BNC BANCORP - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - FORM 8-K - BNC BANCORP	form8-kearnings.htm

Exhibit 99.1

Press Release

Source: BNC Bancorp

Contact: Richard D. Callicutt II David B. Spencer

President and CEO Senior Executive Vice President and CFO

336-869-9200 336-869-9200

BNC Bancorp Announces Earnings for First Quarter 2017

High Point, N.C., April 17, 2017 - BNC Bancorp (NASDAQ: BNCN) (“Company”), parent company for Bank of North Carolina (“Bank”), today reported financial results for the three months ended March 31, 2017. Highlights for the first quarter of 2017 include the following:


•	Net income of $14.4 million, or $0.28 per diluted share, compared to $15.7 million, or $0.31 per diluted share, for fourth quarter of 2016


◦	Return on average assets of 0.79%, compared to 0.87% for fourth quarter of 2016


◦	Return on average tangible common equity of 9.66%, compared to 10.59% for fourth quarter of 2016


•	Operating net income of $22.8 million, or $0.44 per diluted share, compared to $21.8 million, or $0.43 per diluted share, for fourth quarter of 2016


◦	Operating return on average assets of 1.25%, compared to 1.21% for fourth quarter of 2016


◦	Operating return on average tangible common equity of 14.92%, compared to 14.50% for fourth quarter of 2016


•	Originated loans at March 31, 2017 of $3.92 billion, an increase of $275.4 million compared to December 31, 2016


◦	Total portfolio loans of $5.62 billion at March 31, 2017, an increase of $165.2 million compared to December 31, 2016


◦	Loan originations of $627 million, as compared to $535 million during the fourth quarter of 2016


•	Entered into Agreement and Plan of Merger with Pinnacle Financial Partners, Inc. (“Pinnacle”)


◦	Merger has received all necessary regulatory approvals


◦	Shareholders will receive 0.5235 shares of Pinnacle’s common stock for every share of the Company’s common stock


◦	Transaction expected to close end of second quarter or beginning of third quarter 2017, subject to shareholders’ approval and other customary closing conditions

Financial Performance



		Three Months Ended
INCOME SUMMARY		Mar. 31, 2017		Dec. 31, 2016		Sept. 30, 2016		Jun. 30, 2016		Mar. 31, 2016
Interest income		(Dollars and shares in thousands)
	Interest and fees on loans	$	62,901	$	61,992	$	57,824	$	51,978	$	50,302
	Investment securities	6,949		6,974		6,910		6,202		5,965
	Other	321		305		291		228		214
Total interest income		70,171		69,271		65,025		58,408		56,481
Interest expense
	Interest on deposits	8,268		7,935		7,619		6,704		6,241
	Interest on borrowings	1,935		2,009		1,989		1,774		1,750
Total interest expense		10,203		9,944		9,608		8,478		7,991
Net interest income		59,968		59,327		55,417		49,930		48,490
	Provision for loan losses	1,222		1,455		1,865		698		647
Net interest income		58,746		57,872		53,552		49,232		47,843
Non-interest income
	Mortgage lending income	2,221		2,830		3,134		2,671		2,681
	Service charges	2,874		2,937		2,644		2,422		2,321
	Trust/wealth income	1,641		1,086		307		366		436
	Insurance income	1,074		562		—		—		—
	SBA income	495		579		739		1,104		811
	Securities gains (losses)	—		6		34		4		(39		)
	Earnings on bank-owned life insurance	1,453		1,360		1,254		1,160		758
	Other	4,708		2,336		1,699		1,288		994
Total non-interest income		14,466		11,696		9,811		9,015		7,962
Non-interest expense
	Salaries and employee benefits	21,277		20,922		18,491		18,019		17,803
	Occupancy	3,327		3,622		3,154		3,155		3,252
	Furniture and equipment	2,457		2,303		2,297		1,993		2,073
	Data processing and supply	2,067		1,805		1,766		1,491		1,437
	Advertising and business development	879		869		678		923		684
	Insurance, professional and other services	1,540		1,309		1,424		1,494		1,526
	FDIC insurance assessments	766		1,240		1,071		900		900
	Loan, foreclosure and OREO	1,939		1,233		1,562		856		1,367
	Transaction-related expenses	13,294		9,121		2,568		3,808		1,434
	Loss on extinguishment of debt	—		598		—		—		—
	Other	5,252		4,543		4,824		4,201		4,410
Total non-interest expenses		52,798		47,565		37,835		36,840		34,886
Income before income tax expense		20,414		22,003		25,528		21,407		20,919
Income tax expense		5,983		6,312		7,388		6,760		6,484
Net income (GAAP)		14,431		15,691		18,140		14,647		14,435
	Securities gains (losses), net of tax	—		4		21		4		(25		)
	Transaction-related charges, net of tax	8,375		5,746		1,618		2,399		903
	Loss on extinguishment of debt, net of tax	—		377		—		—		—
Operating net income (non-GAAP)		$	22,806	$	21,810	$	19,736	$	17,042	$	15,363

