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| 8-K - 8-K 4TH QUARTER 2015 EARNINGS RELEASE - TALMER BANCORP, INC. | q42015earningsreleasefilin.htm |
Exhibit 99.1
Talmer Bancorp, Inc. reports fourth quarter 2015 net income of $13.1 million, representing $0.19 of earnings per diluted average common share
FDIC loss share agreements and warrant terminated resulting in an after-tax charge of approximately $13.9 million, or $0.20 per diluted common share
Talmer Bancorp, Inc. increases cash dividend on common stock to $0.05 from $0.01 per share
TROY, Mich., January 26, 2016 - Talmer Bancorp, Inc. (NASDAQ: TLMR) (“Talmer”) today reported fourth quarter 2015 net income of $13.1 million, compared to $20.0 million for the third quarter of 2015 and $12.5 million for the fourth quarter of 2014. Earnings per diluted common share were $0.19 for the fourth quarter of 2015, compared to $0.27 for the third quarter of 2015 and $0.16 for the fourth quarter of 2014. In addition, on January 25, 2016, the Board of Directors of Talmer increased the quarterly cash dividend on its Class A common stock to $0.05 from $0.01 per share. The dividend will be paid on February 18, 2016, to our Class A common shareholders of record as of February 4, 2016.
On December 28, 2015, Talmer Bank and Trust ("the Bank") entered into an early termination agreement with the Federal Deposit Insurance Corporation ("FDIC") that terminated the Bank's loss share agreements with the FDIC. Also on December 28, 2015, Talmer entered into an agreement with the FDIC that terminated the FDIC's warrant to purchase 390,000 shares of our Class B non-voting common stock. The early loss share and warrant termination resulted in a pre-tax charge of $20.4 million, or approximately $13.9 million, or $0.20 per diluted average share, after-tax. As a result of the settlement, there was no negative accretion on the FDIC indemnification asset for the fourth quarter nor will there be any future expenses associated with the FDIC clawback liability or FDIC warrant.
Quarterly Results Summary
(Dollars in thousands, except per share data) | 4th Qtr 2015 | 3rd Qtr 2015 | 4th Qtr 2014 | |||||||||
Earnings Summary | ||||||||||||
Net interest income | $ | 58,378 | $ | 55,647 | $ | 51,463 | ||||||
Total provision (benefit) for loan losses | (4,583 | ) | 700 | 2,994 | ||||||||
Noninterest income | 23,575 | 19,342 | 15,834 | |||||||||
Noninterest expense | 68,602 | 47,829 | 48,098 | |||||||||
Income before income taxes | 17,934 | 26,460 | 16,205 | |||||||||
Income tax provision | 4,821 | 6,425 | 3,703 | |||||||||
Net income | 13,113 | 20,035 | 12,502 | |||||||||
Per Share Data | ||||||||||||
Diluted earnings per common share | $ | 0.19 | $ | 0.27 | $ | 0.16 | ||||||
Tangible book value per share (1) | 10.72 | 10.55 | 10.61 | |||||||||
Average diluted common shares (in thousands) | 69,973 | 73,222 | 75,759 | |||||||||
Performance and Capital Ratios | ||||||||||||
Return on average assets (annualized) | 0.80 | % | 1.23 | % | 0.85 | % | ||||||
Return on average equity (annualized) | 7.25 | 10.96 | 6.63 | |||||||||
Net interest margin (fully taxable equivalent) (2) | 3.89 | 3.76 | 3.89 | |||||||||
Core efficiency ratio (1) | 59.51 | 58.54 | 67.09 | |||||||||
Tangible average equity to tangible average assets (1) | 10.79 | 11.02 | 12.67 | |||||||||
Common equity tier 1 capital (3) | 11.95 | 12.12 | N/A | |||||||||
Tier 1 leverage ratio (3) | 10.21 | 10.21 | 11.56 | |||||||||
Tier 1 risk-based capital (3) | 11.95 | 12.12 | 15.20 | |||||||||
Total risk-based capital (3) | 12.96 | 13.20 | 16.44 | |||||||||
Asset Quality Ratios | ||||||||||||
Net charge-offs (recoveries) to average loans (annualized) | (0.23 | )% | (0.19 | )% | 0.34 | % | ||||||
Nonperforming assets as a percentage of total assets | 1.30 | 1.33 | 1.78 | |||||||||
Nonperforming loans as a percent of total loans | 1.20 | 1.14 | 1.34 | |||||||||
Allowance for loan losses as a percentage of period-end loans | 1.12 | 1.19 | 1.30 | |||||||||
(1) | Denotes a non-GAAP Financial Measure, 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) | Fourth quarter 2015 is estimated. Third and fourth quarters of 2015 are under Basel III transitional and fourth quarter 2014 is under Basel I. |
Fourth Quarter 2015 Compared to Third Quarter 2015
• | Net income was $13.1 million, or $0.19 per diluted average common share, in the fourth quarter of 2015, compared to $20.0 million, or $0.27 per diluted average common share, for the third quarter of 2015. The decrease in net income in the fourth quarter of 2015 was primarily due to the after-tax charge resulting from the early termination of the Bank's FDIC loss share agreements and the FDIC's warrant of approximately $13.9 million, or $0.20 per diluted average share. |
• | Net loans increased during the fourth quarter of 2015 by $107.0 million, driven by strong growth in commercial and industrial lending, partially offset by acquired loan run-off. |
• | Total deposits declined $110.9 million, to $5.0 billion as of December 31, 2015, compared to September 30, 2015, primarily due to a decline in brokered deposits of $106.6 million. |
• | Net interest income increased to $58.4 million in the fourth quarter of 2015, compared to $55.6 million in the third quarter of 2015. Net interest income growth was primarily due to the benefit provided by a $4.4 million reduction in negative accretion on the FDIC indemnification asset, partially offset by a $1.7 million decrease in interest on loans due significantly to the run-off of acquired, higher-yielding loans. Our net interest margin increased 13 basis points to 3.89% in the fourth quarter of 2015, compared to 3.76% in the third quarter of 2015, due in large part to the removal of the negative yield on the FDIC indemnification asset. |
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• | Noninterest income increased $4.2 million to $23.6 million in the fourth quarter of 2015, compared to the third quarter of 2015. Noninterest income was impacted by a benefit to earnings of $1.4 million due to the change in the fair value of loan servicing rights, compared to a detriment to earnings of $3.8 million in the third quarter of 2015, which is a key component of the $5.6 million increase in mortgage banking and other loan fees. Fourth quarter of 2015 noninterest income also benefited from the Bank's early termination of the FDIC loss share agreements as we did not have to record a liability due to the FDIC for what would have been the FDIC's share of recoveries on covered loans recognized in the fourth quarter of 2015. |
• | Noninterest expense increased $20.8 million, to $68.6 million in the fourth quarter of 2015, compared to the third quarter of 2015, primarily due to the $20.4 million net loss on the early termination of the Bank's FDIC loss share agreements and the FDIC's warrant. |
• | Total shareholder’s equity of $725.2 million as of December 31, 2015, increased $10.4 million compared to September 30, 2015. The increase is primarily the result of fourth quarter of 2015 net income of $13.1 million, partially offset by a decrease in accumulated other comprehensive income primarily due to a decrease in the fair value of our investment securities portfolio. |
Income Statement
Net Interest Income and Net Interest Margin
Net interest income for the fourth quarter of 2015 was $58.4 million, compared to $55.6 million in the prior quarter. Our net interest margin was 3.89% in the fourth quarter of 2015, an increase of 13 basis points from 3.76% in the third quarter of 2015. The increase in our net interest margin in the fourth quarter was due in large part to the removal of the negative yield on the FDIC indemnification asset as the Bank terminated its FDIC loss share agreements.
