Attached files
| file | filename |
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| EX-99.1 - EXHIBIT 99.1 EARNINGS RELEASE Q4 2017 - TCF FINANCIAL CORP | exhibit9912017q4.htm |
| 8-K - 8-K CHFC Q4 AND YTD 2017 EARNINGS RELEASE - TCF FINANCIAL CORP | chfc8-k2017q4.htm |
2017 Fourth Quarter
Earnings Release David T. Provost
Chief Executive Officer
Thomas C. Shafer
Vice Chairman, Chief Executive
Officer of Chemical Bank
Dennis L. Klaeser
EVP and Chief Financial Officer
January 24, 2018
This presentation and the accompanying presentation by management may contain forward-looking statements that are based on
management's beliefs, assumptions, current expectations, estimates and projections about the financial services industry, the economy
and Chemical Financial Corporation ("Chemical"). Words and phrases such as "anticipates," "believes," "continue," "estimates,"
"expects," "forecasts," "future," "intends," "is likely," "judgment," "look ahead," "look forward," "on schedule," "on track," "opinion,"
"opportunity," "plans," "potential," "predicts," "probable," "projects," "should," "strategic," "trend," "will," and variations of such words
and phrases or similar expressions are intended to identify such forward-looking statements. These statements include, among others,
that Chemical is well-positioned to build market share and enhance revenue growth, plans to invest in commercial lending and banking
teams, make key management and operational staff additions and enhance core operating systems, the strength of our loans pipeline,
our focus and expectations around building shareholder value, including organic revenue growth, and cost discipline and expanding our
market presence and product lines. All statements referencing future time periods are forward-looking.
Management's determination of the provision and allowance for loan losses; the carrying value of acquired loans, goodwill and mortgage
servicing rights; the fair value of investment securities (including whether any impairment on any investment security is temporary or
other-than-temporary and the amount of any impairment); and management's assumptions concerning pension and other postretirement
benefit plans involve judgments that are inherently forward-looking. There can be no assurance that future loan losses will be limited
to the amounts estimated. All of the information concerning interest rate sensitivity is forward-looking. The future effect of changes in
the financial and credit markets and the national and regional economies on the banking industry, generally, and on Chemical, specifically,
are also inherently uncertain.
Forward-looking are based upon current beliefs and expectations and involve substantial risks and uncertainties that could cause actual
results to differ materially from those expressed or implied by such forward-looking statements. Accordingly, such statements are not
guarantees of future performance and involve certain risks, uncertainties and assumptions ("risk factors") that are difficult to predict
with regard to timing, extent, likelihood and degree of occurrence. Therefore, actual results and outcomes may materially differ from
what may be expressed or forecasted in such forward-looking statements. Chemical undertakes no obligation to update, amend or clarify
forward-looking statements, whether as a result of new information, future events or otherwise.
Forward-Looking Statements & Other
Information
2
Risk factors include, without limitation:
• Chemical's ability to attract and retain new commercial lenders and other bankers as well as key operations staff in light of
competition for experienced employees in the banking industry;
• Chemical's ability to grow its deposits while reducing the number of physical branches that it operates;
• Chemical's ability to control operational expenses;
• Negative reactions to the branch closures by Chemical Bank's customers, employees and other counterparties;
• Economic conditions (both generally and in our markets) may be less favorable than expected, which could result in, among
other things, a deterioration in credit quality, a reduction in demand for credit and a decline in real estate values;
• A general decline in the real estate and lending markets, particularly in our market areas, could negatively affect our financial
results;
• Increased cybersecurity risk, including potential network breaches, business disruptions, or financial losses;
• Restrictions or condition imposed by our regulators on our operations may make it more difficult for us to achieve our goals;
• Legislative or regulatory changes, including changes in accounting standards and compliance requirements, may adversely affect
us;
• Changes in the interest rate environment may reduce margins or the volumes or values of the loans we make or have acquired;
and
• Economic, governmental, or other factors may prevent the projected population, residential, and commercial growth in the
markets in which we operate.
