Old National reports 2021 record net income driven

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EVANSVILLE, Ind., Jan. 18, 2022 (GLOBE NEWSWIRE) —

Old National Bancorp (NASDAQ: ONB) reports 4Q21 net income of $56.2 million, diluted EPS of $0.34.
Adjusted1 net income of $60.9 million, or $0.37 per diluted share.
Full-year net income of $277.5 million, or $1.67 per diluted share.
Adjusted1 net income of $286.5 million, or$1.73 per diluted share.

CEO COMMENTARY:

“Old National’s 4th quarter capped off a year of record earnings driven by robust commercial loan growth, strong credit quality and well controlled expenses,” said Chairman and CEO Jim Ryan. “I’m particularly pleased that we achieved these strong results while also working steadily to remain on-task to complete our anticipated merger with First Midwest Bank – which also enjoyed strong 4th quarter and full-year 2021 results.”

FOURTH QUARTER HIGHLIGHTS2:

Net income
  • Net income of $56.2 million
  • Earnings per diluted share of $0.34
   
Net interest income/NIM
  • Net interest income on a fully taxable equivalent basis of $150.2 million compared to $155.1 million
  • Net interest margin on a fully taxable equivalent basis of 2.77% compared to 2.92%
   
Operating Performance
  • Pre-provision net revenue1 (“PPNR”) of $69.8 million
  • Adjusted PPNR1 of $78.1 million
  • Noninterest expense of $131.9 million
  • Adjusted noninterest expense1 of $123.2 million
  • Efficiency ratio1 of 64.27%
  • Adjusted efficiency ratio1 of 59.95%
   
Loans and Credit Quality
  • End-of-period total loans3 of $13,637.3 million compared to $13,636.1 million
  • Total commercial loans increased $162.5 million, excluding the $185.9 million decrease in PPP loans
  • Fourth-quarter total commercial production of $1.1 billion
  • Provision for credit losses was a recapture of $1.9 million
  • December 31 pipeline of $2.5 billion
  • Net recoveries of $1.4 million compared to net recoveries of $3.0 million
  • Non-performing loans of 0.92% of total loans compared to 0.94%
 
Return Profile & Capital
  • Return on average common equity of 7.49%
  • Return on average tangible common equity1 of 12.07%
  • Adjusted return on average tangible common equity1 of 13.04%
  • No shares of common stock were repurchased during the current quarter
   
Notable Items
  • $6.7 million in merger-related charges

1 Non-GAAP financial measure that Management believes is useful in evaluating the financial results of the Company – please refer to the Non GAAP reconciliations contained in this release 2 Comparisons are on a linked-quarter basis, unless otherwise noted 3 Includes loans held for sale

RESULTS OF OPERATIONS

Old National Bancorp (“Old National”) reported fourth quarter 2021 net income of $56.2 million, or $0.34 per diluted share.

Included in the fourth quarter were pre-tax charges of $6.7 million related to the pending merger with First Midwest Bancorp, Inc. Excluding these charges from the current quarter and netting out debt securities gains, adjusted net income was $60.9 million, or $0.37 per diluted share.

LOANS
Strong commercial production resulted in 6.9% annualized commercial loan growth.

  • Period-end total loans were $13,637.3 million at December 31, 2021, consistent with the $13,636.1 million at September 30, 2021.
  • Paycheck Protection Program (PPP) loans declined $185.9 million to $169.0 million at December 31, 2021, compared to $354.9 million at September 30, 2021.
  • Excluding the $185.9 million decrease in PPP loans during the quarter, total loans increased $187.1 million, or 5.6% annualized.
  • Excluding PPP loans, total commercial loans increased $162.5 million, or 6.9% annualized.
  • Total commercial loan production in the fourth quarter was $1.1 billion; period-end pipeline totaled $2.5 billion.
  • Consumer loans increased $9.9 million to $1,574.1 million and residential mortgage loans increased $30.5 million to $2,255.3 million.
  • Average total loans in the fourth quarter were $13,603.6 million, a decrease of $83.7 million from the third quarter of 2021.
  • Excluding PPP loans, average total loans in the fourth quarter increased $178.1 million from the third quarter of 2021.

DEPOSITS
Total deposit growth bolstered by strong increase in checking and NOW accounts.

  • Period-end total deposits were $18,569.2 million at December 31, 2021, an increase of $373.0 million, or 8.2% annualized, when compared to the $18,196.1 million at September 30, 2021.
  • Checking and NOW deposits increased $382.0 million to $5,338.0 million at December 31, 2021 from $4,956.0 million at September 30, 2021.
  • On average, total deposits in the fourth quarter increased $438.3 million to $18,414.3 million, compared to $17,976.0 million in the third quarter of 2021.

NET INTEREST INCOME AND MARGIN
Decrease in PPP interest and fees negatively impact net interest income and margin; funding costs modestly lower.

  • Net interest income decreased to $146.8 million in the fourth quarter of 2021 compared to $151.6 million in the third quarter of 2021.
  • The net interest margin on a fully taxable equivalent basis decreased 15 basis point to 2.77% compared to 2.92% in the third quarter of 2021.
  • PPP interest and net fees combined were $7.7 million, or 11 basis points of net interest margin, in the fourth quarter of 2021 compared to $12.2 million, or 16 basis points of net interest margin, in the third quarter of 2021.
  • Accretion income was $3.9 million, or 7 basis points of net interest margin, in the fourth quarter of 2021 compared to $3.0 million, or 6 basis points of net interest margin, in the third quarter of 2021.
  • Interest collected on nonaccrual loans was $1.4 million, or 3 basis points of net interest margin, in the fourth quarter of 2021 compared to $2.3 million, or 4 basis points of net interest margin, in the third quarter of 2021.
  • The cost of total deposits declined 1 basis point to 0.05% in the fourth quarter of 2021 and the cost of total interest-bearing deposits also declined 1 basis point to 0.08%.

