Attached files
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| EX-99.1 - EX-99.1 - S&T BANCORP INC | stba-3q20investorsheetfi.htm |
| 8-K - 8-K - S&T BANCORP INC | stba-20201116.htm |
Third Quarter 2020 Todd Brice Chief Executive Officer Dave Antolik President Mark Kochvar Chief Financial Officer MEMBERMEMBER FDIC FDIC
Forward Looking Statements and Risk Factors This information contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to our financial condition, results of operations, plans, objectives, outlook for earnings, revenues, expenses, capital and liquidity levels and ratios, asset levels, asset quality, financial position, and other matters regarding or affecting S&T and its future business and operations. Forward-looking statements are typically identified by words or phrases such as “will likely result”, “expect”, “anticipate”, “estimate”, “forecast”, “project”, “intend”, “ believe”, “assume”, “strategy”, “trend”, “plan”, “outlook”, “outcome”, “continue”, “remain”, “potential”, “opportunity”, “believe”, “comfortable”, “current”, “position”, “maintain”, “sustain”, “seek”, “achieve” and variations of such words and similar expressions, or future or conditional verbs such as will, would, should, could or may. Although we believe the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate and the forward-looking statements based on these assumptions could be incorrect. The matters discussed in these forward-looking statements are subject to various risks, uncertainties and other factors that could cause actual results and trends to differ materially from those made, projected, or implied in or by the forward-looking statements depending on a variety of uncertainties or other factors including, but not limited to: credit losses and the credit risk of our commercial and consumer loan products; changes in the level of charge-offs and changes in estimates of the adequacy of the allowance for credit losses; cyber-security concerns; rapid technological developments and changes; operational risks or risk management failures by us or critical third parties, including fraud risk; our ability to manage our reputational risks; sensitivity to the interest rate environment including a prolonged period of low interest rates, a rapid increase in interest rates or a change in the shape of the yield curve; a change in spreads on interest-earning assets and interest-bearing liabilities; regulatory supervision and oversight, including changes in regulatory capital requirements and our ability to address those requirements; unanticipated changes in our liquidity position; changes in accounting policies, practices, or guidance, for example, our adoption of CECL; legislation affecting the financial services industry as a whole, and S&T, in particular; the outcome of pending and future litigation and governmental proceedings; increasing price and product/service competition; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; managing our internal growth and acquisitions; the possibility that the anticipated benefits from acquisitions, including DNB, cannot be fully realized in a timely manner or at all, or that integrating the acquired operations will be more difficult, disruptive or costly than anticipated; containing costs and expenses; reliance on significant customer relationships; an interruption or cessation of an important service by a third-party provider; our ability to attract and retain talented executives and employees; general economic or business conditions, including the strength of regional economic conditions in our market area; the duration and severity of the corona virus (“COVID-19”) pandemic, both in our principal area of operations and nationally, including the ultimate impact of the pandemic on the economy generally and on our operations; deterioration of the housing market and reduced demand for mortgages; deterioration in the overall macroeconomic conditions or the state of the banking industry that could warrant further analysis of the carrying value of goodwill and could result in an adjustment to its carrying value resulting in a non- cash charge to net income; the stability of our core deposit base and access to contingency funding; re-emergence of turbulence in significant portions of the global financial and real estate markets that could impact our performance, both directly, by affecting our revenues and the value of our assets and liabilities, and indirectly, by affecting the economy generally and access to capital in the amounts, at the times and on the terms required to support our future businesses. Many of these factors, as well as other factors, are described in our filings with the SEC. Forward-looking statements are based on beliefs and assumptions using information available at the time the statements are made. We caution you not to unduly rely on forward-looking statements because the assumptions, beliefs, expectations and projections about future events may, and often do, differ materially from actual results. Any forward-looking statement speaks only as to the date on which it is made, and we undertake no obligation to update any forward- looking statement to reflect developments occurring after the statement is made. Non-GAAP Financial Measures In addition to the results of operations presented in accordance with Generally Accepted Accounting Principles (GAAP), S&T