Market Overview

Cadence Bancorporation Reports Second Quarter 2017 Results

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"We are pleased to report our second quarter results. The quarter
reflected record net income, driven by continued organic growth and an
ongoing focus on efficiency and profitability. We have seen meaningful
customer acquisition and development throughout the company, as well as
positive movement in our margins and continued stabilization of credit.
Our bankers have focused on core deposit growth, and generated a notable
improvement in deposit mix this quarter. We feel good about the
quarter's results, and our team is optimistic and energized about our
progress," said Paul Murphy, Cadence's Chairman and Chief Executive
Officer.

  • Net income for the second quarter of 2017 was $29.0 million compared
    to $14.8 million in the second quarter of 2016, a 95% increase, and an
    11% increase compared to first quarter of 2017 net income of $26.1
    million.
  • On a per-share basis, net income was $0.35 per diluted common share
    for the second quarter of 2017, compared to $0.20 in the second
    quarter a year earlier and $0.35 in the first quarter of 2017.
    Earnings per share for the period ending June 30, 2017 reflect
    increases in net income offset by the $0.03 dilutive effect of the
    common stock offering in the second quarter of 2017.
  • Annualized returns on average assets, common equity and tangible
    common equity(1) for the second quarter of 2017 were 1.19%,
    9.29% and 12.63%, respectively, as compared to 0.65%, 5.47% and 7.90%,
    respectively, for the second quarter of 2016, and 1.10%, 9.71% and
    13.96%, respectively, for the first quarter of 2017.
  • Net interest margin increased 39 basis points to 3.71% in the second
    quarter of 2017 from 3.32% for the second quarter of 2016, and
    increased 25 basis points from 3.46% in the first quarter of 2017.
  • Total assets were $9.8 billion at June 30, 2017, an increase of $589.8
    million, or 6%, as compared to $9.2 billion as of June 30, 2016, and
    up $90.6 million, or 1%, from $9.7 billion as of March 31, 2017.
  • Loans were $7.7 billion at June 30, 2017, an increase of $554.6
    million, or 8%, as compared to $7.2 billion at June 30, 2016, and up
    $155.1 million, or 2%, from $7.6 billion as of March 31, 2017.
  • Core deposits (total deposits excluding brokered) of $7.2 billion at
    June 30, 2017 grew $813.7 million, or 13%, from June 30, 2016, and
    were $410.1 million higher, or 6%, from March 31, 2017.

Period End Balance Sheet:

Cadence continued to enjoy solid growth, completing the second quarter
of 2017 with total assets of $9.8 billion, an increase of $589.8
million, or 6.4%, from June 30, 2016, and an increase of $90.6 million,
or 0.9%, from March 31, 2017.

Loans at June 30, 2017 were $7.7 billion, an increase of $554.6 million,
or 7.7%, compared with $7.2 billion at June 30, 2016, reflecting growth
primarily in our commercial and residential loan portfolios. Linked
quarter loans increased $155.1 million, or 2.1%, from $7.6 billion at
March 31, 2017, reflecting growth in specialized, general commercial &
industrial, and consumer mortgage lending. Organic loan production as
well as our pipeline remain robust, with payoffs and paydowns impacting
net growth in the quarter.

Cadence's energy lending portfolio continued to demonstrate improving
credit quality, with balances totaling $902.3 million, or 11.7%, of
total loans at June 30, 2017, as compared to $903.9 million, or 11.9%,
of total loans at March 31, 2017. At June 30, 2017, Midstream continued
to make up the largest component of energy loans at 54.7%, followed by
Exploration and Production at 35.7% and Energy Services at 9.6%.

Core deposits were $7.2 billion at June 30, 2017, an increase of 12.8%,
or $813.7 million, compared to June 30, 2016, and an increase of 6.1%,
or $410.2 million, compared to March 31, 2017. The increases in core
deposits were a result of expansion of commercial deposit relationships
and treasury management services impacting noninterest bearing and
interest bearing deposits, as well as retail time deposit growth. As of
June 30, 2017, brokered deposits totaled $0.7 billion (9.4% of total
deposits) as compared to June 30, 2016 at $1.3 billion (16.9% of total
deposits) and March 31, 2017 at $1.1 billion (13.6% of total deposits).
Total deposits at June 30, 2017 were $7.9 billion, an increase of $257.7
million, or 3.4%, compared with $7.7 billion at June 30, 2016,
reflecting the growth in core deposits offset by $556.0 million, or
42.8%, reduction in brokered deposits. Linked quarter total deposits
increased $88.7 million, or 1.1%, from $7.8 billion at March 31, 2017,
due primarily to the core deposit growth supporting proactive reductions
in brokered deposits during the quarter, with brokered deposits
declining $321.5 million, or 30.2%, linked quarter. Wholesale funds to
total assets of 9.4% at June 30, 2017 improved meaningfully during the
quarter as compared to 14.1% and 14.7% at June 30, 2016 and March 31,
2017, respectively.