CREDIT QUALITY
Strong credit quality remains a hallmark of the Old National franchise.

  • Old National recorded a provision recapture in the fourth quarter of 2021 of $1.9 million, compared to $4.6 million in provision recapture recorded in the third quarter of 2021.
  • Net recoveries in the fourth quarter were $1.4 million, compared to net recoveries of $3.0 million in the third quarter of 2021.
  • 30-89 day delinquencies were 0.11% at the end of the fourth quarter.
  • Non-performing loans decreased as a percentage of total loans to 0.92%.
  • Loans acquired from previous acquisitions were recorded at fair value at the acquisition date. As of December 31, 2021, the remaining discount on these acquired loans was $33.7 million.
  • The allowance for credit losses stood at $107.3 million, or 0.79% of total loans at December 31, 2021.

NONINTEREST INCOME
Noninterest income decreased primarily due to lower mortgage banking revenue.

  • Total noninterest income for the fourth quarter of 2021 was $51.5 million, a decrease of $3.0 million from the third quarter of 2021.
  • Mortgage banking revenue decreased $3.5 million when compared to the third quarter of 2021, due primarily to a smaller pipeline.
  • Gains on sales of debt securities decreased $0.8 million when compared to the third quarter of 2021.

NONINTEREST EXPENSE
Increase in fourth quarter expenses due primarily to increased personnel and marketing expenses.

  • Noninterest expense for the fourth quarter of 2021 was $131.9 million and included $6.7 million in merger-related charges and $2.0 million in tax credit amortization.
  • Excluding these items, adjusted noninterest expense for the fourth quarter was $123.2 million, compared to the $118.2 million in adjusted noninterest expense in the third quarter of 2021.
  • The fourth quarter efficiency ratio was 64.27%, while the adjusted efficiency ratio was 59.95%.

INCOME TAXES

  • On a fully taxable-equivalent basis, income tax expense in the fourth quarter was $15.5 million, resulting in a 21.6% FTE tax rate, compared to 22.8% in the third quarter of 2021.
  • Income tax expense included $2.9 million in tax credit benefit.

CAPITAL AND LIQUIDITY
Capital ratios remain strong.

  • At the end of the fourth quarter, preliminary total risk-based capital was 12.77% and preliminary regulatory tier 1 capital was 12.04%.
  • Tangible common equity to tangible assets was 8.30% at the end of the fourth quarter compared to 8.55% in the third quarter of 2021.
  • The Company did not repurchase any shares of common stock during the fourth quarter.
  • A low loan to deposit ratio of 73.4%, combined with existing funding sources plus available unencumbered, high-quality collateral, provides strong liquidity.

NON-GAAP RECONCILIATIONS

($ in millions, except EPS, shares in 000s) 4Q21 Adjustments4 Adjusted 4Q21
Total Revenues (FTE) $ 201.7   $ (0.4 ) $ 201.3  
Less: Provision for Credit Losses   1.9         1.9  
Less: Noninterest Expenses   (131.9 )   6.7     (125.2 )
Income before Income Taxes (FTE) $ 71.7   $ 6.3   $ 78.0  
Income Taxes (FTE)   (15.5 )   (1.6 )   (17.1 )
Net Income $ 56.2   $ 4.7   $ 60.9  
Average Shares Outstanding   166,128         166,128  
Earnings Per Share – Diluted $ 0.34   $ 0.03   $ 0.37  

4 Tax-effect calculations use the current statutory FTE tax rates (federal + state)

($ in millions, except EPS, shares in 000s)   2021   Adjustments4 Adjusted 2021
Total Revenues (FTE) $ 824.5   $ (4.3 ) $ 820.2  
Less: Provision for Credit Losses   28.8         28.8  
Less: Noninterest Expenses   (500.5 )   16.5     (484.0 )
Income before Income Taxes (FTE) $ 352.8   $ 12.2   $ 365.0  
Income Taxes (FTE)   (75.3 )   (3.2 )   (78.5 )
Net Income $ 277.5   $ 9.0   $ 286.5  
Average Shares Outstanding   165,929         165,929  
Earnings Per Share – Diluted $ 1.67   $ 0.06   $ 1.73  

4 Tax-effect calculations use the current statutory FTE tax rates (federal + state)

($ in millions) 4Q21 3Q21
Net Interest Income $ 146.8   $ 151.6  
Add: FTE Adjustment   3.4     3.5  
Net Interest Income (FTE) $ 150.2   $ 155.1  
Average Earning Assets $ 21,670.7   $ 21,228.6  
Net Interest Margin (FTE)   2.77 %   2.92 %
     
