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| 8-K - 8-K TLMR REPORTS Q3 2015 EARNINGS - TALMER BANCORP, INC. | q32015earningsreleasefilin.htm |
Exhibit 99.1
Talmer Bancorp, Inc. reports third quarter 2015 net income of $20.0 million, representing $0.27 of earnings per diluted average common share
Third quarter deposit growth of $217.4 million, or 17.7% on an annualized basis
Talmer Bancorp, Inc. declares cash dividend on common stock of $0.01 per share
TROY, Mich., October 28, 2015 - Talmer Bancorp, Inc. (NASDAQ: TLMR) (“Talmer”) today reported third quarter 2015 net income of $20.0 million, compared to $17.5 million for the second quarter of 2015 and $19.5 million for the third quarter of 2014. Earnings per diluted common share were $0.27 for the third quarter of 2015, compared to $0.23 for the second quarter of 2015 and $0.26 for the third quarter of 2014. In addition, the Board of Directors of Talmer declared a cash dividend on its Class A common stock of $0.01 per share on October 28, 2015. The dividend will be paid on November 20, 2015, to our Class A common shareholders of record as of November 9, 2015.
Talmer Bancorp President and CEO David Provost commented, “We are pleased with underlying trends this quarter including strong core deposit growth, declines in operating expenses and solid revenue trends. Core deposit growth benefited from the continued focus of our retail sales force to drive growth in key markets in order to fund our lending pipelines. Our reported earnings were impacted by two key non-core items: a $3.8 million detriment to earnings, or an after-tax amount equal to approximately $0.034 per diluted share, due to the change in fair value of our loan servicing rights, and an approximate $0.032 benefit to diluted earnings per share as a result of approximately $2.3 million in lower than normal income tax expense for the quarter. We also accomplished a number of significant strategic initiatives during the quarter including the charter consolidation of Talmer West Bank into Talmer Bank and Trust, the repurchase of $75.0 million of our Class A common stock and the final divestiture of our former lead investor, WL Ross and Co. Going forward, we continue to be keenly focused on driving healthy organic franchise growth and being well-prepared for potential acquisition opportunities.”
Quarterly Results Summary
(Dollars in thousands, except per share data) | 3rd Qtr 2015 | 2nd Qtr 2015 | 3rd Qtr 2014 | |||||||||
Earnings Summary | ||||||||||||
Net interest income | $ | 55,647 | $ | 49,609 | $ | 52,217 | ||||||
Total provision (benefit) for loan losses | 700 | (7,313 | ) | 1,509 | ||||||||
Noninterest income | 19,342 | 22,098 | 29,974 | |||||||||
Noninterest expense | 47,829 | 53,293 | 51,263 | |||||||||
Income before income taxes | 26,460 | 25,727 | 29,419 | |||||||||
Income tax provision | 6,425 | 8,179 | 9,904 | |||||||||
Net income | 20,035 | 17,548 | 19,515 | |||||||||
Per Share Data | ||||||||||||
Diluted earnings per common share | $ | 0.27 | $ | 0.23 | $ | 0.26 | ||||||
Tangible book value per share (1) | 10.55 | 10.53 | 10.40 | |||||||||
Average diluted common shares (in thousands) | 73,222 | 74,900 | 75,752 | |||||||||
Performance and Capital Ratios | ||||||||||||
Return on average assets (annualized) | 1.23 | % | 1.11 | % | 1.36 | % | ||||||
Return on average equity (annualized) | 10.96 | 9.26 | 10.56 | |||||||||
Net interest margin (fully taxable equivalent) (2) | 3.76 | 3.50 | 4.05 | |||||||||
Core efficiency ratio (1) | 58.54 | 68.54 | 70.81 | |||||||||
Tangible average equity to tangible average assets (1) | 11.02 | 11.79 | 12.64 | |||||||||
Common equity tier 1 capital (3) | 12.12 | 13.90 | N/A | |||||||||
Tier 1 leverage ratio (3) | 10.21 | 11.50 | 11.45 | |||||||||
Tier 1 risk-based capital (3) | 12.12 | 13.90 | 15.56 | |||||||||
Total risk-based capital (3) | 13.20 | 14.97 | 16.76 | |||||||||
Asset Quality Ratios | ||||||||||||
Net charge-offs to average loans, excluding covered loans (annualized) | (0.12 | )% | (0.10 | )% | 0.26 | % | ||||||
Nonperforming assets as a percentage of total assets | 1.33 | 1.64 | 1.73 | |||||||||
Nonperforming loans as a percent of total loans | 1.14 | 1.32 | 1.38 | |||||||||
Nonperforming loans as a percent of total loans, excluding covered loans | 1.02 | 0.94 | 1.19 | |||||||||
Allowance for loan losses-uncovered as a percentage of period-end uncovered loans | 1.00 | 0.86 | 0.82 | |||||||||
(1) | See section entitled "Reconciliation of Non-GAAP Financial Measures." |
(2) | Presented on a tax equivalent basis using a 35% tax rate for all periods presented. |
(3) | Third quarter 2015 is estimated. Second and third quarter 2015 are under Basel III transitional and third quarter 2014 is under Basel I. |
Third Quarter 2015 Compared to Second Quarter 2015
• | Net income was $20.0 million, or $0.27 per diluted average common share, in the third quarter of 2015, compared to $17.5 million, or $0.23 per diluted average common share, for the second quarter of 2015. The increase in net income in the third quarter of 2015 was primarily due to reductions in operating expenses and an increase in interest income. |
• | Net total loans increased during the third quarter of 2015 by $173.7 million, driven by strong growth in both commercial and industrial and commercial real estate lending. |
• | Total deposits increased $217.4 million, to $5.1 billion as of September 30, 2015, compared to June 30, 2015. Total deposit growth included increases in time deposits of $184.2 million, demand deposits of $40.4 million, and money market and savings deposits of $38.1 million. These increases were partially offset by a decline in brokered deposits of $45.3 million. |
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• | Net interest income increased to $55.6 million in the third quarter of 2015, compared to $49.6 million in the second quarter of 2015. Net interest income growth was primarily due to the benefit provided by a $4.2 million reduction in negative accretion on the FDIC indemnification asset and a $1.8 million increase in interest on loans due to strong loan growth. Our net interest margin increased 26 basis points to 3.76% in the third quarter of 2015, compared to 3.50% in the second quarter of 2015, due in large part to the decline in the negative yield on the FDIC indemnification asset as we continue to reduce the outstanding amount of this asset. Exclusive of the benefit of excess accretable yield and negative yield on the FDIC indemnification asset, discussed in detail below, our core net interest margin in the third quarter of 2015 was 3.46% compared to 3.41% in the second quarter of 2015. |
• | Noninterest income decreased $2.8 million to $19.3 million in the third quarter of 2015, compared to the second quarter of 2015. Noninterest income was impacted by a detriment to earnings of $3.8 million due to the change in the fair value of loan servicing rights, which is a key component of the negative $1.7 million of income from mortgage banking and other loan fees. The total decrease in mortgage banking and other loan fees of $6.4 million was partially offset by a $3.2 million increase in FDIC loss sharing income and a $2.0 million increase in accelerated discount on acquired loans. |
• | Noninterest expense decreased $5.5 million, to $47.8 million in the third quarter of 2015, compared to the second quarter of 2015. The decrease in noninterest expense includes decreases in occupancy and equipment expense of $1.9 million, other expenses of $1.8 million and salary and employee benefits of $1.0 million. |
• | Total shareholder’s equity of $714.8 million as of September 30, 2015, decreased $51.6 million compared to June 30, 2015. The decrease is primarily the result of our repurchase and retirement of 5.0 million shares of our Class A common stock for $75.0 million, partially offset by third quarter of 2015 net income of $20.0 million and an increase in accumulated other comprehensive income due to an increase in the fair value of our investment securities portfolio. |
• | The income tax provision for the third quarter of 2015 was $6.4 million resulting in an effective tax rate of 24.3%, which is approximately $2.3 million lower than an assumed 33% normalized tax rate. The low effective tax rate in the third quarter of 2015, compared to previous quarters, is due primarily to the finalization of the 2014 Capital Bancorp, Ltd's consolidated federal income tax return (Talmer West Bank's former parent), which resulted in a larger amount of pre-ownership change carryforwards allocated to Talmer West Bank than originally estimated. |
Income Statement
Net Interest Income and Net Interest Margin
Net interest income for the third quarter of 2015 was $55.6 million, compared to $49.6 million in the prior quarter. Our net interest margin was 3.76% in the third quarter of 2015, an increase of 26 basis points from 3.50% in the second quarter of 2015. The increase in our net interest margin in the third quarter was due in large part to the decline in the negative yield on the FDIC indemnification asset.