In addition, risk factors include, but are not limited to, the risk factors described in Item 1A of Chemical’s most recent Annual Report
on Form 10-K or disclosed in documents filed or furnished by the Company with or to the SEC after the filing of such Annual Report
on Form 10-K. These and other factors are representative of the risk factors that may emerge and could cause a difference between an
ultimate actual outcome and a preceding forward-looking statement.
Forward-Looking Statements & Other
Information (continued)
3
Non-GAAP Financial Measures
This presentation and the accompanying presentation by management contain certain non-GAAP financial disclosures that are not in
accordance with U.S. generally accepted accounting principles ("GAAP"). Such non-GAAP financial measures include Chemical’s
tangible shareholders' equity to tangible assets ratio, tangible book value per share, presentation of net interest income and net interest
margin on a fully taxable equivalent basis, operating expenses-core (which excludes merger and restructuring expenses and impairment
of income tax credits), operating expenses-efficiency ratio (which excludes merger and restructuring expenses, impairment of income
tax credits and amortization of intangibles), the adjusted efficiency ratio (which excludes significant items, impairment of income tax
credits, loan servicing rights change in fair value gains (losses), amortization of intangibles, net interest income FTE adjustments, (losses)
gains from sale of investment securities and closed branch locations) ant other information presented excluding significant items,
including net income, diluted earnings per share, return on average assets and return on average shareholders' equity. Chemical uses
non-GAAP financial measures to provide meaningful, supplemental information regarding its operational results and to enhance
investors’ overall understanding of Chemical’s financial performance. The limitations associated with non-GAAP financial measures
include the risk that persons might disagree as to the appropriateness of items comprising these measures and that different companies
might calculate these measures differently. These disclosures should not be considered an alternative to Chemical’s GAAP results. See
the Appendix included with this presentation for a reconciliation of the non-GAAP financial measures to the most directly comparable
GAAP financial measures.
Forward-Looking Statements & Other
Information (continued)
4
Fourth Quarter 2017 Highlights
q Diluted earnings per share of $0.13, compared to $0.56 in the 3rd qtr. 2017 and $0.66 in the 4th qtr. 2016
q Diluted earnings per share, excluding significant items,(1)(2) of $0.87; up 14.5% from 3rd qtr. 2017 and
up 16.0% from 4th qtr. 2016
q Return on average assets and return on average shareholders' equity of 0.20% and 1.4%, respectively, in
4th qtr. 2017 (1.31% and 9.4%, respectively, excluding significant items(1)(2))
q Return on average tangible shareholders' equity of 2.5% in 4th qtr. 2017 (16.5%, excluding significant
items(1)(2))
q Loan Growth
▪ $321.9 million in 4th qtr. 2017, or 9.3% annualized (quarterly organic loan growth: 14.5% real
estate construction, 4.3% commercial real estate, 2.0% commercial and 1.0% residential mortgage
loans)
q Asset quality ratios
▪ Nonperforming loans/total loans of 0.45% at December 31, 2017; increased from 0.39% at
September 30, 2017, and from 0.34% at December 31, 2016
▪ Net loan charge-offs/average loans of 0.04%
(1) "Significant items" include merger and restructuring expenses, the charge to income tax expense as a result of the revaluation of the net deferred tax
assets, the fourth quarter of 2017 losses on sales of investment securities as a treasury and tax management objective and the fourth quarter of 2016 gain
on sales of branch offices.
(2) Denotes a non-GAAP financial measure. Refer to the Appendix for a reconciliation of non-GAAP financial measures.
5
2017 2017 2016
(in thousands except per share data) 4th Qtr. 3rd Qtr. 4th Qtr.
