||||||||
Less: Allocation of Earnings to participating securities(1) | 1,113 | 554 | 1,215 | 1,683 | 1,652 | ||||||||||||||
Net income attributable to common shareholders(1) | 57,953 | 27,483 | 51,089 | 85,420 | 71,720 | ||||||||||||||
Earnings per common share | |||||||||||||||||||
Basic | $ | 1.84 | $ | 0.84 | $ | 1.45 | $ | 2.66 | $ | 2.00 | |||||||||
Diluted | $ | 1.84 | $ | 0.84 | $ | 1.45 | $ | 2.65 | $ | 2.00 | |||||||||
Shares used in computing earnings per common share | |||||||||||||||||||
Basic | 31,520,505 | 32,782,285 | 35,114,053 | 32,158,994 | 35,865,443 | ||||||||||||||
Diluted | 31,535,022 | 32,790,895 | 35,135,550 | 32,175,484 | 35,887,077 |
(1) Amounts presented are used in the two-class earnings per common share calculation.
Average Balances, Interest Rates and Yields
The following table presents, for the periods indicated, the total dollar amount of interest income from average interest-earning assets and the resulting yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and in rates. Only the yield/rate reflects tax-equivalent adjustments. Nonaccruing loans and leases have been included in the table as loans carrying a zero yield.
Three Months Ended | 2021 | 2020 | |||||||||||||||||||
(Dollars in Thousands) | Average Outstanding Balance | Interest Earned / Paid | Yield / Rate(1) | Average Outstanding Balance | Interest Earned / Paid | Yield / Rate(1) | |||||||||||||||
Interest-earning assets: | |||||||||||||||||||||
Cash and fed funds sold | $ | 4,187,558 | $ | 1,090 | 0.11 | % | $ | 196,754 | $ | 739 | 1.51 | % | |||||||||
Mortgage-backed securities | 543,256 | 2,607 | 1.95 | % | 358,103 | 2,493 | 2.80 | % | |||||||||||||
Tax exempt investment securities | 297,299 | 1,132 | 1.96 | % | 454,177 | 2,132 | 2.39 | % | |||||||||||||
Asset-backed securities | 389,406 | 1,290 | 1.34 | % | 304,674 | 2,271 | 3.00 | % | |||||||||||||
Other investment securities | 230,168 | 1,077 | 1.90 | % | 192,379 | 1,275 | 2.67 | % | |||||||||||||
Total investments | 1,460,129 | 6,106 | 1.78 | % | 1,309,333 | 8,171 | 2.68 | % | |||||||||||||
Commercial finance loans and leases | 2,471,694 | 46,299 | 7.60 | % | 2,020,358 | 41,643 | 8.29 | % | |||||||||||||
Consumer finance loans | 255,625 | 6,968 | 11.06 | % | 264,307 | 5,386 | 8.20 | % | |||||||||||||
Tax services loans | 714,789 | 6,544 | 3.71 | % | 516,491 | 6,351 | 4.95 | % | |||||||||||||
Warehouse finance loans | 315,162 | 4,845 | 6.23 | % | 314,474 | 4,785 | 6.12 | % | |||||||||||||
National lending loans and leases | 3,757,270 | 64,656 | 6.98 | % | 3,115,630 | 58,165 | 7.51 | % | |||||||||||||
Community banking loans | 363,285 | 3,817 | 4.26 | % | 1,080,142 | 12,328 | 4.59 | % | |||||||||||||
Total loans and leases | 4,120,555 | 68,473 | 6.74 | % | 4,195,772 | 70,493 | 6.76 | % | |||||||||||||
Total interest-earning assets | $ | 9,768,242 | $ | 75,669 | 3.15 | % | $ | 5,701,859 | $ | 79,403 | 5.64 | % | |||||||||
Non-interest-earning assets | 887,610 | 909,040 | |||||||||||||||||||
Total assets | $ | 10,655,852 | $ | 6,610,899 | |||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||
Interest-bearing checking(2) | $ | 275,982 | $ | — | — | % | $ | 182,107 | $ | 105 | 0.23 | % | |||||||||
Savings deposits | 77,562 | 4 | 0.02 | % | 46,592 | 6 | 0.05 | % | |||||||||||||
Money market deposits | 56,352 | 42 | 0.30 | % | 68,421 | 153 | 0.90 | % | |||||||||||||
Time certificates of deposit | 12,820 | 34 | 1.07 | % | 84,940 | 427 | 2.02 | % | |||||||||||||
Wholesale deposits | 175,777 | 365 | 0.84 | % | 1,476,085 | 7,551 | 2.06 | % | |||||||||||||
Total interest-bearing deposits | 598,493 | 445 | 0.30 | % | 1,858,145 | 8,242 | 1.78 | % | |||||||||||||
Overnight fed funds purchased | — | — | — | % | 372,596 | 1,307 | 1.41 | % | |||||||||||||
FHLB advances | — | — | — | % | 110,000 | 670 | 2.45 | % | |||||||||||||
Subordinated debentures | 73,864 | 1,147 | 6.30 | % | 73,698 | 1,158 | 6.32 | % | |||||||||||||
