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8-K - FORM 8-K - PRIVATEBANCORP, INCd522788d8k.htm

 

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Exhibit 99.1

For further information:

Media Contact:

Amy Yuhn

312-564-1378

ayuhn@theprivatebank.com

Investor Relations Contact:

Sarah Lewensohn

312-564-3894

slewensohn@theprivatebank.com

FOR IMMEDIATE RELEASE

PrivateBancorp Reports Record First Quarter Earnings

 

 

Earnings per share up 35 percent from fourth quarter 2012 and more than double first quarter 2012 results

 

 

Operating profit increased 3 percent from fourth quarter 2012 and 6 percent from first quarter 2012

 

 

Continued improvement in credit quality led to lower provision expense

CHICAGO, April 18, 2013 – PrivateBancorp, Inc. (NASDAQ: PVTB) today reported net income available to common shareholders of $27.3 million, or $0.35 per diluted share, for the first quarter 2013, compared to $10.8 million or $0.15 per diluted share for the first quarter 2012, and $20.0 million or $0.26 per diluted share for the fourth quarter 2012.

“Our first quarter results reflect the momentum we have gained as we execute our commercial middle market strategy,” said Larry D. Richman, President and Chief Executive Officer, PrivateBancorp, Inc. “Net income was up 36 percent from fourth quarter and more than doubled from first quarter 2012 largely on reduced credit costs. Despite continued modest loan demand in a competitive market, we have maintained net interest income due to our ability to build client relationships. Non-interest income increased 11 percent year over year, contributing to strong first quarter results.

“Following robust loan growth in the previous quarter, we saw loan balances decrease in the first quarter due in part to planned and opportunistic syndications and repayments,” Richman continued. “Business clients are generally remaining cautious in this slowly recovering Midwest economy. We have teams poised to capitalize on opportunities to develop new business. Based upon our current pipeline of pending transactions and new prospects, I am expecting stronger loan activity in the second quarter as we maintain our selectivity and discipline.”

 

1


First Quarter 2013 Highlights

Comparison to fourth quarter 2012

 

   

Net income was $27.3 million, up 36 percent from the previous quarter, benefiting from reductions in loan loss provision, net foreclosed property expense and employee expense.

 

   

Net interest income of $103.0 million was down slightly from $104.8 million in the previous quarter. A 2 percent increase in average loan balances partially offset lower loan and investment yields.

 

   

Total loans were $10.0 billion at March 31, 2013, a 1 percent decline from year-end, reflecting lower originations in the early part of the first quarter along with increased syndication activity and paydowns of loans, many associated with loans funded late in the fourth quarter 2012.

 

   

Total deposits were $11.4 billion, a 6 percent decline from year-end 2012, which reduced excess liquidity. Deposits had increased 7 percent as of December 31, 2012 from $11.4 billion at September 30, 2012.

 

   

Asset quality continued to improve with non-performing assets declining 8 percent from last quarter. Non-performing assets to total assets was 1.51 percent at March 31, 2013, compared to 1.57 percent at December 31, 2012.

Comparison to first quarter 2012

 

   

Net income was $27.3 million, an increase of more than 150 percent from the first quarter 2012 net income available to common stockholders, as a result of lower loan loss provision and net foreclosed property expense, and growth in non-interest income.

 

   

Non-interest income of $30.5 million increased 11 percent year over year largely from increased mortgage banking and syndication fees revenue.

 

   

Total loans grew 9 percent over the year to $10.0 billion at March 31, 2013.

Operating Performance

Net revenue was $134.3 million in the first quarter 2013, compared to $132.6 million in the first quarter 2012 and $135.0 million in the fourth quarter 2012. Operating profit was $55.3 million in the first quarter 2013, compared to $52.3 million in the first quarter 2012 and $53.7 million in the fourth quarter 2012. A 3 percent increase in non-interest income and a 3 percent decline in non-interest expense resulted in higher first quarter operating profit than recorded in the previous quarter.

 

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Net interest income was $103.0 million in the first quarter 2013, compared to $104.4 million for the first quarter 2012 and $104.8 million in the fourth quarter 2012. Net interest income was impacted by the reduction in yields from both investments and loans and an increase in average loan balances. Average total loans were $10.2 billion for the first quarter 2013, an increase of $236 million, or 2 percent, from the fourth quarter 2012, and an increase of $1.1 billion over the prior year. The Company issued $125 million of subordinated debt in October 2012, adding long-term debt interest expense that was not incurred in the first quarter 2012.

Net interest margin was 3.19 percent in the first quarter 2013, compared to 3.53 percent in the first quarter 2012 and 3.16 percent in the fourth quarter 2012. Net interest margin benefited from lower liquidity balances and lower cost of interest bearing funds, but was also impacted by a decline in loan and investment yields and lower non-interest bearing deposits during the quarter.

Non-interest income was $30.5 million in the first quarter 2013, compared to $27.5 million in the first quarter 2012 and $29.5 million in the fourth quarter 2012. First quarter 2013 capital markets revenue of $5.0 million declined from $6.7 million, and included a positive credit valuation adjustment of $246,000 as compared to a positive credit valuation adjustment of $854,000 in the fourth quarter 2012. During the quarter, capital markets revenue declined largely due to lower loan origination activity and clients’ outlook on interest rate volatility. Syndication revenue grew 72 percent to $3.8 million from the previous quarter as the Company completed a number of transactions, many associated with a number of loans that funded late in the fourth quarter 2012. First quarter 2013 other income included a $1.1 million gain on loan sale. Loan, letter of credit and commitment fees were $4.1 million, a decline of $594,000 from the previous quarter due to lower origination activity. As compared to the previous quarter, treasury management grew 6 percent to $5.9 million and trust and investments income grew 4 percent to $4.4 million, both benefitting from cross-sell to an expanded base of new and existing clients. Mortgage revenue of $4.2 million was consistent with the prior quarter, reflecting steady demand for refinancings.

Expenses

Non-interest expense was $79.0 million in the first quarter 2013, compared to $80.2 million in the first quarter 2012 and $81.3 million in the fourth quarter 2012. Non-interest expense in the first quarter 2013 reflected a decline in net foreclosed property expenses, salaries and employee benefits expenses and insurance expenses as compared to the fourth quarter 2012, partially offset by a $1.7 million provision for unfunded commitments. Net foreclosed property expense decreased by $2.9 million, or 31 percent, to $6.6 million from the previous quarter, primarily due to reduced charges from loss on sales, valuation adjustments and a decline of ownership costs related to other owned real estate (“OREO”). Net foreclosed property expense remains elevated and may fluctuate from quarter to quarter. Despite seasonally higher payroll taxes, which were $3.1 million greater than the fourth quarter 2012, salaries and benefits expense declined in the first quarter. Salaries and benefits expense benefited from a $2.8 million reduction in share-based compensation that was primarily due to the final vesting of equity awards granted in 2007 and 2008, and a decline in incentive based compensation costs from amounts recorded in the fourth quarter 2012. Insurance expense in the quarter reflected a $700,000 refund of previously paid FDIC assessments. The efficiency ratio for the first quarter 2013 was 58.8 percent, compared to 60.5 percent for first quarter 2012, and 60.2 percent for the fourth quarter 2012.

 

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The effective tax rate declined to 38 percent for the first quarter 2013, compared to 42 percent for the previous quarter, due to increased tax benefits resulting from the repayment of TARP and the final vesting in the fourth quarter 2012 of equity awards granted in 2007 and 2008.

Credit Quality

The allowance for loan losses at March 31, 2013, was 1.53 percent of total loans, down from 1.99 percent at March 31, 2012, and 1.59 percent at December 31, 2012. The allowance for loan losses as a percentage of non-performing loans was 120 percent at March 31, 2013, compared to 79 percent at March 31, 2012, and 116 percent at December 31, 2012. The allowance for loan losses was $154.0 million at March 31, 2013, a decline from $161.4 million at December 31, 2012, primarily due to a 14 percent reduction in the amount of specific reserves from a decrease of the impaired loan population and a modest decline in the general allocated reserve. Net charge-offs of $17.6 million were relatively flat compared to the fourth quarter 2012. For the first quarter 2013, provision for loan loss was $10.1 million, a decline of 19 percent from the previous quarter.

Non-performing loans were $129 million, a 45 percent decline from the first quarter 2012 and a 7 percent decline from the fourth quarter 2012. Special mention and potential problem loans declined 44 percent from the first quarter 2012 and 10 percent from the fourth quarter 2012. Non-performing assets to total assets were 1.51 percent at March 31, 2013, compared to 2.83 percent at March 31, 2012 and 1.57 percent at December 31, 2012. The Company disposed of $28.0 million in problem loans and OREO in the first quarter 2013. In the near term, the Company expects continued progress in reducing non-performing assets through the execution of workout programs and the disposition of problem assets.

Credit quality results exclude covered assets acquired through an FDIC-assisted transaction that are subject to a loss-sharing agreement.

Balance Sheet

Total assets were $13.4 billion at March 31, 2013, compared to $14.1 billion at December 31, 2012. Total loans were $10.0 billion at March 31, 2013, down slightly from $10.1 billion at December 31, 2012. During the first quarter 2013, commercial and industrial loans grew 1 percent while commercial real estate loans declined 6 percent from the previous quarter.

Total deposits were $11.4 billion at March 31, 2013, compared to $12.2 billion at December 31, 2012. The decrease in total deposits was primarily driven by a 25 percent decline in non-interest bearing demand deposits. A number of factors contributed to the decrease in demand deposits including movement to interest bearing products, expiration of the unlimited guarantee, and client usage. At March 31, 2013, non-interest bearing deposits comprised 24 percent of total deposits, and the loan to deposit ratio was 88.08 percent.