Net interest income $ 145,905 $ 143,628 $ 132,447
Provision for loan losses 7,522 5,499 6,272
Noninterest income 32,319 32,122 54,264
Operating expenses 100,022 119,539 114,302
Operating expenses, excl. merger and restructuring
expenses and impairment of income tax credits(1) 91,298 95,241 96,286
Merger expenses 1,511 2,379 18,016
Restructuring expenses 1,056 18,824 —
Impairment of income tax credits 6,157 3,095 —
Net income 9,446 40,459 47,168
Net income, excl. significant items(1) 62,686 54,241 54,074
Diluted EPS 0.13 0.56 0.66
Diluted EPS, excl. significant items(1) 0.87 0.76 0.75
Return on Avg. Assets 0.20% 0.86% 1.09%
Return on Avg. Shareholders’ Equity 1.4% 6.1% 7.4%
Return on average tangible shareholders' equity,
excluding significant items(1) 16.5% 14.6% 15.3%
Efficiency Ratio 56.1% 68.0% 61.2%
Efficiency Ratio - Adjusted(1) 47.4% 51.2% 53.7%
Equity/Total Assets 13.8% 13.8% 14.9%
Tangible Shareholders' Equity/Tangible Assets(1) 8.3% 8.3% 8.8%
Book Value/Share $ 37.48 $ 37.57 $ 36.57
Tangible Book Value/Share(1) $ 21.21 $ 21.36 $ 20.20
Prior Quarter Comparison
▪ Higher net interest income in Q4 compared
to Q3, due to organic loan growth and
higher average balance of investment
securities−partially offset by higher average
balances of deposits
▪ Operating expenses decreased primarily due
to decreases in restructuring expenses and
other line items resulting from the
restructuring efforts−partially offset by an
increase in impairment related to federal
housing tax credits
▪ Slight increase in noninterest income
primarily due to increases in net gain on sale
of loans and other mortgage banking
revenue and interest rate swap fee income,
partially offset by losses on sale of
investment securities
▪ Increase in provision for loan losses,
primarily due to net organic loan growth
Prior-Year Quarter Comparison
▪ Increase in net interest income, attributable
to increase in investment securities and
organic growth in total loans during the
twelve months ended December 31, 2017
and impact of the Talmer merger
(1) Denotes a non-GAAP financial measure. Refer to the Appendix for a reconciliation of non-GAAP financial measures.
Financial Highlights
Income Statement Highlights
6
Financial Highlights
2015 Total: $86.8(1); $92.3(2)(3) 2016 Total: $108.0(1); $143.7(2)(3) 2017 Total: $149.5(1); $219.6(2)(3)
(1)Net Income
(2)Net Income, excluding significant items.
(3)Denotes a non-GAAP financial measure. Please refer to the Appendix for a reconciliation of non-GAAP financial measures.
$62.7(2)(3)
Net Income Trending Upward ($ Millions, except EPS data)
Net Income
$0.57(3)
Net Income Trending Upward ($ Millions, except EPS data)
$60.0
$40.0
$20.0
$0.0
N
et
In
co
m
e
$1.00
$0.80
$0.60
$0.40
$0.20
$0.00
EP
S
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
$17.8 $19.0
$24.5 $25.5 $23.6 $25.8
$11.5
$47.2 $47.6
$52.0
$40.4
$9.4
$0.9
$2.7
$0.6 $1.4 $1.7
$2.0 $25.1
$6.9
$2.7 $0.3 $13.8
$53.3
2015 2016 2017
$54.2(2)(3)
7
$54.1(2)(3)
Significant items (after-tax)
Net Income
__ Diluted EPS, excluding significant items (non-GAAP) (3)
$0.87((3)
Loan Portfolio Composition ($ Millions)
$1,164
8
December 31, 2016 $12,991 December 31, 2017 $14,155
Total Loan Growth -
$3,217
$4,377
$3,087
$2,310
$3,386
$5,075
$3,252
$2,442
$168
$698
$166
$132
n Commercial n CRE/C&D n Residential n Consumer
Loan Growth - Year Ended December 31, 2017
2015 - $476 2016 - $837 2017 - $1,164
$15
$224
$181
$280
$56
$1,164 $837
$96
$186
Loan Growth* ($ Millions)
$275
*Excludes the impact of the $4.88 billion of loans acquired in the Talmer merger.
