8-K
Beacon Financial Corp (BBT)
UNITED STATES
SECURITIES AND EXCHANGECOMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 20, 2023
BERKSHIRE
HILLS BANCORP, INC.
(Exact Name of Registrant as Specified in its Charter)
| Delaware | 001-15781 | 04-3510455 |
|---|---|---|
| (State or Other Jurisdiction)<br><br> <br>of Incorporation) | (Commission File No.) | (I.R.S. Employer<br><br> <br>Identification No.) |
| 60<br> State Street, Boston,<br> Massachusetts | 02109 | |
| --- | --- | |
| (Address of Principal Executive<br> Offices) | (Zip Code) |
Registrant’s telephone number, including area code:
(800
) 773-5601
, ext. 133773
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications<br> pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ¨ | Soliciting<br> material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ¨ | Pre-commencement<br> communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ¨ | Pre-commencement<br> communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common<br> stock, par value $0.01 per share | BHLB | New<br> York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 2.02 | Results of Operations and Financial Condition |
|---|
On April 20, 2023, Berkshire Hills Bancorp, Inc. (the “Company”), the holding company for Berkshire Bank (the “Bank”), announced its financial results for the first quarter ended March 31, 2023. The news release containing the financial results is included as Exhibit 99.1 and shall not be deemed “filed” for any purpose.
The Company conducted a conference call/webcast on April 20, 2023, to discuss the financial results for the quarter and provide guidance about expected future results. A telephone replay of the call will be available through April 27, 2023. The webcast will be available on the Company’s website at ir.berkshirebank.com for an extended period of time.
| Item 7.01 | Regulation FD Disclosure |
|---|
The Company made available slides for a presentation that the Company utilized in connection with its conference call. A copy of the presentation can be found on the Company’s website at ir.berkshirebank.com.
| Item 9.01 | Financial Statements and Exhibits |
|---|
| (a) | Financial Statements of Businesses Acquired. Not applicable. | |
|---|---|---|
| (b) | Pro Forma Financial Information. Not applicable. | |
| (c) | Shell Company Transactions. Not applicable. | |
| (d) | Exhibits. | |
| Exhibit No. | Description | |
| 99.1 | News Release dated April 20, 2023 | |
| 104.1 | Cover Page for this Current Report on Form 8-K, formatted in Inline XBRL |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
| Berkshire Hills Bancorp, Inc. | ||
|---|---|---|
| DATE: April 20, 2023 | By: | /s/Nitin J. Mhatre |
| Nitin J. Mhatre <br><br>President and Chief Executive Officer **** |
Exhibit 99.1
Berkshire Hills Reports First Quarter Net Incomeof $27.6 Million, or $0.63 per Share
| · | Diversified 5 percent growth in average loans; relatively flat (-1%) average deposits |
|---|---|
| · | Cash and borrowing capacity at 117 percent of uninsured deposits |
| · | Tangible book value per share +4 percent to $21.89 |
| · | TCE ratio of 7.9 percent and CET1 ratio of 12.1 percent |
| · | Added two prominent and well-respected board members – Karyn Polito and Eric Rosengren |
BOSTON, April 20, 2023 - Berkshire Hills Bancorp, Inc. (NYSE: BHLB) today reported results for the first quarter of 2023. These results along with comparison periods are summarized below:
| Three Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| ($ in millions, except per share data) | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 | ||||||
| Net income | $ | 27.6 | $ | 30.5 | $ | 20.2 | |||
| Per share | 0.63 | 0.69 | 0.42 | ||||||
| Operating earnings^1^ | 27.6 | 28.3 | 20.8 | ||||||
| Per share | 0.63 | 0.64 | 0.43 | ||||||
| Net interest income, non FTE | $ | 97.5 | $ | 102.1 | $ | 69.1 | |||
| Net interest income, FTE | 99.4 | 103.9 | 70.6 | ||||||
| Net interest margin, FTE | 3.58 | % | 3.84 | % | 2.61 | % | |||
| Non-interest income | 16.6 | 15.7 | 20.7 | ||||||
| Operating non-interest income^1^ | 16.6 | 15.5 | 21.4 | ||||||
| Non-interest expense | $ | 72.0 | $ | 70.0 | $ | 68.6 | |||
| Operating non-interest expense^1^ | 72.0 | 72.6 | 68.5 | ||||||
| Efficiency ratio^1^ | 59.5 | % | 58.3 | % | 72.6 | % | |||
| Average balances | |||||||||
| Loans | $ | 8,515 | $ | 8,082 | $ | 6,974 | |||
| Deposits | 9,676 | 9,731 | 10,036 | ||||||
| Period-end balances | |||||||||
| Loans | 8,682 | 8,335 | 7,267 | ||||||
| Deposits | 10,068 | 10,327 | 10,699 |
See non-GAAP financial measures and reconciliation to GAAP measures on page 11
1
Berkshire CEO Nitin Mhatre stated “We continued to make steady progress on our BEST plan, while responding prudently to recent market turbulence in the quarter. Our teams continued to provide exceptional service to our clients, generating diversified loan growth and managing shifting deposit demand. Key financial metrics improved year-over-year driven by ongoing execution of BEST strategic initiatives. We welcomed new executives – David Rosato as Chief Financial Officer, James Brown as Head of Commercial Banking and Philip Jurgeleit as Chief Credit Officer in first quarter. We also bolstered our board further through addition of two prominent, well-respected board directors - Karyn Polito, former Massachusetts Lieutenant Governor, and Eric Rosengren, retired President of the Federal Reserve Bank of Boston. During the quarter, we were recognized as “America’s Best Mid-sized Employers in 2023” by Forbes, and “America’s Most Trustworthy Companies” in 2023 by Newsweek.”
