Message from our Chairman & CEO
Highlights of fourth quarter and full-year 2020 financial results:
- Fourth quarter 2020 net income of
$28.3 million and diluted EPS of$0.52 - Fourth quarter 2020 adjusted net income1 of
$34.3 million and adjusted diluted EPS1 of$0.62 , an increase from$32.8 million and$0.60 , respectively, in the third quarter of 2020, and$31.8 million and$0.57 , respectively, in the fourth quarter of 2019 - Full year 2020 net income of
$100.3 million and diluted EPS of$1.83 - Full year 2020 adjusted net income1 of
$108.7 million and adjusted diluted EPS1 of$1.98 - Tangible book value per common share1 of
$16.66 atDecember 31, 2020 , as compared to$16.32 atSeptember 30, 2020 , and$15.46 atDecember 31, 2019 , an increase of 7.8% year-over-year - Wealth management assets under care of
$10.23 billion atDecember 31, 2020 , up from$9.50 billion atSeptember 30, 2020 , and$9.70 billion atDecember 31, 2019
Other recent highlights:
- Completion of the previously announced branch consolidation plan
- Definitive agreement to acquire
Cummins-American Corp. , the holding company forGlenview State Bank - Temporary relief via regulatory Interim Final Rule pronouncement on the interchange revenue impacts of the Durbin Amendment
January 2021 dividend of$0.23 per common share, up from$0.22 inOctober 2020 , which represents nearly a 5% increase- For additional information, please refer to the 4Q20 Quarterly Earnings Supplement
Fourth Quarter Financial Results
Net income for
Pre-provision net revenue1 for the fourth quarter of 2020 was
1 See “Non-GAAP Financial Information” below.
The Company views certain non-operating items, including acquisition-related and other restructuring charges, as adjustments to net income reported under
In accordance with the Company’s previously announced plans, 12 banking centers were closed on
On
Acquisition of
On
Under the terms of the merger agreement, CAC’s shareholders will have the right to receive 444.4783 shares of First Busey’s common stock and
COVID-19 Update
The Company continues to navigate the economic environment caused by COVID-19 effectively and prudently. The Company entered this crisis from a position of strength and remains resolute in its focus on serving its customers, communities and associates while protecting its balance sheet. Nevertheless, the Company remains vigilant, given that the negative impacts of COVID-19 are expected to continue in future quarters as the course of the economic recovery remains unclear. These negative impacts may include further margin compression, increased provision expense, lower customer service fees and a deterioration in asset quality.
To alleviate some of the financial hardships qualifying customers faced as a result of COVID-19,
As part of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”),
On
Regulatory Relief
On
Announced Dividend Increase
The Company will pay a cash dividend on
First Busey’s goal of being a strong community bank for the communities it serves begins with outstanding associates. The Company is honored to be named among the 2020 Best Banks to Work For by American Banker, the 2020 Best Places to Work in
As we reflect back on 2020 and look ahead to 2021, the Company remains steadfast in our commitment to the customers and communities we serve. The pending CAC transaction fits with our acquisition strategy as the addition of GSB will grow the Company’s current geographic footprint, allowing the Company to serve customers by expanding in the
/s/
Chairman, President & Chief Executive Officer
SELECTED FINANCIAL HIGHLIGHTS1 | ||||||||||||||||||
(dollars in thousands, except per share data) | ||||||||||||||||||
As of and for the | As of and for the | |||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||||
2020 | 2020 | 2020 | 2019 | 2020 | 2019 | |||||||||||||
EARNINGS & PER SHARE DATA | ||||||||||||||||||
Net income | $ | 28,345 | $ | 30,829 | $ | 25,806 | $ | 28,571 | $ | 100,344 | $ | 102,953 | ||||||