$282
9
n Commercial
n CRE/C&D
n Residential
n Consumer
$400
$300
$200
$100
$0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Loan Growth - 2016 Total* Loan Growth - 2017 YTD
$88
$277
$125
$347
$168
$698
$166
$132
$166
$394
Quarterly Loan Growth Trends
$322
Q4 2017 Q3 2017 Q2 2017 Q1 2017 2017 Total 2016 Total*
Originated Loan Portfolio
Commercial $ 153 $ 71 $ 195 $ 88 $ 507 $ 380
CRE/C&D 356 139 313 238 1,046 594
Residential 86 197 89 119 491 258
Consumer (4) 89 103 56 244 418
Total Originated Loan
Portfolio Growth $ 591 $ 496 $ 700 $ 501 $ 2,288 $ 1,650
Acquired Loan Portfolio
Commercial $ (87) $ (111) $ (88) $ (52) $ (338) $ (292)
CRE/C&D (98) (92) (94) (64) (348) (317)
Residential (55) (102) (97) (72) (326) (133)
Consumer (29) (25) (27) (31) (112) (71)
Total Acquired Loan
Portfolio Run-off $ (269) $ (330) $ (306) $ (219) $ (1,124) $ (813)
Total Loan Portfolio
Commercial $ 66 $ (40) $ 107 $ 36 $ 169 $ 88
CRE/C&D 258 47 219 174 698 277
Residential 31 95 (8) 47 165 125
Consumer (33) 64 76 25 132 347
Total Loan Portfolio Growth $ 322 $ 166 $ 394 $ 282 $ 1,164 $ 837
Loan Growth (Run-off) ($ Millions)
Loan Growth* – Originated v. Acquired
*Excludes the impact of the $4.88 billion of loans acquired in the Talmer merger. 10
Loan Growth (Run-off) ($ Millions)
(1)Comprised of $0.8 billion of growth in customer deposits, partially offset by a $0.1 billion decrease in brokered deposits.
(2)Cost of deposits based on period averages.
Total Deposits – December 31, 2016
$12.9
Total Deposits – December 31, 2017
$13.6
Deposit Growth
$0.7, 5.2%(1)
Total Deposits ($ Billions)
Deposit Composition
(2)
2016 2017
11
otal Deposits ($ Billions)
Average Deposits ($ Millions) & Cost of Deposits(2) (%)
$3.7
$2.7$4.0
$3.1
$0.1
n Noninterest-bearing Demand Deposits n Interest-bearing Demand Deposits n Savings Deposits n Time Deposits n Brokered Deposits
$0.3
$0.3
$0.3$3.4
$2.8$3.7
$2.8
$0.2
Deposits Cost of Deposits
$14,000
$9,000
$4,000T
ot
al
Av
er
ag
e
D
ep
os
its 0.50%
0.25%
0.00%
In
te
re
st
R
at
e
Pa
id
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
$7,535 $7,528
$9,484
$13,003 $12,999 $13,022 $13,389 $13,603
0.22% 0.23% 0.24%
0.27% 0.28%
0.33%
0.38%
0.42%
$(0.1)
$(0.1)
Average Cost of Funds Q4 2017 – 0.56% Average Cost of Funds Q3 2017 – 0.53%
$16.5 billion $16.4 billion
Average cost of wholesale
borrowings – 1.43%
Average cost of wholesale
borrowings – 1.35%
Funding Breakdown ($ Billions)
12
September 30, 2017 December 31, 2017