“We are pleased with our financial performance in the first quarter,” stated CFO David Rosato. “Operating income of $27.6 million decreased by two percent linked-quarter and generated an operating return on average tangible common equity of 9.6 percent. These results included modestly higher non-interest income and a lower provision for credit losses on loans, which mostly offset lower net interest income. Net interest margin of 3.58 percent was 26 basis points lower than the fourth quarter due to higher funding costs which were only partially offset by higher loan yields. The loan-to-deposit ratio ended the quarter at 86 percent as loans increased $347 million or four percent from December 31, while deposits declined by $260 million or three percent at period-end, quarter-over-quarter. The increase in period-end loans was largely driven by $216 million in higher commercial balances and $153 million in higher residential mortgage balances. The reduction in deposits reflected a $179 million decrease in payroll deposits and an $81 million decrease in all other deposit balances. Capital generation supported both organic growth and four percent growth in tangible book value per share. Cash and equivalents increased $321 million to support more on-balance sheet liquidity in the current environment.”
| As of and For the Three Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 | |||||||
| Asset Quality | |||||||||
| Net loan charge-offs to average loans | 0.32 | % | 0.58 | % | 0.15 | % | |||
| Non-performing loans as a percentage of total loans | 0.31 | % | 0.37 | % | 0.41 | % | |||
| Returns | |||||||||
| Return on average assets^1^ | 0.94 | % | 1.08 | % | 0.70 | % | |||
| Return on average tangible common equity^1^ | 9.59 | % | 10.59 | % | 7.29 | % | |||
| Capital Ratios | |||||||||
| Tangible common equity/tangible assets | 7.9 | % | 8.0 | % | 8.8 | % | |||
| Tier 1 leverage | 9.9 | % | 10.2 | % | 10.3 | % | |||
| Common equity Tier 1 | 12.1 | % | 12.4 | % | 13.9 | % | |||
| Tier 1 risk-based | 12.4 | % | 12.6 | % | 14.1 | % | |||
| Total risk-based | 14.4 | % | 14.6 | % | 16.1 | % |
- See non-GAAP measures and reconciliation to GAAP beginning on page 11. All performance ratios are annualized and are based on average balance sheet amounts, where applicable.
Headquartered in Boston, Berkshire Hills Bancorp is the parent of Berkshire Bank. Providing a wide range of financial solutions through its consumer banking, commercial banking and wealth management divisions, the Bank has approximately $12.3 billion in assets and a community-based footprint of 100 financial centers in Massachusetts, New York, Vermont, Connecticut and Rhode Island. Access more information about Berkshire Hills Bancorp at ir.berkshirebank.com.
2
1Q 2023 Financial Highlights
Income Statement
| · | GAAP and operating earnings totaled $27.6 million, or $0.63 per share. |
|---|---|
| · | Net interest income totaled $97.5 million in 1Q23 compared to $102.1 million in<br>4Q22. |
| o | Two fewer calendar days in 1Q23 (2% reduction in net interest income). |
| --- | --- |
| · | Net interest margin decreased 26 basis points from 4Q22 to 3.58% reflecting: |
| --- | --- |
| o | Higher cost of funds (increase of 59 basis points). |
| --- | --- |
| · | Includes higher deposit costs (increase of 40 basis points). |
| --- | --- |
| · | Includes $519 million increase in higher cost average borrowings. |
| o | Higher yields on the loan portfolio (increase of 29 basis points). |
| --- | --- |
| · | Provision for credit losses on loans totaled $9.0 million. |
| --- | --- |
| o | Allowance for credit losses on loans increased $1.7 million. |
| --- | --- |
| o | Net loan charge-offs totaled $6.9 million. |
| o | Net loan charge-off ratio of 0.32%. |
| · | Non-interest income totaled $16.6 million in 1Q23 compared to $15.7 million in 4Q22. |
| --- | --- |
| o | Wealth management revenue increased $484 thousand. At March 31, 2023, wealth assets under supervision totaled $1.9 billion,<br>including $1.4 billion under management. |
| --- | --- |
| o | Gain on SBA loan sales decreased $485 thousand. |
| · | Non-interest expense totaled $72.0 million in 1Q23, compared to $70.0 million in<br>4Q22. |
| --- | --- |
| o | Operating non-interest expense totaled $72.0 million in 1Q23 and $72.6 million in 4Q22. |
| --- | --- |
| o | Compensation and benefits expense increased $1.1 million, primarily reflecting seasonally higher payroll and benefit-related costs<br>in 1Q23. |
| o | Technology and communications expense decreased $258 thousand. |
| o | Non-interest expense includes non-operating amounts totaling ($36) thousand in 1Q23 and ($2.6) million in 4Q22. |
| o | The efficiency ratio was 59.5% for 1Q23 compared to 58.3% for 4Q22 and 72.6% for 1Q22. |
| · | The effective income tax rate was 16.7% for 1Q23 compared to 14.6% in 4Q22 and 18.7% for the full-year<br>of 2022. |
| --- | --- |
Loans
| · | Commercial real estate loans totaled $4.2 billion at March 31, 2023, a $136<br>million increase from December 31, 2022. |
|---|---|
| o | Average commercial real estate loans totaled $4.2 billion in 1Q23, a $232 million increase from 4Q22. |
| --- | --- |
| · | Commercial and industrial loans totaled $1.6 billion at March 31, 2023, an $80 million increase<br>from December 31, 2022. |
| --- | --- |
| o | Average commercial and industrial loans totaled $1.5 billion in 1Q23, a $56 million increase from 4Q22. |
| --- | --- |
| · | Residential mortgage loans totaled $2.4 billion at March 31, 2023, a $153 million increase<br>from December 31, 2022. |
| --- | --- |
| o | Average residential mortgage loans totaled $2.3 billion in 1Q23, a $169 million increase from 4Q22. |
| --- | --- |
| · | Consumer loans totaled $528 million at March 31, 2023, a $23 million decrease<br>from December 31, 2022. |
| --- | --- |
| o | Average consumer loans totaled $539 million in 1Q23, a $24 million decrease from 4Q22. |
| --- | --- |
3
Deposits
| · | Non-interest bearing deposits totaled $2.7 billion at March 31, 2023, a $201 million decrease from<br>December 31, 2022. |
|---|---|
| o | Average non-interest bearing deposits totaled $2.7 billion in 1Q23, a $170 million decrease from December 31, 2022. |
| --- | --- |
| · | Time deposits totaled $2.1 billion at March 31, 2023, a $479 million increase from December 31,<br>2022. |
| --- | --- |
| o | Average time deposits totaled $1.8 billion in 1Q23, a $253 million increase from December 31, 2022. |
| --- | --- |
ESG & CORPORATE RESPONSIBILITY UPDATE
Berkshire is a purpose-driven, values-guided, community-centered bank. Berkshire’s ESG activities are central to its strategy. Key highlights in the quarter include:
| · | The Company released<br> its 2022 ESG Report, Purpose & Performance that Matters which highlights<br> Berkshire’s environmental, social, and governance dimensions of its business. |
|---|---|
| · | Berkshire was again listed in the Bloomberg Gender Equality Index, named by Newsweek as one of America’s Most Trustworthy Companies,<br>and Forbes’ America’s Best Midsize Employers. Berkshire also received a 2023 Communitas Award for Leadership in Corporate<br>Responsibility, and the Company maintained its top quartile ESG rating performance. |
| --- | --- |
ForwardLooking Statements: This document contains “forward-looking statements” within the meaning of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended. You can identify these statements from the use of the words “may,” “will,” “should,” “could,” “would,” “plan,” “potential,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “expect,” “remain,” “target” and similar expressions. There are many factors that could cause actual results to differ significantly from expectations described in the forward-looking statements. For a discussion of such factors, please see Berkshire’s most recent reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission and available on the SEC’s website at www.sec.gov. You should not place undue reliance on forward-looking statements, which reflect our expectations only as of the date of this document. Berkshire does not undertake any obligation to update forward-looking statements.
