Attached files
| file | filename |
|---|---|
| 8-K - 8-K - HEARTLAND FINANCIAL USA INC | form8-kinvestorpresentatio.htm |
Investor Presentation
Lynn B. Fuller
Chairman and CEO
Bryan R. McKeag
Chief Financial Officer
March 2017
Trading Symbol:
HTLF | www.htlf.com
2
Safe Harbor
This presentation may contain, and future oral and written statements of the Company and its management may
contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with
respect to the financial condition, results of operations, plans, objectives, future performance and business of the
Company. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of the
Company’s management and on information currently available to management, are generally identifiable by the use of
words such as believe, expect, anticipate, plan, intend, estimate, may, will, would, could, should or similar expressions.
Additionally, all statements in this release, including forward-looking statements, speak only as of the date they are
made, and the Company undertakes no obligation to update any statement in light of new information or future events.
A number of factors, many of which are beyond the ability of the Company to control or predict, could cause actual
results to differ materially from those in its forward-looking statements. These factors include, among others, the
following: (i) the strength of the local and national economy; (ii) the economic impact of past and any future terrorist
threats and attacks and any acts of war or threats thereof, (iii) changes in state and federal laws, regulations and
governmental policies concerning the Company’s general business; (iv) changes in interest rates and prepayment rates
of the Company’s assets; (v) increased competition in the financial services sector and the inability to attract new
customers; (vi) changes in technology and the ability to develop and maintain secure and reliable electronic systems;
(vii) the loss of key executives or employees; (viii) changes in consumer spending; (ix) unexpected results of
acquisitions; (x) unexpected outcomes of existing or new litigation involving the Company; and (xi) changes in
accounting policies and practices. These risks and uncertainties should be considered in evaluating forward-looking
statements and undue reliance should not be placed on such statements. Additional information concerning the
Company and its business, including other factors that could materially affect the Company’s financial results, is
included in the Company’s filings with the Securities and Exchange Commission.
3
Agenda
Heartland’s growth story
Key tenets of Heartland’s business model
Financial Highlights
4
Cumulative 5-Year Growth Rate As of 12/31/16
Heartland 92%
HP Peer 84%
Heartland: Tremendous Growth in
Assets and Shareholder Return
As of December 31, 2016
Source: SNL Financial
7.18%
8.43%
0%
5%
10%
15%
20%
25%
30%
2011 2012 2013 2014 2015 2016
Heartland Financial USA, Inc.
High Performance Peer Group
183.64
161.80
(50.00)
0.00
50.00
100.00
150.00
200.00
250.00
T
otal
Return
(
%
)
5 Year Total Shareholder Return
HTLF HTLF High Performance Peer
5
Heartland’s Exceptional Performance is
Reflected in its Stock Performance
As of December 31, 2016
Source: SNL Financial
(100.00)
(80.00)
(60.00)
(40.00)
(20.00)
0.00
20.00
40.00
60.00
80.00
To
ta
l R
et
u
rn
(%
)
Ten year Index Total Return (%) Since Q1 '07
HTLF S&P 500
SNL Small Cap U.S. Bank SNL Mid Cap U.S. Bank
SNL Large Cap U.S. Bank 63.69
58.45
5.60
-28.44
-18.46
6
Heartland
Ranked #44
out of 100
Largest Banks
in America in
2017
Forbes 2017 Best Banks in America
Rank Company Total assets ROATCE NPAs/ CET1 Efficiency LTM revenue
($bil) assets ratio ratio growth
1 PacWest Bancorp 21 16.0% 1.2% 12.8% 41% 24%
2 CVB Financial 8 11.9% 0.5% 16.6% 45% 2%
3 Community Bank System 9 14.3% 0.3% 15.7% 62% 15%
4 Western Alliance Bancorp 17 18.3% 0.8% 9.8% 44% 40%
5 Glacier Bancorp 9 12.8% 1.3% 13.9% 56% 9%