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 fourth and third quarters of 2015, the yield on loans was 4.83% and 5.09%, respectively, while the yield generated using only the expected coupon would have been 4.17% and 4.34%, 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, prior to the fourth quarter of 2015, was also adversely impacted by the negative yield on the FDIC indemnification asset. The combination of the excess accretable yield, offset by the negative yield on the FDIC indemnification asset in the third quarter of 2015, benefited net interest margin by 52 basis points in the fourth quarter of 2015 compared to 30 basis points in the third 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 fourth quarter of 2015 was 3.37% compared to 3.46% in the third quarter of 2015. The decline in our core net interest margin was due in large part to the decline in yield on our loan portfolio driven by run-off of higher yielding acquired loans being replaced with new loans with lower, current market-competitive rates.
Noninterest Income
Noninterest income increased $4.2 million to $23.6 million in the fourth quarter of 2015, compared to the third quarter of 2015. The most significant contributor to this increase was an increase in mortgage banking and other loan fees of $5.6 million. The increase in mortgage banking and other loan fees was impacted by a benefit of $1.4 million due to the change in the fair value of loan servicing rights compared to a detriment to earnings of $3.8 million in the third quarter of 2015. The change in the fair value of loan servicing rights in the fourth quarter of 2015 was due mainly to upward movements in market interest rates during the period compared to the falling rate environment in the third quarter of 2015. Fourth quarter of 2015 noninterest income also benefited from the termination of the Bank's FDIC loss share agreements. FDIC loss share income was negative $2.7 million in the third quarter of 2015, representing the amounts due to the FDIC related to significant credit recoveries on covered loans.
As we have noted in prior quarters, we have chosen not to hedge our investment in loan servicing rights, though we may choose to do so in future periods. 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. While there has been meaningful reported earnings volatility due to our decision not to hedge our loan servicing rights, the cumulative acquisition-to-date benefit to pre-tax earnings due to the changes in fair value has been $658 thousand since the majority of our servicing rights were acquired on January 1, 2013.
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Noninterest Expense
Noninterest expense in the fourth quarter of 2015 increased $20.8 million, to $68.6 million, compared to the third quarter of 2015. The increase in noninterest expense is primarily due to the pre-tax charge of $20.4 million taken in the fourth quarter of 2015 as a result of the early termination of the Bank's FDIC loss share agreements and the FDIC's warrant.
Our core efficiency ratio was 59.51% and 58.54%, for the fourth and third quarters of 2015, respectively. 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 fourth quarter of 2015 core efficiency ratio excludes the $20.4 million charge we took to terminate the Bank's FDIC loss share agreements and the FDIC's warrant, the benefit received from the fair value adjustment to our loan servicing rights of $1.4 million and transaction and integration related costs of $328 thousand. 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.
Credit Quality
As a result of the early termination of the Bank's FDIC loss share agreements in the fourth quarter of 2015 all loans and allowance previously classified as covered were reclassified to uncovered.
The fourth quarter of 2015 resulted in a benefit for loan losses of $4.6 million, compared to a provision for loan losses of $700 thousand in the third quarter of 2015. The increase to a benefit for loan losses was primarily due to increases in credit recoveries on acquired loans. At December 31, 2015, the allowance for loan losses on loans was $54.0 million, or 1.12% of total loans, compared to $55.8 million, or 1.19% of total loans, at September 30, 2015. The decrease in the allowance for loan losses for the quarter was primarily due to credit recoveries on acquired loans that were paid off and from payments received on loans previously carrying an allowance for loan loss.
During the fourth 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 $731 thousand. The re-estimations also resulted in a $10.7 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.
Balance Sheet and Capital Management
Total assets increased $91.9 million to $6.6 billion at December 31, 2015 compared to $6.5 billion at September 30, 2015. The primary drivers of the increase in assets in the quarter ended December 31, 2015 were increases in net total loans of $107.0 million and cash and cash equivalents of $57.8 million, partially offset by a decrease in loans held for sale of $42.0 million and the elimination of the FDIC indemnification asset of $30.6 million and the FDIC receivable of $2.6 million. The decrease in loans held for sale primarily reflects a reduction in the overall volume of residential loan originations.
Net total loans at December 31, 2015 increased $107.0 million to $4.8 billion, compared to September 30, 2015. 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 $1.4 billion, or 29.7% of total loans, at December 31, 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.
Total liabilities were $5.9 billion at December 31, 2015 compared to $5.8 billion at September 30, 2015. The $81.4 million increase in liabilities in the quarter ended December 31, 2015 was primarily due to an increase in short-term borrowings of $246.9 million, partially offset by decreases in total deposits of $110.9 million and long-term debt of $20.9 million and the elimination of our FDIC clawback liability of $27.3 million and FDIC warrant payable of $4.5 million in the fourth quarter of 2015. The decrease in total deposits was primarily due to decreases in brokered deposits of $106.6 million and noninterest-bearing demand deposits of $39.0 million, partially offset by growth in interest-bearing demand deposits of $36.0 million.
Total shareholders’ equity of $725.2 million as of December 31, 2015 increased $10.4 million compared to September 30, 2015. The increase is primarily the result of our net income of $13.1 million, partially offset by a decrease in accumulated other comprehensive income primarily due to a decrease in the fair value of our investment securities portfolio. Our Tier 1 leverage ratio was estimated to be 10.21% at December 31, 2015, compared to 10.21% at September 30, 2015.
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Subsequent Event
In January 2016, a settlement was finalized with the Internal Revenue Service regarding First Place Financial Corp.'s utilization of bad debt expense incurred prior to Talmer's acquisition of First Place Bank involving several tax years. The Bank, as successor to First Place Bank, was granted court approval to act as substitute agent for First Place Financial Corp. consolidated group for the purposes of amending various returns, which ultimately impact the tax filings of the Bank. The benefit expected as a result of the amended filings is approximately $4.2 million that will be recorded in the first quarter of 2016 as an offset to the quarterly income tax expense.
