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EX-10.18 - EXHIBIT 10.18 - ACCESS NATIONAL CORP | a51708501ex10_18.htm |
8-K - ACCESS NATIONAL CORP. 8-K - ACCESS NATIONAL CORP | a51708501.htm |
Access National Announces Third Quarter 2017 Earnings
RESTON, Va.--(BUSINESS WIRE)--October 25, 2017--Access National Corporation (NASDAQ: ANCX) (the “Corporation” or “Access”), parent company for Access National Bank (the “Bank”) and Middleburg Investment Group, reported third quarter 2017 net income of $7.0 million, or $0.34 per diluted share. Excluding merger related one-time charges and impairment charges, net income was $8.62 million or $0.42 per diluted share. This represents the Corporation’s 69th consecutive quarterly profit over its 71 quarter history. Consistent with management’s stated objective of a 40% to 50% dividend payout ratio against core earnings, the Board of Directors declared a dividend of $0.15 per share for common shareholders of record as of November 9, 2017 and payable on November 24, 2017.
Highlights
- Strategic merger with Middleburg Financial Corporation (NASDAQ: MBRG) closed on schedule April 1, 2017 and data/office integrations completed on schedule as of August 4, 2017;
- Reported third quarter earnings of $7.0 million or $0.34 per diluted share. Excluding $993 thousand in pre-tax merger related costs ($646 thousand after-tax and $0.03 per diluted share) and $1.5 million of pre-tax impairment charges ($969 thousand after-tax and $0.05 per diluted share), earnings were $8.6 million or $0.42 per diluted share;
- Tangible book value1 per common share was $11.64 at September 30, 2017, an increase of $0.32 from the prior period after considering merger costs;
- Loans held for investment were $1.97 billion at September 30, 2017 compared to $967 million at September 30, 2016, a year-over-year growth of 204.0%. Linked quarter growth was $43.0 million or 8.9% annualized; and
- Non-interest bearing demand deposits of $711 million were 31.1% of total deposits at September 30, 2017 compared to $410 million at September 30, 2016, a year-over-year growth of 173.5%.
The transformative combination of Access National with Middleburg Financial continues on a successful progression. “While the recent quarter contained many integration related distractions, we are pleased to report meaningful organic growth in loans and core deposits that generate long-term value. The positive migration of the acquired customer base is best reflected in the deposit growth and composition. We will continue to sharpen our retail focus on the consumer market that values a relationship based approach to private banking,” said Michael Clarke, President and Chief Executive Officer of Access. He continued, “While realization of expected cost savings is choppy, we remain confident in fulfilling our objectives for 2017 and 2018 such that we meet or exceed EPS accretion estimates in 2018 and beyond.”
Third quarter 2017 pre-tax earnings were $9.4 million, up $3.5 million from second quarter 2017, and included pre-tax merger related costs of $993 thousand. The commercial banking segment’s net interest income grew $294 thousand when compared to the second quarter of 2017 while other revenues grew by $274 thousand due mainly to an increase in miscellaneous loan fees. An increase in the commercial banking segment’s other expense of $802 thousand when compared to the second quarter of 2017 was due mainly to accelerated amortization on abandoned leasehold improvements related to branch restructuring, and was complimented by a decrease in salaries and employee benefits of $906 thousand when compared to the second quarter of 2017.
The earnings and balance sheet impact of departed wealth services personnel and loss of select underpriced accounts was reflected in the current quarter’s financial results. When comparing the third quarter of 2017 to the second quarter of 2017, the wealth services segment saw a $206 thousand decrease in revenue as well as a $359 thousand decrease in salaries and employee benefits which was offset by an increase in operating expenses of $1.4 million due to a $1.5 million impairment of goodwill connected with the unprofitable operations of the legacy Access segment. While management believes the full impact from these changes is reflected in this reporting period, continued analysis of goodwill impairment will be made to determine if the complete write-off remains warranted and will make any recapture adjustments in the fourth quarter. According to Access CEO Michael Clarke, “The loss of subject wealth services personnel and related accounts enables a sharper focus of the organization on the go-forward strategy, closely aligning the marketing and delivery of wealth and banking services to a common target market. The leadership of Middleburg Investment Group and the expanded capabilities resulting from the merger are enhancing the client value proposition in a way that management expects will produce consistent and growing fee income in future periods.”
The net interest margin on a fully tax equivalent (non-GAAP) basis decreased to 3.86% from 3.97% when comparing third quarter to second quarter 2017. Third quarter net interest margin on a fully tax equivalent (non-GAAP) basis exclusive of the $1.2 million credit mark accretion for the acquired loan portfolio and the $19 thousand in liability discount amortization was 3.68% for the three months ended September 30, 2017.
Total assets were $2.9 billion at September 30, 2017, up from $2.8 billion at June 30, 2017 due mainly to growth in the interest-bearing balances of $70.3 million and loans held for investment portfolio of $40.3 million. Organic growth in loans held for investment was $42.7 million on a linked quarter basis due mainly to growth in commercial real estate.
Total deposits at September 30, 2017 were $2.3 billion, an increase of $99.0 million when compared to June 30, 2017. At September 30, 2017, non-interest bearing deposits, which represent 31.1% of the deposit portfolio, were $710.7 million, an increase of $50.2 million from the linked quarter. While non-interest bearing demand deposits remain the largest and most attractive source of funding for the Corporation, the combination of legacy Middleburg’s significant low cost interest-bearing demand deposits and legacy Access’ non-interest bearing demand deposits accounted for $1.2 billion or 52.6% of total deposits at September 30, 2017. Interest-bearing deposits totaled $1.6 billion at September 30, 2017, an increase of $48.8 million from the prior quarter. Brokered deposits as a percentage of the deposit portfolio decreased quarter over quarter, from 4.6% of the portfolio at June 30, 2017 to 3.1% at September 30, 2017. The go-forward strategy places a high priority on the maintenance and expansion of core deposits, particularly high value demand deposit relationships.