| INVESTOR CONTACT <br><br>Kevin Conn <br><br>Investor Relations <br><br>617.641.9206 <br> kaconn@berkshirebank.com | MEDIA CONTACT <br><br>Gary Levante <br><br>Corporate Communications <br><br>413.447.1737 <br><br>glevante@berkshirebank.com |
|---|
4
SELECTED FINANCIAL HIGHLIGHTS (1)
| March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | 2022 | 2022 | 2022 | |||||||||||
| NOMINAL AND PER SHARE DATA | |||||||||||||||
| Net earnings per common share, diluted | $ | 0.63 | $ | 0.69 | $ | 0.42 | $ | 0.50 | $ | 0.42 | |||||
| Operating earnings per common share, diluted (2)(3) | 0.63 | 0.64 | 0.62 | 0.51 | 0.43 | ||||||||||
| Net income, (thousands) | 27,637 | 30,505 | 18,717 | 23,115 | 20,196 | ||||||||||
| Operating net income, (thousands) (2)(3) | 27,608 | 28,254 | 27,928 | 23,562 | 20,789 | ||||||||||
| Net interest income, non FTE | 97,533 | 102,092 | 92,084 | 81,358 | 69,063 | ||||||||||
| Net interest income, FTE (5) | 99,441 | 103,937 | 93,799 | 82,918 | 70,587 | ||||||||||
| Total common shares outstanding, end of period (thousands) | 44,411 | 44,361 | 45,040 | 45,788 | 47,792 | ||||||||||
| Average diluted shares, (thousands) | 44,036 | 44,484 | 45,034 | 46,102 | 48,067 | ||||||||||
| Total book value per common share, end of period | 22.42 | 21.51 | 20.93 | 22.15 | 22.89 | ||||||||||
| Tangible book value per common share, end of period (2)(3) | 21.89 | 20.95 | 20.36 | 21.56 | 22.30 | ||||||||||
| Dividends per common share | 0.18 | 0.18 | 0.12 | 0.12 | 0.12 | ||||||||||
| Dividend payout ratio | 28.98 | % | 26.59 | % | 29.35 | % | 25.24 | % | 30.46 | % | |||||
| PERFORMANCE RATIOS (4) | |||||||||||||||
| Return on equity | 9.11 | % | 10.06 | % | 6.30 | % | 7.82 | % | 6.79 | % | |||||
| Operating return on equity (2)(3) | 9.10 | 9.32 | 9.40 | 7.97 | 6.99 | ||||||||||
| Return on tangible common equity (2)(3) | 9.59 | 10.59 | 6.76 | 8.33 | 7.29 | ||||||||||
| Operating return on tangible common equity (2)(3) | 9.59 | 9.83 | 9.92 | 8.48 | 7.49 | ||||||||||
| Return on assets | 0.94 | 1.08 | 0.66 | 0.82 | 0.70 | ||||||||||
| Operating return on assets (2)(3) | 0.94 | 1.00 | 0.99 | 0.84 | 0.72 | ||||||||||
| Net interest margin, FTE (5) | 3.58 | 3.84 | 3.48 | 3.11 | 2.61 | ||||||||||
| Efficiency ratio (3) | 59.51 | 58.25 | 62.01 | 66.60 | 72.61 | ||||||||||
| FINANCIAL DATA (in millions, end of period) | |||||||||||||||
| Total assets | $ | 12,320 | $ | 11,663 | $ | 11,317 | $ | 11,579 | $ | 12,097 | |||||
| Total earning assets | 11,615 | 10,913 | 10,604 | 10,849 | 11,401 | ||||||||||
| Total loans | 8,682 | 8,335 | 7,943 | 7,803 | 7,267 | ||||||||||
| Total deposits | 10,068 | 10,327 | 9,988 | 10,115 | 10,699 | ||||||||||
| Loans/deposits (%) | 86 | % | 81 | % | 80 | % | 77 | % | 68 | % | |||||
| Total shareholders' equity | $ | 995 | $ | 954 | $ | 943 | $ | 1,014 | $ | 1,094 | |||||
| ASSET QUALITY | |||||||||||||||
| Allowance for credit losses, (millions) | $ | 98 | $ | 96 | $ | 96 | $ | 99 | $ | 99 | |||||
| Net charge-offs, (millions) | (7 | ) | (12 | ) | (6 | ) | (0 | ) | (3 | ) | |||||
| Net charge-offs (QTD annualized)/average loans | 0.32 | % | 0.58 | % | 0.30 | % | 0.02 | % | 0.15 | % | |||||
| Provision (benefit)/expense, (millions) | $ | 9 | $ | 12 | $ | 3 | $ | - | $ | (4 | ) | ||||
| Non-performing assets, (millions) | 29 | 33 | 40 | 29 | 32 | ||||||||||
| Non-performing loans/total loans | 0.31 | % | 0.37 | % | 0.48 | % | 0.34 | % | 0.41 | % | |||||
| Allowance for credit losses/non-performing loans | 363 | 309 | 254 | 368 | 335 | ||||||||||
| Allowance for credit losses/total loans | 1.13 | 1.15 | 1.21 | 1.27 | 1.37 | ||||||||||
| CAPITAL RATIOS | |||||||||||||||
| Risk weighted assets, (millions) (6) | $ | 9,447 | $ | 9,151 | $ | 8,823 | $ | 8,718 | $ | 8,386 | |||||
| Common equity Tier 1 capital to risk weighted assets (6) | 12.1 | % | 12.4 | % | 12.7 | % | 13.0 | % | 13.9 | % | |||||
| Tier 1 capital leverage ratio(6) | 9.9 | 10.2 | 10.1 | 10.2 | 10.3 | ||||||||||
| Tangible common shareholders' equity/tangible assets (3) | 7.9 | 8.0 | 8.1 | 8.5 | 8.8 | ||||||||||
| (1) | All financial tables presented are unaudited. | ||||||||||||||
| --- | --- | ||||||||||||||
| (2) | Reconciliations of non-GAAP financial measures, including all references to operating and tangible amounts,<br>appear on page 11. | ||||||||||||||