6 First Republic Bank 68 14.2% 0.1% 10.5% 56% 19%
7 Bank of Hawaii 16 16.4% 0.4% 13.4% 58% 7%
8 Home BancShares 10 20.3% 0.8% 11.0% 39% 22%
9 Prosperity Bancshares 21 18.1% 0.3% 14.4% 41% -3%
10 FCB Financial Holdings 9 12.6% 0.5% 11.8% 46% 65%
11 Bank of the Ozarks 18 16.8% 0.6% 10.2% 36% 35%
12 First Hawaiian 20 15.5% 0.3% 12.3% 47% 3%
13 South State 9 15.5% 0.5% 11.5% 62% 4%
14 Capital One Financial 345 14.2% 0.9% 10.6% 51% 9%
15 East West Bancorp 33 15.4% 0.6% 10.9% 51% 7%
~
~
~
40 SVB Financial Group 43 11.0% 0.3% 12.8% 53% 5%
41 BankUnited 27 9.9% 0.7% 11.6% 59% 16%
42 BB&T 223 15.3% 0.8% 10.1% 61% 12%
43 M&T Bank 127 12.7% 0.9% 10.8% 58% 14%
44 Heartland Financial USA 8 15.9% 0.8% 9.0% 68% 19%
45 Provident Financial Svcs 9 11.3% 0.8% 11.8% 57% 4%
46 International Bancshares 12 9.4% 0.8% 16.8% 54% -2%
47 MB Financial 19 14.0% 0.6% 8.7% 67% 9%
48 Capitol Federal Financial 9 6.0% 0.5% 32.0% 44% 2%
49 Great Western Bancorp 12 15.0% 1.5% 10.2% 50% NA
50 Banc of California 11 20.6% 0.9% 8.9% 76% 26%
7
$8.25 $8.25 Billion in Assets
36 36 Year Old Company
10/1 10 Independent Bank Charters 1 Consumer Finance Company
12/112/14
12 States
112 Banking Offices(1)
14 Consumer Finance Offices
13.9% 5 Year Compound Annual Asset Growth Rate through 12/31/2016
Heartland has a long history of
growth, stability and diversity…
As of December 31, 2016
(1) – Includes four branches of Founders Community Bank as of March 1, 2017
8
0 Never an annual loss
2x
History of Doubling Earnings
and Assets Every 5 to 7 Years
14%
5 Year Average Annual ROTCE through
12/31/16
21%
5 Year Compound Annual EPS Growth
Rate through 12/31/16
36
36 Consecutive Years of Level
or Increased Dividends
$1.22 B Market Cap (as of 1/31/17)
11%
Significant Inside Ownership by the Board
and Senior Management
…but Heartland also has a
tremendous history of earnings
As of December 31, 2016
9
An Expanding Franchise
Heartland Financial USA, Inc.
10
INDEPENDENT
BANK CHARTERS
112
OFFICES
85
COMMUNITIES
As of December 31, 2016
(1) – Includes 4 branches from Founders Community Bank acquired March 1, 2017
(1)
10
Expansion Timeline
As of February 2017
11
Acquisition and Organic Asset Growth
As of December 31, 2016
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
$9.0
2011 2012 2013 2014 2015 2016
A
ssets
-
B
ill
si
o
n
s
Acquired Growth Assets
$8.25
$7.69
Heritage Bank-$109M
Liberty Bank-$54M
First Nat-Platterville-
$128M
Freedom Bank-$67M
Morrill and Janes-$806M
Comm. B&T Sheboygan-$507M
Comm. Bank Santa Fe-$166M
First Scottsdale-$81M
Premier Valley-$693M
CIC
Bancshares-
$742M
12
12 bank acquisitions announced and 11 closed since 2012
Opportunities abound across entire footprint
Heartland’s community bank model is attractive to sellers
Focus on expanding existing markets >= $1 Billion in assets
Transactions that demonstrate an IRR > 15%
Commitment to shareholders for accretive EPS
Heartland has established core
competencies in the M & A space
13
Centennial Bank (CIC Bancshares)
Announced October 2015
Closed February 2016 with systems integration completed in June 2016
Assets of approximately $742.8 million
14 branches-Serving Denver metro & surrounding mountain resort
communities
Approximately $76.9 million stock and cash transaction
Acquisition expanded Colorado footprint from 3 to 17 banking centers
14
Founders Community Bank
Announced October 2016
Closed February 2017 with systems integration mid-March 2017
Assets of approximately $196.9 million as of 12/31/16
4 branches and one lending center in San Luis Obispo County on the
Central Coast of California
Approximately $31.1 million stock and cash transaction
Acquisition expanded California footprint from 5 to 10 banking centers
Will be combined with Premier Valley Bank charter
15
Citywide Banks
Announced February 2017
Expected close and integration in third and fourth quarters of 2017
Assets of approximately $1.4 billion as of 12/31/16, marking Heartland’s