On April 13, 2017, we executed on our initial public offering, issuing
8.6 million shares with net proceeds adding $155.7 million to tangible
common equity during the quarter, and increasing average diluted shares
to 82.0 million for the second quarter of 2017, as compared to 75.3
million and 75.7 million in the second quarter of 2016 and first quarter
of 2017, respectively.

Results of Operations for the Quarter:

Net income for the second quarter of 2017 was $29.0 million, up 95.2%
from net income of $14.8 million in the second quarter of 2016, and up
10.9% from net income of $26.1 million in the first quarter of 2017. The
year-over-year net income improvement was driven by continued earning
asset and revenue growth, margin improvement, flat expenses, and
improved credit costs. The increase in net income on a linked quarter
basis was due primarily to organic growth, a favorable impact of the
recent short-term rate increases on our net interest margin, and
favorable recovery results in acquired-credit-impaired loans. Pre-tax,
pre-provision earnings(1) were $49.2 million for the second
quarter of 2017 as compared to $44.5 million in the first quarter of
2017. On a per-share basis, net income was $0.35 per diluted common
share for the second quarter of 2017, compared to $0.20 a year earlier
and $0.35 for the linked quarter. Earnings per share for the period
ending June 30, 2017 reflect increases in net income offset by the $0.03
dilutive effect of the common stock offering in the second quarter of
2017. The second quarter of 2017 annualized returns on average assets,
common equity and tangible common equity(1) were 1.19%, 9.29%
and 12.63%, respectively, as compared to 0.65%, 5.47% and 7.90%,
respectively, for the second quarter of 2016, and 1.10%, 9.71% and
13.96% for the first quarter of 2017.

Net interest margin for the second quarter of 2017 was 3.71% as compared
to 3.32% for the second quarter of 2016 and 3.46% for the first quarter
of 2017. The increase resulted from deposit costs lagging the change in
earning asset yields due to short-term rate increases during the
periods, the impact of decreased interest-sensitive brokered deposits
and increased free-funding sources during the periods as well as
increased loan yields in both the originated and acquired loan
portfolios. Earning asset yields for the second quarter of 2017 were
4.45%, up from 3.97% in the second quarter of 2016 and 4.13% in the
first quarter of 2017. Total cost of deposits for the second quarter of
2017 was 59 basis points versus 46 basis points in the prior year's
quarter and 49 basis points in the linked quarter. Total cost of funds
for the second quarter of 2017 was 81 basis points versus 69 basis
points in the prior year's quarter and 71 basis points in the linked
quarter.

Net interest income for the second quarter of 2017 was $82.4 million as
compared to $69.3 million during the same period in 2016, an increase of
$13.1 million, or 19.0%. Linked quarter, net interest income increased
$7.6 million, or 10.2%, from $74.8 million in the first quarter of 2017.
The increases were driven by both solid loan growth during the periods
and meaningful increases in the yield on loans, with loan yields
increasing to 4.74% for the second quarter of 2017 versus 4.24% for the
second quarter of 2016 and 4.34% for the first quarter of 2017. Yield on
loans, excluding acquired-impaired loans, were 4.36%, 3.93% and 4.14%
for the second quarter of 2017, second quarter of 2016 and first quarter
of 2017, respectively, demonstrating the interest-sensitivity inherent
in the loan portfolio. Interest income on loans, excluding
acquired-impaired loans, was $79.9 million for the second quarter of
2017, an increase of $13.4 million, or 20.3%, from the second quarter of
2016, and an increase of $6.0 million or 8.2% from the first quarter of
2017. Total accretion for acquired credit-impaired loans was $10.6
million in the second quarter of 2017, up $1.3 million from the second
quarter of 2016 and up $3.6 million from the first quarter of 2017. The
increased accretion in the second quarter of 2017 was due to accelerated
timing of certain payoffs and paydowns in acquired loans.