Our net interest margin benefits from discount accretion on our purchased credit impaired loan portfolio, a component of the accretable yield. The accretable yield for purchased credit impaired loans includes both the expected coupon of the loan and the discount accretion, and is recognized as interest income over the expected remaining life of the loans. For the third and second quarters of 2015, the yield on uncovered loans was 4.74% and 4.62%, respectively, while the yield generated using only the expected coupon would have been 4.21% and 4.14%, respectively. For the third and second quarters of 2015, the yield on covered loans was 13.34% and 12.48%, respectively, while the yield generated using only the expected coupon would have been 7.50% and 6.17%, respectively. The difference between the actual yield earned on total loans and the yield generated based on the contractual coupon (not including any interest income for loans in nonaccrual status) represents excess accretable yield. Our net interest margin is also adversely impacted by the negative yield on the FDIC indemnification asset. Because our quarterly cash flow re-estimations have continued to result in improvements in the overall expected cash flows on covered loans, our expected payment from the FDIC under our loss share agreements has declined, resulting in a negative yield on the FDIC indemnification asset. This negative yield on the FDIC indemnification asset partially offsets the benefits provided by the excess accretable yield. This negative yield was 49.20%, representing $4.4 million, for the third quarter of 2015 compared to a negative yield of 73.00%, representing $8.5 million, for the second quarter of 2015. The combination of the excess accretable yield on both covered and uncovered loans, offset by the negative yield on the FDIC indemnification asset, benefitted net interest margin by 30 basis points in the third quarter of 2015 compared to nine basis points in the second quarter of 2015. Therefore, excluding the benefit of excess accretable yield and negative yield on the FDIC indemnification asset, our net interest margin in the third quarter of 2015 was 3.46% compared to 3.41% in the second quarter of 2015.
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Noninterest Income
Noninterest income decreased $2.8 million to $19.3 million in the third quarter of 2015, compared to the second quarter of 2015. The decrease is primarily the result of a decrease in mortgage banking and other loan fees of $6.4 million, partially offset by a $3.2 million decrease in the net amounts due to the FDIC resulting from higher recoveries on covered loans, recognized within “FDIC loss sharing income”, and an increase in accelerated discount on acquired loans of $2.0 million. Accelerated discount on acquired loans results from the accelerated recognition of a portion of the loan discount that would have been recognized over the expected life of the loan and occurs when a loan is paid in full or otherwise settled. The decrease in mortgage banking and other loan fees was impacted by a detriment to earnings of $3.8 million due to the change in the fair value of loan servicing rights. In the second quarter of 2015, the change in the fair value of loan servicing rights was a benefit of $3.1 million. The change in the fair value of loan servicing rights in the third quarter was due mainly to downward movements in market interest rates during the period.
As we have noted in prior quarters, we have chosen not to hedge our investment in loan servicing rights. Since our loan servicing rights are accounted for under the fair value measurement method, decreases in interest rates generally result in a detriment to earnings due to an anticipated increase in prepayments speeds, whereas increases in interest rates generally result in a benefit to earnings due to the opposite effect. The large majority of our servicing rights were acquired on January 1, 2013 in our acquisition of First Place Bank. While there has been meaningful reported earnings volatility due to our decision not to hedge our loan servicing rights, the cumulative acquisition-to-date detriment to pre-tax earnings due to the changes in fair value has been only $788 thousand since the acquisition of First Place Bank on January 1, 2013.
Noninterest Expense
Noninterest expense in the third quarter of 2015 decreased $5.5 million, to $47.8 million, compared to the second quarter of 2015. The decrease in noninterest expense includes decreases in occupancy and equipment expense of $1.9 million, other expenses of $1.8 million and salary and employee benefits of $1.0 million, in addition to spending cuts made within other noninterest expense categories. The second quarter of 2015 included $1.8 million of net expense recognized related to our targeted analysis of property efficiency which included a review of certain lease contracts resulting in lease buyouts, final sales of unused properties and impairments taken on owned properties under review for potential upcoming sales.
Our core efficiency ratio was 58.54% and 68.54%, for the third and second quarters of 2015, respectively. The improvement in our efficiency ratio is primarily the result of the combination of an increase in interest income and a reduction in operating expenses. The efficiency ratio is a measure of noninterest expense as a percent of net interest income and noninterest income. The core efficiency ratio begins with the efficiency ratio and then excludes certain items deemed by management to not be related to regular operations. The third quarter of 2015 core efficiency ratio excludes the detriment received from the fair value adjustment to our loan servicing rights of $3.8 million, transaction and integration related costs of $113 thousand, and the FDIC loss sharing income, which was a detriment of $2.7 million. The second quarter of 2015 core efficiency ratio excludes the benefit provided by the fair value adjustment to our loan servicing rights of $3.1 million, transaction and integration related costs of $419 thousand, property efficiency review expenses of $1.8 million and the FDIC loss sharing income, which was a detriment of $5.9 million. Over the next few quarters, the core efficiency ratio is expected to be in the lower 60% range given that overall operating expenses are expected to be modestly higher and accelerated discount on acquired loans is expected to be lower as compared to the level achieved in the third quarter of 2015.
Credit Quality
The third quarter of 2015 resulted in a total net provision for loan losses of $700 thousand, compared to a net benefit of $7.3 million in the second quarter of 2015. The increase in the net provision for loan losses was primarily due to an increase in impairment resulting from our quarterly re-estimation of cash flows for our purchased credit impaired loans in the third quarter of 2015, compared to the second quarter of 2015, and the unanticipated payments received in the second quarter on loans previously charged-off.
The provision for loan losses on uncovered loans in the third quarter of 2015 increased $2.6 million to $3.7 million, compared to the second quarter of 2015. At September 30, 2015, the allowance for loan losses on uncovered loans was $45.1 million, or 1.00% of total uncovered loans, compared to $36.6 million, or 0.86% of total uncovered loans, at June 30, 2015. The increase in allowance for loan losses on uncovered loans for the quarter was primarily due to impairment resulting from our quarterly re-estimation of cash flows for our uncovered purchased credit impaired loans, previous covered loan allowance transferred to uncovered effective July 1, 2015 due to the expiration of our first and largest non-single family FDIC loss share agreement, and the impact of organic loan growth.
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The net benefit for loan losses on covered loans in the third quarter of 2015 decreased $5.4 million to a benefit of $3.0 million, compared to the second quarter of 2015. The net benefit for loan losses on covered loans in the third quarter of 2015 was largely driven by the benefit received from recoveries on loans previously charged-off. The majority of these recoveries are offset by amounts owed to the FDIC related to the associated charge-offs previously claimed with the FDIC and recognized as a reduction to FDIC loss sharing income. At September 30, 2015, the allowance for loan losses on covered loans was $10.8 million, or 5.76% of total covered loans, compared to $16.3 million, or 5.82% of total covered loans at June 30, 2015. The decrease in allowance for loan losses on covered loans primarily reflects previous covered loan allowance transferred to uncovered due to the expiration of our first and largest non-single family FDIC loss share agreement, and the relief of allowance resulting from payments received on covered loans previously carrying an allowance for loan loss.
During the third quarter of 2015, we completed re-estimations of cash flow expectations for purchased credit impaired loans acquired in each of our acquisitions. For the re-estimations, loans with changes in cash flow expectations resulted in net additional loan loss provisions of $3.4 million ($3.4 million uncovered and $24 thousand covered). The re-estimations also resulted in a $16.1 million improvement in the gross cash flow expectations for purchased credit impaired loans, which will be recognized prospectively as an increase in the accretable yield.