 

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The balance sheet at March 31, 2013 included long-term debt of $499.8 million, compared to $379.8 million at March 31, 2012, reflecting $125 million of subordinated debt issued by the Company to refinance a portion of the TARP preferred stock redemption in fourth quarter 2012. The Company’s investment securities portfolio was $2.4 billion at March 31, 2013, up slightly compared to $2.3 billion at December 31, 2012. The securities portfolio is primarily composed of U.S. government agency backed mortgage securities, U.S. Treasuries, agency backed collateralized mortgage obligations, and investment grade municipal bonds.

Capital

As of March 31, 2013, the total risk-based capital ratio was 13.58 percent, the tier 1 risk-based capital ratio was 10.90 percent, and the leverage ratio was 9.81 percent. The tier 1 common capital ratio was 8.89 percent and tangible common equity ratio was 8.48 percent at the end of the first quarter 2013.

Quarterly Conference Call and Webcast Presentation

PrivateBancorp will host a conference call on Thursday, April 18, 2013, at 10 a.m. CT. The call may be accessed by telephone at (888) 782-9127 (U.S. and Canada) or (706) 634-5643 (International) and entering passcode # 29873820. A live webcast of the call can be accessed on the Company website at www.theprivatebank.com by visiting the Investor Relations tab under the About Us section. A rebroadcast will be available beginning approximately two hours after the call until midnight on May 2, 2013, by calling (855) 859-2056 (U.S. and Canada) or (404) 537-3406 (International) and entering passcode # 29873820.

About PrivateBancorp, Inc.

PrivateBancorp, Inc., through its subsidiaries, delivers customized business and personal financial services to middle-market companies, as well as business owners, executives, entrepreneurs and families in all of the markets and communities we serve. As of March 31, 2013, the Company had 36 offices in 10 states and $13.4 billion in assets. The Company website is www.theprivatebank.com.

Forward-Looking Statements

Statements contained in this press release that are not historical facts may constitute forward-looking statements within the meaning of federal securities laws. Our ability to predict results or the actual effects of future plans, strategies or events is inherently uncertain. Factors which could cause actual results to differ from those reflected in forward-looking statements include: unforeseen credit quality problems or further deterioration in problem loans that could result in charge-offs greater than we have anticipated in our allowance for loan losses; slower than anticipated dispositions of other real estate owned which may result in increased losses and ongoing elevated foreclosed property expense;

 

5


continued uncertainty regarding U.S. and global economic recovery and economic outlook that may impact market conditions and credit quality or prolong weakness in demand for loans or other banking products and services; unanticipated developments in the timing or closing of pending or prospective loan transactions or greater than expected paydowns or payoffs of existing loans; unanticipated changes in interest rates; competitive pricing trends; lack of sufficient or cost-effective sources of liquidity or funding as and when needed; loss of key personnel or an inability to recruit and retain appropriate talent; unexpected increases in non-interest expense; uncertainty relating to recently proposed regulatory capital rules that could, depending on the nature of our assets, require us to maintain higher levels of regulatory capital; uncertainty regarding implications of other changes in regulatory requirements relating to implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act that may negatively affect our revenues or profitability; other legislative, regulatory or accounting changes affecting financial services companies and/or the products and services offered by financial services companies; changes in monetary or fiscal policies of the U.S. Government; or failures or disruptions to our data processing or other information or operational systems, including the potential impact of disruptions or breaches at our third party service providers.

Forward-looking statements are subject to risks, assumptions and uncertainties and could be significantly affected by many factors, including those set forth in the “Risk Factors” section of our Form 10-K for the year ended December 31, 2012 as well as those set forth in our subsequent periodic reports filed with the SEC. These factors should be considered in evaluating forward- looking statements and undue reliance should not be placed on our forward-looking statements. Forward-looking statements speak only as of the date they are made and we assume no obligation to update any of these statements in light of new information, future events or otherwise, unless required under the federal securities laws.

Non-GAAP Measures

This press release contains both financial measures based on accounting principles generally accepted in the United States (GAAP) and non-GAAP based financial measures. The Company believes that these non-GAAP financial measures provide information useful to investors in understanding the underlying operational performance of the Company, its business, and performance trends and facilitates comparisons with the performance of others in the banking industry. If 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 this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

Editor’s Note: Financial highlights attached.

 

6


Quarterly Consolidated Income Statements

Unaudited

(Amounts in thousands, except per share data)

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     1Q13      4Q12      3Q12     2Q12     1Q12  

Interest Income

            

Loans, including fees

   $ 106,787       $ 108,172       $ 106,358      $ 105,142      $ 103,539   

Federal funds sold and interest-bearing deposits in banks

     208         452         248        133        132   

Securities:

            

Taxable

     12,822         12,938         13,907        14,723        15,258   

Exempt from Federal income taxes

     1,502         1,462         1,389        1,336        1,300   

Other interest income

     90         168         126        131        122   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total interest income

     121,409         123,192         122,028        121,465        120,351   

Interest Expense

            

Interest-bearing demand deposits

     1,115         985         958        799        636   

Savings deposits and money market accounts

     4,399         4,531         4,206        4,265        4,602   

Brokered and time deposits

     5,129         5,561         5,860        5,394        5,017   

Short-term and secured borrowings

     118         77         101        123        142   

Long-term debt

     7,608         7,235         5,495        5,538        5,578   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total interest expense

     18,369         18,389         16,620        16,119        15,975   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Net interest income

     103,040         104,803         105,408        105,346        104,376   

Provision for loan and covered loan losses

     10,357         13,177         13,509        17,038        27,701   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Net interest income after provision for loan and covered loan losses

     92,683         91,626         91,899        88,308        76,675   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Non-interest Income

            

Trust and Investments

     4,394         4,232         4,254        4,312        4,219   

Mortgage banking

     4,170         4,197         3,685        2,915        2,663   

Capital markets products

     5,039         6,744         5,832        6,033        7,349   

Treasury management

     5,924         5,606         5,490        5,260        5,154   

Loan, letter of credit and commitment fees

     4,077         4,671         4,779        4,359        4,364   

Syndication fees

     3,832         2,231         2,700        2,013        2,163   

Deposit service charges and fees and other income

     2,391         1,582         1,308        1,644        1,487   

Net securities gains (losses)

     641         191         (211     (290     105   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total non-interest income

     30,468         29,454         27,837        26,246        27,504   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Non-interest Expense

            

Salaries and employee benefits

     43,140         45,253         44,820        42,177        42,698   

Net occupancy expense

     7,534         7,762         7,477        7,653        7,679   

Technology and related costs

     3,464         3,249         3,432        3,273        3,296   

Marketing

     2,317         2,448         2,645        3,058        2,160   

Professional services

     1,899         1,998         2,151        2,247        1,957   

Outsourced servicing costs

     1,634         1,814         1,802        2,093        1,710   

Net foreclosed property expenses

     6,643         9,571         8,596        11,894        8,235   

Postage, telephone, and delivery

     843         909         837        882        869   

Insurance

     2,539         3,290         3,352        4,239        4,305   

Loan and collection expense

     2,777         2,227         3,329        2,918        3,157   

Other expenses

     6,173         2,794         3,289        3,424        4,163   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total non-interest expense

     78,963         81,315         81,730        83,858        80,229   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Income before income taxes

     44,188         39,765         38,006        30,696        23,950   

Income tax provision

     16,918         16,682         14,952        13,192        9,695   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Net income

     27,270         23,083         23,054        17,504        14,255   

Preferred stock dividends and discount accretion

     —           3,043         3,447        3,442        3,436   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Net income available to common stockholders

   $ 27,270       $ 20,040       $ 19,607      $ 14,062      $ 10,819   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Per Common Share Data

            

Basic earnings per share

   $ 0.35       $ 0.26       $ 0.27      $ 0.19      $ 0.15   

Diluted earnings per share

   $ 0.35       $ 0.26       $ 0.27      $ 0.19      $ 0.15   

Cash dividends declared

   $ 0.01       $ 0.01       $ 0.01      $ 0.01      $ 0.01   

Weighted-average common shares outstanding

     76,143         75,035         71,010        70,956        70,780   

Weighted-average diluted common shares outstanding

     76,203         75,374         71,274        71,147        70,932   

Note: Certain reclassifications have been made to prior period financial statements to place them on a basis comparable with the current period financial statements.


Consolidated Balance Sheets

(Dollars in thousands)

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     03/31/13     12/31/12     09/30/12     06/30/12     03/31/12  
     unaudited     audited     unaudited     unaudited     unaudited  

Assets

          

Cash and due from banks

   $ 118,583      $ 234,308      $ 143,573      $ 141,563      $ 166,062   

Fed funds sold and interest-bearing deposits in banks

     203,647        707,143        470,984        315,378        193,571   

Loans held for sale

     38,091        49,696        49,209        35,342        29,185   

Securities available-for-sale, at fair value

     1,457,433        1,451,160        1,550,516        1,625,649        1,705,649   

Securities held-to-maturity, at amortized cost

     959,994        863,727        784,930        693,277        598,066   

Federal Home Loan Bank (“FHLB”) stock

     34,288        43,387        43,387        43,467        40,695   

Loans - excluding covered assets, net of unearned fees

     10,033,803        10,139,982        9,625,421        9,436,235        9,222,253   

Allowance for loan losses

     (153,992     (161,417     (166,859     (174,302     (183,844
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loans, net of allowance for loan losses and unearned fees

     9,879,811        9,978,565        9,458,562        9,261,933        9,038,409   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Covered assets

     176,855        194,216        208,979        244,782        276,534   

Allowance for covered loan losses

     (24,089     (24,011     (21,500     (21,733     (26,323
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Covered assets, net of allowance for covered loan losses

     152,766        170,205        187,479        223,049        250,211   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other real estate owned, excluding covered assets

