Attached files
| file | filename |
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| 8-K - 8-K - NEWBRIDGE BANCORP | v391913_8k.htm |
Exhibit 99.1
October 23, 2014
NewBridge Bancorp (NASDAQ: NBBC) Reports
Third Quarter 2014 Financials; Results
Reflect an 83% Increase in Net Income Available to Common Shareholders and
Substantial Balance Sheet Growth
Third Quarter 2014 Highlights (Quarterly, Year-Over-Year)
| · | Net income available to common shareholders totaled $5.1 million, up from $2.8 million |
| · | Net income per diluted share rose 40% to $0.14 |
| · | Net interest income grew 30% to $20.5 million |
| · | Wealth management revenue increased 5% |
| · | Total assets increased to $2.4 billion, driven by acquisitive and organic growth, from $1.8 billion |
| · | Total loans held for investment were $1.7 billion, up from $1.3 billion |
| · | Noninterest-bearing deposits increased 29%, or $69.2 million, and total core deposits grew 24% |
| · | Nonperforming assets were 0.47% of total assets, down from 0.79% |
| · | Return on average assets increased to 0.83%, up from 0.67% |
| · | Return on average equity was 8.95%, up from 7.36% |
Capital Adequacy, Shareholder Value at Period-End
| · | Capital levels rose to a 12.6% total risk-based ratio and an 8.6% tier 1 leverage ratio |
| · | Tangible common equity to tangible assets increased to 8.3% and tangible book value per share increased to $5.41 from $5.05 at December 31, 2013 |
| · | Total shareholders’ common equity increased to $228.4 million from $151.8 million at December 31, 2013 |
Expansion Activities, Subsequent Events
| · | Established middle market banking group and reorganized commercial banking operation into highly specialized teams |
| · | Expanded presence in Winston-Salem, N.C. market with a new commercial banking team |
| · | Added bank-wide Small Business Administration lending capabilities |
| · | Announced planned merger with Premier Commercial Bank, a $173 million asset bank based in Greensboro, N.C., which will add commercial banking clients and assets, and residential mortgage banking in several North Carolina markets |
| · | Announced expansion into Charleston, S.C. with a banking office, and plans to open a full-service branch in first quarter 2015 |
NewBridge Bancorp (the “Company”) today reported earnings for the three and nine month periods ended September 30, 2014. Net income available to common shareholders totaled $5.1 million, or $0.14 per diluted share for the quarter, compared to $2.8 million, or $0.10 per diluted share reported for the quarter ended September 30, 2013. The prior year’s tax rate was impacted by changes in North Carolina’s corporate income tax, which resulted in an effective tax rate of 49%. For the nine months ended September 30, 2014, net income available to common shareholders totaled $9.4 million compared to $17.7 million for the prior year period. The current year’s net income was impacted by one-time merger and severance expenses totaling $5.4 million. Prior year earnings benefited from a $3.7 million income tax benefit due to the reversal of a valuation allowance on the Company’s deferred tax asset. Pre-tax core net operating income, a non-GAAP measure, increased to $20.5 million for the nine months ended September 30, 2014, from $14.9 million in the prior year nine month period.
Pressley A. Ridgill, President and CEO, commented: “The Company’s net income per diluted share growth of 40% and total asset growth of 36% year-over-year, reflects the hard work and dedication of our NewBridge team. We have demonstrated an ability to maximize cost savings and fully leverage acquisitions to drive prudent market expansion alongside the Company’s organic growth strategy. Our recently announced plan to acquire Greensboro, N.C. based Premier Commercial Bank and quickly consolidate its loan production offices and technology systems reflects our focus upon managing acquisitive growth as part of an overall strategy to gain scale. We expect recent whole bank acquisitions and commercial banking team lift-outs, in tandem with expected gains from our newly established middle market banking team and our expansion into the Charleston, S.C. market, to generate an accelerating return on investment and increasing shareholder value.
An important component of our growth strategy is to build a valuable deposit franchise alongside our asset generating businesses. Core deposits grew at an annualized rate of 10% during the third quarter, including core deposit growth experienced in Raleigh and Brunswick County, N.C., two of our newer markets. Recent targeted initiatives in those markets resulted in $20 million of the $30 million of core deposit growth generated during the period. We believe this growth reflects effective leveraging of our market expansion strategy.”