All of our acquired loan portfolios are continuing to perform significantly better than initially anticipated. We believe improvements in performance are primarily due to the strengthening economy and the efforts made by our Special Assets team that manages our acquired loan portfolios. Similar to the third quarter of 2015 re-estimations, the prior re-estimations of cash flows have indicated better overall expected performance in our acquired loan portfolios than originally anticipated at acquisition.
Balance Sheet and Capital Management
Total assets increased $86.4 million to $6.5 billion at September 30, 2015 compared to $6.4 billion at June 30, 2015. The primary drivers of the increase in assets in the quarter ended September 30, 2015 were increases in net total loans of $173.7 million and securities available-for-sale of $35.4 million, partially offset by decreases in cash and cash equivalents of $81.0 million, loans held for sale of $16.8 million and other real estate owned and repossessed assets of $12.8 million. The increase in securities available-for-sale reflects management’s decision to invest liquid assets while retaining accessibility to the funds for potential liquidity needs. The decrease in loans held for sale primarily reflects a reduction in the overall volume of residential loan originations as a result of seasonal trends and changes in the interest rate environment. The decrease in other real estate owned and repossessed assets primarily reflects our successful disposition of a number of properties during the period. The decrease in cash and cash equivalents reflects the items discussed previously in addition to the $75.0 million paid to repurchase 5.0 million shares of our Class A common stock.
Net total loans at September 30, 2015 increased $173.7 million to $4.6 billion, compared to June 30, 2015, as a result of $262.3 million of net uncovered loan growth, inclusive of $77.0 million of loans transferred from covered to uncovered effective July 1, 2015 due to the expiration of our first and largest non-single family loss share agreement, partially offset by $88.6 million of net covered loan run-off, also inclusive of the $77.0 million of loans transferred to uncovered due to the expiration of the loss share agreement previously discussed. As in most prior quarters, uncovered loan growth was primarily driven by growth in commercial and industrial loans. We continue to be focused on sourcing quality loan growth to overcome the run-off of higher-yielding acquired loans. Acquired loans, which total $1.5 billion, or 32.9% of total loans, at September 30, 2015 are reported on the balance sheet at the contractual balance, net of remaining discount resulting from acquisition accounting and charge-offs taken since acquisition.
The FDIC indemnification asset balance was $30.6 million at September 30, 2015. Of this amount, we expect approximately $16.5 million to be collected from the FDIC and the remaining $14.1 million to be amortized prior to the end of the associated loss share agreements, as a result of expected improvements in cash flow expectations on covered loans.
Total liabilities were $5.8 billion at September 30, 2015 compared to $5.7 billion at June 30, 2015. The $138.1 million increase in liabilities in the quarter ended September 30, 2015 was primarily due to an increase in total deposits of $217.4 million and an increase in long-term debt of $70.0 million, partially offset by a decrease in short-term borrowings of $151.9 million. Total deposit growth included time deposits of $184.2 million, noninterest-bearing demand deposits of $48.3 million and money market and savings deposits of $38.1 million, partially offset by decreases in brokered deposits of $45.3 million and interest-bearing demand deposits of $7.9 million.
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Total shareholders’ equity of $714.8 million as of September 30, 2015 decreased $51.6 million compared to June 30, 2015. The decrease is primarily the result of our repurchase of 5.0 million shares of our common stock for $75.0 million in the third quarter of 2015, offset by net income of $20.0 million and an increase in accumulated other comprehensive income primarily due to an increase in the fair value of our investment securities portfolio. Our Tier 1 leverage ratio was 10.21% at September 30, 2015, compared to 11.50% at June 30, 2015.
Key Performance Goals
Our near-term focus continues to be on driving quality loan and core deposit growth. Continuing merger activity in our market area offers the potential for additional growth opportunities; however, we will remain disciplined in our evaluation of the risks and challenges in each and every deal. Recent trends in operating expenses and ongoing investment in growth provide momentum in our pursuit of delivering a sustainable earnings growth over the longer term.
Conference Call and Webcast
Talmer Bancorp, Inc. will host a live conference webcast to review third quarter 2015 financial results at 10:00 a.m. ET on Thursday, October 29, 2015. The webcast may be accessed through Talmer’s Investor Relations page at www.talmerbank.com where a link will be provided. Interested parties may also access the conference call by calling (888) 317-6003 (event ID No. 4967473) or internationally at (412) 317-6061. A replay of the webcast will be available for approximately 90 days after the event on Talmer’s Investor Relations page at www.talmerbank.com.
About Talmer Bancorp, Inc.
Headquartered in Troy, Michigan, Talmer Bancorp, Inc. is the holding company for Talmer Bank and Trust. Talmer Bank and Trust operates branches and lending offices in Michigan, Ohio, Illinois, Indiana, Maryland and Nevada and offers a full suite of commercial and retail banking, mortgage banking, wealth management and trust services to small and medium-sized businesses and individuals.
This press release contains both financial measures based on accounting principles generally accepted in the United States (GAAP) and non-GAAP based financial measures, which are used where management believes it to be helpful in understanding Talmer Bancorp Inc.’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.
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Forward-looking Statements
Some of the statements in this press release and our conference call are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: “intend,” “plan,” “seek,” “believe,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Examples of forward-looking statements, including, among others, statements related to our future expectations, including all statements under the heading entitled “Key Performance Goals,” statements regarding our focus on driving healthy organic franchise growth and being well prepared for potential acquisition opportunities, our expectations that our core efficiency ratio will be in the lower 60% range over the next few quarters, including our expectation that operating expenses will be modestly higher and accelerated discount on acquired loans will be lower, our expected future collections from the FDIC under our loss share agreements and the remaining amortization of the indemnification asset, and statements regarding growth opportunities in our markets. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to risks, uncertainties and other factors, such as a downturn in the economy, unanticipated losses related to the integration of, and accounting for, our acquisition transactions, access to funding sources, greater than expected noninterest expenses, volatile credit and financial markets both domestic and foreign, potential deterioration in real estate values, regulatory changes, excessive loan losses, as well as additional risks and uncertainties contained in the “Risk Factors” and the forward-looking statement disclosure contained in our Annual Report on Form 10-K for the most recently ended fiscal year, any of which could cause actual results to differ materially from future results expressed or implied by those forward-looking statements. All forward-looking statements speak only as of the date on which it is made. We undertake no obligation to update or revise any forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events or otherwise.
Media Contact: Investor Relations Contact:
Shellie Maitre Bradley Adams
(248) 498-2858 (248) 498-2862
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Talmer Bancorp, Inc.