     73,857        81,880        97,833        109,836        123,498   

Premises, furniture, and equipment, net

     38,373        39,508        40,526        38,177        37,462   

Accrued interest receivable

     39,205        34,832        36,892        37,089        36,033   

Investment in bank owned life insurance

     52,873        52,513        52,134        51,751        51,356   

Goodwill

     94,509        94,521        94,534        94,546        94,559   

Other intangible assets

     12,047        12,828        13,500        14,152        14,683   

Capital markets derivative assets

     81,805        90,405        104,697        102,613        97,805   

Other assets

     134,948        152,837        149,798        154,354        145,920   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

   $ 13,372,230      $ 14,057,515      $ 13,278,554      $ 12,942,176      $ 12,623,164   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities

          

Demand deposits:

          

Noninterest-bearing

   $ 2,756,879      $ 3,690,340      $ 3,295,568      $ 2,920,182      $ 3,054,536   

Interest-bearing

     1,390,955        1,057,390        893,194        785,879        714,522   

Savings deposits and money market accounts

     4,741,864        4,912,820        4,381,595        4,146,022        4,347,832   

Brokered time deposits

     983,625        993,455        1,290,796        1,484,435        961,481   

Time deposits

     1,518,980        1,519,629        1,498,287        1,398,012        1,344,341   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total deposits

     11,392,303        12,173,634        11,359,440        10,734,530        10,422,712   

Short-term and secured borrowings

     107,775        5,000        5,000        335,000        355,000   

Long-term debt

     499,793        499,793        374,793        374,793        379,793   

Accrued interest payable

     6,787        7,141        5,287        5,855        5,425   

Capital markets derivative liabilities

     84,210        93,029        108,094        105,773        100,109   

Other liabilities

     49,297        71,752        62,500        52,071        47,971   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

     12,140,165        12,850,349        11,915,114        11,608,022        11,311,010   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Equity

          

Preferred stock

     —           —           241,585        241,185        240,791   

Common stock

     76,680        77,015        71,884        71,843        71,611   

Treasury stock

     (9,631     (24,150     (22,736     (22,639     (21,749

Additional paid-in capital

     1,014,443        1,026,438        956,356        951,127        946,034   

Retained earnings

     106,288        79,799        60,533        41,651        28,315   

Accumulated other comprehensive income, net of tax

     44,285        48,064        55,818        50,987        47,152   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total equity

     1,232,065        1,207,166        1,363,440        1,334,154        1,312,154   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities and equity

   $ 13,372,230      $ 14,057,515      $ 13,278,554      $ 12,942,176      $ 12,623,164   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Note: Certain reclassifications have been made to prior period financial statements to place them on a basis comparable with the current period financial statements.


Selected Financial Data

Unaudited

(Amounts in thousands except per share data)

  LOGO

 

     1Q13     4Q12     3Q12     2Q12     1Q12  

Selected Statement of Income Data:

          

Net interest income

   $ 103,040      $ 104,803      $ 105,408      $ 105,346      $ 104,376   

Net revenue (1) (2)

   $ 134,292      $ 135,022      $ 133,974      $ 132,291      $ 132,560   

Operating profit (1) (2)

   $ 55,329      $ 53,707      $ 52,244      $ 48,433      $ 52,331   

Provision for loan and covered loan losses

   $ 10,357      $ 13,177      $ 13,509      $ 17,038      $ 27,701   

Income before taxes

   $ 44,188      $ 39,765      $ 38,006      $ 30,696      $ 23,950   

Net income available to common stockholders

   $ 27,270      $ 20,040      $ 19,607      $ 14,062      $ 10,819   

Per Common Share Data:

          

Basic earnings per share

   $ 0.35      $ 0.26      $ 0.27      $ 0.19      $ 0.15   

Diluted earnings per share

   $ 0.35      $ 0.26      $ 0.27      $ 0.19      $ 0.15   

Dividends declared

   $ 0.01      $ 0.01      $ 0.01      $ 0.01      $ 0.01   

Book value (period end) (1)

   $ 15.87      $ 15.65      $ 15.49      $ 15.09      $ 14.79   

Tangible book value (period end) (1) (2)

   $ 14.49      $ 14.26      $ 14.00      $ 13.59      $ 13.29   

Market value (close)

   $ 18.89      $ 15.32      $ 15.99      $ 14.76      $ 15.17   

Book value multiple

     1.19     0.98     1.03     0.98     1.03

Share Data:

          

Weighted-average common shares outstanding

     76,143        75,035        71,010        70,956        70,780   

Weighted-average diluted common shares outstanding

     76,203        75,374        71,274        71,147        70,932   

Common shares issued (at period end)

     78,050        78,062        73,291        73,273        73,205   

Common shares outstanding (at period end)

     77,649        77,115        72,436        72,424        72,415   

Performance Ratios:

          

Return on average assets

     0.81     0.67     0.70     0.55     0.46

Return on average common equity

     9.01     6.64     7.00     5.18     4.05

Return on average tangible common equity (1)(2)

     10.04     7.45     7.91     5.92     4.68

Net interest margin (1) (2)

     3.19     3.16     3.35     3.46     3.53

Fee revenue as a percent of total revenue (1)

     22.45     21.83     21.02     20.12     20.79

Non-interest income to average assets

     0.91     0.85     0.85     0.83     0.89

Non-interest expense to average assets

     2.35     2.35     2.49     2.64     2.59

Net overhead ratio (1)

     1.44     1.50     1.64     1.81     1.70

Efficiency ratio (1) (2)

     58.80     60.22     61.00     63.39     60.52

Balance Sheet Ratios:

          

Loans to deposits (period end) (3)

     88.08     83.29     84.73     87.91     88.48

Average interest-earning assets to average interest- bearing liabilities

     141.21     150.03     147.76     146.44     149.68

Capital Ratios (period end):

          

Total risk-based capital (1)

     13.58     13.17     13.90     14.12     14.20

Tier 1 risk-based capital (1)

     10.90     10.51     12.24     12.25     12.31

Tier 1 leverage ratio (1)

     9.81     9.50     11.15     11.20     11.35

Tier 1 common equity to risk-weighted assets (1) (2)

     8.89     8.52     8.12     8.05     8.04

Tangible common equity to tangible assets (1) (2)

     8.48     7.88     7.70     7.67     7.69

Total equity to total assets

     9.21     8.59     10.27     10.31     10.39

 

(1) Refer to Glossary of Terms for definition.
(2) This is a non-U.S. GAAP financial measure. Refer to “Non-U.S. GAAP Financial Measures” for a reconciliation from non-U.S. GAAP to U.S. GAAP.
(3) Excludes covered assets. Refer to Glossary of Terms for definition.


Selected Financial Data (continued)

Unaudited

(Dollars in thousands)

  LOGO

 

     1Q13      4Q12     3Q12      2Q12     1Q12  

Additional Selected Information:

            

Credit valuation adjustment on capital markets derivatives (1)

   $ 246       $ 854      $ 5       $ (830   $ 19   

Salaries and employee benefits:

            

Salaries and wages

   $ 24,015       $ 24,333      $ 24,373       $ 23,728      $ 23,174   

Share-based costs

     2,863         5,665        5,181         5,239        4,569   

Incentive compensation, retirement costs and other employee benefits

     16,262         15,255        15,266         13,210        14,955   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total salaries and employee benefits

   $ 43,140       $ 45,253      $ 44,820       $ 42,177      $ 42,698   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Provision for unfunded commitments

   $ 1,723       $ (867   $ —         $ —        $ 933   

Assets under management and administration (AUMA) (1)

   $ 5,515,199       $ 5,196,094      $ 5,007,235       $ 4,738,973      $ 4,879,947   

Custody assets included in AUMA

   $ 2,438,600       $ 2,345,410      $ 2,192,530       $ 2,073,777      $ 2,060,455   

Loan Composition (excluding covered assets(1))

(Dollars in thousands)

 

            % of            % of            % of            % of            % of  
     03/31/13      Total     12/31/12      Total     09/30/12      Total     06/30/12      Total     03/31/12      Total  
     unaudited            audited            unaudited            unaudited            unaudited         

Commercial and industrial

   $ 4,951,951         49   $ 4,901,210         48   $ 4,666,375         48   $ 4,523,780         48   $ 4,325,558         47

Commercial - owner-occupied CRE

     1,640,064         16     1,595,574         16     1,437,935         15     1,384,831         15     1,175,729         13
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total commercial

     6,592,015         65     6,496,784         64     6,104,310         63     5,908,611         63     5,501,287         60
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Commercial real estate

     2,002,833         20     2,132,063         21     2,069,423         21     2,124,492         23     2,378,640         26

Commercial real estate-multi-family

     517,418         5     543,622         5     544,775         6     499,250         5     493,218         5
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total commercial real estate

     2,520,251         25     2,675,685         26     2,614,198         27     2,623,742         28     2,871,858         31
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Construction

     174,077         2     190,496         2     162,724         2     171,014         2     127,837         1

Residential real estate

     368,569         4     373,580         4     360,094         4     330,254         3     308,880         3

Home equity

     162,035         2     167,760         2     170,068         2     174,131         2     175,972         2

Personal

     216,856         2     235,677         2     214,027         2     228,483         2     236,419         3
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total loans

   $ 10,033,803         100   $ 10,139,982         100   $ 9,625,421         100   $ 9,436,235         100   $ 9,222,253         100
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

 

LOGO

 

(1) Refer to Glossary of Terms for definition.