We are in the process of re-examining the tax attributes associated with our prior acquisitions and we have identified information that may cause us to adjust our estimated deferred tax assets associated with our acquisition of Talmer West Bank on January 1, 2014. While our analysis is not yet complete, it is possible that we may need to reduce the deferred tax assets associated with our acquisition of Talmer West Bank by approximately $16 million. If we make this adjustment, we would reduce our currently reported equity by a like amount, which we expect would have only an immaterial effect on our reported regulatory capital ratios, since a large majority of our deferred tax assets are disallowed from regulatory capital both before and after the adoption of Basel III. If we conclude that an adjustment is necessary, we anticipate reducing the bargain purchase gain recorded as a result of our acquisition of Talmer West Bank in the first quarter of 2014. A one-time adjustment of this nature would have no impact on our future earnings. We are performing this analysis in consultation with our tax, legal and accounting experts. We plan to have the result of our analysis and a conclusion on this matter known before we file our Annual Report on Form 10-K due February 29, 2016.
As announced and further described in a separate press release issued by Talmer today, Talmer has entered into a merger agreement with Chemical Financial Corporation.
Conference Call and Webcast
In light of today’s announcement that Talmer has entered into a merger agreement with Chemical Financial Corporation, Talmer has cancelled its live conference webcast to review fourth quarter 2015 financial results that was scheduled for 10:00 a.m. ET on Thursday, January 28, 2016. Instead, Talmer and Chemical Financial Corporation will jointly host a live conference call today at 11:00 a.m. ET to discuss the merger and Talmer will also discuss its fourth quarter 2015 financial results. Anyone interested may access the conference call on a live basis by dialing toll-free at 1-800-289-0459 and entering 430440 for the participant passcode. The call will also be broadcast live over the Internet hosted on Chemical Financial Corporation’s website at www.chemicalbankmi.com under the “Investor Info” section.
A slide-show presentation regarding the merger will be discussed on the call and will be available for download at www.talmerbank.com under the “Investor Relations” section, and at www.chemicalbankmi.com under the “Investor Info” section.
An audio replay of the call will be available after the event on Talmer’s and Chemical Financial Corporation’s websites for at least 14 days.
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, include, among others, statements related to the impact of interest rates on earnings, statements regarding the proposed merger with Chemical Financial Corporation and statements regarding the potential adjustment to our deferred tax assets related to our acquisition of Talmer West Bank, including whether an adjustment will be required, and if required, the timing, size and impact of any such adjustment. 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, and risks and uncertainties set forth in the joint press release issued by Talmer and Chemical Financial Corporation issued the date hereof with respect to the merger agreement entered into by Talmer and Chemical Financial Corporation, 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) | December 31, 2015 | September 30, 2015 | December 31, 2014 | ||||||||
Assets | |||||||||||
Cash and due from banks | $ | 74,734 | $ | 82,822 | $ | 86,185 | |||||
Interest-bearing deposits with other banks | 137,589 | 106,740 | 96,551 | ||||||||
Federal funds sold and other short-term investments | 175,000 | 140,000 | 71,000 | ||||||||
Total cash and cash equivalents | 387,323 | 329,562 | 253,736 | ||||||||
Securities available-for-sale | 890,770 | 880,705 | 740,819 | ||||||||
Federal Home Loan Bank stock | 29,621 | 25,416 | 20,212 | ||||||||
Loans held for sale, at fair value | 58,223 | 100,255 | 93,453 | ||||||||
Loans: | |||||||||||
Commercial real estate | 1,568,097 | 1,561,529 | 1,497,600 | ||||||||
Residential real estate (includes $22.2 million, $20.9 million, and $18.3 million, respectively, measured at fair value) (1) | 1,547,799 | 1,542,661 | 1,534,238 | ||||||||
Commercial and industrial | 1,257,406 | 1,210,613 | 902,125 | ||||||||
Real estate construction (includes $0, $0, and $1.2 million, respectively, measured at fair value) (1) | 241,603 | 222,184 | 141,075 | ||||||||
Consumer | 191,795 | 164,601 | 174,089 | ||||||||
Total loans | 4,806,700 | 4,701,588 | 4,249,127 | ||||||||
Less: Allowance for loan losses | (53,953 | ) | (55,837 | ) | (55,172 | ) | |||||
Net total loans | 4,752,747 | 4,645,751 | 4,193,955 | ||||||||
Premises and equipment | 43,570 | 44,133 | 48,389 | ||||||||
Other real estate owned and repossessed assets | 28,259 | 33,553 | 48,743 | ||||||||
Loan servicing rights | 58,113 | 55,786 | 70,598 | ||||||||
Core deposit intangible | 12,808 | 13,470 | 13,035 | ||||||||
Goodwill | 3,524 | 3,524 | — | ||||||||
Company-owned life insurance | 107,065 | 105,975 | 97,782 | ||||||||
Income tax benefit | 177,183 | 180,719 | 177,472 | ||||||||
FDIC indemnification asset | — | 30,551 | 67,026 | ||||||||
FDIC receivable | — | 2,618 | 6,062 | ||||||||
Other assets | 46,684 | 52,017 | 40,982 | ||||||||
Total assets | $ | 6,595,890 | $ | 6,504,035 | $ | 5,872,264 | |||||
Liabilities | |||||||||||
Deposits: | |||||||||||
Noninterest-bearing demand deposits | $ | 1,011,414 | $ | 1,050,375 | $ | 887,567 | |||||
Interest-bearing demand deposits | 849,599 | 813,609 | 660,697 | ||||||||
Money market and savings deposits | 1,314,909 | 1,314,798 | 1,170,236 | ||||||||
Time deposits | 1,609,895 | 1,611,315 | 1,188,178 | ||||||||
Other brokered funds | 228,764 | 335,354 | 642,185 | ||||||||
Total deposits | 5,014,581 | 5,125,451 | 4,548,863 | ||||||||
Short-term borrowings | 348,998 | 102,090 | 135,743 | ||||||||
Long-term debt | 464,057 | 484,981 | 353,972 | ||||||||
FDIC clawback liability | — | 27,269 | 26,905 | ||||||||
FDIC warrants payable | — | 4,513 | 4,633 | ||||||||
Other liabilities | 43,039 | 44,963 | 40,541 | ||||||||
Total liabilities | 5,870,675 | 5,789,267 | 5,110,657 | ||||||||
Shareholders’ equity | |||||||||||
Preferred stock - $1.00 par value | |||||||||||
Authorized - 20,000,000 shares at 12/31/2015, 9/30/2015 and 12/31/2014 | |||||||||||
Issued and outstanding - 0 shares at 12/31/2015, 9/30/2015 and 12/31/2014 | — | — | — | ||||||||
Common stock: | |||||||||||
Class A Voting Common Stock - $1.00 par value | |||||||||||
Authorized - 198,000,000 shares at 12/31/2015, 9/30/2015, and 12/31/2014 | |||||||||||
Issued and outstanding - 66,114,798 shares at 12/31/2015, 66,127,598 shares at 9/30/2015 and 70,532,122 shares at 12/31/2014 | 66,115 | 66,128 | 70,532 | ||||||||
Class B Non-Voting Common Stock - $1.00 par value | |||||||||||
Authorized - 2,000,000 shares at 12/31/2015, 9/30/2015 and 12/31/2014 | |||||||||||
Issued and outstanding - 0 shares at 12/31/2015, 9/30/2015 and 12/31/2014 | — | — | — | ||||||||
Additional paid-in-capital | 316,571 | 316,160 | 405,436 | ||||||||
Retained earnings | 339,130 | 326,678 | 281,789 | ||||||||
Accumulated other comprehensive income, net of tax | 3,399 | 5,802 | 3,850 | ||||||||
Total shareholders’ equity | 725,215 | 714,768 | 761,607 | ||||||||
Total liabilities and shareholders’ equity | $ | 6,595,890 | $ | 6,504,035 | $ | 5,872,264 | |||||
(1) Amounts represent loans for which the Company has elected the fair value option.