Non-performing assets (“NPAs”) decreased to $7.8 million at September 30, 2017 from $9.0 million at June 30, 2017, representing 0.27% and 0.32% of total assets, respectively. Included in the NPAs total is $2.0 million in other real estate owned. The allowance for loan loss was $15.7 million and $14.7 million at September 30, 2017 and June 30, 2017, respectively, and represented 0.80% and 0.76% of total loans held for investment at September 30, 2017 and June 30, 2017, respectively. The remaining credit and fair value marks on the loans acquired in the merger totaled $13.1 million at September 30, 2017.
Tangible book value2 per common share increased from $11.32 at June 30, 2017 to $11.64 at September 30, 2017. The tangible common equity ratio for Access National Corporation and its subsidiary bank was 8.85% at September 30, 2017, within the Corporation’s target range of 8.00% to 10.50%.
Access National Corporation is the parent company of Access National Bank and Middleburg Investment Group serving Northern and Central Virginia. Additional information is available on our website at www.AccessNationalBank.com. Shares of Access National Corporation are traded on the NASDAQ Global Market under the symbol "ANCX".
Forward-Looking Statements
The information presented herein contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 regarding expectations or predictions of future financial or business performance or conditions. Forward-looking statements may be identified by words such as "may," "could," "will," "expect," "believe," "anticipate," "forecast," "intend," "plan," "prospects," "estimate," "potential," or by variations of such words or by similar expressions. These forward-looking statements are subject to numerous assumptions, risks and uncertainties which change over time. Forward-looking statements in this report may include, but are not limited to, statements about projected impacts of and financial results generated by the merger of Access and Middleburg Financial Corporation (“Middleburg”). Forward-looking statements speak only as of the date they are made and Access assumes no duty to update forward-looking statements.
In addition to factors previously disclosed in Access's reports filed with the SEC and those identified elsewhere in this release, the following factors, among others, could cause actual results to differ materially from the results expressed in or implied by forward-looking statements and historical performance: changes in asset quality and credit risk; changes in interest rates and capital markets; the introduction, timing and success of business initiatives; competitive conditions; and the inability to recognize cost savings or revenues or to implement integration plans associated with the merger of Access and Middleburg.
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1 | Non-GAAP financial information. See “Reconciliation of Non-GAAP Financial Measures” at end of release. | |
2 | Non-GAAP financial information. See “Reconciliation of Non-GAAP Financial Measures” at end of release. | |
Access National Corporation | |||||||||||
Consolidated Balance Sheet | |||||||||||
September 30, | December 31, | September 30, | |||||||||
2017 | 2016 | 2016 | |||||||||
(In Thousands Except for Share and Per Share Data) | (Unaudited) | (Audited) | (Unaudited) | ||||||||
ASSETS | |||||||||||
Cash and due from banks | $ | 12,774 | $ | 9,186 | $ | 14,109 | |||||
Interest-bearing balances and federal funds sold | 117,159 | 81,873 | 67,801 | ||||||||
Investment securities: | |||||||||||
Available-for-sale, at fair value | 395,040 | 194,090 | 190,265 | ||||||||
Held-to-maturity, at amortized cost (fair value of $16,416, $9,293 and $9,475) | 15,778 | 9,200 | 9,214 | ||||||||
Total investment securities | 410,818 | 203,290 | 199,479 | ||||||||
Restricted Stock, at amortized cost | 14,447 | 10,092 | 6,309 | ||||||||
Loans held for sale - at fair value | 26,234 | 35,676 | 70,998 | ||||||||
Loans held for investment net of allowance for loan losses of $15,692, $16,008 and $14,696, respectively |
1,953,968 | 1,033,690 | 951,849 | ||||||||
Premises, equipment and land, net | 26,400 | 7,084 | 6,875 | ||||||||
Goodwill and intangible assets | 182,156 | 1,833 | 1,845 | ||||||||
Other assets | 129,113 | 47,984 | 43,573 | ||||||||
Total assets | $ | 2,873,069 | $ | 1,430,708 | $ | 1,362,838 | |||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||