Consolidated Balance Sheets
(Unaudited)
(Dollars in thousands, except per share data) | September 30, 2015 | June 30, 2015 | December 31, 2014 | September 30, 2014 | |||||||||||
Assets | |||||||||||||||
Cash and due from banks | $ | 82,822 | $ | 79,357 | $ | 86,185 | $ | 91,214 | |||||||
Interest-bearing deposits with other banks | 106,740 | 161,201 | 96,551 | 121,952 | |||||||||||
Federal funds sold and other short-term investments | 140,000 | 170,000 | 71,000 | 85,500 | |||||||||||
Total cash and cash equivalents | 329,562 | 410,558 | 253,736 | 298,666 | |||||||||||
Securities available-for-sale | 880,705 | 845,319 | 740,819 | 734,489 | |||||||||||
Federal Home Loan Bank stock | 25,416 | 25,418 | 20,212 | 17,426 | |||||||||||
Loans held for sale, at fair value | 100,255 | 117,042 | 93,453 | 122,599 | |||||||||||
Loans: | |||||||||||||||
Residential real estate (includes $20.9 million, $20.9 million, $18.3 million and $17.9 million, respectively, measured at fair value) (1) | 1,452,290 | 1,434,678 | 1,426,012 | 1,430,939 | |||||||||||
Commercial real estate | 1,484,421 | 1,395,783 | 1,310,938 | 1,213,361 | |||||||||||
Commercial and industrial | 1,196,717 | 1,066,353 | 869,477 | 790,867 | |||||||||||
Real estate construction (includes $0, $0, $1.2 million, and $0, respectively, respectively, measured at fair value) (1) | 217,035 | 175,192 | 131,686 | 102,920 | |||||||||||
Consumer | 164,496 | 172,120 | 164,524 | 93,246 | |||||||||||
Total loans, excluding covered loans | 4,514,959 | 4,244,126 | 3,902,637 | 3,631,333 | |||||||||||
Less: Allowance for loan losses - uncovered | (45,080 | ) | (36,566 | ) | (33,819 | ) | (29,892 | ) | |||||||
Net loans - excluding covered loans | 4,469,879 | 4,207,560 | 3,868,818 | 3,601,441 | |||||||||||
Covered loans | 186,629 | 280,847 | 346,490 | 403,792 | |||||||||||
Less: Allowance for loan losses - covered | (10,757 | ) | (16,340 | ) | (21,353 | ) | (25,768 | ) | |||||||
Net loans - covered | 175,872 | 264,507 | 325,137 | 378,024 | |||||||||||
Net total loans | 4,645,751 | 4,472,067 | 4,193,955 | 3,979,465 | |||||||||||
Premises and equipment | 44,133 | 44,857 | 48,389 | 51,059 | |||||||||||
FDIC indemnification asset | 30,551 | 36,997 | 67,026 | 82,441 | |||||||||||
Other real estate owned and repossessed assets | 33,553 | 46,373 | 48,743 | 45,032 | |||||||||||
Loan servicing rights | 55,786 | 58,894 | 70,598 | 74,380 | |||||||||||
Core deposit intangible | 13,470 | 14,131 | 13,035 | 13,696 | |||||||||||
Goodwill | 3,524 | 3,524 | — | — | |||||||||||
FDIC receivable | 2,618 | 5,543 | 6,062 | 12,873 | |||||||||||
Company-owned life insurance | 105,975 | 104,972 | 97,782 | 96,605 | |||||||||||
Income tax benefit | 180,719 | 188,755 | 177,472 | 181,318 | |||||||||||
Other assets | 52,017 | 43,173 | 40,982 | 35,718 | |||||||||||
Total assets | $ | 6,504,035 | $ | 6,417,623 | $ | 5,872,264 | $ | 5,745,767 | |||||||
Liabilities | |||||||||||||||
Deposits: | |||||||||||||||
Noninterest-bearing demand deposits | $ | 1,050,375 | $ | 1,002,053 | $ | 887,567 | $ | 908,343 | |||||||
Interest-bearing demand deposits | 813,609 | 821,557 | 660,697 | 673,336 | |||||||||||
Money market and savings deposits | 1,314,798 | 1,276,726 | 1,170,236 | 1,173,697 | |||||||||||
Time deposits | 1,611,315 | 1,427,126 | 1,188,178 | 1,256,981 | |||||||||||
Other brokered funds | 335,354 | 380,611 | 642,185 | 473,240 | |||||||||||
Total deposits | 5,125,451 | 4,908,073 | 4,548,863 | 4,485,597 | |||||||||||
FDIC clawback liability | 27,269 | 28,588 | 26,905 | 25,723 | |||||||||||
FDIC warrants payable | 4,513 | 4,441 | 4,633 | 4,563 | |||||||||||
Short-term borrowings | 102,090 | 253,945 | 135,743 | 150,573 | |||||||||||
Long-term debt | 484,981 | 414,947 | 353,972 | 285,009 | |||||||||||
Other liabilities | 44,963 | 41,223 | 40,541 | 47,650 | |||||||||||
Total liabilities | 5,789,267 | 5,651,217 | 5,110,657 | 4,999,115 | |||||||||||
Shareholders’ equity | |||||||||||||||
Preferred stock - $1.00 par value | |||||||||||||||
Authorized - 20,000,000 shares at 9/30/2015, 6/30/2015, 12/31/2014 and 9/30/2014 | |||||||||||||||
Issued and outstanding - 0 shares at 9/30/2015, 6/30/2015, 12/31/2014 and 9/30/2014 | — | — | — | — | |||||||||||
Common stock: | |||||||||||||||
Class A Voting Common Stock - $1.00 par value | |||||||||||||||
Authorized - 198,000,000 shares at 9/30/2015, 6/30/2015, 12/31/2014 and 9/30/2014 | |||||||||||||||
Issued and outstanding -66,127,598 shares at 9/30/2015, 71,128,894 shares at 6/30/2015, 70,532,122 shares at 12/31/2014 and 70,503,920 shares at 9/30/2014 | 66,128 | 71,129 | 70,532 | 70,504 | |||||||||||
Class B Non-Voting Common Stock - $1.00 par value | |||||||||||||||
Authorized - 2,000,000 shares at 9/30/2015, 6/30/2015, 12/31/2014 and 9/30/2014 | |||||||||||||||
Issued and outstanding - 0 shares at 9/30/2015, 6/30/2015, 12/31/2014 and 9/30/2014 | — | — | — | — | |||||||||||
Additional paid-in-capital | 316,160 | 385,686 | 405,436 | 404,068 | |||||||||||
Retained earnings | 326,678 | 307,355 | 281,789 | 269,993 | |||||||||||
Accumulated other comprehensive income, net of tax | 5,802 | 2,236 | 3,850 | 2,087 | |||||||||||
Total shareholders’ equity | 714,768 | 766,406 | 761,607 | 746,652 | |||||||||||
Total liabilities and shareholders’ equity | $ | 6,504,035 | $ | 6,417,623 | $ | 5,872,264 | $ | 5,745,767 | |||||||
(1) Amounts represent loans for which the Company has elected the fair value option.
8
Talmer Bancorp, Inc.
Consolidated Statements of Income
(Unaudited)
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
(Dollars in thousands, except per share data) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
Interest income | ||||||||||||||||
Interest and fees on loans | $ | 60,078 | $ | 58,128 | $ | 178,335 | $ | 168,403 | ||||||||
Interest on investments | ||||||||||||||||
Taxable | 2,731 | 2,241 | 7,429 | 6,246 | ||||||||||||
Tax-exempt | 1,873 | 1,444 | 5,146 | 4,622 | ||||||||||||
Total interest on securities | 4,604 | 3,685 | 12,575 | 10,868 | ||||||||||||
Interest on interest-earning cash balances | 107 | 159 | 310 | 546 | ||||||||||||
Interest on federal funds and other short-term investments | 342 | 130 | 776 | 401 | ||||||||||||
Dividends on FHLB stock | 285 | 177 | 754 | 690 | ||||||||||||
FDIC indemnification asset | (4,366 | ) | (6,663 | ) | (22,164 | ) | (18,887 | ) | ||||||||
Total interest income | 61,050 | 55,616 | 170,586 | 162,021 | ||||||||||||
Interest Expense | ||||||||||||||||
Interest-bearing demand deposits | 401 | 190 | 1,073 | 630 | ||||||||||||
Money market and savings deposits | 620 | 487 | 1,653 | 1,473 | ||||||||||||
Time deposits | 2,582 | 1,611 | 6,540 | 4,534 | ||||||||||||
Other brokered funds | 541 | 288 | 1,771 | 352 | ||||||||||||
Interest on short-term borrowings | 350 | 122 | 638 | 330 | ||||||||||||
Interest on long-term debt | 909 | 701 | 2,623 | 1,902 | ||||||||||||
Total interest expense | 5,403 | 3,399 | 14,298 | 9,221 | ||||||||||||
Net interest income | 55,647 | 52,217 | 156,288 | 152,800 | ||||||||||||
Provision for loan losses - uncovered | 3,666 | 7,784 | 8,147 | 17,427 | ||||||||||||