largest acquisition
12 branches all located in the Denver Metro/Front Range area
Approximately $203 million stock and cash transaction at acquisition
10%+ EPS accretion beginning in 2018. IRR well in excess of 15%
Combined with Centennial Bank and Trust will be Colorado’s 8th largest bank
Citywide president will be retained and combined bank will retain the
Citywide Banks brand
16
State
12/31/16
Assets
%
of
Franchise
Number
of
Branches
Projected
Population
Change '17-‘22 (%)
Med
HH
Income
Projected HH Income
Change '15-‘20 (%)
Iowa $1,497,697 17% 12 2.56 57,486 7.78
Illinois $742,173 8% 11 .20 60,950 5.95
Wisconsin $1,065,715 12% 18 1.52 56,576 7.15
Minnesota $229,114 3% 1 3.37 65,782 7.49
Kansas $863,544 10% 9 1.97 55,420 5.90
HTLF Midwest $4,398,243 50% 51
New Mexico $1,374,647 16% 17 1.14 47,043 5.58
Montana $477,063 5% 10 4.34 49,493 7.76
Arizona $882,266 10% 8 5.86 52,453 6.95
Colorado $901,782 10% 17 7.07 65,098 8.19
California (1) $837,587 9% 9 4.74 66,091 7.73
HTLF West $4,443,345 50% 61
Market Overview:
Expanding in High Growth Markets
Source: SNL Financial
(1) – Includes Founders Community Bank
17
Asset and Earnings Growth
As of December 31, 2016
$60.0
$80.3
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
$9.00
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
$35.0
$40.0
$45.0
$50.0
$55.0
$60.0
$65.0
$70.0
$75.0
$80.0
$85.0
1994 1995 1996 1997 1998 1999 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
A
sset
s-B
illio
n
s E
ar
n
in
gs
-M
ill
io
n
s
Net Income in Millions Exclusive of Goodwill Impairment Charge Assets in Billions
18
Heartland EPS (diluted)
As of December 31, 2016
$2.04
$2.19
$2.83
$3.22
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
EPS Exclusive of Goodwill Impairment Charge
19
Price to TBV and
Price to Earnings
(1) See Appendix for Non-GAAP Reconciliation
As of December 31, 2016
T
B
V
a
n
d
St
o
ck
P
ri
ce
Pe
r
S
h
a
re
P/E Ratio
14.91x (Trailing 12 months)
16.22x (Current Qtr. Annualized)
P/TCBV 2.13x
P
/E
R
at
io
$22.55
$48.00
14.91
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
$0.00
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
HTLF TBV per Share(1) Stock Price HTLF P/E (trailing 12 mos.)
20
History of Continuous Dividends
As of December 31, 2016
$0.50
$0.45
$0.00
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
Dividend Special Dividend
21
Agenda
Heartland’s growth story
Key tenets of Heartland’s business model
Financial Highlights
22
Highly Empowered, High-Touch
Local Bank Delivery
• Deeply rooted local leadership and
boards
• Local decision-making
• Invested in local expertise
• Local brands and independent charters
• Commitment to exceptional experience,
relationship building and value added
delivery at competitive prices
Extensive Resources for
Revenue Enhancement
• Expanded commercial and retail
products with focus on government
guaranteed lending and treasury
management
• Extensive menu of wealth
management, investment, insurance,
leasing, mortgage and consumer
financing
• Unique approach to consultative
relationship building
• Highly trained and experienced staff
Customer--Transparent
Backroom Cost Savings
• Leading edge technology
• Efficient back-office support
• Leverage expertise across
all banks gaining economies
of scale
• Utilize best practices
• Big bank punch with the
community bank touch
Three Core Pillars of Success
23
Primary Target Markets
Commercial
&
Small
Business
Residential
Mortgage
Retail Accounts
from Immediate
Area
Personal
Accounts of
Owners and
Employees
24
Heartland Financial USA, Inc.
Commercial
Banking
Retail
Banking
Private Client
Services
Consumer
Finance
Residential
Mortgage
5 Primary Business Lines
25
Solid Capital Ratios
12/31/15 12/31/16
Well Capitalized
Regulatory/Internal
Guidelines
Risk Based Capital/
Risk Weighted Avg. Assets 13.74% 14.01% 10.0%
Tier 1 Capital/
Risk Weighted Avg. Assets 11.56% 11.93% 8.0%
Tier 1 Common/Risk Weighted Avg.