($ in millions) 4Q21 4Q20
Net Interest Income $ 146.8   $ 161.1  
Add: FTE Adjustment   3.4     3.5  
Net Interest Income (FTE) $ 150.2   $ 164.6  
Add: Total Noninterest Income   51.5     58.5  
Less: Noninterest Expense   131.9     142.3  
Pre-Provision Net Revenue $ 69.8   $ 80.8  
Less: Debt Securities Gains/Losses   (0.4 )   (0.2 )
Less: Gain on Branch Actions       (0.1 )
Add: Merger-Related Charges   6.7      
Add: ONB Way Charges       3.6  
Add: Amortization of Tax Credit Investments   2.0     9.9  
Adjusted Pre-Provision Net Revenue $ 78.1   $ 94.0  
($ in millions) 4Q21 3Q21 4Q20   2021     2020  
Noninterest Expense $ 131.9   $ 121.3   $ 142.3   $ 500.5   $ 541.4  
Less: ONB Way Charges           (3.6 )   (1.9 )   (42.6 )
Less: Merger-Related Charges   (6.7 )   (1.4 )       (14.6 )    
Noninterest Expense less Charges $ 125.2   $ 119.9   $ 138.7   $ 484.0   $ 498.8  
Less: Amortization of Tax Credit Investments   (2.0 )   (1.7 )   (9.9 )   (6.7 )   (18.8 )
Adjusted Noninterest Expense $ 123.2   $ 118.2   $ 128.8   $ 477.3   $ 480.0  
Less: Intangible Amortization   (2.6 )   (2.8 )   (3.3 )   (11.4 )   (14.1 )
Adjusted Noninterest Expense Less Intangible Amortization $ 120.6   $ 115.4   $ 125.5   $ 465.9   $ 465.9  
Net Interest Income $ 146.8   $ 151.6   $ 161.1   $ 596.4   $ 596.1  
FTE Adjustment   3.4     3.5     3.5     13.9     13.6  
Net Interest Income (FTE) $ 150.2   $ 155.1   $ 164.6   $ 610.3   $ 609.7  
Total Noninterest Income   51.5     54.5     58.5     214.2     239.2  
Total Revenue (FTE) $ 201.7   $ 209.6   $ 223.1   $ 824.5   $ 848.9  
Less: Debt Securities Gains/Losses   (0.4 )   (1.2 )   (0.2 )   (4.3 )   (10.8 )
Less: Gain on Branch Actions           (0.1 )        
Adjusted Total Revenue (FTE) $ 201.3   $ 208.4   $ 222.8   $ 820.2   $ 838.1  
Efficiency Ratio   64.27 %   56.86 %   62.37 %   59.65 %   62.91 %
Adjusted Efficiency Ratio   59.95 %   55.38 %   56.35 %   56.80 %   55.59 %

                

($ in millions) 4Q21 3Q21
Net Income $ 56.2   $ 71.7  
Add: Intangible Amortization (net of tax5)   1.9     2.1  
Tangible Net Income $ 58.1   $ 73.8  
Less: Securities Gains/Losses (net of tax5)   (0.3 )   (0.9 )
Add: Merger-Related Charges (net of tax5)   5.0     1.1  
Adjusted Tangible Net Income $ 62.8   $ 74.0  
Average Total Shareholders’ Equity   2,998.8     3,027.9  
Less: Average Goodwill   (1,037.0 )   (1,037.0 )
Less: Average Intangibles   (36.0 )   (38.6 )
Average Tangible Shareholders’ Equity $ 1,925.8   $ 1,952.3  
Return on Average Tangible Common Equity   12.07 %   15.13 %
Adjusted Return on Average Tangible Common Equity   13.04 %   15.16 %

5 Tax-effect calculations use the current statutory FTE tax rates (federal + state)

CONFERENCE CALL AND WEBCAST
Old National will host a conference call and live webcast at 9:00 a.m. Central Time on Tuesday, January 18, 2022, to review fourth-quarter 2021 financial results. The live audio webcast link and corresponding presentation slides will be available on the Company’s Investor Relations web page at oldnational.com and will be archived there for 12 months. To listen to the live conference call, dial U.S. (877) 660-9071 or International (929) 517-9523, Conference I.D. 3313815. A replay of the call will also be available from Noon Central Time on January 18 through February 1. To access the replay, dial (855) 859-2056, Conference ID Code 3313815.

ABOUT OLD NATIONAL
Old National Bancorp (NASDAQ: ONB), the holding company of Old National Bank, is the largest bank holding company headquartered in Indiana. With $24.5 billion in assets, it ranks among the top 100 banking companies in the U.S. and has been recognized as a World’s Most Ethical Company by the Ethisphere Institute for ten consecutive years.  Since its founding in Evansville in 1834, Old National Bank has focused on community banking by building long-term, highly valued partnerships and keeping our clients at the center of all we do. This is an approach to business that we call The ONB Way. Today, Old National’s footprint includes Indiana, Kentucky, Michigan, Minnesota and Wisconsin. In addition to providing extensive services in retail and commercial banking, Old National offers comprehensive wealth management, investment and capital market services. For more information and financial data, please visit Investor Relations at oldnational.com.

USE OF NON-GAAP FINANCIAL MEASURES
This earnings release contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding Old National’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in the tables of this release.

FORWARD-LOOKING STATEMENTS
This communication includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to Old National’s future plans, objectives, performance, revenues, growth, profits, operating expenses or Old National’s underlying assumptions; First Midwest’s and Old National’s beliefs, goals, intentions, and expectations regarding the proposed transaction, revenues, earnings, loan production, asset quality, and capital levels, among other matters; our estimates of future costs and benefits of the actions we may take; our assessments of expected losses on loans; our assessments of interest rate and other market risks; our ability to achieve our financial and other strategic goals; the expected timing of completion of the proposed transaction; the expected cost savings, synergies and other anticipated benefits from the proposed transaction; and other statements that are not historical facts.

Forward‐looking statements are typically identified by such words as “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “should,” “will,” and other similar words and expressions, and are subject to numerous assumptions, risks, and uncertainties, which change over time. These forward-looking statements include, without limitation, those relating to the terms, timing and closing of the proposed transaction.