Benefit for loan losses - covered | (2,966 | ) | (6,275 | ) | (12,767 | ) | (16,094 | ) | ||||||||
Net interest income after provision for loan losses | 54,947 | 50,708 | 160,908 | 151,467 | ||||||||||||
Noninterest income | ||||||||||||||||
Deposit fee income | 2,494 | 3,047 | 7,375 | 9,533 | ||||||||||||
Mortgage banking and other loan fees | (1,721 | ) | 2,065 | 1,716 | 2,028 | |||||||||||
Net gain on sales of loans | 6,815 | 4,083 | 24,181 | 12,808 | ||||||||||||
Net gain on sale of branches | — | 14,410 | — | 14,410 | ||||||||||||
Bargain purchase gain | — | — | — | 41,977 | ||||||||||||
FDIC loss sharing income | (2,696 | ) | (2,420 | ) | (9,692 | ) | (5,967 | ) | ||||||||
Accelerated discount on acquired loans | 9,491 | 3,663 | 25,133 | 14,455 | ||||||||||||
Net gain (loss) on sales of securities | 202 | 244 | 101 | (2,066 | ) | |||||||||||
Other income | 4,757 | 4,882 | 14,056 | 14,487 | ||||||||||||
Total noninterest income | 19,342 | 29,974 | 62,870 | 101,665 | ||||||||||||
Noninterest expense | ||||||||||||||||
Salary and employee benefits | 27,665 | 29,795 | 85,562 | 96,112 | ||||||||||||
Occupancy and equipment expense | 6,472 | 7,981 | 22,553 | 24,895 | ||||||||||||
Data processing fees | 1,356 | 1,610 | 5,015 | 5,610 | ||||||||||||
Professional service fees | 3,197 | 2,964 | 10,015 | 9,629 | ||||||||||||
FDIC loss sharing expense | 292 | 245 | 1,374 | 1,752 | ||||||||||||
Bank acquisition and due diligence fees | 113 | 239 | 1,944 | 3,436 | ||||||||||||
Marketing expense | 1,748 | 1,001 | 4,326 | 3,697 | ||||||||||||
Other employee expense | 722 | 621 | 2,482 | 2,016 | ||||||||||||
Insurance expense | 1,305 | 1,383 | 4,362 | 4,082 | ||||||||||||
Other expense | 4,959 | 5,424 | 20,084 | 19,553 | ||||||||||||
Total noninterest expense | 47,829 | 51,263 | 157,717 | 170,782 | ||||||||||||
Income before income taxes | 26,460 | 29,419 | 66,061 | 82,350 | ||||||||||||
Income tax provision | 6,425 | 9,904 | 19,045 | 4,002 | ||||||||||||
Net income | $ | 20,035 | $ | 19,515 | $ | 47,016 | $ | 78,348 | ||||||||
Earnings per common share: | ||||||||||||||||
Basic | $ | 0.29 | $ | 0.28 | $ | 0.67 | $ | 1.13 | ||||||||
Diluted | $ | 0.27 | $ | 0.26 | $ | 0.63 | $ | 1.04 | ||||||||
Average common shares outstanding - basic | 68,731 | 70,092 | 69,744 | 69,414 | ||||||||||||
Average common shares outstanding - diluted | 73,222 | 75,752 | 74,447 | 74,948 | ||||||||||||
Total comprehensive income | $ | 23,601 | $ | 19,369 | $ | 48,968 | $ | 88,431 | ||||||||
9
Talmer Bancorp, Inc.
Consolidated Statements of Income
(Unaudited)
2015 | 2014 | |||||||||||||||||||
(Dollars in thousands, except per share data) | 3rd Qtr | 2nd Qtr | 1st Qtr | 4th Qtr | 3rd Qtr | |||||||||||||||
Interest income | ||||||||||||||||||||
Interest and fees on loans | $ | 60,078 | $ | 58,319 | $ | 59,938 | $ | 58,271 | $ | 58,128 | ||||||||||
Interest on investments | ||||||||||||||||||||
Taxable | 2,731 | 2,375 | 2,323 | 2,263 | 2,241 | |||||||||||||||
Tax-exempt | 1,873 | 1,658 | 1,615 | 1,610 | 1,444 | |||||||||||||||
Total interest on securities | 4,604 | 4,033 | 3,938 | 3,873 | 3,685 | |||||||||||||||
Interest on interest-earning cash balances | 107 | 117 | 86 | 94 | 159 | |||||||||||||||
Interest on federal funds and other short-term investments | 342 | 269 | 165 | 126 | 130 | |||||||||||||||
Dividends on FHLB stock | 285 | 224 | 245 | 177 | 177 | |||||||||||||||
FDIC indemnification asset | (4,366 | ) | (8,548 | ) | (9,250 | ) | (7,539 | ) | (6,663 | ) | ||||||||||
Total interest income | 61,050 | 54,414 | 55,122 | 55,002 | 55,616 | |||||||||||||||
Interest Expense | ||||||||||||||||||||
Interest-bearing demand deposits | 401 | 382 | 290 | 194 | 190 | |||||||||||||||
Money market and savings deposits | 620 | 562 | 471 | 457 | 487 | |||||||||||||||
Time deposits | 2,582 | 2,131 | 1,827 | 1,546 | 1,611 | |||||||||||||||
Other brokered funds | 541 | 607 | 623 | 527 | 288 | |||||||||||||||
Interest on short-term borrowings | 350 | 209 | 79 | 90 | 122 | |||||||||||||||
Interest on long-term debt | 909 | 914 | 800 | 725 | 701 | |||||||||||||||
Total interest expense | 5,403 | 4,805 | 4,090 | 3,539 | 3,399 | |||||||||||||||
Net interest income | 55,647 | 49,609 | 51,032 | 51,463 | 52,217 | |||||||||||||||
Provision for loan losses - uncovered | 3,666 | 1,069 | 3,412 | 5,655 | 7,784 | |||||||||||||||
Benefit for loan losses - covered | (2,966 | ) | (8,382 | ) | (1,419 | ) | (2,661 | ) | (6,275 | ) | ||||||||||
Net interest income after provision for loan losses | 54,947 | 56,922 | 49,039 | 48,469 | 50,708 | |||||||||||||||
Noninterest income | ||||||||||||||||||||
Deposit fee income | 2,494 | 2,561 | 2,320 | 2,692 | 3,047 | |||||||||||||||
Mortgage banking and other loan fees | (1,721 | ) | 4,698 | (1,261 | ) | (865 | ) | 2,065 | ||||||||||||
Net gain on sales of loans | 6,815 | 8,748 | 8,618 | 4,939 | 4,083 | |||||||||||||||
Net gain on sale of branches | — | — | — | — | 14,410 | |||||||||||||||
FDIC loss sharing income | (2,696 | ) | (5,928 | ) | (1,068 | ) | (244 | ) | (2,420 | ) | ||||||||||
Accelerated discount on acquired loans | 9,491 | 7,444 | 8,198 | 3,742 | 3,663 | |||||||||||||||
Net gain (loss) on sales of securities | 202 | 6 | (107 | ) | — | 244 | ||||||||||||||
Other income | 4,757 | 4,569 | 4,730 | 5,570 | 4,882 | |||||||||||||||
Total noninterest income | 19,342 | 22,098 | 21,430 | 15,834 | 29,974 | |||||||||||||||
Noninterest expense | ||||||||||||||||||||
Salary and employee benefits | 27,665 | 28,685 | 29,212 | 25,632 | 29,795 | |||||||||||||||
Occupancy and equipment expense | 6,472 | 8,415 | 7,666 | 6,911 | 7,981 | |||||||||||||||
Data processing fees | 1,356 | 1,805 | 1,854 | 789 | 1,610 | |||||||||||||||
Professional service fees | 3,197 | 3,275 | 3,543 | 3,323 | 2,964 | |||||||||||||||
FDIC loss sharing expense | 292 | 133 | 949 | 406 | 245 | |||||||||||||||
Bank acquisition and due diligence fees | 113 | 419 | 1,412 | 329 | 239 | |||||||||||||||
Marketing expense | 1,748 | 1,483 | 1,095 | 1,226 | 1,001 | |||||||||||||||
Other employee expense | 722 | 826 | 934 | 658 | 621 | |||||||||||||||
Insurance expense | 1,305 | 1,527 | 1,530 | 1,615 | 1,383 | |||||||||||||||
Other expense | 4,959 | 6,725 | 8,400 | 7,209 | 5,424 | |||||||||||||||
Total noninterest expense | 47,829 | 53,293 | 56,595 | 48,098 | 51,263 | |||||||||||||||
Income before income taxes | 26,460 | 25,727 | 13,874 | 16,205 | 29,419 | |||||||||||||||
Income tax provision | 6,425 | 8,179 | 4,441 | 3,703 | 9,904 | |||||||||||||||
Net income | $ | 20,035 | $ | 17,548 | $ | 9,433 | $ | 12,502 | $ | 19,515 | ||||||||||
Earnings per common share: | ||||||||||||||||||||
Basic | $ | 0.29 | $ | 0.25 | $ | 0.13 | $ | 0.18 | $ | 0.28 | ||||||||||
Diluted | $ | 0.27 | $ | 0.23 | $ | 0.12 | $ | 0.16 | $ | 0.26 | ||||||||||
Average common shares outstanding - basic | 68,731 | 70,301 | 70,216 | 70,136 | 70,092 | |||||||||||||||
Average common shares outstanding - diluted | 73,222 | 74,900 | 75,103 | 75,759 | 75,752 | |||||||||||||||
Total comprehensive income | $ | 23,601 | $ | 13,144 | $ | 12,227 | $ | 14,265 | $ | 19,369 | ||||||||||
10
Talmer Bancorp, Inc.