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Talmer Bancorp, Inc.
Consolidated Statements of Income
(Unaudited)
Three months ended December 31, | Year ended December 31, | |||||||||||||||
(Dollars in thousands, except per share data) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
Interest income | ||||||||||||||||
Interest and fees on loans | $ | 58,400 | $ | 58,271 | $ | 236,735 | $ | 226,674 | ||||||||
Interest on investments | ||||||||||||||||
Taxable | 3,234 | 2,263 | 10,663 | 8,509 | ||||||||||||
Tax-exempt | 1,933 | 1,610 | 7,079 | 6,232 | ||||||||||||
Total interest on securities | 5,167 | 3,873 | 17,742 | 14,741 | ||||||||||||
Interest on interest-earning cash balances | 77 | 94 | 387 | 640 | ||||||||||||
Interest on federal funds and other short-term investments | 383 | 126 | 1,159 | 527 | ||||||||||||
Dividends on FHLB stock | 275 | 177 | 1,029 | 867 | ||||||||||||
FDIC indemnification asset | — | (7,539 | ) | (22,164 | ) | (26,426 | ) | |||||||||
Total interest income | 64,302 | 55,002 | 234,888 | 217,023 | ||||||||||||
Interest Expense | ||||||||||||||||
Interest-bearing demand deposits | 395 | 194 | 1,468 | 824 | ||||||||||||
Money market and savings deposits | 732 | 457 | 2,385 | 1,930 | ||||||||||||
Time deposits | 2,891 | 1,546 | 9,431 | 6,080 | ||||||||||||
Other brokered funds | 483 | 527 | 2,254 | 879 | ||||||||||||
Interest on short-term borrowings | 329 | 90 | 967 | 420 | ||||||||||||
Interest on long-term debt | 1,094 | 725 | 3,717 | 2,627 | ||||||||||||
Total interest expense | 5,924 | 3,539 | 20,222 | 12,760 | ||||||||||||
Net interest income | 58,378 | 51,463 | 214,666 | 204,263 | ||||||||||||
Provision (benefit) for loan losses | (4,583 | ) | 2,994 | (9,203 | ) | 4,327 | ||||||||||
Net interest income after provision for loan losses | 62,961 | 48,469 | 223,869 | 199,936 | ||||||||||||
Noninterest income | ||||||||||||||||
Deposit fee income | 2,513 | 2,692 | 9,888 | 12,225 | ||||||||||||
Mortgage banking and other loan fees | 3,853 | (865 | ) | 5,569 | 1,163 | |||||||||||
Net gain on sales of loans | 5,404 | 4,939 | 29,585 | 17,747 | ||||||||||||
Accelerated discount on acquired loans | 7,556 | 3,742 | 32,689 | 18,197 | ||||||||||||
Net gain (loss) on sales of securities | (2 | ) | — | 99 | (2,066 | ) | ||||||||||
Company-owned life insurance | 779 | 805 | 3,115 | 2,691 | ||||||||||||
Net gain on sale of branches | — | — | — | 14,410 | ||||||||||||
Bargain purchase gain | — | — | — | 41,977 | ||||||||||||
FDIC loss sharing income | — | (244 | ) | (9,692 | ) | (6,211 | ) | |||||||||
Other income | 3,472 | 4,765 | 15,192 | 17,366 | ||||||||||||
Total noninterest income | 23,575 | 15,834 | 86,445 | 117,499 | ||||||||||||
Noninterest expense | ||||||||||||||||
Salary and employee benefits | 27,535 | 25,632 | 113,097 | 121,744 | ||||||||||||
Occupancy and equipment expense | 5,993 | 6,911 | 28,546 | 31,806 | ||||||||||||
Data processing fees | 1,603 | 789 | 6,618 | 6,399 | ||||||||||||
Professional service fees | 2,771 | 3,323 | 12,786 | 12,952 | ||||||||||||
Bank acquisition and due diligence fees | 328 | 329 | 2,272 | 3,765 | ||||||||||||
Marketing expense | 1,224 | 1,226 | 5,550 | 4,923 | ||||||||||||
Other employee expense | 943 | 658 | 3,425 | 2,674 | ||||||||||||
Insurance expense | 1,571 | 1,615 | 5,933 | 5,697 | ||||||||||||
FDIC loss sharing expense | — | 406 | 1,374 | 2,158 | ||||||||||||
Net loss on early termination of FDIC loss share agreements and warrant | 20,364 | — | 20,364 | — | ||||||||||||
Other expense | 6,270 | 7,209 | 26,354 | 26,762 | ||||||||||||
Total noninterest expense | 68,602 | 48,098 | 226,319 | 218,880 | ||||||||||||
Income before income taxes | 17,934 | 16,205 | 83,995 | 98,555 | ||||||||||||
Income tax provision | 4,821 | 3,703 | 23,866 | 7,705 | ||||||||||||
Net income | $ | 13,113 | $ | 12,502 | $ | 60,129 | $ | 90,850 | ||||||||
Earnings per common share: | ||||||||||||||||
Basic | $ | 0.20 | $ | 0.18 | $ | 0.87 | $ | 1.30 | ||||||||
Diluted | $ | 0.19 | $ | 0.16 | $ | 0.81 | $ | 1.21 | ||||||||
Average common shares outstanding - basic | 65,388 | 70,136 | 68,646 | 69,605 | ||||||||||||
Average common shares outstanding - diluted | 69,973 | 75,759 | 73,331 | 75,150 | ||||||||||||
Total comprehensive income | $ | 10,710 | $ | 14,265 | $ | 59,678 | $ | 102,696 | ||||||||
8
Talmer Bancorp, Inc.