Additionally, forward‐looking statements speak only as of the date they are made; Old National does not assume any duty, and does not undertake, to update such forward‐looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events, or otherwise. Furthermore, because forward‐looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those indicated in such forward-looking statements as a result of a variety of factors, many of which are beyond the control of Old National. Such statements are based upon the current beliefs and expectations of the management of Old National and are subject to significant risks and uncertainties outside of the control of the parties. Caution should be exercised against placing undue reliance on forward-looking statements. The factors that could cause actual results to differ materially include the following: the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the definitive merger agreement between First Midwest and Old National; the outcome of any legal proceedings that may be instituted against First Midwest or Old National; the possibility that the proposed transaction will not close when expected or at all because required regulatory or other approvals are not received or other conditions to the closing are not satisfied on a timely basis or at all, or are obtained subject to conditions that are not anticipated (and the risk that required regulatory approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the proposed transaction); the ability of First Midwest and Old National to meet expectations regarding the timing, completion and accounting and tax treatments of the proposed transaction; the risk that any announcements relating to the proposed transaction could have adverse effects on the market price of the common stock of either or both parties to the proposed transaction; the possibility that the anticipated benefits of the proposed transaction will not be realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where First Midwest and Old National do business; certain restrictions during the pendency of the proposed transaction that may impact the parties’ ability to pursue certain business opportunities or strategic transactions; the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; iversion of management’s attention from ongoing business operations and opportunities; the possibility that the parties may be unable to achieve expected synergies and operating efficiencies in the merger within the expected timeframes or at all and to successfully integrate First Midwest’s operations and those of Old National; such integration may be more difficult, time consuming or costly than expected; revenues following the proposed transaction may be lower than expected; First Midwest’s and Old National’s success in executing their respective business plans and strategies and managing the risks involved in the foregoing; the dilution caused by Old National’s issuance of additional shares of its capital stock in connection with the proposed transaction; effects of the announcement, pendency or completion of the proposed transaction on the ability of First Midwest and Old National to retain customers and retain and hire key personnel and maintain relationships with their suppliers, and on their operating results and businesses generally; risks related to the potential impact of general economic, political and market factors on the companies or the proposed transaction and other factors that may affect future results of First Midwest and Old National; uncertainty as to the extent of the duration, scope, and impacts of the COVID-19 pandemic on First Midwest, Old National and the proposed transaction; and the other factors discussed in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of each of First Midwest’s and Old National’s Annual Report on Form 10‐K for the year ended December 31, 2020, in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of each of First Midwest’s and Old National’s Quarterly Report on Form 10‐Q for the quarter ended September 30, 2021, and in other reports First Midwest and Old National file with the U.S. Securities and Exchange Commission (the “SEC”).

             
Financial Highlights (unaudited)
($ and shares in thousands, except per share data)
             
  Three Months Ended   Twelve Months Ended
  December 31, September 30, December 31,   December 31, December 31,
    2021     2021     2020       2021     2020  
Income Statement            
Net interest income $ 146,781   $ 151,572   $ 161,079     $ 596,400   $ 596,094  
Tax equivalent adjustment (1)   3,442     3,501     3,517       13,913     13,586  
Net interest income – tax equivalent basis   150,223     155,073     164,596       610,313     609,680  
Provision for credit losses   (1,914 )   (4,613 )   (1,100 )     (28,812 )   38,395  
Noninterest income   51,484     54,515     58,552       214,219     239,274  
Noninterest expense   131,937     121,274     142,318       500,569     541,417  
Net income   56,188     71,746     74,120       277,538     226,409  
             
             
Per Common Share Data            
Weighted average diluted shares   166,128     165,939     165,631       165,929     166,177  
Net income (diluted) $ 0.34   $ 0.43   $ 0.44     $ 1.67   $ 1.36  
Cash dividends   0.14     0.14     0.14       0.56     0.56  
Common dividend payout ratio (2)   41 %   33 %   31 %     33 %   41 %
Book value $ 18.16   $ 18.31   $ 17.98     $ 18.16   $ 17.98  
Stock price   18.12     16.95     16.56       18.12     16.56  
Tangible common book value (3)   11.70     11.83     11.43       11.70     11.43  
             
             
Performance Ratios            
Return on average assets   0.93 %   1.20 %   1.30 %     1.17 %   1.04 %
Return on average common equity   7.49 %   9.48 %   10.11 %     9.26 %   7.87 %
Return on tangible common equity (3)   11.98 %   15.05 %   16.20 %     14.74 %   12.54 %
Return on average tangible common equity (3)   12.07 %   15.13 %   16.57 %     14.89 %   13.27 %
Net interest margin (FTE)   2.77 %   2.92 %   3.26 %     2.89 %   3.18 %
Efficiency ratio (4)   64.27 %   56.86 %   62.37 %     59.65 %   62.91 %
Net charge-offs (recoveries) to average loans (0.04)        % (0.09)        % (0.03)        %   (0.03)        %   0.02 %
Allowance for credit losses to ending loans   0.79 %   0.79 %   0.95 %     0.79 %   0.95 %
Non-performing loans to ending loans   0.92 %   0.94 %   1.20 %     0.92 %   1.20 %
             
             
Balance Sheet (EOP)            
Total loans $ 13,601,846   $ 13,584,828   $ 13,786,479     $ 13,601,846   $ 13,786,479  
Total assets   24,453,564     24,018,733     22,960,622       24,453,564     22,960,622  
Total deposits   18,569,195     18,196,149     17,037,453       18,569,195     17,037,453  
Total borrowed funds   2,575,240     2,536,303     2,676,554       2,575,240     2,676,554  
Total shareholders’ equity   3,012,018     3,035,892     2,972,656       3,012,018     2,972,656  
             
             
Capital Ratios (3)            
Risk-based capital ratios (EOP):            
Tier 1 common equity   12.04 %   12.08 %   11.75 %     12.04 %   11.75 %
Tier 1   12.04 %   12.08 %   11.75 %     12.04 %   11.75 %
Total   12.77 %   12.84 %   12.69 %     12.77 %   12.69 %
Leverage ratio (to average assets)   8.59 %   8.54 %   8.20 %     8.59 %   8.20 %
             
Total equity to assets (averages)   12.35 %   12.69 %   12.83 %     12.60 %   13.20 %
Tangible common equity to tangible assets   8.30 %   8.55 %   8.64 %     8.30 %   8.64 %
             
             
Nonfinancial Data            
Full-time equivalent employees   2,374     2,410     2,445       2,374     2,445  
Banking centers   162     162     162       162     162  
             
(1) Calculated using the federal statutory tax rate in effect of 21% for all periods.        
(2) Cash dividends per share divided by net income per share (basic).  
(3) Represents a non-GAAP financial measure. Refer the “Non-GAAP Measures” table for reconciliations to GAAP financial measures.  
December 31, 2021 capital ratios are preliminary.            
(4) Efficiency ratio is defined as noninterest expense before amortization of intangibles as a percent of FTE net interest income and  
noninterest revenues, excluding net gains from debt securities transactions. This presentation excludes amortization of intangibles
and net debt securities gains, as is common in other company releases, and better aligns with true operating performance.  
FTE – Fully taxable equivalent basis EOP – End of period actual balances  
             
