CNB Financial Corporation Reports Third Quarter 2020 Earnings Per Share of $0.47 Compared to $0.68 for Third Quarter 2019
October 20 2020 - 4:05PM
CNB Financial Corporation (“CNB” or the “Corporation”) (NASDAQ:
CCNE), the parent company of CNB Bank, today announced its earnings
for the third quarter ended September 30, 2020.
Joseph B. Bower, Jr., President and CEO, stated,
“While we continued to support our customers and communities
through these challenging times, CNB also accomplished the
integration of Bank of Akron and the completion of our preferred
stock offering. Both initiatives will provide the support needed to
achieve our long-term objectives. I couldn't be more pleased with
our employees, clients and communities efforts to help each other
succeed through the pandemic. Our positive financial results are a
clear reflection of these efforts by all.”
Summary
- Net income was $7.8 million, or
$0.47 per diluted share, for the quarter ended September 30, 2020,
and $24.8 million, or $1.57 per diluted share, for the nine months
ended September 30, 2020. Income before provision expense and
income taxes was $13.1 million and $42.4 million, for the three
months and nine months ended September 30, 2020,
respectively.
- Excluding after-tax merger costs,
prepayment penalties and branch closure costs discussed below, net
income was $11.6 million, or $0.70 per diluted share, for the three
months ended September 30, 2020, compared to $10.4 million, or
$0.68 per diluted share, for the same period in 2019, reflecting
increases of $1.2 million, or 11.9%, and $0.02 per diluted share,
or 2.9%.
- At October 20, 2020, the
Corporation had $187.4 million of COVID-19 related deferred loan
payments for its commercial and consumer customers, or 5.6% of
total loans, down from $626.0 million, or 20.7% of total loans, at
June 30, 2020.
- On July 17, 2020, the Corporation
closed its acquisition of Bank of Akron (OTC: BARK), whose
franchise merged with and into CNB Bank and whose business operates
as part of the BankOnBuffalo division. The transaction added
approximately $319.1 million in loans and $419.5 million in
deposits, including the estimated fair value adjustments, to the
Corporation’s balance sheet.
- During the third quarter of 2020,
the Corporation also completed its public offering of 2,415,000
preferred stock depository shares, resulting in net proceeds of
$57.8 million. The Corporation intends to use the net proceeds from
the offering for general corporate purposes, which may include
working capital and the funding of organic growth or potential
acquisitions.
Earnings Performance
Highlights
- The third quarter of 2020 includes
costs related to the Corporation’s completion of its acquisition of
Bank of Akron, whereby Bank of Akron merged with and into CNB Bank.
In addition, during the third quarter the Corporation incurred
costs related to its closure of three CNB branches and the
prepayment of $30.0 million in borrowings from the Federal Home
Loan Bank of Pittsburgh (“FHLB”). The cumulative after-tax impact
of the merger-related costs, prepayment penalties and branch
closures costs was approximately $3.8 million, or $0.23 per diluted
share, for the three months ended September 30, 2020, and $4.3
million, or $0.27 per diluted share, for the nine months ended
September 30, 2020.
- Excluding after-tax merger costs,
prepayment penalties and branch closure costs, net income was $29.2
million, or $1.85 per diluted share, for the nine months ended
September 30, 2020, compared to $29.6 million, or $1.94 per diluted
share, for the same period in 2019, reflecting decreases of $431
thousand, or 1.5%, and $0.09 per diluted share, or 4.9%. Net income
for the third quarter and first nine months of 2020 was impacted by
a higher level of provision expense, as discussed below.
- Excluding merger costs, prepayment
penalties and branch closure costs, income before provision expense
and income taxes was $17.7 million for the quarter ended September
30, 2020, an increase of approximately $3.0 million, or 20.5%, from
the same period in 2019. For the nine months ended September 30,
2020, excluding the impact of merger, prepayment penalties and
branch closure costs income before provision expense and income
taxes was $47.6 million, representing an increase of approximately
$6.5 million, or 15.9%, from the same period in 2019.
Balance Sheet and Liquidity
Highlights
- Loans totaled $3.3 billion as of
September 30, 2020, reflected an increase of $596.3 million, or
21.7%, from September 30, 2019, as a result of $319.1 million of
acquired loans from Bank of Akron, net of fair value adjustments,
$223 million in Paycheck Protection Program ("PPP") loans, net of
deferred PPP processing fees and $54.2 million, or 2.0%, as a
result of increases in commercial real estate loans, primarily
within our Erie and Buffalo regions.
- Compared to December 31, 2019, total loans increased
approximately $541.8 million, primarily as a result of the acquired
loans from Bank of Akron and PPP-related loans.
- Deposits totaled $4.0 billion as of
September 30, 2020, increased $1.1 billion, or 40.0%, from
September 30, 2019, as a result of $419.5 million of acquired
deposits from Bank of Akron, net of fair value adjustments, an
estimated $231 million in PPP deposits and $496.6 million, or
17.3%, of increases in deposits across all our regions, as well as
in our Private Banking division.
- Compared to December 31, 2019, total deposits increased
approximately $920.4 million or 30.0%. In addition to the impact of
the acquired deposits from Bank of Akron as well as PPP deposits,
as discussed above, deposits across our regions and our Private
Banking division increased approximately $269.9 million, or 11.6%,
annualized growth rate.
- At September 30, 2020, the
Corporation’s cash position totaled approximately $556 million,
including additional excess liquidity of $509 million held at the
Federal Reserve, reflecting, in management's view, a strong
liquidity level. In addition to its cash position, the
Corporation’s borrowing capacity with the FHLB at September 30,
2020 was approximately $488 million. As briefly discussed above,
during the third quarter of 2020 the Corporation recorded a
prepayment penalty of approximately $522 thousand related to its
prepayment of $30.0 million in borrowings from the FHLB, which
carried an interest rate of 1.97%.
- While book value per common share
was $21.28 and $19.55 as of September 30, 2020 and 2019,
respectively, tangible book value per common share was $18.58 as of
September 30, 2020, reflecting an increase of 9.4% from a tangible
book value per share of $16.98 as of September 30, 2019.
Customer Support Strategies and Loan
Portfolio Profile
- The Corporation participated in the
PPP for loans provided under the auspices of the Small Business
Administration (“SBA”). Under this program, the Corporation lent
money primarily to its existing loan and/or deposit customers,
based on a predetermined SBA-developed formula, intended to
incentivize small business owners to retain their employees. These
loans carry a customer rate of 1.00% plus a processing fee that
varies depending on the balance of the loan at origination. As of
September 30, 2020, the Corporation had outstanding $231 million,
or 2,044 PPP loan relationships, at a rate of 1.00% together with
deferred PPP processing fees of approximately $8.5 million. For the
three and nine months ended September 30, 2020, the Corporation
recognized $683 thousand in deferred PPP processing
fees.
- In addition to participating in the
PPP, in the first nine months of 2020 the Corporation deferred loan
payments for several of its commercial and consumer customers for a
period up to six months, as determined by the financial needs of
each customer. As of October 20, 2020, the deferred loan payment
commitments remaining were $187.4 million, or 5.6% of total loans
outstanding, consisting of 229 loans, or $165.6 million, for which
principal and interest were deferred, and 64 loans, or $21.8
million, for which principal only was deferred. Loan payment
deferrals by loan type were as follows:
- Commercial and industrial loans – 92 loans, totaling $48.8
million;
- Commercial real estate loans – 63 loans, totaling $123.9
million;
- Residential mortgage loans – 127 loans, totaling $14.6 million;
and
- Consumer loans – 11 loans, totaling $82 thousand.
- The Corporation tracks lending exposure by industry
classification to determine potential risk associated with industry
concentrations, if any, that could lead to additional credit loss
exposure. As a result of the COVID-19 pandemic, the Corporation has
determined the Hotels/Motels and Restaurants/Fast Foods industries
represent a potentially higher level of credit risk, as many of
these customers have incurred a significant negative impact to
their businesses as a result of governmental stay-at-home orders as
well as travel limitations. At September 30, 2020, the Corporation
had loan concentrations for these industries as follows, excluding
PPP-related loans:
- Hotels/Motels – $203 million, or
6.5% of total loans outstanding, excluding PPP-related loans;
and
- Restaurants/Fast Foods – $29.7
million, or 1.0% of total loans outstanding, excluding PPP-related
loans.