Net Interest Income
Net interest income increased 29.6%, or $4.7 million, to $20.5 million for the quarter ended September 30, 2014 compared to the quarter ended September 30, 2013. This increase was due primarily to a rise in the average balance of earning assets, primarily loans, following the mergers with CapStone Bank and Security Savings Bank, combined with substantial organic growth over the last year. The quarterly average balance of earning assets increased $617.1 million over the prior year. Although earning asset yield declined 23 basis points, interest income increased $5.2 million over the prior year's quarter. Interest on loans contributed $4.5 million of the $5.2 million increase. The Company’s net interest margin declined 24 basis points from the prior year's quarter to 3.66%, reflecting ongoing repricing of assets in the continued low interest rate environment. For the nine month period ending September 30, 2014, net interest income increased by $11.1 million, or 24.0%, over the prior year period to $57.4 million. For the nine month period, the net interest margin declined 23 basis points to 3.70%.
Noninterest Income
Excluding $458,000 of securities gains for the third quarter of 2013 and $736,000 of gains for the nine month period in 2013, noninterest income increased $65,000 to $4.1 million for the quarter, but declined $13,000 for the nine month period. This decline was due to a $694,000 decrease in year-to-date mortgage revenue, primarily reflecting the slowdown in mortgage refinance market activity in 2014. However, retail banking revenue, wealth management fees and other noninterest income grew over the prior year period, offsetting much of the decline. Retail banking revenues increased $317,000, or 4.2%, wealth management revenue climbed $216,000, or 11.2%, and other sources of noninterest income increased $186,000, or 27.7%, for the year to date over the linked 2013 period. For the three month period, retail banking revenues increased $43,000, or 1.6%, wealth management revenue climbed $37,000, or 5.4%, and other sources of noninterest income increased $29,000, or 23.4%.
Noninterest Expense
For the quarter, noninterest expense increased 15.1%, or $2.2 million, to $16.6 million, primarily reflecting costs related to the acquisitions of Security Savings Bank and CapStone Bank. The number of full time employees increased by 35 from the prior year. For the year, noninterest expense was $54.1 million, an increase of $12.1 million, or 28.8%, and included $5.4 million of merger and severance expenses. Merger expenses for the three and nine month periods totaled $10,000 and $4.9 million, respectively. Severance expenses, associated primarily with the retail realignment strategy, totaled $533,000 for the nine months ended September 30, 2014. Excluding merger and severance expenses, the rise in expense in each category was due to the acquisitions of Security Savings Bank and CapStone Bank.
Spence H. Broadhurst, Senior EVP and Chief Banking Officer, commented: “As previously announced, recent organizational improvements include the realignment of our retail banking operations to optimize productivity at the branch level. We enhanced retail and branch banking efficiency and effectiveness, partially through prudent headcount reductions and by the integration of improved product and service cross-selling and training techniques.
Additionally, the Company revamped its commercial banking organizational structure to provide specific expertise and capabilities throughout the entire organization to an increasing and geographically diverse base of small, midsize, and middle market businesses. Expenses related to the addition of the middle market commercial team and the recently announced Charleston, S.C. banking team were largely not reflected in the third quarter’s expense. However, ongoing expenses related to the addition of the middle market commercial team during the third quarter are expected to be substantially offset by anticipated loan growth in the fourth quarter.”
Balance Sheet
Total assets increased $13.7 million for the quarter and $477.5 million for the year to $2.44 billion at September 30, 2014. Loans held for investment decreased $5.6 million, or 0.3%, for the quarter but increased $304.3 million, or 21.5%, for the nine month period. Excluding CapStone acquired loans, loans increased $43.6 million for the year, an annualized growth rate of 4.1%. Also contributing to the growth in assets, investments increased $27.7 million for the quarter and $128.0 million for the nine month period, and totaled $496.9 million at September 30, 2014. Growth in the investment portfolio during the year occurred in US government agency issued securities and select corporate debt securities. The investment portfolio remains highly liquid with $363.8 million available for sale with an average duration of 3.9 years.
Total liabilities increased $9.9 million during the quarter and $415.9 million for the nine month period, including a $271.1 million increase in deposits. Total deposits were $1.83 billion at September 30, 2014. Core, non-time transaction, savings and money market accounts comprise 70% of the Company's deposits. These core accounts increased $30.8 million for the quarter and $179.4 million for the year to $1.28 billion. The acquisition of CapStone Bank increased core deposits $161.6 million in the second quarter of 2014. Noninterest-bearing deposits, the most valuable core deposits, increased $9.4 million for the quarter and $69.5 million for the year. The weighted average cost of deposits was 0.27% for the three and nine month periods ended September 30, 2014. Time deposit balances declined $61.2 million during the quarter, which included a $44.4 million decrease in broker originated deposits. At September 30, 2014, brokered deposits were 12% of the Company's deposit balances. In March 2014, the Company issued $15.5 million of subordinated debt notes. The notes were issued as an efficient form of regulatory tier two eligible capital, and the proceeds were used for the redemption of the balance of the TARP issued preferred securities. The weighted average cost of these notes is 7.25%; however, the after tax cost to common shareholders is below 5%.
