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| 8-K - 8-K YEAR END EARNING RELEASE 12.31.16 - SOUTHSIDE BANCSHARES INC | a8-kearningsrelease123116.htm |
SOUTHSIDE BANCSHARES, INC.
ANNOUNCES FINANCIAL RESULTS FOR THE
THREE MONTHS AND YEAR ENDED DECEMBER 31, 2016
NASDAQ Global Select Market Symbol - “SBSI”
Tyler, Texas, (January 27, 2017) Southside Bancshares, Inc. (“Southside” or the “Company”) (NASDAQ:SBSI) today reported its financial results for the three months and year ended December 31, 2016.
Southside reported net income of $11.6 million for the three months ended December 31, 2016, a decrease of $0.1 million, or 1.0%, compared to $11.7 million for the same period in 2015. Net income for the year ended December 31, 2016 increased $5.4 million, or 12.2%, to $49.3 million, compared to $44.0 million for the same period in 2015.
Diluted earnings per common share were $0.43 and $0.44 for the three months ended December 31, 2016 and 2015, respectively, a decrease of $0.01, or 2.3%. For the year ended December 31, 2016, diluted earnings per common share increased $0.21, or 12.7%, to $1.86, compared to $1.65 for the same period in 2015.
The return on average shareholders’ equity for the year ended December 31, 2016 was 10.54%, compared to 10.04% for the same period in 2015. The return on average assets was 0.94% for the year ended December 31, 2016, compared to 0.90% for the same period in 2015.
“A 12.2% increase in net income for the year ended December 31, 2016 when compared to the prior year, resulted in record net income of $49.3 million, which highlights our financial performance for the year,” stated Lee R. Gibson, President and Chief Executive Officer of Southside. “During the fourth quarter ended December 31, 2016, we sold available for sale securities at a net loss of $2.7 million compared to a net gain of $0.2 million on the securities that were sold during the fourth quarter of 2015. Net income for the fourth quarter of 2016 decreased $0.1 million compared to the same period in 2015. Excluding sales of available for sale securities, net income during the fourth quarter of 2016 increased $1.8 million, or 15.2%, compared to the same period in 2015.”
“Other highlights for the year included $124.8 million, or 5.1% in loan growth, a decrease in nonperforming assets to total assets to 0.27% and the completion of a common stock offering that netted $76.0 million in additional capital.”
“Our loan pipeline is strong and reflects the potential for more consistent loan growth throughout 2017 than we have experienced during the prior two years. The DFW and Austin markets we serve are expected to continue to experience solid job growth during 2017 as businesses continue to relocate from other states and expand existing facilities” Mr. Gibson concluded.
Loans and Deposits
For the year ended December 31, 2016, total loans increased by $124.8 million, or 5.1%, compared to December 31, 2015. The net increase in our loans was comprised of increases of $310.8 million of commercial real estate loans and $10.5 million of municipal loans, which were partially offset by decreases of $65.3 million of commercial loans, $58.1 million of construction loans, $54.9 million of loans to individuals, and $18.2 million of 1-4 family residential loans. Loans with oil and gas industry exposure totaled 1.09% of the loan portfolio at December 31, 2016.
Nonperforming assets decreased during the year ended December 31, 2016 by $17.4 million, or 53.5%, to $15.1 million, or 0.27% of total assets, compared to 0.63% of total assets at December 31, 2015.
During the year ended December 31, 2016, the allowance for loan losses decreased $1.8 million, or 9.2%, to $17.9 million, or 0.70% of total loans, compared to 0.81% of total loans at December 31, 2015, as a result of charge-offs of two large impaired commercial borrowing relationships partially offset by growth in the loan portfolio.
During the year ended December 31, 2016, deposits, net of brokered deposits, increased $127.4 million, or 3.8%, compared to December 31, 2015. During this period public fund deposits increased $76.8 million.
Net Interest Income for the Three Months Ended December 31, 2016
Net interest income decreased $0.1 million, or 0.2%, to $34.6 million for the three months ended December 31, 2016, compared to $34.7 million for the same period in 2015. The decrease in net interest income was the result of the increase in interest expense of $3.8 million associated with short- and long-term obligations and deposit expenses, which were partially offset by an increase in interest income of $3.7 million, which was primarily a result of the increase in the loan and securities portfolio, compared to the same period in 2015. For the three months ended December 31, 2016, our net interest spread decreased to 2.90%, compared to 3.26% for the same period in 2015, due to higher rates paid on interest-bearing liabilities along with a decrease in the yield on
interest-earning assets. Our net interest margin decreased to 3.03% for the three months ended December 31, 2016, compared to 3.35% for the same period in 2015. The net interest spread and margin on a linked quarter basis decreased from 3.06% and 3.19%, respectively.
Net Interest Income for the Year Ended December 31, 2016
Net interest income increased $4.9 million, or 3.6%, to $139.6 million for the year ended December 31, 2016, compared to $134.7 million for the same period in 2015. The increase in net interest income was due to the increase in interest income of $14.4 million, or 9.3%, which was primarily a result of the increase in the loan portfolio, compared to the same period in 2015, and a $1.3 million recovery of interest income on the payoff of a long-time nonaccrual loan during the first quarter of 2016. The increase in interest income was partially offset by an increase in interest expense of $9.5 million. For the year ended December 31, 2016, our net interest spread decreased to 3.14%, compared to 3.31% for the same period in 2015, due to higher rates paid on interest-bearing liabilities, which offset the increase in the yield on interest-earning assets. Our net interest margin decreased to 3.26% for the year ended December 31, 2016, compared to 3.40% for the same period in 2015.
Net Income for the Three Months Ended December 31, 2016
Net income decreased $0.1 million, or 1.0%, for the three months ended December 31, 2016, to $11.6 million compared to the same period in 2015. The decrease was primarily the result of a $3.8 million increase in interest expense, a $2.1 million decrease in noninterest income, a $0.4 million increase in income tax expense, and a $0.1 million increase in provision for loan losses, partially offset by a $3.7 million increase in interest income and a $2.6 million decrease in noninterest expense.
Noninterest income decreased $2.1 million, or 23.8%, for the three months ended December 31, 2016 compared to the same period in 2015, due to a net loss on sale of securities available for sale which were partially offset by increases in deposit services income and other noninterest income.