Performance Ratios
- While annualized return on average
common equity was 8.81% for the three months ended September 30,
2020, annualized return on average tangible common equity was
10.88% for the same period. Excluding after-tax merger costs,
prepayment penalties and branch closure costs, annualized adjusted
return on average tangible common equity was 16.20% for the three
months ended September 30, 2020, compared to 16.19% for the three
months ended September 30, 2019.
- While annualized return on average
common equity was 10.00% for the nine months ended September 30,
2020, annualized return on average tangible common equity was
11.70% for the same period. Excluding after-tax merger costs,
prepayment penalties and branch closure costs, annualized adjusted
return on average tangible common equity was 13.73% for the nine
months ended September 30, 2020, compared to 16.45% for the nine
months ended September 30, 2019.
- Efficiency ratio was 67.71% and
62.15% for the three and nine months ended September 30, 2020,
respectively. Excluding after-tax merger costs, prepayment
penalties and branch closure costs, the adjusted efficiency ratio
was 56.54% and 57.66% for the three and nine months ended September
30, 2020, respectively, compared to 58.15% and 59.71% for the
comparable periods in 2019. The improvement in efficiency ratio
resulted from an overall lower level of business activity resulting
from the pandemic coupled with the Corporation’s internal cost
management initiatives focusing on travel restrictions, a hiring
freeze, lower marketing expenditures and other expense management
initiatives.
Revenue
- Total revenue (comprised of net
interest income plus non-interest income) was $41.4 million for the
three months ended September 30, 2020, an increase of $5.3 million,
or 14.6%, from the three months ended September 30, 2019 due to the
following:
- Net interest income of $34.7 million, for the three months
ended September 30, 2020, increased $4.8 million or 15.9% from the
three months ended September 30, 2019, primarily as a result of an
overall growth of $682.2 million, or 21.1%, in average earning
assets, excluding PPP-related loans, net of deferred PPP processing
fees and Paycheck Protection Program Lending Facility ("PPPLF")
related assets (collectively the "PPP-related assets"); PPP-related
processing fees totaling approximately $683.0 thousand; partially
offset by a decrease of 22 basis points in net interest margin on a
fully tax-equivalent basis, net of PPP-related assets and
PPP-related processing fees.
- Net interest margin on a fully tax-equivalent basis was 3.15%
and 3.72% for the three months ended September 30, 2020 and 2019,
respectively, including $522 million for the three months ended
September 30, 2020 in average PPP-related assets. Excluding
PPP-related assets and PPP-related processing fees, the net
interest margin on a fully-tax equivalent basis was 3.50% for the
three months ended September 30, 2020.
- The yield on earning assets of 3.84% for the three months ended
September 30, 2020 included $522 million in PPP-related assets.
Excluding the PPP-related assets and PPP-related processing fees,
the yield on earning assets was 4.29% for the three months ended
September 30, 2020, a decrease of 68 basis points from 4.97% for
the three months ended September 30, 2019, primarily as a result of
the lower interest rate environment. The cost of interest-bearing
liabilities decreased 64 basis points from 1.47% for the three
months ended September 30, 2019 to 0.83% for the three months ended
September 30, 2020 primarily as a result of the Corporation’s
targeted deposit rate reductions.
- Total revenue (comprised of net
interest income plus non-interest income) was $114.7 million for
the nine months ended September 30, 2020, an increase of $9.0
million, or 8.5%, from the nine months ended September 30, 2019 due
to the following:
- Net interest income for the nine months ended September 30,
2020 increased 9.4% to $94.6 million from the nine months ended
September 30, 2019, driven by an overall growth of $512 million, or
16.4%, in average earning assets, excluding PPP-related assets,
coupled with PPP-related processing fees totaling approximately
$683 thousand, partially offset by a reduction of 24 basis points
in net interest margin on a fully tax-equivalent basis, excluding
PPP-related assets.
- Net interest margin on a fully tax-equivalent basis was 3.25%
and 3.75% for the nine months ended September 30, 2020 and 2019,
respectively, including $298 million for the nine months ended
September 30, 2020 in average PPP-related assets. Excluding
PPP-related assets, the net interest margin on a fully-tax
equivalent basis was 3.50% for the nine months ended September 30,
2020.
- The yield on earning assets of 4.13% for the nine months ended
September 30, 2020 included $298 million in PPP-related assets.
Excluding PPP-related assets and PPP-related processing fees, the
yield on earning assets was 4.46% for the nine months ended
September, 30, 2020, a decrease of 51 basis points from 4.97% for
the nine months ended September 30, 2019, primarily as a result of
the lower interest rate environment. The cost of interest-bearing
liabilities decreased 40 basis points to 1.04% for the nine months
ended September 30, 2020 from 1.44% for the nine months ended
September 30, 2019 primarily as a result of the Corporation’s
targeted deposit rate reductions.
- Total non-interest income was $6.8
million for the three months ended September 30, 2020, an increase
of $502 thousand, or 8.0%, from the same period in 2019. The
increase was primarily due to continued growth in Wealth and Asset
Management fees and increased mortgage banking income, partially
offset by a decrease in service charges on deposits and other fees
resulting from lower business activity and CNB’s response to the
pandemic.
- Total non-interest income was $20.1 million for the nine months
ended September 30, 2020, an increase of $870 thousand, or 4.5%,
from the same period in 2019.
- Total non-interest income includes
net realized and unrealized losses on trading securities, which
combined totaled $2.1 million for the nine months ended September
30, 2020 compared to $1.8 million for the nine months ended
September 30, 2019.
Non-Interest Expense
- For the three months ended
September 30, 2020, total non-interest expense was $28.4 million.
Excluding merger costs, prepayment penalties and branch closure
costs, total non-interest expense was $23.7 million for the three
months ended September 30, 2020, an increase of $2.3 million, or
10.5%, from the three months ended September 30, 2019, including
approximately $621 thousand resulting from the acquisition of Bank
of Akron.
- For the nine months ended September
30, 2020, total non-interest expense was $72.3 million. Excluding
merger costs, prepayment penalties and branch closure costs, total
non-interest expense was $67.1 million for the nine months ended
September 30, 2020, an increase of $2.5 million, or 3.9%, from the
nine months ended September 30, 2019.
Income Taxes
- Income tax expense of $2.0 million
for the three months ended September 30, 2020 decreased $275
thousand, or 12.2%, from the three months ended September 30, 2019.
Our effective tax rate was 20.3% for the three months ended
September 30, 2020 compared to 17.9% for the three months ended
September 30, 2019.
- Income tax expense of $5.5 million
for the nine months ended September 30, 2020 decreased $793
thousand, or 12.7%, from the nine months ended September 30, 2019.
Our effective tax rate was 18.0% for the nine months ended
September 30, 2020 compared to 17.5% for the nine months ended
September 30, 2019.
Asset Quality
- Total non-performing assets were
$28.0 million, or 0.59%, of total assets as of September 30, 2020,
which included $454 million in PPP-related assets. Excluding the
PPP-related assets, the ratio of total non-performing assets to
total assets was 0.65% as of September 30, 2020 compared to 0.62%
as of December 31, 2019 and 0.48% as of September 30, 2019. The
increase from December 31, 2019 and September 30, 2019, was
primarily due to one commercial real estate loan relationship
totaling approximately $9.7 million. During the three months ended
March 31, 2020, this loan was downgraded to substandard and placed
on non-accrual as a result of a covenant violation. Management
performed an evaluation of the collateral supporting the loan and
concluded no specific loan loss reserve was required at the
time.