Common shares outstanding		52,222		52,177		48,110		45,201		40,806
Weighted average diluted shares outstanding		52,357		50,852		47,360		41,560		40,885

Performance Ratios



	Three Months Ended
	Mar. 31, 2017			Dec. 31, 2016			Sept. 30, 2016			Jun. 30, 2016			Mar. 31, 2016
Earnings per diluted share	$	0.28		$	0.31		$	0.38		$	0.35		$	0.35
Return on average assets	0.79		%	0.87		%	1.10		%	1.00		%	1.03		%
Return on average common equity	6.46		%	7.22		%	9.40		%	9.43		%	9.72		%
Return on average tangible common equity (1)	9.66		%	10.59		%	13.37		%	13.29		%	13.71		%
Efficiency ratio (2)	68.86		%	65.02		%	56.09		%	60.51		%	59.78		%

Operating earnings per diluted share (1)	$	0.44		$	0.43		$	0.42		$	0.41		$	0.38
Operating return on average assets (1)	1.25		%	1.21		%	1.20		%	1.16		%	1.10		%
Operating return on average tangible common equity (1)	14.92		%	14.50		%	14.50		%	15.36		%	14.55		%
Operating efficiency ratio (1) (2)	51.53		%	51.74		%	52.31		%	54.26		%	57.28		%

Book value per common share	$	17.55		$	17.29		$	16.53		$	15.86		$	14.79
Tangible book value per common share (1)	12.59			12.29			12.21			11.28			11.07

(1) See Reconciliation of Non-GAAP Financial Measures for additional details.

(2) Calculated on a fully-taxable equivalent (“FTE”) basis.

Other Selected Financial Data



	Three Months Ended
	Mar. 31, 2017		Dec. 31, 2016		Sept. 30, 2016		Jun. 30, 2016		Mar. 31, 2016
	(Dollars in thousands)
Securities gains (losses), net	$	—	$	6	$	34	$	4	$	(39	)
Loss on extinguishment of debt	—		598		—		—		—
Fair value accretion	6,269		5,841		5,845		5,276		5,505
OREO valuation adjustments, net	40		503		274		222		266
Transaction-related expenses	13,294		9,121		2,568		3,808		1,434

Richard D. Callicutt, II, President and CEO, stated, “We are extremely pleased to report record operating results for the first quarter of 2017. During the quarter, after adjusting for all the transaction-related expenses, operating earnings increased a healthy 48.4% from year ago levels, while operating earnings per share increased 15.8% to $0.44. Operating return on average assets was a healthy 1.25%, up slightly from the prior quarter, while operating return on average tangible common equity increased slightly to 14.92%.

As you are aware, during the quarter we announced a strategic partnership with Pinnacle Financial Partners headquartered in Nashville, Tennessee. We believe this partnership will create one of the highest performing regional banks in the U.S., and reward both sets of shareholders as we implement the best of each company across one of the most geographically appealing footprints in our industry. To date we have received all necessary regulatory approvals providing further evidence of the good-standing and financial health of both companies. Since the announcement, the level of mutual respect and collaboration between the functional leaders of our two companies has been exceptional, and provides additional confidence that the integration efforts will result in a smooth transition for our customers and communities.