LIABILITIES | |||||||||||
Noninterest-bearing deposits | $ | 710,691 | $ | 362,036 | $ | 409,558 | |||||
Interest-bearing demand deposits | 490,759 | 126,189 | 134,858 | ||||||||
Savings and interest-bearing deposits | 658,799 | 314,396 | 302,007 | ||||||||
Time deposits | 425,963 | 251,706 | 268,630 | ||||||||
Total deposits | 2,286,212 | 1,054,327 | 1,115,053 | ||||||||
Short-term borrowings | 79,527 | 186,009 | 41,336 | ||||||||
Long-term borrowings | 60,000 | 60,000 | 75,000 | ||||||||
Trust preferred debentures | 3,863 | - | - | ||||||||
Other liabilities and accrued expenses | 23,294 | 9,842 | 10,118 | ||||||||
Total Liabilities | 2,452,896 | 1,310,178 | 1,241,507 | ||||||||
SHAREHOLDERS' EQUITY | |||||||||||
Common stock $0.835 par value; 60,000,000 authorized; issued and outstanding, 20,449,738, 10,636,242 and 10,610,279, respectively |
17,076 | 8,881 | 8,860 | ||||||||
Additional paid in capital | 305,682 | 21,779 | 21,159 | ||||||||
Retained earnings | 98,607 | 91,439 | 90,026 | ||||||||
Accumulated other comprehensive income (loss), net | (1,192 | ) | (1,569 | ) | 1,286 | ||||||
Total shareholders' equity | 420,173 | 120,530 | 121,331 | ||||||||
Total liabilities and shareholders' equity | $ | 2,873,069 | $ | 1,430,708 | $ | 1,362,838 | |||||
Access National Corporation | ||||||||||||||||
Consolidated Statement of Operations | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | |||||||||||||
(In Thousands Except for Share and Per Share Data) | (unaudited) | (unaudited) | ||||||||||||||
INTEREST INCOME | ||||||||||||||||
Interest and fees on loans | $ | 24,306 | $ | 11,647 | $ | 60,251 | $ | 33,877 | ||||||||
Interest on federal funds sold and bank balances | 394 | 98 | 746 | 264 | ||||||||||||
Interest and dividends on securities | 2,992 | 1,033 | 7,388 | 2,954 | ||||||||||||
Total interest income | 27,692 | 12,778 | 68,385 | 37,095 | ||||||||||||
INTEREST EXPENSE | ||||||||||||||||
Interest on deposits | 2,639 | 1,349 | 6,560 | 3,774 | ||||||||||||
Interest on other borrowings | 459 | 286 | 1,366 | 867 | ||||||||||||
Total interest expense | 3,098 | 1,635 | 7,926 | 4,641 | ||||||||||||
Net interest income | 24,594 | 11,143 | 60,459 | 32,454 | ||||||||||||
Provision for loan losses | 900 | 750 | 3,200 | 870 | ||||||||||||
Net interest income after provision for loan losses | 23,694 | 10,393 | 57,259 | 31,584 | ||||||||||||
NONINTEREST INCOME | ||||||||||||||||
Service charges and fees | 560 | 249 | 1,509 | 748 | ||||||||||||
Gain on sale of loans | 5,594 | 8,316 | 14,985 | 19,419 | ||||||||||||
Other Income | 2,369 | 120 | 6,917 | 4,510 | ||||||||||||
Total noninterest income | 8,523 | 8,685 | 23,411 | 24,677 | ||||||||||||
NONINTEREST EXPENSE | ||||||||||||||||
Salaries and benefits | 11,100 | 8,208 | 31,800 | 24,283 | ||||||||||||
Occupancy and equipment | 3,019 | 768 | 5,820 | 2,278 | ||||||||||||
Other operating expense | 8,674 | 3,193 | 23,594 | 9,040 | ||||||||||||
Total noninterest expense | 22,793 | 12,169 | 61,214 | 35,601 | ||||||||||||
Income before income tax | 9,424 | 6,909 | 19,456 | 20,660 | ||||||||||||
Income tax expense | 2,422 | 2,484 | 6,001 | 7,262 | ||||||||||||
NET INCOME | 7,002 | 4,425 | 13,455 | 13,398 | ||||||||||||
Earnings per common share: | ||||||||||||||||
Basic | $ | 0.34 | $ | 0.42 | $ | 0.77 | $ | 1.27 | ||||||||
Diluted | $ | 0.34 | $ | 0.41 | $ | 0.77 | $ | 1.26 | ||||||||
Average outstanding shares: | ||||||||||||||||
Basic | 20,409,696 | 10,595,599 | 17,156,521 | 10,575,088 | ||||||||||||
Diluted | 20,508,875 | 10,689,167 | 17,273,367 | 10,644,897 | ||||||||||||
Performance and Capital Ratios | ||||||||||||||||||||||||
Three Months | Three Months | Three Months | Nine Months | Nine Months | Twelve Months | |||||||||||||||||||
Ended | Ended | Ended | Ended | Ended | Ended | |||||||||||||||||||
September 30, | June 30, | March 31, | September 30, | September 30, | December 31, | |||||||||||||||||||
(Dollars In Thousands) | 2017 | 2017 | 2017 | 2017 | 2016 | 2016 | ||||||||||||||||||
Return on average assets (annualized) | 0.96 | % | 0.55 | % | 0.74 | % | 0.75 | % | 1.41 | % | 1.27 | % | ||||||||||||
Return on average equity (annualized) | 6.69 | % | 3.73 | % | 8.57 | % | 4.72 | % | 15.56 | % | 14.11 | % | ||||||||||||
Return on average tangible equity (annualized) (1) | 11.89 | % | 6.73 | % | 8.70 | % | 6.96 | % | 15.81 | % | 14.33 | % | ||||||||||||