Noninterest expense decreased $2.6 million, or 9.0%, for the three months ended December 31, 2016, compared to the same period in 2015, due to cost containment in almost all noninterest expense categories. Telephone and communications expense increased during the three months ended December 31, 2016, compared to the same period in 2015, due to a one-time vendor credit received in December 2015.
Net Income for the Year Ended December 31, 2016
Net income increased $5.4 million, or 12.2%, for the year ended December 31, 2016, to $49.3 million compared to the same period in 2015. The increase was primarily the result of a $14.4 million increase in interest income, a $3.4 million decrease in noninterest expense, and a $1.5 million increase in noninterest income, partially offset by a $9.5 million increase in interest expense, a $3.0 million increase in income tax expense and a $1.4 million increase in provision for loan losses.
Noninterest income increased $1.5 million, or 4.0%, for the year ended December 31, 2016 compared to the same period in 2015, primarily due to increases in deposit services income, other noninterest income and gain on sale of loans, partially offset by a net loss on sale of securities available for sale. Increases in other noninterest income were primarily comprised of increases in other investment income and mortgage servicing fee income.
Noninterest expense decreased $3.4 million, or 3.0%, for the year ended December 31, 2016, compared to the same period in 2015, primarily due to decreases in salaries and employee benefits expense, software and data processing expense, FDIC insurance and other noninterest expense, partially offset by increases in professional fees and occupancy expense.
Conference Call
Southside's management team will host a conference call to discuss its fourth quarter and year end 2016 financial results on Friday, January 27, 2017 at 9:00 am CST. The call can be accessed by dialing 844-775-2540 and by identifying the conference ID number 46149540 or by identifying “Southside Bancshares, Inc., Fourth Quarter and Year End 2016 Earnings Call.” To listen to the call via web-cast, register at www.southside.com/about/investor-relations.
For those unable to listen to the conference call live, a recording of the conference call will be available from approximately 3:00 pm CST January 27, 2017 through February 8, 2017 by accessing the company website, www.southside.com/about/investor-relations.
Non-GAAP Financial Measures
Our accounting and reporting policies conform to generally accepted accounting principles (“GAAP”) in the United States and prevailing practices in the banking industry. However, certain non-GAAP measures are used by management to supplement the
evaluation of our performance. These include the following fully-taxable equivalent measures: tax-equivalent net interest income, tax-equivalent net interest margin, tax-equivalent net interest spread, and tax-equivalent efficiency ratio, which include the effects of taxable-equivalent adjustments using a federal income tax rate of 35% to increase tax-exempt interest income to a tax-equivalent basis. Whenever we present a non-GAAP financial measure in an SEC filing, we are also required to present the most directly comparable financial measure calculated and presented in accordance with GAAP and reconcile the differences between the non-GAAP financial measure and such comparable GAAP measure. Tax-equivalent adjustments are reported in Footnotes 2 and 3 to the Average Balances with Average Yields and Rates tables under Results of Operations below.
Tax-equivalent net interest income, net interest margin and net interest spread. Net interest income on a tax-equivalent basis is a non-GAAP measure that adjusts for the tax-favored status of net interest income from loans and investments. We believe this measure to be the preferred industry measurement of net interest income and it enhances comparability of net interest income arising from taxable and tax-exempt sources. The most directly comparable financial measure calculated in accordance with GAAP is our net interest income. Net interest margin on a tax-equivalent basis is net interest income on a tax-equivalent basis divided by average interest-earning assets on a tax-equivalent basis. The most directly comparable financial measure calculated in accordance with GAAP is our net interest margin. Net interest spread on a tax-equivalent basis is the difference in the average yield on average interest-earning assets on a tax equivalent basis and the average rate paid on average interest-bearing liabilities. The most directly comparable financial measure calculated in accordance with GAAP is our net interest spread.
Tax-equivalent efficiency ratio. The efficiency ratio on a tax-equivalent basis is a non-GAAP measure that provides a measure of productivity in the banking industry. This ratio is calculated to measure the cost of generating one dollar of revenue. The ratio is designed to reflect the percentage of one dollar which must be expended to generate that dollar of revenue. We calculate this ratio by dividing noninterest expense, excluding amortization of intangibles and certain non-recurring expense by the sum of net interest income on a tax-equivalent basis and noninterest income, excluding gains (losses) on sales of investment securities and certain non-recurring impairments.
These non-GAAP financial measures should not be considered alternatives to GAAP-basis financial statements, and other bank holding companies may define or calculate these non-GAAP measures or similar measures differently.
About Southside Bancshares, Inc.
Southside Bancshares, Inc. is a bank holding company with approximately $5.6 billion in assets as of December 31, 2016, that owns 100% of Southside Bank. Southside Bank currently has 60 banking centers in Texas and operates a network of 70 ATMs.
To learn more about Southside Bancshares, Inc., please visit our investor relations website at www.southside.com/about/investor-relations. Our investor relations site provides a detailed overview of our activities, financial information and historical stock price data. To receive e-mail notification of company news, events and stock activity, please register on the E-mail Notification portion of the website. Questions or comments may be directed to Deborah Wilkinson at (817) 367-4962, or deborah.wilkinson@southside.com.
Forward-Looking Statements
Certain statements of other than historical fact that are contained in this document and in other written material, press releases and oral statements issued by or on behalf of the Company may be considered to be “forward-looking statements” within the meaning of and subject to the safe harbor protections of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance, nor should they be relied upon as representing management’s views as of any subsequent date. These statements may include words such as “expect,” “estimate,” “project,” “anticipate,” “appear,” “believe,” “could,” “should,” “may,” “likely,” “intend,” “probability,” “risk,” “target,” “objective,” “plans,” “potential,” and similar expressions. Forward-looking statements are statements with respect to the Company’s beliefs, plans, expectations, objectives, goals, anticipations, assumptions and estimates about the Company's future performance and are subject to significant known and unknown risks and uncertainties, which could cause the Company's actual results to differ materially from the results discussed in the forward-looking statements. For example, discussions about trends in asset quality, capital, liquidity, the pace of loan and revenue growth, the Company's ability to sell nonperforming assets, expense reductions, the benefits of the Share Repurchase Plan, planned operational efficiencies, earnings and certain market risk disclosures, including the impact of interest rates and other economic factors, are based upon information presently available to management and are dependent on choices about key model characteristics and assumptions and are subject to various limitations. By their nature, certain of the market risk disclosures are only estimates and could be materially different from what actually occurs in the future.