Noninterest income for the second quarter of 2017 was $23.0 million as
compared to $23.1 million during the same period in 2016, a decrease of
$0.1 million, or 0.5%. The year-over-year change included an increase in
service fees and revenue to $22.1 million at June 30, 2017 versus $20.0
million for June 30, 2016 reflecting broad based business line growth
during the year, partially offset by lower securities gains and other
revenues in the second quarter of 2017. Linked quarter, noninterest
income decreased $1.1 million or 4.6% from $24.1 million for the first
quarter of 2017. The quarter's change included growth in mortgage
banking fees, offset primarily by the impact of first quarter 2017
seasonally higher trust and insurance revenues in the second quarter of
2017. Assets under management grew $187.5 million, or 3.5%, during the
quarter to $5.6 billion.

Noninterest expense for the second quarter of 2017 was $56.1 million as
compared to $55.9 million during the same period in 2016, an increase of
$0.2 million, or 0.5%. Salaries and employee benefits expense of $34.7
million in the second quarter of 2017 increased $1.6 million, or 5.0%,
compared to the second quarter of 2016, including a $1.0 million
increase in certain long-term incentive plan costs related to the
increase in our common stock value associated with our becoming a public
company. These costs were offset by lower FDIC insurance assessments,
lower intangible asset scheduled amortization and other expenses as a
result of targeted expense management efforts. Linked quarter,
noninterest expenses increased $1.8 million, or 3.3%, from $54.3 million
for the first quarter of 2017, including the $1.0 million in incremental
incentive compensation expense associated with the second quarter
valuation increase of Cadence Bancorporation associated with its IPO.

The efficiency ratio(1) for the second quarter of 2017 was
53.27%, an improvement relative to both the second quarter of 2016 and
first quarter of 2017 results of 60.49% and 54.95%, respectively,
reflecting ongoing focus on efficiency and revenue growth.

Asset Quality:

Nonperforming assets (NPAs) declined during the quarter, totaling $141.4
million, or 1.8%, of total loans, OREO and other NPAs at June 30, 2017,
down from $171.0 million, or 2.3%, at March 31, 2017, and down from
$195.5 million, or 2.7%, at June 30, 2016. The decline as compared to
the prior year is due primarily to resolutions, paydowns and general
improvement of energy credits. At June 30, 2017, $109.4 million, or
77.4%, of the nonperforming assets ("NPAs") related to the energy
portfolio, down from $135.0 million at March 31, 2017. Additionally, of
the $93.0 million in energy nonperforming loans included in total
nonperforming assets at June 30, 2017, over 90% were paying in
accordance with contractual terms.

The allowance for credit losses ("ACL") was $93.2 million, or 1.21% of
total loans, at June 30, 2017, as compared to $87.1 million, or 1.22% of
total loans, at June 30, 2016 and $88.3 million, or 1.17% of total
loans, at March 31, 2017. At June 30, 2017, the allowance included
reserves for the energy portfolio of 3.15% as compared to 2.80% at June
30, 2016 and 3.44% at March 31, 2017.

"With the momentum we have achieved year-to-date, we look forward to and
are positive about the outlook for Cadence," stated Mr. Murphy.

Supplementary Financial Tables:

Supplementary Financial Tables are included in this release following
the customary disclosure information.

Second Quarter 2017 Earnings Conference Call:

Cadence Bancorporation executive management will host a conference call
to discuss second quarter 2017 results on Thursday, July 27, 2017, at
10.00 a.m. CT / 11:00 a.m. ET. Slides to be presented by management on
the conference call can be viewed by visiting www.cadencebank.com,
clicking through the following links: "Investor Relations", "Events &
Presentations" and "Event Calendar".

Conference Call Access:

To access the conference call, please dial one of the following numbers
approximately 10-15 minutes prior to the start time to allow time for
registration, and use the Elite Entry Number provided below.

                   
Dial in (toll free): 1-888-317-6003
International dial in: 1-412-317-6061
Canada (toll free): 1-866-284-3684
Participant Elite Entry Number: 4925342
 

For those unable to participate in the live presentation, a replay will
be available through August 10, 2017. To access the replay, please use
the following numbers:

                                       
US Toll Free: 1-877-344-7529
International Toll: 1-412-317-0088
Canada Toll Free: 1-855-669-9658
Replay Access Code: 10110449
End Date: August 10, 2017
 

Webcast Access:

A webcast of the conference call as well as the slides to be presented
by management can be viewed by visiting www.cadencebank.com,
clicking through the following links: "Investor Relations", "Events &
Presentations" and "Event Calendar".