Net interest margin - fully tax equivalent basis (1) | 3.86 | % | 3.97 | % | 3.52 | % | 3.91 | % | 3.55 | % | 3.55 | % | ||||||||||||
Net interest margin | 3.76 | % | 3.91 | % | 3.46 | % | 3.84 | % | 3.54 | % | 3.52 | % | ||||||||||||
Efficiency ratio - Bank only | 57.56 | % | 59.23 | % | 53.26 | % | 57.41 | % | 50.48 | % | 49.59 | % | ||||||||||||
Total average equity to earning assets | 16.00 | % | 16.68 | % | 8.99 | % | 18.10 | % | 9.38 | % | 9.36 | % | ||||||||||||
Tangible common equity ratio (1) | 8.85 | % | 8.97 | % | 8.65 | % | 8.85 | % | 8.78 | % | 8.31 | % | ||||||||||||
Averages | ||||||||||||||||||||||||
Assets | $ | 2,922,105 | $ | 2,789,088 | $ | 1,401,652 | $ | 2,396,103 | $ | 1,267,482 | $ | 1,288,582 | ||||||||||||
Loans held for investment | 2,002,842 | 1,896,824 | 1,052,167 | 1,614,893 | 922,821 | 939,837 | ||||||||||||||||||
Loans held for sale | 28,734 | 28,254 | 24,461 | 27,165 | 47,935 | 47,060 | ||||||||||||||||||
Interest-bearing deposits & federal funds sold | 136,222 | 121,572 | 64,628 | 103,360 | 69,860 | 67,457 | ||||||||||||||||||
Investment securities | 437,628 | 422,792 | 209,533 | 343,360 | 184,479 | 189,585 | ||||||||||||||||||
Earning assets | 2,617,443 | 2,471,036 | 1,353,360 | 2,101,947 | 1,223,798 | 1,242,923 | ||||||||||||||||||
Interest-bearing deposits | 1,566,286 | 1,523,997 | 761,075 | 1,257,364 | 648,844 | 662,271 | ||||||||||||||||||
Total deposits | 2,277,759 | 2,163,567 | 1,096,309 | 1,810,139 | 998,183 | 1,021,624 | ||||||||||||||||||
Repurchase agreements & federal funds purchased | 58,149 | 53,949 | 28,369 | 46,209 | 15,433 | 16,270 | ||||||||||||||||||
FHLB short term borrowings | 59,697 | 57,824 | 86,200 | 67,774 | 58,467 | 56,522 | ||||||||||||||||||
FHLB long-term borrowings | 82,790 | 79,892 | 59,556 | 73,040 | 71,332 | 68,525 | ||||||||||||||||||
Trust Preferred debt | 3,029 | 3,824 | - | 2,289 | - | - | ||||||||||||||||||
Equity | $ | 418,678 | $ | 412,146 | $ | 121,724 | $ | 380,378 | $ | 114,838 | $ | 116,296 | ||||||||||||
Tangible equity (1) | $ | 235,526 | $ | 228,480 | $ | 119,896 | $ | 257,919 | $ | 112,973 | $ | 114,437 | ||||||||||||
Allowance for loan losses | $ | 15,692 | $ | 14,671 | $ | 13,727 | $ | 15,692 | $ | 14,696 | $ | 16,008 | ||||||||||||
Allowance for loan losses/loans held for investment | 0.80 | % | 0.76 | % | 1.28 | % | 0.80 | % | 1.52 | % | 1.53 | % | ||||||||||||
Remaining fair value marks on purchased performing loans | $ | 12,444 | $ | 13,584 | NA | $ | 12,444 | NA | NA | |||||||||||||||
Purchased credit impaired loans | $ | 5,184 | $ | 7,237 | NA | $ | 5,184 | NA | NA | |||||||||||||||
Remaining fair value marks on purchased credit impaired loans | $ | 694 | $ | 2,296 | NA | $ | 694 | NA | NA | |||||||||||||||
Total NPA | $ | 7,817 | $ | 8,954 | $ | 5,244 | $ | 7,817 | $ | 5,845 | $ | 6,922 | ||||||||||||
NPA to total assets | 0.27 | % | 0.32 | % | 0.37 | % | 0.27 | % | 0.43 | % | 0.48 | % | ||||||||||||
Mortgage loan originations and brokered loans | $ | 107,706 | $ | 116,958 | $ | 94,500 | $ | 319,164 | $ | 429,418 | $ | 544,866 | ||||||||||||
Gain on sale of mortgage loans net hedging activity | $ | 5,371 | $ | 10,792 | $ | 3,416 | $ | 14,208 | $ | 16,936 | $ | 23,835 | ||||||||||||
Allowance for losses on mortgage loans sold | $ | 987 | $ | 1,029 | $ | 1,029 | $ | 987 | $ | 1,029 | $ | 1,029 | ||||||||||||
Wealth Services segment - assets under management | $ | 1,935,780 | $ | 1,927,629 | $ | 676,865 | $ | 1,935,780 | $ | 655,000 | $ | 667,300 | ||||||||||||
Book value per common share | $ | 20.55 | $ | 20.36 | $ | 11.40 | $ | 20.55 | $ | 11.44 | $ | 11.33 | ||||||||||||
Tangible book value per common share (1) | $ | 11.64 | $ | 11.32 | $ | 11.23 | $ | 11.64 | $ | 11.26 | $ | 11.16 | ||||||||||||
(1) Non-GAAP financial information. See "Reconciliation of Non-GAAP Financial Measures" at end of release. | ||||||||||||||||||||||||
Composition of Loan Portfolio | ||||||||||||||||||||||||||||||
September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | September 30, 2016 | ||||||||||||||||||||||||||
(Dollars In Thousands) | Amount | Percentage of Total | Amount | Percentage of Total | Amount | Percentage of Total | Amount | Percentage of Total | Amount | Percentage of Total | ||||||||||||||||||||
Commercial real estate - owner occupied | $ | 443,128 | 22.50 | % | $ | 401,853 | 20.84 | % | $ | 262,431 | 24.46 | % | $ | 250,440 | 23.87 | % | $ | 238,224 | 24.65 | % | ||||||||||