Diluted earnings per share | 0.52 | 0.56 | 0.47 | 0.52 | 1.83 | 1.87 | ||||||||||||
Cash dividends paid per share | 0.22 | 0.22 | 0.22 | 0.21 | 0.88 | 0.84 | ||||||||||||
Pre-provision net revenue2,3 | 38,507 | 45,922 | 45,394 | 37,479 | 165,672 | 144,862 | ||||||||||||
Revenue4 | 102,580 | 102,464 | 98,462 | 102,969 | 399,869 | 403,656 | ||||||||||||
Net income by operating segment | ||||||||||||||||||
Banking | $ | 28,573 | $ | 31,744 | $ | 25,985 | $ | 29,573 | $ | 101,226 | $ | 106,409 | ||||||
Remittance Processing | 406 | 578 | 528 | 958 | 2,372 | 4,060 | ||||||||||||
Wealth Management | 3,334 | 3,166 | 3,082 | 3,465 | 13,181 | 11,135 | ||||||||||||
AVERAGE BALANCES | ||||||||||||||||||
Cash and cash equivalents | $ | 551,844 | $ | 836,097 | $ | 563,022 | $ | 533,519 | $ | 607,525 | $ | 427,223 | ||||||
Investment securities | 2,077,284 | 1,824,327 | 1,717,790 | 1,677,962 | 1,840,100 | 1,769,291 | ||||||||||||
Loans held for sale | 52,745 | 104,965 | 108,821 | 68,480 | 82,106 | 38,447 | ||||||||||||
Portfolio loans | 6,990,414 | 7,160,757 | 7,216,825 | 6,657,283 | 7,006,946 | 6,469,920 | ||||||||||||
Interest-earning assets | 9,557,265 | 9,805,948 | 9,485,200 | 8,810,505 | 9,417,938 | 8,590,262 | ||||||||||||
Total assets | 10,419,364 | 10,680,995 | 10,374,820 | 9,713,858 | 10,292,256 | 9,443,690 | ||||||||||||
Non-interest bearing deposits | 2,545,830 | 2,592,130 | 2,472,568 | 1,838,523 | 2,364,442 | 1,746,938 | ||||||||||||
Interest-bearing deposits | 5,985,020 | 6,169,377 | 6,073,795 | 6,052,529 | 6,077,539 | 5,927,154 | ||||||||||||
Total deposits | 8,530,850 | 8,761,507 | 8,546,363 | 7,891,052 | 8,441,981 | 7,674,092 | ||||||||||||
Securities sold under agreements to repurchase | 194,610 | 190,046 | 184,208 | 204,076 | 187,811 | 196,681 | ||||||||||||
Interest-bearing liabilities | 6,482,475 | 6,694,561 | 6,527,709 | 6,537,611 | 6,554,428 | 6,414,969 | ||||||||||||
Total liabilities | 9,158,066 | 9,432,547 | 9,141,550 | 8,489,411 | 9,051,882 | 8,257,563 | ||||||||||||
Stockholders' common equity | 1,261,298 | 1,248,448 | 1,233,270 | 1,224,447 | 1,240,374 | 1,186,127 | ||||||||||||
Tangible stockholders' common | ||||||||||||||||||
Equity3 | 896,178 | 880,958 | 863,571 | 845,179 | 871,750 | 814,461 | ||||||||||||
PERFORMANCE RATIOS | ||||||||||||||||||
Pre-provision net revenue to | ||||||||||||||||||
average assets2,3 | 1.47 | % | 1.71 | % | 1.76 | % | 1.53 | % | 1.61 | % | 1.53 | % | ||||||
Return on average assets | 1.08 | % | 1.15 | % | 1.00 | % | 1.17 | % | 0.97 | % | 1.09 | % | ||||||
Return on average common equity | 8.94 | % | 9.82 | % | 8.42 | % | 9.26 | % | 8.09 | % | 8.68 | % | ||||||
Return on average tangible | ||||||||||||||||||
common equity3 | 12.58 | % | 13.92 | % | 12.02 | % | 13.41 | % | 11.51 | % | 12.64 | % | ||||||
Net interest margin3,5 | 3.06 | % | 2.86 | % | 3.03 | % | 3.27 | % | 3.03 | % | 3.38 | % | ||||||
Efficiency ratio3 | 59.70 | % | 52.42 | % | 50.97 | % | 60.54 | % | 55.68 | % | 61.29 | % | ||||||
Non-interest revenue as a % of total revenue4 | 28.90 | % | 31.92 | % | 28.08 | % | 30.14 | % | 29.24 | % | 28.84 | % | ||||||
NON-GAAP INFORMATION | ||||||||||||||||||
Adjusted pre-provision net revenue2,3 | $ | 47,156 | $ | 48,701 | $ | 46,448 | $ | 41,131 | $ | 180,516 | $ | 166,156 | ||||||
Adjusted net income3 | 34,255 | 32,803 | 26,191 | 31,782 | 108,728 | 118,429 | ||||||||||||
Adjusted diluted earnings per share3 | 0.62 | 0.60 | 0.48 | 0.57 | 1.98 | 2.15 | ||||||||||||
Adjusted pre-provision net revenue | ||||||||||||||||||
to average assets3 | 1.80 | % | 1.81 | % | 1.80 | % | 1.68 | % | 1.75 | % | 1.76 | % | ||||||
Adjusted return on average assets3 | 1.31 | % | 1.22 | % | 1.02 | % | 1.30 | % | 1.06 | % | 1.25 | % | ||||||
Adjusted return on average tangible | ||||||||||||||||||
common equity3 | 15.21 | % | 14.81 | % | 12.20 | % | 14.92 | % | 12.47 | % | 14.54 | % | ||||||
Adjusted net interest margin3,5 | 2.96 | % | 2.75 | % | 2.93 | % | 3.14 | % | 2.92 | % | 3.23 | % | ||||||