- The allowance for loan losses
measured as a percentage of loans, net of unearned income, as of
September 30, 2020 was 0.80%, including $223 million in PPP-related
loans, net of deferred PPP processing fees. Excluding PPP-related
loans, net of deferred PPP processing fees, the allowance for loan
losses measured as a percentage of loans, net of unearned income,
was 0.86% as of September 30, 2020 compared to 0.69% as of December
31, 2019 and 0.73% as of September 30, 2019. The increase in the
allowance for loan losses from December 31, 2019 to September 30,
2020 resulted primarily from updates to the qualitative factors
related to the economic environment and unemployment, in addition
to a continuing update of the qualitative factor related
specifically to the COVID-19 pandemic. As part of its ongoing
evaluation of the allowance for loan losses, the Corporation
evaluates, on at least a quarterly basis, all significant
components of the allowance for loan losses, including historical
loss factors, qualitative factors and other relevant factors to
ensure it adequately represents management’s current estimation of
probable incurred losses within the loan portfolio. Partially
offsetting the increase in the allowance for loan losses, the
second quarter of 2020 included a charge-off of approximately $2.6
million that had been specifically reserved during the first
quarter of 2020, related to a secured commercial and industrial
loan relationship with a borrower who is now deceased, as discussed
in the Corporation’s Annual Report on Form 10-K for the year ended
December 31, 2019.
- Management recognizes the degree of
uncertainty related to the pandemic and its potential impact on the
economy and, as a result, the allowance for loan losses at
September 30, 2020 also included a qualitative factor specifically
related to the COVID-19 pandemic and the potential impact this
pandemic may have on the national and local economies, as well as
our loan portfolio overall. As of September 30, 2020, this
qualitative factor totaled approximately $1.7 million, which was
reflected in the Corporation’s provision expense for the nine
months ended September 30, 2020 and the related allowance for loan
losses during the same period. This factor related specifically to
COVID-19 related deferred loans previously discussed. The
Corporation will continue to evaluate this factor and update its
analysis, as necessary, as developments related to the COVID-19
pandemic and its impact on the economy evolve.
- For the three months ended
September 30, 2020, net loan charge-offs were $0.9 million, or
0.11%, of total average loans, compared to $3.3 million, or 0.50%,
of total average loans during the comparable period in 2019. The
third quarter of 2020 included a net charge-off totaling $522
thousand, related to the resolution of one commercial real estate
loan which had been previously assigned a specific loan loss
reserve.
- For the nine months ended September
30, 2020, net loan charge-offs were $4.7 million, or 0.20%, of
total average loans, compared to $4.7 million, or 0.24%, of total
average loans during the comparable period in 2019.
- As part of the Coronavirus Aid,
Relief and Economic Security Act (the “CARES Act”), enacted in
March 2020, financial institutions were given the option to delay
the adoption of ASU No. 2016-13, “Financial Instruments – Credit
Losses,” until the earlier of December 31, 2020 or the termination
of the national emergency related to COVID-19. Given the complexity
of the processes necessary to evaluate, document and implement
properly the current expected credit losses methodology, combined
with the effects of the COVID-19 pandemic and related responsive
measures on the Corporation’s employees, the Corporation opted to
delay the adoption of ASU No. 2016-13.
Capital
- As of September 30, 2020, CNB’s
total shareholders’ equity of $416 million increased $119 million,
or 40.0%, from September 30, 2019 as a result of an increase in
additional paid in capital related to the Bank of Akron acquisition
combined with the issuance of preferred equity, an increase in
accumulated other comprehensive income and growth in organic
earnings, partially offset by the payment of common stock dividends
to our shareholders during the nine months ended September 30,
2020.
- During the second quarter of 2020,
the Corporation announced the termination of its “at-the-market”
equity offering program (the “ATM Program”), pursuant to which the
Corporation could offer and sell up to $40 million of common stock.
The Corporation elected to terminate the ATM Program due to market
conditions and to limit uncertainty and unfavorable dilution for
its shareholders during this period of global economic volatility.
Prior to termination, the Corporation had sold 168,358 shares of
its common stock, raising approximately $5.1 million in gross
proceeds.
- On July 17, 2020, the Corporation
completed its acquisition of Bank of Akron, a state bank in Akron,
NY. Under the terms of the merger agreement, Bank of Akron merged
with and into CNB Bank, with CNB Bank as the surviving institution.
Banking offices of Bank of Akron will operate under the trade name
BankOnBuffalo, a division of CNB Bank. Based on the elections and
proration procedures, the total consideration payable to Bank of
Akron shareholders was approximately $40.8 million, comprised of
approximately $16.1 million in cash and 1,501,402 shares of CNB
common stock, valued at $24.7 million based on the July 17, 2020
closing price of $16.43 per share of CNB common stock.
- During the three months ended
September 30, 2020, the Corporation raised $57.8 million, net of
issuance costs, from the issuance of depositary shares, each
representing a 1/40th ownership interest in a share of the
Corporation's 7.125% Series A fixed-to-floating rate non-cumulative
perpetual preferred stock, no par value, with a liquidation
preference of $1,000 per share of preferred stock.
- As of September 30, 2020 all of the
Corporation’s regulatory capital ratios reflected increases from
December 31, 2019. The Corporation’s Tier 1 Leverage ratio of 8.39%
at September 30, 2020, includes the impact of average PPP-related
loans, net of deferred PPP processing fees, of $220 million.
Excluding this impact, the estimated Leverage ratio for the three
months ended September 30, 2020, is 8.82%, compared to 7.86% at
December 31, 2019.
- As of September 30, 2020, the
Corporation’s Tangible Common Equity/Tangible Assets ratio reflects
the impact of the PPP of approximately $223 million in PPP-related
loans, net of deferred PPP processing fees. Excluding PPP-related
loans, net of deferred PPP processing fees, the Corporation’s
Tangible Common Equity/Tangible Assets ratio of 7.00% decreased 14
bps from December 31, 2019, primarily as a result of the impact of
the acquisition of Bank of Akron, partially offset by a net
increase in earnings, net of dividends and increase in accumulated
other comprehensive income.
About CNB Financial
Corporation
CNB Financial Corporation is a financial holding
company with consolidated assets of approximately $4.7 billion. CNB
Financial Corporation conducts business primarily through its
principal subsidiary, CNB Bank. CNB Bank is a full-service bank
engaging in a full range of banking activities and services,
including trust and wealth management services, for individual,
business, governmental, and institutional customers. CNB Bank
operations include a private banking division, one loan production
office, one drive-up office and 44 full-service offices in
Pennsylvania, Ohio, and New York. CNB Bank’s divisions include
ERIEBANK, based in Erie, Pennsylvania, with offices in northwest
Pennsylvania and northeast Ohio; FCBank, based in Worthington,
Ohio, with offices in central Ohio; and BankOnBuffalo, based in
Buffalo, New York, with offices in northern New York. CNB Bank is
headquartered in Clearfield, Pennsylvania, with offices in central
and north central Pennsylvania. Additional information about CNB
Financial Corporation may be found at www.CNBBank.bank.
Forward-Looking Statements
This press release includes forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended, with respect to CNB’s financial condition,
liquidity, results of operations, future performance and business.