Assets 8.23% 10.09% 6.5%
Leverage Ratio 9.58% 9.28% 5.0%
Tangible Common Equity/
Tangible Assets (1) 6.09% 7.28%
7.0%-8.0%
Guideline
(1) See Appendix for Non-GAAP Reconciliation
As of December 31, 2016
Parent Company TRUPS and sub-debt currently fixed at
3.0% after tax. Maturities laddered over 3-8 years.
26
Strong Return on Tangible Common Equity (1)
2016 15.15%
2015 13.90%
2014 12.04%
2013 12.16%
2012 17.41%
Strong Stable Net Interest Margin (1)
2016 4.13%
2015 3.97%
2014 3.96%
2013 3.78%
2012 3.98%
Non-Interest Income is approximately 26% of Total Revenue
and Expanding (Mortgage, Private Client Services,
Treasury Management, Loan Servicing Income, Excludes
Securities Gains/Losses)
HTLF core facts summary
(1) See Appendix for Non-GAAP Reconciliation
As of December 31, 2016
27
Low and stable level of nonperforming assets to total assets
12/31/16 0.91%
12/31/15 0.67%
12/31/14 0.74%
12/31/13 1.23%
12/31/12 1.59%
Diverse geographic footprint reduces risk
Master strategy of balanced growth and profit
Solid Midwest franchise balanced with a Western franchise, which
will ultimately be the driver for growth
Never experienced a loss year
During the recession, unlike many of our peers, Heartland
Financial did not do dilutive common stock issuance
HTLF core facts summary (cont.)
As of December 31, 2016
28
Heartland’s growth story
Key tenets of Heartland’s business model
Financial Highlights
Agenda
29
Financial Performance
As of December 31, 2016
AT YEAR END
(billions)
2016
2015
2014
2013
2012
2011
Total Assets $8.25 $7.69 $6.05 $5.92 $4.99 $4.31
Total Loans, net $5.30 $4.95 $3.84 $3.46 $2.79 $2.46
Total Deposits $6.85 $6.41 $4.77 $4.67 $3.85 $3.21
30
Loans By Category
Includes loans held for sale
As of December 31, 2016
*Average loan yield YTD
Yield on Loans – 6.36%*
C.A.G.R – 16%
Yield on Loans – 5.20%*
C&I
24%
Commercial RE
Owner Occupied
20%
Other
Commercial RE
16%
Residential
Mortgages
16%
Agricultural
Loans
11%
Consumer Loans
5%
Construction
8%
12/31/2011
Total Loans - $2.55 Billion
C&I
21%
Commercial RE
Owner Occupied
16%
Other
Commercial RE
17%
Residential
Mortgages
18% Agricultural
Loans
9%
Consumer
Loans
9%
Construction
10%
12/31/2016
Total Loans - $5.41 Billion
31
Solid Risk Profile
As of December 31, 2016
162%
58%
0%
50%
100%
150%
200%
250%
300%
350%
400%
450%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Total CRE/Total Risk-Based Capital (Investor CRE + Const & Land)/Total Risk-Based Capital (Const & Land)/Total Risk-Based Capital
259%
32
Non-Performing Assets/Total Assets
As of December 31, 2016
Source: SNL Financial
0.91%
0.81%
0.68%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Heartland Financial USA, Inc. BHC $1 to $10 Billion Peers in 10 State Footprint High Performance Peer Group
33
IBCA Savings
52%
Demand
23%
CD
25%
12/31/2011
IBCA Savings
55%
Demand
32%
CD
13%
12/31/2016
As of December 31, 2016
* - Average Cost of Deposits YTD
Improving Deposit Mix
Total Deposits
$3.21 Billion
Total Deposits
$6.85 Billion
C.A.G.R. 16%
Cost of Deposits – 1.19% Cost of Deposits - 0.23%
34
Tangible Common Equity
(1) See Appendix for Non-GAAP Reconciliation
As of December 31, 2016
5.46%
5.78%
5.19% 5.14%
5.60% 5.63%
5.78%
5.29%
6.16% 6.09%
7.28%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
TCE Ratio (1)
35
As of December 31, 2016
Income Recap
2016 2015 2014 2013 2012
Net Interest Margin (Thousands) 294,666$ 233,998$ 203,073$ 163,828$ 150,156$
Provision for Loan & Lease Loss 11,694 12,697 14,501 9,697 8,202
Noninterest Income 113,601 110,685 82,224 89,618 108,662
Noninterest Expense 279,668 251,046 215,800 196,561 183,381
Net Income 80,349$ 60,042$ 41,900$ 36,853$ 49,851$
Earnings Per Share (diluted) $3.22 $2.83 $2.19 $2.04 $2.77
36
Provision For Loan & Lease Losses
As of December 31, 2016
$14.5
$12.7 $11.7
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
$35.0
$40.0
$45.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
M
ill
io
n
s
37
Net Interest Margin – tax equivalent
As of December 31, 2016 – See Appendix for Non-GAAP
Reconciliation
Source: SNL Financial
4.13%
3.42%
3.70%
3.00%
3.20%
3.40%
3.60%
3.80%
4.00%