Adjusted efficiency ratio3 | 52.39 | % | 49.97 | % | 50.48 | % | 57.02 | % | 53.02 | % | 56.35 | % | ||||||
1 Results are unaudited. | ||||||||||||||||||
2 Net interest income plus non-interest income, excluding security gains and losses, less non-interest expense. | ||||||||||||||||||
3 See “Non-GAAP Financial Information” below. | ||||||||||||||||||
4 Revenue consist of net interest income plus non-interest income, excluding security gains and losses. | ||||||||||||||||||
5 On a tax-equivalent basis, assuming a federal income tax rate of 21%. | ||||||||||||||||||
Condensed Consolidated Balance Sheets1 | As of | |||||||||||||||
(dollars in thousands, except per share data) | ||||||||||||||||
2020 | 2020 | 2020 | 2020 | 2019 | ||||||||||||
Assets | ||||||||||||||||
Cash and cash equivalents | $ | 688,537 | $ | 479,721 | $ | 1,050,072 | $ | 342,848 | $ | 529,288 | ||||||
Investment securities | 2,266,717 | 2,098,657 | 1,701,992 | 1,770,881 | 1,654,209 | |||||||||||
Loans held for sale | 42,813 | 87,772 | 108,140 | 89,943 | 68,699 | |||||||||||
Commercial loans | 5,368,897 | 5,600,705 | 5,637,999 | 5,040,507 | 4,943,646 | |||||||||||
Retail real estate and retail other loans | 1,445,280 | 1,520,606 | 1,591,021 | 1,704,992 | 1,743,603 | |||||||||||
Portfolio loans | $ | 6,814,177 | $ | 7,121,311 | $ | 7,229,020 | $ | 6,745,499 | $ | 6,687,249 | ||||||
Allowance | (101,048 | ) | (98,841 | ) | (96,046 | ) | (84,384 | ) | (53,748 | ) | ||||||
Premises and equipment | 135,191 | 144,001 | 146,951 | 149,772 | 151,267 | |||||||||||
363,521 | 365,960 | 368,053 | 370,572 | 373,129 | ||||||||||||
Right of use asset | 7,714 | 7,251 | 8,511 | 9,074 | 9,490 | |||||||||||
Other assets | 326,425 | 333,796 | 319,272 | 327,200 | 276,146 | |||||||||||
Total assets | $ | 10,544,047 | $ | 10,539,628 | $ | 10,835,965 | $ | 9,721,405 | $ | 9,695,729 | ||||||
Liabilities & Stockholders' Equity | ||||||||||||||||
Non-interest bearing deposits | $ | 2,552,039 | $ | 2,595,075 | $ | 2,764,408 | $ | 1,910,673 | $ | 1,832,619 | ||||||
Interest-bearing checking, savings, and money | ||||||||||||||||
market deposits | 5,006,462 | 4,819,859 | 4,781,761 | 4,580,547 | 4,534,927 | |||||||||||
Time deposits | 1,119,348 | 1,227,767 | 1,363,497 | 1,482,013 | 1,534,850 | |||||||||||
Total deposits | $ | 8,677,849 | $ | 8,642,701 | $ | 8,909,666 | $ | 7,973,233 | $ | 7,902,396 | ||||||
Securities sold under agreements to | ||||||||||||||||
repurchase | 175,614 | 201,641 | 194,249 | 167,250 | 205,491 | |||||||||||
Short-term borrowings | 4,658 | 4,651 | 24,648 | 21,358 | 8,551 | |||||||||||
Long-term debt | 226,792 | 226,801 | 256,837 | 134,576 | 182,522 | |||||||||||
Junior subordinated debt owed to | ||||||||||||||||
unconsolidated trusts | 71,468 | 71,427 | 71,387 | 71,347 | 71,308 | |||||||||||
Lease liability | 7,757 | 7,342 | 8,601 | 9,150 | 9,552 | |||||||||||
Other liabilities | 109,840 | 129,360 | 134,493 | 126,906 | 95,475 | |||||||||||
Total liabilities | $ | 9,273,978 | $ | 9,283,923 | $ | 9,599,881 | $ | 8,503,820 | $ | 8,475,295 | ||||||
Total stockholders' equity | $ | 1,270,069 | $ | 1,255,705 | $ | 1,236,084 | $ | 1,217,585 | $ | 1,220,434 | ||||||
Total liabilities & stockholders' equity | $ | 10,544,047 | $ | 10,539,628 | $ | 10,835,965 | $ | 9,721,405 | $ | 9,695,729 | ||||||
Share Data | ||||||||||||||||
Book value per common share | $ | 23.34 | $ | 23.03 | $ | 22.67 | $ | 22.38 | $ | 22.28 | ||||||
Tangible book value per common share2 | $ | 16.66 | $ | 16.32 | $ | 15.92 | $ | 15.57 | $ | 15.46 | ||||||
Ending number of common shares outstanding | 54,404,379 | 54,522,231 | 54,516,000 | 54,401,208 | 54,788,772 | |||||||||||
1 Results are unaudited except for amounts reported as of | ||||||||||||||||
2 See “Non-GAAP Financial Information” below, excludes tax effect of other intangible assets. | ||||||||||||||||
Condensed Consolidated Statements of Income1 | |||||||||||||
(dollars in thousands, except per share data) | |||||||||||||