About Cadence Bancorporation

Cadence Bancorporation (NYSE:CADE) is a $9.8 billion in assets regional
bank holding company headquartered in Houston, Texas. Through its
affiliates, Cadence operates 65 locations in Alabama, Florida,
Mississippi, Tennessee and Texas, and provides corporations,
middle-market companies, small businesses and consumers with a full
range of innovative banking and financial solutions. Services and
products include commercial and business banking, treasury management,
specialized lending, commercial real estate, foreign exchange, wealth
management, investment and trust services, financial planning,
retirement plan management, business and personal insurance, consumer
banking, consumer loans, mortgages, home equity lines and loans, and
credit cards. Clients have access to leading-edge online and mobile
solutions, interactive teller machines, and 55,000 ATMs. The Cadence
team of 1,200 associates is committed to exceeding customer expectations
and helping their clients succeed financially. Cadence Bank, N.A.,
Cadence Insurance, and Linscomb & Williams are direct or indirect
subsidiaries of Cadence Bancorporation.

Cautionary Statement Regarding Forward-Looking Information

This communication contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements reflect our current views with respect to,
among other things, future events and our results of operations,
financial condition and financial performance. These statements are
often, but not always, made through the use of words or phrases such as
"may," "should," "could," "predict," "potential," "believe," "will
likely result," "expect," "continue," "will," "anticipate," "seek,"
"estimate," "intend," "plan," "projection," "would" and "outlook," or
the negative version of those words or other comparable words of a
future or forward-looking nature. These forward-looking statements are
not historical facts, and are based on current expectations, estimates
and projections about our industry, management's beliefs and certain
assumptions made by management, many of which, by their nature, are
inherently uncertain and beyond our control. Accordingly, we caution you
that any such forward-looking statements are not guarantees of future
performance and are subject to risks, assumptions and uncertainties that
are difficult to predict. Although we believe that the expectations
reflected in these forward-looking statements are reasonable as of the
date made, actual results may prove to be materially different from the
results expressed or implied by the forward-looking statements. Such
factors include, without limitation, the "Risk Factors" referenced in
our Registration Statement on Form S-1 filed with the Securities and
Exchange Commission (SEC), other risks and uncertainties listed from
time to time in our reports and documents filed with the SEC, including
our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, and
the following factors: business and economic conditions generally and in
the financial services industry, nationally and within our current and
future geographic market areas; economic, market, operational,
liquidity, credit and interest rate risks associated with our business;
lack of seasoning in our loan portfolio; deteriorating asset quality and
higher loan charge-offs; the laws and regulations applicable to our
business; our ability to achieve organic loan and deposit growth and the
composition of such growth; increased competition in the financial
services industry, nationally, regionally or locally; our ability to
maintain our historical earnings trends; our ability to raise additional
capital to implement our business plan; material weaknesses in our
internal control over financial reporting; systems failures or
interruptions involving our information technology and
telecommunications systems or third-party servicers; the composition of
our management team and our ability to attract and retain key personnel;
the fiscal position of the U.S. federal government and the soundness of
other financial institutions; the composition of our loan portfolio,
including the identify of our borrowers and the concentration of loans
in energy-related industries and in our specialized industries; the
portion of our loan portfolio that is comprised of participations and
shared national credits; and the amount of nonperforming and classified
assets we hold. Cadence can give no assurance that any goal or plan or
expectation set forth in forward-looking statements can be achieved and
readers are cautioned not to place undue reliance on such statements.
The forward-looking statements are made as of the date of this
communication, and Cadence does not intend, and assumes no obligation,
to update any forward-looking statement to reflect events or
circumstances after the date on which the statement is made or to
reflect the occurrence of unanticipated events or circumstances, except
as required by applicable law.

About Non-GAAP Financial Measures

Certain of the financial measures and ratios we present, including
"efficiency ratio," "adjusted noninterest expenses," "adjusted operating
revenue," "tangible common equity ratio," "tangible book value per
share" and "return on average tangible common equity" and "pre-tax,
pre-provision net earnings," are supplemental measures that are not
required by, or are not presented in accordance with, U.S. generally
accepted accounting principles (GAAP). We refer to these financial
measures and ratios as "non-GAAP financial measures." We consider the
use of select non-GAAP financial measures and ratios to be useful for
financial and operational decision making and useful in evaluating
period-to-period comparisons. We believe that these non-GAAP financial
measures provide meaningful supplemental information regarding our
performance by excluding certain expenditures or assets that we believe
are not indicative of our primary business operating results or by
presenting certain metrics on a fully taxable equivalent basis. We
believe that management and investors benefit from referring to these
non-GAAP financial measures in assessing our performance and when
planning, forecasting, analyzing and comparing past, present and future
periods.