Shareholders’ equity increased $3.8 million for the quarter and $61.6 million for the nine month period. Retained earnings increased $5.1 million, other comprehensive income declined $1.6 million and common equity increased $277,000 for the third quarter. Equity in the first quarter of 2014 declined $10.0 million due to the redemption of $15.0 million of preferred securities offset by total comprehensive income during the quarter. In the second quarter of 2014, shareholders’ equity increased $64.5 million from the CapStone merger and from stock options exercised following the merger. The Company's tangible book value rose from $5.05 per share at December 31, 2013 to $5.41 at September 30, 2014.
Asset Quality
Asset quality continued to improve during the third quarter of 2014 as total classified assets declined $4.4 million for the quarter and $15.7 million for the nine month period to $35.7 million. Nonperforming assets decreased $3.5 million to $11.4 million, representing 0.47% of total assets. Nonperforming loans totaled $7.8 million at September 30, 2014. Net chargeoffs were $532,000 for the three month period, or 0.12% annualized of loans. Compared to the prior year, net chargeoffs decreased from $3.3 million to $2.9 million through nine months. The allowance for credit losses was $22.5 million at September 30, 2014, or 1.31% of total loans held for investment and 287.4% of nonperforming loans. Excluding loans acquired from CapStone Bank, the allowance for credit losses was 1.52% of loans held for investment.
Outlook
Mr. Ridgill commented on the outlook for NewBridge: “The Company has grown significantly year-over-year in a measured way. We are now anticipating low double digit annualized loan growth in 2015. Despite an ongoing period of accelerated asset growth and market expansion, we have maintained a sharp focus on growing net income and optimizing our financial performance metrics. Prudent investments are being made to support a larger bank. Although an increased cost structure is necessary to support our growing institution, core operating income is already reflecting meaningful contributions from the Bank’s expanding commercial banking business and streamlined commercial and retail operations. We believe the Company is well-positioned to promptly maximize the value of its increased scale, particularly through the addition of experienced banking team leaders. Our multi-faceted growth strategy, executed by an exceptional team of dedicated NewBridge employees, is expected to drive ongoing growth in shareholder value.”
Use of Non-GAAP Measures
Tangible common shareholders’ equity percentages have become a focus of some investors. Because tangible common shareholders’ equity is not formally defined by generally accepted accounting principles (“GAAP”), this measure is considered to be a non-GAAP financial measure, and other entities may calculate it differently. Since analysts and banking regulators may assess our capital adequacy using tangible common shareholders’ equity, management believes that it is useful to provide investors with the ability to assess the Company’s capital adequacy on the same basis.
Management also believes that the presentation of pre-tax core net operating income, which excludes merger and severance expenses, gains on sale of investment securities and provisions for tax, provides a meaningful base for period-to-period comparisons, which management believes will assist investors in assessing the performance of the Company on the same basis as applied by management.
About NewBridge Bancorp
NewBridge Bancorp is the bank holding company for NewBridge Bank, a full service, state-chartered community bank headquartered in Greensboro, North Carolina. The stock of NewBridge Bancorp trades on the NASDAQ Global Select Market under the symbol “NBBC.”
As one of the largest community banks headquartered in North Carolina, NewBridge Bank serves small to midsize businesses, professionals and consumers with a comprehensive array of financial services, including retail and commercial banking, private banking, wealth management and mortgage banking. NewBridge Bank has assets of approximately $2.4 billion and 40 branches and several loan production offices.
Disclosures About Forward Looking Statements
The discussions included in this document and its exhibits may contain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. For the purposes of these discussions, any statements that are not statements of historical fact may be deemed to be forward looking statements. Such statements are often characterized by the use of qualifying words such as “expects,” “anticipates,” “believes,” “estimates,” “plans,” “projects,” or other statements concerning opinions or judgments of NewBridge and its management about future events. The accuracy of such forward looking statements could be affected by factors including, but not limited to, the financial success or changing conditions or strategies of NewBridge’s customers or vendors, fluctuations in interest rates, actions of government regulators, the availability of capital and personnel or general economic conditions. These forward looking statements express management’s current expectations, plans or forecasts of future events, results and condition, including financial and other estimates and expectations regarding the acquisitions of Security Savings Bank and CapStone Bank and the general business strategy of engaging in bank acquisitions. Additional factors that could cause actual results to differ materially from those anticipated by forward looking statements are discussed in NewBridge’s filings with the Securities and Exchange Commission, including without limitation its annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. NewBridge undertakes no obligation to revise or update these statements following the date of this press release.