Consolidated Statements of Income
(Unaudited)
2015 | 2014 | |||||||||||||||||||
(Dollars in thousands, except per share data) | 4th Qtr | 3rd Qtr | 2nd Qtr | 1st Qtr | 4th Qtr | |||||||||||||||
Interest income | ||||||||||||||||||||
Interest and fees on loans | $ | 58,400 | $ | 60,078 | $ | 58,319 | $ | 59,938 | $ | 58,271 | ||||||||||
Interest on investments | ||||||||||||||||||||
Taxable | 3,234 | 2,731 | 2,375 | 2,323 | 2,263 | |||||||||||||||
Tax-exempt | 1,933 | 1,873 | 1,658 | 1,615 | 1,610 | |||||||||||||||
Total interest on securities | 5,167 | 4,604 | 4,033 | 3,938 | 3,873 | |||||||||||||||
Interest on interest-earning cash balances | 77 | 107 | 117 | 86 | 94 | |||||||||||||||
Interest on federal funds and other short-term investments | 383 | 342 | 269 | 165 | 126 | |||||||||||||||
Dividends on FHLB stock | 275 | 285 | 224 | 245 | 177 | |||||||||||||||
FDIC indemnification asset | — | (4,366 | ) | (8,548 | ) | (9,250 | ) | (7,539 | ) | |||||||||||
Total interest income | 64,302 | 61,050 | 54,414 | 55,122 | 55,002 | |||||||||||||||
Interest Expense | ||||||||||||||||||||
Interest-bearing demand deposits | 395 | 401 | 382 | 290 | 194 | |||||||||||||||
Money market and savings deposits | 732 | 620 | 562 | 471 | 457 | |||||||||||||||
Time deposits | 2,891 | 2,582 | 2,131 | 1,827 | 1,546 | |||||||||||||||
Other brokered funds | 483 | 541 | 607 | 623 | 527 | |||||||||||||||
Interest on short-term borrowings | 329 | 350 | 209 | 79 | 90 | |||||||||||||||
Interest on long-term debt | 1,094 | 909 | 914 | 800 | 725 | |||||||||||||||
Total interest expense | 5,924 | 5,403 | 4,805 | 4,090 | 3,539 | |||||||||||||||
Net interest income | 58,378 | 55,647 | 49,609 | 51,032 | 51,463 | |||||||||||||||
Provision (benefit) for loan losses | (4,583 | ) | 700 | (7,313 | ) | 1,993 | 2,994 | |||||||||||||
Net interest income after provision for loan losses | 62,961 | 54,947 | 56,922 | 49,039 | 48,469 | |||||||||||||||
Noninterest income | ||||||||||||||||||||
Deposit fee income | 2,513 | 2,494 | 2,561 | 2,320 | 2,692 | |||||||||||||||
Mortgage banking and other loan fees | 3,853 | (1,721 | ) | 4,698 | (1,261 | ) | (865 | ) | ||||||||||||
Net gain on sales of loans | 5,404 | 6,815 | 8,748 | 8,618 | 4,939 | |||||||||||||||
FDIC loss sharing income | — | (2,696 | ) | (5,928 | ) | (1,068 | ) | (244 | ) | |||||||||||
Accelerated discount on acquired loans | 7,556 | 9,491 | 7,444 | 8,198 | 3,742 | |||||||||||||||
Net gain (loss) on sales of securities | (2 | ) | 202 | 6 | (107 | ) | — | |||||||||||||
Company-owned life insurance | 779 | 740 | 856 | 740 | 805 | |||||||||||||||
Other income | 3,472 | 4,017 | 3,713 | 3,990 | 4,765 | |||||||||||||||
Total noninterest income | 23,575 | 19,342 | 22,098 | 21,430 | 15,834 | |||||||||||||||
Noninterest expense | ||||||||||||||||||||
Salary and employee benefits | 27,535 | 27,665 | 28,685 | 29,212 | 25,632 | |||||||||||||||
Occupancy and equipment expense | 5,993 | 6,472 | 8,415 | 7,666 | 6,911 | |||||||||||||||
Data processing fees | 1,603 | 1,356 | 1,805 | 1,854 | 789 | |||||||||||||||
Professional service fees | 2,771 | 3,197 | 3,275 | 3,543 | 3,323 | |||||||||||||||
FDIC loss sharing expense | — | 292 | 133 | 949 | 406 | |||||||||||||||
Bank acquisition and due diligence fees | 328 | 113 | 419 | 1,412 | 329 | |||||||||||||||
Marketing expense | 1,224 | 1,748 | 1,483 | 1,095 | 1,226 | |||||||||||||||
Other employee expense | 943 | 722 | 826 | 934 | 658 | |||||||||||||||
Insurance expense | 1,571 | 1,305 | 1,527 | 1,530 | 1,615 | |||||||||||||||
Net loss on early termination of FDIC loss share agreements and warrant | 20,364 | — | — | — | — | |||||||||||||||
Other expense | 6,270 | 4,959 | 6,725 | 8,400 | 7,209 | |||||||||||||||
Total noninterest expense | 68,602 | 47,829 | 53,293 | 56,595 | 48,098 | |||||||||||||||
Income before income taxes | 17,934 | 26,460 | 25,727 | 13,874 | 16,205 | |||||||||||||||
Income tax provision | 4,821 | 6,425 | 8,179 | 4,441 | 3,703 | |||||||||||||||
Net income | $ | 13,113 | $ | 20,035 | $ | 17,548 | $ | 9,433 | $ | 12,502 | ||||||||||
Earnings per common share: | ||||||||||||||||||||
Basic | $ | 0.20 | $ | 0.29 | $ | 0.25 | $ | 0.13 | $ | 0.18 | ||||||||||
Diluted | $ | 0.19 | $ | 0.27 | $ | 0.23 | $ | 0.12 | $ | 0.16 | ||||||||||
Average common shares outstanding - basic | 65,388 | 68,731 | 70,301 | 70,216 | 70,136 | |||||||||||||||
Average common shares outstanding - diluted | 69,973 | 73,222 | 74,900 | 75,103 | 75,759 | |||||||||||||||
Total comprehensive income | $ | 10,710 | $ | 23,601 | $ | 13,144 | $ | 12,227 | $ | 14,265 | ||||||||||
9
Talmer Bancorp, Inc.
Loan Data
(Unaudited)
(Dollars in thousands) | December 31, 2015 | September 30, 2015 | June 30, 2015 | March 31, 2015 | December 31, 2014 | ||||||||||||||
Uncovered loans | |||||||||||||||||||
Commercial real estate | |||||||||||||||||||
Non-owner occupied | $ | 1,039,305 | $ | 988,635 | $ | 924,174 | $ | 919,043 | $ | 888,650 | |||||||||
Owner-occupied | 503,814 | 472,269 | 445,927 | 459,002 | 417,843 | ||||||||||||||
Farmland | 24,978 | 23,517 | 25,682 | 26,617 | 4,445 | ||||||||||||||
Total commercial real estate | 1,568,097 | 1,484,421 | 1,395,783 | 1,404,662 | 1,310,938 | ||||||||||||||
Residential real estate | 1,547,799 | 1,452,290 | 1,434,678 | 1,474,025 | 1,426,012 | ||||||||||||||
Commercial and industrial | 1,257,406 | 1,196,717 | 1,066,353 | 948,303 | 869,477 | ||||||||||||||
Real estate construction | 241,603 | 217,035 | 175,192 | 140,705 | 131,686 | ||||||||||||||
Consumer | 191,795 | 164,496 | 172,120 | 187,698 | 164,524 | ||||||||||||||
Total uncovered loans | 4,806,700 | 4,514,959 | 4,244,126 | 4,155,393 | 3,902,637 | ||||||||||||||
Covered loans | |||||||||||||||||||
Commercial real estate | |||||||||||||||||||
Non-owner occupied | — | 40,777 | 85,889 | 97,661 | 108,692 | ||||||||||||||
Owner-occupied | — | 32,009 | 53,614 | 63,031 | 70,492 | ||||||||||||||
Farmland | — | 4,322 | 4,395 | 6,684 | 7,478 | ||||||||||||||
Total commercial real estate | — | 77,108 | 143,898 | 167,376 | 186,662 | ||||||||||||||
Residential real estate | — | 90,371 | 96,371 | 103,429 | 108,226 | ||||||||||||||
Commercial and industrial | — | 13,896 | 24,794 | 29,384 | 32,648 | ||||||||||||||
Real estate construction | — | 5,149 | 7,426 | 8,443 | 9,389 | ||||||||||||||
Consumer | — | 105 | 8,358 | 8,961 | 9,565 | ||||||||||||||
Total covered loans | — | 186,629 | 280,847 | 317,593 | 346,490 | ||||||||||||||
Total loans | $ | 4,806,700 | $ | 4,701,588 | $ | 4,524,973 | $ | 4,472,986 | $ | 4,249,127 | |||||||||
10
Talmer Bancorp, Inc.