These non-GAAP financial measures should not be considered a substitute
for financial information presented in accordance with GAAP and you
should not rely on non-GAAP financial measures alone as measures of our
performance. The non-GAAP financial measures we present may differ from
non-GAAP financial measures used by our peers or other companies. We
compensate for these limitations by providing the equivalent GAAP
measures whenever we present the non-GAAP financial measures and by
including a reconciliation of the impact of the components adjusted for
in the non-GAAP financial measure so that both measures and the
individual components may be considered when analyzing our performance.
A reconciliation of non-GAAP financial measures to the comparable GAAP
financial measures is included at the end of the financial statement
tables (Table 7).

(1) Considered a non-GAAP financial measure. See Table 7
"Reconciliation of Non-GAAP Financial Measures" for a reconciliation of
our non-GAAP measures to the most directly comparable GAAP financial
measure.

   

Table 1 - Selected Financial Data

 
As of and for the Three Months Ended
(In thousands, except per share data)  

June 30,
2017

   

March 31,
2017

   

December 31,
2016

 

September 30,
2016

   

June 30,
2016

Statement of Operations Data:      
Interest income $ 99,375 $ 89,619 $ 87,068 $ 84,654 $ 82,921
Interest expense   16,991   14,861   14,570   14,228   13,672
Net interest income 82,384 74,758 72,498 70,426 69,249
Provision for credit losses   6,701   5,786   (5,222 )   29,627   14,471
Net interest income after provision 75,683 68,972 77,720 40,799 54,778
Noninterest income
- service fees and revenue 22,144 22,489 20,605 20,878 20,048
- other noninterest income 845 1,616 1,755 1,913 3,058
Noninterest expense   56,134   54,321   55,394   54,876   55,868
Income before income taxes 42,538 38,756 44,686 8,714 22,016
Income tax expense   13,570   12,639   15,701   2,107   7,175
Net income $ 28,968 $ 26,117 $ 28,985 $ 6,607 $ 14,841
Period-End Balance Sheet Data:

Investment securities, available-for-sale

$ 1,079,935 $ 1,116,280 $ 1,139,347 $ 1,031,319 $ 980,526
Total loans, net of unearned income 7,716,621 7,561,472 7,432,711 7,207,313 7,162,027
Allowance for credit losses 93,215 88,304 82,268 91,169 87,147
Total assets 9,811,557 9,720,937 9,530,888 9,444,010 9,221,807
Total deposits 7,930,383 7,841,710 8,016,749 7,917,289 7,672,657
Noninterest-bearing deposits 1,857,809 1,871,514 1,840,955 1,642,480 1,668,179
Interest-bearing deposits 6,072,574 5,970,196 6,175,794 6,274,809 6,004,478
Borrowings and subordinated debentures 499,265 682,567 331,712 332,787 334,192
Total shareholders' equity 1,304,054 1,105,976 1,080,498 1,111,783 1,116,076
Average Balance Sheet Data:

Investment securities, available-for-sale

$ 1,099,307 $ 1,125,174 $ 1,060,821 $ 1,110,836 977,597
Total loans, net of unearned income 7,650,048 7,551,173 7,375,446 7,225,365 7,180,357
Allowance for credit losses 90,366 82,258 95,042 93,132 91,211
Total assets 9,786,355 9,670,593 9,596,574 9,400,145 9,167,153
Total deposits 7,940,421 8,025,068 8,425,326 7,843,582 7,496,120
Noninterest-bearing deposits 1,845,447 1,857,657 1,784,422 1,697,633 1,655,761
Interest-bearing deposits 6,094,974 6,167,411 6,640,904 6,145,949 5,840,359
Borrowings and subordinated debentures 510,373 474,976 500,045 368,192 512,837
Total shareholders' equity 1,251,217 1,090,905 1,094,182 1,118,603 1,092,034
   

Table 1 (Continued) - Selected Financial Data

 
As of and for the Three Months Ended
(In thousands, except per share data)

June 30,
2017

 

March 31,
2017

 

December 31,
2016

 

September 30,
2016

 

June 30,
2016

Per Share Data:(3)  
Earnings
Basic $ 0.35 $ 0.35 $ 0.39 $ 0.09 $ 0.20
Diluted 0.35 0.35 0.38 0.09 0.20
Book value per common share 15.59 14.75 14.41 14.82 14.88
Tangible book value (1) 11.64 10.33 9.97 10.37 10.40

Weighted average common shares outstanding

Basic 81,918,956 75,000,000 75,000,000 75,000,000 75,000,000
Diluted 81,951,795 75,672,750 75,402,525 75,258,375 75,258,375
Performance Ratios:
Return on average common equity (2) 9.29 % 9.71 % 10.54 % 2.35 % 5.47 %