n Deposits:
n Time Deposits
n Customer Repurchase
Agreements
n Wholesale borrowings (at
December 31, 2017: brokered
deposits - $0.1 billion, short
and long term borrowings -
$2.4 billion)
$10.7
$3.0
$0.4 $2.4
$10.4
$3.1
$0.4 $2.5
Interest and
noninterest-
bearing, demand,
savings, money
market
ALL
NPLs
2015 2016 2017
Originated Loans ($ billions) $3.3 $3.8 $4.3 $5.0 $5.8 $7.5 $9.8
Acquired Loans ($ billions) 0.5 0.4 0.3 0.7 1.5 5.5 4.4
Total Loans ($ billions) $3.8 $4.2 $4.6 $5.7 $7.3 $13.0 $14.2
Originated ALL $88 $84 $79 $76 $73 $78 $92
Acquired ALL — — — — — — —
Total ALL $88 $84 $79 $76 $73 $78 $92
Originated ALL/ Originated Loans 2.60% 2.22% 1.81% 1.51% 1.26% 1.05% 0.94%
NPLs/ Total Loans 2.05% 1.71% 1.36% 0.89% 0.86% 0.34% 0.45%
Credit Mark as a % of Unpaid
Principal on Acquired Loans 6.6% 6.0% 7.8% 5.4% 4.4% 3.1% 2.4%
Provision for Loan Losses vs. Net Loan Losses
Credit Quality ($ Millions, unless otherwise noted)
Provision for Loan Losses vs. Net Loan Losses (Originated loan portfolio)
Nonperforming Loans (NPLs) and Allowance for Loan Losses (ALL)
Provision for Loan Losses, Originated Net Loan Losses
$7.0
$3.5
$0.0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
$1.5 $1.5 $1.5 $2.0 $1.5
$3.0
$4.1
$6.3
$4.1
$6.2
$4.9
$8.1
$1.9 $1.8
$0.8
$4.3 $4.5
$1.8 $1.8 $1.8
$3.5
$1.2
$3.5
$1.4
$120
$60
$0
YE 2011 YE 2012 YE 2013 YE 2014 YE 2015 YE 2016 YE 2017
$78 $71 $62 $51 $62 $44 $63
$88 $84 $79 $76 $73 $78
$92
13
Net Interest Margin(1) and Loan Yields
Net Interest Margin(1)
Purchase Accounting Accretion on Loans
Loan Yields
Net Interest Income
(Quarterly Trend)
Net Interest Income, Net Interest Margin
and Loan Yields
(1)Computed on a fully taxable equivalent basis (non-GAAP) using a federal income tax rate of 35%. Please refer to the Appendix for a
reconciliation of non-GAAP financial measures.
14
Quarterly Trend
2016 2017
Net Interest Income
$140
$120
$100
$80
$60
$40
$
(M
ill
io
ns
)
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
$74.3
$77.5
$96.8
$132.4 $130.1
$137.9
$143.6 $145.9
2016 2017
5.00%
2.50%
0.00%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
4.13% 4.19% 4.12% 4.18% 4.11% 4.22%
4.31% 4.31%
3.60% 3.70% 3.58% 3.56% 3.49% 3.48% 3.48% 3.47%
0.03% 0.11% 0.11% 0.14% 0.12% 0.21% 0.23% 0.22%
$20.9
$32.1
Quarterly
Non-Interest Income
* Significant items: Q4 2017 included a $7.6 million loss on investment securities and Q4 2016 included a $7.4 million gain on sales of branch offices.