management uses and this presentation contains or references certain non-GAAP financial measures, such as net interest income on a fully taxable equivalent basis. S&T believes these financial measures provide information useful to investors in understanding our operational performance and business and performance trends which facilitate comparisons with the performance of others in the financial services industry. Although S&T believes that these non-GAAP financial measures enhance investors’ understanding of S&T’s business and performance, these non- GAAP financial measures should not be considered an alternative to GAAP. The non-GAAP financial measures contained within this presentation should be read in conjunction with the audited financial statements and analysis as presented in the Annual Report on Form 10-K as well as the unaudited financial statements and analyses as presented in the respective Quarterly Reports in Exhibit 99.1 of Form 8-K for S&T Bancorp, Inc. and subsidiaries. MEMBER FDIC 2
Corporate Profile • Headquartered in Indiana, PA • $9.2 billion in assets (as of 09.30.20) • $694 million market cap (as of 09.30.20) • Locations in 5 markets • Stock symbol: STBA Rated highest in customer satisfaction with retail banking in the Mid-Atlantic Region. S&T Bank received the highest score in the Mid-Atlantic Region of the J.D. Power 2020 U.S. Retail Banking Satisfaction Study of customers' satisfaction with their own retail bank. Visit jdpower.com/awards. MEMBER FDIC 3
STBA Investment Thesis STBA Investment Thesis The Right Size • Above peer performance • Big enough to: • Demonstrated expense – Provide full complement of discipline and efficiency products and services • Organic growth – Access technology • Strategic and effective mergers – Access capital markets and expansion – Attract talent • Exposure to five regional – Expand - mergers and markets acquisitions/de novo • Small enough to: – Stay close to our customers – Understand our markets – Be responsive MEMBER FDIC 4
Strategic Goals Strategic Goals • Remain a high performing, independent regional community bank • Follow a disciplined approach focused on organic growth • Continue to enhance our market-based growth platform focused on the unique opportunities in our 5 distinct markets • Continue to improve the effectiveness and efficiency of our lines of business • Build on the S&T brand strength, drive demand, and enhance our digital capabilities • Pursue and integrate M&A opportunities that align with our strategic objectives MEMBER FDIC 5
J.D. Power Award • S&T ranked highest in customer satisfaction with retail banking in the Mid-Atlantic by J.D. Power in the 2020 U.S. Retail Banking Satisfaction Study. • We ranked #1 in the following factors: – Communication and Advice – Convenience – Product and Fees – Channel Activities • For J.D. Power 2020 award information, visit jdpower.com/awards. MEMBER FDIC 6
Third Quarter Highlights EPS: $ 0.43 • PTPP* 1.61%, $37.5 million • NIM stability Net Income: • Mortgage banking $16.7 million • Moderate ACL build • Dividend of $0.28 declared Returns: ROA ROE ROTE* 0.72% 5.80% 8.96% Asset ACL NCO Provision 1.64% Quality: 0.69% $17.5 million ex-PPP* 1.77% *Refer to appendix for reconciliation of non-GAAP financial measures MEMBER FDIC 7
Key Metrics 2020 2020 2020 2019 Third Second Second Third Quarter Quarter Quarter Quarter Reported Metrics: Reported Ex-fraud* Net income (loss) $16.7 million ($33.1 million) $13.3 million $26.9 million Diluted earnings (loss) per share $0.43 ($0.85) $0.34 $0.79 Dividends declared per share $0.28 $0.28 $0.27 Book value $29.10 $28.93 $28.69 Tangible book value* $19.40 $19.22 $20.25 Return on average assets 0.72% (1.41)% 0.57 % 1.45% Return on average shareholders' equity 5.80% (11.17)% 4.48 % 10.97% Return on average tangible shareholders' equity* 8.96% (16.19)% 6.86 % 15.69% PTPP* $37.5 million $41.9 million $36.6 million PTPP / average assets* 1.61% 1.79% 1.97 % Efficiency ratio (FTE)* 55.75% 50.51% 50.09% Net interest margin (FTE)* 3.29% 3.31% 3.62% Credit Metrics: Nonperforming loans / loans 1.13 % 1.19 % 0.81 % Net loan charge-offs / average loans 0.69 % 3.58 % 0.49 % 0.28 % ACL / total portfolio loans 1.64 % 1.52 % 1.00 % ACL / total portfolio loans, ex-PPP* 1.77 % 1.64 % NA Ex-fraud metrics exclude loss from customer fraud in Q2 2020 *Refer to appendix for reconciliation of non-GAAP financial measures MEMBER FDIC 8
Performance Return on Average Assets Return on Average Equity 1.50% (3) 1.6% 1.45% 15.0% (2) 11.60% 1.4% 1.08% 1.22 9.90%(2) 10.92%(3) 1.2% 8.67% 10.0% 1.0% Peer(1) Peer(1) 0.8% (4) (4) 4.91% 0.63% 5.0% 9.98% 0.6% 1.03% 1.32% 8.37% 0.4% (0.36%) 0.0% 0.2% (0.05%) (3.35%) 0.0% -0.2% (6) (5.0)% (6) 2016 2017 2018 2019 YTD 3Q20 2016 2017 2018 2019 YTD 3Q20 (5) Return on Average Tangible Equity (5) PTPP / Average Assets 20.0% 2.4% 17.14% (3) (2) 15.76% (3) 15.08% 1.89% 1.96% 1.93% 15.0% 13.71% 2.0% 1.74% 1.68% (1) 1.6% 10.0% Peer 7.52%(4) 1.78% (1) 1.2% Peer 12.77% 14.41% 5.0% (0.27%) 0.8% 0.0% 0.4% (4.68%) (5.0)% 0.0% (6) (6) 2016 2017 2018 2019 YTD 3Q20 2016 2017 2018 2019 YTD 3Q20 (1) BHCPR Peer Group 2: Bank Holding Companies with $3-10 billion of assets through 2Q20. (2)This is a non-GAAP number that adjusts for the effects of a one-time, non-cash re-measurement of $13.4 million of our deferred tax asset in 2017. Refer to appendix for reconciliation of non-GAAP financial measures. (3) This is a non-GAAP number that adjusts for $11.4 million of merger related expenses in 2019. Refer to appendix for reconciliation of non-GAAP financial measures. (4) These are non-GAAP numbers that are adjusted for a pre-tax loss of $58.7 million resulting from customer fraud related to a check kiting scheme that was discovered during Q2 2020. Refer to appendix for reconciliation of non-GAAP financial measures. (5)Refer to appendix for reconciliation of non-GAAP financial measures. MEMBER FDIC 9 (6) Annualized