On a personal note, myself and nine others from our organization recently spent three days in Nashville going through a new associate orientation led by Terry Turner, the Pinnacle CEO, and supported by his executive team. After this experience, I am more confident than ever that our decision to join with Pinnacle was clearly the correct decision for our organization. It also made it obviously apparent why Pinnacle consistently is voted as one of the Best Places to Work in the US, as well as one of the most trustworthy and easiest places to do business.”

Non-interest Income and Expense Data



		Three Months Ended
		Mar. 31, 2017		Dec. 31, 2016		Sept. 30, 2016		Jun. 30, 2016		Mar. 31, 2016
Non-interest income		(Dollars in thousands)
	Mortgage lending income	$	2,221	$	2,830	$	3,134	$	2,671	$	2,681
	Service charges	2,874		2,937		2,644		2,422		2,321
	Trust/wealth income	1,641		1,086		307		366		436
	Insurance income	1,074		562		—		—		—
	SBA income	495		579		739		1,104		811
	Earnings on bank-owned life insurance	1,453		1,360		1,254		1,160		758
	Other	4,708		2,336		1,699		1,288		994
Total operating non-interest income - non-GAAP		14,466		11,690		9,777		9,011		8,001
	Securities gains (losses), net	—		6		34		4		(39		)
Total non-interest income - GAAP		$	14,466	$	11,696	$	9,811	$	9,015	$	7,962

Non-interest expense
	Salaries and employee benefits	$	21,277	$	20,922	$	18,491	$	18,019	$	17,803
	Occupancy	3,327		3,622		3,154		3,155		3,252
	Furniture and equipment	2,457		2,303		2,297		1,993		2,073
	Data processing and supply	2,067		1,805		1,766		1,491		1,437
	Advertising and business development	879		869		678		923		684
	Insurance, professional and other services	1,540		1,309		1,424		1,494		1,526
	FDIC insurance assessments	766		1,240		1,071		900		900
	Loan, foreclosure and OREO	1,939		1,233		1,562		856		1,367
	Other	5,252		4,543		4,824		4,201		4,410
Total operating non-interest expense - non-GAAP		39,504		37,846		35,267		33,032		33,452
	Transaction-related expenses	13,294		9,121		2,568		3,808		1,434
	Loss on extinguishment of debt	—		598		—		—		—
Total non-interest expense - GAAP		$	52,798	$	47,565	$	37,835	$	36,840	$	34,886

Total GAAP and operating non-interest income was $14.5 million for the first quarter of 2017, an increase from $11.7 million for the fourth quarter of 2016. The increase in non-interest income was primarily due increased income from trust/wealth services and insurance services, which were slightly offset by a seasonal decrease in mortgage lending income. The Company also recorded an increase in recoveries on previously charged-off acquired loans. Certain sources of our non-interest income are volatile and can vary significantly from period to period.

Total GAAP non-interest expense was $52.8 million for the first quarter of 2017, an increase from $47.6 million for the fourth quarter of 2016. The results for the first quarter of 2017 include $13.3 million of transaction-related expenses, compared to $9.1 million recorded during the fourth quarter of 2016. Excluding non-core charges, operating non-interest expense for the first quarter of 2017 was $39.5 million, an increase compared to $37.8 million for the fourth quarter of 2016. This increase was due to the full quarter impact of the additional headcount and facilities obtained from the High Point Bank Corporation (“High Point”) acquisition during the fourth quarter of 2016, as well as $0.5 million of losses on the sale of other real estate owned (“OREO”), compared to $0.4 million of gain on sale of OREO during the fourth quarter of 2016.