$41.6
$27.8
$54.3*
15
Quarterly
2016 2017
Other Wealth Management
Service Charges Net Gain on Sale of Loans and other Mortgage Banking Revenue
$60.0
$30.0
$0.0
$
(M
ill
io
ns
)
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
$7.1 $7.2
$10.1
$25.4
$15.0 $15.9
$11.6 $8.8
$5.2 $5.8
$5.6
$6.0
$5.8
$7.0
$6.2
$6.5
$5.7 $6.3
$7.7
$8.4
$8.0
$8.8
$9.1
$9.1$1.4 $1.6
$4.4
$14.4
$9.2
$9.9
$5.2 $7.9
$38.0
$19.4
$32.3*
$68.6(1)
$106.1
$56.0(1)
$59.1
$96.3(1)
$114.3
Quarterly
Operating Expenses
$98.2
$100.0(1)
16
Quarterly
2016 2017
$104.2
Other Compensation Occupancy
Equipment Impairments related to historical tax credits Merger & Restructuring Expenses
$120.0
$60.0
$0.0
$
(M
ill
io
ns
)
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
$13.1 $12.5 $16.1
$22.3 $23.9
$28.3 $28.1 $27.4
$33.9 $33.1
$40.6
$57.7
$60.2 $52.6 $52.6 $48.4$4.9 $5.5
$5.5
$7.6
$7.4 $8.7 $6.9
$7.5
$4.4 $4.9
$6.4
$8.7
$8.5 $8.1 $7.6
$8.0
$3.1 $6.2
$2.6 $3.1
$37.5
$18.0
$4.2
$0.5
$21.2
$2.5
$97.7(1)
$95.2(1)
$119.5
(1) Denotes a non-GAAP financial measure. Refer to the Appendix for a reconciliation of non-GAAP financial measures.
$56.3(1)
$58.9
$100.0
$91.3(1)
Peer Average
12/31/2016(1)
CHFC
12/31/2016
CHFC
9/30/2017
CHFC
12/31/2017
Tangible Book Value / Share(2) NA $20.20 $21.36 $21.21
Tangible Common Equity / Tangible Assets(2) 8.1% 8.8% 8.3% 8.3%
Tier 1 Capital(3) 10.8% 10.7% 10.5% 10.1%
Total Risk-Based Capital(3) 12.6% 11.5% 11.2% 10.9%
Capital
(1)Source SNL Financial – ASB, WTFC, CBSH, TCB, UMBF, PVTB, MBFI, ONB, FMBI and FFBC (ordered by asset size).
(2)Denotes a non-GAAP financial measure. Refer to the Appendix for a reconciliation of non-GAAP financial measures.
(3)Estimated at December 31, 2017
Tangible Book Value and Capital Ratios
Tangible Book Value per Share(2) (TBV) Roll Forward
$25
$20
$15
$10
$5
$0
TBV
@ D
ec 3
1, 20
16
Net
Inco
me (
Ex.
Mer
ger a
nd R
estru
cturi
ng
Exp
ense
s an
d De
ferre
d Ta
x Re
valu
ation
) Divi
dend
s
AOC
I Ad
j.
Mer
ger a
nd R
estru
cturi
ng E
xpen
ses
and
Defe
rred
Tax
Rev
alua
tion
TBV
@ D
ec 3
1, 20
17
$20.20
$3.02
$(1.10)
$0.28
$(1.19)
$21.21
17
Full Year
Q4 2017 Q3 2017 Q4 2016 2017 2016
Shareholders’ equity $ 2,668,749 $ 2,673,089 $ 2,581,526
Goodwill, CDI and non-compete agreements, net of tax (1,158,738) (1,153,576) (1,155,528)
Tangible shareholders’ equity $ 1,510,011 $ 1,519,513 $ 1,425,998
Common shares outstanding 71,207 71,152 70,599
Tangible book value per share $ 21.21 $ 21.36 $ 20.20
Total assets $19,280,873 $19,354,308 $17,355,179
Goodwill, CDI and non-compete agreements, net of tax (1,158,738) (1,153,576) (1,155,528)
Tangible assets $18,122,135 $18,200,732 $16,199,651
Tangible shareholders’ equity to tangible assets 8.3% 8.3% 8.8%
Net income $ 9,446 $ 40,459 $ 47,168 $ 149,523 $ 108,032
Significant items, net of tax(1) 53,240 13,782 6,906 70,033 35,695
Net income, excl. significant items(1) $ 62,686 $ 54,241 $ 54,074 $ 219,556 $ 143,727
Diluted earnings per share $ 0.13 $ 0.56 $ 0.66 $ 2.08 $ 2.17
Effect of significant items, net of tax(1) 0.74 0.20 0.09 0.98 0.71
Diluted earnings per share, excl. significant items(1) $ 0.87 $ 0.76 $ 0.75 $ 3.06 $ 2.88