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

12.63 13.96 15.16 3.36 7.90
Return on average assets (2) 1.19 1.10 1.20 0.28 0.65
Net interest margin (2) 3.71 3.46 3.31 3.27 3.32
Efficiency ratio (1) 53.27 54.95 58.40 58.87 60.49
Asset Quality Ratios:

Total nonperforming assets ("NPAs") to total loans and OREO and
other NPAs

1.82 % 2.25 % 2.22 % 2.52 % 2.72 %

Total nonperforming loans to total loans

1.36 1.77 1.73 2.13 2.26
Total ACL to total loans 1.21 1.17 1.11 1.26 1.22

ACL to total nonperforming loans ("NPLs")

88.81 65.80 63.80 59.34 53.84
Net charge-offs to average loans (2) 0.09 (0.01 ) 0.20 1.41 1.01
Capital Ratios:
Total shareholders' equity to assets 13.29 % 11.38 % 11.34 % 11.77 % 12.10 %

Tangible common equity to tangible assets (1)

10.27 8.25 8.13 8.54 8.78

Common equity tier 1 (CET1) (transitional)

10.92 8.99 8.84 8.82 8.69
Tier 1 leverage capital 11.00 9.10 8.89 8.73 8.90
Tier 1 risk-based capital 11.31 9.36 9.19 9.17 9.00
Total risk-based capital 13.41 11.43 11.22 11.38 11.10
 
(1) - Considered a non-GAAP financial measure. See Table 7
"Reconciliation of Non-GAAP Financial Measures" for a reconciliation
of our non-GAAP measures to the most directly comparable GAAP
financial measure.
(2) - Annualized.
(3) - 75,000,000 of our outstanding shares are owned by our
parent-holding company Cadence Bancorp LLC
     

Table 2 - Average Balances/Yield/Rates

 
Three Months Ended June 30,
2017   2016
Average   Income/   Yield/ Average   Income/   Yield/
(In thousands) Balance Expense Rate Balance Expense Rate
ASSETS    
Interest-earning assets:
Loans, net of unearned income(1)
Originated and ANCI loans $ 7,348,932 $ 79,904 4.36 % $ 6,793,328 $ 66,444 3.93 %
ACI portfolio   301,116     10,525 14.02   387,029     9,231 9.59
Total loans 7,650,048 90,429 4.74 7,180,357 75,675 4.24
Investment securities
Taxable 688,464 4,178 2.43 729,213 4,169 2.30
Tax-exempt (2)   410,843     5,208 5.08   248,384     3,003 4.86

 

Total investment securities 1,099,307 9,386 3.42 977,597 7,172 2.95

Federal funds sold and short-term investments

312,287 688 0.88 302,508 493 0.66
Other investments   50,064     695 5.57   49,070     632 5.18
Total interest-earning assets 9,111,706 101,198 4.45 8,509,532 83,972 3.97
Noninterest-earning assets:
Cash and due from banks 59,220 50,196
Premises and equipment 65,392 69,920
Accrued interest and other assets 640,403 628,716
Allowance for credit losses   (90,366 )   (91,211 )
Total assets $ 9,786,355 $ 9,167,153
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Demand deposits $ 4,232,497 $ 6,354 0.60 % $ 3,913,639 $ 4,086 0.42 %
Savings deposits 186,307 119 0.26 179,079 105 0.24
Time deposits   1,676,170     5,298 1.27     1,747,641     4,360 1.00
Total interest-bearing deposits 6,094,974 11,771 0.77 5,840,359 8,551 0.59
Other borrowings 375,681 2,896 3.09 378,919 2,842 3.02
Subordinated debentures   134,692     2,324 6.92     133,918     2,279 6.84
Total interest-bearing liabilities 6,605,347 16,991 1.03 6,353,196 13,672 0.87
Noninterest-bearing liabilities:
Demand deposits 1,845,447 1,655,761
Accrued interest and other liabilities   84,344     66,162
Total liabilities 8,535,138 8,075,119
Stockholders' equity   1,251,217     1,092,034
Total liabilities and stockholders' equity $ 9,786,355   $ 9,167,153
Net interest income/net interest spread 84,207   3.42 % 70,300   3.10 %
Net yield on earning assets/net interest margin   3.71 %   3.32 %
Taxable equivalent adjustment:
Investment securities   (1,823 )   (1,051 )
Net interest income $ 82,384 $ 69,249
 

(1) Nonaccrual loans are included in loans, net of unearned
income. No adjustment has been made for these loans in the
calculation of yields.