Selected Balance Sheet Data



	Ending Balance
	Mar. 31, 2017			Dec. 31, 2016			Sept. 30, 2016			Jun. 30, 2016			Mar. 31, 2016
Portfolio loans:	(Dollars in thousands)
Originated loans	$	3,921,065		$	3,645,687		$	3,455,677		$	3,163,357		$	2,847,466
Acquired loans	1,699,802			1,810,023			1,540,270			1,649,328			1,390,688
Allowance for loan and lease losses	(39,365		)	(37,501		)	(36,366		)	(33,841		)	(32,548		)
Portfolio loans, net	5,581,502			5,418,209			4,959,581			4,778,844			4,205,606
Loans held for sale	23,453			43,731			40,441			41,703			33,455
Investment securities	893,000			896,786			838,289			803,058			757,248
Total interest-earning assets	6,762,077			6,589,774			6,128,554			5,790,893			5,126,452
Goodwill	234,769			234,769			189,968			188,220			134,686
Other intangible assets, net	24,372			25,911			17,852			19,014			17,143
Total assets	7,575,342			7,401,691			6,801,562			6,478,373			5,699,573

Deposits:
Non-interest bearing deposits	1,191,024			1,113,878			917,521			889,254			794,548
Interest-bearing demand and savings	3,527,613			3,405,036			3,080,479			2,652,735			2,431,584
Time deposits	1,597,254			1,564,063			1,652,123			1,814,654			1,537,644
Total deposits	6,315,891			6,082,977			5,650,123			5,356,643			4,763,776
Borrowings	287,516			369,952			310,609			352,119			282,929
Total interest-bearing liabilities	5,412,383			5,339,051			5,043,211			4,819,508			4,252,157
Shareholders' equity:
Common equity	913,180			900,044			786,625			710,300			598,158
Accumulated other comprehensive income	3,458			1,838			8,587			6,761			5,395
Total shareholders' equity	916,638			901,882			795,212			717,061			603,553

Total assets at March 31, 2017 were $7.58 billion, an increase of 2.4% as compared to total assets of $7.40 billion at December 31, 2016. Total portfolio loans were $5.62 billion at March 31, 2017, an increase of 3.0% from $5.46 billion at December 31, 2016. Loans that were originated by the Company increased by $275.4 million, or 7.6%, during the first quarter of 2017.

Total deposits were $6.32 billion at March 31, 2017, an increase of $232.9 million, or 3.8%, as compared to December 31, 2016. While the majority of the increase was in core deposits, the Company increased wholesale funding and used the proceeds to repay short-term debt during the first quarter of 2017. Wholesale deposits comprised 21.3% of total deposits at March 31, 2017, which is consistent with the funding mix as of December 31, 2016. Total borrowings were $287.5 million at March 31, 2017, a decrease of 22.3% compared to $370.0 million at December 31, 2016. Total shareholders’ equity was $916.6 million at March 31, 2017, an increase compared to $901.9 million at December 31, 2016. At March 31, 2017, both the Bank's and Company's capital ratios exceeded the minimum thresholds established for a well-capitalized bank by regulatory measures.

Loan Portfolio Composition



	Ending Balance
	Mar. 31, 2017		Dec. 31, 2016		Sept. 30, 2016		Jun. 30, 2016		Mar. 31, 2016
	(Dollars in millions)
Residential construction	$	125	$	115	$	104	$	98	$	76
Presold	67		58		62		59		39
Speculative	58		57		42		39		37

Commercial construction	467		401		285		294		278
Residential and commercial A&D	51		42		39		33		23

Land	117		120		118		126		118
Residential buildable lots	51		51		44		44		39
Commercial buildable lots	22		23		24		24		21
Land held for development	23		26		23		31		34
Raw and agricultural land	21		20		27		27		24

Commercial real estate	2,964		2,917		2,705		2,500		2,257
Multi-family	223		213		240		203		179
Farmland	4		3		3		4		4
Owner occupied	874		884		787		817		705
Non-owner occupied	1,863		1,817		1,675		1,476		1,369

Commercial and industrial	512		482		443		454		400
Residential mortgage	1,330		1,326		1,251		1,258		1,039
Consumer	24		24		22		21		18
Leases	31		29		29		29		29
Total portfolio loans	$	5,621	$	5,456	$	4,996	$	4,813	$	4,238