| Investors may contact: | |
| Ramsey Hamadi, Chief Financial Officer | 336-369-0975 |
| Richard Cobb, Controller & Chief Accounting Officer | 336-369-0914 |
| David Barksdale, Chief Strategy Officer | 336-369-0939 |
####
FINANCIAL SUMMARY
| Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Income Statement Data | ||||||||||||||||
| (Dollars in thousands, except share data) | ||||||||||||||||
| Interest income: | ||||||||||||||||
| Loans | $ | 18,456 | $ | 13,969 | $ | 52,073 | $ | 41,135 | ||||||||
| Investment securities | 3,884 | 3,171 | 10,413 | 9,122 | ||||||||||||
| Other | 39 | 2 | 80 | 15 | ||||||||||||
| Total interest income | 22,379 | 17,142 | 62,566 | 50,272 | ||||||||||||
| Interest expense: | ||||||||||||||||
| Deposits | 1,033 | 737 | 2,940 | 2,247 | ||||||||||||
| Borrowings from the FHLB | 205 | 271 | 571 | 768 | ||||||||||||
| Other | 665 | 338 | 1,688 | 994 | ||||||||||||
| Total interest expense | 1,903 | 1,346 | 5,199 | 4,009 | ||||||||||||
| Net interest income | 20,476 | 15,796 | 57,367 | 46,263 | ||||||||||||
| Provision for credit losses | 89 | 33 | 833 | 2,049 | ||||||||||||
| Net interest income after provision for credit losses | 20,387 | 15,763 | 56,534 | 44,214 | ||||||||||||
| Noninterest income: | ||||||||||||||||
| Retail banking | 2,657 | 2,614 | 7,909 | 7,592 | ||||||||||||
| Mortgage banking services | 283 | 302 | 653 | 1,347 | ||||||||||||
| Wealth management services | 719 | 682 | 2,148 | 1,932 | ||||||||||||
| Gain on sale of investment securities | - | 458 | - | 736 | ||||||||||||
| Bank-owned life insurance | 292 | 317 | 1,069 | 1,107 | ||||||||||||
| Other | 153 | 124 | 857 | 671 | ||||||||||||
| Total noninterest income | 4,104 | 4,497 | 12,636 | 13,385 | ||||||||||||
| Noninterest expense: | ||||||||||||||||
| Personnel | 8,685 | 8,052 | 26,671 | 23,387 | ||||||||||||
| Occupancy | 1,265 | 1,034 | 3,692 | 3,073 | ||||||||||||
| Furniture and equipment | 948 | 840 | 2,803 | 2,510 | ||||||||||||
| Technology and data processing | 1,209 | 1,032 | 3,499 | 3,071 | ||||||||||||
| Legal and professional | 715 | 603 | 2,178 | 2,031 | ||||||||||||
| FDIC insurance | 407 | 444 | 1,220 | 1,329 | ||||||||||||
| Other real estate owned | 158 | 152 | 494 | (285 | ) | |||||||||||
| Acquisition related expenses | 10 | 69 | 4,910 | 69 | ||||||||||||
| Other | 3,191 | 2,185 | 8,631 | 6,809 | ||||||||||||
| Total noninterest expense | 16,588 | 14,411 | 54,098 | 41,994 | ||||||||||||
| Income before income taxes | 7,903 | 5,849 | 15,072 | 15,605 | ||||||||||||
| Income tax expense (benefit) | 2,804 | 2,861 | 5,361 | (3,740 | ) | |||||||||||
| Net income | 5,099 | 2,988 | 9,711 | 19,345 | ||||||||||||
| Dividends and accretion on preferred stock | - | (208 | ) | (337 | ) | (1,616 | ) | |||||||||
| Net income available to common shareholders | $ | 5,099 | $ | 2,780 | $ | 9,374 | $ | 17,729 | ||||||||
| Net income per share - basic | $ | 0.14 | $ | 0.10 | $ | 0.27 | $ | 0.68 | ||||||||
| Net income per share - diluted | $ | 0.14 | $ | 0.10 | $ | 0.27 | $ | 0.61 | ||||||||
FINANCIAL SUMMARY
| 2014 | 2013 | |||||||||||||||||||||
| Third | Second | First | Fourth | Third | ||||||||||||||||||
| Quarter | Quarter | Quarter | Quarter | Quarter | ||||||||||||||||||
| Period-End Balance Sheet | ||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||
| Assets | ||||||||||||||||||||||
| Loans held for sale | $ | 3,303 | $ | 5,733 | $ | 3,486 | $ | 3,530 | $ | 3,744 | ||||||||||||