Additional information concerning the Company and its business, including additional factors that could materially affect the Company’s financial results, is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, under “Forward-Looking Information” and Item 1A. “Risk Factors,” and in the Company’s other filings with the Securities and
Exchange Commission. The Company disclaims any obligation to update any factors or to announce publicly the result of revisions to any of the forward-looking statements included herein to reflect future events or developments.
SOUTHSIDE BANCSHARES, INC. | |||||||||||||||||||
CONSOLIDATED FINANCIAL SUMMARY (UNAUDITED) | |||||||||||||||||||
(In thousands, except per share data) | |||||||||||||||||||
As of | |||||||||||||||||||
2016 | 2015 | ||||||||||||||||||
Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | |||||||||||||||
ASSETS | |||||||||||||||||||
Cash and due from banks | $ | 59,363 | $ | 54,255 | $ | 45,663 | $ | 52,324 | $ | 54,288 | |||||||||
Interest earning deposits | 102,251 | 144,833 | 18,450 | 16,130 | 26,687 | ||||||||||||||
Federal funds sold | 8,040 | — | — | — | — | ||||||||||||||
Securities available for sale, at estimated fair value | 1,479,600 | 1,622,128 | 1,416,335 | 1,332,381 | 1,460,492 | ||||||||||||||
Securities held to maturity, at carrying value | 937,487 | 775,682 | 784,925 | 784,579 | 784,296 | ||||||||||||||
Federal Home Loan Bank stock, at cost | 61,084 | 51,901 | 47,702 | 47,550 | 51,047 | ||||||||||||||
Loans held for sale | 7,641 | 5,301 | 5,883 | 4,971 | 3,811 | ||||||||||||||
Loans | 2,556,537 | 2,483,641 | 2,384,321 | 2,443,231 | 2,431,753 | ||||||||||||||
Less: Allowance for loan losses | (17,911 | ) | (15,993 | ) | (14,908 | ) | (21,799 | ) | (19,736 | ) | |||||||||
Net loans | 2,538,626 | 2,467,648 | 2,369,413 | 2,421,432 | 2,412,017 | ||||||||||||||
Premises & equipment, net | 106,003 | 106,777 | 107,242 | 107,556 | 107,929 | ||||||||||||||
Goodwill | 91,520 | 91,520 | 91,520 | 91,520 | 91,520 | ||||||||||||||
Other intangible assets, net | 4,608 | 5,060 | 5,534 | 6,029 | 6,548 | ||||||||||||||
Bank owned life insurance | 97,775 | 97,002 | 96,375 | 95,718 | 95,080 | ||||||||||||||
Other assets | 69,769 | 42,796 | 45,886 | 58,743 | 68,281 | ||||||||||||||
Total assets | $ | 5,563,767 | $ | 5,464,903 | $ | 5,034,928 | $ | 5,018,933 | $ | 5,161,996 | |||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||||||||
Noninterest bearing deposits | $ | 704,013 | $ | 747,270 | $ | 679,831 | $ | 698,695 | $ | 672,470 | |||||||||
Interest bearing deposits | 2,829,063 | 2,834,117 | 2,890,418 | 2,920,673 | 2,782,937 | ||||||||||||||
Total deposits | 3,533,076 | 3,581,387 | 3,570,249 | 3,619,368 | 3,455,407 | ||||||||||||||
Short-term obligations | 873,615 | 720,634 | 385,717 | 259,646 | 647,836 | ||||||||||||||
Long-term obligations | 601,464 | 621,640 | 559,071 | 622,222 | 562,512 | ||||||||||||||
Other liabilities | 37,338 | 68,682 | 47,591 | 60,121 | 52,179 | ||||||||||||||
Total liabilities | 5,045,493 | 4,992,343 | 4,562,628 | 4,561,357 | 4,717,934 | ||||||||||||||
Shareholders' equity | 518,274 | 472,560 | 472,300 | 457,576 | 444,062 | ||||||||||||||
Total liabilities and shareholders' equity | $ | 5,563,767 | $ | 5,464,903 | $ | 5,034,928 | $ | 5,018,933 | $ | 5,161,996 | |||||||||
At or For the Three Months Ended | |||||||||||||||||||
2016 | 2015 | ||||||||||||||||||
Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | |||||||||||||||
Income Statement: | |||||||||||||||||||
Total interest income | $ | 43,680 | $ | 41,132 | $ | 41,089 | $ | 43,012 | $ | 39,964 | |||||||||
Total interest expense | 9,039 | 7,202 | 6,711 | 6,396 | 5,267 | ||||||||||||||
Net interest income | 34,641 | 33,930 | 34,378 | 36,616 | 34,697 | ||||||||||||||
Provision for loan losses | 2,065 | 1,631 | 3,768 | 2,316 | 1,951 | ||||||||||||||
Net interest income after provision for loan losses | 32,576 | 32,299 | 30,610 | 34,300 | 32,746 | ||||||||||||||
Noninterest income | |||||||||||||||||||
Deposit services | 5,183 | 5,335 | 5,099 | 5,085 | 4,990 | ||||||||||||||
Net (loss) gain on sale of securities available for sale | (2,676 | ) | 2,343 | 728 | 2,441 | 204 | |||||||||||||
Gain on sale of loans | 461 | 818 | 873 | 643 | 578 | ||||||||||||||
Trust income | 900 | 867 | 869 | 855 | 871 | ||||||||||||||
Bank owned life insurance income | 649 | 656 | 647 | 674 | 640 | ||||||||||||||
Brokerage services | 466 | 551 | 535 | 575 | 555 | ||||||||||||||
Other | 1,730 | 1,162 | 619 | 1,323 | 977 | ||||||||||||||
Total noninterest income | 6,713 | 11,732 | 9,370 | 11,596 | 8,815 | ||||||||||||||
Noninterest expense | |||||||||||||||||||
Salaries and employee benefits | 16,194 | 15,203 | 14,849 | 17,732 | 16,420 | ||||||||||||||
Occupancy expense | 2,825 | 4,569 | 2,993 | 3,335 | 3,263 | ||||||||||||||
Advertising, travel & entertainment | 648 | 588 | 722 | 685 | 726 | ||||||||||||||
ATM and debit card expense | 820 | 868 | 736 | 712 | 1,086 | ||||||||||||||
Professional fees | 982 | 1,148 | 1,478 | 1,338 | 1,517 | ||||||||||||||
