Market Overview

South State Corporation Reports Second Quarter 2019 Results and Declares Increase in Quarterly Cash Dividend

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South State Corporation (NASDAQ:SSB) today released its unaudited results of operations and other financial information for the three-month and six-month period ended June 30, 2019. The Company reported consolidated net income of $41.5 million, or $1.17 per diluted common share for the three months ended June 30, 2019, a $2.9 million decrease, or $0.07 per share decline in EPS, compared to the first quarter of 2019. Adjusted consolidated net income (non-GAAP) was $49.4 million, or $1.40 per diluted common share for the three months ended June 30, 2019, a $4.6 million increase, or $0.15 per share increase in adjusted diluted EPS, compared to the first quarter of 2019.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20190729005711/en/

"The strength of our culture and team provides a great platform to build banking relationships," said Robert R. Hill, Jr., CEO of South State Corporation. "This was apparent this quarter, as all lines of business performed well. This foundation and the investments made the past few years are helping drive performance consistent with our long term performance targets. As we enter the second half of the year, I am optimistic regarding South State's ability to drive additional growth."

Focus on Long-Term Results

We communicated several long-term goals at our Investor Day held in December 2018 and we remain committed to those objectives while adhering to our core operating philosophy of soundness, profitability, and growth. These included loan growth, expense control, capital management, and dividend payout that will result in return on average tangible common equity (non-GAAP) of 16% to 18%.

Operating Leverage

This quarter reflected an increase of $5.6 million, or 17%, in noninterest income from the first quarter of 2019, and was driven by all four lines of business. Net interest income growth of $3.9 million was supported by an increase in average loan balances of $134.9 million, an increase in the investment securities portfolio and in short term investments. In addition, noninterest bearing deposits grew by $162.3 million on average, during the second quarter.

Noninterest expense increased by $11.2 million compared to 1Q 2019, and adjusted (non-GAAP) noninterest expense increased by $678,000 compared to 1Q 2019, an annualized increase of 2.8%, resulting in modest growth in adjusted noninterest expenses. We have completed a significant portion of our announced cost saves and believe these will contribute to further incremental operating leverage improvement over time.

Soundness

Asset quality remains strong with annualized net charge offs on non-acquired loans of 0.02% annualized. Total past due loans across all portfolios were 0.44% of total loans, and total nonperforming assets were 0.26% of total assets as of June 30, 2019. Overall, net charge-offs and OREO losses (from write downs and disposals) remain at very low levels and totaled $2.7 million for the first six months of 2019, and $1.9 million for the second quarter of 2019.

We continue to take advantage of our balance sheet strength and optionality. During the second quarter of 2019, we remained active in repurchasing company common stock and bought 641,200 shares at an average price of $73.13 per share, or $46.9 million. Tangible equity to tangible assets equaled 8.99%, dropping below 9% for the first time since March of 2017. In June of 2019, the Company's Board of Directors authorized a new Repurchase Program of 2,000,000 shares, and there were 1,859,000 shares available for repurchase under this new plan as of June 30, 2019. At June 30 ,2019, outstanding common shares totaled 34,735,587, and the Company has acquired 594,400 shares thus far in the third quarter of 2019, at an average price of $75.08 per share, or $44.6 million.

The Company's Board of Directors voted to increase the common stock dividend this quarter by $0.03 to $0.43 per share, which is a 7.5% increase compared to last quarter, and an $0.08 per share increase, or 22.9%, compared to the same quarter one year ago. The dividend will be payable on August 16, 2019 to shareholders of record as of August 9, 2019.

Branch consolidation and other cost initiatives – 2019

In mid-January 2019, the Company scheduled the closure of 13 branch locations during 2019. All but one of those locations was closed during the second quarter of 2019. In addition, certain cost reduction initiatives began during the first quarter of 2019. The cost incurred with these closures and cost initiatives totals $3.1 million for the first six months, with $2.1 million in the second quarter of 2019. The annual savings of these closures and cost initiatives is expected to be $13.0 million, and the net impact on 2019 anticipated to be approximately $10.0 million. In the second quarter of 2019, the Company recognized approximately $2.5 million in cost saves, and expect to realize another $6.4 million in the third and fourth quarter of 2019.

Pension plan termination – 2Q 2019

During the second quarter of 2019, the Company recorded the impact of the termination of the pension plan. The pre-tax, non-cash charge totaled $9.5 million. $7.7 million was recorded in accumulated other comprehensive loss (AOCL) and was reclassified from equity into the income statement, and the remaining charge of $1.8 million was from the net pension plan asset. This action supports the Company's long-term focus on managing noninterest expense to 0% to 3% growth annually.

Second Quarter 2019 Financial Performance

Three Months Ended

 

Six Months Ended

(Dollars in thousands, except per share data)

June 30,

 

Mar. 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

 

June 30,

INCOME STATEMENT

 

2019

 

 

 

2019

 

 

 

2018

 

 

 

2018

 

 

 

2018

 

 

 

2019

 

 

 

2018

 

Interest income
Loans, including fees (8)

$

135,388

 

$

131,834

 

$

132,541

 

$

132,043

 

$

129,852

 

$

267,222

 

$

256,893

 

Investment securities, federal funds sold and securities purchased under agreements to resell

 

14,594

 

 

 

11,556

 

 

 

11,327

 

 

 

11,517

 

 

 

11,880

 

 

 

26,150

 

 

 

22,887

 

Total interest income

 

149,982

 

 

143,390

 

 

143,868

 

 

143,560

 

 

141,732

 

 

293,372

 

 

279,780

 

Interest expense
Deposits

 

17,393

 

 

16,645

 

 

15,310

 

 

13,220

 

 

10,009

 

 

34,038

 

 

16,922

 

Federal funds purchased, securities sold under agreements to repurchase, and other borrowings

 

5,410

 

 

 

3,478

 

 

 

2,166

 

 

 

2,051

 

 

 

2,161

 

 

 

8,888

 

 

 

4,323

 

Total interest expense

 

22,803

 

 

20,123

 

 

17,476

 

 

15,271

 

 

12,170

 

 

42,926

 

 

21,245

 

Net interest income

 

127,179

 

 

123,267

 

 

126,392

 

 

128,289

 

 

129,562

 

 

250,446

 

 

258,535

 

Provision for loan losses

 

3,704

 

 

1,488

 

 

3,734

 

 

3,117

 

 

4,478

 

 

5,192

 

 

6,932

 

Net interest income after provision for loan losses

 

123,475

 

 

121,779

 

 

122,658

 

 

125,172

 

 

125,084

 

 

245,254

 

 

251,603

 

Noninterest income

 

37,618

 

 