Loan Composition (excluding covered assets(1))

(Dollars in thousands)

Unaudited

  LOGO

Commercial Loans Composition by Industry Segment

(Classified pursuant to the North American Industrial Classification System standard industry descriptions and represents our client’s primary business activity)

 

     03/31/13     12/31/12  
                  Amount                         Amount         
            % of     Non-      % Non-            % of     Non-      % Non-  
     Amount      Total     performing      performing  (2)     Amount      Total     performing      performing  (2)  

Manufacturing

   $ 1,599,688         24   $ —           —        $ 1,496,719         23   $ —           —     

Healthcare

     1,565,431         24     314         *        1,514,496         23     322         *   

Wholesale trade

     684,791         10     —           —          635,477         10     —           —     

Finance and insurance

     504,311         8     186         *        584,763         9     194         *   

Real estate, rental and leasing

     362,060         6     512         *        359,947         6     16,550         5

Professional, scientific and technical services

     434,650         7     5,525         1     391,976         6     10,805         3

Administrative, support, waste management and remediation services

     398,024         6     —           —          426,960         7     —           —     

Architecture, engineering and construction

     229,797         3     9,415         4     225,199         3     629         *   

All other (3)

     813,263         12     15,371         2     861,247         13     13,413         2
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total commercial (4)

   $ 6,592,015         100   $ 31,323         *      $ 6,496,784         100   $ 41,913         1
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Commercial Real Estate and Construction Loans Portfolio by Collateral Type

 

     03/31/13     12/31/12  
                  Amount                         Amount         
            % of     Non-      % Non-            % of     Non-      % Non-  
     Amount      Total     performing      performing  (2)     Amount      Total     performing      performing  (2)  

Commercial Real Estate Portfolio

  

              

Land

   $ 223,880         9   $ 23,335         10   $ 240,503         9   $ 19,747         8

Residential 1-4 family

     48,100         2     6,148         13     58,704         2     13,213         23

Multi-family

     517,418         20     9,704         2     543,622         20     6,553         1

Industrial/warehouse

     273,017         11     7,674         3     272,535         10     8,902         3

Office

     542,737         22     2,715         1     566,834         21     5,849         1

Retail

     463,915         18     7,452         2     472,024         18     8,873         2

Healthcare

     183,359         7     —           —          205,318         8     —           —     

Mixed use/other

     267,825         11     6,615         2     316,145         12     5,417         2
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total commercial real estate

   $ 2,520,251         100   $ 63,643         3   $ 2,675,685         100   $ 68,554         3
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Construction Portfolio

                    

Residential 1-4 family

   $ 11,796         7   $ —           —        $ 14,160         7   $ —           —     

Multi-family

     22,230         13     —           —          36,129         19     —           —     

Industrial/warehouse

     2,800         1     —           —          29,633         16     —           —     

Office

     14,212         8     402         3     8,863         5     402         5

Retail

     51,846         30     —           —          37,457         20     —           —     

Healthcare

     27,005         16     —           —          14,196         7     —           —     

Mixed use/other

     44,188         25     —           —          50,058         26     155         *   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total construction

   $ 174,077         100   $ 402         *      $ 190,496         100   $ 557         *   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

 

LOGO

 

 

(1) Refer to Glossary of Terms for definition.
(2) Calculated as nonperforming loans in the respective industry segment or collateral type divided by total loans of the corresponding industry segment or collateral type presented above.
(3) All other consists of numerous smaller balances across a variety of industries with no category greater than 3%.
(4) Includes owner-occupied commercial real estate of $1.6 billion at March 31, 2013 and December 31, 2012.
* Less than 1%.


Asset Quality (excluding covered assets(1))

Unaudited

(Dollars in thousands)

  LOGO

 

     1Q13     4Q12     3Q12     2Q12     1Q12  

Credit Quality Key Ratios

          

Net charge-offs (annualized) to average loans

     0.70     0.73     0.87     1.16     1.57

Nonperforming loans to total loans

     1.28     1.37     1.87     2.22     2.53

Nonperforming loans to total assets

     0.96     0.99     1.35     1.62     1.85

Nonperforming assets to total assets

     1.51     1.57     2.09     2.47     2.83

Allowance for loan losses to:

          

Total loans

     1.53     1.59     1.73     1.85     1.99

Nonperforming loans

     120     116     93     83     79

Nonperforming assets

          

Loans past due 90 days and accruing

   $ —        $ —        $ —        $ —        $ —     

Nonaccrual loans

     128,657        138,780        179,895        209,339        233,222   

OREO

     73,857        81,880        97,833        109,836        123,498   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total nonperforming assets

   $ 202,514      $ 220,660      $ 277,728      $ 319,175      $ 356,720   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Restructured loans accruing interest

   $ 46,591      $ 60,980      $ 58,431      $ 97,690      $ 136,521   

Special mention loans

   $ 106,446      $ 96,794      $ 104,706      $ 108,052      $ 143,790   

Potential problem loans

   $ 78,185      $ 107,876      $ 112,929      $ 164,077      $ 184,029   

Nonperforming Loans Rollforward

          

Beginning balance

   $ 138,780      $ 179,895      $ 209,339      $ 233,222      $ 259,852   

Additions:

          

New nonaccrual loans

     32,125        28,527        38,948        57,717        69,581   

Reductions:

          

Return to performing status

     (794     (3,824     (236     (1,953     (14,291

Paydowns and payoffs, net of advances

     (885     (21,454     (11,094     (9,961     (4,806

Net sales

     (12,809     (20,544     (21,351     (25,954     (27,479

Transfer to OREO

     (6,266     (2,826     (3,250     (9,968     (13,513

Transfer to loans held for sale

     (2,240     —          (9,200     —          —     

Charge-offs

     (19,254     (20,994     (23,261     (33,764     (36,122
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total reductions

     (42,248     (69,642     (68,392     (81,600     (96,211
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at end of period

   $ 128,657      $ 138,780      $ 179,895      $ 209,339      $ 233,222   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

OREO Rollforward

          

Beginning balance

   $ 81,880      $ 97,833      $ 109,836      $ 123,498      $ 125,729   

New foreclosed properties

     6,266        2,826        3,250        9,968        13,513   

Valuation adjustments

     (4,458     (5,274     (6,245     (9,207     (4,522

Disposals:

          

Sales proceeds

     (9,067     (11,526     (8,041     (13,517     (9,078

Net loss on sale

     (764     (1,979     (967     (906     (2,144
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at end of period

   $ 73,857      $ 81,880      $ 97,833      $ 109,836      $ 123,498   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Restructured Loans Accruing Interest Rollforward

          

Beginning balance

   $ 60,980      $ 58,431      $ 97,690      $ 136,521      $ 100,909   

Additions:

          

New restructured loans accruing interest

     458        6,552        2,001        1,864        47,673   

Restructured loans returned to accruing status

     —          3,823        —          157        —     

Reductions:

          

Paydowns and payoffs, net of advances

     36        (3,995     (3,935     (14,593     (4,661

Transferred to nonperforming loans

     (14,883     (2,988     (15,464     (25,688     (6,665

Net sales

     —          —          —          (170     —     

Removal of restructured loan status

     —          (843     (21,861     (401     (735

Charge-offs, net

     —          —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at end of period

   $ 46,591      $ 60,980      $ 58,431      $ 97,690      $ 136,521   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Refer to Glossary of Terms for definition.


Asset Quality (excluding covered assets(1))

Unaudited

(Dollars in thousands)

  LOGO

Credit Quality Indicators (1)

 

     Special      % of     Potential      % of     Non-      % of        
     Mention      Portfolio     Problem      Portfolio     Performing      Portfolio     Total  
     Loans      Loan Type     Loans      Loan Type     Loans      Loan Type     Loans  

As of March 31, 2013

                 

Commercial

   $ 87,966         1.3   $ 31,198         0.5   $ 31,323         0.5   $ 6,592,015   

Commercial real estate

     11,412         0.5     33,462         1.3     63,643         2.5     2,520,251   

Construction

     —           —          —           —          402         0.2     174,077   

Residential real estate

     5,739         1.6     9,109         2.5     14,966         4.1     368,569   

Home equity

     1,325         0.8     4,312         2.7     13,615         8.4     162,035   

Personal

     4         *        104         *        4,708         2.2     216,856   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

   $ 106,446         1.1   $ 78,185         0.8   $ 128,657         1.3   $ 10,033,803   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

As of December 31, 2012

                 

Commercial

   $ 72,651         1.1   $ 40,495         0.6   $ 41,913         0.6   $ 6,496,784   

Commercial real estate

     21,209         0.8     48,897         1.8     68,554         2.6     2,675,685   

Construction

     —           —          —           —          557         0.3     190,496   

Residential real estate

     2,364         0.6     13,844         3.7     11,224         3.0     373,580   

Home equity

     562         0.3     4,351         2.6     11,710         7.0     167,760   

Personal

     8         *        289         0.1     4,822         2.0     235,677   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

   $ 96,794         1.0   $ 107,876         1.1   $ 138,780         1.4   $ 10,139,982   
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

 

LOGO

 

 

(1) Refer to Glossary of Terms for definition.
* Less than 0.1%.