These forward-looking statements are intended to be covered by the
safe harbor for “forward-looking statements” provided by the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements are those that are not historical facts. Forward-looking
statements include statements with respect to beliefs, plans,
objectives, goals, expectations, anticipations, estimates and
intentions that are subject to significant risks and uncertainties
and are subject to change based on various factors (some of which
are beyond CNB’s control). Forward-looking statements often include
the words “believes,” “expects,” “anticipates,” “estimates,”
“forecasts,” “intends,” “plans,” “targets,” “potentially,”
“probably,” “projects,” “outlook” or similar expressions or future
conditional verbs such as “may,” “will,” “should,” “would” and
“could.” CNB’s actual results may differ materially from those
contemplated by the forward-looking statements, which are neither
statements of historical fact nor guarantees or assurances of
future performance. Such known and unknown risks, uncertainties and
other factors that could cause the actual results to differ
materially from the statements, include, but are not limited to,
(i) the duration and scope of the COVID-19 pandemic and the local,
national and global impact of COVID-19, (ii) actions governments,
businesses and individuals take in response to the pandemic, (iii)
the pace of recovery when the COVID-19 pandemic subsides, (iv)
changes in general business, industry or economic conditions or
competition; (v) changes in any applicable law, rule, regulation,
policy, guideline or practice governing or affecting financial
holding companies and their subsidiaries or with respect to tax or
accounting principles or otherwise; (vi) adverse changes or
conditions in capital and financial markets; (vii) changes in
interest rates; (viii) higher than expected costs or other
difficulties related to integration of combined or merged
businesses; (ix) the effects of business combinations and other
acquisition transactions, including the inability to realize our
loan and investment portfolios; (x) changes in the quality or
composition of our loan and investment portfolios; (xi) adequacy of
loan loss reserves; (xii) increased competition; (xiii) loss of
certain key officers; (xiv) deposit attrition; (xv) rapidly
changing technology; (xvi) unanticipated regulatory or judicial
proceedings and liabilities and other costs; (xvii) changes in the
cost of funds, demand for loan products or demand for financial
services; and (xviii) other economic, competitive, governmental or
technological factors affecting our operations, markets, products,
services and prices. Such developments could have an adverse impact
on CNB's financial position and results of operations. For more
information about factors that could cause actual results to differ
from those discussed in the forward-looking statements, please
refer to the “Risk Factors” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” sections
of and the forward-looking statement disclaimers in CNB’s annual
and quarterly reports.
The forward-looking statements are based upon
management’s beliefs and assumptions and are made as of the date of
this press release. CNB undertakes no obligation to publicly update
or revise any forward-looking statements included in this press
release or to update the reasons why actual results could differ
from those contained in such statements, whether as a result of new
information, future events or otherwise, except to the extent
required by law. In light of these risks, uncertainties and
assumptions, the forward-looking events discussed in this press
release might not occur and you should not put undue reliance on
any forward-looking statements.
Financial Tables
The following tables supplement the financial
highlights described previously for CNB. All dollars are stated in
thousands, except share and per share data.
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(unaudited) |
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(unaudited) |
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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% |
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% |
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2020 |
2019 |
change |
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2020 |
2019 |
change |
Income
Statement |
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|
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|
Interest income |
$ |
42,356 |
|
$ |
40,085 |
|
5.7 |
% |
|
$ |
120,519 |
|
$ |
115,120 |
|
4.7 |
% |
Interest
expense |
7,692 |
|
10,184 |
|
(24.5 |
)% |
|
25,923 |
|
28,667 |
|
(9.6 |
)% |
Net interest income |
34,664 |
|
29,901 |
|
15.9 |
% |
|
94,596 |
|
86,453 |
|
9.4 |
% |
Provision for loan
losses |
3,306 |
|
2,118 |
|
56.1 |
% |
|
12,065 |
|
5,212 |
|
131.5 |
% |
Net interest income after provision for loan losses |
31,358 |
|
27,783 |
|
12.9 |
% |
|
82,531 |
|
81,241 |
|
1.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest
income |
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposit accounts |
1,201 |
|
1,676 |
|
(28.3 |
)% |
|
3,652 |
|
4,726 |
|
(22.7 |
)% |
Other service charges and fees |
652 |
|
761 |
|
(14.3 |
)% |
|
1,848 |
|
2,155 |
|
(14.2 |
)% |
Wealth and asset management fees |
1,414 |
|
1,238 |
|
14.2 |
% |
|
4,081 |
|
3,482 |
|
17.2 |
% |
Net realized gains on available-for-sale securities |
0 |
|
0 |
|
NA |
|
|
2,190 |
|
148 |
|
1,379.7 |
% |
Net realized and unrealized gains (losses) on trading
securities |
202 |
|
197 |
|
2.5 |
% |
|
(80 |
) |
1,651 |
|
(104.8 |
)% |
Mortgage banking |
1,089 |
|
408 |
|
166.9 |
% |
|
2,090 |
|
1,017 |
|
105.5 |
% |
Bank owned life insurance |
425 |
|
315 |
|
34.9 |
% |
|
1,290 |
|
1,002 |
|
28.7 |
% |
Card processing and interchange income |
1,606 |
|
1,195 |
|
34.4 |
% |
|
4,059 |
|
3,445 |
|
17.8 |
% |
Other |
189 |
|
486 |
|
(61.1 |
)% |
|
961 |
|
1,595 |
|
(39.7 |
)% |
Total non-interest income |
6,778 |
|
6,276 |
|
8.0 |
% |
|
20,091 |
|
19,221 |
|
4.5 |
% |
Non-interest
expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and benefits |
12,508 |
|
11,633 |
|
7.5 |
% |
|
34,578 |
|
34,040 |
|
1.6 |
% |
Net occupancy expense of premises |
2,870 |
|
2,683 |
|
7.0 |
% |
|
8,942 |
|
8,244 |
|
8.5 |
% |
FDIC insurance premiums |
726 |
|
107 |
|
578.5 |
% |
|
1,966 |
|
902 |
|
118.0 |
% |
Core Deposit Intangible amortization |
26 |
|
139 |
|
(81.3 |
)% |
|
178 |
|
470 |
|
(62.1 |
)% |
Card processing and interchange expenses |