For the | For the | ||||||||||||
Three Months Ended | Year Ended | ||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||
Interest and fees on loans | $ | 71,525 | $ | 76,290 | $ | 284,959 | $ | 304,193 | |||||
Interest on investment securities | 9,651 | 10,682 | 39,916 | 45,721 | |||||||||
Other interest income | 127 | 1,824 | 1,723 | 6,320 | |||||||||
Total interest income | $ | 81,303 | $ | 88,796 | $ | 326,598 | $ | 356,234 | |||||
Interest on deposits | 4,638 | 13,670 | 30,691 | 55,077 | |||||||||
Interest on securities sold under agreements to | |||||||||||||
repurchase | 64 | 559 | 660 | 2,348 | |||||||||
Interest on short-term borrowings | 19 | 156 | 234 | 1,041 | |||||||||
Interest on long-term debt | 2,906 | 1,719 | 9,118 | 7,131 | |||||||||
Interest on junior subordinated debt owed to | |||||||||||||
unconsolidated trusts | 740 | 756 | 2,960 | 3,414 | |||||||||
Total interest expense | $ | 8,367 | $ | 16,860 | $ | 43,663 | $ | 69,011 | |||||
Net interest income | $ | 72,936 | $ | 71,936 | $ | 282,935 | $ | 287,223 | |||||
Provision for credit losses | 3,141 | 2,367 | 38,797 | 10,406 | |||||||||
Net interest income after provision for credit losses | $ | 69,795 | $ | 69,569 | $ | 244,138 | $ | 276,817 | |||||
Wealth management fees | 10,632 | 11,223 | 42,928 | 38,561 | |||||||||
Fees for customer services | 8,204 | 9,048 | 31,604 | 36,683 | |||||||||
Remittance processing | 3,930 | 3,765 | 15,396 | 15,042 | |||||||||
Mortgage revenue | 3,159 | 3,576 | 13,038 | 11,703 | |||||||||
Income on bank owned life insurance | 1,019 | 1,142 | 5,380 | 5,795 | |||||||||
Security gains (losses), net | 855 | 605 | 1,331 | (18 | ) | ||||||||
Other | 2,700 | 2,279 | 8,588 | 8,649 | |||||||||
Total non-interest income | $ | 30,499 | $ | 31,638 | $ | 118,265 | $ | 116,415 | |||||
Salaries, wages and employee benefits | 31,322 | 35,117 | 126,719 | 140,473 | |||||||||
Data processing | 4,043 | 6,462 | 16,426 | 21,511 | |||||||||
Net occupancy expense of premises | 4,188 | 4,811 | 17,607 | 18,176 | |||||||||
Furniture and equipment expense | 2,239 | 2,570 | 9,550 | 9,506 | |||||||||
Professional fees | 2,888 | 2,103 | 8,396 | 11,104 | |||||||||
Amortization of intangible assets | 2,439 | 2,681 | 10,008 | 9,547 | |||||||||
Other | 16,954 | 11,746 | 45,491 | 48,477 | |||||||||
Total non-interest expense | $ | 64,073 | $ | 65,490 | $ | 234,197 | $ | 258,794 | |||||
Income before income taxes | $ | 36,221 | $ | 35,717 | $ | 128,206 | $ | 134,438 | |||||
Income taxes | 7,876 | 7,146 | 27,862 | 31,485 | |||||||||
Net income | $ | 28,345 | $ | 28,571 | $ | 100,344 | $ | 102,953 | |||||
Per Share Data | |||||||||||||
Basic earnings per common share | $ | 0.52 | $ | 0.52 | $ | 1.84 | $ | 1.88 | |||||
Diluted earnings per common share | $ | 0.52 | $ | 0.52 | $ | 1.83 | $ | 1.87 | |||||
Average common shares outstanding | 54,532,705 | 55,055,530 | 54,567,429 | 54,851,652 | |||||||||
Diluted average common shares outstanding | 54,911,458 | 55,363,258 | 54,826,939 | 55,132,494 | |||||||||
1 Results are unaudited. | |||||||||||||
Balance Sheet Growth
Total assets were
Average portfolio loans were
Total deposits were
Net Interest Margin and Net Interest Income
Net interest margin for the fourth quarter of 2020 was 3.06%, compared to 2.86% for the third quarter of 2020 and 3.27% for the fourth quarter of 2019. Net interest income was
During the fourth quarter of 2020, PPP loan interest and net fees combined were
Net interest margin was also negatively impacted by the sizeable balance of lower-yielding PPP loans, the Company’s significant liquidity position and the issuance of subordinated debt completed during the second quarter. Those impacts were partially offset by the Company’s efforts to lower deposit funding costs (cost of deposits declined to 0.22% in the fourth quarter of 2020, as compared to 0.69% in the fourth quarter of 2019) as well as the fees recognized related to the PPP loans described above.