Expenses (2) Noninterest Expense / Average Assets Efficiency Ratio 3.0% 65% (1) Peer Peer(1) 2.5% 60% 2.17% (3) 2.10% 2.06% 2.09% 2.01% 2.0% 55% 54.06% 53.97% (3) 51.77% 51.39% 1.5% 50.60% 50% 1.0% 0.5% 45% 0.0% (4) 40% 2016 2017 2018 2019 YTD 3Q20 2016 2017 2018 2019 YTD 3Q20 (1) BHCPR Peer Group 2: Bank Holding Companies with $3-10 billion of assets through 2Q20. (2)Refer to appendix for reconciliation of non-GAAP financial measures. (3) This is a non-GAAP number that adjusts for $11.4 million of merger related expenses in 2019. Refer to appendix for reconciliation of these non-GAAP financial measures. (4) Annualized MEMBER FDIC 10
Mergers and Expansion Western PA Central OH Upstate NY Branch opens in Hillard, OH LPO Opens in Pittsburgh, PA Northeast OH LPO Opens in Buffalo, NY Eastern PA March 4, 2019 (LPO 2014) October 31, 2016 LPO opens in Independence, OH May 29, 2019 (LPO 2015) Acquired DNB Financial Corp. August 13, 2018 November 30, 2019 Northeast OH Eastern PA Branch Opens in Cuyahoga Falls, OH LPO Opens in Gr. Berks, PA April 22, 2019 (LPO 2012) November 4, 2019 Total Assets $10,000 $9,500 $9,191 $9,000 $8,765 550 1,138 $8,500 8,641 $8,000 $7,500 $7,252 7,627 $7,060 $7,000 $6,943 in $ (millions) $6,500 $6,000 $5,500 $5,000 $4,500 2016 2017 2018 2019 3Q20 MEMBER FDIC 11 S&T Bank DNB First PPP
Eastern PA Expansion DNB Financial Timeline • June 5, 2019 - S&T & DNB announced merger • November 30, 2019 - Merger is finalized • February 10, 2020 - All systems are converted and DNB starts operating under the name S&T Bank • DNB adds ◦ 14 Branches ◦ $900 million in Loans ◦ $991 million in Deposits S&T Bank (Integrity LPO (2019) 2015) S&T Bank (DNB Financial 2019) MEMBER FDIC 12
Markets S&T Operates in 5 Regional Markets Totals as of 09.30.20 Portfolio Loans - $7,395 Deposits - $7,634 Western PA Western PA Upstate NY 6% $453 50% $3,694 Other 3% $224 65% 9% Upstate NY 0% $33 $4,994 Central OH $625 Central OH 2% $116 Northeast OH 2% $142 7% $539 Northeast OH Eastern PA 28% 28% $2,125 $2,084 Eastern PA MEMBER FDIC 13 Dollars in millions
Loan Mix MEMBER FDIC 14 Dollars in millions
Deposit Mix Amount % of Total DDA $2,233 29 % Money Market 2,034 27 % CDs 1,446 19 % Int Bear DDA 983 13 % Savings 938 12 % Total Deposits $7,634 100 % Amount % of Total Personal $4,218 55 % Business 3,348 44 % Brokered 68 1 % Total $7,634 100 % MEMBER FDIC 15 Dollars in millions
Loan Modifications In response to COVID-19, we offered loan customers needs-based payment deferrals and modifications to interest only periods: June 30, 2020 September 30, 2020 October 31, 2020 Total Mod Mod Total Mod Mod Total Mod Mod % Loan Type Balance Balance % Balance Balance % Balance Balance 6/30/20 6/30/20 9/30/20 9/30/20 9/30/20 10/31/20 CRE $3,346 $993 30% $3,290 $322 10 % $3,290 $270 8 % Resi Secured Business* 425 53 13% 427 1 0 % 427 0 0 % Construction 459 47 10% 477 2 0 % 477 3 1 % C&I 1,593 203 13% 1,493 25 2 % 1,493 4 0 % Total Commercial 5,822 1,297 22% 5,687 350 6 % 5,687 277 5 % Total Consumer 1,179 69 6% 1,158 0 0 % 1,158 0 0 % Total $7,001 $1,365 20% $6,845 $350 5 % $6,845 $277 4 % *Reported as Consumer Loans Dollars in millions Excludes PPP loans MEMBER FDIC 16
Commercial Loan Modifications Commercial loan modifications have been reduced to $277 million or 5% of the outstanding balance: Total Modified % of Bal Total Modified % of Bal Loan Type Balance Balance Modified Loan Type Balance Balance Modified Other $495 $15 3 % Manufacturing $298 $2 1 % Multi-Family 455 3 1 % Services 257 0 0 % Offices 397 0 0 % Other 154 0 0 % Health Care 364 13 4 % Construction 133 0 0 % Flex/Mixed Use 299 0 0 % Real Estate Rent/Lease 113 2 2 % Manufacturing 242 1 0 % Transportation 117 0 0 % Hotels 243 230 95 % Public Admin 107 0 0 % Strip Malls 197 6 3 % Health Care 100 0 0 % Retail Space 195 2 1 % Wholesale Trade 91 0 0 % Storage 173 0 0 % Retail Trade 61 0 0 % Dealerships 113 0 0 % Floorplans 62 0 0 % Convenience Stores 58 0 0 % Total C&I 1,493 4 0 % Restaurants 59 0 0 % Total CRE 3,290 270 8 % Total Commercial $5,687 $277 5 % Resi Secured Business* 427 0 0 % Construction 477 3 1 % Total Real Estate $4,194 $273 7 % *Reported as Consumer Loans Dollars in millions Total balances as of September 30, 2020; modified balances reflect loans with active deferrals as of October 31, 2020 Excludes PPP loans MEMBER FDIC 17
Hotels The COVID-19 pandemic is negatively impacting the hospitality industry and our hotel portfolio: Portfolio Total Modified Balance Balance 9/30/20 9/30/20 Balance $243 $230 Number 57 45 • 84% of the portfolio is with a Average Size $4.3 $5.1 Marriott, Hilton, Holiday Inn, or Hyatt chain. • Pre-COVID LTV 58% Internal Total Risk Rating Balance 9/30/20 Pass $8 Special Mention 115 Substandard 120 Total $243 Dollars in millions MEMBER FDIC 18