32,058

 

 

35,642

 

 

32,027

 

 

37,525

 

 

69,676

 

 

78,080

 

Pre-tax operating expense

 

107,329

 

 

97,125

 

 

96,664

 

 

95,818

 

 

96,410

 

 

204,588

 

 

198,577

 

Branch consolid./acquisition and merger expense

 

2,078

 

 

1,114

 

 

--

 

 

4,476

 

 

14,096

 

 

3,058

 

 

25,392

 

Total noninterest expense

 

109,407

 

 

98,239

 

 

96,664

 

 

100,294

 

 

110,506

 

 

207,646

 

 

223,969

 

Income before provision for income taxes

 

51,686

 

 

55,598

 

 

61,636

 

 

56,905

 

 

52,103

 

 

107,284

 

 

105,714

 

Provision for income taxes, includes deferred tax revaluation

 

10,226

 

 

11,231

 

 

12,632

 

 

9,823

 

 

11,644

 

 

21,457

 

 

22,929

 

Net income

$

41,460

 

$

44,367

 

$

49,004

 

$

47,082

 

$

40,459

 

$

85,827

 

$

82,785

 

 
Adjusted net income (non-GAAP) (3)
Net income (GAAP)

$

41,460

 

$

44,367

 

$

49,004

 

$

47,082

 

$

40,459

 

$

85,827

 

$

82,785

 

Securities losses (gains), net of tax

 

(1,371

)

 

(432

)

 

2

 

 

9

 

 

505

 

 

(1,803

)

 

505

 

Provision for income taxes, deferred tax revaluation

 

--

 

 

--

 

 

--

 

 

(1,602

)

 

613

 

 

--

 

 

613

 

FHLB prepayment penalty

 

--

 

 

107

 

 

--

 

 

--

 

 

--

 

 

107

 

 

--

 

Pension plan termination expense, net of tax

 

7,641

 

 

7,641

 

 

--

 

Branch consolid./acquisition and merger expense, net of tax

 

1,667

 

 

782

 

 

--

 

 

3,577

 

 

11,112

 

 

2,449

 

 

20,030

 

Adjusted net income (non-GAAP)

$

49,397

 

$

44,824

 

$

49,006

 

$

49,066

 

$

52,689

 

$

94,221

 

$

103,933

 

 
Basic earnings per common share

$

1.18

 

$

1.25

 

$

1.36

 

$

1.28

 

$

1.10

 

$

2.43

 

$

2.25

 

Diluted earnings per common share

$

1.17

 

$

1.25

 

$

1.35

 

$

1.28

 

$

1.09

 

$

2.42

 

$

2.24

 

Adjusted net income per common share - Basic (non-GAAP) (3)

$

1.41

 

$

1.26

 

$

1.36

 

$

1.34

 

$

1.44

 

$

2.67

 

$

2.84

 

Adjusted net income per common share - Diluted (non-GAAP) (3)

$

1.40

 

$

1.26

 

$

1.35

 

$

1.33

 

$

1.43

 

$

2.66

 

$

2.82

 

Dividends per common share

$

0.40

 

$

0.38

 

$

0.36

 

$

0.35

 

$

0.34

 

$

0.78

 

$

0.67

 

Basic weighted-average common shares outstanding

 

35,089,129

 

 

35,445,087

 

 

36,154,922

 

 

36,645,181

 

 

36,676,887

 

 

35,268,574

 

 

36,656,689

 

Diluted weighted-average common shares outstanding

 

35,299,747

 

 

35,618,705

 

 

36,364,873

 

 

36,893,496

 

 

36,928,981

 

 

35,461,383

 

 

36,909,739

 

Effective tax rate

 

19.78

%

 

20.20

%

 

20.49

%

 

17.26

%

 

22.35

%

 

20.00

%

 

21.69

%

 

The Company reported consolidated net income of $41.5 million, or $1.17 per diluted common share for the three-months ended June 30, 2019, a $2.9 million decrease, or $0.08 per share decline in EPS compared to the first quarter of 2019. Compared to the second quarter of 2018, net income totaled $40.5 million, or $1.09 per diluted common share. Weighted average diluted shares declined by 319,000, from the first quarter of 2019, due to the continuation of the Company repurchasing common shares under the prior and new Repurchase Programs, which improved second quarter diluted EPS by $0.01 per diluted share. Net interest income increased by $3.9 million compared to the first quarter of 2019 on $6.6 million higher in interest income and $2.7 million higher interest expense. Interest income increased from the loan portfolio (excluding loans held for sale) by $3.4 million, from the securities portfolio by $1.1 million, and from federal funds sold by $2.0 million. These increases were offset partially by an increase of $2.7 million in interest expense with $2.0 million in other borrowings and $460,000 in time deposits. The second quarter of 2019 reflects an additional $200 million FHLB advance with a cash flow hedge, effectively locking in five-year funding at 1.89%. This advance and related hedge was identical to the two transactions executed in March of 2019 totaling $500 million. The funding cost of these FHLB advances and the related hedges total 2.06%, including the positive impact of the estimated dividend over time, and have a weighted average maturity of 4.3 years. The Company's cost of interest-bearing liabilities was 0.95% for the second quarter of 2019, an increase of 0.06% from the first quarter of 2019. Compared to the second quarter of 2018, our overall cost of funds increased by 0.31% which was primarily the result of rising interest rates and competition within our markets. The total provision for loan losses increased $2.2 million compared to the first quarter of 2019. Valuation allowance impairment related to acquired loans was $251,000 compared to $13,000 in the first quarter of 2019. The provision for loan losses related to acquired non-credit impaired loans was higher by $1.3 million compared to the first quarter of 2019. This increase was related to two loans that totaled $1.3 million in charge offs for 2Q 2019. The provision for loan losses on non-acquired loans was $2.0 million, $727,000 higher than first quarter of 2019, and exceeded net charge-offs by $1.6 million. Noninterest income increased by $5.6 million resulting primarily from increases in all categories, except acquired loan recoveries. Excluding securities gains, noninterest income increased by $4.4 million in the second quarter of 2019. Noninterest expense was higher by $11.2 million due to the pension plan termination cost of $9.5 million and $1.1 million increase in branch consolidation expense and other cost initiatives. Adjusted noninterest expense (non-GAAP) increased by $678,000 in 2Q 2019 compared to 1Q 2019, with the largest portion of the increase in professional fees.

Income Tax Expense

During the second quarter of 2019, our effective income tax rate declined to 19.78% from 20.20% in the first quarter of 2019 and from 22.35% in the second quarter of 2018. The primary factor in the lower effective tax rate compared to the first quarter of 2019 was lower pre-tax book income. Compared to the second quarter of 2018, the lower effective tax rate was attributable to an increase in federal tax credits available and the absence of the tax expense related to the revaluation of deferred taxes.