Income Statement (unaudited)
($ and shares in thousands, except per share data)
             
  Three Months Ended   Twelve Months Ended
  December 31, September 30, December 31,   December 31, December 31,
    2021     2021     2020       2021     2020
Interest income $ 156,928   $ 162,026   $ 173,249     $ 638,649   $ 663,308
Less: interest expense   10,147     10,454     12,170       42,249     67,214
Net interest income   146,781     151,572     161,079       596,400     596,094
Provision for credit losses   (1,914 )   (4,613 )   (1,100 )     (28,812 )   38,395
Net interest income after provision for credit losses   148,695     156,185     162,179       625,212     557,699
             
Wealth management fees   9,833     10,134     9,259       40,409     36,806
Service charges on deposit accounts   9,121     8,926     8,724       34,685     35,081
Debit card and ATM fees   5,071     4,942     5,072       20,739     20,178
Mortgage banking revenue   7,336     10,870     16,233       42,558     62,775
Investment product fees   6,258     6,475     5,544       24,639     21,614
Capital markets income   6,394     6,017     6,545       21,997     22,480
Company-owned life insurance   2,737     2,355     3,153       10,589     12,031
Other income   4,299     3,589     3,861       14,276     17,542
Gains (losses) on sales of debt securities   435     1,207     161       4,327     10,767
Total noninterest income   51,484     54,515     58,552       214,219     239,274
             
Salaries and employee benefits   72,336     71,005     78,001       284,098     293,590
Occupancy   13,151     12,757     13,008       54,834     55,316
Equipment   4,473     3,756     3,778       16,704     16,690
Marketing   4,723     3,267     3,242       12,684     10,874
Data processing   11,489     11,508     12,362       47,047     41,086
Communication   2,412     2,372     2,396       10,073     9,731
Professional fees   5,409     3,416     4,834       20,077     15,755
FDIC assessment   1,598     1,628     1,780       6,059     6,722
Amortization of intangibles   2,573     2,779     3,244       11,336     14,091
Amortization of tax credit investments   2,019     1,736     9,871       6,770     18,788
Other expense   11,754     7,050     9,802       30,887     58,774
Total noninterest expense   131,937     121,274     142,318       500,569     541,417
             
Income before income taxes   68,242     89,426     78,413       338,862     255,556
Income tax expense   12,054     17,680     4,293       61,324     29,147
Net income $ 56,188   $ 71,746   $ 74,120     $ 277,538   $ 226,409
             
Diluted Earnings Per Share            
Net income $ 0.34   $ 0.43   $ 0.44     $ 1.67   $ 1.36
             
Average Common Shares Outstanding            
Basic   165,278     165,258     164,799       165,178     165,509
Diluted   166,128     165,939     165,631       165,929     166,177
             
Common shares outstanding at end of period   165,838     165,814     165,367       165,838     165,367
             
 
Balance Sheet (unaudited)
($ in thousands)
  December 31,   September 30,   December 31,
    2021       2021       2020  
Assets          
Federal Reserve Bank account $ 627,354     $ 600,581     $ 307,967  
Money market investments   22,002       16,294       13,537  
Investments:          
Treasury and government-sponsored agencies   1,778,357       1,803,273       852,196  
Mortgage-backed securities   3,698,831       3,354,701       3,339,098  
States and political subdivisions   1,654,986       1,609,283       1,492,162  
Other securities   432,478       442,503       458,639  
Total investments   7,564,652       7,209,760       6,142,095  
Loans held for sale, at fair value   35,458       51,306       63,250  
Loans:          
Commercial   3,391,769       3,505,183       3,956,422  
Commercial and agriculture real estate   6,380,674       6,290,632       5,946,512  
Consumer:          
Home equity   560,590       554,322       556,414  
Other consumer loans   1,013,524       1,009,909       1,078,709  
Subtotal of commercial and consumer loans   11,346,557       11,360,046       11,538,057  
Residential real estate   2,255,289       2,224,782       2,248,422  
Total loans   13,601,846       13,584,828       13,786,479  
Total earning assets   21,851,312       21,462,769       20,313,328  
           
Allowance for credit losses   (107,341 )     (107,868 )     (131,388 )
Non-earning Assets:          
Cash and due from banks   172,663       180,583       268,208  
Premises and equipment, net   476,186       476,036       464,408  
Operating lease right-of-use assets   69,560       69,912       76,197  
Goodwill and other intangible assets   1,071,672       1,074,245       1,083,008  
Company-owned life insurance   463,324       461,310       456,110  
Other assets   456,188       401,746       430,751  
Total non-earning assets   2,709,593       2,663,832       2,778,682  
Total assets $ 24,453,564     $ 24,018,733     $ 22,960,622  
           
Liabilities and Equity          
Noninterest-bearing demand deposits $ 6,303,106     $ 6,440,526     $ 5,633,672  
Interest-bearing:          
Checking and NOW accounts   5,338,022       4,956,012       4,877,046  
Savings accounts   3,798,494       3,708,807       3,395,747  
Money market accounts   2,169,160       2,097,967       1,908,118  
Other time deposits   960,413       992,837       1,103,313  
Total core deposits   18,569,195       18,196,149       16,917,896  
Brokered deposits               119,557  
Total deposits   18,569,195       18,196,149       17,037,453  
           