SBA PPP We dedicated substantial resources to the SBA PPP and approved over $550 million: Total Number of % of. Loan Size Balance(2) Loans Loans. <$50,000 $32 1,441 49.1% <$150,000 66 770 26.3% <$350,000 84 366 12.5% >$350,000 368 355 12.1% Total $550 2,932 PPP loans impacted selected ratios as below: Excluding Including Ratio PPP(1) PPP Impact Net Interest Margin (FTE)(1) 3.36 % 3.29 % (0.07) % ACL / total portfolio loans 1.77 % 1.64 % (0.13) % Nonperforming loans / loans 1.23 % 1.13 % (0.10) % TCE / TA 9.22 % 8.64 % (0.58) % Leverage Ratio 9.71 % 9.11 % (0.60) % Data as of September 30, 2020 Dollars in millions (1)Refer to appendix for reconciliation of non-GAAP financial measures. (2) $19.9 million forgiven through 11/12/2020 MEMBER FDIC 19
Asset Quality Nonperforming Loans / Total Loans Net Charge Offs / Average Loans 0.60%(3) 1.25% 1.13% 0.60% 1.00% 0.45% 0.76% 0.77% 0.76% 0.75% 0.30% (1) 0.25% 0.50% 0.42% Peer 0.22% 0.18% 0.18% 0.15% 0.25% Peer(1) 0.00% 0.00% (2) 2016 2017 2018 2019 3Q 2020 2016 2017 2018 2019 YTD 3Q20 Allowance for Credit Losses (4) 1.80% 1.77% 1.60% 1.40% 1.64% 1.20% Peer(1) 1.03% 1.00% 0.94% 0.98% 0.87% 0.80% 0.60% 0.40% 0.20% 0.00% 2016 2017 2018 2019 3Q 2020 (1) BHCPR Peer Group 2: Bank Holding Companies with $3-10 billion of assets through 2Q20. (2) Annualized MEMBER FDIC 20 (3) Excludes loss from customer fraud in Q2 2020, actual ratio is 1.66%. Refer to appendix for reconciliation of non-GAAP financial measures. (4) Excludes PPP loans, Refer to appendix for reconciliation of non-GAAP financial measures.
Allowance for Credit Losses After adopting CECL in 2020, we have prudently built our ACL in response to the pandemic, its impact on our customers, and the changing economic outlook: Dollars in millions Portfolio Changes: Includes balance changes, internal risk rating changes, and net charge-offs Economic/Qualitative Factors: Includes changes to the reasonable and supportable forecast and changes to qualitative factors MEMBER FDIC 21
Net Interest Income We are asset sensitive but have experienced core NIM stabilization: • Our ex-PPP NIM was stable from Q2 to Q3 • We reduced brokered deposits by $269 million in Q3 due to low-cost customer deposit growth • We significantly reduced deposit rates several times throughout Q2 and Q3 We are proactively managing our interest-bearing deposit costs: We expect favorable repricing on the following funding throughout the next nine months: Funding type Balance Rate CD maturities $838 1.38 % Long-term wholesale funding 46 2.53 % Total $884 1.44 % Data as of September 30, 2020 Dollars in millions MEMBER FDIC 22
Capital We are well-capitalized and have sufficient excess capital: Key points: • The Leverage Ratio and TCE / TA are impacted by PPP. The ex-PPP Leverage Ratio is 9.71% and TCE / TA is 9.22%. • We are taking a prudent approach to capital management, given economic uncertainty. • Our internally-run capital stress test results demonstrate that we have adequate capital cushions. • We are utilizing the five-year CECL transition for regulatory capital purposes. Data as of September 30, 2020 Dollars in millions MEMBER FDIC 23
Valuation Stock Performance Total Annualized Shareholder Return Includes reinvested dividends (Data as of 09.30.20) 1 YR 3 YR 5 YR 10 YR STBA (49.53) % (21.20) % (8.99) % 3.06 % S&P 600 Bank (31.86) % (11.70) % (0.18) % 8.00 % NASDAQ Bank (28.55) % (11.55) % 0.35 % 6.63 % S&P 500 15.09 % 12.25 % 14.12 % 13.72 % Source: Bloomberg Institutional Ownership 62.10 % Insider Ownership 2.16 % Source: NASDAQ MEMBER FDIC 24
Performance Performance Summary YTD YTD 2019 2017 3Q 2020 2019 Excludes 2018 2017 Excludes Excludes (2) (3) 3Q 2020 (5) Merger Exp DTA Fraud Net (Loss)Income (in thousands) ($3,136) $43,214 $98,234 $107,478 $105,334 $72,968 $86,401 Diluted (Loss) Earnings per Share ($0.08) $1.11 $2.82 $3.09 $3.01 $2.09 $2.47 Dividends Declared per Share $0.84 $1.09 $0.99 $0.82 Total Assets (in millions) $9,191 $8,765 $7,252 $7,060 Total Loans (in millions) $7,412 $7,142 $5,949 $5,766 Total Deposits (in millions) $7,634 $7,037 $5,674 $5,428 Return on Average Assets (4) (0.05) % 0.63 % 1.32 % 1.45 % 1.50 % 1.03 % 1.22 % Return on Average Equity (4) (0.36) % 4.91 % 9.98 % 10.92 % 11.60 % 8.37 % 9.90 % Return on Tangible Equity (1)(4) (0.27) % 7.52 % 14.41 % 15.76 % 17.14 % 12.77 % 15.08 % Net Interest Margin (FTE)(1)(4) 3.37 % 3.64 % 3.64 % 3.56 % Nonperforming Assets/Loans+OREO 1.17 % 0.81 % 0.83 % 0.42 % Allowance for Credit Losses/Total Portfolio Loans 1.64 % 0.87 % 1.03 % 0.98 % Net Loan Charge-offs/Average Loans(4) 1.66 % 0.60 % 0.22 % 0.18 % 0.18 % Risk Based Capital-Total 13.18 % 13.22 % 13.21 % 12.55 % Tangible Shareholder Equity/Tangible Assets(1) 8.64 % 9.68 % 9.28 % 8.72 % (1) Refer to appendix for reconciliation of non-GAAP financial measures. (2)These are non-GAAP numbers that adjust for $11.4 million of merger related expenses in 2019. Refer to appendix for reconciliation of these non-GAAP financial measures. (3)These are non-GAAP numbers that adjust for the effects of a one-time, non-cash re-measurement of $13.4 million of our deferred tax asset in 2017. Refer to appendix for reconciliation of non-GAAP financial measures. (4) Annualized. (5) These are non-GAAP numbers that adjusted for a pre-tax loss of $58.7 million resulting from customer fraud related to a check kiting scheme that was discovered during Q2 2020. MEMBER FDIC 25 Refer to appendix for reconciliation of non-GAAP financial measures.