Loan Portfolio Aging (excluding covered assets(1))

Unaudited

(Dollars in thousands)

  LOGO

 

      Current     30-59
Days  Past

Due
    60-89
Days  Past

Due
    90 Days Past
Due and
Accruing
     Nonaccrual     Total Loans  

As of March 31, 2013

             

Loan balances:

             

Commercial

   $ 6,551,320      $ 5,647      $ 3,725      $ —         $ 31,323      $ 6,592,015   

Commercial real estate

     2,448,577        5,666        2,365        —           63,643        2,520,251   

Construction

     173,675        —          —          —           402        174,077   

Residential real estate

     350,943        2,175        485        —           14,966        368,569   

Personal and home equity

     359,460        647        461        —           18,323        378,891   
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Total loans

   $ 9,883,975      $ 14,135      $ 7,036      $ —         $ 128,657      $ 10,033,803   
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Aging as a percent of loan balance:

             

Commercial

     99.37     0.09     0.06     —           0.48     100.00

Commercial real estate

     97.16     0.22     0.09     —           2.53     100.00

Construction

     99.77     —          —          —           0.23     100.00

Residential real estate

     95.22     0.59     0.13     —           4.06     100.00

Personal and home equity

     94.87     0.17     0.12     —           4.84     100.00
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Total loans

     98.51     0.14     0.07     —           1.28     100.00

 

     1Q13     4Q12     3Q12     2Q12     1Q12  

Nonaccrual loans:

          

Commercial

   $ 31,323      $ 41,913      $ 61,182      $ 59,841      $ 40,186   

Commercial real estate

     63,643        68,554        88,057        119,444        159,255   

Construction

     402        557        557        555        2,781   

Residential real estate

     14,966        11,224        12,502        11,028        12,069   

Personal and home equity

     18,323        16,532        17,597        18,471        18,931   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 128,657      $ 138,780      $ 179,895      $ 209,339      $ 233,222   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Nonaccrual loans as a percent of total loan type:

          

Commercial

     0.48     0.65     1.00     1.01     0.73

Commercial real estate

     2.53     2.56     3.37     4.55     5.55

Construction

     0.23     0.29     0.34     0.32     2.18

Residential real estate

     4.06     3.00     3.47     3.34     3.91

Personal and home equity

     4.84     4.10     4.58     4.59     4.59
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     1.28     1.37     1.87     2.22     2.53

Loans past due 60-89 days and still accruing:

          

Commercial

   $ 3,725      $ 1,365      $ 1,129      $ 5,064      $ 3,963   

Commercial real estate

     2,365        5,278        3,588        2,543        2,081   

Construction

     —          —          —          —          68   

Residential real estate

     485        —          655        21        1,135   

Personal and home equity

     461        462        1,569        1,017        253   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 7,036      $ 7,105      $ 6,941      $ 8,645      $ 7,500   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loans past due 60-89 days and still accruing as a percent of total loan type:

          

Commercial

     0.06     0.02     0.02     0.09     0.07

Commercial real estate

     0.09     0.20     0.14     0.10     0.07

Construction

     —          —           —           —          0.05

Residential real estate

     0.13     —           0.18     0.01     0.37

Personal and home equity

     0.12     0.11     0.41     0.25     0.06
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     0.07     0.07     0.07     0.09     0.08

Loans past due 30-59 days and still accruing:

          

Commercial

   $ 5,647      $ 2,195      $ 6,141      $ 901      $ 3,216   

Commercial real estate

     5,666        4,073        5,232        1,314        6,590   

Construction

     —          —          —          —          —     

Residential real estate

     2,175        3,260        240        341        4,960   

Personal and home equity

     647        1,837        2,072        1,983        1,754   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 14,135      $ 11,365      $ 13,685      $ 4,539      $ 16,520   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loans past due 30-59 days and still accruing as a percent of total loan type:

          

Commercial

     0.09     0.03     0.10     0.01     0.06

Commercial real estate

     0.22     0.15     0.20     0.05     0.23

Construction

     —          —           —           —          —     

Residential real estate

     0.59     0.87     0.07     0.10     1.61

Personal and home equity

     0.17     0.46     0.54     0.49     0.43
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     0.14     0.11     0.14     0.05     0.18

 

 

(1) Refer to Glossary of Terms for definition.
* Less than 0.01%.


Asset Quality (excluding covered assets(1))

Unaudited

(Dollars in thousands)

  LOGO

Nonaccrual Loans Stratification

 

     $10.0 Million  or
More
     $5.0 to  $9.9
Million
     $3.0 to  $4.9
Million
     $1.5 to  $2.9
Million
     Under $1.5
Million
     Total  

As of March 31, 2013

                 

Amount:

                 

Commercial

   $ 12,074       $ 8,769       $ 3,082       $ 4,733       $ 2,665       $ 31,323   

Commercial real estate

     15,890         5,915         8,313         14,977         18,548         63,643   

Construction

     —           —           —           —           402         402   

Residential real estate

     —           —           4,789         2,417         7,760         14,966   

Personal and home equity

     —           —           3,760         —           14,563         18,323   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 27,964       $ 14,684       $ 19,944       $ 22,127       $ 43,938       $ 128,657   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Number of borrowers:

                 

Commercial

     1         1         1         2         22         27   

Commercial real estate

     1         1         2         7         37         48   

Construction

     —           —           —           —           1         1   

Residential real estate

     —           —           1         1         29         31   

Personal and home equity

     —           —           1         —           44         45   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     2         2         5         10         133         152   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

As of December 31, 2012

                 

Amount:

                 

Commercial

   $ 26,756       $ —         $ 7,709       $ 2,869       $ 4,579       $ 41,913   

Commercial real estate

     15,890         12,425         4,274         15,473         20,492         68,554   

Construction

     —           —           —           —           557         557   

Residential real estate

     —           —           4,789         —           6,435         11,224   

Personal and home equity

     —           —           3,760         —           12,772         16,532   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 42,646       $ 12,425       $ 20,532       $ 18,342       $ 44,835       $ 138,780   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Number of borrowers:

                 

Commercial

     2         —           2         1         26         31   

Commercial real estate

     1         2         1         7         38         49   

Construction

     —           —           —           —           2         2   

Residential real estate

     —           —           1         —           26         27   

Personal and home equity

     —           —           1         —           39         40   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     3         2         5         8         131         149   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Restructured Loans Accruing Interest Stratification

 

     $10.0 Million  or
More
     $5.0 to  $9.9
Million
     $3.0 to  $4.9
Million
     $1.5 to  $2.9
Million
     Under $1.5
Million
     Total  

As of March 31, 2013

                 

Amount:

                 

Commercial

   $ 22,145       $ 13,919       $ —         $ —         $ 783       $ 36,847   

Commercial real estate

     —           5,090         —           2,159         877         8,126   

Construction

     —           —           —           —           —           —     

Residential real estate

     —           —           —           —           —           —     

Personal and home equity

     —           —           —           —           1,618         1,618   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 22,145       $ 19,009       $ —         $ 2,159       $ 3,278       $ 46,591   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Number of borrowers:

                 

Commercial

     2         2         —           —           3         7   

Commercial real estate

     —           1         —           1         3         5   

Construction

     —           —           —           —           —           —     

Residential real estate

     —           —           —           —           —           —     

Personal and home equity

     —           —           —           —           2         2   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     2         3         —           1         8         14   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

As of December 31, 2012

                 

Amount:

                 

Commercial

   $ 25,073       $ 13,661       $ 4,460       $ —         $ 1,073       $ 44,267   

Commercial real estate

     —           11,667         —           2,193         898         14,758   

Construction

     —           —           —           —           —           —     

Residential real estate

     —           —           —           —           465         465   

Personal and home equity

     —           —           —           —           1,490         1,490   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 25,073       $ 25,328       $ 4,460       $ 2,193       $ 3,926       $ 60,980   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Number of borrowers:

                 

Commercial

     2         2         1         —           3         8   

Commercial real estate

     —           2         —           1         3         6   

Construction

     —           —           —           —           —           —     

Residential real estate

     —           —           —           —           1         1   

Personal and home equity

     —           —           —           —           1         1   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     2         4         1         1         8         16   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

 

(1) Refer to Glossary of Terms for definition.


Foreclosed Real Estate (OREO), excluding covered assets(1)

Unaudited

(Dollars in thousands)

  LOGO

OREO Properties by Type

 

     March 31, 2013     December 31, 2012  
     Number of             % of     Number of             % of  
     Properties      Amount      Total     Properties      Amount      Total  

Single-family homes

     21       $ 1,861         2     50       $ 6,337         8

Land parcels

     151         30,875         42     170         33,072         40

Multi-family

     6         8,089         11     6         8,111         10

Office/industrial

     31         21,263         29     40         27,585         34

Retail

     8         6,709         9     8         6,775         8

Mixed use

     2         5,060         7     —           —           —     
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total

     219       $ 73,857         100     274       $ 81,880         100
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

OREO Property Type by Location

 

                       South     Mid              
     Illinois     Colorado     Wisconsin     Eastern (2)     Western (3)     Other     Total  

March 31, 2013

              

Single-family homes

   $ 1,642      $ —        $ —        $ —        $ 219      $ —        $ 1,861   

Land parcels

     18,700        —          —          9,250        2,925        —          30,875   

Multi-family

     939        7,150        —          —          —          —          8,089   

Office/industrial

     15,152        —          2,070        501        3,540        —          21,263   

Retail

     5,583        —          —          1,126        —          —          6,709   

Mixed use

     —          —          5,060        —          —          —          5,060   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 42,016      $ 7,150      $ 7,130      $ 10,877      $ 6,684      $ —        $ 73,857   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

% of Total

     56     10     10     15     9     0     100

December 31, 2012

              

Single-family homes

   $ 4,301      $ —        $ —        $ —        $ 1,866      $ 170      $ 6,337   

Land parcels

     18,913        —          —          10,446        3,713        —          33,072   

Multi-family

     1,178        6,933        —          —          —          —          8,111   

Office/industrial

     17,960        —          2,300        3,450        3,875        —          27,585   

Retail

     5,584        —          —          1,191        —          —          6,775   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 47,936      $ 6,933      $ 2,300      $ 15,087      $ 9,454      $ 170      $ 81,880   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

% of Total

     59     8     3     18     12     *        100

 

 

(1) Refer to Glossary of Terms for definition.
(2) Represents the Southeastern states of Arkansas, Florida and Georgia.
(3) Represents the Midwestern states of Kansas, Michigan, Missouri, Indiana and Ohio.
* Less than 1%.