Asset Quality
The Company continues to see sound and stable asset quality metrics. Loans 30-89 days past due were
Net charge-offs totaled
As a matter of policy and practice, the Company limits the level of concentration exposure in any particular loan segment and maintains a well-diversified loan portfolio.
Asset Quality1 | |||||||||||||||
(dollars in thousands) | As of and for the Three Months Ended | ||||||||||||||
2020 | 2020 | 2020 | 2020 | 2019 | |||||||||||
Portfolio loans | $ | 6,814,177 | $ | 7,121,311 | $ | 7,229,020 | $ | 6,745,499 | $ | 6,687,249 | |||||
Portfolio loans excluding | |||||||||||||||
amortized cost of PPP loans | 6,367,774 | 6,384,916 | 6,499,734 | 6,745,499 | 6,687,249 | ||||||||||
Loans 30-89 days past due | 7,578 | 6,708 | 5,166 | 10,150 | 14,271 | ||||||||||
Non-performing loans: | |||||||||||||||
Non-accrual loans | 22,930 | 23,898 | 25,095 | 25,672 | 27,896 | ||||||||||
Loans 90+ days past due | 1,371 | 279 | 285 | 1,540 | 1,611 | ||||||||||
Total non-performing loans | $ | 24,301 | $ | 24,177 | $ | 25,380 | $ | 27,212 | $ | 29,507 | |||||
Total non-performing loans, | |||||||||||||||
segregated by geography | |||||||||||||||
16,234 | 15,097 | 16,285 | 17,761 | 20,428 | |||||||||||
6,764 | 6,867 | 5,327 | 5,711 | 5,227 | |||||||||||
1,303 | 2,213 | 3,768 | 3,740 | 3,852 | |||||||||||
Other non-performing assets | 4,571 | 4,978 | 3,755 | 3,553 | 3,057 | ||||||||||
Total non-performing assets | $ | 28,872 | $ | 29,155 | $ | 29,135 | $ | 30,765 | $ | 32,564 | |||||
Total non-performing assets to | |||||||||||||||
total assets | 0.27 | % | 0.28 | % | 0.27 | % | 0.32 | % | 0.34 | % | |||||
Total non-performing assets to | |||||||||||||||
portfolio loans and non- | |||||||||||||||
performing assets | 0.42 | % | 0.41 | % | 0.40 | % | 0.46 | % | 0.49 | % | |||||
Allowance to portfolio loans | 1.48 | % | 1.39 | % | 1.33 | % | 1.25 | % | 0.80 | % | |||||
Allowance to portfolio loans, | |||||||||||||||
excluding PPP | 1.59 | % | 1.55 | % | 1.48 | % | 1.25 | % | 0.80 | % | |||||
Allowance as a percentage of | |||||||||||||||
non-performing loans | 415.82 | % | 408.82 | % | 378.43 | % | 310.10 | % | 182.15 | % | |||||
Net charge-offs | $ | 934 | $ | 2,754 | $ | 1,229 | $ | 3,413 | $ | 1,584 | |||||
Provision | 3,141 | 5,549 | 12,891 | 17,216 | 2,367 | ||||||||||
1 Results are unaudited. | |||||||||||||||
Non-Interest Income
Total non-interest income of
Wealth management fees were
Remittance processing revenue from the Company’s subsidiary, FirsTech, of
Fees for customer services were
Mortgage revenue of
Operating Efficiency
Total non-interest expense was
The efficiency ratio was 59.70% for the quarter ended
Noteworthy components of non-interest expense are as follows:
- Salaries, wages and employee benefits were
$31.3 million in the fourth quarter of 2020, a decrease from$32.8 million in the third quarter of 2020 and$35.1 million from the fourth quarter of 2019. Excluding non-operating adjustments1, salaries, wages and employee benefits increased from$30.8 million in the third quarter of 2020 to$31.2 million in the fourth quarter of 2020. The third quarter of 2020 included$2.0 million in non-operating severance expense related to the banking center closures and operating model reorganization. Total full-time equivalents atDecember 31, 2020 numbered 1,346 compared to 1,371 atSeptember 30, 2020 and 1,531 atDecember 31, 2019 , a decline of 12% year-over-year. - Data processing expenses were
$4.0 million in the fourth quarter of 2020 as compared to$3.9 million in the third quarter of 2020 and$6.5 million in the fourth quarter of 2019. The fourth quarter of 2019 included$1.4 million of non-operating expenses related to payment of merger and conversion expenses. - Other expense in the fourth quarter of 2020 of
$17.0 million increased as compared to$9.0 million in the third quarter of 2020 and$11.7 million in the fourth quarter of 2019. Non-operating pretax acquisition expenses and other restructuring costs recorded in the fourth quarter of 2020 included$6.9 million of fixed asset impairments related to theOctober 2020 banking centers closures and further impairment on a banking center that had been closed related to a past acquisition. Excluding those items, other expense increased$1.1 million in the quarter, primarily related to Federal new market tax credit amortization which reduces income taxes.