Impaired Assets
(Unaudited)
2015 | 2014 | ||||||||||||||||||
(Dollars in thousands) | 4th Qtr | 3rd Qtr | 2nd Qtr | 1st Qtr | 4th Qtr | ||||||||||||||
Uncovered | |||||||||||||||||||
Nonperforming troubled debt restructurings | |||||||||||||||||||
Commercial real estate | $ | 7,485 | $ | 5,519 | $ | 4,652 | $ | 4,031 | $ | 2,644 | |||||||||
Residential real estate | 5,485 | 4,600 | 4,364 | 4,418 | 3,984 | ||||||||||||||
Commercial and industrial | 1,167 | 705 | 414 | 43 | 180 | ||||||||||||||
Real estate construction | 187 | 135 | 202 | 147 | — | ||||||||||||||
Consumer | 127 | 115 | 91 | 89 | 83 | ||||||||||||||
Total nonperforming troubled debt restructurings | 14,451 | 11,074 | 9,723 | 8,728 | 6,891 | ||||||||||||||
Nonaccrual loans other than nonperforming troubled debt restructurings | |||||||||||||||||||
Commercial real estate | 9,313 | 12,421 | 11,075 | 11,120 | 11,112 | ||||||||||||||
Residential real estate | 12,905 | 12,962 | 15,769 | 13,683 | 13,390 | ||||||||||||||
Commercial and industrial | 20,501 | 9,236 | 2,705 | 1,892 | 3,370 | ||||||||||||||
Real estate construction | 226 | 198 | 236 | — | 174 | ||||||||||||||
Consumer | 79 | 149 | 217 | 254 | 174 | ||||||||||||||
Total nonaccrual loans other than nonperforming troubled debt restructurings | 43,024 | 34,966 | 30,002 | 26,949 | 28,220 | ||||||||||||||
Total nonaccrual loans | 57,475 | 46,040 | 39,725 | 35,677 | 35,111 | ||||||||||||||
Other real estate owned and repossessed assets (1) | 28,157 | 27,329 | 37,612 | 30,761 | 36,872 | ||||||||||||||
Total nonperforming assets | 85,632 | 73,369 | 77,337 | 66,438 | 71,983 | ||||||||||||||
Performing troubled debt restructurings | |||||||||||||||||||
Commercial real estate | 15,340 | 13,973 | 3,741 | 2,625 | 3,785 | ||||||||||||||
Residential real estate | 5,749 | 2,402 | 2,392 | 1,875 | 1,368 | ||||||||||||||
Commercial and industrial | 3,438 | 3,433 | 2,597 | 2,171 | 840 | ||||||||||||||
Real estate construction | 420 | 197 | 131 | 89 | 90 | ||||||||||||||
Consumer | 242 | 235 | 233 | 220 | 234 | ||||||||||||||
Total performing troubled debt restructurings | 25,189 | 20,240 | 9,094 | 6,980 | 6,317 | ||||||||||||||
Total uncovered impaired assets | $ | 110,821 | $ | 93,609 | $ | 86,431 | $ | 73,418 | $ | 78,300 | |||||||||
Loans 90 days or more past due and still accruing, excluding loans accounted for under ASC 310-30 | $ | 297 | $ | 196 | $ | 340 | $ | 72 | $ | 53 | |||||||||
Covered | |||||||||||||||||||
Nonperforming troubled debt restructurings | |||||||||||||||||||
Commercial real estate | — | 3,590 | 14,717 | 13,617 | 14,343 | ||||||||||||||
Residential real estate | $ | — | $ | 1,618 | $ | 1,606 | $ | 1,623 | $ | 1,363 | |||||||||
Commercial and industrial | — | 1,045 | 1,652 | 1,476 | 2,043 | ||||||||||||||
Real estate construction | — | 210 | 336 | 267 | 272 | ||||||||||||||
Consumer | — | 2 | 20 | 28 | 13 | ||||||||||||||
Total nonperforming troubled debt restructurings | — | 6,465 | 18,331 | 17,011 | 18,034 | ||||||||||||||
Nonaccrual loans other than nonperforming troubled debt restructurings | |||||||||||||||||||
Commercial real estate | — | 190 | 251 | 1,180 | 1,380 | ||||||||||||||
Residential real estate | — | 392 | 465 | 441 | 485 | ||||||||||||||
Commercial and industrial | — | 633 | 717 | 1,233 | 1,517 | ||||||||||||||
Real estate construction | — | 26 | 29 | 451 | 441 | ||||||||||||||
Total nonaccrual loans other than nonperforming troubled debt restructurings | — | 1,241 | 1,462 | 3,305 | 3,823 | ||||||||||||||
Total nonaccrual loans | — | 7,706 | 19,793 | 20,316 | 21,857 | ||||||||||||||
Other real estate owned and repossessed assets | — | 5,621 | 8,261 | 10,709 | 10,719 | ||||||||||||||
Total nonperforming assets | — | 13,327 | 28,054 | 31,025 | 32,576 | ||||||||||||||
Performing troubled debt restructurings | |||||||||||||||||||
Commercial real estate | — | 1,709 | 3,055 | 8,923 | 9,017 | ||||||||||||||
Residential real estate | — | 3,185 | 3,584 | 3,069 | 3,046 | ||||||||||||||
Commercial and industrial | — | 204 | 569 | 993 | 1,137 | ||||||||||||||
Real estate construction | — | 298 | 300 | 256 | 264 | ||||||||||||||
Consumer | — | — | 7 | — | — | ||||||||||||||
Total performing troubled debt restructurings | — | 5,396 | 7,515 | 13,241 | 13,464 | ||||||||||||||
Total covered impaired assets | $ | — | $ | 18,723 | $ | 35,569 | $ | 44,266 | $ | 46,040 | |||||||||
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.