| (3) | Non-GAAP financial measure. Operating measurements are non-GAAP financial measures that are adjusted to<br>exclude net non-operating charges primarily related to acquisitions and restructuring activities. See page 11 for reconciliations<br>of non-GAAP financial measures. | ||||||||||||||
| (4) | All performance ratios are annualized and are based on average balance sheet amounts, where applicable. | ||||||||||||||
| (5) | Fully taxable equivalent considers the impact of tax advantaged investment securities and loans. | ||||||||||||||
| (6) | Presented as projected for March 31, 2023 and actual for the remaining periods. |
5
CONSOLIDATED BALANCE SHEETS
| March 31, | December 31, | March 31, | |||||||
|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | 2023 | 2022 | 2022 | ||||||
| Assets | |||||||||
| Cash and due from banks | $ | 121,589 | $ | 145,342 | $ | 151,814 | |||
| Short-term investments | 884,973 | 540,013 | 1,455,437 | ||||||
| Total cash and cash equivalents | 1,006,562 | 685,355 | 1,607,251 | ||||||
| Trading securities, at fair value | 6,584 | 6,708 | 7,798 | ||||||
| Equity securities, at fair value | 13,072 | 12,856 | 14,719 | ||||||
| Securities available for sale, at fair value | 1,407,271 | 1,423,200 | 2,032,575 | ||||||
| Securities held to maturity, at amortized cost | 574,606 | 583,453 | 612,174 | ||||||
| Federal Home Loan Bank stock | 44,245 | 7,219 | 10,829 | ||||||
| Total securities | 2,045,778 | 2,033,436 | 2,678,095 | ||||||
| Less: Allowance for credit losses on investment securities | (71 | ) | (91 | ) | (99 | ) | |||
| Net securities | 2,045,707 | 2,033,345 | 2,677,996 | ||||||
| Loans held for sale | 1,906 | 4,311 | 300 | ||||||
| Commercial real estate loans | 4,231,510 | 4,095,079 | 3,763,951 | ||||||
| Commercial and industrial loans | 1,553,340 | 1,473,316 | 1,397,193 | ||||||
| Residential mortgages | 2,369,614 | 2,216,410 | 1,567,299 | ||||||
| Consumer loans | 527,503 | 550,504 | 538,880 | ||||||
| Total loans | 8,681,967 | 8,335,309 | 7,267,323 | ||||||
| Less: Allowance for credit losses on loans | (97,991 | ) | (96,270 | ) | (99,475 | ) | |||
| Net loans | 8,583,976 | 8,239,039 | 7,167,848 | ||||||
| Premises and equipment, net | 78,710 | 85,217 | 92,971 | ||||||
| Other intangible assets | 23,279 | 24,483 | 28,332 | ||||||
| Other assets | 571,616 | 587,854 | 518,322 | ||||||
| Assets held for sale | 8,220 | 3,260 | 3,988 | ||||||
| Total assets | $ | 12,319,976 | $ | 11,662,864 | $ | 12,097,008 | |||
| Liabilities and shareholders' equity | |||||||||
| Non-interest bearing deposits | $ | 2,650,937 | $ | 2,852,127 | $ | 3,020,568 | |||
| NOW and other deposits | 959,417 | 1,054,596 | 2,546,799 | ||||||
| Money market deposits | 3,274,630 | 3,723,570 | 2,469,042 | ||||||
| Savings deposits | 1,069,915 | 1,063,269 | 1,133,877 | ||||||
| Time deposits | 2,112,646 | 1,633,707 | 1,528,922 | ||||||
| Total deposits | 10,067,545 | 10,327,269 | 10,699,208 | ||||||
| Federal Home Loan Bank advances | 904,395 | 4,445 | 14,563 | ||||||
| Subordinated borrowings | 121,176 | 121,064 | 97,569 | ||||||
| Total borrowings | 1,025,571 | 125,509 | 112,132 | ||||||
| Other liabilities | 231,380 | 256,024 | 191,807 | ||||||
| Total liabilities | 11,324,496 | 10,708,802 | 11,003,147 | ||||||
| Common shareholders' equity | 995,480 | 954,062 | 1,093,861 | ||||||
| Total shareholders' equity | 995,480 | 954,062 | 1,093,861 | ||||||
| Total liabilities and shareholders' equity | $ | 12,319,976 | $ | 11,662,864 | $ | 12,097,008 |
6
CONSOLIDATED STATEMENTSOF INCOME
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| March 31, | ||||||
| (in thousands, except per share data) | 2023 | 2022 | ||||
| Interest income | $ | 132,316 | $ | 74,823 | ||
| Interest expense | 34,783 | 5,760 | ||||
| Net interest income, non FTE | 97,533 | 69,063 | ||||
| Non-interest income | ||||||
| Deposit related fees | 8,311 | 7,351 | ||||
| Loan fees and other | 2,469 | 4,939 | ||||
| Gain on SBA loan sales | 2,494 | 3,345 | ||||
| Wealth management fees | 2,739 | 2,625 | ||||
| Other | 359 | 3,166 | ||||
| Total non-interest income excluding gains/(losses) | 16,372 | 21,426 | ||||
| Securities gains/(losses), net | 234 | (745 | ) | |||
| Total non-interest income | 16,606 | 20,681 | ||||
| Total net revenue | 114,139 | 89,744 | ||||
| Provision expense/(benefit) for credit losses | 8,999 | (4,000 | ) | |||
| Non-interest expense | ||||||