Capital Strength
The Company's strong capital levels, coupled with its earnings, have allowed
As of
1 See “Non-GAAP Financial Information” below.
4Q20 Quarterly Earnings Supplement
For additional information on the Company’s response to COVID-19, financial condition and operating results, please refer to the 4Q20 Quarterly Earnings Supplement presentation furnished via Form 8-K on
Corporate Profile
As of
Busey has been named a Best Place to Work across the company footprint since 2016 by Best Companies Group. We are honored to be consistently recognized by national and local organizations for our engaged culture of integrity and commitment to community development.
For more information about us, visit busey.com.
Category: Financial
Source:
Contacts:
217-365-4130
Non-GAAP Financial Information
This earnings release contains certain financial information determined by methods other than GAAP. These measures include adjusted pre-provision net revenue, adjusted net income, adjusted diluted earnings per share, adjusted return on average assets, adjusted net interest margin, adjusted efficiency ratio, tangible common equity, tangible common equity to tangible assets, tangible book value per share and return on average tangible common equity. Management uses these non-GAAP measures, together with the related GAAP measures, in analysis of the Company’s performance and in making business decisions. Management also uses these measures for peer comparisons.
A reconciliation to what management believes to be the most direct compared GAAP financial measures, specifically total net interest income in the case of adjusted pre-provision net revenue, net income in the case of adjusted net income, adjusted diluted earnings per share and adjusted return on average assets, total net interest income in the case of adjusted net interest margin, total non-interest income and total non-interest expense in the case of adjusted efficiency ratio, and total stockholders’ equity in the case of tangible common equity, tangible common equity to tangible assets, tangible book value per share and return on average tangible common equity, appears below. The Company believes the adjusted measures are useful for investors and management to understand the effects of certain non-recurring non-interest items and provide additional perspective on the Company’s performance over time as well as comparison to the Company’s peers.
These non-GAAP disclosures have inherent limitations and are not audited. They should not be considered in isolation or as a substitute for the results reported in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Tax effected numbers included in these non-GAAP disclosures are based on estimated statutory rates or effective rates as appropriate.
Reconciliation of Non-GAAP Financial Measures – Adjusted Pre-Provision Net Revenue | ||||||||||||||||
(dollars in thousands) | ||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||
2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Net interest income | $ | 72,936 | $ | 69,753 | $ | 71,936 | $ | 282,935 | $ | 287,223 | ||||||
Non-interest income | 30,499 | 32,285 | 31,638 | 118,265 | 116,415 | |||||||||||
Less securities (gains) and losses, net | (855 | ) | 426 | (605 | ) | (1,331 | ) | 18 | ||||||||
Non-interest expense | (64,073 | ) | (56,542 | ) | (65,490 | ) | (234,197 | ) | (258,794 | ) | ||||||
Pre-provision net revenue | $ | 38,507 | $ | 45,922 | $ | 37,479 | $ | 165,672 | $ | 144,862 | ||||||
Acquisition and other restructuring expenses | 7,550 | 2,529 | 3,652 | 10,711 | 20,094 | |||||||||||
Provision for unfunded commitments | (12 | ) | 250 | - | 1,822 | - | ||||||||||
New Market Tax Credit amortization | 1,111 | - | - | 2,311 | 1,200 | |||||||||||
Adjusted pre-provision net revenue | $ | 47,156 | $ | 48,701 | $ | 41,131 | $ | 180,516 | $ | 166,156 | ||||||
Average total assets | $ | 10,419,364 | $ | 10,680,995 | $ | 9,713,858 | $ | 10,292,256 | $ | 9,443,690 | ||||||
Reported: Pre-provision net revenue to | ||||||||||||||||