Acquired Loan Summary



	Mar. 31, 2017			Dec. 31, 2016			Sept. 30, 2016			Jun. 30, 2016			Mar. 31, 2016
	(Dollars in thousands)
Performing acquired loans	$	1,602,124		$	1,710,008		$	1,432,351		$	1,537,650		$	1,278,965
Less: remaining FMV adjustments	(23,864		)	(27,846		)	(21,687		)	(25,630		)	(23,359		)
Performing acquired loans, net	1,578,260			1,682,162			1,410,664			1,512,020			1,255,606
FMV adjustment %	1.5		%	1.6		%	1.5		%	1.7		%	1.8		%

Purchase credit impaired loans (PCI)	134,897			143,530			143,494			152,105			148,459
Less: remaining FMV adjustments	(13,355		)	(15,669		)	(13,888		)	(14,797		)	(13,377		)
PCI loans, net	121,542			127,861			129,606			137,308			135,082
FMV adjustment %	9.9		%	10.9		%	9.7		%	9.7		%	9.0		%

Total acquired performing loans	1,578,260			1,682,162			1,410,664			1,512,020			1,255,606
Total acquired PCI loans	121,542			127,861			129,606			137,308			135,082
Total acquired loans	$	1,699,802		$	1,810,023		$	1,540,270		$	1,649,328		$	1,390,688
FMV adjustment % all acquired loans	2.2		%	2.3		%	2.3		%	2.4		%	2.6		%

Asset Quality



	Ending Balance
	Mar. 31, 2017			Dec. 31, 2016			Sept. 30, 2016			Jun. 30, 2016			Mar. 31, 2016
	(Dollars in thousands)
Nonaccrual loans - non-acquired	$	9,315		$	6,647		$	7,662		$	5,407		$	6,228
Nonaccrual loans - acquired	9,464			7,989			9,347			11,756			12,706
OREO - non-acquired	12,397			13,109			13,352			15,806			14,987
OREO - acquired	12,587			13,380			14,696			14,708			15,783
90 days past due - non-acquired	—			115			10			10			—
90 days past due - acquired	—			—			—			—			—
Total nonperforming assets	$	43,763		$	41,240		$	45,067		$	47,687		$	49,704

Total nonperforming assets - non-acquired	$	21,712		$	19,871		$	21,024		$	21,223		$	21,215

Net charge-offs (recoveries), QTD	$	(642	)	$	320		$	(660	)	$	(594	)	$	(202	)
Annualized net charge-offs (recoveries) to total average portfolio loans	(0.05		)%	0.02		%	(0.05		)%	(0.05		)%	(0.02		)%

Ratio of total nonperforming assets to total assets	0.58		%	0.56		%	0.66		%	0.74		%	0.87		%
Ratio of total nonperforming loans to total portfolio loans	0.33		%	0.27		%	0.34		%	0.36		%	0.45		%
Ratio of total allowance for loan losses to total portfolio loans	0.70		%	0.69		%	0.73		%	0.70		%	0.77		%

Excluding acquired
Ratio of nonperforming assets to loans and OREO	0.55		%	0.54		%	0.61		%	0.67		%	0.74		%
Ratio of nonperforming loans to loans	0.24		%	0.19		%	0.22		%	0.17		%	0.22		%
Ratio of allowance for loan losses to loans	0.93		%	0.95		%	0.97		%	0.98		%	1.03		%

Total nonperforming assets at March 31, 2017 were $43.8 million, or 0.58% of total assets, as compared to $41.2 million, or 0.56% of total assets, at December 31, 2016. Excluding nonperforming assets acquired by the Company, nonperforming assets were $21.7 million, or 0.55% of non-acquired loans and OREO, at March 31, 2017, as compared to $19.9 million, or 0.54% of non-acquired loans and OREO, at December 31, 2016. Non-accrual loans increased from $14.6 million at December 31, 2016 to $18.8 million at March 31, 2017, which was primarily due to a larger quantity of smaller dollar loans being reclassified to non-accrual.