Federal funds purchased and interbank borrowings   276       34       1,166  
Securities sold under agreements to repurchase   392,275       375,247       431,166  
Federal Home Loan Bank advances   1,886,019       1,890,054       1,991,435  
Other borrowings   296,670       270,968       252,787  
Total borrowed funds   2,575,240       2,536,303       2,676,554  
Operating lease liabilities   76,236       76,771       86,598  
Accrued expenses and other liabilities   220,875       173,618       187,361  
Total liabilities   21,441,546       20,982,841       19,987,966  
Common stock, surplus, and retained earnings   3,014,393       2,979,082       2,824,885  
Accumulated other comprehensive income (loss), net of tax   (2,375 )     56,810       147,771  
Total shareholders’ equity   3,012,018       3,035,892       2,972,656  
Total liabilities and shareholders’ equity $ 24,453,564     $ 24,018,733     $ 22,960,622  
 
                         
Average Balance Sheet and Interest Rates (unaudited)
($ in thousands)
                         
                         
    Three Months Ended   Three Months Ended   Three Months Ended
    December 31, 2021   September 30, 2021   December 31, 2020
    Average Income (1)/ Yield/   Average Income (1)/ Yield/   Average Income (1)/ Yield/
Earning Assets:   Balance Expense Rate   Balance Expense Rate   Balance Expense Rate
Money market and other interest-earning                        
investments   $ 726,144   $ 276 0.15 %   $ 467,572   $ 177 0.15 %   $ 413,782   $ 126 0.12 %
Investments:                        
Treasury and government-sponsored agencies     1,763,544     6,390 1.45 %     1,730,553     6,968 1.61 %     648,314     2,937 1.81 %
Mortgage-backed securities     3,513,482     15,071 1.72 %     3,313,027     14,509 1.75 %     3,291,436     16,137 1.96 %
States and political subdivisions     1,625,390     12,941 3.18 %     1,586,743     12,609 3.18 %     1,437,890     12,008 3.34 %
Other securities     438,583     2,608 2.38 %     443,393     2,638 2.38 %     462,836     2,629 2.27 %
Total investments     7,340,999     37,010 2.02 %     7,073,716     36,724 2.08 %     5,840,476     33,711 2.31 %
Loans: (2)                        
Commercial     3,420,274     31,641 3.62 %     3,645,197     36,139 3.88 %     4,132,831     46,468 4.40 %
Commercial and agriculture real estate     6,341,296     57,347 3.54 %     6,200,144     57,820 3.65 %     5,829,912     58,334 3.92 %
Consumer:                        
Home equity     556,851     4,380 3.12 %     549,229     4,448 3.21 %     550,548     4,380 3.17 %
Other consumer loans     1,009,690     9,488 3.73 %     1,018,385     9,690 3.77 %     1,099,504     11,276 4.08 %
Subtotal commercial and consumer loans     11,328,111     102,856 3.60 %     11,412,955     108,097 3.76 %     11,612,795     120,458 4.13 %
Residential real estate loans     2,275,469     20,228 3.56 %     2,274,347     20,529 3.61 %     2,314,938     22,471 3.88 %
                         
Total loans     13,603,580     123,084 3.56 %     13,687,302     128,626 3.70 %     13,927,733     142,929 4.04 %
                         
Total earning assets   $ 21,670,723   $ 160,370 2.93 %   $ 21,228,590   $ 165,527 3.08 %   $ 20,181,991   $ 176,766 3.46 %
                         
Less: Allowance for credit losses     (107,990 )         (111,216 )         (137,539 )    
                         
Non-earning Assets:                        
Cash and due from banks   $ 228,126         $ 272,855         $ 341,154      
Other assets     2,481,792           2,479,079           2,479,253      
                         
Total assets   $ 24,272,651         $ 23,869,308         $ 22,864,859      
                         
Interest-Bearing Liabilities:                        
Checking and NOW accounts   $ 5,093,496   $ 458 0.04 %   $ 4,873,914   $ 484 0.04 %   $ 4,708,568   $ 629 0.05 %
Savings accounts     3,766,543     524 0.06 %     3,678,944     500 0.05 %     3,329,494     487 0.06 %
Money market accounts     2,139,702     456 0.08 %     2,110,981     438 0.08 %     1,932,594     445 0.09 %
Other time deposits     978,723     1,047 0.42 %     998,060     1,156 0.46 %     1,158,715     2,189 0.75 %
Total interest-bearing core deposits     11,978,464     2,485 0.08 %     11,661,899     2,578 0.09 %     11,129,371     3,750 0.13 %
Brokered deposits         0.00 %         0.00 %     37,176     26 0.28 %
Total interest-bearing deposits     11,978,464     2,485 0.08 %     11,661,899     2,578 0.09 %     11,166,547     3,776 0.13 %
                         
Federal funds purchased and interbank borrowings     1,162     0.00 %     689     0.00 %     843     0.03 %
Securities sold under agreements to repurchase     381,744     92 0.10 %     384,724     90 0.09 %     438,272     125 0.11 %
Federal Home Loan Bank advances     1,887,821     5,122 1.08 %     1,890,916     5,326 1.12 %     2,089,519     5,953 1.13 %
Other borrowings     274,926     2,448 3.56 %     270,597     2,460 3.64 %     240,815     2,316 3.85 %
Total borrowed funds     2,545,653     7,662 1.19 %     2,546,926     7,876 1.23 %     2,769,449     8,394 1.21 %
                         
Total interest-bearing liabilities   $ 14,524,117   $ 10,147 0.28 %   $ 14,208,825   $ 10,454 0.29 %   $ 13,935,996   $ 12,170 0.35 %
                         
Noninterest-Bearing Liabilities and Shareholders’ Equity                        
Demand deposits   $ 6,435,829         $ 6,314,100         $ 5,644,017      
Other liabilities     313,880           318,448           352,256      
Shareholders’ equity     2,998,825           3,027,935           2,932,590      
                         
Total liabilities and shareholders’ equity   $ 24,272,651         $ 23,869,308         $ 22,864,859      
                         
Net interest rate spread       2.65 %       2.79 %       3.11 %
                         
Net interest margin (FTE)       2.77 %       2.92 %       3.26 %
                         
FTE adjustment     $ 3,442       $ 3,501       $ 3,517  
                         
(1) Interest income is reflected on a fully taxable equivalent basis (FTE).  
(2) Includes loans held for sale.  
 