Allowance for Loan Losses (excluding covered assets(1))

Unaudited

(Dollars in thousands)

  LOGO

 

     1Q13     4Q12     3Q12     2Q12     1Q12  

Change in allowance for loan losses:

          

Balance at beginning of period

   $ 161,417      $ 166,859      $ 174,302      $ 183,844      $ 191,594   

Loans charged-off:

          

Commercial

     (11,146     (10,388     (4,062     (7,769     (9,549

Commercial real estate

     (7,566     (8,105     (16,790     (17,924     (25,280

Construction

     70        30        64        (828     (1,245

Residential real estate

     (436     (621     (299     (1,006     (1,084

Home equity

     (374     (1,640     (1,001     (4     (483

Personal

     (5     (612     (1,006     (6,341     (2,085
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total charge-offs

     (19,457     (21,336     (23,094     (33,872     (39,726
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Recoveries on loans previously charged-off:

          

Commercial

     396        947        919        634        1,679   

Commercial real estate

     1,364        2,133        544        4,150        1,882   

Construction

     9        16        594        1,664        41   

Residential real estate

     2        106        7        2        11   

Home equity

     61        52        117        314        26   

Personal

     52        43        229        163        702   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total recoveries

     1,884        3,297        2,410        6,927        4,341   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net charge-offs

     (17,573     (18,039     (20,684     (26,945     (35,385

Provisions charged to operating expense

     10,148        12,597        13,241        17,403        27,635   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at end of period

   $ 153,992      $ 161,417      $ 166,859      $ 174,302      $ 183,844   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allocation of allowance for loan losses:

          

General allocated reserve:

          

Commercial

   $ 57,280      $ 50,450      $ 49,115      $ 47,210      $ 45,850   

Commercial real estate

     45,030        52,700        54,500        53,700        57,750   

Construction

     2,011        2,317        2,200        2,635        1,900   

Residential real estate

     5,800        5,700        5,100        5,200        5,400   

Home equity

     3,700        4,000        3,980        4,200        4,700   

Personal

     2,900        2,860        2,800        3,260        3,295   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total allocated

     116,721        118,027        117,695        116,205        118,895   

Specific reserve

     37,271        43,390        49,164        58,097        64,949   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 153,992      $ 161,417      $ 166,859      $ 174,302      $ 183,844   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allocation of reserve by a percent of total allowance for loan losses:

          

General allocated reserve:

          

Commercial

     37     31     29     27     25

Commercial real estate

     29     33     33     31     31

Construction

     1     1     1     2     1

Residential real estate

     4     4     3     3     3

Home equity

     3     2     2     2     3

Personal

     2     2     2     2     2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total allocated

     76     73     70     67     65

Specific reserve

     24     27     30     33     35
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     100     100     100     100     100
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for loan losses to:

          

Total loans

     1.53     1.59     1.73     1.85     1.99

Nonperforming loans

     120     116     93     83     79

 

 

(1) Refer to Glossary of Terms for definition.


Deposits

(Dollars in thousands)

  LOGO

 

            % of            % of            % of            % of            % of  
     03/31/13      Total     12/31/12      Total     09/30/12      Total     06/30/12      Total     03/31/12      Total  
     unaudited            audited            unaudited            unaudited            unaudited         

Noninterest-bearing deposits

   $ 2,756,879         24   $ 3,690,340         30   $ 3,295,568         29   $ 2,920,182         27   $ 3,054,536         29

Interest-bearing demand deposits

     1,390,955         12     1,057,390         9     893,194         8     785,879         7     714,522         7

Savings deposits

     245,762         2     310,188         3     245,906         2     221,816         2     225,300         2

Money market accounts

     4,496,102         40     4,602,632         38     4,135,689         37     3,924,206         37     4,122,532         40

Brokered time deposits:

                         

Traditional

     330,851         3     382,833         3     562,717         5     667,454         6     191,023         2

Client CDARS (1)

     652,774         6     610,622         5     728,079         6     762,231         7     695,458         6

Non-client CDARS (1)

     —           —          —           —          —           —          54,750         1     75,000         1
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total brokered time deposits

     983,625         9     993,455         8     1,290,796         11     1,484,435         14     961,481         9

Time deposits

     1,518,980         13     1,519,629         12     1,498,287         13     1,398,012         13     1,344,341         13
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total deposits

   $ 11,392,303         100   $ 12,173,634         100   $ 11,359,440         100   $ 10,734,530         100   $ 10,422,712         100
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Client deposits (1)

   $ 11,061,452         97   $ 11,790,801         97   $ 10,796,723         95   $ 10,012,326         93   $ 10,156,689         97
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

 

LOGO

 

 

(1) Refer to Glossary of Terms for definition.
* Less than 1%.


Net Interest Margin

Unaudited

(Dollars in thousands)

  LOGO

 

     Three Months Ended March 31,  
     2013     2012  
     Average
Balance
    Interest (1)      Yield/
Rate
    Average
Balance
    Interest (1)      Yield/
Rate
 

Assets:

              

Federal funds sold and interest-bearing deposits in banks

   $ 335,916      $ 208         0.25   $ 211,343      $ 132         0.25

Securities:

              

Taxable

     2,106,304        12,822         2.44     2,056,727        15,258         2.97

Tax-exempt (2)

     220,522        2,286         4.15     152,412        1,980         5.20
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Total securities

     2,326,826        15,108         2.60     2,209,139        17,238         3.12
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

FHLB stock

     38,129        90         0.94     40,695        122         1.19

Loans, excluding covered assets:

              

Commercial

     6,529,029        71,256         4.37     5,443,925        63,910         4.64

Commercial real estate

     2,651,132        25,392         3.83     2,598,139        27,715         4.22

Construction

     188,211        1,953         4.15     279,343        2,611         3.70

Residential

     406,091        3,762         3.71     338,144        3,619         4.28

Personal and home equity

     389,395        3,206         3.34     411,152        3,732         3.65
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Total loans, excluding covered assets (3)

     10,163,858        105,569         4.16     9,070,703        101,587         4.44
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Total interest-earning assets before covered assets (2)

     12,864,729        120,975         3.76     11,531,880        119,079         4.10

Covered assets (4)

     161,842        1,218         3.02     264,619        1,952         2.93
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Total interest-earning assets (2)

     13,026,571      $ 122,193         3.75     11,796,499      $ 121,031         4.07
    

 

 

    

 

 

     

 

 

    

 

 

 

Cash and due from banks

     142,925             141,317        

Allowance for loan and covered loan losses

     (188,894          (224,071     

Other assets

     636,726             731,771        
  

 

 

        

 

 

      

Total assets

   $ 13,617,328           $ 12,445,516        
  

 

 

        

 

 

      

Liabilities and Equity:

              

Interest-bearing demand deposits

   $ 1,264,740      $ 1,115         0.36   $ 654,791      $ 636         0.39

Savings deposits

     274,310        164         0.24     218,145        156         0.29

Money market accounts

     4,566,766        4,235         0.38     4,199,855        4,446         0.43

Time deposits

     1,525,931        3,936         1.05     1,352,361        3,933         1.17

Brokered deposits

     1,000,613        1,193         0.48     811,069        1,084         0.54
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Total interest-bearing deposits

     8,632,360        10,643         0.50     7,236,221        10,255         0.57

Short-term and secured borrowings

     92,906        118         0.51     265,205        142         0.21

Long-term debt

     499,793        7,608         6.09     379,793        5,578         5.85
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Total interest-bearing liabilities

     9,225,059        18,369         0.80     7,881,219        15,975         0.81
    

 

 

    

 

 

     

 

 

    

 

 

 

Noninterest-bearing demand deposits

     3,005,007             3,054,679        

Other liabilities

     159,634             194,262        

Equity

     1,227,628             1,315,356        
  

 

 

        

 

 

      

Total liabilities and equity

   $ 13,617,328           $ 12,445,516        
  

 

 

        

 

 

      

Net interest spread (2) (5)

          2.95          3.26

Effect of noninterest-bearing funds

          0.24          0.27
       

 

 

        

 

 

 

Net interest income/margin (2) (5)

     $ 103,824         3.19     $ 105,056         3.53
    

 

 

    

 

 

     

 

 

    

 

 

 

 

 

(1) Interest income included $5.1 million and $7.2 million in loan fees for the three months ended March 31, 2013 and 2012, respectively.
(2) Interest income and yields are presented on a tax-equivalent basis, assuming a federal income tax rate of 35%. This is a non-U.S. GAAP financial measure. Refer to Non-U.S. GAAP Financial Measures for a reconciliation of the effect of the tax-equivalent adjustment.
(3) Average loans on a nonaccrual basis for the recognition of interest income totaled $137.0 million and $256.8 million for the three months ended March 31, 2013 and 2012, respectively, and are included in loans for purposes of this analysis. Interest foregone on nonperforming loans was estimated to be approximately $1.4 million and $2.8 million for the three months ended March 31, 2013 and 2012, respectively, based on the average loan portfolio yield for the respective period.
(4) Covered interest-earning assets consist of loans acquired through an FDIC-assisted transaction that are subject to a loss share agreement and the related indemnification asset.
(5) Refer to Glossary of Terms for definition.

Note: Prior period net interest margin computations were modified to conform with the current period presentation.