Balance Sheet and Capital

(dollars in thousands, except per share and share data)

Ending Balance

June 30,

 

Mar. 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

BALANCE SHEET

 

2019

 

 

 

2019

 

 

 

2018

 

 

 

2018

 

 

 

2018

 

Assets
Cash and cash equivalents

$

851,971

 

$

949,591

 

$

408,983

 

$

307,309

 

$

396,849

 

Investment securities:
Securities held to maturity

 

--

 

 

--

 

 

--

 

 

500

 

 

499

 

Securities available for sale, at fair value

 

1,717,276

 

 

1,466,249

 

 

1,517,067

 

 

1,551,281

 

 

1,577,999

 

Other investments

 

49,124

 

 

40,624

 

 

25,604

 

 

19,229

 

 

19,229

 

Total investment securities

 

1,766,400

 

 

1,506,873

 

 

1,542,671

 

 

1,571,010

 

 

1,597,727

 

Loans held for sale

 

47,796

 

 

33,297

 

 

22,925

 

 

33,752

 

 

36,968

 

Loans:
Acquired credit impaired

 

419,961

 

 

452,258

 

 

485,119

 

 

512,633

 

 

551,979

 

Acquired non-credit impaired

 

2,180,281

 

 

2,378,737

 

 

2,594,826

 

 

2,786,102

 

 

3,076,424

 

Non-acquired

 

8,621,327

 

 

8,310,613

 

 

7,933,286

 

 

7,606,478

 

 

7,197,539

 

Less allowance for non-acquired loan losses

 

(53,590

)

 

(52,008

)

 

(51,194

)

 

(49,869

)

 

(47,874

)

Loans, net

 

11,167,979

 

 

11,089,600

 

 

10,962,037

 

 

10,855,344

 

 

10,778,068

 

Other real estate owned ("OREO")

 

14,506

 

 

11,297

 

 

11,410

 

 

12,119

 

 

17,222

 

Premises and equipment, net

 

321,348

 

 

322,553

 

 

241,076

 

 

241,909

 

 

245,288

 

Bank owned life insurance

 

231,708

 

 

230,629

 

 

230,105

 

 

229,075

 

 

227,588

 

Deferred tax asset

 

28,240

 

 

31,884

 

 

37,128

 

 

47,943

 

 

48,853

 

Mortgage servicing rights

 

30,332

 

 

32,415

 

 

34,727

 

 

36,056

 

 

35,107

 

Core deposit and other intangibles

 

56,351

 

 

59,619

 

 

62,900

 

 

66,437

 

 

69,975

 

Goodwill

 

1,002,900

 

 

1,002,900

 

 

1,002,900

 

 

1,002,900

 

 

1,002,722

 

Other assets

 

163,806

 

 

136,229

 

 

119,466

 

 

118,361

 

 

110,121

 

Total assets

$

15,683,337

 

$

15,406,887

 

$

14,676,328

 

$

14,522,215

 

$

14,566,488

 

 
Liabilities and Shareholders' Equity
Deposits:
Noninterest-bearing

$

3,255,906

 

$

3,219,864

 

$

3,061,769

 

$

3,157,478

 

$

3,152,828

 

Interest-bearing

 

8,666,374

 

 

8,699,107

 

 

8,585,164

 

 

8,456,397

 

 

8,485,461

 

Total deposits

 

11,922,280

 

 

11,918,971

 

 

11,646,933

 

 

11,613,875

 

 

11,638,289

 

Federal funds purchased and securities sold under agreements to repurchase

 

298,029

 

 

276,891

 

 

270,649

 

 

279,698

 

 

331,969

 

Other borrowings

 

816,414

 

 

616,250

 

 

266,084

 

 

115,919

 

 

115,754

 

Other liabilities

 

272,636

 

 

218,298

 

 

126,366

 

 

144,584

 

 

132,109

 

Total liabilities

 

13,309,359

 

 

13,030,410

 

 

12,310,032

 

 

12,154,076

 

 

12,218,121

 

 
Shareholders' equity:
Preferred stock - $.01 par value; authorized 10,000,000 shares

 

--

 

 

--

 

 

--

 

 

--

 

 

--

 

Common stock - $2.50 par value; authorized 80,000,000 shares

 

86,839

 

 

88,421

 

 

89,574

 

 

91,808

 

 

92,064

 

Surplus

 

1,676,229

 

 

1,719,396

 

 

1,750,495

 

 

1,805,685

 

 

1,811,446

 

Retained earnings

 

609,444

 

 

582,034

 

 

551,108

 

 

515,155

 

 

480,928

 

Accumulated other comprehensive income (loss)

 

1,466

 

 

(13,374

)

 

(24,881

)

 

(44,509

)

 

(36,071

)

Total shareholders' equity

 

2,373,978

 

 

2,376,477

 

 

2,366,296

 

 

2,368,139

 

 

2,348,367

 

Total liabilities and shareholders' equity

$

15,683,337

 

$

15,406,887

 

$

14,676,328

 

$

14,522,215

 

$

14,566,488

 

 
Common shares issued and outstanding

 

34,735,587

 

 

35,368,521

 

 

35,829,549

 

 

36,723,238

 

 

36,825,556

 

 

At June 30, 2019, the Company's total assets were $15.7 billion, an increase of $1.0 billion from December 31, 2018, and an increase of $1.1 billion, or 7.7%, from June 30, 2018. During the second quarter of 2019, changes in the balance sheet include the following:

  1. Net loan growth totaled $80.1 million, or 2.9% annualized. Non-acquired loans increased by $310.7 million or 15.0% annualized and acquired loans decreased by $230.6 million, or 32.6% annualized.
  2. Sold 11,400 shares of Class B VISA common stock recognized a gain of $1.8 million.
  3. Executed one 90-day FHLB advance of $200.0 million with a cash flow hedge, effectively locking in five year funding at 1.89%, as we continued to add leverage within the balance sheet to support future loan growth and increase the size of the investment portfolio.
  4. Non-interest bearing deposits grew by $36.0 million, or 4.5% annualized.
  5. Repurchased 641,200 common shares totaling $46.9 million.