Software and data processing expense | 687 | 736 | 739 | 749 | 771 | ||||||||||||||
Telephone and communications | 572 | 407 | 468 | 484 | 372 | ||||||||||||||
FDIC insurance | 215 | 643 | 645 | 638 | 619 | ||||||||||||||
FHLB prepayment fees | — | — | 148 | — | — | ||||||||||||||
Other | 2,934 | 4,263 | 3,035 | 3,734 | 3,657 | ||||||||||||||
Total noninterest expense | 25,877 | 28,425 | 25,813 | 29,407 | 28,431 | ||||||||||||||
Income before income tax expense | 13,412 | 15,606 | 14,167 | 16,489 | 13,130 | ||||||||||||||
Income tax expense | 1,839 | 2,741 | 2,772 | 2,973 | 1,438 | ||||||||||||||
Net income | $ | 11,573 | $ | 12,865 | $ | 11,395 | $ | 13,516 | $ | 11,692 | |||||||||
Common share data: | |||||||||||||||||||
Weighted-average basic shares outstanding | 26,866 | 26,262 | 26,230 | 26,449 | 26,653 | ||||||||||||||
Weighted-average diluted shares outstanding | 27,049 | 26,415 | 26,349 | 26,519 | 26,745 | ||||||||||||||
Shares outstanding end of period | 28,543 | 26,278 | 26,251 | 26,222 | 26,670 | ||||||||||||||
Net income per common share | |||||||||||||||||||
Basic | $ | 0.43 | $ | 0.49 | $ | 0.43 | $ | 0.51 | $ | 0.44 | |||||||||
Diluted | 0.43 | 0.49 | 0.43 | 0.51 | 0.44 | ||||||||||||||
Book value per common share | 18.16 | 17.98 | 17.99 | 17.46 | 16.66 | ||||||||||||||
Cash dividend paid per common share | 0.30 | 0.24 | 0.24 | 0.23 | 0.31 | ||||||||||||||
Selected Performance Ratios: | ||||||||||||||
Return on average assets | 0.83 | % | 0.98 | % | 0.90 | % | 1.07 | % | 0.92 | % | ||||
Return on average shareholders’ equity | 9.56 | 10.78 | 9.91 | 11.96 | 10.35 | |||||||||
Average yield on interest earning assets | 3.73 | 3.78 | 3.93 | 4.06 | 3.80 | |||||||||
Average rate on interest bearing liabilities | 0.83 | 0.72 | 0.69 | 0.66 | 0.54 | |||||||||
Net interest spread | 2.90 | 3.06 | 3.24 | 3.40 | 3.26 | |||||||||
Net interest margin | 3.03 | 3.19 | 3.35 | 3.51 | 3.35 | |||||||||
Average interest earnings assets to average interest bearing liabilities | 119.88 | 120.40 | 120.21 | 119.62 | 120.29 | |||||||||
Noninterest expense to average total assets | 1.85 | 2.17 | 2.05 | 2.33 | 2.25 | |||||||||
Efficiency ratio | 52.00 | 53.88 | 52.85 | 57.47 | 58.45 | |||||||||
At or For the Year Ended | |||||||
December 31, | |||||||
2016 | 2015 | ||||||
Income Statement: | |||||||
Total interest income | $ | 168,913 | $ | 154,532 | |||
Total interest expense | 29,348 | 19,854 | |||||
Net interest income | 139,565 | 134,678 | |||||
Provision for loan losses | 9,780 | 8,343 | |||||
Net interest income after provision for loan losses | 129,785 | 126,335 | |||||
Noninterest income | |||||||
Deposit services | 20,702 | 20,112 | |||||
Net gain on sale of securities available for sale | 2,836 | 3,660 | |||||
Gain on sale of loans | 2,795 | 2,082 | |||||
Trust income | 3,491 | 3,419 | |||||
Bank owned life insurance income | 2,626 | 2,623 | |||||
Brokerage services | 2,127 | 2,206 | |||||
Other | 4,834 | 3,793 | |||||
Total noninterest income | 39,411 | 37,895 | |||||
Noninterest expense | |||||||
Salaries and employee benefits | 63,978 | 67,221 | |||||
Occupancy expense | 13,722 | 12,883 | |||||
Advertising, travel & entertainment | 2,643 | 2,708 | |||||
ATM and debit card expense | 3,136 | 3,132 | |||||
Professional fees | 4,946 | 3,877 | |||||
Software and data processing expense | 2,911 | 3,858 | |||||
Telephone and communications | 1,931 | 1,978 | |||||
FDIC insurance | 2,141 | 2,510 | |||||
FHLB prepayment fees | 148 | — | |||||
Other | 13,966 | 14,787 | |||||
Total noninterest expense | 109,522 | 112,954 | |||||
Income before income tax expense | 59,674 | 51,276 | |||||
Income tax expense | 10,325 | 7,279 | |||||
Net income | $ | 49,349 | $ | 43,997 | |||
Common share data: | |||||||
Weighted-average basic shares outstanding | 26,453 | 26,621 | |||||
Weighted-average diluted shares outstanding | 26,578 | 26,711 | |||||
Net income per common share | |||||||
Basic | $ | 1.86 | $ | 1.65 | |||
Diluted | 1.86 | 1.65 | |||||
Book value per common share | 18.16 | 16.66 | |||||
Cash dividend paid per common share | 1.01 | 1.00 | |||||
Selected Performance Ratios: | |||||
Return on average assets | 0.94 | % | 0.90 | % | |
Return on average shareholders’ equity | 10.54 | 10.04 | |||
Average yield on interest earning assets | 3.87 | 3.84 | |||
Average yield on interest bearing liabilities | 0.73 | 0.53 | |||
Net interest spread | 3.14 | 3.31 | |||
Net interest margin | 3.26 | 3.40 | |||
Average interest earnings assets to average interest bearing liabilities | 120.02 | 120.12 | |||
Noninterest expense to average total assets | 2.09 | 2.32 | |||
Efficiency ratio | 54.08 | 59.32 | |||
Southside Bancshares, Inc. | |||||||||||||||||||
Selected Financial Data (unaudited) | |||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||
Three Months Ended | |||||||||||||||||||
2016 | 2015 | ||||||||||||||||||
Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | |||||||||||||||
Nonperforming assets | $ | 15,105 | $ | 16,008 | $ | 24,510 | $ | 34,046 | $ | 32,480 | |||||||||
Nonaccrual loans (1) | 8,280 | 8,536 | 11,767 | 21,927 | 20,526 | ||||||||||||||