| Compensation and benefits | 39,071 | 37,521 | ||||
| Occupancy and equipment | 9,379 | 10,067 | ||||
| Technology and communications | 9,471 | 8,527 | ||||
| Professional services | 3,277 | 2,692 | ||||
| Other expenses | 10,793 | 9,725 | ||||
| Merger, restructuring and other non-operating expenses | (36 | ) | 18 | |||
| Total non-interest expense | 71,955 | 68,550 | ||||
| Total non-interest expense excluding merger, restructuring and other | 71,991 | 68,532 | ||||
| Income before income taxes | $ | 33,185 | $ | 25,194 | ||
| Income tax expense | 5,548 | 4,998 | ||||
| Net income | $ | 27,637 | $ | 20,196 | ||
| Basic earnings per common share | $ | 0.63 | $ | 0.42 | ||
| Diluted earnings per common share | $ | 0.63 | $ | 0.42 | ||
| Weighted average shares outstanding: | ||||||
| Basic | 43,693 | 47,668 | ||||
| Diluted | 44,036 | 48,067 |
7
CONSOLIDATED STATEMENTS OF INCOME (5 Quarter Trend)
| March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands, except per share data) | 2023 | 2022 | 2022 | 2022 | 2022 | ||||||||||
| Interest income | $ | 132,316 | $ | 121,384 | $ | 103,671 | $ | 87,379 | $ | 74,823 | |||||
| Interest expense | 34,783 | 19,292 | 11,587 | 6,021 | 5,760 | ||||||||||
| Net interest income, non FTE | 97,533 | 102,092 | 92,084 | 81,358 | 69,063 | ||||||||||
| Non-interest income | |||||||||||||||
| Deposit related fees | 8,311 | 8,293 | 8,377 | 8,005 | 7,351 | ||||||||||
| Loan fees and other | 2,469 | 2,123 | 1,292 | 1,113 | 4,939 | ||||||||||
| Gain on SBA loan sales | 2,494 | 2,979 | 2,551 | 3,619 | 3,345 | ||||||||||
| Wealth management fees | 2,739 | 2,255 | 2,353 | 2,775 | 2,625 | ||||||||||
| Other | 359 | (159 | ) | 2,154 | 1,812 | 3,166 | |||||||||
| Total non-interest income excluding gains/(losses) | 16,372 | 15,491 | 16,727 | 17,324 | 21,426 | ||||||||||
| Securities gains/(losses), net | 234 | 163 | (476 | ) | (973 | ) | (745 | ) | |||||||
| Total non-interest income | 16,606 | 15,654 | 16,251 | 16,351 | 20,681 | ||||||||||
| Total net revenue | 114,139 | 117,746 | 108,335 | 97,709 | 89,744 | ||||||||||
| Provision expense/(benefit) for credit losses | 8,999 | 12,000 | 3,000 | - | (4,000 | ) | |||||||||
| Non-interest expense | |||||||||||||||
| Compensation and benefits | 39,071 | 37,968 | 39,422 | 37,830 | 37,521 | ||||||||||
| Occupancy and equipment | 9,379 | 9,431 | 8,702 | 9,438 | 10,067 | ||||||||||
| Technology and communications | 9,471 | 9,729 | 8,719 | 8,611 | 8,527 | ||||||||||
| Professional services | 3,277 | 3,153 | 3,285 | 2,913 | 2,692 | ||||||||||
| Other expenses | 10,793 | 12,350 | 10,076 | 9,648 | 9,725 | ||||||||||
| Merger, restructuring and other non-operating expenses | (36 | ) | (2,617 | ) | 11,473 | 35 | 18 | ||||||||
| Total non-interest expense | 71,955 | 70,014 | 81,677 | 68,475 | 68,550 | ||||||||||
| Total non-interest expense excluding merger, restructuring and other | 71,991 | 72,631 | 70,204 | 68,440 | 68,532 | ||||||||||
| Income before income taxes | $ | 33,185 | $ | 35,732 | $ | 23,658 | $ | 29,234 | $ | 25,194 | |||||
| Income tax expense | 5,548 | 5,227 | 4,941 | 6,119 | 4,998 | ||||||||||
| Net income | $ | 27,637 | $ | 30,505 | $ | 18,717 | $ | 23,115 | $ | 20,196 | |||||
| Diluted earnings per common share | $ | 0.63 | $ | 0.69 | $ | 0.42 | $ | 0.50 | $ | 0.42 | |||||
| Weighted average shares outstanding: | |||||||||||||||
| Basic | 43,693 | 44,105 | 44,700 | 45,818 | 47,668 | ||||||||||
| Diluted | 44,036 | 44,484 | 45,034 | 46,102 | 48,067 |
8
AVERAGE BALANCES AND AVERAGE YIELDS AND COSTS
| Quarters Ended | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31, 2023 | Dec. 31, 2022 | March 31, 2022 | |||||||||||||||||||
| Average | Average | Average | Average | Average | Average | ||||||||||||||||
| (in millions) | Balance | Interest<br> (1) | Yield/Rate | Balance | Interest<br> (1) | Yield/Rate | Balance | Interest<br> (1) | Yield/Rate | ||||||||||||
| Assets | |||||||||||||||||||||
| Commercial real estate | 4,166 | 61 | 5.88 | % | 3,934 | 55 | 5.46 | % | 3,651 | 31 | 3.35 | % | |||||||||
| Commercial and industrial loans | 1,527 | 26 | 6.92 | 1,471 | 25 | 6.62 | 1,373 | 14 | 4.14 | ||||||||||||
| Residential mortgages | 2,283 | 21 | 3.70 | 2,114 | 19 | 3.56 | 1,436 | 13 | 3.56 | ||||||||||||
| Consumer<br> loans | 539 | 10 | 7.24 | 563 | 10 | 7.00 | 514 | 5 | 4.24 | ||||||||||||
| Total loans | 8,515 | 118 | 5.57 | 8,082 | 109 | 5.28 | 6,974 | 63 | 3.61 | ||||||||||||