11
Talmer Bancorp, Inc.
Net Interest Income and Net Interest Margin
(Unaudited)
For the three months ended | ||||||||||||||||||||||||||
December 31, 2015 | September 30, 2015 | December 31, 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 | $ | 113,284 | $ | 77 | 0.27 | % | $ | 172,781 | $ | 107 | 0.24 | % | $ | 147,713 | $ | 94 | 0.25 | % | ||||||||
Federal funds sold and other short-term investments | 187,283 | 383 | 0.81 | 182,826 | 342 | 0.74 | 69,897 | 126 | 0.71 | |||||||||||||||||
Investment securities (3): | ||||||||||||||||||||||||||
Taxable | 603,922 | 3,234 | 2.12 | 575,071 | 2,731 | 1.88 | 519,774 | 2,263 | 1.73 | |||||||||||||||||
Tax-exempt | 282,258 | 1,933 | 3.57 | 266,357 | 1,873 | 3.69 | 223,580 | 1,610 | 3.82 | |||||||||||||||||
Federal Home Loan Bank stock | 25,796 | 275 | 4.23 | 25,416 | 285 | 4.46 | 18,671 | 177 | 3.77 | |||||||||||||||||
Gross loans (4) | 4,800,952 | 58,400 | 4.83 | 4,682,709 | 60,078 | 5.09 | 4,243,329 | 58,271 | 5.45 | |||||||||||||||||
FDIC indemnification asset | — | — | — | 35,211 | (4,366 | ) | (49.20 | ) | 77,865 | (7,539 | ) | (38.41 | ) | |||||||||||||
Total earning assets | 6,013,495 | 64,302 | 4.28 | % | 5,940,371 | 61,050 | 4.12 | % | 5,300,829 | 55,002 | 4.16 | % | ||||||||||||||
Non-earning assets: | ||||||||||||||||||||||||||
Cash and due from banks | 89,269 | 91,225 | 101,884 | |||||||||||||||||||||||
Allowance for loan losses | (54,211 | ) | (53,900 | ) | (52,808 | ) | ||||||||||||||||||||
Premises and equipment | 44,017 | 44,552 | 50,130 | |||||||||||||||||||||||
Core deposit intangible | 13,129 | 13,802 | 13,334 | |||||||||||||||||||||||
Goodwill | 3,524 | 3,524 | — | |||||||||||||||||||||||
Other real estate owned and repossessed assets | 31,813 | 43,420 | 48,983 | |||||||||||||||||||||||
Loan servicing rights | 56,633 | 58,038 | 73,059 | |||||||||||||||||||||||
FDIC receivable | 30,369 | 3,878 | 11,013 | |||||||||||||||||||||||
Company-owned life insurance | 106,438 | 105,377 | 97,081 | |||||||||||||||||||||||
Other non-earning assets | 231,797 | 241,922 | 223,685 | |||||||||||||||||||||||
Total assets | $ | 6,566,273 | $ | 6,492,209 | $ | 5,867,190 | ||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||||
Interest-bearing demand deposits | $ | 836,466 | $ | 395 | 0.19 | % | $ | 823,741 | $ | 401 | 0.19 | % | $ | 676,994 | $ | 194 | 0.11 | % | ||||||||
Money market and savings deposits | 1,351,197 | 732 | 0.21 | 1,293,737 | 620 | 0.19 | 1,174,132 | 457 | 0.15 | |||||||||||||||||
Time deposits | 1,632,608 | 2,891 | 0.70 | 1,523,096 | 2,582 | 0.67 | 1,219,758 | 1,546 | 0.50 | |||||||||||||||||
Other brokered funds | 246,998 | 483 | 0.78 | 365,825 | 541 | 0.59 | 543,784 | 527 | 0.38 | |||||||||||||||||
Short-term borrowings | 142,894 | 329 | 0.91 | 219,663 | 350 | 0.63 | 165,515 | 90 | 0.22 | |||||||||||||||||
Long-term debt | 489,660 | 1,094 | 0.89 | 407,154 | 909 | 0.89 | 326,924 | 725 | 0.88 | |||||||||||||||||
Total interest-bearing liabilities | 4,699,823 | 5,924 | 0.50 | % | 4,633,216 | 5,403 | 0.46 | % | 4,107,107 | 3,539 | 0.34 | % | ||||||||||||||
Noninterest-bearing liabilities and shareholders' equity: | ||||||||||||||||||||||||||
Noninterest-bearing demand deposits | 1,067,500 | 1,051,400 | 934,143 | |||||||||||||||||||||||
FDIC clawback liability | — | 28,774 | 25,923 | |||||||||||||||||||||||
Other liabilities | 75,527 | 47,779 | 45,272 | |||||||||||||||||||||||
Shareholders' equity | 723,423 | 731,040 | 754,745 | |||||||||||||||||||||||
Total liabilities and shareholders' equity | $ | 6,566,273 | $ | 6,492,209 | $ | 5,867,190 | ||||||||||||||||||||
Net interest income | $ | 58,378 | $ | 55,647 | $ | 51,463 | ||||||||||||||||||||
Interest spread | 3.78 | % | 3.66 | % | 3.82 | % | ||||||||||||||||||||
Net interest margin as a percentage of interest-earning assets | 3.85 | % | 3.72 | % | 3.85 | % | ||||||||||||||||||||
Tax equivalent effect | 0.04 | % | 0.04 | % | 0.04 | % | ||||||||||||||||||||
Net interest margin as a percentage of interest-earning assets (FTE) | 3.89 | % | 3.76 | % | 3.89 | % | ||||||||||||||||||||
(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 $610 thousand, $604 thousand, and $542 thousand on tax-exempt securities for the three months ended December 31, 2015, September 30, 2015, and December 31, 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.
12
Talmer Bancorp, Inc.