804 |
|
749 |
|
7.3 |
% |
|
2,192 |
|
2,180 |
|
0.6 |
% |
Merger costs, prepayment penalties and branch closure costs |
4,673 |
|
0 |
|
N/A |
|
|
5,207 |
|
0 |
|
N/A |
|
Other |
6,761 |
|
6,133 |
|
10.2 |
% |
|
19,246 |
|
18,767 |
|
2.6 |
% |
Total non-interest expenses |
28,368 |
|
21,444 |
|
32.3 |
% |
|
72,309 |
|
64,603 |
|
11.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before
income taxes |
9,768 |
|
12,615 |
|
(22.6 |
)% |
|
30,313 |
|
35,859 |
|
(15.5 |
)% |
Income tax
expense |
1,983 |
|
2,258 |
|
(12.2 |
)% |
|
5,469 |
|
6,262 |
|
(12.7 |
)% |
Net income |
$ |
7,785 |
|
$ |
10,357 |
|
(24.8 |
)% |
|
$ |
24,844 |
|
$ |
29,597 |
|
(16.1 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average diluted
shares outstanding |
16,569,440 |
|
15,145,469 |
|
|
|
|
15,734,847 |
|
15,159,613 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
per share |
$ |
0.47 |
|
$ |
0.68 |
|
(30.9 |
)% |
|
$ |
1.57 |
|
$ |
1.94 |
|
(19.1 |
)% |
Cash dividends per
share |
$ |
0.17 |
|
$ |
0.17 |
|
0.0 |
% |
|
$ |
0.51 |
|
$ |
0.51 |
|
0.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payout ratio |
36 |
% |
25 |
% |
|
|
|
32 |
% |
26 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
(unaudited) |
|
|
|
Three Months Ended |
|
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
|
September 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 |
2019 |
|
|
|
2020 |
2019 |
|
|
Average
Balances |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, net of
unearned income |
$ |
3,283,850 |
|
$ |
2,683,690 |
|
|
|
|
$ |
3,034,990 |
|
$ |
2,584,934 |
|
|
|
Loans, net of unearned income
and PPP (1) |
3,063,362 |
|
2,683,690 |
|
|
|
|
2,902,605 |
|
2,584,934 |
|
|
|
Investment
securities |
576,257 |
|
549,529 |
|
|
|
|
569,783 |
|
537,669 |
|
|
|
Total earning
assets |
4,441,326 |
|
3,238,216 |
|
|
|
|
3,951,669 |
|
3,129,021 |
|
|
|
Total earning assets, net of
PPP and PPPLF (1) |
3,920,422 |
|
3,238,216 |
|
|
|
|
3,641,127 |
|
3,129,021 |
|
|
|
Total assets |
4,715,159 |
|
3,455,422 |
|
|
|
|
4,205,339 |
|
3,345,452 |
|
|
|
Total assets, net of PPP and
PPPLF (1) |
4,194,255 |
|
3,455,422 |
|
|
|
|
3,894,797 |
|
3,345,452 |
|
|
|
Non
interest-bearing deposits |
587,405 |
|
366,424 |
|
|
|
|
479,414 |
|
355,799 |
|
|
|
Interest-bearing
deposits |
3,378,547 |
|
2,424,190 |
|
|
|
|
3,007,889 |
|
2,339,733 |
|
|
|
Common
shareholders' equity |
351,489 |
|
292,910 |
|
|
|
|
331,971 |
|
279,832 |
|
|
|
Tangible common
shareholders' equity (1) |
284,655 |
|
253,836 |
|
|
|
|
283,744 |
|
240,597 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
Yields |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans, net of
unearned income |
4.76 |
% |
5.38 |
% |
|
|
|
4.83 |
% |
5.38 |
% |
|
|
Investment
securities |
2.32 |
% |
2.97 |
% |
|
|
|
2.67 |
% |
3.03 |
% |
|
|
Total earning
assets |
3.84 |
% |
4.97 |
% |
|
|
|
4.13 |
% |
4.97 |
% |
|
|
Total earning assets, net of
PPP-related assets (1) |
4.29 |
% |
4.97 |
% |
|
|
|
4.46 |
% |
4.97 |
% |
|
|
Interest-bearing
deposits |
0.66 |
% |
1.28 |
% |
|
|
|
0.86 |
% |
1.23 |
% |
|
|
Interest-bearing
liabilities |
0.83 |
% |
1.47 |
% |
|
|
|
1.04 |
% |
1.44 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Ratios (annualized) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
assets |
0.66 |
% |
1.19 |
% |
|
|
|
0.79 |
% |
1.18 |
% |
|
|
Return on average assets, net
of merger costs, prepayment penalties and branch closure costs
(1) |
1.10 |
% |
1.19 |
% |
|
|
|
1.00 |
% |
1.18 |
% |
|
|
Return on average
common equity |
8.81 |
% |
14.03 |
% |
|
|
|
10.00 |
% |
14.14 |
% |
|
|
Return on average common
equity, net of merger costs, prepayment penalties and branch
closure costs (1) |
13.12 |
% |
14.03 |
% |
|
|
|
11.74 |
% |
14.14 |
% |
|
|
Return on average
tangible common equity (1) |
10.88 |
% |
16.19 |
% |
|
|
|
11.70 |
% |
16.45 |
% |
|
|
Return on average tangible
common equity, net of merger costs, prepayment penalties and branch
closure costs (1) |
16.20 |
% |
16.19 |
% |
|
|
|
13.73 |
% |
16.45 |
% |
|
|
Net interest
margin, fully tax equivalent basis (1) |
3.15 |
% |
3.72 |
% |
|
|
|
3.25 |
% |
3.75 |
% |
|
|
Net interest margin, fully tax
equivalent basis and net of PPP-related assets and PPP estimated
deposits (1) |
3.50 |
% |
3.72 |
% |
|
|
|
3.50 |
% |
3.75 |
% |
|
|
Efficiency
Ratio |
67.71 |
% |
58.15 |
% |
|
|
|
62.15 |
% |
59.71 |
% |
|
|
Efficiency Ratio,
net of merger costs, prepayment penalties and branch closure costs
(1) |
56.54 |
% |
58.15 |
% |
|
|
|
57.66 |
% |
59.71 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loan
Charge-Offs |
|
|
|
|
|
|
|
|
|
|
|
|
|
CNB Bank net loan
charge-offs |
$ |
719 |
|
$ |
2,866 |
|
|
|
|
$ |
3,560 |
|
$ |
3,341 |
|
|
|
Holiday Financial net loan
charge-offs |
229 |
|
483 |
|
|
|
|
1,091 |
|
1,369 |
|
|
|
Total net loan
charge-offs |
$ |
948 |
|
$ |
3,349 |
|
|
|
|
$ |
4,651 |
|
$ |
4,710 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loan charge-offs / average
loans |
0.11 |
% |
0.50 |
% |
|
|
|
0.20 |
% |
0.24 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
(unaudited) |
|
|
|
|
|
|
September 30, |
December 31, |
September 30, |
|
% change versus |
|
2020 |
2019 |
2019 |
|
12/31/19 |
09/30/19 |
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance
Sheet |
|
|
|
|
|
|
|
|
|
|
|
Loans, net of unearned income |
$ |
3,345,810 |
|
$ |
2,804,035 |
|
$ |
2,749,502 |
|
|
19.3 |
% |
21.7 |
% |
Loans held for sale |
3,668 |
|
930 |
|
1,279 |
|
|
294.4 |
% |
186.8 |
% |
Investment securities |
591,021 |
|
552,122 |
|
538,955 |
|
|
7.0 |
% |
9.7 |
% |
FHLB and other equity
interests |
9,369 |
|
11,354 |
|
12,383 |
|
|
(17.5 |
)% |
(24.3 |
)% |
Other earning assets |
513,851 |
|
150,601 |
|
5,072 |
|
|
241.2 |
% |
10,031.1 |
% |
Total earning assets |
4,463,719 |
|
3,519,042 |
|
3,307,191 |
|
|
26.8 |
% |
35.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses |
(26,887 |
) |
(19,473 |
) |
(20,207 |
) |
|
38.1 |
% |
33.1 |
% |
Goodwill |
44,775 |
|
38,730 |
|
38,730 |
|
|
15.6 |
% |
15.6 |
% |
Core deposit intangible |
595 |
|
160 |
|
257 |
|
|
271.9 |
% |
131.5 |
% |
Other assets |
252,273 |
|
225,200 |
|
215,199 |
|
|
12.0 |
% |
17.2 |
% |
Total assets |
$ |
4,734,475 |
|
$ |
3,763,659 |
|
$ |
3,541,170 |
|
|
25.8 |
% |
33.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Non interest-bearing
deposits |
$ |
602,902 |
|
$ |
382,259 |
|
$ |
370,761 |
|
|
57.7 |
% |
62.6 |
% |
Interest-bearing deposits |
3,419,803 |
|
2,720,068 |
|
2,504,834 |
|
|
25.7 |
% |
36.5 |
% |
Total deposits |
4,022,705 |
|
3,102,327 |
|
2,875,595 |
|
|
29.7 |