| Securities (2) | 2,261 | 13 | 2.23 | 2,294 | 13 | 2.20 | 2,649 | 13 | 1.95 | ||||||||||||
| Short-term<br> investments and loans HFS | 313 | 3 | 4.24 | 267 | 2 | 3.05 | 1,202 | - | 0.17 | ||||||||||||
| Total earning assets | 11,089 | 134 | 4.85 | 10,643 | 123 | 4.56 | 10,825 | 76 | 2.82 | ||||||||||||
| Goodwill and other intangible<br> assets | 24 | 25 | 29 | ||||||||||||||||||
| Other assets | 692 | 653 | 639 | ||||||||||||||||||
| Total<br> assets | 11,805 | 11,321 | 11,493 | ||||||||||||||||||
| Liabilities and shareholders'<br> equity | |||||||||||||||||||||
| Non-interest-bearing demand deposits | 2,706 | - | - | % | 2,876 | - | - | % | 2,968 | - | - | % | |||||||||
| NOW and other | 1,456 | 6 | 1.64 | 1,395 | 4 | 1.11 | 1,456 | - | 0.04 | ||||||||||||
| Money market | 2,659 | 10 | 1.59 | 2,819 | 8 | 1.16 | 2,871 | 1 | 0.16 | ||||||||||||
| Savings | 1,047 | - | 0.10 | 1,086 | - | 0.03 | 1,117 | - | 0.03 | ||||||||||||
| Time | 1,808 | 10 | 2.13 | 1,555 | 5 | 1.21 | 1,624 | 3 | 0.71 | ||||||||||||
| Total cost deposits | 9,676 | 26 | 1.09 | 9,731 | 17 | 0.69 | 10,036 | 4 | 0.17 | ||||||||||||
| Borrowings (3) | 688 | 9 | 5.06 | 169 | 2 | 5.56 | 122 | 2 | 5.21 | ||||||||||||
| Total funding liabilities | 10,364 | 35 | 1.36 | 9,900 | 19 | 0.77 | 10,158 | 6 | 0.23 | ||||||||||||
| Other liabilities | 227 | 208 | 146 | ||||||||||||||||||
| Total liabilities | 10,591 | 10,108 | 10,304 | ||||||||||||||||||
| Common shareholders'<br> equity | 1,214 | 1,213 | 1,189 | ||||||||||||||||||
| Total<br> shareholders' equity | 1,214 | 1,213 | 1,189 | ||||||||||||||||||
| Total liabilities and shareholders'<br> equity | 11,805 | 11,321 | 11,493 | ||||||||||||||||||
| Net<br> interest margin, FTE | 3.58 | 3.84 | 2.61 | ||||||||||||||||||
| Total average non-maturity deposits | 7,868 | 8,176 | 8,412 | ||||||||||||||||||
| Supplementary data | |||||||||||||||||||||
| Net Interest Income, non FTE | 97.533 | 102.092 | 69.063 | ||||||||||||||||||
| FTE income<br> adjustment | 1.908 | 1.845 | 1.524 | ||||||||||||||||||
| Net Interest Income, FTE | 99.441 | 103.937 | 70.587 | ||||||||||||||||||
| (1) | Interest<br> income and expense presented on a fully taxable equivalent basis. | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| (2) | Average<br> balances for securities available-for-sale are based on amortized cost. | ||||||||||||||||||||
| (3) | Average<br> balances for borrowings includes the financing lease obligation which is presented under<br> other liabilities on the consolidated balance sheet. |
9
ASSET QUALITY ANALYSIS
| March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | 2023 | 2022 | 2022 | 2022 | 2022 | ||||||||||||||||||||
| NON-PERFORMING ASSETS | |||||||||||||||||||||||||
| Commercial real estate | $ | 2,546 | $ | 2,434 | $ | 2,976 | $ | 8,277 | $ | 8,984 | |||||||||||||||
| Commercial and industrial loans | 12,155 | 17,023 | 21,008 | 4,891 | 5,618 | ||||||||||||||||||||
| Residential mortgages | 9,442 | 8,612 | 10,407 | 10,331 | 11,079 | ||||||||||||||||||||
| Consumer loans | 2,848 | 3,045 | 3,463 | 3,385 | 4,000 | ||||||||||||||||||||
| Total non-performing loans | 26,991 | 31,114 | 37,854 | 26,884 | 29,681 | ||||||||||||||||||||
| Repossessed assets | 2,462 | 2,209 | 2,175 | 2,004 | 2,004 | ||||||||||||||||||||
| Total non-performing assets | $ | 29,453 | $ | 33,323 | $ | 40,029 | $ | 28,888 | $ | 31,685 | |||||||||||||||
| Total non-performing loans/total loans | 0.31 | % | 0.37 | % | 0.48 | % | 0.34 | % | 0.41 | % | |||||||||||||||
| Total non-performing assets/total assets | 0.24 | % | 0.29 | % | 0.35 | % | 0.25 | % | 0.26 | % | |||||||||||||||
| PROVISION AND ALLOWANCE FOR CREDIT LOSSES ON LOANS | |||||||||||||||||||||||||
| Balance at beginning of period | $ | 96,270 | $ | 96,013 | $ | 99,021 | $ | 99,475 | $ | 106,094 | |||||||||||||||
| Adoption of ASU No. 2022-02 | (401 | ) | - | - | - | - | |||||||||||||||||||
| Balance after adoption of ASU No. 2022-02 | 95,869 | 96,013 | 99,021 | 99,475 | 106,094 | ||||||||||||||||||||
| Charged-off loans | (7,936 | ) | (12,995 | ) | (7,424 | ) | (1,593 | ) | (6,048 | ) | |||||||||||||||
| Recoveries on charged-off loans | 1,059 | 1,252 | 1,416 | 1,139 | 3,429 | ||||||||||||||||||||
| Net loans charged-off | (6,877 | ) | (11,743 | ) | (6,008 | ) | (454 | ) | (2,619 | ) | |||||||||||||||