The Company's book value per common share increased to $68.34 per share at June 30, 2019, compared to $67.19 at March 31, 2019 and $63.77 at June 30, 2018. Total equity (capital) decreased by $2.5 million due to the shares of common stock repurchased during the second quarter. The decrease from the repurchased stock of $46.9 million was mostly offset by an improvement in the unrealized gain position of available for sale securities at June 30, 2019, and net income earned, net of the dividend paid, of $27.4 million, during the quarter. Tangible book value ("TBV") per common share increased by $0.70 per share to $37.85 at June 30, 2019, compared to $37.15 at March 31, 2019, and increased by $3.21 per share, or 9.3%, from $34.64 at June 30, 2018. The quarterly increase of $0.70 per share in tangible book value was the result of (1) earnings per share, excluding amortization of intangibles, of $1.27, offset by the dividend paid to shareholders of $0.40 per share; (2) an increase from the change in AOCI of $0.43 per share; (3) the increase from the impact of share-based compensation and employee stock purchases of $0.06 per share; and (4) a net decrease of $0.66 per share due primarily to the buyback of common stock.

"Sound credit quality continues to be a strength of the company, as many of our credit metrics continued to improve," said John C. Pollok, Chief Financial Officer. "South State experienced nice improvement during the second quarter in total revenue, in both net interest income and noninterest income, and good control of adjusted noninterest expense, all resulting in an adjusted return on average tangible equity of 15.79%, which approaches our long-term goal of 16% to 18%."

Performance and Capital Ratios

Three Months Ended

 

Six Months Ended

June 30,

 

Mar. 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

 

June 30,

 

June 30,

PERFORMANCE RATIOS

2019

 

2019

 

2018

 

2018

 

2018

 

2019

 

2018

Return on average assets (annualized)

 

1.08

%

 

1.21

%

 

1.33

%

 

1.28

%

 

1.12

%

1.14

%

1.15

%

Adjusted return on average assets (annualized) (non-GAAP) (3)

 

1.28

%

 

1.23

%

 

1.33

%

 

1.33

%

 

1.45

%

1.26

%

1.45

%

Return on average equity (annualized)

 

6.98

%

 

7.61

%

 

8.24

%

 

7.89

%

 

6.96

%

7.29

%

7.18

%

Adjusted return on average equity (annualized) (non-GAAP) (3)

 

8.32

%

 

7.69

%

 

8.24

%

 

8.23

%

 

9.06

%

8.00

%

9.02

%

Return on average tangible common equity (annualized) (non-GAAP) (7)

 

13.38

%

 

14.66

%

 

15.91

%

 

15.29

%

 

13.79

%

14.01

%

14.23

%

Adjusted return on average tangible common equity (annualized) (non-GAAP) (3) (7)

 

15.79

%

 

14.80

%

 

15.91

%

 

15.90

%

 

17.68

%

15.30

%

17.64

%

Efficiency ratio (tax equivalent)

 

66.87

%

 

63.24

%

 

59.43

%

 

62.31

%

 

65.63

%

65.10

%

66.16

%

Adjusted efficiency ratio (non-GAAP) (9)

 

59.78

%

 

62.52

%

 

59.43

%

 

59.53

%

 

57.26

%

61.12

%

58.65

%

Dividend payout ratio (2)

 

33.89

%

 

30.29

%

 

26.63

%

 

27.30

%

 

30.93

%

32.03

%

29.78

%

Book value per common share

$

68.34

 

$

67.19

 

$

66.04

 

$

64.49

 

$

63.77

 

Tangible common equity per common share (non-GAAP) (7)

$

37.85

 

$

37.15

 

$

36.30

 

$

35.37

 

$

34.64

 

 
CAPITAL RATIOS
Equity-to-assets

 

15.14

%

 

15.42

%

 

16.12

%

 

16.31

%

 

16.12

%

Tangible equity-to-tangible assets (non-GAAP) (7)

 

8.99

%

 

9.16

%

 

9.56

%

 

9.65

%

 

9.45

%

Tier 1 common equity (6)

 

11.6

%

 

11.8

%

 

12.1

%

 

12.3

%

 

12.0

%

Tier 1 leverage (6)

 

10.0

%

 

10.5

%

 

10.6

%

 

10.8

%

 

10.6

%

Tier 1 risk-based capital (6)

 

12.6

%

 

12.8

%

 

13.1

%

 

13.3

%

 

13.0

%

Total risk-based capital (6)

 

13.1

%

 

13.3

%

 

13.6

%

 

13.8

%

 

13.5

%

 
OTHER DATA
Number of branches

 

156

 

 

168

 

 

168

 

 

168

 

 

169

 

Number of employees (full-time equivalent basis)

 

2,544

 

 

2,589

 

 

2,602

 

 

2,640

 

 

2,654

 

 
 
 

Asset Quality

Ending Balance

June 30,

 

Mar. 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

(Dollars in thousands)

 

2019

 

 

 

2019

 

 

 

2018

 

 

 

2018

 

 

 

2018

 

NONPERFORMING ASSETS:
Non-acquired
Non-acquired nonperforming loans

$

15,605

 

$

15,910

 

$

15,018

 

$

15,315

 

$

14,870

 

Non-acquired OREO and other nonperforming assets

 

4,374

 

 

4,070

 

 

4,037

 

 

3,229

 

 

8,179

 

Total non-acquired nonperforming assets

 

19,979

 

 

19,980

 

 

19,055

 

 

18,544

 

 

23,049

 

Acquired
Acquired nonperforming loans

 

9,985

 

 

14,558

 

 

13,651

 

 

10,800

 

 

9,590

 

Acquired OREO and other nonperforming assets

 

10,412

 

 

7,782

 

 

7,755

 

 

9,302

 

 

9,527

 

Total acquired nonperforming assets

 

20,397

 

 

22,340

 

 

21,406

 

 

20,102

 

 

19,117

 

Total nonperforming assets

$

40,376

 

$

42,320

 

$

40,461

 

$

38,646

 

$

42,166

 

 

Three Months Ended

 

Six Months Ended

June 30,

 

Mar. 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

 

June 30,

 

June 30,

 

2019

 

 

 

2019

 

 

 

2018

 

 

 

2018

 

 

 

2018

 

 

2019

 

2018

ASSET QUALITY RATIOS:
Allowance for non-acquired loan losses as a
percentage of non-acquired loans (1)

 

0.62

%

 

0.63

%

 

0.65

%

 

0.66

%

 

0.67

%

0.62

%

0.67

%

Allowance for non-acquired loan losses as a percentage of non-acquired nonperforming loans

 

343.42

%

 

 

326.89

%

 

 

340.88

%

 

 

325.62

%

 

 

321.95

%

 

343.22

%

 

321.95

%

Net charge-offs on non-acquired loans as a percentage of average non-acquired loans (annualized) (1)

 

0.02

%

 

 

0.02

%

 

 

0.06

%

 

 

0.07

%

 

 

0.01

%

 

0.02

%

 