% |
39.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings |
169,327 |
|
227,907 |
|
248,101 |
|
|
(25.7 |
)% |
(31.8 |
)% |
Subordinated debt |
70,620 |
|
70,620 |
|
70,620 |
|
|
0.0 |
% |
0.0 |
% |
Other liabilities |
55,920 |
|
57,839 |
|
49,821 |
|
|
(3.3 |
)% |
12.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
0 |
|
0 |
|
0 |
|
|
NA |
|
NA |
|
Additional paid in
capital |
184,991 |
|
99,335 |
|
97,690 |
|
|
86.2 |
% |
89.4 |
% |
Retained earnings |
218,239 |
|
201,503 |
|
193,612 |
|
|
8.3 |
% |
12.7 |
% |
Treasury stock |
(2,966 |
) |
(2,811 |
) |
(2,799 |
) |
|
5.5 |
% |
6.0 |
% |
Accumulated other
comprehensive income (loss) |
15,639 |
|
6,939 |
|
8,530 |
|
|
125.4 |
% |
NA |
|
Total shareholders' equity |
415,903 |
|
304,966 |
|
297,033 |
|
|
36.4 |
% |
40.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders'
equity |
$ |
4,734,475 |
|
$ |
3,763,659 |
|
$ |
3,541,170 |
|
|
25.8 |
% |
33.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Ending shares outstanding |
16,833,090 |
|
15,247,985 |
|
15,195,571 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value per common
share |
$ |
21.28 |
|
$ |
20.00 |
|
$ |
19.55 |
|
|
6.4 |
% |
8.8 |
% |
Tangible book value per common
share (1) |
$ |
18.58 |
|
$ |
17.45 |
|
$ |
16.98 |
|
|
6.5 |
% |
9.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Ratios |
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity /
tangible assets (1) |
6.67 |
% |
7.14 |
% |
7.37 |
% |
|
|
|
|
|
Tier 1 leverage ratio |
8.39 |
% |
7.86 |
% |
7.95 |
% |
|
|
|
|
|
Common equity tier 1
ratio |
11.41 |
% |
9.32 |
% |
9.28 |
% |
|
|
|
|
|
Tier 1 risk based ratio |
12.05 |
% |
10.03 |
% |
10.02 |
% |
|
|
|
|
|
Total risk based ratio |
14.51 |
% |
12.51 |
% |
12.61 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset
Quality |
|
|
|
|
|
|
|
|
|
|
|
Non-accrual loans |
$ |
26,844 |
|
$ |
21,736 |
|
$ |
14,809 |
|
|
|
|
|
|
Loans 90+ days past due and
accruing |
265 |
|
61 |
|
550 |
|
|
|
|
|
|
Total non-performing loans |
27,109 |
|
21,797 |
|
15,359 |
|
|
|
|
|
|
Other real estate owned |
877 |
|
1,633 |
|
1473 |
|
|
|
|
|
|
Total non-performing assets |
$ |
27,986 |
|
$ |
23,430 |
|
$ |
16,832 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans modified in a troubled
debt restructuring (TDR): |
|
|
|
|
|
|
|
|
|
|
|
Performing TDR loans |
$ |
7,329 |
|
$ |
7,359 |
|
$ |
7,746 |
|
|
|
|
|
|
Non-performing TDR loans (2) |
3,641 |
|
2,443 |
|
2,453 |
|
|
|
|
|
|
Total TDR loans |
$ |
10,970 |
|
$ |
9,802 |
|
$ |
10,199 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing assets / Loans
+ OREO |
0.84 |
% |
0.84 |
% |
0.61 |
% |
|
|
|
|
|
Non-performing assets / Total
assets |
0.59 |
% |
0.62 |
% |
0.48 |
% |
|
|
|
|
|
Non-performing assets / Total
assets, net of PPP-related assets (1) |
0.65 |
% |
0.62 |
% |
0.48 |
% |
|
|
|
|
|
Allowance for loan losses /
Loans |
0.80 |
% |
0.69 |
% |
0.73 |
% |
|
|
|
|
|
Allowance for loan losses /
Loans, net of PPP-related loans and deferred PPP processing fees
(1) |
0.86 |
% |
0.69 |
% |
0.73 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) - The Company uses non-GAAP (Generally Accepted Accounting
Principles) financial information in its analysis of the Company’s
performance. The Company’s management believes that these non-GAAP
measures provide a greater understanding of ongoing operations,
enhance comparability of results of operations with prior periods
and show the effects of significant gains and charges in the
periods presented. The Company’s management believes that investors
may use these non-GAAP measures to analyze the Company’s financial
performance without the impact of unusual items or events that may
obscure trends in the Company’s underlying performance. This
non-GAAP data should be considered in addition to results prepared
in accordance with GAAP, and is not a substitute for, or superior
to, GAAP results. For a reconciliation of these and other non-GAAP
measures to their comparable GAAP measures, see pages. A
reconciliation of these non-GAAP financial measures is provided
below (dollars in thousands, except per share data). |
|
|
|
|
(2) - Nonperforming TDR loans are also included in the balance of
non-accrual loans in the previous table. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Reconciliations (1): |
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
(unaudited) |
|
|
|
|
|
|
September 30, |
December 31, |
September 30, |
|
|
|
|
|
|
2020 |
2019 |
2019 |
|
|
|
|
|
Calculation of
tangible book value per share and tangible common equity/tangible
assets: |
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity |
$ |
415,903 |
|
$ |
304,966 |
|
$ |
297,033 |
|
|
|
|
|
|
Less: preferred equity |
57,760 |
|
0 |
|
0 |
|
|
|
|
|
|
Less goodwill |
44,775 |
|
38,730 |
|
38,730 |
|
|
|
|
|
|
Less core deposit intangible |
595 |
|
160 |
|
257 |
|
|
|
|
|
|
Tangible common equity |
$ |
312,773 |
|
$ |
266,076 |
|
$ |
258,046 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
$ |
4,734,475 |
|
$ |
3,763,659 |
|
$ |
3,541,170 |
|
|
|
|
|
|
Less goodwill |
44,775 |
|
38,730 |
|
38,730 |
|
|
|
|
|
|
Less core deposit intangible |
595 |
|
160 |
|
257 |
|
|
|
|
|
|
Tangible assets |
$ |
4,689,105 |
|
$ |
3,724,769 |
|
$ |
3,502,183 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending shares outstanding |
16,833,090 |
|
15,247,985 |
|
15,195,571 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible book value per common
share |
$ |
18.58 |
|
$ |
17.45 |
|
$ |
16.98 |
|
|
|
|
|
|
Tangible common
equity/Tangible assets |
6.67 |
% |
7.14 |
% |
7.37 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calculation of
tangible common equity/tangible assets, net of PPP-related loans
and net of deferred PPP processing fees: |
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity |
$ |
312,773 |
|
$ |
266,076 |
|
$ |
258,046 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible assets |
$ |
4,689,105 |
|
$ |
3,724,769 |
|
$ |
3,502,183 |
|
|
|
|
|
|
Less: PPP-related loans, net
of deferred PPP processing fees |
222,972 |
|
0 |
|
0 |
|
|
|
|
|
|
Adjusted tangible assets |
$ |
4,466,133 |
|
$ |
3,724,769 |
|
$ |
3,502,183 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted tangible common
equity/tangible assets |
7.00 |
% |
7.14 |
% |
7.37 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Reconciliations (1): |
|
(unaudited) |
|
(unaudited) |
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
2020 |
2019 |
|
2020 |
2019 |
Calculation of average
loans, net of unearned income and PPP-related loans, net of PPP