Commercial real estate - non-owner occupied | 435,181 | 22.09 | 377,037 | 19.55 | 205,452 | 19.15 | 184,688 | 17.59 | 174,342 | 18.04 | ||||||||||||||||||||
Residential real estate | 512,621 | 26.03 | 525,649 | 27.26 | 212,007 | 19.76 | 204,413 | 19.47 | 202,605 | 20.96 | ||||||||||||||||||||
Commercial | 449,450 | 22.82 | 476,055 | 24.69 | 294,451 | 27.45 | 311,486 | 29.67 | 264,794 | 27.40 | ||||||||||||||||||||
Real estate construction | 104,193 | 5.29 | 124,186 | 6.44 | 91,614 | 8.54 | 91,822 | 8.75 | 79,621 | 8.24 | ||||||||||||||||||||
Consumer | 25,087 | 1.27 | 23,565 | 1.22 | 6,836 | 0.64 | 6,849 | 0.65 | 6,959 | 0.71 | ||||||||||||||||||||
Total loans | $ | 1,969,660 | 100.00 | % | $ | 1,928,345 | 100.00 | % | $ | 1,072,791 | 100.00 | % | $ | 1,049,698 | 100.00 | % | $ | 966,545 | 100.00 | % | ||||||||||
Less allowance for loan losses | 15,692 | 14,671 | 13,727 | 16,008 | 14,696 | |||||||||||||||||||||||||
$ | 1,953,968 | $ | 1,913,674 | $ | 1,059,064 | $ | 1,033,690 | $ | 951,849 | |||||||||||||||||||||
Composition of Deposits | ||||||||||||||||||||||||||||||
September 30, 2017 | June 30, 2017 | March 31, 2017 | December 31, 2016 | September 30, 2016 | ||||||||||||||||||||||||||
(Dollars In Thousands) | Amount | Percentage of Total | Amount | Percentage of Total | Amount | Percentage of Total | Amount | Percentage of Total | Amount | Percentage of Total | ||||||||||||||||||||
Demand deposits | $ | 710,691 | 31.09 | % | $ | 660,481 | 30.20 | % | $ | 376,674 | 32.56 | % | $ | 362,036 | 34.34 | % | $ | 409,558 | 36.73 | % | ||||||||||
Interest-bearing demand deposits | 480,620 | 21.02 | 454,675 | 20.79 | 141,981 | 12.27 | 126,189 | 11.97 | 124,856 | 11.20 | ||||||||||||||||||||
Savings and money market | 616,596 | 26.97 | 562,581 | 25.72 | 284,182 | 24.56 | 270,310 | 25.64 | 265,308 | 23.79 | ||||||||||||||||||||
CDARS time deposits | 37,836 | 1.65 | 39,746 | 1.82 | 41,369 | 3.58 | 34,290 | 3.25 | 36,948 | 3.31 | ||||||||||||||||||||
CDARS/ICS non-maturity deposits | 47,219 | 2.07 | 44,009 | 2.01 | 42,960 | 3.71 | 40,925 | 3.88 | 46,156 | 4.14 | ||||||||||||||||||||
Brokered deposits | 71,090 | 3.11 | 101,419 | 4.64 | 110,254 | 9.53 | 57,389 | 5.44 | 68,483 | 6.14 | ||||||||||||||||||||
Time deposits | 322,160 | 14.09 | 324,295 | 14.82 | 159,570 | 13.79 | 163,188 | 15.48 | 163,744 | 14.69 | ||||||||||||||||||||
Total Deposits | $ | 2,286,212 | 100.00 | % | $ | 2,187,206 | 100.00 | % | $ | 1,156,990 | 100.00 | % | $ | 1,054,327 | 100.00 | % | $ | 1,115,053 | 100.00 | % | ||||||||||
Yield on Average Earning Assets and Rates on Average Interest-Bearing Liabilities | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
September 30, 2017 |
September 30, 2016 |
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Average |
Income / | Yield / | Average | Income / |
Yield / |
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(Dollars In Thousands) |
Balance |
Expense | Rate | Balance | Expense |
Rate |
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Assets: | ||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||
Securities | $ | 449,645 | $ | 2,992 | 2.66 | % | $ | 191,794 | $ | 1,033 | 2.15 | % | ||||||||
Loans held for sale | 28,734 | 299 | 4.16 | % | 63,667 | 574 | 3.61 | % | ||||||||||||
Loans(1) | 2,002,842 | 24,007 | 4.79 | % | 947,622 | 11,073 | 4.67 | % | ||||||||||||
Interest-bearing balances and federal funds sold | 136,222 | 394 | 1.16 | % | 72,680 | 98 | 0.54 | % | ||||||||||||
Total interest-earning assets | 2,617,443 | 27,692 | 4.23 | % | 1,275,763 | 12,778 | 4.01 | % | ||||||||||||
Noninterest-earning assets: | ||||||||||||||||||||
Cash and due from banks | 36,260 | 13,251 | ||||||||||||||||||
Premises, land and equipment | 30,382 | 6,819 | ||||||||||||||||||
Other assets | 253,424 | 42,642 | ||||||||||||||||||
Less: allowance for loan losses | (15,404 | ) | (13,964 | ) | ||||||||||||||||
Total noninterest-earning assets | 304,662 | 48,748 | ||||||||||||||||||
Total Assets | $ | 2,922,105 | $ | 1,324,511 | ||||||||||||||||
Liabilities and Shareholders' Equity: | ||||||||||||||||||||
Interest-bearing deposits: | ||||||||||||||||||||
Interest-bearing demand deposits | $ | 483,370 | $ | 412 | 0.34 | % | $ | 137,387 | $ | 127 | 0.37 | % | ||||||||
Money market deposit accounts | 435,241 | 821 | 0.75 | % | 224,548 | 257 | 0.46 | % | ||||||||||||
Savings accounts | 199,109 | 90 | 0.18 | % | 37,892 | 47 | 0.50 | % | ||||||||||||