                 
Average Balance Sheet and Interest Rates (unaudited)
($ in thousands)
                 
                 
    Twelve Months Ended   Twelve Months Ended
    December 31, 2021   December 31, 2020
    Average Income (1)/ Yield/   Average Income (1)/ Yield/
Earning Assets:   Balance Expense Rate   Balance Expense Rate
Money market and other interest-earning                
investments   $ 450,158   $ 589 0.13 %   $ 174,494   $ 568 0.33 %
Investments:                
Treasury and government-sponsored agencies     1,573,855     24,209 1.54 %     547,054     12,124 2.22 %
Mortgage-backed securities     3,356,950     60,479 1.80 %     3,246,520     70,611 2.17 %
States and political subdivisions     1,548,939     50,115 3.24 %     1,347,490     47,034 3.49 %
Other securities     443,606     10,680 2.41 %     485,430     11,990 2.47 %
Total investments   $ 6,923,350   $ 145,483 2.10 %   $ 5,626,494   $ 141,759 2.52 %
Loans: (2)                
Commercial     3,763,099     138,063 3.67 %     3,843,089     140,473 3.66 %
Commercial and agriculture real estate     6,168,146     228,568 3.71 %     5,477,562     234,670 4.28 %
Consumer:                
Home equity     547,322     17,181 3.14 %     553,570     18,561 3.35 %
Other consumer loans     1,030,145     39,100 3.80 %     1,131,028     46,661 4.13 %
Subtotal commercial and consumer loans     11,508,712     422,912 3.67 %     11,005,249     440,365 4.00 %
Residential real estate loans     2,269,989     83,578 3.68 %     2,352,444     94,202 4.00 %
                 
Total loans     13,778,701     506,490 3.68 %     13,357,693     534,567 4.00 %
                 
Total earning assets   $ 21,152,209   $ 652,562 3.09 %   $ 19,158,681   $ 676,894 3.53 %
                 
Less: Allowance for credit losses     (117,436 )         (115,321 )    
                 
Non-earning Assets:                
Cash and due from banks   $ 256,860         $ 327,053      
Other assets     2,492,054           2,414,602      
                 
Total assets   $ 23,783,687         $ 21,785,015      
                 
Interest-Bearing Liabilities:                
Checking and NOW accounts   $ 4,945,435   $ 2,065 0.04 %   $ 4,464,027   $ 5,449 0.12 %
Savings accounts     3,648,019     2,003 0.05 %     3,113,435     3,156 0.10 %
Money market accounts     2,080,332     1,750 0.08 %     1,866,196     4,585 0.25 %
Other time deposits     1,020,359     5,105 0.50 %     1,337,269     14,013 1.05 %
Total interest-bearing core deposits     11,694,145     10,923 0.09 %     10,780,927     27,203 0.25 %
Brokered deposits     41,371     31 0.08 %     85,041     966 1.14 %
Total interest-bearing deposits     11,735,516     10,954 0.09 %     10,865,968     28,169 0.26 %
                 
Federal funds purchased and interbank borrowings     1,113     0.00 %     138,257     1,296 0.94 %
Securities sold under agreements to repurchase     392,777     397 0.10 %     375,961     854 0.23 %
Federal Home Loan Bank advances     1,902,407     21,075 1.11 %     2,055,155     27,274 1.33 %
Other borrowings     269,484     9,823 3.65 %     242,642     9,621 3.96 %
Total borrowed funds     2,565,781     31,295 1.22 %     2,812,015     39,045 1.39 %
                 
Total interest-bearing liabilities     14,301,297     42,249 0.30 %     13,677,983     67,214 0.49 %
                 
Noninterest-Bearing Liabilities and Shareholders’ Equity                
Demand deposits   $ 6,163,937         $ 4,945,506      
Other liabilities     320,933           286,066      
Shareholders’ equity     2,997,520           2,875,460      
                 
Total liabilities and shareholders’ equity   $ 23,783,687         $ 21,785,015      
                 
Net interest rate spread       2.79 %       3.04 %
                 
Net interest margin (FTE)       2.89 %       3.18 %
                 
FTE adjustment     $ 13,913       $ 13,586  
                 
(1) Interest income is reflected on a fully taxable equivalent basis (FTE).
(2) Includes loans held for sale.                
 
             
Asset Quality (EOP) (unaudited)
($ in thousands)
             
  Three Months Ended   Twelve Months Ended
  December 31, September 30, December 31,   December 31, December 31,
    2021     2021     2020       2021     2020  
             
Beginning allowance for credit losses $ 107,868   $ 109,444   $ 131,388     $ 131,388   $ 54,619  
Impact of adopting ASC 326 on 01/01/2020                     41,347  
             
Provision for credit losses   (1,914 )   (4,613 )   (1,100 )     (28,812 )   38,395  
             
Gross charge-offs   (545 )   (1,215 )   (707 )     (4,310 )   (15,553 )
Gross recoveries   1,932     4,252     1,807       9,075     12,580  
Net (charge-offs) recoveries   1,387     3,037     1,100       4,765     (2,973 )
             
Ending allowance for credit losses $ 107,341   $ 107,868   $ 131,388     $ 107,341   $ 131,388  
             
Net charge-offs (recoveries) / average loans (1) (0.04) % (0.09) % (0.03) %   (0.03) %   0.02 %
             
Average loans outstanding (1) $ 13,594,543   $ 13,675,436   $ 13,910,145     $ 13,766,590   $ 13,341,677  
             
EOP loans outstanding (1)   13,601,846     13,584,828     13,786,479       13,601,846     13,786,479  
             
Allowance for credit losses / EOP loans (1)   0.79 %   0.79 %   0.95 %     0.79 %   0.95 %
             
Underperforming Assets:            
Loans 90 Days and over (still accruing) $ 7   $ 113   $ 167     $ 7   $ 167  
             