Net Interest Margin

Unaudited

(Dollars in thousands)

  LOGO

 

     Three Months Ended March 31,     Three Months Ended December 31,  
     2013     2012  
     Average
Balance
    Interest (1)      Yield/
Rate
    Average
Balance
    Interest (1)      Yield/
Rate
 

Assets:

              

Federal funds sold and interest-bearing deposits in banks

   $ 335,916      $ 208         0.25   $ 709,369      $ 452         0.25

Securities:

              

Taxable

     2,106,304        12,822         2.44     2,055,358        12,938         2.52

Tax-exempt (2)

     220,522        2,286         4.15     205,525        2,227         4.33
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Total securities

     2,326,826        15,108         2.60     2,260,883        15,165         2.68
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

FHLB stock

     38,129        90         0.94     43,387        168         1.51

Loans, excluding covered assets:

              

Commercial

     6,529,029        71,256         4.37     6,266,388        71,128         4.44

Commercial real estate

     2,651,132        25,392         3.83     2,684,361        26,586         3.88

Construction

     188,211        1,953         4.15     185,804        1,803         3.80

Residential

     406,091        3,762         3.71     401,581        4,037         4.02

Personal and home equity

     389,395        3,206         3.34     389,235        3,300         3.37
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Total loans, excluding covered assets (3)

     10,163,858        105,569         4.16     9,927,369        106,854         4.22
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Total interest-earning assets before covered assets (2)

     12,864,729        120,975         3.76     12,941,008        122,639         3.72

Covered assets (4)

     161,842        1,218         3.02     174,679        1,318         2.97
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Total interest-earning assets (2)

     13,026,571      $ 122,193         3.75     13,115,687      $ 123,957         3.71
    

 

 

    

 

 

     

 

 

    

 

 

 

Cash and due from banks

     142,925             146,990        

Allowance for loan and covered loan losses

     (188,894          (190,583     

Other assets

     636,726             676,682        
  

 

 

        

 

 

      

Total assets

   $ 13,617,328           $ 13,748,776        
  

 

 

        

 

 

      

Liabilities and Equity:

              

Interest-bearing demand deposits

   $ 1,264,740      $ 1,115         0.36   $ 970,026      $ 985         0.40

Savings deposits

     274,310        164         0.24     282,493        200         0.28

Money market accounts

     4,566,766        4,235         0.38     4,382,023        4,331         0.39

Time deposits

     1,525,931        3,936         1.05     1,507,824        4,139         1.09

Brokered deposits

     1,000,613        1,193         0.48     1,102,772        1,422         0.51
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Total interest-bearing deposits

     8,632,360        10,643         0.50     8,245,138        11,077         0.53

Short-term and secured borrowings

     92,906        118         0.51     20,441        77         1.49

Long-term debt

     499,793        7,608         6.09     476,695        7,235         6.00
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Total interest-bearing liabilities

     9,225,059        18,369         0.80     8,742,274        18,389         0.83
    

 

 

    

 

 

     

 

 

    

 

 

 

Noninterest-bearing demand deposits

     3,005,007             3,567,785        

Other liabilities

     159,634             177,842        

Equity

     1,227,628             1,260,875        
  

 

 

        

 

 

      

Total liabilities and equity

   $ 13,617,328           $ 13,748,776        
  

 

 

        

 

 

      

Net interest spread (2) (5)

          2.95          2.88

Effect of noninterest-bearing funds

          0.24          0.28
       

 

 

        

 

 

 

Net interest income/margin (2) (5)

     $ 103,824         3.19     $ 105,568         3.16
    

 

 

    

 

 

     

 

 

    

 

 

 

 

 

(1) Interest income included $5.1 million and $6.3 million in loan fees for the three months ended March 31, 2013 and December 31, 2012, respectively.
(2) Interest income and yields are presented on a tax-equivalent basis, assuming a federal income tax rate of 35%. This is a non-U.S. GAAP financial measure. Refer to Non-U.S. GAAP Financial Measures for a reconciliation of the effect of the tax-equivalent adjustment.
(3) Average loans on a nonaccrual basis for the recognition of interest income totaled $137.0 million and $164.8 million for the three months ended March 31, 2013 and December 31, 2012, respectively, and are included in loans for purposes of this analysis. Interest foregone on nonperforming loans was estimated to be approximately $1.4 million and $1.7 million for the three months ended March 31, 2013 and December 31, 2012, respectively, based on the average loan portfolio yield for the respective period.
(4) Covered interest-earning assets consist of loans acquired through an FDIC-assisted transaction that are subject to a loss share agreement and the related indemnification asset.
(5) Refer to Glossary of Terms for definition.


Non-U.S. GAAP Financial Measures

Unaudited

(Amounts in thousands)

  LOGO

This press release contains both financial measures based on accounting principles generally accepted in the United States (U.S. GAAP) and non-U.S. GAAP based financial measures. These non-U.S. GAAP financial measures include net interest income, net interest margin, net revenue, operating profit and efficiency ratio all on a fully taxable-equivalent basis; return on average tangible common equity, Tier 1 common equity to risk-weighted assets, tangible equity to tangible assets, tangible equity to risk-weighted assets, tangible common equity to tangible assets, and tangible book value. We believe that presenting these non-U.S. GAAP financial measures will provide information useful to investors in understanding our underlying operational performance, our business, and performance trends and facilitates comparisons with the performance of others in the banking industry.

We use net interest income on a taxable-equivalent basis in calculating various performance measures by increasing the interest income earned on tax-exempt assets to make it fully equivalent to interest income earned on taxable investments assuming a 35% tax rate. Management believes this measure to be the preferred industry measurement of net interest income as it enhances comparability to net interest income arising from taxable and tax-exempt sources, and accordingly believes that providing this measure may be useful for peer comparison purposes.

In addition to capital ratios defined by banking regulators, we also consider various measures when evaluating capital utilization and adequacy, including return on average tangible common equity, Tier 1 common equity to risk-weighted assets, tangible equity to tangible assets, tangible equity to risk-weighted assets, tangible common equity to tangible assets, and tangible book value. These calculations are intended to complement the capital ratios defined by banking regulators for both absolute and comparative purposes. All of these measures exclude the ending balances of goodwill and other intangibles while certain of these ratios exclude preferred capital components. Because U.S. GAAP does not include capital ratio measures, we believe there are no comparable U.S. GAAP financial measures to these ratios. We believe these non-U.S. GAAP financial measures are relevant because they provide information that is helpful in assessing the level of capital available to withstand unexpected market conditions. Additionally, presentation of these measures allows readers to compare certain aspects of our capitalization to other companies. However, because there are no standardized definitions for these ratios, our calculations may not be comparable with other companies, and this may affect the usefulness of these measures to investors.

Non-U.S. GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Although these non-U.S. GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools, and should not be considered in isolation or as a substitute for analyses of results as reported under U.S. GAAP. As a result, we encourage readers to consider our Consolidated Financial Statements in their entirety and not to rely on any single financial measure. The following table reconciles non-U.S. GAAP financial measures to U.S. GAAP:

 

     Quarters Ended  
     1Q13     4Q12     3Q12     2Q12     1Q12  

Taxable-equivalent net interest income

          

U.S. GAAP net interest income

   $ 103,040      $ 104,803      $ 105,408      $ 105,346      $ 104,376   

Taxable-equivalent adjustment

     784        765        729        699        680   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Taxable-equivalent net interest income (a)

   $ 103,824      $ 105,568      $ 106,137      $ 106,045      $ 105,056   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average Earning Assets (b)

   $ 13,026,571      $ 13,115,687      $ 12,420,769      $ 12,148,279      $ 11,796,499   

Net Interest Margin ((a) annualized) / (b)

     3.19     3.16     3.35     3.46     3.53

Net Revenue

          

Taxable-equivalent net interest income

   $ 103,824      $ 105,568      $ 106,137      $ 106,045      $ 105,056   

U.S. GAAP non-interest income

     30,468        29,454        27,837        26,246        27,504   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net revenue (c)

   $ 134,292      $ 135,022      $ 133,974      $ 132,291      $ 132,560   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating Profit

          

U.S. GAAP income before income taxes

   $ 44,188      $ 39,765      $ 38,006      $ 30,696      $ 23,950   

Provision for loan and covered loan losses

     10,357        13,177        13,509        17,038        27,701   

Taxable-equivalent adjustment

     784        765        729        699        680   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating profit

   $ 55,329      $ 53,707      $ 52,244      $ 48,433      $ 52,331   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Efficiency Ratio

          

U.S. GAAP non-interest expense (d)

   $ 78,963      $ 81,315      $ 81,730      $ 83,858      $ 80,229   

Net revenue (c)

   $ 134,292      $ 135,022      $ 133,974      $ 132,291      $ 132,560   

Efficiency ratio (d) / (c)

     58.80     60.22     61.00     63.39     60.52

Adjusted Net Income

          

U.S. GAAP net income available to common stockholders

   $ 27,270      $ 20,040      $ 19,607      $ 14,062      $ 10,819   

Amortization of intangibles, net of tax

     473        411        407        404        403   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net income (e)

   $ 27,743      $ 20,451      $ 20,014      $ 14,466      $ 11,222   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average Tangible Common Equity

          

U.S. GAAP average total equity

   $ 1,227,628      $ 1,260,875      $ 1,356,244      $ 1,332,178      $ 1,315,356   

Less: average goodwill

     94,519        94,531        94,544        94,556        94,569   

Less: average other intangibles

     12,426        13,152        13,820        14,341        15,007   

Less: average preferred stock

     —          60,409        241,389        240,993        240,601   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Average tangible common equity (f)

   $ 1,120,683      $ 1,092,783      $ 1,006,491      $ 982,288      $ 965,179   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Return on average tangible common equity ((e) annualized) / (f)

     10.04     7.45     7.91     5.92     4.68


Non-U.S. GAAP Financial Measures (continued)

Unaudited

(Amounts in thousands, except per share data)

  LOGO

 

     Quarters Ended  
     1Q13     4Q12     3Q12     2Q12     1Q12  

Tier 1 Common Capital

          