Financial Data Income Statement YTD 3Q 2020 2019 Exludes (1) (2) 2017 Dollars in thousands, except for share data YTD 3Q 2020 Excludes Fraud 2019 Merger Exp 2018 2017 Excludes DTA(3) 2016 Net Interest Income $209,460 $246,791 $234,438 $225,733 $203,259 Noninterest Income 44,110 52,558 49,181 55,462 54,635 Total Revenue 253,570 299,349 283,619 281,195 257,894 Noninterest Expense 135,773 155,766 145,445 147,907 143,232 Merger Expenses 2,342 11,350 — — — — Provision for Credit Losses(4) 124,294 65,623 14,873 14,873 14,995 13,883 17,965 Net Income Before Taxes (8,839) 65,623 117,360 128,710 123,179 119,405 96,697 Taxes (5,703) 22,409 19,126 21,232 17,845 46,437 $33,004 25,305 Net Income ($3,136) $43,214 $98,234 $107,478 $105,334 $72,968 $86,401 $71,392 Diluted Earnings per Share ($0.08) $1.11 $2.82 $3.09 $3.01 $2.09 $2.47 $2.05 Balance Sheet Dollars in thousands 3Q 2020 2019 2018 2017 2016 Securities $718,169 $784,283 $684,872 $698,291 $693,487 Interest-bearing Balances 308,489 124,491 82,740 61,965 87,201 Loans, Net 7,273,870 7,080,184 5,888,023 5,709,544 5,562,437 Other 890,044 775,691 596,586 590,455 599,928 Total Assets $9,190,572 $8,764,649 $7,252,221 $7,060,255 $6,943,053 Deposits $7,633,818 $7,036,576 $5,673,922 $5,427,891 $5,272,377 Borrowings 238,850 416,352 604,316 683,081 771,164 Other Liabilities 175,789 119,723 38,222 65,252 57,556 Equity 1,142,115 1,191,998 935,761 884,031 841,956 Total Liabilities & Equity $9,190,572 $8,764,649 $7,252,221 $7,060,255 $6,943,053 (1)These are non-GAAP numbers that adjusted for a pre-tax loss of $58.7 million resulting from customer fraud related to a check kiting scheme that was discovered during Q2 2020. Refer to appendix for reconciliation of non-GAAP financial measures. (2)These are non-GAAP numbers that adjust for $11.4 million of merger related expenses in 2019. Refer to appendix for reconciliation of these non-GAAP financial measures (3)These are non-GAAP numbers that adjust for the effects of a one-time, non-cash re-measurement of $13.4 million of our deferred tax asset in 2017. Refer to appendix for reconciliation of MEMBER FDIC 26 non-GAAP financial measures. (4) Upon adoption of CECL on January 1, 2020, provision for credit losses has been modified to also include amounts related to unfunded loan commitments.