deferred processing fees: |
|
|
|
|
|
Average loans, net of unearned |
$ |
3,283,850 |
|
$ |
2,683,690 |
|
|
$ |
3,034,990 |
|
$ |
2,584,934 |
|
Less: average PPP
loans, net of deferred PPP processing fees |
220,488 |
|
0 |
|
|
132,385 |
|
0 |
|
Adjusted average
loans, net of unearned income and PPP (non-GAAP) |
$ |
3,063,362 |
|
$ |
2,683,690 |
|
|
$ |
2,902,605 |
|
$ |
2,584,934 |
|
|
|
|
|
|
|
Calculation of average total earning assets, net of
PPP-related assets: |
|
|
|
|
|
Average total earning
assets |
$ |
4,441,326 |
|
$ |
3,238,216 |
|
|
$ |
3,951,669 |
|
$ |
3,129,021 |
|
Less: average PPP
loans, net of deferred PPP processing fees |
220,488 |
|
0 |
|
|
132,385 |
|
0 |
|
Less: estimated
average PPP deposits held at the Federal Reserve |
228,938 |
|
0 |
|
|
135,254 |
|
0 |
|
Less: average
PPPLF deposits held at the Federal Reserve |
71,478 |
|
0 |
|
|
42,903 |
|
0 |
|
Adjusted average
total earning assets, net of PPP-related assets (non-GAAP) |
$ |
3,920,422 |
|
$ |
3,238,216 |
|
|
$ |
3,641,127 |
|
$ |
3,129,021 |
|
|
|
|
|
|
|
Calculation of average
total assets, net of PPP-related assets: |
|
|
|
|
|
Average total assets |
$ |
4,715,159 |
|
$ |
3,455,422 |
|
|
$ |
4,205,339 |
|
$ |
3,345,452 |
|
Less: average PPP loans, net
of deferred PPP processing fees |
220,488 |
|
0 |
|
|
132,385 |
|
0 |
|
Less: estimated average PPP
deposits held at the Federal Reserve |
228,938 |
|
0 |
|
|
135,254 |
|
0 |
|
Less: average PPPLF deposits
held at the Federal Reserve |
71,478 |
|
0 |
|
|
42,903 |
|
0 |
|
Adjusted average total assets,
net of PPP-related assets (non-GAAP) |
$ |
4,194,255 |
|
$ |
3,455,422 |
|
|
$ |
3,894,797 |
|
$ |
3,345,452 |
|
|
|
|
|
|
|
Calculation of average
yield on earning assets, net of unearned income, PPP-related assets
and PPP-related processing fees: |
|
|
|
|
|
Investment income (tax
equivalent) |
$ |
3,233 |
|
$ |
4,029 |
|
|
$ |
11,037 |
|
$ |
12,088 |
|
Add: loan income
(tax equivalent) |
39,279 |
|
36,382 |
|
|
109,817 |
|
103,937 |
|
Add: other earning asset
income (tax equivalent) |
180 |
|
37 |
|
|
697 |
|
211 |
|
Less: PPP- related processing
fees |
678 |
|
0 |
|
|
683 |
|
0 |
|
Total income related to
earning assets (tax equivalent) (non-GAAP) |
$ |
42,014 |
|
40,448 |
|
|
$ |
120,868 |
|
$ |
116,236 |
|
|
|
|
|
|
|
Adjusted average
total earning assets, net of PPP-related assets (non-GAAP) |
$ |
3,920,422 |
|
$ |
3,238,216 |
|
|
$ |
3,641,127 |
|
$ |
3,129,021 |
|
Less: average mark to market
adjustment on investments (non-GAAP) |
21,859 |
|
10,770 |
|
|
18,589 |
|
3,446 |
|
Adjusted average total earning
assets, net of market to market, PPP-related assets (non-GAAP) |
$ |
3,898,563 |
|
$ |
3,227,446 |
|
|
$ |
3,622,538 |
|
3,125,575 |
|
Adjusted average yield on
earning assets, net of unearned income, PPP-related assets and
PPP-related processing fees (non-GAAP) (annualized) |
4.29 |
% |
4.97 |
% |
|
4.46 |
% |
4.97 |
% |
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Reconciliations (1): |
|
(unaudited) |
|
(unaudited) |
|
September 30, |
December 31, |
September 30, |
|
2020 |
2019 |
2019 |
|
|
|
|
Calculation of
non-performing assets / Total assets, net of PPP-related
assets: |
|
|
|
Non-performing assets |
$ |
27,986 |
|
$ |
23,430 |
|
$ |
16,832 |
|
|
|
|
|
Total assets |
$ |
4,734,475 |
|
$ |
3,763,659 |
|
$ |
3,541,170 |
|
Less: PPP-related loans, net
of deferred PPP processing fees |
222,972 |
|
0 |
|
0 |
|
Less: estimated PPP deposits
held at the Federal Reserve |
231,484 |
|
0 |
|
0 |
|
Adjusted total assets, net of
PPP and PPPLF (non-GAAP) |
$ |
4,280,019 |
|
$ |
3,763,659 |
|
$ |
3,541,170 |
|
|
|
|
|
Adjusted non-performing assets
/ total assets, net of PPP-related assets (non-GAAP) |
0.65 |
% |
0.62 |
% |
0.48 |
% |
|
|
|
|
Calculation of
allowance / loans, net of PPP-related loans and deferred PPP
processing fees: |
|
|
|
Total allowance for loan
losses |
$ |
26,887 |
|
$ |
19,473 |
|
$ |
20,207 |
|
|
|
|
|
Total loans net of unearned
income |
$ |
3,345,810 |
|
$ |
2,804,035 |
|
$ |
2,749,502 |
|
Less: PPP-related loans, net
of deferred PPP processing fees |
222,972 |
|
0 |
|
0 |
|
Adjusted total loans, net of
unearned income, PPP-related loans and deferred PPP
processing fees (non-GAAP) |
$ |
3,122,838 |
|
$ |
2,804,035 |
|
$ |
2,749,502 |
|
|
|
|
|
Adjusted allowance / loans,
net of PPP-related loans deferred PPP processing fees
(non-GAAP) |
0.86 |
% |
0.69 |
% |
0.73 |
% |
|
|
|
|
|
|
|
|
(unaudited) |
|
(unaudited) |
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
2020 |
2019 |
|
2020 |
2019 |
Calculation of net
interest margin (fully tax equivalent basis): |
|
|
|
|
|
Interest income (fully tax equivalent basis) (non-GAAP) |
$ |
42,692 |
|
$ |
40,448 |
|
|
$ |
121,551 |
|
$ |
116,236 |
|
Interest expense (fully tax
equivalent basis) (non-GAAP) |
7,692 |
|
10,184 |
|
|
25,923 |
|
28,667 |
|
Net interest
income (fully tax equivalent basis (non-GAAP) |
$ |
35,000 |
|
$ |
30,264 |
|
|
$ |
95,628 |
|
$ |
87,569 |
|
|
|
|
|
|
|
Average total earning assets |
$ |
4,441,326 |
|
$ |
3,238,216 |
|
|
$ |
3,951,669 |
|
$ |
3,129,021 |
|
Less: average mark
to market adjustment on investments |
21,859 |
|
10,770 |
|
|
18,589 |
|
3,446 |
|
Adjusted average
total earning assets, net of mark to market (non-GAAP) |
$ |
4,419,467 |
|
$ |
3,227,446 |
|
|
$ |
3,933,080 |
|
$ |
3,125,575 |
|
|
|
|
|
|
|
Net interest margin, fully tax
equivalent basis (non-GAAP) (annualized) |
3.15 |
% |
3.72 |
% |
|
3.25 |
% |
3.75 |
% |
|
|
|
|
|
|
Calculation of net
interest margin (fully tax equivalent basis), net of PPP-related
assets and PPP processing fees: |
|
|
|
|
|
Net interest income (fully tax
equivalent basis (non-GAAP) |
$ |
35,000 |
|
$ |
30,264 |
|
|
$ |
95,628 |
|
$ |
87,569 |
|
Less: Recognized PPP
processing fees |
678 |
|
0 |
|
|
683 |
|
0 |
|
Adjusted interest income
(fully tax equivalent basis), net of PPP processing fees
(non-GAAP) |
$ |
34,322 |
|
$ |
30,264 |
|
|
$ |
94,945 |
|
$ |
87,569 |
|
Adjusted average total earning
assets, net of market to market, PPP-related assets (non-GAAP) |
$ |
3,898,563 |
|
$ |
3,227,446 |
|
|
$ |
3,622,538 |
|
$ |
3,125,575 |
|
|
|
|
|
|
|
Net interest margin, fully tax
equivalent basis, net of PPP-related assets and PPP processing fees
(non-GAAP) (annualized) |
3.50 |
% |
3.72 |
% |
|
3.50 |
% |
3.75 |
% |
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Reconciliations (1): |
|
|
|
|
|
|
|
(unaudited) |
|
(unaudited) |
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
Calculation of
adjusted efficiency ratio, net of merger costs, prepayment
penalties and branch closure costs: |