The Company experienced $0.6 million of net recoveries during the first quarter of 2017, compared to net charge-offs of $0.3 million during the fourth quarter of 2016. Gross charge-offs were $0.4 million during the first quarter of 2017, a decrease compared to gross charge-offs of $1.2 million during the fourth quarter of 2016.

The allowance for loan losses was $39.4 million at March 31, 2017, an increase from $37.5 million at December 31, 2016. The Company recorded a provision for loan losses of $1.2 million during the first quarter of 2017, compared to $1.5 million recorded during the fourth quarter of 2016, as the Company continues to experience strong growth in the originated loan portfolio.

Net Interest Income and Margin



	Three Months Ended
	Mar. 31, 2017			Dec. 31, 2016			Sept. 30, 2016			Jun. 30, 2016			Mar. 31, 2016
Quarterly average balances:	(Dollars in thousands)
Loans	$	5,576,676		$	5,410,066		$	4,893,926		$	4,437,248		$	4,241,970
Investment securities	892,091			835,235			828,144			760,841			737,361
Interest-bearing balances and other	153,225			181,678			147,763			134,923			139,367
Total interest-earning assets	6,621,992			6,426,979			5,869,833			5,333,012			5,118,698
Deposits:
Non-interest bearing	1,126,691			1,056,507			907,344			825,148			778,114
Interest-bearing	5,005,002			4,862,443			4,475,901			4,138,466			3,953,668
Total deposits	6,131,693			5,918,950			5,383,245			4,963,614			4,731,782
Borrowed funds	302,798			315,828			321,218			272,374			262,880
Total interest-bearing liabilities	5,307,800			5,178,271			4,797,119			4,410,840			4,216,548
Shareholders' equity	905,594			864,656			768,124			625,021			597,127

Interest Income/Expense:
Loans	$	62,901		$	61,992		$	57,824		$	51,978		$	50,302
Investment securities, tax	3,144			3,352			3,113			2,908			2,720
Investment securities, non-tax (1)	6,040			5,749			6,027			5,229			5,151
Interest-bearing balances and other	321			305			291			228			214
Total interest income (1)	72,406			71,398			67,255			60,343			58,387
Deposits	8,268			7,935			7,619			6,704			6,241
Borrowings	1,935			2,009			1,989			1,774			1,750
Total interest expense	10,203			9,944			9,608			8,478			7,991
Net interest income (1)	62,203			61,454			57,647			51,865			50,396

Average Yields and Costs:
Loans	4.57		%	4.56		%	4.70		%	4.71		%	4.77		%
Investment securities, tax	3.01		%	2.96		%	2.93		%	3.01		%	2.94		%
Investment securities, non-tax (1)	5.16		%	5.11		%	5.91		%	5.65		%	5.68		%
Interest-bearing balances and other	0.85		%	0.67		%	0.78		%	0.68		%	0.62		%
Total interest-earning assets (1)	4.43		%	4.42		%	4.56		%	4.55		%	4.59		%
Total interest-bearing deposits	0.67		%	0.65		%	0.68		%	0.65		%	0.63		%
Borrowed funds	2.59		%	2.53		%	2.46		%	2.62		%	2.68		%
Total interest-bearing liabilities	0.78		%	0.76		%	0.80		%	0.77		%	0.76		%
Cost of funds	0.64		%	0.63		%	0.67		%	0.65		%	0.64		%
Net interest margin (1)	3.81		%	3.80		%	3.91		%	3.91		%	3.96		%

(1) Calculated on a FTE basis.

FTE net interest income for the first quarter of 2017 was $62.2 million, an increase from $61.5 million for the fourth quarter of 2016. FTE net interest margin was 3.81% for the first quarter of 2017, a slight increase compared to 3.80% for the fourth quarter of 2016. The average yield on interest-earning assets increased one basis point to 4.43% for the first quarter of 2017, while the rate paid on interest-bearing liabilities increased by two basis points to 0.67%. Accretion earned on the Company’s acquired loan portfolio was $6.3 million during the first quarter of 2017, an increase compared to $5.8 million recorded during the fourth quarter of 2016. Excluding accretion, the average yield on loans was 4.12% for the first quarter of 2017, as compared to 4.13% for the fourth quarter of 2016.