Average assets $19,207,430 $18,858,148 $17,264,668 $18,465,156 $12,037,155
Return on average assets 0.20% 0.86% 1.09% 0.81% 0.90%
Effect of significant items, net of tax(1) 1.11% 0.29% 0.16% 0.38% 0.29%
Return on average assets, excl. significant items(1) 1.31% 1.15% 1.25% 1.19% 1.19%
Average shareholders’ equity $ 2,676,029 $ 2,643,233 $ 2,564,943 $ 2,627,862 $ 1,546,721
Average goodwill, CDI and noncompete agreements, net of tax 1,156,122 1,153,394 1,153,598 1,155,734 582,536
Average tangible shareholders' equity 1,519,907 1,489,839 1,411,345 1,472,128 964,185
Return on average shareholders’ equity 1.4% 6.1% 7.4% 5.7% 7.0%
Effect of significant items, net of tax(1) 8.0 2.1 1.0 2.7 2.3
Return on average shareholders’ equity, excl. significant items(1) 9.4% 8.2% 8.4% 8.4% 9.3%
Return on average tangible shareholders’ equity 2.5% 10.9% 13.4% 10.2% 11.2%
Effect of significant items, net of tax(1) 14.0 3.7 1.9 4.7 3.7
Return on average tangible shareholders’ equity, excl. significant items
(1) 16.5% 14.6% 15.3% 14.9% 14.9%
(Dollars in thousands, except per share data)
Appendix: Non-GAAP Reconciliation
18
(Dollars in thousands, except per share data)
(1) "Significant items" include merger and restructuring expenses, the charge to income tax expense as a result of the revaluation of the net deferred tax
assets, the fourth quarter of 2017 losses on sales of investment securities and the fourth quarter of 2016 gain on sales of branch offices.
Q4 2017 Q3 2017 Q4 2016
Efficiency Ratio:
Total revenue – GAAP $ 178,224 $ 175,750 $ 186,711
Net interest income FTE adjustment 3,580 3,260 2,945
Loan servicing rights change in fair value (gains)losses 13 4,041 (6,348)
Significant items(1) 7,556 (1) (7,467)
Total revenue – Non-GAAP $ 189,373 $ 183,050 $ 175,841
Operating expenses – GAAP $ 100,022 $ 119,539 $ 114,302
Merger and restructuring expenses (2,567) (21,203) (18,016)
Impairment of income tax credits (6,157) (3,095) —
Operating expenses, core - Non-GAAP 91,298 95,241 96,286
Amortization of intangibles (1,525) (1,526) (1,843)
Operating expenses, efficiency ratio -excluding merger & restructuring
expenses, impairment of income tax credits and amortization of intangibles -
Non-GAAP $ 89,773 $ 93,715 $ 94,443
Efficiency ratio – GAAP 56.1% 68.0% 61.2%
Efficiency ratio – adjusted 47.4% 51.2% 53.7%
Net Interest Margin:
Net interest income – GAAP $ 145,905 $ 143,628 $ 132,447
Adjustments for tax equivalent interest:
Loans (855) (824) (838)
Investment securities (2,725) (2,436) (2,107)
Total taxable equivalent adjustments (3,580) (3,260) (2,945)
Net interest income (on a tax equivalent basis) $ 149,485 $ 146,888 $ 135,392
Average interest-earning assets $ 17,138,285 $ 16,815,240 $ 15,156,107
Net interest margin – GAAP 3.39% 3.40% 3.48%
Net interest margin (on a tax-equivalent basis) 3.47% 3.48% 3.56%
(Dollars in thousands, except per share data)
Appendix: Non-GAAP Reconciliation
19
(Dollars in thousands, except per share data)
(1) Significant items include fourth quarter 2017 losses on sales of investment securities.