average assets1 | 1.47 | % | 1.71 | % | 1.53 | % | 1.61 | % | 1.53 | % | ||||||
Adjusted: Pre-provision net revenue to | ||||||||||||||||
average assets1 | 1.80 | % | 1.81 | % | 1.68 | % | 1.75 | % | 1.76 | % | ||||||
1 Annualized measure. | ||||||||||||||||
Reconciliation of Non-GAAP Financial Measures – Adjusted Net Income, Adjusted Diluted Earnings Per Share and Adjusted Return on Average Assets | |||||||||||||||||
(dollars in thousands) | |||||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||||
2020 | 2020 | 2019 | 2020 | 2019 | |||||||||||||
Net income | $ | 28,345 | $ | 30,829 | $ | 28,571 | $ | 100,344 | $ | 102,953 | |||||||
Acquisition expenses | |||||||||||||||||
Salaries, wages and employee benefits | - | - | 367 | - | 4,083 | ||||||||||||
Data processing | 56 | - | 1,017 | 56 | 1,523 | ||||||||||||
Lease or fixed asset impairment | 245 | 234 | 165 | 479 | 580 | ||||||||||||
Professional fees and other | 479 | 99 | 879 | 864 | 8,477 | ||||||||||||
Other restructuring costs | |||||||||||||||||
Salaries, wages and employee benefits | 113 | 2,011 | 38 | 2,470 | 495 | ||||||||||||
Data processing | - | - | 351 | - | 827 | ||||||||||||
Fixed asset impairment | 6,657 | - | 1,861 | 6,657 | 1,861 | ||||||||||||
Professional fees and other | - | 185 | 796 | 185 | 2,248 | ||||||||||||
MSR valuation impairment | - | - | (1,822 | ) | - | - | |||||||||||
Related tax benefit | (1,640 | ) | (555 | ) | (441 | ) | (2,327 | ) | (4,618 | ) | |||||||
Adjusted net income | $ | 34,255 | $ | 32,803 | $ | 31,782 | $ | 108,728 | $ | 118,429 | |||||||
Diluted average common shares | |||||||||||||||||
outstanding | 54,911,458 | 54,737,920 | 55,363,258 | 54,826,939 | 55,132,494 | ||||||||||||
Reported: Diluted earnings per share | $ | 0.52 | $ | 0.56 | $ | 0.52 | $ | 1.83 | $ | 1.87 | |||||||
Adjusted: Diluted earnings per share | $ | 0.62 | $ | 0.60 | $ | 0.57 | $ | 1.98 | $ | 2.15 | |||||||
Average total assets | $ | 10,419,364 | $ | 10,680,995 | $ | 9,713,858 | $ | 10,292,256 | $ | 9,443,690 | |||||||
Reported: Return on average assets1 | 1.08 | % | 1.15 | % | 1.17 | % | 0.97 | % | 1.09 | % | |||||||
Adjusted: Return on average assets 1 | 1.31 | % | 1.22 | % | 1.30 | % | 1.06 | % | 1.25 | % | |||||||
1 Annualized measure. | |||||||||||||||||
Reconciliation of Non-GAAP Financial Measures – Adjusted Net Interest Margin | ||||||||||||||||
(dollars in thousands) | ||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||
2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Reported: Net interest income | $ | 72,936 | $ | 69,753 | $ | 71,936 | $ | 282,935 | $ | 287,223 | ||||||
Tax-equivalent adjustment | 655 | 638 | 781 | 2,740 | 3,013 | |||||||||||
Purchase accounting | ||||||||||||||||
accretion related to | ||||||||||||||||
business combinations | (2,469 | ) | (2,618 | ) | (2,983 | ) | (10,391 | ) | (12,422 | ) | ||||||
Adjusted: Net interest income | $ | 71,122 | $ | 67,773 | $ | 69,734 | $ | 275,284 | $ | 277,814 | ||||||
Average interest-earning assets | $ | 9,557,265 | $ | 9,805,948 | $ | 8,810,505 | $ | 9,417,938 | $ | 8,590,262 | ||||||
Reported: Net interest margin1 | 3.06 | % | 2.86 | % | 3.27 | % | 3.03 | % | 3.38 | % | ||||||
Adjusted: Net Interest margin1 | 2.96 | % | 2.75 | % | 3.14 | % | 2.92 | % | 3.23 | % | ||||||
1 Annualized measure. | ||||||||||||||||
Reconciliation of Non-GAAP Financial Measures – Adjusted Efficiency Ratio | ||||||||||||||||
(dollars in thousands) | ||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||
2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Reported: Net Interest income | $ | 72,936 | $ | 69,753 | $ | 71,936 | $ | 282,935 | $ | 287,223 | ||||||
Tax- equivalent adjustment | 655 | 638 | 781 | 2,740 | 3,013 | |||||||||||
Tax-equivalent interest income | $ | 73,591 | $ | 70,391 | $ | 72,717 | $ | 285,675 | $ | 290,236 | ||||||
Reported: Non-interest income | 30,499 | 32,285 | $ | 31,638 | 118,265 | $ | 116,415 | |||||||||
Less securities (gains) and losses, | ||||||||||||||||
net | (855 | ) | 426 | (605 | ) | (1,331 | ) | 18 | ||||||||