Average interest-earning assets for the first quarter of 2017 were $6.62 billion, an increase from $6.43 billion for the fourth quarter of 2016. The increase was primarily due to the full quarter impact of the acquisition of High Point, as well as continued organic loan growth throughout our existing markets. Average interest-bearing liabilities were $5.31 billion for the first quarter of 2017, an increase from $5.18 billion during the fourth quarter of 2016. This increase was primarily in interest-bearing deposits, which increased $142.6 million during the first quarter of 2017.

About BNC Bancorp and Bank of North Carolina

Headquartered in High Point, North Carolina, BNC Bancorp is the parent company of Bank of North Carolina d/b/a BNC Bank, a commercial bank with total assets of $7.58 billion. Bank of North Carolina provides a complete line of banking and financial services to individuals and businesses through its 76 current banking offices in Virginia, North and South Carolina. Bank of North Carolina is insured by the FDIC and is an equal housing lender. BNC Bancorp’s stock is traded and quoted in the Nasdaq Capital Market under the symbol "BNCN." The Company’s website is www.bncbancorp.com.

Non-GAAP Financial Measures

This press release contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States. BNC Bancorp's management uses these "non-GAAP" financial measures in its analysis of the Company's performance. Management believes that these non-GAAP financial measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods as well as demonstrating the effects of significant gains and charges in the current period. 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. See the attached tabular disclosures for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measure.

Forward Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections and statements of our beliefs concerning future events, business plans, objectives, expected operating results and the assumptions upon which those statements are based. Forward-looking statements include without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and are typically identified with words such as “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “project,” “expect,” “intend,” “plan,” or words or phases of similar meaning. Forward-looking statements may include, among other things, statements about the Company’s confidence in its strategies and its expectations about financial performance, market growth, market and regulatory trends and developments, acquisitions and divestitures, new technologies, services and opportunities and earnings. The forward-looking statements are based largely on the Company’s expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond the Company’s control. The Company undertakes no obligation to publicly update any forward-looking statement to reflect developments occurring after the statement is made, except as otherwise required by law. Actual results, performance or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements as a result of, among other factors, the risks and uncertainties described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. Please refer to the SEC’s website at www.sec.gov where you can review this document.

Reconciliation of Non-GAAP Financial Measures



	Three Months Ended
	Mar. 31, 2017			Dec. 31, 2016			Sept. 30, 2016			Jun. 30, 2016			Mar. 31, 2016
Operating Earnings per Share, Diluted (1)	(Dollars in thousands)
Net income (GAAP)	$	14,431		$	15,691		$	18,140		$	14,647		$	14,435
Transaction-related expenses, net of tax	8,375			5,746			1,618			2,399			903
Loss on extinguishment of debt, net of tax	—			377			—			—			—
Securities gains (losses), net of tax	—			4			21			4			(25		)
Operating earnings (non-GAAP)	22,806			21,810			19,736			17,042			15,363
Weighted average fully diluted shares outstanding	52,357			50,852			47,360			41,560			40,885
Operating earnings per share, diluted (non-GAAP)	$	0.44		$	0.43		$	0.42		$	0.41		$	0.38

Tangible Common Book Value per Share (2)
Shareholders' equity (GAAP)	$	916,638		$	901,882		$	795,212		$	717,061		$	603,553
Intangible assets	259,141			260,680			207,820			207,234			151,829
Tangible common shareholders equity (non-GAAP)	657,497			641,202			587,392			509,827			451,724
Common shares outstanding	52,222			52,177			48,110			45,201			40,806
Tangible common book value per share (non-GAAP)	$	12.59		$	12.29		$	12.21		$	11.28		$	11.07