0.02

%

Net charge-offs on acquired non-credit impaired loans as a percentage of average acquired non-credit impaired loans (annualized) (1)

 

0.25

%

 

 

0.03

%

 

 

0.09

%

 

 

0.01

%

 

 

0.14

%

 

0.14

%

 

0.08

%

Total nonperforming assets as a percentage of total assets

 

0.26

%

 

 

0.27

%

 

 

0.28

%

 

 

0.27

%

 

 

0.29

%

 

 

 

 

Excluding Acquired Assets
NPLs as a percentage of period end non-acquired loans (1)

 

0.18

%

 

0.19

%

 

0.19

%

 

0.20

%

 

0.21

%

Total nonperforming assets as a percentage of total non-acquired loans and repossessed assets (1) (4)

 

0.23

%

 

 

0.24

%

 

 

0.24

%

 

 

0.24

%

 

 

0.32

%

Total nonperforming assets as a percentage of total assets (5)

 

0.13

%

 

 

0.13

%

 

 

0.13

%

 

 

0.13

%

 

 

0.16

%

 
 

Total nonperforming assets decreased by $1.9 million to $40.4 million, representing 0.26% of total assets, a decrease of 1 basis point compared to March 31, 2019. Non-performing acquired non-credit impaired loans decreased by $4.6 million and totaled $10.0 million. Legacy non-performing loans decreased by $305,000 during the second quarter of 2019 to $15.6 million at June 30, 2019. The allowance for loan losses as a percentage of non-acquired nonaccrual loans was 343% at June 30, 2019, up from 327% in the first quarter of 2019, and up from 322% at June 30, 2018.

At June 30, 2019, the allowance for non-acquired loan losses was $53.6 million, or 0.62%, of non-acquired period-end loans and $52.0 million, or 0.63%, at March 31, 2019, and $47.9 million, or 0.67% at June 30, 2018. Net charge-offs within the non-acquired portfolio were $452,000, or 0.02% annualized, in the second quarter of 2019, compared to $493,000, or 0.02% annualized, in the first quarter of 2019. Second quarter 2018 net charge-offs totaled $189,000, or 0.01% annualized. Net charge-offs (recoveries) related to the non-acquired loan portfolio were ($292,000) during the second quarter of 2019. The remaining net charge-offs were from overdraft and ready reserve accounts and totaled $744,000.

During the second quarter of 2019, the provision for loan losses totaled $2.0 million for the non-acquired loan portfolio compared to $1.3 million in the first quarter of 2019, and $2.9 million in the second quarter of 2018.

Net charge offs related to "acquired non-credit impaired loans" were $1.4 million, or 0.25% annualized, in the second quarter of 2019; and the Company recorded a provision for loan losses, accordingly. Net charge-offs in the first quarter of 2019 totaled $168,000, or 0.03% annualized, and in the second quarter of 2018, net charge-offs totaled $1.1 million, or 0.14% annualized. There were two loans with charge-offs that totaled $1.3 million in the second quarter of 2019, which comprise the majority of the $1.4 million in provision for loan losses recorded.

During the first quarter of 2019, the Company recorded a net impairment of $251,000 within the acquired credit impaired loan pools compared to $13,000 in the first quarter of 2019. During the second quarter of 2018, the Company recorded net impairment of $522,000.

Total OREO increased during the second quarter due to the branch closures that were completed, and increased by $3.2 million to $14.5 million. This was still below the balance of OREO of $17.2 million at June 30, 2018.

Net Interest Income and Margin

Three Months Ended

June 30, 2019

 

March 31, 2019

 

June 30, 2018

(Dollars in thousands)

Average

 

Income/

 

Yield/

 

Average

 

Income/

 

Yield/

 

Average

 

Income/

 

Yield/

YIELD ANALYSIS

Balance

 

Expense

 

Rate

 

Balance

 

Expense

 

Rate

 

Balance

 

Expense

 

Rate

Interest-Earning Assets:
Federal funds sold, reverse repo, and time deposits

$

602,351

$

3,426

2.28

%

$

248,620

$

1,463

2.39

%

$

203,189

$

1,218

2.40

%

Investment securities (taxable)

 

1,429,378

 

9,551

2.68

%

 

1,327,336

 

8,597

2.63

%

 

1,439,334

 

9,048

2.52

%

Investment securities (tax-exempt)

 

191,686

 

1,617

3.38

%

 

187,732

 

1,496

3.23

%

 

213,712

 

1,614

3.03

%

Loans held for sale

 

33,804

 

337

4.00

%

 

19,308

 

214

4.49

%

 

32,313

 

337

4.18

%

Loans

 

11,157,942

 

135,051

4.85

%

 

11,023,005

 

131,620

4.84

%

 

10,723,400

 

129,515

4.84

%

Total interest-earning assets

 

13,415,161

 

149,982

4.48

%

 

12,806,001

 

143,390

4.54

%

 

12,611,948

 

141,732

4.51

%

Noninterest-earning assets

 

2,004,786

 

2,006,898

 

1,934,359

Total Assets

$

15,419,947

$

14,812,899

$

14,546,307

Interest-Bearing Liabilities:
Transaction and money market accounts

$

5,515,060

$

9,632

0.70

%

$

5,429,375

$

9,340

0.70

%

$

5,203,265

$

4,691

0.36

%

Savings deposits

 

1,354,812

 

1,252

0.37

%

 

1,379,688

 

1,256

0.37

%

 

1,459,851

 

1,160

0.32

%

Certificates and other time deposits

 

1,749,782

 

6,509

1.49

%

 

1,773,365

 

6,049

1.38

%

 

1,784,269

 

4,158

0.93

%

Federal funds purchased and repurchase agreements

 

281,187

 

673

0.96

%

 

284,350

 

753

1.07

%

 

339,917

 

642

0.76

%

Other borrowings

 

677,858

 

4,737

2.80

%

 

301,696

 

2,725

3.66

%

 

165,940

 

1,519

3.67

%

Total interest-bearing liabilities

 

9,578,699

 

22,803

0.95

%

 

9,168,474

 

20,123

0.89

%

 

8,953,242

 

12,170

0.55

%

Noninterest-bearing liabilities

 

3,458,506

 

3,280,126

 

3,260,626

Shareholders' equity

 

2,382,742

 

2,364,299

 

2,332,439

Total Non-IBL and shareholders' equity

 

5,841,248

 

5,644,425

 

5,593,065

Total liabilities and shareholders' equity

$

15,419,947

$

14,812,899

$

14,546,307

Net interest income and margin (NON-TAX EQUIV.)