Time deposits | 448,566 | 1,316 | 1.17 | % | 277,014 | 918 | 1.33 | % | ||||||||||||
Total interest-bearing deposits | 1,566,286 | 2,639 | 0.67 | % | 676,841 | 1,349 | 0.80 | % | ||||||||||||
Borrowings: | ||||||||||||||||||||
FHLB short-term borrowings and subordinated debt | 62,726 | 242 | 1.54 | % | 38,043 | 69 | 0.73 | % | ||||||||||||
Securities sold under agreements to repurchase and federal funds purchased | 58,149 | 16 | 0.11 | % | 14,881 | 4 | 0.11 | % | ||||||||||||
FHLB long-term borrowings | 82,790 | 201 | 0.97 | % | 75,000 | 213 | 1.14 | % | ||||||||||||
Total borrowings | 203,665 | 459 | 0.90 | % | 127,924 | 286 | 0.89 | % | ||||||||||||
Total interest-bearing deposits and borrowings | 1,769,951 | 3,098 | 0.70 | % | 804,765 | 1,635 | 0.81 | % | ||||||||||||
Noninterest-bearing liabilities: | ||||||||||||||||||||
Demand deposits | 711,474 | 390,997 | ||||||||||||||||||
Other liabilities | 22,002 | 10,095 | ||||||||||||||||||
Total liabilities | 2,503,427 | 1,205,857 | ||||||||||||||||||
Shareholders' Equity | 418,678 | 118,654 | ||||||||||||||||||
Total Liabilities and Shareholders' Equity | $ | 2,922,105 | $ | 1,324,511 | ||||||||||||||||
Interest Spread(2) | 3.53 | % | 3.19 | % | ||||||||||||||||
Net Interest Margin(3) | $ | 24,594 | 3.76 | % | $ | 11,143 | 3.49 | % | ||||||||||||
(1) Loans placed on nonaccrual status are included in loan balances. |
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(2) Interest spread is the average yield earned on earning assets, less the average rate incurred on interest-bearing liabilities. |
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(3) Net interest margin is net interest income, expressed as a percentage of average earning assets. |
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Yield on Average Earning Assets and Rates on Average Interest-Bearing Liabilities | ||||||||||||||||||||
Nine Months Ended | ||||||||||||||||||||
September 30, 2017 | September 30, 2016 | |||||||||||||||||||
Average | Income / | Yield / | Average | Income / | Yield / | |||||||||||||||
(Dollars In Thousands) | Balance | Expense | Rate | Balance | Expense | Rate | ||||||||||||||
Assets: | ||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||
Securities | $ | 354,529 | $ | 7,388 | 2.78 | % | $ | 183,182 | $ | 2,954 | 2.15 | % | ||||||||
Loans held for sale | 27,165 | 846 | 4.15 | % | 47,935 | 1,355 | 3.77 | % | ||||||||||||
Loans(1) | 1,614,893 | 59,405 | 4.90 | % | 922,821 | 32,522 | 4.70 | % | ||||||||||||
Interest-bearing balances and federal funds sold | 105,360 | 746 | 0.94 | % | 69,860 | 264 | 0.50 | % | ||||||||||||
Total interest-earning assets | 2,101,947 | 68,385 | 4.34 | % | 1,223,798 | 37,095 | 4.04 | % | ||||||||||||
Noninterest-earning assets: | ||||||||||||||||||||
Cash and due from banks | 21,552 | 12,493 | ||||||||||||||||||
Premises, land and equipment | 21,692 | 6,782 | ||||||||||||||||||
Other assets | 265,578 | 38,142 | ||||||||||||||||||
Less: allowance for loan losses | (14,666 | ) | (13,733 | ) | ||||||||||||||||
Total noninterest-earning assets | 294,156 | 43,684 | ||||||||||||||||||
Total Assets | $ | 2,396,103 | $ | 1,267,482 | ||||||||||||||||
Liabilities and Shareholders' Equity: | ||||||||||||||||||||
Interest-bearing deposits: | ||||||||||||||||||||
Interest-bearing demand deposits | $ | 352,647 | $ | 910 | 0.34 | % | $ | 131,859 | $ | 360 | 0.36 | % | ||||||||
Money market deposit accounts | 352,525 | 1,644 | 0.62 | % | 185,839 | 522 | 0.37 | % | ||||||||||||
Savings accounts | 146,773 | 392 | 0.36 | % | 35,047 | 137 | 0.52 | % | ||||||||||||
Time deposits | 405,419 | 3,614 | 1.19 | % | 296,099 | 2,755 | 1.24 | % | ||||||||||||
Total interest-bearing deposits | 1,257,364 | 6,560 | 0.70 | % | 648,844 | 3,774 | 0.78 | % | ||||||||||||
Borrowings: | ||||||||||||||||||||
FHLB short-term borrowings and subordinated debt | 70,063 | 739 | 1.41 | % | 58,467 | 280 | 0.64 | % | ||||||||||||
Securities sold under agreements to repurchase and federal funds purchased | 46,209 | 58 | 0.17 | % | 15,433 | 11 | 0.10 | % | ||||||||||||
FHLB long-term borrowings | 73,040 | 569 | 1.04 | % | 71,332 | 576 | 1.08 | % | ||||||||||||
Total borrowings | 189,312 | 1,366 | 0.96 | % | 145,232 | 867 | 0.80 | % | ||||||||||||
Total interest-bearing deposits and borrowings | 1,446,676 | 7,926 | 0.73 | % | 794,076 | 4,641 | 0.78 | % | ||||||||||||