Return on Average Tangible Common Equity (2)
Net income (GAAP)	$	14,431		$	15,691		$	18,140		$	14,647		$	14,435
Amortization of intangibles, net of tax	963			888			732			748			728
Tangible net income available to common shareholders (non-GAAP)	15,394			16,579			18,872			15,395			15,163
Average common shareholders equity	905,594			864,656			768,124			625,021			597,127
Average intangible assets	259,466			241,802			206,653			159,184			152,379
Average tangible common shareholders' equity (non-GAAP)	646,128			622,854			561,471			465,837			444,748
Return on average tangible common equity (non-GAAP)	9.66		%	10.59		%	13.37		%	13.29		%	13.71		%

Operating Return on Average Assets (1)
Net income (GAAP)	$	14,431		$	15,691		$	18,140		$	14,647		$	14,435
Transaction-related expenses, net of tax	8,375			5,746			1,618			2,399			903
Loss on extinguishment of debt, net of tax	—			377			—			—			—
Securities gains (losses), net of tax	—			4			21			4			(25		)
Operating earnings (non-GAAP)	22,806			21,810			19,736			17,042			15,363
Average assets	7,391,231			7,158,393			6,532,517			5,908,341			5,635,137
Operating return on average assets (non-GAAP)	1.25		%	1.21		%	1.20		%	1.16		%	1.10		%

Operating Return on Average Tangible Common Equity (2)
Net income (GAAP)	$	14,431		$	15,691		$	18,140		$	14,647		$	14,435
Amortization of intangibles, net of tax	963			888			732			748			728
Transaction-related expenses, net of tax	8,375			5,746			1,618			2,399			903
Loss on extinguishment of debt, net of tax	—			377			—			—			—
Securities gains (losses), net of tax	—			4			21			4			(25		)
Operating tangible net income (non-GAAP)	23,769			22,698			20,468			17,790			16,091
Average common shareholders equity	905,594			864,656			768,124			625,021			597,127
Average intangible assets	259,466			241,802			206,653			159,184			152,379
Average tangible common shareholders' equity (non-GAAP)	646,128			622,854			561,471			465,837			444,748
Operating return on average tangible common equity (non-GAAP)	14.92		%	14.50		%	14.50		%	15.36		%	14.55		%



Operating Efficiency Ratio (3)
Non-interest expense (GAAP)	$	52,798		$	47,565		$	37,835		$	36,840		$	34,886
Transaction-related expenses	13,294			9,121			2,568			3,808			1,434
Loss on extinguishment of debt	—			598			—			—			—
Operating non-interest expense (non-GAAP)	39,504			37,846			35,267			33,032			33,452
Net interest income, FTE	62,203			61,454			57,647			51,865			50,396
Non-interest income - GAAP	14,466			11,696			9,811			9,015			7,962
Securities gains (losses), net	—			6			34			4			(39		)
Operating efficiency ratio (non-GAAP)	51.53		%	51.74		%	52.31		%	54.26		%	57.28		%

(1)

Operating earnings per diluted share, operating non-interest income, operating non-interest expense, operating income tax expense, operating return on average assets, and operating return on average tangible common equity are non-GAAP measures and exclude the after-tax effect of transaction-related charges, loss on extinguishment of debt, securities gains (losses) and other one-time charges. Management believes that non-GAAP operating measures provide additional useful information that allows readers to evaluate the ongoing performance of the company.


(2)	The tangible measures are non-GAAP measures and exclude the effect of period end or average balance of intangible assets. Management believes that these non-GAAP tangible measures provide additional useful information, particularly since these measures are widely used by industry analysts for companies with prior merger and acquisition activities.

(3)

Operating efficiency ratio is calculated by non-interest expense, excluding transaction-related expenses, amortization of intangible assets, and loss on extinguishment of debt, divided by the sum of FTE net interest income and non-interest income excluding securities gains (losses) and insurance settlement income. Management believes this non-GAAP operating measure provides additional useful information that allows readers to evaluate the ongoing performance of the company.

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