Financial Data Net Interest Margin Loan Portfolio YTD 3Q 2020 2019 2018 2017 2016 Dollars in thousands 3Q 2020 2019 2018 2017 2016 Commercial Securities - FTE 2.50 % 2.64 % 2.62 % 2.48 % 2.41 % Commercial Real Estate $3,290,138 $3,416,518 $2,921,832 $2,685,994 $2,498,476 Commercial & Industrial 2,042,467 1,720,833 1,493,416 1,433,266 1,401,035 Loans - FTE 4.16 % 4.95 % 4.72 % 4.32 % 4.08 % Construction 477,429 375,445 257,197 384,334 455,884 Total Interest-earning Assets - FTE 3.94 % 4.71 % 4.48 % 4.09 % 3.87 % Total Commercial 5,810,034 5,512,796 4,672,445 4,503,594 4,355,395 Consumer Residential Mortgage 950,887 998,585 726,679 698,774 701,982 Interest-bearing Deposits 0.76 % 1.40 % 1.01 % 0.62 % 0.51 % Home Equity 537,869 538,348 471,562 487,326 482,284 Borrowings 1.60 % 2.76 % 2.19 % 1.27 % 0.86 % Installment and Other Consumer 80,735 79,033 67,546 67,204 65,852 Total Costing Liabilities 0.81 % 1.51 % 1.18 % 0.72 % 0.55 % Construction 15,343 8,390 8,416 4,551 5,906 Total Consumer 1,584,834 1,624,356 1,274,203 1,257,855 1,256,024 Total Portfolio Loans 7,394,868 7,137,152 5,946,648 5,761,449 5,611,419 Net Interest Margin ( FTE)(1) 3.37 % 3.64 % 3.64 % 3.56 % 3.47 % Loans held for sale 16,724 5,256 2,371 4,485 3,793 Purchase Accounting NIM (FTE)(1) 3.33 % 3.62 % 3.62 % 3.53 % 3.41 % Total Loans $7,411,592 $7,142,408 $5,949,019 $5,765,934 $5,615,212 Asset Quality Capital Dollars in thousands YTD 3Q 2020 2019 2018 2017 2016 3Q 2020 2019 2018 2017 2016 Total Nonperforming Loans $84,072 $54,057 $46,073 $23,938 $42,635 Tier 1 Leverage 9.11 % 10.29 % 10.05 % 9.17 % 8.98 % Nonperforming Loans/ Total Loans 1.13 % 0.76 % 0.77 % 0.42 % 0.76 % Common Tier 1 – Risk-Based Capital 11.05 % 11.43 % 11.38 % 10.71 % 10.04 % Nonperforming Assets/ Total Loans + OREO 1.17 % 0.81 % 0.83 % 0.42 % 0.77 % Net Charge-offs (Recoveries)(2)/Average Tier 1 – Risk-Based Capital 11.46 % 11.84 % 11.72 % 11.06 % 10.39 % Loans 1.66 % 0.22 % 0.18 % 0.18 % 0.25 % Allowance for Credit Losses/Total Portfolio Total – Risk-Based Capital 13.18 % 13.22 % 13.21 % 12.55 % 11.86 % Loans 1.64 % 0.87 % 1.03 % 0.98 % 0.94 % Allowance for Credit Losses/Nonperforming Tangible Common Equity/ Loans 144 % 115 % 132 % 236 % 124 % Tangible Assets(1) 8.64 % 9.68 % 9.28 % 8.72 % 8.23 % (1)Refer to appendix for reconciliation of non-GAAP financial measures. MEMBER FDIC 27 (2) Annualized
Appendix Definitions and Reconciliation of GAAP to Non-GAAP Financial Measures: 2020 2020 QTD 2019 Third Second 2Q 2020 Third Excludes Quarter Quarter Fraud Quarter Tangible Book Value (Non-GAAP) Total shareholders' equity $1,142,115 $1,135,777 $982,447 Less: goodwill and other intangible assets (382,681) (383,032) (289,538) Tax effect of other intangible assets 1,946 2,046 439 Tangible common equity (non-GAAP) $761,380 $754,791 $693,348 Common shares outstanding 39,252 39,263 34,245 Tangible book value (non-GAAP) $19.40 $19.22 $20.25 Net Income Excluding Fraud Net (loss) income ($33,072) Adjustment for provision for credit losses 58,671 Tax effect (12,321) Adjusted net income (non-GAAP) $13,278 Diluted Earnings Per Share Adjusted net income (non-GAAP) $13,278 Average shares outstanding - diluted 39,013 Diluted earnings per share (non-GAAP) $0.34 Return on Average Assets (non-GAAP) Adjusted net income (non-GAAP) (annualized) $53,404 Average total assets 9,429,719 Return on average assets (non-GAAP) 0.57 % Return on Average Shareholders' Equity (non-GAAP) Adjusted net income (non-GAAP) (annualized) $53,404 Average total shareholders' equity 1,191,020 Return on average shareholders' equity (non-GAAP) 4.48 % MEMBER FDIC 28
Appendix Definitions and Reconciliation of GAAP to Non-GAAP Financial Measures: 2020 2020 QTD 2019 Third Second 2Q 2020 Third Excludes Quarter Quarter Fraud Quarter Return on Average Tangible Equity (non-GAAP) Net Income (loss) $16,705 ($33,072) ($33,072) $26,936 Nonrecurring items — — 58,671 — Tax effect of nonrecurring items — — (12,321) — Adjusted net income (non-GAAP) $16,705 ($33,072) $13,278 $26,936 Adjusted net income (non-GAAP) (annualized) $66,455 ($133,016) $53,404 $106,865 Plus: amortization of intangibles (annualized) 2,619 2,623 2,623 647 Tax effect of amortization of intangibles (annualized) (550) (551) (551) (136) Net income before amortization of intangibles (annualized) 68,524 (130,944) 55,476 107,376 Average total shareholders' equity 1,145,882 1,191,020 1,191,020 973,711 Less: average goodwill and other intangible assets (382,780) (384,197) (384,197) (289,622) Tax effect of average goodwill and other intangible assets 1,999 2,116 2,116 457 Average total shareholders' equity (non-GAAP) 765,101 808,939 808,939 684,546 Return on average tangible equity (non-GAAP) 8.96 % (16.19) % 6.86 % 15.69 % Net Interest Margin Rate (FTE) (Non-GAAP) Total interest income $76,848 $80,479 $79,813 Less: interest expense (7,572) (10,331) (18,617) Net interest income per consolidated statements of net income 69,276 70,148 61,196 Plus: taxable equivalent adjustment 780 847 934 Net interest income (FTE) (non-GAAP) 70,056 70,995 62,130 Net interest income (FTE) (non-GAAP) (annualized) $278,701 $285,540 $246,494 Average interest earning assets $8,477,074 $8,611,952 $6,816,359 Net Interest Margin (FTE) (non-GAAP) 3.29 % 3.31 % 3.62 % MEMBER FDIC 29