4.20%
4.40%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Heartland Financial USA, Inc BHC $1 to $10 Billion Peers in 10 State Footprint High Performance Peer Group
38
NPA’s, Charge-Offs & Allowance
$74.8
$6.1
$54.3
$0
$20
$40
$60
$80
$100
$120
$140
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
M
ill
io
n
s
Non-Performing Assets Net Charge-Offs Allowance for Loan & Lease Losses
As of December 31, 2016 – Excludes loans under loss share agreements
39
Diversified Non-Interest Income
As of December 31, 2016
Noninterest income exclusive of security gains YTD
Net Interest
Income
74%
Non-
Interest
Income
26%
BOLI
2%
Brokerage &
Insurance
4%
Mortgage
related gains on
sales and
servicing
37%
Trust Fees
15%
Service charges
and fees
31%
Commercial
Loan Sale and
Servicing
Income
6%
Other non-
interest income
5%
40
Revenue Enhancement:
Mortgage Lending
As of December 31, 2016
Experienced, high-volume loan origination
team of 79 producers servicing Bank footprint
and Loan Production Offices
Based in Phoenix, AZ and Dubuque, IA
Target Net Income of 1% of Gross Revenue
$4.3 Billion Portfolio Loans Serviced for Others
$37.8
$1,165
$4,309
$0
$10
$20
$30
$40
$50
$60
$70
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
$5,000
2009 2010 2011 2012 2013 2014 2015 2016
In
M
ill
io
n
s
Residential Mortgage Loan Activity
Gain on Sales of Loans & Net Servicing Income (Right Axis)
Mortgage Loans Originated
Mortgage Loan Servicing Portfolio
41
• Trust Assets under management as of
12/31/16 were $1.96 Billion
• Operating in eight of ten
Heartland markets
• Expansion organically and via acquisition
• Sophisticated investment platform
• Focus on sales and enhancing the
client experience
Private Client Services
Revenue Enhancement:
Private Client Services
As of December 31, 2016
$18.7
$18.1
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
$20
2009 2010 2011 2012 2013 2014 2015 2016
In
M
ill
io
n
s
Private Client Services Fees
Trust Fees Brokerage & Insurance Commision
42
Treasury Management
• Extensive array of automated treasury
management tools provide strong value
proposition comparable to larger
financial institutions
• Introducing cash-based products for
corporate customers
• New Corporate Credit Card services fee
income with significant growth trajectory
• Significant opportunity to leverage
across newly acquired customer base in
recent M&A deals
Revenue Enhancement:
Treasury Management
As of December 31, 2016
$0
$5
$10
$15
$20
$25
$30
$35
2009 2010 2011 2012 2013 2014 2015 2016
In
M
ill
io
n
s
Service Charges and Fees
Corporate Card Svcs Service Charges and Fees
$31.6
$4.9
$24.3
$2.4
43
Net Income
As of December 31, 2016
$60.0
$80.3
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Annual Net Income Goodwill Impairment Charge
44
Efficiency Ratio
As of December 31, 2016 – See Appendix for Non-GAAP Reconciliation
Source: SNL Financial for Peer / As reported for Heartland
66.25%
64.54%
61.05%
55.0%
60.0%
65.0%
70.0%
75.0%
80.0%
85.0%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Heartland Financial USA, Inc. BHC $1 to $10 Billion Peers in 10 State Footprint High Performance Peer Group
45
Return on Average Common Equity
As of December 31, 2016
Source: SNL Financial
11.80%
9.14%
9.45%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
2010 2011 2012 2013 2014 2015 2016
Heartland Financial USA, Inc. BHC $1 to $10 Billion Peers in 10 State Footprint High Performance Peer Group
46
Return on Average Tangible
Common Equity
As of December 31, 2016 – See Appendix for Non-GAAP Reconciliation
Source: SNL Financial
15.15%
12.92%
10.13%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
2010 2011 2012 2013 2014 2015 2016
Heartland Financial USA, Inc. High Performance Peer Group BHC $1 to $10 Billion Peers in 10 State Footprint
47
Analyst Ratings
(February 2017)
Coverage Rating Price Target
D.A. DAVIDSON
Jeff Rulis Buy $58.00
KEEFE, BRUYETTE & WOODS
Damon DelMonte Market Perform $51.00
RAYMOND JAMES
Daniel Cardenas Strong Buy $54.00
SANDLER O’NEILL PARTNERS
Andrew Liesch Hold $53.00
PIPER JAFFRAY
Matthew Clark
Overweight $55.00
FBR & Co.