(2) Interest income and yields are presented on a fully taxable
equivalent basis using a tax rate of 35%.
 

Table 3 – Loan Interest Income Detail

   
For the Three Months Ended,
(In thousands)

June 30,
2017

   

March 31,
2017

   

December 31,
2016

   

September 30,
2016

   

June 30,
2016

Loan Interest Income Detail
Interest income on loans, excluding ACI loans $ 79,904 $ 73,869 $ 71,237 $ 68,411 $ 66,444
Scheduled accretion for the period 6,075 6,331 6,845 7,296 8,028
Recovery income for the period   4,450   610   968   1,360   1,203
Accretion on acquired credit impaired (ACI) loans   10,525   6,941   7,813   8,656   9,231
Loan interest income $ 90,429 $ 80,810 $ 79,050 $ 77,067 $ 75,675
 
Loan yield, excluding ACI loans 4.36 % 4.14 % 4.03 % 3.96 % 3.93 %
ACI loan yield   14.02   8.89   9.21   9.67   9.59
Total loan yield   4.74 %   4.34 %   4.26 %   4.24 %   4.24 %
       
For the Six Months Ended June 30, For the Years Ended December 31,
(In thousands) 2017     2016 2016     2015
Loan Interest Income Detail
Interest income on loans, excluding ACI loans $ 153,773 $ 129,336 $ 268,984 $ 216,422
Scheduled accretion for the period 12,406 16,728 30,870 46,042
Recovery income for the period   5,060   3,372   5,699   9,970
Total accretion income on purchased loans (ACI loans)   17,466   20,100   36,569   56,012
Loan interest income $ 171,239 $ 149,436 $ 305,553 $ 272,434
 
Loan yield, excluding ACI loans 4.25 % 3.90 % 3.95 % 3.63 %
ACI loan yield   11.41   10.04   9.75   10.49
Total loan yield   4.54 %   4.25 %   4.25 %   4.20 %
     

Table 4 - Allowance for Credit Losses

 
For the Three Months Ended
(In thousands)

June 30,
2017

   

March 31,
2017

   

December 31,
2016

   

September 30,
2016

   

June 30,
2016

Balance at beginning of period $ 88,304 $ 82,268 $ 91,169 $ 87,147 $ 90,751
Charge-offs (2,879 ) (551 ) (3,922 ) (26,868 ) (18,206 )
Recoveries   1,089   801   243   1,263   131
Net (charge-offs) recoveries   (1,790 )   250   (3,679 )   (25,605 )   (18,075 )
Provision for (reversal of) credit losses   6,701   5,786   (5,222 )   29,627   14,471
Balance at end of period $ 93,215 $ 88,304 $ 82,268 $ 91,169 $ 87,147
                 

Table 5 -Noninterest Income

 
Three Months Ended
(In thousands)

June 30,
2017

March 31,
2017

December 31,
2016

September 30,
2016

June 30,
2016

Noninterest Income
Investment advisory revenue $ 5,061 $ 4,916 $ 4,821 $ 4,733 $ 4,653
Trust services revenue 4,584 5,231 4,109 3,959 3,971
Service charges on deposit accounts 3,784 3,815 3,614 3,555 3,270
Credit-related fees 2,741 2,747 2,875 2,689 2,507
Insurance revenue 1,828 2,130 1,577 1,863 1,953
Bankcard fees 1,862 1,812 1,813 1,823 1,777
Mortgage banking revenue 1,213 866 1,019 1,459 1,101
Other service fees earned   1,071   972   777   797     816
Total service fees and revenue   22,144   22,489   20,605   20,878     20,048
Securities (losses) gains, net (244 ) 81 1,267 1,386 1,019
Other   1,089   1,535   488   527   2,039
Total other noninterest income   845   1,616   1,755   1,913   3,058
Total noninterest income (GAAP) 22,989 24,105 22,360 22,791 23,106
Less: Securities (losses) gains   (244 )   81   1,267   1,386   1,019
Adjusted noninterest operating revenue (Non-GAAP measure) $ 23,233 $ 24,024 $ 21,093 $ 21,405 $ 22,087
 
 

Table 6 -Noninterest Expense

 

 

Three Months Ended
(In thousands)