| Commercial loans | 839,696 | 835,248 | 684,643 | 656,440 | 620,445 | |||||||||||||||||
| Real estate - construction loans | 157,841 | 151,078 | 115,748 | 115,396 | 93,256 | |||||||||||||||||
| Real estate - mortgage loans | 689,356 | 703,390 | 610,365 | 610,179 | 524,258 | |||||||||||||||||
| Consumer loans | 26,794 | 28,770 | 25,094 | 26,437 | 22,057 | |||||||||||||||||
| Other loans | 7,277 | 8,064 | 7,991 | 8,251 | 6,345 | |||||||||||||||||
| Total loans held for investment | 1,720,964 | 1,726,550 | 1,443,841 | 1,416,703 | 1,266,361 | |||||||||||||||||
| Allowance for credit losses | (22,501 | ) | (22,944 | ) | (24,435 | ) | (24,550 | ) | (25,385 | ) | ||||||||||||
| Net loans held for investment | 1,698,463 | 1,703,606 | (1) | 1,419,406 | 1,392,153 | (2) | 1,240,976 | |||||||||||||||
| Investment securities | 496,914 | 469,198 | 410,122 | 368,866 | 357,537 | |||||||||||||||||
| Other earning assets | 19,077 | 19,679 | 4,075 | 3,915 | 24,583 | |||||||||||||||||
| Intangible assets | 27,108 | 27,942 | 8,046 | 8,388 | 2,535 | |||||||||||||||||
| Other non-earning assets | 197,885 | 202,935 | 193,134 | 188,380 | 172,967 | |||||||||||||||||
| Total Assets | $ | 2,442,750 | $ | 2,429,093 | $ | 2,038,269 | $ | 1,965,232 | $ | 1,802,342 | ||||||||||||
| # | ||||||||||||||||||||||
| Liabilities and Shareholders' Equity | ||||||||||||||||||||||
| Noninterest-bearing deposits | $ | 310,441 | $ | 301,038 | $ | 258,058 | $ | 240,979 | $ | 241,246 | ||||||||||||
| Savings deposits | 66,521 | 67,554 | 65,386 | 62,353 | 48,794 | |||||||||||||||||
| NOW accounts | 499,184 | 477,372 | 454,198 | 439,624 | 413,268 | |||||||||||||||||
| Money market accounts | 405,369 | 404,801 | 351,797 | 359,174 | 334,091 | |||||||||||||||||
| Time deposits | 543,619 | 604,818 | 492,809 | 451,866 | 374,611 | |||||||||||||||||
| Total deposits | 1,825,134 | 1,855,583 | (3) | 1,622,248 | 1,553,996 | (4) | 1,412,010 | |||||||||||||||
| Total borrowings | 373,974 | 332,274 | 244,774 | 229,774 | 209,474 | |||||||||||||||||
| Other liabilities | 15,211 | 16,585 | 14,422 | 14,670 | 18,012 | |||||||||||||||||
| Shareholders' equity - preferred | - | - | - | 15,000 | 14,981 | |||||||||||||||||
| Shareholders' equity - common | 228,431 | 224,651 | 156,825 | 151,792 | 147,865 | |||||||||||||||||
| Total Liabilities and Shareholders' Equity | $ | 2,442,750 | $ | 2,429,093 | $ | 2,038,269 | $ | 1,965,232 | $ | 1,802,342 | ||||||||||||
| (1) | Includes $260.7 million from CapStone Bank acquisition |
| (2) | Includes $121.5 million from Security Savings Bank acquisition |
| (3) | Includes $229.3 million from CapStone Bank acquisition |
| (4) | Includes $154.3 million from Security Savings Bank acquisition |
COMMON STOCK DATA
| 2014 | 2013 | |||||||||||||||||||
| Third | Second | First | Fourth | Third | ||||||||||||||||
| Quarter | Quarter | Quarter | Quarter | Quarter | ||||||||||||||||
| Market value: | ||||||||||||||||||||
| End of period | $ | 7.59 | $ | 8.06 | $ | 7.14 | $ | 7.43 | $ | 7.29 | ||||||||||
| High | 8.46 | 8.69 | 7.62 | 7.92 | 9.17 | |||||||||||||||
| Low | 7.20 | 6.99 | 6.55 | 6.40 | 5.96 | |||||||||||||||
| Book value | 6.14 | 6.05 | 5.50 | 5.33 | 5.19 | |||||||||||||||
| Tangible book value | 5.41 | 5.30 | 5.22 | 5.05 | 5.10 | |||||||||||||||
| Average shares outstanding | 37,166,736 | 36,808,785 | 28,487,709 | 28,478,316 | 28,478,316 | |||||||||||||||
| Average diluted shares outstanding | 37,576,669 | 37,382,568 | 28,597,530 | 28,584,755 | 28,572,565 | |||||||||||||||