Steven Ross Market Perform $50.00
48
Master strategy of balanced growth and profit
Solid Midwest franchise balanced with a Western franchise
which enhances growth potential and provides diversification
of risk
Sound balance sheet with strong capital and low
non-performing asset levels
Strong, stable net interest margin
Diverse and growing sources of non-interest income
Never a loss year
Investment Summary
49
Contact Information
50
YTD 2016 YTD 2015 YTD 2014 YTD 2013 YTD 2012 YTD 2011
Reconciliation of Return on Average Common Tangible Equity
(non-GAAP) (1)
Net income available to common shareholders (GAAP) 80,108$ 59,225$ 41,083$ 35,696$ 46,392$ 20,404$
Average common stockholders' equity (GAAP) 678,989$ 496,877$ 386,844$ 328,454$ 293,917$ 262,504$
Less average goodwill 125,724 56,781 35,688 30,833 25,926 25,907
Less average other intangibles, net 24,553 14,153 10,022 4,117 1,568 1,964
Average common tangible equity (non-GAAP) 528,712$ 425,943$ 341,134$ 293,504$ 266,423$ 234,633$
Annualized return on average common equity (GAAP) 11.80% 11.92% 10.62% 10.87% 15.78% 7.77%
Annualized return on average common tangible equity (non-GAAP) 15.15% 13.90% 12.04% 12.16% 17.41% 8.70%
Reconciliation of Non-GAAP Measure-Efficiency Ratio (2)
Net interest income 294,666$ 233,998$ 203,073$ 163,826$ 150,156$ 145,395$
Taxable equivalent adjustment(3) 12,919 10,216 10,298 9,467 7,398 5,937
Fully taxable equivalent net interest income 307,585 244,214 213,371 173,293 157,554 151,332
Noninterest income 113,601 110,685 82,224 89,618 108,662 59,577
Securities gains, net (11,340) (13,143) (3,668) (7,121) (13,998) (13,104)
Impairment loss on securities - 769 - - - -
Adjusted income 409,846$ 342,525$ 291,927$ 255,790$ 252,218$ 197,805$
Total noninterest expenses 279,668$ 251,046$ 215,800$ 196,561$ 183,381$ 137,296$
Less:
Intangible assets amortization 5,630 2,978 2,223 1,063 562 -
Partnership investment in historic rehabilitation tax credits 1,051 4,357 2,436 596 5,289 -
(Gain)/loss on sales/valuations of assets, net 1,478 6,821 2,105 3,034 7,093 -
Adjusted noninterest expenses 271,509$ 236,890$ 209,036$ 191,868$ 170,437$ 137,296$
Efficiency ratio, fully taxable equivalent 66.25% 69.16% 71.61% 75.01% 67.58% 69.41%
(1) Return on average common tangible equity is net income available to common stockholders divided by average common stockholders' equity less goodwill and core deposit
intangibles, net. This financial measure is included as it is considered to be a critical metric to analyze and evaluate financial condition and capital strength. This measure should not be
considered a substitute for operating results determined in accordance with GAAP.