Accruing loans past due more than 90 days (1) | 6 | 1 | 6 | 7 | 3 | ||||||||||||||
Restructured loans (2) | 6,431 | 7,193 | 12,477 | 11,762 | 11,143 | ||||||||||||||
Other real estate owned | 339 | 237 | 237 | 265 | 744 | ||||||||||||||
Repossessed assets | 49 | 41 | 23 | 85 | 64 | ||||||||||||||
Asset Quality Ratios: | |||||||||||||||||||
Nonaccruing loans to total loans | 0.32 | % | 0.34 | % | 0.49 | % | 0.90 | % | 0.84 | % | |||||||||
Allowance for loan losses to nonaccruing loans | 216.32 | 187.36 | 126.69 | 99.42 | 96.15 | ||||||||||||||
Allowance for loan losses to nonperforming assets | 118.58 | 99.91 | 60.82 | 64.03 | 60.76 | ||||||||||||||
Allowance for loan losses to total loans | 0.70 | 0.64 | 0.63 | 0.89 | 0.81 | ||||||||||||||
Nonperforming assets to total assets | 0.27 | 0.29 | 0.49 | 0.68 | 0.63 | ||||||||||||||
Net charge-offs to average loans | 0.02 | 0.09 | 1.77 | 0.04 | 0.11 | ||||||||||||||
Capital Ratios: | |||||||||||||||||||
Shareholders’ equity to total assets | 9.32 | 8.65 | 9.38 | 9.12 | 8.60 | ||||||||||||||
Average shareholders’ equity to average total assets | 8.66 | 9.10 | 9.11 | 8.94 | 8.92 | ||||||||||||||
(1) | Excludes purchased credit impaired ("PCI") loans measured at fair value at acquisition. |
(2) | Includes $3.1 million, $3.2 million, $8.3 million, $7.4 million, and $7.5 million in PCI loans restructured as of December 31, 2016, September 30, 2016, June 30, 2016, March 31, 2016, and December 31, 2015, respectively. |
Loan Portfolio Composition
The following table sets forth loan totals by category for the periods presented:
Three Months Ended | |||||||||||||||||||
2016 | 2015 | ||||||||||||||||||
Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | |||||||||||||||
Real Estate Loans: | |||||||||||||||||||
Construction | $ | 380,175 | $ | 466,323 | $ | 425,595 | $ | 464,750 | $ | 438,247 | |||||||||
1-4 Family Residential | 637,239 | 644,746 | 633,400 | 644,826 | 655,410 | ||||||||||||||
Commercial | 945,978 | 759,795 | 694,272 | 657,962 | 635,210 | ||||||||||||||
Commercial Loans | 177,265 | 191,154 | 197,896 | 233,857 | 242,527 | ||||||||||||||
Municipal Loans | 298,583 | 293,949 | 292,909 | 286,217 | 288,115 | ||||||||||||||
Loans to Individuals | 117,297 | 127,674 | 140,249 | 155,619 | 172,244 | ||||||||||||||
Total Loans | $ | 2,556,537 | $ | 2,483,641 | $ | 2,384,321 | $ | 2,443,231 | $ | 2,431,753 | |||||||||
RESULTS OF OPERATIONS
The analysis below shows average interest earning assets and interest bearing liabilities together with the average yield on the interest earning assets and the average rate of the interest bearing liabilities.
AVERAGE BALANCES WITH AVERAGE YIELDS AND RATES | |||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||
December 31, 2016 | September 30, 2016 | ||||||||||||||||||||
AVG | AVG | ||||||||||||||||||||
AVG | YIELD/ | AVG | YIELD/ | ||||||||||||||||||
BALANCE | INTEREST | RATE | BALANCE | INTEREST | RATE | ||||||||||||||||
ASSETS | |||||||||||||||||||||
INTEREST EARNING ASSETS: | |||||||||||||||||||||
Loans (1) (2) | $ | 2,512,820 | $ | 27,835 | 4.41 | % | $ | 2,436,349 | $ | 26,750 | 4.37 | % | |||||||||
Loans Held For Sale | 4,845 | 36 | 2.96 | % | 6,718 | 54 | 3.20 | % | |||||||||||||
Securities: | |||||||||||||||||||||
Investment Securities (Taxable) (4) | 115,057 | 485 | 1.68 | % | 61,238 | 251 | 1.63 | % | |||||||||||||
Investment Securities (Tax-Exempt) (3) (4) | 812,771 | 10,352 | 5.07 | % | 690,635 | 8,911 | 5.13 | % | |||||||||||||
Mortgage-backed Securities (4) | 1,520,045 | 9,294 | 2.43 | % | 1,492,271 | 9,399 | 2.51 | % | |||||||||||||
Total Securities | 2,447,873 | 20,131 | 3.27 | % | 2,244,144 | 18,561 | 3.29 | % | |||||||||||||
FHLB Stock, at cost and Other Investments | 62,087 | 210 | 1.35 | % | 54,085 | 186 | 1.37 | % | |||||||||||||
Interest Earning Deposits | 134,786 | 165 | 0.49 | % | 57,598 | 89 | 0.61 | % | |||||||||||||
Federal Funds Sold | 2,972 | 5 | 0.67 | % | — | — | — | ||||||||||||||
Total Interest Earning Assets | 5,165,383 | 48,382 | 3.73 | % | 4,798,894 | 45,640 | 3.78 | % | |||||||||||||
NONINTEREST EARNING ASSETS: | |||||||||||||||||||||
Cash and Due From Banks | 52,415 | 49,418 | |||||||||||||||||||
Bank Premises and Equipment | 106,520 | 107,318 | |||||||||||||||||||
Other Assets | 252,697 | 278,599 | |||||||||||||||||||
Less: Allowance for Loan Losses | (16,467 | ) | (14,989 | ) | |||||||||||||||||
Total Assets | $ | 5,560,548 | $ | 5,219,240 | |||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||||
INTEREST BEARING LIABILITIES: | |||||||||||||||||||||
Savings Deposits | $ | 250,706 | 76 | 0.12 | % | $ | 248,364 | 71 | 0.11 | % | |||||||||||
Time Deposits | 926,021 | 2,261 | 0.97 | % | 949,019 | 2,073 | 0.87 | % | |||||||||||||
Interest Bearing Demand Deposits | 1,646,535 | 1,543 | 0.37 | % | 1,634,898 | 1,460 | 0.36 | % | |||||||||||||
Total Interest Bearing Deposits | 2,823,262 | 3,880 | 0.55 | % | 2,832,281 | 3,604 | 0.51 | % | |||||||||||||
Short-term Interest Bearing Liabilities | 869,398 | 1,428 | 0.65 | % | 608,130 | 1,122 | 0.73 | % | |||||||||||||