| Class A shares at end of period | 34,007,093 | 33,949,443 | 25,303,820 | 25,291,568 | 25,291,568 | |||||||||||||||
| Class B shares at end of period | 3,186,748 | 3,186,748 | 3,186,748 | 3,186,748 | 3,186,748 | |||||||||||||||
ASSET QUALITY DATA
| 2014 | 2013 | |||||||||||||||||||
| Third | Second | First | Fourth | Third | ||||||||||||||||
| Quarter | Quarter | Quarter | Quarter | Quarter | ||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||
| Loans identified as impaired | $ | 3,947 | $ | 8,025 | $ | 8,954 | $ | 5,879 | $ | 9,607 | ||||||||||
| Other nonperforming loans | 3,882 | 3,268 | 3,883 | 3,519 | 1,896 | |||||||||||||||
| Total nonperforming loans | $ | 7,829 | $ | 11,293 | $ | 12,837 | $ | 9,398 | $ | 11,503 | ||||||||||
| Total nonperforming loans | $ | 7,829 | $ | 11,293 | $ | 12,837 | $ | 9,398 | $ | 11,503 | ||||||||||
| Other real estate owned | 3,580 | 3,585 | 5,633 | 7,620 | 2,695 | |||||||||||||||
| Total nonperforming assets | $ | 11,409 | $ | 14,878 | $ | 18,470 | $ | 17,018 | $ | 14,198 | ||||||||||
| Net chargeoffs | 532 | 2,091 | 259 | 1,477 | 1,043 | |||||||||||||||
| Allowance for credit losses | 22,501 | 22,944 | 24,435 | 24,550 | 25,385 | |||||||||||||||
| Allowance for credit losses to loans held for investment | 1.31 | % | 1.33 | % | 1.69 | % | 1.73 | % | 2.00 | % | ||||||||||
| Nonperforming loans to loans held for investment | 0.45 | 0.65 | 0.89 | 0.66 | 0.91 | |||||||||||||||
| Nonperforming assets to total assets | 0.47 | 0.61 | 0.91 | 0.87 | 0.79 | |||||||||||||||
| Nonperforming loans to total assets | 0.32 | 0.46 | 0.63 | 0.48 | 0.64 | |||||||||||||||
| Net chargeoff percentage (annualized) | 0.12 | 0.48 | 0.07 | 0.42 | 0.34 | |||||||||||||||
| Allowance for credit losses to nonperforming loans | 287.41 | 203.17 | 190.35 | 261.23 | 220.68 | |||||||||||||||
| Allowance for credit losses rollforward | Three Months Ended September 30 | Nine Months Ended September 30 | ||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Beginning balance | $ | 22,944 | $ | 26,395 | $ | 24,550 | $ | 26,630 | ||||||||
| Chargeoffs | 2,083 | 2,346 | 6,064 | 5,905 | ||||||||||||
| Recoveries | 1,551 | 1,303 | 3,182 | 2,611 | ||||||||||||
| Net chargeoffs | 532 | 1,043 | 2,882 | 3,294 | ||||||||||||
| Provision for credit losses | 89 | 33 | 833 | 2,049 | ||||||||||||
| Ending balance | $ | 22,501 | $ | 25,385 | $ | 22,501 | $ | 25,385 | ||||||||
INVESTMENT PORTFOLIO
| (Dollars in thousands) | As of September 30, 2014 | |||||||||||||||||||||||
| Amortized | Gross | Gross | Estimated | Average | Average | |||||||||||||||||||
| Cost | Unrealized gain | Unrealized loss | Fair value | Yield (%) | Duration (years) | |||||||||||||||||||
| Available for Sale(1) | ||||||||||||||||||||||||
| US Agency | $ | 49,602 | $ | - | $ | (2,280 | ) | $ | 47,322 | 2.05 | % | 6.97 | ||||||||||||
| Agency mortgage backed securities | 20,405 | 1,193 | - | 21,598 | 3.87 | 3.36 | ||||||||||||||||||
| Collateralized mortgage obligations | 11,289 | 232 | (5 | ) | 11,516 | 3.86 | 3.38 | |||||||||||||||||
| Commercial mortgage backed securities | 33,972 | 1,286 | - | 35,258 | 3.40 | 2.82 | ||||||||||||||||||
| Covered bonds | 49,966 | 2,338 | (108 | ) | 52,196 | 3.49 | 2.21 | |||||||||||||||||
| Corporate bonds | 128,798 | 4,140 | (457 | ) | 132,481 | 3.78 | 3.73 | |||||||||||||||||
| Municipal obligations | 34,431 | 1,076 | (5 | ) | 35,502 | 5.86 | (2) | 3.90 | ||||||||||||||||
| Total debt securities | 328,463 | 10,265 | (2,855 | ) | 335,873 | 3.66 | (2) | 3.88 | ||||||||||||||||