Noninterest-bearing liabilities: | ||||||||||||||||||||
Demand deposits | 552,775 | 349,339 | ||||||||||||||||||
Other liabilities | 16,274 | 9,229 | ||||||||||||||||||
Total liabilities | 2,015,725 | 1,152,644 | ||||||||||||||||||
Shareholders' Equity | 380,378 | 114,838 | ||||||||||||||||||
Total Liabilities and Shareholders' Equity | $ | 2,396,103 | $ | 1,267,482 | ||||||||||||||||
Interest Spread(2) | 3.61 | % | 3.26 | % | ||||||||||||||||
Net Interest Margin(3) | $ | 60,459 | 3.84 | % | $ | 32,454 | 3.54 | % | ||||||||||||
(1) Loans placed on nonaccrual status are included in loan balances. | ||||||||||||||||||||
(2) Interest spread is the average yield earned on earning assets, less the average rate incurred on interest-bearing liabilities. |
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(3) Net interest margin is net interest income, expressed as a percentage of average earning assets. | ||||||||||||||||||||
Segment Reporting | ||||||||||||||||||||||
Three Months Ended | Commercial | Mortgage | Trust & Wealth | Consolidated | ||||||||||||||||||
September 30, 2017 | Banking | Banking | Management | Other | Eliminations | Totals | ||||||||||||||||
(In Thousands) | ||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||
Interest income | $ | 27,429 | $ | 299 | $ | 4 | $ | 5 | $ | (45 | ) | $ | 27,692 | |||||||||
Gain on sale of loans | - | 5,594 | - | - | - | 5,594 | ||||||||||||||||
Other revenues | 1,977 | (740 | ) | 1,617 | 312 | (237 | ) | 2,929 | ||||||||||||||
Total revenues | 29,406 | 5,153 | 1,621 | 317 | (282 | ) | 36,215 | |||||||||||||||
Expenses: | ||||||||||||||||||||||
Interest expense | 3,072 | (25 | ) | - | 96 | (45 | ) | 3,098 | ||||||||||||||
Salaries and employee benefits | 7,334 | 2,898 | 868 | - | - | 11,100 | ||||||||||||||||
Other expenses | 8,724 | 1,149 | 1,850 | 1,107 | (237 | ) | 12,593 | |||||||||||||||
Total operating expenses | 19,130 | 4,022 | 2,718 | 1,203 | (282 | ) | 26,791 | |||||||||||||||
Income (loss) before income taxes | $ | 10,276 | $ | 1,131 | $ | (1,097 | ) | $ | (886 | ) | $ | - | $ | 9,424 | ||||||||
Total assets | $ | 2,810,037 | $ | 26,485 | $ | 41,002 | $ | 19,756 | $ | (24,211 | ) | $ | 2,873,069 | |||||||||
Three Months Ended | Commercial | Mortgage | Wealth | Consolidated | ||||||||||||||||||
September 30, 2016 | Banking | Banking | Management | Other | Eliminations | Totals | ||||||||||||||||
(In Thousands) | ||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||
Interest income | $ | 12,531 | $ | 574 | $ | - | $ | 5 | $ | (332 | ) | $ | 12,778 | |||||||||
Gain on sale of loans | - | 8,316 | - | - | - | 8,316 | ||||||||||||||||
Other revenues | 682 | (1,060 | ) | 773 | 289 | (315 | ) | 369 | ||||||||||||||
Total revenues | 13,213 | 7,830 | 773 | 294 | (647 | ) | 21,463 | |||||||||||||||
Expenses: | ||||||||||||||||||||||
Interest expense | 1,640 | 261 | - | 66 | (332 | ) | 1,635 | |||||||||||||||
Salaries and employee benefits | 3,977 | 3,664 | 567 | - | - | 8,208 | ||||||||||||||||
Other expenses | 2,578 | 1,491 | 233 | 724 | (315 | ) | 4,711 | |||||||||||||||
Total operating expenses | 8,195 | 5,416 | 800 | 790 | (647 | ) | 14,554 | |||||||||||||||
Income (loss) before income taxes | $ | 5,018 | $ | 2,414 | $ | (27 | ) | $ | (496 | ) | $ | - | $ | 6,909 | ||||||||
Total assets | $ | 1,290,518 | $ | 74,195 | $ | 2,894 | $ | 18,420 | $ | (23,189 | ) | $ | 1,362,838 | |||||||||
Segment Reporting | ||||||||||||||||||||||
Nine Months Ended | Commercial | Mortgage | Trust & Wealth | Consolidated | ||||||||||||||||||
September 30, 2017 | Banking | Banking | Management | Other | Eliminations | Totals | ||||||||||||||||
(In Thousands) | ||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||
Interest income | $ | 67,740 | $ | 846 | $ | 7 | $ | 17 | $ | (225 | ) | $ | 68,385 | |||||||||
Gain on sale of loans | - | 14,985 | - | - | - | 14,985 | ||||||||||||||||
Other revenues | 4,445 | (306 | ) | 4,195 | 975 | (883 | ) | 8,426 | ||||||||||||||
Total revenues | 72,185 | 15,525 | 4,202 | 992 | (1,108 | ) | 91,796 | |||||||||||||||
Expenses: | ||||||||||||||||||||||
Interest expense | 7,796 | 18 | - | 337 | (225 | ) | 7,926 | |||||||||||||||
Salaries and employee benefits | 19,992 | 9,122 | 2,686 | - | - | 31,800 | ||||||||||||||||
Other expenses | 20,173 | 3,246 | 2,541 | 7,537 | (883 | ) | 32,614 | |||||||||||||||
Total operating expenses | 47,961 | 12,386 | 5,227 | 7,874 | (1,108 | ) | 72,340 | |||||||||||||||