Long-term Interest Bearing Liabilities – FHLB Dallas | 457,754 | 1,837 | 1.60 | % | 472,470 | 1,857 | 1.56 | % | |||||||||||||
Subordinated Notes (5) | 98,011 | 1,439 | 5.84 | % | 12,823 | 189 | 5.86 | % | |||||||||||||
Long-term Debt (6) | 60,235 | 455 | 3.01 | % | 60,234 | 430 | 2.84 | % | |||||||||||||
Total Interest Bearing Liabilities | 4,308,660 | 9,039 | 0.83 | % | 3,985,938 | 7,202 | 0.72 | % | |||||||||||||
NONINTEREST BEARING LIABILITIES: | |||||||||||||||||||||
Demand Deposits | 717,599 | 702,539 | |||||||||||||||||||
Other Liabilities | 52,714 | 55,783 | |||||||||||||||||||
Total Liabilities | 5,078,973 | 4,744,260 | |||||||||||||||||||
SHAREHOLDERS’ EQUITY | 481,575 | 474,980 | |||||||||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 5,560,548 | $ | 5,219,240 | |||||||||||||||||
NET INTEREST INCOME | $ | 39,343 | $ | 38,438 | |||||||||||||||||
NET INTEREST MARGIN ON AVERAGE EARNING ASSETS | 3.03 | % | 3.19 | % | |||||||||||||||||
NET INTEREST SPREAD | 2.90 | % | 3.06 | % | |||||||||||||||||
(1) | Interest on loans includes net fees on loans that are not material in amount. |
(2) | Interest income includes taxable-equivalent adjustments of $1,045 and $1,064 for the three months ended December 31, 2016 and September 30, 2016, respectively. See “Non-GAAP Financial Measures.” |
(3) | Interest income includes taxable-equivalent adjustments of $3,657 and $3,444 for the three months ended December 31, 2016 and September 30, 2016, respectively. See “Non-GAAP Financial Measures.” |
(4) | For the purpose of calculating the average yield, the average balance of securities is presented at historical cost. |
(5) | The unamortized debt issuance costs deducted from the carrying amount of the subordinated notes totaled approximately $2.0 million and $220,000 for the three months ended December 31, 2016 and September 30, 2016, respectively. |
(6) | Represents issuance of junior subordinated debentures. In connection with the adoption of ASU 2015-03 that requires unamortized debt issuance costs related to a recognized debt liability be presented as a direct deduction from the carrying amount of that debt liability, our |
average balance sheets for the three months ended December 31, 2016 and September 30, 2016 reflect a decrease in long-term debt of $76,000 and $77,000, respectively.
Note: As of December 31, 2016 and September 30, 2016, loans on nonaccrual status totaled $8,280 and $8,536, respectively. Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.
Three Months Ended | |||||||||||||||||||||
June 30, 2016 | March 31, 2016 | ||||||||||||||||||||
AVG | AVG | ||||||||||||||||||||
AVG | YIELD/ | AVG | YIELD/ | ||||||||||||||||||
BALANCE | INTEREST | RATE | BALANCE | INTEREST | RATE | ||||||||||||||||
ASSETS | |||||||||||||||||||||
INTEREST EARNING ASSETS: | |||||||||||||||||||||
Loans (1) (2) | $ | 2,426,733 | $ | 27,275 | 4.52 | % | $ | 2,434,837 | $ | 28,793 | 4.76 | % | |||||||||
Loans Held For Sale | 4,984 | 40 | 3.23 | % | 3,581 | 32 | 3.59 | % | |||||||||||||
Securities: | |||||||||||||||||||||
Investment Securities (Taxable) (4) | 22,010 | 107 | 1.96 | % | 41,659 | 214 | 2.07 | % | |||||||||||||
Investment Securities (Tax-Exempt) (3) (4) | 657,568 | 8,636 | 5.28 | % | 635,766 | 8,494 | 5.37 | % | |||||||||||||
Mortgage-backed Securities (4) | 1,450,868 | 9,366 | 2.60 | % | 1,454,343 | 9,391 | 2.60 | % | |||||||||||||
Total Securities | 2,130,446 | 18,109 | 3.42 | % | 2,131,768 | 18,099 | 3.41 | % | |||||||||||||
FHLB Stock, at cost and Other Investments | 52,952 | 185 | 1.41 | % | 55,116 | 217 | 1.58 | % | |||||||||||||
Interest Earning Deposits | 57,493 | 61 | 0.43 | % | 51,246 | 70 | 0.55 | % | |||||||||||||
Total Interest Earning Assets | 4,672,608 | 45,670 | 3.93 | % | 4,676,548 | 47,211 | 4.06 | % | |||||||||||||
NONINTEREST EARNING ASSETS: | |||||||||||||||||||||
Cash and Due From Banks | 47,079 | 55,732 | |||||||||||||||||||
Bank Premises and Equipment | 107,842 | 107,941 | |||||||||||||||||||
Other Assets | 270,141 | 262,081 | |||||||||||||||||||
Less: Allowance for Loan Losses | (22,377 | ) | (20,088 | ) | |||||||||||||||||
Total Assets | $ | 5,075,293 | $ | 5,082,214 | |||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||||
INTEREST BEARING LIABILITIES: | |||||||||||||||||||||
Savings Deposits | $ | 244,639 | 68 | 0.11 | % | $ | 235,492 | 65 | 0.11 | % | |||||||||||
Time Deposits | 976,600 | 1,927 | 0.79 | % | 915,316 | 1,723 | 0.76 | % | |||||||||||||
Interest Bearing Demand Deposits | 1,727,431 | 1,520 | 0.35 | % | 1,717,717 | 1,468 | 0.34 | % | |||||||||||||
Total Interest Bearing Deposits | 2,948,670 | 3,515 | 0.48 | % | 2,868,525 | 3,256 | 0.46 | % | |||||||||||||
Short-term Interest Bearing Liabilities | 385,858 | 906 | 0.94 | % | 413,985 | 696 | 0.68 | % | |||||||||||||
Long-term Interest Bearing Liabilities – FHLB Dallas | 492,296 | 1,874 | 1.53 | % | 566,825 | 2,039 | 1.45 | % | |||||||||||||
Long-term Debt (5) | 60,233 | 416 | 2.78 | % | 60,232 | 405 | 2.70 | % | |||||||||||||
Total Interest Bearing Liabilities | 3,887,057 | 6,711 | 0.69 | % | 3,909,567 | 6,396 | 0.66 | % | |||||||||||||