| Federal Home Loan Bank stock | 14,486 | - | - | 14,486 | ||||||||||||||||||||
| Federal Reserve Bank stock | 3,828 | - | - | 3,828 | ||||||||||||||||||||
| Other | 9,336 | 564 | (256 | ) | 9,644 | |||||||||||||||||||
| Total Available for Sale | $ | 356,113 | $ | 10,829 | $ | (3,111 | ) | $ | 363,831 | |||||||||||||||
| Held to Maturity(1) | ||||||||||||||||||||||||
| US Agency | $ | 32,761 | $ | 65 | $ | (738 | ) | $ | 32,088 | 2.15 | % | 5.55 | ||||||||||||
| Agency mortgage backed securities | 56,736 | 1,030 | - | 57,766 | 2.54 | 5.17 | ||||||||||||||||||
| Covered bonds | 4,983 | 10 | - | 4,993 | 2.08 | 4.17 | ||||||||||||||||||
| Corporate bonds | 37,453 | 92 | (120 | ) | 37,425 | 4.04 | 6.35 | |||||||||||||||||
| Municipal obligations | 1,150 | 45 | - | 1,195 | 4.23 | (2) | 10.04 | |||||||||||||||||
| Total Held to Maturity | $ | 133,083 | $ | 1,242 | $ | (858 | ) | $ | 133,467 | 2.87 | (2) | 5.60 | ||||||||||||
| (1) | Available for sale securities are carried at fair value on the balance sheet while held to maturity securities are carried at amortized cost. |
| (2) | Fully taxable equivalent basis |
ANALYSIS OF YIELDS AND RATES
| Three Months Ended September 30, 2014 | Three Months Ended September 30, 2013 | |||||||||||||||||||||||
| Average | Interest Income/ | Average Yield/ | Average | Interest Income/ | Average Yield/ | |||||||||||||||||||
| Balance | Expense(1) | Rate | Balance | Expense | Rate | |||||||||||||||||||
| (Fully taxable equivalent basis, dollars in thousands) | ||||||||||||||||||||||||
| Earning Assets | ||||||||||||||||||||||||
| Loans receivable | $ | 1,728,789 | $ | 18,456 | 4.24 | % | $ | 1,226,469 | $ | 13,969 | 4.52 | % | ||||||||||||
| Investment securities | 486,142 | 4,025 | 3.31 | % | 388,108 | 3,269 | 3.37 | % | ||||||||||||||||
| Other earning assets | 18,970 | 39 | 0.82 | % | 2,213 | 2 | 0.36 | % | ||||||||||||||||
| Total Earning Assets | 2,233,901 | 22,520 | 4.00 | % | 1,616,790 | 17,240 | 4.23 | % | ||||||||||||||||
| Non-Earning Assets | 196,222 | 142,147 | ||||||||||||||||||||||
| Total Assets | $ | 2,430,123 | 22,520 | $ | 1,758,937 | 17,240 | ||||||||||||||||||
| Interest-Bearing Liabilities | ||||||||||||||||||||||||
| Deposits | $ | 1,527,145 | 1,033 | 0.27 | % | $ | 1,160,483 | 737 | 0.25 | % | ||||||||||||||
| Borrowings | 353,202 | 870 | 0.98 | % | 187,837 | 609 | 1.29 | % | ||||||||||||||||
| Total Interest-Bearing Liabilities | 1,880,347 | 1,903 | 0.40 | % | 1,348,320 | 1,346 | 0.40 | % | ||||||||||||||||
| Noninterest-bearing deposits | 308,329 | 229,972 | ||||||||||||||||||||||
| Other liabilities | 15,331 | 19,644 | ||||||||||||||||||||||
| Shareholders' equity | 226,116 | 161,001 | ||||||||||||||||||||||
| Total Liabilities and Shareholders' Equity | $ | 2,430,123 | 1,903 | $ | 1,758,937 | 1,346 | ||||||||||||||||||
| Net Interest Income | $ | 20,617 | $ | 15,894 | ||||||||||||||||||||
| Net Interest Margin | 3.66 | % | 3.90 | % | ||||||||||||||||||||
| Interest Rate Spread | 3.60 | % | 3.83 | % | ||||||||||||||||||||
| Nine Months Ended September 30, 2014 | Nine Months Ended September 30, 2013 | |||||||||||||||||||||||
| Average | Interest Income/ | Average Yield/ | Average | Interest Income/ | Average Yield/ | |||||||||||||||||||
| Balance | Expense(1) | Rate | Balance | Expense | Rate | |||||||||||||||||||
| (Fully taxable equivalent basis, dollars in thousands) | ||||||||||||||||||||||||
| Earning Assets | ||||||||||||||||||||||||