(2) Efficiency ratio, fully taxable equivalent, expresses noninterest expenses as a percentage of fully taxable equivalent net interest income and noninterest income. This efficiency ratio is
presented on a tax equivalent basis, which adjusts net interest income and noninterest expenses for the tax favored status of certain loans, securities and historic rehabilitation tax
credits. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the financial results as it enhances the
comparability of income and expenses arising from taxable and nontaxable sources and excludes specific items, as noted in the table. This measure should not be considered a substitute
for operating results determined in accordance with GAAP.
(3) Computed on a tax equivalent basis using an effective tax rate of 35%.
Appendix – Non-GAAP
Reconcilements
51
Appendix – Non-GAAP
Reconcilements (Continued)
YTD 2016 YTD 2015 YTD 2014 YTD 2013 YTD 2012 YTD 2011
Reconciliation of Tangible Book Value Per Common Share (non-GAAP)
(1)
Common stockholders' equity (GAAP) 739,559$ 581,475$ 414,619$ 357,762$ 320,107$ 268,520$
Less goodwill 127,699$ 97,852$ 35,583 35,583 30,627 25,909
Less other intangible assets, net 22,775$ 22,019$ 8,947$ 11,171$ 2,833$ 1,684$
Tangible common stockholders' equity (non-GAAP) 589,085$ 461,604$ 370,089$ 311,008$ 286,647$ 240,927$
Common shares outstanding, net of treasury stock 24,543,376 22,435,693 18,511,125 18,399,156 16,827,835 16,484,790
Common stockholders' equity (book value) per share (GAAP) 30.13$ 25.92$ 22.40$ 19.44$ 19.02$ 16.29$
Tangible book value per common share (non-GAAP) 24.00$ 20.57$ 19.99$ 16.90$ 17.03$ 14.62$
Reconciliation of Tangible Capital Ratio (non-GAAP) (2)
Total assets (GAAP) 8,247,079$ 7,694,754$ 6,052,362$ 5,923,716$ 4,990,553$ 4,305,058$
Less goodwill 127,699 97,852 35,583 35,583 30,627 25,909
Less other intangible assets, net 22,775 22,019 8,947 11,171 2,833 1,684
Total tangible assets (non-GAAP) 8,096,605$ 7,574,883$ 6,007,832$ 5,876,962$ 4,957,093$ 4,277,465$
Tangible capital ratio (non-GAAP) 7.28% 6.09% 6.16% 5.29% 5.78% 5.63%
(1) Tangible book value per common share is total common stockholders' equity less goodwill and intangible assets, net divided by common shares outstanding, net of treasury. This is a
non-GAAP financial measure but has been included as it is considered to be a critical metric with which to analyze and evaluate financial condition and capital strength. This measure
should not be considered a substitute for operating results determined in accordance with GAAP.
(2) The tangible capital ratio is total common stockholders' equity less goodwill and intangible assets, net divided by total assets less goodwill and intangible assets, net. This is a non-
GAAP financial measure but has been included as it is considered to be a critical metric with which to analyze and evaluate financial condition and capital strength. This measure should not
be considered a substitute for operating results determined in accordance with GAAP.
52
Appendix – Non-GAAP
Reconcilements (Continued)
YTD 2016 YTD 2015 YTD 2014 YTD 2013 YTD 2012 YTD 2011
Reconciliation of Annualized Net Interest Margin, Fully Taxable
Equivalent (non-GAAP) (1)
Net Interest Income (GAAP) 294,666$ 233,998$ 203,073$ 163,826$ 150,156$ 145,395$
Plus taxable equivalent adjustment (2) 12,919 10,216 10,298 9,467 7,398 5,937
Net interest income - taxable equivalent (non-GAAP) 307,585$ 244,214$ 213,371$ 173,293$ 157,554$ 151,332$
Average earning assets 7,455,217$ 6,152,090$ 5,384,275$ 4,582,296$ 3,962,268$ 3,639,926$
Annualized net interest margin (GAAP) 3.95% 3.80% 3.77% 3.58% 3.79% 3.99%
Annualized net interest margin, fully taxable equivalent (non-GAAP) 4.13% 3.97% 3.96% 3.78% 3.98% 4.16%
(1) Annualized net interest margin, fully taxable equivalent is a non-GAAP measure, which adjusts net interest income for the tax-favored status of certain loans and securities.
Management believes this measure enhances the comparability of net interest income arising from taxable and tax-exempt sources. This measure should not be considered a substitute
for operating results determined in accordance with GAAP.
(2) Computed on a tax equivalent basis using an effective tax rate of 35%.
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