NONINTEREST BEARING LIABILITIES: | |||||||||||||||||||||
Demand Deposits | 682,360 | 672,865 | |||||||||||||||||||
Other Liabilities | 43,360 | 45,390 | |||||||||||||||||||
Total Liabilities | 4,612,777 | 4,627,822 | |||||||||||||||||||
SHAREHOLDERS’ EQUITY | 462,516 | 454,392 | |||||||||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 5,075,293 | $ | 5,082,214 | |||||||||||||||||
NET INTEREST INCOME | $ | 38,959 | $ | 40,815 | |||||||||||||||||
NET INTEREST MARGIN ON AVERAGE EARNING ASSETS | 3.35 | % | 3.51 | % | |||||||||||||||||
NET INTEREST SPREAD | 3.24 | % | 3.40 | % | |||||||||||||||||
(1) | Interest on loans includes net fees on loans that are not material in amount. |
(2) | Interest income includes taxable-equivalent adjustments of $1,082 and $1,060 for the three months ended June 30, 2016 and March 31, 2016, respectively. See “Non-GAAP Financial Measures.” |
(3) | Interest income includes taxable-equivalent adjustments of $3,499 and $3,139 for the three months ended June 30, 2016 and March 31, 2016, respectively. See “Non-GAAP Financial Measures.” |
(4) | For the purpose of calculating the average yield, the average balance of securities is presented at historical cost. |
(5) | Represents issuance of junior subordinated debentures. In connection with the adoption of ASU 2015-03 that requires unamortized debt issuance costs related to a recognized debt liability be presented as a direct deduction from the carrying amount of that debt liability, our average balance sheets for the three months ended June 30, 2016 and March 31, 2016 reflect a decrease in long-term debt of $78,000 and $79,000, respectively. |
Note: As of June 30, 2016 and March 31, 2016, loans on nonaccrual status totaled $11,767 and $21,927, respectively. Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.
Three Months Ended | ||||||||||
December 31, 2015 | ||||||||||
AVG | ||||||||||
AVG | YIELD/ | |||||||||
BALANCE | INTEREST | RATE | ||||||||
ASSETS | ||||||||||
INTEREST EARNING ASSETS: | ||||||||||
Loans (1) (2) | $ | 2,318,162 | $ | 25,865 | 4.43 | % | ||||
Loans Held For Sale | 2,740 | 30 | 4.34 | % | ||||||
Securities: | ||||||||||
Investment Securities (Taxable) (4) | 81,344 | 416 | 2.03 | % | ||||||
Investment Securities (Tax-Exempt) (3) (4) | 637,993 | 8,645 | 5.38 | % | ||||||
Mortgage-backed Securities (4) | 1,493,020 | 9,215 | 2.45 | % | ||||||
Total Securities | 2,212,357 | 18,276 | 3.28 | % | ||||||
FHLB Stock, at cost and Other Investments | 53,643 | 75 | 0.55 | % | ||||||
Interest Earning Deposits | 34,147 | 23 | 0.27 | % | ||||||
Total Interest Earning Assets | 4,621,049 | 44,269 | 3.80 | % | ||||||
NONINTEREST EARNING ASSETS: | ||||||||||
Cash and Due From Banks | 53,267 | |||||||||
Bank Premises and Equipment | 108,812 | |||||||||
Other Assets | 258,837 | |||||||||
Less: Allowance for Loan Losses | (18,720 | ) | ||||||||
Total Assets | $ | 5,023,245 | ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
INTEREST BEARING LIABILITIES: | ||||||||||
Savings Deposits | $ | 232,561 | 61 | 0.10 | % | |||||
Time Deposits | 833,141 | 1,477 | 0.70 | % | ||||||
Interest Bearing Demand Deposits | 1,594,109 | 1,117 | 0.28 | % | ||||||
Total Interest Bearing Deposits | 2,659,811 | 2,655 | 0.40 | % | ||||||
Short-term Interest Bearing Liabilities | 630,998 | 600 | 0.38 | % | ||||||
Long-term Interest Bearing Liabilities – FHLB Dallas | 490,396 | 1,638 | 1.33 | % | ||||||
Long-term Debt (5) | 60,231 | 374 | 2.46 | % | ||||||
Total Interest Bearing Liabilities | 3,841,436 | 5,267 | 0.54 | % | ||||||
NONINTEREST BEARING LIABILITIES: | ||||||||||
Demand Deposits | 686,574 | |||||||||
Other Liabilities | 47,155 | |||||||||
Total Liabilities | 4,575,165 | |||||||||
SHAREHOLDERS’ EQUITY | 448,080 | |||||||||
Total Liabilities and Shareholders’ Equity | $ | 5,023,245 | ||||||||
NET INTEREST INCOME | $ | 39,002 | ||||||||
NET INTEREST MARGIN ON AVERAGE EARNING ASSETS | 3.35 | % | ||||||||
NET INTEREST SPREAD | 3.26 | % | ||||||||
(1) | Interest on loans includes net fees on loans that are not material in amount. |
(2) | Interest income includes taxable-equivalent adjustment of $1,068 for the three months ended December 31, 2015. See “Non-GAAP Financial Measures.” |
(3) | Interest income includes taxable-equivalent adjustment of $3,237 for the three months ended December 31, 2015. See “Non-GAAP Financial Measures.” |
(4) | For the purpose of calculating the average yield, the average balance of securities is presented at historical cost. |
(5) | Represents issuance of junior subordinated debentures. In connection with the adoption of ASU 2015-03 that requires unamortized debt issuance costs related to a recognized debt liability be presented as a direct deduction from the carrying amount of that debt liability, our average balance sheet for the three months ended December 31, 2015 reflects a decrease in long-term debt of $80,000. |
Note: As of December 31, 2015, loans on nonaccrual status totaled $20,526. Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.