| Loans receivable | $ | 1,630,921 | $ | 52,073 | 4.27 | % | $ | 1,192,263 | $ | 41,135 | 4.61 | % | ||||||||||||
| Investment securities | 440,433 | 10,771 | 3.26 | % | 385,586 | 9,409 | 3.25 | % | ||||||||||||||||
| Other earning assets | 13,527 | 80 | 0.79 | % | 6,807 | 15 | 0.29 | % | ||||||||||||||||
| Total Earning Assets | 2,084,881 | 62,924 | 4.04 | % | 1,584,656 | 50,559 | 4.27 | % | ||||||||||||||||
| Non-Earning Assets | 191,639 | 136,820 | ||||||||||||||||||||||
| Total Assets | $ | 2,276,520 | 62,924 | $ | 1,721,476 | 50,559 | ||||||||||||||||||
| Interest-Bearing Liabilities | ||||||||||||||||||||||||
| Deposits | $ | 1,478,125 | 2,940 | 0.27 | % | $ | 1,141,146 | 2,247 | 0.26 | % | ||||||||||||||
| Borrowings | 288,954 | 2,259 | 1.05 | % | 159,230 | 1,762 | 1.48 | % | ||||||||||||||||
| Total Interest-Bearing Liabilities | 1,767,079 | 5,199 | 0.39 | % | 1,300,376 | 4,009 | 0.41 | % | ||||||||||||||||
| Noninterest-bearing deposits | 285,464 | 220,654 | ||||||||||||||||||||||
| Other liabilities | 15,436 | 19,420 | ||||||||||||||||||||||
| Shareholders' equity | 208,541 | 181,026 | ||||||||||||||||||||||
| Total Liabilities and Shareholders' Equity | $ | 2,276,520 | 5,199 | $ | 1,721,476 | 4,009 | ||||||||||||||||||
| Net Interest Income | $ | 57,725 | $ | 46,550 | ||||||||||||||||||||
| Net Interest Margin | 3.70 | % | 3.93 | % | ||||||||||||||||||||
| Interest Rate Spread | 3.65 | % | 3.86 | % | ||||||||||||||||||||
| (1) | Income related to securities exempt from federal income taxes is stated on a fully taxable-equivalent basis, assuming a federal income tax rate of 35%, and is then reduced by the non-deductible portion of interest expense. For the three months ended September 30, 2014, the adjustments made to convert to a fully taxable-equivalent basis were $141 for 2014 and $98 for 2013. For the nine months ended September 30, 2014, the adjustments made to convert to a fully taxable-equivalent basis were $358 for 2014 and $287 for 2013. |
OTHER DATA
| Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Tangible common equity | $ | 201,323 | $ | 145,311 | $ | 201,323 | $ | 145,311 | ||||||||
| Return on average assets | 0.83 | % | 0.67 | % | 0.57 | % | 1.50 | % | ||||||||
| Return on average equity | 8.95 | 7.36 | 6.23 | 14.29 | ||||||||||||
| Net yield on earning assets | 3.66 | 3.90 | 3.70 | 3.93 | ||||||||||||
| Average loans to assets | 71.14 | 69.73 | 71.64 | 69.26 | ||||||||||||
| Average loans to deposits | 94.19 | 88.21 | 92.48 | 87.55 | ||||||||||||
| Average noninterest - bearing deposits to total deposits | 16.80 | 16.54 | 16.19 | 16.20 | ||||||||||||
| Average equity to assets | 9.30 | 9.15 | 9.16 | 10.52 | ||||||||||||
| Total capital as a percentage of total risk weighted assets | 12.62 | 13.09 | 12.62 | 13.09 | ||||||||||||
| Tangible common equity as a percentage of tangible assets | 8.33 | 8.07 | 8.33 | 8.07 | ||||||||||||
| Tangible common equity as a percentage of total risk weighted assets | 10.51 | 10.51 | 10.51 | 10.51 | ||||||||||||
OTHER NON-GAAP MEASURES
Pre-tax core net operating income
(Dollars in thousands)
| Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Pre-tax net income | $ | 7,903 | $ | 5,849 | $ | 15,072 | $ | 15,605 | ||||||||
| Gain on sale of investment securities | - | (458 | ) | - | (736 | ) | ||||||||||
| Acquisition related expenses | 10 | 69 | 4,910 | 69 | ||||||||||||
| Severance expenses | - | - | 533 | - | ||||||||||||
| Pre-tax core net operating income | $ | 7,913 | $ | 5,460 | $ | 20,515 | $ | 14,938 | ||||||||