June 30,
2017

March 31,
2017

December 31,
2016

September 30,
2016

June 30,
2016

Noninterest Expenses
Salaries and employee benefits $ 34,682 $ 34,267 $ 28,139 $ 31,086 $ 33,033
Premises and equipment 7,180 6,693 7,475 7,130 6,626
Intangible asset amortization 1,190 1,241 1,555 1,607 1,659
Net cost of operation of other real estate owned 427 296 1,117 1,126 107
Data processing 1,702 1,696 1,767 1,530 1,594
Special asset expenses 469 140 670 477 392
Consulting and professional fees 1,502 1,139 2,288 2,040 1,092
Loan related expenses 757 280 1,236 985 744
FDIC insurance 954 1,493 1,517 1,912 2,292
Communications 675 655 741 535 721
Advertising and public relations 499 345 344 303 338
Legal expenses 508 432 662 337 978
Branch closure expenses 47 46 47 52 75
Other   5,542   5,598   7,836   5,756   6,217
Total noninterest expenses $ 56,134 $ 54,321 $ 55,394 $ 54,876 $ 55,868
 

Table 7 - Reconciliation of Non-GAAP Financial Measures

 
As of and for the Three Months Ended
(In thousands)

June 30,
2017

 

March 31,
2017

 

December 31,
2016

 

September 30,
2016

 

June 30,
2016

Efficiency ratio
Noninterest expenses (numerator) $ 56,134 $ 54,321 $ 55,394 $ 54,876 $ 55,868
Net interest income $ 82,384 $ 74,758 $ 72,498 $ 70,426 $ 69,249
Noninterest income   22,989   24,105   22,360   22,791   23,106
Operating revenue (denominator) $ 105,373 $ 98,863 $ 94,858 $ 93,217 $ 92,355
Efficiency ratio   53.27 %   54.95 %   58.40 %   58.87 %   60.49 %
Adjusted noninterest expenses and operating revenue
Noninterest expense $ 56,134 $ 54,321 $ 55,394 $ 54,876 $ 55,868
Less: Branch closure expenses   47   46   47   52   75
Adjusted noninterest expenses $ 56,087 $ 54,275 $ 55,347 $ 54,824 $ 55,793
Net interest income $ 82,384 $ 74,758 $ 72,498 $ 70,426 $ 69,249
Noninterest income 22,989 24,105 22,360 22,791 23,106
Less: Securities (losses) gains, net   (244 )   81   1,267   1,386   1,019
Adjusted operating revenue $ 105,617 $ 98,782 $ 93,591 $ 91,831 $ 91,336
Tangible common equity ratio
Shareholders' equity $ 1,304,054 $ 1,105,976 $ 1,080,498 $ 1,111,783 $ 1,116,076
Less: Goodwill and other intangible assets, net   (330,261 )   (331,450 )   (332,691 )   (334,246 )   (335,852 )
Tangible common shareholders' equity   973,793   774,526   747,807   777,537   780,224
Total assets 9,811,557 9,720,937 9,530,888 9,444,010 9,221,807
Less: Goodwill and other intangible assets, net   (330,261 )   (331,450 )   (332,691 )   (334,246 )   (335,852 )
Tangible assets $ 9,481,296 $ 9,389,487 $ 9,198,197 $ 9,109,764 $ 8,885,955
Tangible common equity ratio   10.27 %   8.25 %   8.13 %   8.54 %   8.78 %
Tangible book value per share
Shareholders' equity $ 1,304,054 $ 1,105,976 $ 1,080,498 $ 1,111,783 $ 1,116,076
Less: Goodwill and other intangible assets, net   (330,261 )   (331,450 )   (332,691 )   (334,246 )   (335,852 )
Tangible common shareholders' equity $ 973,793 $ 774,526 $ 747,807 $ 777,537 $ 780,224
Common shares issued   83,625,000   75,000,000   75,000,000   75,000,000   75,000,000
Tangible book value per share $ 11.64 $ 10.33 $ 9.97 $ 10.37 $ 10.40
Return on average tangible common equity
Average common equity $ 1,251,217 $ 1,090,905 $ 1,094,182 $ 1,118,603 $ 1,092,034
Less: Average intangible assets   (330,977 )   (332,199 )   (333,640 )   (335,215 )   (336,856 )
Average tangible common shareholders' equity $ 920,240 $ 758,706 $ 760,542 $ 783,388 $ 755,178
Net income $ 28,968 $ 26,117 $ 28,985 $ 6,607 $ 14,841
Return on average tangible common equity   12.63 %   13.96 %   15.16 %   3.36 %   7.90 %
Pre-tax, pre-provision net earnings
Income before taxes $ 42,538 $ 38,756 $ 44,686 $ 8,714 $ 22,016
Plus: Provision for credit losses   6,701   5,786   (5,222 )   29,627   14,471
Pre-tax, pre-provision net earnings $ 49,239 $ 44,542 $ 39,464 $ 38,341 $ 36,487

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