Appendix Definitions and Reconciliation of GAAP to Non-GAAP Financial Measures: 2020 2020 QTD 2019 Third Second 2Q 2020 Third Excludes Quarter Quarter Fraud Quarter PTPP / Average Assets (non-GAAP) Income (loss) before taxes $20,028 ($44,865) $31,679 Plus: Provision for credit losses 17,485 86,759 4,913 Adjusted income before taxes (non-GAAP) $37,513 $41,894 $36,592 Adjusted income before taxes (non-GAAP) (annualized) $149,237 $168,497 $145,175 Average Assets $9,293,004 $9,429,719 $7,354,873 PTPP / Average Assets (non-GAAP) 1.61 % 1.79 % 1.97 % Efficiency Ratio (QTD) (non-GAAP) Noninterest expense $48,246 $43,478 $37,667 Less: nonrecurring items — — — Noninterest income excluding nonrecurring items 48,246 43,478 37,667 Net interest income 69,276 70,148 61,196 Plus: taxable equivalent adjustment 780 847 934 Net interest income (FTE) (non-GAAP) $70,056 $70,995 $62,130 Noninterest income $16,483 $15,224 $13,063 Less: securities gains — (142) — Net interest income (FTE) (non-GAAP) plus noninterest income $86,539 $86,077 $75,193 Efficiency ratio (QTD) (non-GAAP) 55.75 % 50.51 % 50.09 % Net Charge-offs to Average Loans Net charge-offs $68,072 Less: fraud charge off (58,671) Adjusted net charge-offs $9,401 Adjusted net charge-offs (annualized) $37,811 Average loans $7,643,995 Net charge-offs to average loans (non-GAAP) 0.49 % MEMBER FDIC 30
Appendix Definitions and Reconciliation of GAAP to Non-GAAP YTD YTD 2019 2017 Financial Measures: 3Q 2020 2019 Excludes 2018 2017 Excludes 2016 3Q 2020 Excludes Merger Exp DTA Fraud Net Income excluding nonrecurring items Net (loss) income ($3,136) $98,234 $72,968 Nonrecurring items 58,671 11,350 13,433 Tax effect of nonrecurring items (12,321) (2,106) — Adjusted net income (non-GAAP) $43,214 $107,478 $86,401 Diluted Earnings Per Share Adjusted net income (non-GAAP) (annualized) $43,214 $107,478 $86,401 Average shares outstanding - diluted 39,101 34,679 34,955 Diluted earnings per share (non-GAAP) $1.11 $3.09 $2.47 Return on Average Assets (non-GAAP) Adjusted net income (non-GAAP) (annualized) $57,724 $107,478 $86,401 Average total assets 9,162,380 7,435,536 7,060,232 Plus: DTA re-measurement — — 589 Average total assets (non-GAAP) 9,162,380 7,435,536 7,060,821 Return on average assets (non-GAAP) 0.63 % 1.45 % 1.22 % Return on Average Shareholders' Equity (non-GAAP) Adjusted net income (non-GAAP) (annualized) $57,724 $107,478 $86,401 Average total shareholders' equity 1,175,384 983,908 872,130 Plus: DTA re-measurement — — 589 Average total shareholders' equity (non-GAAP) 1,175,384 983,908 872,719 Return on average shareholders' equity (non-GAAP) 4.91 % 10.92 % 9.90 % MEMBER FDIC 31
Appendix Definitions and Reconciliation of GAAP to Non-GAAP YTD YTD 3Q 2020 2019 2017 Financial Measures: 2019 Excludes 2018 2017 Excludes 2016 3Q 2020 Excludes Merger Exp DTA Fraud Return on Average Tangible Equity (non-GAAP) Net (loss) income ($3,136) ($3,136) $98,234 $98,234 $105,334 $72,968 $72,968 $71,392 Nonrecurring items — 58,671 — 11,350 — — 13,433 — Tax effect of nonrecurring items — (12,321) — (2,106) — — — — Adjusted net (loss) income (non-GAAP) ($3,136) $43,214 $98,234 $107,478 $105,334 $72,968 $86,401 $71,392 Adjusted net (loss) income (non-GAAP) (annualized) ($4,189) $57,724 $98,234 $107,478 $105,334 $72,968 $86,401 $71,392 Plus: amortization of intangibles (annualized) 2,595 2,595 836 836 861 1,233 1,233 1,615 Tax effect of amortization of intangibles (annualized) (545) (545) (176) (176) (181) (432) (432) (565) Net (loss) income before amortization of intangibles (annualized) (2,139) 59,774 98,894 108,138 106,014 73,769 87,202 72,442 Average total shareholders' equity 1,175,384 1,175,384 983,908 983,908 908,355 872,130 872,130 823,607 Plus: DTA re-measurement — — — — — — 589 — Less: average goodwill and other intangible assets (383,000) (383,000) (298,228) (298,228) (290,380) (295,937) (295,937) (297,377) Tax effect of average goodwill and other intangible assets 2,116 2,116 639 639 614 1,493 1,493 