Loan Data
(Unaudited)
(Dollars in thousands) | September 30, 2015 | June 30, 2015 | March 31, 2015 | December 31, 2014 | September 30, 2014 | ||||||||||||||
Uncovered loans | |||||||||||||||||||
Residential real estate | $ | 1,452,290 | $ | 1,434,678 | $ | 1,474,025 | $ | 1,426,012 | $ | 1,430,939 | |||||||||
Commercial real estate | |||||||||||||||||||
Non-owner occupied | 988,635 | 924,174 | 919,043 | 888,650 | 814,179 | ||||||||||||||
Owner-occupied | 472,269 | 445,927 | 459,002 | 417,843 | 379,964 | ||||||||||||||
Farmland | 23,517 | 25,682 | 26,617 | 4,445 | 19,218 | ||||||||||||||
Total commercial real estate | 1,484,421 | 1,395,783 | 1,404,662 | 1,310,938 | 1,213,361 | ||||||||||||||
Commercial and industrial | 1,196,717 | 1,066,353 | 948,303 | 869,477 | 790,867 | ||||||||||||||
Real estate construction | 217,035 | 175,192 | 140,705 | 131,686 | 102,920 | ||||||||||||||
Consumer | 164,496 | 172,120 | 187,698 | 164,524 | 93,246 | ||||||||||||||
Total uncovered loans | 4,514,959 | 4,244,126 | 4,155,393 | 3,902,637 | 3,631,333 | ||||||||||||||
Covered loans | |||||||||||||||||||
Residential real estate | 90,371 | 96,371 | 103,429 | 108,226 | 113,228 | ||||||||||||||
Commercial real estate | |||||||||||||||||||
Non-owner occupied | 40,777 | 85,889 | 97,661 | 108,692 | 121,491 | ||||||||||||||
Owner-occupied | 32,009 | 53,614 | 63,031 | 70,492 | 80,990 | ||||||||||||||
Farmland | 4,322 | 4,395 | 6,684 | 7,478 | 17,015 | ||||||||||||||
Total commercial real estate | 77,108 | 143,898 | 167,376 | 186,662 | 219,496 | ||||||||||||||
Commercial and industrial | 13,896 | 24,794 | 29,384 | 32,648 | 47,252 | ||||||||||||||
Real estate construction | 5,149 | 7,426 | 8,443 | 9,389 | 13,734 | ||||||||||||||
Consumer | 105 | 8,358 | 8,961 | 9,565 | 10,082 | ||||||||||||||
Total covered loans | 186,629 | 280,847 | 317,593 | 346,490 | 403,792 | ||||||||||||||
Total loans | $ | 4,701,588 | $ | 4,524,973 | $ | 4,472,986 | $ | 4,249,127 | $ | 4,035,125 | |||||||||
11
Talmer Bancorp, Inc.
Impaired Assets
(Unaudited)
2015 | 2014 | ||||||||||||||||||
(Dollars in thousands) | 3rd Qtr | 2nd Qtr | 1st Qtr | 4th Qtr | 3rd Qtr | ||||||||||||||
Uncovered | |||||||||||||||||||
Nonperforming troubled debt restructurings | |||||||||||||||||||
Residential real estate | $ | 4,600 | $ | 4,364 | $ | 4,418 | $ | 3,984 | $ | 2,284 | |||||||||
Commercial real estate | 5,519 | 4,652 | 4,031 | 2,644 | 3,122 | ||||||||||||||
Commercial and industrial | 705 | 414 | 43 | 180 | 135 | ||||||||||||||
Real estate construction | 135 | 202 | 147 | — | — | ||||||||||||||
Consumer | 115 | 91 | 89 | 83 | 84 | ||||||||||||||
Total nonperforming troubled debt restructurings | 11,074 | 9,723 | 8,728 | 6,891 | 5,625 | ||||||||||||||
Nonaccrual loans other than nonperforming troubled debt restructurings | |||||||||||||||||||
Residential real estate | 12,962 | 15,769 | 13,683 | 13,390 | 13,449 | ||||||||||||||
Commercial real estate | 12,421 | 11,075 | 11,120 | 11,112 | 9,456 | ||||||||||||||
Commercial and industrial | 9,236 | 2,705 | 1,892 | 3,370 | 14,339 | ||||||||||||||
Real estate construction | 198 | 236 | — | 174 | 253 | ||||||||||||||
Consumer | 149 | 217 | 254 | 174 | 161 | ||||||||||||||
Total nonaccrual loans other than nonperforming troubled debt restructurings | 34,966 | 30,002 | 26,949 | 28,220 | 37,658 | ||||||||||||||
Total nonaccrual loans | 46,040 | 39,725 | 35,677 | 35,111 | 43,283 | ||||||||||||||
Other real estate owned and repossessed assets (1) | 27,329 | 37,612 | 30,761 | 36,872 | 32,046 | ||||||||||||||
Total nonperforming assets | 73,369 | 77,337 | 66,438 | 71,983 | 75,329 | ||||||||||||||
Performing troubled debt restructurings | |||||||||||||||||||
Residential real estate | 2,402 | 2,392 | 1,875 | 1,368 | 1,802 | ||||||||||||||
Commercial real estate | 13,973 | 3,741 | 2,625 | 3,785 | 2,961 | ||||||||||||||
Commercial and industrial | 3,433 | 2,597 | 2,171 | 840 | 652 | ||||||||||||||
Real estate construction | 197 | 131 | 89 | 90 | 92 | ||||||||||||||
Consumer | 235 | 233 | 220 | 234 | 56 | ||||||||||||||
Total performing troubled debt restructurings | 20,240 | 9,094 | 6,980 | 6,317 | 5,563 | ||||||||||||||
Total uncovered impaired assets | $ | 93,609 | $ | 86,431 | $ | 73,418 | $ | 78,300 | $ | 80,892 | |||||||||
Loans 90 days or more past due and still accruing, excluding loans accounted for under ASC 310-30 | $ | 196 | $ | 340 | $ | 72 | $ | 53 | $ | 595 | |||||||||
Covered | |||||||||||||||||||
Nonperforming troubled debt restructurings | |||||||||||||||||||
Residential real estate | $ | 1,618 | $ | 1,606 | $ | 1,623 | $ | 1,363 | $ | 1,304 | |||||||||
Commercial real estate | 3,590 | 14,717 | 13,617 | 14,343 | 4,144 | ||||||||||||||
Commercial and industrial | 1,045 | 1,652 | 1,476 | 2,043 | 2,438 | ||||||||||||||
Real estate construction | 210 | 336 | 267 | 272 | 614 | ||||||||||||||
Consumer | 2 | 20 | 28 | 13 | 42 | ||||||||||||||
Total nonperforming troubled debt restructurings | 6,465 | 18,331 | 17,011 | 18,034 | 8,542 | ||||||||||||||
Nonaccrual loans other than nonperforming troubled debt restructurings | |||||||||||||||||||
Residential real estate | 392 | 465 | 441 | 485 | 433 | ||||||||||||||
Commercial real estate | 190 | 251 | 1,180 | 1,380 | 1,313 | ||||||||||||||
Commercial and industrial | 633 | 717 | 1,233 | 1,517 | 1,653 | ||||||||||||||
Real estate construction | 26 | 29 | 451 | 441 | 441 | ||||||||||||||
Total nonaccrual loans other than nonperforming troubled debt restructurings | 1,241 | 1,462 | 3,305 | 3,823 | 3,840 | ||||||||||||||
Total nonaccrual loans | 7,706 | 19,793 | 20,316 | 21,857 | 12,382 | ||||||||||||||
Other real estate owned and repossessed assets | 5,621 | 8,261 | 10,709 | 10,719 | 11,835 | ||||||||||||||
Total nonperforming assets | 13,327 | 28,054 | 31,025 | 32,576 | 24,217 | ||||||||||||||
Performing troubled debt restructurings | |||||||||||||||||||
Residential real estate | 3,185 | 3,584 | 3,069 | 3,046 | 2,860 | ||||||||||||||
Commercial real estate | 1,709 | 3,055 | 8,923 | 9,017 | 14,915 | ||||||||||||||
Commercial and industrial | 204 | 569 | 993 | 1,137 | 2,119 | ||||||||||||||
Real estate construction | 298 | 300 | 256 | 264 | 108 | ||||||||||||||
Consumer | — | 7 | — | — | — | ||||||||||||||
Total performing troubled debt restructurings | 5,396 | 7,515 | 13,241 | 13,464 | 20,002 | ||||||||||||||
Total covered impaired assets | $ | 18,723 | $ | 35,569 | $ | 44,266 | $ | 46,040 | $ | 44,219 | |||||||||
Loans 90 days or more past due and still accruing, excluding loans accounted for under ASC 310-30 | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
(1) Excludes closed branches and operating facilities.