Adjusted: Non-interest income | $ | 29,644 | $ | 32,711 | $ | 31,033 | $ | 116,934 | $ | 116,433 | ||||||
Reported: Non-interest expense | 64,073 | 56,542 | $ | 65,490 | 234,197 | $ | 258,794 | |||||||||
Amortization of intangible assets | (2,439 | ) | (2,493 | ) | (2,681 | ) | (10,008 | ) | (9,547 | ) | ||||||
Non-operating adjustments: | ||||||||||||||||
Salaries, wages and employee | ||||||||||||||||
benefits | (113 | ) | (2,011 | ) | (405 | ) | (2,470 | ) | (4,578 | ) | ||||||
Data processing | (56 | ) | - | (1,368 | ) | (56 | ) | (2,350 | ) | |||||||
Impairment, professional fees and other | (7,381 | ) | (518 | ) | (1,879 | ) | (8,185 | ) | (13,166 | ) | ||||||
Adjusted: Non-interest expense | $ | 54,084 | $ | 51,520 | $ | 59,157 | $ | 213,478 | $ | 229,153 | ||||||
Reported: Efficiency ratio | 59.70 | % | 52.42 | % | 60.54 | % | 55.68 | % | 61.29 | % | ||||||
Adjusted: Efficiency ratio | 52.39 | % | 49.97 | % | 57.02 | % | 53.02 | % | 56.35 | % | ||||||
Reconciliation of Non-GAAP Financial Measures – Tangible Common Equity, Tangible Common Equity to Tangible Assets, Tangible Book Value per Share and Return on Average Tangible Common Equity | |||||||||
(dollars in thousands) | |||||||||
As of and for the Three Months Ended | |||||||||
2020 | 2020 | 2019 | |||||||
Total assets | $ | 10,544,047 | $ | 10,539,628 | $ | 9,695,729 | |||
(363,521 | ) | (365,960 | ) | (373,129 | ) | ||||
Tax effect of other intangible assets, net | 14,556 | 15,239 | 17,247 | ||||||
Tangible assets | $ | 10,195,082 | $ | 10,188,907 | $ | 9,339,847 | |||
Total stockholders’ equity | 1,270,069 | 1,255,705 | 1,220,434 | ||||||
(363,521 | ) | (365,960 | ) | (373,129 | ) | ||||
Tax effect of other intangible assets, net | 14,556 | 15,239 | 17,247 | ||||||
Tangible common equity | $ | 921,104 | $ | 904,984 | $ | 864,552 | |||
Ending number of common shares outstanding | 54,404,379 | 54,522,231 | 54,788,772 | ||||||
Tangible common equity to tangible assets1 | 9.03 | % | 8.88 | % | 9.26 | % | |||
Tangible book value per share | $ | 16.66 | $ | 16.32 | $ | 15.46 | |||
Average common equity | $ | 1,261,298 | $ | 1,248,448 | $ | 1,224,447 | |||
Average goodwill and other intangible assets, net | (365,120 | ) | (367,490 | ) | (379,268 | ) | |||
Average tangible common equity | $ | 896,178 | $ | 880,958 | $ | 845,179 | |||
Reported: Return on average tangible common equity2 | 12.58 | % | 13.92 | % | 13.41 | % | |||
Adjusted: Return on average tangible common equity2,3 | 15.21 | % | 14.81 | % | 14.92 | % | |||
Year Ended | |||||||||
2020 | 2019 | ||||||||
Average common equity | $ | 1,240,374 | $ | 1,186,127 | |||||
Average goodwill and other intangible assets, net | (368,624 | ) | (371,666 | ) | |||||
Average tangible common equity | $ | 871,750 | $ | 814,461 | |||||
Reported: Return on average tangible common equity2 | 11.51 | % | 12.64 | % | |||||
Adjusted: Return on average tangible common equity2,3 | 12.47 | % | 14.54 | % | |||||
1 Tax-effected measure, 28% estimated deferred tax rate. | |||||||||
2 Annualized measure. | |||||||||
3 Calculated using adjusted net income. | |||||||||
Special Note Concerning Forward-Looking Statements
Statements made in this document, other than those concerning historical financial information, may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance and business of the Company. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of the Company’s management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should” or other similar expressions. Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events. A number of factors, many of which are beyond the Company’s ability to control or predict, could cause actual results to differ materially from those in the Company’s forward-looking statements. These factors include, among others, the following: (i) the strength of the local, state, national and international economy (including the impact of the new presidential administration and the impact of tariffs, a
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