1,992 Average total shareholders' equity (non-GAAP) 794,500 794,500 686,319 686,319 618,589 577,686 578,275 528,222 Return on average tangible equity (non-GAAP) (0.27) % 7.52 % 14.41 % 15.76 % 17.14 % 12.77 % 15.08 % 13.71 % Net Interest Margin Rate (FTE) (Non-GAAP) Total interest income $244,916 $320,484 $289,826 $260,642 $227,774 Less: interest expense (35,456) (73,693) (55,388) (34,909) (24,515) Net interest income per consolidated statements of net income 209,460 246,791 234,438 225,733 203,259 Plus: taxable equivalent adjustment 2,477 3,757 3,804 7,493 7,043 Net interest income (FTE) (non-GAAP) 211,937 250,548 238,242 233,226 210,302 Purchase accounting adjustment (2,478) (1,048) (1,242) (1,839) (2,952) Purchase accounting net interest income (FTE) (non-GAAP) $209,459 $249,500 $237,000 $231,387 $207,350 Average interest earning assets $8,389,976 $6,885,372 $6,549,679 $6,549,821 $6,067,151 Net Interest Margin 3.33 % 3.58 % 3.58 % 3.45 % 3.35 % Adjustment to FTE basis 0.04 % 0.06 % 0.06 % 0.11 % 0.12 % Net Interest Margin (FTE) (non-GAAP) 3.37 % 3.64 % 3.64 % 3.56 % 3.47 % Purchase accounting adjustment (0.05) % (0.02) % (0.02) % (0.03) % (0.06) % Purchase accounting NIM (FTE) (non-GAAP) 3.32 % 3.62 % 3.62 % 3.53 % 3.41 % MEMBER FDIC 32
Appendix Definitions and Reconciliation of GAAP to Non-GAAP YTD Financial Measures: YTD 2019 2017 3Q 2020 2019 Excludes 2018 2017 Excludes 2016 3Q 2020 Excludes Merger Exp DTA PPP loans Efficiency Ratio (YTD) (non-GAAP) Noninterest expense $138,115 $167,116 $145,445 $147,907 $143,232 Less: nonrecurring items — (11,350) — — — Noninterest income excluding nonrecurring items 138,115 155,766 145,445 147,907 143,232 Net interest income 209,460 246,791 234,438 225,733 203,259 Plus: taxable equivalent adjustment 2,477 3,757 3,804 7,493 7,043 Net interest income (FTE) (non-GAAP) $211,937 $250,548 $238,242 $233,226 $210,302 Noninterest income $44,110 $52,558 $49,181 $55,462 $54,635 Less: securities (gains) losses, net (142) 26 — (3,000) — Net interest income (FTE) (non-GAAP) plus noninterest income $255,905 $303,132 $287,423 $285,688 $264,937 Efficiency ratio (YTD) (non-GAAP) 53.97 % 51.39 % 50.60 % 51.77 % 54.06 % Leverage Ratio (Non-GAAP) Tier 1 capital $813,100 Adjusted average assets (GAAP basis) 8,926,213 Less: average PPP loans (549,250) Adjusted average assets (non-GAAP) 8,376,963 Leverage ratio (non-GAAP) 9.71 % PTPP/Average loans (Non-GAAP) (Loss) income before taxes ($8,839) $117,360 $117,360 $123,179 $119,405 $96,697 Add: merger related expenses — — 11,350 — — — Add: provision for credit losses 124,294 14,873 14,873 14,995 13,883 17,965 Total adjusted income before taxes (non-GAAP) 115,455 132,233 143,583 138,174 133,288 114,662 Total adjusted income before taxes (non-GAAP) (annualized) 154,221 132,233 143,583 138,174 133,288 114,662 Average assets 9,162,380 7,435,536 7,435,536 7,035,376 7,060,232 6,588,255 PTPP / Average Assets (non-GAAP) 1.68 % 1.78 % 1.93 % 1.96 % 1.89 % 1.74 % MEMBER FDIC 33
Appendix Definitions and Reconciliation of GAAP to Non-GAAP YTD YTD 2019 2017 Financial Measures: 3Q 2020 2019 Excludes 2018 2017 Excludes 2016 3Q 2020 Excludes Merger Exp DTA PPP loans Allowance for Credit Losses /Total Portfolio Loans (Non-GAAP) Allowance for credit losses $120,998 Total portfolio loans (GAAP basis) 7,394,868 Less: PPP loans (550,067) Adjusted portfolio loans (non-GAAP) 6,844,801 ACL/Total Portfolio Loans (non-GAAP) 1.77 % Nonperforming Loans/Total Loans (Non-GAAP) Nonperforming loans (GAAP basis) $84,072 Total loans (GAAP basis) 7,411,592 Less: PPP loans (550,067) Adjusted total loans (non-GAAP) 6,861,525 Nonperforming loans/total loans (non-GAAP) 1.23 % Tangible Shareholders' Equity/Tangible Assets (Non-GAAP) Total shareholders' equity (GAAP basis) $1,142,115 $1,142,115 $1,191,998 $935,761 $884,031 $841,956 Less: goodwill and other intangible assets (383,000) (383,000) (382,540) (290,047) (295,347) (296,580) Tax effect of other intangible assets 2,116 2,116 2,293 546 1,287 1,719 Tangible shareholders' equity (non-GAAP) $761,231 $761,231 $811,751 $646,260 $589,971 $547,095 Total assets (GAAP basis) 9,190,572 9,190,572 8,764,649 7,252,221 7,060,255 6,943,053 Less: PPP loans — (550,067) — — — — Less: goodwill and other intangible assets (383,000) (383,000) (382,540) (290,047) (295,347) (296,580) Tax effect of other intangible assets 2,116 2,116 2,293 546 1,287 1,719 Tangible assets (non-GAAP) 8,809,688 8,259,621 8,384,402 6,962,720 6,766,195 6,648,192 Tangible shareholders' equity/tangible assets (non-GAAP) 8.64 % 9.22 % 9.68 % 9.28 % 8.72 % 8.23 % MEMBER FDIC 34
Third Quarter 2020 MEMBERMEMBER FDIC FDIC