U.S. GAAP total equity

   $ 1,232,065      $ 1,207,166      $ 1,363,440      $ 1,334,154      $ 1,312,154   

Trust preferred securities

     244,793        244,793        244,793        244,793        244,793   

Less: accumulated other comprehensive income, net of tax

     44,285        48,064        55,818        50,987        47,152   

Less: goodwill

     94,509        94,521        94,534        94,546        94,559   

Less: other intangibles

     12,047        12,828        13,500        14,152        14,683   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Tier 1 risk-based capital

     1,326,017        1,296,546        1,444,381        1,419,262        1,400,553   

Less: preferred stock

     —          —          241,585        241,185        240,791   

Less: trust preferred securities

     244,793        244,793        244,793        244,793        244,793   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Tier 1 common capital (g)

   $ 1,081,224      $ 1,051,753      $ 958,003      $ 933,284      $ 914,969   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Tangible Common Equity

          

U.S. GAAP total equity

   $ 1,232,065      $ 1,207,166      $ 1,363,440      $ 1,334,154      $ 1,312,154   

Less: goodwill

     94,509        94,521        94,534        94,546        94,559   

Less: other intangibles

     12,047        12,828        13,500        14,152        14,683   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Tangible equity (h)

     1,125,509        1,099,817        1,255,406        1,225,456        1,202,912   

Less: preferred stock

     —          —          241,585        241,185        240,791   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Tangible common equity (i)

   $ 1,125,509      $ 1,099,817      $ 1,013,821      $ 984,271      $ 962,121   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Tangible Assets

          

U.S. GAAP total assets

   $ 13,372,230      $ 14,057,515      $ 13,278,554      $ 12,942,176      $ 12,623,164   

Less: goodwill

     94,509        94,521        94,534        94,546        94,559   

Less: other intangibles

     12,047        12,828        13,500        14,152        14,683   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Tangible assets (j)

   $ 13,265,674      $ 13,950,166      $ 13,170,520      $ 12,833,478      $ 12,513,922   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Risk-weighted Assets (k)

   $ 12,164,677      $ 12,337,398      $ 11,804,578      $ 11,588,371      $ 11,374,212   

Period-end Common Shares Outstanding (l)

     77,649        77,115        72,436        72,424        72,415   

Ratios:

          

Tier 1 common equity to risk-weighted assets (g) / (k)

     8.89     8.52     8.12     8.05     8.04

Tangible equity to tangible assets (h) / (j)

     8.48     7.88     9.53     9.55     9.61

Tangible equity to risk-weighted assets (h) / (l)

     9.25     8.91     10.63     10.57     10.58

Tangible common equity to tangible assets (i) / (j)

     8.48     7.88     7.70     7.67     7.69

Tangible book value (i) / (l)

   $ 14.49      $ 14.26      $ 14.00      $ 13.59      $ 13.29   


Glossary of Terms

  LOGO

Assets under management and administration (“AUMA”) - Assets held in trust where we serve as trustee or in accounts where we make investment decisions on behalf of clients. AUMA also includes non-managed assets we hold in custody for clients or for which we receive fees for advisory or brokerage services. We do not include these assets on our Consolidated Balance Sheets.

Book value - Total common equity divided by outstanding shares of common stock at end of period.

CDARS® deposit program - A deposit services arrangement that effectively achieves FDIC deposit insurance for jumbo deposit relationships. These deposits are classified as brokered time deposits for regulatory deposit purposes; however, we classify certain of these deposits as client CDARS® due to the source being our client relationships and are, therefore, not traditional ‘brokered’ time deposits. We also participate in a non-client CDARS® program that is more like a traditional brokered time deposit program.

Client deposits - Total deposits, net of traditional brokered time deposits and non-client CDARS®.

Common equity - Total equity less preferred stock.

Covered assets - Assets acquired through an FDIC-assisted transaction that are subject to a loss share agreement and are presented separately on the Consolidated Balance Sheets.

Credit quality indicators - The Company has adopted an internal risk rating policy in which each loan is rated for credit quality with a numerical rating of 1 through 8. Loans rated 5 and better (1-5 ratings, inclusive) are credits that exhibit acceptable financial performance, cash flow, and leverage. If any risk exists, we attempt to mitigate by structure, collateral, monitoring, or other meaningful controls. Credits rated 6 are considered special mention as these credits demonstrate potential weakness and that if left unresolved, may result in deterioration in the Company’s credit position and/or the repayment prospects for the credit. Borrowers rated special mention may exhibit adverse operating trends, high leverage, tight liquidity or other credit concerns. Potential problem loans have a risk rating of 7 and are considered inadequately protected by the current net worth and paying capacity of the obligor, the collateral pledged, or guarantors. These loans generally have a well defined weakness or weaknesses that may jeopardize liquidation of the debt and are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not resolved. Nonperforming loans include nonaccrual loans risk rated 7 or 8 and have all the weaknesses inherent in a 7-rated potential problem loan with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Special mention, potential problem and nonperforming loans are reviewed at minimum on a quarterly basis, while all other rated credits are reviewed as the situation warrants.

Credit valuation adjustment (“CVA”) - An adjustment may need to be incorporated into the valuation of derivative instruments for nonperformance risk to include the counterparty’s credit risk and the Company’s own credit risk. This adjustment is referred to as the CVA. The CVA represents the credit component of fair value with regard to both client-based trades and the related matched trades with interbank dealer counterparties.

Efficiency ratio - Total non-interest expense divided by the sum of net interest income on a tax-equivalent basis and non-interest income. This is a non-U.S. GAAP financial measure.

Fee revenue as percent of total revenue ratio - Total non-interest income less net securities gains (losses) divided by the sum of net interest income and non-interest income less net securities gains (losses).

U.S. GAAP - Accounting principles generally accepted in the United States of America.

Net interest margin - Expressed as a percentage, net interest margin is a ratio computed as annualized taxable-equivalent net interest income divided by average interest-earning assets. The annualization of net interest income for the quarterly yield takes into consideration the interest payment convention at the product level. This is a non-U.S. GAAP financial measure.

Net interest spread - The difference between the average yield earned on interest-earning assets on a taxable-equivalent basis and the average rate paid for interest-bearing liabilities.

Net overhead ratio - Total non-interest expense less non-interest income divided by average total assets.

Net revenue - The sum of taxable equivalent net interest income and non-interest income. This is a non-U.S. GAAP financial measure.

Non-U.S. GAAP - Certain financial measures within this document that are not formally defined by U.S. GAAP or codified in the federal banking regulations. A reconciliation of these non-U.S. GAAP financial measures may be found on the previous pages.

Operating profit - The sum of U.S. GAAP income before income taxes, provision for loan and covered loan losses and taxable-equivalent adjustment. This is a non-U.S. GAAP financial measure.

Return on average tangible common equity - Annualized net income available to common stockholders, adjusted for tax-affected amortization of intangibles, divided by average tangible common equity. Average tangible common equity equals average total equity less average goodwill, average intangible assets, and average preferred stock. This is a non-U.S. GAAP financial measure.

Risk-weighted assets - Computed by the assignment of specific risk-weights (as currently defined by the Board of Governors of the Federal Reserve System) to assets and off-balance sheet instruments.

Tangible book value - Total common equity less goodwill and other intangibles divided by outstanding shares of common stock at end of period. This is a non-U.S. GAAP financial measure.


Glossary of Terms (continued)

  LOGO

Tangible common equity to tangible assets ratio - Tangible common equity divided by tangible assets, where tangible common equity equals total equity less preferred stock, goodwill and other intangible assets and tangible assets equals total assets less goodwill and other intangible assets. This is a non-U.S. GAAP financial measure.

Taxable-equivalent net interest income - The interest income earned on certain assets is completely or partially exempt from Federal income tax. As such, these tax-exempt instruments typically yield lower returns than taxable investments. To provide more meaningful comparisons of yields and margins for all interest-earning assets, we use interest income on a taxable-equivalent basis in calculating average yields and net interest margins by increasing the interest income earned on tax-exempt assets to make it fully equivalent to interest income earned on other taxable investments. This adjustment is not permitted under U.S. GAAP on the Consolidated Income Statement.

Tier 1 common capital - Tier 1 risk-based capital, less preferred equity, less trust preferred capital securities, and less noncontrolling interests.

Tier 1 equity to risk-weighted assets ratio - Tier 1 common capital divided by period-end risk-weighted assets. This is a non-U.S. GAAP financial measure and for purposes of our presentation we calculate risk-weighted assets under current requirements and not under the recently proposed rules issued by banking regulators.

Tier 1 leverage ratio - Tier 1 risk-based capital divided by adjusted average total assets.

Tier 1 risk-based capital - Total equity, plus trust preferred capital securities, plus certain noncontrolling interests that are held by others; less goodwill and certain other intangible assets, less equity investments in nonfinancial companies, less ineligible servicing assets, less disallowed deferred tax assets and less net unrealized holding gains (losses) on available for sale equity securities, available for sale debt securities, and cash flow hedge derivatives.

Tier 1 risk-based capital ratio - Tier 1 risk-based capital divided by period-end risk-weighted assets.

Total risk-based capital - Tier 1 risk-based capital plus qualifying subordinated debt, other noncontrolling interest not qualified as Tier 1, eligible gains on available-for-sale equity securities and the allowance for loan and lease losses, subject to certain limitations.

Total risk-based capital ratio - Total risk-based capital divided by period-end risk-weighted assets.

Transformational and legacy portfolios - We aggregate loans by originating line of business for reserve purposes because of observable similarities in the performance experience of loans underwritten by the business units. Loans originated by the business units that existed prior to the strategic changes in 2007 are considered “legacy” loans. Loans originated by a business unit that was established in connection with or following the business transformation plan are considered “transformational” loans. Renewals or restructurings of legacy loans may continue to be evaluated as legacy loans depending on the structure or defining characteristics of the new transaction. The Company has implemented a line of business model that has reorganized the legacy business units so that after 2009, all new loan originations are considered transformational.