|
|
|
|
|
|
2020 |
2019 |
|
2020 |
2019 |
Non-interest expense |
$ |
28,368 |
|
$ |
21,444 |
|
|
$ |
72,309 |
|
$ |
64,603 |
|
Less: core deposit
intangible amortization |
26 |
|
139 |
|
|
178 |
|
470 |
|
Less: merger
costs, prepayment penalties and branch closure costs |
4,673 |
|
0 |
|
|
5,207 |
|
0 |
|
Adjusted
non-interest expense (non-GAAP) |
$ |
23,669 |
|
$ |
21,305 |
|
|
$ |
66,924 |
|
$ |
64,133 |
|
|
|
|
|
|
|
Non-interest
income |
$ |
6,778 |
|
$ |
6,276 |
|
|
$ |
20,091 |
|
$ |
19,221 |
|
|
|
|
|
|
|
Net interest
income |
$ |
34,664 |
|
$ |
29,901 |
|
|
$ |
94,596 |
|
$ |
86,453 |
|
Less: tax exempt
investment and loan income, net of TEFRA (non-GAAP) |
1,375 |
|
1,733 |
|
|
4,351 |
|
5,058 |
|
Add: tax exempt
investment and loan income (non-GAAP) (tax-equivalent) |
1,792 |
|
2,194 |
|
|
5,730 |
|
6,797 |
|
Adjusted net
interest income (non-GAAP) |
35,081 |
|
30,362 |
|
|
95,975 |
|
88,192 |
|
Adjusted net
revenue (non-GAAP) (tax-equivalent) |
$ |
41,859 |
|
$ |
36,638 |
|
|
$ |
116,066 |
|
$ |
107,413 |
|
Adjusted
efficiency ratio, net of merger costs, prepayment penalties and
branch closure costs |
56.54 |
% |
58.15 |
% |
|
57.66 |
% |
59.71 |
% |
|
|
|
|
|
|
Calculation of
adjusted return on average total assets, net of merger costs,
prepayment penalties, branch closure costs and PPP-related
assets: |
|
|
|
|
|
Net Income |
$ |
7,785 |
|
$ |
10,357 |
|
|
$ |
24,844 |
|
$ |
29,597 |
|
Add: merger costs, prepayment
penalties and branch closure costs (net of tax) |
3,803 |
|
0 |
|
|
4,322 |
|
0 |
|
Adjusted net income
(non-GAAP)(net of tax) |
$ |
11,588 |
|
$ |
10,357 |
|
|
$ |
29,166 |
|
$ |
29,597 |
|
Average total
assets |
$ |
4,715,159 |
|
$ |
3,455,422 |
|
|
$ |
4,205,339 |
|
$ |
3,345,452 |
|
Less: average PPP loans, net
of deferred PPP processing fees |
220,488 |
|
0 |
|
|
132,385 |
|
0 |
|
Less: average estimated PPP
related deposits |
228,938 |
|
0 |
|
|
135,254 |
|
0 |
|
Less: average PPPLF excess
funds held at the Federal Reserve |
71,478 |
|
0 |
|
|
42,903 |
|
0 |
|
Adjusted average total assets
(non-GAAP) |
$ |
4,194,255 |
|
$ |
3,455,422 |
|
|
$ |
3,894,797 |
|
$ |
3,345,452 |
|
Adjusted return on
average total assets, net of merger costs, prepayment penalties,
branch closure costs and PPP-related assets
(non-GAAP)(annualized) |
1.10 |
% |
1.19 |
% |
|
1.00 |
% |
1.18 |
% |
|
|
|
|
|
|
Calculation of
adjusted return on average equity, net of merger costs, prepayment
penalties and branch closure costs: |
|
|
|
|
|
Net Income |
$ |
7,785 |
|
$ |
10,357 |
|
|
$ |
24,844 |
|
$ |
29,597 |
|
Add: merger costs, prepayment
penalties and branch closure costs (net of tax) |
3,803 |
|
0 |
|
|
4,322 |
|
0 |
|
Adjusted net income
(non-GAAP)(net of tax) |
$ |
11,588 |
|
$ |
10,357 |
|
|
$ |
29,166 |
|
$ |
29,597 |
|
Average
shareholders' equity |
$ |
351,489 |
|
$ |
292,910 |
|
|
$ |
331,971 |
|
$ |
279,832 |
|
Adjusted return on
average equity, net of merger costs, prepayment penalties and
branch closure costs (non-GAAP)(annualized) |
13.12 |
% |
14.03 |
% |
|
11.74 |
% |
14.14 |
% |
|
|
|
|
|
|
Calculation of
adjusted return on average tangible equity, net of merger costs,
prepayment penalties and branch closure costs: |
|
|
|
|
|
Net Income |
$ |
7,785 |
|
$ |
10,357 |
|
|
$ |
24,844 |
|
$ |
29,597 |
|
Add: merger costs, prepayment
penalties and branch closure costs (net of tax) |
3,803 |
|
0 |
|
|
4,322 |
|
0 |
|
Adjusted net income
(non-GAAP)(net of tax) |
$ |
11,588 |
|
$ |
10,357 |
|
|
$ |
29,166 |
|
$ |
29,597 |
|
Average tangible
shareholders' equity |
$ |
284,655 |
|
$ |
253,836 |
|
|
$ |
283,744 |
|
$ |
240,597 |
|
Adjusted return on
average tangible equity, net of merger costs, prepayment penalties
and branch closure costs (non-GAAP)(annualized) |
16.20 |
% |
16.19 |
% |
|
13.73 |
% |
16.45 |
% |
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Reconciliations (1): |
|
|
|
|
|
|
|
(unaudited) |
|
(unaudited) |
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
Calculation of
adjusted earnings per common share, net of merger costs, prepayment
penalties and branch closure costs: |
|
|
|
|
|
|
2020 |
2019 |
|
2020 |
2019 |
Net earnings allocated to common stock |
$ |
7,761 |
|
$ |
10,320 |
|
|
$ |
24,762 |
|
$ |
29,483 |
|
Add: Merger costs,
prepayment penalties and branch closure costs, after-tax allocated
to common stock |
3,793 |
|
0 |
|
|
4,308 |
|
0 |
|
Adjusted net
earnings allocated to common stock (non-GAAP) |
$ |
11,554 |
|
$ |
10,320 |
|
|
$ |
29,070 |
|
$ |
29,483 |
|
|
|
|
|
|
|
Weighted average
common shares outstanding |
16,613 |
|
15,197 |
|
|
15,785 |
|
15,218 |
|
Less: Average participating
shares |
47 |
|
51 |
|
|
50 |
|
58 |
|
Add: Dilutive shares |
0 |
|
0 |
|
|
0 |
|
0 |
|
Weighted average
shares and dilutive potential common shares |
16,566 |
|
15,146 |
|
|
15,735 |
|
15,160 |
|
|
|
|
|
|
|
Adjusted diluted
earnings per common share, net of merger costs, prepayment
penalties and branch closure costs |
$ |
0.70 |
|
$ |
0.68 |
|
|
$ |
1.85 |
|
$ |
1.94 |
|
|
|
|
|
|
|
Calculation of income
before provision and income tax expense: |
|
|
|
|
|
Net income |
$ |
7,785 |
|
$ |
10,357 |
|
|
$ |
24,844 |
|
$ |
29,597 |
|
Add: Provision expense |
3,306 |
|
2,118 |
|
|
12,065 |
|
5,212 |
|
Add: Income tax expense |
1,983 |
|
2,258 |
|
|
5,469 |
|
6,262 |
|
Net income before provision
and income tax expense (non-GAAP) |
$ |
13,074 |
|
$ |
14,733 |
|
|
$ |
42,378 |
|
$ |
41,071 |
|
|
|
|
|
|
|
Calculation of income
before provision, income tax, merger costs, prepayment penalties
and branch closure costs: |
|
|
|
|
|
Net income before provision
and income tax expense (non-GAAP) |
$ |
13,074 |
|
$ |
14,733 |
|
|
$ |
42,378 |
|
$ |
41,071 |
|
Add: Merger costs, prepayment
penalties and branch closure costs |
4,673 |
|
0 |
|
|
5,207 |
|
0 |
|
Net income before provision,
income tax, merger costs, prepayment penalties and branch closure
costs (non-GAAP) |
$ |
17,747 |
|
$ |
14,733 |
|
|
$ |
47,585 |
|
$ |
41,071 |
|
|
|
|
|
|
|
Calculation of
non-interest expenses excluding merger costs, prepayment penalties
and branch closure costs: |
|
|
|
|
|
Non-interest expense |
$ |
28,368 |
|
$ |
21,444 |
|
|
$ |
72,309 |
|
$ |
64,603 |
|
Less: Merger costs, prepayment
penalties and branch closure costs |
4,673 |
|
0 |
|
|
5,207 |
|
0 |
|
Non-interest expense excluding
merger costs, prepayment penalties and branch closure costs
(non-GAAP) |
$ |
23,695 |
|
$ |
21,444 |
|
|
$ |
67,102 |
|
$ |
64,603 |
|
|
|
|
|
|
|
Contact: Tito L. Lima
Treasurer
(814) 765-9621
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