$

127,179

3.80

%

$

123,267

3.90

%

$

129,562

4.12

%

Net interest margin (TAX EQUIVALENT)

3.82

%

3.92

%

4.14

%

Overall Cost of Funds (including demand deposits)

0.71

%

0.67

%

0.40

%

Non-taxable equivalent net interest income was $127.2 million for the second quarter of 2019, a $3.9 million increase from the first quarter of 2019. The increase resulted from the leverage of the balance sheet that allowed for higher interest income from investment securities of $1.1 million and federal funds sold of $2.0 million. In addition, interest income from the loan portfolio added $3.4 million, which was attributable to higher yield on the non-acquired loan portfolio to 4.32% from 4.30%, and $387.1 million increase in the average balance. This was offset, partially by $2.2 million decline in acquired loan interest income which resulted from the continued decline in the average acquired loan balance of $252.2 million. Interest expense increased by $2.7 million, with $2.0 million coming from other borrowings (FHLB advances). Time deposit funding cost increased 11 basis points during 2Q 2019 and resulted in $460,000 of additional funding cost. Lastly, there was one more day in the second quarter of 2019 compared to the first quarter of 2019.

Tax-equivalent net interest margin declined 10 basis points from the first quarter of 2019 and declined by 32 basis points from the second quarter of 2018. During the second quarter of 2019, the Company's average total assets increased to $15.4 billion, an increase of $607.0 million from the first quarter of 2019, and an increase of $873.6 million from the second quarter of 2018. Average earning assets totaled $13.4 billion up $609.2 million from 1Q 2019, and up $803.2 million from 2Q 2018. Average interest-bearing liabilities totaled $9.6 billion at 2Q 2019, an increase of $410.2 million from 1Q 2019; and up $625.5 million from 2Q 2018. Average non-interest bearing liabilities increased by $178.4 million, from 1Q 2019, to $3.5 billion; and was up $197.9 million from 2Q 2018. Including the impact of noninterest bearing deposits, the Company's overall cost of funds was 71 basis points for the second quarter of 2019 compared to 67 basis points in the first quarter of 2019, and compared to 40 basis points one year ago.

The first table below reflects the quarterly roll forward of the acquired credit impaired loan accretable yield, including a fair value adjustment of $1.5 million recorded in the second quarter of 2018 for the Park Sterling merger. The table reflects the amount of acquired credit impaired loan interest income recognized each quarter, split between (1) contractual loan interest; and (2) the accretion recognized from the performance of the acquired credit impaired loans.

The second table below shows the split between principal and interest that will be accreted into interest income over the expected remaining life of the ACI loans, the third table shows the nonaccretable difference split between principal and interest which is not expected to be collected, and the fourth table shows "total acquired accretion income" recorded over the past five quarters. The amount increased slightly in the second quarter of 2019 when compared to the first quarter of 2019. The largest impact was the partial collection of the legal balance of an acquired credit impaired loan during the second quarter totaling $1.0 million.

The amount of ANCI discount recognized in the second quarter of 2019 was $3.2 million compared to $3.2 million recognized in the first quarter of 2019. The remaining balance of the discount on the acquired noncredit impaired loan portfolio totals $26.9 million at June 30, 2019, $30.2 million at March 31, 2019, and $43.6 million at June 30, 2018.

 
1 - Accretable Yield Rollforward (Acquired credit impaired loans)

June 30,

 

Mar. 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

(Dollars in thousands)

 

2019

 

 

 

2019

 

 

 

2018

 

 

 

2018

 

 

 

2018

 

 
Balance at beginning of period

$

106,978

 

$

116,754

 

$

114,985

 

$

121,804

 

$

129,857

 

 
Contractual interest income *

 

(7,111

)

 

(7,078

)

 

(7,837

)

 

(8,228

)

 

(8,354

)

Accretion on acquired loans

 

(5,167

)

 

(5,120

)

 

(5,099

)

 

(4,892

)

 

(5,212

)

Additions (decreases) from Park Sterling Bank Acquisition

 

--

 

 

--

 

 

--

 

 

--

 

 

(1,460

)

Improved cash flows affecting nonaccretable difference

 

5,994

 

 

2,474

 

 

14,698

 

 

6,350

 

 

7,118

 

Other changes, net

 

(81

)

 

(52

)

 

7

 

 

(49

)

 

(145

)

 
Balance at end of period

$

100,613

 

$

106,978

 

$

116,754

 

$

114,985

 

$

121,804

 

* Contractual interest income does not include interest income from loan advances post-acquisition on lines of credit, late fees or other loan fees.
 

2 - Principal & Interest of Accretable Yield Period End Balance

Principal - expected to be collected in future periods and recorded as interest income

$

43,616

 

$

46,673

 

$

48,896

 

$

46,526

 

$

50,474

 

Interest - expected to be collected in future periods and recorded as interest income

 

56,997

 

 

60,305

 

 

67,859

 

 

68,459

 

 

71,331

 

Total accretable balance at period end

$

100,613

 

$

106,978

 

$

116,754

 

$

114,985

 

$

121,805

 

 

3 - Principal & Interest of the Nonaccretable Difference

Contractual principal which is not expected to be collected

$

13,151

 

$

15,203

 

$

19,055

 

$

30,081

 

$

32,557

 

Contractual interest which is not expected to be collected

 

5,005

 

$

9,079

 

 

5,763

 

 

8,341

 

 

10,840

 

Total nonaccretable difference

$

18,156

 

$

24,282

 

$

24,818

 

$

38,422

 

$

43,397

 

 
4 - Acquired accretion income over Past 5 Quarters

Three months Ended

(in thousands)

June 30,

 

Mar. 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

 

2019

 

 

 

2019

 

 

 

2018

 

 

 

2018

 

 

 

2018

 

Acquired non credit impaired accretion income and fees

$

3,209

 

$

3,237

 

$

3,792

 

$

6,786

 

$

7,671

 

Acquired credit impaired accretion income

 

5,167

 

 

5,120

 

 

5,099

 

 

4,892

 

 

5,212

 

Other interest and late fees

 

773

 

 

780

 

 

770

 

 

742

 

 

759

 

Total acquired accretion income

$

9,149

 

$

9,137

 

$

9,662

 

$

12,420

 

$

13,642

 

 

Noninterest Income and Expense

Three Months Ended

June 30,

 

Mar. 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

(Dollars in thousands)

2019

 

2019

 

2018

 

 

2018

 

 

2018

Noninterest income:
Fees on deposit accounts

$

18,741

$

17,808

$

18,704

 

$

17,790

 

$

22,612

 

Mortgage banking income

 

5,307

 

2,385

 

2,501

 

 

2,824

 

 

3,317

 

Trust and investment services income

 

7,720

 

7,269

 