AVERAGE BALANCES WITH AVERAGE YIELDS AND RATES | |||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
Years Ended | |||||||||||||||||||||
December 31, 2016 | December 31, 2015 | ||||||||||||||||||||
AVG | AVG | ||||||||||||||||||||
AVG | YIELD/ | AVG | YIELD/ | ||||||||||||||||||
BALANCE | INTEREST | RATE | BALANCE | INTEREST | RATE | ||||||||||||||||
ASSETS | |||||||||||||||||||||
INTEREST EARNING ASSETS: | |||||||||||||||||||||
Loans (1) (2) | $ | 2,452,803 | $ | 110,653 | 4.51 | % | $ | 2,224,401 | $ | 100,471 | 4.52 | % | |||||||||
Loans Held For Sale | 5,036 | 162 | 3.22 | % | 3,439 | 155 | 4.51 | % | |||||||||||||
Securities: | |||||||||||||||||||||
Investment Securities (Taxable) (4) | 60,145 | 1,057 | 1.76 | % | 75,977 | 1,587 | 2.09 | % | |||||||||||||
Investment Securities (Tax-Exempt) (3) (4) | 699,472 | 36,393 | 5.20 | % | 637,333 | 34,981 | 5.49 | % | |||||||||||||
Mortgage-backed Securities (4) | 1,479,528 | 37,450 | 2.53 | % | 1,432,087 | 33,661 | 2.35 | % | |||||||||||||
Total Securities | 2,239,145 | 74,900 | 3.35 | % | 2,145,397 | 70,229 | 3.27 | % | |||||||||||||
FHLB Stock, at cost and Other Investments | 56,071 | 798 | 1.42 | % | 46,584 | 298 | 0.64 | % | |||||||||||||
Interest Earning Deposits | 75,339 | 385 | 0.51 | % | 39,533 | 101 | 0.26 | % | |||||||||||||
Federal Funds Sold | 747 | 5 | 0.67 | % | — | — | — | ||||||||||||||
Total Interest Earning Assets | 4,829,141 | 186,903 | 3.87 | % | 4,459,354 | 171,254 | 3.84 | % | |||||||||||||
NONINTEREST EARNING ASSETS: | |||||||||||||||||||||
Cash and Due From Banks | 51,160 | 52,400 | |||||||||||||||||||
Bank Premises and Equipment | 107,402 | 110,704 | |||||||||||||||||||
Other Assets | 265,876 | 265,769 | |||||||||||||||||||
Less: Allowance for Loan Losses | (18,465 | ) | (16,621 | ) | |||||||||||||||||
Total Assets | $ | 5,235,114 | $ | 4,871,606 | |||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||||
INTEREST BEARING LIABILITIES: | |||||||||||||||||||||
Savings Deposits | $ | 244,826 | 280 | 0.11 | % | $ | 232,385 | 233 | 0.10 | % | |||||||||||
Time Deposits | 941,716 | 7,984 | 0.85 | % | 845,882 | 5,512 | 0.65 | % | |||||||||||||
Interest Bearing Demand Deposits | 1,681,422 | 5,991 | 0.36 | % | 1,648,416 | 4,417 | 0.27 | % | |||||||||||||
Total Interest Bearing Deposits | 2,867,964 | 14,255 | 0.50 | % | 2,726,683 | 10,162 | 0.37 | % | |||||||||||||
Short-term Interest Bearing Liabilities | 570,269 | 4,152 | 0.73 | % | 384,694 | 1,250 | 0.32 | % | |||||||||||||
Long-term Interest Bearing Liabilities – FHLB Dallas | 497,160 | 7,607 | 1.53 | % | 540,600 | 6,987 | 1.29 | % | |||||||||||||
Subordinated Notes (5) | 27,860 | 1,628 | 5.84 | % | — | — | — | ||||||||||||||
Long-term Debt (6) | 60,233 | 1,706 | 2.83 | % | 60,229 | 1,455 | 2.42 | % | |||||||||||||
Total Interest Bearing Liabilities | 4,023,486 | 29,348 | 0.73 | % | 3,712,206 | 19,854 | 0.53 | % | |||||||||||||
NONINTEREST BEARING LIABILITIES: | |||||||||||||||||||||
Demand Deposits | 693,929 | 679,346 | |||||||||||||||||||
Other Liabilities | 49,275 | 41,627 | |||||||||||||||||||
Total Liabilities | 4,766,690 | 4,433,179 | |||||||||||||||||||
SHAREHOLDERS’ EQUITY | 468,424 | 438,427 | |||||||||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 5,235,114 | $ | 4,871,606 | |||||||||||||||||
NET INTEREST INCOME | $ | 157,555 | $ | 151,400 | |||||||||||||||||
NET INTEREST MARGIN ON AVERAGE EARNING ASSETS | 3.26 | % | 3.40 | % | |||||||||||||||||
NET INTEREST SPREAD | 3.14 | % | 3.31 | % | |||||||||||||||||
(1) | Interest on loans includes net fees on loans that are not material in amount. |
(2) | Interest income includes taxable-equivalent adjustments of $4,251 and $4,209 for the years ended December 31, 2016 and 2015, respectively. See “Non-GAAP Financial Measures.” |
(3) | Interest income includes taxable-equivalent adjustments of $13,739 and $12,513 for the years ended December 31, 2016 and 2015, respectively. See “Non-GAAP Financial Measures.” |
(4) | For the purpose of calculating the average yield, the average balance of securities is presented at historical cost. |
(5) | The unamortized debt issuance costs deducted from the carrying amount of the subordinated notes totaled approximately $555,000 for the year ended December 31, 2016. |
(6) | Represents issuance of junior subordinated debentures. In connection with the adoption of ASU 2015-03 that requires unamortized debt issuance costs related to a recognized debt liability be presented as a direct deduction from the carrying amount of that debt liability, our average balance sheets for the years ended December 31, 2016 and 2015 reflect a decrease in long-term debt of $77,000 and $82,000, respectively. |
Note: As of December 31, 2016 and 2015, loans on nonaccrual status totaled $8,280 and $20,526, respectively. Our policy is to reverse previously accrued but unpaid interest on nonaccrual loans; thereafter, interest income is recorded to the extent received when appropriate.