Non-performing loans:            
Nonaccrual loans (2)   106,691     111,586     147,339       106,691     147,339  
TDRs still accruing   18,378     16,420     17,749       18,378     17,749  
Total non-performing loans   125,069     128,006     165,088       125,069     165,088  
             
Foreclosed properties   2,030     1,943     1,324       2,030     1,324  
             
Total underperforming assets $ 127,106   $ 130,062   $ 166,579     $ 127,106   $ 166,579  
             
Classified and Criticized Assets:            
Nonaccrual loans (2)   106,691     111,586     147,339       106,691     147,339  
Substandard accruing loans   162,572     164,192     157,276       162,572     157,276  
Loans 90 days and over (still accruing)   7     113     167       7     167  
Total classified loans – “problem loans” $ 269,270   $ 275,891   $ 304,782     $ 269,270   $ 304,782  
             
Other classified assets   4,338     4,300     3,706       4,338     3,706  
Criticized loans – “special mention loans”   235,910     240,215     287,192       235,910     287,192  
             
Total classified and criticized assets $ 509,518   $ 520,406   $ 595,680     $ 509,518   $ 595,680  
             
Non-performing loans / EOP loans (1)   0.92 %   0.94 %   1.20 %     0.92 %   1.20 %
             
Allowance to non-performing loans   86 %   84 %   80 %     86 %   80 %
             
Under-performing assets / EOP loans (1)   0.93 %   0.96 %   1.21 %     0.93 %   1.21 %
             
EOP total assets $ 24,453,564   $ 24,018,733   $ 22,960,622     $ 24,453,564   $ 22,960,622  
             
Under-performing assets / EOP assets   0.52 %   0.54 %   0.73 %     0.52 %   0.73 %
             
EOP – End of period actual balances            
(1) Excludes loans held for sale.        
(2) Includes non-accruing TDRs totaling $11.7 million at December 31, 2021, $12.8 million at September 30, 2021, and $14.9 million at December 30, 2020.
             
             
Non-GAAP Measures (unaudited)
($ in thousands)
             
  Three Months Ended   Twelve Months Ended
  December 31, September 30, December 31,   December 31, December 31,
    2021     2021     2020       2021     2020  
Actual End of Period Balances            
GAAP shareholders’ equity $ 3,012,018   $ 3,035,892   $ 2,972,656     $ 3,012,018   $ 2,972,656  
             
Deduct:            
Goodwill   1,036,994     1,036,994     1,036,994       1,036,994     1,036,994  
Intangibles   34,678     37,251     46,014       34,678     46,014  
    1,071,672     1,074,245     1,083,008       1,071,672     1,083,008  
             
Tangible shareholders’ equity $ 1,940,346   $ 1,961,647   $ 1,889,648     $ 1,940,346   $ 1,889,648  
             
Average Balances            
GAAP shareholders’ equity $ 2,998,825   $ 3,027,935   $ 2,932,590     $ 2,997,520   $ 2,875,460  
             
Deduct:            
Goodwill   1,036,994     1,036,994     1,036,994       1,036,994     1,036,994  
Intangibles   35,992     38,585     47,536       40,071     52,740  
    1,072,986     1,075,579     1,084,530       1,077,065     1,089,734  
             
Average tangible shareholders’ equity $ 1,925,839   $ 1,952,356   $ 1,848,060     $ 1,920,455   $ 1,785,726  
             
Actual End of Period Balances            
GAAP assets $ 24,453,564   $ 24,018,733   $ 22,960,622     $ 24,453,564   $ 22,960,622  
             
Add:            
Trust overdrafts       116     26           26  
             
Deduct:            
Goodwill   1,036,994     1,036,994     1,036,994       1,036,994     1,036,994  
Intangibles   34,678     37,251     46,014       34,678     46,014  
    1,071,672     1,074,245     1,083,008       1,071,672     1,083,008  
             
Tangible assets $ 23,381,892   $ 22,944,604   $ 21,877,640     $ 23,381,892   $ 21,877,640  
             
Risk-weighted assets (2) $ 16,588,469   $ 16,227,070   $ 15,369,076     $ 16,588,469   $ 15,369,076  
             
GAAP net income $ 56,188   $ 71,746   $ 74,120     $ 277,538   $ 226,409  
             
Add:            
Amortization of intangibles (net of tax)   1,930     2,084     2,433       8,502     10,585  
             
Tangible net income $ 58,118   $ 73,830   $ 76,553     $ 286,040   $ 236,994  
             
Tangible Ratios            
Return on tangible common equity   11.98 %   15.05 %   16.20 %     14.74 %   12.54 %
Return on average tangible common equity   12.07 %   15.13 %   16.57 %     14.89 %   13.27 %
Return on tangible assets   0.99 %   1.29 %   1.40 %     1.22 %   1.08 %
Tangible common equity to tangible assets   8.30 %   8.55 %   8.64 %     8.30 %   8.64 %
Tangible common equity to risk-weighted assets (2)   11.70 %   12.09 %   12.30 %     11.70 %   12.30 %
Tangible common book value (1)   11.70     11.83     11.43       11.70     11.43  
             
Tangible common equity presentation includes other comprehensive income as is common in other company releases.  
(1) Tangible common shareholders’ equity divided by common shares issued and outstanding at period-end.  
             
Tier 1 common equity (2) $ 1,998,056   $ 1,960,340   $ 1,805,194     $ 1,998,056   $ 1,805,194  
             
Risk-weighted assets (2)   16,588,469     16,227,070     15,369,076       16,588,469     15,369,076  
             
Tier 1 common equity to risk-weighted assets (2)   12.04 %   12.08 %   11.75 %     12.04 %   11.75 %
             
(2) December 31, 2021 figures are preliminary.            
             
Media: Kathy A. Schoettlin (812) 465-7269
Investors: Lynell J. Walton (812) 464-1366

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