Net Interest Income and Net Interest Margin
(Unaudited)
For the year ended December 31, | |||||||||||||||||
2015 | 2014 | ||||||||||||||||
(Dollars in thousands) | Average Balance | Interest (1) | Average Rate (2) | Average Balance | Interest (1) | Average Rate (2) | |||||||||||
Earning assets: | |||||||||||||||||
Interest-earning balances | $ | 162,391 | $ | 387 | 0.24 | % | $ | 265,155 | $ | 640 | 0.24 | % | |||||
Federal funds sold and other short-term investments | 155,353 | 1,159 | 0.75 | 73,453 | 527 | 0.72 | |||||||||||
Investment securities (3): | |||||||||||||||||
Taxable | 550,701 | 10,663 | 1.94 | 505,754 | 8,509 | 1.68 | |||||||||||
Tax-exempt | 259,414 | 7,079 | 3.61 | 197,786 | 6,232 | 4.22 | |||||||||||
Federal Home Loan Bank stock | 23,089 | 1,029 | 4.46 | 17,841 | 867 | 4.86 | |||||||||||
Gross loans (4) | 4,618,639 | 236,735 | 5.13 | 3,925,198 | 226,674 | 5.77 | |||||||||||
FDIC indemnification asset | 35,993 | (22,164 | ) | (61.58 | ) | 105,034 | (26,426 | ) | (25.16 | ) | |||||||
Total earning assets | 5,805,580 | 234,888 | 4.09 | % | 5,090,221 | 217,023 | 4.31 | % | |||||||||
Non-earning assets: | |||||||||||||||||
Cash and due from banks | 89,657 | 97,935 | |||||||||||||||
Allowance for loan losses | (53,067 | ) | (56,094 | ) | |||||||||||||
Premises and equipment | 46,163 | 55,125 | |||||||||||||||
Core deposit intangible | 13,898 | 15,055 | |||||||||||||||
Goodwill | 3,167 | — | |||||||||||||||
Other real estate owned and repossessed assets | 42,199 | 53,513 | |||||||||||||||
Loan servicing rights | 57,702 | 75,863 | |||||||||||||||
FDIC receivable | 11,684 | 7,592 | |||||||||||||||
Company-owned life insurance | 104,284 | 81,245 | |||||||||||||||
Other non-earning assets | 237,047 | 225,793 | |||||||||||||||
Total assets | $ | 6,358,314 | $ | 5,646,248 | |||||||||||||
Interest-bearing liabilities: | |||||||||||||||||
Deposits: | |||||||||||||||||
Interest-bearing demand deposits | $ | 815,528 | $ | 1,468 | 0.18 | % | $ | 689,225 | $ | 824 | 0.12 | % | |||||
Money market and savings deposits | 1,281,622 | 2,385 | 0.19 | 1,289,388 | 1,930 | 0.15 | |||||||||||
Time deposits | 1,444,631 | 9,431 | 0.65 | 1,247,907 | 6,080 | 0.49 | |||||||||||
Other brokered funds | 420,354 | 2,254 | 0.54 | 268,080 | 879 | 0.33 | |||||||||||
Short-term borrowings | 121,408 | 967 | 0.80 | 153,951 | 420 | 0.27 | |||||||||||
Long-term debt | 440,660 | 3,717 | 0.84 | 257,487 | 2,627 | 1.02 | |||||||||||
Total interest-bearing liabilities | 4,524,203 | 20,222 | 0.45 | % | 3,906,038 | 12,760 | 0.33 | % | |||||||||
Noninterest-bearing liabilities and shareholders' equity: | |||||||||||||||||
Noninterest-bearing demand deposits | 1,005,905 | 943,321 | |||||||||||||||
FDIC clawback liability | 20,939 | 25,823 | |||||||||||||||
Other liabilities | 59,843 | 39,300 | |||||||||||||||
Shareholders' equity | 747,424 | 731,766 | |||||||||||||||
Total liabilities and shareholders' equity | $ | 6,358,314 | $ | 5,646,248 | |||||||||||||
Net interest income | $ | 214,666 | $ | 204,263 | |||||||||||||
Interest spread | 3.64 | % | 3.98 | % | |||||||||||||
Net interest margin as a percentage of interest-earning assets | 3.70 | % | 4.01 | % | |||||||||||||
Tax equivalent effect | 0.03 | % | 0.03 | % | |||||||||||||
Net interest margin as a percentage of interest-earning assets (FTE) | 3.73 | % | 4.04 | % | |||||||||||||
(2) Average rates are presented on an annual basis and include a taxable equivalent adjustment to interest income of $2.3 million and $2.1 million on tax-exempt securities for the years ended December 31, 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.
13
Talmer Bancorp, Inc.
Reconciliation of Non-GAAP Financial Measures (1)
(Unaudited)
2015 | 2014 | ||||||||||||||||||
(Dollars in thousands, except per share data) | 4th Quarter | 3rd Quarter | 2nd Quarter | 1st Quarter | 4th Quarter | ||||||||||||||
Tangible shareholders' equity: | |||||||||||||||||||
Total shareholders' equity | $ | 725,215 | $ | 714,768 | $ | 766,406 | $ | 753,849 | $ | 761,607 | |||||||||
Less: | |||||||||||||||||||
Core deposit intangibles | 12,808 | 13,470 | 14,131 | 14,796 | 13,035 | ||||||||||||||
Goodwill | 3,524 | 3,524 | 3,524 | 3,524 | — | ||||||||||||||
Tangible shareholders' equity | $ | 708,883 | $ | 697,774 | $ | 748,751 | $ | 735,529 | $ | 748,572 | |||||||||
Tangible book value per share: | |||||||||||||||||||
Shares outstanding | 66,115 | 66,128 | 71,129 | 70,938 | 70,532 | ||||||||||||||
Tangible book value per share | $ | 10.72 | $ | 10.55 | $ | 10.53 | $ | 10.37 | $ | 10.61 | |||||||||
Tangible average equity to tangible average assets: | |||||||||||||||||||
Average assets | $ | 6,566,273 | $ | 6,492,209 | $ | 6,296,629 | $ | 6,050,721 | $ | 5,865,624 | |||||||||
Average equity | 723,423 | 731,040 | 758,284 | 759,365 | 754,722 | ||||||||||||||
Average core deposit intangibles | 13,129 | 13,802 | 14,465 | 14,201 | 13,334 | ||||||||||||||
Average goodwill | 3,524 | 3,524 | 3,524 | 2,075 | — | ||||||||||||||
Tangible average equity to tangible average assets | 10.79 | % | 11.02 | % | 11.79 | % | 12.31 | % | 12.67 | % | |||||||||
Core efficiency ratio: | |||||||||||||||||||
Net interest income | $ | 58,378 | $ | 55,647 | $ | 49,609 | $ | 51,032 | $ | 51,463 | |||||||||
Noninterest income | 23,575 | 19,342 | 22,098 | 21,430 | 15,834 | ||||||||||||||
Total revenue | 81,953 | 74,989 | 71,707 | 72,462 | 67,297 | ||||||||||||||
Less: | |||||||||||||||||||
(Expense)/benefit due to change in the fair value of loan servicing rights | 1,446 | (3,831 | ) | 3,146 | (4,084 | ) | (3,656 | ) | |||||||||||
FDIC loss sharing income | — | (2,696 | ) | (5,928 | ) | (1,068 | ) | (244 | ) | ||||||||||
Total core revenue | 80,507 | 81,516 | 74,489 | 77,614 | 71,197 | ||||||||||||||
Total noninterest expense | 68,602 | 47,829 | 53,293 | 56,595 | 48,098 | ||||||||||||||
Less: | |||||||||||||||||||
Transaction and integration related costs | 328 | 113 | 419 | 3,347 | 329 | ||||||||||||||
Net loss on early termination of FDIC loss share and warrant agreements | 20,364 | — | — | — | — | ||||||||||||||
Property efficiency review | — | — | 1,820 | — | — | ||||||||||||||
Total core noninterest expense | $ | 47,910 | $ | 47,716 | $ | 51,054 | $ | 53,248 | $ | 47,769 | |||||||||
Core efficiency ratio | 59.51 | % | 58.54 | % | 68.54 | % | 68.61 | % | 67.09 | % | |||||||||
14