7,621

 

 

7,527

 

 

7,567

 

Securities (losses) gains, net

 

1,709

 

541

 

(3

)

 

(11

)

 

(641

)

Recoveries of fully charged off acquired loans

 

1,347

 

1,867

 

2,737

 

 

1,238

 

 

2,167

 

Other

 

2,794

 

2,188

 

4,082

 

 

2,659

 

 

2,503

 

Total noninterest income

$

37,618

$

32,058

$

35,642

 

$

32,027

 

$

37,525

 

 
Noninterest expense:
Salaries and employee benefits

$

58,547

$

58,431

$

57,705

 

$

57,934

 

$

55,026

 

Pension plan termination expense

 

9,526

 

--

 

--

 

 

--

 

 

--

 

Net occupancy expense

 

7,616

 

7,199

 

7,205

 

 

7,630

 

 

7,815

 

Information services expense

 

8,671

 

9,009

 

7,877

 

 

7,804

 

 

8,903

 

Furniture and equipment expense

 

4,233

 

4,413

 

4,599

 

 

4,605

 

 

4,519

 

FHLB prepayment penalty

 

--

 

134

 

--

 

 

--

 

 

--

 

OREO expense and loan related

 

881

 

751

 

831

 

 

(19

)

 

1,037

 

Business development and staff related

 

2,171

 

2,288

 

2,822

 

 

2,463

 

 

2,765

 

Amortization of intangibles

 

3,268

 

3,281

 

3,537

 

 

3,537

 

 

3,722

 

Professional fees

 

2,781

 

2,240

 

3,148

 

 

2,138

 

 

1,898

 

Supplies, printing and postage expense

 

1,495

 

1,504

 

1,480

 

 

1,561

 

 

1,406

 

FDIC assessment and other regulatory charges

 

1,455

 

1,535

 

1,340

 

 

2,525

 

 

3,277

 

Advertising and marketing

 

959

 

807

 

1,273

 

 

1,049

 

 

1,163

 

Other operating expenses

 

5,726

 

5,667

 

4,847

 

 

4,591

 

 

4,879

 

Branch consolid. or merger / convers related exp.

 

2,078

 

980

 

--

 

 

4,476

 

 

14,096

 

Total noninterest expense

$

109,407

$

98,239

$

96,664

 

$

100,294

 

$

110,506

 

 
 

Noninterest income totaled $37.6 million during the second quarter of 2019, an increase of $5.6 million from the first quarter of 2019. The increase was the result of higher income in all categories, other than recoveries on acquired loans, which declined by $520,000. Mortgage banking income increased by $2.9 million as gains from the sale of loans improved $1.9 million and mortgage servicing rights (MSR), net of the hedge increased by $1.0 million. Trust and investment services income improved by $451,000, and fees on deposit accounts increased by $933,000, primarily in bankcard income. Also, in the second quarter of 2019, the Company sold another 11,400 shares of VISA class B stock resulting in a gain of $1.8 million, which was partially offset by realized losses of $100,000 on lower yielding investment securities which were sold.

Compared to the second quarter of 2018, noninterest income was slightly up by $93,000. The categories were as follows:

  1. $2.0 million improvement in mortgage banking income primarily from higher secondary market income;
  2. $2.4 million increase in securities gains in 2Q 2019 compared to securities losses of $641,000 in 2Q 2018; offset by
  3. Fees on deposit accounts were down $3.9 million due primarily to the impact of the Durbin Amendment, which reduced income beginning in the third quarter of 2018; and
  4. Lower recoveries on acquired loans of $820,000.

Noninterest expense was $109.4 million in the second quarter of 2019, an increase of $11.2 million from $98.2 million in the first quarter of 2019. The increase was primarily related to the following: (1) the termination of the pension plan in the second quarter of 2019, which totaled $9.5 million, and (2) additional branch consolidation and other cost saving initiatives resulted in $2.1 million of expense in the second quarter of 2019. Excluding these cost, adjusted noninterest expense totaled $97.8 million, an increase of $678,000, or 0.7% compared to first quarter 2019.

Compared to the second quarter of 2018, noninterest expense was lower by $1.1 million. The net decrease was primarily due to the following: (1) merger-related and branch consolidated cost declined $12.0 million, as additional Park Sterling merger / conversion cost were incurred in 2Q 2018, (2) $1.8 million in lower FDIC assessment and other regulatory charges were incurred; offset by (3) higher salaries and benefits which increased by $13.0 million due primarily to the termination of the pension plan ($9.5 million), higher benefits from self-funded medical cost ($907,000) and higher 401(k) matching contributions ($828,000), and higher incentive expense ($1.5 million). Adjusted noninterest expense (non-GAAP) increased $1.4 million, or 1.4%, compared to the second quarter of 2018.

South State Corporation will hold a conference call tomorrow, July 30, 2019, at 10 a.m. Eastern Time, during which management will review earnings and performance trends. Callers wishing to participate may call toll-free by dialing 877-506-9272. The number for international participants is 412-380-2004. The conference ID number is 10133216. Participants can also listen to the live audio webcast through the Investor Relations section of www.SouthStateBank.com. A replay will be available beginning July 30, 2019 by 2:00 p.m. Eastern Time until 9:00 a.m. on August 13, 2019. To listen to the replay, dial 877-344-7529 or 412-317-0088. The passcode is 10133216.

***************

South State Corporation is a financial services company headquartered in Columbia, South Carolina with approximately $15.7 billion in assets. South State Bank, the company's primary subsidiary, provides consumer, commercial, mortgage, and wealth management solutions throughout the Carolinas, Georgia and Virginia. South State has served customers since 1934. Additional information is available at www.SouthStateBank.com.

Non-GAAP Measures

Statements included in this press release include non-GAAP measures and should be read along with the accompanying tables which provide a reconciliation of non-GAAP measures to GAAP measures. Management believes that these non-GAAP measures provide additional useful information which allows readers to evaluate the ongoing performance of the Company. Non-GAAP measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the company's performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the company. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the company's results or financial condition as reported under GAAP.