| Provision (benefit)/expense for loan credit losses | 8,999 | 12,000 | 3,000 | - | (4,000 | ) | |||||||||||||||||||
| Balance at end of period | $ | 97,991 | $ | 96,270 | $ | 96,013 | $ | 99,021 | $ | 99,475 | |||||||||||||||
| Allowance for credit losses/total loans | 1.13 | % | 1.15 | % | 1.21 | % | 1.27 | % | 1.37 | % | |||||||||||||||
| Allowance for credit losses/non-performing loans | 363 | % | 309 | % | 254 | % | 368 | % | 335 | % | |||||||||||||||
| NET LOAN CHARGE-OFFS | |||||||||||||||||||||||||
| Commercial real estate | $ | 122 | $ | 187 | $ | (854 | ) | $ | (76 | ) | $ | (3,280 | ) | ||||||||||||
| Commercial and industrial loans | (5,695 | ) | (10,914 | ) | (4,931 | ) | (237 | ) | 653 | ||||||||||||||||
| Residential mortgages | 305 | 192 | 122 | (30 | ) | (50 | ) | ||||||||||||||||||
| Home equity | 16 | (128 | ) | 1 | 33 | 135 | |||||||||||||||||||
| Auto and other consumer | (1,625 | ) | (1,080 | ) | (346 | ) | (144 | ) | (77 | ) | |||||||||||||||
| Total, net | $ | (6,877 | ) | $ | (11,743 | ) | $ | (6,008 | ) | $ | (454 | ) | $ | (2,619 | ) | ||||||||||
| Net charge-offs (QTD annualized)/average loans | 0.32 | % | 0.58 | % | 0.30 | % | 0.02 | % | 0.15 | % | |||||||||||||||
| Net charge-offs (YTD annualized)/average loans | 0.32 | % | 0.27 | % | 0.16 | % | 0.08 | % | 0.15 | % | |||||||||||||||
| Percent | Percent | Percent | Percent | Percent | |||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| of Total | of Total | of Total | of Total | of Total | |||||||||||||||||||||
| DELINQUENT<br> AND NON-PERFORMING LOANS | Balance | Loans | Balance | Loans | Balance | Loans | Balance | Loans | Balance | Loans | |||||||||||||||
| 30-89 Days delinquent | $ | 14,210 | 0.16 | % | $ | 12,162 | 0.15 | % | $ | 14,662 | 0.18 | % | $ | 36,184 | 0.46 | % | $ | 13,517 | 0.19 | % | |||||
| 90+ Days<br> delinquent and still accruing | 6,937 | 0.08 | % | 7,038 | 0.08 | % | 6,285 | 0.08 | % | 6,760 | 0.09 | % | 6,613 | 0.09 | % | ||||||||||
| Total accruing delinquent loans | 21,147 | 0.24 | % | 19,200 | 0.23 | % | 20,947 | 0.26 | % | 42,944 | 0.55 | % | 20,130 | 0.28 | % | ||||||||||
| Non-performing<br> loans | 26,991 | 0.31 | % | 31,114 | 0.37 | % | 37,854 | 0.48 | % | 26,884 | 0.34 | % | 29,681 | 0.41 | % | ||||||||||
| Total delinquent<br> and non-performing loans | $ | 48,138 | 0.55 | % | $ | 50,314 | 0.60 | % | $ | 58,801 | 0.74 | % | $ | 69,828 | 0.89 | % | $ | 49,811 | 0.69 | % |
10
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND SUPPLEMENTARYDATA
| March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | 2023 | 2022 | 2022 | 2022 | 2022 | |||||||||||
| Total non-interest income | $ | 16,606 | $ | 15,654 | $ | 16,251 | $ | 16,351 | $ | 20,681 | ||||||
| Adj: Net securities (gains)/losses (1) | - | (163 | ) | 476 | 973 | 745 | ||||||||||
| Total operating non-interest income (2) | $ | 16,606 | $ | 15,491 | $ | 16,727 | $ | 17,324 | $ | 21,426 | ||||||
| Total revenue | (A) | $ | 114,139 | $ | 117,746 | $ | 108,335 | $ | 97,709 | $ | 89,744 | |||||
| Adj: Net securities (gains)/losses (1) | - | (163 | ) | 476 | 973 | 745 | ||||||||||
| Total operating revenue (2) | (B) | $ | 114,139 | $ | 117,583 | $ | 108,811 | $ | 98,682 | $ | 90,489 | |||||
| Total non-interest expense | (C) | $ | 71,955 | $ | 70,014 | $ | 81,677 | $ | 68,475 | $ | 68,550 | |||||
| Adj: Merger, restructuring and other expense | 36 | 2,617 | (11,473 | ) | (35 | ) | (18 | ) | ||||||||
| Operating non-interest expense (2) | (D) | $ | 71,991 | $ | 72,631 | $ | 70,204 | $ | 68,440 | $ | 68,532 | |||||
| Pre-tax, pre-provision net revenue (PPNR) | (A-C) | $ | 42,184 | $ | 47,732 | $ | 26,658 | $ | 29,234 | $ | 21,194 | |||||
| Operating pre-tax, pre-provision net revenue (PPNR) (2) | (B-D) | 42,148 | 44,952 | 38,607 | 30,242 | 21,957 | ||||||||||
| Net income | $ | 27,637 | $ | 30,505 | $ | 18,717 | $ | 23,115 | $ | 20,196 | ||||||
| Adj: Net securities (gains)/losses (1) | - | (163 | ) | 476 | 973 | 745 | ||||||||||
| Adj: Restructuring expense and other expense | (36 | ) | (2,617 | ) | 11,473 | 35 | 18 | |||||||||
| Adj: Income taxes (expense)/benefit | 7 | 529 | (2,738 | ) | (561 | ) | (170 | ) | ||||||||
| Total operating income (2) | (E) | $ | 27,608 | $ | 28,254 | $ | 27,928 | $ | 23,562 | $ | 20,789 | |||||
| (in millions, except per share data) | ||||||||||||||||
| Total average assets | (F) | $ | 11,805 | $ | 11,321 | $ | 11,315 | $ | 11,260 | $ | 11,493 | |||||