Other borrowings | 22,377 | 227 | 4.12 | % | 28,714 | 289 | 4.04 | % | |||||||||||||
Total borrowings | 96,241 | 1,374 | 5.79 | % | 585,008 | 3,424 | 2.35 | % | |||||||||||||
Total interest-bearing liabilities | 694,734 | 1,819 | 1.06 | % | 2,443,153 | 11,666 | 1.92 | % | |||||||||||||
Noninterest-bearing deposits | 8,967,067 | — | — | % | 3,199,148 | — | — | % | |||||||||||||
Total deposits and interest-bearing liabilities | $ | 9,661,801 | $ | 1,819 | 0.08 | % | $ | 5,642,301 | $ | 11,666 | 0.83 | % | |||||||||
Other noninterest-bearing liabilities | 177,372 | 136,759 | |||||||||||||||||||
Total liabilities | 9,839,173 | 5,779,060 | |||||||||||||||||||
Shareholders’ equity | 816,679 | 831,839 | |||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 10,655,852 | $ | 6,610,899 | |||||||||||||||||
Net interest income and net interest rate spread including noninterest-bearing deposits | $ | 73,850 | 3.08 | % | $ | 67,737 | 4.81 | % | |||||||||||||
Net interest margin | 3.07 | % | 4.78 | % | |||||||||||||||||
Tax-equivalent effect | 0.01 | % | 0.04 | % | |||||||||||||||||
Net interest margin, tax-equivalent(3) | 3.08 | % | 4.82 | % |
(1) Tax rate used to arrive at the TEY for the three months ended
(2) Of the total balance,
(3) Net interest margin expressed on a fully-taxable-equivalent basis (“net interest margin, tax-equivalent”) is a non-GAAP financial measure. The tax-equivalent adjustment to net interest income recognizes the estimated income tax savings when comparing taxable and tax-exempt assets and adjusting for federal and state exemption of interest income. The Company believes that it is a standard practice in the banking industry to present net interest margin expressed on a fully taxable equivalent basis and, accordingly, believes the presentation of this non-GAAP financial measure may be useful for peer comparison purposes.
Selected Financial Information
As of and For the Three Months Ended | 2021 | 2020 | 2020 | 2020 | 2020 | ||||||||||||||
Equity to total assets | 8.53 | % | 11.19 | % | 13.91 | % | 9.45 | % | 13.78 | % | |||||||||
Book value per common share outstanding | $ | 26.16 | $ | 24.93 | $ | 24.66 | $ | 23.96 | $ | 23.26 | |||||||||
Tangible book value per common share outstanding | $ | 15.31 | $ | 14.23 | $ | 14.44 | $ | 13.76 | $ | 12.97 | |||||||||
Tangible book value per common share outstanding excluding AOCI | $ | 14.91 | $ | 13.61 | $ | 13.93 | $ | 13.53 | $ | 12.92 | |||||||||
Common shares outstanding | 31,926,008 | 32,620,251 | 34,360,890 | 34,631,160 | 34,607,962 | ||||||||||||||
Nonperforming assets to total assets | 0.48 | % | 0.73 | % | 0.79 | % | 0.64 | % | 0.67 | % | |||||||||
Nonperforming loans and leases to total loans and leases | 1.17 | % | 1.18 | % | 0.97 | % | 1.10 | % | 0.87 | % | |||||||||
Net interest margin | 3.07 | % | 4.65 | % | 3.77 | % | 3.28 | % | 4.78 | % | |||||||||
Net interest margin, tax-equivalent | 3.08 | % | 4.67 | % | 3.79 | % | 3.31 | % | 4.82 | % | |||||||||
Return on average assets | 2.22 | % | 1.73 | % | 0.69 | % | 0.86 | % | 3.16 | % | |||||||||
Return on average equity | 28.93 | % | 13.91 | % | 6.21 | % | 8.83 | % | 25.15 | % | |||||||||
Full-time equivalent employees | 1,075 | 1,038 | 1,015 | 999 | 992 |
Non-GAAP Reconciliation
Efficiency Ratio | For the last twelve months ended | ||||||||||||||||||
(Dollars in Thousands) | 2021 | 2020 | 2020 | 2020 | 2020 | ||||||||||||||
Noninterest Expense - GAAP | $ | 320,070 | $ | 315,828 | $ | 319,051 | $ | 314,911 | $ | 316,138 | |||||||||
Net Interest Income | 266,499 | 260,386 | 259,038 | 260,142 | 264,973 | ||||||||||||||
Noninterest Income | 240,706 | 247,766 | 239,794 | 235,024 | 237,766 | ||||||||||||||
Total Revenue: GAAP | $ | 507,205 | $ | 508,152 | $ | 498,832 | $ | 495,166 | $ | 502,739 | |||||||||
Efficiency Ratio, last twelve months | 63.10 | % | 62.15 | % | 63.96 | % | 63.60 | % | 62.88 | % |
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