12
Talmer Bancorp, Inc.
Net Interest Income and Net Interest Margin
(Unaudited)
For the three months ended | ||||||||||||||||||||||||||
September 30, 2015 | June 30, 2015 | September 30, 2014 | ||||||||||||||||||||||||
(Dollars in thousands) | Average Balance | Interest (1) | Average Rate (2) | Average Balance | Interest (1) | Average Rate (2) | Average Balance | Interest (1) | Average Rate (2) | |||||||||||||||||
Earning assets: | ||||||||||||||||||||||||||
Interest-earning balances | $ | 172,781 | $ | 107 | 0.24 | % | $ | 195,874 | $ | 117 | 0.24 | % | $ | 264,158 | $ | 159 | 0.24 | % | ||||||||
Federal funds sold and other short-term investments | 182,826 | 342 | 0.74 | 152,593 | 269 | 0.71 | 76,724 | 130 | 0.67 | |||||||||||||||||
Investment securities (3): | ||||||||||||||||||||||||||
Taxable | 575,071 | 2,731 | 1.88 | 527,632 | 2,375 | 1.81 | 515,388 | 2,241 | 1.73 | |||||||||||||||||
Tax-exempt | 266,357 | 1,873 | 3.69 | 250,765 | 1,658 | 3.52 | 205,329 | 1,444 | 3.77 | |||||||||||||||||
Federal Home Loan Bank stock | 25,416 | 285 | 4.46 | 20,380 | 224 | 4.40 | 17,333 | 177 | 4.04 | |||||||||||||||||
Gross uncovered loans (4) | 4,494,551 | 53,749 | 4.74 | 4,250,403 | 48,919 | 4.62 | 3,548,152 | 44,443 | 4.97 | |||||||||||||||||
Gross covered loans (4) | 188,158 | 6,329 | 13.34 | 302,078 | 9,400 | 12.48 | 439,366 | 13,685 | 12.36 | |||||||||||||||||
FDIC indemnification asset | 35,211 | (4,366 | ) | (49.20 | ) | 46,971 | (8,548 | ) | (73.00 | ) | 99,335 | (6,663 | ) | (26.61 | ) | |||||||||||
Total earning assets | 5,940,371 | 61,050 | 4.12 | % | 5,746,696 | 54,414 | 3.84 | % | 5,165,785 | 55,616 | 4.31 | % | ||||||||||||||
Non-earning assets: | ||||||||||||||||||||||||||
Cash and due from banks | 91,225 | 86,290 | 114,156 | |||||||||||||||||||||||
Allowance for loan losses | (53,900 | ) | (51,033 | ) | (55,579 | ) | ||||||||||||||||||||
Premises and equipment | 44,552 | 47,775 | 52,141 | |||||||||||||||||||||||
Core deposit intangible | 13,802 | 14,465 | 14,398 | |||||||||||||||||||||||
Goodwill | 3,524 | 3,524 | — | |||||||||||||||||||||||
Other real estate owned and repossessed assets | 43,420 | 44,888 | 49,440 | |||||||||||||||||||||||
Loan servicing rights | 58,038 | 55,986 | 73,996 | |||||||||||||||||||||||
FDIC receivable | 3,878 | 6,830 | 5,886 | |||||||||||||||||||||||
Company-owned life insurance | 105,377 | 104,327 | 95,930 | |||||||||||||||||||||||
Other non-earning assets | 241,922 | 236,881 | 230,955 | |||||||||||||||||||||||
Total assets | $ | 6,492,209 | $ | 6,296,629 | $ | 5,747,108 | ||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||||
Interest-bearing demand deposits | $ | 823,741 | $ | 401 | 0.19 | % | $ | 828,482 | $ | 382 | 0.19 | % | $ | 657,107 | $ | 190 | 0.11 | % | ||||||||
Money market and savings deposits | 1,293,737 | 620 | 0.19 | 1,267,347 | 562 | 0.18 | 1,237,984 | 487 | 0.16 | |||||||||||||||||
Time deposits | 1,523,096 | 2,582 | 0.67 | 1,353,226 | 2,131 | 0.63 | 1,236,286 | 1,611 | 0.52 | |||||||||||||||||
Other brokered funds | 365,825 | 541 | 0.59 | 483,716 | 607 | 0.50 | 361,929 | 288 | 0.32 | |||||||||||||||||
Short-term borrowings | 219,663 | 350 | 0.63 | 75,819 | 209 | 1.10 | 219,859 | 122 | 0.22 | |||||||||||||||||
Long-term debt | 407,154 | 909 | 0.89 | 463,210 | 914 | 0.79 | 280,054 | 701 | 0.99 | |||||||||||||||||
Total interest-bearing liabilities | 4,633,216 | 5,403 | 0.46 | % | 4,471,800 | 4,805 | 0.43 | % | 3,993,219 | 3,399 | 0.34 | % | ||||||||||||||
Noninterest-bearing liabilities and shareholders' equity: | ||||||||||||||||||||||||||
Noninterest-bearing demand deposits | 1,051,400 | 976,044 | 961,558 | |||||||||||||||||||||||
FDIC clawback liability | 28,774 | 28,087 | 26,493 | |||||||||||||||||||||||
Other liabilities | 47,779 | 62,414 | 26,968 | |||||||||||||||||||||||
Shareholders' equity | 731,040 | 758,284 | 738,870 | |||||||||||||||||||||||
Total liabilities and shareholders' equity | $ | 6,492,209 | $ | 6,296,629 | $ | 5,747,108 | ||||||||||||||||||||
Net interest income | $ | 55,647 | $ | 49,609 | $ | 52,217 | ||||||||||||||||||||
Interest spread | 3.66 | % | 3.41 | % | 3.97 | % | ||||||||||||||||||||
Net interest margin as a percentage of interest-earning assets | 3.72 | % | 3.46 | % | 4.01 | % | ||||||||||||||||||||
Tax equivalent effect | 0.04 | % | 0.04 | % | 0.04 | % | ||||||||||||||||||||
Net interest margin as a percentage of interest-earning assets (FTE) | 3.76 | % | 3.50 | % | 4.05 | % | ||||||||||||||||||||
(1) Interest income is shown on actual basis and does not include taxable equivalent adjustments.
(2) Average rates are presented on an annual basis and include a taxable equivalent adjustment to interest income of $604 thousand, $540 thousand, and $505 thousand on tax-exempt securities for the three months ended September 30, 2015, June 30, 2015, and September 30, 2014, respectively, using the statutory tax rate of 35%.
(3) For presentation in this table, average balances and the corresponding average rates for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts.
(4) Includes nonaccrual loans.
13
Talmer Bancorp, Inc.