| Total average shareholders’ equity | (G) | 1,214 | 1,213 | 1,189 | 1,182 | 1,189 | ||||||||||
| Total average tangible shareholders’ equity (2)(3) | (H) | 1,190 | 1,188 | 1,164 | 1,155 | 1,160 | ||||||||||
| Total accumulated other comprehensive (loss) net of tax, end of period | (159 | ) | (181 | ) | (188 | ) | (123 | ) | (78 | ) | ||||||
| Total tangible shareholders’ equity, end of period (2)(3) | (J) | 972 | 930 | 917 | 987 | 1,066 | ||||||||||
| Total tangible assets, end of period (2)(3) | (L) | 12,297 | 11,638 | 11,291 | 11,552 | 12,069 | ||||||||||
| Total common shares outstanding, end of period (thousands ) | (M) | 44,411 | 44,361 | 45,040 | 45,788 | 47,792 | ||||||||||
| Average diluted shares outstanding (thousands ) | (N) | 44,036 | 44,484 | 45,034 | 46,102 | 48,067 | ||||||||||
| GAAP earnings per common share, diluted (2) | $ | 0.63 | $ | 0.69 | $ | 0.42 | $ | 0.50 | $ | 0.42 | ||||||
| Operating earnings per common share, diluted (2) | (E/N) | 0.63 | 0.64 | 0.62 | 0.51 | 0.43 | ||||||||||
| Tangible book value per common share, end of period (2) | (K/M) | 21.89 | 20.95 | 20.36 | 21.56 | 22.30 | ||||||||||
| Total tangible shareholders’ equity/total tangible assets (2) | (J/L) | 7.91 | 7.99 | 8.12 | 8.54 | 8.83 | ||||||||||
| Performance ratios (4) | ||||||||||||||||
| GAAP return on equity | 9.11 | % | 10.06 | % | 6.30 | 7.82 | % | 6.79 | % | |||||||
| Operating return on equity (2) | (E/G) | 9.10 | 9.32 | 9.40 | 7.97 | 6.99 | ||||||||||
| Return on tangible common equity (2)(5) | 9.59 | 10.59 | 6.76 | 8.33 | 7.29 | |||||||||||
| Operating return on tangible common equity (2)(5) | (E+Q)/(I) | 9.59 | 9.83 | 9.92 | 8.48 | 7.49 | ||||||||||
| GAAP return on assets | 0.94 | 1.08 | 0.66 | 0.82 | 0.70 | |||||||||||
| Operating return on assets (2) | 0.94 | 1.00 | 0.99 | 0.84 | 0.72 | |||||||||||
| Efficiency ratio (2)(6) | (D-Q)/(B+O+R) | 59.51 | 58.25 | 62.01 | 66.60 | 72.61 | ||||||||||
| Supplementary data (in thousands) | ||||||||||||||||
| Tax benefit on tax-credit investments (7) | (O) | $ | 2,897 | $ | 3,068 | $ | 620 | $ | 595 | $ | 596 | |||||
| Non-interest income tax-credit investments amortization (8) | (P) | (2,285 | ) | (2,355 | ) | (445 | ) | (351 | ) | (357 | ) | |||||
| Net income on tax-credit investments | (O+P) | 612 | 713 | 175 | 244 | 239 | ||||||||||
| Intangible amortization | (Q) | $ | 1,205 | $ | 1,277 | $ | 1,285 | $ | 1,286 | $ | 1,286 | |||||
| Fully taxable equivalent income adjustment | (R) | 1,908 | 1,845 | 1,715 | 1,560 | 1,524 | ||||||||||
| (1) | As of March 31, 2023, securities gains/(losses) are included in operating income. Net securities<br>(gains)/losses for prior periods include the change in fair value of the Company’s equity securities in compliance with the Company’s<br>adoption of ASU 2016-01. | |||||||||||||||
| --- | --- | |||||||||||||||
| (2) | Non-GAAP financial measure. | |||||||||||||||
| (3) | Total tangible shareholders’ equity is computed by taking total shareholders’ equity less the intangible<br>assets at end of period. Total tangible assets is computed by taking intangible assets at end of period. | |||||||||||||||
| (4) | Ratios are annualized and based on average balance sheet amounts, where applicable. Quarterly data may<br>not sum to year-to-date data due to rounding. | |||||||||||||||
| (5) | Operating return on tangible equity is computed by dividing the total operating income/(loss) adjusted<br>for the tax-effected amortization of intangible assets, assuming a 27% marginal rate, by tangible equity. | |||||||||||||||
| (6) | Efficiency ratio is computed by dividing total operating tangible non-interest expense by the sum of total net interest income on<br>a fully taxable equivalent basis and total operating non-interest income adjusted to include tax credit benefit of tax shelter investments.<br>The Company uses this non-GAAP measure to provide important information regarding its operational efficiency. | |||||||||||||||
| (7) | The tax benefit is the direct reduction to the income tax provision due to tax credits and deductions<br>generated from investments in historic rehabilitation, low-income housing, new markets and solar. | |||||||||||||||
| (8) | The non-interest income amortization is the reduction to the tax-advantaged investments, which are incurred<br>as the tax credits are generated. |
11