 

 

 

Three Months Ended

 

Six Months Ended

(Dollars in thousands, except per share data)

June 30,

 

Mar. 31,

 

Dec. 31,

 

Sept. 30,

 

June 30,

 

June 30,

 

June 30,

RECONCILIATION OF GAAP TO Non-GAAP

 

2019

 

 

 

2019

 

 

 

2018

 

 

 

2018

 

 

 

2018

 

 

 

2019

 

 

 

2018

 

Adjusted net income (non-GAAP) (3)
Net income (GAAP)

$

41,460

 

$

44,367

 

$

49,004

 

$

47,082

 

$

40,459

 

$

85,827

 

$

82,785

 

Securities losses (gains), net of tax

 

(1,371

)

 

(432

)

 

2

 

 

9

 

 

505

 

 

(1,803

)

 

505

 

Provision for income taxes - Deferred Tax Asset Write-Off

 

--

 

 

--

 

 

--

 

 

(1,602

)

 

613

 

 

--

 

 

613

 

Pension plan termination expense, net of tax

 

7,641

 

 

--

 

 

--

 

 

--

 

 

--

 

 

7,641

 

 

--

 

FHLB prepayment penalty, net of tax

 

--

 

 

107

 

 

--

 

 

--

 

 

--

 

 

107

 

 

--

 

Merger and branch consolidation/acq. expense, net of tax

 

1,667

 

 

782

 

 

--

 

 

3,577

 

 

11,112

 

 

2,449

 

 

20,030

 

Adjusted net income (non-GAAP)

$

49,397

 

$

44,824

 

$

49,006

 

$

49,066

 

$

52,689

 

$

94,221

 

$

103,933

 

 
Adjusted net income per common share - Basic (3)

Earnings per common share - Basic (GAAP)

$

1.18

 

$

1.25

 

$

1.36

 

$

1.28

 

$

1.10

 

$

2.43

 

$

2.25

 

Effect to adjust for securities losses (gains)

 

(0.04

)

 

(0.01

)

 

--

 

 

0.00

 

 

0.01

 

 

(0.05

)

 

0.01

 

Effect to adjust for provision for income tax DTA Write-Off

 

--

 

 

--

 

 

--

 

 

(0.04

)

 

0.02

 

 

--

 

 

0.02

 

Effect to adjust for pension plan termination expense, net of tax

 

0.22

 

 

--

 

 

--

 

 

--

 

 

--

 

 

0.22

 

 

--

 

Effect to adjust for FHLB prepayment penalty, net of tax

 

--

 

 

0.00

 

 

--

 

 

--

 

 

--

 

 

0.00

 

 

--

 

Effect to adjust for merger & branch consol./acq expenses, net of tax

 

0.05

 

 

0.02

 

 

--

 

 

0.10

 

 

0.31

 

 

0.07

 

 

0.56

 

Adjusted net income per common share - Basic (non-GAAP)

$

1.41

 

$

1.26

 

$

1.36

 

$

1.34

 

$

1.44

 

$

2.67

 

$

2.84

 

 
Adjusted net income per common share - Diluted (3)

Earnings per common share - Diluted (GAAP)

$

1.17

 

$

1.25

 

$

1.35

 

$

1.28

 

$

1.09

 

$

2.42

 

$

2.24

 

Effect to adjust for securities losses (gains)

 

(0.04

)

 

(0.01

)

 

--

 

 

0.00

 

 

0.01

 

 

(0.05

)

 

0.01

 

Effect to adjust for provision for income tax DTA Write-Off

 

--

 

 

--

 

 

--

 

 

(0.05

)

 

0.02

 

 

--

 

 

0.02

 

Effect to adjust for pension plan termination expense, net of tax

 

0.22

 

 

--

 

 

--

 

 

--

 

 

---

 

 

0.22

 

 

--

 

Effect to adjust for FHLB prepayment penalty, net of tax

 

--

 

 

0.00

 

 

--

 

 

--

 

 

---

 

 

0.00

 

 

--

 

Effect to adjust for merger & branch consol./acq expenses, net of tax

 

0.05

 

 

0.02

 

 

--

 

 

0.10

 

 

0.31

 

 

0.07

 

 

0.55

 

Adjusted net income per common share - Diluted (non-GAAP)

$

1.40

 

$

1.26

 

$

1.35

 

$

1.33

 

$

1.43

 

$

2.66

 

$

2.82

 

 
Adjusted Return of Average Assets (3)

Return on average assets (GAAP)

 

1.08

%

 

1.21

%

 

1.33

%

 

1.28

%

 

1.12

%

 

1.14

%

 

1.15

%

Effect to adjust for securities losses (gains)

 

-0.04

%

 

-0.01

%

 

0.00

%

 

0.00

%

 

0.01

%

 

-0.02

%

 

0.01

%

Effect to adjust for provision for income tax DTA Write-Off

 

0.00

%

 

0.00

%

 

0.00

%

 

-0.04

%

 

0.02

%

 

0.00

%

 

0.01

%

Effect to adjust for pension plan termination expense, net of tax

 

0.20

%

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

 

0.10

%

 

0.00

%

Effect to adjust for FHLB prepayment penalty, net of tax

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

Effect to adjust for merger & branch consol./acq expenses, net of tax

 

0.04

%

 

0.03

%

 

0.00

%

 

0.09

%

 

0.30

%

 

0.04

%

 

0.28

%

Adjusted return on average assets (non-GAAP)

 

1.28

%

 

1.23

%

 

1.33

%

 

1.33

%

 

1.45

%

 

1.26

%

 

1.45

%

 
Adjusted Return of Average Equity (3)

Return on average equity (GAAP)

 

6.98

%

 

7.61

%

 

8.24

%

 

7.89

%

 

6.96

%

 

7.29

%

 

7.18

%

Effect to adjust for securities losses (gains)

 

-0.23

%

 

-0.07

%

 

0.00

%

 

0.00

%

 

0.09

%

 

-0.15

%

 

0.04

%

Effect to adjust for provision for income tax DTA Write-Off

 

0.00

%

 

0.00

%

 

0.00

%

 

-0.27

%

 

0.11

%

 

0.00

%

 

0.05

%

Effect to adjust for pension plan termination expense, net of tax

 

1.29

%

 

0.00

%

 

0.00

%

 

0.00

%

 

0.00

%

 

0.65

%

 

0.00

%

Effect to adjust for FHLB prepayment penalty, net of tax

 

0.00

%

 

0.02

%

 

0.00

%

 

0.00

%

 

0.00

%

 

0.01

%

 

0.00

%

Effect to adjust for merger & branch consol./acq expenses, net of tax

 

0.28

%

 

0.13

%

 

0.00

%

 

0.61

%

 

1.90

%

 

0.20

%

 

1.75

%

Adjusted return on average equity (non-GAAP)

 

8.32

%

 

7.69

%

 

8.24

%

 

8.23

%

 

9.06

%

 

8.00

%

 

9.02

%

 
Adjusted Return on Average Common Tangible Equity (3) (7)

Return on average common equity (GAAP)

 

6.98

%

 

7.61

%

 

8.24

%

 

7.89

%

 

6.96

%

 

7.29

%

 

7.18

%

Effect to adjust for securities losses (gains)

 

-0.23