Net Interest Income and Net Interest Margin
(Unaudited)
For the nine months ended | |||||||||||||||||
September 30, 2015 | September 30, 2014 | ||||||||||||||||
(Dollars in thousands) | Average Balance | Interest (1) | Average Rate (2) | Average Balance | Interest (1) | Average Rate (2) | |||||||||||
Earning assets: | |||||||||||||||||
Interest-earning balances | $ | 179,234 | $ | 310 | 0.23 | % | $ | 304,413 | $ | 546 | 0.24 | % | |||||
Federal funds sold and other short-term investments | 144,592 | 776 | 0.72 | 74,651 | 401 | 0.72 | |||||||||||
Investment securities (3): | |||||||||||||||||
Taxable | 532,701 | 7,429 | 1.86 | 501,122 | 6,246 | 1.67 | |||||||||||
Tax-exempt | 251,629 | 5,146 | 3.60 | 189,117 | 4,622 | 4.41 | |||||||||||
Federal Home Loan Bank stock | 22,176 | 754 | 4.55 | 17,561 | 690 | 5.25 | |||||||||||
Gross uncovered loans (4) | 4,284,378 | 152,174 | 4.75 | 3,341,423 | 125,333 | 5.01 | |||||||||||
Gross covered loans (4) | 272,819 | 26,161 | 12.82 | 476,465 | 43,070 | 12.09 | |||||||||||
FDIC indemnification asset | 48,122 | (22,164 | ) | (61.58 | ) | 114,190 | (18,887 | ) | (22.11 | ) | |||||||
Total earning assets | 5,735,651 | 170,586 | 4.01 | % | 5,018,942 | 162,021 | 4.36 | % | |||||||||
Non-earning assets: | |||||||||||||||||
Cash and due from banks | 89,787 | 99,858 | |||||||||||||||
Allowance for loan losses | (52,682 | ) | (57,202 | ) | |||||||||||||
Premises and equipment | 46,886 | 55,160 | |||||||||||||||
Core deposit intangible | 14,157 | 15,635 | |||||||||||||||
Goodwill | 3,046 | — | |||||||||||||||
Other real estate owned and repossessed assets | 45,699 | 55,014 | |||||||||||||||
Loan servicing rights | 58,062 | 76,809 | |||||||||||||||
FDIC receivable | 5,388 | 6,440 | |||||||||||||||
Company-owned life insurance | 103,559 | 75,908 | |||||||||||||||
Other non-earning assets | 237,514 | 222,889 | |||||||||||||||
Total assets | $ | 6,287,067 | $ | 5,569,453 | |||||||||||||
Interest-bearing liabilities: | |||||||||||||||||
Deposits: | |||||||||||||||||
Interest-bearing demand deposits | $ | 808,473 | $ | 1,073 | 0.18 | % | $ | 693,346 | $ | 630 | 0.12 | % | |||||
Money market and savings deposits | 1,258,174 | 1,653 | 0.18 | 1,328,229 | 1,473 | 0.15 | |||||||||||
Time deposits | 1,381,282 | 6,540 | 0.63 | 1,257,393 | 4,534 | 0.48 | |||||||||||
Other brokered funds | 478,775 | 1,771 | 0.49 | 175,169 | 352 | 0.27 | |||||||||||
Short-term borrowings | 114,168 | 638 | 0.75 | 150,057 | 330 | 0.29 | |||||||||||
Long-term debt | 424,148 | 2,623 | 0.83 | 234,087 | 1,902 | 1.09 | |||||||||||
Total interest-bearing liabilities | 4,465,020 | 14,298 | 0.43 | % | 3,838,281 | 9,221 | 0.32 | % | |||||||||
Noninterest-bearing liabilities and shareholders' equity: | |||||||||||||||||
Noninterest-bearing demand deposits | 983,677 | 949,516 | |||||||||||||||
FDIC clawback liability | 27,995 | 25,790 | |||||||||||||||
Other liabilities | 54,574 | 37,723 | |||||||||||||||
Shareholders' equity | 755,801 | 718,143 | |||||||||||||||
Total liabilities and shareholders' equity | $ | 6,287,067 | $ | 5,569,453 | |||||||||||||
Net interest income | $ | 156,288 | $ | 152,800 | |||||||||||||
Interest spread | 3.58 | % | 4.04 | % | |||||||||||||
Net interest margin as a percentage of interest-earning assets | 3.64 | % | 4.07 | % | |||||||||||||
Tax equivalent effect | 0.03 | % | 0.03 | % | |||||||||||||
Net interest margin as a percentage of interest-earning assets (FTE) | 3.67 | % | 4.10 | % | |||||||||||||
(2) Average rates are presented on an annual basis and include a taxable equivalent adjustment to interest income of $1.6 million and $1.6 million on tax-exempt securities for the nine months ended September 30, 2015 and 2014, respectively, using the statutory tax rate of 35%.
(3) For presentation in this table, average balances and the corresponding average rates for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts.
(4) Includes nonaccrual loans.
14
Talmer Bancorp, Inc.
Reconciliation of Non-GAAP Financial Measures (1)
(Unaudited)
2015 | 2014 | ||||||||||||||||||
(Dollars in thousands, except per share data) | 3rd Quarter | 2nd Quarter | 1st Quarter | 4th Quarter | 3rd Quarter | ||||||||||||||
Tangible shareholders' equity: | |||||||||||||||||||
Total shareholders' equity | $ | 714,768 | $ | 766,406 | $ | 753,849 | $ | 761,607 | $ | 746,652 | |||||||||
Less: | |||||||||||||||||||
Core deposit intangibles | 13,470 | 14,131 | 14,796 | 13,035 | 13,696 | ||||||||||||||
Goodwill | 3,524 | 3,524 | 3,524 | — | — | ||||||||||||||
Tangible shareholders' equity | $ | 697,774 | $ | 748,751 | $ | 735,529 | $ | 748,572 | $ | 732,956 | |||||||||
Tangible book value per share: | |||||||||||||||||||
Shares outstanding | 66,128 | 71,129 | 70,938 | 70,532 | 70,504 | ||||||||||||||
Tangible book value per share | $ | 10.55 | $ | 10.53 | $ | 10.37 | $ | 10.61 | $ | 10.40 | |||||||||
Tangible average equity to tangible average assets: | |||||||||||||||||||
Average assets | $ | 6,492,209 | $ | 6,296,629 | $ | 6,050,721 | $ | 5,865,624 | $ | 5,747,108 | |||||||||
Average equity | 731,040 | 758,284 | 759,365 | 754,722 | 738,870 | ||||||||||||||
Average core deposit intangibles | 13,802 | 14,465 | 14,201 | 13,334 | 14,398 | ||||||||||||||
Average goodwill | 3,524 | 3,524 | 2,075 | — | — | ||||||||||||||
Tangible average equity to tangible average assets | 11.02 | % | 11.79 | % | 12.31 | % | 12.67 | % | 12.64 | % | |||||||||
Core efficiency ratio: | |||||||||||||||||||
Net interest income | $ | 55,647 | $ | 49,609 | $ | 51,032 | $ | 51,463 | $ | 52,217 | |||||||||
Noninterest income | 19,342 | 22,098 | 21,430 | 15,834 | 29,974 | ||||||||||||||
Total revenue | 74,989 | 71,707 | 72,462 | 67,297 | 82,191 | ||||||||||||||
Less: | |||||||||||||||||||
(Expense)/benefit due to change in the fair value of loan servicing rights | (3,831 | ) | 3,146 | (4,084 | ) | (3,656 | ) | (176 | ) | ||||||||||
FDIC loss sharing income | (2,696 | ) | (5,928 | ) | (1,068 | ) | (244 | ) | (2,420 | ) | |||||||||
Net gains on sales of branches | — | — | — | — | 14,410 | ||||||||||||||
Total core revenue | 81,516 | 74,489 | 77,614 | 71,197 | 70,377 | ||||||||||||||
Total noninterest expense | 47,829 | 53,293 | 56,595 | 48,098 | 51,263 | ||||||||||||||
Less: | |||||||||||||||||||
Transaction and integration related costs | 113 | 419 | 3,347 | 329 | 1,428 | ||||||||||||||
Property efficiency review | — | 1,820 | — | — | — | ||||||||||||||
Total core noninterest expense | $ | 47,716 | $ | 51,054 | $ | 53,248 | $ | 47,769 | $ | 49,835 | |||||||||
Core efficiency ratio | 58.54 | % | 68.54 | % | 68.61 | % | 67.09 | % | 70.81 | % | |||||||||
15