Income (loss) before income taxes | $ | 24,224 | $ | 3,139 | $ | (1,025 | ) | $ | (6,882 | ) | $ | - | $ | 19,456 | ||||||||
Total assets | $ | 2,810,037 | $ | 26,485 | $ | 41,002 | $ | 19,756 | $ | (24,211 | ) | $ | 2,873,069 | |||||||||
Nine Months Ended | Commercial | Mortgage | Wealth | Consolidated | ||||||||||||||||||
September 30, 2016 | Banking | Banking | Management | Other | Eliminations | Totals | ||||||||||||||||
(In Thousands) | ||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||
Interest income | $ | 36,379 | $ | 1,355 | $ | - | $ | 15 | $ | (654 | ) | $ | 37,095 | |||||||||
Gain on sale of loans | - | 19,419 | - | - | - | 19,419 | ||||||||||||||||
Other revenues | 2,908 | 53 | 2,269 | 978 | (950 | ) | 5,258 | |||||||||||||||
Total revenues | 39,287 | 20,827 | 2,269 | 993 | (1,604 | ) | 61,772 | |||||||||||||||
Expenses: | ||||||||||||||||||||||
Interest expense | 4,656 | 439 | - | 200 | (654 | ) | 4,641 | |||||||||||||||
Salaries and employee benefits | 12,065 | 10,563 | 1,655 | - | - | 24,283 | ||||||||||||||||
Other expenses | 6,285 | 4,127 | 783 | 1,943 | (950 | ) | 12,188 | |||||||||||||||
Total operating expenses | 23,006 | 15,129 | 2,438 | 2,143 | (1,604 | ) | 41,112 | |||||||||||||||
Income (loss) before income taxes | $ | 16,281 | $ | 5,698 | $ | (169 | ) | $ | (1,150 | ) | $ | - | $ | 20,660 | ||||||||
Total assets | $ | 1,290,518 | $ | 74,195 | $ | 2,894 | $ | 18,420 | $ | (23,189 | ) | $ | 1,362,838 | |||||||||
Reconciliation of Non-GAAP Financial Measures
The press release contains certain financial information determined by methods other than in accordance with generally accepted accounting policies in the United States (GAAP). These non-GAAP financial measures are “tangible book value per common share”, “tangible common equity ratio”, and “net interest margin on a fully tax equivalent basis.” This non-GAAP disclosure has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of the Corporation’s results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies. Our management uses these non-GAAP measures in its analysis of our performance because it believes these measures are material and will be used as a measure of our performance by investors.
Three Months | Three Months | Three Months | Nine Months | Nine Months | Twelve Months | |||||||||||||||||||
Ended | Ended | Ended | Ended | Ended | Ended | |||||||||||||||||||
September 30, | June 30, | March 31, | September 30, | September 30, | December 31, | |||||||||||||||||||
(Dollars In Thousands) | 2017 | 2017 | 2017 | 2017 | 2016 | 2016 | ||||||||||||||||||
Book value per common share | $ | 20.55 | $ | 20.36 | $ | 11.40 | $ | 20.55 | $ | 11.44 | $ | 11.33 | ||||||||||||
Effect of intangible assets | $ | (8.91 | ) | $ | (9.04 | ) | $ | (0.17 | ) | $ | (8.91 | ) | $ | (0.18 | ) | $ | (0.17 | ) | ||||||
Tangible book value per common share | $ | 11.64 | $ | 11.32 | $ | 11.23 | $ | 11.64 | $ | 11.26 | $ | 11.16 | ||||||||||||
Common equity ratio | 14.62 | % | 15.05 | % | 8.77 | % | 14.62 | % | 8.90 | % | 8.42 | % | ||||||||||||
Effect of intangible assets | -5.77 | % | -6.08 | % | -0.12 | % | -5.77 | % | -0.12 | % | -0.11 | % | ||||||||||||
Tangible common equity ratio | 8.85 | % | 8.97 | % | 8.65 | % | 8.85 | % | 8.78 | % | 8.31 | % | ||||||||||||
Net interest margin | 3.76 | % | 3.91 | % | 3.46 | % | 3.84 | % | 3.54 | % | 3.52 | % | ||||||||||||
Effect of tax exempt securities and loans | 0.10 | % | 0.06 | % | 0.06 | % | 0.07 | % | 0.01 | % | 0.03 | % | ||||||||||||
Net interest margin - fully tax equivalent basis | 3.86 | % | 3.97 | % | 3.52 | % | 3.91 | % | 3.55 | % | 3.55 | % | ||||||||||||
Return on average equity | 6.69 | % | 3.73 | % | 8.57 | % | 4.72 | % | 15.56 | % | 14.11 | % | ||||||||||||
Effect of intangible assets | 5.20 | % | 3.00 | % | 0.13 | % | 2.24 | % | 0.25 | % | 0.22 | % | ||||||||||||
Return on average tangible equity | 11.89 | % | 6.73 | % | 8.70 | % | 6.96 | % | 15.81 | % | 14.33 | % | ||||||||||||
Average equity | $ | 418,678 | $ | 412,146 | $ | 121,724 | $ | 380,378 | $ | 114,838 | $ | 116,296 | ||||||||||||
Effect of average intangible assets | $ | 183,152 | $ | 183,666 | $ | 1,828 | $ | 122,459 | $ | 1,865 | $ | 1,859 | ||||||||||||
Average tangible equity | $ | 235,526 | $ | 228,480 | $ | 119,896 | $ | 257,919 | $ | 112,973 | $ | 114,437 |
CONTACT:
Access National Corporation
Michael Clarke, 703-871-2100